Foshan Electrical and Lighting Co., Ltd. First Quarter Report 2019 FOSHAN ELECTRICAL AND LIGHTING CO., LTD. FIRST QUARTER REPORT 2019 April 2019 1 Foshan Electrical and Lighting Co., Ltd. First Quarter Report 2019 Part I Important Notes The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors, supervisors and senior management of Foshan Electrical and Lighting Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee the factuality, accuracy and completeness of the contents of this Report and its summary, and shall be jointly and severally liable for any misrepresentations, misleading statements or material omissions therein. All the Company’s directors have attended the Board meeting for the review of this Report and its summary. He Yong, the Company’s legal representative, Liu Xingming, the Company’s General Manager, and Tang Qionglan, the Company’s Chief Financial Officer (CFO) hereby guarantee that the Financial Statements carried in this Report are factual, accurate and complete. This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese versions shall prevail. 2 Part II Key Corporate Information I Key Financial Information Indicate by tick mark whether there is any retrospectively restated datum in the table below. □ Yes √ No Q1 2019 Q1 2018 Change (%) Operating revenue (RMB) 889,232,750.52 1,123,376,512.26 -20.84% Net profit attributable to the listed 86,659,035.18 96,552,712.99 -10.25% company’s shareholders (RMB) Net profit attributable to the listed company’s shareholders before exceptional 74,681,526.84 96,033,861.87 -22.23% items (RMB) Net cash flows from operating activities 29,966,955.13 124,450,627.91 -75.92% (RMB) Basic earnings per share (RMB/share) 0.0619 0.0690 -10.29% Diluted earnings per share (RMB/share) 0.0619 0.0690 -10.29% Weighted average return on equity (%) 1.82% 2.00% -0.18% 31 March 2019 31 December 2018 Change (%) Total assets (RMB) 5,799,151,823.18 5,588,166,699.30 3.78% Equity attributable to the listed company’s 4,645,187,669.60 4,319,259,418.46 7.55% shareholders (RMB) Exceptional gains and losses: √ Applicable □ Not applicable Unit: RMB Item Q1 2019 Note Gain or loss on disposal of non-current assets (inclusive of -630.50 impairment allowance write-offs) Government subsidies charged to the profit/loss for this Reporting Period (except for the government grants closely related to the 163,829.98 business of the Company and given at a fixed quota or amount in accordance with the State’s uniform standards) Gain or loss on fair-value changes in trading financial assets and Investment income received from liabilities and derivative financial assets and liabilities & 13,927,800.00 selling the equities of Chengdu investment income from disposal of trading financial assets and Hongbo Industry Co., Ltd in the 3 liabilities and derivative financial assets and liabilities, and other Reporting Period creditors’ investment (exclusive of effective portion of hedges that arise in the Company’s ordinary course of business) Non-operating income and expense other than above 20,201.65 Less: Income tax effects 2,130,749.24 Non-controlling interests effects (net of tax) 2,943.55 Total 11,977,508.34 -- Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items: □ Applicable √ Not applicable No such cases for the Reporting Period. II Total Number of Shareholders and Holdings of Top 10 Shareholders at 31 March 2019 1. Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well as Holdings of Top 10 Shareholders Unit: share Number of preferred shareholders Number of ordinary shareholders at the 88,597 with resumed voting rights at the 0 period-end period-end (if any) Top 10 shareholders Nature of Shareholding Restricted shares Shares in pledge or frozen Name of shareholder Total shares held shareholder percentage held Status Shares Hong Kong Wah Shing Foreign legal Holding Company 13.47% 188,496,430 In pledge 92,363,251 person Limited Prosperity Lamps & Foreign legal 10.50% 146,934,857 Components Limited person Shenzhen Rising State-owned Investment Development 5.12% 71,696,136 In pledge 35,800,000 legal person Co., Ltd. Guangdong Electronics State-owned Information Industry 4.74% 66,393,501 In pledge 32,532,815 legal person Group Ltd. Central Huijin Asset State-owned 2.42% 33,878,900 Management Co., Ltd. legal person 4 Essence International Foreign legal Securities (Hong Kong) 2.10% 29,332,186 person Co., Ltd. Hong Kong Rising Foreign legal Investment Development 1.82% 25,482,252 person Co., Ltd. DBS Vickers (Hong Foreign legal 1.58% 22,102,137 Kong) Ltd A/C Clients person China Merchants Foreign legal Securities (Hong Kong) 0.88% 12,338,236 person Co., Ltd Foreign natural Zhuang Jianyi 0.85% 11,903,509 8,927,632 person Top 10 unrestricted shareholders Shares by type Name of shareholder Unrestricted shares held Type Shares RMB-denominat Hong Kong Wah Shing Holding Company 188,496,430 ed ordinary 188,496,430 Limited stock RMB-denominat Prosperity Lamps & Components Limited 146,934,857 ed ordinary 146,934,857 stock RMB-denominat Shenzhen Rising Investment Development 71,696,136 ed ordinary 71,696,136 Co., Ltd. stock RMB-denominat Guangdong Electronics Information 66,393,501 ed ordinary 66,393,501 Industry Group Ltd. stock RMB-denominat Central Huijin Asset Management Co., Ltd. 33,878,900 ed ordinary 33,878,900 stock Domestically Essence International Securities (Hong 29,332,186 listed foreign 29,332,186 Kong) Co., Ltd. stock Domestically Hong Kong Rising Investment 25,482,252 listed foreign 25,482,252 Development Co., Ltd. stock Domestically DBS Vickers (Hong Kong) Ltd A/C Clients 22,102,137 listed foreign 22,102,137 stock 5 Domestically China Merchants Securities (Hong Kong) 12,338,236 listed foreign 12,338,236 Co., Ltd stock RMB-denominat Shenzhen Xingsen Asset Management Co., 8,633,126 ed ordinary 8,633,126 Ltd—Phase II Private Fund of Xingsen stock Among the top 10 shareholders, Hong Kong Wah Shing Holding Company Limited, Shenzhen Rising Investment Development Co., Ltd., Guangdong Electronics Information Industry Group Ltd. and Hong Kong Rising Investment Development Co., Related or acting-in-concert parties among Ltd. are acting-in-concert parties; and Prosperity Lamps & Components Limited and the shareholders above Zhuang Jianyi are acting-in-concert parties. Apart from that, it is unknown whether there is among the top 10 shareholders any other related parties or acting-in-concert parties as defined in the Administrative Measures for the Acquisition of Listed Companies. Among the top 10 unrestricted shareholders, shareholder Shenzhen Xingsen Asset Top 10 ordinary shareholders involved in Management Co., Ltd—Phase II Private Fund of Xingsen holds 57,250 shares through securities margin trading (if any) common securities account, and holds 8,575,876 shares through an account of collateral securities for margin trading, where the total shares is 8,633,126. Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the Company conducted any promissory repo during the Reporting Period. □ Yea √ No No such cases in the Reporting Period. 2. Number of Preferred Shareholders and Shareholdings of Top 10 of Them □ Applicable √ Not applicable 6 Part III Significant Events I Changes in Key Financial Statement Line Items and Explanation of why √ Applicable □ Not applicable Unit: RMB Item 31 March 2019/Q1 Q1 2018/31 Change (%) Explanation of why 2019 December 2018 Available-for-sale financial assets 897,716,590.20 -100.00% The transfer of certain available-for-sale Investments in other equity 1,173,231,806.05 N/A financial assets to investments in other instruments equity instruments according to the new accounting standards governing financial instruments issued in the Reporting Period Trading financial liabilities 99,400.00 N/A The transfer of certain financial Financial liabilities at fair value 477,200.00 -100.00% liabilities at fair value through profit or through profit or loss loss to trading financial liabilities according to the new accounting standards governing financial instruments issued in the Reporting Period Payroll payable 66,724,183.83 96,088,621.59 -30.56% The payment in the current period of the year-end bonuses of last year to the employees Deferred income tax liabilities 94,757,791.37 52,530,509.00 80.39% The rise in the fair value of the Company’s shareholdings in other companies in the current period Other comprehensive income 536,937,088.76 297,667,872.80 80.38% The rise in the fair value of the Company’s shareholdings in other companies in the current period Administrative expense 32,701,258.08 48,496,349.98 -32.57% A smaller amount of salary provision as a result of lower revenue R&D expense 14,375,055.48 7,920,976.24 81.48% A greater R&D investment Asset impairment loss 2,181,356.17 6,299,423.27 -65.37% A smaller amount of allowances for doubtful accounts Return on investment 20,086,440.56 7,509,169.19 167.49% Income from the sale of the Company’s equity interests in Chengdu Hongbo Industrial Co., Ltd. in the current period Other income 146,400.00 355,982.00 -58.87% A smaller amount of government subsidies received in the Company’s 7 ordinary course of business Non-operating income 207,409.53 692,142.62 -70.03% A smaller amount of government subsidies not related to the Company’s operating activities Non-operating expense 24,008.40 72,651.12 -66.95% The payment of miscellaneous compensations in the same period of last year Net profit attributable to -202,588.07 2,600,282.32 -107.79% A smaller amount of profits of non-controlling interests non-wholly-owned subsidiaries Other comprehensive income, net 239,269,215.96 -9,187,456.23 2704.30% A rise in the fair value of investments in of tax other equity instruments Changes in the fair value of 239,287,933.48 N/A The transfer of certain available-for-sale investments in other equity financial assets to investments in other instruments equity instruments according to the new Gain/Loss on changes in the fair -9,186,346.21 100.00% accounting standards governing financial value of available-for-sale instruments issued in the Reporting financial assets Period, with the changes in the related fair value recorded into the changes in the fair value of investments in other equity instruments Differences arising from the -18,717.52 -1,110.02 -1586.23% The appreciation of euro against translation of foreign Renminbi currency-denominated financial statements Total comprehensive income 325,725,663.07 89,965,539.08 262.06% A rise in the fair value of investments in Total comprehensive income 325,928,251.14 87,365,256.76 273.06% other equity instruments attributable to owners of the Company as the parent Net cash flows from operating 29,966,955.13 124,450,627.91 -75.92% Mature bank acceptance bills were activities honored in the current period Net cash flows from investing 59,745,391.61 -54,668,249.60 209.29% A higher amount of proceeds from activities disinvestment and a smaller amount of payments for the acquisition of fixed assets Net increase in cash and cash 87,083,045.17 66,459,645.26 31.03% Increase in net cash flows from investing equivalents activities II Progress, Influence and Solutions with regard to Significant Events √ Applicable □ Not applicable 1. The Company held the 26th Meeting of the 8th Board of Directors on 7 September 2018, on which the Proposal 8 on Cancellation of Wholly-owned Subsidiary was reviewed and approved. The cancellation of the wholly-owned subsidiary Guangdong FSL Financing Lease Co., Ltd. was agreed by the board of directors. The cancellation registration procedure of Guangdong FSL Financing Lease Co., Ltd. has been completed on 26 March 2019. 2. The Company held the 28th Meeting of the 8th Board of Directors on 7 March 2019, on which the Proposal on Transfer of Shares in Chengdu Hongbo Industrial Co., Ltd. was reviewed and approved. The transfer of 6.94% of shares held by the Company in Chengdu Hongbo Industrial Co., Ltd. at the price of RMB19.55 million was agreed by the board of directors. As of the period-end, the Company has received the share transfer payment and completed the share transfer registration procedure. Summary of the significant event Disclosure date Index to the related announcement Cancellation of wholly-owned subsidiary 2 April 2019 www.cninfo.com.cn Guangdong FSL Financing Lease Co., Ltd. Transfer of shares of Chengdu Hongbo 8 March 2019 www.cninfo.com.cn Industrial Co., Ltd. Progress of any share repurchase: □ Applicable √ Not applicable Progress of any reduction of the repurchased shares through centralized bidding: □ Applicable √ Not applicable III Commitments that the Company’s Actual Controller, Shareholders, Related Parties, Acquirers, the Company Itself or Other Parties, Failed to Fulfill on Time during the Reporting Period □ Applicable √ Not applicable No such cases in the Reporting Period. IV Operating Performance Forecast for H1 2019 Warning of a forecast loss on or a forecast significant year-on-year change in the net profit of H1 2019, as well as explanation of why: □ Applicable √ Not applicable 9 V Securities Investments □ Applicable √ Not applicable No such cases in the Reporting Period. VI Investments in Derivative Financial Instruments √ Applicable □ Not applicable Unit: USD’0,000 Ending investm Actual Relation Related- Purchas Impairm ent as % Initial Beginni Sold in gain/lo ship party Type of ed in ent Ending of the Operating investm Beginni Ending ng Reporti ss in with the transacti derivativ Reporti allowan investm Compan party ent ng date date investm ng Reporti Compan on or e ng ce (if ent y’s amount ent Period ng y not Period any) ending Period net assets Foshan Forward branch of forex 14 Not 12 July China Not settlemen 1,200 January 200 200 0 0.00% -1.81 related 2018 Constructi t 2019 on Bank portfolio Foshan Forward branch of forex 2 1 the Not Not settlemen 1,200 August Februar 400 400 0 0.00% -0.14 Agricultur related t 2018 y 2019 al Bank of portfolio China Foshan Ordinary branch of forward 22 Guangzho Not 12 June Not forex 600 March 600 600 0.87% -1.48 u Rural related 2019 settlemen 2019 Commerci t al Bank Total 3,000 -- -- 600 600 600 600 0.87% -3.43 Funding source All from the Company’s own money Legal matters involved (if applicable) N/A Disclosure date of board announcement approving derivative investment (if 23 May 2018 any) 10 Disclosure date of general meeting announcement approving derivative investment (if any) Risk Analysis of Forward Exchange Settlement Business: 1. Risk of exchange rate fluctuations. In the case of large fluctuations in the exchange rate, the quoted price of the bank’s forward exchange rate may be lower than the Company’s quoted exchange rate to the customer, which will make the Company unable to lock the quoted exchange rate to the customer or the bank’s forward exchange rate may deviate from the exchange rate at the time of the Company’s actual receipt and payment, and causes exchange losses. 2. Risk of customer default. The customer’s accounts receivable may be overdue, and the payment for goods cannot be recovered within the predictable payback period, which will result in the loss of the Company due to the delayed forward settlement. 3. Risk of payback prediction. The marketing department shall made corresponding payback prediction based on customer orders and expected orders. However, during the actual implementation process, customers may adjust their orders and predictions, which will result in the Company’s incorrect payback prediction and cause the risk of delayed delivery of forward exchange settlement. Adopted Risk Control Measures: 1. The Company will strengthen the research and analysis of the exchange rate. When the exchange rate fluctuates greatly, it will adjust the business strategy in a timely manner to stabilize the export business and avoid exchange losses to the Analysis of risks and control measures utmost. 2. The Management System for Forward Settlement and Sales of Foreign Exchanges associated with derivative investments reviewed and approved by the board of directors of the Company stipulates that all forward held in Reporting Period (including but foreign exchange settlement businesses of the Company shall be based on the normal not limited to market risk, liquidity risk, production and operation, and relied on specific business operations to avoid and prevent credit risk, operational risk, legal risk, various exchange rate risks. However, speculative transaction and interest arbitrage are not etc.) allowed. At the same time, the system clearly defines the operating principles, approval authority, responsible department and responsible person, internal operation procedures, information isolation measures, internal risk reporting system, risk management procedures, and information disclosure related to the forward settlement business as well. In fact, the system is conducive to strengthen the management of the Company’s forward foreign exchange settlement business and prevent investment risks. 3. In order to prevent any delay in the forward exchange settlement, the Company will strengthen the management of accounts receivable, actively collect receivables, and avoid any overdue receivables. In the meantime, the Company plans to increase the export purchases and purchase corresponding credit insurance so as to reduce the risk of default and customer default. 4. The Company’s forward foreign exchange settlement transactions must be based on the Company’s foreign exchange earnings prediction. Besides, the Company shall strictly control the scale of its forward foreign exchange settlement business, and manage all risks that the Company may face within a controllable range. 5. The internal audit department of the Company shall check the actual signing and execution situation of all trading contracts on a regular or irregular basis. Changes in market prices or fair value 1. The Company has invested various derivatives including Forward Exchange Settlement of derivative investments in Reporting 3+3 Portfolio. This product portfolio is superior to other ordinary forward settlement Period (fair value analysis should products during the same period. The first three sessions of vesting conditions of this 11 include measurement method and portfolio are: the spot exchange rate at maturity is lower than the agreed front-end exchange related assumptions and parameters) rate, and the exchange settlement shall be carried out based on the agreed front-end exchange rate; if the spot exchange rate at maturity is higher than the agreed front-end exchange rate, the Company can choose not to settle the exchange or choose to settle the exchange based on the spot exchange rate at maturity. The back-end three sessions of vesting conditions are: the spot exchange rate at maturity is lower than the agreed back-end exchange rate, and the Company can choose not to settle the exchange or choose to settle the exchange based on the spot exchange rate at maturity; if the spot exchange rate at maturity is higher than the agreed back-end exchange rate, the exchange settlement shall be carried out based on the agreed back-end exchange rate. At present, in terms of Forward Exchange Settlement 3+3 Portfolio purchased by the Company, the spot exchange rates at maturity are all higher than the agreed front-end exchange rates, and the Company chooses not to exercise the right. Therefore, the product’s fair value has not changed. 2. The Company has invested ordinary forward exchange settlement product and the exchange settlement shall be carried out in accordance with the currency, amount and exchange rate stipulated in the forward exchange settlement contract, and the fair value of the product will change. Major changes in accounting policies and specific accounting principles adopted for derivative investments in N/A Reporting Period compared to last reporting period The independent directors of the Company are of the opinion that during the Reporting Period, the Company carried out forward forex settlement in strict compliance with the Company Law, the Regulations of the People’s Bank of China on Foreign Exchange Opinion of independent directors on Settlement, Sale and Payment and the Company’s Management Rules for Forward Foreign derivative investments and risk control Exchange Settlement and Sale, among others, as well as within the Board’s authorization. Such trading is primarily aimed to prevent exchange rate fluctuations from impacting the Company’s export business and operating earnings, with no speculative trading involved. It is a necessity, and the risk is well under control. VII Communications with the Investment Community such as Researches, Inquiries and Interviews during the Reporting Period √ Applicable □ Not applicable Type of communication Index to main information Date Way of communication party communicated 21 February 2019 By one-on-one meeting Institution Cninf-Interactive-Investor Relations 19 March 2019 By one-on-one meeting Institution Cninf-Interactive-Investor Relations 12 VIII Irregularities in the Provision of Guarantees □ Applicable √ Not applicable No such cases in the Reporting Period. IX Occupation of the Company’s Capital by the Controlling Shareholder or Its Related Parties for Non-Operating Purposes □ Applicable √ Not applicable No such cases in the Reporting Period. 13 Part IV Financial Statements I Financial Statements 1. Consolidated Balance Sheet Prepared by Foshan Electrical and Lighting Co., Ltd. 31 March 2019 Unit: RMB Item 31 March 2019 31 December 2018 Current assets: Monetary capital 950,691,746.55 896,646,719.87 Settlement reserve Interbank loans granted Trading financial assets Financial assets at fair value through profit or loss Derivative financial assets Notes and accounts receivable 982,213,059.72 941,927,209.55 Including: Notes receivable 135,080,457.47 107,506,613.50 Accounts receivable 847,132,602.25 834,420,596.05 Prepayments 17,021,181.84 13,811,905.18 Premiums receivable Reinsurance receivables Receivable reinsurance contract reserve Other receivables 21,802,949.65 21,745,690.53 Including: Interest receivable 6,320,543.45 5,152,364.04 Dividends receivable Financial assets purchased under resale agreements Inventories 659,861,575.74 767,319,599.00 Contractual assets Assets classified as held for sale Current portion of non-current assets Other current assets 815,531,430.50 864,093,663.30 14 Total current assets 3,447,121,944.00 3,505,544,787.43 Non-current assets: Loans and advances to customers Investments in debt obligations Available-for-sale financial assets 897,716,590.20 Investments in other debt obligations Held-to-maturity investments Long-term receivables Long-term equity investments 182,458,559.69 182,458,559.69 Investments in other equity instruments 1,173,231,806.05 Other non-current financial assets Investment property Fixed assets 508,352,567.33 512,106,912.39 Construction in progress 227,866,204.56 224,624,447.16 Productive living assets Oil and gas assets Right-of-use assets Intangible assets 171,618,097.10 172,725,277.21 R&D expense Goodwill Long-term prepaid expense 7,994,885.24 6,852,985.35 Deferred income tax assets 33,010,063.79 37,831,704.45 Other non-current assets 47,497,695.42 48,305,435.42 Total non-current assets 2,352,029,879.18 2,082,621,911.87 Total assets 5,799,151,823.18 5,588,166,699.30 Current liabilities: Short-term borrowings Borrowings from central bank Interbank loans obtained Trading financial liabilities 99,400.00 Financial liabilities at fair value through 477,200.00 profit or loss Derivative financial liabilities Notes and accounts payable 855,258,604.84 985,280,820.92 Advances from customers 42,765,323.37 43,850,788.04 15 Financial assets sold under repurchase agreements Customer deposits and interbank deposits Payables for acting trading of securities Payables for underwriting of securities Payroll payable 66,724,183.83 96,088,621.59 Taxes payable 28,039,849.00 25,354,466.37 Other payables 44,350,475.98 43,115,011.68 Including: Interest payable Dividends payable Handling charges and commissions payable Reinsurance payables Contractual liabilities Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities Other current liabilities Total current liabilities 1,037,237,837.02 1,194,166,908.60 Non-current liabilities: Insurance contract reserve Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities Long-term payables Long-term payroll payable Provisions Deferred income 116,250.33 155,000.31 Deferred income tax liabilities 94,757,791.37 52,530,509.00 Other non-current liabilities Total non-current liabilities 94,874,041.70 52,685,509.31 Total liabilities 1,132,111,878.72 1,246,852,417.91 Owners’ equity: 16 Share capital 1,399,346,154.00 1,399,346,154.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 158,608,173.07 158,608,173.07 Less: Treasury stock Other comprehensive income 536,937,088.76 297,667,872.80 Specific reserve Surplus reserves 809,456,186.20 809,456,186.20 General reserve Retained earnings 1,740,840,067.57 1,654,181,032.39 Total equity attributable to owners of the 4,645,187,669.60 4,319,259,418.46 Company as the parent Non-controlling interests 21,852,274.86 22,054,862.93 Total owners’ equity 4,667,039,944.46 4,341,314,281.39 Total liabilities and owners’ equity 5,799,151,823.18 5,588,166,699.30 Legal representative: He Yong General manager: Liu Xingming Chief Financial Officer: Tang Qionglan 2. Balance Sheet of the Company as the Parent Unit: RMB Item 31 March 2019 31 December 2018 Current assets: Monetary capital 897,564,675.93 848,949,693.91 Trading financial assets Financial assets at fair value through profit or loss Derivative financial assets Notes and accounts receivable 946,084,406.78 900,843,331.26 Including: Notes receivable 133,737,856.97 104,945,398.61 Accounts receivable 812,346,549.81 795,897,932.65 Prepayments 27,314,944.06 25,444,445.34 Other receivables 52,583,961.86 43,538,848.72 Including: Interest receivable 6,320,543.45 5,152,364.04 Dividends receivable 17 Inventories 602,250,378.73 692,681,479.03 Contractual assets Assets classified as held for sale Current portion of non-current assets Other current assets 809,274,492.71 856,504,839.81 Total current assets 3,335,072,860.07 3,367,962,638.07 Non-current assets: Investments in debt obligations Available-for-sale financial assets 897,716,590.20 Investments in other debt obligations Held-to-maturity investments Long-term receivables Long-term equity investments 466,251,661.95 466,251,661.95 Investments in other equity instruments 1,173,231,806.05 Other non-current financial assets Investment property Fixed assets 426,146,813.45 427,947,613.74 Construction in progress 226,183,855.03 222,570,503.14 Productive living assets Oil and gas assets Right-of-use assets Intangible assets 128,432,316.98 129,452,067.42 R&D expense Goodwill Long-term prepaid expense 6,475,878.82 5,106,268.25 Deferred income tax assets 31,042,289.33 35,908,741.15 Other non-current assets 46,110,695.42 46,852,235.42 Total non-current assets 2,503,875,317.03 2,231,805,681.27 Total assets 5,838,948,177.10 5,599,768,319.34 Current liabilities: Short-term borrowings Trading financial liabilities 99,400.00 Financial liabilities at fair value through 477,200.00 profit or loss Derivative financial liabilities 18 Notes and accounts payable 1,027,536,865.54 1,134,173,851.66 Advances from customers 39,780,260.65 41,912,301.85 Contractual liabilities Payroll payable 54,321,859.42 84,220,746.16 Taxes payable 20,363,003.05 17,528,644.83 Other payables 127,660,528.13 114,073,355.23 Including: Interest payable Dividends payable Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities Other current liabilities Total current liabilities 1,269,761,916.79 1,392,386,099.73 Non-current liabilities: Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities Long-term payables Long-term payroll payable Provisions Deferred income Deferred income tax liabilities 94,757,791.37 52,530,509.00 Other non-current liabilities Total non-current liabilities 94,757,791.37 52,530,509.00 Total liabilities 1,364,519,708.16 1,444,916,608.73 Owners’ equity: Share capital 1,399,346,154.00 1,399,346,154.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 166,211,779.15 166,211,779.15 Less: Treasury stock Other comprehensive income 536,960,817.82 297,672,884.34 19 Specific reserve Surplus reserves 809,456,186.20 809,456,186.20 Retained earnings 1,562,453,531.77 1,482,164,706.92 Total owners’ equity 4,474,428,468.94 4,154,851,710.61 Total liabilities and owners’ equity 5,838,948,177.10 5,599,768,319.34 Legal representative: He Yong General manager: Liu Xingming Chief Financial Officer: Tang Qionglan 3. Consolidated Income Statement Unit: RMB Item Q1 2019 Q1 2018 1. Revenue 889,232,750.52 1,123,376,512.26 Including: Operating revenue 889,232,750.52 1,123,376,512.26 Interest income Premium income Handling charge and commission income 2. Costs and expenses 807,336,382.30 1,012,171,251.73 Including: Cost of sales 686,392,508.53 874,409,768.15 Interest expense Handling charge and commission expense Surrenders Net claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium expense Taxes and surcharges 10,992,127.94 14,410,687.99 Selling expense 56,726,445.41 55,410,407.71 Administrative expense 32,701,258.08 48,496,349.98 R&D expense 14,375,055.48 7,920,976.24 Finance costs 3,967,630.69 5,223,638.39 Including: Interest expense Interest income 4,993,925.50 2,238,215.91 Asset impairment loss 2,181,356.17 6,299,423.27 20 Credit impairment loss Add: Other income 146,400.00 355,982.00 Return on investment (“-” for loss) 20,086,440.56 7,509,169.19 Including: Share of profit or loss of joint -316,136.14 ventures and associates Foreign exchange gain (“-” for loss) Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” for loss) 377,800.00 Asset disposal income (“-” for loss) 3. Operating profit (“-” for loss) 102,507,008.78 119,070,411.72 Add: Non-operating income 207,409.53 692,142.62 Less: Non-operating expense 24,008.40 72,651.12 4. Profit before tax (“-” for loss) 102,690,409.91 119,689,903.22 Less: Income tax expense 16,233,962.80 20,536,907.91 5. Net profit (“-” for net loss) 86,456,447.11 99,152,995.31 5.1 By operating continuity 5.1.1 Net profit from continuing operations 86,456,447.11 99,152,995.31 (“-” for net loss) 5.1.2 Net profit from discontinued operations (“-” for net loss) 5.2 By ownership 5.2.1 Net profit attributable to owners of the 86,659,035.18 96,552,712.99 Company as the parent 5.2.1 Net profit attributable to -202,588.07 2,600,282.32 non-controlling interests 6. Other comprehensive income, net of tax 239,269,215.96 -9,187,456.23 Attributable to owners of the Company as the 239,269,215.96 -9,187,456.23 parent 6.1 Items that will not be reclassified to 239,287,933.48 profit or loss 6.1.1 Changes caused by remeasurements on defined benefit pension schemes 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 6.1.3 Changes in the fair value of 239,287,933.48 investments in other equity instruments 6.1.4 Changes in the fair value of the company’s credit risks 21 6.1.5 Other 6.2 Items that will be reclassified to profit -18,717.52 -9,187,456.23 or loss 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 6.2.2 Changes in the fair value of investments in other debt obligations 6.2.3 Gain/Loss on changes in the fair -9,186,346.21 value of available-for-sale financial assets 6.2.4 Other comprehensive income arising from the reclassification of financial assets 6.2.5 Gain/Loss arising from the reclassification of held-to-maturity investments to available-for-sale financial assets 6.2.6 Allowance for credit impairments in investments in other debt obligations 6.2.7 Reserve for cash flow hedges 6.2.8 Differences arising from the translation of foreign currency-denominated -18,717.52 -1,110.02 financial statements 6.2.9 Other Attributable to non-controlling interests 7. Total comprehensive income 325,725,663.07 89,965,539.08 Attributable to owners of the Company as the 325,928,251.14 87,365,256.76 parent Attributable to non-controlling interests -202,588.07 2,600,282.32 8. Earnings per share 8.1 Basic earnings per share 0.0619 0.0690 8.2 Diluted earnings per share 0.0619 0.0690 Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before the combinations was RMB0.00, with the amount for the same period of last year being RMB0.00. Legal representative: He Yong General manager: Liu Xingming Chief Financial Officer: Tang Qionglan 4. Income Statement of the Company as the Parent Unit: RMB Item Q1 2019 Q1 2018 1. Operating revenue 852,343,699.73 1,067,787,968.82 22 Less: Cost of sales 670,506,168.18 858,449,485.00 Taxes and surcharges 9,152,146.60 12,057,313.68 Selling expense 51,507,913.46 48,345,146.83 Administrative expense 28,180,888.78 43,861,856.58 R&D expense 14,051,923.39 8,015,732.18 Finance costs 4,084,122.70 5,409,152.86 Including: Interest expense Interest income 4,878,769.66 2,043,799.05 Asset impairment loss 1,386,674.74 5,508,500.39 Credit impairment loss Add: Other income 146,400.00 355,982.00 Return on investment (“-” for 20,416,668.76 5,613,752.53 loss) Including: Share of profit or -316,136.14 loss of joint ventures and associates Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” 377,800.00 for loss) Asset disposal income (“-” for loss) 2. Operating profit (“-” for loss) 94,414,730.64 92,110,515.83 Add: Non-operating income 53,128.97 645,474.35 Less: Non-operating expense 10,418.62 72,650.61 3. Profit before tax (“-” for loss) 94,457,440.99 92,683,339.57 Less: Income tax expense 14,168,616.14 13,949,921.35 4. Net profit (“-” for net loss) 80,288,824.85 78,733,418.22 4.1 Net profit from continuing 80,288,824.85 78,733,418.22 operations (“-” for net loss) 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income, net of 239,287,933.48 -9,186,346.21 tax 5.1 Items that will not be reclassified 239,287,933.48 to profit or loss 5.1.1 Changes caused by remeasurements on defined benefit 23 pension schemes 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 5.1.3 Changes in the fair value of 239,287,933.48 investments in other equity instruments 5.1.4 Changes in the fair value of the company’s credit risks 5.1.5 Other 5.2 Items that will be reclassified to -9,186,346.21 profit or loss 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 5.2.2 Changes in the fair value of investments in other debt obligations 5.2.3 Gain/Loss on changes in the fair value of available-for-sale financial -9,186,346.21 assets 5.2.4 Other comprehensive income arising from the reclassification of financial assets 5.2.5 Gain/Loss arising from the reclassification of held-to-maturity investments to available-for-sale financial assets 5.2.6 Allowance for credit impairments in investments in other debt obligations 5.2.7 Reserve for cash flow hedges 5.2.8 Differences arising from the translation of foreign currency-denominated financial statements 5.2.9 Other 6. Total comprehensive income 319,576,758.33 69,547,072.01 7. Earnings per share 7.1 Basic earnings per share 7.2 Diluted earnings per share Legal representative: He Yong General manager: Liu Xingming Chief Financial Officer: Tang Qionglan 24 5. Consolidated Cash Flow Statement Unit: RMB Item Q1 2019 Q1 2018 1. Cash flows from operating activities: Proceeds from sale of commodities 860,544,423.63 888,818,669.95 and rendering of services Net increase in customer deposits and interbank deposits 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 Net increase in proceeds from disposal of financial assets at fair value through profit or loss Interest, handling charges and commissions received Net increase in interbank loans obtained Net increase in proceeds from repurchase transactions Net proceeds from acting trading of securities Tax rebates 25,748,584.53 14,547,468.34 Cash generated from other operating 17,661,656.41 28,140,908.49 activities Subtotal of cash generated from 903,954,664.57 931,507,046.78 operating activities Payments for commodities and 610,047,969.13 520,963,882.48 services Net increase in loans and advances to customers Net increase in deposits in the central bank and in interbank loans granted Payments for claims on original 25 insurance contracts Net increase in financial assets held for trading purposes Net increase in interbank loans granted Interest, handling charges and commissions paid Policy dividends paid Cash paid to and for employees 173,108,110.24 181,134,694.05 Taxes paid 37,615,521.94 53,369,965.83 Cash used in other operating 53,216,108.13 51,587,876.51 activities Subtotal of cash used in operating 873,987,709.44 807,056,418.87 activities Net cash generated from/used in 29,966,955.13 124,450,627.91 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment 51,000,000.00 10,000,000.00 Return on investment 21,535,662.08 10,035,191.59 Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets Net proceeds from the disposal of subsidiaries and other business units Cash generated from other investing activities Subtotal of cash generated from 72,535,662.08 20,035,191.59 investing activities Payments for the acquisition of fixed assets, intangible assets and other 12,790,270.47 74,703,441.19 long-lived assets Payments for investments Net increase in pledged loans granted Net payments for the acquisition of subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 12,790,270.47 74,703,441.19 activities Net cash generated from/used in 59,745,391.61 -54,668,249.60 26 investing activities 3. Cash flows from financing activities: Capital contributions received Including: Capital contributions by non-controlling interests to subsidiaries Borrowings obtained Net proceeds from the issuance of bonds Cash generated from other financing activities Subtotal of cash generated from financing activities Repayments of borrowings Payments for interest and dividends Including: Dividends paid by subsidiaries to non-controlling interests Cash used in other financing activities Subtotal of cash used in financing activities Net cash generated from/used in financing activities 4. Effect of foreign exchange rate -2,629,301.57 -3,322,733.05 changes on cash and cash equivalents 5. Net increase in cash and cash 87,083,045.17 66,459,645.26 equivalents Add: Cash and cash equivalents, 795,285,756.38 570,184,208.96 beginning of the period 6. Cash and cash equivalents, end of 882,368,801.55 636,643,854.22 the period Legal representative: He Yong General manager: Liu Xingming Chief Financial Officer: Tang Qionglan 6. Cash Flow Statement of the Company as the Parent Unit: RMB Item Q1 2019 Q1 2018 1. Cash flows from operating activities: Proceeds from sale of commodities 828,912,698.12 852,348,438.77 and rendering of services 27 Tax rebates 25,745,430.08 14,547,468.34 Cash generated from other operating 13,446,529.19 21,047,144.75 activities Subtotal of cash generated from 868,104,657.39 887,943,051.86 operating activities Payments for commodities and 636,614,939.04 595,935,971.69 services Cash paid to and for employees 133,856,759.29 112,947,808.95 Taxes paid 24,163,638.62 28,100,581.05 Cash used in other operating 49,548,623.78 44,022,548.07 activities Subtotal of cash used in operating 844,183,960.73 781,006,909.76 activities Net cash generated from/used in 23,920,696.66 106,936,142.10 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment 51,000,000.00 10,000,000.00 Return on investment 21,865,890.28 10,035,191.59 Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets Net proceeds from the disposal of subsidiaries and other business units Cash generated from other investing activities Subtotal of cash generated from 72,865,890.28 20,035,191.59 investing activities Payments for the acquisition of fixed assets, intangible assets and other 12,531,880.47 72,690,980.48 long-lived assets Payments for investments Net payments for the acquisition of subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 12,531,880.47 72,690,980.48 activities Net cash generated from/used in 60,334,009.81 -52,655,788.89 investing activities 3. Cash flows from financing activities: Capital contributions received 28 Borrowings obtained Net proceeds from the issuance of bonds Cash generated from other financing activities Subtotal of cash generated from financing activities Repayments of borrowings Payments for interest and dividends Cash used in other financing activities Subtotal of cash used in financing activities Net cash generated from/used in financing activities 4. Effect of foreign exchange rate -2,601,705.96 -3,321,626.93 changes on cash and cash equivalents 5. Net increase in cash and cash 81,653,000.51 50,958,726.28 equivalents Add: Cash and cash equivalents, 747,588,730.42 502,169,100.40 beginning of the period 6. Cash and cash equivalents, end of 829,241,730.93 553,127,826.68 the period Legal representative: He Yong General manager: Liu Xingming Chief Financial Officer: Tang Qionglan II Adjustments to the Financial Statements 1. Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New Standards Governing Financial Instruments, Revenue or Leases √ Applicable □ Not applicable Consolidated balance sheet Unit: RMB Item 31 December 2018 1 January 2019 Adjustment Current assets: Monetary capital 896,646,719.87 896,646,719.87 Trading financial assets N/A 6,000,000.00 6,000,000.00 Notes and accounts 941,927,209.55 941,927,209.55 receivable 29 Including: Notes 107,506,613.50 107,506,613.50 receivable Accounts 834,420,596.05 834,420,596.05 receivable Prepayments 13,811,905.18 13,811,905.18 Other receivables 21,745,690.53 21,745,690.53 Including: Interest 5,152,364.04 5,152,364.04 receivable Inventories 767,319,599.00 767,319,599.00 Other current assets 864,093,663.30 864,093,663.30 Total current assets 3,505,544,787.43 3,511,544,787.43 6,000,000.00 Non-current assets: Available-for-sale financial 897,716,590.20 N/A -897,716,590.20 assets Long-term equity 182,458,559.69 182,458,559.69 investments Investments in other equity N/A 891,716,590.20 891,716,590.20 instruments Fixed assets 512,106,912.39 512,106,912.39 Construction in progress 224,624,447.16 224,624,447.16 Intangible assets 172,725,277.21 172,725,277.21 Long-term prepaid 6,852,985.35 6,852,985.35 expense Deferred income tax assets 37,831,704.45 37,831,704.45 Other non-current assets 48,305,435.42 48,305,435.42 Total non-current assets 2,082,621,911.87 2,076,621,911.87 -6,000,000.00 Total assets 5,588,166,699.30 5,588,166,699.30 Current liabilities: Trading financial liabilities N/A 477,200.00 477,200.00 Financial liabilities at fair 477,200.00 N/A -477,200.00 value through profit or loss Notes and accounts 985,280,820.92 985,280,820.92 payable Advances from customers 43,850,788.04 43,850,788.04 Payroll payable 96,088,621.59 96,088,621.59 Taxes payable 25,354,466.37 25,354,466.37 Other payables 43,115,011.68 43,115,011.68 30 Total current liabilities 1,194,166,908.60 1,194,166,908.60 Non-current liabilities: Deferred income 155,000.31 155,000.31 Deferred income tax 52,530,509.00 52,530,509.00 liabilities Total non-current liabilities 52,685,509.31 52,685,509.31 Total liabilities 1,246,852,417.91 1,246,852,417.91 Owners’ equity: Share capital 1,399,346,154.00 1,399,346,154.00 Capital reserves 158,608,173.07 158,608,173.07 Other comprehensive 297,667,872.80 297,667,872.80 income Surplus reserves 809,456,186.20 809,456,186.20 Retained earnings 1,654,181,032.39 1,654,181,032.39 Total equity attributable to owners of the Company as 4,319,259,418.46 4,319,259,418.46 the parent Non-controlling interests 22,054,862.93 22,054,862.93 Total owners’ equity 4,341,314,281.39 4,341,314,281.39 Total liabilities and owners’ 5,588,166,699.30 5,588,166,699.30 equity Notes to the adjustment The Ministry of Finance enacted the revised Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments (CK [2017] No. 7), Accounting Standards for Business Enterprises No. 23-Transfer of Financial Assets (CK [2017] No. 8), Accounting Standards for Business Enterprises No. 24-Hedge Accounting (CK [2017] No. 9) and Accounting Standards for Business Enterprises No. 37-Presentation of Financial Instruments (CK [2017] No. 14) in 2017. The Company starts to carry out above new financial accounting standards since 1 January 2019. In line with the convergence regulation, the information of comparative period is unnecessary to be adjusted and for the difference with former standards when the new standards are carried out on the first day, the beginning retained earnings and other comprehensive income for the Reporting Period shall be retroactively adjusted. Those originally recorded into “available-for-sale financial assets” are currently recorded into “trading financial assets” and “investments in other equity instruments”; those originally recorded into “Financial liabilities at fair value through profit or loss” are currently recorded into “trading financial liabilities”. Balance sheet of the Company as the parent Unit: RMB Item 31 December 2018 1 January 2019 Adjustment Current assets: Monetary capital 848,949,693.91 848,949,693.91 31 Trading financial assets N/A 6,000,000.00 6,000,000.00 Notes and accounts 900,843,331.26 900,843,331.26 receivable Including: Notes 104,945,398.61 104,945,398.61 receivable Accounts 795,897,932.65 795,897,932.65 receivable Prepayments 25,444,445.34 25,444,445.34 Other receivables 43,538,848.72 43,538,848.72 Including: Interest 5,152,364.04 5,152,364.04 receivable Inventories 692,681,479.03 692,681,479.03 Other current assets 856,504,839.81 856,504,839.81 Total current assets 3,367,962,638.07 3,373,962,638.07 6,000,000.00 Non-current assets: Available-for-sale financial 897,716,590.20 N/A -897,716,590.20 assets Long-term equity 466,251,661.95 466,251,661.95 investments Investments in other equity N/A 891,716,590.20 891,716,590.20 instruments Fixed assets 427,947,613.74 427,947,613.74 Construction in progress 222,570,503.14 222,570,503.14 Intangible assets 129,452,067.42 129,452,067.42 Long-term prepaid 5,106,268.25 5,106,268.25 expense Deferred income tax assets 35,908,741.15 35,908,741.15 Other non-current assets 46,852,235.42 46,852,235.42 Total non-current assets 2,231,805,681.27 2,225,805,681.27 -6,000,000.00 Total assets 5,599,768,319.34 5,599,768,319.34 Current liabilities: Trading financial liabilities N/A 477,200.00 477,200.00 Financial liabilities at fair 477,200.00 N/A -477,200.00 value through profit or loss Notes and accounts 1,134,173,851.66 1,134,173,851.66 payable Advances from customers 41,912,301.85 41,912,301.85 32 Payroll payable 84,220,746.16 84,220,746.16 Taxes payable 17,528,644.83 17,528,644.83 Other payables 114,073,355.23 114,073,355.23 Total current liabilities 1,392,386,099.73 1,392,386,099.73 Non-current liabilities: Deferred income tax 52,530,509.00 52,530,509.00 liabilities Total non-current liabilities 52,530,509.00 52,530,509.00 Total liabilities 1,444,916,608.73 1,444,916,608.73 Owners’ equity: Share capital 1,399,346,154.00 1,399,346,154.00 Capital reserves 166,211,779.15 166,211,779.15 Other comprehensive 297,672,884.34 297,672,884.34 income Surplus reserves 809,456,186.20 809,456,186.20 Retained earnings 1,482,164,706.92 1,482,164,706.92 Total owners’ equity 4,154,851,710.61 4,154,851,710.61 Total liabilities and owners’ 5,599,768,319.34 5,599,768,319.34 equity Notes to the adjustment The Ministry of Finance enacted the revised Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments (CK [2017] No. 7), Accounting Standards for Business Enterprises No. 23-Transfer of Financial Assets (CK [2017] No. 8), Accounting Standards for Business Enterprises No. 24-Hedge Accounting (CK [2017] No. 9) and Accounting Standards for Business Enterprises No. 37-Presentation of Financial Instruments (CK [2017] No. 14) in 2017. The Company starts to carry out above new financial accounting standards since 1 January 2019. In line with the convergence regulation, the information of comparative period is unnecessary to be adjusted and for the difference with former standards when the new standards are carried out on the first day, the beginning retained earnings and other comprehensive income for the Reporting Period shall be retroactively adjusted. Those originally recorded into “available-for-sale financial assets” are currently recorded into “trading financial assets” and “investments in other equity instruments”; those originally recorded into “Financial liabilities at fair value through profit or loss” are currently recorded into “trading financial liabilities”. 2. Retrospective Restatement of Previous Comparative Data due to the First Execution of any New Standards Governing Financial Instruments or Leases □ Applicable √ Not applicable 33 III Independent Auditor’s Report Indicate by tick mark whether the financial statements above have been audited by an independent auditor. □Yes √ No These financial statements have not been audited by such an auditor. The Board of Directors Foshan Electrical and Lighting Co., Ltd. 25 April 2019 34