Stock Code: 603195 Stock Name: Gongniu Group
公牛集团股份有限公司GONGNIU GROUP CO., LTD.
Annual Report 2022
Important Notes
1. The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,supervisors and senior management of Gongniu Group Co., Ltd. (hereinafter referred to as the“Company”) hereby guarantee that the contents of this Report are true, accurate and completeand free of any misrepresentations, misleading statements or material omissions, and collectivelyand individually accept legal responsibility for such contents.
2. All the directors of the Company attended the board meeting for the review of this Report.
3. Pan-China Certified Public Accountants LLP has issued an independent auditor’s report withunmodified unqualified opinion for the Company.
4. Ruan Liping, the Company’s legal representative, Zhang Lina, the Company’s Chief FinancialOfficer, and Luo Yuebo, head of the Company’s financial department (equivalent to financialmanager) hereby guarantee that the financial statements carried in this Report are true, accurateand complete.
5. Final dividend plan approved by the Board of Directors
As audited by Pan-China Certified Public Accountants LLP, net profit attributable to shareholdersof the Company as the parent stood at RMB3,188,619,359.56 for 2022, and the cumulative distributableprofit of the Company as the parent was RMB4,693,667,008.01 as at 31 December 2022. The 2022 finaldividend plan is as follows: Based on the total share capital (exclusive of the shares in the Company’srepurchased share account) at the record date of the dividend payout, the Company intends to pay a cashdividend of RMB33 (tax inclusive) per 10 shares to shareholders, with a bonus issue of 4.8 additionalshares for every 10 shares held by shareholders from capital reserves.
According to the total share capital of 601,077,590 shares minus the 46 shares in the repurchasedshare account at the date when this Report was authorized for issue, the total cash dividend amount isRMB1,983,555,895.20 (tax inclusive), and the total share capital will increase to 889,594,811 sharesupon the bonus issue (share capital subject to the number registered with the Shanghai branch of ChinaSecurities Depository and Clearing Co., Ltd., with tail difference, if any, due to rounding).
Where any change occurs to the total share capital before the record date of the dividend payout,the cash dividend and bonus issue per share shall remain the same while the total payout and bonus issueamount shall be adjusted accordingly.
The final dividend plan is subject to final approval by the 2022 Annual General Meeting ofShareholders.
6. Risk warning regarding forward-looking statements
√ Applicable □ Not applicable
Any plans, development strategies and other forward-looking statements mentioned in this Reportshall not be considered as promises to investors. Investors and those concerned shall be sufficientlyaware of the risks and understand the differences between plans and forecasts and promises.
7. Indicate whether any of the controlling shareholder or other related parties occupied theCompany’s capital for non-operating purpose.N/A
8. Indicate whether the Company provided any guarantee for any external party in violation of theprescribed decision-making procedure.N/A
9. Indicate whether over half of the directors refused to guarantee the truthfulness, accuracy andcompleteness of this Report.N/A
10. Major risk warning
The Company has described the possible risks in this Report. For further information, please referto the contents under the heading “Possible risks” under Item VI (IV) in “Part III ManagementDiscussion and Analysis”.
11. Other information
□ Applicable √ Not applicable
To Shareholders
In 2022, we surmounted a multitude of adversities, cultivating vitality amid crises and pioneeringnew paths in the face of change, ultimately achieving a robust growth in performance. Our traditionalbusiness strengthened its competitive advantages, while our initial ventures into new markets andindustries began to reveal their potential. The Company’s overall operational quality experienced acomprehensive enhancement. We extend our gratitude to our shareholders for their unwavering supportand companionship, as well as to our devoted employees for their relentless efforts and persistence.Throughout this year, we have diligently kept up with the evolving trends in consumer preferences,placing customer needs at the forefront of our priorities and actively pursuing product innovation. Weintroduced a range of state-of-the-art products, such as orbital socket, ultra-thin switches withaerospace-level safety features, eye-friendly desk lamps, intelligent door locks with integrated peepholecameras, and fan lights. This has enabled us to offer our customers a diverse selection of top-quality,trendy, and visually attractive products.We enthusiastically pursued the advancement of renewable energy and intelligent headless lamp.Upon its launch, our charging gun rapidly became the top-selling online product among independentbrands. Additionally, our portable outdoor energy storage experienced swift growth, and our intelligentheadless lamp achieved more than RMB 100 million turnover during its inaugural year on the market,demonstrating a highly promising beginning.In our extensive brand upgrade, we achieved remarkable progress by unveiling Gongniu’s freshlogo in 2022 and reinforcing our brand’s core message: “Gongniu is used by 7 out of 10 Chinesefamilies.” Additionally, we launched the novel “Muguang” brand and proudly became the first Chinaspace affiliate in the civil electrical industry. Our cutting-edge orbital socket quickly gained prominence,emerging as the unrivaled leader among individual products, owing to innovative media promotion. Thissuccess sets a robust foundation for our brand’s continued growth in 2023.
We diligently endeavored to strengthen our management reforms and augment the development ofour Bull Business System (BBS), and comprehensively implanted the improved BBS gene into thewhole value chain consisting of production, research, sales, and service from point to surface and frominside to outside, and thus enabled the BBS to be a powerful engine for our innovation, growth, costreduction and efficiency improvement. In 2022, we established a top-tier Audit and Risk Committee,focusing on addressing ten major risks and effectively enhancing our internal control management.Furthermore, we persistently advocated for organizational innovation and cultivated our talent pool toensure our company’s ongoing, healthy growth.
We stayed true to our founding mission, proactively embraced our social responsibility, and in 2022,we established the “Gongniu Charity Trust”, the largest annual charity trust in the country. Additionally,we actively contributed to Shanghai’s epidemic prevention and control efforts, supported theconstruction of cabin hospitals in Hong Kong, and participated in other crucial initiatives. Our efforts
made a positive impact in various fields, including epidemic prevention and control, culture, education,health, poverty alleviation, disaster relief, and employee well-being.As we enter a new year, we also embrace new opportunities. China’s economic fundamentals aresteadily improving, the new energy industry is booming and expanding, and China’s supply chain andbrand have gained global edge in some emerging sectors, all of which lay a solid foundation for ourcompany’s growth. In 2023, we will prioritize the following three areas of work:
Firstly, we will diligently work to refine our brand, heightening the professionalism and premiumappeal of the Gongniu brand to meet the domestic market’s demand for superior quality consumption.We will further raise awareness of our flagship products, including converters, wall switches, andsockets, while increasing visibility for our eco-friendly offerings, such as LED lighting, clothes dryers,and smart door locks. Additionally, we will bolster the promotion of our “Muguang” brand for strategicnew ventures, including headless lamp solutions, and establish a professional brand image.Secondly, we will fortify the core competitive edge of Gongniu’s new energy business bymastering critical technologies, including power modules, group charging, and intelligent control. Wewill expedite the development of our marketing network and establish a swift-response servicecapability to accelerate our charging pile business growth and delve into the home energy storage market.This will take Gongniu’s new energy business to the next level.Thirdly, we are passionately advancing the internationalization of the Gongniu brand. We arecapitalizing on the new wave of new energy development in European and American markets by swiftlyentering with our core new energy charging and home energy storage businesses. Simultaneously, weare embracing the new cycle of household electrification development in Southeast Asia and othercountries by overcoming the development bottleneck of Chinese brands in emerging markets with coreproducts like converters.Though the journey ahead may be lengthy and filled with challenges, we will reach our destinationby persistently pressing onward. We will maintain our business philosophy of “taking the long way withprofessionalism and devotion” as we forge ahead. Our commitment lies in generating high-quality andsustainable value returns for our shareholders and striving relentlessly to achieve our vision of“becoming a leader in the international civil electrical industry”.
Board of Directors of Gongniu Group Co., Ltd.
27 April 2023
Contents
Part I Definitions ...... 7
Part II General Information of the Company and Key Financial Indicators ...... 10
Part III Management Discussion and Analysis ...... 16
Part IV Corporate Governance ...... 54
Part V Environmental and Social Responsibility ...... 77
Part VI Significant Events ...... 81
Part VII Changes in Ordinary Shares and Information about Shareholders ...... 99
Part VIII Relevant Information of Corporate Bonds ...... 111
Part IX Relevant Information of Preference Shares ...... 112
Part X Financial Statements ...... 113
| Documents available for reference | The financial statements for the year ended 31 December 2022 signed and stamped by the legal representative, the Chief Financial Officer, and the head of the financial department |
| The Independent Auditor’s Report for the year ended 31 December 2022 stamped by the CPA firm, as well as signed and stamped by the relevant certified public accountants | |
| The originals of all the Company’s documents and announcements disclosed on newspapers and websites designated by CSRC during the Reporting Period |
Part I Definitions
I DefinitionsThe expressions in the left column in the table below refer to the contents in the right column unlessotherwise specified.
| Definitions of frequently used terms | ||
| The “Company”, “Gongniu”, or “we” | refers to | Gongniu Group Co., Ltd. |
| Reporting Period | refers to | The period from 1 January 2022 to 31 December 2022 |
| Liangji Industrial | refers to | Ningbo Liangji Industrial Co., Ltd., the Company’s controlling shareholder |
| Ninghui Investment | refers to | Ningbo Ninghui Investment Management Partnership (Limited Partnership) , the Company’s shareholder |
| Suiyuan Investment | refers to | Ningbo Suiyuan Investment Management Partnership (Limited Partnership) , the Company’s shareholder |
| Qiyuanbao | refers to | Ningbo Qiyuanbao Investment Management Partnership (Limited Partnership) , the Company’s shareholder |
| Cixi Gongniu | refers to | Cixi Gongniu Electrics Co., Ltd., a wholly-owned subsidiary of the Company |
| Shanghai Gongniu | refers to | Shanghai Gongniu Electrics Co., Ltd., a wholly-owned subsidiary of the Company |
| Ningbo Gongniu | refers to | Ningbo Gongniu Electrics Co., Ltd., a wholly-owned subsidiary of the Company |
| Banmen Electric Appliance | refers to | Ningbo Banmen Electric Appliance Co., Ltd., a wholly-owned subsidiary of the Company |
| Gongniu Photoelectric | refers to | Ningbo Gongniu Photoelectric Technology Co., Ltd., a wholly-owned subsidiary of the Company |
| Gongniu Precision | refers to | Ningbo Gongniu Precision Manufacturing Co., Ltd., a wholly-owned subsidiary of the Company |
| Gongniu Digital | refers to | Ningbo Gongniu Digital Technology Co., Ltd., a wholly-owned subsidiary of the Company |
| Bull International Trading | refers to | Ningbo Bull International Trading Co., Ltd., a wholly-owned subsidiary of the Company |
| Xingluo Trading | refers to | Ningbo Xingluo Trading Co., Ltd., a wholly-owned subsidiary of the Company |
| Electric Sales | refers to | Ningbo Gongniu Electric Sales Co., Ltd., a wholly-owned subsidiary of the Company |
| Bull HK | refers to | Bull International Trading (HK) Limited, a wholly-owned subsidiary of the Company |
| Gongniu Low Voltage | refers to | Ningbo Gongniu Low Voltage Electric Co., Ltd., a wholly-owned subsidiary of the Company |
| Hainan Dacheng | refers to | Hainan Dacheng Supply Chain Management Co., Ltd., a wholly-owned subsidiary of the Company |
| Murora Intelligent | refers to | Guangdong Murora Intelligent Lighting Co., Ltd., a wholly-owned subsidiary of the Company |
| Gongniu New Energy | refers to | Ningbo Gongniu New Energy Technology Co., Ltd., a wholly-owned subsidiary of the Company |
| Information Technology | refers to | Shanghai Gongniu Information Technology Co., Ltd., a wholly-owned subsidiary of the Company |
| Shenzhen Intelligent | refers to | Shenzhen Gongniu Intelligent Information Co., Ltd., a wholly-owned subsidiary of the Company |
| Domestic Electrical Appliance | refers to | Ningbo Gongniu Domestic Electrical Appliance Co., Ltd., a wholly-owned subsidiary of the Company |
| Gongniu Marketing | refers to | Ningbo Gongniu Marketing Co., Ltd., a wholly-owned subsidiary of the Company |
| Hangniu Hardware | refers to | Hangzhou Hangniu Hardware and Electrical Co., Ltd. |
| Dalitek | refers to | Dalitek Intelligent Technology (Shanghai) Inc., a majority-owned subsidiary of the Company |
| Liangniu Hardware | refers to | Hangzhou Liangniu Hardware and Electrical Co., Ltd. |
| Feiniu Hardware | refers to | Hangzhou Feiniu Hardware and Electrical Co., Ltd. |
| Niuweiwang Trading | refers to | Suzhou Niuweiwang Trading Co., Ltd. |
| Cixi Libo | refers to | Cixi Libo Electric Co., Ltd. |
| Yaoyang Trading | refers to | Yichang Yaoyang Trading Co., Ltd. |
| Huantian Technology | refers to | Hubei Huantian Technology Co., Ltd. |
| Jianke Trading | refers to | Changde Jianke Trading Co., Ltd. |
| Chenhao Electronic | refers to | Beijing Chenhao Electronic Technology Co., Ltd. |
| Guoxin Trading | refers to | Changde Guoxin Trading Co., Ltd. |
| Qiudi Trading | refers to | Hebei Qiudi Trading Co., Ltd. |
| The “Articles of Association” | refers to | The Articles of Association of Gongniu Group Co., Ltd. |
| The “Company Law” | refers to | The Company Law of the People’s Republic of China |
| The “Securities Law” | refers to | The Securities Law of the People’s Republic of China |
| A-stock | refers to | RMB-denominated ordinary stock |
| CSRC | refers to | China Securities Regulatory Commission |
| The Ministry of Finance | refers to | The Ministry of Finance of the People’s Republic of China |
| STA | refers to | The State Taxation Administration of the People’s Republic of China |
| Sinolink Securities | refers to | Sinolink Securities Co., Ltd. |
| PCCPA or the “Independent Auditor” | refers to | Pan-China Certified Public Accountants LLP |
| RMB RMB’000 RMB’0,000 RMB’00,000,000 | refers to | Expressed in the Chinese currency of Renminbi Expressed in thousands of Renminbi Expressed in tens of thousands of Renminbi Expressed in hundreds of millions of Renminbi |
II Terminology
| Civil electrical appliances | refers to | Products that are typically purchased at the discretion of consumers and are suitable for use at home, in the office and on other occasions for power connection, transmission, storage, conversion, control and other functions, such as adaptors, wall switches and sockets, circuit breakers, distribution boxes, LED lamps, etc. |
| Adaptors | refers to | Products that are produced in accordance with GB/T 2099.3-2015 Plugs and Socket-outlets for Household and Similar Purposes -- Parts 2-5: Particular Requirements for Adaptors, GB/T 2099.7-2015 Plugs and Socket-outlets for Household and Similar Purposes -- Parts 2-7: Particular Requirements for Extension-cord Sockets and GB/T 2099.1-2008 Plugs and Socket-outlets for Household and Similar Purposes -- Part 1: General Requirements, as well as similar foreign standards, and are commonly referred to as adaptors in the Company. Consumers or peer companies often call adaptors socket-outlets, power strips, portable sockets, extension-cord sockets, or power converters. |
| PDU | refers to | Power Distribution Unit. PDU is an electric connection product suitable for power distribution at the data center end that can make power distribution more orderly, reliable, safe, professional and beautiful and make power supply maintenance more convenient and reliable. |
| Wall switches and sockets | refers to | Wall switches and wall sockets. Specifically, a wall switch refers to a device mounted on the wall for switching on/off the current of one or more circuits and is commonly used to control the on/off status of lighting lamps. A wall socket, also known as a fixed socket, is an electrical accessory mounted on the wall, with a socket inserted with a pin of a plug and installed with terminals for connecting soft cables and |
| hard wires, and is often used to provide a power supply interface for electrical products. | ||
| Smart ecosystem | refers to | A novel, intelligent household appliance network that builds an interconnected smart home ecosystem. |
| LED lighting | refers to | Light sources that are produced using light-emitting diodes (such as LED bulb lamps), or luminaries that are produced using LED as a light source. |
| No-main-lamp lighting | refers to | A lighting design style and lighting without the main light source, that is, a lighting design technique through which downlights, spotlights, light belts, track lights and other luminaries are used to create a light (light and shadow) atmosphere in a point-line-surface combination manner. |
| Charging plugs | refers to | Portable chargers that are suitable for AC charging of new energy vehicles and special protectors used to connect household sockets and electric vehicles, with such functions as over-voltage and under-voltage protection, over-current protection and leakage protection. |
| Charging points | refers to | Fixed charging devices for AC charging of new energy vehicles that often require special wiring and installation in garages and special parking spaces, with such functions as over-voltage and under-voltage protection, over-current protection, leakage protection, insulation detection, electricity billing, timed charging and reserved charging. |
| Circuit breakers | refers to | A mechanical switching device that can connect, carry and disconnect the current both under normal circuit conditions and under specified abnormal circuit conditions. They are also known as automatic switches and are widely used in households, factories and other distribution circuits. |
| Distribution, delivery, visit and sales | refers to | A sales model in which specialized vehicles are used to provide retail stores with goods distribution, goods delivery, visit services and door-to-door sales on a regular basis along a fixed planned route. |
| BBS | refers to | Bull Business System |
Part II General Information of the Company and Key Financial
IndicatorsI Corporate Information
| Company name in Chinese | 公牛集团股份有限公司 |
| Abbr. | 公牛集团 |
| Company name in English | GONGNIU GROUP CO.,LTD. |
| Abbr. | GONGNIU |
| Legal representative | Ruan Liping |
II Contact Information
| Board Secretary | Securities Representative | |
| Name | Liu Shengsong | Jin Xiaoxue |
| Address | Tower 20, Baoshi Plaza, 487 Tianlin Road, Xuhui District, Shanghai | Tower 20, Baoshi Plaza, 487 Tianlin Road, Xuhui District, Shanghai |
| Tel. | 021-33561091 | 021-33561091 |
| Fax | 021-33561091 | 021-33561091 |
| E-mail address | liushengsong@gongniu.cn | jinxx@gongniu.cn |
III General Company Information
| Registered address | East Zone of Guanhaiwei Town Industrial Park, Cixi City, Zhejiang Province |
| Changes of registered address | N/A |
| Office address | Tower 20, Baoshi Plaza, 487 Tianlin Road, Xuhui District, Shanghai |
| Zip code | 201103 |
| Company website | http://www.gongniu.cn |
| Email address | ir@gongniu.cn |
IV Media for Information Disclosure and Place where this Report Is Lodged
| Media and websites where this Report is disclosed | China Securities Journal, Shanghai Securities News, Securities Daily, and Securities Times |
| Stock exchange website where this Report is disclosed | http://www.sse.com.cn |
| Place where this Report is lodged | The Securities Department of the Company |
V Stock Profile
| Stock profile | ||||
| Class of stock | Stock exchange | Stock name | Stock code | Formerly used stock name |
| A-stock | Shanghai Stock exchange | Gongniu Group | 603195 | / |
VI Other Information
| Domestic CPA firm appointed by the Company | Name | Pan-China Certified Public Accountants LLP |
| Office address | Block B, China Resources Building, 1366 |
| Qianjiang Road, Jianggan District, Hangzhou | ||
| Accountants writing signatures | Qian Zhongxian, and Liu Chong | |
| Sponsor that exercised supervision over the Company in the Reporting Period | Name | Sinolink Securities Co., Ltd. |
| Office address | 23/F, Zizhu International Plaza, 1088 Fangdian Road, Pudong New District, Shanghai | |
| Representatives writing signatures | Du Chunjing, and Feng Bing | |
| Supervision period | From 6 February 2020 to 31 December 2022 |
VII Key Financial Information for the Past Three Years(I) Key accounting information
Unit: RMB
| Key accounting information | 2022 | 2021 | 2022-over-2021 change (%) | 2020 |
| Operating revenue | 14,081,373,030.94 | 12,384,916,337.51 | 13.70 | 10,051,128,834.05 |
| Net profit attributable to the listed company’s shareholders | 3,188,619,359.56 | 2,780,360,732.66 | 14.68 | 2,313,430,074.14 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 2,904,148,417.50 | 2,632,476,489.56 | 10.32 | 2,221,818,427.52 |
| Net cash generated from/used in operating activities | 3,057,914,218.16 | 3,014,326,741.14 | 1.45 | 3,437,202,711.65 |
| 31 December 2022 | 31 December 2021 | Change of 31 December 2022 over 31 December 2021 (%) | 31 December 2020 | |
| Equity attributable to the listed company’s shareholders | 12,398,865,675.75 | 10,755,751,576.63 | 15.28 | 9,137,392,569.09 |
| Total assets | 16,650,497,198.32 | 15,473,904,666.62 | 7.60 | 12,437,541,574.38 |
(II) Key financial indicators
| Key financial indicator | 2022 | 2021 | 2022-over-2021 change (%) | 2020 |
| Basic earnings per share (RMB/share) | 5.32 | 4.63 | 14.90 | 3.89 |
| Diluted earnings per share (RMB/share) | 5.30 | 4.63 | 14.47 | 3.89 |
| Basic earnings per share before exceptional gains and losses (RMB/share) | 4.84 | 4.39 | 10.25 | 3.73 |
| Weighted average return on equity (%) | 27.88 | 28.28 | Down by 0.40 percentage point | 26.87 |
| Weighted average return on equity before exceptional gains and losses (%) | 25.39 | 26.77 | Down by 1.38 percentage points | 25.81 |
Explanations about the key accounting and financial information for the past three years:
□ Applicable √ Not applicable
VIII Accounting Data Differences under China’s Accounting Standards for Business Enterprises(CAS) and International Financial Reporting Standards (IFRS) and Foreign AccountingStandards(I) Differences in net profit and equity attributable to the listed company’s shareholders underCAS and IFRS
□ Applicable √ Not applicable
(II) Differences in net profit and equity attributable to the listed company’s shareholders underCAS and foreign accounting standards
□ Applicable √ Not applicable
(III) Reasons for accounting data differences above
□ Applicable √ Not applicable
IX Key Financial Information for 2022 by Quarter
Unit: RMB
| Q1 (January-March) | Q2 (April-June) | Q3 (July-September) | Q4 (October-December) | |
| Operating revenue | 3,078,423,636.94 | 3,759,884,528.11 | 3,636,181,747.68 | 3,606,883,118.21 |
| Net profit attributable to the listed company’s shareholders | 641,426,707.25 | 866,370,913.31 | 853,623,027.81 | 827,198,711.19 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 562,060,111.05 | 810,718,307.90 | 739,555,455.44 | 791,814,543.11 |
| Net cash generated from/used in operating activities | 433,646,077.61 | 711,246,493.62 | 836,250,178.68 | 1,076,771,468.25 |
Indicate whether any of the quarterly financial data in the table above differs from what have beendisclosed in the Company’s past periodic reports.
□ Applicable √ Not applicable
X Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2022 | Notes (if | 2021 | 2020 |
| applicable) | ||||
| Gain or loss on disposal of non-current assets | -3,980,890.27 | -9,714,625.18 | -669,979.13 | |
| Exceptional tax rebates, reductions and exemptions given with ultra vires approval, in lack of official approval documents or for other reasons | ||||
| Government grants through profit or loss (exclusive of government grants consistently given in the Company’s ordinary course of business at fixed quotas or amounts as per governmental policies or standards) | 130,991,587.24 | 388,196,973.94 | 126,164,339.75 | |
| Capital occupation charges on non-financial enterprises that are recognized in profit or loss | 590,062.34 | 8,121,324.51 | 407,671.23 | |
| Gain equal to the amount by which investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the Company’s enjoyable fair value of identifiable net assets of investees when making investments | ||||
| Gain or loss on non-monetary asset swaps | ||||
| Gain or loss on assets entrusted to other entities for investment or management | 279,374,491.92 | 171,623,256.63 | 166,225,979.47 | |
| Allowance for asset impairments due to acts of God such as natural disasters | ||||
| Gain or loss on debt restructuring | ||||
| Restructuring costs in staff arrangement, integration, etc. | ||||
| Gain or loss on the over-fair value amount as a result of transactions with distinctly unfair prices | ||||
| Current profit or loss on subsidiaries obtained in business combinations involving entities under common control from the period-begin to combination dates, net | ||||
| Gain or loss on contingencies that do not arise in the Company’s ordinary course of business | ||||
| Gain or loss on fair-value | -7,385,680.00 | 11,107,836.63 | -114,631,050.00 |
| changes on held-for-trading and derivative financial assets and liabilities & income from disposal of held-for-trading and derivative financial assets and liabilities and other debt investments (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | ||||
| Reversed portions of impairment allowances for receivables and contract assets which are tested individually for impairment | ||||
| Gain or loss on loan entrustments | ||||
| Gain or loss on fair-value changes in investment property of which subsequent measurement is carried out using the fair value method | ||||
| Effects of all adjustments required by taxation, accounting and other applicable laws and regulations on current profit or loss | ||||
| Income from charges on entrusted management | ||||
| Non-operating income and expense other than the above | -58,763,095.61 | -327,898,293.86 | -47,932,397.93 | |
| Other gains and losses that meet the definition of exceptional gain/loss | 1,712,485.52 | 2,739,167.53 | 1,014,971.00 | |
| Less: Income tax effects | 57,894,123.94 | 96,291,397.10 | 38,967,887.77 | |
| Non-controlling interests effects (net of tax) | 173,895.14 | |||
| Total | 284,470,942.06 | 147,884,243.10 | 91,611,646.62 |
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listedin the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering TheirSecurities to the Public—Exceptional Gain/Loss Items:
□ Applicable √ Not applicable
XI Items Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB
| Item | Opening balance | Closing balance | Change in the period | Effect on current profit |
| Held-for-trading financial assets | 5,926,600,000.00 | 6,949,000,000.00 | 1,022,400,000.00 | |
| Derivative financial assets | 3,613,050.00 | 643,100.00 | -2,969,950.00 | |
| Receivables financing | 927,023.00 | 1,036,801.70 | 109,778.70 |
| Held-for-trading financial liabilities | 0.00 | 18,200,000.00 | 18,200,000.00 | |
| Total | 5,931,140,073.00 | 6,968,879,901.70 | 1,037,739,828.70 |
XII Other Information
□ Applicable √ Not applicable
Part III Management Discussion and Analysis
I Discussion and Analysis on OperationsAmid a complex and changeable external environment in 2022, the Company adopted an operatingstrategy of seeking progress in stability. As a result, it achieved steady growth in operating results andmaintained good resilience for development. For the year, operating revenue increased 13.70% year onyear to RMB14.081 billion and the net profit attributable to the Company’s shareholders amounted toRMB3.189 billion, up 14.68% from the previous year.
During the Reporting Period, the Company focused closely on the three major businesses of electricconnection, smart electrical lighting and new energy, continuously promoted product innovation andbrand upgrading of traditional advantageous businesses such as adaptors and wall switches and sockets,and accelerated the expansion of new businesses such as new energy connection and smartno-main-lamps, achieving a good start. These efforts have helped further enhance the Company'scomprehensive competitiveness in product, channel, brand and supply chain, laying a solid foundationfor long-term sustainable and healthy development.In 2022, the presence and reputation of the Bull brand were further enhanced, with the Companyranking 70th on the 2022 Hurun Brand List China's Top 300 Brands by Brand Value, becoming the firstcivil electric manufacturer to establish a partnership with the aerospace sector in China, and winning the"China Brand Annual Award for Wall Switches and Sockets No.1" by the World Brand Lab. TheCompany and its subsidiaries Ningbo Gongniu, Gongniu Photoelectric, Gongniu Digital, and GongniuDomestic Electrical Appliance were certified as high-tech enterprises, and the Company was named"2022 Pilot Demonstration of Integration of New Generation Information Technology andManufacturing Industry " by the Ministry of Industry and Information Technology, and "2022 NationalIntellectual Property Demonstration Enterprise" by the China National Intellectual PropertyAdministration, and was recognised as Top 100 Manufacturing Enterprises of Zhejiang Province. In2022, the Company achieved sound results in the following aspects:
(I) Seized the trend of consumption upgrading, intelligent transformation and new energy,and developed innovative products centering on user needs
In 2022, the Company firmly captured the major trends of consumption upgrade, intelligenttransformation, and new energy. With deep insight into user needs, it continued to launch innovativeproducts such as smart and ecosystem-based home appliances and new energy-based electrical products.Throughout the year, up to 13 design awards were earned at home and abroad. As of the end of theReporting Period, the Company has won a total of 64 design awards at home and abroad, including theRed Dot Award (Germany), the iF Award (Germany), the G-Mark Award (Japan), the IDEA Award, theRed Star Design Award (China), the AWE Award, and the Design Intelligence Award. In addition,technical strengths were further enhanced, with 565 new patents and 23 new software copyrights grantedin 2022. As of the end of the Reporting Period, the Company boasts 2,379 valid patents and 59 softwarecopyrights.
1. The electric connection business
In the electric connection business in 2022, the Company made continuous exploration andindividualised innovation fully focusing on scenario-based electricity use, and was committed toproviding consumers with a safe, comfortable and pleasant experience of electricity use. This businessrecorded revenue of RMB7,051 million for the year, an increase of 4.22% year on year.
(1) Adaptor business
In product innovation in the adaptor business, the Company focused on satisfying user needs insegmented electricity scenarios and extending channel-related categories in 2022.
In terms of satisfying user needs in segmented electricity scenarios, the Company further optimisedthe consumer experience through trend-based user research, and focused on the development andimplementation of mainstream USB fast charging, table lamp power strips and decorative track sockets;based on research on consumer trends and concerns, the Company rapidly extended its product coveragein retractable power strips, textured decorative power strips and retro power strips, which well satisfiedthe young consumers' pursuit of quality and personalised life.
In the extension of channel-related products, based on the characteristics of hardware, decorationand e-commerce channels and the differences in user groups, the Company has further enriched theproduct lines of track sockets, electrical wire products and electrical accessories (plugs, electrical tape,etc.) to provide consumers with a convenient "one-stop" purchasing experience in multi-channeldimensions and multi-category sets; in the emerging business-end channels such as industrial terminalpower distribution, data centre and embedded home, the Company has continued to enrich and iterate itsproduct lines, further exploring and implementing product families such as track sockets, industrialconnectors, PDUs and embedded power strips, which have gained market recognition and userpopularity.
(2) Digital accessories business
In 2022, Gongniu Digital, by following the industry and user trends, successfully listed a series ofself-developed new products with profound user insight, leading fast-charging technology and exquisiteindustrial design.
Based on the charging concept of "safe and fast charging", and relying on the unique miniaturisedstacking technology and the exclusively patented "APO Technology", the good-looking charger seriesbased on advanced technology are launched, which save more energy than traditional chargers and caneffectively extend the life of mobile phone batteries, giving users differentiated smart chargingexperience; to meet consumers' needs for fast charging in multiple scenarios, the compact 67W portablefast charging power strip is launched based on the combination of the professional electric connectiontechnology and distinctive gallium nitride fast-charging technology; based on the desktop electricityscenario, the Company optimised the wave crest design through ergonomic research and the goldenplugging angle of the power strip, and launched the 67W Mountain Peak fast charging power strip; inaddition, in response to needs of female users, the Company launched the Planet fast-charging power
strip which is innovative and upgraded in appearance, which have realised new exploration and salesgrowth in fast charging power strips.Furthermore, by leveraging its digital and hardware channels, the Company continued to developbusiness segments such as audio, mobile phone cells, and dry cells, thereby achieving accurate inboundmarketing, enhancing channel and customer royalty, and systematically arranging products for mobilephones and laptops.
2. The smart electrical lighting business
In the smart electrical lighting business, the Company focuses on the process before householddecoration is completed (referred to as "pre-decoration"), providing wall switches and sockets, LEDlighting, bathroom heaters, circuit breakers, and smart door locks to meet consumers' upgraded needs forwhole-house smart home appliances. In 2022, the business reported revenue of RMB6.849 billion, anincrease of 23.39% year on year.
(1) Wall switches and sockets
In 2022, the Company continued to lead the way in terms of decorative wall switches and sockets,optimised the product layout based on the strategy of "steadily establishing the foundation, responding tothe trend; making insights into new opportunities and layout in the high-end market", and deepened theconstruction of different product systems as informed by the differentiated needs of customers indifferent channels.
With the development of industry trends, the Company has taken the initiative to make layouts inlarge-panel and ultra-thin products in the mainstream price range and successfully launched the Lineaswitch series, and used the original design by Italian design masters to create a new ultra-thin platform toenhance product power as well as brand power with high-end texture, technology and industrial design.
In order to better meet the home decoration needs of consumers and solve the pain points of userneeds, the Company innovatively used radar scanning tools to open up key nodes and stages such asdemand management, project establishment and development, promoted lean commodity planning andmanagement, and launched innovative products that have received good market response. At the sametime, in view of the characteristics and needs of weak channels, the Company closely followed itsdevelopment and changes, actively carried out targeted product planning and layout, and successfullylisted G35 series switches, with remarkable market integration effects.
In addition, in order to meet the differentiated needs of customers in the business-side market, theCompany further improved product flexibility and scalability by strengthening platform and modularstructure design, and continued to build a tiered combination of basic products, high-end products andintelligent products to enhance market competitiveness.
(2) LED lighting
Adhering to the positioning of "eye-caring", and oriented to meeting the needs for light in space andbehaviour, the Company has continued to push forward the research of "light" and the innovation andapplication of optical design. According to the segmented customer group profile, different applicationscenarios for demand mining, the Company made technological innovation in the directions of
"anti-blue light", "visible flicker-free", "full spectrum", "high index", "anti-glare", "comfortable colourtemperature", etc., and is committed to providing consumers with a comfortable, healthy lightenvironment.The Company followed the market trend in basic light source business; in 2022, starting with thenew demand of users for product cost performance and functions, the Company further improved theproduct layout for segmented scenario-based lighting needs, iteratively launched the Wanjiang-seriesprojector lamps, ceiling fittings, and Yue-series panel lights, and launched the commercial lighting seriesof downlights, induction bulbs, can lights, and lamp tube products for commercial lighting, quicklysupplementing the product line and significantly enhancing the competitiveness in commercial lighting.
In 2022, the Company continued to make breakthroughs in technology of lighting business,prepositioned the research and development of "control mode" and "eye-caring technology" to establishtechnical barriers to products and strengthen the construction of platforms to enhance the level ofstandardisation. The Company upgraded lighting products to be "ultra-thin" in appearance, deepenedintelligent control in terms of functionality, and upgraded the "offline voice" system to address user painpoints such as complicated and unresponsive operation of intelligent voice control, and launched anumber of collections of "modern and simple" line products that meet the needs of the markets in largercommunities and are popular with consumers. In order to meet the higher requirements of users for theappearance and quality of lamps and lanterns, new products such as S02 ceiling spotlights and T02Pluscan lights were launched for ambient lighting of homes. These products have good wall washing effect,natural light spot transition, high texture, and possess such advantages as being bright and uniform, anddeeply anti-glare, and have received a good market response.
In mobile lighting business, the Company focused on the pain points and needs of consumers inreading and light-filling scenarios, and strove to achieve the best light experience. Focusing on thereading scenarios, in 2022, the Company launched the Eye-Caring Desk Lamp with honeycombanti-glare technology at its core, which can better block the harsh light by shading treatment; the productis equipped with personalised interactive functions such as stepless dimming, rest reminder and delayedlight-off, creating a comfortable, healthy and intelligent reading light environment for consumers athome. Focusing on the light-filling scenarios, the Company has developed light-filling products such asnight light, cabinet light and clip light by following the market trend and gaining insight into user needsin 2022, and is committed to bringing good light to every corner of home.
(3) Smart no-main-lamps
Focusing on consumers' upgraded demand for minimalist decoration style and intelligent lightexperience, the Company has made smart no-main-lamps a key development direction for its lightingbusiness and is committed to creating a comfortable and professional light environment and convenientcontrol experience for users, better interpreting the lighting levels and light atmosphere of a space.
Upholding the concept of modular and standardised product design, the Company launched S03magnetic rail light and T03 downlight series and other products for smart no-main-lamps in 2022. Themagnetic rail light can be flexibly adjusted to the position of the light source on the rail according to user
needs, and different modules can meet different lighting needs respectively; the downlight seriesincludes embedded downlights, bezel-less downlights, surface mounted downlights, single/dual-endedgrille lights and mini grille lights. The high-CRI light source, coupled with professional optical lens,highly reproduces the real colour of objects, and the innovative industrial design ensures uniform lighteffect and natural visual comfort.
In 2022, the Company created "Murora", a new brand that is positioned as a professional brand inno-main-lamp lighting, with a product layout covering downlight, rail light, strip light, ambient light,Murora MOS system and so on. Murora's products, by employing high colour rendering light sources,have industry-leading optical performance indicators; adopting user-friendly design with user experienceat its core, Murora products won the G-Mark Design Award upon its launch; the Company'sself-developed Murora MOS system, together with the intelligent large screen and peripheral ecologicalproducts, further enhance the convenience, safety and stability of product use through continuousoptimisation and software iteration.
(4) Ecosystem-based products
To meet consumers' needs for one-stop shopping during pre-decoration, the Company proactivelybuilds a pre-decoration intelligent ecosystem, transforming from providing products that meet users'needs to providing better scenario-based solutions, constantly iterating and innovating ecosystem-basedproducts such as bathroom heaters, smart door locks, smart clothes drying racks, smart curtain machines,fan lights and circuit breakers.
In 2022, Domestic Electrical Appliance fully researched the user habits and pain points of electricalappliances in various household scenarios and gradually improved the category layout. In the bathroomscenario, based on the decoration problem of users with needs in replacement, and taking into accountthe product use scenario, the Company launched a ceiling-mounting-free, plug-and-use wall-mountedbathroom heater solution to meet users' heating needs; at the same time, the Company launched a seriesof electric towel racks in 2022, so that the drying needs of users in humid and cold areas can be bettermet. In the dining and bedroom scenarios, through insight and understanding of users' differentiateddemand for different space wind, the Company extended the fan light layout, and launched adifferentiated product in the industry - 07A wide-area wind fan light. Also, the Company keptinnovation in the fan light around the core needs of users; the ultra-thin fan light launched in 2022 wonthe international design awards of iF and G-Mark, and the industry's first centrifugal bladeless fan lightwas successfully launched by the Company. In the balcony scenario, with the continuous upgrade andchange of consumer groups and home space aesthetics, the Company launched the Yuebian series ofclothes drying racks in 2022, which are more in line with the consumer aesthetics of young people,increasing the attributes of living scenarios on top of satisfying users with easy drying. In the light andshadow scenario, in 2022, the Company launched the new one-line smart retractable rail curtain, whichbrings a better experience to users in terms of quick collection, one-off installation, smoothness ofproduct operation, and user experience.
Circuit breakers are constantly iterated and innovated on the basis of home decoration and civilproduct technology platform, and the existing product lines are constantly enriched for factory andengineering project users. In 2022, LC2 contactors, LW3 frame circuit breakers and LQ3 dual poweradaptors were launched to meet the needs of new scenarios and applications, while helping customers tofurther improve the reliability of electricity consumption.
In 2022, the Company completed the layout of two major platforms--the fully automatic type andthe handle type, for smart door locks, and added the remote cat-eye model, 3D face model and WiFimodel product series to achieve the layout of the full-product and full-function architecture. TheCompany's latest flagship product combines the functions of AI intelligent cat-eye, 3D face recognition,and intelligent doorbell to continuously improve product integration. In addition, the Companyintroduced WiFi low-power preservation technology across the industry, and equipped AliCloud videostreaming technology and distributed forwarding technology, breaking the technical difficulties of theindustry's visual cat-eye category, and bringing consumers a highly smooth and reliable visualexperience. The continued strengthening of the smart door lock product iteration capability will becomean important guarantee for the Company to enhance market competitiveness.
3. The new energy business
With years of accumulation of electricity technology and brand advantages, the Company's newenergy business has been running smoothly as it conducted product iterations and technologicalinnovation based on users' pain points and concerns, and gradually built up a complete product layoutand system. Revenue for the year was RMB153 million in this business, an increase of 638.62% year onyear.
In the new energy vehicle charging plug and charging point business, for the customer-side market,the Company has fully researched the characteristics of cars and consumer application scenarios, and hassuccessively launched a number of innovative products such as the high-power in-car charger, Minicharging point for A00-class cars and the Smart Link version of the charging point to meet thedifferentiated scenario-based charging needs of mainstream car models in the market; for thebusiness-side operator market, the Company has launched flexible DC charging points that support thefull power range from 20kW to 240kW. The output voltage bandwidth can fully meet the batterycharging needs of DC150V-1000V and can operate at maximum power output for a long time. Themodular and highly-integrated design ensures stable and reliable performance, and the networkedoperation and independent deployment technology enables remote supervision and maintenance, whichcan effectively meet the core requirements of operators for product functionality, operational efficiencyand post-maintenance. The listed products have been widely praised by the market for their superiortechnology, standard quality, innovative appearance and experience design.
The Company accelerated energy storage product innovation and technology research anddevelopment, and in 2022, the portable energy storage business focused on camping scenarios, anddeepened its expansion in outdoor power supply and outdoor power accessories. Through demandinsight, the Company launched a small-size and good-looking portable power supply product for
camping users, with bi-directional inverter fast charging and dimension-raising power technology; forsenior users concerned about the characteristics of power, the Company launched a high-energy lithiumiron phosphate power supply, advancing product capacity from 1kWh to 2kWh, which has received wideattention in the market; to address senior users' concerns about the low efficiency of battery discharge atlow temperature, the Company carried out research and development on the underlying technology andtook the lead in applying low-temperature-resistant lithium iron phosphate batteries to its products,leading the innovation trend of the industry. At the same time, the Company has launched solar chargingpanels, car-mounted chargers, outdoor bracket lighting and other camping products to provideconsumers with a complete solution for outdoor electricity use.
(II) Deepened channel integration and lean marketing, and focused on building a new salessystemIn 2022, the Company continued to promote marketing reforms according to the changes inconsumer needs, further establishing the ToC and ToB marketing systems and clarifying the synergy andcomplementarity strategies of channels including offline hardware, decoration, digital, and onlinee-commerce. The hardware channel was primarily for the sales of adaptors, circuit breakers, basic lightsource products, among others. Serving as a shared channel for all categories in smart electrical lighting,the decoration channel focused on the sales of domestic decorative products, including wall switches andsockets, LED lighting, circuit breakers, bathroom heaters, smart door locks, smart clothes drying racks,and curtain machines. The digital channel was primarily for the sales of digital accessories. In 2022, theCompany built a new offline energy distribution channel around the development of the new energybusiness, and has begun to see results. At the same time, the Company accelerated the expansion ofoverseas channels and increased the pace of internationalisation.In terms of the consumer-side decoration channel, to meet the needs for one-stop purchase duringpre-decoration, the Company deepened a specialised and comprehensive decoration channel, promotedthe downward sales of a range of electrical lighting products such as wall switches and sockets, LEDlighting, circuit breakers, domestic electrical appliances, and smart door locks in the county and townmarkets; the Company also launched the construction layout of the full-category flagship shops, whichhas strongly driven the development of the whole category business. In 2022, the Company carried outthe construction of core outlets for no-main-lamps in the decoration channel in a timely manner andachieved good market feedback. In line with the development trend of the industry, the Company hasmade comprehensive efforts to develop small and medium-sized decoration enterprises as its customersto create a new strategic growth channel. In addition, the Company further expanded new channels suchas integrated suspended ceiling shops and integrated kitchen and bath shops, and achieved an importantbreakthrough in the channel system. In terms of capacity building, the Company further deepened leanmarketing in the decorative channel, fully implemented lean dealer market planning, and improveddealer market planning and daily management capabilities. Also, the Company began to promote andreplicate lean retailing after exploration and verification, and implemented regional classification and
refinement management and top city management change innovation, making marketing strategies andpolicies more accurate and effectively stimulating channel vitality.The Company continued to strengthen its advantages in customer-side hardware channel, managedits core customers precisely, improved the efficiency and output of a single shop by enhancing shopdisplays and creating exclusive sales areas, consolidated the channel foundation, and with the help of anationwide network of distributors, continuously expanded product sales channels and optimised themarket structure; the Company entered the procurement platform for government and enterprises,provided quality services for government, enterprises and public institutions, and further enhanced theBull brand's awareness and reputation. In order to meet the needs of young consumers, the Company haslaunched good-looking youthful products one after another and further explored new channels such astrendy shops, boutique bookstores and high-end supermarkets. At the same time, in the hardwarechannel in 2022, the Company fully empowered dealer teams by lean marketing tools such as leanoperations and market planning in three dimensions: source-opening, cost-cutting and risk prevention,and effectively improved the efficiency of market operations with marketing tools such as CRM andnew media.For the consumer-side digital channel, a range of forms was introduced, including mobile phonerepair stores, digital accessories stores, small supermarket and convenient stores, the points mall, and thegifts channel. Through measures such as enhancing the "distribution, delivery, visit and sales" servicecapability, regional distribution and product improvement, the coverage of terminal outlets wassignificantly increased and customer stickiness was strengthened. The Company also further upgradedthe CRM digital tools to improve the quality of sales services and enhance the channel operation andmanagement capabilities.
The construction of the new energy channel commenced in March 2022 to expand the offline newenergy charging point market; Relying on the marketing system capabilities accumulated during thelong-term service to distributed customers, the pilots summed up the methodology of precise and rapidinvestment attraction, recruiting more than a hundred professional distributors nationwide, focusing oncovering first-, second- and third-tier cities. For customer-side users, the Company has formed standard"distribution, delivery, visit and sales" method and process, and focused on developing more than 5,000professional distributors such as new energy auto trade shops and auto beauty and decoration shops; forbusiness-side users, the Company has focused on developing pilot projects for clients such as publicinstitutions, enterprises, properties and charging stations, and summarised and formed a methodology toestablish the all-round capability of project development, solution design, installation service andafter-sales maintenance unique to the new energy channel, laying a solid foundation for the large-scalepromotion of the Company’s new energy charging point business in the country.In terms of business-side channels, in 2022, the Company continued to refine its developmentaround the three major businesses of installation enterprises, engineering projects and houses with finedecoration. With wall switches and sockets as the foundation and smart no-main-lamps as the core, andwith the advantage of a multi-category portfolio, the Company continued to broaden and deepen its
cooperation with top domestic installers. In 2022, the Company established strategic partnerships withabout 200 well-known top installers and platforms, such as Yenova, Create Decoration, SD, ke.com andLB, and enhanced the coverage of regional installer outlets around key cities; at the same time, theCompany made comprehensive efforts in the engineering project business and has become an importantpartner of Xiong'an New Area, Hong Kong-Zhuhai-Macao Greater Bay Area and other constructionprojects, and has been proactively building benchmark projects in the fields of provident housing,education, hotels and logistics, etc. The Company has also continued to focus on the development ofhouses with fine decoration, and has continued its solid cooperation with high-quality real estatecompanies such as Taikang, Poly and China Construction.In e-commerce channels, the Company continued to deepen its strategy of advancing digitalmarketing across all categories and platforms in 2022 by focusing on strengthening its capabilities inchannel construction, demand insight and digital marketing promotion. In terms of channel construction,the Company kept optimising its "1+Specialty+N" shop matrix by building flagship shops in lighting,digital and new energy categories with benchmarking significance, and creating a healthy ecology forchannel development with distributors in 2022. Regarding demand insight, the Company leveragedonline big data to gain in-depth insight into the needs of consumer groups, and continued to seizeopportunities in segmented categories to make precise efforts, constantly layout and improve the productmatrix with strong competitiveness, successfully created a number of trendy models such as tracksockets and new energy charging plugs. With respect to digital marketing, in 2022, the Company formeda digital marketing closed-loop system of "efficient off-site advertising and accurate in-site customerattraction", deepening the relevance of products to users' life scenarios and gradually opening up acrowd-expanding marketing method. In 2022, according to the data of Intelligence, the Companycontinued to maintain the first place in the market share of two categories, namely adaptors and wallswitches and sockets on Tmall and consolidate the leading position; the market share of new energy andother categories had a steady growth and made new breakthroughs.In terms of overseas channels, the Company grasped the new trend of globalisation andregionalisation of consumption, adopted differentiated strategies for different types of markets, andaccelerated the pace of internationalisation. In 2022, the Company focused on exploring the SoutheastAsian market for independent brand business, carried out in-depth research on the trend of upgradinghome decoration consumption in Southeast Asia, further identified potential opportunity markets,categories and channels, and laid a good foundation for future strategic breakthroughs. In response to thetrend of increasing share of new energy in the energy mix of developed countries in Europe and theUnited States, the Company has actively launched cross-border e-commerce business. Currently,through platforms such as Amazon and independent overseas webs, products such as new energy vehiclecharging plugs and portable chargers have been launched and have achieved good market response. TheOEM business, as a window for communication and cooperation with international markets, alsocontinued its steady development during the Reporting Period.
(III) Ongoing efforts were made to promote a lean, automated, and digital supply chain aswell as the transformation and upgrade to smart manufacturing in order to build a high-quality,low-cost, and efficient green supply chain
In 2022, the Company improved intelligent manufacturing factories with a lean, automated, anddigital supply chain as the pillar, made the manufacturing technology innovation capability an importantcarrier of the core competitiveness of the supply chain, deepened the layout of the supply chain invertical areas, and further enhanced the quality, cost and efficiency advantages.
The Company continued to promote lean improvements. In 2022, the adaptor factory continued toimprove its automation level with the help of BPD tools, identified waste through the VSM methodologyand promoted the implementation of an agile delivery system. The Company pioneered the directoperations of the moulding factory and assembly factory, through which the production materials of theprevious process were directly distributed to the assembly workshop’s warehouse, achieving streamlinedlogistics, warehousing and manpower and continuous improvement in production efficiency. Theintelligent logistics system of moulding-painting in the wall switch factory has made possible directdelivery and direct distribution between different internal factories, reducing intermediate inventory andsignificantly improving operational efficiency. In terms of digital factory, the Company continued tobuild a lean and flexible factory and achieved a double reduction in finished goods and raw materialinventories through VSM's full value stream diagnostics, while initially building a smart delivery systemwith the APS system as the core and multi-system collaboration. The moulding factory has upgraded itsinjection moulding machines and ancillary equipment through lean tools such as BMS, SMED, DM andTPM2.0 to achieve improved energy utilisation throughout the year, and has built industry-leadingmodels such as direct delivery of flat logistics and integration of painting. The new energy electricconnection factory insists on prioritising quality, and through the MES system, connects intelligentelectric batches, AI+vision, testing machines and ageing machines to establish a digital lean line tocontinuously improve product quality.
The Company insisted on promoting automation upgrading and transformation, and in 2022, theLED lighting factory continued to innovate in its business model, developing a characteristic lightingproduction model combining automation, line flexibility and lean production. The digital factorytransformed into "unitised" flexible automation, focusing on process automation to increase theproportion of automation; through lean gold panning, new product DFM implantation, mechanical arm +vision + flexible vibration plate development and verification, it built the first charging head flexiblemanufacturing line, and successfully achieved high-flexibility production. It also continued to deepenCMF process research, accelerated the development and application of matching process technologiesfor fast charging categories, introduced the glue-filling process, through-hole reflow process and gluesolder paste dual process, etc., and completed the construction of production capacity for "good-lookingblack technology" trendy products, greatly enriching the product line. The introduction of automatedresistance welding equipment in the circuit breaker factory made available one-off multi-positionwelding and helped carry out process innovations such as non-destructive welding of silver points and
integrated welding of hot rivets; the automatic product testing line adopted a digital anti-dulling systemto realise real-time uploading, storage and analysis of test data of finished circuit breakers to improveproduct yields in a targeted manner.
In 2022, the Company continued to vigorously promote digital transformation by focusing on thedigitisation of core business processes and improvement of factory digital construction, comprehensivelyupgrading the MES system, integrating ERP, MES, QMS, PLM and other software and hardwaresystems, fully developing and using MES application functions (internal control and safety, quality anddelivery, cost control) to make it more relevant to production; the Company also created the digitalmanagement of "design and manufacturing integration, production and processing automation,production process transparency, logistics control precision", realising the information-based andsystematic monitoring and management throughout the process covering raw materials (code-sweepingmaterial feeding, dummy prevention and error warning), injection production process (process upload,CCD intelligent detection, intelligent logistics system), and warehouse management system (WMS). Theconstruction of APS2.0 in the wall switch factory has integrated the planning and scheduling of thepainting, injection moulding and assembly factories, realised the collaboration of sales, production andprocurement planning, and reshaped the business and operational processes of "human", "machine","material", "method", "environment" and "measurement" with digitalisation. The adaptor factory haspromoted digital infrastructure construction and put MES, WMS, QMS and APS into operation,enabling digital management of core business and improving the delivery process by focusing on the"T+2" project. LED and digital factories have also introduced the APS, achieving a significant reductionin inventory and sluggish materials. The moulding factory has introduced such technologies as automaticpallet, automatic cartoning, CCD, AGV and self-researched mechanical arms, and through an intelligentlogistics system that highly correlates the injection moulding business with the decorative paintingbusiness, innovatively used an integrated production model, enabling injection moulding products to beautomatically received - identified - reported - allocated - stocked - discharged, and delivered to thepainting workshop fully automatically within a short period, reducing the process of handling andwarehousing, and significantly improving the turnaround rate.
(IV) Strengthened the construction of the BBS to build and enhanced the organisationalcapacity of talents to support future development
After continuous strengthening and construction in recent years, the BBS has gradually become animportant methodology and operational system that drives the Company to improve the quality of itsoperations. In 2022, the Company has made continued efforts to deepen its management changes,implanting the BBS improvement gene from point to plane and from inside to outside into the entirevalue chain of production, research, marketing and employment, becoming a powerful engine for theCompany's innovative growth and cost reduction; it also continuously promoted organisationalinnovation and talent building, providing a solid guarantee for the Company's sustainable and healthydevelopment. Through improvement practices, 12 best practices as the lean benchmark were created, 40BBS methodologies were precipitated and exported, 19 black-belt talents, 25 blue-belt talents and 729
green-belt talents were trained, and the lean transformation was increased from 3 points to 4 points,reaching an industry-leading level.Driven by the strategic deployment breakthrough target, BBS fully utilised BBS methods (such aslean product planning, BPD trending product development, 3P rapid self-production, etc.) to helppromote the continuous improvement of the competitiveness of existing businesses and accelerate therapid incubation and ground-breaking growth of strategic new businesses. At the same time, the BBShas effectively facilitated the business integration and strategic synergy of the newly acquired companies,helping the Company to quickly fill the capacity requirements of the new business of intelligentno-main-lamp lighting.After nearly two years of construction and cultivation, the Company has initially realised the layoutof a distributed headquarters around the high ground of talents in line with the Company's futuresustainable development needs for organisational capacity, talent training and new business development.In 2022, the Company's Shanghai second headquarters project is progressing smoothly, positioning itselfas an important base and window for future research and development, product and brand presentation;the Pearl River Delta Centre focused on core cities with obvious industrial clusters, such as Shenzhenand Huizhou, to lay out the R&D and innovation and supply chain support of the no-main-lamp lightingand intelligent and new energy businesses, and further build up the core competitiveness of the strategicbusiness for future development.The Company keeps focusing on the "selection", "employment", "cultivation" and "retention" ofhuman resources. In addition to attracting outstanding talents from various industries, the Company alsobrings in highly skilled talents with industry experience for new businesses under incubation andcultivation, so as to quickly build up team capabilities; the Company stimulates the vitality andmotivation of employees under the framework of a synergistic assessment system that breaks downorganisational performance and individual performance, so as to support the effective implementation ofthe Company's strategies with efficient organisational execution; based on the Gongniu LeadershipModel and BBS empowerment, the Company formulates competency development plans formanagement and technical talents of different categories and levels, and provides all employees withcomplete career development plans; the core management team and technical backbones are providedwith a regular incentive mechanism by means of restricted share Incentive Plans and special talentshareholding plan, so as to better attract and retain talents to grow with the Company and provide aninexhaustible source of power for organisational development.(V) Fully launched the brand upgrade and built the new Murora brand while consolidatingthe positioning of "Expert in Safe Electricity Use" for the Bull brandIn 2022, the Company initiated a comprehensive upgrade of the Bull brand, establishing the mainbrand vision where “7 out of 10 Chinese households will be using Bull products”, and officiallybecoming the first civil electric manufacturer to establish a partnership with the aerospace sector inChina. Relying on its core high-end product series, the Company carried out all-round brand promotionusing media channels with strong interaction, wide coverage and high accuracy as a communication
bridge, leveraging the high popularity of hot celebrities, the high potential of China's aerospace IP andthe high authority of mainstream media, and systematically upgraded the terminal images of online andoffline channels, official websites, new media and other consumer touch points, further consolidating thepositioning of "Expert in Safe Electricity Use" for the Bull brand in 2022.In order to support the development of the strategic business, the Company cultivated andincubated the new brand "Murora", which is positioned as a professional and intelligent no-main-lamplighting brand, and established the brand's main appeal of "Works of Simplicity by InternationalMasters". In 2022, the Company systematically created a differentiated and recognisable brand VI andSI visual system, deepened the online and offline brand channels’ image of being simple, professional,and warm, laying a good foundation for the development of Murora brand. In March 2023, the brandlaunch and the first flagship shop of Murora was released, attracting much attention from both industryinsiders and outsiders with a comprehensive brand promotion, exposing the brand efficiently to dealersand customers and gaining a good market response.
II Introduction of the Industry where the Company Operates during the Reporting Period
1. Development stage and periodic characteristics of the industry
According to the Industry Classification of National Economy (GB/T 4754--2017) issued by theNational Bureau of Statistics, the main type of the Company's business is assigned to “ManufacturingIndustry of C38 Electric Machine and Equipment”. Among them, adaptors, wall switches and sockets,and digital accessories are all assigned to the specific type of “3899 Other Not Classified Manufacture ofElectric Machine and Equipment”. LED lighting is assigned to the specific type of “3872 Manufactureof Lighting Devices”. And new energy charging plugs/points fall in the specific type of “3829Manufacture of Other Power Distribution and Control Facilities”.With the further improved economic structure as well as the continuous increase of the residentdiscretionary income and consumption level in China, industries such as household appliances,consumer electronics, real estate, home decoration, and new energy vehicles, grow continuously andrapidly, promoting the market demand for products in electric connection, smart electrical lighting andnew energy charging and storage. Nowadays, China is the main producing base of adaptors across theworld. The brands of wall switches and sockets in China’s market are nationally leading as well asinternationally famous. In the field of lighting, China has become the workshop of the world withproducts sold to around 220 countries and regions. In the field of new energy vehicles, China is theworld's largest producer and consumer. In general, traditional electric connection products such asadaptors and digital accessories, as well as wall switches and sockets, LED lighting and electricallighting products, have entered a mature period of development, but the sub-categories, such as smartecosystem household products, and new energy products are in a growing period with increasing policysupport.
Products of electric connection, smart electrical lighting and new energy all have close connectionto people’s lives with no obvious characteristics of industry cycle and regions. Among them, some
products of electric connection and smart electrical lighting have been affected by some factorsincluding cessation of business in major retail terminal end outlets (such as hardware stores, specializedmarkets and so on) and the reduction of housing fixtures during the Spring Festival. Therefore, the firstquarter always has the fewer sales volume all over the year.
2. The Company’s position in the industry
The Company concentrates on the civil electric industry and always upholds the businessphilosophy of “Be Professional and Concentrated, and Go Further”. Since its establishment in 1995,the Company has gradually formed three main businesses: electric connection, smart electrical lightingand new energy. Relying on excellent product quality and sound word of mouth, the reputation of theBull brand has increased constantly and its sales volume has always been leading. During the ReportingPeriod, the Company ranked 70th on the 2022 Hurun Brand List China's Top 300 Brands by BrandValue, becoming the first civil electric manufacturer to establish a partnership with the aerospace sectorin China, and winning the "China Brand Annual Award for Wall Switches and Sockets NO.1" by theWorld Brand Lab. The Company was recognised as a "2022 National Intellectual PropertyDemonstration Enterprise" by the China National Intellectual Property Administration, named "2022Pilot Demonstration of Integration of New Generation Information Technology and ManufacturingIndustry" by the Ministry of Industry and Information Technology, and awarded the honours of Top 100Manufacturing Enterprises of Zhejiang Province and Top 100 Fastest Growing Enterprises in ZhejiangProvince.
According to the data provided by Info Master, in 2022, the Company’s products such as adaptorsand wall switches and sockets had the No. 1 online sales volume in Tmall market. In June 2021, theCompany successively launched new products such as new energy vehicle charging plugs and chargingpoints for e-commerce platforms, with the sales volume in a leading position among third-party brands.
III Principal Operations of the Company during the Reporting Period
1. Principal operations
During the Reporting Period, the Company focused on the three major businesses of electricconnection, smart electrical lighting and new energy towards its strategic objectives. The primaryproducts of electric connection are adaptors (power strips), digital accessories, etc. The products ofsmart electrical lighting mainly include wall switches and sockets, LED lights (smart no-main-lamps),safe circuit breakers, smart bathroom heaters, smart door locks, smart clothes drying racks, smart curtainmachines and so on. The products of new energy mainly include new energy vehicle chargingpoints/plugs, outdoor portable chargers, etc.
The Company adheres to the vision of “Becoming a Leader in the International Civil ElectricIndustry”, the mission of “providing safe and comfortable electricity experience for customers” and thedevelopment philosophy of “be professional, concentrated and go further”. Since its establishment in1995, the Company has always adhered to the guidance of consumer demand and the base of productquality. The Company started to from the segmentation of power strips, constantly promoting theinnovation of functions, technology and design, and developing batches of new products popular amongconsumers. Focusing on innovation, the Company has the comprehensive advantages of product R&D,marketing, supply chain and branding. After years of developing and expanding, the Company hasformed three major business segments: electric connection, smart electrical lighting and new energy.Besides, it has also formed sustainable business layout in the fields of civil electrical industry andlighting.
2. Business models
(1) Procurement model: The procurement business of the Company mainly includes theprocurement of operating supplies including copper, silver, aluminum, tin, plastic granule, paper pulp,etc., and the procurement of non-operating supplies such as IT materials, administrative supplies and soon. The Company has established a procurement strategy with quality as the core. It has selected themain supplier through the mechanism of strict supplier entrance and regular examination and inspection.Besides, the Company established strategic cooperating relationships with the main suppliers to ensurethe quality and delivery. The Company has set up a procurement sharing platform with professionalpersonnel at the group level. It improves the ability of negotiating prices and debasing procurement coststhrough central procurement. Furthermore, the Company has optimized and improved the suppliersmanagement system, ERP system, manufacturing and storage system, etc. Meanwhile, it has improvedthe management of procurement and constantly improved the procurement efficiency.
The Company has performed central procurement of bulk raw materials such as copper, silver,aluminum, tin, plastic granules, paper pulp and so on. In addition, the Company has locked the trading
| Electric Connection | Smart Electrical Lighting | New Energy |
price through ways such as forward hedging to reduce the uncertain risk brought by the price fluctuationin spot market of raw materials.
(2) Production model: The Company has adopted the manufacturing model of “Market Forecast +Safe Inventory”. Products are mainly self-made. Some new products and supporting products have beenmade by adopting the OEM manufacturing mode. Every factory is responsible for the production ofcorresponding products and parts. They have ensured product quality, efficient management and on-timedelivery at the same time. Meanwhile, the Company has constantly promoted the innovation ofmanufacturing model. By building a balanced production and sales system, continuously improving lean,automated and intelligent levels, and insisting on technical process innovation, the Company hasgradually enhanced its "order-driven" flexible production model while ensuring product quality andreducing inventory slow moving losses.
(3) Sales model: The Company has established online and offline integrated sales model throughomnichannel. The offline sales model is mainly based on distribution and partially based on directselling. The Company has promoted the innovative offline sales mode of “distribution, delivery, visitand sales” in the field of civil electrical appliances and implemented refined management of channels.Through efficiently organizing and transferring dealer resources around the country, and long-termaccumulation, the Company has established distribution network with 1.1 million retail stores coveringnational urban and rural areas. The online channel has covered the mainstream e-commerce platformsthrough direct selling + distribution, with which we have made every effort to build the flagship storesinto a brand promotion window. The Company has actively implemented digital marketing to realize“diversion outside the online channel and sales inside the channel” with the help of each traffic inlet.Additionally, the Company has beefed up development and sales in the B-end channels of decorationand engineering projects. Besides, it has actively explored overseas markets to speed up the globallayout.
IV Analysis on Core Competitiveness during the Reporting Period
√ Applicable □ Not applicable
The Company has always adhered to the core values of “Honest, Faithful, Professional andConcentrated”. It has gradually established strong and comprehensive competitive edges throughcontinual and comprehensive innovation and reform in product development, quality control, channeldevelopment, marketing and supply chain construction. During the Reporting Period, the Company’score edges were continuously strengthened.
(I) The Company has established an edge of innovative product development based onconsumer demand, enabling constant product launches.
For long, the Company has attached great importance to research on consumer demand and theinnovation of product planning and research. It has always viewed the promotion of consumerexperience as the primary goal in product research. The Company has established an integratedinnovation system and teams of forward research, product planning and research. It has created and
applied all kinds of new technologies, materials and crafts. Through the constant superposition of microinnovation, the Company has promoted a batch of products of electric connection, smart electricallighting and new energy with new and different characteristics in the aspects of design, performance,technology and function, which are popular among consumers. For years, the Company has participatedin drafting 118 national standards, industry standards and association standards. It is the vice chairmanunit of the Electrical Accessories and Household Controller Branch of the China Electrical EquipmentIndustry Association. It is also the vice chairman unit of the National Technical Committee forStandardization of Electrical Accessories. What’s more, it is the first electrical enterprise in the industryto draft the “Made in Zhejiang” standard and attain certification.As of the end of December 2022, the Company holds 2,379 valid patents, of which 565 weregranted during the Reporting Period. Meanwhile, the Company is a national industrial design centerapproved by the Ministry of Industry and Information Technology of the People's Republic of China. Itis also a unit of national postdoctoral workstation.(II) The Company has always adhered to the philosophy of winning through high quality andput in place an efficient quality control system.Since its founding, the Company has aimed to manufacture high-quality products. The idea ofwinning through high quality has gained support among all in the Company. The Company hasestablished a good brand image and reputation on the market with reliable product quality.In the aspects of selecting raw materials, procurement, research and production process control,product testing and after-sales service, the Company has established a comprehensive and perfect qualitymanagement system of product planning -- product design -- procurement -- production in batch quantity-- post-sale strictly in line with the national standards, related laws and regulations, and enterprisestandards. In order to ensure the highly efficient operation of the quality management system, theCompany has been equipped with more than 900 professional personnel in quality management,experiment testing, analysis and quality control. It has also had more than 7,000 sets of testingequipment for experiment and production line automation, and established 10 high-standard laboratoriesfor R&D, development and quality testing in the industry. The related laboratories have acquired CNASNational Laboratory Certification, UL WTDP Laboratory Certification and other product certificatessuch as CCC, VDE, UL, NF, CE, and so on. It assures solid resources for management and control ofproduct quality.
With long-term accumulation, the Company has formed an efficient and systematic qualitymanagement and control system. It has achieved the management system certification of IS09001,ISO14001 and OHSAS18001. Besides, it has been successively awarded 20 prizes related to qualitysuch as “National Qualified Products of Stable Quality”, “Products with Reliable Quality”,“Demonstration Enterprise of Export Quality and Safety in China”, “Famous Brand Products inZhejiang” and “Ningbo Mayor Quality Award”.
(III) The Company always adapts itself to market changes. Supported by the offlinemarketing network of more than 1.1 million outlets covering urban and rural areas, as well as a
professional online marketing network, the Company has established a marketing systemfeaturing coordinative online and offline channels in the civil electrical industry.The Company has implemented an innovative offline sales model featuring “distribution, delivery,visit and sales” in the civil electrical industry. In China, it has already developed more than 750,000hardware channel retailers (including hardware stores, grocery stores, office supplies stores,supermarkets and so on), more than 120,000 specialized decoration and lamp decoration retailers, andmore than 250,000 digital accessories channel retailers. These channels have expanded the selling pointsto stores, large market places, professional markets in urban and rural areas, forming an offlinemarketing network hard to be duplicated. At the same time, the Company has established a professionale-commerce direct selling operational team and an online distributor system with strong ability.Nowadays, the Company has comprehensively entered the leading e-commerce platforms such as Tmall,Taobao, JD.com, Vipshop, Pinduoduo, and so on. It has dozens of authorized online distributors. On thebasis of maintaining the sales on traditional e-commerce platforms, the Company also worked on hobbyand content-oriented e-commerce channels to strengthen its brand presence while driving sales.According to the data provided by Info Master, in 2022, the Company’s products of adaptors and wallswitches and sockets continued to maintain the first place in the Tmall online market share andcontinued to consolidate the leading position, while the market share of new energy and other categoriesgrew steadily and made new breakthroughs.
The high quality coordinated development between offline and online channels has helped theCompany establish a comprehensive, multilevel and stereoscopic marketing network, which is theadvantage of the Company to maintain sustainable development and competitiveness in the industry.Simultaneously, the Company has always adhered to the refined management of channels for years,developing established systems in the aspects of development, management, operation, and so on. It hashad the advantage of exploring new channels.
(IV) The Company has put in place an integrated branding model with selling pointpromotion as the core, making “Bull” a household name.
The Company has adhered to the branding model with selling point promotion as the core. Over thepast 20 years, the Company has made constant efforts to support the distributors to put the Bull brand inretail stores and put advertising resources such as display inside and outside the stores, in so doing theBull brand has been disseminated to cities, towns and counties. It has formed a simple, efficient andunique branding model. With an increasingly strong presence, Bull has become a household name.Meanwhile, the Company has constantly enriched the brand connotation and improved the brand’spenetration and loyalty among different consumers with the help of diversified, intelligent and youngnew products and the Internet new media promotion.
(V) The Company boasts a supply chain system featuring advanced manufacturingtechnologies and automation, helping it stay competitive with respect to quality, efficiency andcost.
The Company has regarded manufacturing technology as the important carrier of corecompetitiveness in the supply chain. It has been equipped with a professional mold factory. The factoryhas designed, developed and manufactured all kinds of high-precision mold for the Company’sdiversified products by adopting high-precision tolerance grade technology, advanced automatic pouringtechnology and 3D print technology. At the same time, the factory has adopted manipulator technologyand post processing free technology to achieve automation of injection molding production and moldingintegration as well as to greatly improve the product quality, production efficiency and productioninnovation. At the same time, the Company has established a dust free electronic factory which hasadopted 3D image analysis technology and phase shifting AOI technology. The factory has also beenequipped with an independently developed four-axis manipulator. It has ensured the quality of PCBAboard products through image comparison after firing, greatly supporting the Company’s manufacturingof digital accessories, lighting and smart products.The Company has constantly improved the fine, automatic and smart manufacturing level andestablished an industrial automatic team of integrated research, design and manufacturing. Theindependent development and design, and the assembly application capability of automatic devices andsmart assembly devices have constantly improved. The flexible production mode of “man-machineintegration” has been promoted rapidly. With the help of a leading automatic stereoscopic warehouseand smart sorting shipment system, the Company has achieved the mechanization and automation ofwarehouse work, which greatly improves the speed of distribution and delivery, and the customerresponse ability. The automatic stereoscopic warehouse has efficiently connected the front-endautomatic production. The smart manufacturing system for the whole process of feedstock -- production-- storage -- shipment has been established, providing solid support for the sustainable development ofthe Company’s business.(VI) The Company has established the Bull Business System (BBS) with innovation andgrowth as the core, driving growth and breakthroughs to create a stream of business growthpoints.The Company has continuously summarized, refined, iterated, and built the unique Bull BusinessSystem (BBS) by importing and extracting the essence of advanced management modes at home andabroad, and combining it with its own experience. It has also established a whole value chain of R&D,manufacturing and marketing with value creation as the core, innovation increase as the key point andcost reduction, efficiency increase as the base. Gongniu BBS takes “empowering everyone and everybusiness of Gongniu in pursuit of faster, higher and further growth” as the mission. It has constantlystrengthened the system development and promoted the ability internalization. Focusing on theCompany’s strategic goal, Gongniu has fully used the BBS instrumental methodology mode (such as 3Pquick self-manufacturing, BPD development of popular products, fine marketing and so on). GongniuBBS has driven the Company to constantly make breakthrough to promote the development of newbusiness, and facilitate the cost reduction and efficiency increase of the traditional business, and the
innovation development. It has also promoted the achievement of high performance objectives, creatinga stream of business growth points for the Company.
V Major Operations during the Reporting PeriodFor the Reporting Period, operating revenue increased 13.70% year on year to RMB14.081 billionand the net profit attributable to the Company’s shareholders amounted to RMB3.189 billion, up 14.68%from the previous year.(I) Analysis of Principal Operations
1. Changes in consolidated income statement and cash flow statement items
Unit: RMB
| Item | 2022 | 2021 | Change (%) |
| Operating revenue | 14,081,373,030.94 | 12,384,916,337.51 | 13.70 |
| Cost of sales | 8,730,082,585.08 | 7,808,540,666.84 | 11.80 |
| Selling expense | 800,387,659.41 | 560,187,002.80 | 42.88 |
| Administrative expense | 500,596,373.88 | 427,615,556.97 | 17.07 |
| Finance costs | 588,296,080.11 | 471,015,016.82 | 24.90 |
| R&D expense | -107,993,300.96 | -87,842,281.32 | Not applicable |
| Net cash generated from/used in operating activities | 3,057,914,218.16 | 3,014,326,741.14 | 1.45 |
| Net cash generated from/used in investing activities | -1,746,083,657.48 | -1,588,987,931.15 | Not applicable |
| Net cash generated from/used in financing activities | -1,945,455,689.54 | -700,808,446.71 | Not applicable |
The change in operating revenue was primarily driven by the steady growth in the traditional corebusiness and the fast growth in new businesses in the year.The change in cost of sales was primarily driven by the increased costs along with the increased revenue.The change in selling expense was primarily driven by the increased advertising and marketingexpenses.The change in administrative expense was primarily driven by the increased employee salaries andequity incentive expenditures.The change in R&D expense was primarily driven by the increased R&D investments.The change in finance costs was primarily driven by the increased interest income from bank deposits inthe year.The change in net cash generated from/used in operating activities was primarily driven by the decreasedmaterial procurement costs and inventories.The change in net cash generated from/used in investing activities was primarily driven by the increasedpurchases of financial products in the year.The change in net cash generated from/used in financing activities was primarily driven by the decreasedbank borrowings in the year.
Particulars about any significant change to the Company’s business nature, profit composition or sourcesin the current period.
□ Applicable √ Not applicable
2. Revenue and cost analysis
√ Applicable □ Not applicable
In 2022, the Company continued to implement individualized innovation in electricity scenariosand develop products based on customer demands for its electric connection business, and the businesssaw steady growth as a result. For the smart electrical lighting business, the Company actively expandednew product categories and accelerated the construction of a smart home ecosystem with no-main-lamp
lighting as the core, which resulted in rapid growth in the business. And the new energy businessenriched the product portfolio to meet the needs of different customers and saw smooth channelexpansion, achieving a good start.
(1) Principal operations by operating division, product category, operating segment and salesmodel
Unit: RMB
| Principal operations by operating division | ||||||
| Operating division | Operating revenue | Cost of sales | Gross profit margin (%) | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) |
| Civil electrical appliances | 14,052,771,512.23 | 8,716,930,704.54 | 37.97 | 13.91 | 11.89 | Up by 1.12 percentage points |
| Principal operations by product category | ||||||
| Operating division | Operating revenue | Cost of sales | Gross profit margin (%) | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) |
| Electric connection products | 7,050,721,172.38 | 4,636,164,967.40 | 34.25 | 4.22 | 1.73 | Up by 1.61 percentage points |
| Smart electrical lighting products | 6,849,336,470.12 | 3,977,436,921.39 | 41.93 | 23.39 | 23.59 | Down by 0.09 percentage point |
| New energy products | 152,713,869.73 | 103,328,815.75 | 32.34 | 638.62 | 588.48 | Up by 4.93 percentage points |
| Principal operations by operating segment | ||||||
| Operating division | Operating revenue | Cost of sales | Gross profit margin (%) | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) |
| Domestic | 13,791,305,035.94 | 8,486,294,382.03 | 38.47 | 14.36 | 12.60 | Up by 0.96 percentage point |
| Overseas | 261,466,476.29 | 230,636,322.51 | 11.79 | -5.78 | -9.31 | Up by 3.43 percentage points |
Notes:
As the product categories were adjusted in the current year, the financial data of the prior year wereadjusted accordingly based on the new categories.
1) Electric connection products include adaptors, electrical tape, wire coil, couplers, digitalaccessories, etc.
2) Smart electrical lighting products include wall switches and sockets, LED lighting, circuitbreaker, bathroom heaters, smart door locks, smart clothes drying racks, smart curtain machines andother smart ecosystem products.
3) New energy products include new energy vehicle charging plugs/points, portable energy storageproducts, etc.
The performance of the Company’s principal operations by operating division, product category,operating segment and sales model:
1) For electric connection products, the revenue amounted to RMB7,051 million, up 4.22% year onyear, while the cost of sales stood at RMB4,636 million, up 1.73% year on year. Supported by the brandadvantage and the hardware channel advantage, the electric connection business, as the Company's corebusiness, maintained a steady growth.
2) For smart electrical lighting products, the revenue amounted to RMB6,849 million, up 23.39%year on year, while the cost of sales stood at RMB3,977 million, up 23.59% year on year. In thisbusiness, the Company accelerated the development of new business and decoration channels wereexpanded during the Reporting Period, achieving strong growth in all operations.
3) For new energy products, the revenue amounted to RMB153 million, up 638.62% year on year,while the cost of sales stood at RMB103 million, up 588.48% year on year. The new energy businessenriched the product portfolio and focused on building a new offline sales channel system during theReporting Period, achieving a good start.
(2) Output and unit sales analysis
√ Applicable □ Not applicable
| Primary products | Unit | Output | Unit sales | Inventory | YoY change in output (%) | YoY change in unit sales (%) | YoY change in inventory (%) |
| Electricity connecting products | 0,000 pieces | 56,973.48 | 56,418.53 | 3,852.52 | -1.24 | -0.71 | 4.17 |
| Electrical lighting products | 0,000 pieces | 80,362.34 | 74,716.25 | 6,042.97 | 12.19 | 11.62 | -22.51 |
| New energy products | 0,000 pieces | 25.65 | 23.90 | 4.96 | 228.73 | 435.63 | 19.04 |
Notes:
As the product categories were adjusted in the current year, the financial data of the prior year wereadjusted accordingly based on the new categories.
1) The inventory of electric connection products increased steadily in the current period comparedwith last year.
2) The inventory of electrical lighting products showed a substantial decrease compared with lastyear, mainly due to the strong sales in Q4.
3) The inventory of new energy products showed a significant increase compared with last year,mainly due to the strategic re-stocking due to strong sales this year.
(3) Execution of significant purchase or sales contracts
□ Applicable √ Not applicable
(4) Cost analysis
Unit: RMB
| By operating division | |||||||
| Operating division | Cost category | 2022 | As % of | 2021 | As % of | Change in | Note |
| total costs in 2022 (%) | total costs in 2021 (%) | amount (%) | |||||
| Civil electrical appliances | Direct materials | 6,975,115,126.99 | 79.90 | 6,440,815,836.35 | 82.48 | 8.30 | |
| Direct labor cost | 597,581,598.69 | 6.85 | 494,515,730.18 | 6.33 | 20.84 | ||
| Manufacturing expense | 1,144,233,978.87 | 13.11 | 855,431,187.95 | 10.96 | 33.76 |
Notes:
The cost of direct materials as a percentage of total costs decreased year on year, primarily drivenby the falling prices of bulk materials in the current period.The manufacturing expense increased year on year, primarily driven by the increased costs as aresult of the stronger sales in the current period.
(5) Changes to the consolidation scope due to changed ownership in principal subsidiaries in theReporting Period
√ Applicable □ Not applicable
For details, please refer to “VIII Changes in Consolidation Scope” in “Part X FinancialStatements”.
(6) Significant changes to the business scope or product or service range in the Reporting Period
□ Applicable √ Not applicable
(7) Major customers and suppliers
A. Major customers
√ Applicable □ Not applicable
Sales to the top five customers stood at RMB1,808.4866 million, accounting for 12.84% of the totalannual sales. Sales to the related-parties among the top five customers stood at RMB0, accounting for0% of the total annual sales.
Indicate whether sales to a single customer accounted for over 50% of the total sales, there was any newcustomer in the top five customers, or the Company heavily relied on a few number of customers in theReporting Period.
□ Applicable √ Not applicable
B. Major suppliers
√ Applicable □ Not applicable
Purchases from the top five suppliers stood at RMB2,101.8552 million, accounting for 22.14% of thetotal annual purchases. Purchases from the related-parties among the top five suppliers stood at RMB0,accounting for 0% of the total annual purchases.
Indicate whether purchases from a single supplier accounted for over 50% of the total purchases, therewas any new supplier in the top five suppliers, or the Company heavily relied on a few number ofsuppliers in the Reporting Period.
□ Applicable √ Not applicable
3. Expense
√ Applicable □ Not applicable
Unit: RMB
| Item | 2022 | 2021 | Amount of change | Change |
| Selling expense | 800,387,659.41 | 560,187,002.80 | 240,200,656.61 | 42.88% |
| Administrative | 500,596,373.88 | 427,615,556.97 | 72,980,816.91 | 17.07% |
| expense | ||||
| R&D expense | 588,296,080.11 | 471,015,016.82 | 117,281,063.29 | 24.90% |
| Finance costs | -107,993,300.96 | -87,842,281.32 | -20,151,019.64 | Not applicable |
(1) Selling expense increased primarily driven by the increased advertising and marketing expenses.
(2) Administrative expense increased primarily driven by the increased employee salaries and equityincentive expenditures.
(3) R&D expense increased primarily driven by the increased R&D investments.
(4) Finance costs decreased primarily driven by the increased interest income from bank deposits in the
year.
4. R&D investments
(1) R&D investments
√ Applicable □ Not applicable
Unit: RMB
| Expensed R&D investments in the current period | 588,296,080.11 |
| Capitalized R&D investments in the current period | |
| Total R&D investments | 588,296,080.11 |
| Total R&D investments as % of operating revenue | 4.18 |
| Capitalized R&D investments as % of total R&D investments |
(2) R&D personnel
√ Applicable □ Not applicable
| Number of R&D personnel | 1,400 |
| R&D personnel as % of total employees | 11.34 |
| Educational background of R&D personnel | |
| Educational background | Number of employees |
| Doctoral degree | 0 |
| Master’s degree | 69 |
| Bachelor’s degree | 787 |
| Junior colleges | 465 |
| Senior high school and below | 79 |
| Age structure of R&D personnel | |
| Age | Number of employees |
| Below 30 (exclusive) | 319 |
| 30-40 (inclusive of 30 and exclusive of 40) | 817 |
| 40-50 (inclusive of 40 and exclusive of 50) | 245 |
| 50-60(inclusive of 50 and exclusive of 60) | 19 |
| 60 and beyond | 0 |
(3) Other information
√ Applicable □ Not applicable
The Company, as a national industrial design center and a national postdoctoral workstation, hasalways attached importance to product development and technological innovation. By establishing aleading scientific research innovation platform and innovating mechanism, the Company focuses on theresearch of industry basic and key common technologies to continuously improve product developmentand technological innovation capability. Meanwhile, with great emphasis on cultivation and introduction
of talents of R&D and product planning as well as adhering to market demand-oriented principle, theCompany continues to strengthen the insight and research on the potential consumer demands andscenario-based requirements, constantly expands the areas by launching products that meet consumerdemands to lead the industry development. In addition, the Company continues reinforcing theconstruction of the standardization system and the strategic layout of intellectual property rights, andconstantly promotes open innovation to set an excellent example with respect to innovation capability.
(4) Reasons for any significant change to the composition of R&D personnel and the impact on theCompany
□ Applicable √ Not applicable
5. Cash flows
√ Applicable □ Not applicable
Unit: RMB
| Item | 2022 | 2021 | Amount of change | Change |
| Net cash generated from/used in operating activities | 3,057,914,218.16 | 3,014,326,741.14 | 43,587,477.02 | 1.45% |
| Net cash generated from/used in investing activities | -1,746,083,657.48 | -1,588,987,931.15 | -157,095,726.33 | Not applicable |
| Net cash generated from/used in financing activities | -1,945,455,689.54 | -700,808,446.71 | -1,244,647,242.83 | Not applicable |
(1) Net cash generated from operating activities increased primarily driven by the decreased materialprocurement costs and inventories.
(2) Net cash generated from investing activities decreased primarily driven by the increased purchases offinancial products in the year.
(3) Net cash generated from financing activities decreased primarily driven by the decreased bankborrowings in the year.
(II) Significant changes in profit incurred by non-core business
□ Applicable √ Not applicable
(III) Analysis of assets and liabilities
√ Applicable □ Not applicable
1. Assets and Liabilities
Unit: RMB
| Item | Closing amount | As % of closing total assets (%) | Opening amount | As % of opening total assets (%) | Change (%) | Note |
| Derivative financial assets | 643,100.00 | 0.00 | 3,613,050.00 | 0.02 | -82.20 | |
| Notes receivable | 0.00 | - | 750,723.35 | 0.00 | -100.00 | |
| Prepayments | 49,635,694.61 | 0.30 | 29,140,223.00 | 0.19 | 70.33 | |
| Other receivables | 71,887,692.32 | 0.43 | 195,924,505.99 | 1.27 | -63.31 |
| Other current assets | 363,825,426.89 | 2.19 | 1,126,520,898.44 | 7.28 | -67.70 | |
| Construction in progress | 611,457,850.54 | 3.67 | 198,364,136.97 | 1.28 | 208.25 | |
| Goodwill | 45,133,442.04 | 0.27 | - | Not applicable | ||
| Short-term borrowings | 845,374,749.03 | 5.08 | 500,430,555.55 | 3.23 | 68.93 | |
| Held-for-trading financial liabilities | 18,200,000.00 | 0.11 | - | Not applicable | ||
| Notes payable | - | 2,333,774.75 | 0.02 | -100.00 | ||
| Taxes and levies payable | 300,308,365.64 | 1.80 | 533,077,969.51 | 3.45 | -43.67 | |
| Current portion of non-current liabilities | 8,798,658.13 | 0.05 | 673,911,937.53 | 4.36 | -98.69 | |
| Deferred income | 53,820,328.00 | 0.32 | - | Not applicable | ||
| Treasury shares | 129,612,354.00 | 0.78 | 80,711,540.00 | 0.52 | 60.59 | |
| Other comprehensive income | 4,389,526.95 | 0.03 | 7,537,390.37 | 0.05 | -41.76 | |
| Minority interests | 16,498,466.95 | 0.10 | - | Not applicable |
Other notes:
Derivative financial assets decreased primarily driven by the decreased carrying closing amount offloating income of hedges.Notes receivable decreased primarily driven by the decreased closing balance of trade acceptance notesreceivable.Prepayments increased primarily driven by the increased advance payments to suppliers.Other receivables decreased primarily driven by the decreased closing balance of security depositpayments.Other current assets decreased primarily driven by the decreased closing balance of structured depositsheld.Construction in progress increased primarily driven by the increased investments in infrastructure andequipment of the raised funds investment projects.Goodwill increased primarily driven by the goodwill arising from the acquisition of Dalitek.Short-term borrowings increased primarily driven by additional short-term bank loan in the period.Held-for-trading financial liabilities increased primarily driven by the unpaid investment amount for theacquisition of Dalitek.Notes payable decreased primarily driven by the decreased bank acceptance notes payable.Taxes and levies payable decreased primarily driven by the substantial tax and levy deferral last year.Current portion of non-current liabilities decreased primarily driven by the decreased current portion oflong-term borrowings.Deferred income increased primarily driven by the increased special government subsidies.Treasury shares increased primarily driven by the increased equity incentives.Other comprehensive income decreased primarily driven by the decreased net gain (exclusive of tax)recognized on futures contracts for hedging purposes.Minority interests increased primarily driven by the inclusion of Dalitek in the consolidated financialstatements in the current period.
2. Overseas assets
□ Applicable √ Not applicable
3. Major restricted assets as at the period-end
√ Applicable □ Not applicable
For details, please refer to “81. Assets with restricted ownership or right to use” under “VII Notesto the Consolidated Financial Statements” of “Part X Financial Statements”.
4. Other information
□ Applicable √ Not applicable
(IV) Industry environment analysis
√ Applicable □ Not applicable
For details, please refer to “(I) Industry landscape and trends” under “VI Outlook Discussion andAnalysis” of Part III Management Discussion and Analysis”.
(V) Investments madeEquity investments in other entities
□ Applicable √ Not applicable
1. Significant equity investments
□ Applicable √ Not applicable
2. Significant non-equity investments
√ Applicable □ Not applicable
For details, please refer to “(2) Changes in significant constructions in progress in the current period” under “22. Construction in progress” in “VII Notes to theConsolidated Financial Statements” of “Part X Financial Statements”.
3. Financial assets measured at fair value
√ Applicable □ Not applicable
For details, please refer to “XI Items Measured at Fair Value” in “Part II Corporate Information and Key Financial Information”.
Securities investments:
□ Applicable √ Not applicable
Investments in private equity funds:
□ Applicable √ Not applicable
Derivatives investments:
□ Applicable √ Not applicable
4. Progress on any major asset restructuring in the Reporting Period
□ Applicable √ Not applicable
(VI) Sale of significant assets and equity investments
□ Applicable √ Not applicable
(VII) Principal subsidiaries
√ Applicable □ Not applicable
1. Principal subsidiaries
Unit: RMB’0,000
| Full name of subsidiary | Principal activities | Registered capital | Total assets | Net assets | Operating revenue | Net profit |
| Ningbo Gongniu Electrics Co., Ltd. | Household appliances manufacturing; manufacturing of mechanical and electrical equipment; manufacturing of distribution switch control equipment; lighting apparatus manufacturing; general merchandising of hardware products; electrical materials manufacturing; manufacturing of electronic components and electromechanical components and equipment; manufacturing of intelligent home consumption equipment; communication equipment manufacturing; network equipment manufacturing; IoT equipment manufacturing; technical services, technical development, technical consulting, technical communication, technical transfer, and technical promotion (business activities shall be conducted independently in accordance with laws with the business license, except the items that require approval in accordance with laws). Items permitted: Import and export of products; and import and export of technologies (business activities that require approval in accordance with laws shall be subject to the approval by relevant authorities. Specific business items are indicated on the approval results). | 10,000 | 477,118.57 | 168,090.09 | 446,008.40 | 144,878.09 |
| Ningbo Gongniu Precision Manufacturing Co., Ltd. | Manufacturing, processing and sales of mold, plastic products, hardware accessories, and electronic components. | 10,000 | 53,375.22 | 19,614.63 | 230,303.32 | 4,648.98 |
| Ningbo | General merchandising, retailing and | 10,000 | 223,545.26 | 21,670.47 | 1,328,447.7 | 62,555.96 |
| Gongniu Electric Sales Co., Ltd. | online sales of electrical materials, electronic products, hardware products, household appliances, communication apparatus, lamps, and articles of everyday use; import and export businesses of self-owned and commissioned goods and technologies (excluding those limited or prohibited by state laws and regulations). (business activities that require approval in accordance with laws shall be subject to the approval by relevant authorities) | 9 |
2. New subsidiaries
Unit: RMB’0,000
| Full name of subsidiary | Principal activities | How it was obtained | Registered capital | Closing net assets | Net profit in the current period |
| Shanghai Gongniu Information Technology Co., Ltd. | General operations: Technical services, technical development, technical consulting, technical communication, technical transfer, and technical promotion; software development; information consultant services(excluding the information consultant services requiring any license); sales of household appliances; sales of mechanical and electrical equipment; sales of power distribution switch control equipment; wholesale of hardware products; sales of electrical equipment; sales of electrical accessories; sales of electronic components and electromechanical component equipment; sales of electronic products; sales of plastic products; sales of lighting apparatus; sales of lamps; non-residential real estate leasing; sales of charging points; sales of intelligent vehicle-mounted equipment; sales of electric accessories for new energy vehicles (business activities shall be conducted independently in accordance with laws with the business license, except the items that require approval in accordance with laws). | Incorporated | 10,000.00 | 11,329.22 | 829.23 |
| Ningbo Gongniu Tool Technology Co., Ltd. | General operations: Technical services, technical development, technical consulting, technical communication, technical transfer, and technical promotion; sales of wind and power tools; sales of electronic products; sales of electrical equipment; wholesale of hardware products; sales of mechanical and electrical equipment; sales of communication equipment; sales of lamps; sales of general merchandise; sales of daily necessities (business activities shall be conducted independently in accordance with laws with the business license, except the items that | Incorporated | 4,800.00 | 0.00 | 0.00 |
| require approval in accordance with laws). | |||||
| Ningbo Gongniu New Energy Technology Co., Ltd. | General operations: Engineering and technological research and experimental development; technical services, technical development, technical consulting, technical communication, technical transfer, and technical promotion; manufacturing of new energy primary-power equipment; manufacturing of power transmission and distribution and control equipment; manufacturing of power and electronic components; operations of electric vehicle charging infrastructure; sales of intelligent power transmission and distribution and control equipment; sales of charging points; centralised fast charging station; information consultant services(excluding the information consultant services requiring any license); sales of new energy vehicle power exchange facilities; sales of motor vehicle chargers; manufacturing of electronic components; installation services for household appliances; engineering management services (business activities shall be conducted independently in accordance with laws with the business license, except the items that require approval in accordance with laws). | Incorporated | 1,000.00 | 56.36 | -3.64 |
| Shenzhen Gongniu Intelligent Information Co., Ltd. | General operations: Software development; information technology consulting services; manufacturing of lighting apparatus; manufacturing of distribution switch control equipment; manufacturing of electrical equipment; manufacturing of hardware products; manufacturing of household appliances; manufacturing of other electronic devices; manufacturing of plastic products; manufacturing of electronic components (business activities shall be conducted independently in accordance with laws with the business license, except the items that require approval in accordance with laws). | Incorporated | 1,000.00 | 32.73 | -94.45 |
| Guangdong Murora Intelligent Lighting Co., Ltd. | General operations: Manufacturing of lighting apparatus; sales of lighting apparatus; manufacturing of special equipment for the production of lighting apparatus; manufacturing of distribution switch control equipment; manufacturing of electronic components; manufacturing of special electronic equipment; manufacturing of hardware products; manufacturing of household appliances; information technology consulting services; manufacturing of intelligent household consumption equipment (business activities shall be conducted independently in accordance with laws with the business | Incorporated | 1,000.00 | 543.49 | 424.28 |
| license, except the items that require approval in accordance with laws). | |||||
| Ningbo Gongniu Marketing Co., Ltd. | General operations: Wholesale of hardware products; sales of electrical accessories; sales of household appliances; sales of communication equipment; sales of electronic products; sales of daily necessities; sales of special equipment for lighting apparatus production; sales of mechanical and electrical equipment; sales of lighting apparatus; sales of general merchandise; sales of lamps; sales of wind and power tools; sales of metal tools; wholesale of electronic components; sales of plastic products; sales of motor vehicle chargers; sales of charging points; sales of household goods; installation services for household appliances (business activities shall be conducted independently in accordance with laws with the business license, except the items that require approval in accordance with laws). | Incorporated | 1,000.00 | 0.00 | 0.00 |
| Dalitek Intelligent Technology (Shanghai) Inc. | Research and development, design, assembly, manufacturing and sales of intelligent electrical systems, lighting control systems and related ancillary equipment, development and design of software systems, design of intelligent lighting systems, installation and maintenance of self-produced products, import and export of the above products and related technologies, and provision of related consultancy and technical services (not related to the state-operated trade and management commodities; if it is related to the commodities under quota or license management, application must be filed according to the relevant national regulations). | Business combination | 1,500.00 | 5,499.49 | -1,052.88 |
(VIII) Structured entities controlled by the Company
□ Applicable √ Not applicable
VI Discussion and Analysis on the Company’s Future Development(I) Industry landscape and trends
√ Applicable □ Not applicable
According to the National Bureau of Statistics, the national GDP grew by 3.0% year on year in2022; the national per capita disposable income reached RMB36,883 in 2022, up by 5.0% year on year;the national per capita consumption expenditure for the year was RMB24,538, up by 1.8% compared tothe previous year; the urbanisation rate of the resident population was 65.22% at the end of the year, upby 0.50 percentage points compared to the end of the previous year. In 2022, the report of the 20th CPCNational Congress and the Central Economic Work Conference reaffirmed the status of real estate as a
pillar industry of the national economy; real estate regulation and control policies focusing on"preserving the delivery of buildings and stabilising people's livelihood" were one after anotherintroduced; policies emphasised strengthening the housing security system, strongly supporting rigid andimproved housing demand, and accelerating the renovation of old neighbourhoods and dilapidatedhouses, thus fuelling the steady and healthy development of the real estate industry. We expect that thesteady growth of the national economy and the stable operation of the real estate industry will provide agood environment for the sustainable and healthy development of the Company.The domestic lighting market size is more than RMB200 billion, but the industrial pattern isscattered. In recent years, under the influence of complex changes in the social and economicenvironment and rising bulk raw materials, small and medium-sized lighting enterprises are facinggreater pressure to survive, and the advantages of leading enterprises will be more prominent. With thepopularity of minimalist decoration style, as well as the rising concern of consumers for the home lightenvironment and light effect, both light quality and intelligent no-main-lamp lighting products areemerging and enter gradually into the mass market and become a trend from the previous commerciallighting and high-end home decoration field. At the same time, LED lighting technology innovationdrives the cost reduction so that LED light has the basic conditions to become mass consumer goods; onthis basis, the Company judges that no-main-lamp lighting will be expected to grow into an importantopportunity category in the lighting field. After incubation and cultivation, the Company's no-main-lamplighting business has started well and is in the process of rapidly building core capabilities. In the future,the Company will continue to vigorously promote it to seize the minds of consumers, bring into playthe advantages of industrial synergy and achieve ground-breaking development.The smart home industry has undergone a transformation from single product to system andinteraction after the integration and evolution in recent years. With the increasing maturity of thesupply-side solutions and the gradual increase in consumer acceptance on the demand side, smart homeproducts are increasingly coming into homes and bringing convenient use experience. AVC monitoringdata suggest that in 2022, China's smart home overall (smart home system, smart switch, smart door lock)refined decoration market size reaches 1,661,000 sets, of which the smart home system configurationrate is 13.6%, up 4.0% year-on-year; smart switch configuration rate is 17.6%, up 2.7% year-on-year;smart door lock configuration rate is 79.2%, up 5.1% year-on-year. The brand pattern of the smart homeindustry has not yet been formed, and there is a huge market space behind the rapid development. As thecore of the smart home system, the lighting control system has obvious user interaction perception andhigh usage frequency. The Company makes intelligent no-main-lamp lighting and self-developed controlsystem the entry point, takes into account smart door locks, smart curtain machines, smart clothes dryingracks and other eco-categories to build a front-loading smart ecology, which will be an importantdevelopment direction for the future smart electrical lighting business.
In 2022, under the dual impacts of policy and market, the new energy vehicle industry continued togrow explosively. According to the China Association of Automobile Manufacturers, in 2022, 7,058,000new energy vehicles were produced and 6,887,000 were sales in China, up 96.9% and 93.4%
year-on-year, and the market share on the sales side increased by 12.1 percentage points to 25.6%,reaching ahead of schedule the goal that by 2025, the sales of new energy vehicles will reach about 20%of the total sales of new vehicles in the New Energy Automobile Development Plan (2021-2035) issuedby the General Office of the State Council. With the continuous refinement and implementation ofpolicies such as the Implementation Opinions on Further Improving the Service Guarantee Capability ofElectric Vehicle Charging Infrastructure by the National Development and Reform Commission andother ten ministries, and the Notice on Organizing the Pilot Work of the Comprehensive Electrificationof Vehicles in the Public Sector by the Ministry of Industry and Information Technology and other eightministries, China's new energy vehicles will enter an accelerated development stage in variousapplication areas. Following the trends of the industry and policy, the Company has quickly completedthe layout of new energy vehicle charging plugs and charging points for individual consumers and smalland medium-sized operators over the past two years, and our business development is now in goodshape. In the future, the Company will respond to market demand, accelerate product innovation andtechnology reserves, proactively explore new business directions, meet the storage and charging needsof more user groups in a wider variety of scenarios, and seize the historical opportunities of thedevelopment of the new energy industry.
(II) Development strategies of the Company
√ Applicable □ Not applicable
With the vision of “Becoming a Leader in the International Civil Electric Industry”, the Companywill grasp the opportunities of the times brought by consumption upgrading, new energy andinternationalisation, focus on the three major businesses of electric connection, smart electrical lightingand new energy, promote the upgrading of the Bull brand and the construction of the new Murora brandin all aspects, accelerate the building of the core competitiveness of the new energy business, andproactively explore the international market by providing consumers with better electrical products andservices across the world.
(III) Business plans
√ Applicable □ Not applicable
In order to achieve its operating goals in 2023, the Company will work on the following priorities:
1. The electric connection business will continue to be rooted in the brand positioning of “Expert inSafe Electricity Use” to provide consumers with a safe and comfortable electricity use experience.
(1) Adaptors are the foundation of the Company. The Company will continue to study the marketand consumer trends in depth, carry out product innovation around the needs of segmented electricityscenarios, launch more high-value products by focusing on scenario fit, smart upgrade and intelligentpower distribution, and promote product structure upgrade. On the basis of consolidating the advantagesof the original hardware channel, the Company will focus on developing the offline industrial decorationmarket, and continue to enhance digital marketing in the e-commerce channel. In terms of supply chain,the Company will pilot the "T+2" production and sales model reform, which is centred on customer
demand, to strengthen delivery capacity, enhance business efficiency and improve operational indicators.With regard to the brand, the Company will further consolidate the brand positioning of Bull as the"Expert in Safe Electricity Use" in consumers' minds through a series of marketing and promotion.
(2) In terms of digital accessories business, the Company adheres to the third-party boutiquestrategy and complies with the mainstreaming and civilianisation trend of high-power devices. BullDigital will focus on the field of fast charging. Relying on good-looking black-technology chargers, fastcharging power strips and other product platforms, and "overcharge protection" + gallium nitride andother technology accumulation, Gongniu Digital will innovate in products, strengthen the userperception of "safe and fast charging". At the same time, the Company will explore the "exquisitelifestyle" to meet consumers' needs for convenient power consumption in multiple scenarios.
2. In terms of smart electrical lighting business, the Company will, based on the home improvementconsumer upgrading demand, accelerate the construction of the whole-house intelligent ecology withno-main-lamp lighting as the core.
(1) In terms of wall switches and sockets, the Company will, in the product side, uphold thedecorative line, grasp the intelligent, ultra-thin and other industry trends, and accelerate high-end,intelligent product layout, so as to further enhance brand power and competitiveness through productswith a strong sense of design and high value, and lead consumption upgrade in the wall switch industry.Regarding the channel side, the Company will continue to increase the marketing and promotion effortsin the high-end market and lower markets, and comprehensively expand the market shares throughflagship shop construction, disadvantaged market support, expansion of installer project channel,channel product planning, lean marketing and other measures. With respect to the supply chain, theCompany will promote the comprehensive transformation from automation to digitalisation, amplify theproductivity of the end-to-end process, and enhance the comprehensive competitiveness of the supplychain brought about by the synergy of research, production and marketing. In terms of brand, theCompany will, taking series of products as the carrier, further enhance the visibility and reputation of theBull brand in the wall switch and socket industry.
(2) In terms of LED lighting and light source business, the Company will continue to lay outproduct lines in outdoor, office, commercial chain and other segments, keep developing engineeringchannels, and further explore the industrial and commercial basic light source market. As for lightingbusiness, the Company will continue to study the light needs of users in different scenarios such asliving room, dining room, bedroom, kitchen and bathroom, differentiate product layout based on thecharacteristics of user needs in different channels, integrate intelligence into modern and simple productinnovation and solution provision, and strengthen the construction of the "Eye-Caring" brand positioningin the minds of consumers. Mobile lighting will continue to focus on users' reading and light-fillingneeds in the home environment to further enhance the competitiveness of products in the professionalreading and writing field; safe eye-caring will be combined with convenient access to electricity andother usage trends to continue to improve the use experience.
(3) In terms of no-main-lamp lighting business, the Company will focus on creating a high-quality,low-cost and high-efficiency supply chain through whole value chain integration and innovation. It willalso enrich and perfect no-main-lamp lighting product lines, build a closed-loop system withstandardised and simple hardware and software to improve product user experience. On the basis ofaccelerating the coordinated sales of no-main-lamps in existing decoration channels, the Company willbuild a new intelligent no-main-lamp lighting brand "Murora" to quickly reach and seize consumers'minds with independent channel system construction, professional and complete product lines, agile andstable MOS light control system, and high investment in brand construction.
(4) With respect to ecosystem-based products, Domestic Electrical Appliance will upgrade andextend product categories through functional differentiation, intelligence and conceptual innovation, leadthe development of the industry based on creation of new categories and quality leadership with thethinking of building trending products, and drive business growth relying on the upgrade of integratedand exclusive decoration channels and the development of associated new channels through online andoffline synergy. Regarding circuit breaker business, the Company will take into account thediversification of application scenarios and product technology specialisation, continue to enhance thepower of residential products for home decoration, and develop and improve factory engineering productlines to further expand customer groups. For smart door lock business, the Company will focus onsecurity and technology, build a professional brand image, focus on improving the terminal sales of themain sales channels, and accelerate the improvement of the service system and the building of capacity.In terms of intelligent ecosystems, the Company will continue to focus on smart lighting, rely on thecloud platform and local control technology starting with user needs, optimise the interactive experienceand accelerate the system layout, creating a more comfortable home electricity environment forconsumers.
3. As for new energy business, the Company will be in line with the trend of the times andaccelerate the layout of products and channel development for more customer groups and more usescenarios.
With respect to new energy vehicle charging plugs and points, customer-end products will movefrom "complete" to "refined", further improving compatibility, stability and durability in extremeenvironments to support brand positioning. In terms of business-side products, the Company willcontinue to build core technical capabilities in the DC charging field to support remarkable growth ofoperators' business, and provide high-quality, reliable and safe products for different user groups.Regarding new energy channel, the Company will continue the construction of a nationwide distributionchannel network, improve the coverage of terminal outlets, focus on expanding customers such asoperators, establish a nationwide after-sales operation system to improve the quality and satisfaction ofafter-sales service, build benchmark shops and establish the online competitive advantage of new energycharging products relying on a complete e-commerce channel system. The Company will also continueto integrate its vertical supply chain system and accelerate its self-research and self-production of keycore components and processes, such as power modules. As for charger products, the Company will
continue to gain deep insight into consumer demand, enrich its technical reserves in the field of highercapacity and power, and launch high-quality products suitable for more scenarios. Also, the Companywill accelerate its technological research and product layout in the field of energy systems to provideconsumers with more and better electricity products and services for the future household electricityecology.
4. The Company will proactively explore the implementation path of internationalisation strategy.In response to the increasingly widespread application of new energy in homes, household transportationand other fields in developed countries in Europe and the United States, as well as the trend ofconsumption upgrading and the rise of the real estate industry in some emerging markets, the Companywill focus on promoting the overseas business expansion of new energy and electric connection productsthrough cross-border e-commerce and offline channels of its own brand.
5. The Company will continuously improve its business management capabilities, further build afull value chain empowerment system based on its strategic objectives, and consolidate the Company'scomprehensive competitive advantages in products, channels, brands and supply chains. The Companywill stimulate organisational vitality through innovation in organisational design and process mechanismfor the implementation of strategic objectives and future business development, and effectively integratequality resources such as human resources, technology research and development, and industrial supplychain by relying on the headquarters laid out in the talent hub, so as to continuously enhance theCompany's business innovation and value creation capabilities.
(IV) Possible risks
√ Applicable □ Not applicable
1. Risk associated with the sluggish macroeconomic growth
Domestic and overseas political and economic environments are undergoing profound changes. Themain products of the Company are consumer goods widely used at home, office, and other placesneeding electricity. The cyclical fluctuation of economy will directly influence the actual discretionaryincome of consumers, consumers' income structure, and the consumer confidence index. Then,consumers' demand for consumer goods including electric connection products and smart electricallighting products will be affected. If the growth rate of the domestic macroeconomy is sluggish or slides,it will lead to a decrease in discretionary income and the power of consumption of residents. It will alsodecrease consumers' demand and purchasing capacity for the Company's products. As a result, thebusiness development and the growth of results of the Company.
2. Risk of intensified market competition
The civil electrical industry demonstrates full market competition. There are not only manydomestic enterprises, but also some famous international brands. Meanwhile, adaptors, wall switchesand sockets, and other products, as the main controlled entrance of future smart home, also haveattracted many powerful new enterprises to join in the competition. In the future, the civil electrical andlighting industry is expected to remain its relatively fierce competition. There are uncertainties in the
changes of market competition. If the Company cannot adapt to the new competition situation, intensifyand expand its original competition advantages, it will face the risk of losing market shares.
3. Risk of the new business development failing to reach expectation
At the time of intensifying and expanding the original competition advantages, centering on thescenarios of electric vehicle charging and home decoration, the Company developed new business suchas charging plugs/points, no main lamps, circuit breakers, bathroom heaters, smart door locks, smartclothes drying racks, and smart curtain machines. However, considering uncertain factors including thedevelopment trend, market competition, and changes of consumer preferences in relevant fields, thepossibility that the development of new businesses will fail to reach expectation cannot be excluded.
4. Risk of the new channel development failing to reach expectation
According to the differences and changes of consumers' purchasing habits, the Company continuedto improve the layout of channels. Regarding the B-end business with decoration companies as the core,the overlap of the channels such as the vehicle after-markets for new energy charging plugs/points andB-end operators and the existing competitive channels is relatively low. The possibility that thedevelopment of new channels will fail to reach expectation cannot be excluded.
5. Risk of fluctuations in main material prices
The main materials that the Company needs for production are copper, plastic, assembly, hardware,packaging materials, electronic parts, etc. There is certain relevance between the procurement prices ofraw materials and the prices of bulk commodities such as copper and plastic. The procurement prices ofraw materials have a relatively big impact on the cost of sales of the Company. If the procurement pricesof raw materials rise significantly or fluctuate sharply in the future, it will be harmful to the cost controlof the Company and then influence the Company's results.
6. Risk of failing to recover a small amount of receivables
There is a small amount of undue loans for some real estate enterprises in other receivables of theCompany. The Company has disclosed it in the periodic report and the bad debt provision has beenaccrued with prudence. The possibility that such receivables will not be recovered cannot be excluded.
(V) Other information
□ Applicable √ Not applicable
VII Explanation of circumstances and reasons for non-disclosure by the company inconsiderationof inapplicable regulations, state secrets and commercial secrets.
□ Applicable √ Not applicable
Part IV Corporate GovernanceI Overview of Corporate Governance
√ Applicable □ Not applicable
In accordance with the requirements of the Company Law, the Securities Law, the Code ofCorporate Governance for Listed Companies and other relevant national laws and regulations, and basedon the business development, the Company has established a governance structure consisting of theGeneral Meeting of Shareholders, the Board of Directors, the Supervisory Committee and theManagement, and formed a mechanism of mutual coordination and checks and balances among theauthority, decision-making body, supervisory body and the management to promote modern corporategovernance and system building.In accordance with the relevant laws and regulations and the Articles of Association, the Companyhas formulated policies such as the Rules of Procedure of the General Meeting of Shareholders, theRules of Procedure of the Board of Directors, the Rules of Procedure of the Supervisory Committee, theWork Policy for Independent Directors, the Working Rules for the Board Secretary, the Working Rulesfor the General Manager (President), the Related-Party Transaction Management System, ForeignInvestment Management System and the External Guarantee Management System, and amended theArticles of Association, the Rules of Procedure of the General Meeting of Shareholders, the Rules ofProcedure of the Board of Directors, the Raised Funds Management Methods, the InformationDisclosure Management System, the Internal Reporting System Regarding Significant Information, theInvestor Relations Management System, and the Management System for Changes in Shareholdings ofDirectors, Supervisors and Senior Management during the Reporting Period to comply with the latestlaws and regulations and further improve the management level.(I) General Meeting of ShareholdersThe General Meeting of Shareholders of the Company has clear duties and rules of procedure,which are effectively implemented. The procedures for convening, holding and proposing the GeneralMeeting of Shareholders of the Company are in line with laws and regulations and the Company'sinternal systems and other relevant regulations.
(II) Directors and the Board of Directors
The duties of the Board of Directors of the Company are clear and all directors are able to performtheir duties conscientiously and responsibly. The procedures for convening and holding the meeting ofthe Board of Directors are in line with relevant laws, regulations and systems.
During their tenure, all directors were diligent and attended the meeting of the Board of Directorsconscientiously and responsibly. They were familiar with the relevant laws and regulations, and able tofully exercise and perform their rights, obligations and responsibilities as directors, safeguarding thelegitimate rights and interests of the Company and all shareholders.
In order to align with the Company’s development, the Audit Committee under the Board ofDirectors was renamed the Audit and Risk Committee during the Reporting Period with moreresponsibilities to accommodate the development of the Company and strengthen its risk prevention
capability. Except for the Strategy Committee, all other specialized committees are chaired byindependent directors, who play an important role in the performance of major decision-making andmonitoring functions by the Board of Directors, making the Company's decision-making more efficient,standardized and scientific.(III) Supervisors and the Supervisory CommitteeThe duties of the Supervisory Committee of the Company are clear and all supervisors are able toperform their duties conscientiously and responsibly. The procedures for convening and holding themeeting of the Supervisory Committee are in line with relevant laws, regulations and systems.During the tenure, the Supervisors were diligent, actively attended the meetings of the SupervisoryCommittee of the Company and performed their duties conscientiously. In line with the attitude of beingresponsible to shareholders, they supervised the financial affairs of the Company as well as the legalityand compliance of the performance of duties by directors and senior management personnel of theCompany, and safeguarded the legitimate rights and interests of the Company and all shareholders.In addition, the Company has established a relatively sound internal management and controlsystem, and has formulated relevant management systems in the areas of technology research anddevelopment, procurement management, safe production, marketing management, quality control andfinancial accounting. It conducted internal audit and supervision of the organization and management,operating activities, financial revenues and expenditures and economic benefits of its subsidiaries, andregularly inspected and evaluated the establishment and implementation of its internal control system toensure the effectiveness of internal control.
Indicate whether there was any material incompliance with the applicable laws and regulations, as wellas the CSRC’s requirements in corporate governance. If yes, please explain.
□ Applicable √ Not applicable
II Specific Measures Taken by the Controlling Shareholder and Actual Controller to Guaranteethe Asset, Personnel, Financial, Organizational and Business Independence of the Company, aswell as Solutions, Progress and Subsequent Plans when the Company’s Independence IsIntervened
√ Applicable □ Not applicable
The Company is independent of its controlling shareholder in assets, personnel, finance,organization, business, etc.
Indicate whether the controlling shareholder, the actual controller, or any entity under their control isengaged in the same or similar business with the Company. Please explain the impact of horizontalcompetition or any significant change to horizontal competition on the Company, solutions taken,progress and subsequent plans.
□ Applicable √ Not applicable
III General Meetings of Shareholders
| Meeting | Date | Index to disclosed resolutions | Disclosure date | Resolutions |
| The First Extraordinary General | 12 January 2022 | http://www.sse.com.cn | 13 January 2022 | The Proposal on the Change of Registered Capital and Amendment to the Articles of Association was approved. |
| Meeting of Shareholders of 2022 | ||||
| The 2021 Annual General Meeting of Shareholders | 5 May 2022 | http://www.sse.com.cn | 6 May 2022 | The Proposal on the Work Report of the Board of Directors in 2021, Proposal on the Work Report of the Supervisory Committee in 2021, Proposal on the Financial Final Account Report of 2021, Proposal on the Annual Report and its Summary for 2021, Proposal on the Profit Distribution Plan for 2021, Proposal on the Renewal of the Annual Auditor for 2022, Proposal on the Use of Equity Funds for Entrusting Wealth Management, Proposal on the Compensation Scheme for Directors, Proposal on the Restricted Share Incentive Plan for 2022 (Draft) and its Summary, Proposal on the Management Measures for the Assessment of the Restricted Share Incentive Plan for 2022, and Proposal on the Request to the General Meeting to Authorize the Board of Directors to Handle Share Incentive-Related Matters were approved. |
Extraordinary general meetings of shareholders convened at the request of preference shareholders withresumed voting rights:
□ Applicable √ Not applicable
Notes to general meetings of shareholders:
√ Applicable □ Not applicable
For details, please refer to the Announcement on the Resolutions of the First Extraordinary GeneralMeeting of Shareholders of 2022 (Announcement No.: 2022-004), and the Announcement on theResolutions of the 2021 Annual General Meeting of Shareholders (Announcement No.: 2022-047)published by the Company on the website of the Shanghai Stock Exchange (http://www.sse.com.cn).
IV Directors, Supervisors and Senior Management(I) Shareholding changes and remunerations of incumbent directors, supervisors and senior management and those who resigned before the end of theirtenures during the Reporting Period
√ Applicable □ Not applicable
Unit: share
| Name | Office title (note) | Gender | Age | Start of tenure | End of tenure | Opening shareholding (share) | Closing shareholding (share) | Change in shareholding in the Reporting Period (share) | Reason for change | Total pre-tax remuneration received from the Company in the Reporting Period (RMB’ 0,000) | Remuneration received from any of the Company’s related parties (yes/no) |
| Ruan Liping | Chairman of the Board and President | Male | 59 | 2017-12-23 | 2024-1-6 | 96,864,199 | 96,864,199 | 287.17 | No | ||
| Ruan Xueping | Vice Chairman of the Board | Male | 51 | 2017-12-23 | 2024-1-6 | 96,864,199 | 96,864,199 | 248.00 | No | ||
| Cai Yingfeng | Director and Vice President | Male | 60 | 2017-12-23 | 2024-1-6 | 25,300 | 43,800 | 18,500 | Granted under the 2022 Restricted Share Incentive Plan | 239.75 | No |
| Liu Shengsong | Director, Vice President and Board | Male | 53 | 2017-12-23 | 2024-1-6 | 18,800 | 42,400 | 23,600 | Granted under the 2022 Restricted | 293.47 | No |
| Secretary | Share Incentive Plan | ||||||||||
| Zhou Zhenghua | Director and Vice President | Male | 51 | 2017-12-23 | 2024-1-6 | 13,100 | 42,600 | 29,500 | Granted under the 2022 Restricted Share Incentive Plan | 409.90 | No |
| Zhou Wenchuan | Director | Female | 39 | 2021-5-20 | 2024-1-6 | 0 | No | ||||
| Xie Tao | Independent Director | Male | 60 | 2017-12-23 | 2024-1-6 | 0 | 16.67 | No | |||
| Zhang Zeping | Independent Director | Male | 50 | 2017-12-23 | 2024-1-6 | 0 | 16.67 | No | |||
| He Hao | Independent Director | Female | 47 | 2017-12-23 | 2024-1-6 | 0 | 16.67 | No | |||
| Shen Huiyuan | Chairman of the Supervisory Committee | Male | 59 | 2017-12-23 | 2024-1-6 | 0 | 244.89 | No | |||
| Guan Xuejun | Supervisor | Male | 45 | 2017-12-23 | 2024-1-6 | 0 | 215.77 | No | |||
| Li Yu | Employee Supervisor | Male | 40 | 2017-12-23 | 2024-1-6 | 0 | 121.84 | No | |||
| Li Guoqiang | Vice President | Male | 56 | 2017-12-23 | 2024-1-6 | 24,400 | 44,200 | 19,800 | Granted under the 2022 Restricted Share Incentive Plan | 245.96 | No |
| Zhang Lina | Vice President | Female | 63 | 2017-12-23 | 2024-1-6 | 7,500 | 21,600 | 14,100 | Granted under the | 151.14 | No |
| and CFO | 2022 Restricted Share Incentive Plan | ||||||||||
| Total | / | / | / | / | / | 193,817,498 | 193,922,998 | 105,500 | / | 2,507.90 | / |
| Name | Main work experience |
| Ruan Liping | Born in 1964, Bachelor's degree, Chinese nationality, with permanent residence in Singapore and a Hong Kong Identity Card. He once served as an engineer at Hangzhou Mechanical Design Institute of the Ministry of Water Resources, and Chairman of the Board and President of Gongniu Group Co., Ltd. (the former private company). He is currently the Chairman of the Board and President of Gongniu Group and a member of the 13th National People's Congress of Zhejiang Province. Also, he is the Executive Director and General Manager of Gongniu Photoelectric, and the Executive Director of Liangji Industrial, among others. |
| Ruan Xueping | Born in 1972, junior secondary education, Chinese nationality, with permanent residence in Singapore and a Hong Kong Identity Card. He once served as the Production Manager of Cixi Gongniu, Vice Chairman of the Board of Gongniu Group Co., Ltd. (the former private company). He is currently the Vice Chairman of the Board of Gongniu Group. Also, he is the Executive Director of Cixi Gongniu, and the Supervisor of Liangji Industrial. |
| Cai Yingfeng | Born in 1963, Bachelor's degree, professor-level senior engineer, Chinese nationality, with permanent residence in Singapore. He once served as the Director Engineer of the Crane Room of Hangzhou Mechanical Design Institute of the Ministry of Water Resources, Senior Engineer of Portek International Pte Ltd (Singapore), Vice President and Chief Engineer of Gongniu Group Co., Ltd. (the former private company). He is currently a director and Vice President of Gongniu Group. |
| Liu Shengsong | Born in 1970, Bachelor's degree, engineer, Chinese nationality, no permanent residence abroad. He once served as the Director's Assistant of the Science and Technology Department of Kmk Group, Senior Manager of Midea Group Co., Ltd., Director of strategic operations and Deputy General Manager of the Business Division of AUX Group Co., Ltd., President's Assistant and General Manager of the Business Division of Jiangxi Zhengbang Technology Co., Ltd., and Vice President of Gongniu Group Co., Ltd. He is currently a director, Vice President and Board Secretary of Gongniu Group, with the professional qualification of Board Secretary of the Shanghai Stock Exchange. |
| Zhou Zhenghua | Born in 1972, Master's degree, Chinese nationality, no permanent residence abroad. He once served as a technician of incoming material quality control (IQC) at Zhongshan Kawa Electronic(Group)Co., Ltd., the Managing Officer of quality control (QC) at One Earth Group Limited, General Manager of the product company of Midea Group Co., Ltd., and Vice President of Gongniu Group Co., Ltd. (the former private company). He is currently a director, Vice President and General Manager of the Wall Opening Division of Gongniu Group. |
| Zhou Wenchuan | Born in 1983, Master's degree, Ph.D. in progress, permanent resident of Hong Kong. She is currently the Vice Chairman and President of Meilleure Health International Group, Assistant President of U-Home Group, General Manager of Shenzhen Xiaozhou Investment Co., Ltd., and a member of the Standing Executive Committee of Shenzhen Federation of Industry & Commerce (Chamber of Commerce), and a director of Gongniu Group. |
| Xie Tao | Born in 1963, Bachelor's degree, member of the Institute of Chartered Accountants, Singaporean nationality. He once served as a partner of PwC. |
| He is currently a director of Shanghai Vico Precision Mold &Plastics Co., Ltd., an independent director of China Yuchai International Limited, Zhejiang Wanfeng Auto Wheel Co., Ltd. and Gongniu Group. | |
| Zhang Zeping | Born in 1973, doctoral degree, Chinese nationality, no permanent residence abroad. He once served as a teacher at the School of Basic Education of Shanghai University of Engineering Science, a teacher at the School of International Law of East China University of Political Science and Law, and the Director of the Consular Department of the China Embassy in Macedonia. He is currently a professor at the School of International Law of East China University of Political Science and Law, an arbitrator of Shanghai International Economic and Trade Arbitration Commission (SHIAC), Shanghai Arbitration Commission and Shenzhen Court of International Arbitration, a part-time lawyer of Shanghai Zhonglian Law Firm, an independent director of Shenzhen Soocas Technology Co., Ltd., an independent director of CTS International Logistics Corporation Limited, an independent director of Shanghai Allied Industrial Co., Ltd., a director of Suzhou Kelinyuan Electronics Co., Ltd. and an independent director of Gongniu Group. |
| He Hao | Born in 1976, Master's degree, Chinese nationality, no permanent residence abroad. He once served as a senior auditor of Arthur Andersen LLP, an audit manager of PwC LLP, Vice President of Deutsche Bank (China) Co., Ltd., and Chief Controller of the Corporate Customer Department of Standard Chartered Bank (China) Limited. He is currently the CEO of Hang Fun International Group Limited, a managing partner of Shanghai Xingduo Investment Partnership Enterprise (Limited Partnership), executive director of Shanghai Heyue Intelligent Technology Co., Ltd., an executive director of Shanghai Lihao Creative Design Co., Ltd., executive director and manager of Beijing Xinghao Kairui Technology Co., Ltd., and independent director of Gongniu Group. |
| Shen Huiyuan | Born in 1964, Bachelor's degree, Chinese nationality, no permanent residence abroad. He once served as the project leader of the International Electrical Development Department of TCL Group Co., Ltd, head of the Electrical R&D Department of Huizhou IDV Electrical Technology Co., Ltd., head of Electrical Accessories Department of Gongniu Group Co., Ltd. (the former private company), Executive Deputy General Manager and Deputy General Manager of R&D of Ningbo Gongniu Electrics Co., Ltd., and Director of the Research Institute of Gongniu Group Co., Ltd. (the former private company). He is currently the Chairman of the Supervisory Committee of Gongniu Group Co., Ltd., head of the R&D and Technology Management Center and Director of the Research Institute of Gongniu Group. |
| Guan Xuejun | Born in 1978, Master's degree, Chinese nationality, no permanent residence abroad. He once served as the procurement manager of Foshan Shunde District MiTAC Computer (Shunde) Limited, senior procurement manager of Ningbo Franta Kitchenware Co., Ltd., senior procurement manager of Quanyou Furniture Co., Ltd., and Director of the New Business Management Center of Gongniu Group Co., Ltd. (the former private company). He is currently a supervisor of Gongniu Group and the General Manager of the decoration channel marketing system. |
| Li Yu | Born in 1983, Bachelor's degree, intermediate auditor, international certified internal auditor, Chinese nationality, no permanent residence abroad. He once served as the Manager of the Audit Department, Manager of the Operation Department, Executive President of Gongniu University and Director of Human Resources Center of Gongniu Group Co., Ltd. (the former private company). He is currently the General Manager of the Low-voltage Electrical Appliances Division of Gongniu Group. |
| Li Guoqiang | Born in 1967, junior college’s degree, Chinese nationality, no permanent residence abroad. He used to be a regional manager for TCL International Electrical (Huizhou) Co., Ltd., the Marketing Director of Aidiwei International Electrical (Huizhou) Co., Ltd., and the Marketing Vice President of Gongniu Group. He is now the Marketing Vice President of Gongniu Group. |
| Zhang Lina | Born in 1960, junior college’s degree, Chinese nationality, no permanent residence abroad. She used to be the Finance Director at the Cixi branch of China Telecom Corporation Limited, and the Financial Manager and CFO of Gongniu Group. She is now a Vice President and the CFO of Gongniu |
Group.
Other information:
□ Applicable √ Not applicable
(II) Offices held by incumbent directors, supervisors and senior management and those whoresigned before the end of their tenures during the Reporting Period
1. Offices held concurrently in shareholding entities
√ Applicable □ Not applicable
| Name | Shareholding entity | Office held in the shareholding entity | Start of tenure | End of tenure |
| Ruan Liping | Ningbo Liangji Industrial Co., Ltd. | Executive Director | November 2011 | Currently ongoing |
| Ruan Xueping | Ningbo Liangji Industrial Co., Ltd. | Supervisor | November 2011 | Currently ongoing |
| Note | Not applicable | |||
2. Offices held concurrently in other entities
√ Applicable □ Not applicable
| Name | Other entity | Office held in other entity | Start of tenure | End of tenure |
| Ruan Liping | Shanghai Minshen Property Co., Ltd. | Vice Chairman of the Board | July 1999 | Currently ongoing |
| Ruan Liping | Ningbo Gongniu Property Co., Ltd. | Executive Director | June 2010 | Currently ongoing |
| Ruan Liping | Qingdao Haili Commercial Appliances Co., Ltd. | Director | May 2009 | Currently ongoing |
| Ruan Liping | Cixi Gongniu Electrics Co., Ltd. | General Manager | January 2008 | Currently ongoing |
| Ruan Liping | Wuhan Fenjin Power Tech Co., Ltd. | Executive Director | December 2006 | Currently ongoing |
| Ruan Liping | Ningbo Meishan Bonded Port Shuojin Investment Management Co., Ltd. | Executive Director | November 2017 | Currently ongoing |
| Ruan Liping | Wuhan Zhongjia Hongyi Technology Information Industrial Park Co., Ltd. | Director | January 2019 | Currently ongoing |
| Ruan Liping | Dalitek Intelligent Technology (Shanghai) Inc. | Chairman of the Board | October 2021 | Currently ongoing |
| Ruan Liping | Ningbo Gongniu Precision Manufacturing Co., Ltd. | Executive Director and General Manager | September 2015 | Currently ongoing |
| Ruan Liping | Ningbo Gongniu Photoelectric Technology Co., Ltd. | Executive Director and General Manager | June 2014 | Currently ongoing |
| Ruan Liping | Shenzhen Gongniu Intelligent Information Co., Ltd. | Executive Director and General Manager | July 2022 | Currently ongoing |
| Ruan Liping | Guangdong Murora Intelligent Lighting Co., Ltd. | Executive Director | July 2022 | Currently ongoing |
| Ruan Liping | Ningbo Gongniu Electrics Co., Ltd. | Executive Director and General Manager | December 2008 | February 2023 |
| Ruan Liping | Ningbo Gongniu Digital Technology Co., Ltd. | Executive Director and General Manager | October 2016 | February 2023 |
| Ruan Liping | Ningbo Bull International Trading Co., Ltd. | Executive Director and General Manager | March 2017 | February 2023 |
| Ruan Liping | Ningbo Gongniu Supply Chain Management Co., Ltd. | Executive Director and General Manager | December 2016 | January 2023 |
| Ruan Liping | Ningbo Gongniu Electric Sales Co., Ltd. | Executive Director | August 2017 | December 2022 |
| Ruan Liping | Ningbo Xingluo Trading Co., Ltd. | Executive Director | August 2017 | January 2023 |
| Ruan Liping | Cixi Shenghui Electronics Co., Ltd. | Executive Director | January 2016 | February 2023 |
| Ruan Liping | Ningbo Golden Mango Ecological Manor Co., Ltd. | Executive Director | December 2013 | February 2023 |
| Ruan Liping | Ningbo Gongniu Domestic Electrical Appliance Co., Ltd. | Executive Director and Manager | April 2020 | February 2023 |
| Ruan Liping | Shanghai Gongniu Information Technology Co., Ltd. | Executive Director and General Manager | February 2022 | March 2023 |
| Ruan Liping | Ningbo Gongniu Smart Technology Co., Ltd. | Executive Director and Manager | October 2021 | February 2023 |
| Ruan Xueping | Cixi Gongniu Electrics Co., Ltd. | Executive Director | January 1995 | Currently ongoing |
| Ruan Xueping | Shanghai Minshen Property Co., Ltd. | Director | July 1999 | Currently ongoing |
| Ruan Xueping | Shanghai Dumin Real Estate Co., Ltd. | Chairman of the Board | March 2006 | Currently ongoing |
| Ruan Xueping | Shanghai Minshen Real Estate Management Co., Ltd. | Director | August 2005 | Currently ongoing |
| Ruan Xueping | Ningbo Meishan Bonded Port Shuojin Investment Management Co., Ltd. | Supervisor | November 2017 | Currently ongoing |
| Ruan Xueping | Dalitek Intelligent Technology (Shanghai) Inc. | Supervisor | September 2021 | Currently ongoing |
| Cai Yingfeng | Hainan Dacheng Supply Chain Management Co., Ltd. | Executive Director and General Manager | January 2021 | Currently ongoing |
| Zhou Zhenghua | Ningbo Gongniu Intelligent Technology Co., Ltd. | Executive Director and General Manager | February 2023 | Currently ongoing |
| Zhou Zhenghua | Ningbo Gongniu Electrics Co., Ltd. | Executive Director and General Manager | February 2023 | Currently ongoing |
| Liu Shengsong | Wuhan Gongniu Investment Management Co., Ltd. | Supervisor | October 2021 | Currently ongoing |
| Liu Shengsong | Shanghai Gongniu Information Technology Co., Ltd. | Supervisor | January 2022 | Currently ongoing |
| Liu Shengsong | Wuhan Gongniu Venture Capital Co., Ltd. | Supervisor | January 2021 | Currently ongoing |
| Liu Shengsong | Yangtze Optical Electronic Co., Ltd. | Director | August 2020 | Currently ongoing |
| Liu Shengsong | Qingdao Soar Automobile Co., Ltd. | Director | September 2022 | Currently ongoing |
| Liu Shengsong | Dalitek Intelligent Technology (Shanghai) Inc. | Director | September 2021 | Currently ongoing |
| Zhou Wenchuan | Meilleure Health International Group Co., Ltd. | Vice Chairman of the Board and President | August 2013 | Currently ongoing |
| Zhou Wenchuan | U-Home Group Co., Ltd. | Supervisor | June 2010 | Currently ongoing |
| Zhou Wenchuan | Shenzhen Xiaozhou Investment Co., Ltd. | General Manager | January 2009 | Currently ongoing |
| Zhou Wenchuan | Yunnan Hansu Biotechnology Co., Ltd. | Director | June 2018 | Currently ongoing |
| Zhou Wenchuan | Shenzhen Yinguan Biological Technology Co., Ltd. | Director | February 2019 | Currently ongoing |
| Zhou Wenchuan | Shenzhen Meiray Vap Technology Co., Ltd. | Chairman of the Board | December 2019 | Currently ongoing |
| Zhou Wenchuan | Zhuhai Fuhai Canyang Investment Development Co., Ltd. | Director | December 2009 | Currently ongoing |
| Zhou Wenchuan | Wuhu Meilleure Health Management Co., Ltd. | General Manager | April 2018 | Currently ongoing |
| Zhou Wenchuan | Shenzhen Skin Analysis Medical Beauty Clinic | Chairman of the Board | June 2017 | Currently ongoing |
| Zhou Wenchuan | Shenzhen Ruima Electric Technology Co., Ltd. | General Manager | September 2019 | Currently ongoing |
| Zhou Wenchuan | Beijing Meiaikang Technology Co., Ltd. | Director | February 2020 | Currently ongoing |
| Zhou Wenchuan | Wuhu Xiaozhou Investment Co., Ltd. | General Manager | October 2019 | Currently ongoing |
| Zhang Zeping | Shanghai Allied Industrial Co., Ltd. | Independent Director | December 2022 | Currently ongoing |
| Zhang Zeping | Shenzhen Soocas Technology Co., Ltd. | Independent Director | October 2020 | Currently ongoing |
| Zhang Zeping | Suzhou Kelinyuan Electronics Co., Ltd. | Director | January 2022 | Currently ongoing |
| Zhang Zeping | CTS International Logistics Corporation Limited | Independent Director | January 2023 | Currently ongoing |
| Xie Tao | Shanghai Vico Precision Mold &Plastics Co., Ltd. | Director | May 2021 | Currently ongoing |
| Xie Tao | China Yuchai International Limited | Independent Director | September 2020 | Currently ongoing |
| Xie Tao | Zhejiang Wanfeng Auto Wheel Co., Ltd. | Independent Director | June 2020 | Currently ongoing |
| He Hao | Hang Fun International Group Limited | CEO | March 2023 | Currently ongoing |
| He Hao | Shanghai Xingduo Investment Partnership Enterprise (Limited Partnership) | Executive Partner | July 2018 | Currently ongoing |
| He Hao | Shanghai Heyue Intelligent Technology Co., Ltd. | Executive Director | June 2022 | Currently ongoing |
| He Hao | Shanghai Lihao Creative Design Co., Ltd. | Executive Director | July 2019 | Currently ongoing |
| He Hao | Beijing Xinghao Kairui Technology Co., Ltd. | Executive Director and Manager | December 2018 | Currently ongoing |
| Li Yu | Ningbo Gongniu Electrics Co., Ltd. | Supervisor | December 2017 | Currently ongoing |
| Li Yu | Cixi Gongniu Electrics Co., Ltd. | Supervisor | December 2017 | Currently ongoing |
| Li Yu | Ningbo Gongniu Low Voltage Electric Co., Ltd. | Executive Director and Manager | December 2022 | Currently ongoing |
| Li Yu | Ningbo Banmen Electric Appliance Co., Ltd. | Supervisor | December 2017 | Currently ongoing |
| Li Yu | Ningbo Gongniu Digital Technology Co., Ltd. | Supervisor | December 2017 | Currently ongoing |
| Li Yu | Ningbo Bull International Trading Co., Ltd. | Supervisor | December 2017 | Currently ongoing |
| Li Yu | Ningbo Gongniu Supply Chain Management Co., Ltd. | Supervisor | December 2017 | Currently ongoing |
| Li Yu | Ningbo Gongniu Photoelectric Technology Co., Ltd. | Supervisor | December 2017 | Currently ongoing |
| Li Yu | Shanghai Gongniu Electrics Co., Ltd. | Supervisor | December 2017 | Currently ongoing |
| Li Yu | Ningbo Gongniu Precision Manufacturing Co., Ltd. | Supervisor | November 2019 | Currently ongoing |
| Li Yu | Ningbo Gongniu Domestic Electrical Appliance Co., Ltd. | Supervisor | April 2020 | Currently ongoing |
| Shen | Hainan Dacheng Supply Chain | Supervisor | January 2021 | Currently |
| Huiyuan | Management Co., Ltd. | ongoing | ||
| Guan Xuejun | Ningbo Gongniu Electric Sales Co., Ltd. | Executive Director and General Manager | December 2022 | Currently ongoing |
| Li Guoqiang | Ningbo Bull International Trading Co., Ltd. | Executive Director and General Manager | January 2023 | Currently ongoing |
| Zhang Lina | Dalitek Intelligent Technology (Shanghai) Inc. | Supervisor | September 2021 | Currently ongoing |
| Note | Not applicable | |||
(III) Remunerations of directors, supervisors and senior management
√ Applicable □ Not applicable
| Decision-making procedures for the remuneration of directors, supervisors and senior management personnel | The remuneration of directors and supervisors shall be deliberated and determined by the General Meeting of Shareholders. The remuneration of senior management personnel shall be reviewed and determined by the Board of Directors. |
| Basis for determining the remuneration of directors, supervisors and senior management personnel | Internal directors, supervisors and senior management personnel are paid remuneration in accordance with the specific management positions they hold in the Company, taking into account the Company's business picture, relevant remuneration system and results of performance appraisals. The remuneration of independent directors is based on an allowance system, and directors who do not hold specific management positions in the Company will not receive remuneration. |
| Actual payment of remuneration for directors, supervisors and senior management personnel | The earnings disclosed in the report represent the actual remuneration of the directors, supervisors and senior management personnel. |
| Total actual remuneration received by all directors, supervisors and senior management personnel at the end of the Reporting Period | RMB25.0790 million |
(IV) Changes of directors, supervisors and senior management
□ Applicable √ Not applicable
(V) Punishments imposed by securities regulators in the past three years
□ Applicable √ Not applicable
(VI) Other information
□ Applicable √ Not applicable
V Board Meetings Convened during the Reporting Period
| Meeting | Date | Resolutions |
| The 10th Meeting of the Second Board of Directors | 11 April 2022 | The Proposal on the Work Report of the President (General Manager) in 2021, Proposal on the Financial Final Account Report of 2021, Proposal on the Work Report of the Board of Directors in 2021, Proposal on the Annual Report and its Summary for 2021, Proposal on the Profit Distribution Plan for 2021, Proposal on the 2021 Annual Internal Control Evaluation Report, Proposal on Renaming the Audit Committee of the Board of Directors as the Audit and Risk Committee of the Board of Directors and Revising the Implementation Rules, Proposal on the 2021 Environmental, Social and Governance Report, Proposal on the Work Report of Independent Directors for 2021, Proposal on |
| the Report on the Performance of the Audit Committee of the Board of Directors for 2021, Proposal on the Estimated Routine Related-party Transactions of the Company in 2022, Proposal on the Renewal of the Annual Auditor for 2022, Proposal on the Use of Equity Funds for Entrusting Wealth Management, Proposal on the Special Report on the Deposit and Actual Use of Raised Funds for 2021, Proposal on Repurchasing the Company's Shares through Call Auction, Proposal on Authorizing the Management of the Company to Handle Matters Related to the Share Repurchase, Proposal on the Restricted Share Incentive Plan in 2022 (Draft) and Its Summary, Proposal on the Management Measures for the Assessment of the Restricted Share Incentive Plan for 2022, Proposal on the Request to the General Meeting to Authorise the Board of Directors to Handle Share Incentive-Related Matters, Proposal on the Compensation Schemes for Directors and Senior Management Personnel, Proposal on the Appointment of Securities Affairs Representative, and Proposal on Holding 2021 Annual General Meeting were approved by the resolution. | ||
| The 11th Meeting of the Second Board of Directors | 26 April 2022 | The Proposal on the Report for the First Quarter of 2022 and Proposal on the Repurchase and Write-off of Certain Restricted Shares were approved by the resolution. |
| The 12th Meeting of the Second Board of Directors | 20 May 2022 | The Proposal on the Adjustment of the Repurchase Price of the 2020 Restricted Share Incentive Plan, Proposal on the Adjustment of the Repurchase Price of the 2021 Restricted Share Incentive Plan, Proposal on Adjusting the List of Awardees, the Number of Grants and the Grant Price of the Restricted Share Incentive Plan in 2022, and Proposal on Granting Restrictive Shares to Awardees were approved by the resolution. |
| The 13th Meeting of the Second Board of Directors | 17 June 2022 | The Proposal on the Achievement of Lifting the Restriction Conditions in the Second Lifting Period of the 2020 Restricted Share Incentive Plan and Proposal on the Achievement of Lifting the Restriction Conditions in the First Lifting Restriction Period of the 2021 Restricted Share Incentive Plan were approved by the resolution. |
| The 14th Meeting of the Second Board of Directors | 17 August 2022 | The Proposal on the Semi-Annual Report for 2022 and its Summary and Proposal on the Special Report on the Deposit and Actual Use of Raised Funds for the Semi-Annual Period of 2022 were approved by the resolution. |
| The 15th Meeting of the Second Board of Directors | 27 October 2022 | The Proposal on the Report for the Third Quarter of 2022, Proposal on the Repurchase and Write-off of Certain Restricted Shares, and Proposal on Revising Certain Corporate Governance Policies were approved by the resolution. |
| The 16th Meeting of the Second Board of Directors | 21 December 2022 | The Proposal on the Continued Use of Part of Temporarily Idle Raised Funds for Cash Management, Proposal on the Continued Use of Part of Idle Raised Funds for Temporary Replenishment of Working Capital, Proposal on the Application for Comprehensive Credit Line from Banks, Proposal on Conducting Bulk Raw Material Futures Business, Proposal on the Extension of Some Investment Projects with Raised Funds, Proposal on Adding the Implementation Entity of Some Investment Projects with Raised Funds, Proposal on the Change of Registered Capital and Domicile, Modification of Business Scope, and Amendment to the Articles of Association, Proposal on Amending the Rules of Procedure for General Meeting, Proposal on Revising the Management Measures for the Use of Raised Funds, and Proposal on the Convening of the 1st Extraordinary General Meeting of |
2023 were approved by the resolution.
VI Performance of Duty by Directors(I) Attendance of directors at board meetings and general meetings of shareholders during theReporting Period
| Name of director | Independent director or not | Attendance at board meetings | Attendance at general meetings of shareholders | |||||
| Total number of board meetings the director was supposed to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Absence | The director failed to attend two consecutive board meetings (yes/no) | Total number of general meetings of shareholders the director was supposed to attend | ||
| Ruan Liping | No | 7 | 7 | 1 | 0 | 0 | No | 2 |
| Ruan Xueping | No | 7 | 7 | 5 | 0 | 0 | No | 2 |
| Cai Yingfeng | No | 7 | 7 | 4 | 0 | 0 | No | 2 |
| Liu Shengsong | No | 7 | 7 | 3 | 0 | 0 | No | 2 |
| Zhou Zhenghua | No | 7 | 7 | 2 | 0 | 0 | No | 2 |
| Zhou Wenchuan | No | 7 | 7 | 7 | 0 | 0 | No | 2 |
| Xie Tao | Yes | 7 | 7 | 7 | 0 | 0 | No | 2 |
| Zhang Zeping | Yes | 7 | 7 | 7 | 0 | 0 | No | 2 |
| He Hao | Yes | 7 | 7 | 7 | 0 | 0 | No | 2 |
Explain why any director failed to attend two consecutive board meetings.
□ Applicable √ Not applicable
| Total number of board meetings convened in the Reporting Period | 7 |
| Of which: on-site meetings | 0 |
| Meetings convened by way of telecommunication | 1 |
| Meetings where on-site attendance and attendance by telecommunication were both allowed | 6 |
(II) Objections raised by directors on matters of the Company
□ Applicable √ Not applicable
(III) Other information
□ Applicable √ Not applicable
VII Specialized Committees under the Board of Directors
√ Applicable □ Not applicable
(1) Members of the specialized committees
| Specialized committee | Members |
| Audit and Risk Committee | He Hao (convener), Xie Tao, and Ruan Xueping |
| Nomination Committee | Xie Tao (convener), Ruan Liping, and Zhang Zeping |
| Remuneration and Appraisal Committee | Zhang Zeping (convener), Ruan Liping, and He Hao |
| Strategy Committee | Ruan Liping (convener), Liu Shengsong, Zhou Zhenghua, Zhou Wenchuan, and Xie Tao |
(2) The Audit and Risk Committee held five meetings during the Reporting Period.
| Date | Contents | Important comments and suggestions | Other performance of duties |
| 1 April 2022 | The Proposal on the Financial Final Account Report of 2021, Proposal on the 2021 Annual Report and the Summary, Proposal on the 2021 Annual Internal Control Evaluation Report, Proposal on the Estimated Continuing Related-party Transactions in 2022, Proposal on the Renewal of the Annual Auditor for 2022, Proposal on the Special Report on the Deposit and Actual Use of Raised Funds for 2021, and Proposal on the Audit Committee under the Board of Directors Being Renamed the Audit and Risk Committee and Amendments to the Specific Implementation Rules were approved. | The Audit and Risk Committee carried out its work in strict accordance with laws, regulations and relevant rules and policies with diligence. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | For details, please refer to the Report of Gongniu Group Co., Ltd. On the Duty Performance of the Audit and Risk Committee of the Board of Directors in 2022. |
| 19 April 2022 | The Proposal on the First Quarterly Report 2022 was approved. | The Audit and Risk Committee carried out its work in strict accordance with laws, regulations and relevant rules and policies with diligence. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals | For details, please refer to the Report of Gongniu Group Co., Ltd. On the Duty Performance of the Audit and Risk Committee of the Board of Directors in 2022. |
| were unanimously approved. | |||
| 5 August 2022 | The Proposal on the 2022 Interim Report and the Summary, Proposal on the Special Report on the Deposit and Actual Use of Raised Funds for H1 2022, and Proposal on the Work Report of the Audit and Risk Management Joint Office for H1 2022 were approved. | The Audit and Risk Committee carried out its work in strict accordance with laws, regulations and relevant rules and policies with diligence. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | For details, please refer to the Report of Gongniu Group Co., Ltd. On the Duty Performance of the Audit and Risk Committee of the Board of Directors in 2022. |
| 20 October 2022 | The Proposal on the Third Quarterly Report 2022 was approved. | The Audit and Risk Committee carried out its work in strict accordance with laws, regulations and relevant rules and policies with diligence. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | For details, please refer to the Report of Gongniu Group Co., Ltd. On the Duty Performance of the Audit and Risk Committee of the Board of Directors in 2022. |
| 21 December 2022 | The Annual Audit Plan of Pan-China Certified Public Accountants LLP was approved. | The Audit and Risk Committee carried out its work in strict accordance with laws, regulations and relevant rules and policies with diligence. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | For details, please refer to the Report of Gongniu Group Co., Ltd. On the Duty Performance of the Audit and Risk Committee of the Board of Directors in 2022. |
(3) The Remuneration and Appraisal Committee held two meetings during the Reporting Period.
| Date | Contents | Important comments and suggestions | Other performance of duties |
| 11 April 2022 | The Proposal on the Remuneration Schemes for Directors and Senior Management Personnel, Proposal on the Restricted Share Incentive Plan for 2022 (Draft) and its Summary, and Proposal on the Management Measures for the Appraisal of the Restricted Share Incentive Plan for 2022 were | The Remuneration and Appraisal Committee carried out its work in strict accordance with laws, regulations and relevant rules and policies with diligence. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were |
| approved. | unanimously approved. | ||
| 17 June 2022 | The Proposal on the Achievement of Lifting the Restriction Conditions in the Second Lifting Restriction Period of the 2020 Restricted Share Incentive Plan, and the Proposal on the Achievement of Lifting the Restriction Conditions in the First Lifting Restriction Period of the 2021 Restricted Share Incentive Plan were approved. | The Remuneration and Appraisal Committee carried out its work in strict accordance with laws, regulations and relevant rules and policies with diligence. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. |
(4) Objections
□ Applicable √ Not applicable
VIII Risks Detected by the Supervisory Committee
□ Applicable √ Not applicable
The Supervisory Committee raised no objections during the Reporting Period.
IX Employees of the Company as the Parent and Its Principal Subsidiaries at the Period-end(I) Employees
| Number of in-service employees of the Company as the parent | 3,987 |
| Number of in-service employees of principal subsidiaries | 8,364 |
| Total number of in-service employees | 12,351 |
| Number of retirees to whom the Company as the parent or its principal subsidiaries need to pay retirement pensions | 0 |
| Functions | |
| Function | Employees |
| Production | 7,876 |
| Sales | 1,457 |
| Technical | 1,842 |
| Financial | 163 |
| Administrative | 1,013 |
| Total | 12,351 |
| Educational background | |
| Educational background | Employees |
| Bachelor’s degree and above | 2,113 |
| Junior college | 2,076 |
| Technical secondary school and below | 8,162 |
| Total | 12,351 |
(II) Remuneration policy
√ Applicable □ Not applicable
The Company further improved its remuneration management and incentive mechanism by revisingthe management system related to remuneration and benefits to establish remuneration guide lines for alllevels and categories of employees, thus enhancing the competitiveness of employee remunerations with
changes in the labor market taken into account. Following the establishment of the Company's new jobgrade system, the welfare and incentive system for marketing staff was continuously improved. TheCompany conducted comprehensive and objective appraisals of employees from dimensions such ascompany operating performance, job value, personal performance and personal ability, and continued toimprove the performance-oriented system of assessment, training, promotion and incentive, fullymobilizing the creativity and enthusiasm of employees and promoting the Company's performancegrowth and personal career development while improving the remuneration and benefits.
(III)Training plans
√ Applicable □ Not applicable
The Company takes the needs of strategic development as the input for learning and development,and is committed to the training of its cadre team and expert team. It continuously cultivates and buildsoutstanding talents to help achieve the strategic goals of the Company. Adhering to the learning conceptof "combination of training and practice, with a focus on practice and supplemented by training", theCompany adopts the "721" talent training principle to systematically train talent in a stratified andgraded manner with the two-wheel drive of "BBS capacity" and "leadership development", so as tocomprehensively build a Gongniu talent team in line with the Company's cultural values and abilityrequirements. So far, it has successfully developed a series of Gongniu leadership training programmesto promote the leadership training of managers at all levels and their successors. Taking competencymodel as the standard, the Company has carried out professional and general competence training,pushed forward the building of an expert team, and developed an autonomous and shared learningatmosphere in an all-round way based on the Gongniu online learning platform.
(IV) Labor outsourcing
□ Applicable √ Not applicable
X Dividend Payouts(I) Formulation, execution and adjustments of the cash dividend policy
√ Applicable □ Not applicable
1. The cash dividend policy
The Articles of Association clarifies the decision-making procedures and mechanism for profitdistribution, the principles of profit distribution, the conditions and proportion of cash dividends, etc.,ensuring the transparency and operability of cash dividends to effectively safeguard the legitimate rightsand interests of small and medium shareholders and investors. The Company's profit distribution plan isstrictly implemented in accordance with the provisions of the Articles of Association and the resolutionsof the Company's General Meeting of Shareholders.
The Company will implement sustaining and stable profit distribution methods in line with theprovisions of the Articles of Association. The Company may distribute dividends by means of cash,stocks, a combination of cash and stocks, or other means permitted by laws and regulations.
Among the profit distribution methods, the Company gives priority to cash dividends over stockdividends; if the Company adopts stock dividends for profit distribution, it shall have taken into accountfactors such as its growth and stock liquidity.Description of dividends in the Articles of Association: The Board of Directors of the Companyshall comprehensively consider factors such as the Company's industry characteristics, developmentphase, business model, profitability, and whether there are arrangements for major capital expenditures,distinguish the following circumstances, and propose differentiated cash dividend policies according tothe procedures set forth in the Articles of Association:
(1) If the Company is in the phase of mature development and there is no arrangement for majorcapital expenditures, cash dividends shall account for at least 80% in the profit distribution;
(2) If the Company is in the phase of mature development and there are arrangements for majorcapital expenditures, cash dividends shall account for at least 40% in the profit distribution;
(3) If the Company is in the growth period and there are arrangements for major capitalexpenditures, cash dividends shall account for at least 20% in the profit distribution; where it is difficultto distinguish the Company's development phase but there are arrangements for major capitalexpenditures, it may be handled in accordance with the provisions of the preceding paragraph.
2. Cash dividend payouts during the Reporting Period
As approved at the 2021 Annual General Meeting of Shareholders on 5 May 2022, the 2021 finaldividend payout was carried out. Based on the total share capital of 601,180,520 shares at the record dateof the dividend payout (i.e. 18 May 2022), the Company paid out a cash dividend of RMB2.40 (taxinclusive) per share to its shareholders. The total amount of the cash dividend payout wasRMB1,442,833,248.00 (tax inclusive), accounting for 51.89% of the net profit attributable to theCompany’s shareholders during 2021. The dividend payout was completed on 19 May 2022.
(II) Special statement on the cash dividend policy
√ Applicable □ Not applicable
| In compliance with the Company’s Articles of Association or the relevant resolutions of general meeting of shareholders | √ Yes □ No |
| Specific and clear dividend standards and ratios | √ Yes □ No |
| Complete decision-making procedure and mechanism | √ Yes □ No |
| Independent directors have faithfully performed their duties and played their due role | √ Yes □ No |
| Non-controlling shareholders are able to fully express their opinion and demand and their legal rights and interests are fully protected | √ Yes □ No |
(III) Where the Company fails to put forward a cash dividend proposal despite the facts that theCompany has made profits in the Reporting Period and the profits of the Company as the parentdistributable to shareholders are positive, it shall give a detailed explanation of why, as well as ofthe purpose and use plan for the retained earnings.
□ Applicable √ Not applicable
(IV) Final dividend plan for the Reporting Period
√ Applicable □ Not applicable
Unit: RMB
| Bonus issue from profit (share/10 shares) | / |
| Cash dividend/10 shares (tax inclusive) | 33 |
| Bonus issue from capital reserves (share/10 shares) | 4.8 |
| Cash dividends (tax inclusive) | 1,983,555,895.20 |
| Consolidated net profit attributable to the ordinary shareholders of the listed company in the year | 3,188,619,359.56 |
| Cash dividends as % of consolidated net profit attributable to the ordinary shareholders of the listed company | 62.21 |
| Cash dividends in form of share repurchase in cash | 215,219,556.49 |
| Total dividend amount (tax inclusive) | 2,198,775,451.69 |
| Total dividend amount as % of consolidated net profit attributable to the ordinary shareholders of the listed company | 68.96 |
XI Status and Impact of Share Incentive Plans, Employee Shareholding Plan or Other IncentiveMeasures for Employees(I)Relevant incentive matters disclosed in current announcement with no subsequent progress orchange
√ Applicable □ Not applicable
| Overview | Index to the disclosed information |
| To further establish and improve its long-term incentive mechanisms to attract and retain outstanding talent, the Company formulated the 2022 Restricted Share Incentive Plan (Draft) of Gongniu Group and its summary, completed the registration of the grant of the 2022 Restricted Share Incentive Plan on 21 June 2022, and granted a total of 1,501,800 restricted shares to 646 people at a price of RMB63.06/share. | For details, please refer to the following announcements disclosed on the website of the Shanghai Stock Exchange (www.sse.com.cn): The 2022 Restricted Share Incentive Plan (Draft) of Gongniu Group; The Announcement on Adjusting the List of Awardees, the Number of Grants and the Grant Price of the Restricted Share Incentive Plan in 2022 (Announcement No.: 2022-057); and The Announcement on the Grant Results of the 2022 Restricted Share Incentive Plan (Announcement No.: 2022-071) |
| According to the provisions of the 2020 Restricted Share Incentive Plan of Gongniu Group Co., Ltd. and 2021 Restricted Share Incentive Plan of Gongniu Group Co., Ltd., some awardees have lost the incentive qualification of the Incentive Plan due to their departure from the Company, and the Company completed the repurchase and cancellation of 28,100 restricted shares held by them which had been granted but not lifted from restricted sales on 29 July 2022. | For details, please refer to the following announcements disclosed on the website of the Shanghai Stock Exchange (www.sse.com.cn): The Announcement on the Repurchase and Cancellation of Some Restricted Shares (Announcement No.: 2022-042); The Announcement on Notifying Creditors of the Repurchase and Cancellation of Some Restricted Shares (Announcement No.: 2022-043); The Announcement on Adjusting the Repurchase Price for the 2020 Restricted Share Incentive Plan (Announcement No.: 2022-055); The Announcement on Adjusting the Repurchase Price for the 2021Restricted Share Incentive Plan (Announcement No.: 2022-056); and The Announcement of Gongniu Group on the Implementation of the Repurchase and Cancellation of Some Restricted Incentive Shares (Announcement No.: 2022-080) |
| According to the relevant provisions of the 2021 Restricted Share Incentive Plan, the lifting of the restriction conditions in the second lifting restriction period of the 2020 Restricted Share Incentive Plan has been achieved, and a total of 152,190 shares held by 367 awardees have met the conditions for lifting the sale restrictions, which were unlocked and listed on 6 July 2022. | For details, please refer to the following announcements disclosed on the website of the Shanghai Stock Exchange (www.sse.com.cn): The Announcement on Satisfaction of the Conditions for Lifting Restriction in the Second Lifting Restriction Period of the 2020 Restricted Share Incentive Plan (Announcement No.: 2022-067); and The Announcement on Lifting the Restriction Conditions in the Second Lifting Restriction Period of the 2020 Restricted Share Incentive Plan and Trading in the Market (Announcement No.: 2022-073) |
| According to the relevant provisions of the 2021 Restricted Share Incentive Plan, the lifting of the restriction conditions in the first lifting restriction period of the 2021 Restricted Share Incentive Plan has been achieved, and a total of 251,680 held by 486 awardees have met the conditions for lifting the sale restrictions, which were unlocked and listed on 15 July 2022. | For details, please refer to the following announcements disclosed on the website of the Shanghai Stock Exchange (www.sse.com.cn): The Announcement on Satisfaction of the Conditions for Lifting Restriction in the First Lifting Restriction Period of the 2021 Restricted Share Incentive Plan (Announcement No.: 2022-068); and The Announcement on Lifting the Restriction Conditions in the First Lifting Restriction Period of the 2021 Restricted Share Incentive Plan and Trading in the Market (Announcement No.: 2022-077) |
| According to the relevant provisions of the 2020 Restricted Share Incentive Plan, 2021 Restricted Share Incentive Plan and 2022 Restricted Share Incentive Plan, 31 awardees have lost the incentive qualification of the Incentive Plan due to their departure from the Company, and the Company completed the repurchase and cancellation of 74,830 restricted shares held by them which had been granted but not lifted from restricted sales on 23 December 2022. | For details, please refer to the following announcements disclosed on the website of the Shanghai Stock Exchange (www.sse.com.cn): The Announcement on the Repurchase and Cancellation of Some Restricted Shares (Announcement No.: 2022-104); The Announcement on Notifying Creditors of the Repurchase and Cancellation of Some Restricted Shares (Announcement No.: 2022-105); and The Announcement of Gongniu Group on the Implementation of the Repurchase and Cancellation of Some Restricted Incentive Shares (Announcement No.: 2022-121) |
(II) Incentive Plans undisclosed in current announcements or disclosed but with new progressEquity Incentive Plans:
□ Applicable √ Not applicable
Other information:
□ Applicable √ Not applicable
Employee stock ownership plans:
□ Applicable √ Not applicable
Other incentive measures:
□ Applicable √ Not applicable
(III) Equity incentives granted to directors and senior management during the Reporting Period
√ Applicable □ Not applicable
Unit: share
| Name | Office title | Restricted shares held at the period-begin | Restricted shares granted in the Reporting Period | Grant price (RMB) | Unlocked shares | Shares still in lockup | Restricted shares held at the period-end | Closing market price (RMB) |
| Cai Yingfeng | Director and Vice President | 25,300 | 18,500 | 63.06 | 13,870 | 29,930 | 29,930 | 143.26 |
| Liu Shengsong | Director, Vice President and Board Secretary | 18,800 | 23,600 | 63.06 | 13,160 | 29,240 | 29,240 | 143.26 |
| Zhou Zhenghua | Director and Vice President | 13,100 | 29,500 | 63.06 | 9,170 | 33,430 | 33,430 | 143.26 |
| Li Guoqiang | Vice President | 24,400 | 19,800 | 63.06 | 13,900 | 30,300 | 30,300 | 143.26 |
| Zhang Lina | Vice President and CFO | 7,500 | 14,100 | 63.06 | 5,250 | 16,350 | 16,350 | 143.26 |
| Total | / | 89,100 | 105,500 | / | 55,350 | 139,250 | 139,250 | / |
(IV) Establishment and formulation of appraisal and incentive mechanisms for seniormanagement during the Reporting Period
√ Applicable □ Not applicable
The remuneration of the senior management personnel of the Company is implemented based onthe actual operations and the relevant rules of the Company.
XII Development and implementation of internal control systems during the Reporting Period
√ Applicable □ Not applicable
In strict compliance with the Company Law, Securities Law, Code of Corporate Governance forListed Companies, Guidelines for Evaluation of Enterprise Internal Control and other relevant laws andregulations, the Company continuously establishes and improves its internal control system andenhances the level of internal control management. During the Reporting Period, in order to furtherpromote the standardized operation of the Company, the Audit Committee under the Board of Directorswas renamed the Audit and Risk Committee with more responsibilities, and the Specific ImplementationRules for the Audit and Risk Committee was amended accordingly. And the Audit and RiskManagement Joint Office has been established to further strengthen internal control.
Explanation of material weaknesses in internal control during the Reporting Period:
□ Applicable √ Not applicable
XIII Management and control over subsidiaries during the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period, the Company strictly followed the requirements of the ShanghaiStock Exchange and various rules and regulations of the Board of Directors of the Company to regulatethe management and risk control of subsidiaries. Subsidiaries reported significant information such asoperations to the Company, and there were no undisclosed matters that should have been disclosed.
XIV Independent auditor’s report on internal control
√ Applicable □ Not applicable
Upon its audit on the effectiveness of the Company’s internal control over financial reporting for2022, Pan-China Certified Public Accountants LLP is of the opinion that the Company maintained, in allmaterial respects, effective internal control over financial reporting as of 31 December 2022, based onthe Basic Rules on Enterprise Internal Control and other applicable regulations. For further information,see the Independent Auditor’s Report on Internal Control for 2022, which has been disclosed togetherwith this Report on the website of the Shanghai Stock Exchange (www.sse.com.cn).
Whether the Independent Auditor’s Report on Internal Control is disclosed: YesType of the independent auditor’s opinion: Unmodified unqualified opinion
XV Remediation of problems identified by self-inspection in the special action on the governanceof the CompanyNot applicable
XVI Other information
□ Applicable √ Not applicable
Part V Environmental and Social Responsibility
I Environmental information
| Whether any environment protecting mechanism has been established | Yes |
| Spending on environmental protection during the Reporting Period (unit: RMB’0,000) | 960.50 |
(I) Description of the environmental protection of the company and its major subsidiaries that arekey emission units as declared by the environmental protection authorities
√ Applicable □ Not applicable
1. Discharge information
√ Applicable □ Not applicable
Ningbo Gongniu Electrics Co., Ltd. is a key unit supervised for soil environmental pollution inNingbo, with a commissioned disposal volume of 530 tons of hazardous waste in 2022. The company'shazardous waste disposal is in compliance with relevant regulations and administrative plans.During the Reporting Period, the Company discharged in strict accordance with the requirements ofthe implemented pollutant discharge standards, with no environmental pollution incidents and nopenalties imposed by the environmental protection authorities. None of the Company's units, other thanNingbo Gongniu Electrics Co., Ltd., is a key emission unit as declared by the environmental protectionauthorities.
2. Construction and operation of pollution control facilities
√ Applicable □ Not applicable
As a state-level Green Factory, Ningbo Gongniu Electrics Co., Ltd. actively implements the greendevelopment strategy, practices the concept of green, low-carbon and ecological development, increasesinvestment in safety and environmental protection, applies green technologies of green, energyconservation, environmental protection and resource reuse, promotes innovation and transformation inmanufacturing processes and business procedures, reduces wastewater, waste gas emissions and noisepollution, vigorously carries out energy-saving technology reform and eliminates backward equipmentwith high energy consumption, and continuously develops a green manufacturing system.
In 2022, the Company spent a total of RMB9.605 million in operation costs of environmentalprotection equipment, and the majority of the waste gas pollution treatment facilities have beenupgraded to the international advanced “zeolite rotary adsorption + RTO combustion” technology,with the treatment effect of VOC reduced to 30mg/m3 and below. In addition, an online monitoringsystem has been put in place to monitor the exhaust gas emissions in real time, and monitor the pollutantdata in real time to make sure that the exhaust gas emissions meet the applicable standards andregulations at all time.
3. Assessment of the environmental impact of construction projects and other administrativelicenses of environmental protection
√ Applicable □ Not applicable
All the Company's construction projects have fulfilled the environmental impact evaluation andother environmental protection administrative licensing procedures in accordance with the requirementsof national environmental protection laws and regulations.
4. Contingency plan for environmental emergencies
√ Applicable □ Not applicable
The Company has established an effective emergency response mechanism for environmentalemergencies, and the chemical intermediate warehouse of each base and each plant involving hazardouswaste and hazardous chemicals rehearse the contingency plan at least twice a year. In order to improvethe corporate ability to respond to environmental pollution accidents, the Company formulated theContingency Plan of Ningbo Gongniu Electrics Co., Ltd. for Environmental Emergencies (File No.330282-2018-001-L) in accordance with relevant legal provisions such as the requirements of theEnvironmental Protection Law of the People's Republic of China and based on the actual situation.
5. Environmental self-monitoring plan
√ Applicable □ Not applicable
In accordance with the pollutant discharge permits and the requirements of self-monitoring ofenvironmental protection, the Company has formulated the Management System for Self-monitoring ofPollution Sources and regularly carries out self-monitoring work. In 2022, it commissioned qualifiedthird-party testing units to orderly carry out tests on spraying exhaust gas, noise at the factory boundary,domestic sewage, etc., and made sure that the test reports issued were all valid.
6. Administrative penalties imposed for environmental issues during the Reporting Period
□ Applicable √ Not applicable
7. Other environmental information that should be disclosed
√ Applicable □ Not applicable
Ningbo Gongniu Electrics Co., Ltd. is among the first batch of Ningbo 2022 positive list ofenterprises for ecological and environmental supervision and enforcement. Also, the company was ratedA in the environmental credit evaluation of enterprises in Zhejiang Province in 2022.
(II) Environmental protection of companies other than key emission units
√ Applicable □ Not applicable
1. Administrative penalties for environmental problems
□ Applicable √ Not applicable
2. Other environmental information disclosed with reference to key emission units
√ Applicable □ Not applicable
Except for Ningbo Gongniu Electrics Co., Ltd., all other units of the Group are not key emissionunits and have strictly implemented relevant laws and regulations on environmental protection, installedadditional environmental protection equipment for processes that generate environmental pollution inaccordance with the requirements of the environmental credit evaluation, which passed the acceptanceand met the discharge standards. All three wastes were discharged in accordance with the standard.There was no environmental pollution accident and no punishment by the environmental protectionauthorities, and all the units were rated A in the environmental credit evaluation of enterprises inZhejiang Province. In particular, Ningbo Gongniu Photoelectric Technology Co., Ltd. is among the firstbatch of Ningbo 2022 positive list of enterprises for ecological and environmental supervision andenforcement.
3. Reasons for not disclosing other environmental information
□ Applicable √ Not applicable
(III) Efforts and results in ecological protection, pollution prevention and environmentalresponsibility performance
√ Applicable □ Not applicable
To strengthen the awareness of environmental protection among employees, the Companyorganized a photographic event at the World Environment Day on 5 June 2022. Promotional photos andvideos were taken on themes such as low carbon living and green factories, and winning works wereexhibited to motivate employees.
The Company has strengthened the environmental management on the spraying lines with theinternationally advanced “zeolite rotary adsorption + RTO combustion” technologies. Theenvironmental protection equipment operated in an efficient manner during the Reporting Period, withthe VOC removal rate reaching over 95%.
Meanwhile, the spraying plants have increased research into source substitution - water-basedpaints instead of oil-based paints - during the Reporting Period. The substantial investment is expectedto produce results by 2023. Adhering to its business philosophy of "Strive for No. 1" in everything itdoes, the Company is committed to environmental responsibility.
In order to practice a circular economy and make effective use of resources, the molding plantshave set up a recycling mechanism for plastic pellets.
(IV) Measures taken to reduce carbon emissions during the Reporting Period and their effects
| Whether any measure was taken to reduce carbon emissions | Yes |
| Emissions of CO2 equivalent reduced (unit: ton) | Not applicable |
| Type of carbon reduction measures (for example, use of clean energy in power generation, use of carbon reducing technologies in production processes, development and production of novel | During the Reporting Period, the Company actively enhanced the management and conservation of energy resources and took necessary measures, including vigorously increasing the proportion of clean energy use such as photovoltaic, with a total of 5.94 million kilowatt |
| products that can help reduce carbon emissions, etc.) | hours of photovoltaic power use; strengthening the energy consumption management of equipment and the conservation management of water resources; promoting green office and issuing office rules, etc. Meanwhile, the Company is vigorously developing its new energy business and has launched various products such as new energy vehicle charging plugs/points and portable products to actively contribute to the national strategy of "carbon peaking and carbon neutrality". |
Detailed description:
√ Applicable □ Not applicable
For details, please refer to the 2022 Environmental, Social and Governance Report of GongniuGroup Co., Ltd. published by the Company on the website of the Shanghai Stock Exchange(www.sse.com.cn).
II Fulfillment of Social Responsibility(I) Indicate whether a separate social responsibility report, sustainability report or ESG report hasbeen disclosed.
√ Applicable □ Not applicable
For details, please refer to the 2022 Environmental, Social and Governance Report of GongniuGroup Co., Ltd. published by the Company on the website of the Shanghai Stock Exchange(www.sse.com.cn).
(II) Specific efforts in relation to social responsibility
√ Applicable □ Not applicable
| Donations and public welfare programs | Number/content | Description |
| Total spending (RMB’0,000) | 6,250 | |
| Of which: Funds (RMB’0,000) | 6,224 | Gongniu Group Charitable Trust, Medical and Health Fund, etc. |
| Worth of supplies (RMB’0,000) | 26 | Pandemic prevention and control |
| Number of beneficiaries |
Detailed description:
√ Applicable □ Not applicable
For details, please refer to the 2022 Environmental, Social and Governance Report of GongniuGroup Co., Ltd. published by the Company on the website of the Shanghai Stock Exchange(www.sse.com.cn).
III Efforts in Poverty Alleviation, Rural Revitalization, etc
□ Applicable √ Not applicable
Detailed description:
□ Applicable √ Not applicable
Part VI Significant EventsI Fulfillment of Commitments(I) Commitments of the Company's actual controller, shareholders, related parties and acquirers, as well as the Company and other entities during theReporting Period or commitments continuing to the Reporting Period
√ Applicable □ Not applicable
| Commitment background | Commitment category | Promisor | Commitment contents | Time of commitment making and term | Whether there is a deadline for performance | Whether it is timely and strictly performed | If it is not timely performed, the specific reasons shall be stated | If it is not timely performed, the plan for the next step shall be stated |
| Commitments related to IPO | Restricted share sales | Liangji Industrial, Ninghui Investment, Suiyuan Investment | Within 36 months from the date of listing of the Company's shares, the promisor will not transfer or entrust others to manage the shares he/she directly or indirectly holds in the Company which were issued before the IPO, nor will the Company repurchase such shares. If the shares held by the promisor are reduced within two years after the expiry of the lock-up period, the price of such reduction shall not be lower than the issue price of the IPO (if the Company's shares are subject to ex-rights and ex-dividend matters such as dividend distribution, share bonus and capital reserves to share capital, the issue price will be adjusted ex-rights and ex-dividend, the same below); if the closing price of the Company's shares for 20 consecutive trading days is lower than the issue price within six months after the listing of the Company, or the closing price at the end of six months after | Within 36 months from the date of listing of the Company's shares | Yes | Yes | Not applicable | Not applicable |
| the listing is lower than the issue price, the lock-up period for holding the Company's shares will be automatically extended for at least six months. | |||||||
| Restricted share sales | Qiyuanbao | Within 36 months from the date of listing of the Company's shares, the promisor will not transfer or entrust others to manage the shares he/she directly or indirectly holds in the Company which were issued before the IPO, nor will the Company repurchase such shares. | Within 36 months from the date of listing of the Company's shares | Yes | Yes | Not applicable | Not applicable |
| Restricted share sales | Ruan Liping, Ruan Xueping, Cai Yingfeng, Liu Shengsong, Zhou Zhenghua, Li Guoqiang, Zhang Lina | Within 36 months from the date of listing of the Company's shares, the promisor will not transfer or entrust others to manage the shares he/she directly or indirectly holds in the Company which were issued before the IPO, nor will the Company repurchase such shares. If the Company's shares directly or indirectly held by the promisor are reduced within two years after the expiry of the lock-up period, the price of such reduction shall not be lower than the issue price (if the Company's shares are subject to ex-rights and ex-dividend matters such as dividend distribution, share bonus and capital reserves to share capital, the issue price will be adjusted ex-rights and ex-dividend, the same below); if the closing price of the Company's shares for 20 consecutive trading days is lower than the issue price within six months after the listing of the Company, or the closing price at the end of six months after the listing is lower than the issue price, the lock-up period for holding the Company's shares will be automatically extended for at least six months. | Within 36 months from the date of listing of the Company's shares | Yes | Yes | Not applicable | Not applicable |
| After the expiry of the above-mentioned commitment lock-up period, during my term of office as a director, supervisor or senior management personnel of the Company, if I leave the Company before the expiry of my term of office, during the term of office determined at the time of my assumption of office and within six months after the expiry of my term of office: 1) I will transfer no more than 25% of the total number of shares of the Company held directly or indirectly by me each year; 2) I will not transfer the shares of the Company held directly or indirectly by me within six months after leaving the Company; 3) (iii) I will comply with laws, administrative regulations, departmental rules and regulations, regulatory documents and other regulations for the transfer of shares by directors, supervisors and senior management personnel of the business rules of the stock exchange. | |||||||
| Restricted share sales | Shen Huiyuan, Guan Xuejun, Li Yu | Within 36 months from the date of listing of the Company's shares, the promisor will not transfer or entrust others to manage the shares he/she directly or indirectly holds in the Company which were issued before the IPO, nor will the Company repurchase such shares. After the expiry of the above-mentioned commitment lock-up period, during my term of office as a director, supervisor or senior management personnel of the Company, if I leave the Company before the expiry of my term of office, during the term of office determined at the time of my assumption of office and within six months after the expiry | Within 36 months from the date of listing of the Company's shares | Yes | Yes | Not applicable | Not applicable |
| of my term of office: 1) I will transfer no more than 25% of the total number of shares of the Company held directly or indirectly by me each year; 2) I will not transfer the shares of the Company held directly or indirectly by me within six months after leaving the Company; 3) (iii) I will comply with laws, administrative regulations, departmental rules and regulations, regulatory documents and other regulations for the transfer of shares by directors, supervisors and senior management personnel of the business rules of the stock exchange. | |||||||
| Other | Gongniu Group | 1. Specific conditions for initiating the stock price stabilisation measures: Within three years of the Company’s IPO and listing, if the closing price of the Company's shares is lower than the latest audited net asset value per share for 20 consecutive trading days (hereinafter referred to as the "initiation condition"), the Company shall initiate the measures for stabilizing its stock prices in line with relevant provisions. In the event of changes in the Company's net assets or the total number of shares due to matters such as capitalisation from capital reserve, distribution of stock or cash dividends, follow-on offering, share allotment and stock reverse split-up after the latest audit base day, the net assets per share shall be adjusted accordingly. 2. When the initiation condition for the specific measures to stabilise stock prices is triggered, the Company shall, in accordance with laws and regulations, normative documents, and relevant plans of the Articles | Three years from the date of the Company’s IPO and listing | Yes | Yes | Not applicable | Not applicable |
| of Association, take one or more of the following measures to stabilise stock prices at the same time or in steps in the light of the actual situation of the Company and the stock market, and based on the principle of protecting the interests of the Company and investors: (1) The Company repurchases shares from the public; (2) Controlling shareholders, directors who receive remuneration from the Company (except independent directors) and senior managers increase their holdings of the Company's shares. | |||||||
| Others | Liangji Industrial | In strict accordance with the Proposal on the Stabilization of Share Price within Three Years of Listing, Ningbo Liangji Industrial Co., Ltd. will fully and effectively fulfill its obligations and responsibilities under the Proposal, and strongly urge the joint stock company and the relevant parties to fully and effectively fulfill their obligations and responsibilities under the Proposal. When the General Meeting of the Company resolves on the repurchase of shares in accordance with the provisions of the Proposal, Ningbo Liangji Industrial Co., Ltd. undertakes to vote in favor of the proposal on the repurchase at the General Meeting. | Three years from the date of the Company’s IPO and listing | Yes | Yes | Not applicable | Not applicable |
| Others | Ruan Liping, Ruan Xueping | In strict accordance with the Proposal on the Stabilization of Share Price within Three Years of Listing, I will fully and effectively fulfill its obligations and responsibilities under the Proposal, and strongly urge the company and the relevant parties to fully and effectively fulfill the obligations and responsibilities | Three years from the date of the Company’s IPO and listing | Yes | Yes | Not applicable | Not applicable |
| under the Proposal. When the General Meeting of the Company resolves on the repurchase of shares in accordance with the provisions of the Proposal, I undertake that I and those acting in concert will vote in favor of the proposal on the repurchase at the General Meeting. | |||||||
| Others | Senior management of the Company | In strict accordance with the Proposal on the Stabilization of Share Price within Three Years of Listing, I will fully and effectively fulfill its obligations and responsibilities under the Proposal, and strongly urge the company and the relevant parties to fully and effectively fulfill the obligations and responsibilities under the Proposal. | Three years from the date of the Company’s IPO and listing | Yes | Yes | Not applicable | Not applicable |
| Others | Liangji Industrial, Ruan Liping, and Ruan Xueping | 1. No reduction of the Company's shares will be performed within 36 months after the Company's shares are listed. 2. The methods of shareholding reduction include but are not limited to call auction on exchanges, block trade, and negotiating transfer. 3. When reducing shareholdings, information such as the amount and method of reduction shall be notified to the Company in writing in advance, and the Company shall make an announcement in a timely manner. Shareholding reduction shall be performed after three trading days from the date of the Company's announcement. | Three years from the date of the Company’s IPO and listing | Yes | Yes | Not applicable | Not applicable |
| Settlement of horizontal competition | Liangji Industrial | (1) The company and companies or other organizations controlled by the company are not engaged in the same or similar business as the issuer and its subsidiaries, with no horizontal competition. (2) The company and companies or other organizations controlled | Not applicable | No | Yes | Not applicable | Not applicable |
| of the issuer and its subsidiaries are damaged due to a breach of the above statements and commitments by the company and companies or other organizations controlled by the company, the company agrees to be liable to the issuer and its subsidiaries for the corresponding damages. | |||||||
| Settlement of horizontal competition | Ruan Liping, Ruan Xueping | (1) I and companies or other organizations controlled by me are not engaged in the same or similar business as the issuer and its subsidiaries, with no horizontal competition. (2) I and companies or other organizations controlled by me will not engage in the same or similar business as the existing business of the issuer and its subsidiaries in any form outside China, including not investing in, acquiring or merging with companies or other economic organizations outside China that compete with the existing principal business of the issuer and its subsidiaries. (3) If the issuer and its subsidiaries engage in new business in the future, I and companies or other organizations controlled by me will not engage in business activities in direct competition with the new business of the issuer and its subsidiaries by share holding or participating in but having substantial control over the shares of the issuer and its subsidiaries within or outside China, including investing in, acquiring or merging with companies or other economic organizations within or outside China that directly compete with the new business of the issuer and its subsidiaries in the future. (4) If I and legal entities controlled by me have business | Not applicable | No | No | Not applicable | Not applicable |
| operations in direct competition with the issuer and its subsidiaries, the issuer and its subsidiaries shall have the right to centralize the competing businesses to the operations of the issuer and its subsidiaries through preferential acquisition or entrustment. (5) I undertake not to use its position as a shareholder of the issuer and its subsidiaries to seek improper benefits and thereby harm the rights and interests of other shareholders of the issuer and its subsidiaries. If the rights and interests of the issuer and its subsidiaries are damaged due to a breach of the above statements and commitments by me and companies or other organizations controlled by me, I agree to be liable to the issuer and its subsidiaries for the corresponding damages. | |||||||
| Settlement of related-party transactions | Liangji Industrial | The company will minimize and standardize the related-party transactions with Gongniu Group Co., Ltd. and its wholly-owned or controlled subsidiaries. For related-party transactions that are inevitable or occur for reasonable reasons, the company will strictly comply with the provisions of relevant laws, regulations and the Articles of Association of the company, follow the principles of equitable, remunerative and fair transactions, perform legal procedures, and determine the transaction prices in accordance with reasonable prices recognized by the market to ensure the fairness of the related-party transactions. The company will not leverage its shareholder status to induce the General Meeting or the Board of Directors of the Company to make resolutions that infringe | Not applicable | No | Yes | Not applicable | Not applicable |
| upon the legitimate rights and interests of the Company and other shareholders. In operating decisions, the company will strictly follow the relevant provisions of the Company Law and the Articles of Association to implement the avoidance system of related shareholders to safeguard the legitimate rights and interests of all shareholders. | ||||||||
| Settlement of related-party transactions | Ruan Liping, Ruan Xueping | I will minimize and standardize the related-party transactions with Gongniu Group Co., Ltd. and its wholly-owned or controlled subsidiaries. For related-party transactions that are inevitable or occur for reasonable reasons, I will strictly comply with the provisions of relevant laws, regulations and the Articles of Association of the company, follow the principles of equitable, remunerative and fair transactions, perform legal procedures, and determine the transaction prices in accordance with reasonable prices recognized by the market to ensure the fairness of the related-party transactions. I will not leverage its shareholder status to induce the General Meeting or the Board of Directors of the Company to make resolutions that infringe upon the legitimate rights and interests of the Company and other shareholders. In operating decisions, I will strictly follow the relevant provisions of the Company Law and the Articles of Association to implement the avoidance system of related shareholders to safeguard the legitimate rights and interests of all shareholders. | Not applicable | No | Yes | Not applicable | Not applicable | |
| Commitments related to | Others | Gongniu Group | The Company will not provide loans and any other forms of financial assistance, including | Not applicable | No | Yes | Not applicable | Not applicable |
| equity incentives | provision of guarantees for loans, to the awardees of the Restricted Share Incentive Plan for acquiring the relevant restricted shares under the Incentive Plan. | |||||||
| Others | Awardees of restricted share Incentive Plans | If the Company is not eligible for the grant of equity or exercise of equity arrangement due to a false record, misleading statement or material omission in the information disclosure document, the awardee shall return to the Company all the benefits received from the share Incentive Plan after the false record, misleading statement or material omission are confirmed in relevant information disclosure documents. | Not applicable | No | Yes | Not applicable | Not applicable |
(II) Where there had been an earnings forecast for an asset or project and the Reporting Periodwas still within the forecast period, explain why the forecast has or has not been reached for theReporting Period.
□ Forecast reached □ Forecast unreached √ Not applicable
(III) Fulfillment of performance commitments and the impact on goodwill impairment tests
□ Applicable √ Not applicable
II Occupation of the Company’s Capital by the Controlling Shareholder or Other Related Partiesfor Non-Operating Purposes during the Reporting Period
□ Applicable √ Not applicable
III Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
IV Explanation Given by the Board of Directors Regarding “Independent Auditor’s Report withModified Opinion”
□ Applicable √ Not applicable
V Reasons for Accounting Policy or Estimate Changes or Correction of Material AccountingErrors and the Impact(I) Reasons for accounting policy or estimate changes and the impact
√ Applicable □ Not applicable
For details, see “44. Changes to critical accounting policies and estimates” under “V CriticalAccounting Policies and Estimates” of “Part X Financial Statements”.
(II) Reasons for correction of material accounting errors and the impact
□ Applicable √ Not applicable
(III) Communications with the former CPA firm
□ Applicable √ Not applicable
(IV) Other information
□ Applicable √ Not applicable
VI Appointment and Dismissal of CPA Firm
Unit: RMB’0,000
| In service | |
| Name of the domestic CPA firm | Pan-China Certified Public Accountants LLP |
| The Company’s payment to the domestic CPA firm | 278 |
| How many years the domestic CPA firm has provided audit service for the Company | 10 |
| Name of certified public accountants of the domestic CPA firm | Qian Zhongxian, and Liu Chong |
| How many consecutive years the certified public accountants of the domestic CPA firm have provided audit service for the Company | Qian Zhongxian: 2 years Liu Chong: 1 year |
| Name | Payment | |
| CPA firm for the audit of internal control | Pan-China Certified Public Accountants LLP | 50 |
Note: The audit fees of the Company for the year 2022 amounted to RMB2,780,000, of which theaudit fee for the financial statements of the Company for the year 2022 amounted to RMB2,180,000, theinternal control audit fee amounted to RMB500,000 and the raised funds authentification fee amountedto RMB100,000.
Appointment and dismissal of CPA firm:
√ Applicable □ Not applicable
As resolved by the 2021 Annual General Meeting of Shareholders, the Company decided tore-appoint Pan-China Certified Public Accountants LLP as the independent auditor for the financialstatements and internal control of 2022.
Change of the CPA firm during the audit:
□ Applicable √ Not applicable
VII Delisting Risk(I) Reasons for the delisting risk warning
□ Applicable √ Not applicable
(II) The Company’s response
□ Applicable √ Not applicable
(III) Risk of termination of listing and the reasons
□ Applicable √ Not applicable
VIII Insolvency and Reorganization
□ Applicable √ Not applicable
IX Significant Legal Matters
□ The Company has material litigation and arbitration this year
√ The Company has no material litigation and arbitration this year
X Punishments on the Company as well as Its Directors, Supervisors, Senior Management,Controlling Shareholder and Actual Controller for Violation of Laws or Regulations, as well as theRelevant Rectifications
□ Applicable √ Not applicable
XI Credit Standings of the Company as well as Its Controlling Shareholder and Actual Controllerduring the Reporting Period
□ Applicable √ Not applicable
XII Major Related-Party Transactions(I) Continuing related-party transactions
1. Already disclosed in current announcement without new progress or changes
□ Applicable √ Not applicable
2. Disclosed in current announcement but with new progress or changes
√ Applicable □ Not applicable
The Proposal on Estimated Continuing Related-Party Transactions for 2022 was approved at theTenth Meeting of the Second Board of Directors. For details, please refer to the Announcement onEstimated Continuing Related-Party Transactions for 2022 (Announcement No. 2022-024) disclosed bythe Company on the website of the Shanghai Stock Exchange (www.sse.com.cn). For the actualexecution of the aforesaid estimated related-party transactions, see the Announcement on EstimatedContinuing Related-Party Transactions for 2023 (Announcement No. 2023-018).
3. Undisclosed in current announcement
□ Applicable √ Not applicable
(II) Related-party transactions regarding purchase or sale of assets or equity investments
1. Already disclosed in current announcement without new progress or changes
□ Applicable √ Not applicable
2. Disclosed in current announcement but with new progress or changes
□ Applicable √ Not applicable
3. Undisclosed in current announcement
□ Applicable √ Not applicable
4. Where a performance commitment is involved in such a related-party transaction, theperformance results for the Reporting Period shall be disclosed.
□ Applicable √ Not applicable
(III) Major related-party transactions regarding joint investments in third parties
1. Already disclosed in current announcement without new progress or changes
□ Applicable √ Not applicable
2. Disclosed in current announcement but with new progress or changes
□ Applicable √ Not applicable
3. Undisclosed in current announcement
□ Applicable √ Not applicable
(IV) Amounts due to and from related parties
1. Already disclosed in current announcement without new progress or changes
□ Applicable √ Not applicable
2. Disclosed in current announcement but with new progress or changes
□ Applicable √ Not applicable
3. Undisclosed in current announcement
□ Applicable √ Not applicable
(V) Financial transactions between the Company and related finance companies, or betweenfinance companies under the Company’s control and related parties
□ Applicable √ Not applicable
(VI) Other information
□ Applicable √ Not applicable
XIII Major Contracts and the Execution(I) Entrustment, Contracting and Leases
1. Entrustment
□ Applicable √ Not applicable
2. Contracting
□ Applicable √ Not applicable
3. Leases
□ Applicable √ Not applicable
(II) Guarantees
□ Applicable √ Not applicable
(III) Cash entrusted to other entities for management
1. Cash entrusted for wealth management
(1) Total cash entrusted for wealth management
√ Applicable □ Not applicable
Unit: RMB’0,000
| Type | Funding source | Amount | Undue amount | Unrecovered overdue amount |
| Bank’s financial product | Self-funded | 209,450.00 | 191,900.00 | |
| Structured deposits | Self-funded | 50,001.00 | 3,001.00 | |
| Structured deposits | Raised funds | 60,000.00 | 15,000.00 | |
| Trust product | Self-funded | 126,000.00 | 126,000.00 | |
| Securities firm’s product | Self-funded | 342,000.00 | 342,000.00 | |
| Securities firm’s product | Raised funds | 78,000.00 | 45,000.00 |
Other information
□ Applicable √ Not applicable
(2) Single Wealth Management Entrustment
□ Applicable √ Not applicable
Other information:
□ Applicable √ Not applicable
(3) Impairment allowances for wealth management entrustment
□ Applicable √ Not applicable
2. Entrustment loans
(1) Total entrustment loans
□ Applicable √ Not applicable
Other information:
□ Applicable √ Not applicable
(2) Single entrustment loans
□ Applicable √ Not applicable
Other information:
□ Applicable √ Not applicable
(3) Impairment allowances for entrustment loans
□ Applicable √ Not applicable
3. Other information
□ Applicable √ Not applicable
(IV) Other significant contracts
□ Applicable √ Not applicable
XIV Other Significant Events for Investors’ Judgment of Value and Investment Decision-making
□ Applicable √ Not applicable
Part VII Changes in Ordinary Shares and Information about Shareholders
I Share Changes(I) Share changes
1. Share changes
Unit: share
| Before | Increase/decrease in the current period (+/-) | After | |||||||
| Shares | Percentage (%) | New issue | Bonus issue from profit | Bonus issue from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| I Restricted shares | 525,579,506 | 87.42 | 995,000 | 995,000 | 526,574,506 | 87.61 | |||
| 1. Shares held by the state | |||||||||
| 2. Shares held by state-owned corporations | |||||||||
| 3. Shares held by other domestic investors | 525,579,506 | 87.42 | 995,000 | 995,000 | 526,574,506 | 87.61 | |||
| Including: Shares held by domestic corporations | 330,886,108 | 55.04 | 330,886,108 | 55.05 | |||||
| Shares held by domestic individuals | 194,693,398 | 32.38 | 995,000 | 995,000 | 195,688,398 | 32.56 | |||
| 4. Shares held by overseas investors | |||||||||
| Including: Shares held by overseas corporations | |||||||||
| Shares held by overseas individuals | |||||||||
| II Unrestricted shares | 75,601,014 | 12.58 | -1,097,930 | -1,097,930 | 74,503,084 | 12.39 | |||
| 1. RMB-denominated ordinary shares | 75,601,014 | 12.58 | -1,097,930 | -1,097,930 | 74,503,084 | 12.39 | |||
| 2. Domestically listed foreign shares | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III Total shares | 601,180,520 | 100.00 | -102,930 | -102,930 | 601,077,590 | 100.00 | |||
2. Description of changes in shares
√ Applicable □ Not applicable
(1) On 11 April 2022, the Company held the 10th meeting of the 2nd Board of Directors and the 10th meeting of the 2nd Supervisory Committee, and reviewedand approved the Proposal on the Restricted Share Incentive Plan for 2022 (Draft) and its Summary, and Proposal on the Management Measures for the Assessmentof the Restricted Share Incentive Plan for 2022. On 20 May 2022, the Company held the 12th meeting of the 2nd Board of Directors and the 12th meeting of the 2ndSupervisory Committee, and review and approved the Proposal on Adjusting the List of Awardees, the Number of Grants and the Grant Price of the Restricted ShareIncentive Plan in 2022, and Proposal on Granting Restrictive Shares to Awardees, agreeing to grant a total of 1,501,800 shares (ordinary shares repurchased by theCompany from the secondary market) to awardees. After this change, the total share capital of the Company remained unchanged, and the number of restrictedtradable shares changed from 525,579,506 to 527,081,306, while that of non-restricted tradable shares changed from 75,601,014 to 74,099,214. For details, pleaserefer to the Announcement on the Grant Results of the 2022 Restricted Share Incentive Plan (Announcement No.: 2022-071) published by the Company on thewebsite of the Shanghai Stock Exchange (www.sse.com.cn) on 23 June 2022;
(2) According to the relevant provisions, the lifting of the restriction conditions in the second lifting restriction period of the 2020 Restricted Share IncentivePlan has been achieved, and a total of 152,190 shares held by 367 awardees have met the conditions for lifting the sale restrictions. After this change, the total sharecapital of the Company remained unchanged, and the number of restricted tradable shares changed from 527,081,306 to 526,929,116, while that of non-restrictedtradable shares changed from 74,099,214 to 74,251,404. For details, please refer to the Announcement on Lifting the Restriction Conditions in the Second LiftingRestriction Period of the 2020 Restricted Share Incentive Plan and Trading in the Market (Announcement No.: 2022-073) published by the Company on the websiteof the Shanghai Stock Exchange (www.sse.com.cn) on 1 July 2022;
(3) According to the relevant provisions, the lifting of the restriction conditions in the first lifting restriction period of the 2021 Restricted Share Incentive Planhas been achieved, and a total of 251,680 shares held by 486 awardees have met the conditions for lifting the sale restrictions. After this change, the total sharecapital of the Company remained unchanged, and the number of restricted tradable shares changed from 526,929,116 to 526,677,436, while that of non-restrictedtradable shares changed from 74,251,404 to 74,503,084. For details, please refer to the Announcement on Lifting the Restriction Conditions in the First LiftingRestriction Period of the 2021 Restricted Share Incentive Plan and Trading in the Market (Announcement No.: 2022-077) published by the Company on the websiteof the Shanghai Stock Exchange (www.sse.com.cn) on 12 July 2022;
(4) As 22 awardees of the 2020 Restricted Share Incentive Plan and 2021 Restricted Share Incentive Plan have lost the incentive qualification of the IncentivePlan due to their departure from the Company, the Company repurchased and cancelled 28,100 restricted shares held by them, which had been granted but not liftedfrom restricted sales. After that, the total share capital of the Company changed from 601,180,520 to 601,152,420, and the number of restricted tradable shareschanged from 526,677,436 to 526,649,336. For details, please refer to the Announcement of Gongniu Group on the Implementation of the Repurchase andCancellation of Some Restricted Incentive Shares (Announcement No.: 2022-080) published by the Company on the website of the Shanghai Stock Exchange(www.sse.com.cn) on 27 July 2022;
(5) As 31 awardees of the 2020 Restricted Share Incentive Plan, 2021 Restricted Share Incentive Plan and 2022 Restricted Share Incentive Plan have left theCompany, the Company repurchased and cancelled 74,830 restricted shares held by them, which had been granted but not lifted from restricted sales. After that, thetotal share capital of the Company changed from 601,152,420 to 601,077,590, and the number of restricted tradable shares changed from 526,649,336 to526,574,506. For details, please refer to the Announcement of Gongniu Group on the Implementation of the Repurchase and Cancellation of Some RestrictedIncentive Shares (Announcement No.: 2022-121) published by the Company on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 21 December2022.
3. Impact of share changes on financial indicators such as earnings per share and net asset valueper share for the most recent year and the most recent period (if any)
□ Applicable √ Not applicable
4. Other information necessary to be disclosed or required to be disclosed
□ Applicable √ Not applicable
(II) Change of restricted shares
√ Applicable □ Not applicable
Unit: Share
| Name of shareholder | Opening restricted shares | Number of shares lifted from restrictions during the year | Number of new restricted shares during the year | Shares repurchased and retired | Closing restricted shares | Reasons for restricted sales | Date of unlocking |
| Awardees of the 2020 Equity Incentive Plan | 296,600 | 152,190 | 0 | 8,610 | 135,800 | Conditions for unlocking the equity incentives are unmet | 6 July 2022 |
| Awardees of the 2021 Equity Incentive Plan | 668,400 | 251,680 | 0 | 41,920 | 374,800 | Conditions for unlocking the equity incentives are unmet | 15 July 2022 |
| Awardees of the 2022 Equity Incentive Plan | 0 | 0 | 1,501,800 | 52,400 | 1,449,400 | Conditions for unlocking the equity incentives are unmet | In lockup |
| Total | 965,000 | 403,870 | 1,501,800 | 102,930 | 1,960,000 | / | / |
II Issuance and Listing of Securities(I) Securities issued during the Reporting Period
□ Applicable √ Not applicable
Description of securities issued during the Reporting Period (for bonds with different interest rates overthe lifetime, please specify separately):
□ Applicable √ Not applicable
(II) Changes in Total Shares and Shareholder Structure, as well as in Asset and LiabilityStructures
√ Applicable □ Not applicable
For changes in the shareholder structure, see “(I) Share changes” under “I Share Changes” of “PartVII Share in Ordinary Shares and Information about Shareholders”.
For changes in asset and liabilities structures, see “(III) Analysis of assets and liabilities” under “VBusiness Overview for the Reporting Period” of “Part III Management Discussion and Analysis”.
(III) Existing staff-held shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller(I) Total number of shareholders
| Number of ordinary shareholders at the period-end | 21,987 |
| Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 18,815 |
| Number of preference shareholders with resumed voting rights at the period-end | Not applicable |
| Number of preference shareholders with resumed voting rights at the month-end prior to the disclosure of this Report | Not applicable |
(II) Top 10 shareholders and public shareholders (or unrestricted shareholders) at the period-end
Unit: share
| Top 10 shareholders | |||||||
| Full name of shareholder | Shareholding increase/decrease in the Reporting Period | Closing shareholding | Shareholding percentage (%) | Restricted shares held | Shares in pledge, marked or frozen | Nature of shareholder | |
| Status | Shares | ||||||
| Ningbo Liangji Industrial Co., Ltd. | 0 | 324,000,000 | 53.90 | 324,000,000 | N/A | Domestic non-state-owned corporation | |
| Ruan Liping | 0 | 96,864,199 | 16.12 | 96,864,199 | N/A | Domestic individual | |
| Ruan Xueping | 0 | 96,864,199 | 16.12 | 96,864,199 | N/A | Domestic individual | |
| Hong Kong Securities Clearing Company Limited | -5,122,251 | 8,920,301 | 1.48 | 0 | N/A | Other | |
| Ningbo Ninghui Investment Management Partnership (Limited Partnership) | 0 | 4,072,954 | 0.68 | 4,072,954 | N/A | Other | |
| China Merchants Bank Co., Ltd.－Xingquan Herun Mixed Securities Investment Fund | 478,840 | 3,949,515 | 0.66 | 0 | N/A | Other | |
| China Merchants Bank Co., Ltd.－Xingquan Heyi Dynamic Asset Allocation Mixed Securities Investment Fund (LOF) | 0 | 2,600,615 | 0.43 | 0 | N/A | Other | |
| Schroder Investment Management (Hong Kong) Limited－Schroder International Selection Fund -Emerging Asia (ETF) | 0 | 2,465,095 | 0.41 | 0 | N/A | Other | |
| Industrial Bank Co., Ltd.－Xingquan New View Dynamic Asset Allocation Regularly Open-ended Mixed Initiated Securities Investment Fund | 9,731 | 1,878,106 | 0.31 | 0 | N/A | Other |
| China Everbright Bank Company Limited－Xingquan Business Model Selected Mixed Securities Investment Fund (LOF) | 305,207 | 1,819,850 | 0.30 | 0 | N/A | Other | |||
| Top 10 unrestricted shareholders | |||||||||
| Name of shareholder | Unrestricted public shares held | Type and number of shares | |||||||
| Class | Shares | ||||||||
| Hong Kong Securities Clearing Company Limited | 8,920,301 | RMB-denominated ordinary stock | 8,920,301 | ||||||
| China Merchants Bank Co., Ltd.－Xingquan Herun Mixed Securities Investment Fund | 3,949,515 | RMB-denominated ordinary stock | 3,949,515 | ||||||
| China Merchants Bank Co., Ltd.－Xingquan Heyi Dynamic Asset Allocation Mixed Securities Investment Fund (LOF) | 2,600,615 | RMB-denominated ordinary stock | 2,600,615 | ||||||
| Schroder Investment Management (Hong Kong) Limited－Schroder International Selection Fund -Emerging Asia (ETF) | 2,465,095 | RMB-denominated ordinary stock | 2,465,095 | ||||||
| Industrial Bank Co., Ltd.－Xingquan New View Dynamic Asset Allocation Regularly Open-ended Mixed Initiated Securities Investment Fund | 1,878,106 | RMB-denominated ordinary stock | 1,878,106 | ||||||
| China Everbright Bank Company Limited Co., Ltd.－Xingquan Business Model Selected Mixed Securities Investment Fund (LOF) | 1,819,850 | RMB-denominated ordinary stock | 1,819,850 | ||||||
| Schroder Investment Management (Hong Kong) Limited－Schroder International Selection Fund -China A (ETF) | 1,562,700 | RMB-denominated ordinary stock | 1,562,700 | ||||||
| Basic Endowment Insurance Fund—Portfolio 807 | 1,184,651 | RMB-denominated ordinary stock | 1,184,651 | ||||||
| National Social Security Fund—Portfolio 114 | 1,142,436 | RMB-denominated ordinary stock | 1,142,436 | ||||||
| Schroder Investment Management (Hong Kong) Limited－Schroder International Selection Fund -Greater China (ETF) | 1,076,041 | RMB-denominated ordinary stock | 1,076,041 |
| Share repurchase account among the top 10 shareholders | Not applicable | ||
| Shareholders above entrusting/entrusted with or waiving voting rights | Not applicable | ||
| Related or acting-in-concert parties among shareholders above | Ruan Liping and Ruan Xueping are brothers and acting-in-concert parties. They jointly control Ningbo Liangji Industrial Co., Ltd., the Company’s controlling shareholder. Ningbo Meishan Bonded Port Area Shuo Jin Investment Management Co., Ltd., under the joint control of Ruan Liping and Ruan Xueping, is an executive partner of Ningbo Ninghui Investment Management Partnership (Limited Partnership), one of the Company’s shareholders. Save as disclosed above, the Company is not aware of any other related parties or acting-in-concert parties as defined in the Administration Methods for Acquisition of Listed Companies among the shareholders above. | ||
| Preference shareholders with resumed voting rights and their shareholdings | Not applicable | ||
Shareholdings of the top 10 restricted shareholders and the restrictions:
√ Applicable □ Not applicable
Unit: share
| No. | Name of restricted shareholder | Restricted shares held | Restricted shares allowed for public trading | Restriction | |
| Date when public trading is allowed | Increase in restricted shares allowed for public trading | ||||
| 1 | Ningbo Liangji Industrial Co., Ltd. | 324,000,000 | 6 February 2023 | Non-tradable for 36 months from the IPO | |
| 2 | Ruan Liping | 96,864,199 | 6 February 2023 | Non-tradable for 36 months from the IPO | |
| 3 | Ruan Xueping | 96,864,199 | 6 February 2023 | Non-tradable for 36 months from the IPO | |
| 4 | Ningbo Ninghui Investment Management Partnership (Limited Partnership) | 4,072,954 | 6 February 2023 | Non-tradable for 36 months from the IPO | |
| 5 | Ningbo Suiyuan Investment Management Partnership (Limited Partnership) | 1,787,442 | 6 February 2023 | Non-tradable for 36 months from the IPO | |
| 6 | Ningbo Qiyuanbao Investment Management Partnership (Limited Partnership) | 1,025,712 | 6 February 2023 | Non-tradable for 36 months from the IPO | |
| 7 | Cheng Rong | 33,800 | To be unlocked when the conditions for the equity incentives are met | In the lockup period according to the equity Incentive Plan | |
| 8 | Xie Weiwei | 33,590 | To be unlocked when the conditions for the equity incentives are met | In the lockup period according to the equity Incentive Plan | |
| 9 | Zhou Zhenghua | 33,430 | To be unlocked when the conditions for the equity incentives are met | In the lockup period according to the equity Incentive Plan | |
| 10 | Li Guoqiang | 30,300 | To be unlocked when the conditions for the equity incentives are met | In the lockup period according to the equity Incentive Plan | |
| Related or acting-in-concert parties among shareholders above | Ruan Liping and Ruan Xueping are brothers and acting-in-concert parties. They jointly control Ningbo Liangji Industrial Co., Ltd., the Company’s controlling shareholder. Ningbo Meishan Bonded Port Area Shuo Jin Investment Management Co., Ltd., under the joint control of Ruan Liping and Ruan Xueping, is an executive partner of Ningbo Ninghui Investment Management Partnership (Limited Partnership) and Ningbo Suiyuan Investment Management Partnership (Limited Partnership), both shareholders of the Company. Ruan Liping and Ruan Xueping are both limited partners of Ningbo Suiyuan Investment Management Partnership (Limited Partnership). The Company’s shareholder Ningbo Qiyuanbao Investment Management Partnership (Limited Partnership) is under the control of Ruan Shuhong and Zhu Funing, both near relatives of Ruan Liping. Zhou Zhenghua is a director and senior executive of the Company. And Li Guoqiang, a senior executive of the Company, is a limited partner of the Company’s shareholder Ningbo Suiyuan Investment Management Partnership (Limited Partnership). Save as disclosed above, the Company is not aware of any other related parties or acting-in-concert parties as defined in the Administration Methods for Acquisition of Listed Companies among the shareholders above. | ||||
(III) Indicate whether any strategic investor or general corporation has become a top-10shareholder in a rights issue.
□ Applicable √ Not applicable
IV Controlling Shareholder and Actual Controller(I) Controlling shareholder
1. Corporation
√ Applicable □ Not applicable
| Name | Ningbo Liangji Industrial Co., Ltd. |
| Legal representative/company principal | Ruan Liping |
| Date of establishment | 23 November 2011 |
| Principal activities | Investment management |
| Interests held in other domestically and overseas listed companies in the Reporting Period | Not applicable |
| Other information | Not applicable |
2. Individual
□ Applicable √ Not applicable
3. Special statement regarding the fact that the Company does not have a controlling shareholder
□ Applicable √ Not applicable
4. Change of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
5. Illustration of the controlling shareholder’s ownership in the Company
√ Applicable □ Not applicable
(II) Actual controller
1. Corporation
□ Applicable √ Not applicable
2. Individual
√ Applicable □ Not applicable
| Name | Ruan Liping |
| Nationality | Chinese |
| Residency in other countries or regions (yes/no) | Yes |
| Main occupations and positions | Chairman of the Board and President of Gongniu Group Co., Ltd. |
| Controlling interests in other domestically and overseas listed companies in the past 10 years | Not applicable |
| Name | Ruan Xueping |
Ningbo Liangji Industrial Co., Ltd.
Ningbo Liangji Industrial Co., Ltd.Gongniu Group Co., Ltd.
Gongniu Group Co., Ltd.
53.90%
| Nationality | Chinese |
| Residency in other countries or regions (yes/no) | Yes |
| Main occupations and positions | Vice Chairman of the Board of Gongniu Group Co., Ltd. and General Manager of Shanghai Gongniu Electrics Co., Ltd. |
| Controlling interests in other domestically and overseas listed companies in the past 10 years | Not applicable |
3. Special statement regarding the fact that the Company does not have an actual controller.
□ Applicable √ Not applicable
4. Change of the actual controller in the Reporting Period
□ Applicable √ Not applicable
5. Illustration of the actual controller’s ownership in the Company
√ Applicable □ Not applicable
6. Indicate whether the actual controller controls the Company via trust or other ways of assetmanagement.
□ Applicable √ Not applicable
(III) Other information about the controlling shareholder and the actual controller
□ Applicable √ Not applicable
V Indicate whether the cumulative number of shares put in pledge by the Company’s controllingshareholder or the largest shareholder and its acting-in-concert parties accounts for over 80% oftheir shareholdings in the Company.
□ Applicable √ Not applicable
VI Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
VII Restrictions on Shareholding Reduction
□ Applicable √ Not applicable
Ningbo Meishan Bonded Port Area ShuoJin Investment Management Co., Ltd.
Ruan Liping
| Ruan Liping | Ruan Xueping |
Ningbo Liangji Industrial Co., Ltd.
Ningbo Liangji Industrial Co., Ltd.
Gongniu Group Co., Ltd.
Gongniu Group Co., Ltd.
16.12%
16.12%
16.12%
| 53.90% | 16.12% |
VIII Share Repurchases during the Reporting Period
√ Applicable □ Not applicable
Unit: RMB’0,000
| Title of the share repurchase plan | The Plan for a Share Repurchase on the Open Market |
| Date of the disclosure of the plan | 12 April 2022 |
| To-be-repurchased shares as % of the total share capital | 0.16-0.25 |
| Amount to be used | 20,000-30,000 |
| Intended period for the repurchase | Within 12 months from 11 April 2022 |
| Purpose of the repurchase | For the implementation of equity Incentive Plan |
| Number of shares already repurchased | 1,501,846 |
| Number of shares already repurchased (if any) as % of all the target shares of the equity Incentive Plan | 100 |
| Progress on any reduction of repurchased shares on the open market | Not applicable |
Note: The repurchase plan has been carried out. A total of 1,501,846 shares were repurchased, ofwhich 1,501,800 shares were granted under the 2022 Restricted Share Incentive Plan and the rest of 46shares were in the Company’s securities account for repurchased shares. For further information, see theAnnouncement on the Results of the Implementation of the Share Repurchase Plan & the Changes inShares (announcement No.: 2022-106) disclosed by the Company on the website of the Shanghai StockExchange (www.sse.com.cn).
Part VIII Relevant Information of Corporate Bonds
I Enterprise Bonds, Corporate Bonds and Debt Financing Instruments of Non-financialEnterprise
□ Applicable √ Not applicable
II Convertible Corporate Bonds
□ Applicable √ Not applicable
Part IX Relevant Information of Preference shares
□ Applicable √ Not applicable
Part X Financial StatementsI Independent Auditor’s Report
√ Applicable □ Not applicable
Independent Auditor’s Report
PCCPA Audit〔2023〕No. 5588
To the shareholders of Gongniu Group Co., Ltd.:
I OpinionWe have audited the financial statements of Gongniu Group Co., Ltd. (“Gongniu” or the“Company”), which comprise the consolidated and parent company (the Company as the parentexclusive of subsidiaries) balance sheets as at 31 December 2022, the consolidated and parent companystatements of income, cash flows and changes in owners’ equity for the year then ended, as well as thenotes to the financial statements.In our opinion, the financial statements referred to above present fairly, in all material respects, theconsolidated and parent company financial position of the Company at 31 December 2022, and theconsolidated and parent company operating results and cash flows for the year then ended, in conformitywith the Chinese Accounting Standards (CAS).II Basis for OpinionWe conducted our audits in accordance with the Audit Standards for Chinese RegisteredAccountants. Our responsibilities under those standards are further described in the Auditor’sResponsibilities for Audit of Financial Statements section of our report. We are independent of theCompany in accordance with the China Code of Ethics for Certified Public Accountants, and we havefulfilled our other ethical responsibilities in accordance with the said Code of Ethics. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.III Key Audit MattersKey audit matters are matters that, based on our professional judgment, are deemed most importantto the audit of the financial statements of the current period. These matters were addressed in the contextof our audit of the financial statements as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters.(I) Revenue recognition
1. Description
For relevant information disclosed, please refer to "38. Revenue" in "V Significant AccountingPolicies and Accounting Estimates" and "61. Operating revenue and cost of sales" in "VII Notes to theConsolidated Financial Statements" of "Part X Financial Statements".The revenue of Gongniu Group is mainly derived from the sale of adaptors, wall switches, LEDsand digital accessories. In 2022, Gongniu Group achieved operating revenue of RMB14.081 billion.Gongniu Group has identified different specific methods of revenue recognition for different salesmethods.
As operating revenue is one of the key performance indicators of Gongniu Group, we haveidentified revenue recognition as a key audit matter.
2. Audit response
The audit procedures we performed in relation to revenue recognition primarily include:
(1) Understanding the key internal controls relating to revenue recognition, evaluating the design ofthose controls, determining whether they are implemented and testing the effectiveness of the operationof the relevant internal controls;
(2) Examining major sales contracts for major contractual terms and evaluating whether therevenue recognition policy is in line with the provisions of the Accounting Standard for BusinessEnterprises;
(3) Implementing substantive analysis procedures for operating revenue and gross margin on amonthly, product and customer basis to identify any significant or abnormal fluctuations and analyze thecauses of fluctuations;
(4) For domestic sales revenue, conducting sample-check on supporting documents related torevenue recognition, including sales contracts, orders, sales invoices, outbound delivery orders, deliverynotes, transportation orders and customer sign-off sheets; for export revenue, obtaining information fromthe Administration of Foreign Exchange and reconciling it with the carrying records, and checkingsupporting documents such as sales contracts, export customs declarations, freight bills of lading andsales invoices on a sample basis;
(5) Confirming with key customers on a sample basis regarding sales for the period based on theaccounts receivable letter;
(6) Verifying operating revenue recognized around the balance sheet date on a sample basis tosupporting documents such as outbound delivery orders, delivery notes, customer sign-off sheets andfreight bills of lading, and evaluating whether operating revenue is recognized in the appropriate period;
(7) Checking whether the information relating to operating revenue is properly presented in thefinancial statements.
(II) Recognition, measurement and presentation of wealth management products
1. Description
For relevant information disclosed, please refer to "10. Financial instruments" in "V SignificantAccounting Policies and Accounting Estimates" and "2. "Held-for-trading financial assets", "13. Othercurrent assets" and "68. Return on investment" in "VII Notes to the Consolidated Financial Statements"of "Part X Financial Statements".
As at 31 December 2022, the wealth management balance of held-for-trading financial assets ofGongniu Group was RMB6,949 million, the wealth management balance of other current assets wasRMB284 million, and the cumulative return on investment for wealth management products in 2022amounted to RMB279 million. We determined the recognition, measurement and presentation of wealthmanagement products as a key audit matter due to the large amount of wealth management products and
the fact that the return on investment of the relevant products had a significant impact on the net profit ofGongniu Group for 2022.
2. Audit response
The audit procedures we performed in relation to the recognition, measurement and presentation ofwealth management products primarily include:
(1) Understanding the key internal controls relating to investments in wealth management products,evaluating the design of those controls, determining whether they are implemented and testing theeffectiveness of the operation of the relevant internal controls;
(2) Checking whether the classification of wealth management products is correct based on thecontractual cash flow characteristics of the wealth management products and the business model ofGongniu Group in managing the wealth management products;
(3) Obtaining statements of account related to wealth management products, reconciling them withthe carrying amount and writing to banks, securities companies and trust companies to confirm the assetbalance and the existence of balances of wealth management products;
(4) Checking the supporting documents for increase and reduction in wealth management productsduring the period on a sample basis, checking whether they have been authorized and approved, andconfirming that the amounts relating to the purchase, sale and return on investment of wealthmanagement products are correct and fully recorded;
(5) Reviewing the valuation method of wealth management products to check whether the basis forobtaining their fair value, the measurement of their value at the end of the period and the accountingtreatment are correct;
(6) Checking whether information related to the recognition, measurement and presentation ofwealth management products has been properly presented in the financial statements.
IV Other Information
The Company’s management is responsible for the other information. The other informationcomprises all of the information included in the Company’s 2021 Annual Report other than the financialstatements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not expressany form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for FinancialStatements
The Company’s management is responsible for the preparation of the financial statements that givea fair view in accordance with CAS, and for designing, implementing and maintaining such internalcontrol as the management determines is necessary to enable the preparation of financial statements thatare free from material misstatement, whether due to fraud or error.In preparing the financial statements, the management is responsible for assessing the Company’sability to continue as a going concern, disclosing, as applicable, matters related to going concern (ifapplicable) and using the going concern basis of accounting unless the management either intends toliquidate the Company or to cease operations, or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reportingprocess.VI Auditor’s Responsibilities for Audit of Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a wholeare free from material misstatement, whether due to fraud or error, and to issue an auditor’s report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with CAS will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(II) Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances.
(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by the management.
(IV) Conclude on the appropriateness of the management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Company’s ability to continue as a goingconcern. If we conclude that a material uncertainty exists, we are required by CAS to draw users’attention in our auditor’s report to the related disclosures in the financial statements or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor’s report. However, future events or conditions may cause theCompany to cease to continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements, and whetherthe financial statements represent the underlying transactions and events in a manner that achieves fairpresentation.
(VI) Obtain sufficient appropriate audit evidence regarding the financial information of the entitiesor business activities within the Company to express an opinion on the financial statements. We areresponsible for the direction, supervision and performance of the Company audit. We remain solelyresponsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any noteworthy deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence, and communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.
From the matters communicated with those charged with governance, we determine those mattersthat were of most significance in the audit of the financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor’s report unless law orregulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such communication.
Pan-China Certified Public Accountants LLP Chinese certified public accountant: Qian Zhongxian(engagement partner)
Hangzhou·China Chinese certified public accountant: Liu Chong
27 April 2023
II Financial Statements
Consolidated Balance Sheet
31 December 2022Prepared by Gongniu Group Co., Ltd.
Unit: RMB
| Item | Note | 31 December 2022 | 31 December 2021 |
| Current assets： | |||
| Monetary assets | 4,611,966,169.54 | 4,377,228,556.74 | |
| Settlement reserve | |||
| Loans to other banks and financial institutions | |||
| Held-for-trading financial assets | 6,949,000,000.00 | 5,926,600,000.00 | |
| Derivative financial assets | 643,100.00 | 3,613,050.00 | |
| Notes receivable | 750,723.35 | ||
| Accounts receivable | 226,808,699.19 | 219,259,743.25 | |
| Receivables financing | 1,036,801.70 | 927,023.00 | |
| Prepayments | 49,635,694.61 | 29,140,223.00 | |
| Premiums receivable | |||
| Reinsurance receivables | |||
| Receivable reinsurance contract reserve | |||
| Other receivables | 71,887,692.32 | 195,924,505.99 | |
| Of which: Interest receivable | |||
| Dividends receivable | |||
| Financial assets purchased under resale agreements | |||
| Inventories | 1,285,218,456.09 | 1,376,987,122.60 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 363,825,426.89 | 1,126,520,898.44 | |
| Total current assets | 13,560,022,040.34 | 13,256,951,846.37 | |
| Non-current assets： | |||
| Loans and advances to customers | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | |||
| Other equity investments | |||
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 1,854,494,510.57 | 1,493,733,120.82 | |
| Construction in progress | 611,457,850.54 | 198,364,136.97 | |
| Productive living assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 13,312,707.57 | 18,809,799.71 | |
| Intangible assets | 325,725,286.18 | 295,769,642.48 | |
| Development costs | |||
| Goodwill | 45,133,442.04 | ||
| Long-term prepaid expense | 20,364,230.78 | 17,750,835.99 | |
| Deferred income tax assets | 143,479,114.53 | 116,456,369.78 | |
| Other non-current assets | 76,508,015.77 | 76,068,914.50 | |
| Total non-current assets | 3,090,475,157.98 | 2,216,952,820.25 | |
| Total assets | 16,650,497,198.32 | 15,473,904,666.62 | |
| Current liabilities： | |||
| Short-term borrowings | 845,374,749.03 | 500,430,555.55 | |
| Borrowings from the central bank | |||
| Loans from other banks and financial institutions | |||
| Held-for-trading financial | 18,200,000.00 | ||
| liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 2,333,774.75 | ||
| Accounts payable | 1,643,661,963.53 | 1,701,686,564.14 | |
| Advances from customers | |||
| Contract liabilities | 431,654,611.71 | 437,999,921.93 | |
| Financial assets sold under repurchase agreements | |||
| Customer deposits and deposits from other banks and financial institutions | |||
| Payables for acting trading of securities | |||
| Payables for underwriting of securities | |||
| Employee benefits payable | 335,092,159.01 | 279,463,472.43 | |
| Taxes and levies payable | 300,308,365.64 | 533,077,969.51 | |
| Other payables | 446,413,870.85 | 430,813,760.10 | |
| Of which: Interest payable | |||
| Dividends payable | |||
| Fees and commissions payable | |||
| Reinsurance payables | |||
| Liabilities directly associated with assets held for sale | |||
| Current portion of non-current liabilities | 8,798,658.13 | 673,911,937.53 | |
| Other current liabilities | 56,140,971.75 | 56,939,989.86 | |
| Total current liabilities | 4,085,645,349.65 | 4,616,657,945.80 | |
| Non-current liabilities： | |||
| Insurance contract reserve | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Of which: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | 4,544,619.22 | 5,089,837.39 | |
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | 53,820,328.00 | ||
| Deferred income tax liabilities | 56,308,610.05 | 50,280,119.30 | |
| Other non-current liabilities | 34,814,148.70 | 46,125,187.50 | |
| Total non-current liabilities | 149,487,705.97 | 101,495,144.19 | |
| Total liabilities | 4,235,133,055.62 | 4,718,153,089.99 | |
| Owners’ equity (or shareholders’ equity)： | |||
| Paid-in capital (or share capital) | 601,077,590.00 | 601,180,520.00 | |
| Other equity instruments | |||
| Of which: Preference shares | |||
| Perpetual bonds | |||
| Capital reserves | 3,863,547,883.54 | 3,914,068,288.56 | |
| Less: Treasury shares | 129,612,354.00 | 80,711,540.00 | |
| Other comprehensive income | 4,389,526.95 | 7,537,390.37 | |
| Specific reserve | |||
| Surplus reserves | 302,797,998.73 | 302,797,998.73 | |
| General reserve | |||
| Retained earnings | 7,756,665,030.53 | 6,010,878,918.97 | |
| Total equity attributable to owners (or shareholders) of the Company as the parent | 12,398,865,675.75 | 10,755,751,576.63 | |
| Non-controlling interests | 16,498,466.95 | ||
| Total owners’ equity (or shareholders’ equity) | 12,415,364,142.70 | 10,755,751,576.63 | |
| Total liabilities and owners’ equity (or shareholders’ equity) | 16,650,497,198.32 | 15,473,904,666.62 |
Legal representative: Ruan Liping Chief Financial Officer: Zhang LinaHead of the financial department: Luo Yuebo
Balance Sheet of the Company as the Parent
31 December 2022Prepared by Gongniu Group Co., Ltd.
Unit: RMB
| Item | Note | 31 December 2022 | 31 December 2021 |
| Current assets： | |||
| Monetary assets | 2,558,169,565.15 | 2,815,595,132.13 | |
| Held-for-trading financial assets | 3,000,000,000.00 | 1,700,000,000.00 | |
| Derivative financial assets | |||
| Notes receivable | |||
| Accounts receivable | 341,413,356.20 | 3,783,723.14 | |
| Receivables financing | |||
| Prepayments | 60,568,126.16 | 302,683,310.52 | |
| Other receivables | 2,756,026,303.85 | 3,038,980,082.79 | |
| Of which: Interest receivable | |||
| Dividends receivable | 1,700,000,000.00 | 2,000,000,000.00 | |
| Inventories | 292,728,441.34 | 409,900,890.43 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 253,744,657.54 | 610,271,780.82 | |
| Total current assets | 9,262,650,450.24 | 8,881,214,919.83 | |
| Non-current assets： | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 688,178,210.52 | 441,959,500.17 | |
| Other equity investments | |||
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 812,047,460.58 | 805,605,614.22 | |
| Construction in progress | 517,776,172.33 | 171,842,155.89 | |
| Productive living assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 2,707,156.94 | 7,057,187.09 | |
| Intangible assets | 244,677,232.50 | 258,323,362.23 | |
| Development costs | |||
| Goodwill | |||
| Long-term prepaid expense | 19,172,452.61 | 17,750,835.99 | |
| Deferred income tax assets | 7,810,872.95 | 3,735,033.97 | |
| Other non-current assets | 58,509,382.81 | 72,827,494.50 | |
| Total non-current assets | 2,350,878,941.24 | 1,779,101,184.06 | |
| Total assets | 11,613,529,391.48 | 10,660,316,103.89 | |
| Current liabilities： | |||
| Short-term borrowings | 611,169,986.13 | ||
| Held-for-trading financial liabilities | 18,200,000.00 | ||
| Derivative financial liabilities | |||
| Notes payable | 100,000,000.00 | ||
| Accounts payable | 596,911,385.90 | 450,634,960.80 | |
| Advances from customers | |||
| Contract liabilities | 550,246,157.68 | 424,645,030.61 | |
| Employee benefits payable | 108,720,042.83 | 101,482,634.41 | |
| Taxes and levies payable | 70,631,710.25 | 205,109,507.99 | |
| Other payables | 196,246,589.96 | 126,829,316.67 | |
| Of which: Interest payable | |||
| Dividends payable | |||
| Liabilities directly associated with assets held for sale | |||
| Current portion of non-current liabilities | 1,660,616.21 | 666,081,836.66 | |
| Other current liabilities | 71,532,000.50 | 55,203,853.98 | |
| Total current liabilities | 2,225,318,489.46 | 2,129,987,141.12 | |
| Non-current liabilities： | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Of which: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | 1,074,013.26 | 2,163,270.25 | |
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | |||
| Deferred income tax liabilities | 25,344,037.44 | 22,249,738.30 | |
| Other non-current liabilities | 34,814,148.70 | 46,125,187.50 | |
| Total non-current liabilities | 61,232,199.40 | 70,538,196.05 | |
| Total liabilities | 2,286,550,688.86 | 2,200,525,337.17 | |
| Owners’ equity (or shareholders’ equity)： | |||
| Paid-in capital (or share capital) | 601,077,590.00 | 601,180,520.00 | |
| Other equity instruments | |||
| Of which: Preference shares | |||
| Perpetual bonds | |||
| Capital reserves | 3,859,048,459.88 | 3,909,568,864.90 | |
| Less: Treasury shares | 129,612,354.00 | 80,711,540.00 | |
| Other comprehensive income | |||
| Specific reserve | |||
| Surplus reserves | 302,797,998.73 | 302,797,998.73 | |
| Retained earnings | 4,693,667,008.01 | 3,726,954,923.09 | |
| Total owners’ equity (or shareholders’ equity) | 9,326,978,702.62 | 8,459,790,766.72 | |
| Total liabilities and owners’ equity (or shareholders’ equity) | 11,613,529,391.48 | 10,660,316,103.89 |
Legal representative: Ruan Liping Chief Financial Officer: Zhang LinaHead of the financial department: Luo Yuebo
Consolidated Income StatementJanuary-December 2022
Unit: RMB
| Item | Note | 2022 | 2021 |
| I Total revenues | 14,081,373,030.94 | 12,384,916,337.51 | |
| Of which: Operating revenue | 14,081,373,030.94 | 12,384,916,337.51 | |
| Interest income | |||
| Insurance premium income | |||
| Fee and commission income | |||
| II Total costs and expenses | 10,627,127,457.42 | 9,262,301,258.59 | |
| Of which: Cost of sales | 8,730,082,585.08 | 7,808,540,666.84 | |
| Interest expense | |||
| Fee and commission expense | |||
| Surrenders | |||
| Net insurance claims paid | |||
| Net amount provided as insurance contract reserve | |||
| Expenditure on policy dividends | |||
| Reinsurance premium expense | |||
| Taxes and levies | 115,758,059.90 | 82,785,296.48 | |
| Selling expense | 800,387,659.41 | 560,187,002.80 | |
| Administrative expense | 500,596,373.88 | 427,615,556.97 | |
| R&D expense | 588,296,080.11 | 471,015,016.82 | |
| Finance costs | -107,993,300.96 | -87,842,281.32 | |
| Of which: Interest expense | 35,925,352.09 | 39,763,491.76 | |
| Interest income | 137,795,215.87 | 128,887,165.64 | |
| Add: Other income | 132,940,722.76 | 390,936,141.47 | |
| Return on investment (“－” for loss) | 271,988,811.92 | 190,025,308.81 | |
| Of which: Share of profit or loss of joint ventures and associates | |||
| Income from the derecognition of financial assets at amortized cost |
| Exchange gain (“－” for loss) | |||
| Net gain on exposure hedges (“－” for loss) | |||
| Gain on changes in fair value (“－” for loss) | |||
| Credit impairment loss (“－” for loss) | -30,470,523.21 | -24,746,561.94 | |
| Asset impairment loss (“－” for loss) | -11,504,455.94 | -16,257,123.26 | |
| Asset disposal income (“－” for loss) | -3,139,686.69 | -11,308,464.89 | |
| III Operating profit (“－” for loss) | 3,814,060,442.36 | 3,651,264,379.11 | |
| Add: Non-operating income | 3,784,363.32 | 4,353,269.76 | |
| Less: Non-operating expense | 63,388,662.51 | 330,657,723.91 | |
| IV Gross profit (“－” for gross loss) | 3,754,456,143.17 | 3,324,959,924.96 | |
| Less: Income tax expense | 568,995,412.93 | 544,599,192.30 | |
| V Net profit (“－” for net loss) | 3,185,460,730.24 | 2,780,360,732.66 | |
| (I) By operating continuity | |||
| 1.Net profit from continuing operations (“－” for net loss) | 3,185,460,730.24 | 2,780,360,732.66 | |
| 2.Net profit from discontinued operations (“－” for net loss) | |||
| (II) By ownership | |||
| 1.Net profit attributable to owners of the Company as the parent (“－” for net loss) | 3,188,619,359.56 | 2,780,360,732.66 | |
| 2.Net profit attributable to non-controlling interests (“－” for net loss) | -3,158,629.32 | ||
| VI Other comprehensive income, net of tax | -3,147,863.42 | -21,326,379.54 | |
| (I) Other comprehensive income, net of tax attributable to owners of the Company as the parent | -3,147,863.42 | -21,326,379.54 | |
| 1．Other comprehensive income that will not be reclassified to profit or loss | |||
| （1）Changes caused by remeasurements on defined benefit schemes | |||
| （2）Other comprehensive income that will not be reclassified to profit or loss under the equity method | |||
| （3）Changes in the fair value of other equity investments | |||
| （4）Changes in the fair value arising from changes in own credit risk | |||
| 2．Other comprehensive income that will be reclassified to profit or loss | -3,147,863.42 | -21,326,379.54 | |
| （1）Other comprehensive income that will be reclassified to profit or loss under the equity method | |||
| （2）Changes in the fair value of other debt investments | |||
| （3）Other comprehensive income arising from the reclassification of financial assets | |||
| （4）Credit impairment allowance for other debt investments | |||
| （5）Reserve for cash flow hedges | -3,182,910.54 | -21,324,986.08 | |
| （6）Differences arising from the translation of foreign currency-denominated financial statements | 35,047.12 | -1,393.46 | |
| （7）Others | |||
| (II) Other comprehensive income, net of tax attributable to non-controlling interests | |||
| VII Total comprehensive income | 3,182,312,866.82 | 2,759,034,353.12 | |
| (I) Total comprehensive income attributable to owners of the Company as the parent | 3,185,471,496.14 | 2,759,034,353.12 | |
| (II) Total comprehensive income attributable to non-controlling interests | -3,158,629.32 | ||
| VIII Earnings per share： | |||
| (I) Basic earnings per share (RMB/share) | 5.32 | 4.63 | |
| (II) Diluted earnings per share (RMB/share) | 5.30 | 4.63 | |
Where business combinations involving entities under common control occurred in the current period,the net profit achieved by the acquirees before the combinations was nil, with the amount for last yearbeing nil.
Legal representative: Ruan Liping Chief Financial Officer: Zhang LinaHead of the financial department: Luo Yuebo
Income Statement of the Company as the Parent
January-December 2022
Unit: RMB
| Item | Note | 2022 | 2021 |
| I Operating revenue | 5,527,593,701.30 | 5,306,290,224.15 | |
| Less: Cost of sales | 4,279,629,067.01 | 3,876,062,056.48 | |
| Taxes and levies | 29,964,139.67 | 27,736,575.48 | |
| Selling expense | 24,152,009.03 | 22,442,913.93 | |
| Administrative expense | 257,770,302.62 | 237,296,868.57 | |
| R&D expense | 243,157,154.27 | 190,443,988.85 | |
| Finance costs | -41,364,078.62 | -31,504,593.32 | |
| Of which: Interest expense | 24,239,236.11 | 24,790,531.90 | |
| Interest income | 66,036,418.38 | 56,305,098.21 | |
| Add: Other income | 18,055,681.70 | 266,969,614.03 | |
| Return on investment (“－” for loss) | 1,811,912,481.21 | 2,079,124,417.58 | |
| Of which: Share of profit or loss of joint ventures and associates | |||
| Income from the |
| derecognition of financial assets at amortized cost | |||
| Net gain on exposure hedges (“－” for loss) | |||
| Gain on changes in fair value (“－” for loss) | |||
| Credit impairment loss (“－” for loss) | -54,867,900.40 | -18,213,104.15 | |
| Asset impairment loss (“－” for loss) | -1,215,659.46 | -2,744,147.10 | |
| Asset disposal income (“－” for loss) | -1,475,418.41 | -3,937,217.96 | |
| II Operating profit (“－” for loss) | 2,506,694,291.96 | 3,305,011,976.56 | |
| Add: Non-operating income | 2,547,612.90 | 602,007.58 | |
| Less: Non-operating expense | 10,152,903.02 | 317,803,063.92 | |
| III Gross profit (“－” for gross loss) | 2,499,089,001.84 | 2,987,810,920.22 | |
| Less Income tax expense | 89,543,668.92 | 172,118,152.88 | |
| IV Net profit (“－” for net loss) | 2,409,545,332.92 | 2,815,692,767.34 | |
| (I) Net profit from continuing operations (“－” for net loss) | 2,409,545,332.92 | 2,815,692,767.34 | |
| (II) Net profit from discontinued operations (“－” for net loss) | |||
| V Other comprehensive income, net of tax | |||
| (I) Other comprehensive income that will not be reclassified to profit or loss | |||
| 1. Changes caused by remeasurements on defined benefit schemes | |||
| 2. Other comprehensive income that will not be reclassified to profit or loss under the equity method | |||
| 3. Changes in the fair value of other equity investments | |||
| 4. Changes in the fair value arising from changes in own credit risk | |||
| (II) Other comprehensive income that will be reclassified to profit or loss | |||
| 1. Other comprehensive income that will be reclassified to profit or loss under the equity method | |||
| 2. Changes in the fair value of other debt investments | |||
| 3. Other comprehensive income arising from the reclassification of financial assets | |||
| 4. Credit impairment allowance for other debt investments | |||
| 5. Reserve for cash flow hedges | |||
| 6. Differences arising from the translation of foreign currency-denominated financial statements |
| 7. Others | |||
| VI Total comprehensive income | 2,409,545,332.92 | 2,815,692,767.34 | |
| VII Earnings per share： | |||
| (I) Basic earnings per share (RMB/share) | |||
| (II) Diluted earnings per share (RMB/share) | |||
Legal representative: Ruan Liping Chief Financial Officer: Zhang LinaHead of the financial department: Luo Yuebo
Consolidated Cash Flow Statement
January-December 2022
Unit: RMB
| Item | Note | 2022 | 2021 |
| I Cash flows from operating activities: | |||
| Proceeds from sale of goods and rendering of services | 15,641,388,293.29 | 14,169,320,101.49 | |
| Net increase in customer deposits and deposits from other banks and financial institutions | |||
| Net increase in borrowings from the central bank | |||
| Net increase in loans from other financial institutions | |||
| Premiums received on original insurance contracts | |||
| Net proceeds from reinsurance | |||
| Net increase in deposits and investments of policy holders | |||
| Interest, fees and commissions received | |||
| Net increase in loans from other banks and financial institutions | |||
| Net increase in proceeds from repurchase transactions | |||
| Net proceeds from acting trading of securities | |||
| Tax and levy rebates | 25,583,045.08 | 25,804,052.16 | |
| Cash generated from other operating activities | 370,035,518.43 | 525,426,517.23 | |
| Subtotal of cash generated from operating activities | 16,037,006,856.80 | 14,720,550,670.88 | |
| Payments for goods and services | 8,181,607,639.34 | 7,589,799,374.35 | |
| Net increase in loans and advances to customers | |||
| Net increase in deposits in the central bank and other banks and financial institutions | |||
| Payments for claims on original insurance contracts | |||
| Net increase in loans to other banks and financial institutions | |||
| Interest, fees and commissions paid | |||
| Policy dividends paid | |||
| Cash paid to and for employees | 1,902,469,445.47 | 1,741,129,477.86 | |
| Taxes and levies paid | 1,783,549,323.16 | 1,161,567,823.93 | |
| Cash used in other operating activities | 1,111,466,230.67 | 1,213,727,253.60 | |
| Subtotal of cash used in operating activities | 12,979,092,638.64 | 11,706,223,929.74 | |
| Net cash generated from/used in operating activities | 3,057,914,218.16 | 3,014,326,741.14 | |
| II Cash flows from investing activities: | |||
| Proceeds from disinvestment | |||
| Return on investment | 290,169,702.87 | 203,660,051.16 | |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-term assets | 3,462,880.79 | 22,285,265.83 | |
| Net proceeds from the disposal of subsidiaries and other business units | |||
| Cash generated from other investing activities | 9,613,715,309.31 | 11,281,533,253.72 | |
| Subtotal of cash generated from investing activities | 9,907,347,892.97 | 11,507,478,570.71 | |
| Payments for the acquisition and construction of fixed assets, intangible assets and other long-term assets | 1,018,824,058.36 | 475,375,845.86 | |
| Payments for investments | |||
| Net increase in pledged loans granted | |||
| Net payments for the acquisition of subsidiaries and other business units | 19,107,492.09 | ||
| Cash used in other investing activities | 10,615,500,000.00 | 12,621,090,656.00 | |
| Subtotal of cash used in investing activities | 11,653,431,550.45 | 13,096,466,501.86 | |
| Net cash generated from/used in investing activities | -1,746,083,657.48 | -1,588,987,931.15 | |
| III Cash flows from financing activities: | |||
| Capital contributions received | 94,703,508.00 | 58,919,460.00 | |
| Of which: Capital contributions by non-controlling interests to subsidiaries | |||
| Borrowings received | 1,685,000,000.00 | 1,229,444,657.64 | |
| Cash generated from other financing activities | |||
| Subtotal of cash generated from financing activities | 1,779,703,508.00 | 1,288,364,117.64 | |
| Repayment of borrowings | 2,010,000,000.00 | 733,145,768.73 | |
| Interest and dividends paid | 1,478,511,496.88 | 1,235,638,745.39 | |
| Of which: Dividends paid by subsidiaries to non-controlling interests | |||
| Cash used in other financing activities | 236,647,700.66 | 20,388,050.23 | |
| Subtotal of cash used in | 3,725,159,197.54 | 1,989,172,564.35 | |
| financing activities | |||
| Net cash generated from/used in financing activities | -1,945,455,689.54 | -700,808,446.71 | |
| IV Effect of foreign exchange rate changes on cash and cash equivalents | 6,251,850.30 | -1,365,206.44 | |
| V Net increase in cash and cash equivalents | -627,373,278.56 | 723,165,156.84 | |
| Add: Cash and cash equivalents, beginning of the period | 2,552,716,453.54 | 1,829,551,296.70 | |
| VI Cash and cash equivalents, end of the period | 1,925,343,174.98 | 2,552,716,453.54 |
Legal representative: Ruan Liping Chief Financial Officer: Zhang LinaHead of the financial department: Luo Yuebo
Cash Flow Statement of the Company as the Parent
January-December 2022
Unit: RMB
| Item | Note | 2022 | 2021 |
| I Cash flows from operating activities: | |||
| Proceeds from sale of goods and rendering of services | 6,407,458,800.74 | 6,475,570,410.73 | |
| Tax and levy rebates | |||
| Cash generated from other operating activities | 843,447,820.27 | 338,813,300.33 | |
| Subtotal of cash generated from operating activities | 7,250,906,621.01 | 6,814,383,711.06 | |
| Payments for goods and services | 3,994,662,575.62 | 4,252,140,785.92 | |
| Cash paid to and for employees | 632,474,762.15 | 622,109,797.27 | |
| Taxes and levies paid | 433,295,397.95 | 262,378,388.50 | |
| Cash used in other operating activities | 1,409,134,256.52 | 898,019,962.90 | |
| Subtotal of cash used in operating activities | 6,469,566,992.24 | 6,034,648,934.59 | |
| Net cash generated from/used in operating activities | 781,339,628.77 | 779,734,776.47 | |
| II Cash flows from investing activities: | |||
| Proceeds from disinvestment | |||
| Return on investment | 2,118,439,604.49 | 1,095,128,801.14 | |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-term assets | 5,068,195.56 | 17,822,095.19 | |
| Net proceeds from the disposal of subsidiaries and other business units | |||
| Cash generated from other investing activities | 3,920,000,000.00 | 4,390,001,001.00 | |
| Subtotal of cash generated from investing activities | 6,043,507,800.05 | 5,502,951,897.33 | |
| Payments for the acquisition and construction of fixed assets, intangible assets and other long-term assets | 450,775,042.68 | 351,818,203.17 | |
| Payments for investments | 148,409,344.00 | 11,000,000.00 | |
| Net payments for the acquisition of subsidiaries and other business units | |||
| Cash used in other investing activities | 5,120,000,000.00 | 3,906,990,656.00 | |
| Subtotal of cash used in investing activities | 5,719,184,386.68 | 4,269,808,859.17 | |
| Net cash generated from/used in investing activities | 324,323,413.37 | 1,233,143,038.16 | |
| III Cash flows from financing activities: | |||
| Capital contributions received | 94,703,508.00 | 58,919,460.00 | |
| Borrowings received | 1,010,000,000.00 | 633,145,768.73 | |
| Cash generated from other financing activities | |||
| Subtotal of cash generated from financing activities | 1,104,703,508.00 | 692,065,228.73 | |
| Repayment of borrowings | 1,060,000,000.00 | 633,145,768.73 | |
| Interest and dividends paid | 1,466,589,386.88 | 1,225,366,634.27 | |
| Cash used in other financing activities | 225,449,579.56 | 11,332,303.38 | |
| Subtotal of cash used in financing activities | 2,752,038,966.44 | 1,869,844,706.38 | |
| Net cash generated from/used in financing activities | -1,647,335,458.44 | -1,177,779,477.65 | |
| IV Effect of foreign exchange rate changes on cash and cash equivalents | |||
| V Net increase in cash and cash equivalents | -541,672,416.30 | 835,098,336.98 | |
| Add: Cash and cash equivalents, beginning of the period | 1,729,210,241.72 | 894,111,904.74 | |
| VI Cash and cash equivalents, end of the period | 1,187,537,825.42 | 1,729,210,241.72 | |
Legal representative: Ruan Liping Chief Financial Officer: Zhang LinaHead of the financial department: Luo Yuebo
Consolidated Statements of Changes in Owners’ Equity
January-December 2022
Unit: RMB
| Item | 2022 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I Balance as at the end of the prior year | 601,180,520.00 | 3,914,068,288.56 | 80,711,540.00 | 7,537,390.37 | 302,797,998.73 | 6,010,878,918.97 | 10,755,751,576.63 | 10,755,751,576.63 | |||||||
| Add: Adjustments for changes in accounting policies | |||||||||||||||
| Adjustments for correction of previous errors | |||||||||||||||
| Adjustments for business combinations involving entities under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| II Balance as at the | 601,180,520.00 | 3,914,068,288.56 | 80,711,540.00 | 7,537,390.37 | 302,797,998.73 | 6,010,878,918.97 | 10,755,751, | 10,755,751,576.63 | |||||||
| beginning of the year | 576.63 | ||||||||||||||
| III Increase/decrease in the period (“-” for decrease) | -102,930.00 | -50,520,405.02 | 48,900,814.00 | -3,147,863.42 | 1,745,786,111.56 | 1,643,114,099.12 | 16,498,466.95 | 1,659,612,566.07 | |||||||
| (I) Total comprehensive income | -3,147,863.42 | 3,188,619,359.56 | 3,185,471,496.14 | -3,158,629.32 | 3,182,312,866.82 | ||||||||||
| (II) Capital increased and reduced by owners | -102,930.00 | -50,520,405.02 | 48,900,814.00 | -99,524,149.02 | 19,657,096.27 | -79,867,052.75 | |||||||||
| 1．Ordinary shares increased by owners | -102,930.00 | -127,989,881.86 | 215,286,334.56 | -343,379,146.42 | -343,379,146.42 | ||||||||||
| 2．Capital increased by other equity holders | |||||||||||||||
| 3．Share-based payments recognized in owners’ equity | 77,469,476.84 | -166,385,520.56 | 243,854,997.40 | 243,854,997.40 | |||||||||||
| 4．Others | 19,657,096.27 | 19,657,096.27 | |||||||||||||
| (III) Profit distribution | -1,442,833,248.00 | -1,442,833,248.00 | -1,442,833,248.00 | ||||||||||||
| 1．Appropriation to surplus reserves | |||||||||||||||
| 2．Appropriation to general reserve |
| 3．Appropriation to owners (or shareholders) | -1,442,833,248.00 | -1,442,833,248.00 | -1,442,833,248.00 | ||||||||||||
| 4．Others | |||||||||||||||
| (IV) Transfers within owners’ equity | |||||||||||||||
| 1．Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 2．Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3．Surplus reserves used to offset loss | |||||||||||||||
| 4．Changes in defined benefit schemes transferred to retained earnings | |||||||||||||||
| 5．Other comprehensive income transferred to retained earnings | |||||||||||||||
| 6．Others | |||||||||||||||
| (V) Specific reserve | |||||||||||||||
| 1．Increase in |
| the period | |||||||||||||||
| 2．Used in the period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV Balance as at the end of the period | 601,077,590.00 | 3,863,547,883.54 | 129,612,354.00 | 4,389,526.95 | 302,797,998.73 | 7,756,665,030.53 | 12,398,865,675.75 | 16,498,466.95 | 12,415,364,142.70 |
| Item | 2021 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I Balance as at the end of the prior year | 600,613,800.00 | 3,820,175,608.14 | 46,728,594.00 | 28,863,769.91 | 302,797,998.73 | 4,431,669,986.31 | 9,137,392,569.09 | 9,137,392,569.09 | |||||||
| Add: Adjustments for changes in accounting policies | |||||||||||||||
| Adjustments for correction of previous errors | |||||||||||||||
| Adjustments for business combinations involving entities under common control | |||||||||||||||
| Other | |||||||||||||||
| adjustments | |||||||||||||||
| II Balance as at the beginning of the year | 600,613,800.00 | 3,820,175,608.14 | 46,728,594.00 | 28,863,769.91 | 302,797,998.73 | 4,431,669,986.31 | 9,137,392,569.09 | 9,137,392,569.09 | |||||||
| III Increase/decrease in the period (“-” for decrease) | 566,720.00 | 93,892,680.42 | 33,982,946.00 | -21,326,379.54 | 1,579,208,932.66 | 1,618,359,007.54 | 1,618,359,007.54 | ||||||||
| (I) Total comprehensive income | -21,326,379.54 | 2,780,360,732.66 | 2,759,034,353.12 | 2,759,034,353.12 | |||||||||||
| (II) Capital increased and reduced by owners | 566,720.00 | 93,892,680.42 | 33,982,946.00 | 60,476,454.42 | 60,476,454.42 | ||||||||||
| 1．Ordinary shares increased by owners | 566,720.00 | 50,544,523.60 | 51,111,243.60 | 51,111,243.60 | |||||||||||
| 2．Capital increased by other equity holders | |||||||||||||||
| 3．Share-based payments recognized in owners’ equity | 43,348,156.82 | 33,982,946.00 | 9,365,210.82 | 9,365,210.82 | |||||||||||
| 4．Others | |||||||||||||||
| (III) Profit distribution | -1,201,151,800.00 | -1,201,151,800.00 | -1,201,151,800.00 | ||||||||||||
| 1．Appropriation to surplus reserves | |||||||||||||||
| 2．Appropriation to |
| general reserve | |||||||||||||||
| 3．Appropriation to owners (or shareholders) | -1,201,151,800.00 | -1,201,151,800.00 | -1,201,151,800.00 | ||||||||||||
| 4．Others | |||||||||||||||
| (IV) Transfers within owners’ equity | |||||||||||||||
| 1．Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 2．Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3．Surplus reserves used to offset loss | |||||||||||||||
| 4．Changes in defined benefit schemes transferred to retained earnings | |||||||||||||||
| 5．Other comprehensive income transferred to retained earnings | |||||||||||||||
| 6．Others | |||||||||||||||
| (V) Specific reserve |
| 1．Increase in the period | |||||||||||||||
| 2．Used in the period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV Balance as at the end of the period | 601,180,520.00 | 3,914,068,288.56 | 80,711,540.00 | 7,537,390.37 | 302,797,998.73 | 6,010,878,918.97 | 10,755,751,576.63 | 10,755,751,576.63 |
Legal representative: Ruan Liping Chief Financial Officer: Zhang Lina Head of the financial department: Luo Yuebo
Statements of Changes in Owners’ Equity of the Company as the Parent
January-December 2022
Unit: RMB
| Item | 2022 | ||||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Total owners’ equity | |||
| Preference shares | Perpetual bonds | Others | |||||||||
| I Balance as at the end of the prior year | 601,180,520.00 | 3,909,568,864.90 | 80,711,540.00 | 302,797,998.73 | 3,726,954,923.09 | 8,459,790,766.72 | |||||
| Add: Adjustments for changes in accounting policies | |||||||||||
| Adjustments for correction of previous errors | |||||||||||
| Other adjustments | |||||||||||
| II Balance as at the beginning of the year | 601,180,520.00 | 3,909,568,864.90 | 80,711,540.00 | 302,797,998.73 | 3,726,954,923.09 | 8,459,790,766.72 | |||||
| III Increase/ decrease in the period (“-” for decrease) | -102,930.00 | -50,520,405.02 | 48,900,814.00 | 966,712,084.92 | 867,187,935.90 | ||||||
| (I) Total comprehensive income | 2,409,545,332.92 | 2,409,545,332.92 | |||||||||
| (II) Capital increased and reduced by owners | -102,930.00 | -50,520,405.02 | 48,900,814.00 | -99,524,149.02 | |||||||
| 1．Ordinary shares increased by owners | -102,930.00 | -127,989,881.86 | 215,286,334.56 | -343,379,146.42 | |||||||
| 2．Capital increased by other equity holders | |||||||||||
| 3．Share-based payments | 28,594,844 | -166,385,5 | 194,980,36 | ||||||||
| recognized in owners’ equity | .11 | 20.56 | 4.67 | ||||||||
| 4．Others | 48,874,632.73 | 48,874,632.73 | |||||||||
| (III) Profit distribution | -1,442,833,248.00 | -1,442,833,248.00 | |||||||||
| 1．Appropriation to surplus reserves | |||||||||||
| 2．Appropriation to owners (or shareholders) | -1,442,833,248.00 | -1,442,833,248.00 | |||||||||
| 3．Others | |||||||||||
| (IV) Transfers within owners’ equity | |||||||||||
| 1．Increase in capital (or share capital) from capital reserves | |||||||||||
| 2．Increase in capital (or share capital) from surplus reserves | |||||||||||
| 3．Surplus reserves used to offset loss | |||||||||||
| 4．Changes in defined benefit schemes transferred to retained earnings | |||||||||||
| 5．Other comprehensive income transferred to retained earnings | |||||||||||
| 6．Others | |||||||||||
| (V) Specific reserve | |||||||||||
| 1．Increase in the period | |||||||||||
| 2．Used in the period | |||||||||||
| (VI) Others | |||||||||||
| IV Balance as at the end of the period | 601,077,590.00 | 3,859,048,459.88 | 129,612,354.00 | 302,797,998.73 | 4,693,667,008.01 | 9,326,978,702.62 |
| Item | 2021 | ||||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserves | Less: Treasury shares | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Total owners’ equity | |||
| Preference shares | Perpetual bonds | Others | |||||||||
| I Balance as at the end of the | 600,613,80 | 3,815,676, | 46,728,594 | 302,797,9 | 2,112,413, | 6,784,773, | |||||
| prior year | 0.00 | 184.48 | .00 | 98.73 | 955.75 | 344.96 | |||||
| Add: Adjustments for changes in accounting policies | |||||||||||
| Adjustments for correction of previous errors | |||||||||||
| Other adjustments | |||||||||||
| II Balance as at the beginning of the year | 600,613,800.00 | 3,815,676,184.48 | 46,728,594.00 | 302,797,998.73 | 2,112,413,955.75 | 6,784,773,344.96 | |||||
| III Increase/ decrease in the period (“-” for decrease) | 566,720.00 | 93,892,680.42 | 33,982,946.00 | 1,614,540,967.34 | 1,675,017,421.76 | ||||||
| (I) Total comprehensive income | 2,815,692,767.34 | 2,815,692,767.34 | |||||||||
| (II) Capital increased and reduced by owners | 566,720.00 | 70,456,679.24 | 33,982,946.00 | 37,040,453.24 | |||||||
| 1．Ordinary shares increased by owners | 566,720.00 | 50,544,523.60 | 51,111,243.60 | ||||||||
| 2．Capital increased by other equity holders | |||||||||||
| 3．Share-based payments recognized in owners’ equity | 19,912,155.64 | 33,982,946.00 | -14,070,790.36 | ||||||||
| 4．Others | |||||||||||
| (III) Profit distribution | -1,201,151,800.00 | -1,201,151,800.00 | |||||||||
| 1．Appropriation to surplus reserves | |||||||||||
| 2．Appropriation to owners (or shareholders) | -1,201,151,800.00 | -1,201,151,800.00 | |||||||||
| 3．Others | |||||||||||
| (IV) Transfers within owners’ equity | |||||||||||
| 1．Increase in capital (or share capital) from capital reserves | |||||||||||
| 2．Increase in capital (or share capital) from surplus reserves | |||||||||||
| 3．Surplus reserves used to offset loss | |||||||||||
| 4．Changes in defined benefit schemes transferred to |
| retained earnings | |||||||||||
| 5．Other comprehensive income transferred to retained earnings | |||||||||||
| 6．Others | |||||||||||
| (V) Specific reserve | |||||||||||
| 1．Increase in the period | |||||||||||
| 2．Used in the period | |||||||||||
| (VI) Others | 23,436,001.18 | 23,436,001.18 | |||||||||
| IV Balance as at the end of the period | 601,180,520.00 | 3,909,568,864.90 | 80,711,540.00 | 302,797,998.73 | 3,726,954,923.09 | 8,459,790,766.72 |
Legal representative: Ruan Liping Chief Financial Officer: Zhang Lina Head of the financial department: Luo Yuebo
III Company Profile
1. Company overview
√ Applicable □ Not applicable
Gongniu Group Co., Ltd (hereinafter referred to as “the Company” or “Gongniu”) is a joint stocklimited company transformed from the former Gongniu Group Limited with 31 August 2017 as the basedate. It was registered with Ningbo Municipal Market Supervision Administration on 27 December 2017and is headquartered in Ningbo City, Zhejiang Province. The Company now holds a business licensewith a unified social credit code of 91330282671205242Y, with a registered capital of RMB601.0776million and a total of 601.0776 million shares (each with a par value of RMB1). Among them, there are
526.5746 million restricted public A-shares and 74.5030 million unrestricted public A-shares. TheCompany’s shares were listed for public trading on the Shanghai Stock Exchange on 6 February 2020.
The Company pertains to the electrical machinery and equipment manufacturing industry. It ismainly engaged in the research, development, production and sales of power connection and powerextension products such as adaptors, wall switches and sockets, LED lighting and digital accessories.Products mainly include adaptors, wall switches and sockets, LED lighting and digital accessories.
These financial statements have been authorized for issue by the 17
thMeeting of the Second Boardof Directors of the Company on 27 April 2023.
The Company included 23 subsidiaries including Ningbo Gongniu Electrics Co., Ltd. in theconsolidated financial statements for the current period. For further information, see “VII Notes to theConsolidated Financial Statements” and “IX Interests in Other Entities” under “Part X FinancialStatements” herein.
For the sake of conciseness, the subsidiaries and other related companies of the Company arehereinafter referred to by their abbreviations as follows:
| Full name | Abbreviation |
| Subsidiaries | |
| Ningbo Gongniu Electrics Co., Ltd. | Ningbo Gongniu |
| Ningbo Gongniu Photoelectric Technology Co., Ltd. | Gongniu Photoelectric |
| Ningbo Gongniu Digital Technology Co., Ltd. | Gongniu Digital |
| Ningbo Gongniu Precision Manufacturing Co., Ltd. | Gongniu Precision |
| Ningbo Banmen Electric Appliance Co., Ltd. | Banmen Electric Appliance |
| Cixi Gongniu Electrics Co., Ltd. | Cixi Gongniu |
| Shanghai Gongniu Electrics Co., Ltd. | Shanghai Gongniu |
| Bull International Trading (HK) Limited | Bull HK |
| Ningbo Gongniu Supply Chain Management Co., Ltd. | Gongniu Management |
| Ningbo Bull International Trading Co., Ltd. | Bull International Trading |
| Ningbo Gongniu Electric Sales Co., Ltd. | Electric Sales |
| Ningbo Xingluo Trading Co., Ltd. | Xingluo Trading |
| Ningbo Gongniu Low Voltage Electric Co., Ltd. | Gongniu Low Voltage |
| Ningbo Gongniu Domestic Electrical Appliance Co., Ltd. | Domestic Electrical Appliance |
| Hainan Dacheng Supply Chain Management Co., Ltd. | Hainan Dacheng |
| Ningbo Gongniu Intelligent Technology Co., Ltd. | Intelligent Technology |
| Dalitek Intelligent Technology (Shanghai) Inc. | Dalitek |
| Shanghai Gongniu Information Technology Co., Ltd. | Information Technology |
| Ningbo Gongniu Tool Technology Co., Ltd. | Gongniu Tool |
| Ningbo Gongniu New Energy Technology Co., Ltd. | Gongniu New Energy |
| Shenzhen Gongniu Intelligent Information Co., Ltd. | Shenzhen Intelligent |
| Guangdong Murora Intelligent Lighting Co., Ltd. | Murora Intelligent |
| Ningbo Gongniu Marketing Co., Ltd. | Gongniu Marketing |
| Other related parties | |
| Ningbo Liangji Industrial Co., Ltd. | Liangji Industrial |
| Hangzhou Liangniu Hardware and Electrical Co., Ltd. | Liangniu Hardware |
| Hangzhou Hangniu Hardware and Electrical Co., Ltd. | Hangniu Hardware |
| Hangzhou Feiniu Hardware and Electrical Co., Ltd. | Feiniu Hardware |
| Shanghai Baidi Electrics Co., Ltd. | Baidi Electrics |
| Yichang Yaoyang Trading Co., Ltd. | Yaoyang Trading |
| Hubei Huantian Technology Co., Ltd. | Huantian Technology |
| Cixi Libo Electric Co., Ltd. | Cixi Libo |
| Suzhou Niuweiwang Trading Co., Ltd. | Niuweiwang Trading |
| Beijing Chenhao Electronic Technology Co., Ltd. | Chenhao Electronic |
| Shanghai Minshen Property Co., Ltd. | Minshen Property |
| Hebei Qiudi Trading Co., Ltd. | Qiudi Trading |
| Changde Jianke Trading Co., Ltd. | Jianke Trading |
| Cixi Shenghui Electronics Co., Ltd. | Shenghui Electronics |
2. Scope of consolidated financial statements
√ Applicable □ Not applicable
The Company included 23 subsidiaries, including Ningbo Gongniu Electrics Co., Ltd., CixiGongniu Electrics Co., Ltd. and Shanghai Gongniu Electrics Co., Ltd. in the scope of consolidatedfinancial statements for the current period. For details, please refer to the notes of "VIII. Changes inConsolidation Scope" and "IX. Interests in Other Entities" in "Section 10 Financial Report" of thisannual report.
IV Preparation Basis of Financial Statement
1. Basis of preparation
The financial statements of the Company are based on continuing operations.
2. Continuing operations
√ Applicable □ Not applicable
The Company does not undergo any event or situation which may cause great concern aboutsustainable operation ability within 12 months since the end of the reporting period.
V Significant Accounting Policies and Accounting EstimatesSpecific accounting policies and accounting estimation hint:
□ Applicable √ Not applicable
1. Statement on Compliance with Accounting Standards for Business Enterprises
The Company’s Financial Statements are prepared in accordance with Accounting Standards forBusiness Enterprises, and indicate relevant information about the Company's financial status, businessresults and cash flow truly and completely.
2. Accounting period
The fiscal year of the Company is from January 1 to December 31 of every calendar year.
3. Operating cycle
√ Applicable □ Not applicable
The operating cycle of the Company is short, and 12 months is taken as the liquidity criterion forassets and liabilities.
4. Standard currency for accounting
The standard currency for accounting is RMB.
5. Accounting treatment of business combination under the same control and businesscombination not under the same control
√ Applicable □ Not applicable
1. Accounting methods of business combination under the same control
The Company’s assets and liabilities acquired from business combinations will be measuredaccording to the carrying value of the acquiree in financial statement of the final controlling party. TheCompany will adjust capital reserves according to proportion of the acquiree’s carrying value inconsolidated financial statement of the final controlling party and the balance between carrying valueand the carrying value paid for combination consideration or total nominal value of issued shares; if thecapital reserve is insufficient to offset such difference, the difference will be offset against retainedearnings.
2. Accounting methods of business combination not under the same control
On the acquisition date, the difference between the combined cost and the fair value share of theidentifiable net assets of the acquiree obtained in the merger is recognized as goodwill. If the combinedcost is less than the fair value share of the identifiable net assets of the acquiree obtained in thecombination, firstly, the fair value of identifiable assets, liabilities and contingent liabilities of theacquiree and the measurement of combined cost are reviewed. If the combined cost is still less than thefair value share of identifiable net assets of the acquiree obtained in the merger after review, thedifference is recorded in profit and loss of the current period.
6. Method of preparation of consolidated financial statements
√ Applicable □ Not applicable
1. The Company as the parent brings all subsidiaries under its control into the consolidated scope ofthe consolidated financial statements. The consolidated financial statements are based on the financialstatements of the Company as the parent and its subsidiaries and are prepared by the Company as theparent according to other relevant information and Accounting Standards for Enterprises No. 33 -Consolidated Financial Statements.
2. Relevant accounting treatment methods for buying and re-selling or selling and re-buying theequity of the same subsidiary in two consecutive fiscal years
7. Classification of joint arrangements and accounting of joint operations
□ Applicable √ Not applicable
8. Criteria for recognition of cash and cash equivalents
Cash listed in cash flow statement refers to cash on hand and reserves always available for payment.Cash equivalents refer to investments that are held for short term, highly liquid, and readily convertibleto known amounts of cash and subject to insignificant risk of change in value.
9. Foreign currency business and conversion of foreign currency statement
√ Applicable □ Not applicable
1. Conversion of foreign currency business
At the initial recognition of foreign currency transactions, foreign currency shall be converted intoRMB at the approximate exchange rate of the spot exchange rate on the transaction date. On the balancesheet date, foreign currency monetary items are converted at the spot exchange rate on the balance sheetdate, and the exchange difference arising from different exchange rates is recorded in profit and loss ofthe current period except the exchange difference between the principal and interest of foreign currencyspecial loans related to the purchase and construction of assets eligible for capitalization. Foreigncurrency non-monetary items measured at historical cost adopt the spot exchange rate on the transactiondate, without changing their RMB amount. Foreign currency non-monetary items measured at fair valueshall be converted at the spot exchange rate on the date when the fair value is determined, and thedifference shall be recorded in the profit and loss of the current period or other comprehensive income.
2. Conversion of foreign currency financial statements
Assets and liabilities in the balance sheet shall be converted at the spot exchange rate on thebalance sheet date. Except for the “undistributed profit” item, other items of owner’s equity items areconverted at the spot exchange rate on the transaction date; the income and expense items in the incomestatement are converted at the spot exchange rate on the transaction date. The differences arising fromthe above conversion of foreign currency-denominated financial statements shall be recorded in othercomprehensive income.
10. Financial instruments
√ Applicable □ Not applicable
1. Classification of financial assets and financial liabilities
Financial assets are classified into the following three categories when they are initially recognized:
(1) Financial assets measured at amortized cost; (2) financial assets at fair value through othercomprehensive income; (3) financial assets at fair value through current profit or loss.
Financial liabilities are classified into the following four categories when they are initiallyrecognized: (1) Financial liabilities at fair value through current profit or loss; (2) financial liabilitiesarising from the transfer of financial assets not meeting the de-recognition criteria or from the continuinginvolvement in the transferred assets; (3) financial guarantee contracts which do not fall within thecategory of (1) or (2) above, and loan commitments which do not fall within category (1) above andmade at an interest rate lower than the market rate; (4) financial liabilities measured at amortized cost.
2. Recognition basis, measurement methods and derecognition conditions for financial assets andfinancial liabilities
(1) Determination basis and measuring methods for financial assets and financial liabilities
A financial instrument is recognized as an asset or liability when the Company becomes a partythereto. For financial assets or financial liabilities measured at fair value through profit or loss, thetransaction expenses are directly included in profit and loss of the current period; for financial assets orfinancial liabilities in other categories, the transaction expenses are included in the amount initiallyrecognized. However, accounts receivable initially recognized by the Company that do not include asignificant financing component or where the Company does not consider the financing component in acontract with a term not exceeding one year will be initially measured at the transaction price defined inAccounting Standard for Business Enterprises No.14-Income.
(2) Subsequent measurement of financial assets
1) Financial assets measured at amortized cost
Financial assets are subsequently measured at amortized cost by the effective interest method.Gains or losses arising from a financial asset measured at amortized cost which does not form part ofany hedging relationship are recorded in current profit or loss at the time of de-recognition,reclassification, amortization according to the effective interest method or recognition of impairment.
2) Investments in debt instruments at fair value through other comprehensive income
Such financial assets shall be subsequently measured at fair value. Interest, impairment loss or gainand exchange gain/loss calculated using the effective interest method are recorded in current profit orloss, other gains or losses are recorded in other comprehensive income. On derecognition, cumulativegains or losses that were previously recorded in other comprehensive income are transferred from othercomprehensive income and recorded in current profit or loss.
3) Investments in equity instruments at fair value through other comprehensive income
Such financial assets shall be subsequently measured at fair value. Dividend received (except forthe portion which forms part of investment cost recovered) is recorded in current profit or loss, othergains or losses are recorded in other comprehensive income. On derecognition, cumulative gains orlosses that were previously recorded in other comprehensive income are transferred from othercomprehensive income and recorded in retained earnings.
4) Financial assets at fair value through profit or loss
Gains or losses (including interest income and dividend income) arising from the subsequentmeasurement at fair value are recorded in current profit or loss, unless the financial asset forms part of a
hedging relationship.
(3) Method for the subsequent measurement of financial liabilities
1) Financial liabilities measured at fair value through profit and loss of the current periodSuch financial liabilities include transactional financial liabilities (including derivative instrumentswhich belong to the category of financial liabilities) and financial liabilities designated as at fair valuethrough current profit or loss. Such financial liabilities are subsequently measured at fair value. Theamount of changes in the fair value of financial liabilities designated as at fair value through profit orloss, which arise from the change in the credit risk of the Company, is recorded in other comprehensiveincome, unless such accounting treatment would result in or increase the accounting mismatch of gainand loss. Other gains or losses (including interest expense, except for the fair value changes arising fromthe change in credit risk of the Company) on such financial liabilities are recorded in current profit orloss, unless such financial liabilities form part of a hedging relationship. On derecognition, cumulativegains or losses that were previously recorded in other comprehensive income are transferred from othercomprehensive income and recorded in retained earnings.
2) Financial liabilities resulting from the transfer of financial assets which does not satisfy thede-recognition criteria or from the continuing involvement in the transferred assets are measuredaccording to the relevant provisions of the Accounting Standard for Business Enterprises No.23-Transferof Financial Assets.
3) Financial guarantee contracts that do not fall within the category of 1) or 2) above, and loancommitments that do not fall within the category of 1) above and made at an interest rate lower than themarket rate, are subsequently measured at the higher of the two following amounts after initialrecognition: ① The amount of loss provision determined according to the rules related to theimpairment of financial instruments; ② The remaining balance of the initially recognized amount afterdeducting the amount of cumulative amortization determined according to relevant rules of theAccounting Standard for Business Enterprises No.14-Income.
4) Financial liabilities measured at amortized cost
Such financial liabilities are measured at amortized cost using the effective interest method. Gainsor losses arising from a financial liability measured at amortized cost which does not form part of anyhedging relationship are recorded in current profit or loss at the time of de-recognition or amortizationaccording to the effective interest method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when any of the following criteria is met:
① The contractual rights to receive the cash flows from the financial assets terminate; or
② The financial asset has been transferred, and such transfer satisfies the criteria set out in theAccounting Standard for Business Enterprises No.23-Transfer of Financial Assets regarding thede-recognition of financial assets.
2) Where the present obligation of a financial liability (or a portion thereof) has been discharged,the Company de-recognizes the financial liability (or a portion thereof).
3. Recognition basis and measurement method of financial asset transfer
If the Company has transferred substantially all risks and rewards of ownership of the financialasset, the financial asset is de-recognized, and the right and obligation arising from or retained in thetransfer are individually recognized as an asset or liability. If substantially all risks and rewards ofownership of the financial asset are retained, the financial asset transferred remains recognized. If theCompany has not transferred or retained nearly all the risks and remunerations of ownership of the creditassets, different measures should be taken in accordance with the following circumstances respectively:
(1) If the Company gives up the control of the financial assets, these financial assets shall bederecognized; (2) if the Company does not give up the control of the financial assets, the relevantfinancial assets shall be recognized and the relevant liabilities shall be recognized accordingly inaccordance with the extent of their continued involvement in the transferred financial assets.
If the overall transfer of financial assets meets the conditions for derecognition, the differencebetween the following two amounts shall be recorded in profit and loss of the current period: (1) Thecarrying value of the transferred financial asset as of the date of derecognition; (2) Sum of theconsideration received for the transfer of the financial asset, and the portion of the cumulative amount offair value changes previously recorded in other comprehensive income that corresponds with the portionof the asset de-recognized (the transferred financial asset is an investment in debt instruments at fairvalue through other comprehensive income). Where a portion of the financial asset has been transferredand the transferred portion as a whole satisfies the derecognition criteria, the carrying value of thefinancial asset as a whole prior to its transfer is allocated between the portion of the asset derecognizedand the portion that remains recognized, according to their relative fair value as of the transfer date, andthe difference between the two amounts mentioned below is recorded in current profit or loss: (1) Thecarrying value of the derecognized portion; (2) Sum of the consideration received for the derecognitionportion, and the portion of the cumulative amount of fair value changes previously recorded in othercomprehensive income, which corresponds with the derecognized portion (the transferred financial assetis an investment in debt instruments at fair value through other comprehensive income).
4. Methods for determining the fair value of financial assets and financial liabilities
The Company applies valuation techniques that are applicable in the current situation and aresupported by sufficient available data and other information to determine the fair value of relevantfinancial assets and financial liabilities. The Company classifies the inputs of valuation techniques intothe following levels and applies them accordingly:
(1) Level 1 inputs are the unadjusted quotation of the same assets or liabilities available on theactive market on the measurement day;
(2) Level 2 inputs are inputs for the relevant assets or liabilities other than the level 1 inputs, whichare directly or indirectly observable, including quotations for similar assets or liabilities in an activemarket; quotations for the same or similar assets or liabilities in an inactive market; other observableinputs other than quotations, such as interest rate and yield curve observable during normal quotationintervals; and market-tested inputs;
(3) Level 3 inputs are non-observable inputs for the relevant assets or liabilities, including interestrate and stock volatility which cannot be directly observed or cannot be verified by observable marketdata, the future cash flow of a retirement obligation assumed in a business combination, and financialforecast performed based on internal data.
5. Impairment of financial instruments
(1) Measurement and accounting treatment of impairment of financial instruments
Based on the expected credit loss, for financial assets measured in amortized cost, investment indebt instruments measured at fair value and whose changes are recorded in other comprehensive income,contract assets, lease receivables, loan commitments classified as financial liabilities measured at fairvalue and whose changes are recorded in profit and loss of the current period, financial guaranteecontracts that do not belong to financial liabilities measured at fair value and whose changes arerecorded in the profits and losses of the current period or financial liabilities formed by the transfer offinancial assets that do not meet the conditions for derecognition or continue to be involved in thetransferred financial assets shall be impaired and loss reserves shall be recognized.
Expected credit loss refers to the weighted average of credit loss of financial instruments weightedwith default risks. Credit loss refers to the difference between all contractual cash flow receivable by theCompany under contracts which are discounted according to the original effective interest rate, and allthe cash flow expected to be received, namely the present value of all cash shortfall. Specifically,financial assets acquired or derived to which credit impairment has occurred are discounted by theCompany according to the credit-adjusted effective interest rate.
For the acquired or derived financial assets with credit impairment, the Company only recognizesthe cumulative change of expected credit loss over the lifetime after initial recognition as the loss reserveon the balance sheet date.
For receivables and contract assets formed by transactions regulated by Accounting Standards forBusiness Enterprises No.14-Income, which do not contain significant financing components or theCompany does not consider the financing components in contracts not exceeding one year, the Companyuses simplified measurement methods to measure the loss reserve according to the expected credit lossamount over the lifetime.
For financial assets other than the above measurement methods, at each balance sheet date, theCompany assesses the financial assets to see if the credit risk has significantly increased after initialrecognition. If the credit risk has significantly increased after initial recognition, the Company calculatesprovision for loss according to the amount of expected credit loss over the lifetime of the assets; if creditrisk has not significantly increased after initial recognition, the Company calculates loss provision basedon expected credit loss in the future 12 months.
The Company uses available reasonable and well-founded information, including forward-lookinginformation, to determine whether the credit risk of financial instruments has increased significantlysince the initial recognition by comparing the default risk of financial instruments on the balance sheetdate with the default risk on the initial recognition date.
On the balance sheet date, if the Company judges that the financial instrument only has low creditrisk, it is assumed that the credit risk of the financial instrument has not increased significantly since theinitial recognition.
The Company assesses the expected credit risk and measures the expected credit loss on the basisof single financial instrument or portfolios of financial instruments. When based on the portfolio offinancial instruments, the Company classifies the financial instruments into different portfoliosaccording to the common risk characteristics.
The Company re-measures expected credit loss at each balance sheet date, and the amount ofincrease in loss provision or the written-back amount of loss provision arising from re-measurement isrecorded in current profit or loss as an impairment loss or gain. For financial assets measured atamortized cost, impairment losses were allocated to offset the carrying value of the financial assetpresented in the balance sheet. For the debt investments measured at fair value through othercomprehensive income, the Company recognized its loss reserves in other comprehensive income butdid not offset the carrying value of the financial asset.
(2) Financial instruments of which expected credit risk is assessed by portfolio and expected creditloss is measured using the three-stage model
| Item | Basis for portfolio recognition | Measurement of expected credit loss |
| Other receivables-aging portfolio | Aging portfolio | 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 through default risk exposure and the expected credit loss rate in the next 12 months or over the lifetime. |
(3) Receivables and contract assets with expected credit losses measured by portfolio using asimplified approach
1) Specific combination and method of measuring expected credit loss
| Item | Basis for portfolio recognition | Measurement of expected credit loss |
| Notes receivable--trade acceptance portfolio | Type of notes | 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 through default risk exposure and the expected credit loss rate or over the lifetime. Commercial acceptance bills receivable |
| Notes receivable--bank acceptance portfolio | Type of notes | 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 through default risk exposure and the expected credit loss rate or over the lifetime. Commercial acceptance bills |
| receivable | ||
| Accounts receivable--aging portfolio | Aging portfolio | With reference to historical credit loss experience, combined with the current situation and the forecast of future economic conditions, the comparison table between the aging of accounts receivable and the expected credit loss rate over the lifetime is prepared to calculate the expected credit loss. |
2) Accounts receivable--comparison of aging portfolio with expected credit loss rate over thelifetime
| Aging | Accounts receivable Expected credit losses (%) |
| Within 1 year (inclusive, the same below) | 5.00 |
| 1 to 2 years | 10.00 |
| 2 to 3 years | 50.00 |
| Over 3 years | 100.00 |
6. Offsetting financial assets and financial liabilities
The financial assets and financial liabilities are respectively listed in the balance sheet, notoffsetting each other. However, when all the following criteria are met, financial assets and liabilities areshown on a net basis after offsetting: (1) The Company has the statutory right to offset the recognizedamounts, and such right is currently enforceable; (2) The Company intends to settle the financial assetsand liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously.
For the transfer of financial assets where the derecognition criteria are not met, the Company maynot offset the financial assets transferred against the related liabilities.
11. Notes receivable
Determination methods and accounting methods of the expected credit losses of notes receivable
□ Applicable √ Not applicable
12. Accounts receivable
Determination methods and accounting methods of the expected credit losses of accountsreceivable
□ Applicable √ Not applicable
13. Receivables financing
□ Applicable √ Not applicable
14. Other receivables
Determination methods and accounting methods of the expected credit losses of other receivables
□ Applicable √ Not applicable
15. Inventories
√ Applicable □ Not applicable
1. Classification of inventories
Inventories refer to finished goods or commodities for sale held in daily activities, unfinished goodsin manufacturing process, and materials and supplies consumed in process of manufacturing products orproviding services, etc.
2. Valuation method of inventories upon delivery
The cost measurement for the inventories delivered is made with a one-time weighted averagemethod at the end of the month.
3. Basis for determining the net realizable value of various categories of inventories
On the balance sheet date, inventories should be measured whichever is lower in accordance withthe cost and net reliable value, and the provision for decline in value of inventories shall be madeaccording to the difference that the cost of each item of inventories higher than the net realizable value.For inventories directly used for sale, the net realizable value shall be determined by the estimatedselling price of the inventory minus the estimated selling expenses and relevant taxes and fees in thenormal production and operation process. For materials inventory requiring processing during normalprocess of production and operation, the net realizable value shall be determined by deducting estimatedcosts occurring during completion, estimated selling expenses and related taxes from estimated saleprice of finished products. On the balance sheet date, some of the same inventory have contract priceagreed, others not; their net realizable value shall be recognized respectively and compared with thecorresponding cost to determine the amount of provision or write-back of inventory depreciation reserve.
4. Inventory system of inventories
The perpetual inventory system is adopted for the inventories of the Company.
5. Amortization of low-value consumables and packing materials
(1) Low-value consumables
Low-value consumables are amortized with a one-time write-off method.
(2) Packing materials
Packing materials are amortized with a one-time write-off method.
16. Contract assets
(1). Method and criteria for determining contract assets
√ Applicable □ Not applicable
The Company presented contract assets or contract liabilities on the balance sheet in accordancewith the relationship between performance obligations and customer payment. The Company will set offthe contract assets and contract liabilities under the same contract and present them in net amount.
The right of the Company to receive consideration from its customers unconditionally (i.e. onlydepending on the passage of time) is presented as receivables, and the right to receive consideration forgoods transferred to its customers (depending on factors other than the passage of time) is presented as acontract asset.
The obligation to transfer goods to customers for consideration received or receivable fromcustomers is presented as a contract liability.
(2). Determination methods and accounting methods of the expected credit losses of contract assets
□ Applicable √ Not applicable
17. Assets held for sale
□ Applicable √ Not applicable
18. Debt investments
(1). Determination methods and accounting methods of the expected credit losses of debtinvestments
□ Applicable √ Not applicable
19. Other debt investments
(1). Determination methods and accounting methods of the expected credit losses of other debtinvestments
□ Applicable √ Not applicable
20. Long-term receivables
(1). Determination methods and accounting methods of the expected credit losses of long-termreceivables
□ Applicable √ Not applicable
21. Long-term equity investments
√ Applicable □ Not applicable
1. Judgment criteria for joint control and significant influence
Joint control refers to the control the Company shares with other entities over a certain arrangementfollowing relevant agreements by which any activity under the arrangement may be conducted only withthe unanimous agreement of all participants sharing the power of control. Significant influence refers tothe power to participate in making decisions on the financial and operating policies of an investee, butnot to control or do joint control together with other parties over the formulation of these policies.
2. Determination of investment cost
(1) In case of a business combination under the same control, if the acquirer pays cash, transfersnon-cash assets, assumes debts or issues equity securities as merger consideration, the share of theowner’s equity of the acquiree obtained on combination date in the carrying value of the financialstatements of the ultimate controlling party is deemed as an initial investment cost. Capital reserve isadjusted based on the difference between initial investment cost of long-term equity investment andcarrying value of paid combination consideration or total nominal value of issued share; if the capital
reserve is insufficient to offset such difference, the difference will be offset against retained earnings.
If business combination under the same control is realized step by step through multipletransactions, whether the multiple transactions is a “Package Deal” is determined. If the deals fell into a"Package Deal", all transactions shall be treated as a transaction to gain control. If it is not a “packagedeal”, on the combination date, the initial investment cost of the long-term equity investment shall bedetermined based on the share of net assets’ carrying value of the acquiree in the consolidated financialstatements of the ultimate controlling party. The capital reserve is adjusted based on the differencebetween the initial investment cost of the long-term equity investment on the combination date and thesum of the carrying value of the long-term equity investment before the acquisition and the carryingvalue of the new payment consideration on the acquisition date. If the capital reserve is insufficient tooffset such difference, the difference will be offset against retained earnings.
(2) For business combinations not under the same control, the fair value of the combinationconsideration paid by it on the acquisition date shall be its initial investment cost.
For long-term equity investment formed by a business combination achieved step by step throughmultiple transactions, relevant accounting treatment is performed with distinctions made betweenseparate financial statements and consolidated financial statements:
1) In the separate financial statements, the sum of the fair value of the originally held equityinvestment and the additional investment cost shall be taken as the initial investment cost whenconverting to using the cost method.
2) In the consolidated financial statements, it is determined whether it is a “package deal”. If thedeals fell into a "Package Deal", all transactions shall be treated as a transaction to gain control. If it isnot a “Package Deal”, the equity of the acquiree held prior to the acquisition date shall be re-measuredaccording to the fair value of the equity at the acquisition date, and the difference between the fair valueand the carrying value shall be recorded in the current investment income. Where the equity of theacquiree held prior to the acquisition date involves other comprehensive income accounted for based onthe equity method, etc., the other comprehensive income related to it shall be converted into the currentinvestment income of the acquisition date. However, other comprehensive income arising from there-measurement of net liabilities or changes in net assets of defined benefit plans by the investee isexcluded.
(3) Except for business combination: If it is acquired by paying cash, the actual acquisition priceshall be taken as its initial investment cost; if it is acquired by issuing equity securities, the fair value ofthe issued equity securities shall be taken as its initial investment cost; if it is acquired by means of debtrestructuring, the initial investment cost shall be determined according to the Accounting Standards forBusiness Enterprises No. 12-Debt Restructuring; if it is acquired by exchange of non-monetary assets,the initial investment cost shall be determined according to the Accounting Standards for BusinessEnterprises No. 7-Exchange of Non-monetary Assets.
3. Method for subsequent measurement and recognition of profit or loss
The long-term equity investment controlled by the investee shall be accounted for by the cost
method; the long-term equity investment of associated enterprises and joint ventures shall be accountedfor by the equity method.
4. Treatment method of investing in subsidiaries until loss of control right step by step throughmultiple transactions
(1) Separate financial statements
For the disposal of long-term equity investments, the difference between the carrying value and theactual price acquired shall be recorded into profit and loss of the current period. For the remaining equity,if it still has a significant impact on the investee or implements joint control with other parties, it shall beaccounted for by the equity method; if it is no longer possible to exercise control, joint control orsignificant influence on the investee, accounting shall be carried out in accordance with the relevantprovisions of Accounting Standards for Business Enterprises No. 22-Recognition and Measurement ofFinancial Instruments.
(2) Consolidated financial statements
1) The Company disposes of investment in subsidiaries step by step through multiple transactionsuntil loss of control right. If it is not a "package deal", before the loss of control right, the differencebetween the disposal price and the share of net assets is continuously calculated by the subsidiary fromthe acquisition date or combination date corresponding to the disposal of long-term equity investmentshall be adjusted, and the capital reserve (capital premium) shall be adjusted. If the capital premium isinsufficient to offset, the retained earnings shall be offset.
In case of loss of control over the original subsidiary, the remaining equity shall be re-measuredaccording to its fair value on the date of loss of control. The aggregate of the consideration obtained bydisposing of the equity and the fair value of the remaining equity less the portion of the net assets of thesubsidiary that has been measured, as calculated at the original shareholding proportion, from theacquisition date or combination date is recognized in profit and loss of the current period on investmentsin which the control is lost, and goodwill shall be offset. Other comprehensive income, etc. related to theoriginal subsidiary’s equity investment will be converted into income from investment for the currentperiod when the control is lost.
2) The Company disposes of investment in subsidiaries step by step through multiple transactionsuntil loss of control right. If it is a “package deal”, the Company treats each transaction as a transactionthat disposes of a subsidiary and loses control. However, the difference between each disposal pricebefore losing control and the share of subsidiaries’ net assets corresponding to the disposed investmentshall be recognized as other comprehensive income in the consolidated financial statements, and shall betransferred into the profits and losses of the current period in case of loss of control.
22. Investment property
Not applicable
23. Fixed assets
(1). recognition criteria
√ Applicable □ Not applicable
The fixed assets of the Company refer to tangible assets held for production of goods, provision oflabor services, lease or business with a service life of over a fiscal year. Fixed assets shall be recognizedwhen the economic benefits are flowing in and the cost can be measured reliably.
(2). Depreciation method
√ Applicable □ Not applicable
| Category | Depreciation method | Depreciable life (year) | Residual value rate | Annual depreciation rate |
| Houses and buildings | Straight-line depreciation method | 20 | 3% | 4.85% |
| Machinery equipment | Straight-line depreciation method | 4-10 | 3% | 9.70%-24.25% |
| Means of transportation | Straight-line depreciation method | 2-10 | 3% | 9.70%-48.50% |
| Electronic and other equipment | Straight-line depreciation method | 2-10 | 3% | 9.70%-48.50% |
| Fixed assets fixtures | Straight-line depreciation method | 5 | 0 | 20% |
(3). Recognition basis, valuation and depreciation method for fixed assets under financing lease
□ Applicable √ Not applicable
24. Construction in progress
√ Applicable □ Not applicable
1. Fixed assets shall be recognized when the economic benefits are flowing in and the cost can bemeasured reliably. The construction in progress is measured according to the actual cost incurred beforethe construction of the asset reaches its intended serviceable condition.
2. When construction in progress reaches expected serviceable conditions, it will be carried forwardinto fixed assets based on its actual cost. For those that have reached their intended serviceable status buthave not yet completed the settlement, they shall be transferred to fixed assets according to the estimatedvalue, and the original provisional value shall be adjusted according to the actual cost after the finalaccounts are completed, but the depreciation already accrued shall not be adjusted.
25. Borrowing costs
√ Applicable □ Not applicable
1. Recognition principles for the capitalization of borrowing costs
The borrowing costs that have occurred and can be directly attributed to the acquisition,construction or production of assets eligible for capitalization are capitalized by the Company andrecorded in relevant cost of assets; other borrowing costs are recognized as expenses based on theamount incurred when they occur, and shall be recorded in profit and loss of current period.
2. Period for capitalization of borrowing costs
(1) When all the following conditions are met by the borrowing costs, capitalization will start: 1)asset expenditure has occurred; 2) borrowing costs have occurred; 3) acquisition, construction orproduction activities have started in order to make the fixed asset be ready for the intended use or sale.
(2) If the acquisition, construction or production of an asset eligible for capitalization iscontinuously suspended for over 3 months for abnormal reasons, capitalization of the borrowing costsshall be suspended; borrowing costs incurred during the suspension shall be recognized as the currentexpenses until the acquisition, construction or production of the asset is resumed.
(3) When the assets with the purchase, construction or production meeting the capitalizationconditions reach the expected available or marketable state, the borrowing cost ceases to be capitalized.
3. Capitalization rate and capitalization amount of borrowing costs
For a specifically borrowed fund for the acquisition, construction or production of an asset eligible forcapitalization, the amount of interest that shall be capitalized is determined based on the interestexpenses incurred in the period when a specifically borrowed fund is obtained (including theamortization of discounts or premiums recognized according to the effective interest method) less anyincome earned on the unused borrowing fund as a deposit in a bank or as a temporary investment. Wherea general borrowing is used for the acquisition, construction and production of an asset eligible forcapitalization, the amount of interest that shall be capitalized is determined by multiplying the part of theaccumulative asset disbursements in excess of the weighted average asset disbursement for thespecifically borrowed fund by the capitalization rate of the general borrowing used.
26. Biological assets
□ Applicable √ Not applicable
27. Oil and gas assets
□ Applicable √ Not applicable
28. Right-of-use assets
□ Applicable √ Not applicable
29. Intangible assets
(1). Pricing method, service life, and impairment test
√ Applicable □ Not applicable
1. Intangible assets include land use rights, software, etc., which are initially measured at costs.
2. Intangible assets with limited service life are properly amortized within the service life based onthe expected method to realize economic benefits relating to the intangible assets. Where the expectedrealization method cannot be reliably determined, Straight-line Amortization Method is adopted. Thedetailed period is as follows:
| Item | Amortization period (year) |
| Land use right | Duration of land use |
| Software | 2-5 |
Intangible assets with indefinite useful lives are not amortised and the Company reviews the usefullife of the intangible asset in each accounting period.
(2). Accounting policies for internal research and development costs
√ Applicable □ Not applicable
The expenditures occurring during the research period of internal R&D items are included in theprofit or loss for the current period at the time of occurrence. Expenditure on internal research anddevelopment projects in the research stage shall be recognized as intangible assets when the followingconditions are met at the same time: (1) It is technically feasible to complete the intangible assets so thatthey can be used or sold; (2) it has the intention of completing the intangible asset and using or selling it;
(3) the ways in which intangible assets generate economic benefits include the existence of a market forthe products produced by using such intangible assets or the existence of a market for the intangibleassets themselves, and intangible assets that will be used internally shall be proven their usefulness; (4)there should be sufficient technical, financial and other resources to complete the development of theintangible asset and have the ability to use or sell the intangible assets; (5) the expenditure attributed tothe development stage of intangible assets can be measured reliably.
30. Long-term assets impairment
√ Applicable □ Not applicable
For long-term equity investments, fixed assets, construction in progress, right-of-use assets,long-term assets with limited service life and other long-term assets, if there are signs of impairment onthe balance sheet date, the recoverable amount shall be estimated. Goodwill and intangible assets withuncertain service life formed by business combinations are tested for impairment every year regardlessof whether there are signs of impairment. Goodwill is tested for impairment in conjunction with the assetgroup or combination of asset groups to which it relates.
If the recoverable amount of the above-mentioned long-term assets is lower than its carrying value,the asset impairment reserve shall be recognized according to the difference and recorded in profit andloss of the current period.
31. Long-term prepaid expense
√ Applicable □ Not applicable
Long-term prepaid expenses are accounted for all expenses that have been paid and have anamortization period of more than one year (excluding one year). The long-term prepaid expenses areaccounted for according to the actual amount incurred and are amortized averagely over the benefitperiod or the specified period. If the long-term deferred expenses item cannot bring benefit in thesubsequent accounting period, the amortized value of the item that has not been amortized will betransferred to the profit or loss for the current period.
32. Contract liabilities
(1). Method for determining contract liabilities
√ Applicable □ Not applicable
The Company presented contract assets or contract liabilities on the balance sheet in accordancewith the relationship of performance obligations and customer payment. The Company will set off thecontract assets and contract liabilities under the same contract and present them in net amount.
The obligations of transferring goods to customers as a result of the consideration that the Companyhad received or shall receive from customers were presented as contract liabilities.
33. Employee remuneration
(1). Accounting treatment methods of short-term remuneration
√ Applicable □ Not applicable
1. Employee remuneration includes short-term remuneration, post-employment benefits, dismissalbenefits and other long-term employee benefits.
2. Accounting treatment methods of short-term remuneration
Within the accounting period when employees provide service, the actual short-term remunerationshall be recognized as liabilities and be recorded in profit and loss of the current period or relevant assetcosts.
(2). Accounting treatment method for post-employment benefits
√ Applicable □ Not applicable
The Company classifies post-employment benefit plans into the defined contribution plan and thedefined benefit plan.
(1) During the accounting period in which the employees provide services to the Company, theamount to be contributed as calculated according to the defined contribution plan is recognized as aliability and recorded in the profit or loss for the current period or the related asset costs.
(2) The accounting handling of the defined benefit plan usually includes the following steps:
1) Based on the projected unit credit method, related demographic variables and financial variablesare estimated by using unbiased and mutually compatible actuarial assumptions, the obligations under
the defined benefit plan are measured, and the periods to which relevant obligations are attributed aredetermined. Meanwhile, the Company will discount the obligations incurred from a defined benefit plan,to determine present value of defined benefit plan and current service cost.
2) The deficit or surplus formed by present value of obligations to the defined benefit plan minusthe fair value of assets of the defined benefit plans is recognized as one net liabilities or net profits of thedefined benefit plans. If the defined benefit plans have a surplus, the Company shall measure the netprofit of the defined benefit plans according to whichever is lower between the surplus and upper limiton the assets of the defined benefit plans.
3) At the end of the period, the employee compensation cost incurred in the defined benefit plan isrecognized as service cost, net interest arising from the net liabilities and net assets of the defined benefitplan, and changes in the net liabilities or net assets of the remeasured defined benefit plan. Of which, thenet interest arising from the net liabilities or net assets of the defined benefit plan is recorded in profitand loss of the current period or related asset cost, and changes in the net liabilities or net assets of theremeasured defined benefit plan are recorded in other comprehensive income, and is not written-back toprofits and losses in subsequent accounting periods. But these amounts recognized in othercomprehensive income can be transferred within the scope of equity.
(3). Accounting treatment method for dismissal benefits
√ Applicable □ Not applicable
If the Company provides the employee with dismissal benefits, the Company shall recognize theemployee remuneration liabilities and record them in profit or loss for the current period on thefollowing dates (whichever is earlier): (1) the date when the Company may not unilaterally withdrawdismissal benefits provided due to termination of labor relationship plans or layoff proposals; (2) thedate when the Company recognizes costs or expenses relating to the restructure of payments of dismissalbenefits.
(4). Accounting treatment method for other long-term employee benefits
√ Applicable □ Not applicable
If other long-term benefits provided by the Company to employees meet the conditions of thedefined contribution plan, accounting treatment shall be carried out according to the relevant provisionsof defined contribution plan. Except for that, the other long-term benefits shall be subject to theaccounting handling according to the defined benefit plan. To simplify the related accounting treatment,employee compensation cost incurred in the defined benefit plan is recognized as service costs. Netinterests of net liabilities or net assets of other long-term employee benefits, as well as the total netamount of changes caused by re-measurement of net liabilities or net assets of other long-term employeebenefits, will be recorded in profit and loss of the current period or the related asset costs.
34. Lease liabilities
□ Applicable √ Not applicable
35. Provisions
□ Applicable √ Not applicable
36. Share-based payment
√ Applicable □ Not applicable
1. Category of share-based payment
The Company's share-based payment includes equity-settled share-based payment and cash-settledshare-based payment.
2. Relevant accounting processing for the implementation, modification, and termination ofshare-based payment plans
(1) Equity-settled share-based payment
For an equity-settled share-based payment in return for services of employees, if the right can beexercised immediately after the grant, the fair value of the equity instruments shall, on the grant date, berecorded in the relevant costs or expenses and the capital reserve shall be adjusted accordingly. For anequity-settled share-based payment in return for employee services, if the right cannot be exercised onlyafter completing the service during the vesting period or meeting the prescribed performance conditions,then on each balance sheet date within the vesting period, the services acquired in the current periodshall, based on the best estimate of the number of vested equity instruments, be recorded in the relevantcosts or expenses at the fair value of the equities instruments on the grant date, and the capital reserveshall be increased accordingly.
For an equity-settled share-based payment in return for the service of any other party, if the fairvalue of the service of any other party can be reliably measured, it shall be measured at the fair value ofthe service of any other party on the acquisition date; if the fair value of the service of any other partycan not be reliably measured, but the fair value of the equity instruments can be reliably measured, itshall be measured at the fair value of the equity instruments on the acquisition date and recorded in therelevant costs or expenses, and the owner's equity shall be increased correspondingly.
(2) Cash-settled share payment
For a cash-settled share-based payment in return for services of employees, if the right can beexercised immediately after the grant, the fair value of liabilities assumed by the Company shall, on thegrant date, be recorded in the relevant costs or expenses and the liabilities shall be increased accordingly.For a cash-settled share-based payment, if the right cannot be exercised only after completing the serviceduring the vesting period or meeting the prescribed performance conditions, on each balance sheet datewithin the vesting period, the services acquired in the current period shall, based on the best estimate ofthe information about the vesting right, be recorded in the relevant costs or expenses and thecorresponding liabilities at the fair value of the liabilities assumed by the Company.
(3) Modification and termination of share-based payment plans
If the modification increases the fair value of the granted equity instruments, the Company shallrecognize the increase of the services acquired according to the increase of the fair value of the equityinstruments. If the modification increases the number of the granted equity instruments, the Companyshall recognize the increased fair value of equity instruments as the increase of the services acquired. Ifthe Company modifies the vesting conditions in a way that is favorable to employees, the Company shallconsider the modified vesting conditions when processing vesting conditions.
If the modification reduces the fair value of the granted equity instruments, the Company shallcontinue to recognize the amount of the service acquired based on the fair value of the equityinstruments on the grant date, and shall not consider the decrease of the fair value of the equityinstruments. If the modification reduces the number of equity instruments, the Company shall processequity instruments by reducing some of them as the cancellation of the granted equity instruments. If thevesting conditions are modified in a way that is unfavorable to employees, the Company shall notconsider the modified vesting conditions when processing vesting conditions.
If the Company cancels the granted equity instruments or settles the granted equity instruments (notincluding those canceled due to failure to meet vesting conditions) during the vesting period, thecancellation or settlement shall be processed as the vested right and the amount to be recognized withinthe remaining vesting period originally shall be recognized immediately.
37. Preference shares, perpetual bonds and other financial instruments
□ Applicable √ Not applicable
38. Revenue
(1). Accounting policy for recognition and measurement of revenue
√ Applicable □ Not applicable
1. Principles of revenue recognition
On the commencement date of a contract, the Company shall assess the contract, identify eachsingle performance obligation in the contract, and determine that each single performance obligation issatisfied whether within a certain period of time or at a certain point in time.
When one of the following conditions is met, it belongs to fulfilling the performance obligationwithin a certain period of time, otherwise, it belongs to fulfilling the performance obligation at a certainpoint in time: (1) The customer obtains and consumes the economic benefits brought by the Company'sperformance while the Company performs the obligation; (2) The customer can control the goods underconstruction during the performance of the Company; (3) The goods produced during the performanceof the Company have irreplaceable uses, and the Company has the right to collect amount for thecumulative performance completed so far during the whole contract period.
For the performance obligations performed within a certain period of time, the Company recognizesthe revenue according to the performance progress within that period of time. When the performance
progress cannot be reasonably determined, if the cost incurred is expected to be compensated, therevenue shall be recognized according to the amount of the cost incurred until the performance progresscan be reasonably determined. For performance obligations performed at a certain point in time, revenueis recognized at the time when the customer obtains control over related goods or services. To decidewhether the customer has obtained the control over goods, the Company takes into account the followingsigns: (1) the enterprise has the present right to collection for the goods, meaning the customer bears thepresent obligation to payment for the goods; (2) the enterprise has passed the legal title to the goods tothe customer, meaning the customer has had the legal title to the goods; (3) the enterprise has transferredthe physical possession of the goods to the customer, meaning the customer has had the physicalpossession of the goods; (4) the enterprise has transferred the major risks and remunerations concerningthe title to the goods to the customer, meaning the customer has obtained the major risks andremunerations concerning the title to the goods; (5) the customer has accepted the goods; (6) other signsto show that the customer has obtained the control over the goods.
2. Principles of revenue measurement
(1) The Company measures revenue on the basis of the transaction price allocated to eachperformance obligation. Transaction price is the amount of consideration that the Company is expectedto be entitled to receive for transferring goods or services to customers, excluding the amount receivedon behalf of third parties and the amount expected to be refunded to customers.
(2) If there is variable consideration in a contract, the Company shall determine the best estimate ofthe variable consideration according to the expected value or the most likely amount, but the transactionprice including the variable consideration shall not exceed the amount that the cumulative recognizedincome will most likely not be significantly written-back when the relevant uncertainty is eliminated.
(3) If there is a significant financing component in a contract, the Company shall determine thetransaction price according to the amount payable in cash when the customer assumes control of thegoods or services. The difference between the transaction price and the contract consideration shall beamortized by the effective interest rate method during the contract period.
(4) If a contract contains two or more performance obligations, the Company shall allocate thetransaction price to each single performance obligation according to the relative proportion of the singleselling price of the goods promised by each single performance obligation on the commencement date ofthe contract.
3. Specific methods for revenue recognition
The Company mainly sells adaptors, wall switches and sockets, LED lighting and digitalaccessories. In addition to meeting the general principles of revenue recognition, the sales of productsunder different sales situations are generally recognized after meeting the following conditions.
(1) The specific time points for revenue recognition of various domestic sales methods of theCompany are as follows:
1) Distribution method: Revenue is recognized when the goods are sent to the designated place andthe distributor receives the goods.
2) Direct sales: For direct sales by supermarkets and e-commerce, when the buyer receives thegoods and publishes the information on the quantity and amount of goods received on its supplierplatform, the Company recognizes the revenue when it completes the reconciliation. For sales byopening an online shop on the e-commerce platform, the Company recognizes the revenue when thecustomer receives the goods and confirms such receipt on the e-commerce platform. For the sales by realestate developers or decoration companies, the Company recognizes the revenue when the buyer hasreceived the goods and both parties complete the reconciliation. For offline direct sales such as Shanghaiarea, the Company recognizes the revenue when the goods are delivered to the buyer.
3) Consignment method: The Company recognizes the revenue when receiving the consignmentlist.
(2) The Company recognizes its revenue when it has completed the customs declaration formalitiesand obtained the bill of lading.
(2). Different business models are adopted for different businesses, which may lead to thedifferences in the accounting policy for recognition of revenue
□ Applicable √ Not applicable
39. Contract costs
√ Applicable □ Not applicable
Assets related to contract costs include costs of obtaining a contract and costs to fulfil a contract.
The Company recognizes as an asset the incremental costs of obtaining a contract if it expects torecover those costs. The costs of obtaining a contract shall be included in profit or loss if the asset'samortization period is one year or less.
If the costs incurred in fulfilling a contract are not within the scope of standards related toinventories, fixed assets or intangible assets, etc., the Company shall recognize the costs to fulfil acontract as an asset if all the following criteria are satisfied:
1. The costs relate directly to a contract or to an anticipated contract, including direct labour, directmaterials, manufacturing overhead cost (or a similar cost), costs that are explicitly chargeable to thecustomer under the contract, and other costs that are only related to the contract.
2. The costs enhance the resources of the Company that will be used in satisfying performanceobligations in the future.
3. The costs are expected to be recovered.
An asset related to contract costs shall be amortized on a systematic basis that is consistent withrelated goods or services and included in profit or loss.
The Company shall make provision for impairment and recognize it as impairment losses on assetsto the extent that the carrying amount of an asset related to the contract costs exceeds the remainingamount of consideration that the Company expects to receive in exchange for the goods or services towhich the asset relates less the costs expected to be incurred. If the remaining amount of considerationthat the Company expects to receive in exchange for the goods or services to which the asset relates
minus the costs expected to be incurred is higher than the carrying amount of the asset due to thesubsequent changes in the factors of impairment in previous periods, the asset impairment provisions setaside should be reversed and included in profit and loss of the current period. However, the carryingamount of the asset upon the reversal should not exceed the carrying amount of the asset on the reversaldate, supposing that impairment provisions are not set aside.
40. Government grants
√ Applicable □ Not applicable
1. Government grants are recognized when all the criteria below are satisfied: (1) The Company isable to satisfy all the conditions attached to such government grant; (2) The Company is able to receivethe grants from the government. Government grants were measured at the amount received or receivableif they were monetary assets. Non-monetary government grants were measured at fair value; if the fairvalue could not be reliably obtained, they were measured at the nominal amount.
2. Judgment basis and accounting treatment method for government grants related to assets
Government documents stipulate that government grants used to purchase, build or otherwise formlong-term assets are classified as government grants related to assets. If the government documentsconcerning a government grant do not specify the target of the grant, it should be determined based onthe basic conditions that must be met in order to receive the grant, and government grants which areconditional upon a long-term asset acquired, constructed or otherwise formed are classified asasset-related government grants. Government grants related to assets are used to offset carrying value ofassets or are recognized as deferred income. If recognized as deferred income, government grants relatedto assets shall be recorded in the profit and loss in stages in a reasonable and systematic manner withinthe useful life of the relevant asset. Government grants measured at nominal amount were directlyrecognized as profit or loss for the current period. If the underlying assets were sold, transferred,scrapped, or damaged before the end of the useful life, the unallocated balance of the relevant deferredincome was transferred to the profit or loss for the period of assets disposal.
3. Judgment basis and accounting treatment method for government grants related to income
Government grants other than government grants related to assets were classified as governmentgrants related to income. For government grants, including both asset-related parts and income-relatedparts that are difficult to be distinguished, overall government grants shall be classified as governmentgrants related to income. Government grants related to income shall be recognized as deferred income ifthey are used to compensate related future expenses or losses and recorded in profit and loss of thecurrent period during the period when relevant expenses are recognized, or shall be recognized ascurrent profit and loss or offset the related costs if they are used to compensate related expenses or lossesincurred.
4. Government grants related to daily activities are recognized as other income or used to offsetrelevant costs according to the substance of business activities. Government grants that are not related todaily activities are recognized as non-operating income and expenses.
5. Accounting method for interest subsidy on policy prime loans
(1) If the fiscal system allocated the funds of interest subsidies to the lending bank, and the lendingbank provided loans to the Company at a policy prime interest rate, the actual loan amount received bythe Company was recognised as the carrying value of the loan, and the relevant borrowing costs werecalculated in accordance with the loan principal and the policy prime interest rate. /The fair value of theloan was recognised as the carrying value and the borrowing costs were calculated according to theeffective interest method. The discrepancy between the actual loan amount received by the Companyand the fair value of the loan was recognised as deferred income. The deferred income was amortised bythe effective interest method during the outstanding maturities of the loan to offset relevant borrowingcosts.
(2) If the fiscal system allocated the funds of interest subsidies to the Company directly, theCompany reduced the corresponding interest subsidies against relevant borrowing costs.
41. Deferred income tax assets/Deferred income tax liabilities
√ Applicable □ Not applicable
1. Based on the difference between the carrying value of assets and liabilities and their tax bases(the difference between the tax base and the carrying value, where tax bases of items that are notrecognized as assets and liabilities can be determined according to the tax law), deferred income taxassets or deferred income tax liabilities are recognized in accordance with the applicable tax rates duringthe expected period in which such assets are to be recovered or such liabilities are to be settled.
2. Deferred income tax assets shall be recognized to the extent of the amount of the taxable incomethat is likely to be obtained and deducted from deductible temporary difference. On the balance sheetdate, if there is conclusive evidence that it is probable that sufficient taxable income will be available tooffset the deductible temporary differences in the future, the deferred income tax assets that have notbeen recognized in the previous accounting period shall be recognized.
3. The Company reviews carrying values of deferred tax assets on the balance sheet date. If it isdetermined that the Company is not Period likely to obtain adequate taxable income to offset benefitsfrom deferred tax assets, the carrying values of deferred tax assets are written down. Such write-downsare reversed when it becomes probable that sufficient taxable income should be available.
4. The current income tax and deferred income tax of the Company shall be recorded in profit andloss of the current period as income tax expenses or incomes, excluding the income taxes incurred in thefollowing circumstances: (1) Business combination; (2) Transactions or events directly recognized in theowner's equity.
42. Leases
(1). Accounting treatment method for operating lease
√ Applicable □ Not applicable
1. The Company as the leasee
On the beginning date of the lease term, the Company will recognize the lease with a lease term notexceeding 12 months and excluding the purchase option as a short-term lease. Leases with lower valuewhen a single leased asset is a brand-new asset are identified as low-value asset leases. If the Companysublets or expects to sublet the leased assets, the original lease shall not be deemed as a low-value assetlease.The Company records the payments of short-term and low-value asset leases incurred during eachperiod of the lease term in the relevant asset costs or the profit or loss for the current period by thestraight-line method.
The Company will recognize right-of-use assets and lease liabilities on the inception date of thelease term, excluding the above short-term and low-value asset leases.
(1) Right-of-use assets
Right-of-use assets are initially measured at costs, including: 1) The initial measurement amount oflease liabilities; 2) If there is a lease incentive for the lease payment paid on or before the start date ofthe lease term, the relevant amount of the lease incentive already enjoyed shall be deducted; 3) Initialdirect expenses incurred by the lessee; 4) The expected cost to be borne by the lessee in order todismantle and remove the assets leased, restore original state of the place where the assets leased are in,or restore the assets leased to the state stipulated in the lease terms.
The Company depreciates right-of-use assets on a straight-line basis. If it is reasonably certain thatownership of the leased asset(s) will be obtained at the end of the lease term, the Company depreciatesthe leased asset(s) over its/their remaining service life. If it is not reasonably certain that the ownershipof the leasehold property will be obtained at the end of the lease term, the Company will depreciate theleased asset(s) over the lease term or the remaining service life, whichever is shorter.
(2) Lease liabilities
On the start date of the lease term, the Company recognizes the present value of the outstandinglease payments as lease liabilities. The Company regards the interest rate implicit in lease as the rate ofdiscount when calculating the present value of the lease payment. The incremental lending rate of thelessee will be deemed as the rate of discount, if the interest rate implicit in lease cannot be confirmed.The difference between the lease payment and its present value is regarded as an unrecognized financingexpense. Interest expense is recognized at the discount rate of the present value of the recognized leasepayment during each period of the lease term and is recorded in the profits and losses of the currentperiod. Variable lease payments that are not recorded in the lease liabilities measurement are recorded inprofits and losses of the current period when they are actually incurred.
After the start of the lease term, in case of any changes in actual fixed payment amount, theexpected payable amount of the guarantee residual value, the index or ratio used to determine the leasepayment amount, and the evaluation result or actual exercise of the purchase option, renewal option ortermination option, the Company will re-calculate the lease obligation using the present value of thechanged lease payment, and adjusts the carrying value of right-of-use assets accordingly. If the carryingvalue of right-of-use assets has been reduced to zero, while lease liabilities still needs to be further
reduced, the remaining amount will be recorded in the profits and losses of the current period.
2. The Company as lessor
On the start date of the lease term, the Company divides the lease that substantially transfers almostall risks and rewards related to the ownership of the leased assets into finance leases, except foroperating leases.The Company recognizes the lease payments receivable as rental earnings in each period within thelease term on a straight-line basis. The initial direct costs related to the operating lease are capitalized,amortized within the lease term on the same basis as the recognition of rental earnings, and included inthe profit or loss for the current period. Variable lease payments obtained by the Company in relation tooperating leases that are not included in the lease receivable are included in the profit or loss for thecurrent period when they are actually incurred.
(2). Accounting treatment method for finance lease
□ Applicable √ Not applicable
(3). Definition method and accounting treatment method of lease under the new lease standards
□ Applicable √ Not applicable
43. Other important accounting policies and accounting estimation
□ Applicable √ Not applicable
44. Changes in important accounting policies and accounting estimation
(1). Changes in important accounting policy
√ Applicable □ Not applicable
| Contents of and reasons for the changes to accounting policies | Approval procedure | Remarks (Name and amount of items in the statement suffering significant influence) |
| 1. The Company started to implement the provisions on "accounting treatment for the sale of products or by-products produced by an enterprise before the fixed assets reach their intended useable state or during the research and development process" stipulated in the Interpretation No. 15 of the Accounting Standards for Business Enterprises issued by the Ministry of Finance since 1 January 2022. Changes in the accounting policy had no influence on the Company's financial statements. | No approval required | No influence |
| 2. The Company started to implement the provisions on "judgment on loss-making contracts" stipulated in the Interpretation No. 15 of the Accounting Standards for Business Enterprises issued by the Ministry of Finance since 1 January 2022. Changes in the accounting policy had no influence on the Company's financial statements. | No approval required | No influence |
| 3. The Company started to implement the provisions on "accounting treatment of the income tax effect of financial instrument related dividend whose issuer is classified as equity instrument" stipulated in the Interpretation No. 16 of the Accounting Standards for Business Enterprises issued by the Ministry of Finance since 30 November 2022. Changes in the accounting policy had no influence on the Company's financial statements. | No approval required | No influence |
| 4. The Company started to implement the provisions on "accounting treatment of share-based payment in cash settlement modified into share-based payment in equity settlement by the enterprise" stipulated in the Interpretation No. 16 of the Accounting Standards for Business Enterprises issued by the Ministry of Finance since 30 November 2022. Changes in the accounting policy had no influence on the Company's financial statements. | No approval required | No influence |
Other notes:
N/A
(2). Key changes in accounting estimates
□ Applicable √ Not applicable
(3). Adjustments to the financial statements at the beginning of the year of implementation of thenew accounting standards or interpretations of the standards for the first time since 2022
□ Applicable √ Not applicable
45. Other information
√ Applicable □ Not applicable
(1) Segment reporting
The Company identifies the operating segments based on the internal organisation structure,management requirements and internal reporting system. An operating segment of the Company refersto a component that meets the following conditions:
1. The component can generate revenue and incur expenses in its routine activities;
2. The management assesses the operating results of the component on a regular basis to decide itsresource allocation and evaluate its performance;
3. The Company can obtain the financial position, operating results, cash flow and other accountinginformation of the component through analysis.
(2) Hedge accounting
1. The hedging relationship is classified into fair value hedge, cash flow hedge and hedge of netinvestment in foreign operations.
2. For hedging that meets the following conditions, hedging accounting methods are used to dealwith it: (1) The hedging relationship is only composed of qualified hedging instruments and hedgedinstruments; (2) At the beginning of hedging, the Company formally designated hedging instruments andhedged items, and prepared written documents on hedging relationship and risk management strategiesand risk management objectives of the Company engaged in hedging; (3) The hedging relationshipmeets the requirements of hedging effectiveness.
When the hedging meets the following conditions at the same time, the Company determines thatthe hedging relationship meets the requirements of hedging effectiveness: (1) There is an economicrelationship between the hedged item and the hedging instrument; (2) Credit risk does not play adominant role in the value changes caused by the economic relationship between hedged items andhedging instruments; (3) The hedging ratio of the hedging relationship is equal to the ratio of the numberof hedged items actually hedged by the Company to the actual number of hedging instruments, but doesnot reflect the imbalance of the relative weights of hedged items and hedging instruments.
The Company continuously evaluates whether the hedging relationship meets the hedgingeffectiveness requirements on and after the hedging start date. If the hedging relationship no longermeets the requirements of hedging effectiveness due to the hedging ratio, but the risk managementobjectives of the designated hedging relationship have not changed, the Company shall rebalance thehedging relationship.
3. Hedging accounting treatment
(1) Fair value hedge
1) Gain or loss arising from a hedging instrument shall be recorded in profit and loss of the currentperiod. If the hedging instrument is used to hedge a non-trading equity instrument (or a componentthereof) that is chosen to be measured at fair value and whose changes are included in othercomprehensive income, the gains or losses arising from the hedging instrument are included in othercomprehensive income.
2) Gain or loss of a hedged item arising from hedged risk exposure shall be recorded in profit andloss of the current period and meanwhile the carrying value of the hedged item not measured at fairvalue shall be adjusted. If a hedged item is classified as financial assets (or a component thereof) that aremeasured at fair value and whose changes are recorded in other comprehensive income according toArticle 18 of Accounting Standards for Business Enterprises No.22-Recognition and Measurement ofFinancial Instruments, its gains or losses due to hedged risk exposure are recorded in profit and loss ofthe current period, and its carrying value has been measured at fair value and will not be adjusted. If thehedged item is a non-trading equity instrument investment (or a component thereof) that the Companychooses to measure at fair value and its changes are recorded in other comprehensive income, the gainsor losses arising from the hedged risk exposure are recorded in other comprehensive income, and itscarrying value has been measured at fair value and will not be adjusted.
If a hedged item is an unrecognized firm commitment (or a component thereof), the cumulativechanges in the fair value arising from hedged risk after the designation of hedging relationship shall berecognized as an asset or liability, and the related gain or loss shall be recorded in profit and loss of therespective periods. In case of acquiring assets or bearing liabilities for performing a firm commitment,the initially recognized amount of the assets or liabilities shall be adjusted to include the cumulativechanges in the fair value of the recognized hedged item.
If a hedged item is a financial instrument (or a component thereof) at measured amortized cost, theadjustment to the carrying value of the hedged item shall be amortized based on the actual interest raterecalculated on the commencement date of amortization and recorded in profit and loss of the currentperiod. If a hedged item is classified as financial assets (or a component thereof) that are measured atfair value and whose changes are recorded in other comprehensive income according to Article 18 ofAccounting Standards for Business Enterprises No.22-Recognition and Measurement of FinancialInstruments, cumulative recognized hedging gains or losses are amortized in the same manner and
recorded in profit and loss of the current period, but the carrying value of financial assets (or theircomponents) is not adjusted.
(2) Cash flow hedge
1) The part of the gain or loss of the hedging instrument that belongs to the effective hedging isincluded in the other comprehensive income as a reserve for cash flow hedges, and the invalid part isincluded in profit and loss of the current period. The amount of reserve for cash flow hedges isrecognized as the absolute amount of the lower of the following two items: A. The cumulative gains orlosses of hedging instruments since hedging; B. The cumulative change in the present value of theestimated future cash flows of the hedged item since hedging.
2) If a hedged item is a forecast transaction and the forecast transaction leads the Company tosubsequently recognize a non-financial asset or non-financial liability, or the forecast transaction of thenon-financial asset or non-financial liability forms a recognized commitment to which fair value hedgeaccounting is applicable, the original amount of reserve for cash flow hedges recognized in othercomprehensive income shall be transferred out and recorded in the initially recognized amount of suchnon-financial asset or non-financial liability.
3) For other cash flow hedges, the amount of reserve for cash flow hedges originally included inother comprehensive income is transferred out during the same period when the hedged expectedtransaction affects the profit and loss, and is recorded in the profit and loss of the current profit.
(3) Net investment hedge in a foreign operation
The part of the gains or losses formed by hedging instruments that belong to effective hedging isrecognized as other comprehensive income, and when disposing of foreign operations, it is transferredout and recorded in the profit and loss of the current profit. The part of the gains or losses resulting fromhedging instruments that belong to invalid hedging shall be recorded in profit and loss of the currentperiod.
VI Taxation
1. Main taxes and tax rates
Major types of taxes and tax rates
√ Applicable □ Not applicable
| Tax | Tax basis | Tax rate |
| VAT | Revenue from commodity sales and taxable services calculated according to the tax law are the basic calculation of output tax. After deducting the amount of input tax which is allowed to be deducted in the current period, the difference is the VAT payable. | 13%, 9%, 6%, 5% [Note 1] |
| Real estate tax | Ad valorem tax: levied at 1.2% of the remaining value after deducting 30% from the original value of the housing property; Tax levied from rent: levied at 12% of the rental income. | 1.2%, 12% |
| Urban maintenance and construction tax | Turnover tax paid | 5%, 7% [Note 2] |
| Educational fee | Turnover tax paid | 3% |
| Local educational fee | Turnover tax paid | By 2% |
| Enterprise income tax | Amount of taxable income | 25%, 20%, 15%, 8.25% |
[Note 1] The tax of the Company's main products is levied at the tax rate of 13%, and VAT ofinterest income is levied at the tax rate of 6%; VAT of the real estate rental income of subsidiariesBanmen Electric Appliance and Shanghai Gongniu is levied at a tax rate of 5% according to the simplemethod; VAT of Lingbo Gongniu's real estate rental income is partly levied at a tax rate of 5% andpartly at 9% according to the simple method.[Note 2] Electric Sales is levied at a tax rate of 7%, and other companies at a tax rate of 5%Explanation of disclosure if different income tax rates apply to different corporate taxpayers
√ Applicable □ Not applicable
| Name of taxpayer | Income tax rate (%) |
| The Company | 15% |
| Ningbo Gongniu | 15% |
| Gongniu Photoelectric | 15% |
| Gongniu Digital | 15% |
| Domestic Electrical Appliance | 15% |
| Bull HK | 8.25% |
| Xingluo Trading | 20% |
| Bull International Trading | 20% |
| Hainan Dacheng | 20% |
| Other taxpayers except the above | 25% |
2. Tax concessions
√ Applicable □ Not applicable
1. According to the Notice on the Filing of the First Batch of High-tech Enterprises Identified byNingbo City's Accreditation Authority in 2022 issued by the Office of the National Leading Group forthe Identification and Management of High-tech Enterprises on 30 December 2022, the Company andDomestic Electrical Appliance were identified as high-tech enterprises in Ningbo in 2022, with a validterm of 3 years. Therefore, from 2022 to 2024, the Company and Domestic Electrical Appliance enjoy apreferential corporate income tax rate of 15%.
2. According to the Notice on Publishing the List of High-tech Enterprises in Ningbo in 2020(YGQRL [2020] No.1) issued by the Leading Group for the Identification and Management ofHigh-tech Enterprises of Ningbo on 15 January 2021, Gongniu Digital was recognized as a high-techenterprise in Ningbo in 2020, and its qualification is valid for 3 years. From 2020 to 2022, GongniuDigital enjoys a preferential corporate income tax rate of 15%.
3. According to the Notice on Publishing the List of High-tech Enterprises in Ningbo in 2021issued by Beilun District Science and Technology Bureau of Ningbo on 19 January 2022, NingboGongniu and Gongniu Photoelectric were recognized as high-tech enterprises in Ningbo in 2020, andtheir qualification is valid for 3 years. From 2021 to 2023, Ningbo Gongniu and Gongniu Photoelectricenjoy a preferential corporate income tax rate of 15%.
4. In line with the Announcement of the Ministry of Finance, the State Taxation Administration,and the Ministry of Science and Technology on Increasing Pre-tax Deductions in Support of Scientificand Technological Innovation (Announcement No. 28 [2022] of the Ministry of Science and Technology)issued on 22 September 2022, equipment and instruments purchased from 1 October 2022 to 31
December 2022 were eligible for a full deduction in a lump sum for the year in the calculation of taxableincome and for a 100% pre-tax additional deduction. The Company, Ningbo Gongniu, PhotoelectricTechnology, Digital Technology and Domestic Electrical Appliance satisfied the above requirementsand enjoyed relevant concessions.
5. In accordance with the Notice on Implementing Inclusive Tax Credit Policies for Small andMicro Enterprises (C.SH. [2019] No. 13) issued by the Ministry of Finance and the State TaxationAdministration and the Announcement on Issues Related to Implementing Inclusive Income TaxReduction and Exemption Policy for Small Low-profit Enterprises (State Administration of TaxationAnnouncement No. 2 in 2019) issued by the State Administration of Taxation, from 1 January 2019 to31 December 2021, the annual taxable revenue of small low-profit enterprises with a value of less thanRMB1 million (including RMB1 million) shall be included in the taxable revenue at a reduced rate of25%, and the corporate revenue tax shall be levied at the tax rate of 20%. The part that the annualtaxable revenue exceeds RMB1 million but not more than RMB3 million shall be included in the taxablerevenue at a reduced rate of 50%, and the corporate revenue tax shall be levied at the tax rate of 20%.According to the Announcement on the Implementation of Preferential Income Tax Policies for Small-and Micro-sized Enterprises and Individual Industrial and Commercial Entities (No. 12 of 2021) issuedby the Ministry of Finance and the State Taxation Administration, from 1 January 2021 to 31 December2022, the portion of the annual taxable income of small- and micro-sized enterprises not exceedingRMB1 million, the corporate income tax will be levied by half on the basis of the preferential policiesstipulated in Article 2 of the Tax Credit Policies for Small and Micro Enterprises (C.SH. [2019] No. 13)issued by the Ministry of Finance and the State Taxation Administration. Xingluo Trading, BullInternational Trading and Hainan Dacheng meet the recognition criteria of small low-profit enterprises,and pay corporate income tax at the preferential tax rate of small low-profit enterprises.
3. Other information
□ Applicable √ Not applicable
VII. Notes to the Consolidated Financial Statements
1. Monetary assets
√Applicable □Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash on hand | 34,167.84 | |
| Bank deposits | 4,435,294,692.17 | 4,230,383,599.91 |
| Other monetary assets | 55,930,602.55 | 87,372,876.35 |
| Interest receivable on term deposits | 120,706,706.98 | 59,472,080.48 |
| Total | 4,611,966,169.54 | 4,377,228,556.74 |
| Of which: Total amount deposited overseas | 174,605.10 | 217,966.13 |
| Deposits placed with finance companies |
Other notes
The limited funds in the closing balance of other monetary assets include a futures margin ofRMB13,774,515.95 and cash deposits for L/G of RMB7,141,771.63.
2. Held-for-trading financial assets
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial assets at fair value through profit or loss | 6,949,000,000.00 | 5,926,600,000.00 |
| Of which: | ||
| Banking WM products | 1,919,000,000.00 | 1,936,600,000.00 |
| Trust product | 1,260,000,000.00 | 1,120,000,000.00 |
| Asset management plan | 3,420,000,000.00 | 2,670,000,000.00 |
| Securities return voucher | 350,000,000.00 | 200,000,000.00 |
| Total | 6,949,000,000.00 | 5,926,600,000.00 |
Other notes:
√Applicable□Not applicable
(1) Description of held-for-trading financial assets with restrictions on the realisation
The closing balance of held-for-trading financial assets includes closed-end WM products worthRMB6,853 million
(2) Details of banking WM products
| Item | Closing balance | Opening balance | Type | |
| “Yangguang Tianli Zhenxiang” No. C001 of Everbright Wealth Management | 300,000,000.00 | Non-principal-guaranteed floating income | ||
| Ningxin One-year Regular Open Wealth Management Product No. 32 with Fixed Income of BNB Wealth Management Co., Ltd., Bank of Ningbo | 300,000,000.00 | 100,000,000.00 | Non-principal-guaranteed floating income | |
| CMBC Fuzhu Bond, Automatically Renewed Public Wealth Management Products, with a Holding Period of 182 Days | 298,000,000.00 | 200,000,000.00 | Non-principal-guaranteed floating income | |
| Ningxin One-year Regular Open Wealth Management Product No. 19 with Fixed Income of BNB Wealth Management Co., Ltd., Bank of Ningbo | 150,000,000.00 | Non-principal-guaranteed floating income | ||
| BOC Wealth Management “Wenxiang” Enhanced Fixed Income (Closed-end) Phase 202218 of Bank of China | 150,000,000.00 | Non-principal-guaranteed floating income | ||
| BOC Wealth Management “Wenxiang” Enhanced Fixed Income (Closed-end) Phase 202219 of Bank of China | 150,000,000.00 | Non-principal-guaranteed floating income | ||
| Ningxin One-year Regular Open Wealth Management Product No. 34 with Fixed Income of BNB Wealth Management Co., Ltd., Bank of Ningbo | 115,000,000.00 | 170,000,000.00 | Non-principal-guaranteed floating income | |
| Jingyao One-year Regular Open Wealth Management Product No. 7 with Fixed Income of BNB Wealth Management Co., Ltd., Bank of Ningbo | 100,000,000.00 | Non-principal-guaranteed floating income | |
| Ningxin Closed-end Wealth Management Product No. 254 with Fixed Income of BNB Wealth Management Co., Ltd., Bank of Ningbo | 100,000,000.00 | Non-principal-guaranteed floating income | |
| Ningxin One-year Regular Open Wealth Management Product No. 21 with Fixed Income of BNB Wealth Management Co., Ltd., Bank of Ningbo | 100,000,000.00 | Non-principal-guaranteed floating income | |
| 2021 Closed-end Net-value Private Placement Products of Bank of Ningbo | 50,000,000.00 | 50,000,000.00 | Non-principal-guaranteed floating income |
| Ningxin One-year Regular Open Wealth Management Product No. 16 with Fixed Income of BNB Wealth Management Co., Ltd., Bank of Ningbo | 50,000,000.00 | Non-principal-guaranteed floating income | |
| CMB Wealth Management “Zhaorui Jinding” Fixed Income Program No. 4 with 14-month Fixed Opening Period | 30,000,000.00 | Non-principal-guaranteed floating income | |
| “ABC Pay at Any Time” Open RMB Wealth Management Products of ABC Wealth Management | 26,000,000.00 | 92,500,000.00 | Non-principal-guaranteed floating income |
| CMBC Tiantian Zengli | 372,000,000.00 | Non-principal-guaranteed floating income | |
| 2020 Closed-end Net-value Private Placement Products of Bank of Ningbo | 200,000,000.00 | Non-principal-guaranteed floating income | |
| Ningxin Semi-annual Regular Open Wealth Management Product No. 6 with Fixed Income of BNB Wealth Management Co., Ltd., Bank of Ningbo | 180,000,000.00 | Non-principal-guaranteed floating income | |
| CMBC Corporate Wealth Management Product Ririxin 80008 | 125,200,000.00 | Non-principal-guaranteed floating income | |
| Ningxin Closed-end Wealth Management Product No. 75 with Fixed Income of BNB Wealth Management Co., Ltd., Bank of Ningbo | 120,000,000.00 | Non-principal-guaranteed floating income | |
| CMBC Extraordinary Asset Management Daily Profit-increasing Wealth Management Products (Institutional Funds) | 100,000,000.00 | Non-principal-guaranteed floating income | |
| Ningxin Closed-end Wealth Management Product No. 183 with Fixed Income of BNB Wealth Management Co., Ltd., Bank of | 100,000,000.00 | Non-principal-guaranteed floating income |
| Ningbo | |||
| Everbright Cash A of Everbright Bank (EB4395) | 50,000,000.00 | Non-principal-guaranteed floating income | |
| Ningxin Semi-annual Regular Open Wealth Management Product No. 1 with Fixed Income of BNB Wealth Management Co., Ltd., Bank of Ningbo | 50,000,000.00 | Non-principal-guaranteed floating income | |
| ICBC “TLB” Net-value Wealth Management Products | 16,900,000.00 | Non-principal-guaranteed floating income | |
| ABC “Golden Key, Anxin Profits 90 Days” RMB Wealth Management Products | 10,000,000.00 | Non-principal-guaranteed floating income | |
| Subtotal | 1,919,000,000.00 | 1,936,600,000.00 |
(3) Details of trust products
| Item | Closing balance | Opening balance | Type |
| Financial City Hongyu No. 1 Collective Fund Trust Plan of Lujiazui International Trust | 490,000,000.00 | 350,000,000.00 | Non-principal-guaranteed floating income |
| Xicheng Profit Increase Single Fund Trust of Huaneng Guicheng Trust | 300,000,000.00 | 300,000,000.00 | Non-principal-guaranteed floating income |
| Zhaofubao No. 17 Collective Fund Trust Plan of SDIC Taikang Trust | 115,000,000.00 | Non-principal-guaranteed floating income | |
| Wenying No. 2 Single Fund Trust of Lujiazui International Trust | 110,000,000.00 | Non-principal-guaranteed floating income | |
| Wenying No. 1 Single Fund Trust of Lujiazui International Trust | 100,000,000.00 | Non-principal-guaranteed floating income | |
| Yongxinbao D-type WM No. 2 Collective Fund Trust Plan of SDIC Taikang Trust | 50,000,000.00 | Non-principal-guaranteed floating income | |
| Fengli Jijixin No. 8 Collective Fund Trust Plan of Cofco Trust | 50,000,000.00 | Non-principal-guaranteed floating income | |
| Xinyue Fengli FL30 of Shanghai Trust | 30,000,000.00 | Non-principal-guaranteed floating income | |
| Yongxinbao D-type WM No. 2 Collective Fund Trust Plan of SDIC Taikang Trust | 15,000,000.00 | Non-principal-guaranteed floating income | |
| Xinyue Fengli Series Collective Fund Trust Plan of Shanghai Trust | 240,000,000.00 | Non-principal-guaranteed floating income | |
| Shengyuan Profit-increasing Bond Collective Fund Trust Plan of Everbright Securities and Everbright Trust | 200,000,000.00 | Non-principal-guaranteed floating income | |
| Xinxiang Bond Investment Collective Fund Trust Plan of CITIC Trust | 30,000,000.00 | Non-principal-guaranteed floating income | |
| Subtotal | 1,260,000,000.00 | 1,120,000,000.00 |
(4) Asset management plan
| Item | Closing balance | Opening balance | Type |
| Yuxiang No. 1 Collective Asset Management Plan of Everbright | 1,500,000,000.00 | 250,000,000.00 | Non-principal-guaranteed floating income |
| Securities Asset Management | |||
| Anxiang Bond No. 53 of Haitong Securities | 1,000,000,000.00 | Non-principal-guaranteed floating income | |
| Financing Business, Debt Income Right Transfer and Forward Transfer Contract of Founder Securities | 300,000,000.00 | 100,000,000.00 | Non-principal-guaranteed fixed income |
| Yuxiang No. 2 Collective Asset Management Plan of Everbright Securities Asset Management | 220,000,000.00 | 220,000,000.00 | Non-principal-guaranteed floating income |
| Anzhi No. 2 Single Asset Management Plan of Huafu Securities | 200,000,000.00 | Non-principal-guaranteed floating income | |
| Yongxin No. 2 Single Asset Management Plan of Yongzheng Asset Management | 200,000,000.00 | Non-principal-guaranteed floating income | |
| Yuexiang No.1 Collective Asset Management Plan of Everbright Securities Asset Management | 800,000,000.00 | Non-principal-guaranteed floating income | |
| Niannianwang Collective Asset Management Plan of Haitong Securities Asset Management | 400,000,000.00 | Non-principal-guaranteed floating income | |
| Huatai Zijin Collective Asset Management Plan of Huatai Securities | 400,000,000.00 | Non-principal-guaranteed floating income | |
| Yongxin Single Asset Management Plan of Yongxing Securities Asset Management, Yongxing Securities | 200,000,000.00 | Non-principal-guaranteed floating income | |
| Niannianwang No.88 Collective Asset Management Plan of Haitong Securities Asset Management | 150,000,000.00 | Non-principal-guaranteed floating income | |
| Everbright Sunshine Big Dipper Star No. 7 Collective Asset Management Plan of Everbright Securities | 90,000,000.00 | Non-principal-guaranteed floating income | |
| Everbright Sunshine Big Dipper Star No. 6 Collective Asset Management Plan of Everbright Securities | 60,000,000.00 | Non-principal-guaranteed floating income | |
| Subtotal | 3,420,000,000.00 | 2,670,000,000.00 |
(5) Securities return voucher
| Item | Closing balance | Opening balance | Type |
| Caiyingtong Series CSI 500 Single Bullish Shark No. 28 Return Voucher of Caitong Securities | 50,000,000.00 | Principal-guaranteed floating income | |
| Caiyingtong Series CSI 500 Single Bullish Shark No. 25 Return Voucher of Caitong Securities | 50,000,000.00 | Principal-guaranteed floating income | |
| Guangpu 360 Feicui No. 154 of Everbright Securities | 50,000,000.00 | Principal-guaranteed floating income | |
| Guangpu 360 Feicui No. 95 of Everbright Securities | 50,000,000.00 | Principal-guaranteed floating income | |
| Zhangdiebao Spread Series No. 135 Return Voucher (CSI 500 Long) of Sinolink Securities | 50,000,000.00 | Principal-guaranteed floating income |
| Xingdong Series Single Bullish Shark Floating Return Voucher No. 235 (Ningbo) of Industrial Securities (CSI 500 Long) | 50,000,000.00 | Principal-guaranteed floating income | |
| Caiyingtong Series CSI 500 Double Bullish Shark No. 20 Return Voucher of Caitong Securities | 30,000,000.00 | Principal-guaranteed floating income | |
| Guangpu 360 Feicui No. 95 of Everbright Securities | 20,000,000.00 | Principal-guaranteed floating income | |
| Return Voucher “JinTianli” No. D184 of Founder Securities | 50,000,000.00 | Principal-guaranteed floating income | |
| Guangjing Series Return Voucher No. 30 of Everbright Securities | 50,000,000.00 | Principal-guaranteed floating income | |
| Xingdong Series Automatically-redeemed Floating Return Voucher No. 65 of Industrial Securities (CSI 500 Long) | 50,000,000.00 | Principal-guaranteed floating income | |
| Xingzhi Series Single Shark Floating Return Voucher No. 107of Industrial Securities (Ningbo) (CSI 500 Long) | 50,000,000.00 | Principal-guaranteed floating income | |
| Subtotal | 350,000,000.00 | 200,000,000.00 |
3. Derivative financial assets
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Hedge instruments - commodity future contract | 643,100.00 | 3,613,050.00 |
| Total | 643,100.00 | 3,613,050.00 |
Other notes:
The Company hedged raw materials such as copper and plastic particles purchased, performedaccounting treatment as cash flow hedges, and recorded the profit on the book in the derivative financialassets.
4. Notes receivable
(1) Notes receivable listed by category
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Bank acceptance notes | ||
| Trade acceptance notes | 750,723.35 | |
| Total | 750,723.35 |
(2) Notes receivable pledged by the Company at the period-end
□Applicable√Not applicable
(3) Notes receivable which had been endorsed by the Company or had discounted and had not dueon the balance sheet date at the period-end
□Applicable√Not applicable
(4) Notes transferred to accounts receivable because the drawer of the notes failed to execute thecontract or agreement
□Applicable√Not applicable
(5) Breakdown by method of establishing allowance for doubtful account
√Applicable□Not applicable
Unit: RMB
| Type | Closing balance | Opening balance | ||||||||
| Carrying balance | Bad debt provision | Carrying amount | Carrying balance | Bad debt provision | Carrying amount | |||||
| Amount | Percentage (%) | Amount | Accrued proportion (%) | Amount | Percentage (%) | Amount | Accrued proportion (%) | |||
| Bad debt provision established on the individual basis | 3,712,829.75 | 100.00 | 3,712,829.75 | 100.00 | 361,810.71 | 31.41 | 361,810.71 | 100.00 | ||
| Of which: | ||||||||||
| Bank acceptance notes | ||||||||||
| Trade acceptance notes | 3,712,829.75 | 100.00 | 3,712,829.75 | 100.00 | 361,810.71 | 31.41 | 361,810.71 | 100.00 | ||
| Bad debt provision accrued by portfolio | 790,235.11 | 68.59 | 39,511.76 | 5.00 | 750,723.35 | |||||
| Of which: | ||||||||||
| Bank acceptance notes | ||||||||||
| Trade acceptance notes | 790,235.11 | 68.59 | 39,511.76 | 5.00 | 750,723.35 | |||||
| Total | 3,712,829.75 | 100.00 | 3,712,829.75 | 100.00 | 1,152,045.82 | 100.00 | 401,322.47 | 34.84 | 750,723.35 | |
Bad debt provision established on the individual basis:
√Applicable□Not applicable
Unit: RMB
| Name | Closing balance | |||
| Carrying balance | Bad debt provision | Accrued proportion (%) | Reason for accruing | |
| Sunac Real Estate Group Co., Ltd. | 3,712,829.75 | 3,712,829.75 | 100.00 | Significant impairment risk expected |
| Total | 3,712,829.75 | 3,712,829.75 | 100.00 | / |
Notes to bad debt provision accrued by item:
√Applicable□Not applicable
Note: The Company is related to and controlled by Sunac Real Estate Group which is the ultimatevoucher issuer.
Bad debt provision accrued by portfolio:
□Applicable√Not applicable
To accrue bad debt provision under the expected general model of credit loss, please refer to thedisclosure of other receivables:
□Applicable√Not applicable
(6) Bad debt provision
√Applicable□Not applicable
Unit: RMB
| Type | Opening balance | Changes for the current period | Closing balance | ||
| Established | Reversed or transferred-back | Charged-off/Written-off | |||
| Bad debt provision accrued by item | 361,810.71 | 3,351,019.04 | 3,712,829.75 | ||
| Bad debt provision accrued by portfolio | 39,511.76 | -39,511.76 | |||
| Total | 401,322.47 | 3,311,507.28 | 3,712,829.75 | ||
Of which significant amount of recovered or transferred-back bad debt provision for the current period:
□Applicable√Not applicable
Other notes:
None.
(7) Notes receivable with actual written-off for the Reporting Period
□Applicable√Not applicable
Other notes
□Applicable√Not applicable
5. Accounts receivable
(1) Breakdown by aging
√Applicable□Not applicable
Unit: RMB
| Aging | Closing carrying balance |
| Within 1 year | |
| Of which: Sub-items within one year | |
| Within 1 year | 233,008,605.06 |
| Subtotal within one year | 233,008,605.06 |
| 1 to 2 years | 5,456,955.48 |
| 2 to 3 years | 1,078,528.87 |
| Over 3 years | 6,932,922.28 |
| Total | 246,477,011.69 |
(2) Breakdown by method of establishing allowance for doubtful account
√Applicable□Not applicable
Unit: RMB
| Type | Closing balance | Opening balance | ||||||||
| Carrying balance | Bad debt provision | Carrying amount | Carrying balance | Bad debt provision | Carrying amount | |||||
| Amount | Percentage (%) | Amount | Accrued proportion (%) | Amount | Percentage (%) | Amount | Accrued proportion (%) | |||
| Bad debt provision established on the individual basis | ||||||||||
| Bad debt provision accrued by portfolio | 246,477,011.69 | 100.00 | 19,668,312.50 | 7.98 | 226,808,699.19 | 230,995,739.56 | 100.00 | 11,735,996.31 | 5.08 | 219,259,743.25 |
| Total | 246,477,011.69 | 100.00 | 19,668,312.50 | 7.98 | 226,808,699.19 | 230,995,739.56 | 100.00 | 11,735,996.31 | 5.08 | 219,259,743.25 |
Bad debt provision established on the individual basis:
□Applicable√Not applicable
Bad debt provision accrued by portfolio:
√Applicable□Not applicable
Unit: RMB
| Name | Closing balance | ||
| Accounts receivable | Bad debt provision | Accrued proportion (%) | |
| Within 1 year | 233,008,605.06 | 11,650,430.23 | 5.00 |
| 1 to 2 years | 5,456,955.48 | 545,695.54 | 10.00 |
| 2 to 3 years | 1,078,528.87 | 539,264.45 | 50.00 |
| Over 3 years | 6,932,922.28 | 6,932,922.28 | 100.00 |
| Total | 246,477,011.69 | 19,668,312.50 | 7.98 |
Criteria and explanation of bad debt provision accrued by portfolio:
□Applicable√Not applicable
To accrue bad debt provision under the expected general model of credit loss, please refer to thedisclosure of other receivables:
□Applicable√Not applicable
(3) Bad debt provision
√Applicable□Not applicable
Unit: RMB
| Type | Opening balance | Changes for the current period | Closing balance | |||
| Established | Recovered or reversed | Transferred or written-off | Other changes | |||
| Bad debt provision accrued by portfolio | 11,735,996.31 | 324,932.55 | 817,175.84 | 615,760.06 | 7,405,967.86 | 19,668,312.50 |
| Total | 11,735,996.31 | 324,932.55 | 817,175.84 | 615,760.06 | 7,405,967.86 | 19,668,312.50 |
[Note] Other changes represent the increase in the bad debt provision arising from the acquisitionof Dalitek.
Of which significant amount of recovered or transferred-back bad debt provision for the current period:
√Applicable□Not applicable
Unit: RMB
| Entity | Amount reversed or transferred-back | Way of recovery |
| Shanghai Lotus Supermarket Chain Store Co., Ltd. | 707,267.51 | Litigation |
| Total | 707,267.51 | / |
Other notes:
None.
(4) Accounts receivable written-off in current period
√Applicable□Not applicable
Unit: RMB
| Item | Amount written-off |
| Accounts receivable written-off | 615,760.06 |
Of which: The written-off of significant accounts receivable
□Applicable√Not applicable
Notes to written-off of accounts receivable:
□Applicable√Not applicable
(5) Top 5 of the closing balance of the accounts receivable collected according to arrears party
√Applicable □Not applicable
Unit: RMB
| Entity | Closing balance | As % of the closing balance of total accounts receivable | Closing balance of bad debt provision |
| Beijing Jingdong Century Trading Co., Ltd. | 57,730,716.19 | 23.42 | 2,886,535.81 |
| Ningbo Boya Metal Material Co.,Ltd | 19,053,649.73 | 7.73 | 952,682.49 |
| Zhejiang TMALL Technology Co., Ltd. | 18,772,610.30 | 7.62 | 938,630.52 |
| ALPHA.LTD | 6,685,976.72 | 2.71 | 334,298.84 |
| Kangcheng Investment (China) Co., Ltd. | 6,223,169.73 | 2.52 | 311,158.49 |
| Total | 108,466,122.67 | 44.01 | 5,423,306.15 |
Other notesNone.
(6) Accounts receivable derecognised due to the transfer of financial assets
□Applicable √Not applicable
(7) Amount of assets and liabilities formed due to the transfer and the continued involvement ofaccounts receivable
□Applicable √Not applicable
Other notes:
□Applicable √Not applicable
6. Receivables financing
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Bank acceptance notes | 1,036,801.70 | 927,023.00 |
| Total | 1,036,801.70 | 927,023.00 |
The changes of accounts receivable financing in the Current Period and the changes in fair value
□Applicable√Not applicable
To accrue bad debt provision under the expected general model of credit loss, please refer to thedisclosure of other receivables:
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
7. Prepayments
(1) Breakdown of prepayments by aging
√Applicable □Not applicable
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Percentage (%) | Amount | Percentage (%) | |
| Within 1 year | 48,536,368.53 | 97.79 | 28,765,116.10 | 98.71 |
| 1 to 2 years | 955,431.40 | 1.92 | 319,248.90 | 1.10 |
| 2 to 3 years | 101,394.68 | 0.20 | 18,358.00 | 0.06 |
| Over 3 years | 42,500.00 | 0.09 | 37,500.00 | 0.13 |
| Total | 49,635,694.61 | 100.00 | 29,140,223.00 | 100.00 |
Reason for outstanding prepayments that are over 1 year and of a substantial amount:
None.
(2). Status of the top five advance payments in the closing balances by prepaid subject
√Applicable □Not applicable
| Entity | Closing balance | Percentage of total advances to suppliers (%) |
| Guangxi Jingdong Xinjie E-commerce Co., Ltd. | 4,418,549.65 | 8.90 |
| Giugiaro Architecture S.r.l. | 2,809,992.00 | 5.66 |
| Tianjin Bohua Nangang International Trade Co., Ltd. | 2,381,716.00 | 4.80 |
| Beijing Jiahe Jingshi Culture Media Co., Ltd. | 2,358,490.57 | 4.75 |
| Jiangsu Pengbo Xingye E-commerce Co., Ltd. | 2,342,768.60 | 4.72 |
| Total | 14,311,516.82 | 28.83 |
Other notesNone.
Other notes
□Applicable √Not applicable
8. Other receivables
Breakdown
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Interests receivable | ||
| Dividends receivable | ||
| Other receivables | 71,887,692.32 | 195,924,505.99 |
| Total | 71,887,692.32 | 195,924,505.99 |
Other notes:
□Applicable√Not applicable
Interests receivable
(1) Category of interests receivable
□Applicable√Not applicable
(2) Significant overdue interest
□Applicable√Not applicable
(3) Bad debt provision
□Applicable√Not applicable
Other notes:
□Applicable √Not applicable
Dividends receivable
(4) Dividends receivable
□Applicable√Not applicable
(5) Significant dividends receivable aging over one Year
□Applicable√Not applicable
(6) Bad debt provision
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
Other receivables
(7) Breakdown by aging
√Applicable□Not applicable
Unit: RMB
| Aging | Closing carrying balance |
| Within 1 year | |
| Of which: Sub-items within one year | |
| Within 1 year | 13,221,675.68 |
| Subtotal within one year | 13,221,675.68 |
| 1 to 2 years | 4,000,909.07 |
| 2 to 3 years | 112,402,564.49 |
| Over 3 years | 4,575,618.48 |
| Total | 134,200,767.72 |
(8) Breakdown by nature
√Applicable□Not applicable
Unit: RMB
| Nature | Closing carrying balance | Opening carrying balance |
| Call money | 110,000,000.00 | 111,000,000.00 |
| Housing loan for employees | 12,466,303.78 | 16,817,779.29 |
| Guaranteed deposit | 8,486,128.40 | 101,781,134.68 |
| Others | 3,248,335.54 | 670,191.81 |
| Total | 134,200,767.72 | 230,269,105.78 |
(9) Bad debt provision
√Applicable□Not applicable
Unit: RMB
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| 12-month expected credit loss | Lifetime expected credit loss (without credit impairment) | Lifetime expected credit loss (with credit impairment) | ||
| Balance of 1 January 2022 | 5,363,986.42 | 22,483,651.78 | 6,496,961.59 | 34,344,599.79 |
| Balance of 1 |
| January 2022 in the Current Period | ||||
| - Transferred to Stage 2 | -250,045.44 | 250,045.44 | ||
| - Transferred to Stage 3 | -20,240,256.45 | 20,240,256.45 | ||
| - Transferred back to Stage 2 | ||||
| - Transferred back to Stage 1 | ||||
| Amount accrued for the current period | -4,045,817.46 | -1,571,349.86 | 32,451,250.70 | 26,834,083.38 |
| Amount transferred-back for the current period | ||||
| Amount charged-off for the current period | ||||
| Amount written-off for the current period | 11,100.00 | 11,100.00 | ||
| Other changes | 42,960.23 | 3,000.00 | 1,099,532.00 | 1,145,492.23 |
| Balance as at 31 December 2022 | 1,111,083.75 | 925,090.91 | 60,276,900.74 | 62,313,075.40 |
Notes to significant changes in the carrying balance of other receivables for which changes in the lossreserve for the current period occurred:
√Applicable□Not applicable
Note: Other changes represent the increase in the bad debt provision arising from the acquisition ofDalitek.
The amount of bad debt provision for the current period and the basis for assessing whether the creditrisk of financial instruments has increased significantly:
□Applicable√Not applicable
(10) Bad debt provision
√Applicable□Not applicable
Unit: RMB
| Type | Opening balance | Changes for the current period | Closing balance | |||
| Established | Reversed or transferred-back | Charged-off/Written-off | Other changes | |||
| Bad debt provision accrued by item | 22,000,000.00 | 33,500,000.00 | 55,500,000.00 | |||
| Bad debt provision accrued by | 12,344,599.79 | -6,665,916.62 | 11,100.00 | 1,145,492.23 | 6,813,075.40 | |
| portfolio | ||||||
| Total | 34,344,599.79 | 26,834,083.38 | 11,100.00 | 1,145,492.23 | 62,313,075.40 |
Of which the bad debt provision recovered or transferred-back with significant amount during thecurrent period:
□Applicable√Not applicable
(11) Particulars of the actual written-off of other receivables during the current period
□Applicable√Not applicable
(12) Other receivables with the top five closing balances collected according to the arrears party
√Applicable□Not applicable
Unit: RMB
| Entity | Nature of other receivable | Closing balance | Aging | As a % of the closing balance of total other receivables | Bad debt provision Closing balance |
| Sunac Real Estate Group Co., Ltd. [note] | Call money | 110,000,000.00 | 2 to 3 years | 81.97 | 55,000,000.00 |
| Changzhou Pa’erlingke Intelligent Lifting Lighting Equipment Co., Ltd. | Payment for goods | 1,099,532.00 | Over 3 years | 0.82 | 1,099,532.00 |
| Xie Weiwei | Advances Receivable | 708,080.00 | Within 1 year | 0.53 | 35,404.00 |
| Shanghai Caohejing Development Zone High-tech Park Development Co., Ltd. | Guaranteed deposit | 702,062.90 | Within 1 year | 0.52 | 35,103.15 |
| Beijing Jingdong Century Trading Co., Ltd. | Guaranteed deposit | 650,000.00 | Within 1 year | 0.48 | 32,500.00 |
| Total | / | 113,159,674.90 | 84.32 | 56,202,539.15 |
[Note] The loan was provided by the Company's subsidiary Electric Sales to Sunac Real EstateGroup Co., Ltd. Inclusive of seven of its subsidiaries in order to expand its sales to Sunac Group in theprincipal amount of RMB110,000,000.00 for a period of two years, which was guaranteed by SunacGroup.
(13) Accounts receivable involving government grants
□Applicable√Not applicable
(14) Other receivables derecognised due to the transfer of financial assets
□Applicable √Not applicable
(15) Amount of assets and liabilities formed due to the transfer and the continued involvement ofother receivables
□Applicable √Not applicable
Other notes:
□Applicable √Not applicable
9. Inventories
(1). Category of inventories
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Inventory falling price reserves | Carrying amount | Carrying balance | Inventory falling price reserves | Carrying amount | |
| Finished goods | 673,207,187.70 | 14,761,249.29 | 658,445,938.41 | 893,826,248.24 | 9,387,709.01 | 884,438,539.23 |
| Goods in transit | 293,819,050.68 | 293,819,050.68 | 130,428,496.71 | 130,428,496.71 | ||
| Raw materials | 113,937,083.04 | 113,937,083.04 | 124,009,445.42 | 124,009,445.42 | ||
| Work-in-progress | 160,824,141.92 | 160,824,141.92 | 163,087,929.27 | 163,087,929.27 | ||
| Commissioned products | 41,122,518.19 | 41,122,518.19 | 57,323,866.45 | 57,323,866.45 | ||
| Low-value consumables | 9,948,213.19 | 9,948,213.19 | 10,298,408.48 | 10,298,408.48 | ||
| Packaging material | 7,121,510.66 | 7,121,510.66 | 7,400,437.04 | 7,400,437.04 | ||
| Total | 1,299,979,705.38 | 14,761,249.29 | 1,285,218,456.09 | 1,386,374,831.61 | 9,387,709.01 | 1,376,987,122.60 |
(2). Inventory falling price reserves and impairment allowances for contract performance costs
√Applicable□Not applicable
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Established | Others | Reversed or charged-off | Others | |||
| Finished goods | 9,387,709.01 | 11,504,455.94 | 2,529,326.21 | 8,660,241.87 | 14,761,249.29 | |
| Total | 9,387,709.01 | 11,504,455.94 | 2,529,326.21 | 8,660,241.87 | 14,761,249.29 | |
Note: Other increased amounts represent the increase in the acquisition of Dalitek.
(3). Note on closing balance of inventory containing the capitalised amount of borrowing costs
□Applicable √Not applicable
(4). Notes of the amount of contract performance costs amortised for the current period
□Applicable√Not applicable
Other notes
√Applicable □Not applicable
The specific basis for determining the net realisable value, the reasons for the shrinkage reserves fortransferred-back or charged-off inventories for the current period
| Item | The specific basis for determining the net realisable value | Reasons for transferred-backing the reserve for inventory shrinkage | Reasons for charged-off the reserve for inventory shrinkage |
| Finished goods | The net realisable value is determined by estimated selling price deducting the estimated selling expense and the relevant taxes | For the Current Period, the inventories, which accrued shrinkage reserves, have been sold |
10. Contract assets
(1). Details of contract assets
□Applicable√Not applicable
(2). Significant changes in the amount of carrying value and the reason in the Reporting Period
□Applicable√Not applicable
(3). Impairment allowances for contract assets in the current period
□Applicable√Not applicable
To accrue bad debt provision under the expected general model of credit loss, please refer to thedisclosure of other receivables:
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
11. Assets held for sale
□Applicable√Not applicable
12. Current portion of non-current assets
□Applicable√Not applicable
Significant investments in debt obligations and other investments in debt obligations at theperiod-end:
□Applicable√Not applicable
13. Other current assets
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Contract acquisition costs | ||
| Refund costs receivable | ||
| Wealth management products | 283,755,939.73 | 1,114,551,150.68 |
| Input VAT to be credited | 63,937,448.75 | 10,534,966.75 |
| Advance payment of enterprise income tax | 16,132,038.41 | 1,434,781.01 |
| Total | 363,825,426.89 | 1,126,520,898.44 |
Other notes
Details of WM products
| Item | Closing balance | Opening balance | Type |
| Structural bank deposits of Ningbo Bank | 150,000,000.00 | Structural bank deposits | |
| Return voucher of Founder Securities | 100,000,000.00 | Fixed income | |
| Structural bank deposits of China Merchants Bank | 30,000,000.00 | Structural bank deposits |
| Yanguangbi Jigouying of Everbright Bank | 10,000.00 | 10,000.00 | Fixed income |
| Structural bank deposits of Industrial & Commercial Bank of China | 500,000,000.00 | Structural bank deposits | |
| Structural bank deposits of Agricultural Bank of China | 300,000,000.00 | Structural bank deposits | |
| Structural bank deposits of Bank of Communications | 200,000,000.00 | Structural bank deposits | |
| Structural bank deposits of Bank of Communications | 100,000,000.00 | Structural bank deposits | |
| Interest on structural bank deposits | 3,745,939.73 | 14,541,150.68 | |
| Total | 283,755,939.73 | 1,114,551,150.68 |
14. Debt investments
(1). Debt investments
□Applicable√Not applicable
(2). Significant debt investments at the period-end
□Applicable√Not applicable
(3). Status of accrued depreciation reserves
□Applicable√Not applicable
The amount of the depreciation reserves for the current period and the basis for assessing whether thecredit risk for financial instruments has increased significantly
□Applicable√Not applicable
Other notes
□Applicable√Not applicable
15. Other debt investments
(1). Other debt investments
□Applicable√Not applicable
(2). Significant other debt investments at the period-end
□Applicable√Not applicable
(3). Status of accrued depreciation reserves
□Applicable√Not applicable
The amount of the depreciation reserves for the current period and the basis for assessing whether thecredit risk for financial instruments has increased significantly
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
16. Long-term receivables
(1). Details of long-term receivables
□Applicable√Not applicable
(2). Bad debt provision
□Applicable√Not applicable
The amount of the bad debt provision for the current period and the basis for assessing whether thecredit risk for financial instruments has increased significantly
□Applicable√Not applicable
(3). Derecognition of long-term receivables due to the transfer of financial assets
□Applicable √Not applicable
(4). The amount of the assets and liabilities formed due to the transfer and the continuedinvolvement of long-term receivables
□Applicable √Not applicable
Other notes
□Applicable√Not applicable
17. Long-term equity investments
□Applicable√Not applicable
18. Other equity investments
(1). Investment in other equity instruments
□Applicable√Not applicable
(2). Status of an equity investment that is not held for trading
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
19. Other non-current financial assets
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
20. Investment property
Investment property by measurement methodN/A
21. Fixed assets
Breakdown
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 1,851,129,657.93 | 1,489,874,874.31 |
| Fixed assets disposed of | 3,364,852.64 | 3,858,246.51 |
| Total | 1,854,494,510.57 | 1,493,733,120.82 |
Other notes:
□Applicable√Not applicable
Fixed assets
(1). List of fixed assets
√Applicable□Not applicable
Unit: RMB
| Item | Buildings and constructions | Machinery equipment | Transportation vehicle | Electronic and other equipment | Decoration of the fixed assets | Total |
| I. Original Carrying Value: | ||||||
| 1. Opening balance | 1,178,242,527.05 | 950,248,036.79 | 32,711,306.57 | 125,410,346.27 | 62,388,782.80 | 2,349,000,999.48 |
| 2. Increase in the current period | 428,700,972.22 | 125,281,944.29 | 3,459,432.68 | 28,830,928.84 | 6,156,530.82 | 592,429,808.85 |
| (1) Purchased | 14,355,932.40 | 9,477,055.49 | 1,269,001.99 | 9,358,706.80 | 2,686,096.74 | 37,146,793.42 |
| (2) Transfer from construction in progress | 414,345,039.82 | 115,804,888.80 | 954,252.38 | 18,387,916.45 | 3,470,434.08 | 552,962,531.53 |
| (3) Increase due to business combination | 1,236,178.31 | 1,084,305.59 | 2,320,483.90 | |||
| 3. Decrease in the current period | 1,096,640.58 | 40,015,377.08 | 1,981,471.84 | 4,457,862.07 | 47,551,351.57 | |
| (1) Disposal or retirement | 1,096,640.58 | 40,015,377.08 | 1,981,471.84 | 4,457,862.07 | 47,551,351.57 | |
| 4. Closing balance | 1,605,846,858.69 | 1,035,514,604.00 | 34,189,267.41 | 149,783,413.04 | 68,545,313.62 | 2,893,879,456.76 |
| II. Accumulated Depreciation | ||||||
| 1. Opening balance | 244,794,519.60 | 429,424,279.29 | 28,809,594.52 | 105,290,677.82 | 42,062,826.50 | 850,381,897.73 |
| 2. Increase in the current period | 59,642,335.61 | 129,819,079.79 | 5,694,034.54 | 19,473,402.27 | 9,226,461.39 | 223,855,313.60 |
| (1) Established | 59,642,335.61 | 129,819,079.79 | 4,923,341.74 | 18,809,459.48 | 9,226,461.39 | 222,420,678.01 |
| (2) Increase | 770,692.80 | 663,942.79 | 1,434,635.59 | |||
| through consolidation | ||||||
| 3. Decrease in the current period | 1,087,607.83 | 29,238,818.56 | 1,918,590.01 | 4,457,862.07 | 36,702,878.47 | |
| (1) Disposal or retirement | 1,087,607.83 | 29,238,818.56 | 1,918,590.01 | 4,457,862.07 | 36,702,878.47 | |
| 4. Closing balance | 303,349,247.38 | 530,004,540.52 | 32,585,039.05 | 120,306,218.02 | 51,289,287.89 | 1,037,534,332.86 |
| III. Impairment Allowances | ||||||
| 1. Opening balance | 8,124,587.26 | 619,640.18 | 8,744,227.44 | |||
| 2. Increase in the current period | ||||||
| (1) Established | ||||||
| 3. Decrease in the current period | 3,528,761.47 | 3,528,761.47 | ||||
| (1) Disposal or retirement | 3,528,761.47 | 3,528,761.47 | ||||
| 4. Closing balance | 4,595,825.79 | 619,640.18 | 5,215,465.97 | |||
| IV. Carrying Amount | ||||||
| 1. Closing carrying amount | 1,302,497,611.31 | 500,914,237.69 | 1,604,228.36 | 28,857,554.84 | 17,256,025.73 | 1,851,129,657.93 |
| 2. Opening carrying amount | 933,448,007.45 | 512,699,170.24 | 3,901,712.05 | 19,500,028.27 | 20,325,956.30 | 1,489,874,874.31 |
(2). List of temporarily idle fixed assets
□Applicable√Not applicable
(3). Status of fixed assets obtained by finance lease
□Applicable√Not applicable
(4). Fixed assets leased out from operation lease
√Applicable□Not applicable
Unit: RMB
| Item | Ending carrying amount |
| Buildings and constructions | 2,499,295.57 |
(5). Fixed assets with pending ownership certificate
√Applicable□Not applicable
Unit: RMB
| Item | Carrying amount | Reason for not obtaining ownership certificate |
| A technology information company in Room 301 and others, Building 7, Zone A, Yinggang East Road, Zhao Xiang Town | 240,154,680.74 | Delivered and procedures are in process in the Current Period |
| The 3# Factory in the Western Base of the Company | 170,760,567.22 | Information needs to be changed, and ownership certificate needs to be replaced |
| The 2# Factory and auxiliary engineering in Cidong Precision Manufacturing Base of the Company | 89,207,113.81 | Information needs to be changed, and ownership certificate needs to be replaced |
| The 1# Factory and auxiliary engineering in the Company’s precision manufacturing base | 81,103,303.69 | Information needs to be changed, and ownership certificate needs to be replaced |
| Auxiliary engineering of the 3# Factory | 11,740,932.14 | Information needs to be changed, and ownership certificate needs to be replaced |
| Subtotal | 592,966,597.60 |
Other notes:
□Applicable√Not applicable
Fixed assets disposed of
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Scrapped machinery equipment yet to be completely disposed | 3,364,852.64 | 3,858,246.51 |
| Total | 3,364,852.64 | 3,858,246.51 |
Other notes:
None.
22. Construction in progress
Breakdown
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
Construction in progress
(1). Details of construction in progress
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Impairment allowances | Carrying amount | Carrying balance | Impairment allowances | Carrying amount | |
| R&D centre and headquarters base construction project | 212,491,009.57 | 212,491,009.57 | 73,430,650.25 | 73,430,650.25 | ||
| Base construction project for annual output of 180 million sets of LED lamps | 146,348,397.94 | 146,348,397.94 | 71,757,502.31 | 71,757,502.31 | ||
| Base construction project for annual output of 410 million sets of wall switches and sockets | 130,109,662.81 | 130,109,662.81 | 2,156,275.13 | 2,156,275.13 | ||
| Construction project for automation upgrading of annual output of 400 million sets of converters | 20,761,287.51 | 20,761,287.51 | 14,280,038.14 | 14,280,038.14 | ||
| Information construction project | 2,814,215.88 | 2,814,215.88 | 3,539,851.67 | 3,539,851.67 | ||
| Equipment to be installed | 22,521,969.18 | 22,521,969.18 | 28,504,645.70 | 28,504,645.70 | ||
| Other small projects | 76,411,307.65 | 76,411,307.65 | 4,695,173.77 | 4,695,173.77 | ||
| Total | 611,457,850.54 | 611,457,850.54 | 198,364,136.97 | 198,364,136.97 | ||
(2). Changes in significant construction in progress during the current period
√Applicable□Not applicable
Unit: RMB
| Project | Budget | Period-beginning balance | Increase in the current period | Transferred to fixed assets in the current period | Transferred in fixed assets in the Current Period | Other decreases in the current period | Period-end balance | Cumulative project investment as % of the budget | Project progress(%) | Cumulative capitalised interest | Of which: Capitalised interest in the current period | Interest capitalisation rate for the current period (%) | Funding source |
| R&D centre and headquarters base construction project | 708,225,600.00 | 73,430,650.25 | 144,438,563.25 | 5,217,588.00 | 160,615.93 | 212,491,009.57 | 30.95 | 35.00 | Fund raising | ||||
| Base construction project for annual output of 180 million sets of LED lamps | 743,810,500.00 | 71,757,502.31 | 74,590,895.63 | 146,348,397.94 | 23.90 | 30.00 | Fund raising | ||||||
| Base construction project for annual output of 410 million sets of wall switches and sockets | 1,204,528,600.00 | 2,156,275.13 | 132,618,896.80 | 4,665,509.12 | 130,109,662.81 | 32.76 | 40.00 | Fund raising |
| Construction project for automation upgrading of annual output of 400 million sets of converters | 999,036,300.00 | 14,280,038.14 | 55,065,646.71 | 48,087,765.13 | 496,632.21 | 20,761,287.51 | 30.70 | 35.00 | Fund raising | ||||
| Information construction project | 240,350,000.00 | 3,539,851.67 | 9,760,392.16 | 7,741,067.27 | 2,744,960.68 | 2,814,215.88 | 6.63 | 10.00 | Fund raising | ||||
| Equipment to be installed | 28,504,645.70 | 80,312,526.06 | 85,068,408.83 | 1,226,793.75 | 22,521,969.18 | Equity fund | |||||||
| Other small projects | 4,695,173.77 | 473,898,327.06 | 402,182,193.18 | 76,411,307.65 | Equity fund | ||||||||
| Total | 3,895,951,000.00 | 198,364,136.97 | 970,685,247.67 | 552,962,531.53 | 4,629,002.57 | 611,457,850.54 | / | / | / | / |
(3). Impairment allowances for construction in progress for the current period
□Applicable√Not applicable
Other notes
□Applicable√Not applicable
Engineering materials
(4) Status of engineering materials
□Applicable√Not applicable
23. Productive living assets
(1). Productive living assets adopting cost measurement mode
□Applicable√Not applicable
(2). Productive living assets adopting fair value measurement mode
□Applicable√Not applicable
Other notes
□Applicable√Not applicable
24. Oil and gas assets
□Applicable√Not applicable
25. Right-of-use assets
√Applicable□Not applicable
Unit: RMB
| Item | Buildings and constructions | Total |
| I. Original Carrying Value | ||
| 1. Opening balance | 30,054,784.58 | 30,054,784.58 |
| 2. Increase in the current period | 14,993,101.31 | 14,993,101.31 |
| (1) Rent | 5,813,706.50 | 5,813,706.50 |
| (2) Increase through consolidation | 9,179,394.81 | 9,179,394.81 |
| 3. Decrease in the current period | 8,500,077.77 | 8,500,077.77 |
| (1) Disposed amount | 8,500,077.77 | 8,500,077.77 |
| 4. Closing balance | 36,547,808.12 | 36,547,808.12 |
| II. Accumulated Depreciation | ||
| 1. Opening balance | 11,244,984.87 | 11,244,984.87 |
| 2. Increase in the current period | 16,375,484.00 | 16,375,484.00 |
| (1) Accrued amount | 14,110,005.67 | 14,110,005.67 |
| (2) Increase through consolidation | 2,265,478.33 | 2,265,478.33 |
| 3. Decrease in the current period | 4,385,368.32 | 4,385,368.32 |
| (1) Disposal | 4,385,368.32 | 4,385,368.32 |
| 4. Closing balance | 23,235,100.55 | 23,235,100.54 |
| III. Impairment Allowances | ||
| 1. Opening balance | ||
| 2. Increase in the current period | ||
| (1) Accrued amount | ||
| 3. Decrease in the current period | ||
| (1) Disposal | ||
| 4. Closing balance | ||
| IV. Carrying Amount |
| 1. Closing carrying amount | 13,312,707.57 | 13,312,707.57 |
| 2. Opening carrying amount | 18,809,799.71 | 18,809,799.71 |
Other notes:
None.
26. Intangible assets
(1). Details of intangible assets
√Applicable □Not applicable
Unit: RMB
| Item | Land use rights | Software | Patent and know-how | Total |
| I. Original carrying value | ||||
| 1. Opening balance | 311,759,224.07 | 84,490,456.01 | 30,283,018.69 | 426,532,698.77 |
| 2. Increase in the current period | 44,980,100.00 | 6,326,653.77 | 51,306,753.77 | |
| (1) Purchased | 44,980,100.00 | 450,443.00 | 45,430,543.00 | |
| (2) Increase through business combination | 1,247,208.20 | 1,247,208.20 | ||
| (3) Transfer from construction in progress | 4,629,002.57 | 4,629,002.57 | ||
| 3. Decrease in the current period | 62,239.32 | 62,239.32 | ||
| (1) Disposal | 62,239.32 | 62,239.32 | ||
| 4. Closing balance | 356,739,324.07 | 90,754,870.46 | 30,283,018.69 | 477,777,213.22 |
| II. Accumulated depreciation | ||||
| 1. Opening balance | 39,952,495.42 | 60,527,542.18 | 30,283,018.69 | 130,763,056.29 |
| 2. Increase in the current period | 7,001,392.06 | 14,349,718.01 | 21,351,110.07 | |
| (1) Established | 7,001,392.06 | 13,493,236.91 | 20,494,628.97 | |
| (2) Increase through consolidation | 856,481.10 | 856,481.10 | ||
| 3. Decrease in the current period | 62,239.32 | 62,239.32 | ||
| (1) Disposal | 62,239.32 | 62,239.32 | ||
| 4. Closing balance | 46,953,887.48 | 74,815,020.87 | 30,283,018.69 | 152,051,927.04 |
| IV. Carrying amount | ||||
| 1. Closing carrying amount | 309,785,436.59 | 15,939,849.59 | 325,725,286.18 | |
| 2. Opening carrying amount | 271,806,728.65 | 23,962,913.83 | 295,769,642.48 | |
The proportion of intangible assets formed from the internal R&D of the Company at the Period-end tothe ending balance of intangible assets is 0.
(2). Status of land use right without certificate of title
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
27. Development costs
□Applicable√Not applicable
28. Goodwill
(1). Original carrying value of goodwill
√Applicable□Not applicable
Unit: RMB
| Investee or item generating goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Generated due to business combination | Disposal | |||||
| Dalitek | 45,133,442.04 | 45,133,442.04 | ||||
| Total | 45,133,442.04 | 45,133,442.04 | ||||
(2). Impairment allowances for goodwill
□Applicable√Not applicable
(3). Information on the asset group or combination of asset groups to which goodwill isapportioned
√Applicable□Not applicable
| Composition of the asset group or combination of asset groups | Dalitek assets group |
| Carrying value of this assets group or combination of assets groups | 39,853,583.71 |
| Carrying value of goodwill apportioned to this asset group or combination of asset groups | 64,476,345.77 [Note] |
| Carrying value of this asset group or combination of asset groups including goodwill | 104,329,929.48 |
| Is this asset group or combination of asset groups consistent with that at the time it was purchased and that in the prior year goodwill impairment tests? | Yes |
(4). Describe the goodwill depreciation testing process, key parameters (e.g., expect growth rate
during the forecast period when the present value of future cash flows, growth rate during thestabilisation period, profit margin, discount rate, forecast period, etc., if applicable) and themethod of recognizing impairment losses of goodwill
√Applicable□Not applicable
1) The recoverable amount of the asset group is calculated based on the present value of theprojected cash flow in the future, which is on the basis of the Company’s approved detailed cash flowprojections for the 5-year forecast period, with a discount rate of 11.76%. The Company expects its cashflows to remain stable beyond the five-year period, with cash flows beyond the detailed projectionperiod remaining consistent with those of 2027.According to the test, the recoverable amount of asset group containing goodwill is RMB108.8546million, which is higher than the difference of the carrying value of the asset group or combination ofasset groups containing goodwill by RMB4.5247 million. Therefore, no impairment loss on goodwillwas recognised at the end of the period.Other key data used in the impairment test include the expected selling price of the product, salesvolume, production costs and other related expenses. The company determines the above key data basedon historical experience and forecasts of market developments. The discount rate adopted by the
Company is a pre-tax rate that reflects the current market time value of money and the risks specific tothe related asset group.
2) Completion of performance commitments and the impact on goodwill impairment testingDue to the impact of the pandemic, the business development of Dalitek was restricted and itsoperating revenue of RMB53.136 million in 2022 was lower than the committed amount ofRMB79.6752 million, and the performance commitment for the year was not fulfilled.The current goodwill impairment is a projection based on the audited operating results of Dalitek inthe year 2022. Failure to meet the performance commitments for the year has no impact on the goodwillimpairment test.
(5). Impact of goodwill impairment tests
□Applicable√Not applicable
Other notes
□Applicable√Not applicable
29. Long-term prepaid expense
√Applicable□Not applicable
Unit: RMB
| Item | Opening balance | Increase in the current period | Increase amount through consolidation | Amortisation in the current period | Other decreases | Closing balance |
| 2020 Special Talent Shareholding Plan | 17,750,835.99 | 8,033,477.00 | 6,611,860.38 | 19,172,452.61 | ||
| Payment for fixtures | 2,586,173.25 | 1,394,395.08 | 1,191,778.17 | |||
| Total | 17,750,835.99 | 8,033,477.00 | 2,586,173.25 | 8,006,255.46 | 20,364,230.78 |
Other notes:
For details of the 2020 Special Talent Shareholding Plan, please refer to “5. Other information”under “XIII Share-based Payments” of “Part X Financial Statements” herein.
30. Deferred income tax assets/Deferred income tax liabilities
(1). Deferred income tax assets before offsetting
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred income tax Assets | Deductible temporary differences | Deferred income tax Assets | |
| Unrealised profit of internal transactions | 252,930,292.22 | 62,732,294.01 | 131,943,914.81 | 32,868,900.61 |
| Discount on sale accrued in advance | 215,847,304.76 | 53,961,826.18 | 285,699,608.15 | 71,424,902.04 |
| Restricted share Incentive Plan | 75,629,104.14 | 12,895,430.16 | 40,618,629.47 | 6,833,658.60 |
| Deferred income | 53,820,328.00 | 8,073,049.20 | ||
| Bad debt provision of accounts receivable | 12,807,769.56 | 2,837,063.79 | 11,005,073.06 | 2,741,024.17 |
| Shrinkage reserves for inventories | 11,405,652.18 | 2,113,928.17 | 9,387,709.01 | 1,686,199.27 |
| 2020 Special Talent Shareholding Plan | 5,153,783.46 | 865,523.02 | 5,569,298.01 | 901,685.09 |
| Total | 627,594,234.32 | 143,479,114.53 | 484,224,232.51 | 116,456,369.78 |
(2). Deferred income tax liabilities before offsetting
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred income tax Liabilities | Taxable temporary differences | Deferred income tax Liabilities | |
| Depreciation policy on fixed assets subject to tax variances | 340,139,021.71 | 54,854,169.49 | 309,268,738.92 | 50,024,829.68 |
| Gain and loss of hedge instrument included in the other comprehensive income | 5,817,762.23 | 1,454,440.56 | 1,021,158.47 | 255,289.62 |
| Total | 345,956,783.94 | 56,308,610.05 | 310,289,897.39 | 50,280,119.30 |
(3). Deferred income tax assets or liabilities listed in net amount after offset
□Applicable√Not applicable
(4). Schedule of deferred income tax assets unrecognised
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 88,836,167.52 | 43,819,750.48 |
| Deductible losses | 37,516,651.15 | 46,483,443.12 |
| Total | 126,352,818.67 | 90,303,193.60 |
(5). Deductible losses on which deferred income tax assets were unrecognised will expire in thefollowing years
√Applicable□Not applicable
Unit: RMB
| Year | Closing balance | Opening balance | Remark |
| 2025 | 11,515,440.62 | ||
| 2026 | 5,998,535.59 | 34,968,002.50 | |
| 2027 | 31,518,115.56 | ||
| Total | 37,516,651.15 | 46,483,443.12 | / |
Other notes:
□Applicable√Not applicable
31. Other non-current assets
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Impairment allowances | Carrying amount | Carrying balance | Impairment allowances | Carrying amount | |
| Contract acquisition costs | ||||||
| Contract performance costs | ||||||
| Refund costs receivable | ||||||
| Contract assets | ||||||
| Prepayment for equipment acquisition | 57,186,173.77 | 57,186,173.77 | 21,722,939.50 | 21,722,939.50 | ||
| 2020 Special Talent Shareholding Plan | 19,321,842.00 | 19,321,842.00 | 27,355,319.00 | 27,355,319.00 | ||
| Prepayment for investment | 26,990,656.00 | 26,990,656.00 | ||||
| Total | 76,508,015.77 | 76,508,015.77 | 76,068,914.50 | 76,068,914.50 |
Other notes:
None.
32. Short-term borrowings
(1). Category of short-term borrowings
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Borrowings secured by pledge | ||
| Borrowings secured by collateral | ||
| Borrowings secured by guarantee | 4,000,000.00 | |
| Credit loan | 840,000,000.00 | 500,000,000.00 |
| Interest payable on short-term borrowings | 1,374,749.03 | 430,555.55 |
| Total | 845,374,749.03 | 500,430,555.55 |
Notes of the category for short-term borrowings:
Note: Zhang Wenying, a minority shareholder of Dalitek, and her spouse, Zhou Yun, provided guaranteefor the loan to Dalitek.
(2). Short-term borrowings overdue but not returned
□Applicable√Not applicable
Of which: The status of significant overdue short-term borrowings that are not repaid is as follows:
□Applicable√Not applicable
Other notes
□Applicable√Not applicable
33. Held-for-trading financial liabilities
√Applicable□Not applicable
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Held-for-trading financial liabilities | 27,300,000.00 | 9,100,000.00 | 18,200,000.00 | |
| Of which: | ||||
| Investment payables | 27,300,000.00 | 9,100,000.00 | 18,200,000.00 | |
| Financial liabilities measured at fair value through profit and | ||||
| loss for the current period | ||||
| Of which: | ||||
| Total | 27,300,000.00 | 9,100,000.00 | 18,200,000.00 | |
Other notes:
√Applicable□Not applicable
For details of the investment payables, please refer to “1. Business combinations involving entities notunder the common control” under “VIII Changes to the Consolidation Scope” of “Part X FinancialStatements”.
34. Derivative financial liabilities
□Applicable√Not applicable
35. Notes payable
(1). List of notes payable
√Applicable□Not applicable
Unit: RMB
| Type | Closing balance | Opening balance |
| Trade acceptance notes | ||
| Bank acceptance notes | 2,333,774.75 | |
| Total | 2,333,774.75 |
Total amount of notes payable which became matured but unpaid at the end of the current period isRMB0.00.
36. Accounts payable
(1). Breakdown of accounts payable
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Payment for goods | 1,506,053,347.86 | 1,580,297,065.42 |
| Engineering equipment | 87,123,159.57 | 69,316,617.33 |
| Payment for expense | 50,485,456.10 | 52,072,881.39 |
| Total | 1,643,661,963.53 | 1,701,686,564.14 |
(2). Substantial accounts payable that are over 1 year
□Applicable√Not applicable
Other notes
□Applicable√Not applicable
37. Advances from customers
(1). Breakdown of advances from customers
□Applicable√Not applicable
(2). Significant advances from customers aged over 1 year
□Applicable√Not applicable
Other notes
□Applicable√Not applicable
38. Contract liabilities
(1). Details of contract liabilities
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Advance receipt of payment for goods | 431,654,611.71 | 437,999,921.93 |
| Total | 431,654,611.71 | 437,999,921.93 |
(2). Significant changes in the amount of carrying value and the reason in the Reporting Period
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
39. Employee benefits payable
(1). Breakdown of employee benefits payable
√Applicable□Not applicable
Unit: RMB
| Item | Opening balance | Increase in the current period | Increase through consolidation | Decrease in the current period | Closing balance |
| I. Short-term Benefits | 271,307,479.92 | 1,835,393,373.35 | 3,588,183.40 | 1,783,678,472.30 | 326,610,564.37 |
| II. After-service Benefits-defined Contribution Schemes | 8,155,992.51 | 112,420,655.50 | 163,189.93 | 112,325,743.30 | 8,414,094.64 |
| III. Severance Benefits | 7,295,211.88 | 7,227,711.88 | 67,500.00 | ||
| IV. Other Benefits that are due within 1 year | |||||
| Total | 279,463,472.43 | 1,955,109,240.73 | 3,751,373.33 | 1,903,231,927.48 | 335,092,159.01 |
(2). Breakdown of short-term benefits
√Applicable□Not applicable
Unit: RMB
| Item | Opening balance | Increase in the current period | Increase through consolidation | Decrease in the current period | Closing balance |
| I. Salaries, Bonuses, Allowances and Subsidies | 265,991,374.61 | 1,643,543,719.39 | 3,397,504.18 | 1,592,175,792.41 | 320,756,805.77 |
| II. Staff welfare | 58,214,632.72 | 58,214,632.72 | |||
| III. Social Insurance Premiums | 5,183,398.31 | 59,915,305.96 | 107,639.33 | 59,470,100.95 | 5,736,242.65 |
| Of which: Medical insurance premiums | 4,818,852.08 | 55,950,293.65 | 103,704.86 | 55,541,039.48 | 5,331,811.11 |
| Work-related injury insurance premiums | 364,546.23 | 3,965,012.31 | 3,934.47 | 3,929,061.47 | 404,431.54 |
| Maternity insurance | |||||
| IV. Housing Allowance | 132,707.00 | 52,377,114.54 | 71,373.09 | 52,463,678.68 | 117,515.95 |
| V. Labour Union Expense and Employee Education Budget | 21,342,600.74 | 11,666.80 | 21,354,267.54 |
| VI. Short-term Paid Absence | |||||
| VII. Short-term Profit Sharing Plan | |||||
| Total | 271,307,479.92 | 1,835,393,373.35 | 3,588,183.40 | 1,783,678,472.30 | 326,610,564.37 |
(3). List of defined contribution plan
√Applicable□Not applicable
Unit: RMB
| Item | Opening balance | Increase in the current period | Increase through consolidation | Decrease in the current period | Closing balance |
| 1. Basic pension insurance | 7,877,141.07 | 108,108,662.80 | 158,244.56 | 108,018,315.26 | 8,125,733.17 |
| 2. Unemployment insurance premiums | 278,851.44 | 4,311,992.70 | 4,945.37 | 4,307,428.04 | 288,361.47 |
| 3. Supplementary pension payment | |||||
| Total | 8,155,992.51 | 112,420,655.50 | 163,189.93 | 112,325,743.30 | 8,414,094.64 |
Other notes:
□Applicable√Not applicable
40. Taxes and levies payable
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Enterprise income tax | 203,734,037.13 | 305,914,943.40 |
| VAT | 58,417,765.49 | 195,348,236.75 |
| Real estate tax | 10,551,939.19 | 10,692,552.05 |
| Stamp duty | 8,636,239.12 | 877,508.40 |
| Land use tax | 4,827,210.48 | 4,695,105.35 |
| Personal income tax | 4,800,514.20 | 4,038,032.19 |
| Urban construction and maintenance tax | 3,173,319.78 | 5,836,578.13 |
| Disability allowance | 3,103,966.10 | 1,695,195.50 |
| Educational surcharges | 1,838,024.51 | 2,387,890.63 |
| Local educational fee | 1,225,349.64 | 1,591,927.11 |
| Total | 300,308,365.64 | 533,077,969.51 |
Other notes:
None.
41. Other payables
Breakdown
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Interest payable | ||
| Dividends payable | ||
| Other payables | ||
| Discount on sale accrued in advance | 215,847,304.76 | 285,699,608.15 |
| Obligations of restricted stock repurchase within one year | 94,791,611.30 | 34,586,352.50 |
| Guaranteed deposit | 90,292,099.16 | 61,020,316.08 |
| Accrued expenses | 44,520,261.35 | 46,433,533.02 |
| Temporary receipts and advances payable | 962,594.28 | 3,073,950.35 |
| Total | 446,413,870.85 | 430,813,760.10 |
Other notes:
□Applicable√Not applicable
Interest payable
(1). List by category
□Applicable√Not applicable
Dividends payable
(2) List by category
□Applicable√Not applicable
Other payables
(1). Other payables listed by nature of account
□Applicable√Not applicable
(2). Other significant payables aging over one year
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
42. Liabilities directly associated with assets held for sale
□Applicable√Not applicable
43. Current portion of non-current liabilities
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Current portion of long-term borrowings | 660,000,000.00 | |
| Current portion of long-term borrowings - interest payable | 686,888.90 | |
| Current portion of bonds payable | ||
| Current portion of long-term payables | ||
| Lease obligation matured within 1 Year | 8,798,658.13 | 13,225,048.63 |
| Total | 8,798,658.13 | 673,911,937.53 |
Other notes:
None.
44. Other current liabilities
Other current liabilities
√Applicable □Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Short-term bond payable | ||
| Refunds payable | ||
| Output VAT to be charged off | 56,140,971.75 | 56,939,989.86 |
| Total | 56,140,971.75 | 56,939,989.86 |
Increase/decrease of the short-term bonds payable:
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
45. Long-term borrowings
(1). Category of long-term borrowings
□Applicable√Not applicable
Other notes, including interest rate range:
□Applicable√Not applicable
46. Bonds payable
(1). Bonds payable
□Applicable√Not applicable
(2). Changes of bonds payable: (excluding other financial instruments divided as financialliabilities such as preferred shares and perpetual bonds)
□Applicable√Not applicable
(3). Notes of the conditions for the conversion of convertible corporation bonds and the time ofconversion
□Applicable √Not applicable
(4). Notes of other financial instruments classified as financial liabilities
Basic information about other outstanding financial instruments such as preferred shares and perpetualbonds at the period-end
□Applicable√Not applicable
Changes of outstanding financial instruments such as preferred shares and perpetual bonds at theperiod-end
□Applicable√Not applicable
Notes of basis for the classification of other financial instruments as financial liabilities:
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
47. Lease liabilities
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| The amount of the lease payment that has not yet been made | 4,668,943.91 | 5,208,552.97 |
| Minus: Unrecognised financing expenses | 124,324.69 | 118,715.58 |
| Total | 4,544,619.22 | 5,089,837.39 |
Other notes:
None.
48. Long-term payables
Breakdown
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
Long-term payables
(1). Long-term payables listed by nature
□Applicable√Not applicable
Specific payables
(2) Special payables listed by nature of payments
□Applicable√Not applicable
49. Long-term employee benefits payable
□Applicable√Not applicable
50. Provisions
□Applicable√Not applicable
51. Deferred income
Deferred income
√Applicable □Not applicable
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | Reason for Formation |
| Government grants | 53,820,328.00 | 53,820,328.00 | Related to assets | ||
| Total | 53,820,328.00 | 53,820,328.00 | / |
Item involving government grants:
√Applicable□Not applicable
Unit: RMB
| Item | Opening balance | Amount of newly subsidy for the current period | Amount recorded into non-operating income in the Current Period | Amount recorded into other income in the Current Period | Other changes | Closing balance | Related to assets/related income |
| Awards and subsidies for Longshan Leasing Market | 53,820,328.00 | 53,820,328.00 | Related to assets | ||||
| 53,820,328.00 | 53,820,328.00 |
Other notes:
√Applicable□Not applicable
Note: For details of government grants, please refer to “84. Government grants” under “VII Notes to theConsolidated Financial Statements” of “Part X Financial Statements” herein.
52. Other non-current liabilities
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Contract liabilities |
| Obligations of restricted stock repurchase for over one year | 34,814,148.70 | 46,125,187.50 |
| Total | 34,814,148.70 | 46,125,187.50 |
Other notes:
None.
53. Share capital
√Applicable□Not applicable
Unit: RMB
| Opening balance | Increase/Decrease (+/-) | Closing balance | |||||
| Issuance New shares | Bonus shares | Provident fund Conversion of capital | Others | Subtotal | |||
| Total shares | 601,180,520 | -102,930 | -102,930 | 601,077,590 | |||
Other notes:
Due to the departure of employees participating in the restricted share incentive plan in the currentperiod, the Company repurchased 102,930 shares of restricted shares, reducing share capital byRMB102,930.00 and capital reserves (share premium) by RMB7,413,649.30.
54. Other equity instruments
(1). Basic information about other outstanding financial instruments such as preferred shares and
perpetual bonds at the period-end
□Applicable√Not applicable
(2). Changes of outstanding financial instruments such as preferred shares and perpetual bonds
at the period-end
□Applicable√Not applicable
Changes of other equity instruments in the Current Period, reasons thereof and basis of relatedaccounting treatment:
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
55. Capital reserves
√Applicable□Not applicable
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Capital premium (share premium) | 3,756,383,873.79 | 127,989,881.86 | 3,628,393,991.93 | |
| Other capital reserves | 157,684,414.77 | 77,469,476.84 | 235,153,891.61 | |
| Total | 3,914,068,288.56 | 77,469,476.84 | 127,989,881.86 | 3,863,547,883.54 |
Other notes, including a description of the increase or decrease for the current period and the reasons forthe change:
1) Decrease in capital premium (share premium): ① the actual repurchase amount ofRMB120,576,232.56 borne by the Company due to the repurchase of shares under the 2022 RestrictedShare Incentive Plan was charged to the capital premium (share premium), as described in “XIIIShare-based Payments” in “Part X Financial Statements”; ② A decrease of RMB7,413,649.30 in thecurrent period was due to the departure of employees participating in the restricted share incentive plan.
2) Increase in other capital reserves: Based on the performance appraisal conditions and servicevesting period of the restricted shares, the Company recognised the share-based payment cost ofRMB77,469,476.84, which was recorded in capital reserves (other capital reserves).
56. Treasury stock
√Applicable□Not applicable
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Treasury stock | 80,711,540.00 | 309,989,842.56 | 261,089,028.56 | 129,612,354.00 |
| Total | 80,711,540.00 | 309,989,842.56 | 261,089,028.56 | 129,612,354.00 |
Other notes, including a description of the increase or decrease for the current period and the reasons forthe change:
1) Due to the implementation of the 2022 Restricted Share Incentive Plan, the Companyrepurchased stock from the secondary market, increasing the treasury stock by RMB215,286,334.56,granted restricted share incentives to awardees, reducing treasury stock by RMB215,279,740.56, andrecognized the repurchase obligation on the aforesaid restricted shares, increasing treasury stock byRMB94,703,508.00. For further information, see “XIII Share-based Payments” under “Part X FinancialStatements” herein.
2) The departure of awardees of the restricted share incentive plans in the current period resulted ina decrease in treasury stock worth RMB7,516,579.30; the partially unlocked shares under the 2020 and2021 restricted share incentive plans in the current period caused a decrease in treasury stock worthRMB33,467,436.70; and the dividend for the current period includes locked-up restricted shareincentives and the cash dividend is revocable, resulting in a decrease in treasury stock worthRMB4,825,272.00.
57. Other comprehensive income
√Applicable□Not applicable
Unit: RMB
| Item | Period-beginning balance | 2022 | Period-end balance | |||||
| Amount before deducting income tax for the current period | Less: recorded in other comprehensive income in prior period and transferred in profit or loss in the current period | Less: recorded in other comprehensive income in prior period and transferred in retained earnings in the current period | Less: Income tax expense | Attributable to the Company as the parent after tax | Attributable minority shareholders after tax | |||
| I. Other Comprehensive Income that may not be Reclassified to Profit or Loss | ||||||||
| Of which: The changes of re-measurement of the defined benefit pension plan | ||||||||
| Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||||||||
| Changes in the fair value of other equity investments | ||||||||
| Changes in the fair value arising from changes in own credit risk | ||||||||
| II. Other Comprehensive Income that may Subsequently be Reclassified to Profit or Loss | 7,537,390.37 | -4,208,833.60 | -1,060,970.18 | -3,147,863.42 | 4,389,526.95 | |||
| Of which: Other | ||||||||
| comprehensive income that will be reclassified to profit or loss under the equity method | ||||||||
| Changes in the fair value of other debt investments | ||||||||
| Other comprehensive income arising from the reclassification of financial assets | ||||||||
| Credit impairment allowances for other debt investments | ||||||||
| Reserve for cash flow hedges | 7,546,232.21 | -4,243,880.72 | -1,060,970.18 | -3,182,910.54 | 4,363,321.67 | |||
| Differences arising from the translation of foreign currency-denominated financial statements | -8,841.84 | 35,047.12 | 35,047.12 | 26,205.28 | ||||
| Total of other comprehensive income | 7,537,390.37 | -4,208,833.60 | -1,060,970.18 | -3,147,863.42 | 4,389,526.95 |
Other notes, including the adjustment of the effective gain/loss on cash flow hedges to the initial recognised amount:
None.
58. Specific reserve
□Applicable√Not applicable
59. Surplus reserves
√Applicable□Not applicable
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Statutory surplus reserves | 302,797,998.73 | 302,797,998.73 | ||
| Discretional surplus reserves | ||||
| General reserves | ||||
| Enterprise expansion fund | ||||
| Others | ||||
| Total | 302,797,998.73 | 302,797,998.73 |
Notes, including changes and reason of change:
None.
60. Retained earnings
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Beginning balance of retained profits before adjustments | ||
| Adjust the total amount of undistributed profits at the beginning of the year (increase +, decrease -) | ||
| Beginning balance of retained profits after adjustments | 6,010,878,918.97 | 4,431,669,986.31 |
| Add: Net profit attributable to owners of the Company as the parent | 3,188,619,359.56 | 2,780,360,732.66 |
| Less: Withdrawal of statutory surplus reserve | ||
| Withdrawal of discretional surplus reserves | ||
| Appropriated to general reserve | ||
| Dividends of common shares payable | 1,442,833,248.00 | 1,201,151,800.00 |
| Dividends on common stock transferred to equity | ||
| Ending retained profits | 7,756,665,030.53 | 6,010,878,918.97 |
List of adjustment of beginning retained profits:
1. RMB0.00 beginning retained profits was affected by retrospective adjustment conducted according tothe Accounting Standards for Business Enterprises and relevant new regulations.
2. RMB0.00 beginning retained profits was affected by changes in accounting policies.
3. RMB0.00 beginning retained profits was affected by correction of significant accounting errors.
4. RMB0.00 beginning retained profits was affected by changes in combination scope arising from samecontrol.
5. RMB0.00 beginning retained profits was affected totally by other adjustments.
61. Revenue and cost of sales
(1). Operating revenue and cost of sales
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 | ||
| Income | Cost | Income | Cost | |
| Principal business | 14,052,771,512.23 | 8,716,930,704.54 | 12,336,870,690.29 | 7,790,762,754.47 |
| Other businesses | 28,601,518.71 | 13,151,880.54 | 48,045,647.22 | 17,777,912.37 |
| Total | 14,081,373,030.94 | 8,730,082,585.08 | 12,384,916,337.51 | 7,808,540,666.84 |
| Of which: Revenue generated by contracts with customers | 14,080,683,516.01 | 8,729,867,530.13 | 12,383,778,964.63 | 7,808,260,223.58 |
(2). Status of contract revenue
□Applicable√Not applicable
Details of contract revenue:
□Applicable√Not applicable
(3). Details of obligation for contract performance
□Applicable√Not applicable
(4). Notes of the allocation to the remaining obligations for contract performance
□Applicable√Not applicable
Other notes:
None.
62. Taxes and levies
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Urban maintenance and construction tax | 43,535,121.72 | 31,545,703.77 |
| Educational surcharges | 24,378,077.48 | 17,945,609.53 |
| Local education surcharge | 16,252,051.57 | 12,118,900.15 |
| Real estate tax | 10,331,309.05 | 10,754,950.02 |
| Stamp duty | 16,430,918.58 | 5,560,108.84 |
| Land use tax | 4,770,521.69 | 4,791,701.11 |
| Vehicle and vessel usage tax | 44,403.17 | 53,029.46 |
| Environment protection tax | 15,656.64 | 15,293.6 |
| Total | 115,758,059.90 | 82,785,296.48 |
Other notes:
None.
63. Selling expense
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Employee remuneration | 325,364,319.34 | 261,647,749.30 |
| Marketing expense | 299,723,604.19 | 217,339,450.58 |
| Advertising expense | 77,484,221.03 | 5,339,637.47 |
| Travel expense | 43,297,989.40 | 34,695,865.40 |
| Administrative expense | 36,290,184.82 | 32,909,137.36 |
| Lease rental | 9,778,151.66 | 1,976,612.98 |
| Others | 8,449,188.97 | 6,278,549.71 |
| Total | 800,387,659.41 | 560,187,002.80 |
Other notes:
None.
64. Administrative expense
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Employee remuneration | 256,350,627.82 | 214,964,233.06 |
| Restricted share incentive | 77,469,476.84 | 41,090,453.82 |
| Depreciation and amortisation | 52,172,006.88 | 43,934,085.95 |
| Administrative expense | 45,742,988.76 | 56,125,085.23 |
| House and equipment maintenance expense | 21,657,342.01 | 26,859,235.14 |
| Consultant service expense | 16,904,014.09 | 20,597,126.42 |
| Lease rental | 9,285,328.92 | 2,455,152.98 |
| Entertainment expense | 5,668,555.03 | 5,788,268.11 |
| Expense on 2020 special talent plan | 6,611,860.38 | 6,701,548.01 |
| Tax | 3,082,509.25 | 2,864,245.72 |
| Others | 5,651,663.90 | 6,236,122.53 |
| Total | 500,596,373.88 | 427,615,556.97 |
Other notes:
None.
65. R&D expense
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| R&D of converters | 249,597,370.31 | 204,811,830.81 |
| R&D of wall switches and sockets | 154,925,908.04 | 141,889,975.17 |
| R&D of LED | 67,196,736.33 | 53,911,159.57 |
| R&D of digital accessories | 51,413,278.02 | 41,413,616.82 |
| R&D of household appliances | 25,044,926.07 | 17,154,346.37 |
| R&D of circuit breakers | 15,897,548.30 | 11,834,088.08 |
| R&D of smart door locks | 12,858,419.10 | |
| R&D of smart lighting | 11,361,893.94 | |
| Total | 588,296,080.11 | 471,015,016.82 |
Other notes:
None.
66. Finance costs
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Interest costs | 35,925,352.09 | 39,763,491.76 |
| Interest income | -137,795,215.87 | -128,887,165.64 |
| Exchange profit and loss | -6,216,803.18 | 1,365,206.44 |
| Auxiliary expense | 812,258.47 | 1,194,046.81 |
| Cash discount | -718,892.47 | -1,277,860.69 |
| Total | -107,993,300.96 | -87,842,281.32 |
Other notes:
None.
67. Other income
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 | Amount recorded in non-recurring profit or loss in the Current Period |
| Government grants related to income [Note] | 130,991,587.24 | 388,196,973.94 | 130,991,587.24 |
| Employment VAT reduction or exemption for veterans and key groups | 236,650.00 | 416,950.00 | |
| Return of auxiliary expense for individual income tax withheld | 1,712,485.52 | 2,322,217.53 | 1,712,485.52 |
| Total | 132,940,722.76 | 390,936,141.47 | 132,704,072.76 |
Other notes:
[Note] For details of government grants included in other income, please refer to “84. Governmentgrants” under “VII Notes to the Consolidated Financial Statements” of “Part X Financial Statements”herein.
68. Investment income
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Long-term equity investment income accounted by equity method | ||
| Investment income from disposal of long-term equity investment | ||
| Investment income from holding of held-for-trading financial asset | ||
| Dividend income of other equity investments gained for the holding period | ||
| Interest income earned on investment in debt obligations during the holding period | ||
| Interest income earned on other investment in debt obligations during the holding period | ||
| Investment income from disposal of held-for-trading financial asset | ||
| Investment income from disposal of other equity instruments | ||
| Investment income from disposal of investment in debt obligations |
| Investment income from disposal of other investment in debt obligations | ||
| Earnings of debt restructuring | ||
| Investment income from bank wealth management products | 279,374,491.92 | 171,623,256.63 |
| Investment income from disposal of financial instruments | -7,385,680.00 | 11,107,836.63 |
| Of which: Investment in futures | -7,385,680.00 | 11,107,836.63 |
| Interest income from calling money | 7,294,215.55 | |
| Total | 271,988,811.92 | 190,025,308.81 |
Other notes:
None.
69. Net gain on exposure hedges
□Applicable√Not applicable
70. Income from changes in fair value
□Applicable√Not applicable
71. Credit impairment loss
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Loss on bad debts of notes receivable | ||
| Bad debt loss of accounts receivable | ||
| Bad debt loss of other receivables | ||
| Impairment loss on investment in debt obligations | ||
| Impairment loss on other investment in debt obligations | ||
| Bad debt loss of long-term receivables | ||
| Contractual Asset Impairment Loss | ||
| Bad debt loss | -30,470,523.21 | -24,746,561.94 |
| Total | -30,470,523.21 | -24,746,561.94 |
Other notes:
None.
72. Asset impairment loss
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| I. Bad Debt Loss | ||
| II. Inventory shrinkage loss and impairment provision for contract performance costs | -11,504,455.94 | -7,512,895.82 |
| III. Impairment Loss on Long-term Equity Investment | ||
| IV. Impairment Loss on Investment Property | ||
| V. Impairment loss on fixed assets | -8,744,227.44 | |
| VI. Depreciation Loss of Engineering Materials | ||
| VII. Impairment Losses on Construction in Progress |
| VIII. Impairment Losses on Productive Living Assets | ||
| IX. Impairment Losses of Oil & Gas Assets | ||
| X. Impairment Losses on Intangible Assets | ||
| XI. Impairment losses on Goodwill | ||
| XII. Miscellaneous | ||
| Total | -11,504,455.94 | -16,257,123.26 |
Other notes:
None.
73. Gains on disposal of assets
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 | Non-recurring amount in the Current Period |
| Gains on disposal of fixed assets | -3,139,686.69 | -11,308,464.89 | -3,139,686.69 |
| Total | -3,139,686.69 | -11,308,464.89 | -3,139,686.69 |
Other notes:
None.
74. Non-operating revenue
Non-operating Income
√Applicable □Not applicable
Unit: RMB
| Item | 2022 | 2021 | Amount recorded in the current non-recurring profit or loss |
| Gains from disposal of non-current assets | |||
| Of which: Gains from fixed assets disposal | |||
| Gains from disposal of intangible assets | |||
| Gains on exchange of non-monetary assets | |||
| Donation accepted | |||
| Government grants | |||
| Damages for infringement and contract breaching | 2,952,203.08 | 2,254,500.38 | 2,952,203.08 |
| Default revenue of suppliers | 498,535.51 | 931,382.02 | 498,535.51 |
| Default revenue of dealers | 17,277.64 | 362,538.90 | 17,277.64 |
| Payment not required to be made | 12,773.55 | 701,484.58 | 12,773.55 |
| Others | 303,573.54 | 103,363.88 | 303,573.54 |
| Total | 3,784,363.32 | 4,353,269.76 | 3,784,363.32 |
Government grants recorded in profit or loss for the current period
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
75. Non-operating expenses
√Applicable □Not applicable
Unit: RMB
| Item | 2022 | 2021 | Amount recorded in the current non-recurring profit or loss |
| Gains from disposal of non-current assets | 841,203.58 | 1,593,839.71 | 841,222.69 |
| Of which: Loss caused by disposal of fixed assets | |||
| Loss caused by disposal of intangible assets | |||
| Loss caused by exchange of non-monetary assets | |||
| Donation | 62,500,296.94 | 32,185,534.91 | 62,500,296.94 |
| Compensation expense | 2,025,121.90 | ||
| Fines expenditure | 294,810,000.00 | ||
| Others | 47,161.99 | 43,227.39 | 47,161.99 |
| Total | 63,388,662.51 | 330,657,723.91 | 63,388,681.62 |
Other notes:
Details of donations:
| Item | Amount of Current Period | Same period of last year |
| Cixi General Institution of Charity | 56,275,000.00 | 7,402,000.00 |
| Red Cross Society of China Cixi Branch | 4,688,737.42 | |
| Shanghai Charity Foundation | 1,000,000.00 | 11,583,534.91 |
| Peking University Education Foundation | 10,000,000.00 | |
| Red Cross Society of China Ningbo Branch | 2,000,000.00 | |
| Sichuan Province Leshan Normal University Education Development Foundation | 1,000,000.00 | |
| Other petty donations | 536,559.52 | 200,000.00 |
| Subtotal | 62,500,296.94 | 32,185,534.91 |
76. Income tax expense
(1). Income tax expense
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Current income tax expense | 589,710,229.89 | 582,281,936.16 |
| Deferred income tax expense | -20,714,816.96 | -37,682,743.86 |
| Total | 568,995,412.93 | 544,599,192.30 |
(2). Adjustment process of accounting profit and income tax expense
√Applicable□Not applicable
Unit: RMB
| Item | 2022 |
| Total profit | 3,754,456,143.17 |
| Income tax expense calculated at the parent company’s applicable tax rate | 563,168,421.48 |
| Influence of applying different tax rates by subsidiaries | 87,944,503.29 |
| Influence of income tax before adjustment | 237,402.68 |
| Influence of non-taxable income | |
| Influence of non-deductible costs, expenses and losses | 793,597.28 |
| The effect of using deductible losses of deferred income tax assets that have not been recognised in the previous period | -10,088,778.03 |
| Effect of deductible temporary differences or deductible losses on deferred income tax assets not recognised in the current period | 13,289,743.03 |
| Influence of R&D and deductions | -77,819,239.95 |
| Fourth quarter add-on deduction | -8,530,236.85 |
| Income tax expense | 568,995,412.93 |
Other notes:
□Applicable√Not applicable
77. Other comprehensive income
√Applicable□Not applicable
For details of other comprehensive income after tax, please refer to “57. Other comprehensive income”under “VII Notes to the Consolidated Financial Statements” of “Part X Financial Statements” herein.
78. Cash flow statement items
(1). Other cash received from business activities
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Income from government subsidy | 184,811,915.24 | 390,519,191.47 |
| Deposit received | 94,815,279.98 | 46,881,551.84 |
| Interest income | 76,560,589.37 | 82,233,607.43 |
| Return of housing loan for employees | 8,172,679.13 | 2,447,354.41 |
| Others | 5,675,054.71 | 3,344,812.08 |
| Total | 370,035,518.43 | 525,426,517.23 |
Notes:
None.
(2). Cash payments related to other operating activities
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Out-of-pocket expense | 982,834,528.81 | 705,132,660.86 |
| Fine payment | 294,810,000.00 | |
| Deposit payment | 58,237,557.33 | 173,494,360.86 |
| Donation expenditure | 62,500,296.94 | 32,185,534.91 |
| Housing loan for employees | 3,821,203.62 | 4,840,000.00 |
| Others | 4,072,643.97 | 3,264,696.97 |
| Total | 1,111,466,230.67 | 1,213,727,253.60 |
Notes:
None.
(3). Other cash received from investment activities
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Redemption of investments such as bank wealth management | 9,314,400,000.00 | 11,033,100,000.00 |
| Return of futures margin | 298,315,309.31 | 241,233,253.72 |
| Received interest on call money | 1,000,000.00 | 7,200,000.00 |
| Total | 9,613,715,309.31 | 11,281,533,253.72 |
Notes:
None.
(4). Other cash paid for investment activities
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Investment expenditure such as bank wealth management | 10,321,800,000.00 | 12,413,600,000.00 |
| Payment for futures margin | 293,700,000.00 | 180,500,000.00 |
| Payment for equity transfer | 26,990,656.00 | |
| Total | 10,615,500,000.00 | 12,621,090,656.00 |
Notes:
None.
(5). Other cash received from funding activities
□Applicable√Not applicable
(6). Other cash paid for funding activities
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Repurchase of share incentive | 222,802,913.86 | 7,808,216.40 |
| Repayment of lease liabilities | 13,844,786.80 | 12,579,833.83 |
| Total | 236,647,700.66 | 20,388,050.23 |
Notes:
None.
79. Supplemental information for cash flow statement
(1). Supplemental information for cash flow statement
√Applicable □Not applicable
Unit: RMB
| Supplemental information | Amount during the current period | Previous period |
| 1. Reconciliation of net profit to net cash flows generated from operating activities | ||
| Net profit | 3,185,460,730.24 | 2,780,360,732.66 |
| Add: Provision for impairment of credit | 30,470,523.21 | 24,746,561.94 |
| Asset impairment loss | 11,504,455.94 | 16,257,123.26 |
| Depreciation of fixed assets, oil and gas assets, and productive living assets | 222,420,678.01 | 206,424,241.17 |
| Amortisation of right-of-use assets | 14,110,005.67 | 11,244,984.87 |
| Amortisation of intangible assets | 20,494,628.97 | 16,458,214.68 |
| Amortisation of long-term prepaid expenses | 8,006,255.46 | 6,701,548.01 |
| Losses from disposal of fixed assets, intangible assets and other long-lived assets (gains represented by “-”) | 3,139,686.69 | 11,308,464.89 |
| Losses from scrap of fixed assets (gains represented by “-”) | 841,203.58 | 1,593,839.71 |
| Losses from changes in fair value (gains represented by “-”) | ||
| Finance costs (gains represented by “-”) | -30,687,370.90 | 41,128,698.20 |
| Investment loss (gains represented by “-”) | -271,988,811.92 | -190,025,308.81 |
| Decrease in deferred income tax assets (gains represented by “-”) | -27,022,744.75 | -49,553,192.50 |
| Increase in deferred income tax liabilities (decrease represented by “-”) | 6,028,490.75 | 11,870,448.64 |
| Decrease in inventory (gains represented by “-”) | 100,544,363.75 | -596,259,958.11 |
| Decrease in accounts receivable generated from operating activities (gains represented by “-”) | -72,562,204.17 | -190,636,989.81 |
| Increase in accounts payable used in operating activities (decrease represented by “-”) | -220,315,149.21 | 869,359,175.52 |
| Others | 77,469,476.84 | 43,348,156.82 |
| Net cash generated from/used in operating activities | 3,057,914,218.16 | 3,014,326,741.14 |
| 2. Significant investing and financing activities without involvement of cash receipts and payments | ||
| Conversion of debt to capital | ||
| Convertible corporate bonds matured within one year | ||
| Fixed asset under finance lease | ||
| 3. Net increase/decrease of cash and cash equivalent: | ||
| Closing balance of cash | 1,925,343,174.98 | 2,552,716,453.54 |
| Less: Opening balance of cash | 2,552,716,453.54 | 1,829,551,296.70 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | -627,373,278.56 | 723,165,156.84 |
(2). Net cash paid for the current period to acquire subsidiaries
□Applicable□Not applicable
Unit: RMB
| Amount | |
| Cash or cash equivalents paid in the current period for the business combination occurring in the current period | 45,809,344.00 |
| Of which: Dalitek | 45,809,344.00 |
| Less: cash and cash equivalents held by subsidiaries on the purchase date | 26,701,851.91 |
| Of which: Dalitek | 26,701,851.91 |
| Add: Payments of cash and cash equivalents made in current period due to business combinations incurred in previous periods | |
| Net cash paid for acquisition of subsidiaries | 19,107,492.09 |
Other notes:
None.
(3). Net cash received for the disposal of subsidiaries for the current period
□Applicable√Not applicable
(4). Composition of cash and cash equivalents
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 1,925,343,174.98 | 2,552,716,453.54 |
| Of which: Cash on hand | 34,167.84 | |
| Bank deposits on demand | 1,890,294,692.17 | 2,500,383,599.91 |
| Other monetary assets on demand | 35,014,314.97 | 52,332,853.63 |
| Due from central banks that can be used for payment | ||
| Due from banks and other financial institutions | ||
| Interbank withdrawal | ||
| II. Cash Equivalents | ||
| Of which: Investment in bonds due within three months | ||
| III. Ending balance of cash and cash equivalents | 1,925,343,174.98 | 2,552,716,453.54 |
| Of which: Cash and cash equivalents with restricted use by the Company as the parent or subsidiaries within the Group |
Other notes:
√Applicable□Not applicable
Supplemental information for cash flow statementAs at 31 December 2022, the balance of monetary assets was RMB4,611,966,169.54, the balance ofcash and cash equivalents was RMB1,925,343,174.98, the difference was RMB2,686,622,994.56, whichwas the futures margins of RMB13,774,515.95 not belonging to cash and cash equivalents, the cashdeposits for L/G was RMB7,141,771.63, and the fixed deposit of RMB2,545,000,000.00 and the interestof RMB120,706,706.98 that cannot be withdrawn at any time.As at 31 December 2021, the balance of monetary assets was RMB4,377,228,556.74, the balance ofcash and cash equivalents was RMB2,552,716,453.54, the difference was RMB1,824,512,103.20, whichwas the futures margins of RMB25,988,465.80 not belonging to cash and cash equivalents, the cashdeposits for L/G was RMB6,654,782.17, and the bill deposits was RMB2,333,774.75. The third partypays the platform deposit of RMB63,000.00, and the fixed deposit of RMB1,730,000,000 and theinterest of RMB59,472,080.48 that cannot be withdrawn at any time.
80. Notes to items of the statements of changes in owners’ equity
Notes to the name of “Other” of closing balance of the same period of last year adjusted and the amountadjusted:
□Applicable√Not applicable
81. Assets with restricted ownership or right to use
√Applicable□Not applicable
Unit: RMB
| Item | Ending carrying amount | Reason for Restriction |
| Monetary assets | 20,916,287.58 | Deposits that cannot be withdrawn at any time |
| Notes receivable | ||
| Inventories | ||
| Fixed assets | ||
| Intangible assets | ||
| Total | 20,916,287.58 | / |
Other notes:
None.
82. Foreign currency monetary items
(1). Foreign currency monetary items
√Applicable□Not applicable
Unit: RMB
| Item | Closing foreign currency balance | Exchange rate | Closing balance converted to RMB balance |
| Monetary assets | - | - | 1,500,906.06 |
| Of which: USD | 205,639.39 | 6.9646 | 1,432,196.10 |
| EUR | 5,970.43 | 7.4229 | 44,317.90 |
| CAD | 4,212.75 | 5.1385 | 21,647.22 |
| HKD | 3,072.80 | 0.8933 | 2,744.84 |
| Accounts receivable | - | - | 33,989,427.41 |
| Of which: USD | 4,880,312.93 | 6.9646 | 33,989,427.41 |
| EUR | |||
| HKD | |||
| Long-term borrowings | - | - | |
| Of which: USD | |||
| EUR | |||
| HKD |
Other notes:
None.
(2). Notes to overseas operating entities, including: For important overseas operating entities,
their main overseas business location, bookkeeping base currency and basis for selectionshould be disclosed, and the reasons for changes in the bookkeeping base currency shouldalso be disclosed
√Applicable□Not applicable
As Bull HK was established and carries out its operating activities in Hong Kong, its bookkeeping basecurrency is HKD.
83. Hedge
√Applicable□Not applicable
The hedge items, related hedge instruments, and qualitative and quantitative information about hedgedrisks are disclosed by hedging category:
The Company used commodity future contracts to hedge the Company’s exposure to raw materialprice risks. The future contracts used by the Company are mainly the cathode copper future standardcontracts of the Shanghai Futures Exchange and the polypropylene standard contracts of the DalianCommodity Exchange.
| Hedged items | Expected bulk-purchase of raw materials such as copper and plastic particles |
| Hedge instruments | Commodity future contracts |
| Hedging method | Commodity future purchase contracts locked in changes of price in expected raw materials bulk-purchase contract |
The Company used commodity future contracts to hedge the expected bulk-purchase of rawmaterials of copper and plastic particles to avoid the risk of fluctuations in the expected future cashflows caused by the fluctuations in the market price of the above raw materials.
As at 31 December 2022, the pre-tax profit arising from the change in fair value of cash flow hedgeinstruments that has been included in other comprehensive income was RMB5,817,762.23.
84. Government grants
(1). Basic information on government subsidy
√Applicable □Not applicable
Unit: RMB
| Type | Amount | Listed items | Amount recorded in the current profit or loss |
| Financial aid in the first half of 2022 | 44,500,000.00 | Other income | 44,500,000.00 |
| Financial aid from the Bureau of Finance of Ningbo Meishan Bonded Port Area | 26,410,000.00 | Other income | 26,410,000.00 |
| Financial aid cleared in 2021 | 21,930,000.00 | Other income | 21,930,000.00 |
| 2021 Ningbo award for Top 100 manufacturing companies | 11,000,000.00 | Other income | 11,000,000.00 |
| Industrial incentive from administrative committee of Zhejiang Cixi Binhai Economic Development Zone | 5,608,000.00 | Other income | 5,608,000.00 |
| Refund of unemployment insurance premiums from stabilizing job positions | 3,933,289.18 | Other income | 3,933,289.18 |
| 2021 Ningbo city digital workshop upgrading project subsidy | 3,800,000.00 | Other income | 3,800,000.00 |
| Government support incentive from Qingpu district finance Bureau, Shanghai | 2,556,600.00 | Other income | 2,556,600.00 |
| 2021 Cixi key sectors industrial internet platform pilot application project subsidy | 1,591,200.00 | Other income | 1,591,200.00 |
| 2021 subsidy for M&A and restructuring projects of high quality enterprises in Ningbo | 1,274,000.00 | Other income | 1,274,000.00 |
| 2022 rewards for recruiting | 966,000.00 | Other income | 966,000.00 |
| Industrial Economy Awards | 715,100.00 | Other income | 715,100.00 |
| 2021 subsidy of integration application project of information technology and manufacturing industry | 576,800.00 | Other income | 576,800.00 |
| Support funds from Xinzhuang Industrial Zone | 490,000.00 | Other income | 490,000.00 |
| Award for integrated management system of informatisation and industrialisation and excellent industrial APPs in Cixi in 2021 | 420,000.00 | Other income | 420,000.00 |
| Intellectual property strategy funding grant project (appearance design excellence award) | 410,000.00 | Other income | 410,000.00 |
| Refund of unemployment insurance premiums from stabilizing job positions | 395,702.58 | Other income | 395,702.58 |
| Rewards for enterprises that retained employees, hired talents, steadily developed and enhanced investment in the first quarter in 2022 in Ningbo | 369,000.00 | Other income | 369,000.00 |
| 2021 annual science and technology innovation voucher use cashing-in grant | 368,800.00 | Other income | 368,800.00 |
| 2021 Industrial Governance Project Incentive | 300,000.00 | Other income | 300,000.00 |
| 2021 Ningbo award for green manufacturing | 290,000.00 | Other income | 290,000.00 |
| project (enterprises) | |||
| Subsidy for export credit insurance provided by Cixi Municipal Bureau of Commerce | 270,615.00 | Other income | 270,615.00 |
| Service industry contribution award | 263,520.30 | Other income | 263,520.30 |
| The second batch of project-based support in Meilong Town in 2022 | 260,000.00 | Other income | 260,000.00 |
| 2021 Technical innovation project incentive | 236,300.00 | Other income | 236,300.00 |
| 2021 Industrial design subsidy | 214,100.00 | Other income | 214,100.00 |
| Postdoctoral subsidy funding | 200,000.00 | Other income | 200,000.00 |
| Items to be supported of advanced manufacturing industry special project by Minhang District (some categories) | 200,000.00 | Other income | 200,000.00 |
| VAT deduction of enterprises recruiting key group personnel | 192,400.00 | Other income | 192,400.00 |
| One-time expansion grant | 159,000.00 | Other income | 159,000.00 |
| 2021 introduction of scientific management model incentive | 158,500.00 | Other income | 158,500.00 |
| Incentive for trade and circulation enterprises to get bigger and stronger provided by Cixi Municipal Bureau of Commerce | 150,000.00 | Other income | 150,000.00 |
| Refund of unemployment insurance premiums from stabilizing job positions | 121,529.16 | Other income | 121,529.16 |
| 2021 awards and subsidies for enterprise industrial control safety diagnosis and excellent protection products | 118,800.00 | Other income | 118,800.00 |
| 2021 enterprise on cloud awards | 100,000.00 | Other income | 100,000.00 |
| Output value standard reward for manufacturing enterprises above designated size in Ningbo in the fourth quarter of 2021 | 100,000.00 | Other income | 100,000.00 |
| Others | 342,331.02 | Other income | 342,331.02 |
| Subtotal | 130,991,587.24 | 130,991,587.24 |
(2). Return of government subsidy
□Applicable√Not applicable
Other notes:
None.
85. Others
□Applicable√Not applicable
VIII Changes in Consolidation Scope
1. Business combination not under common control
√Applicable□Not applicable
(1). Business combination not under the same control during the current period
√Applicable□Not applicable
Unit: RMB
| Name of acquiree | Time and place of gaining equity | Cost of gaining the equity | Proportion of equity (%) | Way to gain equity | Purchase date | Recognition basis of purchase date | Income of acquiree from the purchase date to period-end | Net profits of acquiree from the purchase date to period-end |
| Daliktek | 1 January 2022 | 91.00 million | 70.00 | Outsourcing | 1 January 2022 | Controlled | 53,135,968.72 | -10,978,504.44 |
Other notes:
On 18 August 2021, the Company signed the Equity Transfer Agreement with Dalitek and itsshareholders Bridges Electronic Technology Co., Ltd., Shanghai Houqi Investment Centre (LimitedPartnership) and natural person shareholders Pan Xiaobin and Zhang Wenying, agreeing that 70% of theequity interests of the Company held by the shareholders be transferred at the price of RMB91,000,000(inclusive of contingent considerations). The agreement stipulates that the compound growth rate of theaudited main business revenue of Dalitek for 2021-2023 over 2020 shall not be less than 20%, i.e. thecommitted revenue for 2021-2023 shall be RMB66.396 million, RMB79.6752 million and RMB95.6102million respectively, and the main business revenue can be calculated cumulatively. If Dalitek reachesthe performance commitment requirement, the Company shall pay the original shareholders of Dalitek acontingent consideration of RMB27.3 million, with a maximum of RMB9.1 million in 2022, a maximumof RMB18.2 million in 2022 and 2023 combined, and a maximum of RMB27.3 million in 2022, 2023and 2024 combined.The Company has paid for the equity transfer in two installments, including RMB26.9907 millionin November 2021 and RMB36.7093 million in January 2022, which amounted to more than 50% of thetotal consideration for the equity transfer. Therefore, Dalitek has been included in the consolidatedfinancial statements from 1 January 2022. RMB9.1 million of contingent consideration was paid in 2022and the remaining consideration for the equity transfer (contingent consideration) of RMB18.2 million isunpaid.
(2). Combination cost and goodwill
√Applicable□Not applicable
Unit: RMB
| Combination cost | Daliktek |
| -Cash | 63,700,000.00 |
| -Fair value of non-cash assets | |
| -Fair value of debt issued or assumed | |
| -Fair value of equity securities issued | |
| -Fair value of contingent consideration | 27,300,000.00 |
| -Fair value of equity interests held before the purchase date | |
| --Other | |
| Total combination costs | 91,000,000.00 |
| Less: share in the fair value of identifiable net assets acquired | 45,866,557.96 |
| Goodwill | 45,133,442.04 |
Note to determination method of the fair value of the combination cost, consideration and changes:
The Company uses the net assets of Dalitek on the acquisition date as the fair value.
The contingent consideration for the Company's acquisition of Dalitek was RMB27.3 million.Dalitek has completed the performance commitment in 2021, and the Company paid RMB9,100,000 forthe performance commitment in 2021 on 2 September 2022. The audited revenue of Dalitek in 2022 wasRMB53.136 million, which did not reach the performance commitment in 2022. Therefore, theCompany does not need to pay the amount in relation to the performance commitment of Dalitek. IfDalitek’s performance in 2023 can meet the cumulative target, the Company will pay the contingentconsideration.
The main formation reason for the large goodwill:
None.
Other notes:
None.
(3). The acquiree can identify the assets and liabilities on the date of purchase
√Applicable□Not applicable
Unit: RMB
| Dalitek | ||
| Fair value on purchase date | Carrying value on purchase date | |
| Assets: | 97,523,456.12 | 97,523,456.12 |
| Monetary assets | 26,701,851.91 | 26,701,851.91 |
| Accounts receivable | 22,606,150.89 | 22,606,150.89 |
| Inventories | 22,809,479.39 | 22,809,479.39 |
| Fixed assets | 885,848.31 | 885,848.31 |
| Intangible assets | 390,727.10 | 390,727.10 |
| Held-for-trading financial assets | 10,000,000.00 | 10,000,000.00 |
| Receivables financing | 886,500.00 | 886,500.00 |
| Prepayments | 1,396,516.07 | 1,396,516.07 |
| Other receivables | 843,244.24 | 843,244.24 |
| Other current assets | 2,612.50 | 2,612.50 |
| Right-of-use assets | 6,913,916.48 | 6,913,916.48 |
| Long-term prepaid expense | 2,586,173.25 | 2,586,173.25 |
| Deferred income tax assets | 1,478,587.98 | 1,478,587.98 |
| Other non-current assets | 21,848.00 | 21,848.00 |
| Liabilities: | 31,999,801.89 | 31,999,801.89 |
| Borrowings | 9,010,201.37 | 9,010,201.37 |
| Accounts payable | 8,376,364.12 | 8,376,364.12 |
| Deferred income tax liabilities | ||
| Contract liabilities | 1,750,598.84 | 1,750,598.84 |
| Employee benefits payable | 3,751,373.33 | 3,751,373.33 |
| Taxes and levies payable | 1,540,092.96 | 1,540,092.96 |
| Deferred income tax liabilities | ||
| Other payables | 168,126.42 | 168,126.42 |
| Current portion of non-current liabilities | 2,170,444.17 | 2,170,444.17 |
| Other current liabilities | 227,577.86 | 227,577.86 |
| Lease liabilities | 5,005,022.82 | 5,005,022.82 |
| Net assets | 65,523,654.23 | 65,523,654.23 |
| Less: non-controlling interests | ||
| Net assets acquired | 65,523,654.23 | 65,523,654.23 |
The determination method of the fair value of identifiable assets and liabilities:
The Company uses the audited net assets of Dalitek on the acquisition date as the fair value.Contingent liability of acquiree undertaken in the business combination:
None.Other notes:
None.
(4). Gains or losses resulting from the remeasurement of equity held prior to the date of purchaseat fair valueWhether there is a transaction that through multiple transaction step by step to realise businesscombination and gaining the control during the Reporting Period
□Applicable√Not applicable
(5). Notes to reasonable consideration or fair value of identifiable assets and liabilities of the
Acquiree that cannot be determined on the date of purchase or at the end of the merger
□Applicable √Not applicable
(6). Other notes
□Applicable √Not applicable
2. Adjustments for business combinations involving entities under common control
□Applicable√Not applicable
3. Counter purchase
□Applicable√Not applicable
4. Disposal of subsidiary
Whether there was a single disposal of an investment in a subsidiary that resulted in a loss of control
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
5. Changes in combination scope for other reasons
Notes of other changes in the combination scope (e.g., new subsidiaries, liquidation of subsidiaries, etc.)and relevant situations:
√Applicable□Not applicable
Increase in scope of combination
| Company name | Way to gain equity | Time and place of gaining equity | Paid-in capital | Contribution proportion |
| Information technology | Set-up | January 2022 | RMB100 million | 100.00% |
| Gongniu Tools | Set-up | January 2022 | 62.00% | |
| Gongniu New Energy | Set-up | April 2022 | RMB600,000 | 100.00% |
| Shenzhen Intelligent | Set-up | July 2022 | RMB1 million | 100.00% |
| Muguang Technology | Set-up | July 2022 | RMB1 million | 100.00% |
| Gongniu Marketing | Set-up | November 2022 | 100.00% |
On 17 January 2022, Information Technology completed the business registration procedures, andobtained a business licence with a unified social credit code of 91310118MA7F49691P, with aregistered capital of RMB100 million, and a shareholding ratio of 100% of the Company. As at 31December 2022, the Company’s paid-up capital contribution was RMB100 million. Therefore, since thedate of its establishment, Information Technology has been included in the scope of the consolidatedfinancial statements.On 27 January 2022, Gongniu Tools completed the business registration procedures, and obtained abusiness licence with a unified social credit code of 91330206MA7GDPWU2Q, with a registered capitalof RMB48 million and a shareholding ratio of 62% of the Company. As at 31 December 2022, theCompany didn’t pay its capital contribution. Therefore, since the date of its establishment, GongniuTools has been included in the scope of the consolidated financial statements.On 12 April 2022, Gongniu New Energy completed the business registration procedures, andobtained a business licence with a unified social credit code of 91330282MA7NGRDG5Q, with aregistered capital of RMB10 million and a shareholding ratio of 100% of the Company. As at 31December 2022, the Company’s paid-up capital contribution was RMB600,000. Therefore, since thedate of its establishment, Gongniu New Energy has been included in the scope of the consolidatedfinancial statements.On 25 July 2022, Shenzhen Intelligent completed the business registration procedures, and obtaineda business licence with a unified social credit code of 91440300MA5HEL5G8Y, with a registeredcapital of RMB10 million and a shareholding ratio of 100% of the Company. As at 31 December 2022,the Company’s paid-up capital contribution was RMB1 million. Therefore, since the date of itsestablishment, Shenzhen Intelligent has been included in the scope of the consolidated financialstatements.
On 27 July 2021, Muguang Technology completed the business registration procedures, andobtained a business licence with a unified social credit code of 91441303MABUTN451A, with aregistered capital of RMB10 million and a shareholding ratio of 100% of the Company. As at 31December 2022, the Company’s paid-up capital contribution was RMB1 million. Therefore, since thedate of its establishment, Muguang Technology has been included in the scope of the consolidatedfinancial statements.
On 29 November 2022, Gongniu Marketing completed the business registration procedures, andobtained a business licence with a unified social credit code of 91330282MAC3BUBJ9H, with aregistered capital of RMB10 million and a shareholding ratio of 100% of the Company. As at 31December 2022, the Company didn’t pay its capital contribution. Therefore, since the date of itsestablishment, Gongniu Marketing has been included in the scope of the consolidated financialstatements.
6. Other information
□Applicable √Not applicable
IX Interests in Other Entities
1. Interests in subsidiaries
(1). Subsidiaries
√Applicable□Not applicable
| Subsidiary Name | Main Operating Place | Place of Registration | Business Nature | Shareholding Ratio (%) | Acquisition Method | |
| Directly | Indirectly | |||||
| Ningbo Gongniu | Ningbo, Zhejiang | Ningbo, Zhejiang | Manufacturing industry | 100.00 | Merge under common control | |
| Gongniu Photoelectricity | Ningbo, Zhejiang | Ningbo, Zhejiang | Manufacturing industry | 100.00 | Set-up | |
| Gongniu Digital | Ningbo, Zhejiang | Ningbo, Zhejiang | Manufacturing industry | 100.00 | Set-up | |
| Banmen Electrical Appliances | Ningbo, Zhejiang | Ningbo, Zhejiang | Manufacturing industry | 100.00 | Set-up | |
| Gongniu Precision Manufacturing | Ningbo, Zhejiang | Ningbo, Zhejiang | Manufacturing industry | 100.00 | Set-up | |
| Electric Sales | Ningbo, Zhejiang | Ningbo, Zhejiang | Commercial | 100.00 | Merge under common control | |
| Cixi Gongniu | Ningbo, Zhejiang | Ningbo, Zhejiang | Commercial | 100.00 | Merge under common control | |
| Shanghai Gongniu | Shanghai | Shanghai | Commercial | 100.00 | Merge under common control | |
| Gongniu Management | Ningbo, Zhejiang | Ningbo, Zhejiang | Commercial | 100.00 | Set-up | |
| Gongniu International Trade | Ningbo, Zhejiang | Ningbo, Zhejiang | Commercial | 100.00 | Set-up | |
| Hong Kong Gongniu | Hong Kong | Hong Kong | Commercial | 100.00 | Merge under common control | |
| Xingluo Trading | Ningbo, Zhejiang | Ningbo, Zhejiang | Commercial | 100.00 | Merge under common control | |
| Gongniu Low Voltage Electrical | Ningbo, Zhejiang | Ningbo, Zhejiang | Commercial | 100.00 | Set-up | |
| Household Electrical Appliances | Ningbo, Zhejiang | Ningbo, Zhejiang | Manufacturing industry | 100.00 | Set-up | |
| Hainan Dacheng | Sanya, Hainan | Sanya, Hainan | Commercial services | 100.00 | Set-up | |
| Intelligent Technology | Ningbo, Zhejiang | Ningbo, Zhejiang | Manufacturing industry | 100.00 | Set-up | |
| Dalitek | Shanghai | Shanghai | Commercial | 70.00 | Business combination not under common control | |
| Information | Shanghai | Shanghai | Commercial | 100.00 | Set-up | |
| technology | ||||||
| Gongniu Tools | Ningbo, Zhejiang | Ningbo, Zhejiang | Commercial | 62.00 | Set-up | |
| Gongniu New Energy | Ningbo, Zhejiang | Ningbo, Zhejiang | Commercial | 100.00 | Set-up | |
| Murora Intelligent | Guangdong | Guangdong | Manufacturing industry | 100.00 | Set-up | |
| Shenzhen Intelligent | Shenzhen | Shenzhen | Manufacturing industry | 100.00 | Set-up | |
| Gongniu Marketing | Ningbo, Zhejiang | Ningbo, Zhejiang | Commercial | 100.00 | Set-up |
Notes of shareholding percentage in subsidiaries different from voting percentage:
None.
Basis of holding half or less voting rights but still controlling the investee and holding more than half ofthe voting rights but not controlling the investee:
None.
Basis of controlling significant structural entities incorporated in the scope of combination:
None.
Basis of determining whether the Company is the agent or the mandatorNone.
Other notes:
None.
(2). Significant non-wholly-owned subsidiary
√Applicable□Not applicable
Unit: RMB
| Name of subsidiaries | Shareholding of minority shareholder Percentage | The profit or loss attributable to the non-controlling interests for the current period | Declaring dividends distributed to non-controlling interests for the current period | Balance of non-controlling interests at the period-end |
| Dalitek | 30.00% | -3,158,629.32 | 16,498,466.95 | |
| Gongniu Tools | 38.00% |
Holding proportion of non-controlling interests in subsidiary different from voting proportion:
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
(3). The main financial information of significant not wholly-owned subsidiary
√Applicable□Not applicable
Unit: RMB
| Name of 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 | |
| Dalitek | 70,444,095.63 | 7,160,779.01 | 77,604,874.64 | 19,948,974.82 | 2,661,009.99 | 22,609,984.81 | 85,246,355.00 | 12,277,101.12 | 97,523,456.12 | 26,994,779.07 | 5,005,022.82 | 31,999,801.89 |
| Name of subsidiaries | 2022 | 2021 | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Dalitek | 53,135,968.72 | -10,528,764.40 | -10,528,764.40 | -4,681,119.04 | 73,742,183.32 | 2,578,060.73 | 2,578,060.73 | 4,144,776.69 |
Other notes:
None.
(4). Significant restrictions on the use of assets and the settlement of debts of the Group
□Applicable√Not applicable
(5). Financial or other support to structured entities included in the scope of consolidatedfinancial statements
□Applicable √Not applicable
Other notes:
□Applicable√Not applicable
2. The transaction of the Company with its owner’s equity share changing but the Company stillcontrols the subsidiary
□Applicable√Not applicable
3. Equity in joint ventures or associated enterprises
□Applicable√Not applicable
4. Significant co-operation
□Applicable√Not applicable
5. Rights and interests in structured entities where not included in the consolidated financialstatementsNotes to the structured entity excluded in the scope of consolidated financial statements:
□Applicable√Not applicable
6. Other information
□Applicable √Not applicable
X Risks Related to Financial Instruments
√Applicable□Not applicable
The Company is engaged in risk management to achieve balance between risks and returns,minimizing the negative effects of risks on its operation performance and maximizing the interests of itsshareholders and other equity investors. Based on that risk management goal, the fundamental strategyof its risk management is to identify and analyse various risks facing the Company, establish anappropriate risk bottom line, carry out risk management and monitor various risks in a timely andreliable manner to control them within a restricted scope.The Company faces various risks related to financial instruments in its routine activities, mainlyincluding credit risk, liquidity risk market risk. The management has reviewed and approved the policiesof managing those risks, which are summarised as follows.
(I) Credit risk
Credit risk means the risk of financial losses incurred to the other party when one party of afinancial instrument is unable to fulfil its obligations.
1. Practices of credit risk management
(1) Methods for evaluating credit risk
On each balance sheet date, the Company shall evaluate whether the credit risk of relevant financialinstruments has increased significantly since the initial recognition. After determining whether the creditrisk has increased significantly since the initial recognition, the Company shall consider obtainingreasonable and reliable information without paying unnecessary extra costs or efforts, includingqualitative and quantitative analysis based on historical data, external credit risk rating andforward-looking information. On the basis of the single financial instrument or combination of financialinstruments with similar credit risk characteristics, the Company compares the risk of default offinancial instruments on the balance sheet date with the risk of default on the initial recognition date todetermine the change of default risk of financial instruments during their expected duration.
When one or more of the following quantitative and qualitative criteria prevails, the Company shallbelieve the credit risk of financial instruments has increased significantly:
1) The quantitative criteria are mainly that the probability of default in the remaining period at thebalance sheet date increases by more than a certain percentage from the time of initial recognition;
2) The qualitative criteria are mainly material adverse changes in the debtor’s operating or financialstatus, changes in the existing or expected technical, market, economic or legal environment that willhave a material adverse impact on the debtor’s ability to repay the Company.
(2) Definition of default and asset with credit impairment
When a financial instrument meets one or more of the following conditions, the Company shalldefine the financial asset as having defaulted, and its criteria are consistent with the definition of havingincurred credit impairment:
1) The debtor has major financial difficulties;
2) The debtor violates the binding clauses of the contract against the debtor;
3) The debtor is likely to go bankrupt or undergo other financial restructuring;
4) The creditor, out of economic or contractual considerations related to the debtor’s financialdifficulties, gives concessions to the debtor which would not have been made in any othercircumstances.
2. Measurement of expected credit losses
The key parameters for measuring expected credit loss included default probability, loss givendefault and exposure at default. The Company considered quantitative analysis and forward-lookinginformation of historical statistical data (such as counterparty rating, guarantee method, repaymentmethod, etc.) to establish a model of probability of default, default loss ratio and default risk exposure.
For details of the reconciliation statements of opening balance and closing balance of financialinstrument loss provision, please refer to “4. Notes receivable”, “5. Accounts receivable”, and “8. Otherreceivables” under “VII Notes to the Consolidated Financial Statements” of “Part X FinancialStatements” herein.
4. Credit risk exposure and credit risk concentrations
The Company’s credit risk mainly comes from monetary assets and accounts receivable. To controlthe aforementioned relevant risks, the Company has adopted the following measures.
(1) Monetary assets
The Company places the bank deposit and its monetary assets with financial institutions of highcredit ratings. Thus, its credit risk is low.
(2) Accounts receivable
The Company continuously conducted credit assessments for customers who trade on credit lines.Based on the credit assessment result, the Company chooses to trade with recognised customers withgood credit and monitor the balance of the accounts receivable from them to ensure that the Companywill not face any significant bad debt risk.
Due to the Company merely trades with the authorised third party with good credit, the guarantee isnot required. Credit risk concentration is managed in accordance with the customers. As at 31 December2022, there were certain credit concentration risks in the Company, and 44.01% of the accountsreceivable of the Company (70.04% on 31 December 2021) came from the top 5 customers by balance.The Company hasn’t held any guarantee or other credit enhancement for balance of accounts receivable.
The maximum credit risk exposure the Company undertook shall be the carrying value of eachfinancial asset on balance sheet.
(II) Liquidity risk
Liquidity risk refers to the risk of fund shortage occurring when the Company fulfils the settlementobligation in the mode of cash delivery or other financial assets. Liquidity risk may originate from thefailure to sell financial assets at fair value as soon as possible; or from the other party’s failure to pay offits contractual debts; or from the earlier maturity of debts; or from the failure to generate the expectedcash flow.
To control the risk, the Company comprehensively used a variety of financing methods such asbank clearing and bank borrowing, and adopted the appropriate combination of long-term and short-termfinancing methods to optimise the financing structure and maintain a balance between financingsustainability and flexibility. The Company has obtained the line of credit from a number of commercialbanks to satisfy its operation fund needs and capital expenditure.
Financial liabilities classified by remaining maturity
| Item | Closing balance | ||||
| Carrying amount | Undiscounted contract amount | Within 1 year | 1-3 years | Over 3 years | |
| Banking borrowings | 845,374,749.03 | 857,063,545.21 | 857,063,545.21 | ||
| Held-for-trading financial liabilities | 18,200,000.00 | 18,200,000.00 | 18,200,000.00 | ||
| Notes payable | |||||
| Accounts payable | 1,643,661,963.53 | 1,643,661,963.53 | 1,643,661,963.53 | ||
| Other payables | 446,413,870.85 | 446,413,870.85 | 446,413,870.85 | ||
| Current portion of non-current liabilities | 8,798,658.13 | 9,116,363.36 | 9,116,363.36 | ||
| Lease liabilities | 4,544,619.22 | 4,668,943.91 | 4,668,943.91 | ||
| Subtotal | 2,966,993,860.76 | 2,979,124,686.86 | 2,974,455,742.95 | 4,668,943.91 | |
(Continued)
| Item | Amount of the Previous Period | ||||
| Carrying amount | Undiscounted contract amount | Within 1 year | 1-3 years | Over 3 years | |
| Banking borrowings | 1,161,117,444.45 | 1,172,065,444.45 | 1,172,065,444.45 | ||
| Held-for-trading financial liabilities | |||||
| Notes payable | 2,333,774.75 | 2,333,774.75 | 2,333,774.75 | ||
| Accounts payable | 1,701,686,564.14 | 1,701,686,564.14 | 1,701,686,564.14 | ||
| Other payables | 430,813,760.10 | 430,813,760.10 | 430,813,760.10 | ||
| Current portion of non-current liabilities | 13,225,048.63 | 13,759,081.13 | 13,759,081.13 | ||
| Lease liabilities | 5,089,837.39 | 5,208,552.97 | 5,208,552.97 | ||
| Subtotal | 3,314,266,429.46 | 3,325,867,177.54 | 3,320,658,624.57 | 5,208,552.97 |
(III) Market riskMarket risk refers to the risk of fluctuations in the fair value or future cash flows of financialinstruments arising from changes in market prices. Market risk mainly includes interest rate risk andforeign exchange risk.
1. Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flows of financialinstruments arising from changes in market interest rates. Interest-bearing financial instruments withfixed interest rates may bring the fair value interest rate risk to the Company, while those with floatinginterest rate may bring the cash flow interest rate risk to the Company. The Company will determine theproportion between the financial instruments with fixed interest rate and those with floating interest ratein combination with market environment, and maintain an appropriate portfolio of financial instrumentsthrough regular review and monitoring. The interest rate risk of cash flows facing the Company ismainly related to the bank loans calculated by floating interest rate of the Company.As at 31 December 2022, the Company had borrowed RMB844 million (RMB1,160 million at 31December 2021) from banks, and the interest rate change would not have a significant influence on theCompany’s gross profit and shareholders’ equity.
2. Foreign exchange risk
Foreign exchange risk refers to the risk that may lead to the changes of fair value of financialinstruments or future cash flows due to fluctuation in exchange rate. The Company operates in mainlandChina, and the main activities are recorded by RMB. Thus, the foreign exchange market risk undertakenis insignificant for the Company.
For details of the Company’s foreign currency monetary assets and liabilities at the end of theCurrent Period, please refer to “82. Foreign currency monetary items” under “VII Notes to theConsolidated Financial Statements” of “Part X Financial Statements” herein.
XI The Disclosure of Fair Value
1. Closing fair value of assets and liabilities measured at fair value
√Applicable□Not applicable
Unit: RMB
| Item | Closing fair value | |||
| Fair value measurement items at level 1 | Fair value measurement items at level 2 | Fair value measurement items at level 3 | Total | |
| I. Consistent Fair Value Measurement | ||||
| i. Held-for-trading Financial Assets | 643,100.00 | 6,950,036,801.70 | 6,950,679,901.70 | |
| 1. Financial assets measured at fair value through profit or loss for the current period | 643,100.00 | 6,950,036,801.70 | 6,950,679,901.70 | |
| (1) Debt instrument investments | ||||
| (2) Equity instruments investments | ||||
| (3) Derivative financial assets | 643,100.00 | 643,100.00 | ||
| (4) Banking WM products | 6,949,000,000.00 | 6,949,000,000.00 | ||
| (5) Receivables financing | 1,036,801.70 | 1,036,801.70 | ||
| 2. Financial assets assigned to be measured at fair value through profit or loss for the current period | ||||
| (1) Debt instrument investments | ||||
| (2) Equity instruments investments | ||||
| (II) Other equity investments | ||||
| (III) Other equity instrument investment | ||||
| (IV) Investment properties | ||||
| 1. Land use right for rent | ||||
| 2. Buildings for rent | ||||
| 3. Land use right held and to be transferred after appreciation | ||||
| (V) Biological assets | ||||
| 1. Consumptive biological assets | ||||
| 2. Productive living assets | ||||
| The total amount of assets consistently measured at fair value | 643,100.00 | 6,950,036,801.70 | 6,950,679,901.70 | |
| vi. Trading financial liabilities | ||||
| 1. Financial liabilities measured at fair value through profit or loss for the current period | 18,200,000.00 | 18,200,000.00 | ||
| Of which: Issued trading bonds | ||||
| Derivative financial liabilities | ||||
| Investment payables | 18,200,000.00 | 18,200,000.00 | ||
| 2. Designated as a financial liabilities measured at fair value through profit or loss for the current period | ||||
| Total amount of liabilities at fair value | 18,200,000.00 | 18,200,000.00 |
| II. Inconsistent Fair Value Measurement | ||||
| (I) Assets held for sale | ||||
| Total assets of inconsistent fair value measurement | ||||
| Total liabilities of inconsistent fair value measurement |
2. Basis for determining the market prices of consistent and inconsistent fair value measurementitems at Level 1
√Applicable □Not applicable
The Company’s first-level item measured at fair value is derivative financial assets (futurescontract), which determines the fair value based on the public quotation of the futures market.
3. Valuation technique adopted and qualitative and quantitative information of importantparameters for consistent and inconsistent fair value measurement items at Level 2
√Applicable □Not applicable
□Applicable √Not applicable
4. Valuation technique adopted and qualitative and quantitative information of importantparameters for consistent and inconsistent fair value measurement items at Level 3
□Applicable √Not applicable
5. Reconciliation information between opening and closing carrying value, and sensitivity analysisof unobservable parameters of third-level items measured consistently at fair value
√Applicable □Not applicable
The Company’s third-level items measured at fair value are bank WM products and trust products,etc., with a low expected yield rate and a small change in fair value, so the initial recognition cost is usedas its fair value.
6. The reason for the conversion and the policy for determining the timing of the conversion,where there is a conversion between the various levels for the current period in items consistentlymeasured at fair value
□Applicable √Not applicable
7. Technical changes in valuation techniques that occurred for the current period and the reasonsfor the changes
□Applicable √Not applicable
8. Fair value of financial assets and financial liabilities not measured at fair value
□Applicable √Not applicable
9. Other information
□Applicable √Not applicable
XII Related Party and Related-party Transaction
1. The Company as the parent
√Applicable □Not applicable
Unit: RMB’0,000
| Name of the Company as the parent | Place of Registration | Business Nature | Registered Capital | Shareholding percentage held by the Company as the parent to the Company | Proportion of voting rights owned by the Company as the parent to the |
| Company (%) | |||||
| Liangji Industrial | Ningbo, Zhejiang | Investment | 50,000 | 53.90 | 53.90 |
Notes: Information on the Company as the parentRuan Liping and Ruan Xueping are the joint actual controllers of the Company, and the two jointlyhold 100% of the equity of Liangji Industrial, 53.89% of the equity of the Company through LiangjiIndustrial, and directly hold 32.22% of the equity of the Company through the Ningbo NinghuiInvestment Management Partnership (Limited Partnership), indirectly holds 0.68% of the voting rightsof the Company and indirectly holds 0.30% of the voting rights of the Company through the NingboSuiyuan Investment Management Partnership (Limited Partnership).The ultimate controllers of the Company are Ruan Liping and Ruan Xueping.
2. Subsidiaries of the Company
Details of the subsidiaries of the Company are in the notes
√Applicable □Not applicable
The Company’s subsidiaries are detailed in “IX. Interests in Other Entities” of “Section 10Financial Report” of the Annual Report
3. Joint ventures and associated enterprises of the Company
Details of joint ventures and associated enterprises of the Company are in the notes
□Applicable√Not applicable
The following are the circumstances of other joint ventures or associated enterprises that have a balancewith the Company for the current period or that have formed balances from related-party transactionswith the Company for the previous period
□Applicable√Not applicable
Other notes
□Applicable√Not applicable
4. Other related party
√Applicable□Not applicable
| Name of other related party | Relationship with the Company |
| Ruan Shuhong | Daughter of the actual controller Ruan Liping |
| Liangniu Hardware | A company controlled by the actual controller, Ruan Liping’s wife’s brother Pan Minfeng and his wife Xu Yirong |
| Hangniu Hardware | A company controlled by the actual controller, Ruan Liping’s wife’s brother Pan Minfeng and his wife Xu Yirong |
| Feiniu Hardware | The actual controller Ruan Liping’s wife’s brother Pan Minfeng and his wife Xu Yirong’s son Pan Qianliang holds 55% of the shares, and Xu Yirong holds 45% of the shares |
| Niuweiwang Trading | A company controlled by Yu Shoufu, father of Director Cai Yingfeng’s daughter’s spouse |
| Cixi Libo | The main body controlled by Cai Libo, sister of Director Cai Yingfeng |
| Jianke Trading | A company controlled by the Ying Jianguo, brother-in-law of Director Cai Yingfeng |
| Yaoyang Trading | Zhang Meina, sister of Senior Executive Zhang Lina, holds 100% of the shares |
| Huantian Technology | Zhang Meina, sister of Senior Executive Zhang Lina, indirectly holds 7.9%% of the shares, and Xu Yanhao, son of Zhang Meina, holds 43.10% of the shares |
| Chenhao Electronics | A company controlled by Xia Zhonggui, brother of Supervisor Li Yu’s spouse, and his spouse Zeng Minhui |
| Minshen Property | A company controlled by another company controlled by Ruan Liping and Ruan Xueping |
| Shenghui Electronics | A company controlled by Liangji Industrial |
| Guoxin Trading | A company controlled by the Ying Jianguo, brother-in-law of Director Cai Yingfeng |
| Qiudi Trading | A company controlled by siblings of Senior Executive Li Guoqiang |
5. Related transactions
(1). Related-party transactions of purchase and sale of goods, provision and acceptance ofservicesInformation on acquisition of goods and reception of labour service
□Applicable√Not applicable
Information of sales of goods and provision of labour service
√Applicable□Not applicable
Unit: RMB
| Related Parties | Content of the Related-Party Transaction | 2022 | 2021 |
| Liangniu Hardware | Adapters, wall switches, LEDs, digital products | 13,079,962.46 | 19,286,108.43 |
| Hangniu Hardware | Adapters, wall switches, LEDs, digital products | 36,858,578.23 | 35,795,907.44 |
| Feiniu Hardware | Adapters, digital products | 1,481,704.60 | 1,282,944.42 |
| Subtotal of Hangniu Hardware [note] | 51,420,245.29 | 56,364,960.29 | |
| Guoxin Trading | Adapters, LEDs, digital products | 7,242,317.55 | |
| Jianke Trading | Adapters, LEDs, digital products | 3,625,007.82 | 10,814,536.24 |
| Subtotal of Jianke Trading [note 2] | 10,867,325.37 | 10,814,536.24 | |
| Huantian Technology | Adapters, LEDs, digital products | 14,088,847.19 | 12,206,053.32 |
| Niuweiwang Trading | Adapters, LEDs | 21,583,182.90 | 21,108,464.96 |
| Cixi Libo | Adapters, LEDs, digital products | 12,230,224.20 | 11,075,424.86 |
| Chenhao Electronics | Digital products, Adapters | 1,116,890.54 | 894,547.84 |
| Minshen Property | Adapters, wall switches, LEDs, digital products | 252,151.56 | |
| Qiudi Trading | Adapters, LEDs, digital products | 5,179,424.46 | |
| Subtotal | 116,733,608.32 | 112,463,987.51 |
[Note 1] includes Hangniu Hardware, Liangniu Hardware and Feiniu Hardware. LiangniuHardware and Hangniu Hardware are controlled by Pan Minfeng and his spouse Xu Yirong; FeiniuHardware is 55% owned by Pan Minfeng’s son Pan Qianliang and 45% owned by Xu Yirong.[Note 2] Jianke Trading comprises Guoxin Trading and Jianke Trading, which are both undercontrol of Ying Jianguo.
Notes to acquisition of goods and reception of labour service
□Applicable√Not applicable
(2). Related entrusted management/contracting and entrusted management/outsourcingLists of trusteeship/contract of the Company:
□Applicable√Not applicable
Notes:
□Applicable√Not applicable
Entrusted management/contracting of the Company
□Applicable√Not applicable
Notes:
□Applicable√Not applicable
(3). Information on related-party lease
The Company was lessor:
□Applicable√Not applicable
The Company as the lessee:
√Applicable□Not applicable
Unit: RMB
| Name of lessor | Category of leased assets | Rental expense of simplified short-term leases and low-value asset leases (if applicable) | Variable lease payments that are not covered in the measurement of the lease liabilities (if applicable) | Rent payable | Interest expense on lease liabilities borne | Added right-of-use assets | |||||
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||
| Ruan Shuhong | Buildings and contructions | 798,806.97 | 799,598.46 | 36,133.46 | 36,133.46 | ||||||
| Shenghui Electronics | Buildings and contructions | 233,539.20 | |||||||||
Notes:
□Applicable√Not applicable
(4). Information on related-party guarantee
The Company was guarantor:
□Applicable√Not applicable
The Company was secured party
√Applicable□Not applicable
Unit: RMB’0,000
| Guarantor | Amount of guarantee | Start date | End date | Execution accomplished or not |
| Liangji Industrial | 16,000.00 | 28 December 2020 | 27 January 2022 | Yes |
| Liangji Industrial | 50,000.00 | 8 April 2021 | 7 May 2022 | Yes |
Notes:
□Applicable√Not applicable
(5). Borrowings of funds
□Applicable√Not applicable
(6). Information on assets transfer and debt restructuring by related party
□Applicable√Not applicable
(7). Remuneration for key management personnel
√Applicable□Not applicable
Unit: RMB’0,000
| Item | 2022 | 2021 |
| Remuneration for key management personnel | 2,507.90 | 2,436.63 |
(8). Other related transaction
□Applicable √Not applicable
6. Accounts receivable and payable of related party
(1). Accounts receivable
□Applicable √Not applicable
(2). Accounts payable
√Applicable □Not applicable
Unit: RMB
| Item name | Related Parties | Closing carrying balance | Opening carrying balance |
| Contract liabilities | Hangniu Hardware | 2,387,446.01 | 96,061.89 |
| Contract liabilities | Niuweiwang Trading | 883,947.33 | 13,432.85 |
| Contract liabilities | Guoxin Trading | 527,657.82 | |
| Contract liabilities | Cixi Libo | 437,257.56 | 157,748.83 |
| Contract liabilities | Huantian Technology | 234,326.66 | 28,959.98 |
| Contract liabilities | Jianke Trading | 194,410.70 | 322,837.70 |
| Contract liabilities | Liangniu Hardware | 126,617.06 | 1,500,950.96 |
| Contract liabilities | Feiniu Hardware | 90,790.88 | 11,914.81 |
| Contract liabilities | Qiudi Trading | 3,955.24 | |
| Contract liabilities | Yaoyang Trading | 3,461.19 | 3,461.19 |
| Contract liabilities | Chenhao Electronics | 245.67 | 2,727.19 |
| Subtotal | 4,890,116.12 | 2,138,095.40 | |
| Other payables | Hangniu Hardware | 2,387,446.01 | 96,061.89 |
| Other payables | Liangniu Hardware | 70,000.00 | 70,000.00 |
| Other payables | Cixi Libo | 70,000.00 | 70,000.00 |
| Other payables | Yaoyang Trading | 30,000.00 | 30,000.00 |
| Other payables | Qiudi Trading | 30,000.00 | 30,000.00 |
| Other payables | Niuweiwang Trading | 23,000.00 |
| Other payables | Feiniu Hardware | 20,000.00 | 20,000.00 |
| Other payables | Huantian Technology | 20,000.00 | 20,000.00 |
| Other payables | Chenhao Electronics | 20,000.00 | 20,000.00 |
| Other payables | Guoxin Trading | 20,000.00 | 10,000.00 |
| Other payables | Jianke Trading | 20,000.00 | |
| Subtotal | 20,000.00 |
7. Commitments of related party
□Applicable √Not applicable
8. Others
□Applicable √Not applicable
XIII Share-based Payment
1. Overall status of share payments
√Applicable□Not applicable
Unit: Share Currency: RMB
| The total amount of equity instruments granted by the Company for the current period | 1,501,800.00 |
| The total amount of the Company’s equity instruments exercised for the current period | 403,870.00 |
| The total amount of equity instruments of the Company losing efficacy for the current period | |
| The range of exercise prices of stock options issued and outstanding at the end of the period of the Company and the remaining term of the contract | |
| The range of exercise prices of other equity instruments issued at the end of the period of the Company and the remaining term of the contract | The exercise price of restricted shares in 2020 was: RMB76.13; the remaining contract term was: 0.5 years; the exercise price of restricted shares in 2021 was: RMB88.15; the remaining contract term was: 1.5 years; the exercise price of restricted shares in 2022 was: RMB63.06; the remaining contract term was: 2.5 years |
Other notes
(1) Restricted share Incentive Plan in 2020
The Company held the 12th Meeting of the 1st Board of Directors of the Company and the 2019Annual General Meeting, where the Proposal on the Company’s Restricted Share Incentive Plan in 2020(Draft) and Its Summary, Proposal on Adjusting the List of Awardees, the Number of Grants and theGrant Price of the Restricted Share Incentive Plan in 2020 and the Proposal on Granting RestrictiveShares to Awardees were deliberated and adopted. The Company decided to grant 613,800 restrictedshares to 441 incentive subjects who met the conditions for the grant at a price of RMB76.13 per share,with an equity grant date of 3 June 2020.The main performance appraisal requirements for restricted shares: For the first release period, theperformance appraisal target was the operating revenue or net profit attributable to the shareholders ofthe listed company in 2020 was not less than the average of the previous three fiscal years (i.e. 2017 -2019); for the second release period, the performance appraisal target was the operating revenue or netprofit attributable to the shareholders of the listed company in 2021 was not lower than the average ofthe previous three fiscal years (i.e. 2018 - 2020); for the third release period, the performance appraisaltarget was the operating revenue or net profit attributable to the shareholders of the listed company in2022 was not lower than the average of the previous three fiscal years (i.e. 2019 - 2021).
In 2021, the Company’s restricted share Incentive Plan in 2020 recognised equity incentiveexpenses of RMB7,347,206.26.
(2) Restricted share Incentive Plan in 2021
The Company held the 5th Meeting of the 2nd Board of Directors of the Company and the 2020Annual General Meeting, where the Proposal on the Company’s Restricted Share Incentive Plan in 2021
(Draft) and Its Summary, Proposal on Adjusting the List of Awardees, the Number of Grants and theGrant Price of the Restricted Share Incentive Plan in 2021 and the Proposal on Granting RestrictiveShares to Awardees were deliberated and adopted. The Company decided to grant 668,400 restrictedshares to 523 incentive subjects who met the conditions for the grant at a price of RMB88.15 per share,with an equity grant date of 4 June 2021.The main performance appraisal requirements for restricted shares: For the first release period, theperformance appraisal target was the operating revenue or net profit attributable to the shareholders ofthe listed company in 2021 was not less than 110% of the average of the previous three fiscal years (i.e.2018 - 2020); for the second release period, the performance appraisal target was the operating revenueor net profit attributable to the shareholders of the listed company in 2022 was not less than 110% of theaverage of the previous three fiscal years (i.e. 2019 - 2021); for the third release period, the performanceappraisal target was the operating revenue or net profit attributable to the shareholders of the listedcompany in 2023 was not less than 110% of the average of the previous three fiscal years (i.e. 2020 -2022).
As at 22 June 2021, the Company has received a total of RMB58,919,460 in restricted sharesubscription payments from 523 incentive subjects in monetary assets, of which RMB668,400 isincluded in the paid-up share capital, and RMB58,251,060 in capital reserves (premium on stock). Thematter was examined by Pan-China Certified Public Accountants LLP, which issued the CapitalVerification Report (T.J.Y. [2021] No. 343).
In 2022, the Company’s restricted share Incentive Plan in 2020 recognised equity incentiveexpenses of RMB27,625,677.80
(3) Restricted share Incentive Plan in 2022
The Company held the 10th and 12th Meeting of the 2nd Board of Directors of the Company andthe 2021 Annual General Meeting, where the Proposal on the Company’s Restricted Share IncentivePlan in 2022 (Draft) and Its Summary, Proposal on Adjusting the List of Awardees, the Number ofGrants and the Grant Price of the Restricted Share Incentive Plan in 2022 and the Proposal on GrantingRestrictive Shares to Awardees were deliberated and adopted. The Company planned to implement therestricted share Incentive Plan with shares of the Company’s common stock repurchased from thesecondary market.
The main performance appraisal requirements for restricted shares in 2022: For the first releaseperiod, the performance appraisal target was the operating revenue or net profit attributable to theshareholders of the listed company in 2022 was not less than 110% of the average of the previous threefiscal years (i.e. 2019 - 2021); for the second release period, the performance appraisal target was theoperating revenue or net profit attributable to the shareholders of the listed company in 2023 was notless than 110% of the average of the previous three fiscal years (i.e. 2020 - 2022); for the third releaseperiod, the performance appraisal target was the operating revenue or net profit attributable to theshareholders of the listed company in 2024 was not less than 110% of the average of the previous threefiscal years (i.e. 2021 - 2023).
The Company determined to grant 1,501,800 restricted shares to 646 awardees who met theconditions at a price of RMB63.06 per share on 20 May 2022. The Company repurchased shares fromthe secondary market for RMB215,279,740.56, increasing treasury shares by RMB215,279,740.56;received RMB94,703,508.00 in subscriptions for shares from the awardees, decreasing treasury sharesby RMB94,703,508.00; the difference between the cost of repurchase in the secondary market and thesubscriptions received was RMB120,576,232.56, deecreasing capital reserves (share premium) by thecorresponding amount. The Company had a repurchase obligation for restricted shares that had not beenunlocked at the end of the period, and the provision for the repurchase obligation increased treasuryshares by RMB94,703,508.00.
In 2022, the Company’s restricted share Incentive Plan in 2022 recognised equity incentiveexpenses of RMB42,496,592.78.
2. Equity-settled share payments
√Applicable□Not applicable
Unit: RMB
| Methods for determining the fair value of equity instruments on the grant date | The fair value of the restricted shares is the closing price on the grant date |
| Basis for determining the number of feasible right equity instruments | The number of people expected to exercise the rights is multiplied by the number granted per |
| person | |
| Reasons for the significant discrepancy between the current period estimates and the previous estimates | |
| Accumulated amount of equity-settled share-based payment included in capital reserves | 139,156,125.60 |
| The total amount of the expense recognised for the current period paid on equity-settled shares | 77,469,476.84 |
Other notes
The Company accounts for the above share payments in line with the relevant provisions ofshare-based payments in Accounting Standard for Business Enterprises as equity-settled share-basedpayments, and on each balance sheet date of the waiting period, on the basis of the best estimate of thenumber of viable equity instruments, the services received in the current period are included in theadministrative expense based on the fair value of the equity instruments granted on the grant date, andthe capital reserves (other capital reserves) of RMB77,469,476.84 are added.
3. Cash-settled share payments
□Applicable√Not applicable
4. Modification or termination of share payments
□Applicable √Not applicable
5. Other information
√Applicable □Not applicable
On 23 April 2020, the Company held the 11th Meeting of the 1st Board of Directors, where theSpecial Talent Shareholding Plan was deliberated and adopted, which granted shares of the SpecialTalent Shareholding Plan to eligible employees of the Company. The number of people involvedincluded supervisors, specially introduced talents and talents with special contribution, and the numberof people did not exceed 23. The source of funds for the shareholding plan is the special fund of theshareholding plan accrued by the Company, and the total amount of funds for the shareholding plan isRMB50 million, RMB1 per share. The source of stock in the shareholding plan is the A-share commonstock of the Company acquired in the secondary market.
After the Company’s performance evaluation target under the current shareholding plan isachieved, the corresponding interests of the underlying stock of the holders will be vested to the holdersin batches in line with the evaluation situation in the year of attribution. If there is any remainingunallocated underlying stock and its corresponding dividends (if any), they will all belong to theCompany.
The duration of the shareholding plan is 60 months, counting from the date of completion of theacquisition of the underlying stock announced by the Company. Before the expiration of the duration, itmay be extended after the shareholding plan management committee submits it to the Board of Directorsfor deliberation and adoption.
The lock-up period for each batch of the subject shares under the shareholding plan is 12 months,24 months, 36 months and 48 months, respectively, and the lock-up period is calculated from the date ofthe Company’s disclosure of the completion of the stock acquisition in the secondary market, and notransactions shall be carried out during the lock-up period.
After the expiration of the lock-up period, it is divided into four batches, and the specific attributionarrangement of each batch is as follows: Attribution of the 1st batch: 12 months from the date ofcompletion of the Company’s announcement of the completion of the stock acquisition, the plannedattribution amount is 25% of the total number of stock subject to the shareholding plan. Attribution ofthe 2nd batch: 24 months from the date of completion of the stock acquisition announced by theCompany, the planned attribution amount is 25% of the total number of stock subject to the shareholdingplan. Attribution of the 3rd batch: 36 months from the date of completion of the stock acquisitionannounced by the Company, the planned attribution amount is 25% of the total number of stock subjectto the shareholding plan. Attribution of the 4th batch: 48 months from the date of completion of thestock acquisition announced by the Company, the planned attribution amount is 25% of the total numberof stock subject to the shareholding plan.
The evaluation target for the attribution of each batch under the shareholding plan is that theoperating revenue or net profit for the current year is not lower than the average of the previous threefiscal years.On 25 September 2020, Sinolink Securities Co., Ltd., the manager entrusted by the Company, hascompleted the stock acquisition of the 2020 Special Talent Shareholding Plan through the 2020 SpecialTalent Shareholding Single Asset Management Plan of Sinolink Securities and Gongniu Group, with atotal acquisition of 322,000 shares, a transaction amount of RMB50,002,409, and an average transactionprice of RMB155.29 per share.The Company actually granted 3,600,000 shares of the 2020 employee shareholding plan and26,592,932 shares of the 2021 employee shareholding plan, and recovered 5,290,548 shares due to theresignation of employees. In 2022, the Company actually granted 8,033,477 shares the employeeshareholding plan. The Company presents the granted share of the plan as the long-term prepaidexpense, confirmed the amortisation of share payment by the evaluation period, and presents the portionnot granted as the other non-current assets. In 2021, the Company’s amortisation by service period wasincluded in the administrative expense of RMB6,6,611,860.38.
XIV Commitment and Contingency
1. Significant commitment
√Applicable□Not applicable
The external significant commitments, nature and amounts that exist on the balance sheet date
As at 31 December 2022, the Company’s public offerings to raise funds for investment items are asfollows:
| Item name | Fund raising Investment amount (RMB’0,000) | Amount used Raised fund (RMB0’000) |
| Base construction project for annual output of 410 million sets of wall switches and sockets | 75,452.86 | 35,666.63 |
| Construction project for automation upgrading of annual output of 400 million sets of converters | 58,883.63 | 40,721.84 |
| Base, R&D centre and headquarters base construction project for an annual output of 180 million sets of LED lamps | 115,203.61 | 65,849.35 |
| Information construction project | 16,035.00 | 10,459.19 |
| Channel terminal construction and brand promotion projects | 84,745.75 | 51,686.17 |
| Total | 350,320.85 | 204,383.18 |
2. Contingency
(1). Significant contingencies existing on the balance sheet date
√Applicable □Not applicable
On 31 March 2022, Guangdong Ebelong Intelligent Technology Co., Ltd. (hereafter referred asEbelong) filed a lawsuit with Hangzhou Intermediate People’s Court in Zhejiang Province against theCompany, Ningbo Gongniu, Cixi Gongniu, and Information Technology, as well as Zhejiang TmallNetwork Co., Ltd. (hereafter referred as Tmall), demanding the defendants to stop manufacturing,selling and promising to sell the infringing products, destroy the infringing products in stock and thecorresponding moulds, and compensate for the infringing economic loss of RMB 3 million.As of the date of approval of the Current Report, the Company expects that the probability of outflow ofeconomic benefits from the Company as a result of the present obligation of the Company arising fromthe above-mentioned litigation is insignificant, thus no related estimated liability has been accrued.
(2). If the Company does not have significant contingencies to be disclosed, it should also be
stated:
□Applicable √Not applicable
3. Other information
□Applicable √Not applicable
XV Subsequent Events after the Balance Sheet Date
1. Significant non-adjusting event
□Applicable√Not applicable
2. Profit distribution
√Applicable□Not applicable
Unit: RMB
| Profit or dividend to be distributed | 1,983,555,895.20 |
| Profit or dividend announced to issue after review and approval |
3. Sales returns
□Applicable√Not applicable
4. Notes to other events after the balance sheet date
√Applicable□Not applicable
(1) Profit distribution after the balance sheet date
On 27 April 2023, the 2022 final dividend and bonus issue plan was approved at the 17
th
Meetingof the Second Board of Directors. Based on the total share capital (exclusive of the shares in theCompany’s repurchased share account) at the record date of the dividend payout, the Company intendsto pay a cash dividend of RMB33 (tax inclusive) per 10 shares to shareholders, with a bonus issue of 4.8additional shares for every 10 shares held by shareholders from capital reserves.
(2) The 2023 Restricted Share Incentive Plan
According to the 2023 Restricted Share Incentive Plan approved at the 17
thMeeting of the SecondBoard of Directors on 27 April 2023, the Company intends to grant a total of 1,510,000 restricted sharesto 762 awardees at a certain price. The plan is subject to final approval by a general meeting ofshareholders.The restricted shares granted under the incentive plan will be subject to performance appraisal inthree unlocking years/periods, with the achievement of the performance requirements as the conditionfor the unlocking of the restricted shares for the awardees. For the first unlocking period, the operatingrevenue or net profit in 2023 shall be no less than the average of the previous three fiscal years (i.e.2020-2022) and no less than 110% of the average of the previous two fiscal years (i.e. 2021-2022); forthe second unlocking period, the operating revenue or net profit in 2024 shall be no less than the averageof the previous three fiscal years (i.e. 2021-2023) and no less than 110% of the average of the previoustwo fiscal years (i.e. 2022-2023); for the third unlocking period, the operating revenue or net profit in2025 shall be no less than the average of the previous three fiscal years (i.e. 2022-2024) and no less than110% of the average of the previous two fiscal years (i.e. 2023-2024).
XVI Other Significant Events
1. Correction of prior-period accounting errors
(1). Retrospective restatement
□Applicable√Not applicable
(2). Prospective application
□Applicable√Not applicable
2. Debt reorganisation
□Applicable√Not applicable
3. Asset replacement
(1). Exchange of non-monetary assets
□Applicable √Not applicable
(2). Replacement of other assets
□Applicable √Not applicable
4. Annuity plan
□Applicable√Not applicable
5. Termination of business
□Applicable√Not applicable
6. Segment information
(1). Basis for the determination of the reporting segment and accounting policies
√Applicable □Not applicable
The Company determines the reporting segment on the basis of the regional division, the incomefrom principal businesses and the cost of principal business are divided based on the final sales place,and the assets and liabilities are divided based on the location of the operating entity.
(2). Financial information of reporting segment
√Applicable □Not applicable
Unit: RMB
| Item | Domestic | Overseas companies in China | Overseas companies outside China | Offset among segment | Total |
| Revenue from principal business | 13,791,305,035.94 | 261,466,476.29 | 14,052,771,512.23 | ||
| Principal business cost | 8,486,294,382.03 | 230,636,322.51 | 8,716,930,704.54 | ||
| Total assets | 16,650,319,848.38 | 177,349.94 | 16,650,497,198.32 | ||
| Total liabilities | 4,235,133,055.62 | 4,235,133,055.62 |
(3). If the Company does not report the segment, or cannot disclose the total assets and liabilities
of each reporting segment, the reasons should be explained
□Applicable √Not applicable
(4). Other notes
□Applicable √Not applicable
7. Other significant transactions and events that have an influence on investors’ decisions
□Applicable √Not applicable
8. Other information
□Applicable √Not applicable
XVII Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts receivable
(1). Breakdown by aging
√Applicable□Not applicable
Unit: RMB
| Aging | Closing carrying balance |
| Within 1 year | |
| Of which: Sub-items within one year | |
| Within 1 year | 359,382,480.21 |
| Subtotal within 1 year | 359,382,480.21 |
| 1 to 2 years | |
| 2 to 3 years | |
| Over 3 years | |
| 3 to 4 years | |
| 4 to 5 years | |
| Over 5 years | |
| Total | 359,382,480.21 |
(2). Breakdown by method of establishing allowance for doubtful account
√Applicable□Not applicable
Unit: RMB
| Type | Closing balance | Opening balance | ||||||||
| Carrying balance | Bad debt provision | Carrying amount | Carrying balance | Bad debt provision | Carrying amount | |||||
| Amount | Percentage (%) | Amount | Accrued proportion (%) | Amount | Percentage (%) | Amount | Accrued proportion (%) | |||
| Bad debt provision established on the individual basis | ||||||||||
| Bad debt provision accrued by portfolio | 359,382,480.21 | 100.00 | 17,969,124.01 | 5.00 | 341,413,356.20 | 3,982,866.46 | 100.00 | 199,143.32 | 5.00 | 3,783,723.14 |
| Total | 359,382,480.21 | / | 17,969,124.01 | 5.00 | 341,413,356.20 | 3,982,866.46 | / | 199,143.32 | 5.00 | 3,783,723.14 |
Bad debt provision established on the individual basis:
□Applicable√Not applicable
Bad debt provision accrued by portfolio:
√Applicable□Not applicable
Unit: RMB
| Name | Closing balance | ||
| Accounts receivable | Bad debt provision | Accrued proportion (%) | |
| Within 1 year | 359,382,480.21 | 17,969,124.01 | 5.00 |
| Total | 359,382,480.21 | 17,969,124.01 | 5.00 |
Criteria and explanation of bad debt provision accrued by portfolio:
□Applicable√Not applicable
To accrue bad debt provision under the expected general model of credit loss, please refer to thedisclosure of other receivables:
□Applicable√Not applicable
(3). Bad debt provision
√Applicable□Not applicable
Unit: RMB
| Type | Opening balance | Changes for the current period | Closing balance | |||
| Established | Reversed or transferred-back | Charged-off/Written-off | Other changes | |||
| Bad debt provisio | 199,143.32 | 17,779,904.69 | 9,924.00 | 17,969,124.01 | ||
| n accrued by portfolio | ||||||
| Total | 199,143.32 | 17,779,904.69 | 9,924.00 | 17,969,124.01 |
Of which significant amount of recovered or transferred-back bad debt provision for the current period:
□Applicable√Not applicable
(4). Accounts receivable written-off in current period
√Applicable□Not applicable
Unit: RMB
| Item | Amount written-off |
| Accounts receivable written-off | 9,924.00 |
Of which: The written-off of significant accounts receivable
□Applicable√Not applicable
(5). Top 5 of the closing balance of the accounts receivable collected according to arrears party
√Applicable □Not applicable
Unit: RMB
| Entity | Closing balance | As % of the closing balance of total accounts receivable | Closing balance of bad debt provision |
| Information technology | 349,673,489.15 | 97.30 | 17,483,674.46 |
| Gongniu International Trade | 3,784,596.47 | 1.05 | 189,229.82 |
| Murora Intelligent | 2,730,979.62 | 0.76 | 136,548.98 |
| Kehua Hengsheng (Guangzhou) Co., Ltd. | 1,395,298.00 | 0.39 | 69,764.90 |
| Kehua Data Co., Ltd. | 898,089.82 | 0.25 | 44,904.49 |
| Total | 358,482,453.06 | 99.75 | 17,924,122.65 |
(6). Accounts receivable derecognised due to the transfer of financial assets
□Applicable √Not applicable
(7). Amount of assets and liabilities formed due to the transfer and the continued involvement ofaccounts receivable
□Applicable √Not applicable
Other notes:
□Applicable√Not applicable
2. Other receivables
Breakdown
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance |
| Interests receivable | ||
| Dividends receivable | 1,700,000,000.00 | 2,000,000,000.00 |
| Other receivables | 1,056,026,303.85 | 1,038,980,082.79 |
| Total | 2,756,026,303.85 | 3,038,980,082.79 |
Other notes:
□Applicable√Not applicable
Interests receivable
(1). Category of interests receivable
□Applicable√Not applicable
(2). Significant overdue interest
□Applicable√Not applicable
(3). Bad debt provision
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
(4). Dividends receivable
√Applicable□Not applicable
Unit: RMB
| Project (or investee) | Closing balance | Opening balance |
| Ningbo Gongniu | 1,200,000,000.00 | 1,000,000,000.00 |
| Electric Sales | 500,000,000.00 | 700,000,000.00 |
| Gongniu Photoelectricity | 300,000,000.00 | |
| Total | 1,700,000,000.00 | 2,000,000,000.00 |
(5). Significant dividends receivable aging over one year
□Applicable√Not applicable
(6). Bad debt provision
□Applicable√Not applicable
Other notes:
□Applicable√Not applicable
Other receivables
(1). Breakdown by aging
√Applicable□Not applicable
Unit: RMB
| Aging | Closing carrying balance |
| Within 1 year | |
| Of which: Sub-items within 1 year | |
| Within 1 year | 437,048,066.18 |
| Subtotal within 1 year | 437,048,066.18 |
| 1 to 2 years | 711,594,599.88 |
| 2 to 3 years | 791,002.18 |
| Over 3 years | 1,570,245.20 |
| Total | 1,151,003,913.44 |
(2). Breakdown by nature
√Applicable□Not applicable
Unit: RMB
| Nature | Closing carrying balance | Opening carrying balance |
| Intercourse funds | 1,143,058,695.61 | 1,000,999,087.76 |
| Guaranteed deposit | 1,858,945.12 | 88,048,852.00 |
| Housing loan for employees | 4,768,468.33 | 7,347,019.79 |
| Others | 1,317,804.38 | 474,737.12 |
| Total | 1,151,003,913.44 | 1,096,869,696.67 |
(3). Bad debt provision
√Applicable□Not applicable
Unit: RMB
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| 12-month expected credit loss | Lifetime expected credit loss (without credit impairment) | Lifetime expected credit loss (with credit impairment) | ||
| Balance of 1 January 2022 | 54,565,748.60 | 161,109.99 | 3,162,755.29 | 57,889,613.88 |
| Balance of 1 January 2022 in the Current Period | ||||
| - Transferred to Stage 2 | -35,579,730.00 | 35,579,730.00 | ||
| - Transferred to Stage 3 | -79,100.22 | 79,100.22 | ||
| - Transferred back to Stage 2 | ||||
| - Transferred back to Stage 1 | ||||
| Amount accrued for the current period | 2,866,384.71 | 35,497,720.22 | -1,276,109.22 | 37,087,995.71 |
| Amount transferred-back for the current period | ||||
| Amount charged-off for the current period | ||||
| Amount written-off for the current period | ||||
| Other changes | ||||
| Balance as at 31 December 2022 | 21,852,403.31 | 71,159,459.99 | 1,965,746.29 | 94,977,609.59 |
Notes to significant changes in the carrying balance of other receivables for which changes in the lossreserve for the current period occurred:
□Applicable√Not applicable
The amount of bad debt provision for the current period and the basis for assessing whether the creditrisk of financial instruments has increased significantly:
□Applicable√Not applicable
(4). Bad debt provision
□Applicable□Not applicable
Unit: RMB
| Type | Opening balance | Changes for the current period | Closing balance | |||
| Established | Reversed or transferred-back | Charged-off/Written-off | Other changes | |||
| Bad debt provision | ||||||
| accrued by item | ||||||
| Bad debt provision accrued by portfolio | 57,889,613.88 | 37,087,995.71 | 94,977,609.59 | |||
| Total | 57,889,613.88 | 37,087,995.71 | 94,977,609.59 |
Of which the bad debt provision recovered or transferred-back with significant amount during thecurrent period:
□Applicable√Not applicable
(5). Particulars of the actual written-off of other receivables during the current period
□Applicable√Not applicable
(6). Other receivables with the top five closing balances collected according to the arrears party
√Applicable□Not applicable
Unit: RMB
| Entity | Nature of other receivable | Closing balance | Aging | As a % of the closing balance of total other receivables | Closing balance of bad debt provision |
| Ningbo Gongniu | Transaction amounts | 152,607,928.97 | Within 1 year | 13.26 | 7,630,396.45 |
| 556,470,349.85 | 1-2 years | 48.34 | 55,647,034.99 | ||
| Cixi Gongniu | Transaction amounts | 116,000,000.00 | Within 1 year | 10.08 | 5,800,000.00 |
| 96,700,000.00 | 1-2 years | 8.40 | 9,670,000.00 | ||
| Electric Sales | Transaction amounts | 113,107,936.67 | Within 1 year | 9.83 | 5,655,396.83 |
| 45,600,000.00 | 1-2 years | 3.96 | 4,560,000.00 | ||
| Gongniu Photoelectricity | Transaction amounts | 33,328,569.55 | Within 1 year | 2.90 | 1,666,428.48 |
| Gongniu Digital | Transaction amounts | 15,558,901.56 | Within 1 year | 1.35 | 777,945.08 |
| Total | / | 1,129,373,686.60 | / | 98.12 | 91,407,201.83 |
(7). Accounts receivable involving government grants
□Applicable √Not applicable
(8). Other receivables derecognised due to the transfer of financial assets
□Applicable √Not applicable
(9). Amount of assets and liabilities formed due to the transfer and the continued involvement of
other receivables
□Applicable √Not applicable
Other notes:
□Applicable √Not applicable
3. Long-term equity investments
√Applicable□Not applicable
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Impairment allowances | Carrying amount | Carrying balance | Impairment allowances | Carrying amount | |
| Investment to subsidiaries | 688,178,210.52 | 688,178,210.52 | 441,959,500.17 | 441,959,500.17 | ||
| Investment to joint ventures and associated enterprises | ||||||
| Total | 688,178,210.52 | 688,178,210.52 | 441,959,500.17 | 441,959,500.17 | ||
(1). Investment to subsidiaries
√Applicable□Not applicable
Unit: RMB
| Investee | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | Depreciation reserves accrued for the current period | Closing balance of impairment allowance |
| Ningbo Gongniu | 142,720,497.66 | 14,127,013.30 | 156,847,510.96 | |||
| Gongniu Photoelectricity | 16,135,993.74 | 6,130,156.42 | 22,266,150.16 | |||
| Gongniu Digital | 14,677,129.14 | 6,358,997.83 | 21,036,126.97 | |||
| Banmen Electrical Appliances | 11,546,142.26 | 288,241.80 | 11,834,384.06 | |||
| Gongniu Precision Manufacturing | 102,141,438.83 | 2,589,365.47 | 104,730,804.30 | |||
| Cixi Gongniu | 42,399,186.50 | 1,170,285.63 | 43,569,472.13 | |||
| Shanghai Gongniu | 40,502,198.63 | 1,816,922.44 | 42,319,121.07 | |||
| Gongniu Management | 30,041,028.00 | 86,356.46 | 30,127,384.46 | |||
| Gongniu International Trade | 3,110,000.00 | 221,613.44 | 3,331,613.44 | |||
| Electric Sales | 13,385,245.91 | 8,425,502.56 | 21,810,748.47 | |||
| Xingluo Trading | 9,910,274.20 | 9,910,274.20 | ||||
| LV Electric | 1,799,085.11 | 1,138,137.90 | 2,937,223.01 | |||
| Household Electrical Appliances | 2,591,280.19 | 2,872,366.86 | 5,463,647.05 | |||
| Hainan Dacheng | 10,000,000.00 | 10,000,000.00 | ||||
| Intelligent Technology | 1,000,000.00 | 1,929,997.01 | 2,929,997.01 | |||
| Dalitek | 91,000,000.00 | 91,000,000.00 | ||||
| Information | 104,999,859.03 | 104,999,859.03 |
| technology | ||||||
| Gongniu New Energy | 600,000.00 | 600,000.00 | ||||
| Shenzhen Intelligent | 1,271,829.22 | 1,271,829.22 | ||||
| Murora Intelligent | 1,192,064.98 | 1,192,064.98 | ||||
| Total | 441,959,500.17 | 246,218,710.35 | 688,178,210.52 |
(2). Investment to joint ventures and associated enterprises
□Applicable√Not applicable
4. Revenue and cost of sales
(1). Operating revenue and cost of sales
√Applicable □Not applicable
Unit: RMB
| Item | 2022 | 2021 | ||
| Revenue | Cost | Revenue | Cost | |
| Principal business | 5,488,247,628.07 | 4,258,503,387.22 | 5,196,022,727.01 | 3,782,944,961.56 |
| Other businesses | 39,346,073.23 | 21,125,679.79 | 110,267,497.14 | 93,117,094.92 |
| Total | 5,527,593,701.30 | 4,279,629,067.01 | 5,306,290,224.15 | 3,876,062,056.48 |
| Of which: Revenue generated by contracts with customers | 5,503,428,124.33 | 4,271,075,267.90 | 5,292,184,752.33 | 3,867,282,763.40 |
(2). Status of contract revenue
□Applicable√Not applicable
(3). Details of obligation for contract performance
□Applicable√Not applicable
(4). Notes of the allocation to the remaining obligations for contract performance
□Applicable√Not applicable
Other notes:
None.
5. Investment income
√Applicable□Not applicable
Unit: RMB
| Item | 2022 | 2021 |
| Long-term equity investment income accounted by cost method | 1,700,000,000.00 | 2,000,000,000.00 |
| Long-term equity investment income accounted by equity method | ||
| Investment income from disposal of long-term equity investment | ||
| Investment income from holding of held-for-trading financial asset | ||
| Dividend income of other equity investments gained for the holding period |
| Interest income earned on investment in debt obligations during the holding period | ||
| Interest income earned on other investment in debt obligations during the holding period | ||
| Investment income from disposal of held-for-trading financial asset | ||
| Investment income from disposal of other equity instruments | ||
| Investment income from disposal of investment in debt obligations | ||
| Investment income from disposal of other investment in debt obligations | ||
| Earnings of debt restructuring | ||
| Investment income from bank wealth management products | 111,912,481.21 | 79,124,417.58 |
| Total | 1,811,912,481.21 | 2,079,124,417.58 |
Other notes:
None.
6. Other information
√Applicable □Not applicable
R&D expense
| Item | 2022 | 2021 |
| Employee remuneration | 155,896,137.96 | 119,019,111.86 |
| Direct investment | 52,557,844.59 | 44,047,037.17 |
| Depreciation and amortisation | 7,656,663.14 | 5,049,216.83 |
| Others | 27,046,508.58 | 22,328,622.99 |
| Total | 243,157,154.27 | 190,443,988.85 |
XVIII Supplemental Information
1. Schedule of current year’s non-recurring profits and losses
√Applicable □Not applicable
Unit: RMB
| Item | Amount | Note |
| Gain or loss on disposal of non-current assets | -3,980,890.27 | |
| Exceptional tax rebates, reductions and exemptions given with ultra vires approval, in lack of official approval documents or for other reasons | ||
| Government grants through profit or loss (exclusive of government grants consistently given in the Company’s ordinary course of business at fixed quotas or amounts as per governmental policies or standards) | 130,991,587.24 | |
| Capital occupation charges on non-financial enterprises that are recognized in profit or loss | 590,062.34 | |
| Gain equal to the amount by which |
| investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the Company’s enjoyable fair value of identifiable net assets of investees when making investments | ||
| Gain or loss on non-monetary asset swaps | ||
| Gain or loss on assets entrusted to other entities for investment or management | 279,374,491.92 | |
| Allowance for asset impairments due to acts of God such as natural disasters | ||
| Gain or loss on debt restructuring | ||
| Restructuring costs in staff arrangement, integration, etc. | ||
| Gain or loss on the over-fair value amount as a result of transactions with distinctly unfair prices | ||
| Current profit or loss on subsidiaries obtained in business combinations involving entities under common control from the period-begin to combination dates, net | ||
| Gain or loss on contingencies that do not arise in the Company’s ordinary course of business | ||
| Gain or loss on fair-value changes on held-for-trading and derivative financial assets and liabilities & income from disposal of held-for-trading and derivative financial assets and liabilities and other debt investments (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | -7,385,680.00 | |
| Reversed portions of impairment allowances for receivables and contract assets which are tested individually for impairment | ||
| Gain or loss on loan entrustments | ||
| Gain or loss on fair-value changes in investment property of which subsequent measurement is carried out using the fair value method | ||
| Effects of all adjustments required by taxation, accounting and other applicable laws and regulations on current profit or loss | ||
| Income from charges on entrusted management | ||
| Non-operating income and expense other than the above | -58,763,095.61 | |
| Other gains and losses that meet the definition of exceptional gain/loss | 1,712,485.52 | |
| Less: Income tax effects | 57,894,123.94 | |
| Non-controlling interests effects (net of tax) | 173,895.14 | |
| Total | 284,470,942.06 |
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listedin the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering TheirSecurities to the Public—Exceptional Gain/Loss Items:
□Applicable √Not applicable
2. Return on equity (ROE) and earnings per share (EPS)
√Applicable □Not applicable
| Profit of the Reporting Period | Weighted average ROE (%) | EPS | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to ordinary shareholders | 27.88 | 5.32 | 5.30 |
| Net profit attributable to ordinary shareholders before exceptional gains and losses | 25.39 | 4.84 | 4.82 |
3. Accounting data differences under China’s and foreign accounting standards
□Applicable √Not applicable
4. Other information
□Applicable √Not applicable
Chairman of the Board: Ruan LipingDate when this Report was authorized for issue: 27 April 2023
Revised information:
□Applicable √Not applicable