Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Guangdong Dongfang Precision Science & Technology Co., Ltd.
Annual Report 2023
【Date of Disclosure】28 March 2024
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Message to Our Shareholders
Upon the pass of a fruitful year, we are now ready to embark on a new journey!In 2023, the world is evolving like never before. At this historical juncture, alongside ourdomestic and international partners, we have forged ahead with steadfast, pragmatic measures thathave led to 13 consecutive years of robust main business growth since our IPO.Throughout 13 years of perseverance and resilience, from our 2011 debut on the stock marketto 2023, our operating revenue soared from RMB360 million to RMB4,746 million, multiplying byover twelvefold; gross profit jumped from RMB89 million to RMB659 million, maintaining acompound annual growth rate (CAGR) of 18%; and net profit attributable to our shareholdersleaped from RMB76 million to RMB433 million, achieving a CAGR of close to 16%. Today,Dongfang Precision stands as a global powerhouse, with operations and assets spanning Asia,Europe, and North America. With our base in China, we provide products and services forcustomers in over 100 countries and regions. Bolstered by the synergy of worldwide resources,leading-edge design concepts, and strong R&D capabilities, our high-end intelligent packagingequipment division now commands approximately 15% of the global market of this industry,the largest in China and the second largest worldwide.Looking back, what truly fills us with pride is not merely how Dongfang Precision evolvedfrom a follower into a trailblazer in the industry, but also the fact that we have actively paved theway and garnered invaluable lessons for Chinese private enterprises venturing abroad. Our effortsinclude carrying out overseas M&As, and adeptly managing the subsequent integration andoptimisation of acquired foreign entities.In 2014, we strategically acquired Fosber (now Fosber Group) in Italy, a professionalmanufacturer of high-end corrugated cardboard production lines, thereby swiftly integratingupstream and downstream sectors to assume leadership in the global industry. Subsequently, wetook over EDF, a top-ranking manufacturer of box printing and packaging equipment, and Tiru?a(now Tiru?a Group), Spain's esteemed corrugated roller and pressure roller maker, along withAgnati (now Qcorr), an illustrious Italian provider of corrugated cardboard production lines. Thesemoves culminated in a profound synergy among intelligent corrugated cardboard production lines,intelligent corrugated box printing equipment, and auxiliary intelligent systems for these equipment.This strategic expansion notably augmented our market share and core competencies, extended the
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
reach of our industrial chain, and unlocked access to premium overseas assets, cutting-edgetechnologies, and sophisticated management expertise.
Capitalising on our profound industry insights, foresight into market trends, and clear strategicdevelopment goals, coupled with robust strategic control and industrial integration capabilities, wehave effectively integrated each of our merged and acquired businesses. This has unleashedcontinuous industrial chain synergies. As exemplified by Fosber Group and Parsun Power,following strategic empowerment by our management team, Fosber Group has surged into a phaseof rapid expansion, registering a CAGR of roughly 15% in operating revenue and 26% in net profitbetween 2015 and 2023. Similarly, during 2016 to 2023, Parsun Power achieved a CAGR of around20% in both operating revenue and net profit. Notably, Parsun Power's ChiNext IPO application hasbeen approved by the Shenzhen Stock Exchange.Time will tell all. Throughout the past 13 years since our listing, we've consistently held thatfostering enduring value outweighs the chase for fleeting growth spurts. Harnessing the power ofcapital for organic growth and external expansion, we've ceaselessly enhanced our prowess inindustrial integration and empowerment, steadily fortifying and expanding our core business everystep of the way.Our relentless pursuit of long-term value, coupled with adherence to independent innovationand active expansion, has shaped today's Dongfang Precision into an industry leader. It equips uswith the backbone to navigate the current changes and drive the implementation of our FourthFive-Year Strategic Plan, ensuring long-term, sustainable, and robust growth.Step by step, we keep moving forward!As an industry frontrunner, Dongfang Precision constantly heeds caution amidst prosperity. Tosustain perpetual growth momentum, building on our previous three five-year strategic plans, in2023, we have adopted a stance that safeguards our "stable" strategic footing while concurrentlyamassing "progressive" developmental impetus:
Over the past year, we exercised rigorous cost control, maintained stable operations,concentrated on bolstering and expanding our core business, resulting in record-high revenue andindustry-leading net profit attributable to our shareholders before exceptional gains and losses forfour straight years.
Over the past year, we boosted efficiency and service quality, cemented strong ties with keyclients, and persistently delivered top-notch products and services to mid-to-large manufacturers inthe European and American markets, thereby enhancing our brand recognition and industry sway in
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
the overseas arena.Over the past year, we intensified marketing efforts, broadened our market reach, proactivelyaligned with national strategies, and fortified our presence in Belt and Road countries includingAfrica, South Asia, and Southeast Asia. We supplied these regions with high-end intelligentpackaging equipment and services, thereby substantially expanding the market scope of ourbusiness.Over the past year, we initiated projects and ramped up production capacities, propelling theconstruction of Fosber Asia’s intelligent factory sprawling across approximately 80 mu, ParsunPower's eco-friendly, digitalised manufacturing plant and R&D centre with an annual output of76,400 high-end water powersports products, Tiru?a Asia’s domestic corrugated and pressure rollerproduction base, and Fosber Group's new European headquarters. These endeavours reinforcestability through advancement, laying a solid groundwork for consistent performance growth.Over the past year, we focused on innovation, drove upgrades, and dedicated ourselves todigital and intelligent upgrading in the industry. Leveraging next-generation technologies like IoT,cloud computing, big data, 5G, and AI, we constructed a novel, self-reliant, secure, and controllableindustrial Internet platform. This platform extends to domestic markets in South and East China, aswell as overseas territories in Southeast Asia and Africa. And we've made significant strides inindependent R&D and innovation, breaking new ground from scratch.
A brighter future lies ahead, and our journey continues!2023 marks the first year for Dongfang Precision's fourth five-year strategic blueprint.Anchored by the operational guideline of “steady growth, core business concentration, andintelligent upgrading”, we've made concrete strides in the kickoff phase, efficiently advancingpivotal initiatives. From 2023 to 2027, we will intensify our "1+N" strategic dominance, stay rootedin China yet embracing a worldwide outlook. While concentrating on our core business, we'll alsodynamically shape new growth trajectories harnessing the power of capital for organic growth andexternal expansion.
Amid the surging tide of a new scientific and technological revolution and industrial shift, thereshuffle of the global innovation landscape and competitive structure accelerates, mandatingChina's commitment to nurturing new quality productive forces for high-quality growth. Weconsistently balance the development of existing businesses through intelligent transformation andthe incubation of emerging business opportunities. To this end, we first amplify forward-thinkingR&D, spur innovation towards "intelligent, digital, and autonomous equipment", and transform
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
from a mere intelligent equipment maker to a provider of comprehensive intelligent factorysolutions. Concurrently, we invest in groundbreaking, disruptive and frontier technologies toempower domestic firms in emerging fields like AI, cloud computing and big data, therebycontinually energising the engine for high-quality development. Such measures represent not justpractical strides to expedite new quality productive force generation but also vital explorations inforging new edges for high-quality growth.Supported by an experienced team with profound know-how in the industry, we are confidentthat we have the experience and capabilities needed to enhance strategic leadership, stimulate thevitality for reform through “new” productive forces, and erect core competitive barriers through"quality" productive forces. Thus, we strive to build ourselves as a "business card for the world" forChina's new quality productive forces.We also believe that China's high-end intelligent equipment sector has just embarked on its"golden era". We will remain steadfast in our pursuit of intelligent transformation in our long-termbusiness operations and technological exploration. Forging ahead towards the untapped ocean of thehigh-end intelligent equipment market, we aim to chart a remarkable growth trajectory, ultimatelydelivering greater returns to our investors.Thank you!
Chairman of the Board: Tang Zhuolin
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
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 Chen Nan, the Head of the Company’s Accounting Department(equivalent to Financial Manager) hereby guarantee that the financial statements carried inthis Report are truthful, accurate and complete.
All directors of the Company attended in person the board meeting for the approval ofthis Report.
The future development strategies, business plans and other forward-looking statementsmentioned in this Report shall be deemed as uncertain plans instead of promises to investors.Therefore, investors are reminded to exercise caution when making investment decisions.
For possible risks with respect to the Company, please refer to “(III) Possible Risks andCountermeasures” in “XI Prospects” of “Part III Management Discussion and Analysis”herein. And investors are kindly advised to read through the aforesaid contents.
The Company planed not to distribute cash dividends, neither give away bonus shares,nor capitalize from public reserve.
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.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 6
Part II Corporate Information and Key Financial Information ...... 11
Part III Management Discussion and Analysis ...... 16
Part IV Corporate Governance ...... 90
Part V Environmental and Social Responsibilities ...... 122
Part VI Significant Events ...... 124
Part VII Share Changes and Shareholder Information ...... 138
Part VIII Preference Shares ...... 149
Part IX Corporate Bonds ...... 150
Part X Corporate Financial Statement ...... 151
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
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. The original of the Auditor’s Report sealed by the CPA firm as well as signed and sealed by the certifiedpublic accounts.
3. 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.
4. The 2023 Annual Report carrying the signature of the legal representative.
5. The documents above are lodged in the Securities Department of the Company, 18A, China MerchantsPlaza, 1166 Wanghai Road, Shekou, Shuiwan Community, Zhaoshang Street, Nanshan District, Shenzhen City,Guangdong Province, China.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
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 Slu |
| Tiru?a America | Tiru?a America Inc. |
| Tiru?a Asia | Tiru?a (Guangdong) Intelligent Equipment Manufacturing Co., Ltd |
| 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. |
| 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 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
integrates pre-feeding, printing, grooving, die cutting, forming and packagingfunctions in whole or in part, which is highly functionally integrated, highlyautomated and highly technical, can save the capital and manpower investment,reduce workers' workload and improve the production efficiency of boxmanufacturers, and requires equipment manufacturers to be highly competent indesign, technological innovation, assembly and finishing of parts.
| 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. | |
| Corrugated cardboard production lines | 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 31 December 2023 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Part II Corporate Information and Key Financial InformationI 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 | ||
| Registered address | (Office Building, Plant A, Plant B) 2 Qiangshi Road, Shishan Town, Nanhai District, Foshan City, Guangdong Province, China | ||
| Previous registered address | N/A | ||
| Zip code | 528225 | ||
| Office address | 18A, China Merchants Plaza, 1166 Wanghai Road, Shekou, Shuiwan Community, Zhaoshang Street, Nanshan District, Shenzhen City, Guangdong Province, China | ||
| Zip code | 518000 | ||
| Company website | http://www.df-global.cn/ | ||
| Email address | ir@vmtdf.com | ||
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 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
III Media for Information Disclosure and Place where this Report Is Lodged
| Newspapers designated by the Company for information disclosure | China Securities Journal, Shanghai Securities News, and Securities Times |
| Website designated by the CSRC for publication of this Report | http://www.cninfo.com.cn |
| Place where this Report is lodged | Securities Department of the Company, 18A, China Merchants Plaza, 1166 Wanghai Road, Shekou, Shuiwan Community, Zhaoshang Street, Nanshan District, Shenzhen City, Guangdong Province, China |
IV Change to Company Registered Information
| Unified social credit code | 914406002318313119 |
| Change to the principal activities of the Company since its listing (if any) | Unchanged |
| Every change of controlling shareholder since incorporation (if any) | Unchanged |
V Other InformationThe independent auditor hired by the Company:
| Name of independent auditor | Ernst & Young Hua Ming LLP |
| Office address | 18/F, Ernst & Young Tower, 13 Pearl River East Road, Tianhe District, Guangzhou City, China (the Headquarters: Rooms 01-12, 17/F, Ernst & Young Tower, Oriental Plaza, 1 East Chang An Avenue, Dongcheng District, Beijing, China) |
| Accountants writing signatures | Feng Xingzhi and Hu Chuan |
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial InformationIndicate whether there is any retrospectively restated datum in the table below.
□ Yes √ No
| 2023 | 2022 | 2023-over-2022 change (%) | 2021 | |
| Operating revenue (RMB) | 4,745,737,321.83 | 3,892,708,509.64 | 21.91% | 3,524,734,783.94 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Net profit attributable to the listedcompany’s shareholders (RMB)
| Net profit attributable to the listed company’s shareholders (RMB) | 433,240,237.44 | 447,177,897.38 | -3.12% | 467,333,661.79 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 364,739,306.60 | 398,376,648.08 | -8.44% | 380,806,233.00 |
| Net cash generated from/used in operating activities (RMB) | 487,180,738.66 | 506,294,460.95 | -3.78% | 306,659,276.02 |
| Basic earnings per share (RMB/share) | 0.36 | 0.37 | -2.70% | 0.35 |
| Diluted earnings per share (RMB/share) | 0.36 | 0.37 | -2.70% | 0.35 |
| Weighted average return on equity (%) | 10.14% | 11.72% | -1.58% | 11.72% |
| 31 December 2023 | 31 December 2022 | Change of 31 December 2023 over 31 December 2022 (%) | 31 December 2021 | |
| Total assets (RMB) | 7,538,222,570.02 | 6,928,577,115.10 | 8.80% | 6,357,168,835.19 |
| Equity attributable to the listed company’s shareholders (RMB) | 4,511,690,693.97 | 4,063,966,310.23 | 11.02% | 3,681,970,298.39 |
Indicate whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional gains andlosses was negative for the last three accounting years, and the latest independent auditor’s report indicated that there was uncertaintyabout the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional gains andlosses was negative.
□ Yes √ No
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
VIII Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 907,101,141.80 | 1,175,505,311.92 | 1,243,655,954.95 | 1,419,474,913.16 |
| Net profit attributable to the listed company’s shareholders | 84,973,342.92 | 121,176,262.38 | 65,710,031.94 | 161,380,600.20 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 51,961,918.89 | 110,563,973.51 | 83,299,830.01 | 118,913,584.19 |
| Net cash generated from/used in operating activities | 104,429,591.30 | 87,006,475.22 | 88,847,907.60 | 206,896,764.54 |
Indicate whether any of the quarterly financial data in the table above or their summations differs materially from what have beendisclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2023 | 2022 | 2021 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 694,491.43 | -351,386.78 | -65,995.13 | |
| 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) | 15,747,293.82 | 20,933,377.44 | 14,700,007.84 | |
| 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) | 60,354,587.25 | 35,196,327.83 | 73,435,063.51 | |
| Reversal of provision for impairment of receivables individually tested for impairment | 516,000.00 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Non-operating income and expenses otherthan the above
| Non-operating income and expenses other than the above | -10,155,229.58 | 1,761,273.49 | 4,779,490.65 | |
| Less: Income tax effects | -3,743,887.17 | 7,277,576.78 | 6,017,410.70 | |
| Non-controlling interests effects (net of tax) | 2,400,099.25 | 1,460,765.90 | 303,727.38 | |
| Total | 68,500,930.84 | 48,801,249.30 | 86,527,428.79 | -- |
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. 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 ofsmart corrugated 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 leaderin smart corrugated packaging equipment, a leading domestic provider of digital printers, and a top-rankingdomestic supplier of water powersports equipment.The Company is developing its industrial Internet industrysolutions business to achieve an upgrading of a digital intelligent high quality development as an intelligentequipment manufacturer .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. Annual Report 2023
Strategicemergingindustry
| Strategic emerging industry | Industry | Principal business division | Primary products and their applications |
| Digital printers | 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. The Industries to which the Company's Intelligent Packaging Equipment Business Segment Belongs
1.1 Demand side—customers
The intelligent packaging equipment division of the Company specializes in “smart corrugated packagingequipment” and “digital printers”. This division primarily serves B-end customers such as corrugated cardboardand corrugated box manufacturers. As a machinery supplier, the Company provides various single machine andcomplete production line products for cardboard and box production, which makes the Company depend on thedevelopment of the downstream paper packaging industry to some extent.End demand for corrugated packaging is growing: The corrugated box field is one of the major fields of
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
the paper packaging industry, of which the end demand is relevant to the prosperity of consumption and businessactivities. Corrugated packaging products are used in a vast number of fields, including food and beverage,household chemicals, electronic products, and e-commerce express delivery, and are inelastically demanded byconsumers. Electronic products, food, beverage, and express delivery take up 26%, 20%, 21%, and 13%respectively of the downstream application market of paper packaging.Over the past few years, the scale of China’s express corrugated packaging market has been on the rise. Bythe forecast of Qianzhan Industry Research Institute, the scale of China’s express corrugated packaging marketwill continue to rise in the upcoming years and is estimated to reach RMB86.4 billion by 2025 (CAGR for 2019 to2025: Approximately 15%). Terminal markets, including the express, electronics, and household chemicalsterminal markets, show an increasing demand for corrugated box and board packaging, which will drive theexpansion of the capacity of corrugated packaging enterprises and thus increase the demand for corrugatedpackaging machinery, benefiting the machinery manufacturers.Between 2017 and 2023, the domestic express business recorded rapid growth, with a compound annualgrowth rate (CAGR) of approximately 27%. Data from the State Post Bureau showed that the total volume ofdomestic express delivery for 2023 was 162.48 billion pieces, up 16.8% year-on-year.
Trend of China's Express Business Volume Above Scale, 2016-2023
Guided by the “large-scale equipment renewal” policy, a swift acceleration in equipment upgrades isanticipated within the domestic corrugated packaging sector.In February 2024, the Central Financial and Economic Affairs Commission held its fourth meeting topromote a new round of large-scale equipment renewal and consumer goods trade-in, explicitly mentioning theneed to “promote the renewal and technological transformation of various types of production equipment andservice equipment”. On March 1, the State Council executive meeting considered and passed the Issuing theAction Plan for Promoting Large-scale Equipment Renewals and Consumer Goods Trade-ins, proposing to“promote the proportion of advanced production capacity to continue to increase”.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Over the years, China's corrugated packaging sector has largely consisted of numerous small- andmedium-sized box manufacturers dominated by low-end production capacities, leading to a highly decentralisedmarket and relatively low industry consolidation. Responding to the Party Central Committee and State Council's“large-scale equipment renewal” policy directive, the corrugated packaging industry anticipates a heightened paceof equipment modernisation throughout the 14th Five-Year Plan period, with an expected surge in medium- tohigh-end production capacity proportions.With the continuous development of the downstream end consumption industry in China, the requirements ofcorporate customers for corrugated boxes gradually increase. In the corrugated packaging industry, marketconcentration and the phase-out of low-end production capacity is an inevitable trend, due to market competition,capacity upgrading, M&A, etc. It is estimated that the line machinery that is more intelligent and productive willreplace the existing corrugated cardboard production lines and corrugated box printing and packaging productionline equipment in the upcoming five to ten years. By statistics, there are over 6,000 existing corrugated cardboardproduction lines in the domestic market, and more corrugated box printing and packaging machinery.Data show that the domestic market share of the 15 listed corrugated packaging companies in Chinacombined has risen from 5.7% in 2017 to 10.1% in 2022, and further to 11.3% in the first half of 2023. Thisindicates the continued concentration of the domestic corrugated packaging industry and the steadily increasingmarket share of major manufacturers.Data from SCI99.COM show that, as of the end of November 2023, China's corrugated cardboard productioncapacity grew against the trend. A corrugated cardboard market analyst at SCI99.COM said that in 2023, theproduction capacity of China's corrugated cardboard industry was still in the midst of a new expansion cycle, withnew capacity constantly being put in place and the industry's supply capacity constantly being increased.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 managementmode. The “strategy of robot assembling line” and “smart factory” are increasingly recognized by the industry.Amid intelligent 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 ShenzhenJinjia Group Co., Ltd., have pushed ahead with Internet-based development in recent years by entering intointelligent manufacturing, cloud printing, or other markets, expected to launch a revolution in the Internet-baseddevelopment of the paper packaging and printing industry and injecting new impetus into industry integration.Concurrently, amid intelligent manufacturing and Internet-based packaging, leading enterprises engaged incorrugated packaging machinery are also expected to embrace new development opportunities.
Overseas demand is growing steadily: In recent years, corrugated packaging markets in Europe and the UShave operated at high levels due to factors like global supply chain restructuring, onshoring of manufacturing inEurope and the US, and increased overseas consumer online spending.
Based on the annual and quarterly data of major listed corrugated packaging companies in Europe and the
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
US, capex of these companies continued to hit record highs in H1 2023. According to China Customs statistics,China's exports of printing equipment totaled USD3.176 billion in 2023, up 2% YoY, with the figure beingUSD3.03 billion in December alone, up 5% 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 thatsingle-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).The corrugated cardboard produced by corrugated cardboard production lines is used to make variouscorrugated boxes, corrugated cartons and other corrugated packaging materials, which are rigid consumerproducts in European and American countries. According to Statista data, the US e-commerce market is expectedto grow at a compound annual growth rate of 12.7% from 2017 to 2027. The philosophy of “sustainability” isgaining ground in the European and US consumer goods packaging markets. With the growing trend of "replacingplastics with paper" in the packaging industry, demand for corrugated packaging materials in the European andUS consumer goods markets continues to grow steadily, helping to drive demand for corrugated packagingproduction line equipment.
1.2 Supply side——the Company’s presence in the industry
A． World-leading comprehensive strengthCorrugated cardboard production lines: Major manufacturers of corrugated cardboard production linesaround the world include Fosber Group, BHS (Germany), Marquip (a wholly-owned subsidiary of the AmericanBarry-Wehmiller), and J.S. Machine. Among them, Fosber Group and its major rival from Germany, BHS, leadthe others and are leaders in the global middle- and high-end corrugated cardboard production line field. FosberGroup holds approximately 30% of the global middle- and high-end corrugated cardboard production line marketand more than 50% of the North American market.Corrugated & pressure rollers, key components of corrugated cardboard production lines: The subsidiaryTiru?a Group has more than 40 years of experience in the corrugated and pressure roller segment and is renownedin Europe as a world-leading specialist in this segment.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 complete
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
production 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 printers: Major manufacturers include HP, EFI, Koenig & Bauer Durst, Wonder Digital, HanhuaGongye, and Atexco, among others. Wonder Digital, a majority-owned subsidiary of Dongfang Precision, hasbeen specializing in the development and manufacturing of digital printers for 13 years, and is a leader in thedomestic digital printer industry. It takes the lead among global suppliers of digital printers in applying high-speedinkjet printing technology to corrugated packaging and is committed to extending digital printing technology tosuch fields as paper packaging (colour printing & pre-printing), advertising, home furnishing, building materials,and label printing.
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 plantswith “one-stop” machinery and service support that covers each production process, including corrugatedcardboard production, corrugated box production, and pre-printing and post-printing production processes, anddifferent technology roadmaps, including flexographic printing and digital printing.
The value of the global corrugated packaging equipment market is estimated to be about RMB30-40billion. In terms of operating revenue, Dongfang Precision accounts for approximately 15% of the globalcorrugated packaging equipment market, ranking first among domestic enterprises of the same type andsecond in the global market.
B. The rapid development of digital printing brings more development opportunities for the industry.
According to the latest report The Future of Inkjet Printing to 2027 by Smithers Pira, the market value ofinkjet printing in graphic printing and package printing globally reached USD86.8 billion in 2022. The inkjetprinting market has grown strongly over the past 5 years. Total inkjet printing output in 2022 was 46.2% highercompared to 2017, with printed volume growing by over two-thirds. The report forecasts that growth of inkjetprinting in packaging will be most rapid from 2022 to 2027, with expected compound annual growth rates of 17.7%by shipment quantity and 16.3% by value.
The main competitive edges of the digital printing technology of Wonder Digital, a majority-ownedsubsidiary of Dongfang Precision, are as follows:
(1) Advanced technology and a wide range of products
Digital printing adopts inkjet printing technology. It can be divided into UV printing (including colourprinting & pre-printing, with printing effects close to colour offset printing) and water-based ink printing(including colour printing & pre-printing, with water-based dye/pigment inks, etc.) in terms of the ink type andprinting effects. With continuous improvements in technology, the printing effects of Wonder Digital’s WD200++digital printer series approach those of traditional HD water-based ink printing, while the printing effects ofWonder Digital’s WDUV200++ digital printer series rival those of traditional colour offset printing.
(2) Integrated digital solutions that feature human-machine interaction and an integrated system
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
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
user-friendly and easier-to-operate. 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 massproduction.
(3) Convenient, flexible and efficient
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 todigital printers. Moreover, digital printing enables one-sheet, flexible printing, which cannot be done by traditionalprinting.
Additionally, digital printing enables a more flexible printing method that is, modifying while printing, andvice versa, enabling “zero stock”. Such a flexible and quick printing method has strengthened the competitivenessof customers in a competitive environment where every minute counts. With regard to pattern design, platemakingin traditional printing is not required in digital printing, allowing more freedom for design and enabling designersto give full play to their professionalism and tailor products to customers’ needs.
2. The industry to which the company's industrial Internet industry solutions business belongs
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’sofficial entry into digital development from information-based development in terms of industries. “Acceleratethe development of the industrial Internet” was proposed for the first time in the report on government work in2018 and became a frequent visitor in the reports on government work for the next five years. In 2020, theNational Development and Reform Commission stated that, as one of the new network infrastructure types, theindustrial Internet is a part of the new infrastructure. Under the guidance of a range of policies, the industrialInternet and smart factory have become the strategic development orientation of the transformation and upgradingof China’s manufacturing.
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 sector enters a “digital and intelligent” era, an increasing number of manufacturingenterprises have realized that buying production equipment, enterprise resource planning (ERP) systems, ormanufacturing executive systems (MES) cannot meet the systematic requirements of intelligent manufacturing.By contrast, industrial Internet platforms can systematically resolve all critical issues that cannot be handledthrough traditional means. According to the Bluebook on the Digital Transformation of Enterprises--Empoweringthe Low-carbon and Green Transformation of the Real Economy with New IT released by the China Academy of
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Information and Communications Technology, after relevant manufacturing enterprises complete digitaltransformation, on average, their production efficiency will be boosted by 37.6%, their operating expenses will belowered by 21.2%, and their energy utilisation rate will be improved by 16.1%. Concurrently, with the rapiddevelopment and continuous iteration of the new-generation information technology, the cost of digitaltransformation of enterprises is gradually decreasing, and more and more industrial enterprises will implementindustrial Internet-based digital transformation.According to the data released by Frost & Sullivan, the scale of the market of industrial Internet platformsand relevant solutions in China by 2025 is estimated to reach RMB193.12 billion. Between 2021 and 2025, theCAGR of 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 owncomparative advantages, enabling China’s industrial Internet industry to enjoy industrial enterprises, ICTenterprises, and Internet enterprises 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 RootCloud, Midea Cloud, and Baosight. In the packaging field, major manufacturers that provide industrialInternet-related products and solutions services include Yunyin, Dongfang Digicom, and wantit.The subsidiary Dongfang Digicom, carrying Dongfang Precision’s missions of expanding into the industrial
| RMB'00 million |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Internet industry and implementing “digital and intelligent transformation strategies”, was established in 2020.With the vision “to become a world-leading provider of industrial Internet industry solutions”, Dongfang Digicomis engaged in building industrial Internet platforms for industries using new-generation information technologies,such as the IoT, cloud computing, big data, and artificial intelligence to facilitate digital and intelligent upgrading.
2. The Industries to which the company's water power products segment belongs
2.1 Demand side——customers
The outboard motors are the subsidiary Parsun Power’s main water powersports products. Outboard motorsare the key auxiliary equipment for small- and medium-sized ships and are characterized by their compactstructures, light weights, convenient installation and maintenance, easy operations, and low noise. They are widelyused in water recreation and sports, fishing, water traffic, 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. Annual Report 2023
Official and
military
| Official and military | Emergency rescue and maritime patrol Beach landing and water reconnaissance |
In terms of the global market, according to a report released by Global Market Insights Research PrivateLimited (GMI), the global sales volume of outboard motors is expected to reach 914,800 in 2023 and 1.171million in 2030; and the global market value of outboard motors is expected to reach USD11.093 billion in 2023and USD15.975 billion in 2030, with low-horsepower and medium- and high-horsepower outboard motors takingup 20.28% and 79.72% respectively of the market. Outboard motors enjoy a vast global market. With globaleconomic growth, personal income increase, and the change in personal consumption habits, the global outboardmotor market trends toward stable growth. Worldwide, the outboard motor industry is dominated by Japanese andAmerican brands, including Yamaha (a Japanese outboard motor brand under Yamaha Motor) and Mercury (anAmerican outboard motor brand under Bentfield Group). Compared with major international competitors, ParsunPower continues to capture market share in Europe, the United States and other developed countries, supported byits cost-effective advantage of similar product performance and obvious price advantage.In terms of the Chinese market, according to GMI’s report, the sales volume of outboard motors in China isexpected to reach 45,500 in 2023 and 75,800 million in 2030; and the market value of outboard motors in China isexpected to reach USD306 million in 2023 and USD588 million in 2030, with China’s compound annual growthrate (CAGR) in sales volume and market value both much higher than those of the world. In recent years,considering the development of China’s water tourism and recreational industry and the emphasis of thegovernment on maritime rights, the Chinese government agencies at all levels have granted vigorous policysupport to ship-related industries. For example, the National Development and Reform Commission has includedhigh-performance ships, such as superyachts, luxury cruise ships, marine surveillance vessels, andsmall-waterplane-area twin hulls, among items for encouragement. The Ministry of Industry and InformationTechnology has proposed developing brand products, such as luxury superyachts, sightseeing boats, and officialboats. The State Council has also proposed vigorously developing marine tourism, manufacturing localisedtourism equipment such as cruises and cruise yachts, and vigorously developing cruise yacht tourism. Under theguidance of policies, China’s yacht industry will usher in rapid development. China has become one of the world’sfastest-growing outboard motor markets owing to its rapid economic growth and changing recreational habits.With the rise of domestic brands represented by Parsun Power, domestic substitution has gradually become one ofthe mainstream trends in the development of the outboard motor industry in China, and there is the huge market
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
potential for domestic substitution.
2.2 Supply side——the Company’s presence in the industry
The subsidiary Parsun Power specialises in R&D, manufacturing, and sales of outboard motors, aspiring tobe a world-class provider of water powersports products. Its outboard motors span a diverse power spectrum,compatible with fossil fuels, electricity, and alternative energy sources. The majority of its product models havebeen CCS-, CE- and EPA-certified. These products are widely used in water recreation, fishing, water traffic,emergency rescue, shore landing and maritime patrol.As a top-ranking manufacturer in the domestic outboard motor industry, Parsun Power is a State-level "LittleGiant" enterprise with specialties, refined management, unique technologies and innovation, as well as aState-level High-tech Enterprise. According to the certificate issued by the China Internal Combustion EngineIndustry Association, Parsun Power’s outboard motors ranked first in the industry for three consecutive yearsfrom 2020 to 2022. In 2021 and 2023, it successfully commercialised 115hp and 130hp outboard motors,disrupting the longtime dominance of international brands in these power categories. In 2023, Parsun Powerreached a milestone with the completion of prototype production for a 300ph gasoline outboard motor model,currently undergoing final testing and validation. Officially debuting this high-horsepower outboard motor, ParsunPower unveiled the 300hp unit at the Shanghai International Boat Show on 26 March 2024.II Principal operations of the Company in the Reporting Period
With “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” consistsof smart corrugated packaging equipment, digital printers, and industrial Internet industry solutions.
Business Divisions and Entities of Dongfang Precision
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
(I) The intelligent packaging equipment divisionThe intelligent packaging equipment division consists of smart corrugated packaging equipment, digital printers, and industrial Internet industry solutions,which cover the most important links in the value chain of corrugated packaging production (as shown below).
Relationship between Corrugated Packaging Manufacturing Value Chain and the Company's Smart Corrugated Packaging Equipment
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
1. Smart corrugated packaging equipment
(1) Corrugated cardboard production lines (including corrugated rollers)
The corrugated cardboard production lines business of Dongfang Precision is engaged in corrugatedcardboard production lines (under the brands of Fosber and Quantum) as well as corrugated and pressure rollers(under the Tiru?a brand), which are key components of corrugated cardboard production lines. With the overseasFosber Group (under it, Fosber Italy, Fosber America, QCorr, and Tiru?a Group) as well as the domestic FosberAsia and Tiru?a Asia, Dongfang Precision is able to provide products and services for customers around theworld.From the perspective of end market, the three major series of corrugated cardboard production lines (S/Lineand Pro/Line under the Fosber brand, as well as Quantum Line under the Quantum brand), along with a widerange of corrugated and pressure rollers (key components, under the Tiru?a brand), are complementary andsynergistic, achieving full coverage of the end market as a product portfolio.From the point of the locations of business entities, the global layout of business assets lays a solidfoundation for the Company's global sales. (1) Overseas, Fobser Group primarily serves large- and medium-sizedmanufacturers in Europe, North America, Latin America and other countries and regions. All the business unitsand profit centres of Fosber Group have their business, assets and staff located in Europe and North America.They adopt a local management and operation model, and design, develop and manufacture their products locally.Fosber Group has established stable partnerships with major manufacturers in the corrugated packaging industryin Europe and the US. (2) Domestically, Fosber’s corrugated lines have been designed and adapted to the needs ofcustomers in the Chinese market. Supported by China’s most complete supply chain across all industrial sectorsglobally, as well as the competitive edge of manufacturing, over 90% of the components of the corrugated linesare manufactured domestically. These products, which are high-tech, high-performance and cost-efficient for theyare made in China, are provided for corrugated packaging manufacturers in China, Asia (East Asia, SoutheastAsia, South Asia, and the Middle East), Africa, Russia, and Latin America. Since 2022, the Company has furtherintroduced Tiru?a’s corrugated and pressure rollers to China for domestic design and local production. Whilecatering to the needs of Fosber Asia’s corrugated lines for corrugated and pressure rollers, Tiru?a is alsodeveloping new markets in China and the rest of Asia for its products.
(2) Corrugated box printing and packaging production lines
Dongfang Precision is a professional supplier of medium- and high-end corrugated box printing andpackaging production lines. Domestically, Dongfang Precision (China) is responsible for business operationsassociated with corrugated box printing and packaging equipment, while in the overseas market, it is DongfangPrecision (Europe).
The product matrix of Dongfang Precision (China) includes corrugated converting line and single machineproducts that are of dozens of specifications and different market positioning, featuring fixed type/open-close type,top printing/bottom printing, and other technologies. These products mainly include “Dongfang Star” QuicksetTop Printing FFG and Top Printing Open-Close Type FFG Inline, as well as “Super Star” Bottom Printing DieCutter Stripper Vacuum Stacker Converting Line, Bottom Printing Open-Close Type FFG Inline and Bottom
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Printing Open-Closed Type/FFG & Stitcher.
Dongfang Precision (Europe) specializes in high-end corrugated converting line products. Its primaryproducts include “FD” Quickset Top Printing FFG, “HGL” Quickset Bottom Printing FFG, and Quickset BottomPrinting/Die Cutter Stripper Vacuum Line. These products are designed with noncrush feeder design, full servocontrol, and fully automatic control features, making them more suitable for high-definition printing. DongfangPrecision (Europe) also provides pre-printing and post-printing equipment compatible with the complete lineproducts, covering production processes such as paper feeding, stripping, transferring, palletizing, folding andgluing. Dongfang Precision (Europe) primarily serves the European markets.In the area of corrugated converting lines/single machines, Dongfang Precision is a professionalmanufacturer with an early start and a strong foundation among domestic fellow companies, enjoying high brandawareness and customer recognition in the industry. The products are highly popular not only in the domesticmarket but also exported to over 60 countries and regions worldwide, including Europe, America, Asia, Africa,Latin America, and Oceania.
Guangdong Dongfang Precision Science & Technology Co., Ltd. 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 | Fosber Brand S/Line Width: 2.5m~2.8m Production speed: 370~470 meters/minute Designed for large corrugated board manufacturers Beltless Technology Caddy oil-free technology Gapless changeover with no speed reduction of the cadre Industry leading changeover times Optimum board quality and low operating costs Industry leading Syncro4 system control Process Control Supervision (PCS) Data Tracking Supervision (DTS) | ||
| Quantum Line： Widths from 1.8m to 2.5m A new concept in corrugated board production Better suited for lightweight corrugated board production Innovative design, compact and flexible Optimum appearance and print surface quality Lower energy consumption and less labor Wavy Line： Designed for the production of single-sided corrugated boards Compact and flexible High quality at high speeds | |||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
| Width: 2.2m~2.8m Design speed: 270-370 meters/minute Single tile, double tile, triple tile wet section Wet section without belt technology Cadre without lubrication technology High board quality Industry-leading Syncro system control Process Control Supervision (PCS) Data Tracking Supervision (DTS) | |||
| Instant Set: Dual Module Slitting Machine Gapless order change speed of 250 meters/minute Positioning accuracy of +/-0.5mm, 3 seconds to change the order and line up the knives | |||
| 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. 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 | ||||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Product type
| Product type | Brand | Product image | Main characteristics | ||||
| Integrated corrugated box printing and packaging lines | 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 | |||||||
| 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 | |||||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Product type
| Product type | Brand | Product image | Main characteristics |
| 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. | |||
| 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. Annual Report 2023
2. Digital printers
The business is primarily led by the subsidiary Shenzhen Wonder Digital Technology Co., Ltd. WonderDigital provides solutions for customers in the digital printing industry, including digital printers, ink, accessories,and professional 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 speedprinting into one, supporting both scanning mode printing for large size, high precision, and full colour orders,and instantly switching to Single Pass mode for printing large volumes of small size orders.
Wonder Digital offers a diverse range of products that cover various types and specifications, frompostprinting to pre-printing, from water-based dye/pigment, water-based ink to spot colour UV ink, from boxes,offset cartons to sheet metal. The products also support a range of application modes and scenarios, fromsingle-sheet printing to exchange orders seamlessly with variable data printing, and from single machine printingto integration with ERP systems.
With a comprehensive product matrix, Wonder Digital provides paper packaging digital printers that meetthe diverse 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, theMiddle East, Latin America, and Southeast Asia, with over 1,600 units of equipment installed worldwide.
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 forcustomers 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 aluminiumsheets, 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 individualproducts or services. More importantly, it strives to provide complete digital printing solutions to help customersproduce high-quality packaging materials in a convenient, efficient, and cost-effective way and make profit onfiercely competitive markets. To achieve this, tailored solutions are needed for different application areas and
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
customer requirements. With years of accumulation in technology, manufacturing process and industry experiencein the field of digital printing, Wonder Digital can provide different combinations of printheads, inks, inkjetcontrol systems and other key components according to the needs of different customers. Meanwhile, it optimizespre-printing, printing, and post-printing processes, matches equipment with corresponding production materials,and offers tailored digital printing solutions to help customers improve order delivery efficiency, increase turnover,reduce costs and ultimately strengthen competitiveness on the market.
Guangdong Dongfang Precision Science & Technology Co., Ltd. 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. Annual Report 2023
Digital Printers
| 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-rollhigh-speed digital pre-printing machine
3. Industrial Internet industry solutions
Dongfang Digicom, a subsidiary of Dongfang Precision, serves as the primary business entity for “industrialInternet industry solutions”.
Based on the extensive industry experience of Dongfang Precision spanning over three decades in the field ofcorrugated packaging equipment, as well as guided by the Group’s strategies, the subsidiary Dongfang Digicom,leveraging cutting-edge technologies such as the Internet of Things (IoT), cloud computing, big data, 5G, andartificial intelligence (AI), has developed iDataPioneer, an industrial Internet platform for the packaging industryin a broad sense.
The platform adheres to the Industrial Internet Architecture (v2.0) set forth by the Ministry of Industry andInformation Technology (MIIT), ensuring all products are secure, autonomous, and manageable. Anchored by thethree pillars of digital factory construction—connecting, data integration and analysis, and intelligent dataapplication—the platform's product framework consists of three integral parts:
(1) IoT platform: IoT, 5G, and edge computing are leveraged to establish seamless, bidirectionalcommunication and control between devices, humans, and systems through a single-point factory-wide datacollection service. This enables efficient device data gathering and management for enterprises, boostingequipment utilization and energy efficiency.
(2) Big data platform: Harnessing data mining and algorithmic analysis, it processes integrated and analysedcollected data, facilitating data convergence, circulation, and analytical insights for business optimisation. Thisplatform offers intelligent decision-making assistance for scenarios like order delivery prediction, productionbottleneck analysis, and predictive maintenance of equipments, so as to improve production efficiency.
(3) Intelligent application platform: Employing big data, AI, and related technologies, this platform craftsintelligent solutions, encompassing equipment health mapping, failure prediction, remote O&M, and spans theentire corporate business lifecycle. It supports enterprises in adopting data-driven scientific management anddecision-making, thus trimming production and operational expenses. Currently, Dongfang Digicom has rolledout data-intelligent applications such as the "Production Management System" (PMS) and "ManufacturingExecution System" (MES).
The industrial Internet platform iDataPioneer delivers a comprehensive one-stop service, spanning fromequipment connectivity for data collection to data integration, processing, analysis, and intelligent applications. Itsets benchmarks in several metrics within the industry, empowering large packaging enterprises to adoptdata-driven scientific management and decision-making, thereby facilitating their digital transformation.
Schematic diagram of the iDataPioneer Industrial Internet platform architecture
Dongfang Digicom has also introduced its proprietary Intelligent Production Management System tailoredfor corrugated packaging and laminated cardboard manufacturing sectors. The Intelligent Production ManagementSystem for Corrugated Box Printing and Packaging is compatible with a wide range of brands and specificationsof corrugated converting line products, including the Dongfang Precision brand. Sold either bundled withDongfang Precision corrugated converting line products or as a standalone software solution, it helps customers inthe corrugated packaging and laminated cardboard industries to improve the intelligent and digital level of a largenumber of existing production line equipment, empowering packaging companies to "digitally manufacture" andhelping to build digital factories and digital workshops.Most core members of the Dongfang Digicom team come from famous manufacturers in the Internet,industrial Internet, and ERP industries. Of IT manufacturers in the domestic packaging industry, DongfangDigicom boasts high professionalism and strong R&D strength. As of 31 December 2023, it has beencumulatively granted 59 software copyrights and 29 patents.
4. The operational model of the intelligent packaging equipment business
R&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 industryexperts, employs a blend of long and short-term product R&D planning, supported by a market-oriented R&Dmechanism. Additionally, a robust R&D talent incentive mechanism enhances the Company’s overall technicalproficiency, 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.
In 2023, the lead times for the Company’s corrugated cardboard production lines, corrugated converting lines,and digital printers were six to 12 months, three to six months, and one to three months, respectively (varyingbased on different product models and specifications).
Marketing Model: The Company employs a “direct selling + distribution” marketing model. It utilizes adirect sales approach for the domestic market and a combination of direct sales and agent distribution for overseasmarkets, tailoring the strategy to suit the unique needs of different countries and regions. This approach not onlywidens the scope 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, withmore significant transaction amounts. However, accessories, software, and services can be sold multiple timesthroughout the life-cycle of complete production line or single machine products. The growing number of existingequipment sold 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 thesales of complete 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 corrugatedcardboard production lines and corrugated box printing and packaging equipment. Generally, 80% to 90% of thesales payment can be collected upon the delivery of products.
(II) The water powersports equipment division
The subsidiary, Parsun Power, is a leading enterprise in the domestic outboard motor industry. According tothe certificate issued by the China Internal Combustion Engine Industry Association, Parsun Power’s outboardmotors ranked first in the industry for three consecutive years from 2020 to 2022. Parsun Power’s main productsare outboard motors of various specifications and different series, with horsepower ranging from 2 to 130. Theoutboard motor products are exported 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 hasaccumulated years 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 hassuccessfully broken the long-term monopoly by international well-known brands in the 115hp sector. With stableand reliable quality of its 115hp gasoline outboard motors, Parsun Power has won more and more product ordersin Europe and China, contributing to domestic substitution of medium- and high-horsepower outboard motors andthe improvement of the global market share of domestic brands. After successfully conquering the 115hp gasolinemodel, Parsun Power's R&D team marches toward higher-horsepower models and strives the makedomestic-brand high-horsepower outboard motors take a place in the global competition of the high-horsepoweroutboard motor market. In the first half of 2023, Parsun Power took it to the next level by successfully completingthe mass production and sale of 130hp gasoline outboard motors.Meanwhile, Parsun Power completed prototypeproduction for a 300ph gasoline outboard motor model, currently undergoing final testing and validation. Itofficially debuted this 300hp unit at the Shanghai International Boat Show on 26 March 2024.
Electric outboard motors are powered by batteries. They convert electric power into kinetic power throughmotors. Compared with oil-fired ones, electric outboard motors are characterized by zero emissions, low noise,and easy operation. Most of Parsun Power’s electric outboard motors are of low- and medium-horsepower, whichare mainly used in scenic spots and other sectors requiring stricter environmental protection.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, greatertorque and being safer, more reliable, and easier for maintenance, which are mainly used in commercialtransportation and public law enforcement. Parsun Power now has diesel outboard motors and is selling thehigh-horsepower outboard motors of 150hp, 175hp, 200hp and 300hp of OXE Marine (a Swedish brand) in thedomestic market.Parsun Power has achieved a complete product line layout of “gasoline-diesel-electric” outboard motors,and will rely on its years of technical expertise and leading market share in the gasoline outboard motor field toexpand into high-horsepower diesel outboard motors and electric outboard motors.Parsun Power's outboard motor products have stable quality and reliable performance, and some of themenjoy the comprehensive performance comparable to that of internationally well-known brands and emissionsreaching European and American standards. In the future, Parsun Power will focus on medium- andhigh-horsepower outboard motors, enrich electric outboard motor production lines, continuously optimize theproduct structure of outboard motors, and consolidate its leading position among domestic outboard motormanufacturers.
(2) General machines
Aside from outboard motors, Parsun Power also engages in the business of general machines. These generalmachines constitute versatile power solutions and associated end-user items, featuring primarily small gasolineand diesel engines for use in generators (like emergency power kits, field operation power supplies), agriculturalequipment (e.g., water pumps, cultivators), gardening machinery (e.g., lawnmowers, chainsaws), compactconstruction tools (e.g., cutters, tampers, concrete mixers, and levellers), among other miscellaneous applications.These products find extensive usage across various sectors.
Parsun Power's general machine products mainly include gasoline engines, gasoline generator sets and
gasoline water pump sets. Gasoline engines, primarily single-cylinder four-stroke units, utilize gasoline as fueland are adaptable for use in agricultural machinery, gardening equipment, and other small machinery applications.Gasoline generator sets combine these engines with generators, functioning as standby power sources. Thegasoline water pump sets feature centrifugal pumps driven by gasoline engines and are extensively utilized inagricultural irrigation, livestock watering, and similar domains.
(3) The operational model of the water powersports equipment business
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.Parsun Power produces outboard motor products independently, utilizing sales demand forecasts, customerorders, product inventory status, material delivery progress, and product production cycles to formulateproduction plans. The company then organizes the production of components in accordance with specializedprocesses and procedures.Following the principle of “sales determine production, production determinesprocurement,” Parsun Power determines the procurement requirements for its outboard motor business, whilealso taking into account reasonable safety stock.III Core Competitiveness AnalysisThe analysis of the Company’s core competitiveness in the Reporting Period is as follows:
(I) Industry-leading technology and strong capabilities of R&D and innovation
The Company is at the forefront industry-wide in China in terms of R&D and technology. In terms ofintellectual property rights, as at the end of 2023, the Company had been granted a total of 420 domestic andforeign patents, an increase of 49 as compared to the end of 2022, and a total of 75 software copyrights, anincrease of 42 as compared to the end of 2022.
1. 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,energy saving, stability, reliability, intelligent control, and easy operation and maintenance. The corrugatedcardboard production lines under the Fosber brand boast machinery with high technology, quality, and reliability,advanced intelligent software systems, and technical support services and have won the praise of customersworldwide.
Fosber Asia has launched the “Instant Set” unit and applied it to corrugated cardboard production lines.Each cutting blade and indentor are independently controlled by the servo motor, thus significantly improving thespeed of the order change of the dry section of corrugated lines and shortening the average time of order changefrom 8-15 seconds to around 3 seconds. Moreover, it can better support the quick order switch of downstreamcustomers and 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-end
corrugated cardboard production lines, including functional modules such as Syncro4, 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 performanceanalysis and cost analysis, it helps customers improve production efficiency. Through the “self-diagnosis system”,it identifies abnormal operations and sends alerts, and identifies solutions in an intelligent manner. Through the“big data analysis system” module, it collects real-time data in the corrugator production process throughsensors, outputs recommended configuration parameters and improvements through algorithm analysis, and helpscustomers improve the effectiveness of production process control.
How Fosber Group’s PRO Series Intelligent Production Management Information Technology System
Works
2. The digital printer business:
Wonder Digital is a leader in the domestic digital printer industry, a State-level High-tech Enterprise, and aState-level “Little Giant” Enterprise with specialties, refined management, unique technologies and innovation.With a complete digital printer offering, Wonder Digital breaks through the edge of mechanical engineering,bridges the physical world and the digital world, and provides industry customers with a full range of digitalprinting solutions.Wonder Digital’s UV digital colour printers and single-pass digital printers feature printing accuracy as highas 1200dpi. Their colour printing effects rival those of traditional offset printers in clarity, fineness, colour
brightness and saturation but with lower costs, helping customers effectively enhance competitiveness.
Wonder Digital’s large format roll to roll high speed digital printer outperforms domestic competitors interms of width and resolution and is competitive on the market in terms of size, energy consumption, andcost-performance.
3. 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 technologiesand innovation, a national high-tech enterprise, the Provincial Outboard Motor Engineering and TechnologyResearch Institute of Jiangsu, a technology center recognized by Jiangsu Province, a leading enterprise in China'sinternal combustion 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 forIndustrialization Demonstration Program under the National Torch Plan and honors including Innovative Productsin Chinese Machinery Industry, Products of Well-known Brands in Jiangsu, and Products of Well-known Brandsin Suzhou.
Parsun Power has been developing in the outboard motor industry for over ten years and has had severalChina-leading core technologies and accumulated rich scientifically innovative achievements after long-termR&D input and technical accumulation.As of 31 December 2023, Parsun Power has been granted a total of 73patents, including 11 invention patents; and it has won the Second Prize of China Machinery Industry Science andTechnology Award for twice.Parsun Power is one of the main drafters of two industry standards includingOutboard Gasoline Engines- General Requirements (JB/T 11875-2014) and General Technical Specification ofOutboard Engine (CB/T 4505-2020). In 2021, Parsun Power successfully realized the mass production of 115hpoutboard motors, breaking the long-standing monopoly of internationally well-known brands in the 115hpsector.In 2023, Parsun Power took it to the next level by successfully completing the mass production and sale of130hp outboard motors.
(II) Complete layout in the corrugated packaging machinery industry chain and the most completeand richest 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 allkey processes in the corrugated packaging production and processing business chain. Meanwhile, the Companyhas the most complete and richest corrugated packaging production line equipment in the industry, making itcapable of meeting the demands for complete production line and single machine products of different marketpositioning, different customer types and dozens of specifications and models, second to none in China.
1. Corrugated cardboard production lines
In the area of “high-end smart corrugated cardboard production lines”, the subsidiary Fosber Group offersS/Line and Pro/Line corrugated cardboard production lines under the brand of Fosber, Quantum Line microflutecorrugated board production lines, as well as corrugated and pressure rollers (key components of corrugatedcardboard production lines), among others. It provides medium- and high-end corrugated cardboard productionlines of various specifications and prices for medium and large corrugated cardboard manufacturers across the
world.
The corrugated lines of the Fosber brand are applicable for producing corrugated cardboard with a thicknessof 2mm to 13mm, known for their high load-bearing capacity, excellent shock resistance, plasticity, andenvironmental performance. The resulting corrugated cardboard is extensively used in fields such as logistics andexpress delivery, furniture and household appliances, and electronic product packaging, serving as the outerpackaging for various types of corrugated boxes. The Quantum Line production line of the subsidiary QCorr isprimarily used for creating solid fiberboard below 2mm and microflute corrugated board. These corrugated boardproducts are known for being lightweight, strong, moisture-resistant, and environmentally friendly. As such, theyare widely used in offset carton packaging, high-end products, electronic products, and cultural and artisticproduct packaging. From the perspective of end market, the three major series of corrugated cardboard productionlines of Fosber Group, S/Line, Pro/Line, and Quantum Line, are complementary, achieving full coverage of theend market as a product portfolio.Based on more than 40 years of experience in the corrugated and pressure roller segment, the subsidiaryTiru?a Group is familiar with a wide range of brands and specifications of corrugated cardboard production linesin the market, and is able to supply corrugated and pressure rollers compatible with these corrugated boardproduction lines. Additionally, the company can design and produce customized rollers to meet the specific needsof customers, taking into account their machine types, special coating requirements, and paper characteristics.
2. Corrugated box printing and packaging production lines
Dongfang Precision (China) and Dongfang Precision (Europe) offer high quality corrugated converting lineand single machine products for China and the rest of the world. These products, which are of dozens ofspecifications and different market positioning, cover fixed type/open-close type, top printing/bottom printing,converting line (inline)/single machine, etc. They are the manufacturers with the widest range of products in thissegment across the world.
3. Digital printers
Wonder Digital possesses four major series of digital printers that cover various types and specifications,from postprinting to pre-printing, from water-based dye/pigment, water-based ink to spot colour UV ink, fromboxes, offset cartons to sheet metal. The products also support a range of application modes and scenarios, fromsingle-sheet printing to exchange orders seamlessly with variable data printing, and from single machine printingto integration with ERP systems. With a complete digital printer portfolio, Wonder Digital serves as a"supermarket of digital printers", providing domestic and foreign industrial customers with a wide range of low-,medium-, and high-end digital printers to satisfy the needs of these customers from different market segments.
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.
(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, whichhas 20 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 team
management. 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 toachieve steady 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"as the 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,improves the Group's overall operational efficiency and reduces the Group's operation cost and promotes theCompany's healthy and sustainable development by optimizing the organizational structure design, standardizingthe authorization and control system, implementing medium- and long-term incentives and further developing thecorporate culture.(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-branded corrugated cardboard production lines, Tiru?a-branded corrugated rollers and Parsun-brandedoutboard motors of the Company are enjoying considerable brand recognition and industry influence at home andabroad.In the field of intelligent packaging equipment: The subsidiary Fosber Group, established in 1978, stands asone of the world's top two players in high-end corrugated cardboard production lines. Its Fosber-brandedcorrugated lines enjoy strong brand recognition and customer favour in markets like Europe, North America, andLatin America. Tiru?a Group, founded in 1921, boasts almost four decades of expertise in corrugated and pressurerollers, with products distributed to over 60 countries globally. The subsidiary Qcorr, previously known as Agnati,an esteemed Italian supplier of corrugated cardboard production lines with over 80 years' experience, commands ahigh standing internationally. Dongfang Precision's corrugated box printing and packaging lines lead amongGreater China competitors, exporting to over 60 countries. Wonder Digital, a Chinese front-runner in the area ofdigital printers, ships its digital printers to over 80 countries, boasting a market presence of over 1,600installations.With the constant growth in concentration and the continuous upgrading of capacity in the downstreamindustry, large- and medium-sized packaging enterprises will need more middle- and high-end production lineequipment, digital printing solutions, and industrial Internet industry solutions. The Company has seizedopportunities and formed a better competitive edge by virtue of its stable business partnership during the industrychanges.In the field of water powersports equipment: The subsidiary Parsun Power is a top-ranking manufacturer inthe domestic outboard motor industry. According to the certificate issued by the China Internal CombustionEngine Industry Association, Parsun Power’s outboard motors ranked first in the industry for three consecutiveyears from 2020 to 2022. Following extensive industry immersion, the Parsun Power brand has garneredsignificant recognition and accolades, such as being named a "famous brand product of Jiangsu province" and a"famous brand product of Suzhou city." Internationally, Parsun Power's distribution network extends to hundreds
of countries and regions across Europe, Africa, Oceania, South America, North America, the Middle East, andSoutheast Asia. Domestically, the company's sales footprint blankets most provinces and regions in China.Backed by dependable product quality and comprehensive after-sales service, Parsun Power has forged enduringpartnerships with numerous clients worldwide.
(V) Global layout of business assetsThe 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 makeprompt responses worldwide and meet customer demands and is conducive to the Company's integration of globalresources, improvement of resource allocation efficiency, complement of advantages, reduction of the total costand improvement of the allocation efficiency, so that the Company can be increasingly competitive in the worldwhen it is operated as a group.
(VI) Strong capabilities of strategic control and integration
Since 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. In
practice, 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 forpost-investment integration, including the corporate governance standardization policy, the “Board ofDirectors-Supervisory Committee-General Meeting” operation mechanism, the strategic and financial controlsystem, decentralized authorization management, complete audits, and management incentives, forming a set ofmeasures for effective controls for post-investment integration with the Company’s own characteristics to securethe effective implementation of the strategic plan.
● Corrugated cardboard production lines: Fosber Group recorded a compound annual growth rate (CAGR)of net profit of 26%
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 2023, the CAGR of the operating revenue of Fosber Group was approximately15%, and that of its net profit was 26%.
● 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, andR&D, strengthen the marketing force, and improve the efficiency of the supply chain and production. It alsosupported Parsun Power to introduce excellent talent for a more powerful core team. These measures enabledParsun Power to realize continuous and stable growth. From 2016 to 2023, both CAGRs of the operating revenueand net profit of Parsun Power stood at 20%.
● Tiru?a Group and, the manufacturing pioneer, Agnati, were expanded to effectively stimulate newmomentum of established enterprises
In 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 vitalityof the two old European companies and the enthusiasm of their manager teams.In 2023, subsidiaries QCorr andTiru?a Group both achieved good growth in annual operating revenue, the best annual results since they becamemembers of the Dongfang Precision family.
Relying on its strong strategic control and integration of business divisions, based on “mutual respect and
mutual 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 goglobal and 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 2023, China's economy maintained an upturn, with a 5.2% increase in GDP and solid advancements inhigh-quality development. China's equipment manufacturing industry achieved a positive growth of 4.1% in profit,the optimisation and upgrading of the industrial chain was furthered, and new momentum continued to build upfor industrial development.Under the strong leadership of the Board of Directors and the management team, all the people in theCompany actively seized opportunities, took pragmatic actions, and forged ahead together in 2023, helping theCompany sustain the strong growth momentum.In 2023, the Company recorded operating revenue of RMB4,746 million, up 21.91% YoY; a gross profit ofRMB659 million, up 30.20% YoY; a net profit attributable to its shareholders of RMB433 million, down 3.12%YoY; and net cash generated from operating activities of RMB487 million, down 3.78% YoY.
Unit: RMB’0,000
| Business division | Operating revenue in 2023 | YoY change | Gross profit margin in 2023 | YoY change |
| Intelligent packaging equipment | 400,867.34 | 20.72% | 29.80% | 2.08% |
| Corrugated cardboard production lines | 320,988.93 | 23.29% | 28.61% | 3.19% |
| Corrugated box printing and packaging production lines | 64,444.48 | 1.44% | 34.00% | -0.17% |
| Digital printers | 15,433.93 | 88.51% | 36.89% | -13.62% |
| Water powersports equipment | 73,706.39 | 28.86% | 26.02% | 1.69% |
Note: Wonder Digital, a majority-owned subsidiary of the Company that is engaged in digital printers,have been included in the consolidated financial statements since June 2022. And in 2023, 100% of WonderDigital’s operating revenue was included in the consolidated financial statements of Dongfang Precision.
In 2023, the aggregate value of orders secured by the Company's business entities at home and abroadreached about RMB5.4 billion. As of the end of December 2023, the order backlog stood at approximatelyRMB3,635 million, thereby amassing a strong order book that fortifies the basis for the Company's continuedfinancial growth.Amidst the alleviation of supply constraints on chips, electronic components, and raw materials in 2023,Fosber Italy, the Company's main business entity specialising in corrugated cardboard production lines,experienced a substantial enhancement in its supply chain dependability. This led to significant improvements inoperational efficiency across procurement, inventory management, and logistics compared to 2022. Consequently,Fosber Italy successfully implemented more effective "lean manufacturing" practices in 2023, therebysubstantively bolstering the enhancement of order fulfilment speed. As a result, the lead time for Fosber Italy'sorder production decreased progressively, shrinking from an initial 12 months during the first half of 2023 toapproximately 9 months by the second half, and ultimately reducing to roughly 6 months by the close of the year.
(II) Performance of principal operations during the Reporting Period
1. The business division of intelligent packaging equipment
In 2023, the business division of intelligent packaging equipment recorded operating revenue of RMB4,009million, up 20.71% YoY; and an order intake worth approximately RMB4,595 million. As of the end ofDecember 2023, the order backlog of this business division was worth approximately RMB3,412 million(including orders for production lines, accessories and related services).
A. The segment of corrugated cardboard production lines
a) Overseas operations
During the period from 2020 to 2022, Fosber Group, which mainly serves corrugated packagingmanufacturers in Europe and North America, has achieved rapid growth, benefiting from the combined effects ofthe rapid growth of the e-commerce market in the U.S. and Europe that is boosting the consumption of corrugatedpackaging, the increase in the capex of major paper packaging manufacturers, as well as the factors of sustainabledevelopment and the green economy. In 2023, the good momentum in the overseas corrugated packagingequipment market continued, and Fosber Group achieved strong growth in operating revenue and net profit withsound business operations and more comprehensive development.
During 2023, Fosber Group recorded operating revenue of RMB2,917 million, up 8% YoY; and a net profitof RMB286 million, up 28% YoY. From 2015 to 2023, Fosber Group's operating revenue and net profit grew at acompound annual growth rate of 15% and 26%, respectively. The above-mentioned operating revenue and netprofit are both on a consolidated basis of Fosber Group.
Following a decrease in inflation rates in both the US and Europe in 2023 relative to 2022, Fosber Italyobserved a corresponding drop in the market prices of its key raw materials and energy costs, thereby mitigatingcost pressures. Additionally, the strain on the supply of electrical components that characterised 2022 easedconsiderably in 2023, contributing to an uplift in Fosber Italy's overall gross profit margin compared to theprevious year. This culminated in an improvement of Fosber Italy's aggregate gross margins compared to 2022.
In the European market, Fosber Italy sustained long-term, close collaboration with the continent's leadingfirms and major players in the corrugated packaging industry, thereby securing robust backing for steady ordersales growth in the region. Meanwhile, in the U.S., Fosber America maintained its strong ties with the behemothsin the American corrugated packaging sector, further entrenching its status as the premier supplier within the U.S.corrugated packaging equipment market. Notably, Fosber America recorded a substantial revenue increase ofapproximately 40% in 2023 compared to 2022. Across the Latin American and African markets, Fosber Groupalso achieved noteworthy strides in 2023, successfully capturing orders for complete production line products.The business of corrugated & pressure rollers:
In 2023, under the support of shareholders and the Board of Directors, the subsidiary Tiru?a Group launcheda new business plan, 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 implement the “Toyota Production System”, add productionshifts, as well as improve operational efficiency and capacity utilization. In 2023, the first phase has beencompleted, and Tiru?a Group will extend the “Toyota Production System” to 2024 in order to further establish acorporate culture of lean production.
As the business plan is being gradually implemented, Tiru?a Group’s vitality has been further stimulated,driving faster growth. In 2023, Tiru?a Group achieved operating revenue of RMB0.23 billion.
Tiru?a as a pivotal component supplier to Fosber-branded corrugated lines and providing corrugated andpressure rollers to Fosber Group, Tiru?a Group also furnishes high-performance corrugated and pressure rollers tonon-Group third-party clients, encompassing other-brand corrugated cardboard production line manufacturers andcorrugated packaging producers. During 2023, Tiru?a’s sales to external third-party customers grew by 15% YoY,and the company successfully penetrated the supply chain of a prominent European corrugated packagingconglomerate. Furthermore, in 2023, Tiru?a Group reinforced its competitive edge in both the American andEuropean markets.
b) Domestic operations
In 2023, Fosber Asia recorded operating revenue of RMB0.39 billion, up approximately 72% YoY, with anapproximately 150% YoY increase in sales of corrugated lines. This represents the best results ever for thecompany since 2019. And the compound annual growth rate of operating revenue for the five consecutive yearsfrom 2019 to 2023 is approximately 20%.
In 2023, Fosber Asia debuted its domestically developed premium S/Line 2.8m corrugated cardboardproduction line along with the innovative "Instant Set" dual-module slitter, tackling the critical issue of rapid orderchanges in corrugated production corrugator lines. During the year, it achieved sales breakthroughs with orderssecured both domestically and internationally. By the close of 2023, Fosber Asia amassed 83 granted inventionpatents and software copyrights, marking a roughly 30% hike from the end of 2022. The company advanced thelocalisation rate of its high-end domestic corrugated cardboard production lines, realising local production ofcertain key components. While consistently delivering orders at a superior level, Fosber Asia also managed to
further reduce costs and enhance efficiency in corrugated line manufacturing. With growing industry sway, anincreasing number of industrial clients partnered with Fosber Asia, embracing domestically produced high-endcorrugated cardboard production lines.
B. The business of corrugated box printing and packaging production linesThe overseas market: In 2023, Dongfang Precision (China) sustained its competitive edge, achieving notablesuccess in North America, Belt and Road countries, and beyond, securing favourable sales of complete productionline orders. The Company pursued a hybrid "agency + direct sales" approach in overseas market expansion.Throughout the year, its international marketing team intensified outreach efforts, engaging in more face-to-faceinteractions with foreign clients and yielding positive outcomes in developing direct sales regional markets.Additionally, Dongfang Precision (China) fortified its international service team, continuously enhancing thequality of product installation, delivery, and after-sales services in foreign markets. During the Reporting Period,export revenue took up approximately 72% of Dongfang Precision (China)'s total revenue.The domestic market: As China’s economy recovered in 2023, Dongfang Precision (China)’s domestic salesgrew approximately 44% YoY, and its domestic order intake for complete lines/machines went up over 58% YoY.In May and July 2023, Dongfang Precision (China) exhibited at the 2023 China International Corrugated Festival,China (Tianjin) Printing and Packaging Industry Expo 2023, and SinoCorrugated 2023, receiving a lot of attentionindustry-wide and a multitude of pre-orders.In production operations, Dongfang Precision (China) successfully completed the acceptance of its "DigitalFactory" project in 2023, integrating WPS scheduling, MES, WMS, SRM, and other modules to generatecomprehensive analytical reports on order progression, production performance, capacity utilization, qualitycontrol, product traceability, and inventory management. These reports furnished valuable data to informproduction decisions, aiding in enhancing overall operational efficiency and lowering costs. During the ReportingPeriod, Dongfang Precision (China) further optimised its production costs and boosted efficiency.
C. The business of digital printersWonder Digital, a majority-owned subsidiary, has been included in the Group’s consolidated financialstatements since June 2022. And in 2023, 100% of Wonder Digital’s operating revenue was included in theconsolidated financial statements of Dongfang Precision. During the Reporting Period, Wonder Digital achievedoperating revenue of RMB0.16 billion and an order intake of approximately RMB0.18 billion, creating a newearnings growth curve for Dongfang Precision’s intelligent packaging equipment division.Amid China’s economic recovery in 2023, the corrugated packaging industry, especially the numerousthird-tier factories, showed significantly greater recognition of the characteristics offered by digital printerscompared to traditional printing equipment, including lower one-time initial investment, greater variability inprinting data, and better adaptability to end packaging flexibility and short, flat, quick marketing needs, enablinghigher turnover, higher on-time delivery rates, and higher return on investment.In 2023, Wonder Digital proactively ventured into markets by participating in eight domestic andinternational trade shows, including events in Germany, Vietnam, Thailand, Indonesia, and the SinoCorrugatedexpo in Shanghai, China. These exhibitions yielded a considerable number of potential orders, with around
RMB50 million worth of intended orders secured during SinoCorrugated 2023 in Shanghai in July. The companyhosted two separate factory open days throughout the year, each drawing in hundreds of industry merchants andpartners. On these occasions, Wonder Digital showcased real-life instances where its digital printer technologyempowered tertiary factories to achieve profitability, sharing insights on packaging industry best practices. Thiscollaborative effort fostered a pioneering model for industry growth and shared prosperity.In terms of new products and new technology, in 2023, Wonder Digital's four series of complete digitalprinters saw continuous improvement and enhancement in performance and efficiency, particularly within therealm of high-speed colour printing digital printers designed for the premium market segment. There was amarked uptick in both machine stability and output, garnering acclaim from clients and translating into multipleunit sales. Leveraging its robust R&D prowess in China's digital printer sector, Wonder Digital has forged anenviable brand identity and industry standing. Its cutting-edge technology, superior reliability and stability, alongwith a compelling price-to-performance ratio, constitute the core competitive strengths of Wonder Digital.In July 2023, Wonder Digital was recognized as a State-level “Little Giant” Enterprise with specialties,refined management, unique technologies and innovation.
2. The business division of water powersports equipment
In 2023, the majority-owned subsidiary Parsun Power recorded operating revenue of RMB737 million, up 29%YoY, and a net profit of RMB95 million, up 30.95% YoY. In the year, Parsun Power sold 83.2 thousand units ofoutboard motors, accounting for 11.50% of the global sales of low- and medium-horsepower outboard motors.In 2023, Parsun Power's outboard motor sales revenue sustains robust growth due to persistent overseasdemand in water recreational activities and rising domestic substitution trends in specialised markets. Bolstered bythe necessity for medium- and high-horsepower domestic alternatives and the maturing domestic supportingindustrial chain, Parsun Power has effectively transitioned from focusing on low- and medium-horsepoweroutboard motors to medium- and high-horsepower products.With respect to sales, Parsun Power actively participated in exhibitions targeting domestic and overseaswatersports markets in 2023 to strengthen marketing efforts. It attended the China Shanghai International BoatShow in March and the China Import and Export Fair in May. It actively developed markets along the "Belt andRoad", and the sales of its outboard motors in Russia and other countries grew well.In terms of production, Parsun Power continued to tap the existing capacity potential, and outboard motoroutput value continued to increase. In 2023, the construction of a new green digital and intelligence factory withan annual production capacity of 76,400 units of high-end water powersports equipment and the construction of anew R&D centre was officially started. This project builds upon Parsun Power's current core business, aligningwith national industrial policies and industry-specific developmental traits, leveraging existing technologies toaugment and upgrade present operations. Upon completion and commissioning, it is anticipated to broaden theproduction and sales scale of outboard motors, thereby capitalising on the company's technological prowess,product offerings, customer base, brand equity, and management assets. This strategic move aims to reinforcemarket competitiveness, promote sustainable growth, and fortify resilience against fluctuations in marketconditions.
In January 2023, the application for Parsun Power’s IPO on the ChiNext board of the Shenzhen StockExchange was approved at the second meeting in 2023 of the ChiNext Board Listing Committee of the ShenzhenStock Exchange. Currently, Parsun Power’s IPO application is under review in a normal, orderly manner beforethe relevant information can be registered with the China Securities Regulatory Commission (CSRC).(III) Analysis of key financial indicators
1. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
| 2023 | 2022 | Change (%) | |||
| Operating revenue | As a % of total operating revenue (%) | Operating revenue | As a % of total operating revenue (%) | ||
| Total | 4,745,737,321.83 | 100% | 3,892,708,509.64 | 100% | 21.91% |
| By operating division | |||||
| Intelligent manufacturing | 4,745,737,321.83 | 100.00% | 3,892,708,509.64 | 100.00% | 21.91% |
| By product category | |||||
| Corrugated cardboard production lines | 3,209,889,258.08 | 67.64% | 2,603,549,326.99 | 66.89% | 23.29% |
| Corrugated box printing and packaging production line equipment | 798,784,145.98 | 16.83% | 717,169,922.31 | 18.42% | 11.38% |
| Water powersports products and general machines | 737,063,917.77 | 15.53% | 571,989,260.34 | 14.69% | 28.86% |
| By operating segment | |||||
| Mainland China | 744,020,072.39 | 15.68% | 441,664,388.05 | 11.35% | 68.46% |
| Other countries and regions | 4,001,717,249.44 | 84.32% | 3,451,044,121.59 | 88.65% | 15.96% |
| By sales mode | |||||
| Direct selling | 3,977,761,773.94 | 83.82% | 3,229,852,665.56 | 82.97% | 23.16% |
| Distribution selling + reselling | 767,975,547.89 | 16.18% | 662,855,844.08 | 17.03% | 15.86% |
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of OperatingRevenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
| Intelligent manufacturing | 4,745,737,321.83 | 3,359,528,546.01 | 29.21% | 21.91% | 18.57% | 1.99% |
| By product category | ||||||
| Corrugated cardboard production lines | 3,209,889,258.08 | 2,291,568,630.42 | 28.61% | 23.29% | 18.02% | 3.19% |
| Corrugated box printing and packaging production line equipment | 798,784,145.98 | 522,704,680.37 | 34.56% | 11.38% | 13.95% | -1.47% |
| Water powersports products and general machines | 737,063,917.77 | 545,255,235.22 | 26.02% | 28.86% | 25.98% | 1.69% |
| By operating segment | ||||||
| Mainland China | 744,020,072.39 | 559,477,908.69 | 24.80% | 68.46% | 70.90% | -1.07% |
| Other countries and regions | 4,001,717,249.44 | 2,800,050,637.32 | 30.03% | 15.96% | 11.74% | 2.64% |
| By sales mode | ||||||
| Direct selling | 3,977,761,773.94 | 2,817,945,983.44 | 29.16% | 23.16% | 19.78% | 2.00% |
| Distribution selling + reselling | 767,975,547.89 | 541,582,562.57 | 29.48% | 15.86% | 12.67% | 1.99% |
Under the circumstances that the statistical caliber of the Company's main business data is adjusted in the Reporting Period, theCompany's main business data that adjusted according to the caliber at the end of the Reporting Period
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
| Operating division | Item | Unit | 2023 | 2022 | Change (%) |
| Corrugated cardboard | Unit sales | Unit | 194.00 | 160.00 | 21.25% |
| Output | Unit | 195.00 | 162.00 | 20.37% |
Operating division
| Operating division | Item | Unit | 2023 | 2022 | Change (%) |
| production lines | Inventory | Unit | 4.00 | 3.00 | 33.33% |
| Corrugated box printing and packaging production line equipment | Unit sales | Unit | 350.00 | 233.00 | 50.21% |
| Output | Unit | 323.00 | 229.00 | 41.05% | |
| Inventory | Unit | 24.00 | 51.00 | -52.94% | |
| Water powersports products and general machines | Unit sales | Unit | 47.35 | 32.05 | 47.75% |
| Output | Unit | 48.04 | 30.10 | 59.53% | |
| Inventory | Unit | 1.56 | 0.94 | 65.96% |
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
The over 30% YoY increase in the inventory of corrugated cardboard production lines is primarily driven by the increasedorders in the current period.The over 30% YoY increases in the output and unit sales of corrugated box printing and packaging production line equipmentare primarily driven by the increased sales in the current period; and the over 30% YoY decrease in inventory is mainly because thelead time for digital printers has been shortened as a result of optimized supply chain management after the acquisition of WonderDigital.The over 30% YoY increases in the output and unit sales of water powersports products and general machines are primarilydriven by the increased sales in the current period; and the over 30% YoY increase in inventory is primarily driven by the increasedorders in the current period.
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
Unit: RMB
| Product category | Item | 2023 | 2022 | Change (%) | ||
| Cost of sales | As a % of total cost of sales (%) | Cost of sales | As a % of total cost of sales (%) | |||
| Corrugated cardboard production lines | Raw materials | 1,386,840,647.93 | 41.27% | 1,132,363,095.01 | 39.97% | 22.47% |
| Labor cost | 398,729,132.93 | 11.87% | 335,242,775.36 | 11.83% | 18.94% | |
| Other | 505,998,849.56 | 15.06% | 474,152,150.56 | 16.73% | 6.72% | |
| Corrugated box printing and packaging production line equipment | Raw materials | 394,267,397.00 | 11.74% | 345,662,621.86 | 12.20% | 14.06% |
| Labor cost | 64,402,686.38 | 1.92% | 53,218,657.90 | 1.88% | 21.02% | |
| Other | 64,034,596.99 | 1.91% | 59,845,931.02 | 2.11% | 7.00% | |
Waterpowersportsproducts andgeneralmachines
| Water powersports products and general machines | Raw materials | 492,291,198.10 | 14.65% | 384,529,146.81 | 13.57% | 28.02% |
| Labor cost | 30,152,308.98 | 0.90% | 28,498,837.44 | 1.01% | 5.80% | |
| Other | 22,811,728.14 | 0.68% | 19,792,532.58 | 0.70% | 15.25% |
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
□ Yes √ No
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √Not applicable
(8) Major Customers and Suppliers
Major customers:
| Total sales to top five customers (RMB) | 1,119,524,077.70 |
| Total sales to top five customers as a % of total sales of the Reporting Period (%) | 23.59% |
| Total sales to related parties among top five customers as a % of total sales of the Reporting Period (%) | 0.00% |
Top five customers:
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As a % of total sales revenue (%) |
| 1 | Customer A | 552,766,086.28 | 11.65% |
| 2 | Customer B | 219,131,889.02 | 4.62% |
| 3 | Customer C | 150,976,218.92 | 3.18% |
| 4 | Customer D | 101,688,898.65 | 2.14% |
| 5 | Customer E | 94,960,984.83 | 2.00% |
| Total | -- | 1,119,524,077.70 | 23.59% |
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
| Total purchases from top five suppliers (RMB) | 432,374,216.43 |
| Total purchases from top five suppliers as a % of total purchases of the Reporting Period (%) | 17.28% |
| Total purchases from related parties among top five suppliers as a % of total purchases of the Reporting Period (%) | 0.00% |
Top five suppliers:
| No. | Supplier | Purchase in the Reporting Period (RMB) | As a % of total purchases (%) |
| 1 | Supplier A | 230,840,463.13 | 9.23% |
| 2 | Supplier B | 66,629,892.51 | 2.66% |
| 3 | Supplier C | 57,264,853.07 | 2.29% |
| 4 | Supplier D | 39,876,913.91 | 1.59% |
| 5 | Supplier E | 37,762,093.81 | 1.51% |
| Total | -- | 432,374,216.43 | 17.28% |
Other information about major suppliers:
□ Applicable √ Not applicable
2. Expenses
Unit: RMB
| 2023 | 2022 | Change (%) | Reason for any significant change | |
| Selling expenses | 278,840,528.93 | 182,555,875.71 | 52.74% | 1. Increase in sales activities leads to increase in advertising and exhibition expenses and travel expenses. 2. Increase in product quality deposit, commission and agency service fees due to sales growth. 3. The impact of exchange rate changes. |
| Administrative expenses | 344,224,692.51 | 311,463,613.16 | 10.52% | Mainly due to the increase in employee compensation and the impact of exchange rate changes. |
| Finance costs | -1,089,616.70 | -8,970,693.69 | -87.85% | Mainly due to exchange rate changes. |
| R&D expenses | 127,566,482.42 | 97,954,453.40 | 30.23% | Mainly due to increased investment in research and development. |
3. R&D Investments
√ Applicable □ Not applicable
| Main R&D projects | Purpose | Project progress | Objectives to be achieved | Expected impact on the Company |
| iDataPioneer, Industrial Internet Platform 2.0 for the packaging industry | To provide one-stop smart factory solutions for corporate customers including but not limited to the paper | Completed | The project includes IoT platform, big data platform and intelligent application platform products to help | Become a profit growth point for the Company's industrial Internet platform business |
packaging industry
| packaging industry | customers achieve intelligent transformation of equipment, integrated production, operation and management, intelligent decision-making and agile innovation. | |||
| Localization of a world-leading high-end corrugated cardboard production line | To introduce the world-leading high-end corrugated cardboard production line and make it localized to meet the needs of Chinese customers for the highest-end and highest-speed corrugated cardboard production line. | Promote as planned | Mass production for sales in the domestic market | Further enrich the Company's product portfolio which can become a new profit growth point for the Company's corrugated box printing and packaging production line machinery. |
| High-horsepower outboard motors | To make up the blank market of high-horsepower outboard motors, and further enhance the competitiveness of products. | Promote as planned | Mass production for sales in the world | Meet the demand for high-horsepower outboard motors in domestic and international markets, becoming a new profit growth point for the Company. |
| Electric outboard motors | To develop a battery-powered outboard motor to further enhance product competitiveness in the new energy outboard motor market. | The electric outboard motor has been developed and put into mass production. | Mass production for sales in the world | Meet market demand and become a new profit growth point for the Company. |
Details about R&D personnel:
| 2023 | 2022 | Change (%) | |
| Number of R&D personnel | 335 | 327 | 2.45% |
| R&D personnel as a % of total employees | 14.80% | 15.49% | -0.69% |
| Educational background of R&D personnel | |||
| Bachelor’s degree | 163 | 146 | 11.64% |
| Master’s degree | 25 | 25 | 0.00% |
| Other | 147 | 156 | -5.77% |
| Age structure of R&D personnel | |||
| Under 30 | 91 | 80 | 13.75% |
| 30-40 | 141 | 140 | 0.71% |
Other
| Other | 103 | 107 | -3.74% |
Details about R&D investments:
| 2023 | 2022 | Change (%) | |
| R&D investments (RMB) | 129,198,284.64 | 101,656,683.16 | 27.09% |
| R&D investments as a % of operating revenue | 2.72% | 2.61% | 0.11% |
| Capitalized R&D investments (RMB) | 1,631,802.22 | 3,702,229.76 | -55.92% |
| Capitalized R&D investments as a % of total R&D investments | 1.26% | 3.64% | -2.38% |
Reasons for any significant change to the composition of R&D personnel and the impact:
□ Applicable √ Not applicable
Reasons for any significant YoY change in the percentage of R&D investments in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D investments and rationale:
√ Applicable □ Not applicable
Mainly due to the completion of R&D for capitalized projects.
4. Cash Flows
Unit: RMB
| Item | 2023 | 2022 | Change (%) |
| Subtotal of cash generated from operating activities | 4,773,160,187.72 | 4,083,606,350.48 | 16.89% |
| Subtotal of cash used in operating activities | 4,285,979,449.06 | 3,577,311,889.53 | 19.81% |
| Net cash generated from/used in operating activities | 487,180,738.66 | 506,294,460.95 | -3.78% |
| Subtotal of cash generated from investing activities | 2,827,005,182.87 | 5,502,146,075.67 | -48.62% |
| Subtotal of cash used in investing activities | 3,013,612,153.30 | 5,939,677,869.61 | -49.26% |
| Net cash generated from/used in investing activities | -186,606,970.43 | -437,531,793.94 | -57.35% |
| Subtotal of cash generated from financing activities | 857,532,104.79 | 998,366,302.50 | -14.11% |
| Subtotal of cash used in financing activities | 768,667,640.45 | 1,133,800,124.92 | -32.20% |
| Net cash generated from/used | 88,864,464.34 | -135,433,822.42 | -165.61% |
in financing activities
| in financing activities | |||
| Net increase in cash and cash equivalents | 438,793,914.57 | -25,583,078.47 | -1,815.17% |
Explanation of why any of the data above varies significantly on a year-on-year basis:
√ Applicable □ Not applicable
(1) Net cash generated from operating activities was RMB487.1807 million, primarily because the Company's revenue growthduring the Reporting Period.
(2) Net cash used in investing activities was RMB186.6070 million, primarily driven by the increased investment in long-termassets during the Reporting Period.
(3) Net cash generated from financing activities was RMB88.8645 million, primarily driven by the combined effects of the sharerepurchase and the recovery of some security deposits for loans during the Reporting Period.
(4) Net increase in cash and cash equivalents was RMB438.7939 million, primarily driven by net cash generated from operatingand financing activities during the Reporting Period.Explanation of why the net cash generated from/used in operating activities varies significantly from the net profit of the ReportingPeriod:
□ Applicable √ Not applicable
V Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
| Amount | As a % of gross profit | Primary source/reason | Recurrent or not | |
| Return on investment | 10,707,429.16 | 1.63% | Mainly due to the Gains on wealth management product and securities investments during the period | Yes |
| Gain/loss on changes in fair value | 47,387,905.11 | 7.19% | Mainly due to the fair value changes of securities investments and financial investments during the period | Yes |
| Asset impairment loss | -17,217,097.39 | -2.61% | Mainly due to the provision for decline in value of inventories. | No |
| Non-operating income | 5,974,641.17 | 0.91% | No significant impact. | No |
| Non-operating | 16,152,375.18 | 2.45% | Mainly due to the | No |
expenses
| expenses | payment of tax-related expenses |
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| 31 December 2023 | 1 January 2023 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As a % of total assets | Amount | As a % of total assets | |||
| Cash and bank balances | 1,826,419,904.49 | 24.23% | 1,274,447,199.74 | 18.39% | 5.84% | Mainly due to the recovery of security deposits for the internal guarantees and external loans that are due within one year. |
| Accounts receivable | 904,003,975.47 | 11.99% | 837,305,757.46 | 12.08% | -0.09% | Mainly due to the increased sales. |
| Contract assets | 45,946,377.14 | 0.61% | 65,089,851.21 | 0.94% | -0.33% | No significant change. |
| Inventories | 1,182,411,055.68 | 15.69% | 1,092,981,884.51 | 15.77% | -0.08% | Mainly due to the increased stocks as a result of more orders |
| Long-term equity investments | 117,265,884.84 | 1.56% | 95,352,681.52 | 1.38% | 0.18% | Mainly due to the capital increase to Nanjing Profeta during the period. |
| Fixed assets | 611,851,577.04 | 8.12% | 570,200,113.79 | 8.23% | -0.11% | No significant change. |
| Construction in progress | 195,557,097.80 | 2.59% | 38,904,537.85 | 0.56% | 2.03% | Mainly due to the increased investment in long-term assets during the period. |
| Right-of-use assets | 82,342,398.83 | 1.09% | 86,448,978.02 | 1.25% | -0.16% | No significant change. |
| Short-term borrowings | 370,549,972.80 | 4.92% | 41,815,129.24 | 0.60% | 4.32% | Mainly due to the short-term borrowings received during the period. |
| Contract liability | 645,608,919.34 | 8.56% | 692,567,968.60 | 10.00% | -1.44% | No significant change. |
| Long-term borrowings | 79,107,701.15 | 1.05% | 57,884,494.89 | 0.84% | 0.21% | No significant change. |
| Lease liabilities | 65,861,441.32 | 0.87% | 68,989,111.33 | 1.00% | -0.13% | No significant change. |
Current portionof non-currentassets
| Current portion of non-current assets | 5,970,000.00 | 0.08% | 311,763,750.00 | 4.50% | -4.42% | Mainly due to the recovery of security deposits for the internal guarantees and external loans that are due within one year. |
| Goodwill | 440,633,826.08 | 5.85% | 430,916,848.74 | 6.22% | -0.37% | No significant change. |
| Current portion of non-current liabilities | 57,001,396.44 | 0.76% | 315,767,431.26 | 4.56% | -3.80% | Mainly due to the repayment of borrowings that are due within one year during the period. |
Overseas assets that take up a large percentage of the Company’s net asset value:
√ 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 | 1,084,502,996.19 | Italy | Producing and marketing by itself | Operation management | Good | 22.91% | Not |
| 100% interest of EDF S.R. L | M&A | 36,162,008.90 | Italy | Producing and marketing by itself | Operation management | Good | 0.76% | Not |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
| 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 | -35,069,801.61 | 2,581,570,596.21 | 2,755,254,085.43 | 651,296,267.76 | |||
| 2. Derivative financial assets | 782,720.29 | -21,269,301.59 | 52,053,065.57 | 237,309.58 | 31,329,174.69 | |||
| 5.Other non-current financial assets | 334,449,603.33 | 74,779,681.84 | 56,924,222.10 | 4,875,247.60 | 0.00 | 461,278,259.67 | ||
| Subtotal of financial assets | 1,195,281,882.21 | 18,440,578.64 | 0.00 | 0.00 | 2,690,547,883.88 | 2,760,366,642.61 | 0.00 | 1,143,903,702.12 |
| Other non-current financial assets | 248,630.14 | 10,000,000.00 | 10,248,630.14 | |||||
| Total of the above | 1,195,281,882.21 | 18,689,208.78 | 0.00 | 0.00 | 2,700,547,883.88 | 2,760,366,642.61 | 0.00 | 1,154,152,332.26 |
| Financial liabilities | 193,418,848.13 | 649,723.36 | 0.00 | 161,616.03 | 57,022,555.58 | 1,112,050.07 | 138,319,682.01 | |
Particulars about other changes: Other changes are mainly exchange movements.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Indicate whether any significant change occurred to the measurement attributes of the major assets in the Reporting Period. □ Yes √ No
3. Assets to which the Company’s Rights Were Restricted as at the Period-End
Unit: RMB
| Item | Closing carrying amount | Reason for restriction |
| Cash and bank balances | 153,905,292.65 | Deposits used for obtaining bank acceptance bills and guarantees, etc. |
Fixed assets
| Fixed assets | 4,460,554.82 | For bank loans obtained by subsidiaries |
| Total | 158,365,847.47 |
VII Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
| Total investment amount in 2023 (RMB) | Total investment amount in 2022 (RMB) | Change (%) |
| 1,002,404,107.56 | 1,227,440,484.73 | -18.33% |
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
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
| 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/ overseas listed stocks | 603566.SH | Pleco | 62,847,290.00 | Fair value | -16,444,235.00 | 62,847,290.00 | -16,444,235.00 | 46,403,055.00 | Financial assets held for trading | Self-funded | |||
| Domestically/ overseas listed stocks | 688563.SH | Baimtec Material | 73,172,079.31 | Fair value | 2,863.49 | 73,172,079.31 | 2,863.49 | 73,174,942.80 | Financial assets held for trading | Self-funded | |||
| Domestically/ overseas listed stocks | 002123.SZ | Montnets Technolo | 96,999,559.37 | Fair value | -22,240,559.28 | 96,999,559.37 | 11,146,564.21 | -20,088,065.16 | 65,764,930.00 | Financial assets held for trading | Self-funded |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
gy
| gy | |||||||||||||
| Domestically/ overseas listed stocks | Others | 165,553,521.28 | Fair value | 165,553,521.28 | 206,853,810.22 | 412,641,774.17 | 40,234,442.67 | Financial assets held for trading | Self-funded | ||||
| Trust products | 717,241.38 | Fair value | 717,241.38 | -717,241.38 | -717,241.38 | Financial assets held for trading | Self-funded | ||||||
| Funds | 342,596,480.19 | Fair value | 342,596,480.19 | -1,613,387.04 | 337,000,000.00 | 344,223,085.24 | -3,082,669.38 | 332,290,725.57 | Financial assets held for trading | Self-funded | |||
| Others | 351,182,315.74 | Fair value | 351,182,315.74 | 5,942,757.60 | 1,804,697,857.31 | 2,105,755,188.86 | 83,537,630.20 | 133,662,614.39 | Financial assets held for trading | Self-funded | |||
| Total | 1,093,068,487.27 | -- | 860,049,558.59 | -35,069,801.61 | 0.00 | 2,581,570,596.21 | 2,873,766,612.48 | 83,442,725.44 | 651,296,267.76 | -- | -- | ||
| Disclosure date of the board announcement approving the securities investments | March 28, 2023 | ||||||||||||
| Disclosure date of the general meeting announcement approving the securities investments (if any) | 2April 18, 2023 | ||||||||||||
(2) Investments in Derivative Financial Instruments
√ Applicable □Not applicable
1) Derivative Investments for Hedging Purposes in the Reporting Period
√ Applicable □Not applicable
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Unit: RMB'0,000
| Type of derivative | Initial investment amount | Opening amount | Gain/loss on fair-value changes in the period | Cumulative fair-value changes recognized in equity | Purchased in the Reporting Period | Sold in the Reporting Period | Closing amount | Closing amount as % of the Company’s closing equity |
| Fixed forward | 1,134.3 | 1,134.3 | -6.1 | 0 | 3,741.2 | 4,875.5 | 0 | 0.00% |
| Total | 1,134.3 | 1,134.3 | -6.1 | 0 | 3,741.2 | 4,875.5 | 0 | 0.00% |
| Description of significant changes in accounting policies and specific financial accounting principles in respect of the Company's hedges for the Reporting Period as compared to the prior reporting period | No significant change | |||||||
| Actual gains/losses in the Reporting Period | During the Reporting Period, the actual loss on derivative contracts for hedging purposes stood at RMB-61 thousand. | |||||||
| Results of hedges | Currently not available | |||||||
| Funding source | Self-funded | |||||||
| 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 above-mentioned hedging transactions are mainly intended to avert and prevent risks arising from fluctuations in exchange rates. 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 | 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. | |||||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
of derivativeproducts during theReporting Period,specific methodsused, and relevantassumption andparameter settingsshall be disclosedfor analysis of fairvalue of derivatives
| 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 | |
| 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 |
| Special opinions expressed by independent directors concerning the Company's derivatives investment and risk control | 1. The proposed futures and derivatives trading business of the Company and its subsidiaries is based on the actual situation of the Company and on the premise of ensuring the capital requirements for daily business operations and effective control of investment risks. Carrying out commodity and foreign exchange hedging business is conducive to reducing the Company's operational and performance risks caused by the price fluctuations of raw materials, and foreign currency exchange rate fluctuations. At the same time, the moderate implementation of derivatives trading business is conducive to improving the efficiency of the use of funds and investment returns, and enriching the ways of investment for the Company’s own funds. 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. The Company has accumulated certain business experience in futures and derivatives trading, and the relevant feasibility analysis report has fully explained the necessity and feasibility of the business as well as the related risks. 3. In strict compliance with the Stock Listing Rules of the Shenzhen Stock Exchange (Revised in 2023), the Guideline No. 7 of the Shenzhen Stock Exchange for the Self-regulation of Listed Companies--Transactions and Related-party Transactions (Revised in 2023), and other relevant laws and regulatory guidelines, the Company shall make prudent decisions and conduct prudent management, inspections and monitoring of the futures and derivative transactions of the Company and its subsidiaries, strictly control risks, and promptly discharge the information disclosure duty. 4. We hold that the futures and derivative trading 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. Annual Report 2023
2) Derivative Investments for Speculative Purposes in the Reporting Period
√ 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 |
| Shenwan Hongyuan Securities | N/A | No | Accumulator | 5,000 | 15 August 2023 | 19 August 2024 | 0 | 5,000 | 0 | 0 | 2,871 | 0.64% | -2,129 |
| Total | 5,000 | -- | -- | 0 | 5,000 | 0 | 0 | 2,871 | 0.64% | -2,129 | |||
| 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.) | Risk analysis: 1. Decision-making risk: The Company's involvement in futures and derivatives trading is influenced by a variety of factors, including international and domestic economic policies, economic conditions, developments in the underlying commodity sectors, fluctuations in exchange rates and interest rates. Furthermore, this type of trading is inherently complex and requires a high level of specialisation, thus carrying a certain degree of risk in trading decision-making processes. 2. Market risk: Financial markets are susceptible to macroeconomic conditions, industry cycles, and numerous other influences, causing linked underlyings in snowball products to fluctuate during holding periods, leading to variable valuations that could result in substantial gains or losses. Exchange rate movements are bi-directional; in the context of forward exchange rates, there's a possibility that locked-in forward exchange transactions may lead to settlement exchange rates below the company's book rate on the delivery date, potentially generating foreign exchange losses. Additionally, due to factors tied to futures and other derivative markets, futures prices and spot prices might exhibit discrepancies in timing and volatility, such that during the hedging period, related businesses could incur either additional profits or losses. 3. Liquidity risk: A sudden and extreme shift in the relevant price index, or managing excessively large positions, could potentially result in untimely margin calls and force the liquidation of positions, thereby exposing the Company to liquidity risks. 4. Policy and legal risks: The Company may suffer losses due to alterations in the legal framework, non-compliance with relevant laws, | ||||||||||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
regulations, or contractual breaches by counterparties, leading to improper execution of contracts.
5. Other risks: During transaction execution, failing to adhere to standard procedures for derivatives trading or inadequate comprehension ofderivative product information can introduce operational risks, potentially leading to losses stemming from non-compliant actions orunforeseen legal contingencies.Description of control measures:
1. In the Rules on the Management of Financial Derivative Transaction Business formulated by the Company, the operating rules, reviewand approval authority, routine management, and risk control mechanisms on the financial derivative transaction business have beenprescribed to standardise business operation as well as prevent and control related risks.
2. The Company will diligently select qualified financial institutions for partnership and may engage experienced external professionalswhen needed to offer advisory services. This ensures thorough and methodical research and analysis prior to investments, therebyminimising operational risks and performance uncertainties.
3. Throughout its business operations, the Company and its associates rigorously comply with applicable national laws and regulations toavert legal hazards. They conduct regular supervision and inspections to ensure the derivatives business's standardisation, internal controlefficacy, and information disclosure accuracy. They closely monitor shifts in domestic and international regulatory policies and changes torelevant rules, proactively adjusting hedging strategies accordingly to mitigate potential policy risks well ahead of time.
4. Domestic futures exchanges maintain a robust risk control framework, assuming clearing responsibilities, thereby reducing the likelihoodof credit risk significantly. The Company will diligently stay informed and aligned with national policies and management bodyrequirements to mitigate credit and legal risks effectively.
5. The Company will steadfastly uphold cautious investment principles, consistently enhancing its analysis and research on economicpolicies, market conditions, and environmental shifts, promptly adjusting its investment strategies and scales as needed. Moreover, it willcontinuously fortify the professional education of its team members, elevating the proficiency of its practitioners.
6. The internal audit departments of the Company are responsible for supervising and verifying the implementation of futures andderivatives trading business, proposing timely rectification opinions on existing problems, and reporting to the Audit Committee of theBoard of Directors of the Company.
| regulations, or contractual breaches by counterparties, leading to improper execution of contracts. 5. Other risks: During transaction execution, failing to adhere to standard procedures for derivatives trading or inadequate comprehension of derivative product information can introduce operational risks, potentially leading to losses stemming from non-compliant actions or unforeseen legal contingencies. Description of control measures: 1. 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 standardise business operation as well as prevent and control related risks. 2. The Company will diligently select qualified financial institutions for partnership and may engage experienced external professionals when needed to offer advisory services. This ensures thorough and methodical research and analysis prior to investments, thereby minimising operational risks and performance uncertainties. 3. Throughout its business operations, the Company and its associates rigorously comply with applicable national laws and regulations to avert legal hazards. They conduct regular supervision and inspections to ensure the derivatives business's standardisation, internal control efficacy, and information disclosure accuracy. They closely monitor shifts in domestic and international regulatory policies and changes to relevant rules, proactively adjusting hedging strategies accordingly to mitigate potential policy risks well ahead of time. 4. Domestic futures exchanges maintain a robust risk control framework, assuming clearing responsibilities, thereby reducing the likelihood of credit risk significantly. The Company will diligently stay informed and aligned with national policies and management body requirements to mitigate credit and legal risks effectively. 5. The Company will steadfastly uphold cautious investment principles, consistently enhancing its analysis and research on economic policies, market conditions, and environmental shifts, promptly adjusting its investment strategies and scales as needed. Moreover, it will continuously fortify the professional education of its team members, elevating the proficiency of its practitioners. 6. The internal audit departments of the Company are responsible for supervising and verifying the implementation of futures and derivatives trading business, proposing timely rectification opinions on existing problems, and reporting to the Audit Committee of the Board of Directors of the Company. | |
| 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 | Based on market value changes |
| 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 | No significant change |
| Special opinions expressed by independent directors concerning the Company's derivatives investment and risk control | 1. The proposed futures and derivatives trading business of the Company and its subsidiaries is based on the actual situation of the Company and on the premise of ensuring the capital requirements for daily business operations and effective control of investment risks. Carrying out commodity and foreign exchange hedging business is conducive to reducing the Company's operational and performance risks caused by the price fluctuations of raw materials, and foreign currency exchange rate fluctuations. At the same time, the moderate implementation of derivatives trading business is conducive to improving the efficiency of the use of funds and investment returns, and enriching the ways of investment for the Company’s own funds. 2. The Company has prepared the rules on the internal control management |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
of the financial derivate transaction business by relevant regulatory prescriptions, which is conducive to standardizing and strengthening therisk control management of financial derivative transactions. The Board of Directors of the Company has performed the necessary reviewand approval procedures for this matter in a legal and rule-compliant manner. No illegalities or violations of regulations and Articles ofAssociation have occurred. The Company has accumulated certain business experience in futures and derivatives trading, and the relevantfeasibility analysis report has fully explained the necessity and feasibility of the business as well as the related risks. 3. In strict compliancewith the Stock Listing Rules of the Shenzhen Stock Exchange (Revised in 2023), the Guideline No. 7 of the Shenzhen Stock Exchange forthe Self-regulation of Listed Companies--Transactions and Related-party Transactions (Revised in 2023), and other relevant laws andregulatory guidelines, the Company shall make prudent decisions and conduct prudent management, inspections and monitoring of thefutures and derivative transactions of the Company and its subsidiaries, strictly control risks, and promptly discharge the informationdisclosure duty. 4. We hold that the futures and derivative trading business of the Company and its subsidiaries does not prejudice theinterests of the Company and all shareholders, particularly not impair the interests of non-controlling shareholders. Therefore, we approvethis matter and suggest submitting it to the General Meeting of Shareholders of the Company for deliberation.
of the financial derivate transaction business by relevant regulatory prescriptions, which is conducive to standardizing and strengthening therisk control management of financial derivative transactions. The Board of Directors of the Company has performed the necessary reviewand approval procedures for this matter in a legal and rule-compliant manner. No illegalities or violations of regulations and Articles ofAssociation have occurred. The Company has accumulated certain business experience in futures and derivatives trading, and the relevantfeasibility analysis report has fully explained the necessity and feasibility of the business as well as the related risks. 3. In strict compliancewith the Stock Listing Rules of the Shenzhen Stock Exchange (Revised in 2023), the Guideline No. 7 of the Shenzhen Stock Exchange forthe Self-regulation of Listed Companies--Transactions and Related-party Transactions (Revised in 2023), and other relevant laws andregulatory guidelines, the Company shall make prudent decisions and conduct prudent management, inspections and monitoring of thefutures and derivative transactions of the Company and its subsidiaries, strictly control risks, and promptly discharge the informationdisclosure duty. 4. We hold that the futures and derivative trading business of the Company and its subsidiaries does not prejudice theinterests of the Company and all shareholders, particularly not impair the interests of non-controlling shareholders. Therefore, we approvethis matter and suggest submitting it to the General Meeting of Shareholders of the Company for deliberation.
5. Use of Raised Funds
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII 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.IX Principal Subsidiaries and Joint Stock Companies
√ Applicable □ Not applicable
Principal 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 | 2,533,392,132.87 | 1,097,001,659.96 | 2,916,671,004.26 | 423,314,651.23 | 286,150,426.36 |
| Shunyi Investment | Subsidiary | Shunyi Investment is principally engaged in business entity and project investments, etc. It is the direct controlling shareholder of Parsun Power. | RMB10 million | 721,560,099.51 | 421,113,521.73 | 737,063,917.77 | 108,003,111.04 | 95,054,932.64 |
X Structured Bodies Controlled by the Company
√ Applicable □ Not applicable
1. In March 2021, the Company established Tianjin Hangchuang Zhijin Investment Partnership (LimitedPartnership) (the "Tianjin Hangchuang Fund" or the "Partnership") with AVIC Innovation Capital ManagementCo., Ltd. The Company, as the sole LP of the Fund, subscribed for the Partnership's contribution share ofRMB20,000,000. The Fund is a special fund which is to invest in the equity of Sichuan Dajin Stainless Steel Co.,Ltd. (now renamed as Chengdu 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 theFund in 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 obtainednon-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 statementsof Dongfang 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.
XI Prospects(I) The Company's development strategy
1. Company vision
Business purposes of the Company: To become an industrial group with high influence in its areas, trust fromcustomers and shareholders, and respect from employees; uphold the business philosophies of "Integrity,Innovation and Excellence", and achieve mutual benefits with customers, shareholders, employees and thesociety.
2. Corporate strategy
In 2022, the Company completed its strategic plan for the third five-year period (2018-2022). Looking backat the past five years, the Company achieved 100.1% of its strategic objectives of operating revenue and 96.9% ofits strategic objectives of net profit. To be specific, the Company's annual operating revenue (excluding the impactof Pride) has expanded from RMB2,377 million in 2018 to RMB3,893 million in 2022, representing a compound
annual growth rate of approximately 13.13%, and its annual net profit (excluding the impact of Pride) hasincreased from RMB209 million in 2018 to RMB484 million in 2022, with a compound annual growth rate ofapproximately 23.24%. These results demonstrate the strong capabilities of the Company’s management team inscientific decision-making and strategic planning, as well as the competence of efficient strategic execution andrealization of all staff of the Company. These capabilities are a solid foundation for the Company's sound andsustainable growth in the future.Currently, the Company has formulated its strategic plan for the fourth five-year period (2023-2027). Duringthe period from 2023 to 2027, the Company will adhere to the strategy of "a wealth of talent" and "culturalguidance" as the solid support, and promote the five strategies of "business concentration", "extended investment","globalization", "digitalization" and "collaboration" to achieve the goal of "to become an industrial group withhigh influence in its areas, trust from customers and shareholders, and respect from employees". .
The Company's strategic plan for the fourth five-year period (2023-2027)
Details are as follows:
? Business concentration strategy: Focus on the two major business divisions of “intelligent packaging
equipment” and “water powersports equipment” and strengthen the endogenous growth constantly, aswell as complete the spin-off listing of the subsidiary Parsun Power with its business of "waterpowersports products" for better development.
? Extended investment strategy: Follow the guidance of the Group's strategic plan, seek businesssynergies, explore new business opportunities, and facilitate the Group's robust development with theprincipal businesses as the core and extended investment as the support, as well as use such means asM&A, financial investment and the spin-off listing of subsidiary to accumulate momentum for higher
| To become an industrial group with | ||
| high influence in its areas, trust from customers and shareholders, and respect from employees | ||
"1+N" development model
"1+N" development model
Businessconcentrationstrategy
Businessconcentration
strategy
Focus on
"integrated
corrugated
packagingsolutions", carry on
with the spin-offlisting of thebusiness of "water
powersportsequipment", and
continuouslyoptimize capital
operation
Focus on
"integratedcorrugatedpackagingsolutions", carry on
with the spin-off
listing of thebusiness of "water
powersportsequipment", and
continuouslyoptimize capital
operation
Extended
investment
strategy
Extended
investment
strategy
Follow the guidance
of the Group'sstrategic plan, seekbusiness synergies,explore new business
opportunities, andfacilitate the Group'srobust developmentwith the principalbusinesses as the core
and extended
investment as thesupport
Follow the guidance
of the Group's
strategic plan, seek
business synergies,explore new business
opportunities, andfacilitate the Group's
robust development
with the principalbusinesses as the core
and extended
investment as thesupport
Globalization
| Globalization | |
| Global marketing, global operation, and a global business portfolio | |
Digitalization
| Digitalization | ||
| Improve the internal IT system, build digitalized factories, increase management effectiveness, and support better production efficiency | ||
Collaboration
Collaboration
Realize close
collaborationamong all businessdivisions by givingplay to the Group
Headquarters’functions
Realize close
collaborationamong all businessdivisions by givingplay to the Group
Headquarters’functions
"A wealth of Talent" × "Cultural Guidance"
growth.
? Globalization strategy: Committed to the globalization of the marketing network, management andoperation and the business portfolio.
? Digitalization strategy: Internally, continue to enhance the IT system to improve management
effectiveness and support the improvement of operational efficiency; externally, build digital factoriesas a benchmark in the equipment manufacturing industry, provide modular digital factory solutions, andfacilitate the digital transformation of the industrial chain.
? Collaboration strategy: Accelerate the building of a three-tier group operation structure of "GroupHeadquarters + Business Divisions + Profit Generating Units", realize close collaboration among allbusiness divisions by giving play to the Group Headquarters’ functions, as well as strengthen theorganizing ability and the collaboration mechanism for group operation
? A wealth of talent strategy: Enhance cross-culture leadership, optimize the talent management system,
build an excellent management team, etc.
? Cultural guidance strategy: Establish common goals and values for the Group, build the Group as aninternational family, and lead the Group and subsidiaries towards common growth.(II) The Company's main business plan for 2024
1. Promote capacity expansion and support growth in operating performance
During 2022 and 2023, the Company's two major business divisions, "intelligent packaging equipment" and"water powersports equipment”, reported a robust order book. To proactively capitalise on market prospects andaddress the requirements for timely order fulfilment, pertinent business entities commenced capacity expansionworks in 2023 and plan to advance the following initiatives further in 2024:
A. Fosber Group's new European headquarters base project
In February 2024, Fosber Group inaugurated its new European headquarters base project situated inMonsagrati, Pescaglia, Lucca Province, Italy, spanning an approximate built-up area of 35,000 to 40,000 squaremeters. The project entails consolidating existing production capabilities to create a European manufacturing hubfor the Fosber Group, backed by a total investment exceeding EUR40 million. Scheduled to break ground in 2024,the facility is projected to be finalised by late 2026. This venture represents a pivotal investment in DongfangPrecision's strategy for consistent growth and sustainability. Once completed, it will reinforce the Group's centralrole in the corrugated packaging equipment manufacturing sector.
B. Fosber Asia’s domestic corrugated cardboard production line intelligent factory construction project
In early 2023, a groundbreaking event marked the commencement of the construction of Fosber Asia’sDomestic Corrugated Cardboard Production Lines Intelligent Factory Construction Project. Located in theSongxia Industrial Park within Nanhai District, Foshan City, Guangdong Province, the project spans anapproximate area of 80 mu and carries a planned investment of RMB500 million. Primarily, the facility willfunction as a hub for R&D, manufacturing, and maintenance of domestically-made high-end corrugated cardboardproduction equipment for Fosber Asia. Upon completion, the new plant is forecast to more than double Fosber
Asia's manufacturing capacity.
On 12 January 2024, Fosber Asia conducted a topping-out ceremony for its new intelligent manufacturingfacility, commemorating the successful conclusion of the main building's construction and the structure'stopping-out milestone. From this juncture, the project advances to focus entirely on the installation of integratedsystems and the subsequent renovation phase. The facility is expected to be operational and handed over in 2024.C. Tiru?a Asia’s domestic corrugated and pressure roller production base projectSituated in Nanhai District, Foshan City, Guangdong Province, this project spans an area of 30 mu with atotal planned investment exceeding RMB100 million. Once completed, it will serve as the Asian production basefor Tiru?a's domestically manufactured corrugated and pressure rollers. The project's realisation will harnessChina's globally competitive manufacturing capabilities, enabling the localisation of corrugated and pressurerollers—a crucial component of Tiru?a's branded corrugated cardboard production lines. By doing so, it not onlybolsters the expansion and robustness of Dongfang Precision's domestic high-end corrugated cardboardproduction line business but also paves the way for Tiru?a's branded corrugated and pressure rollers to penetratethe Chinese and Asian markets, becoming a new source of growth for the Group.
To date, the project has successfully finished constructing the factory, office building, and staff dormitories,and has undergone acceptance before being commissioned into operation. In 2024, Tiru?a Asia is set to proceedwith the planned pre-commissioning preparations to ensure a seamless commissioning process for the project.
D. Parsun Power's green, digital and intelligent factory with an annual production capacity of 76,400 units ofhigh-end water powersports products and R&D centre
In March 2023, Parsun Power commenced the construction of a green, digital and intelligent factory with anannual production capacity of 76,400 units of high-end water powersports products, which is located in SuzhouCity, Jiangsu Province, and is expected to lay a solid foundation for Parsun Power's future development uponcompletion. In 2023, Parsun Power will complete the project of upgrading its central laboratory, which willprovide strong technical support and various testing guarantees for Parsun Power's new outboard motor researchand development, as well as provide reliable test reports and certification services for product access to the globalmarket.
2. Smart corrugated packaging equipment business: Improve business synergy and release growthpotential
The smart corrugated packaging equipment business, as the Company’s core business, covers all the keyprocesses in the value chain of corrugated packaging production and processing. The industrial chain is wellarranged, and the products, technologies, sales networks and supply chains of different business entities havemany similarities and commonalities, so that they can learn and complement each other, which can promote theintegration of various business entities within the Group, and thus achieve business synergy.
Guided by the “collaboration strategy”, the Company will continue to promote domestic business entities tointroduce leading high-end equipment products from Europe into China, redesign, modify and localize suchproducts in combination with the needs of customers in China and Asia markets, and launch appropriatedomestically produced high-end equipment products to customers in both domestic and Asia markets; as well aspromote the Group’s business entities at home and abroad to share resources in such aspects as supply chain,
production capacity and sales network to achieve advantage complementation and joint resource utilization, thusimproving the overall operating efficiency of core business, reducing the overall cost, strengthening the overallmarket competitiveness, and exploring new markets on this basis.In 2024, the three principal corrugated cardboard production lines—Fosber-branded, Quantum-branded, anddomestically-manufactured by Fosber Asia—will continue to deepen their synergies within the Group, fosteringenhanced collaboration across R&D, design, manufacturing, and supply chain integration. Similarly, thecorrugated printing and packaging production line businesses under Dongfang Precision (China) and DongfangPrecision (Europe) will persistently intensify their synergies across R&D, design, manufacturing, and sharedsupply chains. Moreover, the Company will persist in advancing its corrugated and pressure rollers businesssegment. It will propel the progressive execution of the business blueprint for its subsidiary, Tiru?a Group, toinvigorate corporate growth dynamics further. Efforts include promoting the construction and commissioning ofTiru?a's domestic corrugated and pressure roller manufacturing base in Asia, and fostering closer alignmentbetween its overseas and domestic corrugated roller business operations.In 2024, Dongfang Digicom will concentrate on the packaging sector in a broad sense, driving digitalisationand intelligence in manufacturing for its clientele. Anchored by its technological expertise in industrial internetand equipment production management solutions, and driven by market and client demands, it will relentlesslyrefine and enhance its offerings, such as its Production Management System (PMS) and Manufacturing ExecutionSystem (MES), tailoring them to the precise needs of large packaging industry customers Continuously refiningthese products, including the PMS and MES, Dongfang Digicom aims to construct a tailored product portfoliomatching real-world customer requirements. Simultaneously, the company will proactively align itself withnational policy directives, stepping up engagement in government-backed digital manufacturing initiatives. It willalso forge closer integration with product and sales teams across other business segments of Dongfang Precision,maximising the synergy of internal group resources. The goal is to exploit this synergy fully to engineer asignificant breakthrough in market penetration and product sales during 2024.
3. Digital printing solutions business: Expand new fields to achieve continuous growthIn terms of research and development, Wonder Digital is actively advancing the development of severalinnovative products, with a view to launching them as per schedule in 2024. These new offerings will extend thereach of the company’s digital printers into broader colour printing applications, enhancing product performanceand catering to diverse usage scenarios, thereby unlocking fresh avenues for the company's advancement. From asales perspective, Wonder Digital is committed to reinforcing its presence in both domestic and internationalmarkets. The company endeavours to bolster its marketing and service network infrastructure worldwide,continually reinforcing technical support and post-sales services to deliver an even higher calibre of after-salescare to its valued customers.
4. Explore "AI+ Intelligent Factory Solution"
Since 2020, the Company has implemented a "digital, intelligent" transformation strategy, leveraging IoT,cloud computing, big data, AI, and other cutting-edge IT to establish an industrial Internet platform tailored forthe packaging sector. The subsidiary Dongfang Digicom serves as a key enabler of digital and intelligent upgradesfor the packaging industry in a broad sense, functioning as a premier IT solution provider. Meanwhile, Dongfang
Precision's holding company, Guangdong Jaten Robot & Automation Co., Ltd., stands as a global leader in AGVrobots and intelligent logistics systems, ranking among China's top ten industrial robot brands.In March 2024, Dongfang Precision completed its equity investment in Shenzhen Ruoyu Technology Co.,Ltd ("Ruoyu Technology"), acquiring approximately 12.3905% equity interest (also the shareholding ratio) inRuoyu Technology by way of a capital increase in Ruoyu Technology. By investing in Ruoyu Technology,Dongfang Precision Group has further deepened its layout in the AI and industrial internet sectors, and at the sametime demonstrated to the market the determination of Dongfang Precision Group to commit itself to realising thestrategy of “digital and intelligent transformation”.In the wave of enterprise digital transformation, companies require not just data collection frominterconnected devices, but also end-to-end solutions encompassing data integration, processing, analysis, andsmart applications to actualise intelligent manufacturing. Ruoyu Technology's AI expertise and products aligngenerative language models and multimodal models rich in broad human knowledge towards a robot-centric focus.Their aim is to facilitate digital transitions for a multitude of businesses while swiftly adapting these capabilitiesto various robotic contexts. This pivot translates human wisdom into the robotic realm, thereby sparkinginnovative advancements at the intersection of the industrial Internet and artificial intelligence.Moving forward, Dongfang Digicom, a fully-owned subsidiary of Dongfang Precision, anticipates leveragingRuoyu Technology to elevate the technical sophistication of comprehensive digital factory and smart factorysolutions within the packaging sector in a broad sense. This collaboration is expected to deliver not only aseamless, one-stop service ranging from collecting data via connected machinery to integrated data processing,analysis, and intelligent applications, but also to empower clients in achieving true intelligent manufacturingcapabilities.
5. The extended investment business: Make industrial investments and explore developmentopportunities
The Company will adhere to the "1+N" strategic model with the co-development and mutual promotion of"Core Business + Extended Investments" business.
"1" represents the Company's main business of high-end intelligent equipment manufacturing and as thecornerstone, the Company is making great efforts in developing it, and striving to obtain a higher market share inthe era of high-end, digital and intelligent trends; "N" represents the Company’s investments in strategic emerginghigh-tech industries, which will empower the implementation of the Company’s intelligent transformationstrategy.
In 2024, the subsidiary, Yineng Investment, the main entity of the extended investment business, willcontinue to take advantage of industries related to the principal operations of Dongfang Precision, focus onhigh-quality companies in the industrial chain of China and the world. It will also carry out equity investmentsand M&As around the industrial chain according to the business needs and the actual situation of the Company,strengthen the horizontal and vertical integration of the industrial chain, and seek for business synergies.
During M&As, Yineng Investment will fully participate in the industries supported by China's "14thFive-Year Plan", focusing its equity investment on high-end equipment manufacturing, intelligent manufacturingand other strategic emerging high-tech industries, and will aim at enterprises with extensive industrial
development opportunities and favorable industrial advantages. It will obtain good investment returns and at thesame time create new business development opportunities for the Group.(III) Possible risks and countermeasures
1. Risks arising from fluctuations in exchange rates
The main settlement currency and recording currency of Fosber Group, the principal overseas business entityof the Company, are euros, while the revenue of Fosber America and domestic entities from export is mainlysettled with the US dollar. Fluctuations in the US dollar and euro exchange rates do not significantly impact theroutine operation of overseas business entities but exert certain impacts on the presentation of their assets andoperating results in the consolidated financial statements.Since 2022, changes in global geopolitical landscape, climate risks, and macroeconomic cycles have resultedin developed 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 2023, after 4interest rate hikes and as inflation cooled, the US dollar entered a consolidation phase at high levels. The Eurorebounded 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 experiencedlarge fluctuations, depreciating somewhat.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 alsoreduce risk exposure and increase exchange gains by increasing debts of foreign currency and rely on Groupmanagement to strengthen the level of capital coordination in different countries and regions, balance, and offsetfluctuation risks at 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 investmentbusiness such as securities investment and entrusted wealth management in an appropriate manner, based on theactual and development needs. There are certain risks of carrying out the above business due to fluctuations in thefinancial market and uncertainty of income; and the risk that the Company may suffer certain investment losses incase of risk events in the process of wealth management activities in terms of investment strategies and use offunds.
Countermeasures:
On the premise that the funds required for the daily operation of the main business will not be affected, theCompany reasonably controls the capital scale for financial investment; it establishes and improves the internalcontrol system and mechanism standards for securities investment and entrusted financial management, andstrengthens the risk control management of securities investment business, safeguard the safety of investmentfunds, and strictly control the risk exposure. In accordance with the economic situation and changes in thefinancial market, it continuously tracks and analyses the progress of securities investment and the investment of
funds, the progress of project investment and the performance of the capital market, and timely takescorresponding preservation measures to control investment risks.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
XII Communications with the Investment Community such as Researches, Inquiries and Interviews
√ Applicable □ Not applicable
| Date | Place | Way of communication | Type of the communication party | Communication party | Main discussions and materials provided by the Company | Index to the relevant information |
| February 21, 2023 | Company Conference Room | Field Research | Institutes | Jefferies Hong Kong Limited | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
| March 28, 2023 | Company Conference Room | Online communication | Institutes | CICC Fund Management Co., Ltd, Xingquan Fund Management Co., Ltd., Tianhong Innovation Assets Management Co., Ltd., Ping'an Dahua Fund Management Co., Ltd., Pengyang Fund Management Co., Ltd., China Merchants Fund Management Co., Ltd., Wanjia Asset Management Co., Ltd., Maxwealth Fund Management Company Limited, Bosc ASSET Co., Ltd., Taiping Fund Management Company Limited, Penghua Fund Management Co., Ltd., Fuguo Fund Management Co., Ltd., Boshi Fund Management Co., Ltd., Western Leadbank Fund Management Company Limited, SWS MU Fund Management Co., Ltd., Huatai Baoxiao Fund Management Co., Ltd., Morgan Fund Management Co., Ltd., Xingquan Fund Management Co., Ltd., UBS SDIC Fund Management Co., Ltd., Cinda Fund Management Company Limited., Huatai-Pinebridge Fund Management Co., Ltd., Hotland Innovation Asset Management Co., Ltd., Anxin Fund Management Co., Ltd., China Southern Asset Management Co., Ltd., Everbright Pramerica Fund Management Limited, China Universal Asset Management Co., | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Ltd., China AMC HK, CICC, Pinpoint, Goldstream, LYGH, WestRidge, CLOUDALPHA MASTER FUND, Dalian FenglanInvestment Co., Ltd., Zhejiang Jingan Investment ManagementCo., Ltd., Fengpei Capital LLC, Xizang Yuancheng InvestmentManagement Co., Ltd, Shanghai Tinnyinvestment Co., Ltd.,Shanghai Lizhen Investment Management Co., Ltd., BeijingGuhuai Capital Investment Co., Ltd., Shenzhen Red PomegranateInvestment Management Co., Ltd., Shibei InvestmentManagement (Beijing) Co., Ltd., Xiniu Investment Management(Beijing) Co., Ltd., Shanghai Panjing Investment Centre (LimitedPartnership), Pegasus Equity Investment Management (Shanghai)Co., Ltd., Shanghai Danyi Investment Management Partnership,Zhuhai Hengqin Wanfang Investment Management Partnership(Limited Partnership), Point 72, Mars Asset, Platina Capital, HELVED CAPITAL MANAGEMENT LIMITED, U Capital Co.,Ltd., DH Fund Management Co., Ltd., Shanghai Yili AssetsManagement Co., Ltd., Shanghai Shangguo Investment AssetManagement Co., Ltd., Shanghai Ningquan Asset ManagementCo., Ltd., Yongan Guofu Asset Management Co., Ltd., HuaxiaJiuying Asset Management Co., Ltd., Shanghai YongxingSecurities Asset Management Co., Ltd., Shanghai DIJUN AssetManagement Centre (Limited Partnership), Shenzhen QianhaiChengshi Fund Management Co., Ltd., Caitong AssetsManagement Co., Ltd., Shenwan Hongyuan Securities, AnxinSecurities Co., Ltd., Orient Securities Company Limited, ChinaSecurities Co., Ltd., Shenzhen Hong Ding Wealth ManagementCo., Ltd., Great Eastern Life Assurance (China) Co., Ltd.,AVIVA-COFCO Life Insurance Company Limited, Founder LifeInsurance Co., Ltd., China Post Life Insurance Co., Ltd., TaipingPension Co., Ltd., Life Insurance Asset Management Co., Ltd.,and Shanghai Fosun High Tech (Group) Co., Ltd.
| Ltd., China AMC HK, CICC, Pinpoint, Goldstream, LYGH, West Ridge, CLOUDALPHA MASTER FUND, Dalian Fenglan Investment Co., Ltd., Zhejiang Jingan Investment Management Co., Ltd., Fengpei Capital LLC, Xizang Yuancheng Investment Management Co., Ltd, Shanghai Tinnyinvestment Co., Ltd., Shanghai Lizhen Investment Management Co., Ltd., Beijing Guhuai Capital Investment Co., Ltd., Shenzhen Red Pomegranate Investment Management Co., Ltd., Shibei Investment Management (Beijing) Co., Ltd., Xiniu Investment Management (Beijing) Co., Ltd., Shanghai Panjing Investment Centre (Limited Partnership), Pegasus Equity Investment Management (Shanghai) Co., Ltd., Shanghai Danyi Investment Management Partnership, Zhuhai Hengqin Wanfang Investment Management Partnership (Limited Partnership), Point 72, Mars Asset, Platina Capital, HEL VED CAPITAL MANAGEMENT LIMITED, U Capital Co., Ltd., DH Fund Management Co., Ltd., Shanghai Yili Assets Management Co., Ltd., Shanghai Shangguo Investment Asset Management Co., Ltd., Shanghai Ningquan Asset Management Co., Ltd., Yongan Guofu Asset Management Co., Ltd., Huaxia Jiuying Asset Management Co., Ltd., Shanghai Yongxing Securities Asset Management Co., Ltd., Shanghai DIJUN Asset Management Centre (Limited Partnership), Shenzhen Qianhai Chengshi Fund Management Co., Ltd., Caitong Assets Management Co., Ltd., Shenwan Hongyuan Securities, Anxin Securities Co., Ltd., Orient Securities Company Limited, China Securities Co., Ltd., Shenzhen Hong Ding Wealth Management Co., Ltd., Great Eastern Life Assurance (China) Co., Ltd., AVIVA-COFCO Life Insurance Company Limited, Founder Life Insurance Co., Ltd., China Post Life Insurance Co., Ltd., Taiping Pension Co., Ltd., Life Insurance Asset Management Co., Ltd., and Shanghai Fosun High Tech (Group) Co., Ltd. | ||||||
| March 30, 2023 | Company Conference Room | Online communication | Institutes | China Foundation Management Co., Ltd., China Life Pension Company Limited, and China International Capital Corporation Limited | Introduction of the Company's operation, competitive advantages, | cninfo.com http://www.cninfo.com. |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
industry development trendand future strategicplanning and answeringinvestor questions
| industry development trend and future strategic planning and answering investor questions | cn | |||||
| March 31, 2023 | Company Conference Room | Online communication | Institutes | Beijing Longrising Asset Management Co., Ltd., DH Fund Management Co., Ltd., and Citic Securities Company Limited | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
| April 03, 2023 | Company Conference Room | Field Research | Institutes | Guotai Junan Securities Co., Ltd., Pengyang Asset Management Co., Ltd., Bank Of Beijing Scotiabank Asset Management Co., Ltd., First State Cinda Fund Management Co., Ltd., Fullgoal Fund Management Co., Ltd., China Securities Co., Ltd.csc Financial Co., Ltd., Shenzhen Xishan Capital Management Co., Ltd., Invesco Great Wall Fund Management Co., Ltd., and Shanghai Yili Assets Management Co., Ltd. | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
| April 04, 2023 | Company Conference Room | Field Research | Institutes | Essence Fund Management Co., Ltd., China Southern Asset Management Co., Ltd., Shenzhen Yingda Securities Co., Ltd., Hotland Innovation Asset Management Co., Ltd., Penghua Fund Management Co., Ltd., and Qian Hai Kai Yuan Fund Management Co., Ltd. | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
| April 06, 2023 | Company Conference Room | Field Research | Institutes | Jinxin Fund Management Co., Ltd., Hotland Innovation Asset Management Co., Ltd., Dacheng Fund Management Co., Ltd., Essence Fund Management Co., Ltd., Chengdu Mars Asset Management Centre (Limited Partnership), MINDHAND MANAGEMENT LIMITED, Sws Mu Fund Management Co., Ltd., China Investment Securities Co., Ltd., and China | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering | cninfo.com http://www.cninfo.com.cn |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
International Capital Corporation Limited
| International Capital Corporation Limited | investor questions | |||||
| April 13, 2023 | Company Conference Room | Online communication | Institutes | Essence Fund Management Co., Ltd., Hotland Innovation Asset Management Co., Ltd., Hwabao WP Fund Management Co., Ltd., Huashang Fund Management Co., Ltd., HSBC Jintrust Fund Management Co., Ltd., Huiquan Fund Management Co., Ltd., China Universal Asset Management Co., Ltd., China Southern Asset Management Co., Ltd., Pingan Fund Management Co., Ltd., Everbright PGIM Fund Management Co., Ltd., Haihuihuasheng Fund Management Co., Ltd, GF Fund Management Co., Ltd., First State Cinda Fund Management Co., Ltd., BOC International (China) Co., Ltd., Essence Securities Co., Ltd., Aeon Insurance Asset Management Co., Ltd., Orient Securities Company Limited, Haoze Zhiyuan Asset Management Ltd., Evergrande Life Assurance Co., Ltd., Shanghai Haitong Securities Assets Management Co., Ltd., Sino Life Asset Management Co., Ltd., Xizang Yuancheng Investment Management Co., Ltd, Chongqing Derui Hengfeng Asset Management Co., Ltd., and Bingqi Finance Co., Ltd. | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
| April 27, 2023 | Company Conference Room | Online communication | Institutes | Jiantou Investment Co., Ltd. | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
| May 18, 2023 | Company Conference Room | Online communication | Institutes | Aegon-industrial Fund Management Co., Ltd., and GF Securities Co., Ltd. | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
July 26, 2023
| July 26, 2023 | Company Conference Room | Online communication | Institutes | Dacheng Fund Management Co., Ltd., Furong Fund Management Co., Ltd., Baoying Fund Management Co., Ltd., Xinyuan Asset Management Co., Ltd., Pengyang Asset Management Co., Ltd., Guotai Asset Management Co., Ltd., Harvest Fund Management Co., Ltd., Maxwealth Fund Management Co., Ltd., Purekind Fund Management Co.,Ltd, AXA-SPDB Investment Managers Co., Ltd., Icbc Credit Suisse Asset Management Co., Ltd., Huatai-pinebridge Fund Management Co., Ltd., Golden Trust Sinopac Fund Management Co., Ltd., China Life AMP Asset Management Co., Ltd., Essence Fund Management Co., Ltd., CCB Principal Asset Management Co., Ltd., New China Fund Management Co., Ltd., Hongyi Yuanfang Fund Management Co., Ltd., China Universal Asset Management Co., Ltd., Everbright PGIM Fund Management Co., Ltd., Bank of Communications Schroder Fund Management Co., Ltd., Shanghai Qinchen Private Equity Fund Management Partnership (Limited Partnership), Essence Securities Co., Ltd., Orient Securities Company Limited, Duoxin Investment Co., Ltd., Guangxi Huihong Investment Management Co., Ltd, Guangdong Henghua Investment Development Co., Ltd., Shenzhen Qianhai Julong Investment Co., Ltd, Shanghai Far Strategy Investment Management Centre (limited Partnership), Shenzhen Oriental Harbor Investment Management Co., Ltd., Turing Asset Management Co., Ltd., Henan Hong Ming Asset Management Co., Ltd., Anxin Securities Asset Management Co., Ltd., Tibet Knight Asset Management Co., Ltd., Shanghai South Land Asset Management Co.,Ltd, Beijing Hongyi Asset Management Co., Ltd., CITIC Securities Asset Management Limited, Zhuhai Zhengyuan Asset Management Co., Ltd, GreatWall Wealth I.A.M.C., Zhongyin International Asset Management Holding Group Co., Ltd., and CCB Pension Management Co., Ltd. | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
| August 08, 2023 | Company Conference | Field Research | Institutes | Yinhai (HK) Investment Fund Management Co., Ltd., Fortune factorial (Hong Kong) Fund Limited, Capital Securities Corporation Limited, GF Securities Co., Ltd., Guizhou | Introduction of the Company's operation, competitive advantages, | cninfo.com http://www.cninfo.com. |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Room
| Room | Huachuang Securities Broker Co., Ltd., Shanghai Everbright Securities Asset Management Co., Ltd., and Guangdong Hong Kong Macao Greater Bay Area Industry and Finance Asset Management Co., Ltd. | industry development trend and future strategic planning and answering investor questions | cn | |||
| August 17, 2023 | Company Conference Room | Field Research | Institutes | Baoying Fund Management Co., Ltd., Invesco Great Wall Fund Management Co., Ltd., Hainan Shangshanru is a private fund management partnership enterprise (limited partnership), Hengze (Shenzhen) Financial Services Co., Ltd., Shenzhen Jingyuan Tiancheng Investment Consulting Co., Ltd., and Evergrande Life Assurance Co., Ltd. | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
| August 25, 2023 | Company Conference Room | Field Research | Institutes | hanghai Securities Company Limited, Guorong Securities Co., Ltd., Shenzhen Qianhai Deyun Asset Management Co., Ltd, Shenzhen Jinpengcheng Capital Management Co., Ltd, and Zhuhai Zhongshi Boya Management Consulting Partnership Enterprise (Limited Partnership) | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
| August 30, 2023 | Company Conference Room | Field Research | Institutes | CITIC Securities Co., Ltd. | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
| September 19, 2023 | Company Conference Room | Online communication | Individuals | Investor Online Question | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
November 24,2023
| November 24, 2023 | Company Conference Room | Field Research | Institutes | First State Cinda Fund Management Co., Ltd., Founder Securities Co., Ltd., Tianfeng Securities Co., Ltd., Essence Securities Co., Ltd., Minsheng Securities Co., Ltd., Suzhou Gewai Investment Management Co., Ltd., Mengsen (Shanghai) Investment Management Co, Ltd., Shanghai Valoran Investment Management Co., Ltd., Shanghai Yili Assets Management CO., Ltd, and Suzhou Clivia Capital Manage Co., Ltd. | Introduction of the Company's operation, competitive advantages, industry development trend and future strategic planning and answering investor questions | cninfo.com http://www.cninfo.com.cn |
XIII Implementation of the “Quality and Earnings Dual Improvement” Action Plan
Indicate whether the Company has disclosed the “Quality and Earnings Dual Improvement” Action Plan.
□ Yes √ No
Part IV Corporate Governance
I General Information of Corporate GovernanceDuring the Reporting Period, the Company strictly abided by laws and regulations and rules and normative documents ofregulatory authorities, including the Company Law, the Securities Law, the Code of Corporate Governance for Listed Companies,the Rules for Stock Listing of Shenzhen Stock Exchange and the Shenzhen Stock Exchange Guideline No. 1 for the Self-regulationof Listed Companies - Standardized Operation of Listed Companies on the Main Board, continued to improve the Company'scorporate governance structure, refine internal management and control policies, and further strengthen the Company's capability ofgovernance.(I) Shareholders and general meetingDuring the Reporting Period, the Company convened and held general meetings in a standard manner in strict accordance withlaws and regulations. The convening and holding procedures of general meetings, the qualifications of attendants to the meetings andthe voting procedures of the meetings met the provisions of the Company Law, Rules for the Shareholders' Meetings of ListedCompanies, Articles of Associations and Rules of Procedure for General Meeting. Lawyers were engaged to witness the generalmeetings of shareholders and issued legal opinions on their legitimacy to ensure fair treatment toward and fully execution of rights ofall shareholders, especially minority shareholders.(II) The Company and controlling shareholdersDuring the Reporting Period, the Company properly handled the relationship between it and the controlling shareholders inaccordance with the Company Law, Securities Law, Articles of Association and relevant provisions of the securities regulatoryauthority. The controlling shareholders of the Company acted in a normative manner, could exercise their rights and assume theirobligations according to law, did not directly or indirectly interfere with the decision-making and business activities of the Companybeyond the general meeting of shareholders. The Company was independent of the controlling shareholders in terms of business,staffing, assets, organization and finance, and had an independent and complete business system and capability to operateindependently. The Board of Directors, Supervisory Committee and internal organs of the Company operated independently.
(III) Directors and the Board of DirectorsDuring the Reporting Period, directors of the Company were elected in strict accordance with the director election procedurespecified in the Articles of Association. The Board of Directors of the Company was composed of seven directors, including threeindependent directors, and the number of members and composition of it met legal and regulatory requirements. During theReporting Period, all directors of the Company actively and strictly complied with the Company Law, Articles of Association andRules of Procedure for the Board of Directors, earnestly attended meetings of the Board of Directors and general meetings ofshareholders, and took an active part in relevant training to improve their business skill, and were diligent and responsible. Theconvening, holding and voting procedure and daily operation of the meetings of the Board of Directors of the Company compliedwith relevant regulations.
(IV) Supervisors and the Supervisory CommitteeDuring the Reporting Period, supervisors of the Company were elected in strict accordance with the supervisor electionprocedure specified in the Articles of Association. The Supervisory Committee of the Company was composed of three supervisors,
including one supervising employee representative, and the number of members and composition of it met legal and regulatoryrequirements. The supervisors conscientiously performed their duties and, in line with the attitude of being responsible toshareholders, supervised the financial affairs of the Company as well as the legality and compliance of the performance of duties bydirectors and senior managers of the Company, and safeguarded the legitimate rights and interests of the Company and shareholders.The convening, holding and voting procedures of the meetings of the Supervisory Committee of the Company complied with theCompany Law, Articles of Association and Rules of Procedure for the Supervisory Committee.(V) Independent directors and special committees of the Board of DirectorsDuring the Reporting Period, independent directors of the Company honestly, diligently and independently performed theirduties in accordance with the Company Law and regulations, normative documents and implementation rules of other departments,actively attended relevant meetings, earnestly deliberated the proposals of the Board of Directors, gave independent advice about themajor issues of the Company, effectively protected the interests of the Company and shareholders, especially small and mediumshareholders, and well played their role to supervise as independent directors. In addition, the Company has revised the Work Rulesfor Independent Directors in accordance with the Administrative Measures for Independent Directors of Listed Companies issued bythe CSRC to ensure that the Company's internal systems are legally compliant. Special committees of the Board of Directors of theCompany also performed their duties in a standard manner according to their respective implementation rules.(VI) Information disclosure and transparencyDuring the Reporting Period, the Company performed its obligation of information disclosure in strict accordance with laws andregulations and the Management Measures for Information Disclosure, and disclosed information in a true, accurate, complete andtimely manner and made no false records, misleading statements or major omissions, by which it ensured that all investors andstakeholders had equal opportunities to obtain the Company's information, increased the Company's information transparency, andeffectively played its role in protecting the right to know of small and medium investors.
Were there any significant differences between the actual situation of the corporate governance and the applicable laws andregulations, as well as rules published by China Securities Regulatory Commission on the governance of listed companies?
□ Yes √ No
There were not significant differences between the actual situation of the corporate governance and the applicable laws andregulations, as well as rules published by China Securities Regulatory Commission on the governance of listed companies.II The Independence of the Company from Controlling Shareholders and Actual Controlleron Assets, Personnel, Finance, Structure, and BusinessSince establishment, the Company has been operating in strict accordance with the Company Law, Securities Law and Articlesof Association, and has established and improved its corporate governance structure. The Company is completely independent of itscontrolling shareholders and actual controller in terms of business, staffing, assets, organization and finance, and has an independentand complete business system and capability to operate independently in the market. All production operations and major issues ofthe Company were discussed and determined by the Management, the Board of Directors and the general meetings of shareholders inaccordance with the Articles of Association and relevant policies, and none of them was controlled by any controlling shareholder orthe actual controller.
1. Asset independence
The Company was founded on the overall change of a limited liability company. All its assets and personnel before the share
restructuring joined the joint stock company. The Company has independent and complete operating assets. After the overall change,the Company owns all the production and operational assets needed for production and operation, and there is no dispute overproperty rights. The Company owns production systems, auxiliary production systems and supporting facilities related to itsproduction and operation, and has independent raw material procurement and product selling systems. Assets of the Company arestrictly separated from those of shareholders and the actual controller, and no assets of the Company are being occupied byshareholders or the actual controller.
2. Personnel independence
The Company has completely independent labour, personnel and salary management systems and independent staff teams, andhas signed labour contracts with its employees in accordance with the Labour Law and the Company's policies on labourmanagement. Directors, supervisors and senior managers of the Company were elected in strict accordance with the Company Lawand Articles of Association, and senior managers, including general managers, deputy general managers, financial directors, andsecretaries to the Board of Directors are working full time in the Company and getting paid by the Company. Mr Tang Zhuolin, theactual controller of the Company, is serving as the Chairman of the Board of Directors, and has been legally exercising its functionsand powers according to the Company Law and Articles of Association in engaging in the Company's management.
3. Finance independence
The Company has an independent financial department and full-time financial personnel, and has established an independentand fine financial accounting system and standardized financial policies. It has implemented an effective financial supervision andmanagement system and an internal control system, and it is capable of making independent financial decisions, carrying outindependent accounting and assuming sole responsibility for its profits and losses according to the Articles of Association and itsown situation. The Company has an independent bank account and is not sharing any account of controlling shareholders or theactual controller and, as an independent taxpayer, declares taxes and fulfils tax payment obligations independently according to law,and has never paid taxes together with shareholders' companies.
4. Organization independence
The Company, in accordance with the Company Law and Articles of Association, has set up the General Meeting ofShareholders as the highest authority, the Board of Directors as the decision-making body, and the Supervisory Committee as thesupervisory body, and has a complete corporate governance structure. The Company has a complete internal management system andcorresponding offices and operating departments. The functional departments work according to respective duties and cooperate witheach other, making the Company an organic and independent operating entity free from the intervention of controlling shareholdersand the actual controller.
5. Business independence
The Company has its business independent of controlling shareholders, has independent and complete supply, production andsales systems, and is capable of independent decision-making on business policies and business plans, independent allocation and useof personnel, money and materials, and successful organization and implementation of production and business activities. TheCompany is completely independent in business and is not relying on the first majority shareholder and the actual controller. Thecontrolling shareholders are not conducting business of horizontal competition with that of the Company, and have undertaken not toconduct any business that may be of horizontal competition with that of the Company.III Horizontal Competition
□ Applicable √ Not applicable
IV 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% | 2023-01-30 | 2023-01-31 | 1. The Proposal on the Plan for Repurchase of Some Public Shares was approved item by item. 1.01 Objective and background of the share repurchase 1.02 The Company's eligibility for share repurchase 1.03 Method of the share repurchase 1.04 Price range of shares to be repurchased 1.05 Total amount and source of the funds to be used for the repurchase 1.06 Number and percentage to the total capital of shares to be repurchased 1.07 Purpose of the share repurchase 1.08 Time limit of the share repurchase 1.09 The valid period of the resolution on the share repurchase 2. The Proposal on Request for General Meeting’s Authorization to the Board to Handle Matters Regarding the Share Repurchase was approved. |
| The Second Extraordinary General Meeting of 2023 | Extraordinary General Meeting | 33.4246% | 2023-03-06 | 2023-03-07 | 1. The Proposal on Repurchase and Retirement of Some Restricted Shares was approved. 2. The Proposal on Change of the Company's Registered Capital and Amendments to the Company's Articles of Association was approved. |
| The 2022 Annual General Meeting | Annual General Meeting | 36.1623% | 2023-04-17 | 2023-04-18 | 1. The Proposal on the 2022 Work Report of the Board of Directors (including the 2022 Work Report of Independent Directors) was approved. 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 Intention to Appoint 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 2023 Estimated Quota of
Futures and Derivatives Transactions wasapproved.
| approved. 10. The Proposal on 2023 Estimated Quota of Futures and Derivatives Transactions was approved. | |||||
| The Third Extraordinary General Meeting of 2023 | Extraordinary General Meeting | 33.9262% | 2023-06-30 | 2023-07-01 | 1. The Proposal on Repurchase and Retirement of Some Restricted Shares was approved. 2. The Proposal on Change of the Company's Registered Capital and Amendments to the Company's Articles of Association was approved. |
| The Fourth Extraordinary General Meeting of 2023 | Extraordinary General Meeting | 34.8597% | 2023-09-05 | 2023-09-06 | 1. The Proposal on Repurchase and Retirement of Some Restricted Shares was approved. 2. The Proposal on Change of the Company's Registered Capital and Amendments to the Company's Articles of Association was approved. |
| The Fifth Extraordinary General Meeting of 2023 | Extraordinary General Meeting | 34.7310% | 2023-11-15 | 2023-11-16 | 1. The Proposal on Election of Non-independent Directors for the Fifth Board of Directors was approved by cumulative voting. 1.01. Candidate: Mr. Tang Zhuolin was elected as a non-independent director for the fifth Board of Directors. 1.02. Candidate: Ms. Qiu Yezhi was elected as a non-independent director for the fifth Board of Directors. 1.03. Candidate: Mr. Xie Weiwei was elected as a non-independent director for the fifth Board of Directors. 1.04. Candidate: Ms. Feng Jia was elected as a non-independent director for the fifth Board of Directors. 2. The Proposal on Election of Independent Directors for the Fifth Board of Directors was approved by cumulative voting. 2.01. Candidate: Mr. Li Ketian was elected as an independent director for the fifth Board of Directors. 2.02. Candidate: Mr. Liu Da was elected as an independent director for the fifth Board of Directors. 2.03. Candidate: Mr. Tu Haichuan was elected as an independent director for the fifth Board of Directors. 3. The Proposal on Election of Non-employee Supervisor for the Fifth Supervisory Committee was approved by cumulative voting. 3.01. Candidate: Ms. Chen Huiyi was elected as a non-employee supervisor for the fifth Supervisory Committee. 3.02. Candidate: Mr. He Baohua was elected as a non-employee supervisor for the fifth Supervisory Committee. 4. The Proposal on Allowance for Independent Directors of the Fifth Board of Directors was |
approved.
| 5. The Proposal on Allowance for Supervisors of the Fifth Supervisory Committee was approved. 6. The Proposal on Amendments to the Company's Articles of Association was approved. 7. The Proposal on Amendments to the Work Rules for Independent Directors was approved. |
2. Extraordinary General Meetings Convened at the Request of Preference Shareholders with ResumedVoting Rights
□ Applicable √ Not applicable
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
V Directors, Supervisors and Senior Management
1. General Information
| Name | Gender | Age | Office title | Incumbent/Former | Start of tenure | End of tenure | Opening shareholding (share) | Increase in the period (share) | Decrease in the period (share) | Other increase/decrease (share) | Closing shareholding (share) | Reason for share change |
| Tang Zhuolin | Male | 61 | Chairman of the Board | Incumbent | 22 July 2010 | 15 November 2026 | 270,737,568 | 270,737,568 | ||||
| Qiu Yezhi | Female | 52 | Director and General Manager | Incumbent | 22 July 2010 | 15 November 2026 | 23,382,388 | 23,382,388 | ||||
| Xie Weiwei | Male | 50 | Director and Deputy General Manager | Incumbent | 16 June 2016 | 15 November 2026 | 1,000,000 | 248,000 | 752,000 | reduce holdings | ||
| Feng Jia | Female | 38 | Director, Board Secretary and Vice President | Incumbent | 12 August 2022 | 15 November 2026 | 700,000 | 700,000 | ||||
| Shao Yongfeng | Male | 49 | Chief Financial Officer and Vice President | Incumbent | 29 December 2020 | 15 November 2026 | 800,000 | 800,000 | ||||
| Li Ketian | Male | 67 | Independent Director | Incumbent | 12 August 2022 | 15 November 2026 | ||||||
| Liu Da | Male | 49 | Independent Director | Incumbent | 12 August 2022 | 15 November 2026 | ||||||
| Tu Haichuan | Male | 44 | Independent Director | Incumbent | 12 August 2022 | 15 November 2026 | ||||||
| Chen Huiyi | Female | 39 | Chairman of the Supervisory | Incumbent | 19 May 2017 | 15 November 2026 | 480 | 480 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Committee
| Committee | ||||||||||||
| Zhao Xiuhe | Male | 53 | Employee Supervisor | Incumbent | 16 June 2016 | 15 November 2026 | ||||||
| He Baohua | Male | 42 | Supervisor | Incumbent | 22 September 2020 | 15 November 2026 | 614,088 | 614,088 | ||||
| Total | -- | -- | -- | -- | -- | -- | 297,234,524 | 0 | 248,000 | 0 | 296,986,524 | -- |
Indicate whether any director, supervisor or senior management resigned or was dismissed before the end of their tenure during theReporting Period.
□ Yes √ No
Changes of directors, supervisors and senior management:
□ Applicable √ Not applicable
2. Biographical Information
Professional backgrounds, major work experience and current posts in the Company of the incumbent directors, supervisors andsenior management:
1. Members of the Board of Directors
Mr. Tang Zhuolin, Chinese, has no right of permanent residence abroad. He is a member of the 12
thPeople's Political ConsultativeConference of Nanhai District, Foshan City, Guangdong Province, Managing Director of the 9th Council of China PackagingFederation, Managing Director of Guangdong Food and Packaging Machinery Association, Vice President of Foshan MachineryEquipment Industry Association, Honorary President of Foshan Nanhai District Machinery Equipment Trade Association, VicePresident of Foshan High-tech Zone Chamber of Commerce, and Vice President of Foshan Nanhai District Listed CompanyAssociation. He once was Head of Nanhai Guichengdong Plastic and Textile Factory No. 2, Head of Nanhai Guichengdong PrintingMachinery Factory No. 2, and Supervisor of Shenzhen Zhiquan Venture Capital Co., Ltd. He used to serve as Dongfang Precision'sGeneral Manager and Chief Engineer since 1996, and is currently Chairman of the Board of Dongfang Precision, Director of DongFang Precision (HK) Limited, Director of Guangdong Fosber Intelligent Equipment Co., Ltd., Director of Suzhou Parsun PowerMachine Co., Ltd., Executive Director and General Manager of Suzhou Shunyi Investment Co., Ltd., Executive Director and GeneralManager of Hainan Yineng Investment Co., Ltd., Supervisor of Dongfang Digicom Technology Co., Ltd., Supervisor of DongfangDigicom Technology (Guangdong) Co., Ltd., Executive Director and Manager of Dongfang Yineng International Holding Co., Ltd.,Chairman of the Board of Shenzhen Wonder Digital Technology Co., Ltd., Chairman of the Board of Fosber S.p.A., Director of EDFEurope S.r.l., Director of Fosber America, Inc., Director of Tiru?a S.L.U., Director of QuantumCorrugated S.r.l., Executive Directorand General Manager of Shenzhen Xianglin Venture Capital Co., Ltd., Supervisor of Shenzhen Shenghui Venture Capital Co., Ltd.,and Supervisor of Foshan Hengbao Taisheng Trade Co., Ltd.Ms. Qiu Yezhi, Chinese, has no right of permanent residence abroad, MBA, National Model Worker, Member of the 12
thPeople'sPolitical Consultative Conference of Foshan City, Guangdong Province, and Deputy to the 17
thPeople’s Congress of Nanhai District,Foshan City, Guangdong Province. She served successively as Dongfang Precision's Director of the General Manager's Office,General Manager of Operations and General Manager since 1996, and as Dongfang Precision's General Manager and BoardSecretary from July 2010 to October 2013. She served as the General Manager and Director of Tiru?a (Guangdong) IntelligentEquipment Manufacturing Co., Ltd. from May 2017 to September 2020. And from July 2020 to January 2023, she was successivelySupervisor, Executive Director and Manager of Foshan Jingmu Trading Co., Ltd. Currently, she is Dongfang Precision's Director andGeneral Manager, Chairman of the Board of Guangdong Fosber Intelligent Equipment Co., Ltd., Director of Suzhou Parsun PowerMachine Co., Ltd., Executive Director and General Manager of Dongfang Digicom Technology Co., Ltd., Executive Director ofDongfang Digicom Technology (Guangdong) Co., Ltd., Supervisor of Hainan Yineng Investment Co., Ltd., Supervisor of DongfangYineng International Holding Co., Ltd., Vice Chairman of the Board of Fosber S.p.A., Director of Fosber America, Inc., Director ofTiru?a S.L.U., Director of EDF Europe S.r.l., Director of Tiru?a America inc., Director of Dong Fang Precision (Netherland)Cooperatief U.A., Executive Director and General Manager of Shenzhen Shenghui Venture Capital Co., Ltd., and Supervisor ofShenzhen Xianglin Venture Capital Co., Ltd.
Mr. Xie Weiwei, Chinese, has no right of permanent residence abroad, MBA, Member of the 14
thPeople's Political ConsultativeConference of Nanhai District, Foshan City, Guangdong Province, graduated from Huazhong University of Science and Technologyin 2008. Once served as the Standing Deputy General Manager of Foshan Multimodal Transport Corp., Chairman of the Board ofFoshan Donghuochang Railway Logistics Co., Ltd., Deputy Chief of the Reform and Development Division of Foshan SASAC, andDeputy Head of the Investment Department and Head of the Asset Management Department of Foshan Financial InvestmentHoldings Co., Ltd. Currently the Company's Director and Deputy General Manager, and Director of the joint-stock companyGuangdong Jaten Robot & Automation Co., Ltd.Ms. Feng Jia, Chinese, has no right of permanent residence abroad. She is Doctor of Engineering of Zhejiang University,Postdoctoral Fellow of Guangzhou Institute of Energy Conversion of Chinese Academy of Sciences, and Intermediate Engineer. Sheused to work as Associate Researcher at Guangzhou Institute of Energy Conversion of Chinese Academy of Sciences from 2014 to2018, Senior Manager in the Research and Development Department of China Securities Co., Ltd. from 2018 to 2019, and Assistantto President & Board Secretary of Tianjin LVYIN Landscape and Ecology Construction Co., Ltd. from 2019 to 2021. Joining theCompany in September 2021, she is now Director, Vice President and Board Secretary of the Company. Currently the supervisor ofShenzhen Wonder Digital Technology Co. from December 2023 to present.Mr. Li Ketian, Chinese, has no right of permanent residence abroad. Graduated from South China University of Technology with adoctoral degree and a professional title of professor of mechanical engineering. Once served as a worker, technician and engineer atthe Wuhan Camera Factory from 1974 to 1989 and as a lecturer, associate professor and professor at Guangdong University ofTechnology from 1992 to 2020. Currently the Independent Director of Dongfang Precision.Mr. Liu Da, Chinese, has no right of permanent residence abroad. Graduated from University of International Business andEconomics with bachelor of economics. A certified public accountant. Once served as the Senior Audit Manager ofPricewaterhouseCoopers from 1998 to 2009, Chief Internal Auditor of Prudential Life Insurance Co., Ltd. from 2009 to 2010.Currently the Director and General Manager of Guangzhou Kaihua Investment Consulting Co., Ltd. In the last five years, he has beenthe Independent Director of Zensun Enterprises Limited (Stock Code: HK00185) and the Independent Director of KimouEnvironmental Holding Limited (Stock Code: HK06805), both are sted companies on the main board of the Hong Kong StockExchange. He has also been the Supervisor of Guangzhou Longyi Kaihua Enterprise Management Consulting Co., Ltd, Supervisor ofOne Tutor Education Consulting (Guangzhou) Co., Ltd., and Independent Director of Dongfang Precision.Mr. Tu Haichuan, Chinese, has no right of permanent residence abroad. Graduated from Shanghai University of Finance andEconomics. Bachelor degree. A certified public accountant. Once served as the Audit Manager of Guangdong Dahua Delv CertifiedPublic Accountants from 2004 to 2009, Investment Director of Guangxi Saifu Investment Co., Ltd. in 2010, Financial Manager,Chief Financial Officer and Assistant to the Chairman of Guangdong Dongfang Precision Science & Technology Co., Ltd. fromDecember 2010 to September 2016. Currently the Executive Director and General Manager of Shenzhen Changhe CapitalManagement Co., Ltd. In the last five years, he has been the Director of Guangzhou Shoulian Environment Group Co., Ltd. andShenzhen Aiwen Culture Development Co., Ltd., and Independent Director of Dongfang Precision.
2. Members of the Supervisory Committee
Ms. Chen Huiyi, Chinese, with a university degree, has no right of permanent residence abroad. Once served as the assistant of theQuality Control Department of Dongfang Plastic Products Co., Ltd. from September 2008 to December 2009, currently the Chairmanof the Supervisory Committee and Secretary to General Manager of Dongfang Precision, as well as Supervisor of the subsidiarySuzhou Parsun Power Machine Co., Ltd.Mr. He Baohua, Chinese, with a university degree, has no right of permanent residence abroad. Joined Guangdong DongfangPrecision Science & Technology Co., Ltd. in 2002, engaged in after-sales management and project management, currently the
Company's supervisor and Senior Project Manager of the Project Management Department.Mr. Zhao Xiuhe, Chinese, with a technical secondary school degree, has no right of permanent residence abroad. Joined DongfangPrecision in February 2006, currently the Company's Director of the Administration Department. Served as the Company's EmployeeSupervisor since June 2016.
3. Senior management
Ms. Qiu Yezhi, currently the Company's General Manager. Her resume is detailed in "1. Members of the Board of Directors".Mr. Xie Weiwei, currently the Company's Deputy General Manager. His resume is detailed in "1. Members of the Board ofDirectors".Ms. Feng Jia, currently the Company’s Board Secretary and Vice President. Her resume is detailed in "1. Members of the Board ofDirectors".Mr. Shao Yongfeng, Chinese, has no right of permanent residence abroad. Graduated with a bachelor's degree from ZhongnanUniversity of Economics and Law, a PRC certified public accountant and PRC certified public assets estimator. Served as FinancialManager and Financial Director of TCL Multimedia Technology Holdings Limited from 2001 to 2010, joined Haier Europe in 2015and served successively as the company's Financial Director and CFO of Europe, joined Shenzhen Smoore Technology Limited andserved as Financial Director from 2016 to 2017, served as Vice President Finance in Shenzhen CIMC Tianda from 2017 to 2020, andjoined Guangdong Dongfang Precision Science & Technology Co., Ltd. in April 2020 and currently the Company's Chief FinancialOfficer and Vice President.Offices held concurrently in shareholding entities:
□ Applicable √ Not applicable
Offices held concurrently in other entities:
√ Applicable □ Not applicable
| Name | Other entity | Office held in the entity | Start of tenure | End of tenure | Remuneration or allowance from the entity or not |
| Tang Zhuolin | Dongfang Precision (HK) | Director | 5 February 2013 | No | |
| Tang Zhuolin | Fosber Italy | Chairman of the Board | 19 May 2023 | Yes | |
| Tang Zhuolin | Dongfang Precision (Europe) | Director | 15 June 2016 | Yes | |
| Tang Zhuolin | Fosber Asia | Director | 30 September 2014 | Yes | |
| Tang Zhuolin | Parsun Power | Director | 24 May 2015 | No | |
| Tang Zhuolin | Shunyi Investment | Executive Director and General Manager | 2 July 2015 | No | |
| Tang Zhuolin | Yineng Investment | Executive Director and General Manager | 10 October 2020 | Yes | |
| Tang Zhuolin | Dongfang Digicom | Supervisor | 26 October 2020 | Yes | |
| Tang Zhuolin | Dongfang Digicom | Supervisor | 26 February 2021 | No |
(Guangdong)
| (Guangdong) | |||||
| Tang Zhuolin | Wonder Digital | Chairman of the Board | 7 June 2022 | Yes | |
| Tang Zhuolin | Dongfang Yineng International Holding Co., Ltd. | Executive Director and Manager | 15 February 2022 | No | |
| Tang Zhuolin | Shenzhen Xianglin Venture Capital Co., Ltd. | Executive Director and General Manager | 26 May 2016 | No | |
| Tang Zhuolin | Shenzhen Shenghui Venture Capital Co., Ltd. | Supervisor | 16 May 2016 | No | |
| Tang Zhuolin | Fosber America | Director | 26 July 2022 | Yes | |
| Tang Zhuolin | Tiru?a S.L.U. | Director | 3 August 2022 | Yes | |
| Tang Zhuolin | QCorr | Director | 22 May 2023 | No | |
| Tang Zhuolin | Foshan Hengbao Taisheng Trade Co., Ltd. | Supervisor | 6 September 2023 | No | |
| Qiu Yezhi | Fosber Italy | Vice Chairman of the Board | 26 March 2014 | Yes | |
| Qiu Yezhi | Fosber America | Director | 26 July 2022 | Yes | |
| Qiu Yezhi | Tiru?a America | Director | 26 July 2022 | Yes | |
| Qiu Yezhi | Tiru?a S.L.U. | Director | 30 May 2019 | Yes | |
| Qiu Yezhi | Fosber Asia | Chairman of the Board | 15 July 2020 | Yes | |
| Qiu Yezhi | Dongfang Precision (Europe) | Director | 15 June 2016 | Yes | |
| Qiu Yezhi | Parsun Power | Director | 24 May 2015 | No | |
| Qiu Yezhi | Yineng Investment | Supervisor | 10 October 2020 | No | |
| Qiu Yezhi | Dongfang Digicom | Executive Director and General Manager | 26 October 2020 | No | |
| Qiu Yezhi | Dongfang Digicom (Guangdong) | Executive Director | 26 February 2021 | No | |
| Qiu Yezhi | Dongfang Yineng International Holding Co., Ltd. | Supervisor | 15 February 2022 | No | |
| Qiu Yezhi | Shenzhen Xianglin Venture Capital Co., Ltd. | Supervisor | 26 May 2016 | No | |
| Qiu Yezhi | Shenzhen Shenghui | Executive Director | 18 May 2015 | No |
Venture Capital Co.,Ltd.
| Venture Capital Co., Ltd. | and General Manager | ||||
| Qiu Yezhi | Dongfang Precision (Netherland) | Director | 8 November 2023 | Yes | |
| Xie Weiwei | Shunyi Investment | Supervisor | 2 July 2015 | No | |
| Xie Weiwei | Jaten Robot | Director | 23 March 2016 | Yes | |
| Xie Weiwei | Foshan Nanhai District Machinery Equipment Trade Association | Branch Secretary | 23 November 2020 | Yes | |
| Xie Weiwei | Huanong Property and Casualty Insurance Co., Ltd. | External supervisor | 23 December 2023 | Yes | |
| Feng Jia | Wonder Digital | supervisor | 21 December 2023 | Yes | |
| Liu Da | Guangzhou Kaihua Investment Consulting Co., Ltd. | Director and General Manager | April 2010 | Yes | |
| Liu Da | Zensun Enterprises Limited | Independent Director | 27 July 2015 | Yes | |
| Liu Da | Kimou Environmental Holding Limited | Independent Director | 1 March 2023 | Yes | |
| Tu Haichuan | Shenzhen Longriver Capital Management Co., Ltd. | Executive Director | October 2016 | Yes | |
| Tu Haichuan | Shenzhen Ivan Culture Development Co., Ltd. | Director | March 2018 | No | |
| Shao Yongfeng | Dongfang Digicom | Chief Financial Officer | 1 January 2021 | Yes | |
| Shao Yongfeng | Yineng Investment | Chief Financial Officer | 1 January 2021 | Yes | |
| Chen Huiyi | Parsun Power | Supervisor | 10 October 2022 | No | |
| He Baohua | Shenzhen Zhiquan Venture Capital Co., Ltd. | Supervisor | 10 August 2021 | No | |
| He Baohua | Foshan Hengbao Taisheng Trade Co., Ltd. | Executive Director, General Manager, Head of Finance | 6 September 2023 | Yes | |
| Note | Not applicable | ||||
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and seniormanagement as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
Following the approval of the Remuneration and Appraisal Committee, the remunerations for directors, supervisors and seniormanagement are submitted to the Board of Directors and the Supervisory Committee for further approval. The remunerations ofdirectors and supervisors are subject to final approval by the general meeting, and those of senior management are subject to theBoard of Directors. The decision-making procedures are in compliance with the Company Law, the Company’s Articles ofAssociation, and the Company’s Specific Implementation Rules for the Remuneration and Appraisal Committee under the Board ofDirectors. In the Reporting Period, the actual payments of remuneration for directors, supervisors and senior management wereconsistent with the resolutions of the general meeting and the Board of Directors.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
| Name | Gender | Age | Office title | Incumbent/Former | Total before-tax remuneration from the Company | Remuneration from any related party or not |
| Tang Zhuolin | Male | 61 | Chairman of the Board | Incumbent | 425.77 | Yes |
| Qiu Yezhi | Female | 52 | Director and General Manager | Incumbent | 417.44 | Yes |
| Xie Weiwei | Male | 50 | Director and Deputy General Manager | Incumbent | 86.83 | Yes |
| Feng Jia | Female | 38 | Director, Board Secretary and Vice President | Incumbent | 86.85 | No |
| Shao Yongfeng | Male | 49 | Chief Financial Officer and Vice President | Incumbent | 142.49 | No |
| Li Ketian | Male | 67 | Independent Director | Incumbent | 20.00 | No |
| Liu Da | Male | 49 | Independent Director | Incumbent | 20.00 | No |
| Tu Haichuan | Male | 44 | Independent Director | Incumbent | 20.00 | No |
| Chen Huiyi | Female | 39 | Chairman of the Supervisory Committee | Incumbent | 27.64 | No |
| Zhao Xiuhe | Male | 53 | Employee Supervisor | Incumbent | 24.62 | No |
He Baohua
| He Baohua | Male | 42 | Supervisor | Incumbent | 44.14 | Yes |
| Total | -- | -- | -- | -- | 1,315.78 | -- |
VI Performance of Duty by Directors in the Reporting Period
1. Board Meetings Convened during the Reporting Period
| Meeting | Date of the meeting | Disclosure date | Resolution |
| The 22nd (Extraordinary) Meeting of the 4th Board of Directors | 2023-01-06 | 2023-01-07 | 1. The Proposal on the Plan for Repurchase of Some Public Shares was approved item by item. 1.01 Objective and background of the share repurchase 1.02 The Company's eligibility for share repurchase 1.03 Method of the share repurchase 1.04 Price range of shares to be repurchased 1.05 Total amount and source of the funds to be used for the repurchase 1.06 Number and percentage to the total capital of shares to be repurchased 1.07 Purpose of the share repurchase 1.08 Time limit of the share repurchase 1.09 The valid period of the resolution on the share repurchase 2. The Proposal on Request for General Meeting’s Authorization to the Board to Handle Matters Regarding the Share Repurchase was approved. 3. The Proposal on the Convening of the 1st Extraordinary General Meeting for 2023 was approved. |
| The 23rd (Extraordinary) Meeting of the 4th Board of Directors | 2023-02-17 | 2023-02-18 | 1. The Proposal on the Satisfaction of the Unlocking Conditions for the Second Unlocking Period for the Reserved Restricted Shares under the 2020 Restricted Share Incentive Plan was approved. 2. The Proposal on Repurchase and Retirement of Some Restricted Shares was approved. 3. The Proposal on Change of the Company's Registered Capital and Amendments to the Company's Articles of Association was approved. 4. The Proposal on the Convening of the 2nd Extraordinary General Meeting for 2023 was approved. |
| The 24th Meeting of the 4th Board of Directors | 2023-03-24 | 2023-03-28 | 1. The Proposal on the 2022 Work Report of the Board of Directors (including the 2022 Work Report of Independent Directors) was approved. 2. The Proposal on the 2022 Work Report of the General Manager 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 Summary Report of the Audit
Committee of the Board of Directors on the 2022 AuditService Provided by Ernst & Young Hua Ming LLP (SpecialGeneral Partnership) and the Renewal of Ernst & Young asthe Company's 2023 Audit Institution was approved.
9. The Proposal on the Use of Own Funds for Entrusted
Wealth Management in 2023 was approved.
10. The Proposal on the Use of Own Funds for Investment
Securities in 2023 was approved.
11. The Proposal on the Application for Comprehensive
Credit Line from Banks in 2023 was approved.
12. The Proposal on 2023 Estimated Quota of Futures and
Derivatives Transactions was approved.
13. The Proposal on the 2023~2027 Five Year Strategic Plan
was approved.
14. The Proposal on Re-election of Members for the Special
Committees under the Fourth Board of Directors wasapproved.
15. The Proposal on the Convening of the 2022 Annual
General Meeting was approved.
| 7. The Proposal on the 2022 Internal Control Assessment Report was approved. 8. The Proposal on the Summary Report of the Audit Committee of the Board of Directors on the 2022 Audit Service Provided by Ernst & Young Hua Ming LLP (Special General Partnership) and the Renewal of Ernst & Young as the Company's 2023 Audit Institution was approved. 9. The Proposal on the Use of Own Funds for Entrusted Wealth Management in 2023 was approved. 10. The Proposal on the Use of Own Funds for Investment Securities in 2023 was approved. 11. The Proposal on the Application for Comprehensive Credit Line from Banks in 2023 was approved. 12. The Proposal on 2023 Estimated Quota of Futures and Derivatives Transactions was approved. 13. The Proposal on the 2023~2027 Five Year Strategic Plan was approved. 14. The Proposal on Re-election of Members for the Special Committees under the Fourth Board of Directors was approved. 15. The Proposal on the Convening of the 2022 Annual General Meeting was approved. | |||
| The 25th (Extraordinary) Meeting of the 4th Board of Directors | 2023-04-21 | 2023-04-22 | 1. The Proposal on the 2023 First Quarter Report was approved. 2. The Proposal on the Satisfaction of the Unlocking Conditions for the First Unlocking Period for the First Grant under the 2022 Restricted Share Incentive Plan was approved (the related director, Feng Jia, avoided voting). |
| The 26th (Extraordinary) Meeting of the 4th Board of Directors | 2023-06-13 | 2023-06-14 | 1. The Proposal on the Provision of Guarantee for Overseas Wholly-owned Subsidiary was approved. 2. The Proposal on the Satisfaction of the Unlocking Conditions for the Third Unlocking Period for the First Grant under the 2020 Restricted Share Incentive Plan was approved (the related directors, Qiu Yezhi and Xie Weiwei, avoided voting). 3. The Proposal on Repurchase and Retirement of Some Restricted Shares was approved. 4. The Proposal on Change of the Company's Registered Capital and Amendments to the Company's Articles of Association was approved. 5. The Proposal on the Convening of the 3rd Extraordinary General Meeting for 2023 was approved. |
| The 27th Meeting of the 4th Board of Directors | 2023-07-24 | 2023-07-26 | 1. The Proposal on the 2023 Semi-Annual Report and Its Summary was approved. |
| The 28th (Extraordinary) Meeting of the 4th Board of Directors | 2023-08-18 | 2023-08-19 | 3. The Proposal on Repurchase and Retirement of Some Restricted Shares was approved. 4. The Proposal on Change of the Company's Registered Capital and Amendments to the Company's Articles of Association was approved. 5. The Proposal on the Convening of the 4th Extraordinary General Meeting for 2023 was approved. |
| The 29th | 2023-10-23 | 2023-10-24 | 1. The Proposal on the 2023 Third Quarter Report was |
(Extraordinary)Meeting of the 4
th
Board of Directors
| (Extraordinary) Meeting of the 4th Board of Directors | approved. 2. The Proposal on Re-election of the Board of Directors and Nomination of Non-independent Director Candidates for the 5th Board of Directors was approved. 3. The Proposal on Re-election of the Board of Directors and Nomination of Independent Director Candidates for the 5th Board of Directors was approved. 4. The Proposal on Allowance for the Independent Directors of the 5th Board of Directors was approved (the related directors, Li Ketian, Liu Da, and Tu Haichuan, avoided voting). 5. The Proposal on Amendments to the Company's Articles of Association was approved. 6. The Proposal on Amendments to the Work Rules for Independent Directors was approved. 7. The Proposal on the Convening of the 5th Extraordinary General Meeting for 2023 was approved. | ||
| The 1st (Extraordinary) Meeting of the 5th Board of Directors | 2023-11-15 | 2023-11-16 | 1. The Proposal on Election of Chairman for the 5th Board of Directors was approved. 2. The Proposal on Election of Members for the Special Committees under the 5th Board of Directors was approved. 3. The Proposal on Appointment of General Manager was approved. 4. The Proposal on Appointment of Deputy General Manager was approved. 5. The Proposal on Appointment of Head of Finance was approved. 6. The Proposal on Appointment of Board Secretary was approved. |
2. Attendance of Directors at Board Meetings and General Meetings
| Attendance of directors at board meetings and general meetings | |||||||
| Director | Total number of board meetings the director was eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the director failed to attend | The director failed to attend two consecutive board meetings or not | General meetings attended |
| Tang Zhuolin | 9 | 3 | 6 | 0 | 0 | Not | 6 |
| Qiu Yezhi | 9 | 3 | 6 | 0 | 0 | Not | 6 |
| Xie Weiwei | 9 | 3 | 6 | 0 | 0 | Not | 6 |
| Feng Jia | 9 | 3 | 6 | 0 | 0 | Not | 6 |
| Li Ketian | 9 | 3 | 6 | 0 | 0 | Not | 6 |
| Liu Da | 9 | 3 | 6 | 0 | 0 | Not | 6 |
| Tu Haichuan | 9 | 3 | 6 | 0 | 0 | Not | 6 |
Why any director failed to attend two consecutive board meetings: N/A
3. Objections Raised by Directors on Matters of the Company
Indicate whether any directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
4. Other Information about the Performance of Duty by Directors
Indicate whether any suggestions from directors were adopted by the Company.
√ Yes □ No
Suggestions from directors adopted or not adopted by the Company:
During the Reporting Period, the directors and independent directors of the Company worked in strict accordance with therequirements of the Company Law, the Securities Law, Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed CompaniesNo. 1 - Standardized Operation of Main Board Listed Companies, the Articles of Association, the Rules of Procedure for the Boardof Directors, the Rules for Independent Directors and other relevant laws and regulations, earnestly attended the Board meetings andthe General Meetings, and were diligent and responsible. They have made relevant suggestions on the major governance andoperation decisions of the Company. The independent directors actively got to know the operation of the Company and delivereddifferent opinions on major matters of the Company, giving better play to their supervisory role and effectively maintaining theinterests of the Company and its shareholders.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
VII Performance of Duty by Special Committees under the Board in the Reporting Period
| Committee | Members | Number of meetings convened | Date of meeting | Contents | Important opinion and suggestions | Other performance of duties | Particulars about objections (if any) |
| Audit Committee | Tu Haichuan, Li Ketian, and Qiu Yezhi | 1 | March 23, 2023 | 2. The Proposal on the 2022 Internal Control Self-Assessment Report was approved. 3. The Proposal on the Summary Report of the Audit Committee of the Board of Directors on the 2022 Annual Audit of Ernst & Young Hua Ming LLP was approved. 4. The Proposal on the Proposed Appointment of an Audit Institution for 2023 was approved. | No | No | No |
| Audit Committee | Tu Haichuan, Li Ketian, and Qiu Yezhi | 1 | March 23, 2023 | 2. The Proposal on the Work Report of the Audit Committee for Q4 2022 was approved. 3. The Proposal on the Work Report of the Audit Department for 2022 was approved. 4. The Proposal on the Work Report of the Audit Committee for 2022 was approved. 5. The Proposal on the Work Plan of the Audit Department for 2023 was approved. | No | No | No |
| Audit Committee | Tu Haichuan, Li Ketian, and Qiu Yezhi | 1 | March 23, 2023 | 1. The Proposal on the Election of Convenor for the Audit Committee under the Fourth Board of Directors was approved. | No | No | No |
| Audit Committee | Tu Haichuan, Li Ketian, and Qiu Yezhi | 1 | April 20, 2023 | 2. The Proposal on the Work Report of the Audit Committee for Q1 2023 was approved. 3. The Proposal on the Work Plan of the Audit Department for Q2 2023 was approved. 4. The Proposal on the Audit Report for the Q1 2023 Financial Statements was approved. | No | No | No |
| Audit Committee | Tu Haichuan, Li Ketian, | 1 | July 21, 2023 | 1. The Proposal on the Work Report of the Audit Department for Q2 2023 was approved. | No | No | No |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Committee
| Committee | Members | Number of meetings convened | Date of meeting | Contents | Important opinion and suggestions | Other performance of duties | Particulars about objections (if any) |
| and Qiu Yezhi | 3. The Proposal on the Work Plan of the Audit Department for Q3 2023 was approved. 4. The Proposal on the Audit Report for the 2023 Semi-Annual Financial Statements was approved. | ||||||
| Audit Committee | Tu Haichuan, Li Ketian, and Qiu Yezhi | 1 | October 20, 2023 | 2. The Proposal on the Work Report of the Audit Committee for Q3 2023 was approved. 3. The Proposal on the Work Plan of the Audit Department for Q4 2023 was approved. 4. The Proposal on the Audit Report for the Q3 2023 Financial Statements was approved. | No | No | No |
| Audit Committee | Tu Haichuan, Li Ketian, and Qiu Yezhi | 1 | November 15, 2023 | 1. The Proposal on the Election of Convenor for the Audit Committee under the Fifth Board of Directors was approved. | No | No | No |
| Remuneration and Appraisal Committee | Liu Da, Qiu Yezhi, and Li Ketian | 1 | February 13, 2023 | 2. The Proposal on the Satisfaction of the Unlocking Conditions for the Second Unlocking Period for the Reserved Shares under the 2020 Restricted Share Incentive Plan was approved. 3. The Proposal on Repurchase and Retirement of Some Restricted Shares was approved. | No | No | No |
| Remuneration and Appraisal Committee | Liu Da, Qiu Yezhi, and Li Ketian | 1 | March 23, 2023 | 1. The Proposal on the Election of Convenor for the Remuneration and Appraisal Committee under the Fourth Board of Directors was approved. | No | No | No |
| Remuneration and | Liu Da, Qiu Yezhi, and Li | 1 | April 21, 2023 | 1. The Proposal on the Satisfaction of the Unlocking Conditions for the First Unlocking Period for the First Grant under the 2022 Restricted Share Incentive Plan | No | No | No |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Committee
| Committee | Members | Number of meetings convened | Date of meeting | Contents | Important opinion and suggestions | Other performance of duties | Particulars about objections (if any) |
| Appraisal Committee | Ketian | 2. The Proposal on the 2022 Annual Performance Appraisal Results for the Awardees of the First Grant under the 2022 Restricted Share Incentive Plan was approved. | |||||
| Remuneration and Appraisal Committee | Liu Da, Qiu Yezhi, and Li Ketian | 1 | June 12, 2023 | 2. The Proposal on the Satisfaction of the Unlocking Conditions for the Third Unlocking Period for the First Grant under the 2020 Restricted Share Incentive Plan was approved. | No | No | No |
| Remuneration and Appraisal Committee | Liu Da, Qiu Yezhi, and Li Ketian | 1 | October 23, 2023 | 2. The Proposal on Allowance for Supervisors of the Fifth Supervisory Committee was approved. | No | No | No |
| Remuneration and Appraisal Committee | Liu Da, Qiu Yezhi, and Li Ketian | 1 | November 15, 2023 | 1. The Proposal on the Election of Convenor for the Remuneration and Appraisal Committee under the Fifth Board of Directors was approved. | No | No | No |
| Nomination Committee | Liu Da, Tang Zhuolin, and Tu Haichuan | 1 | March 23, 2023 | 1. The Proposal on the Election of Convenor for the Nomination Committee under the Fourth Board of Directors was approved. | No | No | No |
| Nomination Committee | Liu Da, Tang Zhuolin, and Tu Haichuan | 1 | October 23, 2023 | 1.01 The Proposal on Nomination of Mr. Tang Zhuolin as Non-independent Director Candidate for the Fifth Board of Directors 1.02 The Proposal on Nomination of Ms. Qiu Yezhi as Non-independent Director Candidate for the Fifth Board of Directors 1.03 The Proposal on Nomination of Mr. Xie Weiwei as Non-independent Director Candidate for the Fifth Board of Directors 1.04 The Proposal on Nomination of Ms. Feng Jia as Non-independent Director Candidate for the Fifth Board of Directors | No | No | No |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Committee
| Committee | Members | Number of meetings convened | Date of meeting | Contents | Important opinion and suggestions | Other performance of duties | Particulars about objections (if any) |
| 2.01 The Proposal on Nomination of Mr. Li Ketian as Independent Director Candidate for the Fifth Board of Directors 2.02 The Proposal on Nomination of Mr. Tu Haichuan as Independent Director Candidate for the Fifth Board of Directors 2.03 The Proposal on Nomination of Mr. Liu Da as Independent Director Candidate for the Fifth Board of Directors | |||||||
| Nomination Committee | Liu Da, Tang Zhuolin, and Tu Haichuan | 1 | November 15, 2023 | 1. The Proposal on the Election of Convenor for the Nomination Committee under the Fifth Board of Directors was approved. | No | No | No |
VIII Performance of Duty by the Supervisory CommitteeIndicate whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.IX Employees
1. Number, Functions and Educational Backgrounds of Employees
| Number of in-service employees of the Company as the parent at the period-end | 532 |
| Number of in-service employees of principal subsidiaries at the period-end | 1732 |
| Total number of in-service employees at the period-end | 2264 |
| Total number of paid employees in the Reporting Period | 2661 |
| Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 0 |
| Functions | |
| Function | Employees |
| Production&Operation | 1360 |
| Marketing | 269 |
| R&D and technical | 335 |
| Financial | 80 |
| Comprehensive | 220 |
| Total | 2264 |
| Educational backgrounds | |
| Educational background | Employees |
| Below junior college | 881 |
| Junior college | 825 |
| Bachelor’s degree | 400 |
| Master’s degree and above | 158 |
| Total | 2264 |
2. Employee Remuneration Policy
The Company remuneration policy in 2023 continued to be based on posts and performance and subject to totalcontrol. A comprehensive remuneration system was established and further improved to retain and attract talentsneeded for the Company's sustainable development.
1. Paid remuneration based on posts: The relative value of a post was determined based on its duties, and theremuneration rage of the post was determined based on the relative value and according to the Company's valueorientation.
2. Paid remuneration based on performance: The Company determined the basic remuneration based on therelative value of a post and personal competence, determined the performance bonus in an employee's remunerationbased on his/her performance, and adjusted the remuneration based on his/her personal competence and overallperformance.
3. Changed remuneration with the change in post: The remuneration was strictly fitted to the post, and if thepost changed, the remuneration changed, so that the remuneration system can support the career development ofemployees.
4. Total control: The total amount of remuneration was controlled within the scope recognized by the Company,and the growth rate of remuneration should be lower than that of sales revenue and profit. The Company'saffordability was taken into account so that the Company's business performance can support the growth of the totallabour cost.
5. The remuneration system of payment by piece is applied to first-line workers of domestic business entities,so that they could be paid more by being more profession and working harder, so as to reflect an internally fairremuneration policy based on differential skill scoring.Overseas business entities:
The remuneration system for each overseas business entity is put in place in accordance with the local laborlaw and other applicable laws.
3. Training Plan
1. Overall status: 229 training sessions were carried out at the Group headquarters and domestic branches and subsidiaries in2023. The number of training hours per capita was approximately 13.86 hours, totaling 5,113 training attendees. There were 11leadership empowerment training sessions, with 166 hours of teaching, covering 110 people; 167 professional competence trainingsessions, with 1,225 hours of teaching, covering 1,861 people; 14 general capability training sessions, with 144.5 hours of teaching,covering 437 people; 18 training sessions for safety and health, with 38 hours of teaching, covering 2,379 people; 19 trainingsessions for new recruits, with 72 hours of teaching, covering 326 people. Online training resources enabled a total of 186 hours ofempowerment.
2.The Company actively introduced external online and offline training resources, implemented the training more effectivelyand conveniently, empowered core employees and shared training resources in the Group.
3. The Company instituted a cross-departmental talent exchange initiative within the Group, fostering collaboration and sharedlearning across subsidiaries, while dynamically optimising, adjusting, and monitoring progress in accordance with evolving businessdevelopment needs at the subsidiary and Group levels.
4. The Company developed a comprehensive plan for the Group's Training Knowledge Base project, aiming to consistentlyrefresh and refine its contents, covering aspects like the curriculum framework, instructor resources, management of trainingprogramme suppliers, and overall training administration.
5. In December 2023, the Company convened a summit to decode and strategise around the Group's a "Wealth of Talent"initiative, clarifying its goals and tactical roadmap. This endeavour seeks to bolster and refine all aspects of talent acquisition,cultivation, development, deployment, and retention, thereby ensuring a stronger foundation to support the execution of theCompany's business strategies.
6. Overseas subsidiaries constantly prioritised employee career progression and personal development, proactively
implementing a variety of training programmes, including professional and technical instruction, leadership development, safety andhealth education, language courses, and soft skills enhancement. In 2023, Fosber Italy executed the FormaT training plan, featuring73 courses and totaling 384 hours. This involved coordinating 174 hours of leadership training, 2,729 hours dedicated to safety andhealth topics, and 892 hours focusing on soft skills improvement, benefiting over 120 employees in skill upgrades. Moreover, itoffered online language classes for white-collar workers and devised custom-fit training schemes for operators.
4. Labor Outsourcing
√ Applicable □ Not applicable
| Total hours of labor outsourced | 95,013.5 |
| Total payment for labor outsourcing (RMB yuan) | 2,734,754 |
X Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)The profit distribution policy for shareholders, especially the formulation, implementation and amendments to the cash dividendpolicy, in the Reporting Period:
√ Applicable □ Not applicable
Articles 183 and 186 of the Articles of Association of Guangdong Dongfang Precision Science & Technology Co., Ltd. hasspecified the method of profit distribution and the conditions, schedule and proportion of cash dividend, as well as the procedures todecide and adjust or change profit distribution, in order to fully protect the legitimate rights and interests of investors.
The profit distribution policy of the Company remained unchanged in the Reporting Period.
| Special statement about the cash dividend policy | |
| In compliance with the Company’s Articles of Association and resolution of general meeting | Yes |
| Specific and clear dividend standard and ratio | Yes |
| Complete decision-making procedure and mechanism | Yes |
| Independent directors faithfully performed their duties and played their due role | Yes |
| If the Company has no dividend plan, it should disclose the specific reasons and the next steps it intends to take to enhance investor returns | Yes |
| Non-controlling shareholders are able to fully express their opinion and desire and their legal rights and interests are fully protected | Yes |
| In case of adjusting or changing the cash dividend policy, the conditions and procedures involved are in compliance with applicable regulations and transparent | Not applicable |
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees
√ Applicable □ Not applicable
1. Equity Incentives
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 Second Unlocking Period for theReserved Restricted Shares under the 2020 Restricted Share Incentive Plan was approved at the 23rd (Extraordinary) Meeting of the4th Board of Directors and the 17th (Extraordinary) Meeting of the 4th Supervisory Committee. On 28 February 2023, 1,632,000shares held by 17 awardees were unlocked for public trading in the second unlocking period for the reserved restricted shares underthe 2020 Restricted Share Incentive Plan.
2. On 21 April 2023, the Proposal on the Satisfaction of the Unlocking Conditions for the First Unlocking Period for the FirstGrant under the 2022 Restricted Share Incentive Plan was approved at the 25th (Extraordinary) Meeting of the 4th Board of Directorsand the 19th (Extraordinary) Meeting of the 4th Supervisory Committee. On 28 April 2023, 530,000 shares held by 7 awardees wereunlocked for public trading in the first unlocking period for the 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 Unlocking Period for the FirstGrant under the 2020 Restricted Share Incentive Plan was approved at the 26th (Extraordinary) Meeting of the 4th Board of Directorsand the 20th (Extraordinary) Meeting of the 4th Supervisory Committee. On 26 June 2023, 8,620,000 shares held by 37 awardeeswere unlocked for public trading in the third unlocking period for 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 approved at the SecondExtraordinary General Meeting of 2023. As one awardee resigned from the Company due to personal reasons and thus was no longereligible as an awardee for the restricted shares, the Company repurchased and retired the 128,000 restricted shares that had beengranted to this awardee but were still in lockup. The Shenzhen branch of China Securities Depository and Clearing CorporationLimited confirmed that the retirement of the aforesaid repurchased restricted shares was completed on 22 March 2023.
5. On 30 June 2023, the Proposal on the Repurchase and Retirement of Some Restricted Shares was approved at the ThirdExtraordinary General Meeting of 2023. As one awardee had resigned from the Company and thus was no longer eligible for theequity incentives, the Company intended to repurchase the 120,000 restricted shares that had been granted to this awardee but werestill in lockup, all of which would be retired. The Shenzhen branch of China Securities Depository and Clearing Corporation Limitedconfirmed that the retirement of the aforesaid repurchased restricted shares was completed on 8 August 2023.
6. On 5 September 2023, the Proposal on the Repurchase and Retirement of Some Restricted Shares was approved at the FourthExtraordinary General Meeting of 2023. As one awardee had resigned from the Company and thus was no longer eligible for theequity incentives, the Company intended to repurchase the 240,000 restricted shares that had been granted to this awardee but werestill in lockup, all of which would be retired. The Shenzhen branch of China Securities Depository and Clearing Corporation Limitedconfirmed that the retirement of the aforesaid repurchased restricted shares was completed on 23 October 2023.
7. On 14 March 2023, the Company disclosed the Announcement on Lapse of Reserved Interests under the 2022 RestrictedShare Incentive Plan. The Company had reserved 662,500 restricted shares under the 2022 Restricted Share Incentive Plan forpotential awardees in the future. According to the 2022 Restricted Share Incentive Plan, “The awardees for the reserved portion of the
Plan shall be determined within 12 months after the Plan has been approved by a general meeting of shareholders. After the Board ofDirectors has proposed, the Independent Directors and the Supervisory Committee have expressed their consent, and the law firm hasexpressed their professional opinions and issued a legal opinion, the Company shall disclose the relevant information about theawardees in a timely and accurate manner at the designated website in accordance with the requirements. If the awardees are notdetermined within 12 months, the reserved interests shall lapse.”It has been more than 12 months since the First Extraordinary General Meeting of 2022 held on 14 March 2022 approved theProposal on the 2022 Restricted Share Incentive Plan (Draft) and Summary, the Company has not identified any awardees for thereserved interests, and the reserved 662,500 restricted shares have lapsed.Equity incentives received by directors and senior management:
√ Applicable □ Not applicable
Unit: share
| Name | Office title | Opening share options | Share options newly granted in the Reporting Period | Exercisable shares in the Reporting Period | Exercised shares in the Reporting Period | Exercise price for exercised shares in the Reporting Period (RMB yuan/share) | Closing share options | Market price at the period-end (RMB yuan/share) | Opening restricted shares | Unlocked shares in the Reporting Period | Restricted shares newly granted in the Reporting Period | Grant price (RMB yuan/share) | Closing restricted shares |
| Qiu Yezhi | Director and General Manager | 3,600,000 | 3,600,000 | 0 | 1 | 0 | |||||||
| Xie Weiwei | Director and Deputy General Manager | 400,000 | 400,000 | 0 | 1 | 0 | |||||||
| Feng Jia | Director, Board | 700,000 | 140,000 | 0 | 1 | 560,000 |
SecretaryandVicePresident
| Secretary and Vice President | |||||||||||||
| Shao Yongfeng | Chief Financial Officer and Vice President | 640,000 | 320,000 | 0 | 1 | 320,000 | |||||||
| Total | -- | -- | -- | 5,340,000 | 4,460,000 | 0 | -- | 880,000 |
Appraisal of and incentive for senior management:
The Company has established a sound performance appraisal and remuneration policy for senior managers, and determined keyperformance indicators (KPIs) matching different posts, which linked the income of the Company's managers and employees atdifferent levels to their work performance. During the Reporting Period, the Company assessed and appraised the work ability, dutyperformance and completion of responsibility goals of senior managers based on the KPIs, and closely linked their remunerationlevels with the Company's business performance.
2. Implementation of Employee Stock Ownership Plans
□ Applicable √ Not applicable
3. Other Incentive Measures for Employees
□ Applicable √ Not applicable
XII Formulation and Implementation of Internal Control System during the ReportingPeriod
1. Internal Control Formulation and Implementation
In accordance with the provisions of the Basic Code for Internal Control of Enterprises and its supporting guidelines and otherregulatory requirements for internal control, the Company has set up a relatively complete corporate governance structure andinternal control management system in line with its actual operation, which is in line with the needs of the Company's operation andmanagement. The Company has established internal control over the businesses and matters included in the scope of evaluation foreffective implementation. The objective of internal control has been basically achieved with no material weakness.
The Board of Directors of the Company is responsible for establishing sound and effective internal controls and evaluating theireffectiveness in accordance with the provisions of the standard system for enterprise internal control. The Supervisory Committeesupervised the establishment and implementation of internal controls by the Board of Directors.
The Company would ensure legal compliance in operation and management, assets safety, truthfulness and integrity of financialreports and related information through the sound and effective implementation of internal controls to improve operational efficiencyand effect, and promote the development strategy.
2. Significant Defects in Internal Control Identified during the Reporting Period
□ Yes √ No
XIII Subsidiary Management during the Reporting Period
| Subsidiary | Management plan | Progress | Problems | Solutions | Solution progress | Subsequent plan |
| N/A | N/A | N/A | N/A | N/A | N/A | N/A |
XIV Self-Assessment Report and Independent Auditor’s Report on Internal Control
1. Internal Control Self-Assessment Report
| Date of disclosure of the full internal control assessment report | 28 March 2024 | |
| Index to the full internal control assessment report disclosed | Published on www.cninfo.com.cn | |
| Ratio of the total assets of the organizations included in the assessment to the total assets in the Company's consolidated financial report | 100.00% | |
| Ratio of the revenue of the organizations included in the assessment to the revenue in the Company's consolidated financial report | 100.00% | |
| Defect identification criteria | ||
| Category | Financial report | Non-financial report |
| Qualitative criteria | 1) Indications of significant defects in financial reports include: a. Fraudulent conduct by directors, supervisors and senior management of the Company; b. Correction of a published financial report by the Company; c. | The identification of defects in non-financial reports is mainly based on the degree of impact of the defects on the effectiveness of business procedures and the possibility of their occurrence. 1) Significant defect |
Significant misstatement in the current financialreport identified by a certified public account but notidentified during the Company's internal controlaudit; d. Invalid supervision of the Audit Committeeand audit department over the Company's externalfinancial reports and internal control of financialreports.
2) Indications of important defects in financial
reports included:
a. Failure to select or apply accounting policies inaccordance with GAAP; b. Failure to implementanti-fraud procedures and take control measures; c.Lack of corresponding control mechanism foraccounting treatment of unconventional or specialtransactions or lack of corresponding compensatorycontrol; d. One or more defects in the control of theperiod-end financial reporting process and failure toreasonably ensure true and complete financialreports.
3) General defects refer to the control defects other
than significant and important defects mentionedabove.
| Significant misstatement in the current financial report identified by a certified public account but not identified during the Company's internal control audit; d. Invalid supervision of the Audit Committee and audit department over the Company's external financial reports and internal control of financial reports. 2) Indications of important defects in financial reports included: a. Failure to select or apply accounting policies in accordance with GAAP; b. Failure to implement anti-fraud procedures and take control measures; c. Lack of corresponding control mechanism for accounting treatment of unconventional or special transactions or lack of corresponding compensatory control; d. One or more defects in the control of the period-end financial reporting process and failure to reasonably ensure true and complete financial reports. 3) General defects refer to the control defects other than significant and important defects mentioned above. | If the possibility of the defect is high, it will seriously reduce the work efficiency or effectiveness, seriously increase the uncertainty of the effectiveness, or make the work result seriously deviate from the expected goal, the defect is a significant defect. The following usually indicates a significant defect in the internal control of non-financial reports: a. Violation of national laws and regulations; b. Outflow of managers or key technicians; c. Frequent negative news from media; d. Failure to correct the results, especially significant or important defects, in internal control assessment; e. Lack of system control or systematic failure of system in important business. 2) Important defect If the possibility of the defect is relatively high, it will significantly reduce the work efficiency or effectiveness, significantly increase the uncertainty of the effectiveness, or make the work result significantly deviate from the expected goal, the defect is an important defect. The following usually indicates an important defect in the internal control of non-financial reports: a. Defects in important business policies or systems; b. Important mistakes in the decision-making process; c. Serious outflow of business personnel in key posts; d. Failure to timely remedy the important defects identified in internal supervision of internal control; e. Other circumstances that have a negative impact on the Company. 3) General defects referred to the control defects other than significant and important defects mentioned above. | |
| Quantitative criteria | A quantitative judgment was made based on the pretax profit of the Company. The misstatement exceeding 5% of the total pretax profit was determined as a significant misstatement, that exceeding 3% of the total pretax profit was determined as an important misstatement, and others were determined as general misstatements. | The revenue and total assets were the measuring indicators for the quantitative criteria. If the loss that may result from or results from an internal control defect is related to the profit report, it was measured by the revenue indicator. If the amount of misstatement in the financial report that may result from the defect alone or it together with other defects is less than 0.5% of the revenue, the defect was determined as a general defect. If it exceeds 0.5% and is less than 1% of the revenue, it was determined as an important defect. If it exceeds 1% of the revenue, it was determined as a significant defect. If the loss that may result from or results from an |
internal control defect is related to asset management,it was measured by the total asset indicator. If theamount of misstatement in the financial report thatmay result from the defect alone or it together withother defects is less than 0.5% of the total assets, thedefect was determined as a general defect. If itexceeds 0.5% and is less than 1% of the total assets, itwas determined as an important defect. If it exceeds1% of the total assets, it was determined as asignificant defect.
| internal control defect is related to asset management, it was measured by the total asset indicator. If the amount of misstatement in the financial report that may result from the defect alone or it together with other defects is less than 0.5% of the total assets, the defect was determined as a general defect. If it exceeds 0.5% and is less than 1% of the total assets, it was determined as an important defect. If it exceeds 1% of the total assets, it was determined as a significant defect. | ||
| Number of significant defects in financial reports | 0 | |
| Number of significant defects in non-financial reports | 0 | |
| Number of important defects in financial reports | 0 | |
| Number of important defects in non-financial reports | 0 | |
2. Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
| Opinion paragraph in the independent auditor’s report on internal control | |
| In the opinion of Ernst & Young Hua Ming LLP, Guangdong Dongfang Precision Science & Technology Co., Ltd. maintained, in all material respects, effective internal control over financial reporting as at 31 December 2023, based on the Basic Rules on Enterprise Internal Control and other applicable rules. | |
| Independent auditor’s report on internal control disclosed or not | Yes |
| Disclosure date | 28 March 2024 |
| Index to such report disclosed | www.cninfo.com.cn |
| Type of the auditor’s opinion | Unmodified unqualified opinion |
| Material weaknesses in internal control not related to financial reporting | None |
Indicate whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal control.
□ Yes √ No
Indicate whether the independent auditor’s report on the Company’s internal control is consistent with the internal controlself-evaluation report issued by the Company’s Board of Directors.
√ Yes □ No
XV Rectifications of Problems Identified by Self-inspection in the Special Action for ListedCompany Governance
N/A
Part V Environmental and Social ResponsibilitiesI Significant Environmental IssuesMeasures taken to reduce carbon emissions in the Reporting Period and the impact:
√ Applicable □ Not applicable
The subsidiary Fosber Italy has established and implemented a sustainability management system and is certified to thefollowing international standards: ISO45001:2018, ISO9001:2015, ISO14001:2015, EMAS (EU Eco-Management and AuditSystem), and SA8000:2014.
The subsidiary Tiru?a Group has reached full reliance on green power for its entire energy consumption and is progressing in2023 to augment its self-sufficiency by installing additional solar panels and boosting its photovoltaic capacity.
The subsidiary, Parsun Power, completed an installed capacity of 1MW rooftop photovoltaic power station in 2023. The projectutilises a self-consumption model for generated power and feeds excess energy back to the grid. Anticipated to yield an average of
1.1 million kWh annually, the project is projected to conserve approximately 117 tons of standard coal and simultaneously cut downaround 948 tonnes of CO2 emissions each year.Reasons for non-disclosure of other environmental information
□ Applicable √ Not applicable
II Social Responsibilities
The Company attached importance to fulfil social responsibility in daily operations, intending to promote the harmony andco-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 Lawand Code of Corporate Governance for Listed Companies, continued to refine the corporate governance structure, improve theinternal control system, formed the decision-making system comprising the Shareholders' General Meeting, the Board of Directors,the Supervisory 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 andwin-win", the Company took the initiative to construct and develop strategic partnership with suppliers and customers and jointlybuilt a platform 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.
(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
of employees, and has set up a labour union to effectively protect the interests of employees. It also provided labour protectionsupplies according to the risk factors of different posts, organized occupational health examinations for employees (before taking thepost, on the post and before leaving the post), and bought safety liability insurance for employees on highly risky posts. In 2020,Dongfang Precision extended its Grade II Production Safety Standardization Certificate for Machinery Enterprises, and Parsun Powerand Fosber Asia were granted the Grade III Production Safety Standardization Certificate for Machinery Enterprises.
(5) Environmental protection: Dongfang Precision was granted the National Pollutant Discharge Permit and regularly completesthe filling of data for post-license monitoring of the National Discharge License. It commissioned the qualified third-partyenvironmental protection agencies to compile the Contingency Plans for Environmental Emergencies and update it on a regular basis.The Company established the "Environmental Self-Monitoring Programme", entrusted a third party to install and operate 24-hoursewage on-line flow monitoring equipment, and entrusted a third-party monitoring organisation to carry out quarterly testing ofwastewater, exhaust gas and noise and issue third-party test reports. Moreover, the Company’s environmental protection facilitiespassed the qualification re-examination on OHSAS18001:2007 Occupational Health and Safety Management Systems andISO14001:2005 Environmental Management System. Parsun Power, which is a subsidiary of the Company, has purchased completeenvironmental protection equipment to meet the daily pollutant treatment requirements, that leads no violation of environmentalprotection related laws and administrative 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 theanti-fraud reporting platform to encourage employees to report fraud findings.
(7) Social honour: Dongfang Precision is a State-level High-tech Enterprise and won honorary titles including "Top 500 PrivateManufacturing Enterprises in China", "Leading Enterprises in Subdivided Industries in Foshan", and "Guangdong ProvincialIndustrial Design Centre ". The subsidiary Fosber Asia won honorary titles including "Guangdong Demonstration Enterprise ofIntellectual Property". The subsidiary Wonder Digital has been successfully selected as a State-level "Little Giant" enterprise withspecialties, refined management, unique technologies and innovation in 2023. The subsidiary Parsun Power is a State-level "LittleGiant" enterprise with specialties, refined management, unique technologies and innovation, a State-level High-tech Enterprise anengineering technology research centre for outboard motors in Jiangsu Province, an enterprise technology centre recognised byJiangsu Province, a leading enterprise in China's internal combustion engine industry and a director unit of the Small GasolineEngine Branch of China Internal Combustion Engine Industry Association. The outboard motors of Parsun Power have also wonmany honours such as the certificate of industrialisation demonstration project of national torch plan, innovative product of Chinamachinery industry, famous brand product of Jiangsu province and famous brand product of Suzhou city.III Efforts in Poverty Alleviation and Rural RevitalizationThe Company did not conduct activities related to targeted poverty alleviation in the Reporting Year, nor did it develop anysubsequent plan for targeted poverty alleviation.
Part VI Significant EventsI Fulfillment of Undertakings
1. Undertakings of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as wellas the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
√ Applicable □ Not applicable
| Cause of undertakings | Parties of undertakings | Types of undertakings | Contents of undertakings | Date of undertakings | Term of undertakings | Fulfilment of undertakings |
| Undertakings related to reform of shareholder structure | ||||||
| Undertakings made in acquisition report of change of equity report | ||||||
| Undertakings made in asset reorganization | Tang Zhuolin, Tang Zhuomian | Undertaking on horizontal competition, related-party transactions and capital occupation | 1. I will conduct all related-party transactions, unavoidable or arising from a reasonable reason, between me and companies controlled by me and Dongfang Precision and its controlling subsidiaries in a fair and reasonable manner and on an equal, mutually beneficial, equivalent and compensable basis in strict accordance with market principles. For all related-party transactions between me and companies controlled by me and Dongfang Precision and its controlling subsidiaries, I will sign agreements and go through procedures according to law and fulfil the obligation of information disclosure in accordance with relevant laws, regulations, normative documents, Articles of Association of Dongfang Precision and other corporate governance provisions, and undertakes not to damage the legitimate rights or interests of the listed company and small and medium shareholders. 2. When any related-party | 25 April 2017 | Long-term effective | In normal progress of fulfilment |
Cause ofundertakings
| Cause of undertakings | Parties of undertakings | Types of undertakings | Contents of undertakings | Date of undertakings | Term of undertakings | Fulfilment of undertakings |
| transaction involving me and companies controlled by me is being deliberated by the authority of Dongfang Precision, I will proactively perform the obligation of evading according to law and conduct the transaction only with the approval of the competent authority. 3. I undertake not to obtain any improper benefits or cause Dongfang Precision and its controlling subsidiaries to assume any improper obligations through related-party transactions. In case of any losses to Dongfang Precision or its controlling subsidiaries as a result of any breach of the above undertakings, I will be liable for such losses. | ||||||
| Tang Zhuolin, Tang Zhuomian | Undertaking on horizontal competition, related-party transactions and capital occupation | 1. The undertaker and companies controlled by it are not engaging in any business the same as, similar to or competing with the business of the listed company and companies controlled by it, and they will neither, in any way, engage in or assist others in engaging in any business that competes or may compete with the business of the listed company and companies controlled by it, nor merge or substantially invest in (or jointly hold), directly or indirectly, other companies engaging in any business that competes or may compete with the business of the listed company and companies controlled by it. 2. If the listed company engages in a new business sector, the undertaker will not engage in any business that competes with such a new business of the listed company, except with the prior written consent of the listed company. 3. If any business opportunity obtained by the undertaker from any third party completes or may compete with the business of the listed company and companies controlled by it, the undertaker will immediately inform and make every effort to deliver the business opportunity to the listed company. 4. The undertaker will not, in any way, use the information or other resources obtained from the listed company to conduct any act that harms the interests of the listed company. 5. In case of any | 25 November 2019 | Long-term effective | In normal progress of fulfilment |
Cause ofundertakings
| Cause of undertakings | Parties of undertakings | Types of undertakings | Contents of undertakings | Date of undertakings | Term of undertakings | Fulfilment of undertakings |
| losses to the listed company as a result of breach of these undertakings by the undertaker, the undertaker will make thorough, timely and full compensation for all such losses and take active measures to eliminate the adverse effects caused thereby. | ||||||
| Tang Zhuolin, Tang Zhuomian | Undertaking on horizontal competition, related-party transactions and capital occupation | 1. The undertaker will refrain from any illegal occupation of the funds and assets of the listed company, and will never require the listed company to provide any form of guarantee to it or companies controlled by it under any circumstances. 2. The undertaker will, to the extent possible, avoid and minimize related-party transactions with the listed company, and for all related-party transactions unavoidable or arising from a reasonable reason, it will conduct following the principle of voluntary, fair and reasonable market pricing and according to normal market trading conditions, sign agreements and go through procedures according to law, abide by relevant laws, regulations, normative documents and articles of association of the listed company, perform internal decision-making and approval procedures according to law, and timely perform the obligation of information disclosure, so as to ensure that the related-party transactions are fairly and reasonably priced and conducted under fair trading conditions and that it will not damage the legitimate rights or interests of the listed company and its shareholders through related-party transactions. 3. In case of any losses to the listed company as a result of breach of these undertakings by the undertaker, the undertaker will make thorough, timely and full compensation for all such losses and take active measures to eliminate the adverse effects caused thereby. | 25 November 2019 | Long-term effective | In normal progress of fulfilment | |
| Tang Zhuolin, | Other undertakings | 1. I will not overstep my authority to intervene in the operation and management of Dongfang | 25 November | Long-term effective | In normal progress of |
Cause ofundertakings
| Cause of undertakings | Parties of undertakings | Types of undertakings | Contents of undertakings | Date of undertakings | Term of undertakings | Fulfilment of undertakings |
| Tang Zhuomian | Precision, will not occupy the interests of Dongfang Precision, and will earnestly take corresponding measures to fill up the diluted spot returns of Dongfang Precision. 2. After the CSRC and Shenzhen Stock Exchange otherwise release the measures to fill up diluted spot returns and opinions and implementation rules for its undertakings, if Dongfang Precision's corresponding policies and undertakings fail to meet such provisions, I will immediately submit a supplementary undertaking to the CSRC and Shenzhen Stock Exchange as required in order to be compliant. 3. I undertake to earnestly take the corresponding measures formulated by the listed company to fill up diluted spot returns and to earnestly fulfil my undertakings. If I violate such undertaking(s) and cause losses to the Company or investors, I am willing to bear the corresponding liability for compensation according to law. | 2019 | fulfilment | |||
| Tang Zhuolin, Tang Zhuomian | Other undertakings | 1. After the relevant transaction, the undertaker will continue to maintain the independence of the listed company in terms of staffing, asset, business, organization and finance in accordance with relevant laws, regulations and normative documents, and will not conduct any act that affects such independence or damages the interests of the listed company and other shareholders, and will effectively safeguard the independence of the listed company in terms of staffing, asset, business, organization and finance. 2. This letter of undertaking shall be effective and irrevocable as of the date when it is officially signed by the undertaker. The undertaker warrants to fulfil the undertaking(s) in good faith, and the listed company has the right to supervise its fulfilment. Where the undertaker fails to fulfil the undertaking(s) in good faith of undertaking and thus cause actual losses to the listed company, the undertaker shall compensate the listed company for all director or indirect | 25 November 2019 | Long-term effective | In normal progress of fulfilment |
Cause ofundertakings
| Cause of undertakings | Parties of undertakings | Types of undertakings | Contents of undertakings | Date of undertakings | Term of undertakings | Fulfilment of undertakings |
| losses caused thereby. | ||||||
| He Weifeng, Mai Zhirong, Peng Xiaowei, Qiu Yezhi, Tang Zhuolin, Xie Weiwei, Zhou Wenhui | Other undertakings | I, as a director/senior executive of the Company, will faithfully and diligently perform my duties, safeguard the legitimate rights and interests of the Company and all shareholders, and make the following undertakings to ensure that the Company's measures to fill up returns will be effectively implemented. 1. I will not transfer benefits to other organizations or individuals for free or under unfair conditions, nor will I damage the interests of the Company in other ways. 2. I will constrain my consumption behaviour on the position. 3. I will not use the Company's assets to engage in any investment or consumption activities unrelated to my performance of duties. 4. I will link the remuneration system formulated by the Board of Directors or the Remuneration Committee to the implementation of the Company's measures to fill up returns. 5. If the Company has an equity incentive program, I will link the exercise conditions of the equity incentive program to be announced to the implementation of the Company's measures to fill up returns. 6. After this undertaking is given, if the regulator puts forward other requirements for the measures to fill up returns and the undertaking and the undertaking fails to meet such requirements, I will give a supplementary undertaking according to the latest requirements of the regulator. 7. I will effectively implement the Company's measures to fill up returns and fully fulfil my corresponding undertakings, and I am willing to bear the corresponding liability for compensation according to law if I violate such undertaking(s) and cause losses to the Company or investors. | 25 November 2019 | Long-term effective | In normal progress of fulfilment | |
| Undertakings made in IPO or refinancing | Tang Zhuolin, Tang | Undertaking on horizontal | Before the fact that I am (or the Company is) a major shareholder of the issuer is changed, I (or the Company) will not, directly or indirectly, in | 18 August 2010 | Long-term effective | In normal progress of fulfilment |
Cause ofundertakings
| Cause of undertakings | Parties of undertakings | Types of undertakings | Contents of undertakings | Date of undertakings | Term of undertakings | Fulfilment of undertakings |
| Zhuomian | competition, related-party transactions and capital occupation | any way (including but not limited to sole proprietorship, joint venture and holding stocks or interests in other companies or enterprises), engage in any business or activity that competes or may compete with the business of the issuer. I (The Company) shall compensate the issuer for any loss caused to it as a result of the failure to fulfil the undertaking to avoid horizontal competition. | ||||
| Tang Zhuolin, Tang Zhuomian | Other undertakings | If relevant government or judicial authorities decide that Dongfang Precision or Weike Dongmeng need to make a supplementary payment for employees' public housing provision, or Dongfang Precision or Weike Dongmeng is subject to any late fee, fine or loses for failing to pay the public housing provision for some employees, I will unconditionally and in full bear such supplementary payment, late fees and fines. | 15 August 2011 | Long-term effective | In normal progress of fulfilment | |
| Undertakings related to equity incentives | ||||||
| Undertakings made to minority shareholders of the Company | ||||||
| Other undertakings | ||||||
| Whether the undertakings were timely performed | Yes | |||||
| Where the Company failed to fulfill an | Not applicable | |||||
Cause ofundertakings
| Cause of undertakings | Parties of undertakings | Types of undertakings | Contents of undertakings | Date of undertakings | Term of undertakings | Fulfilment of undertakings |
| undertaking on time, it shall explain in detail the reasons for failing to do so and the subsequent plan |
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was stillwithin the forecast period, explain why the forecast has been reached for the Reporting Period.
□ Applicable √ Not applicable
II Occupation of the Company’s Capital by the Controlling Shareholder or Its Related Partiesfor Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.III Irregularities in Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Explanations Given by the Board of Directors Regarding the Last “Modified Opinion” onFinancial Statements
□ Applicable √ Not applicable
V Explanations Given by the Board of Directors, the Supervisory Committee and theIndependent Directors (if any) Regarding the Independent Auditor's “Modified Opinion” onthe Financial Statements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies and Estimates and Correction of MaterialAccounting Errors
√ Applicable □ Not applicable
According to Interpretation No. 16 for The Accounting Standards for Business Enterprises issued by the Ministry of Finance inNovember 2022 (C.K. [2022] No. 31), for a single transaction that is not a business combination and does not affect eitheraccounting profit or taxable income (or deductible losses) at the time the transaction occurs, and where the initial recognition ofassets and liabilities results in taxable temporary differences and deductible temporary differences in equal amounts, the exemptionfrom initial recognition of deferred income tax is not applicable. The above provisions are effective from 1 January 2023 inaccordance with the said Interpretation No. 16.
Since 1 January 2023, the Company has adopted the above-mentioned accounting policy and changed from consolidatingdeferred income taxes to recognising the corresponding deferred income tax liabilities and deferred income tax assets, respectively,for taxable temporary differences and deductible temporary differences arising from the initial recognition of assets and liabilities forlease transactions in which lease liabilities are initially recognised on the lease commencement date and included in the right-of-useassets.
Save as disclosed above, the Company had no other changes to accounting policies or estimates or correction of materialaccounting errors in the Reporting Period.
VII YoY Changes to the Scope of the Consolidated Financial Statements
□ Applicable √ Not applicable
No such cases in the Reporting Period.VIII Engagement and Disengagement of Independent AuditorCurrent independent auditor:
| Name of the domestic independent auditor | Ernst & Young Hua Ming LLP |
| The Company’s payment to the domestic independent auditor | RMB4.73 million |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 4 years |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Feng Xingzhi and Hu Chuan |
| How many consecutive years the certified public accountants have provided audit service for the Company | Feng Xingzhi: 4 years; Hu Chuan: 2 year |
| Name of the overseas independent auditor (if any) | N/A |
| The Company’s payment to the overseas independent auditor | N/A |
| How many consecutive years the overseas independent auditor has provided audit service for the Company | N/A |
| Names of the certified public accountants from the overseas independent auditor writing signatures on the auditor’s report | N/A |
How many consecutive years the overseas certified publicaccountants have provided audit service for the Company
| How many consecutive years the overseas certified public accountants have provided audit service for the Company | N/A |
Indicate whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
Independent auditor, financial advisor or sponsor hired for the audit of internal control:
√ Applicable □ Not applicable
Ernst & Young Hua Ming LLP was appointed as the independent auditor of internal control for the Company for 2023 for a fee ofRMB300,000.IX Possibility of Delisting after the Disclosure of this Report
□ Applicable √ Not applicable
X Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.XI Significant Legal Matters
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII Punishments and Rectifications
√ Applicable □ Not applicable
A dispute arose between Fosber Italy, a wholly-owned subsidiary of Dongfang Precision (Netherlands), and the TuscanyRegional Directorate of the Italian Revenue Agency in relation to the matter of the applicable rate of the withholding tax on foreigndividends for the distribution of dividends to its parent company, Dongfang Precision (Netherlands), for the period from 2017 to2022, and Fosber Italy reached a settlement of the above dispute with the Italian Revenue Agency on 12 October 2023, and signedthe Settlement Agreement. In the Settlement Agreement, the parties agreed that Fosber Italy's dividend distribution to DongfangPrecision (Netherlands) for the year 2022 is exempted from dividend withholding tax, and the that Fosber Italy shall pay to the ItalianRevenue Agency, in the form of a lump sum, the withholding tax (including interest) on dividends for the years 2017 to 2021 in theamount of EUR5,877,700,000 and the related penalty in the amount of EUR324,500,000, in accordance with the rate of 10%provided for under the Double Taxation Convention signed by Italy and China; and that Fosber Italy shall apply the "WithholdingTax Exemption Regime" to the distribution of dividends for the years 2022 and thereafter. Fosber Italy will be subject to a"withholding tax exemption" for the distribution of dividends from 2022 onwards. At the same time, the agreement provides for taxadjustments for the period from 2019 to 2021 in respect of the business transactions between Fosber Italy and Fosber Tianjin andFosber Asia, subsidiaries of Dongfang Precision, in the amount of EUR453,200,000 in back taxes (including interest) and EUR8000in penalties.The Company disclosed the Announcement on Tax Settlement Agreements Signed by Overseas Subsidiaries on 14 October 2023,which was published in China Securities Journal, Shanghai Securities News, Securities Times and www.cninfo.com.cn.
XIII Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XIV 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
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 between the Company and Related Financial Companies
□ Applicable √ Not applicable
No such cases in the Reporting Period.
6. Transactions between Financial Companies 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.
XV 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.
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) | 14 June 2023 | No more than EUR34.5 million | 15 June 2023 | EUR34.4056 million | Joint liability; Pledge | Security deposits | -- | From the date when the guarantee took effect to | No | No |
15 June2024
| 15 June 2024 | ||||||||||||
| 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) | EUR34.4056 million | |||||||||
| Total approved line for such guarantees at the end of the Reporting Period (B3) | No more than EUR34.5 million | Total actual balance of such guarantees at the end of the Reporting Period (B4) | EUR34.4056million | |||||||||
| 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 | No more than EUR3 million | 30 April 2020 | EUR0.4124 million | General Guarantee | - | - | From the date when the guarantee took effect to 30 June 2024 | No | No | ||
| Total approved line for such guarantees in the Reporting Period (C1) | 0 | Total actual amount of such guarantees in the Reporting Period (C2) | EUR0.4124 million | |||||||||
| Total approved line for such guarantees at the end of the Reporting Period (C3) | No more than EUR3 million | Total actual balance of such guarantees at the end of the Reporting Period (C4) | EUR0.4124 million | |||||||||
| 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) | EUR34.818 million | |||||||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | No more than EUR37.5 million | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | EUR34.818 million | |||||||||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 6.07% | |||||||||||
Of which:
| 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) | EUR0.4124 million |
| 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) | EUR0.4124 million |
| 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 to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overview of wealth management entrustments in the Reporting Period:
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 | 13,300 | 0 | 0 |
| Securities firm’s wealth management product | Self-funded | 44,040 | 31,700 | 0 | 0 |
| Trust product | Self-funded | 0 | 0 | 358.62 | 358.62 |
| Total | 77,513.16 | 45,000 | 358.62 | 358.62 | |
High-risk wealth management transactions with a significant single amount or with low security and low liquidity:
□ Applicable √ Not applicable
Wealth management transactions where the principal is expectedly irrecoverable or an impairment may be incurred:
√ Applicable □ Not applicable
As of the end of the Reporting Period, the unrecovered amount of trust products was RMB3.5862 million, for which an impairmentallowance of RMB3.5862 million was established.
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVI Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVII Significant Events of Subsidiaries
□ Applicable √ Not applicable
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 | -6,810,000 | -6,810,000 | 226,372,533 | 18.25% |
| 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 | -6,130,000 | -6,130,000 | 226,212,533 | 18.23% |
| 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 | -6,130,000 | -6,130,000 | 226,212,533 | 18.23% |
| 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 | 0.00% | |
| Shares held by overseas individuals | 840,000 | 0.07% | 0 | 0 | 0 | -680,000 | -680,000 | 160,000 | 0.01% |
| 2. Unrestricted | 1,007,923,867 | 81.21% | 0 | 0 | 0 | 6,322,000 | 6,322,000 | 1,014,245,867 | 81.75% |
shares
| shares | |||||||||
| 2.1 RMB-denominated ordinary shares | 1,007,923,867 | 81.21% | 0 | 0 | 0 | 6,322,000 | 6,322,000 | 1,014,245,867 | 81.75% |
| 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 | -488,000 | -488,000 | 1,240,618,400 | 100.00% |
Reasons for share changes:
√ Applicable □ Not applicable
1. Repurchase and retirement of 488,000 shares
On 22 March 2023, one awardee for the reserved restricted shares under the 2020 Restricted Share Incentive Plan left office andwas thus no longer eligible for the said equity incentives. Therefore, the Company repurchased and retired the 128,000 restrictedshares that had been granted to this awardee but were still in lockup.
On 8 August 2023 and 23 October 2023, two awardees for the first grant under the 2022 Restricted Share Incentive Plan leftoffice and were thus no longer eligible for the said equity incentives. Therefore, the Company repurchased and retired the 360,000restricted shares that had been granted to these awardees but were still in lockup.
2. Unlocking of some restricted shares
(1) Unlocking of restricted shares as equity incentives
On 28 February 2023, the shares were unlocked for public trading in the second unlocking period for the reserved restrictedshares under the 2020 Restricted Share Incentive Plan, which involved 1,632,000 shares held by 17 awardees.
On 28 April 2023, the shares were unlocked for public trading in the first unlocking period for the first grant under the 2022Restricted Share Incentive Plan, which involved 530,000 shares held by seven awardees.
On 26 June 2023, the shares were unlocked for public trading in the third unlocking period for the first grant under the 2020Restricted Share Incentive Plan, which involved 8,620,000 shares held by 37 awardees.
(2) Changes in locked-up shares of senior management
Data provided by China Securities Depository and Clearing Corporation Limited show that on 30 January 2023, Mr. ZhouWenhui's annual transferable share quota was changed from 0% to 25%, corresponding to 300,000 shares, for it had been six monthssince his departure from the office of director. Also according to the aforesaid data, during the Reporting Period, some statutorysenior management participating in equity incentives had their equity incentives (restricted shares) converted to locked-up shares ofsenior management after the unlocking, involving a total of 4,760,000 shares.Approval of share changes:
√ Applicable □ Not applicable
1. In the Reporting Period, with respect to share changes involved in the “unlocking for public trading of shares in the secondunlocking period for the reserved restricted shares under the 2020 Restricted Share Incentive Plan”, “unlocking for public trading ofshares in the first unlocking period for the first grant under the 2022 Restricted Share Incentive Plan” and “unlocking for publictrading of shares in the third unlocking period for the first grant under the 2020 Restricted Share Incentive Plan”, the Companyfollowed the applicable laws and regulations and its Articles of Association, executed the approval procedures with the generalmeeting and the Board of Directors, and obtained approval from the Shenzhen Stock Exchange.
2. The restricted shares granted to one awardee with the reserved restricted shares under the 2020 Restricted Share IncentivePlan and to two awardees in the first grant under the 2022 Restricted Share Incentive Plan were repurchased and retired for they wereno longer eligible for these equity incentives upon their departure from the Company. In terms of the share changes incurred, theCompany fulfilled the due approval procedures of the shareholders' general meeting and the Board of Directors in accordance withthe applicable laws and regulations and the Articles of Association, and obtained the approval of the Shenzhen Stock Exchange.Transfer of share ownership:
√ Applicable □ Not applicable
In the Reporting Period, with respect to the transfers of share ownership involved in the “repurchase and retirement of somerestricted shares”, the Company completed the transfers with the Shenzhen branch of China Securities Depository and Clearing Co.,Ltd. after they were approved by the Shenzhen Stock Exchange.Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to theCompany’s ordinary shareholders and other financial indicators of the prior year and the prior accounting period,respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
| Shareholder | Opening restricted shares | Increase in restricted shares in the period | Unlocked in the period | Closing restricted shares | Reason for restriction | Date of unlocking |
| Qiu Yezhi | 17,536,791 | 3,600,000 | 3,600,000 | 17,536,791 | Participated in the Restricted Share Incentive Plan of the Company/restricted shares of senior management | 2023-06-26 |
| Xie Weiwei | 750,000 | 400,000 | 400,000 | 750,000 | Participated in the Restricted Share Incentive | 2023-06-26 |
Plan of theCompany/restricted shares ofseniormanagement
| Plan of the Company/restricted shares of senior management | ||||||
| Zhou Wenhui | 1,200,000 | 480,000 | 780,000 | 900,000 | Participated in the Restricted Share Incentive Plan of the Company/restricted shares of senior management | 2023-01-30 2023-06-26 |
| The other 34 awardees of the first grant of the 2020 Restricted Share Incentive Plan | 4,140,000 | 0 | 4,140,000 | 0 | Participated in the Restricted Share Incentive Plan of the Company | 2023-06-26 |
| Feng Jia | 700,000 | 0 | 140,000 | 560,000 | Participated in the Restricted Share Incentive Plan of the Company | 2023-04-28 |
| The other 6 awardees of the first grant of the 2022 Restricted Share Incentive Plan | 1,950,000 | 0 | 390,000 | 1,200,000 | Participated in the Restricted Share Incentive Plan of the Company | 2023-04-28 |
| Shao Yongfeng | 640,000 | 280,000 | 320,000 | 600,000 | Participated in the Restricted Share Incentive Plan of the Company/restricted shares of senior management | 2023-02-28 |
| The other 16 awardees of the reserved grant of the 2020 | 2,752,000 | 0 | 1,312,000 | 1,312,000 | Participated in the Restricted Share Incentive Plan of the | 2023-02-28 |
RestrictedShare IncentivePlan
| Restricted Share Incentive Plan | Company | |||||
| Total | 29,668,791 | 4,760,000 | 11,082,000 | 22,858,791 | -- | -- |
II Issuance and Listing of Securities
1. Securities (Exclusive of Preference Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
√ Applicable □ Not applicable
At the end of the Reporting Period, the total number of shares of the Company decreased by 488,000 shares compared with thebeginning of the Reporting Period. At the end of the Reporting Period, there was no significant change in the proportion of restrictedshares to the total number of shares of the Company as compared with the beginning of the Reporting Period.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
| Number of ordinary shareholders at the period-end | 45,883 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 84,401 | Number of preference shareholders with resumed voting rights at the period-end (if any) | 0 | Number of preference shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) | 0 | |
| 5% or greater shareholders or top 10 shareholders(excluding lending of shares through the facility) | ||||||||
| Name of sharehold | Nature of shareholder | Shareholding | Total shares held at the | Increase/decrease in the | Restricted shares held | Unrestricted shares held | Shares in pledge, marked or frozen | |
er
| er | percentage | period-end | Reporting Period | 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 | 3.88% | 48,183,133 | 38,666,919 | 0 | 48,183,133 | ||
| Pulead Technology Industry Co., Ltd. | State-owned corporation | 2.88% | 35,748,587 | -12,401,200 | 0 | 35,748,587 | ||
| 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 | 17,536,791 | 5,845,597 | ||
| Bank of China Limited - Dacheng Jingheng Mixed Securities Investment Fund | Other | 0.64% | 7,962,600 | 7,000,300 | 0 | 7,962,600 | ||
| Liu Wucai | Domestic | 0.53% | 6,597,688 | 0 | 0 | 6,597,688 |
individual
| individual | |||||||||
| Beixin Ruifeng Fund - Industrial and Commercial Bank of China - Beijing Hengyu Tianze Investment Management Co., Ltd. | Other | 0.50% | 6,171,777 | 0 | 0 | 6,171,777 | |||
| Strategic investor or general corporation becoming a top-10 shareholder in a rights issue (if any) | 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. 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) | As of the end of the Reporting Period, there were 42,902,492 shares in the Company’s special account for repurchase, accounting for 3.46% 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 shareholders | |||||||||
| Name of shareholder | Unrestricted shares held at the period-end | Shares by type | |||||||
| Type | Shares | ||||||||
| Tang Zhuomian | 96,885,134 | 96,885,134 | 96,885,134 | ||||||
| Tang Zhuolin | 67,684,392 | 67,684,392 | 67,684,392 | ||||||
| Hong Kong Securities Clearing Company Limited | 48,183,133 | 48,183,133 | 48,183,133 | ||||||
| Pulead Technology | 35,748,587 | 35,748,587 | 35,748,587 | ||||||
Industry Co., Ltd.
| Industry Co., Ltd. | |||
| Luzhou Industrial Development Investment Group Co., Ltd. | 31,770,010 | 31,770,010 | 31,770,010 |
| Qinghai Puren Intelligent Technology R & D Center (Limited Partnership) | 26,628,340 | 26,628,340 | 26,628,340 |
| Bank of China Limited - Dacheng Jingheng Mixed Securities Investment Fund | 7,962,600 | 7,962,600 | 7,962,600 |
| Liu Wucai | 6,597,688 | 6,597,688 | 6,597,688 |
| Beixin Ruifeng Fund - Industrial and Commercial Bank of China - Beijing Hengyu Tianze Investment Management Co., Ltd. | 6,171,777 | 6,171,777 | 6,171,777 |
| Qiu Yezhi | 5,845,597 | 5,845,597 | 5,845,597 |
| 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 Zhuo Lin and Mr. Tang Zhuo Min are brothers and on August 18, 2010, they entered into a "Letter of Agreement on Acting in Concert". Ltd. and Qinghai Puren Intelligent Technology Research and Development Center (Limited Partnership) are parties acting in concert. The Company does not know whether there are any other related relationships or persons acting in concert between the above shareholders. | ||
| Description of the participation of the top 10 common shareholders in the financing and securities financing business (if any) | The Company's shareholder, Luzhou Industrial Development Investment Group Co., Ltd. holds 31,770,010 shares through a client credit transaction guarantee securities account with Guotai Junan Securities Co. Ltd. | ||
Top 10 shareholders involved in refinancing shares lending:
□ Applicable √ Not applicable
Changes in top 10 shareholders compared with the prior period:
√ Applicable □ Not applicable
Unit: share
| Changes in top 10 shareholders compared with the end of the prior period | |||||
| Full name of shareholder | Newly added to or exiting from top 10 shareholders in the Reporting Period | Shares lent in refinancing and not yet returned at the period-end | Shares in the common account and credit account plus shares lent in refinancing and not yet returned at the period-end | ||
| Total shares | As % of total share capital | Total shares | As % of total share capital | ||
Bank of ChinaLimited－DachengJingheng MixedSecuritiesInvestment Fund
| Bank of China Limited－Dacheng Jingheng Mixed Securities Investment Fund | Newly added | 0 | 0.00% | 7,962,600 | 0.64% |
| Beixin Ruifeng Fund－Industrial and Commercial Bank of China－Beijing Heyutz Investment Management Co., Ltd. | Newly added | 0 | 0.00% | 6,171,777 | 0.50% |
| Liu Wucai | Newly added | 0 | 0.00% | 6,597,688 | 0.53% |
| Shengji Equity Investment Fund (Shanghai) Co., Ltd. | Exiting | 0 | 0.00% | 0 | 0.00% |
| JIC Investment Co., Ltd. | Exiting | 0 | 0.00% | 0 | 0.00% |
| Beixin Ruifeng Fund－SPD Bank－Beijing International Trust－Beijing Trust·Qingyan Fengshou Wealth Management Collective Capital Trust Plan No. 2015015 | Exiting | 0 | 0.00% | 0 | 0.00% |
Indicate whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the Company conductedany promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: controlled by an individualType of the controlling shareholder: individual
| Name of the controlling shareholder | Nationality | Residency in other countries or regions or not |
| Tang Zhuolin | Chinese | Not |
| Main occupation and position | Chairman of the Board of Dongfang Precision | |
| Interests held in other domestically and overseas listed companies in the Reporting | Not applicable | |
Period
Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Acting-in-Concert Parties
Nature of the actual controller: domestic individual
| Name of the actual controller | Relationship with the actual controller | Nationality | Residency in other countries or regions or not |
| Tang Zhuolin | Actual controller himself | Chinese | Not |
| Tang Zhuomian | Acting-in-concert party (contractual, kinship-based, and common control-based) | Chinese | Not |
| Main occupation and position | Mr. Tang Zhuolin serves as the Chairman of the Board of Dongfang Precision as his main occupation. | ||
| Controlling interests in other domestically and overseas listed companies in the past 10 years | Not applicable | ||
The actual controller of the Company remained unchanged during the Reporting Period.Ownership and control relationship between the actual controller and the Company:
Indicate whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Shares Cumulatively Put in Pledge by the Company’s Controlling Shareholder or Biggest Shareholderand Its Acting-in-Concert Parties Accounting for 80% of Their Shareholdings in the Company
□ Applicable √ Not applicable
5. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
| Tang Zhuolin | Tang Zhuomian |
Guangdong Dongfang Precision Science &
Technology Co., Ltd.
Guangdong Dongfang Precision Science &
Technology Co., Ltd.
21.82%
| 21.82% | 7.81% |
6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
IV Share Repurchase in the Reporting PeriodProgress on any share repurchase:
√ Applicable □ Not applicable
| Disclosure date of the repurchase plan | Number of shares to be repurchased | As % of total share capital | Amount to be used | Repurchase period | Purpose | Shares repurchased (share) | Shares repurchased as % of total shares under the equity incentive plan (if any) |
| 7 January 2023 | Not lower than RMB100 million (inclusive) and no more than RMB200 million (inclusive) | From 31 January 2023 to 30 January 2024 | All the repurchased shares are to be retired, which will reduce the Company’s registered capital accordingly | 21,572,060 | N/A |
Progress on reducing the repurchased shares by way of centralized bidding:
□ Applicable √ Not applicable
Part VIII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Part IX Corporate Bonds
□ Applicable √ Not applicable
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Part X Corporate Financial StatementI. Auditor’s Report
| Type of Audit Opinion | Standard Unreserved opinion |
| Signing date of the Auditor’s Report | 26 March 2024 |
| Name of the Audit Institution | Ernst & Young Hua Ming LLP |
| Document number of the Auditor’s report | Ernst & Young Hua Ming (2023) Auditor’s Report No. 70022785_G01 |
| Name of the Chinese Certified Public Accountant | Feng Xingzhi, Hu Chuan |
Auditor’s Report
Ernst & Young Hua Ming (2023) Auditor’s Report No. 70022785_G01
Guangdong Dongfang Precision Science & Technology Co., Ltd.
To the Shareholders of Guangdong Dongfang Precision Science & Technology Co., Ltd.,
I. Opinion
We have audited the financial statements of Guangdong Dongfang Precision Science & Technology Co.,Ltd. (hereinafter referred to as the “Company”), which comprise the consolidated and the Company’sbalance sheets as at 31 December 2023, the consolidated and the Company’s income statements, theconsolidated and the Company’s statements of changes in equity and the consolidated and the Company’sstatements of cash flows for the year then ended, and notes to the financial statements. In our opinion, theaccompanying financial statements present fairly, in all material respects, the consolidated and theCompany’s financial position as at 31 December 2023, and the consolidated and the Company’s financialperformance and cash flows for the year then ended in accordance with Accounting Standards for BusinessEnterprises (“ASBEs”).
II. Basis for OpinionWe conducted our audit in accordance with China’s Standards on Auditing “CSAs”. Our responsibilitiesunder those standards are further described in the Auditor’s Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordance with China Code ofEthics for Certified Public Accountants (the “Code”), and we have fulfilled our other ethical responsibilitiesin accordance with the Code. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
III. Key Audit MatterKey audit matter is the matter that, in our professional judgment, was of most significance in our audit of thefinancial statements of the current period. This matter was addressed in the context of our audit of thefinancial statements as a whole, and in forming our opinion thereon, and we do not provide a separateopinion on this matter. For the matter below, our description of how our audit addressed the matter isprovided in that context.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
We have fulfilled our responsibilities described in the Auditor’s Responsibilities for the Audit of theFinancial Statements section of our report, including in relation to these matters. Accordingly, our auditincluded the performance of procedures designed to respond to our assessment of the risks of materialmisstatements of the financial statements. The results of our audit procedures, including proceduresperformed to address the matter below, provide the basis for our opinion on the accompanying financialstatements.
| Key audit matter: | How our audit addressed the key audit matter: |
| Impairment of goodwill | |
| As at 31 December 2023, the carrying amount of goodwill was RMB571,486,395.71 and the impairment allowance for goodwill was RMB130,852,569.63. The Group's management performs goodwill impairment testing at the end of each year. The assessment of goodwill impairment testing was based on the recoverable amount of the relevant asset groups to which the goodwill is allocated, and the recoverable amount of such asset groups was determined by the present value of the asset groups’ expected future cash flows. In a goodwill impairment test, the forecasting of future cash flows involved significant judgments and estimates, including sales growth rate, gross margin and discount rate. Because goodwill had a significant carrying value and exerted a significant impact on the financial statements, we identified goodwill impairment as a key audit matter. The accounting policies on and disclosures of goodwill were set out in Item 16 of Note III, Item 31 of Note III, and Item 20 of Note V to the financial statements. | The procedures performed to address this matter are as follows: (1) Performed internal control walk through and executed control tests on identified critical control points (2) Assessed the identification of asset groups by the Group's management and the goodwill allocated to the asset groups; (3) Obtained reports on the assessment of goodwill impairment issued by the independent third-party asset appraisal institution engaged by the management with securities and futures related business qualifications; (4) Involved our internal valuation experts to assess the rationality of the major assumptions and assessment methods used by the Group's management when forecasting the recoverable amount of asset groups, including the discount rate and long-term growth rate; (5) Assessed the forecast sales revenue and operating performance for future years and comparing them with historical operating performance; and (6) Evaluated the adequacy of the Group's disclosures in the notes to the financial statements. |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
IV. Other Information
The management of the Company is responsible for the other information. The other informationcomprises all of the information included in the annual report, other than the financial statements and ourauditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express anyform of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other informationand, in doing so, consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of Management and Those Charged with Governance for the Financial Statements
The management is responsible for the preparation and fair presentation of the financial statements inaccordance with ASBEs, and for designing, implementing and maintaining such internal control as themanagement determines is necessary to ensure the preparation of financial statements to be free frommaterial misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s abilityto continue as a going concern, disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting, unless the management either intends to liquidate or to cease operations,or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an auditconducted in accordance with CSAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,they could reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.
As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resulting from error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override ofinternal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as a going concern.If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the financial statements or, and if such disclosures are inadequate,to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor’s report. However, future events or conditions may cause the Company to cease tocontinue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and eventsin a manner that achieves fair presentation.
VI. Auditor’s Responsibilities for the Audit of the Financial Statements (Cont’d)
As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also: (cont’d)
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an audit opinion on the financial statements. Weare responsible for the direction, supervision and performance of the group audit. We remain solelyresponsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scopeand timing of the audit and significant audit findings, including any significant deficiencies in internalcontrol that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards (if applicable).
From the matters communicated with those charged with governance, we determine the matter that was ofmost significance in the audit of the financial statements of the current period and is therefore the key auditmatter. We describe this matter in our auditor’s report unless law or regulation precludes public disclosureabout the matter or when, in extremely rare circumstances, we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonably be expectedto outweigh the public interest benefits of such communication.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
| Ernst & Young Hua Ming LLP | Chinese Certified Public Accountant: Feng Xingzhi (Engagement Partner) |
| Chinese Certified Public Accountant: Hu Chuan | |
| Beijing, China | 26 March 2024 |
错误!未知的文档属性名称Consolidated Balance SheetAs at 31 December 2023 Expressed in Renminbi Yuan
II. Financial Statements
| Assets | Note V | 31 December 2023 | 31 December 2022 | ||||
| Current assets | |||||||
| Cash and bank balances | 1 | 1,826,419,904.49 | 1,274,447,199.74 | ||||
| Financial assets held for trading | 2 | 682,625,442.45 | 860,832,278.88 | ||||
| Notes receivable | 3 | 47,661,412.88 | 24,566,100.12 | ||||
| Accounts receivable | 4 | 904,003,975.47 | 837,305,757.46 | ||||
| Receivables financing | 5 | 9,365,344.07 | 15,305,668.26 | ||||
| Prepayments | 6 | 45,741,143.90 | 64,946,901.26 | ||||
| Other receivables | 7 | 51,797,943.96 | 83,996,902.82 | ||||
| Inventories | 8 | 1,182,411,055.68 | 1,092,981,884.51 | ||||
| Contract assets | 9 | 45,946,377.14 | 65,089,851.21 | ||||
| Current portion of non-current assets | 10 | 5,970,000.00 | 311,763,750.00 | ||||
| Other current assets | 11 | 75,234,656.07 | 61,370,451.31 | ||||
| Total current assets | 4,877,177,256.11 | 4,692,606,745.57 | |||||
| Non-current assets | |||||||
| Long-term receivables | 12 | 4,308,196.00 | 1,294,299.00 | ||||
| Long-term equity investments | 13 | 117,265,884.84 | 95,352,681.52 | ||||
| Other non-current financial assets | 14 | 461,278,259.67 | 334,449,603.33 | ||||
| Fixed assets | 15 | 611,851,577.04 | 570,200,113.79 | ||||
| Construction in progress | 16 | 195,557,097.80 | 38,904,537.85 | ||||
| Right-of-use assets | 17 | 82,342,398.83 | 86,448,978.02 | ||||
| Intangible assets | 18 | 365,954,480.05 | 368,103,395.11 | ||||
| Research and development expenditures | 19 | - | 3,702,229.76 | ||||
| Goodwill | 20 | 440,633,826.08 | 430,916,848.74 | ||||
| Long-term prepaid expenses | 21 | 28,543,581.54 | 16,735,552.98 | ||||
| Deferred tax assets | 22 | 255,872,409.78 | 244,542,124.61 | ||||
| Other non-current assets | 23 | 97,437,602.28 | 45,320,004.82 | ||||
| Total non-current assets | 2,661,045,313.91 | 2,235,970,369.53 | |||||
| Total assets | 7,538,222,570.02 | 6,928,577,115.10 | |||||
The accompanying notes to the financial statements form an integral part of the financial statements.
错误!未知的文档属性名称Consolidated Balance SheetAs at 31 December 2023 Expressed in Renminbi Yuan
| Liabilities and equity | Note V | 31 December 2023 | 31 December 2022 | ||||
| Current liabilities | |||||||
| Short-term borrowings | 25 | 370,549,972.80 | 41,815,129.24 | ||||
| Financial liabilities held for trading | 26 | 115,900,827.21 | 57,022,555.58 | ||||
| Notes payable | 27 | 152,433,276.09 | 149,918,253.31 | ||||
| Accounts payable | 28 | 737,544,841.42 | 748,319,561.21 | ||||
| Contract liabilities | 29 | 645,608,919.34 | 692,567,968.60 | ||||
| Employee benefits payable | 30 | 153,282,932.10 | 123,695,328.31 | ||||
| Tax payable | 31 | 67,609,203.41 | 24,111,703.70 | ||||
| Other payables | 32 | 126,415,425.61 | 90,080,142.50 | ||||
| Current portion of non-current liabilities | 33 | 57,001,396.44 | 315,767,431.26 | ||||
| Other current liabilities | 34 | 9,145,175.01 | 5,988,879.29 | ||||
| Total current liabilities | 2,435,491,969.43 | 2,249,286,953.00 | |||||
| Non-current liabilities | |||||||
| Long-term borrowings | 35 | 79,107,701.15 | 57,884,494.89 | ||||
| Lease liabilities | 36 | 65,861,441.32 | 68,989,111.33 | ||||
| Long-term employee benefits payable | 37 | 13,964,394.20 | 13,179,944.17 | ||||
| Provisions | 38 | 168,358,953.84 | 118,945,953.78 | ||||
| Deferred income | 39 | 9,956,991.66 | 11,073,651.66 | ||||
| Deferred tax liabilities | 22 | 8,854,294.28 | 6,825,450.77 | ||||
| Other non-current liabilities | 40 | 22,418,854.80 | 136,396,292.55 | ||||
| Total non-current liabilities | 368,522,631.25 | 413,294,899.15 | |||||
| Total liabilities | 2,804,014,600.68 | 2,662,581,852.15 | |||||
The accompanying notes to the financial statements form an integral part of the financial statements.
错误!未知的文档属性名称Consolidated Balance SheetAs at 31 December 2023 Expressed in Renminbi Yuan
| Liabilities and equity | Note V | 31 December 2023 | 31 December 2022 | ||||
| Equity | |||||||
| Share capital | 41 | 1,240,618,400.00 | 1,241,106,400.00 | ||||
| Capital surplus | 42 | 2,889,928,997.21 | 2,947,263,843.53 | ||||
| Less: Treasury stock | 43 | 218,298,532.79 | 240,255,502.45 | ||||
| Other comprehensive income | 44 | 75,122,078.52 | 26,512,917.07 | ||||
| Special reserve | 45 | 16,229,817.03 | 14,488,955.52 | ||||
| Surplus reserves | 46 | 51,830,974.45 | 51,830,974.45 | ||||
| Retained earnings | 47 | 456,258,959.55 | 23,018,722.11 | ||||
| Total equity attributable to owners of the parent | 4,511,690,693.97 | 4,063,966,310.23 | |||||
| Non-controlling interests | 222,517,275.37 | 202,028,952.72 | |||||
| Total equity | 4,734,207,969.34 | 4,265,995,262.95 | |||||
| Total liabilities and equity | 7,538,222,570.02 | 6,928,577,115.10 |
The financial statements have been signed by:
Legal representative: Tang ZhuolinChief Financial Officer: Shao YongfengHead of Accounting Department: Chen Nan
The accompanying notes to the financial statements form an integral part of the financial statements.
Guangdong Dongfang Precision Science & Technology Co., Ltd.Consolidated Income Statement2023 Expressed in Renminbi Yuan
| Note V | 2023 | 2022 | |||||
| Operating revenue | 48 | 4,745,737,321.83 | 3,892,708,509.64 | ||||
| Less: Cost of sales | 48 | 3,359,528,546.01 | 2,833,305,748.54 | ||||
| Taxes and surcharges | 49 | 14,552,830.09 | 11,956,289.95 | ||||
| Selling expenses | 50 | 278,840,528.93 | 182,555,875.71 | ||||
| Administrative expenses | 51 | 344,224,692.51 | 311,463,613.16 | ||||
| R&D expenses | 52 | 127,566,482.42 | 97,954,453.40 | ||||
| Finance costs | 53 | (1,089,616.70 | ) | (8,970,693.69 | ) | ||
| Including: Interest expenses | 53 | 24,236,011.48 | 13,839,292.38 | ||||
| Interest income | 53 | (35,308,583.52 | ) | (19,042,851.72 | ) | ||
| Add: Other income | 54 | 15,747,293.82 | 20,933,377.44 | ||||
| Investment income | 55 | 10,707,429.16 | 19,131,077.82 | ||||
| Including: Share of profit of joint ventures and associates | 55 | (2,259,252.98 | ) | 1,851,796.60 | |||
| Gain on changes in fair value | 56 | 47,387,905.11 | 17,917,046.61 | ||||
| Credit impairment loss | 57 | (10,541,916.77 | ) | (5,109,974.87 | ) | ||
| Asset impairment loss | 58 | (17,217,097.39 | ) | (12,796,323.56 | ) | ||
| Gain/loss on disposal of assets | 59 | 716,995.85 | (168,835.37 | ) | |||
| Operating profit | 668,914,468.35 | 504,349,590.64 | |||||
| Add: Non-operating income | 60 | 5,974,641.17 | 2,459,567.33 | ||||
| Less: Non-operating expenses | 61 | 16,152,375.18 | 880,845.25 | ||||
| Profit before income taxes | 658,736,734.34 | 505,928,312.72 | |||||
| Less: Income tax expenses | 62 | 188,398,152.72 | 22,187,291.43 | ||||
| Net profit | 470,338,581.62 | 483,741,021.29 | |||||
| Net profit classified by continuing operations | |||||||
| Net profit from continuing operations | 470,338,581.62 | 483,741,021.29 | |||||
The accompanying notes to the financial statements form an integral part of the financial statements.
Guangdong Dongfang Precision Science & Technology Co., Ltd.Consolidated Income Statement2023 Expressed in Renminbi Yuan
| Note V | 2023 | 2022 | |||||
| Net profit classified by attribution of ownership | |||||||
| Net profit attributable to owners of the parent | 433,240,237.44 | 447,177,897.38 | |||||
| Net profit attributable to non-controlling interests | 37,098,344.18 | 36,563,123.91 | |||||
| Other comprehensive income, net of tax | 44 | 48,074,232.21 | 56,936,768.65 | ||||
| Other comprehensive income attributable to owners of the parent, net of tax | 48,609,161.45 | 59,835,580.05 | |||||
| Other comprehensive income that will not be reclassified to profit or loss | (44,025.32 | ) | 1,856,564.02 | ||||
| Changes caused by remeasurements on defined benefit schemes | (44,025.32 | ) | 1,856,564.02 | ||||
| Other comprehensive income that will be reclassified to profit or loss | 48,653,186.77 | 57,979,016.03 | |||||
| Differences arising from the translation of foreign currency-denominated financial statements | 48,653,186.77 | 57,979,016.03 | |||||
| Other comprehensive income attributable to non-controlling interests, net of tax | 44 | (534,929.24 | ) | (2,898,811.40 | ) | ||
| Total comprehensive income | 518,412,813.83 | 540,677,789.94 | |||||
| Including: | |||||||
| Total comprehensive income attributable to owners of the parent | 481,849,398.89 | 507,013,477.43 | |||||
| Total comprehensive income attributable to non-controlling interests | 36,563,414.94 | 33,664,312.51 | |||||
| Earnings per share | 63 | ||||||
| Basic earnings per share | 63 | 0.36 | 0.37 | ||||
| Diluted earnings per share | 0.36 | 0.37 | |||||
The accompanying notes to the financial statements form an integral part of the financial statements.
错误!未知的文档属性名称Consolidated Statements of Changes in Equity错误!未知的文档属性名称 Expressed in Renminbi Yuan
2023
| Equity attributable to owners of the parent | Non-controlling | Total equity | ||||||||||||||||||||||||||
| Share capital | Capital surplus | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserves | Retained earnings | Subtotal | interests | ||||||||||||||||||||
| I. | At 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 | |||||||||||||||||
| II. | At 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 year | |||||||||||||||||||||||||||
| (I) | Total comprehensive income | - | - | - | 48,609,161.45 | - | - | 433,240,237.44 | 481,849,398.89 | 36,563,414.94 | 518,412,813.83 | |||||||||||||||||
| (II) | Owner’s contributions and | |||||||||||||||||||||||||||
| 1. | Share-based payments included in equity | - | 22,151,043.21 | - | - | - | - | - | 22,151,043.21 | - | 22,151,043.21 | |||||||||||||||||
| 2. | Others | (488,000.00 | (79,485,889.53 | (21,956,969.66 | ) | - | - | - | - | (58,016,919.87 | (16,075,092.29 | (74,092,012.16 | ) | |||||||||||||||
| (III) | Special reserve | |||||||||||||||||||||||||||
| 1. | Provision in the period | - | - | - | - | 5,118,146.78 | - | - | 5,118,146.78 | - | 5,118,146.78 | |||||||||||||||||
| 2. | Utilisation in the period | - | - | - | - | (3,377,285.27 | ) | - | - | (3,377,285.27 | - | (3,377,285.27 | ) | |||||||||||||||
| IV. | At 31 December 2023 | 1,240,618,400.00 | 2,889,928,997.21 | 218,298,532.79 | 75,122,078.52 | 16,229,817.03 | 51,830,974.45 | 456,258,959.55 | 4,511,690,693.97 | 222,517,275.37 | 4,734,207,969.34 | |||||||||||||||||
The accompanying notes to the financial statements form an integral part of the financial statements.
错误!未知的文档属性名称Consolidated Statements of Changes in Equity (Cont’d)错误!未知的文档属性名称Expressed in Renminbi Yuan
2022
| Equity attributable to owners of the parent | Non-controlling | Total equity | ||||||||||||||||||
| Share capital | Capital surplus | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserves | Retained earnings | Subtotal | interests | ||||||||||||
| I. | At 31 December 2021 and 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 | |||||||||
| II. | Changes for the year | |||||||||||||||||||
| (I) | Total comprehensive income | - | - | - | 59,835,580.05 | - | - | 447,177,897.38 | 507,013,477.43 | 33,664,312.51 | 540,677,789.94 | |||||||||
| (II) | Owner’s contributions and reduction in capital | - | - | - | - | - | - | - | - | - | - | |||||||||
| 1. | Share-based payments included in equity | - | 29,628,076.98 | - | - | - | - | - | 29,628,076.98 | - | 29,628,076.98 | |||||||||
| 2. | Others | (90,831,767.00 | (321,130,093.39 | (254,080,001.49 | - | - | - | - | (157,881,858.90 | (3,240,607.07 | ) | (161,122,465.97 | ||||||||
| (III) | Special reserve | |||||||||||||||||||
| 1. | Provision in the period | - | - | - | - | 6,161,824.10 | - | - | 6,161,824.10 | - | 6,161,824.10 | |||||||||
| 2. | Utilisation in the period | - | - | - | - | (2,925,507.77 | - | - | (2,925,507.77 | - | (2,925,507.77 | |||||||||
| III. | At 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 | |||||||||
The accompanying notes to the financial statements form an integral part of the financial statements.
Guangdong Dongfang Precision Science & Technology Co., Ltd.Consolidated Statement of Cash Flows2023 Expressed in Renminbi Yuan
| Note V | 2023 | 2022 | ||||||
| I. | Cash flows from operating activities | |||||||
| Proceeds from sale of goods and rendering of services | 4,642,173,392.49 | 3,980,777,143.75 | ||||||
| Receipts of taxes and surcharges refunds | 67,900,854.62 | 65,415,784.48 | ||||||
| Cash generated from other operating activities | 64 | 63,085,940.61 | 37,413,422.25 | |||||
| Subtotal of cash generated from operating activities | 4,773,160,187.72 | 4,083,606,350.48 | ||||||
| Payments for goods and services | 3,004,966,440.52 | 2,469,141,272.41 | ||||||
| Cash payments to and on behalf of employees1 | 766,697,629.83 | 672,362,139.67 | ||||||
| Payments of all types of taxes and surcharges | 170,874,687.85 | 155,555,899.95 | ||||||
| Cash used in other operating activities | 64 | 343,440,690.86 | 280,252,577.50 | |||||
| Subtotal of cash used in operating activities | 4,285,979,449.06 | 3,577,311,889.53 | ||||||
| Net cash generated from/used in operating activities | 65 | 487,180,738.66 | 506,294,460.95 | |||||
| II. | Cash flows from investing activities | |||||||
| Proceeds from disinvestment | 2,817,697,183.06 | 5,461,128,307.85 | ||||||
| Investment income | 8,788,769.72 | 19,977,080.02 | ||||||
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 519,230.09 | 299,284.95 | ||||||
| Cash generated from other investing activities | 64 | - | 20,741,402.85 | |||||
| Subtotal of cash generated from investing activities | 2,827,005,182.87 | 5,502,146,075.67 | ||||||
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 307,727,914.50 | 217,707,161.02 | ||||||
| Payments for investments | 2,705,884,238.80 | 5,586,038,692.54 | ||||||
| Net payments for the acquisition of subsidiaries and other business units | - | 115,932,016.05 | ||||||
| Cash used in other investing activities | 64 | - | 20,000,000.00 | |||||
| Subtotal of cash used in investing activities | 3,013,612,153.30 | 5,939,677,869.61 | ||||||
| Net cash generated from/used in investing activities | (186,606,970.43 | ) | (437,531,793.94 | ) | ||||
The accompanying notes to the financial statements form an integral part of the financial statements.
Guangdong Dongfang Precision Science & Technology Co., Ltd.Consolidated Statement of Cash Flows2023 Expressed in Renminbi Yuan
| Note V | 2023 | 2022 | ||||||
| III. | Cash flows from financing activities | |||||||
| Cash proceeds from investments by others | - | 2,600,000.00 | ||||||
| Including: Cash receipts from minority investment | - | 2,600,000.00 | ||||||
| Borrowings raised | 441,741,239.04 | 255,640,726.89 | ||||||
| Cash generated from other financing activities | 64 | 415,790,865.75 | 740,125,575.61 | |||||
| Subtotal of cash generated from financing activities | 857,532,104.79 | 998,366,302.50 | ||||||
| Repayment of borrowings | 373,742,740.68 | 452,030,374.54 | ||||||
| Interest and dividends paid | 16,883,749.75 | 8,391,200.32 | ||||||
| Cash used in other financing activities | 64 | 378,041,150.02 | 673,378,550.06 | |||||
| Subtotal of cash used in financing activities | 768,667,640.45 | 1,133,800,124.92 | ||||||
| Net cash generated from/used in financing activities | 88,864,464.34 | (135,433,822.42 | ) | |||||
| IV. | Effect of foreign exchange rates changes on cash and cash equivalents | 49,355,682.00 | 41,088,076.94 | |||||
| V. | Net increase/(decrease) in cash and cash equivalents | 65 | 438,793,914.57 | (25,583,078.47 | ) | |||
| Add: Cash and cash equivalents, beginning of the period | 65 | 1,233,720,697.27 | 1,259,303,775.74 | |||||
| VI. | Cash and cash equivalents, at end of the period | 65 | 1,672,514,611.84 | 1,233,720,697.27 |
The accompanying notes to the financial statements form an integral part of the financial statements.
Guangdong Dongfang Precision Science & Technology Co., Ltd.Company Balance SheetAs at 31 December 2023 Expressed in Renminbi Yuan
| Assets | Note XV | 31 December 2023 | 31 December 2022 | ||||
| Current assets | |||||||
| Cash and bank balances | 522,275,723.41 | 150,462,307.50 | |||||
| Financial assets held for trading | 641,997,959.60 | 544,644,172.35 | |||||
| Note receivable | 5,606,037.02 | - | |||||
| Accounts receivable | 1 | 190,361,646.28 | 252,845,901.89 | ||||
| Receivables financing | 4,268,677.09 | 8,665,919.20 | |||||
| Prepayments | 5,298,841.09 | 5,599,366.14 | |||||
| Other receivables | 2 | 654,825,093.49 | 595,201,759.62 | ||||
| Inventories | 159,389,489.31 | 144,657,557.06 | |||||
| Contract assets | 22,201,442.67 | 28,301,152.72 | |||||
| Current portion of non-current assets | 5,970,000.00 | 311,763,750.00 | |||||
| Other current assets | 1,583,542.63 | 620,238.68 | |||||
| Total current assets | 2,213,778,452.59 | 2,042,762,125.16 | |||||
| Non-current assets | |||||||
| Long-term receivables | 4,308,196.00 | 1,294,299.00 | |||||
| Long-term equity investments | 3 | 875,978,593.12 | 760,833,667.45 | ||||
| Other non-current financial assets | 148,108,670.05 | 134,097,590.81 | |||||
| Fixed assets | 296,287,511.68 | 311,637,453.98 | |||||
| Construction in progress | 4,273,340.82 | 4,716.98 | |||||
| Right-of-use assets | 6,238,404.20 | 8,298,157.57 | |||||
| Intangible assets | 55,652,155.93 | 56,644,698.03 | |||||
| Long-term prepaid expenses | 4,967,872.25 | 6,215,303.00 | |||||
| Deferred tax assets | 174,616,613.96 | 173,968,753.31 | |||||
| Other non-current assets | 72,919,162.50 | 34,520,000.00 | |||||
| Total non-current assets | 1,643,350,520.51 | 1,487,514,640.13 | |||||
| Total assets | 3,857,128,973.10 | 3,530,276,765.29 | |||||
The accompanying notes to the financial statements form an integral part of the financial statements.
Guangdong Dongfang Precision Science & Technology Co., Ltd.Company Balance SheetAs at 31 December 2023 Expressed in Renminbi Yuan
| Liabilities and equity | 31 December 2023 | 31 December 2022 | |||||
| Current liabilities | |||||||
| Short term loans | 20,000,000.00 | - | |||||
| Trading financial liabilities | 728.57 | 7,230,000.00 | |||||
| Notes payable | 39,577,380.86 | 47,602,955.27 | |||||
| Accounts payable | 65,855,068.76 | 46,036,442.22 | |||||
| Contract liabilities | 53,704,255.92 | 29,803,024.37 | |||||
| Employee benefits payable | 16,801,339.01 | 14,571,839.42 | |||||
| Tax payable | 5,459,697.96 | 430,234.63 | |||||
| Other payables | 103,498,597.36 | 125,142,268.32 | |||||
| Current portion of non-current liabilities | 9,361,216.26 | 1,703,312.89 | |||||
| Other current liabilities | 588,152.27 | 1,481,251.36 | |||||
| Total current liabilities | 314,846,436.97 | 274,001,328.48 | |||||
| Non-current liabilities | |||||||
| Long term loans | 32,436,000.00 | - | |||||
| Lease liabilities | 5,166,917.05 | 6,781,238.89 | |||||
| Provisions | 1,418,799.52 | 1,283,500.00 | |||||
| Deferred income | 9,956,991.66 | 11,073,651.66 | |||||
| Other non-current liabilities | - | 470,437.92 | |||||
| Total non-current liabilities | 48,978,708.23 | 19,608,828.47 | |||||
| Total liabilities | 363,825,145.20 | 293,610,156.95 | |||||
| Equity | |||||||
| Share capital | 1,240,618,400.00 | 1,241,106,400.00 | |||||
| Capital surplus | 2,745,450,997.27 | 2,820,661,243.26 | |||||
| Less: Treasury stock | 218,298,532.79 | 240,255,502.45 | |||||
| Special reserve | 6,645,318.98 | 7,200,502.88 | |||||
| Surplus reserves | 51,830,974.45 | 51,830,974.45 | |||||
| Retained earnings | (332,943,330.01 | ) | (643,877,009.80 | ) | |||
| Total Equity | 3,493,303,827.90 | 3,236,666,608.34 | |||||
| Total liabilities and Equity | 3,857,128,973.10 | 3,530,276,765.29 |
The accompanying notes to the financial statements form an integral part of the financial statements.
Guangdong Dongfang Precision Science & Technology Co., Ltd.Company Income Statement2023 Expressed in Renminbi Yuan
| Note XV | 2023 | 2022 | |||||
| Operating revenue | 4 | 500,581,222.34 | 521,042,097.24 | ||||
| Less: Cost of sales | 4 | 266,015,344.67 | 272,827,724.91 | ||||
| Taxes and surcharges | 6,779,241.99 | 5,683,155.26 | |||||
| Selling expenses | 40,854,863.63 | 17,209,290.59 | |||||
| Administrative expenses | 93,180,157.73 | 97,805,978.92 | |||||
| R&D expenses | 22,829,162.22 | 18,858,241.84 | |||||
| Finance costs | (11,186,446.37 | ) | (30,772,961.40 | ) | |||
| Including: Interest expenses | 4,350,360.42 | 2,212,567.00 | |||||
| Interest income | (13,912,716.65 | ) | 12,296,701.61 | ||||
| Add: Other income | 3,897,767.25 | 6,635,795.27 | |||||
| Investment income | 5 | 321,068,620.44 | 24,811,647.21 | ||||
| Including: Share of profit or loss of joint ventures and associates | (753,369.07 | ) | 3,143,695.45 | ||||
| Gain/(loss) on changes in fair value | (56,253,675.31 | ) | 8,365,325.57 | ||||
| Credit impairment loss | 284,355.09 | 206,054.50 | |||||
| Asset impairment loss | (106,669.84 | ) | (1,117,287.51 | ) | |||
| Gain on disposal of assets | - | 1,379,510.93 | |||||
| Operating profit | 350,999,296.10 | 179,711,713.09 | |||||
| Add: Non-operating income | 713,971.52 | 613,023.15 | |||||
| Less: Non-operating expenses | 845,736.74 | 146,746.24 | |||||
| Profit before income taxes | 350,867,530.88 | 180,177,990.00 | |||||
| Less: Income tax expenses | 39,933,851.09 | (64,521,335.28 | ) | ||||
| Net profit | 310,933,679.79 | 244,699,325.28 | |||||
| Including: Net profit from continuing operations | 310,933,679.79 | 244,699,325.28 | |||||
| Total comprehensive income | 310,933,679.79 | 244,699,325.28 |
The accompanying notes to the financial statements form an integral part of the financial statements.
错误!未知的文档属性名称Company Statement of Changes in Equity错误!未知的文档属性名称Expressed in Renminbi Yuan
2023
| Share capital | Share capital Capital surplus | Less: Treasury stock | Special reserve | Surplus reserves | Retained earnings | Total equity | ||||||||||||||||
| I. | At 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 | |||||||||||||
| II. | At 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 year | (488,000.00 | ) | (75,210,245.99 | ) | (21,956,969.66 | ) | (555,183.90 | ) | - | 310,933,679.79 | 256,637,219.56 | ||||||||||
| (I) | Total comprehensive income | - | - | - | - | - | 310,933,679.79 | 310,933,679.79 | ||||||||||||||
| (II) | reduction in capital | - | ||||||||||||||||||||
| 1. | Share-based payments included in equity | - | 21,203,834.59 | - | - | - | - | 21,203,834.59 | ||||||||||||||
| 2. | Others | (488,000.00 | ) | (96,414,080.58 | ) | (21,956,969.66 | ) | - | - | - | (74,945,110.92 | ) | ||||||||||
| (III) | Special reserve | |||||||||||||||||||||
| 1. | Provision in the period | - | - | - | 826,188.88 | - | - | 826,188.88 | ||||||||||||||
| 2. | Amount utilised in the period | - | - | - | (1,381,372.78 | ) | - | - | (1,381,372.78 | ) | ||||||||||||
| IV. | At 31 December 2023 | 1,240,618,400.00 | 2,745,450,997.27 | 218,298,532.79 | 6,645,318.98 | 51,830,974.45 | (332,943,330.01 | ) | 3,493,303,827.90 |
The accompanying notes to the financial statements form an integral part of the financial statements.
错误!未知的文档属性名称Company Statement of Changes in Equity错误!未知的文档属性名称 Expressed in Renminbi Yuan
2022
| Share capital | Share capital Capital surplus | Less: Treasury stock | Special reserve | Surplus reserves | Retained earnings | Total equity | ||||||||||||||||
| I. | At 31 December 2021 and 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 | |||||||||||||
| II. | Changes for the year | |||||||||||||||||||||
| （I） | Total comprehensive income | - | - | - | - | - | 244,699,325.28 | 244,699,325.28 | ||||||||||||||
| （II） | Owner’s contributions and reduction in capital | |||||||||||||||||||||
| 1. | Share-based payments included in equity | - | 27,945,791.19 | - | - | - | - | 27,945,791.19 | ||||||||||||||
| 2. | Others | (90,831,767.00 | ) | (370,245,450.06 | ) | (254,080,001.49 | ) | - | - | - | (206,997,215.57 | ) | ||||||||||
| （III） | Special reserve | |||||||||||||||||||||
| 1. | Provision in the period | - | - | - | 2,326,893.29 | - | - | 2,326,893.29 | ||||||||||||||
| 2. | Amount utilised in the period | - | - | - | (193,495.03 | ) | - | - | (193,495.03 | ) | ||||||||||||
| III. | At 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 |
The accompanying notes to the financial statements form an integral part of the financial statements.
错误!未知的文档属性名称Company Statement of Cash Flows2023 Expressed in Renminbi Yuan
| 2023 | 2022 | |||||||
| I. | Cash flows from operating activities | |||||||
| Proceeds from sale of goods and rendering of services | 543,144,763.30 | 355,422,382.54 | ||||||
| Receipts of taxes and surcharges refunds | 18,624,572.39 | 20,405,793.81 | ||||||
| Cash generated from other operating activities | 37,082,171.29 | 33,411,792.89 | ||||||
| Subtotal of cash generated from operating activities | 598,851,506.98 | 409,239,969.24 | ||||||
| Payments for goods and services | 255,701,960.58 | 238,655,533.97 | ||||||
| Cash payments to and on behalf of employees | 96,818,630.04 | 90,655,013.90 | ||||||
| Payments of all types of taxes and surcharges | 5,907,970.50 | 9,877,155.70 | ||||||
| Cash used in other operating activities | 145,909,271.88 | 35,938,085.85 | ||||||
| Subtotal of cash used in operating activities | 504,337,833.00 | 375,125,789.42 | ||||||
| Net cash generated from operating activities | 94,513,673.98 | 34,114,179.82 | ||||||
| II. | Cash flows from investing activities | |||||||
| Proceeds from disinvestment | 1,695,765,692.04 | 2,957,634,482.77 | ||||||
| Investment income | 72,940,439.51 | 3,788,252.05 | ||||||
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | - | 23,000.00 | ||||||
| Other cash receipts relating to investing activities | 326,643,514.64 | 20,903,000.00 | ||||||
| Subtotal of cash generated from investing activities | 2,095,349,646.19 | 2,982,348,734.82 | ||||||
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 49,079,505.20 | 47,508,537.31 | ||||||
| Payments for investments | 2,030,963,951.96 | 2,834,602,224.34 | ||||||
| Net payments for the acquisition of subsidiaries and other business units | - | 173,800,000.00 | ||||||
| Other cash payments relating to other investing activities | - | 20,000,000.00 | ||||||
| Subtotal of cash used in investing activities | 2,080,043,457.16 | 3,075,910,761.65 | ||||||
| Net cash generated from/used in investing activities | 15,306,189.03 | (93,562,026.83 | ) |
The accompanying notes to the financial statements form an integral part of the financial statements.
错误!未知的文档属性名称Company Statement of Cash Flows (Cont’d)2023 Expressed in Renminbi Yuan
| 2023 | 2022 | |||||||
| III. | Cash flows from financing activities | |||||||
| Borrowings raised | 98,180,000.00 | 33,431,500.00 | ||||||
| Cash generated from other financing activities | 340,829,045.67 | 585,791,128.23 | ||||||
| Subtotal of cash generated from financing activities | 439,009,045.67 | 619,222,628.23 | ||||||
| Repayment of borrowings | 38,048,000.00 | 33,431,500.00 | ||||||
| Interest and dividends paid | 5,103,094.39 | 1,438,732.23 | ||||||
| Cash used in other financing activities | 242,155,673.21 | 539,194,859.08 | ||||||
| Subtotal of cash used in financing activities | 285,306,767.60 | 574,065,091.31 | ||||||
| Net cash generated from financing activities | 153,702,278.07 | 45,157,536.92 | ||||||
| IV. | Net increase/(decrease) in cash and cash equivalents | - | - | |||||
| Add: Cash and cash equivalents, beginning of the period | ||||||||
| V. | 263,522,141.08 | (14,290,310.09 | ) | |||||
| Cash and cash equivalents, beginning of the period | 142,319,826.12 | 156,610,136.21 | ||||||
| VI. | Cash and cash equivalents, at end of the period | 405,841,967.20 | 142,319,826.12 |
The accompanying notes to the financial statements form an integral part of the financial statements.
错误!未知的文档属性名称Notes to the Financial Statements2023 Expressed in Renminbi Yuan
III. Corporate Background
Guangdong Dongfang Precision Science & Technology Co., Ltd. (the "Company"), a joint stock companywith limited liability registered in Guangdong Province of the People's Republic of China and established on9 December 1996, obtained a Business License for Enterprise Legal Person with a registration number of440682000040868.
In August 2011, upon the approval by the China Securities Regulatory Commission (CSRC) in the Reply onApproving the Initial Public Offering of Shares by Guangdong Dongfang Precision Science & TechnologyCo., Ltd. (ZH.J.X.K. [2011] No. 1237), the Company issued Renminbi-denominated ordinary shares to thepublic, and was listed on the Shenzhen Stock Exchange in the same month. The Company started to use theunified social credit code (914406002318313119) in 2016. The Company is headquartered in 2 QiangshiRoad, Shishan Town, Nanhai District, Foshan City, Guangdong Province, China.
The Group's main business includes four business sectors: smart corrugated packaging equipment, industrialinternet industry solutions, digital printers and water power spots equipment.
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 26 March2024.
IV.Basis of Preparation of the Financial Statements
These financial statements have been prepared in accordance with China’s “Accounting Standards forBusiness Enterprises — Basic Standards” promulgated by the Ministry of Finance and the specificaccounting standards, application guidance, interpretations and other relevant regulations issued oramended thereafter (hereafter collectively referred to as “Accounting Standards for Business Enterprises” or“CAS”). In addition, the financial statements also disclose relevant financial information in accordance withthe Rules No. 15 for the Preparation of Information Disclosure by Companies Offering Securities to thePublic - General Provisions on Financial Reports.
The financial statements are prepared on a going concern basis.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III.Principal Accounting Policies and Accounting Estimates
The Group has formulated specific accounting policies and accounting estimates according to thecharacteristics of its actual production and operation, which is mainly embodied in the provision for the baddebt of accounts receivable, provision for write-down of inventories, depreciation of fixed assets, provisionfor product warranties, capitalization conditions for expenditure on the development phase of research anddevelopment expenses and recognition and measurement of revenue.
1. Statement of compliance
The financial statements present truly and completely the financial positions of the Group and the Companyas at 31 December 2023, and the financial performance and the cash flows for the year then ended inaccordance with Accounting Standards for Business Enterprises.
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.The amounts in the financial statements were denominated in Renminbi yuan, unless otherwise stated.
4. Determination method and selection basis of materiality criteria
| Materiality criteria | |||
| Significant construction in progress | Budgeted amount for investment exceeds RMB50,000,000 | ||
| Significant cash flows from investing activities | Amount exceeds RMB50,000,000 | ||
| Significant non-wholly owned subsidiaries | Net assets of non-wholly owned subsidiaries account for more than 10% of consolidated net assets | ||
| Significant associates | The carrying amount of long-term equity investments in associates accounts for more than 5% of the consolidated net assets |
5. 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.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
5. Business combination (cont’d)
Business combinations involving entities under common control (cont’d)
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 adjustedto retained earnings.
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 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 andequity interests in the acquiree held prior to the date of acquisition over the share of the attributable netidentifiable assets of the acquiree, measured at fair value, was recognized as goodwill, which is subsequentlymeasured at cost less cumulative impairment loss. In case the fair value of the sum of the consideration paid (orequities issued) and equity interests in the acquire held prior to the date of acquisition is less than the fair value ofthe share of the attributable net identifiable assets of the acquiree, a review of the measurement of the fair valuesof the identifiable assets, liabilities and contingent liabilities, the consideration paid for the combination (or equityissued) and the equity interests in the acquiree held prior to the date of acquisition is conducted. If the reviewindicates that the fair value of the sum of the consideration paid (or equities issued) and equity interests in theacquiree held prior to the date of acquisition is indeed less than the fair value of the share of the attributable netidentifiable assets of the acquiree, the difference is recognized in profit or loss.
6. 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 entitieswhich the Company has control over (including enterprises, separable components of investee units and structuredentities controlled by the Company). An investor controls an investee when the investor is exposed, or has rights,to variable returns from its involvement with the investee and has the ability to affect those returns through itspower over the investee.
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.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
6. Consolidated financial statements (cont’d)
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 cashflows of the combined entities are included in the consolidated financial statements from the beginning of theperiod in which the combination occurred. When preparing and comparing the consolidated financial statements,the Group makes adjustments to relevant items of the financial statements of the previous period, deeming thereporting entity formed through combination as existing since initial implementation of control by the ultimatecontrolling party.
In the event of the change in one or more elements of control as a result of changes in relevant facts andconditions, the Group reassesses whether it has control over the investee.
If the control right is not lost, the change of minority shareholders' equity shall be regarded as equitytransaction.
7. 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.
8. 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 incomeaccording to the nature of foreign currency non-monetary items.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
8. Foreign currency translation (cont’d)
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 aforesaidtranslation of financial statements denominated in foreign currency shall be recognized as other comprehensiveincome. When foreign operations are disposed, other comprehensive income relating to the foreign operation istransferred to current 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 theaverage exchange rate for the period when cash flows occur. The impact on cash by the fluctuation of exchangerates is presented as a separate line item of reconciliation in the statement of cash flows.
9. Financial instruments
Financial instruments refer to the contracts which give rise to a financial asset in one entity and a financialliability or 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 contractualprovisions of 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 offinancial assets have been transferred, or (b) control over such type of financial assets has not beenretained even though substantially all risks and rewards of the ownership of such type of financial assetshave been neither transferred nor retained.
If the obligation of financial liability has been fulfilled, cancelled or expired, the financial liability isderecognized. If the present financial liability is substituted by the same debtee with another liability differing insubstance, or the terms of the present liability have been substantially modified, this substitution or modification istreated as derecognition of a present liability and recognition of a new liability with any arising differencesrecognized in profit 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 financialasset.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
9. Financial instruments (cont’d)
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 characteristicsof the financial assets. When and only when the Group changes its business model of managing financial assets,all relevant 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.
For financial assets at fair value through profit or loss, the relevant transaction costs are directly recognized inprofit or loss; for other financial assets, the relevant transaction costs are recognized in their initial recognitionamount.
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 throughother comprehensive income: the objective of the Group’s business management model in respect of such type offinancial assets is both to generate contract cash flow and to sell such type of financial assets; the contract terms ofsuch type of financial assets provide that cash flow generated on specific dates represents interest payment inrelation to principal amounts based on outstanding principal amounts only. Interest income from this type offinancial assets is recognized using the effective interest rate method. Other than interest income, impairment lossand exchange differences which shall be recognized as current profit or loss, other fair value changes shall beincluded in other comprehensive income. Upon derecognition of the financial assets, the cumulative gains orlosses previously included in other comprehensive income shall be transferred from other comprehensive incometo current profit or loss.
Financial assets at fair value through profit or lossOther than financial assets measured at amortized cost and financial assets at fair value through othercomprehensive income as aforementioned, all financial assets are classified as financial assets at fair valuethrough profit or loss, which are subsequently measured at fair value, any changes of which are recognized incurrent profit or loss.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
9. Financial instruments (cont’d)
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 relevanttransaction costs are directly recognized in profit or loss; for other financial liabilities, the relevant transactioncosts are recognized in their initial recognition amount.
The subsequent measurement of financial liabilities is dependent on its classification:
Financial liabilities at fair value through profit or lossFinancial liabilities at fair value through profit or loss include mainly financial liabilities held fortrading(comprising derivatives classified as financial liabilities). Financial liabilities held for trading (comprisingderivatives classified as financial liabilities) are subsequently measured at fair value and all changes arerecognized in current profit or loss.
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 whichcredit risk has not significantly increased since initial recognition is considered the first stage, at which the Groupshall measure loss allowance based on the amount of expected credit loss for the next 12 months and shallcompute interest income according to the book balance and effective interest rate; the period during which creditrisk has significantly increased since initial recognition although no credit impairment has occurred is consideredthe second stage, at which the Group shall measure loss allowance based on the amount of expected credit loss forthe entire valid period and shall compute interest income according to the book balance and effective interest rate;The period during which credit impairment has occurred after initial recognition is considered the third stage, atwhich the Group shall measure loss allowance based on the amount of the lifetime expected credit loss and shallcompute interest 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. TheGroup considers the credit risk features of different customers and estimates the expected credit losses of financialinstruments based on aging portfolio.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
9. Financial instruments (cont’d)
Impairment of financial instruments (cont’d)
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, pleaserefer to Note IX.2.
The Group's approach to measuring ECLs on financial instruments reflects factors such as the unbiasedprobability-weighted average amount determined by evaluating a range of possible outcomes, the time valueof money, and reasonable and supportable information about past events, current conditions and projectionsof future economic conditions available at the balance sheet date without undue additional cost or effort.
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 incurrent profit or loss.
Transfer of financial assets
If the Group has transferred substantially all the risks and rewards associated with the ownership of a financialasset to the transferee, the asset should be derecognized. If the Group retains substantially all the risks and rewardsof ownership 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.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
10. 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 relateto products 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.
错误!未知的文档属性名称Notes to the Financial Statements2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
11. 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 inthe consolidated financial statements of the ultimate controlling party. Any difference between the initialinvestment cost and the carrying value of the consideration for the combination shall be dealt with by adjustingthe capital surplus(if the capital surplus are insufficient for setting off the difference, such difference shall befurther set off against retained earnings). Upon disposal of the investment, other comprehensive income prior tothe date of combination shall be dealt with on the same basis as if the relevant assets or liabilities were disposed ofdirectly by the investee. Equity recognized as a result of changes in equity other than the set-off of profit and loss,other comprehensive income and profit allocation of the investee shall be transferred to current profit and lossupon 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. For long-term equity investments acquired through the business combination of entities notunder common control, the initial investment cost shall be the cost of combination (for business combinations ofentities not under common control achieved in stages through multiple transactions, the initial investment costshall be the sum of the carrying value of the equity investment in the acquired party held at the date of acquisitionand new investment cost incurred as at the date of acquisition). The cost of combination shall be the sum of assetscontributed by the acquiring party, liabilities incurred or assumed by the acquiring party and the fair value ofequity securities issued. Upon disposal of the investment, other comprehensive income recognized under theequity method held prior to the date of acquisition shall be dealt with on the same basis as if the relevant assets orliabilities were disposed of directly by the investee. Equity recognized as a result of changes in equity other thanthe set-off of profit and loss, other comprehensive income and profit allocation of the investee shall be transferredto current profit and loss upon disposal of the investment. Items which remain long-term equity investments afterthe disposal shall be accounted for on a pro-rata basis, while items reclassified as financial instruments followingthe disposal shall be accounted for in full. The initial investment cost of long-term equity investments other thanthose acquired through business combination shall be recognized in accordance with the following: for thoseacquired by way of cash payments, the initial investment cost shall be the consideration actually paid plusexpenses, tax amounts and other necessary outgoings directly related to the acquisition of the long-term equityinvestments.
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 incomefor the period.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
11. 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 theformulation of 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-termequity investment. When the carrying amount of the investment is less than the Company’s share of the fair valueof the investment’s identifiable net assets, the difference is recognized in profit or loss of the current period anddebited to 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 basedon fair values of the investees’ identifiable assets and liabilities at the acquisition date in accordance with theGroup’s accounting policy and accounting period to investee’s net profits, eliminating pro-rata profit or loss frominternal transactions with associates and joint ventures attributed to investor (except that loss from inter-grouptransactions deemed as asset impairment loss shall be fully recognized), provided that invested or sold assetsconstituting businesses shall be excluded. When the invested enterprise declares profit distribution or cashdividends, the carrying amount of investment is adjusted down by the Group’s share of the profit distribution anddividends. The Group shall derecognize its share of the losses of the investee after the long-term equityinvestment together with any long-term interests that in substance forms part of the Group’s net investment in theinvestee are reduced to zero, except to the extent that the Group has incurred obligations to assume additionallosses. The Group also adjusts the carrying amount of long-term equity investments for other changes in owner’sequity of the investees (other than the net-off of net profits or losses, other comprehensive income and profitdistribution of the investee), and includes the corresponding adjustment in equity.
12. 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, relevanttaxes, and any directly attributable expenditure for bringing the asset to working conditions for its intended use.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
12. Fixed assets (cont’d)
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 annualdepreciation rates 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.
13. 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.
The criteria for construction in progress to be transferred to fixed assets when it is ready for its intended useare as follows:
| Criteria | |||
| Buildings and constructions | Actual start of use | ||
| Machinery | The earlier of actual start of use/completion of installation and acceptance |
14. Borrowing costs
The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifyingasset are capitalized. The amounts of other borrowing costs incurred are recognised as an expense in the period inwhich they are incurred. The Group has no borrowing costs eligible for capitalization in the current year.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
15. Intangible assets
Overseas land use rights and trademark rights are intangible assets with indefinite useful lives. Impairmenttests shall be conducted annually regardless of whether there are indications of impairment. Such intangibleassets shall not be amortized and their useful life shall be reviewed during each accounting period. If there isevidence suggesting that their useful life is limited, accounting treatment will be performed according to theabove policy on intangible assets with definite useful life.
Other intangible assets are amortised on a straight-line basis over their useful lives as follows:
| Useful life | Determination basis | |||||
| Land use rights | 40-50 years | Term of land use right | ||||
| Trademark | 5-10 years | The shorter of the term of trademark rights/expected term of use | ||||
| Patent | 5-10 years | Expected benefit period |
The land ownership of Fosber S.p.A. ("Fosber Group"), a subsidiary of the Company, in Italy has apermanent term, and the Company believes that the land ownership will be used and will bring expectedinflows of economic benefits to the Company in the foreseeable future, so its useful life is regarded asindefinite. The trademarks registered by subsidiaries Fosber Group and Fosber America, Inc. ("FosberAmerica") have a useful life in accordance with the law, but at the expiration of the protection period, FosberGroup and Fosber America can apply for an extension at low service charges, so the Company will benefitfrom the above trademarks in the long term. Thus, the Company recognized the trademark use right asintangible assets with indefinite useful life. The useful life of intangible assets with indefinite useful life willbe reviewed at the end of each year. After review, the useful life of the above intangible assets is stilluncertain.
The Group classifies the expenses for internal research and development as research costs and developmentcosts. All research costs are charged to the current profit or loss as incurred. Expenditure incurred on projectsto develop new products is capitalized and deferred only when the Group can demonstrate the technicalfeasibility of completing the intangible asset so that it will be available for use or sale, its intention tocomplete and its ability to use or sell the asset, how the asset will generate future economic benefits(including demonstration that the product derived from the intangible asset or the intangible asset itself willbe marketable or, in the case of internal use, the usefulness of the intangible asset as such), the availability oftechnical and financial resources to complete the project and procure the use or sale of the intangible asset,and the ability to measure reliably the expenditure during the development. Development costs which do notmeet these criteria is recognized in profit or loss when incurred.
After meeting the above conditions, passing the technical feasibility and economic feasibility study, thecorresponding projects of the Group enter the development stage and begin to be capitalized after beingreviewed and approved.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. 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 contractcosts, 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 ofthe asset 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 businesscombination is allocated to relevant cash generating units (“CGU”) from the date of acquisition on a reasonablebasis. If it is difficult to allocate such goodwill to a relevant CGU, it should be allocated to a relevant CGU group.A relevant CGU or CGU group is defined as one which can benefit from the synergies of the businesscombination and is not larger 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 onCGUs or CGU groups that do not comprise goodwill and recognize impairment loss after estimating therecoverable amount. Then impairment tests on CGUs or CGU groups that comprise goodwill should be performedand the carrying value and recoverable amount should be compared. Where the recoverable amount is lower thanthe carrying value, the impairment loss should first be offset against the carrying value of the goodwill allocatedto CGUs or CGU groups and then against assets in the CGUs or CGU groups other than goodwill in proportion tothe weighting of these assets.
Previously recognized impairment losses are not reversed in subsequent periods.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. 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 asfollows:
| 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 operatedfund. No funds have been injected into the scheme. The cost of benefits provided under the defined benefitscheme is calculated 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 benefitschemes) are instantly recognized in the balance sheet and charged to equity through other comprehensive incomefor the period 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.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
18. Employee benefits (cont’d)
Retirement benefits (defined benefit schemes) (cont’d)
Net interest is arrived at by multiplying net liabilities or net assets of defined benefits with a discount rate.Changes in net obligations of defined benefits are recognized as cost of sales, administrative expenses, R&Dexpenses, selling expenses and finance costs in the income statement. Service costs included current servicescosts, past service costs and settlement of profit or loss. Net interest included interest income from scheme assets,interest expenses for scheme obligations and interest of the asset cap effect.
19. 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 contingentmatters when 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.
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 wouldbe reassessed on every balance sheet date. The carrying value will be adjusted to the best estimated value if thereis certain 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.
20. 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 ofshares or other equity instruments in consideration for receiving services.
Equity-settled share-based payments made in exchange for services rendered by employees are measured at thefair value of equity instruments granted to employees. Instruments which are vested immediately upon the grantare charged 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 ofperformance conditions are measured by recognising services rendered during the period in relevant costs orexpenses and crediting the capital surplus accordingly at the fair value on the date of grant according to the bestestimates of the number of exercisable equity instruments conducted by the Group at each balance sheet dateduring the pending period. The fair value of equity instruments is determined using the closing price of theCompany’s stock on the date of grant.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
21. 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.
Contract for the sales of productsThe product sales contract between the Group and its customers typically includes different contractualperformance obligations for the transfer of products and the rendering of services. With respect to the sales ofproducts, the Group typically recognizes its revenue at the time when the customer takes control over theproducts, taking into account the following factors: the acquisition of the current right to receive payments for theproducts, the transfer of major risks and rewards of ownership, the transfer of the legal title of the products, thetransfer of the physical assets of the 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 bythe Group’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 oneach balance 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 overthe contract 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 andregulations. The accounting treatment of quality assurance in the form of warranty assuring customers productssold are in compliance with required standards is set out in Note III.20. Where the Group provides a servicewarranty for a standalone service in addition to the assurance of compliance of products with required standards,such warranty is treated as a standalone contractual performance obligation, and a portion of the transaction priceshall be allocated to the service warranty based on a percentage of the standalone price for the provision ofproduct and service warranty. When assessing whether a warranty is rendering a standalone service in addition toproviding guarantee to customers that all sold goods are in compliance with required standards, the Group willconsider whether or not such warranty is a statutory requirement, the term of the warranty and the nature of theGroup’s undertaking to perform its obligations.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
22. Contract assets and contract liabilities
The Group presents contract assets or contract liabilities on the balance sheet according to the relationshipbetween contractual 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 III.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.
23. 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 theassets.
Where the Group expects the incremental costs for acquiring a contract to be recoverable, such contractacquisition costs are recognized as an asset (unless the amortisation period of the asset is not more than 1 year).
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.
24. 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 asincome-related government grants.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
24. Government grants (cont’d)
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 orloss are recognized. Government grants specifically applied for the reimbursement of incurred related costs andexpenses shall be directly recognized in profit or loss.
Government grants relating to assets shall offset the carrying amount of related assets, or be recognized asdeferred income and credited to profit or loss over the useful life of the asset concerned by reasonable andsystematic instalments (provided that government grants measured at nominal value shall be directly recognizedin profit or loss). Where the asset concerned is disposed of, transferred, retired or damaged prior to the end of itsuseful life, the balance of the deferred income yet to be allocated shall be transferred to “asset disposal” undercurrent profit or loss.
25. 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, affectsneither the accounting 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 temporarydifferences will reverse in the foreseeable future, it is probable that taxable profit against the deductibletemporary differences will be available.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
25. Deferred tax assets (cont’d)
As at balance sheet date, deferred tax assets and liabilities are measured in accordance with relevant tax laws atthe tax rates that are expected to apply to the period when the asset is realized or the liability is settled, and reflectsthe tax consequences that would follow the manner in which the Group expects, at the balance sheet date, torecover the 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 theextent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferredtax asset 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.
Deferred tax assets and liabilities are offset and presented as a net amount if all of the following conditions aremet: the Group has the legal right to set off the current income tax assets and liabilities and the deferred tax assetsand liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity ordifferent taxable entities, provided that the taxable entity concerned intends either to settle current income taxliabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each futureperiod in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
26. Leases
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, orcontains, a lease if the contract conveys the right to control the use of an identified asset for a period of time inexchange for consideration.
As lessee
The Group recognizes leases as the right-of-use asset and lease liabilities, except for short-term leases and leasesof low-value assets.
Right-of-use assetsAt the commencement date of the lease, the Group recognizes a right-of-use asset. The cost of theright-of-use asset comprises: (1) the amount of the initial measurement of the lease liability; (2) any leasepayments made at or before the commencement date less any lease incentives received; (3) any initial directcost incurred; (4) an estimate of costs incurred by the lessee in dismantling and removing the underlyingasset, restoring the site on which it is located or restoring the underlying asset to the condition required bythe terms and conditions of the lease. The right-of-use assets are depreciated on a straight-line basissubsequently by the Group. If ownership of the leased asset transfers to the Group at the end of the leaseterm, depreciation is calculated using the estimated useful life of the asset. Otherwise, the right-of-use assetsare depreciated over the shorter of the lease term and the estimated useful lives of the assets.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
26. Leases (cont’d)
Lease liabilitiesAt 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 constantpayments and the substantial constant payments net of lease incentives, variable lease payments that depend on anindex or ratio, the estimated payables of guaranteed residual value, and also include the exercise price of thepurchase option or the amount to be paid upon vest of the termination option, provided that the Group isreasonably certain that the option will be vested or that the lease term reflects that the Group will exercise thetermination 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.The Group calculates the interest expenses of the lease liability in each period during the lease term using theconstant periodic rate of interest, and recognizes such interest expenses in profit or loss, except those that in therelated asset costs as required. Variable lease payments that are not included in the measurement of the leaseassets are recognized in profit or loss as incurred, except those that shall be included in the related asset costs asrequired.
After the commencement date, the Group increases the book value of the lease liability when interest isrecognized and decreases the book value of the lease liability when lease payments are made. In the event of anychange to the substantial constant payments, the estimated payables of guaranteed residual value, the index orratio used to determine lease payments, the assessment results or actual vesting of the purchase option, therenewal option or the termination option, the Group remeasures the lease liability at the present value of themodified lease payments.
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 forbuildings short-term leases. The Group recognizes lease payments on short-term leases and leases of low-valueassets in the related 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 thelease term on a straight-line basis, while variable lease payment not included in lease receipts is charged to profitor loss as and when incurred.
Initial direct costs are capitalised and recognised over the lease term on the same basis as rental income, throughprofit or loss.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
27. 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.
28. Expenses for safety production
The expenses for safety production set side as stipulated shall be included in the cost of relevant products orcurrent profits and losses, and included in the special reserve at the same time. When such expenses are used,accounting treatment will be performed according to whether fixed assets are formed. If identified as expenseexpenditures, the special reserve will be written down directly; if fixed assets are formed, the expenses incurredwill be collected, fixed assets will be recognized when they reach a predetermined usable state, and the equivalentamount of special reserve will be written down and the equivalent accumulated depreciation will be recognized.
29. 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 fromits equity (excluding non-controlling interests) and classifies it as financial liability, which is remeasured insubsequent periods at the present value of the the amount payable to redeem the put option and recognized inprofit or loss.
30. 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 fairvalue will be determined on the basis of the lowest level of input which is significant for the fair valuemeasurement as a whole. Input at the first level represents unadjusted quoted prices in an active market for theacquisition of the same asset or liability on the measurement date. Input at the second level represents directly orindirectly observable assets or liabilities apart from input at the first level. Input at the third level representsunobservable input for the asset 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 bechanged.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
31. Significant accounting judgements and estimates
The preparation of financial statements requires judgement and estimation of the management. Such judgementand estimation 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,which have 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 ofproduct or service commitments, i.e. the sale, installation, transportation and insurance services of machinery. Asthe customer 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 formanaging the assets. Factors considered by the Group in judging the business model include enterprise valuation,the method of reporting the results of financial assets to key management members, risks affecting the results offinancial assets and the method for managing such risks, as well as the form of remuneration received by themanagement personnel of the businesses concerned. In assessing whether the business model is aimed at receivingcontract cash flow, the Group is required to analyse and exercise judgment in respect of the reasons, timing,frequency and values of any disposals 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, includingjudgement of whether it is significantly different from the benchmark cash flow when assessing modifications tothe time value of currencies, and judgement of whether the fair value of early repayment features is minimalwhere the financial assets 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.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
31. Significant accounting judgements and estimates (cont’d)
Estimation uncertainty (cont’d)
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 riskaccording 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 assetor asset 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 offuture cash flows, the Group needs to estimate future cash flows generating from the asset group or asset groupportfolio, and at the same time choose a proper discount rate to determine the present value of future cash flows.For details, see Note V.20.
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 makeestimates about expected future cash flows, credit risk, volatility and discount rates, and hence they are subject touncertainty.
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.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
31. Significant accounting judgements and estimates (cont’d)
Estimation uncertainty (cont’d)
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 determinethe applicable 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 therelated present obligation. The recognition and measurement of provisions largely depend on the judgment ofmanagement. In the process of making judgment, the Group is required to assess the risks, uncertainties, timevalue of money and other 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’srecent 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.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
IV. Taxation
1. Principal tax items and tax rates
| Tax basis | Tax rate | |||||
| Value-added tax (VAT) | The output tax: taxable income; VAT: difference after deducting the input tax which is allowed to be deducted in the current period | 13% and 6% | ||||
| City maintenance and construction tax | Turnover tax actually paid | 7% | ||||
| Education surcharge | Turnover tax actually paid | 3% | ||||
| Local education Surcharge | Turnover tax actually paid | 2% | ||||
| Property tax | Ad valorem tax: remaining value after deducting 30% from the original value of the property; Tax levied from rent: rental income. | 1.2% and 12% | ||||
| Corporate income tax | Taxable income | 15%-28% |
The taxpaying entities subject to different corporate income tax rates are as follows:
| Income tax rate | |||
| Guangdong Dongfang Precision Science & Technology Co., Ltd. | 15.0% | ||
| Suzhou Parsun Power Machine Co., Ltd. ("Parsun Power") | 15.0% | ||
| Guangdong Fosber Intelligent Equipment Co., Ltd. ("Fosber Asia") | 15.0% | ||
| Shenzhen Wonder Printing System Co.,Ltd. ("Wonder Printing") | 15.0% | ||
| Dong Fang Precision (HK) Limited (“Dongfang Precision (HK)”) | 16.5% | ||
| Dong Fang Precision (Netherland) Cooperatief U.A.(“Dongfang Precision (Netherland)”) | 20.0% | ||
| Fosber S.p.A. | 24.0% | ||
| Fosber America, Inc.(“Fosber America”) | 21.0% | ||
| EDF Europe s.r.l.(“EDF”) | 24.0% | ||
| Tiru?a America inc. (“Tiru?a America”) | 21.0% | ||
| Quantum Corrugated S.r.l.(“QCorr”) | 24.0% | ||
| Tiru?a S.L.U. | 28.0% | ||
| Tiru?a France SARL | 15.0% | ||
| SCI Candan | 15.0% |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
IV. Taxation (Cont’d)
2. Tax concessions
On 28 December 2023, 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 aHigh-tech Enterprise Certificate (certificate no.: GR202344004676) jointly issued by the above authorities, with avalidity of three years, during which the Company paid the corporate income tax at a reduced rate of 15%, so thepreferential tax rate of 15% was applicable to the Company's corporate income tax as at 31 December 2023.
Suzhou Parsun Power Machine Co., Ltd., a subsidiary of the Company, passed the high-tech enterprise review bythe Department of Science and Technology of Jiangsu Province, Department of Finance of Jiangsu Province andJiangsu Provincial Tax Service of State Taxation Administration on 18 November 2022 and obtained a High-techEnterprise Certificate (certificate no.: GR201932000339) jointly issued by the above authorities, with a validity ofthree years, during which the subsidiary paid the corporate income tax at a reduced rate of 15%, so the preferentialtax rate of 15% was applicable to the corporate income tax of Parsun Power as at 31 December 2023.
Guangdong Fosber Intelligent Equipment Co., Ltd., a subsidiary of the Company, passed the high-tech enterprisereview by the Department of Science and Technology of Guangdong Province, Department of Finance ofGuangdong Province and Guangdong Provincial Tax Service of State Taxation Administration on 20 December2021 and obtained a High-tech Enterprise Certificate (certificate no.: GR202144003984) jointly issued by theabove authorities, with a validity of three years, during which the subsidiary paid the corporate income tax at areduced rate of 15%, so the preferential tax rate of 15% was applicable to the corporate income tax of Fosber Asiaas at 31 December 2023.
Shenzhen Wonder Printing System Co.,Ltd., a subsidiary of the Company, passed the high-tech enterprise reviewby the Department of Science and Technology of Guangdong Province, Department of Finance of GuangdongProvince and Guangdong Provincial Tax Service of State Taxation Administration on 19 December 2022 andobtained a High-tech Enterprise Certificate (certificate no.: GR202244206125) 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 Wonder Printing asat 31 December 2023.
错误!未知的文档属性名称Notes to the Financial Statements2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements
1. Cash and bank balances
| 2023 | 2022 | |||||
| Cash on hand | 438,600.93 | 589,575.75 | ||||
| Cash at banks | 1,491,798,403.81 | 1,011,562,524.44 | ||||
| Other cash balances | 334,182,899.75 | 262,295,099.55 | ||||
| 1,826,419,904.49 | 1,274,447,199.74 | |||||
| Of which: Total amount deposited overseas | 889,925,365.66 | 752,430,975.78 | ||||
| Total restricted amount as collateral, pledge or frozen | 153,905,292.65 | 40,726,502.47 |
As at 31 December 2023, the fund deposited abroad with restrictions on repatriation was equivalent toRMB9,020,813.02 (31 December 2022: RMB17,937,703.00).
Current bank deposits earn interest income based on interest rates for current deposits.
Note 1: Other cash balances include: 1) a total of RMB153,157,792.65 in guarantee deposits for letters ofguarantee, bank acceptance bill deposits, loan deposits, and forward exchange settlement and sale deposits;
2) pledged time deposits with a book value of RMB480,000.00; 3) legal freeze funds with a book value ofRMB267,500.00; 4) RMB119,423,040.75 of investment deposits; 5) RMB422,270.04 of funds pendingverification; 6) RMB60,432,296.31 of monetary funds are funds in transit generated by internal transfers ofthe Group's overseas subsidiaries on December 29, 2023. These funds in transit arrived at the relevantaccounts on January 2, 2024.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
2. Financial assets held for trading
| 2023 | 2022 | |||||
| Financial assets at fair value through profit or loss | ||||||
| Asset management plans | 312,284,352.19 | 307,794,620.13 | ||||
| Investments in bank’s wealth management products | 133,662,614.39 | 351,182,315.74 | ||||
| Stocks and Funds | 205,349,301.18 | 200,355,381.34 | ||||
| Investments in trust products | - | 717,241.38 | ||||
| Derivative financial assets | 31,329,174.69 | 782,720.29 | ||||
| 682,625,442.45 | 860,832,278.88 |
3. Notes receivable
| 2023 | 2022 | |||||
| Bank acceptance notes | 47,661,412.88 | 24,566,100.12 |
Notes receivable that were endorsed or discounted but undue at the balance sheet date are as follows:
| Derecognized | Un-derecognized | |||||
| Bank acceptance notes | - | 25,837,473.39 |
As at 31 December 2023, there’s no need to establish impairment allowances for notes receivable in themanagement’s opinion.
4. Accounts receivable
The aging of accounts receivable is analyzed as follows:
| 2023 | 2022 | |||||
| Within 1 year | 797,174,742.31 | 759,915,056.92 | ||||
| 1-2 years | 97,122,608.26 | 74,419,438.55 | ||||
| 2-3 years | 30,354,347.33 | 13,000,155.24 | ||||
| 3-4 years | 3,905,106.39 | 7,711,547.63 | ||||
| 4-5 years | 4,320,546.03 | 7,653,168.93 | ||||
| Over 5 years | 8,831,175.90 | 7,018,540.90 | ||||
| 941,708,526.22 | 869,717,908.17 | |||||
| Less: allowances for doubtful accounts receivable | 37,704,550.75 | 32,412,150.71 | ||||
| 904,003,975.47 | 837,305,757.46 |
V. Notes to the Consolidated Financial Statements (cont’d)
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
4. Accounts receivable (cont’d)
2023
| Gross amount | Allowance | Carrying amount | |||||||||||||
| Amount | Percentage | Amount | Percentage | ||||||||||||
| (%) | (%) | ||||||||||||||
| Accounts receivable for which allowances are established individually | 2,477,303.19 | 0.26 | 2,477,303.19 | 100.00 | - | ||||||||||
| Accounts receivable for which allowances are established by group with similar credit risk characteristics | 939,231,223.03 | 99.74 | 35,227,247.56 | 3.75 | 904,003,975.47 | ||||||||||
| 941,708,526.22 | 100.00 | 37,704,550.75 | 904,003,975.47 | ||||||||||||
2022
| Gross amount | Allowance | Carrying amount | |||||||||||||
| Amount | Percentage | Amount | Percentage | ||||||||||||
| (%) | (%) | ||||||||||||||
| Accounts receivable for which allowances are established individually | 3,004,100.00 | 0.35 | 3,004,100.00 | 100.00 | - | ||||||||||
| Accounts receivable for which allowances are established by group with similar credit risk characteristics | 866,713,808.17 | 99.65 | 29,408,050.71 | 3.39 | 837,305,757.46 | ||||||||||
| 869,717,908.17 | 100.00 | 32,412,150.71 | 837,305,757.46 | ||||||||||||
错误!未知的文档属性名称Notes to the Financial Statements2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
4. Accounts receivable (cont’d)
Accounts receivable for which allowances are established individually are as follows:
| 2023 | 2022 | ||||||||||||||||
| Gross amount | Allowance | ECL | Reason for allowance | Gross amount | Allowance | ||||||||||||
| (%) | |||||||||||||||||
| Customer 1 | 939,000.00 | 939,000.00 | 100.00 | Customer’s inability to settle the amount due | 939,000.00 | 939,000.00 | |||||||||||
| Customer 2 | 641,600.00 | 641,600.00 | 100.00 | Customer’s inability to settle the amount due | 641,600.00 | 641,600.00 | |||||||||||
| Customer 3 | 608,800.00 | 608,800.00 | 100.00 | Customer’s inability to settle the amount due | 608,800.00 | 608,800.00 | |||||||||||
| Customer 4 | - | - | - | 516,000.00 | 516,000.00 | ||||||||||||
| Customer 5 | 283,000.00 | 283,000.00 | 100.00 | Customer’s inability to settle the amount due | 283,000.00 | 283,000.00 | |||||||||||
| Customer 6 | 4,903.19 | 4,903.19 | 100.00 | Customer’s inability to settle the amount due | 15,700.00 | 15,700.00 | |||||||||||
| 2,477,303.19 | 2,477,303.19 | 3,004,100.00 | 3,004,100.00 | ||||||||||||||
As at 31 December 2023, accounts receivable for which allowances are established by group with similarcredit risk characteristics are as follows:
| Gross amount | Allowance | ECL(%) | |||||||
| Within 1 year | 797,174,742.31 | 8,884,081.81 | 1.11 | ||||||
| 1-2 years | 97,122,608.26 | 7,016,334.29 | 7.22 | ||||||
| 2-3 years | 30,354,347.33 | 8,412,219.67 | 27.71 | ||||||
| 3-4 years | 3,905,106.39 | 1,665,177.92 | 42.64 | ||||||
| 4-5 years | 4,320,546.03 | 2,895,561.16 | 67.02 | ||||||
| Over 5 years | 6,353,872.71 | 6,353,872.71 | 100.00 | ||||||
| 939,231,223.03 | 35,227,247.56 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
4. Accounts receivable (cont’d)
Movements in allowances for doubtful accounts receivable are as follows:
| Opening balance | Established in the period | Reversed in the period | Written off in the period | Effect of exchange rate movements | Closing balance | |||||||||||||
| 2023 | 32,412,150.71 | 11,351,715.95 | (870,645.35 | ) | (6,435,596.12 | ) | 1,246,925.56 | 37,704,550.75 |
As at 31 December 2023, the top five accounts receivable and contract assets were as follows:
| Closing balance of accounts receivable | Closing balance of contract assets | Total closing balance of accounts receivable and contract assets | As a % of the closing balance of total accounts receivable and contract assets | Total closing balance of provision for bad debts of accounts receivable and provision for impairment of contract assets | |||||||||||
| Customer 7 | 95,762,655.22 | - | 95,762,655.22 | 9.68 | 777,411.90 | ||||||||||
| Customer 8 | 88,195,466.36 | - | 88,195,466.36 | 8.91 | 2,101,671.68 | ||||||||||
| Customer 9 | 38,878,636.20 | - | 38,878,636.20 | 3.93 | 323,316.84 | ||||||||||
| Customer 10 | 36,499,400.00 | - | 36,499,400.00 | 3.69 | 1,824,970.00 | ||||||||||
| Customer 11 | 29,602,061.11 | - | 29,602,061.11 | 2.99 | 247,534.38 | ||||||||||
| 合计 | 288,938,218.89 | - | 288,938,218.89 | 29.20 | 5,274,904.80 |
5. Receivables financing
| 2023 | 2022 | |||||
| Bank acceptance notes | 9,365,344.07 | 15,305,668.26 |
6. Prepayments
The aging of prepayments is analyzed as follows:
| 2023 | 2022 | |||||||||
| Carrying amount | Percentage (%) | Carrying amount | Percentage (%) | |||||||
| Within 1 year | 42,509,851.47 | 92.93 | 64,413,090.83 | 99.18 | ||||||
| 1-2 years | 2,960,199.29 | 6.47 | 275,315.22 | 0.42 | ||||||
| 2-3 years | 20,968.14 | 0.05 | 31,175.83 | 0.05 | ||||||
| Over 3 years | 250,125.00 | 0.55 | 227,319.38 | 0.35 | ||||||
| 45,741,143.90 | 100.00 | 64,946,901.26 | 100.00 | |||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
6. Prepayments (cont’d)
Top 5 of prepayments are as follows:
| 2023 | As a % of total prepayments | |||||
| Supplier 1 | 6,466,538.76 | 14.14 | ||||
| Supplier 2 | 4,262,830.08 | 9.32 | ||||
| Supplier 3 | 3,883,266.09 | 8.49 | ||||
| Supplier 4 | 3,351,578.17 | 7.33 | ||||
| Supplier 5 | 3,147,271.65 | 6.88 | ||||
| 21,111,484.75 | 46.16 |
7. Other receivables
| 2023 | 2022 | |||||
| Other receivables | 51,797,943.96 | 83,996,902.82 |
Other receivables
The aging of other receivables is analyzed as follows:
| 2023 | 2022 | |||||
| Within 1 year | 38,472,808.52 | 39,240,181.70 | ||||
| 1-2 years | 6,754,108.79 | 5,772,952.90 | ||||
| 2-3 years | 4,574,557.21 | 3,174,795.18 | ||||
| 3-4 years | 2,082,428.89 | 176,147.32 | ||||
| 4-5 years | 138,543.93 | 38,260,742.08 | ||||
| Over 5 years | 1,111,902.73 | 1,260,558.08 | ||||
| Less: allowances for doubtful other receivables | 1,336,406.11 | 3,888,474.44 | ||||
| 51,797,943.96 | 83,996,902.82 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
7. Other receivables (cont’d)
Other receivables (cont’d)
Other receivables are classified by nature as follows:
| 2023 | 2022 | |||||
| Amount for transfer of equity investments | - | 39,461,356.50 | ||||
| Prepaid service charges | 19,593,768.86 | 12,446,401.37 | ||||
| Security deposits | 7,956,393.69 | 8,340,341.53 | ||||
| Export tax refunds | 2,952,066.14 | 1,294,466.80 | ||||
| Employee loans and petty cash | 5,078,147.88 | 3,388,217.50 | ||||
| Others | 17,553,973.50 | 22,954,593.56 | ||||
| 53,134,350.07 | 87,885,377.26 |
2023
| Gross amount | Allowance | Carrying amount | |||||||||||||
| Amount | Percentage | Amount | Percentage | ||||||||||||
| (%) | (%) | ||||||||||||||
| Other receivables for which allowances are established by group with similar credit risk characteristics | 53,134,350.07 | 100.00 | 1,336,406.11 | 2.52 | 51,797,943.96 | ||||||||||
As at 31 December 2023, other receivables for provision for bad debts according to the combination of creditrisk characteristics:
| Gross amount | Allowance | ECL(%) | |||||||
| Accounts receivable for which allowances are established by group with similar credit risk characteristics | 53,134,350.07 | 1,336,406.11 | 2.52 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
7. Other receivables (cont’d)
Other receivables (cont’d)
Movements in allowances for doubtful other receivables that are established based on the 12-month ECL andthe lifetime ECL are as follows:
| Stage 1 | Stage 2 | Stage 3 | Total | |||||||||
| 12-month ECL | Lifetime ECL | with credit impairment (lifetime ECL) | ||||||||||
| Opening balance | 3,388,474.44 | 500,000.00 | - | 3,888,474.44 | ||||||||
| Reversed in the period | (2,756.83 | ) | (2,756.83 | ) | ||||||||
| Written off in the period | (2,624,421.55 | ) | - | - | (2,624,421.55 | ) | ||||||
| Other changes | 75,110.05 | - | - | 75,110.05 | ||||||||
| Closing balance | 836,406.11 | 500,000.00 | - | 1,336,406.11 |
Movements in allowances for doubtful other receivables are as follows:
| Opening balance | Established in the period | Reversed in the period | Decrease due to disposal of subsidiaries | Effect of exchange rate movements | Closing balance | |||||||||||||
| 2023 | 3,888,474.44 | - | (2,756.83 | ) | (2,624,421.55 | ) | 75,110.05 | 1,336,406.11 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
7. Other receivables (cont’d)
Other receivables (cont’d)
As at 31 December 2023, top 5 of other receivables are as follows:
| 2023 | As a % of total other receivables | Nature | Age | Closing balance of allowance | |||||||||||
| Entity 1 | 4,133,194.98 | 7.78 | Transactions with third parties | Within 1 year | - | ||||||||||
| Entity 2 | 3,094,404.29 | 5.82 | Transactions with third parties | Within 1 year | - | ||||||||||
| Entity 3 | 2,140,000.00 | 4.03 | Deposit | Within 1 year, 1-2 years | - | ||||||||||
| Entity 4 | 1,630,000.00 | 3.07 | Deposit | 3-4 years | - | ||||||||||
| Entity 5 | 965,159.53 | 1.82 | Deposit | 1-2 years | - | ||||||||||
| 11,962,758.80 | 22.52 | - |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)错误!未知的文档属性名称 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
8. Inventories
| 2023 | 2022 | |||||||||||||||||
| Gross amount | Valuation allowance | Carrying amount | Gross amount | Valuation allowance | Carrying amount | |||||||||||||
| Raw materials | 658,870,239.78 | 23,591,282.36 | 635,278,957.42 | 582,372,253.76 | 18,010,104.87 | 564,362,148.89 | ||||||||||||
| Work-in-progress | 422,201,722.20 | 20,499,380.02 | 401,702,342.18 | 368,570,631.39 | 19,879,129.16 | 348,691,502.23 | ||||||||||||
| Finished goods | 75,950,836.96 | 3,475,752.29 | 72,475,084.67 | 108,150,704.87 | 4,681,895.11 | 103,468,809.76 | ||||||||||||
| Product deliveries | 31,374,046.56 | - | 31,374,046.56 | 35,190,253.35 | - | 35,190,253.35 | ||||||||||||
| Semi-finished goods | 41,372,916.93 | 662,291.37 | 40,710,625.56 | 28,847,199.70 | 787,613.38 | 28,059,586.32 | ||||||||||||
| Materials consigned for processing | 869,999.29 | - | 869,999.29 | 13,209,583.96 | - | 13,209,583.96 | ||||||||||||
| 1,230,639,761.72 | 48,228,706.04 | 1,182,411,055.68 | 1,136,340,627.03 | 43,358,742.52 | 1,092,981,884.51 | |||||||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
8 Inventories (cont’d)
Movements in inventory valuation allowances are as follows:
| Opening balance | Established in the period | Decrease in the period | Closing balance | ||||||||||||
| Reversed or written off | Others | ||||||||||||||
| Raw materials | 18,010,104.87 | 14,928,451.87 | (10,085,023.65 | ) | 737,749.27 | 23,591,282.36 | |||||||||
| Work-in-progress | 19,879,129.16 | 708,399.86 | (356,537.19 | ) | 268,388.19 | 20,499,380.02 | |||||||||
| Finished goods | 4,681,895.11 | 1,192,065.37 | (2,398,208.19 | ) | - | 3,475,752.29 | |||||||||
| Semi-finished goods | 787,613.38 | 512,240.37 | (637,562.38 | ) | - | 662,291.37 | |||||||||
| 43,358,742.52 | 17,341,157.47 | (13,477,331.41 | ) | 1,006,137.46 | 48,228,706.04 | ||||||||||
9. Contract assets
| 2023 | 2022 | |||||||||||||||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |||||||||||||
| Carrying amount | 47,751,792.27 | 1,805,415.13 | 45,946,377.14 | 67,018,545.44 | 1,928,694.23 | 65,089,851.21 | ||||||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)错误!未知的文档属性名称 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
9. Contract assets (cont’d)
2023
| Gross amount | allowance | Carrying amount | |||||||||||||
| Amount | Percentage | Amount | Percentage | ||||||||||||
| (%) | (%) | ||||||||||||||
| Contract assets for which allowances are established by group with similar credit risk characteristics | 47,751,792.27 | 100 | 1,805,415.13 | 3.78 | 45,946,377.14 | ||||||||||
2022
| Gross amount | Impairment allowance | Carrying amount | |||||||||||||
| Amount | Percentage | Amount | Percentage | ||||||||||||
| (%) | (%) | ||||||||||||||
| Contract assets for which allowances are established by group with similar credit risk characteristics | 67,018,545.44 | 100.00 | 1,928,694.23 | 2.88 | 65,089,851.21 | ||||||||||
As at 31 December 2023, contract assets for which allowances are established by group with similar creditrisk characteristics are as follows:
| Gross amount | Impairment allowance | ECL(%) | |||||||
| Within 1 year | 35,474,332.34 | 388,204.27 | 1.09 | ||||||
| 1-2 years | 11,792,268.12 | 1,114,037.77 | 9.45 | ||||||
| 2-3 years | 485,191.81 | 303,173.09 | 62.49 | ||||||
| 47,751,792.27 | 1,805,415.13 |
Movements in impairment allowances for contract assets are as follows:
| Opening balance | Established in the period | Reversed in the period | Other decreases | Closing balance | |||||||||||
| 1,928,694.23 | 258,269.89 | (382,329.97 | ) | 780.98 | 1,805,415.13 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
10. Current portion of non-current assets
| 2023 | 2022 | |||||
| Current portion of long-term receivables | 5,970,000.00 | 1,463,750.00 | ||||
| Current portion of security deposits for loans | - | 310,300,000.00 | ||||
| 5,970,000.00 | 311,763,750.00 |
As at 31 December 2023, there’s no need to establish impairment allowances for the current portion ofnon-current assets in the management’s opinion.
11. Other current assets
| 2023 | 2022 | |||||
| Input VAT to be deducted | 19,118,882.69 | 15,469,529.33 | ||||
| Overpaid value-added tax (VAT) | 37,973,926.46 | 23,483,390.49 | ||||
| Tax repayments | 5,248,796.24 | 13,582,808.39 | ||||
| Others | 12,893,050.68 | 8,834,723.10 | ||||
| 75,234,656.07 | 61,370,451.31 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
12. Long-term receivables
| 2023 | 2022 | ||||||||||||||||
| Gross amount | Provision for bad debts | Carrying amount | Gross amount | Provision for bad debts | Carrying amount | ||||||||||||
| Amounts receivable by installment for selling goods | 4,382,500.00 | 74,304.00 | 4,308,196.00 | 1,305,000.00 | 10,701.00 | 1,294,299.00 | |||||||||||
| Gross amount | Allowance | Carrying amount | |||||||||||||
| Amount | Percentage | Amount | Percentage | ||||||||||||
| (%) | (%) | ||||||||||||||
| Long-term receivables for which allowances are established by group with similar credit risk characteristics | 4,382,500.00 | 100.00 | 74,304.00 | 1.70 | 4,308,196.00 | ||||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
12. Long-term receivables (cont’d)
Movements in allowances for doubtful long-term receivables are as follows:
| Opening balance | the period | Reversed in the period | Written off in the period | Closing balance | |||||||||||
| 2023 | 10,701.00 | 63,603.00 | - | - | 74,304.00 |
13. Long-term equity investments
| Opening | Change in the period | Closing | ||||||||||||||||
| balance | Additional investment | Return on investment under the equity method | Other comprehensive income | Other equity changes | balance | |||||||||||||
| Associates | ||||||||||||||||||
| Jaten Robot | 86,533,484.12 | - | 943,242.05 | - | - | 87,476,726.17 | ||||||||||||
| Talleres Tapre | 1,707,227.29 | - | - | 52,674.17 | - | 1,759,901.46 | ||||||||||||
| Nanjing Profeta | 7,111,970.11 | 23,075,777.90 | (3,202,495.03 | ) | - | 1,044,004.23 | 28,029,257.21 | |||||||||||
| 95,352,681.52 | 23,075,777.90 | (2,259,252.98 | ) | 52,674.17 | 1,044,004.23 | 117,265,884.84 | ||||||||||||
As at 31 December 2023, there’s no need to establish impairment allowances for long-term equity investments in the management’s opinion.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
14. Other non-current financial assets
| 2023 | 2022 | |||||
| Financial assets at fair value through profit or loss | 461,278,259.67 | 334,449,603.33 |
Other non-current financial assets mainly refer to the Group’s investment in equity instrument investments,long-term wealth management product investments and long-term derivative financial assets.
15. Fixed assets
| Buildings and constructions | Machinery | Transportation facility | Other equipment | Total | ||||||||||
| Gross amount | ||||||||||||||
| Opening balance | 595,767,164.78 | 495,941,700.77 | 35,181,776.36 | 65,440,308.96 | 1,192,330,950.87 | |||||||||
| Purchases | 6,784,769.93 | 13,308,437.13 | 5,478,483.17 | 6,128,776.37 | 31,700,466.60 | |||||||||
| Transfers from construction in progress | 51,528,107.01 | 4,404,214.47 | - | 184,844.53 | 56,117,166.01 | |||||||||
| Disposal or retirement | (361,637.88 | ) | (10,675,610.31 | ) | (5,310,350.20 | ) | (631,971.27 | ) | (16,979,569.66 | ) | ||||
| Effect of exchange rate movements | 10,766,071.74 | 18,073,394.57 | 161,375.11 | 411,482.36 | 29,412,323.78 | |||||||||
| Closing balance | 664,484,475.58 | 521,052,136.63 | 35,511,284.44 | 71,533,440.95 | 1,292,581,337.60 | |||||||||
| Accumulated depreciation | ||||||||||||||
| Opening balance | 199,822,190.57 | 364,322,605.23 | 20,295,753.93 | 37,690,287.35 | 622,130,837.08 | |||||||||
| Provision | 15,780,045.44 | 22,264,645.63 | 3,716,943.97 | 8,980,044.80 | 50,741,679.84 | |||||||||
| Disposal or retirement | (170,379.18 | ) | (9,576,266.18 | ) | (4,992,881.21 | ) | (529,714.51 | ) | (15,269,241.08 | ) | ||||
| Effect of exchange rate movements | 5,643,947.54 | 17,121,985.31 | 110,943.11 | 249,608.76 | 23,126,484.72 | |||||||||
| Closing balance | 221,075,804.37 | 394,132,969.99 | 19,130,759.80 | 46,390,226.40 | 680,729,760.56 | |||||||||
| Carrying amount | ||||||||||||||
| Closing | 443,408,671.21 | 126,919,166.64 | 16,380,524.64 | 25,143,214.55 | 611,851,577.04 | |||||||||
| Opening | 395,944,974.21 | 131,619,095.54 | 14,886,022.43 | 27,750,021.61 | 570,200,113.79 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
15. Fixed assets (cont’d)
As at 31 December 2023, no registration certificate for properties has been obtained for the new plant with carrying amount of RMB51,528,107.01 (2022: Nil).
16. Construction in progress
| 2023 | 2022 | |||||||||||||||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |||||||||||||
| Plants and buildings | 161,127,696.15 | - | 161,127,696.15 | 36,216,546.63 | - | 36,216,546.63 | ||||||||||||
| Equipment installation | 34,429,401.65 | - | 34,429,401.65 | 2,687,991.22 | - | 2,687,991.22 | ||||||||||||
| 195,557,097.80 | - | 195,557,097.80 | 38,904,537.85 | - | 38,904,537.85 | |||||||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
16. Construction in progress (cont’d)
Movements in substantial construction in progress in 2023 are as follows:
| Budget | Opening balance | Increase in the period | Transferred to fixed assets in the period | Other decrease | Closing balance | Funding source | Input as a % of budget | |||||||||||||||||
| Dongfang Precision - Plant Construction Project | 32,753,000.00 | - | 4,268,623.84 | - | - | 4,268,623.84 | Self-funded | 13 | ||||||||||||||||
| Tiru?a (Guangdong) Intelligent Equipment Manufacturing Co., Ltd. (“Tiru?a Asia”)-Plant Construction Project | 85,745,627.16 | 32,851,532.05 | 32,334,095.11 | 51,528,107.01 | - | 13,657,520.15 | Self-funded | 76 | ||||||||||||||||
| Parsun Power - Plant Construction Project | 348,503,300.00 | 1,570,900.95 | 85,292,644.71 | - | - | 86,863,545.66 | Self-funded | 25 | ||||||||||||||||
| Fosber Asian – Fosber Songgang Plant | 300,000,000.00 | 1,673,461.65 | 38,054,030.19 | - | - | 39,727,491.84 | Self-funded | 13 | ||||||||||||||||
| Tiru?a S.L.U.- Corrugated roller production equipment | 74,874,598.40 | - | 25,079,297.27 | - | - | 25,079,297.27 | Self-funded | 33 | ||||||||||||||||
| Fosber Group - Plant Construction Project | 157,184,000.00 | 68,703.32 | 16,537,099.73 | - | - | 16,605,803.05 | Self-funded | 11 | ||||||||||||||||
| Others | - | 2,739,939.88 | 11,216,541.59 | 4,589,059.00 | 12,606.48 | 9,354,815.99 | Self-funded | - | ||||||||||||||||
| 999,060,525.56 | 38,904,537.85 | 212,782,332.44 | 56,117,166.01 | 12,606.48 | 195,557,097.80 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
17. Right-of-use assets
| Buildings | Vehicles | Total | |||||||
| Cost | |||||||||
| Opening balance | 107,881,926.02 | 16,228,783.97 | 124,110,709.99 | ||||||
| Increase | 7,859,694.19 | 7,991,990.67 | 15,851,684.86 | ||||||
| Disposal | (11,164,431.77 | ) | (1,976,499.84 | ) | (13,140,931.61 | ) | |||
| Effect of exchange rate movements | 14,177,505.08 | 6,546,212.31 | 20,723,717.39 | ||||||
| Closing balance | 118,754,693.52 | 28,790,487.11 | 147,545,180.63 |
| Accumulated depreciation | |||||||||
| Opening balance | 29,083,848.03 | 8,577,883.94 | 37,661,731.97 | ||||||
| Provision | 17,792,786.39 | 4,274,048.67 | 22,066,835.06 | ||||||
| Disposal | (10,971,283.51 | ) | (940,298.88 | ) | (11,911,582.39 | ) | |||
| Effect of exchange rate movements | 11,391,947.49 | 5,993,849.67 | 17,385,797.16 | ||||||
| Closing balance | 47,297,298.40 | 17,905,483.40 | 65,202,781.80 | ||||||
| Carrying amount | |||||||||
| Closing | 71,457,395.12 | 10,885,003.71 | 82,342,398.83 | ||||||
| Opening | 78,798,077.99 | 7,650,900.03 | 86,448,978.02 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
18. Intangible assets
| Land use rights | Land ownership | Patented technologies | Trademarks and software | Total | |||||||||||
| Gross amount | |||||||||||||||
| Opening balance | 177,783,228.49 | 15,881,320.90 | 112,511,121.61 | 187,064,046.11 | 493,239,717.11 | ||||||||||
| Purchases | - | - | 2,050,304.02 | 4,300,847.11 | 6,351,151.13 | ||||||||||
| Internal R&D | - | - | - | 5,334,031.98 | 5,334,031.98 | ||||||||||
| Disposal | - | - | - | (472,518.34 | ) | (472,518.34 | ) | ||||||||
| Effect of exchange rate movements | - | 933,465.38 | 5,409,249.46 | 9,701,035.21 | 16,043,750.05 | ||||||||||
| Closing balance | 177,783,228.49 | 16,814,786.28 | 119,970,675.09 | 205,927,442.07 | 520,496,131.93 | ||||||||||
| Accumulated depreciation | |||||||||||||||
| Opening balance | 24,758,265.85 | - | 66,420,930.77 | 33,957,125.38 | 125,136,322.00 | ||||||||||
| Provision | 3,856,021.52 | - | 10,212,114.77 | 10,029,983.61 | 24,098,119.90 | ||||||||||
| Disposal | - | - | - | (279,351.45 | ) | (279,351.45 | ) | ||||||||
| Effect of exchange rate movements | 259,376.87 | - | 4,000,069.40 | 1,327,115.16 | 5,586,561.43 | ||||||||||
| Closing balance | 28,873,664.24 | - | 80,633,114.94 | 45,034,872.70 | 154,541,651.88 | ||||||||||
| Carrying amount | |||||||||||||||
| Closing | 148,909,564.25 | 16,814,786.28 | 39,337,560.15 | 160,892,569.37 | 365,954,480.05 | ||||||||||
| Opening | 153,024,962.64 | 15,881,320.90 | 46,090,190.84 | 153,106,920.73 | 368,103,395.11 |
As at 31 December 2023, the proportion of intangible assets formed through internal research anddevelopment to the carrying amount of intangible assets at the end of the year was 1.25%.
19. Research and development costs
| Opening balance | Increase in the period | Decrease in the period | Closing balance | |||||||||
| Internal research and development | Recognition of intangible assets | |||||||||||
| Data Platform Project | 108,069.78 | 1,011,090.52 | (1,119,160.30 | ) | - | |||||||
| Business Platform Project | 2,874,316.59 | 119,643.15 | (2,993,959.74 | ) | - | |||||||
| IoT Platform Project | 719,843.39 | 501,068.55 | (1,220,911.94 | ) | - | |||||||
| 3,702,229.76 | 1,631,802.22 | (5,334,031.98 | ) | - |
Refer to Note VI.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
20. Goodwill
| Opening balance | Increase in the period | Decrease in the period | Closing balance | |||||||||
| Exchange rate movements | Disposal allocated to disposal groups held for sale | |||||||||||
| Fosber Group | 152,396,437.31 | 8,957,491.76 | - | 161,353,929.07 | ||||||||
| Parsun Power | 208,031,946.10 | - | - | 208,031,946.10 | ||||||||
| Italy EDF | 65,167,148.84 | 3,830,366.44 | - | 68,997,515.28 | ||||||||
| Italy QCorr | 12,921,351.12 | 759,485.58 | - | 13,680,836.70 | ||||||||
| Wonder Printing | 119,422,168.56 | - | - | 119,422,168.56 | ||||||||
| 557,939,051.93 | 13,547,343.78 | - | 571,486,395.71 |
Movements in impairment allowances for goodwill are as follows:
| Opening balance | Increase in the period | Decrease in the period | Closing balance | |||||||||
| Exchange rate movements | Disposal allocated to disposal groups held for sale | |||||||||||
| Parsun Power | 61,855,054.35 | - | - | 61,855,054.35 | ||||||||
| Italy EDF | 65,167,148.84 | 3,830,366.44 | - | 68,997,515.28 | ||||||||
| 127,022,203.19 | 3,830,366.44 | - | 130,852,569.63 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
20. Goodwill (cont’d)
Information about the asset groups is as follows:
Corrugator line business asset group of Fosber GroupThe corrugator line business asset group is an asset group owned by Fosber Group, consistent with the assetgroup combination determined on the purchase date and during impairment tests of the previous years. Thecarrying amount of the corrugator line business asset group was RMB 525.97 million. The recoverableamount is determined using the present value of the projected future cash flows of the asset groupcombination according to the cash flow forecasting based on the financial budget over a five-year periodapproved by the management. The perpetual cash flows are determined at the level of the last year of thedetailed forecast period and based on the industry development trend and other factors. The discount rateused in cash flow forecasting was 20.59% (19.85% in 2022).
Corrugator line business asset group of Italy QCorrThe corrugator line business asset group of Italy QCorr is the only asset group owned by Italy QCorr,consistent with the asset group combination determined on the purchase date. The carrying amount of thecorrugator line asset group was RMB 319.68 million. The recoverable amount is determined using thepresent value of the projected future cash flows of the asset group combination according to the cash flowforecasting based on the financial budget over a five-year period approved by the management. Theperpetual cash flows will be determined at the level of the last year of the detailed forecast period and basedon the industry development trend and other factors. The discount rate used in cash flow forecasting was
11.85% (12.22% in 2022).
Corrugated carton printer business asset group of Italy EDFFor the corrugated carton printer business asset group of Italy EDF, impairment allowances for goodwillwere established in full amount in 2019.
Corrugated digital printer business asset group of Wonder PrintingThe digital printer business asset group is the only asset group owned by Wonder Printing, consistent withthe asset group combination determined on the purchase date. The carrying amount of the digital printerbusiness asset group was RMB 264.81 million. The recoverable amount is determined using the presentvalue of the projected future cash flows of the asset group combination according to the cash flowforecasting based on the financial budget over a five-year period approved by the management and theindustry development trend and other factors. The discount rate used in cash flow forecasting was 12.17%(13.27% in 2022).
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
20. Goodwill (cont’d)
Where the recoverable amount is determined according to the present value of the expected future cashflows:
| Carrying amoun | Recoverable amount | Impairment amount | Years of budget/forecast period | Key parameters of budget/forecast period | Key parameters of stable period | Basis for determination of key parameters of stable period | |||||||||||||
| Fosber Group | 525,967,510.91 | 2,393,364,573.02 | - | 5 years | Revenue growth rate | Revenue growth rate | Based on 0% revenue growth rate for stable period | ||||||||||||
| Parsun Power | 319,677,584.80 | 1,087,360,886.38 | - | 5 years | Revenue growth rate | Revenue growth rate | Based on 0% revenue growth rate for stable period | ||||||||||||
| Italy QCorr | 63,349,819.29 | 163,750,198.36 | - | 5 years | Revenue growth rate | Revenue growth rate | Based on 0% revenue growth rate for stable period | ||||||||||||
| Wonder Printing | 264,808,276.22 | 279,036,383.05 | - | 5 years | Revenue growth rate | Revenue growth rate | Based on 0% revenue growth rate for stable period | ||||||||||||
| 1,173,803,191.22 | 3,923,512,040.81 | - |
Goodwill acquired in business combinations is allocated to the following asset groups or asset groupportfolios for impairment testing:
? Corrugator line business asset group of Fosber Group? Power machine business asset group of Parsun Power? Corrugator line business asset group of Italy QCorr? Corrugated carton printer business asset group of Italy EDF? Corrugated digital printer business asset group of Wonder Printing
The following describes the key assumptions made by the management in determining cash flow forecastingfor goodwill impairment testing:
| Budget gross margin | - | Developed based on the average gross margin of historical operating results and expectations for market development. | |
| Discount rate | - | The discount rate used is the pre-tax discount rate that reflects the specific risks of the relevant asset group or asset group combination. |
The amount of the key assumptions allocated to the above asset group or asset group portfolio is consistentwith the Group's historical experience and external information.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
21. Long-term prepaid expenses
| Opening balance | Increase in the period | Amortization in the period | Other decreases | Closing balance | |||||||||||
| Plant decoration expenditures | 3,387,139.73 | 874,886.54 | (1,110,325.20 | ) | (31,911.69 | ) | 3,119,789.38 | ||||||||
| Office decoration expenditures | 5,324,776.48 | 2,132,445.01 | (3,098,032.48 | ) | (444,948.31 | ) | 3,914,240.70 | ||||||||
| Amortization of moulds | 2,305,043.35 | 20,587,622.65 | (5,870,957.95 | ) | - | 17,021,708.05 | |||||||||
| Amortization of lease assets | 2,172,204.26 | - | (57,918.55 | ) | - | 2,114,285.71 | |||||||||
| Internet access for offices | 811,214.14 | 614,629.98 | (1,230,103.16 | ) | (147,342.77 | ) | 48,398.19 | ||||||||
| CE certification fee | 617,562.29 | 192,363.78 | (325,815.54 | ) | - | 484,110.53 | |||||||||
| Expenditures on supporting engineering for plants | 2,117,612.73 | 654,787.96 | (794,066.65 | ) | (137,285.06 | ) | 1,841,048.98 | ||||||||
| 16,735,552.98 | 25,056,735.92 | (12,487,219.53 | ) | (761,487.83 | ) | 28,543,581.54 |
22. Deferred tax assets/liabilities
Deferred tax assets and liabilities before offsetting:
| 2023 | 2022 | |||||||||||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |||||||||
| Deferred tax assets | ||||||||||||
| Deductible loss | 41,464,787.21 | 7,585,286.13 | 39,530,769.25 | 7,299,859.61 | ||||||||
| Provisions—after-sales maintenance service charges | 31,106,124.16 | 7,465,469.80 | 29,017,229.54 | 6,964,135.09 | ||||||||
| Deferred income | 1,148,967,602.00 | 174,998,363.51 | 1,115,356,405.03 | 170,790,680.98 | ||||||||
| Accrued expenses | 137,007,925.99 | 35,957,989.47 | 110,904,039.46 | 27,965,656.80 | ||||||||
| Asset impairment allowances | 52,411,022.56 | 11,682,516.17 | 63,619,447.75 | 14,092,864.85 | ||||||||
| Equity incentive expenses | 48,552,350.45 | 9,375,318.47 | 29,263,236.96 | 4,659,406.75 | ||||||||
| Credit impairment loss | 1,549,606.23 | 237,403.35 | 59,507,278.84 | 9,165,630.00 | ||||||||
| Internal unrealized profit | 41,884,654.49 | 9,319,501.09 | 38,382,165.54 | 8,119,663.58 | ||||||||
| Lease liabilities | 25,116,594.05 | 3,435,296.89 | - | - | ||||||||
| Others | 117,570,323.59 | 26,223,652.55 | 121,057,339.07 | 22,623,110.51 | ||||||||
| 1,645,630,990.73 | 286,280,797.43 | 1,606,637,911.44 | 271,681,008.17 | |||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
22. Deferred tax assets/liabilities (cont’d)
| 2023 | 2022 | |||||||||||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |||||||||
| Deferred tax liabilities | ||||||||||||
| Financial assets at fair value through profit or loss | 1,794,832.35 | 233,592.92 | 21,098,870.19 | 3,750,525.42 | ||||||||
| Increase in value in asset valuation | 42,559,397.20 | 7,565,638.16 | 49,738,790.86 | 8,867,879.18 | ||||||||
| Depreciation difference of fixed assets | 61,963,523.25 | 10,363,510.02 | 26,455,083.92 | 5,468,413.09 | ||||||||
| 22,733,086.57 | 3,069,779.96 | - | - | |||||||||
| Others | 69,220,019.79 | 18,030,160.88 | 79,681,187.34 | 15,877,516.64 | ||||||||
| 合计 | 198,270,859.16 | 39,262,681.94 | 176,973,932.31 | 33,964,334.33 | ||||||||
Deferred tax assets and liabilities are offset and presented as a net amount:
| 2023 | 2022 | |||||||||||
| Offset balance | Offset amount | Offset balance | ||||||||||
| Deferred tax assets | 30,408,387.66 | 255,872,409.78 | 27,138,883.56 | 244,542,124.61 | ||||||||
| Deferred tax liabilities | 30,408,387.66 | 8,854,294.28 | 27,138,883.56 | 6,825,450.77 | ||||||||
Deductible temporary differences and deductible losses not recognized as deferred tax assets are as follows:
| 2023 | 2022 | |||||
| Deductible temporary differences | 3,925,408.90 | 9,196,588.97 | ||||
| Deductible losses | 149,803,433.80 | 90,723,784.03 | ||||
| 153,728,842.70 | 99,920,373.00 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
22. Deferred tax assets/liabilities (cont’d)
Deductible temporary differences and tax losses not recognized as deferred tax assets will expire as follows:
| 2023 | 2022 | |||||
| 2023 | - | 11,447,032.87 | ||||
| 2024 | 4,418,846.10 | 493,437.20 | ||||
| 2025 | 13,984,168.64 | 13,984,168.64 | ||||
| 2026 | 12,841,957.31 | 12,841,957.31 | ||||
| 2027 | 73,324,757.62 | 61,153,776.98 | ||||
| 2028 | 49,159,113.03 | - | ||||
| 153,728,842.70 | 99,920,373.00 |
The Company has accrued deferred tax assets of RMB168,933,394.30 (2022: RMB164,436,231.16) for theaccumulated deductible losses of RMB1,126,222,628.65 based on the forecast of its profits in the next fiveyears.
23. Other non-current assets
| 2023 | 2022 | |||||
| Prepayment for acquisition of long-term assets | 87,122,697.89 | 45,320,004.82 | ||||
| Certificates of deposit | 10,248,630.14 | - | ||||
| Others | 66,274.25 | - | ||||
| 97,437,602.28 | 45,320,004.82 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
24. Assets with restricted ownership or right of use
2023
| 2023 | 2022 | Limited type | |||||
| Cash and bank balances | 153,905,292.65 | 40,726,502.47 | Deposit, pledge and freezing | Note 1 | |||
| Fixed assets | 4,460,554.82 | 4,409,110.42 | Mortgage | Note 2 | |||
| Current portion of non-current assets | - | 310,300,000.00 | |||||
| 合计 | 158,365,847.47 | 355,435,612.89 |
Note 1：At 31 December 2023, currency funds with carrying amount of RMB153,157,792.65 were used to
obtain deposits for bank acceptance bills, letters of guarantee, loans, forward settlement and salesand other payments (31 December 2022: RMB40,726,502.47); currency funds with carrying amountof RMB480,000.00 are pledged as time deposits (31 December 2022: Nil); currency funds withcarrying amount of RMB267,500.00元 were legally frozen (31 December 2022: Nil).
Note 2：At 31 December 2023, a carrying amount of RMB4,460,554.82 (31 December 2022:
RMB4,409,110.42) of fixed assets was pledged for the Group to obtain bank loans with a maturityuntil 2030.
25. Short-term borrowings
| 2023 | 2022 | |||||
| Guaranteed loan | 260,544,181.40 | 2,800,000.00 | ||||
| Credit loan | 89,544,237.78 | 39,015,129.24 | ||||
| Bills discounted | 20,461,553.62 | - | ||||
| 370,549,972.80 | 41,815,129.24 |
26. Financial liabilities held for trading
| 2023 | 2022 | |||||
| Financial liabilities at fair value through profit or loss | ||||||
| Non-controlling interests put options | 115,900,827.21 | 57,022,555.58 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
27. Notes payable
| 2023 | 2022 | |||||
| Bank acceptance notes | 152,433,276.09 | 149,918,253.31 |
As at 31 December 2023, outstanding notes payable upon maturity were nil (31 December 2022: nil).
28. Accounts payable
| 2023 | 2022 | |||||
| Purchases of inventories | 737,544,841.42 | 748,319,561.21 |
As at 31 December 2023, substantial accounts payable with aging over 1 year were nil (31 December 2022:
nil).
29. Contract liabilities
| 2023 | 2022 | |||||
| Contract liabilities | 645,608,919.34 | 692,567,968.60 |
As at 31 December 2023, there were no significant contract liabilities with aging over one year (31December 2022: Nil).
Information about contractual performance obligations is as follows:
Corrugator line, corrugated case printing and packaging equipment and outboard engine salesFulfill the contractual performance obligations when relevant products are delivered to the customers and thecontrol over the equipment is transferred. For all customers, the contract price usually expires within 1 to 12months after relevant products are delivered and the control over the equipment is transferred.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
30. Employee benefits payable
| Opening balance | Increase in the period | Decrease in the period | Closing balance | |||||||||
| Short-term benefits | 114,133,461.02 | 733,377,200.69 | 707,948,798.51 | 139,561,863.20 | ||||||||
| Retirement benefits (defined contribution schemes) | 9,561,867.29 | 98,552,268.20 | 94,393,066.59 | 13,721,068.90 | ||||||||
| 123,695,328.31 | 831,929,468.89 | 802,341,865.10 | 153,282,932.10 |
Short-term benefits are as follows:
| Opening balance | Increase in the period | Decrease in the period | Closing balance | |||||||||
| Salaries, bonuses, allowances and subsidies | 108,414,374.41 | 649,112,978.61 | 624,884,133.01 | 132,643,220.01 | ||||||||
| Employee welfare | 4,716,503.25 | 33,218,545.65 | 32,179,239.12 | 5,755,809.78 | ||||||||
| Social security contributions | 554,100.71 | 44,785,261.93 | 45,043,640.70 | 295,721.94 | ||||||||
| Including: Medical insurance | 529,159.87 | 30,520,045.91 | 30,806,528.96 | 242,676.82 | ||||||||
| Work injury insurance | 23,264.84 | 13,679,631.47 | 13,665,963.18 | 36,933.13 | ||||||||
| Maternity insurance | 1,676.00 | 585,584.55 | 571,148.56 | 16,111.99 | ||||||||
| Housing funds | 22,348.00 | 5,106,643.42 | 4,514,919.42 | 614,072.00 | ||||||||
| Labour union funds and employee education funds | 426,134.65 | 1,153,771.08 | 1,326,866.26 | 253,039.47 | ||||||||
| 114,133,461.02 | 733,377,200.69 | 707,948,798.51 | 139,561,863.20 |
Defined contribution schemes are as follows:
| Opening balance | Increase in the period | Decrease in the period | Closing balance | |||||||||
| Basic endowment insurance | 9,553,228.48 | 97,986,576.10 | 93,836,694.52 | 13,703,110.06 | ||||||||
| Unemployment insurance | 8,638.81 | 565,692.10 | 556,372.07 | 17,958.84 | ||||||||
| 9,561,867.29 | 98,552,268.20 | 94,393,066.59 | 13,721,068.90 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
31. Tax payable
| 2023 | 2022 | |||||
| Value-added tax | 5,649,692.90 | 2,794,718.85 | ||||
| Corporate income tax | 45,973,508.11 | 9,990,213.17 | ||||
| Individual income tax | 11,897,332.76 | 9,978,972.79 | ||||
| City maintenance and construction tax | 430,752.88 | 552,631.31 | ||||
| Education surcharge | 307,070.00 | 411,264.85 | ||||
| Property tax | 2,731,038.94 | 218,184.92 | ||||
| Stamp duties | 151,505.57 | 109,070.84 | ||||
| Land use tax | 468,302.25 | 47,325.67 | ||||
| Others | - | 9,321.30 | ||||
| 67,609,203.41 | 24,111,703.70 |
32. Other payables
| 2023 | 2022 | |||||
| Other payables | 126,415,425.61 | 90,080,142.50 |
Other payables
| 2023 | 2022 | |||||
| Accrued expenses | 53,166,304.73 | 36,647,193.30 | ||||
| Repurchase obligation of restricted shares | 2,290,000.00 | 28,440,000.00 | ||||
| Payables for settled lawsuit | 3,311,817.37 | 3,127,963.30 | ||||
| Security deposits | 2,557,648.92 | 4,807,183.50 | ||||
| Equity acquisition | 31,587,327.06 | - | ||||
| Others | 33,502,327.53 | 17,057,802.40 | ||||
| 126,415,425.61 | 90,080,142.50 |
As at 31 December 2023, substantial other payables with aging over 1 year were nil (31 December 2022:
nil).
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
33. Current portion of non-current liabilities
| 2023 | 2022 | |||||
| Current portion of long-term borrowings | 35,871,630.01 | 295,113,556.27 | ||||
| Of which: Pledge loan | - | 254,610.59 | ||||
| Mortgage loan | 249,305.06 | 7,100,000.00 | ||||
| Guaranteed loan | 20,683,642.46 | 263,030,910.73 | ||||
| Credit loan | 14,938,682.49 | 24,728,034.95 | ||||
| Current portion of lease liabilities | 21,129,766.43 | 20,653,874.99 | ||||
| 57,001,396.44 | 315,767,431.26 |
34. Other current liabilities
| 2023 | 2022 | |||||
| Endorsed notes receivable | 5,375,919.77 | 1,449,810.18 | ||||
| Output tax to be written off | 3,769,255.24 | 4,539,069.11 | ||||
| 9,145,175.01 | 5,988,879.29 |
35. Long-term borrowings
| 2023 | 2022 | |||||
| Pledge loan | - | 2,262,533.40 | ||||
| Mortgage loan | 2,150,669.29 | 7,100,000.00 | ||||
| Guaranteed loan | 55,374,274.02 | 296,130,679.37 | ||||
| Credit loan | 57,454,387.85 | 47,504,838.39 | ||||
| Of which: Current portion of long-term borrowings | (35,871,630.01 | ) | (295,113,556.27 | ) | ||
| 79,107,701.15 | 57,884,494.89 |
As at 31 December 2023, the annual interest rates of the above borrowings ranged from 0.0% to 5.65% (31December 2022: 0.0%-4.55%).
As at 31 December 2023 and 31 December 2022, the Group has no loans overdue.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
36. Lease liabilities
| 2023 | 2022 | |||||
| Lease payments | 86,991,207.75 | 89,642,986.32 | ||||
| Less: Current portion of non-current liabilities | 21,129,766.43 | 20,653,874.99 | ||||
| 65,861,441.32 | 68,989,111.33 |
37. Long-term employee benefits payable
| 2023 | 2022 | |||||
| Net liabilities of defined benefit schemes | 13,964,394.20 | 13,179,944.17 | ||||
| 13,964,394.20 | 13,179,944.17 |
Movements in the present value of defined benefit obligations are as follows:
| 2023 | 2022 | |||||
| Opening balance | 13,179,944.17 | 16,083,170.32 | ||||
| Included in profit or loss | ||||||
| Current service cost | 298,718.86 | 209,406.84 | ||||
| Net interest | 60,856.56 | 485,893.76 | ||||
| Included in other comprehensive income | ||||||
| Actuarial gains or losses | 44,025.32 | (1,948,490.61 | ) | |||
| Other changes | ||||||
| Benefits paid | (394,106.12 | ) | (2,102,700.40 | ) | ||
| Effect of exchange rate movements | 774,955.41 | 452,664.26 | ||||
| Closing balance | 13,964,394.20 | 13,179,944.17 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
37. Long-term employee benefits payable(cont’d)
Defined benefit schemes refer to retirement compensation (Trattamento di Fine Rapporto, for short, “TFR”)of the Group according to Italian regulations. The latest actuarial valuation of the scheme assets and thepresent value of the obligation associated with the defined benefit scheme were determined as at 31December 2022 by Italian actuarial institution Managers & Partners – Actuarial Services S.p.A. using theexpected accumulated benefit unit method.
Key actuarial assumptions used as at the balance sheet date are as follows:
| 2023 | 2022 | |||||
| Separation rate | 2.50% | 2.50% | ||||
| Inflation rate | 2.00% | 2.30% | ||||
| Discount rate | 3.08% | 3.63% |
The quantitative sensitivity analysis of key assumptions used is as follows:
2023
| Increase % | Increase/(decrease) in obligations of defined benefit scheme | Decrease % | Increase/(decrease) in obligations of defined benefit scheme | |||||||||
| Separation rate | 1.00 | 22,821.94 | 1.00 | (25,101.66 | ) | |||||||
| Inflation rate | 0.25 | 86,826.24 | 0.25 | (85,238.92 | ) | |||||||
| Discount rate | 0.25 | (134,531.35 | ) | 0.25 | 139,045.20 |
2022
| Increase % | Increase/(decrease) in obligations of defined benefit scheme | Decrease % | Increase/(decrease) in obligations of defined benefit scheme | |||||||||
| Separation rate | 1.00 | 73,125.51 | 1.00% | (2,644.11 | ) | |||||||
| Inflation rate | 0.25 | 120,180.83 | 0.25% | (44,483.29 | ) | |||||||
| Discount rate | 0.25 | (91,077.57 | ) | 0.25% | 169,657.13 |
The above sensitivity analysis is based on an inference of the impact of key assumptions on the definedbenefit scheme obligation at a reasonable change on the balance sheet date. Sensitivity analysis is madeaccording to the changes in major assumptions on the premise that other assumptions remain unchanged.Since the changes in assumptions are often not isolated from one another, sensitivity analysis may notrepresent an actual change in the defined benefit obligation.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
38. Provisions
| Opening balance | Increase in the period | Decrease in the period | Closing balance | |||||||||
| Product quality warranty | 108,406,154.83 | 93,250,839.58 | 65,852,506.29 | 135,804,488.12 | ||||||||
| Others | 10,539,798.95 | 25,349,468.65 | 3,334,801.88 | 32,554,465.72 | ||||||||
| 118,945,953.78 | 118,600,308.23 | 69,187,308.17 | 168,358,953.84 |
39. Deferred income
| Opening balance | Increase in the period | Decrease in the period | Closing balance | |||||||||
| Government grants | 11,073,651.66 | - | 1,116,660.00 | 9,956,991.66 |
40. Other non-current liabilities
| 2023 | 2022 | |||||
| Purchase obligations of non-controlling interest options | 16,941,926.93 | 132,077,339.29 | ||||
| Other | 5,476,927.87 | 4,318,953.26 | ||||
| 22,418,854.80 | 136,396,292.55 |
The option repurchase obligation relates to the non-controlling interests of QCorr and Parsun Power. At 31December 2023, the Group recognized other non-current liabilities of RMB16,941,926.93 (31 December2022: RMB132,077,339.29) based on evaluation. As at 31 December 2023, the repurchase obligation periodof minority shareholders' put options of Parsun Power was one year, which was transferred from othernon-current liabilities to financial liabilities held for trading.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
41. Share capital
| Opening balance | Movement | Closing balance | ||||||||||
| Others | Total | |||||||||||
| Total share capital | 1,241,106,400.00 | (488,000.00 | ) | (488,000.00 | ) | 1,240,618,400.00 | ||||||
For the current year, the total number of shares cancelled by the Company was 488,000 shares, and the totalnumber of shares of the Company changed from 1,241,106,400 shares to 1,240,618,400 shares after thecancellation.
42. Capital surplus
| Opening balance | Increase in the period (Note 1) | Decrease in the period (Note 2) | Closing balance | |||||||||
| Share premium | 2,848,837,575.96 | - | 96,604,986.05 | 2,752,232,589.91 | ||||||||
| Others | 98,426,267.57 | 39,270,139.73 | - | 137,696,407.30 | ||||||||
| 2,947,263,843.53 | 39,270,139.73 | 96,604,986.05 | 2,889,928,997.21 |
Note 1: Increases of capital surplus in the period are as follows:
（1） The Company’s share-based payments in the period were included in shareholder’s equity and increased
other capital surplus by RMB 22,151,043.21.
（2） The Company acquired 10.8% non-controlling interests of its subsidiary Fosber Asia in the period,
increasing other capital surplus by RMB 16,075,092.29.
（3） Other equity of the Company’s associated enterprises changed, increasing other capital surplus by RMB
1,044,004.23.
Note 2: Decreases of capital surplus in the period are as follows:
（1） The Company retired a total of 488,000 shares in the period (as described in Item 41 of Note V),
reducing other capital surplus by RMB 1,744,093.01.
（2） The Company’ share-based payments unlocked 25,662,000 shares in the period, reducing other capital
surplus by RMB 94,838,368.04.
（3） The Company repurchsed shares in the period, which resulted in payment of related commissions and
charges, reducing other capital surplus by RMB 22,525.00.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
43. Treasury shares
| Opening balance | Increase in the period (Note) | Decrease in the period (Note) | Closing balance | ||||||||
| Share repurchase | 240,255,502.45 | 107,553,284.40 | 129,510,254.06 | 218,298,532.79 | |||||||
| 240,255,502.45 | 107,553,284.40 | 129,510,254.06 | 218,298,532.79 |
Note: Changes in the period are as follows:
The increase in treasury shares was driven by the Company’s repurchase of shares in the period, and thedecrease in treasury shares was mainly driven by the Company’s retirement of shares in the period (asdescribed in Item 41 of Note V).
44. Other comprehensive income
Cumulative balance of other comprehensive income attributable to shareholders of the Company in theconsolidated balance sheet:
2023
| 1 January 2023 | Change | 31 December 2023 | |||||||
| Changes due to remeasurement of defined benefit schemes | 1,209,005.83 | (44,025.32 | ) | 1,164,980.51 | |||||
| Differences arising from the translation of foreign currency-denominated financial statements | 25,347,883.31 | 48,653,186.77 | 74,001,070.08 | ||||||
| Others | (43,972.07 | ) | - | (43,972.07 | ) | ||||
| 26,512,917.07 | 48,609,161.45 | 75,122,078.52 |
2022
| 1 January 2022 | Change | 31 December 2022 | |||||||
| Changes due to remeasurement of defined benefit schemes | (647,558.19 | ) | 1,856,564.02 | 1,209,005.83 | |||||
| Differences arising from the translation of foreign currency-denominated financial statements | (32,631,132.72 | ) | 57,979,016.03 | 25,347,883.31 | |||||
| Others | (43,972.07 | ) | - | (43,972.07 | ) | ||||
| (33,322,662.98 | ) | 59,835,580.05 | 26,512,917.07 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
44. Other comprehensive income (cont’d)
Other comprehensive income:
2023
| Before tax | Less: Income tax | Attributable to owners of the parent | Attributable to non-controlling interests | |||||||||
| Other comprehensive income that will not be reclassified to profit or loss | ||||||||||||
| Changes caused by remeasurements on defined benefit schemes | (44,025.32 | ) | - | (44,025.32 | ) | - | ||||||
| Other comprehensive income that will be reclassified to profit or loss | ||||||||||||
| Differences arising from the translation of foreign currency-denominated financial statements | 48,118,257.53 | - | 48,653,186.77 | (534,929.24 | ) | |||||||
| - | ||||||||||||
| 48,074,232.21 | - | 48,609,161.45 | (534,929.24 | ) |
2022
| Before tax | Less: Income tax | Attributable to owners of the parent | Attributable to non-controlling interests | ||||||||
| Other comprehensive income that will not be reclassified to profit or loss | |||||||||||
| Changes caused by remeasurements on defined benefit schemes | 1,856,564.02 | - | 1,856,564.02 | ||||||||
| Other comprehensive income that will be reclassified to profit or loss | |||||||||||
| Differences arising from the translation of foreign currency-denominated financial statements | 55,080,204.63 | - | 57,979,016.03 | (2,898,811.40 | ) | ||||||
| 56,936,768.65 | - | 59,835,580.05 | (2,898,811.40 | ) |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
45. Special reserve
| Opening balance | Provision in the period | Ultilisation in the period | Closing balance | |||||||||
| Expenses for Safety Production | 14,488,955.52 | 5,118,146.78 | 3,377,285.27 | 16,229,817.03 |
46. Surplus reserves
| Opening balance | Increase in the period | Decrease in the period | Closing balance | |||||||||
| Statutory surplus reserves | 51,830,974.45 | - | - | 51,830,974.45 | ||||||||
| 51,830,974.45 | - | - | 51,830,974.45 |
Pursuant to the Company Law, when the Company allocates after-tax profits of the year, the Company shallset aside 10% net profit after making up losses in previous years as its statutory surplus reserves. When theCompany’s statutory reserves are not enough to make up losses in previous years, the Company shall firstmake up the losses with profits in the year before it withdraws statutory surplus reserves according to theabove-mentioned regutlation. As there is still losses that can be made up in the Company’s account, statutorysurplus reserves are not made in the current year.
47. Retained earnings
| 2023 | 2022 | |||||
| Opening retained earnings | 23,018,722.11 | (424,159,175.27 | ) | |||
| Net profit attributable to owners of the parent | 433,240,237.44 | 447,177,897.38 | ||||
| Closing retained earnings | 456,258,959.55 | 23,018,722.11 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
48. Operating revenue and costs
| 2023 | 2022 | ||||||||||
| Revenue | Costs | Revenue | Costs | ||||||||
| Principal operations | 4,711,802,008.34 | 3,335,255,728.46 | 3,861,267,826.14 | 2,811,064,346.64 | |||||||
| Other operations | 33,935,313.49 | 24,272,817.55 | 31,440,683.50 | 22,241,401.90 | |||||||
| 4,745,737,321.83 | 3,359,528,546.01 | 3,892,708,509.64 | 2,833,305,748.54 | ||||||||
Breakdown of operating revenue arising from contracts with customers is as follows:
2023
| Reporting segments | |||
| Principal product type | |||
| Goods | 4,345,601,360.53 | ||
| Services | 398,874,776.36 | ||
| 4,744,476,136.89 | |||
| Principal operating segment | |||
| Mainland China | 744,020,072.39 | ||
| Other regions | 4,000,456,064.49 | ||
| 4,744,476,136.88 | |||
| By revenue recognition time | |||
| Revenue recognition at a point of time | 4,345,601,360.53 | ||
| Revenue recognition for a period of time | 398,874,776.36 | ||
| 4,744,476,136.89 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
48. Operating revenue and costs (cont’d)
Breakdown of operating revenue arising from contracts with customers is as follows: (cont’d)
2022
| Reporting segments | |||
| Principal product type | |||
| Goods | 3,530,766,862.10 | ||
| Services | 360,640,124.60 | ||
| 3,891,406,986.70 | |||
| Principal operating segment | |||
| Mainland China | 441,664,388.05 | ||
| Other regions | 3,449,742,598.65 | ||
| 3,891,406,986.70 | |||
| By revenue recognition time | |||
| Revenue recognition at a point of time | 3,530,766,862.10 | ||
| Revenue recognition for a period of time | 360,640,124.60 | ||
| 3,891,406,986.70 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
48. Operating revenue and costs (cont’d)
Breakdown of operating cost arising from contracts with customers is as follows:
| Reporting segments | |||
| Principal product type | |||
| Goods | 3,034,567,411.11 | ||
| Services | 324,961,134.90 | ||
| 3,359,528,546.01 |
| Principal operating segment | |||
| Mainland China | 559,477,908.69 | ||
| Other regions | 2,800,050,637.32 | ||
| 3,359,528,546.01 | |||
| By revenue recognition time | |||
| Revenue recognition at a point of time | 3,034,567,411.11 | ||
| Revenue recognition for a period of time | 324,961,134.90 | ||
| 3,359,528,546.01 |
Revenue recognized that was included in contract liabilities at the beginning of the year:
| 2023 | 2022 | |||||
| Sales payment in advance | 581,304,573.91 | 334,296,679.75 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
48. Operating revenue and costs (cont’d)
Information about the Group's performance obligations is as follows:
| Timing of satisfaction of performance obligations | Significant payment terms | Nature of goods promised to transfer | Whether the principal | Expected refunds to customers | Types of warranties and related obligations | ||||||||||
| Sales of goods | Upon delivery | 80%-90% payment before delivery | Yes | Nil | Statutory warranties | ||||||||||
| Provision of services | During service | After service | Installation and maintenance service | Yes | Nil | Nil | |||||||||
| Provision of services | During service | Payment based on service progress | Warranties for services | Yes | Nil | Nil |
The expected time for recognizing in revenue the total transaction price allocated to outstanding contractualperformance obligations as at the period-end is as follows:
| 2023 | 2022 | |||||
| Within 1 year | 645,608,919.34 | 692,567,968.60 |
49. Taxes and surcharges
| 2023 | 2022 | |||||
| City maintenance and construction tax | 4,201,309.37 | 3,556,299.02 | ||||
| Education surcharge | 1,912,550.12 | 1,354,323.03 | ||||
| Property tax | 5,039,330.50 | 4,472,175.71 | ||||
| Land use tax | 800,993.84 | 518,958.69 | ||||
| Vehicle and vessel tax | 14,719.14 | 11,064.76 | ||||
| Stamp tax | 1,212,137.29 | 836,666.85 | ||||
| Local education surcharge | 1,200,374.13 | 892,159.78 | ||||
| Environmental protection tax | 25,023.33 | 16,321.08 | ||||
| Others | 146,392.37 | 298,321.03 | ||||
| 14,552,830.09 | 11,956,289.95 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
50. Selling expenses
| 2023 | 2022 | |||||
| Commissions and agency fees | 65,569,469.47 | 47,370,007.70 | ||||
| Employee benefits and equity incentive expenses | 73,673,180.14 | 56,966,000.14 | ||||
| Product quality warranties | 78,496,207.90 | 42,349,630.26 | ||||
| Advertising and exhibition expenses | 19,791,182.47 | 7,889,277.47 | ||||
| Travel expenses | 12,198,575.02 | 11,572,146.49 | ||||
| Office expenses | 2,469,847.27 | 2,216,107.13 | ||||
| Depreciation and amortization expenses | 2,828,742.50 | 1,327,867.77 | ||||
| Other expenses | 23,813,324.16 | 12,864,838.75 | ||||
| 278,840,528.93 | 182,555,875.71 |
51. Administrative expenses
| 2023 | 2022 | |||||
| Employee benefits | 178,922,030.42 | 151,890,144.23 | ||||
| Depreciation and amortization expenses | 27,465,333.94 | 30,683,414.09 | ||||
| Intermediary expenses | 35,873,535.50 | 32,748,743.44 | ||||
| Equity incentives | 14,812,302.40 | 28,245,389.68 | ||||
| Office expenses | 17,171,371.14 | 15,241,253.59 | ||||
| Travel and reception expenses | 15,935,791.58 | 9,797,492.56 | ||||
| Conference expenses | 11,643,977.90 | 11,037,605.97 | ||||
| Property management expenses | 5,547,279.55 | 3,168,050.31 | ||||
| Maintenance expenses | 1,347,244.81 | 1,060,687.27 | ||||
| Car expenses | 1,725,795.42 | 814,131.46 | ||||
| Materials consumption | 2,180,990.32 | 1,857,128.89 | ||||
| Rental expenses | 6,603,503.97 | 4,952,760.91 | ||||
| Other expenses | 24,995,535.56 | 19,966,810.76 | ||||
| 344,224,692.51 | 311,463,613.16 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
52. R&D expenses
| 2023 | 2022 | |||||
| Employee benefits and equity incentive expenses | 79,930,804.74 | 64,751,562.30 | ||||
| Depreciation and amortization expenses | 18,038,231.99 | 12,327,999.54 | ||||
| Material expenses | 13,107,475.15 | 11,111,028.94 | ||||
| Utilities | 1,939,154.97 | 1,708,605.10 | ||||
| Assembly testing and debugging expenses | 770,749.65 | 176,934.19 | ||||
| Other expenses | 13,780,065.92 | 7,878,323.33 | ||||
| 127,566,482.42 | 97,954,453.40 |
53. Finance costs
| 2023 | 2022 | |||||
| Interest expenses | 24,236,011.48 | 13,839,292.38 | ||||
| Less: Interest income | 35,308,583.52 | 19,042,851.72 | ||||
| Exchange losses | 3,836,892.35 | (6,540,524.94 | ) | |||
| Others | 6,146,062.99 | 2,773,390.59 | ||||
| (1,089,616.70 | ) | (8,970,693.69 | ) |
54. Other income
| 2023 | 2022 | |||||
| Government grants related to routine activities | 15,006,349.35 | 20,754,916.28 | ||||
| Refund of handling charges for individual income tax withheld | 740,944.47 | 178,461.16 | ||||
| 15,747,293.82 | 20,933,377.44 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
55. Investment income
| 2023 | 2022 | |||||
| Income from long-term equity investments measured at equity method | (2,259,252.98 | ) | 1,851,796.60 | |||
| Income from financial assets held for trading | 12,718,052.00 | 17,279,281.22 | ||||
| Interest income from certificates of deposit during the holding period | 248,630.14 | - | ||||
| 10,707,429.16 | 19,131,077.82 |
56. Gains and losses on changes in fair value
| 2023 | 2022 | |||||
| Financial assets at fair value through profit or loss | 38,915,711.89 | 13,423,921.51 | ||||
| Financial liability at fair value through profit or loss | - | (844,476.88 | ) | |||
| Changes in fair value of non-controlling interests call/put options | 8,472,193.22 | 5,337,601.98 | ||||
| 47,387,905.11 | 17,917,046.61 |
57. Credit impairment loss
| 2023 | 2022 | |||||
| Loss on doubtful accounts receivable | 10,481,070.60 | 4,417,400.72 | ||||
| Allowances losses for other receivables | (2,756.83 | ) | 681,873.15 | |||
| Impairment loss on contract assets | 63,603.00 | 10,701.00 | ||||
| 10,541,916.77 | 5,109,974.87 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
58. Asset impairment loss
| 2023 | 2022 | |||||
| Inventory valuation loss | 17,341,157.47 | 10,867,629.33 | ||||
| Reversed impairment loss on contract assets | (124,060.08 | ) | 1,928,694.23 | |||
| 17,217,097.39 | 12,796,323.56 |
59. Gains and losses on disposal of assets
| 2023 | 2022 | |||||
| Gain/(loss) on disposal of fixed assets | 716,995.85 | (168,835.37 | ) |
60. Non-operating income
| 2023 | 2022 | Recognized in exceptional gains and losses of 2023 | |||||||
| Compensation fee | - | 283,274.15 | - | ||||||
| Penalty income | 229,338.58 | - | 229,338.58 | ||||||
| Equity compensation | 1,686,462.38 | - | 1,686,462.38 | ||||||
| Others | 4,058,840.21 | 2,176,293.18 | 4,058,840.21 | ||||||
| 5,974,641.17 | 2,459,567.33 | 5,974,641.17 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
61. Non-operating expenses
| 2023 | 2022 | Recognized in exceptional gains and losses of 2023 | |||||||
| Loss on disposal of non-current assets | 23,374.33 | 182,551.41 | 23,374.33 | ||||||
| Donations | 450,624.37 | 224,849.92 | 450,624.37 | ||||||
| Tax penalties and interest expense | 14,800,942.90 | - | 14,800,942.90 | ||||||
| Others | 877,433.58 | 473,443.92 | 877,433.58 | ||||||
| 16,152,375.18 | 880,845.25 | 16,152,375.18 |
62. Income tax expenses
| 2023 | 2022 | |||||
| Current income tax expenses | 194,787,159.35 | 83,948,000.57 | ||||
| Deferred tax expenses | (6,389,006.63 | ) | (61,760,709.14 | ) | ||
| 188,398,152.72 | 22,187,291.43 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
62. Income tax expenses (cont’d)
Reconciliation between income tax expenses and gross profit is as follows:
| 2023 | 2022 | |||||
| Gross profit | 658,736,734.34 | 505,928,312.72 | ||||
| Income tax calculated at applicable tax rates (Note 1) | 98,810,510.15 | 75,889,246.91 | ||||
| Different tax rates for specific provinces or enacted by local authority | 53,504,528.96 | 18,881,060.06 | ||||
| Adjustment to current income tax in previous periods | 482,708.87 | (775,371.61 | ) | |||
| Supplementary income tax paid by overseas subsidiaries (Note 2) | 40,581,711.74 | - | ||||
| Income not subject to tax | - | (471,554.32 | ) | |||
| Over-deduction for R&D | (10,372,245.63 | ) | (9,884,156.68 | ) | ||
| Expenses not deductible for tax | 9,450,693.56 | 5,666,686.60 | ||||
| Utilization and recognition of deductible losses of previous periods | (249,117.78 | ) | (82,173,231.29 | ) | ||
| Effect of unrecognized deductible temporary differences and deductible losses | (3,810,637.15 | ) | 15,054,611.76 | |||
| Income tax expenses | 188,398,152.72 | 22,187,291.43 |
Note 1: The provision for income tax of the Group was recognized based on the estimated taxable income tobe derived from mainland China and applicable tax rate. Taxable income derived from other jurisdictionsshall be taxed based on applicable tax rate in accordance with the current laws, interpretations andconventions in the country/jurisdiction where the Group operates.
Note 2: Fosber Group, a subsidiary of the Group, reached a tax settlement with the Italian Revenue Agencyin October 2023 and paid taxes owed.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
63. Earnings per share
| 2023 | 2022 | |||||
| RMB/share | RMB/share | |||||
| Basic earnings per share | ||||||
| Continuing operations | 0.36 | 0.37 | ||||
| Diluted earnings per share | ||||||
| Continuing operations | 0.36 | 0.37 |
Basic earnings per share is computed by dividing the net profit attributable to ordinary shareholders of theCompany for the period by the weighted average number of ordinary shares in issue.
In the calculation of diluted earnings per share, the numerator shall be determined based on the net profitattributable to ordinary shareholders of the Company for the period after adjusting the following factors: (1)the interest of diluted potential ordinary shares that have been recognized as expenses in the period; (2) gainsor expenses that will be incurred when the diluted potential ordinary shares are converted; and (3) theincome tax impact related to the above adjustments.
In the calculation of diluted earnings per share, the denominator shall be the sum of: (1) weighted averagenumber of ordinary shares of the Company in issue adopted in the calculation of basic earnings per share;and (2) weighted average number of ordinary shares created assuming conversion of potentially dilutiveordinary shares into ordinary shares.
In calculating the weighted average number of ordinary shares created upon conversion of potentiallydilutive ordinary shares into ordinary shares, potentially dilutive ordinary shares issued in previous periodsare assumed to have been converted at the beginning of the current period, whereas potentially dilutiveordinary shares issued in the current period are assumed to have been converted on the date of issue.
Calculations of basic and diluted earnings per share are as follows:
| 2023 | 2022 | |||||
| Earnings | ||||||
| Net profit attributable to ordinary shareholders of the Company for the period | 433,240,237.43 | 447,177,897.38 | ||||
| Shares | ||||||
| Weighted average number of ordinary shares in issue of the Company | 1,202,048,618.00 | 1,214,301,810.17 | ||||
| Diluting effect——weighted average number of ordinary shares | - | 8,044,635.29 | ||||
| Adjusted weighted average number of ordinary shares in issue of the Company | 1,202,048,618.00 | 1,222,346,445.46 |
V. Notes to the Consolidated Financial Statements (cont’d)
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
64. Notes to cash flow statement line items
(1) Cash related to operating activities
| 2023 | 2022 | |||||
| Cash generated from other operating activities | ||||||
| Government grants | 17,630,633.82 | 19,804,538.17 | ||||
| Interest income | 35,811,051.77 | 9,167,093.01 | ||||
| Current accounts and others | 5,369,286.45 | 8,441,791.07 | ||||
| Guarantee deposit received | 1,674,968.57 | - | ||||
| Deposits | 2,600,000.00 | - | ||||
| 63,085,940.61 | 37,413,422.25 |
| Cash used in other operating activities | ||||||
| Selling expenses in cash | 167,635,219.01 | 130,038,891.90 | ||||
| Administrative expenses in cash | 122,829,444.94 | 105,291,187.76 | ||||
| R&D expenses in cash | 18,407,566.42 | 13,993,627.09 | ||||
| Security deposits | 2,145,000.00 | 2,187,739.39 | ||||
| Letter of guarantee paid | 1,821,640.29 | 695,566.59 | ||||
| Tax penalties and interest paid by overseas subsidiaries | 14,800,942.90 | - | ||||
| Current accounts and others | 15,800,877.30 | 28,045,564.77 | ||||
| 343,440,690.86 | 280,252,577.50 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
64. Notes to cash flow statement line items (Cont’d)
(2) Cash related to investing activities
| 2023 | 2022 | |||||
| Cash received relating to significant investing activities | ||||||
| Disposal/redemption of financial assets held for trading | 2,665,803,265.78 | 5,299,709,934.05 | ||||
| 2,665,803,265.78 | 5,299,709,934.05 |
| Cash payments relating to significant investing activities | ||||||
| Purchase of financial assets held for trading | 2,581,570,596.21 | 5,276,995,616.79 | ||||
| Purchase of equity investments | 50,000,000.00 | 133,225,000.00 | ||||
| Acquisition of subsidiaries | - | 173,800,000.00 | ||||
| Increase in capital of associates | 20,000,000.00 | - | ||||
| 2,651,570,596.21 | 5,584,020,616.79 |
| 2023 | 2022 | |||||
| Cash generated from other investing activities | ||||||
| Performance compensation | - | 741,402.85 | ||||
| Investment deposit | - | 20,000,000.00 | ||||
| - | 20,741,402.85 |
| Cash used in other investing activities | ||||||
| Investment deposit | - | 20,000,000.00 | ||||
| - | 20,000,000.00 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
64. Notes to cash flow statement line items (cont’d)
(3) Cash related to financing activities
| 2023 | 2022 | |||||
| Cash generated from other financing activities | ||||||
| Security deposits for bank acceptance notes | 87,228,875.76 | 177,363,575.61 | ||||
| Security deposits recovered for internal guarantees for external loans | 310,300,000.00 | 420,000,000.00 | ||||
| Security deposits for loan | 17,700,000.00 | 140,000,000.00 | ||||
| Share subscription | 561,989.99 | 2,762,000.00 | ||||
| 415,790,865.75 | 740,125,575.61 |
| Cash used in other financing activities | ||||||
| Share repurchase | 101,286,016.39 | 215,606,658.62 | ||||
| Security deposits paid for loans | 107,345,506.70 | 210,000,000.00 | ||||
| Security deposits for bank acceptance notes | 91,719,487.52 | 170,580,626.43 | ||||
| Payment of loan deposits | 17,700,000.00 | - | ||||
| Purchase of non-controlling interests | 36,698,456.01 | 50,866,860.00 | ||||
| Lease and interest payments | 23,291,683.40 | 26,324,405.01 | ||||
| 378,041,150.02 | 673,378,550.06 |
Changes in liabilities arising from financing activities：
| Opening | Changes in the current period | Closing | ||||||||||
| balance | Changes in cash | Non-cash changes | balance | |||||||||
| Short-term borrowing | 41,815,129.24 | 317,848,152.63 | 10,886,690.93 | 370,549,972.80 | ||||||||
| Long-term borrowings (Including current portion of long-term borrowings) | 352,998,051.16 | (249,849,654.27 | ) | 11,830,934.27 | 114,979,331.16 | |||||||
| Lease liabilities (Including current portion of non-current liabilities) | 89,642,986.32 | (23,291,683.40 | ) | 20,639,904.83 | 86,991,207.75 | |||||||
| 484,456,166.72 | 44,706,814.96 | 43,357,530.03 | 572,520,511.71 | |||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
64. Notes to cash flow statement line items (cont’d)
(4) Major non-cash transactions
| 2023 | 2022 | |||||
| Non-cash additions to right-of-use assets and lease liabilities | 15,851,684.86 | 36,996,563.25 |
65. Supplemental information on statement of cash flows
(1) Supplemental information on statement of cash flows
Reconciliation of net profit to net cash generated from/used in operating activities:
| 2023 | 2022 | |||||
| Net profit | 470,338,581.62 | 483,741,021.29 | ||||
| Add: Asset impairment allowances | 17,217,097.39 | 12,796,323.56 | ||||
| Credit impairment loss | 10,541,916.77 | 5,109,974.87 | ||||
| Depreciation of fixed assets | 50,741,679.84 | 46,764,632.53 | ||||
| Depreciation of right-of-use assets | 22,066,835.06 | 22,658,947.90 | ||||
| Amortization of intangible assets | 23,060,612.28 | 22,931,485.79 | ||||
| Amortization of long-term prepaid expenses | 12,487,219.53 | 5,992,219.61 | ||||
| Gain an loss on disposal of fixed assets, intangible assets and other long-lived assets | (716,995.85 | ) | 168,835.37 | |||
| Loss on retirement of fixed assets | 14,608.43 | 182,551.41 | ||||
| Loss on changes in fair value | (47,387,905.11 | ) | (17,917,046.61 | ) | ||
| Finance costs | 10,697,674.87 | 3,689,292.38 | ||||
| Investment income | (10,707,429.16 | ) | (19,131,077.82 | ) | ||
| Increase in deferred tax assets | (11,297,358.96 | ) | (63,715,107.07 | ) | ||
| Decrease in deferred tax liabilities | 1,995,917.30 | 1,377,055.21 | ||||
| Increase in inventories | (65,829,716.73 | ) | (181,404,611.30 | ) | ||
| Decrease in operating receivables | (7,194,337.99 | ) | (237,029,947.97 | ) | ||
| Increase/(decrease) in operating payables | (27,468,741.59 | ) | 385,587,050.58 | |||
| Others | 38,621,080.96 | 34,492,861.22 | ||||
| Net cash generated from/used in operating activities | 487,180,738.66 | 506,294,460.95 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
65. Supplemental information on statement of cash flows (cont’d)
(1) Supplemental information on statement of cash flows (cont’d)
Net change in cash and cash equivalents:
| 2023 | 2022 | |||||
| Closing balance of cash | 1,672,514,611.84 | 1,233,720,697.27 | ||||
| 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/(decrease) in cash and cash equivalents | 438,793,914.57 | (25,583,078.47 | ) |
(2) Cash and cash equivalents
| 2023 | 2022 | |||||
| Cash | 1,672,514,611.84 | 1,233,720,697.27 | ||||
| Including: cash on hand | 438,600.93 | 587,935.98 | ||||
| Bank deposits readily available | 1,491,798,403.81 | 1,011,564,164.21 | ||||
| Other cash and bank balances readily available | 180,277,607.10 | 221,568,597.08 | ||||
| Cash equivalents | - | - | ||||
| Closing balance of cash and cash equivalents | 1,672,514,611.84 | 1,233,720,697.27 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
66. Monetary items in foreign currencies
| Original currency | Exchange rate | RMB equivalent | |||||||
| Cash and bank balances | |||||||||
| Including: USD | 80,302,039.41 | 7.0827 | 568,755,254.53 | ||||||
| EUR | 73,240,243.64 | 7.8592 | 575,609,722.82 | ||||||
| HKD | 35,359.65 | 0.9062 | 32,042.91 | ||||||
| GBP | 127,253.74 | 9.0411 | 1,150,513.79 | ||||||
| Accounts receivable | |||||||||
| Including: USD | 4,893,301.00 | 7.0827 | 34,657,782.99 | ||||||
| EUR | 100,864,530.83 | 7.8592 | 792,714,520.70 | ||||||
| Contract assets | |||||||||
| Including: USD | 2,004,010.68 | 7.0827 | 14,193,806.44 | ||||||
| EUR | 780,000.00 | 7.8592 | 6,130,176.00 | ||||||
| Other receivables | |||||||||
| Including: EUR | 11,302,383.25 | 7.8592 | 88,827,690.44 | ||||||
| Accounts payable | |||||||||
| Including: EUR | 66,186,982.45 | 7.8592 | 520,176,732.47 | ||||||
| Short-term borrowings | |||||||||
| Including: EUR | 40,923,811.48 | 7.8592 | 321,628,419.18 | ||||||
| Current portion of non-current liabilities | |||||||||
| Including: EUR | 4,628,126.57 | 7.8592 | 36,373,372.34 | ||||||
| Long-term borrowings | |||||||||
| Including: EUR | 5,938,479.89 | 7.8592 | 46,671,701.15 | ||||||
| Lease liabilities | |||||||||
| Including: EUR | 6,342,369.65 | 7.8592 | 49,845,951.55 | ||||||
| Other payables | |||||||||
| Including: USD | 556,146.02 | 7.0827 | 3,939,015.42 | ||||||
| EUR | 1,943,772.81 | 7.8592 | 15,276,499.27 | ||||||
| 3,075,983,202.00 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
66. Monetary items in foreign currencies (cont’d)
The principal places of business overseas, the functional currencies and their determination basis of the majoroverseas business entities included in the consolidated financial statements are as follows:
| Major overseas business entities | Principal place of business | Functional currency | Determination basis | ||||||
| Fosber Group | Italy | EUR | Settlement currency for local business activities | ||||||
| Fosber America | America | USD | Settlement currency for local business activities | ||||||
| Italy EDF | Italy | EUR | Settlement currency for local business activities | ||||||
| Tiru?a Group | Spain | EUR | Settlement currency for local business activities |
67. Leases
(1) As lessee
| 2023 | 2022 | |||||
| Interest expense on lease liabilities | 2,382,929.15 | 2,474,602.57 | ||||
| Short term lease expense through profit or loss adopting simplified approach | 7,855,599.28 | 1,205,273.76 | ||||
| Total cash outflows related to lease | 31,319,311.36 | 29,438,261.70 |
Assets leased by the Group include houses and buildings, and transportation equipment used in the course ofbusiness,the lease term of houses,buildings and machinery is usually 8 years, and the lease term oftransportation equipment is usually 3 years. The lease contract does not contain terms such as renewaloption, termination option and variable rent. No effect of variable rent terms on potential future cashoutflows.
For the right-of-use assets, see Note V.17; for the simplified approach on short-term leases and leases ofassets of low value, see Note III.26; for lease liabilities, see Note V.33&36.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
VI. R&D expenditure
Classified by nature as follows:
| 2023 | 2022 | |||||
| Employee benefits and equity incentive expenses | 81,261,816.52 | 67,601,154.68 | ||||
| Depreciation and amortization expenses | 18,194,502.36 | 12,874,846.10 | ||||
| Material expenses | 13,113,046.67 | 11,172,857.69 | ||||
| Utilities | 1,939,154.97 | 1,708,605.10 | ||||
| Assembly testing and debugging expenses | 770,749.65 | 176,934.19 | ||||
| Other expenses | 13,919,014.47 | 8,122,285.40 | ||||
| 129,198,284.64 | 101,656,683.16 |
Of which：Capitalized R&D expenses
| Of which：Capitalized R&D expenses | 127,566,482.42 | 97,954,453.40 | ||||
| Expensed R&D expenditure | 1,631,802.22 | 3,702,229.76 |
R&D expenditures eligible for capitalization are as follows:
| Opening balance | Increase in the period | Decrease in the period | Closing balance | |||||||||
| Internal research and development | Recognition of intangible assets | |||||||||||
| Data Platform Project | 108,069.78 | 1,011,090.52 | (1,119,160.30 | ) | - | |||||||
| Business Platform Project | 2,874,316.59 | 119,643.15 | (2,993,959.74 | ) | - | |||||||
| IoT Platform Project | 719,843.39 | 501,068.55 | (1,220,911.94 | ) | - | |||||||
| 3,702,229.76 | 1,631,802.22 | (5,334,031.98 | ) | - |
Capitalized R&D projects are as follows:
| R&D progress | Expected completion date | Expected economic benefits generation method | Commencement point for capitalization | Specific basis for commencement of capitalization | |||||||||||
| Data Platform Project | Closed on 2023/8/18 | Closed on 2023/8/18 | Product sales | 2022/12/4 | Approval of project development decision review report | ||||||||||
| IoT Platform Project | Closed on 2023/4/26 | Closed on 2023/4/26 | Product sales | 2022/9/14 | Approval of project development decision review report | ||||||||||
| Business Platform Project | Closed on 2023/4/26 | Closed on 2023/4/26 | Product sales | 2022/5/31 | Approval of project development decision review report |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
VII. Interests in Other Entities
1. Interests in subsidiaries
Particulars of the subsidiaries of the Company are as follows:
| Principal place of business | Place of registration | Business nature | Registered capita | The Company’s interest(%) | |||||||||
| Direct | Indirect | ||||||||||||
| Subsidiaries acquired by way of incorporation or investment | |||||||||||||
| Dongfang Precision (HK) | HK | HK | Trading | USD300,000 | 100.00 | - | |||||||
| Dongfang Precision (Netherland) | Netherland | Netherland | Trading | EUR40,000 | 90.00 | 10.00 | |||||||
| Fosber Asia | Foshan, Guangdong, China | Foshan, Guangdong, China | Manufacturing | RMB29,581,891 | 100.00 | - | |||||||
| Italy QCorr | Italy | Italy | Manufacturing | EUR375,000 | - | 60.00 | |||||||
| Suzhou High-Tech Zone Jinquan Business Management Partnership (Limited Partnership)*(“High-Tech Zone Jinquan”) | Suzhou, Jiangsu, China | Suzhou, Jiangsu, China | Investment | RMB10,553,000 | - | 1.23 | |||||||
| Suzhou Parsun Power Technology Co., Ltd. (“Parsun Power Technology”) | Suzhou, Jiangsu, China | Suzhou, Jiangsu, China | Trading | RMB10million | - | 70.63 | |||||||
| Suzhou Baisheng International Trade Co., Ltd. (“Baisheng International”) | Suzhou, Jiangsu, China | Suzhou, Jiangsu, China | Trading | RMB3 million | - | 70.63 | |||||||
| Dongfang Digicom Data Technology Co., Ltd. (“Dongfang Digicom”) | Haikou, Hainan, China | Haikou, Hainan, China | Industrial Internet | RMB100 million | 100.00 | - | |||||||
| Dongfang Digicom Data Technology (Guangdong) Co., Ltd. (“Dongfang Digicom (Guangdong)”) | Foshan, Guangdong, China | Foshan, Guangdong, China | Industrial Internet | RMB8 million | 100.00 | - | |||||||
| Hainan Yineng Investment Co., Ltd. (“Yineng Investment”) | Haikou, Hainan, China | Haikou, Hainan, China | Investment | RMB100 million | 100.00 | - | |||||||
| Dongfang Yineng International Holdings Co., Ltd. (“Yineng International”) | Foshan, Guangdong, China | Foshan, Guangdong, China | Investment | RMB50 million | 100.00 | - | |||||||
| Tianjin Hangchuang Zhijin Investment Partnership (Limited Partnership) (“Tianjin Hangchuang”) | Tianjin, China | Tianjin, China | Investment | RMB21 million | 95.24 | - | |||||||
| Changzhou Xinchen Investment Partnership (Limited Partnership) (“Changzhou Xinchen”) | Changzhou, Jiangsu, China | Changzhou, Jiangsu, China | Investment | RMB50.6 million | - | 94.86 | |||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
VII. Interests in Other Entities (Cont’d)
1. Interests in subsidiaries (cont’d)
| of business | registration | nature | capita | interest (%) | ||||||||||||
| Direct | Indirect | |||||||||||||||
| Subsidiaries acquired in business combinations not under common control | ||||||||||||||||
| Fosber Group | Italy | Italy | Manufacturing | EUR1.56 million | - | 100.00 | ||||||||||
| Fosber America | America | America | Manufacturing | USD1.10 million | - | 100.00 | ||||||||||
| Forsberg (Machinery) Tianjin Co., Ltd. (“Fosber Tianjin”) | Tianjin, China | Tianjin, China | Manufacturing | USD500,000 | - | 100.00 | ||||||||||
| Parsun Power | Suzhou, Jiangsu, China | Suzhou, Jiangsu, China | Manufacturing | RMB85.3 million | 7.83 | 62.80 | ||||||||||
| Suzhou Shunyi Investment Co., Ltd. .(“Shunyi Investment”) | Suzhou, Jiangsu, China | Suzhou, Jiangsu, China | Investment | RMB10 million | 100.00 | - | ||||||||||
| EDF | Italy | Italy | Manufacturing | EUR100,000 | - | 100.00 | ||||||||||
| Tiru?a S.L.U. | Spain | Spain | Manufacturing | EUR1.44 million | - | 100.00 | ||||||||||
| Tiru?a FranceSARL | France | France | Manufacturing | EUR100,000 | - | 100.00 | ||||||||||
| SCI Candan | France | France | Manufacturing | EUR10,000 | - | 100.00 | ||||||||||
| Tiru?a America | America | America | Manufacturing | USD3 million | - | 100.00 | ||||||||||
| Guangdong Tiru?a Rolls Manufactury company limited (“Tiru?a Rolls Manufactury”) | Foshan, Guangdong, China | Foshan, Guangdong, China | Manufacturing | EUR21 million | - | 66.30 | ||||||||||
| Tiru?a Asia | Foshan, Guangdong, China | Foshan, Guangdong, China | Manufacturing | RMB50 million | 100.00 | - | ||||||||||
| Wonder Printing | Shenzhen, Guangdong, China | Shenzhen, Guangdong, China | Manufacturing | RMB31,171,949 | 51.00 | - | ||||||||||
| Dongguan Wonder Digital Machinery Co., Ltd. (“Wonder Digital”) | Dongguan, Guangdong, China | Dongguan, Guangdong, China | Manufacturing | RMB5million | - | 51.00 | ||||||||||
*According to the partnership agreement, the general partner of the partnership shall execute partnership affairs, and other partners shall not execute partnership affairs. As the solegeneral partner, the Company forms control over the partnership, which is included in the scope of consolidation of the Group.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
VII. Interests in Other Entities (Cont’d)
2. Interests in associates
| Principal place of business | registration | nature | capital | interest (%) | Accounting method | |||||||||
| Direct | Indirect | |||||||||||||
| Associates | ||||||||||||||
| Guangdong Jaten Robot & Automation Co., Ltd. | Foshan, Guangdong, China | Foshan, Guangdong, China | Manufacturing | RMB31.759 million | 19.84 | - | method | |||||||
| Talleres Tapre,S.L. | Spain | Spain | Manufacturing | EUR37,563 | - | 20.00 | Equity method | |||||||
| Nanjing Profeta | Nanjing, Jiangsu, China | Nanjing, Jiangsu, China | Manufacturing | RMB4.5427 million | 15.00 | 5.67 | Equity method | Equity method | ||||||
The table below presents the aggregate financial information of associates insignificant to the Group:
| 2023 | 2022 | |||||
| Associates | ||||||
| Total carrying amount of investments | 117,265,884.84 | 95,352,681.52 | ||||
| Total amounts based on the Company’s interests: | ||||||
| Net loss | (2,259,252.98 | ) | 1,851,796.60 | |||
| Total comprehensive loss | (2,259,252.98 | ) | 1,851,796.60 |
As there is no obligation to bear additional losses, the net losses incurred by the investee are recognized tothe extent that the book value of the long-term equity investment and other long-term interests thatsubstantially constitute the net investment in the investee are reduced to zero.
VIII. Government grants
As of December 31, 2023, no government grants was included in other receivables.
As of December 31, 2023, liabilities related to government grants are as follows:
| Opening balance | Recognized in Other Income During the Year | Closing balance | Related to asset/income | ||||||||
| Deferred Income | 11,073,651.66 | 1,116,660.00 | 9,956,991.66 | Related to assets |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
VIII. Government grants (Cont’d)
The government grants recognised in profit or loss are as follows:
| 2023 | 2022 | |||||
| Government grants related to assets | ||||||
| Recognised as other income | 1,116,660.00 | 1,116,660.00 | ||||
| Government grants related to income | ||||||
| Recognised as other income | 13,889,689.35 | 19,638,256.28 | ||||
| 15,006,349.35 | 20,754,916.28 |
IX. Risks Associated with Financial Instruments
1. Classification of financial instruments
As at 31 December 2023, financial assets at fair value through profit or loss amounted toRMB1,143,903,702.12 (31 December 2022: RMB1,195,281,882.21), which was mainly presented inFinancial assets held for trading and Other non-current financial assets; financial assets at fair value throughother comprehensive income amounted to RMB19,613,974.21 (31 December 2022: RMB15,305,668.26),which was mainly presented in Receivables financing and Other non-current financial assets; financial assetsat amortised cost amounted to RMB2,840,161,432.80 (31 December 2022: RMB2,530,374,009.14), whichwas mainly presented in Currency funds, Notes receivable, Accounts receivable Current portion ofnon-current assets, Long-term receivables and Other receivables; financial liabilities at fair value throughprofit or loss amounted to RMB138,319,682.01 (31 December 2022: RMB193,418,848.13), which wasmainly presented in Financial liabilities held for trading and Other non-current liabilities; and financialliabilities at amortised cost amounted to RMB1,730,652,355.43 (31 December 2022:
RMB1,474,223,933.92), which was mainly presented in Short-term borrowings, Notes payable, Accountspayable, Other payables, Current portion of non-current liabilities, Long-term borrowings, Other currentliabilities and Lease liabilities.
2. Risks of financial instruments
The main risks arising from the Group's financial instruments are credit risk, liquidity risk and market risk.The Group’s policies are summarised below.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (cont’d)
1. Classification of financial instruments (cont’d)
Credit risk
The Group transacts only with recognized and reputable third parties. According to the Group's policies,credit checks are needed for all customers that require transactions should be conducted by means of credit.Additionally, the Group performs continuous monitoring of the balance of accounts receivable to ensure thatthe Group will not face major bad debt risk. For transactions not settled in the accounting standard currencyof the relevant business unit, unless specifically approved by the credit control department of the Group, theGroup will not provide credit transaction conditions.
Since the counterparties of cash and bank balances and notes receivable are banks with a good reputation andhigh credit rating, the credit 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 which arises from counterparty default, and the maximum risk exposure is equal to thecarrying value of these instruments.
The Group transacts only with recognized and reputable third parties, so no collateral is required. Credit riskconcentration is managed by customer/counterparty, geographic region and industry. Because the customerbase of accounts receivable of the Group is widely dispersed in different departments and industries, there isno major credit risk concentration within the Group. The Group does not hold any collateral or other creditenhancement on the balance of accounts receivable.
Criteria for judging significant increases in credit riskThe Group assesses whether or not the credit risk of the relevant financial instruments has increasedsignificantly since the initial recognition at each balance sheet date. The Group's main criteria fordetermining significant increase in credit risk are that the number of days past due exceed 30 days, or one ormore of the following indicators have changed significantly: significant adverse changes in the operatingenvironment of the debtor, internal and external credit ratings, and actual or expected operating results.
Definition of credit-impaired financial assetsThe Group's main criterion for determining that credit impairment has occurred is that the number of dayspast due exceeds 90 days. However, in some cases, if internal or external information indicates that thecontract amount may not be recovered in full before considering any credit enhancements held, the Groupwill also consider that credit impairment has occurred.
The credit impairment on a financial asset may be caused by the combined effect of multiple events and maynot be necessarily due to a single event.
Liquidity risk
The Group aims to maintain sufficient cash and credit lines to meet its liquidity requirements. The Groupfinances its working capital requirements through a combination of funds generated from operations andother borrowings.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (Cont’d)
2. Financial instrument risks (cont’d)
Liquidity risk (cont’d)
The maturity profile of financial liabilities based on undiscounted contractual cash flow is summarized as follows:
2023
| Within 1 month | 1-3 months | 3 months-1 year | 1-5 years | Over 5 years | Total | |||||||||||||
| Short-term borrowings | 47,649,929.46 | 21,673,776.48 | 305,994,589.47 | - | - | 375,318,295.41 | ||||||||||||
| Notes payable | - | - | 152,433,276.09 | - | - | 152,433,276.09 | ||||||||||||
| Accounts payable | - | - | 737,544,841.42 | - | - | 737,544,841.42 | ||||||||||||
| Other payables | - | - | 126,415,425.61 | - | - | 126,415,425.61 | ||||||||||||
| Financial liabilities held for trading | - | - | 115,900,827.21 | - | - | 115,900,827.21 | ||||||||||||
| Current portion of non-current liabilities | 2,457,366.02 | 4,392,084.31 | 52,417,329.88 | - | - | 59,266,780.21 | ||||||||||||
| Long-term borrowings | - | - | - | 84,490,564.27 | 836,642.77 | 85,327,207.04 | ||||||||||||
| Lease liabilities | - | - | - | 65,861,441.32 | - | 65,861,441.32 | ||||||||||||
| Other current liabilities | - | - | 25,837,473.39 | - | - | 25,837,473.39 | ||||||||||||
| Other non-current liabilities | - | - | - | 22,418,854.80 | - | 22,418,854.80 | ||||||||||||
| 50,107,295.48 | 26,065,860.79 | 1,516,543,763.07 | 172,770,860.39 | 836,642.77 | 1,766,324,422.50 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (Cont’d)
2. Financial instrument risks (cont’d)
Liquidity risk (cont’d)
2022
| Within 1 month | 1-3 months | 3 months-1 year | 1-5 years | Over 5 years | Total | |||||||||||||
| Short-term borrowings | 10,109,326.19 | 13,053,856.47 | 18,592,633.64 | - | - | 41,755,816.30 | ||||||||||||
| Financial liabilities held for trading | - | - | 57,022,555.58 | - | - | 57,022,555.58 | ||||||||||||
| Notes payable | - | - | 149,918,253.31 | - | - | 149,918,253.31 | ||||||||||||
| Accounts payable | - | - | 748,319,561.21 | - | - | 748,319,561.21 | ||||||||||||
| Other payables | - | - | 90,080,142.50 | - | - | 90,080,142.50 | ||||||||||||
| Current portion of non-current liabilities | 769,865.02 | 2,725,256.25 | 302,043,449.86 | - | - | 305,538,571.13 | ||||||||||||
| Long-term borrowings | - | - | - | 58,982,718.09 | 1,075,526.84 | 60,058,244.93 | ||||||||||||
| Lease liabilities | - | - | - | 68,989,111.33 | - | 68,989,111.33 | ||||||||||||
| Other current liabilities | - | - | 1,449,810.18 | - | - | 1,449,810.18 | ||||||||||||
| Other non-current liabilities | - | - | - | 136,396,292.55 | - | 136,396,292.55 | ||||||||||||
| 10,879,191.21 | 15,779,112.72 | 1,367,426,406.28 | 264,368,121.97 | 1,075,526.84 | 1,659,528,359.02 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (Cont’d)
2. Financial instrument risks (cont’d)
Market Risk
Interest rate risk
The Group’s exposure to risk of changes in market interest rates relates primarily to the Group’s long-termliabilities with floating interest rates.
The sensitivity analysis of interest rate risks is set out in the following table, reflecting the impact ofreasonable and probable change in interest rates on net profit or loss (through the impact on floating rateloans) and other comprehensive income (net of tax) assuming that other variables remain constant
2023
| Increase/ (decrease) in basis points | Increase/ (decrease) in net profit or loss | Increase/ (decrease) in other comprehensive income net of tax | Increase/ (decrease) in total equity | |||||||||
| Loans | 0.50 | (435,630.76 | ) | - | (435,630.76 | ) | ||||||
| Loans | (0.50 | ) | 435,630.76 | - | 435,630.76 |
2022
| Increase/ (decrease) in basis points | Increase/ (decrease) in net profit or loss | Increase/ (decrease) in other comprehensive income net of tax | Increase/ (decrease) in total equity | |||||||||
| Loans | 0.50 | (1,458,187.97 | ) | - | (1,458,187.97 | ) | ||||||
| Loans | (0.50 | ) | 1,458,187.97 | - | 1,458,187.97 |
Exchange rate risk
The Group is exposed to trading exchange rate risks. Such exposures arise from sales or purchases bybusiness units in currencies other than the units’ functional currencies.
The sensitivity analysis of exchange rate risks is set out in the following table, reflecting the impact ofreasonable and probable change in the exchange rates of EUR and USD on net profit or loss and othercomprehensive income (net of tax) assuming that other variables remain constant.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (Cont’d)
2. Financial instrument risks (cont’d)
Market Risk (cont’d)
Exchange rate risk (cont’d)
2023
| Increase/ (decrease) in exchange rate (%) | Increase/ (decrease) in net profit or loss | Increase/ (decrease) in other comprehensive income net of tax | Increase/ (decrease) in total equity | |||||||||
| Stronger RMB against EUR | 2.00 | (6,940,212.28 | ) | - | (6,940,212.28 | ) | ||||||
| Weaker RMB against EUR | (2.00 | ) | 6,940,212.28 | - | 6,940,212.28 | |||||||
| Stronger RMB against USD | 2.00 | (10,011,216.17 | ) | - | (10,011,216.17 | ) | ||||||
| Weaker RMB against USD | (2.00 | ) | 10,011,216.17 | - | 10,011,216.17 |
2022
| Increase/ (decrease) in exchange rate (%) | Increase/ (decrease) in net profit or loss | Increase/ (decrease) in other comprehensive income net of tax | Increase/ (decrease) in total equity | |||||||||
| Stronger RMB against EUR | 2.00 | (8,836,102.40 | ) | - | (8,836,102.40 | ) | ||||||
| Weaker RMB against EUR | (2.00 | ) | 8,836,102.40 | - | 8,836,102.40 | |||||||
| Stronger RMB against USD | 2.00 | (6,699,491.41 | ) | - | (6,699,491.41 | ) | ||||||
| Weaker RMB against USD | (2.00 | ) | 6,699,491.41 | - | 6,699,491.41 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (cont’d)
3. Capital management
The primary objective of the Group’s capital management is to safeguard the Group’s ability to continue as agoing concern and to maintain healthy capital ratios in order to support its business and maximizeshareholders’ value.
The Group manages its capital structure and makes adjustments in the light of changes in economicconditions and in the risk profiles of relevant assets. To maintain or adjust the capital structure, the Groupmay adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. TheGroup is not subject to any externally imposed capital requirements. No changes were made in theobjectives, policies or processes for managing capital during 2023 and 2022.
4. Transfer of financial assets
| Transfer method | Nature of transferred financial assets | Amount of transferred financial assets | Derecognition | Judgment basis for derecognition |
| Notes discounted/ endorsed | Notes receivable | 25,837,473.39 | Not derecognised | Retained the substantial risks and rewards, which include default risks relating to such endorsed/discounted notes |
| Notes endorsed | Notes receivable | 13,508,608.93 | Derecognised | Transferred substantially all risks and rewards relating to the derecognised notes |
| 39,346,082.32 |
In 2023, financial assets derecognised as a result of the transfer are as follows:
| Transfer method | Amount of derecognised financial assets | Gains or losses related to derecognition | |
| Notes receivable | Notes endorsed | 13,508,608.93 | - |
Financial assets already transferred but not wholly derecognized
On 31 December 2023, the carrying value of the bank acceptance notes (BAs) discounted by the Group wasRMB20,461,553.62 (31 December 2022: Nil). The Group believed that the Group retained almost all theirrisks and rewards, including the risk of default associated therewith, so the Group continued to confirm themand recognise in full its and related bank borrowings. After the discounting, the Group will no longer reservethe right to use them, including the right to sell, transfer, or pledge them to other third parties. On 31December 2023, the carrying amount of bank borrowings recognised by the Group amounted toRMB20,461,553.62 (31 December 2022: Nil).
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (Cont’d)
4. Transfer of financial assets (cont’d)
Financial assets already transferred but not wholly derecognized (cont’d)
On 31 December 2023, the carrying value of the BAs endorsed by the Group to suppliers for the settlementof accounts payable was RMB5,375,919.77 (31 December 2022: RMB1,449,810.18). The Group believedthat the Group retained almost all their risks and rewards, including the risk of default associated therewith,so the Group continued to confirm them and the settled accounts payable associated therewith in full amount.After the endorsement, the Group will no longer reserve the right to use them, including the right to sell,transfer, or pledge them to other third parties. On 31 December 2023, the carrying value of the accountspayable settled with them totaled RMB5,375,919.77 (31 December 2022: RMB1,449,810.18).
Transferred financial assets that have been wholly derecognized but continue to be involved
On 31 December 2023, the carrying value of the BAs endorsed by the Group to suppliers for the settlementof accounts payable was RMB13,508,608.93 (31 December 2022: RMB23,495,743.47). On 31 December2023, their maturity date varied from one to 12 months. As stipulated in the Negotiable Instruments Law, ifthe accepting bank refuses to pay, their holders have the right to recourse from the Group ("continue to beinvolved"). The Group believed that the Group had transferred almost all their risks and rewards, so theGroup derecognized the carrying value of them and the settled accounts payable associated therewith. Themaximum loss and undiscounted cash flows from continuing involvement and repurchase were equal to theircarrying value. The Group believed that it was insignificant to continue to involve in fair value.
In 2023, the Group did not confirm the gains or losses on the transfer day. The Group had no income orexpenses recognized in the current year and cumulatively due to continued involvement in derecognizedfinancial assets. Endorsements occurred roughly evenly during the year.
X. Disclosure of Fair Values
1. Assets and liabilities measured at fair valueJTBO2023D
| Input applied in the measurement of fair value | ||||||
| Quoted prices in active markets | Significant Observable inputs | Significant unobservable inputs | Total | |||
| (Level 1) | (Level 2) | (Level 3) | ||||
| Continuous measurement of fair value | ||||||
| Financial assets held for trading | 682,619,158.57 | 6,283.88 | - | 682,625,442.45 | ||
| Receivables financing | - | 9,365,344.07 | - | 9,365,344.07 | ||
| Other non-current financial assets | 31,420,551.63 | - | 429,857,708.04 | 461,278,259.67 | ||
| Other non-current assets | - | 10,248,630.14 | - | 10,248,630.14 | ||
| 714,039,710.20 | 19,620,258.09 | 429,857,708.04 | 1,163,517,676.33 | |||
| Input applied in the measurement of fair value | |||||||||||
| Quoted prices | Significant | Significant | Total | ||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
in active markets
| in active markets | observable inputs | unobservable inputs | ||||||||||
| (Level 1) | (Level 2) | (Level 3) | ||||||||||
| Continuous measurement of fair value | ||||||||||||
| Financial liabilities held for trading | - | - | 115,900,827.21 | 115,900,827.21 | ||||||||
| Other non-current liabilities | - | - | 22,418,854.80 | 22,418,854.80 | ||||||||
| - | - | 138,319,682.01 | 138,319,682.01 |
2022
| Input applied in the measurement of fair value | |||||||||||
| Quoted prices in active markets | Significant observable inputs | Significant unobservable inputs | Total | ||||||||
| (Level 1) | (Level 2) | (Level 3) | |||||||||
| Continuous measurement of fair value | |||||||||||
| Financial assets held for trading | 860,832,278.88 | - | - | 860,832,278.88 | |||||||
| Receivables financing | - | 15,305,668.26 | - | 15,305,668.26 | |||||||
| Continuous measurement of fair value | 28,708,356.60 | 99,633,064.36 | 206,108,182.37 | 334,449,603.33 | |||||||
| 889,540,635.48 | 114,938,732.62 | 206,108,182.37 | 1,210,587,550.47 | ||||||||
X. Disclosure of Fair Values (cont’d)
| Input applied in the measurement of fair value | |||||||||||
| Quoted prices in active markets | Significant observable inputs | Significant unobservable inputs | Total | ||||||||
| (Level 1) | (Level 2) | (Level 3) | |||||||||
| Continuous measurement of fair value | |||||||||||
| Financial liabilities held for trading | - | - | 57,022,555.58 | 57,022,555.58 | |||||||
| Other non-current liabilities | - | 1,298,626.48 | 135,097,666.07 | 136,396,292.55 | |||||||
| - | 1,298,626.48 | 192,120,221.65 | 193,418,848.13 | ||||||||
2. Level 1 fair value measurement
The fair value of the listed equity instrument investment is determined based on the market quotation.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
X. Disclosure of Fair Values (Cont’d)
3. Level 2 fair value measurement
In a fair transaction, the fair value of financial assets and financial liabilities is determined by the amount ofvoluntary asset exchange or debt redemption between the parties to the transaction, rather than the amount inthe case of force sale or liquidation.
The fair value of receivable financing is determined by the discounted future cash flow method, the fairvalue is similar to their carrying value.
The fair value of long-term receivables and long- and short-term borrowings is determined by the discountedfuture cash flow method, where the market yield of other financial instruments with similar contract terms,credit risks and remaining maturity serves as the discount rate. On 31 December 2023, the result of theself-default risk assessment of long- and short-term borrowings was not significant.
4. Level 3 fair value measurement
The fair values of unlisted equity investments have been estimated using a market-based valuation techniquebased on assumptions that are not supported by observable market prices or rates. The valuation requiresthe Group to determine comparable listed companies based on industry, size, leverage and strategy, and tocalculate an appropriate price multiple for each comparable company identified. They are adjusted forconsiderations such as illiquidity and size differences between the comparable companies based oncompany-specific facts and circumstances. The Group believes that the estimated fair values resulting fromthe valuation technique and the related changes in fair values are reasonable, and that they were the mostappropriate values at the balance sheet date. For the fair value of investments in unlisted equity instruments,the Group estimates the potential impact of using other reasonable and possible assumptions as inputs to thevaluation model.
The fair value of equity resale rights in other non-current liabilities is assessed using a binary tree model.
Below is a summary of the significant unobservable inputs to the fair value measurement of Level 3:
| Closing fair value | Valuation technique | Unobservable inputs | Range | ||||||||
| Other non-current financial assets | 27,743,545.96 | Option pricing model | Volatility | 32.95%-45.34% | |||||||
| Other non-current financial assets | 155,340,603.88 | Comparison approach | Liquidity discount | 20.00% | |||||||
| Financial liabilities held for trading | 115,900,827.21 | Discounted cash flow method | Weighted average cost | 10.30% | |||||||
| Other non-current liabilities | 22,418,854.80 | Discounted cash flow method | Weighted average cost | 14.30% |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)错误!未知的文档属性名称 Expressed in Renminbi Yuan
X. Disclosure of Fair Values (Cont’d)
5. Reconciliation in fair value measurement
Reconciliation of continuous fair value measurements categorized within Level 3 of the fair value hierarchy:
2023
| Opening | Transfer to | Total current gains and losses | Purchase | Closing | Change in unrealized gains and losses for the period of assets | ||||||||||
| balance | Level 3 | Through profit or loss | Through other comprehensive income | balance | held at end of period through profit or loss | ||||||||||
| Other non-current financial assets | 206,108,182.37 | 99,633,064.36 | 66,334,382.51 | 857,856.70 | 56,924,222.10 | 429,857,708.04 | 66,334,382.51 | ||||||||
| Opening | Transfer to | Transfers to financial | Total current gains and losses | Settlement | Closing | Change in unrealized gains and losses for the period of liabilities | |||||||||||||||
| balance | Level 3 | liabilities held for trading | Through profit or loss | Through other comprehensive income | balance | held at end of period through profit or loss | |||||||||||||||
| Financial liabilities held for trading | 57,022,555.58 | - | 115,900,827.21 | 1,263,227.49 | - | (58,285,783.07 | ) | 115,900,827.21 | - | ||||||||||||
| Other non-current liabilities | 135,097,666.07 | 1,298,626.48 | (115,900,827.21 | ) | 759,283.68 | 1,164,105.78 | - | 22,418,854.80 | 759,283.68 | ||||||||||||
| 192,120,221.65 | 1,298,626.48 | - | 2,022,511.17 | 1,164,105.78 | (58,285,783.07 | ) | 138,319,682.01 | 759,283.68 | |||||||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)错误!未知的文档属性名称 Expressed in Renminbi Yuan
2022
| Opening | Transfer out of | Total current gains and losses | Purchase | Settlement | Closing | Change in unrealized gains and losses for the period of assets | |||||
| balance | Level 3 | Through profit or loss | Through other comprehensive income | balance | held at end of period through profit or loss | ||||||
| Financial assets held for trading | 12,936,500.63 | - | (8,292,000.00 | ) | - | - | (4,644,500.63 | ) | - | - | |
| Other non-current financial assets | 156,882,743.97 | (94,496,262.63 | ) | 45,117,740.43 | 378,960.60 | 98,225,000.00 | - | 206,108,182.37 | 45,117,740.43 | ||
| 169,819,244.60 | (94,496,262.63 | ) | 36,825,740.43 | 378,960.60 | 98,225,000.00 | (4,644,500.63 | ) | 206,108,182.37 | 45,117,740.43 | ||
| Opening | Total current gains and losses | Purchase | Settlement | Closing | Change in unrealized gains and losses for the period of liabilities | ||||||||||||||||
| balance | Through profit or loss | Through other comprehensive income | balance | held at end of period through profit or loss | |||||||||||||||||
| Financial liabilities held for trading | 110,746,939.04 | (164,544.82 | ) | - | - | (53,559,838.64 | ) | 57,022,555.58 | (164,544.82 | ) | |||||||||||
| Other non-current liabilities | 136,178,304.44 | (4,118,251.52 | ) | 437,613.15 | 2,600,000.00 | - | 135,097,666.07 | (4,118,251.52 | ) | ||||||||||||
| 246,925,243.48 | (4,282,796.34 | ) | 437,613.15 | 2,600,000.00 | (53,559,838.64 | ) | 192,120,221.65 | (4,282,796.34 | ) | ||||||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
X. Disclosure of Fair Values (Cont’d)
5. Reconciliation in fair value measurement (cont’d)
In the continuous fair value measurement at Level 3, gains and losses through profit or loss relating tofinancial assets and non-financial assets is analyzed as follows:
2023
| Gains and losses relating to financial assets | Gains and losses relating to non-financial assets | |||||
| Total gains and losses through profit or loss | 66,334,382.51 | - | ||||
| Change in unrealized gains and losses for the period of assets held at end of period through profit or loss | 66,334,382.51 | - |
2022
| Gains and losses relating to financial assets | Gains and losses relating to non-financial assets | |||||
| Total gains and losses through profit or loss | 36,825,740.43 | - | ||||
| Change in unrealized gains and losses for the period of assets held at end of period through profit or loss | 45,117,740.43 | - |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
X. Disclosure of Fair Values (Cont’d)
5. Reconciliation in fair value measurement (cont’d)
In the continuous fair value measurement at Level 3, gains and losses through profit or loss relating tofinancial assets and non-financial assets is analyzed as follows:
2023
| relating to financial liabilities | relating to non-financial liabilities | |||||
| Total gains and losses through profit or loss | 2,022,511.17 | - | ||||
| Change in unrealized gains and losses for the period of assets held at end of period through profit or loss | 759,283.68 | - |
2022
| Gains and losses relating to financial liabilities | Gains and losses relating to non-financial liabilities | |||||
| Total gains and losses through profit or loss | (4,282,796.34 | ) | - | |||
| Change in unrealized gains and losses for the period of assets held at end of period through profit or loss | (4,282,796.34 | ) | - |
6. Transfers between levels of fair value measurement
Fair value hierarchy transition
In 2023, the Group used Level 3 valuation techniques to value some other non-current financial assets forwhich observable inputs could not be reliably obtained, and transferred their fair values from Level 2 toLevel 3 disclosures, The conversion amounts were RMB99,633,064.36 (in 2022, the fair value measurementof some other non-current financial assets was transferred from Level 3 to Level 2, and the conversionamount was RMB94,496,262.63)
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XI. Relationships and Transactions with Related Parties
1. Controlling Shareholder
| Relationship with the Company | Interest in the | |||||
| Tang Zhuolin (individual) | One of the Company’s controlling shareholders and actual controllers | 21.82 | ||||
| Tang Zhuomian (individual) | One of the Company’s controlling shareholders and actual controllers | 7.81 |
The ultimate controllers of the Company are Tang Zhuolin and Tang Zhuomian.
2. Subsidiaries
See Note VII.1.
3. Associates
See Note VII.2.
4. Other related parties
| Relationship with the Company | |||
| Tang Zhuolin | Chairman | ||
| 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 | ||
| Li Ketian | Independent Director | ||
| Liu Da | Independent Director | ||
| Tu Haichuan | Independent Director | ||
| Feng Jia | Director and Board Secretary | ||
| Shao Yongfeng | Chief Financial Officer and Vice President |
5. Major transactions between the Group and related parties
(1) Salary of key management
| 2023 | 2022 | |||||
| Salary of key management | 13,157,851.82 | 12,448,768.93 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XII. Share-based Payments
On 27 March 2020, the Company convened the Board of Directors, where the Proposal on GrantingRestricted Shares to Awardees was approved, and the Board of Directors agreed to grant restricted shares to42 qualified senior managers and core technicians, and agreed to have the right to purchase shares at RMB1within the exercise validity period when the corresponding performance assessment objectives are metwithin the lifting period. The maximum period shall not exceed 60 months from the date of completion ofregistration of the first grant of some restricted shares to the date when all restricted shares granted to theincentive objects are lifted or repurchased and cancelled.
On 29 December 2020, the Company convened the Board of Directors, where the Proposal on GrantingReserved Restricted Shares to Awardees was approved, and the Board of Directors agreed to grant restrictedshares to 18 qualified senior managers and core technicians, and agreed to have the right to purchase sharesat RMB1 within the exercise validity period when the corresponding performance assessment objectives aremet within the lifting period. The maximum period shall not exceed 60 months from the date of completionof registration of the first grant of some restricted shares to the date when all restricted shares granted to theincentive objects are lifted or repurchased and cancelled.
On 21 March 2022, the Company convened the Board of Directors, where the Proposal on GrantingRestricted Shares to Awardees was approved, and the Board of Directors agreed to grant restricted shares to7 qualified senior managers and core technicians, and agreed to have the right to purchase shares at RMB1within the exercise validity period when the corresponding performance assessment objectives are metwithin the lifting period. The maximum period shall not exceed 60 months from the date of completion ofregistration of the first grant of some restricted shares to the date when all restricted shares granted to theincentive objects are lifted or repurchased and cancelled.
The equity instruments granted are as follows:
| Granted in the period | Exercised in the period | Unlocked in the period | Expired in the period | |||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | |||||||||||||
| Marketing | - | - | - | - | 2,670,000.00 | 2,670,000.00 | 120,000.00 | 120,000.00 | ||||||||||||
| management | - | - | - | - | 21,062,000.00 | 21,062,000.00 | 128,000.00 | 128,000.00 | ||||||||||||
| R&D | - | - | - | - | 1,680,000.00 | 1,680,000.00 | - | - | ||||||||||||
| Production&Operation | - | - | - | - | 250,000.00 | 250,000.00 | 240,000.00 | 240,000.00 | ||||||||||||
| Total | - | - | - | - | 25,662,000.00 | 25,662,000.00 | 488,000.00 | 488,000.00 | ||||||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XII. Share-based Payments (Cont’d)
Equity-settled share-based payments are as follows：
| 2023 | ||
| Determination method of fair value of equity instruments at grant date | Based on the share price on the grant date minus the grant price, it is RMB3.74 (RMB4.74 minus RMB1) | |
| Important parameters of fair value of equity instruments at grant date | Share price at grant date Grant Price | |
| Basis for determining the number of vested equity instruments | Make the best estimate of the number of vested employees based on the latest information such as turnover rate and substandard rate | |
| Reasons for significant difference between current year's estimate and prior year's estimate | None | |
| Accumulated amount of equity-settled share-based payment included in capital reserve | 92,193,033.60 |
Share-based payment expenses incurred during the year are as follows:
| Equity-settled share-based payment expenses | Cash-settled share-based payment expenses | ||||
| Marketing | 4,009,092.14 | - | |||
| management | 14,812,302.40 | - | |||
| R&D | 3,017,408.05 | - | |||
| Production&Operation | 312,240.63 | - | |||
| Total | 22,151,043.22 | - |
XIII. Commitments and Contingent Events
1. Significant commitments
As at the balance sheet date, the Group had no commitments which were required to be disclosed.
2. Contingent Events
As at the balance sheet date, the Group had no contingent events which were required to bedisclosed.
XIV. Events after the Balance Sheet DateAs at the balance sheet date, the Group had no events after the balance sheet date which wererequired to be disclosed.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XV.Other Significant Matters
1. Segment reporting
Operating segment
For management purposes, the Group is divided into business units based on products and services. TheGroup has the following three reporting segments:
2023
| Item | Domestic entities | Overseas entities | Offset | Total | |||||||
| Operating revenue | 1,844,474,037.62 | 3,175,318,828.12 | (274,055,543.91 | ) | 4,745,737,321.83 | ||||||
| Cost of sales | 1,222,108,902.33 | 2,364,285,010.11 | (226,865,366.43 | ) | 3,359,528,546.01 | ||||||
| Total assets | 5,747,082,095.93 | 3,273,503,656.86 | (1,482,363,182.77 | ) | 7,538,222,570.02 | ||||||
| Total liabilities | 1,392,010,817.81 | 2,244,942,800.45 | (832,939,017.58 | ) | 2,804,014,600.68 |
2022
| Item | Domestic entities | Overseas entities | Offset | Total | |||||||
| Operating revenue | 1,581,783,109.71 | 2,756,556,385.95 | (445,630,986.02 | ) | 3,892,708,509.64 | ||||||
| Cost of sales | 1,081,978,416.13 | 2,141,063,654.54 | (389,736,322.13 | ) | 2,833,305,748.54 | ||||||
| Total assets | 5,407,121,469.14 | 2,914,415,535.60 | (1,392,959,889.64 | ) | 6,928,577,115.10 | ||||||
| Total liabilities | 1,489,530,074.02 | 1,952,540,777.80 | (779,488,999.67 | ) | 2,662,581,852.15 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements
1. Account Receivable
The aging of accounts receivable is analyzed as follows:
| 2023 | 2022 | |||||
| Within 1 year | 190,721,565.80 | 212,140,018.11 | ||||
| 1-2 years | 454,811.38 | 39,011,159.02 | ||||
| 2-3 years | 357,849.03 | 1,456,776.00 | ||||
| 3-4 years | 456,982.47 | 1,688,672.44 | ||||
| 4-5 years | - | - | ||||
| Over 5 years | 2,477,303.19 | 3,004,100.00 | ||||
| 194,468,511.87 | 257,300,725.57 | |||||
| Less: allowances for doubtful accounts receivable | 4,106,865.59 | 4,454,823.68 | ||||
| 190,361,646.28 | 252,845,901.89 |
2023
| Gross amount | Allowance | Carrying amount | ||||||||||
| Amount | Percentage | Amount | Percentage | |||||||||
| (%) | (%) | |||||||||||
| Accounts receivable for which allowances are established individually | 2,477,303.19 | 1.27 | 2,477,303.19 | 100.00 | - | |||||||
| Accounts receivable for which allowances are established by group with similar credit risk characteristics | 191,991,208.68 | 98.73 | 1,629,562.40 | 0.85 | 190,361,646.28 | |||||||
| 194,468,511.87 | 100.00 | 4,106,865.59 | 190,361,646.28 | |||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
1. Account Receivable (cont’d)
2022
| Gross amount | Allowance | Carrying amount | ||||||||||
| Amount | Percentage | Amount | Percentage | |||||||||
| (%) | (%) | |||||||||||
| Accounts receivable for which allowances are established individually | 3,004,100.00 | 1.17 | 3,004,100.00 | 100.00 | - | |||||||
| Accounts receivable for which allowances are established by group with similar credit risk characteristics | 254,296,625.57 | 98.83 | 1,450,723.68 | 0.57 | 252,845,901.89 | |||||||
| 257,300,725.57 | 100.00 | 4,454,823.68 | 252,845,901.89 | |||||||||
As at 31 December 2023, accounts receivable for which allowances are established individually are asfollows:
| 2023 | 2022 | ||||||||||||||||
| Gross amount | Allowance | ECL | Reason for allowance | Gross amount | Allowance | ||||||||||||
| (%) | |||||||||||||||||
| Customer 1 | 939,000.00 | 939,000.00 | 100.00 | Customer’s inability to settle the amount due | 939,000.00 | 939,000.00 | |||||||||||
| Customer 2 | 641,600.00 | 641,600.00 | 100.00 | Customer’s inability to settle the amount due | 641,600.00 | 641,600.00 | |||||||||||
| Customer 3 | 608,800.00 | 608,800.00 | 100.00 | Customer’s inability to settle the amount due | 608,800.00 | 608,800.00 | |||||||||||
| Customer 4 | - | - | - | 516,000.00 | 516,000.00 | ||||||||||||
| Customer 5 | 283,000.00 | 283,000.00 | 100.00 | Customer’s inability to settle the amount due | 283,000.00 | 283,000.00 | |||||||||||
| Customer 6 | 4,903.19 | 4,903.19 | 100.00 | Customer’s inability to settle the amount due | 15,700.00 | 15,700.00 | |||||||||||
| 2,477,303.19 | 2,477,303.19 | 3,004,100.00 | 3,004,100.00 | ||||||||||||||
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
1. Account Receivable (cont’d)
As at 31 December 2023, accounts receivable for provision for bad debts according to the combination ofcredit risk characteristics:
| Gross amount | Allowance | ECL(%) | |||||||
| Within 1 year | 190,721,565.80 | 959,922.98 | 0.50 | ||||||
| 1-2 years | 454,811.38 | 25,924.25 | 5.70 | ||||||
| 2-3 years | 357,849.03 | 186,725.62 | 52.18 | ||||||
| 3-4 years | 456,982.47 | 456,989.55 | 100.00 | ||||||
| 191,991,208.68 | 1,629,562.40 |
Movements in allowances for doubtful accounts receivable are as follows:
| Opening balance | Established in the period | Reversed in the period | Written off in the period | Closing balance | |||||||||||
| 2023 | 4,454,823.68 | 178,838.72 | 526,796.81 | - | 4,106,865.59 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
1. Accounts receivable (cont’d)
As at 31 December 2023, the top five accounts receivable and contract assets were as follows:
| Closing balance of accounts receivable | Closing balance of contract assets | Total closing balance of accounts receivable and contract assets | As a % of the closing balance of total accounts receivable and contract assets | Total closing balance of provision for bad debts of accounts receivable and provision for impairment of contract assets | |||||||||||
| Dongfang Precision (Netherland) | 97,801,222.50 | - | 97,801,222.50 | 44.88 | - | ||||||||||
| Dongfang Precision (HK) | 56,041,392.75 | - | 56,041,392.75 | 25.72 | - | ||||||||||
| Fosber Aisa | 8,608,032.39 | - | 8,608,032.39 | 3.95 | - | ||||||||||
| Customer 12 | 8,591,315.10 | 2,493,074.99 | 11,084,390.09 | 5.09 | 106,410.14 | ||||||||||
| Customer 13 | 5,400,000.00 | - | 5,400,000.00 | 2.48 | 51,840.00 | ||||||||||
| 176,441,962.74 | 2,493,074.99 | 178,935,037.73 | 82.12 | 158,250.14 |
2. Other receivables
| 2023 | 2022 | |||||
| Dividends receivable | 272,564,800.00 | 17,840,000.00 | ||||
| Other receivables | 382,260,293.49 | 577,361,759.62 | ||||
| 654,825,093.49 | 595,201,759.62 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
2. Other receivables (cont’d)
Other receivables
The aging of other receivables is analyzed as follows:
| 2023 | 2022 | |||||
| Within 1 year | 288,812,991.16 | 139,336,039.54 | ||||
| 1-2 years | 68,762,598.71 | 437,233,397.22 | ||||
| 2-3 years | 24,699,392.06 | 117,761.18 | ||||
| 3-4 years | 117,761.18 | 24,092.04 | ||||
| 4-5 years | 4,400.00 | 217,983.00 | ||||
| Over 5 years | 1,018,174.92 | 1,587,511.18 | ||||
| Less: allowances for doubtful other receivables | 1,155,024.54 | 1,155,024.54 | ||||
| 382,260,293.49 | 577,361,759.62 |
Other receivables are classified by nature as follows:
| 2023 | 2022 | |||||
| Internal transactions with related parties | 378,012,519.05 | 562,762,515.20 | ||||
| Prepaid service charges | 1,211,065.51 | 2,772,188.53 | ||||
| Security deposits | 976,244.53 | 2,089,429.81 | ||||
| Employee loans and petty cash | 1,451,110.72 | 1,806,931.45 | ||||
| Performance compensation | 500,000.00 | 500,000.00 | ||||
| Others | 1,264,378.22 | 8,585,719.17 | ||||
| 383,415,318.03 | 578,516,784.16 |
2023
| Gross amount | Allowance | Carrying amount | ||||||||||||
| Amount | Percentage | Amount | Percentage | |||||||||||
| (%) | (%) | |||||||||||||
| Accounts receivable for which allowances are established by group with similar credit risk characteristics | 383,415,318.03 | 100.00 | 1,155,024.54 | 0.30 | 382,260,293.49 | |||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
2. Other receivables (cont’d)
Other receivables (cont’d)
2022
| Gross amount | Allowance | Carrying amount | ||||||||||||
| Amount | Percentage | Amount | Percentage | |||||||||||
| (%) | (%) | |||||||||||||
| Accounts receivable for which allowances are established by group with similar credit risk characteristics | 578,516,784.16 | 100.00 | 1,155,024.54 | 0.20 | 577,361,759.62 | |||||||||
Movements in allowances for doubtful other receivables that are established based on the 12-month ECL andthe lifetime ECL are as follows:
| Stage 1 | Stage 2 | Stage 3 | ||||||||||
| 12-month ECL | Lifetime ECL | Financial assets with credit impairment (lifetme ECL) | ||||||||||
| Opening and closing balance | 655,024.54 | 500,000.00 | - | 1,155,024.54 |
Movements in allowances for doubtful other receivables are as follows:
| Opening balance | Established in the period | Reversed in the period | Closing balance | |||||||||
| 2023 | 1,155,024.54 | - | - | 1,155,024.54 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
2. Other receivables (cont’d)
Other receivables (cont’d)
As at 31 December 2023, top 5 of other receivables are as follows:
| 2023 | As a % of total other receivables | Nature | Age | Closing balance of allowance | |||||||||||
| Hainan Yineng | 196,311,336.74 | 51.20 | Current account | Within 1 year | - | ||||||||||
| Tiru?a Aisa | 113,768,955.41 | 29.67 | Current account | Within 1 year; 1-2 years; 2-3years | - | ||||||||||
| Dongfang Digicom (Guangdong) | 43,948,943.99 | 11.46 | Current account | Within 1 year; 1-2 years; 2-3years | - | ||||||||||
| Dongfang Digicom | 11,429,035.99 | 2.98 | Current account | Within 1 year; 1-2 years; 2-3years | - | ||||||||||
| Dongfang Precision (Netherland) | 6,682,462.38 | 1.74 | Current account | Within 1 year; 1-2 years; 3-4years | - | ||||||||||
| 372,140,734.51 | 97.05 | - |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
3. Long-term equity investments
| Change in the period | |||||||||||||||||||||
| Opening balance | Opening impairment allowance | Additional investment | Reduction in investment | Change in other equity | Closing balance | Closing impairment allowance | |||||||||||||||
| Subsidiaries | |||||||||||||||||||||
| Dong Fang Precision (HK) Limited | 1,856,010.00 | - | - | - | - | 1,856,010.00 | - | ||||||||||||||
| Dongfang Precision (Netherland) | 967,767.81 | - | - | - | 634,626.49 | 1,602,394.30 | - | ||||||||||||||
| Guangdong Fosber Intelligent Equipment Co., Ltd. | 55,275,470.44 | - | 58,285,783.07 | - | 1,229,509.77 | 114,790,763.28 | - | ||||||||||||||
| Suzhou Shunyi Investment Co., Ltd. | 337,141,253.48 | (45,303,485.99 | ) | - | - | 2,961,590.28 | 340,102,843.76 | (45,303,485.99 | ) | ||||||||||||
| Tiru?a (Guangdong) Intelligent Equipment Manufacturing Co., Ltd. | 21,903,462.34 | - | - | - | - | 21,903,462.34 | - | ||||||||||||||
| Dongfang Digicom Data Technology Co., Ltd. | 5,419,727.91 | - | - | - | (700,809.17 | ) | 4,718,918.74 | - | |||||||||||||
| Dongfang Digicom Data Technology (Guangdong) Co., Ltd. | 470,213.33 | - | - | - | 393,227.64 | 863,440.97 | - | ||||||||||||||
| Hainan Yineng Investment Co., Ltd. | 101,572,033.67 | - | - | - | 549,542.16 | 102,121,575.83 | - | ||||||||||||||
| EDF | 1,197,730.34 | - | - | - | 634,626.49 | 1,197,730.34 | - | ||||||||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
3. Long-term equity investments (cont’d)
| Change in the period | |||||||||||||||||||||
| Opening balance | Opening impairment allowance | Additional investment | Reduction in investment | Change in other equity | Closing balance | Closing impairment allowance | |||||||||||||||
| Subsidiaries | |||||||||||||||||||||
| Tianjin Hangchuang | 20,000,000.00 | - | - | - | - | 20,000,000.00 | - | ||||||||||||||
| Shenzhen Wonder Printing System Co.,Ltd | 173,800,000.00 | - | - | - | - | 173,800,000.00 | - | ||||||||||||||
| Yineng International Holdings Co., Ltd | - | - | 28,643,514.64 | - | - | 29,278,141.13 | - | ||||||||||||||
| 719,603,669.32 | (45,303,485.99 | ) | 86,929,297.71 | - | 5,702,313.66 | 812,235,280.69 | (45,303,485.99 | ) | |||||||||||||
| Associates/joint ventures | |||||||||||||||||||||
| Guangdong Jaten Robot & Automation Co., Ltd. | 86,533,484.12 | - | - | 943,242.05 | - | 87,476,726.17 | - | ||||||||||||||
| Nanjing Profeta Intelligent Technology Co., Ltd. | - | - | 23,075,777.90 | (1,696,611.12 | ) | 190,905.47 | 21,570,072.25 | - | |||||||||||||
| 806,137,153.44 | (45,303,485.99 | ) | 110,005,075.61 | (753,369.07 | ) | 5,893,219.13 | 921,282,079.11 | (45,303,485.99 | ) | ||||||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
3. Long-term equity investments (cont’d)
Provision for impairment of long-term equity investments:
| Opening balance | Increase in the period | Decrease in the period | Closing balance | ||||||||
| Suzhou Shunyi Investment Co., Ltd. | (45,303,485.99 | ) | - | - | (45,303,485.99 | ) | |||||
| (45,303,485.99 | ) | - | - | (45,303,485.99 | ) |
4. Operating revenue and costs
| 2023 | 2022 | |||||||||||
| Revenue | Costs | Revenue | Costs | |||||||||
| Principal operations | 449,768,458.48 | 261,527,056.85 | 451,368,550.29 | 269,503,960.08 | ||||||||
| Other operations | 50,812,763.86 | 4,488,287.82 | 69,673,546.95 | 3,323,764.83 | ||||||||
| 500,581,222.34 | 266,015,344.67 | 521,042,097.24 | 272,827,724.91 | |||||||||
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
4. Operating revenue and costs (cont’d)
Breakdown of operating revenue arising from contracts with customers is as follows:
2023
| Reporting segments | |||
| Principal product type | |||
| Goods | 449,117,581.31 | ||
| Services | 28,406,255.64 | ||
| Interest income | 15,725,104.30 | ||
| Others | 3,155,631.27 | ||
| 496,404,572.52 | |||
| Principal operating segment | |||
| Mainland China | 167,729,877.24 | ||
| Other regions | 328,674,695.28 | ||
| 496,404,572.52 | |||
| By revenue recognition time | |||
| Revenue recognition at a point of time | 452,273,212.58 | ||
| Revenue recognition for a period of time | 44,131,359.94 | ||
| 496,404,572.52 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
4. Operating revenue and costs (cont’d)
Breakdown of operating revenue arising from contracts with customers is as follows: (cont’d)
2022
| Reporting segments | |||
| Principal product type | |||
| Goods | 450,366,148.27 | ||
| Services | 26,023,502.28 | ||
| Interest income | 38,612,370.94 | ||
| Others | 3,955,930.63 | ||
| 518,957,952.12 | |||
| Principal operating segment | |||
| Mainland China | 152,236,401.33 | ||
| Other regions | 366,721,550.79 | ||
| 518,957,952.12 | |||
| By revenue recognition time | |||
| Revenue recognition at a point of time | 454,322,078.90 | ||
| Revenue recognition for a period of time | 64,635,873.22 | ||
| 518,957,952.12 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
4. Operating revenue and costs (cont’d)
Breakdown of operating cost arising from contracts with customers is as follows:
| Reporting segments | |||
| Principal product type | |||
| Goods | |||
| Services | 260,173,669.46 | ||
| Reporting segments | 3,320,346.69 | ||
| Others | 2,521,328.52 | ||
| 266,015,344.67 |
| Principal operating segment | |||
| Mainland China | 95,892,780.14 | ||
| Other regions | 170,122,564.53 | ||
| 266,015,344.67 | |||
| By revenue recognition time | |||
| Revenue recognition at a point of time | 262,694,997.98 | ||
| Revenue recognition for a period of time | 3,320,346.69 | ||
| 266,015,344.67 |
Revenue recognized in the period included in the book value of contractual liabilities at the beginning ofyear is as follows:
| 2023 | 2022 | |||||
| Advances on sales | 20,199,887.60 | 18,352,946.11 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
4. Operating revenue and costs (cont’d)
The expected time for recognizing in revenue the total transaction price allocated to outstanding (or partlyoutstanding) contractual performance obligations as at the period-end is as follows:
| 2023 | 2022 | |||||
| Within 1 year | 53,704,255.92 | 29,803,024.37 |
5. Investment income
| 2023 | 2022 | |||||
| Income from long-term equity investments measured at equity method | (753,369.07 | ) | 3,143,695.45 | |||
| Income from financial assets held for trading | 5,100,439.51 | 3,827,951.76 | ||||
| Dividends under cost method | 316,721,550.00 | 17,840,000.00 | ||||
| 321,068,620.44 | 24,811,647.21 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
6. Major transactions between the Company and related parties
(1) Transaction of goods and services with related parties
Purchases of goods and services from related parties
| Nature of transaction | 2023 | 2022 | |||||||
| Fosber Group | Purchases of goods | 3,013.68 | - | ||||||
| EDF | Purchases of goods | 7,358,768.72 | 2,868,721.41 |
Sales of goods and services to related parties
| Nature of transaction | 2023 | 2022 | |||||||
| Dongfang Precision (HK) | Sales of goods | 51,378,876.10 | 171,028,352.25 | ||||||
| Dongfang Precision (Netherland) | Sales of goods | 55,117,411.88 | 56,133,478.23 | ||||||
| Fosber Asia | Sales of goods | 11,744,151.97 | 4,950,006.92 | ||||||
| EDF | Sales of goods | 4,174,831.00 | 12,834,213.72 | ||||||
| Tiru?a Asia | Sales of goods | 62,986.48 | - | ||||||
| Dongfang Digicom (Guangdong) | Sales of goods | 96,163.09 | - | ||||||
| Yineng Investment | Rendering of services | 19,589,859.20 | 18,273,836.24 | ||||||
| Fosber Asia | Rendering of leasing | 4,176,649.82 | 2,064,483.40 | ||||||
| Fosber Asia | Rendering of services | 2,595,446.00 | 1,628,341.84 | ||||||
| Tiru?a Asia | Rendering of services | 37,952.50 | 153,842.22 | ||||||
| Dongfang Digicom (Guangdong) | Rendering of services | 313,102.90 | 246,417.10 |
(2) Interest income of related parties
| Nature of transaction | 2023 | 2022 | |||||||
| Yineng Investment | Interest income | 9,675,891.05 | 34,878,049.06 | ||||||
| Tiru?a Asia | Interest income | 3,685,092.68 | 2,686,891.68 | ||||||
| Dongfang Digicom | Interest income | 475,600.57 | 494,726.27 | ||||||
| Dongfang Digicom (Guangdong) | Interest income | 1,888,520.00 | 1,247,087.29 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
6. Major transactions between the Company and related parties (cont’d)
(3) Guarantees for related parties
Provision of guarantees for related parties
| Amount of guarantee | Start date | End date | Having expired or not | |||
| Dongfang Precision (Netherland) | 270,400,578.91 | 2023/6/15 | 2024/6/15 | No |
(4) Lending to and borrowing from related parties
Lending to related parties2023
| Borrowing amount | Start date | End date | |||||||
| Dongfang Digicom (Guangdong) | 17,000,000.00 | 2023/1/13-2023/10/19 | 2028/1/12-2028/10/18 | ||||||
| Yineng Investment | 3,000,000.00 | 2023/8/18-2023/12/15 | 2028/8/17-2028/12/14 | ||||||
| Yineng Investment | 60,000,000.00 | 2023/4/23-2023/11/23 | 2023/4/23-2023/11/24 | ||||||
| Yineng Investment | 35,000,000.00 | 2023/6/6 | 2024/1/2 | ||||||
| Dongfang Digicom | 4,500,000.00 | 2023/1/6-2023/12/15 | 2028/1/5-2028/12/14 | ||||||
| Tiru?a Asia | 56,810,508.70 | 2023/2/17-2023/11/24 | 2025/2/16-2025/11/23 | ||||||
| Yineng International | 25,000,000.00 | 2023/12/1 | 2023/12/4 |
2022
| Borrowing amount | Start date | End date | |||
| Dongfang Digicom (Guangdong) | 19,000,000.00 | 2022/1/14-2022/12/19 | 2027/1/13-2027/12/18 | ||
| Yineng Investment | 50,000,000.00 | 2022/11/24 | 2022/11/24 | ||
| Dongfang Digicom (Guangdong) | 6,594,298.45 | 2022/3/22 | 2027/3/22 | ||
| Yineng Investment | 3,000,000.00 | 2022/5/13-2022/10/14 | 2027/5/12-2027/10/13 | ||
| Tiru?a Asia | 35,007,925.89 | 2022/1/23-2022/12/19 | 2024/1/22-2024/12/18 |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
7. Balances of amounts due from related parties
(1) Accounts receivable
| Related parties | 2023 | 2022 | |||
| Gross amount | Allowance | Gross amount | Allowance | ||
| Accounts receivable | |||||
| Dongfang Precision (HK) | 57,130,520.69 | - | 125,873,821.40 | - | |
| Dongfang Precision (Netherland) | 97,801,222.50 | - | 86,838,377.31 | - | |
| EDF | 1,202,127.69 | - | 11,999,515.22 | - | |
| Fosber Asia | 8,608,032.39 | - | 2,033,754.02 | - | |
| Tiru?a Asia | 660,000.00 | - | 941,966.99 | - | |
| Dongfang Digicom (Guangdong) | 6,342.69 | - | - | - | |
| Other Receivables | |||||
| Yineng Investment | 196,311,336.74 | - | 466,903,350.55 | - | |
| Tiru?a Asia | 113,768,955.41 | - | 53,013,045.29 | - | |
| Dongfang Digicom (Guangdong) | 43,948,943.99 | - | 25,031,945.37 | - | |
| Dongfang Digicom | 11,429,035.99 | - | 6,424,864.39 | - | |
| Shunyi Investment | 1,698,000.00 | - | 1,698,000.00 | - | |
| Fosber Asia | 3,530,740.08 | - | 1,280,118.38 | - | |
| Dongfang Precision (Netherland) | 6,682,462.38 | - | 6,608,152.98 | - | |
| Yining International | 1,000.00 | - | 1,000.00 | - | |
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
7. Balances of amounts due from related parties (cont’d)
(2) Accounts payable
| Related parties | 2023 | 2022 | ||||||
| Accounts payable | ||||||||
| EDF | 1,035,581.06 | 177,681.12 | ||||||
| Dongfang Precision (Netherland) | 51,212.19 | 51,212.19 | ||||||
| Dongfang Precision (HK) | 6,155.19 | 6,155.19 | ||||||
| Tiru?a Asia | 3,898.92 | 205,124.43 | ||||||
| Dongfang Digicom (Guangdong) | 1,386,775.94 | 1,130,000.00 | ||||||
| Fosber Group | 3,284.00 | 1,899.00 | ||||||
| Fosber Asia | 322,665.96 | - | ||||||
| Other payables | ||||||||
| Dongfang Precision (Netherland) | 650,069.71 | 331,099.71 | ||||||
| Yineng Investment | - | 68,000,000.00 | ||||||
| Fosber Asia | 1,015,465.78 | 1,015,465.78 | ||||||
| Tiru?a Asia | 15,332.33 | 171,706.39 | ||||||
| EDF | 56,189.26 | 56,189.26 |
Except the borrowings receivable from related parties, all payables to related parties are non-interest bearing,unsecured, and have no fixed repayment period.
错误!未知的文档属性名称Notes to the Financial Statements (Cont’d)2023 Expressed in Renminbi Yuan
XVII. Supplementary information
1. Schedule of exceptional gains and losses
| 2023 | |||
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 694,491.43 | ||
| Government grants through profit or loss (Except for government grants that are closely related to normal business, comply with national policies and regulations, enjoy according to the recognition criteria and have a sustained impact on profit and loss) | 15,747,293.82 | ||
| Profit or loss from changes in fair value of financial assets and financial liabilities held by non-financial enterprises and profit or loss from disposal of financial assets and financial liabilities, except for effective hedging business related to normal business operations | 60,354,587.25 | ||
| Reversal of impairment provision for receivables subject to separate impairment test | 516,000.00 | ||
| Non-operating income and expenses other than the above | (10,155,229.58 | ) | |
| Subtotal of non-recurring gain or loss | 67,157,142.92 | ||
| Income tax effects | 3,743,887.17 | ||
| Non-controlling interests effects (net of tax) | (2,400,099.25 | ) | |
| 68,500,930.84 |
2. Return on equity (ROE) and earnings per share (EPS)
| Weighted average ROE (%) | EPS | ||||||||
| Basic | Diluted | ||||||||
| Net profit attributable to ordinary shareholders of the Company | 10.14 | 0.36 | 0.36 | ||||||
| Net profit attributable to ordinary shareholders of the Company before exceptional gains and losses | 8.53 | 0.30 | 0.30 | ||||||