Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
Suzhou Dongshan Precision Manufacturing Co., Ltd.
Annual Report 2021
April 2022
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
Section I Important Note, Table of Contents and DefinitionsThe Board of Directors, the Board of Supervisors, directors, supervisors and seniormanagement of the Company hereby warrant that the information presented in this AnnualReport is true, accurate and complete and this Annual Report is free from anymisrepresentations, misleading statements or material omissions, and agree to assume jointand several liabilities for this Annual Report.YUAN Yonggang, Chairman of the Company, WANG Xu, CFO, and ZHU Deguang, ChiefAccountant hereby represent that the financial statements contained in this Annual Reportare true, accurate and complete.All directors of the Company attended the Board meeting to review this Annual Report.The future plans and other forward-looking statements mentioned in this Annual Report donot constitute a material commitment to any stakeholders, and the realization of them issubject to material uncertainty due to various factors, including changes in the market andthe efforts of the Company's operating team.The main risk factors facing the Company are set forth in “Section III – XI. Prospects forFuture Development of the Company” in this Annual Report. Investors are kindly remindedto pay attention to the relevant investment risks.According to the profit distribution proposal approved by the Board of Directors, theCompany will distribute a cash dividend of RMB 2.00 (inclusive of tax) per 10 shares to allshareholders on the basis of 1,705,913,710 shares, while bonus share and share distributionfrom capital reserve is nil.
Note：
This document is a translated version of the Chinese version Annual Report 2021(“2021年年度报告全文”), and the published Chinese version shall prevail when inconsistency occurs, which can beobtained at http://www.cninfo.com.cn.
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
Table of Contents
Section I Important Note, Table of Contents and Definitions ...... 2
Section II Company Profile and Financial Highlights ...... 7
Section III Management’s Discussion and Analysis ...... 11
Section IV Corporate Governance ...... 41
Section V Environmental and Social Responsibility ...... 61
Section VI Significant Events ...... 66
Section VII Changes in Share Capital and Shareholders ...... 82
Section VIII Preferred Shares ...... 93
Section IX Bonds ...... 94
Section X Financial Report ...... 95
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
List of References
I. The financial statements signed and chopped by Mr. YUAN Yonggang, legal representative, Mr.WANG Xu, CFO, and Mr. ZHU Deguang, Chief Accountant of the Company;II. The original of the auditor’s report stamped with the seal of the accounting firm, and signedand chopped by the certified public accountants;III. The originals of all documents publicly disclosed during the reporting period and relatedannouncements;IV. The original of the Annual Report 2021 signed by the legal representative of the Company; andV. Place for inspection of all the above-mentioned documents: Securities Department of theCompany at Buliding 12A, No 99, Taihu East Road, Suzhou, PRC
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
Definitions
| Term | means | Definition |
| The Company, we/our or DSBJ | means | Suzhou Dongshan Precision Manufacturing Co., Ltd. |
| PCB segment | means | one of the Company’s three major business segments, including research and development (R&D), design, production and sale of flexible PCBs, rigid PCBs, rigid-flex PCBs and other products. |
| Photoelectric display segment | means | one of the Company’s three major business segments, including R&D, design, production and sale of LED devices, touch panels, liquid crystal display modules and other products. |
| Precision manufacturing segment | means | one of the Company’s three major business segments, including design, production and sale of precision metal structural components & assemblies and other products. |
| YCMT | means | Suzhou Yongchuang Metal Science and Technology Co., Ltd., a wholly owned subsidiary of the Company. |
| Hong Kong Dongshan | means | Hong Kong Dongshan Precision Union Opoelectronic Co., Limited, a wholly owned subsidiary of the Company. |
| Dragon Holdings | means | Dragon Electronix Holdings Inc., a wholly owned subsidiary of Hong Kong Dongshan. |
| MFLEX | means | Multi-Fineline Electronix, Inc., a wholly owned subsidiary of Dragon Holdings. |
| MFLEX Suzhou | means | MFLEX Suzhou Co., Ltd., a wholly owned subsidiary of MFLEX. |
| MFLEX Yancheng | means | MFLEX Yancheng Co., Ltd., a wholly owned subsidiary of MFLEX. |
| Hong Kong Dongshan Holding | means | Hong Kong Dongshan Holding Limited, a wholly owned subsidiary of the Company. |
| Multek Group | means | Multek Group (Hong Kong) Limited, a wholly owned subsidiary of the Company |
| Multek Industries | means | Multek Industries Limited, a wholly owned subsidiary of Multek Group. |
| Multek Electronics | means | Multek Electronics Limited, a wholly owned subsidiary of Multek Group. |
| Multek Zhuhai | means | Multek Zhuhai Limited, a wholly owned subsidiary of Multek Group. |
| Multek China | means | Multek China Ltd., a wholly owned subsidiary of Multek Group. |
| Yancheng Dongshan | means | Yancheng Dongshan Precision Manufacturing Co., Ltd., a wholly owned subsidiary of the Company. |
| Mutto Optronics | means | Mutto Optronics Technology Co., Ltd., a wholly owned subsidiary of the Company |
| RF Top Electronic | means | Suzhou RF Top Electronic Communication Co., Ltd., a controlled subsidiary of the Company |
| Shenzhen Dongshan | means | Shenzhen Dongshan Precision Manufacturing Co., Ltd., a company controlled by the controlling shareholder and actual controller of the Company. |
| 5G | means | the 5th generation mobile communication technology. |
| AI | means | Artificial Intelligence, the simulation of human intelligence using computer programs. |
| AR | means | Augmented Reality, a technology that combines and integrates the virtual world on screen with real world, based on precise calculation of position |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| & angle of camera images and image analysis technology. | ||
| VR | means | Virtual Reality, a computer-simulated 3D virtual world with scenes and objects that appear to be real. |
| IoT | means | Internet of Things, a system of interrelated computing devices, mechanical equipment and digital machines, that has a unique identifier (UID) and is capable to transmit data over the network. |
| PCB | means | Printed Circuit Board, a finished product with insulated substrates and conductors as materials, designed and made into printed circuits, printed components or a combination of conductive patterns according to the pre-designed circuit schematic diagram. |
| FPC | means | Flexible Printed Circuit. |
| LED or LED device | means | Light-emitting diode, a conductor diode that emits incoherent light when current flows through it, and the recombination of electrons and electron holes in the semiconductor produces radiation, for purpose of this Annual Report, including LED particles, LED light bars, LED backlight modules, LED lighting devices and other LED products. |
| Mini LED | means | sub-millimeter light emitting diode, a LED device with a grain size of about 50-200μm. |
| LCM | means | LCD module or LCD display module, a module formed by assembling LCD display device with the relevant connectors, drivers and other peripheral circuits, PCB, backlight source, structural components and other components. |
| Touch panel | means | a device under the protection of transparent glass that detects touches using sensors and processes, and transmits the relevant information. |
| AOA | means | the Articles of Association of the Company |
| CSRC | means | the China Securities Regulatory Commission. |
| SZSC | means | the Shenzhen Stock Exchange. |
| Reporting period | means | the period from January 1, 2021 to December 31, 2021. |
| RMB and RMB 0’000 | means | Renminbi and ten thousand Yuan. |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
Section II Company Profile and Financial Highlights
I. Company Profile
| Stock abbreviation | DSBJ | Stock code | 002384 |
| Stock exchange | Shenzhen Stock Exchange | ||
| Chinese name | 苏州东山精密制造股份有限公司 | ||
| Chinese short name | 东山精密 | ||
| English name (if any) | Suzhou Dongshan Precision Manufacturing Co., Ltd. | ||
| English short name (if any) | DSBJ | ||
| Legal representative | YUAN Yonggang | ||
| Registered address | No. 88 Tangdong Road, Wuzhong Economic Development Zone, Suzhou | ||
| Postal code of registered address | 215124 | ||
| History of changes in registered address | The Company’s registered address was at Shangwan Village, Dongshan, Wuzhong District, Suzhou, Jiangsu when the Company were reorganized from Suzhou Dongshan Sheet Metal Co., Ltd. into Suzhou Dongshan Precision Manufacturing Co., Ltd. in 2007, and was changed into No. 88 Tangdong Road, Wuzhong Economic Development Zone, Suzhou on December 27, 2019. | ||
| Office address | Buliding 12A, No 99, Taihu East Road, Suzhou, PRC | ||
| Postal code of office address | 215128 | ||
| Company website | http://www.dsbj.com | ||
| dsbj@dsbj.com | |||
II. Contact Person and Contact Information
| Board Secretary | |
| Name | MAO Xiaoyan |
| Address | Buliding 12A, No 99, Taihu East Road, Suzhou, PRC |
| Telephone | 0512-80190019 |
| Facsimile | 0512-80190029 |
| maoxy@dsbj.com |
III. Media for Information Disclosure and Place for Keeping the Annual Report
| Website of the stock exchange disclosing the Company’s annual report | Securities Times, China Securities Journal, Shanghai Securities News and Securities Daily |
| Media and website disclosing the Company’s annual report | http://www.cninfo.com.cn |
| Place for keeping the Company’s annual report | Securities Department of the Company |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
IV. Changes in Registration Particulars
| Organization code | 91320500703719732P |
| Changes in main business activities since the listing of the Company (if any) | Since the I.P.O., the Company’s business operations have strategically included PCB segment, photoelectric display segment and other electronic business. The Company focuses on the R&D and manufacturing of technologically advanced core components for the smartly interconnected world, and the offering of comprehensive smart interconnection solutions to customers throughout the world. |
| Changes in controlling shareholders (if any) | None |
V. Other Related InformationAccounting firm engaged by the Company:
| Name of accounting firm | Pan-China Certified Public Accountants LLP |
| Office address of accounting firm | 31/F, Block B, China Resources Building, No. 1366 Qianjiang Road, Jianggan District, Hangzhou, Zhejiang |
| Name of accountants signing this report | SUN Tao and HUANG Zhenshuang |
Sponsor engaged by the Company to perform the duties of continuous supervision over the Company during the reporting period:
√Applicable □ N/A
| Name | Office address | Sponsor’s representatives | Period of continuous supervision |
| TF Securities Co., Ltd. | Block 2, TF Plaza, No. 217 Zhongbei Road, Wuchang District, Wuhan, Hubei | HE Zhaodan and ZHANG Xingwang | From August 6, 2020 to December 31, 2021 |
Financial advisor engaged by the Company to perform the duties of continuous supervision over the Company during the reportingperiod:
□ Applicable √ N/A
VI. Key Accounting Data and Financial IndicatorsWhether the Company need to retrospectively adjust or restate any accounting data of previous fiscal years?
□ Yes √ No
| 2021 | 2020 | Y/Y % change | 2019 | |
| Operating revenue (RMB) | 31,793,147,908.12 | 28,093,409,430.26 | 13.17% | 23,552,825,103.23 |
| Net profit attributable to shareholders of the listed company (RMB) | 1,862,481,138.84 | 1,530,132,196.09 | 21.72% | 702,656,380.67 |
| Net profit attributable to shareholders of the listed company excluding non-recurring gains and losses (RMB) | 1,576,650,669.18 | 1,301,219,335.83 | 21.17% | 418,778,063.97 |
| Net cash flows from operating activities (RMB) | 3,209,544,484.21 | 2,932,168,894.65 | 9.46% | 2,651,461,601.10 |
| Basic earnings per share (RMB/share) | 1.09 | 0.93 | 17.20% | 0.44 |
| Diluted earnings per share (RMB/share) | 1.09 | 0.93 | 17.20% | 0.44 |
| Weighted average ROE | 13.46% | 14.41% | -0.95% | 8.25% |
| December 31, 2021 | December 31, 2020 | Y/Y % change | December 31, 2019 | |
| Total assets (RMB) | 37,951,408,787.25 | 37,503,068,713.54 | 1.20% | 31,670,271,635.86 |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| Net assets attributable to shareholders of the listed company (RMB) | 14,576,500,325.15 | 13,068,916,872.79 | 11.54% | 8,646,124,544.20 |
Whether the lower of the net profit before and after deduction of non-recurring gains and losses in the past three accounting years hasbeen negative, and the most recent annual auditor’s report indicates that the Company’s ability to continue as a going concern isuncertain?
□ Yes √ No
Whether the lower of the net profit before and after deduction of non-recurring gains and losses is negative?
□ Yes √ No
VII. Differences in Accounting Data under China Accounting Standards for BusinessEnterprises (CASBEs) and Overseas Accounting Standards
1. Differences in net profit and in net assets disclosed in the financial statements during the reporting periodprepared under CASBEs and International Financial Reporting Standards (IFRS)
□ Applicable √ N/A
There was no difference in net profit and in net assets disclosed in the financial statements during the reporting period, whichprepared under CASBEs and International Financial Reporting Standards (IFRS)
2. Differences in net profit and in net assets disclosed in the financial statements during the reporting periodprepared under CASBEs and overseas accounting standards
□ Applicable √ N/A
There was no difference in net profit and in net assets disclosed in the financial statements during the reporting period, whichprepared under CASBEs and overseas accounting standards.VIII. Key Financial Indicators by Quarter
Unit: RMB
| First quarter | Second quarter | Third quarter | Fourth quarter | |
| Operating revenue | 7,508,277,291.61 | 6,496,895,027.89 | 7,802,005,689.02 | 9,985,969,899.60 |
| Net profit attributable to shareholders of the listed company | 245,090,642.75 | 359,561,445.63 | 593,397,856.04 | 664,431,194.42 |
| Net profit attributable to shareholders of the listed company excluding non-recurring gains and losses | 209,686,552.99 | 320,979,638.44 | 509,182,981.57 | 536,801,496.18 |
| Net cash flows from operating activities | 146,830,386.84 | 807,682,971.19 | 238,084,288.21 | 2,016,946,837.97 |
Whether there’s any material difference between the financial indicators or aggregate amounts thereof set out above, and thecorresponding financial indicators set out in any quarter report or semi-annual report of the Company which already disclosed?
□ Yes √ No
IX. Items and Amounts of Non-recurring Gains and Losses
√ Applicable □ N/A
Unit: RMB
| Items | 2021 | 2020 | 2019 |
| Gains or losses on disposal of non-current assets (including the write-off for the impairment provision of assets) | 13,783,433.93 | 18,548,846.52 | 8,002,622.39 |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| Government grants included in profits or losses (excluding government grants that are closely related to the business of the Company and are provided based on standard quota or quantitative continuous application according to the state industrial policy) | 268,965,326.25 | 208,864,058.42 | 309,693,674.86 |
| Fund occupation fee received from non-financial entities that was recorded in profits or losses | 19,777,467.66 | 25,555,038.76 | 9,326,161.55 |
| Gains or losses on assets under entrusted investment or management | 11,913,618.63 | 10,718,494.92 | 4,075,701.37 |
| Gains or losses on changes in fair value of financial assets held for trading and financial liabilities held for trading, and gains on disposal of financial assets held for trading, financial liabilities held for trading and available-for-sale financial assets, except for effective hedges held in the ordinary course of business | 17,766,609.82 | 12,906,432.35 | -15,244,514.54 |
| Reversal of impairment losses on accounts receivable tested for impairment individually | 22,451,468.46 | 19,035,541.70 | |
| Other non-operating revenue and expenses | -1,909,316.59 | -1,135,781.75 | -931,352.59 |
| Other gains or losses within the meaning of non-recurring gains and losses | 722,866.99 | -4,668,613.96 | |
| Less: Impact of income tax | 65,906,713.13 | 46,295,962.38 | 46,447,862.64 |
| Impact of non-controlling interest (exclusive of tax) | 1,734,292.36 | 248,266.58 | -1,036,958.56 |
| Total | 285,830,469.66 | 228,912,860.26 | 283,878,316.70 |
There is no other item of gains or losses within the meaning of non-recurring gains or losses.There is no situation that any item of non-recurring gains or losses defined by the Explanatory Announcement No. 1 on InformationDisclosure for Companies Publicly Offering Securities – Non-recurring Gains or Losses classified as recurrent profit or loss duringthe reporting period.
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
Section III Management’s Discussion and AnalysisI. Industry Overview and Outlook for the Reporting PeriodDuring the reporting period, the industry in which we operate has not undergone any material change as compared withthe preceding year.PCB segment: According to the latest report issued by Prismark, the PCB industry is expected to grow by 5.2% in 2022,and the total output value of the global PCB industry will exceed USD 100 billion by 2026. The vigorous developmentof 5G, AI, Cloud, consumer electronics, new energy and other industries will continuously drive the rapid growth of thePCB industry. According to Prismark, we were ranked the world’s third largest PCB manufacturer in terms of operatingrevenue in 2021. In reliance on our strength in R&D, production engineering, quality control, delivery and other aspects,we are able to provide high-quality products and services to our customers.Photoelectric display segment: (1) Touch panel products: Along with the rapid development of AI, Big Data and othernew technologies, touch panel products are applied in more and more fields, the market size is increasing continuously,the adoption of touch panels in laptops is increasing steadily, and more and more touch panels are used on smart homeand smart automotive products to realize human-machine interaction. (2) LED devices: Small-pitch LEDs arecharacterized by high definition, high brightness, high fidelity, long life and seamless image, and suit differentapplication scenarios. Due to their remarkable advantages, small-pitch LEDs come into favor of the professional displayand commercial market and their market penetration has been increasing continuously. In the future, after the productsshow their cost advantages, they are expected to enter the broader commercial market. In the field of photoelectricdisplay, we are a well-known manufacturer of touch panel modules and LED display devices.Precision manufacturing segment: Our products in the field of precision manufacturing, including base stationantennas, filters and other structural components and assemblies for mobile communication, functional and structuralcomponents for new energy vehicles, etc., are mainly applied in communication, new energy and other fields. As aglobal communication technology standard, 5G stands at a critical period of development of technical standards andcommercialization. The prospects for the 5G related industry are extensive in the long run. As a well-known supplier ofcommunication equipment and assemblies in the world, we will firmly grasp this opportunity for development. Alongwith the vigorous development of the new energy vehicle industry, the vehicles tend to be lighter, resulting in anincrease in the adoption of aluminum products on new energy vehicles. We provide light aluminum functional andstructural components and other products to major carmakers. In the future, our advantages in the coverage of multipleindustry chains and provision of integrated solutions will help us improve customer adhesion.
II. Main Business Overview during the Reporting Period
During the reporting period, the main business conducted by us has not undergone any material changes.We are committed to growing into a supplier of core components for the smartly interconnected world. Our businessoperations are divided into three main segments: PCB, photoelectric display, and precision manufacturing. Our productsare widely applied in consumer electronics, communication equipment, new energy vehicle, industrial equipment, AI,medical appliances and other fields.
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
In the field of PCB, we are committed to providing industry-leading customers with comprehensive PCB products andservices, and integrated solutions covering design, R&D and manufacturing of PCB products that are customized to suitdifferent downstream end products. Our products are widely applied on mobile phones, computers, AR/VR devices,wearable devices, servers, communication equipment, new energy vehicles, industrial control equipment, etc.In the field of photoelectric display, we are a well-known manufacturer of touch panel modules and LED displaydevices. Our touch panel products are mainly used on medium- and large-sized displays for laptops, tablets, smart homedevices, on-board displays, etc.; LCM products are mainly used on medium- and small-sized displays for mobile phones,tablets, etc.; and LED products are widely used on outdoor and indoor small-pitch HD displays. In addition, we havesuccessfully launched our new Mini LED backlight products on the market, and are actively developing customers forsuch products.In the field of precision manufacturing, we mainly provide precision metal structural components and assemblies forcustomers engaged in the business of communication equipment, consumer electronics and new energy vehicles, etc.,including base station antennas, filters and other structural components and assemblies for mobile communication,functional and structural components for new energy vehicles, etc.III. Core Competencies of DSBJ
1. Advantage in products: wide range of products and integrated industry chainIn recent years, we have continuously improved our industrial and product mix through acquisitions and internaldevelopment, broken development bottlenecks, and introduced superior businesses to build up new growth drivers. Atpresent, our product offerings cover three business segments, namely PCB, photoelectric display and precisionmanufacturing. We are able to provide customers with a variety of basic and core components for smart interconnection.In the field of PCB and small-pitch LED devices, we have grown into a leading company in the industry. We activelygive full play to the synergistic effect of all business segments in R&D, technology, supply chain, products, marketingand other areas, through integration of internal resources and coordinated development, gradually achieve the synergyadvantage of vertically integrated industry chain, and strive to provide comprehensive, one-stop and technologicallyadvanced integrated product solutions to customers in the field of smart interconnection, and satisfy the customizationrequirements of customers to the maximum extent.
2. Advantage in customers: high-quality domestic and foreign customer base
We have a mature global sales service system, industry-leading technical capabilities and advanced productioncapabilities, and our products are popular with top customers in different areas throughout the world and have ahigh-quality customer base. The remarkable platform superiority of our customers helps us maintain high profitability,reduce credit risks and continuously expand the scope of cooperation with them. In addition, the high-quality customerbase has a good demonstration effect, and will help us further enhance our popularity and capability to develop newcustomers, and acquire larger market shares in the future competition. Our customers come from consumer electronics,communication equipment, industrial equipment, automotive and other industries. Such diversified customer baseenables us to fend off the impact of the seasonal and cyclical fluctuations of different industries, and helps usaccumulate experience of cooperation with customers from different industries and improve our core competencieswhile maintaining stable growth of business.
3. Advantage in technology: stick to the principle that technological innovation capability is the primary
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
production factorWe attach great importance to technological innovation in our business development, and drive our developmentthrough innovation. Through continuous R&D investments, we now own hundreds of patents and licenses, and havebuilt complete open R&D system and efficient R&D mechanisms, and a global R&D team with outstandingprofessional level, rich industrial experience and strong innovation capabilities. Through continuous investments inR&D of new materials, new technologies and new production processes, we have continuously explored frontierproduction technologies for core components in the field of smart interconnection, and laid a solid foundation forserving emerging businesses, such as AR/VR, IoT, Mini LED and new energy vehicles. While improving producttechnologies, we attach great importance to the innovation and upgrading of production technologies, and have gainedsome effect in integrated development of informatization and industrialization. By promoting integrated development ofinformatization and industrialization, we have vigorously implemented intelligent manufacturing and built intelligentfactories.
4. Advantage in scale: promote development in reliance on advantage in scale and increase benefits based onsynergistic effectOur customers are well-known domestic and international hi-tech companies who have high purchase quantities, setstrict requirements for delivery of products, and have high requirements for the scale of production and productionefficiency of suppliers. Through years of development and accumulation, we have grown into a supplier of corecomponents for smart interconnection with relatively strong overall capabilities in China. Our large scale of productioncan satisfy the purchase demands of major downstream customers, creating a big advantage in scale. Our advantage inscale provides us with strong bargaining power in the purchase of raw materials, resulting in reduction of the unitproduction cost. On the other hand, through effective integration of internal resources, we can reduce operating costs,thereby increasing our superiority over our competitors, further consolidating and enhancing our position in the industry,and improving our core competencies.
5. Advantage in management: advanced concept, complete system and efficient executionWe advocate the corporate spirit of “openness, inclusion and pragmatism”, stick to the management principle of“delegation of powers in business operation, support by the platform and centralized supervision”, give full play to theinitiative and creativity of grass-roots organizations, and have built a scientific and efficient management system. Ourmanagement team owns practical experience in the management of advanced manufacturing industry, has wide globalvisions, is able to make accurate strategic judgments and decisions on the trends of industry and opportunities fordevelopment, and has strong cohesion and executive ability. We are practical and keep forging ahead in day-to-daymanagement and operation, make periodic benchmarking analysis to compare our performance against historic data,budget targets and the results of outstanding peers, and effectively improve our operational quality and efficiency bysetting examples and objectives, identifying the breakthrough point, focusing on implementation and reviewing whathas been done, to lay a solid foundation for our sustained high-quality development.
6. Advantage in internationalization: promoting the establishment of a “dual circulation” development patternWe closely follow the national development strategy, actively take part in global economic competitions, andcontinuously enhance integration of high-quality resources of the industry. After completing two overseas acquisitionsin 2016 and 2018 respectively, we have successfully entered the PCB industry that has broader prospects fordevelopment, optimized our business structure, and laid a solid foundation for our high-quality development. We have
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
realized growth in both scale of operation and operating results through such lead-forward development. In 2019, weestablished our overseas headquarters and operating entities with different functions in North America, Europe,Southeast Asia and other countries and regions, in order to further improve our global operating capabilities, promotethe establishment of a “dual circulation” development pattern, and actively cope with the complicated competitionenvironment.
IV. Analysis of Main Business
1. Overview
During the reporting period, we faced lots of challenges, such as the complicated global economic situation, repeatedoutbreaks of COVID-19, continuous rise of the prices of staple commodities, continuous appreciation of Renminbi,periodic shortage of energy and great shock on the global supply chain. However, we acted with one mind, coped withchallenges calmly and prioritized stability while pursuing progress. We adopted more moderate business strategies,actively promoted integrated development of informatization and industrialization, and improved our technicalcapabilities to continuously provide our customers throughout the world with technologically advanced products andservices; optimized out organization structure, strictly controlled unnecessary capital expenditures, and enhanced budgetmanagement, so that our financial position and cash flows have been continuously improved and optimized.In 2021, our main financial performance grew stably: our operating revenue totaled RMB 31.793 billion, an increase of
13.17% year on year; net profit attributable to shareholders of the listed company was RMB 1.862 billion, an increaseof 21.72% year on year; net profit attributable to shareholders of the listed company after deduction of non-recurringgains or losses was RMB 1.577 billion, an increase of 21.17% year on year; net cash flows from operating activities wasRMB 3.210 billion, an increase of 9.46% year on year; and as of the end of the reporting period, equity-debt ratio was
61.34%, a decrease of 3.53% year on year.
In 2021, we and our subsidiaries were granted with many special honors, including “China ESG Golden Award 2021”,“2021 Model Enterprise for Industrial Internet Development of Jiangsu”, and “Specialized, Refinement, Characteristicand Novelty Little Giant Enterprise”, among others.Below is a brief description of the main activities conducted by us in 2021:
(1) The PCB business grew stably and our overall competencies were improved rapidlyWe center on the requirements of customers, continuously increase R&D investments, and strive to improve our corecompetencies. During the reporting period, our PCB business realized continued growth of operating revenue andattained good operating results. While maintaining in-depth cooperation with key customers, MFLEX activelydeveloped AR/VR, new energy vehicle and other new businesses, gave full play to its advantages in customer response,product R&D and internal operation, and realized stable growth of main operating results. Multek made active efforts tomitigate the adverse effect caused by periodic power rationing, price rise of raw materials and other factors, and madegreat breakthroughs in its operating results by integrating resources, improving management capabilities and bringingall internal potentialities into full play.
(2) Take full advantage of industry chain and synergistic effect, and actively promote innovation and developmentWe always give priority to development. We have made correct assessments of the situation, and responses andarrangements taking into account of our capabilities and position on the market, and further defined our new “three-yeardevelopment plan” from the strategic perspective; made full use of our brand, capabilities and advantages in the field of
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
PCB and precision manufacturing and actively cooperated with customers from the new energy vehicle industry indeveloping solutions. During the reporting period, our operating revenue from the new energy vehicle businessincreased by 120% as compared with the preceding year. In addition, we have enhanced R&D efforts, closely graspedthe new opportunities brought about by the technology innovation and growth of market size of the industry, andaccelerated forward-looking deployments. Our headquarters also established the new energy strategy department, inorder to actively seek the application and breakthroughs of our products in electrification, intelligentization or otherwisein respect of new energy vehicles, develop new customers of the industry, and build up new growth drivers.
(3) Adjust and optimize our compensation policies and system and enhance the training of personnelAs our professional and international management structure and corporate strategies have mounted a new step, we needto continuously improve and make breakthroughs in our compensation policy and system, and augment ourmanagement and technical staff. During the reporting period, we implemented our 2021 employee stock ownership planand repurchased certain shares, which would be available under our share incentive and employee stock ownershipplans. In the future, we will actively explore the establishment of a more competitive compensation system, strive toenhance the sense of gain and arouse the enthusiasm of the employees, and maximize the value of the Company. Inaddition, we have established the medium-to-long term talent training plan, in order to promote our future development.
(4) Continue to promote integration of informatization and industrialization and improve management efficiencyWe focus on the development of intelligent manufacturing, and an advanced production model; actively use moderninformation technologies, give full play to our advantages, build smart factories, and promote high integration ofinformatization and industrialization, and the application of big data, AI, cloud platform and IoT technologies in ourmanagement and operation, and digitalization of management and operation, to drive development with technology.During the reporting period, we completed the smart transmission system of the die bond workshop of YanchengDongshan, automatic and smart workshop of MFLEX Yancheng, financial RPA document review system and otherprojects, which effectively improved our management efficiency. In addition, we and our subsidiaries have been grantedmany provincial and municipal-level honors due to our excellent achievements in the integration of informatization andindustrialization.
(5) Stick to the strategy of prudent operations, and promote our high-quality developmentDuring the reporting period, we stuck to the strategy of prudent operations, strictly controlled capital expenditures, andcontinuously adjusted and optimized capital structure and debt structure. The benchmarking, cost reduction andefficiency improvement and other activities conducted by us previously effectively promoted the improvement of ouroperating performance in 2021. In particular, the operating performance indicators of our LED segment have reachedthe advanced level of the industry. In view of the high proportion of our foreign currency assets and the impact of theprices of maple commodities on material costs, our finance department, in conjunction with the business departments,flexibly used hedging instruments to mitigate the adverse effect brought about by the fluctuations in foreign exchangerates and prices of maple commodities, and avoid the risk of market fluctuations. In the future, we will adopt moremoderate and prudent financial strategies, strive to improve asset turnovers, and promote our high-quality development.
2. Revenue and cost
(1) Components of operating revenue
Unit: RMB
| 2021 | 2020 | Y/Y % |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| Amount | % of operating revenue | Amount | % of operating revenue | change | |
| Total operating revenue | 31,793,147,908.12 | 100% | 28,093,409,430.26 | 100% | 13.17% |
| By segment | |||||
| Computer, communication and other electronic components | 31,682,727,248.03 | 99.65% | 28,017,895,740.11 | 99.73% | 13.08% |
| Others | 110,420,660.09 | 0.35% | 75,513,690.15 | 0.27% | 46.23% |
| By product | |||||
| PCBs | 20,495,329,957.29 | 64.46% | 18,771,308,897.12 | 66.82% | 9.18% |
| Touch panels and LCMs | 5,156,396,939.04 | 16.22% | 4,090,095,126.44 | 14.56% | 26.07% |
| LED display devices | 2,603,932,687.66 | 8.19% | 2,162,663,506.28 | 7.70% | 20.40% |
| Precision components | 3,427,067,664.04 | 10.78% | 2,993,828,210.27 | 10.66% | 14.47% |
| Others | 110,420,660.09 | 0.35% | 75,513,690.15 | 0.27% | 13.08% |
| By region | |||||
| Domestic market | 6,798,743,063.07 | 21.38% | 7,617,683,512.66 | 27.12% | -10.75% |
| Overseas market | 24,994,404,845.05 | 78.62% | 20,475,725,917.60 | 72.88% | 22.07% |
| By sales model | |||||
| Direct sales | 31,793,147,908.12 | 100.00% | 28,093,409,430.26 | 100.00% | 13.17% |
(2) Segments, products, regions or sales models representing more than 10% of operating revenue or profit
√ Applicable □ N/A
Unit: RMB
| Operating revenue | Operating cost | Gross margin | Y/Y % change in operating revenue | Y/Y % change in operating cost | Y/Y % change in gross margin | |
| By industry | ||||||
| Computer, communication and other electronic components | 31,682,727,248.03 | 27,080,576,091.48 | 14.53% | 13.08% | 14.51% | -1.06% |
| By product | ||||||
| PCBs | 20,495,329,957.29 | 17,319,465,575.78 | 15.50% | 9.18% | 10.48% | -0.99% |
| Touch panels and LCMs | 5,156,396,939.04 | 4,735,719,298.33 | 8.16% | 26.07% | 31.68% | -3.91% |
| LED display devices | 2,603,932,687.66 | 2,127,082,704.10 | 18.31% | 20.40% | 14.79% | 4.00% |
| Precision components | 3,427,067,664.04 | 2,898,308,513.27 | 15.43% | 14.47% | 14.86% | -0.29% |
| By region | ||||||
| Domestic market | 6,798,743,063.07 | 5,888,391,366.92 | 13.39% | -10.75% | -9.51% | -1.19% |
| Overseas market | 24,994,404,845.05 | 21,240,159,261.01 | 15.02% | 22.07% | 23.68% | -1.11% |
| By sales model | ||||||
| Direct sales | 31,793,147,908.12 | 27,128,550,627.93 | 14.67% | 13.17% | 14.56% | -1.04% |
In case of any adjustment to the statistic scale for main business data, the main business data of the most recent reporting period asadjusted according to the statistic scale applied at the end of the current reporting period:
□ Applicable √ N/A
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
(3) Whether the Company’s revenue from sale of tangible goods is higher than the revenue from labor service?
√ Yes □ No
| Segment | Items | Unit | 2021 | 2020 | Y/Y % change |
| PCBs | Sales volume | m2 | 3,331,653.39 | 3,010,306.6 | 10.67% |
| Output | m2 | 3,312,615.14 | 3,055,122.93 | 8.43% | |
| Inventories | m2 | 137,265.92 | 156,304.17 | -12.18% | |
| Touch panels and LCMs | Sales volume | PC | 21,628,005 | 18,667,902 | 15.86% |
| Output | PC | 22,321,638 | 19,769,074 | 12.91% | |
| Inventories | PC | 3,886,955 | 3,193,322 | 21.72% | |
| LED display devices | Sales volume | PC | 208,056,642,319 | 135,284,812,074 | 53.79% |
| Output | PC | 216,650,785,694 | 141,610,493,380 | 52.99% | |
| Inventories | PC | 31,809,179,557 | 23,215,036,182 | 37.02% | |
| Precision components | Sales volume | PC | 65,150,504 | 58,146,074 | 12.05% |
| Output | PC | 66,107,258 | 58,733,074 | 12.56% | |
| Inventories | PC | 12,082,070 | 11,125,316 | 8.60% |
Analysis of changes in the relevant data over 30% year on year:
√ Applicable □ N/A
The sales volume and output of LED display devices increased by 53.79% and 52.99% respectively, primarily due to the utilizationof the production capacity of our Yancheng production base.
(4) Performance of material sales contracts and material purchase contracts by the Company as of the end ofthe reporting period
□ Applicable √ N/A
(5) Components of operating cost
Classification of products:
Unit: RMB
| Items | 2021 | 2020 | Y/Y % change | |||
| Amount | % of operating revenue | Amount | % of operating revenue | |||
| Computer, communication and other electronic components | Direct material costs | 20,105,035,098.47 | 74.11% | 17,173,719,408.59 | 72.52% | 17.07% |
| Direct labor costs | 2,073,617,167.68 | 7.64% | 1,824,434,978.54 | 7.70% | 13.66% | |
| Manufacturing and other costs | 4,949,898,361.78 | 18.25% | 4,682,137,122.64 | 19.77% | 5.72% | |
(6) Changes in the scope of consolidation during the reporting period
√ Yes □ No
Subsidiaries newly included in the scope of consolidation:
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| Company name | Method of acquisition of shares | Date of acquisition of shares |
| Suzhou Dongchen Intelligent Equipment Manufacturing Co., Ltd. | Investment | November 30, 2021 |
| Shanghai Dongxin New Energy Technology Co., Ltd. | Investment | August 27, 2021 |
| Shanghai Donglan New Energy Technology Co., Ltd. | Investment | November 1, 2021 |
| Hainan Chengjia Technology Consulting Co., Ltd. | Investment | May 14, 2021 |
Subsidiaries removed from the scope of consolidation:
| Company name | Method of disposal of shares | Date of disposal of shares |
| Chongqing Chengjia Precision Electronic Technology Co., Ltd. | Deregistration | January 29, 2021 |
| Dongguan Xindong Intelligent Technology Co., Ltd. [Note] | Loss of control | August 31, 2021 |
| DSBJ FINLAND OY | Deregistration | December 31, 2021 |
| Suzhou Dongshan Precision Technology Co., Ltd. | Deregistration | November 16, 2021 |
Note: Dongguan Xindong Intelligent Technology Co., Ltd. has entered the bankruptcy and liquidation proceedings and we have lostcontrol over it. It is a small subsidiary of Dongguan Dongshan Precision Manufacturing Co., Ltd., and its disposal will not affect ouroperating results.
(7) Material changes or adjustments in respect of business, products or services of the Company during thereporting period
□ Applicable √ N/A
(8) Major customers and suppliers
Major customers of the Company:
| Aggregate sales revenue from top 5 customers (RMB) | 19,932,554,623.75 |
| Proportion of aggregate sales revenue from top 5 customers to annual sales revenue | 62.69% |
| Proportion of aggregate sales revenue from related parties among top 5 customers to annual sales revenue | 0.00% |
Particulars of top 5 customers:
| No. | Name of customer | Sales revenue (RMB) | % of annual sales revenue |
| 1 | Customer 1 | 14,148,014,353.45 | 44.50% |
| 2 | Customer 2 | 2,838,222,234.37 | 8.93% |
| 3 | Customer 3 | 1,495,655,942.16 | 4.70% |
| 4 | Customer 4 | 911,012,633.29 | 2.87% |
| 5 | Customer 5 | 539,649,460.47 | 1.70% |
| Total | -- | 19,932,554,623.75 | 62.69% |
Other information of major customers:
□ Applicable √ N/A
Major suppliers of the Company:
| Aggregate purchase amount from top 5 suppliers (RMB) | 6,378,907,211.14 |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| Proportion of aggregate purchase amount from top 5 suppliers to annual purchase cost | 29.68% |
| Proportion of aggregate purchase amount from related parties among top 5 suppliers to annual purchase cost | 0.00% |
Particulars of top 5 customers:
| No. | Name of supplier | Purchase amount (RMB) | % of annual purchase cost |
| 1 | Supplier 1 | 2,426,861,042.69 | 11.29% |
| 2 | Supplier 2 | 1,525,225,415.40 | 7.10% |
| 3 | Supplier 3 | 1,133,848,116.04 | 5.28% |
| 4 | Supplier 4 | 698,807,986.48 | 3.25% |
| 5 | Supplier 5 | 594,164,650.53 | 2.76% |
| Total | -- | 6,378,907,211.14 | 29.68% |
Other information of major suppliers:
□ Applicable √ N/A
3. Expenses
Unit: RMB
| 2021 | 2020 | Y/Y % change | Reason of material changes | |
| Selling expenses | 341,087,646.41 | 329,180,346.50 | 3.62% | Primarily due to the reconciliation of transportation-out cost of about RMB 190 million to operating costs for the reporting period |
| Administrative expenses | 781,664,730.36 | 686,479,003.08 | 13.87% | |
| Financial expenses | 436,663,673.90 | 630,110,578.97 | -30.70% | During the reporting period, our financial strategy of reducing leverage and adjusting structure produced a marked effect, as a result of which our overall capital costs further decreased; on the other hand, we reduced certain foreign exchange risk through effective hedging transactions. |
| R&D expenses | 1,028,567,206.95 | 910,253,381.44 | 13.00% |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
4. R&D investments
√ Applicable □ N/A
| Description of major R&D project | Purpose | Progress | Objectives | Expected effect on the future development of Company |
| Development of full LCP multi-layer flexible PCBs | To improve the technology and market competitiveness of the relevant products. | In progress | To develop the production process for full LCP multi-layer flexible PCBs and provide better signal transmission performance. | The technology and market competitiveness of the relevant products will be improved. |
| Research of the new-type flexible PCB protection technology | To improve the technology and market competitiveness of the relevant products. | Completed | To research the new-type PECVD waterproof technology, and improve the waterproof and environmental resistant performance of flexible PCBs. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the production technology of roll to roll multi-layer flexible PCBs | To improve the technology and market competitiveness of the relevant products. | Completed | To improve the production efficiency and automation level of the production process, shorten the production cycle and increase the yield rate of the relevant products. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the application of bending resistant high-frequency electromagnetic shielding films | To improve the performance and market competitiveness of the relevant products. | Completed | To optimize the material selection and technology, and lengthen the bending life, to satisfy the requirements of the relevant electronic products. | The performance and market competitiveness of the relevant products will be improved. |
| Development of press-fit technology for flexible PCB coverlay films | To reduce carbon emission and improve the market competitiveness of the relevant products. | In progress | To improve the efficiency and reduce energy consumption of the production process of the relevant products. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the new-type press-fit technology for super efficient flexible PCBs | To reduce carbon emission and improve the market competitiveness of the relevant products. | In progress | To improve the efficiency of press-fit process for multi-layer boards and coverlay films. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the application of the new-type photo-imageable coverlay film on flexible PCBs | To improve the technology and market competitiveness of the relevant products. | Completed | To realize the application of photo-imageable coverlay film, optimize the production technology and realize industrialization of the technology. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the biometric product for flexible PCBs | To improve the technology and market competitiveness of the relevant products. | Completed | To develop the fingerprint identification product using mSAP technology. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the multi-layer circuit board for coils of voice coil motors | To improve the technology and market competitiveness of the relevant products. | Completed | To develop micro-coils of voice coil motors for consumer electronic cameras. | The technology and market competitiveness of the relevant products will be improved. |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| Research of the wettability technology for electroless nickel/immersion gold surface-treated surface pads | To improve the technology and market competitiveness of the relevant products. | Completed | To research the influence mechanism of wettablity, and improve soldering quality. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the laser soldering technology for automotive PCBs | To introduce new precision soldering technology, and improve product quality. | In progress | To innovate in the method of soldering, and improve the efficiency of soldering, and level of automation. | The technology and market competitiveness of the relevant on-vehicle products will be improved. |
| Development of the laser hole-opening technology for flexible PCB coverlay films | To improve the market competitiveness of the relevant products. | In progress | To shorten the process and improve the precision of coverlay film hole-opening, and realize automation of the process. | The technology and market competitiveness of the relevant products will be improved. |
| Industrialization of the high-frequency and high-speed signal simulation and testing technology | To improve the technology and market competitiveness of the relevant products. | Completed | To realize the industrialization of the high-frequency and high-speed products, and standardization of the high-frequency and high-speed simulation and testing technology. | The technology and market competitiveness of the relevant products will be improved. |
| Research of the long-life dynamic bending technology for foldable devices | To improve the technology and market competitiveness of the relevant products. | Completed |
To optimize the product design, material selectionand stacking, increase the dynamic bending life tomore than 400,000 times, and satisfy therequirements of mass production of foldablemobile phones.
| The technology and market competitiveness of the relevant products will be improved. | ||||
| Industrialization of the electroplating simulation technology | To improve the technology and market competitiveness of the relevant products. | Completed | To develop the electroplating simulation process and improve the capacity of the electroplating process. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the on-board battery panel temperature rise simulation and testing technology | To improve the technology and market competitiveness of the relevant products. | Completed | To develop the simulation and precise testing methods for circuit temperature rise, fuse burn-out and other electro-thermal coupling of on-board battery panels. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the fracture simulation and analysis technology | To improve the performance and market competitiveness of the relevant products. | Completed | To carry out board-level fracture simulation research, optimize preliminary product design and setting of process parameters, and predict and avoid mechanic failure of the relevant products. | The performance and market competitiveness of the relevant products will be improved. |
| Development of the pressure sensing technology for flexible PCB coverlay films | To improve the performance and market competitiveness of the relevant products. | Completed | To realize the use of flexible PCB production technology and materials with special functions, and pressure sensing function. | The performance and market competitiveness of the relevant products will be improved. |
| Development of multiple cutting | To improve the technology and market | Completed | To realize cutting of multi-layer boards with | The technology and market |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| methods for multi-layer flexible PCBs | competitiveness of the relevant products. | different thickness. | competitiveness of the relevant products will be improved. | |
| Development of the application of graphene glue and semiconductor ceramic substrate on flexible PCBs | To improve the technology and market competitiveness of the relevant products. | In progress | To realize the control of heating temperature using flexible PCBs. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the single SMT assembly technology | To improve the engineering and market competitiveness. | In progress | To realize the diversification of assembly technologies. | The engineering and market competitiveness will be improved. |
| Research of recycling of metal materials | To improve the engineering and market competitiveness. | Completed | To reduce carbon emission, protect the environment and recycle the resources. | The engineering and market competitiveness will be improved. |
| Development of the bending testing technology for full automatic electric testing of flexible PCBs | To improve the engineering and market competitiveness. | Completed | To make the back-end assembly process unmanned and intelligent. | The engineering and market competitiveness will be improved. |
| Research of the assembly technology for ultra-micro components | To improve the engineering and market competitiveness. | Completed | To realize the diversification of assembly technologies, and application of fine pitch components. | The engineering and market competitiveness will be improved. |
| R&D of the real-time pressure sensing monitoring technology | To improve the engineering and market competitiveness. | Completed | To realize the digitalization of hot pressing parameters. | The engineering and market competitiveness will be improved. |
| Automation of design assistant software | To improve the engineering competitiveness. | Completed | To realize the integration of design automation and informatization. | The engineering and market competitiveness will be improved. |
| Development of the thermally conductive copper grease process | To improve the technology and market competitiveness of the relevant products. | Completed | To provide the customers with a heat dissipation solution in lieu of small copper billet, and improve the production efficiency. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the conductive copper grease process and technology | To improve the technology and market competitiveness of the relevant products. | In progress | To use copper grease to connect two or more sub-PCBs. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the electrolytic nickel/gold + electroless nickel electroless palladium immersion gold process | To improve the technology and market competitiveness of the relevant products. | Completed | To provide the customers with a solution to realize different surface treatment of two sides of PCBs, and reduce contamination of palladium and gold cylinders. | The technology and market competitiveness of the relevant products will be improved. |
| Research of the signal insertion loss performance of different types of copper foils | To improve the technology and market competitiveness of the relevant products. | Completed | To satisfy the customers’ signal requirements and provide the customers with optimal stacking design. | The technology and market competitiveness of the relevant products will be improved. |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| Development of the technology to control the length of electroplated stubs on the pit walls of high frequency PCBs | To improve the technology and market competitiveness of the relevant products. | Completed | To control stubs on pit walls, reduce power loss, simplify the production process, and greatly lower costs. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the buried resistance process | To improve the technology and market competitiveness of the relevant products. | In progress | To satisfy the integration, anti-interference and other requirements of devices. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the semi-flex PCB technology | To improve the technology and market competitiveness of the relevant products. | Completed | To produce PCBs bendable and adjustable from four directions. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the micro copper inlay technology for optoelectronic modules | To improve the technology and market competitiveness of the relevant products. | Completed | To develop the copper inlay technology that permits boring and interconnection at any layer. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the femtosecond laser moulding technology | To improve the technology and market competitiveness of the relevant products. | Completed | To use femtosecond green light to cut PI flexible PCB material or FR4 rigid PCB material, to reduce edge carbonization in laser moulding. | The technology and market competitiveness of the relevant products will be improved. |
| Simulation and design of 56/112 Gbps transmission line | To improve the product design capability. | In progress | To improve high-speed product design capability and efficiency, and reach the leading level of the industry. | The technology and market competitiveness of the relevant products will be improved. |
| Development of LCM blind hole technology | To improve the technology and market competitiveness of the relevant products. | Completed | To develop the LCM side blind hole and middle blind hole process, which can be applied in mass production. | The technology and market competitiveness of the relevant products will be improved. |
| Development of LCM three-side sealing technology | To improve the technology and market competitiveness of the relevant products. | In progress | To narrow the frames of LCMs and connect LCMs with the enclosures more closely, to produce a better sealing effect. | The technology and market competitiveness of the relevant products will be improved. |
| Mini LED LCM | To develop the new technology to improve the display effect of LCDs. | In progress | To develop the optic and structural design, driver and algorithm of blue light COB Mini LEDs, and realize the industrialization of the technology. | The technology and market competitiveness of the relevant products will be improved. |
| PF2 R&D project | To improve the technology and market competitiveness of laptop and all-in-one PC device products. | In progress | To satisfy the requirements of ultra-thin specifications of the customers, be able to carry out mass production and be applied in new projects. | The technology and market competitiveness of the relevant products will be improved. |
| Self-made metal mesh sensor | To improve the technology and market competitiveness of tablet, laptop and | In progress | With respect to metal mesh sensor, to reach the advanced technical level of the industry, be able to | The technology and market competitiveness of the relevant |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| all-in-one PC device products. | carry out mass production and be applied in new projects. | products will be improved. | ||
| Self-made G-sensor | To improve the technology and market competitiveness of on-board and industrial control products. | In progress | With respect to G-sensor, to reach the advanced technical level of the industry, be able to carry out mass production and be applied in new projects. | The technology and market competitiveness of the relevant products will be improved. |
| Development of the lean manufacturing technology for energy storage cabinet | To improve the production efficiency, quality and market competitiveness of the relevant products. | Completed | With respect to cabinet welding, to realize automatic work station welding by robots, adopt the welding technology for a variety of materials, including copper-iron welding, iron-stainless steel welding, laser welding and MAG, and realize full recycling of circulation packing materials. | The production efficiency, quality and market competitiveness of the relevant products will be improved. |
| Development of the energy saving cabinet structure and semi-integrated assembly technology | To improve the manufacturability, quality and market competitiveness of the relevant products. | Completed | To optimize the cabinet structure and BOM cost, improve the manufacturability of the processing technology, and realize assembly of the devices designated by the customers, and delivery of semi-integrated products. | The manufacturability, quality and market competitiveness of the relevant products will be improved. |
| Development of the self-servicing cabinet structure technology | To independently design the innovative cabinet structure and improve the market competitiveness of the relevant products. | Completed | To realize mainstream design of the appearance, modular design of glass door structure of the cabinet, and rapid maintenance. | The market competitiveness of the relevant products in the field will be improved. |
| Development of the cold plate production line and tooling technology | To improve the market competitiveness of the relevant products. | Under validation | To be validated for key products of strategic customers in the automotive industry. | The market share in the new energy sector and market competitiveness of the relevant products will be improved. |
| Development of the automatic production line of cell products | To improve the market competitiveness of the relevant products. | Samples are under validation | To be validated for key products of strategic customers in the industry. | The market share in the new energy sector and market competitiveness of the relevant products will be improved. |
Particulars of R&D personnel:
| 2021 | 2020 | Y/Y % change | |
| Number of R&D personnel | 3,699 | 3,487 | 6.08% |
| Proportion of R&D personnel to total number of employees | 18.53% | 16.59% | 1.94% |
| Education background of R&D personnel | - | - | - |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| Undergraduate | 1?741 | 1?492 | 16.69% |
| Master | 37 | 34 | 8.82% |
| Aging of R&D personnel | - | - | - |
| Below 30 | 1?726 | 1?479 | 16.70% |
| 30-40 | 518 | 471 | 9.98% |
Particulars of R&D expenses:
| 2021 | 2020 | Y/Y % change | |
| Amount of R&D expenses (RMB) | 1,028,567,206.95 | 910,253,381.44 | 13.00% |
| Proportion of R&D expenses to operating revenue | 3.24% | 3.24% | 0.00% |
| Amount of R&D expenses capitalized (RMB) | 0.00 | 0.00 | 0.00% |
| Proportion of capitalized R&D expenses to total R&D expenses | 0.00% | 0.00% | 0.00% |
Analysis of the cause and effect of significant change in the composition of R&D personnel:
□ Applicable √ N/A
Analysis of the cause of significant change in the proportion of R&D expenses to operating revenue compared with the preceding year:
□ Applicable √ N/A
Analysis of the cause and reasonableness of significant change in the proportion of R&D expenses capitalized:
□ Applicable √ N/A
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
5. Cash flows
Unit: RMB
| Items | 2021 | 2020 | Y/Y % change |
| Cash provided by operating activities | 31,571,649,840.58 | 28,907,652,380.61 | 9.22% |
| Cash used in operating activities | 28,362,105,356.37 | 25,975,483,485.96 | 9.19% |
| Net cash flows from operating activities | 3,209,544,484.21 | 2,932,168,894.65 | 9.46% |
| Cash provided by investment activities | 1,871,205,697.48 | 529,960,243.63 | 253.08% |
| Cash used in investment activities | 3,898,266,527.76 | 3,627,907,348.30 | 7.45% |
| Net cash flows from investment activities | -2,027,060,830.28 | -3,097,947,104.67 | -34.57% |
| Cash provided by financing activities | 13,568,826,956.10 | 21,388,286,958.74 | -36.56% |
| Cash used in financing activities | 13,662,677,252.42 | 20,284,639,506.39 | -32.65% |
| Net cash flows from financing activities | -93,850,296.32 | 1,103,647,452.35 | -108.50% |
| Net increase in cash and cash equivalents | 1,066,166,041.32 | 926,274,214.75 | 15.10% |
Analysis of the main causes of significant changes in the relevant data:
√ Applicable □ N/A
1. The cash provided by investing activities increased by 253.08%, primarily due to recovery of the investment in wealthmanagement products that reached maturity.
2. The cash used in investment activities decreased by 34.57%, primarily due to recovery of the investment in wealth managementproducts that reached maturity, and increase in the investment in investment projects by offering proceeds.
3. The cash provided by financing activities decreased by 36.56%, primarily due to receipt of the offering proceeds of RMB 2.869billion through private placement of 103 million shares in the preceding year.
4. The cash used in financing activities decreased by 32.65%, primarily due to repayment of certain bank loans with surplus funds inthe preceding year.
5. The net cash flows from financing activities decreased by 108.50%, primarily due to receipt of the offering proceeds of RMB
2.869 billion through private placement in the preceding year, and repayment of certain bank loans with surplus funds during thereporting period.Analysis of the significant difference between net cash flows from operating activities during the reporting period and net profit incurrent year:
√ Applicable □ N/A
In 2021, the net profit attributable to the parent was RMB 1.86 billion and net cash flows from operating activities was RMB 3.21billion, primarily due to operating cash inflows from depreciation of fixed assets, amortization of intangible assets and other non-cashpayments.
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
VI. Analysis of Assets and Liabilities
1. Material changes in the components of assets
Unit: RMB
| December 31, 2021 | January 1, 2021 | Y/Y % change | Reason of significant change | |||
| Amount | % of total assets | Amount | % of total assets | |||
| Cash and bank balances | 5,400,837,392.47 | 14.23% | 5,154,010,538.74 | 13.72% | 0.51% | |
| Accounts receivable | 7,666,079,765.82 | 20.20% | 7,090,498,632.70 | 18.87% | 1.33% | |
| Inventories | 6,451,712,389.82 | 17.00% | 5,977,123,863.84 | 15.91% | 1.09% | |
| Investment properties | 1,554,262.58 | Primarily due to the leasehold properties newly acquired by RF Top Electronic during the reporting period. | ||||
| Long-term equity investment | 143,121,019.78 | 0.38% | 101,207,887.93 | 0.27% | 0.11% | Primarily due to the investment in Suzhou Yongxin Jingshang Venture Capital Partnership (Limited Partnership) and BVF (BVI) Holding during the reporting period. |
| Fixed assets | 10,736,270,678.33 | 28.29% | 10,414,964,294.37 | 27.72% | 0.57% | |
| Construction in progress | 503,037,513.25 | 1.33% | 562,008,491.36 | 1.50% | -0.17% | |
| Right-of-use assets | 920,952,667.75 | 2.43% | 919,933,989.09 | 2.45% | -0.02% | |
| Short-term borrowings | 8,047,168,009.16 | 21.20% | 8,579,155,068.19 | 22.84% | -1.64% | |
| Contract liabilities | 39,681,986.94 | 0.10% | 21,204,655.32 | 0.06% | 0.04% | Primarily due to an increase in the considerations received or receivable from customers recognized according to the new revenue recognition accounting standard in the reporting period. |
| Long-term loans | 2,030,525,761.80 | 5.35% | 2,764,720,894.68 | 7.36% | -2.01% | |
| Lease liabilities | 1,147,810,164.72 | 3.02% | 1,116,750,563.53 | 2.97% | 0.05% | |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
Analysis of high proportion of overseas assets:
√ Applicable □ N/A
| Assets | Method of acquisition | Amount | Location | Mode of operation | Controls for guaranteeing the security of assets | Income | Proportion of overseas assets to net assets | Whether it involves risk of material impairment loss |
| Dragon Holdings | Established by the Company | 23,263,646,158.29 | Delaware, U.S. | R&D and sales | Its manufacturing entity is located in China | 938,077,220.83 | 44.92% | No |
| Multek Group | Established by the Company | 5,337,096,155.12 | Hong Kong, China | R&D and sales | Its manufacturing entity is located in China | 19,453,208.78 | 3.83% | No |
2. Assets and liabilities at fair value
√ Applicable □ N/A
Unit: RMB
| Items | Beginning balance | Gains or losses on changes in fair value | Aggregate changes in fair value recorded in equity | Impairment loss recognized in the current period | Amount acquired in the reporting period | Amount sold in the reporting period | Other changes | Ending balance |
| Financial assets | ||||||||
| 1. Financial assets held for trading (excluding derivative financial assets) | 1,175,736,670.62 | 2,706,056,914.79 | 3,519,793,585.41 | 98,666.66 | 362,098,666.66 | |||
| 2. Derivative financial assets | 76,290,891.03 | 8,645,469.99 | 110,126,954.93 | 103,583,872.45 | 201,591,636.32 | 124,360.00 | 97,179,912.08 | |
| 4. Investment in other equity instruments | 10,000,000.00 | 30,249,971.12 | 40,249,971.12 | |||||
| Subtotal of financial assets | 1,262,027,561.65 | 8,645,469.99 | 110,126,954.93 | 2,839,890,758.36 | 3,721,385,221.73 | 223,026.66 | 499,528,549.86 | |
| Total | 1,262,027,561.65 | 8,645,469.99 | 110,126,954.93 | 2,839,890,758.36 | 3,721,385,221.73 | 223,026.66 | 499,528,549.86 |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| Financial liabilities | 881,721.20 | 881,721.20 | 0.00 |
Other changes:
N/AWhether there’s any material change in the measurement properties of main assets of the Company during the reporting period?
□ Yes √ No
3. Encumbrances on assets as of the end of the reporting period
Unit: RMB
| Items | Closing carrying amount | Reasons for restrictions |
| Cash and bank balances | 1,461,536,265.68 | Security deposit for notes, etc. |
| Receivables financing | 337,954,600.06 | Pledge of notes receivable |
| Accounts receivable | 49,750,000.00 | Factoring of accounts receivable |
| Fixed assets | 490,778,211.02 | Collateral for loans and sale and lease back |
| Intangible assets | 4,207,098.63 | Collateral for loans |
| Right-of-use assets | 920,952,667.75 | Finance lease |
| Total | 3,265,178,843.14 |
VII. Analysis of Investments
1. Overview
√ Applicable □ N/A
| Amount of investment in 2021 (RMB) | Amount of investment in 2020 (RMB) | Y/Y % change |
| 841,517,692.36 | 304,876,301.58 | 176.02% |
2. Major equity investments acquired during the reporting period
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
□ Applicable √ N/A
3. Major non-equity investments that have not yet been completed in the reporting period
□ Applicable √ N/A
4. Investment in financial assets
(1) Investment in securities
We have not invested in securities during the reporting period.
(2) Investment in derivatives
√ Applicable □ N/A
Unit: RMB 0’000
| Counterparty | Affiliation | Whether or not a related-party transaction | Type of derivative | Initial investment cost | Date of commencement | Date of termination | Beginning balance | Amount acquired in the reporting period | Amount sold in the reporting period | Allowance for impairment loss (if any) | Ending balance | % of ending balance to the net asset as at the end of the reporting period | Actual gains or losses in the reporting period |
| Futures company | None | No | Commodity futures | 187.3 | June 24, 2021 | June 14, 2022 | 0 | 31,105.12 | 16,836.63 | 0 | 14,257.18 | 0.97% | -11.31 |
| Total | 187.3 | - | - | 0 | 31,105.12 | 16,836.63 | 0 | 14,257.18 | 0.97% | -11.31 | |||
| Source of funds | Self-owned funds | ||||||||||||
| Whether or not involved in any litigation (if applicable) | No | ||||||||||||
| Disclosure date of the announcement of the board of directors approving the investment in derivatives (if any) | June 15, 2021 | ||||||||||||
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| Analysis of risks associated with the derivatives held in the reporting period (including without limitation market risk, liquidity risk, credit risk, operational risk and legal risk) and related risk control measures | The risk analysis and control measures are set out in the Announcement on the Conduct of Hedging Transactions with Commodity Futures disclosed by us on June 15, 2021 (Announcement No.: 2021-037). |
| Changes in the market price or fair value of the derivatives held in the reporting period (in the analysis of the fair value of derivatives, the specific approaches, assumptions and parameters used shall be disclosed) | We are mainly engaged in hedging transactions with mainstream products on major domestic futures markets. The derivatives traded by us have a transparent and active market, and their transaction prices and settlement prices can fully reflect their fair value. |
| Whether there’s any material change in the accounting policies and accounting principles for the measurement of derivatives in the reporting period as compared with the preceding reporting period | None |
| Special opinion issued by the independent directors regarding the Company’s investment in derivatives and related risk control measures | The hedging transactions conducted by the Company with commodity futures can give full play to the hedging function of futures, reduce the effect of the fluctuations in market prices of raw materials and products on the production and operating costs and the prices of main products of the Company, improve its capability to fend off risks and enhance its financial soundness. The relevant transactions have been considered and decided in accordance with the provisions of the Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange, the Guide on Operational Compliance for Companies Listed on the Shenzhen Stock Exchange, and other applicable laws and regulations and the AOA, and will not prejudice the interests of the Company and the shareholders. Therefore, we consent to the conduct of the hedging transactions by the Company with commodity futures. |
5. Use of offering proceeds
√ Applicable □ N/A
(1) Description of use of offering proceeds
√ Applicable □ N/A
Unit: RMB 0’000
| Year of offering | Method of offering | Total offering proceeds | Total amount of offering proceeds | Aggregate amount of offering | Total amount of offering proceeds the | Aggregate amount of offering | Percentage of offering proceeds the | Total amount of unused | Purpose and whereabouts of unused | Total amount of offering proceeds that has remained |
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| used in the reporting period | proceeds already used | purpose of which was changed in the reporting period | proceeds the purpose of which has been changed | purpose of which has been changed | offering proceeds | offering proceeds | unused for more than two years | |||
| 2020 | Private share offering | 286,395.39 | 65,800.5 | 153,004.25 | 0 | 0 | 0.00% | 134,607.54 | To be invested in the relevant projects | 0 |
| Total | -- | 286,395.39 | 65,800.5 | 153,004.25 | 0 | 0 | 0.00% | 134,607.54 | -- | 0 |
| Description of use of offering proceeds | ||||||||||
| With the approval of the CSRC by its document Zheng Jian Xu Ke [2020] No. 980 and the consent of the SZSE, we privately offered 103,294,850 Renminbi-denominated ordinary A shares at the offer price of RMB 28.00 per share to specific investors through the lead underwriter TF Securities Co., Ltd., and raised RMB 2.89 billion in total, and after deduction of the underwriter’s fee and sponsor’s fee totaling RMB 23?500?000, the balance of the offering proceeds, RMB 2.87 billion, was remitted to our supervisory account of offering proceeds by TF Securities Co., Ltd. on July 13, 2020. After deduction of the accountant’s fee, attorney’s fee, legal information disclosure fee and other external costs directly relating to the offering of equity securities, totaling RMB 6?500,000, the amount of net offering proceeds was RMB 2.86 billion (exclusive of tax). Pan-China Certified Public Accountants LLP verified the receipt of such offering proceeds, and issued the Capital Verification Report (Tian Jian Yan [2020] No. 5-9). | ||||||||||
(2) Committed investment projects by offering proceeds
√ Applicable □ N/A
Unit: RMB 0’000
| Committed investment project and use of over-raised funds | Whether the project has been changed or partially changed | Total committed investment amount | Total investment amount as adjusted (1) | Amount invested in the reporting period | Aggregate amount already invested as of the end of the reporting period (2) | Progress of investment as of the end of the reporting period (3) = (2) / (1) | Date that the project is ready for its intended use | Income earned in the reporting period | Whether the project has produced the desired result | Whether there’s any significant change in the feasibility of the project |
| Committed investment project | ||||||||||
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| Wireless module production and construction project of Yancheng Dongshan Communication Technology Co., Ltd. | No | 70,122.75 | 70,122.75 | 2,383.85 | 8,049.51 | 11.48% | N/A | N/A | N/A | No |
| Multek 5G high-speed high-frequency and high-density PCB technology upgrading project | No | 65,958.46 | 65,958.46 | 13,410.81 | 25,656.23 | 38.90% | N/A | N/A | N/A | No |
| Multek PCB production line technology upgrading project | No | 72,805.89 | 72,805.89 | 25,256.24 | 51,114.15 | 70.21% | N/A | N/A | N/A | No |
| 400?000 m2 fine line FPC production and assembly capacity expansion project | No | 80,338.48 | 80,338.48 | 24,749.6 | 68,184.36 | 84.87% | N/A | N/A | N/A | No |
| Subtotal | -- | 289,225.58 | 289,225.58 | 65,800.5 | 153,004.25 | -- | -- | -- | -- | |
| Use of over-raised funds | ||||||||||
| None | ||||||||||
| Total | -- | 289,225.58 | 289,225.58 | 65,800.5 | 153,004.25 | -- | -- | -- | -- | |
| Failure to meet the scheduled progress and produce the desired result and reason thereof (please describe on a project per project basis) | Due to the fact that 5G deployment falls short of expectations, and the effect of COVID-19 and other factors, the investment in the wireless module production and construction project of Yancheng Dongshan Communication Technology Co., Ltd., Multek 5G high-speed high-frequency and high-density PCB technology upgrading project and Multek PCB production line technology upgrading project slowed down. We will accelerate the investment in the investment projects by offering proceeds, taking into account the situation of the industry in which we operate and our actual situations, and improve the efficiency of the use of offering proceeds. | |||||||||
| Reason of significant change in the feasibility of the project | None | |||||||||
| Amount and use of over-raised offering proceeds and progress of use thereof | N/A | |||||||||
| Change in the place of the | Applicable | |||||||||
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
| investment projects by offering proceeds | Occurred during the reporting period |
| On August 10, 2021, the 15th meeting of the 5th session of the Board of Directors considered and adopted the Proposal for Changing the Place of Certain Investment Project by Offering Proceeds, approving the addition of Plot Su Wu Guo Tu 2020-WG-16 at the north of Tangdong Road, Wuzhong Economic Development Zone, Suzhou as the new place for implementing the 400?000 m2 fine line FPC production and assembly capacity expansion project. After such change, the project will be implemented at No.88 Tangdong Road, Wuzhong Economic Development Zone, Suzhou and Plot Su Wu Guo Tu 2020-WG-16 (north of Tangdong Road, Wuzhong Economic Development Zone, Suzhou). | |
| Adjustment of the method of implementation of the investment project by offering proceeds | N/A |
| Funds pre-invested in the investment project and replacement thereof | Applicable |
| The 3rd meeting of the 5th session of the Board of Directors considered and adopted the Proposal for Replacing the Self-raised Funds Pre-invested in the Investment Projects by Offering Proceeds with the Idle Offering Proceeds, approving the replacement of the funds pre-invested in the investment projects by offering proceeds in the amount of RMB 399.59 million with the offering proceeds. The replacement was completed in 2020. | |
| Temporary replenishment of working capital with the idle offering proceeds | Applicable |
| On July 28, 2021, the 14th meeting of the 5th session of the Board of Directors considered and adopted the Proposal for Temporary Replenishment of Working Capital with the Idle Offering Proceeds, approving the temporary replenishment of working capital with the idle offering proceeds up to RMB 1.2 billion for a period of not more than 12 months. As of December 31, 2021, we used the idle offering proceeds of RMB 1.13 billion to temporarily replenish the working capital. | |
| Amount of surplus offering proceeds and reason thereof | N/A |
| Purpose and whereabouts of unused offering proceeds | As of December 31, 2021, the amount of unused offering proceeds was RMB 1?346.0754 million, of which, RMB 1,130 million was used to replenish the working capital, RMB 45 million was used to purchase wealth management products for purpose of cash management, and the remaining RMB 171.0754 million was deposited in the special account of offering proceeds. |
(3) Changes in the investment projects by offering proceeds
□ Applicable √ N/A
There has been no change in the investment projects by offering proceeds during the reporting period.
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
VIII Sale of Material Assets and Equities
1. Sale of material assets
No material asset has been sold during the reporting period.
2. Sale of material equities
□ Applicable √ N/A
IX. Analysis of Major Subsidiaries and Associates
√ Applicable □ N/A
Major subsidiaries and associates representing more than 10% of the net profit of the Company:
Unit: RMB
| Company name | Type of company | Main business | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Dragon Holdings | Subsidiary | Design, R&D, sale and after-sale services in respect of PCBs; sale and after-sale services in respect of electronic products; and investment holding | USD 113,450,100 | 23,263,646,158.29 | 6,590,536,235.65 | 32,506,671,197.17 | 1,132,987,332.05 | 938,077,220.83 |
| Multek Group | Subsidiary | R&D, sale and after-sale services in respect of PCBs | USD 100 | 5,337,096,155.12 | 562,250,926.27 | 4,775,336,289.38 | 33,865,776.91 | 19,453,208.78 |
Subsidiaries acquired or disposed of during the reporting period:
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
√ Applicable □ N/A
| Company name | Method of acquisition or disposal | Effect on overall production, operation and results |
| Suzhou Dongchen Intelligent Equipment Manufacturing Co., Ltd. | Investment | No material effect on our operating results in the reporting period |
| Shanghai Dongxin New Energy Technology Co., Ltd. | Investment | No material effect on our operating results in the reporting period |
| Shanghai Donglan New Energy Technology Co., Ltd. | Investment | No material effect on our operating results in the reporting period |
| Hainan Chengjia Technology Consulting Co., Ltd. | Investment | No material effect on our operating results in the reporting period |
| Chongqing Chengjia Precision Electronic Technology Co., Ltd. | Deregistration | No material effect on our operating results in the reporting period |
| Dongguan Xindong Intelligent Technology Co., Ltd. | Loss of control | No material effect on our operating results in the reporting period |
| DSBJ FINLAND OY | Deregistration | No material effect on our operating results in the reporting period |
| Suzhou Dongshan Precision Technology Co., Ltd. | Deregistration | No material effect on our operating results in the reporting period |
Particulars of major subsidiaries and associates:
None.
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
X. Structured Entities Controlled by the Company
□ Applicable √ N/A
XI. Prospects for Future Development of the Company
1. Our development strategy
We focus on high-quality development, enhance systemic thinking, make top-level design, strictlydefend the bottom line of operation; actively embrace changes, continue to develop the main business,consolidate and improve the basic business; increase R&D investments, enable industrial development,fully exploit internal resources and potentialities, strive to improve our performance in the new energysector; implement comprehensive budget management, focus on key products, serve key customers;insist on prudent operation, maintain the healthiness of financial position; optimize the organizationstructure, enhance the training of personnel; implement integration of informatization andindustrialization, and drive the transition from “manufacturing” to “intelligent manufacturing”.
2. 2022 business plan
Make further use of our advantages in R&D, technology and delivery, consolidate and improve thebasic business; fully exploit our potentialities, actively increase the application of our products in thefield of new energy; give full play to the role of the headquarters in business planning, overallarrangement of sales, etc., efficiently allocate resources, and strive to provide the customers with moreaccurate and one-stop products and services.Insist on prudent operation, enhance comprehensive budget management, improve the asset turnovers;ensure the security of supply chain, keep a close watch on the changes in foreign exchange rates andprices of staple commodities, and strive to eliminate and mitigate the effect of external factors on us.Enhance integration of informatization and industrialization, insist on lean operations and cost control,strive to improve the return on investment; implement systemic governance, and promote ourhigh-quality development.Actively explore scientific and effective incentive mechanisms, enhance organizational building andtraining of personnel, in particular, young people, to build a talent pool for our future development.Maintain the healthiness of financial position, enhance management of cash flows, and continuouslyoptimize debt structure and financing costs.
3. Main risk factors
Risk of concentration of customersWe have good customer resources. Our major customers are well-known domestic and internationalcompanies in the relevant industries that are of sound credit and have established stable cooperationrelationship with us. However, our top 5 customers constitute a large proportion in our total salesrevenue, which may further increase in the future. Any material adverse change in the businesssituation of such major customers could have an adverse effect on our business.We will give full play to our advantages, make active deployment in new energy and other emergingindustries and strive to develop new customers, in order to mitigate the adverse effect of the relativeconcentration of customers on us.Risks brought by rapid technology upgrading of the industryOur business covers PCB, photoelectric display, precision manufacturing and other technologyintensive industries, and our products are widely applied in consumer electronics, communicationequipment, industrial equipment, AI, medical appliances and other fields, all of which are characterizedby rapid technology upgrading. If our R&D and manufacturing capabilities fail to keep pace with the
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
rapid technology upgrading of downstream products, our products and technologies may becomeobsolete.We will follow up on the new technologies and new processes of the industry from the strategicperspective, and strive to keep our technologies and processes at the advanced level through continuousand effective R&D investments.Risk of changes in the global trade environmentOur major customers include some well-known international companies, and our export sales havegrown steadily for years. Though China has established good economic and trade cooperationrelationships with major countries in the world, the increasingly fierce regional disputes in recent yearsmay cause uncertainties to the applicable trade policies, which could affect our international trade.We will follow up on the development of international trade disputes, enhance communication with ourcustomers, and continue to enhance our competencies and customer adhesion.Risk of market exploitationWe are a strong R&D and manufacturing enterprise in the field of PCB, photoelectric display andprecision manufacturing. Due to our stable product quality and efficient customer services, we haveremarkable competitive edge, and are able to provide the downstream enterprises with “one-stop”products and services, and satisfy their demands for systemic manufacturing solutions. However, ourdownstream industries are characterized by rapid upgrading and rapid changes in the preference ofconsumers, among others. If our major customers are at a disadvantage on the market, or we are unableto satisfy the demands of customers or fail to acquire new customers, the sales and margin rate of ourproducts may decrease.We will continue to increase R&D investments, optimize our product mix and process structure,enhance our competitive edge, and actively cope with market competitions.Risk of environmental protectionIn our production, the electroplating, etching and other processes are subject to relatively higherrequirements for environmental protection, and require huge investment in purification and treatmentof the relevant wastes. In recent years, the country’s environmental protection regulation over theindustrial manufacturing enterprises has become increasingly strict, resulting in continued increase inthe investment by the enterprises in environmental protection facilities. Though our and oursubsidiaries’ environmental protection investment in connection with the production lines can ensurethat all environmental protection metrics comply with the applicable national and local environmentalprotection standards, if the country puts forward stricter environmental protection requirements, wemay need to increase our environmental protection investment, which would increase ourenvironmental protection costs and affect our results.In our production and operation, we will continue to attach great importance to environmentalprotection investment, enhance environmental protection training and employees’ awareness ofenvironmental protection, take control measures at source, establish and improve the environmentalmanagement system, to reduce the risk of environmental protection.Foreign exchange riskExport sales constitute a large proportion in our total sales revenue. Because our day-to-day operationinvolves transactions in USD and other foreign currencies, and our consolidated accounts are expressedin RMB, the changes in the exchange rate between RMB and USD may cause foreign exchange risk toour future operation.We will keep a close watch on the changes in the relevant foreign exchange rate, strive to control theexposure to foreign exchange risk at a reasonable level, and hedge or otherwise reduce exposure tosuch risk.Effect of COVID-19 on global economyAt present, COVID-19 is still spreading in China and throughout the world, which greatly impactsmany industries, and the production and operation of enterprises, global supply chain, transportation,
Suzhou Dongshan Precision Manufacturing Co., Ltd. Annual Report 2021
logistics, business exchanges and cooperation, consumer confidence, among others.We will pay close attention to the situations of epidemic prevention and control, keep closecommunication with the relevant parties, take anti-epidemic measures regularly, and strive to eliminatethe adverse effect of COVID-19.
XII. Investigation, Research, Communication, Interview and Other Activities during the Reporting Period
√ Applicable □ N/A
| Date | Place | Method of communication | Type of guests | Guests | Main topic of discussion and information provided | Particulars of the investigation and research activity available at |
| January 21, 2021 | online | Communication by telephone | Institutional investors | Millenium and other 90 institutional investors | Our development plan, team management, foreign exchange risk management and business development. | http://www.cninfo.com.cn |
| April 26, 2021 | online | Others | Retail investors | Investors | Interpretation of the financial data disclosed in our annual report and first quarter report, and our development of customers, risk management and market value management, etc. | http://www.cninfo.com.cn |
| August 12, 2021 | online | Communication by telephone | Institutional investors | Brilliance and other 73 institutional investors | Our business development and exchange risk management. | http://www.cninfo.com.cn |
| November 3, 2021 | Suzhou | Others | Institutional investors | Beijing Hongcheng Investment Management Co., Ltd. and other 14 institutional investors | Interpretation of our third quarter report 2021, and introduction about the development of our main business segments, operation of major subsidiaries, and development plan for the automotive electronic business. | http://www.cninfo.com.cn |
| November 30, 2021 | Suzhou | Communication by telephone | Institutional investors | Guangdong-Hong Kong-Macao Greater Bay Area Industrial, Finance and Investment Company | Our new energy vehicle-related business and IC substrate project. | http://www.cninfo.com.cn |
Section IV Corporate GovernanceI. Basic Situation of Corporate GovernanceDuring the reporting period, the Company has been improving the corporate governance structure, regulating our operation andspeeding up disclosure of information in strict accordance with the Company Law, the Securities Law, the Code of CorporateGovernance of Listed Companies and the Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange. Currently, theCompany has in place a legal person governance structure where all organs have clearly defined rights and duties and maintaineffective balance and coordinated operation. The board of shareholders, the board of directors and board of supervisors of theCompany have fulfilled their respective responsibilities and duties and operated in a standardized manner, and have effectivelysafeguarded the legitimate interests of investors and the Company.Does the actual situation of corporate governance materially differ from applicable laws, administrative regulations and the rules forcorporate governance of listed companies issued by the CSRC?
□ Yes √ No
The actual situation of corporate governance does not materially differ from applicable laws, administrative regulations and the rulesfor corporate governance of listed companies issued by the CSRC.II. The Company’s Independence from Controlling Shareholder and Actual Controller inTerms of Assets, Personnel, Finance, Organizations and BusinessThe Company is completely independent in business, personnel, assets, organizations, and finances from its controlling shareholder,and has independent and full capacity for business operation and independent management.
1. Business: The Company is independent from our shareholders and other affiliates in terms of business, and has a complete set ofproduction, R&D, management, procurement and sales business systems, and is able to independently operate business in the market.
2. Personnel: The Company has established and perfected the legal person governance structure, and all directors, supervisors andsenior officers are elected in strict accordance with the Company Law, the Articles of Association and other pertinent regulations, andhave never taken any part-time job as prohibited by applicable laws and regulations. The Company shall be completely separatedfrom our shareholders in terms of personnel and payroll management, and all of our employees get paid by the Company; theCompany has formulated a stringent labor system involving employee recruitment, assessment and promotion, and has entered into aLabor Contract with all of our employees. The Company’s labor, personnel and payroll management are completely independentfrom one another.
3. Assets: The property relationship between the Company and our controlling shareholder is clear, and the Company has the title toor the right to use the principal premises for production and operation activities, and a complete set of auxiliary production systemand supporting facilities. Neither the controlling shareholder nor the enterprise legal person under our control has possessed anyfunds, assets or other sources of the Company.
4. Organizations: The Company has established a relatively perfect legal person governance structure in accordance with therequirements of the Company Law and the Articles of Association, and the board of shareholders, board of directors and board ofsupervisors have operated in strict accordance with applicable laws and regulations. In terms of internal bodies, the Company hasestablished bodies suitable for our growth, clarified the functions of all bodies, and formulated corresponding internal management
and control systems. The operation of each functional department is not subject to intervention by any shareholder or other relevantdepartment, entity or individual. There is no mixed operation or shared workplace for different functional departments.
5. Finance: The Company has established an independent finance department equipped with financial professionals, established andperfected our accounting system and financial management and decision-making policy, and implemented rigorous financialsupervision and administration. The Company opens bank accounts and controls our funds and assets independently, and noshareholder has intervened in the Company’s use of funds; as an independent taxpayer, the Company has paid taxes independently bylaw, and there is no mixed taxation between the Company and any of our shareholders.III. Horizontal Competition
□ Applicable √ N/A
IV. Particulars of Annual General Meeting and Extraordinary General Meetings Held duringthe Reporting Period
1. Particulars of general meetings held during the reporting period
| Meeting | Type of meeting | Proportion of participating investors | Convened Date | Disclosure date | Resolution of the Meeting |
| First Extraordinary General Meeting in 2021 | Extraordinary General Meeting | 45.93% | February 26, 2021 | February 27, 2021 | Announcement of Resolutions Passed at the First Extraordinary General Meeting in 2021 (No.: 2021-009) |
| 2020 Annual General Meeting | Annual General Meeting | 35.56% | May 25, 2021 | May 26, 2021 | Announcement of Resolutions Passed at the Annual General Meeting in 2020 (No.: 2021-034) |
2. The preferred shareholder, whose voting right has been restored, requests the holding of extraordinarygeneral meetings
□ Applicable √ N/A
V. Particulars of Directors, Supervisors and Senior Officers
1. Basic information
| Name | Title | Tenure status | Gender | Age | Employment commencement date | Employment termination date | Number of shares held at the beginning of the period (Shares) | Number of shares held at the end of the period (Shares) |
| YUAN Yonggang | Chairman | Incumbent | Male | 43 | December 14, 2007 | May 29, 2023 | 202,226,196 | 202,226,196 |
| YUAN Yongfeng | Director & General Manager | Incumbent | Male | 45 | December 14, 2007 | May 29, 2023 | 222,388,153 | 222,388,153 |
| ZHAO Xiutian | Vice Chairman | Incumbent | Male | 59 | May 29, 2020 | May 29, 2023 | ||
| SHAN Jianbin | Director | Incumbent | Male | 46 | January 16, 2017 | May 29, 2023 | 553,700 | 553,700 |
| CEO | May 29, 2020 | May 29, 2023 | ||||||
| MAO Xiaoyan | Director | Incumbent | Female | 42 | December 10, 2013 | May 29, 2023 | 391,600 | 391,600 |
| Deputy General Manager & Board Secretary | August 23, 2012 | May 29, 2023 | ||||||
| WANG Xu | Director | Incumbent | Male | 40 | January 16, 2017 | May 29, 2023 | 560,000 | 560,000 |
| Deputy General Manager | December 10, 2013 | May 29, 2023 | ||||||
| CFO | October 14, 2013 | May 29, 2023 | ||||||
| WANG Zhangzhong | Independent Director | Incumbent | Male | 59 | May 29, 2020 | May 29, 2023 | ||
| SONG Liguo | Independent Director | Incumbent | Male | 58 | May 29, 2020 | May 29, 2023 | ||
| LIN Shu | Independent Director | Incumbent | Male | 44 | May 29, 2020 | May 29, 2023 | ||
| MA Liqiang | Chairman of board of supervisors | Incumbent | Male | 41 | January 16, 2017 | May 29, 2023 | 3,000 | 3,000 |
| JI Yachun | Employee Supervisor | Incumbent | Male | 44 | May 29, 2020 | May 29, 2023 | ||
| HUANG Yongxin | Employee Supervisor | Incumbent | Male | 36 | May 29, 2020 | May 29, 2023 | ||
| In Total | -- | -- | -- | -- | -- | -- | 426,122,649 | 426,122,649 |
Has any director or supervisor resigned from or senior officer been removed by the Company during the reporting period
□ Yes √ No
Change of the Company’s directors, supervisors or senior officers
□ Applicable √ N/A
2. Employment particulars
Professional background and work experience of the Company’s current directors, supervisors and senior officers, and their currentduties and responsibilities at the Company
(1) Basic information about members of board of directors of the Company
Mr. YUAN Yonggang: a PRC citizen who has a bachelor’s degree and serves as the controlling shareholder and actual controller ofthe Company. He served as the Director of the Marketing Department, Deputy General Manager and Vice Chairman of the Companysince October 1998. He currently serves as the Chairman of the Company, the Vice Chairman of Jiangsu General Chamber ofCommerce, the member of Suzhou Seventeenth People’s Congress, and the Chairman of Suzhou Chamber of Commerce forNew-Generation Entrepreneurs (Directly under the JGCC).Mr. YUAN Yongfeng: a PRC citizen who has a bachelor’s degree and serves as the controlling shareholder and actual controller ofthe Company. He served as the Director of the Manufacturing Department and Supervisor of the Company since October 1998. Hecurrently serves as the Director and General Manager of the Company, the President of Yancheng Electronic Information IndustryAssociation, and the member of the Fifth Suzhou Wuzhong District Committee of CPPCC.Mr. ZHAO Xiutian: a US citizen who has a master’s degree. He once worked for Feichuang, Hughes Network Systems, MCE,Celiant and Andrew. He currently serves as the Vice Chairman of the Company.Mr. SHAN Jianbin: a PRC citizen who has a bachelor’s degree. He once worked for Mektec Manufacturing Corporation (Zhuhai)Ltd. He currently serves as the Director & CEO of the Company, the member of the Twelfth Jiangsu Committee of CPPCC, and theVice President of China Printed Circuit Association.Ms. MAO Xiaoyan: a PRC citizen with a master’s degree, and an economist. She once worked for Suzhou Huacheng Auto CarTrade Group Company Limited and Jiangsu Wuzhong Industrial Co., Ltd. She currently serves as the Director, Deputy GeneralManager and Board Secretary of the Company, and the member of Suzhou Wuzhong District NSSA.Mr. WANG Xu: a PRC citizen with a master’s degree, and a certified public accountant (non-practitioner). He once worked forKunshan Fengrui United Accounting Firm and Suzhou Good-ark Electronics Co., Ltd. He currently serves as the Director, DeputyGeneral Manager and CFO of the Company, the Off-Campus Tutor for Masters in Accounting Program of Soochow UniversityDongwu Business School, and the Off-Campus Career Development Tutor of Renmin University of China Suzhou Campus.Mr. WANG Zhangzhong: a PRC citizen who has a master’s degree. He has been working for the School of Materials Science andEngineering of Nanjing Institute of Technology in his capacity as Teacher, Office Director, Secretary of Party Committee, Head ofDivision of Science and Technology, Dean and Professor since August 1983. He served as the independent director of the Companyfrom December 2007 to November 2013. He currently serves as the independent director of the Company. He concurrently serves asthe Director of Jiangsu Key Laboratory of Advanced Structural Materials and Application Technology, the member of China HeatTreatment Association, the Chairman of Industrial Furnace Branch of Jiangsu Mechanical Engineering Society (JMES), and the VicePresident of New Metal Materials Branch of Jiangsu Metallurgical Industry Association.Mr. SONG Liguo: a Hong Kong citizen with a doctoral degree. He once worked for Tianjin Business Unit of CITIC Securities,Tianjin Equity Exchange, Anhui Antai Law Firm, China Baoan Group, Hong Kong Heng Feng Group International InvestmentLimited, CHAN & CO., ARTHUR K.H. and Dan Hao Dun International Law Firm (Hong Kong). He currently serves as theindependent director of the Company, and the Barrister of Jones Day International Law Firm (Hong Kong). He concurrently serves as
the Visiting Associate Professor of Anhui University Law School, the Arbitrator of China International Economic and TradeArbitration Commission, the Arbitrator of the Cross-Straits Arbitration Center, and the Arbitrator of Xiamen Arbitration Commission.Mr. LIN Shu: a PRC citizen who has a doctoral degree. He has been working for the Department of Accounting of NanjingUniversity Business School in his capacity as Lecturer, Associate Professor, Professor, Doctorate Tutor and Dean since November2006. As of the end of the reporting period, he serves as the independent director of the Company. He also serves as the independentdirector of CTS International Logistics Corporation Limited.
(2) Basic information about members of the Company’s board of supervisors
Mr. MA Liqiang: a PRC citizen who has a bachelor’s degree. He once worked for Suzhou Dayin Electronic TelecommunicationsEquipment Co., Ltd., Suzhou Jinhuasheng Paper Co., Ltd. and Dongshan Optronics (Suzhou) Co., Ltd. He currently serves as theChairman of the board of supervisors of the Company, COO and President of China Region of Multek, and President of the Touch &Display Business Unit.Mr. JI Yachun: a PRC citizen with a master’s degree. He once worked for the Central Committee of the Communist Youth Leagueof China. He currently serves as the PR President of the Company (in Yancheng), Employee Representative Supervisor, and theSecretary of the Party Committee and the Chairman of the Management Committee of Yancheng Dongshan Precision Industrial Park.Mr. HUANG Yongxin: a PRC citizen with a bachelor’s degree. He once worked for Everlight Electronics (China) Co., Ltd.. Hecurrently serves as the Employee Representative Supervisor of the Company, and the General Manager of Yancheng DongshanPrecision Manufacturing Co., Ltd.
(3) Basic information about senior officers of the Company
The basic information about Mr. YUAN Yongfeng (General Manager), Mr. SHAN Jianbin (CEO), Ms. MAO Xiaoyan (DeputyGeneral Manager and Board Secretary), Mr. WANG Xu (Deputy General Manager and CFO) is seen in the “Basicinformation about the members of board of directors of the Company” section.Positions held in shareholders’ entities
□ Applicable √ N/A
Positions held in other entities
√ Applicable □ N/A
| Name | Name of other entity | Position in other entity |
| YUAN Yonggang | Jingbaiyue Investment Development (Suzhou) Co., Ltd. | Executive Director |
| Suzhou Dongyang Investment Co., Ltd. | Supervisor | |
| Suzhou Dongding Tea Shop Co., Ltd. | Supervisor | |
| Shanghai Keguna New Materials Technology Co., Ltd. | Chairman | |
| Anhui Landunguang Electronic Co., Ltd. | Chairman | |
| Ningbo Qixiang Information Technology Co., Ltd. | Director | |
| Shenzhen National Star Vision Technology Co., Ltd. | Director | |
| Brave Pioneer International Limited | Executive Director | |
| Hong Kong Dongshan Investment Holdings Co., Ltd. | Executive Director |
| Shanghai Xinhuarui Semiconductor Technology Co., Ltd. | Director | |
| Fujian Nanping Nanfu Battery Co., Ltd. | Director | |
| Jiangsu General Chamber of Commerce | Vice Chairman | |
| Suzhou Chamber of Commerce for New-Generation Entrepreneurs (Directly under the JGCC) | Chairman | |
| YUAN Yongfeng | Suzhou Dongyang Investment Co., Ltd. | Executive Director |
| Yancheng Electronic Information Industry Association | Chairman | |
| ZHAO Xiutian | Suzhou Langsheng Communication Technology Co., Ltd. | Director |
| SHAN Jianbin | Vice Chairman of China Printed Circuit Association | Vice Chairman |
| MAO Xiaoyan | Shanghai Dotwil Intelligence Technology Ltd. | Director |
| Suzhou Wuzhong District NSSA | Member | |
| WANG Xu | Soochow University Dongwu Business School | Off-Campus Tutor for Masters in Accounting Program |
| Renmin University of China Suzhou Campus | Off-Campus Career Development Tutor | |
| WANG Zhangzhong | School of Materials Science and Engineering of Nanjing Institute of Technology | Professor and Dean |
| Jiangsu Key Laboratory of Advanced Structural Materials and Application Technology | Director | |
| China Heat Treatment Association | Member | |
| Industrial Furnace Branch of Jiangsu Mechanical Engineering Society | Chairman | |
| New Metal Materials Branch of Jiangsu Metallurgical Industry Association | Vice President | |
| SONG Liguo | Jones Day International Law Firm (Hong Kong) | Barrister |
| Anhui University Law School | Visiting Associate Professor | |
| China International Economic and Trade Arbitration Commission | Arbitrator | |
| Cross-Straits Arbitration Center | Arbitrator | |
| Xiamen Arbitration Commission | Arbitrator | |
| LIN Shu | Department of Accounting of Nanjing University Business School | Professor, Doctorate Tutor and Dean |
| CTS International Logistics Corporation Limited | Independent Director |
Punishments imposed during the last three (3) years by the securities regulator on current and off-office directors, supervisors andsenior officers of the Company during the reporting period
□ Applicable √ N/A
3. Remuneration of directors, supervisors and senior officers
Decision-making procedures, basis for determination and actual payment of the remuneration of directors, supervisors and seniorofficers
The Company shall determine the remuneration of our directors, supervisors and senior officers in accordance with the provisions ofthe Articles of Association. The remuneration of members of board of directors and board of supervisors and payment method thereofshall be determined by the board of shareholders; the remuneration of senior officers and payment method thereof shall bedetermined by the board of directors. The remuneration of the Company’s directors, supervisors and senior officers shall bedetermined based on their respective job responsibilities, and the remuneration payable to any director, supervisor or senior officerwho concurrently takes any key operation position shall be assessed and determined according to the completion of his or her annualperformance appraisal indicators, and who concurrently takes any key management position shall be assessed and determinedaccording to the completion of their annual job responsibilities and tasks. The Company shall grant remuneration to our directors,supervisors and senior officers in accordance with our remuneration system and the regulations regarding the assessment of thecompletion of our job responsibilities.Remuneration of directors, supervisors and senior officers during the reporting period of the Company
Unit: RMB 0’000
| Name | Title | Gender | Age | Tenure status | Total before-tax remuneration received from the Company | Has any remuneration been received from the Company’s affiliates |
| YUAN Yonggang | Chairman | Male | 43 | Incumbent | 287.12 | No |
| YUAN Yongfeng | Director & General Manager | Male | 45 | Incumbent | 287.12 | No |
| ZHAO Xiutian | Vice Chairman | Male | 59 | Incumbent | 410 | No |
| SHAN Jianbin | Director & CEO | Male | 46 | Incumbent | 380 | No |
| MAO Xiaoyan | Director, Deputy General Manager & Board Secretary | Female | 42 | Incumbent | 127.47 | No |
| WANG Xu | Director, Deputy General Manager & CFO | Male | 40 | Incumbent | 181.97 | No |
| WANG Zhangzhong | Independent Director | Male | 59 | Incumbent | 11.33 | No |
| SONG Liguo | Independent Director | Male | 58 | Incumbent | 11.33 | No |
| LIN Shu | Independent Director | Male | 44 | Incumbent | 11.33 | No |
| MA Liqiang | Chairman of board of supervisors | Male | 41 | Incumbent | 240 | No |
| JI Yachun | Employee Supervisor | Male | 44 | Incumbent | 145.65 | No |
| HUANG Yongxin | Employee Supervisor | Male | 36 | Incumbent | 160 | No |
| Total | -- | -- | -- | -- | 2,253.32 | -- |
VI. Fulfillment by Directors of Responsibilities during the Reporting Period
1. Performance of Duties by Directors during the Reporting Period
| Meeting | Convening date | Disclosure date | Meeting resolution |
| The eighth meeting of the fifth session | January 22, 2021 | January 26, 2021 | Announcement of Resolutions Passed at the Eighth Meeting of the Fifth Session of Board of Directors |
| (No.: 2021-001) | |||
| The ninth meeting of the fifth session | February 9, 2021 | February 10, 2021 | Announcement of Resolutions Passed at the Ninth Meeting of the Fifth Session of Board of Directors (No.: 2021-005) |
| The tenth meeting of the fifth session | April 13, 2021 | April 15, 2021 | Announcement of Resolutions Passed at the Tenth Meeting of the Fifth Session of Board of Directors (No.: 2021-016) |
| The eleventh meeting of the fifth session | April 22, 2021 | April 26, 2021 | The Report Q1 2021 of the Company was passed upon deliberation |
| The twelfth meeting of the fifth session | June 11, 2021 | June 15, 2021 | Announcement of Resolutions Passed at the Twelfth Meeting of the Fifth Session of Board of Directors (No.: 2021-036) |
| The thirteenth meeting of the fifth session | July 8, 2021 | July 9, 2021 | Announcement of Resolutions Passed at the Thirteenth Meeting of the Fifth Session of Board of Directors (No.: 2021-044) |
| The fourteenth meeting of the fifth session | July 28, 2021 | July 29, 2021 | Announcement of Resolutions Passed at the Fourteenth Meeting of the Fifth Session of Board of Directors (No.: 2021-049) |
| The fifteenth meeting of the fifth session | August 10, 2021 | August 12, 2021 | Announcement of Resolutions Passed at the Fifteenth Meeting of the Fifth Session of Board of Directors (No.: 2021-056) |
| The sixteenth meeting of the fifth session | September 1, 2021 | September 3, 2021 | Announcement of Resolutions Passed at the Sixteenth Meeting of the Fifth Session of Board of Directors (No.: 2021-062) |
| The seventeenth meeting of the fifth session | October 25, 2021 | October 26, 2021 | The Report Q3 2021 of the Company was passed upon deliberation |
2. Attendance by directors at board meetings and general meetings
| Attendance by directors at board meetings and general meetings | |||||||
| Name of director | Number of expected attendances at board meetings during the reporting period | Number of in-person attendances at board meetings | Number of attendances by telecommunication at board meetings | Number of attendances by proxy at board meetings | Number of absences from board meetings | Was there any failure to attend board meetings in person on two consecutive occasions? | Number of attendances at general meetings |
| YUAN Yonggang | 10 | 1 | 9 | No | 2 | ||
| YUAN Yongfeng | 10 | 1 | 9 | No | 2 | ||
| ZHAO Xiutian | 10 | 10 | No | 2 | |||
| SHAN Jianbin | 10 | 1 | 9 | No | 2 | ||
| MAO Xiaoyan | 10 | 1 | 9 | No | 2 | ||
| WANG Xu | 10 | 1 | 9 | No | 2 | ||
| WANG Zhangzhong | 10 | 10 | No | 2 | |||
| SONG Liguo | 10 | 10 | No | 2 | |||
| LIN Shu | 10 | 10 | No | 2 |
Statement on failure to attend board meetings in person on two consecutive occasionsNone
3. Objection raised by directors to matters relating to the Company
Has any director raised any objection to matters relating to the Company?
□ Yes √ No
No director has raised any objection to matters relating to the Company during the reporting period.
4. Other description of fulfillment by directors of job responsibilities
Has any suggestion made by any director regarding the Company been accepted?
√ Yes □ No
Statement on acceptance or refusal of any suggestion made by any director regarding the CompanyDuring the reporting period, each independent director of the Company has diligently carried out his or her work in strict accordancewith applicable laws and regulations and the provisions of the Articles of Association, and has paid attention to the operation of theCompany, and all professional opinions rendered by such independent director have been accepted, and played an active role inperfecting the Company’s supervisory mechanism and improving the scientificity of decision-making system.
VII. Performance of Duties by Special Committees under the Board of Directors during the Reporting Period
| Name of committee | Name of member(s) | Number of meeting(s) | Convening date | Content of meeting | Key opinions and suggestions rendered at the meeting | Fulfillment of responsibilities |
| Audit committee of board of directors | LIN Shu, WANG Zhangzhong and SHAN Jianbin | 1 | April 13, 2021 | The Resolutions on Payment of 2020 Annual Audit Remuneration to and 2021 Renewal of Retention of Pan-China Certified Public Accountants (Special General Partnership), the Self-Assessment Report 2020 Regarding Internal Control and the Resolution on Changes to Accounting Policies were passed through deliberation | The audit committee has carried out our work in a diligent and responsible manner, and adopted the relevant resolutions upon consensus through thorough discussions in strict accordance with the Company Law, the Securities Law, the Code of Corporate Governance of Listed Companies and other pertinent laws and regulations, as well as the Articles of Association and the Working Rules of Audit Committee of Board of Directors. | The audit committee held audit communication meetings on January 21, March 30 and April 12, 2021 respectively, and listened to the pre-event, mid-event and post-event facts subject to annual audit by accountants who prepare this annual report. |
| Remuneration and assessment committee of board of directors | YUAN Yonggang, YUAN Yongfeng, WANG Zhangzhong, SONG Liguo and LIN Shu | 1 | April 13, 2021 | The Resolution on Remuneration of the Company’s Directors and Senior Officers in 2021 was passed through deliberation | The remuneration and assessment committee has carried out our work in a diligent and responsible manner, and adopted the relevant resolutions upon consensus through thorough discussions in strict accordance with the Company Law, the Securities Law, the Code of Corporate Governance of Listed Companies and other pertinent laws and regulations, as well as the Articles of Association and the Implementation Rules of Remuneration and Assessment Committee of Board of Directors. |
VIII. Work of Board of SupervisorsHas the board of supervisors discovered the Company’s risk exposures in conducting monitoring activities during the reportingperiod?
□ Yes √ No
The board of supervisors has not raised any objection to the matters under our supervision during the reporting period.IX. Information about the Company’s Employees
1. Number, composition by profession and degree of education of employees
| Number of incumbent employees in the parent company at the end of the reporting period | 1,667 |
| Number of incumbent employees in major subsidiary at the end of the reporting period | 18,295 |
| Total number of incumbent employees at the end of the reporting period | 19,962 |
| Total number of employees receiving remuneration during the current period | 19,962 |
| Number of retired employees to whom the parent and key subsidiaries are required to pay retirement benefits | 0 |
| Composition by profession | |
| Type of professionals | Number of professionals |
| Production personnel | 14,041 |
| Sales personnel | 395 |
| Technical personnel | 3,699 |
| Financial personnel | 132 |
| Administrative personnel | 442 |
| Management personnel | 1,253 |
| Total | 19,962 |
| Degree of education | |
| Classification of degree of education | Number of professionals |
| Doctoral degree | 5 |
| Master’s degree | 110 |
| Bachelor’s degree | 2,058 |
| Associate degree | 3,570 |
| Below associate degree | 14,219 |
| Total | 19,962 |
2. Remuneration policy
The Company advocates value creation, and the remuneration mechanism is tilted towards efficiency creation. The Companyimplements a flexible remuneration policy, and has been improving the performance assessment and incentive scheme of our team.The Company provides our employees with competitive remuneration and benefits in the same industry based on their respectivepositions, responsibilities, capabilities and contributions, and makes remuneration adjustments in due time depending on the level ofeconomic development and industry wage of the operational performance reference region.
3. Training programs
The Company attaches great importance to the development, cultivation and training of talents, and strives to create opportunities forself-challenges and continuous study and growth for each employee. The Company encourages our employees to keep studying, andimprove their competency and professional capability, and improve personal self-growth and career development, so as to fullyenhance the overall quality and capacity of the workforce. The Company has formulated a targeted training program to improve thework performance of our employees, boost both our growth and the growth of our employees, strengthen our centripetal force andcohesion, and create a good learning atmosphere, an excellent corporate culture and a learning-oriented organization. The Companypractices the talent cultivation concept of “openness, inclusiveness and pragmatism”, and helps outstanding employees achieve thesustainable development of their career through talent search and cultivation.
X. Profit Distribution and Conversion of Capital Reserve into Share CapitalProfit distribution policy during the reporting period, in particular the formulation, implementation or adjustment of cash bonuspolicy
√ Applicable □ N/A
The Company implements a profit distribution policy in a continuous and steady manner, attaches great importance to reasonableinvestment return of investors by taking into account our sustainable growth, proactively implements the policies and requirements ofthe securities regulator governing cash dividends of listed companies, ensures our shareholders receive stable and consistentinvestment returns, and adequately protects the legitimate rights and interests of small and medium investors. In 2021, the board ofdirectors of the Company formulated the Annual Profit Distribution Plan 2021 based on our operating conditions and profitdistribution principles by ensuring compliance with applicable laws and regulations and our normal operation and long-termdevelopment.
| Special explanation of cash dividend policy | |
| Whether it complies with the provisions of the Company’s articles of association or the requirements of the resolution of the shareholders’ meeting: | Yes |
| Whether the dividend standard and dividend ratio are clear: | Yes |
| Whether the relevant decision-making procedures and mechanisms are complete: | Yes |
| Whether independent directors performed their duties and played their due roles: | Yes |
| Whether minority shareholders have the opportunity to fully express their opinions and demands, and whether their legitimate rights and interests are fully protected: | Yes |
| If the cash dividend policy is adjusted or changed, whether the conditions and procedures are compliant and transparent: | Yes |
The Company was profitable during the reporting period, and the parent company had positive profits distributable to shareholdersbut has not put forward a cash dividend distribution plan
□ Applicable √ N/A
Profit distribution and conversion of capital reserve into share capital during the current reporting period
√ Applicable □ N/A
| Bonus issue per 10 shares (share) | 0 |
| Cash dividend per 10 shares (RMB) (tax inclusive) | 2.00 |
| Total capital shares as the basis for the distribution proposal (share) | 1,705,913,710 |
| Amount of cash dividends (RMB) (tax inclusive) | 341,182,742.00 |
| Amount of cash dividends distributed by any other means (e.g. share repurchase) (RMB) | 100,479,794.32 |
| Total amount of cash dividends (including those distributed by any other means) (RMB) | 441,662,536.32 |
| Distributable profits (RMB) | 352,818,601.06 |
| Percentage of the total amount of cash dividends (including those distributed by any other means) in the total amount of distributable profits | 100% |
| Current cash dividend | |
| If the Company is still in the growth phase and has major capital expenditure arrangements, in making any profit distribution, the percentage of cash dividends in current profit distribution shall be at least 20%. | |
| Detailed explanation on profit distribution plan or plan for conversion of capital reserve into share capital | |
| Under the annual distribution plan 2021 of the Company, based on 1,705,913,710 shares, a cash dividend of RMB 2 (inclusive of tax) for per 10 shares shall be distributed to all shareholders, and no bonus share shall be distributed, and no capital reserve shall be converted into share capital. This distribution plan conforms to the provisions of the Articles of Association, and will be submitted to the board of shareholders of the Company for deliberation. In connection with the share repurchase implemented by the Company, subject to applicable regulations, the shares in the dedicated account for share repurchase of the Company are not included in this equity distribution. | |
XI. Implementation of the Company’s Stock Incentive Plan, Employee Stock Ownership Planor Other Employee Incentives
√ Applicable □ N/A
1. Stock incentive
The Company has not implemented any stock incentive plan during the reporting periodStock incentives granted to the Company's directors and senior officers
□ Applicable √ N/A
Assessment mechanism of and incentives granted to senior officersThe Company has not implemented any stock incentive plan during the reporting period
2. Implementation of employee stock ownership plan
√ Applicable □ N/A
All effective employee stock ownership plans during the reporting period
| Scope of employees | Number of employees | Total number of stocks held | Changes | Percentage in the total equity of the listed company | Funding sources of implementation plan |
| Certain directors, supervisors and senior officers of the Company, and certain mid and high-level management and core backbone above the director level who take full-time jobs at, receive remuneration from and enter into labor contracts with the Company and our controlling subsidiaries. | 119 | 21.9141 million shares | None | 1.28% | The source of funds for this employee stock ownership plan is the legal remuneration of the Company’s employees and their self-raised funds and other legal funds permitted by applicable laws and regulations. The Company has not provided any financial assistance to our employees or provided security for their loans. |
Shareholding of directors, supervisors and senior officers under the employee stock ownership plan during the reporting period
| Name | Job title | Number of shares held at the beginning of the reporting period | Number of shares held at the end of the reporting period | Percentage in the total equity of the listed company |
| SHAN Jianbin | Director & CEO | 0 | 1,753,128 | 0.10% |
| WANG Xu | Director, Deputy General Manager & CFO | 0 | 1,314,846 | 0.08% |
| MAO Xiaoyan | Director, Deputy General Manager & Board Secretary | 0 | 525,938 | 0.03% |
| MA Liqiang | Chairman of board of supervisors | 0 | 525,938 | 0.03% |
| JI Yachun | Supervisor | 0 | 525,938 | 0.03% |
| HUANG Yongxin | Supervisor | 0 | 525,938 | 0.03% |
Change of asset management company during the reporting period
□ Applicable √ N/A
Equity change resulting from any holder’s disposal of shares during the reporting period
□ Applicable √ N/A
Exercise of shareholders’ rights during the reporting periodDuring the reporting period, all participants in the Company’s employee stock ownership plan exercised their right in the capacity asshareholder to participate in 2020 cash dividend distribution, but have not exercised the voting rights of the Company’s board ofshareholders and other shareholder rights.Other relevant facts and description of the employee stock ownership plan during the reporting period
□ Applicable √ N/A
Change of members of management committee of employee stock ownership plan
□ Applicable √ N/A
Impact of employee stock ownership plan on the financial affairs of the listed company during the reporting period andrelevant accounting treatment
□ Applicable √ N/A
Termination of the employee stock ownership plan during the reporting period
□ Applicable √ N/A
Other notesAs of the end of the current reporting period, the Company’s employee stock ownership plan 2021 was in the lock-up period.
3. Other employee incentives
□ Applicable √ N/A
XII. Improvement and Implementation of Internal Control System during the ReportingPeriod
1. Improvement and implementation of internal control system
The Company has established the legal person governance structure and rules of procedure for our board of shareholders, board ofdirectors, board of supervisors and management in accordance with the Company Law, the Securities Law and other pertinent lawsand administrative regulations, and has formed a scientific and effective mechanism for work division and balancing. The board ofshareholders is the highest authority of the Company, and the board of directors implements the resolutions of the board ofshareholders, is responsible to the board of shareholders and exercises the decision-making power of the Company by law. Thestrategy committee, audit committee, remuneration and assessment committee and nomination committee under the board ofdirectors of the Company have diligently performed their respective responsibilities and fully played their professional roles inmanaging our business in accordance with their respective working rules.The Company has established an independent internal audit department, primarily responsible for establishing and implementing ourinternal control system, inspecting and supervising the truthfulness, completeness and other aspects of financial information,rendering improvement suggestions, supervising and urging the relevant personnel to rectify problems discovered in the audit,cooperating with the audit committee of the board of directors to conduct internal control and self-assessment, and examining theeffectiveness of our internal control procedures. The internal audit department is responsible and reports to the audit committee.Based on the determination result of major deficiencies in the Company’s internal control over financial reporting, on the benchmarkdate of the internal control evaluation report, there is no major deficiency in the Company’s internal control over financial reporting,and the Company has maintained effective internal control over financial reporting in all material respects in accordance with ourstandard system for internal control and the requirements of applicable regulations; based on the determination result of majordeficiencies in the Company’s internal control over non-financial reporting, on the benchmark date of the internal control evaluationreport, no major deficiency in internal control over non-financial reporting has been identified.
2. Particulars of major deficiencies in internal control identified during the reporting period
□ Yes √ No
XIII. Management and Control of Subsidiaries during the Reporting Period of the Company
| Company name | Consolidation plan | Consolidation progress | Problems encountered in the consolidation | Solutions adopted | Solution progress | Subsequent solution |
| N/A | N/A | N/A | N/A | N/A | N/A | N/A |
XIV. Internal Control Self-Assessment Report or Internal Control Attestation Report
1. Internal control self-assessment report
| Date of disclosure of the full text of internal control self-assessment report | April 20, 2022 | |
| Index of the full text of internal control self-assessment report | http://www.cninfo.com.cn | |
| Percentage of the total assets of the entity included in the scope of assessment in the total assets in the consolidated financial statements of the Company | 100.00% | |
| Percentage of the operating revenue of the entity included in the scope of assessment in the operating revenue in the consolidated financial statements of the Company | 100.00% | |
| Deficiency determination standard | ||
| Type | Financial reporting | Non-financial reporting |
| Qualitative standard | Indications of major deficiency in financial reporting include: (1) malpractices committed by directors, supervisors or senior officers of the Company; (2) the Company’s revision of financial reports that had been published; (3) any significant misstatement in current financial reports as discovered by certified public accountants but not identified through the internal control of the Company; (4) the audit committee and internal audit department exert ineffective supervision over the Company’s financial reporting and internal control over financial reporting. Indications of significant deficiency in financial reporting: (1) failure to accurately select and apply accounting policies in accordance with generally accepted accounting standards; (2) failure to establish anti-malpractice procedures and controls; (3) failure to establish a corresponding control mechanism for | The occurrence of any of the following circumstances is determined to be a major deficiency, including: (1) violation of national laws or regulations or normative documents; (2) lack of scientificity of key decision-making procedures; (3) lack of system which might cause systematic failure; (4) failure to rectify any major or significant deficiency; and (5) any other circumstance that has a material adverse effect on the Company. Other circumstances are determined to be significant deficiencies or general deficiencies depending on the degree of impact. |
| non-regular or special transactions, or failure to implement and absence of corresponding compensatory controls; and (4) one or more deficiencies in the control over end-of-period financial reporting, and no reasonable assurance that the financial statements prepared achieve true and complete objectives. General deficiency means any other control deficiency other than the said major and significant deficiencies. | ||
| Quantitative standard | The quantitative standard for the level of significance of any misstatement (including omission) contained in the consolidated financial statements of the listed company based on the data contained in the consolidated financial statement 2021. Major deficiency: Incorrect amount ≥ operating revenue*0.5% Significant deficiency: Operating revenue *0.3% ≤ incorrect amount＜operating revenue*0.5% General deficiency: Incorrect amount＜operating revenue*0.3% | Quantitative standard for the assessment of deficiencies in internal control over non-financial reporting as determined by the Company is as follows: Major deficiency: Amount of direct loss＞total assets*0.5% Significant deficiency: Total assets*0.2%＜amount of direct loss ≤ total assets*0.5% General deficiency: Amount off direct loss ≤ total assets*0.2% |
| Number of major deficiencies in internal control over financial reporting | 0 | |
| Number of major deficiencies in internal control over non-financial reporting | 0 | |
| Number of significant deficiencies in internal control over financial reporting | 0 | |
| Number of significant deficiencies in internal control over non-financial reporting | 0 | |
2. Internal control attestation report
√ Applicable □ N/A
| Deliberative opinions in the internal control attestation report |
| We believe that, DSBJ maintained effective internal control over financial reporting in all material respects on December 31, 2021 in accordance with the provisions of the Shenzhen Stock Exchange Self-Regulatory Supervision Guidelines for Listed Companies (No.1)-Standardized Operations of Companies Listed on the Main Board (Shen Zheng Shang [2022] No.13). |
| Disclosure of internal control attestation report | Disclosed |
| Date of disclosure of the full text of internal control attestation report | April 20, 2022 |
| Index of the full text of internal control attestation report | http://www.cninfo.com.cn |
| Type of opinions rendered in the internal control attestation report | Standard unqualified opinions |
| Was there any major deficiency in internal control over non-financial reporting? | No |
Has the accounting firm issued any internal control audit report that contains non-standard opinions?
□ Yes √ No
Is the internal control audit report issued by the accounting firm consistent with the opinions in the self-assessment report issued by the board of directors
√ Yes □ No
Section V Environmental and Social ResponsibilityI. Major Environmental IssuesAre the listed company and its subsidiaries included in the list of key pollutant discharge units published by the environmental protection authority?
√ Yes □ No
| Name of company or subsidiary | Name of key pollutant and characteristic pollutant | Discharge method | Number of discharge outlets | Distribution of discharge outlets | Discharge density | Pollutant discharge standards implemented | Total quantity of discharge | Total quantity of authorized discharge | Excessive emission |
| Multek Industries, Multek Electronics and Multek Technology | COD | Continuous discharge | 1 | Interior of factory premises | 15.25mg/l | 160mg/L | 34.055 t | 242.36t | None |
| Ammonia nitrogen | Continuous discharge | 1 | Interior of factory premises | 1.204mg/l | 30mg/L | 2.78 t | 45.44t | None | |
| Total nitrogen | Continuous discharge | 1 | Interior of factory premises | 8.04.mg/l | 40mg/L | 17.15t | 95.238t | None | |
| Total nickel | Discontinuous discharge | 1 | Interior of factory premises | 0.017mg/l | 0.5mg/L | 0.0385t | 0.055t | None | |
| Multek Zhuhai | COD | Continuous discharge | 1 | Interior of factory premises | 11.75mg/L | 160mg/L | 4.237 t | 33.643t | None |
| Ammonia nitrogen | Continuous discharge | 1 | Interior of factory premises | 2.257mg/L | 30mg/L | 0.803t | 6.308t | None | |
| Total nitrogen | Continuous discharge | 1 | Interior of factory premises | 7.5mg/L | 40mg/L | 2.646t | 28.6748t | None | |
| Total nickel | Discontinuous discharge | 1 | Interior of factory premises | 0.0119mg/L | 0.5mg/L | 0.00415t | 0.358t | None |
| Multek China | COD | Continuous discharge | 1 | Interior of factory premises | 40mg/L | 160mg/L | 35.63t | 216.372t | None |
| Ammonia nitrogen | Continuous discharge | 1 | Interior of factory premises | 8.02mg/L | 30mg/L | 7.207 t | 40.56975t | None | |
| Total nitrogen | Continuous discharge | 1 | Interior of factory premises | 16.09mg/L | 40mg/L | 14.452t | 54.093t | None | |
| Total nickel | Discontinuous discharge | 1 | Interior of factory premises | 0.01mg/L | 0.5mg/L | 0.0096 t | 1.352325t | None | |
| Total silver | Discontinuous discharge | 1 | Interior of factory premises | 0.0064mg/L | 0.1mg/L | 0.00554t | 0.270465t | None | |
| YCMT | Particles | Continuous discharge | 1 | Southwest side of factory premises | 1.5mg/m3 | 120mg/m3 | 0.01083t/a | / | None |
| Nitric oxide | Continuous discharge | 1 | Southwest side of factory premises | 8mg/m3 | 150mg/m3 | 0.16604 t/a | / | None | |
| Sulfur dioxide | Continuous discharge | 1 | Southwest side of factory premises | 23mg/m3 | 50mg/m3 | 0.05792 t/a | / | None | |
| Suzhou Chengjia Precision Manufacturing Co., Ltd. | Non-methane hydrocarbon | Continuous discharge | 1 | Northwest side of factory premises | 2mg/m3 | 120mg/m3 | 0.023 t/a | / | None |
| Yancheng Dongshan | COD | Indirect discharge | 1 | Wastewater discharge outlet at the southwest side of factory premises | 52mg/L | 500mg/L | 12.9372t | 188.745t | None |
| Ammonia nitrogen | Indirect discharge | 1 | Wastewater discharge outlet | 11mg/L | 35mg/L | 2.5846t | 11.91t | None |
| at the southwest side of factory premises | |||||||||
| Total nickel | Indirect discharge | 1 | Wastewater discharge outlet at the southwest side of factory premises | 0.05mg/L | 0.5mg/L | 0.01t | 0.0057t | None | |
| Hydrogen chloride | Organized | 2 | 5#roof | 1.24mg/m3 | 30mg/m3 | 0.1222t | 0.412t | None | |
| Hydrogen cyanide | Organized | 4 | 5#Roof, roof of 28# wastewater treatment plant | 0.05mg/m3 | 0.5mg/m3 | 0.008t | 0.059t | None | |
| MFLEX Yancheng | COD | Continuous discharge | 1 | Interior of factory premises | 96.32mg/l | 500mg/L | 49.1521t | 717.828t | None |
| Ammonia nitrogen | Continuous discharge | 1 | Interior of factory premises | 2.18mg/l | 35mg/L | 1.0803t | 65.402t | None | |
| Total phosphorus | Continuous discharge | 1 | Interior of factory premises | 0.72mg/l | 3.5mg/L | 0.3546t | 6.46t | None | |
| Total nitrogen | Continuous discharge | 1 | Interior of factory premises | 6.29 mg/l | 40mg/L | 3.2096t | 72.58t | None | |
| MFLEX Suzhou (two factory premises) | COD | Continuous discharge | 1 | Interior of factory premises | 142mg/l | 500mg/L | 78.239t | 152.5t | None |
| Ammonia nitrogen | Continuous discharge | 1 | Interior of factory premises | 3.18mg/l | 25mg/L | 2.05t | 3.413t | None | |
| Total copper | Continuous discharge | 1 | Interior of factory premises | 0.117.mg/l | 0.3mg/L | 0.005t | 0.319t | None | |
| Total nickel | Continuous | 1 | Interior of factory | ND | 0.1mg/L | ND | 0.010652t | None |
| discharge | premises | |||||||
| COD | Continuous discharge | 1 | Interior of factory premises | 126.7mg/l | 500mg/L | 0.974 t | 92.893t | None |
| Ammonia nitrogen | Continuous discharge | 1 | Interior of factory premises | 3.603mg/l | 30mg/L | 0.156 t | 7.963t | None |
Construction and operation of pollution prevention facilitiesThe Company and its subsidiaries have a complete solution for waste gas and wastewater treatment, and are equipped with a full set of pollution control facilities to be operated and maintainedon their own or on their behalf. The Company has arranged for dedicated personnel to supervise equipment operation and pollutant discharge, and to regularly maintain and repair pollutionprevention and control facilities. Currently, such facilities are in good condition.Environmental impact assessment of construction projects and other administrative licenses for environmental protectionThe Company and its subsidiaries have submitted filings with respect to new, alteration and expansion projects in strict accordance with applicable laws and regulations, requested a pollutantdischarge permit as required, and periodically monitored the completion of implementation report.Environmental emergency response planThe Company and its subsidiaries have formulated an environmental emergency response plan, obtained a filing receipt and conducted regular drills in accordance with the requirements ofapplicable laws and regulations.Environmental monitoring planThe Company and its subsidiaries have formulated an environmental monitoring plan by using automatic monitoring equipment, and entrusted a qualified third party to regularly test wastewater,waste gas, noise, underground water and soil.Administrative penalties imposed due to environmental issues during the reporting periodN/AOther environmental information that should be made publicNoneMeasures taken to reduce carbon emissions during the reporting period and the effect thereof
√ Applicable □ N/A
Please refer to the Social Responsibility Report 2021 of Suzhou Dongshan Precision Manufacturing Co., Ltd. disclosed on http://www.cninfo.com.cn/ on the date of this report.Other information relating to environmental protectionPlease refer to the Social Responsibility Report 2021 of Suzhou Dongshan Precision Manufacturing Co., Ltd. disclosed on http://www.cninfo.com.cn/ on the date of this report.
II. Social Responsibility
Please refer to the Social Responsibility Report 2021 of Suzhou Dongshan Precision Manufacturing Co., Ltd. disclosed on http://www.cninfo.com.cn/ on the date of this report.III. Strengthen and Expand Poverty Alleviation Achievements and Rural RevitalizationPlease refer to the Social Responsibility Report 2021 of Suzhou Dongshan Precision Manufacturing Co., Ltd. disclosed on http://www.cninfo.com.cn/ on the date of this report.
Section VI Significant EventsI. Performance of Commitments
1. Complete and incomplete commitments of the Company and its actual controller, shareholders, related parties, acquirers, and other related parties for thecommitments by the end of the reporting period.
√ Applicable □ N/A
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| Commitments given at the time of initial public offering or refinancing | YUAN Yongfeng; YUAN Yonggang | Commitment to impose restrictions on sale of shares | Each of shareholders YUAN Yonggang and YUAN Yongfeng who serve as directors and senior officers of the Company undertake that the number of shares that may be transferred each year during his term of office shall not exceed 25% of the total number of shares held by him or her in the Company, and that no shares of the Company held by him shall be transferred within six (6) months of his termination of office. The number of shares of the Company sold by him or her through listing and trading on the stock exchange within twelve (12) months following the expiration of six (6) months of his or her departure shall not exceed 50% of the total number of shares held by him or her in the Company. | April 9, 2010 | The commitment continues to have binding force | As of the end of the current reporting period, the party giving commitment has fulfilled such commitment |
| YUAN Yongfeng; YUAN Yonggang; YUAN Fugen | Commitments on horizontal competition, related transactions and use of funds | Commitment on horizontal competition: Each of shareholders YUAN Yonggang, YUAN Yongfeng and YUAN Fugen undertakes that: I have not directly or indirectly conducted any business in competition with the business actually conducted by the joint-stock company. | April 9, 2010 | The commitment continues to have binding force | As of the end of the current reporting period, the party giving commitment has fulfilled such commitment |
| YUAN Fugen; YUAN Yongfeng; YUAN Yonggang | Commitments on horizontal competition, related transactions and use of funds | Commitment to avoid horizontal competition: Each of shareholders YUAN Yonggang, YUAN Yongfeng and YUAN Fugen undertakes that: upon completion of the major asset restructuring, I will not directly or indirectly through any of his affiliates participate in or conduct any business activity that materially competes with or is likely to materially compete with the business conducted by DSBJ. In the event that any product to be manufactured or business to be conducted by any enterprise wholly-owned, held or participated by me competes or is likely to compete with the product or business of DSBJ, upon DSBJ’s request, I undertake to assign all of my capital contributions to or shares in such enterprise, and undertake to grant DSBJ or any of its wholly-owned subsidiaries the right of first refusal with respect to such capital contributions or shares, and will make my best efforts to cause the price of the relevant transaction to be determined based on fair, reasonable and normal business transactions with an independent third party. If the interests of DSBJ or any other shareholder are damaged due to my violation or any of my affiliates’ breach of the commitments, I will assume the liability for compensation by law. | June 11, 2018 | The commitment continues to have binding force | As of the end of the current reporting period, the party giving commitment has fulfilled such commitment |
| YUAN Fugen; YUAN Yongfeng; YUAN Yonggang | Commitments on horizontal competition, related transactions and use of funds | Commitment on regulating and reducing related party transactions: Each of shareholders YUAN Yonggang, YUAN Yongfeng and YUAN Fugen undertakes that: 1. I will and cause my affiliates to avoid or reduce related party transactions with DSBJ to the maximum extent. 2. For any related party transactions that cannot be avoided or is doomed to happen, I undertake to duly execute agreements based on the principles of justness, fairness and openness, perform legitimate procedures in accordance with applicable laws and regulations, normative documents and the Articles of Association of DSBJ, guarantee the fairness and compliance of related party transactions, ensure that related party | June 11, 2018 | The commitment continues to have binding force | b |
| transactions will not damage the legitimate rights and interests of DSBJ and other shareholders, and make timely information disclosure in accordance with the requirements of applicable laws and regulations and normative documents. 3. I will exercise shareholder rights in accordance with the Company Law and other laws and regulations as well as the Articles of Association of DSBJ; when DSBJ’s board of shareholders votes on any related party transactions conducted by me or any enterprise under my control, I will perform the obligation to abstain from voting in accordance with the relevant regulations. | |||||
| YUAN Yongfeng; YUAN Yonggang; ZHAO Xiutian; SHAN Jianbin; WANG Xu; MAO Xiaoyan; MA Liqiang | Other commitments | Commitment to take measures to recover the current returns diluted as a result of non-public offering of stocks: Each of the directors and senior officers of the Company undertakes as follows: 1. I undertake not to transfer interests to any other entity or individual on a gratuitous or unfair basis, or to otherwise damage the interests of the Company. 2. I undertake to restrain my job-related consumption behavior. 3. I undertake not to use the Company’s assets to engage in any investment or consumption activity unrelated to my job duties. 4. I undertake that the remuneration system formulated by the board of directors or remuneration committee is linked with the implementation of the Company’s return recovery measures. 5. If the Company proposes to implement its stock incentive plan in the future, I undertake to link the vesting conditions of such stock incentive plan with the implementation of the return recovery measures by the Company. 6. I undertake to effectively fulfill the current return recovery measures formulated by the Company and my commitments regarding current return recovery measures. In the event that I am in violation of such commitments and thus cause losses to investors, I am willing to duly assume the liability for compensation to the Company or its | October 10, 2019 | The commitment continues to have binding force | As of the end of the current reporting period, the party giving commitment has fulfilled such commitment |
| investors and accept punishments imposed by the regulatory authority. | ||||||
| YUAN Fugen; YUAN Yongfeng; YUAN Yonggang | Other commitments | Commitment to take measures to recover the current return diluted as a result of non-public offering of stocks: the controlling shareholder and actual controller undertake as follows: as the controlling shareholder and actual controller of Suzhou Dongshan Precision Manufacturing Co., Ltd., I undertake not to act beyond my authority to intervene in operating management activities of the Company, nor to misappropriate interests of the Company. As the party responsible for the effective recovery of the current return diluted as a result of non-public offering, I am willing to assume legal liabilities for failure or refusal to fulfill the said commitments. | October 17, 2019 | The commitment continues to have binding force | As of the end of the current reporting period, the party giving commitment has fulfilled such commitment | |
| Other commitments to small and medium shareholders of the Company | YUAN Yongfeng; YUAN Yonggang | Commitments on horizontal competition, related transactions and use of funds | Commitment on payment term of the remaining transfer price of the large format display business assets and interest thereon (the “Target Indebtedness”): Each of YUAN Yonggang and YUAN Yongfeng undertakes as follows: (1) I will cause Shenzhen Dongshan to, subject to the provisions of the Supplemental Agreement: A. pay the principal amount of RMB 100 million and interest thereon prior to June 30, 2020, and the principal amount of RMB 132 million and interest thereon prior to December 31, 2020, and complete the payment of the total principal amount of RMB 232 million (accounting for 30% of the principal amount of the Target Indebtedness) and interest thereon in 2020; B. pay the principal amount of RMB 539,893,189.16 and interest thereon prior to December 31, 2021, and complete the payment of the total principal amount of RMB 771,893,189.16 and interest thereon in 2021; C. pay the interest on the principal amount of the outstanding Target Indebtedness at one-year LPR (4.20%) published by the People's Bank of China in September 2019 from the interest commencement date (September 18, 2019); (2) If Shenzhen | April 2, 2020 | December 31, 2021 | As of the end of the current reporting period, Shenzhen Dongshan has promptly fulfilled the relevant payment obligation in accordance with the provisions of the Supplemental Agreement. As of the end of the current reporting period, the commitment has been fulfilled. |
| Dongshan fails to timely repay the indebtedness to Dongguan Dongshan according to the payment schedule set forth in the Supplemental Agreement, the person acting in concert and I will promptly and duly reduce the shares of DSBJ and will firstly use the proceeds from share reduction to fully repay the outstanding indebtedness to Dongguan Dongshan, so as to ensure the Target Indebtedness be repaid according to the payment schedule set forth in the Supplemental Agreement. | |||
| Has the commitment been promptly performed? | Yes | ||
| If the commitment fails to be fulfilled within a prescribed period of time, explain in details the reason for such failure and future action plan | N/A | ||
2. If there is a profit forecast for the assets or projects of the Company and the reporting period is still in the profit forecast period, the Company shall explain whythe assets or projects meet the original profit forecast.
□ Applicable √ N/A
II. Use of Funds of the Listed Company by Controlling Shareholder and Other Affiliates forNon-Operating PurposesThere was no use of the funds of the listed company by controlling shareholder and other affiliates for non-operating purposes duringthe reporting period of the Company.III. Illegal External Security
There was no illegal external security during the reporting period of the Company.IV. Board of Directors’ Description of the Most Recent “Non-Standard Audit Report”
□ Applicable √ N/A
V. Statement of Board of Directors, Board of Supervisors and Independent Directors (if any)on the “Non-Standard Audit Report” Issued by the Accounting Firm during the ReportingPeriod
□ Applicable √ N/A
VI. Description of Changes in Accounting Policies and Accounting Estimates or Correctionsof Significant Accounting Errors in Comparison to the Financial Reports of the Previous Year
√ Applicable □ N/A
The Ministry of Finance of the People’s Republic of China (the “MOF”) issued the Accounting Standards for Enterprises No.21 -Leases (Cai Kuai [2018] No.35) (the “New Lease Standards”) in December 2018. Subject to the requirements of the MOF, theCompany began to implement the New Lease Standards from January 1, 2021, and amended the accounting policies accordingly.According to the linkage regulations, the Company has not adjusted the information of the comparable period, but retrospectivelyadjusted the retained earnings at the beginning of the current reporting period based on the difference between the New LeaseStandards implemented on the first day and the current standards. The said changes in accounting policies were deliberated andapproved at the tenth meeting of the fifth board of directors and the eighth meeting of the fifth board of supervisors of the Company,as detailed in the information disclosure media designated by the Company.VII. Description of Changes in the Scope of Consolidated Financial Statements in Comparisonwith the Financial Reports of the Previous Year
√ Applicable □ N/A
1. Expansion of consolidation scope
| Company name | Method of stock acquisition | Stock acquisition time |
| Suzhou Dongchen Intelligent Equipment Manufacturing Co., Ltd. | Through investment | November 30, 2021 |
Shanghai Dongxin New Energy Technology Co., Ltd.
| Shanghai Dongxin New Energy Technology Co., Ltd. | Through investment | August 27, 2021 |
| Shanghai Donglan New Energy Technology Co., Ltd. | Through investment | November 1, 2021 |
| Hainan Chengjia Technology Consulting Co., Ltd. | Through investment | May 14, 2021 |
2. Reduction in consolidation scope
| Company name | Stock disposal method | Stock disposal time |
Chongqing Chengjia Precision Electronic Technology Co., Ltd.
| Chongqing Chengjia Precision Electronic Technology Co., Ltd. | Canceled | January 29, 2021 |
| Dongguan Xindong Intelligent Technology Co., Ltd. | Loss of control | August 31, 2021 |
| DSBJ FINLAND OY | Canceled | December 31, 2021 |
Suzhou Dongshan Precision Technology Co., Ltd.
| Suzhou Dongshan Precision Technology Co., Ltd. | Canceled | November 16, 2021 |
VIII. Appointment and Dismissal of Accounting Firm
Current accounting firm
| Name of domestic accounting firm | Pan-China Certified Public Accountants (Special General Partnership) |
| Compensation to domestic accounting firm (RMB 0’000) | 210 |
| Continuous length of audit services of domestic accounting firm | 11 years |
| Name of certified public accounts of domestic accounting firm | SUN Tao and HUANG Zhenshuang |
| Continuous length of audit services of certified public accountants at the domestic accounting firm | 1 year; 1 year |
Was there any replacement of the accounting firm during the current reporting period?
□ Yes √ No
Engagement of accounting firm, financial advisor or sponsor for internal control audit
√ Applicable □ N/A
1. During the reporting period, the Company engaged Pan-China Certified Public Accountants (Special General Partnership) as theinternal control auditor responsible for the internal control audit work of the Company in 2021.
2. During the reporting period, the Company engaged TF Securities Co., Ltd. as the sponsor of non-public offering of A shares in2020.IX. Delisting After Disclosure of Annual Report
□ Applicable √ N/A
X. Matters Relating to Bankruptcy Reorganization
□ Applicable √ N/A
The Company was not involved in bankruptcy reorganization during the reporting period.XI. Major Litigation and Arbitration Matters
□ Applicable √ N/A
The Company was not involved in any major lawsuit or arbitration proceeding during the current reporting period.
XII. Punishments and Rectifications
□ Applicable √ N/A
The Company was not punished or made rectifications during the reporting period.XIII. Credit Condition of the Company and its Controlling Shareholder and ActualController
□ Applicable √ N/A
XIV. Material Related Party Transactions
1. Related party transactions relating to day-t0-day operations
□ Applicable √ N/A
No related party transactions occurred in connection with day-to-day operations during the reporting period of the Company.
2. Related party transactions relating to acquisition or sale of assets or stocks
□ Applicable √ N/A
No related party transactions relating to acquisition or sale of assets or stocks occurred during the reporting period of the Company.
3. Related party transactions relating to joint foreign investment
□ Applicable √ N/A
No related party transactions relating to joint foreign investment occurred during the reporting period of the Company.
4. Related claims and debts
□ Applicable √ N/A
There were no related claims and debts during the reporting period of the Company.
5. Transactions with financial company affiliated with the Company
□ Applicable √ N/A
There was no deposit, loan, facility or other financing business between the Company and any financial company affiliated with it orany of its affiliates.
6. Transactions between the financial company held by the Company and any of its affiliates
□ Applicable √ N/A
There was no deposit, loan, facility or other financing business between the financial company held by the Company and any of itsaffiliates.
7. Other material related party transactions
√ Applicable □ N/A
Transfer of assets relating to large format display business:
In order to implement the business strategy of the Company’s primary business, the Company sold to YUAN Yonggang, YUANYongfeng or any third party designated by him, being Shenzhen Dongshan Precision Manufacturing Co., Ltd. (“ShenzhenDongshan”), the assets relating to large format display business and other non-core businesses, so as to further optimize industrylandscape, consolidate the Company’s resources, and improve its operation efficiency. On July 12, 2018 and August 10, 2018, theCompany and its controlling shareholder and actual controller YUAN Yonggang and YUAN Yongfeng entered into the Agreement ofIntent on Transfer of Assets Relating to Large Format Display Business and the Equity Transfer Agreement (the “Asset TransferAgreements”). In accordance with the Asset Transfer Agreements, the Company sold to Shenzhen Dongshan the group’s assetrelating to large format display business, and transferred 100% equity of Shenzhen Dongshan held by it to Dongyang Investmentjointly controlled by YUAN Yonggang and YUAN Yongfeng, so as to effect the sale of the assets relating to the said non-corebusiness. The sale was deliberated and approved by the board of directors and board of shareholders of the Company. The relevantdirectors and shareholders abstained from voting. As of December 31, 2019, Shenzhen Dongshan owed to Dongguan Dongshan theoutstanding principal amount of RMB 771.8932million of the transfer price of the asset relating to large format display business andinterest thereon (the “Target Indebtedness” or the “Target Claims”).On December 30, 2019 and January 20, 2020, the Company’s wholly-owned subsidiary Dongguan Dongshan, Shenzhen Dongshanand the Company’s controlling shareholder and actual controller YUAN Yonggang entered into the Asset Purchase Agreement andthe Supplemental Agreement to Asset Purchase Agreement (collectively the “Original Agreements”). Dongguan Dongshan proposedto purchase from Shenzhen Dongshan 99.9944% capital contributed to Ningbo Meishan Bonded Port District Yimusheng InvestmentPartnership (Limited Partnership) (“Ningbo Yimusheng”) at a consideration paid in the form of the Target Claims held by DongguanDongshan against Shenzhen Dongshan, in which case any shortfall shall be made good in cash. The sale was deliberated andapproved by the board of directors and board of shareholders of the Company. The relevant directors and shareholders abstained fromvoting.On March 23, 2020, since the general partner of Ningbo Yimusheng was accelerating the withdrawal of fund units based on theinterests of all partners, the general partner of Ningbo Yimusheng did not agree to the Original Agreements, and the OriginalAgreement was terminated on the same day.In order for Shenzhen Dongshan to timely repay the Target Indebtedness and guarantee the interests of the listed company, aftercomprehensive consideration of all such factors as actual condition of assets and liabilities of Shenzhen Dongshan and theCompany’s controlling shareholder, the overall market environment of financial leverage reduction and the Covid-19’s impact on thecapital market, the Company, Dongguan Dongshan, YUAN Yonggang, YUAN Yongfeng and Shenzhen Dongshan executed theSupplemental Agreement to the Asset Transfer Agreement (the “Supplemental Agreement”) upon deliberation and approval at thefifty-seventh meeting of the fourth session of the board of directors of the Company and the third extraordinary shareholders’meeting in 2019, and the parties hereby agree to make the following arrangement with respect to the Target Indebtedness:
(1) Shenzhen Dongshan shall repay to Dongguan Dongshan the principal amount of RMB 100 million and interest thereon prior toJune 30, 2020, and the principal amount of RMB 132 million and interest thereon prior to December 31, 2020, and shall complete thepayment of the total principal amount of RMB 232 million (accounting for 30% of the principal amount of the Target Indebtedness)and interest thereon in 2020;
(2) Shenzhen Dongshan shall repay to Dongguan Dongshan the principal amount of RMB 539,893,189.16 and interest thereon prior
to December 31, 2021, and shall complete the payment of the total principal amount of RMB 771,893,189.16 and interest thereon in2021;
(3) During the continuance and extension of the Target Indebtedness, the interest on the Target Indebtedness was the principalamount of the outstanding indebtedness*number of days from interest commencement date (being September 18, 2019) tosatisfaction date*one-year LPR published by the People's Bank of China in September 2019 (4.20%/365).
(4) YUAN Yonggang and YUAN Yongfeng undertake that, if Shenzhen Dongshan fails to timely repay the indebtedness toDongguan Dongshan according to the payment schedule set forth in the Supplemental Agreement, YUAN Yonggang, YUANYongfeng and persons acting in concert will promptly reduce their holding of DSBJ's shares by law, and will firstly use the proceedsfrom reduction to fully repay the outstanding indebtedness to Dongguan Dongshan, so as to ensure timely repayment of the TargetIndebtedness according to the payment schedule set forth in the Supplemental Agreement.As of the December 28, 2021, Dongguan Dongshan received a total principal amount of RMB 771.8932 million and interest thereonfrom Shenzhen Dongshan, and Shenzhen Dongshan promptly fulfilled all relevant obligations in accordance with the SupplementalAgreement. All matters relating to the related party transactions have been completed.Related searches on the website for disclosure of interim announcement of material related party transactions
| Name of interim announcement | Disclosure date of interim announcement | Name of disclosure website of interim announcement |
| Announcement on Asset Purchase and Related Party Transactions | December 31, 2019 | http://www.cninfo.com.cn |
| January 21, 2020 | http://www.cninfo.com.cn | |
| Progress Announcement on Asset Purchase and Related Party Transactions | March 24, 2020 | http://www.cninfo.com.cn |
| Announcement on the Execution of Supplemental Agreement to Asset Transfer Agreement and Related Party Transactions | April 3, 2020 | http://www.cninfo.com.cn |
| Progress Announcement on Asset Transfer and Related Party Transactions | June 20, 2020 | http://www.cninfo.com.cn |
| December 22, 2020 | http://www.cninfo.com.cn | |
| Announcement on Asset Transfer and Related Party Transactions | December 29, 2021 | http://www.cninfo.com.cn |
XV. Major Contracts and Contract Performance
1. Custody, Contracting and Lease
(1) Custody
There was no custody business during the reporting period of the Company.
(2) Contracting
There was no contracting business during the reporting period of the Company.
(3) Lease
√ Applicable □ N/A
Description of leases
(1) Upon deliberation and approval at the thirty-ninth meeting of the fourth session of the board of directors of the Company, theCompany (as the lessee) conducted the financing lease transaction with COSCO Shipping Leasing Co., Ltd. involving the principalamount no more than RMB 300 million.
(2) Upon deliberation and approval at the forty-fifth meeting of the fourth session of the board of directors of the Company, theCompany (as the lessee) conducted the financing lease transaction with JIC Leasing Co., Ltd. involving the principal amount no morethan RMB 100 million.Project that generated loss/profit of the Company no less than 10% of the total profit during the reporting period of the Company
□ Applicable √ N/A
There was no leasing project that generated loss/profit of the Company no less than 10% of the total profit during the reporting periodof the Company
2. Major Security
√ Applicable □ N/A
Unit: RMB 0’000
| External security provided by the Company and its subsidiaries (excluding those provided to its subsidiaries) | ||||||||
| Name of guaranteed party | Disclosure date of announcement on guarantee limit | Guarantee limit | Actual guarantee amount | Type of guarantee | Counter security (if any) | Security period | Whether or not the security has been fulfilled | Whether or not the security was provided for affiliates |
| Suzhou Toprun Electric Equipment Co., Ltd. | April 15, 2021 | 3,000 | 2,900 | Guarantee with joint and several liability | Other shareholders provide equal security in proportion to their capital contributions | 18 months | No | No |
| Suzhou Legate Intelligent Equipment Co., Ltd. | April 15, 2021 | 3,000 | 0 | |||||
| Shanghai Fushan Precision Manufacturing Co., Ltd. | April 15, 2021 | 3,000 | 0 | |||||
| Aggregate amount of external security approved during the reporting period (A1) | 9,000 | Aggregate amount of external security actually provided during the reporting period (A2) | 5,800 | |||||
| Aggregate amount of external security approved at the end of the reporting period (A3) | 9,000 | Total remaining amount of external security actually provided at the end of the reporting period (A4) | 2,900 | |||||
| Security provided by the Company to its subsidiaries | ||||||||
| Name of guaranteed | Disclosure date of | Guarantee limit | Actual guarantee | Type of | Security period | Whether or not the | Whether or not the | |
| party | announcement on guarantee limit | amount | guarantee | security has been fulfilled | security was provided for affiliates | ||
| Dragon Electronix Holdings Inc. and its controlled subsidiaries | April 15, 2021 | 300,000 | 196,184.07 | Guarantee with joint and several liability | 18 months | No | No |
| Hong Kong Dongshan Holding Limited | April 15, 2021 | 260,000 | 60,569.15 | Guarantee with joint and several liability | 18 months | No | No |
| Yancheng Dongshan Precision Manufacturing Co., Ltd. | April 15, 2021 | 180,000 | 108,188.19 | Guarantee with joint and several liability | 18 months | No | |
| Multek Group (Hong Kong) Limited and its controlled subsidiaries | April 15, 2021 | 150,000 | 92,011.7 | Guarantee with joint and several liability | 18 months | No | |
| Yancheng Mutto Optronics Technology Co., Ltd. | April 15, 2021 | 100,000 | 54,387.33 | Guarantee with joint and several liability | 18 months | No | |
| YCMT | April 15, 2021 | 100,000 | 56,906.93 | Guarantee with joint and several liability | 18 months | No | |
| Hong Kong Dongshan Precision Union Opoelectronic Co., Limited | April 15, 2021 | 50,000 | 0 | ||||
| Yancheng Dongshan Communication Technology Co., Ltd. | April 15, 2021 | 30,000 | 15,570.9 | Guarantee with joint and several liability | 18 months | No |
| Suzhou Rf Top Electronic Communication Co., Ltd. | April 15, 2021 | 20,000 | 2,642.24 | Guarantee with joint and several liability | 18 months | No | |
| Dongguan Dongshan Precision Manufacturing Co., Ltd. | April 15, 2021 | 10,000 | 0 | ||||
| Suzhou Chengjia Precision Manufacturing Co., Ltd. | April 15, 2021 | 8,000 | 3,079.17 | Guarantee with joint and several liability | 18 months | No | |
| Suzhou Dongbo Precision Manufacturing Co., Ltd. | April 15, 2021 | 3,000 | 0 | ||||
| Aggregate amount of external security for subsidiaries approved during the reporting period (B1) | 1,211,000 | Aggregate amount of external security actually provided for subsidiaries during the reporting period (B2) | 1,139,929.48 | ||||
| Aggregate amount of external security for subsidiaries approved at the end of the reporting period (B3) | 1,211,000 | Total remaining amount of external security actually provided for subsidiaries at the end of the reporting period (B4) | 589,539.68 | ||||
| Total amount of security provided by the Company (being the aggregate amount of the above three items) | |||||||
| Aggregate amount of security approved during the reporting period (A1+B1) | 1,220,000 | Aggregate amount of security actually provided during the reporting period (A2+B2) | 1,145,729.48 | ||||
| Aggregate amount of security approved at the end of the reporting period (A3+B3) | 1,220,000 | Total remaining amount of security actually provided at the end of the reporting period (A4+B4) | 592,439.68 | ||||
| Percentage of aggregate amount of actual security (being A4+B4) in the Company’s net assets | 40.64% |
| In which: | |
| Remaining amount of security provided for shareholders, actual controller and their affiliates (D) | 0 |
| Remaining amount of debt guarantee directly or indirectly provided for the guaranteed party whose asset-liability ratio exceeds 70% (E) | 589,797.44 |
| Amount of total security amount in excess of 50% of net assets (F) | 0 |
| Aggregate amount of the above three items (D+E+F) | 589,797.44 |
| Description of occurrence or (as evidenced by proof) possible occurrence of joint and several liability for satisfaction with respect to the guarantee contract that has not expired during the reporting period (if any) | None |
| Description of provision of external security against prescribed procedures (if any) | None |
3. Entrusted cash asset management
(1) Entrusted wealth management
√ Applicable □ N/A
Overview of entrusted wealth management during the reporting period
Unit: RMB 0’000
| Type | Source of funds of entrusted wealth management | Amount of entrusted wealth management | Outstanding balance | Unrecovered amount | Unrecovered amount of impairment provision of wealth management |
| Bank wealth management products | Self-owned funds | 612,370.04 | 41,709.87 | 0 | 0 |
| Bank wealth management products | Raised funds | 59,200 | 4,500 | 0 | 0 |
| In Total | 671,570.04 | 46,209.87 | 0 | 0 | |
Particulars of high-risk entrusted wealth management with single significant amount, poor security or low liquidity
□ Applicable √ N/A
The principal amount of entrusted wealth management product cannot be recovered or there are other circumstances that may result in impairment
□ Applicable √ N/A
(2) Entrusted loan
□ Applicable √ N/A
There was no entrusted loan during the reporting period of the Company.
4. Other major contracts
There was no other major contract during the reporting period of the Company.
XVI. Description of Other Major Matters
There was no other major matter during the reporting period of the Company.XVII. Major Matters of the Company’s Subsidiaries
□ Applicable √ N/A
Section VII Changes in Share Capital and Shareholders
I. Changes in Share Capital
1. Changes in share capital
Unit: Share
| Before current change | Increase or reduction (+, -) | After current change | |||||||
| Quantity | Percentage | Issue of new shares | Bonus issue | Conversion of accumulation fund into share capital | Others | Sub-total | Quantity | Percentage | |
| I. Restricted Shares | 446,984,337 | 26.14% | -127,392,350 | -127,392,350 | 319,591,987 | 18.69% | |||
| 1. State-owned shares | |||||||||
| 2. Shares held by state-owned legal persons | 8,928,570 | 0.52% | -8,928,570 | -8,928,570 | 0 | 0.00% | |||
| 3. Shares held by other domestic entities | 438,055,767 | 25.62% | -118,463,780 | -118,463,780 | 319,591,987 | 18.69% | |||
| Including: shares held by domestic legal persons | 94,366,280 | 5.52% | -94,366,280 | -94,366,280 | 0 | 0.00% | |||
| Shares held by domestic natural persons | 343,689,487 | 20.10% | -24,097,500 | -24,097,500 | 319,591,987 | 18.69% | |||
| II. Non-restricted Shares | 1,262,882,990 | 73.86% | 127,392,350 | 127,392,350 | 1,390,275,340 | 81.31% | |||
| 1. RMB-denominated common shares | 1,262,882,990 | 73.86% | 127,392,350 | 127,392,350 | 1,390,275,340 | 81.31% | |||
| III. Total Number of Shares | 1,709,867,327 | 100.00% | 0 | 0 | 1,709,867,327 | 100.00% | |||
Reasons for changes in share capital
√ Applicable □ N/A
Upon approval by the Zheng Jian Xu Ke [2020] No.980 Document issued by the China Securities Regulatory Commission, and the approval by the Shenzhen Stock Exchange, the Companyappointed its lead underwriter TF Securities Co., Ltd. to make a non-public offering of 103,294,850 common shares to 20 investors (including CITIC Securities Co., Ltd., Taiping AssetManagement Co., Ltd. and Zhejiang Zheshang Securities Asset Management Co., Ltd.), with a lock-up period of six (6) months. On February 8, 2021, the sale restriction on the said non-publicoffering of shares was lifted.Approval of changes in share capital
□ Applicable √ N/A
Share transfer
□ Applicable √ N/A
Impact of changes in share capital on such financial indicators as basic earnings per share, diluted earnings per share and net assets per share attributable to common shareholders of theCompany in the most recent year and the most recent period
□ Applicable √ N/A
Other information that the Company deems necessary or the securities regulatory requires disclosure
□ Applicable √ N/A
2. Changes in restricted shares
√ Applicable □ N/A
Unit: Share
| Name of shareholder | Number of restricted shares at the beginning of the period | Number of additional restricted shares during the current period | Number of restricted shares lifted during the current period | Number of restricted shares at the end of the period | Reason for sale restriction | Date of listing of sale restriction |
| CITIC Securities Co., Ltd. (3 accounts) | 4,642,857 | 0 | 4,642,857 | 0 | Non-public offering of stocks | February 8, 2021 |
| Taiping Asset Management Co., Ltd. (Taiping Asset Management-China Merchants Bank-Taiping Asset Fixed Asset No.36 Asset | 2,928,571 | 0 | 2,928,571 | 0 | Non-public offering of stocks | February 8, 2021 |
| Management Product) | ||||||
| Zhejiang Zheshang Securities Asset Management Co., Ltd. | 5,714,285 | 0 | 5,714,285 | 0 | Non-public offering of stocks | February 8, 2021 |
| Jinan Tianfu Hengtong Equity Investment Fund Partnership (Limited Partnership) | 2,928,571 | 0 | 2,928,571 | 0 | Non-public offering of stocks | February 8, 2021 |
| Bosera Fund Management Co., Ltd. (4 accountants) | 3,642,857 | 0 | 3,642,857 | 0 | Non-public offering of stocks | February 8, 2021 |
| Greater Bay Area Industrial and Financing Investment (Guangzhou) Co., Ltd. | 5,357,142 | 0 | 5,357,142 | 0 | Non-public offering of stocks | February 8, 2021 |
| Foresight Fund Management Co., Ltd. | 5,616,288 | 0 | 5,616,288 | 0 | Non-public offering of stocks | February 8, 2021 |
| Xinhua Asset Management Co., Ltd. (Xinhua Life Insurance Co., Ltd.-Bonus-Group Bonus-018L-FH001 Shen) | 10,714,285 | 0 | 10,714,285 | 0 | Non-public offering of stocks | February 8, 2021 |
| Taikang Asset Management Co., Ltd. (Taikang Life Insurance Co., Ltd.-Traditional) | 8,892,857 | 0 | 8,892,857 | 0 | Non-public offering of stocks | February 8, 2021 |
| Taikang Asset Management Co., Ltd. (Investment-Linked Multi-Strategy Selected Investment Account of Taikang Life Insurance Co., Ltd.) | 2,928,571 | 0 | 2,928,571 | 0 | Non-public offering of stocks | February 8, 2021 |
| Taikang Asset Management Co., Ltd. (Investment- Linked Innovation-Driven Investment Account of Taikang Life Insurance Co., Ltd.) | 2,928,571 | 0 | 2,928,571 | 0 | Non-public offering of stocks | February 8, 2021 |
| Taikang Asset Management Co., Ltd. (Enterprise Annuity Plan of China Construction Bank Corporation) | 2,928,571 | 0 | 2,928,571 | 0 | Non-public offering of stocks | February 8, 2021 |
| Ping An Asset Management Co., Ltd. (Ping An Asset Management-ICBC-Xin Heng No.3 Asset Management Product) | 7,857,142 | 0 | 7,857,142 | 0 | Non-public offering of stocks | February 8, 2021 |
| Ping An Asset Management Co., Ltd. (Ping An Life Insurance Company of China, Ltd.-Bonus-Personal Insurance Bonus) | 7,142,857 | 0 | 7,142,857 | 0 | Non-public offering of stocks | February 8, 2021 |
| Ping An Asset Management Co., Ltd. (Ping An Life Insurance Company of China, Ltd.-Personal Investment-Linked Insurance) | 7,142,857 | 0 | 7,142,857 | 0 | Non-public offering of stocks | February 8, 2021 |
| Generali China Asset Management Co., Ltd. (Generali Asset Management-China Merchants Bank-Generali Asset-Fixed Increase Selected No.1 Asset Management Product) | 2,964,285 | 0 | 2,964,285 | 0 | Non-public offering of stocks | February 8, 2021 |
| Ping An Securities Co., Ltd. | 2,928,571 | 0 | 2,928,571 | 0 | Non-public offering of stocks | February 8, 2021 |
| Caitong Fund Management Co., Ltd. (20 accounts) | 7,107,142 | 0 | 7,107,142 | 0 | Non-public offering of stocks | February 8, 2021 |
| Guotai Junan Securities Co., Ltd. | 5,357,142 | 0 | 5,357,142 | 0 | Non-public offering of stocks | February 8, 2021 |
| CITIC Construction Investment Securities Co., Ltd. | 3,571,428 | 0 | 3,571,428 | 0 | Non-public offering of stocks | February 8, 2021 |
| YUAN Yongfeng | 183,602,175 | 0 | 16,811,060 | 166,791,115 | Release of executive quota | N/A |
| YUAN Yonggang | 158,956,087 | 0 | 7,286,440 | 151,669,647 | Release of executive quota | N/A |
| Total | 445,853,112 | 0 | 127,392,350 | 318,460,762 | -- | -- |
II. Issue and Listing of Securities
1. Issue of securities (excluding preferred shares) during the reporting period
□ Applicable √ N/A
2. Description of changes in the total number of shares and shareholding structure of the Company, and in the asset and liability structure of the Company
□ Applicable √ N/A
3. Shares held by current internal employees
□ Applicable √ N/A
III. Particulars of Shareholders and Actual Controller
1. Number of shareholders and their shareholdings
Unit: Share
| Total number of common shareholders at the end of the reporting period | 71,390 | Total number of common shareholders at the end of the month preceding the disclosure date of the annual report | 79,592 | The total number of preferred shareholders (if any) whose voting rights have been restored at the end of the reporting period (see Note 8) | 0 | The total number of preferred shareholders (if any) whose voting rights have been restored at the end of the month preceding the disclosure date of the annual report (see Note 8) | 0 | ||||||
| Shares held by shareholder holding no less than 5% of the total shares or top 10 shareholders | |||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding proportion | Number of shares held at the end of the reporting period | Increase or reduction during the reporting period | Number of restricted shares held | Number of unrestricted shares held | Pledged, marked or frozen | ||||||
| Status of shares | Quantity | ||||||||||||
| YUAN Yongfeng | Domestic natural person | 13.01% | 222,388,153 | - | 166,791,115 | 55,597,038 | Pledged | 129,340,000 |
| YUAN Yonggang | Domestic natural person | 11.83% | 202,226,196 | - | 151,669,647 | 50,556,549 | Pledged | 87,620,000 |
| Frozen | 9,295,000 | |||||||
| Hong Kong Securities Clearing Company Ltd. | Foreign legal person | 4.43% | 75,735,418 | 33,098,165 | 0 | 75,735,418 | ||
| YUAN Fugen | Domestic natural person | 3.44% | 58,796,052 | - | 0 | 58,796,052 | ||
| Industrial and Commercial Bank of China - Flexible Allocation of Guangfa Multi-factor Hybrid Securities Investment Fund | Others | 2.21% | 37,793,406 | 0 | 37,793,406 | |||
| Shaanxi International Trust Co., Ltd. - Shaanxi State Investment·DSBJ Phase II Employee Stock Ownership and Collective Fund Trust Plan | Others | 1.28% | 21,914,118 | 21,914,118 | 0 | 21,914,118 | ||
| China Life Insurance Company Limited -Bonus-Personal Bonus-005L-FH002 Shen | Others | 1.26% | 21,575,866 | 10,101,221 | 0 | 21,575,866 | ||
| China Life Insurance Company Limited-Traditional-Ordinary Insurance Product-005L-CT001 Shen | Others | 1.25% | 21,382,371 | 18,582,371 | 0 | 21,382,371 | ||
| Zhangjiagang Industry Capital Investment Co., Ltd. | State-owned legal person | 1.13% | 19,285,281 | -10,784,719 | 0 | 19,285,281 |
| Taikang Life Insurance co., Ltd.-Traditional- Ordinary Insurance Product-019L-CT001 Shen | Others | 1.00% | 17,046,805 | 1,863,357 | 0 | 17,046,805 | |||||
| Strategic investor or general legal person becomes one of top 10 shareholders as a result of placement of new shares (if any) (see Note 3) | N/A | ||||||||||
| Description of connected relationship or acting in concert relationship among the said shareholders | Among the said shareholders, YUAN Yonggang and YUAN Yongfeng are the sons of YUAN Fugen, YUAN Yongfeng is the elder brother of YUAN Yonggang, and these three people are the actual controllers of the Company. Shaanxi International Trust Co., Ltd. - Shaanxi State Investment·DSBJ Phase II Employee Stock Ownership and Collective Fund Trust Plan is the account opened by the Company for employee stock ownership plan 2021. Among other shareholders, the Company is not aware whether it is connected with such shareholders or is the person acting in concert provided in the Administrative Measures for Disclosure of Information About Changes in the Shareholding in the Listed Company. | ||||||||||
| Description of voting trust/fiduciary voting and waiver of voting right by the said shareholders | N/A | ||||||||||
| Special statement on dedicated repurchase accounts of any of top 10 shareholders (if any)) (see Note 10) | N/A | ||||||||||
| Shares held by top 10 unrestricted shareholders | |||||||||||
| Name of Shareholder | Number of unrestricted shares held at the end of the reporting period | Type of share | |||||||||
| Type of share | Quantity | ||||||||||
| Hong Kong Securities Clearing Company Ltd. | 75,735,418 | RMB-denominated common shares | 75,735,418 | ||||||||
| YUAN Fugen | 58,796,052 | RMB-denominated common shares | 58,796,052 | ||||||||
| YUAN Yongfeng | 55,597,038 | RMB-denominated common shares | 55,597,038 | ||||||||
| YUAN Yonggang | 50,556,549 | RMB-denominated common shares | 50,556,549 | ||||||||
| Industrial and Commercial Bank of China - Flexible Allocation of Guangfa Multi-factor Hybrid Securities Investment Fund | 37,793,406 | RMB-denominated common shares | 37,793,406 | ||||||||
| Shaanxi International Trust Co., Ltd. - Shaanxi State Investment·DSBJ Phase II Employee Stock Ownership and Collective Fund Trust Plan | 21,914,118 | RMB-denominated common shares | 21,914,118 |
| China Life Insurance Company Limited -Bonus-Personal Bonus-005L-FH002 Shen | 21,575,866 | RMB-denominated common shares | 21,575,866 |
| China Life Insurance Company Limited-Traditional-Ordinary Insurance Product-005L-CT001 Shen | 21,382,371 | RMB-denominated common shares | 21,382,371 |
| Zhangjiagang Industry Capital Investment Co., Ltd. | 19,285,281 | RMB-denominated common shares | 19,285,281 |
| Taikang Life Insurance co., Ltd.-Traditional-Ordinary Insurance Product-019L-CT001 Shen | 17,046,805 | RMB-denominated common shares | 17,046,805 |
| Description of the connected relationship or acting in concert relationship among top 10 unrestricted circulating shares, and between top 10 holders of unrestricted circulating shares and top 10 shareholders | Among the said shareholders, YUAN Yonggang and YUAN Yongfeng are the sons of YUAN Fugen, YUAN Yongfeng is the elder brother of YUAN Yonggang, and these three people are the actual controllers of the Company. Shaanxi International Trust Co., Ltd. - Shaanxi State Investment·DSBJ Phase II Employee Stock Ownership and Collective Fund Trust Plan is the account opened by the Company for employee stock ownership plan 2021. Among other shareholders, the Company is not aware whether it is connected with such shareholders or is the person acting in concert provided in the Administrative Measures for Disclosure of Information About Changes in the Shareholding in the Listed Company. | ||
| Description of top 10 common shareholders participating in the financing and securities trading business (if any) (see Note 4) | N/A | ||
No repurchase transaction has been agreed upon by and between the Company’s top 10 common shareholders and top 10 holders of its unrestricted common shares.
2. Controlling shareholders of the Company
Nature of controlling shareholder: natural personType of controlling shareholder: natural person
| Name of controlling shareholder | Nationality | Whether or not the right to reside in any other country or region has been obtained |
| YUAN Yongfeng | PRC | No |
| YUAN Yonggang | PRC | No |
| YUAN Fugen | PRC | No |
| Primary occupations and positions | YUAN Yonggang is the Chairman of the Company, YUAN Yongfeng is the Director and General Manager of the Company, and YUAN Fugen is the Senior Consultant of the Company. | |
Shareholding structure of otherdomestic and overseas listed companiescontrolled and participated by theCompany during the reporting period
There has been no change of the controlling shareholder during the reporting period of the Company.
3. Actual controller of the Company and persons acting in concert
Nature of actual controller: domestic natural personType of actual controller: natural person
| Name of actual controller | Relationship with actual controller | Nationality | Whether or not the right to reside in any other country or region has been obtained |
| YUAN Yongfeng | Himself | PRC | No |
| YUAN Yonggang | Himself | PRC | No |
| YUAN Fugen | Himself | PRC | No |
| Primary occupations and positions | YUAN Yonggang is the Chairman of the Company, YUAN Yongfeng is the Director and General Manager of the Company, and YUAN Fugen is the Senior Consultant of the Company. | ||
| Domestic and overseas listed companies controlled by the Company in the last ten years | (1) YUAN Yonggang held 23.94 % of shares of Anhui Landun Photoelectron Co., Ltd. (stock name: Landun Photoelectron; stock code: 300862), and Anhui Gaoxin Jintong Anyi Phase II Entrepreneurship Investment Fund (Limited Partnership) under the control of the couple YUAN Yonggang and WANG Wenjuan held 10.95% of shares of Landun Photoelectron. Thus, the couple YUAN Yonggang and WANG Wenjuan held 34.89% of Landun Photoelectron in aggregate, and was the actual controller of Landun Photoelectron; (2) The couple YUAN Yonggang and WANG Wenjuan held 95% of shares of Shenzhen Qianhai Rongyao Capital Management Co., Ltd. (“Rongyao Capital”) through Jintong Zhihui Investment Management Co., Ltd. (an investment company operated and managed by a professional management team, whose investment funds were primarily sourced from the society), and Rongyao Capital was the Managing Partner of Hefei Rongxin Equity Investment Fund Partnership (Limited Partnership) (“Hefei Rongxin”). On November 21, 2019, Hefei Rongxin became the controlling shareholder of Anhui Andeli Department Store Co., Ltd. (stock name: Andeli; stock code: 603031), holding 12.84% of shares of Andeli, and the couple YUAN Yonggang and WANG Wenjuan was the actual controller of Andeli. | ||
There was no change of the actual controller during the reporting period of the Company.
Block scheme of property rights and control between the Company and its actual controller
Persons acting in concertYUAN Fugen YUAN Yonggang YUAN Yongfeng(3.44% shareholding) (11.83% shareholding) (13.01% shareholding)
Suzhou Dongshan Precision Manufacturing Co., Ltd.
The Company is controlled by the actual controller by trust or other asset management method
□ Applicable √ N/A
4. The aggregate number of pledged shares held by the Company’s controlling shareholder or the largestshareholder and its person acting in concert accounts for 80% of the shares held by it in the Company
□ Applicable √ N/A
5. Other institutional shareholders holding more than 10% of the shares of the Company
□ Applicable √ N/A
6. Shareholding restriction and reduction by the controlling shareholder, actual controller, reorganizing partyand other parties giving undertakings
□ Applicable √ N/A
IV. Implementation of Share Repurchase during the Reporting PeriodProgress on the implementation of share repurchase
√ Applicable □ N/A
| Plan disclosure time | Number of shares to be repurchased | Percentage in the total share capital | Amount of proposed repurchase | Proposed repurchase period | Repurchase purpose | Number of shares repurchased |
| July 9, 2021 | 3.3967 million shares to 6.7935 million shares | 0.20%-0.40% | RMB 100 million (inclusive) to RMB 200 million | From July 8, 2021 to July 8, 2022 | Subsequent implementation of employee stock ownership plan or equity incentive | 5,319,737 |
Progress on the reduction of repurchased shares by centralized bidding
√ Applicable □ N/A
As of August 31, 2021, the Company repurchased 5.3197 million shares of the Company by centralized bidding using the dedicatedsecurity repurchase account, accounting for 0.31% of the total share capital of the Company. The highest closing price was RMB
19.18 per share, and the lowest closing price was RMB 18.24 per share. The total closing value was RMB 100.4798 million(excluding transaction costs).
Section VIII Preferred Shares
□ Applicable √ N/A
The Company does not have preferred shares during the reporting period.
Section IX Bonds
□ Applicable √ N/A
Section X Financial Report
I. Auditor’s Report
| Audit opinion | Standard unqualified opinions |
| Signing date of auditor’s report | April 19, 2022 |
| Auditor | Pan-China Certified Public Accountants LLP |
| Auditor’s report document number | Tian Jian Shen [2022] No. 5-46 |
| Name of certified public accountants | SUN Tao, HUANG Zhenshuang |
Auditor’s Report
Auditor’s ReportTian Jian Shen [2022] No. 5-46
To all shareholders of Suzhou Dongshan Precision Manufacturing Co., Ltd.,
I. Audit OpinionWe have audited the accompanying financial statements of Suzhou Dongshan Precision Manufacturing Co., Ltd.(hereinafter referred to as“Dongshan Precision”), which comprise the consolidated and parent company balance sheets as at December 31, 2021, the consolidated andparent company income statements, the consolidated and parent company cash flow statements, and the consolidated and parent companystatements of changes in equity for the year then ended, as well as notes to financial statements.In our opinion, the accompanying financial statements are prepared in all material respects in accordance with Accounting Standards forBusiness Enterprises and fairly present the consolidated and the parent company’s financial position as of December 31, 2021, and theconsolidated and the parent company’s operating results and cash flows for the year then ended.
II. Basis for Audit OpinionWe conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those standards are further describedin the “Certified Public Accountant’s Responsibilities for the Audit of the Financial Statements” section of our report. We are independent ofDongshan Precision in accordance with China Code of Ethics for Certified Public Accountants, and we have fulfilled other ethicalresponsibilities. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, are of most significance in our audit of the financial statements forthe current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinionthereon, and we do not express a separate opinion on these matters.(I) Revenue recognition
1. Key audit matters
Please refer to Note III (XXIV), V(II)1 and XIII(I) to the financial statements for details.Dongshan Precision is mainly engaged in the sales of PCBs, LED display devices, Touch panels and LCMs, precision components andother products. In 2021, the operating revenue of Dongshan Precision amounted to RMB 31,793,147,900.The products sold by Dongshan Precision can be recognized as the performance obligation at a certain time point. Revenue from domesticsales is recognized when: (1) the products have been delivered by the Company to the contracted delivery place and confirmed by the customers
for acceptance; (2) the payment has been received or the right of collecting payment has been obtained; and (3) it is probable that the associatedeconomic benefits will flow to the Company. Revenue from oversea sales is recognized when: (1) the Company has declared the products forcustoms clearance in accordance with the contract with bills of clearance and waybills received; (2) the payment has been received or the right ofcollecting payment has been obtained; and (3) it is probable that the associated economic benefits will flow to the Company.As the operating revenue is one of the key performance indicators, there might be inherent risks that the management of DongshanPrecision (the “Management”) adopts inappropriate revenue recognition to achieve specific goals or expectations. Therefore, we have identifiedrevenue recognition as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for revenue recognition are as follows:
(1) We obtained understandings of key internal controls related to revenue recognition, assessed the design of these controls, determinedwhether they had been executed, and tested the effectiveness of the operation;
(2) We checked sale contracts, obtained understandings of main contractual terms or conditions, and assessed whether the revenuerecognition method was appropriate;
(3) For revenue from domestic sales, we checked supporting documents related to revenue recognition by sampling method, includingsales contracts, sales invoices, shipping documents, and client acceptance receipts, etc.; for revenue from overseas sales, we obtainedinformation from electron port and checked it with accounting records, and checked supporting documents related to revenue recognition bysampling method, including sales contracts, sales invoices, sales issue document, bills of clearance, waybills, etc.;
(4) We performed analysis procedure on operating revenue and gross margin by month, product, client, etc., so as to identify whetherthere are significant or abnormal fluctuations and find out the reason of fluctuations;
(5) We performed confirmation procedures on current sales amount by sampling method in combination with confirmation procedure ofaccounts receivable;
(6) We performed cut-off tests on the operating revenue recognized around the balance sheet date, and assessed whether the operatingrevenue was recognized in the appropriate period;
(7) We checked whether information related to operating revenue had been presented appropriately in the financial statements.
(II) Impairment of accounts receivable
1. Key audit matters
Please refer to Note III (X) and V(I)4 to the financial statements for details.
As of December 31, 2021, the book balance of accounts receivable of Dongshan Precision amounted to RMB 8,643,059,900, withprovision for bad debts of RMB 976,980,200, and the carrying amount amounted to RMB 7,666,079,800.
Based on credit risk features of accounts receivable, the Management measures the provision for bad debts at the amount of lifetimeexpected credit losses, either on an individual basis or on a collective basis. For accounts receivable with expected credit losses measured on anindividual basis, the Management estimates the expected cash flows to recognize the provision for bad debts accordingly based on acomprehensive consideration of reasonable and supportable information related to the past events, the current situation and the forecast of futureeconomic conditions. For accounts receivable with expected credit losses measured on a collective basis, the Management classifies portfolioson the basis of aging, adjusts them based on historical credit risk loss experience and forward-looking estimations, and prepares the comparisontable of aging and expected credit loss rate of accounts receivable, so as to calculate the provision for bad debts accordingly.
As the amount of accounts receivable is significant and the impairment involves significant judgment of the Management, we haveidentified impairment of accounts receivable as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for impairment of accounts receivable are as follows:
(1) We obtained understandings of key internal controls related to impairment of accounts receivable, assessed the design of thesecontrols, determined whether they had been executed, and tested the effectiveness of their operation;
(2) We reviewed the accounts receivable with provision for bad debts made in previous periods for their subsequent write-off or reversal,and assessed the accuracy of historical estimations made by the Management;
(3) We reviewed the consideration of the Management on credit risk assessment and objective evidence, and assessed whether the creditrisk features of accounts receivable had been appropriately identified by the Management;
(4) For accounts receivable with expected credit losses measured on an individual basis, we obtained and checked the Management’sestimations on the expected future cash flows, assessed the reasonableness of key assumptions and the accuracy of data adopted in theestimations and checked them with acquired external evidence;
(5) For accounts receivable with expected credit losses measured on a collective basis, we assessed the reasonableness of portfolioclassification on the basis of credit risk features; we assessed the reasonableness of the comparison table of aging and expected credit loss rate ofaccounts receivable prepared by the Management based on the historical credit loss experience of portfolios with similar credit risk features andforward-looking estimations; we tested the accuracy and completeness of data used by the Management (including aging of accounts receivable,historical loss rate, etc.) and whether the calculation of provision for bad debts was accurate;
(6) We checked the subsequent collection of accounts receivable and assessed the reasonableness of provision for bad debts made by theManagement;
(7) We checked whether information related to impairment of accounts receivable had been presented appropriately in the financialstatements.
(III) Impairment of goodwill
1. Key audit matters
Please refer to Note III(XIX) and V(I)18 to the financial statements for details.
As of December 31, 2021, the book balance of goodwill of Dongshan Precision amounted to RMB 2,239,041,200, with provision for baddebts of RMB 27,318,400, and the carrying amount amounted to RMB 2,211,722,800.
When there is objective evidence indicating that asset group or asset group portfolio related to goodwill may be impaired, or at the end ofeach period, the Management will perform impairment test on goodwill together with related asset group or asset group portfolio, and therecoverable amount of related asset group or asset group portfolio is determined based on the estimated present value of future cash flows. Keyassumptions adopted in the impairment test include: revenue growth rate in detailed forecast period, growth rate in perpetual forecast period,gross margin, discount rate, etc.
As the amount of goodwill is significant and impairment test involves significant judgment of the Management, we have identifiedimpairment of goodwill as a key audit matter.
2. Responsive audit procedures
Our main audit procedures for impairment of goodwill are as follows:
(1) We obtained understandings of key internal controls related to impairment of goodwill, assessed the design of these controls,determined whether they had been executed, and tested the effectiveness of their operation;
(2) We reviewed the present value of future cash flows estimated by the Management in previous years and the actual operating results,and assessed the accuracy of the Management’s historical estimations;
(3) We obtained understandings of and assessed the competency, professional quality and objectivity of external appraisers engaged bythe Management;
(4) We assessed the reasonableness and consistency of impairment test method adopted by the Management;
(5) We assessed the reasonableness of key assumptions used in impairment test and reviewed whether relevant assumptions wereconsistent with overall economy environment, industry condition, operating situation, historical experience, operation plan, approved budget,and other assumptions related to the financial statements used by the Management;
(6) We tested the accuracy, completeness and relativity of data used in the impairment test and reviewed the internal consistency ofrelated information in the impairment test;
(7) We tested whether the calculation of estimated present value of future cash flows was accurate;
(8) We checked whether information related to impairment of goodwill had been presented appropriately in the financial statements.
IV. Other Information
The Management is responsible for other information. The other information comprises the information included in the annual report, butdoes not include the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, considerwhether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwiseappears to be materially misstated.If, based on the work we have performed, we conclude that there is any material misstatement of other information, we are required toreport that fact. We have nothing to report in this regard.
V. Responsibilities of the Management and Those Charged with Governance for the Financial Statements
The Management is responsible for preparing and presenting fairly the financial statements in accordance with China AccountingStandards for Business Enterprises(“CASBEs”), as well as designing, implementing and maintaining internal control relevant to the preparationof financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Management is responsible for assessing Dongshan Precision’s ability to continue as a goingconcern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Managementeither intends to liquidate Dongshan Precision or to cease operations, or have no realistic alternative but to do so.
Those charged with governance of Dongshan Precision (hereinafter referred to as “those charged with governance”) are responsible foroverseeing Dongshan Precision’s financial reporting process.
VI. Certified Public Accountant’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but isnot a guarantee that an audit conducted in accordance with China Standards on Auditing will always detect a material misstatement when itexists. Misstatement can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably beexpected to influence the economic decisions of users taken on the basis of these financial statements.
We exercise professional judgment and maintain professional skepticism throughout the audit performed in accordance with ChinaStandards on Auditing. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and performaudit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,intentional omissions, misrepresentations, or the override of internal control.
(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose to express opinions on the effectiveness of internal control.
(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures madeby the Management.
(IV) Conclude on the appropriateness of the Management’s use of the going concern basis of accounting and, based on the audit evidenceobtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Dongshan Precision’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause Dongshan Precision to cease tocontinue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities withinDongshan Precision to express an opinion on the financial statements. We are responsible for the direction, supervision, and performance of thegroup audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding the planned audit scope, time schedule and significant audit findings,including any deficiencies in internal control of concern that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.From the matters communicated with those charged with governance, we determine those matters that were of most significance in theaudit of the financial statements for the current period and are therefore key audit matters. We describe these matters in our auditor’s reportunless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a mattershould not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Pan-China Certified Public Accountants LLP Chinese Certified Public Accountant: SUN Tao(Engagement Partner)
Hangzhou·China Chinese Certified Public Accountant: HUANG ZhenshuangApril 19, 2022
II. Financial Statements
Consolidated balance sheet as at December 31, 2021
Unit: RMB
| Items | Closing balance | Opening balance |
| Current assets： | ||
| Cash and bank balances | 5,400,837,392.47 | 5,154,010,538.74 |
| Held-for-trading financial assets | 499,528,549.86 | 1,262,027,561.65 |
| Notes receivable | 14,624,540.85 | 70,758,949.85 |
| Accounts receivable | 7,666,079,765.82 | 7,090,498,632.70 |
| Receivables financing | 828,355,016.30 | 750,470,779.44 |
| Payment in advance | 186,095,112.93 | 195,402,953.35 |
| Other receivables | 37,505,521.59 | 567,026,166.56 |
| Inventories | 6,451,712,389.82 | 5,977,123,863.84 |
| Other current assets | 646,070,013.64 | 790,354,229.77 |
| Total current assets | 21,730,808,303.28 | 21,857,673,675.90 |
| Non-current assets: | ||
| Long-term receivables | 69,950,000.88 | 105,950,000.00 |
| Long-term equity investments | 143,121,019.78 | 101,207,887.93 |
| Other equity instrument investments | 171,322,110.00 | 64,889,404.30 |
| Investment property | 1,554,262.58 | |
| Fixed assets | 10,736,270,678.33 | 11,225,101,992.17 |
| Construction in progress | 503,037,513.25 | 562,008,491.36 |
| Right-of-use assets | 920,952,667.75 | |
| Intangible assets | 297,383,991.47 | 355,484,167.00 |
| Goodwill | 2,211,722,774.04 | 2,220,590,908.21 |
| Long-term deferred expenses | 343,067,848.10 | 324,048,122.31 |
| Deferred tax assets | 535,920,683.59 | 558,419,834.12 |
| Other non-current assets | 286,296,934.20 | 127,694,230.24 |
| Total non-current assets | 16,220,600,483.97 | 15,645,395,037.64 |
| Total assets | 37,951,408,787.25 | 37,503,068,713.54 |
| Current liabilities: | ||
| Short-term borrowings | 8,047,168,009.16 | 8,579,155,068.19 |
| Held-for-trading financial liabilities | 881,721.20 | |
| Notes payable | 1,646,644,107.17 | 1,767,940,549.75 |
| Accounts payable | 6,729,890,126.00 | 7,443,237,912.72 |
| Contract liabilities | 39,681,986.94 | 21,204,655.32 |
| Employee benefits payable | 503,138,722.06 | 381,434,530.09 |
| Taxes and rates payable | 151,692,543.85 | 160,212,704.05 |
| Other payables | 323,166,075.34 | 59,939,206.62 |
| Non-current liabilities due within one year | 1,490,545,864.93 | 964,563,666.84 |
| Other current liabilities | 2,440,030.34 | 865,474.44 |
| Total current liabilities | 18,934,367,465.79 | 19,379,435,489.22 |
| Non-current liabilities: | ||
| Long-term borrowings | 2,030,525,761.80 | 2,764,720,894.68 |
| Lease liabilities | 1,147,810,164.72 | |
| Long-term payables | 78,927,000.98 | 1,200,752,321.09 |
| Provisions | 89,442,831.13 | 35,719,550.76 |
| Deferred income | 685,633,680.65 | 648,248,649.02 |
| Deferred tax liabilities | 314,359,343.00 | 299,223,880.52 |
| Other non-current liabilities | ||
| Total non-current liabilities | 4,346,698,782.28 | 4,948,665,296.07 |
| Total liabilities | 23,281,066,248.07 | 24,328,100,785.29 |
| Equity: | ||
| Share capital | 1,709,867,327.00 | 1,709,867,327.00 |
| Capital reserve | 8,099,524,872.90 | 8,136,879,413.39 |
| Less: Treasury shares | 100,479,794.32 | |
| Other comprehensive income | -519,626,066.21 | -451,615,637.76 |
| Surplus reserve | 111,698,315.15 | 75,205,377.40 |
| Undistributed profit | 5,275,515,670.63 | 3,598,580,392.76 |
| Total equity attributable to the parent company | 14,576,500,325.15 | 13,068,916,872.79 |
| Non-controlling interest | 93,842,214.03 | 106,051,055.46 |
| Total equity | 14,670,342,539.18 | 13,174,967,928.25 |
| Total liabilities & equity | 37,951,408,787.25 | 37,503,068,713.54 |
Legal representative: Yuan Yonggang Office in charge of accounting: Wang Xu Head of accounting department:：Zhu Deguang
Parent company balance sheet as at December 31, 2021
Unit: RMB
| Items | Closing balance | Opening balance |
| Current assets: | ||
| Cash and bank balances | 1,320,945,743.89 | 1,293,611,181.02 |
| Held-for-trading financial assets | 12,875,960.00 | 179,977,128.89 |
| Notes receivable | 31,632,433.51 | 52,820,740.92 |
| Accounts receivable | 2,751,126,772.11 | 2,065,260,003.35 |
| Receivables financing | 552,882,532.72 | 1,299,814,805.31 |
| Payment in advance | 115,749,043.07 | 65,943,156.29 |
| Other receivables | 3,408,234,419.21 | 5,195,393,439.65 |
| Including: Interest receivable | ||
| Dividends receivable | 581,000,000.00 | 354,000,000.00 |
| Inventories | 697,310,419.09 | 706,079,830.35 |
| Other current assets | 44,816,583.10 | 51,762,882.90 |
| Total current assets | 8,935,573,906.70 | 10,910,663,168.68 |
| Non-current assets: | ||
| Long-term receivables | 55,000,000.88 | 81,000,000.00 |
| Long-term equity investments | 7,096,642,244.53 | 6,260,723,998.11 |
| Other equity instrument investments | 171,322,110.00 | 21,322,110.00 |
| Fixed assets | 1,180,664,110.78 | 1,325,537,475.58 |
| Construction in progress | 119,752,899.75 | 79,816,940.03 |
| Right-of-use assets | 8,479,902.43 | |
| Intangible assets | 63,720,204.68 | 65,707,338.87 |
| Long-term deferred expenses | 97,651,794.61 | 29,220,093.04 |
| Deferred tax assets | 161,821,257.17 | 137,154,643.56 |
| Other non-current assets | 41,372,547.26 | 49,306,454.73 |
| Total non-current assets | 8,996,427,072.09 | 8,049,789,053.92 |
| Total assets | 17,932,000,978.79 | 18,960,452,222.60 |
| Current liabilities: | ||
| Short-term borrowings | 3,523,782,504.56 | 3,191,844,609.44 |
| Notes payable | 1,500,663,176.84 | 2,519,127,432.91 |
| Accounts payable | 930,354,491.13 | 1,480,836,972.32 |
| Contract liabilities | 184,899,206.27 | 6,935,179.16 |
| Employee benefits payable | 27,858,029.13 | 39,680,685.65 |
| Taxes and rates payable | 3,879,187.43 | 1,953,916.69 |
| Other payables | 1,472,895,655.79 | 1,511,253,113.37 |
| Non-current liabilities due within one year | 152,150,642.66 | 251,062,315.15 |
| Other current liabilities | 704,759.12 | |
| Total current liabilities | 7,796,482,893.81 | 9,003,398,983.81 |
| Non-current liabilities: | ||
| Long-term borrowings | 334,960,336.11 | 240,466,300.00 |
| Lease liabilities | 6,774,436.43 | |
| Long-term payables | 78,927,000.98 | 95,690,893.64 |
| Provisions | 1,935,062.28 | 654,354.68 |
| Deferred income | 25,653,396.00 | 27,284,932.00 |
| Deferred tax liabilities | 2,178,114.46 | 1,329,870.22 |
| Total non-current liabilities | 450,428,346.26 | 365,426,350.54 |
| Total liabilities | 8,246,911,240.07 | 9,368,825,334.35 |
| Equity: | ||
| Share capital | 1,709,867,327.00 | 1,709,867,327.00 |
| Capital reserve | 7,961,185,289.83 | 7,961,185,289.83 |
| Less: Treasury shares | 100,479,794.32 | |
| Other comprehensive income | -350,000,000.00 | -350,000,000.00 |
| Surplus reserve | 111,698,315.15 | 75,205,377.40 |
| Undistributed profit | 352,818,601.06 | 195,368,894.02 |
| Total equity | 9,685,089,738.72 | 9,591,626,888.25 |
| Total liabilities & equity | 17,932,000,978.79 | 18,960,452,222.60 |
Consolidated income statement for the year ended December 31, 2021
Unit：RMB
| Items | Current period cumulative | Preceding period comparative |
| I. Total operating revenue | 31,793,147,908.12 | 28,093,409,430.26 |
| Including: Operating revenue | 31,793,147,908.12 | 28,093,409,430.26 |
| II. Total operating cost | 29,789,694,099.52 | 26,323,802,819.86 |
| Including: Operating cost | 27,128,550,627.93 | 23,680,291,509.77 |
| Taxes and surcharges | 73,160,213.97 | 87,488,000.10 |
| Selling expenses | 341,087,646.41 | 329,180,346.50 |
| Administrative expenses | 781,664,730.36 | 686,479,003.08 |
| R&D expenses | 1,028,567,206.95 | 910,253,381.44 |
| Financial expenses | 436,663,673.90 | 630,110,578.97 |
| Including: Interest expenses | 371,339,473.57 | 562,315,180.30 |
| Interest income | 62,819,318.55 | 87,524,003.63 |
| Add: Other income | 269,467,593.24 | 202,345,395.03 |
| Investment income (or less: losses) | 41,578,291.23 | 18,878,418.25 |
| Including: Investment income from associates and joint ventures | -7,515,648.15 | 6,412,017.44 |
| Gains on changes in fair value (or less: losses) | 8,645,469.99 | 13,233,451.39 |
| Credit impairment loss | -7,992,105.91 | -142,200,047.48 |
| Assets impairment loss | -187,376,720.10 | -84,916,564.37 |
| Gains on asset disposal (or less: losses) | -14,060,145.96 | 21,382,265.54 |
| III. Operating profit (or less: losses) | 2,113,716,191.09 | 1,798,329,528.76 |
| Add: Non-operating revenue | 3,112,802.79 | 13,465,190.82 |
| Less: Non-operating expenditures | 6,006,471.39 | 25,469,372.36 |
| IV. Profit before tax (or less: total loss) | 2,110,822,522.49 | 1,786,325,347.22 |
| Less: Income tax | 249,922,824.36 | 249,138,163.22 |
| V. Net profit (or less: net loss) | 1,860,899,698.13 | 1,537,187,184.00 |
| (I) Categorized by the continuity of operations | ||
| 1. Net profit from continuing operations (or less: net loss) | 1,860,899,698.13 | 1,537,187,184.00 |
| 2. Net profit from discontinued operations (or less: net loss) | ||
| (II) Categorized by the portion of equity ownership | ||
| 1. Net profit attributable to owners of parent company (or less: net loss) | 1,862,481,138.84 | 1,530,132,196.09 |
| 2. Net profit attributable to non-controlling shareholders (or less: net loss) | -1,581,440.71 | 7,054,987.91 |
| VI. Other comprehensive income after tax | -46,074,281.99 | 89,653,243.55 |
| Items attributable to the owners of the parent company | -46,074,281.99 | 89,653,243.55 |
| (I) Not to be reclassified subsequently to profit or loss | 21,936,146.46 | |
| 1. Changes in remeasurement on the net defined benefit plan | ||
| 2. Items under equity method that will not be reclassified to profit or loss | ||
| 3. Changes in fair value of other equity instrument investments | 21,936,146.46 | |
| (II) To be reclassified subsequently to profit or loss | -46,074,281.99 | 67,717,097.09 |
| 1. Items under equity method that may be reclassified to profit or loss | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Profit or loss from reclassification of financial assets into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedging reserve | 4,646,609.02 | 50,109,339.97 |
| 6. Translation reserve | -50,720,891.01 | 17,607,757.12 |
| Items attributable to non-controlling shareholders | ||
| VII. Total comprehensive income | 1,814,825,416.14 | 1,626,840,427.55 |
| Items attributable to the owners of the parent company | 1,816,406,856.85 | 1,619,785,439.64 |
| Items attributable to non-controlling shareholders | -1,581,440.71 | 7,054,987.91 |
| VIII. Earnings per share (EPS): | ||
| (I) Basic EPS (yuan per share) | 1.09 | 0.93 |
| (II) Diluted EPS (yuan per share) | 1.09 | 0.93 |
Legal representative: Yuan Yonggang Office in charge of accounting: Wang Xu Head of accounting department:：Zhu Deguang
Parent company income statement for the year ended December 31, 2021
Unit：RMB
| Items | Current period cumulative | Preceding period comparative |
| I. Operating revenue | 4,244,074,740.42 | 4,176,303,767.88 |
| Less: Operating cost | 3,883,235,776.32 | 3,527,999,329.09 |
| Taxes and surcharges | 19,465,458.59 | 21,067,498.22 |
| Selling expenses | 38,690,956.59 | 67,368,855.84 |
| Administrative expenses | 324,739,564.30 | 277,058,369.13 |
| R&D expenses | 43,692,074.72 | 59,701,745.21 |
| Financial expenses | 190,892,392.23 | 328,740,785.58 |
| Including: Interest expenses | 232,182,345.26 | 237,028,665.44 |
| Interest income | 80,410,545.58 | 34,008,241.90 |
| Add: Other income | 15,687,436.18 | 13,049,853.51 |
| Investment income (or less: losses) | 562,696,915.32 | 363,631,155.33 |
| Including: Investment income from associates and joint ventures | -7,099,445.94 | 6,412,017.44 |
| Gains on changes in fair value (or less: losses) | 7,766,360.00 | 8,309,600.00 |
| Credit impairment loss | 40,737,910.06 | -90,728,600.17 |
| Assets impairment loss | -29,305,690.70 | |
| Gains on asset disposal (or less: losses) | 236,751.46 | -3,926,734.10 |
| II. Operating profit (or less: losses) | 341,178,199.99 | 184,702,459.38 |
| Add: Non-operating revenue | 1,322,195.03 | 12,000,000.00 |
| Less: Non-operating expenditures | 1,389,386.90 | 5,782,225.10 |
| III. Profit before tax (or less: total loss) | 341,111,008.12 | 190,920,234.28 |
| Less: Income tax | -23,818,369.37 | -15,855,385.56 |
| IV. Net profit (or less: net loss) | 364,929,377.49 | 206,775,619.84 |
| (I) Net profit from continuing operations (or less: net loss) | 364,929,377.49 | 206,775,619.84 |
| (II) Net profit from discontinued operations (or less: net loss) | ||
| V. Other comprehensive income after tax | ||
| VI. Total comprehensive income | 364,929,377.49 | 206,775,619.84 |
Consolidated cash flow statement for the year ended December 31, 2021
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| I. Cash flows from operating activities: | ||
| Cash receipts from sale of goods or rendering of services | 29,815,812,937.85 | 26,873,781,591.53 |
| Receipts of tax refund | 1,243,753,661.97 | 1,016,052,066.14 |
| Other cash receipts related to operating activities | 512,083,240.76 | 1,017,818,722.94 |
| Subtotal of cash inflows from operating activities | 31,571,649,840.58 | 28,907,652,380.61 |
| Cash payments for goods purchased and services received | 23,091,788,130.30 | 21,167,542,452.52 |
| Cash paid to and on behalf of employees | 4,026,453,550.20 | 3,577,192,069.71 |
| Cash payments for taxes and rates | 519,261,401.11 | 419,793,256.48 |
| Other cash payments related to operating activities | 724,602,274.76 | 810,955,707.25 |
| Subtotal of cash outflows from operating activities | 28,362,105,356.37 | 25,975,483,485.96 |
| Net cash flows from operating activities | 3,209,544,484.21 | 2,932,168,894.65 |
| II. Cash flows from investing activities:： | ||
| Cash receipts from withdrawal of investments | 1,221,008,889.75 | 8,500,000.00 |
| Cash receipts from investment income | 21,034,758.46 | 19,360,758.39 |
| Net cash receipts from the disposal of fixed assets, intangible assets and other long-term assets | 14,867,642.54 | 132,109,214.21 |
| Net cash receipts from the disposal of subsidiaries & other business units | 29,581,735.55 | |
| Other cash receipts related to investing activities | 614,294,406.73 | 340,408,535.48 |
| Subtotal of cash inflows from investing activities | 1,871,205,697.48 | 529,960,243.63 |
| Cash payments for the acquisition of fixed assets, intangible assets and other long-term assets | 3,049,208,456.95 | 2,390,718,571.68 |
| Cash payments for investments | 849,056,781.87 | 1,237,188,776.62 |
| Other cash payments related to investing activities | 1,288.94 | |
| Subtotal of cash outflows from investing activities | 3,898,266,527.76 | 3,627,907,348.30 |
| Net cash flows from investing activities | -2,027,060,830.28 | -3,097,947,104.67 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | 17,800,000.00 | 2,935,855,800.00 |
| Including: Cash received by subsidiaries from non-controlling shareholders as investments | 17,800,000.00 | 67,100,000.00 |
| Cash receipts from borrowings | 9,629,498,697.60 | 13,141,749,676.63 |
| Other cash receipts related to financing activities | 3,921,528,258.50 | 5,310,681,482.11 |
| Subtotal of cash inflows from financing activities | 13,568,826,956.10 | 21,388,286,958.74 |
| Cash payments for the repayment of borrowings | 8,348,766,123.52 | 13,709,859,928.08 |
| Cash payments for distribution of dividends or profits and for interest expenses | 456,920,317.80 | 575,776,591.34 |
| Other cash payments related to financing activities | 4,856,990,811.10 | 5,999,002,986.97 |
| Subtotal of cash outflows from financing activities | 13,662,677,252.42 | 20,284,639,506.39 |
| Net cash flows from financing activities | -93,850,296.32 | 1,103,647,452.35 |
| IV. Effect of foreign exchange rate changes on cash & cash equivalents | -22,467,316.29 | -11,595,027.58 |
| V. Net increase in cash and cash equivalents | 1,066,166,041.32 | 926,274,214.75 |
| Add: Opening balance of cash and cash equivalents | 2,873,135,085.47 | 1,946,860,870.72 |
| VI. Closing balance of cash and cash equivalents | 3,939,301,126.79 | 2,873,135,085.47 |
Parent company cash flow statement for the year ended December 31, 2021
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| I. Cash flows from operating activities: | ||
| Cash receipts from sale of goods and rendering of services | 3,363,805,354.17 | 4,100,442,519.83 |
| Receipts of tax refund | 134,161,286.35 | 112,809,807.52 |
| Other cash receipts related to operating activities | 3,081,500,098.60 | 1,225,133,552.27 |
| Subtotal of cash inflows from operating activities | 6,579,466,739.12 | 5,438,385,879.62 |
| Cash payments for goods purchased and services received | 4,090,981,643.21 | 4,419,569,654.69 |
| Cash paid to and on behalf of employees | 398,660,527.63 | 364,350,627.14 |
| Cash payments for taxes and rates | 33,744,370.30 | 61,601,122.75 |
| Other cash payments related to operating activities | 592,980,732.05 | 1,871,683,692.06 |
| Subtotal of cash outflows from operating activities | 5,116,367,273.19 | 6,717,205,096.64 |
| Net cash flows from operating activities | 1,463,099,465.93 | -1,278,819,217.02 |
| II. Cash flows from investing activities: | ||
| Cash receipts from withdrawal of investments | 252,000,000.00 | 142,000,000.00 |
| Cash receipts from investment income | 356,296,361.26 | 245,342,322.01 |
| Net cash receipts from the disposal of fixed assets, intangible assets and other long-term assets | 31,699,821.28 | 447,367,880.73 |
| Other cash receipts related to investing activities | 50,000,000.00 | 3,800,640.02 |
| Subtotal of cash inflows from investing activities | 689,996,182.54 | 838,510,842.76 |
| Cash payments for the acquisition of fixed assets, intangible assets and other long-term assets | 233,002,384.33 | 465,792,578.28 |
| Cash payments for investments | 1,086,517,692.36 | 608,035,700.00 |
| Subtotal of cash outflows from investing activities | 1,319,520,076.69 | 1,073,828,278.28 |
| Net cash flows from investing activities | -629,523,894.15 | -235,317,435.52 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | 2,868,755,800.00 | |
| Cash receipts from borrowings | 3,991,741,102.36 | 5,396,272,516.90 |
| Other cash receipts related to financing activities | 172,300,000.00 | |
| Subtotal of cash inflows from financing activities | 3,991,741,102.36 | 8,437,328,316.90 |
| Cash payments for the repayment of borrowings | 3,495,543,277.60 | 6,227,823,977.88 |
| Cash payments for distribution of dividends or profits and for interest expenses | 396,644,933.48 | 298,599,474.73 |
| Other cash payments related to financing activities | 274,156,177.46 | 384,413,186.37 |
| Subtotal of cash outflows from financing activities | 4,166,344,388.54 | 6,910,836,638.98 |
| Net cash flows from financing activities | -174,603,286.18 | 1,526,491,677.92 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | -1,751,977.28 | -10,446,914.88 |
| V. Net increase in cash and cash equivalents | 657,220,308.32 | 1,908,110.50 |
| Add: Opening balance of cash and cash equivalents | 273,162,856.89 | 271,254,746.39 |
| VI. Closing balance of cash and cash equivalents | 930,383,165.21 | 273,162,856.89 |
Consolidated statement of changes in equity for the year ended December 31, 2021
Unit: RMB
| Items | Current period cumulative | ||||||||
| Equity attributable to parent company | Non-controlling interest | Total equity | |||||||
| Share capital | Capital reserve | Less: Treasury shares | Other comprehensive income | Surplus reserve | Undistributed profit | Subtotal | |||
| I. Balance at the end of prior year | 1,709,867,327.00 | 8,136,879,413.39 | -451,615,637.76 | 75,205,377.40 | 3,598,580,392.76 | 13,068,916,872.79 | 106,051,055.46 | 13,174,967,928.25 | |
| II. Balance at the beginning of current year | 1,709,867,327.00 | 8,136,879,413.39 | -451,615,637.76 | 75,205,377.40 | 3,598,580,392.76 | 13,068,916,872.79 | 106,051,055.46 | 13,174,967,928.25 | |
| III. Current period increase (or less: decrease) | -37,354,540.49 | 100,479,794.32 | -68,010,428.45 | 36,492,937.75 | 1,676,935,277.87 | 1,507,583,452.36 | -12,208,841.43 | 1,495,374,610.93 | |
| (I) Total comprehensive income | -46,074,281.99 | 1,862,481,138.84 | 1,816,406,856.85 | -1,581,440.71 | 1,814,825,416.14 | ||||
| (II) Capital contributed or withdrawn by owners | -37,354,540.49 | 100,479,794.32 | -2,336.98 | -137,836,671.79 | -10,602,369.68 | -148,439,041.47 | |||
| 1. Ordinary shares contributed by owners | 17,800,000.00 | 17,800,000.00 | |||||||
| 2. Others | -37,354,540.49 | 100,479,794.32 | -2,336.98 | -137,836,671.79 | -28,402,369.68 | -166,239,041.47 | |||
| (III) Profit distribution | 36,492,937.75 | -207,479,670.45 | -170,986,732.70 | -25,031.04 | -171,011,763.74 | ||||
| 1. Appropriation of surplus reserve | 36,492,937.75 | -36,492,937.75 | |||||||
| 3. Appropriation of profit to owners | -170,986,732.70 | -170,986,732.70 | -25,031.04 | -171,011,763.74 | |||||
| (IV) Internal carry-over within equity | -21,936,146.46 | 21,936,146.46 | |||||||
| 1. Other comprehensive income carried over to retained earnings | -21,936,146.46 | 21,936,146.46 | |||||||
| IV. Balance at the end of current period | 1,709,867,327.00 | 8,099,524,872.90 | 100,479,794.32 | -519,626,066.21 | 111,698,315.15 | 5,275,515,670.63 | 14,576,500,325.15 | 93,842,214.03 | 14,670,342,539.18 |
Unit: RMB
| Items | Preceding period comparative | |||||||
| Equity attributable to parent company | Non-controlling interest | Total equity | ||||||
| Share capital | Capital reserve | Other comprehensive income | Surplus reserve | Undistributed profit | Subtotal | |||
| I. Balance at the end of prior year | 1,606,572,477.00 | 5,356,838,750.59 | -541,268,881.31 | 54,527,815.42 | 2,169,454,382.50 | 8,646,124,544.20 | 51,277,667.14 | 8,697,402,211.34 |
| II. Balance at the beginning of current year | 1,606,572,477.00 | 5,356,838,750.59 | -541,268,881.31 | 54,527,815.42 | 2,169,454,382.50 | 8,646,124,544.20 | 51,277,667.14 | 8,697,402,211.34 |
| III. Current period increase (or less: decrease) | 103,294,850.00 | 2,780,040,662.80 | 89,653,243.55 | 20,677,561.98 | 1,429,126,010.26 | 4,422,792,328.59 | 54,773,388.32 | 4,477,565,716.91 |
| (I) Total comprehensive income | 89,653,243.55 | 1,530,132,196.09 | 1,619,785,439.64 | 7,054,987.91 | 1,626,840,427.55 | |||
| (II) Capital contributed or withdrawn by owners | 103,294,850.00 | 2,780,040,662.80 | 2,883,335,512.80 | 47,718,400.41 | 2,931,053,913.21 | |||
| 1. Ordinary shares contributed by owners | 103,294,850.00 | 2,760,659,063.21 | 2,863,953,913.21 | 67,100,000.00 | 2,931,053,913.21 | |||
| 2. Others | 19,381,599.59 | 19,381,599.59 | -19,381,599.59 | |||||
| (III) Profit distribution | 20,677,561.98 | -101,006,185.83 | -80,328,623.85 | -80,328,623.85 | ||||
| 1. Appropriation of surplus reserve | 20,677,561.98 | -20,677,561.98 | ||||||
| 2. Appropriation of profit to owners | -80,328,623.85 | -80,328,623.85 | -80,328,623.85 | |||||
| IV. Balance at the end of current period | 1,709,867,327.00 | 8,136,879,413.39 | -451,615,637.76 | 75,205,377.40 | 3,598,580,392.76 | 13,068,916,872.79 | 106,051,055.46 | 13,174,967,928.25 |
Parent company statement of changes in equity for the year ended December 31, 2021
Unit：RMB
| Items | Current period cumulative | ||||||
| Share capital | Capital reserve | Less: Treasury shares | Other comprehensive income | Surplus reserve | Undistributed profit | Total equity | |
| I. Balance at the end of prior year | 1,709,867,327.00 | 7,961,185,289.83 | -350,000,000.00 | 75,205,377.40 | 195,368,894.02 | 9,591,626,888.25 | |
| II. Balance at the beginning of current year | 1,709,867,327.00 | 7,961,185,289.83 | -350,000,000.00 | 75,205,377.40 | 195,368,894.02 | 9,591,626,888.25 | |
| III. Current period increase (or less: decrease) | 100,479,794.32 | 36,492,937.75 | 157,449,707.04 | 93,462,850.47 | |||
| (I) Total comprehensive income | 364,929,377.49 | 364,929,377.49 | |||||
| (II) Capital contributed or withdrawn by owners | 100,479,794.32 | -100,479,794.32 | |||||
| 1. Ordinary shares contributed by owners | 100,479,794.32 | -100,479,794.32 | |||||
| (III) Profit distribution | 36,492,937.75 | -207,479,670.45 | -170,986,732.70 | ||||
| 1. Appropriation of surplus reserve | 36,492,937.75 | -36,492,937.75 | |||||
| 2. Appropriation of profit to owners | -170,986,732.70 | -170,986,732.70 | |||||
| IV. Balance at the end of current period | 1,709,867,327.00 | 7,961,185,289.83 | 100,479,794.32 | -350,000,000.00 | 111,698,315.15 | 352,818,601.06 | 9,685,089,738.72 |
Unit：RMB
| Items | Preceding period comparative | |||||
| Share capital | Capital reserve | Other comprehensive income | Surplus reserve | Undistributed profit | Total equity | |
| I. Balance at the end of prior year | 1,606,572,477.00 | 5,200,526,226.62 | -350,000,000.00 | 54,527,815.42 | 89,599,460.01 | 6,601,225,979.05 |
| II. Balance at the beginning of current year | 1,606,572,477.00 | 5,200,526,226.62 | -350,000,000.00 | 54,527,815.42 | 89,599,460.01 | 6,601,225,979.05 |
| III. Current period increase (or less: decrease) | 103,294,850.00 | 2,760,659,063.21 | 20,677,561.98 | 105,769,434.01 | 2,990,400,909.20 | |
| (I) Total comprehensive income | 206,775,619.84 | 206,775,619.84 | ||||
| (II) Capital contributed or withdrawn by owners | 103,294,850.00 | 2,760,659,063.21 | 2,863,953,913.21 | |||
| 1. Ordinary shares contributed by owners | 103,294,850.00 | 2,760,659,063.21 | 2,863,953,913.21 | |||
| (III) Profit distribution | 20,677,561.98 | -101,006,185.83 | -80,328,623.85 | |||
| 1. Appropriation of surplus reserve | 20,677,561.98 | -20,677,561.98 | ||||
| 2. Appropriation of profit to owners | -80,328,623.85 | -80,328,623.85 | ||||
| IV. Balance at the end of current period | 1,709,867,327.00 | 7,961,185,289.83 | -350,000,000.00 | 75,205,377.40 | 195,368,894.02 | 9,591,626,888.25 |
III. Company Profile
Suzhou Dongshan Precision Manufacturing Co., Ltd. (“Company” or “the Company”) is a joint stock company withlimited liability converted from Suzhou Dong Shan Sheet Metal Co., Ltd. which was registered at the Administrationfor Industry and Commerce of Wuxian City on October 28, 1998 and converted into the Company on the benchmarkdate of September 30, 2007. The Company, headquartered in Suzhou City, Jiangsu Province, was registered at theAdministration for Industry and Commerce of Suzhou City, Jiangsu Province on December 24, 2007, with a businesslicense with unified social credit code of 91320500703719732P and a registered capital of RMB1,709,867,327.00 atpresent. The Company has held 1,709,867,327 shares (each with par value of RMB 1) in total, of which, 319,591,987shares are restricted outstanding A shares, and 1,390,275,340 shares are unrestricted outstanding A shares. TheCompany’s shares were listed at the Shenzhen Stock Exchange on April 9, 2010.The Company belongs to the manufacturing industry relating to computer, communication and other electronicequipment, and is mainly engaged in providing core devices for intelligent interconnection and interoperability. TheCompany’s key products include PCBs, LED display devices, Touch panels and LCMs and precision components.The financial statements were approved and authorized for issue by the 20nd meeting of the 5th session of the Board ofDirectors dated April 19, 2022.Sixty-four subsidiaries and sub-subsidiaries have been incorporated in the scope of the consolidated financial statementsby the end of the Reporting Period, such as Multi-Fineline Electronix Inc.(“MFLEX”), Multek Group (Hong Kong)Limited(“Multek”) and Yancheng Dongshan Precision Manufacturing Co., Ltd. Please refer to Note VIII and IX to thefinancial statements for details.IV. Preparation Basis of the Financial Statements
1. Preparation basis
The financial statements have been prepared on the basis of going concern.
2. Going concern
The Company has no events or conditions that may cast significant doubts upon the Company’s ability to continue as agoing concern within the 12 months after the end of the reporting period.V. Significant accounting policies and estimatesImportant note:
The Company has set up accounting policies and estimates on transactions or events such as impairment of financialinstruments, depreciation of fixed assets, depreciation of right-of-use assets, amortization of intangible assets, revenuerecognition, etc., based on the Company’s actual production and operation features.
1. Statement of compliance
The financial statements have been prepared in accordance with the requirements of China Accounting Standards forBusiness Enterprises (CASBEs), and present truly and completely the financial position, results of operations and cashflows of the Company.
2. Accounting period
The accounting year of the Company runs from January 1 to December 31 under the Gregorian calendar.
3. Operating cycle
The Company has a relatively short operating cycle for its business, an asset or a liability is classified as current if it isexpected to be realized or due within 12 months.
4. Functional currency
The functional currency of the Company is RMB Yuan, while MFLEX takes US Dollar as its functional currency.Subsidiaries of MFLEX, Multek as well as other subsidiaries engaged in overseas operations take the currency of theprimary economic environment in which they operate as their functional currency.
5. Accounting treatments of business combination under and not under common control
(1) Accounting treatment of business combination under common control
Assets and liabilities arising from business combination are measured at carrying amount of the combined partyincluded in the consolidated financial statements of the ultimate controlling party at the combination date. Differencebetween carrying amount of the equity of the combined party included in the consolidated financial statements of theultimate controlling party and that of the combination consideration or total par value of shares issued is adjusted tocapital reserve, if the balance of capital reserve is insufficient to offset, any excess is adjusted to retained earnings.
(2) Accounting treatment of business combination not under common control
When combination cost is in excess of the fair value of identifiable net assets obtained from the acquiree at theacquisition date, the excess is recognized as goodwill; otherwise, the fair value of identifiable assets, liabilities andcontingent liabilities, and the measurement of the combination cost are reviewed, then the difference is recognized inprofit or loss.
6. Compilation method of consolidated financial statements
(1) The parent company brings all its controlled subsidiaries into the consolidation scope. The consolidated financialstatements are compiled by the parent company according to “CASBE 33 – Consolidated Financial Statements”, basedon relevant information and the financial statements of the parent company and its subsidiaries.
(2) Accounting treatments on the subsidiary whose equity is sold after purchase or repurchased after sale within twoconsecutive accounting years
7. Classification of joint arrangements and accounting treatment of joint operations
(1) Joint arrangements include joint operations and joint ventures.
(2) When the Company is a joint operator of a joint operation, it recognizes the following items in relation to its interestin a joint operation:
1) its assets, including its share of any assets held jointly;
2) its liabilities, including its share of any liabilities incurred jointly;
3) its revenue from the sale of its share of the output arising from the joint operation;
4) its share of the revenue from the sale of the assets by the joint operation; and
5) its expenses, including its share of any expenses incurred jointly.
8. Recognition criteria of cash and cash equivalents
Cash as presented in cash flow statement refers to cash on hand and deposit on demand for payment. Cash equivalentsrefer to short-term, highly liquid investments that can be readily converted to known amounts of cash and that aresubject to an insignificant risk of changes in value.
9. Conversion of Transactions and Financial Statements Denominated in Foreign Currencies.
(1) Translation of transactions denominated in foreign currency
Transactions denominated in foreign currency are translated into RMB yuan at the spot exchange rate/the approximateexchange rate similar to the spot exchange rate at the transaction date at initial recognition. At the balance sheet date,monetary items denominated in foreign currency are translated at the spot exchange rate at the balance sheet date withdifference, except for those arising from the principal and interest of exclusive borrowings eligible for capitalization,included in profit or loss; non-cash items carried at historical costs are translated at the spot exchange rate/theapproximate exchange rate similar to the spot exchange rate at the transaction date, with the RMB amounts unchanged;non-cash items carried at fair value in foreign currency are translated at the spot exchange rate at the date when the fairvalue was determined, with difference included in profit or loss or other comprehensive income.
(2) Translation of financial statements measured in foreign currency
The assets and liabilities in the balance sheet are translated into RMB at the spot rate at the balance sheet date; theequity items, other than undistributed profit, are translated at the spot rate at the transaction date; the revenues andexpenses in the income statement are translated into RMB at the spot exchange rate/the approximate exchange ratesimilar to the spot exchange rate at the transaction date. The difference arising from the aforementioned foreigncurrency translation is included in other comprehensive income.
10. Financial instruments
(1) Classification of financial assets and financial liabilities
Financial assets are classified into the following three categories when initially recognized: 1) financial assets atamortized cost; 2) financial assets at fair value through other comprehensive income; 3) financial assets at fair valuethrough profit or loss.
Financial liabilities are classified into the following four categories when initially recognized: 1) financial liabilities atfair value through profit or loss; 2) financial liabilities that arise when a transfer of a financial asset does not qualify forderecognition or when the continuing involvement approach applies; 3) financial guarantee contracts not fall within theabove categories 1) and 2), and commitments to provide a loan at a below-market interest rate, which do not fall withinthe above category 1); 4) financial liabilities at amortized cost.
(2) Recognition criteria, measurement method and derecognition condition of financial assets and financialliabilities
1) Recognition criteria and measurement method of financial assets and financial liabilitiesWhen the Company becomes a party to a financial instrument, it is recognized as a financial asset or financial liability.The financial assets and financial liabilities initially recognized by the Company are measured at fair value; for thefinancial assets and liabilities at fair value through profit or loss, the transaction expenses thereof are directly includedin profit or loss; for other categories of financial assets and financial liabilities, the transaction expenses thereof areincluded into the initially recognized amount. However, at initial recognition, for accounts receivable that do notcontain a significant financing component or in circumstances where the Company does not consider the financingcomponents in contracts within one year, the Company measures the transaction price in accordance with “CASBE 14 –Revenues”.
2) Subsequent measurement of financial assets
①Financial assets measured at amortized cost
The Company measures its financial assets at the amortized costs using effective interest method. Gains or losses onfinancial assets that are measured at amortized cost and are not part of hedging relationships shall be included into profitor loss when the financial assets are derecognized, reclassified, amortized using effective interest method or recognizedwith impairment loss.
②Debt instrument investments at fair value through other comprehensive income
The Company measures its debt instrument investments at fair value. Interests, impairment gains or losses, and gainsand losses on foreign exchange that calculated using effective interest method shall be included into profit or loss, whileother gains or losses are included into other comprehensive income. Accumulated gains or losses that initiallyrecognized as other comprehensive income should be transferred out into profit or loss when the financial assets arederecognized.
③Equity instrument investments at fair value through other comprehensive incomeThe Company measures its equity instrument investments at fair value. Dividends obtained (other than those as part ofinvestment cost recovery) shall be included into profit or loss, while other gains or losses are included into othercomprehensive income. Accumulated gains or losses that initially recognized as other comprehensive income should betransferred out into retained earnings when the financial assets are derecognized.
④Financial assets at fair value through profit or loss
For financial asset at fair value through profit and loss, subsequent measurement will be calculated at fair value. Gainsor losses arising from changes in fair value (including interests and dividends) shall be included into profit or loss,except for financial assets that are part of hedging relationships.
3) Subsequent measurement of financial liabilities
①Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities (including derivativesthat are liabilities) and financial liabilities designated as at fair value through profit or loss. The Company measuressuch kind of liabilities at fair value. The amount of changes in the fair value of the financial liabilities that areattributable to changes in the Company’s own credit risk shall be included into other comprehensive income, unlesssuch treatment would create or enlarge accounting mismatches in profit or loss. Other gains or losses on those financialliabilities (including interests, changes in fair value that are attributable to reasons other than changes in the Company’sown credit risk) shall be included into profit or loss, except for financial liabilities that are part of hedging relationships.Accumulated gains or losses that originally recognized as other comprehensive income should be transferred out intoretained earnings when the financial liabilities are derecognized.
②Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when thecontinuing involvement approach appliesThe Company measures its financial liabilities in accordance with “CASBE 23 – Transfer of Financial Assets”.
③Financial guarantee contracts not fall within the above categories ① and ②, and commitments to provide a loan ata below-market interest rate, which do not fall within the above categoryThe Company measures its financial liabilities at the higher of:
a. the amount of loss allowances in accordance with impairment requirements of financial instruments;b. the amount initially recognized less the amount of accumulated amortization recognized in accordance with “CASBE14 – Revenues”.
④Financial liabilities at amortized cost
The Company measures its financial liabilities at amortized cost using effective interest method. Gains or losses onfinancial liabilities that are measured at amortized cost and are not part of hedging relationships shall be included intoprofit or loss when the financial liabilities are derecognized and amortized using effective interest method.
4) Derecognition of financial assets and financial liabilities
Financial assets are derecognized when:
a. the contractual rights to the cash flows from the financial assets expire; orb. the financial assets have been transferred and the transfer qualifies for derecognition in accordance with “CASBE 23– Transfer of Financial Assets”.Only when the underlying present obligations of a financial liability are relieved totally or partly may the financialliability be derecognized accordingly.
(3) Recognition criteria and measurement method of financial assets transfer
Where the Company has transferred substantially all of the risks and rewards related to the ownership of the financialasset, it derecognizes the financial asset, and any right or liability arising from such transfer is recognized independentlyas an asset or a liability. If it retained substantially all of the risks and rewards related to the ownership of the financialasset, it continues recognizing the financial asset.Where the Company does not transfer or retain substantially all of the risks and rewards related to the ownership of afinancial asset, it is dealt with according to the circumstances as follows respectively:
a. if the Company does not retain its control over the financial asset, it derecognizes the financial asset, and any rightor liability arising from such transfer is recognized independently as an asset or a liability;
b. if the Company retains its control over the financial asset, according to the extent of its continuing involvement in thetransferred financial asset, it recognizes the related financial asset and recognizes the relevant liability accordingly.If the transfer of an entire financial asset satisfies the conditions for derecognition, the difference between the amountsof the following two items is included in profit or loss:
a the carrying amount of the transferred financial asset as of the date of derecognition;b the sum of consideration received from the transfer of the financial asset, and the accumulative amount of the changesof the fair value originally included in other comprehensive income proportionate to the transferred financial asset(financial assets transferred refer to debt instrument investments at fair value through other comprehensive income).If the transfer of financial assets partially satisfies the conditions to derecognition, the entire carrying amount of thetransferred financial assets is, between the portion which is derecognized and the portion which is not, apportionedaccording to their respective relative fair value, and the difference between the amounts of the following two items isincluded into profit or loss:
a the carrying amount of the portion which is derecognized;b the sum of consideration of the portion which is derecognized, and the portion of the accumulative amount of thechanges in the fair value originally included in other comprehensive income which is corresponding to the portionwhich is derecognized (financial assets transferred refer to debt instrument investments at fair value through othercomprehensive income).
(4) Fair value determination method of financial assets and liabilities
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data andinformation are available. The inputs to valuation techniques used to measure fair value are arranged in the followinghierarchy and used accordingly:
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company canaccess at the measurement date.Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability,either directly or indirectly. They include: quoted prices for similar assets or liabilities in active markets; quoted pricesfor identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that areobservable for the asset or liability, for example, interest rates and yield curves observable at commonly quotedintervals; market-corroborated inputs;Level 3 inputs are unobservable inputs for the asset or liability. They include interest rate that is not observable andcannot be corroborated by observable market data at commonly quoted intervals, historical volatility, future cash flowsto be paid to fulfill the disposal obligation assumed in business combination, financial forecast developed using theCompany’s own data, etc.
(5) Impairment of financial instruments
1) Measurement and accounting treatment
The Company, on the basis of expected credit loss, recognizes loss allowances of financial assets at amortized cost, debtinstrument investments at fair value through other comprehensive income, contract assets, leases receivable, loancommitments other than financial liabilities at fair value through profit or loss, financial guarantee contracts not belongto financial liabilities at fair value through profit or loss or financial liabilities that arise when a transfer of a financialasset does not qualify for derecognition or when the continuing involvement approach applies.
Expected credit losses refer to the weighted average of credit losses with the respective risks of a default occurring asthe weights. Credit loss refers to the difference between all contractual cash flows that are due to the Company inaccordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls),discounted at the original effective interest rate. Among which, purchased or originated credit-impaired financial assetsare discounted at the credit-adjusted effective interest rate.At the balance sheet date, the Company shall only recognize the cumulative changes in the lifetime expected creditlosses since initial recognition as a loss allowance for purchased or originated credit-impaired financial assets.For leases receivable, and accounts receivable and contract assets resulting from transactions regulated in “CASBE 14 –Revenues” which do not contain a significant financing component or in circumstances where the Company does notconsider the financing components in contracts within one year, the Company chooses simplified approach to measurethe loss allowance at an amount equal to lifetime expected credit losses.For financial assets other than the above, on each balance sheet date, the Company shall assess whether the credit riskon the financial instrument has increased significantly since initial recognition. The Company shall measure the lossallowance for the financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on thatfinancial instrument has increased significantly since initial recognition; otherwise, the Company shall measure the lossallowance for that financial instrument at an amount equal to 12-month expected credit loss.Considering reasonable and supportable forward-looking information, the Company compares the risk of a defaultoccurring on the financial instrument as at the balance sheet date with the risk of a default occurring on the financialinstrument as at the date of initial recognition, so as to assess whether the credit risk on the financial instrument hasincreased significantly since initial recognition.The Company may assume that the credit risk on a financial instrument has not increased significantly since initialrecognition if the financial instrument is determined to have relatively low credit risk at the balance sheet date.The Company shall estimate expected credit risk and measure expected credit losses on an individual or a collectivebasis. When the Company adopts the collective basis, financial instruments are grouped with similar credit risk features.The Company shall remeasure expected credit loss on each balance sheet date, and increased or reversed amounts ofloss allowance arising therefrom shall be included into profit or loss as impairment losses or gains. For a financial assetmeasured at amortized cost, the loss allowance reduces the carrying amount of such financial asset presented in thebalance sheet; for a debt investment measured at fair value through other comprehensive income, the loss allowanceshall be recognized in other comprehensive income and shall not reduce the carrying amount of such financial asset.
2) Financial instruments with expected credit risk assessed and expected credit losses measured on a collective basis
| Items | Basis for determination of portfolio | Method for measuring expected credit loss |
| Other receivables - Portfolio grouped with aging | Aging | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and 12-month or lifetime expected credit loss rate. |
| Other receivables - Portfolio grouped with related parties within the consolidation scope | Related parties within the consolidation scope |
3) Accounts receivable and contract assets with expected credit losses measured on a collective basisa. Specific portfolios and method for measuring expected credit loss
| Items | Basis for determination of portfolio | Method for measuring expected credit loss |
| Bank acceptance receivable | Type of notes | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and lifetime expected credit loss rate. |
| Trade acceptance receivable |
Accounts receivable - Portfolio groupedwith aging
| Accounts receivable - Portfolio grouped with aging | Aging | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company prepares the comparison table of aging and lifetime expected credit loss rate of accounts receivable, so as to calculate expected credit loss. |
| Accounts receivable - Portfolio grouped with related parties within the consolidation scope | Related parties within the consolidation scope | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and lifetime expected credit loss rate. |
| Long-term receivables - Portfolio grouped with security deposits | Nature of receivables | Based on historical credit loss experience, the current situation and the forecast of future economic conditions, the Company calculates expected credit loss through exposure at default and lifetime expected credit loss rate. |
b Accounts receivable - comparison table of aging and lifetime expected credit loss rate of portfolio grouped with aging
| Aging | Expected credit loss rate (%) |
| Within 6 months(inclusive,the same hereinafter) | 0.5 |
7-12 months
| 7-12 months | 5 |
| 1-2 years | 20 |
| 2-3 years | 60 |
| Over 3 years | 100 |
(6) Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are not offset. However, theCompany offsets a financial asset and a financial liability and presents the net amount in the balance sheet when, andonly when, the Company: currently has a legally enforceable right to set off the recognized amounts, and intends eitherto settle on a net basis, or to realize the asset and settle the liability simultaneously.For a transfer of a financial asset that does not qualify for derecognition, the Company does not offset the transferredasset and the associated liability.
11. Inventories
(1) Classification of inventories
Inventories include finished goods or goods held for sale in the ordinary course of business, work in process in theprocess of production, materials or supplies etc., to be consumed in the production process or in the rendering ofservices.
(2) Accounting method for dispatching inventories
Inventories dispatched from storage are accounted for with weighted average method at the end of each month.
(3) Basis for determining net realizable value
At the balance sheet date, inventories are measured at the lower of cost and net realizable value; provisions forinventory write-down are made on the excess of its cost over the net realizable value. The net realizable value ofinventories held for sale is determined based on the amount of the estimated selling price less the estimated sellingexpenses and relevant taxes and surcharges in the ordinary course of business; the net realizable value of materials to beprocessed is determined based on the amount of the estimated selling price less the estimated costs of completion,selling expenses and relevant taxes and surcharges in the ordinary course of business; at the balance sheet date, whenonly part of the same item of inventories have agreed price, their net realizable value is determined separately and iscompared with their costs to set the provision for inventory write-down to be made or reversed.
(4) Inventory system
Perpetual inventory method is adopted.
(5) Amortization method of low-value consumables and packages
1) Low-value consumables are amortized with one-off method.
2) Packages are amortized with one-off method.
12. Contract Assets
The Company lists contract assets or contract liabilities in the balance sheet according to the relationship between itsperformance obligations and customer payments.The Company shall present the contract assets and contract liabilities under the same contract in net amount afteroffsetting each other.The Company lists the right to receive consideration from customers unconditionally (namely only depending on thepassage of time) as accounts receivable, and the right to receive consideration after transferring goods to customers (theright depends on other factors other than the passage of time) as contract assets.
13. Contract costs
Assets related to contract costs including costs of obtaining a contract and costs to fulfil a contract.The Company recognizes as an asset the incremental costs of obtaining a contract if those costs are expected to berecovered. The costs of obtaining a contract shall be included into profit or loss when incurred if the amortization period
of the asset is one year or less.If the costs incurred in fulfilling a contract are not within the scope of standards related to inventories, fixed assets orintangible assets, etc., the Company shall recognize the costs to fulfil a contract as an asset if all the following criteriaare satisfied:
1. The costs relate directly to a contract or to an anticipated contract, including direct labor, direct materials,manufacturing overhead cost (or similar cost), cost that are explicitly chargeable to the customer under the contract,and other costs that are only related to the contract;
2. The costs enhance resources of the Company that will be used in satisfying performance obligations in the future;and
3. The costs are expected to be recovered.
An asset related to contract costs shall be amortized on a systematic basis that is consistent with related goods orservices, with amortization included into profit or loss.The Company shall make provision for impairment and recognize an impairment loss, to the extent that the carryingamount of an asset related to contract costs exceeds the remaining amount of consideration that the Company expects toreceive in exchange for the goods or services to which the asset relates, less the costs expected to be incurred. TheCompany shall recognize a reversal of an impairment loss previously recognized in profit or loss when the impairmentconditions no longer exist or have improved. The carrying amount of the asset after the reversal shall not exceed theamount that would have been determined on the reversal date if no provision for impairment had been made previously.
14. Long-term equity investments
(1) Judgment of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions aboutthe relevant activities require the unanimous consent of the parties sharing control.Significant influence is the power to participate in the financial and operating policy decisions of the investee but is notcontrol or joint control of these policies.
(2) Determination of investment cost
1) For business combination under common control, if the consideration of the combining party is that it makespayment in cash, transfers non-cash assets, assumes its liabilities or issues equity securities, on the date of combination,it regards the share of the carrying amount of the equity of the combined party included in the consolidated financialstatements of the ultimate controlling party as the initial cost of the investment. The difference between the initial costof the long-term equity investments and the carrying amount of the combination consideration paid or the par value ofshares issued offsets capital reserve; if the balance of capital reserve is insufficient to offset, any excess is adjusted toretained earnings.When long-term equity investments are obtained through business combination under common control achieved instages, the Company determines whether it is a “bundled transaction”. If it is a “bundled transaction”, stages as a wholeare considered as one transaction in accounting treatment. If it is not a “bundled transaction”, on the date ofcombination, investment cost is initially recognized at the share of the carrying amount of net assets of the combinedparty included in the consolidated financial statements of the ultimate controlling party. The difference between the
initial investment cost of long-term equity investments at the acquisition date, and the carrying amount of the previouslyheld long-term equity investments plus the carrying amount of the consideration paid for the newly acquired equity, isadjusted to capital reserve; if the balance of capital reserve is insufficient to offset, any excess is adjusted to retainedearnings.
2) For business combination not under common control, investment cost is initially recognized at the acquisition-datefair value of considerations paid. As for business combinations which involve enterprises not under common controland are carried out in stages, the accounting treatment of stand-alone financial report and consolidated financial reportshall be different:
① In the stand-alone financial report, the initial investment cost, which is accounted for using the newly adopted costmethod, is the sum of carrying value of equity investment originally held and the addition of investment cost.
② In the case of consolidated financial statements, the Company determines whether it is a “bundled transaction”. If itis a “bundled transaction”, stages as a whole are considered as one transaction in accounting treatment. If it is not a“bundled transaction”, the carrying amount of the acquirer’s previously held equity interest in the acquiree isremeasured at the acquisition-date fair value, and the difference between the fair value and the carrying amount isrecognized in investment income; when the acquirer’s previously held equity interest in the acquiree involves othercomprehensive income under equity method, the related other comprehensive income is reclassified as income for theacquisition period, excluding other comprehensive income arising from changes in net liabilities or assets fromremeasurement of defined benefit plan of the acquiree.
3) Long-term equity investments obtained through ways other than business combination: the initial cost of a long-termequity investment that obtained by making payment in cash is the purchase cost which is actually paid; that obtained onthe basis of issuing equity securities is the fair value of the equity securities issued; that obtained through debtrestructuring is determined according to “CASBE 12 – Debt Restructuring”; and that obtained through non-cash assetsexchange is determined according to “CASBE 7 – Non-cash Assets Exchange”.
(3) Subsequent measurement and recognition method of profit or loss
For long-term equity investments with control relationship, it is accounted for with cost method; for long-term equityinvestments with joint control or significant influence relationship, it is accounted for with equity method.
(4) Disposal of a subsidiary in stages resulting in the Company’s loss of control
1) Stand-alone financial statements
The difference between the carrying amount of the disposed equity and the consideration obtained thereof is recognizedin profit or loss. If the disposal does not result in the Company’s loss of significant influence or joint control, theremained equity is accounted for with equity method; however, if the disposal results in the Company’s loss of control,joint control, or significant influence, the remained equity is accounted for according to “CASBE 22 – FinancialInstruments: Recognition and Measurement”.
2) Consolidated financial statements
① Disposal of a subsidiary in stages not qualified as “bundled transaction” resulting in the Company’s loss of controlBefore the Company’s loss of control, the difference between the disposal consideration and the proportionate share ofnet assets in the disposed subsidiary from acquisition date or combination date to the disposal date is adjusted to capitalreserve (capital premium), if the balance of capital reserve is insufficient to offset, any excess is adjusted to retainedearnings. When the Company loses control, the remained equity is remeasured at the loss-of-control-date fair value. Theaggregated value of disposal consideration and the fair value of the remained equity, less the share of net assets in the
disposed subsidiary held before the disposal from the acquisition date or combination date to the disposal date, isrecognized in investment income in the period when the Company loses control over such subsidiary, and meanwhilegoodwill is offset correspondingly. Other comprehensive income related to equity investments in former subsidiary isreclassified as investment income upon the Company’s loss of control.
② Disposal of a subsidiary in stages qualified as “bundled transaction” resulting in the Company’s loss of controlIn case of “bundled transaction”, stages as a whole are considered as one transaction resulting in loss of control inaccounting treatment. However, before the Company loses control, the difference between the disposal consideration ateach stage and the proportionate share of net assets in the disposed subsidiary, is recognized as other comprehensiveincome at the consolidated financial statements, and reclassified as profit or loss in the period when the Company losescontrol over such subsidiary.
15. Investment property
(1) Investment properties include the right to use the leased land, the land held for appreciation and transfer and theleased buildings.
(2) The initial measurement of investment properties is based on its cost, and subsequent measurement is made usingthe cost model. The depreciation or amortization method is the same as that of fixed assets and intangible assets.
16. Fixed assets
(1) Recognition principles of fixed assets
Fixed assets are tangible assets held for use in the production of goods or rendering of services, for rental to others, orfor administrative purposes, and expected to be used during more than one accounting year. Fixed assets are recognizedif, and only if, it is probable that future economic benefits associated with the assets will flow to the Company and thecost of the assets can be measured reliably.
(2) Depreciation method
| Categories | Depreciation method | Useful life (years) | Residual value proportion | Annual depreciation rate |
| Buildings | Straight-line method | 20-30 | 5% | 3.17%-4.75% |
| Machinery and equipment | 5-10 | 5% | 9.50%-19.00% | |
| Motor vehicles | 5 | 5% | 19.00% | |
| Office equipment and others | 5 | 5% | 19.00% |
17. Construction in progress
(1) Construction in progress is recognized if, and only if, it is probable that future economic benefits associated with theitem will flow to the Company, and the cost of the item can be measured reliably. Construction in progress is measuredat the actual cost incurred to reach its designed usable conditions.
(2) Construction in progress is transferred into fixed assets at its actual cost when it reaches the designed usableconditions. When the auditing of the construction in progress was not finished while reaching the designed usableconditions, it is transferred to fixed assets using estimated value first, and then adjusted accordingly when the actual
cost is settled, but the accumulated depreciation is not to be adjusted retrospectively.
18. Borrowing costs
(1) Recognition principle of borrowing costs capitalization
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and construction orproduction of assets eligible for capitalization, it is capitalized and included in the costs of relevant assets; otherborrowing costs are recognized as expenses on the basis of the actual amount incurred, and are included in profit orloss.
(2) Borrowing costs capitalization period
1) The borrowing costs are not capitalized unless the following requirements are all met:
①the asset disbursementshave already incurred;②the borrowing costs have already incurred; and③the acquisition and construction orproduction activities which are necessary to prepare the asset for its intended use or sale have already started.
2)Suspension of capitalization: where the acquisition and construction or production of a qualified asset is interruptedabnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs issuspended; the borrowing costs incurred during such period are recognized as expenses, and are included in profit orloss, till the acquisition and construction or production of the asset restarts.
3) Ceasing of capitalization: when the qualified asset under acquisition and construction or production is ready for theintended use or sale, the capitalization of the borrowing costs is ceased.
(3) Capitalization rate and capitalized amount of borrowing costs
For borrowings exclusively for the acquisition and construction or production of assets eligible for capitalization, theto-be-capitalized amount of interests is determined in light of the actual interest expenses incurred (includingamortization of premium or discount based on effective interest method) of the special borrowings in the current period,less the interest income on the unused borrowings as a deposit in the bank or as a temporary investment.For general borrowings used to acquire, construct or produce assets qualified for capitalization, the capitalized amountof interests on general borrowings shall be determined on the basis that the weighted average (of the excess ofcumulative assets expenditures over the specific borrowings) times capitalization rate (of used general borrowings).
19. Intangible assets
(1) Intangible assets include land use right, patent right, application software, etc. The initial measurement of intangibleassets is based on its cost.
(2) Intangible assets with definite useful lives are reasonably amortized over their useful lives based on the pattern ofthe economic benefits relating to the way they are expected to be realized. If it is unable to determine the expectedrealization pattern reliably, intangible assets are amortized by the straight-line method. Details are as follows：
| Items | Amortization period (years) |
| Land use right | 50 |
| Development expenditure | 5 |
| Application Software | 3 |
| Trademark and patent right | 10 |
(3) Expenditures on the research phase of an internal project are recognized as profit or loss when they are incurred. Anintangible asset arising from the development phase of an internal project is recognized if the Company can demonstrateall of the followings:
①the technical feasibility of completing the intangible asset so that it will be available for use or sale;②its intention to complete the intangible asset and use or sell it;③how the intangible asset will generate probable future economic benefits, among other things, the Company candemonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to beused internally, the usefulness of the intangible asset;④the availability of adequate technical, financial and other resources to complete the development and to use or sellthe intangible asset; and
⑤its ability to measure reliably the expenditure attributable to the intangible asset during its development.
20. Long-term Assets Impairment
For long-term assets such as long-term equity investments, fixed assets, construction in progress, intangible assets withfinite useful lives, etc., if at the balance sheet date there is indication of impairment, the recoverable amount is to beestimated. For goodwill recognized in business combination and intangible assets with indefinite useful lives, no matterwhether there is indication of impairment, impairment test is performed annually. Impairment test on goodwill isperformed on related asset group or asset group portfolio.When the recoverable amount of such long-term assets is lower than their carrying amount, the difference is recognizedas provision for assets impairment through profit or loss.
21. long-term deferred expenses
Long-term deferred expenses are expenses that have been recognized but with amortization period over one year(excluding one year). They are recorded with actual cost, and evenly amortized within the beneficiary period orstipulated period. If items of long-term deferred expenses fail to be beneficial to the following accounting periods,residual values of such items are included in profit or loss.
22. Contract liabilities
The Company lists contract assets or contract liabilities in the balance sheet according to the relationship between itsperformance obligations and customer payments.The Company shall present the contract assets and contract liabilities under the same contract in net amount afteroffsetting each other.The company lists the obligation to transfer goods to customers for the consideration received or receivables fromcustomers as contract liabilities.
23. Employee benefits
(1) Short-term employee benefits
The Company recognizes, in the accounting period in which an employee provides service, short-term employeebenefits actually incurred as liabilities, with a corresponding charge to profit or loss or the cost of a relevant asset.
(2) Post-employment benefits
The Company classifies post-employment benefit plans as either defined contribution plans or defined benefit plans.
1) The Company recognizes the contribution payable to a defined contribution plan as a liability in the accountingperiod in which an employee provides service, with a corresponding charge to profit or loss or the cost of a relevantasset.
2) Accounting treatment by the Company for defined benefit plan usually involves the following steps:
①In accordance with the projected unit credit method, using unbiased and mutually compatible actuarial assumptionsto estimate related demographic variables and financial variables, measure the obligations under the defined benefitplan, and determine the periods to which the obligations are attributed. Meanwhile, the Company discounts obligationsunder the defined benefit plan to determine the present value of the defined benefit plan obligations and the currentservice cost;
②When a defined benefit plan has assets, the Company recognizes the deficit or surplus by deducting the fair value ofdefined benefit plan assets from the present value of the defined benefit plan obligation as a net defined benefit planliability or net defined benefit plan asset. When a defined benefit plan has a surplus, the Company measures the netdefined benefit plan asset at the lower of the surplus in the defined benefit plan and the asset ceiling;③At the end of the period, the Company recognizes the following components of employee benefits cost arising fromdefined benefit plan: a. service cost; b. net interest on the net defined benefit plan liability (asset); and c. changes as aresult of remeasurement of the net defined benefit liability (asset). Item a and item b are recognized in profit or loss orthe cost of a relevant asset. Item c is recognized in other comprehensive income and is not to be reclassifiedsubsequently to profit or loss. However, the Company may transfer those amounts recognized in other comprehensiveincome within equity.
(3) Termination benefits
Termination benefits provided to employees are recognized as an employee benefit liability for termination benefits,with a corresponding charge to profit or loss at the earlier of the following dates: 1) when the Company cannotunilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailmentproposal; or 2) when the Company recognizes cost or expenses related to a restructuring that involves the payment oftermination benefits
(4) Other long-term employee benefits
When other long-term employee benefits provided to the employees satisfied the conditions for classifying as a definedcontribution plan, those benefits are accounted for in accordance with the requirements relating to defined contributionplan, while other benefits are accounted for in accordance with the requirements relating to defined benefit plan.The Company recognizes the cost of employee benefits arising from other long-term employee benefits as thefollowings: 1) service cost; 2) net interest on the net liability or net assets of other long-term employee benefits; and 3)changes as a result of remeasurement of the net liability or net assets of other long-term employee benefits. As a
practical expedient, the net total of the aforesaid amounts is recognized in profit or loss or included in the cost of arelevant asset.
24. Provisions
(1) Provisions are recognized when fulfilling the present obligations arising from contingencies such as providingguarantee for other parties, litigation, products quality guarantee, onerous contract, etc., may cause the outflow of theeconomic benefit and such obligations can be reliably measured.
(2) The initial measurement of provisions is based on the best estimated expenditures required in fulfilling the presentobligations, and its carrying amount is reviewed at the balance sheet date.
25. Share-based payment
(1) Types of share-based payment
Share-based payment consists of equity-settled share-based payment and cash-settled share-based payment.
(2) Accounting treatment for settlements, modifications and cancellations of share-based payment plans
1) Equity-settled share-based payment
For equity-settled share-based payment transaction with employees, if the equity instruments granted vest immediately,the fair value of those equity instruments is measured at grant date and recognized as transaction cost or expense, with acorresponding adjustment in capital reserve; if the equity instruments granted do not vest until the counterpartycompletes a specified period of service, at the balance sheet date within the vesting period, the fair value of those equityinstruments measured at grant date based on the best estimate of the number of equity instruments expected to vest isrecognized as transaction cost or expense, with a corresponding adjustment in capital reserve.For equity-settled share-based payment transaction with parties other than employees, if the fair value of the servicesreceived can be measured reliably, the fair value is measured at the date the Company receives the service; if the fairvalue of the services received cannot be measured reliably, but that of equity instruments can be measured reliably, thefair value of the equity instruments granted measured at the date the Company receives the service is referred to, andrecognized as transaction cost or expense, with a corresponding increase in equity.
2) Cash-settled share-based payment
For cash-settled share-based payment transactions with employees, if share appreciation rights vest immediately, thefair value of the liability incurred as the acquisition of services is measured at grant date and recognized as transactioncost or expense, with a corresponding increase in liabilities; if share appreciation rights do not vest until the employeeshave completed a specified period of service, the liability is measured, at each balance sheet date until settled, at the fairvalue of the share appreciation rights as of the balance sheet date based on the best estimate of the number of shareappreciation right expected to vest, while the corresponding transaction cost or expense is recognized.
3) Modifications and cancellations of share-based payment plan
If the modification increases the fair value of the equity instruments granted, the Company includes the incremental fairvalue granted, in the measurement of the amount recognized for services received as consideration for the equityinstruments granted; similarly, if the modification increases the number of equity instruments granted, the Companyincludes the fair value of the additional equity instruments granted, in the measurement of the amount recognized for
services received as consideration for the equity instruments granted; if the Company modifies the vesting conditions ina manner that is beneficial to the employee, the Company takes the modified vesting conditions into account.If the modification reduces the fair value of the equity instruments granted, the Company does not take into account thatdecrease in fair value, and continue to measure the amount recognized for services received as consideration for theequity instruments based on the grant date fair value of the equity instruments granted; if the modification reduces thenumber of equity instruments granted to an employee, that reduction is accounted for as a cancellation of that portion ofthe grant; if the Company modifies the vesting conditions in a manner that is not beneficial to the employee, theCompany does not take the modified vesting conditions into account.If the Company cancels or settles a grant of equity instruments during the vesting period (other than that cancelled whenthe vesting conditions are not satisfied), the Company accounts for the cancellation or settlement as an acceleration ofvesting, and therefore recognizes immediately the amount that otherwise would have been recognized for servicesreceived over the remainder of the vesting period.
26. Revenue
(1) Revenue recognition principles
At contract inception, the Company shall assess the contracts and shall identify each performance obligation in thecontracts, and determine whether the performance obligation should be satisfied over time or at a point in time.The Company satisfies a performance obligation over time if one of the following criteria is met, otherwise, theperformance obligation is satisfied at a point in time: 1) the customer simultaneously receives and consumes theeconomic benefits provided by the Company’s performance as the Company performs; 2) the customer can controlgoods as they are created by the Company’s performance; 3) goods created during the Company’s performance haveirreplaceable uses and the Company has an enforceable right to the payments for performance completed to dateduring the whole contract period.For each performance obligation satisfied over time, the Company shall recognize revenue over time by measuring theprogress towards complete satisfaction of that performance obligation. In the circumstance that the progress cannot bemeasured reasonably, but the costs incurred in satisfying the performance obligation are expected to be recovered, theCompany shall recognize revenue only to the extent of the costs incurred until it can reasonably measure the progress.For each performance obligation satisfied at a point in time, the Company shall recognize revenue at the time point thatthe customer obtains control of relevant goods or services. To determine whether the customer has obtained control ofgoods, the Company shall consider the following indications: 1) the Company has a present right to payment for thegoods, i.e., the customer is presently obliged to pay for the goods; 2) the Company has transferred the legal title of thegoods to the customer, i.e., the customer has legal title to the goods; 3) the Company has transferred physicalpossession of the goods to the customer, i.e., the customer has physically possessed the goods; 4) the Company hastransferred significant risks and rewards of ownership of the goods to the customer, i.e., the customer has obtainedsignificant risks and rewards of ownership of the goods; 5) the customer has accepted the goods; 6) other evidenceindicating the customer has obtained control over the goods.
(2) Revenue measurement principle
1) Revenue is measured at the amount of the transaction price that is allocated to each performance obligation. Thetransaction price is the amount of consideration to which the Company expects to be entitled in exchange for
transferring goods or services to a customer, excluding amounts collected on behalf of third parties and those expectedto be refunded to the customer.
2) If the consideration promised in a contract includes a variable amount, the Company shall confirm the best estimateof variable consideration at expected value or the most likely amount. However, the transaction price that includes theamount of variable consideration is only to the extent that it is high probable that a significant reversal in the amount ofcumulative revenue recognized will not occur, when the uncertainty associated with the variable consideration issubsequently resolved.
3) In the circumstance that the contract contains a significant financing component, the Company shall determine thetransaction price based on the price that a customer would have paid for if the customer had paid cash for obtainingcontrol over those goods or services. The difference between the transaction price and the amount of promisedconsideration is amortized under effective interest method over contractual period. The effects of a significant financingcomponent shall not be considered if the Company expects, at the contract inception, that the period between when thecustomer obtains control over goods or services and when the customer pays consideration will be one year or less.
4) For contracts containing two or more performance obligations, the Company shall determine the stand-alone sellingprice of the distinct good underlying each performance obligation at contract inception, and allocate the transactionprice to each performance obligation on a relative stand-alone selling price basis.
(3) Revenue recognition method
The Company is mainly engaged in the sales of PCBs, LED display devices, Touch panels and LCMs, precisioncomponents and other products. The products sold by the Company can be recognized as the performance obligation ata certain time point.Revenue from domestic sales is recognized when: 1) the products have been delivered by the Company to thecontracted delivery place and confirmed by the customers for acceptance; 2) the payment has been received or the rightof collecting payment has been obtained; and(3) it is probable that the associated economic benefits will flow to theCompany.Revenue from oversea sales is recognized when: 1) the Company has declared the products for customs clearance inaccordance with the contract with bills of clearance and waybills received; 2) the payment has been received or theright of collecting payment has been obtained; and 3) it is probable that the associated economic benefits will flow tothe Company.
27. Government grants
(1) Government grants shall be recognized if, and only if, the following conditions are all met: 1) the Company willcomply with the conditions attaching to the grants; 2) the grants will be received. Monetary government grants aremeasured at the amount received or receivable. Non-monetary government grants are measured at fair value, and can bemeasured at nominal amount in the circumstance that fair value cannot be assessed.
(2) Government grants related to assets
Government grants related to assets are government grants with which the Company purchases, constructs or otherwiseacquires long-term assets under requirements of government. In the circumstances that there is no specific governmentrequirement, the Company shall determine based on the primary condition to acquire the grants, and government grants
related to assets are government grants whose primary condition is to construct or otherwise acquire long-term assets.They offset carrying amount of relevant assets, or they are recognized as deferred income. If recognized as deferredincome, they are included in profit or loss on a systematic basis over the useful lives of the relevant assets. Thosemeasured at notional amount are directly included into profit or loss. For assets sold, transferred, disposed or damagedwithin the useful lives, balance of unamortized deferred income is transferred into profit or loss of the period in whichthe disposal occurred.
(3) Government grants related to income
Government grants related to income are government grants other than those related to assets. For government grantsthat contain both parts related to assets and parts related to income, in which those two parts are blurred, they are thuscollectively classified as government grants related to income. For government grants related to income used forcompensating the related future cost, expenses or losses, they are recognized as deferred income and included in profitor loss or used to offset relevant cost during the period in which the relevant cost, expenses or losses are recognized; forgovernment grants related to income used for compensating the related cost, expenses or losses incurred to theCompany, they are directly included in profit or loss or used to offset relevant cost.
(4) Government grants related to the ordinary course of business shall be included into other income or used to offsetrelevant cost based on business nature, while those not related to the ordinary course of business shall be included intonon-operating revenue or expenditures.
(5) Policy interest subvention
1) In the circumstance that government appropriates interest subvention to lending bank, who provides loans for theCompany with a policy subsidized interest rate, borrowings are carried at the amount received, with relevantborrowings cost computed based on the principal and the policy subsidized interest rate.
2) In the circumstance that government directly appropriates interest subvention to the Company, the subsidized interestshall offset relevant borrowing cost.
28. Deferred tax assets/Deferred tax liabilities
(1) Deferred tax assets or deferred tax liabilities are calculated and recognized based on the difference between thecarrying amount and tax base of assets and liabilities (and the difference of the carrying amount and tax base of itemsnot recognized as assets and liabilities, but with their tax base being able to be determined according to tax laws), and inaccordance with the tax rate applicable to the period during which the assets are expected to be recovered or theliabilities are expected to be settled.
(2) A deferred tax asset is recognized to the extent of the amount of the taxable income, which is most likely to obtainand which can be deducted from the deductible temporary difference. At the balance sheet date, if there is any exactevidence that it is probable that future taxable income will be available, against which deductible temporary differencescan be utilized, the deferred tax assets unrecognized in prior periods are recognized.
(3) At the balance sheet date, the carrying amount of deferred tax assets is reviewed. The carrying amount of a deferredtax asset is reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow thebenefit of the deferred tax asset to be utilized. Such reduction is subsequently reversed to the extent that it becomesprobable that sufficient taxable income will be available.
(4) The income tax and deferred tax for the period are treated as income tax expenses or income through profit or loss,excluding those arising from the following circumstances: 1) business combination; and 2) the transactions or itemsdirectly recognized in equity.
29. Leases
(1) The Company as lessee
At the commencement date, the Company recognizes a lease that has a lease term of 12 months or less as a short-termlease, which shall not contain a purchase option; the Company recognizes a lease as a lease of a low-value asset if theunderlying asset is of low value when it is new. If the Company subleases an asset, or expects to sublease an asset, thehead lease does not qualify as a lease of a low-value asset.For all short-term leases and leases of low-value assets, lease payments are recognized as cost or profit or loss withstraight-line method over the lease term.Apart from the above-mentioned short-term leases and leases of low-value assets with simplified approach, theCompany recognizes right-of-use assets and lease liabilities at the commencement date.
① Right-of-use assets
The right-of-use asset is measured at cost and the cost shall comprise: 1) the amount of the initial measurement of thelease liability; 2) any lease payments made at or before the commencement date, less any lease incentives received; 3)any initial direct costs incurred by the lessee; and 4) an estimate of costs to be incurred by the lessee in dismantling andremoving the underlying asset, restoring the site on which it is located or restoring the underlying asset to the conditionrequired by the terms and conditions of the lease.The Company depreciates the right-of-use asset using the straight-line method. If it is reasonable to be certain that theownership of the underlying asset can be acquired by the end of the lease term, the Company depreciates theright-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, theCompany depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life ofthe right-of-use asset or the end of the lease term.
② Lease liability
At the commencement date, the Company measures the lease liability at the present value of the lease payments that arenot paid at that date, discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, theCompany’s incremental borrowing rate shall be used. Unrecognized financing expenses, calculated at the differencebetween the lease payment and its present value, are recognized as interest expenses over the lease term using thediscount rate which has been used to determine the present value of lease payment and included in profit or loss.Variable lease payments not included in the measurement of lease liabilities are included in profit or loss in the periodsin which they are incurred.After the commencement date, if there is a change in the following items: (a) actual fixed payments; (b) amountsexpected to be payable under residual value guarantees; (c) an index or a rate used to determine lease payments; (d)assessment result or exercise of purchase option, extension option or termination option., the Company remeasures thelease liability based on the present value of lease payments after changes, and adjusts the carrying amount of theright-of-use asset accordingly. If the carrying amount of the right-of-use asset is reduced to zero but there shall be a
further reduction in the lease liability, the remaining amount shall be recognized into profit or loss.
(2) The Company as lessor
At the commencement date, the Company classifies a lease as a finance lease if it transfers substantially all the risks andrewards incidental to ownership of an underlying asset. Otherwise, it is classified as an operating lease.
① Operating lease
Lease receipts are recognized as lease income with straight-line method/unit-of-production method over the lease term.Initial direct costs incurred shall be capitalized, amortized on the same basis as the recognition of lease income, andincluded into profit or loss by installments. Variable lease payments related to operating lease, which are not included inthe lease payment, are charged as profit or loss in the periods in which they are incurred.
② Finance lease
At the commencement date, the Company recognizes the finance lease payment receivable based on the net investmentin the lease (sum of the present value of unguaranteed residual value and lease receipts that are not received at thecommencement date, discounted by the interest rate implicit in the lease), and derecognizes assets held under thefinance lease. The Company calculates and recognizes interest income using the interest rate implicit in the lease overthe lease term. Variable lease payments not included in the measurement of the net investment in the lease are chargedas profit or loss in the periods in which they are incurred.
30. Other significant accounting policies and estimates
(1) Recognition criteria and accounting treatment of discontinued operations
A component of the Company that has been disposed of, or is classified as held for sale and can be clearly distinguishedis recognized as a discontinued operation when it fulfills any of the following conditions:
1) it represents a separate major line of business or a separate geographical area of operations;
2) it is part of a related plan to dispose of a separate major line of business, or a separate geographical area of operations;or
3) it is a subsidiary acquired exclusively with a review to resale.
(2) Basis of the adoption of hedge accounting and its accounting treatment
1) Hedge includes fair value hedge, cash flow hedge and hedge of a net investment in a foreign operation.
2) A hedging relationship qualifies for hedge accounting, if all of the following conditions are met:
①the hedgingrelationship consists only of eligible hedging instruments and eligible hedged instruments;②at the inception of thehedge, there is formal designation of hedging instruments and hedged item, and documentation of the hedgingrelationship and the Company’s risk management objective and strategy for undertaking the hedge;③the hedgingrelationship meets the hedging effectiveness requirements.The Company recognizes that the hedging relationship meets effectiveness requirements if the all of the followings aresimultaneously satisfied: a. there is an economic relationship between the hedged item and the hedging instruments; b.the effect of credit risk does not dominate the value changes that result from that economic relationship between thehedged item and the hedging instruments; and c. the hedge ratio of the hedging relationship is the same as the ratio ofthe quantity of the hedged item that the Company actually hedges and the number of hedging instruments that the
Company actually uses to hedge that quantity of hedged item, but does not reflect an imbalance between the weightingsof the hedged item and the hedging instrument.The Company shall assess whether a hedging relationship meets the hedge effectiveness requirements at inception andon an ongoing basis. If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedgeratio, but the risk management objective for that designated hedging relationship remains the same, the hedgingrelationship shall be rebalanced.
3) Hedge accounting
① Fair value hedge
a. Gains or losses on the hedging instrument shall be recognized in profit or loss (or other comprehensive income, if thehedging instrument hedges a non-trading equity instrument (or a component thereof) at fair value through othercomprehensive income).b. The gains or losses on hedged item arising from risk exposure should be recognized in profit or loss, and meanwhile,the carrying amount of the hedged item which is not measured at fair value should be adjusted. If the hedged item is afinancial asset (or a component thereof) that is measured at fair value through other comprehensive income inaccordance with article XVIII in “CASBE 22 – Financial Instruments: Recognition and Measurement”, the gains orlosses arising from the risk exposure on the hedged item shall be recognized in profit or loss, with carrying amountunadjusted, for it has already been measured at fair value; if the hedged item is a non-trading equity instrument (or acomponent thereof) for which the Company has elected to present changes at fair value through other comprehensiveincome, the gains or losses arising from the risk exposure on the hedged item shall be recognized in profit or loss, withcarrying amount unadjusted, for it has already been measured at fair value.When a hedged item is an unrecognized firm commitment (or a component thereof), the cumulative change in fair valueof the hedged item subsequent to its designation is recognized as an asset or a liability, with a corresponding gains orlosses recognized in profit or loss. When a firm commitment is performed to acquire an asset or assume a liability, theinitial carrying amount of the asset or the liability is adjusted to include the cumulative change in fair value of thehedged item that was previously recognized.For a hedged item that is a financial instrument (or a component thereof) measured at amortized cost, any adjustment onthe carrying amount of the hedged item shall be amortized to profit or loss, based on a recalculated effective interestrate at the date that amortization begins. In the case of a financial asset (or a component thereof) that is a hedged itemand that is measured at fair value through other comprehensive income in accordance with article XVIII in “CASBE 22- Financial Instruments: Recognition and Measurement”, amortization applies in the same manner, but to the amountthat represents the cumulative gains or losses previously recognized, which shall be subsequently recognized in profit orloss, instead of by adjusting the carrying amount.
② Cash flow hedges
a. The portion of the gains or losses on the hedging instrument that is determined to be an effective hedge shall berecognized in other comprehensive income as cash flow hedge reserve, while the ineffective portion shall be recognizedin profit or loss. The cash flow hedge reserve shall be recognized at the lower of the following (in absolute amounts): (i)the cumulative gains or losses on the hedging instrument from inception of the hedge; and (ii) the cumulative change inpresent value of the expected future cash flows of the hedged item from inception of the hedge.b. If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial
liability, or a hedged forecast transaction for a non-financial asset or non-financial liability becomes a firm commitmentfor which fair value hedge accounting is applied, the Company shall transfer out the amount of cash flow hedge reservepreviously recognized in other comprehensive income, and include it in the initial cost of the asset or the liability.c. For other cash flow hedges, the amount of cash flow hedge reserve previously recognized in other comprehensiveincome shall be transferred out into profit or loss in the same period the hedged forecast sale affects profit or loss.
③ Hedges of a net investment in a foreign operation
The portion of the gains or losses on the hedging instrument that is determined to be an effective hedge, is recognized inother comprehensive income, and reclassified from other comprehensive income to profit or loss, on the disposal of theforeign operation; and the ineffective portion is recognized in profit or loss.
(3) Accounting treatment related to share repurchase
When the Company repurchases its shares for the purpose of reducing its registered capital or rewarding its employees,if the purchased shares are to be kept as treasury shares, the treasury shares are recorded at the cash distributed toexisting shareholders for repurchase. If the purchased shares are to be retired, the difference between the total bookvalue of shares retired and the cash distributed to existing shareholders for repurchase, is to reduce capital reserve, orretained earnings when the capital reserve is not enough to reduce. If the Company repurchases vested equityinstruments in equity-settled share-based payment transactions with employees, cost of treasury shares granted toemployees and capital reserve (other capital reserve) accumulated within the vesting period are to be written off on thepayment made to employees, with a corresponding adjustment in capital reserve (share premium).
31. Significant changes in accounting policies and estimates
(1) Significant changes in accounting policies
| Changes in accounting policies and reasons | Approval Procedures |
| Since January 1, 2021 (the “first adoption date”), the Company has implemented the “CASBE 22 - Leases” revised by the Ministry of Finance in 2018 (hereinafter referred to as the “New Lease Standards”) (1) For contracts existing before the first adoption date, the Company chooses not to re-evaluate whether they are leases or include leases. (2) For lease contracts with the Company as the lessee, the Company adjusts the amount of retained earnings at the beginning of the reporting period and other relevant items in the financial statements, according to the cumulative impact of implementing the New Lease Standards on the first adoption date, while the information of comparable periods is not adjusted. | On April 13,2021, the Company held the 10th conference of the 5th session of Board of Directors and the 8th conference of the 5th session of Board of Supervisors, deliberating and approving the Proposal on Changes in Accounting Policies, for which independent directors expressed consent opinion independently. In accordance with the relevant regulations of the Rules Governing the Listing of Shares on the Shenzhen Stock Exchange, the changes in accounting policies was not required to be submitted to the shareholders' meeting for approval. |
| In accordance with the Questions and Answers on Implementation of Accounting Standards for Business Enterprise issued by the Accounting Department of the Ministry of Finance on November 2, 2021, the Company reclassifies the transportation costs into operating cost from selling expenses, since transportation activities for performance of the sales contract occurring before the control of | On April 19, 2022, the Company held the 20th conference of the 5th session of Board of Directors and the 14th conference of the 5th session of Board of Supervisors, deliberating and approving the Proposal on Changes in Accounting Policies, for which independent directors expressed consent opinion independently. In accordance with the relevant regulations of the Rules |
| enterprise goods is transferred to the customer do not constitute a single performance obligation. | Governing the Listing of Shares on the Shenzhen Stock Exchange, the changes in accounting policies was not required to be submitted to the shareholders' meeting for approval. |
Unit: RMB
1) Main effects of the Company's adoption of the New Lease Standards on the financial statements as at January 1,2021 are stated asfollows:
| Items | consolidated balance sheet as at December 31, 2021 | ||
| December 31, 2020 | Reclassified (Note) | January 1, 2021 | |
| Payment in advance | 195,402,953.35 | -945,182.29 | 194,457,771.06 |
| Fixed assets | 11,225,101,992.17 | -810,137,697.80 | 10,414,964,294.37 |
Right-of-use assets
| Right-of-use assets | 919,933,989.09 | 919,933,989.09 | |
| Intangible assets | 355,484,167.00 | -46,144,586.42 | 309,339,580.58 |
| Non-current liabilities due within one year | 964,563,666.84 | 20,648,075.55 | 985,211,742.39 |
| Lease liabilities | 1,116,750,563.53 | 1,116,750,563.53 |
Long-term payables
| Long-term payables | 1,200,752,321.09 | -1,074,692,116.50 | 126,060,204.59 |
2) Main effects of the Company's implementation of the Questions and Answers on Implementation of Accounting Standards forBusiness Enterprise on the financial statements in 2020 are stated as follows:
| Items | Consolidated income statement for the year ended December 31, 2020 | ||
| 2020 [Before restatement] | Adjusted amount | 2020 [After restatement] | |
Selling expenses
| Selling expenses | 484,650,341.42 | -155,469,994.92 | 329,180,346.50 |
| Operating cost | 23,524,821,514.85 | 155,469,994.92 | 23,680,291,509.77 |
(2) Significant changes in accounting estimates
□ Applicable √ N/A
(3) The impact of the implementation of the New Lease Standards on the relevant items in the consolidatedbalance sheet at the beginning of the period is shown below:
Reclassification of the consolidated balance sheet as at December 31, 2021 Unit: RMB
| Items | December 31, 2020 | January 1, 2021 | Reclassified (Note) |
| Current assets: | |||
| Payment in advance | 195,402,953.35 | 194,457,771.06 | -945,182.29 |
| Total current assets | 21,857,673,675.90 | 21,856,728,493.61 | -945,182.29 |
| Non-current assets: | |||
| Fixed assets | 11,225,101,992.17 | 10,414,964,294.37 | -810,137,697.80 |
| Right-of-use assets | 919,933,989.09 | 919,933,989.09 | |
| Intangible assets | 355,484,167.00 | 309,339,580.58 | -46,144,586.42 |
| Total non-current assets | 15,645,395,037.64 | 15,709,046,742.51 | 63,651,704.87 |
| Total assets | 37,503,068,713.54 | 37,565,775,236.12 | 62,706,522.58 |
| Current liabilities: | |||
| Non-current liabilities due within one year | 964,563,666.84 | 985,211,742.39 | 20,648,075.55 |
| Total current liabilities | 19,379,435,489.22 | 19,400,083,564.77 | 20,648,075.55 |
| Non-current liabilities: | |||
| Lease liabilities | 1,116,750,563.53 | 1,116,750,563.53 | |
| Long-term payables | 1,200,752,321.09 | 126,060,204.59 | -1,074,692,116.50 |
| Total non-current liabilities | 4,948,665,296.07 | 4,990,723,743.10 | 42,058,447.03 |
| Total liabilities | 24,328,100,785.29 | 24,390,807,307.87 | 62,706,522.58 |
| Equity: | |||
| Total liabilities & equity | 37,503,068,713.54 | 37,565,775,236.12 | 62,706,522.58 |
Remarks on adjustment
(1) For contracts existing before the first adoption date, the Company chooses not to re-evaluate whether they areleases or include leases.
(2) For lease contracts with the Company as the lessee, the Company adjusts the amount of retained earnings at thebeginning of the reporting period and other relevant items in the financial statements, according to the cumulativeimpact of implementing the New Lease Standards on the first adoption date, while the information of comparableperiods is not adjusted.Details of the adjustment are stated as follows:
For financial lease before the first adoption date, the Company, at the first adoption date, measures the right-of-use assetand the lease liability at the original carrying amount of the asset leased in under finance lease and the finance leasepayable respectively.For operating lease before the first adoption date, the Company, at the first adoption date, measures the lease liability atthe present value of the remaining lease payments that is discounted at the Company’s incremental borrowing rate at thefirst adoption date, and the right-of-use asset at an amount equal to the lease liability adjusted by the amount of anyprepaid rents.At the first adoption date, the Company tests the impairment of right-of-use assets and takes accounting treatmentaccordingly in accordance with regulations of “Long-term assets impairment” of this section.
1) Main effects of the Company's adoption of the New Lease Standards on the financial statements as at January
1,2021 are stated as above.
2) Practical expedients adopted for operating lease before the first adoption date are stated as follows:
①For the lease contracts for which the lease term will end within 12 months from the first adoption date, theCompany chooses to adopt practical expedients, not recognizing right-of-use assets and lease liabilities;
②The Company applies a single discount rate to lease contracts with similar characteristics, such as lease contractsof plants, lands and others, when measuring lease liabilities;
③The Company excludes initial direct costs from measuring the right-of-use assets
④The Company determines the lease term according to the actual exercise or other updates of extension options ortermination options before the first adoption date;
⑤The Company adjusts the right-of-use assets by the amount of onerous contract provision recognized in thebalance sheet before the first adoption date if the contract including leases is measured as an onerous contractbefore the first adoption date in accordance with “CASBE 13 – Contingencies”, as an alternative of testing theimpairment of right-of-use assets;
⑥The Company accounts for lease modifications before the first adoption date according to the final arrangementof the lease modifications.The practical expedients mentioned above bring no significant impact on the Company’s financial statements.
(3) For contracts for operating lease of low-value assets existing before the first adoption date, the Company choosesto adopt practical expedients, not recognizing right-of-use assets and lease liabilities, and accounts for the contractssubject to the New Lease Standards from the first adoption date.
(4) For lease contracts with the Company as the lessor, the Company accounts for the contracts subject to the NewLease Standards from the first adoption date.
(5)Sale and leaseback transactions existing before the first adoption date are accounted for as follows:
For sale and leaseback transactions existing before the first adoption date, the Company would not re-assess whether thetransfer of an asset in the sale and leaseback transactions satisfies the requirements to be accounted for as a sale of theasset as provided in the “CASBE 14 – Revenues”.For sale and leaseback transactions accounted for as a sale of assets and financial leases before the first adoption date,the Company, as the seller (lessee), accounts for the leaseback transactions in the same manner as other finance leasesexisting at the first adoption date, and continues to amortize the related deferred profit or loss over the lease term.For sale and leaseback transactions accounted for as a sale of assets and operating leases before the first adoption date,as the seller (lessee), accounts for the leaseback transactions in the same manner as other operating leases existing at thefirst adoption date, and adjusts the right-of-use assets based on the related deferred profit or loss recorded in the balancesheet prior to the first adoption date.
(4) Notes on retrospectively adjusted comparative data in the prior periods since the first adoption of the NewLease Standard in 2021
□ Applicable √ N/A
32. Others
(1) Sale and leaseback
1) The Company as the lessee
In accordance with the “CASBE 14 – Revenues”, the Company would assess and determine whether the transfer of anasset in the sale and leaseback transaction is accounted for as a sale of that asset.If the transfer of an asset is accounted for as a sale of the asset, the Company measures the right-of-use asset arisingfrom the leaseback, at the proportion of the original carrying amount of the asset that relates to the right of use retainedby the Company. Accordingly, the Company recognizes only the amount of any gain or loss that relates to the rightstransferred to the lessor.Otherwise, the Company continues the recognition of the transferred assets, and recognizes a financial liability equal tothe amount of transfer income in accordance with the “CASBE 22 – Financial Instruments: Recognition andMeasurement” at the same time.
2) The Company as the lessor
In accordance with the “CASBE 14 - Revenues”, the Company would assess and determine whether the transfer of anasset in the sale and leaseback transaction is accounted for as a sale of that asset.If the transfer of an asset is accounted for as a sale of the asset, the Company accounts for the purchase of assets inaccordance with other applicable standards, and accounts for the lease of assets in accordance with the “CASBE 21 –Leases”.Otherwise, the Company does not recognize the transferred asset, but recognizes a financial asset equal to the amount oftransfer income in accordance with the “CASBE 22 – Financial Instruments: Recognition and Measurement”.
VI. Taxes
1. Main taxes and tax rates
| Taxes | Tax bases | Tax rates |
| Value-added tax (VAT) | The output tax calculated based on the revenue from sales of goods or rendering of services in accordance with the tax law, net of the input tax that is allowed to be deducted in the current period | 16% and 13%; for companies outside of China, VAT rates ranging from 7% to 25% |
| Consumption tax | The taxable sales value | 8% in USA |
| Urban maintenance and construction tax | Turnover tax actually paid | 5% and 7% in Mainland China |
| Enterprise income tax | Turnover tax actually paid | 15%, 16.50%, 25%, 0, 21%, 0.75%-8.84%, 17%, 10%, 20%, 21.4%, 24% |
| Housing property tax | For housing property levied on the basis of price, housing property tax is levied at the rate of 1.2% of the balance after deducting 30% of the cost; for housing property levied on the basis of rent, housing property tax is levied at the rate of 12% of rent revenue. | 1.2% and 12% in Mainland China |
| Education surcharge | Turnover tax actually paid | 3% in Mainland China |
| Local education surcharge | Turnover tax actually paid | 2% in Mainland China |
Disclosure of taxpayers with different rates of enterprise income tax:
| Taxpayers | Income tax rate |
| The Company, YCMT, Mutto Optronics Technology Co., Ltd., MFLEX Yancheng Co., Ltd., Yancheng Dongshan Precision Manufacturing Co., Ltd., Suzhou Jebson Intelligent Technology Co., Ltd., Dongguan Dongshan Precision Manufacturing Co., Ltd., Suzhou RF Top Electronic Communication Co., Ltd., Suzhou Chengjia Precision Manufacturing Co.,Ltd., Yancheng Mutto Optronics Technology Co., Ltd., Suzhou Dongdai Electronic Technology Co., Ltd. | 15.00% |
| HongKong Dongshan Precision Union Opoelectronic Co., Limited and other companies registered in Hong Kong | 16.50% |
| Mutto Optronics Group Limited, MFLEX Delaware, Inc., Dii Group (BVI) Co. Limited | 0 |
| Multi-Fineline Electronix, Inc. and other companies registered in USA | USA federal enterprise income tax rate of 21%, state enterprise income tax rate ranging from 0.75% to 8.84% |
| Multi-Fineline Electronix Singapore Ptd. Ltd and other companies registered in Singapore | 17% in Singapore |
| Multek Technologies Limited | 15% (enjoying an 80% reduction on this rate) |
| Multek Technology Sweden AB | 21.4% in Sweden |
| Multek Technology Malaysia SDN.BHD | 24% in Malaysia |
| Taxpayers other than the above-mentioned | 25.00% |
2. Tax preferential policies
1.In accordance with the Reply to Publication of the Fourth Batch of High and New Technology Enterprise Recordationof Jiangsu Province in 2019 (Guo Ke Huo Zi [2020]No.34)issued by the Office of Leading Group for Administration ofRecognition of National High and New Technology Enterprises, the Company and the Company’s subsidiaries, namely,Mutto Optronics Technology Co., Ltd., Yancheng Dongshan Precision Manufacturing Co., Ltd. and Suzhou ChengjiaPrecision Manufacturing Co., Ltd. passed the qualification review and were recognized as high and new technologyenterprises with a valid period of 3 years, ranging from 2019 to 2021. Therefore, the above companies paid enterpriseincome tax at a tax rate of 15% for the current period.
2. In accordance with the Reply to the Second Batch of High and New Technology Enterprise Recordation of JiangsuProvince in 2020 (Guo Ke Huo Zi [2021]No.40) issued by the Office of Leading Group for Administration ofRecognition of National High and New Technology Enterprises, the Company’s wholly-owned subsidiary YCMTpassed the qualification review and was recognized as a high and new technology enterprise with a valid period of 3years, ranging from 2020 to 2022. Therefore, such company paid enterprise income tax at a tax rate of 15% for thecurrent period.
3. In accordance with the Reply to the First Batch of High and New Technology Enterprise Recordation of JiangsuProvince in 2019 (Guo Ke Fa Huo [2019] No.253) issued by the Office of Leading Group for Administration ofRecognition of National High and New Technology Enterprises, the Company’s subsidiaries, Suzhou RF TopElectronic Communication Co., Ltd. and MFLEX Yancheng Co., Ltd., passed the qualification review and wasrecognized as high and new technology enterprises with a valid period of 3 years, ranging from 2019 to 2021. Therefore,the above companies paid enterprise income tax at a tax rate of 15% for the current period.
4. In accordance with the Reply to the Third Batch of High and New Technology Enterprise Recordation of GuangdongProvince in 2020 (Guo Ke Huo Zi [2021]No.23) issued by the Office of Leading Group for Administration ofRecognition of National High and New Technology Enterprises, the Company’s wholly-owned subsidiary DongguanDongshan Precision Manufacturing Co., Ltd. passed the qualification review and was recognized as a high and newtechnology enterprise with a valid period of 3 years, ranging from 2020 to 2022. Therefore, the above company paidenterprise income tax at a tax rate of 15% for the current period.
5. In accordance with the Announcement for the Recordation of the Recognized Third Batch of High and NewTechnology Enterprise of Jiangsu Province in 2021, the Company’s wholly-owned subsidiary Yancheng MuttoOptronics Technology Co., Ltd. passed the qualification review and was recognized as a high and new technologyenterprise with a valid period of 3 years, ranging from 2021 to 2023. Therefore, such company paid enterprise incometax at a tax rate of 15% for the current period.
6. In accordance with the Reply to the Third Batch of High and New Technology Enterprise Recordation of JiangsuProvince in 2019 (Guo Ke Huo Zi [2020] No.31) issued by the Office of Leading Group for Administration ofRecognition of National High and New Technology Enterprises, the Company’s subsidiary Suzhou Jebson IntelligentTechnology Co., Ltd., passed the qualification review and was recognized as a high and new technology enterprise witha valid period of 3 years, ranging from 2019 to 2021. Therefore, such company paid enterprise income tax at a tax rate
of 15% for the current period.
7. In accordance with the Reply to the Second Batch of High and New Technology Enterprise Recordation of JiangsuProvince in 2020 (Guo Ke Huo Zi [2021] No.40) issued by the Office of Leading Group for Administration ofRecognition of National High and New Technology Enterprises, the Company’s subsidiary Suzhou Dongdai ElectronicTechnology Co., Ltd. passed the qualification review and was recognized as a high and new technology enterprise witha valid period of 3 years, ranging from 2020 to 2022. Therefore, such company paid enterprise income tax at a tax rateof 15% for the current period.
8. The Enterprise Income Tax Act of Mauritius is applicable to Multek Technologies Limited, which means thiscompany is subject to the 15% enterprise income tax rate. In accordance with the Enterprise Income Tax Act ofMauritius, a company qualified as a global class 1 enterprise, namely, domiciled in Mauritius but operating businessoutside of Mauritius, can enjoy a tax benefit of reducing 80% taxes. Therefore, the effective rate of enterprise incometax levied on the company is only 3% after the reduction.
VII. Notes to Items in the Consolidated Financial Statements
1. Cash and bank balances
Unit: RMB
| Items | Closing balance | Opening balance |
| Cash on hand | 241,046.60 | 533,015.82 |
| Cash in bank | 3,939,060,080.19 | 2,872,602,069.65 |
| Other cash and bank balances | 1,461,536,265.68 | 2,280,875,453.27 |
| Total | 5,400,837,392.47 | 5,154,010,538.74 |
| Including: Deposited overseas | 1,025,270,288.66 | 1,196,208,767.68 |
Other remarksOther cash and bank balances include deposits for acceptance bills amounting to RMB 126,592,248.04, financing margin foracceptance bills amounting to RMB 302,065,000.00, factoring funds temporarily received from customers amounting to RMB255,139,275.92, deposits for letter of credit amounting to RMB 425,484,321.15, borrowings deposits amounting to RMB24,758,348.07, deposits for letter of guarantee amounting to RMB 74,562,551.50; time deposits amounting to RMB 228,424,521.00and foreign exchange deposits amounting to RMB 24,510,000.00, all of which are restricted to use.
2. Held-for-trading financial assets
Unit: RMB
| Items | Closing balance | Opening balance |
| Financial assets at fair value through profit or loss | 499,528,549.86 | 1,262,027,561.65 |
| Including: | ||
| Equity instrument investments | 40,249,971.12 | 10,000,000.00 |
| Bank wealth management product | 459,278,578.74 | 1,252,027,561.65 |
| Including: | ||
| Total | 499,528,549.86 | 1,262,027,561.65 |
3. Notes receivable
(1) Presentation of notes receivable by category
Unit: RMB
| Items | Closing balance | Opening balance |
| Trade acceptance | 14,624,540.85 | 70,758,949.85 |
| Total | 14,624,540.85 | 70,758,949.85 |
Unit: RMB
| Categories | Closing balance | Opening balance | ||||||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |||||
| Amount | % to total | Amount | Provision proportion (%) | Amount | % to total | Amount | Provision proportion (%) | |||
| Including: | ||||||||||
| Notes receivables with provision for bad debts made on a collective basis | 14,698,031.00 | 100.00% | 73,490.15 | 0.50% | 14,624,540.85 | 71,189,513.63 | 100.00% | 430,563.78 | 0.60% | 70,758,949.85 |
| Including: | ||||||||||
| Trade acceptance | 14,698,031.00 | 100.00% | 73,490.15 | 0.50% | 14,624,540.85 | 71,189,513.63 | 100.00% | 430,563.78 | 0.60% | 70,758,949.85 |
| Total | 14,698,031.00 | 100.00% | 73,490.15 | 0.50% | 14,624,540.85 | 71,189,513.63 | 100.00% | 430,563.78 | 0.60% | 70,758,949.85 |
Notes receivable with provision for bad debts made on a collective basis
Unit: RMB
| Items | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| Trade acceptance portfolio | 14,698,031.00 | 73,490.15 | 0.50% |
| Total | 14,698,031.00 | 73,490.15 | -- |
If a provision for bad debts is made for notes receivable in accordance with the general model of expected credit losses, pleasedisclose relevant information on provisions for bad debts with reference to the disclosure method of other receivables:
□ Applicable √ N/A
(2) Provisions, recovery or reversal of bad debts for the current period
Provisions for bad debts made for the current period:
Unit: RMB
| Categories | Opening balance | Changes for the current period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Trade acceptance | 430,563.78 | -357,073.63 | 73,490.15 | |||
| Total | 430,563.78 | -357,073.63 | 73,490.15 | |||
Significant recovery or reversal of bad debt provision for the current period:
□ Applicable √ N/A
(3) Notes receivable of the Company endorsed or discounted at the end of the Reporting Period and undue at thebalance sheet date
Unit: RMB
| Items | Closing balance derecognized |
| Trade acceptance | 60,703,646.76 |
| Total | 60,703,646.76 |
4. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
| Categories | Closing balance | Opening balance | ||||||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |||||
| Amount | % to total | Amount | Provision proportion (%) | Amount | % to total | Amount | Provision proportion (%) | |||
| Accounts receivable with provision for bad debts made on an individual basis | 648,099,738.87 | 7.50% | 648,099,738.87 | 100.00% | 645,653,783.62 | 8.01% | 645,653,783.62 | 100.00% | ||
| Including: | ||||||||||
| Accounts receivable with provision for bad debts made on a collective basis | 7,994,960,203.24 | 92.50% | 328,880,437.42 | 4.11% | 7,666,079,765.82 | 7,410,313,636.18 | 91.99% | 319,815,003.48 | 4.32% | 7,090,498,632.70 |
| Total | 8,643,059,942.11 | 100.00% | 976,980,176.29 | 11.30% | 7,666,079,765.82 | 8,055,967,419.80 | 100.00% | 965,468,787.10 | 11.98% | 7,090,498,632.70 |
Accounts receivable with provision for bad debts made on an individual basis:
Unit: RMB
| Debtors | Closing balance | |||
| Book balance | Provision for bad debts | Provision proportion (%) | Reasons | |
| The first | 401,778,317.42 | 401,778,317.42 | 100.00% | Provision for impairment was made due to the low probability of recovery according to the recovery forecast. |
| The second | 169,582,771.72 | 169,582,771.72 | 100.00% | Provision for impairment was made due to the low probability of recovery according to the recovery forecast. |
| The third | 32,623,735.29 | 32,623,735.29 | 100.00% | Provision for impairment was made due to the low probability of recovery according to the recovery forecast. |
| The fourth | 25,666,994.00 | 25,666,994.00 | 100.00% | Provision for impairment was made due to the low probability of recovery according to the recovery forecast. |
| The fifth | 8,425,896.00 | 8,425,896.00 | 100.00% | Provision for impairment was made due to the low probability of recovery according to the recovery forecast. |
| Others | 10,022,024.44 | 10,022,024.44 | 100.00% | Provision for impairment was made due to the low probability of recovery according to the recovery forecast. |
| Total | 648,099,738.87 | 648,099,738.87 | -- | -- |
On a collective basis: accounts receivable with provision for bad debts made on a collective basis of aging
Unit: RMB
| Items | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| 0-6 months | 7,137,724,362.72 | 35,688,621.83 | 0.50% |
| 7-12 months | 445,130,436.54 | 22,256,521.83 | 5.00% |
| 1- 2 years | 146,652,073.82 | 29,330,414.76 | 20.00% |
| 2-3 years | 59,621,127.90 | 35,772,676.74 | 60.00% |
| Over 3 years | 205,832,202.26 | 205,832,202.26 | 100.00% |
| Total | 7,994,960,203.24 | 328,880,437.42 | -- |
If a provision for bad debts is made for accounts receivable in accordance with the general model of expected credit losses, pleasedisclose relevant information on provisions for bad debts with reference to the disclosure method of other receivables:
□ Applicable √ N/A
Aging analysis
Unit: RMB
| Aging | Book balance |
| Within 1 year (including) | 7,582,854,799.26 |
| 0-6 months | 7,137,724,362.72 |
| 7-12 months | 445,130,436.54 |
| 1-2 years | 155,266,599.84 |
| 2-3 years | 59,665,426.21 |
| Over 3 years | 845,273,116.80 |
| 3-4 years | 479,970,396.68 |
| 4-5 years | 307,578,707.96 |
| Over 5 years | 57,724,012.16 |
| Total | 8,643,059,942.11 |
(2) Provisions, recovery or reversal of bad debts for the current period
Provisions for bad debts made for the current period:
Unit: RMB
| Categories | Opening balance | Changes for the current period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Accounts receivable with provision for bad debts made on an individual basis | 645,653,783.62 | 5,148,884.48 | 2,702,929.23 | 648,099,738.87 | ||
| Accounts receivable with provision for bad debts made on a collective basis | 319,815,003.48 | 14,486,095.28 | 1,084,624.80 | 5,670,923.93 | -834,362.21 | 328,880,437.42 |
| Total | 965,468,787.10 | 19,634,979.76 | 1,084,624.80 | 8,373,853.16 | -834,362.21 | 976,980,176.29 |
Significant recovery or reversal of bad debt provision for the current period:
Unit: RMB
| Debtors | Amount collected or reversed | Ways of collection |
| Hunan Helilai Intelligent Display Technology Co., Ltd. | 1,084,624.80 | Cash in bank |
| Total | 1,084,624.80 | -- |
(3) Accounts receivable actually written off for the current period
Unit: RMB
| Items | Write-off amount |
| Accounts receivable | 8,373,853.16 |
(4) Top five closing balances of accounts receivable categorized by debtor
Unit: RMB
| Debtors | Closing balance of accounts receivable | Proportion to the total closing balance of accounts receivable (%) | Closing balance of provisions for bad debts |
| The first | 2,863,883,030.69 | 33.14% | 15,066,915.51 |
| The second | 560,808,415.65 | 6.49% | 2,804,042.08 |
| The third | 401,778,317.42 | 4.65% | 401,778,317.42 |
| The fourth | 288,493,200.35 | 3.34% | 1,442,466.00 |
| The fifth | 209,774,907.77 | 2.43% | 2,607,443.87 |
| Total | 4,324,737,871.88 | 50.05% |
(5) Assets and liabilities arising from transferred but still involved accounts receivableAs of December 31, 2021, accounts receivable with a carrying amount of RMB 49,750,000.00 have completed the factoring loan fortrade acceptance with right of recourse.
(6) Accounts receivable derecognized due to financial assets transfer
Unit: RMB
| Items | Amount derecognized | Gains or losses related to derecognition | Ways of financial assets transfer |
| Customer 1 | 1,241,499,010.00 | -736,764.87 | Non-recourse factoring |
| Customer 2 | 56,363,120.81 | -617,079.86 | Non-recourse factoring |
Sub-total
| Sub-total | 1,297,862,130.81 | -1,353,844.73 |
5. Receivables financing
Unit: RMB
| Items | Closing balance | Opening balance |
| Bank acceptance | 828,355,016.30 | 750,470,779.44 |
| Total | 828,355,016.30 | 750,470,779.44 |
Increase or decrease of receivables financing for the current period and changes in its fair value
□ Applicable √ N/A
If a provision for impairment is made for receivables financing in accordance with the general model of expected credit losses, please
disclose relevant information on the provisions for impairment with reference to the disclosure method of other receivables:
□ Applicable √ N/A
Other remarks:
Acceptors of bank acceptances are commercial banks. As it is unlikely for commercial banks with high credit levels to be unable topay the matured acceptance bills, the Company derecognizes the bank acceptances that have been endorsed or discounted. However,if these bank acceptances are not paid on maturity, the Company will still be jointly and severally liable to the holder in accordancewith the provisions of the Law of the People’s Republic of China on Negotiable Instruments.
6. Payment in advance
(1) Presentation of payment in advance by aging analysis
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | % to total | Amount | % to total | |
| Within 1 year | 160,251,493.67 | 86.11% | 156,750,934.72 | 80.61% |
| 1-2 years | 15,439,994.92 | 8.30% | 17,768,659.21 | 9.14% |
| 2-3 years | 3,182,325.68 | 1.71% | 16,953,924.89 | 8.72% |
| Over 3 years | 7,221,298.66 | 3.88% | 2,984,252.24 | 1.53% |
| Total | 186,095,112.93 | -- | 194,457,771.06 | -- |
Reasons for unsettlement on payment in advance with aging over one year and significant amount:
| Debtors | Closing balance (Unit: RMB) | Reasons for unsettlement |
| Toyo Kuni Electronics Company Limited | 6,934,900.34 | Not implemented |
| Sub-total | 6,934,900.34 |
(2) Top five closing balances of payment in advance that are categorized by debtorsUnit: RMB
| Debtors | Book balance | Proportion to the total balance of Payment in advance (%) |
| The first | 25,200,759.98 | 12.77 |
| The second | 21,956,000.00 | 11.12 |
The third
| The third | 9,196,768.09 | 4.66 |
| The fourth | 8,271,000.00 | 4.19 |
| The fifth | 7,910,323.79 | 4.01 |
| Sub-total | 72,534,851.86 | 36.75 |
7. Other receivables
Unit: RMB
| Items | Closing balance | Opening balance |
| Other receivables | 37,505,521.59 | 567,026,166.56 |
| Total | 37,505,521.59 | 567,026,166.56 |
(1) Other receivables
1) Other receivables categorized by nature
Unit: RMB
| Nature of other receivables | Closing balance | Opening balance |
| Transfer amount from Shenzhen Dongshan Asset | 538,577,180.10 | |
| Loans and petty cash | 6,048,087.60 | 7,622,496.74 |
| Security deposits | 31,879,767.11 | 29,290,206.06 |
| Performance compensation | 7,000,000.00 | 9,000,000.00 |
| Temporary advance payments receivable and others | 17,631,714.10 | 18,961,548.78 |
| Total | 62,559,568.81 | 603,451,431.68 |
2) Provisions for bad debts
Unit: RMB
| Provision for bad debts | Phase I | Phase II | Phase III | Total |
| 12?month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Balance as at January 1, 2021 | 1,911,706.86 | 23,963,046.46 | 10,550,511.80 | 36,425,265.12 |
| Balance as at January 1, 2021 in the current period | —— | —— | —— | —— |
| -- Transferred to phase II | -587,632.69 | 587,632.69 | ||
| -- Transferred to phase III | -1,125,956.91 | 1,125,956.91 | ||
| Provision | -203,108.50 | 202,011.62 | 11,166,765.12 | 11,165,668.24 |
| Reversal | 22,451,468.46 | 22,451,468.46 | ||
| Written off | 80,729.96 | 80,729.96 | ||
| Other changes | 4,687.72 | 4,687.72 | ||
| Balance as at December 31, 2021 | 1,120,965.67 | 1,175,265.40 | 22,757,816.15 | 25,054,047.22 |
Remarks on significant changes in book balance of other receivables with changes in provision for bad debts
□ Applicable √ N/A
Aging analysis
Unit: RMB
| Aging | Book balance |
| Within 1 year (including) | 22,422,934.21 |
| 1-2 years | 15,430,049.81 |
| 2-3 years | 14,669,258.11 |
| Over 3 years | 10,037,326.68 |
| 3-4 years | 3,578,781.56 |
| 4-5 years | 1,308,542.12 |
| Over 5 years | 5,150,003.00 |
| Total | 62,559,568.81 |
3) Top five closing balances of other receivables categorized by debtor
Unit: RMB
| Debtors | Nature of other receivables | Closing balance | Aging | Proportion to total closing balance of other receivables (%) | Closing balance of provisions for bad debts |
| The first | Guarantee deposits | 7,165,521.72 | 2-3 years | 11.45% | 3,582,760.86 |
| The second | Receivables and payables | 3,620.00 | Within 1 year | 0.01% | 3,620.00 |
| Receivables and payables | 3,677,395.91 | 1- 2 years | 5.87% | 3,677,395.91 | |
| Receivables and payables | 3,409,689.00 | 2-3 years | 5.45% | 3,409,689.00 | |
| The third | Performance compensation | 6,163,521.33 | 1- 2 years | 9.85% | 616,352.13 |
| The fourth | Guarantee deposits | 4,146,250.00 | Over 3 years | 6.63% | 4,146,250.00 |
| The fifth | Temporary advance payment receivable | 2,303,972.42 | Within 1 year | 3.68% | 115,198.62 |
| Total | -- | 26,869,970.38 | -- | 42.94% | 15,551,266.52 |
8. Inventories
Did the Company need to comply with the disclosure requirements on the real estate industry?No
(1) Categories of inventories
Unit: RMB
| Items | Closing balance | Opening balance |
| Book balance | Provision for inventory write-down or for impairment of contract performance costs | Carrying amount | Book balance | Provision for inventory write-down or for impairment of contract performance costs | Carrying amount | |
| Raw materials | 1,389,061,379.96 | 21,517,744.17 | 1,367,543,635.79 | 1,068,198,270.11 | 24,397,185.00 | 1,043,801,085.11 |
| Work in process | 1,043,705,029.33 | 13,539,434.50 | 1,030,165,594.83 | 874,579,038.34 | 12,716,948.03 | 861,862,090.31 |
| Goods on hand | 4,234,690,470.68 | 188,416,933.04 | 4,046,273,537.64 | 4,177,408,358.80 | 118,669,588.44 | 4,058,738,770.36 |
| Revolving materials | 7,768,136.44 | 38,514.88 | 7,729,621.56 | 12,760,432.94 | 38,514.88 | 12,721,918.06 |
| Total | 6,675,225,016.41 | 223,512,626.59 | 6,451,712,389.82 | 6,132,946,100.19 | 155,822,236.35 | 5,977,123,863.84 |
(2) Provision for inventory write-down and for impairment of contract performance costs
Unit: RMB
| Items | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Provision | Others | Reversal or write-off | Others | |||
| Raw materials | 24,397,185.00 | 5,764,461.85 | 8,643,902.68 | 21,517,744.17 | ||
| Work in process | 12,716,948.03 | 993,034.81 | 170,548.34 | 13,539,434.50 | ||
| Goods on hand | 118,669,588.44 | 159,496,910.81 | 235,179.88 | 89,984,746.09 | 188,416,933.04 | |
| Revolving materials | 38,514.88 | 38,514.88 | ||||
| Total | 155,822,236.35 | 166,254,407.47 | 235,179.88 | 98,799,197.11 | 223,512,626.59 | |
Remarks
| Items | Determination basis of net realizable value | Reasons for write-off of provision for inventory write-down in the current period |
Raw materials
| Raw materials | Estimated selling price of relevant finished goods less cost to be incurred upon completion, estimated selling expenses, and relevant taxes and surcharges | Inventories with provision for inventory write-down made in preceding period were used in current period |
| Work in process | Estimated selling price of relevant finished goods less cost to be incurred upon completion, estimated selling expenses, and relevant taxes and surcharges | Inventories with provision for inventory write-down made in preceding period were used in current period |
| Goods on hand | Estimated selling price of relevant finished goods less estimated selling expenses, and relevant taxes and surcharges | Inventories with provision for inventory write-down made in preceding period were sold in current period |
9. Other current assets
Unit: RMB
| Items | Closing balance | Opening balance |
| Cost of returning goods | 12,777,920.71 | 15,580,541.71 |
| Input VAT to be deducted | 309,081,986.00 | 430,728,862.55 |
| Prepaid enterprise income tax | 34,663,477.77 | 48,150,853.42 |
| Deferred expenses and others | 289,546,629.16 | 295,893,972.09 |
| Total | 646,070,013.64 | 790,354,229.77 |
10. Long-term receivables
(1) Details of long-term receivables
Unit: RMB
| Items | Closing balance | Opening balance | Discount rate range | ||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | ||
| Deposits for finance lease | 69,950,000.88 | 69,950,000.88 | 105,950,000.00 | 105,950,000.00 | |||
| Receivables from Powerwave Technologies Thailand Co., Ltd. | 10,703,905.76 | 10,703,905.76 | 10,703,905.76 | 10,703,905.76 | 7.5 | ||
| Total | 80,653,906.64 | 10,703,905.76 | 69,950,000.88 | 116,653,905.76 | 10,703,905.76 | 105,950,000.00 | -- |
Remarks on significant changes in book balance of long-term receivables with changes in provision for bad debts:
□ Applicable √ N/A
11. Long-term equity investments
Unit: RMB
| Investees | Opening balance (carrying amount) | Increase or decrease for the current period | Closing balance (carrying amount) | Closing balance of provisions for bad debts | ||
| Investments increased | Investment profit or loss under equity method | Others | ||||
| Suzhou Toprun Electric Equipment Co., Ltd. | 25,893,111.25 | -1,880,121.23 | 24,012,990.02 | 51,487,204.05 | ||
| Shenzhen Nanfang Blog Technology Development Co., Ltd. | 17,507,056.47 | |||||
| Shanghai Fu Shan Precision Manufacturing Co., Ltd. | ||||||
| Suzhou LEGATE Intelligent Equipment Co., Ltd. | 25,510,113.59 | -2,422,342.61 | 23,087,770.98 | |||
| Suzhou Dongcan Optoelectronics Technology Co., Ltd. | 3,642,892.51 | 73,257.78 | 3,716,150.29 | |||
| Jiangsu Nangao Intelligent Equipment Innovation Center Co., Ltd. | 3,952,690.31 | 67,866.28 | 4,020,556.59 | |||
| Jiaozuo Songyang Optoelectric Technology Co., Ltd. | 33,669,655.66 | -2,921,596.04 | 30,748,059.62 | |||
| ISOTEK MICROWAVE LIMITED | 8,539,424.61 | 8,539,424.61 | ||||
| Suzhou Yongxin Jingshang Venture Capital Partnership (Limited Partnership) | 15,000,000.00 | -16,510.12 | 14,983,489.88 | |||
| BVF (BVI) Holding L.P. | 34,428,780.00 | -416,202.21 | 34,012,577.79 | |||
| Sub-total | 101,207,887.93 | 49,428,780.00 | -7,515,648.15 | 143,121,019.78 | 68,994,260.52 | |
| Total | 101,207,887.93 | 49,428,780.00 | -7,515,648.15 | 143,121,019.78 | 68,994,260.52 |
12. Other equity instrument investments
Unit: RMB
| Items | Closing balance | Opening balance |
| Jiangsu Bohua Equity Investment Partnership (Limited Partnership) | 150,000,000.00 | |
| Hai Dixin Semiconductor (Nantong) Co., Ltd. | 21,322,110.00 | 21,322,110.00 |
| X2 Power Technologies Limited | 43,567,294.30 | |
| Total | 171,322,110.00 | 64,889,404.30 |
Other remarks:
1) Hai Dixin Semiconductor (Nantong) Co., Ltd.
Hai Dixin Semiconductor (Nantong) Co., Ltd. (“Hai Dixin Semiconductor”) was established on April 6, 2012 with a registeredcapital of RMB 36,152,329.00, in which the Company holds 10.2345% equity shares. Considering the fact that the Company holdsshares of Hai Dixin Semiconductor is conducive to improving business competitiveness due to close business connection between theCompany and Hai Dixin Semiconductor and the investment in Hai Dixin Semiconductor is not held for trading, the Companydesignated the investment in Hai Dixin Semiconductor as a financial asset measured at fair value through other comprehensiveincome as at January 1, 2019.
2) X2 Power Technologies Limited
X2 Power Technologies Limited was established in 2014 with the registered place in Cayman, mainly engaged in research anddevelopment of new materials for consumer electronics products. The Company holds 7.5% of its equity shares. Considering the fact
that the Company holds shares of X2 Power Technologies Limited is conducive to improving business competitiveness due to closebusiness connection between the Company and X2 Power Technologies Limited and the investment in X2 Power TechnologiesLimited is not held for trading, the Company designated the investment in X2 Power Technologies Limited as a financial assetmeasured at fair value through other comprehensive income as at January 1, 2019.
3) Jiangsu Bohua Equity Investment Partnership (Limited Partnership)
Jiangsu Bohua Equity Investment Partnership (Limited Partnership) was established on September 27, 2021 with a registered capitalof RMB 3.3 billion, mainly engaged in equity investment; and venture capital investment (limited to investment in unlistedenterprises). The investment in Jiangsu Bohua Equity Investment Partnership (Limited Partnership) is not only conducive toobtaining better investment income for the Company, but also can help the Company grasp the opportunity to make prior layout inhigh quality track and underlying assets at an early stage by leveraging the investment platform, and in addition, this investment isnot held for trading. Therefore, the Company designated the investment in Jiangsu Bohua Equity Investment Partnership (LimitedPartnership) as a financial asset measured at fair value through other comprehensive income.
13. Investment property
(1) Investment property measured at cost
√ Applicable □ N/A
Unit: RMB
| Items | Buildings and structures | Total |
| I. Cost | ||
| 1.Opening balance | ||
| 2. Increase in the current period | 5,309,132.17 | 5,309,132.17 |
| (1) Acquisition | ||
| (2) Transferred in from inventories/fixed assets/construction in progress | 5,309,132.17 | 5,309,132.17 |
| (3) Increase due to business combination | ||
| 3. Decrease in the current period | ||
| (1) Disposal | ||
| (2) Other transfer-out | ||
| 4. Closing balance | 5,309,132.17 | 5,309,132.17 |
| II. Accumulated depreciation and amortization | ||
| 1.Opening balance | ||
| 2. Increase in the current period | 3,754,869.59 | 3,754,869.59 |
| (1) Accrual or amortization | 257,728.95 | 257,728.95 |
| (2) Transferred in from fixed assets | 3,497,140.64 | 3,497,140.64 |
| 3. Decrease in the current period |
| (1) Disposal | ||
| (2) Other transfer-out | ||
| 4. Closing balance | 3,754,869.59 | 3,754,869.59 |
| III. Provision for impairment | ||
| IV. Carrying amount | ||
| 1. Closing balance | 1,554,262.58 | 1,554,262.58 |
| 2. Opening balance |
14. Fixed assets
Unit: RMB
| Items | Closing balance | Opening balance |
| Fixed assets | 10,736,270,678.33 | 10,414,964,294.37 |
| Total | 10,736,270,678.33 | 10,414,964,294.37 |
(1) Details of fixed assets
Unit: RMB
| Items | Buildings and structures | Machines and equipment | Transport facilities | Office equipment and others | Total |
| I. Cost: | |||||
| 1.Opening balance | 3,282,068,536.53 | 14,447,313,627.93 | 80,276,391.87 | 597,182,483.09 | 18,406,841,039.42 |
| 2. Increase in the current period | 128,104,326.47 | 1,736,316,926.10 | 6,013,557.38 | 64,408,457.42 | 1,934,843,267.37 |
| (1) Acquisition | 15,305,538.77 | 757,214,530.99 | 1,609,998.52 | 50,756,386.75 | 824,886,455.03 |
| (2) Transferred from construction in progress | 112,798,787.70 | 979,102,395.11 | 4,403,558.86 | 13,652,070.67 | 1,109,956,812.34 |
| 3. Decrease in the current period | 5,601,709.53 | 243,028,044.26 | 1,937,164.99 | 8,169,045.49 | 258,735,964.27 |
| (1) Disposal or scrapping | 267,052.23 | 243,028,044.26 | 1,921,648.25 | 8,027,332.00 | 253,244,076.74 |
| (2) Transferred to investment property | 5,309,132.17 | 5,309,132.17 | |||
| (3) Translation reserve | 25,525.13 | 15,516.74 | 141,713.49 | 182,755.36 | |
| 4. Closing balance | 3,404,571,153.47 | 15,940,602,509.77 | 84,352,784.26 | 653,421,895.02 | 20,082,948,342.52 |
| II. Accumulated depreciation | |||||
| 1.Opening balance | 1,036,523,225.97 | 6,554,605,810.36 | 56,297,612.77 | 336,444,425.46 | 7,983,871,074.56 |
| 2. Increase in the current period | 167,887,882.46 | 1,339,741,384.19 | 4,506,829.46 | 68,655,566.66 | 1,580,791,662.77 |
| (1) Accrual | 167,887,882.46 | 1,339,741,384.19 | 4,506,829.46 | 68,655,566.66 | 1,580,791,662.77 |
| 3. Decrease in the current period | 3,766,284.16 | 213,319,066.62 | 1,419,659.61 | 7,258,249.92 | 225,763,260.31 |
| (1) Disposal or scrapping | 256,321.09 | 213,319,066.62 | 1,410,323.72 | 7,136,362.07 | 222,122,073.50 |
| (2) Transferred to investment property | 3,497,140.64 | 3,497,140.64 | |||
| (3) Translation reserve | 12,822.43 | 9,335.89 | 121,887.85 | 144,046.17 | |
| 4. Closing balance | 1,200,644,824.27 | 7,681,028,127.93 | 59,384,782.62 | 397,841,742.20 | 9,338,899,477.02 |
| III. Provision for impairment | |||||
| 1.Opening balance | 7,273,567.79 | 732,102.70 | 8,005,670.49 | ||
| 2. Increase in the current period | 983,457.38 | 983,457.38 | |||
| (1) Accrual | 983,457.38 | 983,457.38 | |||
| 3. Decrease in the current period | 1,037,123.75 | 173,816.95 | 1,210,940.70 | ||
| (1) Disposal or scrapping | 1,037,123.75 | 173,816.95 | 1,210,940.70 | ||
| 4. Closing balance | 7,219,901.42 | 558,285.75 | 7,778,187.17 | ||
| IV. Carrying amount | |||||
| 1. Closing balance | 2,203,926,329.20 | 8,252,354,480.42 | 24,968,001.64 | 255,021,867.07 | 10,736,270,678.33 |
| 2. Opening balance | 2,245,545,310.56 | 7,885,434,249.78 | 23,978,779.10 | 260,005,954.93 | 10,414,964,294.37 |
(2) Fixed assets with certificate of titles being unsettled
Unit: RMB
| Items | Carrying amount | Reason for unsettlement |
| Multek plant | 6,196,068.75 | In progress |
| Total | 6,196,068.75 |
15. Construction in progress
Unit: RMB
| Items | Closing balance | Opening balance |
| Construction in progress | 503,037,513.25 | 562,008,491.36 |
| Total | 503,037,513.25 | 562,008,491.36 |
(1) Details of construction in progress
Unit: RMB
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Phase I Yancheng manufacturing base | 338,379,254.70 | 338,379,254.70 | ||||
| Wireless module production and construction project of Yancheng Dongshan Communication Technology Co., Ltd. | 6,086,553.24 | 6,086,553.24 | 15,903,554.40 | 15,903,554.40 | ||
| Multek 5G high-speed high-frequency and high-density PCB technology upgrading project | 6,499,800.00 | 6,499,800.00 | 36,065,932.47 | 36,065,932.47 | ||
| Multek PCB production line technology upgrading project | 108,766,335.70 | 108,766,335.70 | 53,567,745.80 | 53,567,745.80 | ||
| 400?000 m2 fine line FPC production and assembly capacity expansion project | 15,468,498.40 | 15,468,498.40 | 8,992,177.76 | 8,992,177.76 | ||
| LED packaging technology development and industrialization | 125,169,108.26 | 125,169,108.26 | ||||
| Installation equipment and others under construction | 241,047,217.65 | 241,047,217.65 | 109,099,826.23 | 109,099,826.23 | ||
| Total | 503,037,513.25 | 503,037,513.25 | 562,008,491.36 | 562,008,491.36 | ||
(2) Changes in significant projects
Unit: RMB
| Projects | Budgets | Opening balance | Increase in the current period | Transferred to fixed assets | Other decrease in the current period | Closing balance | Accumulated input to budget (%) | Completion percentage (%) | Fund source |
| Phase I Yancheng manufacturing base | 6,000,000,000.00 | 338,379,254.70 | 330,551,780.56 | 7,827,474.14 | 110.60% | 100.00% | Self-raised funds | ||
| Wireless module production and construction project of | 701,000,000.00 | 15,903,554.40 | 9,179,378.44 | 11,916,538.20 | 7,079,841.40 | 6,086,553.24 | 11.48% | 11.48% | Raised funds |
| Yancheng Dongshan Communication Technology Co., Ltd. | |||||||||
| Multek 5G high-speed high-frequency and high-density PCB technology upgrading project | 660,000,000.00 | 36,065,932.47 | 9,778,545.22 | 38,746,966.49 | 597,711.20 | 6,499,800.00 | 38.90% | 38.90% | Raised funds |
| Multek PCB production line technology upgrading project | 728,000,000.00 | 53,567,745.80 | 123,021,456.51 | 66,767,208.55 | 1,055,658.06 | 108,766,335.70 | 70.21% | 70.21% | Raised funds |
| 400?000 m2 fine line FPC production and assembly capacity expansion project | 803,000,000.00 | 8,992,177.76 | 89,744,708.82 | 83,268,388.18 | 15,468,498.40 | 84.87% | 84.87% | Raised funds | |
| LED packaging technology development and industrialization | 680,000,000.00 | 519,046,971.78 | 393,877,863.52 | 125,169,108.26 | 76.33% | 76.33% | Self-raised funds | ||
| Total | 9,572,000,000.00 | 452,908,665.13 | 750,771,060.77 | 925,128,745.50 | 16,560,684.80 | 261,990,295.60 | -- | -- | -- |
16. Right-of-use assets
Unit: RMB
| Items | Buildings and structures | Machines and equipment | Land | Total |
| I. Cost: | ||||
| 1.Opening balance | 922,722,587.26 | 24,598,690.24 | 49,571,215.74 | 996,892,493.24 |
| 2. Increase in the current period | 15,601,408.64 | 71,722,130.92 | 87,323,539.56 | |
| Leased in | 15,601,408.64 | 71,722,130.92 | 87,323,539.56 | |
| 3. Decrease in the current period | ||||
| 4. Closing balance | 938,323,995.90 | 96,320,821.16 | 49,571,215.74 | 1,084,216,032.80 |
| II. Accumulated depreciation | ||||
| 1.Opening balance | 69,403,465.43 | 4,128,409.39 | 3,426,629.33 | 76,958,504.15 |
| 2. Increase in the current period | 58,030,514.27 | 26,769,686.31 | 1,504,660.32 | 86,304,860.90 |
| (1) Accrual | 58,030,514.27 | 26,769,686.31 | 1,504,660.32 | 86,304,860.90 |
| 3. Decrease in the current period | ||||
| 4. Closing balance | 127,433,979.70 | 30,898,095.70 | 4,931,289.65 | 163,263,365.05 |
| III. Provision for impairment | ||||
| IV. Carrying amount | ||||
| 1. Closing balance | 810,890,016.20 | 65,422,725.46 | 44,639,926.09 | 920,952,667.75 |
| 2. Opening balance | 853,319,121.83 | 20,470,280.85 | 46,144,586.41 | 919,933,989.09 |
17. Intangible assets
(1) Details of intangible assets
Unit: RMB
| Items | Land use right | Software | Trademark and patent rights | Development expenditures | Total |
| I. Cost | |||||
| 1.Opening balance | 222,570,625.36 | 163,084,713.43 | 140,567,942.35 | 6,733,029.45 | 532,956,310.59 |
| 2. Increase in the current period | 13,536,317.43 | 23,284,372.78 | 36,820,690.21 | ||
| (1) Acquisition | 13,536,317.43 | 23,284,372.78 | 36,820,690.21 | ||
| 3. Decrease in the current period | 1,293,782.82 | 1,293,782.82 | |||
| (1) Disposal | 61,724.55 | 61,724.55 | |||
| (2) Translation reserve | 1,232,058.27 | 1,232,058.27 | |||
| 4. Closing balance | 236,106,942.79 | 185,075,303.39 | 140,567,942.35 | 6,733,029.45 | 568,483,217.98 |
| II. Accumulated amortization | |||||
| 1.Opening balance | 55,924,016.26 | 103,865,568.81 | 57,094,115.49 | 6,733,029.45 | 223,616,730.01 |
| 2. Increase in the current period | 5,227,750.84 | 29,490,167.22 | 14,057,163.08 | 48,775,081.14 | |
| (1) Accrual | 5,227,750.84 | 29,490,167.22 | 14,057,163.08 | 48,775,081.14 | |
| 3. Decrease in the current period | 1,292,584.64 | 1,292,584.64 | |||
| (1) Disposal | 60,646.58 | 60,646.58 |
| (2) Translation reserve | 1,231,938.06 | 1,231,938.06 | |||
| 4. Closing balance | 61,151,767.10 | 132,063,151.39 | 71,151,278.57 | 6,733,029.45 | 271,099,226.51 |
| III. Provision for impairment | |||||
| IV. Carrying amount | |||||
| 1. Closing balance | 174,955,175.69 | 53,012,152.00 | 69,416,663.78 | 297,383,991.47 | |
| 2. Opening balance | 166,646,609.10 | 59,219,144.62 | 83,473,826.86 | 309,339,580.58 |
The proportion of intangible assets generated from the Company’s internal research and development accounts for 0.00% of thebalance of intangible assets at the end of the period.
18. Goodwill
(1) Cost of goodwill
Unit: RMB
| Investees or events resulting in goodwill | Opening balance | Closing balance |
| MFLEX | 1,770,752,915.84 | 1,770,752,915.84 |
| Multek | 179,329,062.90 | 179,329,062.90 |
| Mutto Optronics Technology Co., Ltd. | 153,957,647.78 | 153,957,647.78 |
| Suzhou RF Top Electronic Communication Co., Ltd. | 135,001,580.53 | 135,001,580.53 |
| Total | 2,239,041,207.05 | 2,239,041,207.05 |
(2) Provision for impairment of goodwill
Unit: RMB
| Investees or events resulting in goodwill | Opening balance | Increase | Closing balance | |
| Provision | ||||
| Mutto Optronics Technology Co., Ltd. | 18,450,298.84 | 18,450,298.84 | ||
| Suzhou RF Top Electronic Communication Co., Ltd. | 8,868,134.17 | 8,868,134.17 | ||
| Total | 18,450,298.84 | 8,868,134.17 | 27,318,433.01 | |
Related information of asset group or asset group portfolios which include goodwill
(1) MFLEX
Unit: RMB
| Composition of asset group or asset group portfolios | Assets and liabilities |
| Carrying amount of asset group or asset group portfolios | 8,247,888,700.81 |
| Carrying amount of goodwill allocated to the asset group or asset group portfolios and the allocation method | 1,770,752,915.84 |
| Carrying amount of asset group or asset group portfolios that include goodwill | 10,018,641,616.65 |
| Whether asset group or asset group portfolios are consistent with those at acquisition date or those with goodwill impairment tested in previous years | Yes |
(2) Multek
Unit: RMB
| Composition of asset group or asset group portfolios | Assets and liabilities |
| Carrying amount of asset group or asset group portfolios | 2,385,678,155.26 |
| Carrying amount of goodwill allocated to the asset group or asset group portfolios and the allocation method | 179,329,062.87 |
Carrying amount of asset group or asset group portfolios that include goodwill
| Carrying amount of asset group or asset group portfolios that include goodwill | 2,565,007,218.13 |
| Whether asset group or asset group portfolios are consistent with those at acquisition date or those with goodwill impairment tested in previous years | Yes |
(3) Mutto Optronics Technology Co., Ltd.
Unit: RMB
| Composition of asset group or asset group portfolios | Assets and liabilities |
| Carrying amount of asset group or asset group portfolios | 603,218,441.75 |
Carrying amount of goodwill allocated to the asset group or asset group portfolios and the allocation method
| Carrying amount of goodwill allocated to the asset group or asset group portfolios and the allocation method | 135,507,348.94 |
| Carrying amount of asset group or asset group portfolios that include goodwill | 738,725,790.69 |
| Whether asset group or asset group portfolios are consistent with those at acquisition date or those with goodwill impairment tested in previous years | Yes |
(4) Suzhou RF Top Electronic Communication Co., Ltd.
Unit: RMB
| Composition of asset group or asset group portfolios | Assets and liabilities |
Carrying amount of asset group or asset group portfolios
| Carrying amount of asset group or asset group portfolios | 229,809,362.34 |
| Goodwill attributable to the Company | 135,001,580.53 |
| Goodwill attributable to minority shareholders | 57,857,820.23 |
Carrying amount of goodwill allocated to the asset group or asset group portfolios and the allocation method
| Carrying amount of goodwill allocated to the asset group or asset group portfolios and the allocation method | 192,859,400.76 |
| Carrying amount of asset group or asset group portfolios that include goodwill | 422,668,763.10 |
| Whether asset group or asset group portfolios are consistent with those at acquisition date or those with goodwill impairment tested in previous years | Yes |
Remarks on the goodwill impairment testing process, key parameters (such as the growth rate over the estimated period when thepresent value of future cash flows is expected, the growth rate over the stabilization period, profitability, discount rate, estimatedperiod, etc.) and the method for recognizing goodwill impairment losses:
(1) Goodwill impairment testing process of MFLEX
The recoverable amount of goodwill is computed based on the present value of estimated future cash flows, which is based on the5-year estimated annual cash flows approved by the Company. The discount rate used in estimating the annual cash flows is 9.93%,and the cash flows subsequent to the estimated period is inferred by a growth rate of 0.00%.Other key data used in the impairment test include: the estimated selling price, sales amount, cost of product, and other relevantexpenses.Such key data are determined by the Company based on its experience and its prediction towards market development. The discountrate used by the Company is the pre-tax interest rate that reveals the time value of currency under the current market situation and
special risks of certain asset group.Pursuant to the Evaluation Report (Kun Yuan Ping Bao [2022] No.2-7) issued by Kunyuan Assets Appraisal Co., Ltd., which isengaged by the Company, the recoverable amount of asset group or asset group portfolios that include goodwill totaled RMB15,460,000,000.00, with an amount of RMB 5,441,358,383.35 higher than the carrying amount, which suggests that the Company’sgoodwill is not impaired.
(2) Goodwill impairment testing process of Multek
The recoverable amount of goodwill is computed based on the present value of estimated future cash flows, which is based on the5-year estimated annual cash flows approved by the Company. The discount rate used in estimating the annual cash flows is 11.98%,and the cash flows subsequent to the estimated period is inferred by a growth rate of 0.00%.Other key data used in the impairment test include: the estimated selling price, sales amount, cost of product, and other relevantexpenses.Such key data are determined by the Company based on its experience and its prediction towards market development. The discountrate used by the Company is the pre-tax interest rate that reveals the time value of currency under the current market situation andspecial risks of certain asset group.Pursuant to the Evaluation Report (Kun Yuan Ping Bao [2022] No.2-6) issued by Kunyuan Assets Appraisal Co., Ltd., which isengaged by the Company, the recoverable amount of asset group or asset group portfolios that include goodwill totaled RMB3,450,000,000.00, with an amount of RMB 884,992,781.87 higher than the carrying amount, which suggests that the Company’sgoodwill is not impaired.
(3) Goodwill impairment testing process of Mutto Optronics Technology Co., Ltd.
The recoverable amount of goodwill is computed based on the present value of estimated future cash flows, which is based on the5-year estimated annual cash flows approved by the Company. The discount rate used in estimating the annual cash flows is 11.48%,and the cash flows subsequent to the estimated period is inferred by a growth rate of 0.00%.Other key data used in the impairment test include: the estimated selling price, sales amount, cost of product, and other relevantexpenses.Such key data are determined by the Company based on its experience and its prediction towards market development. The discountrate used by the Company is the pre-tax interest rate that reveals the time value of currency under the current market situation andspecial risks of certain asset group.Pursuant to the Evaluation Report (Kun Yuan Ping Bao [2022] No.2-8) issued by Kunyuan Assets Appraisal Co., Ltd., which isengaged by the Company, the recoverable amount of asset group or asset group portfolios that include goodwill totaled RMB761,000,000.00, with an amount of RMB 22,274,209.31 higher than the carrying amount, which suggests that the Company’sgoodwill is not impaired.
(4) Goodwill impairment testing process of Suzhou RF Top Electronic Communication Co., Ltd.The recoverable amount of goodwill is computed based on the present value of estimated future cash flows, which is based on the5-year estimated annual cash flows approved by the Company. The discount rate used in estimating the annual cash flows is 13.40%,and the cash flows subsequent to the estimated period is inferred by a growth rate of 0.00%.Other key data used in the impairment test include: the estimated selling price, sales amount, cost of product, and other relevant
expenses. Such key data are determined by the Company based on its experience and its prediction towards market development. Thediscount rate used by the Company is the pre-tax interest rate that reveals the time value of currency under the current marketsituation and special risks of certain asset group.Pursuant to the Evaluation Report (Zhong Sheng Ping Bao Zi [2022] No.0015 issued by Zhongsheng Appraisal and Consulting Co.,Ltd., which is engaged by the Company, the recoverable amount of asset group or asset group portfolios that include goodwill totaledRMB 410,000,000.00, and the carrying amount totaled RMB 422,668,763.10. For the current period, an amount of RMB12,668,763.10 is recognized as goodwill impairment loss, of which an amount of RMB 8,868,134.17 is attributable to the Company.
19. Long-term deferred expenses
Unit: RMB
| Items | Opening balance | Increase | Amortization | Other decreases | Closing balance |
| Fixed asset decoration fees and others | 324,048,122.31 | 166,390,747.92 | 147,371,022.13 | 343,067,848.10 | |
| Total | 324,048,122.31 | 166,390,747.92 | 147,371,022.13 | 343,067,848.10 |
20. Deferred tax assets/deferred tax liabilities
(1) Details of deferred tax assets before offset
Unit: RMB
| Items | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Provision for impairment losses of assets | 956,860,891.98 | 180,116,639.73 | 903,919,163.21 | 137,912,736.07 |
| Deductible losses | 1,160,149,214.53 | 184,025,381.05 | 1,210,681,790.98 | 222,254,426.15 |
| Fixed assets | 18,518,436.84 | 3,989,568.63 | 50,988,502.52 | 12,747,125.63 |
| Accrued expenses | 215,578,295.20 | 37,447,545.61 | 383,739,338.69 | 76,083,096.12 |
| Provisions | 89,442,831.13 | 17,799,642.22 | 17,132,627.84 | 4,217,721.50 |
| Deferred income | 681,387,013.96 | 112,541,906.35 | 573,283,629.52 | 105,204,728.65 |
| Total | 3,121,936,683.64 | 535,920,683.59 | 3,139,745,052.76 | 558,419,834.12 |
(2) Details of deferred tax liabilities before offset
Unit: RMB
| Items | Closing balance | Opening balance | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Book-tax difference of depreciation of fixed assets | 1,292,505,799.91 | 285,711,977.06 | 1,109,639,572.77 | 277,409,893.20 |
| Accrued interest income, etc. | 136,407,400.98 | 28,647,365.94 | 90,802,270.04 | 21,813,987.32 |
| Total | 1,428,913,200.89 | 314,359,343.00 | 1,200,441,842.81 | 299,223,880.52 |
(3) Deferred tax assets or liabilities after offset
Unit: RMB
| Items | Closing balance of deferred tax assets or liabilities after offset | Opening balance of deferred tax assets or liabilities after offset |
| Deferred tax assets | 535,920,683.59 | 558,419,834.12 |
| Deferred tax liabilities | 314,359,343.00 | 299,223,880.52 |
(4) Details of unrecognized deferred tax assets
Unit: RMB
| Items | Closing balance | Opening balance |
| Deductible losses | 260,832,646.62 | 284,863,458.27 |
| Bad debt provisions for accounts receivable | 143,374,158.66 | 150,808,177.86 |
| Bad debt provisions for other receivables | 25,054,047.22 | 36,135,299.60 |
| Provision for inventory write-down | 100,331,242.39 | 75,289,882.17 |
| Provision for payment in advance | 11,270,721.08 | |
| Investment losses | 74,092,106.93 | 66,576,458.78 |
| Changes in other equity instrument investments | 400,000,000.00 | 400,000,000.00 |
| Provision for impairment of long-term equity investment | 68,994,260.52 | 68,994,260.52 |
| Provision for impairment of goodwill | 27,318,433.01 | 18,450,298.84 |
| Total | 1,111,267,616.43 | 1,101,117,836.04 |
(5) Maturity years of deductible losses of unrecognized deferred tax assets
Unit: RMB
| Maturity years | Closing balance | Opening balance |
| Year 2021 | 63,407,823.66 | |
| Year 2022 | 66,252,182.98 | 66,252,182.98 |
| Year 2023 | 13,996,117.83 | 13,996,117.83 |
| Year 2024 | 40,403,329.83 | 40,403,329.83 |
| Year 2025 | 100,804,003.97 | 100,804,003.97 |
| Year 2026 | 39,377,012.01 | |
| Total | 260,832,646.62 | 284,863,458.27 |
21. Other non-current assets
Unit: RMB
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Deferred income-unrealized sale-leaseback profit or loss | 41,372,547.26 | 41,372,547.26 | 39,365,561.68 | 39,365,561.68 | ||
| Prepayments for project equipment | 244,924,386.94 | 244,924,386.94 | 88,328,668.56 | 88,328,668.56 | ||
| Total | 286,296,934.20 | 286,296,934.20 | 127,694,230.24 | 127,694,230.24 | ||
22. Short-term borrowings
(1) Category of short-term borrowings
Unit: RMB
| Items | Closing balance | Opening balance |
| Pledged borrowings | 803,328,447.58 | 263,605,960.00 |
| Credit borrowings | 5,423,644,628.31 | 4,536,179,758.34 |
| Discounted payments on acceptance bills and letters of credit | 1,820,194,933.27 | 3,581,805,423.85 |
| Financing borrowings of export trade acceptances | 197,563,926.00 | |
| Total | 8,047,168,009.16 | 8,579,155,068.19 |
23. Held-for-trading financial liabilities
Unit: RMB
| Items | Closing balance | Opening balance |
| Held-for-trading financial liabilities | 881,721.20 | |
| Including: | ||
| Derivative financial liabilities | 881,721.20 | |
| Total | 881,721.20 |
24. Notes payable
Unit: RMB
| Category | Closing balance | Opening balance |
| Trade acceptance | 495,211,358.88 | 541,472,482.11 |
| Bank acceptance | 1,151,432,748.29 | 1,226,468,067.64 |
| Total | 1,646,644,107.17 | 1,767,940,549.75 |
At the end of the reporting period, balances due but unpaid totaled RMB0.00.
25. Accounts payable
(1) Accounts payable
Unit: RMB
| Items | Closing balance | Opening balance |
| Payables for materials | 6,379,442,178.87 | 6,251,650,591.54 |
| Payables for project equipment | 238,100,061.70 | 1,051,629,072.88 |
| Others | 112,347,885.43 | 139,958,248.30 |
| Total | 6,729,890,126.00 | 7,443,237,912.72 |
26. Contract liabilities
Unit: RMB
| Items | Closing balance | Opening balance |
| Goods payments | 39,681,986.94 | 21,204,655.32 |
| Total | 39,681,986.94 | 21,204,655.32 |
27. Employee benefits payable
(1) Employee benefits payable
Unit: RMB
| Items | Opening balance | Increase | Decrease | Closing balance |
| I. Short-term employee benefits | 373,384,122.38 | 3,928,073,203.08 | 3,807,269,007.26 | 494,188,318.20 |
| II. Post-employment benefits-defined contribution plan | 8,050,407.71 | 215,116,416.24 | 214,216,420.09 | 8,950,403.86 |
| III. Termination benefits | 6,475,698.34 | 6,475,698.34 | ||
| Total | 381,434,530.09 | 4,149,665,317.66 | 4,027,961,125.69 | 503,138,722.06 |
(2) Details of short-term employee benefits
Unit: RMB
| Items | Opening balance | Increase | Decrease | Closing balance |
| 1. Wage, bonus, allowance and subsidy | 369,650,802.72 | 3,462,795,244.94 | 3,349,143,601.70 | 483,302,445.96 |
| 2.Employee welfare fund | 256,368,603.05 | 249,334,638.10 | 7,033,964.95 | |
| 3. Social insurance premium | 2,938,722.85 | 99,565,514.71 | 99,408,387.74 | 3,095,849.82 |
| Occupational injuries premium | 379,233.09 | 13,199,457.47 | 13,273,353.52 | 305,337.04 |
| Medicare and maternity premium | 2,559,489.76 | 86,366,057.24 | 86,135,034.22 | 2,790,512.78 |
| 4. Housing provident fund | 767,689.28 | 99,745,056.47 | 99,799,031.28 | 713,714.47 |
| 5. Trade union fund and employee education fund | 26,907.53 | 9,598,783.91 | 9,583,348.44 | 42,343.00 |
| Total | 373,384,122.38 | 3,928,073,203.08 | 3,807,269,007.26 | 494,188,318.20 |
(3) Details of defined contribution plan
Unit: RMB
| Items | Opening balance | Increase | Decrease | Closing balance |
| 1.Basic endowment insurance premium | 7,623,423.95 | 207,388,041.17 | 206,496,101.60 | 8,515,363.52 |
| 2. Unemployment insurance premium | 426,983.76 | 7,728,375.07 | 7,720,318.49 | 435,040.34 |
| Total | 8,050,407.71 | 215,116,416.24 | 214,216,420.09 | 8,950,403.86 |
28. Taxes and rates payable
Unit: RMB
| Items | Closing balance | Opening balance |
| Value-added tax (VAT) | 13,157,710.23 | 12,591,579.73 |
| Enterprise income tax | 118,468,480.14 | 131,306,099.72 |
| Personal income tax | 6,497,075.81 | 4,989,500.32 |
| Urban maintenance and construction tax | 5,756,770.23 | 3,924,093.42 |
| Housing property tax | 2,086,047.98 | 2,914,231.15 |
| Stamp duty | 1,218,619.49 | 888,997.63 |
| Education surcharge | 2,533,372.30 | 2,578,621.84 |
| Land use tax | 251,467.78 | 261,295.92 |
| Local education surcharge | 1,688,914.92 | 718,643.14 |
| Water conservancy construction fund | 3,191.10 | 15,707.90 |
| Environmental taxes | 30,893.87 | 23,933.28 |
| Total | 151,692,543.85 | 160,212,704.05 |
29. Other payables
Unit: RMB
| Items | Closing balance | Opening balance |
| Other payables | 323,166,075.34 | 59,939,206.62 |
| Total | 323,166,075.34 | 59,939,206.62 |
(1) Other payables
1) Other payables by nature
Unit: RMB
| Items | Closing balance | Opening balance |
| Factoring funds temporarily received from customers | 255,139,275.93 | |
| Temporary advance receipts payable | 53,170,787.42 | 29,912,249.35 |
| Payables for transfer of equity shares | 24,761,591.39 | |
| Others | 14,856,011.99 | 5,265,365.88 |
| Total | 323,166,075.34 | 59,939,206.62 |
30. Non-current liabilities due within one year
Unit: RMB
| Items | Closing balance | Opening balance |
| Long-term borrowings due within one year | 1,386,857,142.00 | 601,243,593.78 |
| Long-term payables due within one year | 34,658,340.90 | 363,320,073.06 |
| Lease liabilities due within 1 year | 69,030,382.03 | 20,648,075.55 |
| Total | 1,490,545,864.93 | 985,211,742.39 |
31. Other current liabilities
Unit: RMB
| Items | Closing balance | Opening balance |
| Output tax to be transferred | 2,440,030.34 | 865,474.44 |
| Total | 2,440,030.34 | 865,474.44 |
32. Long-term borrowings
(1) Category of long-term borrowings
Unit: RMB
| Items | Closing balance | Opening balance |
| Pledged borrowings | 96,273,070.00 | |
| Guaranteed borrowings | 200,000,000.00 | 1,272,146,490.00 |
| Credit borrowings | 1,274,252,691.80 | 1,192,574,404.68 |
| Guaranteed and pledged borrowings | 200,000,000.00 | |
| Pledged, mortgaged and guaranteed borrowings | 260,000,000.00 | 300,000,000.00 |
| Total | 2,030,525,761.80 | 2,764,720,894.68 |
33. Lease liabilities
Unit: RMB
| Items | Closing balance | Opening balance |
| Lease payments not paid yet | 1,477,069,971.87 | 1,487,741,006.63 |
| Financing expenses unrecognized | -329,259,807.15 | -370,990,443.10 |
| Total | 1,147,810,164.72 | 1,116,750,563.53 |
34. Long-term payables
Unit: RMB
| Items | Closing balance | Opening balance |
| Long-term payables | 78,927,000.98 | 126,060,204.59 |
| Total | 78,927,000.98 | 126,060,204.59 |
(1) Details in long-term payables categorized by nature
Unit: RMB
| Items | Closing balance | Opening balance |
| Finance lease payables | 78,927,000.98 | 126,060,204.59 |
35. Provisions
Unit: RMB
| Items | Closing balance | Opening balance |
| Products quality guarantee | 67,188,779.26 | 13,895,925.00 |
| Goods refund payable | 22,254,051.87 | 21,823,625.76 |
| Total | 89,442,831.13 | 35,719,550.76 |
36. Deferred income
Unit: RMB
| Items | Opening balance | Increase | Decrease | Closing balance | Reasons for balance |
| Government grants | 648,248,649.02 | 142,954,343.00 | 105,569,311.37 | 685,633,680.65 | Related to assets |
| Total | 648,248,649.02 | 142,954,343.00 | 105,569,311.37 | 685,633,680.65 | -- |
37. Share capital
Unit: RMB
| Opening balance | Increase or decrease (+,-) | Closing balance | |||||
| Issue of new shares | Bonus shares | Reserve transferred to shares | Others | Sub-total | |||
| Total shares | 1,709,867,327.00 | 1,709,867,327.00 | |||||
38. Capital reserve
Unit: RMB
| Items | Opening balance | Increase | Decrease | Closing balance |
| Capital premium (share capital premium) | 7,957,871,910.95 | 7,957,871,910.95 | ||
| Other capital reserve | 179,007,502.44 | 37,354,540.49 | 141,652,961.95 | |
| Total | 8,136,879,413.39 | 37,354,540.49 | 8,099,524,872.90 |
Other remarks, including changes and reasons therefor:
The Company purchased a minority interest of RF Top Electronic, resulting capital surplus decreased by RMB 37,354,540.49 sincethere is a difference between the purchase price and the net assets held by the Company based on the shareholding proportion.
39.Treasury shares
Unit: RMB
| Items | Opening balance | Increase | Decrease | Closing balance |
| Treasury shares | 100,479,794.32 | 100,479,794.32 | ||
| Total | 100,479,794.32 | 100,479,794.32 |
Other remarks, including changes and reasons therefor:
As of August 31, 2021, the Company accumulatively repurchased a total of 5.3197 million shares of the Company through a specialsecurities account for repurchase by means of centralized competitive bidding with a transaction amount totaled RMB 100.4798(excluding transaction costs), accounting for 0.31% of the total share capital of the Company. In the above repurchase transactions,the highest transaction price paid by the Company was RMB 19.18 per share while the lowest transaction price was RMB 18.24 pershare.
40. Other comprehensive income (OCI)
Unit: RMB
| Items | Opening balance | Current period cumulative | Closing balance | |||||
| Current period cumulative before income | Less: OCI previously recognized but | Less: OCI previously recognized but | Less: Income tax | Attributable to the parent company after | Attributable to non-controllin | |||
| tax | transferred to profit or loss in current period | transferred to retained earnings in current period | tax | g shareholders | ||||
| I. Items not to be reclassified subsequently to profit or loss | -328,063,853.54 | 21,936,146.46 | -21,936,146.46 | -350,000,000.00 | ||||
| Changes in fair value of other equity instrument investments | -328,063,853.54 | 21,936,146.46 | -21,936,146.46 | -350,000,000.00 | ||||
| II. Items to be reclassified subsequently to profit or loss | -123,551,784.22 | 18,958,707.99 | 63,740,316.63 | 1,292,673.35 | -46,074,281.99 | -169,626,066.21 | ||
| Cash flow hedging reserves | 50,109,339.97 | 69,679,599.00 | 63,740,316.63 | 1,292,673.35 | 4,646,609.02 | 54,755,948.99 | ||
| Translation reserves | -173,661,124.19 | -50,720,891.01 | -50,720,891.01 | -224,382,015.20 | ||||
| Total | -451,615,637.76 | 18,958,707.99 | 63,740,316.63 | 21,936,146.46 | 1,292,673.35 | -68,010,428.45 | -519,626,066.21 |
41. Surplus reserve
Unit: RMB
| Items | Opening balance | Increase | Decrease | Closing balance |
| Statutory surplus reserve | 75,205,377.40 | 36,492,937.75 | 111,698,315.15 | |
| Total | 75,205,377.40 | 36,492,937.75 | 111,698,315.15 |
Descriptions of surplus reserve, including changes for the current period and reasons therefor:
Surplus reserve increased by RMB 36,492,937.75 this year, arising from appropriation of statutory surplus reserve in accordance with10% of net profits of the parent company.
42. Undistributed profit
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Balance before adjustment at the end of preceding period | 3,598,580,392.76 | 2,169,454,382.50 |
| Opening balance after adjustment | 3,598,580,392.76 | 2,169,454,382.50 |
| Add: Net profit attributable to owners of the parent company | 1,862,481,138.84 | 1,530,132,196.09 |
| Less: Appropriation of statutory surplus reserve | 36,492,937.75 | 20,677,561.98 |
| Dividends payable on ordinary shares | 170,986,732.70 | 80,328,623.85 |
| Add: others | 21,933,809.48 | |
| Closing balance | 5,275,515,670.63 | 3,598,580,392.76 |
43. Operating revenue and operating costs
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Revenue | Cost | Revenue | Cost | |
| Main operations | 31,682,727,248.03 | 27,080,576,091.48 | 28,017,895,740.11 | 23,648,679,360.68 |
| Other operations | 110,420,660.09 | 47,974,536.45 | 75,513,690.15 | 31,612,149.09 |
| Total | 31,793,147,908.12 | 27,128,550,627.93 | 28,093,409,430.26 | 23,680,291,509.77 |
Whether the lower of the net profit after non-recurring gains or losses is negative
□ Yes √ No
Other remarksRevenue recognized in the current period and included in the opening balance of the book value of contract liabilities amounted toRMB 6,648,456.90.
44. Taxes and surcharges
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Urban maintenance and construction tax | 24,263,505.47 | 32,460,565.44 |
| Education surcharge | 11,969,192.59 | 17,176,219.26 |
| Housing property tax | 16,123,105.43 | 15,533,333.82 |
| Land use tax | 1,365,774.21 | 1,259,185.72 |
| Vehicle and vessel use tax | 24,502.86 | 12,480.02 |
| Stamp duty | 11,367,477.23 | 9,503,081.81 |
| Local education surcharge | 7,913,333.55 | 11,450,772.16 |
| Environmental taxes | 133,322.63 | 92,361.87 |
| Total | 73,160,213.97 | 87,488,000.10 |
45. Selling expenses
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Employee benefits | 190,368,189.92 | 187,002,497.39 |
| Selling service fees | 39,874,711.20 | 28,320,239.10 |
| Export expenses | 35,107,304.52 | 34,040,606.18 |
| Travel expenses | 30,192,865.53 | 29,294,177.28 |
| Business entertainment expenses | 13,589,530.56 | 17,916,382.22 |
| Others | 31,955,044.68 | 32,606,444.33 |
| Total | 341,087,646.41 | 329,180,346.50 |
Other remarks:
The Company presents transportation costs incurred to fulfill customers’ sales contracts in the line item of operating cost inaccordance with the Q&A for the Implementation of CASBEs issued by the Accounting Department of the Ministry of Finance on
November 2, 2021.
46. Administrative expenses
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Employee benefits | 416,884,816.93 | 379,738,766.26 |
| Depreciation and amortization | 112,065,654.97 | 93,375,850.37 |
| Consulting service fees | 72,107,147.93 | 62,071,843.91 |
| Office allowances | 49,392,919.93 | 41,196,948.62 |
| Business entertainment expenses | 39,212,589.24 | 37,962,065.24 |
| Travel expenses | 12,835,540.39 | 17,948,042.56 |
| Lease payments | 8,372,878.92 | 6,696,424.00 |
| Repair expenses | 17,205,668.65 | 3,204,690.07 |
| Taxes | 436,304.97 | 840,453.62 |
| Others | 53,151,208.43 | 43,443,918.43 |
| Total | 781,664,730.36 | 686,479,003.08 |
47. R&D expenses
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Materials used | 553,757,553.07 | 521,199,000.98 |
| Labor costs | 345,837,438.45 | 293,856,853.11 |
| Depreciation expenses | 56,671,015.71 | 48,314,696.60 |
| Others | 72,301,199.72 | 46,882,830.75 |
| Total | 1,028,567,206.95 | 910,253,381.44 |
48. Financial expenses
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Interest expenses | 285,474,106.93 | 460,228,886.85 |
| Lease interest and financing charges | 85,865,366.64 | 102,086,293.45 |
| Less: interest income | 62,819,318.55 | 87,524,003.63 |
| Add: foreign exchange losses | 70,483,663.21 | 103,103,675.59 |
| Bank commissions and others | 57,659,855.67 | 52,215,726.71 |
| Total | 436,663,673.90 | 630,110,578.97 |
49. Other income
Unit: RMB
| Source of other income | Current period cumulative | Preceding period comparative |
| Government grants related to assets | 105,569,311.37 | 62,619,560.46 |
| Government grants related to income | 163,175,414.88 | 139,310,997.96 |
| Refund of handling fees for withholding individual income tax | 722,866.99 | 414,836.61 |
50. Investment income
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Investment income from long-term equity investments under equity method | -7,515,648.15 | 6,412,017.44 |
| Investment income from disposal of long-term equity investments | 28,827,931.90 | 7,620,144.16 |
| Investment income from held-for-trading financial assets | 108,467.86 | |
| Investment income from disposal of held-for-trading financial assets | 9,012,671.97 | -327,019.04 |
| Discounted loss on receivables financing | -768,750.98 | -5,545,219.23 |
| Income from bank wealth management product | 11,913,618.63 | 10,718,494.92 |
| Total | 41,578,291.23 | 18,878,418.25 |
51. Gains on changes in fair value
Unit: RMB
| Source of gains on changes in fair value | Current period cumulative | Preceding period comparative |
| Held-for-trading financial assets | 8,645,469.99 | 18,302,922.59 |
| Held-for-trading financial liabilities | -5,069,471.20 | |
| Total | 8,645,469.99 | 13,233,451.39 |
52. Credit impairment losses
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Bad debt losses | -7,992,105.91 | -142,200,047.48 |
| Total | -7,992,105.91 | -142,200,047.48 |
53. Assets impairment loss
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| I. Bad debt losses | -11,270,721.08 | |
| II. Losses from inventory write-down and impairment loss of contract performance costs | -166,254,407.47 | -84,916,564.37 |
| V. Impairment loss of fixed assets | -983,457.38 | |
| XI. Impairment loss of goodwill | -8,868,134.17 | |
| Total | -187,376,720.10 | -84,916,564.37 |
54. Gains on asset disposal
Unit: RMB
| Source of gains on asset disposal | Current period cumulative | Preceding period comparative |
| Gains on disposal of fixed assets | -14,060,145.96 | 20,840,573.82 |
| Gains on disposal of intangible assets | 541,691.72 |
55. Non-operating revenue
Unit: RMB
| Items | Current period cumulative | Preceding period comparative | Amount included in the non-recurring gains or losses for the current period |
| Performance compensation | 12,000,000.00 | ||
| Income from fines and confiscations | 407,738.14 | 528,429.78 | 407,738.14 |
| Payment unable to be made | 2,380,233.49 | 152,263.58 | 2,380,233.49 |
| Others | 324,831.16 | 784,497.46 | 324,831.16 |
| Total | 3,112,802.79 | 13,465,190.82 | 3,112,802.79 |
56. Non-operating expenditures
Unit: RMB
| Items | Current period cumulative | Preceding period comparative | Amount included in the non-recurring gains or losses for the current period |
| Donation expenditures | 3,503,180.00 | 11,626,835.65 | 3,503,180.00 |
| Losses on damage or scrapping of non-current assets | 984,352.01 | 10,453,563.18 | 984,352.01 |
| Penalties, late payment fees, and liquidated damages | 972,242.63 | 3,045,323.20 | 972,242.63 |
| Others | 546,696.75 | 343,650.33 | 546,696.75 |
| Total | 6,006,471.39 | 25,469,372.36 | 6,006,471.39 |
57. Income tax expenses
(1) Table of income tax expenses
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Current period income tax expenses | 213,580,884.70 | 311,953,419.80 |
| Deferred income tax expenses | 36,341,939.66 | -62,815,256.58 |
| Total | 249,922,824.36 | 249,138,163.22 |
(2) Reconciliation of accounting profit to income tax expenses
Unit: RMB
| Items | Current period cumulative |
| Profit before tax | 2,110,822,522.49 |
| Income tax expense calculated based on statutory/applicable tax rate | 316,623,378.37 |
| Effect of different tax rate applicable to subsidiaries | -11,239,785.34 |
| Effect of non-deductible costs, expenses and losses | 4,571,962.96 |
| Effect of deducible temporary differences or deductible losses not recognized as deferred tax assets in the current period | 12,065,419.74 |
| Effect of additional deduction of R&D expenses | -72,098,151.37 |
| Income tax expenses | 249,922,824.36 |
58. Other comprehensive income
Please refer to the note of other comprehensive income (OCI) for details.
59. Items of the consolidated cash flow statement
(1) Other cash receipts related to operating activities
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Deposits for acceptance bills | 129,542,128.04 | 460,794,004.93 |
| Government grants | 318,989,224.87 | 468,187,787.14 |
| Interest income | 62,819,318.55 | 87,524,003.63 |
| Temporary advance receipts payable and others | 732,569.30 | 1,312,927.24 |
| Total | 512,083,240.76 | 1,017,818,722.94 |
(2) Other cash payments related to operating activities
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Deposits for acceptance bills | 151,102,248.04 | 129,542,128.04 |
| Cash payments of selling expenses | 150,719,456.49 | 297,647,844.03 |
| Cash payments of administrative expenses | 252,714,258.46 | 213,364,386.45 |
| Cash payments of R&D expenses | 72,301,199.72 | 95,197,527.35 |
| Band commissions | 57,659,855.67 | 52,215,726.71 |
| Temporary advance payments receivable and others | 40,105,256.38 | 22,988,094.67 |
| Total | 724,602,274.76 | 810,955,707.25 |
(3) Other cash receipts related to investing activities
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Time deposits | 50,000,000.00 | 108,408,535.48 |
| Recovery of asset transfer payments | 564,294,406.73 | 232,000,000.00 |
| Total | 614,294,406.73 | 340,408,535.48 |
(4) Other cash payments related to investing activities
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Loss control over subsidiaries | 1,288.94 | |
| Total | 1,288.94 |
(5) Other cash receipts related to financing activities
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Cash receipts of sale-leaseback financing lease | 167,000,000.00 | |
| Various guarantee deposits | 2,101,333,325.23 | 1,561,876,058.26 |
| Discounted payments on acceptance bills and letters of credit | 1,820,194,933.27 | 3,581,805,423.85 |
| Total | 3,921,528,258.50 | 5,310,681,482.11 |
(6) Other cash payments related to financing activities
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Auditing and consulting fees paid for issue of securities | 4,801,886.79 | |
| Various guarantee deposits | 826,870,220.72 | 2,101,333,325.23 |
| Lease payments | 282,078,462.04 | 546,136,122.12 |
| Payments for bill financing | 3,581,805,423.85 | 3,346,731,652.83 |
| Repurchase of shares | 100,479,794.32 | |
| Acquisition of non-controlling interest of RF Top Electronic | 65,756,910.17 | |
| Total | 4,856,990,811.10 | 5,999,002,986.97 |
60. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Unit: RMB
| Supplementary information | Current period cumulative | Preceding period comparative |
| 1. Reconciliation of net profit to cash flow from operating activities: | -- | -- |
| Net profit | 1,860,899,698.13 | 1,537,187,184.00 |
| Add: Provision for assets impairment loss | 195,368,826.01 | 227,116,611.85 |
| Depreciation of fixed assets, oil and gas assets, productive biological assets | 1,581,049,391.72 | 1,464,361,023.91 |
| Depreciation of right-of-use assets | 86,304,860.90 | |
| Amortization of intangible assets | 48,775,081.14 | 44,872,349.70 |
| Amortization of long-term prepayments | 147,371,022.13 | 140,820,154.70 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (or less: gains) | 14,060,145.96 | -21,382,265.54 |
| Fixed assets scrapping loss (or less: gains) | 984,352.01 | 10,453,563.18 |
| Losses on changes in fair value (or less: gains) | -8,645,469.99 | -13,233,451.39 |
| Financial expenses (or less: gains) | 351,562,005.91 | 569,248,680.30 |
| Investment losses (or less: gains) | -41,578,291.23 | -18,878,418.25 |
| Decrease of deferred tax assets (or less: increase) | 22,499,150.53 | -214,192,107.74 |
| Increase of deferred tax liabilities (or less: decrease) | 13,842,789.13 | 151,376,851.16 |
| Decrease of inventories (or less: increase) | -739,877,310.44 | -1,505,664,143.68 |
| Decrease of operating receivables (or less: increase) | -780,445,681.69 | -1,538,112,737.17 |
| Increase of operating payables (or less: decrease) | 457,373,913.99 | 2,110,195,599.62 |
| Others | -12,000,000.00 | |
| Net cash flows from operating activities | 3,209,544,484.21 | 2,932,168,894.65 |
| 2. Significant investing and financing activities not related to cash receipts and payments: | -- | -- |
| 3. Net changes in cash and cash equivalents: | -- | -- |
| Closing balance of cash | 3,939,301,126.79 | 2,873,135,085.47 |
| Less: opening balance of cash | 2,873,135,085.47 | 1,946,860,870.72 |
| Add: closing balance of cash equivalents | ||
| Less: opening balance of cash equivalents | ||
| Net increase of cash and cash equivalents | 1,066,166,041.32 | 926,274,214.75 |
(2) Net cash receipts from disposal of subsidiaries in current period
Unit: RMB
| Amount | |
| Including: | -- |
| Less: cash and cash equivalents held by subsidiaries at the date of losing control | 1,288.94 |
| Including: | -- |
| Chongqing Chengjia Precision Electronic Technology Co., Ltd. | 153.36 |
| Dongguan Xindong Intelligent Technology Co., Ltd. | 1,135.58 |
| Including: | -- |
| Net cash receipts from disposal of subsidiaries | -1,288.94 |
(3) Composition of cash and cash equivalents
Unit: RMB
| Items | Closing balance | Opening balance |
| I. Cash | 3,939,301,126.79 | 2,873,135,085.47 |
| Including: cash on hand | 241,046.60 | 533,015.82 |
| Cash in bank on demand for payment | 3,939,060,080.19 | 2,872,602,069.65 |
| III. Closing balance of cash and cash equivalents | 3,939,301,126.79 | 2,873,135,085.47 |
61. Assets with title or use right restrictions
Unit: RMB
| Items | Closing carrying amount | Reason for restriction |
| Cash and bank balances | 1,461,536,265.68 | Bill deposits, etc. |
| Fixed assets | 490,778,211.02 | Mortgaged for borrowings or subject to sale-leaseback contract |
| Intangible assets | 4,207,098.63 | Mortgaged for borrowings |
| Receivables financing | 337,954,600.06 | Pledged for notes receivable |
| Accounts receivable | 49,750,000.00 | Factoring of accounts receivable |
| Right-of-use assets | 920,952,667.75 | Finance lease |
| Total | 3,265,178,843.14 | -- |
62. Monetary items in foreign currencies
(1) Monetary items in foreign currencies
Unit: RMB
| Items | Closing balance in foreign currencies | Exchange rate | Closing balance of RMB equivalent |
| Cash and bank balances | -- | -- | 2,488,349,146.44 |
| Including: USD | 387,317,338.71 | 6.37570 | 2,469,419,156.43 |
| EUR | 1,490,666.23 | 7.21970 | 10,762,162.98 |
| HKD | 965,806.65 | 0.81760 | 789,643.52 |
| SGD | 1,516,516.89 | 4.71790 | 7,154,775.04 |
| NTD | 740,822.00 | 0.23020 | 170,537.22 |
| JPY | 793.00 | 0.05542 | 43.94 |
| SEK | 74,930.25 | 0.70502 | 52,827.31 |
| Accounts receivable | -- | -- | 5,643,879,544.37 |
| Including: USD | 883,824,378.16 | 6.37570 | 5,634,999,087.83 |
| EUR | 1,230,031.24 | 7.21970 | 8,880,456.54 |
| Long-term borrowings | -- | -- | 357,385,842.79 |
| Including: USD | 56,054,369.37 | 6.37570 | 357,385,842.79 |
| Other receivables | 38,924,944.21 | ||
| Including: USD | 6,104,481.11 | 6.37570 | 38,920,340.21 |
| NTD | 20,000.00 | 0.23020 | 4,604.00 |
| Short-term borrowings | 2,022,294,192.26 | ||
| Including: USD | 317,187,789.93 | 6.37570 | 2,022,294,192.26 |
| Accounts payable | 2,428,693,982.42 |
| Including: USD | 379,913,796.40 | 6.37570 | 2,422,216,391.71 |
| EUR | 896,951.73 | 7.21970 | 6,475,722.41 |
| SEK | 2,650.00 | 0.70502 | 1,868.30 |
| Employee benefits payable | 42,079,655.64 | ||
| Including: USD | 6,600,005.59 | 6.37570 | 42,079,655.64 |
| Taxes and rates payable | 71,136,583.87 | ||
| Including: USD | 11,157,454.69 | 6.37570 | 71,136,583.87 |
| Other payables | 286,397,676.81 | ||
| Including: USD | 44,920,193.36 | 6.37570 | 286,397,676.81 |
| Non-current liabilities due within one year | 239,905,784.80 | ||
| Including: USD | 37,628,148.25 | 6.37570 | 239,905,784.80 |
(2) Descriptions of overseas operating entities, including disclosure of the main overseas business locations,functional currency and the basis for selection of important overseas operating entities, and the reasons forchanges in functional currency (if any).
□ Applicable √ N/A
63. Government grants
(1) Basic information of government grants
Unit: RMB
| Category | Amount | Items presented | Amount recognized in current profit or loss |
| Yancheng Production Equipment Subsidy | 381,880,587.80 | Other income | 49,780,281.81 |
| 2019 Special Funds for the High-Quality Development of Industrial Economy All over the Industry Park | 85,700,482.60 | Other income | 24,441,307.92 |
| Multek Technology Transformation Subsidy | 92,686,284.78 | Other income | 10,450,326.53 |
| Special Incentive Funds of Science and Technology Industrial Park | 64,890,000.00 | Other income | 9,270,000.00 |
| 2020 Subsidy for the Construction of the Emergency Material Security System from Central Financial Administration | 21,973,333.33 | Other income | 2,560,000.00 |
| Subsidy for Technical Transformation of Mutto Optronics | 5,289,866.67 | Other income | 749,200.00 |
| Suzhou Machinery and Equipment Subsidy | 10,150,591.00 | Other income | 2,621,409.05 |
| 2020 High-Quality Development Funds -2019 Demonstration Intelligent Workshop | 1,182,222.20 | Other income | 1,182,222.24 |
| Yancheng Flexible Circuit Board and Supporting Assembly Project | 1,458,332.94 | Other income | 500,000.04 |
| Municipal Financial Subsidy for the Promotion of New Energy Vehicles | 390,062.67 | Other income | 1,011,536.00 |
| 2019 Special Funds for High-Quality Development of Industrial Economy | 1,200,000.00 | Other income | 150,000.00 |
| Showroom Decoration Subsidy | 822,500.00 | Other income | 105,000.00 |
| 2018 Subsidy Received for Encouraging Intelligent Equipment Input | 248,888.89 | Other income | 35,555.55 |
| 2020 Incentives of High-Quality Development of Industrial Economy – Replacing Workforce with Machine | 9,330,188.70 | Other income | 2,169,811.30 |
| RF Top Electronic Industrial Technology Reform Subsidy | 5,766,116.87 | Other income | 94,883.13 |
| 2020 Special Support Funds for Promoting High Quality Development of Industrial Economy and Accelerating the Industry Upgrading of Robotics and Intelligent Manufacturing in Wuzhong District | 2,090,000.00 | Other income | 110,000.00 |
| 2020 Incentives of High-Quality Development of Industrial Economy –Intelligent System Utilization | 574,222.20 | Other income | 337,777.80 |
| 2020 Special Funds for Provincial Industrial Transformation and Upgrading | 42,309,000.00 | Other income | 42,309,000.00 |
| Special Incentives to MFLEX Yancheng to Expand and Strengthen the Intelligent Terminal Industry Chain | 29,608,400.00 | Other income | 29,608,400.00 |
| Social Insurance Subsidy (2020) | 17,327,239.00 | Other income | 17,327,239.00 |
| 2020 Incentives for High-Quality Development of Industrial Economy and Listing | 9,645,000.00 | Other income | 9,645,000.00 |
| 2021 Central Foreign Trade and Economic Development Special Funds | 6,309,500.00 | Other income | 6,309,500.00 |
| Outstanding Contribution Award in Development Zone Commendation Conference, Incentives for Expanding and Strengthening the Intelligent Manufacturing, Incentives for Intelligent Manufacturing Demonstration Application, Incentives for Energy-Saving Green System Construction; and Subsidy for Purchase of IT Tools | 5,200,000.00 | Other income | 5,200,000.00 |
| Interest Subsidy for Import Business | 4,441,712.00 | Other income | 4,441,712.00 |
| Spring Festival Subsidy for Staying in Yancheng City | 4,078,000.00 | Other income | 4,078,000.00 |
| Special Support Funds for Promoting High Quality Development of Industrial Economy and Accelerating the Industry Upgrading of Robotics and Intelligent Manufacturing in Wuzhong District | 3,070,000.00 | Other income | 3,070,000.00 |
| 2020 Provincial Business Development Funds | 2,769,300.00 | Other income | 2,769,300.00 |
| Employment Stabilization Subsidy | 2,498,436.60 | Other income | 2,498,436.60 |
| Special Funds for Industrial Transformation and Upgrading (Technical Transformation) | 2,457,400.00 | Other income | 2,457,400.00 |
| District-Level Funds for New Registered Capital Awards for the Real Economy | 2,400,000.00 | Other income | 2,400,000.00 |
| 2020 Seagull Plan Subsidy | 2,362,125.00 | Other income | 2,362,125.00 |
| Excellent Foreign Trade Enterprises, Energy-Saving and Emission Reduction Outstanding Enterprises, Excellent Foreign Enterprises, Top 100 Enterprises | 2,250,000.00 | Other income | 2,250,000.00 |
| Spring Festival Subsidy for Staying in Wuzhong District | 2,213,717.06 | Other income | 2,213,717.06 |
| Subsidy for Work-Based Training | 1,683,807.02 | Other income | 1,683,807.02 |
| Science and Innovation Support for Accelerating the Construction of World-Class High-tech Industrial Park | 1,198,700.00 | Other income | 1,198,700.00 |
| 2020 Incentives for Science and Technology Innovation All over the Industry Park | 1,018,900.00 | Other income | 1,018,900.00 |
| Achievement of High-Quality Development Through Capital Market | 1,000,000.00 | Other income | 1,000,000.00 |
| Supporting Incentives of Core Technology Product Subsidy by Suzhou City | 1,000,000.00 | Other income | 1,000,000.00 |
| 2020 District-Level Reward for R&D Investment in Science and Technology Innovation | 905,500.00 | Other income | 905,500.00 |
| “Staying In Wuzhong District to Improve Skills” Project-Based Training Subsidy of Wuzhong District, Suzhou City | 862,600.00 | Other income | 862,600.00 |
| Special Funds for Utilizing Vocational Skills to Improve Actions - Improve the Quality and Efficiency of Vocational Skills Training | 849,500.00 | Other income | 849,500.00 |
| 2020 Provincial Industrial Enterprise Technical Transformation Comprehensive Award | 808,700.00 | Other income | 808,700.00 |
| 2021 Provincial Special Development Funds - Functional Institutions | 800,000.00 | Other income | 800,000.00 |
| Anti-Epidemic Subsidy | 771,484.00 | Other income | 771,484.00 |
| 2021 Seagull Plan Subsidy | 700,000.00 | Other income | 700,000.00 |
| City-Level Funds for New Registered Capital Awards for the Real Economy | 600,000.00 | Other income | 600,000.00 |
| Suzhou Science and Innovation Bureau Subsidies - Supporting Funds for 2020 Post-Grant Incentives of Core Technology Products | 545,450.00 | Other income | 545,450.00 |
| 2020 Support Funds to Innovation and Entrepreneurship Leading Talents | 510,000.00 | Other income | 510,000.00 |
| Other government grants | 10,980,944.20 | Other income | 10,980,944.20 |
| 2020 Interest Subsidy for Science and Technology Loan | 196,100.00 | Financial expenses | 196,100.00 |
| Interest Subsidy for Loan of Stabilizing Growth | 24,500.00 | Financial expenses | 24,500.00 |
(2) Government grants returned in the current period
□ Applicable √ N/A
VIII. Changes in the Consolidation Scope
1. Changes in the consolidation scope caused by other reasons
Descriptions of changes in the consolidation scope caused by other reasons (such as establishment of a new subsidiary andliquidation of a subsidiary, etc.) and their relevant information:
(1) Entities brought into the consolidation scope
Unit: RMB
| Entities | Equity acquisition method | Equity acquisition time point | Capital contribution | Capital contribution proportion (%) |
| Suzhou Dongchen Intelligent Equipment Manufacturing Co., Ltd. (Note 1) | Establishment through investment | November 30,2021 | 2,000,000.00 | 100.00% |
| Shanghai Dongxin New Energy Technology Co., Ltd. (Note 2) | Establishment through investment | August 27, 2021 | 300,000,000.00 | 100.00% |
| Shanghai Donglan New Energy Technology Co., Ltd. (Note 3) | Establishment through investment | November 1, 2021 | 90,000,000.00 | 100.00% |
| Hainan Chengjia Technology Consulting Co., Ltd. | Establishment through investment | May 14, 2021 | 1,000,000.00 | 100.00% |
[Note 1] The company subscribed capital contribution amounting to RMB 10,000,000.00, and paid up RMB 2,000,000.00.[Note 2] The company subscribed capital contribution amounting to RMB 300,000,000.00, none of which was paid up.[Note 3] The company subscribed capital contribution amounting to RMB 90,000,000.00, none of which was paid up.
(2) Entities excluded from the consolidation scope
Unit: RMB
| Entities | Equity disposal method | Equity disposal time point | Disposal-date net assets | Net profit from the period beginning to the |
| disposal date | ||||
| Chongqing Chengjia Precision Electronic Technology Co., Ltd. | Deregistration | January 29, 2021 | 24,342.84 | -958.00 |
| Dongguan Xindong Intelligent Technology Co., Ltd. | Losing control | August 31, 2021 | -28,852,274.89 | -6,347.59 |
| DSBJ FINLAND OY | Deregistration | December 31, 2021 | -294,299.73 | |
| Suzhou Dongshan Precision Technology Co., Ltd. | Deregistration | November 16, 2021 |
IX. Interests in Other Entities
1. Interests in subsidiaries
(1) Composition of enterprise group
| Subsidiaries | Main operating place | Place of registration | Business nature | Holding proportion (%) | Acquisition method | |
| Direct | Indirect | |||||
| YCMT | Suzhou | Suzhou | Manufacturing | 100.00% | Business combination under common control | |
| Suzhou Yuanshi Electronic Technology Co., Ltd. | Suzhou | Suzhou | Manufacturing | 100.00% | Business combination under common control | |
| HongKong Dongshan Precision Union Opoelectronic Co., Limited | Hong Kong, China | Hong Kong, China | Business and investment | 100.00% | Establishment | |
| Suzhou Dongkui Lighting Co.,Ltd. | Suzhou | Suzhou | Manufacturing | 100.00% | Establishment | |
| Suzhou Chengjia Precision Manufacturing Co.,Ltd. | Suzhou | Suzhou | Manufacturing | 100.00% | Establishment | |
| Dongguan Dongshan Precision Manufacturing Co., Ltd. | Dongguan | Dongguan | Manufacturing | 95.00% | 5.00% | Establishment |
| Chongqing Chengjia Precision Electronic Technology Co., Ltd. | Chongqing | Chongqing | Manufacturing | 90.00% | 10.00% | Establishment |
| Suzhou Dongjiyuan Metal Technology Co., Ltd. | Suzhou | Suzhou | Manufacturing | 100.00% | Establishment | |
| Yancheng Dongshan Precision Manufacturing Co., Ltd. | Yancheng | Yancheng | Manufacturing | 95.00% | 5.00% | Establishment |
| Suzhou RF Top Electronic Communication Co., Ltd. | Suzhou | Suzhou | Manufacturing | 68.91% | Business combination not under common control | |
| Suzhou Jebson Intelligent Technology Co., Ltd. | Suzhou | Suzhou | Manufacturing | 51.00% | Establishment | |
| Suzhou Dongdai Electronic Technology Co., Ltd. | Suzhou | Suzhou | Manufacturing | 51.00% | Establishment | |
| Suzhou Dongyan Electronic Technology Co., Ltd. | Suzhou | Suzhou | Manufacturing | 51.00% | Establishment | |
| Yancheng Dongshan Enterprise Management Co., Ltd. | Yancheng | Yancheng | Property management | 95.00% | 5.00% | Establishment |
| Hong Kong Dongshan Holding Limited | Hong Kong, China | Hong Kong, China | Business and investment | 100.00% | Establishment | |
| Yancheng Dongshan Communication Technology Co., Ltd. | Yancheng | Yancheng | Manufacturing | 100.00% | Establishment | |
| Shanghai Chengjia Consulting Management Co., Ltd. | Shanghai | Shanghai | Business and investment | 100.00% | Establishment | |
| Suzhou Aiguan Material Technology Co., Ltd. | Suzhou | Suzhou | Manufacturing | 100.00% | Business combination not under common control | |
| Dongguan Xindong Intelligent Technology Co., Ltd. | Dongguan | Dongguan | Manufacturing | 51.00% | Establishment | |
| Mutto Optronics Group Limited | British Virgin Islands | British Virgin Islands | Business and investment | 100.00% | Business combination not under common control | |
| DSBJ Solutions INC | USA | USA | Business and investment | 100.00% | Establishment | |
| DSBJ holdings Inc. | USA | USA | Business and investment | 100.00% | Establishment | |
| DSBJ International Inc. | USA | USA | Business and investment | 100.00% | Establishment | |
| DSBJ FINLAND OY | Finland | Finland | Business and investment | 100.00% | Establishment | |
| Dragon Electronix Holdings INC. | USA | USA | Business and investment | 100.00% | Establishment | |
| Dongshan International Holdings Inc | Cayman Islands | Cayman Islands | Business and investment | 100.00% | Establishment | |
| Mutto Optronics Technology Co., Ltd. | Suzhou | Suzhou | Manufacturing | 100.00% | Business combination not under common |
| control | ||||||
| Suzhou Dongshan Precision Technology Co., Ltd. | Suzhou | Suzhou | Manufacturing | 100.00% | Establishment | |
| Yancheng Mutto Optronics Technology Co., Ltd. | Yancheng | Yancheng | Manufacturing | 100.00% | Establishment | |
| Multi-Fineline Electronix, Inc. | USA | USA | Business and investment | 100.00% | Business combination not under common control | |
| MFLEX Delaware, Inc. | Delaware, USA | Delaware, USA | Business and investment | 100.00% | Business combination not under common control | |
| MFLEX B.V. | Netherlands | Netherlands | Business and investment | 100.00% | Business combination not under common control | |
| Multi-Fineline Electronix Singapore Pte.Ltd. | Singapore | Singapore | Business and investment | 100.00% | Business combination not under common control | |
| MFLEX Suzhou Co., Ltd. | Suzhou | Suzhou | Manufacturing | 100.00% | Business combination not under common control | |
| Dowell Smart Suzhou Co., Ltd. | Suzhou | Suzhou | Manufacturing | 100.00% | Establishment | |
| MFLEX Chengdu Co., Ltd. | Chengdu | Chengdu | Manufacturing | 100.00% | Business combination not under common control | |
| MFLEX Yancheng Co., Ltd. | Yancheng | Yancheng | Manufacturing | 100.00% | Establishment | |
| DSBJ PTE.LTD. | Singapore | Singapore | Business and investment | 100.00% | Establishment | |
| Multek Technology Sweden AB | Sweden | Sweden | Business and investment | 100.00% | Establishment | |
| Multek Technology Malaysia SDN.BHD | Malaysia | Malaysia | Business and investment | 100.00% | Establishment | |
| DSBJ Germany PTE.LTD. | German | German | Business and investment | 100.00% | Establishment | |
| Multek Group(Hong Kong) Limited | Hong Kong, | Hong Kong, | Business and | 100.00% | Establishment |
| China | China | investment | ||||
| The Dii Group (BVI) Co. Limited | British Virgin Islands | British Virgin Islands | Business and investment | 100.00% | Business combination not under common control | |
| Multek Hong Kong Limited | Hong Kong, China | Hong Kong, China | Business and investment | 100.00% | Business combination not under common control | |
| Multek Technologies Limited | Mauritius | Mauritius | Business and investment | 100.00% | Business combination not under common control | |
| The Dii Group Asia Limited | Hong Kong, China | Hong Kong, China | Business and investment | 100.00% | Business combination not under common control | |
| Astron Group Limited | Hong Kong, China | Hong Kong, China | Business and investment | 100.00% | Business combination not under common control | |
| Multek Technology (Zhuhai) Co., Ltd. | Zhuhai | Zhuhai | Manufacturing | 100.00% | Business combination not under common control | |
| Vastbright PCB (HOLDING) Limited | Hong Kong, China | Hong Kong, China | Business and investment | 100.00% | Business combination not under common control | |
| Multek Electronics Limited | Zhuhai | Zhuhai | Manufacturing | 100.00% | Business combination not under common control | |
| Multek Industries Limited | Zhuhai | Zhuhai | Manufacturing | 100.00% | Business combination not under common control | |
| Multek Zhuhai Limited | Zhuhai | Zhuhai | Manufacturing | 100.00% | Business combination not under common control |
| Multek China Ltd. | Zhuhai | Zhuhai | Manufacturing | 100.00% | Business combination not under common control | |
| Multek Technology, Inc. | USA | USA | Business and investment | 100.00% | Establishment | |
| Suzhou Dongbo Precision Manufacturing Co., Ltd. | Suzhou | Suzhou | Manufacturing | 51.00% | Establishment | |
| MFLEX Shanghai Co., Ltd. | Shanghai | Shanghai | Wholesale | 100.00% | Establishment | |
| Shenzhen Qindao Dongchuang Investment Partnership (Limited Partnership) | Shenzhen | Shenzhen | Business and investment | 76.92% | Establishment | |
| Suzhou Dongke Real Estate Co., Ltd. | Suzhou | Suzhou | Real estate | 100.00% | Establishment | |
| Yancheng Dongchuang Precision Manufacturing Co., Ltd. | Yancheng | Yancheng | Manufacturing | 100.00% | Establishment | |
| DSBJ NORWAY AS | Norway | Norway | Business and investment | 100.00% | Establishment | |
| Suzhou Dongchen Intelligent Equipment Manufacturing Co., Ltd. | Suzhou | Suzhou | Manufacturing | 100.00% | Establishment | |
| Shanghai Dongxin New Energy Technology Co., Ltd. | Shanghai | Shanghai | Manufacturing | 95.00% | 5.00% | Establishment |
| Shanghai Donglan New Energy Technology Co., Ltd. | Shanghai | Shanghai | Manufacturing | 100.00% | Establishment | |
| Hainan Chengjia Technology Consulting Co., Ltd. | Haikou | Haikou | Technical consultation | 100.00% | Establishment |
2. Interests in joint ventures or associates
(1) Aggregated financial information of insignificant joint ventures and associates
Unit: RMB
| Closing balance/Current period cumulative | Opening balance/Preceding period comparative | |
| Joint ventures: | -- | -- |
| Proportionate shares in the following items | -- | -- |
| Associates: | -- | -- |
| Total carrying amount of investments | 143,121,019.78 | 101,207,887.93 |
| Proportionate shares in the following items | -- | -- |
| --Net profit | -7,515,648.15 | 6,412,017.44 |
| --Total comprehensive income | -7,515,648.15 | 6,412,017.44 |
X. Risks Related to Financial InstrumentsIn risk management, the Company aims to seek the appropriate balance between the risks and benefits from its useof financial instruments and to mitigate the adverse effects that the risks of financial instruments have on theCompany’s financial performance, so as to maximize the profits of shareholders and other equity investors. Based onsuch risk management objectives, the Company’s risk management policies are established to identify and analyze therisks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits on atimely and reliable basis.The Company has exposure to the following risks from its use of financial instruments, which mainly include:
credit risk, liquidity risk, and market risk. The Management has deliberated and approved policies concerning such risks,with details as below.(I) Credit riskCredit risk is the risk that one party to a financial instrument will cause a financial loss for the other party byfailing to discharge an obligation.
1. Credit risk management practice
(1) Evaluation method of credit risk
At each balance sheet date, the Company assesses whether the credit risk on a financial instrument has increasedsignificantly since initial recognition. When assessing whether the credit risk has increased significantly since initialrecognition, the Company takes into account reasonable and supportable information, which is available without unduecost or effort, including qualitative and quantitative analysis based on historical data, external credit risk rating, andforward-looking information. Based on the single financial instrument or the combination of financial instruments withsimilar characteristics of credit risk, the Company compares the risk of default of financial instruments at the balancesheet date with that on the initial recognition date in order to figure out the changes of default risk in the expectedlifetime of financial instruments.The Company considers the credit risk on a financial instrument has increased significantly when one or more ofthe following qualitative and quantitative standards are met:
1) Quantitative standard mainly relates to the scenario in which, at the balance sheet date, the probability of defaultin the remaining lifetime has risen by more than a certain percentage compared with the initial recognition;
2) Qualitative standard mainly relates to significant adverse changes in the debtor’s operation or financial position,present or expected changes in technology, market, economy or legal environment that will have significant adverseimpact on the debtor’s repayment ability;
(2) Definition of default and credit-impaired assets
A financial instrument is defined as defaulted when one or more following events have occurred, of which thestandard is consistent with that for credit-impairment:
1) significant financial difficulty of the debtor;
2) a breach of binding clause of contract;
3) it is very likely that the debtor will enter bankruptcy or other financial reorganization;
4) the creditor of the debtor, for economic or contractual reasons relating to the debtor’s financial difficulty,having granted to the debtor a concession(s) that the creditor would not otherwise consider.
2. Measurement of expected credit losses
The key factors in the measurement of expected credit loss include the probability of default, loss rate of default,and exposure to default risk. The Company develops a model of the probability of default, loss rate of default, andexposure to default risk on the basis of quantitative analysis of historical data (e.g. counterparty rating, guaranteemeasures and collateral type, payment method, etc.) and forward-looking information.
3. Please refer to Note V (I) 3, 4, 7 and 10 to the financial statements for details on the reconciliation table ofopening balance and closing balance of provision for losses of financial instrument.
4. Exposure to credit risk and concentration of credit risk
The Company’s credit risk is primarily attributable to cash and bank balances and receivables. In order to controlsuch risks, the Company has taken the following measures:
(1) Cash and bank balances
The Company deposits its bank balances and other cash and bank balances in financial institutions with relativelyhigh credit levels, hence, its credit risk is relatively low.
(2) Receivables
The Company performs credit assessment on customers using credit settlement on a continuous basis. TheCompany selects credible and well-reputed customers based on credit assessment result, and conducts ongoingmonitoring on balance of receivables, to avoid significant risks in bad debts.
As the Company only conducts business with credible and well-reputed third parties, collateral is not requiredfrom customers. The Company manages credit risk aggregated by customers. As of December 31, 2021, the Companyhas certain concentration of credit risk, and 50.05% (December 31, 2020: 54.10%) of the total accounts receivable wasdue from the five largest customers of the Company. The Company held no collateral or other credit enhancement onbalance of receivables.
The maximum amount of exposure to credit risk of the Company is the carrying amount of each financial asset atthe balance sheet.
(II) Liquidity risk
Liquidity risk is the risk that the Company may encounter deficiency of funds in meeting obligations associatedwith cash or other financial assets settlement, which is possibly attributable to failure in selling financial assets at fairvalue on a timely basis, or failure in collecting liabilities from counterparties of contracts, or early redemption of debts,or failure in achieving estimated cash flows.
In order to control such risk, the Company comprehensively utilized financing tools such as notes settlement, bankborrowings, etc. and adopts long-term and short-term financing methods to optimize financing structures, and finallymaintains a balance between financing sustainability and flexibility. The Company has obtained credit limit fromseveral commercial banks to meet working capital requirements and expenditures.
Financial liabilities classified based on remaining time period till maturity
Unit: RMB
| Items | Closing balance | ||||
| Carrying amount | Contract amount not yet discounted | Within 1 year | 1-3 years | Over 3 years | |
| Bank borrowings (including non-current borrowings due within one year) | 11,464,550,912.96 | 11,736,409,681.74 | 9,646,227,290.73 | 1,985,923,474.35 | 104,258,916.66 |
| Notes payable | 1,646,644,107.17 | 1,646,644,107.17 | 1,646,644,107.17 | ||
| Accounts payable | 6,729,890,126.00 | 6,729,890,126.00 | 6,729,890,126.00 | ||
| Other payables | 323,166,075.34 | 323,166,075.34 | 323,166,075.34 | ||
| Long-term payables (including non-current borrowings due within one year) | 113,585,341.88 | 117,815,283.97 | 38,648,899.77 | 79,166,384.20 | |
| Lease liabilities (including non-current borrowings due within one year) | 1,216,840,546.75 | 1,547,455,035.50 | 70,417,680.05 | 140,536,827.11 | 1,336,500,528.34 |
| Sub-total | 21,494,677,110.10 | 22,101,380,309.72 | 18,454,994,179.06 | 2,205,626,685.66 | 1,440,759,445.00 |
(Continued)
| Items | December 31, 2020 | ||||
| Carrying amount | Contract amount not yet discounted | Within 1 year | 1-3 years | Over 3 years | |
| Bank borrowings | 11,945,119,556.65 | 12,083,578,945.87 | 9,158,948,388.90 | 2,734,050,436.13 | 190,580,120.84 |
| Notes payable | 1,767,940,549.75 | 1,767,940,549.75 | 1,767,940,549.75 | ||
| Accounts payable | 7,443,237,912.72 | 7,443,237,912.72 | 7,443,237,912.72 | ||
| Other payables | 59,939,206.62 | 59,939,206.62 | 59,939,206.62 | ||
| Long-term payables | 1,200,752,321.09 | 1,601,888,588.90 | 160,374,354.31 | 1,441,514,234.59 | |
| Non-current liabilities due within one year | 363,320,073.06 | 363,320,073.06 | 363,320,073.06 | ||
| Sub-total | 22,780,309,619.89 | 23,319,905,276.92 | 18,793,386,131.05 | 2,894,424,790.44 | 1,632,094,355.43 |
(III) Market risk
Market risk is the risk that a company may encounter fluctuation in fair value or future cash flows of financialinstruments due to changes in market price. Market risk mainly includes interest risk and foreign currency risk.
1. Interest risk
Interest risk is the risk that a company may encounter fluctuation in fair value or future cash flows of financialinstruments due to changes in market interest. The Company’s fair value interest risks arise from fixed-rate financialinstruments, while the cash flow interest risks arise from floating-rate financial instruments. The Company determinesthe proportion of fixed-rate financial instruments and floating-rate financial instruments based on the marketenvironment, and maintains a proper financial instruments portfolio through regular review and monitoring. TheCompany’s interest risk in cash flows relates mainly to bank borrowings with floating interest rate.
As of December 31, 2021, balance of borrowings with interest accrued at floating interest rate totaled RMB11,449,693,630.87(December 31, 2020: RMB 11,930,608,873.34). If interest rates had been 50 basis pointshigher/lower and all other variables were held constant, financial effect on the Company would be a/andecrease/increase of RMB 48,661,197.93 (December 31, 2020: a/an decrease/increase of RMB 50,705,087.71) in equity,a/an decrease/increase of RMB 48,661,197.93(2020: a/an decrease/increase of RMB 50,705,087.71) in net profit.
2. Foreign currency risk
Foreign currency risk is the risk arising from changes in fair value or future cash flows of financial instrumentresulted from changes in exchange rate. The Company’s foreign currency risk relates mainly to foreign currencymonetary assets and liabilities. When short-term imbalance occurred to foreign currency assets and liabilities, theCompany may trade foreign currency at market exchange rate when necessary, in order to maintain the net riskexposure within an acceptable level.
Please refer to Note VII to financial statements for details in foreign currency financial assets and liabilities at theend of the period.
XI. Fair Value Disclosure
1. Fair value of assets and liabilities measured at fair value at the end of the period
Unit: RMB
| Items | Fair value at the end of the period | |||
| Level 1 fair value measurement | Level 2 fair value measurement | Level 3 fair value measurement | Total | |
| I. Recurring fair value measurement | -- | -- | -- | -- |
| 1. Financial assets at fair value through profit or loss | 459,278,578.74 | 40,249,971.12 | 499,528,549.86 | |
| (2) Equity instrument investments | 40,249,971.12 | 40,249,971.12 | ||
| (3) Derivative financial assets | 459,278,578.74 | 459,278,578.74 | ||
| (II) Other debt investments | 828,355,016.30 | 828,355,016.30 | ||
| (III) Other equity instrument investments | 171,322,110.00 | 171,322,110.00 | ||
| Total assets at recurring fair value measurement | 459,278,578.74 | 1,039,927,097.42 | 1,499,205,676.16 | |
| II. Non-recurring fair value measurement | -- | -- | -- | -- |
2. Qualitative and quantitative information of valuation technique(s) and key input(s) for level 2 fair value atrecurring and non-recurring fair value measurementThe fair value of bank wealth management products at the end of the period is mainly recognized based on theirprincipals and expected proceeds.For forward exchange settlement transactions that have been entrusted but not delivered, the fair value is recognizedbased on the forward exchange rate recognized by the trading banks at the end of the period.
3. Qualitative and quantitative information of valuation technique(s) and key input(s) for level 3 fair value atrecurring and non-recurring fair measurementThe fair value of other equity instrument investments is recognized as the initial investment amount.The fair value of notes receivable held is recognized as the par value of these notes.
XII. Related Party Relationships and Transactions
1. Parent company
The Company’s actual controllers are YUAN Yonggang, YUAN Yongfeng and YUAN Fugen, who hold 11.83%, 13.01%and 3.44% of the Company’s shareholding and voting rights, respectively, with collective shareholding and votingrights of the Company totaled 28.28%.
2. Subsidiaries
Please refer to Note IX. Interests in Other Entities for details on the Company’s subsidiaries.
3. Joint ventures and associates of the Company
Please refer to Note IX. Interests in Other Entities for details on the Company’s significant joint ventures and associates.Details of other joint ventures or associates carrying out related party transactions with the Company in current periodor in preceding period but with balance in current period are as follows:
| Joint ventures or associates | Relationships with the Company |
| Suzhou Toprun Electric Equipment Co., Ltd. | Associates |
| Suzhou Dongcan Optoelectronics Technology Co., Ltd. | Associates |
4.Other related parties of the Company
| Other related parties of the Company | Relationships with the Company |
| Hai Dixin Semiconductor (Nantong) Co., Ltd. | Invested company |
| Shenzhen Dongshan Precision Manufacturing Co., Ltd. | Company controlled by the same actual controller |
5. Related party transactions
(1) Purchase and sale of goods, rendering and receiving of services
Purchase of goods and receiving of services
Unit: RMB
| Related parties | Content of transaction | Current period cumulative | Approved amount | Exceed the approved amount or not | Preceding period comparative |
| Suzhou Dongcan Optoelectronics Technology Co., Ltd. | Purchase of goods | 49,297.45 | No | 142,724.25 |
Sale of goods and rendering of services
Unit: RMB
| Related parties | Content of transaction | Current period cumulative | Preceding period comparative |
| Suzhou Toprun Electric Equipment Co., Ltd. | Goods payments | 1,580,509.87 | 8,107.96 |
| Suzhou Dongcan Optoelectronics Technology Co., Ltd. | Goods payments | 109,532.95 |
Remarks on purchase and sale of goods, rendering and receiving of services
(2) Related party guarantees
The Company as a guarantor
Unit: RMB
| Guaranteed parties | Amount guaranteed | Commencement date | Maturity date | Whether the guarantee is mature |
| Suzhou Toprun Electric Equipment Co., Ltd. | 4,000,000.00 | November 12, 2021 | November 12, 2022 | No |
| 5,000,000.00 | November 19, 2021 | November 19, 2022 | No | |
| 5,400,000.00 | September 13, 2021 | September 9, 2022 | No | |
| 6,600,000.00 | September 18, 2021 | September 16, 2022 | No | |
| 8,000,000.00 | November 8,2021 | November 7, 2022 | No |
The Company as a guaranteed party
Unit: RMB
| Guarantors | Amount guaranteed | Commencement date | Maturity date | Whether the guarantee is mature |
| YUAN Yonggang and YUAN Yongfeng | 500,000,000.00 | March 22, 2018 | August 28, 2024 | No |
| 500,000,000.00 | January 31, 2018 | July 26, 2023 | No | |
| 1,118,935,350.00 | July 25, 2018 | July 25, 2023 | No | |
| 75,100,000.00 | August 14, 2019 | July 14, 2022 | No | |
| 100,000,000.00 | September 30, 2019 | August 31, 2022 | No |
(3) Key management’s emoluments
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Key management’s emoluments | 22,533,200.00 | 19,643,500.00 |
(4) Other related party transactions
Unit: RMB
| Related parties | Content of transaction | Current period cumulative | Preceding period comparative |
| Shenzhen Dongshan Precision | Asset transfer payments and | 564,294,406.73 | 25,555,038.76 |
| Manufacturing Co., Ltd. | interest income |
6. Balance due to or from related parties
(1) Balance due from related parties
Unit: RMB
| Items | Related parties | Closing balance | Opening balance | ||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | ||
| Accounts receivable | Hai Dixin Semiconductor (Nantong) Co., Ltd. | 1,607,132.92 | 1,607,132.92 | 1,607,132.92 | 1,607,132.92 |
| Accounts receivable | Suzhou Dongcan Optoelectronics Technology Co., Ltd. | 63,031.33 | 315.16 | 29,369.88 | 146.85 |
| Accounts receivable | Suzhou Toprun Electric Equipment Co., Ltd. | 1,485,976.17 | 7,429.88 | ||
| Other receivables | Shenzhen Dongshan Precision Manufacturing Co., Ltd. | 538,577,180.10 | 22,451,468.46 | ||
| Other receivables | Hai Dixin Semiconductor (Nantong) Co., Ltd. | 1,790,748.55 | 1,438,405.10 | 1,790,748.55 | 613,499.52 |
| Other receivables | Suzhou Dongcan Optoelectronics Technology Co., Ltd. | 20,000.00 | 1,000.00 | ||
(2) Balance due to related parties
Unit: RMB
| Items | Related parties | Closing balance | Opening balance |
| Accounts payable | Suzhou Dongcan Optoelectronics Technology Co., Ltd. | 3,499.61 |
XIII. Commitments and contingencies
1. Significant commitments
Significant commitments as of the balance sheet date:
As of the balance sheet date, the Company has no significant commitments to be disclosed.
2. Contingencies
(1) Significant contingencies as of the balance sheet date
As of the balance sheet date, the Company has no significant contingencies to be disclosed.
(2) Remarks on contingencies though the Company has no significant contingencies to be disclosedThe Company has no significant contingencies to be disclosed.XIV. Events after the Balance Sheet Date
1. Profit distribution
Unit: RMB
| Profit or dividend proposed to be distributed | 341,182,742.00 |
| Profit or dividend approved to be distributed | 341,182,742.00 |
XV. Other Significant Events
1. Segment information
(1) Identification basis for reportable segments and accounting policies
The Company is mainly engaged in the sales of PCBs, LED display devices, touch panels, LCMs, precision componentsand other products. These businesses are identified by the Company as an entire business for management and operatingresults assessment. Therefore, it is unnecessary for the Company to disclose the segment information.
(2) Financial information of reportable segments
Unit: RMB
| Items | PCBs | LED display devices | Touch panels and LCMs | Precision components | Inter-segment offset | Total |
| Main operating revenue | 20,495,329,957.29 | 2,603,932,687.66 | 5,156,396,939.04 | 3,427,067,664.04 | 31,682,727,248.03 | |
| Main operating costs | 17,319,465,575.78 | 2,127,082,704.10 | 4,735,719,298.33 | 2,898,308,513.27 | 27,080,576,091.48 |
2. Others
Unit: RMB
(1) The Company as a lessee
1) Please refer to Note VII to financial statements for details on right-of-use assets.
2) Please refer to Note V to financial statements for details on the Company’s accounting policies on short-term leases
and leases for which the underlying asset is of low value. The amounts of short-term leases and low-value asset leasesincluded into profit or loss are as follows:
| Items | Current period cumulative |
Expense relating to short-term leases
| Expense relating to short-term leases | 12,662,311.00 |
| Total | 12,662,311.00 |
3) Current period profit or loss and cash flows related to leases
| Items | Current period cumulative |
| Interest expenses from lease liabilities | 69,800,646.24 |
| Total cash outflows related to leases | 294,740,773.04 |
4) Please refer to Note X to the financial statements for details on maturity analysis of lease payments and relatedliquidity risk management.
(2) The Company as a lessor
Operating lease
1) Lease income
| Items | Current period cumulative |
| Lease income | 4,253,653.65 |
2) Assets leased out under operating leases
| Items | Closing balance |
| Fixed assets | 25,725.92 |
| Investment property | 1,554,262.58 |
| Sub-total | 1,579,988.50 |
3) Undiscounted lease payments to be received arising from non-cancellable leases based on the lease contract signedwith lessee
| Remaining years | Closing balance |
| Within 1 year | 4,497,481.58 |
| 1- 2 years | 935,664.81 |
| Total | 5,433,146.39 |
XVI. Notes to Items in the Parent Company Financial Statements
1. Accounts receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
| Categories | Closing balance | Opening balance | ||||||||
| Book balance | Provision for bad debts | Carrying amount | Book balance | Provision for bad debts | Carrying amount | |||||
| Amount | % to total | Amount | Provision proportio | Amount | % to total | Amount | Provision proportio | |||
| n (%) | n (%) | |||||||||
| Accounts receivable with provision made on an individual basis | 13,584,081.38 | 0.47% | 13,584,081.38 | 100.00% | 8,425,896.00 | 0.38% | 8,425,896.00 | 100.00% | ||
| Including: | ||||||||||
| Accounts receivable with provision for bad debts made on a collective basis | 2,846,995,763.39 | 99.53% | 95,868,991.28 | 3.37% | 2,751,126,772.11 | 2,208,387,452.19 | 99.62% | 143,127,448.84 | 6.48% | 2,065,260,003.35 |
| Total | 2,860,579,844.77 | 100.00% | 109,453,072.66 | 3.83% | 2,751,126,772.11 | 2,216,813,348.19 | 100.00% | 151,553,344.84 | 6.84% | 2,065,260,003.35 |
Accounts receivable with provision made on an individual basis:
Unit: RMB
| Items | Closing balance | |||
| Book balance | Provision for bad debts | Provision proportion (%) | Reasons | |
| Jiangyin Hanwei Aluminum Co., Ltd. | 8,425,896.00 | 8,425,896.00 | 100.00% | Provision for impairment was made due to the low probability of recovery according to the recovery forecast. |
| Dongguan Xindong Intelligent Technology Co., Ltd. | 3,787,969.53 | 3,787,969.53 | 100.00% | Provision for impairment was made due to the low probability of recovery according to the recovery forecast. |
| Shenzhen Hongyexin Technology Co., Ltd. | 496,188.63 | 496,188.63 | 100.00% | Provision for impairment was made due to the low probability of recovery according to the recovery forecast. |
| Others | 874,027.22 | 874,027.22 | 100.00% | Provision for impairment was made due to the low probability of recovery according to the recovery forecast. |
| Total | 13,584,081.38 | 13,584,081.38 | -- | -- |
Accounts receivable with provision for bad debts made on a collective basis
Unit: RMB
| Items | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| Aging portfolio | 1,282,044,623.65 | 95,868,991.28 | 7.48% |
| Related-party portfolio within the consolidation scope | 1,564,951,139.74 | ||
| Total | 2,846,995,763.39 | 95,868,991.28 | -- |
Accounts receivable with provision for bad debts made on a collective basis
Unit: RMB
| Items | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion (%) | |
| 0-6 months | 767,680,412.60 | 3,838,402.06 | 0.50% |
| 7-12 months | 370,032,778.62 | 18,501,638.93 | 5.00% |
| 1- 2 years | 65,836,154.67 | 13,167,230.93 | 20.00% |
| 2-3 years | 45,333,896.01 | 27,200,337.61 | 60.00% |
| Over 3 years | 33,161,381.75 | 33,161,381.75 | 100.00% |
| Total | 1,282,044,623.65 | 95,868,991.28 | -- |
If a provision for bad debts is made for accounts receivable in accordance with the general model of expected credit losses, pleasedisclose relevant information on provisions for bad debts with reference to the disclosure method of other receivables:
□ Applicable √ N/A
Aging analysis
Unit: RMB
| Aging | Book balance |
| Within 1 year (including) | 1,829,469,180.93 |
| 0-6 months | 1,407,041,133.51 |
| 7-12 months | 422,428,047.42 |
| 1-2 years | 194,204,679.25 |
| 2-3 years | 153,090,639.54 |
| Over 3 years | 683,815,345.05 |
| 3-4 years | 413,872,895.38 |
| 4-5 years | 252,857,124.01 |
| Over 5 years | 17,085,325.66 |
| Total | 2,860,579,844.77 |
(2) Provisions, recovery or reversal of bad debts for the current period
Provisions for bad debts made for the current period:
Unit: RMB
| Categories | Opening balance | Changes for the current period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Accounts receivable with provision for bad debts made on an individual basis | 8,425,896.00 | 5,158,185.38 | 13,584,081.38 | |||
| Accounts receivable with provision for bad debts made on | 143,127,448.84 | -45,575,250.49 | 1,683,207.07 | 95,868,991.28 | ||
| a collective basis | ||||||
| Total | 151,553,344.84 | -40,417,065.11 | 1,683,207.07 | 109,453,072.66 |
(3) Accounts receivable actually written off for the current period
Unit: RMB
| Items | Write-off amount |
| Accounts receivable | 1,683,207.07 |
(4) Top five closing balances of accounts receivable categorized by debtor
Unit: RMB
| Debtors | Closing balance of accounts receivable | Proportion to the total closing balance of accounts receivable (%) | Closing balance of provisions for bad debts |
| HongKong Dongshan Precision Union Opoelectronic Co., Limited | 447,332,447.60 | 15.64% | |
| Dongguan Dongshan Precision Manufacturing Co., Ltd. | 398,604,428.29 | 13.93% | |
| Mutto Optronics Technology Co., Ltd. | 256,877,621.92 | 8.98% | |
| Yancheng Dongshan Precision Manufacturing Co., Ltd. | 188,200,392.00 | 6.58% | |
| The fifth | 165,106,915.13 | 5.77% | 825,534.58 |
| Total | 1,456,121,804.94 | 50.90% | -- |
(5) Assets and liabilities arising from transferred but still involved accounts receivable
As of December 31, 2021, accounts receivable with a carrying amount of RMB 98,910,000.00 have completed the factoring loan fortrade acceptance with right of recourse.
2. Other receivables
Unit: RMB
| Items | Closing balance | Opening balance |
| Dividends receivable | 581,000,000.00 | 354,000,000.00 |
| Other receivables | 2,827,234,419.21 | 4,841,393,439.65 |
| Total | 3,408,234,419.21 | 5,195,393,439.65 |
(1) Dividends receivable
1) Category of dividends receivable
Unit: RMB
| Item (or investee) | Closing balance | Opening balance |
| Hong Kong Dongshan Holdings Limited | 315,000,000.00 | 190,000,000.00 |
| Yancheng Dongshan Precision Manufacturing Co., Ltd. | 266,000,000.00 | 114,000,000.00 |
| YCMT | 30,000,000.00 | |
| Suzhou Chengjia Precision Manufacturing Co., Ltd. | 20,000,000.00 | |
| Total | 581,000,000.00 | 354,000,000.00 |
2) Provisions for bad debts
□ Applicable √ N/A
(2) Other receivables
1) Category of other receivables by nature
Unit: RMB
| Nature of other receivables | Closing balance | Opening balance |
| Financial transactions | 2,811,870,279.40 | 4,828,790,456.04 |
| Security deposits | 2,852,298.50 | 1,099,951.62 |
| Performance compensation | 7,000,000.00 | 9,000,000.00 |
| Loans and petty cash | 7,083,613.68 | 4,485,483.25 |
| Total | 2,828,806,191.58 | 4,843,375,890.91 |
2) Provisions for bad debts
Unit: RMB
| Provision for bad debts | Phase I | Phase II | Phase III | Total |
| 12?month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Balance as at January 1, 2021 | 626,256.08 | 201,282.68 | 1,154,912.50 | 1,982,451.26 |
| Balance as at January 1, 2021 in the current period | —— | —— | —— | —— |
| -- Transferred to phase II | -409,322.32 | 409,322.32 | ||
| -- Transferred to phase III | -26,855.00 | 26,855.00 | ||
| Provision | 196,858.98 | 234,894.63 | -761,702.54 | -329,948.93 |
| Written off | 80,729.96 | 80,729.96 | ||
| Balance as at December 31, 2021 | 413,792.74 | 818,644.63 | 339,335.00 | 1,571,772.37 |
Remarks on significant changes in book balance of other receivables with changes in provision for bad debts
□ Applicable √ N/A
Aging analysis
Unit: RMB
| Aging | Book balance |
| Within 1 year (including) | 1,153,307,663.16 |
| 1-2 years | 1,675,024,918.42 |
| 2-3 years | 268,550.00 |
| Over 3 years | 205,060.00 |
| 3-4 years | 205,060.00 |
| Total | 2,828,806,191.58 |
3) Other receivables actually written off for the current period
Unit: RMB
| Items | Write-off amount |
| Other receivables | 80,729.96 |
4) Top five closing balances of other receivables categorized by debtor
Unit: RMB
| Debtors | Nature of other receivables | Closing balance | Aging | Proportion to total closing balance of other receivables (%) | Closing balance of provisions for bad debts |
| Yancheng Dongshan Precision Manufacturing Co., Ltd. | Receivables and payables | 739,796,338.62 | Within 1 year | 26.15% | |
| Yancheng Dongshan Precision Manufacturing Co., Ltd. | Receivables and payables | 761,233,742.43 | 1- 2 years | 26.91% | |
| HongKong Dongshan Precision Union Opoelectronic Co., Limited | Receivables and payables | 33,654,124.65 | Within 1 year | 1.19% | |
| HongKong Dongshan Precision Union Opoelectronic Co., Limited | Receivables and payables | 550,459,234.25 | 1- 2 years | 19.46% | |
| Suzhou Dongkui Lighting Co., Ltd. | Receivables | 2,320,250.00 | Within 1 year | 0.08% |
| and payables | |||||
| Suzhou Dongkui Lighting Co., Ltd. | Receivables and payables | 321,852,326.13 | 1- 2 years | 11.38% | |
| Multek Industries Limited | Receivables and payables | 111,969,361.73 | Within 1 year | 3.96% | |
| Hong Kong Dongshan Holding Limited | Receivables and payables | 190,000,000.00 | Within 1 year | 6.72% | |
| Total | -- | 2,711,285,377.81 | -- | 95.85% |
3. Long-term equity investments
Unit: RMB
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Investments in subsidiaries | 7,148,611,337.41 | 133,690,000.00 | 7,014,921,337.41 | 6,320,593,645.05 | 133,690,000.00 | 6,186,903,645.05 |
| Investments in associates and joint ventures | 99,227,963.59 | 17,507,056.47 | 81,720,907.12 | 91,327,409.53 | 17,507,056.47 | 73,820,353.06 |
| Total | 7,247,839,301.00 | 151,197,056.47 | 7,096,642,244.53 | 6,411,921,054.58 | 151,197,056.47 | 6,260,723,998.11 |
(1) Investments in subsidiaries
Unit: RMB
| Investees | Opening balance (carrying amount) | Increase or decrease for the current period | Closing balance (carrying amount) | Closing balance of provisions for bad debts | |
| Investments increased | Investments decreased | ||||
| YCMT | 451,439,101.11 | 451,439,101.11 | |||
| Suzhou Yuanshi Electronic Technology Co., Ltd. | 5,000,000.00 | 5,000,000.00 | |||
| HongKong Dongshan Precision Union Opoelectronic Co., Limited | 3,144,565,150.00 | 600,000,000.00 | 3,744,565,150.00 | 133,690,000.00 | |
| Suzhou Dongkui Lighting Co., Ltd. | 12,100,000.00 | 12,100,000.00 | |||
| Suzhou Chengjia Precision Manufacturing Co., Ltd. | 80,000,000.00 | 80,000,000.00 | |||
| Dongguan Dongshan Precision Manufacturing Co., Ltd. | 342,000,000.00 | 342,000,000.00 | |||
| Chongqing Chengjia Precision Electronic Technology Co., Ltd. | 13,500,000.00 | 13,500,000.00 | |||
| Suzhou Dongjiyuan Metal Technology Co., Ltd. | 52,600,000.00 | 52,600,000.00 | |||
| Yancheng Dongshan Precision Manufacturing Co., Ltd. | 1,092,500,000.00 | 1,092,500,000.00 | |||
| Suzhou RF Top Electronic Communication Co., Ltd. | 171,500,000.00 | 65,756,910.17 | 237,256,910.17 | ||
| Suzhou Jebson Intelligent Technology Co., Ltd. | 255,000.00 | 255,000.00 | |||
| Suzhou Dongdai Electronic Technology Co., Ltd. | 1,530,000.00 | 1,530,000.00 | |||
| Suzhou Dongyan Electronic Technology Co., Ltd. | 1,530,000.00 | 1,530,000.00 | |||
| Hong Kong Dongshan Holding Limited | 452,677,880.00 | 452,677,880.00 | |||
| Yancheng Dongshan Communication Technology Co., Ltd. | 251,605,513.94 | 28,372,686.19 | 279,978,200.13 | ||
| Suzhou Dongbo Precision Manufacturing Co., Ltd. | 5,100,000.00 | 5,100,000.00 | |||
| MFLEX Shanghai Co., Ltd. | 100,000.00 | 1,900,000.00 | 2,000,000.00 | ||
| Shenzhen Qindao Dongchuang Investment Partnership (Limited Partnership) | 50,000,000.00 | 50,000,000.00 | 100,000,000.00 | ||
| Suzhou Dongke Real Estate Co., Ltd. | 58,901,000.00 | 91,488,096.00 | 150,389,096.00 | ||
| Yancheng Dongshan Enterprise Management Co., Ltd. | 3,000,000.00 | 3,000,000.00 | |||
| Hainan Chengjia Technology Consulting Co., Ltd. | 1,000,000.00 | 1,000,000.00 | |||
| Total | 6,186,903,645.05 | 841,517,692.36 | 13,500,000.00 | 7,014,921,337.41 | 133,690,000.00 |
(2) Investments in associates and joint ventures
Unit: RMB
| Investees | Opening balance (carrying amount) | Increase or decrease for the current period | Closing balance (carrying amount) | Closing balance of provisions for bad debts | |||||||
| Investments increased | Investments decreased | Investment profit or loss under equity method | Adjustment in other comprehensive income | Other equity changes | Cash dividends or profits declared | Provisions for impairment | Others | ||||
| I. Joint ventures | |||||||||||
| II. Associates | |||||||||||
| Suzhou Toprun Electric Equipment Co., Ltd. | 18,199,860.18 | -1,880,121.23 | 16,319,738.95 | ||||||||
| Shenzhen Nanfang Blog Technology Development Co., Ltd. | 17,507,056.47 | ||||||||||
| Shanghai Fu Shan Precision Manufacturing Co., Ltd. | |||||||||||
| Suzhou LEGATE Intelligent Equipment Co., Ltd. | 14,355,254.40 | -2,422,342.61 | 11,932,911.79 | ||||||||
| Suzhou Dongcan Optoelectronics Technology Co., Ltd. | 3,642,892.51 | 73,257.78 | 3,716,150.29 | ||||||||
| Jiangsu Nangao Intelligent Equipment Innovation Center Co., Ltd. | 3,952,690.31 | 67,866.28 | 4,020,556.59 | ||||||||
| Jiaozuo Songyang Optoelectric Technology Co., Ltd. | 33,669,655.66 | -2,921,596.04 | 30,748,059.62 | ||||||||
| Suzhou Yongxin Jingshang Venture Capital Partnership (Limited Partnership) | 15,000,000.00 | -16,510.12 | 14,983,489.88 | ||||||||
| Sub-total | 73,820,353.06 | 15,000,000.00 | -7,099,445.94 | 81,720,907.12 | 17,507,056.47 | ||||||
| Total | 73,820,353.06 | 15,000,000.00 | -7,099,445.94 | 81,720,907.12 | 17,507,056.47 | ||||||
4. Operating revenue and operating costs
Unit: RMB
| Items | Current period cumulative | Preceding period comparative | ||
| Revenue | Cost | Revenue | Cost | |
| Main operations | 3,936,953,911.43 | 3,714,657,158.64 | 4,007,913,773.08 | 3,454,308,954.78 |
| Other operations | 307,120,828.99 | 168,578,617.68 | 168,389,994.80 | 73,690,374.31 |
| Total | 4,244,074,740.42 | 3,883,235,776.32 | 4,176,303,767.88 | 3,527,999,329.09 |
Other remarks:
Revenue recognized in the current period and included in the opening balance of the book value of contract liabilities amounted toRMB 6,935,179.16.
5. Investment income
Unit: RMB
| Items | Current period cumulative | Preceding period comparative |
| Income from long-term equity investments under cost method | 581,083,436.82 | 354,000,000.00 |
| Investment income from long-term equity investments under equity method | -7,099,445.94 | 6,412,017.44 |
| Investment income from disposal of long-term equity investments | -13,500,000.00 | 342,322.01 |
| Bank wealth management product | 2,212,924.44 | 2,876,815.88 |
| Total | 562,696,915.32 | 363,631,155.33 |
XVII. Supplementary Information
1. Schedule of non-recurring gains or losses
√ Applicable □ N/A
Unit: RMB
| Items | Amount |
| Profit or loss on disposal of non-current assets | 13,783,433.93 |
| Government grants included in profit or loss (excluding those closely related to operating activities of the Company, satisfying government policies and regulations, and continuously enjoyed with certain quantity/quota based on certain standards) | 268,965,326.25 |
| Fund possession charge from non-financial entities and included in profit or loss | 19,777,467.66 |
| Profit or loss on assets consigned to the third party for investment or management | 11,913,618.63 |
| Profit or loss on changes in fair value of held-for-trading financial assets and liabilities, and investment income from disposal of held-for-trading financial assets and liabilities, and available-for-sale financial assets, excluding | 17,766,609.82 |
| those arising from hedging business related to operating activities | |
| Reversed provision for impairment of receivables and contract assets based on impairment testing on an individual basis | 22,451,468.46 |
| Other non-operating revenue or expenditures | -1,909,316.59 |
| Other profit or loss satisfying the definition of non-recurring gains or losses | 722,866.99 |
| Less: Enterprise income tax affected | 65,906,713.13 |
| Non-controlling interest affected | 1,734,292.36 |
| Total | 285,830,469.66 |
Details of other profit or loss satisfying the definition of non-recurring gains or losses
□ Applicable √ N/A
There is no other item of gains or losses within the meaning of non-recurring gains or losses.Classification of any item of non-recurring gains or losses defined by the Explanatory Announcement No. 1 on InformationDisclosure for Companies Publicly Offering Securities – Non-recurring Gains or Losses as recurrent profit or loss:
□ Applicable √ N/A
2. RONA and EPS
| Profit of the reporting period | Weighted average RONA (%) | EPS (RMB/share) | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to shareholders of ordinary shares | 13.46% | 1.09 | 1.09 |
| Net profit attributable to shareholders of ordinary shares after deducting non-recurring gains or losses | 11.40% | 0.92 | 0.92 |
Suzhou Dongshan Precision Manufacturing Co., Ltd.
Legal representative: YUAN Yonggang
April 19, 2022