Hangzhou GreatStar Industrial Co., Ltd.
2022 Annual Report
2023-013
April 2023
2022 Annual Report
Section I Important Notes, Contents and DefinitionsThe Board of Directors, the Board of Supervisors, and the Directors, Supervisors, andsenior management of the Company guarantee the truthfulness, accuracy, and completenessof the contents in this annual report, and that there are no false records, misleadingstatements, or material omissions, and assume individual and joint legal responsibilities.Qiu Jianping, the person in charge of the Company, and Ni Shuyi, the chief accountant andthe head of accounting department, declare that they guarantee the truthfulness, accuracy,and completeness of the financial information in this annual report.All the Directors have attended the Board Meeting at which this report was deliberated.This annual report involves forward-looking statements such as future plans, which do notconstitute a material commitment of the Company to investors. Investors and relatedparties shall maintain adequate risk awareness and understand the differences among plans,forecasts and commitments.This report details the potential risks that the Company will face in the future in “SectionIII Management Discussion and Analysis, (XI) Prospects for the Company’s FutureDevelopment: Potential Risks”. Investors shall be aware of the investment risks.The profit distribution plan deliberated and approved by the Company at the BoardMeeting is as follows: Based on the amount of CNY 1,194,478,182.00, the Company willdistribute a cash dividend of CNY 1.66 (tax included) for every 10 shares to all theshareholders and issue 0 bonus shares (tax included), without carrying out conversion ofcapital reserve into share capital.
Contents
Section I Important Notes, Contents and Definitions ...... 3
Section II Company Profile and Key Financial Results ...... 7
Section III Management Discussion and Analysis ...... 11
Section IV Corporate Governance ...... 50
Section V Environmental and Social Responsibility ...... 72
Section VI Important Matters ...... 74
Section VII Changes in Shares and Information about Shareholders ...... 103
Section VIII Preferred Shares ...... 113
Section IX Information about Bond ...... 114
Section X Financial Statements ...... 115
Documents Available for Reference
I. Financial statements signed and sealed by the person in charge of the Company, the chiefaccountant and the head of accounting department.II. Original audit reports signed and sealed by the accounting firm and certified public accountant.III. Original copies of all the Company’s documents and announcements publicly disclosed innewspapers and periodicals designated by China Securities Regulatory Commission (CSRC)during the reporting period.
Definitions
| Item | refers to | Definition |
| Reporting period | refers to | From January 1, 2022 to December 31, 2022 |
| Company, the Company, the Public Company and GreatStar | refers to | Hangzhou GreatStar Industrial Co., Ltd. |
| Sheffield | refers to | Hangzhou GreatStar Sheffield Trading Co., Ltd. |
| Guozi | refers to | Zhejiang Guozi Robotics Co., Ltd. |
| Arrow | refers to | Arrow Fastener Co., LLC |
| Huada Kejie | refers to | Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd |
| Ole-Systems | refers to | Hangzhou Ole-Systems Co., Ltd. |
| NDHB | refers to | Ningbo Donghai Bank Co., Ltd. |
| PT | refers to | PRIM'TOOLS LIMITED |
| GreatStar Group | refers to | GreatStar Holding Group Co., Ltd. |
| Lista | refers to | Lista Holding AG |
| Prime-Line | refers to | Prime-Line Products, LLC |
| Lianhe | refers to | Hangzhou Lianhe Machinery Co., Ltd. |
| Haining GreatStar | refers to | Haining GreatStar Intelligent Equipment Co., Ltd. |
| Zhongce Haichao | refers to | Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. |
| Hangcha Group | refers to | Hangcha Group Co., Ltd. |
| Hangzhou Haichao | refers to | Hangzhou Haichao Enterprise Management Partnership (Limited Partnership) |
| GreatStar Europe | refers to | GreatStar Europe AG |
| JFB AG and BeA | refers to | Joh. Friedrich Behrens AG |
| Geelong | refers to | Geelong Holdings Limited |
| GDR | refers to | Global Depository Receipts |
| CSRC | refers to | China Securities Regulatory Commission |
Section II Company Profile and Key Financial ResultsI. Company information
| Stock abbreviation | GreatStar | Stock code | 002444 |
| Stock exchange on which shares are listed | Shenzhen Stock Exchange | ||
| Name of the Company in Chinese | Hangzhou GreatStar Industrial Co., Ltd. | ||
| Chinese abbreviation | GreatStar | ||
| Name of the Company in English (if any) | Hangzhou GreatStar Industrial Co., Ltd. | ||
| English abbreviation (if any) | GreatStar | ||
| Legal representative of the Company | Qiu Jianping | ||
| Registered address | 35 Jiuhuan Road, Shangcheng District, Hangzhou City | ||
| Postal code of the registered address | 310019 | ||
| Historical changes of the registered address of the Company | Changed from 35 Jiuhuan Road, Jianggan District, Hangzhou City to 35 Jiuhuan Road, Shangcheng District, Hangzhou City | ||
| Office address | 35 Jiuhuan Road, Shangcheng District, Hangzhou City | ||
| Postal code of the office address | 310019 | ||
| Website of the Company | https://www.greatstartools.com/ | ||
| zq@greatstartools.com | |||
II. Contact persons and contact methods
| Secretary to the Board of Directors | Representative of Securities Affairs | |
| Name | Zhou Siyuan | Lu Haidong |
| Contact address | 35 Jiuhuan Road, Shangcheng District, Hangzhou City | 35 Jiuhuan Road, Shangcheng District, Hangzhou City |
| Telephone | 0571-81601076 | 0571-81601076 |
| Fax | 0571-81601088 | 0571-81601088 |
| zq@greatstartools.com | zq@greatstartools.com |
III. Information disclosure and the place where the report is available
| Stock exchange website where companies disclose annual reports | http://www.szse.cn/ |
| Website of the stock exchange on which the annual report of the Company is published | Securities Times, Securities Daily, cninfo (http://www.cninfo.com.cn) |
| Place where the Company’s annual report is available | Office for the Board of Directors of the Company |
IV. Change of registration
| Unified social credit code | 91330000731506099D |
| Change of the Company's main business since its listing (if any) | None |
| Change of controlling shareholders (if any) | None |
V. Other relevant information
Accounting firms engaged by the Company
| Name | Pan-China Certified Public Accountants LLP (Special General Partnership) |
| Office address | T2 Office Building, Runao Business Center, Intersection of Boao Road and Pinglan Road, Yingfeng Street, Xiaoshan District, Hangzhou City, Zhejiang Province |
| Name of signing accountant | Fei Fanghua and Li Xi |
Sponsors engaged by the Company to perform continuous supervision duties during the reporting period
□ Applicable ? N/A
Financial advisors engaged by the Company to perform continuous supervision duties during the reporting period
□ Applicable ? N/A
VI. Principal accounting data and financial indicators
Whether the Company needs to retroactively adjust or restate the accounting data of prior years
□Yes ?No
| 2022 | 2021 | YOY increase/decrease | 2020 | |
| Operating proceeds (CNY) | 12,610,189,590.33 | 10,919,683,344.37 | 15.48% | 8,544,440,154.30 |
| Net profits attributable to shareholders of the Public Company (CNY) | 1,419,559,507.10 | 1,270,003,396.40 | 11.78% | 1,350,132,516.91 |
| Net profits attributable to shareholders of the Public Company after deducting non-recurring gains and losses (CNY) | 1,454,643,772.32 | 1,073,557,965.88 | 35.50% | 1,233,758,395.96 |
| Net cash flows from operating activities (CNY) | 1,631,836,642.39 | 18,632,169.67 | 8,658.17% | 771,150,625.24 |
| Basic earnings per share (CNY/share) | 1.24 | 1.13 | 9.73% | 1.27 |
| Diluted earnings per share (CNY/share) | 1.24 | 1.13 | 9.73% | 1.25 |
| Weighted average return on equity (ROE) | 12.31% | 12.70% | -0.39% | 16.67% |
| As at the end of 2022 | As at the end of 2021 | Change | As at the end of 2020 |
| Total assets (CNY) | 18,579,554,796.77 | 17,307,154,886.67 | 7.35% | 13,677,779,045.68 |
| Net assets attributable to shareholders of the Public Company (CNY) | 13,397,947,543.83 | 10,598,896,746.70 | 26.41% | 8,826,190,578.28 |
The lower of the Company's net profits before and after deducting non-recurring gains and losses is negative in the last three fiscalyears, and the audit report of the latest fiscal year shows that there is uncertainty in the Company's sustainable operation ability
□Yes ?No
The lower of the net profits before and after deducting non-recurring gains and losses is negative
□Yes ?No
VII. Differences in accounting data by domestic and overseas accounting standards
1. Differences in the net profits and net assets disclosed in the financial reports prepared under theinternational accounting standards and Chinese accounting standards
□ Applicable ? N/A
2. Difference in the net profits and net assets disclosed in the financial reports prepared under theoverseas accounting standards and Chinese accounting standards
□ Applicable ? N/A
VIII. Quarterly principal financial indicators
Unit: CNY
| Q1 | Q2 | Q3 | Q4 | |
| Operating proceeds | 2,875,588,357.88 | 3,358,609,094.36 | 3,600,569,974.82 | 2,775,422,163.27 |
| Net profits attributable to shareholders of the Public Company | 182,880,976.76 | 458,662,642.78 | 621,565,034.54 | 156,450,853.02 |
| Net profits attributable to shareholders of the Public Company after deducting non-recurring gains and losses | 192,168,174.10 | 432,121,803.36 | 610,004,863.57 | 220,348,931.29 |
| Net cash flows from operating activities | 42,355,099.74 | 269,267,134.98 | 133,185,327.92 | 1,187,029,079.75 |
Whether there is any material difference between the above financial indicators or their totals and those disclosed by the Companyin the quarterly and semi-annual reports
□Yes ?No
IX. Items and amounts of non-recurring gains and losses?Applicable □ N/A
Unit: CNY
| Item | Amount in 2022 | Amount in 2021 | Amount in 2020 | Remarks |
| Gains or losses on disposal of non-current assets (including write-off of provision for assets impairment) | -24,332,379.79 | -4,813,678.28 | -688,830.06 | |
| Government grants accounted for, in the profit or loss for the current period (except for the government grants closely related to the business of the Company and continuously given at a fixed amount or quantity in accordance with certain standards) | 46,471,430.13 | 43,080,948.70 | 30,007,164.80 | |
| Gains in fair value of identifiable net assets attributable to invested units at the time of acquisition over investment costs for acquiring subsidiaries, associates and joint ventures by the enterprise | 82,984,773.90 | 53,341,459.79 | ||
| Gains or losses on assets entrusted for investment or management | 2,368,356.03 | 1,808,120.10 | 1,792,735.16 | |
| Gains or losses on changes in fair value of held-for-trading financial assets, held-for-trading financial liabilities and investment income from disposal of held-for-trading financial assets, held-for-trading financial liabilities and available-for-sale financial assets, excluding those arising from hedging business related to operating activities | -66,784,931.44 | 95,687,869.64 | 62,235,238.75 | |
| Other non-operational income and expenditure in addition to the items listed above | -12,290,983.36 | -127,210.71 | -632,799.21 | |
| Other items of gains and losses that fall into the category of non-recurring gains and losses | 12,733,584.83 | 502,892.56 | 267,035.13 | |
| Less: Income tax impact | -9,422,034.54 | 17,156,521.94 | 25,137,742.09 | |
| Non-controlling interests impact (after tax) | 2,671,376.16 | 5,521,763.45 | 4,810,141.32 | |
| Total | -35,084,265.22 | 196,445,430.52 | 116,374,120.95 | -- |
Details of other items of gains and losses that fall into the category of non-recurring gains and losses:
□ Applicable ? N/A
The Company has no other items of gains and losses that fall into the category of non-recurring gains and losses.Remarks on the situation that non-recurring profit and loss items listed in the Explanatory Announcement No. 1 of InformationDisclosure of Companies Offering Securities to the Public – Non-recurring Profit and Loss are defined as recurring profit and lossitems
□ Applicable ? N/A
There is no situation that non-recurring profit and loss items listed in the Explanatory Announcement No. 1 of InformationDisclosure of Companies Offering Securities to the Public – Non-recurring Profit and Loss are defined as recurring profit and lossitems.
Section III Management Discussion and Analysis
I. Situation of the industry in which the Company is operating during the reporting period
The Company is operating in the tools & storage industry. Its main products include hand tools & storage aswell as power tools & laser measurement & power stations, which are primarily used for family housingmaintenance, construction engineering, vehicle maintenance, surveying and mapping, home energymanagement, etc. Family housing and related maintenance are the most important sector where tool productsare most widely applied.In most parts of North America and Europe, due to the extensive use of freestanding buildings and the largefloor area per capita, the maintenance of residential houses is costly and time-consuming. On account of therelatively high labor cost, residents in Europe and North America are more willing to carry out the maintenancework of their houses and attached buildings by themselves, thus giving rise to the famous European andAmerican DIY culture. Meanwhile, European and American families have a large number of cars, and the dailymaintenance of cars, covering the inspection and replacement of parts, is an important part of the European andAmerican DIY culture. There are heavy professional and DIY-related demands for various tools which are oneof the necessities for maintenance in North America and Europe. Therefore, North America and Europe havebecome the most important markets for the global tool industry, with the highest proportion of potentialcustomers.With the longest history, the tool industry can be said to have evolved with the birth and development of humanbeings. In recent centuries, with the ever-increasing global population, the tool industry has been scaling up at astable growth rate due to the rigid demand for and short replacement cycle of tool products. Besides, it stillshowed a sustained positive growth trend after a short-lived fluctuation caused by the financial crisis in 2008.According to the reports released by Frost & Sullivan, the global tool market grew steadily from 2018 to 2022,with the market size increasing from USD 82 billion to USD 103 billion, representing a compound annualgrowth rate of 5.9%. From 2020 to 2021, the global tool market experienced temporary fluctuations in rawmaterial prices and supply chains. Due to the lockdown of professional maintenance shops, customers,especially local residents in North America and Europe, were in greater and greater demand for professionaltools and warehouses used in daily household maintenance. The problem that global tool manufacturingcapabilities were lagging in 2020 got solved in 2021, which contributed to strong growth in the size of theglobal tool market in 2021. Due to customers’ overspending on tool products in 2021, the market demand forsuch products slowed down significantly in 2022. The surge in tool shipments led to inventory accumulation in2021, so local tool dealers paid more attention to inventory optimization. The growth rate of the global toolmarket decreased temporarily from 10.8% in 2021 to 3.2% in 2022. In Europe and America, the main marketsfor tool products, the actual expenditures on tools and hardware fell by 11.7% without regard to inflation, withthe lowest year-on-year growth rate over the past 30 years.In the future, with the recovery of real estate and manufacturing industries as well as the economic growth, thedemand for tools and warehousing products is expected to increase continuously, and the size of the global toolmarket is expected to reach USD 131 billion by 2027 at a CAGR of 4.7% compared to 2023.
II. Main business carried out by the Company during the reporting period
During the reporting period, the Company continued to develop its main business in the global consumermarket of tools. The hand tools & storage business expanded steadily, and important breakthroughs were madein channels and new categories for the power tools business. Moreover, non-tool consumer goods became thehighlight of the Company's performance. At present, the Company's main products include hand tools & storageas well as power tools & laser measurement & power stations, which are primarily used for family housingmaintenance, construction engineering, vehicle maintenance, surveying and mapping, home energymanagement, etc.During the reporting period, the Company continued to maintain its dominant position in the hand tools &storage industry, promoting its sales through product innovation and accelerating category expansion to furthergain market share. The power tools business continued to grow at a high rate, becoming an important growthpoint for the Company’s performance. A breakthrough was achieved in the home energy storage business,which proved the Company's ability to develop and expand new categories. Furthermore, the Company obtainedimportant orders for consumer goods other than tools, which is expected to become a new growth point in thefuture. The cross-border e-commerce business continued to grow rapidly, and the Company's overall marketshare increased steadily. During the reporting period, the Company achieved operating proceeds of CNY12,610,189,600.00, up 15.48% year-on-year. In 2022, the Company's net profits attributable to shareholders ofthe Public Company were CNY 1,419,559,500.00, and the net profits attributable to shareholders of the PublicCompany after deducting non-recurring gains and losses were CNY 1,454,643,800.00, achieving a year-on-yeargrowth rate of 35.50%.
III. Analysis of core competitiveness
1. Innovation advantage
Innovation has always been the soul of the Company's development. The Company has an experienced R&Dteam for professional tool products and non-tool consumer goods, which is always committed to developmentand innovation of new products and upholds the concept that details determine success or failure to improveproduct functionality and added value, as well as to ensure the Company's long-term core competitiveness.During the reporting period, the Company invested CNY 319 million in R&D, designing 2,105 new products.The numbers of new patents applied for and patents granted both exceeded 300. Besides, the Company wasapproved as a high-tech enterprise, innovatively developing automatic lifting and shifting vice series, 12V and20V lithium battery products, 360-degree surround measuring and light-emitting torches with handles and manyother products which received good market feedback. The project of "Intelligent Robot System for BulkHandling and Its Application" declared by Ole-Systems, one of the Company’s subsidiaries, jointly with JinlingInstitute of Technology in Jiangsu won the Jiangsu Provincial Science and Technology Achievement Award.During the reporting period, the Company continued to carry out large-scale innovation of power tools,especially lithium battery power tools. With a large number of highly cost-effective innovative products, theCompany obtained orders of 12V power tools from a large retail company in the United States. Meanwhile, theCompany successfully achieved a breakthrough in home energy storage products, relying on its ownprofessional product team. In the face of constant changes in the global tool industry, the Company timelyresponded to and seized market opportunities with its innovation advantage, continuing to gain market shareand maintaining long-term and stable development.
2. Channel advantage
The Company has its own sales channels, highly trusted by customers. This is the guarantee for GreatStar’scontinuous development. The diversified product mix and sustainable innovation ability of the Company cannot only meet the one-stop purchasing needs of channel customers to the greatest extent, but also constantlysave their purchasing and management costs and continuously improve channel customer loyalty. The Companyhas become one of the largest suppliers of tools and storage for many large supermarket chains such as HOMEDEPOT, WALMART and LOWES in the United States, Kingfisher in Europe and CTC in Canada, and hasbeen expanding new product categories. In a global context, there are currently more than 20,000 largesupermarket chains such as those for hardware, building materials and auto parts, selling a wide range of theCompany’s products. These channels effectively ensure the rapid development of various innovative productsof the Company. Meanwhile, the Company makes continuous efforts in the new sales channel of cross-border e-commerce. The direct sales model based on cross-border e-commerce has become the most important saleschannel for GreatStar, in addition to traditional large supermarket chains. As an effective supplement totraditional channels, this channel not only provides a new market for the Company to develop its own brands,but also gives better play to the Company’s advantage of rapid innovation. Relying on the above channeladvantage, the Company can constantly develop and expand new product categories with good marketprospects. Historically, it has successfully achieved breakthroughs in such major categories as lasermeasurement, storage, power tools and home energy storage.
3. Supply chain advantage
After decades of development, the Company has established a global supply chain management system withChina at its core, and has built good cooperative relationships with thousands of suppliers worldwide, ensuringthat the Company will not be restricted by its own production capacity and can quickly respond to marketdemands and timely complete the delivery of various large orders. Relying on China's global supply chainsystem with the most complete basic categories and the growing global supplier network, the Company can
realize global purchasing and global manufacturing, enabling the Company to maintain a stable supply capacityin the context of short global shipping cycles and laying a foundation for it to continuously increase its marketshare. Meanwhile, given the high efficiency arising from China's ultra-wide and ultra-fine supply chain networkas well as the strong resilience, the Company can also achieve centralized purchasing in China and globaldistribution, greatly reducing the comprehensive purchasing cost and improving the market competitiveness ofthe Company's products. At present, the Company has 20 manufacturing bases worldwide, which can fully meetvarious needs and cope with the complicated external environment.
4. Brand advantage
The main products of the Company are durable consumer goods for households and industrial products forprofessionals. Brand is the most effective guarantee for the Company to provide consumers with products andservices for a long time, so the Company is always committed to the creation and development of its ownbrands. During the reporting period, the Company made great efforts to develop its own brands, enhance thebrand influence and strengthen the brand advantage. Its own brands, especially e-commerce brands, continuedto grow. The sales revenues of WORKPRO, DURATECH, SWISSTECH, Prexiso and other brands increasedsignificantly year-on-year. Besides, the sales revenues of the Company’s own brands accounted for more than40% for the first time. The brand advantage not only further enhances the international competitiveness of theCompany's products, but also effectively improves the Company's gross profit margin and business stability,providing a guarantee for the long-term healthy development of the Company.
5. International advantage
During the reporting period, domestic and international economic patterns were complicated. As a companywith international development planning, GreatStar made full use of manufacturing capacities and sales marketsin different regions worldwide, actively coping with risks and seeking opportunities.During the reporting period, the Company positively promoted the full production of manufacturing bases inSoutheast Asia and constantly optimized the division and planning of manufacturing work on a global scale,fully reflecting the advantage of the Company's international layout and flexibility of production capacity. Atpresent, the Company’s factories in Southeast Asia have all been put into use, and the layout of productioncapacity has preliminarily taken shape in Southeast Asia. Meanwhile, in the face of poor staff mobility on aninternational scale during the reporting period, the Company actively made use of the advantages of local teamsin Europe and America, continuing to provide customers with a well-established nearby service system andguaranteeing the matching between orders and after-sales services. The international advantage effectivelyensures that the Company can not only give play to the superiority of China's manufacturing clusters, but alsomake use of the strengths in manufacturing costs in Southeast Asia and local channel services in the Europeanand American markets when facing other international competitors, so as to build stronger core competitiveness.The Company is accelerating to become a global resource allocation company integrating local services inEurope and America, manufacturing based on industrial chains in Asia and R&D management in China.IV. Analysis of main business
1. Overview
During the reporting period, the total demand of the global tool market slowed down and the overall overseasproduct inventory was high, leading to a sharp decline in the gross sales. Due to inflation, the growth rate of theindustry scale still increased, and online channels as well as some best-selling products provided good growthopportunities for the Company. The Company seized the opportunities and effectively guaranteed theunimpeded supply chains and order delivery with its innovation, supply chain integration and channelexpansion abilities, achieving substantial growth in some new businesses and products. Online channelscontinued to grow at a high rate, and the Company’s overall market share increased steadily. Meanwhile, drasticfluctuations in the CNY exchange rate and favorable changes in global logistics costs had a positive impact onthe Company's profitability. During the reporting period, the Company achieved operating proceeds of CNY12,610,189,600.00, up 15.48% year-on-year. In 2022, the Company's net profits attributable to shareholders ofthe Public Company were CNY 1,419,559,500.00, and the net profits attributable to shareholders of the PublicCompany after deducting non-recurring gains and losses were CNY 1,454,643,800.00, achieving a year-on-yeargrowth rate of 35.50%. The performance of each business segment is as follows:
1. Hand tools & storage
During the reporting period, the influence of the Company’s own brands gradually improved, and the orders ofsome brands increased more than expected. The sales of the Company’s own brands accounted for more than 40%for the first time. Besides, in the face of market changes, the product strategy was adjusted timely, andsubstantial growth was realized in some products, especially outdoor tools. The Company reinforced thedevelopment of markets in the Belt and Road countries and achieved some results in channel construction. Thecross-border e-commerce business maintained a high growth rate while categories and product lines wereconstantly improved. The self-built stations of the Company’s own brands were put into operation for the firsttime, and the channel expansion continued to deepen with improvements in online live-streaming channels aswell as a continuous increase in the brand popularity and fan base. Combined with the development direction of
the Company, the export department took the initiative to analyze and tap the potential of customers. Whileensuring the steady growth of main tool products, it actively sought opportunities for non-tool consumer goodsand signed important purchase agreements for non-tool household goods.The storage business achieved rapid growth, with new categories and products launched at an accelerated pace.The production bases in Thailand were fully put into operation, laying a foundation for further increasing themarket share. Zhongshan Geelong took the initiative to adjust its own business strategy and achieved growthmore than expected all year round. Lista, located in Europe, seized the opportunities of the market demandrecovery in Europe and the rising import demand to maintain steady growth.
2. Power tools & laser measurement & power stations
During the reporting period, the Company obtained the purchase order confirmation of power tools from a largeretail company for the first time after restarting the power tools business, reaching the ceiling for growth in thepower tool business. It proactively adjusted the product supply according to market demand and gave priority toproviding customers with heating equipment and home energy storage equipment, so as to meet consumers'immediate needs, extend the Company's product lines, and achieve significant breakthroughs especially in thehome energy storage products. Moreover, the Company continued to innovate in power tool product lines foronline channels, setting up an important channel for the power tool business.For the laser measurement business, the focus is on new products and channel construction. Based on thereadjusted brand positioning and business direction, the awareness of the Company’s own brands and productswas improved, and the new series of products launched obtained good market feedback. Besides, the Companyopened up marketing channels based on short videos and expanded the online sales business scale. The laserradar business maintained rapid growth year on year, with increasing product application scenarios andchannels, and the Company completed the iterative design of some products according to the changing needs ofthe industry and customers.
2. Revenue and costs
(1) Composition of operating proceeds
Unit: CNY
| 2022 | 2021 | YOY increase or decrease | |||
| Amount | Percentage in operating proceeds | Amount | Percentage in operating proceeds | ||
| Total | 12,610,189,590.33 | 100% | 10,919,683,344.37 | 100% | 15.48% |
| Business segment | |||||
| Tools and hardware | 12,545,286,576.78 | 99.49% | 10,849,925,564.41 | 99.36% | 15.63% |
| Other operating proceeds | 64,903,013.55 | 0.51% | 69,757,779.96 | 0.64% | -6.96% |
| Product | |||||
| Hand tools & storage | 10,004,744,537.61 | 79.34% | 8,911,550,156.07 | 81.61% | 12.27% |
| Power tools & laser measurement & power stations | 2,540,542,039.17 | 20.15% | 1,909,689,643.58 | 17.49% | 33.03% |
| Personal protective equipment | 0.00 | 0.00% | 28,685,764.76 | 0.26% | -100.00% |
| Other operating proceeds | 64,903,013.55 | 0.51% | 69,757,779.96 | 0.64% | -6.96% |
| Region | |||||
| America | 7,892,263,869.75 | 62.59% | 7,521,994,025.83 | 68.88% | 4.92% |
| Europe | 3,296,852,123.29 | 26.14% | 2,399,120,860.68 | 21.97% | 37.42% |
| Others | 634,667,980.89 | 5.03% | 510,223,523.81 | 4.67% | 24.39% |
| Domestic (China) | 721,502,602.85 | 5.72% | 418,587,154.09 | 3.83% | 72.37% |
| Other operating proceeds | 64,903,013.55 | 0.51% | 69,757,779.96 | 0.64% | -6.96% |
| Sales model | |||||
| OBM | 5,087,869,546.67 | 40.35% | 3,836,999,428.09 | 35.14% | 32.60% |
| ODM | 7,457,417,030.11 | 59.14% | 7,012,926,136.32 | 64.22% | 6.34% |
| Other operating proceeds | 64,903,013.55 | 0.51% | 69,757,779.96 | 0.64% | -6.96% |
(2) Business segments, products, regions and sales models that account for more than 10% of the Company's operatingproceeds or operating profit?Applicable □ N/A
Unit: CNY
| Operating proceeds | Operating costs | Gross profit margin | YOY increase or decrease of operating proceeds | YOY increase or decrease of operating costs | YOY increase or decrease of gross profit margin | |
| Business segment | ||||||
| Tools and hardware | 12,545,286,576.78 | 9,244,404,166.19 | 26.31% | 15.63% | 13.46% | 1.40% |
| Product | ||||||
| Hand tools & storage | 10,004,744,537.61 | 7,332,189,779.90 | 26.71% | 12.27% | 9.84% | 1.62% |
| Power tools & laser measurement & power stations | 2,540,542,039.17 | 1,912,214,386.29 | 24.73% | 33.03% | 32.10% | 0.53% |
| Region | ||||||
| America | 7,892,263,869.75 | 5,744,738,104.68 | 27.21% | 4.75% | 1.52% | 2.32% |
| Europe | 3,296,852,123.29 | 2,362,455,830.12 | 28.34% | 37.42% | 34.95% | 1.31% |
| Sales model | ||||||
| OBM | 5,087,869,546.67 | 3,831,561,078.82 | 24.69% | 32.60% | 33.54% | -0.53% |
| ODM | 7,457,417,030.11 | 5,412,843,087.37 | 27.42% | 6.34% | 2.47% | 2.74% |
In case of any adjustment in the statistical standards for the Company’s main business data during the reporting period, theCompany’s main business data in the prior year based on the statistical standards adjusted at the end of the reporting period shallprevail
□ Applicable ? N/A
(3) Whether the Company's revenue from physical product sales is greater than its service revenue?Yes □ No
| Business segment | Item | Unit | 2022 | 2021 | YOY increase or |
| decrease | |||||
| Tools and hardware | Sales volume | PCS | 513,462,176 | 444,440,557 | 15.53% |
| Production quantity | PCS | 523,831,646 | 497,037,108 | 5.39% | |
| Inventory level | PCS | 123,945,263 | 113,575,793 | 9.13% | |
Reasons for any year-on-year increase or decrease of relevant data by more than 30%
□ Applicable ? N/A
(4) Performance of major sales contracts and purchase contracts signed by the Company as of the reporting period
□ Applicable ? N/A
(5) Composition of operating costs
Business segment and product
Unit: CNY
| Business segment | Item | 2022 | 2021 | YOY increase or decrease | ||
| Amount | Percentage in operating costs | Amount | Percentage in operating costs | |||
| Tools and hardware | / | 9,244,404,166.19 | 99.76% | 8,147,389,910.45 | 99.65% | 13.46% |
| Other operating costs | / | 22,518,138.56 | 0.24% | 28,733,758.05 | 0.35% | -21.63% |
Unit: CNY
| Product | Item | 2022 | 2021 | YOY increase or decrease | ||
| Amount | Percentage in operating costs | Amount | Percentage in operating costs | |||
| Hand tools & storage | / | 7,332,189,779.90 | 79.12% | 6,675,528,068.48 | 81.65% | 9.84% |
| Power tools & laser measurement & power stations | / | 1,912,214,386.29 | 20.63% | 1,447,529,390.12 | 17.70% | 32.10% |
| Personal protective equipment | / | 0.00 | 0.00% | 24,332,451.85 | 0.30% | -100.00% |
| Other operating costs | / | 22,518,138.56 | 0.24% | 28,733,758.05 | 0.35% | -21.63% |
NotesNone
(6) Whether there was any change in the consolidation scope during the reporting period
?Yes □ NoFor details, see the notes in VIII, Section X.
(7) Major changes or adjustments in the Company's business segments, products or services during the reporting period
□ Applicable ? N/A
(8) Major customers and suppliers
Major customers
| Total sales revenue from the top five customers (CNY) | 6,056,269,323.22 |
| Proportion of the total sales revenue from the top five customers in the total annual sales revenue | 48.03% |
| Proportion of the sales revenue from the affiliated parties thereof in the total annual sales revenue | 0.00% |
Information of the Company's top five customers
| No. | Name | Sales revenue (CNY) | Proportion in the total annual sales revenue |
| 1 | Customer 1 | 3,057,264,391.78 | 24.24% |
| 2 | Customer 2 | 1,578,675,477.75 | 12.52% |
| 3 | Customer 3 | 862,130,369.56 | 6.84% |
| 4 | Customer 4 | 346,410,830.38 | 2.75% |
| 5 | Customer 5 | 211,788,253.75 | 1.68% |
| Total | -- | 6,056,269,323.22 | 48.03% |
Other information on major customers
□ Applicable ? N/A
Major suppliers
| Total acquisition cost paid to the top five suppliers (CNY) | 519,819,828.17 |
| Proportion of the total acquisition cost paid to the top five suppliers in the total annual acquisition cost | 5.61% |
| Proportion of the acquisition cost paid to the affiliated parties thereof in the total annual acquisition cost | 0.00% |
Information of the Company's top five suppliers
| No. | Name | Acquisition cost (CNY) | Proportion in the total annual acquisition cost |
| 1 | Supplier 1 | 163,104,790.91 | 1.76% |
| 2 | Supplier 2 | 96,702,638.71 | 1.04% |
| 3 | Supplier 3 | 95,133,654.01 | 1.03% |
| 4 | Supplier 4 | 89,906,569.94 | 0.97% |
| 5 | Supplier 5 | 74,972,174.60 | 0.81% |
| Total | -- | 519,819,828.17 | 5.61% |
Other information on major suppliers
□ Applicable ? N/A
3. Expenses
Unit: CNY
| 2022 | 2021 | YOY increase or decrease | Reasons for any material change | |
| Sales expenses | 757,228,439.80 | 593,003,103.68 | 27.69% | Mainly attributable to the increase in personnel compensation, advertising and promotion expenses and office expenses |
| Administrative expenses | 760,961,439.86 | 686,120,731.06 | 10.91% | Mainly attributable to the increase in personnel compensation |
| Financial expenses | -110,855,174.76 | 64,801,716.03 | -271.07% | Mainly attributable to the increase in exchange earnings and interest income arising from the depreciation of CNY |
| R&D expenses | 319,444,535.16 | 309,763,366.15 | 3.13% |
4. R&D expenses
?Applicable □ N/A
| Item | Purpose | Progress | Expected goal | Expected impact on the Company's future development |
| R&D of two-axis laser level which can be directly traced to laser wavelength | To increase product functionality or improve performance | Completed | To achieve good economic benefits for the Company | To enhance the Company’s market competitiveness |
| R&D of laser instrument which projects cross laser rays on four sides | To increase product functionality or improve performance | Completed | To achieve good economic benefits for the Company | To enhance the Company’s market competitiveness |
| R&D of laser positioning level for continuous measuring and positioning | To increase product functionality or improve performance | Completed | To achieve good economic benefits for the Company | To enhance the Company’s market competitiveness |
| R&D of integrated laser base assembly system technology for laser level | To increase product functionality or improve performance | Completed | To achieve good economic benefits for the Company | To enhance the Company’s market competitiveness |
| R&D of multi-mode control laser level | To increase product functionality or improve performance | Completed | To achieve good economic benefits for the Company | To enhance the Company’s market competitiveness |
| R&D of cross line laser which can realize the function of optical path alignment | To increase product functionality or improve performance | Completed | To achieve good economic benefits for the Company | To enhance the Company’s market competitiveness |
| R&D of laser level for fixed-point horizontal marking at arbitrary distance | To increase product functionality or improve performance | Completed | To achieve good economic benefits for the Company | To enhance the Company’s market competitiveness |
| R&D and application of new multifunction tool car | To develop new products | Completed | To cut down on labor | To increase product lines |
| Development and application of a high-strength PC alloy in toolbox | To improve functionality or performance | Completed | To ensure product stability | To increase product lines |
| R&D and application of high-performance antibacterial dust-proof coating materials | To improve functionality or performance | Completed | To ensure product stability | To increase product lines |
| R&D of high-efficiency wireless charging technology in the application scenarios of power tools and cabinet products | To improve functionality or performance | Uncompleted | To ensure product stability | To increase product lines |
| R&D and application of intelligent storage system | To improve functionality or performance | Completed | To ensure product stability | To increase product lines |
| Development and application of leak-proof RFID technology in cabinet products | To develop new products | Uncompleted | To increase product lines | |
| Development and application of multi-station intelligent toolbox production lines | To improve functionality or performance | Completed | To ensure product stability | To increase product lines |
| Development and application of multi-dimensional intelligent bending machine in toolbox products | To improve functionality or performance | Completed | To ensure product stability | To increase product lines |
| Application of nano-level spraying technology in toolbox | To improve functionality or performance | Completed | To ensure product stability | To increase product lines |
| R&D and application of intelligent combination lock in combined cabinets | To improve functionality or performance | Uncompleted | To ensure product stability | To increase product lines |
| R&D of cable cutters with aluminum handles and replaceable blades | To make it easier to cut cables than traditional products | Completed | To save the labor by 20% | To increase product lines |
| R&D of copper pipe cutter for ratchets | To resolve the problem of cutting copper pipes in a narrow space | Completed | To enable cutting copper pipes in a narrow space | To increase product lines |
| R&D of dredging device with a steerable grip | To facilitate driving hand-held and switchable power tools | Completed | To make it available for both hand and power tools | To increase product lines |
| R&D of multi-angle functional scissors with two-color handles | To cut plates at different angles | Completed | To cut materials at several fixed angles | To increase product lines |
| R&D of portable multifunction straight plate cutter | To develop portable and multifunction cutters | Completed | To develop small and portable cutters with wrenching function | To increase product lines |
| R&D of multi-specification ratchet wrench with large torque | To resolve the limitations on the application of traditional ratchet wrenches | Completed | To realize the rotation of ratchet wrenches at multiple angles | To increase product lines |
| R&D of fine crystal | To increase product | Completed | To achieve | To increase the |
| tandem rolling and hardening technology and its application in grid products | functionality or improve performance | breakthroughs in existing products and processes | Company’s profits | |
| Application of fully automatic integrated drawer molding process in toolbox | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| R&D of power lithium battery packs for BMS integrated control system and their application in power tools | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Research and application of key technologies of multi-mode 3D laser imaging for large-space and high-definition natural scenes – R&D of a laser ranging module with imaging function | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Application of PU foaming materials in cutting tools | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Application of 304 antibacterial materials containing copper in cutting tools | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Development of anti-hydrogen embrittlement high-strength vacuum chrome-plated screwdriver | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Feasibility research on high-power COB integrated light source module | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Application of wireless and PD fast chargers in POWER-BANK | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Research and application of key technologies of multi-mode 3D laser imaging for large-space and high-definition natural scenes – R&D of high-definition laser ranging products based on 12V lithium battery pack platform | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| R&D and application of high-performance polypropylene materials | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| R&D of fluorinated | To increase product | Completed | To achieve | To increase the |
| coatings and their application in the tool industry | functionality or improve performance | breakthroughs in existing products and processes | Company’s profits | |
| R&D of nail guns with quick-change clips | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| R&D of screw bits based on "polymer magnetic composite materials" | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Application of high wear-resistant super-hydrophobic composite coating in lighting products | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| R&D of energy recovery for high-speed screwdrivers | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Application of adaptive control processing technology in hand tool products | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Application of residual heat quenching process of hot rolled alloy steel in tool products | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Design of precision, complex and long-life injection mold based on the control volume method | To increase product functionality or improve performance | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| Intelligent storage SAAS cloud management platform | To increase labor productivity | Completed | To meet the needs of multi-mode business expansion | To increase the Company’s profits |
| Lean supply chain business system software – lean supply chain system for domestic trade | To increase labor productivity | Completed | To meet the needs of multi-mode business expansion | To increase the Company’s profits |
| R&D and industrialization of high-resolution 3D vision sensors with a wide imaging range | To increase product functionality or improve performance | Duration: 2022.07-2023.12 | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| R&D of high-power and high-precision 3D laser building instrument platform | To increase the added value of products | Completed | To develop new customers and increase revenue | To enrich product lines |
| R&D of panoramic real-time indoor and outdoor removable space laser measuring instrument | To increase the added value of products | Completed | To develop new customers and increase revenue | To increase product lines |
| R&D on integration of long-distance laser ranging technology and cross line laser | To improve production efficiency and develop products in a new mode of operation | In progress | To reduce labor and improve construction efficiency | To innovate in products and fill the gaps in the market |
| R&D of large-angle and | To develop a high-precision | In progress | To develop a platform | To innovate in |
| high-precision attitude control sensors for laser measuring instrument | and high-value innovative technology | technology and new customers | platforms and fill the gaps in the market | |
| R&D of high-precision panoramic 3D laser imaging system based on single-photon array | Application of full-waveform measurement technology | In progress | To develop a platform technology for laser products | To innovate in platforms and increase the added value of products |
| R&D of folding trolley | To develop new products | Completed | To mass-produce new products | To increase income |
| R&D of multifunction combined gas furnace | To develop new products | Completed | To mass-produce new products | To increase income |
| Demountable service cart for barbecue | To develop new products | Uncompleted | To mass-produce new products | To increase income |
| R&D of environmental waste sorting and recycling bins | To develop new products | Completed | To mass-produce new products | To increase income |
| R&D of storage bins | To develop new products | Uncompleted | To mass-produce new products | To increase income |
| Folding miter saw bracket | To develop new products | Uncompleted | To mass-produce new products | To increase income |
| Practical application of general-purpose dual power supply system with dry lithium battery in lamps and lanterns | To raise the technical requirements of products | Completed | To increase the output value | To increase the Company’s profits |
| Technical solution of LED applied in flexible light strips | To raise the technical requirements of products | Completed | To increase the output value | To increase the Company’s profits |
| Application of wireless bluetooth interconnection technology in lamps and lanterns | To raise the technical requirements of products | Completed | To increase the output value | To increase the Company’s profits |
| R&D and application of laser sensor module for intelligent equipment – 01 development of special-purpose laser sensor chip | To improve the technological process | Completed | To increase sales | To increase the Company’s profits |
| R&D and application of laser sensor module for intelligent equipment – 02 development of opto-mechatronics module | To improve the technological process | Completed | To increase sales | To increase the Company’s profits |
| R&D and application of laser sensor module for intelligent equipment – 03 development of algorithms matching application scenarios | To improve the technological process | Completed | To increase sales | To increase the Company’s profits |
| R&D and application of laser sensor module for intelligent equipment – 04 development of intelligent laser sensor | To improve the technological process | Completed | To increase sales | To increase the Company’s profits |
| R&D and application of laser sensor module for intelligent equipment – 05 development of new | To improve the technological process | Completed | To increase sales | To increase the Company’s profits |
| intelligent measuring tools | ||||
| RD11 – safety-certified single-channel scanning and sensing laser detection device | To develop new products and improve production efficiency | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| RD12 – miniaturized mid- and long-range single-channel multi-angle scanning and sensing laser detection device | To develop new products and improve production efficiency | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| RD13 – phase-type long-range single-point laser sensor detection device | To develop new products and improve production efficiency | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| RD14 – multi-step laser-receiving single-channel scanning and sensing laser detection device | To develop new products and improve production efficiency | Completed | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| RD15 – large-sized multi-channel multi-reflection light path scanning and sensing laser detection device | To develop new products and improve production efficiency | 2022.1.1-2023.12.31 | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| RD16 – heavy multi-channel 3D space scanning and sensing laser detection device | To develop new products and improve production efficiency | 2022.1.1-2023.12.31 | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| RD17 – lightweight ultra-small close-range multi-angle scanning and sensing laser detection device | To develop new products and improve production efficiency | 2022.1.1-2023.12.31 | To achieve breakthroughs in existing products and processes | To increase the Company’s profits |
| R&D of six-claw energy-efficient quick ratchet wrenches | To independently develop new product prototypes or sample products | Completed | To develop new products | To increase revenue from product sales |
| R&D of aerospace double-ended ring spanner | To make general improvements for existing products and processes | Completed | To increase product functionality or improve performance | To increase revenue from product sales |
| R&D of toothed socket ratchet wrench | To make general improvements for existing products and processes | Completed | To increase product functionality or improve performance | To increase revenue from product sales |
| R&D of triple-purpose wrench | To make general improvements for existing products and processes | Completed | To increase product functionality or improve performance | To increase revenue from product sales |
| R&D of new water pipe wrench | To independently develop new technologies, processes or construction methods | Completed | To develop new products | To increase revenue from product sales |
| R&D of eight-in-one dog-bone-shaped wrench | To independently develop new technologies, processes or construction methods | Uncompleted | To develop new products | To increase revenue from product sales |
| Ratchet wrench tester | To independently develop new technologies, processes or construction methods | Completed | To improve product quality | To improve product quality |
| Assembly machine for ratchet retainer ring | To independently develop new technologies, processes or construction methods | Completed | To increase labor productivity | To increase labor productivity |
| R&D of numerically-controlled pressing process | To independently develop new technologies, processes or construction methods | Completed | To increase labor productivity | To increase labor productivity |
| Improvement and application of reverse nail pulling process | To enhance the market competitiveness of products | Completed | To increase production and output value | To increase product lines |
| Hammer handle spacing lengthening and appearance upgrading process and its application | To enhance the market competitiveness of products | Completed | To increase production and output value | To increase product lines |
| One-time forging and handle upgrading process and its application | To enhance the market competitiveness of products | Completed | To increase production and output value | To increase product lines |
| Torsion and tension reinforcement process of brick trowel handle and its application | To enhance the market competitiveness of products | Completed | To increase production and output value | To increase product lines |
| Development of automatic loading and unloading process for grinding teeth of saws based on robot technology | To improve work efficiency and reduce labor costs | Completed | To reduce labor | To save the cost |
| Research on single-edge sharpening process of pipe cutter based on five-axis CNC machining technology | Completed | To shorten the time and improve the product accuracy | To improve product quality and win more customers | |
| R&D of multi-station toothing process of hand cutter | Completed | To shorten the time and improve the efficiency | To shorten the production time | |
| R&D of NC precision single-sided grinding process of plastering trowel | Completed | To improve the product accuracy | To improve product quality and win more customers | |
| Development of semi-automatic riveting technology for pipe cutter holder | Completed | To reduce labor and improve product accuracy | To save the cost and improve product quality | |
| Research on file cutting tools | Completed | To increase the product functionality | To develop new products and sales growth points | |
| Research on pipe wrench with opening size adjustable quickly according to the outer pipe diameter | Completed | To increase the product functionality | To develop new products and sales growth points | |
| Development and industrialization of DLC film coating strengthening tool | In progress | To develop new coating technologies | To improve product quality and add new products | |
| Development of 3-axis technology upgrade to 4-axis technology for machining center | In progress | To improve the machining precision, simplify the process and improve the production efficiency | To shorten the production time | |
| R&D of saw tooth dividing machine | In progress | To realize automatic machine feeding and | To save the cost |
| reduce the labor | ||||
| Research on automatic polishing technology of plastering tools | In progress | To realize fully automatic processing and reduce the dependency on labor | To save production costs and improve product quality | |
| R&D of automatic feeding technology of wire stripper for manipulator polishing and forging | To improve work efficiency and reduce labor costs | In progress | To reduce labor | To save the cost |
| Development of automatic feeding technology for stamping parts | To improve work efficiency and reduce labor costs | In progress | To reduce labor | To save the cost |
| R&D and industrialization of high-resolution 3D vision sensors with a wide imaging range | In progress | R&D of 3D vision sensor | To add new products | |
| Research on multi-station automatic welding process of shelf brackets | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To increase product lines |
| Research on high-peel-strength thermoplastic elastomer for nylon handle cladding of hand tools and its application | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To increase the application highlights of corresponding products, improve the Company's technical strength, promote other products and enhance the Company’s overall competitiveness |
| Technical research on production lines for high-efficiency stamping of stainless steel plates for putty knives | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To increase the application highlights of corresponding products, improve the Company's technical strength, promote other products and enhance the Company’s overall competitiveness |
| Research on forming process of low-shrinkage polypropylene composite filled with calcium carbonate and plastic parts | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To increase the application highlights of corresponding products, improve the Company's technical strength, promote other products and enhance the Company’s overall competitiveness |
| PLC-based manipulator-operated material taking and feeding system for screwdriver bits | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To improve the adhesion strength of product cladding. To decrease the scrap rate. |
| Multi-specification injection mould for screwdriver bits based on rapid positioning technology | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To improve the adhesion strength of product cladding. To decrease the scrap rate. |
| Research on manufacturing process of folding prefabricated plastic operating table for woodworking decoration | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To improve the adhesion strength of product cladding. To decrease the scrap rate. |
| Fine blanking die sets of nitrogen spring type and fine blanking of impact parts | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To increase product lines |
| Research on multi-station automatic welding technology and equipment | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To increase product lines |
| Precision mold for rapid prototyping and extruding of aluminum alloy with uneven wall thickness | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To increase product lines |
| Design and development of continuous precision punching process and mold for stepless quick-clamp high-carbon steel | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To increase product lines |
| Drive circuit with a hand-held power bank and multiple LED functions | To realize various functions, make products portable, as well as save energy and electricity | Uncompleted | To realize various functions, make products portable, as well as save energy and electricity | To increase product lines |
| R&D of LED lamps with portable bluetooth speakers | To realize various functions, make products portable, as well as save energy and electricity | Completed | To realize various functions, make products portable, as well as save energy and electricity | To increase product lines |
| R&D of integrated continuous die forging technology for sheet metal parts | To improve production efficiency and reduce labor costs | Completed | To cut down on labor | To increase product lines |
| R&D of fully automatic assembly technology for L-shaped angle square | To increase labor productivity | Completed | To reduce labor | To further promote automatic production |
| R&D of automatic assembly technology for angle square | To increase product functionality or improve performance | Completed | To reduce labor and ensure quality stability | To further promote automatic production |
| Research on the engine guarantee technology for yacht consignment | To develop new products | Completed | To promote new products and technologies | To expand product lines |
| Development of key technologies of multifunction laser level | To increase product functionality or improve performance | Completed | To increase the output value | To expand product lines |
| Development of key technologies of display stand for fishing rods | To increase product functionality or improve performance | Completed | To increase the output value | To expand product lines |
| R&D of fully automatic dispensing and assembly technology of level production line | To increase labor productivity | Completed | To reduce labor and ensure quality stability | To further promote automatic production |
| Development of several key technologies of file cutting | To develop new products | Product design-drawing completed | To increase the output value | To expand product lines |
| R&D of folding trolley | To develop new products | Completed | To mass-produce new products | To increase income |
| R&D of multifunction combined gas furnace | To develop new products | Completed | To mass-produce new products | To increase income |
| Demountable service cart for barbecue | To develop new products | Uncompleted | To mass-produce new products | To increase income |
| R&D of environmental waste sorting and recycling bins | To develop new products | Completed | To mass-produce new products | To increase income |
| R&D of storage bins | To develop new products | Uncompleted | To mass-produce new products | To increase income |
| Folding miter saw bracket | To develop new products | Uncompleted | To mass-produce new products | To increase income |
| R&D of adjustable wrenches with helical teeth | To nearly double the torque of adjustable wrenches | Trial production | To improve product performance | To obtain stable market orders |
| R&D of SK-type plier tools | To achieve quick shift and increase the torque | Trial production | To improve product performance | To obtain stable market orders |
R&D employees
| 2022 | 2021 | Turnover | |
| Number of R&D employees (person-time) | 1,099 | 978 | 12.37% |
| As (%) in the total number of the Company’s employees | 10.41% | 9.07% | 1.34% |
| Educational background structure of R&D employees | |||
| Undergraduate | 408 | 361 | 13.02% |
| Master's degree | 24 | 20 | 20.00% |
| Age structure of R&D employees | |||
| Under 30 | 178 | 141 | 26.24% |
| 30-40 | 599 | 378 | 58.47% |
R&D expenses
| 2022 | 2021 | Turnover | |
| R&D expenses (CNY) | 319,444,535.16 | 309,763,366.15 | 3.13% |
| As (%) in the operating proceeds | 2.53% | 2.84% | -0.31% |
| Capitalized R&D expenses (CNY) | 0.00 | 0.00 | 0.00% |
| As (%) in the R&D expenses | 0.00% | 0.00% | 0.00% |
Reasons for the significant changes in R&D employees and their impacts
□ Applicable ? N/A
Reasons for the significant changes in the proportion of the total R&D expenses in the operating proceeds compared with prioryear
□ Applicable ? N/A
Reasons for and reasonable explanation of the significant changes in capitalized R&D expenses
□ Applicable ? N/A
5. Cash flows
Unit: CNY
| Item | 2022 | 2021 | YOY increase or decrease |
| Sub-total of cash inflows from operating activities | 13,850,370,894.60 | 11,353,982,165.74 | 21.99% |
| Sub-total of cash outflows from operating activities | 12,218,534,252.21 | 11,335,349,996.07 | 7.79% |
| Net cash flows from operating activities | 1,631,836,642.39 | 18,632,169.67 | 8,658.17% |
| Sub-total of cash inflows from investing activities | 345,733,789.20 | 576,965,254.73 | -40.08% |
| Sub-total of cash outflows from investment activities | 860,100,111.16 | 1,790,034,046.53 | -51.95% |
| Net cash flows from investment activities | -514,366,321.96 | -1,213,068,791.80 | -57.60% |
| Sub-total of cash inflows from financing activities | 4,690,798,053.76 | 4,415,766,206.58 | 6.23% |
| Sub-total of cash outflows from financing activities | 5,300,549,759.79 | 2,884,992,006.99 | 83.73% |
| Net cash flows from financing activities | -609,751,706.03 | 1,530,774,199.59 | -139.83% |
| Net increase in cash and cash equivalents | 792,240,939.29 | 270,923,023.10 | 192.42% |
Main influencing factors of the significant year-on-year changes in relevant data?Applicable □ N/AThe net cash flows from operating activities increased by 8,658.17% year on year, mainly due to the substantial increase in cashreceived from sales of goods and provision of services.The net cash flows from investing activities increased by 57.60% year on year, mainly due to the decrease in the net cash paid bysubsidiaries and other business units in the current year compared to the prior year.The net cash flows from financing activities decreased by -139.83% year-on-year, mainly due to the increase in cash payments fordebt service.Reasons for the significant differences between the net cash flows from the Company's operating activities and the net profits forthe current year during the reporting period
□ Applicable ? N/A
V. Analysis of non-core business
□ Applicable ? N/A
VI. Analysis of assets and liabilities
1. Material changes in composition of assets
Unit: CNY
| As at the end of 2022 | As at the beginning of 2022 | Change in percentage | Reasons for any material change | |||
| Amount | Percentage in total assets | Amount | Percentage in total assets | |||
| Monetary assets | 4,863,206,182.40 | 26.18% | 4,033,707,240.16 | 23.31% | 2.87% | |
| Accounts receivable | 1,896,685,590.11 | 10.21% | 1,798,265,505.53 | 10.39% | -0.18% | |
| Inventories | 2,812,572,525.68 | 15.14% | 2,835,777,996.84 | 16.39% | -1.25% | |
| Investment real estate property | 122,158,556.01 | 0.66% | 127,058,966.69 | 0.73% | -0.07% | |
| Long-term equity investment | 2,544,523,517.55 | 13.70% | 2,353,942,699.80 | 13.60% | 0.10% | |
| Fixed assets | 1,518,902,232.96 | 8.18% | 1,494,547,487.29 | 8.64% | -0.46% | |
| Construction in progress | 304,599,362.46 | 1.64% | 113,750,851.49 | 0.66% | 0.98% | |
| Right-to-use assets | 417,129,361.41 | 2.25% | 411,722,761.66 | 2.38% | -0.13% | |
| Short-term loans | 1,379,062,713.11 | 7.42% | 1,806,901,201.39 | 10.44% | -3.02% | Mainly attributable to the decrease in loans caused by the rise in market interest rate of USD loans |
| Contractual liabilities | 131,898,420.14 | 0.71% | 91,235,951.19 | 0.53% | 0.18% | |
| Long-term loans | 798,604,951.84 | 4.30% | 1,015,445,732.07 | 5.87% | -1.57% | |
| Lease liabilities | 318,221,349.99 | 1.71% | 289,196,511.02 | 1.67% | 0.04% | |
| Other amounts payable | 21,198,376.32 | 0.11% | 676,502,987.21 | 3.91% | -3.80% | Mainly attributable to the repayment of funds borrowed from affiliated parties |
The overseas assets account for a relatively high proportion?Applicable □ N/A
| Item | Reason for formation | Size | Location | Operation mode | Control measures to ensure the safety of | Profitability | Proportion of overseas assets in the | Whether there is a material impairment |
| assets | Company’s net assets | risk | ||||||
| 100% shares of Lista Holding AG | Share acquisition | 20,607.23 (Unit: CNY 10,000) | Switzerland | Independent accounting | Financial supervision and commissioned external audit | Profitable | 1.51% | No |
| 100% shares of Arrow Fasterner Co., LLC | Share acquisition | 46,131.71(Unit: CNY 10,000) | USA | Independent accounting | Financial supervision and commissioned external audit | Profitable | 3.39% | No |
2. Assets and liabilities measured at fair value
?Applicable □ N/A
Unit: CNY
| Item | Opening balance | Changes in fair value recognised in profit or loss for the current period | Cumulative changes in fair value recognised in equity | Provision for impairment in the current period | Purchase amount in the current period | Sales amount in the current period | Other changes | Closing balance |
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (excluding derivative financial assets) | 0.00 | 188,000,000.00 | 128,000,000.00 | 60,000,000.00 | ||||
| 2. Derivative financial assets | 4,330,070.00 | 5,900,034.24 | 5,162,396,751.13 | 2,374,061,458.24 | 10,230,104.24 | |||
| 4. Investments in other equity instruments | 16,550,000.00 | 16,550,000.00 | ||||||
| Sub-total of financial assets | 20,880,070.00 | 5,900,034.24 | 0.00 | 0.00 | 5,350,396,751.13 | 2,502,061,458.24 | 0.00 | 86,780,104.24 |
| Total | 20,880,070.00 | 5,900,034.24 | 0.00 | 0.00 | 5,350,396,751.13 | 2,502,061,458.24 | 0.00 | 86,780,104.24 |
| Financial liabilities | 978,031.91 | -47,435,678.38 | 48,413,710.29 | |||||
Other changesN/AWhether there is a significant change in the measurement attribute of the Company's main assets during the reporting period
□Yes ?No
3. Restricted assets rights as at the end of the reporting period
| Item | Book value as at the end of the reporting period (Unit: CNY） | Reason for restriction |
| Monetary assets | 33,448,671.74 | Guarantee deposits for future foreign exchange settlement |
| Monetary assets | 20,893,800.00 | Guarantee deposits for short-term loans |
| Monetary assets | 6,616,370.00 | Guarantee deposits for letters of credit |
| Monetary assets | 7,384,067.19 | Guarantee deposits for bank acceptance bills |
| Monetary assets | 1,393,093.00 | Customs guarantee deposits |
| Monetary assets | 43,000.00 | Guarantee deposits for ETC |
| Fixed assets | 27,776,638.39 | Used as collateral for drawing bank acceptance bills |
| Fixed assets | 10,003,152.72 | Used as collateral for bank loans |
| Intangible assets | 2,046,633.50 | Used as collateral for drawing bank acceptance bills |
| Intangible assets | 1,385,386.53 | Used as collateral for bank loans |
| 100% shares of Arrow Fastener Co., LLC (Note) | 481,723,419.57 | Used as collateral for bank loans |
| Total | 592,714,232.64 |
(Note): The 100% shares of Arrow Fastener Co., LLC are the book balance of net assets as at the end of the reporting period
VII. Analysis of investment situation
1. General situation
?Applicable □ N/A
| Investment in the reporting period (CNY) | Investment in the same period of prior year (CNY) | Change |
| 1,529,848,856.93 | 1,123,031,335.02 | 36.22% |
2. Significant equity investments acquired during the reporting period
?Applicable □ N/A
Unit: CNY
| Name of the investee | Main business | Investment mode | Amount of investment | Shareholding ratio | Source of funds | Partner | Term of investment | Product type | Progress as of the balance sheet date | Projected income | Profit or loss from investments in the current period | Whether it is involved in a lawsuit | Date of disclosure (if any) | Index of disclosure (if any) |
| Hangzhou GreatStar Garden Tools Co., Ltd. | Agricultural scientific research and experimental development; | Newly established | 698,610,000.00 | 100.00% | Self-owned funds | / | Long-term | Long-term equity investment | Established and completed | -2,317,343.88 | -2,317,343.88 | No | December 17, 2022 | Announcement No.: 2022-093 |
| Hangzhou GreatStar Energy Co., Ltd. | Battery manufacturing; atomic-power equipment manufacturing based on new energy | Newly established | 349,305,000.00 | 100.00% | Self-owned funds | / | Long-term | Long-term equity investment | Established and completed | -1,158,671.94 | -1,158,671.94 | No | September 24, 2022 | Announcement No.: 2022-067 |
| Zhongshan Jilong Import and Export Trade Co., Ltd. | Wholesale sales of hardware products; import and export of goods | Newly established | 21,065,000.00 | 100.00% | Self-owned funds | / | Long-term | Long-term equity investment | Established and completed | 2,035,695.77 | 2,035,695.77 | No | ||
| Zhejiang Shiwanke | Household appliance | Newly established | 10,000,000.00 | 100.00% | Self-owned fund | / | Long-term | Long-term equity | Established and comp | -1,036,552.73 | -1,036,552.73 | No |
| Electric Appliance Co., Ltd. | manufacturing | s | investment | leted | ||||||||||
| Total | -- | -- | 1,078,980,000.00 | -- | -- | -- | -- | -- | -- | -2,476,872.78 | -2,476,872.78 | -- | -- | -- |
3. Significant non-equity investments ongoing during the reporting period
?Applicable □ N/A
Unit: CNY
| Item | Investment mode | Whether it is a fixed asset investment | Related industry | Amount invested in this reporting period | Actual investment amount accumulated as at the end of the reporting period | Source of funds | Progress | Projected income | Accumulated income realized as at the end of the reporting period | Reasons for failure to complete the planned schedule and realize the projected income | Date of disclosure (if any) | Index of disclosure (if any) |
| Annual output of 550,000 sets of laser sensor modules | Self-built | Yes | Laser measurement | 12,024,283.02 | 39,960,000.00 | Raised funds | 40.00% | 0.00 | 0.00 | / | ||
| Phase-I factory construction of GreatStar Intelligent Equipment Co., Ltd. in | Self-built | Yes | Hand tools | 68,380,874.81 | 92,216,998.59 | Raised funds | 92.00% | 0.00 | 0.00 | / |
| Vietnam | ||||||||||||
| Intelligent factory with an annual output of 1 million sets of new power tools | Self-built | Yes | Power tools | 19,200,447.56 | 3,749,200.00 | Raised & Self-owned funds | 23.00% | 0.00 | 0.00 | / | ||
| Construction of toolbox production bases in Thailand | Self-built | Yes | Toolbox | 11,233,233.87 | 116,493,835.50 | Raised and self-owned funds | 97.00% | 0.00 | 0.00 | / | ||
| Total | -- | -- | -- | 110,838,839.26 | 252,420,034.09 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
4. Investments in financial assets
(1) Securities investment
□ Applicable ? N/A
There is no securities investment in the reporting period.
(2) Investment in derivatives
?Applicable □ N/A
1) Investment in derivatives for the purpose of hedging during the reporting period
?Applicable □ N/A
Unit: CNY 10,000
| Type | Initial investment amount | Changes in fair value recognised in profit or loss for the current period | Cumulative changes in fair value recognised in equity | Purchase amount in the current period | Sales amount in the current period | Closing amount | Proportion of the closing amount in the Company’s net assets as at the end of the reporting |
| period | |||||||
| Future exchange | 28,062.46 | -4,139.28 | 0 | 516,239.68 | 237,406.15 | 306,895.99 | 22.53% |
| Total | 28,062.46 | -4,139.28 | 0 | 516,239.68 | 237,406.15 | 306,895.99 | 22.53% |
| Reasons for the significant changes in the accounting policies and specific accounting principles of hedging business during the reporting period compared to the same period of prior year | Unchanged | ||||||
| Realized gains and losses during the reporting period | The gains or losses from investment in derivatives recognised during the reporting period are CNY -25,565,069.36. | ||||||
| Description of the effect of hedging | During the reporting period, the Company adhered to the principle of exchange rate risk-neutral and signed forward exchange contracts as hedging tools according to the amount of foreign exchange based on the sales forecasts as well as the target cost of exchange rate, with the delivery time and the agreed delivery amount matching the predicted amount cashed, so as to avoid the risks caused by exchange rate fluctuations. During this report period, the changes of hedging tools in cash flows could offset the changes of the hedged items in cash flows caused by the risk of exchange rate fluctuations, which met the hedging effectiveness requirements and achieved the hedging target. | ||||||
| Source of funds for investment in derivatives | Self-owned funds | ||||||
| Position risk analysis and control measures of derivatives during the reporting period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | 1. Market risk: The changes in the international and domestic economic conditions may cause large fluctuations in the exchange rate, so forward exchange transactions will face certain market risks. The Company's forward exchange transactions are to lock in the settlement or sale price of foreign exchange and reduce the impact of exchange rate fluctuations on the Company's profits. The Company will closely track exchange rate changes and determine the plan to sign forward exchange contracts based on the target exchange rate for transactions, the research and judgment of foreign exchange rate trends, as well as the Company's forecasts of foreign exchange payment and ability to withstand price changes caused by exchange rate fluctuations, while implementing dynamic management on transactions to ensure a reasonable profit level. 2. Liquidity risk: All foreign exchange transactions of the Company are based on reasonable estimates of the Company's future imports and exports to meet the needs of transaction authenticity. 3. Bank default risk: If the cooperative bank closes down or any other defaults occur during the term of the contract, the Company will not be able to deliver the original foreign exchange contract at the contract price, resulting in the risk of uncertain returns. Therefore, the banks that the Company chooses to carry out foreign exchange transactions with include the five major state-owned banks, Chinese-funded banks such as China Merchants Bank, and foreign-funded banks such as HSBC and Standard Chartered Bank. These banks have strong strength and stable operations, and the risk of their closedown that may bring losses to the Company is very low. | ||||||
| 4. Operational risk: The Company's forward exchange transactions may cause related risks due to improper operation of handling personnel. The Company has formulated relevant management systems and specified the operating procedures and responsible persons, which is conducive to preventing and controlling risks. 5. Legal risk: Legal disputes may arise when the Company conducts forward exchange transactions and signs ambiguous contracts or agreements with banks on relevant transactions. The Company will legally strengthen the review of relevant contracts and choose banks with good credit to carry out such transactions, so as to control risks. | |
| For the changes in the market prices of the invested derivatives or the fair values of products during the reporting period, the analysis of the fair values of derivatives shall disclose the specific method used and the setting of relevant assumptions and parameters | The gains or losses from changes in fair value recognised during the reporting period are CNY -41,392,762.63. The fair values of derivatives are measured with the notice of valuation given by banks and securities companies as a reasonable estimate of the fair value. |
| Whether it is involved in a lawsuit (if applicable) | N/A |
| Date of announcement of the Board Meeting on approval of investment in derivatives (if any) | April 12, 2022 |
| Date of announcement of the Shareholders' Meeting on approval of investment in derivatives (if any) | May 10, 2022 |
| Independent directors’ | The Company carries out foreign-exchange derivative transactions, which meets the needs of the Company's actual operation and can reduce the impact of exchange rate fluctuations on the Company's profits to a certain |
| special opinions on the Company's investment in derivatives and risk control | extent. The Company has established the Management System of Foreign-exchange Derivative Transactions and effective risk control measures in accordance with relevant laws and regulations. We agree upon the Company's proposal to conduct foreign-exchange derivative transactions in 2022. |
2) Investment in derivatives for speculation purposes during the reporting period
□ Applicable ? N/A
There is no investment in derivatives for speculation purposes during the reporting period.
5. Use of raised funds
?Applicable □ N/A
(1) Overall use of raised funds
?Applicable □ N/A
Unit: CNY 10,000
| Year of fund-raising | Mode of fund-raising | Total funds raised | Total funds used during the current period | Total accumulated funds used | Total funds repurposed during the reporting period | Total accumulated funds repurposed | Proportion of the total accumulated funds repurposed | Total funds unused | Use and whereabouts of funds unused | Amount of funds that have been idle for more than two years |
| 2020 | Issue of convertible bonds | 97,260 | 20,275.42 | 74,006.34 | 0 | 13,494.42 | 13.87% | 25,991.94 | Deposited in a special fund raising account | 0 |
| Total | -- | 97,260 | 20,275.42 | 74,006.34 | 0 | 13,494.42 | 13.87% | 25,991.94 | -- | 0 |
| Overall use of raised funds | ||||||||||
| According to the Reply on Approval of Public Issue of Convertible Bonds for Hangzhou GreatStar Industrial Co., Ltd. (ZJXK (2019) No. 2656) from CSRC, the Company is authorized to issue convertible bonds not exceeding CNY 972,600,000.00. CITIC Construction Securities Co., Ltd., the lead underwriter, shall give priority to the original shareholders of the Company for placement, and the remaining part after the original shareholders' priority placing (including the part waived by the original shareholders) shall be issued to public investors via the Internet. The part whose subscription amount is less than CNY 972,600,000.00 shall be exclusively sold by the lead underwriter. The Company actually issued 9,726,000 convertible bonds, each with a face value of CNY 100.00, raising a total of CNY 972,600,000.00. After deducting the underwriting and sponsor fees of CNY 5,188,679.25 (excluding tax), the raised funds reached CNY 967,411,320.75. These funds have been remitted by CITIC Construction Securities Co., Ltd., the lead underwriter, to the Company's supervision account for raised funds on July 2, 2020. In addition, after deducting the underwriting and sponsor fees, audit and capital verification fees, attorney fees, credit rating fees, information disclosure fees for this issue, lottery fees, bond issuance registration fees and other external expenses directly related to the issue of convertible bonds, with a total of CNY 2,289,867.92, the Company raised a net of CNY 965,121,452.83. The above raised funds have been verified by Pan-China Certified Public Accountants LLP (Special General Partnership) with the Verification Report issued (TJY (2020) No. 244). | ||||||||||
As of December 31, 2022, the Company has invested a total of CNY 740,063,400.00 in the raised funds. The net income frominterest on funds is CNY 34,052,300.00, and the gains or losses from exchange of financial expenses are CNY 809,000.00. As ofDecember 31, 2022, the account balance of the raised funds is CNY 259,919,400.00.
(2) Commitments of raised funds
?Applicable □ N/A
Unit: CNY 10,000
| Committed investments and over-raised funds | Whether there is any change (including partial changes) | Total committed investments of raised funds | Total investments adjusted (1) | Amount invested in this reporting period | Cumulative investments as at the end of the reporting period (2) | Progress as at the end of the reporting period (3) = (2)/(1) | Date of achieving the conditions for intended use | Benefits realized during this reporting period | Whether the expected benefits are achieved | Whether there is any significant change in the feasibility |
| Committed investments | ||||||||||
| Laser measuring instrument and smart home appliance production base construction | No | 20,426 | 20,426 | 8,368.39 | 16,962.59 | 83.04% | December 31, 2023 | N/A | No | |
| Toolbox production base construction | Yes | 26,776 | 13,281.58 | 0 | 13,281.58 | 100.00% | 2,311.3 | N/A | Yes | |
| Intelligent warehousing and logistics base construction | No | 22,542.15 | 22,542.15 | 246.87 | 7,717.06 | 34.23% | December 31, 2023 | N/A | No | |
| R&D center construction | No | 7,768 | 7,768 | 3,538.33 | 3,550.69 | 45.71% | December 31, 2023 | N/A | No | |
| Capital increase of subsidiaries and acquisition of the | No | 13,494.42 | 8,121.83 | 13,494.42 | 100.00% | July 2, 2021 | 27,026.69 | N/A | No | |
| 100% shares of Geelong Holdings Limited held by Geelong Orchid Holdings Ltd | ||||||||||
| Sub-total of committed investments | -- | 77,512.15 | 77,512.15 | 20,275.42 | 55,006.34 | -- | -- | 29,337.99 | -- | -- |
| Over-raised funds | ||||||||||
| N/A | ||||||||||
| Additional working capital (if any) | -- | 19,000 | 19,000 | 19,000 | 100.00% | -- | -- | -- | -- | |
| Sub-total of over-raised funds | -- | 19,000 | 19,000 | 19,000 | -- | -- | -- | -- | ||
| Total | -- | 96,512.15 | 96,512.15 | 20,275.42 | 74,006.34 | -- | -- | 29,337.99 | -- | -- |
| Failures to complete the planned schedule and realize the projected income and their respective reasons (including the reasons for N/A as to whether the expected benefits are | I. The reasons why the Company’s investments of raised funds did not reach the planned schedule are as follows: 1. The subjects of implementation for laser measuring instrument and smart home appliance production base construction are the Company’s wholly-owned sub-subsidiary, Haining GreatStar Intelligent Equipment Co., Ltd., as well as wholly-owned subsidiaries, GreatStar Intelligent Equipment Co., Ltd. in Vietnam and Hangzhou GreatStar Tools Co., Ltd. The implementation sites are located in Lianhang Economic and Technological Development Zone, Haining City, Zhejiang Province, Nanjianqiao Industrial Zone, Shuiyuan County, Haiphong City, Vietnam, and HZGC Lot 26 (2020), Jianggan District, Hangzhou City. The project was originally scheduled to be completed on December 31, 2022. During the implementation of the project, the Company was restricted by the shortage of global shipping capacity in 2021 and the first half of 2022, and some raw materials and equipment could not be timely delivered to Vietnam. The COVID-19 pandemic affected the construction progress of the project to a certain extent, resulting in the delay of the completion time of the project. In order to better implement this project and ensure the maximization of project benefits, the 29th Meeting of the 5th Session of Board of Directors and the 1st Extraordinary General Meeting of Shareholders of the Company in 2023 approved the extension of the project implementation period to December 31, 2023. 2. The subject of implementation for intelligent warehousing and logistics base construction is the Company’s wholly-owned sub-subsidiary, Haining GreatStar Intelligent Equipment Co., Ltd. The implementation site is located in Lianhang Economic and Technological Development Zone, Haining City, Zhejiang Province. The project was originally scheduled to be completed on December 31, 2022. During the implementation of this project, the Company's revenue scale and order size achieved rapid growth. The existing warehousing capacity cannot meet the growing order demand, so the Company needs to increase the number of warehousing and logistics bases and improve the overall warehousing and logistics capacity. In order to better implement the project and ensure the maximization of project benefits, the 29th Meeting of the 5th Session of Board of Directors and the 1st Extraordinary General Meeting of Shareholders of the Company in 2023 have approved and decided to add Vietnam GreatStar Intelligence Co., Ltd., a wholly-owned subsidiary, and Hangzhou GreatStar Energy Co., Ltd., a wholly-owned sub-subsidiary as one of the implementation subjects of the intelligent warehousing and logistics base project, and to add Nanjianqiao Industrial Zone, Shuiyuan County, Haiphong City, Vietnam, JG1601-43 Plot, Unit of Genbei New District, | |||||||||
| achieved) | Shangcheng District, Hangzhou City, Zhejiang Province, and Chang'an Town, Haining City, Zhejiang Province as one of the implementation sites of the project, as well as to adjust the investment structure of the project while extending the implementation period of the project to December 31, 2023. 3. The subject of implementation for R&D center construction is the Company, and the construction site is located at the northwest corner of the intersection of Hongpu Road and Jiuheng Road, Jiupu Street, Shangcheng District, Hangzhou City. The project was originally scheduled to be completed on December 31, 2022. During the implementation of this project, new products combined endlessly, so it was necessary to adjust the R&D focus to products more in line with the long-term development strategy of the Company. Meanwhile, after the Company consolidated by combining its original wholly-owned subsidiary, Hangzhou Lianhe Machinery Co., Ltd., the planned investments in equipment and software needed to be reevaluated, resulting in the failure to complete the relevant work as planned. In order to make efficient use of the Company's R&D capability and ensure the maximization of project benefits, the 29th Meeting of the 5th Session of Board of Directors and the 1st Extraordinary General Meeting of Shareholders the Company in 2023 approved the extension of the project implementation period to December 31, 2023. II. Description of the failure of raised funds investment project to be separately accounted for the benefits The construction project of intelligent warehousing and logistics base is designed to meet the needs of the Company to improve operation efficiency, expand business in the future and achieve sustainable development of the Company, so the benefits cannot be calculated separately. The implementation of R&D center construction projects is mainly based on product R&D design, product trial production and product testing, producing no direct economic benefits. The supplementary working capital project is designed to meet the needs of working capital for the continuous expansion of the Company's operating scale, so the benefits cannot be accounted separately. |
| Description of significant changes in project feasibility | Due to the shortage of global shipping capacity, some raw materials and equipment cannot be delivered to the project’s implementation site in time, which has a certain impact on the construction progress of the Company's tool storages production base project. As a result, the project’s completion date is delayed to some extent. According to the Company's long-term strategic planning and current development needs, in order to improve the use efficiency of raised funds, improve the Company's existing production capacity and supply capacity faster, and better meet customer needs, after deliberation and approval of the 7th meeting of 5th session of board of directors and the annual general meeting of shareholders in 2020, the Company used the uninvested raised funds of CNY 134,944,200.00 from the Toolbox cabinet production base construction project up to April 5, 2021 for the purchase of 100% equity of Geelong Holdings Limited held by Geelong Orchid Holdings Ltd., and the construction project of the original toolbox cabinet production base was terminated. In order to promote the smooth implementation of equity acquisition and reduce transaction costs, the Company held its 10th meeting of 5th session of board of directors meeting on June 21, 2021, deliberated and approved the Proposal on Changing the Implementation Subjects of Some Raised Projects, and agreed to change the implementation subjects of equity acquisition projects from the Company to Hong Kong GreatStar International Co., Ltd., a wholly-owned subsidiary of the Company. |
| Amount, purpose and progress of the overraised funds | N/A |
| Change of the implementation location of the raised funds investment project | Applicable |
| Incurred in prior year | |
| On July 22, 2020, the Company held the 37th Meeting of the 4th Session of Board of Directors, deliberated and approved the Proposal on Adding the Implementation Subjects and Locations of the Raised Funds Investment project and Using Part of the Raised Funds to Increase Capital to the Wholly-owned Subsidiary. 1. Agreed to add Vietnam Giant Intelligence Co., Ltd., a wholly-owned subsidiary, as one of the implementation subjects of the laser measuring instrument and smart home production base construction project, and add Nanjianqiao Industrial Zone, Shuiyuan County, Haiphong City, Vietnam, as one of the implementation locations of the project; 2. Agreed to add the wholly-owned subsidiary Thailand New Land Co., Ltd. (renamed Geelong (Thailand) Co., Ltd.) as one of the implementation subjects of the toolbox cabinet production base construction project, and add No. 54/5, Village 1, Mayangpong Town, Baodan County, Rayong Province, Thailand, as one of the implementation locations of the project. On April 14, 2021, the Company held the 8th meeting of the 5th Session of Board of Directors, deliberating and approving the Proposal on Changing the Implementation Subject and Location of the Raised Funds Investment Project, Adjusting the Investment Structure of the Raised Project and Extending the Implementation Period. 1. Agreed to add Hangzhou GreatStar Tool Co., Ltd., a wholly-owned subsidiary, as one of the implementation subjects of the |
| laser measuring instrument and smart home production base construction project, and add Hang Zheng Gong Chu (2020) No. 26 Plot, Jianggan District, Hangzhou as one of the implementation sites of the project; 2. Agreed to change the implementation subject of R&D center construction project to Hangzhou GreatStar Technology Co., Ltd. On June 21, 2021, the Company held the 10th meeting of the 5th Session of Board of Directors, deliberated and approved the Proposal on Changing the Implementation Subject of Some Raised Funds Investment Projects, agreeing that the implementing entity for the Company's acquisition of 100% of the equity in Geelong Holdings Limited held through Geelong Orchid Holdings Ltd be changed from the Company to Hong Kong GreatStar International Limited, a wholly-owned subsidiary of the Company. On December 30, 2022, the Company held the 29th meeting of the 5th Session of Board of Directors, deliberated and approved the Proposal on Increasing the Implementation Subject and Implementation Location of the Raised Funds Investment Projects, Adjusting the Investment Structure of the Raised Projects and Extending the Implementation Period. Agreed to add Vietnam GreatStar Intelligence Co., Ltd., a wholly-owned subsidiary, and Hangzhou GreatStar Energy Co., Ltd., a wholly-owned Sub-subsidiary, as one of the project implementation subjects. Meanwhile, Nanjianqiao Industrial Zone, Shuiyuan County, Haiphong City, Vietnam, JG1601-43 Plot, Unit of Genbei New District, Shangcheng District, Hangzhou City, Zhejiang Province, and Chang'an Town, Haining City, Zhejiang Province are added as one of the implementation sites of this project. | |
| Adjustment of implementation methods of raised funds investment project | N/A |
| Advance investment and replacement of raised funds for investment projects | Applicable |
| 1. On July 22, 2020, the Company held the 37th meeting of the 4th Session of Board of Directors, deliberated and approved the Proposal on Using Raised Funds to Replace Self-raised Funds of Pre-investment in the Project. (1) The Company agreed to replace the self-raised funds pre-invested in the project with the raised funds of CNY 148,254,900. (2) The Company agreed to replace the issuance fee of CNY 1.7238 million paid by the Company’s own funds with the raised funds. The expenses of the Company's R&D center construction project include employees' remunerations, bonuses, social insurance premiums, housing provident funds and other expenses. In accordance with the relevant provisions of the People's Bank of China Administrative Rules for RMB Bank Settlement Accounts, the employees' remunerations can not be paid via the Company's special account. And considering that the employees' social insurance premium and housing provident fund are uniformly transferred or paid by the Company's own fund account, it is not feasible to pay the personnel expenses involved in the raised funds investment project (hereinafter referred to as “Fund-raised Project”) directly via the special account for raising funds. Therefore, it is necessary to advance the payment with the Company’s own funds, and then transfer the same amount from the fund raising account to the relevant deposit account of the Company. On September 23, 2022, the Company held the 24th meeting of the 5th Session of Board of Directors, deliberated and approved the Proposal on Using its Own Funds to Pay Part of the Subsequent Funds of the Raised Funds Investment Project in Exchange for the Same Amount of Raised Funds. It is agreed that during the implementation of the raised funds investment project (hereinafter referred to as “Project”), the Company shall first pay part of the project with its own funds (personnel expenses such as salary, bonus, social insurance premium, housing provident fund, etc.), then make monthly statistics on the amount of funds paid for the project with its own funds, and transfer the same amount from the raised funds special account to the Company's own funds account. As of December 31, 2022, the Company paid the fund amount of the raised project with its own funds, and transferred the same amount from the special fund raising account to the Company's own fund account, totaling CNY 20.1543 million. | |
| Description of temporary replenishment of | N/A |
| working capital with idle raised funds | |
| Amount and reasons of raised fund surplus in the implementation of the project | Applicable |
| The Company’s project of "capital increase to subsidiaries and acquisition of 100% equity of Geelong Holdings Limited held through Geelong Orchid Holdings Ltd" has been implemented as planned. In order to facilitate the management of the fund collection special account, the Company has cancelled the raised fund special account of the project. In addition, the saved raised funds (interest income) of USD 14.98 (discounted to CNY 100.00 according to the spot exchange rate of the trading day) will be transferred to its own fund account for permanent replenishment of working capital. | |
| Purpose and destination of unutilized raised funds | By the end of the period, the balance of the unutilized raised funds is equivalent to CNY 259,919,400.00 (CNY 34,052,300.00, including the cumulative bank deposit interest minus bank charges), which is deposited in the special account for the raised funds. |
| Problems or other circumstances in the utilization and disclosure of the raised funds | N/A |
(3) Projects involved with changes in raised fund
?Applicable □ N/A
Unit: CNY 10,000
| Items after change | Corresponding original commitment project | Total funds to be invested in the project after change (1) | Actual investment amount in this reporting period | Actual cumulative investment amount at the end of the period (2) | Investment progress by the end of the period (3)=(2)/(1) | Date of achieving the conditions for intended use | Benefits realized during this reporting period | Whether the expected benefits are achieved | Whether the project feasibility has changed significantly after change |
| Capital increase to subsidiary and | Toolbox production base construction | 13,494.42 | 8,121.83 | 13,494.42 | 100.00% | July 2, 2021 | 27,026.69 | N/A | No |
| acquisition of 100% stake in Geelong Holdings Limited through Geelong Orchid Holdings Ltd | |||||||||
| Total | -- | 13,494.42 | 8,121.83 | 13,494.42 | -- | -- | 27,026.69 | -- | -- |
| Description of reasons for change, decision-making procedures and information disclosure (project-wise) | According to the Company's long-term strategic planning and current development needs, in order to improve the use efficiency of raised funds, improve the Company's existing production capacity and supply capacity faster, and better meet customer needs, after deliberation and approval of the 7th meeting of the 5th session of board of directors and the annual general meeting of shareholders in 2020, the Company used the uninvested raised funds of CNY 134,944,200.00 from the Toolbox cabinet production base construction project up to April 5, 2021 for the purchase of 100% equity of Geelong Holdings Limited held by Geelong Orchid Holdings Ltd., and the construction project of the original toolbox cabinet production base was terminated. In order to promote the smooth implementation of equity acquisition and reduce transaction costs, the Company held it’s the 10th meeting of the 5th session of board of directors meeting on June 21, 2021, deliberated and approved the Proposal on Changing the Implementation Subjects of Some Raised Projects, and agreed to change the implementation subjects of equity acquisition projects from the Company to Hong Kong GreatStar International Co., Ltd., a wholly-owned subsidiary of the Company. | ||||||||
| Details and reasons for not achieving the planned progress or expected earnings (project-wise) | N/A | ||||||||
| Description of significant changes in project feasibility after change | N/A | ||||||||
VIII. Sale of major assets and equity
1. Sale of major assets
□ Applicable ? N/A
No major assets were sold during the reporting period.
2. Sale of major equity
□ Applicable ? N/A
IX. Analysis of major holding and participating companies?Applicable □ N/ADetails of main subsidiaries and the participating companies which have more than 10% influence on the net profit of theCompany
Unit: CNY
| Designatio | Type | Main | Registered | Total assets | Net assets | Operating | Operating | Net profit |
| n | business | capital | proceeds | profit | ||||
| Hong Kong GreatStar International Co., LTD | Subsidiary | Hand tools, power tools and storages | 978,911,994.66 | 3,602,465,774.67 | 1,877,030,188.85 | 1,164,633,571.47 | 173,992,774.96 | 150,241,386.40 |
Acquisition and disposal information of subsidiaries during the reporting period?Applicable □ N/A
| Companies | Acquisition and disposal method of subsidiaries during the reporting period | Impact on overall production, operation and performance |
| Zhongshan Jilong Import and Export Trade Co., Ltd. | Established | No significant impact |
| Zhejiang Shiwanke Electric Appliance Co., Ltd. | Established | No significant impact |
| Hangzhou GreatStar Energy Co., Ltd. | Established | No significant impact |
| Hangzhou GreatStar Garden Tools Co., Ltd. | Established | No significant impact |
| SHOP-VAC VIETNAM CO.,LTD | Established | No significant impact |
| HUADA VIETNAM CO.,LTD | Established | No significant impact |
| Hangzhou Lianhe Machinery Co., Ltd. | Cancelled | No significant impact |
| Zhejiang GreatStar Intelligent Tool Co., Ltd. | Cancelled | No significant impact |
| Hangzhou GreatStar Power Tools Co., Ltd. | Cancelled | No significant impact |
| International Storage Solutions Limited | Cancelled | No significant impact |
Description of major holding and participating companiesNone
X. Structural subjects under control of the Company
□ Applicable ? N/A
XI. Prospect of the company's future development
(I) The Company's development strategyThe Company's overall development strategy is: to focus on the main business, base in China, pursue the global layout, and planlong-term development.“Focusing on the main business” means that the Company will continue to use the existing European and American large-scalesupermarkets and e-commerce self-operated channels to focus on the main business with TOOLS as the core product. Meanwhile,the Company will continue to dispose of non-core business assets to recover cash and use it for the development of the mainbusiness. The Company will also rely on the extension of acquisitions, focusing on the development of non-hand tools includingpower tools and outdoor products.“Basing in China” means that the Company will rely on the Southeast Asia supply chain network with China as the core and theknow-how of Chinese engineers, leading global supply chain division of tool industry, continue to expand the leading position inthe industry, leading the development of international tool industry, and in the future, gradually take over the European andAmerican industrial transfer to create customer demand as the core of the innovative economic era.“Pursuing the global layout” means that the Company will continue to strengthen the construction of its own brand service systemin Europe and America and the production capacity layout in Southeast Asia, select foreign high-quality companies for industrialcombination and integration, better access to international resources and international markets, and gradually upgrade the
Company from an ODM company in China to an international OBM company designed in China, created in Asia and combinedwith local services in Europe and America.Finally, “Planning long-term development” means that the Company will respect the century-old development history of the toolindustry, rely on the characteristics of slow growth and stable cash flow in the field of durable consumer goods, plan its ownbusiness and development path in a long period, gradually cultivate new business growth points, and eventually become a goodcompany with steady operation, sustained growth and healthy development that creates long-term value for society.(II) Business plan
1. Overall business goals
The basic strategy of the Company is to focus on the main business, base in China, pursue the global layout and plan long-termdevelopment. Since the three-year development goal was set in the annual report in 2019, the cumulative revenue had increased by
90.33% and non-profit increased by 77.13% in the past three years. The current global supply chain and industry pattern continueto present rare strategic development opportunities. The international layout of the Company since 2018 will continue tostrengthen its position in the industry in the future. Meanwhile, the layout of power tool product line, especially household energystorage products, will bring new growth points to the Company. The Company strives to achieve the cumulative 100% growth ofthe main business in the next three years.
2. Development goal in private brands
The private brands are the long-term and stable core competitiveness of the Company. The Company will continue to maintaininvestment in the promotion of private brand products, and ensure that the sales revenue proportion of private brand products willcontinue to increase in 2023, striving to reach 50% of the revenue proportion.
3. Development goal in cross-border e-commerce
Cross-border e-commerce is the core of the Company's strategy for sustainable growth. The Company will actively integrateinternal advantageous resources, improve the product categories and service capabilities of cross-border e-commerce, and continueto maintain the cross-border e-commerce business growth of nearly 50% in 2023.
4. Development goal in power tools
As a new business line after laser and cabinet, power tool will become the second growth curve of the Company in the future. TheCompany will integrate domestic high-quality lithium power resources, orderly promote the power tool products with its owncharacteristics, and strive to achieve more than 50% growth of power tool business in 2023.(III) Possible risksAfter a comprehensive analysis of the Company's external environment and actual situation, the main operating risks the Companyfaces include:
1. Exchange rate fluctuation risk
At present, the Company's operating income basically comes from the overseas market. For example, the wide fluctuation of CNYexchange rate will have a certain impact on the Company's operating income. Most of the Company's main business orders aredenominated in USD, and the fluctuations of the exchange rate between CNY and USD directly affect the price competitiveness ofproducts, thus affecting the Company's operating performance. In this regard, the Company will continue to strengthen overseaslayout and foreign exchange settlement regulation, to hedge and reduce the impact of exchange rate fluctuations on the Company'sperformance.
2. Risk of rising raw material prices
Recently, the Company's main raw material prices fluctuate greatly, resulting in the Company's production costs have fluctuated.Although the Company's production capacity is dominated by outsourced production, which has a high ability of bargaining withupstream outsourced manufacturers, if the price of raw materials continues to rise, the Company's profitability may still be affectedto some extent. In this regard, the Company will continue to strengthen procurement and cost control, establish strategiccooperative relations with suppliers and sign long-term agreements to absorb the risk of raw material price fluctuations.
Meanwhile, the Company will continue to optimize the product structure, strengthen the R&D of new products, and rely oninnovative products to determine reasonable prices, maintaining the product gross margin.
3. Risk of trade conflict
Currently, the United States is the largest single market of the Company, and most of the products exported by the Company to theUnited States are still subject to 25% tariff, which has an adverse impact on the development of the Company. In this regard, theCompany will pay close attention to the international situation, continue to implement the internationalization strategy, promotethe construction of overseas manufacturing bases, cultivate overseas supply chains, and establish a global production capacitylayout and supply chain system to ensure the stable development of the Company's business.XII. Reception of survey, communication and interview activities during the report period
?Applicable □ N/A
| Reception date | Reception place | Reception mode | Reception object type | Reception object | Main contents discussed and information provided | Basic information index of survey |
| January 17, 2022 | Company | Telephone communication | Others | Institutional investors and individual investors | The Company's 2021 annual performance forecast. | The Company's 2021 annual performance forecast. |
| January 18, 2022 | Company | Telephone communication | Others | Institutional investors and individual investors | The Company's 2021 annual performance forecast. | The Company's 2021 annual performance forecast. |
| January 19, 2022 | Company | Telephone communication | Others | Institutional investors and individual investors | The Company's 2021 annual performance forecast. | The Company's 2021 annual performance forecast. |
| April 26, 2022 | Company | Telephone communication | Others | Institutional investors and individual investors | The Company's 2021 annual report and 2022 quarterly report. | The Company's 2021 annual report and 2022 quarterly report. |
| April 27, 2022 | Company | Telephone communication | Others | Institutional investors and individual investors | The Company's 2021 annual report and 2022 quarterly report. | The Company's 2021 annual report and 2022 quarterly report. |
| April 28, 2022 | Company | Telephone communication | Others | Institutional investors and individual investors | The Company's 2021 annual report and 2022 quarterly report. | The Company's 2021 annual report and 2022 quarterly report. |
| August 29, 2022 | Company | Telephone communication | Others | Institutional investors and individual investors | The Company's 2022 semi-annual report. | The Company's 2022 semi-annual report. |
| August 30, 2022 | Company | Telephone communication | Others | Institutional investors and individual investors | The Company's 2022 semi-annual report. | The Company's 2022 semi-annual report. |
| August 31, 2022 | Company | Telephone communication | Others | Institutional investors and individual investors | The Company's 2022 semi-annual report. | The Company's 2022 semi-annual report. |
| October 21, | Company | Telephone | Others | Institutional investors | Company 2022 | Company 2022 |
| 2022 | communication | and individual investors | Q3 report. | Q3 report. | ||
| October 24, 2022 | Company | Telephone communication | Others | Institutional investors and individual investors | Company 2022 Q3 report. | Company 2022 Q3 report. |
| October 25, 2022 | Company | Telephone communication | Others | Institutional investors and individual investors | Company 2022 Q3 report. | Company 2022 Q3 report. |
Section IV Corporate GovernanceI. Basic situation of corporate governanceDuring the reporting period, the Company continuously improved the corporate governance structure, established and improvedthe internal management and control system, improved the corporate governance level, and standardized the operation of theCompany in strict accordance with the requirements of relevant laws and regulations such as the Company Law, Securities Law,Governance Code for Listed Companies, and Rules for Stock Listing of Shenzhen Stock Exchange.By the end of this report, the actual situation of corporate governance basically conforms to the requirements of the documents oncorporate governance of listed companies issued by China Securities Regulatory Commission.(I) Situation of shareholders and general meetings of shareholdersIn strict accordance with the requirements of the Opinions on the Shareholders' Meeting of Listed Companies, Articles ofAssociation and Rules of Procedure of the Shareholders' Meeting, the Company standardizes the convening, holding and votingprocedures of the shareholders' meeting, treats all shareholders equally, guarantees the right of all shareholders to know andparticipate in the Company's major matters, and ensures that all shareholders can fully exercise their rights.(II) Situation of directors and the board of directorsThe Company elects directors in strict accordance with the appointment procedures stipulated in the Company Law and Articles ofAssociation. Currently, the Company has nine directors, including three independent directors, accounting for one-third of the totaldirectors. The number and composition of the board of directors of the Company meet the requirements of laws and regulations.The board of directors consists of four special committees: Strategy and Development Committee, Compensation and EvaluationCommittee, Nomination Committee and Audit Committee. The board of directors carries out its work in strict accordance with theArticles of Association, Rules of Procedure of the Board of Directors, Working System of Independent Directors, Rules ofSecretary of the Board of Directors, Guidelines on Self-Regulation of Listed Companies of Shenzhen Stock Exchange No. 1 --Standardized Operation of Listed Companies on the Main Board, etc. All directors of the Company attend the board of directorsand general meeting of shareholders on time to perform the duties of director in good faith, diligence and due diligence.(III) Situation of supervisors and the board of supervisorsThe board of supervisors shall elect supervisors in strict accordance with the recruitment procedures of the Company Law, Articlesof Association and Rules of Procedure of the Board of Supervisors. The Board of Supervisors shall consist of three supervisors,one of whom is the employee supervisor. The number and personnel composition of the board of supervisors shall meet therequirements of laws and regulations. The Company's supervisors conscientiously perform their duties, in the spirit of beingresponsible to all shareholders, and in accordance with the Rules of Procedure of the Board of Supervisors and other rules andregulations, convene the board of supervisors, attend the general meeting of shareholders, sit on the board of directors, effectivelysupervise the Company's major matters, related transactions, financial conditions, the performance of the directors and thepresident and give independent opinions.(IV) Situation of relationship between the controlling shareholder and the listed companyThe Company and the controlling shareholder are separately independent in personnel, assets, finance, organization and business,and the Company's board of directors, board of supervisors and internal organs can operate independently. The code of conduct ofthe controlling shareholders of the Company is, through the general meeting of shareholders, to exercise shareholder rights, andundertake corresponding obligations, not directly or indirectly intervene in the Company's decision-making and business activitiesbeyond the general meeting of shareholders, damage the legitimate rights and interests of the Company or other shareholders.(V) Situation of performance evaluation and incentive and constraint mechanismThe Company has established a relatively comprehensive performance evaluation method, and the appointment of senior managersis open, transparent and in accordance with relevant laws, regulations and internal rules and regulations of the Company. The
Company has established a work performance evaluation system, so that employees' income is linked with their work performance.In the future, the Company will explore more forms of incentive, form a multi-level comprehensive incentive mechanism, improveperformance evaluation standards, better mobilize the enthusiasm of managers, attract and stabilize outstanding managementtalents and technical and business backbone.(VI) Situation of relevant stakeholdersThe Company fully respects and maintains the legitimate rights and interests of relevant stakeholders, achieves the balance ofinterests of shareholders, employees, society and other parties, attaches great importance to social responsibility, and jointlypromotes the sustainable and healthy development of the Company with stakeholders.(VII) Situation of information disclosure and transparencyIn strict accordance with the provisions of relevant laws and regulations and the provisions of the Company’s InformationDisclosure Management System, the Company shall strengthen the management of information disclosure affairs, fulfill theobligation of information disclosure, and appoint Securities Times, Securities Daily and www.cninfo.com.cn as the newspapersand websites of the Company to disclose information truthfully, accurately, timely and completely, ensuring fair access tocompany information for all investors. The Company will continue to improve various internal rules and regulations of corporategovernance, strengthen standardized operation and promote the sustainable and stable development of the Company in accordancewith the requirements of the Code of Governance for Listed Companies and Rules for Stock Listing of Shenzhen Stock Exchange.Whether there is any material difference between the actual situation of corporate governance and laws, administrative regulationsand the regulations issued by the China Securities Regulatory Commission on the governance of listed companies
□Yes ?No
There is no material difference between the actual situation of corporate governance and laws, administrative regulations and theregulations issued by the China Securities Regulatory Commission on the governance of listed companies.
II. Independence of the Company in terms of assets, personnel, finance, organization andbusiness, etc. relative to the controlling shareholders and actual controllersDuring the reporting period, the Company and the controlling shareholder were completely separated from each other in terms ofbusiness, assets, personnel, organization, finance, etc. The Company's production and operation was stable, its internalorganization was perfect, and it could operate independently:
(I) Independence of the Company's businessThe Company has independent production, procurement and sales systems, and is completely independent from the controllingshareholder in business. The controlling shareholder and its affiliated enterprises have no competition with the Company.(II) Independence of the Company’s personnelThe Company’s personnel, personal affairs and wages are completely independent. The president, vice president, secretary of theboard of directors, chief financial officer and other senior management personnel of the Company all work in the Company andreceive remuneration, but do not hold any position or receive remuneration except director and supervisor in the controllingshareholder and its subsidiaries.(III) Integrity of the Company's assetsThe property right relationship between the Company and the controlling shareholder is clear, and the Company's funds, assets andother resources are not illegally occupied or dominated by them. The assets of the Company are complete, with productionequipment, auxiliary production equipment, patents and other assets suitable for the scope of production and business. TheCompany has complete control and dominance of all assets.(IV) Independence of institutionsThe Company's board of directors, board of supervisors, managers and other internal institutions operate independently, and eachfunctional department is completely separated from the controlling shareholder in terms of powers and responsibilities, personneland other aspects. There is no superior and subordinate relationship between the controlling shareholder and its functional
departments and the Company and its functional departments, and there is no phenomenon that the controlling shareholder affectsthe independence of the Company's production, operation and management.(V) Independence of financeThe Company has set up an independent financial department, and established a sound financial and accounting managementsystem for independent accounting. And there is no controlling shareholder’s intervention in the Company's financial andaccounting activities. The Company opens accounts in commercial banks independently and does not share bank accounts withcontrolling shareholders. The Company independently declares its taxes and fulfills tax obligations in accordance with the law.III. Competition among peers
□ Applicable ? N/A
IV. Description of annual and extraordinary general meetings of shareholders held duringthe reporting period
1. General Meeting of shareholders during this reporting period
| Session | Type | Investor participation ratio | Date of convening | Date of disclosure | Resolution |
| Annual General Meeting 2021 | Annual general meeting | 57.74% | May 9, 2022 | May 10, 2022 | Announcement No.: 2022-031 |
| 1st extraordinary general meeting 2022 | Extraordinary general meeting of shareholders | 59.30% | August 3, 2022 | August 4, 2022 | Announcement No.: 2022-046 |
| 2nd extraordinary general meeting 2022 | Extraordinary general meeting of shareholders | 55.44% | August 29, 2022 | August 30, 2022 | Announcement No.: 2022-060 |
| 3rd Extraordinary general meeting 2022 | Extraordinary general meeting of shareholders | 53.13% | October 10, 2022 | October 11, 2022 | Announcement No.: 2022-069 |
2. Preferred shareholders whose voting rights have been restored request an extraordinary generalmeeting of shareholders
□ Applicable ? N/A
V. Description of directors, supervisors and senior managers
1. Basic information
| Name | Position | Employment status | Gender | Age | Commencement date | Expiration date | Number of shares (shares) at the beginning of the period | Number of shares increased in the current period (shares) | Number of shares (shares) reduced in the current period | Other increase/decrease changes (shares) | Ending number of shares held (shares) | Reasons for change in shares |
| Qiu Jianping | Chairman of the board | Incumbent | Male | 61 | June 16, 2008 | August 30, 2023 | 45,817,500 | 2,878,958 | 0 | 0 | 48,696,458 | Increased shares |
| Chi Xiaoheng | Vice Chairman & President | Incumbent | Female | 48 | January 12, 2021 | August 30, 2023 | 729,950 | 0 | 0 | 0 | 729,950 | |
| Wang Lingling | Director & Vice President | Incumbent | Female | 61 | June 16, 2008 | August 30, 2023 | 12,950,960 | 0 | 0 | 0 | 12,950,960 | |
| Li Zheng | Director & Vice President | Incumbent | Male | 63 | August 31, 2020 | August 30, 2023 | 676,470 | 0 | 0 | 0 | 676,470 | |
| Xu Zheng | Director | Incumbent | Female | 39 | June 16, 2008 | August 30, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Cen Zhengping | Director | Incumbent | Male | 61 | 0 | 0 | 0 | 0 | 0 | |||
| Wang Gang | Independent director | Incumbent | Male | 47 | August 31, 2020 | August 30, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Chen Zhimin | Independent director | Incumbent | Female | 62 | August 31, 2020 | August 30, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Shi Hong | Independent director | Incumbent | Female | 59 | August 31, 2020 | August 30, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Fu Yajuan | Chairman of the Board of Supervisors | Incumbent | Female | 50 | August 31, 2020 | August 30, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Chen Jun | Supervisor | Incumbent | Male | 42 | June 15, 2011 | August 30, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Huang Qiaozhen | Supervisor | Incumbent | Female | 39 | May 9, 2022 | August 30, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Ni Shuyi | Chief financial officer | Incumbent | Female | 46 | June 16, 2008 | August 30, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Wang Weiyi | Vice president | Incumbent | Male | 53 | June 16, 2008 | August 30, 2023 | 771,525 | 0 | 0 | 0 | 771,525 |
| Wang Min | Vice president | Incumbent | Male | 51 | June 16, 2008 | August 30, 2023 | 760,200 | 0 | 0 | 0 | 760,200 | |
| Li Feng | Vice president | Incumbent | Male | 48 | June 16, 2008 | August 30, 2023 | 812,977 | 40,300 | 0 | 0 | 853,277 | Increased shares |
| Zhou Siyuan | Secretary to the Board of Directors | Incumbent | Male | 36 | January 31, 2018 | August 30, 2023 | 0 | 600,000 | 0 | 0 | 600,000 | Increased shares |
| Zhang Ou | Vice president | Incumbent | Male | 56 | April 29, 2019 | August 30, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Jiang Saiping | Vice president | Incumbent | Female | 51 | May 10, 2022 | August 30, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Zhang Mao | Vice president | Incumbent | Female | 43 | January 27, 2022 | August 30, 2023 | 2,900 | 0 | 0 | 0 | 2,900 | |
| Total | -- | -- | -- | -- | -- | -- | 62,522,482 | 3,519,258 | 0 | 0 | 66,041,740 | -- |
During the reporting period, whether there is any resignation of directors and supervisors and dismissal of senior managementpersonnel during their terms of office
□Yes ?No
Description of changes in directors, supervisors and senior managers of the Company?Applicable □ N/A
| Name | Position | Type | Date | Cause |
| Zhang Mao | Senior executive | Appointment | January 27, 2022 | According to the needs of the Company's business development, we aim to better manage international e-commerce business. After being nominated by the Company's president, we have agreed to appoint Ms. Zhang Mao, the head of the international e-commerce department, as the vice president of the Company. |
| Huang Qiaozhen | Supervisor | Elected | May 9, 2022 | Due to the resignation of the former supervisor Jiang Saiping, the Board of Supervisors of the Company has nominated Ms. Huang Qiaozhen as the candidate of shareholder |
| representative supervisor of the 5th Board of Supervisors. | ||||
| Jiang Saiping | Senior executive | Appointment | May 10, 2022 | In order to further develop the Company's own brand and key account business, upon the nomination of the president of the Company, we have agreed to appoint Ms. Jiang Saiping, senior Sales Director, as the Vice President of the Company. |
| Jiang Saiping | Supervisor | Quit | May 9, 2022 | Application for resignation as chairman of the Board of Supervisors as a result of the job. |
2. Employment status
Professional background, main work experience and main responsibilities of directors, supervisors and senior managers of theCompanyProfessional background, main work experience and main responsibilities of directors, supervisors and senior managers of theCompany
1. Directors
Mr. Qiu Jianping, Chairman of the board, Chinese nationality, has no right of permanent residence abroad. Born in 1962, hegraduated from Xi'an Jiaotong University in 1985 with a master's degree in mechanical casting. He served as Chairman andPresident of the Company from June 2008 to January 2021, Chairman of the Board of Directors of the Company from January2021 to present.Ms. Chi Xiaoheng, Vice Chairman & President, Chinese nationality, no right of permanent residence abroad. Born in 1975,college degree. Director and Vice President of the Company from June 2008 to August 2020. She served as Vice Chairman &Vice President of the Company from August 2020 to January 2021. Vice Chairman & President of the Company from January2021 to present.Mr. Li Zheng, Director and Vice President, Chinese nationality, has no right of permanent residence abroad. Born in 1959, collegedegree. Vice Chairman & Vice President of the Company from 2008 to August 2020, Director and Vice President of the Companyfrom August 2020 to present.Ms. Wang Lingling, Director & Vice President, Chinese nationality, has no right of permanent residence abroad. Born in 1961,bachelor’s degree, Director and Vice President of the Company from 2008 to present.Ms. Xu Zheng, Director, Chinese nationality, has no right of permanent residence abroad. Born in 1984, bachelor’s degree. From2008 to present, she has been secretary to the chairman of GreatStar Holding Group Co., Ltd. Director of Hangcha Group Co., Ltd.from 2011 to present. She has been a director of the Company since 2008.Mr. Cen Zhengping, Director of the Company, born in Hong Kong, China in 1962, master’s degree, professor-level seniorengineer. He has served as a director of the Company since May 2019.Mr. Wang Gang, Independent Director, Chinese nationality, has no right of permanent residence abroad. Born in October 1975,Master’s degree, Certified Public Accountant, senior economist. From August 2017 to now, he has served as Director, Deputy
General Manager and Secretary of the Board of Directors of Hangzhou Robam Appliances Co., Ltd. He has been an independentdirector of the Company since August 2020.Ms. Shi Hong, Independent Director, Chinese nationality, no right of permanent residence abroad. Born in July 1963, master’sdegree, associate professor. From September 2005 to July 2018, she served as Associate Professor and Director of EnvironmentalEngineering Laboratory, College of Marine Science and Engineering, Shanghai Maritime University. He has been an independentdirector of the Company since August 2020.Ms. Chen Zhimin, Independent Director, Chinese nationality, has no right of permanent residence abroad. Born in April 1960,master’s degree. Currently, she is a director of Zhejiang Caitong Capital Investment Co., Ltd., a supervisor of Hangzhou TigermedPharmaceutical Technology Co., Ltd., and Zhejiang Canaan Technology Co., Ltd., and an independent director of HangzhouHonghua Digital Technology Co., Ltd., and Tongkun Group Co., Ltd. He has been an independent director of the Company sinceAugust 2020.
4.5.2.2 Supervisors
Ms. Fu Yajuan, Supervisor of the Company, Chinese nationality, has no right of permanent residence abroad. Born in September1972, college degree, senior accountant, Deputy Chief Financial Officer of the Company from July 2008 to present.Mr. Chen Jun, Supervisor, Chinese nationality, has no right of permanent residence abroad. Born in August 1980, bachelor’sdegree, intermediate engineer. Since 2009, he has been the manager of the Industrial Design Department of the Company, theDeputy Secretary of the Enterprise Science and Technology Association of the Company, and the Secretary of the R&D andInnovation Branch of the Communist Party of China GreatStar.Ms. Huang Qiaozhen, Supervisor, Chinese nationality, has no right of permanent residence abroad. Born in November 1983,bachelor’s degree. From January 2021 to now, she has served as secretary to the president of the Company and part-time deputydirector of the Office of the President.
4.5.2.3 Other senior managers
Mr. Zhou Siyuan, Secretary of the Board of Directors and Vice President, Chinese nationality, has no right of permanent residenceabroad. Born in 1986, master’s degree, Secretary of the Board of Directors from January 2018 to present.Ms. Ni Shuyi, Chief Financial Officer, Chinese nationality, has no right of permanent residence abroad. Born in 1976, bachelor’sdegree. She has been the Chief Financial Officer of the Company since 2008.Mr. Wang Weiyi, Vice President, Chinese nationality, has no right of permanent residence abroad. Born in 1970, he graduatedfrom Zhejiang University with a bachelor's degree in mechanical manufacturing and technology. Since 2008, he has been the vicePresident of the Company, responsible for product development and quality management, and one of the principal persons incharge of the national laboratory.Mr. Wang Min, Vice President, Chinese nationality, has no right of permanent residence abroad. Born in 1971, college degree,Vice President of the Company from 2008 to present, responsible for the Company's product procurement business.Mr. Li Feng, Vice President, Chinese nationality, has no right of permanent residence abroad. Born in 1975, college degree. From2008 to present, he has been the Vice President of the Company, responsible for the external sales of the Company's products.Mr. Zhang Ou, Vice President, Chinese nationality, no overseas permanent residence right, born in 1967, senior economist,professor, Vice President of the Company from April 2019 to now, responsible for the operation of the Company's laser industrysector.Ms. Zhang Mao, Vice President Chinese nationality, no right of permanent residence abroad. Born in 1979, bachelor’s degree.From May 2021 to January 2022, she served as Senior Director of International E-commerce Department of Hangzhou GreatStarTechnology Co., Ltd. Vice President of the Company from January 2022 to present, responsible for the Company's international e-commerce business.Ms. Jiang Saiping, Vice President, Chinese nationality, no right of permanent residence abroad. Born in November 1971,bachelor’s degree. From December 2013 to May 2022, she served as the Director of Export Sales of the Company, Vice Presidentof the Company from May 2022 to present, responsible for the Company's private brand and key account business.
Employment in the shareholder unit?Applicable □ N/A
| Name | Shareholder unit | Position in the shareholder unit | Commencement date | Expiration date | Whether to receive remuneration and allowance in the shareholder unit |
| Qiu Jianping | GreatStar Holding Group Co., Ltd. | Chairman of the board | August 10, 2009 | No | |
| Wang Lingling | GreatStar Holding Group Co., Ltd. | Vice Chairman | January 10, 2020 | No | |
| Li Zheng | GreatStar Holding Group Co., Ltd. | Director | August 10, 2009 | No | |
| Chi Xiaoheng | GreatStar Holding Group Co., Ltd. | Director | August 10, 2009 | No | |
| Xu Zheng | GreatStar Holding Group Co., Ltd. | Manager | January 1, 2016 | Yes | |
| Fu Yajuan | GreatStar Holding Group Co., Ltd. | Supervisor | January 10, 2020 | No | |
| Description of employment in a shareholder unit | None | ||||
Employment in other organizations?Applicable □ N/A
| Name | Other units | Position in other units | Commencement date | Expiration date | Whether to receive compensation and allowance in other units |
| Qiu Jianping | Zhejiang Hangcha Holding Co., Ltd. | Chairman & General Manager | February 2, 2011 | No | |
| Qiu Jianping | Hangcha Group Co., Ltd. | Director | February 2, 2011 | No | |
| Qiu Jianping | Zhejiang Zhongtai GreatStar Real Estate Co., Ltd. | Director | May 10, 2005 | No | |
| Qiu Jianping | Hangzhou Haiwo Holding Co., Ltd. | Executive Director | March 19, 2011 | No | |
| Qiu Jianping | Hangzhou GreatStar Precision Machinery Co., Ltd. | Chairman of the board | December 30, 2006 | No | |
| Qiu Jianping | SMART SILVER LIMITED | Director | January 20, 2011 | No | |
| Qiu Jianping | Hong Kong Golden Deer Limited | Director | January 20, 2011 | No | |
| Qiu Jianping | Ruian Zhaowei Co., Ltd. | Director | January 20, 2011 | No | |
| Qiu Jianping | Ruian Qihao Co., Ltd. | Director | January 20, 2011 | No | |
| Qiu Jianping | Ruian Junye Co., Ltd. | Director | January 20, 2011 | No | |
| Qiu Jianping | GreatStar Industries Co., | Executive Director | June 20, 2013 | No |
| Ltd. | |||||
| Qiu Jianping | Jindao Investment Co., Ltd. | Director | January 20, 2011 | No | |
| Qiu Jianping | Hangzhou Xihu Tiandi Development Co., Ltd. | Director | May 13, 2011 | No | |
| Qiu Jianping | Xinjiang Lianhe Investment limited partnership | Managing partner | January 10, 2012 | No | |
| Qiu Jianping | Taifeng Co., Ltd. | Director | January 20, 2011 | No | |
| Qiu Jianping | Hangzhou Kunxia Investment Management Partnership (limited partnership) | Managing partner | January 18, 2018 | No | |
| Qiu Jianping | Zhejiang Equity Service Group Co., Ltd. | Director | November 8, 2017 | No | |
| Qiu Jianping | Zhejiang Guozi Robotics Co., Ltd. | Director | September 26, 2014 | No | |
| Qiu Jianping | Zhejiang Private Enterprise Joint Investment Co., Ltd. | Director | April 13, 2015 | No | |
| Qiu Jianping | Hangzhou Lujing Cultural Creative Co., Ltd. | Executive Director | November 26, 2015 | No | |
| Qiu Jianping | Zhejiang Youbang Small Loan Co., Ltd. | Director | December 25, 2009 | No | |
| Qiu Jianping | Shanghai Haichao Haoyun Enterprise Management Partnership (limited partnership) | Managing partner | April 17, 2019 | No | |
| Qiu Jianping | Shanghai Haichao Wenxing Enterprise Management Partnership (limited partnership) | Managing partner | January 7, 2021 | No | |
| Qiu Jianping | Shanghai Haichao Jinguan Enterprise Management Partnership (limited partnership) | Managing partner | January 7, 2021 | No | |
| Qiu Jianping | Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | Chairman of the board | April 17, 2019 | No | |
| Qiu Jianping | Zhejiang Xinchai | Director | December 26, | No |
| Co., Ltd. | 2019 | ||||
| Qiu Jianping | Zhongce Rubber Group Co., Ltd. | Director | October 21, 2019 | No | |
| Qiu Jianping | Zhejiang Zhongtai GreatStar Real Estate Co., Ltd. | Director | May 10, 2005 | No | |
| Wang Lingling | Hangzhou GreatStar Precision Machinery Co., Ltd. | Director | September 20, 2011 | No | |
| Wang Lingling | Hangzhou Fuyang Chongsheng Trading Co., Ltd. | Executive Director & General Manager | November 11, 2013 | No | |
| Wang Lingling | Zhejiang Zhongtai GreatStar Real Estate Co., Ltd. | Supervisor | March 11, 2011 | No | |
| Wang Lingling | Zhejiang Hangcha Holding Co., Ltd. | Director | January 27, 2012 | No | |
| Wang Lingling | Hangzhou Haiwo Holding Co., Ltd. | Supervisor | February 17, 2022 | No | |
| Wang Lingling | Zhejiang Yunsong Artificial Intelligence Technology Co., Ltd. | Supervisor | May 20, 2022 | No | |
| Li Zheng | Hangzhou GreatStar Precision Machinery Co., Ltd. | Director | September 20, 2011 | No | |
| Xu Zheng | Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | Supervisor | April 21, 2019 | No | |
| Xu Zheng | Hangcha Group Co., Ltd. | Director | March 25, 2011 | No | |
| Xu Zheng | Zhejiang Hangcha Holding Co., Ltd. | Supervisor | January 27, 2012 | No | |
| Xu Zheng | Zhongce Rubber Group Co., Ltd. | Chairman of the Board of Supervisors | October 21, 2019 | No | |
| Cen Zhengping | Hanjia Design Group Co., Ltd. | Chairman of the board | March 18, 2007 | No | |
| Cen Zhengping | Zhejiang Chengjian Group Co., Ltd. | Chairman & General Manager | February 15, 2006 | No | |
| Cen Zhengping | Shanghai Hanjia Investment Co., Ltd. | Chairman & General Manager | September 12, 2007 | No | |
| Cen Zhengping | Zhejiang Chengjian Real Estate Group Co., Ltd. | Chairman of the board | September 21, 2010 | Yes | |
| Cen Zhengping | Zhejiang Hanjia Investment Co., | Executive Director, General | October 20, 2010 | No |
| Ltd. | Manager | ||||
| Cen Zhengping | Zhejiang Dishang Investment Co., Ltd. | Chairman of the board | April 4, 2006 | No | |
| Cen Zhengping | Zhejiang Zhonglian Real Estate Development Co., Ltd. | Director | July 25, 2005 | No | |
| Cen Zhengping | Hangzhou Hanjia Xinde Investment Management Partnership | Managing partner | August 28, 2014 | No | |
| Cen Zhengping | Hangzhou Zheda Zinc Electric Energy Co., Ltd. | Director | June 21, 2017 | No | |
| Cen Zhengping | Zhejiang Kaiyin Holding Co., Ltd. | Director | April 9, 2018 | No | |
| Cen Zhengping | Zhejiang Chengjian Design & Research Institute Co., Ltd. | Director | March 15, 2022 | No | |
| Wang Gang | Hangzhou Robam Appliances Co., Ltd. | Vice President, Secretary of the Board, Director | June 1, 2008 | Yes | |
| Wang Gang | Hangzhou Nuobang Non-textile Co., Ltd. | Director | January 1, 2013 | No | |
| Wang Gang | Dize Household Appliances (Shanghai) Trading Co., Ltd. | Director | July 1, 2012 | No | |
| Wang Gang | Hangzhou Fortune Gas Cryogenic Equipment Co., Ltd. | Director | January 1, 2018 | No | |
| Wang Gang | Jiangsu Mige New Material Co., Ltd. | Director | December 7, 2022 | No | |
| Wang Gang | De Dietrich Appliances Trading (Shanghai) Co., Ltd. | Director | June 1, 2016 | No | |
| Wang Gang | Hangzhou Guoguang Tourism Supplies Co., Ltd. | Director | October 1, 2017 | No | |
| Wang Gang | Shanghai Qingke Information Technology Co., Ltd. | Supervisor | November 1, 2017 | No | |
| Wang Gang | Ningbo Qingfeng Investment Co., Ltd. | Director | December 1, 2017 | No | |
| Wang Gang | Hangzhou Laoban Fuchuang Investment Management Co., | Supervisor | May 1, 2018 | No |
| Ltd. | |||||
| Wang Gang | Shengzhou Jindi Intelligent Kitchen Electric Co., Ltd. | Director | July 1, 2018 | No | |
| Wang Gang | Hangzhou Xiaodian Technology Co., Ltd. | Independent director | September 1, 2020 | Yes | |
| Wang Gang | Hangzhou Hengsheng Technology Co., Ltd. | Director | December 28, 2022 | No | |
| Chen Zhimin | Zhejiang Caitong Capital Investment Co., Ltd. | Director | No | ||
| Chen Zhimin | Hangzhou Tigermed Consulting Co., Ltd. | Supervisor | April 22, 2020 | Yes | |
| Chen Zhimin | Zhejiang Canaan Technology Co., Ltd. | Supervisor | September 20, 2022 | Yes | |
| Chen Zhimin | Hangzhou Honghua Digital Technology Co., Ltd. | Independent director | December 6, 2019 | Yes | |
| Chen Zhimin | Tongkun Group Co., Ltd. | Independent director | June 23, 2020 | Yes | |
| Zhou Siyuan | Zhejiang Guozi Robotics Co., Ltd. | Director | September 14, 2017 | No | |
| Zhou Siyuan | Hangzhou Weiming Investment Management Co., Ltd. | Director | September 1, 2017 | No | |
| Zhou Siyuan | Hangzhou Xihu Tiandi Development Co., Ltd. | Director | May 13, 2011 | No | |
| Zhou Siyuan | Hangzhou Xihu Tiandi Management Co., Ltd. | Director | July 23, 2014 | No | |
| Zhou Siyuan | Zhejiang Hangcha Holding Co., Ltd. | Director | January 28, 2011 | No | |
| Zhou Siyuan | Ningbo Donghai Bank Co., Ltd. | Director | No | ||
| Zhang Ou | Shanghai Lainuo Photoelectric Technology Co., Ltd. | Director | April 4, 2007 | No | |
| Zhang Ou | Changzhou Haojia Intelligent Technology Service Co., Ltd. | Executive Director, General Manager | September 20, 2018 | No |
Punishment of current and outgoing directors, supervisors and senior managers of the Company by the securities regulatoryauthorities in the past three years
□ Applicable ? N/A
3. Remuneration of directors, supervisors and senior managers
Decision-making procedure, determination basis and actual payment of remuneration for directors, supervisors and seniormanagers
4.3.1 Decision-making procedures for remuneration of directors, supervisors and senior managersThe remuneration plan for directors of the Company shall be put forward by the remuneration committee and examined andapproved by the board of directors and the general meeting of shareholders. The compensation plan of the Company's supervisorsshall be put forward by the Human Resources Department and reviewed and approved by the Board of Supervisors and theshareholders' meeting. The compensation committee of the Company's senior management personnel shall put forward the pre-plan for the part of duty salary, which shall be reviewed and approved by the board of directors; Based on the Company'soperating performance, the annual reward principle will be determined for performance-based pay, which will be paid after theexecutive's personal performance appraisal and authorized by the chairman of the board.
4.3.2 Determination basis for remuneration of directors, supervisors and senior managers
The directors, supervisors and senior managers of the Company shall receive their duties salary according to their positions, andthe annual reward principle shall be determined according to the Company's operating performance. The performance salary shallbe paid after examination and verification by the chairman of the Company.Remuneration of directors, supervisors and senior managers during the reporting period
Unit: CNY 10,000
| Name | Position | Gender | Age | Employment status | Total pre-tax remuneration received from the Company | Whether to receive remuneration from related parties of the Company |
| Qiu Jianping | Chairman of the board | Male | 61 | Incumbent | 62.57 | No |
| Chi Xiaoheng | Vice Chairman & President | Female | 48 | Incumbent | 180 | No |
| Li Zheng | Director & Vice President | Male | 63 | Incumbent | 120 | No |
| Wang Lingling | Director & Vice President | Female | 61 | Incumbent | 40.67 | No |
| Cen Zhengping | Director | Male | 61 | Incumbent | 0 | Yes |
| Xu Zheng | Director | Female | 39 | Incumbent | 0 | Yes |
| Shi Hong | Independent director | Female | 59 | Incumbent | 9.29 | No |
| Chen Zhimin | Independent director | Female | 62 | Incumbent | 9.29 | No |
| Wang Gang | Independent director | Male | 47 | Incumbent | 9.29 | No |
| Jiang Saiping | Vice president | Female | 51 | Incumbent | 68.4 | No |
| Fu Yajuan | Chairman of the Board of Supervisors | Female | 50 | Incumbent | 34.52 | No |
| Chen Jun | Supervisor | Male | 42 | Incumbent | 44.08 | No |
| Huang Qiaozhen | Supervisor | Female | 39 | Incumbent | 21.06 | No |
| Zhou Siyuan | Secretary of the Board and Vice | Male | 36 | Incumbent | 100 | No |
| President | ||||||
| Ni Shuyi | Chief financial officer | Female | 46 | Incumbent | 100 | No |
| Wang Weiyi | Vice president | Male | 53 | Incumbent | 120 | No |
| Wang Min | Vice president | Male | 51 | Incumbent | 100 | No |
| Li Feng | Vice president | Male | 48 | Incumbent | 120 | No |
| Zhang Ou | Vice president | Male | 56 | Incumbent | 121.21 | No |
| Zhang Mao | Vice president | Female | 43 | Incumbent | 62.4 | No |
| Total | -- | -- | -- | -- | 1,322.78 | -- |
VI. Performance of directors' duties during the reporting period
1. Situation of the Board of Directors during this reporting period
| Session | Date of convening | Date of disclosure | Resolution |
| 16th Meeting of the 5th Session of Board of Directors | January 27, 2022 | January 28, 2022 | Announcement No.: 2022-004 |
| 17th Meeting of the 5th Session of Board of Directors | April 11, 2022 | April 12, 2022 | Announcement No.: 2022-013 |
| 18th Meeting of the 5th Session of Board of Directors | April 25, 2022 | April 26, 2022 | Announcement No.: 2022-027 |
| 19th Meeting of the 5th Session of Board of Directors | May 10, 2022 | May 11, 2022 | Announcement No.: 2022-032 |
| 20th Meeting of the 5th Session of Board of Directors | June 30, 2022 | July 1, 2022 | Announcement No.: 2022-038 |
| 21st Meeting of the 5th Session of Board of Directors | July 18, 2022 | July 19, 2022 | Announcement No.: 2022-043 |
| 22nd Meeting of the 5th Session of Board of Directors | August 12, 2022 | August 13, 2022 | Announcement No.: 2022-047 |
| 23rd Meeting of the 5th Session of Board of Directors | August 25, 2022 | August 26, 2022 | Announcement No.: 2022-057 |
| 24th Meeting of the 5th Session of Board of Directors | September 23, 2022 | September 24, 2022 | Announcement No.: 2022-063 |
| 25th Meeting of the 5th Session of Board of Directors | October 19, 2022 | October 20, 2022 | Announcement No.: 2022-072 |
| 26th Meeting of the 5th Session of Board of Directors | November 8, 2022 | November 9, 2022 | Announcement No.: 2022-077 |
| 27th Meeting of the 5th Session of Board of Directors | December 11, 2022 | December 14, 2022 | Announcement No.: 2022-090 |
| 28th Meeting of the 5th Session of Board of Directors | December 16, 2022 | December 17, 2022 | Announcement No.: 2022-092 |
| 29th Meeting of the 5th Session of Board of Directors | December 30, 2022 | December 31, 2022 | Announcement No.: 2022-096 |
2. Directors' attendance at the board of directors and shareholders' meetings
| Directors' attendance at the board of directors and shareholders' meetings | |||||||
| Name of director | Number of board meetings to be attended during the reporting period | Number of board meetings attended | Number of board meetings attended via correspondence | Number of board appointments | Number of board absences | Whether failed to attend two consecutive board meetings in person | Number of shareholders' meetings attended |
| Qiu Jianping | 14 | 14 | 0 | 0 | 0 | No | 4 |
| Chi Xiaoheng | 14 | 14 | 0 | 0 | 0 | No | 4 |
| Wang Lingling | 14 | 14 | 0 | 0 | 0 | No | 4 |
| Li Zheng | 14 | 14 | 0 | 0 | 0 | No | 4 |
| Xu Zheng | 14 | 14 | 0 | 0 | 0 | No | 4 |
| Cen Zhengping | 14 | 11 | 3 | 0 | 0 | No | 4 |
| Wang Gang | 14 | 11 | 3 | 0 | 0 | No | 4 |
| Chen Zhimin | 14 | 11 | 3 | 0 | 0 | No | 4 |
| Shi Hong | 14 | 11 | 3 | 0 | 0 | No | 4 |
Description of failure to attend two consecutive board meetings in person
3. Cases in which directors raise objections to relevant matters of the Company
Whether the director has raised an objection to the relevant matters of the Company
□Yes ?No
During the reporting period, the directors raised no objections to relevant matters of the Company.
4. Other instructions for directors to perform their duties
Whether the director's suggestions to the Company have been accepted?Yes □ NoWhether the director's suggestions to the Company have been adopted or notDuring the reporting period, in strict accordance with relevant laws and regulations, the Articles of Association and Rules ofProcedure of the Board of Directors of the Company, the directors of the Company earnestly performed the relevant duties, strictlyimplemented the resolutions of the general meeting of shareholders, participated in the meetings of the board of directors and thegeneral meeting of shareholders, carefully deliberated various proposals, and actively promoted the implementation of theresolutions of the board of directors. Meanwhile, each director timely understood the Company's operating conditions, internalcontrol system construction and the implementation of the board's resolutions, studied, planned and promoted the next stage ofwork priorities, fully understood and agreed on the Company's renewal of financial audit institutions, profit distribution, relatedtransactions, financial assistance and other matters in the report period, so as to promote the sustainable and high-qualitydevelopment of the Company's various businesses.VII. Situation of special committees under the board of directors during the reportingperiod
| Committee name | Membership | Number of meetings held | Date of convening | Meeting content | Important opinions and suggestions put forward | Performance of other duties | Details of objection (if any) |
| Compensation and Evaluation Committee | Chen Zhimin, Shi Hong, Wang Gang, | 1 | April 11, 2022 | We deliberated and adopted the Proposal on the Compensation Plan |
| Chi Xiaoheng, Xu Zheng | of the Company's Directors in 2022 and Proposal on the Compensation Plan of the Company's Senior Executives in 2022. | ||||||
| Audit committee | Wang Gang, Shi Hong, Chen Zhimin, Wang Lingling, Xu Zheng | 4 | April 11, 2022 | The meeting deliberated and approved the full text and abstract of 2021 Annual Report, 2021 Annual Audit Report of the Company, 2021 Financial Final Accounts Report of the Company, 2021 Annual Internal Control Self-evaluation Report of the Company, Proposal on Renewing Tianjian Certified Public Accountants (Special General Partnership) as Audit Institution of the Company in 2022, Proposal on the Forecast of Daily Connected Transactions in 2022, Summary of 2021 Audit Work and 2022 Audit Work Plan of the Audit Department, and Special Report on the Deposit and Use of the Company's Raised Funds in 2021. | |||
| Audit committee | Wang Gang, Shi Hong, Chen Zhimin, Wang Lingling, Xu Zheng | 4 | April 25, 2022 | The meeting has deliberated and approved Q1 2021 Report. | |||
| Audit committee | Wang Gang, Shi Hong, Chen Zhimin, Wang Lingling, | 4 | August 25, 2022 | The meeting has deliberated and approved the full text and abstract of the 2022 Semi-Annual Report and |
| Xu Zheng | Special Report on 2022 Semi-Annual Storage and Use of the Company's Raised Funds. | ||||||
| Audit committee | Wang Gang, Shi Hong, Chen Zhimin, Wang Lingling, Xu Zheng | 4 | October 19, 2022 | The meeting has deliberated and approved the Q3 Report 2022 |
VIII. Work of the Board of SupervisorsThe Board of Supervisors find out whether the Company is at risk in its supervisory activities during the reporting period
□Yes ?No
The Board of Supervisors has no objection to the supervisory matters in the reporting period.
IX. Employees condition
1. Number of employees, position types and education level
| Number of active employees in the parent company at the end of reporting period (person) | 1,403 |
| Number of active employees in the main subsidiary at the end of reporting period (person) | 9,156 |
| Total number of active employees at the end of reporting period (person) | 10,559 |
| Total number of employees receiving salary during the period (person) | 10,559 |
| Number of retired employees of the parent company and its main subsidiary that shall bear the expenses(person) | 0 |
| Positions | |
| Position category | Number of each position (person) |
| Production personnel | 7,199 |
| Sales personnel | 1,035 |
| Technical personnel | 1,099 |
| Financial personnel | 170 |
| Administrative personnel | 1,056 |
| Total | 10,559 |
| Educational background | |
| Educational background type | Quantity (person) |
| Graduate degree or above | 120 |
| University degree (including junior college) | 2,716 |
| Senior high school (including technical secondary school and technical school) | 2,924 |
| Below high school | 4,799 |
| Total | 10,559 |
2. Salary policy
In strict accordance with the relevant provisions of the national labor contract law, the Company carries out staff salarymanagement and ensures that the employees are paid on time and in full before the 20th day of each month. The average salary ofemployees in 2022 is higher than the provincial average salary standard of Zhejiang Province in 2022. The overtime salary ofemployees in weekdays and weekends is calculated in full according to the regulations. Some positions are subject to thecomprehensive working hour system. Complete one general salary adjustment annually, three salary adjustment quarterly, and oneexternal salary level survey. The salary calculation scheme is divided into two categories: the front-line employees are paidaccording to overtime work, and the hourly wage and overtime pay are calculated according to the national labor law policy. Thesalary of management positions are based on a combination of fixed salary and performance-based pay.
3. Training plan
Staff training and development is an important part of the Company's work. Training management in 2022 will continue to focuson the three directions of new staff growth education, professional and technical training, and staff professional quality education.The Company organized 314 training sessions throughout the year, with a total of 5,999 people attending the training, and the totalclass hours reached 11,783 hours. Meanwhile, the Company continued to carry out the construction of talent echelon and focuseson the director and manager level talent selection and training. In 2022, in order to support the long-term sustainable developmentof the Company, the Company will focus on improving the management skills of in-service middle and senior managementpersonnel, doing a good job in the training of reserve talents, strengthening the construction of internal trainer team and building astrong teaching team to meet the growing training demand.
4. Labor service outsourcing condition
□ Applicable ? N/A
X. Profit distribution of the Company and conversion of capital reserve fund to sharecapitalProfit distribution policy, especially the formulation, implementation or adjustment of cash dividend policies during the reportingperiod?Applicable □ N/AThe Company held the 2020 annual general meeting of shareholders on May 10, 2021, deliberated and approved the Company'sShareholder Return Plan for the Next Three Years (2021-2023), which comprehensively considered the Company's profitability,development strategy planning, shareholder return, social cost of capital, external financing environment and other factors. TheCompany's Board of Directors has formulated the Three-year Shareholder Return Plan (2021-2023).During the reporting period, the formulation and implementation of the Company's profit distribution policy were in line withChina Securities Regulatory Commission's Notice on Further Implementation of Related Matters Concerning Cash Dividend ofListed Companies, Guidance on Supervision of Listed Companies No. 3 -- Cash Dividend of Listed Companies, the Articles ofAssociation, and other relevant provisions. The relevant decision-making procedures and mechanisms were complete, and theindependent directors were diligent and responsible, fully safeguarding the legitimate rights and interests of minority shareholders.
| Special description of the cash dividend policy | |
| Whether it complies with the provisions of the Company's articles of association or the resolution of the general meeting of shareholders: | Yes |
| Whether the dividend standard and proportion are clear and definite: | Yes |
| Whether the relevant decision-making procedures and mechanisms are complete: | Yes |
| Whether the independent directors performed their duties and played their due roles: | Yes |
| Whether minority shareholders have sufficient opportunities to express their opinions and appeals, 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's profit in the reporting period and the parent company's profit available to shareholders are positive, but no cashdividend distribution plan has been proposed
□ Applicable ? N/A
Profit distribution and conversion of capital reserve into share capital during the reporting period?Applicable □ N/A
| Bonus shares per 10 shares (shares) | 0 |
| Dividend payout per 10 shares (CNY) (tax included) | 1.66 |
| Share capital base (shares) of the distribution plan | 1,194,478,182 |
| Cash dividend amount (CNY) (tax included) | 198,283,378.21 |
| Amount of cash dividend by other means (e.g. share repurchase) (CNY) | 50,184,048.00 |
| Total cash dividend (including other means) (CNY) | 248,467,426.21 |
| Distributable profit (CNY) | 4,882,191,240.72 |
| The proportion of total cash dividends (including other means) in total profit distribution | 100 |
| This cash dividend situation | |
| Others | |
| Detailed description of profit distribution or capital reserve conversion plan | |
| Audited by Pan-China Certified Public Accountants (special general partnership), the Company (parent company) achieved a net profit of CNY 653,002,000.00 in 2022. According to the Company Law, the Accounting Standards for Business Enterprises and the Articles of Association, the Company intends to withdraw the legal surplus reserve of CNY 65,300,200.00 in accordance with 10% of the net profit achieved in 2022, and the remaining profit available for distribution in prior years is CNY 429,8560,700.00, deducting CNY 4,071,200.00 generated by absorption of combined subsidiaries. The actual profit available for distribution by shareholders was CNY 4,882,191,200.00. (Note: The difference in mantissa between the total count and the number calculated according to the details is due to rounding) | |
XI. Implementation of company equity incentive plans, employee stock ownership plans, orother employee incentive measures
□ Applicable ? N/A
The Company has no implementation of equity incentive plan, employee stock ownership plan or other employee incentivemeasures during the reporting period.
XII. Construction and implementation of the internal control system during the reportingperiod
1. Construction and implementation of internal control
During the reporting period, the Company continuously improves the internal control system in strict accordance with theCompany Law, Securities Law, Governance Guidelines for Listed Companies, Basic Norms for Enterprise Internal Control andrelevant laws, regulations and normative documents. The Board of Directors carries out self-evaluation on the internal control ofthe company every year and discloses the Internal Control Self-Evaluation Report. Meanwhile, according to the requirements ofShenzhen Stock Exchange, the Company hires an accounting firm to conduct internal control audit of the company. In 2022, theCompany revised the Articles of Association in accordance with the new Securities Law, the Shenzhen Stock Exchange ListingRules and other laws, regulations and normative documents, and the actual situation of the company. The Company constantlyimproves and enhances the level of corporate governance in accordance with the provisions and requirements of laws, regulations,normative documents and the Articles of Association.During the reporting period, the Company has no major or material defects in the internal control of financial reporting and non-financial reporting. The Company has maintained effective internal control over financial reporting in all major aspects inaccordance with the requirements of the internal control standard system and relevant regulations of the enterprise.
2. Specific situation of major internal control defects found during the reporting period
□Yes ?No
XIII. The Company's management and control over its subsidiaries during the reportingperiod
| Designation | Integration plan | Integration progress | Problems encountered in integration | Measures taken to resolve it | Settlement progress | Follow-up resolution plan |
| N/A | N/A | N/A | N/A | N/A | N/A | N/A |
XIV. Internal control self-evaluation report or internal control audit report
1. Internal control self-evaluation report
| Date of full text disclosure of internal control evaluation reports | April 22, 2023 |
| Index to full text disclosure of internal control evaluation reports | The 2022 Annual Internal Control Self-Evaluation Report disclosed by http://www.cninfo.com.cn |
| Proportion of the total assets of the units included in the evaluation to the total assets of the consolidated financial statements of the Company | 100.00% |
| Proportion of the operating income of the units included in the evaluation to the operating income of the Company's consolidated financial statements | 100.00% |
| Defect identification criteria | |
| Category | Financial report | Non-financial report |
| Qualitative criteria | (1) Signs of major defects in financial reports include: ① Fraud by directors, supervisors and senior managers; ② Correct the material defects in the financial reports that have been announced; ③ The CPA found that there was a material misstatement in the current financial report and the Company's internal control failed to find the misstatement in the operation process; ④ Ineffective supervision of internal control by the audit committee and the internal audit institution. (2) Indications of material deficiencies in financial reports include: ① Failure to select and apply accounting policies in accordance with GAAP; ② No anti-fraud procedures and control measures have been established; ③ No corresponding control mechanism has been established or no corresponding compensatory control has been implemented for the accounting treatment of unconventional or special transactions; (3) Refers to other defects except major defects and material defects as general defects. | If any of the following circumstances occurs, it can be identified as a major defect. In other circumstances, it can be identified as a material defect or a general defect according to the degree of influence. (1) Unscientific decision-making procedure; (2) Violating national laws and regulations, such as environmental pollution; (3) The loss of managerial or technical personnel; (3) The loss of managerial or technical personnel; (5) The results of internal control evaluation, especially the major or material defects, have not been rectified; (6) Lack of system control or systematic failure of system for important business. |
| Quantitative criteria | Internal control defects that may cause or have caused loss related to profit, as measured by operating income measures. If this defect alone or in conjunction with other defects may result in a misstatement of less than 1% of the operating income in the financial report, it is considered a general defect; If it is more than 1% of operating proceeds but less than 3%, it is deemed to be a material defect. If it exceeds 3% of revenue, it is considered a major defect. Losses that may result from or have resulted from internal control defects related to asset management, measured by the total assets index. If this defect alone or in conjunction with other defects may result in a misstatement of less than 1% of the total assets in the financial report, it is considered to be a general defect; If it is more than 1% of the total assets but less than 3%, it is deemed as a material defect; If it exceeds 3% of the total assets, it is considered a major defect. | (1) Major defects: causing direct property losses of more than CNY 10 million; (2) Material defects: causing direct property losses of CNY 1 million - 10 million (inclusive); (3) General defects: causing direct property losses of less than CNY 1 million (inclusive). |
| Number of major defects in financial reports (PCS) | 0 | |
| Number of major defects in non-financial reports (PCS) | 0 | |
| Number of material defects in financial reports (PCS) | 0 |
| Number of material defects in non-financial reports (PCS) | 0 |
2. Internal control audit report
?Applicable □ N/A
| The deliberative comment section of the internal control audit report | |
| In our opinion, GreatStar maintained effective internal control over financial reporting in all material respects as of December 31, 2022, in accordance with the Basic Norms for Internal Control of Enterprises and relevant regulations. | |
| Disclosure of internal control audit report | Disclosure |
| Date of the full text disclosure of internal control audit reports | April 22, 2023 |
| Index to the full text disclosure of internal control audit reports | Verification Report on the Internal Control of Hangzhou GreatStar Industrial Co., Ltd. (Tian Jian Shen (2023) No.3370, published by http://www.cninfo.com.cn) |
| Internal control audit report opinion type | Standard unqualified opinion |
| Whether there are major defects in non-financial reports | No |
Whether the accounting firm issues non-standard opinions of the internal control audit report
□Yes ?No
Whether the internal control audit report issued by the accounting firm is consistent with the self-evaluation report of the Board ofDirectors?Yes □ NoXV. Description of listed company governance special action self-examination problemrectificationAccording to the document requirements of Zhejiang Securities Regulatory Bureau Notice on Carrying out Special Action on theGovernance of Listed Companies under the Jurisdiction (Zhejiang Securities Regulatory Company (2022) No. 141), our companycarefully carries out inspection according to the relevant requirements in the self-inspection list. Through self-inspection, it isfound that the Company complies with relevant regulations in terms of the operation of the three committees, investormanagement and management, internal control system construction, information disclosure quality and other aspects. Thedirectors, supervisors and senior managers are diligent and responsible, and the Company does not have the situation that thecontrolling shareholders and their related parties occupy funds or violate external guarantees. The Company will further improvethe internal control system, do a good job in information disclosure, investor relationship management and other related work, andconstantly improve the level of corporate governance.
Section V Environmental and Social ResponsibilityI. Major environmental protection issues
Whether the listed company and its subsidiaries belong to the key pollutant discharge units announced by the environmentalprotection department
□Yes ?No
Administrative punishment for environmental problems during the reporting period
| Name of company or subsidiary | Cause of punishment | Violation situation | Punishment result | The impact on the production and operation of listed companies | Corrective action of the Company |
| None | None | None | None | None | None |
Refer to other environmental information disclosed by key pollutant discharge unitsThe Company and its subsidiaries do not belong to the key pollutant discharge units announced by the national environmentalprotection department. During the reporting period, the Company was not subject to administrative penalties due to environmentalproblems.
Measures taken to reduce its carbon emissions during the reporting period and their effects?Applicable □ N/AIn response to the national call for energy conservation and emission reduction, the Company has formulated the EnergyConservation and Emission Reduction Management System, Energy Management Operation Instruction, Regulations onGreenhouse Gas Management and other systems, integrating the concept of environmental protection into the daily production andoperation of the company. Meanwhile, the Company actively design green products, build green factories and promote greenoffice to implement the concept of energy saving and low carbon. The Company takes environmental factors into fullconsideration in the product design and R&D stage, actively launches green products, continuously improves the productenvironmental protection attributes, and continuously develops new environmental protection technology, so as to reduce materialwaste, environmental pollution and energy consumption; In order to help fight the battle of pollution prevention and control, theCompany has developed scientific waste management and control procedures, chemical management procedures and otherrelevant standards, so as to strictly control pollution, maximize the impact of its business operations on the environment, andrealize green production; In accordance with the principles of low-carbon energy and clean production, the Company promotes thegreen transformation and upgrading of the factory through the construction of rooftop solar energy, the use of electric forklift andother measures to achieve green development, centering on the concept of green office. The Company advocates system upgradingand supports with all departments to actively promote the popularity of green office awareness in the whole company.Reasons for not disclosing other environmental informationNone
II. Social Responsibility
(1) Protecting the rights and interests of shareholders and creditors
During the reporting period, the Company further strengthened the standardized operation, established and improved the corporategovernance structure, standardized management in the convening and procedure of the general meeting of shareholders, and
ensured the shareholders' right to know, right to participate and right to vote on major issues of the company; The Companyconstantly improved the Company's internal control system, revised the Articles of Association according to relevant regulations;The Company conscientiously performed the obligation of information disclosure, ensured the true, accurate, complete, timely andfair information disclosure, did not selectively disclose information, strictly implemented the insider information registration andinsider information confidentiality system, and treated all shareholders and investors fairly; The Company strengthened investorrelationship management, communicated with investors through investor relationship interactive platforms, hotlines and othermeans, and protected the legitimate rights and interests of all shareholders, especially minority shareholders.
(2) Protection of employee rights and interests
The Company adheres to the people-oriented, takes the talent strategy as the focus of enterprise development, strictly abides by theLabor Law, the Law on the Protection of Women's Rights and Interests and other relevant laws and regulations, pays employees'pension, medical, unemployment, industrial injury, maternity and other social insurance on time, respects and protects employees'individual rights and interests, and pays attention to employees' health, safety and satisfaction. The Company attaches greatimportance to personnel training, and regularly organizes training on production safety knowledge, basic skills of various positions,and comprehensive quality training of management personnel, so that employees can effectively improve their overall professionalquality and comprehensive quality in addition to their own work, so as to realize the common growth of employees and enterprises,and build harmonious and stable labor-capital relations.
(3) Protecting the rights and interests of suppliers, clients and consumers
The Company has been following the trading principles of "honesty and trustworthiness, mutual benefit, legal compliance", paysattention to the communication and coordination with all relevant parties, fully respects and protects the legitimate rights andinterests of suppliers and customers, and establishes a strategic partnership with suppliers and customers. The Company constantlyimproves the procurement system and process. In terms of the selection of suppliers, the Company has established a fair andimpartial evaluation system to select qualified suppliers. The Company adheres to customer interests first, strictly controls productquality, constantly improves service quality, and always pays attention to product safety, so that the rights and interests of allparties have been duly protected.
(4) Environmental protection
The Company attaches great importance to environmental protection and takes environmental protection, energy saving andemission reduction as an important work. During the reporting period, the Company conducted effective and comprehensivetreatment of waste water and waste gas in strict accordance with relevant environmental laws and regulations and correspondingstandards, and the waste water and waste gas treatment facilities operated normally. In order to strengthen the management ofemission reduction and pollution control, the Company conducts regular testing. The overall operation of environmental protectionfacilities is in good condition, and the work of energy conservation and emission reduction is carried out orderly.III. Consolidate and expand the achievements in poverty alleviation and rural revitalizationDuring the reporting period, the Company did not participate in the precise consolidation and expansion of poverty alleviation andrural revitalization work.
Section VI Important MattersI. Performance of commitments
1. Commitments completed by the actual controller, shareholders, related parties, acquirers, theCompany and other relevant parties within the reporting period and commitments not completed by theend of the reporting period?Applicable □ N/A
| Cause of commitment | Promising party | Type of commitment | Content of commitment | Commitment time | Term of commitment | Performance |
| Commitments made at the time of asset restructuring | Qiu Jianping; Wang Lingling | Reduce and standardize related transactions | 1. I and the enterprises controlled by me shall minimize related transactions with the listed company as much as possible, and shall not use my position as the actual controller of the listed company to seek to grant rights superior to other third parties in business cooperation with the listed company. 2. The Company will not use its position as the controlling shareholder of the listed company to seek the right to enter into transactions with the listed company first. 3. In case of necessary and unavoidable related transactions, the Company | June 4, 2019 | Long-term validity | In strict performance |
| interests of the listed company and other shareholders. | ||||||
| Commitments made at the time of asset restructuring | GreatStar Group | Reduce and standardize related transactions | 1. The Company and the enterprises controlled by the Company will minimize affiliated transactions with the listed company and will not use its position as the controlling shareholder of the listed Company to seek to grant rights superior to other third parties in business cooperation with the listed Company. 2. The Company will not use its position as the controlling shareholder of the listed company to seek the right to enter into transactions with the listed company first. 3. In case of necessary and unavoidable related transactions, the Company and the enterprises controlled by the Company will enter into agreements with the listed company according to the principles of fairness and compensation | June 4, 2019 | Long-term validity | In strict performance |
| of equivalent value and perform legal procedures, and comply with the requirements of relevant laws, regulations and normative documents and provisions of the Articles of Association. The Company will perform the obligations of information disclosure and relevant internal decision-making and approval procedures in accordance with the law, and ensure that it will not conduct transactions with the listed company on terms that are obviously unfair compared with the market price, nor will it use such transactions to engage in any behavior that damages the legitimate rights and interests of the listed company and other shareholders. | ||||||
| Commitments made at the time of asset restructuring | Qiu Jianping; Wang Lingling | Avoid competition | 1. I shall not directly or indirectly engage in or participate in any business that may be in direct or | June 4, 2019 | Long-term validity | In strict performance |
| therefrom and fully compensate or compensate for all the direct or indirect losses caused to the listed company. | ||||||
| Commitments made at the time of asset restructuring | GreatStar Group | Avoid competition | 1. The Company does not directly or indirectly engage in or participate in any business that is in potential direct or indirect competition with the business of the listed company and its subsidiaries; The Company warrants that it will take legal and effective measures to prevent other enterprises controlled by the Company from engaging in or participating in any business that competes with the operation of the listed company and its subsidiaries. 2. If the listed company further expands its business scope, the Company and other enterprises controlled by the Company will not compete with the expanded business of the listed company; | June 4, 2019 | Long-term validity | In strict performance |
| opportunity, and within a reasonable period specified in the notice. If the listed company gives a positive reply that it is willing to take advantage of such business opportunity, the Company will try to give the business opportunity to the listed company. 4. In case of violation of the above commitments, the Company is willing to bear all the liabilities arising therefrom and fully compensate or compensate for all the direct or indirect losses caused to the listed company. | ||||||
| Commitments made at the time of asset restructuring | Qiu Jianping; Wang Lingling | Ensure the independence of listed companies | I promise that after the completion of this transaction, I will ensure that the listed company will continue to improve its corporate governance structure and independently operated corporate management system in accordance with relevant laws and regulations and the Articles of Association, | June 4, 2019 | Long-term validity | In strict performance |
| continue to maintain the independence of the listed company in terms of business, assets, finance, institutions and personnel, and effectively protect the interests of all shareholders. | ||||||
| Commitments made at the time of asset restructuring | GreatStar Group | Ensure the independence of listed companies | The Company undertakes that after the completion of this transaction, it will ensure that the listed company will continue to improve its corporate governance structure and independently operated corporate management system in accordance with relevant laws and regulations and the requirements of the Articles of Association, continue to maintain the independence of the listed company in terms of business, assets, finance, institutions and personnel, and effectively protect the interests of all shareholders. | June 4, 2019 | Long-term validity | In strict performance |
| Commitments made at the time of asset | All directors and senior management personnel of the | Other commitments | 1. I promise not to transfer benefits to other units or | June 4, 2019 | Long-term validity | In strict performance |
| restructuring | Company | individuals free of charge or under unfair conditions, nor to damage the interests of the company in other ways. 2. I promise to restrict my duty consumption behavior. 3. I promise that I will not use the Company's assets to engage in investment and consumption activities unrelated to the performance of my duties. 4. I promise that the compensation system set by the Board of Directors or the compensation and Evaluation Committee will be linked to the implementation of the Company's compensation measures. In case of any loss caused to the Company or the stockholders by violation of the above commitments, I shall be liable for compensation according to law. | ||||
| Commitments made at the time of asset restructuring | GreatStar Group | Other commitments | 1. I shall not interfere with the Company's operation and management activities beyond its authority, and shall not | June 4, 2019 | Long-term validity | In strict performance |
| apologize to the Company's shareholders and public investors; If investors suffer losses in securities trading due to failure to fulfill relevant commitments, they will be compensated according to law. In case of any loss caused to the Company or its shareholders due to its breach of the aforesaid commitment, the Company shall be liable for compensation according to law. | ||||||
| Commitments made at the time of asset restructuring | Qiu Jianping; Wang Lingling | Other commitments | 1. I shall not interfere with the Company's operation and management activities beyond its authority, and shall not encroach on the company's interests. 2. If the China Securities Regulatory Commission (CSRC) makes explicit provisions on supplementary return measures and commitments between the issuance date of this Commitment and the | June 4, 2019 | Long-term validity | In strict performance |
| or its shareholders by violation of the above commitments, I shall be liable for compensation according to law. | ||||||
| Commitments made at the time of an initial public offering or refinancing | All directors and senior management personnel of the Company | Other commitments | 1. Promise not to transfer benefits to other units or individuals free of charge or under unfair conditions, nor to damage the interests of the Company by other means. 2. Promise to restrict the consumption behavior of directors and senior managers. 3. Promise not to use company assets to engage in investment and consumption activities unrelated to the performance of duties. 4. Promise that the compensation system set by the Board of Directors or the compensation committee will be linked to the implementation of the Company's compensation measures. 5. If the Company implements the equity incentive plan in the future, promise | November 23, 2018 | Long-term validity | In strict performance |
| that the exercise conditions of the future equity incentive plan will be linked to the implementation of the Company's filling return measures. As one of the subjects responsible for filling the return measures, if I violate the above commitments or refuse to perform the above commitments, I agree to be punished or take relevant management measures in accordance with the relevant regulations and rules formulated or issued by China Securities Regulatory Commission, Shenzhen Stock Exchange and other securities regulatory authorities, and I am willing to bear the corresponding legal liabilities. | ||||||
| Commitments made at the time of an initial public offering or refinancing | GreatStar Group | Other commitments | Promise not to interfere with the Company's operation and management activities beyond its power and not to encroach on | November 23, 2018 | Long-term validity | In strict performance |
| the Company's interests. As one of the subjects responsible for the compensation measures, if the Company violates the above commitments or refuses to perform the above commitments, the Company agrees to impose relevant penalties or take relevant management measures on the Company in accordance with the relevant regulations and rules formulated or issued by the China Securities Regulatory Commission, Shenzhen Stock Exchange and other securities regulatory authorities, and is willing to bear the corresponding legal liabilities. | ||||||
| Commitments made at the time of an initial public offering or refinancing | Qiu Jianping; Wang Lingling | Other commitments | Promise not to interfere with the Company's operation and management activities beyond its power and not to encroach on the Company's interests. As one of the subjects responsible for | November 13, 2019 | Long-term validity | In strict performance |
| filling the return measures, if I violate the above commitments or refuse to perform the above commitments, I agree to take relevant penalties or take relevant management measures in accordance with the relevant regulations and rules formulated or issued by China Securities Regulatory Commission, Shenzhen Stock Exchange and other securities regulatory authorities, and I am willing to bear the corresponding legal liabilities. | ||||||
| Commitments made at the time of an initial public offering or refinancing | GreatStar Group | Commitments on trade competition, connected transactions, and utilization of funds | During its tenure as the controlling shareholder of the issuer, GreatStar Holdings Group Co., Ltdand the companies it will directly or indirectly control in the future will not engage in or participate in any business or activity within or outside China in any form (including but not limited to investment, | April 5, 2009 | As the controlling shareholder of the Company | In strict performance |
| combination and acquisition, association, joint venture, cooperation, partnership, contract or lease operation, or purchase of shares of listed companies) that constitutes or may constitute material competition with the Issuer's main business. Nor will it support, in any form, any third party other than the issuer and its wholly-owned or majority-controlled subsidiaries in or outside China to engage in or participate in any business or activity that constitutes or may constitute material competition with the Issuer's main business. In case any loss is caused to the issuer due to the failure to fulfill the promises and warranties made in the commitment letter, the GreatStar Holding Group Co., Ltd. will compensate the issuer for all actual losses. | ||||||
| Commitments | Qiu Jianping; Wang Lingling | Commitments on trade | While it has effective | April 5, 2010 | As the actual controller of the | In strict performance |
| made at the time of an initial public offering or refinancing | competition, connected transactions, and utilization of funds | control of the issuer, Qiu Jianping and his wife and the other enterprises directly or indirectly controlled by Qju Jianping and his wife and other enterprises other than the issuer and its wholly-owned or controlling subsidiaries will not engage in or participate in any form (including but not limited to investment, combination and acquisition, association, joint venture, cooperation, partnership, contract or lease operation, purchase of shares of listed companies) within or outside China, which constitutes or may constitute the main business of the issuer any business or activity in which the issuer has a material competitive relationship will not support in any way, whether in or outside China, any third party other than the issuer and its wholly-owned | Company |
| or majority-owned subsidiaries to engage in or participate in any business or activity that constitutes or may constitute a material competitive relationship with the issuer's main business. If any loss is caused to the issuer due to the failure to fulfill the promise and guarantee made in the commitment letter, Qiu Jianping and his wife will compensate the issuer for all actual losses. | |||
| Whether promises are kept on time | Yes | ||
2. If there is a profit forecast for the assets or projects of the Company and the reporting period is still inthe profit forecast period, the Company shall explain the reasons for the assets or projects reaching theoriginal profit forecast
□ Applicable ? N/A
II. Non-operational funds occupied by the controlling shareholders and other related partiesof the listed company
□ Applicable ? N/A
During the reporting period, the controlling shareholder and other related parties do not occupy non-operational funds of the listedcompany.III. Violation of foreign guarantee
□ Applicable ? N/A
The Company has no violation of external guarantee during the reporting period.
IV. The Board of Directors' explanation of the latest issue of "Non-standard Audit Report"
□ Applicable ? N/A
V. Explanation of the Board of Directors, the Board of Supervisors and the independentdirectors (if any) to the "Non-standard Audit Report" of the accounting firm in the currentreporting period
□ Applicable ? N/A
VI. Description of changes in accounting policies, accounting estimates or corrections ofmajor accounting errors compared with the financial report of the prior year
□ Applicable ? N/A
There is no change in accounting policies, accounting estimates or correction of material accounting errors during the reportingperiod.
VII. Description of changes in the scope of consolidated statements compared with thefinancial report of the prior year?Applicable □ N/AFor details, see Section 10, VIII, “Changes in the scope of consolidation”
VIII. Employment and dismissal of accounting firmsThe accounting firm currently employed
| Name of domestic accounting firm | Pan-China Certified Public Accountants LLP (Special General Partnership) |
| Remuneration of domestic accounting firms (ten thousand CNY) | 89.5 |
| Consecutive years of audit services provided by domestic accounting firms | 14 |
| Name of CPA of domestic accounting firm | Fei Fanghua and Li Xi |
| Number of consecutive years of CPA audit services provided by domestic accounting firms | 2 |
Whether to hire an accounting firm during the current period
□Yes ?No
Employment of internal control audit firms, financial advisers or sponsors
□ Applicable ? N/A
IX. Delisting after disclosure of annual report
□ Applicable ? N/A
X. Matters related to bankruptcy reorganization
□ Applicable ? N/A
No bankruptcy reorganization related matters occurred during the reporting period.XI. Major litigation and arbitration matters?Applicable □ N/A
| Basic information of litigation (arbitration) | Amount involved (ten thousand CNY) | Whether provisions are formed | Progress of litigation (arbitration) | Litigation (arbitration) hearing results and impact | Enforcement of litigation (arbitration) judgments | Date of disclosure | Disclosure index |
| Summary of other matters that do not meet the material litigation disclosure standards (the Company as plaintiff) | 83.82 | No | As of December 31, 2022, the settlement amount has reached CNY 0.00; The amount involved in the mediation to be recovered is CNY 0.00 The amount of money involved in the case that has won the arbitration but has not been completed is CNY 808,200.00. | For litigation matters, the Company will: 1. Successful litigation or mediation to recover the funds involved; 2. Require the involved unit and its associated legal person or nature to provide guarantee for the execution of the debt, so as to guarantee the recovery of the involved funds; 3. Set aside bad debt allowance in accordance with accounting standards and company management system. In summary, this summary of litigation matters has no material impact on the Company. | A total of CNY 0.00 has been collected |
| Summary of other matters that do not meet the material litigation disclosure criteria (the company as defendant) | 54.32 | No | By December 31, 2022, the amount of money involved in the case has been settled and withdrawn is CNY 43,900.00; The amount of compensation involved in the case is CNY 2,480.00. | For litigation matters, the Company will: 1. Successful litigation or mediation to recover the funds involved; 2. Require the involved unit and its associated legal person or nature to provide guarantee for the execution of the debt, so as to guarantee the recovery of the involved funds; 3. Set aside bad debt allowance in accordance with accounting standards and company management system. In summary, this summary of litigation matters has no material impact on the Company. | Among them, the compensation judgment has been executed |
XII. Punishment and rectification
□ Applicable ? N/A
The Company has no punishment and rectification during the reporting period.
XIII. Good faith status of the Company and its controlling shareholders and actualcontrollers
?Applicable □ N/A
During the reporting period, the Company and Qiu Jianping, the controlling shareholder of GreatStar Group and the actualcontroller, have good integrity. There is no failure to fulfill the effective judgment of the court, and the debts with a large amountof debt are not repaid when they mature.XIV. Material affiliated Transactions
1. Related transactions related to daily operations
□ Applicable ? N/A
During the reporting period, no affiliated transactions related to daily operations occurred.
2. Related transactions arising from asset or equity acquisition or sale
□ Applicable ? N/A
During the reporting period, there is no related transaction of asset or equity acquisition or sale.
3. Related transactions for joint foreign investment
□ Applicable ? N/A
There is no affiliated transaction of the Company's joint foreign investment during the reporting period.
4. Related creditor's rights and debts
□ Applicable ? N/A
The Company does not have related debt transactions during the reporting period.
5. Dealings with related financial companies
□ Applicable ? N/A
There is no deposit, loan, credit granting or other financial business between the Company and the finance company and therelated parties.
6. Transactions between financial companies controlled by the Company and related parties
□ Applicable ? N/A
There is no deposit, loan, credit granting or other financial business between the finance company controlled by the Company andits related parties.
7. Other major related transactions
□ Applicable ? N/A
The Company has no other significant related transactions during the reporting period.
XV. Major Contracts and performance
1. Trusteeship, contracting and leasing matters
(1) Trusteeship situation
□ Applicable ? N/A
There is no trusteeship during the reporting period.
(2) Contracting conditions
□ Applicable ? N/A
There is no contract in the reporting period.
(3) The leasing situation
□ Applicable ? N/A
There is no lease during the reporting period.
2. Major guarantee
?Applicable □ N/A
Unit: CNY 10,000
| External guarantees of the Company and its subsidiaries (excluding guarantees for subsidiaries) | ||||||||||
| Name of the guarantor | Guarantee amount related announcement disclosure date | Amount of guarantee | Actual date of occurrence | Actual amount guaranteed | Type of guarantee | Security (if any) | Counter guarantee situation (if any) | Guarantee period | Whether the performance is completed or not | Whether to guarantee for related parties |
| N/A | ||||||||||
| The guarantee status of the Company to its subsidiaries | ||||||||||
| Name of the guarantor | Guarantee amount related announcement disclosure date | Amount of guarantee | Actual date of occurrence | Actual amount guaranteed | Type of guarantee | Security (if any) | Counter guarantee situation (if any) | Guarantee period | Whether the performance is completed or not | Whether to guarantee for related parties |
| GreatStar Europe Limited by shares Company | July 3, 2018 | 48,991.14 | August 31, 2018 | 13,360.52 | General warranty | 2018/8/31-2023/7/27 | No | Yes | ||
| Arrow Fastener | April 12, 2022 | 6,964.6 | May 23, 2022 | 6,964.60 | General warranty | 1 | No | Yes | ||
| Co., LLC | ||||||||||
| Prime-Line Products, LLC | April 12, 2022 | 5,223.45 | May 23, 2022 | 5,223.45 | General warranty | 1 | No | Yes | ||
| Shop-Vac USA, LLC | April 12, 2022 | 6,964.6 | April 12, 2022 | 6,964.6 | General warranty | 1 | No | Yes | ||
| Suzhou Xindadi Hardware Product Co., Ltd. | June 22, 2020 | 10,000 | January 7, 2021 | 7,600 | General warranty | 3 | No | Yes | ||
| Geelong Sales Co., Ltd. | September 24, 2022 | 8,400 | October 13, 2022 | 0.00 | General warranty | 2022/10/13-2025/12/31 | No | Yes | ||
| GreatStar Europe Limited by shares Company | December 4, 2021 | 25,980.15 | December 27, 2021 | 25,980.15 | General warranty | 2021/12/27-2029/06/30 | No | Yes | ||
| Total amount of guarantee approved for subsidiaries during the reporting period (B1) | 27,552.65 | Total amount of guarantee actually incurred to the subsidiary during the reporting period (B2) | 26,752.65 | |||||||
| Total approved guarantee amount for subsidiaries at the end of the report period (B3) | 112,523.94 | Total balance of actual guarantee to subsidiary at the end of reporting period (B4) | 66,093.32 | |||||||
| The guarantee of the subsidiary to the subsidiary | ||||||||||
| Name of the guarantor | Guarantee amount related announcement disclosure date | Amount of guarantee | Actual date of occurrence | Actual amount guaranteed | Type of guarantee | Security (if any) | Counter guarantee situation (if any) | Guarantee period | Whether the performance is completed or not | Whether to guarantee for related parties |
| N/A | ||||||||||
| Total amount of company guarantee (the sum of the first three items) | ||||||||||
| Total amount of approved guarantee in reporting period (A1+B1+C1) | 27,552.65 | Total amount of actual guarantee incurred during the reporting period (A2+B2+C2) | 26,752.65 | |||||||
| Total amount of | 112,523.94 | Total amount of | 66,093.32 | |||||||
| approved guarantee at the end of the reporting period (A3+B3+C3) | actual guaranteed balance at the end of the reporting period (A4+B4+C4) | ||
| Proportion of the actual total guaranteed (i.e. A4+B4+C4) to the company's net assets | 4.93% | ||
| Including: | |||
| Balance of security provided to shareholders, actual controllers and their affiliates (D) | 0 | ||
| Balance of debt guarantees provided directly or indirectly to the insured with an asset-liability ratio of more than 70% (E) | 59,128.72 | ||
| Amount guaranteed in excess of 50% of net assets (F) | 0 | ||
| Total amount of the above three guarantees (D+E+F) | 59,128.72 | ||
The specific situation of the composite guaranteeN/A
3. Entrusted cash asset management
(1) Entrusted financial management situation
?Applicable □ N/ASummary of entrusted financial management during the reporting period
Unit: CNY 10,000
| Concrete type | Sources of funds entrusted to finance | Amount of entrusted financial management | Outstanding balance | Amount not recovered after the deadline | Overdue recovery of the financial management has been deducted impairment amount |
| Bank financial products | Self-owned funds | 18,800 | 6,000 | 0 | 0 |
| Total | 18,800 | 6,000 | 0 | 0 | |
Specific situation of high-risk entrusted financial management with significant single amount or low security and poor liquidity
□ Applicable ? N/A
Entrusted financing is expected to fail to recover the principal or exist other circumstances that may lead to impairment
□ Applicable ? N/A
(2) Entrusted loans
□ Applicable ? N/A
There are no entrusted loans during the reporting period.
4. Other major contracts
□ Applicable ? N/A
There are no other major contracts during the reporting period.XVI. Explanation of other important matters?Applicable □ N/A
1. During the reporting period, the Company obtained the purchase confirmation from a large retail company in the United States,the purchase target is 12 volt power tools, the purchase scope is all the sales and services of this type of products in about 2,000stores in North America in the next three years, and the estimated order amount is no less than USD 15 million per year, more than50% of the Company's 2020 power tool product revenue. For details, see Notice (2022) No. 010 disclosed on April 7, 2022.
2. During the reporting period, the Company signed a supplier purchase agreement with a large retail company in the United States.The purchase object is non-tool household goods, and the expected purchase amount is no less than USD 40 million per year. Fordetails, see Announcement (2022) No. 034 disclosed on May 13, 2022.
3. During the reporting period, the Company obtained the final confirmation of product procurement from a large retail company,the procurement target is mobile energy storage (POWER BANK) and household energy storage (POWER STATION) products,and the expected purchase amount is no less than USD 20 million per year. The validity period of this purchase is two years. Fordetails, see Announcement (2022) No. 061 disclosed on September 10, 2022.
4. On September 23, 2022, the 24th meeting of the 5th session of Board of Directors of the Company deliberated and approved theProposal on the Establishment of a Wholly-owned Subsidiary Company through Foreign Investment. Hong Kong GreatStarInternational Co., Ltd., a wholly-owned subsidiary of the company, intends to establish a wholly-owned sub-subsidiary company,Hangzhou GreatStar New Energy Co., Ltd. (tentatively named, subject to the approval of the competent authorities), with aregistered capital of USD 15 million, which will be raised by Hong Kong GreatStar. For details, see Announcement (2022) No.067 disclosed on September 24, 2022.
5. Global Depository Receipts issued by the Company approved by China Securities Regulatory Commission and SIX ExchangeRegulationAG, Switzerland Hereinafter referred to as "GDR") will be listed on the Swiss Stock Exchange on November 15, 2022(Swiss time) (hereinafter referred to as "Issuance"). GDR securities are Hangzhou GreatStar Industrial Co., Ltd. GDR listing code:
GSI. 70% or more of the net proceeds from the offering will be used to expand the Company's main business, including but notlimited to the development of power tools and home energy storage products and overseas distribution: not more than 30% or theremainder of the net proceeds will be used for working capital and general corporate purposes. The price of each GDR in theIssuance is USD13.08. The number of GDRS in the Issuance is 11,812,700, among which each GDR represents 5 shares of theCompany's A shares, and the corresponding number of new underlying A shares is 59,063,500. After the completion of theIssuance of GDRS, the total share capital of the Company is changed to 1,202,501,992 shares, and the total amount of funds raisedby the Issuance of GDRS is USD154,510,116.00. The funds raised in the Issuance have been received.
6. On December 16, 2022, the 28th meeting of the 5th session of Board of Directors of the Company deliberated and approved theProposal on the Establishment of a Wholly-owned Sub-subsidiary through Foreign Investment. Hong Kong GreatStar InternationalCo., Ltd., a wholly-owned subsidiary of the Company, intends to establish a wholly-owned sub-subsidiary, Hangzhou GreatStarGarden Tools Co., Ltd. (tentatively named, subject to the approval of the competent authorities), in Shangcheng District,Hangzhou City, Zhejiang Province, with a registered capital of USD 100 million, which is self-raised by Hong Kong GreatStar.For details, see Announcement (2022) No. 093 disclosed on December 17, 2022.XVII. Major matters of subsidiaries of the Company
□ Applicable ? N/A
Section VII Changes in Shares and Information about Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
| Before change | Increase/decrease (+, -) | After change | |||||||
| Quantity | Proportion | Issue new shares | Share delivery | Conversion of provident fund shares | Others | Subtotal | Quantity | Proportion | |
| I. Limited sale condition shares | 61,339,786 | 5.36% | -11,808,482 | -11,808,482 | 49,531,304 | 4.12% | |||
| 1. State shareholding | |||||||||
| 2. Shareholding by state-owned legal persons | |||||||||
| 3. Other domestic holdings | 61,339,786 | 5.36% | -11,808,482 | -11,808,482 | 49,531,304 | 4.12% | |||
| Including: domestic legal person shareholding | |||||||||
| Domestic natural person shareholding | 61,339,786 | 5.36% | -11,808,482 | -11,808,482 | 49,531,304 | 4.12% | |||
| 4. Foreign ownership | |||||||||
| Including: foreign legal person shareholding | |||||||||
| Shareholding by foreign natural persons | |||||||||
| II. Shares subject to unlimited sale | 1,082,098,706 | 94.64% | 59,063,500 | 11,808,482 | 70,871,982 | 1,152,970,688 | 95.88% | ||
| 1. CNY ordinary shares | 1,082,098,706 | 94.64% | 59,063,500 | 11,808,482 | 70,871,982 | 1,152,970,688 | 95.88% | ||
| 2. Foreign capital stocks listed in China | |||||||||
| 3. Foreign capital stocks listed overseas | |||||||||
| 4. Others | |||||||||
| III. Total number of shares | 1,143,438,492 | 100.00% | 59,063,500 | 0 | 59,063,500 | 1,202,501,992 | 100.00% |
Reasons for changes in shares?Applicable □ N/ADuring the reporting period, the number of global depositary receipts issued by the Company was 11,812,700, in which each GDRrepresented five A-shares of the Company, and the corresponding number of new underlying A-shares was 59,063,500. As a result,the total capital of the Company increased by 59,063,500 shares; Changes in limited sale conditions are caused by changes in theholdings of directors and executives of the Company.Approval of changes in shares?Applicable □ N/AThe Company has obtained the approval of the China Securities Regulatory Commission (hereinafter referred to as "CSRC") forthe issuance of GDRS. For details, please refer to the Announcement on the Issuance and Listing of GDRS on the Swiss StockExchange Approved by the CSRC published by the Company on November 10, 2022 (Announcement (2022) No. 081) and hasobtained the approval of the Prospectus Office of the Swiss Stock Exchange Regulator for the GDR offering, as detailed in theCompany's Notice concerning the Determination of the Price Range for the GDR Offering and the Approval of the ProspectusOffice of the Swiss Stock Exchange Regulator, dated 10 November 2022 (Announcement (2022) No. 082).Transfer of stock changes
□ Applicable ? N/A
The impact of stock changes on basic and diluted earnings per share, net asset value per share attributable to the Company'scommon shareholders and other financial indicators in the most recent year and the most recent period
□ Applicable ? N/A
Other contents deemed necessary by the Company or required by the securities regulatory authorities to be disclosed
□ Applicable ? N/A
2. Changes in restricted shares
?Applicable □ N/A
Unit: share
| Name of shareholder | Initial limited number of shares sold | Increase the number of restricted shares in the current period | Number of restricted shares released in the current period | Number of restricted shares at the end of the period | Reasons for restricted sales | Date of lifting the restriction |
| Zhang Mao | 0 | 2,175 | 2,175 | Appointed an executive and locked up 75% of his shares. | 25% of the total number of restricted shares to be released at the beginning of each year during the term of office. | |
| Li Feng | 609,733 | 30,225 | 639,958 | Executive lock stock | 25% of the total number of restricted shares to be released at the beginning of each year during the term of office. | |
| Qiu Jianping | 45,663,225 | 2,159,218 | 11,300,100 | 36,522,343 | Director lock-in stock | 25% of the total number of restricted shares to be released at the beginning of each year during the term of office. |
| Wang Lingling | 12,863,220 | 3,150,000 | 9,713,220 | Executive lock stock | 25% of the total number of restricted shares to be released at the beginning of each year during the term of office. | |
| Zhou Siyuan | 0 | 450,000 | 450,000 | Executive lock stock | 25% of the total number of restricted shares to be released at the beginning of each year |
| during the term of office. | ||||||
| Total | 59,136,178 | 2,641,618 | 14,450,100 | 47,327,696 | -- | -- |
II. Securities issuance and listing
1. Securities issuance (excluding preferred shares) during the reporting period?Applicable □ N/A
| Names of stocks and derivative securities | Date of issue | Issue price (or interest rate) | Quantity issued | Date of listing | Number of approved listings | Closing date | Disclosure index | Date of disclosure |
| Stock class | ||||||||
| A-share | November 10, 2022 | USD 2.616 per share | 59,063,500 | November 15, 2022 | 59,063,500 | Announcement No.: 2022-086 | March 15, 2023 | |
| Convertible bonds, separately traded convertible bonds and corporate bonds | ||||||||
| Other derivative securities | ||||||||
| Global depositary receipts | November 10, 2022 | It's USD 13.08 per copy | 11,812,700 | November 15, 2022 | 11,812,700 | Announcement No.: 2022-084 | November 10, 2022 | |
Description of securities issuance (excluding preferred stock) during the reporting periodThe Company completed the issue of Global Depository Receipts (hereinafter referred to as "GDR") in November 2022 and waslisted on the Swiss Stock Exchange on November 15, 2022 (Swiss time) (hereinafter referred to as "Issuance"). The price of eachGDR in the Issuance is USD 13.08. The number of GDRS in the Issuance is 11,812,700, among which each GDR represents 5shares of the Company's A shares, and the corresponding number of new underlying A shares is 59,063,500. After the completionof this GDR, the total share capital of the Company is changed to 1,202,501,992 shares.
2. Description of changes in the total number of shares and shareholder structure of the company, as wellas changes in the structure of assets and liabilities of the company?Applicable □ N/AThe Company completed the issue of Global Depository Receipts (hereinafter referred to as "GDR") in November 2022 and waslisted on the Swiss Stock Exchange on November 15, 2022 (Swiss time) (hereinafter referred to as "Issuance"). The price of eachGDR in the Issuance is USD 13.08. The number of GDRS in the Issuance is 11,812,700, among which each GDR represents 5shares of the Company's A shares, and the corresponding number of new underlying A shares is 59,063,500. After the completionof this GDR, the total share capital of the Company is changed to 1,202,501,992 shares.
3. Situation of the existing internal job stock
□ Applicable ? N/A
III. Shareholders and actual controllers
1. Number and shareholding of the Company's shareholders
Unit: share
| Reporting the total number of common shareholders at the end of the period | 46,393 | Total number of common shareholders at the end of the preceding month prior to disclosure of the Annual Report | 53,807 | Total number of preferred shareholders reporting restoration of voting rights (if any) at the end of the period (see Note 8) | 0 | Total number of preferred shareholders whose voting rights were restored at the end of the month prior to disclosure of the Annual Report (if any) (see Note 8) | 0 | |
| Shareholders holding more than 5% or the top 10 shareholders | ||||||||
| Name of shareholder | Nature of shareholder | Shareholding ratio | Report the number of holdings at the end of the period | Changes in the reporting period | Number of shares held on limited terms of sale | Number of shares held under an unlimited condition | Condition of pledge, mark or freeze | |
| Share status | Quantity | |||||||
| GreatStar Holding Group Co., Ltd. | Domestic non-state-owned legal person | 37.61% | 452,305,864 | -11434000 | 0 | 452,305,864 | ||
| Citibank, National Association | Overseas legal person | 4.91% | 59,063,500 | 59063500.00 | 0 | 59,063,500.00 | ||
| Qiu Jianping | Domestic natural person | 4.05% | 48,696,458 | 2878958 | 36,522,343 | 12,174,115 | ||
| Hong Kong Securities Clearing Company Limited | Overseas legal person | 2.08% | 25,044,623 | -53725619 | 0 | 25,044,623 | ||
| China Construction Bank Co., Ltd. - BoCOM Schroders Economic new power hybrid securities investment fund | Others | 1.61% | 19,359,284 | 5056185 | 0 | 19,359,284 | ||
| China Merchants Bank Co., | Others | 1.09% | 13,103,456 | 3139581 | 0 | 13,103,456 | ||
| Ltd. - BoCOM Schroders Innovation Pilot hybrid securities investment fund | ||||||||
| Wang Lingling | Domestic natural person | 1.08% | 12,950,960 | 0 | 9,713,220 | 3,237,740 | ||
| National Social Security Fund 115 portfolio | Others | 1.02% | 12,300,000 | -500000 | 0 | 12,300,000 | ||
| National Social Security Fund 418 portfolio | Others | 0.97% | 11,635,720 | 6922494 | 0 | 11,635,720 | ||
| Industrial and Commercial Bank of China Limited - Fuguo Tianhui Select Growth Hybrid Securities Investment Fund (LOF) | Others | 0.83% | 10,003,400 | 2794148 | 0 | 10,003,400 | ||
| Placement of new shares by strategic investors or general corporations as top 10 shareholders (if any) (see Note 3) | During the reporting period, the Company added 59,063,500 basic A-shares due to the issuance of GDRS. At the end of the reporting period, the above added shares were held by Citibank and National Association. | |||||||
| Description of such stockholder affiliation or concerted action | GreatStar Holding Group Co., Ltd., Qiu Jianping and Wang Lingling are related and belong to the concerted actors stipulated in the Measures for the Administration of Acquisition of Listed Companies. | |||||||
| Description of the above shareholders involved in entrustment/fiduciary voting rights, waiver of voting rights | None | |||||||
| Special description of the repurchase account (if any) among the top 10 shareholders (see Note 10) | None | |||||||
| Holdings of the top 10 unlimited sale condition shareholders | ||||||||
| Name of shareholder | Number of unlimited sale condition shares held at the end of reporting period | Class of shares | |
| Class of shares | Quantity | ||
| GreatStar Holding Group Co., Ltd. | 452,305,864 | CNY common stock | 452,305,864 |
| Citibank, National Association | 59,063,500 | CNY common stock | 59,063,500 |
| Hong Kong Securities Clearing Company Limited | 25,044,623 | CNY common stock | 25,044,623 |
| China Construction Bank Co., Ltd. - BoCOM Schroders Economic new power hybrid securities investment fund | 19,359,284 | CNY common stock | 19,359,284 |
| China Merchants Bank Co., Ltd. - BoCOM Schroders Innovation Pilot hybrid securities investment fund | 13,103,456 | CNY common stock | 13,103,456 |
| National Social Security Fund 115 portfolio | 12,300,000 | CNY common stock | 12,300,000 |
| Qiu Jianping | 12,174,115 | CNY common stock | 12,174,115 |
| National Social Security Fund 418 portfolio | 11,635,720 | CNY common stock | 11,635,720 |
| Industrial and Commercial Bank of China Limited - Fuguo Tianhui Select Growth Hybrid Securities Investment Fund (LOF) | 10,003,400 | CNY common stock | 10,003,400 |
| CITIC Securities Co., Ltd. - Social Security Fund 17052 portfolio | 9,760,298 | CNY common stock | 9,760,298 |
| Description of the relationships or concerted actions of the top 10 unlimited-float stockholders and the top 10 unlimited-float stockholders and the top 10 stockholders | GreatStar Holding Group Co., Ltd. and Qiu Jianping are related to each other and belong to the joint actors stipulated in the Measures for the Administration of Acquisition of Listed Companies. | ||
| Description of top 10 common shareholders' participation in margin trading (if any) (see Note 4) | GreatStar Holding Group Co., Ltd. participated in the lending business of the securities of the transfer, by the end of the reporting period, a total of 11,434,000 shares had been lent. | ||
Whether the top 10 common shareholders and the top 10 unlimited condition common shareholders of the company have engagedin agreed repurchase transactions during the reporting period
□Yes ?No
The top 10 common shareholders and the top 10 unlimited condition common shareholders of the Company did not conductagreed repurchase transactions during the reporting period.
2. Controlling shareholders of the Company
Nature of controlling shareholder: natural person holdingType of controlling shareholder: natural person
| Name of controlling shareholder | Nationality | Whether they have obtained the right of abode in another country or region |
| Qiu Jianping | China | No |
| Main occupation and position | Chairman of the Board, Chairman of GreatStar Group | |
| Equity status of other domestic and foreign listed companies holding or participating shares during the reporting period | Hangcha Group Co., Ltd., stock code: 603298, stock abbreviation: Hangcha Group, the company was listed in Shanghai Stock Exchange on December 27, 2016, mainly engaged in forklift trucks, intelligent vehicles and other industrial vehicle products and main parts of the kit. Zhejiang Xinchai Co., Ltd., stock code: 301032, stock abbreviation: Xinchai Co., Ltd., listed in Shenzhen Stock Exchange on July 22, 2021, is mainly engaged in the R&D, production and sales of non-road diesel engines and related parts. | |
Change in reporting period of controlling shareholders
□ Applicable ? N/A
The controlling shareholders of the company have not changed during the reporting period.
3. The actual controller of the Company and the person 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 they have obtained the right of abode in another country or region |
| Qiu Jianping | Myself | China | No |
| Main occupation and position | Chairman of the Board, Chairman of GreatStar Group | ||
| The domestic and foreign listed companies in the past 10 years | Qiu Jianping is the actual controller of Hangcha Group Co., Ltd. (Stock code: 603298) and Zhejiang Xinchai Co., Ltd. (stock code: 301032). | ||
Whether actual controller has changed in the reporting period
□ Applicable ? N/A
The actual controller of the Company has not changed during the reporting period.Block diagram of the property rights and control relationship between the company and the actual controller
The actual controller controls the Company through trust or other asset management
□ Applicable ? N/A
4. The accumulative number of shares pledged by the controlling shareholder or the largest shareholderof the Company and the persons acting in concert shall account for 80% of the number of shares held bythem
□ Applicable ? N/A
5. Other corporate shareholders holding more than 10%
□ Applicable ? N/A
6. The controlling shareholder, the actual controller, the reorganization party and other commitmentsubject stock restriction reduction
□ Applicable ? N/A
IV. Specific implementation of share repurchase in the reporting periodThe implementation progress of share repurchase?Applicable □ N/A
| Scheme disclosure time | Number of shares to be repurchased (shares) | As a percentage of total equity | Amount to be repurchased (ten thousand CNY) | Proposed buyback period | Repurchase use | Number of shares repurchased (shares) | Proportion of shares repurchased to the underlying shares covered by the equity incentive plan (if any) |
| July 6, 2021 | 18,000-36,000 | 2021-7-6 to 2022-7-4 | Among them, 40% of the repurchased shares are intended to be used for | 8,023,810 |
Qiu Jianping
Qiu Jianping
Qiu Jianping and his wife
Qiu Jianping and his wife
GreatStar Holding Group Co., Ltd.
GreatStar Holding Group Co., Ltd.
Hangzhou GreatStar Industrial Co., Ltd.
stock sourceof employeestockownershipplan orequityincentiveplan, and60% of therepurchasedshares areintended tobe used forconversion ofcorporatebonds issuedby theCompanythat can beconvertedinto stock
The implementation progress of reducing shares and repurchasing shares by centralized bidding trading
□ Applicable ? N/A
Section VIII Preferred Shares
□ Applicable ? N/A
No preferred stock existed in the Company during the reporting period.
Section IX Information about Bond
□ Applicable ? N/A
Section X Financial Statements
I. Audit report
| Type of audit opinion | Standard unreserved opinion |
| Date of signing the audit report | April 21, 2023 |
| Name of audit institution | Pan-China Certified Public Accountants (special general partnership) |
| Audit report number | Pan-China Audit (2023) No. 3368 |
| CPA name | Fei Fanghua and Li Xi |
Text of audit reportAll shareholders of Hangzhou GreatStar Industrial Co., Ltd.:
I. Audit opinionsWe have audited the financial statements of Hangzhou GreatStar Technology Co., Ltd. (hereinafter referred to as “GreatStar”),including the consolidated and parent company balance sheet for December 31, 2022, the consolidated and parent companyincome statement for 2022, the consolidated and parent company cash flow statement, the consolidated and parent companystatement of changes in shareholders’ equity, and the relevant notes to the financial statements.In our opinion, the accompanying financial statements, prepared in all material respects in accordance with the provisions of theaccounting standards for business enterprises, fairly present the financial position of the combination and parent company as ofDecember 31, 2022, and the results of the combination and parent company's operations and cash flows for the year 2022.
II. Basis of audit opinionsWe carried out the audit in accordance with the auditing standards of Chinese certified public accountants. Our responsibilitiesunder these standards are further elaborated in the "Certified Public Accountant Responsibilities for the Audit of FinancialStatements" section of the audit report. In accordance with the Chinese Certified Public Accountant Code of Ethics, we areindependent of GreatStar and fulfill other ethical responsibilities. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion.
III. Key audit mattersKey audit items refer to the items that we consider to be the most important in the audit of current financial statements based onour professional judgment. The response to these matters is in the context of an audit of the financial statements as a whole and theformation of an audit opinion. We do not express an opinion on these matters separately.(I) Revenue recognition
1. Event description
For details of disclosure of relevant information, see Note V, (II), 1 and Note III, (XXV) to the financial statements.The revenue of GreatStar comes from hand tools, power tools, laser measurement and storage, etc. In 2022, the operating incomeof GreatStar was CNY 1,261,0189,600.00. As revenue is one of the key performance indicators of GreatStar, there may be aninherent risk that the management of GreatStar (hereinafter referred to as “Management”) may achieve specific goals orexpectations through inappropriate revenue recognition. Therefore, we have identified revenue recognition as a key audit item.
2. Audit response
For revenue recognition, our audit procedures mainly include:
(1) Understand the key internal controls related to revenue recognition, evaluate the design of these controls, determine whetherthey are implemented, and test the operational effectiveness of the relevant internal controls;
(2) Examine the sales contract, understand the main contract terms or conditions, and evaluate whether the revenue recognitionmethod is appropriate;
(3) Carry out analysis procedures for operating proceeds and gross profit margin on a monthly, product and customer basis,identify whether there are significant or abnormal fluctuations, and find out the causes of fluctuations;
(4) For domestic sales revenue, check supporting documents related to revenue recognition by sampling method, including salescontract, order, sales invoice, warehouse delivery and customer signature; For export income, check sales contract, exportdeclaration, freight bill of lading, customer receipt, sales invoice and other supporting documents by sampling method;
(5) Confirm current sales to major customers by sampling method in combination with receivables confirmation;
(6) Implement cut-off test for the operating income recognized around the balance sheet date to evaluate whether the operatingincome is recognized in the appropriate period;
(7) Check whether the information related to the operating income has been properly presented in the financial statements.
(II) Impairment of goodwill
1. Event description
For details of disclosure of relevant information, see Note III, (XX) and Note V, (I), 19 to the financial statements.As at December 31, 2022, the original book value of goodwill of GreatStar was CNY 2,585,130,465.59, the reserve forimpairment was CNY 148,989,670.93, and the book value was CNY 2,436,140,794.66.When there are signs of impairment in the asset group or asset group combination related to goodwill, and at the end of each year,management shall conduct impairment tests on goodwill. Management will combine the goodwill with its related asset group orasset group combination for impairment test, and the recoverable amount of the related asset group or asset group combinationshall be calculated according to the present value of the estimated future cash flow. Key assumptions used in the impairment testinclude: revenue growth rate in the detailed forecast period, growth rate in the perpetual forecast period, gross profit rate anddiscount rate, etc.Because the amount of goodwill is material and the test of goodwill impairment involves significant management judgment, wehave identified goodwill impairment as a critical audit matter.
2. Audit response
For goodwill impairment, our audit procedures mainly include:
(1) Understand the key internal controls related to goodwill impairment, evaluate the design of these controls, determine whetherthey are implemented, and test the operational effectiveness of the relevant internal controls;
(2) Review the management's forecast of the present value of future cash flows and actual operating results in prior years, andevaluate the accuracy of the management's past forecasts;
(3) Understand and evaluate the competence, professional quality and objectivity of external valuation experts employed bymanagement;
(4) Evaluate the rationality and consistency of the methods used by the management in the impairment test;
(5) Evaluate the rationality of key assumptions adopted by the management in the impairment test, and review whether relevantassumptions are consistent with the overall economic environment, industrial conditions, business conditions, historical experienceand other assumptions used by the management in relation to financial statements;
(6) Test the accuracy, completeness and relevance of the data used by the management in the impairment test, and review theinternal consistency of relevant information in the impairment test;
(7) Test whether the calculation of the present value of the expected future cash flow by the management is accurate;
(8) Check whether the information related to goodwill impairment has been properly presented in the financial statements.
IV. Other informationManagement is responsible for other information. Other information includes information covered in the annual report, butexcludes the financial statements and our audit reports.Our audit opinion on the financial statements does not cover other information, nor do we express any form of forensicconclusions on other information.In conjunction with our audit of the financial statements, it is our responsibility to read the additional information and, in doing so,consider whether the additional information is materially inconsistent with the financial statements or what we have learned duringthe audit or appears to be materially misstated.Based on the work we have performed, if we determine that additional information is materially misstated, we shall report that fact.We have nothing to report in this regard.
V. Responsibility of the management for financial statementsManagement is responsible for preparing the financial statements in accordance with the accounting standards for businessenterprises to achieve fair representation, and for designing, implementing and maintaining the necessary internal controls toensure that the financial statements are free from material misstatement due to fraud or error.In preparing the financial statements, management is responsible for evaluating GreatStar's ability to go as a going concern,disclosing matters relating to going concern, if applicable, and applying the going concern assumption, unless a liquidation isplanned, the operations are discontinued or there is no other realistic alternative.The GreatStar Management Layer (hereinafter referred to as “Management”) is responsible for overseeing the financial reportingprocess of GreatStar.
VI. Responsibilities of Certified Public Accountants for auditing financial statementsOur objective is to obtain reasonable assurance that the financial statements as a whole are free from material misstatement due tofraud or error, and to produce an audit report containing an audit opinion. Reasonable assurance is a high level of assurance, but itdoes not guarantee that an audit performed in accordance with auditing standards will always find a material misstatement. Themisstatement may result from fraud or error and is generally considered material if it is reasonably expected that the misstatement,in isolation or in combination, could affect the economic decisions made by users of the financial statements based on the financialstatements.In performing our audit work in accordance with audit standards, we exercise professional judgment and maintain professionalskepticism. Meanwhile, we also perform the following work:
(I) Identify and assess the risk of material misstatement of financial statements caused by fraud or error, design and implementaudit procedures to deal with these risks, and obtain sufficient and appropriate audit evidence as the basis for expressing auditopinions. Because fraud may involve collusion, forgery, willful omission, misrepresentation, or override internal controls, the riskof failing to detect a material misstatement as a result of fraud is higher than the risk of failing to detect a material misstatement asa result of error.(II) Understand the internal controls related to audit to design appropriate audit procedures.(III) Evaluate the appropriateness of accounting policies chosen by the management and the reasonableness of accountingestimates and relevant disclosures made by the management.(IV) Conclude the appropriateness of management's use of the going concern assumption. Meanwhile, based on the audit evidenceobtained, it concludes whether there is a material uncertainty about matters or circumstances that may raise material doubt aboutGreatStar's ability to go as a going concern. If we conclude that there is a material uncertainty, auditing standards require us tobring relevant disclosures in the financial statements to the attention of statement users in our audit reports; If disclosure is
inadequate, we shall express a non-unqualified opinion. Our conclusions are based on information available as of the auditreporting date. However, future events or circumstances may result in GreatStar not being a going concern.(V) Evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financialstatements fairly reflect the relevant transactions and events.(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entity or business activities of theGreatStar, so as to express audit opinions on the financial statements. We are responsible for the guidance, supervision andexecution of Group audits and take full responsibility for audit opinions.We communicate with the management about the planned audit scope, timing, and significant audit findings, including internalcontrol deficiencies of concern that we have identified during the audit.We also provide the management with a statement that we have complied with ethical requirements related to our independenceand communicate with governance about all relationships and other matters that may reasonably be considered to affect ourindependence, as well as relevant precautions, if applicable.From the matters communicated with the management layer, we determine which matters are the most important for the audit ofthe current financial statements and therefore constitute the key audit matters. We describe these matters in our audit reports unlessthe public disclosure of such matters is prohibited by law or regulation or, in rare circumstances, we determine that we shall notcommunicate a matter in our audit report if the negative consequences of communicating the matter in our audit report canreasonably be expected to outweigh the benefit in the public interest.II. Financial statementsThe unit of the statement in the financial notes: CNY
1. Consolidated balance sheets
Prepared by: Hangzhou GreatStar Industrial Co., Ltd.
December 31, 2022
Unit: CNY
| Item | December 31, 2022 | January 1, 2022 |
| Current assets: | ||
| Cash and Cash equivalents | 4,863,206,182.40 | 4,033,707,240.16 |
| Settlements Provision | ||
| Loans to banks and other financial institutions | ||
| Financial assets held for trading | 70,230,104.24 | 13,557,757.75 |
| Derivative financial assets | ||
| Notes receivable | 18,765,981.83 | 6,629,914.18 |
| Accounts receivable | 1,896,685,590.11 | 1,798,265,505.53 |
| Financing receivables | 324,557,679.71 | 559,020,827.52 |
| Prepayments | 128,254,093.87 | 77,743,441.90 |
| Insurance premium receivable | ||
| Due from reinsurers | ||
| Reinsurance contract reserves receivable | ||
| Other receivables | 58,325,042.10 | 96,151,003.68 |
| Including: Interest receivable |
| Dividends receivable | ||
| Financial assets purchased under agreements to resell | ||
| Inventories | 2,812,572,525.68 | 2,835,777,996.84 |
| Contract assets | ||
| Assets classified as held for sale | ||
| Current portion of non-current assets | 98,061.60 | 90,708.80 |
| Other current assets | 134,130,648.58 | 193,991,198.10 |
| Total current assets | 10,306,825,910.12 | 9,614,935,594.46 |
| Non-current assets: | ||
| Loans and advances | ||
| Debt investment | ||
| Other debt investments | ||
| Long-term receivables | 2,872,179.47 | 2,721,241.71 |
| Long-term equity investment | 2,544,523,517.55 | 2,353,942,699.80 |
| Other equity instruments investment | 16,550,000.00 | 16,550,000.00 |
| Other non-current financial assets | ||
| Investment properties | 122,158,556.01 | 127,058,966.69 |
| Fixed assets | 1,518,902,232.96 | 1,494,547,487.29 |
| Construction in progress | 304,599,362.46 | 113,750,851.49 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-to-use assets | 417,129,361.41 | 411,722,761.66 |
| Intangible assets | 712,798,866.46 | 671,293,451.61 |
| Development expenditure | ||
| Goodwill | 2,436,140,794.66 | 2,305,780,623.86 |
| Long-term deferred expenses | 29,683,274.34 | 26,745,962.25 |
| Deferred tax assets | 92,863,613.38 | 64,333,652.79 |
| Other non-current assets | 74,507,127.95 | 103,771,593.06 |
| Total non-current assets | 8,272,728,886.65 | 7,692,219,292.21 |
| Total assets | 18,579,554,796.77 | 17,307,154,886.67 |
| Current liabilities: | ||
| Short-term borrowings | 1,379,062,713.11 | 1,806,901,201.39 |
| Borrowings from the central bank | ||
| Deposits and balances from banks and other financial institutions | ||
| Financial liabilities held for trading | 48,413,710.29 | 978,031.91 |
| Derivative financial liabilities | ||
| Notes payable | 21,096,540.03 | 51,728,000.00 |
| Accounts payable | 1,366,875,268.71 | 1,640,430,929.84 |
| Receipts in advance | ||
| Contract liabilities | 131,898,420.14 | 91,235,951.19 |
| Financial assets sold under agreements |
| to buy | ||
| Customer deposits and balances from banks and other financial institutions | ||
| Customer brokerage deposits | ||
| Securities underwriting brokerage deposits | ||
| Payroll and employee benefits payable | 270,678,187.82 | 264,073,705.38 |
| Tax payable | 176,943,955.53 | 170,836,108.02 |
| Other payables | 21,198,376.32 | 676,502,987.21 |
| Including: Interest payable | ||
| Dividend payable | ||
| Fees and commissions payable | ||
| Reinsurance payable | ||
| Liabilities classified as held for sale | ||
| Current portion of non-current liabilities | 323,296,833.40 | 358,525,963.69 |
| Other current liabilities | 2,136,266.97 | 2,501,196.81 |
| Total current liabilities | 3,741,600,272.32 | 5,063,714,075.44 |
| Non-current liabilities: | ||
| Insurance reserves | ||
| Long-term borrowings | 798,604,951.84 | 1,015,445,732.07 |
| Bonds payable | ||
| Including: Preference shares | ||
| Perpetual debt | ||
| Lease liabilities | 318,221,349.99 | 289,196,511.02 |
| Long-term payables | ||
| Long-term payroll and employee benefits payable | 19,223,856.97 | 20,854,276.60 |
| Provisions | 4,548,413.90 | 4,924,868.93 |
| Deferred income | 2,364,687.74 | 2,802,244.63 |
| Deferred tax liabilities | 70,462,027.25 | 96,927,387.14 |
| Other non-current liabilities | ||
| Total non-current liabilities | 1,213,425,287.69 | 1,430,151,020.39 |
| Total liabilities | 4,955,025,560.01 | 6,493,865,095.83 |
| Shareholders’ equity: | ||
| Paid-in capital | 1,202,501,992.00 | 1,143,438,492.00 |
| Other equity instruments | ||
| Including: Preference shares | ||
| Perpetual bond | ||
| Capital reserve | 3,950,778,936.53 | 2,924,951,844.93 |
| Less: Treasury shares | 236,625,962.00 | 186,441,914.48 |
| Other comprehensive income | 115,010,556.85 | -229,774,189.10 |
| Special reserve | ||
| Surplus reserve | 663,843,379.04 | 598,543,176.63 |
| General risk reserve | ||
| Retained earnings | 7,702,438,641.41 | 6,348,179,336.72 |
| Equity attributable to parent company | 13,397,947,543.83 | 10,598,896,746.70 |
| Non-controlling interests | 226,581,692.93 | 214,393,044.14 |
| Total shareholders’ equity | 13,624,529,236.76 | 10,813,289,790.84 |
| Total liabilities and shareholders’ equity | 18,579,554,796.77 | 17,307,154,886.67 |
Legal representative: Qiu Jianping Chief accountant: Ni Shuyi Head of accounting department: Ni Shuyi
2. Balance sheet of parent company
Unit: CNY
| Item | December 31, 2022 | January 1, 2022 |
| Current assets: | ||
| Cash and Cash equivalents | 1,959,109,461.78 | 2,206,647,760.44 |
| Financial assets held for trading | 2,805,400.00 | |
| Derivative financial assets | ||
| Notes receivable | 6,303,252.22 | 3,817,503.68 |
| Accounts receivable | 1,094,304,301.40 | 972,916,000.96 |
| Financing receivables | 321,247,171.36 | 370,836,450.93 |
| Prepayment | 11,356,975.59 | 15,407,186.40 |
| Other receivables | 2,755,900,353.60 | 1,458,883,819.83 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventories | 67,443,090.27 | 68,823,270.52 |
| Contract assets | ||
| Assets classified as held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 56,338,463.11 | 51,228,927.28 |
| Total current assets | 6,272,003,069.33 | 5,151,366,320.04 |
| Non-current assets: | ||
| Debt investment | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investment | 6,646,597,702.06 | 6,509,236,517.72 |
| Other equity instruments Investment | 16,550,000.00 | 16,550,000.00 |
| Other non-current financial assets | ||
| Investment properties | 122,158,556.01 | |
| Fixed assets | 164,458,168.94 | 148,222,773.14 |
| Construction in progress | 32,000,978.77 | 6,172,215.82 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-to-use assets | ||
| Intangible assets | 21,448,416.46 | 16,166,495.20 |
| Development expenditure | ||
| Goodwill | ||
| Long-term deferred expenses |
| Deferred tax assets | 16,436,967.81 | 12,054,042.27 |
| Other non-current assets | 2,422,590.14 | 5,741,206.20 |
| Total non-current assets | 7,022,073,380.19 | 6,714,143,250.35 |
| Total assets | 13,294,076,449.52 | 11,865,509,570.39 |
| Current liabilities: | ||
| Short-term borrowings | 656,030,197.16 | 1,547,295,724.96 |
| Financial liabilities held for trading | 13,075,775.62 | |
| Derivative financial liabilities | ||
| Notes payable | 100,000,000.00 | |
| Accounts payable | 1,107,917,284.47 | 389,834,880.42 |
| Receipts in advance | ||
| Contract liabilities | 43,237,007.23 | 46,268,755.74 |
| Payroll and employee benefits payable | 52,247,521.65 | 46,155,738.14 |
| Taxes payable | 35,226,805.80 | 76,469,338.83 |
| Other payables | 3,392,054.12 | 585,010,369.48 |
| Including: Interest payable | ||
| Dividend payable | ||
| Liabilities classified as held for sale | ||
| Current portion of non-current liabilities | 73,583,468.23 | 82,994,001.43 |
| Other current liabilities | 604,815.09 | 427,742.00 |
| Total current liabilities | 2,085,314,929.37 | 2,774,456,551.00 |
| Non-current liabilities: | ||
| Long-term borrowings | 792,728,586.65 | 391,626,437.89 |
| Bonds payable | ||
| Including: Preference shares | ||
| Perpetual bond | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term payroll and employee benefits payable | ||
| Provisions | ||
| Deferred income | 795,332.50 | 1,556,851.32 |
| Deferred tax liabilities | 2,413,918.11 | 1,799,743.40 |
| Other non-current liabilities | ||
| Total non-current liabilities | 795,937,837.26 | 394,983,032.61 |
| Total liabilities | 2,881,252,766.63 | 3,169,439,583.61 |
| Shareholders’ equity: | ||
| Paid-in capital | 1,202,501,992.00 | 1,143,438,492.00 |
| Other equity instruments | ||
| Including: Preference shares | ||
| Perpetual debt | ||
| Capital reserve | 3,958,727,598.88 | 2,930,657,501.76 |
| Less: Treasury shares | 236,625,962.00 | 186,441,914.48 |
| Other comprehensive income | -54,066,268.84 | -84,939,637.21 |
| Special reserve | ||
| Surplus reserve | 660,095,082.13 | 594,794,879.72 |
| Retained earnings | 4,882,191,240.72 | 4,298,560,664.99 |
| Total shareholders’ equity | 10,412,823,682.89 | 8,696,069,986.78 |
| Total liabilities and shareholders’ equity | 13,294,076,449.52 | 11,865,509,570.39 |
3. Consolidated income statement
Unit: CNY
| Item | 2022 | 2021 |
| I. Total revenue | 12,610,189,590.33 | 10,919,683,344.37 |
| Including: Operating proceeds | 12,610,189,590.33 | 10,919,683,344.37 |
| Interest income | ||
| Net earned premiums | ||
| Net fee and commission revenue | ||
| II. Total operating costs | 11,041,030,293.49 | 9,865,931,262.26 |
| Including: Operating cost | 9,266,922,304.75 | 8,176,123,668.50 |
| Interest expense | ||
| Fees and commission expenses | ||
| Surrenders | ||
| Net payments for insurance claims | ||
| Net provision of insurance reserve | ||
| Policyholder dividends | ||
| Reinsurance expense | ||
| Taxes and surcharges | 47,328,748.68 | 36,118,676.84 |
| Selling expenses | 757,228,439.80 | 593,003,103.68 |
| General and administrative expenses | 760,961,439.86 | 686,120,731.06 |
| R&D expenses | 319,444,535.16 | 309,763,366.15 |
| Financial expenses | -110,855,174.76 | 64,801,716.03 |
| Including: Interest expense | 102,114,891.52 | 59,754,089.36 |
| Interest income | 83,482,441.75 | 59,709,415.20 |
| Add: Other income | 50,671,622.68 | 47,550,853.31 |
| Investment income (loss presented by “-”) | 176,927,540.37 | 370,298,858.39 |
| Including: Share of profits or loss of associates and joint ventures | 186,224,854.43 | 253,722,685.68 |
| Gain from derecognition of financial assets measured at amortized cost | ||
| Exchange gain (loss presented by “-”) | ||
| Net exposure hedging gain (loss |
| presented by “-”) | ||
| Gain on changes in fair value (loss presented by “-”) | -50,580,428.04 | -23,610,602.75 |
| Credit impairment loss (loss presented by “-”) | 19,113,580.83 | -44,330,212.07 |
| Assets impairment loss (loss presented by “-”) | -61,324,795.37 | -23,131,165.61 |
| Gain from disposal of assets (loss presented by “-”) | -16,894,964.73 | -3,020,089.44 |
| III. Operating profit (loss presented by “-”) | 1,687,071,852.58 | 1,377,509,723.94 |
| Add: Non-operating income | 1,183,010.44 | 87,347,950.40 |
| Less: Non-operating costs | 20,981,657.35 | 6,324,391.50 |
| IV. Total Profit (total loss presented by “-”) | 1,667,273,205.67 | 1,458,533,282.84 |
| Less: Income tax expense | 222,629,780.80 | 161,218,083.23 |
| V. Net profit (net loss presented by “-”) | 1,444,643,424.87 | 1,297,315,199.61 |
| (1) Classified by operation continuity | ||
| 1. Net profit from continuing operations (net loss presented by “-”) | 1,444,643,424.87 | 1,297,315,199.61 |
| 2. Net profit from discontinuing operations (net loss presented by “-”) | ||
| (2) Classified by ownership | ||
| 1. Net profit attributable to owners of parent company | 1,419,559,507.10 | 1,270,003,396.40 |
| 2. Net profit attributable to non-controlling interests | 25,083,917.77 | 27,311,803.21 |
| VI. Other comprehensive income, net of tax | 345,139,758.35 | -124,287,257.00 |
| Other comprehensive income, net of tax, attributable to owners of the parent company | 344,784,745.95 | -123,936,842.23 |
| (1) Other comprehensive income that will not be reclassified to profit or loss | -57,181,824.00 | 71,842,154.00 |
| 1. Remeasurement gains or losses of a defined benefit plan | -57,181,824.00 | 71,842,154.00 |
| 2. Other comprehensive income using the equity method that will not be reclassified to profit or loss | ||
| 3. Changes in fair value of other equity instrument investments | ||
| 4. Changes in the fair value of the enterprise's own credit risk | ||
| 5. Others | ||
| (2) Other comprehensive income to be reclassified into profit or loss | 401,966,569.95 | -195,778,996.23 |
| 1. Other comprehensive income that can be classified into profit or loss in equity method | 30,873,368.37 | -57,553,901.17 |
| 2. Changes in the fair value of other debt investments | ||
| 3. Amount of financial assets reclassified into other comprehensive |
| income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedging reserves | ||
| 6. Exchange differences on translation of foreign currency financial statements | 371,093,201.58 | -138,225,095.06 |
| 7. Others | ||
| Other comprehensive income, net of tax, attributable to non-controlling interests | 355,012.40 | -350,414.77 |
| VII. Total comprehensive income | 1,789,783,183.22 | 1,173,027,942.61 |
| Total comprehensive income attributable to the owner of the parent company | 1,764,344,253.05 | 1,146,066,554.17 |
| Total comprehensive income attributable to non-controlling interests | 25,438,930.17 | 26,961,388.44 |
| VIII. Earnings per share | ||
| (1) Basic earnings per share | 1.24 | 1.13 |
| (2) Diluted earnings per share | 1.24 | 1.13 |
If a combination of enterprises under common control occurs in the current period, the net profit realized by the combined partybefore the combination: CNY 0.00, and the net profit realized by the combined party in the prior period: CNY 0.00.Legal representative: Qiu Jianping Chief accountant: Ni Shuyi Head of accounting department: Ni Shuyi
4. Profit statement of parent company
Unit: CNY
| Item | 2022 | 2021 |
| I. Operating proceeds | 4,823,927,494.05 | 5,221,628,054.56 |
| Less: Operating costs | 3,916,985,810.07 | 4,191,586,370.63 |
| Taxes and surcharges | 7,125,272.26 | 3,914,655.88 |
| Selling expenses | 157,616,107.21 | 148,931,778.67 |
| Administrative expenses | 158,154,677.59 | 149,112,457.48 |
| R&D expenses | 172,795,285.87 | 179,141,639.18 |
| Financial expenses | -118,107,418.16 | 14,697,466.10 |
| Including: Interest expenses | 61,350,280.13 | 34,320,239.29 |
| Interest income | 81,159,347.99 | 60,903,121.60 |
| Add: Other income | 26,535,450.88 | 30,673,586.63 |
| Investment income (loss presented by “-”) | 212,798,675.79 | 328,237,087.74 |
| Including: Investment income from associates and joint ventures | 185,125,266.05 | 254,321,468.97 |
| Gain from derecognition of financial assets measured at amortized cost (loss presented by “-”) | ||
| Net exposure hedging gain (loss presented by “-”) | ||
| Gain on changes in fair value (loss presented by “-”) | -15,881,175.62 | -10,581,000.00 |
| Credit impairment loss (loss presented by “-”) | -19,083,749.36 | -14,920,249.84 |
| Assets impairment loss (loss presented by “-”) | -766,503.26 | -458,846.42 |
| Gain from disposal of assets (loss presented by “-”) | 70,451.00 | 74,881.50 |
| II. Operating profit (loss presented by “-”) | 733,030,908.64 | 867,269,146.23 |
| Add: Non-operating income | 624.86 | 381,632.32 |
| Less: Non-operating costs | 118,114.79 | 714,318.83 |
| III. Total Profit (total loss presented by "-") | 732,913,418.71 | 866,936,459.72 |
| Less: Income tax expense | 79,911,394.57 | 97,532,338.07 |
| IV. Net Profit (net loss presented by “-”) | 653,002,024.14 | 769,404,121.65 |
| (1) Net profit from continuing operations (net loss presented by “-”) | 653,002,024.14 | 769,404,121.65 |
| (2) Net profit from discontinuing operations (net loss presented by “-”) | ||
| V. Other comprehensive income, net of tax | 30,873,368.37 | -57,553,901.17 |
| (1) Other comprehensive income that will not be reclassified to profit or loss | ||
| 1. Changes arising from the re-measurement of defined benefit plans | ||
| 2. Other comprehensive income using the equity method that will not be reclassified to profit or loss | ||
| 3. Changes in fair value of other equity instrument investments | ||
| 4. Changes in fair value of enterprise’s own credit risk | ||
| 5. Others | ||
| (2) Other comprehensive income to be reclassified to profit or loss | 30,873,368.37 | -57,553,901.17 |
| 1. Other comprehensive income that can be reclassified to profit or loss in equity method | 30,873,368.37 | -57,553,901.17 |
| 2. Changes in fair value of other debt investments | ||
| 3. Change in the fair value of available-for-sale financial assets | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedge reserve | ||
| 6. Exchange differences on translation of foreign currency financial statements | ||
| 7. Others | ||
| VI. Total comprehensive income | 683,875,392.51 | 711,850,220.48 |
| VII. Earnings per share | ||
| (1) Basic earnings per share | ||
| (2) Diluted earnings per share |
5. Consolidated cash flow statement
Unit: CNY
| Item | 2022 | 2021 |
| I. Cash flows from operating activities: | ||
| Cash receipts from the sale of goods and the rendering of services | 12,910,612,353.48 | 10,523,385,725.14 |
| Net increase in customer bank deposits and due to banks and other financial institutions | ||
| Net increase in loans from the central bank | ||
| Net increase in funds borrowed from other financial institutions | ||
| Cash premiums received on original insurance contracts | ||
| Net cash received from re-insurance business | ||
| Net increase in deposits and investments from insurers | ||
| Cash received from interest, fees and commission | ||
| Net increase in funds deposit | ||
| Net increase in repurchase business funds | ||
| Net income from securities trading brokerage business | ||
| Tax refunds received | 767,676,772.01 | 670,357,690.68 |
| Cash received relating to other operating activities | 172,081,769.11 | 160,238,749.92 |
| Sub-total of cash inflows from operating activities | 13,850,370,894.60 | 11,353,982,165.74 |
| Cash paid for purchase of goods and services | 8,589,229,524.03 | 8,138,089,857.73 |
| Net increase in loans and payments on behalf of customers | ||
| Net increase in deposits with central bank and other financial institutions | ||
| Payments for claims for original insurance contracts | ||
| Net increase in funds lent | ||
| Cash paid for interest, fees and commission | ||
| Commissions on insurance policies pai | ||
| Cash paid to and on behalf of employee | 2,037,598,678.58 | 1,806,978,106.79 |
| Cash paid for taxes | 419,820,083.63 | 365,159,229.48 |
| Cash paid relating to other operating activities | 1,171,885,965.97 | 1,025,122,802.07 |
| Sub-total of cash outflows from operating activities | 12,218,534,252.21 | 11,335,349,996.07 |
| Net cash flows from operating activities | 1,631,836,642.39 | 18,632,169.67 |
| II. Cash flows from investment activities: | ||
| Cash received from disposal of investments | 167,680,415.22 | 399,043,604.99 |
| Cash received from investment income | 67,654,596.08 | 121,150,687.38 |
| Net proceeds from disposal of property, intangible assets and other long-term assets | 40,203,072.92 | 50,825,512.05 |
| Cash received from disposal of subsidiaries and other business units | ||
| Cash received relating to other investing activities | 70,195,704.98 | 5,945,450.31 |
| Sub-total of cash inflows from investing activities | 345,733,789.20 | 576,965,254.73 |
| Purchase of property, intangible assets and other non-current assets | 432,498,640.04 | 541,990,133.84 |
| Cash paid for investments | 221,000,000.00 | 321,320,000.00 |
| Net increase in secured loans | ||
| Net cash paid for acquisition of a subsidiary and other operating units | 76,724,758.42 | 923,935,753.71 |
| Cash paid relating to other investing activities | 129,876,712.70 | 2,788,158.98 |
| Sub-total of cash outflows from investment activities | 860,100,111.16 | 1,790,034,046.53 |
| Net cash flows from investment activities | -514,366,321.96 | -1,213,068,791.80 |
| III. Cash flows from financing Activities: | ||
| Cash received from investments | 1,087,601,650.11 | |
| Including: Cash receipts from capital contributions from non-controlling interests of subsidiaries | ||
| Proceeds from borrowings | 3,498,929,736.98 | 3,832,766,206.58 |
| Cash receipts relating to other financing activities | 104,266,666.67 | 583,000,000.00 |
| Sub-total of cash inflows from financing activities | 4,690,798,053.76 | 4,415,766,206.58 |
| Cash paid for repayment of debt | 4,431,592,234.99 | 2,540,690,729.79 |
| Cash payments for distribution of dividends or profit and interest expenses | 84,667,826.94 | 53,626,407.90 |
| Including: Dividends or profit paid to non-controlling shareholders of subsidiaries | 13,170,580.97 | 755,470.43 |
| Cash payments relating to other financing activities | 784,289,697.86 | 290,674,869.30 |
| Sub-total of cash outflows from financing activities | 5,300,549,759.79 | 2,884,992,006.99 |
| Net cash flows from financing activities | -609,751,706.03 | 1,530,774,199.59 |
| IV. Effect of exchange rate change on cash and cash equivalents | 284,522,324.89 | -65,414,554.36 |
| V. Net increase in cash and cash equivalents | 792,240,939.29 | 270,923,023.10 |
| Add: Cash and cash equivalent at the beginning of the period | 4,001,186,241.18 | 3,730,263,218.08 |
| VI. Cash and cash equivalents at the end of the period | 4,793,427,180.47 | 4,001,186,241.18 |
6. Cash flow statement of parent company
Unit: CNY
| Item | 2022 | 2021 |
| I. Cash flows from operating activities: | ||
| Cash receipts from the sale of goods and the rendering of services | 4,918,593,279.27 | 5,540,994,419.37 |
| Tax refunds received | 478,049,259.74 | 539,325,024.06 |
| Cash received relating to other operating activities | 91,105,691.64 | 105,584,100.91 |
| Sub-total of cash inflows from operating activities | 5,487,748,230.65 | 6,185,903,544.34 |
| Cash paid for purchase of goods and services | 3,482,411,796.27 | 4,918,942,931.09 |
| Cash paid to and on behalf of employee | 316,096,416.76 | 287,460,870.76 |
| Cash paid for taxes | 135,425,402.10 | 130,907,197.94 |
| Cash paid for other operating activities | 274,272,238.19 | 329,723,900.32 |
| Sub-total of cash outflows from operating activities | 4,208,205,853.32 | 5,667,034,900.11 |
| Net cash flows from operating activities | 1,279,542,377.33 | 518,868,644.23 |
| II. Cash flows from investment activities: | ||
| Cash received from disposal of investments | 119,399.32 | 52,950,000.00 |
| Cash received from investment income | 78,605,425.60 | 78,486,454.00 |
| Net proceeds from disposal of property, intangible assets and other long-term assets | 731,000.00 | 256,690.72 |
| Cash received from disposal of subsidiaries and other business units | ||
| Cash received relating to other investing activities | 103,688,450.77 | 12,022,084.95 |
| Sub-total of cash inflows from investing activities | 183,144,275.69 | 143,715,229.67 |
| Purchase of property, intangible assets and other non-current assets | 39,019,508.60 | 25,307,503.53 |
| Cash paid for investments | 154,755,189.04 | 1,207,408,860.00 |
| Cash paid for disposal of subsidiaries and other business units | ||
| Cash paid relating to other investing activities | 1,360,257,082.16 | 616,537,578.64 |
| Sub-total of cash outflows from investment activities | 1,554,031,779.80 | 1,849,253,942.17 |
| Net cash flows from investment activities | -1,370,887,504.11 | -1,705,538,712.50 |
| III. Cash flows from financing Activities: | ||
| Cash received from investments | 1,087,601,650.11 | |
| Proceeds from borrowings | 2,986,019,388.00 | 2,985,778,938.56 |
| Cash receipts relating to other financing activities | 18,857,097.90 | 583,000,000.00 |
| Sub-total of cash inflows from financing activities | 4,092,478,136.01 | 3,568,778,938.56 |
| Repayments for debts | 3,637,460,412.39 | 2,197,497,826.00 |
| Cash payments for distribution of dividends or profit and interest expenses | 42,758,384.71 | 29,988,023.43 |
| Cash payments relating to other financing activities | 676,660,516.57 | 216,024,031.31 |
| Sub-total of cash outflows from financing activities | 4,356,879,313.67 | 2,443,509,880.74 |
| Net cash flows from financing activities | -264,401,177.66 | 1,125,269,057.82 |
| IV. Effect of exchange rate changes on cash and cash equivalents | 108,079,052.78 | -20,904,019.78 |
| V. Net increase in cash and cash equivalents | -247,667,251.66 | -82,305,030.23 |
| Add: Cash and cash equivalents at the beginning of the period | 2,205,340,620.44 | 2,287,645,650.67 |
| VI. Cash and cash equivalents at the end of the period | 1,957,673,368.78 | 2,205,340,620.44 |
7. Consolidated statement of changes in shareholders’ equity
Current amount
Unit: CNY
| Item | 2022 | ||||||||||||||
| Shareholders’ equity attributable to parent company | Minority equity | Total shareholders’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Retained profits | Others | Subtotal | |||||
| Preference shares | Perpetual bond | Others | |||||||||||||
| I. Balance at the end of prior year | 1,143,438,492.00 | 2,924,951,844.93 | 186,441,914.48 | -229,774,189.10 | 598,543,176.63 | 6,348,179,336.72 | 10,598,896,746.70 | 214,393,044.14 | 10,813,289,790.84 | ||||||
| Add: Accounting policy changes | 0.00 | ||||||||||||||
| Previous error correction | 0.00 | ||||||||||||||
| erger of enterprises under common control | 0.00 | ||||||||||||||
| Others | 0.00 | ||||||||||||||
| II. Balance at the beginning of the year | 1,143,438,492.00 | 0.00 | 0.00 | 0.00 | 2,924,951,844.93 | 186,441,914.48 | -229,774,189.10 | 0.00 | 598,543,176.63 | 0.00 | 6,348,179,336.72 | 10,598,896,746.70 | 214,393,044.14 | 10,813,289,790.84 | |
| III. Changed during the | 59,063,5 | 0.00 | 0.00 | 0.00 | 1,025,82 | 50,184,047. | 344,784, | 0.00 | 65,300,2 | 0.00 | 1,354,25 | 2,799,05 | 12,188,6 | 2,811,23 | |
| period (decrease presented by “-") | 00.00 | 7,091.60 | 52 | 745.95 | 02.41 | 9,304.69 | 0,797.13 | 48.79 | 9,445.92 | ||||||
| (1) Total comprehensive income | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 344,784,745.95 | 0.00 | 0.00 | 0.00 | 1,419,559,507.10 | 1,764,344,253.05 | 25,438,930.17 | 1,789,783,183.22 | |
| (2) Owner investment and reduction of capital | 59,063,500.00 | 0.00 | 0.00 | 0.00 | 1,012,264,796.24 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,071,328,296.24 | 1,071,328,296.24 | ||
| 1. Common shares invested by the owner | 59,063,500.00 | 0.00 | 0.00 | 0.00 | 1,012,264,796.24 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,071,328,296.24 | 1,071,328,296.24 | ||
| 2. Other equity instrument | 0.00 | ||||||||||||||
| 3. Shares paid taken into shareholder’s equity | 0.00 | ||||||||||||||
| 4. Others | 0.00 | ||||||||||||||
| (3) Profit distribution | 0.00 | 65,300,202.41 | 0.00 | -65,300,202.41 | 0.00 | -13,170,580.97 | -13,170,580.97 | ||||||||
| 1. Transfer to surplus reserve | 0.00 | 65,300,202.41 | 0.00 | -65,300,202.41 | 0.00 | 0.00 | 0.00 | ||||||||
| 2. Transfer to general reserve | 0.00 | 0.00 | |||||||||||||
| 3. Distribution to owners (or shareholders) | -13,170,580.97 | -13,170,580.97 | |||||||||||||
| 4. Others | 0.00 | ||||||||||||||
| (4) Transfer within equity | 0.00 | ||||||||||||||
| 1. Transfer-in from capital reserves | 0.00 | ||||||||||||||
| 2. Transfer- | 0.00 |
| in from surplus reserves | |||||||||||||||
| 3. Loss covered by surplus reserves | 0.00 | ||||||||||||||
| 4. Retained earnings transferred from changes in defined benefit plans | 0.00 | ||||||||||||||
| 5. Retained earnings transferred from other comprehensive income | 0.00 | ||||||||||||||
| 6. Others | 0.00 | ||||||||||||||
| 5. Special reserves | 0.00 | ||||||||||||||
| 1. Current extraction | 0.00 | ||||||||||||||
| 2. Current use | 0.00 | ||||||||||||||
| (6) Others | 0.00 | 0.00 | 0.00 | 0.00 | 13,562,295.36 | 50,184,047.52 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -36,621,752.16 | -79,700.41 | -36,701,452.57 | |
| IV. Balance at the end of the current period | 1,202,501,992.00 | 0.00 | 0.00 | 0.00 | 3,950,778,936.53 | 236,625,962.00 | 115,010,556.85 | 0.00 | 663,843,379.04 | 0.00 | 7,702,438,641.41 | 13,397,947,543.83 | 226,581,692.93 | 13,624,529,236.76 |
Prior amount
Unit: CNY
| Item | 2021 | ||||||||||||||
| Shareholders’ equity attributable to parent company | Minority equity | Total shareholders’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk | Retained profits | Others | Subtotal | |||||
| Preference shares | Perpetual bond | Others | |||||||||||||
| reserve | |||||||||||||||
| I. Balance at the end of prior year | 1,075,247,700.00 | 190,509,257.28 | 2,095,044,541.15 | 105,492,690.23 | -105,837,346.87 | 521,602,764.46 | 5,155,116,352.49 | 8,826,190,578.28 | 211,219,605.02 | 9,037,410,183.30 | |||||
| Add: Accounting policy changes | |||||||||||||||
| Previous error correction | |||||||||||||||
| Combination of enterprises under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of the year | 1,075,247,700.00 | 190,509,257.28 | 2,095,044,541.15 | 105,492,690.23 | -105,837,346.87 | 521,602,764.46 | 5,155,116,352.49 | 8,826,190,578.28 | 211,219,605.02 | 9,037,410,183.30 | |||||
| III. Changed during the period (decrease presented by “-") | 68,190,792.00 | -190,509,257.28 | 829,907,303.78 | 80,949,224.25 | -123,936,842.23 | 76,940,412.17 | 1,193,062,984.23 | 1,772,706,168.42 | 3,173,439.12 | 1,775,879,607.54 | |||||
| (1) Total comprehensive income | -123,936,842.23 | 1,270,003,396.40 | 1,146,066,554.17 | 26,961,388.44 | 1,173,027,942.61 | ||||||||||
| (2) Owner investment and reduction of capital | 68,190,792.00 | -190,509,257.28 | 818,159,478.29 | -105,492,690.23 | 801,333,703.24 | 801,333,703.24 | |||||||||
| 1. Common shares invested by the owner | |||||||||||||||
| 2. Other equity instrument |
| 3. Shares paid taken into shareholder’s equity | |||||||||||||||
| 4. Others | 68,190,792.00 | -190,509,257.28 | 818,159,478.29 | -105,492,690.23 | 801,333,703.24 | 801,333,703.24 | |||||||||
| (3) Profit distribution | 76,940,412.17 | -76,940,412.17 | -755,470.43 | -755,470.43 | |||||||||||
| 1. Transfer to surplus reserve | 76,940,412.17 | -76,940,412.17 | |||||||||||||
| 2. Transfer to general reserve | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -755,470.43 | -755,470.43 | |||||||||||||
| 4. Others | |||||||||||||||
| (4) Transfer within equity | |||||||||||||||
| 1. Transfer-in from capital reserves | |||||||||||||||
| 2. Transfer-in from surplus reserves | |||||||||||||||
| 3. Loss covered by surplus reserves | |||||||||||||||
| 4. Retained earnings transferred from changes in defined benefit plans | |||||||||||||||
| 5. Retained earnings transferred |
| from other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| 5. Special reserves | |||||||||||||||
| 1. Current extraction | |||||||||||||||
| 2. Current use | |||||||||||||||
| (6) Others | 11,747,825.49 | 186,441,914.48 | -174,694,088.99 | -23,032,478.89 | -197,726,567.88 | ||||||||||
| IV. Balance at the end of the current period | 1,143,438,492.00 | 0.00 | 2,924,951,844.93 | 186,441,914.48 | -229,774,189.10 | 598,543,176.63 | 6,348,179,336.72 | 10,598,896,746.70 | 214,393,044.14 | 10,813,289,790.84 |
8. Statement of changes in shareholders’ equity of parent company
Current amount
Unit: CNY
| Item | 2022 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Retained profits | Others | Total shareholders’ equity | |||
| Preference shares | Perpetual bond | Others | ||||||||||
| I. Balance at the end of prior year | 1,143,438,492.00 | 0.00 | 0.00 | 0.00 | 2,930,657,501.76 | 186,441,914.48 | -84,939,637.21 | 0.00 | 594,794,879.72 | 4,298,560,664.99 | 8,696,069,986.78 | |
| Add: Accounting policy changes | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Previous error correction | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| II. Balance at the beginning of the year | 1,143,438,492.00 | 0.00 | 0.00 | 0.00 | 2,930,657,501.76 | 186,441,914.48 | -84,939,637.21 | 0.00 | 594,794,879.72 | 4,298,560,664.99 | 8,696,069,986.78 | |
| III. Changed during the period | 59,063,500.00 | 0.00 | 0.00 | 0.00 | 1,028,070,097.12 | 50,184,047.5 | 30,873,368.37 | 0.00 | 65,300,202.41 | 583,630,575.73 | 1,716,753,696.11 | |
| (decrease presented by “-") | 2 | |||||||||||
| (1) Total comprehensive income | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 30,873,368.37 | 0.00 | 0.00 | 653,002,024.14 | 683,875,392.51 | |
| (2) Owner investment and reduction of capital | 59,063,500.00 | 0.00 | 0.00 | 0.00 | 1,012,264,796.24 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,071,328,296.24 | |
| 1. Common shares invested by the owner | 59,063,500.00 | 0.00 | 0.00 | 0.00 | 1,012,264,796.24 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,071,328,296.24 | |
| 2. Other equity instrument | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 3. Shares paid taken into shareholder’s equity | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 4. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| (3) Profit distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 65,300,202.41 | -65,300,202.41 | 0.00 | |
| 1. Transfer to surplus reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 65,300,202.41 | -65,300,202.41 | 0.00 | |
| 2. Distribution to owners (or shareholders) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 3. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| (4) Transfer within equity | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 1. Transfer-in from capital reserves | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 2. Transfer-in from surplus reserves | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 3. Loss covered by surplus | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| reserves | ||||||||||||
| 4. Retained earnings transferred from changes in defined benefit plans | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 5. Retained earnings transferred from other comprehensive income | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 6. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 5. Special reserves | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 1. Current extraction | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 2. Current use | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| (6) Others | 0.00 | 0.00 | 0.00 | 0.00 | 15,805,300.88 | 50,184,047.52 | 0.00 | 0.00 | 0.00 | -4,071,246.00 | -38,449,992.64 | |
| IV. Balance at the end of the current period | 1,202,501,992.00 | 0.00 | 0.00 | 0.00 | 3,958,727,598.88 | 236,625,962.00 | -54,066,268.84 | 0.00 | 660,095,082.13 | 4,882,191,240.72 | 10,412,823,682.89 |
Prior amount
Unit: CNY
| Item | 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Retained profits | Others | Total shareholders’ equity | |||
| Preference shares | Perpetual bond | Others | ||||||||||
| I. Balance at the end of prior year | 1,075,247,700.00 | 190,509,257.28 | 2,103,492,365.12 | 105,492,690.23 | -27,385,736.04 | 517,854,467.55 | 3,606,096,955.51 | 7,360,322,319.19 | ||||
| Add: Accounting policy changes | ||||||||||||
| Previous error correction | ||||||||||||
| Others | ||||||||||||
| II. Balance at the beginning of the year | 1,075,247,700.00 | 190,509,257.28 | 2,103,492,365.12 | 105,492,690.23 | -27,385,736.04 | 517,854,467.55 | 3,606,096,955.51 | 7,360,322,319.19 | ||||
| III. Changed during the period (decrease presented by “-") | 68,190,792.00 | -190,509,257.28 | 827,165,136.64 | 80,949,224.25 | -57,553,901.17 | 76,940,412.17 | 692,463,709.48 | 1,335,747,667.59 | ||||
| (1) Total comprehensive income | -57,553,901.17 | 769,404,121.65 | 711,850,220.48 | |||||||||
| (2) Owner investment and reduction of capital | 68,190,792.00 | -190,509,257.28 | 818,159,478.29 | -105,492,690.23 | 801,333,703.24 | |||||||
| 1. Common shares invested by the owner | ||||||||||||
| 2. Other equity instrument | ||||||||||||
| 3. Shares paid taken into shareholder’s equity | ||||||||||||
| 4. Others | 68,190,792.00 | -190,509,257.28 | 818,159,478.29 | -105,492,690.23 | 801,333,703.24 | |||||||
| (3) Profit distribution | 76,940,412.17 | -76,940,412.17 | ||||||||||
| 1. Transfer to surplus reserve | 76,940,412.17 | -76,940,412.17 | ||||||||||
| 2. Distribution to owners (or shareholders) | ||||||||||||
| 3. Others | ||||||||||||
| (4) Transfer within equity | ||||||||||||
| 1. Transfer- |
| in from capital reserves | ||||||||||||
| 2. Transfer-in from surplus reserves | ||||||||||||
| 3. Loss covered by surplus reserves | ||||||||||||
| 4. Retained earnings transferred from changes in defined benefit plans | ||||||||||||
| 5. Retained earnings transferred from other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| 5. Special reserves | ||||||||||||
| 1. Current extraction | ||||||||||||
| 2. Current use | ||||||||||||
| (6) Others | 9,005,658.35 | 186,441,914.48 | -177,436,256.13 | |||||||||
| IV. Balance at the end of the current period | 1,143,438,492.00 | 2,930,657,501.76 | 186,441,914.48 | -84,939,637.21 | 594,794,879.72 | 4,298,560,664.99 | 8,696,069,986.78 |
III. Basic Information about the CompanyHangzhou GreatStar Industrial Co., Ltd. (hereinafter referred to as “Company”), formerly known as Hangzhou GreatStar IndustrialLimited., was formed and jointly invested by natural persons Qiu Jianping, Wang Lingling, Li Zheng, Wang Weiyi and Wang Min,and was registered in Hangzhou Administrative Bureau for Industry and Commerce on August 9, 2001. Hangzhou GreatStarIndustrial Co., Ltd. was established by way of an overall change with March 31, 2008 as the base date, and was registered with theHangzhou Administration for Industry and Commerce on July 2, 2008. Its headquarters is located in Hangzhou, Zhejiang Province.
The Company now holds the business license of unified social credit code 91330000731506099D. As of December 31, 2022, theregistered capital was CNY 1,202,501,992.00 and the total number of shares was 1,202,501,992, with the nominal value of CNY 1per share. Among them, there are 49,531,304 outstanding shares subject to selling restrictions and 1,152,970,688 outstandingshares not subject to selling restrictions. The Company's shares have been listed and traded in Shenzhen Stock Exchange since July13, 2010.The Company engages in the tool hardware industry. The main business activities are the R&D, production and sales of hand tools,power tools, laser measurement, storage cabinets and Power Stations. The main products of the Company are hand tools, powertools, laser measurement, storage cabinets and Power Stations.This financial statement was approved for disclosure by the 30th meeting of the 5th session of Board of Directors of the Companyon April 21, 2023.The Company has incorporated 91 subsidiaries, including Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd., ZhejiangGreatStar Tools Limited, Hangzhou GreatStar Tools Limited, Hong Kong GreatStar International Limited, GreatStar Tools USAInc, Arrow Fastener Co., LLC, GreatStar Industrial USA LLC, GreatStar Europe AG, Lista Holding AG, BeA GmbH andZhongshan Kilong Industrial Co., Ltd. in the scope of the consolidated financial statements for the period. For details, see thenotes VI & VII to the financial statements.
4. Basis for preparing financial statements
1. Preparation basis
The Company's financial statements are prepared on a going concern basis.
2. Continuing operation
The Company has no events or circumstances that would cause material doubt about its ability to go as a going concern for the 12months from the end of the reporting period.
5. Important accounting policies and accounting estimates
Specific accounting policies and accounting estimates notes:
The Company has formulated specific accounting policies and estimates for transactions or events such as impairment of financialinstruments, depreciation of fixed assets, amortization of intangible assets, and revenue recognition based on actual production andoperation characteristics.
1. Statement of compliance with accounting standards for business enterprisesThe financial statements prepared by the Company meet the requirements of the accounting standards for business enterprises andtruly and completely reflect the company's financial position, operating results and cash flow and other relevant information.
2. Accounting period
The fiscal year begins on January 1 and ends on December 31 of a calendar year.
3. Business cycle
The operating cycle of the Company's business is relatively short, with 12 months as the liquidity division standard of assets andliabilities.
4. Functional currency
The Company and its domestic subsidiaries adopt CNY as the functional standard currency. Overseas subsidiaries such as HongKong GreatStar International Limited, GreatStar Tools USA, Inc and GreatStar Europe AG have chosen the currency of theaccounting standard for their overseas operations in the main economic environment in which they operate.
5. Accounting treatment methods for combination of enterprises under common control and not undercommon control
1. Accounting treatment methods for business combinations under common control
The assets and liabilities acquired by the Company in the business combination shall be measured according to the book value ofthe combined party in the consolidated financial statements of the ultimate controlling party on the combination date. TheCompany shall adjust the capital reserve according to the difference between the book value share of the shareholders’ equity ofthe combined party in the consolidated financial statements of the ultimate controlling party and the book value of the combinedconsideration paid or the total face value of the issued shares. If the capital reserve is insufficient for write-down, the retainedearnings shall be adjusted.
2. Accounting treatment methods for business combinations not under common control
On the purchase date, the Company recognizes the difference between the cost of the combination and the share of the fair valueof the identifiable net assets of the purchaser obtained in the combination as goodwill. If the combination cost is less than the fairvalue share of the identifiable net assets of the purchaser obtained in the combination, the fair value of the acquired identifiableassets, liabilities and contingent liabilities and the measurement of the combination cost shall be reviewed first. If the combination
cost is still less than the fair value share of the identifiable net assets of the purchaser obtained in the combination, the differenceshall be recorded into profit and loss.
6. Preparation method of consolidated financial statements
The parent company includes all subsidiaries under its control in the consolidated scope of the consolidated financial statements.The consolidated financial statements are based on the financial statements of the parent company and its subsidiaries and areprepared by the parent company in accordance with Accounting Standard for Business Enterprises No. 33 - Consolidated FinancialStatements based on other relevant information.
7. Classification of joint venture arrangement and accounting treatment of joint operation
1. The joint venture arrangement is divided into joint operations and joint venture.
2. When the Company is a joint venture party, the following items related to the share of profits in the joint operation shall berecognized:
(1) Recognize the assets held separately, and confirm the assets held jointly according to the holding share;
(2) Recognize the liabilities undertaken separately and the liabilities jointly undertaken according to the share held;
(3) Recognize the income generated from the sale of the Company's share of joint operation;
(4) Recognize the income generated from the disposal of assets in joint operation according to the shares held by the Company;
(5) Recognize the expenses incurred separately and the expenses incurred by joint operation according to the shares held by theCompany.
8. Criteria for determining cash and cash equivalents
Cash shown in the statement of cash flows refers to cash on hand and deposits available for payment at any time. Cash equivalentsrefer to investments held by enterprises with a short term, strong liquidity, easy to convert into known amounts of cash, and littlerisk of changes in value.
9. Translation of foreign currency business and foreign currency statements
1. Translation of foreign currency business
When a foreign currency transaction is initially recognized, the approximate spot rate of the transaction date shall be convertedinto the CNY amount. On the balance sheet date, foreign currency monetary items shall be converted at the spot exchange rate onthe balance sheet date. The exchange difference arising from the different exchange rates shall be recorded into profit and loss,except for the exchange difference of the principal and interest of special foreign currency loans related to the acquisition andconstruction of assets eligible for capitalization. The foreign currency non-monetary items measured at historical cost shall still be
converted at the approximate spot rate on the date of transaction without changing the CNY amount; The foreign currency non-monetary items measured at fair value shall be converted by the spot exchange rate on the fair value determination date, and thedifference shall be booked into profit and loss or other comprehensive income.
2. Translation of financial statements in foreign currency
The assets and liabilities in the balance sheet shall be converted at the spot exchange rate on the balance sheet date; Theshareholders’ equity items, except the "undistributed profit" items, shall be converted at the spot exchange rate on the transactiondate; The income and expense items in the income statement shall be converted at the approximate spot rate of the transaction date.The difference in translation of foreign currency financial statements resulting from the above-mentioned translation shall beincluded in other comprehensive income.
10. Financial instruments
1. Classification of financial assets and financial liabilities
At the initial recognition, financial assets are divided into the following three categories: (1) Financial assets measured atamortized cost; (2) Financial assets measured at fair value through other comprehensive income; (3) Financial assets measured atfair value through profit and loss.At the initial recognition, financial liabilities are divided into the following four categories: (1) Financial liabilities measured atfair value through profit and loss; (2) Financial liabilities arising from transfers of financial assets that do not qualify forderecognition or from continuing involvement in the transferred financial assets; (3) Financial guarantee contracts that do not fallunder (1) or (2) above, and loan commitments that do not fall under (1) above and lend at below-market rates; (4) Financialliabilities measured at amortized cost.
2. Recognition basis, measurement method and derecognition conditions for financial assets and financial liabilities
(1) Recognition basis and initial measurement method of financial assets and financial liabilitiesWhen the Company becomes a party to a financial instrument contract, it recognizes a financial asset or liability. When financialassets or financial liabilities are initially recognized, they are measured at fair value. For financial assets and financial liabilitiesmeasured at fair value through profit and loss, relevant transaction costs are directly recognized in profit and loss. For other typesof financial assets or financial liabilities, related transaction costs are included in the initial recognized amount. However, if theaccounts receivable initially recognized by the Company does not contain significant financing component or the Company doesnot consider the financing component in the contract less than one year, the initial measurement shall be made in accordance withthe transaction price defined in the Accounting Standards for Business Enterprises No. 14 -- Revenue.
(2) Follow-up measurement methods of financial assets
1) Financial assets measured at amortized cost
Using the effective interest rate method, the follow-up measurement is carried out according to the amortized cost. The gains orlosses arising from financial assets measured at amortized cost and not part of any hedging relationship shall be recognized inprofit or loss upon derecognition, reclassification, amortization according to the effective interest rate method or recognition ofimpairment.
2) Investment in debt instruments measured at fair value and whose changes are included in other comprehensive incomeFair value is used for subsequent measurement. Interest, impairment losses or gains and exchange gains and losses calculatedusing the effective interest rate method are included in profit and loss, while other gains or losses are included in othercomprehensive income. Upon derecognition, the accumulated gains or losses previously recognized in other comprehensiveincome shall be transferred out of other comprehensive income and recognized in profit and loss.
3) Investment in equity instruments measured at fair value through other comprehensive income
Fair value is used for subsequent measurement. The dividends obtained (except the part of investment cost recovery) are includedin the profit and loss, and other gains or losses are included in other comprehensive income. Upon derecognition, the accumulatedgains or losses previously recorded in other comprehensive income are transferred out of other comprehensive income andrecognized in retained earnings.
4) Financial assets measured at fair value through profit and loss
The fair value is adopted for subsequent measurement, and the resulting gain or loss (including interest and dividend income) isrecognized in profit and loss, unless the financial asset is a part of the hedge relationship.
(3) Follow-up measurement methods of financial liabilities
1) Financial liabilities measured at fair value through profit and loss
Such financial liabilities include trading financial liabilities (including derivative instruments belonging to financial liabilities) andfinancial liabilities designated as measured at fair value through profit and loss. Follow-up measurement of such financialliabilities is recognized at fair value. Changes in the fair value of financial liabilities designated as measured at fair value throughprofit and loss due to changes in the Company's own credit risks are recognized in other comprehensive income unless accountingmisallocation in profit and loss is caused or extended by such adjustment. Other gains or losses arising from such financialliabilities (including interest expense, except changes in fair value caused by changes in the Company's own credit risk) arerecognized in profit or loss, unless the financial liabilities are part of the hedging relationship. Upon derecognition, theaccumulated gains or losses previously recorded in other comprehensive income are transferred out of other comprehensiveincome and recognized in retained earnings.
2) Financial liabilities arising from transfers of financial assets that do not qualify for derecognition or from continuinginvolvement in the transferred financial assetsMeasurement is carried out in accordance with relevant provisions in the Accounting Standards for Business Enterprises No. 23 -Financial assets transfer.
3) Financial guarantee contracts that do not fall under 1) or 2) above, and loan commitments that do not fall under 1) and lend atbelow-market ratesAfter the initial recognition, subsequent measurement shall be made in accordance with the higher of the following two amounts:
(1) the loss reserve amount determined in accordance with the impairment provisions of financial instruments; (2) The balance ofthe initial recognized amount after deducting the accumulated amortization amount determined in accordance with the relevantprovisions of the Accounting Standards for Business Enterprises No. 14 -- Income.
4) Financial liabilities measured at amortized cost
The effective interest rate method is adopted to measure the amortized cost. The gains or losses arising from financial liabilitiesmeasured at amortized cost and not part of any hedging relationship shall be recognized in profit and loss upon derecognition andamortization according to the effective interest rate method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets shall be derecognized when one of the following conditions is met:
① The contractual right to collect cash flows of financial assets has been terminated;
② The financial assets have been transferred, and the transfer meets the provisions related to derecognition of financial assets inthe Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets.
2) When the current obligation of the financial liabilities (or part thereof) has been discharged, financial liabilities (or part thereof)shall be derecognized accordingly.
3. Confirmation basis and measurement method of financial asset transfer
If the Company transfers almost all risks and rewards in the ownership of financial assets, it shall derecognize such financial assetsand separately recognize the rights and obligations generated or retained in the transfer as assets or liabilities. Those who retainalmost all risks and rewards in the ownership of financial assets continue to recognize the transferred financial assets. If thecompany neither transfers nor retains almost all the risks and rewards in the ownership of the financial asset, it shall deal with the
following cases respectively: (1) If it does not retain the control over the financial asset, it shall derecognize the financial asset andseparately recognize the rights and obligations generated or retained in the transfer as assets or liabilities; (2) If the control of thefinancial assets is retained, the relevant financial assets shall be recognized according to the degree of continued involvement inthe transferred financial assets, and the relevant liabilities shall be recognized accordingly.If the overall transfer of financial assets meets the conditions for termination of recognition, the difference between the followingtwo amounts shall be recorded into current profit and loss: (1) Book value of the transferred financial assets on the date ofderecognition; (2) The sum of the consideration received for the transfer of financial assets and the amount corresponding to thepart of termination of recognition in the accumulative amount of the change in fair value directly included in other comprehensiveincome (the financial assets involved in the transfer are debt instrument investment measured at fair value through othercomprehensive income). If a part of the financial asset is transferred and the transferred part satisfies the conditions forderecognition, the book value of the whole financial asset before transfer shall be apportioned between the part of termination ofrecognition and the part of continued recognition according to their relative fair value on the transfer date, and the difference of thefollowing two amounts shall be recognized in profit and loss: (1) Book value of the part of termination of recognition; (2) The sumof the consideration for the part of termination of recognition and the amount corresponding to the part of derecognition in theaccumulated amount of the change in fair value directly included in other comprehensive income (the financial assets involved inthe transfer are the debt instrument investment measured at fair value through other comprehensive income).
4. Methods for determining the fair value of financial assets and financial liabilities
The Company determines the fair value of the relevant financial assets and financial liabilities using valuation techniquesapplicable in the current circumstances and supported by sufficient available data and other information. The Company divides theinput values used by the valuation technology into the following levels and uses them successively:
(1) The input value of the first level is the unadjusted quotation of the same asset or liability available on the measurement date inthe active market;
(2) The input value of the second level is the directly or indirectly observable input value of related assets or liabilities except theinput value of the first level, including the quotation of similar assets or liabilities in the active market; quotation of the same orsimilar assets or liabilities in inactive markets; observable input values other than quotes, such as interest rates and yield curvesthat are observable during normal quotation intervals; and market validation input values;
(3) The input values of the third level are the unobtainable input values of related assets or liabilities, including interest rates thatcannot be directly observed or verified by observable market data, stock volatility, future cash flows of the disposal obligationsundertaken in the enterprise combination, and financial forecasts made using their own data.
5. Impairment of financial instruments
(1) Measurement and accounting treatment of impairment of financial instruments
Based on expected credit losses, the Company shall make provisions for impairment and recognize loss reserve with respect tofinancial assets measured at amortized cost, investment in debt instruments measured at fair value through other comprehensiveincome, contract assets, lease receivables, loan commitments other than financial liabilities classified as measured at fair valuethrough profit and loss, financial liabilities not measured at fair value through profit and loss, or financial guarantee contracts forfinancial liabilities arising from transfers of financial assets that do not qualify for derecognition or from continuing involvementin the transferred financial assets.Expected credit loss refers to the weighted average of credit loss of financial instruments weighted by the risk of default. Creditloss refers to the difference between all contract cash flows receivable by the company at the original actual interest rate and allcash flows expected to be collected, i.e., the present value of all cash shortages. The financial assets purchased or originated by theCompany that have suffered credit impairment shall be discounted according to the actual credit-adjusted interest rate of thefinancial assets.
For the financial assets purchased or originated by the Company that have suffered credit impairment , the Company will onlyrecognize the cumulative changes in expected credit losses in the entire duration since the initial recognition as a loss reserve at thebalance sheet date.For receivables and contract assets formed from transactions regulated by Accounting Standard for Business Enterprises No. 14 --Revenue and without significant financing component or the Company does not consider the financing component in contracts lessthan one year, the Company uses simplified measurement method to measure the loss reserve in accordance with the expectedcredit loss amount equivalent to the entire duration.For financial assets other than those measured in the above manners, the Company evaluates at each balance sheet date whethertheir credit risk has increased significantly since the initial recognition. If the credit risk has increased significantly since the initialrecognition, the Company measures the loss reserve in accordance with the amount of expected credit losses during the entireduration. If the credit risk does not increase significantly since the initial recognition, the Company measures the loss reserve inaccordance with the amount of expected credit losses on the financial instrument within the next 12 months.The Company uses reasonably available and evidence-based information, including forward-looking information to determinewhether the credit risk of the financial instruments has increased significantly since the initial recognition by comparing the risk ofdefault on the financial instruments as of the balance sheet date with the risk of default on the initial recognition date.At the balance sheet date, if the Company determines that a financial instrument has only low credit risk, it is assumed that thecredit risk of the financial instrument has not increased significantly since the initial recognition.The Company evaluates expected credit risk and measures expected credit losses on the basis of individual financial instruments orcombinations of financial instruments. When the combination of financial instruments is based, the Company divides the financialinstruments into different combinations based on common risk characteristics.The company will remeasure the expected credit losses on each balance sheet date, and the resulting increase or reversal of lossreserves will be recorded into current profit and loss as impairment losses or gains. For a financial asset measured at amortizedcost, the loss reserve shall be used to offset the carrying value of the financial asset listed in the balance sheet. For creditor's rightsinvestment measured at fair value and whose changes are included in other comprehensive income, the Company recognizes itsloss reserve in other comprehensive income and does not offset the carrying value of the financial asset.
(2) A financial instrument that evaluates expected credit risk by portfolio and adopts a three-stage model to measure expectedcredit losses
| Item | Basis for determining the combination | Method of measuring expected credit losses |
| Other receivables -- aging combination | Aging | With reference to historical credit loss experience, combined with the current situation and the forecast of future economic conditions, the expected credit loss is calculated by default risk exposure and the expected credit loss rate within the next 12 months or the whole duration |
| Other receivables -- collections of related party funds within the scope of consolidated receivables | Associated transactions within the scope of consolidation | With reference to historical credit loss experience, combined with the current situation and the forecast of future economic conditions, the expected credit loss is calculated by default risk exposure and the expected credit loss rate within the next 12 months or the whole duration |
(3) Adopt simplified measurement method to measure receivables and contract assets of expected credit losses by combination
1) Specific combinations and methods for measuring expected credit losses
| Item | Basis for determining the combination | Method of measuring expected credit losses |
| Banker's acceptance receivable | Type of bill | By referring to the historical credit loss experience, combining the current situation and the forecast of the future economic situation, the expected credit loss is calculated through the default risk exposure and the expected credit loss rate of the whole duration |
| Trade acceptance receivables |
| Accounts receivable -- aging combination | Aging | By referring to the historical credit loss experience, combining the current situation and the forecast of the future economic situation, the comparison table between the aging receivable and the expected credit loss rate in the whole duration is prepared to calculate the expected credit loss |
2) Accounts receivable -- comparison table of aging combination and expected credit loss rate over the whole duration
| Aging | Accounts receivable Expected credit loss ratio (%) |
| Within 1 year (inclusive, the same below) | 5 |
| 1-2 years | 10 |
| 2-3 years | 20 |
| 3-4 years | 30 |
| 4-5 years | 50 |
| More than 5 years | 100 |
6. Offset of financial assets and financial liabilities
Financial assets and financial liabilities are shown separately in the balance sheet and do not offset each other. Provided that thefollowing conditions are met meanwhile, the Company shall show the net amount after offsetting each other in the balance sheet:
(1) The Company has the legal right to offset the confirmed amount, and such legal right is currently enforceable; (2) TheCompany plans to settle on a net basis, or meanwhile realize the financial assets and settle the financial liabilities.If the transfer of financial assets does not meet the conditions for termination of recognition, the Company shall not offset thetransferred financial assets and related liabilities.
11. Notes receivable
The notes receivable has a short maturity, low default risk and strong ability to fulfill the contract cash flow obligation in the shortterm, and therefore the Company regards notes receivable as a financial instrument with low credit risk and directly makes theassumption that the credit risk has not increased significantly since the initial recognition. Considering that the historical defaultrate is zero, the Company's fixed non-performing debt ratio for notes receivable is 0.
12. Accounts receivable
For details, see V “Major Accounting Policies and Accounting Estimates”, 10 “Financial Instruments”.
13. Financing of receivables
For details, see V “Major Accounting Policies and Accounting Estimates”, 10 “Financial Instruments”.
14. Other receivables
Methods of determining and accounting for expected credit losses of other receivablesFor details, see V “Major Accounting Policies and Accounting Estimates”, 10 “Financial Instruments”.
15. Inventory
1. Classification of inventory
Inventory includes finished products or commodities held for sale in daily activities, products in the production process, materialsand supplies consumed in the production process or in the provision of services.
2. Valuation method for issuing inventory
The monthly weighted average method is adopted for issuing inventory.
3. The basis for determining the net realizable value of inventory
On the balance sheet date, the inventory shall be measured by the lower of cost and net realizable value, and the inventorydepreciation reserve shall be drawn according to the difference between the cost and net realizable value of a single inventory. Thenet realizable value of the inventory directly used for sale shall be determined by the estimated selling price of the inventory lessestimated selling expenses and related taxes in the normal course of production and operation. For inventories that need to beprocessed, the net realizable value shall be determined by the estimated selling price of finished products produced in the normalcourse of production and operation after deducting the estimated cost, estimated selling expenses and related taxes to be incurredupon completion. On the balance sheet date, if a part of the same inventory has a contract price, but the other part does not have acontract price, its net realizable value shall be determined respectively, and the corresponding cost shall be compared with it todetermine the amount to be withdrawn or transferred back from the reserve for inventory declines respectively.
4. Inventory system
The inventory system is the perpetual inventory system.
5. Amortization method of low-value consumable products and packaging
(1) Low-value consumable products
Amortization is carried out in accordance with the one-time resale method.
(2) Packaging
Amortization is carried out in accordance with the one-time resale method.(XII) Contract costThe assets related to contract cost include contract acquisition cost and contract performance cost.The incremental cost incurred by the company to acquire the contract is expected to be recovered and recognized as an asset as thecontract acquisition cost. If the amortization period of contract acquisition costs does not exceed one year, it is recognized directlyin profit and loss when incurred.The cost incurred by the Company for the performance of the contract, which does not apply to the scope of relevant standardssuch as inventory, fixed assets or intangible assets and meets the following conditions, shall be recognized as an asset as theperformance cost of the contract:
1. The costs are directly related to a current or prospective contract, including direct labor, direct materials, manufacturingexpenses (or similar expenses), costs expressly borne by the customer and other costs incurred solely as a result of the contract;
2. The cost increases the Company's resources for future performance obligations;
3. The cost is expected to be recovered.
The Company amortizes the assets related to the contract cost on the same basis as the commodity or service revenue recognitionrelated to the asset and recognizes them in profit and loss.If the carrying value of the asset related to the contract cost is higher than the remaining consideration expected to be obtainedfrom the transfer of the commodity or service related to the asset minus the estimated cost to be incurred, the Company shall setaside an impairment reserve for the excess part and recognize it as an asset impairment loss. The factors of impairment in the priorperiod change after the transfer, so that if the remaining consideration expected to be obtained minus the estimated cost to beincurred is higher than the book value of the asset, the original asset impairment reserve has been withdrawn and recorded into thecurrent profit and loss. However, the carrying value of the asset after conversion shall not exceed the carrying value of the asset onthe date of conversion under the assumption that no impairment provision is made.
16. Contract assets
The Company shall list the contractual assets or contractual liabilities in the balance sheet according to the relationship betweenthe performance of the obligations and the payment of the customer. The Company presents contract assets and contract liabilitiesunder the same contract on a net basis after offsetting them against each other.The Company shows as receivables its right to collect consideration from the customer unconditionally (that is, depending only onthe passage of time), and its right to collect consideration for goods transferred to the customer (which depends on factors otherthan the passage of time) as contractual assets.
17. Contract cost
The assets related to contract cost include contract acquisition cost and contract performance cost.The incremental cost incurred by the company to acquire the contract is expected to be recovered and recognized as an asset as thecontract acquisition cost. If the amortization period of contract acquisition costs does not exceed one year, it is recognized directlyin profit and loss when incurred.The cost incurred by the Company for the performance of the contract, which does not apply to the scope of relevant standardssuch as inventory, fixed assets or intangible assets and meets the following conditions, shall be recognized as an asset as theperformance cost of the contract:
1. The costs are directly related to a current or prospective contract, including direct labor, direct materials, manufacturingexpenses (or similar expenses), costs expressly borne by the customer and other costs incurred solely as a result of the contract;
2. The cost increases the Company's resources for future performance obligations;
3. The cost is expected to be recovered.
The Company amortizes the assets related to the contract cost on the same basis as the commodity or service revenue recognitionrelated to the asset and recognizes them in profit and loss.If the carrying value of the asset related to the contract cost is higher than the remaining consideration expected to be obtainedfrom the transfer of the commodity or service related to the asset minus the estimated cost to be incurred, the Company shall setaside an impairment reserve for the excess part and recognize it as an asset impairment loss. The factors of impairment in the priorperiod change after the transfer, so that if the remaining consideration expected to be obtained minus the estimated cost to beincurred is higher than the book value of the asset, the original asset impairment reserve has been withdrawn and recorded into thecurrent profit and loss. However, the carrying value of the asset after conversion shall not exceed the carrying value of the asset onthe date of conversion under the assumption that no impairment provision is made.
18. Assets held for sale
1. Classification of non-current assets held for sale or disposal groups
Non-current assets or disposal groups are classified as assets held for sale by the Company if they both meet the followingconditions: (1) They can be immediately sold under current conditions, as is customary for the sale of such assets or disposalgroups in similar transactions; (2) A sale is highly likely to occur, that is, the Company has decided on the sale plan and obtainedfirm purchase commitments, and the sale is expected to be completed within one year.Non-current assets or disposal groups acquired by the Company specifically for resale shall be classified as assets held for sale onthe acquisition date if they meet the condition that the sale is expected to be completed within one year and are likely to meet otherclassification conditions for the held-for-sale category within a short period (usually three months).
If the transaction between non-related parties is not completed within one year due to one of the following reasons beyond thecontrol of the Company and the Company remains committed to selling the non-current assets or disposal group, the non-currentassets or disposal group shall continue to be classified as assets held for sale: (1) The Purchaser or any other party sets conditionsthat lead to the postponement of the Sale, and the Company has acted in a timely manner in respect of such conditions and expectsto be able to successfully resolve the postponement factors within one year from the date of setting conditions that lead to thepostponement of the Sale; (2) Due to the occurrence of rare circumstances that cause the non-current assets held for sale or thedisposal group to fail to complete the sale within one year, the Company has taken necessary measures in response to these newcircumstances and re-satisfied the classification conditions of the categories held for sale within the first one year.
2. Measurement of non-current assets held for sale or disposal groups
(1) Initial measurement and subsequent measurement
When the non-current assets or disposal groups held for sale are initially measured or remeasured on the balance sheet date, if thecarrying value is higher than the net amount after the fair value minus the selling expense, the carrying value shall be written downto the net amount after the fair value minus the selling expense, and the amount written down shall be recognized as the assetimpairment loss and included in profit and loss. Meanwhile, the impairment provisions of the assets held for sale shall berecognized.Initial measurement amount of the non-current assets or disposal groups classified as assets held for sale on the acquisition date isthe lower of initial measurement amount assuming that they are not classified as assets held for sale and the net fair value afterdeducting selling expenses are compared. Except for the non-current assets or disposal group acquired in the enterprisecombination, the difference generated by the net amount of the fair value minus the sale expense of the non-current assets ordisposal group as the initial measurement amount shall be recorded in profit and loss.As for the amount of asset impairment loss recognized by the disposal group held for sale, the carrying value of goodwill in thedisposal group shall be offset first, and then the carrying value shall be offset proportionally according to the proportion of thecarrying value of various non-current assets in the disposal group.Non-current assets held for sale or in the disposal group are not depreciated or amortized, and interest and other expenses ofliabilities in the disposal group held for sale continue to be recognized.
(2) Accounting treatment for reversal of asset impairment loss
If the net amount of the fair value of the non-current assets held for sale after subtracting the selling expense increases on thesubsequent balance sheet date, the amount previously written down shall be restored and reversed within the amount of assetimpairment loss recognized after being classified as assets held for sale, and the reversed amount shall be recorded in profit andloss. Asset impairment losses recognized before being classified as assets held for sale are not reversed.If the net amount of the fair value of the disposal group held for sale after subtracting the selling expense increases on thesubsequent balance sheet date, the amount previously written down shall be restored and reversed within the amount of assetimpairment loss recognized after the non-current assets are classified as held for sale, and the reversed amount shall be included inprofit and loss. The carrying value of goodwill that has been written off and the asset impairment losses recognized before the non-current assets are classified as assets held for sale are not reversed.The subsequent reversed amount of asset impairment loss recognized by the disposal group held for sale shall be increased inproportion to the carrying value of various non-current assets except goodwill in the disposal group.
(3) Accounting treatment for assets no longer classified as held-for-sale category and derecognitionWhen non-current assets or disposal groups are no longer classified as assets held for sale because they no longer meet theconditions for classification of the held-for-sale class or non-current assets are removed from the held-for-sale disposal group, themeasurement shall be at the lower of the following: 1) Book value before it is classified as assets held for sale, adjusted fordepreciation, amortization or impairment that would have been recognized if it were not classified as assets held for sale; and 2)reversible amount.
When the non-current assets held for sale or disposal group is derecognized, the unrecognized gains or losses shall be booked inprofit and loss.
19. Long-term equity investment
1. Judgment of joint control and significant influence
There is common control over an arrangement in accordance with relevant provisions, and the relevant activities of thearrangement can only be decided after the consensus of the participants who share the control right, which is deemed as jointcontrol. Having the power to participate in the decision-making of the financial and operational policies of the investee, but notbeing able to control or jointly control the formulation of these policies with other parties, shall be regarded as having significantinfluence.
2. Determination of investment cost
(1) For the combination of enterprises under common control, if the merging party pays cash, transfers non-cash assets, assumesdebt or issues equity securities as the combination consideration, the initial investment cost shall be based on the book value of theshareholders’ equity of the combined party acquired in the consolidated financial statements of the ultimate controlling party onthe combination date. The capital reserve shall be adjusted by the difference between the initial investment cost of long-termequity investment and the book value of the combined consideration paid or the total face value of the issued shares. If the capitalreserve is insufficient for write-down, the retained earnings shall be adjusted.The Company realizes long-term equity investment formed by enterprise combination under common control step by step throughmultiple transactions to judge whether it is a package transaction. In the case of a package transaction, each transaction isaccounted for as one transaction in which control is acquired. If it is not a package transaction, the initial investment cost shall bedetermined on the combination date according to the share of the book value of the consolidated party's net assets in theconsolidated financial statements of the ultimate controlling party after the combination. The capital reserve shall be adjusted bythe difference between the initial investment cost of long-term equity investment on the combination date and the sum of the bookvalue of long-term equity investment before the combination and the book value of the new payment consideration of sharesfurther acquired on the combination date. If the capital reserve is insufficient for write-down, the retained earnings shall beadjusted.
(2) If it is formed by the combination of enterprises not under common control, the fair value of the combination considerationpaid on the purchase date shall be taken as the initial investment cost.The Company realizes long-term equity investment formed by enterprise consolidation under different control step by step throughmultiple transactions, and conducts relevant accounting treatment by differentiating individual financial statements andconsolidated financial statements:
1) In individual financial statements, the sum of the book value of the original equity investment plus the cost of the newinvestment shall be used as the initial investment cost calculated according to the cost method.
2) Determine whether it is a package transaction in the consolidated financial statements. In the case of a package transaction, eachtransaction is accounted for as one transaction in which control is acquired. If it does not belong to the package transaction, theequity held by the purchaser before the purchase date shall be remeasured according to the fair value of the equity on the purchasedate, and the difference between the fair value and the carrying value shall be included in the current investment income. If theequity held by the purchaser before the purchase date involves other comprehensive income under the equity method, othercomprehensive income related thereto shall be converted into the current income of the purchase date, except other comprehensiveincome arising from changes in net liabilities or net assets of the invested party due to remeasurement of the defined benefit plan.
(3) Other than the enterprise combination: In case of cash payment, the purchase price actually paid shall be regarded as the initialinvestment cost. Where equity securities are issued, the fair value of the equity securities issued shall be taken as the initialinvestment cost. If it is obtained through debt restructuring, its initial investment cost shall be determined according to AccountingStandards for Business Enterprises No. 12 - Debt Restructuring. If it is obtained by exchange of non-monetary assets, its initial
investment cost shall be determined according to Accounting Standards for Business Enterprises No. 7 - Exchange of non-monetary Assets.
3. Follow-up measurement and profit and loss recognition methods
The long-term equity investment controlled by the invested entity shall be accounted by cost method. Long-term equityinvestments in associates and joint ventures shall be accounted for by the equity method.
4. The method of disposing the investment in the subsidiary company step by step through multiple transactions until the loss ofcontrol
(1) Individual financial statements
The difference between the book value and the actual purchase price of the disposed equity shall be booked into profit and loss.For the remaining equity, which still has a significant influence on the invested entity or is under joint control with other parties, itshall be converted to the equity method of accounting. If it is no longer able to control, jointly control or have significant influenceon the invested entity, the accounting shall be carried out in accordance with the relevant provisions of the Accounting Standardsfor Business Enterprises No. 22 -- Recognition and Measurement of Financial Instruments.
(2) Consolidated financial statements
1) Disposal of the investment in the subsidiary step by step through multiple transactions until the control right is lost and it is nota package transactionBefore the loss of control, the disposal price and the disposal of long-term equity investment shall be entitled to the differencebetween the net asset share continuously calculated by the subsidiary since the purchase date or the combination date, and thecapital reserve (capital premium) shall be adjusted. If the capital premium is insufficient, the retained earnings shall be deducted.When the control of original subsidiary is lost, the remaining equity shall be remeasured according to its fair value on the date ofthe loss of control. The sum of the consideration obtained from the disposal of the equity and the fair value of the remaining equity,minus the difference between the shares of the original shareholding proportion which shall enjoy the net assets continuouslycalculated from the purchase date or combination date of the original subsidiary, shall be included in the investment income of theperiod of loss of control, and the goodwill shall be written down meanwhile. Other comprehensive income related to the equityinvestment of the original subsidiary shall be converted to current investment income when the right of control is lost.
2) Disposal of the investment in the subsidiary step by step through multiple transactions until the control right is lost and it is apackage transactionEach transaction shall be treated as a transaction for the disposal of a subsidiary and loss of control. However, the differencebetween the disposal price and the disposal investment corresponding to the share of the net assets of the subsidiary before the lossof the right of control shall be recognized as other comprehensive income in the consolidated financial statements and transferredto the profit and loss of the period when the right of control is lost.
20. Investment real estate
Investment real estate measurement modelCost method measurementDepreciation or amortization method
1. Investment real estate includes leased land use right, land use right held and ready to be transferred after appreciation and leasedbuildings.
2. The initial measurement of investment real estate shall be based on the cost, the subsequent measurement shall be carried out inthe cost mode, and the depreciation or amortization shall be carried out in the same way as that of fixed assets and intangible assets.
21. Fixed assets
(1) Recognition conditions
Fixed assets refer to tangible assets that are held for the production of commodities, the provision of labor services, the lease or theoperation and management, and whose service life exceeds one fiscal year. Fixed assets are recognized when economic benefitsare likely to flow in and costs can be measured reliably.
(2) Depreciation method
| Category | Depreciation method | Depreciation life | Residual value rate | Annual depreciation rate |
| Houses and buildings | Average years method | 20-25 years | 0%, 5% | 5.00% - 3.80% |
| General purpose equipment | Average years method | 3-10 years | 0%, 10% | 33.33%-9.00% |
| Special equipment | Average years method | 5-15 years | 0%, 10% | 20.00%-6.00% |
| Means of transport | Average years method | 4-10 years | 5%, 10% | 23.75%-9.00% |
(3) Identification basis, valuation and depreciation method of fixed assets leased by financingIf one or more of the following criteria is met, it shall be regarded as a finance lease: (1) When the lease term expires, theownership of the leased asset is transferred to the lessee; (2) The lessee has the option to purchase the leased asset, and thepurchase price concluded is expected to be far lower than the fair value of the leased asset when the option is exercised, so it isreasonably certain that the lessee will exercise this option on the commencement date of the lease; (3) Even if the ownership of theasset is not transferred, the lease period accounts for the majority of the useful life of the leased asset [usually more than 75%(inclusive) of the useful life of the leased asset]; (4) The present value of the minimum lease payment of the lessee on thebeginning date of the lease, which is almost equivalent to the fair value of the leased asset on the beginning date of the lease [morethan 90% (inclusive)]; The present value of the minimum lease payment of the lessor on the lease commencement date, which isalmost equivalent to the fair value of the leased asset on the lease commencement date [more than 90% (inclusive)]; and (5) Thenature of the leased assets is special, if there is no major transformation, only the lessee can use it. For the fixed assets underfinancing lease, the lower of the fair value of the leased assets on the date of lease commencement and the current value of theminimum lease payment shall be recognized and depreciation shall be calculated and deducted according to the depreciationpolicy of the self-owned fixed assets.
22. Construction in progress
1. The construction in progress will be recognized when the financial benefit is likely to flow in, and the cost can be reliablymeasured. The construction in progress is measured at the actual cost incurred before the construction of the asset reaches apredetermined usable state.
2. When the project under construction reaches the predetermined usable state, it shall be transferred to fixed assets according tothe actual cost of the project. If it has reached the predetermined serviceable state but has not yet handled the final accounting forcompletion, it shall first transfer the estimated value to the fixed assets, and after the final accounting for completion, it shall adjustthe original provisional estimated value according to the actual cost, but no longer adjust the depreciation that has already beendrawn.
23. Borrowing costs
1. Recognition principle of capitalization of borrowing costs
If the borrowing expenses incurred by the Company can be directly attributed to the purchase, construction or production of assetsthat meet the capitalization conditions, they shall be capitalized and included into the cost of the relevant assets. Other borrowingexpenses shall be recognized as expenses when incurred and recorded into profit and loss.
2. Period of capitalization of borrowing costs
(1) Capitalization begins when the borrowing cost meets the following conditions: 1) Asset expenditure has been incurred; 2) Theborrowing cost has been incurred; 3) The purchase, construction or production activities necessary to bring the assets to apredetermined usable or marketable state have begun.
(2) If the assets eligible for capitalization are abnormally interrupted in the process of purchase, construction or production, andthe interruption time is more than 3 months, the capitalization of borrowing costs will be suspended. The borrowing costs incurredduring the interruption period are recognized as current expenses until the purchase and construction of assets or productionactivities are restarted.
(3) When the assets purchased, built or produced in line with the capitalization conditions reach a predetermined useable orsaleable state, the capitalization of borrowing costs ceases.
3. Capitalization rate and capitalization amount of borrowing costs
When a special loan is borrowed for the purchase, construction or production of assets that meet the capitalization conditions, theinterest expense actually incurred in the current period of the special loan (including the amortization of discount or premiumdetermined according to the effective rate method), less the amount of interest income obtained from depositing the loan funds notyet used in the bank or investment income obtained from making temporary investment, Determining the amount of interest to becapitalized. Where the general loan is occupied for the purchase, construction or production of assets conforming to thecapitalization conditions, the amount of interest to be capitalized for the general loan shall be calculated and determined accordingto the weighted average of the accumulated asset expenditure exceeding the special loan's asset expenditure multiplied by thecapitalization rate of the occupied general loan.
24. Right-to-use assets
1. Recognition conditions for the right-to-use assets
The right to use assets refers to the right of the company as the lessee to use the leased assets during the lease term. The Companyshall confirm the right-to-use assets of the lease on the commencement date of the lease term. Right-to-use assets are recognizedwhen economic benefits are likely to flow in and costs can be measured reliably.
2. Initial measurement of right-to-use assets
The right-to-use assets are initially measured according to the cost, which includes: (1) The initial measurement amount of thelease liability; (2) The amount of the lease payment paid on or before the commencement date of the lease term, if there is leaseincentive, the amount related to the lease incentive already enjoyed shall be deducted; (3) Initial direct expenses incurred by lessee;
(4) The estimated costs incurred by the Lessee for dismantling and removing the leased assets, restoring the premises where theleased assets are located, or restoring the leased assets to the state agreed in the lease terms.
3. Follow-up measurement of right-to-use assets
(1) The Company adopts the cost model to carry out follow-up measurement of the right-to-use assets.
(2) The Company shall calculate and depreciate the right-to-use assets. If the ownership of the leased asset can be reasonablydetermined at the end of the lease term, the company shall calculate and withdraw depreciation within the remaining service life ofthe leased asset. If it is not reasonably certain that the ownership of the leased asset can be acquired at the end of the lease term,the Company shall calculate and withdraw depreciation during the short period between the lease term and the remaining servicelife of the leased asset.
(3) When the company re-measures the lease liability according to the current value of the changed lease payment amount andadjusts the book value of the right-to-use asset accordingly, if the book value of the right-to-use asset has been reduced to zero, butthe lease liability still needs to be further reduced, the remaining amount shall be recorded into the current profit and loss.
25. Intangible assets
(1) Valuation method, service life and impairment test
1. Intangible assets, including land ownership, land use right, patent right, trademark right, proprietary technology, managementsoftware and pollutant discharge right, shall be initially measured according to cost.
2. Intangible assets with limited service life shall be systematically and reasonably amortized within the service life according tothe expected realization mode of the economic benefits related to the intangible assets. If the expected realization mode cannot bereliably determined, the straight-line method shall be adopted for amortization. The specific years are as follows:
| Item | Amortization years (year) |
| Land use right | 50, 30 |
| Patent right | 10 |
| Trademark right | 10 |
| Proprietary technology | 5 |
| Management software | 3-10 |
| Pollutant discharge right | 10 |
The Company does not amortize intangible assets such as land ownership and trademark right whose service life is uncertain. TheCompany will review the service life of such intangible assets in each accounting period. For intangible assets with uncertainservice life, the basis for judging the uncertain service life is that it is impossible to estimate the period of intangible assetsbringing future economic benefits to the enterprise. Intangible assets whose service life is uncertain shall be the ownership of land.
(2) Internal R&D expenditure accounting policies
The expenditure in the research phase of internal R&D projects shall be booked into profit and loss when incurred. Theexpenditures in the development stage of an internal R&D project shall be recognized as intangible assets if the followingconditions are met: (1) It is technically feasible to complete the intangible assets so that they can be used or sold; (2) It has theintention to complete the intangible assets and use or sell them; (3) The way in which intangible assets generate economic benefits,including proving the existence of a market for products produced by the use of intangible assets or the existence of a market forintangible assets themselves, and proving the usefulness of intangible assets to be used internally; (4) It has sufficient technical,financial and other resources to complete the development of the intangible assets and has the ability to use or sell the intangibleassets; (5) The expenditures attributable to the development stage of the intangible assets can be measured reliably.
26. Impairment of long-term assets
For long-term equity investment, investment real estate measured by cost mode, fixed assets, construction in progress, assets withuse right, intangible assets with limited service life and other long-term assets, if there are signs of impairment on the balancesheet date, the recoverable amount shall be estimated. For the intangible assets whose goodwill and service life are uncertain due
to the business combination, the impairment test will be conducted every year regardless of whether there is any indication ofimpairment. Goodwill is tested for impairment in conjunction with its associated asset group or combination of asset groups.If the recoverable amount of the above long-term assets is lower than the carrying value, the asset impairment reserve shall berecognized according to the difference and booked into profit and loss.
27. Long-term deferred expenses
Long-term amortized expenses have been accounted for, amortization period of more than 1 year (exclusive) of various expenses.Long-term deferred expenses are recorded in the account according to the actual amount incurred and amortized evenly ininstallments during the benefit period or specified period. If long-term deferred expense items do not benefit future accountingperiods, the amortized value of the item that has not been amortized is fully transferred to current profit and loss.
28. Contractual liabilities
The Company shall list the contractual assets or contractual liabilities in the balance sheet according to the relationship betweenthe performance of the obligations and the payment of the customer. The Company shall set off the contractual assets andcontractual liabilities under the same contract and show them in net.The Company lists as a contractual liability the obligation to transfer goods to the customer for consideration received orreceivable from the customer.
29. Employee compensation
(1) Accounting treatment of short-term compensation
During the accounting period when employees provide services to the company, the short-term compensation actually incurred isrecognized as a liability and recorded into the current profit and loss or the cost of related assets.
(2) Accounting treatment of post-employment benefits
Post-employment benefits are divided into defined deposit plan and defined benefit plan.
(1) During the accounting period when an employee provides services to the Company, the amount to be paid according to theestablished withdrawal plan shall be recognized as a liability and recorded into the current profit and loss or the cost of relatedassets.
(2) Accounting for defined benefit plans usually includes the following steps:
1) According to the expected cumulative benefit unit method, using unbiased and mutually consistent actuarial assumptions toestimate the relevant demographic variables and financial variables, measure the obligations arising from the benefit plan, anddetermine the duration of the related obligations. Meanwhile, the obligation arising from the defined benefit plan is discounted todetermine the current value of the defined benefit plan obligation and the current service cost;
2) If there are assets in the defined benefit plan, the deficit or surplus formed by the present value of the obligations of the definedbenefit plan minus the fair value of the assets in the defined benefit plan will be recognized as the net liability or net asset of adefined benefit plan. If there is surplus in the defined benefit plan, the net assets of the defined benefit plan shall be measuredaccording to the lower of the surplus of the defined benefit plan or the upper limit of assets;
3) At the end of the period, the employee compensation cost generated by the defined benefit plan shall be recognized as servicecost, net interest of net liabilities or net assets of the defined benefit plan, and changes generated by remeasuring net liabilities ornet assets of the defined benefit plan, among which the service cost and net interest of net liabilities or net assets of the defined
benefit plan shall be included into current profit or loss or cost of related assets. Changes resulting from the re-measurement of netliabilities or net assets of the benefit plan are recorded in other comprehensive income and are not allowed to be carried back toprofit or loss in subsequent accounting periods, but such amounts recognized in other comprehensive income can be transferredwithin the scope of equity.
(3) Accounting treatment of dismiss welfare
For dismiss benefits provided to employees, the employee compensation liability generated by dismiss benefits shall be recognizedas soon as possible and recorded into profit and loss: (1) The Company cannot unilaterally withdraw the dismiss benefits providedby the termination of labor relations plan or reduction proposal; (2) When the Company recognizes the costs or expenses related tothe restructuring involving the payment of dismiss benefits.
(4) Accounting treatment of other long-term employee benefits
Other long-term benefits provided to the staff and workers, which meet the requirements of the defined deposit plan, shall beaccounted for in accordance with the relevant provisions of the defined deposit plan. In addition, other long-term benefits shall beaccounted for in accordance with the relevant provisions of the defined benefit plan. To simplify the relevant accounting treatment,the employee compensation cost generated as service cost, net interest of net liabilities or net assets of other long-term employeebenefits, and the total net income generated by the re-measurement of net liabilities or net assets of other long-term employeebenefits shall be recognized in profit and loss or cost of related assets.
30. Lease liabilities
On the commencement date of the lease, the Company recognizes the present value of the outstanding lease payments as a leaseliability. When calculating the present value of lease payments, the internal interest rate of lease is used as the discount rate. If theinternal interest rate of lease cannot be determined, the company's incremental borrowing rate is used as the discount rate. Thedifference between the lease payment amount and the present value shall be regarded as the unrecognized financing expense, andthe interest expense shall be recognized in accordance with the discount rate of the present value of the lease payment amountduring each period of the lease term and recorded into the current profit and loss. Variable lease payments not included in themeasurement of lease liabilities are booked into current profit and loss when actually incurred.After the commencement of the lease term, when the actual fixed payment amount changes, the estimated amount payable of theguarantee balance changes, the index or ratio used to determine the lease payment amount changes, the evaluation result of thepurchase option, the renewal option or the termination option changes, or the actual exercise of the option changes, the Companyshall remeasure the lease liability according to the present value of the changed lease payment amount. And adjust the book valueof the right to use assets accordingly. If the book value of the right to use assets has been reduced to zero, but the lease liabilitystill needs to be further reduced, the remaining amount shall be booked in profit and loss.
31. Provisions
1. Obligations arising from contingent matters such as external guarantee, litigation, product quality assurance and loss contractbecome the current obligations undertaken by the Company, and the performance of such obligations is likely to lead to theoutflow of economic benefits from the Company. When the amount of such obligations can be measured reliably, the Companywill recognize such obligations as provisions.
2. The Company makes the initial measurement of the provisions in accordance with the best estimate of the expenditures requiredto fulfill the relevant current obligations, and reviews the carrying value of the provisions on the balance sheet date.
32. Share payment
1. Types of share payments
Including share payments settled in equity and share payments settled in cash.
2. Implement, modify and terminate relevant accounting treatment of share payment plans
(1) To be paid in equity settled shares
Immediately after the grant of feasible rights in exchange for employee services with equity settlement of the stock payment, onthe grant date according to the fair value of the equity instrument into the relevant costs or expenses, adjust the capital reserveaccordingly. If the service within the waiting period is completed or the performance conditions are met, the right is paid by theequity settled shares. On each balance sheet day during the waiting period, based on the best estimate of the number of theavailable right equity instruments, the service acquired during the current period is included into the relevant cost or expenseaccording to the fair value of the grant date of the equity instruments, and the capital reserve is adjusted accordingly.If the fair value of the other party's services can be measured reliably, it shall be measured according to the fair value of the otherparty's services on the date of acquisition; If the fair value of the services of other parties cannot be measured reliably, but the fairvalue of the equity instrument can be measured reliably, it shall be measured according to the fair value of the equity instrumenton the date the service is acquired, and recorded into the relevant cost or expense, and the shareholders’ equity shall be increasedaccordingly.
(2) To be paid in cash shares
Cash settled share-based payments that are immediately exercisable after the grant in exchange for employee services arerecognized as relevant costs or expenses at the fair value of the Company's liabilities on the grant date, with correspondingincreases in liabilities. After completing the service within the waiting period or meeting the specified performance conditions, theright is paid in cash settled shares in exchange for the employee's service. On each balance sheet date within the waiting period,based on the best estimate of the situation of the right, the service acquired during the current period is included in the relevantcosts or expenses and corresponding liabilities according to the fair value of the liabilities assumed by the company.
(3) Modify and terminate the share payment plan
If the amendment increases the fair value of the equity instrument granted, the Company recognizes the increase in the acquiredservices accordingly according to the increase in the fair value of the equity instrument; If the amendment increases the number ofequity instruments granted, the Company accordingly recognizes the fair value of the increased equity instruments as an increasein the services acquired; If the Company modifies the option conditions in a way that benefits the employee, the Company willconsider the revised option conditions when dealing with the option conditions.If the amendment reduces the fair value of the equity instrument granted, the Company continues to recognize the amount ofservices obtained based on the fair value of the equity instrument on the grant date, without regard to the decrease in the fair valueof the equity instrument; If the modification reduces the number of equity instruments granted, the Company will treat thereduction as a cancellation of the equity instruments granted; If an option condition is modified to the detriment of the employee,the modified option condition shall not be taken into account when dealing with the option condition.If the Company cancellations or settles the vested instrument during the waiting period (other than if it is cancelled because theconditions of the vesting right have not been met), the cancellation or settlement will be treated as an accelerated vesting right,immediately recognizing the amount originally recognized during the remaining waiting period.
33. Revenue
The accounting policies used to recognize and measure revenue
1. Principle of revenue recognition
On the commencement date of the contract, the Company evaluates the contract, identifies the individual performance obligationscontained in the contract, and determines whether the individual performance obligations shall be performed within a certainperiod or at a certain point.If one of the following conditions is met, the performance obligation shall be performed within a certain period; otherwise, theperformance obligation shall be performed at a certain point: (1) The customer shall obtain and consume the economic benefitsbrought by the performance of the Company meanwhile; (2) The customer can control the goods under construction during thecompany's contract performance; (3) The commodities produced by the Company during the performance of the Contract haveirreplaceable uses, and the Company has the right to collect payment for the performance part accumulated so far during the wholecontract period.For the performance obligations performed within a certain period of time, the Company recognizes revenue in accordance withthe progress of the performance within that period of time. If the performance progress cannot be reasonably determined, and thecost already incurred is expected to be compensated, the income shall be recognized according to the amount of cost alreadyincurred until the performance progress can be reasonably determined. For performance obligations performed at a certain point,revenue is recognized when the customer obtains control of the relevant goods or services. In determining whether the customerhas acquired control of the commodity, the company considers the following indications: (1) The Company has a current right tocollect on the commodity, that is, the customer has a current obligation to pay for the commodity; (2) The Company hastransferred the legal ownership of the commodity to the customer, that is, the customer has the legal ownership of the commodity;
(3) The Company has physically transferred the commodity to the customer, that is, the customer has physically possessed thecommodity; (4) The Company has transferred the main risks and rewards of the ownership of the commodities to the customer,that is, the customer has acquired the main risks and rewards of the ownership of the commodities; (5) The customer has acceptedthe commodity; (6) Other indications indicating that the customer has taken control of the goods.
2. Principles of income measurement
(1) The Company measures its income according to the transaction price apportioned to each individual performance obligation.The transaction price is the amount of consideration that the Company expects to be entitled to receive in connection with thetransfer of goods or services to the customer, excluding amounts collected on behalf of third parties and amounts expected to berefunded to the Customer.
(2) Where there is variable consideration in the contract, the Company determines the best estimate of the variable consideration inaccordance with the expected value or the amount most likely to occur, provided that the transaction price containing the variableconsideration does not exceed the amount of accumulated recognized revenue that is highly unlikely to be materially reversedwhen the relevant uncertainty is eliminated.
(3) If there is a significant financing component in the contract, the Company shall determine the transaction price according to theamount payable in cash, which is assumed to be paid by the customer upon acquisition of control of the commodity or service. Thedifference between the transaction price and the contract consideration shall be amortized by the effective interest rate methodduring the contract period. On the commencement date of the contract, if the Company expects that the interval between thecustomer acquiring the control of the commodity or service and the customer paying the price is not more than one year, it will notconsider the significant financing element in the contract.
(4) If the contract contains two or more performance obligations, the Company shall, on the commencement date of the contract,apportion the transaction price to the performance obligations of each individual item in accordance with the relative proportion ofthe individual selling price of the commodity promised by the performance obligations of each individual item.
3. Specific methods of revenue recognition
The sales business of Hand Tools, Power Tools, Laser Measurement, Storage and other products of the company belong to theperformance obligations performed at a certain point. Domestic sales income will be recognized when the company delivers theproducts to the place of delivery agreed in the contract and the customer confirms acceptance, the company has received the price
or has obtained the right to collect payment, and the related economic benefits are likely to flow in. Export sales income isrecognized when the company has declared the products to customs according to the contract, obtained the bill of lading or arrivedat the destination designated by the customer and confirmed by the customer, received the payment for goods or obtained the rightto collect payment and the related economic benefits are likely to flow in.Different business models of the same type of business lead to differences in revenue recognition accounting policies
34. Government subsidies
1. The government subsidy shall be recognized when the following conditions are met: (1) The Company can meet the conditionsattached to the government subsidy; (2) The Company can receive government subsidies. If the government subsidy is a monetaryasset, it shall be measured according to the amount received or receivable. If government subsidies are non-monetary assets, theyshall be measured at fair value; if the fair value cannot be obtained reliably, it shall be measured according to the nominal amount.
2. Judgment basis and accounting treatment method of government subsidies related to assets
Government documents specify that government subsidies used to purchase and build or otherwise form long-term assets areclassified as asset-related government subsidies. If the government documents are not clear, it shall be judged on the basis of thebasic conditions that must be met to obtain the subsidy, and if the basic conditions are the purchase and construction of long-termassets or the formation of long-term assets by other means, it shall be regarded as government subsidies related to assets.Government subsidies related to assets, write-down of the book value of related assets or recognized as deferred income. If thegovernment subsidy related to assets is recognized as deferred income, it shall be recorded into profit and loss by stages in areasonable and systematic way during the service life of the relevant assets. The government subsidy measured according to thenominal amount is directly booked into the current profit and loss. If relevant assets are sold, transferred, scrapped or damagedbefore the end of their useful life, the balance of relevant deferred income that has not been distributed shall be transferred to theprofit or loss of the asset disposal period.
3. Judgment basis and accounting treatment method of government subsidies related to income
Government subsidies other than those related to assets are divided into revenue-related government subsidies. For governmentsubsidies that contain both asset-related parts and revenue-related parts, it is difficult to distinguish between asset-related orrevenue-related government subsidies, and the overall government subsidies are classified as revenue-related governmentsubsidies. The government subsidies related to revenue, which are used to compensate the relevant costs or losses in thesubsequent period, are recognized as deferred revenue, and in the period of recognizing the relevant costs or losses, are recordedinto the current profit and loss or write-off the relevant costs; If it is used to compensate the incurred costs or losses, it shall bedirectly recorded into the current profit and loss or write-off the relevant costs.
4. Government subsidies related to daily business activities of the company shall be recorded into other income or written downrelated costs according to the essence of economic business. Government subsidies unrelated to daily activities of the companyshall be included in non-operating income and expenditure.
35. Deferred income tax assets/deferred income tax liabilities
1. The deferred income tax asset or deferred income tax liability shall be calculated and recognized according to the applicable taxrate during the expected recovery of the asset or repayment of the liability based on the difference between the book value of theasset or liability and its tax basis (if the tax basis of the item not recognized as an asset or liability can be determined in accordancewith the tax law).
2. Identify deferred income tax assets to the extent that taxable income is likely to be obtained to offset deductible temporarydifferences. On the balance sheet date, if there is conclusive evidence that it is likely that sufficient taxable income will be
obtained in the future period to offset the deductible temporary differences, the deferred income tax assets not recognized in theprevious accounting period will be recognized.
3. On the balance sheet date, review the carrying value of the deferred income tax assets, and write down the carrying value of thedeferred income tax assets if it is likely that it cannot obtain enough taxable income to offset the benefits of the deferred incometax assets in the future period. When sufficient taxable income is likely to be obtained, the amount of the write-down is reversed.
4. The current income tax and deferred income tax of the company are recorded into the current profit and loss as income taxexpense or income, but the income tax generated under the following circumstances is excluded: (1) enterprise combination; (2)Transactions or events directly recognized in shareholders’ equity.
36. Leasing
(1) Accounting treatment of operating leases
1. The Company as lessee
On the commencement date of the Lease term, the Company considers any lease for a period not exceeding 12 months and withouta purchase option to be a short-term lease; when a single leased asset is a brand-new asset, the lease with a lower value isidentified as a low-value asset lease. Where the company subleases or intends to sublease the leased assets, the original lease shallnot be deemed as a low-value asset lease.For all short-term leases and low-value asset leases, the Company shall, in accordance with the straight-line method, record thelease payment into the cost of the relevant asset or current profit or loss during each period of the lease term.With the exception of short-term leases and low-value asset leases which adopt simplified treatment above, the Companyrecognizes the use right assets and lease liabilities for the lease on the commencement date of the lease term.
(1) Right to use assets
The right to use assets shall be initially measured according to the cost, which includes: 1) the initial measurement amount of thelease liability; 2) The amount of lease payment paid on or before the beginning of the lease term, if there is lease incentive, theamount related to lease incentive already enjoyed will be deducted; 3) Initial direct expenses incurred by Lessee; 4) The estimatedcosts incurred by the Lessee for dismantling and removing the leased assets, restoring the site where the leased assets are located,or restoring the leased assets to the state agreed in the lease terms.The company shall depreciate the assets to be used according to the straight-line method. If the ownership of the leased asset canbe reasonably determined at the end of the lease term, the company shall calculate and withdraw depreciation within the remainingservice life of the leased asset. If it is not reasonably certain that the ownership of the leased asset can be acquired at the end of thelease term, the Company shall calculate and withdraw depreciation during the short period between the lease term and theremaining service life of the leased asset.
(2) Lease liabilities
On the commencement date of the lease, the Company recognizes the present value of the outstanding lease payments as a leaseliability. When calculating the present value of lease payments, the internal interest rate of lease is used as the discount rate. If theinternal interest rate of lease cannot be determined, the company's incremental borrowing rate is used as the discount rate. Thedifference between the lease payment amount and the present value shall be regarded as the unrecognized financing expense, andthe interest expense shall be recognized in accordance with the discount rate of the present value of the lease payment amountduring each period of the lease term and recorded into the current profit and loss. Variable lease payments not included in themeasurement of lease liabilities are booked into current profit and loss when actually incurred.After the commencement of the lease term, when the actual fixed payment amount changes, the estimated amount payable of theguarantee balance changes, the index or ratio used to determine the lease payment amount changes, the evaluation result of thepurchase option, the renewal option or the termination option changes, or the actual exercise of the option changes, the Companyshall remeasure the lease liability according to the present value of the changed lease payment amount. And adjust the book value
of the right to use assets accordingly. If the book value of the right to use assets has been reduced to zero, but the lease liabilitystill needs to be further reduced, the remaining amount shall be booked in profit and loss.
2. The Company acts as lessor
On the beginning day of the lease, the company classifies the leases that essentially transfer almost all the risks and rewards relatedto the ownership of the leased assets as financial leases, and all the others as operating leases.
(1) Operating lease
During each period of the lease term, the company recognizes the lease revenue as rental income according to the straight-linemethod, and the initial direct expenses incurred are capitalized and apportioned according to the same basis as the rental incomerecognition, and recorded into the current profit and loss by stages. The amount of variable lease payments obtained by theCompany in connection with the operating lease and not included in the lease collection amount shall be recorded in the currentprofit and loss when actually incurred.
(2) Accounting treatment of finance lease
On the beginning date of the lease term, the Company shall recognize the finance lease payment receivable according to the netlease investment (the sum of the unguaranteed balance and the lease payment not received on the beginning date of the lease termaccording to the present value discounted by the inherent interest rate of the lease) and terminate the recognition of the financelease asset. During each period of the lease term, the Company calculates and recognizes interest income based on the inherentinterest rate of the lease.The amount of variable lease payments obtained by the Company that are not included in the measurement of net lease investmentis recorded in current profit and loss when actually incurred.
37. Changes in major accounting policies and estimates
(1) Changes in major accounting policies
?Applicable □ N/A
| Contents and reasons of changes in accounting policy | Approval procedure | Remarks |
1. Since January 1, 2022, the Company has implemented the provisions of Accounting Standards for Enterprises Interpretation No.15 issued by the Ministry of Finance on “Accounting treatment of the products or by-products produced before the fixed assetsreach the predetermined usable state or in the process of R&D”. This change in accounting policy has no impact on the financialstatements of the company.
2. Since January 1, 2022, the Company has implemented the provisions of “Judgment on loss-making Contracts” in Interpretationof Accounting Standards for Business Enterprises No. 15 issued by the Ministry of Finance, and this change in accounting policyhas no impact on the Company's financial statements.
3. Since November 30, 2022, the Company has implemented the provisions of Interpretation of Accounting Standards for BusinessEnterprises No. 16 issued by the Ministry of Finance on “Accounting treatment of income tax Impact on dividends related tofinancial instruments classified by the Issuer as equity instruments”. Such change of accounting policy has no impact on thefinancial statements of the Company.
4. Since November 30, 2022, the Company has implemented the provisions of Interpretation of Accounting Standards for BusinessEnterprises No. 16 issued by the Ministry of Finance on “Accounting treatment of the Company's modification of cash settlementshare payment to equity settlement share payment”. This change of accounting policy has no impact on the Company's financialstatements.
(2) Changes in material accounting estimates
□ Applicable ? N/A
VI. Taxes
1. Main types of taxes and tax rates
| Type of tax | Tax basis | Tax rate |
| Value-added tax | Output tax shall be calculated on the basis of the income from sales of goods and taxable services calculated in accordance with the provisions of the Tax Law. After deducting the input tax allowed to be deducted for the current period, the difference shall be VAT payable | 13%, 6% |
| City maintenance and construction tax | The turnover tax actually paid | 7%, 5% |
| Corporate income tax | Taxable income | For details, see instructions on corporate income tax rates of tax subjects with different tax rates |
| Property tax | In case of AD valorem tax, 1.2% of the remaining value of the original value of the property after a one-time reduction of 30% shall be paid; If the tax is levied from rent, 12% of the rental income shall be paid | 1.2%, 12% |
| Education surcharge | The turnover tax actually paid | 3% |
| Local education fees surcharge | The turnover tax actually paid | 2% |
If there are tax payers with different corporate income tax rates, the information shall be disclosed
| Name of taxpayer | Income tax rate |
| The Company | 15% |
| Hong Kong GreatStar International Limited | 16.50% |
| Prim' Tools Limited | 16.50% |
| Hong Kong Goldblatt Industrial Co.,Ltd. | 16.50% |
| Hong Kong International Huada Kejie Opto-Electro Instrument Co., Ltd. | 16.50% |
| Hong Kong Shop-Vac International Co., Limited | 16.50% |
| Geelong Sales Company International (HK) Limited | 16.50% |
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd | 15% |
| Hangzhou Lianhe Electric Manufacturing Co., Ltd. | 15% |
| Dongguan Ouda Electronics Co., Ltd. | 15% |
| Hangzhou Lianhe Tool Manufacturing Co., Ltd. | 15% |
| Hangzhou Liansheng Measuring Tool Manufacturing Co., Ltd. | 15% |
| Zhejiang Yiyang Tool Manufacturing Co., Ltd. | 15% |
| Suzhou Xindadi Hardware Product Co., Ltd. | 15% |
| Geelong Sales Co., Ltd. | 15% |
| Geelong Investment Holding Limited | 15% |
| GreatStar Europe AG and its subsidiaries | 13.24%, 19.00%, 19.41%, 21.00%, 22.00%, 24.00%, 25.00%, 27.50%, 27.90%, 29.13% |
| Zhejiang Guoxin Tool Co., Ltd. | 20% |
| Changzhou Huada Kejie Construction Machinery Co., Ltd. | 20% |
| Zhongshan Geelong Import and Export Trade Co., Ltd. | 20% |
| Ningbo Fenghua Giant Star Tool Co., Ltd. | 15% |
| GreatStar Vietnam Co., Ltd | 20% |
| Vietnam United Co., Ltd | 20% |
| TGH (Cambodia) Industrial Co., LTD | 20% |
| Geelong (Thailand) Co., Ltd | 20% |
| GreatStar Industrial Vietnam Co., Ltd | 20% |
| XDD Products (USA) LLC | 21% |
| SHOP-VAC VIETNAM CO.,LTD | 20% |
| HUADA VIETNAM CO.,LTD | 20% |
| Newland.LLC | 21% |
| GreatStar Tools USA,Inc and its subsidiaries | 25.1745%, GreatStar according to the Internal Revenue Code of the United States Industrial USA, LLC, Arrow Fastener Co., LLC, Prime-Line Products, LLC, 4900 Highlands Parkway, LLC, Shop-Vac USA, LLC and SK Hand Tool, LLC are not required to declare and pay corporate income tax as LLC. The subject of tax liability is GreatStar Tools USA,Inc |
| GreatStar Japan Co., Ltd | Corporate tax is payable at a progressive rate |
| GreatStar International Holdings Limited | A company incorporated in the British Virgin Islands. No corporate income tax is payable under the British Virgin Islands tax system |
| Geelong Orchid Holding Limited | A company registered in the British Cayman Islands. No corporate income tax is required under the British Cayman Islands tax system |
| Geelong Holdings Limited | A company registered in the British Cayman Islands. No corporate income tax is required under the British Cayman Islands tax system |
| Geelong Sales (Macau Commercial) Limited | The taxable income tax not exceeding 600,000 patacas shall be subject to 0% corporate income tax rate, and the portion exceeding 600,000 Patacas shall be subject to 12% corporate income tax rate |
| Other taxable entities other than those mentioned above | 25% |
2. Tax incentives
1. According to the relevant provisions of Measures for the Identification and Administration of High-tech Enterprises (Guo Ke FaHuo (2016) No. 32) and "Guidelines for the Identification and Administration of High-tech Enterprises" (Guo Ke Fa Huo (2016)No. 195), the Company is recognized as a high-tech enterprise and has obtained the High-tech Enterprise Certificate (No.GR202233005456). The validity period of the recognition is 3 years (2022-2024), and the corporate income tax shall be paid at thetax rate of 15% in 2022.
2. According to the List of the First Batch of High-tech Enterprises to be Recognized in Jiangsu Province in 2020 issued by theOffice of the National Leading Group for the Recognition and Management of High-tech Enterprises, Changzhou HuadkejiePhotoelectric Instrument Co., Ltd. is recognized as a high-tech enterprise and has obtained the High-tech Enterprise Certificatenumbered GR202032002996. The validity period of the recognition is 3 years (2020-2022), and the corporate income tax shall bepaid at the tax rate of 15% in 2022.
3. According to the relevant provisions of Measures for the Identification and Administration of High-tech Enterprises (Guo Ke FaHuo (2016) No. 32) and Guidelines on the Identification and Administration of High-tech Enterprises (Guo Ke Fa Huo (2016) No.
195), its subsidiary Hangzhou Lianhe Electric Manufacturing Co., Ltd. is identified as a high-tech enterprise. The company shallobtain the High-tech Enterprise Certificate numbered GR202233010022, which shall be valid for 3 years (2022-2024), and pay theenterprise income tax at the tax rate of 15% in 2022.
4. According to the relevant provisions of Measures for the Identification and Management of High-tech Enterprises (Guo Ke FaHuo (2016) No. 32) and Guidelines for the Identification and Management of High-tech Enterprises (Guo Ke Fa Huo (2016) No.
195), Dongguan Ouda Electronic Co., Ltd. of Sub-subsidiary is recognized as a high-tech enterprise. The company shall obtain theHigh-tech Enterprise Certificate numbered GR202144002851, which shall be valid for 3 years (2021-2023), and pay the enterpriseincome tax at 15% tax rate in 2022.
5. According to the Letter on the Record of High-tech Enterprises in Zhejiang Province in 2020 (Guo Ke Huo Zi (2020) No. 251)issued by the Office of the Leading Group for the Identification and Management of National High-tech Enterprises, the subsidiaryHangzhou Lianhe Tool Manufacturing Co., Ltd. is recognized as a high-tech enterprise. The company shall obtain the High-techEnterprise Certificate numbered GR202133002795, which shall be valid for 3 years (2021-2023), and pay the enterprise incometax at 15% tax rate in 2022.
6. According to the Letter on the Record of High-tech Enterprises in Zhejiang Province in 2020 (Guo Ke Huo Zi (2020) No. 251)issued by the Office of the Leading Group for the Identification and Management of National High-tech Enterprises, the subsidiaryHangzhou Liansheng Measuring Tool Manufacturing Co., Ltd. is recognized as a high-tech enterprise. The company shall obtainthe High-tech Enterprise Certificate numbered GR202133004728, which shall be valid for 3 years (2021-2023), and pay theenterprise income tax at 15% tax rate in 2022.
7. According to the relevant provisions of Measures for the Identification and Management of High-tech Enterprises (Guo Ke FaHuo (2016) No. 32) and Guidelines for the Identification and Management of High-tech Enterprises (Guo Ke Fa Huo (2016) No.
195), Sub-subsidiary Zhejiang Yiyang Tool Manufacturing Co., Ltd. is recognized as a high-tech enterprise. The company shallobtain the High-tech Enterprise Certificate numbered GR202233007785, which shall be valid for 3 years (2022-2024), and pay theenterprise income tax at the tax rate of 15% in 2022.
8. According to the relevant provisions of the Measures for the Identification and Administration of New and High-techEnterprises (Guo Ke Fa Huo (2016) No. 32) and the Guidelines for the Identification and Administration of New and High-techEnterprises (Guo Ke Fa Huo (2016) No. 195), Suzhou New Earth Hardware Products Co., Ltd. is identified as a new and high-techenterprise. The company shall obtain the High-tech Enterprise Certificate numbered GR202132006099, which shall be valid for 3years (2021-2023), and pay the enterprise income tax at 15% tax rate in 2022.
9. According to the relevant provisions of Measures for the Identification and Management of High-tech Enterprises (Guo Ke FaHuo (2016) No. 32) and Guidelines for the Identification and Management of High-tech Enterprises (Guo Ke Fa Huo (2016) No.
195), Sub-subsidiary Zhongshan Jiilong Industrial Co., Ltd. is recognized as a high-tech enterprise. The company shall obtain theHigh-tech Enterprise Certificate numbered GR202244011605, which shall be valid for 3 years (2022-2024), and pay the enterpriseincome tax at 15% tax rate in 2022.
10. In accordance with relevant provisions in Administrative Measures for Identification of High-tech Enterprises (Guo Ke Fa Huo(2016) No. 32) and Guidelines for Administration of Identification High-tech Enterprises (Guo Ke Fa Huo (2016) No. 195), the
subsidiary Ningbo Fenghua GreatStar Tools Co., Ltd. has been identified as a high-tech enterprise and granted the High-techEnterprise Certificate numbered GR202233100274 with a validity period of 3 years (from 2022 to 2024). Therefore, the enterpriseincome tax was paid at the tax rate of 15% in 2022.
11. According to the Announcement of the Ministry of Finance and the State Administration of Taxation on the AdministrativeMeasures for the Preferential VAT Policies to Promote the Employment of Disabled Persons (Cai Shui (2016) No. 52), thesubsidiary Longyou Hugong Forging Three Tools Co., Ltd., after filing with the competent tax authority for the employment ofdisabled persons, enjoys the preferential policy of the VAT limit collection and refund at this period.
12. According to the document of Announcement on Further Implementation of Preferential Income Tax Policies for Small andMicro Enterprises (Announcement No. 13 2022 of the Ministry of Finance and the State Administration of Taxation) issued by theMinistry of Finance and the State Administration of Taxation, during the period from January 1, 2022 to December 31, 2024, theannual taxable income of small and micro profit enterprises shall not exceed CNY 1 million. Deduct 12.50% from the amount oftaxable income and pay the enterprise income tax at the rate of 20%. The part of the annual taxable income exceeding CNY 1million but not exceeding CNY 3 million shall be included in the taxable income at a reduced rate of 25%, and the enterpriseincome tax shall be paid at a tax rate of 20%. From January 1, 2022 to December 31, 2022, Zhejiang Guoxin Tools Co., Ltd.,
Zhongshan Kilong Import and Export Trading Co., Ltd., and Changzhou Huada Kejie Construction Machinery Co., Ltd., shall besubject to this preferential income tax policy and pay corporate income tax at a tax rate of 20%.
VII. Notes to consolidated financial statements
1. Cash and cash equivalents
Unit: CNY
| Item | Closing balance | Opening balance |
| Cash on hand | 4,328,053.84 | 2,574,760.83 |
| Bank deposit | 4,788,725,570.94 | 3,983,507,419.70 |
| Other monetary funds | 70,152,557.62 | 47,625,059.63 |
| Total | 4,863,206,182.40 | 4,033,707,240.16 |
| Including: the total amount of funds deposited abroad | 1,073,586,253.48 | 802,607,925.10 |
| Total amount of money subject to restrictions on use by reason of mortgage, pledge or freeze | 69,779,001.93 | 32,520,998.98 |
Other notes:
Other monetary funds at the end of the period include forward settlement of foreign exchange of CNY 33,448,671.74, short-termloan of CNY 20,893,800.00, letter of credit of CNY 6,616,370.00, banker's acceptance of CNY 7,384,067.19 and customs dutyguarantee of CNY 1,393,093.00, Alipay of CNY 373,555.69 and ETC deposit of CNY 43,000.00. Other monetary funds at thebeginning of the period include bank acceptance deposit of CNY 27,725,700.00, securities account deposit of CNY 13,598,051.60,forward settlement and sale of foreign exchange deposit of CNY 2,295,252.00, ETC deposit of CNY 32,000.00, customs dutybond deposit of CNY 1,975,140.00, project performance deposit of CNY 492,906.98, and deposit in Alipay of CNY 1,506,009.05.
2. Trading financial assets
Unit: CNY
| Item | Closing balance | Opening balance |
| Financial assets measured at fair value through profit or loss | 70,230,104.24 | 13,557,757.75 |
| Including: | ||
| Derivative financial assets | 10,230,104.24 | 4,330,070.00 |
| Bank financial products | 60,000,000.00 | |
| Equity instrument investment | 9,227,687.75 | |
| Including: | ||
| Total | 70,230,104.24 | 13,557,757.75 |
Other notes:
None
3. Notes receivable
(1) Classification and listing of notes receivable
Unit: CNY
| Item | Closing balance | Opening balance |
| Banker's acceptance | 18,765,981.83 | 5,663,502.93 |
| Commercial acceptance | 966,411.25 | |
| Total | 18,765,981.83 | 6,629,914.18 |
Unit: CNY
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Proportion | Amount | Provision ratio | Amount | Proportion | Amount | Provision ratio | |||
| Including: | ||||||||||
| Notes receivable set aside for bad debts assessed by groups | 18,765,981.83 | 100.00% | 18,765,981.83 | 6,629,914.18 | 100.00% | 6,629,914.18 | ||||
| Including: | ||||||||||
| Banker's acceptance | 18,765,981.83 | 100.00% | 18,765,981.83 | 5,663,502.93 | 85.42% | 5,663,502.93 | ||||
| Commercial acceptance | 966,411.25 | 14.58% | 966,411.25 | |||||||
| Total | 18,765,981.83 | 100.00% | 18,765,981.83 | 6,629,914.18 | 100.00% | 6,629,914.18 | ||||
Bad debt provision assessed by groups:
Unit: CNY
| Name | Closing balance | ||
| Book balance | Bad debt provision | Provision ratio | |
| Bank acceptance portfolio | 18,765,981.83 | ||
| Total | 18,765,981.83 | ||
Instructions for determining the basis of the combination:
Bad debt provision assessed by groups:
Unit: CNY
| Name | Closing balance | ||
| Book balance | Bad debt provision | Provision ratio | |
Instructions for determining the basis of the combination:
If the provision for doubtful accounts of notes receivable is made according to the general model of expected credit losses, pleaserefer to other methods of disclosure of receivables to disclose the relevant information of doubtful accounts:
□ Applicable ? N/A
(2) Notes receivable that have been endorsed or discounted by the Company at the end of the period andare not due on the balance sheet date
Unit: CNY
| Item | Amount derecognized at the end of the period | Amount not derecognized at the end of the period |
| Banker's acceptance | 4,504,513.91 | |
| Total | 4,504,513.91 |
4. Accounts receivable
(1) Classification of accounts receivable
Unit: CNY
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Proportion | Amount | Provision ratio | Amount | Proportion | Amount | Provision ratio | |||
| Account receivable of bad debt provision assessed individually | 3,780,753.57 | 0.19% | 3,780,753.57 | 100.00% | ||||||
| Including: | ||||||||||
| Accounts receivable of bad debt provision assessed by groups | 1,999,942,811.41 | 99.81% | 103,257,221.30 | 5.16% | 1,896,685,590.11 | 1,899,008,012.88 | 100.00% | 100,742,507.35 | 5.31% | 1,798,265,505.53 |
| Including: | ||||||||||
| Total | 2,003,723,564.98 | 100.00% | 107,037,974.87 | 5.34% | 1,896,685,590.11 | 1,899,008,012.88 | 100.00% | 100,742,507.35 | 5.31% | 1,798,265,505.53 |
Provision for bad debts assessed individually: 3,780,753.57
Unit: CNY
| Name | Closing balance | |||
| Book balance | Bad debt provision | Provision ratio | Reason for provision | |
| Shanghai Lainuo Photoelectric Technology Co., Ltd. | 3,780,753.57 | 3,780,753.57 | 100.00% | Expected unrecoverable |
| Total | 3,780,753.57 | 3,780,753.57 | ||
Bad debt provision assessed by groups: 103,257,221.30
Unit: CNY
| Name | Closing balance | ||
| Book balance | Bad debt provision | Provision ratio | |
| Aging groups | 1,999,942,811.41 | 103,257,221.30 | 5.16% |
| Total | 1,999,942,811.41 | 103,257,221.30 | |
Instructions for determining the basis of the combination:
AgingIf the provision for doubtful accounts receivable is made according to the general model of expected credit losses, please refer toother methods of disclosure of receivables to disclose the relevant information of doubtful accounts:
□ Applicable ? N/A
Aging disclosure
Unit: CNY
| Aging | Book balance |
| Within 1 year (inclusive) | 1,970,425,386.97 |
| 1-2 years | 25,344,201.58 |
| 2-3 years | 5,830,575.46 |
| More than 3 years | 2,123,400.97 |
| 3-4 years | 696,290.54 |
| 4-5 years | 454,657.11 |
| More than 5 years | 972,453.32 |
| Total | 2,003,723,564.98 |
(2) Bad debt provision withdrawn, recovered or reversed in the current period
Details of bad debt provision:
Unit: CNY
| Category | Opening balance | Changes in the current period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Bad debt provision assessed individually | 3,591,754.39 | 188,999.18 | 3,780,753.57 | |||
| Bad debt provision assessed by groups | 100,742,507.35 | -1,858,727.49 | 1,055,458.37 | 5,428,899.81 | 103,257,221.30 | |
| Total | 100,742,507.35 | 1,733,026.90 | 188,999.18 | 1,055,458.37 | 5,617,898.99 | 107,037,974.87 |
Among them, the amount of the current bad debt provision recovery or reversal is important:
Unit: CNY
| Name of unit | Recovery or reversal | Recovery mode |
(3) Receivables among the top five closing balances collected by the debtor
Unit: CNY
| Customer | Closing balance of accounts receivable | Percentage of total closing balance of accounts receivable | Closing balance of bad debt provision |
| Customer 1 | 417,503,364.89 | 20.84% | 20,875,168.24 |
| Customer 2 | 369,853,367.35 | 18.46% | 18,492,668.37 |
| Customer 3 | 60,719,295.17 | 3.03% | 3,035,964.76 |
| Customer 4 | 56,385,734.96 | 2.81% | 2,819,286.75 |
| Customer 5 | 51,415,571.21 | 2.57% | 2,570,778.56 |
| Total | 955,877,333.58 | 47.71% |
5. Financing of receivables
Unit: CNY
| Item | Closing balance | Opening balance |
| Banker's acceptance | 3,310,508.35 | 5,278,343.13 |
| Accounts receivable | 321,247,171.36 | 553,742,484.39 |
| Total | 324,557,679.71 | 559,020,827.52 |
Changes in the current period and fair value of receivables financing?Applicable □ N/A
(1) Breakdown
| Item | Closing balance | Opening balance | ||
| Book value | Accumulative confirmed reserve for credit impairment | Book value | Accumulative confirmed reserve for credit impairment | |
| Banker's acceptance | 3,310,508.35 | 5,278,343.13 | ||
| Accounts receivable | 321,247,171.36 | 16,907,745.86 | 553,742,484.39 | 29,144,341.28 |
| Total | 324,557,679.71 | 16,907,745.86 | 559,020,827.52 | 29,144,341.28 |
(2) Reserve for credit impairment of receivables financing
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | |||
| Provision | Impact of exchange rate fluctuations | Reversal | Write-off | Others | |||
| Reserve for credit impairment is set aside on a combination basis | 29,144,341.28 | -12,767,474.27 | 530,878.85 | 16,907,745.86 | |||
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | |||
| Provision | Impact of exchange rate fluctuations | Reversal | Write-off | Others | |||
| Total | 29,144,341.28 | -12,767,474.27 | 530,878.85 | 16,907,745.86 | |||
(3) At the end of the period, the Company has endorsed or discounted the notes receivable and has not matured on the balancesheet date
| Item | Derecognition amount at the end of the period |
| Banker's acceptance | 6,559,637.55 |
| Subtotal | 6,559,637.55 |
The acceptor of the banker's acceptance bill is the commercial bank. Because the commercial bank has high credit, the possibilitythat the banker's acceptance bill will not be paid when it expires is low, so our company will terminate the confirmation of thebanker's acceptance bill that has been endorsed or discounted. However, if such notes are not paid at maturity, the Company shallremain jointly and severally liable to the holders under the Instruments Act.
(4) Accounts receivable derecognized due to the transfer of financial assets
| Item | Derecognition | Gain or loss associated with the derecognition | Transfer mode of financial assets |
| Payment for goods | 1,878,525,994.18 (Note) | -7,931,415.18 | Receivables financing assignment without additional recourse |
| Subtotal | 1,878,525,994.18 | -7,931,415.18 |
(Note) The amount of the receivables financing transfer without recourse was USD 269,724,893.63. The transfer of receivablesfinancing in USD without recourse was translated into CNY 1,878,525,994.18 by the exchange rate at the end of the periodIf the financing impairment reserve of receivables is prepared according to the general model of expected credit losses, please referto other methods of disclosure of receivables to disclose the relevant information of impairment reserve:
□ Applicable ? N/A
Other notes:
6. Advance payment
(1) Prepayments shall be listed and shown according to aging
Unit: CNY
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 123,153,057.84 | 95.25% | 74,702,657.14 | 96.09% |
| 1-2 years | 3,784,255.82 | 0.00% | 1,748,154.88 | 2.25% |
| 2-3 years | 808,907.98 | 0.00% | 1,075,509.98 | 1.38% |
| More than 3 years | 507,872.23 | 0.47% | 217,119.90 | 0.28% |
| Total | 128,254,093.87 | 77,743,441.90 |
Explanation of the reasons why the prepayment with an important amount and an aging age of more than 1 year is not settled intime:
(2) Advance payment among the top five in the closing balance of the prepaid objectsThe total prepayments of the top five closing balance amounts to CNY 47,934,016.73, accounting for 35.13% of the total closingbalance of prepaymentsOther notes:
(1) Provision for bad debts in the current period amounted to CNY 2,411,861.08, which increased by CNY 463,566.46 due toexchange rate fluctuations.
(2) The actual written off prepayment is CNY 54,269.29 in the current period.
7. Other receivables
Unit: CNY
| Item | Closing balance | Opening balance |
| Other receivables | 58,325,042.10 | 96,151,003.68 |
| Total | 58,325,042.10 | 96,151,003.68 |
(1) Other receivables
1) Classification of other receivables by nature
Unit: CNY
| Nature | Book balance at the end of the reporting period | Book balance at the beginning of the reporting period |
| Deposit | 30,880,521.21 | 24,611,560.03 |
| Export tax rebate receivable | 24,697,312.44 | 61,953,922.99 |
| Provisional payment receivable | 5,617,725.38 | 6,025,540.52 |
| Employee reserve fund | 1,529,914.18 | 2,666,593.46 |
| Equity settlement receivable | 6,160,202.73 | |
| Others | 2,327,676.34 | 2,653,025.72 |
| Total | 65,053,149.55 | 104,070,845.45 |
2) Provision for bad debts
Unit: CNY
| Bad debt provision | Stage I | Stage II | Stage III | Total |
| 12-month ECL | Lifetime ECL (not impaired) | Lifetime ECL (impaired) | ||
| As at January 1, 2022 | 4,606,101.41 | 854,761.14 | 2,458,979.22 | 7,919,841.77 |
| Changes due to |
| financial instruments recognized as at January 1, 2022 | ||||
| -- Transfer to stage II | -99,539.17 | 99,539.17 | ||
| -- Transfer to stage III | -775,552.12 | 775,552.12 | ||
| Provision | -11,184,311.29 | 20,330.15 | 672,986.60 | -10,490,994.54 |
| Write-off | 5,000.00 | 5,000.00 | ||
| Other changes | 9,304,260.22 | 9,304,260.22 | ||
| As at December 31, 2022 | 2,621,511.17 | 199,078.34 | 3,907,517.94 | 6,728,107.45 |
Loss reserve for a significant change in book balance during the current period
□ Applicable ? N/A
Aging disclosure
Unit: CNY
| Aging | Book balance |
| Within 1 year (inclusive) | 52,430,223.89 |
| 1-2 years | 1,990,783.43 |
| 2-3 years | 7,755,521.23 |
| More than 3 years | 2,876,621.00 |
| 3-4 years | 588,931.41 |
| 4-5 years | 215,910.64 |
| More than 5 years | 2,071,778.95 |
| Total | 65,053,149.55 |
3) Other receivables actually written off during the current period
Unit: CNY
| Item | Write-off amount |
| Shifeng outdoor shopping mall | 5,000.00 |
Other significant write-offs of receivables:
Unit: CNY
| Name of unit | Nature of other receivables | Write-off amount | Reason for write-off | Write-off procedures performed | Whether the payment is generated by related party transactions |
Instructions for writing off other receivables:
Other receivables actually written off during the period are CNY 5,000.00.
4) Other receivables among the top five closing balances collected by the debtor
Unit: CNY
| Name of unit | Nature of payment | Closing balance | Aging | Percentage of the total closing | Closing balance of bad debt provision |
| balance of other receivables | |||||
| Export tax rebate receivable | Export tax rebate receivable | 24,697,312.44 | Within 1 year | 37.96% | 1,234,865.62 |
| C?ng ty c? ph?n T??ng Viên Grand Park | Deposit | 5,058,071.44 | 2-3 years | 7.78% | 1,011,614.29 |
| Payment of social insurance premium and housing provident fund on behalf of employees | Provisional payment receivable | 2,923,397.25 | Within 1 year | 4.49% | 146,169.86 |
| Hangzhou Qiantang Smart City Management Committee | deposit | 1,908,000.00 | More than 5 years | 2.93% | 1,908,000.00 |
| Hangzhou Qiantang Smart City Management Committee | deposit | 1,007,000.00 | 2-3 years | 1.55% | 201,400.00 |
| China Construction Electronic Commerce Co., Ltd. | deposit | 2,510,000.00 | Within 1 year | 3.86% | 125,500.00 |
| Total | 38,103,781.13 | 58.57% | 4,627,549.77 |
8. Inventory
Whether the Company is required to follow real estate industry disclosure requirementsNone
(1) Categories of inventories
Unit: CNY
| Item | Closing balance | Opening balance | ||||
| Book balance | Reserve for inventory decline or impairment of contract performance costs | Book value | Book balance | Reserve for inventory decline or impairment of contract performance costs | Book value | |
| Raw material | 763,015,426.57 | 11,758,583.43 | 763,015,426.57 | 828,353,943.87 | 828,353,943.87 | |
| Goods in progress | 346,179,403.66 | 346,179,403.66 | 411,642,818.41 | 411,642,818.41 | ||
| Finished goods | 1,769,035,629.25 | 72,251,465.32 | 1,685,025,580.50 | 1,619,622,574.68 | 47,220,974.64 | 1,572,401,600.04 |
| Commissioned materials | 16,699,727.54 | 16,699,727.54 | 22,559,098.84 | 22,559,098.84 | ||
| Low-value consumable goods | 1,652,387.41 | 1,652,387.41 | 820,535.68 | 820,535.68 | ||
| Total | 2,896,582,574.43 | 84,010,048.75 | 2,812,572,525.68 | 2,882,998,971.48 | 47,220,974.64 | 2,835,777,996.84 |
(2) Reserve for inventory decline and impairment of contract performance costs
Unit: CNY
| Item | Opening balance | Current increase | Current reduction | Closing balance | |||||||
| Provision | Others | Reversal or elimination | Others | ||||||||
| Raw material | 12,089,485.73 | 39,929.66 | 370,831.96 | 11,758,583.43 | |||||||
| Finished goods | 47,220,974.64 | 31,100,452.54 | 3,977,161.75 | 10,047,123.61 | 72,251,465.32 | ||||||
| Total | 47,220,974.64 | 43,189,938.27 | 4,017,091.41 | 10,417,955.57 | 84,010,048.75 | ||||||
| Item | Determine net realizable value Concrete basis | Reverse inventory decline Reasons for preparation | The value of inventory sold fell Reasons for preparation | ||||||||
| Raw material | The amount of the estimated selling price of the relevant finished products less the estimated cost to be incurred up to completion, estimated selling expenses and related taxes and fees | During the current period, the inventory that has been set aside for inventory decline is consumed/sold | |||||||||
| Finished goods | The amount of the estimated selling price of the relevant finished products less the estimated selling expenses and related taxes is determined as net realizable value | Selling or scrapping part of the inventory that has been drawn down the reserve for inventory decline, and selling off the corresponding inventory decline reserve that has been drawn up | |||||||||
9. Current portion of non-current assets
Unit: CNY
| Item | Closing balance | Opening balance |
| Finance lease receivable | 98,061.60 | 90,708.80 |
| Total | 98,061.60 | 90,708.80 |
Significant debt investments/other debt investments
Unit: CNY
| Credit item | Closing balance | Opening balance | ||||||
| Face value | Coupon rate | Effective interest rate | Maturity date | Face value | Coupon rate | Effective interest rate | Maturity date | |
Other notes:
10. Other current assets
Unit: CNY
| Item | Closing balance | Opening balance |
| VAT allowance | 114,913,836.33 | 160,295,028.26 |
| Advance payment of corporate income tax | 4,945,994.21 | 24,135,847.39 |
| Deferred expense | 3,832,917.83 | 5,876,647.96 |
| Time deposit interest | 10,437,900.21 | 3,683,674.49 |
| Total | 134,130,648.58 | 193,991,198.10 |
Other notes:
11. Long-term receivables
(1) Long-term receivables
Unit: CNY
| Item | Closing balance | Opening balance | Discount rate interval | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | ||
| Finance lease | 299,568.31 | 299,568.31 | 446,386.40 | 446,386.40 | 0.75% | ||
| Including: Unrealized financing income | -4,002.95 | -4,002.95 | -14,135.20 | -14,135.20 | |||
| Land lease deposit | 2,572,611.16 | 2,572,611.16 | 2,274,855.31 | 2,274,855.31 | |||
| Total | 2,872,179.47 | 2,872,179.47 | 2,721,241.71 | 2,721,241.71 | |||
Impairment of bad debt provision
Unit: CNY
| Bad debt provision | Stage I | Stage II | Stage III | Total |
| 12-month ECL | Lifetime ECL (not impaired) | Lifetime ECL (impaired) | ||
| Changes due to financial instruments recognized as at January 1, 2022 |
Loss reserve for a significant change in book balance during the current period
□ Applicable ? N/A
12. Long-term equity investment
Unit: CNY
| Investee | Opening balance (book value) | Changes in the current period | Closing balance (book value) | Impairment reserve closing balance | |||||||
| Additional investment | Reduction of investment | Investment gains and losses recognized under the equity method | Other comprehensive income adjustments | Other changes in equity | Declaration of cash dividend or profit | Provision for impairment | Others | ||||
| I. Joint ventures | |||||||||||
| II. Associates | |||||||||||
| Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | 1,268,865,846.61 | 85,019,436.77 | 28,287,071.60 | 5,465,577.19 | 1,387,637,932.17 | ||||||
| Zhejiang Hangcha Holding Co., Ltd. | 732,591,395.62 | 95,134,172.50 | 3,648,430.69 | 6,495,730.54 | 40,000,000.00 | 797,869,729.35 | |||||
| Zhejiang Guozi Robotics Co., Ltd. | 75,805,856.54 | -14,947,882.51 | 1,521,287.22 | 62,379,261.25 | |||||||
| Ningbo Donghai Bank Co., Ltd. | 190,561,324.86 | 12,234,926.64 | -1,053,170.16 | 201,743,081.34 | |||||||
| Changzhou Huada Xidebao Laser Instrument Co., Ltd. | 1,873,675.00 | 1,099,588.38 | 2,973,263.38 | ||||||||
| Hangzhou Micro Nano Technology Co., Ltd. | 84,244,601.17 | 7,684,612.65 | -8,963.76 | 91,920,250.06 | |||||||
| Subtotal | 2,353,942,699.80 | 186,224,854.43 | 30,873,368.37 | 13,482,594.95 | 40,000,000.00 | 2,544,523,517.55 | |||||
| Total | 2,353,942,699.80 | 186,224,854.43 | 30,873,368.37 | 13,482,594.95 | 40,000,000.00 | 2,544,523,517.55 | |||||
Other notes:
None
13. Investments in other equity instruments
Unit: CNY
| Item | Closing balance | Opening balance |
| Hangzhou Haibang Xinhu Talent Venture Investment Partnership (limited partnership) | 16,550,000.00 | 16,550,000.00 |
| Total | 16,550,000.00 | 16,550,000.00 |
Itemized disclosure of non-trading equity instrument investments in the current period
Unit: CNY
| Item | Recognized dividend income | Cumulative gain | Cumulative loss | Amounts transferred from other comprehensive income to retained earnings | Reasons for measurement at fair value with their changes included into other comprehensive income | Reasons for transferring other comprehensive incomes into retained earnings |
| Hangzhou Haibang Xinhu Talent Venture Investment Partnership (limited partnership) | 12,400,000.00 |
Other notes:
None
14. Investment real estate
(1) Investment real estate with cost measurement model
?Applicable □ N/A
Unit: CNY
| Item | Houses and buildings | Land use right | Construction in progress | Total |
| I. Original book value | ||||
| 1. Opening balance | 118,165,047.78 | 16,928,850.24 | 135,093,898.02 | |
| 2. Amount increased in the current period | ||||
| (1) Outsourcing | ||||
| (2) Inventory, fixed assets, transfer-in of construction in progress |
| (3) Increase of enterprise combination | ||||
| 3. Amount decreased in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfer-out | ||||
| 4. Closing balance | 118,165,047.78 | 16,928,850.24 | 135,093,898.02 | |
| II. Cumulative depreciation and Cumulative amortization | ||||
| 1. Opening balance | 6,059,898.87 | 1,975,032.46 | 8,034,931.33 | |
| 2. Amount increased in the current period | 4,561,833.68 | 338,577.00 | 4,900,410.68 | |
| (1) Provision or amortization | 4,561,833.68 | 338,577.00 | 4,900,410.68 | |
| 3. Amount decreased in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfer-out | ||||
| 4. Closing balance | 10,621,732.55 | 2,313,609.46 | 12,935,342.01 | |
| III. Reserve for impairment | ||||
| 1. Opening balance | ||||
| 2. Amount increased in the current period | ||||
| (1) Provision | ||||
| 3. Amount decreased in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfer-out | ||||
| 4. Closing balance | ||||
| IV. Book value |
| 1. Closing book value | 107,543,315.23 | 14,615,240.78 | 122,158,556.01 | |
| 2. Opening book value | 112,105,148.91 | 14,953,817.78 | 127,058,966.69 |
(2) Investment real estate with fair value measurement model
□ Applicable ? N/A
15. Fixed assets
Unit: CNY
| Item | Closing balance | Opening balance |
| Fixed assets | 1,518,902,232.96 | 1,494,547,487.29 |
| Total | 1,518,902,232.96 | 1,494,547,487.29 |
(1) Fixed assets
Unit: CNY
| Item | Houses and buildings | General purpose equipment | Special equipment | Means of transport | Total |
| I. Original book value: | |||||
| 1. Opening balance | 1,221,859,989.74 | 208,831,294.89 | 1,325,263,396.67 | 44,231,023.20 | 2,800,185,704.50 |
| 2. Amount increased in the current period | 94,159,063.15 | 49,115,083.32 | 138,256,756.93 | 8,552,151.34 | 290,083,054.74 |
| (1) Purchase | 36,556,513.47 | 38,547,696.43 | 93,759,147.55 | 4,242,093.19 | 173,105,450.64 |
| (2) Transfer-in of construction in progress | 27,885,715.08 | 1,855,954.14 | 9,671,073.12 | 3,041,043.36 | 42,453,785.70 |
| (3) Increase of enterprise combinations | |||||
| (4) Impact of exchange rate fluctuations | 29,716,834.60 | 8,711,432.75 | 34,826,536.26 | 1,269,014.79 | 74,523,818.40 |
| 3. Amount decreased in the current period | 7,359,741.55 | 6,002,459.65 | 93,452,684.73 | 8,025,841.63 | 114,840,727.56 |
| (1) Disposal or scrapping | 7,359,741.55 | 6,002,459.65 | 93,452,684.73 | 8,025,841.63 | 114,840,727.56 |
| 4. Closing | 1,308,659,311.34 | 251,943,918.56 | 1,370,067,468.87 | 44,757,332.91 | 2,975,428,031.68 |
| balance | |||||
| II. Cumulative depreciation | |||||
| 1. Opening balance | 376,911,458.22 | 146,391,564.76 | 743,906,907.98 | 37,645,885.82 | 1,304,855,816.78 |
| 2. Amount increased in the current period | 59,158,712.49 | 18,643,595.92 | 119,449,690.75 | 3,857,957.27 | 201,109,956.43 |
| (1) Provision | 52,744,462.75 | 12,401,804.36 | 109,060,827.37 | 2,956,682.34 | 177,163,776.82 |
| (2) Impact of exchange rate fluctuations | 6,414,249.74 | 6,241,791.56 | 10,388,863.38 | 901,274.93 | 23,946,179.61 |
| 3. Amount decreased in the current period | 784,252.64 | 4,668,140.95 | 41,411,177.43 | 6,677,728.03 | 53,541,299.05 |
| (1) Disposal or scrapping | 784,252.64 | 4,668,140.95 | 41,411,177.43 | 6,677,728.03 | 53,541,299.05 |
| 4. Closing balance | 435,285,918.07 | 160,367,019.73 | 821,945,421.30 | 34,826,115.06 | 1,452,424,474.16 |
| III. Reserve for impairment | |||||
| 1. Opening balance | 782,400.43 | 782,400.43 | |||
| 2. Amount increased in the current period | 3,428,590.31 | 3,428,590.31 | |||
| (1) Provision | 3,305,922.73 | 3,305,922.73 | |||
| (2) Impact of exchange rate fluctuations | 122,667.58 | 122,667.58 | |||
| 3. Amount decreased in the current period | 109,666.18 | 109,666.18 | |||
| (1) Disposal or scrapping | 109,666.18 | 109,666.18 | |||
| 4. Closing balance | 4,101,324.56 | 4,101,324.56 | |||
| IV. Book value | |||||
| 1. Closing book value | 873,373,393.27 | 91,576,898.83 | 544,020,723.01 | 9,931,217.85 | 1,518,902,232.96 |
| 2. Opening book value | 844,948,531.52 | 62,439,730.13 | 580,574,088.26 | 6,585,137.38 | 1,494,547,487.29 |
(2) Fixed assets leased through operating leases
Unit: CNY
| Item | Book value as at the end of the reporting period |
| Houses and buildings | 10,845,503.63 |
| Subtotal | 10,845,503.63 |
16. Construction in progress
Unit: CNY
| Item | Closing balance | Opening balance |
| Construction in progress | 304,599,362.46 | 113,750,851.49 |
| Total | 304,599,362.46 | 113,750,851.49 |
(1) Details of construction in progress
Unit: CNY
| Item | Closing balance | Opening balance | ||||
| Book balance | Reserve for impairment | Book value | Book balance | Reserve for impairment | Book value | |
| Annual output of 550,000 sets of laser sensor modules | 1,865,865.07 | 1,865,865.07 | 27,730,496.71 | 27,730,496.71 | ||
| Phase-I factory construction of GreatStar Intelligent Equipment Co., Ltd. in Vietnam | 95,185,314.94 | 95,185,314.94 | 23,839,910.93 | 23,839,910.93 | ||
| Cambodia Phase II plant construction project | 21,017,425.13 | 21,017,425.13 | 17,095,602.29 | 17,095,602.29 | ||
| Cambodia phase III plant construction project | 19,576,510.61 | 19,576,510.61 | ||||
| Annual output of 1.5 million mesh technology transformation phase II project | 9,141,619.68 | 9,141,619.68 | 10,154,222.15 | 10,154,222.15 | ||
| Intelligent factory with an annual output of 1 million sets of new power tools | 19,200,447.56 | 19,200,447.56 | ||||
| GreatStar headquarters renovation | 28,297,770.43 | 28,297,770.43 | 5,824,743.14 | 5,824,743.14 | ||
| project | ||||||
| Construction of toolbox production bases in Thailand | 11,842,636.03 | 11,842,636.03 | 62,254.53 | 62,254.53 | ||
| Vietnam Union Company equipment installation | 1,348,331.57 | 1,348,331.57 | 200,574.51 | 200,574.51 | ||
| Drawer cabinet production line construction project | 28,596,859.65 | 28,596,859.65 | ||||
| Sporadic projects | 68,526,581.79 | 68,526,581.79 | 28,843,047.23 | 28,843,047.23 | ||
| Total | 304,599,362.46 | 304,599,362.46 | 113,750,851.49 | 113,750,851.49 |
(2) Changes of major construction in progress in the current period
Unit: CNY
| Item | Budget | Opening balance | Current increase | Amount transferred to fixed assets in the current period | Other reduced amounts in the current period | Closing balance | Proportion of cumulative project investment to budget | Progress | Cumulative amount of capitalized interest | Including: Amount of capitalized interest in the current period | Current interest capitalization rate | Source of funds |
| Annual output of 550,000 sets of laser sensor modules | 100,000,000.00 | 27,730,496.71 | 12,024,283.02 | 37,888,914.66 | 1,865,865.07 | 39.75% | 40% | Stock offering funds & others | ||||
| Phase-I factory construction of GreatStar Intelligent Equipment Co., Ltd. in | 102,383,700.00 | 23,839,910.93 | 68,380,874.81 | 2,964,529.20 | 95,185,314.94 | 92.97% | 92% | Stock offering funds & others |
| Vietnam | ||||||||||||
| Cambodia Phase II plant construction project | 20,756,100.00 | 17,095,602.29 | 2,262,941.42 | 1,658,881.42 | 21,017,425.13 | 101.26% | 99% | Others | ||||
| Cambodia Phase III plant construction project | 24,658,000.00 | 18,909,493.70 | 667,016.91 | 19,576,510.61 | 79.39% | 75% | Others | |||||
| Annual output of 1.5 million mesh technology transformation phase II project | 15,000,000.00 | 10,154,222.15 | 3,119,272.51 | 4,131,874.98 | 9,141,619.68 | 88.49% | 90% | Others | ||||
| Intelligent factory with an annual output of 1 million sets of new power tools | 103,000,000.00 | 19,200,447.56 | 19,200,447.56 | 18.64% | 20% | Stock offering funds & Others | ||||||
| GreatStar headquarters renovation project | 35,220,000.00 | 5,824,743.14 | 22,473,027.29 | 28,297,770.43 | 80.35% | 80% | Others | |||||
| Construction of toolbox production | 116,785,800.00 | 62,254.53 | 11,233,233.87 | 547,147.63 | 11,842,636.03 | 93.33% | 95% | Stock offering funds |
| bases in Thailand | ||||||||||||
| Vietnam Union Company equipment installation | 17,234,300.00 | 200,574.51 | 1,542,532.40 | 432,996.06 | 38,220.72 | 1,348,331.57 | 106.95% | 99% | Others | |||
| Drawer cabinet production line construction project | 45,704,200.00 | 28,596,859.65 | 28,596,859.65 | 62.57% | 62% | Others | ||||||
| Total | 580,742,100.00 | 84,907,804.26 | 187,742,966.23 | 42,453,785.70 | 5,875,795.88 | 236,072,780.67 |
17. Productive biological assets
(1) Productive biological assets using cost measurement model
□ Applicable ? N/A
(2) Productive biological assets using fair value measurement model
□ Applicable ? N/A
18. Oil and gas assets
□ Applicable ? N/A
19. Right-to-use assets
Unit: CNY
| Item | Houses and buildings | General purpose equipment | Means of transport | Total |
| I. Original book value | ||||
| 1. Opening balance | 504,829,254.24 | 3,540,581.40 | 9,299,747.81 | 517,669,583.45 |
| 2. Amount increased in the current period | 109,390,010.92 | 671,700.57 | 9,036,662.95 | 119,098,374.44 |
| (1) New lease | 75,608,439.45 | 437,472.00 | 6,618,528.00 | 82,664,439.45 |
| (2) Increase |
| resulted from the combination of enterprises not under common control | ||||
| (3) Impact of exchange rate fluctuations | 33,781,571.47 | 234,228.57 | 2,418,134.95 | 36,433,934.99 |
| 3. Amount decreased in the current period | 17,138,965.73 | 229,213.09 | 17,368,178.82 | |
| (1) Lease expiration | 17,138,965.73 | 229,213.09 | 17,368,178.82 | |
| 4. Closing balance | 597,080,299.43 | 4,212,281.97 | 18,107,197.67 | 619,399,779.07 |
| II. Cumulative depreciation | ||||
| 1. Opening balance | 101,721,014.98 | 1,142,277.36 | 3,083,529.45 | 105,946,821.79 |
| 2. Amount increased in the current period | 103,121,531.98 | 680,961.90 | 6,442,374.58 | 110,244,868.46 |
| (1) Provision | 93,465,964.39 | 550,368.00 | 4,332,384.00 | 98,348,716.39 |
| (2) Increase resulted from the combination of enterprises not under common control | ||||
| (3) Impact of exchange rate fluctuations | 9,655,567.59 | 130,593.90 | 2,109,990.58 | 11,896,152.07 |
| 3. Amount decreased in the current period | 13,861,403.50 | 59,869.09 | 13,921,272.59 | |
| (1) Disposal | ||||
| (2) Lease expiration | 13,861,403.50 | 59,869.09 | 13,921,272.59 | |
| 4. Closing balance | 190,981,143.46 | 1,823,239.26 | 9,466,034.94 | 202,270,417.66 |
| III. Reserve for impairment | ||||
| 1. Opening balance | ||||
| 2. Amount increased in the current period | ||||
| (1) Provision | ||||
| 3. Amount decreased in the current period | ||||
| (1) Disposal | ||||
| 4. Closing balance |
| IV. Book value | ||||
| 1. Closing book value | 406,099,155.97 | 2,389,042.71 | 8,641,162.73 | 417,129,361.41 |
| 2. Opening book value | 403,108,239.26 | 2,398,304.04 | 6,216,218.36 | 411,722,761.66 |
Other notes:
None
20. Intangible assets
(1) Intangible assets
Unit: CNY
| Item | Land use right | Patent right | Unpatented technology | Land ownership | Trademark right | Proprietary technology | Management software | Pollutant discharge right | Total |
| I. Original book value | |||||||||
| 1. Opening balance | 232,058,168.21 | 5,117,908.04 | 129,852,268.23 | 310,883,476.53 | 18,478,820.35 | 132,102,169.22 | 2,648,543.69 | 831,141,354.27 | |
| 2. Amount increased in the current period | 23,051,254.70 | 289,742.53 | 6,978,678.95 | 15,539,106.30 | 31,384,537.22 | 77,243,319.70 | |||
| (1) Purchase | 18,643,000.00 | 289,742.53 | 1,906,467.25 | 3,773.58 | 23,742,516.14 | 44,585,499.50 | |||
| (2) Internal R&D | |||||||||
| (3) Increase of enterprise combinations | |||||||||
| (4) Impact of exchange rate fluctuations | 4,408,254.70 | 5,072,211.70 | 15,535,332.72 | 7,642,021.08 | 32,657,820.20 | ||||
| 3. | 1,816,371 | 584,614.0 | 2,400,985 |
| Amount decreased in the current period | .00 | 3 | .03 | ||||||
| (1) Disposal | 1,816,371.00 | 584,614.03 | 2,400,985.03 | ||||||
| 4. Closing balance | 255,109,422.91 | 5,407,650.57 | 135,014,576.18 | 326,422,582.83 | 18,478,820.35 | 162,902,092.41 | 2,648,543.69 | 905,983,688.94 | |
| II. Cumulative amortization | |||||||||
| 1. Opening balance | 39,264,221.69 | 2,634,970.57 | 5,310,521.33 | 11,264,380.89 | 100,689,600.98 | 684,207.20 | 159,847,902.66 | ||
| 2. Amount increased in the current period | 6,008,367.61 | 514,583.30 | 4,771,932.85 | 1,755,487.93 | 20,606,307.76 | 264,854.40 | 33,921,533.85 | ||
| (1) Provision | 5,935,759.66 | 514,583.30 | 4,146,261.20 | 1,755,487.93 | 19,327,676.58 | 264,854.40 | 31,944,623.07 | ||
| (2) Impact of exchange rate fluctuations | 72,607.95 | 0.00 | 625,671.65 | 1,278,631.18 | 1,976,910.78 | ||||
| 3. Amount decreased in the current period | 584,614.03 | 584,614.03 | |||||||
| (1) Disposal | 584,614.03 | 584,614.03 | |||||||
| 4. Closing balance | 45,272,589.30 | 3,149,553.87 | 10,082,454.18 | 13,019,868.82 | 120,711,294.71 | 949,061.60 | 193,184,822.48 | ||
| III. Reserve for impairment | |||||||||
| 1. |
| Opening balance | |||||||||
| 2. Amount increased in the current period | |||||||||
| (1) Provision | |||||||||
| 3. Amount decreased in the current period | |||||||||
| (1) Disposal | |||||||||
| 4. Closing balance | |||||||||
| IV. Book value | |||||||||
| 1. Closing book value | 209,836,833.61 | 2,258,096.70 | 135,014,576.18 | 316,340,128.65 | 5,458,951.53 | 42,190,797.70 | 1,699,482.09 | 712,798,866.46 | |
| 2. Opening book value | 192,793,946.52 | 2,482,937.47 | 129,852,268.23 | 305,572,955.20 | 7,214,439.46 | 31,412,568.24 | 1,964,336.49 | 671,293,451.61 |
The intangible assets formed through internal R&D of the Company at the end of the current period account for 0.00% of thebalance of intangible assets.
21. Goodwill
(1) Original book value of goodwill
Unit: CNY
| Investee or matter of forming goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Formed by the combination of enterprises | Impact of exchange rate fluctuations | Disposal | ||||
| Lista Holding AG | 985,816,724.04 | 79,909,702.35 | 1,065,726,426.39 | |||
| Geelong Orchid Holdings Ltd | 568,037,859.11 | 568,037,859.11 | ||||
| Arrow Fastener Co., LLC | 588,655,629.60 | 54,371,959.20 | 643,027,588.80 | |||
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd | 118,076,677.01 | 118,076,677.01 | ||||
| Prim' Tools Limited | 62,974,701.61 | 5,816,741.97 | 68,791,443.58 | |||
| Suzhou Xindadi Hardware Product Co., Ltd. | 42,288,608.30 | 42,288,608.30 | ||||
| Prexiso AG | 31,562,433.97 | 2,558,431.65 | 34,120,865.62 | |||
| Prime-Line Products, LLC | 27,415,510.00 | 2,532,270.00 | 29,947,780.00 | |||
| Longyou Hugong Forging No. 3 Tools Co., Ltd. | 8,072,738.29 | 8,072,738.29 | ||||
| Shanghai Endura Tool Co., Ltd. | 5,677,361.84 | 5,677,361.84 | ||||
| Haining Sheffield Cutting Tools Co., Ltd. | 884,415.32 | 884,415.32 | ||||
| Zhejiang Guoxin Tool Co., Ltd. | 308,667.41 | 308,667.41 | ||||
| Longyou Yiyang Forging Co., Ltd. | 170,033.92 | 170,033.92 | ||||
| Total | 2,439,941,360.42 | 145,189,105.17 | 2,585,130,465.59 |
(2) Reserve for goodwill impairment
Unit: CNY
| Investee or matter of forming goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Provision | Disposal | |||||
| Lista Holding AG | 70,398,887.67 | 70,398,887.67 | ||||
| Geelong Orchid Holdings Ltd (Note) | 524,650.53 | 1,049,301.06 | 1,573,951.59 | |||
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd | 58,591,956.96 | 58,591,956.96 | ||||
| Prime-Line Products, LLC | 3,311,657.93 | 3,311,657.93 | ||||
| Longyou Hugong | 1,333,583.47 | 6,739,154.82 | 8,072,738.29 | |||
| Forging No. 3 Tools Co., Ltd. (Note) | ||||||
| Shanghai Endura Tool Co., Ltd. | 5,677,361.84 | 5,677,361.84 | ||||
| Haining Sheffield Cutting Tools Co., Ltd. | 884,415.32 | 884,415.32 | ||||
| Zhejiang Guoxin Tool Co., Ltd. | 308,667.41 | 308,667.41 | ||||
| Longyou Yiyang Forging Co., Ltd. | 170,033.92 | 170,033.92 | ||||
| Total | 134,160,736.56 | 14,828,934.37 | 148,989,670.93 |
Information about the asset group or combination of asset groups where goodwill is locatedIn recognition of the goodwill generated by the deferred income tax liabilities of Longyou Hugong Forging No. 3 Tools Co., Ltd.and the related asset group of Geelong Orchid Holdings Ltd, an equivalent amount of goodwill impairment provision of CNY444,527.83 and CNY 1,049,301.06 was made due to the reversal of the current deferred income tax liabilities.Explanations for the goodwill impairment test process, key parameters (such as forecast period growth rate, stable period growthrate, profit rate, discount rate, forecast period, etc. when the present value of future cash flows is expected) and the recognitionmethod of goodwill impairment loss:
Goodwill impairment test process
1) Lista Holding AG
① Information about the asset group or combination of asset groups where goodwill is located
| Composition of the asset group or the combination of asset groups | Related asset group of Lista Holding AG |
| Book value of the asset group or the combination of asset groups | 679,523,110.89 |
| Book value of goodwill apportioned to the asset group or combination of asset groups and method of apportionment | 995,327,538.72 |
| Book value of the asset group or combination of asset groups containing goodwill | 1,674,850,649.61 |
| Whether the asset group or combination of asset groups is consistent with the asset group or combination of asset groups as determined at the date of purchase and at the time of the goodwill impairment test in prior years | Yes |
② Process, method and conclusion of goodwill impairment test
The recoverable amount of goodwill is calculated according to the present value of the expected future cash flow, which is basedon the 5-year cash flow forecast approved by the Company. The discount rate used for the cash flow forecast is 11.10% (2021:
9.96%), and the cash flow after the forecast period remains stable.
Other key data used in the impairment test include: estimated selling price, sales volume, production cost and other relatedexpenses. The Company has determined the above key data based on its historical experience and forecast of market development.The discount rate adopted by the Company is the pre-tax interest rate that reflects the current market time value of money and thespecific risks of the underlying asset group.According to the Appraisal Report issued by Wanbang Asset Appraisal Co., Ltd. (Wan Bang Ping Bao (2023) No. 91), therecoverable amount of the asset group or combination of asset groups containing goodwill is CNY 1,782,760,000.00, and the bookvalue is CNY 1,674,850,649.61, and there is no impairment loss of goodwill.
2) Geelong Orchid Holdings Ltd
① Information about the asset group or combination of asset groups where goodwill is located
| Composition of the asset group or the combination of asset groups | Related asset group of Geelong Orchid Holdings Ltd |
| Book value of the asset group or the combination of asset groups | 533,728,771.00 |
| Book value of goodwill apportioned to the asset group or combination of asset groups and method of apportionment | 566,463,907.52 |
| Book value of the asset group or combination of asset groups containing goodwill | 1,100,192,678.52 |
| Whether the asset group or combination of asset groups is consistent with the asset group or combination of asset groups as determined at the date of purchase and at the time of the goodwill impairment test in prior years | No |
| Composition of asset group or combination of asset groups during the goodwill impairment test in 2021 | Geelong Orchid Holdings Ltd asset group |
| Reason for change in the composition of an asset group or combination of asset groups | Due to the adjustment of internal business and equity structure, Geelong (Thailand) Co., Ltd. has been included in the asset group of Geelong Orchid Holdings Ltd since 2022 |
② Process, method and conclusion of goodwill impairment test
The recoverable amount of goodwill is calculated according to the present value of the expected future cash flow, which is basedon the 5-year cash flow forecast approved by the Company. The discount rate used in the cash flow forecast is 12.14% (2021:
12.68%), and the cash flow after the forecast period remains stable.
Other key data used in the impairment test include: estimated selling price, sales volume, production cost and other relatedexpenses. The Company has determined the above key data based on its historical experience and forecast of market development.The discount rate adopted by the Company is the pre-tax interest rate that reflects the current market time value of money and thespecific risks of the underlying asset group.According to the Appraisal Report issued by Wanbang Asset Appraisal Co., Ltd. (Wan Bang Ping Bao (2023) No. 90), therecoverable amount of the asset group or combination of asset groups containing goodwill is CNY 1,243,000,000.00, and the bookvalue is CNY 1,100,192,678.52, and there is no impairment loss of goodwill.
3) Arrow Fastener Co., LLC
① Information about the asset group or combination of asset groups where goodwill is located
| Composition of the asset group or the combination of asset groups | Related asset group of Arrow Fastener Co., LLC |
| Book value of the asset group or the combination of asset groups | 474,187,618.63 |
| Book value of goodwill apportioned to the asset group or combination of asset groups and method of apportionment | 643,027,588.80 |
| Book value of the asset group or combination of asset groups containing goodwill | 1,117,215,207.43 |
| Whether the asset group or combination of asset groups is consistent with the asset group or combination of asset groups as determined at the date of purchase and at the time of the goodwill impairment test in prior years | Yes |
② Process, method and conclusion of goodwill impairment test
The recoverable amount of goodwill is calculated according to the present value of the expected future cash flow, which is basedon the 5-year cash flow forecast approved by the Company. The discount rate used for the cash flow forecast is 11.61% (2021:
10.61%), and the cash flow after the forecast period remains stable.
Other key data used in the impairment test include: estimated selling price, sales volume, production cost and other relatedexpenses. The Company has determined the above key data based on its historical experience and forecast of market development.The discount rate adopted by the Company is the pre-tax interest rate that reflects the current market time value of money and thespecific risks of the underlying asset group.
According to the Appraisal Report issued by Wanbang Asset Appraisal Co., Ltd. (Wan Bang Ping Bao (2023) No. 93), therecoverable amount of the asset group or combination of asset groups containing goodwill is CNY 1,126,384,758.00, and the bookvalue is CNY 1,117,215,207.80, and there is no impairment loss of goodwill.
4) Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd.
① Information about the asset group or combination of asset groups where goodwill is located
| Composition of the asset group or the combination of asset groups | Related asset group of Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd. |
| Book value of the asset group or the combination of asset groups | 272,284,100.63 |
| Book value of goodwill apportioned to the asset group or combination of asset groups and method of apportionment | 91,514,953.92 |
| Book value of the asset group or combination of asset groups containing goodwill | 363,799,054.55 |
| Whether the asset group or combination of asset groups is consistent with the asset group or combination of asset groups as determined at the date of purchase and at the time of the goodwill impairment test in prior years | Yes |
② Process, method and conclusion of goodwill impairment test
The recoverable amount of goodwill is calculated according to the present value of the expected future cash flow, which is basedon the 5-year cash flow forecast approved by the Company. The discount rate used for the cash flow forecast is 11.34% (2021:
12.85%), and the cash flow after the forecast period remains stable.
Other key data used in the impairment test include: estimated selling price, sales volume, production cost and other relatedexpenses. The Company has determined the above key data based on its historical experience and forecast of market development.The discount rate adopted by the Company is the pre-tax interest rate that reflects the current market time value of money and thespecific risks of the underlying asset group.According to the Appraisal Report issued by Wanbang Asset Appraisal Co., Ltd. (Wan Bang Ping Bao (2023) No. 88), therecoverable amount of the asset group or combination of asset groups containing goodwill is CNY 420,050,000.00, and the bookvalue is CNY 363,799,054.55, and there is no impairment loss of goodwill.
5) Prim' Tools Limited
① Information about the asset group or combination of asset groups where goodwill is located
| Composition of the asset group or the combination of asset groups | Related asset group of Prim' Tools Limited |
| Book value of the asset group or the combination of asset groups | 127,292,247.61 |
| Book value of goodwill apportioned to the asset group or combination of asset groups and method of apportionment | 68,791,443.58 |
| Book value of the asset group or combination of asset groups containing goodwill | 196,083,691.19 |
| Whether the asset group or combination of asset groups is consistent with the asset group or combination of asset groups as determined at the date of purchase and at the time of the goodwill impairment test in prior years | Yes |
② Process, method and conclusion of goodwill impairment test
The recoverable amount of goodwill is calculated according to the present value of the expected future cash flow, which is basedon the 5-year cash flow forecast approved by the Company. The discount rate used for the cash flow forecast is 11.41% (2021:
13.00%), and the cash flow after the forecast period remains stable.
Other key data used in the impairment test include: estimated selling price, sales volume, production cost and other relatedexpenses. The Company has determined the above key data based on its historical experience and forecast of market development.The discount rate adopted by the Company is the pre-tax interest rate that reflects the current market time value of money and thespecific risks of the underlying asset group.
According to the Appraisal Report issued by Wanbang Asset Appraisal Co., Ltd. (Wan Bang Ping Bao (2023) No. 89), therecoverable amount of the asset group or combination of asset groups containing goodwill is CNY 232,330,000.00, and the bookvalue is CNY 196,083,691.19, and there is no impairment loss of goodwill.
6) Prime-Line Products, LLC
① Information about the asset group or combination of asset groups where goodwill is located
| Composition of the asset group or the combination of asset groups | Related asset group of Prime-Line Products, LLC |
| Book value of the asset group or the combination of asset groups | 274,962,185.83 |
| Book value of goodwill apportioned to the asset group or combination of asset groups and method of apportionment | 26,636,122.07 |
| Book value of the asset group or combination of asset groups containing goodwill | 301,598,307.90 |
| Whether the asset group or combination of asset groups is consistent with the asset group or combination of asset groups as determined at the date of purchase and at the time of the goodwill impairment test in prior years | Yes |
② Process, method and conclusion of goodwill impairment test
The recoverable amount of goodwill is calculated according to the present value of the expected future cash flow, which is basedon the 5-year cash flow forecast approved by the Company. The discount rate used for the cash flow forecast is 12.07% (2021:
10.61%), and the cash flow after the forecast period remains stable.
Other key data used in the impairment test include: estimated selling price, sales volume, production cost and other relatedexpenses. The Company has determined the above key data based on its historical experience and forecast of market development.The discount rate adopted by the Company is the pre-tax interest rate that reflects the current market time value of money and thespecific risks of the underlying asset group.According to the Appraisal Report issued by Wanbang Asset Appraisal Co., Ltd. (Wan Bang Ping Bao (2023) No. 92), therecoverable amount of the asset group or combination of asset groups containing goodwill is CNY 318,909,000.00, and the bookvalue is CNY 301,598,307.90, and there is no impairment loss of goodwill.
7) Other companies
① The Company has conducted a closing goodwill impairment test on the related asset groups of Suzhou Xindadi HardwareProducts Co., Ltd. and Prexiso AG. The recoverable amount of the asset group or combination of asset groups containing goodwillis calculated at the present value of projected future cash flows based on a five-year cash flow forecast approved by the Company,which remains stable after the forecast period. The discount rate adopted by the Company is the pre-tax interest rate that reflectsthe current market time value of money and the specific risks of the underlying asset group. Other key data used in the impairmenttest include: estimated selling price, sales volume, production cost and other related expenses. The Company has determined theabove key data based on its historical experience and forecast of market development. The above estimates of recoverable amountsindicate that there is no impairment loss of goodwill.
② The Company has conducted impairment tests on the related asset groups of Longyou Hugong Forging No. 3 Tool Co., Ltd.,Shanghai Liyi Tool Co., Ltd., Haining Sheffield Tool Co., Ltd., Zhejiang Guoxin Tool Co., Ltd., and Longyou Yiyang Forging Co.,Ltd., and their goodwill impairment losses are identified as CNY 6,739,154.82 CNY 5,677,361.84, CNY 884,415.32, CNY308,667.41 and CNY 170,033.92 respectively.Impact of goodwill impairment testN/AOther notes:
22. Long-term deferred expenses
Unit: CNY
| Item | Opening balance | Increase in the current period | Current period amortization amount | Other reduced amounts | Closing balance |
| Expenditures for improvement of leased fixed assets | 6,739,950.58 | 2,043,196.51 | 2,072,420.44 | -25,249.99 | 6,735,976.64 |
| Decoration cost | 6,561,351.43 | 9,812,208.16 | 5,662,902.96 | -163,739.04 | 10,874,395.67 |
| Mold cost | 11,183,138.80 | 7,096,182.44 | 8,045,165.23 | 10,234,156.01 | |
| Others | 2,261,521.44 | 243,355.20 | 786,030.72 | -119,900.10 | 1,838,746.02 |
| Total | 26,745,962.25 | 19,194,942.31 | 16,566,519.35 | -308,889.13 | 29,683,274.34 |
Other notes:
None
23. Deferred income tax assets/deferred income tax liabilities
(1) Unoffset deferred tax assets
Unit: CNY
| Item | Closing balance | Opening balance | ||
| Deductible for temporary differences | Deferred tax assets | Deductible for temporary differences | Deferred tax assets | |
| Bad debt provision | 75,037,482.03 | 19,562,336.87 | 126,923,687.93 | 24,804,313.63 |
| Reserve for inventory decline | 94,747,478.74 | 20,983,892.60 | 63,458,652.61 | 14,741,539.47 |
| Mold cost | 165,257.83 | 24,788.68 | ||
| Changes in the fair value of trading financial instruments | 13,075,775.60 | 1,961,366.34 | ||
| Withholding expense | 188,560,571.00 | 48,671,047.11 | 169,819,676.11 | 24,529,483.31 |
| Deferred income | 795,332.50 | 119,299.88 | 1,556,851.32 | 233,527.70 |
| Profits distributed from partnership business | 10,437,803.87 | 1,565,670.58 | ||
| Total | 382,654,443.74 | 92,863,613.38 | 361,924,125.80 | 64,333,652.79 |
(2) Unoffset deferred income tax liabilities
Unit: CNY
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Appraisal of assets appreciation of enterprises with different control | 130,493,175.41 | 22,637,189.13 | 136,221,613.07 | 24,608,080.53 |
| Changes in the fair value of trading financial assets | 216,822.79 | 32,523.42 | 2,822,612.24 | 423,391.84 |
| Interest receivable | 10,354,688.66 | 1,553,203.30 | 3,683,674.49 | 552,551.17 |
| Depreciation of fixed assets | 157,866,605.45 | 33,965,448.24 | 215,457,755.28 | 48,392,628.88 |
| Reserve for inventory decline | 6,370,128.97 | 1,301,362.33 | 17,481,348.51 | 2,452,010.77 |
| Withholding expense | 51,761,401.14 | 10,591,929.69 | 143,184,822.64 | 19,782,033.37 |
| Others | 1,861,905.13 | 380,371.14 | 5,266,299.15 | 716,690.58 |
| Total | 358,924,727.55 | 70,462,027.25 | 524,118,125.38 | 96,927,387.14 |
(3) Details of unrecognized deferred income tax assets
Unit: CNY
| Item | Closing balance | Opening balance |
| Deductible loss | 291,942,202.73 | 268,267,176.46 |
| Total | 291,942,202.73 | 268,267,176.46 |
(4) Deductible losses on unrecognized deferred tax assets will become due in the following years
Unit: CNY
| Year | Closing amount | Opening amount | Remarks |
| 2022 | 8,794,514.34 | ||
| 2023 | 12,521,147.05 | 13,108,405.23 | |
| 2024 | 32,951,460.64 | 34,197,239.43 | |
| 2025 | 34,819,578.42 | 34,847,410.00 | |
| 2026 | 69,022,589.38 | 92,940,492.11 | |
| 2027 | 50,649,136.49 | 7,204,355.21 | |
| 2028 | 26,243,099.31 | 26,243,099.31 | |
| 2029 | 7,438,617.58 | 7,438,617.58 | |
| 2030 | 13,508,002.18 | 15,081,463.76 | |
| 2031 | 32,348,426.72 | 28,411,579.49 | |
| 2032 | 12,440,144.96 | ||
| Total | 291,942,202.73 | 268,267,176.46 |
Other notes:
None
24. Other non-current assets
Unit: CNY
| Item | Closing balance | Opening balance | ||||
| Book balance | Reserve for impairment | Book value | Book balance | Reserve for impairment | Book value | |
| Prepayment for land purchase | 57,883,798.81 | 57,883,798.81 | 54,968,493.62 | 54,968,493.62 | ||
| Prepayment for equipment | 14,558,437.00 | 14,558,437.00 | 40,432,170.46 | 40,432,170.46 | ||
| Prepayment for intangible assets purchase | 2,064,892.14 | 2,064,892.14 | 8,370,928.98 | 8,370,928.98 | ||
| Total | 74,507,127.95 | 74,507,127.95 | 103,771,593.06 | 103,771,593.06 | ||
Other notes:
None
25. Short-term borrowings
(1) Classification of short-term borrowings
Unit: CNY
| Item | Closing balance | Opening balance |
| Pledged borrowings | 20,924,304.95 | |
| Mortgaged borrowings | 10,000,000.00 | 14,000,000.00 |
| Secured borrowings | 145,646,000.00 | 73,000,000.00 |
| Credit borrowings | 1,199,414,617.82 | 1,718,165,732.74 |
| Interest payables that have been withdrawn not yet due | 3,077,790.34 | 1,735,468.65 |
| Total | 1,379,062,713.11 | 1,806,901,201.39 |
Description about classification of short-term borrowings:
None
(2) Overdue and unpaid short-term borrowings
The total amount of overdue and unpaid short-term borrowings at the end of the current period is CNY xxx, among which theimportant overdue short-term borrowings are as follows:
Unit: CNY
| Borrower | Closing balance | Borrowing rate | Overdue time | Overdue interest rate |
Other notes:
26. Trading financial liabilities
Unit: CNY
| Item | Closing balance | Opening balance |
| Trading financial liabilities | 48,413,710.29 | 978,031.91 |
| Including: | ||
| Derivative financial liabilities | 48,413,710.29 | 978,031.91 |
| Including: | ||
| Total | 48,413,710.29 | 978,031.91 |
Other notes:
27. Notes payable
Unit: CNY
| Types | Closing balance | Opening balance |
| Banker's acceptance | 21,096,540.03 | 51,728,000.00 |
| Total | 21,096,540.03 | 51,728,000.00 |
The total amount of notes payable due and unpaid at the end of the current period is CNY 0.00.
28. Accounts payable
(1) List of accounts payable
Unit: CNY
| Item | Closing balance | Opening balance |
| Payment payable for materials purchase | 1,150,990,191.95 | 1,425,489,422.83 |
| Expenses payable | 165,627,875.06 | 164,006,095.43 |
| Payment payable for engineering equipment | 50,257,201.70 | 50,935,411.58 |
| Total | 1,366,875,268.71 | 1,640,430,929.84 |
29. Contractual liabilities
Unit: CNY
| Item | Closing balance | Opening balance |
| Payment for goods | 131,898,420.14 | 91,235,951.19 |
| Total | 131,898,420.14 | 91,235,951.19 |
Amount and reason of significant changes in book value during the reporting period
Unit: CNY
| Item | Variable amount | Reasons for change |
30. Employee benefits payable
(1) List of employee benefits payable
Unit: CNY
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| I. Short-term benefits | 258,963,855.94 | 1,903,414,672.41 | 1,904,071,498.98 | 258,307,029.37 |
| II. Post-employment benefits - defined contribution plan | 5,109,849.44 | 122,826,836.18 | 115,565,527.17 | 12,371,158.45 |
| Total | 264,073,705.38 | 2,026,241,508.59 | 2,019,637,026.15 | 270,678,187.82 |
(2) List of short-term benefits
Unit: CNY
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1. Salaries, bonuses, allowances and | 249,932,098.41 | 1,705,346,783.15 | 1,702,241,783.54 | 253,037,098.02 |
| subsidies | ||||
| 2. Employee welfare expenses | 0.00 | 62,735,235.93 | 62,735,235.93 | 0.00 |
| 3. Social insurance premium | 3,774,792.73 | 99,123,280.97 | 98,914,773.97 | 3,983,299.73 |
| Including: health insurance premiums | 3,588,364.25 | 84,300,727.84 | 84,210,968.85 | 3,678,123.24 |
| Industrial injury insurance premium | 179,773.07 | 14,241,854.09 | 14,120,316.75 | 301,310.41 |
| Maternity insurance premium | 6,655.41 | 580,699.04 | 583,488.37 | 3,866.08 |
| 4. Housing provident fund | 127,564.00 | 28,622,105.77 | 28,404,520.21 | 345,149.56 |
| 5. Trade union funds and employee education funds | 5,129,400.80 | 7,587,266.59 | 11,775,185.33 | 941,482.06 |
| Total | 258,963,855.94 | 1,903,414,672.41 | 1,904,071,498.98 | 258,307,029.37 |
(3) List of defined contribution plan
Unit: CNY
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1. Basic endowment insurance premium | 4,965,811.04 | 120,432,567.24 | 113,209,605.37 | 12,188,772.91 |
| 2. Unemployment insurance premium | 144,038.40 | 2,394,268.94 | 2,355,921.80 | 182,385.54 |
| Total | 5,109,849.44 | 122,826,836.18 | 115,565,527.17 | 12,371,158.45 |
Other notes:
None
31. Taxes payable
Unit: CNY
| Item | Closing balance | Opening balance |
| Value-added tax | 25,628,212.44 | 10,372,853.71 |
| Consumption tax | 4,646,613.97 | 3,774,804.62 |
| Corporate income tax | 128,337,935.70 | 141,051,404.72 |
| Individual income tax | 3,844,249.01 | 3,916,018.80 |
| City maintenance and construction tax | 1,356,721.18 | 1,207,760.74 |
| Property tax | 6,855,195.19 | 6,481,130.82 |
| Stamp duty | 2,116,945.92 | 751,473.65 |
| Land use tax | 2,072,352.53 | 2,193,256.20 |
| Education surcharge | 682,263.36 | 543,959.59 |
| Local education additional tax | 462,433.69 | 464,719.08 |
| Environmental protection tax | 1,442.26 | 1,464.83 |
| Security fund for the disabled | 61,129.65 | 65,433.09 |
| Vehicle and vessel tax | 11,828.17 | |
| Withholding and payment of VAT | 494,411.75 | |
| Withholding and payment of enterprise income tax | 384,048.88 | |
| Total | 176,943,955.53 | 170,836,108.02 |
Other notes:
None
32. Other payables
Unit: CNY
| Item | Closing balance | Opening balance |
| Other amounts payable | 21,198,376.32 | 676,502,987.21 |
| Total | 21,198,376.32 | 676,502,987.21 |
(1) Other payables
1) List other payables according to the nature of the payments
Unit: CNY
| Item | Closing balance | Opening balance |
| Provisional receipts payable | 8,050,261.29 | 5,712,537.69 |
| Fund lending | 5,055,791.67 | 583,570,527.78 |
| deposit | 2,453,772.95 | 2,476,768.95 |
| Withholding expense | 1,447,150.53 | 4,166,538.26 |
| Equity payments payable | 76,724,758.42 | |
| Others | 4,191,399.88 | 3,851,856.11 |
| Total | 21,198,376.32 | 676,502,987.21 |
2) Other important payables whose account age exceeds 1 year
Unit: CNY
| Item | Closing balance | Reasons for not being repaid or carried forward |
Other notes:
None
33. Current portion of non-current liabilities
Unit: CNY
| Item | Closing balance | Opening balance |
| Current portion of long-term borrowing | 233,875,782.07 | 231,828,892.32 |
| Current portion of lease liability | 88,367,583.10 | 125,724,601.18 |
| Interest payable on long-term borrowings that have been withdrawn not yet due | 1,053,468.23 | 972,470.19 |
| Total | 323,296,833.40 | 358,525,963.69 |
Other notes:
None
34. Other current liabilities
Unit: CNY
| Item | Closing balance | Opening balance |
| Tax on items to be resold | 2,136,266.97 | 2,501,196.81 |
| Total | 2,136,266.97 | 2,501,196.81 |
Change in short-term bonds payable:
Unit: CNY
| Bond name | Face value | Date of issue | Bond period | Amount issued | Opening balance | Current issue | Interest charged at par | Amortization of premiums or discounts | Repayment in the current period | Closing balance | |
| Total |
Other notes:
35. Long-term borrowings
(1) Classification of long-term borrowings
Unit: CNY
| Item | Closing balance | Opening balance |
| Pledged borrowings | 73,600,000.00 | 147,120,000.00 |
| Secured borrowings | 129,954,602.72 | |
| Credit borrowings | 724,448,825.19 | 273,594,153.36 |
| Pledge and guarantee borrowings | 464,565,380.50 | |
| Interest payable on long-term borrowings that have been withdrawn not yet due | 556,126.65 | 211,595.49 |
| Total | 798,604,951.84 | 1,015,445,732.07 |
Description about classification of long-term borrowings:
Other notes, including interest rate ranges:
36. Lease liabilities
Unit: CNY
| Item | Closing balance | Opening balance |
| Unpaid lease payments | 324,601,077.37 | 296,462,213.75 |
| Less: Financing charges not recognized | -6,379,727.38 | -7,265,702.73 |
| Total | 318,221,349.99 | 289,196,511.02 |
Other notes:
None
37. Long-term employee benefits payable
(1) Long-term employee benefits payable statement
Unit: CNY
| Item | Closing balance | Opening balance |
| II. Dismiss welfare | 19,223,856.97 | 20,854,276.60 |
| Total | 19,223,856.97 | 20,854,276.60 |
38. Provisions
Unit: CNY
| Item | Closing balance | Opening balance | Reason for formation |
| Product quality assurance | 2,511,885.60 | 2,309,585.60 | |
| Soil remediation cost | 2,036,528.30 | 2,615,283.33 | |
| Total | 4,548,413.90 | 4,924,868.93 |
Other statements, including the statements of material assumptions and estimates relating to significant provisions:
None
39. Deferred income
Unit: CNY
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | Reason for formation |
| Government subsidy | 2,802,244.63 | 873,200.00 | 1,310,756.89 | 2,364,687.74 | Special subsidy |
| Total | 2,802,244.63 | 873,200.00 | 1,310,756.89 | 2,364,687.74 | -- |
Items involving government grants:
Unit: CNY
| Liability items | Opening balance | Amount of additional subsidy in the current period | Amount included in non-operating income in the current period | Amount included in other income in the current period | Amount of write-down of costs and expenses in the current period | Other changes | Closing balance | Asset-related/income-related |
| Special subsidy for "machine | 1,085,393.07 | 191,918.07 | 893,475.00 | Asset-related |
| replaces human" technical transformation project | ||||||||
| Special subsidies for equipment manufacturing projects in strategic emerging industries | 689,999.72 | 230,000.04 | 459,999.68 | Asset-related | ||||
| Special subsidies for building a public service platform for foreign trade | 636,555.46 | 393,222.48 | 243,332.98 | Asset-related | ||||
| Special funds for development pilot and base projects in strategic emerging industries | 183,999.88 | 92,000.04 | 91,999.84 | Asset-related | ||||
| Financial subsidy for new hand tool series product expansion project | 160,000.24 | 99,999.96 | 60,000.28 | Asset-related | ||||
| Special subsidy for innovation capacity construction projects of provincial enterprise technology center | 46,296.26 | 46,296.26 | Asset-related | |||||
| Subsidies for industrial production equipment | 573,200.00 | 57,320.04 | 515,879.96 | Asset-related | ||||
| Subsidies for project R&D | 300,000.00 | 200,000.00 | 100,000.00 | Income-related |
| Subtotal | 2,802,244.63 | 873,200.00 | 1,310,756.89 | 2,364,687.74 |
Other notes:
For details of the amount of government grants included in current profit and loss, see Section X, (VII), 66 “Description ofgovernment grants”
40. Capital stock
Unit: CNY
| Opening balance | Increase or decrease in this change (+, -) | Closing balance | |||||
| Issue new shares | Share delivery | Conversion of provident fund shares | Others | Subtotal | |||
| Number of shares | 1,143,438,492.00 | 59,063,500.00 | 59,063,500.00 | 1,202,501,992.00 | |||
Other notes:
In accordance with the resolutions of the 22nd Meeting of the 5th Session of Board of Directors of the Company and the 2ndextraordinary General Meeting of Shareholders in 2022, and after the approval of the Prospectus Office of SIX Swiss Exchange(hereinafter referred to as "SIX") and the License No. (2022) 2680 of China Securities Regulatory Commission, the Company isauthorized to issue no more than 114,343,849 new A-share underlying shares corresponding to Global Depositary Receipt (GDR),and the number of GDR to be issued does not exceed 22,868,769 shares based on the conversion ratio determined (each GDRrepresents 5 A-share underlying shares). In accordance with the offering plan and subscription, the Company has issuedGDR11,812,700 shares, corresponding to 59,063,500 A-share underlying shares of the Company, to the qualified internationalinvestors and other investors in compliance with relevant regulations at an offering price of USD 13.08 per GDR, for a totalamount of funds to be raised USD 154,510,116.00. As of November 18, 2022, the Company has actually issued GDR11,812,700shares to the above qualified investors, corresponding to 59,063,500 A-share underlying shares of the Company, and the totalamount of funds to be raised is USD 154,510,116.00 (equivalent to CNY 1,087,601,650.11). After deducting the issuance fee ofCNY 16,273,353.87, the net fund raised is CNY 1,071,328,296.24. Among them, the paid-in capital stock is CNY fifty-ninemillion, sixty-three thousand and five hundred (CNY 59,063,500.00) and the capital reserve (capital stock premium) is CNY1,012,264,796.24. The receipt of the above raised funds has been verified by Tianjian Certified Public Accountants (SpecialGeneral Partnership), and the capital verification report No. Tian Jian Yan (2022) No. 681 is issued.
41. Capital reserve
Unit: CNY
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Capital premium (equity premium) | 2,720,102,577.01 | 1,012,344,496.65 | 3,732,447,073.66 | |
| Other capital reserves | 204,849,267.92 | 13,482,594.95 | 218,331,862.87 | |
| Total | 2,924,951,844.93 | 1,025,827,091.60 | 3,950,778,936.53 |
Other explanations, including description of changes in the current period and reasons for changes:
1) Capital reserve - Description about changes in equity premium
① In the current period, due to the Company's issuance of Global Depositary Receipt (GDR) on SIX, the capital reserve -premium on capital stock is increased by CNY 1,012,264,796.24. For details, see Section 10, (VII), 40, “Description of CapitalStock”.
② The Company accepts the 1.94% equity of Hangzhou GreatStar Hardware Tools Co., Ltd., which is held by minorityshareholders of Hangzhou GreatStar Hardware Tools Co., Ltd., at the price of CNY 0.00. When the Company is preparing theconsolidated financial statements, the difference of CNY 79,700.41 between the newly acquired long-term equity investment dueto the purchase of minority shares and the net asset share of Hangzhou GreatStar Hardware Tools Co., Ltd., which shall becontinuously calculated since the combination date based on the newly added shareholding ratio, is included in the capital reserve.
2) Capital Reserve – Description about changes in other capital reserve
The shares of changes in shareholders’ equity of Zhejiang Guozi Robotics Co., Ltd., Zhejiang Hangcha Holding Co., Ltd., andHangzhou Zhongce Haichao Enterprise Management Co., Ltd., excluding the net profit and loss, other comprehensive income andprofit distribution, which shall be calculated according to the Company's shareholding ratio, have increased in long-term equityinvestment and capital reserves respectively - other capital reserves of CNY 1,521,287.22, CNY 6,495,730.54 and CNY5,465,577.19.
42. Treasury stock
Unit: CNY
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Treasury stock | 186,441,914.48 | 50,184,047.52 | 236,625,962.00 | |
| Total | 186,441,914.48 | 50,184,047.52 | 236,625,962.00 |
Other explanations, including description of changes in the current period and reasons for changes:
According to the resolution of the 11th Meeting of the 5th Session of Board of Directors of the Company, it is agreed that theCompany shall use its own funds of no less than (inclusive) CNY 180 million and no more than (inclusive) CNY 360 million tobuy back part of the Company's shares through centralized bidding. The price of the repurchased shares shall not exceed CNY 36per share, and the term of the repurchased shares shall not exceed 12 months from the date of deliberation and approval by theboard of directors. By the end of the period, the Company's special account for share repurchase has repurchased 8,023,810 sharesin total and paid CNY 236,625,962.00 in total.
43. Other comprehensive income
Unit: CNY
| Item | Opening balance | Current period amount | Closing balance | |||||
| Current period amount before income tax | Less: transferred to profit or loss in the current period from other comprehensive income booked earlier | Less: transferred to retained earnings in the current period from other comprehensive income booked earlier | Less: Income tax expense | Amount attributable to the parent company after tax | Amount attributable to the minority shareholders after tax | |||
| I. Other comprehen | -31,557,637. | -60,977,952. | -3,796,128.0 | -57,181,824. | -88,739,461. | |||
| sive income that cannot be reclassified into profit or loss | 08 | 00 | 0 | 00 | 08 | |||
| Including: remeasured change amount of defined benefit plan | -31,557,637.08 | -60,977,952.00 | -3,796,128.00 | -57,181,824.00 | -88,739,461.08 | |||
| II. Other comprehensive incomes that can be reclassified into profit and loss | -198,216,552.02 | 401,966,569.95 | 401,966,569.95 | 355,012.40 | 203,750,017.93 | |||
| Including: other comprehensive income that can be transferred to profit or loss under the equity method | -84,939,637.21 | 30,873,368.37 | 30,873,368.37 | -54,066,268.84 | ||||
| Difference in translation of financial statements in foreign currency | -113,276,914.81 | 371,093,201.58 | 371,093,201.58 | 355,012.40 | 257,816,286.77 | |||
| Total other comprehensive incomes | -229,774,189.10 | 340,988,617.95 | -3,796,128.00 | 344,784,745.95 | 355,012.40 | 115,010,556.85 |
Other explanations, including the adjustment of the effective part of cash flow hedge profit and loss to the initial recognizedamount of the hedged items:
None
44. Surplus reserve
Unit: CNY
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Statutory surplus | 598,543,176.63 | 65,300,202.41 | 663,843,379.04 |
| reserve | ||||
| Total | 598,543,176.63 | 65,300,202.41 | 663,843,379.04 |
Description of surplus reserve, including changes in current period and reasons for changes:
According to the provisions of the articles of association, the statutory surplus reserve is withdrawn at 10% of the net profitrealized by the parent company in the current period.
45. Undistributed profits
Unit: CNY
| Item | Current period amount | Prior period amount |
| Undistributed profit at the end of the prior period before adjustment | 6,348,179,336.72 | 5,155,116,352.49 |
| Undistributed profit at the beginning of the period after adjustment | 6,348,179,336.72 | 5,155,116,352.49 |
| Add: Net profit attributable to owners of parent company for the period | 1,419,559,507.10 | 1,270,003,396.40 |
| Less: Withdrawal of statutory surplus reserve | 65,300,202.41 | 76,940,412.17 |
| Undistributed profit at the end of the period | 7,702,438,641.41 | 6,348,179,336.72 |
Details of adjustment of undistributed profit at the beginning of the period:
1) Due to the retroactive adjustment of Accounting Standards for Business Enterprises and relevant new regulations, theundistributed profit at the beginning of the period is affected by CNY 0.00.
2) Due to the change of accounting policies, the undistributed profit at the beginning of the period is affected by CNY 0.00.
3) Due to the correction of major accounting errors, the undistributed profit at the beginning of the period is affected by CNY 0.00.
4) Due to changes in the scope of combination caused by the same control, the undistributed profit at the beginning of the period isaffected by CNY 0.00.
5) After other adjustments in total, the undistributed profit at the beginning of the period is affected by CNY 0.00.
46. Operating proceeds and operating costs
Unit: CNY
| Item | Current period amount | Prior period amount | ||
| Revenues | Costs | Revenues | Costs | |
| Main business | 12,545,286,576.78 | 9,244,404,166.19 | 10,849,925,564.41 | 8,147,389,910.45 |
| Other business | 64,903,013.55 | 22,518,138.56 | 69,757,779.96 | 28,733,758.05 |
| Total | 12,610,189,590.33 | 9,266,922,304.75 | 10,919,683,344.37 | 8,176,123,668.50 |
Whether the net profit is negative after deducting the non-recurrent profit and loss
□Yes ?No
Revenue-related information:
Unit: CNY
| Classification of contract | Branch 1 | Branch 2 | Total | |
| Type of commodity | 12,545,286,576.78 | 12,545,286,576.78 |
| Including: | ||||
| Hand Tools & Storage | 10,004,744,537.61 | 10,004,744,537.61 | ||
| Power Tools ＆ laser Measurement ＆ Power Stations | 2,540,542,039.17 | 2,540,542,039.17 | ||
| Classification by operating area | 12,545,286,576.78 | 12,545,286,576.78 | ||
| Including: | ||||
| America | 7,892,263,869.75 | 7,892,263,869.75 | ||
| Europe | 3,296,852,123.29 | 3,296,852,123.29 | ||
| Others | 634,667,980.89 | 634,667,980.89 | ||
| China | 721,502,602.85 | 721,502,602.85 | ||
| Type of market or customer | ||||
| Including: | ||||
| Type of contract | ||||
| Including: | ||||
| Classification by time of transfer of goods | ||||
| Including: | ||||
| Classification by contract term | ||||
| Including: | ||||
| Classification by sales channel | ||||
| Including: | ||||
| Total |
Information related to performance obligations:
The sales performance obligations of the Company's hand tools and power tools, laser measurings, industrial storages, personalprotective equipment and other products are usually within 1 year. The Company will take advance payment or provide an accountperiod according to different customers. As the main responsible person, the Company directly sells the products. For the domesticsales, the Company will obtain the unconditional right of collection when the Company delivers the products to the customers andthe customers have accepted the products as agreed in the contract; and for the overseas sales, the Company will obtain theunconditional right of collection when the Company declares the products at customs, obtains the bill of lading or delivers theproducts to the customers at the designated destination as agreed in the contract, and the control of the products is transferred tothe customers.Information relating to the transaction price apportioned to the remaining performance obligations:
The amount of revenues corresponding to the performance obligations of the contract signed but not yet performed or completed atthe end of the current reporting period is CNY 131,898,420.14, among which CNY 131,898,420.14 is expected to be recognized in2023, and CNY 0.00 is expected to be recognized in 2024, and CNY 0.00 is expected to be recognized in 2025.Other notes:
The income that is recognized in the current period and included in the opening book value of contract liabilities is CNY91,235,951.19.
47. Taxes and surcharges
Unit: CNY
| Item | Current period amount | Prior period amount |
| City maintenance and construction tax | 11,571,038.85 | 7,256,954.85 |
| Education surcharge | 5,189,547.92 | 3,771,830.67 |
| Property tax | 16,912,104.43 | 12,351,881.98 |
| Land use tax | 2,084,005.49 | 2,227,537.31 |
| Vehicle and vessel use tax | 58,382.49 | 86,214.28 |
| Stamp duty | 8,040,968.45 | 7,829,087.46 |
| Local education additional tax | 3,459,698.53 | 2,585,929.23 |
| Environmental protection tax | 13,002.52 | 9,241.06 |
| Total | 47,328,748.68 | 36,118,676.84 |
Other notes:
None
48. Sales expenses
Unit: CNY
| Item | Current period amount | Prior period amount |
| Compensation expenditures | 398,662,746.55 | 329,786,407.95 |
| Advertising and promotion expenses | 234,815,034.42 | 173,588,091.95 |
| Office expenses | 53,295,831.67 | 22,868,008.43 |
| Depreciation and amortization | 16,451,396.81 | 21,114,863.37 |
| Consulting fee | 14,737,583.22 | 10,976,839.16 |
| Rent fee | 8,096,364.87 | 6,737,089.27 |
| Travel expense | 6,520,356.14 | 5,472,391.88 |
| Commodity inspection fee | 5,278,754.56 | 7,773,433.50 |
| Insurance premium | 4,133,914.99 | 5,538,490.21 |
| Others | 15,236,456.57 | 9,147,487.96 |
| Total | 757,228,439.80 | 593,003,103.68 |
Other notes:
None
49. General and administrative expenses
Unit: CNY
| Item | Current period amount | Prior period amount |
| Compensation expenditures | 474,556,828.40 | 414,247,951.75 |
| Office expenses | 97,032,204.35 | 73,875,810.36 |
| Depreciation and amortization | 77,866,531.84 | 67,871,799.44 |
| Consulting fee | 64,751,668.35 | 88,634,883.05 |
| Travel expense | 17,871,137.28 | 14,051,596.45 |
| Business entertainment expenses | 3,874,433.78 | 3,968,221.22 |
| Greening cost | 2,976,006.64 | 3,459,791.23 |
| Tax expenditure | 2,793,774.11 | 2,206,645.73 |
| Others | 19,238,855.11 | 17,804,031.83 |
| Total | 760,961,439.86 | 686,120,731.06 |
Other notes:
None
50. R&D expenses
Unit: CNY
| Item | Current period amount | Prior period amount |
| Compensation expenditures | 198,631,442.97 | 175,844,458.23 |
| Direct input | 83,802,929.10 | 97,611,535.85 |
| Depreciation and amortization | 15,283,842.90 | 12,408,282.37 |
| Others | 21,726,320.19 | 23,899,089.70 |
| Total | 319,444,535.16 | 309,763,366.15 |
Other notes:
None
51. Financial expenses
Unit: CNY
| Item | Current period amount | Prior period amount |
| Interest expense | 102,114,891.52 | 59,754,089.36 |
| Interest income | -83,482,441.75 | -59,709,415.20 |
| Exchange gain or loss | -146,152,161.07 | 53,973,441.25 |
| Bank charges | 16,664,536.54 | 10,783,600.62 |
| Total | -110,855,174.76 | 64,801,716.03 |
Other notes:
None
52. Other revenues
Unit: CNY
| Other sources of revenue | Current period amount | Prior period amount |
| Government grants related to assets | 1,110,756.89 | 1,190,493.96 |
| Government grants related to revenues | 49,227,280.96 | 45,857,466.79 |
| Refund of withholding personal income tax commission | 333,584.83 | 502,892.56 |
| Total | 50,671,622.68 | 47,550,853.31 |
53. Investment income
Unit: CNY
| Item | Current period amount | Prior period amount |
| Income from long-term equity investments accounted for by the equity method | 186,224,854.43 | 253,722,685.68 |
| Investment income from disposal of long-term equity investments | 70,248.49 | 40,415.45 |
| Investment income of the trading financial asset during the holding period | 2,368,356.03 | 1,808,120.10 |
| Investment income from the disposal of trading financial assets | -16,204,503.40 | 119,298,472.39 |
| Loss on discounted receivables financing | -7,931,415.18 | -4,570,835.23 |
| Dividend income from other equity instruments during the holding period | 12,400,000.00 | |
| Total | 176,927,540.37 | 370,298,858.39 |
Other notes:
None
54. Income from changes in fair value
Unit: CNY
| Source of income from changes in fair value | Current period amount | Prior period amount |
| Trading financial assets | -50,580,428.04 | -22,632,570.84 |
| Including: income from changes in fair value incurred from derivative financial instruments | -41,392,762.63 | -31,697,410.86 |
| Trading financial liabilities | -978,031.91 | |
| Total | -50,580,428.04 | -23,610,602.75 |
Other notes:
None
55. Credit impairment loss
Unit: CNY
| Item | Current period amount | Prior period amount |
| Loss on other bad debts due from receivables | 10,552,317.00 | -4,967,019.95 |
| Bad debt loss on accounts receivable financing | 12,767,474.27 | -9,918,842.81 |
| Bad debt loss on accounts receivable | -1,794,349.36 | -30,906,344.55 |
| Loss on bad debts on prepayments | -2,411,861.08 | 1,461,995.24 |
| Total | 19,113,580.83 | -44,330,212.07 |
Other notes:
None
56. Asset impairment loss
Unit: CNY
| Item | Current period amount | Prior period amount |
| II. Loss of inventory decline and impairment loss of contract performance cost | -43,189,938.27 | -18,850,329.32 |
| V. Impairment loss of fixed assets | -3,305,922.73 | |
| XI. Impairment loss of goodwill | -14,828,934.37 | -4,280,836.29 |
| Total | -61,324,795.37 | -23,131,165.61 |
Other notes:
None
57. Proceeds from asset disposal
Unit: CNY
| Source of asset disposal proceeds | Current period amount | Prior period amount |
| Proceeds from disposal of fixed assets | -15,154,452.66 | -3,020,089.44 |
| Proceeds from disposal of intangible assets | -1,816,371.00 | |
| Proceeds from disposal of right-of-use assets | 75,858.93 | |
| Total | -16,894,964.73 | -3,020,089.44 |
58. Non-operating income
Unit: CNY
| Item | Current period amount | Prior period amount | Amount booked into non-recurring profit or loss in the current period |
| Unpayable accounts | 927,736.08 | 3,836,871.67 | 927,736.08 |
| Indemnity income | 142,321.59 | 324,870.81 | 142,321.59 |
| Gain on decommissioning of non-current assets | 245.38 | 13,785.22 | 245.38 |
| Negative goodwill incurred from business consolidation | 82,984,773.90 | ||
| Others | 112,707.39 | 187,648.80 | 112,707.39 |
| Total | 1,183,010.44 | 87,347,950.40 | 1,183,010.44 |
Government grants recorded in the current profit and loss:
Unit: CNY
| Subsidy item | Issuing body | Reason for issuance | Property/type | Whether subsidies affect profits and losses in the current year | Whether it is a special subsidy | Current period amount | Prior period amount | Asset-related/income-related |
Other notes:
None
59. Non-operating expenses
Unit: CNY
| Item | Current period amount | Prior period amount | Amount booked into non-recurring profit or loss in the current period |
| External donation | 2,381,483.86 | 4,019,141.43 | 2,381,483.86 |
| Indemnity expenditure | 9,616,939.96 | 9,616,939.96 | |
| Loss on scrap of non-current assets | 7,507,908.93 | 1,847,789.51 | 7,507,908.93 |
| Penalty expenditure | 846,535.48 | 321,317.87 | 846,535.48 |
| Others | 628,789.12 | 136,142.69 | 628,789.12 |
| Total | 20,981,657.35 | 6,324,391.50 | 20,981,657.35 |
Other notes:
None
60. Income tax expenses
(1) Income tax expense statement
Unit: CNY
| Item | Current period amount | Prior period amount |
| Income tax expense in the current period | 273,828,973.28 | 181,379,736.40 |
| Deferred income tax expense | -51,199,192.48 | -20,161,653.17 |
| Total | 222,629,780.80 | 161,218,083.23 |
(2) Adjustment process of accounting profit and income tax expense
Unit: CNY
| Item | Current period amount |
| Total profit | 1,667,273,205.67 |
| Income tax expense at statutory/applicable tax rates | 250,090,980.85 |
| Impact of different tax rates applied to subsidiaries | 16,972,963.30 |
| Impact of adjusting income tax for prior periods | 23,824,878.53 |
| Impact of non-taxable income | -7,509,723.61 |
| Impact of non-deductible costs, expenses and losses | 7,811,040.89 |
| Impact of deductible losses on deferred income tax assets not recognized in the prior period | -20,962,995.36 |
| Impact of deductible temporary differences or deductible losses on deferred tax assets not recognized in the current period | 17,778,857.42 |
| Impact of investment income recognized for long-term equity investment calculated under the equity method | -28,150,792.19 |
| Impact of additional deductions for technology development expenses and wages of the disabled | -37,225,429.03 |
| Income tax expense | 222,629,780.80 |
Other notes:
None
61. Other comprehensive income
For details, see Note 43, “Other Comprehensive Incomes”
62. Cash flow statement items
(1) Other cash received in connection with operating activities
Unit: CNY
| Item | Current period amount | Prior period amount |
| Withdrawal of bank acceptance deposit | 27,725,700.00 | 14,267,400.00 |
| Interest income | 76,728,216.03 | 76,718,283.04 |
| Government subsidy income | 46,029,953.90 | 42,393,347.30 |
| Operating lease income | 20,667,575.93 | 19,564,397.37 |
| Withdrawal of customs bond money | 700,000.00 | |
| Others | 230,323.25 | 7,295,322.21 |
| Total | 172,081,769.11 | 160,238,749.92 |
Description of other cash received in connection with operating activities:
None
(2) Other cash paid in connection with operating activities
Unit: CNY
| Item | Current period amount | Prior period amount |
| Operating period expenses | 1,146,808,817.06 | 985,886,790.62 |
| Payment of bank acceptance deposit | 7,384,067.19 | 27,725,700.00 |
| Payment of L/C guarantee deposit | 6,616,370.00 | |
| Payment of customs bond | 1,975,140.00 | |
| Others | 11,076,711.72 | 9,535,171.45 |
| Total | 1,171,885,965.97 | 1,025,122,802.07 |
Description of other cash paid in connection with operating activities:
None
(3) Other cash received in connection with investment activities
Unit: CNY
| Item | Current period amount | Prior period amount |
| Withdrawal of margin purchased for forward settlement and sale of foreign exchange | 69,702,798.00 | 3,295,074.50 |
| Withdrawal of project performance bond | 492,906.98 | 495,608.89 |
| Withdrawal of refundable deposit | 2,154,766.92 | |
| Total | 70,195,704.98 | 5,945,450.31 |
Description of other cash received in connection with investing activities:
None
(4) Other cash paid in connection with investment activities
Unit: CNY
| Item | Current period amount | Prior period amount |
| Purchase of margin for forward settlement and sale of foreign exchange | 100,856,217.74 | 2,295,252.00 |
| Payment of project performance bond | 492,906.98 | |
| Loss on forward settlement and sale of foreign exchange investment | 29,020,494.96 | |
| Total | 129,876,712.70 | 2,788,158.98 |
Description of other cash paid in connection with investment activities:
None
(5) Other cash received in connection with financing activities
Unit: CNY
| Item | Current period amount | Prior period amount |
| Receipt of financial support from the actual controller | 583,000,000.00 | |
| Receipt of bill discount | 99,266,666.67 | |
| Receipt of social fund loan | 5,000,000.00 | |
| Total | 104,266,666.67 | 583,000,000.00 |
Description of other cash received in connection with fund-raising activities:
None
(6) Other cash paid in connection with financing activities
Unit: CNY
| Item | Current period amount | Prior period amount |
| Funds paid for share repurchases | 50,184,047.52 | 186,441,914.48 |
| Funds paid for minority stakes | 20,201,500.00 | |
| Repayment of borrowings and interests | 602,271,700.00 | 16,850,810.54 |
| Repayment of lease liabilities and interests | 86,735,381.29 | 59,939,559.59 |
| Fees for handling of financing guarantee and receivables financing transfer | 7,931,415.18 | 4,570,835.23 |
| Payment of deposit for bank borrowings | 20,893,800.00 | |
| Payment for stock issue | 16,273,353.87 | |
| Redemption amount of convertible bonds | 2,581,437.71 | |
| Payment for settlement of minority shareholders of FRONTIER Kitchen & Bath (Suzhou) Co., Ltd. | 88,811.75 | |
| Total | 784,289,697.86 | 290,674,869.30 |
Description of other cash paid in connection with other financing activities:
None
63. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Unit: CNY
| Supplementary information | Current period amount | Prior period amount |
| 1. Adjustment net profit into cash flow from operating activities | ||
| Net profit | 1,444,643,424.87 | 1,297,315,199.61 |
| Add: Reserve for asset impairment | 42,211,214.54 | 67,461,377.68 |
| Depreciation of fixed assets, depletion of oil and gas assets, depreciation of productive biological assets | 181,387,033.50 | 170,864,798.78 |
| Depreciation of right-of-use assets | 98,348,716.39 | 78,057,113.74 |
| Amortization of intangible assets | 32,283,200.07 | 24,648,378.98 |
| Amortization of long-term deferred expenses | 16,566,519.35 | 28,589,540.58 |
| Loss on disposal of fixed assets, intangible assets and other long-term assets (presented by “-” for gain) | 16,894,964.73 | 3,020,089.44 |
| Loss on retirement of fixed assets (income presented by “-”) | 7,507,663.55 | 1,834,004.29 |
| Loss from changes in fair value (income presented by “-”) | 50,580,428.04 | 23,610,602.75 |
| Financial expenses (income presented by “-”) | -44,037,269.55 | 111,747,068.72 |
| Investment losses (income presented by “-”) | -176,927,540.37 | -370,298,858.39 |
| Decrease in deferred tax assets (increase presented by “-”) | -28,529,960.59 | -21,863,965.98 |
| Increase in deferred income tax liabilities (decrease presented by “-”) | -26,465,359.89 | 1,702,312.81 |
| Decrease in inventory (increase presented by “-”) | -24,001,558.52 | -1,209,507,080.11 |
| Decrease in operating receivables (increase presented by “-”) | 313,928,739.58 | -537,038,480.67 |
| Increase in operating payables (decrease presented by “-”) | -272,553,573.31 | 348,490,067.44 |
| Others | ||
| Net cash flows from operating activities | 1,631,836,642.39 | 18,632,169.67 |
| 2. Major investments and financing activities that do not involve cash receipts and payments | ||
| Conversion of debt into capital | ||
| Current portion of convertible bonds |
| Fixed assets under financing lease | ||
| 3. Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 4,793,427,180.47 | 4,001,186,241.18 |
| Less: Opening balance of cash | 4,001,186,241.18 | 3,730,263,218.08 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 792,240,939.29 | 270,923,023.10 |
(2) Net cash received from subsidiaries paid in the current period
Unit: CNY
| Amount | |
| Including: | |
| Including: | |
| Add: Cash or cash equivalents paid in the current period for business combinations that occurred in the prior period | 76,724,758.42 |
| Including: | |
| Geelong Orchid Holding Limited | 47,973,954.65 |
| BeA | 28,750,803.77 |
| Net cash paid by subsidiaries | 76,724,758.42 |
Other notes:
None
(3) Composition of cash and cash equivalents
Unit: CNY
| Item | Closing balance | Opening balance |
| I. Cash | 4,793,427,180.47 | 4,001,186,241.18 |
| Including: cash on hand | 4,328,053.84 | 2,574,760.83 |
| Bank deposit that is readily available for payment | 4,788,725,570.94 | 3,983,507,419.70 |
| Funds in other currencies that are readily available for payment | 373,555.69 | 15,104,060.65 |
| III. Balance of cash and cash equivalents at the end of the period | 4,793,427,180.47 | 4,001,186,241.18 |
Other notes:
Due to limited liquidity, the Company will use the cash funds other than cash and cash equivalents for bank acceptance deposit,project performance deposit, forward settlement and sale of foreign exchange deposit, customs duty guarantee deposit, ETCdeposit and investment deposit. The opening balance of such margin deposits is CNY 32,520,998.98 and the closing balance isCNY 69,779,001.93.
64. Assets with limited ownership or access
Unit: CNY
| Item | Book value as at the end of the reporting period | Reason for restriction |
| Monetary assets | 33,448,671.74 | Guarantee deposits for future foreign exchange settlement |
| Fixed assets | 27,776,638.39 | Used as collateral for drawing bank acceptance bills |
| Intangible assets | 2,046,633.50 | Used as collateral for drawing bank acceptance bills |
| Monetary assets | 20,893,800.00 | Guarantee deposits for short-term loans |
| Monetary assets | 6,616,370.00 | Guarantee deposits for letters of credit |
| Monetary assets | 7,384,067.19 | Guarantee deposits for bank acceptance bills |
| Monetary assets | 1,393,093.00 | Customs guarantee deposits |
| Monetary assets | 43,000.00 | Guarantee deposits for ETC |
| Fixed assets | 10,003,152.72 | Used as collateral for bank loans |
| Intangible assets | 1,385,386.53 | Used as collateral for bank loans |
| 100% shares of Arrow Fastener Co., LLC (Note) | 481,723,419.57 | Used as collateral for bank loans |
| Total | 592,714,232.64 |
Other notes:
(Note) Arrow Fastener Co., LLC100.00% equity is the closing net book asset
65. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: CNY
| Item | Closing balance of foreign currency | Converted exchange rate | Balance that is converted into CNY at the end of the period |
| Monetary assets | 1,495,179,172.94 | ||
| Including: USD | 158,889,555.73 | 6.9646 | 1,106,602,199.84 |
| EUR | 17,414,286.72 | 7.4229 | 129,264,508.89 |
| HKD | 30,417,977.09 | 0.8933 | 27,172,378.93 |
| VND | 121,580,449,561.00 | 0.00029486 | 35,849,211.36 |
| JPY | 99,935,216.00 | 0.0524 | 5,236,605.32 |
| CHF | 25,241,152.73 | 7.5432 | 190,399,063.27 |
| THP | 2,061,537.85 | 0.2014 | 415,193.72 |
| KHR | 4,016,935.00 | 0.0017 | 6,828.79 |
| MOP | 274,655.85 | 0.849 | 233,182.82 |
| Accounts receivable | 1,823,138,813.21 | ||
| Including: USD | 214,797,632.77 | 6.9646 | 1,495,979,593.19 |
| EUR | 33,201,649.79 | 7.4229 | 246,452,526.23 |
| HKD | 2,046,598.02 | 0.8933 | 1,828,226.01 |
| VND | 1,392,428,508.44 | 0.00029486 | 410,571.47 |
| JPY | 81,660,969.85 | 0.0524 | 4,279,034.82 |
| CHF | 9,503,127.55 | 7.5432 | 71,683,991.74 |
| GBP | 296,684.47 | 8.3941 | 2,490,399.11 |
| THP | 71,850.25 | 0.2014 | 14,470.64 |
| Financing of receivables | 321,247,171.36 | ||
| Including: USD | 46,125,717.39 | 6.9646 | 321,247,171.36 |
| Long-term receivables | 2,872,179.47 | ||
| Including: VND | 8,724,856,400.00 | 0.00029486 | 2,572,611.16 |
| CHF | 39,713.69 | 7.5432 | 299,568.31 |
| Short-term loans | 744,724,368.21 | ||
| Including: EUR | 58,612,784.65 | 7.4229 | 435,076,839.18 |
| USD | 43,110,552.00 | 6.9646 | 300,247,750.46 |
| GBP | 1,119,807.79 | 8.3941 | 9,399,778.57 |
| Accounts payable | 498,822,023.08 | ||
| Including: USD | 38,114,561.49 | 6.9646 | 265,452,674.95 |
| EUR | 4,678.15 | 7.4229 | 34,725.44 |
| HKD | 21,960,029.99 | 0.8933 | 19,616,894.79 |
| JPY | 32,917,910.76 | 0.0524 | 1,724,898.52 |
| CHF | 23,141,772.99 | 7.5432 | 174,563,022.02 |
| VND | 119,627,680,372.34 | 0.00029486 | 35,273,417.83 |
| THP | 10,706,998.66 | 0.2014 | 2,156,389.53 |
| Current portion of non-current liabilities | 161,345,782.08 | ||
| Including: EUR | 21,689,289.48 | 7.4229 | 160,997,426.88 |
| JPY | 6,648,000.00 | 0.0524 | 348,355.20 |
| Long-term loans | 424,448,825.21 | ||
| Including: USD | 60,100,000.00 | 6.9646 | 418,572,460.00 |
| EUR | 791,653.56 | 7.4229 | 5,876,365.21 |
| HKD | |||
| Lease liabilities | 276,291,656.14 | ||
| Including: VND | 42,234,063,296.18 | 0.00029486 | 12,453,135.90 |
| CHF | 27,717,039.17 | 7.5432 | 209,075,169.87 |
| EUR | 4,619,145.25 | 7.4229 | 34,287,453.28 |
| USD | 2,913,418.93 | 6.9646 | 20,290,797.48 |
| HKD | 207,208.79 | 0.8933 | 185,099.61 |
Other notes:
None
(2) Description of overseas operating entities, including important overseas operating entities that shalldisclose their main overseas operating places, bookkeeping base currency and the basis for selection, andshall also disclose the reasons for changes in the bookkeeping base currency.?Applicable □ N/A
| Name | Principal place of business | Bookkeeping base currency |
| BeA GmbH and its subsidiaries | Germany, Austria, Australia, France, Czech Republic, United States, Norway, Sweden, Switzerland, Slovakia, Spain, Italy, United Kingdom | EUR, AUD, USD, CHF, GBP |
| GreatStar Tools USA,INC., and its subsidiaries | USA | USD |
| Lista Holding AG and its subsidiaries | Switzerland, Austria, Germany, France, Spain, Italy, England | CHF, EUR, GBP |
| Geelong Orchid Holding Limited and its subsidiaries | British Cayman Islands, Thailand, Hong Kong, Mauritius, Macau | HKD, THB, USD |
| XDD Products (USA) LLC | USA | USD |
| TGH (Cambodia) Industrial Co., LTD | Cambodia | USD |
| Newland.LLC | USA | USD |
| GreatStar Japan Co., LTD | Japan | JPY |
| GreatStar Europe AG | Switzerland | CHF |
| Prexiso AG | Switzerland | CHF |
| Hong Kong International Huada Kejie Opto-Electro Instrument Co., Ltd. | Hong Kong | USD |
| Hong Kong GreatStar International Limited | Hong Kong | USD |
| Hong Kong Goldblatt Industrial Co., Ltd. | Hong Kong | USD |
| Prim' Tools Limited | Hong Kong | HKD |
| Hong Kong Shop-Vac International Co., Limited | Hong Kong | USD |
| GreatStar International Holdings Limited | British Virgin Islands | USD |
| GreatStar Vietnam Co.,Ltd | Vietnam | VND |
| Vietnam United Co., Ltd | Vietnam | VND |
| GreatStar Industrial Vietnam Co., Ltd | Vietnam | VND |
| SHOP-VAC VIETNAM CO.,LTD | Vietnam | VND |
| HUADA VIETNAM CO.,LTD | Vietnam | VND |
66. Government subsidies
(1) Basic information of government grants
Unit: CNY
| Types | Amount | Presentation item | Amount booked into current profit and loss |
| Special subsidies for building a public service platform for foreign trade | 243,332.98 | Other income | 393,222.48 |
| Special subsidy for "machine replaces human" technical transformation project | 893,475.00 | Other income | 191,918.07 |
| Special subsidies for equipment manufacturing projects in strategic emerging industries | 459,999.68 | Other income | 230,000.04 |
| Financial subsidy for new hand tool series product expansion project | 60,000.28 | Other income | 99,999.96 |
| Special subsidy for innovation capacity construction projects of provincial enterprise technology center | Other income | 46,296.26 | |
| Special funds for development pilot and base projects in strategic emerging industries | 91,999.84 | Other income | 92,000.04 |
| Subsidies for industrial production equipment | 515,879.96 | Other income | 57,320.04 |
| Subtotal | 2,264,687.74 | 1,110,756.89 |
(2) Return of government grants
□ Applicable ? N/A
Other notes:
Government grants that are related to revenues and are used to compensate for related costs or losses of the Company in the futureperiod
| Items | Opening Deferred income | Current period Additional subsidy | Current carry-over | Closing Deferred income | Current carry-over Presentation item | Remarks |
| Subsidy for R&D project | 300,000.00 | 200,000.00 | 100,000.00 | R&D expenses | Chang Ke Fa (2022) No.110 | |
| Subtotal | 300,000.00 | 200,000.00 | 100,000.00 |
Government subsidy related to revenue that is used to compensate a company for related costs or losses that have been incurred
| Items | Amount | Presentation item | Remarks |
| Special financial fund | 12,629,864.00 | Other income | Zhe Cai Ke Jiao (2022) No. 3, Hang Qian Tang Shi Jian (2022) No. 21, Zhe Jing Xin Zhuang Bei (2021) No. 226, etc. |
| Special fund for foreign trade development | 9,575,100.00 | Other income | Hang Cai Qi (2022) No. 57, Zhe Cai Jian (2021) No. 83, Hang Shang Wu (2022) No.69, etc. |
| Subsidies for maintaining stable employment | 5,671,645.53 | Other income | Yue Ren She Gui (2022) No. 9, Zhe Ren She No. 37 (2022), Hai Jing Xin No. 27 (2022), etc. |
| Business development fund | 5,506,637.62 | Other income | Shang Shang Wu (2022) No. 16, Shang Shang Wu (2022) No. 12, Hang Cai Qi (2021) No. 47, etc. |
| Tax refund | 4,070,527.06 | Other income | Cai Shui (2016) No. 52 |
| Special fund for subsidizing e-commerce | 3,602,900.00 | Other income | Shang Shang Wu (2022) No. 11, Hang Zi Mao Ban (2022) No. 2 |
| Patent and intellectual property grants | 2,327,180.00 | Other income | Hang Shi Guan Gan (2021) No. 180, Zhejiang Cai Hang (2020) No. 55, Su Cai Hang (2022) No. 40, etc. |
| Financial assistance fund for R&D | 1,129,310.00 | Other income | Hang Qian Tang Shi Jian (2022) No. 21 |
| Training subsidy | 691,100.00 | Other income | Hang Ren She Ban Fa (2022) No. 16, Hang Ren She Ban Fa (2022) No. 17, Zhe Ren She Fa (2022) No. 4, etc. |
| Special award for brand building | 400,000.00 | Other income | Hai Zhi Fa Ban (2022) No. 1 |
| Others | 3,623,016.75 | Other income | Cai Shui (2019) No. 22, Shang Zheng Han (2022) No. 19, Hang Ke Wai Zhuan (2022) No. 80, etc. |
| Subtotal | 49,227,280.96 |
The amount of government subsidy included in the current period profit and loss is CNY 50,538,037.85.VIII. Changes in the scope of combination
1. Changes in the scope of combination for other reasons
Description of changes in the scope of combination caused by other reasons (such as the establishment of a new subsidiary,liquidation of a subsidiary, etc.) and relevant information:
1. Increase of combination scope
| Companies | Method of equity acquisition | Date of acquisition of the equity | Amount of contribution | Ratio of contribution |
| Zhongshan Geelong Import and Export Trade Co., Ltd. | Setup | June 23, 2022 | CNY 21,065,000.00 | 100.00% |
| Zhejiang Shiwanke Electric Appliance Co., Ltd. | Setup | April 21, 2022 | CNY 10,000,000.00 | 100.00% |
| Hangzhou GreatStar Energy Co., Ltd. | Setup | December 16, 2022 | 50,000,000.00 USD | 100.00% |
| Hangzhou GreatStar Garden Tools Co., Ltd. | Setup | December 16, 2022 | USD 100,000,000.00 | 100.00% |
2. Decrease of combination scope
| Companies | Equity disposal method | Date of disposal of the shares | Net assets at the disposal date | From beginning to disposal date Net profit |
| Hangzhou Lianhe Machinery Co., Ltd. | Write-off | September 19, 2022 | -4,071,246.00 | -206,011.38 |
| Zhejiang GreatStar Intelligent Tool Co., Ltd. | Write-off | May 13, 2022 | -9,168.96 | -987.91 |
| Hangzhou GreatStar Power Tools Co., Ltd. | Write-off | June 20, 2022 | -3,070,849.17 | -3,069,955.62 |
| International Storage Solutions Limited | Write-off | December 9, 2022 | 0.00 | 0.00 |
IX. Rights and interests in other subjects
1. Interests in subsidiaries
(1) Composition of enterprise group
| Subsidiaries | Principal place of business | Place of registration | Nature of business | Shareholding ratio | Acquisition mode | |
| Direct | Indirect | |||||
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd | Changzhou City, Jiangsu Province | Changzhou City, Jiangsu Province | Manufacturing industry | 65.00% | Combination of enterprises not under common control | |
| Zhejiang GreatStar Tool Co., Ltd. | Hangzhou City, Zhejiang Province | Hangzhou City, Zhejiang Province | Manufacturing industry | 100.00% | Setup | |
| Hangzhou | Hangzhou City, | Hangzhou City, | Manufacturing | 100.00% | Combination of | |
| GreatStar Tool Co., Ltd. | Zhejiang Province | Zhejiang Province | industry | enterprises under common control | ||
| Prim' Tools Limited | Hong Kong | Hong Kong | Commerce | 86.96% | Combination of enterprises not under common control | |
| Hong Kong GreatStar International Limited | Hong Kong | Hong Kong | Commerce | 100.00% | Setup | |
| GreatStar Tools USA, Inc | USA | USA | Commerce | 100.00% | Setup | |
| Arrow Fastener Co., LLC | USA | USA | Manufacturing industry | 100.00% | Combination of enterprises not under common control | |
| GreatStar Industrial USA, LLC | USA | USA | Commerce | 100.00% | Setup | |
| GreatStar Europe AG | Switzerland | Switzerland | Commerce | 100.00% | Setup | |
| Lista Holding AG | Switzerland | Switzerland | Manufacturing industry | 100.00% | Combination of enterprises not under common control | |
| BeA GmbH | Germany | Germany | Manufacturing industry | 100.00% | Setup | |
| Geelong Sales Co., Ltd. | Zhongshan City, Guangdong Province | Zhongshan City, Guangdong Province | Manufacturing industry | 100.00% | Combination of enterprises not under common control |
Explanation that the shareholding ratio in the subsidiary is different from the voting rights ratio:
N/ABasis for holding half or less voting rights but still controlling the investee, and holding more than half of the voting rights but notcontrolling the investee:
N/ABasis of control for significant structured entities that are included in the scope of combination:
N/ABasis for determining whether the Company is an agent or a principal:
N/AOther notes:
None
(2) Important non-wholly-owned subsidiaries
Unit: CNY
| Subsidiaries | Shareholding of minority shareholders | Profit and loss attributable to minority shareholders in the current period | Dividends declared and distributed to minority shareholders in the current period | Closing balance of minority shareholders' equity for the period |
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd | 35.00% | 15,926,120.48 | 12,250,000.00 | 112,851,595.03 |
| Prim' Tools Limited | 13.04% | 3,094,007.61 | 920,580.97 | 20,307,068.89 |
Explanation of the difference between the shareholding proportion of minority shareholders and the voting right proportion ofsubsidiaries:
N/AOther notes:
None
(3) Major financial information of important non-wholly-owned subsidiaries
Unit: CNY
| Subsidiaries | Closing balance | Opening balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd | 349,552,501.39 | 73,416,525.23 | 422,969,026.62 | 112,515,156.24 | 132,523.42 | 112,647,679.66 | 405,975,953.52 | 77,136,343.79 | 483,112,297.31 | 185,081,625.15 | 631,034.97 | 185,712,660.12 |
| Prim' Tools Limited | 170,852,422.73 | 23,624,711.52 | 194,477,134.25 | 36,527,312.23 | 7,492,999.77 | 44,020,312.00 | 143,750,402.46 | 11,369,163.40 | 155,119,565.86 | 26,734,231.87 | 1,086,722.10 | 27,820,953.97 |
Unit: CNY
| Subsidiaries | Current period amount | Prior period amount | ||||||
| Operating proceeds | Net profit | Total comprehensive incomes | Cash flow from operating activities | Operating proceeds | Net profit | Total comprehensive incomes | Cash flow from operating activities | |
| Changzhou Huada Kejie Opto-Electro | 461,625,605.94 | 47,884,566.79 | 47,921,709.77 | 81,146,145.88 | 571,558,623.42 | 59,396,937.13 | 59,381,572.04 | 32,031,010.76 |
| Instrument Co., Ltd | ||||||||
| Prim' Tools Limited | 225,102,044.54 | 23,760,712.24 | 30,217,880.39 | 33,810,293.05 | 204,292,345.86 | 24,562,639.10 | 22,420,559.07 | -5,995,149.12 |
Other notes:
None
2. Transactions in which the owner's share of equity in the subsidiary changes and remains in control ofthe subsidiary
(1) Description of changes in shareholders’ equity shares of subsidiaries
| Subsidiaries | Date of change | Shareholding ratio before change | Shareholding ratio after change |
| Hangzhou GreatStar Hardware Tools Co., Ltd. | August 2022 | 68.13% | 70.07% |
(2) Impact of the transaction on the non-controlling interests and the shareholders’ equity attributable to the parentcompany
Unit: CNY
| Hangzhou GreatStar Hardware Tools Co., Ltd. | |
| Purchase cost/disposal consideration | 0.00 |
| - Cash | |
| - Fair value of non-cash assets | |
| Total purchase cost/disposal consideration | 0.00 |
| Less: share of net assets of the subsidiary based on the proportion of equity acquired/disposed of | 79,700.41 |
| Balance | -79,700.41 |
| Including: adjustment of capital reserve | 79,700.41 |
| Adjustment of surplus reserve | |
| Adjustment of undistributed profit |
Other notes:
None
3. Interests in joint venture arrangements or joint ventures
(1) Important joint venture or associated enterprise
| Name of joint venture or associated | Principal place of business | Place of registration | Nature of business | Shareholding ratio | Accounting method for investment in | |
| Direct | Indirect | |||||
| enterprise | joint venture or associated enterprise | |||||
| Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | Hangzhou City, Zhejiang Province | Hangzhou City, Zhejiang Province | Service industry | 27.86% | Accounting under the equity method | |
| Zhejiang Hangcha Holding Co., Ltd. | Hangzhou City, Zhejiang Province | Hangzhou City, Zhejiang Province | Manufacturing industry | 20.00% | Accounting under the equity method | |
| Zhejiang Guozi Robotics Co., Ltd. | Hangzhou City, Zhejiang Province | Hangzhou City, Zhejiang Province | Manufacturing industry | 21.95% | Accounting under the equity method | |
| Ningbo Donghai Bank Co., Ltd. | Ningbo City, Zhejiang Province | Ningbo City, Zhejiang Province | Finance industry | 19.00% | Accounting under the equity method | |
| Shanghai Lainuo Photoelectric Technology Co., Ltd. | Shanghai City | Shanghai City | Commerce | 26.00% | Accounting under the equity method | |
| Changzhou Huada Xidebao Laser Instrument Co., Ltd. | Changzhou City, Jiangsu Province | Changzhou City, Jiangsu Province | Manufacturing industry | 31.85% | Accounting under the equity method | |
| Hangzhou Micro Nano Technology Co., Ltd. | Hangzhou City, Zhejiang Province | Hangzhou City, Zhejiang Province | Manufacturing industry | 32.53% | Accounting under the equity method |
Explanations that the proportion of shares in a joint venture or associated enterprise is different from the proportion of votingrights:
NoneBasis for holding less than 20% of the voting rights but having significant influence, or holding 20% or more of the voting rightsbut not having significant influence:
The Company holds 19.00% of the equity of Ningbo Donghai Bank Co., Ltd. and is the third largest shareholder. TheCompany is represented on the Board of Directors of Ningbo Donghai Bank Co., Ltd. and has decision-making power over itsfinancial and operational policies.
(2) Main financial information of important associates
Unit: CNY
| Closing balance/current period amount | Opening balance/prior period amount | |||
| Zhejiang Hangcha Holding Co., Ltd. | Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | Zhejiang Hangcha Holding Co., Ltd. | Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | |
| Current assets | 8,277,441,059.61 | 18,308,908,248.12 | 7,418,780,740.77 | 14,948,356,801.94 |
| Non-current assets | 4,131,292,679.55 | 22,072,977,513.86 | 3,731,133,085.89 | 19,969,457,376.52 |
| Total assets | 12,408,733,739.16 | 40,381,885,761.98 | 11,149,913,826.66 | 34,917,814,178.46 |
| Current liabilities | 3,740,265,952.40 | 21,272,363,669.80 | 3,477,650,918.98 | 15,446,567,589.35 |
| Non-current liabilities | 1,153,351,595.36 | 6,146,529,870.38 | 961,010,530.12 | 7,448,879,770.24 |
| Total liabilities | 4,893,617,547.76 | 27,418,893,540.18 | 4,438,661,449.10 | 22,895,447,359.59 |
| Minority interests | 4,070,665,933.39 | 7,981,720,186.41 | 3,593,193,876.73 | 7,467,456,772.20 |
| Equity attributable to shareholders of the parent company | 3,444,450,258.01 | 4,981,272,035.39 | 3,118,058,500.83 | 4,554,910,046.67 |
| Share of net assets based on the shareholding ratio | 688,890,029.35 | 1,387,637,932.17 | 623,611,700.17 | 1,268,865,846.61 |
| Adjustment items | 108,979,700.00 | 108,979,700.00 | ||
| - Goodwill | 108,979,700.00 | 108,979,700.00 | ||
| - Unrealized profits from internal trading | ||||
| - Others | ||||
| Book value of equity investment in associates | 797,869,729.35 | 1,387,637,932.17 | 732,591,400.17 | 1,268,865,846.61 |
| Fair value of equity investment of associates with public offer | ||||
| Operating proceeds | 14,416,244,509.63 | 31,888,853,180.61 | 14,493,418,510.34 | 30,285,690,427.77 |
| Net profit | 1,110,752,833.42 | 1,023,039,308.35 | 1,074,154,744.24 | 1,415,381,801.88 |
| Net profit from discontinued operations | ||||
| Other comprehensive income | 18,242,153.44 | 247,182,937.32 | -25,326,711.49 | -475,468,089.70 |
| Total comprehensive incomes | 1,128,994,986.86 | 1,270,222,245.67 | 1,048,828,032.75 | 939,913,712.18 |
| Dividends received from associates in the current year | 40,000,000.00 |
Other notes:
None
(3) Summary financial information of non-material joint ventures and associates
Unit: CNY
| Closing balance/current period amount | Opening balance/prior period amount | |
| Joint ventures: | ||
| Sum of the following items in proportion to their shareholding |
| Associates: | ||
| Total book value of investment | 359,015,856.03 | 352,485,457.57 |
| Sum of the following items in proportion to their shareholding | ||
| - Net profit | 6,071,245.16 | 1,101,187.62 |
| - Other comprehensive income | -1,062,133.92 | 1,477,170.16 |
| - Total comprehensive income | 5,009,111.24 | 2,578,357.78 |
Other notes:
None
(4) Excess losses incurred by a joint venture or a associate
Unit: CNY
| Name of joint venture or associated enterprise | Cumulative unrecognized loss in the prior period | Unrecognized loss in the current period (or net profit shared for the current period) | Cumulative unrecognized loss at the end of the period |
| Shanghai Lainuo Photoelectric Technology Co., Ltd. | -693,831.45 | -85,658.09 | -779,489.54 |
Other notes:
NoneX. Risks relevant financial instruments
The Company engages in risk management with the objective of striking a balance between risk and return, minimizing thenegative impact of risk on the Company's operating performance and maximizing the benefits of shareholders and other equityinvestors. Based on this risk management objective, the Company's basic risk management strategy is to confirm and analyzevarious risks faced by the Company, establish an appropriate risk tolerance bottom line, implement risk management, monitorvarious risks timely and reliably, and keep the risk control within the limited scope.The Company faces various risks related to financial instruments in its daily activities, including credit risk, liquidity risk andmarket risk. The management has reviewed and approved policies to manage the risks, as outlined below.(I) Credit riskCredit risk refers to the risk that one party to a financial instrument fails to fulfill its obligations and causes financial losses to theother party.
1. Credit risk management practice
(1) Evaluation method of credit risk
The Company evaluates at each balance sheet date whether the credit risk of the relevant financial instruments has increasedsignificantly since the initial recognition. To determine whether credit risk has increased significantly since the initial recognition,the Company considers that reasonable and evidence-based information, including qualitative and quantitative analysis based onhistorical data, external credit risk ratings and forward-looking information, can be obtained without unnecessary additional cost oreffort. Based on a single financial instrument or a combination of financial instruments with similar credit risk characteristics, theCompany determines the change of default risk within the expected duration of financial instruments by comparing the risk ofdefault on the balance sheet date with the risk of default on the initial recognition date.
The Company considers that the credit risk of financial instruments has significantly increased when one or more of the followingquantitative and qualitative criteria are triggered:
1) The quantitative criteria is that the default probability of the remaining duration of the balance sheet date increases by more thana certain percentage compared with the initial recognition;
2) The qualitative criteria is that the debtor's business or financial situation is involved with material adverse changes, existing orexpected changes in technology, market, economy or legal environment, which poses a material adverse impact on the debtor'srepayment ability to the Company.
(2) Definition of default and credit impairment assets
The Company will define the financial asset as having defaulted when the financial instrument meets one or more of the followingconditions, using the same criteria as the definition of having incurred credit impairment:
1) The debtor has major financial difficulties;
2) The debtor violates the binding terms on the debtor in the contract;
3) The debtor is likely to go bankrupt or undergo other financial restructuring;
4) The creditor, for economic or contractual reasons related to the debtor's financial difficulties, grants concessions that the debtorwould not have made in any other circumstances.
2. Measurement of expected credit losses
The key parameters of expected credit loss measurement include default probability, default loss rate and default risk exposure.The Company establishes default probability, default loss rate and default risk exposure model taking into accounting quantitativeanalysis and forward-looking information of historical statistical data (such as counterparty ratings, guarantee methods and typesof collateral, repayment methods, etc.).
3. For the opening balance and closing reconciliation of the reserve for losses on financial instrument, see Section X, VII, 4,Section X, VII, 5 and Section X, VII, 7 of this report.
4. Credit risk exposure and credit risk concentration
The Company's credit risk is primarily derived from monetary funds and receivables. In order to control the above related risks,the Company has taken the following measures.
(1) Monetary funds
The Company deposits its bank deposits and other monetary funds in financial institutions with high credit ratings and thereforehas low credit risk.
(2) Receivables
The Company continuously evaluates the credit of customers who transact on credit. Based on the results of the credit evaluation,the Company chooses to transact with approved and creditworthy customers and monitors their receivables balances to ensure thatthe Company is not exposed to material bad debt risk.No guaranty is required as the Company only trades with the recognized and reputable third parties. The credit risk is managed bycustomers in a centralized manner. As of December 31, 2022, the Company has certain credit concentration risk, 47.71% of theCompany's accounts receivable (December 31, 2021: 37.03%) originated from the top five balance customers. The Company doesnot hold any collateral or other credit enhancement on the balance of accounts receivable.The Company's maximum credit exposure is the book values of all financial assets on the balance sheet.(II) Liquidity riskLiquidity risk refers to the risk of shortage of funds when the Company performs its obligation of settlement through delivery ofcash or other financial assets. Liquidity risks may arise from the inability to sell financial assets at fair value as soon as possible; orfrom the failure of the other party to repay its contractual obligations; or from debts that mature early; or the inability to generatethe desired cash flow.In order to control this risk, the Company integrates various financing means such as bill settlement and bank loan, and adoptsappropriate combination of long-term and short-term financing methods to optimize the financing structure and maintain the
balance between sustainability and flexibility of financing. The Company has obtained bank lines of credit from a number ofcommercial banks to meet its working capital needs and capital expenditures.Financial liabilities are classified by remaining maturity date
| Item | Closing balance | ||||
| Book value | Undiscounted contract amount | Within 1 year | 1-3 years | More than 3 years | |
| Bank loan | 2,412,596,915.25 | 2,479,666,840.77 | 1,653,566,564.54 | 825,295,053.98 | 805,222.25 |
| Trading financial liabilities | 48,413,710.29 | 48,413,710.29 | 48,413,710.29 | ||
| Notes payable | 21,096,540.03 | 21,096,540.03 | 21,096,540.03 | ||
| Accounts payable | 1,366,875,268.71 | 1,366,875,268.71 | 1,366,875,268.71 | ||
| Other amounts payable | 21,198,376.32 | 21,198,376.32 | 21,198,376.32 | ||
| Lease liabilities | 406,588,933.09 | 413,037,311.70 | 88,436,234.33 | 134,252,177.05 | 190,348,900.32 |
| Subtotal | 4,276,769,743.69 | 4,350,288,047.82 | 3,199,586,694.22 | 959,547,231.03 | 191,154,122.57 |
(Continued)
| Item | Number at the end of prior year | ||||
| Book value | Undiscounted contract amount | Within 1 year | 1-3 years | More than 3 years | |
| Bank loan | 3,055,148,295.97 | 3,139,533,799.57 | 2,057,990,775.73 | 494,435,452.74 | 587,107,571.10 |
| Trading financial liabilities | 978,031.91 | 978,031.91 | 978,031.91 | ||
| Notes payable | 51,728,000.00 | 51,728,000.00 | 51,728,000.00 | ||
| Accounts payable | 1,640,430,929.84 | 1,640,430,929.84 | 1,640,430,929.84 | ||
| Other amounts payable | 676,502,987.21 | 676,502,987.21 | 676,502,987.21 | ||
| Lease liabilities | 414,921,112.20 | 422,186,814.93 | 125,724,601.18 | 140,362,949.63 | 156,099,264.12 |
| Subtotal | 5,839,709,357.13 | 5,931,360,563.46 | 4,553,355,325.87 | 634,798,402.37 | 743,206,835.22 |
(III) Market risksMarket risk refers to the risk that the fair value or future cash flow of financial instruments will fluctuate due to changes in marketprices. Market risks mainly include interest rate risk and foreign exchange risk.
1. Interest rate risk
Interest rate risk refers to the risk of fluctuation in the fair value of the financial instruments or the future cash flow due to thechange in the market interest rate. The interest-bearing financial instruments at a fixed rate expose the Company to fair valueinterest rate risk, while interest-bearing financial instruments at a floating rate expose the Company to cash flow interest rate risk.The Company determines the ratio of financial instrument at a fixed rate to financial instrument at a floating rate based on marketconditions, and maintains an appropriate combination of financial instruments through regular review and monitoring. The cashflow interest rate risk faced by the Company is mainly related to its bank borrowings accrued at a floating interest rate.As at December 31, 2022, the Company had bank borrowings of CNY 713,120,304.41 bearing interest at a floating rate (as atDecember 31, 2021: CNY 929,187,140.36), assuming that a change in interest rates of 50 basis points will not have a materialimpact on the Company's total profit and shareholders' equity under the assumption that other variables remain constant.
2. Foreign exchange risk
Foreign exchange risk refers to the risk that the fair value or future cash flow of financial instruments will fluctuate due to changesin foreign exchange rates. The exchange rate change faced by the Company is mainly related to its foreign currency monetaryassets and liabilities. For foreign currency assets and liabilities, if short-term imbalances occur, the Company will buy and sellforeign currency at market rates as necessary to ensure that net exposure is maintained at an acceptable level.For the Company's foreign currency monetary assets and liabilities at the end of the period, see the notes in Section X, VII, 65 ofthis report.XI. Disclosure of fair value
1. Fair value of assets and liabilities measured at fair value at the end of the period
Unit: CNY
| Item | 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. Continuous fair value measurement | -- | -- | -- | -- |
| (I) Trading financial assets | 70,230,104.24 | 70,230,104.24 | ||
| 1. Financial assets that are measured at fair value and whose changes are booked into current profit or loss | 70,230,104.24 | 70,230,104.24 | ||
| (3) Derivative financial assets | 10,230,104.24 | 10,230,104.24 | ||
| (4) Bank financial products | 60,000,000.00 | 60,000,000.00 | ||
| (II) Other investments in creditor's rights | 324,557,679.71 | 324,557,679.71 | ||
| (III) Investment in other equity instruments | 16,550,000.00 | 16,550,000.00 | ||
| Total assets continuously measured at fair value | 70,230,104.24 | 341,107,679.71 | 411,337,783.95 | |
| (VI) Trading financial liabilities | 48,413,710.29 | 48,413,710.29 | ||
| Derivative financial liabilities | 48,413,710.29 | 48,413,710.29 | ||
| Total liabilities continuously measured at fair value | 48,413,710.29 | 48,413,710.29 | ||
| II. Non-continuous fair value measurement | -- | -- | -- | -- |
2. Basis for determining the market price of continuous and non-continuous level 1 fair valuemeasurement itemsFinancial products are measured with market quotation as a reasonable estimate of fair value.
3. Qualitative and quantitative information on the valuation techniques used and important parametersfor continuous and non-continuous level 2 fair value measurement itemsDerivative financial assets and derivative financial liabilities are measured with the valuation notice provided by banks andsecurities companies as a reasonable estimate of fair value.
4. Qualitative and quantitative information on the valuation techniques used and important parametersfor continuous and non-continuous level 3 fair value measurement items
1. As the term of receivables financing is not more than one year, the influence of the time value of funds on its fair value is notsignificant, so it is recognized that the fair value of the above receivables financing is approximately equal to its carrying value.
2. Investment in other equity instruments (Hangzhou Haibang Xinhu Talent Venture Capital Partnership (limited partnership))shall be measured according to the investment cost as a reasonable estimate of fair value, considering the operating environmentand conditions comprehensively.
5. Continuous level 3 fair value measurement items, adjustment information between the opening andclosing carrying amount and sensitivity analysis of unobservable parameters
6. Continuous fair value measurement items, if there is a conversion between various levels during thecurrent period, the reasons for the conversion and the policy for determining the timing of the conversion
7. Changes in valuation technology during the current period and reasons for the changes
8. Fair value of financial assets and financial liabilities not measured at fair value
9. Others
XII. Related parties and related party transactions
1. Parent company of the Company
| Parent company | Place of registration | Nature of business | Registered capital | Shareholding ratio of parent company to the Company | Proportion of voting rights of parent company to the Company |
| GreatStar Holding Group Co., Ltd. | Hangzhou | Industrial investment | CNY 10,000.00 | 37.61% | 37.61% |
Description of the Company’s parent companyThe predecessor of GreatStar Holding Group Co., Ltd. is the former Hangzhou GreatStar Investment Holding Co., Ltd.(hereinafter referred to as GreatStar Investment Company). GreatStar Investment Company was jointly funded by natural personsQiu Jianping, Li Zheng, Chi Xiaoheng, Wang Min, Li Feng, Yu Wentan, Wang Weiyi, He Tianle, Fu Yajuan, Fang Zhenjun, XuWeisu and Wang Wei, and registered in Hangzhou Administration for Industry and Commerce Jianggan Branch on November 2,2007. The Company holds the business license with the unified social credit code of 913301046680178300, registered capital ofCNY 100 million.The Company engages in general equipment manufacturing and tool hardware industry. The main business activities includeforklift, hand tools, handheld electric tools, engineering test instruments, tires, R&D production and sales of tires and rubberproducts. Main products or services provided: forklifts, accessories and other, hand tools, hand-held electric tools, engineering testinstruments, tires, tires and rubber products.Qiu Jianping is the ultimate control party of the Company.Other notes:
None
2. Subsidiaries of the Company
For details of the Company's subsidiaries, see Notes IX, 1, (1) “Composition of the Group”.
3. Joint ventures and associates of the Company
For important joint ventures or associates of the Company, see Notes IX, 3, (1) “Important joint ventures or associates”.The details of other joint ventures or associates with the balance of related party transactions with the Company in the currentperiod or related party transactions with the Company in the prior period are as follows:
| Name of joint venture or associate | Relationship with the Company |
Other notes:
None
4. Other related parties
| Name of other related parties | The relationship between other related parties and the Company |
| Wang Lingling | The spouse of the actual controller and the person acting in concert with him |
| Hangzhou GreatStar Precision Machinery Co., Ltd. | Controlled by the actual controller |
| Hangcha Group Co., Ltd. and its affiliated enterprises | The companies controlled by Zhejiang Hangcha Holding Co., Ltd., an associate enterprise of the Company, are also controlled by the actual controller |
| Zhongce Rubber Group Co., Ltd. and its affiliated enterprises | The companies controlled by Hangzhou Zhongce Haichao Enterprise Management Co., Ltd., an associate enterprise of the Company, are also controlled by the actual controller |
| Hangzhou Weiming Investment Management Co., Ltd. | Original associates of the Company |
Other notes:
None
5. Related party transactions
(1) Related party transactions of purchase and sales of goods, render and accept servicesPurchase of goods / accept of services
Unit: CNY
| Related party | Related party transaction | Current period amount | Approved trading quotas | Whether to exceed the trading limit | Prior period amount |
| Shanghai Lainuo Photoelectric Technology Co., Ltd. | Materials | 0.00 | No | 7,192.04 | |
| Zhejiang Guozi Robotics Co., Ltd. and its affiliated enterprises | Products and services | 9,276,973.76 | No | 785,830.34 | |
| Hangcha Group Co., Ltd. and its affiliated enterprises | Forklift, spare parts and maintenance fee | 16,577,579.13 | No | 9,749,969.30 | |
| Hangcha Group Co., Ltd. and its affiliated enterprises | Automatic library | 0.00 | No | 781,280.21 | |
| Changzhou Huada Xidebao Laser Instrument Co., Ltd. | Materials | 95,066.86 | No | 0.00 | |
| Zhongce Rubber Group Co., Ltd. and its affiliated enterprises | Cost of parts and maintenance | 57,766,301.68 | No | 1,050,065.29 | |
| Hangzhou Micro Nano Technology Co., Ltd. | Software and hardware | 0.00 | No | 37,168.14 |
Sales of goods / render of services
Unit: CNY
| Related party | Related party transaction | Current period amount | Prior period amount |
| Changzhou Huada Xidebao Laser Instrument Co., Ltd. | Laser measuring instrument | 8,430,267.36 | 8,802,699.15 |
| Changzhou Huada Xidebao Laser Instrument Co., Ltd. | Hydropower | 134,416.80 | 117,404.10 |
| Changzhou Huada Xidebao Laser Instrument Co., Ltd. | Consulting service | 3,476,428.09 | 2,520,746.47 |
| Hangcha Group Co., Ltd. and its affiliated enterprises | Hand tools and accessories | 13,943,429.18 | 16,188,555.01 |
| Hangcha Group Co., Ltd. and its affiliated enterprises | Operating service fee | 2,903,893.36 | 2,535,515.08 |
| Zhejiang Guozi Robotics Co., Ltd. and its affiliated enterprises | Hand tools | 11,977,029.04 | 9,957,102.80 |
| Shanghai Lainuo Photoelectric Technology Co., Ltd. | Sale of goods | 3,043.54 | 1,937,505.66 |
| Hangzhou GreatStar Precision Machinery Co., Ltd. | Hand tools | 2,807.12 | 0.00 |
| Zhongce Rubber Group Co., Ltd. and its affiliated enterprises | Hand tools | 0.00 | 14,409.98 |
| Zhejiang Hangcha Holding Co., Ltd. | Hand tools | 594.69 |
Description of related party transactions of purchase and sales of goods, render and accept servicesNone
(2) Related lease
The Company as the lessor:
Unit: CNY
| Lessee | Types of leased assets | Lease income in the current period | Lease income in the prior period |
| Changzhou Huada Xidebao Laser Instrument Co., Ltd. | Houses | 201,625.20 | 176,106.15 |
The Company as lessee:
Unit: CNY
| Lessor | Types of leased assets | Rental charges for simplified treatment of short-term leases and low-value asset leases (if applicable) | Variable lease payments not included in the lease liabilities (if applicable) | Rent paid | Interest expenses incurred on lease liabilities | Increased right-to-use assets | |||||
| Current period amount | Prior period amount | Current period amount | Prior period amount | Current period amount | Prior period amount | Current period amount | Prior period amount | Current period amount | Prior period amount | ||
| Hangzhou GreatStar Precision | Houses | 1,342,542.86 | 1,264,476.19 | ||||||||
| Machinery Co., Ltd. | |||||||||||
| Hangcha Group Co., Ltd. and its affiliated enterprises | Transport equipment | 154,024.82 | 243,840.42 |
Description of related leaseNone
(3) Related-party guarantee
The Company provides guarantee for the bank loan to its wholly owned subsidiary GreatStar Europe AG and the GreatStarHoldings Group Limited provides guarantee for the loan to the Company. As of December 31, 2022, the amount guaranteed isEUR 18 million and the repayment period is from February 28, 2023 to June 26, 2023.
(4) Funds borrowing from related parties
Unit: CNY
| Related party | Amount | Starting date | Maturity date | Remarks |
| Borrowing | ||||
| Mr. Qiu Jianping and Ms. Wang Lingling (the person acting in concert) | 583,000,000.00 | December 20, 2021 | December 9, 2022 | By the end of this reporting period, all principal and interest have been repaid, and the balance is 0 |
(5) Remuneration for key management personnel
Unit: CNY
| Item | Current period amount | Prior period amount |
| Remuneration for key management personnel | 13,227,889.94 | 12,192,656.29 |
6. Receivables and payables of related parties
(1) Receivables
Unit: CNY
| Item | Related party | Closing balance | Opening balance | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | ||
| Accounts receivable | Zhejiang Guozi Robotics Co., Ltd. and its affiliated | 19,380,071.99 | 1,220,477.10 | 10,664,320.29 | 533,216.01 |
| enterprises | |||||
| Accounts receivable | Changzhou Huada Xidebao Laser Instrument Co., Ltd. | 2,886,966.26 | 144,348.31 | 8,233,675.28 | 411,683.76 |
| Accounts receivable | Shanghai Lainuo Photoelectric Technology Co., Ltd. | 3,780,753.57 | 3,780,753.57 | 3,779,983.57 | 188,999.18 |
| Accounts receivable | Hangcha Group Co., Ltd. and its affiliated enterprises | 2,302,883.58 | 115,144.18 | 1,229,141.76 | 61,457.09 |
| Accounts receivable | Hangzhou GreatStar Precision Machinery Co., Ltd. | 472.05 | 23.60 | 0.00 | 0.00 |
| Accounts receivable | Zhejiang Hangcha Holding Co., Ltd. | 672.00 | 33.60 | 0.00 | 0.00 |
| Subtotal | 28,351,819.45 | 5,260,780.36 | 23,907,120.90 | 1,195,356.04 | |
| Notes receivable | Zhejiang Guozi Robotics Co., Ltd. | 2,300,000.00 | 0.00 | 20,702.51 | 0.00 |
| Subtotal | 2,300,000.00 | 0.00 | 20,702.51 | 0.00 | |
| Prepayment | Hangcha Group Co., Ltd. and its affiliated enterprises | 37,000.00 | 1,850.00 | 0.00 | 0.00 |
| Subtotal | 37,000.00 | 1,850.00 | 0.00 | 0.00 | |
| Other receivables | Hangzhou Weiming Investment Management Co., Ltd. | 0.00 | 0.00 | 6,160,202.73 | 308,010.14 |
| Changzhou Huada Xidebao Laser Instrument Co., Ltd. | 103,556.95 | 5,177.85 | |||
| Subtotal | 103,556.95 | 5,177.85 | 6,160,202.73 | 308,010.14 |
(2) Payables
Unit: CNY
| Item | Related party | Book balance at the end of the reporting period | Book balance at the beginning of the reporting period |
| Accounts payable | Hangcha Group Co., Ltd. and its affiliated enterprises | 2,557,004.00 | 2,595,530.60 |
| Accounts payable | Zhejiang Guozi Robotics Co., Ltd. and its affiliated enterprises | 778,570.66 | 920,220.37 |
| Accounts payable | Zhongce Rubber Group Co., Ltd. and its affiliated enterprises | 7,567,269.62 | 2,064.00 |
| Accounts payable | Hangzhou GreatStar Precision Machinery Co., Ltd. | 36,500.00 | 124,000.00 |
| Subtotal | 10,939,344.28 | 3,641,814.97 |
| Other amounts payable | Qiu Jianping, Wang Lingling | 0.00 | 583,570,527.78 |
| Subtotal | 0.00 | 583,570,527.78 |
XIII. Commitments and contingencies
1. Important commitments
Important commitments that exist at the balance sheet dateAs of the date of approval of this report, the Company has no important commitments to be disclosed.
2. Contingencies
(1) Material contingencies that exist at the balance sheet date
As of the date of approval of this report, the Company has no major contingencies to be disclosed.
(2) The Company shall explain the material contingencies to be disclosed, even if there are no importantcontingencies to be disclosedThe Company has no material contingencies to be disclosed.XIV. Matters after the balance sheet date
1. Description of other events after the balance sheet date
Information about profit distribution after the balance sheet dateOn April 21, 2023, the 30th Meeting of the 5th Session of Board of Directors of the Company deliberated and approved theProposal on the Company's Profit Distribution Plan in 2022. The Company intends to pay a cash dividend of CNY 1.66 (includingtax) per 10 shares to all shareholders on the basis of 1,194,478,182 shares, namely 1,202,501,992 shares of the total capital stockof the Company as at December 31, 2022 after deducting 8,023,810 shares held in the Company's special securities account forrepurchase. It is estimated that the total cash dividend will be CNY 198,283,378.21, and the remaining undistributed profit will becarried forward to the next year without bonus shares or capital reserve conversion to capital increase. The distribution plan is stillsubject to the review and approval of the Company's general meeting of shareholders.XV. Other important matters
1. Information of division
(1) Determination basis and accounting policies of reporting divisions
The Company determines the reporting divisions according to internal organizational structure, management requirements, internalreporting system, etc. from the perspective of products. Assets and liabilities used in common with the divisions are distributedamong different divisions in proportion to their sizes.
(2) Reporting of financial information of divisions
Unit: CNY
| Item | Hand Tools & | Power Tools & | Others | Interdivisional | Total |
| Storage | Laser Measurement & Power Stations | offset | |||
| Operating proceeds | 10,004,744,537.61 | 2,540,542,039.17 | 64,903,013.55 | 12,610,189,590.33 | |
| Operating costs | 7,332,189,779.90 | 1,912,214,386.29 | 22,518,138.56 | 9,266,922,304.75 | |
| Total assets | 15,951,566,250.03 | 2,505,829,990.73 | 122,158,556.01 | 18,579,554,796.77 | |
| Total liabilities | 4,305,685,441.29 | 623,837,243.54 | 25,502,875.18 | 4,955,025,560.01 |
2. Others
(II) Lease
1. The Company as lessee
(1) For relevant information of the assets to be used, see the notes in Section X, VII, 19 of this report;
(2) For details of the Company's accounting policies for short-term leases and low-value asset leases, see the notes in Section X, V,36 of this report. The amounts of short-term leasing expenses and low-value asset leasing expenses included in current profit andloss are as follows:
| Item | Amount in the current period | Amount in the same period of the prior year |
| Short-term lease charge | 41,007,534.99 | 44,003,860.27 |
| Low value asset lease expense (except short-term lease) | 640,296.62 | 657,286.80 |
| Total | 41,647,831.61 | 44,661,147.07 |
(3) Current profit and loss and cash flow related to lease
| Item | Amount in the current period | Amount in the same period of the prior year |
| Interest expense on lease liabilities | 10,349,638.07 | 9,721,218.32 |
| Total cash outflow related to leases | 128,383,212.90 | 59,939,559.59 |
(4) For the maturity analysis of lease liabilities and the corresponding liquidity risk management, see Note VIII, (II) to thefinancial statements.
2. The Company acts as lessor
(1) Operating lease
1) Lease income
| Item | Amount in the current period | Amount in the same period of the prior year |
| Lease income | 23,799,395.61 | 18,779,421.23 |
2) Operating leased assets
| Item | Closing balance | Number at the end of prior year |
| Fixed assets | 10,845,503.63 | 6,623,884.70 |
| Investment real estate property | 122,158,556.01 | 127,058,966.69 |
| Subtotal | 133,004,059.64 | 133,682,851.39 |
For details of leased fixed assets, see Note V, (I), 15 to the financial statements.
3) According to the lease contract signed with the lessee, the undiscounted lease receipts that will be received in the future underthe irrevocable lease
| Remaining term | Closing balance | Number at the end of prior year |
| Within 1 year | 17,223,063.97 | 17,983,746.50 |
| More than 1 years | 110,837,023.47 | 157,079,216.00 |
| Total | 128,060,087.45 | 175,062,962.50 |
(2) Finance lease
1) Current profit and loss related to finance lease
| Item | Amount in the current period | Amount in the same period of the prior year |
| Financing income on net lease investment | 84,672.00 | 84,811.20 |
2) According to the lease contract signed with the lessee, the undiscounted lease receipts that will be received in the future underthe irrevocable lease
| Remaining term | Closing balance | Number at the end of prior year |
| Within 1 year | 98,061.60 | 90,708.80 |
| 1-2 years | 78,321.04 | 90,708.80 |
| 2-3 years | 78,321.04 | 90,708.80 |
| 3-4 years | 78,321.04 | 90,708.80 |
| 4-5 years | 68,608.14 | 90,708.80 |
| After 5 years | 97,686.40 | |
| Total | 401,632.86 | 551,230.40 |
3) Reconciliation statement of undiscounted lease receipts and net lease investments
| Item | Closing balance | Number at the end of prior year |
| Undiscounted lease receipts | 401,632.86 | 551,230.40 |
| Less: Unrealized financing gains related to lease receipts | 4,002.95 | 14,135.20 |
| Net lease investment | 397,629.91 | 537,095.20 |
XVI. Notes to major items of the parent company's financial statements
1. Accounts receivable
(1) Classification of accounts receivable
Unit: CNY
| Categor | Closing balance | Opening balance |
| y | Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | ||||
| Amount | Proportion | Amount | Provision ratio | Amount | Proportion | Amount | Provision ratio | |||
| Including: | ||||||||||
| Accounts receivable set aside for bad debts on a group basis | 1,160,307,684.08 | 100.00% | 66,003,382.68 | 5.69% | 1,094,304,301.40 | 1,030,064,717.88 | 100.00% | 57,148,716.92 | 5.55% | 972,916,000.96 |
| Including: | ||||||||||
| Accounts receivable with provision for bad debts using aging combinations | 1,160,307,684.08 | 100.00% | 66,003,382.68 | 5.69% | 1,094,304,301.40 | 1,030,064,717.88 | 100.00% | 57,148,716.92 | 5.55% | 972,916,000.96 |
| Total | 1,160,307,684.08 | 100.00% | 66,003,382.68 | 5.69% | 1,094,304,301.40 | 1,030,064,717.88 | 100.00% | 57,148,716.92 | 5.55% | 972,916,000.96 |
Bad debt provision assessed by groups:
Unit: CNY
| Name | Closing balance | ||
| Book balance | Bad debt provision | Provision ratio | |
| Aging groups | 1,160,307,684.08 | 66,003,382.68 | 5.69% |
| Total | 1,160,307,684.08 | 66,003,382.68 | |
Instructions for determining the basis of the combination:
If the provision for doubtful accounts receivable is made according to the general model of expected credit losses, please refer toother methods of disclosure of receivables to disclose the relevant information of doubtful accounts:
□ Applicable ? N/A
Aging disclosure
Unit: CNY
| Aging | Book balance |
| Within 1 year (inclusive) | 1,129,025,055.05 |
| 1-2 years | 15,584,716.05 |
| 2-3 years | 4,726,442.38 |
| More than 3 years | 10,971,470.60 |
| 3-4 years | 3,922,817.49 |
| 4-5 years | 2,354,257.02 |
| More than 5 years | 4,694,396.09 |
| Total | 1,160,307,684.08 |
(2) Bad debt provision withdrawn, recovered or reversed in the current period
Details of bad debt provision:
Unit: CNY
| Category | Opening balance | Changes in the current period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Provision for bad debts shall be made on a combination basis | 57,148,716.92 | 8,518,333.50 | 67,584.40 | 403,916.66 | 66,003,382.68 | |
| Total | 57,148,716.92 | 8,518,333.50 | 67,584.40 | 403,916.66 | 66,003,382.68 | |
Among them, the amount of the current bad debt provision recovery or reversal is important:
Unit: CNY
| Name of unit | Recovery or reversal | Recovery mode |
No reversal or recovery.
(3) Receivables among the top five closing balances collected by the debtor
Unit: CNY
| Name of unit | Closing balance of accounts receivable | Percentage of total closing balance of accounts receivable | Closing balance of bad debt provision |
| Customer 1 | 479,140,221.04 | 41.29% | 23,957,011.05 |
| Customer 2 | 160,111,492.17 | 13.80% | 8,005,574.61 |
| Customer 3 | 45,423,332.56 | 3.91% | 2,271,166.63 |
| Customer 4 | 43,523,472.78 | 3.75% | 2,176,173.64 |
| Customer 5 | 29,743,912.80 | 2.56% | 1,527,351.11 |
| Total | 757,942,431.35 | 65.31% |
2. Other receivables
Unit: CNY
| Item | Closing balance | Opening balance |
| Other receivables | 2,755,900,353.60 | 1,458,883,819.83 |
| Total | 2,755,900,353.60 | 1,458,883,819.83 |
(1) Other receivables
1) Classification of other receivables by nature
Unit: CNY
| Nature of money | Book balance at the end of the reporting | Book balance at the beginning of the |
| period | reporting period | |
| Amounts receivable from related parties within the scope of combination | 2,841,560,502.29 | 1,519,230,520.47 |
| Export tax rebate receivable | 15,408,984.91 | 22,067,723.30 |
| deposit | 7,280,560.36 | 5,173,827.26 |
| Provisional payment receivable | 1,762,196.83 | 1,175,931.64 |
| Employee reserve fund | 178,008.90 | 0.00 |
| Equity disposal receivable | 0.00 | 6,160,202.73 |
| Total | 2,866,190,253.29 | 1,553,808,205.40 |
2) Provision for bad debts
Unit: CNY
| Bad debt provision | Stage I | Stage II | Stage III | Total |
| 12-month ECL | Lifetime ECL (not impaired) | Lifetime ECL (impaired) | ||
| As at January 1, 2022 | 76,248,927.82 | 217,514.25 | 18,457,943.50 | 94,924,385.57 |
| Changes due to financial instruments recognized as at January 1, 2022 | ||||
| - Transfer to stage II | -56,226.58 | 56,226.58 | 0.00 | |
| - Transfer to stage III | -131,727.92 | 131,727.92 | 0.00 | |
| Provision | 10,316,214.04 | -29,559.75 | 3,170,859.83 | 13,457,514.12 |
| Other changes | 1,908,000.00 | 1,908,000.00 | ||
| As at December 31, 2022 | 86,508,915.28 | 112,453.16 | 23,668,531.25 | 110,289,899.69 |
Loss reserve for a significant change in book balance during the current period
□ Applicable ? N/A
Aging disclosure
Unit: CNY
| Aging | Book balance |
| Within 1 year (inclusive) | 2,863,002,414.81 |
| 1-2 years | 264,500.31 |
| 2-3 years | 410,304.20 |
| More than 3 years | 2,513,033.97 |
| 3-4 years | 459,300.00 |
| 4-5 years | 85,160.64 |
| More than 5 years | 1,968,573.33 |
| Total | 2,866,190,253.29 |
3) Bad debt provisions withdrawn, recovered or transferred back in the current period
Details of bad debt provision:
Unit: CNY
| Category | Opening | Changes in the current period | Closing balance |
| balance | Provision | Recovery or reversal | Write-off | Others | ||
| Bad debt provisions assessed by groups | 94,924,385.57 | 13,457,514.12 | 1,908,000.00 | 110,289,899.69 | ||
| Total | 94,924,385.57 | 13,457,514.12 | 1,908,000.00 | 110,289,899.69 |
Among them, the amount of the reversal or recovery of the current bad debt provision is important:
Unit: CNY
| Name of unit | Amount transferred back or recovered | Recovery mode |
4) Other receivables among the top five closing balances collected by the debtor
Unit: CNY
| Name of unit | Nature of payment | Closing balance | Aging | Percentage of the total closing balance of other receivables | Closing balance of bad debt provision |
| Unit 1 | Amounts receivable from related parties within the scope of combination | 1,527,279,127.95 | Within 1 year | 53.29% | 21,098,217.85 |
| Unit 2 | Amounts receivable from related parties within the scope of combination | 681,532,438.52 | Within 1 year | 23.78% | 34,076,621.93 |
| Unit 3 | Amounts receivable from related parties within the scope of combination | 201,973,400.00 | Within 1 year | 7.05% | 10,098,670.00 |
| Unit 4 | Amounts receivable from related parties within the scope of combination | 135,000,000.00 | Within 1 year | 4.71% | 6,750,000.00 |
| Unit 5 | Amounts receivable from related parties within the scope of combination | 94,545,636.09 | Within 1 year | 3.30% | 4,727,281.80 |
| Total | 2,640,330,602.56 | 92.13% | 76,750,791.58 |
3. Long-term equity investment
Unit: CNY
| Item | Closing balance | Opening balance | ||||
| Book balance | Reserve for | Book value | Book balance | Reserve for | Book value | |
| impairment | impairment | |||||
| Investment in subsidiaries | 4,105,047,447.89 | 4,105,047,447.89 | 4,157,167,492.92 | 4,157,167,492.92 | ||
| Investment in joint venture or associate | 2,541,550,254.17 | 2,541,550,254.17 | 2,352,069,024.80 | 2,352,069,024.80 | ||
| Total | 6,646,597,702.06 | 6,646,597,702.06 | 6,509,236,517.72 | 6,509,236,517.72 |
(1) Investment in subsidiaries
Unit: CNY
| Investee | Opening balance (book value) | Changes in the current period | Closing balance (book value) | Impairment reserve closing balance | |||
| Additional investment | Reduction of investment | Provision for impairment | Others | ||||
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd | 200,864,082.56 | 200,864,082.56 | |||||
| Guangdong Shiwanke Electric Appliance Co., Ltd. | 50,000,000.00 | 50,000,000.00 | |||||
| Haining GreatStar Hardware Tools Co., Ltd. | 2,000,000.00 | 2,000,000.00 | |||||
| Hangzhou GreatStar Power Tools Co., Ltd. | 2,000,000.00 | 1,120,000.00 | 3,120,000.00 | 0.00 | |||
| Hangzhou GreatStar Craftsman Tools Co., Ltd. | 4,250,000.00 | 4,250,000.00 | |||||
| Hangzhou GreatStar Tool Co., Ltd. | 63,772,246.86 | 63,772,246.86 | |||||
| Hangzhou GreatStar Hardware Tools Co., Ltd. | 3,406,500.00 | 3,406,500.00 | |||||
| Hangzhou GreatStar Sheffield Trading Co., Ltd. | 5,000,000.00 | 5,000,000.00 | |||||
| Hangzhou | 22,000,000.0 | 22,000,000.0 | |||||
| GreatStar Intelligent Technology Co., Ltd. | 0 | 0 | |||||
| Hangzhou Juye Tool Co., Ltd. | 120,000,000.00 | 120,000,000.00 | |||||
| Hangzhou Lianhe Electric Manufacturing Co., Ltd. | 21,185,561.86 | 21,185,561.86 | |||||
| Hangzhou Lianhe Tool Manufacturing Co., Ltd. | 12,804,728.00 | 12,804,728.00 | |||||
| Hangzhou Lianhe Machinery Co., Ltd. | 7,677,294.07 | 7,677,294.07 | 0.00 | ||||
| Hangzhou Liansheng Measuring Tool Manufacturing Co., Ltd. | 10,030,288.26 | 10,030,288.26 | |||||
| Hangzhou Ole-Systems Co., Ltd. | 9,600,000.00 | 9,600,000.00 | |||||
| Longyou Hugong Forging No. 3 Tools Co., Ltd. | 104,612,153.88 | 104,612,153.88 | |||||
| Longyou Yiyang Forging Co., Ltd. | 48,437,846.12 | 48,437,846.12 | |||||
| Ningbo Fenghua Giant Star Tool Co., Ltd. | 22,558,141.65 | 22,558,141.65 | |||||
| Pretest Laser Measuring Tool (Hangzhou) Co., Ltd. | 3,920,000.00 | 3,920,000.00 | |||||
| Suzhou Xindadi Hardware Product Co., Ltd. | 60,000,000.00 | 60,000,000.00 | |||||
| Zhejiang Guoxin Tool Co., Ltd. | 25,750,000.00 | 25,750,000.00 | |||||
| Zhejiang | 464,800,000. | 464,800,000. |
| GreatStar Tool Co., Ltd. | 00 | 00 | |||||
| Zhejiang Shiwanke Electric Appliance Co., Ltd. | 0.00 | 10,000,000.00 | 10,000,000.00 | ||||
| Geelong(Thailand) Co., Ltd. | 196,077,940.00 | 196,077,940.00 | 0.00 | ||||
| GreatStar Tools USA, Inc | 955,660,000.00 | 955,660,000.00 | |||||
| GreatStar Europe AG | 732,567,215.00 | 62,416,889.04 | 794,984,104.04 | ||||
| GreatStar Industrial Vietnam Co., Ltd. | 110,499,800.00 | 110,499,800.00 | |||||
| Hong Kong GreatStar International Limited | 897,693,694.66 | 81,218,300.00 | 978,911,994.66 | ||||
| Total | 4,157,167,492.92 | 154,755,189.04 | 206,875,234.07 | 4,105,047,447.89 |
(2) Investment in joint venture or associate
Unit: CNY
| Investor | Opening balance (book value) | Changes in the current period | Closing balance (book value) | Impairment reserve closing balance | |||||||
| Additional investment | Reduction of investment | Investment gains and losses recognized under the equity method | Other comprehensive income adjustments | Other changes in equity | Declaration of cash dividend or profit | Provision for impairment | Others | ||||
| I. Joint ventures | |||||||||||
| II. Associates | |||||||||||
| Hangzhou Micro Nano Technology Co., Ltd. | 84,244,601.17 | 7,684,612.65 | -8,963.76 | 91,920,250.06 | |||||||
| Zhejiang Guozi Robotic | 75,805,856.54 | -14,947,882.51 | 1,521,287.22 | 62,379,261.25 | |||||||
| s Co., Ltd. | |||||||||||
| Zhejiang Hangcha Holding Co., Ltd. | 732,591,395.62 | 95,134,172.50 | 3,648,430.69 | 6,495,730.54 | 40,000,000.00 | 797,869,729.35 | |||||
| Ningbo Donghai Bank Co., Ltd. | 190,561,324.86 | 12,234,926.64 | -1,053,170.16 | 201,743,081.34 | |||||||
| Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | 1,268,865,846.61 | 85,019,436.77 | 28,287,071.60 | 5,465,577.19 | 1,387,637,932.17 | ||||||
| Subtotal | 2,352,069,024.80 | 185,125,266.05 | 30,873,368.37 | 13,482,594.95 | 40,000,000.00 | 2,541,550,254.17 | |||||
| Total | 2,352,069,024.80 | 185,125,266.05 | 30,873,368.37 | 13,482,594.95 | 40,000,000.00 | 2,541,550,254.17 |
4. Operating proceeds and operating costs
Unit: CNY
| Item | Current period amount | Prior period amount | ||
| Revenues | Costs | Revenues | Costs | |
| Main business | 4,800,335,671.96 | 3,904,877,757.04 | 5,212,156,918.90 | 4,187,985,128.21 |
| Other business | 23,591,822.09 | 12,108,053.03 | 9,471,135.66 | 3,601,242.42 |
| Total | 4,823,927,494.05 | 3,916,985,810.07 | 5,221,628,054.56 | 4,191,586,370.63 |
Revenue-related information:
Unit: CNY
| Classification of contract | Branch 1 | Branch 2 | Total | |
| Type of commodity | ||||
| Including: | ||||
| Hand tools and storages | 4,337,685,453.80 | 4,337,685,453.80 | ||
| Power tools and laser measurements | 462,650,218.16 | 462,650,218.16 | ||
| Other business | 23,591,822.09 | 23,591,822.09 | ||
| Classification by |
| operating area | ||||
| Including: | ||||
| America | 3,444,088,900.00 | 3,444,088,900.00 | ||
| Europe | 740,763,400.00 | 740,763,400.00 | ||
| Domestic | 237,783,571.96 | 237,783,571.96 | ||
| Other regions | 377,699,800.00 | 377,699,800.00 | ||
| Other business | 23,591,822.09 | 23,591,822.09 | ||
| Type of market or customer | ||||
| Including: | ||||
| Type of contract | ||||
| Including: | ||||
| Classification by time of transfer of goods | ||||
| Including: | ||||
| Classification by contract term | ||||
| Including: | ||||
| Classification by sales channel | ||||
| Including: | ||||
| Total |
Information related to performance obligations:
On the commencement date of the contract, the Company evaluates the contract, identifies the individual performance obligationscontained in the contract, and determines whether the individual performance obligations shall be performed within a certainperiod or at a certain point.If one of the following conditions is met, the performance obligation shall be performed within a certain period; otherwise, theperformance obligation shall be performed at a certain point: (1) The customer shall obtain and consume the economic benefitsbrought by the performance of the Company meanwhile; (2) The customer can control the goods under construction during thecompany's contract performance; (3) The commodities produced by the Company during the performance of the Contract haveirreplaceable uses, and the Company has the right to collect payment for the performance part accumulated so far during the wholecontract period.For the performance obligations performed within a certain period of time, the Company recognizes revenue in accordance withthe progress of the performance within that period of time. If the performance progress cannot be reasonably determined, and thecost already incurred is expected to be compensated, the income shall be recognized according to the amount of cost alreadyincurred until the performance progress can be reasonably determined. For performance obligations performed at a certain point,revenue is recognized when the customer obtains control of the relevant goods or services. In determining whether the customerhas acquired control of the commodity, the company considers the following indications: (1) The Company has a current right tocollect on the commodity, that is, the customer has a current obligation to pay for the commodity; (2) The Company hastransferred the legal ownership of the commodity to the customer, that is, the customer has the legal ownership of the commodity;
(3) The Company has physically transferred the commodity to the customer, that is, the customer has physically possessed thecommodity; (4) The Company has transferred the main risks and rewards of the ownership of the commodities to the customer,
that is, the customer has acquired the main risks and rewards of the ownership of the commodities; (5) The customer has acceptedthe commodity; (6) Other indications indicating that the customer has taken control of the goods.
2. Principles of income measurement
(1) The Company measures its income according to the transaction price apportioned to each individual performance obligation.The transaction price is the amount of consideration that the Company expects to be entitled to receive in connection with thetransfer of goods or services to the customer, excluding amounts collected on behalf of third parties and amounts expected to berefunded to the Customer.
(2) If there is variable consideration in the contract, the Company shall determine the best estimate of the variable consideration inaccordance with the expected value or the amount most likely to occur, provided that the transaction price containing the variableconsideration does not exceed the amount of cumulative recognized revenue that is highly unlikely to be materially reversed whenthe relevant uncertainty is eliminated.
(3) If there is a significant financing component in the contract, the Company shall determine the transaction price according to theamount payable in cash, which is assumed to be paid by the customer upon acquisition of control of the commodity or service. Thedifference between the transaction price and the contract consideration shall be amortized by the effective interest rate methodduring the contract period. On the commencement date of the contract, if the Company expects that the interval between thecustomer acquiring the control of the commodity or service and the customer paying the price is not more than one year, it will notconsider the significant financing element in the contract.
(4) If the contract contains two or more performance obligations, the Company shall, on the commencement date of the contract,apportion the transaction price to the performance obligations of each individual item in accordance with the relative proportion ofthe individual selling price of the commodity promised by the performance obligations of each individual item.
3. Specific methods of income recognition
The sales business of Hand Tools, Power Tools, Laser Measurement, Storage and other products of the company belong to theperformance obligations performed at a certain point. Domestic sales income will be recognized when the company delivers theproducts to the place of delivery agreed in the contract and the customer confirms acceptance, the company has received the priceor has obtained the right to collect payment, and the related economic benefits are likely to flow in. Export sales income isrecognized when the company has declared the products to customs according to the contract, obtained the bill of lading or arrivedat the destination designated by the customer and confirmed by the customer, received the payment for goods or obtained the rightto collect payment and the related economic benefits are likely to flow in.Information relating to the transaction price apportioned to the remaining performance obligations:
The amount of revenues corresponding to the performance obligations of the contract signed but not yet performed or completed atthe end of the current reporting period is CNY 43,237,007.23, among which CNY 43,237,007.23 is expected to be recognized in2023, and CNY 0.00 is expected to be recognized in 2024, and CNY 0.00 is expected to be recognized in 2025.Other notes:
The income that is recognized in the current period and is included in the opening book value of contract liabilities is CNY46,268,755.74.
5. Investment income
Unit: CNY
| Item | Current period amount | Prior period amount |
| Cost-based returns on long-term equity investments | 22,750,000.00 | |
| Income from long-term equity | 185,125,266.05 | 254,321,468.97 |
| investments accounted for by the equity method | ||
| Investment income from disposal of long-term equity investments | -3,000,600.68 | |
| Investment income from the disposal of trading financial assets | 3,455,425.60 | 78,486,454.00 |
| Dividend income from other equity instruments during the holding period | 12,400,000.00 | |
| Loss on discounted receivables financing | -7,931,415.18 | -4,570,835.23 |
| Total | 212,798,675.79 | 328,237,087.74 |
XVII. Supplementary information
1. Details of current non-recurring profit and loss
?Applicable □ N/A
Unit: CNY
| Item | Amount | Remarks |
| Gains and losses on disposal of non-current assets | -24,332,379.79 | |
| Government grants accounted for, in the profit or loss for the current period (except for the government grants closely related to the business of the Company and continuously given at a fixed amount or quantity in accordance with certain standards) | 46,471,430.13 | |
| Gains or losses on assets entrusted for investment or management | 2,368,356.03 | |
| In addition to the effective hedging business related to the Company’s normal operation, the profit and loss of fair value changes arising from the holding of trading financial assets, derivative financial assets, trading financial liabilities, and the investment income obtained from the disposal of trading financial assets and trading financial assets available for sale | -66,784,931.44 | |
| Other non-operational income and expenditure in addition to the items listed above | -12,290,983.36 | |
| Other items of gains and losses that fall into the category of non-recurring gains and losses | 12,733,584.83 | |
| Less: Income tax impact | -9,422,034.54 | |
| Impact on minority shareholders' equity | 2,671,376.16 | |
| Total | -35,084,265.22 | -- |
Details of other items of gains and losses that fall into the category of non-recurring gains and losses:
□ Applicable ? N/A
The Company has no other items of gains and losses that fall into the category of non-recurring gains and losses.Remarks on the situation that non-recurring profit and loss items listed in the Explanatory Announcement No. 1 of InformationDisclosure of Companies Offering Securities to the Public – Non-recurring Profit and Loss are defined as recurring profit and lossitems
□ Applicable ? N/A
2. Return on equity and earnings per share
| Profit in the reporting period | Weighted average return on equity (ROE) | Earnings per share | |
| Basic earnings per share (CNY/share) | Diluted earnings per share (CNY/share) | ||
| Net profit attributable to the Company's ordinary shareholders | 12.31% | 1.24 | 1.24 |
| Net profit attributable to the Company's ordinary shareholders after deducting non-recurring gains and losses | 12.61% | 1.28 | 1.28 |
3. Others
1. Calculation process of weighted average return on equity
| Item | No. | Amount in the current period | |
| Net profit attributable to the Company's ordinary shareholders | A | 1,419,559,507.10 | |
| Non-recurring profit or loss | B | -35,084,265.22 | |
| Net profit attributable to the Company's ordinary shareholders after deducting non-recurring gains and losses | C=A-B | 1,454,643,772.32 | |
| Opening net assets attributable to the Company's ordinary shareholders | D | 10,598,896,746.70 | |
| New net assets attributable to the Company's ordinary shareholders by issuing new shares or exchanging debt for equity | E | 1,071,328,296.24 | |
| Cumulative number of months from the next month of new net assets to the end of the reporting period | F | 1 | |
| Net assets that are reduced by buybacks or cash dividend and are attributable to the Company's ordinary shareholders | G | 50,184,047.52 | |
| Cumulative number of months from the next month of reduced net assets to the end of the reporting period | H | 10, 11 | |
| Others | Differences of accounting data under domestic and foreign accounting standards | I1 | 371,093,201.58 |
| Cumulative number of months from the next month of increased/reduced net assets to the end of the reporting period | J1 | 6 | |
| Share of other comprehensive income of Hangzhou Zhongce Haichao Enterprise Management Co., Ltd., calculated according to the equity method | I2 | 28,287,071.60 | |
| Cumulative number of months from the next month of increased/reduced net assets to the end of the reporting period | J2 | 6 | |
| Share of other comprehensive income of Ningbo Donghai Bank Co., Ltd., as calculated under the equity method | I3 | -1,053,170.16 | |
| Cumulative number of months from the next month of increased/reduced net assets to the end of the reporting period | J3 | 6 | |
| Share of other comprehensive income of Zhejiang Hangcha Holding Co., Ltd., as calculated under the equity method | I4 | 3,648,430.69 | |
| Cumulative number of months from the next month of increased/reduced net assets to the end of the reporting period | J4 | 6 | |
| Share of other comprehensive income of Hangzhou Micro Nano Technology Co., Ltd., as calculated under the equity method | I5 | -8,963.76 | |
| Cumulative number of months from the next month of increased/reduced net assets to the end of the reporting period | J5 | 6 | |
| Share of shareholders’ equity changes in Zhejiang Guozi Robotics Co., Ltd., excluding net profit and loss, other comprehensive income and profit distribution, as calculated under the equity method | I6 | 1,521,287.22 | |
| Cumulative number of months from the next month of increased/reduced net assets to the end of the reporting period | J6 | 6 | |
| Share of shareholders’ equity changes in Zhejiang Hangcha Holding Co., Ltd., excluding net profit and loss, other comprehensive income and profit distribution, as calculated under the equity method | I7 | 6,495,730.54 | |
| Cumulative number of months from the next month of increased/reduced net assets to the end of the reporting period | J7 | 6 | |
| Share of shareholders’ equity changes in Hangzhou Zhongce Haichao Enterprise Management Co., Ltd., excluding net profit and loss, other comprehensive income and profit distribution, as calculated under the equity method | I8 | 5,465,577.19 | |
| Cumulative number of months from the next month of increased/reduced net assets to the end of the reporting period | J8 | 6 | |
| Changes in remeasurement of the defined benefit plan | I9 | -57,181,824.00 | |
| Cumulative number of months from the next month of increased/reduced net assets to the end of the reporting period | J9 | 6 | |
| Acquisition of minority equity of Hangzhou Juxing Hardware Tools Co., Ltd. for payment of consideration adjustment capital reserve | I10 | 79,700.41 | |
| Cumulative number of months from the next month of increased/reduced net assets to the end of the reporting period | J10 | 4 | |
| Number of months in the reporting period | K | 12 | |
| Weighted average net worth | L= D+A/2+ E×F/K-G×H/K±I×J/K | 11,533,924,629.26 | |
| Weighted average return on equity (ROE) | M=A/L | 12.31% |
| Weighted average return on equity excluding non-recurring gains and losses | N=C/L | 12.61% |
2. Calculation process of basic and diluted earnings per share
(1) Calculation process of basic earnings per share
| Item | No. | Amount in the current period |
| Net profit attributable to the Company's ordinary shareholders | A | 1,419,559,507.10 |
| Non-recurring profit or loss | B | -35,084,265.22 |
| Net profit attributable to the Company's ordinary shareholders after deducting non-recurring gains and losses | C=A-B | 1,454,643,772.32 |
| Total number of shares at the beginning of the period | D | 1,137,423,182 |
| Number of shares increased due to conversion of capital stock from provident fund or stock dividend distribution | E | |
| Number of shares increased by issuing new shares or exchanging debt for equity | F | 59,063,500 |
| Cumulative number of months from the next month of increased shares to the end of the reporting period | G | 1 |
| Reduction of shares due to buybacks | H | 2,008,500 |
| Cumulative number of months from the next month of reduced shares to the end of the reporting period | I | 10, 11 |
| Shrinkage of shares in the reporting period | J | |
| Number of months in the reporting period | K | 12 |
| Weighted average number of ordinary shares outstanding | L=D+E+F×G/K-H×I/K-J | 1,140,616,515.33 |
| Basic earnings per share | M=A/L | 1.24 |
| Basic earnings per share excluding non-recurring gains and losses | N=C/L | 1.28 |
(Note) The number of shares repurchased is excluded from the total number of shares at the beginning of the period
(2) The process for calculating diluted earnings per share is the same as that for calculating basic earnings per share.