Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Guangdong Dongfang Precision Science & Technology Co., Ltd.
Annual Report 2023
【Date of Disclosure】28 March 2024
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Message to Our Shareholders
Upon the pass of a fruitful year, we are now ready to embark on a new journey!
In 2023, the world is evolving like never before. At this historical juncture, alongside our
domestic and international partners, we have forged ahead with steadfast, pragmatic measures that
have led to 13 consecutive years of robust main business growth since our IPO.
Throughout 13 years of perseverance and resilience, from our 2011 debut on the stock market
to 2023, our operating revenue soared from RMB360 million to RMB4,746 million, multiplying by
over twelvefold; gross profit jumped from RMB89 million to RMB659 million, maintaining a
compound annual growth rate (CAGR) of 18%; and net profit attributable to our shareholders
leaped from RMB76 million to RMB433 million, achieving a CAGR of close to 16%. Today,
Dongfang Precision stands as a global powerhouse, with operations a nd assets spanning Asia,
Europe, and North America. With our base in China, we provide products and services for
customers in over 100 countries and regions. Bolstered by the synergy of worldwide resources,
leading-edge design concepts, and strong R&D capabilities, our high-end intelligent packaging
equipment division now commands approximately 15% of the global market of this industry,
the largest in China and the second largest worldwide.
Looking back, what truly fills us with pride is not merely how Dongfang Precision evolved
from a follower into a trailblazer in the industry, but also the fact that we have actively paved the
way and garnered invaluable lessons for Chinese private enterprises venturing abroad. Our efforts
include carrying out overseas M&As, and adeptly managing the subsequent integration and
optimisation of acquired foreign entities.
In 2014, we strategically acquired Fosber (now Fosber Group) in Italy, a professional
manufacturer of high-end corrugated cardboard production lines, thereby swiftly integrating
upstream and downstream sectors to assume leadership in the global industry. Subsequently, we
took over EDF, a top-ranking manufacturer of box printing and packaging equipment, and Tirua
(now Tirua Group), Spain's esteemed corrugated roller and pressure roller maker, along with
Agnati (now Qcorr), an illustrious Italian provider of corrugated cardboard production lines. These
moves culminated in a profound synergy among intelligent corrugated cardboard production lines,
intelligent corrugated box printing equipment, and auxiliary intelligent systems for these equipment.
This strategic expansion notably augmented our market share and core competencies, extended the
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reach of our industrial chain, and unlocked access to premium overseas assets, cutting-edge
technologies, and sophisticated management expertise.
Capitalising on our profound industry insights, foresight into market trends, and clear strategic
development goals, coupled with robust strategic control and industrial integration capabilities, we
have effectively integrated each of our merged and acquired businesses. This has unleashed
continuous industrial chain synergies. As exemplified by Fosber Group and Parsun Power,
following strategic empowerment by our management team, Fosber Group has surged into a phase
of rapid expansion, registering a CAGR of roughly 15% in operating revenue and 26% in net profit
between 2015 and 2023. Similarly, during 2016 to 2023, Parsun Power achieved a CAGR of around
20% in both operating revenue and net profit. Notably, Parsun Power's ChiNext IPO application has
been approved by the Shenzhen Stock Exchange.
Time will tell all. Throughout the past 13 years since our listing, we've consistently held that
fostering enduring value outweighs the chase for fleeting growth spurts. Harnessing the power of
capital for organic growth and external expansion, we've ceaselessly enhanced our prowess in
industrial integration and empowerment, steadily fortifying and expanding our core business every
step of the way.
Our relentless pursuit of long-term value, coupled with adherence to independent innovation
and active expansion, has shaped today's Dongfang Precision into an industry leader. It equips us
with the backbone to navigate the current changes and drive the i mplementation of our Fourth
Five-Year Strategic Plan, ensuring long-term, sustainable, and robust growth.
Step by step, we keep moving forward!
As an industry frontrunner, Dongfang Precision constantly heeds caution amidst prosperity. To
sustain perpetual growth momentum, building on our previous three five-year strategic plans, in
2023, we have adopted a stance that safeguards our "stable" strategic footing while concurrently
amassing "progressive" developmental impetus:
Over the past year, we exercised rigorous cost control, maintained stable operations,
concentrated on bolstering and expanding our core business, resulting in record-high revenue and
industry-leading net profit attributable to our shareholders before exceptional gains and losses for
four straight years.
Over the past year, we boosted efficiency and service quality, cemented strong ties with key
clients, and persistently delivered top-notch products and services to mid-to-large manufacturers in
the European and American markets, thereby enha ncing our brand recognition and industry sway in
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the overseas arena.
Over the past year, we intensified marketing efforts, broadened our market reach, proactively
aligned with national strategies, and fortified our presence in Belt and Road countries including
Africa, South Asia, and Southeast Asia. We supplied these regions with high-end intelligent
packaging equipment and services, thereby substantially expanding the market scope of our
business.
Over the past year, we initiated projects and ramped up production capacities, propelling the
construction of Fosber Asia’s intelligent factory sprawling across approximately 80 mu, Parsun
Power's eco-friendly, digitalised manufacturing plant and R&D centre with an annual output of
76,400 high-end water powersports products, Tirua Asia’s domestic corrugated and pressure roller
production base, and Fosber Group's new European headquarters. These endeavours reinforce
stability through advancement, laying a solid groundwork for consistent performance growth.
Over the past year, we focused on innovation, drove upgrades, and dedicated ourselves to
digital and intelligent upgrading in the industry. Leveraging next-generation technologies like IoT,
cloud computing, big data, 5G, and AI, we constructed a novel, self-reliant, secure, and controllable
industrial Internet platform. This platform extends to domestic markets in South and East China, as
well as overseas territories in Southeast Asia and Africa. And we've made significant strides in
independent R&D and innovation, breaking new ground from scratch.
A brighter future lies ahead, and our journey continues!
2023 marks the first year for Dongfang Precision's fourth five-year strategic blueprint.
Anchored by the operational guideline of “steady growth, core business concentration, and
intelligent upgrading”, we've made concrete strides in the kickoff phase, efficiently advancing
pivotal initiatives. From 2023 to 2027, we will intensify our "1+N" strategic dominance, stay rooted
in China yet embracing a worldwide outlook. While concentrating on our core business, we'll also
dynamically shape new growth trajectories harnessing the power of capital for organic growth and
external expansion.
Amid the surging tide of a new scientific and technological revolution and industrial shift, the
reshuffle of the global innovation landscape and competitive structure accelerates, mandating
China's commitment to nurturing new quality productive forces for high-quality growth. We
consistently balance the development of existing businesses through intelligent transformation and
the incubation of emerging business opportunities. To this end, we first amplify forward-thinking
R&D, spur innovation towards "intelligent, digital, and autonomous equipment", and transform
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from a mere intelligent equipment maker to a provider of comprehensive intelligent factory
solutions. Concurrently, we invest in groundbreaking, disruptive and frontier technologies to
empower domestic firms in emerging fields like AI, cloud computing and big data, thereby
continually energising the engine for high-quality development. Such measures represent not just
practical strides to expedite new quality productive force generation but also vital explorations in
forging new edges for high-quality growth.
Supported by an experienced team with profound know-how in the industry, we are confident
that we have the experience and capabilities needed to enhance strategic leadership, stimulate the
vitality for reform through “new” productive forces, and erect core competitive barriers through
"quality" productive forces. Thus, we strive to build ourselves as a "business card for the world" for
China's new quality productive forces.
We also believe that China's high-end intelligent equipment sector has just embarked on its
"golden era". We will remain steadfast in our pursuit of intelligent transformation in our long-term
business operations and technological exploration. Forging ahead towards the untapped ocean of the
high-end intelligent equipment market, we aim to chart a remarkable growth trajectory, ultimately
delivering greater returns to our investors.
Thank you!
Chairman of the Board: Tang Zhuolin
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Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the
directors, supervisors and senior manage ment of Guangdong Dongfang Precision Science &
Technology Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee that the
contents of this Report are true, accurate and complete and free of any misrepresentations,
misleading statements or material omissions, and colle ctively and individually accept legal
responsibility for such contents.
Tang Zhuolin, the Company’s legal representative, Shao Yongfeng, the Company’s Chief
Financial Officer, and Che n Nan, the Head of the Company’s Accounting Department
(equivalent to Financial Manager) hereby guarantee that the financial statements carried in
this Report are truthful, accurate and complete.
All directors of the Company attended in person the board meeting for the approval of
this Report.
The future development strategies, business plans and other forward-looking statements
me ntioned in this Report shall be deemed as uncertain plans instead of promises to investors.
Therefore, investors are reminded to exercise caution when making investment decisions.
For possible risks with respect to the Company, please refer to “(III) Possible Risks and
Countermeasures” in “XI Prospects” of “Part III Manage ment Discussion and Analysis”
herein. And investors are kindly advised to read through the aforesaid contents.
The Company planed not to distribute cash dividends, neither give away bonus shares,
nor capitalize from public reserve.
This Report has been prepared in Chinese and translated into English. Should there be
any discrepancies or misunderstandings between the two versions, the Chinese version shall
prevail.
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Table of Contents
Part I Important Notes, Table of Contents and Definitions ........................................................... 6
Part II Corporate Information and Key Financial Information ................................................. 11
Part III Manage ment Discussion and Analysis ............................................................................. 16
Part IV Corporate Governance ...................................................................................................... 90
Part V Environme ntal and Social Responsibilities ..................................................................... 122
Part VI Significant Events ............................................................................................................. 124
Part VII Share Changes and Shareholder Information ............................................................. 138
Part VIII Preference Shares .......................................................................................................... 149
Part IX Corporate Bonds .............................................................................................................. 150
Part X Corporate Financial Statement ........................................................................................ 151
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Documents Available for Reference
1. The financial statements signed and sealed by the Company’s legal representative, Chief Financial Officer,
and the person-in-charge of the financial organ.
2. The original of the Auditor’s Report sealed by the CPA firm as well as signed and sealed by the certified
public accounts.
3. All the originals of the Company’s announcements and documents that were disclosed to the public during
the Reporting Period on the media designated by the CSRC for information disclosure.
4. The 2023 Annual Report carrying the signature of the legal representative.
5. The documents above are lodged in the Securities Department of the Company, 18A, China Merchants
Plaza, 1166 Wanghai Road, Shekou, Shuiwan Community, Zhaoshang Street, Nanshan District, Shenzhen City,
Guangdong Province, China.
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Definitions
Term Definition
Guangdong Dongfang Precision Science & Technology Co., Ltd., and its
Dongfang Precision, or the “Company”
consolidated subsidiaries, except where the context otherwise requires
The corrugated box packaging machinery division of Guangdong Dongfang
Dongfang Precision (China)
Precision Science & Technology Co., Ltd.
Fosber Italy Fosber S.p.A.
Fosber Asia Guangdong Fosber Intelligent Equipment Co., Ltd.
Fosber America Fosber America, Inc.
Fosber Tianjin Fosber Machinery (Tianjin) Co., Ltd.
The business group including subsidiaries Fosber Italy, Fosber America, Qcorr,
Fosber Group
Tirua Group, etc.
Tirua Group Tirua Slu
Tirua America Tirua America Inc.
Tirua Asia Tirua (Guangdong) Intelligent Equipment Manufacturing Co., Ltd
QCorr QuantumCorrugated S.r.l.
Dongfang Precision (Europe)/EDF EDF Europe S.r.l.
Dongfang Precision (Netherland) Dong Fang Precision (Netherland) Cooperatief U.A.
Dongfang Precision (HK) Dong Fang Precision (HK) Limited
Wonder Digital Shenzhen Wonder Digital Technology Co., Ltd.
Parsun Power Suzhou Parsun Power Machine Co., Ltd.
Suzhou High-Tech Zone Jinquan Business Management Partnership (Limited
Suzhou Jinquan
Partnership)
Shunyi Investment Suzhou Shunyi Investment Co., Ltd.
Jaten Robot Guangdong Jaten Robot & Automation Co., Ltd.
Yineng Investment Hainan Yineng Investment Co., Ltd.
Yineng International Dongfang Yineng International Holding Co., Ltd.
Dongfang Digicom Dongfang Digicom Technology Co., Ltd.
Dongfang Digicom (Guangdong) Dongfang Digicom Technology (Guangdong) Co., Ltd.
Corrugated cardboard is a multi-layer paper-bonding object composed of at least
one sandwich layer of wavy medium (commonly known as "corrugated paper",
Corrugated cardboard
"corrugated medium paper", "corrugated paper medium" and "corrugated base
paper") and one layer of cardboard (also known as "liner board").
Corrugated box is a rigid paper container made of corrugated boards through die
Corrugated box cutting, indenting, nailing, or gluing. Corrugated box is one of the most widely
used packaging containers in modern business and trade.
Corrugated box printing and packaging production Corrugated box printing and packaging production line equipment include
line equipment corrugated box printing and packaging line and stand-alone products that
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integrates pre-feeding, printing, grooving, die cutting, forming and packaging
functions in whole or in part, which is highly functionally integrated, highly
automated and highly technical, can save the capital and manpower investment,
reduce workers' workload and improve the production efficiency of box
manufacturers, and requires equipment manufacturers to be highly competent in
design, technological innovation, assembly and finishing of parts.
Corrugated cardboard production lines are assembly lines comprising
corrugating, gluing, agglutinating, bundle breaking, dimension board cutting and
output processes, which are used to produce and process corrugated boards.
A corrugated cardboard production line has two independent process sections as
the wet section and the dry section. The wet section, composed of the base paper
stand, auto splicer, preheat pre-regulator, single-face corrugator, feeding bridge,
Corrugated cardboard production lines glue machine and double facer, is used to make corrugated based paper into
three-layer, five-layer, and seven-layer corrugated boards of different corrugated
combinations. The dry section, composed of the rotary shear, slitter indenter,
cut-off knife and stacker, is used to slit, indent, cut off and stack corrugated
boards as ordered.
Corrugated cardboard production lines are key production equipment for
corrugated board and box manufacturers.
Pre-printing and post-printing intelligent automatic packaging machinery refers
to equipment that is compatible with the corrugated box printing line or
Pre-printing and post-printing intelligent automatic
stand-alone products and can provide functions related to pre-printing and
packaging machinery
post-printing processes of corrugated box printing and packaging. It includes the
pre-feeder, stripper conveyor, intelligent stacker, and folder gluer.
Outboard motors are a kind of detachable power units that are mounted on the
Outboard motors
stern plate of a boat to drive the boat to sail.
General utility small gasoline motors are a kind of thermo-dynamic machinery
of 20kW power or less with a wide range of applicability. It is characterized by
small size, light weight, and easy operation, and is usually used as a power
General utility small gasoline motors engine for a variety of terminal products. By the structure of engine and
principle of work, general utility small gasoline motors can be divided into
two-stroke general utility small gasoline motors and four-stroke general utility
small gasoline motors.
CSRC China Securities Regulatory Commission
SZSE, or the “Stock Exchange” Shenzhen Stock Exchange
Expressed in the Chinese currency of Renminbi, expressed in tens of thousands
RMB yuan, RMB’0,000
of Renminbi
The “Reporting Period” or “Current Period” The period from 1 January 2023 to 31 December 2023
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Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name Dongfang Precision Stock code 002611
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 广东东方精工科技股份有限公司
Abbr. 东方精工
Company name in English (if
Guangdong Dongfang Precision Science & Technology Co., Ltd
any)
Abbr. (if any) Dongfang Precision
Legal representative Tang Zhuolin
(Office Building, Plant A, Plant B) 2 Qiangshi Road, Shishan Town, Nanhai District, Foshan City,
Registered address
Guangdong Province, China
Previous registered address N/A
Zip code 528225
18A, China Merchants Plaza, 1166 Wanghai Road, Shekou, Shuiwan Community, Zhaoshang
Office address
Street, Nanshan District, Shenzhen City, Guangdong Province, China
Zip code 518000
Company website http://www.df-global.cn/
Email address ir@vmtdf.com
II Contact Information
Board Secretary Securities Representative
Name Feng Jia Zhu Hongyu
18A, China Merchants Plaza, 1166 18A, China Merchants Plaza, 1166
Wanghai Road, Shekou, Shuiwan Wanghai Road, Shekou, Shuiwan
Office address Community, Zhaoshang Street, Nanshan Community, Zhaoshang Street, Nanshan
District, Shenzhen City, Guangdong District, Shenzhen City, Guangdong
Province, China Province, China
Tel. 0755-36889712 0755-36889712
Fax 0755-36889822 0755-36889822
Email address ir@vmtdf.com ir@vmtdf.com
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III Media for Information Disclosure and Place where this Report Is Lodged
Newspapers designated by the Company for
China Securities Journal, Shanghai Securities News, and Securities Times
information disclosure
Website designated by the CSRC for publication of
http://www.cninfo.com.cn
this Report
Securities Department of the Company, 18A, China Merchants Plaza, 1166
Place where this Report is lodged Wanghai Road, Shekou, Shuiwan Community, Zhaoshang Street, Nanshan
District, Shenzhen City, Guangdong Province, China
IV Change to Company Registered Information
Unified social credit code 914406002318313119
Change to the principal activities of the
Unchanged
Company since its listing (if any)
Every change of controlling shareholder
Unchanged
since incorporation (if any)
V Other Information
The independent auditor hired by the Company:
Name of independent auditor Ernst & Young Hua Ming LLP
18/F, Ernst & Young Tower, 13 Pearl River East Road, Tianhe District, Guangzhou City, China
Office address (the Headquarters: Rooms 01-12, 17/F, Ernst & Young Tower, Oriental Plaza, 1 East Chang An
Avenue, Dongcheng District, Beijing, China)
Accountants writing signatures Feng Xingzhi and Hu Chuan
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2023-over-2022
2023 2022 2021
change (%)
Operating revenue (RMB) 4,745,737,321.83 3,892,708,509.64 21.91% 3,524,734,783.94
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Net profit attributable to the listed
433,240,237.44 447,177,897.38 -3.12% 467,333,661.79
company’s shareholders (RMB)
Net profit attributable to the listed
company’s shareholders before 364,739,306.60 398,376,648.08 -8.44% 380,806,233.00
exceptional gains and losses (RMB)
Net cash generated from/used in
487,180,738.66 506,294,460.95 -3.78% 306,659,276.02
operating activities (RMB)
Basic earnings per share (RMB/share) 0.36 0.37 -2.70% 0.35
Diluted earnings per share
0.36 0.37 -2.70% 0.35
(RMB/share)
Weighted average return on equity (%) 10.14% 11.72% -1.58% 11.72%
Change of 31
December 2023 over
31 December 2023 31 December 2022 31 December 2021
31 December 2022
(%)
Total assets (RMB) 7,538,222,570.02 6,928,577,115.10 8.80% 6,357,168,835.19
Equity attributable to the listed
4,511,690,693.97 4,063,966,310.23 11.02% 3,681,970,298.39
company’s shareholders (RMB)
Indicate whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional gains and
losses was negative for the last three accounting years, and the latest independent auditor’s report indicated that there was uncertainty
about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional gains and
losses was negative.
□ Yes √ No
VII Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
Accounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.
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VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 907,101,141.80 1,175,505,311.92 1,243,655,954.95 1,419,474,913.16
Net profit attributable to the listed
84,973,342.92 121,176,262.38 65,710,031.94 161,380,600.20
company’s shareholders
Net profit attributable to the listed
company’s shareholders before 51,961,918.89 110,563,973.51 83,299,830.01 118,913,584.19
exceptional gains and losses
Net cash generated from/used in
104,429,591.30 87,006,475.22 88,847,907.60 206,896,764.54
operating activities
Indicate whether any of the quarterly financial data in the table above or their summations differs materially from what have been
disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2023 2022 2021 Note
Gain or loss on disposal of non-current
assets (inclusive of impairment allowance 694,491.43 -351,386.78 -65,995.13
write-offs)
Government grants through profit or loss
(exclusive of government grants given in the
Company’s ordinary course of business at 15,747,293.82 20,933,377.44 14,700,007.84
fixed quotas or amounts as per the
government’s uniform standards)
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
60,354,587.25 35,196,327.83 73,435,063.51
assets and liabilities and other debt
investments (exclusive of the effective
portion of hedges that arise in the
Company’s ordinary course of business)
Reversal of provision for impairment of
receivables individually tested for 516,000.00
impairment
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Non-operating income and expenses other
-10,155,229.58 1,761,273.49 4,779,490.65
than the above
Less: Income tax effects -3,743,887.17 7,277,576.78 6,017,410.70
Non-controlling interests effects (net
2,400,099.25 1,460,765.90 303,727.38
of tax)
Total 68,500,930.84 48,801,249.30 86,527,428.79 --
Details of other profit and loss items that meet the definition of non-recurring profit or loss.
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the 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 in the Reporting Period.
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Part III Management Discussion and Analysis
I Principal Operations of the Company in the Reporting Period
(I) Industries in which the Company principally operates
With “intelligent equipment manufacturing” as its primary strategic focus, Dongfang Precision concentrates
on the manufacturing of high-end intelligent equipment. Its principal operations include “intelligent packaging
equipment” and “water powersports equipment”. The “intelligent packaging equipment business” consists of
smart corrugated packaging equipment, digital printers, and industrial Internet industry solutions.
Since its IPO on the Shenzhen Stock Exchange in 2011, Dongfang Precision has grown into a global leader
in smart corrugated packaging equipment, a leading domestic provider of digital printers, and a top-ranking
domestic supplier of water powersports equipment.The Company is developing its industrial Internet industry
solutions business to achieve an upgrading of a digital intelligent high quality development as an intelligent
equipment manufacturer .
According to the Classification of Strategic Emerging Industries (2018) and the Industrial Classification for
National Economic Activities (GB/T 4754-2017), the industries in which the Company principally operates are
shown below:
The Company’s Principal Business Divisions and Their Industries
Strategic Principal
emerging Industry business Primary products and their applications
industry division
1. Corrugated cardboard production lines: The corrugated cardboard
production lines are used for the production of corrugated cardboards of
different specifications, are the core machinery for corrugated packaging
production, and are widely used by medium and large enterprises
(cardboard plants) that produce corrugated cardboards in the corrugated
packaging industry.
Smart 2. Corrugated box printing and packaging production line equipment: The
Intelligent Specialised corrugated box printing and packaging production line equipment is used
corrugated
manufacturing equipment to produce and process corrugated cardboards into corrugated boxes of
packaging
equipment manufacturing different specifications and is the back-end machinery of the corrugated
equipment
cardboard production lines. Of the machinery, the printing unit is the core
machinery, of which the peripheral equipment units includes the paper
feeder unit, slotting and die cutter unit, stripper transfer unit, FFG and
stitching unit, and the counting and palletizer unit. The corrugated box
printing and packaging production line equipment is widely used by
various enterprises (box plants) that produce corrugated boxes in the
corrugated packaging industry.
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Strategic Principal
emerging Industry business Primary products and their applications
industry division
Digital printing is a printing method that generates sheet-by-sheet variable
graphic images from digital information. With the help of printhead ink,
digital printing enables the formation of the image directly on the printing
stocks and can indirectly transmit the colour and auxiliary substances to the
print stocks to form the presswork. Digital printing can meet the
Digital requirement for industrial production.
printers
Wonder Digital, one of the subsidiaries controlled by Dongfang Precision,
is a leading supplier of digital printers in China. It is committed to
providing digital printers for industries such as paper packaging (colour
printing & pre-printing), advertising, home decoration, building materials,
and label printing.
Build the Industrial Internet Platform for industry, provide end-to-end
solutions and operational services that range from intelligent machinery,
Industrial Industrial integrated management of production and operations of enterprises,
Software and
Internet and Internet intelligent business decision-making, to agile corporate reforms and
information
supporting industry innovation for corporate customers from more than the paper packaging
services
services solutions industry, and promote the step-by-step digital transformation of the
business with a focus on essentials such as “connecting + data processing
and modeling + data intelligence applications”.
Railway, Outboard motors are a kind of detachable power units that are mounted on
shipping, the stern plate of a boat to drive the boat to sail and can be applied to boats
aviation and shorter than 24m in inland rivers, lakes, and coastal waters. They are
Manufacturing Water
other widely used in water recreation, fishing, water traffic, emergency rescue,
of ship auxiliary powersports
transport shore landing and maritime patrol.
equipment equipment
equipment
manufacturing
industries
(II) Industry overview
1. The Industries to which the Company's Intelligent Packaging Equipment Business Segment Belongs
1.1 Demand side—customers
The intelligent packaging equipment division of the Company specializes in “smart corrugated packaging
equipment” and “digital printers”. This division primarily serves B-end customers such as corrugated cardboard
and corrugated box manufacturers. As a machinery supplier, the Company provides various single machine and
complete production line products for cardboard and box production, which makes the Company depend on the
development of the downstream paper packaging industry to some extent.
End demand for corrugated packaging is growing: The corrugated box field is one of the major fields of
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the paper packaging industry, of which the end demand is relevant to the prosperity of consumption and business
activities. Corrugated packaging products are used in a vast number of fields, including food and beverage,
household chemicals, electronic products, and e-commerce express delivery, and are inelastically demanded by
consumers. Electronic products, food, beverage, and express delivery take up 26%, 20%, 21%, and 13%
respectively of the downstream application market of paper packaging.
Over the past few years, the scale of China’s express corrugated packaging market has been on the rise. By
the forecast of Qianzhan Industry Research Institute, the scale of China’s express corrugated packaging market
will continue to rise in the upcoming years and is estimated to reach RMB86.4 billion by 2025 (CAGR for 2019 to
2025: Approximately 15%). Terminal markets, including the express, electronics, and household chemicals
terminal markets, show an increasing demand for corrugated box and board packaging, which will drive the
expansion of the capacity of corrugated packaging enterprises and thus increase the demand for corrugated
packaging machinery, benefiting the machinery manufacturers.
Between 2017 and 2023, the domestic express business recorded rapid growth, with a compound annual
growth rate (CAGR) of approximately 27%. Data from the State Post Bureau showed that the total volume of
domestic express delivery for 2023 was 162.48 billion pieces, up 16.8% year-on-year.
Trend of China's Express Business Volume Above Scale, 2016-2023
1800 60%
1624.8
1600
50%
1400
1200 1083.0 1105.9 40%
1000
833.6 30%
800
635.2
600 507.1 20%
400.6
400 312.8
10%
200
0 0%
2016 2017 2018 2019 2020 2021 2022 2023
China's Express Business Volume Growth rate YOY
Guided by the “large-scale equipment renewal” policy, a swift acceleration in equipment upgrades is
anticipated within the domestic corrugated packaging sector.
In February 2024, the Central Financial and Economic Affairs Commission held its fourth meeting to
promote a new round of large-scale equipment renewal and consumer goods trade-in, explicitly mentioning the
need to “promote the renewal and technological transformation of various types of production equipment and
service equipment”. On March 1, the State Council executive meeting considered and passed the Issuing the
Action Plan for Promoting Large-scale Equipment Renewals and Consumer Goods Trade-ins, proposing to
“promote the proportion of advanced production capacity to continue to increase”.
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Over the years, China's corrugated packaging sector has largely consisted of numerous small- and
medium-sized box manufacturers dominated by low-end production capacities, leading to a highly decentralised
market and relatively low industry consolidation. Responding to the Party Central Committee and State Council's
“large-scale equipment renewal” policy directive, the corrugated packaging industry anticipates a heightened pace
of equipment modernisation throughout the 14th Five-Year Plan period, with an expected surge in medium- to
high-end production capacity proportions.
With the continuous development of the downstream end consumption industry in China, the requirements of
corporate customers for corrugated boxes gradually increase. In the corrugated packaging industry, market
concentration and the phase-out of low-end production capacity is an inevitable trend, due to market competition,
capacity upgrading, M&A, etc. It is estimated that the line machinery that is more intelligent and productive will
replace the existing corrugated cardboard production lines and corrugated box printing and packaging production
line equipment in the upcoming five to ten years. By statistics, there are over 6,000 existing corrugated cardboard
production lines in the domestic market, and more corrugated box printing and packaging machinery.
Data show that the domestic market share of the 15 listed corrugated packaging companies in China
combined has risen from 5.7% in 2017 to 10.1% in 2022, and further to 11.3% in the first half of 2023. This
indicates the continued concentration of the domestic corrugated packaging industry and the steadily increasing
market share of major manufacturers.
Data from SCI99.COM show that, as of the end of November 2023, China's corrugated cardboard production
capacity grew against the trend. A corrugated cardboard market analyst at SCI99.COM said that in 2023, the
production capacity of China's corrugated cardboard industry was still in the midst of a new expansion cycle, with
new capacity constantly being put in place and the industry's supply capacity constantly being increased.
Digital and intelligent upgrading of the paper packaging and printing industry bring new development
opportunities. The traditional production mode has caused domestic paper packaging and printing enterprises to
be overly dependent on skilled technicians at critical positions and slow to identify the outdated management
mode. The “strategy of robot assembling line” and “smart factory” are increasingly recognized by the industry.
Amid intelligent manufacturing, the paper packaging and printing industry will usher in industrial upgrading and
transformation. Additionally, leading packaging enterprises, including Xiamen Hexing Packaging Printing Co.,
Ltd. (HXPP), MYS Group Co. Ltd. (MYS), Shenzhen YUTO Packaging Technology Co., Ltd., and Shenzhen
Jinjia Group Co., Ltd., have pushed ahead with Internet-based development in recent years by entering into
intelligent manufacturing, cloud printing, or other markets, expected to launch a revolution in the Internet-based
development of the paper packaging and printing industry and injecting new impetus into industry integration.
Concurrently, amid intelligent manufacturing and Internet-based packaging, leading enterprises engaged in
corrugated packaging machinery are also expected to embrace new development opportunities.
Overseas demand is growing steadily: In recent years, corrugated packaging markets in Europe and the US
have operated at high levels due to factors like global supply chain restructuring, onshoring of manufacturing in
Europe and the US, and increased overseas consumer online spending.
Based on the annual and quarterly data of major listed corrugated packaging companies in Europe and the
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US, capex of these companies continued to hit record highs in H1 2023. According to China Customs statistics,
China's exports of printing equipment totaled USD3.176 billion in 2023, up 2% YoY, with the figure being
USD3.03 billion in December alone, up 5% YoY.
In recent years when environmental pollution becomes more and more serious, growing environmental
awareness has led to “plastic bans and restrictions” across the world, providing a major boost to paper as an
alternative to plastic. England announced a ban on single-use plastics starting October 2023, covering items like
disposable plastic plates, trays, bowls and utensils. France is phasing in bans on single-use plastic packaging for
around 30 fruits and vegetables starting January 2022. The U.S. Department of the Interior announced that
single-use plastics will be gradually phased out in national parks and other public lands by 2032. The global green
packaging market is projected to grow from USD262.27 billion in 2023 to USD381.98 billion in 2028, with a
compound annual growth rate of 7.81% during the forecast period (2023-2028).
The corrugated cardboard produced by corrugated cardboard production lines is used to make various
corrugated boxes, corrugated cartons and other corrugated packaging materials, which are rigid consumer
products in European and American countries. According to Statista data, the US e-commerce market is expected
to grow at a compound annual growth rate of 12.7% from 2017 to 2027. The philosophy of “sustainability” is
gaining ground in the European and US consumer goods packaging markets. With the growing trend of "replacing
plastics with paper" in the packaging industry, demand for corrugated packaging materials in the European and
US consumer goods markets continues to grow steadily, helping to drive demand for corrugated packaging
production line equipment.
1.2 Supply side——the Company’s presence in the industry
A． World-leading comprehensive strength
Corrugated cardboard production lines: Major manufacturers of corrugated cardboard production lines
around the world include Fosber Group, BHS (Germany), Marquip (a wholly-owned subsidiary of the American
Barry-Wehmiller), and J.S. Machine. Among them, Fosber Group and its major rival from Germany, BHS, lead
the others and are leaders in the global middle- and high-end corrugated cardboard production line field. Fosber
Group holds approximately 30% of the global middle- and high-end corrugated cardboard production line market
and more than 50% of the North American market.
Corrugated & pressure rollers, key components of corrugated cardboard production lines: The subsidiary
Tirua Group has more than 40 years of experience in the corrugated and pressure roller segment and is renowned
in Europe as a world-leading specialist in this segment.
Corrugated box printing and packaging production line equipment: Major manufacturers in this field include
Dongfang Precision, Bobst (Switzerland), Gopfert (Germany), Ward (a wholly-owned subsidiary of the American
Barry-Wehmiller), Ding Long (Shanghai), and Guangzhou Keshenglong. Dongfang Precision is an industry leader
in China and is competitive with the global industry leader, Bobst, from Switzerland. With an advantage in global
resource coordination, leading design concept, excellent overall R&D strength, and a product system featuring
complete categories and rich specifications, the Company can produce products that meet dozens of specifications
and different market positioning, covering fixed/open-close type, top printing/bottom printing, and complete
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production line (inline) products/single machine, and has the completest product lines and richest product base of
the corrugated box printing and packaging production line equipment worldwide.
Digital printers: Major manufacturers include HP, EFI, Koenig & Bauer Durst, Wonder Digital, Hanhua
Gongye, and Atexco, among others. Wonder Digital, a majority-owned subsidiary of Dongfang Precision, has
been specializing in the development and manufacturing of digital printers for 13 years, and is a leader in the
domestic digital printer industry. It takes the lead among global suppliers of digital printers in applying high-speed
inkjet printing technology to corrugated packaging and is committed to extending digital printing technology to
such fields as paper packaging (colour printing & pre-printing), advertising, home furnishing, building materials,
and label printing.
In conclusion, Dongfang Precision leads the world in terms of its comprehensive strength in smart corrugated
packaging equipment business and can provide downstream customers such as cardboard plants and box plants
with “one-stop” machinery and service support that covers each production process, including corrugated
cardboard production, corrugated box production, and pre-printing and post-printing production processes, and
different technology roadmaps, including flexographic printing and digital printing.
The value of the global corrugated packaging equipment market is estimated to be about RMB30-40
billion. In terms of operating revenue, Dongfang Precision accounts for approximately 15% of the global
corrugated packaging equipment market, ranking first among domestic enterprises of the same type and
second in the global market.
B. The rapid development of digital printing brings more development opportunities for the industry.
According to the latest report The Future of Inkjet Printing to 2027 by Smithers Pira, the market value of
inkjet printing in graphic printing and package printing globally reached USD86.8 billion in 2022. The inkjet
printing market has grown strongly over the past 5 years. Total inkjet printing output in 2022 was 46.2% higher
compared to 2017, with printed volume growing by over two-thirds. The report forecasts that growth of inkjet
printing in packaging will be most rapid from 2022 to 2027, with expected compound annual growth rates of 17.7%
by shipment quantity and 16.3% by value.
The main competitive edges of the digital printing technology of Wonder Digital, a majority-owned
subsidiary of Dongfang Precision, are as follows:
(1) Advanced technology and a wide range of products
Digital printing adopts inkjet printing technology. It can be divided into UV printing (including colour
printing & pre-printing, with printing effects close to colour offset printing) and water-based ink printing
(including colour printing & pre-printing, with water-based dye/pigment inks, etc.) in terms of the ink type and
printing effects. With continuous improvements in technology, the printing effects of Wonder Digital’s WD200++
digital printer series approach those of traditional HD water-based ink printing, while the printing effects of
Wonder Digital’s WDUV200++ digital printer series rival those of traditional colour offset printing.
(2) Integrated digital solutions that feature human-machine interaction and an integrated system
Wonder Digital’s digital printers feature high levels of system integration and human-machine interaction in
product design and technical implementation. Compared to traditional package printers, they are more
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user-friendly and easier-to-operate. Wonder Digital’s digital printers can be operated after simple training, with
just one person needed to operate a multi-pass digital printer and two to run a single-pass inline for mass
production.
(3) Convenient, flexible and efficient
Digital printing enjoys an absolute advantage in small and medium batches of printing and urgent printing
needs as it saves tedious processes, such as platemaking, imposition, and colour calibration. It enables electronic
documents generated via typesetting software, design software, and office applications to be directly output to
digital printers. Moreover, digital printing enables one-sheet, flexible printing, which cannot be done by traditional
printing.
Additionally, digital printing enables a more flexible printing method that is, modifying while printing, and
vice versa, enabling “zero stock”. Such a flexible and quick printing method has strengthened the competitiveness
of customers in a competitive environment where every minute counts. With regard to pattern design, platemaking
in traditional printing is not required in digital printing, allowing more freedom for design and enabling designers
to give full play to their professionalism and tailor products to customers’ needs.
2. The industry to which the company's industrial Internet industry solutions business belongs
According to the Classification of Strategic Emerging Industries (2018), Dongfang Precision’s “industrial
Internet industry solutions” business division falls under the “industrial Internet and supporting services”
industry.
Policy side: The Guiding Opinions of the State Council on Deepening the “Internet plus Advanced
Manufacturing” and Developing the Industrial Internet released by the State Council in 2017 marked China’s
official entry into digital development from information-based development in terms of industries. “Accelerate
the development of the industrial Internet” was proposed for the first time in the report on government work in
2018 and became a frequent visitor in the reports on government work for the next five years. In 2020, the
National Development and Reform Commission stated that, as one of the new network infrastructure types, the
industrial Internet is a part of the new infrastructure. Under the guidance of a range of policies, the industrial
Internet and smart factory have become the strategic development orientation of the transformation and upgrading
of China’s manufacturing.
Market side: China is the only country in the world whose industries cover all industrial categories in the
United Nations’ industrial classification. Concurrently, it is expected to grow into the world’s largest industrial
digitalization market. For the current manufacturing industry of China, digital transformation is no longer an
“option” but a “compulsory course” that is critical to its survival and long-term development.
As the manufacturing sector enters a “digital and intelligent” era, an increasing number of manufacturing
enterprises have realized that buying production equipment, enterprise resource planning (ERP) systems, or
manufacturing executive systems (MES) cannot meet the systematic requirements of intelligent manufacturing.
By contrast, industrial Internet platforms can systematically resolve all critical issues that cannot be handled
through traditional means. According to the Bluebook on the Digital Transformation of Enterprises--Empowering
the Low-carbon and Green Transformation of the Real Economy with New IT released by the China Academy of
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Information and Communications Technology, after relevant manufacturing enterprises complete digital
transformation, on average, their production efficiency will be boosted by 37.6%, their operating expenses will be
lowered by 21.2%, and their energy utilisation rate will be improved by 16.1%. Concurrently, with the rapid
development and continuous iteration of the new-generation information technology, the cost of digital
transformation of enterprises is gradually decreasing, and more and more industrial enterprises will implement
industrial Internet-based digital transformation.
According to the data released by Frost & Sullivan, the scale of the market of industrial Internet platforms
and relevant solutions in China by 2025 is estimated to reach RMB193.12 billion. Between 2021 and 2025, the
CAGR of the market of industrial Internet platforms and relevant solutions in China is approximately 45.3%.
The Scale of the Market of Industrial Internet Platforms and Relevant Solutions and Forecast between 2020 and
2025
2,500 RMB'00 million
2,000 1,931.2
1,500
1,301.6
1,000 885.9
601.3
500 432.8
302.4
0
2020 2021 2022E 2023E 2024E 2025E
Supply side:According to the White Paper on the Economic Development of the Industrial Internet Industry
in China (2022), participants in the construction of industrial Internet platforms in China are diversified. Leading
manufacturing enterprises, information and communications enterprises, and Internet-based enterprises build
industrial Internet platforms in different dimensions and from different perspectives based on their own
comparative advantages, enabling China’s industrial Internet industry to enjoy industrial enterprises, ICT
enterprises, and Internet enterprises at the same time.
The key technologies and industries that the industrial Internet involves are extensive and complex and can
hardly be fully covered by enterprises. Thus, developing the industrial Internet by relying on industrial
manufacturing enterprises becomes a typical development path of industrial Internet enterprises, such as Root
Cloud, Midea Cloud, and Baosight. In the packaging field, major manufacturers that provide industrial
Internet-related products and solutions services include Yunyin, Dongfang Digicom, and wantit.
The subsidiary Dongfang Digicom, carrying Dongfang Precision’s missions of expanding into the industrial
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Internet industry and implementing “digital and intelligent transformation strategies”, was established in 2020.
With the vision “to become a world-leading provider of industrial Internet industry solutions”, Dongfang Digicom
is engaged in building industrial Internet platforms for industries using new-generation information technologies,
such as the IoT, cloud computing, big data, and artificial intelligence to facilitate digital and intelligent upgrading.
2. The Industries to which the company's water power products segment belongs
2.1 Demand side——customers
The outboard motors are the subsidiary Parsun Power’s main water powersports products. Outboard motors
are the key auxiliary equipment for small- and medium-sized ships and are characterized by their compact
structures, light weights, convenient installation and maintenance, easy operations, and low noise. They are widely
used in water recreation and sports, fishing, water traffic, emergency rescue, shore landing, and maritime patrol.
Applications of Parsun Power’s Outboard Motors
Field Scenario Example
Recreational
Recreational fishing, sailing and
water sports
Fishing, water
traffic and
Commercial
waterway
maintenance
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Emergency rescue
and maritime
Official and patrol
military Beach landing and
water
reconnaissance
In terms of the global market, according to a report released by Global Market Insights Research Private
Limited (GMI), the global sales volume of outboard motors is expected to reach 914,800 in 2023 and 1.171
million in 2030; and the global market value of outboard motors is expected to reach USD11.093 billion in 2023
and USD15.975 billion in 2030, with low-horsepower and medium- and high-horsepower outboard motors taking
up 20.28% and 79.72% respectively of the market. Outboard motors enjoy a vast global market. With global
economic growth, personal income increase, and the change in personal consumption habits, the global outboard
motor market trends toward stable growth. Worldwide, the outboard motor industry is dominated by Japanese and
American brands, including Yamaha (a Japanese outboard motor brand under Yamaha Motor) and Mercury (an
American outboard motor brand under Bentfield Group). Compared with major international competitors, Parsun
Power continues to capture market share in Europe, the United States and other developed countries, supported by
its cost-effective advantage of similar product performance and obvious price advantage.
In terms of the Chinese market, according to GMI’s report, the sales volume of outboard motors in China is
expected to reach 45,500 in 2023 and 75,800 million in 2030; and the market value of outboard motors in China is
expected to reach USD306 million in 2023 and USD588 million in 2030, with China’s compound annual growth
rate (CAGR) in sales volume and market value both much higher than those of the world. In recent years,
considering the development of China’s water tourism and recreational industry and the emphasis of the
government on maritime rights, the Chinese government agencies at all levels have granted vigorous policy
support to ship-related industries. For example, the National Development and Reform Commission has included
high-performance ships, such as superyachts, luxury cruise ships, marine surveillance vessels, and
small-waterplane-area twin hulls, among items for encouragement. The Ministry of Industry and Information
Technology has proposed developing brand products, such as luxury superyachts, sightseeing boats, and official
boats. The State Council has also proposed vigorously developing marine tourism, manufacturing localised
tourism equipment such as cruises and cruise yachts, and vigorously developing cruise yacht tourism. Under the
guidance of policies, China’s yacht industry will usher in rapid development. China has become one of the world’s
fastest-growing outboard motor markets owing to its rapid economic growth and changing recreational habits.
With the rise of domestic brands represented by Parsun Power, domestic substitution has gradually become one of
the mainstream trends in the development of the outboard motor industry in China, and there is the huge market
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potential for domestic substitution.
2.2 Supply side——the Company’s presence in the industry
The subsidiary Parsun Power specialises in R&D, manufacturing, and sales of outboard motors, aspiring to
be a world-class provider of water powersports products. Its outboard motors span a diverse power spectrum,
compatible with fossil fuels, electricity, and alternative energy sources. The majority of its product models have
been CCS-, CE- and EPA-certified. These products are widely used in water recreation, fishing, water traffic,
emergency rescue, shore landing and maritime patrol.
As a top-ranking manufacturer in the domestic outboard motor industry, Parsun Power is a State-level "Little
Giant" enterprise with specialties, refined management, unique technologies and innovation, as well as a
State-level High-tech Enterprise. According to the certificate issued by the China Internal Combustion Engine
Industry Association, Parsun Power’s outboard motors ranked first in the industry for three consecutive years
from 2020 to 2022. In 2021 and 2023, it successfully commercialised 115hp and 130hp outboard motors,
disrupting the longtime dominance of international brands in these power categories. In 2023, Parsun Power
reached a milestone with the completion of prototype production for a 300ph gasoline outboard motor model,
currently undergoing final testing and validation. Officially debuting this high-horsepower outboard motor, Parsun
Power unveiled the 300hp unit at the Shanghai International Boat Show on 26 March 2024.
II Principal operations of the Company in the Reporting Period
With “intelligent equipment manufacturing” as its primary strategic focus, Dongfang Precision concentrates
on the manufacturing of high-end intelligent equipment. Its principal operations include “intelligent packaging
equipment” and “water powersports equipment”. The “intelligent packaging equipment business” consists
of smart corrugated packaging equipment, digital printers, and industrial Internet industry solutions.
Business Divisions and Entities of Dongfang Precision
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(I) The intelligent packaging equipment division
The intelligent packaging equipment division consists of smart corrugated packaging equipment, digital printers, and industrial Internet industry solutions,
which cover the most important links in the value chain of corrugated packaging production (as shown below).
Relationship between Corrugated Packaging Manufacturing Value Chain and the Company's Smart Corrugated Packaging Equipment
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1. Smart corrugated packaging equipment
(1) Corrugated cardboard production lines (including corrugated rollers)
The corrugated cardboard production lines business of Dongfang Precision is engaged in corrugated
cardboard production lines (under the brands of Fosber and Quantum) as well as corrugated and pressure rollers
(under the Tirua brand), which are key components of corrugated cardboard production lines. With the overseas
Fosber Group (under it, Fosber Italy, Fosber America, QCorr, and Tirua Group) as well as the domestic Fosber
Asia and Tirua Asia, Dongfang Precision is able to provide products and services for customers around the
world.
From the perspective of end market, the three major series of corrugated cardboard production lines (S/Line
and Pro/Line under the Fosber brand, as well as Quantum Line under the Quantum brand), along with a wide
range of corrugated and pressure rollers (key components, under the Tirua brand), are complementary and
synergistic, achieving full coverage of the end market as a product portfolio.
From the point of the locations of business entities, the global layout of business assets lays a solid
foundation for the Company's global sales. (1) Overseas, Fobser Group primarily serves large- and medium-sized
manufacturers in Europe, North America, Latin America and other countries and regions. All the business units
and profit centres of Fosber Group have their business, assets and staff located in Europe and North America.
They adopt a local management and operation model, and design, develop and manufacture their products locally.
Fosber Group has established stable partnerships with major manufacturers in the corrugated packaging industry
in Europe and the US. (2) Domestically, Fosber’s corrugated lines have been designed and adapted to the needs of
customers in the Chinese market. Supported by China’s most complete supply chain across all industrial sectors
globally, as well as the competitive edge of manufacturing, over 90% of the components of the corrugated lines
are manufactured domestically. These products, which are high-tech, high-performance and cost-efficient for they
are made in China, are provided for corrugated packaging manufacturers in China, Asia (East Asia, Southeast
Asia, South Asia, and the Middle East), Africa, Russia, and Latin America. Since 2022, the Company has further
introduced Tirua’s corrugated and pressure rollers to China for domestic design and local production. While
catering to the needs of Fosber Asia’s corrugated lines for corrugated and pressure rollers, Tirua is also
developing new markets in China and the rest of Asia for its products.
(2) Corrugated box printing and packaging production lines
Dongfang Precision is a professional supplier of medium- and high-end corrugated box printing and
packaging production lines. Domestically, Dongfang Precision (China) is responsible for business operations
associated with corrugated box printing and packaging equipment, while in the overseas market, it is Dongfang
Precision (Europe).
The product matrix of Dongfang Precision (China) includes corrugated converting line and single machine
products that are of dozens of specifications and different market positioning, featuring fixed type/open-close type,
top printing/bottom printing, and other technologies. These products mainly include “Dongfang Star” Quickset
Top Printing FFG and Top Printing Open-Close Type FFG Inline, as well as “Super Star” Bottom Printing Die
Cutter Stripper Vacuum Stacker Converting Line, Bottom Printing Open-Close Type FFG Inline and Bottom
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Printing Open-Closed Type/FFG & Stitcher.
Dongfang Precision (Europe) specializes in high-end corrugated converting line products. Its primary
products include “FD” Quickset Top Printing FFG, “HGL” Quickset Bottom Printing FFG, and Quickset Bottom
Printing/Die Cutter Stripper Vacuum Line. These products are designed with noncrush feeder design, full servo
control, and fully automatic control features, making them more suitable for high-definition printing. Dongfang
Precision (Europe) also provides pre-printing and post-printing equipment compatible with the complete line
products, covering production processes such as paper feeding, stripping, transferring, palletizing, folding and
gluing. Dongfang Precision (Europe) primarily serves the European markets.
In the area of corrugated converting lines/single machines, Dongfang Precision is a professional
manufacturer with an early start and a strong foundation among domestic fellow companies, enjoying high brand
awareness and customer recognition in the industry. The products are highly popular not only in the domestic
market but also exported to over 60 countries and regions worldwide, including Europe, America, Asia, Africa,
Latin America, and Oceania.
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Primary Product Portfolio of Dongfang Precision’s intelligent packaging Equipment Business - Corrugated Cardboard Production Lines
Product type Brand Product image Main characteristics
Fosber Brand S/Line
Width: 2.5m~2.8m
Production speed: 370~470
meters/minute
Designed for large corrugated board
manufacturers Beltless Technology
Caddy oil-free technology
Gapless changeover with no speed
reduction of the cadre
Industry leading changeover times
Optimum board quality and low
operating costs
Industry leading Syncro4 system control
Process Control Supervision (PCS)
Corrugated Data Tracking Supervision (DTS)
Cardboard Quantum Line：
Production Widths from 1.8m to 2.5m
A new concept in corrugated board
Lines
production
Better suited for lightweight corrugated
board production
Innovative design, compact and flexible
Optimum appearance and print surface
quality
Lower energy consumption and less
labor
Wavy Line：
Designed for the production of
single-sided corrugated boards
Compact and flexible
High quality at high speeds
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Domestic Line:
Width: 2.2m~2.8m
Design speed: 270-370 meters/minute
Single tile, double tile, triple tile wet
section
Wet section without belt technology
Cadre without lubrication technology
High board quality
Industry-leading Syncro system control
Process Control Supervision (PCS)
Data Tracking Supervision (DTS)
Instant Set:
Dual Module Slitting Machine
Gapless order change speed of 250
meters/minute
Positioning accuracy of +/-0.5mm,
3 seconds to change the order and line up
the knives
Corrugated & The world's leading supplier of
corrugating rolls and pressure rolls with
pressure
industry-leading machining and tungsten
rollers carbide treatment
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Primary Product Portfolio of Dongfang Precision’ Smart Corrugated Packaging Equipment Business - Corrugated Box Printing and Packaging Production Line Equipment
Product type Brand Product image Main characteristics
Upper printing fixed type
Full servo control
DONGFANG STAR I QUICKSET TOP PRINTING FFG
No downtime for plate change
2 minutes quick order change
Vacuum adsorption large belt,
high precision cardboard
transfer, long service life
Energy saving up to 30
Only 2 people are needed to
operate the whole line
Print-on/off type
Integrated DONGFANG STAR II TOP PRINTING OPEN-CLOSE TYPE FFG Vacuum adsorption roller
corrugated transfer; Computerized
box printing adjustment, easy to operate;
and High speed and stable
packaging operation; Patented folding
lines structure; Improve carton
molding effect
Only 2-3 persons are needed to
operate the whole line
Suitable for shaped box,
machine box and pre-printed
box, etc., with one point and
multiple die-cutting.
Mature down-printing
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Product type Brand Product image Main characteristics
die-cutting technology; Clean
Asia-Pacific STAR I BOTTOM PRINTING DIE CUTTER STRIPPER VACUUM STACKER CONVERTING LINE chip removal and accurate
counting
Efficient production;
Uninterrupted feeding;
No-speed down output of
bundles, flexible palletizing
methods
Configurable for double-sided
printing; 2-3 person operation
Integrated Vacuum adsorption roller
corrugated transfer
Asia-Pacific STAR II BOTTOM PRINTING OPEN-CLOSE TYPE FFG INLINE
box printing Computerized adjustment of the
and whole machine, easy to operate
packaging Good effect of clearing waste,
lines can realize one opening and two
die-cutting line gluing carton.
Patented folding structure
improves carton molding effect.
The whole line is operated by
2-3 persons
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Product type Brand Product image Main characteristics
Design concept of
down-printing type gluing and
Asia-Pacific STAR III BOTTOM PRINTING OPEN-CLOSED TYPE/FFG & STITCHER nailing as a whole
Multi-purpose machine, to meet
the production needs of
different orders
Saving space, reducing process,
greatly reducing labor cost.
Multiple pre-pressure to
enhance folding and molding
effect, precise control of
molding accuracy.
High-end down-printing fixed
in-line
Spindle servo drive
Quick order change
Complete pre-press and
post-press supporting units
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2. Digital printers
The business is primarily led by the subsidiary Shenzhen Wonder Digital Technology Co., Ltd. Wonder
Digital provides solutions for customers in the digital printing industry, including digital printers, ink, accessories,
and professional services. Wonder Digital has introduced a variety of digital printers to meet the diverse needs of
different market segments and customer levels, including:
(1) Multi Pass digital printer series applicable for small-batch paper packaging printing
(2) Single Pass digital printer series applicable for large/medium/small batch paper packaging printing
(3) Single Pass digital series applicable for pre-printing on raw paper
(4) Hybrid printer series that combines Multi Pass high-precision printing and Single Pass high speed
printing into one, supporting both scanning mode printing for large size, high precision, and full colour orders,
and instantly switching to Single Pass mode for printing large volumes of small size orders.
Wonder Digital offers a diverse range of products that cover various types and specifications, from
postprinting to pre-printing, from water-based dye/pigment, water-based ink to spot colour UV ink, from boxes,
offset cartons to sheet metal. The products also support a range of application modes and scenarios, from
single-sheet printing to exchange orders seamlessly with variable data printing, and from single machine printing
to integration with ERP systems.
With a comprehensive product matrix, Wonder Digital provides paper packaging digital printers that meet
the diverse needs of industry customers with different market positions and levels. Since its establishment in 2011,
Wonder Digital’s digital printers have been exported to countries and regions such as Europe, America, the
Middle East, Latin America, and Southeast Asia, with over 1,600 units of equipment installed worldwide.
Apart from digital printers, Wonder Digital also sells supporting units after printing section including slotting
and varnish coating units, as well as special ink products that are compatible with its own-brand equipment. These
special ink products, including water-based dye ink, water-based pigment ink, and UV ink. Wonder Digital’ high
cost-performance digital printing solution provides customers with cost-effective configuration plans for digital
inkjet printing equipment and ink formulation plans. The cost-performance ratio of the ink is a crucial factor for
customers to consider when evaluating the overall solution.
Based on accumulated know-how and experience, Wonder Digital provides digital printers for advertising,
home decoration, and other fields, including flatbed printing and roll to roll printing technologies. The flatbed
models can be used for digital printing on materials such as aluminium panels, glass, ceramic tiles, metal plates,
acrylic sheets, and alucobond panels, while the roll-to-roll models are applicable for digital printing on corrugated
cardboard, vehicle paste paper, lamp box fabric, PVC film, decorated paper, and sheet metal like aluminium
sheets, among others. Additionally, Wonder Digital also offers digital printers for the label printing industry.
Wonder Digital aims to offer its customers in the paper packaging industry more than just individual
products or services. More importantly, it strives to provide complete digital printing solutions to help customers
produce high-quality packaging materials in a convenient, efficient, and cost-effective way and make profit on
fiercely competitive markets. To achieve this, tailored solutions are needed for different application areas and
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customer requirements. With years of accumulation in technology, manufacturing process and industry experience
in the field of digital printing, Wonder Digital can provide different combinations of printheads, inks, inkjet
control systems and other key components according to the needs of different customers. Meanwhile, it optimizes
pre-printing, printing, and post-printing processes, matches equipment with corresponding production materials,
and offers tailored digital printing solutions to help customers improve order delivery efficiency, increase turnover,
reduce costs and ultimately strengthen competitiveness on the market.
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Primary Product Portfolio of Dongfang Precision’s Smart Corrugated Packaging Equipment Business——Digital Printers
Product type Brand Product image Main characteristics
A cost-effective tool for bulk orders
Adopts Epson's latest HD industrial
printheads.
Printing width up to 2500mm
Speed up to 700 ㎡/h
Printing thickness 1.5mm-35mm
Full suction platform printing and
feeding
Coated paper and honeycomb
board can also be easily printed.
Base accuracy 1200dpi
WD250++ Series Scanning Wide Format
Water-based dye ink/water-based
High Quality Carton Digital Printer
Digital Printers pigment waterproof ink is optional.
Reference accuracy 1200dpi
Printing speed 150m/min
Support 8 colors printing
Wide format can be customized
WD200++SINGLE-PASS industrial grade high speed
cardboard digital printing machine
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Reel-to-Reel Printing
Suitable for corrugated paper, body
stickers, light box fabric, PVC color
film, decorative paper, thin
aluminum sheet, etc.
Decorative paper, thin aluminum
plate, etc.
Industrial SINGLE PASS roll-to-roll Centralized printing and
high-speed digital pre-printing machine decentralized printing, cost saving
Digital Printers
Combines two different digital
printing methods: Multi Pass
high-precision scanning and
Single Pass high-speed printing.
Reduce the capital investment in
equipment, save space, labor,
MULTI PASS-SINGLE PASS All-in-One
maintenance and other costs,
Digital Printing Machine
improve production efficiency
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3. Industrial Internet industry solutions
Dongfang Digicom, a subsidiary of Dongfang Precision, serves as the primary business entity for “industrial
Internet industry solutions”.
Based on the extensive industry experience of Dongfang Precision spanning over three decades in the field of
corrugated packaging equipment, as well as guided by the Group’s strategies, the subsidiary Dongfang Digicom,
leveraging cutting-edge technologies such as the Internet of Things (IoT), cloud computing, big data, 5G, and
artificial intelligence (AI), has developed iDataPioneer, an industrial Internet platform for the packaging industry
in a broad sense.
The platform adheres to the Industrial Internet Architecture (v2.0) set forth by the Ministry of Industry and
Information Technology (MIIT), ensuring all products are secure, autonomous, and manageable. Anchored by the
three pillars of digital factory construction—connecting, data integration and analysis, and intelligent data
application—the platform's product framework consists of three integral parts:
(1) IoT platform: IoT, 5G, and edge computing are leveraged to establish seamless, bidirectional
communication and control between devices, humans, and systems through a single-point factory-wide data
collection service. This enables efficient device data gathering and management for enterprises, boosting
equipment utilization and energy efficiency.
(2) Big data platform: Harnessing data mining and algorithmic analysis, it processes integrated and analysed
collected data, facilitating data convergence, circulation, and analytical insights for business optimisation. This
platform offers intelligent decision-making assistance for scenarios like order delivery prediction, production
bottleneck analysis, and predictive maintenance of equipments, so as to improve production efficiency.
(3) Intelligent application platform: Employing big data, AI, and related technologies, this platform crafts
intelligent solutions, encompassing equipment health mapping, failure prediction, remote O&M, and spans the
entire corporate business lifecycle. It supports enterprises in adopting data-driven scientific management and
decision-making, thus trimming production and operational expenses. Currently, Dongfang Digicom has rolled
out data-intelligent applications such as the "Production Management System" (PMS) and "Manufacturing
Execution System" (MES).
The industrial Internet platform iDataPioneer delivers a comprehensive one-stop service, spanning from
equipment connectivity for data collection to data integration, processing, analysis, and intelligent applications. It
sets benchmarks in several metrics within the industry, empowering large packaging enterprises to adopt
data-driven scientific management and decision-making, thereby facilitating their digital transformation.
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Schematic diagram of the iDataPioneer Industrial Internet platform architecture
Dongfang Digicom has also introduced its proprietary Intelligent Production Management System tailored
for corrugated packaging and laminated cardboard manufacturing sectors. The Intelligent Production Management
System for Corrugated Box Printing and Packaging is compatible with a wide range of brands and specifications
of corrugated converting line products, including the Dongfang Precision brand. Sold either bundled with
Dongfang Precision corrugated converting line products or as a standalone software solution, it helps customers in
the corrugated packaging and laminated cardboard industries to improve the intelligent and digital level of a large
number of existing production line equipment, empowering packaging companies to "digitally manufacture" and
helping to build digital factories and digital workshops.
Most core members of the Dongfang Digicom team come from famous manufacturers in the Internet,
industrial Internet, and ERP industries. Of IT manufacturers in the domestic packaging industry, Dongfang
Digicom boasts high professionalism and strong R&D strength. As of 31 December 2023, it has been
cumulatively granted 59 software copyrights and 29 patents.
4. The operational model of the intelligent packaging equipment business
R&D model: The Company has industry-leading independent design and R&D capabilities, continually
establishing high-level R&D innovation management mechanisms. The R&D team, spearheaded by industry
experts, employs a blend of long and short-term product R&D planning, supported by a market-oriented R&D
mechanism. Additionally, a robust R&D talent incentive mechanism enhances the Company’s overall technical
proficiency, cementing its leadership position in the industry.
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Procurement and production model: The Company procures raw materials, such as steel plates, metal
components, and electrical parts (such as motors and PLCs), from external suppliers, while producing some core
components and corrugated rollers in-house.
The majority of the Company’s equipment products adhere to a “made-to-order production” model. Upon
receiving orders and partial deposits from customers, the Company purchases raw materials from suppliers based
on specific customer requirements and inventory levels, and develops production plans and schedules. The
Company advocates a “lean production” model for production and operational management, ensuring precise
control over BOM costs and manufacturing expenses, while continuously enhancing operational efficiency.
In 2023, the lead times for the Company’s corrugated cardboard production lines, corrugated converting lines,
and digital printers were six to 12 months, three to six months, and one to three months, respectively (varying
based on different product models and specifications).
Marketing Model: The Company employs a “direct selling + distribution” marketing model. It utilizes a
direct sales approach for the domestic market and a combination of direct sales and agent distribution for overseas
markets, tailoring the strategy to suit the unique needs of different countries and regions. This approach not only
widens the scope of sales channels and increases sales volume but also reduces market expansion and sales costs.
The Company’s complete production line and single machine products are typically one-time sales, with
more significant transaction amounts. However, accessories, software, and services can be sold multiple times
throughout the life-cycle of complete production line or single machine products. The growing number of existing
equipment sold in the downstream industry market presents a steady stream of sales opportunities for accessories,
software, and services. Additionally, providing high-quality technical support and services helps to promote the
sales of complete production line products.
In terms of the settlement of orders, the Company enjoys a high brand awareness and superior bargain power
in the industry, so it collects down payment in advance and payment by stages for the sales of corrugated
cardboard production lines and corrugated box printing and packaging equipment. Generally, 80% to 90% of the
sales payment can be collected upon the delivery of products.
(II) The water powersports equipment division
The subsidiary, Parsun Power, is a leading enterprise in the domestic outboard motor industry. According to
the certificate issued by the China Internal Combustion Engine Industry Association, Parsun Power’s outboard
motors ranked first in the industry for three consecutive years from 2020 to 2022. Parsun Power’s main products
are outboard motors of various specifications and different series, with horsepower ranging from 2 to 130. The
outboard motor products are exported to hundreds of countries and regions, including Europe, Africa, Oceania,
South America, North America, the Middle East, and Southeast Asia.
(1) Outboard motors
By the source of power, outboard motor products of Parsun Power are divided into gasoline outboard motors,
electric outboard motors, and diesel outboard motors.
Gasoline outboard motors enjoy the most abundant specifications and varieties. Parsun Power has
accumulated years of industry experience in the field and has had several proprietary technologies and applied
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them to products. It has achieved mass production of the maximum 115hp gasoline outboard motors, and has
successfully broken the long-term monopoly by international well-known brands in the 115hp sector. With stable
and reliable quality of its 115hp gasoline outboard motors, Parsun Power has won more and more product orders
in Europe and China, contributing to domestic substitution of medium- and high-horsepower outboard motors and
the improvement of the global market share of domestic brands. After successfully conquering the 115hp gasoline
model, Parsun Power's R&D team marches toward higher-horsepower models and strives the make
domestic-brand high-horsepower outboard motors take a place in the global competition of the high-horsepower
outboard motor market. In the first half of 2023, Parsun Power took it to the next level by successfully completing
the mass production and sale of 130hp gasoline outboard motors.Meanwhile, Parsun Power completed prototype
production for a 300ph gasoline outboard motor model, currently undergoing final testing and validation. It
officially debuted this 300hp unit at the Shanghai International Boat Show on 26 March 2024.
Electric outboard motors are powered by batteries. They convert electric power into kinetic power through
motors. Compared with oil-fired ones, electric outboard motors are characterized by zero emissions, low noise,
and easy operation. Most of Parsun Power’s electric outboard motors are of low- and medium-horsepower, which
are mainly used in scenic spots and other sectors requiring stricter environmental protection.
Diesel outboard motors not only retain the characteristics of easy assembly, easy maintenance and easy
operation of gasoline outboard motors but also enjoy the advantages of fuel saving, lower emissions, greater
torque and being safer, more reliable, and easier for maintenance, which are mainly used in commercial
transportation and public law enforcement. Parsun Power now has diesel outboard motors and is selling the
high-horsepower outboard motors of 150hp, 175hp, 200hp and 300hp of OXE Marine (a Swedish brand) in the
domestic market.
Parsun Power has achieved a complete product line layout of “gasoline-diesel-electric” outboard motors,
and will rely on its years of technical expertise and leading market share in the gasoline outboard motor field to
expand into high-horsepower diesel outboard motors and electric outboard motors.
Parsun Power's outboard motor products have stable quality and reliable performance, and some of them
enjoy the comprehensive performance comparable to that of internationally well-known brands and emissions
reaching European and American standards. In the future, Parsun Power will focus on medium- and
high-horsepower outboard motors, enrich electric outboard motor production lines, continuously optimize the
product structure of outboard motors, and consolidate its leading position among domestic outboard motor
manufacturers.
(2) General machines
Aside from outboard motors, Parsun Power also engages in the business of general machines. These general
machines constitute versatile power solutions and associated end-user items, featuring primarily small gasoline
and diesel engines for use in generators (like emergency power kits, field operation power supplies), agricultural
equipment (e.g., water pumps, cultivators), gardening machinery (e.g., lawnmowers, chainsaws), compact
construction tools (e.g., cutters, tampers, concrete mixers, and levellers), among other miscellaneous applications.
These products find extensive usage across various sectors.
Parsun Power's general machine products mainly include gasoline engines, gasoline generator sets and
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gasoline water pump sets. Gasoline engines, primarily single-cylinder four-stroke units, utilize gasoline as fuel
and are adaptable for use in agricultural machinery, gardening equipment, and other small machinery applications.
Gasoline generator sets combine these engines with generators, functioning as standby power sources. The
gasoline water pump sets feature centrifugal pumps driven by gasoline engines and are extensively utilized in
agricultural irrigation, livestock watering, and similar domains.
(3) The operational model of the water powersports equipment business
Parsun Power follows an industry-standard sales model that primarily relies on distribution, supplemented by
direct selling. The demand for outboard motors, which are the company’s main product, is mainly distributed
overseas, with end customers scattered throughout the world. Adopting a distribution-centric sales model enables
Parsun Power to reach end customers to the fullest extent possible.
Parsun Power produces outboard motor products independently, utilizing sales demand forecasts, customer
orders, product inventory status, material delivery progress, and product production cycles to formulate
production plans. The company then organizes the production of components in accordance with specialized
processes and procedures.Following the principle of “ sales determine production, production determines
procurement,” Parsun Power determines the procurement requirements for its outboard motor business, while
also taking into account reasonable safety stock.
III Core Competitiveness Analysis
The analysis of the Company’s core competitiveness in the Reporting Period is as follows:
(I) Industry-leading technology and strong capabilities of R&D and innovation
The Company is at the forefront industry-wide in China in terms of R&D and technology. In terms of
intellectual property rights, as at the end of 2023, the Company had been granted a total of 420 domestic and
foreign patents, an increase of 49 as compared to the end of 2022, and a total of 75 software copyrights, an
increase of 42 as compared to the end of 2022.
1. The smart corrugated packaging equipment business:
The middle- and high-end corrugated cardboard production lines under the Fosber brand are industry-leading
in speed, width, precision, stability, reliability, failure rate, and intelligence, characterized by high efficiency,
energy saving, stability, reliability, intelligent control, and easy operation and maintenance. The corrugated
cardboard production lines under the Fosber brand boast machinery with high technology, quality, and reliability,
advanced intelligent software systems, and technical support services and have won the praise of customers
worldwide.
Fosber Asia has launched the “Instant Set” unit and applied it to corrugated cardboard production lines.
Each cutting blade and indentor are independently controlled by the servo motor, thus significantly improving the
speed of the order change of the dry section of corrugated lines and shortening the average time of order change
from 8-15 seconds to around 3 seconds. Moreover, it can better support the quick order switch of downstream
customers and meet the characteristics of multiple types and small batches of paper packaging orders in China.
Fosber Group has control systems that are developed based on Industry 4.0 technologies for its own high-end
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corrugated cardboard production lines, including functional modules such as Syncro4, PCS (Process Control
System), Pro/Care, and Pro/Quality. These systems can help achieve highly accurate, digital and intelligent
management and control of the machine status, production process, routine maintenance, technical support, and
quality inspection of corrugated cardboard production lines. Advanced technologies, such as sensors, Advanced
Reality (AR), algorithm analysis, big data, and cloud computing, are adopted in these systems to realize the full
automation and intelligence of the whole process of production and processing of corrugated cardboards, monitor
the temperature, humidity, heat, folds, and other data of corrugated cardboard production lines in real time, and
monitor the dashboard dynamically in the production process. Through data-based production performance
analysis and cost analysis, it helps customers improve production efficiency. Through the “self-diagnosis system”
it identifies abnormal operations and sends alerts, and identifies solutions in an intelligent manner. Through the
“big data analysis system” module, it collects real-time data in the corrugator production process through
sensors, outputs recommended configuration parameters and improvements through algorithm analysis, and helps
customers improve the effectiveness of production process control.
How Fosber Group’ PRO Series Intelligent Production Management Information Technology System
Works
2. The digital printer business:
Wonder Digital is a leader in the domestic digital printer industry, a State-level High-tech Enterprise, and a
State-level “Little Giant” Enterprise with specialties, refined management, unique technologies and innovation.
With a complete digital printer offering, Wonder Digital breaks through the edge of mechanical engineering,
bridges the physical world and the digital world, and provides industry customers with a full range of digital
printing solutions.
Wonder Digital’s UV digital colour printers and single-pass digital printers feature printing accuracy as high
as 1200dpi. Their colour printing effects rival those of traditional offset printers in clarity, fineness, colour
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brightness and saturation but with lower costs, helping customers effectively enhance competitiveness.
Wonder Digital’s large format roll to roll high speed digital printer outperforms domestic competitors in
terms of width and resolution and is competitive on the market in terms of size, energy consumption, and
cost-performance.
3. The water powersports equipment business:
The subsidiary Parsun Power is committed to independent R&D and innovation of China-made outboard
motors, and is a state-level "Little Giant" enterprise with specialties, refined management, unique technologies
and innovation, a national high-tech enterprise, the Provincial Outboard Motor Engineering and Technology
Research Institute of Jiangsu, a technology center recognized by Jiangsu Province, a leading enterprise in China's
internal combustion engine industry and a council member of the Small Gasoline Motor Branch of China Internal
Combustion Engine Industry Association. Its outboard motor products have won the Certificate for
Industrialization Demonstration Program under the National Torch Plan and honors including Innovative Products
in Chinese Machinery Industry, Products of Well-known Brands in Jiangsu, and Products of Well-known Brands
in Suzhou.
Parsun Power has been developing in the outboard motor industry for over ten years and has had several
China-leading core technologies and accumulated rich scientifically innovative achievements after long-term
R&D input and technical accumulation.As of 31 December 2023, Parsun Power has been granted a total of 73
patents, including 11 invention patents; and it has won the Second Prize of China Machinery Industry Science and
Technology Award for twice.Parsun Power is one of the main drafters of two industry standards including
Outboard Gasoline Engines- General Requirements (JB/T 11875-2014) and General Technical Specification of
Outboard Engine (CB/T 4505-2020). In 2021, Parsun Power successfully realized the mass production of 115hp
outboard motors, breaking the long-standing monopoly of internationally well-known brands in the 115hp
sector.In 2023, Parsun Power took it to the next level by successfully completing the mass production and sale of
130hp outboard motors.
(II) Complete layout in the corrugated packaging machinery industry chain and the most complete
and richest product portfolio in the industry
Among enterprises of the same type in the domestic corrugated packaging machinery industry, Dongfang
Precision has the most complete and comprehensive industry chain layout, with its business covering almost all
key processes in the corrugated packaging production and processing business chain. Meanwhile, the Company
has the most complete and richest corrugated packaging production line equipment in the industry, making it
capable of meeting the demands for complete production line and single machine products of different market
positioning, different customer types and dozens of specifications and models, second to none in China.
1. Corrugated cardboard production lines
In the area of “high-end smart corrugated cardboard production lines”, the subsidiary Fosber Group offers
S/Line and Pro/Line corrugated cardboard production lines under the brand of Fosber, Quantum Line microflute
corrugated board production lines, as well as corrugated and pressure rollers (key components of corrugated
cardboard production lines), among others. It provides medium- and high-end corrugated cardboard production
lines of various specifications and prices for medium and large corrugated cardboard manufacturers across the
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world.
The corrugated lines of the Fosber brand are applicable for producing corrugated cardboard with a thickness
of 2mm to 13mm, known for their high load-bearing capacity, excellent shock resistance, plasticity, and
environmental performance. The resulting corrugated cardboard is extensively used in fields such as logistics and
express delivery, furniture and household appliances, and electronic product packaging, serving as the outer
packaging for various types of corrugated boxes. The Quantum Line production line of the subsidiary QCorr is
primarily used for creating solid fiberboard below 2mm and microflute corrugated board. These corrugated board
products are known for being lightweight, strong, moisture-resistant, and environmentally friendly. As such, they
are widely used in offset carton packaging, high-end products, electronic products, and cultural and artistic
product packaging. From the perspective of end market, the three major series of corrugated cardboard production
lines of Fosber Group, S/Line, Pro/Line, and Quantum Line, are complementary, achieving full coverage of the
end market as a product portfolio.
Based on more than 40 years of experience in the corrugated and pressure roller segment, the subsidiary
Tirua Group is familiar with a wide range of brands and specifications of corrugated cardboard production lines
in the market, and is able to supply corrugated and pressure rollers compatible with these corrugated board
production lines. Additionally, the company can design and produce customized rollers to meet the specific needs
of customers, taking into account their machine types, special coating requirements, and paper characteristics.
2. Corrugated box printing and packaging production lines
Dongfang Precision (China) and Dongfang Precision (Europe) offer high quality corrugated converting line
and single machine products for China and the rest of the world. These products, which are of dozens of
specifications and different market positioning, cover fixed type/open-close type, top printing/bottom printing,
converting line (inline)/single machine, etc. They are the manufacturers with the widest range of products in this
segment across the world.
3. Digital printers
Wonder Digital possesses four major series of digital printers that cover various types and specifications,
from postprinting to pre-printing, from water-based dye/pigment, water-based ink to spot colour UV ink, from
boxes, offset cartons to sheet metal. The products also support a range of application modes and scenarios, from
single-sheet printing to exchange orders seamlessly with variable data printing, and from single machine printing
to integration with ERP systems. With a complete digital printer portfolio, Wonder Digital serves as a
"supermarket of digital printers", providing domestic and foreign industrial customers with a wide range of low-,
medium-, and high-end digital printers to satisfy the needs of these customers from different market segments.
Apart from digital printers, Wonder Digital also sells supporting units after printing section including slotting
and varnish coating units, as well as special ink products that are compatible with its own-brand equipment. These
special ink products, including water-based dye ink, water-based pigment ink, and UV ink.
(III) Profound Know-How experience and experienced team in the industry
Dongfang Precision has an experienced team with profound Know-How experience in the industry, which
has 20 years of experience in both global and domestic industry markets and has an in-depth understanding of the
Company's industrial layout, development planning, R&D approach, production operation, marketing, and team
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management. The core management team has a broad vision, can promptly keep up with the general development
trend of the smart corrugated packaging equipment manufacturing industry, and can enable the Company to
achieve steady and sustainable development through forward-looking strategic planning and layout.
As an enterprise that practices the management model of professional manager team and attaches great
importance to authorization management, Dongfang Precision takes "a wealth of talent" and "cultural guidance"
as the basis of its corporate strategy and corporate culture, and develops its organizational capacity, improves the
Group's control over all business units and subsidiaries and integration of resources and assistance and aid,
improves the Group's overall operational efficiency and reduces the Group's operation cost and promotes the
Company's healthy and sustainable development by optimizing the organizational structure design, standardizing
the authorization and control system, implementing medium- and long-term incentives and further developing the
corporate culture.
(IV) High brand popularity and customer recognition worldwide
Dongfang Precision-branded corrugated box printing and packaging production line equipment,
Fosber-branded corrugated cardboard production lines, Wonder Digital-branded digital printers,
Quantum-branded corrugated cardboard production lines, Tirua-branded corrugated rollers and Parsun-branded
outboard motors of the Company are enjoying considerable brand recognition and industry influence at home and
abroad.
In the field of intelligent packaging equipment: The subsidiary Fosber Group, established in 1978, stands as
one of the world's top two players in high-end corrugated cardboard production lines. Its Fosber-branded
corrugated lines enjoy strong brand recognition and customer favour in markets like Europe, North America, and
Latin America. Tirua Group, founded in 1921, boasts almost four decades of expertise in corrugated and pressure
rollers, with products distributed to over 60 countries globally. The subsidiary Qcorr, previously known as Agnati,
an esteemed Italian supplier of corrugated cardboard production lines with over 80 years' experience, commands a
high standing internationally. Dongfang Precision's corrugated box printing and packaging lines lead among
Greater China competitors, exporting to over 60 countries. Wonder Digital, a Chinese front-runner in the area of
digital printers, ships its digital printers to over 80 countries, boasting a market presence of over 1,600
installations.
With the constant growth in concentration and the continuous upgrading of capacity in the downstream
industry, large- and medium-sized packaging enterprises will need more middle- and high-end production line
equipment, digital printing solutions, and industrial Internet industry solutions. The Company has seized
opportunities and formed a better competitive edge by virtue of its stable business partnership during the industry
changes.
In the field of water powersports equipment: The subsidiary Parsun Power is a top-ranking manufacturer in
the domestic outboard motor industry. According to the certificate issued by the China Internal Combustion
Engine Industry Association, Parsun Power’s outboard motors ranked first in the industry for three consecutive
years from 2020 to 2022. Following extensive industry immersion, the Parsun Power brand has garnered
significant recognition and accolades, such as being named a "famous brand product of Jiangsu province" and a
"famous brand product of Suzhou city." Internationally, Parsun Power's distribution network extends to hundreds
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of countries and regions across Europe, Africa, Oceania, South America, North America, the Middle East, and
Southeast Asia. Domestically, the company's sales footprint blankets most provinces and regions in China.
Backed by dependable product quality and comprehensive after-sales service, Parsun Power has forged enduring
partnerships with numerous clients worldwide.
(V) Global layout of business assets
The Company mainly serves customers in the corrugated packaging industry worldwide, and has realized the
global layout of its business assets:
In Asia, the Company has three domestic R&D and production bases in Foshan, Suzhou, and Shenzhen, in
Europe, it has R&D and production bases in Lucca, Bologna and Milan, Italy, and Pamplona, Spain, and in North
America, it has a production base in Green Bay, Wisconsin, USA. With such a layout in the three continents, the
Company has formed a global marketing and service network.
An internationalized marketing and service network enables the Company to seize all opportunities in the
global industry market and to provide product machinery and technical services for customers in the industry in
over 100 countries and regions worldwide.
An internationalized product R&D, production and supply chain layout enables the Company to make
prompt responses worldwide and meet customer demands and is conducive to the Company's integration of global
resources, improvement of resource allocation efficiency, complement of advantages, reduction of the total cost
and improvement of the allocation efficiency, so that the Company can be increasingly competitive in the world
when it is operated as a group.
(VI) Strong capabilities of strategic control and integration
Since listing, the Company has kept expanding its presence in the upstream and downstream of the industry
chain of its core business. After years of practice, the Company has developed strong strategic control and deep
integration of its business divisions and accumulated rich experience and practice, through the deep perception of
the industry, forecast of industry trends, and a clear understanding of its own strategic development objectives.
Strategic control is the core capability that the Company relies on to manage its various business entities. In
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practice, the Company adjusted the strategic development plans, business models, product portfolios, market
strategies, and core management teams of the companies acquired with its in-depth understanding of the industry,
forward-looking foresight to the development trend of the industry, clear awareness of its strategic development
objectives, and well-established understanding of the capabilities and resources of all its business entities, so that
these companies can be energized for new growth and step on a new development stage.
In terms of post-investment integration, the Company has formulated a set of effective controls for
post-investment integration, including the corporate governance standardization policy, the “ Board of
Directors-Supervisory Committee-General Meeting” operation mechanism, the strategic and financial control
system, decentralized authorization management, complete audits, and management incentives, forming a set of
measures for effective controls for post-investment integration with the Company’s own characteristics to secure
the effective implementation of the strategic plan.
● Corrugated cardboard production lines: Fosber Group recorded a compound annual growth rate (CAGR)
of net profit of 26%
After acquiring the controlling stake of Fosber Italy in 2014, the Company and its management took several
effective measures for integration, helped Fosber Group adjust its strategic planning and business strategies and
standardize the authorization management system, implemented the performance incentive policy for the core
management, and strengthened financial control.Such measures have successfully stimulated Fosber Group’s
business vitality. From 2015 to 2023, the CAGR of the operating revenue of Fosber Group was approximately
15%, and that of its net profit was 26%.
● Water powersports products: Parsun Power’s CAGRs of operating revenue and net profit exceeded 20%
After acquiring the controlling stake of Parsun Power in 2015, the Company helped Parsun Power streamline
and adjust its strategies, develop the new development roadmap, increase inputs in technology, products, and
R&D, strengthen the marketing force, and improve the efficiency of the supply chain and production. It also
supported Parsun Power to introduce excellent talent for a more powerful core team. These measures enabled
Parsun Power to realize continuous and stable growth. From 2016 to 2023, both CAGRs of the operating revenue
and net profit of Parsun Power stood at 20%.
● Tirua Group and, the manufacturing pioneer, Agnati, were expanded to effectively stimulate new
momentum of established enterprises
In 2019 and 2020, the Company acquired the relevant business assets of Tirua Group, a nearly century-old
corrugated roller manufacturer, and merged Agnati, an Italian corrugated cardboard production line manufacturer
enjoying a high reputation for more than eight decades, into QCorr, a subsidiary of Dongfang Precision. The
Company and its management fully streamlined and standardized the development strategies, R&D planning,
product positioning, marketing, team building, and authorization management of these two established enterprises,
based on which optimization and adjustment were performed. These measures effectively stimulated the vitality
of the two old European companies and the enthusiasm of their manager teams.In 2023, subsidiaries QCorr and
Tirua Group both achieved good growth in annual operating revenue, the best annual results since they became
members of the Dongfang Precision family.
Relying on its strong strategic control and integration of business divisions, based on “mutual respect and
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
mutual trust” and with an open mind seeking common grounds while putting aside differences, the Company
effectively integrated all its business entities continuously released the synergy with the industry chain. Moreover,
it conducted active practice and accumulated precious experience in helping domestic private enterprises go
global and perform overseas industrial M&As and overseas companies carry out post-investment integration and
management optimization. Concurrently, such practice and experience facilitated the Company to lay a solid
foundation and provided strong support for the Company to promote the implementation of the five-year strategic
planning and realize long-term, sustainable, and steady development.
III Analysis of Principal Operations
(I) Overview
In 2023, China's economy maintained an upturn, with a 5.2% increase in GDP and solid advancements in
high-quality development. China's equipment manufacturing industry achieved a positive growth of 4.1% in profit,
the optimisation and upgrading of the industrial chain was furthered, and new momentum continued to build up
for industrial development.
Under the strong leadership of the Board of Directors and the management team, all the people in the
Company actively seized opportunities, took pragmatic actions, and forged ahead together in 2023, helping the
Company sustain the strong growth momentum.
In 2023, the Company recorded operating revenue of RMB4,746 million, up 21.91% YoY; a gross profit of
RMB659 million, up 30.20% YoY; a net profit attributable to its shareholders of RMB433 million, down 3.12%
YoY; and net cash generated from operating activities of RMB487 million, down 3.78% YoY.
Unit: RMB’0,000
Operating
Gross profit
Business division revenue in YoY change YoY change
margin in 2023
2023
Intelligent packaging 400,867.34 20.72% 29.80% 2.08%
equipment
Corrugated cardboard 320,988.93 23.29% 28.61% 3.19%
production lines
Corrugated box 64,444.48 1.44% 34.00% -0.17%
printing and packaging
production lines
Digital printers 15,433.93 88.51% 36.89% -13.62%
Water powersports 73,706.39 28.86% 26.02% 1.69%
equipment
Note: Wonder Digital, a majority-owned subsidiary of the Company that is engaged in digital printers,
have been included in the consolidated financial statements since June 2022. And in 2023, 100% of Wonder
Digital’s operating revenue was included in the consolidated financial statements of Dongfang Precision.
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In 2023, the aggregate value of orders secured by the Company's business entities at home and abroad
reached about RMB5.4 billion. As of the end of December 2023, the order backlog stood at approximately
RMB3,635 million, thereby amassing a strong order book that fortifies the basis for the Company's continued
financial growth.
Amidst the alleviation of supply constraints on chips, electronic components, and raw materials in 2023,
Fosber Italy, the Company's main business entity specialising in corrugated cardboard production lines,
experienced a substantial enhancement in its supply chain dependability. This led to significant improvements in
operational efficiency across procurement, inventory management, and logistics compared to 2022. Consequently,
Fosber Italy successfully implemented more effective "lean manufacturing" practices in 2023, thereby
substantively bolstering the enhancement of order fulfilment speed. As a result, the lead time for Fosber Italy's
order production decreased progressively, shrinking from an initial 12 months during the first half of 2023 to
approximately 9 months by the second half, and ultimately reducing to roughly 6 months by the close of the year.
(II) Performance of principal operations during the Reporting Period
1. The business division of intelligent packaging equipment
In 2023, the business division of intelligent packaging equipment recorded operating revenue of RMB4,009
million, up 20.71% YoY; and an order intake worth approximately RMB4,595 million. As of the end of
December 2023, the order backlog of this business division was worth approximately RMB3,412 million
(including orders for production lines, accessories and related services).
A. The segment of corrugated cardboard production lines
a) Overseas operations
During the period from 2020 to 2022, Fosber Group, which mainly serves corrugated packaging
manufacturers in Europe and North America, has achieved rapid growth, benefiting from the combined effects of
the rapid growth of the e-commerce market in the U.S. and Europe that is boosting the consumption of corrugated
packaging, the increase in the capex of major paper packaging manufacturers, as well as the factors of sustainable
development and the green economy. In 2023, the good momentum in the overseas corrugated packaging
equipment market continued, and Fosber Group achieved strong growth in operating revenue and net profit with
sound business operations and more comprehensive development.
During 2023, Fosber Group recorded operating revenue of RMB2,917 million, up 8% YoY; and a net profit
of RMB286 million, up 28% YoY. From 2015 to 2023, Fosber Group's operating revenue and net profit grew at a
compound annual growth rate of 15% and 26%, respectively. The above-mentioned operating revenue and net
profit are both on a consolidated basis of Fosber Group.
Following a decrease in inflation rates in both the US and Europe in 2023 relative to 2022, Fosber Italy
observed a corresponding drop in the market prices of its key raw materials and energy costs, thereby mitigating
cost pressures. Additionally, the strain on the supply of electrical components that characterised 2022 eased
considerably in 2023, contributing to an uplift in Fosber Italy's overall gross profit margin compared to the
previous year. This culminated in an improvement of Fosber Italy's aggregate gross margins compared to 2022.
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In the European market, Fosber Italy sustained long-term, close collaboration with the continent's leading
firms and major players in the corrugated packaging industry, thereby securing robust backing for steady order
sales growth in the region. Meanwhile, in the U.S., Fosber America maintained its strong ties with the behemoths
in the American corrugated packaging sector, further entrenching its status as the premier supplier within the U.S.
corrugated packaging equipment market. Notably, Fosber America recorded a substantial revenue increase of
approximately 40% in 2023 compared to 2022. Across the Latin American and African markets, Fosber Group
also achieved noteworthy strides in 2023, successfully capturing orders for complete production line products.
The business of corrugated & pressure rollers:
In 2023, under the support of shareholders and the Board of Directors, the subsidiary Tirua Group launched
a new business plan, which is summarized as follows:
① Production ramp-up: It plans to invest nearly EUR10 million in this respect. After completion, Tirua
Group’s existing production capacity of corrugated & pressure rollers is expected to increase by nearly 60%.
② Improving production efficiency: It will implement the “Toyota Production System”, add production
shifts, as well as improve operational efficiency and capacity utilization. In 2023, the first phase has been
completed, and Tirua Group will extend the “Toyota Production System” to 2024 in order to further establish a
corporate culture of lean production.
As the business plan is being gradually implemented, Tirua Group’s vitality has been further stimulated,
driving faster growth. In 2023, Tirua Group achieved operating revenue of RMB0.23 billion.
Tirua as a pivotal component supplier to Fosber-branded corrugated lines and providing corrugated and
pressure rollers to Fosber Group, Tirua Group also furnishes high-performance corrugated and pressure rollers to
non-Group third-party clients, encompassing other-brand corrugated cardboard production line manufacturers and
corrugated packaging producers. During 2023, Tirua’s sales to external third-party customers grew by 15% YoY,
and the company successfully penetrated the supply chain of a prominent European corrugated packaging
conglomerate. Furthermore, in 2023, Tirua Group reinforced its competitive edge in both the American and
European markets.
b) Domestic operations
In 2023, Fosber Asia recorded operating revenue of RMB0.39 billion, up approximately 72% YoY, with an
approximately 150% YoY increase in sales of corrugated lines. This represents the best results ever for the
company since 2019. And the compound annual growth rate of operating revenue for the five consecutive years
from 2019 to 2023 is approximately 20%.
In 2023, Fosber Asia debuted its domestically developed premium S/Line 2.8m corrugated cardboard
production line along with the innovative "Instant Set" dual-module slitter, tackling the critical issue of rapid order
changes in corrugated production corrugator lines. During the year, it achieved sales breakthroughs with orders
secured both domestically and internationally. By the close of 2023, Fosber Asia amassed 83 granted invention
patents and software copyrights, marking a roughly 30% hike from the end of 2022. The company advanced the
localisation rate of its high-end domestic corrugated cardboard production lines, realising local production of
certain key components. While consistently delivering orders at a superior level, Fosber Asia also managed to
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further reduce costs and enhance efficiency in corrugated line manufacturing. With growing industry sway, an
increasing number of industrial clients partnered with Fosber Asia, embracing domestically produced high-end
corrugated cardboard production lines.
B. The business of corrugated box printing and packaging production lines
The overseas market: In 2023, Dongfang Precision (China) sustained its competitive edge, achieving notable
success in North America, Belt and Road countries, and beyond, securing favourable sales of complete production
line orders. The Company pursued a hybrid "agency + direct sales" approach in overseas market expansion.
Throughout the year, its international marketing team intensified outreach efforts, engaging in more face-to-face
interactions with foreign clients and yielding positive outcomes in developing direct sales regional markets.
Additionally, Dongfang Precision (China) fortified its international service team, continuously enhancing the
quality of product installation, delivery, and after-sales services in foreign markets. During the Reporting Period,
export revenue took up approximately 72% of Dongfang Precision (China)'s total revenue.
The domestic market: As China’s economy recovered in 2023, Dongfang Precision (China)’s domestic sales
grew approximately 44% YoY, and its domestic order intake for complete lines/machines went up over 58% YoY.
In May and July 2023, Dongfang Precision (China) exhibited at the 2023 China International Corrugated Festival,
China (Tianjin) Printing and Packaging Industry Expo 2023, and SinoCorrugated 2023, receiving a lot of attention
industry-wide and a multitude of pre-orders.
In production operations, Dongfang Precision (China) successfully completed the acceptance of its "Digital
Factory" project in 2023, integrating WPS scheduling, MES, WMS, SRM, and other modules to generate
comprehensive analytical reports on order progression, production performance, capacity utilization, quality
control, product traceability, and inventory management. These reports furnished valuable data to inform
production decisions, aiding in enhancing overall operational efficiency and lowering costs. During the Reporting
Period, Dongfang Precision (China) further optimised its production costs and boosted efficiency.
C. The business of digital printers
Wonder Digital, a majority-owned subsidiary, has been included in the Group’s consolidated financial
statements since June 2022. And in 2023, 100% of Wonder Digital’s operating revenue was included in the
consolidated financial statements of Dongfang Precision. During the Reporting Period, Wonder Digital achieved
operating revenue of RMB0.16 billion and an order intake of approximately RMB0.18 billion, creating a new
earnings growth curve for Dongfang Precision’s intelligent packaging equipment division.
Amid China’s economic recovery in 2023, the corrugated packaging industry, especially the numerous
third-tier factories, showed significantly greater recognition of the characteristics offered by digital printers
compared to traditional printing equipment, including lower one-time initial investment, greater variability in
printing data, and better adaptability to end packaging flexibility and short, flat, quick marketing needs, enabling
higher turnover, higher on-time delivery rates, and higher return on investment.
In 2023, Wonder Digital proactively ventured into markets by participating in eight domestic and
international trade shows, including events in Germany, Vietnam, Thailand, Indonesia, and the SinoCorrugated
expo in Shanghai, China. These exhibitions yielded a considerable number of potential orders, with around
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RMB50 million worth of intended orders secured during SinoCorrugated 2023 in Shanghai in July. The company
hosted two separate factory open days throughout the year, each drawing in hundreds of industry merchants and
partners. On these occasions, Wonder Digital showcased real-life instances where its digital printer technology
empowered tertiary factories to achieve profitability, sharing insights on packaging industry best practices. This
collaborative effort fostered a pioneering model for industry growth and shared prosperity.
In terms of new products and new technology, in 2023, Wonder Digital's four series of complete digital
printers saw continuous improvement and enhancement in performance and efficiency, particularly within the
realm of high-speed colour printing digital printers designed for the premium market segment. There was a
marked uptick in both machine stability and output, garnering acclaim from clients and translating into multiple
unit sales. Leveraging its robust R&D prowess in China's digital printer sector, Wonder Digital has forged an
enviable brand identity and industry standing. Its cutting-edge technology, superior reliability and stability, along
with a compelling price-to-performance ratio, constitute the core competitive strengths of Wonder Digital.
In July 2023, Wonder Digital was recognized as a State-level “Little Giant” Enterprise with specialties,
refined management, unique technologies and innovation.
2. The business division of water powersports equipment
In 2023, the majority-owned subsidiary Parsun Power recorded operating revenue of RMB737 million, up 29%
YoY, and a net profit of RMB95 million, up 30.95% YoY. In the year, Parsun Power sold 83.2 thousand units of
outboard motors, accounting for 11.50% of the global sales of low- and medium-horsepower outboard motors.
In 2023, Parsun Power's outboard motor sales revenue sustains robust growth due to persistent overseas
demand in water recreational activities and rising domestic substitution trends in specialised markets. Bolstered by
the necessity for medium- and high-horsepower domestic alternatives and the maturing domestic supporting
industrial chain, Parsun Power has effectively transitioned from focusing on low- and medium-horsepower
outboard motors to medium- and high-horsepower products.
With respect to sales, Parsun Power actively participated in exhibitions targeting domestic and overseas
watersports markets in 2023 to strengthen marketing efforts. It attended the China Shanghai International Boat
Show in March and the China Import and Export Fair in May. It actively developed markets along the "Belt and
Road", and the sales of its outboard motors in Russia and other countries grew well.
In terms of production, Parsun Power continued to tap the existing capacity potential, and outboard motor
output value continued to increase. In 2023, the construction of a new green digital and intelligence factory with
an annual production capacity of 76,400 units of high-end water powersports equipment and the construction of a
new R&D centre was officially started. This project builds upon Parsun Power's current core business, aligning
with national industrial policies and industry-specific developmental traits, leveraging existing technologies to
augment and upgrade present operations. Upon completion and commissioning, it is anticipated to broaden the
production and sales scale of outboard motors, thereby capitalising on the company's technological prowess,
product offerings, customer base, brand equity, and management assets. This strategic move aims to reinforce
market competitiveness, promote sustainable growth, and fortify resilience against fluctuations in market
conditions.
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In January 2023, the application for Parsun Power’s IPO on the ChiNext board of the Shenzhen Stock
Exchange was approved at the second meeting in 2023 of the ChiNext Board Listing Committee of the Shenzhen
Stock Exchange. Currently, Parsun Power’s IPO application is under review in a normal, orderly manner before
the relevant information can be registered with the China Securities Regulatory Commission (CSRC).
(III) Analysis of key financial indicators
1. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2023 2022
As a % of total As a % of total
Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%) (%)
Total 4,745,737,321.83 100% 3,892,708,509.64 100% 21.91%
By operating division
Intelligent
4,745,737,321.83 100.00% 3,892,708,509.64 100.00% 21.91%
manufacturing
By product category
Corrugated
cardboard 3,209,889,258.08 67.64% 2,603,549,326.99 66.89% 23.29%
production lines
Corrugated box
printing and
packaging 798,784,145.98 16.83% 717,169,922.31 18.42% 11.38%
production line
equipment
Water powersports
products and 737,063,917.77 15.53% 571,989,260.34 14.69% 28.86%
general machines
By operating segment
Mainland China 744,020,072.39 15.68% 441,664,388.05 11.35% 68.46%
Other countries
4,001,717,249.44 84.32% 3,451,044,121.59 88.65% 15.96%
and regions
By sales mode
Direct selling 3,977,761,773.94 83.82% 3,229,852,665.56 82.97% 23.16%
Distribution
767,975,547.89 16.18% 662,855,844.08 17.03% 15.86%
selling + reselling
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(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Operating
Revenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
YoY change
YoY change YoY change
Gross profit in gross
Operating revenue Cost of sales in operating in cost of
margin profit
revenue (%) sales (%)
margin (%)
By operating division
Intelligent manufacturing 4,745,737,321.83 3,359,528,546.01 29.21% 21.91% 18.57% 1.99%
By product category
Corrugated cardboard
3,209,889,258.08 2,291,568,630.42 28.61% 23.29% 18.02% 3.19%
production lines
Corrugated box printing
and packaging production 798,784,145.98 522,704,680.37 34.56% 11.38% 13.95% -1.47%
line equipment
Water powersports
products and general 737,063,917.77 545,255,235.22 26.02% 28.86% 25.98% 1.69%
machines
By operating segment
Mainland China 744,020,072.39 559,477,908.69 24.80% 68.46% 70.90% -1.07%
Other countries and
4,001,717,249.44 2,800,050,637.32 30.03% 15.96% 11.74% 2.64%
regions
By sales mode
Direct selling 3,977,761,773.94 2,817,945,983.44 29.16% 23.16% 19.78% 2.00%
Distribution selling +
767,975,547.89 541,582,562.57 29.48% 15.86% 12.67% 1.99%
reselling
Under the circumstances that the statistical caliber of the Company's main business data is adjusted in the Reporting Period, the
Company's main business data that adjusted according to the caliber at the end of the Reporting Period
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
Operating division Item Unit 2023 2022 Change (%)
Corrugated Unit sales Unit 194.00 160.00 21.25%
cardboard
Output Unit 195.00 162.00 20.37%
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Operating division Item Unit 2023 2022 Change (%)
production lines Inventory Unit 4.00 3.00 33.33%
Corrugated box Unit sales Unit 350.00 233.00 50.21%
printing and
Output Unit 323.00 229.00 41.05%
packaging
production line
Inventory Unit 24.00 51.00 -52.94%
equipment
Water powersports Unit sales Unit 47.35 32.05 47.75%
products and
Output Unit 48.04 30.10 59.53%
general machines
Inventory Unit 1.56 0.94 65.96%
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
The over 30% YoY increase in the inventory of corrugated cardboard production lines is primarily driven by the increased
orders in the current period.
The over 30% YoY increases in the output and unit sales of corrugated box printing and packaging production line equipment
are primarily driven by the increased sales in the current period; and the over 30% YoY decrease in inventory is mainly because the
lead time for digital printers has been shortened as a result of optimized supply chain management after the acquisition of Wo nder
Digital.
The over 30% YoY increases in the output and unit sales of water powersports products and general machines are prima rily
driven by the increased sales in the current period; and the over 30% YoY increase in inventory is primarily driven by the increased
orders in the current period.
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
Unit: RMB
2023 2022
Product As a % of As a % of
Item Change (%)
category Cost of sales total cost of Cost of sales total cost of
sales (%) sales (%)
Corrugated Raw materials 1,386,840,647.93 41.27% 1,132,363,095.01 39.97% 22.47%
cardboard
Labor cost 398,729,132.93 11.87% 335,242,775.36 11.83% 18.94%
production
lines Other 505,998,849.56 15.06% 474,152,150.56 16.73% 6.72%
Corrugated box Raw materials 394,267,397.00 11.74% 345,662,621.86 12.20% 14.06%
printing and
Labor cost 64,402,686.38 1.92% 53,218,657.90 1.88% 21.02%
packaging
production line
Other 64,034,596.99 1.91% 59,845,931.02 2.11% 7.00%
equipment
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Water Raw materials 492,291,198.10 14.65% 384,529,146.81 13.57% 28.02%
powersports Labor cost 30,152,308.98 0.90% 28,498,837.44 1.01% 5.80%
products and
general Other 22,811,728.14 0.68% 19,792,532.58 0.70% 15.25%
machines
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
□ Yes √ No
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √Not applicable
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 1,119,524,077.70
Total sales to top five customers as a % of total sales of the
23.59%
Reporting Period (%)
Total sales to related parties among top five customers as a %
0.00%
of total sales of the Reporting Period (%)
Top five customers:
Sales revenue contributed for As a % of total sales revenue
No. Customer
the Reporting Period (RMB) (%)
1 Customer A 552,766,086.28 11.65%
2 Customer B 219,131,889.02 4.62%
3 Customer C 150,976,218.92 3.18%
4 Customer D 101,688,898.65 2.14%
5 Customer E 94,960,984.83 2.00%
Total -- 1,119,524,077.70 23.59%
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 432,374,216.43
Total purchases from top five suppliers as a % of total
17.28%
purchases of the Reporting Period (%)
Total purchases from related parties among top five suppliers as
0.00%
a % of total purchases of the Reporting Period (%)
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Top five suppliers:
Purchase in the Reporting
No. Supplier As a % of total purchases (%)
Period (RMB)
1 Supplier A 230,840,463.13 9.23%
2 Supplier B 66,629,892.51 2.66%
3 Supplier C 57,264,853.07 2.29%
4 Supplier D 39,876,913.91 1.59%
5 Supplier E 37,762,093.81 1.51%
Total -- 432,374,216.43 17.28%
Other information about major suppliers:
□ Applicable √ Not applicable
2. Expenses
Unit: RMB
2023 2022 Change (%) Reason for any significant change
1. Increase in sales activities leads to
increase in advertising and exhibition
expenses and travel expenses.
Selling expenses 278,840,528.93 182,555,875.71 52.74% 2. Increase in product quality deposit,
commission and agency service fees due
to sales growth.
3. The impact of exchange rate changes.
Mainly due to the increase in employee
Administrative
344,224,692.51 311,463,613.16 10.52% compensation and the impact of
expenses
exchange rate changes.
Finance costs -1,089,616.70 -8,970,693.69 -87.85% Mainly due to exchange rate changes.
Mainly due to increased investment in
R&D expenses 127,566,482.42 97,954,453.40 30.23%
research and development.
3. R&D Investments
√ Applicable □ Not applicable
Objectives to be Expected impact on the
Main R&D projects Purpose Project progress
achieved Company
To provide one-stop The project includes
iDataPioneer, Industrial Become a profit growth
smart factory solutions IoT platform, big data
Internet Platform 2.0 point for the Company's
for corporate customers Completed platform and intelligent
for the packaging industrial Internet
including but not application platform
industry platform business
limited to the paper products to help
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packaging industry customers achieve
intelligent
transformation of
equipment, integrated
production, operation
and management,
intelligent
decision-making and
agile innovation.
To introduce the
world-leading high-end Further enrich the
corrugated cardboard Company's product
production line and portfolio which can
Localization of a
make it localized to Mass production for become a new profit
world-leading high-end
meet the needs of Promote as planned sales in the domestic growth point for the
corrugated cardboard
Chinese customers for market Company's corrugated
production line
the highest-end and box printing and
highest-speed packaging production
corrugated cardboard line machinery.
production line.
Meet the demand for
To make up the blank
high-horsepower
market of
outboard motors in
high-horsepower
High-horsepower Mass production for domestic and
outboard motors, and Promote as planned
outboard motors sales in the world international markets,
further enhance the
becoming a new profit
competitiveness of
growth point for the
products.
Company.
To develop a
battery-powered
The electric outboard Meet market demand
outboard motor to
Electric outboard motor has been Mass production for and become a new
further enhance product
motors developed and put into sales in the world profit growth point for
competitiveness in the
mass production. the Company.
new energy outboard
motor market.
Details about R&D personnel:
2023 2022 Change (%)
Number of R&D personnel 335 327 2.45%
R&D personnel as a % of total
14.80% 15.49% -0.69%
employees
Educational background of R&D personnel
Bachelor’s degree 163 146 11.64%
Master’s degree 25 25 0.00%
Other 147 156 -5.77%
Age structure of R&D personnel
Under 30 91 80 13.75%
30-40 141 140 0.71%
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Other 103 107 -3.74%
Details about R&D investments:
2023 2022 Change (%)
R&D investments (RMB) 129,198,284.64 101,656,683.16 27.09%
R&D investments as a % of
2.72% 2.61% 0.11%
operating revenue
Capitalized R&D investments
1,631,802.22 3,702,229.76 -55.92%
(RMB)
Capitalized R&D investments
as a % of total R&D 1.26% 3.64% -2.38%
investments
Reasons for any significant change to the composition of R&D personnel and the impact:
□ Applicable √ Not applicable
Reasons for any significant YoY change in the percentage of R&D investments in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D investments and rationale:
√ Applicable □ Not applicable
Mainly due to the completion of R&D for capitalized projects.
4. Cash Flows
Unit: RMB
Item 2023 2022 Change (%)
Subtotal of cash generated
4,773,160,187.72 4,083,606,350.48 16.89%
from operating activities
Subtotal of cash used in
4,285,979,449.06 3,577,311,889.53 19.81%
operating activities
Net cash generated from/used
487,180,738.66 506,294,460.95 -3.78%
in operating activities
Subtotal of cash generated
2,827,005,182.87 5,502,146,075.67 -48.62%
from investing activities
Subtotal of cash used in
3,013,612,153.30 5,939,677,869.61 -49.26%
investing activities
Net cash generated from/used
-186,606,970.43 -437,531,793.94 -57.35%
in investing activities
Subtotal of cash generated
857,532,104.79 998,366,302.50 -14.11%
from financing activities
Subtotal of cash used in
768,667,640.45 1,133,800,124.92 -32.20%
financing activities
Net cash generated from/used 88,864,464.34 -135,433,822.42 -165.61%
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
in financing activities
Net increase in cash and cash
438,793,914.57 -25,583,078.47 -1,815.17%
equivalents
Explanation of why any of the data above varies significantly on a year-on-year basis:
√ Applicable □ Not applicable
(1) Net cash generated from operating activities was RMB487.1807 million, primarily because the Company's revenue growth
during the Reporting Period.
(2) Net cash used in investing activities was RMB186.6070 million, primarily driven by the increased investment in long-term
assets during the Reporting Period.
(3) Net cash generated from financing activities was RMB88.8645 million, primarily driven by the combined effects of the share
repurchase and the recovery of some security deposits for loans during the Reporting Period.
(4) Net increase in cash and cash equivalents was RMB438.7939 million, primarily driven by net cash generated from operating
and financing activities during the Reporting Period.
Explanation of why the net cash generated from/used in operating activities varies significantly from the net profit of the Reporting
Period:
□ Applicable √ Not applicable
V Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
Amount As a % of gross profit Primary source/reason Recurrent or not
Mainly due to the
Gains on wealth
management product
Return on investment 10,707,429.16 1.63% Yes
and securities
investments during the
period
Mainly due to the fair
value changes of
Gain/loss on changes securities investments
47,387,905.11 7.19% Yes
in fair value and financial
investments during the
period
Mainly due to the
Asset impairment loss -17,217,097.39 -2.61% provision for decline in No
value of inventories.
Non-operating income 5,974,641.17 0.91% No significant impact. No
Non-operating 16,152,375.18 2.45% Mainly due to the No
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
expenses payment of tax-related
expenses
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2023 1 January 2023 Change in
Reason for any
As a % of total As a % of total percentage
Amount Amount significant change
assets assets (%)
Mainly due to the
recovery of security
Cash and bank deposits for the
1,826,419,904.49 24.23% 1,274,447,199.74 18.39% 5.84% internal guarantees
balances
and external loans
that are due within
one year.
Accounts Mainly due to the
904,003,975.47 11.99% 837,305,757.46 12.08% -0.09%
receivable increased sales.
No significant
Contract assets 45,946,377.14 0.61% 65,089,851.21 0.94% -0.33%
change.
Mainly due to the
Inventories 1,182,411,055.68 15.69% 1,092,981,884.51 15.77% -0.08% increased stocks as a
result of more orders
Long-term Mainly due to the
capital increase to
equity 117,265,884.84 1.56% 95,352,681.52 1.38% 0.18%
Nanjing Profeta
investments during the period.
No significant
Fixed assets 611,851,577.04 8.12% 570,200,113.79 8.23% -0.11%
change.
Mainly due to the
Construction in increased investment
195,557,097.80 2.59% 38,904,537.85 0.56% 2.03%
progress in long-term assets
during the period.
Right-of-use No significant
82,342,398.83 1.09% 86,448,978.02 1.25% -0.16%
assets change.
Mainly due to the
Short-term short-term
370,549,972.80 4.92% 41,815,129.24 0.60% 4.32%
borrowings borrowings received
during the period.
Contract No significant
645,608,919.34 8.56% 692,567,968.60 10.00% -1.44%
liability change.
Long-term No significant
79,107,701.15 1.05% 57,884,494.89 0.84% 0.21%
borrowings change.
No significant
Lease liabilities 65,861,441.32 0.87% 68,989,111.33 1.00% -0.13%
change.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Mainly due to the
recovery of security
Current portion deposits for the
of non-current 5,970,000.00 0.08% 311,763,750.00 4.50% -4.42% internal guarantees
assets and external loans
that are due within
one year.
No significant
Goodwill 440,633,826.08 5.85% 430,916,848.74 6.22% -0.37%
change.
Mainly due to the
Current portion repayment of
of non-current 57,001,396.44 0.76% 315,767,431.26 4.56% -3.80% borrowings that are
liabilities due within one year
during the period.
Overseas assets that take up a large percentage of the Company’s net asset value:
√ Applicable □ Not applicable
Control As a % of the
Any material
Asset value Management measures to Company’s
Asset Source Location Return impairment
(RMB) model protect asset net asset
risk or not
safety value
100% Producing
interest of and Operation
M&A 1,084,502,996.19 Italy Good 22.91% Not
Fosber marketing by management
S.p.A. itself
Producing
100%
and Operation
interest of M&A 36,162,008.90 Italy Good 0.76% Not
marketing by management
EDF S.R. L
itself
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Cumulative
Impairment
fair-value
Gain/loss on fair-value allowance
Item Opening amount changes Purchased in the period Sold in the period Other changes Closing amount
changes in the period for the
recognized
period
in equity
Financial assets
1. Financial assets
held for trading
(exclusive of 860,049,558.59 -35,069,801.61 2,581,570,596.21 2,755,254,085.43 651,296,267.76
derivative financial
assets)
2. Derivative
782,720.29 -21,269,301.59 52,053,065.57 237,309.58 31,329,174.69
financial assets
5.Other non-current
334,449,603.33 74,779,681.84 56,924,222.10 4,875,247.60 0.00 461,278,259.67
financial assets
Subtotal of financial
1,195,281,882.21 18,440,578.64 0.00 0.00 2,690,547,883.88 2,760,366,642.61 0.00 1,143,903,702.12
assets
Other non-current
248,630.14 10,000,000.00 10,248,630.14
financial assets
Total of the above 1,195,281,882.21 18,689,208.78 0.00 0.00 2,700,547,883.88 2,760,366,642.61 0.00 1,154,152,332.26
Financial liabilities 193,418,848.13 649,723.36 0.00 161,616.03 57,022,555.58 1,112,050.07 138,319,682.01
Particulars about other changes: Other changes are mainly exchange movements.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Indicate whether any significant change occurred to the measurement attributes of the major assets in the Reporting Period. □ Yes √ No
3. Assets to which the Company’s Rights Were Restricted as at the Period-End
Unit: RMB
Item Closing carrying amount Reason for restriction
Cash and bank balances 153,905,292.65 Deposits used for obtaining bank acceptance bills and guarantees, etc.
Fixed assets 4,460,554.82 For bank loans obtained by subsidiaries
Total 158,365,847.47
VII Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
Total investment amount in 2023 (RMB) Total investment amount in 2022 (RMB) Change (%)
1,002,404,107.56 1,227,440,484.73 -18.33%
2. Significant Equity Investments Acquired in the Reporting Period
□ Applicable √Not applicable
3. Significant Non-Equity Investments of which the Acquisition Was Uncompleted in the Reporting Period
□ Applicable √ Not applicable
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
Cum
ulati
ve
fair-v
Gain/loss on alue Fund
Secu Measure
Security Initial investment Opening fair-value chan Purchased in the Gain/loss in the Closing carrying Accounting ing
Security type rity ment Sold in the period
code cost carrying amount changes in the ges period period amount title sourc
name method
period recog e
nized
in
equit
y
Do mestically/ Financial Self-
603566.S
overseas listed Pleco 62,847,290.00 Fair value -16,444,235.00 62,847,290.00 -16,444,235.00 46,403,055.00 assets held fund
H
stocks for trading ed
Baim
Do mestically/ Financial Self-
688563.S tec
overseas listed 73,172,079.31 Fair value 2,863.49 73,172,079.31 2,863.49 73,174,942.80 assets held fund
H Mate
stocks for trading ed
rial
Mont
Do mestically/ Financial Self-
002123.S nets
overseas listed 96,999,559.37 Fair value -22,240,559.28 96,999,559.37 11,146,564.21 -20,088,065.16 65,764,930.00 assets held fund
Z Tech
stocks for trading ed
nolo
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
gy
Do mestically/ Financial Self-
Othe
overseas listed 165,553,521.28 Fair value 165,553,521.28 206,853,810.22 412,641,774.17 40,234,442.67 assets held fund
rs
stocks for trading ed
Financial Self-
Trust products 717,241.38 Fair value 717,241.38 -717,241.38 -717,241.38 assets held fund
for trading ed
Financial Self-
Funds 342,596,480.19 Fair value 342,596,480.19 -1,613,387.04 337,000,000.00 344,223,085.24 -3,082,669.38 332,290,725.57 assets held fund
for trading ed
Financial Self-
Others 351,182,315.74 Fair value 351,182,315.74 5,942,757.60 1,804,697,857.31 2,105,755,188.86 83,537,630.20 133,662,614.39 assets held fund
for trading ed
Total 1,093,068,487.27 -- 860,049,558.59 -35,069,801.61 0.00 2,581,570,596.21 2,873,766,612.48 83,442,725.44 651,296,267.76 -- --
Disclosure date of the board
announcement approving the March 28, 2023
securities investments
Disclosure date of the general
meeting announcement approving 2April 18, 2023
the securities investments (if any)
(2) Investments in Derivative Financial Instruments
√ Applicable □Not applicable
1) Derivative Investments for Hedging Purposes in the Reporting Period
√ Applicable □Not applicable
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Unit: RMB'0,000
Cumulative Closing amount
Gain/loss on
Initial investment fair-value changes Purchased in the Sold in the as % of the
Type of derivative Opening amount fair-value changes Closing amount
amount recognized in Reporting Period Reporting Period Company’s closing
in the period
equity equity
Fixed forward 1,134.3 1,134.3 -6.1 0 3,741.2 4,875.5 0 0.00%
Total 1,134.3 1,134.3 -6.1 0 3,741.2 4,875.5 0 0.00%
Description of
significant changes
in accounting
policies and specific
financial accounting
principles in respect
No significant change
of the Company's
hedges for the
Reporting Period as
compared to the
prior reporting
period
Actual gains/losses
in the Reporting During the Reporting Period, the actual loss on derivative contracts for hedging purposes stood at RMB-61 thousand.
Period
Results of hedges Currently not available
Funding source Self-funded
Risk analysis of
positions held in
derivatives during
the Reporting Period
The above-mentioned hedging transactions are mainly intended to avert and prevent risks arising from fluctuations in exchange rates. In the Rules on the Management of Financial
and description of
Derivative Transaction Business formulated by the Company, the operating rules, review and approval authority, routine management, and risk control mechanisms on the financial
control measures
derivative transaction business have been prescribed to standardize business operation as well as prevent and control related risks. Chinese futures exchanges have established
(Including but not
well-improved risk control mechanisms. As future exchanges assume the performance responsibility, there is a low probability of credit risk. The Company will strengthen the
limited to market
understanding and mastering of national policies and requirements of relevant governing bodies to avoid related credit and legal risks.
risk, liquidity risk,
credit risk,
operational risk,
legal risk, etc.)
Changes in market Undue forward forex settlement and sale contracts are measured at fair value, i.e., the difference between the signing price of an undue forward forex settlement and sale contract held
prices or fair value at the period-end and the bank’s forward forex rates at the period-end.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
of derivative
products during the
Reporting Period,
specific methods
used, and relevant
assumption and
parameter settings
shall be disclosed
for analysis of fair
value of derivatives
Legal matter (if
N/A
applicable)
Disclosure date of
the announcement
about the board’s
28 March 2023
consent for the
derivative
investment (if any)
Disclosure date of
the announcement
about the general
18 April 2023
meeting’s consent
for the derivative
investment (if any)
1. The proposed futures and derivatives trading business of the Company and its subsidiaries is based on the actual situation of the Company and on the premise of ensuring the capital
requirements for daily business operations and effective control of investment risks. Carrying out commodity and foreign exchange hedging business is conducive to reducing the
Company's operational and performance risks caused by the price fluctuations of raw materials, and foreign currency exchange rate fluctuations. At the same time, the moderate
Special opinions
implementation of derivatives trading business is conducive to improving the efficiency of the use of funds and investment returns, and enriching the ways of investment for the
expressed by
Company’s own funds. 2. The Company has prepared the rules on the internal control management of the financial derivate transaction business by relevant regulatory prescriptions,
independent
which is conducive to standardizing and strengthening the risk control management of financial derivative transactions. The Board of Directors of the Company has performed the
directors
necessary review and approval procedures for this matter in a legal and rule-compliant manner. No illegalities or violations of regulations and Articles of Association have occurred.
concerning the
The Company has accumulated certain business experience in futures and derivatives trading, and the relevant feasibility analysis report has fully explained the necessity and feasibility
Company's
of the business as well as the related risks. 3. In strict compliance with the Stock Listing Rules of the Shenzhen Stock Exchange (Revised in 2023), the Guideline No. 7 of the Shenzhen
derivatives
Stock Exchange for the Self-regulation of Listed Companies--Transactions and Related-party Transactions (Revised in 2023), and other relevant laws and regulatory guidelines, the
investment and risk
Company shall make prudent decisions and conduct prudent management, inspections and monitoring of the futures and derivative transactions of the Company and its subsidiaries,
control
strictly control risks, and promptly discharge the information disclosure duty. 4. We hold that the futures and derivative trading business of the Company and its subsidiaries does not
prejudice the interests of the Company and all shareholders, particularly not impair the interests of non-controlling shareholders. Therefore, we approve this matter and suggest
submitting it to the General Meeting of Shareholders of the Company for deliberation.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
2) Derivative Investments for Speculative Purposes in the Reporting Period
√ Applicable □Not applicable
Unit: RMB'0,000
Closing
Actual
Purchased investment
Relationship Initial Opening Sold in the Impairment Closing gain/loss
Related Type of Start End in the amount as %
Counterparty with the investment investment Reporting allowance (if investment in the
transaction derivative date date Reporting of the
Company amount amount Period any) amount Reporting
Period Company’s
Period
closing equity
Shenwan 15 19
Hongyuan N/A No Accumulator 5,000 August August 0 5,000 0 0 2,871 0.64% -2,129
Securities 2023 2024
Total 5,000 -- -- 0 5,000 0 0 2,871 0.64% -2,129
Funding source Self-funded
Legal matter (if applicable) N/A
Disclosure date of the announcement about the board’s consent
28 March 2023
for the derivative investment (if any)
Disclosure date of the announcement about the general
18 April 2023
meeting’s consent for the derivative investment (if any)
Risk analysis:
1. Decision-making risk: The Company's involvement in futures and derivatives trading is influenced by a variety of factors, including
international and domestic economic policies, economic conditions, developments in the underlying commodity sectors, fluctuations in
exchange rates and interest rates. Furthermore, this type of trading is inherently complex and requires a high level of specialisation, thus
carrying a certain degree of risk in trading decision-making processes.
2. Market risk: Financial markets are susceptible to macroeconomic conditions, industry cycles, and numerous other influences, causing
Risk analysis of positions held in derivatives during the
linked underlyings in snowball products to fluctuate during holding periods, leading to variable valuations that could result in substantial
Reporting Period and description of control measures (Including
gains or losses. Exchange rate movements are bi-directional; in the context of forward exchange rates, there's a possibility that locked-in
but not limited to market risk, liquidity risk, credit risk,
forward exchange transactions may lead to settlement exchange rates below the company's book rate on the delivery date, potentially
operational risk, legal risk, etc.)
generating foreign exchange losses. Additionally, due to factors tied to futures and other derivative markets, futures prices and spot prices
might exhibit discrepancies in timing and volatility, such that during the hedging period, related businesses could incur either additional
profits or losses.
3. Liquidity risk: A sudden and extreme shift in the relevant price index, or managing excessively large positions, could potentially result in
untimely margin calls and force the liquidation of positions, thereby exposing the Company to liquidity risks.
4. Policy and legal risks: The Company may suffer losses due to alterations in the legal framework, non-compliance with relevant laws,
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
regulations, or contractual breaches by counterparties, leading to improper execution of contracts.
5. Other risks: During transaction execution, failing to adhere to standard procedures for derivatives trading or inadequate comprehension of
derivative product information can introduce operational risks, potentially leading to losses stemming from non-compliant actions or
unforeseen legal contingencies.
Description of control measures:
1. In the Rules on the Management of Financial Derivative Transaction Business formulated by the Company, the operating rules, review
and approval authority, routine management, and risk control mechanisms on the financial derivative transaction business have been
prescribed to standardise business operation as well as prevent and control related risks.
2. The Company will diligently select qualified financial institutions for partnership and may engage experienced external professionals
when needed to offer advisory services. This ensures thorough and methodical research and analysis prior to investments, thereby
minimising operational risks and performance uncertainties.
3. Throughout its business operations, the Company and its associates rigorously comply with applicable national laws and regulations to
avert legal hazards. They conduct regular supervision and inspections to ensure the derivatives business's standardisation, internal control
efficacy, and information disclosure accuracy. They closely monitor shifts in domestic and international regulatory policies and changes to
relevant rules, proactively adjusting hedging strategies accordingly to mitigate potential policy risks well ahead of time.
4. Domestic futures exchanges maintain a robust risk control framework, assuming clearing responsibilities, thereby reducing the likelihood
of credit risk significantly. The Company will diligently stay informed and aligned with national policies and management body
requirements to mitigate credit and legal risks effectively.
5. The Company will steadfastly uphold cautious investment principles, consistently enhancing its analysis and research on economic
policies, market conditions, and environmental shifts, promptly adjusting its investment strategies and scales as needed. Moreover, it will
continuously fortify the professional education of its team members, elevating the proficiency of its practitioners.
6. The internal audit departments of the Company are responsible for supervising and verifying the implementation of futures and
derivatives trading business, proposing timely rectification opinions on existing problems, and reporting to the Audit Committee of the
Board of Directors of the Company.
Changes in market prices or fair value of derivative products
during the Reporting Period, specific methods used, and
Based on market value changes
relevant assumption and parameter settings shall be disclosed
for analysis of fair value of derivatives
Description of significant changes in accounting policies and
specific financial accounting principles in respect of the
No significant change
Company's derivatives for the Reporting Period as compared to
the prior reporting period
1. The proposed futures and derivatives trading business of the Company and its subsidiaries is based on the actual situation of the
Company and on the premise of ensuring the capital requirements for daily business operations and effective control of investment risks.
Special opinions expressed by independent directors concerning Carrying out commodity and foreign exchange hedging business is conducive to reducing the Company's operational and performance risks
the Company's derivatives investment and risk control caused by the price fluctuations of raw materials, and foreign currency exchange rate fluctuations. At the same time, the moderate
implementation of derivatives trading business is conducive to improving the efficiency of the use of funds and investment returns, and
enriching the ways of investment for the Company’s own funds. 2. The Company has prepared the rules on the internal control management
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
of the financial derivate transaction business by relevant regulatory prescriptions, which is conducive to standardizing and strengthening the
risk control management of financial derivative transactions. The Board of Directors of the Company has performed the necessary review
and approval procedures for this matter in a legal and rule-compliant manner. No illegalities or violations of regulations and Articles of
Association have occurred. The Company has accumulated certain business experience in futures and derivatives trading, and the relevant
feasibility analysis report has fully explained the necessity and feasibility of the business as well as the related risks. 3. In strict compliance
with the Stock Listing Rules of the Shenzhen Stock Exchange (Revised in 2023), the Guideline No. 7 of the Shenzhen Stock Exchange for
the Self-regulation of Listed Companies--Transactions and Related-party Transactions (Revised in 2023), and other relevant laws and
regulatory guidelines, the Company shall make prudent decisions and conduct prudent management, inspections and monitoring of the
futures and derivative transactions of the Company and its subsidiaries, strictly control risks, and promptly discharge the information
disclosure duty. 4. We hold that the futures and derivative trading business of the Company and its subsidiaries does not prejudice the
interests of the Company and all shareholders, particularly not impair the interests of non-controlling shareholders. Therefore, we approve
this matter and suggest submitting it to the General Meeting of Shareholders of the Company for deliberation.
5. Use of Raised Funds
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
VIII Sale of Major Assets and Equity Investments
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IX Principal Subsidiaries and Joint Stock Companies
√ Applicable □ Not applicable
Principal subsidiaries and joint stock companies with an over 10% effect on the consolidated net profit:
Unit: RMB
Relations
hip with Principal Registered Operating Operating
Name Total assets Net assets Net profit
the activities capital revenue profit
Company
R&D,
processing,
manufacturin
g, and
marketing of
corrugated
Fosber Subsidiar EUR1.56 2,533,392,1 1,097,001,6 2,916,671,0 423,314,65 286,150,42
cardboard
Group y million 32.87 59.96 04.26 1.23 6.36
production
lines and
parts, as well
as provision
of after-sales
services
Shunyi
Investment is
principally
engaged in
business
entity and
Shunyi Subsidiar project RMB10 721,560,09 421,113,52 737,063,91 108,003,11 95,054,932.
Investment y investments, million 9.51 1.73 7.77 1.04 64
etc. It is the
direct
controlling
shareholder
of Parsun
Power.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
X Structured Bodies Controlled by the Company
√ Applicable □ Not applicable
1. In March 2021, the Company established Tianjin Hangchuang Zhijin Investment Partnership (Limited
Partnership) (the "Tianjin Hangchuang Fund" or the "Partnership") with AVIC Innovation Capital Management
Co., Ltd. The Company, as the sole LP of the Fund, subscribed for the Partnership's contribution share of
RMB20,000,000. The Fund is a special fund which is to invest in the equity of Sichuan Dajin Stainless Steel Co.,
Ltd. (now renamed as Chengdu Dajin Aero-Tech Co., Ltd.).
This investment is in line with the Company’s development strategy considering the Fund’s investment direction,
decision-making, management, income distribution, loss allocation, etc. From the perspective of business nature,
the Company provides much of the capital of the Tianjin Hangchuang Fund, so it is reasonable to include the
Fund in the Company’s consolidated financial statements of the Reporting Period.
2. In March 2022, the wholly owned subsidiary Yineng Investment indirectly invested in Beijing Sinoscience
Fullcryo Technology Co., Ltd. (referred to as "Fullcryo" in this Report) and Sinoscience Fullcryo (Zhongshan)
Equipment Manufacturing Co., Ltd. by making a capital contribution to a limited partnership and obtained
non-controlling interests of the two companies.
As one of the limited partners of the partnership, Yineng Investment accounts for 94.86% of the total capital
contributions. Considering the partnership's agreements on investment orientation, investment decisions, operation
and management, income apportionment, and loss bearing, and the fact that Yineng Investment accounts for the
majority of the capital contributions to the partnership, the partnership is included in the consolidated statements
of Dongfang Precision as a "structured body controlled by the Company" from the perspective of commercial
substance and after complying with the Accounting Standard for Business Enterprises and referring to the
professional opinions of the independent auditor.
XI Prospects
(I) The Company's development strategy
1. Company vision
Business purposes of the Company: To become an industrial group with high influence in its areas, trust from
customers and shareholders, and respect from employees; uphold the business philosophies of "Integrity,
Innovation and Excellence", and achieve mutual benefits with customers, shareholders, employees and the
society.
2. Corporate strategy
In 2022, the Company completed its strategic plan for the third five-year period (2018-2022). Looking back
at the past five years, the Company achieved 100.1% of its strategic objectives of operating revenue and 96.9% of
its strategic objectives of net profit. To be specific, the Company's annual operating revenue (excluding the impact
of Pride) has expanded from RMB2,377 million in 2018 to RMB3,893 million in 2022, representing a compound
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annual growth rate of approximately 13.13%, and its annual net profit (excluding the impact of Pride) has
increased from RMB209 million in 2018 to RMB484 million in 2022, with a compound annual growth rate of
approximately 23.24%. These results demonstrate the strong capabilities of the Company’s management team in
scientific decision-making and strategic planning, as well as the competence of efficient strategic execution and
realization of all staff of the Company. These capabilities are a solid foundation for the Company's sound and
sustainable growth in the future.
Currently, the Company has formulated its strategic plan for the fourth five-year period (2023-2027). During
the period from 2023 to 2027, the Company will adhere to the strategy of "a wealth of talent" and "cultural
guidance" as the solid support, and promote the five strategies of "business concentration", "extended investment",
"globalization", "digitalization" and "collaboration" to achieve the goal of "to become an industrial group with
high influence in its areas, trust from customers and shareholders, and respect from employees". .
The Company's strategic plan for the fourth five-year period (2023-2027)
To become an industrial group
with
high influence in its areas, trust from customers and
shareholders, and respect from employees
"1+N" development model
Business Extended
concentration investment Globalization Digitalization Collaboration
strategy
Focus on
strategy
Follow the guidance
Global marketing, Realize close
"integrated of the Group's Improve the
strategic plan, seek global operation, and a collaboration
corrugated internal IT system,
global business among all business
packaging business synergies, build digitalized
explore new business portfolio divisions by giving
solutions", carry on factories, increase play to the Group
with the spin-off opportunities, and management Headquarters’
listing of the facilitate the Group's effectiveness, and
business of "water robust development functions
support better
powersports with the principal production
equipment", and businesses as the core efficiency
continuously and extended
optimize capital investment as the
operation support
"A wealth of Talent" × "Cultural Guidance"
Details are as follows:
Business concentration strategy: Focus on the two major business divisions of “intelligent packaging
equipment” and “water powersports equipment” and strengthen the endogenous growth constantly, as
well as complete the spin-off listing of the subsidiary Parsun Power with its business of "water
powersports products" for better development.
Extended investment strategy: Follow the guidance of the Group's strategic plan, seek business
synergies, explore new business opportunities, and facilitate the Group's robust development with the
principal businesses as the core and extended investment as the support, as well as use such means as
M&A, financial investment and the spin-off listing of subsidiary to accumulate momentum for higher
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
growth.
Globalization strategy: Committed to the globalization of the marketing network, management and
operation and the business portfolio.
Digitalization strategy: Internally, continue to enhance the IT system to improve management
effectiveness and support the improvement of operational efficiency; externally, build digital factories
as a benchmark in the equipment manufacturing industry, provide modular digital factory solutions, and
facilitate the digital transformation of the industrial chain.
Collaboration strategy: Accelerate the building of a three-tier group operation structure of "Group
Headquarters + Business Divisions + Profit Generating Units", realize close collaboration among all
business divisions by giving play to the Group Headquarters’ functions, as well as strengthen the
organizing ability and the collaboration mechanism for group operation
A wealth of talent strategy: Enhance cross-culture leadership, optimize the talent management system,
build an excellent management team, etc.
Cultural guidance strategy: Establish common goals and values for the Group, build the Group as an
international family, and lead the Group and subsidiaries towards common growth.
(II) The Company's main business plan for 2024
1. Promote capacity expansion and support growth in operating performance
During 2022 and 2023, the Company's two major business divisions, "intelligent packaging equipment" and
"water powersports equipment”, reported a robust order book. To proactively capitalise on market prospects and
address the requirements for timely order fulfilment, pertinent business entities commenced capacity expansion
works in 2023 and plan to advance the following initiatives further in 2024:
A. Fosber Group's new European headquarters base project
In February 2024, Fosber Group inaugurated its new European headquarters base project situated in
Monsagrati, Pescaglia, Lucca Province, Italy, spanning an approximate built-up area of 35,000 to 40,000 square
meters. The project entails consolidating existing production capabilities to create a European manufacturing hub
for the Fosber Group, backed by a total investment exceeding EUR40 million. Scheduled to break ground in 2024,
the facility is projected to be finalised by late 2026. This venture represents a pivotal investment in Dongfang
Precision's strategy for consistent growth and sustainability. Once completed, it will reinforce the Group's central
role in the corrugated packaging equipment manufacturing sector.
B. Fosber Asia’s domestic corrugated cardboard production line intelligent factory construction project
In early 2023, a groundbreaking event marked the commencement of the construction of Fosber Asia’s
Domestic Corrugated Cardboard Production Lines Intelligent Factory Construction Project. Located in the
Songxia Industrial Park within Nanhai District, Foshan City, Guangdong Province, the project spans an
approximate area of 80 mu and carries a planned investment of RMB500 million. Primarily, the facility will
function as a hub for R&D, manufacturing, and maintenance of domestically-made high-end corrugated cardboard
production equipment for Fosber Asia. Upon completion, the new plant is forecast to more than double Fosber
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Asia's manufacturing capacity.
On 12 January 2024, Fosber Asia conducted a topping-out ceremony for its new intelligent manufacturing
facility, commemorating the successful conclusion of the main building's construction and the structure's
topping-out milestone. From this juncture, the project advances to focus entirely on the installation of integrated
systems and the subsequent renovation phase. The facility is expected to be operational and handed over in 2024.
C. Tirua Asia’s domestic corrugated and pressure roller production base project
Situated in Nanhai District, Foshan City, Guangdong Province, this project spans an area of 30 mu with a
total planned investment exceeding RMB100 million. Once completed, it will serve as the Asian production base
for Tirua's domestically manufactured corrugated and pressure rollers. The project's realisation will harness
China's globally competitive manufacturing capabilities, enabling the localisation of corrugated and pressure
rollers—a crucial component of Tirua's branded corrugated cardboard production lines. By doing so, it not only
bolsters the expansion and robustness of Dongfang Precision's domestic high-end corrugated cardboard
production line business but also paves the way for Tirua's branded corrugated and pressure rollers to penetrate
the Chinese and Asian markets, becoming a new source of growth for the Group.
To date, the project has successfully finished constructing the factory, office building, and staff dormitories,
and has undergone acceptance before being commissioned into operation. In 2024, Tirua Asia is set to proceed
with the planned pre-commissioning preparations to ensure a seamless commissioning process for the project.
D. Parsun Power's green, digital and intelligent factory with an annual production capacity of 76,400 units of
high-end water powersports products and R&D centre
In March 2023, Parsun Power commenced the construction of a green, digital and intelligent factory with an
annual production capacity of 76,400 units of high-end water powersports products, which is located in Suzhou
City, Jiangsu Province, and is expected to lay a solid foundation for Parsun Power's future development upon
completion. In 2023, Parsun Power will complete the project of upgrading its central laboratory, which will
provide strong technical support and various testing guarantees for Parsun Power's new outboard motor research
and development, as well as provide reliable test reports and certification services for product access to the global
market.
2. Smart corrugated packaging equipment business: Improve business synergy and release growth
potential
The smart corrugated packaging equipment business, as the Company’s core business, covers all the key
processes in the value chain of corrugated packaging production and processing. The industrial chain is well
arranged, and the products, technologies, sales networks and supply chains of different business entities have
many similarities and commonalities, so that they can learn and complement each other, which can promote the
integration of various business entities within the Group, and thus achieve business synergy.
Guided by the “collaboration strategy”, the Company will continue to promote domestic business entities to
introduce leading high-end equipment products from Europe into China, redesign, modify and localize such
products in combination with the needs of customers in China and Asia markets, and launch appropriate
domestically produced high-end equipment products to customers in both domestic and Asia markets; as well as
promote the Group’s business entities at home and abroad to share resources in such aspects as supply chain,
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production capacity and sales network to achieve advantage complementation and joint resource utilization, thus
improving the overall operating efficiency of core business, reducing the overall cost, strengthening the overall
market competitiveness, and exploring new markets on this basis.
In 2024, the three principal corrugated cardboard production lines—Fosber-branded, Quantum-branded, and
domestically-manufactured by Fosber Asia—will continue to deepen their synergies within the Group, fostering
enhanced collaboration across R&D, design, manufacturing, and supply chain integration. Similarly, the
corrugated printing and packaging production line businesses under Dongfang Precision (China) and Dongfang
Precision (Europe) will persistently intensify their synergies across R&D, design, manufacturing, and shared
supply chains. Moreover, the Company will persist in advancing its corrugated and pressure rollers business
segment. It will propel the progressive execution of the business blueprint for its subsidiary, Tirua Group, to
invigorate corporate growth dynamics further. Efforts include promoting the construction and commissioning of
Tirua's domestic corrugated and pressure roller manufacturing base in Asia, and fostering closer alignment
between its overseas and domestic corrugated roller business operations.
In 2024, Dongfang Digicom will concentrate on the packaging sector in a broad sense, driving digitalisation
and intelligence in manufacturing for its clientele. Anchored by its technological expertise in industrial internet
and equipment production management solutions, and driven by market and client demands, it will relentlessly
refine and enhance its offerings, such as its Production Management System (PMS) and Manufacturing Execution
System (MES), tailoring them to the precise needs of large packaging industry customers Continuously refining
these products, including the PMS and MES, Dongfang Digicom aims to construct a tailored product portfolio
matching real-world customer requirements. Simultaneously, the company will proactively align itself with
national policy directives, stepping up engagement in government-backed digital manufacturing initiatives. It will
also forge closer integration with product and sales teams across other business segments of Dongfang Precision,
maximising the synergy of internal group resources. The goal is to exploit this synergy fully to engineer a
significant breakthrough in market penetration and product sales during 2024.
3. Digital printing solutions business: Expand new fields to achieve continuous growth
In terms of research and development, Wonder Digital is actively advancing the development of several
innovative products, with a view to launching them as per schedule in 2024. These new offerings will extend the
reach of the company’s digital printers into broader colour printing applications, enhancing product performance
and catering to diverse usage scenarios, thereby unlocking fresh avenues for the company's advancement. From a
sales perspective, Wonder Digital is committed to reinforcing its presence in both domestic and international
markets. The company endeavours to bolster its marketing and service network infrastructure worldwide,
continually reinforcing technical support and post-sales services to deliver an even higher calibre of after-sales
care to its valued customers.
4. Explore "AI+ Intelligent Factory Solution"
Since 2020, the Company has implemented a "digital, intelligent" transformation strategy, leveraging IoT,
cloud computing, big data, AI, and other cutting-edge IT to establish an industrial Internet platform tailored for
the packaging sector. The subsidiary Dongfang Digicom serves as a key enabler of digital and intelligent upgrades
for the packaging industry in a broad sense, functioning as a premier IT solution provider. Meanwhile, Dongfang
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Precision's holding company, Guangdong Jaten Robot & Automation Co., Ltd., stands as a global leader in AGV
robots and intelligent logistics systems, ranking among China's top ten industrial robot brands.
In March 2024, Dongfang Precision completed its equity investment in Shenzhen Ruoyu Technology Co.,
Ltd ("Ruoyu Technology"), acquiring approximately 12.3905% equity interest (also the shareholding ratio) in
Ruoyu Technology by way of a capital increase in Ruoyu Technology. By investing in Ruoyu Technology,
Dongfang Precision Group has further deepened its layout in the AI and industrial internet sectors, and at the same
time demonstrated to the market the determination of Dongfang Precision Group to commit itself to realising the
strategy of “digital and intelligent transformation”.
In the wave of enterprise digital transformation, companies require not just data collection from
interconnected devices, but also end-to-end solutions encompassing data integration, processing, analysis, and
smart applications to actualise intelligent manufacturing. Ruoyu Technology's AI expertise and products align
generative language models and multimodal models rich in broad human knowledge towards a robot-centric focus.
Their aim is to facilitate digital transitions for a multitude of businesses while swiftly adapting these capabilities
to various robotic contexts. This pivot translates human wisdom into the robotic realm, thereby sparking
innovative advancements at the intersection of the industrial Internet and artificial intelligence.
Moving forward, Dongfang Digicom, a fully-owned subsidiary of Dongfang Precision, anticipates leveraging
Ruoyu Technology to elevate the technical sophistication of comprehensive digital factory and smart factory
solutions within the packaging sector in a broad sense. This collaboration is expected to deliver not only a
seamless, one-stop service ranging from collecting data via connected machinery to integrated data processing,
analysis, and intelligent applications, but also to empower clients in achieving true intelligent manufacturing
capabilities.
5. The extended investment business: Make industrial investments and explore development
opportunities
The Company will adhere to the "1+N" strategic model with the co-development and mutual promotion of
"Core Business + Extended Investments" business.
"1" represents the Company's main business of high-end intelligent equipment manufacturing and as the
cornerstone, the Company is making great efforts in developing it, and striving to obtain a higher market share in
the era of high-end, digital and intelligent trends; "N" represents the Company’s investments in strategic emerging
high-tech industries, which will empower the implementation of the Company’s intelligent transformation
strategy.
In 2024, the subsidiary, Yineng Investment, the main entity of the extended investment business, will
continue to take advantage of industries related to the principal operations of Dongfang Precision, focus on
high-quality companies in the industrial chain of China and the world. It will also carry out equity investments
and M&As around the industrial chain according to the business needs and the actual situation of the Company,
strengthen the horizontal and vertical integration of the industrial chain, and seek for business synergies.
During M&As, Yineng Investment will fully participate in the industries supported by China's "14th
Five-Year Plan", focusing its equity investment on high-end equipment manufacturing, intelligent manufacturing
and other strategic emerging high-tech industries, and will aim at enterprises with extensive industrial
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development opportunities and favorable industrial advantages. It will obtain good investment returns and at the
same time create new business development opportunities for the Group.
(III) Possible risks and countermeasures
1. Risks arising from fluctuations in exchange rates
The main settlement currency and recording currency of Fosber Group, the principal overseas business entity
of the Company, are euros, while the revenue of Fosber America and domestic entities from export is mainly
settled with the US dollar. Fluctuations in the US dollar and euro exchange rates do not significantly impact the
routine operation of overseas business entities but exert certain impacts on the presentation of their assets and
operating results in the consolidated financial statements.
Since 2022, changes in global geopolitical landscape, climate risks, and macroeconomic cycles have resulted
in developed economies operating under high inflation and high interest rates, leading to pronounced volatility in
international currency markets. In H1 2022, the euro depreciated constantly; the US dollar became robust after it
entered the interest rate hike cycle, and the US Dollar Index has hit a record high since 2002. In 2023, after 4
interest rate hikes and as inflation cooled, the US dollar entered a consolidation phase at high levels. The Euro
rebounded somewhat against the US dollar, with volatility declining. Over the same period, RMB foreign
exchange market saw markedly increased volatility amid China's economic recovery, US dollar index fluctuations,
inverted China-US interest rate differences, and other factors. The RMB/USD spot exchange rate experienced
large fluctuations, depreciating somewhat.
Countermeasures:
The Company can closely track the global financial market and national exchange rate policies, make timely
decisions to select proper exchange rate management tools to manage exchange rate risks actively. It can also
reduce risk exposure and increase exchange gains by increasing debts of foreign currency and rely on Group
management to strengthen the level of capital coordination in different countries and regions, balance, and offset
fluctuation risks at the Group level.
2. Potential risks of financial investment business
In recent years, the Company has arranged some of its idle owned funds to carry out financial investment
business such as securities investment and entrusted wealth management in an appropriate manner, based on the
actual and development needs. There are certain risks of carrying out the above business due to fluctuations in the
financial market and uncertainty of income; and the risk that the Company may suffer certain investment losses in
case of risk events in the process of wealth management activities in terms of investment strategies and use of
funds.
Countermeasures:
On the premise that the funds required for the daily operation of the main business will not be affected, the
Company reasonably controls the capital scale for financial investment; it establishes and improves the internal
control system and mechanism standards for securities investment and entrusted financial management, and
strengthens the risk control management of securities investment business, safeguard the safety of investment
funds, and strictly control the risk exposure. In accordance with the economic situation and changes in the
financial market, it continuously tracks and analyses the progress of securities investment and the investment of
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funds, the progress of project investment and the performance of the capital market, and timely takes
corresponding preservation measures to control investment risks.
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XII Communications with the Investment Community such as Researches, Inquiries and Interviews
√ Applicable □ Not applicable
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Index to the relevant
Date Place communicat communication Communication party materials provided by the
information
ion party Company
Introduction of the
Company's operation,
Company competitive advantages, cninfo.com
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Co., Ltd., Tianhong Innovation Assets Management Co., Ltd.,
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Co., Ltd., Maxwealth Fund Management Co., Ltd., Purekind
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planning and answering
investor questions
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
First State Cinda Fund Management Co., Ltd., Founder Securities Introduction of the
Co., Ltd., Tianfeng Securities Co., Ltd., Essence Securities Co., Company's operation,
Company Ltd., Minsheng Securities Co., Ltd., Suzhou Gewai Investment competitive advantages, cninfo.com
November 24, Field
Conference Institutes Management Co., Ltd., Mengsen (Shanghai) Investment industry development trend http://www.cninfo.com.
2023 Research
Room Management Co, Ltd., Shanghai Valoran Investment and future strategic cn
Management Co., Ltd., Shanghai Yili Assets Management CO., planning and answering
Ltd, and Suzhou Clivia Capital Manage Co., Ltd. investor questions
XIII Implementation of the “Quality and Earnings Dual Improvement” Action Plan
Indicate whether the Company has disclosed the “Quality and Earnings Dual Improvement” Action Plan.
□ Yes √ No
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Part IV Corporate Governance
I General Information of Corporate Governance
During the Reporting Period, the Company strictly abided by laws and regulations and rules and normative documents of
regulatory authorities, including the Company Law, the Securities Law, the Code of Corporate Governance for Listed Companies ,
the Rules for Stock Listing of Shenzhen Stock Exchange and the Shenzhen Stock Exchange Guideline No. 1 for the Self-regulation
of Listed Companies - Standardized Operation of Listed Companies on the Main Board, continued to improve the Company's
corporate governance structure, refine internal management and control policies, and further strengthen the Company's capability of
governance.
(I) Shareholders and general meeting
During the Reporting Period, the Company convened and held general meetings in a standard manner in strict accordance with
laws and regulations. The convening and holding procedures of general meetings, the qualifications of attendants to the meetings and
the voting procedures of the meetings met the provisions of the Company Law, Rules for the Shareholders' Meetings of Listed
Companies, Articles of Associations and Rules of Procedure for General Meeting. Lawyers were engaged to witness the general
meetings of shareholders and issued legal opinions on their legitimacy to ensure fair treatment toward and fully execution of rights of
all shareholders, especially minority shareholders.
(II) The Company and controlling shareholders
During the Reporting Period, the Company properly handled the relationship between it and the controlling shareholders in
accordance with the Company Law, Securities Law, Articles of Association and relevant provisions of the securitie s regulatory
authority. The controlling shareholders of the Company acted in a normative manner, could exercise their rights and assume their
obligations according to law, did not directly or indirectly interfere with the decision-making and business activities of the Company
beyond the general meeting of shareholders. The Company was independent of the controlling shareholders in terms of business,
staffing, assets, organization and finance, and had an independent and complete business system and capability to operate
independently. The Board of Directors, Supervisory Committee and internal organs of the Company operated independently.
(III) Directors and the Board of Directors
During the Reporting Period, directors of the Company were elected in strict accordance with the director election procedure
specified in the Articles of Association. The Board of Directors of the Company was composed of seven directors, including three
independent directors, and the number of members and composition of it met legal and regulatory requirements. During the
Reporting Period, all directors of the Company actively and strictly complied with the Company Law, Articles of Association a nd
Rules of Procedure for the Board of Directors, earnestly attended meetings of the Board of Directors and general meetings of
shareholders, and took an active part in relevant training to improve their business skill, and were diligent and responsible . The
convening, holding and voting procedure and daily operation of the meetings of the Board of Directors of the Company complied
with relevant regulations.
(IV) Supervisors and the Supervisory Committee
During the Reporting Period, supervisors of the Company were elected in strict accordance with the supervisor election
procedure specified in the Articles of Association. The Supervisory Committee of the Company was composed of three supervisors,
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
including one supervising employee representative, and the number of members and composition of it met legal and regulatory
requirements. The supervisors conscientiously performed their duties and, in line with the attitude of being responsible to
shareholders, supervised the financial affairs of the Company as well as the legality and compliance of the performance of duties by
directors and senior managers of the Company, and safeguarded the legitimate rights and interests of the Company and shareholders.
The convening, holding and voting procedures of the meetings of the Supervisory Committee of the Company complied with the
Company Law, Articles of Association and Rules of Procedure for the Supervisory Committee.
(V) Independent directors and special committees of the Board of Directors
During the Reporting Period, independent directors of the Company honestly, diligently and independently performed their
duties in accordance with the Company Law and regulations, normative documents and implementation rules of other departments,
actively attended relevant meetings, earnestly deliberated the proposals of the Board of Directors, gave independent advice about the
major issues of the Company, effectively protected the interests of the Company and shareholders, especially small and medium
shareholders, and well played their role to supervise as independent directors. In addition, the Company has revised the Work Rule s
for Independent Directors in accordance with the Administrative Measures for Independent Directors of Listed Companies issued by
the CSRC to ensure that the Company's internal systems are legally compliant. Special committees of the Board of Directors of the
Company also performed their duties in a standard manner according to their respective implementation rules.
(VI) Information disclosure and transparency
During the Reporting Period, the Company performed its obligation of information disclosure in strict accordance with laws and
regulations and the Management Measures for Information Disclosure, and disclosed information in a true, accurate, complete and
timely manner and made no false records, misleading statements or major omissions, by which it ensured that all investors and
stakeholders had equal opportunities to obtain the Company's information, increased the Company's information transparency, and
effectively played its role in protecting the right to know of small and medium investors.
Were there any significant differences between the actual situation of the corporate governance and the applicable laws and
regulations, as well as rules published by China Securities Regulatory Commission on the governance of listed companies?
□ Yes √ No
There were not significant differences between the actual situation of the corporate governance and the applicable laws and
regulations, as well as rules published by China Securities Regulatory Commission on the governance of listed companies.
II The Inde pendence of the Company from Controlling Shareholders and Actual Controller
on Assets, Personnel, Finance, Structure, and Business
Since establishment, the Company has been operating in strict accordance with the Company Law, Securities Law and Articles
of Association, and has established and improved its corporate governance structure. The Company is completely independent of its
controlling shareholders and actual controller in terms of business, staffing, assets, organization and finance, and has an independent
and complete business system and capability to operate independently in the market. All production operations and major issues of
the Company were discussed and determined by the Management, the Board of Directors and the general meetings of shareholders in
accordance with the Articles of Association and relevant policies, and none of them was controlled by any controlling shareholder or
the actual controller.
1. Asset independence
The Company was founded on the overall change of a limited liability company. All its assets and personnel before the share
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restructuring joined the joint stock company. The Company has independent and complete operating assets. After the overall change,
the Company owns all the production and operational assets needed for production and operation, and there is no dispute over
property rights. The Company owns production systems, auxiliary production systems and supporting facilities related to its
production and operation, and has independent raw material procurement and product selling systems. Assets of the Company are
strictly separated from those of shareholders and the actual controller , and no assets of the Company are being occupied by
shareholders or the actual controller.
2. Personnel independence
The Company has completely independent labour, personnel and salary management systems and independent staff teams, and
has signed labour contracts with its employees in accordance with the Labour Law and the Company's policies on labour
management. Directors, supervisors and senior managers of the Company were elected in strict accordance with the Company Law
and Articles of Association, and senior managers, including general managers, deputy general managers, financial directors, and
secretaries to the Board of Directors are working full time in the Company and getting paid by the Company. Mr Tang Zhuolin, the
actual controller of the Company, is serving as the Chairman of the Board of Directors, and has been legally exercising its functions
and powers according to the Company Law and Articles of Association in engaging in the Company's management.
3. Finance independence
The Company has an independent financial department and full-time financial personnel, and has established an independent
and fine financial accounting system and standardized financial policies. It has implemented an effective financial supervision and
management system and an internal control system, and it is capable of making independent financial decisions, carrying out
independent accounting and assuming sole responsibility for its profits and losses according to the Articles of Association a nd its
own situation. The Company has an independent bank account and is not sharing any account of controlling shareholders or the
actual controller and, as an independent taxpayer, declares taxes and fulfils tax payment obligations independently according to law,
and has never paid taxes together with shareholders' companies.
4. Organization independence
The Company, in accordance with the Company Law and Articles of Association, has set up the General Meeting of
Shareholders as the highest authority, the Board of Directors as the decision-making body, and the Supervisory Committee as the
supervisory body, and has a complete corporate governance structure. The Company has a complete internal management system an d
corresponding offices and operating departments. The functional departments work according to respective duties and cooperate with
each other, making the Company an organic and independent operating entity free from the intervention of controlling shareholders
and the actual controller.
5. Business independence
The Company has its business independent of controlling shareholders, has independent and complete supply, production and
sales systems, and is capable of independent decision-making on business policies and business plans, independent allocation and use
of personnel, money and materials, and successful organization and implementation of production and business activities. The
Company is completely independent in business and is not relying on the first majority shareholder and the actual controller. The
controlling shareholders are not conducting business of horizontal competition with that of the Company, and have undertaken not to
conduct any business that may be of horizontal competition with that of the Company.
III Horizontal Competition
□ Applicable √ Not applicable
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
IV Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor
Date of the Disclosure
Meeting Type participation Resolution
meeting date
ratio
1. The Proposal on the Plan for Repurchase of
Some Public Shares was approved item by item.
1.01 Objective and background of the share
repurchase
1.02 The Company's eligibility for share
repurchase
1.03 Method of the share repurchase
The First 1.04 Price range of shares to be repurchased
Extraordinary Extraordina 1.05 Total amount and source of the funds to be
used for the repurchase
General ry General 35.5383% 2023-01-30 2023-01-31
1.06 Number and percentage to the total capital
Meeting of Meeting
of shares to be repurchased
2023 1.07 Purpose of the share repurchase
1.08 Time limit of the share repurchase
1.09 The valid period of the resolution on the
share repurchase
2. The Proposal on Request for General
Meeting’s Authorization to the Board to Handle
Matters Regarding the Share Repurchase was
approved.
The Second 1. The Proposal on Repurchase and Retirement
Extraordinary Extraordina of Some Restricted Shares was approved.
2. The Proposal on Change of the Company's
General ry General 33.4246% 2023-03-06 2023-03-07
Registered Capital and Amendments to the
Meeting of Meeting Company's Articles of Association was
2023 approved.
1. The Proposal on the 2022 Work Report of the
Board of Directors (including the 2022 Work
Report of Independent Directors) was approved.
2. The Proposal on the 2022 Work Report of the
Supervisory Committee was approved.
3. The Proposal on the 2022 Annual Report and
Its Summary was approved.
The 2022 4. The Proposal on the 2022 Final Financial
Annual Accounts was approved.
Annual
General 36.1623% 2023-04-17 2023-04-18 5. The Proposal on the 2023 Budget was
General
Meeting approved.
Meeting 6. The Proposal on the 2022 Final Dividend
Plan was approved.
7. The Proposal on the 2022 Internal Control
Assessment Report was approved.
8. The Proposal on Intention to Appoint the
Independent Auditor for 2023 was approved.
9. The Proposal on the Use of Own Funds for
Entrusted Wealth Management in 2023 was
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
approved.
10. The Proposal on 2023 Estimated Quota of
Futures and Derivatives Transactions was
approved.
The Third 1. The Proposal on Repurchase and Retirement
Extraordinary Extraordina of Some Restricted Shares was approved.
2. The Proposal on Change of the Company's
General ry General 33.9262% 2023-06-30 2023-07-01
Registered Capital and Amendments to the
Meeting of Meeting Company's Articles of Association was
2023 approved.
The Fourth 1. The Proposal on Repurchase and Retirement
Extraordinary Extraordina of Some Restricted Shares was approved.
2. The Proposal on Change of the Company's
General ry General 34.8597% 2023-09-05 2023-09-06
Registered Capital and Amendments to the
Meeting of Meeting Company's Articles of Association was
2023 approved.
1. The Proposal on Election of Non-independent
Directors for the Fifth Board of Directors was
approved by cumulative voting.
1.01. Candidate: Mr. Tang Zhuolin was elected
as a non-independent director for the fifth Board
of Directors.
1.02. Candidate: Ms. Qiu Yezhi was elected as a
non-independent director for the fifth Board of
Directors.
1.03. Candidate: Mr. Xie Weiwei was elected as
a non-independent director for the fifth Board of
Directors.
1.04. Candidate: Ms. Feng Jia was elected as a
non-independent director for the fifth Board of
Directors.
2. The Proposal on Election of Independent
The Fifth Directors for the Fifth Board of Directors was
Extraordinary Extraordina approved by cumulative voting.
2.01. Candidate: Mr. Li Ketian was elected as
General ry General 34.7310% 2023-11-15 2023-11-16
an independent director for the fifth Board of
Meeting of Meeting Directors.
2023 2.02. Candidate: Mr. Liu Da was elected as an
independent director for the fifth Board of
Directors.
2.03. Candidate: Mr. Tu Haichuan was elected
as an independent director for the fifth Board of
Directors.
3. The Proposal on Election of Non-employee
Supervisor for the Fifth Supervisory Committee
was approved by cumulative voting.
3.01. Candidate: Ms. Chen Huiyi was elected as
a non-employee supervisor for the fifth
Supervisory Committee.
3.02. Candidate: Mr. He Baohua was elected as
a non-employee supervisor for the fifth
Supervisory Committee.
4. The Proposal on Allowance for Independent
Directors of the Fifth Board of Directors was
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
approved.
5. The Proposal on Allowance for Supervisors
of the Fifth Supervisory Committee was
approved.
6. The Proposal on Amendments to the
Company's Articles of Association was
approved.
7. The Proposal on Amendments to the Work
Rules for Independent Directors was approved.
2. Extraordinary General Meetings Convened at the Request of Preference Shareholders with Resumed
Voting Rights
□ Applicable √ Not applicable
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
V Directors, Supervisors and Senior Management
1. General Information
Opening Increase in Decrease in Other Closing Reason
Incumbent/
Name Gender Age Office title Start of tenure End of tenure shareholding the period the period increase/dec shareholding for share
Former
(share) (share) (share) rease (share) (share) change
Tang Chairman of the 15 November
Male 61 Incumbent 22 July 2010 270,737,568 270,737,568
Zhuolin Board 2026
Director and General 15 November
Qiu Yezhi Female 52 Incumbent 22 July 2010 23,382,388 23,382,388
Manager 2026
Xie Director and Deputy 15 November reduce
Male 50 Incumbent 16 June 2016 1,000,000 248,000 752,000
Weiwei General Manager 2026 holdings
Director, Board
15 November
Feng Jia Female 38 Secretary and Vice Incumbent 12 August 2022 700,000 700,000
2026
President
Chief Financial
Shao 29 December 15 November
Male 49 Officer and Vice Incumbent 800,000 800,000
Yongfeng 2020 2026
President
15 November
Li Ketian Male 67 Independent Director Incumbent 12 August 2022
2026
15 November
Liu Da Male 49 Independent Director Incumbent 12 August 2022
2026
Tu 15 November
Male 44 Independent Director Incumbent 12 August 2022
Haichuan 2026
Chen Chairman of the 15 November
Female 39 Incumbent 19 May 2017 480 480
Huiyi Supervisory 2026
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Committee
Zhao 15 November
Male 53 Employee Supervisor Incumbent 16 June 2016
Xiuhe 2026
He 22 September 15 November
Male 42 Supervisor Incumbent 614,088 614,088
Baohua 2020 2026
Total -- -- -- -- -- -- 297,234,524 0 248,000 0 296,986,524 --
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Indicate whether any director, supervisor or senior management resigned or was dismissed before the end of their tenure during the
Reporting Period.
□ Yes √ No
Changes of directors, supervisors and senior management:
□ Applicable √ Not applicable
2. Biographical Information
Professional backgrounds, major work experience and current posts in the Company of the incumbent directors, supervisors and
senior management:
1. Members of the Board of Directors
Mr. Tang Zhuolin, Chinese, has no right of permanent residence abroad. He is a member of the 12th People's Political Consultative
Conference of Nanhai District, Foshan City, Guangdong Province, Managing Director of the 9th Council of China Packaging
Federation, Managing Director of Guangdong Food and Packaging Machinery Association, Vice President of Foshan Machinery
Equipment Industry Association, Honorary President of Foshan Nanhai District Machinery Equipment Trade Association, Vice
President of Foshan High-tech Zone Chamber of Commerce, and Vice President of Foshan Nanhai District Listed Company
Association. He once was Head of Nanhai Guichengdong P lastic and Textile Factory No. 2, Head of Nanhai Guichengdong Printing
Machinery Factory No. 2, and Supervisor of Shenzhen Zhiquan Venture Capital Co., Ltd. He used to serve as Dongfang Precision's
General Manager and Chief Engineer since 1996, and is currently Chairman of the Board of Dongfang Precision, Director of Dong
Fang Precision (HK) Limited, Director of Guangdong Fosber Intelligent Equipment Co., Ltd., Director of Suzhou Parsun Power
Machine Co., Ltd., Executive Director and General Manager of Suzhou Shunyi Investment Co., Ltd., Executive Director and General
Manager of Hainan Yineng Investment Co., Ltd., Supervisor of Dongfang Digicom Technology Co., Ltd., Supervisor of Dongfang
Digicom Technology (Guangdong) Co., Ltd., Executive Director and Manager of Dongfang Yineng International Holding Co., Ltd.,
Chairman of the Board of Shenzhen Wonder Digital Technology Co., Ltd., Chairman of the Board of Fosber S.p.A., Director of EDF
Europe S.r.l., Director of Fosber America, Inc., Director of Tirua S.L.U., Director of QuantumCorrugated S.r.l., Executive Director
and General Manager of Shenzhen Xianglin Venture Capital Co., Ltd., Supervisor of Shenzhen Shenghui Venture Capital Co., Ltd.,
and Supervisor of Foshan Hengbao Taisheng Trade Co., Ltd.
Ms. Qiu Yezhi, Chinese, has no right of permanent residence abroad, MBA, National Model Worker, Member of the 12 th People's
Political Consultative Conference of Foshan City, Guangdong Province, and Deputy to the 17th People’s Congress of Nanhai District,
Foshan City, Guangdong Province. She served successively as Dongfang Precision's Director of the General Manager's Office,
General Manager of Operations and General Manager since 1996, and as Dongfang Precision's General Manager and Board
Secretary from July 2010 to October 2013. She served as the General Manager and Director of Tirua (Guangdong) Intelligent
Equipment Manufacturing Co., Ltd. from May 2017 to September 2020. And from July 2020 to January 2023, she was successively
Supervisor, Executive Director and Manager of Foshan Jingmu Trading Co., Ltd. Currently, she is Dongfang Precision's Director and
General Manager, Chairman of the Board of Guangdong Fosber Intelligent Equipment Co., Ltd., Director of Suzhou Parsun Power
Machine Co., Ltd., Executive Director and General Manager of Dongfang Digicom Technology Co., Ltd., Executive Director of
Dongfang Digicom Technology (Guangdong) Co., Ltd., Supervisor of Hainan Yineng Investment Co., Ltd., Supervisor of Dongfang
Yineng International Holding Co., Ltd., Vice Chairman of the Board of Fosber S.p.A., Director of Fosber America, Inc., Director of
Tirua S.L.U., Director of EDF Europe S.r.l., Director of Tirua America inc., Director of Dong Fang Precision (Netherland)
Cooperatief U.A., Executive Director and General Manager of Shenzhen Shenghui Venture Capital Co., Ltd., and Supervisor of
Shenzhen Xianglin Venture Capital Co., Ltd.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Mr. Xie Weiwei, Chinese, has no right of permanent residence abroad, MBA, Member of the 14th People's Political Consultative
Conference of Nanhai District, Foshan City, Guangdong Province, graduated from Huazhong University of Science and Technology
in 2008. Once served as the Standing Deputy General Manager of Foshan Multimodal Transport Corp., Chairman of the Board of
Foshan Donghuochang Railway Logistics Co., Ltd., Deputy Chief of the Reform and Development Division of Foshan SASAC, and
Deputy Head of the Investment Department and Head of the Asset Management Department of Foshan Financial Investment
Holdings Co., Ltd. Currently the Company's Director and Deputy General Manager, and Director of the joint-stock company
Guangdong Jaten Robot & Automation Co., Ltd.
Ms. Feng Jia, Chinese, has no right of permanent residence abroad. She is Doctor of Engineering of Zhejiang University,
Postdoctoral Fellow of Guangzhou Institute of Energy Conversion of Chinese Academy of Sciences, and Intermediate Engineer. She
used to work as Associate Researcher at Guangzhou Institute of Energy Conversion of Chinese Academy of Sciences from 2014 to
2018, Senior Manager in the Research and Development Department of China Securities Co., Ltd. from 2018 to 2019, and Assistant
to President & Board Secretary of Tianjin LVYIN Landscape and Ecology Construction Co., Ltd. from 2019 to 2021. Joining the
Company in September 2021, she is now Director, Vice President and Board Secretary of the Company. Currently the supervisor of
Shenzhen Wonder Digital Technology Co. from December 2023 to present.
Mr. Li Ketian, Chinese, has no right of permanent residence abroad. Graduated from South China University of Technology with a
doctoral degree and a professional title of professor of mechanical engineering. Once served as a worker, technician and engineer at
the Wuhan Camera Factory from 1974 to 1989 and as a lecturer, associate professor and professor at Guangdong University of
Technology from 1992 to 2020. Currently the Independent Director of Dongfang Precision.
Mr. Liu Da, Chinese, has no right of permanent residence abroad. Graduated from University of International Business and
Economics with bachelor of economics. A certified public accountant. Once served as the Senior Audit Manager of
PricewaterhouseCoopers from 1998 to 2009, Chief Internal Auditor of Prudential Life Insurance Co., Ltd. from 2009 to 2010.
Currently the Director and General Manager of Guangzhou Kaihua Investment Consulting Co., Ltd. In the last five years, he has been
the Independent Director of Zensun Enterprises Limited (Stock Code: HK00185) and the Independent Director of Kimou
Environmental Holding Limited (Stock Code: HK06805), both are sted companies on the main board of the Hong Kong Stock
Exchange. He has also been the Supervisor of Guangzhou Longyi Kaihua Enterprise Management Consulting Co., Ltd, Supervisor of
One Tutor Education Consulting (Guangzhou) Co., Ltd., and Independent Director of Dongfang Precision.
Mr. Tu Haichuan, Chinese, has no right of permanent residence abroad. Graduated from Shanghai University of Finance and
Economics. Bachelor degree. A certified public accountant. Once served as the Audit Manager of Guangdong Dahua Delv Certified
Public Accountants from 2004 to 2009, Investment Director of Guangxi Saifu Investment Co., Ltd. in 2010, Financial Manager,
Chief Financial Officer and Assistant to the Chairman of Guangdong Dongfang Precision Science & Technology Co., Ltd. from
December 2010 to September 2016. Currently the Executive Director and General Manager of Shenzhen Changhe Capital
Management Co., Ltd. In the last five years, he has been the Director of Guangzhou Shoulian Environment Group Co., Ltd. and
Shenzhen Aiwen Culture Development Co., Ltd., and Independent Director of Dongfang Precision.
2. Members of the Supervisory Committee
Ms. Chen Huiyi, Chinese, with a university degree, has no right of permanent residence abroad. Once served as the assistant of the
Quality Control Department of Dongfang P lastic Products Co., Ltd. from September 2008 to December 2009, currently the Chairma n
of the Supervisory Committee and Secretary to General Manager of Dongfang Precision, as well as Supervisor of the subsidiary
Suzhou Parsun Power Machine Co., Ltd.
Mr. He Baohua, Chinese, with a university degree, has no right of permanent residence abroad. Joined Guangdong Dongfang
Precision Science & Technology Co., Ltd. in 2002, engaged in after-sales management and project management, currently the
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Company's supervisor and Senior Project Manager of the Project Management Department.
Mr. Zhao Xiuhe, Chinese, with a technical secondary school degree, has no right of permanent residence abroad. Joined Dongfang
Precision in February 2006, currently the Company's Director of the Administration Department. Served as the Company's Employee
Supervisor since June 2016.
3. Senior management
Ms. Qiu Yezhi, currently the Company's General Manager. Her resume is detailed in "1. Members of the Board of Directors".
Mr. Xie Weiwei, currently the Company's Deputy General Manager. His resume is detailed in "1. Members of the Board of
Directors".
Ms. Feng Jia, currently the Company’s Board Secretary and Vice President. Her resume is detailed in "1. Members of the Board of
Directors".
Mr. Shao Yongfeng, Chinese, has no right of permanent residence abroad. Graduated with a bachelor's degree from Zhongnan
University of Economics and Law, a PRC certified public accountant and PRC certified public assets estimator. Served as Financial
Manager and Financial Director of TCL Multimedia Technology Holdings Limited from 2001 to 2010, joined Haier Europe in 2015
and served successively as the company's Financial Director and CFO of Europe, joined Shenzhen Smoore Technology Limited and
served as Financial Director from 2016 to 2017, served as Vice President Finance in Shenzhen CIMC Tian da from 2017 to 2020, and
joined Guangdong Dongfang Precision Science & Technology Co., Ltd. in April 2020 and currently the Company's Chief Financial
Officer and Vice President.
Offices held concurrently in shareholding entities:
□ Applicable √ Not applicable
Offices held concurrently in other entities:
√ Applicable □ Not applicable
Remuneration or
Office held in the
Name Other entity Start of tenure End of tenure allowance from the
entity
entity or not
Dongfang Precision
Tang Zhuolin Director 5 February 2013 No
(HK)
Chairman of the
Tang Zhuolin Fosber Italy 19 May 2023 Yes
Board
Dongfang Precision
Tang Zhuolin Director 15 June 2016 Yes
(Europe)
Tang Zhuolin Fosber Asia Director 30 September 2014 Yes
Tang Zhuolin Parsun Power Director 24 May 2015 No
Executive Director
Tang Zhuolin Shunyi Investment 2 July 2015 No
and General Manager
Executive Director
Tang Zhuolin Yineng Investment 10 October 2020 Yes
and General Manager
Tang Zhuolin Dongfang Digicom Supervisor 26 October 2020 Yes
Tang Zhuolin Dongfang Digicom Supervisor 26 February 2021 No
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
(Guangdong)
Chairman of the
Tang Zhuolin Wonder Digital 7 June 2022 Yes
Board
Dongfang Yineng
Executive Director
Tang Zhuolin International Holding 15 February 2022 No
and Manager
Co., Ltd.
Shenzhen Xianglin
Executive Director
Tang Zhuolin Venture Capital Co., 26 May 2016 No
and General Manager
Ltd.
Shenzhen Shenghui
Tang Zhuolin Venture Capital Co., Supervisor 16 May 2016 No
Ltd.
Tang Zhuolin Fosber America Director 26 July 2022 Yes
Tang Zhuolin Tirua S.L.U. Director 3 August 2022 Yes
Tang Zhuolin QCorr Director 22 May 2023 No
Foshan Hengbao
Tang Zhuolin Taisheng Trade Co., Supervisor 6 September 2023 No
Ltd.
Vice Chairman of the
Qiu Yezhi Fosber Italy 26 March 2014 Yes
Board
Qiu Yezhi Fosber America Director 26 July 2022 Yes
Qiu Yezhi Tirua America Director 26 July 2022 Yes
Qiu Yezhi Tirua S.L.U. Director 30 May 2019 Yes
Chairman of the
Qiu Yezhi Fosber Asia 15 July 2020 Yes
Board
Dongfang Precision
Qiu Yezhi Director 15 June 2016 Yes
(Europe)
Qiu Yezhi Parsun Power Director 24 May 2015 No
Qiu Yezhi Yineng Investment Supervisor 10 October 2020 No
Executive Director
Qiu Yezhi Dongfang Digicom 26 October 2020 No
and General Manager
Dongfang Digicom
Qiu Yezhi Executive Director 26 February 2021 No
(Guangdong)
Dongfang Yineng
Qiu Yezhi International Holding Supervisor 15 February 2022 No
Co., Ltd.
Shenzhen Xianglin
Qiu Yezhi Venture Capital Co., Supervisor 26 May 2016 No
Ltd.
Qiu Yezhi Shenzhen Shenghui Executive Director 18 May 2015 No
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Venture Capital Co., and General Manager
Ltd.
Dongfang Precision
Qiu Yezhi Director 8 November 2023 Yes
(Netherland)
Xie Weiwei Shunyi Investment Supervisor 2 July 2015 No
Xie Weiwei Jaten Robot Director 23 March 2016 Yes
Foshan Nanhai
District Machinery
Xie Weiwei Branch Secretary 23 November 2020 Yes
Equipment Trade
Association
Huanong Property
Xie Weiwei and Casualty External supervisor 23 December 2023 Yes
Insurance Co., Ltd.
Feng Jia Wonder Digital supervisor 21 December 2023 Yes
Guangzhou Kaihua
Director and General
Liu Da Investment April 2010 Yes
Manager
Consulting Co., Ltd.
Zensun Enterprises
Liu Da Independent Director 27 July 2015 Yes
Limited
Kimou
Liu Da Environmental Independent Director 1 March 2023 Yes
Holding Limited
Shenzhen Longriver
Tu Haichuan Capital Management Executive Director October 2016 Yes
Co., Ltd.
Shenzhen Ivan
Tu Haichuan Culture Development Director March 2018 No
Co., Ltd.
Chief Financial
Shao Yongfeng Dongfang Digicom 1 January 2021 Yes
Officer
Chief Financial
Shao Yongfeng Yineng Investment 1 January 2021 Yes
Officer
Chen Huiyi Parsun Power Supervisor 10 October 2022 No
Shenzhen Zhiquan
He Baohua Venture Capital Co., Supervisor 10 August 2021 No
Ltd.
Foshan Hengbao Executive Director,
He Baohua Taisheng Trade Co., General Manager, 6 September 2023 Yes
Ltd. Head of Finance
Note Not applicable
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and senior
management as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
102 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
3. Remuneration of Directors, Supervisors and Senior Management
Following the approval of the Remuneration and Appraisal Committee, the remunerations for directors, supervisors and senior
management are submitted to the Board of Directors and the Supervisory Committee for further approval. The remunerations of
directors and supervisors are subject to final approval by the general meeting, and those of senior management are subject to the
Board of Directors. The decision-making procedures are in compliance with the Company Law, the Company’s Articles of
Association, and the Company’s Specific Implementation Rules for the Remuneration and Appraisal Committee under the Board of
Directors. In the Reporting Period, the actual payments of remuneration for directors, supervisors and senior management were
consistent with the resolutions of the general meeting and the Board of Directors.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
Total before-tax
Remuneration
remuneration
Name Gender Age Office title Incumbent/Former from any related
from the
party or not
Company
Chairman of the
Tang Zhuolin Male 61 Incumbent 425.77 Yes
Board
Director and
Qiu Yezhi Female 52 Incumbent 417.44 Yes
General Manager
Director and
Xie Weiwei Male 50 Deputy General Incumbent 86.83 Yes
Manager
Director, Board
Feng Jia Female 38 Secretary and Incumbent 86.85 No
Vice President
Chief Financial
Shao Yongfeng Male 49 Officer and Vice Incumbent 142.49 No
President
Independent
Li Ketian Male 67 Incumbent 20.00 No
Director
Independent
Liu Da Male 49 Incumbent 20.00 No
Director
Independent
Tu Haichuan Male 44 Incumbent 20.00 No
Director
Chairman of the
Chen Huiyi Female 39 Supervisory Incumbent 27.64 No
Committee
Employee
Zhao Xiuhe Male 53 Incumbent 24.62 No
Supervisor
103 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
He Baohua Male 42 Supervisor Incumbent 44.14 Yes
Total -- -- -- -- 1,315.78 --
VI Performance of Duty by Directors in the Reporting Period
1. Board Meetings Convened during the Reporting Period
Meeting Date of the meeting Disclosure date Resolution
1. The Proposal on the Plan for Repurchase of Some Public
Shares was approved item by item.
1.01 Objective and background of the share repurchase
1.02 The Company's eligibility for share repurchase
1.03 Method of the share repurchase
1.04 Price range of shares to be repurchased
1.05 Total amount and source of the funds to be used for the
The 22nd repurchase
(Extraordinary) 1.06 Number and percentage to the total capital of shares to
2023-01-06 2023-01-07 be repurchased
Meeting of the 4th
1.07 Purpose of the share repurchase
Board of Directors
1.08 Time limit of the share repurchase
1.09 The valid period of the resolution on the share
repurchase
2. The Proposal on Request for General Meeting’s
Authorization to the Board to Handle Matters Regarding the
Share Repurchase was approved.
3. The Proposal on the Convening of the 1st Extraordinary
General Meeting for 2023 was approved.
1. The Proposal on the Satisfaction of the Unlocking
Conditions for the Second Unlocking Period for the
Reserved Restricted Shares under the 2020 Restricted Share
The 23rd Incentive Plan was approved.
2. The Proposal on Repurchase and Retirement of Some
(Extraordinary)
2023-02-17 2023-02-18 Restricted Shares was approved.
Meeting of the 4th
3. The Proposal on Change of the Company's Registered
Board of Directors Capital and Amendments to the Company's Articles of
Association was approved.
4. The Proposal on the Convening of the 2nd Extraordinary
General Meeting for 2023 was approved.
1. The Proposal on the 2022 Work Report of the Board of
Directors (including the 2022 Work Report of Independent
Directors) was approved.
2. The Proposal on the 2022 Work Report of the General
Manager was approved.
The 24th Meeting
3. The Proposal on the 2022 Annual Report and Its Summary
of the 4th Board of 2023-03-24 2023-03-28
was approved.
Directors 4. The Proposal on the 2022 Final Financial Accounts was
approved.
5. The Proposal on the 2023 Budget was approved.
6. The Proposal on the 2022 Final Dividend Plan was
approved.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
7. The Proposal on the 2022 Internal Control Assessment
Report was approved.
8. The Proposal on the Summary Report of the Audit
Committee of the Board of Directors on the 2022 Audit
Service Provided by Ernst & Young Hua Ming LLP (Special
General Partnership) and the Renewal of Ernst & Young as
the Company's 2023 Audit Institution was approved.
9. The Proposal on the Use of Own Funds for Entrusted
Wealth Management in 2023 was approved.
10. The Proposal on the Use of Own Funds for Investment
Securities in 2023 was approved.
11. The Proposal on the Application for Comprehensive
Credit Line from Banks in 2023 was approved.
12. The Proposal on 2023 Estimated Quota of Futures and
Derivatives Transactions was approved.
13. The Proposal on the 2023~2027 Five Year Strategic Plan
was approved.
14. The Proposal on Re-election of Members for the Special
Committees under the Fourth Board of Directors was
approved.
15. The Proposal on the Convening of the 2022 Annual
General Meeting was approved.
1. The Proposal on the 2023 First Quarter Report was
The 25th
approved.
(Extraordinary) 2. The Proposal on the Satisfaction of the Unlocking
2023-04-21 2023-04-22
Meeting of the 4th Conditions for the First Unlocking Period for the First Grant
Board of Directors under the 2022 Restricted Share Incentive Plan was approved
(the related director, Feng Jia, avoided voting).
1. The Proposal on the Provision of Guarantee for Overseas
Wholly-owned Subsidiary was approved.
2. The Proposal on the Satisfaction of the Unlocking
Conditions for the Third Unlocking Period for the First Grant
under the 2020 Restricted Share Incentive Plan was approved
The 26th (the related directors, Qiu Yezhi and Xie Weiwei, avoided
(Extraordinary) voting).
2023-06-13 2023-06-14
Meeting of the 4th 3. The Proposal on Repurchase and Retirement of Some
Restricted Shares was approved.
Board of Directors
4. The Proposal on Change of the Company's Registered
Capital and Amendments to the Company's Articles of
Association was approved.
5. The Proposal on the Convening of the 3rd Extraordinary
General Meeting for 2023 was approved.
The 27th Meeting
1. The Proposal on the 2023 Semi-Annual Report and Its
of the 4th Board of 2023-07-24 2023-07-26
Summary was approved.
Directors
3. The Proposal on Repurchase and Retirement of Some
The 28th Restricted Shares was approved.
(Extraordinary) 4. The Proposal on Change of the Company's Registered
2023-08-18 2023-08-19 Capital and Amendments to the Company's Articles of
Meeting of the 4th
Association was approved.
Board of Directors 5. The Proposal on the Convening of the 4th Extraordinary
General Meeting for 2023 was approved.
The 29th 2023-10-23 2023-10-24 1. The Proposal on the 2023 Third Quarter Report was
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
(Extraordinary) approved.
Meeting of the 4th 2. The Proposal on Re-election of the Board of Directors and
Nomination of Non-independent Director Candidates for the
Board of Directors
5th Board of Directors was approved.
3. The Proposal on Re-election of the Board of Directors and
Nomination of Independent Director Candidates for the 5th
Board of Directors was approved.
4. The Proposal on Allowance for the Independent Directors
of the 5th Board of Directors was approved (the related
directors, Li Ketian, Liu Da, and Tu Haichuan, avoided
voting).
5. The Proposal on Amendments to the Company's Articles
of Association was approved.
6. The Proposal on Amendments to the Work Rules for
Independent Directors was approved.
7. The Proposal on the Convening of the 5th Extraordinary
General Meeting for 2023 was approved.
1. The Proposal on Election of Chairman for the 5th Board of
Directors was approved.
2. The Proposal on Election of Members for the Special
Committees under the 5th Board of Directors was approved.
The 1st
3. The Proposal on Appointment of General Manager was
(Extraordinary) approved.
2023-11-15 2023-11-16
Meeting of the 5th 4. The Proposal on Appointment of Deputy General Manager
Board of Directors was approved.
5. The Proposal on Appointment of Head of Finance was
approved.
6. The Proposal on Appointment of Board Secretary was
approved.
2. Attendance of Directors at Board Meetings and General Meetings
Attendance of directors at board meetings and general meetings
The director
Total number Board
Board Board failed to
of board Board meetings
meetings meetings the attend two General
meetings the meetings attended by
Director attended director consecutive meetings
director was attended on way of
through a failed to board attended
eligible to site telecommuni
proxy attend meetings or
attend cation
not
Tang Zhuolin 9 3 6 0 0 Not 6
Qiu Yezhi 9 3 6 0 0 Not 6
Xie Weiwei 9 3 6 0 0 Not 6
Feng Jia 9 3 6 0 0 Not 6
Li Ketian 9 3 6 0 0 Not 6
Liu Da 9 3 6 0 0 Not 6
Tu Haichuan 9 3 6 0 0 Not 6
106 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Why any director failed to attend two consecutive board meetings: N/A
3. Objections Raised by Directors on Matters of the Company
Indicate whether any directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
4. Other Information about the Performance of Duty by Directors
Indicate whether any suggestions from directors were adopted by the Company.
√ Yes □ No
Suggestions from directors adopted or not adopted by the Company:
During the Reporting Period, the directors and independent directors of the Company worked in strict accordance with the
requirements of the Company Law, the Securities Law, Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed Companies
No. 1 - Standardized Operation of Main Board Listed Companies , the Articles of Association, the Rules of Procedure for the Board
of Directors, the Rules for Independent Directors and other relevant laws and regulations, earnestly attended the Board meetings and
the General Meetings, and were diligent and responsible. They have made relevant suggestions on the major governance and
operation decisions of the Company. The independent directors actively got to know the operation of the Company and delivered
different opinions on major matters of the Company, giving better play to their supervisory role and effectively maintaining the
interests of the Company and its shareholders.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
VII Performance of Duty by Special Committees under the Board in the Reporting Period
Number
Important
of Other Particulars
opinion
meeting Date of performan about
Committee Members Contents and
s meeting ce of objections
suggestion
convene duties (if any)
s
d
1. The Proposal on the 2022 Auditor’s Report of Guangdong Dongfang Precision
Science & Technology Co., Ltd. was approved.
Tu Haichuan, 2. The Proposal on the 2022 Internal Control Self-Assessment Report was approved.
Audit Li Ketian, March 23, 3. The Proposal on the Summary Report of the Audit Committee of the Board of
1 No No No
Committee and Qiu 2023 Directors on the 2022 Annual Audit of Ernst & Young Hua Ming LLP was approved.
Yezhi
4. The Proposal on the Proposed Appointment of an Audit Institution for 2023 was
approved.
1. The Proposal on the Work Report of the Audit Department for Q4 2022 was
approved.
Tu Haichuan, 2. The Proposal on the Work Report of the Audit Committee for Q4 2022 was
Audit Li Ketian, March 23, approved.
1 No No No
Committee and Qiu 2023
3. The Proposal on the Work Report of the Audit Department for 2022 was approved.
Yezhi
4. The Proposal on the Work Report of the Audit Committee for 2022 was approved.
5. The Proposal on the Work Plan of the Audit Department for 2023 was approved.
Tu Haichuan,
Audit Li Ketian, March 23, 1. The Proposal on the Election of Convenor for the Audit Committee under the Fourth
1 No No No
Committee and Qiu 2023 Board of Directors was approved.
Yezhi
1. The Proposal on the Work Report of the Audit Department for Q1 2023 was
approved.
Tu Haichuan,
2. The Proposal on the Work Report of the Audit Committee for Q1 2023 was
Audit Li Ketian,
1 April 20, 2023 approved. No No No
Committee and Qiu
3. The Proposal on the Work Plan of the Audit Department for Q2 2023 was approved.
Yezhi
4. The Proposal on the Audit Report for the Q1 2023 Financial Statements was
approved.
Audit Tu Haichuan, 1. The Proposal on the Work Report of the Audit Department for Q2 2023 was
1 July 21, 2023 No No No
Committee Li Ketian, approved.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Number
Important
of Other Particulars
opinion
meeting Date of performan about
Committee Members Contents and
s meeting ce of objections
suggestion
convene duties (if any)
s
d
and Qiu 2. The Proposal on the Work Report of the Audit Committee for Q2 2023 was
Yezhi approved.
3. The Proposal on the Work Plan of the Audit Department for Q3 2023 was approved.
4. The Proposal on the Audit Report for the 2023 Semi-Annual Financial Statements
was approved.
1. The Proposal on the Work Report of the Audit Department for Q3 2023 was
approved.
Tu Haichuan,
2. The Proposal on the Work Report of the Audit Committee for Q3 2023 was
Audit Li Ketian, October 20,
1 approved. No No No
Committee and Qiu 2023
3. The Proposal on the Work Plan of the Audit Department for Q4 2023 was approved.
Yezhi
4. The Proposal on the Audit Report for the Q3 2023 Financial Statements was
approved.
Tu Haichuan,
Audit Li Ketian, November 15, 1. The Proposal on the Election of Convenor for the Audit Committee under the Fifth
1 No No No
Committee and Qiu 2023 Board of Directors was approved.
Yezhi
1. The Proposal on the 2021 Annual Performance Appraisal Results for the Awardees
of the 2020 Restricted Share Incentive Plan was approved.
Remuneratio
Liu Da, Qiu 2. The Proposal on the Satisfaction of the Unlocking Conditions for the Second
n and February 13,
Yezhi, and Li 1 Unlocking Period for the Reserved Shares under the 2020 Restricted Share Incentive No No No
Appraisal 2023
Ketian Plan was approved.
Committee
3. The Proposal on Repurchase and Retirement of Some Restricted Shares was
approved.
Remuneratio
Liu Da, Qiu
n and March 23, 1. The Proposal on the Election of Convenor for the Remuneration and Appraisal
Yezhi, and Li 1 No No No
Appraisal 2023 Committee under the Fourth Board of Directors was approved.
Ketian
Committee
Remuneratio Liu Da, Qiu 1. The Proposal on the Satisfaction of the Unlocking Conditions for the First
1 April 21, 2023 No No No
n and Yezhi, and Li Unlocking Period for the First Grant under the 2022 Restricted Share Incentive Plan
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Number
Important
of Other Particulars
opinion
meeting Date of performan about
Committee Members Contents and
s meeting ce of objections
suggestion
convene duties (if any)
s
d
Appraisal Ketian was approved.
Committee 2. The Proposal on the 2022 Annual Performance Appraisal Results for the Awardees
of the First Grant under the 2022 Restricted Share Incentive Plan was approved.
1. The Proposal on the 2022 Annual Performance Appraisal Results for the Awardees
Remuneratio
Liu Da, Qiu of the First Grant under the 2020 Restricted Share Incentive Plan was approved.
n and
Yezhi, and Li 1 June 12, 2023 2. The Proposal on the Satisfaction of the Unlocking Conditions for the Third No No No
Appraisal
Ketian Unlocking Period for the First Grant under the 2020 Restricted Share Incentive Plan
Committee
was approved.
Remuneratio 1. The Proposal on Allowance for Independent Directors of the Fifth Board of
Liu Da, Qiu
n and October 23, Directors was approved.
Yezhi, and Li 1 No No No
Appraisal 2023 2. The Proposal on Allowance for Supervisors of the Fifth Supervisory Committee was
Ketian
Committee approved.
Remuneratio
Liu Da, Qiu
n and November 15, 1. The Proposal on the Election of Convenor for the Remuneration and Appraisal
Yezhi, and Li 1 No No No
Appraisal 2023 Committee under the Fifth Board of Directors was approved.
Ketian
Committee
Liu Da, Tang
Nomination March 23, 1. The Proposal on the Election of Convenor for the Nomination Committee under the
Zhuolin, and 1 No No No
Committee 2023 Fourth Board of Directors was approved.
Tu Haichuan
1. The Proposal on Nomination of Non-independent Director Candidates for the Fifth
Board of Directors was approved.
1.01 The Proposal on Nomination of Mr. Tang Zhuolin as Non-independent Director
Candidate for the Fifth Board of Directors
Liu Da, Tang
Nomination October 23, 1.02 The Proposal on Nomination of Ms. Qiu Yezhi as Non-independent Director
Zhuolin, and 1 No No No
Committee 2023 Candidate for the Fifth Board of Directors
Tu Haichuan
1.03 The Proposal on Nomination of Mr. Xie Weiwei as Non-independent Director
Candidate for the Fifth Board of Directors
1.04 The Proposal on Nomination of Ms. Feng Jia as Non-independent Director
Candidate for the Fifth Board of Directors
110 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Number
Important
of Other Particulars
opinion
meeting Date of performan about
Committee Members Contents and
s meeting ce of objections
suggestion
convene duties (if any)
s
d
2. The Proposal on Nomination of Independent Director Candidates for the Fifth Board
of Directors was approved.
2.01 The Proposal on Nomination of Mr. Li Ketian as Independent Director Candidate
for the Fifth Board of Directors
2.02 The Proposal on Nomination of Mr. Tu Haichuan as Independent Director
Candidate for the Fifth Board of Directors
2.03 The Proposal on Nomination of Mr. Liu Da as Independent Director Candidate for
the Fifth Board of Directors
Liu Da, Tang
Nomination November 15, 1. The Proposal on the Election of Convenor for the Nomination Committee under the
Zhuolin, and 1 No No No
Committee 2023 Fifth Board of Directors was approved.
Tu Haichuan
111 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
VIII Performance of Duty by the Supervisory Committee
Indicate whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
IX Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the parent at
532
the period-end
Number of in-service employees of principal subsidiaries at the
1732
period-end
Total number of in-service employees at the period-end 2264
Total number of paid employees in the Reporting Period 2661
Number of retirees to whom the Company as the parent or its
0
major subsidiaries need to pay retirement pensions
Functions
Function Employees
Production&Operation 1360
Marketing 269
R&D and technical 335
Financial 80
Comprehensive 220
Total 2264
Educational backgrounds
Educational background Employees
Below junior college 881
Junior college 825
Bachelor’s degree 400
Master’s degree and above 158
Total 2264
2. Employee Remuneration Policy
The Company remuneration policy in 2023 continued to be based on posts and performance and subject to total
control. A comprehensive remuneration system was established and further improved to retain and attract talents
needed for the Company's sustainable development.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
1. Paid remuneration based on posts: The relative value of a post was determined based on its duties, and the
remuneration rage of the post was determined based on the relative value and according to the Company's value
orientation.
2. Paid remuneration based on performance: The Company determined the basic remuneration based on the
relative value of a post and personal competence, determined the performance bonus in an employee's remuneration
based on his/her performance, and adjusted the remuneration based on his/her personal competence and overall
performance.
3. Changed remuneration with the change in post: The remuneration was strictly fitted to the post, and if the
post changed, the remuneration changed, so that the remuneration system can support the career development of
employees.
4. Total control: The total amount of remuneration was controlled within the scope recognized by the Company,
and the growth rate of remuneration should be lower than that of sales revenue and profit. The Company's
affordability was taken into account so that the Company's business performance can support the growth of the total
labour cost.
5. The remuneration system of payment by piece is applied to first-line workers of domestic business entities,
so that they could be paid more by being more profession and working harder, so as to reflect an internally fair
remuneration policy based on differential skill scoring.
Overseas business entities:
The remuneration system for each overseas business entity is put in place in accordance with the local labor
law and other applicable laws.
3. Training Plan
1. Overall status: 229 training sessions were carried out at the Group headquarters and domestic branches and subsidiaries in
2023. The number of training hours per capita was approximately 13.86 hours, totaling 5,113 training attendees. There were 11
leadership empowerment training sessions, with 166 hours of teaching, covering 110 people; 167 professional competence training
sessions, with 1,225 hours of teaching, covering 1,861 people; 14 general capability training sessions, with 144.5 hours of teaching,
covering 437 people; 18 training sessions for safety and health, with 38 hours of teaching, covering 2,379 people; 19 trainin g
sessions for new recruits, with 72 hours of teaching, covering 326 people. Online training resources enabled a total of 186 hours of
empowerment.
2.The Company actively introduced external online and offline training resources, implemented the training more effectively
and conveniently, empowered core employees and shared training resources in the Group.
3. The Company instituted a cross-departmental talent exchange initiative within the Group, fostering collaboration and shared
learning across subsidiaries, while dynamically optimising, adjusting, and monitoring progress in accordance with evolving business
development needs at the subsidiary and Group levels.
4. The Company developed a comprehensive plan for the Group's Training Knowledge Base project, aiming to consistently
refresh and refine its contents, covering aspects like the curriculum framework, instructor resources, management of training
programme suppliers, and overall training administration.
5. In December 2023, the Company convened a summit to decode and strategise around the Group's a "Wealth of Talent"
initiative, clarifying its goals and tactical roadmap. This endeavour seeks to bolster and refine all aspects of talent acquisition,
cultivation, development, deployment, and retention, thereby ensuring a stronger foundation to support the execution of the
Company's business strategies.
6. Overseas subsidiaries constantly prioritised employee career progression and personal development, proactively
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
implementing a variety of training programmes, including professional and technical instruction, leadership development, safety and
health education, language courses, and soft skills enhancement. In 2023, Fosber Italy executed the FormaT training plan, fea turing
73 courses and totaling 384 hours. This involved coordinating 174 hours of leadership training, 2,729 hours dedic ated to safety and
health topics, and 892 hours focusing on soft skills improvement, benefiting over 120 employees in skill upgrades. Moreover, it
offered online language classes for white-collar workers and devised custom-fit training schemes for operators.
4. Labor Outsourcing
√ Applicable □ Not applicable
Total hours of labor outsourced 95,013.5
Total payment for labor outsourcing (RMB yuan) 2,734,754
X Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)
The profit distribution policy for shareholders, especially the formulation, implementation and amendments to the cash dividend
policy, in the Reporting Period:
√ Applicable □ Not applicable
Articles 183 and 186 of the Articles of Association of Guangdong Dongfang Precision Science & Technology Co., Ltd. has
specified the method of profit distribution and the conditions, schedule and proportion of cash dividend, as well as the proc edures to
decide and adjust or change profit distribution, in order to fully protect the legitimate rights and interests of investors.
The profit distribution policy of the Company remained unchanged in the Reporting Period.
Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association and
Yes
resolution of general meeting
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors faithfully performed their duties and
Yes
played their due role
If the Company has no dividend plan, it should disclose the
specific reasons and the next steps it intends to take to enhance Yes
investor returns
Non-controlling shareholders are able to fully express their
opinion and desire and their legal rights and interests are fully Yes
protected
In case of adjusting or changing the cash dividend policy, the
conditions and procedures involved are in compliance with Not applicable
applicable regulations and transparent
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees
√ Applicable □ Not applicable
1. Equity Incentives
The implementations of the above-mentioned incentive plans during the Reporting Period are as follows:
1. On 17 February 2023, the Proposal on the Satisfaction of the Unlocking Conditions for the Second Unlocking Period for the
Reserved Restricted Shares under the 2020 Restricted Share Incentive Plan was approved at the 23rd (Extraordinary) Meeting of the
4th Board of Directors and the 17th (Extraordinary) Meeting of the 4th Supervisory Committee. On 28 February 2023, 1,632,000
shares held by 17 awardees were unlocked for public trading in the second unlocking period for the reserved restricted shares under
the 2020 Restricted Share Incentive Plan.
2. On 21 April 2023, the Proposal on the Satisfaction of the Unlocking Conditions for the First Unlocking Period for the First
Grant under the 2022 Restricted Share Incentive Plan was approved at the 25th (Extraordinary) Meeting of the 4th Board of Directors
and the 19th (Extraordinary) Meeting of the 4th Supervisory Committee. On 28 April 2023, 530,000 shares held by 7 awardees were
unlocked for public trading in the first unlocking period for the first grant under the 2022 Restricted Share Incentive Plan.
3. On 13 June 2023, the Proposal on the Satisfaction of the Unlocking Conditions for the Third Unlocking Period for the First
Grant under the 2020 Restricted Share Incentive Plan was approved at the 26th (Extraordinary) Meeting of the 4th Board of Directors
and the 20th (Extraordinary) Meeting of the 4th Supervisory Committee. On 26 June 2023, 8,620,000 shares held by 37 awardees
were unlocked for public trading in the third unlocking period for the first grant under the 2020 Restricted Share Incentive Plan.
4. On 6 March 2023, the Proposal on the Repurchase and Retirement of Some Restricted Shares was approved at the Second
Extraordinary General Meeting of 2023. As one awardee resigned from the Company due to personal reasons and thus was no longe r
eligible as an awardee for the restricted shares, the Company repurchased and retired the 128,000 restricted shares that had been
granted to this awardee but were still in lockup. The Shenzhen branch of China Securities Depository and Clearing Corporation
Limited confirmed that the retirement of the aforesaid repurchased restricted shares was completed on 22 March 2023.
5. On 30 June 2023, the Proposal on the Repurchase and Retirement of Some Restricted Shares was approved at the Third
Extraordinary General Meeting of 2023. As one awardee had resigned from the Company and thus was no longer eligible for the
equity incentives, the Company intended to repurchase the 120,000 restricted shares that had been granted to this awardee but were
still in lockup, all of which would be retired. The Shenzhen branch of China Securities Depository and Clearing Corporation Limited
confirmed that the retirement of the aforesaid repurchased restricted shares was completed on 8 August 2023.
6. On 5 September 2023, the Proposal on the Repurchase and Retirement of Some Restricted Shares was approved at the Fourth
Extraordinary General Meeting of 2023. As one awardee had resigned from the Company and thus was no longer eligible for the
equity incentives, the Company intended to repurchase the 240,000 restricted shares that had been granted to this awardee but were
still in lockup, all of which would be retired. The Shenzhen branch of China Securities Depository and Clearing Corporation L imited
confirmed that the retirement of the aforesaid repurchased restricted shares was completed on 23 October 2023.
7. On 14 March 2023, the Company disclosed the Announcement on Lapse of Reserved Interests under the 2022 Restricted
Share Incentive Plan. The Company had reserved 662,500 restricted shares under the 2022 Restricted Share Incentive Plan for
potential awardees in the future. According to the 2022 Restricted Share Incentive Plan, “The awardees for the reserved portion of the
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Plan shall be determined within 12 months after the Plan has been approved by a general meeting of shareholders. After the Board of
Directors has proposed, the Independent Directors and the Supervisory Committee have expressed their consent, and the law fir m has
expressed their professional opinions and issued a legal opinion, the Company shall disclose the relevant information about the
awardees in a timely and accurate manner at the designated website in accordance with the requirements. If the awardees are not
determined within 12 months, the reserved interests shall lapse.”
It has been more than 12 months since the First Extraordinary General Meeting of 2022 held on 14 March 2022 approved the
Proposal on the 2022 Restricted Share Incentive Plan (Draft) and Summary, the Company has not identified any awardees for the
reserved interests, and the reserved 662,500 restricted shares have lapsed.
Equity incentives received by directors and senior management:
√ Applicable □ Not applicable
Unit: share
Exercis
e price
Share Restri
for
option Market cted
Exercis Exerci exercis Unloc
s Clos price at shares Closi
Open able sed ed Openi ked Grant
newly ing the newly ng
ing shares shares shares ng shares price
Offic grante shar period- grante restri
Name share in the in the in the restric in the (RMB
e title d in e end d in cted
optio Reporti Repor Reporti ted Repor yuan/sh
the optio (RMB the share
ns ng ting ng shares ting are)
Repor ns yuan/sh Repor s
Period Period Period Period
ting are) ting
(RMB
Period Period
yuan/sh
are)
Direct
or and
Qiu Gener 3,600, 3,600,
0 1 0
Yezhi al 000 000
Mana
ger
Direct
or and
Deput
Xie
y 400,0 400,0
Weiw 0 1 0
Gener 00 00
ei
al
Mana
ger
Direct
Feng 700,0 140,0 560,0
or, 0 1
Jia 00 00 00
Board
116 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Secret
ary
and
Vice
Presid
ent
Chief
Finan
cial
Shao
Offic 640,0 320,0 320,0
Yongf 0 1
er and 00 00 00
eng
Vice
Presid
ent
5,340, 4,460, 880,0
Total -- -- -- 0 --
000 000 00
Appraisal of and incentive for senior management:
The Company has established a sound performance appraisal and remuneration policy for senior managers, and determined key
performance indicators (KPIs) matching different posts, which linked the income of the Company's managers and employees at
different levels to their work performance. During the Reporting Period, the Company assessed and appraised the work ability, duty
performance and completion of responsibility goals of senior managers based on the KPIs, and closely linked their remuneration
levels with the Company's business performance.
2. Implementation of Employee Stock Ownership Plans
□ Applicable √ Not applicable
3. Other Incentive Measures for Employees
□ Applicable √ Not applicable
XII Formulation and Imple mentation of Internal Control System during the Reporting
Period
1. Internal Control Formulation and Implementation
In accordance with the provisions of the Basic Code for Internal Control of Enterprises and its supporting guidelines and other
regulatory requirements for internal control, the Company has set up a relatively complete corporate governance structure and
internal control management system in line with its actual operation, which is in line with the needs of the Company's operation and
management. The Company has established internal control over the businesses and matters included in the scope of evaluation for
effective implementation. The objective of internal control has been basically achieved with no material weakness.
The Board of Directors of the Company is responsible for establishing sound and effective internal controls and evaluating their
effectiveness in accordance with the provisions of the standard system for enterpr ise internal control. The Supervisory Committee
supervised the establishment and implementation of internal controls by the Board of Directors.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
The Company would ensure legal compliance in operation and management, assets safety, truthfulness and integrity of financial
reports and related information through the sound and effective implementation of internal controls to improve operational efficiency
and effect, and promote the development strategy.
2. Significant Defects in Internal Control Identified during the Reporting Period
□ Yes √ No
XIII Subsidiary Management during the Reporting Period
Subsidiary Management plan Progress Problems Solutions Solution progress Subsequent plan
N/A N/A N/A N/A N/A N/A N/A
XIV Self-Assessment Report and Independent Auditor’s Report on Internal Control
1. Internal Control Self-Assessment Report
Date of disclosure of
the full internal control 28 March 2024
assessment report
Index to the full internal
control assessment Published on www.cninfo.com.cn
report disclosed
Ratio of the total assets
of the organizations
included in the
assessment to the total 100.00%
assets in the Company's
consolidated financial
report
Ratio of the revenue of
the organizations
included in the
assessment to the 100.00%
revenue in the
Company's consolidated
financial report
Defect identification criteria
Category Financial report Non-financial report
1) Indications of significant defects in financial The identification of defects in non-financial reports
reports include: is mainly based on the degree of impact of the defects
Qualitative criteria a. Fraudulent conduct by directors, supervisors and on the effectiveness of business procedures and the
senior management of the Company; b. Correction possibility of their occurrence.
of a published financial report by the Company; c. 1) Significant defect
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Significant misstatement in the current financial If the possibility of the defect is high, it will seriously
report identified by a certified public account but not reduce the work efficiency or effectiveness, seriously
identified during the Company's internal control increase the uncertainty of the effectiveness, or make
audit; d. Invalid supervision of the Audit Committee the work result seriously deviate from the expected
and audit department over the Company's external goal, the defect is a significant defect. The following
financial reports and internal control of financial usually indicates a significant defect in the internal
reports. control of non-financial reports:
2) Indications of important defects in financial a. Violation of national laws and regulations; b.
reports included: Outflow of managers or key technicians; c. Frequent
a. Failure to select or apply accounting policies in negative news from media; d. Failure to correct the
accordance with GAAP; b. Failure to implement results, especially significant or important defects, in
anti-fraud procedures and take control measures; c. internal control assessment; e. Lack of system control
Lack of corresponding control mechanism for or systematic failure of system in important business.
accounting treatment of unconventional or special 2) Important defect
transactions or lack of corresponding compensatory If the possibility of the defect is relatively high, it will
control; d. One or more defects in the control of the significantly reduce the work efficiency or
period-end financial reporting process and failure to effectiveness, significantly increase the uncertainty of
reasonably ensure true and complete financial the effectiveness, or make the work result
reports. significantly deviate from the expected goal, the
3) General defects refer to the control defects other defect is an important defect. The following usually
than significant and important defects mentioned indicates an important defect in the internal control of
above. non-financial reports:
a. Defects in important business policies or systems;
b. Important mistakes in the decision-making process;
c. Serious outflow of business personnel in key posts;
d. Failure to timely remedy the important defects
identified in internal supervision of internal control; e.
Other circumstances that have a negative impact on
the Company. 3) General defects referred to the
control defects other than significant and important
defects mentioned above.
The revenue and total assets were the measuring
indicators for the quantitative criteria. If the loss that
may result from or results from an internal control
A quantitative judgment was made based on the defect is related to the profit report, it was measured
pretax profit of the Company. The misstatement by the revenue indicator. If the amount of
exceeding 5% of the total pretax profit was misstatement in the financial report that may result
Quantitative criteria determined as a significant misstatement, that from the defect alone or it together with other defects
exceeding 3% of the total pretax profit was is less than 0.5% of the revenue, the defect was
determined as an important misstatement, and others determined as a general defect. If it exceeds 0.5% and
were determined as general misstatements. is less than 1% of the revenue, it was determined as
an important defect. If it exceeds 1% of the revenue, it
was determined as a significant defect.
If the loss that may result from or results from an
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
internal control defect is related to asset management,
it was measured by the total asset indicator. If the
amount of misstatement in the financial report that
may result from the defect alone or it together with
other defects is less than 0.5% of the total assets, the
defect was determined as a general defect. If it
exceeds 0.5% and is less than 1% of the total assets, it
was determined as an important defect. If it exceeds
1% of the total assets, it was determined as a
significant defect.
Number of significant
defects in financial 0
reports
Number of significant
defects in non-financial 0
reports
Number of important
defects in financial 0
reports
Number of important
defects in non-financial 0
reports
2. Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal control
In the opinion of Ernst & Young Hua Ming LLP, Guangdong Dongfang Precision Science & Technology Co., Ltd. maintained, in
all material respects, effective internal control over financial reporting as at 31 December 2023, based on the Basic Rules on
Enterprise Internal Control and other applicable rules.
Independent auditor’s report on
Yes
internal control disclosed or not
Disclosure date 28 March 2024
Index to such report disclosed www.cninfo.com.cn
Type of the auditor’s opinion Unmodified unqualified opinion
Material weaknesses in internal
control not related to financial None
reporting
Indicate whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal control.
□ Yes √ No
Indicate whether the independent auditor’s report on the Company’s internal control is consistent with the internal control
self-evaluation report issued by the Company’s Board of Directors.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
√ Yes □ No
XV Rectifications of Proble ms Identified by Self-inspection in the Special Action for Listed
Company Governance
N/A
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Part V Environmental and Social Responsibilities
I Significant Environmental Issues
Measures taken to reduce carbon emissions in the Reporting Period and the impact:
√ Applicable □ Not applicable
The subsidiary Fosber Italy has established and implemented a sustainability management system and is certified to the
following international standards: ISO45001:2018, ISO9001:2015, ISO14001:2015, EMAS (EU Eco-Management and Audit
System), and SA8000:2014.
The subsidiary Tirua Group has reached full reliance on green power for its entire energy consumption and is progressing in
2023 to augment its self-sufficiency by installing additional solar panels and boosting its photovoltaic capacity.
The subsidiary, Parsun Power, completed an installed capacity of 1MW rooftop photovoltaic power station in 2023. The project
utilises a self-consumption model for generated power and feeds excess energy back to the grid. Anticipated to yield an average of
1.1 million kWh annually, the project is projected to conserve approximately 117 tons of standard coal and simultaneously cut dow n
around 948 tonnes of CO2 emissions each year.
Reasons for non-disclosure of other environmental information
□ Applicable √ Not applicable
II Social Responsibilities
The Company attached importance to fulfil social responsibility in daily operations, intending to promote the harmony and
co-prosperity between it and parties related to its interests. The Company also took active measures in the protection of the rights and
interests of shareholders, creditors, employees, suppliers, customers and consumers, environmental protection, sustainable
development, public relations and social public welfare undertakings, and strived to maximize comprehensive social benefits
including the sustainable development of itself.
(1) Corporate governance: During the Reporting Period, the Company strictly abided by the Company Law, the Securities Law
and Code of Corporate Governance for Listed Companies, continued to refine the corporate governance structure, improve the
internal control system, formed the decision-making system comprising the Shareholders' General Meeting, the Board of Directors,
the Supervisory Committee and the Management, and timely fulfilled its obligation of information disclosure according to laws and
regulations and effectively safeguarded the rights and interests of all shareholders.
(2) Rights and interests of employees: The Company provided employees with welfare and care by providing holiday gifts and
holding employee birthday parties, annual meetings and team building activities, improved employees' professional competence by
offering regular or irregular training to employees in the headquarters and domestic and foreign branches and subsidiaries, and
continued to improve the competitive comprehensive remuneration system to retain and attract talents needed for the Company's
sustainable development.
(3) Relationship with customers and suppliers: Long adhering to the principle of "honest business" and "mutual benefit and
win-win", the Company took the initiative to construct and develop strategic partnership with suppliers and customers and jointly
built a platform of trust and cooperation, and earnestly fulfilled its social respo nsibilities to suppliers, customers and consumers. The
Company has been well performing contracts with suppliers and customers and ensuring that the rights and interests of all parties are
highly valued and duly protected.
(4) Production safety: The Company strictly abided by the Labour Law and the Labour Contract Law, adhered to the
"people-oriented" principle, attached importance to the needs of employees, strived to improve the working and living environments
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
of employees, and has set up a labour union to effectively protect the interests of employees. It also provided labour protection
supplies according to the risk factors of different posts, organized occupational health examinations for employees (before taking the
post, on the post and before leaving the post), and bought safety liability insurance for employees on highly risky posts. In 2020,
Dongfang Precision extended its Grade II Production Safety Standardization Certificate for Machinery Enterprises, and Parsun Power
and Fosber Asia were granted the Grade III Production Safety Standardization Certificate for Machinery Enterprises.
(5) Environmental protection: Dongfang Precision was granted the National Pollutant Discharge Permit and regularly completes
the filling of data for post-license monitoring of the National Discharge License. It commissioned the qualified third-party
environmental protection agencies to compile the Contingency Plans for Environmental Emergencies and update it on a regular basis.
The Company established the "Environmental Self-Monitoring Programme", entrusted a third party to install and operate 24-hour
sewage on-line flow monitoring equipment, and entrusted a third-party monitoring organisation to carry out quarterly testing of
wastewater, exhaust gas and noise and issue third-party test reports. Moreover, the Company’s environmental protection facilities
passed the qualification re-examination on OHSAS18001:2007 Occupational Health and Safety Management Systems and
ISO14001:2005 Environmental Management System. Parsun Power, which is a subsidiary of the Company, has purchased complete
environmental protection equipment to meet the daily pollutant treatment requirements, that leads no violation of environmental
protection related laws and administrative regulations and receive administrative penalties.
(6) Anti-fraud: The Group complied a thorough internal authorization manual that detailed provisions on internal authorization
process of major matters to ensure appropriate internal control and reduce the risk of fraud. In order to create a fair, just, honest and
non-corrupt internal business environment and strengthen internal monitoring, the Company also established and launched the
anti-fraud reporting platform to encourage employees to report fraud findings.
(7) Social honour: Dongfang Precision is a State-level High-tech Enterprise and won honorary titles including "Top 500 Private
Manufacturing Enterprises in China", "Leading Enterprises in Subdivided Industries in Foshan", and "Guangdong Provincial
Industrial Design Centre ". The subsidiary Fosber Asia won honorary titles including "Guangdong Demonstration Enterprise of
Intellectual Property". The subsidiary Wonder Digital has been successfully selected as a State -level "Little Giant" enterprise with
specialties, refined management, unique technologies and innovation in 2023. The subsidiary Parsun Power is a State -level "Little
Giant" enterprise with specialties, refined management, unique technologies and innovation, a State -level High-tech Enterprise an
engineering technology research centre for outboard motors in Jiangsu Province, an enterprise technology centre recognised by
Jiangsu Province, a leading enterprise in China's internal combustion engine industry and a director unit of the Small Gasoline
Engine Branch of China Internal Combustion Engine Industry Association. The outboard motors of Parsun Power have also won
many honours such as the certificate of industrialisation demonstration project of national torch plan, innovative product of China
machinery industry, famous brand product of Jiangsu province and famous brand product of Suzhou city.
III Efforts in Poverty Alleviation and Rural Revitalization
The Company did not conduct activities related to targeted poverty alleviation in the Reporting Year, nor did it develop any
subsequent plan for targeted poverty alleviation.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Part VI Significant Events
I Fulfillment of Undertakings
1. Undertakings of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well
as the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
√ Applicable □ Not applicable
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
Undertakings
related to
reform of
shareholder
structure
Undertakings
made in
acquisition
report of
change of
equity report
1. I will conduct all related-party transactions,
unavoidable or arising from a reasonable reason,
between me and companies controlled by me and
Dongfang Precision and its controlling
subsidiaries in a fair and reasonable manner and
on an equal, mutually beneficial, equivalent and
Undertaking compensable basis in strict accordance with
on market principles. For all related-party
Tang horizontal transactions between me and companies
Undertakings In normal
Zhuolin, competition, controlled by me and Dongfang Precision and its 25 April Long-term
made in asset progress of
Tang related-party controlling subsidiaries, I will sign agreements 2017 effective
reorganization fulfilment
Zhuomian transactions and go through procedures according to law and
and capital fulfil the obligation of information disclosure in
occupation accordance with relevant laws, regulations,
normative documents, Articles of Association of
Dongfang Precision and other corporate
governance provisions, and undertakes not to
damage the legitimate rights or interests of the
listed company and small and medium
shareholders. 2. When any related-party
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
transaction involving me and companies
controlled by me is being deliberated by the
authority of Dongfang Precision, I will
proactively perform the obligation of evading
according to law and conduct the transaction only
with the approval of the competent authority. 3. I
undertake not to obtain any improper benefits or
cause Dongfang Precision and its controlling
subsidiaries to assume any improper obligations
through related-party transactions. In case of any
losses to Dongfang Precision or its controlling
subsidiaries as a result of any breach of the above
undertakings, I will be liable for such losses.
1. The undertaker and companies controlled by it
are not engaging in any business the same as,
similar to or competing with the business of the
listed company and companies controlled by it,
and they will neither, in any way, engage in or
assist others in engaging in any business that
competes or may compete with the business of
the listed company and companies controlled by
it, nor merge or substantially invest in (or jointly
hold), directly or indirectly, other companies
Undertaking engaging in any business that competes or may
on compete with the business of the listed company
Tang horizontal and companies controlled by it. 2. If the listed
25 In normal
Zhuolin, competition, company engages in a new business sector, the Long-term
November progress of
Tang related-party undertaker will not engage in any business that effective
2019 fulfilment
Zhuomian transactions competes with such a new business of the listed
and capital company, except with the prior written consent of
occupation the listed company. 3. If any business opportunity
obtained by the undertaker from any third party
completes or may compete with the business of
the listed company and companies controlled by
it, the undertaker will immediately inform and
make every effort to deliver the business
opportunity to the listed company. 4. The
undertaker will not, in any way, use the
information or other resources obtained from the
listed company to conduct any act that harms the
interests of the listed company. 5. In case of any
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
losses to the listed company as a result of breach
of these undertakings by the undertaker, the
undertaker will make thorough, timely and full
compensation for all such losses and take active
measures to eliminate the adverse effects caused
thereby.
1. The undertaker will refrain from any illegal
occupation of the funds and assets of the listed
company, and will never require the listed
company to provide any form of guarantee to it
or companies controlled by it under any
circumstances. 2. The undertaker will, to the
extent possible, avoid and minimize related-party
transactions with the listed company, and for all
related-party transactions unavoidable or arising
from a reasonable reason, it will conduct
following the principle of voluntary, fair and
reasonable market pricing and according to
Undertaking normal market trading conditions, sign
on agreements and go through procedures according
Tang horizontal to law, abide by relevant laws, regulations,
25 In normal
Zhuolin, competition, normative documents and articles of association Long-term
November progress of
Tang related-party of the listed company, perform internal effective
2019 fulfilment
Zhuomian transactions decision-making and approval procedures
and capital according to law, and timely perform the
occupation obligation of information disclosure, so as to
ensure that the related-party transactions are
fairly and reasonably priced and conducted under
fair trading conditions and that it will not damage
the legitimate rights or interests of the listed
company and its shareholders through
related-party transactions. 3. In case of any losses
to the listed company as a result of breach of
these undertakings by the undertaker, the
undertaker will make thorough, timely and full
compensation for all such losses and take active
measures to eliminate the adverse effects caused
thereby.
Tang Other 1. I will not overstep my authority to intervene in 25 Long-term In normal
Zhuolin, undertakings the operation and management of Dongfang November effective progress of
126 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
Tang Precision, will not occupy the interests of 2019 fulfilment
Zhuomian Dongfang Precision, and will earnestly take
corresponding measures to fill up the diluted spot
returns of Dongfang Precision. 2. After the CSRC
and Shenzhen Stock Exchange otherwise release
the measures to fill up diluted spot returns and
opinions and implementation rules for its
undertakings, if Dongfang Precision's
corresponding policies and undertakings fail to
meet such provisions, I will immediately submit
a supplementary undertaking to the CSRC and
Shenzhen Stock Exchange as required in order to
be compliant. 3. I undertake to earnestly take the
corresponding measures formulated by the listed
company to fill up diluted spot returns and to
earnestly fulfil my undertakings. If I violate such
undertaking(s) and cause losses to the Company
or investors, I am willing to bear the
corresponding liability for compensation
according to law.
1. After the relevant transaction, the undertaker
will continue to maintain the independence of the
listed company in terms of staffing, asset,
business, organization and finance in accordance
with relevant laws, regulations and normative
documents, and will not conduct any act that
affects such independence or damages the
interests of the listed company and other
shareholders, and will effectively safeguard the
Tang
independence of the listed company in terms of 25 In normal
Zhuolin, Other Long-term
staffing, asset, business, organization and November progress of
Tang undertakings effective
finance. 2. This letter of undertaking shall be 2019 fulfilment
Zhuomian
effective and irrevocable as of the date when it is
officially signed by the undertaker. The
undertaker warrants to fulfil the undertaking(s) in
good faith, and the listed company has the right
to supervise its fulfilment. Where the undertaker
fails to fulfil the undertaking(s) in good faith of
undertaking and thus cause actual losses to the
listed company, the undertaker shall compensate
the listed company for all director or indirect
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
losses caused thereby.
I, as a director/senior executive of the Company,
will faithfully and diligently perform my duties,
safeguard the legitimate rights and interests of
the Company and all shareholders, and make the
following undertakings to ensure that the
Company's measures to fill up returns will be
effectively implemented.
1. I will not transfer benefits to other
organizations or individuals for free or under
unfair conditions, nor will I damage the interests
of the Company in other ways. 2. I will constrain
my consumption behaviour on the position. 3. I
will not use the Company's assets to engage in
He Weifeng,
any investment or consumption activities
Mai
unrelated to my performance of duties. 4. I will
Zhirong,
link the remuneration system formulated by the
Peng
Board of Directors or the Remuneration
Xiaowei, 25 In normal
Other Committee to the implementation of the Long-term
Qiu Yezhi, November progress of
undertakings Company's measures to fill up returns. 5. If the effective
Tang 2019 fulfilment
Company has an equity incentive program, I will
Zhuolin, Xie
link the exercise conditions of the equity
Weiwei,
incentive program to be announced to the
Zhou
implementation of the Company's measures to
Wenhui
fill up returns. 6. After this undertaking is given,
if the regulator puts forward other requirements
for the measures to fill up returns and the
undertaking and the undertaking fails to meet
such requirements, I will give a supplementary
undertaking according to the latest requirements
of the regulator. 7. I will effectively implement
the Company's measures to fill up returns and
fully fulfil my corresponding undertakings, and I
am willing to bear the corresponding liability for
compensation according to law if I violate such
undertaking(s) and cause losses to the Company
or investors.
Undertakings Tang Undertaking Before the fact that I am (or the Company is) a In normal
18 August Long-term
made in IPO Zhuolin, on major shareholder of the issuer is changed, I (or progress of
2010 effective
or refinancing Tang horizontal the Company) will not, directly or indirectly, in fulfilment
128 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
Zhuomian competition, any way (including but not limited to sole
related-party proprietorship, joint venture and holding stocks
transactions or interests in other companies or enterprises),
and capital engage in any business or activity that competes
occupation or may compete with the business of the issuer. I
(The Company) shall compensate the issuer for
any loss caused to it as a result of the failure to
fulfil the undertaking to avoid horizontal
competition.
If relevant government or judicial authorities
decide that Dongfang Precision or Weike
Dongmeng need to make a supplementary
Tang payment for employees' public housing
In normal
Zhuolin, Other provision, or Dongfang Precision or Weike 15 August Long-term
progress of
Tang undertakings Dongmeng is subject to any late fee, fine or loses 2011 effective
fulfilment
Zhuomian for failing to pay the public housing provision for
some employees, I will unconditionally and in
full bear such supplementary payment, late fees
and fines.
Undertakings
related to
equity
incentives
Undertakings
made to
minority
shareholders
of the
Company
Other
undertakings
Whether the
undertakings
Yes
were timely
performed
Where the
Company
Not applicable
failed to
fulfill an
129 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
undertaking
on time, it
shall explain
in detail the
reasons for
failing to do
so and the
subsequent
plan
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.
□ Applicable √ Not applicable
II Occupation of the Company’s Capital by the Controlling Shareholder or Its Related Parties
for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
III Irregularities in Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Explanations Given by the Board of Directors Re garding the Last “Modified Opinion” on
Financial Statements
□ Applicable √ Not applicable
V Explanations Given by the Board of Directors, the Supervisory Committee and the
Independent Directors (if any) Regarding the Independe nt Auditor's “Modified Opinion” on
the Financial Statements of the Reporting Period
□ Applicable √ Not applicable
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
VI YoY Changes to Accounting Policies and Estimates and Correction of Material
Accounting Errors
√ Applicable □ Not applicable
According to Interpretation No. 16 for The Accounting Standards for Business Enterprises issued by the Ministry of Finance in
November 2022 (C.K. [2022] No. 31), for a single transaction that is not a business combination and does not affect either
accounting profit or taxable income (or deductible losses) at the time the transaction occurs, and where the initial recognition of
assets and liabilities results in taxable temporary differences and deductible temporary differences in equal amounts, the exemption
from initial recognition of deferred income tax is not applicable. The above provisions are effective from 1 January 2023 in
accordance with the said Interpretation No. 16.
Since 1 January 2023, the Company has adopted the above-mentioned accounting policy and changed from consolidating
deferred income taxes to recognising the corresponding deferred income tax liabilities and deferred income tax assets, respectively,
for taxable temporary differences and deductible temporary differences arising from the initial recognition of assets and lia bilities for
lease transactions in which lease liabilities are initially recognised on the lease commencement date and included in the right-of-use
assets.
Save as disclosed above, the Company had no other changes to accounting policies or estimates or correc tion of material
accounting errors in the Reporting Period.
VII YoY Changes to the Scope of the Consolidated Financial Statements
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII Engagement and Disengagement of Independent Auditor
Current independent auditor:
Name of the domestic independent auditor Ernst & Young Hua Ming LLP
The Company’s payment to the domestic independent auditor RMB4.73 million
How many consecutive years the domestic independent auditor
4 years
has provided audit service for the Company
Names of the certified public accountants from the domestic
Feng Xingzhi and Hu Chuan
independent auditor writing signatures on the auditor’s report
How many consecutive years the certified public accountants
Feng Xingzhi: 4 years; Hu Chuan: 2 year
have provided audit service for the Company
Name of the overseas independent auditor (if any) N/A
The Company’s payment to the overseas independent auditor N/A
How many consecutive years the overseas independent auditor N/A
has provided audit service for the Company
Names of the certified public accountants from the overseas N/A
independent auditor writing signatures on the auditor’s report
131 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
How many consecutive years the overseas certified public N/A
accountants have provided audit service for the Company
Indicate whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
Independent auditor, financial advisor or sponsor hired for the audit of internal control:
√ Applicable □ Not applicable
Ernst & Young Hua Ming LLP was appointed as the independent auditor of internal control for the Company for 2023 for a fee of
RMB300,000.
IX Possibility of Delisting after the Disclosure of this Report
□ Applicable √ Not applicable
X Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XI Significant Legal Matters
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Punishments and Rectifications
√ Applicable □ Not applicable
A dispute arose between Fosber Italy, a wholly-owned subsidiary of Dongfang Precision (Netherlands), and the Tuscany
Regional Directorate of the Italian Revenue Agency in relation to the matter of the applicable rate of the withholding tax on foreign
dividends for the distribution of dividends to its parent company, Dongfang Precision (Netherlands), for the period from 2017 to
2022, and Fosber Italy reached a settlement of the above dispute with the Italian Revenue Agency on 12 October 2023, and signed
the Settlement Agreement. In the Settlement Agreement, the parties agreed that Fosber Italy's dividend distribution to Dongfang
Precision (Netherlands) for the year 2022 is exempted from dividend withholding tax, and the that Fosber Italy shall pay to the Italian
Revenue Agency, in the form of a lump sum, the withholding tax (including interest) on dividends for the years 2017 to 2021 in the
amount of EUR5,877,700,000 and the related penalty in the amount of EUR324,500,000, in accordance with the rate of 10%
provided for under the Double Taxation Convention signed by Italy and China; and that Fosber Italy shall apply the "Withholding
Tax Exemption Regime" to the distribution of dividends for the years 2022 and thereafter. Fosber Italy will be subject to a
"withholding tax exemption" for the distribution of dividends from 2022 onwards. At the same time, the agreement provides for tax
adjustments for the period from 2019 to 2021 in respect of the business transactions between Fosber Italy and Fosber Tianjin and
Fosber Asia, subsidiaries of Dongfang Precision, in the amount of EUR453,200,000 in back taxes (including interest) and EUR8000
in penalties.
The Company disclosed the Announcement on Tax Settlement Agreements Signed by Overseas Subsidiaries on 14 October 2023,
which was published in China Securities Journal, Shanghai Securities News, Securities Times and www.cninfo.com.cn.
132 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
XIII Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XIV Significant Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related-Party Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Amounts Due to and from Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Transactions between the Company and Related Financial Companies
□ Applicable √ Not applicable
No such cases in the Reporting Period.
6. Transactions between Financial Companies Controlled by the Company and Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
7. Other Significant Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
133 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
XV Significant Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Significant Guarantees
√ Applicable □ Not applicable
Unit: RMB'0,000
Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)
Disclosure
Guarante
date of the Counter
Actual Actual Having e for a
guarantee Line of Type of Security (if -guarant Term of
Obligor occurrence guarantee expired or related
line guarantee guarantee any) ees (if guarantee
date amount not party or
announcem any)
not
ent
Guarantees provided by the Company as the parent for its subsidiaries
Disclosure
Guarante
date of the Counter
Actual Actual Having e for a
guarantee Line of Type of Security (if -guarant Term of
Obligor occurrence guarantee expired or related
line guarantee guarantee any) ees (if guarantee
date amount not party or
announcem any)
not
ent
From the
Dongfang No more date when
Joint
Precision 14 June than 15 June EUR34.405 Security the
liability; -- No No
(Netherland 2023 EUR34.5 2023 6 million deposits guarantee
Pledge
) million took
effect to
134 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
15 June
2024
Total approved line for Total actual amount of
No more than EUR34.5
such guarantees in the such guarantees in the EUR34.4056 million
million
Reporting Period (B1) Reporting Period (B2)
Total approved line for Total actual balance of
such guarantees at the No more than EUR34.5 such guarantees at the
EUR34.4056million
end of the Reporting million end of the Reporting
Period (B3) Period (B4)
Guarantees provided between subsidiaries
Disclosure
Guarante
date of the Counter
Actual Actual Having e for a
guarantee Line of Type of Security (if -guarant Term of
Obligor occurrence guarantee expired or related
line guarantee guarantee any) ees (if guarantee
date amount not party or
announcem any)
not
ent
From the
date when
the
No more t
15 May 30 April EUR0.4124 General guarantee
QCorr han EUR3 - - No No
2020 2020 million Guarantee took
million
effect to
30 June
2024
Total approved line for Total actual amount of
such guarantees in the 0 such guarantees in the EUR0.4124 million
Reporting Period (C1) Reporting Period (C2)
Total approved line for Total actual balance of
such guarantees at the No more than EUR3 such guarantees at the
EUR0.4124 million
end of the Reporting million end of the Reporting
Period (C3) Period (C4)
Total guarantee amount (total of the three kinds of guarantees above)
Total guarantee line approved in No more than Total actual guarantee
the Reporting Period EUR34.5 amount in the Reporting EUR34.818 million
(A1+B1+C1) million Period (A2+B2+C2)
Total actual guarantee
Total approved guarantee line at No more than
balance at the end of the
the end of the Reporting Period EUR37.5 EUR34.818 million
Reporting Period
(A3+B3+C3) million
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4) as % of the
6.07%
Company’s net assets
135 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Of which:
Balance of guarantees provided for shareholders,
0
the actual controller and their related parties (D)
Balance of debt guarantees provided directly or
indirectly for obligors with an over 70% debt/asset EUR0.4124 million
ratio (E)
Amount by which the total guarantee amount
0
exceeds 50% of the Company’s net assets (F)
Total of the three amounts above (D+E+F) EUR0.4124 million
Joint liability possibly borne or already borne in
the Reporting Period for outstanding guarantees (if N/A
any)
Guarantees provided in breach of prescribed
N/A
procedures (if any)
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overview of wealth management entrustments in the Reporting Period:
Unit: RMB’0,000
Impairment
Unrecovered provision for
Type Funding source Amount Undue amount
overdue amount unrecovered
overdue amount
Bank’s wealth
management Self-funded 33,473.16 13,300 0 0
product
Securities firm’s
wealth management Self-funded 44,040 31,700 0 0
product
Trust product Self-funded 0 0 358.62 358.62
Total 77,513.16 45,000 358.62 358.62
High-risk wealth management transactions with a significant single amount or with low security and low liquidity:
□ Applicable √ Not applicable
Wealth management transactions where the principal is expectedly irrecoverable or an impairment may be incurred:
√ Applicable □ Not applicable
As of the end of the Reporting Period, the unrecovered amount of trust products was RMB3.5862 million, for which an impairment
allowance of RMB3.5862 million was established.
136 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVI Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVII Significant Events of Subsidiaries
□ Applicable √ Not applicable
137 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Part VII Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the period (+/-) After
Shares as
Shares as
dividend
New dividend
Percentag converte Percentag
Shares issue converte Other Subtotal Shares
e (%) d from e (%)
s d from
capital
profit
reserves
1. Restricted -6,810,00 -6,810,00
233,182,533 18.79% 0 0 0 226,372,533 18.25%
shares 0 0
1.1 Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
the government
1.2 Shares held by
state-owned 0 0.00% 0 0 0 0 0 0 0.00%
corporations
1.3 Shares held by
-6,130,00 -6,130,00
other domestic 232,342,533 18.72% 0 0 0 226,212,533 18.23%
0 0
investors
Including: Shares
held by domestic 0 0.00% 0 0 0 0 0 0 0.00%
corporations
Shares held by
-6,130,00 -6,130,00
domestic 232,342,533 18.72% 0 0 0 226,212,533 18.23%
0 0
individuals
1.4 Shares held by
840,000 0.07% 0 0 0 -680,000 -680,000 160,000 0.01%
overseas investors
Including: Shares
held by overseas 0 0.00% 0 0 0 0 0 0.00%
corporations
Shares held by
overseas 840,000 0.07% 0 0 0 -680,000 -680,000 160,000 0.01%
individuals
1,007,923,86 1,014,245,86
2. Unrestricted 81.21% 0 0 0 6,322,000 6,322,000 81.75%
7 7
138 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
shares
2.1
1,007,923,86 1,014,245,86
RMB-denominate 81.21% 0 0 0 6,322,000 6,322,000 81.75%
7 7
d ordinary shares
2.2 Domestically
listed foreign 0 0.00% 0 0 0 0 0 0 0.00%
shares
2.3 Overseas
listed foreign 0 0.00% 0 0 0 0 0 0 0.00%
shares
2.4 Others 0 0.00% 0 0 0 0 0 0 0.00%
1,241,106,40 1,240,618,40
3. Total shares 100.00% 0 0 0 -488,000 -488,000 100.00%
0 0
Reasons for share changes:
√ Applicable □ Not applicable
1. Repurchase and retirement of 488,000 shares
On 22 March 2023, one awardee for the reserved restricted shares under the 2020 Restricted Share Incentive Plan left office and
was thus no longer eligible for the said equity incentives. Therefore, the Company repurchased and retired the 128,000 restricted
shares that had been granted to this awardee but were still in lockup.
On 8 August 2023 and 23 October 2023, two awardees for the first grant under the 2022 Restricted Share Incentive P lan left
office and were thus no longer eligible for the said equity incentives. Therefore, the Company repurchased and retired the 360,000
restricted shares that had been granted to these awardees but were still in lockup.
2. Unlocking of some restricted shares
(1) Unlocking of restricted shares as equity incentives
On 28 February 2023, the shares were unlocked for public trading in the second unlocking period for the reserved restricted
shares under the 2020 Restricted Share Incentive Plan, which involved 1,632,000 shares held by 17 awardees.
On 28 April 2023, the shares were unlocked for public trading in the first unlocking period for the first grant under the 2022
Restricted Share Incentive Plan, which involved 530,000 shares held by seven awardees.
On 26 June 2023, the shares were unlocked for public trading in the third unlocking period for the first grant under the 2020
Restricted Share Incentive Plan, which involved 8,620,000 shares held by 37 awardees.
(2) Changes in locked-up shares of senior management
Data provided by China Securities Depository and Clearing Corporation Limited show that on 30 January 2023, Mr. Zhou
Wenhui's annual transferable share quota was changed from 0% to 25%, corresponding to 300,000 shares, for it had been six mon ths
since his departure from the office of director. Also according to the aforesaid data, during the Reporting Period, some statutory
senior management participating in equity incentives had their equity incentives (restricted shares) converted to locked-up shares of
senior management after the unlocking, involving a total of 4,760,000 shares.
Approval of share changes:
√ Applicable □ Not applicable
139 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
1. In the Reporting Period, with respect to share changes involved in the “unlocking for public trading of shares in the second
unlocking period for the reserved restricted shares under the 2020 Restricted Share Incentive Plan”, “unlocking for public trading of
shares in the first unlocking period for the first grant under the 2022 Restricted Share Incentive Plan” and “unlocking for public
trading of shares in the third unlocking period for the first grant under the 2020 Restricted Share Incentive Plan” , the Company
followed the applicable laws and regulations and its Articles of Association, executed the approval procedures with the gener al
meeting and the Board of Directors, and obtained approval from the Shenzhen Stock Exchange.
2. The restricted shares granted to one awardee with the reserved restricted shares under the 2020 Restricted Share Incentive
Plan and to two awardees in the first grant under the 2022 Restricted Share Incentive Plan were repurchased and retired for t hey were
no longer eligible for these equity incentives upon their departure from the Company. In terms of the share changes incurred, the
Company fulfilled the due approval procedures of the shareholders' general meeting and the Board of Directors in accordance w ith
the applicable laws and regulations and the Articles of Association, and obtained the approval of the Shenzhen Stock Exchange.
Transfer of share ownership:
√ Applicable □ Not applicable
In the Reporting Period, with respect to the transfers of share ownership involved in the “repurchase and retirement of some
restricted shares”, the Company completed the transfers with the Shenzhen branch of China Securities Depository and Clearing Co.,
Ltd. after they were approved by the Shenzhen Stock Exchange.
Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to the
Company’s ordinary shareholders and other financial indicators of the prior year and the prior accounting period,
respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
Increase in
Opening Closing
restricted Unlocked in the Reason for Date of
Shareholder restricted restricted
shares in the period restriction unlocking
shares shares
period
Participated in
the Restricted
Share Incentive
Plan of the
Qiu Yezhi 17,536,791 3,600,000 3,600,000 17,536,791 2023-06-26
Company/restri
cted shares of
senior
management
Participated in
Xie Weiwei 750,000 400,000 400,000 750,000 the Restricted 2023-06-26
Share Incentive
140 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Plan of the
Company/restri
cted shares of
senior
management
Participated in
the Restricted
Share Incentive
Plan of the 2023-01-30
Zhou Wenhui 1,200,000 480,000 780,000 900,000
Company/restri 2023-06-26
cted shares of
senior
management
The other 34
awardees of the Participated in
first grant of the Restricted
the 2020 4,140,000 0 4,140,000 0 Share Incentive 2023-06-26
Restricted Plan of the
Share Incentive Company
Plan
Participated in
the Restricted
Feng Jia 700,000 0 140,000 560,000 Share Incentive 2023-04-28
Plan of the
Company
The other 6
Participated in
awardees of the
first grant of the Restricted
the 2022 1,950,000 0 390,000 1,200,000 Share Incentive 2023-04-28
Restricted Plan of the
Share Incentive
Company
Plan
Participated in
the Restricted
Share Incentive
Plan of the
Shao Yongfeng 640,000 280,000 320,000 600,000 2023-02-28
Company/restri
cted shares of
senior
management
The other 16 Participated in
awardees of the the Restricted
2,752,000 0 1,312,000 1,312,000 2023-02-28
reserved grant Share Incentive
of the 2020 Plan of the
141 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Restricted Company
Share Incentive
Plan
Total 29,668,791 4,760,000 11,082,000 22,858,791 -- --
II Issuance and Listing of Securities
1. Securities (Exclusive of Preference Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
√ Applicable □ Not applicable
At the end of the Reporting Period, the total number of shares of the Company decreased by 488,000 shares compared with the
beginning of the Reporting Period. At the end of the Reporting Period, there was no significant change in the proportion of restricted
shares to the total number of shares of the Company as compared with the beginning of the Reporting Period.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
Number
of
ordinary
Number of
Number sharehol
preference Number of preference
of ders at
shareholders shareholders with
ordinary the
with resumed resumed voting rights at
sharehold 45,883 month-e 84,401 0 0
voting rights the month-end prior to
ers at the nd prior
at the the disclosure of this
period-en to the
period-end (if Report (if any)
d disclosu
any)
re of
this
Report
5% or greater shareholders or top 10 shareholders(excluding lending of shares through the facility)
Name of Nature of Shareho Total shares Increase/decre Restricted Unrestricted Shares in pledge,
sharehold shareholder lding held at the ase in the shares held shares held marked or frozen
142 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
er percenta period-end Reporting
Status Shares
ge Period
Tang Domestic In
21.82% 270,737,568 0 203,053,176 67,684,392 105,360,000
Zhuolin individual pledge
Tang Domestic In
7.81% 96,885,134 0 0 96,885,134 40,000,000
Zhuomian individual pledge
Hong
Kong
Securities Overseas
3.88% 48,183,133 38,666,919 0 48,183,133
Clearing corporation
Company
Limited
Pulead
Technolog State-owned
2.88% 35,748,587 -12,401,200 0 35,748,587
y Industry corporation
Co., Ltd.
Luzhou
Industrial
Developm
State-owned
ent 2.56% 31,770,010 0 0 31,770,010
corporation
Investmen
t Group
Co., Ltd.
Qinghai
Puren
Intelligent
Domestic
Technolog
non-state-o
yR&D 2.15% 26,628,340 0 0 26,628,340
wned
Center
corporation
(Limited
Partnershi
p)
Domestic
Qiu Yezhi 1.88% 23,382,388 0 17,536,791 5,845,597
individual
Bank of
China
Limited -
Dacheng
Jingheng Other 0.64% 7,962,600 7,000,300 0 7,962,600
Mixed
Securities
Investmen
t Fund
Liu Wucai Domestic 0.53% 6,597,688 0 0 6,597,688
143 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
individual
Beixin
Ruifeng
Fund -
Industrial
and
Commerci
al Bank of
China -
Other 0.50% 6,171,777 0 0 6,171,777
Beijing
Hengyu
Tianze
Investmen
t
Managem
ent Co.,
Ltd.
Strategic investor or
general corporation
becoming a top-10 None
shareholder in a rights
issue (if any)
Mr. Tang Zhuolin and Mr. Tang Zhuomian are brothers. On 18 August 2010, they signed the
Related or
Agreement on Acting in Concert. Pulead Technology Industry Co., Ltd. and Qinghai Puren
acting-in-concert parties
Intelligent Technology R & D Center (Limited Partnership) are acting-in-concert parties.
among the shareholders
Apart from that, the Company is not aware of any related or acting-in-concert parties among the
above
other shareholders above.
Above shareholders
entrusting or entrusted
None
with voting rights, or
waiving voting rights
As of the end of the Reporting Period, there were 42,902,492 shares in the Company’s specia l
Top 10 shareholders
account for repurchase, accounting for 3.46% of its total share capital. As per the Shenzhen Stock
including the special
Exchange Guideline No. 1 for the Self-regulation of Listed Companies—Business Handling, the
account of repurchased
existence of a special account of repurchased shares among the top 10 shareholders should be
shares (if any)
specifically stated but not included in the presentation of the top 10 shareholders.
Top 10 unrestricted shareholders
Unrestricted shares held at the Shares by type
Name of shareholder
period-end Type Shares
Tang Zhuomian 96,885,134 96,885,134 96,885,134
Tang Zhuolin 67,684,392 67,684,392 67,684,392
Hong Kong Securities
Clearing Company 48,183,133 48,183,133 48,183,133
Limited
Pulead Technology 35,748,587 35,748,587 35,748,587
144 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Industry Co., Ltd.
Luzhou Industrial
Development Investment 31,770,010 31,770,010 31,770,010
Group Co., Ltd.
Qinghai Puren Intelligent
Technology R & D Center 26,628,340 26,628,340 26,628,340
(Limited Partnership)
Bank of China Limited -
Dacheng Jingheng Mixed
7,962,600 7,962,600 7,962,600
Securities Investment
Fund
Liu Wucai 6,597,688 6,597,688 6,597,688
Beixin Ruifeng Fund -
Industrial and
Commercial Bank of
6,171,777 6,171,777 6,171,777
China - Beijing Hengyu
Tianze Investment
Management Co., Ltd.
Qiu Yezhi 5,845,597 5,845,597 5,845,597
Related or
acting-in-concert parties Mr. Tang Zhuo Lin and Mr. Tang Zhuo Min are brothers and on August 18, 2010, they entered into a
among top 10 unrestricted "Letter of Agreement on Acting in Concert".
ordinary shareholders, as Ltd. and Qinghai Puren Intelligent Technology Research and Development Center (Limited
well as between top 10 Partnership) are parties acting in concert.
unrestricted ordinary The Company does not know whether there are any other related relationships or persons acting in
shareholders and top 10 concert between the above shareholders.
ordinary shareholders
Description of the
participation of the top 10
The Company's shareholder, Luzhou Industrial Development Investment Group Co., Ltd. holds
common shareholders in
31,770,010 shares through a client credit transaction guarantee securities account with Guotai Junan
the financing and
Securities Co. Ltd.
securities financing
business (if any)
Top 10 shareholders involved in refinancing shares lending:
□ Applicable √ Not applicable
Changes in top 10 shareholders compared with the prior period:
√ Applicable □ Not applicable
Unit: share
Changes in top 10 shareholders compared with the end of the prior period
Newly added to or Shares in the common account and credit
Shares lent in refinancing and not yet
exiting from top account plus shares lent in refinancing
Full name of returned at the period-end
10 shareholders in and not yet returned at the period-end
shareholder
the Reporting As % of total share As % of total share
Period Total shares Total shares
capital capital
145 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Bank of China
Limited－Dacheng
Jingheng Mixed Newly added 0 0.00% 7,962,600 0.64%
Securities
Investment Fund
Beixin Ruifeng
Fund－Industrial
and Commercial
Bank of China－
Newly added 0 0.00% 6,171,777 0.50%
Beijing Heyutz
Investment
Management Co.,
Ltd.
Liu Wucai Newly added 0 0.00% 6,597,688 0.53%
Shengji Equity
Investment Fund
Exiting 0 0.00% 0 0.00%
(Shanghai) Co.,
Ltd.
JIC Investment
Exiting 0 0.00% 0 0.00%
Co., Ltd.
Beixin Ruifeng
Fund－SPD Bank
－Beijing
International Trust
－Beijing
TrustQingyan Exiting 0 0.00% 0 0.00%
Fengshou Wealth
Management
Collective Capital
Trust Plan No.
2015015
Indicate 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.
□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: controlled by an individual
Type of the controlling shareholder: individual
Name of the controlling shareholder Nationality Residency in other countries or regions or not
Tang Zhuolin Chinese Not
Main occupation and position Chairman of the Board of Dongfang Precision
Interests held in other domestically and
Not applicable
overseas listed companies in the Reporting
146 / 296
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Acting-in-Concert Parties
Nature of the actual controller: domestic individual
Relationship with the actual Residency in other countries or
Name of the actual controller Nationality
controller regions or not
Tang Zhuolin Actual controller himself Chinese Not
Acting-in-concert party
Tang Zhuomian (contractual, kinship-based, and Chinese Not
common control-based)
Mr. Tang Zhuolin serves as the Chairman of the Board of Dongfang Precision as his main
Main occupation and position
occupation.
Controlling interests in other
domestically and overseas listed Not applicable
companies in the past 10 years
The actual controller of the Company remained unchanged during the Reporting Period.
Ownership and control relationship between the actual controller and the Company:
Tang Zhuolin Tang Zhuomian
21.82% 7.81%
Guangdong Dongfang Precision Science &
Technology Co., Ltd.
Indicate whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Shares Cumulatively Put in Pledge by the Company’s Controlling Shareholder or Biggest Shareholder
and Its Acting-in-Concert Parties Accounting for 80% of Their Shareholdings in the Company
□ Applicable √ Not applicable
5. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
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6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
IV Share Repurchase in the Reporting Period
Progress on any share repurchase:
√ Applicable □ Not applicable
Shares
repurchased
Disclosure date of Number of As % of Shares as % of total
Amount to be Repurchase
the repurchase shares to be total share Purpose repurchased shares under
used period
plan repurchased capital (share) the equity
incentive plan
(if any)
Not lower
than RMB100
All the repurchased
million From 31
shares are to be retired,
(inclusive) January 2023
7 January 2023 which will reduce the 21,572,060 N/A
and no more to 30 January
Company’s registered
than RMB200 2024
capital accordingly
million
(inclusive)
Progress on reducing the repurchased shares by way of centralized bidding:
□ Applicable √ Not applicable
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Part VIII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
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Part IX Corporate Bonds
□ Applicable √ Not applicable
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Part X Corporate Financial Statement
I. Auditor’s Report
Type of Audit Opinion Standard Unreserved opinion
Signing date of the Auditor’s Report 26 March 2024
Name of the Audit Institution Ernst & Young Hua Ming LLP
Document number of the Auditor’s report Ernst & Young Hua Ming (2023) Auditor’s Report No.
70022785_G01
Name of the Chinese Certified Public Accountant Feng Xingzhi, Hu Chuan
Auditor’s Report
Ernst & Young Hua Ming (2023) Auditor’s Report No. 70022785_G01
Guangdong Dongfang Precision Science & Technology Co., Ltd.
To the Shareholders of Guangdong Dongfang Precision Science & Technology Co., Ltd.,
I. Opinion
We have audited the financial statements of Guangdong Dongfang Precision Science & Technology Co.,
Ltd. (hereinafter referred to as the “Company”), which comprise the consolidated and the Company’s
balance sheets as at 31 December 2023, the consolidated and the Company ’s income statements, the
consolidated and the Company’s statements of changes in equity and the consolidated and the Company’s
statements of cash flows for the year then ended, and notes to the financial statements. In our opinion, the
accompanying financial statements present fairly, in all material respects, the consolidated and the
Company’s financial position as at 31 December 2023, and the consolidated and the Company’s financial
performance and cash flows for the year then ended in accordance with Accounting Standards for Business
Enterprises (“ASBEs”).
II. Basis for Opinion
We conducted our audit in accordance with China’s Standards on Auditing “CSAs”. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with China Code of
Ethics for Certified Public Accountants (the “Code”), and we have fulfilled our other ethical responsibilities
in accordance with the Code. We believe that the audit evidence we have obtained is suffic ient and
appropriate to provide a basis for our opinion.
III. Key Audit Matter
Key audit matter is the matter that, in our professional judgment, was of most significance in our audit of the
financial statements of the current period. This matter was addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on this matter. For the matter below, our description of how our audit addressed the matter is
provided in that context.
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We have fulfilled our responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatements of the financial statements. The results of our audit procedures, including procedures
performed to address the matter below, provide the basis for our opinion on the accompanying financial
statements.
Key audit matter: How our audit addressed the key audit
matter:
Impairment of goodwill
As at 31 December 2023, the carrying amount of The procedures performed to address this matter are
goodwill was RMB571,486,395.71 and the as follows:
impairment allowance for goodwill was
RMB130,852,569.63. (1) Performed internal control walk through and
executed control tests on identified critical
The Group's management performs goodwill control points
impairment testing at the end of each year. The (2) Assessed the identification of asset groups by
assessment of goodwill impairment testing was based the Group's management and the goodwill
on the recoverable amount of the relevant asset allocated to the asset groups;
groups to which the goodwill is allocated, and the (3) Obtained reports on the assessment of goodwill
recoverable amount of such asset groups was impairment issued by the independent
determined by the present value of the asset groups’ third-party asset appraisal institution engaged by
expected future cash flows. In a goodwill impairment the management with securities and futures
test, the forecasting of future cash flows involved related business qualifications;
significant judgments and estimates, including sales (4) Involved our internal valuation experts to assess
growth rate, gross margin and discount rate. Because the rationality of the major assumptions and
goodwill had a significant carrying value and exerted assessment methods used by the Group's
a significant impact on the financial statements, we management when forecasting the recoverable
identified goodwill impairment as a key audit matter. amount of asset groups, including the discount
rate and long-term growth rate;
The accounting policies on and disclosures of (5) Assessed the forecast sales revenue and
goodwill were set out in Item 16 of Note III, Item 31 operating performance for future years and
of Note III, and Item 20 of Note V to the financial comparing them with historical operating
statements. performance; and
(6) Evaluated the adequacy of the Group's
disclosures in the notes to the financial
statements.
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IV. Other Information
The management of the Company is responsible for the other information. The other information
comprises all of the information included in the annual report, other than the financial statements and our
auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financia l
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
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 the Financial Statements
The management is responsible for the preparation and fair presentation of the financial statements in
accordance with ASBEs, and for designing, implementing and maintaining such internal control as the
management determines is necessary to ensure the preparation of financial statements to be free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting, unless the management either intends to liquidate or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with CSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professiona l
skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accountin g
estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accountin g
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, and if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
VI. Auditor’s Responsibilities for the Audit of the Financial Statements (Cont’d)
As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professiona l
skepticism throughout the audit. We also: (cont’d)
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an audit opinion on the financial statements. We
are responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in interna l
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards (if applicable).
From the matters communicated with those charged with governance, we determine the matter that was of
most significance in the audit of the financial statements of the current period and is therefore the key audit
matter. We describe this matter in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2023
Ernst & Young Hua Ming LLP Chinese Certified Public Accountant: Feng Xingzhi
(Engagement Partner)
Chinese Certified Public Accountant: Hu Chuan
Beijing, China 26 March 2024
Important Notice
This auditor’s report is an English translation of the auditor’s report for the audit engagements which adopt
CSAs. In case the English version does not conform to the Chinese version, the Chinese version prevails.
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错误!未知的文档属性名称
Consolidated Balance Sheet
As at 31 December 2023 Expressed in Renminbi Yuan
II. Financial Statements
Assets Note V 31 December 2023 31 December 2022
Current assets
Cash and bank balances 1 1,826,419,904.49 1,274,447,199.74
Financial assets held for trading 2 682,625,442.45 860,832,278.88
Notes receivable 3 47,661,412.88 24,566,100.12
Accounts receivable 4 904,003,975.47 837,305,757.46
Receivables financing 5 9,365,344.07 15,305,668.26
Prepayments 6 45,741,143.90 64,946,901.26
Other receivables 7 51,797,943.96 83,996,902.82
Inventories 8 1,182,411,055.68 1,092,981,884.51
Contract assets 9 45,946,377.14 65,089,851.21
Current portion of non-current assets 10 5,970,000.00 311,763,750.00
Other current assets 11 75,234,656.07 61,370,451.31
Total current assets 4,877,177,256.11 4,692,606,745.57
Non-current assets
Long-term receivables 12 4,308,196.00 1,294,299.00
Long-term equity investments 13 117,265,884.84 95,352,681.52
Other non-current financial assets 14 461,278,259.67 334,449,603.33
Fixed assets 15 611,851,577.04 570,200,113.79
Construction in progress 16 195,557,097.80 38,904,537.85
Right-of-use assets 17 82,342,398.83 86,448,978.02
Intangible assets 18 365,954,480.05 368,103,395.11
Research and development expenditures 19 - 3,702,229.76
Goodwill 20 440,633,826.08 430,916,848.74
Long-term prepaid expenses 21 28,543,581.54 16,735,552.98
Deferred tax assets 22 255,872,409.78 244,542,124.61
Other non-current assets 23 97,437,602.28 45,320,004.82
Total non-current assets 2,661,045,313.91 2,235,970,369.53
Total assets 7,538,222,570.02 6,928,577,115.10
The accompanying notes to the financial statements form an integral part of the financial statements.
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Consolidated Balance Sheet
As at 31 December 2023 Expressed in Renminbi Yuan
Liabilities and equity Note V 31 December 2023 31 December 2022
Current liabilities
Short-term borrowings 25 370,549,972.80 41,815,129.24
Financial liabilities held for trading 26 115,900,827.21 57,022,555.58
Notes payable 27 152,433,276.09 149,918,253.31
Accounts payable 28 737,544,841.42 748,319,561.21
Contract liabilities 29 645,608,919.34 692,567,968.60
Employee benefits payable 30 153,282,932.10 123,695,328.31
Tax payable 31 67,609,203.41 24,111,703.70
Other payables 32 126,415,425.61 90,080,142.50
Current portion of non-current liabilities 33 57,001,396.44 315,767,431.26
Other current liabilities 34 9,145,175.01 5,988,879.29
Total current liabilities 2,435,491,969.43 2,249,286,953.00
Non-current liabilities
Long-term borrowings 35 79,107,701.15 57,884,494.89
Lease liabilities 36 65,861,441.32 68,989,111.33
Long-term employee benefits payable 37 13,964,394.20 13,179,944.17
Provisions 38 168,358,953.84 118,945,953.78
Deferred income 39 9,956,991.66 11,073,651.66
Deferred tax liabilities 22 8,854,294.28 6,825,450.77
Other non-current liabilities 40 22,418,854.80 136,396,292.55
Total non-current liabilities 368,522,631.25 413,294,899.15
Total liabilities 2,804,014,600.68 2,662,581,852.15
The accompanying notes to the financial statements form an integral part of the financial statements.
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Consolidated Balance Sheet
As at 31 December 2023 Expressed in Renminbi Yuan
Liabilities and equity Note V 31 December 2023 31 December 2022
Equity
Share capital 41 1,240,618,400.00 1,241,106,400.00
Capital surplus 42 2,889,928,997.21 2,947,263,843.53
Less: Treasury stock 43 218,298,532.79 240,255,502.45
Other comprehensive income 44 75,122,078.52 26,512,917.07
Special reserve 45 16,229,817.03 14,488,955.52
Surplus reserves 46 51,830,974.45 51,830,974.45
Retained earnings 47 456,258,959.55 23,018,722.11
Total equity attributable to owners of the
parent 4,511,690,693.97 4,063,966,310.23
Non-controlling interests 222,517,275.37 202,028,952.72
Total equity 4,734,207,969.34 4,265,995,262.95
Total liabilities and equity 7,538,222,570.02 6,928,577,115.10
The financial statements have been signed by:
Legal representative: Tang Zhuolin
Chief Financial Officer: Shao Yongfeng
Head of Accounting Department: Chen Nan
The accompanying notes to the financial statements form an integral part of the financial statements.
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Guangdong Dongfang Precision Science & Technology Co., Ltd.
Consolidated Income Statement
2023 Expressed in Renminbi Yuan
Note V 2023 2022
Operating revenue 48 4,745,737,321.83 3,892,708,509.64
Less: Cost of sales 48 3,359,528,546.01 2,833,305,748.54
Taxes and surcharges 49 14,552,830.09 11,956,289.95
Selling expenses 50 278,840,528.93 182,555,875.71
Administrative expenses 51 344,224,692.51 311,463,613.16
R&D expenses 52 127,566,482.42 97,954,453.40
Finance costs 53 (1,089,616.70) (8,970,693.69)
Including: Interest expenses 53 24,236,011.48 13,839,292.38
Interest income 53 (35,308,583.52) (19,042,851.72)
Add: Other income 54 15,747,293.82 20,933,377.44
Investment income 55 10,707,429.16 19,131,077.82
Including: Share of profit of joint ventures 55
and associates (2,259,252.98) 1,851,796.60
Gain on changes in fair value 56 47,387,905.11 17,917,046.61
Credit impairment loss 57 (10,541,916.77) (5,109,974.87)
Asset impairment loss 58 (17,217,097.39) (12,796,323.56)
Gain/loss on disposal of assets 59 716,995.85 (168,835.37 )
Operating profit 668,914,468.35 504,349,590.64
Add: Non-operating income 60 5,974,641.17 2,459,567.33
Less: Non-operating expenses 61 16,152,375.18 880,845.25
Profit before income taxes 658,736,734.34 505,928,312.72
Less: Income tax expenses 62 188,398,152.72 22,187,291.43
Net profit 470,338,581.62 483,741,021.29
Net profit classified by continuing operations
Net profit from continuing operations 470,338,581.62 483,741,021.29
The accompanying notes to the financial statements form an integral part of the financial statements.
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Consolidated Income Statement
2023 Expressed in Renminbi Yuan
Note V 2023 2022
Net profit classified by attribution of ownership
Net profit attributable to owners of the
parent 433,240,237.44 447,177,897.38
Net profit attributable to non-controlling
interests 37,098,344.18 36,563,123.91
Other comprehensive income, net of tax 44 48,074,232.21 56,936,768.65
Other comprehensive income attributable to
owners of the parent, net of tax 48,609,161.45 59,835,580.05
Other comprehensive income that will not be
reclassified to profit or loss (44,025.32) 1,856,564.02
Changes caused by remeasurements on defined
benefit schemes (44,025.32) 1,856,564.02
Other comprehensive income that will be
reclassified to profit or loss 48,653,186.77 57,979,016.03
Differences arising from the translation of
foreign currency-denominated financial
statements 48,653,186.77 57,979,016.03
Other comprehensive income attributable to 44
non-controlling interests, net of tax (534,929.24) (2,898,811.40)
Total comprehensive income 518,412,813.83 540,677,789.94
Including:
Total comprehensive income attributable to
owners of the parent 481,849,398.89 507,013,477.43
Total comprehensive income attributable to
non-controlling interests 36,563,414.94 33,664,312.51
Earnings per share 63
Basic earnings per share 63 0.36 0.37
Diluted earnings per share 0.36 0.37
The accompanying notes to the financial statements form an integral part of the financial statements.
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Consolidated Statements of Changes in Equity
错误!未知的文档属性名称 Expressed in Renminbi Yuan
2023
Equity attributable to owners of the parent Non-controlling Total equity
O ther
Le ss: Tre asury compre hensive
Share capital Capital surplus stock income Spe cial reserve Surplus reserves Re tained earnings Subtotal interests
I. At 31 December 2022 1,241,106,400.00 2,947,263,843.53 240,255,502.45 26,512,917.07 14,488,955.52 51,830,974.45 23,018,722.11 4,063,966,310.23 202,028,952.72 4,265,995,262.95
II. At 1 January 2023 1,241,106,400.00 2,947,263,843.53 240,255,502.45 26,512,917.07 14,488,955.52 51,830,974.45 23,018,722.11 4,063,966,310.23 202,028,952.72 4,265,995,262.95
III. Changes for the year
(I) T otal comprehensive
income - - - 48,609,161.45 - - 433,240,237.44 481,849,398.89 36,563,414.94 518,412,813.83
(II) Owner’s
contributions and
1. Share-based
payments included
in equity - 22,151,043.21 - - - - - 22,151,043.21 - 22,151,043.21
2. Others (488,000.00 ) (79,485,889.53 ) (21,956,969.66 ) - - - - (58,016,919.87) (16,075,092.29 ) (74,092,012.16 )
(III) Special reserve
Provision in the
1.
period - - - - 5,118,146.78 - - 5,118,146.78 - 5,118,146.78
Utilisation in the
2.
period - - - - (3,377,285.27) - - (3,377,285.27) - (3,377,285.27 )
IV. At 31 December 2023 1,240,618,400.00 2,889,928,997.21 218,298,532.79 75,122,078.52 16,229,817.03 51,830,974.45 456,258,959.55 4,511,690,693.97 222,517,275.37 4,734,207,969.34
The accompanying notes to the financial statements form an integral part of the financial statements.
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Consolidated Statements of Changes in Equity (Cont’d)
错 误 ! 未 知 的 文 档 属 性 名 称
Expressed in Renminbi Yuan
2022
Equity attributable to owners of the parent Non-controlling Total equity
O ther comprehensive
Share capital Capital surplus Le ss: Tre asury stock income Spe cial reserve Surplus reserves Retained earnings Subtotal interests
I. At 31 December 2021 and 1 January 2022 1,331,938,167.00 3,238,765,859.94 494,335,503.94 (33,322,662.98 ) 11,252,639.19 51,830,974.45 (424,159,175.27) 3,681,970,298.39 171,605,247.28 3,853,575,545.67
II. Changes for the year
(I) Total comprehensive income - - - 59,835,580.05 - - 447,177,897.38 507,013,477.43 33,664,312.51 540,677,789.94
(II) Owner’s contributions and reduction in
capital - - - - - - - - - -
1. Share-based payments included in equity - 29,628,076.98 - - - - - 29,628,076.98 - 29,628,076.98
2. Others (90,831,767.00) (321,130,093.39) (254,080,001.49) - - - - (157,881,858.90) (3,240,607.07) (161,122,465.97)
(III) Special reserve
1. Provision in the period - - - - 6,161,824.10 - - 6,161,824.10 - 6,161,824.10
2. Utilisation in the period - - - - (2,925,507.77) - - (2,925,507.77) - (2,925,507.77)
III. At 31 December 2022 1,241,106,400.00 2,947,263,843.53 240,255,502.45 26,512,917.07 14,488,955.52 51,830,974.45 23,018,722.11 4,063,966,310.23 202,028,952.72 4,265,995,262.95
The accompanying notes to the financial statements form an integral part of the financial statements.
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Consolidated Statement of Cash Flows
2023 Expressed in Renminbi Yuan
Note V 2023 2022
I. Cash flows from operating activities
Proceeds from sale of goods and rendering
of services 4,642,173,392.49 3,980,777,143.75
Receipts of taxes and surcharges refunds 67,900,854.62 65,415,784.48
Cash generated from other operating
activities 64 63,085,940.61 37,413,422.25
Subtotal of cash generated from operating
activities 4,773,160,187.72 4,083,606,350.48
Payments for goods and services 3,004,966,440.52 2,469,141,272.41
Cash payments to and on behalf of
employees1 766,697,629.83 672,362,139.67
Payments of all types of taxes and
surcharges 170,874,687.85 155,555,899.95
Cash used in other operating activities 64 343,440,690.86 280,252,577.50
Subtotal of cash used in operating activities 4,285,979,449.06 3,577,311,889.53
Net cash generated from/used in operating
activities 65 487,180,738.66 506,294,460.95
II. Cash flows from investing activities
Proceeds from disinvestment 2,817,697,183.06 5,461,128,307.85
Investment income 8,788,769.72 19,977,080.02
Net proceeds from the disposal of fixed
assets, intangible assets and other
long-lived assets 519,230.09 299,284.95
Cash generated from other investing
activities 64 - 20,741,402.85
Subtotal of cash generated from investing
activities 2,827,005,182.87 5,502,146,075.67
Payments for the acquisition of fixed assets,
intangible assets and other long-lived
assets 307,727,914.50 217,707,161.02
Payments for investments 2,705,884,238.80 5,586,038,692.54
Net payments for the acquisition of
subsidiaries and other business units - 115,932,016.05
Cash used in other investing activities 64 - 20,000,000.00
Subtotal of cash used in investing activities 3,013,612,153.30 5,939,677,869.61
Net cash generated from/used in investing
activities (186,606,970.43 ) (437,531,793.94 )
The accompanying notes to the financial statements form an integral part of the financial statements.
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Consolidated Statement of Cash Flows
2023 Expressed in Renminbi Yuan
Note V 2023 2022
III. Cash flows from financing activities
Cash proceeds from investments by others - 2,600,000.00
Including: Cash receipts from minority
investment - 2,600,000.00
Borrowings raised 441,741,239.04 255,640,726.89
Cash generated from other financing
activities 64 415,790,865.75 740,125,575.61
Subtotal of cash generated from financing
activities 857,532,104.79 998,366,302.50
Repayment of borrowings 373,742,740.68 452,030,374.54
Interest and dividends paid 16,883,749.75 8,391,200.32
Cash used in other financing activities 64 378,041,150.02 673,378,550.06
Subtotal of cash used in financing activities 768,667,640.45 1,133,800,124.92
Net cash generated from/used in financing
activities 88,864,464.34 (135,433,822.42 )
IV. Effect of foreign exchange rates changes on
cash and cash equivalents 49,355,682.00 41,088,076.94
Net increase/(decrease) in cash and cash
V. equivalents 65 438,793,914.57 (25,583,078.47)
Add: Cash and cash equivalents, beginning
of the period 65 1,233,720,697.27 1,259,303,775.74
Cash and cash equivalents, at end of the
VI. period 65 1,672,514,611.84 1,233,720,697.27
The accompanying notes to the financial statements form an integral part of the financial statements.
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Guangdong Dongfang Precision Science & Technology Co., Ltd.
Company Balance Sheet
As at 31 December 2023 Expressed in Renminbi Yuan
Assets Note XV 31 December 2023 31 December 2022
Current assets
Cash and bank balances 522,275,723.41 150,462,307.50
Financial assets held for trading 641,997,959.60 544,644,172.35
Note receivable 5,606,037.02 -
Accounts receivable 1 190,361,646.28 252,845,901.89
Receivables financing 4,268,677.09 8,665,919.20
Prepayments 5,298,841.09 5,599,366.14
Other receivables 2 654,825,093.49 595,201,759.62
Inventories 159,389,489.31 144,657,557.06
Contract assets 22,201,442.67 28,301,152.72
Current portion of non-current assets 5,970,000.00 311,763,750.00
Other current assets 1,583,542.63 620,238.68
Total current assets 2,213,778,452.59 2,042,762,125.16
Non-current assets
Long-term receivables 4,308,196.00 1,294,299.00
Long-term equity investments 3 875,978,593.12 760,833,667.45
Other non-current financial assets 148,108,670.05 134,097,590.81
Fixed assets 296,287,511.68 311,637,453.98
Construction in progress 4,273,340.82 4,716.98
Right-of-use assets 6,238,404.20 8,298,157.57
Intangible assets 55,652,155.93 56,644,698.03
Long-term prepaid expenses 4,967,872.25 6,215,303.00
Deferred tax assets 174,616,613.96 173,968,753.31
Other non-current assets 72,919,162.50 34,520,000.00
Total non-current assets 1,643,350,520.51 1,487,514,640.13
Total assets 3,857,128,973.10 3,530,276,765.29
The accompanying notes to the financial statements form an integral part of the financial statements.
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Guangdong Dongfang Precision Science & Technology Co., Ltd.
Company Balance Sheet
As at 31 December 2023 Expressed in Renminbi Yuan
Liabilities and equity 31 December 2023 31 December 2022
Current liabilities
Short term loans 20,000,000.00 -
Trading financial liabilities 728.57 7,230,000.00
Notes payable 39,577,380.86 47,602,955.27
Accounts payable 65,855,068.76 46,036,442.22
Contract liabilities 53,704,255.92 29,803,024.37
Employee benefits payable 16,801,339.01 14,571,839.42
Tax payable 5,459,697.96 430,234.63
Other payables 103,498,597.36 125,142,268.32
Current portion of non-current liabilities 9,361,216.26 1,703,312.89
Other current liabilities 588,152.27 1,481,251.36
Total current liabilities 314,846,436.97 274,001,328.48
Non-current liabilities
Long term loans 32,436,000.00 -
Lease liabilities 5,166,917.05 6,781,238.89
Provisions 1,418,799.52 1,283,500.00
Deferred income 9,956,991.66 11,073,651.66
Other non-current liabilities - 470,437.92
Total non-current liabilities 48,978,708.23 19,608,828.47
Total liabilities 363,825,145.20 293,610,156.95
Equity
Share capital 1,240,618,400.00 1,241,106,400.00
Capital surplus 2,745,450,997.27 2,820,661,243.26
Less: Treasury stock 218,298,532.79 240,255,502.45
Special reserve 6,645,318.98 7,200,502.88
Surplus reserves 51,830,974.45 51,830,974.45
Retained earnings (332,943,330.01 ) (643,877,009.80 )
Total Equity 3,493,303,827.90 3,236,666,608.34
Total liabilities and Equity 3,857,128,973.10 3,530,276,765.29
The accompanying notes to the financial statements form an integral part of the financial statements.
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Guangdong Dongfang Precision Science & Technology Co., Ltd.
Company Income Statement
2023 Expressed in Renminbi Yuan
Note XV 2023 2022
Operating revenue 4 500,581,222.34 521,042,097.24
Less: Cost of sales 4 266,015,344.67 272,827,724.91
Taxes and surcharges 6,779,241.99 5,683,155.26
Selling expenses 40,854,863.63 17,209,290.59
Administrative expenses 93,180,157.73 97,805,978.92
R&D expenses 22,829,162.22 18,858,241.84
Finance costs (11,186,446.37 ) (30,772,961.40)
Including: Interest expenses 4,350,360.42 2,212,567.00
Interest income (13,912,716.65) 12,296,701.61
Add: Other income 3,897,767.25 6,635,795.27
Investment income 5 321,068,620.44 24,811,647.21
Including: Share of profit or loss of joint
ventures and associates (753,369.07 ) 3,143,695.45
Gain/(loss) on changes in fair value (56,253,675.31) 8,365,325.57
Credit impairment loss 284,355.09 206,054.50
Asset impairment loss (106,669.84 ) (1,117,287.51)
Gain on disposal of assets - 1,379,510.93
Operating profit 350,999,296.10 179,711,713.09
Add: Non-operating income 713,971.52 613,023.15
Less: Non-operating expenses 845,736.74 146,746.24
Profit before income taxes 350,867,530.88 180,177,990.00
Less: Income tax expenses 39,933,851.09 (64,521,335.28)
Net profit 310,933,679.79 244,699,325.28
Including: Net profit from continuing
operations 310,933,679.79 244,699,325.28
Total comprehensive income 310,933,679.79 244,699,325.28
The accompanying notes to the financial statements form an integral part of the financial statements.
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错误!未知的文档属性名称
Company Statement of Changes in Equity
错 误 ! 未 知 的 文 档 属 性 名 称
Expressed in Renminbi Yuan
2023
Share capital Less: Treasury
Share capital Capital surplus stock Special reserve Surplus reserves Retained earnings Total equity
I. At 31 December 2022 1,241,106,400.00 2,820,661,243.26 240,255,502.45 7,200,502.88 51,830,974.45 (643,877,009.80) 3,236,666,608.34
II. At 1 January 2023 1,241,106,400.00 2,820,661,243.26 240,255,502.45 7,200,502.88 51,830,974.45 (643,877,009.80) 3,236,666,608.34
III. Changes for the year (488,000.00) (75,210,245.99) (21,956,969.66) (555,183.90 ) - 310,933,679.79 256,637,219.56
(I) Total comprehensive income - - - - - 310,933,679.79 310,933,679.79
Owner’s contributions and
(II)
reduction in capital -
Share-based payments
1.
included in equity - 21,203,834.59 - - - - 21,203,834.59
2. Others (488,000.00) (96,414,080.58) (21,956,969.66) - - - (74,945,110.92)
(III) Special reserve
1. Provision in the period - - - 826,188.88 - - 826,188.88
2. Amount utilised in the period - - - (1,381,372.78 ) - - (1,381,372.78)
IV At 31 December 2023 1,240,618,400.00 2,745,450,997.27 218,298,532.79 6,645,318.98 51,830,974.45 (332,943,330.01) 3,493,303,827.90
The accompanying notes to the financial statements form an integral part of the financial statements.
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错误!未知的文档属性名称
Company Statement of Changes in Equity
错误!未知的文档属性名称 Expressed in Renminbi Yuan
2022
Share capital
Share capital Capital surplus Less: Treasury stock Special reserve Surplus reserves Retained earnings Total equity
At 31 December 2021 and 1 January
I. 2022 1,331,938,167.00 3,162,960,902.13 494,335,503.94 5,067,104.62 51,830,974.45 (888,576,335.08) 3,168,885,309.18
II. Changes for the year
（I） Total comprehensive income - - - - - 244,699,325.28 244,699,325.28
Owner’s contributions and reduction
（II）
in capital
Share-based payments included in
1.
equity - 27,945,791.19 - - - - 27,945,791.19
2. Others (90,831,767.00) (370,245,450.06) (254,080,001.49) - - - (206,997,215.57)
（III） Special reserve
1. Provision in the period - - - 2,326,893.29 - - 2,326,893.29
2. Amount utilised in the period - - - (193,495.03) - - (193,495.03)
III. At 31 December 2022 1,241,106,400.00 2,820,661,243.26 240,255,502.45 7,200,502.88 51,830,974.45 (643,877,009.80) 3,236,666,608.34
The accompanying notes to the financial statements form an integral part of the financial statements.
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错误!未知的文档属性名称
Company Statement of Cash Flows
2023 Expressed in Renminbi Yuan
2023 2022
I. Cash flows from operating activities
Proceeds from sale of goods and rendering
of services 543,144,763.30 355,422,382.54
Receipts of taxes and surcharges refunds 18,624,572.39 20,405,793.81
Cash generated from other operating
activities 37,082,171.29 33,411,792.89
Subtotal of cash generated from operating
activities 598,851,506.98 409,239,969.24
Payments for goods and services 255,701,960.58 238,655,533.97
Cash payments to and on behalf of
employees 96,818,630.04 90,655,013.90
Payments of all types of taxes and
surcharges 5,907,970.50 9,877,155.70
Cash used in other operating activities 145,909,271.88 35,938,085.85
Subtotal of cash used in operating activities 504,337,833.00 375,125,789.42
Net cash generated from operating activities 94,513,673.98 34,114,179.82
II. Cash flows from investing activities
Proceeds from disinvestment 1,695,765,692.04 2,957,634,482.77
Investment income 72,940,439.51 3,788,252.05
Net proceeds from the disposal of fixed
assets, intangible assets and other
long-lived assets - 23,000.00
Other cash receipts relating to investing
activities 326,643,514.64 20,903,000.00
Subtotal of cash generated from investing
activities 2,095,349,646.19 2,982,348,734.82
Payments for the acquisition of fixed assets,
intangible assets and other long-lived
assets 49,079,505.20 47,508,537.31
Payments for investments 2,030,963,951.96 2,834,602,224.34
Net payments for the acquisition of
subsidiaries and other business units - 173,800,000.00
Other cash payments relating to other
investing activities - 20,000,000.00
Subtotal of cash used in investing activities 2,080,043,457.16 3,075,910,761.65
Net cash generated from/used in investing
activities 15,306,189.03 (93,562,026.83)
The accompanying notes to the financial statements form an integral part of the financial statements.
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Company Statement of Cash Flows (Cont’d)
2023 Expressed in Renminbi Yuan
2023 2022
III. Cash flows from financing activities
Borrowings raised 98,180,000.00 33,431,500.00
Cash generated from other financing
activities 340,829,045.67 585,791,128.23
Subtotal of cash generated from financing
activities 439,009,045.67 619,222,628.23
Repayment of borrowings 38,048,000.00 33,431,500.00
Interest and dividends paid 5,103,094.39 1,438,732.23
Cash used in other financing activities 242,155,673.21 539,194,859.08
Subtotal of cash used in financing activities 285,306,767.60 574,065,091.31
Net cash generated from financing activities 153,702,278.07 45,157,536.92
IV. Net increase/(decrease) in cash and cash
equivalents - -
Add: Cash and cash equivalents, beginning
of the period
V. 263,522,141.08 (14,290,310.09)
Cash and cash equivalents, beginning of the
period 142,319,826.12 156,610,136.21
Cash and cash equivalents, at end of the
VI. period 405,841,967.20 142,319,826.12
The accompanying notes to the financial statements form an integral part of the financial statements.
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错误!未知的文档属性名称
Notes to the Financial Statements
2023 Expressed in Renminbi Yuan
III. Corporate Background
Guangdong Dongfang Precision Science & Technology Co., Ltd. (the "Company"), a joint stock company
with limited liability registered in Guangdong Province of the People's Republic of China and established on
9 December 1996, obtained a Business License for Enterprise Legal Person with a registration number of
440682000040868.
In August 2011, upon the approval by the China Securities Regulatory Commission (CSRC) in the Reply on
Approving the Initial Public Offering of Shares by Guangdong Dongfang Precision Science & Technology
Co., Ltd. (ZH.J.X.K. [2011] No. 1237), the Company issued Renminbi-denominated ordinary shares to the
public, and was listed on the Shenzhen Stock Exchange in the same month. The Company started to use the
unified social credit code (914406002318313119) in 2016. The Company is headquartered in 2 Qiangshi
Road, Shishan Town, Nanhai District, Foshan City, Guangdong Province, China.
The Group's main business includes four business sectors: smart corrugated packaging equipment, industrial
internet industry solutions, digital printers and water power spots equipment.
The actual controllers of the Company are Tang Zhuolin and Tang Zhuomian.
These financial statements were authorized for issue by the Board of Directors of the Company on 26 March
2024.
IV.Basis of Preparation of the Financial Statements
These financial statements have been prepared in accordance with China’s “Accounting Standards for
Business Enterprises — Basic Standards” promulgated by the Ministry of Finance and the specific
accounting standards, application guidance, interpretations and other relevant regulations issued or
amended thereafter (hereafter collectively referred to as “Accounting Standards for Business Enterprises” or
“CAS”). In addition, the financial statements also disclose relevant financial information in accordance with
the Rules No. 15 for the Preparation of Information Disclosure by Companies Offering Securities to the
Public - General Provisions on Financial Reports.
The financial statements are prepared on a going concern basis.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III.Principal Accounting Policies and Accounting Estimates
The Group has formulated specific accounting policies and accounting estimates according to the
characteristics of its actual production and operation, which is mainly embodied in the provision for the bad
debt of accounts receivable, provision for write-down of inventories, depreciation of fixed assets, provision
for product warranties, capitalization conditions for expenditure on the development phase of research and
development expenses and recognition and measurement of revenue.
1. Statement of compliance
The financial statements present truly and completely the financial positions of the Group and the Company
as at 31 December 2023, and the financial performance and the cash flows for the year then ended in
accordance with Accounting Standards for Business Enterprises.
2. Accounting year
The accounting year of the Group is from 1 January to 31 December of each calendar year.
3. Functional currency
The Group’s functional currency and the currency used in preparing the financial statements were Renminbi.
The amounts in the financial statements were denominated in Renminbi yuan, unless otherwise stated.
4. Determination method and selection basis of materiality criteria
Materiality criteria
Significant construction in Budgeted amount for investment exceeds RMB50,000,000
progress
Significant cash flows from Amount exceeds RMB50,000,000
investing activities
Significant non-wholly owned Net assets of non-wholly owned subsidiaries account for
subsidiaries more than 10% of consolidated net assets
Significant associates The carrying amount of long-term equity investments in
associates accounts for more than 5% of the consolidated net
assets
5. Business combination
Business combinations are classified into business combinations involving entities under common control and
business combinations not involving entities under common control.
Business combinations involving entities under common control
A business combination involving entities under common control is a business combination in which all of the
combining entities are ultimately controlled by the same party or parties both before and after the business
combination, and that control is not transitory.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
5. Business combination (cont’d)
Business combinations involving entities under common control (cont’d)
Assets and liabilities obtained by combining party in the business combination involving entities under common
control (including goodwill arising from the acquisition of the merged party by the ultimate controller) are
recognized on the basis of their carrying amounts at the combination date recorded on the financial statements of
the ultimate controlling party. The difference between the carrying amount of the consideration paid for the
combination (or aggregate face values of the shares issued) and the carrying amount of the net assets obtained is
adjusted to capital surplus. If the capital surplus are not sufficient to absorb the difference, any excess is adjusted
to retained earnings.
Business combinations not involving entities under common control
A business combination not involving entities under common control is a business combination in which all of the
combining entities are not ultimately controlled by the same party or parties both before and after the business
combination.
The acquiree’s identifiable assets, liabilities and contingent liabilities are recognized at their fair values at the
acquisition date. The excess of the sum of the consideration paid (or equities issued) for business combination and
equity interests in the acquiree held prior to the date of acquisition over the share of the attributable net
identifiable assets of the acquiree, measured at fair value, was recognized as goodwill, which is subsequently
measured at cost less cumulative impairment loss. In case the fair value of the sum of the consideration paid (or
equities issued) and equity interests in the acquire held prior to the date of acquisition is less than the fair value of
the share of the attributable net identifiable assets of the acquiree, a review of the measurement of the fair values
of the identifiable assets, liabilities and contingent liabilities, the consideration paid for the combination (or equity
issued) and the equity interests in the acquiree held prior to the date of acquisition is conducted. If the review
indicates that the fair value of the sum of the consideration paid (or equities issued) and equity interests in the
acquiree held prior to the date of acquisition is indeed less than the fair value of the share of the attributable net
identifiable assets of the acquiree, the difference is recognized in profit or loss.
6. Consolidated financial statements
The consolidation scope for consolidated financial statements is determined based on the concept of control,
including the Company and all subsidiaries’ financial statements. Subsidiaries are those enterprises or entities
which the Company has control over (including enterprises, separable components of investee units and structured
entities controlled by the Company). An investor controls an investee when the investor is exposed, or has rights,
to variable returns from its involvement with the investee and has the ability to affect those returns through its
power over the investee.
The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using
consistent accounting policies. Any inconsistent accounting policies have been adjusted to become consistent with
the Company’s accounting policies. All assets, liabilities, equities, revenues, costs and cash flows arising from
intercompany transactions are eliminated on consolidation.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
6. Consolidated financial statements (cont’d)
The excess of current loss attributable to non-controlling shareholders of a subsidiary over their entitlements to the
opening balance of equity shall be charged to non-controlling interests.
For subsidiaries obtained through a business combination not involving entities under common control, the
operating results and cash flows of the acquirees will be recognized in consolidated financial statements from the
date the Group effectively obtains the control until the date that control is terminated. When consolidated financial
statement is prepared, the subsidiaries’ financial statements will be adjusted based on the fair values of the
identifiable assets, liabilities and contingent liabilities at the acquisition date.
For subsidiaries acquired through combination of entities under common control, the business results and cash
flows of the combined entities are included in the consolidated financial statements from the beginning of the
period in which the combination occurred. When preparing and comparing the consolidated financial statements,
the Group makes adjustments to relevant items of the financial statements of the previous period, deeming the
reporting entity formed through combination as existing since initial implementation of control by the ultimate
controlling party.
In the event of the change in one or more elements of control as a result of changes in relevant facts and
conditions, the Group reassesses whether it has control over the investee.
If the control right is not lost, the change of minority shareholders' equity shall be regarded as equity
transaction.
7. Cash and cash equivalents
Cash comprises cash on hand and deposits readily available for payments. Cash equivalents represent short-term
highly liquid investments which are readily convertible to known amounts of cash, and subject to an insignificant
risk of changes in value.
8. Foreign currency translation
For foreign currency transactions, the Group translates the foreign currency into its functional currency.
Upon initial recognition, foreign currency transactions are translated into the functional currency using the spot
exchange rate of the dates on which transactions occur. At the balance sheet date, foreign currency monetary items
are translated using the spot exchange rate at the balance sheet date. The translation differences arising from the
settlement and foreign currency monetary items are recognized in profit or loss. Also at the balance sheet date,
foreign currency non-monetary items measured at historical cost continue to be translated using the spot exchange
rate at the dates of the transactions and it does not change its carrying amount in functional currency. Foreign
currency non-monetary items measured at fair value are translated using the spot exchange rate. The differences
arising from the above translations are recognized in current profit or loss or other comprehensive income
according to the nature of foreign currency non-monetary items.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
8. Foreign currency translation (cont’d)
The Group translates the functional currencies of foreign operations into Renminbi when preparing the financial
statements. Asset and liability items in the balance sheet are translated at the spot exchange rate prevailing at the
balance sheet date. Equity items, except for retained earnings, are translated at the spot exchange rates at the date
when such items arose. Revenue and expense items in the income statement are translated using the average
exchange rate for the periods when transactions occur. Translation differences arising from the aforesaid
translation of financial statements denominated in foreign currency shall be recognized as other comprehensive
income. When foreign operations are disposed, other comprehensive income relating to the foreign operation is
transferred to current profit or loss. Partial disposal shall be recognized on a pro-rata basis.
Cash flows denominated in foreign currencies and foreign subsidiaries’ cash flows are translated using the
average exchange rate for the period when cash flows occur. The impact on cash by the fluctuation of exchange
rates is presented as a separate line item of reconciliation in the statement of cash flows.
9. Financial instruments
Financial instruments refer to the contracts which give rise to a financial asset in one entity and a financial
liability or equity instrument in another entity.
Recognition and derecognition of financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual
provisions of the financial instrument.
A financial asset (or part of it, or a part of a group of similar financial asset) is derecognized when one of the
following criteria is met, that is, when a financial asset is written off from its account and balance sheet:
(1) The right of receiving the cash flow generated from the financial asset has expired;
(2) The right of receiving cash flow generated by the financial assets is transferred, or an obligation of paying
the full amount of cash flow received to third parties in a timely manner has been undertaken under
“pass-through” agreements, where (a) substantially all risks and rewards of the ownership of such type of
financial assets have been transferred, or (b) control over such type of financial assets has not been
retained even though substantially all risks and rewards of the ownership of such type of financial assets
have been neither transferred nor retained.
If the obligation of financial liability has been fulfilled, cancelled or expired, the financial liability is
derecognized. If the present financial liability is substituted by the same debtee with another liability differing in
substance, or the terms of the present liability have been substantially modified, this substitution or modification is
treated as derecognition of a present liability and recognition of a new liability with any arising differences
recognized in profit or loss.
Conventional dealings in financial assets are recognized or derecognized under the trade day accounting method.
Conventional dealings refer to the receipt or delivery of financial assets within periods stipulated by the law and
according to usual practices. The trade day is the date on which the Group undertakes to buy or sell a financial
asset.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
9. Financial instruments (cont’d)
Classification and measurement of financial assets
At initial recognition, the Group classifies its financial assets into: financial assets at fair value through profit or
loss, financial assets at amortized cost, or financial assets at fair value through other comprehensive income,
according to the Group’s business model for managing financial assets and the contract cash flow characteristics
of the financial assets. When and only when the Group changes its business model of managing financial assets,
all relevant financial assets affected will be re-classified.
Financial assets are measured at fair value on initial recognition, but if the accounts receivable or notes receivable
generated from the sales of goods or provision of services do not contain significant financing components or do
not consider financing components of no longer than one year, the initial measurement will be based on the
transaction price.
For financial assets at fair value through profit or loss, the relevant transaction costs are directly recognized in
profit or loss; for other financial assets, the relevant transaction costs are recognized in their initial recognition
amount.
The subsequent measurement of financial assets is dependent on its classification:
Debt instruments measured at amortized cost
Financial assets fulfilling all of the following conditions are classified as financial assets at amortized cost: the
objective of the Group’s business management model in respect of such type of financial assets is to generate
contract cash flow; the contract terms of such type of financial assets provide that cash flow generated on specific
dates represents interest payment in relation to principal amounts based on outstanding principal amounts only.
Interest income from such type of financial assets are recognized using the effective interest rate method, and any
profit or loss arising from derecognition, amendments or impairment shall be charged to current profit or loss.
Debt instruments at fair value through other comprehensive income
Financial assets fulfilling all of the following conditions are classified as financial assets at fair value through
other comprehensive income: the objective of the Group’s business management model in respect of such type of
financial assets is both to generate contract cash flow and to sell such type of financial assets; the contract terms of
such type of financial assets provide that cash flow generated on specific dates represents interest payment in
relation to principal amounts based on outstanding principal amounts only. Interest income from this type of
financial assets is recognized using the effective interest rate method. Other than interest income, impairment loss
and exchange differences which shall be recognized as current profit or loss, other fair value changes shall be
included in other comprehensive income. Upon derecognition of the financial assets, the cumulative gains or
losses previously included in other comprehensive income shall be transferred from other comprehensive income
to current profit or loss.
Financial assets at fair value through profit or loss
Other than financial assets measured at amortized cost and financial assets at fair value through other
comprehensive income as aforementioned, all financial assets are classified as financial assets at fair value
through profit or loss, which are subsequently measured at fair value, any changes of which are recognized in
current profit or loss.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
9. Financial instruments (cont’d)
Classification and measurement of financial liabilities
The Group classifies its financial liabilities at initial recognition: financial liabilities at fair value through profit or
loss, and other financial liabilities. For financial liabilities at fair value through profit or loss, the relevant
transaction costs are directly recognized in profit or loss; for other financial liabilities, the relevant transaction
costs are recognized in their initial recognition amount.
The subsequent measurement of financial liabilities is dependent on its classification:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include mainly financial liabilities held for
trading(comprising derivatives classified as financial liabilities). Financial liabilities held for trading (comprising
derivatives classified as financial liabilities) are subsequently measured at fair value and all changes are
recognized in current profit or loss.
Other financial liabilities
Subsequent to initial recognition, these financial liabilities are carried at amortized cost using the effective interest
method.
Impairment of financial instruments
The Group performs impairment treatment on financial assets at amortized cost, debt instruments at fair value
through other comprehensive income and contract assets based on expected credit losses (ECL) and recognizes
allowances for losses.
For receivables and contract assets that do not contain significant financing components, the Group adopts a
simplified measurement method to measure allowances for losses based on an amount equivalent to the lifetime
expected credit losses.
Financial assets other than those measured with simplified valuation methods, the Group evaluates at each balance
sheet date whether its credit risk has significantly increased since initial recognition. The period during which
credit risk has not significantly increased since initial recognition is considered the first stage, at which the Group
shall measure loss allowance based on the amount of expected credit loss for the next 12 months and shall
compute interest income according to the book balance and effective interest rate; the period during which credit
risk has significantly increased since initial recognition although no credit impairment has occurred is considered
the second stage, at which the Group shall measure loss allowance based on the amount of expected credit loss for
the entire valid period and shall compute interest income according to the book balance and effective interest rate;
The period during which credit impairment has occurred after initial recognition is considered the third stage, at
which the Group shall measure loss allowance based on the amount of the lifetime expected credit loss and shall
compute interest income according to the amortized cost and effective interest rate.
The Group estimates the expected credit loss of financial instruments individually and on a group basis. The
Group considers the credit risk features of different customers and estimates the expected credit losses of financial
instruments based on aging portfolio.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
9. Financial instruments (cont’d)
Impairment of financial instruments (cont’d)
For the Group’s criteria for judging whether credit risks have significantly increased, the definition of assets
subjected to credit impairment, and assumptions underlying the measurement of expected credit losses, please
refer to Note IX.2.
The Group's approach to measuring ECLs on financial instruments reflects factors such as the unbiased
probability-weighted average amount determined by evaluating a range of possible outcomes, the time value
of money, and reasonable and supportable information about past events, current conditions and projections
of future economic conditions available at the balance sheet date without undue additional cost or effort.
When the Group no longer reasonably expects to be able to fully or partially recover the contract cash flow of
financial assets, the Group directly writes down the book balance of such financial assets.
Derivative financial instruments
The Group uses derivative financial instruments. Derivative financial instruments are initially recognized at fair
value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value.
Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
Gains or losses arising from changes in the fair value of derivative instruments shall be directly recognized in
current profit or loss.
Transfer of financial assets
If the Group has transferred substantially all the risks and rewards associated with the ownership of a financial
asset to the transferee, the asset should be derecognized. If the Group retains substantially all the risks and rewards
of ownership of a financial asset, the asset should not be derecognized.
When the Group has neither transferred nor retained substantially all the risks and rewards of ownership of the
financial asset, it may either derecognize the financial asset and recognize any associated assets and liabilities if
control of the financial asset has not been retained; or recognizes the financial asset to the extent of its continuing
involvement in the transferred financial asset and recognizes an associated liability if control has been retained.
Assets formed by the continuing involvement by way of the provision of financial guarantee in respect of the
transferred financial assets shall be recognized as the lower of the carrying value of the financial asset and the
amount of financial guarantee. The amount of financial guarantee means the maximum amount among
considerations received to be required for repayment.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
10. Inventories
Inventories include raw materials, work-in-progress, finished goods, product deliveries, semi-finished goods,
materials consigned for processing, etc.
Inventories are initially recorded at costs. Inventories’ costs include purchasing costs, processing costs and other
costs. Actual costs of product deliveries are recognized using the weighted average method. Turnover materials
include low-value consumables, packaging materials, etc., which are expensed in full.
The Group adopts the perpetual inventory system.
Inventories on the balance sheet date are stated at the lower of cost or net realisable value. Inventory valuation
allowance is made and recognized in profit or loss when the net realisable value is lower than cost. Net realizable
value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs
to completion and estimated costs necessary to make the sale and related taxes. Valuation allowances for raw
materials are established by category, and those for finished goods by individual item. For inventories that relate
to products produced and sold in the same region, have the same or similar ultimate purpose, and are difficult to
separate in measurement, valuation allowances are established on a combined basis.
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Notes to the Financial Statements
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
11. Long-term equity investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associates.
Long-term equity investments were recorded at initial investment cost on acquisition. For long-term equity
investments acquired through the business combination of entities under common control, the initial investment
cost shall be the share of carrying value of the equity of the merged party at the date of combination as stated in
the consolidated financial statements of the ultimate controlling party. Any difference between the initial
investment cost and the carrying value of the consideration for the combination shall be dealt with by adjusting
the capital surplus(if the capital surplus are insufficient for setting off the difference, such difference shall be
further set off against retained earnings). Upon disposal of the investment, other comprehensive income prior to
the date of combination shall be dealt with on the same basis as if the relevant assets or liabilities were disposed of
directly by the investee. Equity recognized as a result of changes in equity other than the set-off of profit and loss,
other comprehensive income and profit allocation of the investee shall be transferred to current profit and loss
upon disposal of the investment. Items which remain long-term equity investments after the disposal shall be
accounted for on a pro-rata basis, while items reclassified as financial instruments following the disposal shall be
accounted for in full. For long-term equity investments acquired through the business combination of entities not
under common control, the initial investment cost shall be the cost of combination (for business combinations of
entities not under common control achieved in stages through multiple transactions, the initial investment cost
shall be the sum of the carrying value of the equity investment in the acquired party held at the date of acquisition
and new investment cost incurred as at the date of acquisition). The cost of combination shall be the sum of assets
contributed by the acquiring party, liabilities incurred or assumed by the acquiring party and the fair value of
equity securities issued. Upon disposal of the investment, other comprehensive income recognized under the
equity method held prior to the date of acquisition shall be dealt with on the same basis as if the relevant assets or
liabilities were disposed of directly by the investee. Equity recognized as a result of changes in equity other than
the set-off of profit and loss, other comprehensive income and profit allocation of the investee shall be transferred
to current profit and loss upon disposal of the investment. Items which remain long-term equity investments after
the disposal shall be accounted for on a pro-rata basis, while items reclassified as financial instruments following
the disposal shall be accounted for in full. The initial investment cost of long-term equity investments other than
those acquired through business combination shall be recognized in accordance with the following: for those
acquired by way of cash payments, the initial investment cost shall be the consideration actually paid plus
expenses, tax amounts and other necessary outgoings directly related to the acquisition of the long-term equity
investments.
In the financial statements of the Company, the cost method is used for long term equity investments in investees
over which the Company exercises control. Control is defined as the power exercisable over the investee, the
entitlement to variable return through involvement in the activities of the investee and the ability to influence the
amount of return using the power over the investee.
When the cost method is used, long-term equity investments are measured at initial cost on acquisition. When
additional investments are made or investments are recouped, the cost of longterm equity investments shall be
adjusted. Cash dividend or profit distribution declared by the investee shall be recognized as investment income
for the period.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
11. Long-term equity investments (cont’d)
The equity method is used to account for long-term equity investments when the Group can jointly control or has
significant influence over the invested entity. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the
parties sharing control. Significant influence means having the authority to take part in the decision over the
financial and operational policies but not the authority to control or jointly control with other parties the
formulation of such policies.
Under the equity method, any excess of the initial investment cost over the Company’s share of the net fair value
of the investment’s identifiable assets and liabilities is included in the initial investment cost of the long-term
equity investment. When the carrying amount of the investment is less than the Company’s share of the fair value
of the investment’s identifiable net assets, the difference is recognized in profit or loss of the current period and
debited to long-term equity investments.
Under the equity method, after the long-term equity investments are acquired, investment gains or losses and other
comprehensive income are recognized according to the entitled share of net profit or loss and other comprehensive
income of the investee and the carrying amount of the long-term equity investment is adjusted accordingly. When
recognising the Group’s share of the net profit or loss of the invested entity, the Group makes adjustments based
on fair values of the investees’ identifiable assets and liabilities at the acquisition date in accordance with the
Group’s accounting policy and accounting period to investee’s net profits, eliminating pro-rata profit or loss from
internal transactions with associates and joint ventures attributed to investor (except that loss from inter-group
transactions deemed as asset impairment loss shall be fully recognized), provided that invested or sold assets
constituting businesses shall be excluded. When the invested enterprise declares profit distribution or cash
dividends, the carrying amount of investment is adjusted down by the Group’s share of the profit distribution and
dividends. The Group shall derecognize its share of the losses of the investee after the long-term equity
investment together with any long-term interests that in substance forms part of the Group’s net investment in the
investee are reduced to zero, except to the extent that the Group has incurred obligations to assume additional
losses. The Group also adjusts the carrying amount of long-term equity investments for other changes in owner’s
equity of the investees (other than the net-off of net profits or losses, other comprehensive income and profit
distribution of the investee), and includes the corresponding adjustment in equity.
12. Fixed assets
A fixed asset is recognized when, and only when, it is probable that future economic benefits that are associated
with the fixed asset will flow to the Group and the cost can be measured reliably. Subsequent expenditures related
to a fixed asset are recognized in the carrying amount of the fixed asset if the above recognition criteria are met,
and the carrying value of the replaced part is derecognized; otherwise, those expenditures are recognized in profit
or loss as incurred.
Fixed assets are initially recognized at cost. Cost of purchased fixed assets includes purchasing price, relevant
taxes, and any directly attributable expenditure for bringing the asset to working conditions for its intended use.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
12. Fixed assets (cont’d)
Except for those incurred by using the accrued expenses for safety production, fixed assets are depreciated on a
straight-line basis, and the respective estimated useful lives, estimated residual value ratios and annual
depreciation rates are as follows:
Estimated residual Annual
Useful life
value ratio depreciation rate
Buildings and constructions 20-40 years 5.00% 2.38%-4.75%
Machinery 5-18 years 5.00% 5.28%-19.00%
Transportation equipment 5-10 years 5.00% 9.5%-19.00%
Electronic equipment 3-10 years 5.00% 9.5%-31.67%
Office equipment 3-10 years 5.00% 9.5%-31.67%
Other equipment 5-10 years 5.00% 9.5%-19.00%
The Group reviews, at least at each year end, useful lives, estimated residual values, and depreciation methods of
fixed assets and makes adjustments if necessary.
13. Construction in progress
Construction in progress is measured at the actual construction expenditures, including necessary project work
expenses incurred during the period while construction is in progress, and other related fees.
The criteria for construction in progress to be transferred to fixed assets when it is ready for its intended use
are as follows:
Criteria
Buildings and constructions Actual start of use
The earlier of actual start of use/completion
Machinery of installation and acceptance
14. Borrowing costs
The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalized. The amounts of other borrowing costs incurred are recognised as an expense in the period in
which they are incurred. The Group has no borrowing costs eligible for capitalization in the current year.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
15. Intangible assets
Overseas land use rights and trademark rights are intangible assets with indefinite useful lives. Impairment
tests shall be conducted annually regardless of whether there are indications of impairment. Such intangible
assets shall not be amortized and their useful life shall be reviewed during each accounting period. If there is
evidence suggesting that their useful life is limited, accounting treatment will be performed according to the
above policy on intangible assets with definite useful life.
Other intangible assets are amortised on a straight-line basis over their useful lives as follows:
Useful life Determination basis
Land use rights 40-50 years Term of land use right
The shorter of the term of trademark
Trademark 5-10 years rights/expected term of use
Patent 5-10 years Expected benefit period
The land ownership of Fosber S.p.A. ("Fosber Group"), a subsidiary of the Company, in Italy has a
permanent term, and the Company believes that the land ownership will be used and will bring expected
inflows of economic benefits to the Company in the foreseeable future, so its useful life is regarded as
indefinite. The trademarks registered by subsidiaries Fosber Group and Fosber America, Inc. ("Fosber
America") have a useful life in accordance with the law, but at the expiration of the protection period, Fosber
Group and Fosber America can apply for an extension at low service charges, so the Company will benefit
from the above trademarks in the long term. Thus, the Company recognized the trademark use right as
intangible assets with indefinite useful life. The useful life of intangible assets with indefinite useful life will
be reviewed at the end of each year. After review, the useful life of the above intangible assets is still
uncertain.
The Group classifies the expenses for internal research and development as research costs and development
costs. All research costs are charged to the current profit or loss as incurred. Expenditure incurred on projects
to develop new products is capitalized and deferred only when the Group can demonstrate the technical
feasibility of completing the intangible asset so that it will be available for use or sale, its intention to
complete and its ability to use or sell the asset, how the asset will generate future economic benefits
(including demonstration that the product derived from the intangible asset or the intangible asset itself will
be marketable or, in the case of internal use, the usefulness of the intangible asset as such), the availability of
technical and financial resources to complete the project and procure the use or sale of the intangible asset,
and the ability to measure reliably the expenditure during the development. Development costs which do not
meet these criteria is recognized in profit or loss when incurred.
After meeting the above conditions, passing the technical feasibility and economic feasibility study, the
corresponding projects of the Group enter the development stage and begin to be capitalized after being
reviewed and approved.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
16. Impairment
The Group assesses impairment of assets other than inventories, contract assets and assets related to contract
costs, deferred tax assets and financial assets, using the methods described below:
Impairment of assets (other than the impairment of inventories, contract assets and contract cost assets, investment
properties measured using the fair value model, deferred tax assets, and financial assets ) is determined in the
following way: the Group assesses at the balance sheet date whether there is any indication that an asset may be
impaired; if any indication exists that an asset may be impaired, the Group estimates the recoverable amount of
the asset and performs impairment testing; goodwill arising from a business combination, intangible assets with
indefinite useful lives and intangible assets not yet available for use are tested for impairment at least at each year
end, irrespective of whether there is any indication that the asset may be impaired.
The recoverable amount is the higher of the asset’s fair value less costs to sell and its present value of estimated
future cash flows. The Group estimates recoverable value for individual assets. When it is difficult to estimate
individually, the recoverable value of the cash generating units which the asset belongs to will be estimated. The
definition of cash generating units is determined on the basis of whether the cash generating units generate cash
flows which are largely independent of those from other cash generating units.
Where the carrying amount of an asset or a cash generating unit exceeds its recoverable amount, the asset or cash
generating unit is considered impaired and is written down to its recoverable amount. The difference between the
carrying amount and recoverable amount is recognized in profit or loss and allowance for impairment is made
accordingly.
In connection with impairment tests for goodwill, the carrying value of goodwill arising from business
combination is allocated to relevant cash generating units (“CGU”) from the date of acquisition on a reasonable
basis. If it is difficult to allocate such goodwill to a relevant CGU, it should be allocated to a relevant CGU group.
A relevant CGU or CGU group is defined as one which can benefit from the synergies of the business
combination and is not larger than the reporting segments determined by the Group.
In connection with impairment tests for CGUs or CGU groups that comprise goodwill, where indications of
impairment exists in a CGU or CGU group related to goodwill, impairment tests should be performed first on
CGUs or CGU groups that do not comprise goodwill and recognize impairment loss after estimating the
recoverable amount. Then impairment tests on CGUs or CGU groups that comprise goodwill should be performed
and the carrying value and recoverable amount should be compared. Where the recoverable amount is lower than
the carrying value, the impairment loss should first be offset against the carrying value of the goodwill allocated
to CGUs or CGU groups and then against assets in the CGUs or CGU groups other than goodwill in proportion to
the weighting of these assets.
Previously recognized impairment losses are not reversed in subsequent periods.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term prepaid expenses
Long-term prepaid expenses are amortized using the straight-line method, with the amortization periods as
follows:
Amortization period
Decoration expenditures 3-5 years
Amortization of moulds 3 years
Other expenditures 3-5 years
18. Employee benefits
Employee benefits include all kinds of rewards or compensation incurred by the Group in exchange for service
rendered by employees or in the termination of employment, other than share-based payment. Employee benefits
include short-term benefits, retirement benefits, dismission benefits and other long-term employees’ benefits.
Benefits provided by the Group to the spouses, children and dependents of employees and families of deceased
employees are also a part of employee benefits.
Short-term benefits
For accounting periods during which services are rendered by employees, short-term benefits that will incur is
recognized as liability and included in profit and loss or related capital costs.
Retirement benefits (defined contribution schemes)
Employees of the Group participated in pension insurance and unemployment insurance schemes managed by the
local government. The contribution costs are charged as asset cost or to profit or loss when incurred.
Retirement benefits (defined benefit schemes)
The Group operates a defined benefit pension scheme, which requires payments to an independently operated
fund. No funds have been injected into the scheme. The cost of benefits provided under the defined benefit
scheme is calculated using the expected benefit accrual unit approach.
Remeasurement arising from defined benefit pension schemes, including actuarial gains or losses, changes in the
asset cap effect (deducting amounts included in net interest on net liabilities of the defined benefit schemes) and
return on scheme assets (deducting amounts included in net interest on net liabilities of the defined benefit
schemes) are instantly recognized in the balance sheet and charged to equity through other comprehensive income
for the period during which it is incurred. It will not be reversed to profit and loss in subsequent periods.
Previous service costs are recognized as current expenses when: the defined benefit scheme is revised, or relevant
restructuring costs or dismission benefits are recognized by the Group, whichever earlier.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
18. Employee benefits (cont’d)
Retirement benefits (defined benefit schemes) (cont’d)
Net interest is arrived at by multiplying net liabilities or net assets of defined benefits with a discount rate.
Changes in net obligations of defined benefits are recognized as cost of sales, administrative expenses, R&D
expenses, selling expenses and finance costs in the income statement. Service costs included current services
costs, past service costs and settlement of profit or loss. Net interest included interest income from scheme assets,
interest expenses for scheme obligations and interest of the asset cap effect.
19. Provisions
Other than contingent consideration and assumed contingent liabilities in a business combination not involving
entities under common control, the Group recognizes as provision an obligation that is related to contingent
matters when all of the following criteria are fulfilled:
(1) the obligation is a present obligation of the Group;
(2) the obligation would probably result in an outflow of economic benefits from the Group;
(3) the obligation could be reliably measured.
Provisions are initially measured according to the best estimate of expenses on fulfilling the current liabilities, in
connection with the risk, uncertainty and timing value of the currency. The carrying value of the provisions would
be reassessed on every balance sheet date. The carrying value will be adjusted to the best estimated value if there
is certain evidence that the current carrying value is not the best estimate.
The contingent liabilities obtained from a business combination not involving entities under common control shall
be measured at fair value at the time of initial recognition. After the initial recognition, according to the amount
confirmed by provisions and the balance of the initial recognition amount after deducting the accumulated
amortization determined by the revenue recognition principle, the higher of the two shall prevail for subsequent
measurements.
20. Share-based payments
Share-based payments can be distinguished into equity-settled share-based payments and cash-settled share-based
payments. Equity-settled share-based payments are transactions of the Group settled through the payment of
shares or other equity instruments in consideration for receiving services.
Equity-settled share-based payments made in exchange for services rendered by employees are measured at the
fair value of equity instruments granted to employees. Instruments which are vested immediately upon the grant
are charged to relevant costs or expenses at the fair value on the date of grant and the capital surplus are credited
accordingly. Instruments of which vesting is conditional upon completion of services or fulfillment of
performance conditions are measured by recognising services rendered during the period in relevant costs or
expenses and crediting the capital surplus accordingly at the fair value on the date of grant according to the best
estimates of the number of exercisable equity instruments conducted by the Group at each balance sheet date
during the pending period. The fair value of equity instruments is determined using the closing price of the
Company’s stock on the date of grant.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
21. Revenue generating from contracts with customers
The Group recognizes its revenue upon the fulfilment of contractual performance obligations under a contract,
namely, when the customer obtains control over the relevant products or services. The acquisition control over
relevant products or services shall mean the ability to direct the use of the products or the provision of the services
and receive substantially all economic benefits derived therefrom.
Contract for the sales of products
The product sales contract between the Group and its customers typically includes different contractual
performance obligations for the transfer of products and the rendering of services. With respect to the sales of
products, the Group typically recognizes its revenue at the time when the customer takes control over the
products, taking into account the following factors: the acquisition of the current right to receive payments for the
products, the transfer of major risks and rewards of ownership, the transfer of the legal t itle of the products, the
transfer of the physical assets of the products, and customers’ acceptance of the products.
Contract for the rendering of installation services
The service contract between the Group and its customers includes contractual performance obligations for
installation services. As the customer is able to forthwith obtain and consume the economic benefits brought by
the Group’s contractual performance when the Group performs a contract, the Group considers such contractual
performance obligations to be obligations performed over a period of time, and revenue shall be recognized on
each balance sheet date according to the progress of installation.
Significant financing component
Where a contract contains a significant financing component, the Group determines transaction prices based on
amounts payable assumed to be settled in cash by customers immediately upon the acquisition of control over the
products or services. The difference between such transaction price and contract consideration is amortized over
the contract period using the effective interest method based on a ratio that discounts the nominal contractual
consideration to the current selling price of the products or services. The Group shall not give consideration to any
significant financing component in a contract if the gap between the customer’s acquisition of control over the
products or services and payment of consideration is expected to be less than 1 year.
Warranty clauses
The Group provides quality assurance for products sold in accordance with contract terms and laws and
regulations. The accounting treatment of quality assurance in the form of warranty assuring customers products
sold are in compliance with required standards is set out in Note III.20. Where the Group provides a service
warranty for a standalone service in addition to the assurance of compliance of products with required standards,
such warranty is treated as a standalone contractual performance obligation, and a portion of the transaction price
shall be allocated to the service warranty based on a percentage of the standalone price for the provision of
product and service warranty. When assessing whether a warranty is rendering a standalone service in addition to
providing guarantee to customers that all sold goods are in compliance with required standards, the Group will
consider whether or not such warranty is a statutory requirement, the term of the warranty and the nature of the
Group’s undertaking to perform its obligations.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
22. Contract assets and contract liabilities
The Group presents contract assets or contract liabilities on the balance sheet according to the relationship
between contractual performance obligations and customer payments.
Contract assets
Contract assets are the right to receive consideration following the transfer of products or services to customers
which is dependent on factors other than the passage of time.
For details of the Group’s determination and accounting treatment of expected credit losses from contract assets,
please refer to Note III.8.
Contract liabilities
Contract liabilities are the obligation to pass products or services to customers in connection with customer
consideration received or receivable, for example, amounts received prior to the transfer of the promised products
or services.
23. Assets relating to contract cost
The Group’s assets relating to contract costs include the contract acquisition costs and contract performance costs.
The costs are presented in inventory, other current assets or other non-current assets based on liquidity of the
assets.
Where the Group expects the incremental costs for acquiring a contract to be recoverable, such contract
acquisition costs are recognized as an asset (unless the amortisation period of the asset is not more than 1 year).
Costs incurred by the Group for the performance of a contract are recognized as an asset as contract performance
costs if they do not fall under the scope of the relevant standards for inventories, fixed assets or intangible assets
but meet all the following conditions:
(1) they are directly related to a current or anticipated contract, including direct labour, direct materials,
manufacturing expenses (or similar expenses), to be borne by customers as specifically stipulated, and
otherwise incurred solely in connection with the contract;
(2) they will increase the resources to be utilized in the Company’s future performance of its contractual
obligations;
(3) they are expected to be recoverable.
24. Government grants
Government grants are recognized when there is reasonable assurance that the grant will be received and all
attaching conditions will be complied with. The grant is measured as the amount received or receivable where it
takes the form of a cash asset, or at fair value where it is not a cash asset. Where the fair value cannot be reliably
obtained, it should be measured at the nominal value.
In accordance with the stipulations of the government instruments, government grants applied towards acquisition
or the formation of long-term assets in other manners are asset-related government grants; the instruments
unspecifically refer to the exercise of judgement based on the basic conditions for receiving the asset-related grant
applied towards or the formation of long-term assets in other manners. All other grants are recognized as
income-related government grants.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
24. Government grants (cont’d)
Government grants relating to income and applied to make up for related costs or losses in future periods shall be
recognized as deferred income, and shall be recognized in profit or loss of the period for which related costs or
loss are recognized. Government grants specifically applied for the reimbursement of incurred related costs and
expenses shall be directly recognized in profit or loss.
Government grants relating to assets shall offset the carrying amount of related assets, or be recognized as
deferred income and credited to profit or loss over the useful life of the asset concerned by reasonable and
systematic instalments (provided that government grants measured at nominal value shall be directly recognized
in profit or loss). Where the asset concerned is disposed of, transferred, retired or damaged prior to the end of its
useful life, the balance of the deferred income yet to be allocated shall be transferred to “asset disposal” under
current profit or loss.
25. Deferred tax assets
The Group recognizes deferred tax assets and liabilities based on temporary differences using the balance sheet
liability method. Temporary differences are differences between the carrying amount of assets or liabilities in the
balance sheet and their tax base on the balance sheet date. Temporary differences also include the differences
between the carrying values and tax bases of items not recognized as assets or liabilities where the tax base can be
calculated according to the relevant tax regulations.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
(1) where the taxable temporary difference arises from goodwill or the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss;
(2) in respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilized except:
(1) where the deductible temporary difference arises from transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
(2) deductible temporary differences associated with investments in subsidiaries, associates and interests in
joint ventures are recognized when all following conditions are met: it is probable that the temporary
differences will reverse in the foreseeable future, it is probable that taxable profit against the deductible
temporary differences will be available.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
25. Deferred tax assets (cont’d)
As at balance sheet date, deferred tax assets and liabilities are measured in accordance with relevant tax laws at
the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, and reflects
the tax consequences that would follow the manner in which the Group expects, at the balance sheet date, to
recover the assets or settle the carrying amount of its assets and liabilities.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax asset to be utilized. Unrecognized deferred tax assets are reassessed at the end of each reporting period and are
recognized to the extent that it has become probable that sufficient taxable profit will be available to allow all or
part of the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset and presented as a net amount if all of the following conditions are
met: the Group has the legal right to set off the current income tax assets and liabilities and the deferred tax assets
and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities, provided that the taxable entity concerned intends either to settle current income tax
liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
26. Leases
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.
As lessee
The Group recognizes leases as the right-of-use asset and lease liabilities, except for short-term leases and leases
of low-value assets.
Right-of-use assets
At the commencement date of the lease, the Group recognizes a right-of-use asset. The cost of the
right-of-use asset comprises: (1) the amount of the initial measurement of the lease liability; (2) any lease
payments made at or before the commencement date less any lease incentives received; (3) any initial direct
cost incurred; (4) an estimate of costs incurred by the lessee in dismantling and removing the underlying
asset, restoring the site on which it is located or restoring the underlying asset to the condition required by
the terms and conditions of the lease. The right-of-use assets are depreciated on a straight-line basis
subsequently by the Group. If ownership of the leased asset transfers to the Group at the end of the lease
term, depreciation is calculated using the estimated useful life of the asset. Otherwise, the right-of-use assets
are depreciated over the shorter of the lease term and the estimated useful lives of the assets.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
26. Leases (cont’d)
Lease liabilities
At the commencement date, the Group measures the lease liability at the present value of the lease payments that
are not paid at that date, except for short-term leases and low-value asset leases. Lease payments include constant
payments and the substantial constant payments net of lease incentives, variable lease payments that depend on an
index or ratio, the estimated payables of guaranteed residual value, and also include the exercise price of the
purchase option or the amount to be paid upon vest of the termination option, provided that the Group is
reasonably certain that the option will be vested or that the lease term reflects that the Group will exercise the
termination option.
In calculating the present value of the lease payments, the Group uses the interest rate implicit in the lease as the
discount rate. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.
The Group calculates the interest expenses of the lease liability in each period during the lease term using the
constant periodic rate of interest, and recognizes such interest expenses in profit or loss, except those that in the
related asset costs as required. Variable lease payments that are not included in the measurement of the lease
assets are recognized in profit or loss as incurred, except those that shall be included in the related asset costs as
required.
After the commencement date, the Group increases the book value of the lease liability when interest is
recognized and decreases the book value of the lease liability when lease payments are made. In the event of any
change to the substantial constant payments, the estimated payables of guaranteed residual value, the index or
ratio used to determine lease payments, the assessment results or actual vesting of the purchase option, the
renewal option or the termination option, the Group remeasures the lease liability at the present value of the
modified lease payments.
Short-term leases and leases of low-value assets
A short-term lease is a lease that, at the commencement date, has a lease term of 12 months or less, and does not
contains any purchase option. The Group does not recognize the right-of-use assets and lease liabilities for
buildings short-term leases. The Group recognizes lease payments on short-term leases and leases of low-value
assets in the related asset costs or profit or loss on a straight-line basis over the lease term.
As a lessor
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership
of an underlying asset, except that a lease is classified as an operating lease at the inception date.
As a lessor of operating leases
Rental income of operating leases is recognized in current profit or loss over the respective periods during the
lease term on a straight-line basis, while variable lease payment not included in lease receipts is charged to profit
or loss as and when incurred.
Initial direct costs are capitalised and recognised over the lease term on the same basis as rental income, through
profit or loss.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
27. Share repurchase
The consideration and transaction costs paid to repurchase equity instruments are charged against owner’s equity.
Except for share-based payments, the issue (including refinancing), repurchase, disposal or retirement of the
Company’s own equity instruments are accounted for as changes in equity.
28. Expenses for safety production
The expenses for safety production set side as stipulated shall be included in the cost of relevant products or
current profits and losses, and included in the special reserve at the same time. When such expenses are used,
accounting treatment will be performed according to whether fixed assets are formed. If identified as expense
expenditures, the special reserve will be written down directly; if fixed assets are formed, the expenses incurred
will be collected, fixed assets will be recognized when they reach a predetermined usable state, and the equivalent
amount of special reserve will be written down and the equivalent accumulated depreciation will be recognized.
29. Put option related to non-controlling interests
In the process of acquiring majority equity of subsidiaries, the Group grants to minority shareholders the option to
sell the shares of subsidiaries held by them to the Group (put option). The Group recognizes the shares of
subsidiaries held by minority shareholders as non-controlling interests in its consolidated financial statements; for
the put option, the Group undertakes the obligation to redeem the shares of the subsidiaries held by minority
shareholders in cash. The Group removes the present value of the amount payable to redeem the put option from
its equity (excluding non-controlling interests) and classifies it as financial liability, which is remeasured in
subsequent periods at the present value of the the amount payable to redeem the put option and recognized in
profit or loss.
30. Fair value measurement
At each balance sheet date, the Group measures the fair value of derivative financial instruments and equity
instrument investments. Fair value means the price receivable from the disposal of an asset or required to be paid
for the transfer of a liability in an orderly transaction incurred by market participants on the measurement date.
The fair value hierarchy to which an asset or liability measured or disclosed in the financial statements at fair
value will be determined on the basis of the lowest level of input which is significant for the fair value
measurement as a whole. Input at the first level represents unadjusted quoted prices in an active market for the
acquisition of the same asset or liability on the measurement date. Input at the second level represents directly or
indirectly observable assets or liabilities apart from input at the first level. Input at the third level represents
unobservable input for the asset or liability.
At each balance sheet date, the Group reassesses assets and liabilities measured at fair value on an ongoing basis
recognized in the financial statements to determine whether the level of fair value measurement should be
changed.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
31. Significant accounting judgements and estimates
The preparation of financial statements requires judgement and estimation of the management. Such judgement
and estimation will affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of
contingent liabilities as at the balance sheet date. However, the consequence arising from the uncertain nature of
such estimation may result in significant adjustment to the carrying value of the asset or liability affected in the
future.
Judgement
In the process of applying the Group’s accounting policies, management has made the following judgements,
which have the most significant effect on the amounts recognized in the financial statements:
Determination of standalone contractual performance obligations
The intelligent packaging equipment (printers and corrugators) business of the Group includes four kinds of
product or service commitments, i.e. the sale, installation, transportation and insurance services of machinery. As
the customer can benefit from the individual use of the four kinds of products or services or their use together with
other readily available resources and such product or service commitments are distinctly separable from other
products or service commitments, the aforesaid product or service commitments constitute standalone contractual
performance obligations respectively.
Business model
The classification of financial assets at initial recognition is dependent on the Group’s business model for
managing the assets. Factors considered by the Group in judging the business model include enterprise valuation,
the method of reporting the results of financial assets to key management members, risks affecting the results of
financial assets and the method for managing such risks, as well as the form of remuneration received by the
management personnel of the businesses concerned. In assessing whether the business model is aimed at receiving
contract cash flow, the Group is required to analyse and exercise judgment in respect of the reasons, timing,
frequency and values of any disposals prior to maturity.
Characteristics of contract cash flow
The classification of financial assets at initial recognition is dependent on the characteristics of the contract cash
flow of such type of financial assets. Judgement is required to determine whether the contract cash flow represents
interest payment in relation to principal amounts based on outstanding principal amounts only, including
judgement of whether it is significantly different from the benchmark cash flow when assessing modifications to
the time value of currencies, and judgement of whether the fair value of early repayment features is minimal
where the financial assets include such early repayment features.
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within subsequent financial years, are discussed below.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
31. Significant accounting judgements and estimates (cont’d)
Estimation uncertainty (cont’d)
Impairment of financial instruments and contract assets
The Group has adopted the expected credit loss model to evaluate the impairment of financial instruments and
contract assets. The application of the expected credit loss model requires significant judgement and estimates and
the consideration of all reasonable and soundly based information, including forward-looking information. In
making such judgement and estimates, the Group estimates the projected movements of the debtor’s credit risk
according to past repayment records, economic policies, macro-economic indicators and industry risks. Different
estimates may affect impairment allowances, and established impairment allowances may not equal the actual
impairment loss amount in the future.
Impairment of non-current assets other than financial assets (exclusive of goodwill)
The Group assesses at each balance sheet date whether there is an indication that a non-current asset other than
financial assets may be impaired. For an intangible asset with an indefinite useful life, in addition to the annual
impairment test, it is also tested when there is an indication that it may be impaired. Non-current assets other than
financial assets are tested for impairment when there is an indication that the carrying amount is irrecoverable.
Where the carrying amount of an asset or an asset group exceeds its recoverable amount—the higher of the asset
or asset group’s fair value less costs to sell and its present value of estimated future cash flows, it is considered
impaired. The net amount of the fair value less costs to sell is determined based on the price of a similar asset’s
sales contract in a fair transaction or the observable market price less the incremental cost directly attributable to
the disposal of the asset. When estimating the present value of future cash flows, the management must choose a
proper discount rate.
Impairment of goodwill
Goodwill must be tested for impairment at least annually. It requires estimating the present value of future cash
flows of an asset group or asset group portfolio allocated with goodwill. When estimating the present value of
future cash flows, the Group needs to estimate future cash flows generating from the asset group or asset group
portfolio, and at the same time choose a proper discount rate to determine the present value of future cash flows.
For details, see Note V.20.
Fair value of unlisted equity investments
The unlisted equity investments have been valued based on the expected cash flows discounted at current rates
applicable for items with similar terms and risk characteristics. This valuation requires the Group to make
estimates about expected future cash flows, credit risk, volatility and discount rates, and hence they are subject to
uncertainty.
Deferred tax assets
Deferred tax assets are recognized for all unused tax losses, to the extent that it is likely that taxable profit will be
available to utilize these unused tax losses. Significant judgments are needed from management to estimate the
timing and amount of taxable profit in the future, with tax planning strategies, to determine the amount of the
deferred tax assets that should be recognized.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
31. Significant accounting judgements and estimates (cont’d)
Estimation uncertainty (cont’d)
Lessee’s incremental borrowing rate
If the interest rate implicit in the lease cannot be readily determined, the Group measures the lease liability at the
present value of the lease payments that are not paid at that date. The Group discounted the lease payments using
the lessee’s incremental borrowing rate. The Group determines the incremental borrowing rate based on the
economic environment by reference to the observable interest rate. Then the Group adjusts the reference interest
rate based on its own circumstances, underlying assets, lease terms and amounts of lease liabilities to determine
the applicable incremental borrowing rate.
Provisions
The Group estimates and makes corresponding provision for product quality guaranty according to contract terms,
existing knowledge and past experience. When such contingencies have formed a present obligation and it is
probable that an outflow of economic benefits from the Group will be required to settle the obligation, the Group
recognizes the contingencies as provisions based on the best estimate of the expenditure required to settle the
related present obligation. The recognition and measurement of provisions largely depend on the judgment of
management. In the process of making judgment, the Group is required to assess the risks, uncertainties, time
value of money and other factors related to such contingencies.
The Group will undertake the provisions for post-sale quality maintenance provided to customers for the sale,
maintenance and renovation of the sold goods. The provisions have been made taking into account the Group’s
recent data of maintenance experience, and taking into account the risks, uncertainties and other factors related to
maintenance matters. Any increase or decrease in this provision may affect the profit and loss in future years.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
IV. Taxation
1. Principal tax items and tax rates
Tax basis Tax rate
Value-added tax The output tax: taxable income; 13% and 6%
(VAT) VAT : difference after deducting the input tax which is
allowed to be deducted in the current period
City maintenance Turnover tax actually paid 7%
and construction
tax
Education Turnover tax actually paid 3%
surcharge
Local education Turnover tax actually paid 2%
Surcharge
Property tax Ad valorem tax: remaining value after deducting 30% 1.2% and 12%
from the original value of the property;
Tax levied from rent: rental income.
Corporate income Taxable income 15%-28%
tax
The taxpaying entities subject to different corporate income tax rates are as follows:
Income tax rate
Guangdong Dongfang Precision Science & Technology Co., Ltd. 15.0%
Suzhou Parsun Power Machine Co., Ltd. ("Parsun Power") 15.0%
Guangdong Fosber Intelligent Equipment Co., Ltd. ("Fosber Asia") 15.0%
Shenzhen Wonder Printing System Co.,Ltd. ("Wonder Printing") 15.0%
Dong Fang Precision (HK) Limited (“Dongfang Precision (HK)”) 16.5%
Dong Fang Precision (Netherland) Cooperatief U.A.(“Dongfang Precision 20.0%
(Netherland)”)
Fosber S.p.A. 24.0%
Fosber America, Inc.(“Fosber America”) 21.0%
EDF Europe s.r.l.(“EDF”) 24.0%
Tirua America inc. (“Tirua America”) 21.0%
Quantum Corrugated S.r.l.(“QCorr”) 24.0%
Tirua S.L.U. 28.0%
Tirua France SARL 15.0%
SCI Candan 15.0%
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
IV. Taxation (Cont’d)
2. Tax concessions
On 28 December 2023, the Company passed the high-tech enterprise review by the Department of Science and
Technology of Guangdong Province, Department of Finance of Guangdong Province, Guangdong Provincial Tax
Service of State Taxation Administration and Guangdong Provincial Local Taxation Bureau and obtained a
High-tech Enterprise Certificate (certificate no.: GR202344004676) jointly issued by the above authorities, with a
validity of three years, during which the Company paid the corporate income tax at a reduced rate of 15%, so the
preferential tax rate of 15% was applicable to the Company's corporate income tax as at 31 December 2023.
Suzhou Parsun Power Machine Co., Ltd., a subsidiary of the Company, passed the high-tech enterprise review by
the Department of Science and Technology of Jiangsu Province, Department of Finance of Jiangsu Province and
Jiangsu Provincial Tax Service of State Taxation Administration on 18 November 2022 and obtained a High-tech
Enterprise Certificate (certificate no.: GR201932000339) jointly issued by the above authorities, with a validity of
three years, during which the subsidiary paid the corporate income tax at a reduced rate of 15%, so the preferential
tax rate of 15% was applicable to the corporate income tax of Parsun Power as at 31 December 2023.
Guangdong Fosber Intelligent Equipment Co., Ltd., a subsidiary of the Company, passed the high-tech enterprise
review by the Department of Science and Technology of Guangdong Province, Department of Finance of
Guangdong Province and Guangdong Provincial Tax Service of State Taxation Administration on 20 December
2021 and obtained a High-tech Enterprise Certificate (certificate no.: GR202144003984) jointly issued by the
above authorities, with a validity of three years, during which the subsidiary paid the corporate income tax at a
reduced rate of 15%, so the preferential tax rate of 15% was applicable to the corporate income tax of Fosber Asia
as at 31 December 2023.
Shenzhen Wonder Printing System Co.,Ltd., a subsidiary of the Company, passed the high-tech enterprise review
by the Department of Science and Technology of Guangdong Province, Department of Finance of Guangdong
Province and Guangdong Provincial Tax Service of State Taxation Administration on 19 December 2022 and
obtained a High-tech Enterprise Certificate (certificate no.: GR202244206125) jointly issued by the above
authorities, with a validity of three years, during which the subsidiary paid the corporate income tax at a reduced
rate of 15%, so the preferential tax rate of 15% was applicable to the corporate income tax of Wonder Printing as
at 31 December 2023.
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Notes to the Financial Statements
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements
1. Cash and bank balances
2023 2022
Cash on hand 438,600.93 589,575.75
Cash at banks 1,491,798,403.81 1,011,562,524.44
Other cash balances 334,182,899.75 262,295,099.55
1,826,419,904.49 1,274,447,199.74
Of which: Total amount deposited overseas 889,925,365.66 752,430,975.78
Total restricted amount 153,905,292.65 40,726,502.47
as collateral, pledge or frozen
As at 31 December 2023, the fund deposited abroad with restrictions on repatriation was equivalent to
RMB9,020,813.02 (31 December 2022: RMB17,937,703.00).
Current bank deposits earn interest income based on interest rates for current deposits.
Note 1: Other cash balances include: 1) a total of RMB153,157,792.65 in guarantee deposits for letters of
guarantee, bank acceptance bill deposits, loan deposits, and forward exchange settlement and sale deposits;
2) pledged time deposits with a book value of RMB480,000.00; 3) legal freeze funds with a book value of
RMB267,500.00; 4) RMB119,423,040.75 of investment deposits; 5) RMB422,270.04 of funds pending
verification; 6) RMB60,432,296.31 of monetary funds are funds in transit generated by internal transfers of
the Group's overseas subsidiaries on December 29, 2023. These funds in transit arrived at the relevant
accounts on January 2, 2024.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
2. Financial assets held for trading
2023 2022
Financial assets at fair value through profit or loss
Asset management plans 312,284,352.19 307,794,620.13
Investments in bank’s wealth management
products 133,662,614.39 351,182,315.74
Stocks and Funds 205,349,301.18 200,355,381.34
Investments in trust products - 717,241.38
Derivative financial assets 31,329,174.69 782,720.29
682,625,442.45 860,832,278.88
3. Notes receivable
2023 2022
Bank acceptance notes 47,661,412.88 24,566,100.12
Notes receivable that were endorsed or discounted but undue at the balance sheet date are as follows:
Derecognized Un-derecognized
Bank acceptance notes - 25,837,473.39
As at 31 December 2023, there’s no need to establish impairment allowances for notes receivable in the
management’s opinion.
4. Accounts receivable
The aging of accounts receivable is analyzed as follows:
2023 2022
Within 1 year 797,174,742.31 759,915,056.92
1-2 years 97,122,608.26 74,419,438.55
2-3 years 30,354,347.33 13,000,155.24
3-4 years 3,905,106.39 7,711,547.63
4-5 years 4,320,546.03 7,653,168.93
Over 5 years 8,831,175.90 7,018,540.90
941,708,526.22 869,717,908.17
Less: allowances for doubtful accounts
receivable 37,704,550.75 32,412,150.71
904,003,975.47 837,305,757.46
V. Notes to the Consolidated Financial Statements (cont’d)
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
4. Accounts receivable (cont’d)
2023
Gross amount Allowance Carrying amount
Amount Percentage Amount Percentage
(%) (%)
Accounts receivable for
which allowances are
established
individually 2,477,303.19 0.26 2,477,303.19 100.00 -
Accounts receivable for
which allowances are
established by group
with similar credit
risk characteristics 939,231,223.03 99.74 35,227,247.56 3.75 904,003,975.47
941,708,526.22 100.00 37,704,550.75 904,003,975.47
2022
Gross amount Allowance Carrying amount
Amount Percentage Amount Percentage
(%) (%)
Accounts receivable for
which allowances are
established
individually 3,004,100.00 0.35 3,004,100.00 100.00 -
Accounts receivable for
which allowances are
established by group
with similar credit
risk characteristics 866,713,808.17 99.65 29,408,050.71 3.39 837,305,757.46
869,717,908.17 100.00 32,412,150.71 837,305,757.46
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Notes to the Financial Statements
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
4. Accounts receivable (cont’d)
Accounts receivable for which allowances are established individually are as follows:
2023 2022
Reason for
Gross amount Allowance ECL allowance Gross amount Allowance
(%)
Customer’s
Customer 1
inability to
settle the
939,000.00 939,000.00 100.00 amount due 939,000.00 939,000.00
Customer’s
Customer 2
inability to
settle the
641,600.00 641,600.00 100.00 amount due 641,600.00 641,600.00
Customer’s
inability to
Customer 3
settle the
608,800.00 608,800.00 100.00 amount due 608,800.00 608,800.00
Customer 4 - - - 516,000.00 516,000.00
Customer’s
inability to
Customer 5
settle the
283,000.00 283,000.00 100.00 amount due 283,000.00 283,000.00
Customer’s
inability to
settle the
Customer 6 4,903.19 4,903.19 100.00 amount due 15,700.00 15,700.00
2,477,303.19 2,477,303.19 3,004,100.00 3,004,100.00
As at 31 December 2023, accounts receivable for which allowances are established by group with similar
credit risk characteristics are as follows:
Gross amount Allowance ECL(%)
Within 1 year 797,174,742.31 8,884,081.81 1.11
1-2 years 97,122,608.26 7,016,334.29 7.22
2-3 years 30,354,347.33 8,412,219.67 27.71
3-4 years 3,905,106.39 1,665,177.92 42.64
4-5 years 4,320,546.03 2,895,561.16 67.02
Over 5 years 6,353,872.71 6,353,872.71 100.00
939,231,223.03 35,227,247.56
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
4. Accounts receivable (cont’d)
Movements in allowances for doubtful accounts receivable are as follows:
Effect of
Established in Reversed in Written off in exchange rate
Opening balance the period the period the period movements Closing balance
2023 32,412,150.71 11,351,715.95 (870,645.35) (6,435,596.12) 1,246,925.56 37,704,550.75
As at 31 December 2023, the top five accounts receivable and contract assets were as follows:
Total closing
balance of
provision for bad
Total closing As a % of the debts of accounts
balance of closing balance receivable and
Closing balance of Closing accounts of total accounts provision for
accounts balance of receivable and receivable and impairment of
receivable contract assets contract assets contract assets contract assets
Customer 7 95,762,655.22 - 95,762,655.22 9.68 777,411.90
Customer 8 88,195,466.36 - 88,195,466.36 8.91 2,101,671.68
Customer 9 38,878,636.20 - 38,878,636.20 3.93 323,316.84
Customer 10 36,499,400.00 - 36,499,400.00 3.69 1,824,970.00
Customer 11 29,602,061.11 - 29,602,061.11 2.99 247,534.38
合计 288,938,218.89 - 288,938,218.89 29.20 5,274,904.80
5. Receivables financing
2023 2022
Bank acceptance notes 9,365,344.07 15,305,668.26
6. Prepayments
The aging of prepayments is analyzed as follows:
2023 2022
Percentage Percentage
Carrying amount Carrying amount
(%) (%)
Within 1 year 42,509,851.47 92.93 64,413,090.83 99.18
1-2 years 2,960,199.29 6.47 275,315.22 0.42
2-3 years 20,968.14 0.05 31,175.83 0.05
Over 3 years 250,125.00 0.55 227,319.38 0.35
45,741,143.90 100.00 64,946,901.26 100.00
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
6. Prepayments (cont’d)
Top 5 of prepayments are as follows:
As a % of total
2023 prepayments
Supplier 1 6,466,538.76 14.14
Supplier 2 4,262,830.08 9.32
Supplier 3 3,883,266.09 8.49
Supplier 4 3,351,578.17 7.33
Supplier 5 3,147,271.65 6.88
21,111,484.75 46.16
7. Other receivables
2023 2022
Other receivables 51,797,943.96 83,996,902.82
Other receivables
The aging of other receivables is analyzed as follows:
2023 2022
Within 1 year 38,472,808.52 39,240,181.70
1-2 years 6,754,108.79 5,772,952.90
2-3 years 4,574,557.21 3,174,795.18
3-4 years 2,082,428.89 176,147.32
4-5 years 138,543.93 38,260,742.08
Over 5 years 1,111,902.73 1,260,558.08
Less: allowances for doubtful other receivables 1,336,406.11 3,888,474.44
51,797,943.96 83,996,902.82
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
7. Other receivables (cont’d)
Other receivables (cont’d)
Other receivables are classified by nature as follows:
2023 2022
Amount for transfer of equity investments - 39,461,356.50
Prepaid service charges 19,593,768.86 12,446,401.37
Security deposits 7,956,393.69 8,340,341.53
Export tax refunds 2,952,066.14 1,294,466.80
Employee loans and petty cash 5,078,147.88 3,388,217.50
Others 17,553,973.50 22,954,593.56
53,134,350.07 87,885,377.26
2023
Gross amount Allowance Carrying amount
Amount Percentage Amount Percentage
(%) (%)
Other receivables for
which allowances are
established by group
with similar credit risk
characteristics 53,134,350.07 100.00 1,336,406.11 2.52 51,797,943.96
As at 31 December 2023, other receivables for provision for bad debts according to the combination of credit
risk characteristics:
Gross amount Allowance ECL(%)
Accounts receivable for which
allowances are established by
group with similar credit risk
characteristics 53,134,350.07 1,336,406.11 2.52
206 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
7. Other receivables (cont’d)
Other receivables (cont’d)
Movements in allowances for doubtful other receivables that are established based on the 12-month ECL and
the lifetime ECL are as follows:
Stage 1 Stage 2 Stage 3 Total
Financial assets
with credit
impairment
12-month ECL Lifetime ECL (lifetime ECL)
Opening balance 3,388,474.44 500,000.00 - 3,888,474.44
Reversed in the
period (2,756.83 ) (2,756.83 )
Written off in the
period (2,624,421.55 ) - - (2,624,421.55 )
Other changes 75,110.05 - - 75,110.05
Closing balance 836,406.11 500,000.00 - 1,336,406.11
Movements in allowances for doubtful other receivables are as follows:
Established i Decrease due t Effect of
Opening Reversed in
n o disposal of exchange rate Closing
balance the period
the period subsidiaries movements balance
2023 3,888,474.44 - (2,756.83 ) (2,624,421.55) 75,110.05 1,336,406.11
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
7. Other receivables (cont’d)
Other receivables (cont’d)
As at 31 December 2023, top 5 of other receivables are as follows:
As a % of Closing
total other Nature Age balance of
2023 receivables allowance
Entity 1 7.78 Transactions Within 1 year
with third
4,133,194.98 parties -
Entity 2 5.82 Transactions Within 1 year
with third
3,094,404.29 parties -
Entity 3 4.03 Deposit Within 1 year,
2,140,000.00 1-2 years -
Entity 4 1,630,000.00 3.07 Deposit 3-4 years -
Entity 5 965,159.53 1.82 Deposit 1-2 years -
11,962,758.80 22.52 -
208 / 296
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Notes to the Financial Statements (Cont’d)
错误!未知的文档属性名称 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
8. Inventories
2023 2022
Valuation Valuation
Gross amount allowance Carrying amount Gross amount allowance Carrying amount
Raw materials 658,870,239.78 23,591,282.36 635,278,957.42 582,372,253.76 18,010,104.87 564,362,148.89
Work-in-progress 422,201,722.20 20,499,380.02 401,702,342.18 368,570,631.39 19,879,129.16 348,691,502.23
Finished goods 75,950,836.96 3,475,752.29 72,475,084.67 108,150,704.87 4,681,895.11 103,468,809.76
Product deliveries 31,374,046.56 - 31,374,046.56 35,190,253.35 - 35,190,253.35
Semi-finished
goods 41,372,916.93 662,291.37 40,710,625.56 28,847,199.70 787,613.38 28,059,586.32
Materials consigned
for processing 869,999.29 - 869,999.29 13,209,583.96 - 13,209,583.96
1,230,639,761.72 48,228,706.04 1,182,411,055.68 1,136,340,627.03 43,358,742.52 1,092,981,884.51
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
8 Inventories (cont’d)
Movements in inventory valuation allowances are as follows:
Established in
Opening balance
the period Decrease in the period Closing balance
Reversed or written off Others
Raw materials 18,010,104.87 14,928,451.87 (10,085,023.65) 737,749.27 23,591,282.36
Work-in-progress 19,879,129.16 708,399.86 (356,537.19) 268,388.19 20,499,380.02
Finished goods 4,681,895.11 1,192,065.37 (2,398,208.19) - 3,475,752.29
Semi-finished goods 787,613.38 512,240.37 (637,562.38) - 662,291.37
43,358,742.52 17,341,157.47 (13,477,331.41) 1,006,137.46 48,228,706.04
9. Contract assets
2023 2022
Impairment Carrying Impairment Carrying
Gross amount allowance amount Gross amount allowance amount
Carrying amount 47,751,792.27 1,805,415.13 45,946,377.14 67,018,545.44 1,928,694.23 65,089,851.21
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Notes to the Financial Statements (Cont’d)
错误!未知的文档属性名称 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
9. Contract assets (cont’d)
2023
Impairment
Gross amount allowance Carrying amount
Amount Percentage Amount Percentage
(%) (%)
Contract assets for which
allowances are
established by group
with similar credit risk
characteristics 47,751,792.27 100 1,805,415.13 3.78 45,946,377.14
2022
Impairment
Gross amount allowance Carrying amount
Amount Percentage Amount Percentage
(%) (%)
Contract assets for which
allowances are
established by group
with similar credit risk
characteristics 67,018,545.44 100.00 1,928,694.23 2.88 65,089,851.21
As at 31 December 2023, contract assets for which allowances are established by group with similar credit
risk characteristics are as follows:
Impairment
Gross amount allowance ECL(%)
Within 1 year 35,474,332.34 388,204.27 1.09
1-2 years 11,792,268.12 1,114,037.77 9.45
2-3 years 485,191.81 303,173.09 62.49
47,751,792.27 1,805,415.13
Movements in impairment allowances for contract assets are as follows:
Opening Established in Reversed Other Closing
balance the period in the period decreases balance
1,928,694.23 258,269.89 (382,329.97) 780.98 1,805,415.13
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
10. Current portion of non-current assets
2023 2022
Current portion of long-term receivables 5,970,000.00 1,463,750.00
Current portion of security deposits for loans - 310,300,000.00
5,970,000.00 311,763,750.00
As at 31 December 2023, there’s no need to establish impairment allowances for the current portion of
non-current assets in the management’s opinion.
11. Other current assets
2023 2022
Input VAT to be deducted 19,118,882.69 15,469,529.33
Overpaid value-added tax (VAT) 37,973,926.46 23,483,390.49
Tax repayments 5,248,796.24 13,582,808.39
Others 12,893,050.68 8,834,723.10
75,234,656.07 61,370,451.31
212 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
12. Long-term receivables
2023 2022
Provision for bad Provision for bad
Gross amount debts Carrying amount Gross amount debts Carrying amount
Amounts receivable by
installment for selling
goods 4,382,500.00 74,304.00 4,308,196.00 1,305,000.00 10,701.00 1,294,299.00
Gross amount Allowance Carrying amount
Amount Percentage Amount Percentage
(%) (%)
Long-term receivables for
which allowances are
established by group with
similar credit risk
characteristics 4,382,500.00 100.00 74,304.00 1.70 4,308,196.00
213 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
12. Long-term receivables (cont’d)
Movements in allowances for doubtful long-term receivables are as follows:
Established in Reversed in Written off
Opening balance the period the period in the period Closing balance
2023 10,701.00 63,603.00 - - 74,304.00
13. Long-term equity investments
Opening Change in the period Closing
balance Return on Other balance
Additional investment under comprehensive Other equity
investment the equity method income changes
Associates
Jaten Robot 86,533,484.12 - 943,242.05 - - 87,476,726.17
Talleres Tapre 1,707,227.29 - - 52,674.17 - 1,759,901.46
Nanjing Profeta 7,111,970.11 23,075,777.90 (3,202,495.03) - 1,044,004.23 28,029,257.21
95,352,681.52 23,075,777.90 (2,259,252.98) 52,674.17 1,044,004.23 117,265,884.84
As at 31 December 2023, there’s no need to establish impairment allowances for long-term equity investments in the management’s opinion.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
14. Other non-current financial assets
2023 2022
Financial assets at fair value through profit or loss 461,278,259.67 334,449,603.33
Other non-current financial assets mainly refer to the Group’s investment in equity instrument investments,
long-term wealth management product investments and long-term derivative financial assets.
15. Fixed assets
Buildings and Machinery Transportation Other equipment Total
constructions facility
Gross amount
Opening balance 595,767,164.78 495,941,700.77 35,181,776.36 65,440,308.96 1,192,330,950.87
Purchases 6,784,769.93 13,308,437.13 5,478,483.17 6,128,776.37 31,700,466.60
Transfers from
construction in
progress 51,528,107.01 4,404,214.47 - 184,844.53 56,117,166.01
Disposal or
retirement (361,637.88) (10,675,610.31) (5,310,350.20) (631,971.27) (16,979,569.66 )
Effect of
exchange rate
movements 10,766,071.74 18,073,394.57 161,375.11 411,482.36 29,412,323.78
Closing
balance 664,484,475.58 521,052,136.63 35,511,284.44 71,533,440.95 1,292,581,337.60
Accumulated
depreciation
Opening balance 199,822,190.57 364,322,605.23 20,295,753.93 37,690,287.35 622,130,837.08
Provision 15,780,045.44 22,264,645.63 3,716,943.97 8,980,044.80 50,741,679.84
Disposal or
retirement (170,379.18) (9,576,266.18) (4,992,881.21) (529,714.51) (15,269,241.08 )
Effect of
exchange rate
movements 5,643,947.54 17,121,985.31 110,943.11 249,608.76 23,126,484.72
Closing balance 221,075,804.37 394,132,969.99 19,130,759.80 46,390,226.40 680,729,760.56
Carrying amount
Closing 443,408,671.21 126,919,166.64 16,380,524.64 25,143,214.55 611,851,577.04
Opening 395,944,974.21 131,619,095.54 14,886,022.43 27,750,021.61 570,200,113.79
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
15. Fixed assets (cont’d)
As at 31 December 2023, no registration certificate for properties has been obtained for the new plant with carrying amount of RMB51,528,107.01 (2022: Nil).
16. Construction in progress
2023 2022
Impairment Carrying Impairment Carrying
Gross amount Gross amount
allowance amount allowance amount
Plants and buildings 161,127,696.15 - 161,127,696.15 36,216,546.63 - 36,216,546.63
Equipment installation 34,429,401.65 - 34,429,401.65 2,687,991.22 - 2,687,991.22
195,557,097.80 - 195,557,097.80 38,904,537.85 - 38,904,537.85
216 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
16. Construction in progress (cont’d)
Movements in substantial construction in progress in 2023 are as follows:
Budget Opening balance Increase in Transferred to Other decrease Closing balance Funding Input as a % of
the period fixed assets in source budget
the period
Dongfang Precision -
Plant Construction
Project 32,753,000.00 - 4,268,623.84 - - 4,268,623.84 Self-funded 13
Tirua (Guangdong)
Intelligent Equipment
Manufacturing Co.,
Ltd. (“Tirua
Asia”)-Plant
Construction Project 85,745,627.16 32,851,532.05 32,334,095.11 51,528,107.01 - 13,657,520.15 Self-funded 76
Parsun Power - Plant
Construction Project 348,503,300.00 1,570,900.95 85,292,644.71 - - 86,863,545.66 Self-funded 25
Fosber Asian – Fosber
Songgang Plant 300,000,000.00 1,673,461.65 38,054,030.19 - - 39,727,491.84 Self-funded 13
Tirua S.L.U.-
Corrugated roller
production equipment 74,874,598.40 - 25,079,297.27 - - 25,079,297.27 Self-funded 33
Fosber Group - Plant
Construction Project 157,184,000.00 68,703.32 16,537,099.73 - - 16,605,803.05 Self-funded 11
Others - 2,739,939.88 11,216,541.59 4,589,059.00 12,606.48 9,354,815.99 Self-funded -
999,060,525.56 38,904,537.85 212,782,332.44 56,117,166.01 12,606.48 195,557,097.80
217 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
17. Right-of-use assets
Buildings Vehicles Total
Cost
Opening balance 107,881,926.02 16,228,783.97 124,110,709.99
Increase 7,859,694.19 7,991,990.67 15,851,684.86
Disposal (11,164,431.77) (1,976,499.84) (13,140,931.61)
Effect of exchange rate
movements 14,177,505.08 6,546,212.31 20,723,717.39
Closing balance 118,754,693.52 28,790,487.11 147,545,180.63
Accumulated depreciation
Opening balance 29,083,848.03 8,577,883.94 37,661,731.97
Provision 17,792,786.39 4,274,048.67 22,066,835.06
Disposal (10,971,283.51) (940,298.88) (11,911,582.39)
Effect of exchange rate
movements 11,391,947.49 5,993,849.67 17,385,797.16
Closing balance 47,297,298.40 17,905,483.40 65,202,781.80
Carrying amount
Closing 71,457,395.12 10,885,003.71 82,342,398.83
Opening 78,798,077.99 7,650,900.03 86,448,978.02
218 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
18. Intangible assets
Land use Land Patented Trademarks
Total
rights ownership technologies and software
Gross amount
Opening
balance 177,783,228.49 15,881,320.90 112,511,121.61 187,064,046.11 493,239,717.11
Purchases - - 2,050,304.02 4,300,847.11 6,351,151.13
Internal R&D - - - 5,334,031.98 5,334,031.98
Disposal - - - (472,518.34 ) (472,518.34)
Effect of
exchange rate
movements - 933,465.38 5,409,249.46 9,701,035.21 16,043,750.05
Closing
balance 177,783,228.49 16,814,786.28 119,970,675.09 205,927,442.07 520,496,131.93
Accumulated
depreciation
Opening
balance 24,758,265.85 - 66,420,930.77 33,957,125.38 125,136,322.00
Provision 3,856,021.52 - 10,212,114.77 10,029,983.61 24,098,119.90
Disposal - - - (279,351.45) (279,351.45)
Effect of
exchange rate
movements 259,376.87 - 4,000,069.40 1,327,115.16 5,586,561.43
Closing
balance 28,873,664.24 - 80,633,114.94 45,034,872.70 154,541,651.88
Carrying amount
Closing 148,909,564.25 16,814,786.28 39,337,560.15 160,892,569.37 365,954,480.05
Opening 153,024,962.64 15,881,320.90 46,090,190.84 153,106,920.73 368,103,395.11
As at 31 December 2023, the proportion of intangible assets formed through internal research and
development to the carrying amount of intangible assets at the end of the year was 1.25%.
19. Research and development costs
Opening Increase in Decrease in Closing
balance the period the period balance
Internal Recognition of
research and intangible assets
development
Data Platform Project 108,069.78 1,011,090.52 (1,119,160.30 ) -
Business Platform
Project 2,874,316.59 119,643.15 (2,993,959.74 ) -
IoT Platform Project 719,843.39 501,068.55 (1,220,911.94 ) -
3,702,229.76 1,631,802.22 (5,334,031.98 ) -
Refer to Note VI.
219 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
20. Goodwill
Increase in the Decrease in the
Opening balance period period Closing balance
Exchange rate Disposal allocated
movements to disposal groups
held for sale
Fosber Group 152,396,437.31 8,957,491.76 - 161,353,929.07
Parsun Power 208,031,946.10 - - 208,031,946.10
Italy EDF 65,167,148.84 3,830,366.44 - 68,997,515.28
Italy QCorr 12,921,351.12 759,485.58 - 13,680,836.70
Wonder
Printing 119,422,168.56 - - 119,422,168.56
557,939,051.93 13,547,343.78 - 571,486,395.71
Movements in impairment allowances for goodwill are as follows:
Increase in the Decrease in the
Opening balance period period Closing balance
Exchange rate Disposal allocated
movements to disposal groups
held for sale
Parsun Power 61,855,054.35 - - 61,855,054.35
Italy EDF 65,167,148.84 3,830,366.44 - 68,997,515.28
127,022,203.19 3,830,366.44 - 130,852,569.63
220 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
20. Goodwill (cont’d)
Information about the asset groups is as follows:
Corrugator line business asset group of Fosber Group
The corrugator line business asset group is an asset group owned by Fosber Group, consistent with the asset
group combination determined on the purchase date and during impairment tests of the previous years. The
carrying amount of the corrugator line business asset group was RMB 525.97 million. The recoverable
amount is determined using the present value of the projected future cash flows of the asset group
combination according to the cash flow forecasting based on the financial budget over a five-year period
approved by the management. The perpetual cash flows are determined at the level of the last year of the
detailed forecast period and based on the industry development trend and other factors. The discount rate
used in cash flow forecasting was 20.59% (19.85% in 2022).
Corrugator line business asset group of Italy QCorr
The corrugator line business asset group of Italy QCorr is the only asset group owned by Italy QCorr,
consistent with the asset group combination determined on the purchase date. The carrying amount of the
corrugator line asset group was RMB 319.68 million. The recoverable amount is determined using the
present value of the projected future cash flows of the asset group combination according to the cash flow
forecasting based on the financial budget over a five-year period approved by the management. The
perpetual cash flows will be determined at the level of the last year of the detailed forecast period and based
on the industry development trend and other factors. The discount rate used in cash flow forecasting was
11.85% (12.22% in 2022).
Corrugated carton printer business asset group of Italy EDF
For the corrugated carton printer business asset group of Italy EDF, impairment allowances for goodwill
were established in full amount in 2019.
Corrugated digital printer business asset group of Wonder Printing
The digital printer business asset group is the only asset group owned by Wonder Printing, consistent with
the asset group combination determined on the purchase date. The carryin g amount of the digital printer
business asset group was RMB 264.81 million. The recoverable amount is determined using the present
value of the projected future cash flows of the asset group combination according to the cash flow
forecasting based on the financial budget over a five-year period approved by the management and the
industry development trend and other factors. The discount rate used in cash flow forecasting was 12.17%
(13.27% in 2022).
221 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
20. Goodwill (cont’d)
Where the recoverable amount is determined according to the present value of the expected future cash
flows:
Recoverable amount Impairment Years of Key Key Basis for
amount budget/forecast parameters of parameters of determination of
period budget/forecast stable period key parameters of
Carrying amoun period stable period
Revenue Based on 0%
growth rate revenue growth
Revenue rate for stable
Fosber Group 525,967,510.91 2,393,364,573.02 - 5 years growth rate period
Revenue Revenue Based on 0%
growth rate growth rate revenue growth
rate for stable
Parsun Power 319,677,584.80 1,087,360,886.38 - 5 years period
Revenue Revenue Based on 0%
growth rate growth rate revenue growth
rate for stable
Italy QCorr 63,349,819.29 163,750,198.36 - 5 years period
Revenue Revenue Based on 0%
growth rate growth rate revenue growth
Wonder rate for stable
Printing 264,808,276.22 279,036,383.05 - 5 years period
1,173,803,191.22 3,923,512,040.81 -
Goodwill acquired in business combinations is allocated to the following asset groups or asset group
portfolios for impairment testing:
Corrugator line business asset group of Fosber Group
Power machine business asset group of Parsun Power
Corrugator line business asset group of Italy QCorr
Corrugated carton printer business asset group of Italy EDF
Corrugated digital printer business asset group of Wonder Printing
The following describes the key assumptions made by the management in determining cash flow forecastin g
for goodwill impairment testing:
Budget gross - Developed based on the average gross margin of historical operating
margin results and expectations for market development.
Discount rate - The discount rate used is the pre-tax discount rate that reflects the
specific risks of the relevant asset group or asset group combination.
The amount of the key assumptions allocated to the above asset group or asset group portfolio is consistent
with the Group's historical experience and external information.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
21. Long-term prepaid expenses
Opening Increase in Amortization in Other Closing
balance the period the period decreases balance
Plant decoration
expenditures 3,387,139.73 874,886.54 (1,110,325.20) (31,911.69) 3,119,789.38
Office decoration
expenditures 5,324,776.48 2,132,445.01 (3,098,032.48) (444,948.31) 3,914,240.70
Amortization of
moulds 2,305,043.35 20,587,622.65 (5,870,957.95) - 17,021,708.05
Amortization of
lease assets 2,172,204.26 - (57,918.55) - 2,114,285.71
Internet access for
offices 811,214.14 614,629.98 (1,230,103.16) (147,342.77) 48,398.19
CE certification fee 617,562.29 192,363.78 (325,815.54) - 484,110.53
Expenditures on
supporting
engineering for
plants 2,117,612.73 654,787.96 (794,066.65) (137,285.06) 1,841,048.98
16,735,552.98 25,056,735.92 (12,487,219.53) (761,487.83) 28,543,581.54
22. Deferred tax assets/liabilities
Deferred tax assets and liabilities before offsetting:
2023 2022
Deductible Deferred Deductible Deferred
temporary tax assets temporary tax assets
differences differences
Deferred tax assets
Deductible loss 41,464,787.21 7,585,286.13 39,530,769.25 7,299,859.61
Provisions—after-sales
maintenance service
charges 31,106,124.16 7,465,469.80 29,017,229.54 6,964,135.09
Deferred income 1,148,967,602.00 174,998,363.51 1,115,356,405.03 170,790,680.98
Accrued expenses 137,007,925.99 35,957,989.47 110,904,039.46 27,965,656.80
Asset impairment
allowances 52,411,022.56 11,682,516.17 63,619,447.75 14,092,864.85
Equity incentive expenses 48,552,350.45 9,375,318.47 29,263,236.96 4,659,406.75
Credit impairment loss 1,549,606.23 237,403.35 59,507,278.84 9,165,630.00
Internal unrealized profit 41,884,654.49 9,319,501.09 38,382,165.54 8,119,663.58
Lease liabilities 25,116,594.05 3,435,296.89 - -
Others 117,570,323.59 26,223,652.55 121,057,339.07 22,623,110.51
1,645,630,990.73 286,280,797.43 1,606,637,911.44 271,681,008.17
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
22. Deferred tax assets/liabilities (cont’d)
2023 2022
Deductible Deferred Deductible Deferred
temporary tax assets temporary tax assets
differences differences
Deferred tax liabilities
Financial assets at fair
value through profit or
loss 1,794,832.35 233,592.92 21,098,870.19 3,750,525.42
Increase in value in asset
valuation 42,559,397.20 7,565,638.16 49,738,790.86 8,867,879.18
Depreciation difference of
fixed assets 61,963,523.25 10,363,510.02 26,455,083.92 5,468,413.09
22,733,086.57 3,069,779.96 - -
Others 69,220,019.79 18,030,160.88 79,681,187.34 15,877,516.64
合计 198,270,859.16 39,262,681.94 176,973,932.31 33,964,334.33
Deferred tax assets and liabilities are offset and presented as a net amount:
2023 2022
Offset balance Offset amount Offset balance
Deferred tax assets 30,408,387.66 255,872,409.78 27,138,883.56 244,542,124.61
Deferred tax liabilities 30,408,387.66 8,854,294.28 27,138,883.56 6,825,450.77
Deductible temporary differences and deductible losses not recognized as deferred tax assets are as follows:
2023 2022
Deductible temporary differences 3,925,408.90 9,196,588.97
Deductible losses 149,803,433.80 90,723,784.03
153,728,842.70 99,920,373.00
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
22. Deferred tax assets/liabilities (cont’d)
Deductible temporary differences and tax losses not recognized as deferred tax assets will expire as follows:
2023 2022
2023 - 11,447,032.87
2024 4,418,846.10 493,437.20
2025 13,984,168.64 13,984,168.64
2026 12,841,957.31 12,841,957.31
2027 73,324,757.62 61,153,776.98
2028 49,159,113.03 -
153,728,842.70 99,920,373.00
The Company has accrued deferred tax assets of RMB168,933,394.30 (2022: RMB164,436,231.16) for the
accumulated deductible losses of RMB1,126,222,628.65 based on the forecast of its profits in the next five
years.
23. Other non-current assets
2023 2022
Prepayment for acquisition of long-term assets 87,122,697.89 45,320,004.82
Certificates of deposit 10,248,630.14 -
Others 66,274.25 -
97,437,602.28 45,320,004.82
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
24. Assets with restricted ownership or right of use
2023
2023 2022 Limited type
Deposit, pledge and Note 1
Cash and bank balances 153,905,292.65 40,726,502.47 freezing
Fixed assets 4,460,554.82 4,409,110.42 Mortgage Note 2
Current portion of
non-current assets - 310,300,000.00
合计 158,365,847.47 355,435,612.89
Note 1：At 31 December 2023, currency funds with carrying amount of RMB153,157,792.65 were used to
obtain deposits for bank acceptance bills, letters of guarantee, loans, forward settlement and sales
and other payments (31 December 2022: RMB40,726,502.47); currency funds with carrying amount
of RMB480,000.00 are pledged as time deposits (31 December 2022: Nil); currency funds with
carrying amount of RMB267,500.00元 were legally frozen (31 December 2022: Nil).
Note 2 ： At 31 December 2023, a carrying amount of RMB4,460,554.82 (31 December 2022 :
RMB4,409,110.42) of fixed assets was pledged for the Group to obtain bank loans with a maturity
until 2030.
25. Short-term borrowings
2023 2022
Guaranteed loan 260,544,181.40 2,800,000.00
Credit loan 89,544,237.78 39,015,129.24
Bills discounted 20,461,553.62 -
370,549,972.80 41,815,129.24
26. Financial liabilities held for trading
2023 2022
Financial liabilities at fair value through profit
or loss
Non-controlling interests put options 115,900,827.21 57,022,555.58
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
27. Notes payable
2023 2022
Bank acceptance notes 152,433,276.09 149,918,253.31
As at 31 December 2023, outstanding notes payable upon maturity were nil (31 December 2022: nil).
28. Accounts payable
2023 2022
Purchases of inventories 737,544,841.42 748,319,561.21
As at 31 December 2023, substantial accounts payable with aging over 1 year were nil (31 December 2022 :
nil).
29. Contract liabilities
2023 2022
Contract liabilities 645,608,919.34 692,567,968.60
As at 31 December 2023, there were no significant contract liabilities with aging over one year (31
December 2022: Nil).
Information about contractual performance obligations is as follows:
Corrugator line, corrugated case printing and packaging equipment and outboard engine sales
Fulfill the contractual performance obligations when relevant products are delivered to the customers and the
control over the equipment is transferred. For all customers, the contract price usually expires within 1 to 12
months after relevant products are delivered and the control over the equipment is transferred.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
30. Employee benefits payable
Increase in Decrease in
Opening balance Closing balance
the period the period
Short-term benefits 114,133,461.02 733,377,200.69 707,948,798.51 139,561,863.20
Retirement benefits
(defined contribution
schemes) 9,561,867.29 98,552,268.20 94,393,066.59 13,721,068.90
123,695,328.31 831,929,468.89 802,341,865.10 153,282,932.10
Short-term benefits are as follows:
Increase in Decrease in
Opening balance Closing balance
the period the period
Salaries, bonuses,
allowances and
subsidies 108,414,374.41 649,112,978.61 624,884,133.01 132,643,220.01
Employee welfare 4,716,503.25 33,218,545.65 32,179,239.12 5,755,809.78
Social security
contributions 554,100.71 44,785,261.93 45,043,640.70 295,721.94
Including: Medical
insurance 529,159.87 30,520,045.91 30,806,528.96 242,676.82
Work injury insurance 23,264.84 13,679,631.47 13,665,963.18 36,933.13
Maternity insurance 1,676.00 585,584.55 571,148.56 16,111.99
Housing funds 22,348.00 5,106,643.42 4,514,919.42 614,072.00
Labour union funds and
employee education
funds 426,134.65 1,153,771.08 1,326,866.26 253,039.47
114,133,461.02 733,377,200.69 707,948,798.51 139,561,863.20
Defined contribution schemes are as follows:
Increase in Decrease in
Opening balance Closing balance
the period the period
Basic endowment
insurance 9,553,228.48 97,986,576.10 93,836,694.52 13,703,110.06
Unemployment insurance 8,638.81 565,692.10 556,372.07 17,958.84
9,561,867.29 98,552,268.20 94,393,066.59 13,721,068.90
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
31. Tax payable
2023 2022
Value-added tax 5,649,692.90 2,794,718.85
Corporate income tax 45,973,508.11 9,990,213.17
Individual income tax 11,897,332.76 9,978,972.79
City maintenance and construction tax 430,752.88 552,631.31
Education surcharge 307,070.00 411,264.85
Property tax 2,731,038.94 218,184.92
Stamp duties 151,505.57 109,070.84
Land use tax 468,302.25 47,325.67
Others - 9,321.30
67,609,203.41 24,111,703.70
32. Other payables
2023 2022
Other payables 126,415,425.61 90,080,142.50
Other payables
2023 2022
Accrued expenses 53,166,304.73 36,647,193.30
Repurchase obligation of restricted shares 2,290,000.00 28,440,000.00
Payables for settled lawsuit 3,311,817.37 3,127,963.30
Security deposits 2,557,648.92 4,807,183.50
Equity acquisition 31,587,327.06 -
Others 33,502,327.53 17,057,802.40
126,415,425.61 90,080,142.50
As at 31 December 2023, substantial other payables with aging over 1 year were nil (31 December 2022 :
nil).
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
33. Current portion of non-current liabilities
2023 2022
Current portion of long-term borrowings 35,871,630.01 295,113,556.27
Of which: Pledge loan - 254,610.59
Mortgage loan 249,305.06 7,100,000.00
Guaranteed loan 20,683,642.46 263,030,910.73
Credit loan 14,938,682.49 24,728,034.95
Current portion of lease liabilities 21,129,766.43 20,653,874.99
57,001,396.44 315,767,431.26
34. Other current liabilities
2023 2022
Endorsed notes receivable 5,375,919.77 1,449,810.18
Output tax to be written off 3,769,255.24 4,539,069.11
9,145,175.01 5,988,879.29
35. Long-term borrowings
2023 2022
Pledge loan - 2,262,533.40
Mortgage loan 2,150,669.29 7,100,000.00
Guaranteed loan 55,374,274.02 296,130,679.37
Credit loan 57,454,387.85 47,504,838.39
Of which: Current portion of long-term
borrowings (35,871,630.01) (295,113,556.27)
79,107,701.15 57,884,494.89
As at 31 December 2023, the annual interest rates of the above borrowings ranged from 0.0% to 5.65% (31
December 2022: 0.0%-4.55%).
As at 31 December 2023 and 31 December 2022, the Group has no loans overdue.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
36. Lease liabilities
2023 2022
Lease payments 86,991,207.75 89,642,986.32
Less: Current portion of non-current liabilities 21,129,766.43 20,653,874.99
65,861,441.32 68,989,111.33
37. Long-term employee benefits payable
2023 2022
Net liabilities of defined benefit schemes 13,964,394.20 13,179,944.17
13,964,394.20 13,179,944.17
Movements in the present value of defined benefit obligations are as follows:
2023 2022
Opening balance 13,179,944.17 16,083,170.32
Included in profit or loss
Current service cost 298,718.86 209,406.84
Net interest 60,856.56 485,893.76
Included in other comprehensive income
Actuarial gains or losses 44,025.32 (1,948,490.61)
Other changes
Benefits paid (394,106.12) (2,102,700.40)
Effect of exchange rate movements 774,955.41 452,664.26
Closing balance 13,964,394.20 13,179,944.17
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
37. Long-term employee benefits payable(cont’d)
Defined benefit schemes refer to retirement compensation (Trattamento di Fine Rapporto, for short, “TFR”)
of the Group according to Italian regulations. The latest actuarial valuation of the scheme assets and the
present value of the obligation associated with the defined benefit scheme were determined as at 31
December 2022 by Italian actuarial institution Managers & Partners – Actuarial Services S.p.A. using the
expected accumulated benefit unit method.
Key actuarial assumptions used as at the balance sheet date are as follows:
2023 2022
Separation rate 2.50% 2.50%
Inflation rate 2.00% 2.30%
Discount rate 3.08% 3.63%
The quantitative sensitivity analysis of key assumptions used is as follows:
2023
Increase/(decreas Increase/(decreas
e) in obligations e) in obligations
Increase of defined Decrease of defined
% benefit scheme % benefit scheme
Separation rate 1.00 22,821.94 1.00 (25,101.66)
Inflation rate 0.25 86,826.24 0.25 (85,238.92)
Discount rate 0.25 (134,531.35 ) 0.25 139,045.20
2022
Increase/(decreas Increase/(decreas
e) in obligations e) in obligations
Increase of defined Decrease of defined
% benefit scheme % benefit scheme
Separation rate 1.00 73,125.51 1.00% (2,644.11)
Inflation rate 0.25 120,180.83 0.25% (44,483.29)
Discount rate 0.25 (91,077.57) 0.25% 169,657.13
The above sensitivity analysis is based on an inference of the impact of key assumptions on the defined
benefit scheme obligation at a reasonable change on the balance sheet date. Sensitivity analysis is made
according to the changes in major assumptions on the premise that other assumptions remain unchanged.
Since the changes in assumptions are often not isolated from one another, sensitivity analysis may not
represent an actual change in the defined benefit obligation.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
38. Provisions
Increase in Decrease in
Opening balance Closing balance
the period the period
Product quality warranty 108,406,154.83 93,250,839.58 65,852,506.29 135,804,488.12
Others 10,539,798.95 25,349,468.65 3,334,801.88 32,554,465.72
118,945,953.78 118,600,308.23 69,187,308.17 168,358,953.84
39. Deferred income
Increase in Decrease in
Opening balance Closing balance
the period the period
Government grants 11,073,651.66 - 1,116,660.00 9,956,991.66
40. Other non-current liabilities
2023 2022
Purchase obligations of non-controlling interest
options 16,941,926.93 132,077,339.29
Other 5,476,927.87 4,318,953.26
22,418,854.80 136,396,292.55
The option repurchase obligation relates to the non-controlling interests of QCorr and Parsun Power. At 31
December 2023, the Group recognized other non-current liabilities of RMB16,941,926.93 (31 December
2022: RMB132,077,339.29) based on evaluation. As at 31 December 2023, the repurchase obligation period
of minority shareholders' put options of Parsun Power was one year, which was transferred from other
non-current liabilities to financial liabilities held for trading.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
41. Share capital
Opening balance Movement Closing balance
Others Total
Total
share
capital 1,241,106,400.00 (488,000.00) (488,000.00) 1,240,618,400.00
For the current year, the total number of shares cancelled by the Company was 488,000 shares, and the total
number of shares of the Company changed from 1,241,106,400 shares to 1,240,618,400 shares after the
cancellation.
42. Capital surplus
Increase in Decrease in
Opening balance the period the period Closing balance
(Note 1) (Note 2)
Share
premium 2,848,837,575.96 - 96,604,986.05 2,752,232,589.91
Others 98,426,267.57 39,270,139.73 - 137,696,407.30
2,947,263,843.53 39,270,139.73 96,604,986.05 2,889,928,997.21
Note 1: Increases of capital surplus in the period are as follows:
（1） The Company’s share-based payments in the period were included in shareholder’s equity and increased
other capital surplus by RMB 22,151,043.21.
（2） The Company acquired 10.8% non-controlling interests of its subsidiary Fosber Asia in the period,
increasing other capital surplus by RMB 16,075,092.29.
（3） Other equity of the Company’s associated enterprises changed, increasing other capital surplus by RMB
1,044,004.23.
Note 2: Decreases of capital surplus in the period are as follows:
（1） The Company retired a total of 488,000 shares in the period (as described in Item 41 of Note V),
reducing other capital surplus by RMB 1,744,093.01.
（2） The Company’ share-based payments unlocked 25,662,000 shares in the period, reducing other capita l
surplus by RMB 94,838,368.04.
（3） The Company repurchsed shares in the period, which resulted in payment of related commissions and
charges, reducing other capital surplus by RMB 22,525.00.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
43. Treasury shares
Increase in Decrease in
Opening the period the period
balance (Note) (Note) Closing balance
Share
repurchase 240,255,502.45 107,553,284.40 129,510,254.06 218,298,532.79
240,255,502.45 107,553,284.40 129,510,254.06 218,298,532.79
Note: Changes in the period are as follows:
The increase in treasury shares was driven by the Company’s repurchase of shares in the period, and the
decrease in treasury shares was mainly driven by the Company’s retirement of shares in the period (as
described in Item 41 of Note V).
44. Other comprehensive income
Cumulative balance of other comprehensive income attributable to shareholders of the Company in the
consolidated balance sheet:
2023
1 January 2023 Change 31 December 2023
Changes due to remeasurement
of defined benefit schemes 1,209,005.83 (44,025.32) 1,164,980.51
Differences arising from the
translation of foreign
currency-denominated
financial statements 25,347,883.31 48,653,186.77 74,001,070.08
Others (43,972.07) - (43,972.07)
26,512,917.07 48,609,161.45 75,122,078.52
2022
1 January 2022 Change 31 December 2022
Changes due to remeasurement
of defined benefit schemes (647,558.19) 1,856,564.02 1,209,005.83
Differences arising from the
translation of foreign
currency-denominated
financial statements (32,631,132.72) 57,979,016.03 25,347,883.31
Others (43,972.07) - (43,972.07)
(33,322,662.98) 59,835,580.05 26,512,917.07
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
44. Other comprehensive income (cont’d)
Other comprehensive income:
2023
Before tax Less: Attributable to Attributable to
Income tax owners of the parent non-controlling
interests
Other comprehensive income
that will not be reclassified
to profit or loss
Changes caused by
remeasurements on
defined benefit schemes (44,025.32) - (44,025.32) -
Other comprehensive income
that will be reclassified to
profit or loss
Differences arising from
the translation of foreign
currency-denominated
financial statements 48,118,257.53 - 48,653,186.77 (534,929.24)
-
48,074,232.21 - 48,609,161.45 (534,929.24)
2022
Before tax Less: Attributable to Attributable to
Income tax owners of the parent non-controlling
interests
Other comprehensive income
that will not be reclassified
to profit or loss
Changes caused by
remeasurements on
defined benefit schemes 1,856,564.02 - 1,856,564.02
Other comprehensive income
that will be reclassified to
profit or loss
Differences arising from the
translation of foreign
currency-denominated
financial statements 55,080,204.63 - 57,979,016.03 (2,898,811.40)
56,936,768.65 - 59,835,580.05 (2,898,811.40)
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
45. Special reserve
Provision in Ultilisation in
Opening balance Closing balance
the period the period
Expenses for
Safety
Production 14,488,955.52 5,118,146.78 3,377,285.27 16,229,817.03
46. Surplus reserves
Increase in Decrease in
Opening balance the period the period Closing balance
Statutory
surplus
reserves 51,830,974.45 - - 51,830,974.45
51,830,974.45 - - 51,830,974.45
Pursuant to the Company Law, when the Company allocates after-tax profits of the year, the Company shall
set aside 10% net profit after making up losses in previous years as its statutory surplus reserves. When the
Company’s statutory reserves are not enough to make up losses in previous years, the Company shall first
make up the losses with profits in the year before it withdraws statutory surplus reserves according to the
above-mentioned regutlation. As there is still losses that can be made up in the Company’s account, statutory
surplus reserves are not made in the current year.
47. Retained earnings
2023 2022
Opening retained earnings 23,018,722.11 (424,159,175.27)
Net profit attributable to owners of the parent 433,240,237.44 447,177,897.38
Closing retained earnings 456,258,959.55 23,018,722.11
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
48. Operating revenue and costs
2023 2022
Revenue Costs Revenue Costs
Principal
operations 4,711,802,008.34 3,335,255,728.46 3,861,267,826.14 2,811,064,346.64
Other
operations 33,935,313.49 24,272,817.55 31,440,683.50 22,241,401.90
4,745,737,321.83 3,359,528,546.01 3,892,708,509.64 2,833,305,748.54
Breakdown of operating revenue arising from contracts with customers is as follows:
2023
Reporting segments
Principal product type
Goods 4,345,601,360.53
Services 398,874,776.36
4,744,476,136.89
Principal operating segment
Mainland China 744,020,072.39
Other regions 4,000,456,064.49
4,744,476,136.88
By revenue recognition time
Revenue recognition at a point of time 4,345,601,360.53
Revenue recognition for a period of time 398,874,776.36
4,744,476,136.89
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
48. Operating revenue and costs (cont’d)
Breakdown of operating revenue arising from contracts with customers is as follows: (cont’d)
2022
Reporting segments
Principal product type
Goods 3,530,766,862.10
Services 360,640,124.60
3,891,406,986.70
Principal operating segment
Mainland China 441,664,388.05
Other regions 3,449,742,598.65
3,891,406,986.70
By revenue recognition time
Revenue recognition at a point of time 3,530,766,862.10
Revenue recognition for a period of time 360,640,124.60
3,891,406,986.70
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
48. Operating revenue and costs (cont’d)
Breakdown of operating cost arising from contracts with customers is as follows:
Reporting segments
Principal product type
Goods 3,034,567,411.11
Services 324,961,134.90
3,359,528,546.01
Principal operating segment
Mainland China 559,477,908.69
Other regions 2,800,050,637.32
3,359,528,546.01
By revenue recognition time
Revenue recognition at a point of time 3,034,567,411.11
Revenue recognition for a period of time 324,961,134.90
3,359,528,546.01
Revenue recognized that was included in contract liabilities at the beginning of the year:
2023 2022
Sales payment in advance 581,304,573.91 334,296,679.75
240 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
48. Operating revenue and costs (cont’d)
Information about the Group's performance obligations is as follows:
Timing of Significant Nature of Whether the Expected Types of
satisfaction of payment goods principal refunds to warranties and
performance terms promised to customers related
obligations transfer obligations
80%-90% Sales of
payment machinery
Sales of Upon before and parts Statutory
goods delivery delivery Yes Nil warranties
Installation
and
Provision During maintenance
of services service After service service Yes Nil Nil
Payment
based on
Provision During service Warranties
of services service progress for services Yes Nil Nil
The expected time for recognizing in revenue the total transaction price allocated to outstanding contractua l
performance obligations as at the period-end is as follows:
2023 2022
Within 1 year 645,608,919.34 692,567,968.60
49. Taxes and surcharges
2023 2022
City maintenance and construction tax 4,201,309.37 3,556,299.02
Education surcharge 1,912,550.12 1,354,323.03
Property tax 5,039,330.50 4,472,175.71
Land use tax 800,993.84 518,958.69
Vehicle and vessel tax 14,719.14 11,064.76
Stamp tax 1,212,137.29 836,666.85
Local education surcharge 1,200,374.13 892,159.78
Environmental protection tax 25,023.33 16,321.08
Others 146,392.37 298,321.03
14,552,830.09 11,956,289.95
241 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
50. Selling expenses
2023 2022
Commissions and agency fees 65,569,469.47 47,370,007.70
Employee benefits and equity incentive
expenses 73,673,180.14 56,966,000.14
Product quality warranties 78,496,207.90 42,349,630.26
Advertising and exhibition expenses 19,791,182.47 7,889,277.47
Travel expenses 12,198,575.02 11,572,146.49
Office expenses 2,469,847.27 2,216,107.13
Depreciation and amortization expenses 2,828,742.50 1,327,867.77
Other expenses 23,813,324.16 12,864,838.75
278,840,528.93 182,555,875.71
51. Administrative expenses
2023 2022
Employee benefits 178,922,030.42 151,890,144.23
Depreciation and amortization expenses 27,465,333.94 30,683,414.09
Intermediary expenses 35,873,535.50 32,748,743.44
Equity incentives 14,812,302.40 28,245,389.68
Office expenses 17,171,371.14 15,241,253.59
Travel and reception expenses 15,935,791.58 9,797,492.56
Conference expenses 11,643,977.90 11,037,605.97
Property management expenses 5,547,279.55 3,168,050.31
Maintenance expenses 1,347,244.81 1,060,687.27
Car expenses 1,725,795.42 814,131.46
Materials consumption 2,180,990.32 1,857,128.89
Rental expenses 6,603,503.97 4,952,760.91
Other expenses 24,995,535.56 19,966,810.76
344,224,692.51 311,463,613.16
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
52. R&D expenses
2023 2022
Employee benefits and equity incentive
expenses 79,930,804.74 64,751,562.30
Depreciation and amortization expenses 18,038,231.99 12,327,999.54
Material expenses 13,107,475.15 11,111,028.94
Utilities 1,939,154.97 1,708,605.10
Assembly testing and debugging expenses 770,749.65 176,934.19
Other expenses 13,780,065.92 7,878,323.33
127,566,482.42 97,954,453.40
53. Finance costs
2023 2022
Interest expenses 24,236,011.48 13,839,292.38
Less: Interest income 35,308,583.52 19,042,851.72
Exchange losses 3,836,892.35 (6,540,524.94)
Others 6,146,062.99 2,773,390.59
(1,089,616.70) (8,970,693.69)
54. Other income
2023 2022
Government grants related to routine activities 15,006,349.35 20,754,916.28
Refund of handling charges for individual income
tax withheld 740,944.47 178,461.16
15,747,293.82 20,933,377.44
243 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
55. Investment income
2023 2022
Income from long-term equity investments
measured at equity method (2,259,252.98) 1,851,796.60
Income from financial assets held for trading 12,718,052.00 17,279,281.22
Interest income from certificates of deposit
during the holding period 248,630.14 -
10,707,429.16 19,131,077.82
56. Gains and losses on changes in fair value
2023 2022
Financial assets at fair value through profit or
loss 38,915,711.89 13,423,921.51
Financial liability at fair value through profit or
loss - (844,476.88)
Changes in fair value of non-controlling
interests call/put options 8,472,193.22 5,337,601.98
47,387,905.11 17,917,046.61
57. Credit impairment loss
2023 2022
Loss on doubtful accounts receivable 10,481,070.60 4,417,400.72
Allowances losses for other receivables (2,756.83) 681,873.15
Impairment loss on contract assets 63,603.00 10,701.00
10,541,916.77 5,109,974.87
244 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
58. Asset impairment loss
2023 2022
Inventory valuation loss 17,341,157.47 10,867,629.33
Reversed impairment loss on contract assets (124,060.08) 1,928,694.23
17,217,097.39 12,796,323.56
59. Gains and losses on disposal of assets
2023 2022
Gain/(loss) on disposal of fixed assets 716,995.85 (168,835.37)
60. Non-operating income
Recognized in
exceptional gains
2023 2022 and losses of 2023
Compensation fee - 283,274.15 -
Penalty income 229,338.58 - 229,338.58
Equity compensation 1,686,462.38 - 1,686,462.38
Others 4,058,840.21 2,176,293.18 4,058,840.21
5,974,641.17 2,459,567.33 5,974,641.17
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
61. Non-operating expenses
Recognized in
exceptional gains
2023 2022 and losses of 2023
Loss on disposal of
non-current assets 23,374.33 182,551.41 23,374.33
Donations 450,624.37 224,849.92 450,624.37
Tax penalties and
interest expense 14,800,942.90 - 14,800,942.90
Others 877,433.58 473,443.92 877,433.58
16,152,375.18 880,845.25 16,152,375.18
62. Income tax expenses
2023 2022
Current income tax expenses 194,787,159.35 83,948,000.57
Deferred tax expenses (6,389,006.63) (61,760,709.14)
188,398,152.72 22,187,291.43
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
62. Income tax expenses (cont’d)
Reconciliation between income tax expenses and gross profit is as follows:
2023 2022
Gross profit 658,736,734.34 505,928,312.72
Income tax calculated at applicable tax rates
(Note 1) 98,810,510.15 75,889,246.91
Different tax rates for specific provinces or
enacted by local authority 53,504,528.96 18,881,060.06
Adjustment to current income tax in previous
periods 482,708.87 (775,371.61)
Supplementary income tax paid by overseas
subsidiaries (Note 2) 40,581,711.74 -
Income not subject to tax - (471,554.32)
Over-deduction for R&D (10,372,245.63) (9,884,156.68)
Expenses not deductible for tax 9,450,693.56 5,666,686.60
Utilization and recognition of deductible losses
of previous periods (249,117.78) (82,173,231.29)
Effect of unrecognized deductible temporary
differences and deductible losses (3,810,637.15) 15,054,611.76
Income tax expenses 188,398,152.72 22,187,291.43
Note 1: The provision for income tax of the Group was recognized based on the estimated taxable income to
be derived from mainland China and applicable tax rate. Taxable income derived from other jurisdictions
shall be taxed based on applicable tax rate in accordance with the current laws, interpretations and
conventions in the country/jurisdiction where the Group operates.
Note 2: Fosber Group, a subsidiary of the Group, reached a tax settlement with the Italian Revenue Agency
in October 2023 and paid taxes owed.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
63. Earnings per share
2023 2022
RMB/share RMB/share
Basic earnings per share
Continuing operations 0.36 0.37
Diluted earnings per share
Continuing operations 0.36 0.37
Basic earnings per share is computed by dividing the net profit attributable to ordinary shareholders of the
Company for the period by the weighted average number of ordinary shares in issue.
In the calculation of diluted earnings per share, the numerator shall be determined based on the net profit
attributable to ordinary shareholders of the Company for the period after adjusting the following factors: (1)
the interest of diluted potential ordinary shares that have been recognized as expenses in the period; (2) gains
or expenses that will be incurred when the diluted potential ordinary shares are converted; and (3) the
income tax impact related to the above adjustments.
In the calculation of diluted earnings per share, the denominator shall be the sum of: (1) weighted average
number of ordinary shares of the Company in issue adopted in the calculation of basic earnings per share;
and (2) weighted average number of ordinary shares created assuming conversion of potentially dilutive
ordinary shares into ordinary shares.
In calculating the weighted average number of ordinary shares created upon conversion of potentially
dilutive ordinary shares into ordinary shares, potentially dilutive ordinary shares issued in previous periods
are assumed to have been converted at the beginning of the current period, whereas potentia lly dilutive
ordinary shares issued in the current period are assumed to have been converted on the date of issue.
Calculations of basic and diluted earnings per share are as follows:
2023 2022
Earnings
Net profit attributable to ordinary shareholders of the
Company for the period 433,240,237.43 447,177,897.38
Shares
Weighted average number of ordinary shares in issue
of the Company 1,202,048,618.00 1,214,301,810.17
Diluting effect——weighted average number of
ordinary shares - 8,044,635.29
Adjusted weighted average number of ordinary
shares in issue of the Company 1,202,048,618.00 1,222,346,445.46
V. Notes to the Consolidated Financial Statements (cont’d)
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
64. Notes to cash flow statement line items
(1) Cash related to operating activities
2023 2022
Cash generated from other operating activities
Government grants 17,630,633.82 19,804,538.17
Interest income 35,811,051.77 9,167,093.01
Current accounts and others 5,369,286.45 8,441,791.07
Guarantee deposit received 1,674,968.57 -
Deposits 2,600,000.00 -
63,085,940.61 37,413,422.25
Cash used in other operating activities
Selling expenses in cash 167,635,219.01 130,038,891.90
Administrative expenses in cash 122,829,444.94 105,291,187.76
R&D expenses in cash 18,407,566.42 13,993,627.09
Security deposits 2,145,000.00 2,187,739.39
Letter of guarantee paid 1,821,640.29 695,566.59
Tax penalties and interest paid by overseas
subsidiaries 14,800,942.90 -
Current accounts and others 15,800,877.30 28,045,564.77
343,440,690.86 280,252,577.50
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
64. Notes to cash flow statement line items (Cont’d)
(2) Cash related to investing activities
2023 2022
Cash received relating to significant investing
activities
Disposal/redemption of financial assets held
for trading 2,665,803,265.78 5,299,709,934.05
2,665,803,265.78 5,299,709,934.05
Cash payments relating to significant investing
activities
Purchase of financial assets held for trading 2,581,570,596.21 5,276,995,616.79
Purchase of equity investments 50,000,000.00 133,225,000.00
Acquisition of subsidiaries - 173,800,000.00
Increase in capital of associates 20,000,000.00 -
2,651,570,596.21 5,584,020,616.79
2023 2022
Cash generated from other investing activities
Performance compensation - 741,402.85
Investment deposit - 20,000,000.00
- 20,741,402.85
Cash used in other investing activities
Investment deposit - 20,000,000.00
- 20,000,000.00
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
64. Notes to cash flow statement line items (cont’d)
(3) Cash related to financing activities
2023 2022
Cash generated from other financing activities
Security deposits for bank acceptance notes 87,228,875.76 177,363,575.61
Security deposits recovered for internal
guarantees for external loans 310,300,000.00 420,000,000.00
Security deposits for loan 17,700,000.00 140,000,000.00
Share subscription 561,989.99 2,762,000.00
415,790,865.75 740,125,575.61
Cash used in other financing activities
Share repurchase 101,286,016.39 215,606,658.62
Security deposits paid for loans 107,345,506.70 210,000,000.00
Security deposits for bank acceptance notes 91,719,487.52 170,580,626.43
Payment of loan deposits 17,700,000.00 -
Purchase of non-controlling interests 36,698,456.01 50,866,860.00
Lease and interest payments 23,291,683.40 26,324,405.01
378,041,150.02 673,378,550.06
Changes in liabilities arising from financing activities：
Opening Changes in the current period Closing
Non-cash
balance Changes in cash changes balance
Short-term
borrowing 41,815,129.24 317,848,152.63 10,886,690.93 370,549,972.80
Long-term
borrowings
(Including current
portion of
long-term
borrowings) 352,998,051.16 (249,849,654.27 ) 11,830,934.27 114,979,331.16
Lease liabilities
(Including current
portion of
non-current
liabilities) 89,642,986.32 (23,291,683.40) 20,639,904.83 86,991,207.75
484,456,166.72 44,706,814.96 43,357,530.03 572,520,511.71
251 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
64. Notes to cash flow statement line items (cont’d)
(4) Major non-cash transactions
2023 2022
Non-cash additions to right-of-use assets and
lease liabilities 15,851,684.86 36,996,563.25
65. Supplemental information on statement of cash flows
(1) Supplemental information on statement of cash flows
Reconciliation of net profit to net cash generated from/used in operating activities:
2023 2022
Net profit 470,338,581.62 483,741,021.29
Add: Asset impairment allowances 17,217,097.39 12,796,323.56
Credit impairment loss 10,541,916.77 5,109,974.87
Depreciation of fixed assets 50,741,679.84 46,764,632.53
Depreciation of right-of-use assets 22,066,835.06 22,658,947.90
Amortization of intangible assets 23,060,612.28 22,931,485.79
Amortization of long-term prepaid
expenses 12,487,219.53 5,992,219.61
Gain an loss on disposal of fixed assets,
intangible assets and other long-lived
assets (716,995.85) 168,835.37
Loss on retirement of fixed assets 14,608.43 182,551.41
Loss on changes in fair value (47,387,905.11) (17,917,046.61)
Finance costs 10,697,674.87 3,689,292.38
Investment income (10,707,429.16) (19,131,077.82)
Increase in deferred tax assets (11,297,358.96) (63,715,107.07)
Decrease in deferred tax liabilities 1,995,917.30 1,377,055.21
Increase in inventories (65,829,716.73) (181,404,611.30)
Decrease in operating receivables (7,194,337.99) (237,029,947.97)
Increase/(decrease) in operating payables (27,468,741.59) 385,587,050.58
Others 38,621,080.96 34,492,861.22
Net cash generated from/used in operating
activities 487,180,738.66 506,294,460.95
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
65. Supplemental information on statement of cash flows (cont’d)
(1) Supplemental information on statement of cash flows (cont’d)
Net change in cash and cash equivalents:
2023 2022
Closing balance of cash 1,672,514,611.84 1,233,720,697.27
Less: Opening balance of cash 1,233,720,697.27 1,259,303,775.74
Add: Closing balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net increase/(decrease) in cash and cash equivalents 438,793,914.57 (25,583,078.47)
(2) Cash and cash equivalents
2023 2022
Cash 1,672,514,611.84 1,233,720,697.27
Including: cash on hand 438,600.93 587,935.98
Bank deposits readily available 1,491,798,403.81 1,011,564,164.21
Other cash and bank balances readily available 180,277,607.10 221,568,597.08
Cash equivalents - -
Closing balance of cash and cash equivalents 1,672,514,611.84 1,233,720,697.27
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
66. Monetary items in foreign currencies
Original Exchange
currency rate RMB equivalent
Cash and bank balances
Including: USD 80,302,039.41 7.0827 568,755,254.53
EUR 73,240,243.64 7.8592 575,609,722.82
HKD 35,359.65 0.9062 32,042.91
GBP 127,253.74 9.0411 1,150,513.79
Accounts receivable
Including: USD 4,893,301.00 7.0827 34,657,782.99
EUR 100,864,530.83 7.8592 792,714,520.70
Contract assets
Including: USD 2,004,010.68 7.0827 14,193,806.44
EUR 780,000.00 7.8592 6,130,176.00
Other receivables
Including: EUR 11,302,383.25 7.8592 88,827,690.44
Accounts payable
Including: EUR 66,186,982.45 7.8592 520,176,732.47
Short-term borrowings
Including: EUR 40,923,811.48 7.8592 321,628,419.18
Current portion of non-current
liabilities
Including: EUR 4,628,126.57 7.8592 36,373,372.34
Long-term borrowings
Including: EUR 5,938,479.89 7.8592 46,671,701.15
Lease liabilities
Including: EUR 6,342,369.65 7.8592 49,845,951.55
Other payables
Including: USD 556,146.02 7.0827 3,939,015.42
EUR 1,943,772.81 7.8592 15,276,499.27
3,075,983,202.00
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
V. Notes to the Consolidated Financial Statements (cont’d)
66. Monetary items in foreign currencies (cont’d)
The principal places of business overseas, the functional currencies and their determination basis of the major
overseas business entities included in the consolidated financial statements are as follows:
Major overseas Principal place Functional Determination basis
business entities of business currency
Fosber Group Italy EUR Settlement currency for local
business activities
Fosber America America USD Settlement currency for local
business activities
Italy EDF Italy EUR Settlement currency for local
business activities
Tirua Group Spain EUR Settlement currency for local
business activities
67. Leases
(1) As lessee
2023 2022
Interest expense on lease liabilities 2,382,929.15 2,474,602.57
Short term lease expense through profit or loss
adopting simplified approach 7,855,599.28 1,205,273.76
Total cash outflows related to lease 31,319,311.36 29,438,261.70
Assets leased by the Group include houses and buildings, and transportation equipment used in the course of
business,the lease term of houses,buildings and machinery is usually 8 years, and the lease term of
transportation equipment is usually 3 years. The lease contract does not contain terms such as renewal
option, termination option and variable rent. No effect of variable rent terms on potential future cash
outflows.
For the right-of-use assets, see Note V.17; for the simplified approach on short-term leases and leases of
assets of low value, see Note III.26; for lease liabilities, see Note V.33&36.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
VI. R&D expenditure
Classified by nature as follows:
2023 2022
Employee benefits and equity incentive
expenses 81,261,816.52 67,601,154.68
Depreciation and amortization expenses 18,194,502.36 12,874,846.10
Material expenses 13,113,046.67 11,172,857.69
Utilities 1,939,154.97 1,708,605.10
Assembly testing and debugging expenses 770,749.65 176,934.19
Other expenses 13,919,014.47 8,122,285.40
129,198,284.64 101,656,683.16
Of which：Capitalized R&D expenses 127,566,482.42 97,954,453.40
Expensed R&D expenditure 1,631,802.22 3,702,229.76
R&D expenditures eligible for capitalization are as follows:
Opening Increase in Decrease in Closing
balance the period the period balance
Internal Recognition of
research and intangible assets
development
Data Platform Project 108,069.78 1,011,090.52 (1,119,160.30 ) -
Business Platform
Project 2,874,316.59 119,643.15 (2,993,959.74 ) -
IoT Platform Project 719,843.39 501,068.55 (1,220,911.94 ) -
3,702,229.76 1,631,802.22 (5,334,031.98 ) -
Capitalized R&D projects are as follows:
Expected
economic Commencem
benefits ent point for Specific basis for
R&D Expected generation capitalizatio commencement of
progress completion date method n capitalization
Product sales Approval of project
Data Platform Closed on Closed on development
Project 2023/8/18 2023/8/18 decision review
2022/12/4 report
Product sales Approval of project
Closed on Closed on development
IoT Platform 2023/4/26 2023/4/26 decision review
Project 2022/9/14 report
Approval of project
Closed on Closed on development
Business Platform 2023/4/26 2023/4/26 decision review
Project Product sales 2022/5/31 report
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
VII. Interests in Other Entities
1. Interests in subsidiaries
Particulars of the subsidiaries of the Company are as follows:
Principal place Place of Business Registered The Company’s
of business registration nature capita interest(%)
Direct Indirect
Subsidiaries acquired by way of incorporation or investment
Dongfang Precision (HK) HK HK Trading USD300,000 100.00 -
Dongfang Precision (Netherland) Netherland Netherland Trading EUR40,000 90.00 10.00
Fosber Asia Foshan, Foshan,
Guangdong, China Guangdong, China Manufacturing RMB29,581,891 100.00 -
Italy QCorr Italy Italy Manufacturing EUR375,000 - 60.00
Suzhou High-Tech Zone Jinquan Business Management Partnership Suzhou, Suzhou,
(Limited Partnership)*(“High-Tech Zone Jinquan”) Jiangsu, China Jiangsu, China Investment RMB10,553,000 - 1.23
Suzhou Parsun Power Technology Co., Ltd. (“Parsun Power Suzhou, Suzhou,
Technology”) Jiangsu, China Jiangsu, China Trading RMB10million - 70.63
Suzhou Baisheng International Trade Co., Ltd. (“Baisheng Suzhou, Suzhou,
International”) Jiangsu, China Jiangsu, China Trading RMB3 million - 70.63
Haikou, Hainan, Haikou, Hainan, China Industrial
Dongfang Digicom Data Technology Co., Ltd. (“Dongfang Digicom”) China Internet RMB100 million 100.00 -
Dongfang Digicom Data Technology (Guangdong) Co., Ltd. (“Dongfang Foshan, Foshan, Industrial
Digicom (Guangdong)”) Guangdong, China Guangdong, China Internet RMB8 million 100.00 -
Haikou, Hainan, Haikou, Hainan, China
Hainan Yineng Investment Co., Ltd. (“Yineng Investment”) China Investment RMB100 million 100.00 -
Dongfang Yineng International Holdings Co., Ltd. (“Yineng Foshan, Foshan,
International”) Guangdong, China Guangdong, China Investment RMB50 million 100.00 -
Tianjin Hangchuang Zhijin Investment Partnership (Limited Partnership) Tianjin, China Tianjin, China
(“Tianjin Hangchuang”) Investment RMB21 million 95.24 -
Changzhou Xinchen Investment Partnership (Limited Partnership) Changzhou, Changzhou,
(“Changzhou Xinchen”) Jiangsu, China Jiangsu, China Investment RMB50.6 million - 94.86
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
VII. Interests in Other Entities (Cont’d)
1. Interests in subsidiaries (cont’d)
Principal place Place of Business Registered The Company’s
of business registration nature capita interest (%)
Direct Indirect
Subsidiaries acquired in business combinations not under common
control
Fosber Group Italy Italy Manufacturing EUR1.56 million - 100.00
Fosber America America America Manufacturing USD1.10 million - 100.00
Forsberg (Machinery) Tianjin Co., Ltd. (“Fosber Tianjin”) Tianjin, China Tianjin, China Manufacturing USD500,000 - 100.00
Suzhou, Jiangsu, Suzhou, Jiangsu,
Parsun Power China China Manufacturing RMB85.3 million 7.83 62.80
Suzhou, Jiangsu, Suzhou, Jiangsu,
Suzhou Shunyi Investment Co., Ltd. .(“Shunyi Investment”) China China Investment RMB10 million 100.00 -
EDF Italy Italy Manufacturing EUR100,000 - 100.00
Tirua S.L.U. Spain Spain Manufacturing EUR1.44 million - 100.00
Tirua FranceSARL France France Manufacturing EUR100,000 - 100.00
SCI Candan France France Manufacturing EUR10,000 - 100.00
Tirua America America America Manufacturing USD3 million - 100.00
Guangdong Tirua Rolls Manufactury company limited (“Tirua Rolls Foshan, Guangdong, Foshan, Guangdong,
Manufactury”) China China Manufacturing EUR21 million - 66.30
Foshan, Guangdong, Foshan, Guangdong,
Tirua Asia China China Manufacturing RMB50 million 100.00 -
Shenzhen, Shenzhen,
Wonder Printing Guangdong, China Guangdong, China Manufacturing RMB31,171,949 51.00 -
Dongguan, Dongguan,
Dongguan Wonder Digital Machinery Co., Ltd. (“Wonder Digital”) Guangdong, China Guangdong, China Manufacturing RMB5million - 51.00
*According to the partnership agreement, the general partner of the partnership shall execute partnership affairs, and other partners shall not execute partnership affairs. As the sole
general partner, the Company forms control over the partnership, which is included in the scope of consolidation of the Group.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
VII. Interests in Other Entities (Cont’d)
2. Interests in associates
Principal Place of
place of Business Registered The Company’s Accounting
business registration nature capital interest (%) method
Direct Indirect
Associates
Guangdong Jaten
Robot & Foshan, Foshan,
Automation Co., Guangdong, Guangdong, Manufact Equity
Ltd. China China uring RMB31.759 million 19.84 - method
Manufact Equity
Talleres Tapre,S.L. Spain Spain uring EUR37,563 - 20.00 method
Nanjing, Nanjing,
Jiangsu, Jiangsu, Manufact Equity
Nanjing Profeta China China uring RMB4.5427 million 15.00 5.67 method
The table below presents the aggregate financial information of associates insignificant to the Group:
2023 2022
Associates
Total carrying amount of investments 117,265,884.84 95,352,681.52
Total amounts based on the Company’s
interests:
Net loss (2,259,252.98) 1,851,796.60
Total comprehensive loss (2,259,252.98) 1,851,796.60
As there is no obligation to bear additional losses, the net losses incurred by the investee are recognized to
the extent that the book value of the long-term equity investment and other long-term interests that
substantially constitute the net investment in the investee are reduced to zero.
VIII. Government grants
As of December 31, 2023, no government grants was included in other receivables.
As of December 31, 2023, liabilities related to government grants are as follows:
Recognized in Other
Income During the Closing balanc Related to asse
Opening balance Year e t/income
Deferred Related to asse
Income 11,073,651.66 1,116,660.00 9,956,991.66 ts
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
VIII. Government grants (Cont’d)
The government grants recognised in profit or loss are as follows:
2023 2022
Government grants related to assets
Recognised as other income 1,116,660.00 1,116,660.00
Government grants related to income
Recognised as other income 13,889,689.35 19,638,256.28
15,006,349.35 20,754,916.28
IX. Risks Associated with Financial Instruments
1. Classification of financial instruments
As at 31 December 2023, financial assets at fair value through profit or loss amounted to
RMB1,143,903,702.12 (31 December 2022: RMB1,195,281,882.21), which was mainly presented in
Financial assets held for trading and Other non-current financial assets; financial assets at fair value through
other comprehensive income amounted to RMB19,613,974.21 (31 December 2022: RMB15,305,668.26),
which was mainly presented in Receivables financing and Other non-current financial assets; financial assets
at amortised cost amounted to RMB2,840,161,432.80 (31 December 2022: RMB2,530,374,009.14), which
was mainly presented in Currency funds, Notes receivable, Accounts receivable Current portion of
non-current assets, Long-term receivables and Other receivables; financial liabilities at fair value through
profit or loss amounted to RMB138,319,682.01 (31 December 2022: RMB193,418,848.13), which was
mainly presented in Financial liabilities held for trading and Other non-current liabilities; and financia l
liabilities at amortised cost amounted to RMB1,730,652,355.43 (31 December 2022 :
RMB1,474,223,933.92), which was mainly presented in Short-term borrowings, Notes payable, Accounts
payable, Other payables, Current portion of non-current liabilities, Long-term borrowings, Other current
liabilities and Lease liabilities.
2. Risks of financial instruments
The main risks arising from the Group's financial instruments are credit risk, liquidity risk and market risk.
The Group’s policies are summarised below.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (cont’d)
1. Classification of financial instruments (cont’d)
Credit risk
The Group transacts only with recognized and reputable third parties. According to the Group' s policies,
credit checks are needed for all customers that require transactions should be conducted by means of credit.
Additionally, the Group performs continuous monitoring of the balance of accounts receivable to ensure that
the Group will not face major bad debt risk. For transactions not settled in the accounting standard currency
of the relevant business unit, unless specifically approved by the credit control department of the Group, the
Group will not provide credit transaction conditions.
Since the counterparties of cash and bank balances and notes receivable are banks with a good reputation and
high credit rating, the credit risk of such financial instruments is low.
Other financial assets of the Group mainly include accounts receivable, other receivables and contract assets,
the credit risk of which arises from counterparty default, and the maximum risk exposure is equal to the
carrying value of these instruments.
The Group transacts only with recognized and reputable third parties, so no collateral is required. Credit risk
concentration is managed by customer/counterparty, geographic region and industry. Because the customer
base of accounts receivable of the Group is widely dispersed in different departments and industries, there is
no major credit risk concentration within the Group. The Group does not hold any collateral or other credit
enhancement on the balance of accounts receivable.
Criteria for judging significant increases in credit risk
The Group assesses whether or not the credit risk of the relevant financial instruments has increased
significantly since the initial recognition at each balance sheet date. The Group's main criteria for
determining significant increase in credit risk are that the number of days past due exceed 30 da ys, or one or
more of the following indicators have changed significantly: significant adverse changes in the operatin g
environment of the debtor, internal and external credit ratings, and actual or expected operating results.
Definition of credit-impaired financial assets
The Group's main criterion for determining that credit impairment has occurred is that the number of days
past due exceeds 90 days. However, in some cases, if internal or external information indicates that the
contract amount may not be recovered in full before considering any credit enhancements held, the Group
will also consider that credit impairment has occurred.
The credit impairment on a financial asset may be caused by the combined effect of multiple events and may
not be necessarily due to a single event.
Liquidity risk
The Group aims to maintain sufficient cash and credit lines to meet its liquidity requirements. The Group
finances its working capital requirements through a combination of funds generated from operations and
other borrowings.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (Cont’d)
2. Financial instrument risks (cont’d)
Liquidity risk (cont’d)
The maturity profile of financial liabilities based on undiscounted contractual cash flow is summarized as follows:
2023
Within 1 month 1-3 months 3 months-1 year 1-5 years Over 5 years Total
Short-term borrowings 47,649,929.46 21,673,776.48 305,994,589.47 - - 375,318,295.41
Notes payable - - 152,433,276.09 - - 152,433,276.09
Accounts payable - - 737,544,841.42 - - 737,544,841.42
Other payables - - 126,415,425.61 - - 126,415,425.61
Financial liabilities held for
trading - - 115,900,827.21 - - 115,900,827.21
Current portion of non-current
liabilities 2,457,366.02 4,392,084.31 52,417,329.88 - - 59,266,780.21
Long-term borrowings - - - 84,490,564.27 836,642.77 85,327,207.04
Lease liabilities - - - 65,861,441.32 - 65,861,441.32
Other current liabilities - - 25,837,473.39 - - 25,837,473.39
Other non-current liabilities - - - 22,418,854.80 - 22,418,854.80
50,107,295.48 26,065,860.79 1,516,543,763.07 172,770,860.39 836,642.77 1,766,324,422.50
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (Cont’d)
2. Financial instrument risks (cont’d)
Liquidity risk (cont’d)
2022
Within 1 month 1-3 months 3 months-1 year 1-5 years Over 5 years Total
Short-term borrowings 10,109,326.19 13,053,856.47 18,592,633.64 - - 41,755,816.30
Financial liabilities held for
trading - - 57,022,555.58 - - 57,022,555.58
Notes payable - - 149,918,253.31 - - 149,918,253.31
Accounts payable - - 748,319,561.21 - - 748,319,561.21
Other payables - - 90,080,142.50 - - 90,080,142.50
Current portion of non-current
liabilities 769,865.02 2,725,256.25 302,043,449.86 - - 305,538,571.13
Long-term borrowings - - - 58,982,718.09 1,075,526.84 60,058,244.93
Lease liabilities - - - 68,989,111.33 - 68,989,111.33
Other current liabilities - - 1,449,810.18 - - 1,449,810.18
Other non-current liabilities - - - 136,396,292.55 - 136,396,292.55
10,879,191.21 15,779,112.72 1,367,426,406.28 264,368,121.97 1,075,526.84 1,659,528,359.02
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (Cont’d)
2. Financial instrument risks (cont’d)
Market Risk
Interest rate risk
The Group’s exposure to risk of changes in market interest rates relates primarily to the Group’s long-term
liabilities with floating interest rates.
The sensitivity analysis of interest rate risks is set out in the following table, reflecting the impact of
reasonable and probable change in interest rates on net profit or loss (through the impact on floating rate
loans) and other comprehensive income (net of tax) assuming that other variables remain constant
2023
Increase/ Increase/ Increase/ Increase/
(decrease) in basis (decrease) in net (decrease) in other (decrease) in
points profit or loss comprehensive income total equity
net of tax
Loans 0.50 (435,630.76) - (435,630.76)
Loans (0.50) 435,630.76 - 435,630.76
2022
Increase/ Increase/ Increase/ Increase/
(decrease) in basis (decrease) in net (decrease) in other (decrease) in
points profit or loss comprehensive income total equity
net of tax
Loans 0.50 (1,458,187.97) - (1,458,187.97)
Loans (0.50) 1,458,187.97 - 1,458,187.97
Exchange rate risk
The Group is exposed to trading exchange rate risks. Such exposures arise from sales or purchases by
business units in currencies other than the units’ functional currencies.
The sensitivity analysis of exchange rate risks is set out in the following table, reflecting the impact of
reasonable and probable change in the exchange rates of EUR and USD on net profit or loss and other
comprehensive income (net of tax) assuming that other variables remain constant.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (Cont’d)
2. Financial instrument risks (cont’d)
Market Risk (cont’d)
Exchange rate risk (cont’d)
2023
Increase/ Increase/ Increase/ Increase/
(decrease) in (decrease) in (decrease) in (decrease) in
exchange rate net profit or loss other total equity
(%) comprehensive
income net of
tax
Stronger RMB against
EUR 2.00 (6,940,212.28) - (6,940,212.28)
Weaker RMB against
EUR (2.00) 6,940,212.28 - 6,940,212.28
Stronger RMB against
USD 2.00 (10,011,216.17) - (10,011,216.17)
Weaker RMB against
USD (2.00) 10,011,216.17 - 10,011,216.17
2022
Increase/ Increase/ Increase/ Increase/
(decrease) in (decrease) in (decrease) in (decrease) in
exchange rate net profit or loss other total equity
(%) comprehensive
income net of
tax
Stronger RMB against
EUR 2.00 (8,836,102.40) - (8,836,102.40)
Weaker RMB against
EUR (2.00) 8,836,102.40 - 8,836,102.40
Stronger RMB against
USD 2.00 (6,699,491.41) - (6,699,491.41)
Weaker RMB against
USD (2.00) 6,699,491.41 - 6,699,491.41
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (cont’d)
3. Capital management
The primary objective of the Group’s capital management is to safeguard the Group’s ability to continue as a
going concern and to maintain healthy capital ratios in order to support its business and maximize
shareholders’ value.
The Group manages its capital structure and makes adjustments in the light of changes in economic
conditions and in the risk profiles of relevant assets. To maintain or adjust the capital structure, the Group
may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The
Group is not subject to any externally imposed capital requirements. No changes were made in the
objectives, policies or processes for managing capital during 2023 and 2022.
4. Transfer of financial assets
Transfer Nature of Amount of Derecog Judgment basis for derecognition
method transferred transferred nition
financial assets financial assets
Notes
discount Not
ed/ derecog Retained the substantial risks and rewards, which include
endorsed Notes receivable 25,837,473.39 nised default risks relating to such endorsed/discounted notes
Notes Derecog Transferred substantially all risks and rewards relating to
endorsed Notes receivable 13,508,608.93 nised the derecognised notes
39,346,082.32
In 2023, financial assets derecognised as a result of the transfer are as follows:
Transfer Amount of derecognised financial Gains or losses related to
method assets derecognition
Notes
Notes endorsed
receivable 13,508,608.93 -
Financial assets already transferred but not wholly derecognized
On 31 December 2023, the carrying value of the bank acceptance notes (BAs) discounted by the Group was
RMB20,461,553.62 (31 December 2022: Nil). The Group believed that the Group retained almost all their
risks and rewards, including the risk of default associated therewith, so the Group continued to confirm them
and recognise in full its and related bank borrowings. After the discounting, the Group will no longer reserve
the right to use them, including the right to sell, transfer, or pledge them to other third parties. On 31
December 2023, the carrying amount of bank borrowings recognised by the Group amounted to
RMB20,461,553.62 (31 December 2022: Nil).
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
IX. Risks Associated with Financial Instruments (Cont’d)
4. Transfer of financial assets (cont’d)
Financial assets already transferred but not wholly derecognized (cont’d)
On 31 December 2023, the carrying value of the BAs endorsed by the Group to suppliers for the settlement
of accounts payable was RMB5,375,919.77 (31 December 2022: RMB1,449,810.18). The Group believed
that the Group retained almost all their risks and rewards, including the risk of default associated therewith,
so the Group continued to confirm them and the settled accounts payable associated therewith in full amount.
After the endorsement, the Group will no longer reserve the right to use them, including the right to sell,
transfer, or pledge them to other third parties. On 31 December 2023, the carrying value of the accounts
payable settled with them totaled RMB5,375,919.77 (31 December 2022: RMB1,449,810.18).
Transferred financial assets that have been wholly derecognized but continue to be involved
On 31 December 2023, the carrying value of the BAs endorsed by the Group to suppliers for the settlement
of accounts payable was RMB13,508,608.93 (31 December 2022: RMB23,495,743.47). On 31 December
2023, their maturity date varied from one to 12 months. As stipulated in the Negotiable Instruments Law, if
the accepting bank refuses to pay, their holders have the right to recourse from the Group ("continue to be
involved"). The Group believed that the Group had transferred almost all their risks and rewards, so the
Group derecognized the carrying value of them and the settled accounts payable associated therewith. The
maximum loss and undiscounted cash flows from continuing involvement and repurchase were equal to their
carrying value. The Group believed that it was insignificant to continue to involve in fair value.
In 2023, the Group did not confirm the gains or losses on the transfer day. The Group had no income or
expenses recognized in the current year and cumulatively due to continued involvement in derecognized
financial assets. Endorsements occurred roughly evenly during the year.
X. Disclosure of Fair Values
1. Assets and liabilities measured at fair valueJTB
O
2023D
Input applied in the measurement of fair value
Quoted prices Significant Significant
Total
in active markets Observable inputs unobservable inputs
(Level 1) (Level 2) (Level 3)
Continuous measurement of fair value
Financial assets held for trading 682,619,158.57 6,283.88 - 682,625,442.45
Receivables financing - 9,365,344.07 - 9,365,344.07
Other non-current financial assets 31,420,551.63 - 429,857,708.04 461,278,259.67
Other non-current assets - 10,248,630.14 - 10,248,630.14
714,039,710.20 19,620,258.09 429,857,708.04 1,163,517,676.33
Input applied in the measurement of fair value
Quoted prices Significant Significant Total
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
in active markets observable unobservable
inputs inputs
(Level 1) (Level 2) (Level 3)
Continuous
measurement of fair
value
Financial liabilities
held for trading - - 115,900,827.21 115,900,827.21
Other non-current
liabilities - - 22,418,854.80 22,418,854.80
- - 138,319,682.01 138,319,682.01
2022
Input applied in the measurement of fair value
Quoted prices Significant Significant
in active markets observable unobservable Total
inputs inputs
(Level 1) (Level 2) (Level 3)
Continuous
measurement of fair
value
Financial assets held
for trading 860,832,278.88 - - 860,832,278.88
Receivables
financing - 15,305,668.26 - 15,305,668.26
Continuous
measurement of
fair value 28,708,356.60 99,633,064.36 206,108,182.37 334,449,603.33
889,540,635.48 114,938,732.62 206,108,182.37 1,210,587,550.47
X. Disclosure of Fair Values (cont’d)
Input applied in the measurement of fair value
Quoted prices Significant Significant
in active markets observable unobservable Total
inputs inputs
(Level 1) (Level 2) (Level 3)
Continuous
measurement of fair
value
Financial liabilities
held for trading - - 57,022,555.58 57,022,555.58
Other non-current
liabilities - 1,298,626.48 135,097,666.07 136,396,292.55
- 1,298,626.48 192,120,221.65 193,418,848.13
2. Level 1 fair value measurement
The fair value of the listed equity instrument investment is determined based on the market quotation.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
X. Disclosure of Fair Values (Cont’d)
3. Level 2 fair value measurement
In a fair transaction, the fair value of financial assets and financial liabilities is determined by the amount of
voluntary asset exchange or debt redemption between the parties to the transaction, rather than the amount in
the case of force sale or liquidation.
The fair value of receivable financing is determined by the discounted future cash flow method, the fair
value is similar to their carrying value.
The fair value of long-term receivables and long- and short-term borrowings is determined by the discounted
future cash flow method, where the market yield of other financial instruments with similar contract terms,
credit risks and remaining maturity serves as the discount rate. On 31 December 2023, the result of the
self-default risk assessment of long- and short-term borrowings was not significant.
4. Level 3 fair value measurement
The fair values of unlisted equity investments have been estimated using a market-based valuation technique
based on assumptions that are not supported by observable market prices or rates. The valuation requires
the Group to determine comparable listed companies based on industry, size, leverage and strategy, and to
calculate an appropriate price multiple for each comparable company identified. They are adjusted for
considerations such as illiquidity and size differences between the comparable companies based on
company-specific facts and circumstances. The Group believes that the estimated fair values resulting from
the valuation technique and the related changes in fair values are reasonable, and that they were the most
appropriate values at the balance sheet date. For the fair value of investments in unlisted equity instruments,
the Group estimates the potential impact of using other reasonable and possible assumptions as inputs to the
valuation model.
The fair value of equity resale rights in other non-current liabilities is assessed using a binary tree model.
Below is a summary of the significant unobservable inputs to the fair value measurement of Level 3:
Closing Valuation Unobservable
Range
fair value technique inputs
Other non-current Option pricing
Volatility
financial assets 27,743,545.96 model 32.95%-45.34%
Other non-current Comparison Liquidity
financial assets 155,340,603.88 approach discount 20.00%
Financial
Discounted cash Weighted average
liabilities held
flow method cost
for trading 115,900,827.21 10.30%
Other non-current Discounted cash Weighted average
liabilities 22,418,854.80 flow method cost 14.30%
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Notes to the Financial Statements (Cont’d)
错误!未知的文档属性名称 Expressed in Renminbi Yuan
X. Disclosure of Fair Values (Cont’d)
5. Reconciliation in fair value measurement
Reconciliation of continuous fair value measurements categorized within Level 3 of the fair value hierarchy:
2023
Change in
unrealized gains
and losses for the period
Opening Transfer to Total current gains and losses Purchase Closing of assets
balance Level 3 Through Through other balance held at end of
profit or loss comprehensive period through
income profit or loss
Other non-current financial
assets 206,108,182.37 99,633,064.36 66,334,382.51 857,856.70 56,924,222.10 429,857,708.04 66,334,382.51
Change in
unrealized gains
and losses for the
Opening Transfer to Transfers to financial Total current gains and losses Settlement Closing period of liabilities
balance Level 3 liabilities held for Through Through other balance held at end of
trading profit or loss comprehensive period through
income profit or loss
Financial
liabilities held
for trading 57,022,555.58 - 115,900,827.21 1,263,227.49 - (58,285,783.07) 115,900,827.21 -
Other
non-current
liabilities 135,097,666.07 1,298,626.48 (115,900,827.21) 759,283.68 1,164,105.78 - 22,418,854.80 759,283.68
192,120,221.65 1,298,626.48 - 2,022,511.17 1,164,105.78 (58,285,783.07) 138,319,682.01 759,283.68
270 / 296
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Notes to the Financial Statements (Cont’d)
错误!未知的文档属性名称 Expressed in Renminbi Yuan
2022
Change in
unrealized gains
Opening Transfer out of Total current gains and losses Purchase Settlement Closing and losses for the period of assets
balance Level 3 Through Through other balance held at end of
profit or loss comprehensive income period through
profit or loss
Financial assets held for trading 12,936,500.63 - (8,292,000.00 ) - - (4,644,500.63) - -
Other non-current financial assets 156,882,743.97 (94,496,262.63) 45,117,740.43 378,960.60 98,225,000.00 - 206,108,182.37 45,117,740.43
169,819,244.60 (94,496,262.63) 36,825,740.43 378,960.60 98,225,000.00 (4,644,500.63) 206,108,182.37 45,117,740.43
Change in
unrealized gains
and losses for the period
Opening Total current gains and losses Purchase Settlement Closing of liabilities
balance Through Through other balance held at end of
profit or loss comprehensive period through
income profit or loss
Financial liabilities
held for trading 110,746,939.04 (164,544.82) - - (53,559,838.64 ) 57,022,555.58 (164,544.82)
Other non-current
liabilities 136,178,304.44 (4,118,251.52) 437,613.15 2,600,000.00 - 135,097,666.07 (4,118,251.52)
246,925,243.48 (4,282,796.34) 437,613.15 2,600,000.00 (53,559,838.64 ) 192,120,221.65 (4,282,796.34)
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
X. Disclosure of Fair Values (Cont’d)
5. Reconciliation in fair value measurement (cont’d)
In the continuous fair value measurement at Level 3, gains and losses through profit or loss relating to
financial assets and non-financial assets is analyzed as follows:
2023
Gains and losses Gains and losses
relating to financial relating to
assets non-financial assets
Total gains and losses through profit or loss 66,334,382.51 -
Change in unrealized gains and losses for the period
of assets held at end of period through profit or
loss 66,334,382.51 -
2022
Gains and losses Gains and losses
relating to financial relating to
assets non-financial assets
Total gains and losses through profit or loss 36,825,740.43 -
Change in unrealized gains and losses for the period
of assets held at end of period through profit or
loss 45,117,740.43 -
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
X. Disclosure of Fair Values (Cont’d)
5. Reconciliation in fair value measurement (cont’d)
In the continuous fair value measurement at Level 3, gains and losses through profit or loss relating to
financial assets and non-financial assets is analyzed as follows:
2023
Gains and losses Gains and losses
relating to financial relating to
liabilities non-financial liabilities
Total gains and losses through profit or
loss 2,022,511.17 -
Change in unrealized gains and losses for the period
of assets held at end of period through profit or
loss 759,283.68 -
2022
Gains and losses Gains and losses
relating to financial relating to
liabilities non-financial liabilities
Total gains and losses through profit or
loss (4,282,796.34) -
Change in unrealized gains and losses for the period
of assets held at end of period through profit or
loss (4,282,796.34) -
6. Transfers between levels of fair value measurement
Fair value hierarchy transition
In 2023, the Group used Level 3 valuation techniques to value some other non-current financial assets for
which observable inputs could not be reliably obtained, and transferred their fair values from Level 2 to
Level 3 disclosures, The conversion amounts were RMB99,633,064.36 (in 2022, the fair value measurement
of some other non-current financial assets was transferred from Level 3 to Level 2, and the conversion
amount was RMB94,496,262.63)
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XI. Relationships and Transactions with Related Parties
1. Controlling Shareholder
Relationship with the Company Interest in the
Tang Zhuolin One of the Company’s controlling
(individual) shareholders and actual controllers 21.82
Tang Zhuomian One of the Company’s controlling
(individual) shareholders and actual controllers 7.81
The ultimate controllers of the Company are Tang Zhuolin and Tang Zhuomian.
2. Subsidiaries
See Note VII.1.
3. Associates
See Note VII.2.
4. Other related parties
Relationship with the Company
Tang Zhuolin Chairman
Qiu Yezhi Director and General Manager
Xie Weiwei Director and Deputy General Manager
Chen Huiyi Chairman of the Supervisory Committee
Zhao Xiuhe Employee Supervisor
He Baohua Supervisor
Li Ketian Independent Director
Liu Da Independent Director
Tu Haichuan Independent Director
Feng Jia Director and Board Secretary
Shao Yongfeng Chief Financial Officer and Vice President
5. Major transactions between the Group and related parties
(1) Salary of key management
2023 2022
Salary of key management 13,157,851.82 12,448,768.93
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XII. Share-based Payments
On 27 March 2020, the Company convened the Board of Directors, where the Proposal on Grantin g
Restricted Shares to Awardees was approved, and the Board of Directors agreed to grant restricted shares to
42 qualified senior managers and core technicians, and agreed to have the right to purchase shares at RMB1
within the exercise validity period when the corresponding performance assessment objectives are met
within the lifting period. The maximum period shall not exceed 60 months from the date of completion of
registration of the first grant of some restricted shares to the date when all restricted shares granted to the
incentive objects are lifted or repurchased and cancelled.
On 29 December 2020, the Company convened the Board of Directors, where the Proposal on Grantin g
Reserved Restricted Shares to Awardees was approved, and the Board of Directors agreed to grant restricted
shares to 18 qualified senior managers and core technicians, and agreed to have the right to purchase shares
at RMB1 within the exercise validity period when the corresponding performance assessment objectives are
met within the lifting period. The maximum period shall not exceed 60 months from the date of completion
of registration of the first grant of some restricted shares to the date when all restricted shares granted to the
incentive objects are lifted or repurchased and cancelled.
On 21 March 2022, the Company convened the Board of Directors, where the Proposal on Grantin g
Restricted Shares to Awardees was approved, and the Board of Directors agreed to grant restricted shares to
7 qualified senior managers and core technicians, and agreed to have the right to purchase shares at RMB1
within the exercise validity period when the corresponding performance assessment objectives are met
within the lifting period. The maximum period shall not exceed 60 months from the date of completion of
registration of the first grant of some restricted shares to the date when all restricted shares granted to the
incentive objects are lifted or repurchased and cancelled.
The equity instruments granted are as follows:
Granted in Exercised in
the period the period Unlocked in the period Expired in the period
Num Amo Num Amo
ber unt ber unt Number Amount Number Amount
Marketing - - - - 2,670,000.00 2,670,000.00 120,000.00 120,000.00
manageme
nt - - - - 21,062,000.00 21,062,000.00 128,000.00 128,000.00
R&D - - - - 1,680,000.00 1,680,000.00 - -
Production
&Operat
ion - - - - 250,000.00 250,000.00 240,000.00 240,000.00
Total - - - - 25,662,000.00 25,662,000.00 488,000.00 488,000.00
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XII. Share-based Payments (Cont’d)
Equity-settled share-based payments are as follows：
2023
Determination method of fair value of equity Based on the share price on the grant
instruments at grant date date minus the grant price, it is
RMB3.74 (RMB4.74 minus RMB1)
Important parameters of fair value of equity Share price at grant date
instruments at grant date Grant Price
Basis for determining the number of vested Make the best estimate of the number of
equity instruments vested employees based on the latest
information such as turnover rate and
substandard rate
Reasons for significant difference between
current year's estimate and prior year's
estimate None
Accumulated amount of equity-settled
share-based payment included in capita l
reserve 92,193,033.60
Share-based payment expenses incurred during the year are as follows:
Equity-settled Cash-settled
share-based payment share-based
expenses payment expenses
Marketing 4,009,092.14 -
management 14,812,302.40 -
R&D 3,017,408.05 -
Production&Operation 312,240.63 -
Total 22,151,043.22 -
XIII. Commitments and Contingent Events
1. Significant commitments
As at the balance sheet date, the Group had no commitments which were required to be disclosed.
2. Contingent Events
As at the balance sheet date, the Group had no contingent events which were required to be
disclosed.
XIV. Events after the Balance Sheet Date
As at the balance sheet date, the Group had no events after the balance sheet date which were
required to be disclosed.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XV.Other Significant Matters
1. Segment reporting
Operating segment
For management purposes, the Group is divided into business units based on products and services. The
Group has the following three reporting segments:
2023
Item Domestic entities Overseas entities Offset Total
Operating
revenue 1,844,474,037.62 3,175,318,828.12 (274,055,543.91) 4,745,737,321.83
Cost of
sales 1,222,108,902.33 2,364,285,010.11 (226,865,366.43) 3,359,528,546.01
Total assets 5,747,082,095.93 3,273,503,656.86 (1,482,363,182.77) 7,538,222,570.02
Total
liabilities 1,392,010,817.81 2,244,942,800.45 (832,939,017.58) 2,804,014,600.68
2022
Item Domestic entities Overseas entities Offset Total
Operating
revenue 1,581,783,109.71 2,756,556,385.95 (445,630,986.02) 3,892,708,509.64
Cost of
sales 1,081,978,416.13 2,141,063,654.54 (389,736,322.13) 2,833,305,748.54
Total assets 5,407,121,469.14 2,914,415,535.60 (1,392,959,889.64) 6,928,577,115.10
Total
liabilities 1,489,530,074.02 1,952,540,777.80 (779,488,999.67) 2,662,581,852.15
277 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements
1. Account Receivable
The aging of accounts receivable is analyzed as follows:
2023 2022
Within 1 year 190,721,565.80 212,140,018.11
1-2 years 454,811.38 39,011,159.02
2-3 years 357,849.03 1,456,776.00
3-4 years 456,982.47 1,688,672.44
4-5 years - -
Over 5 years 2,477,303.19 3,004,100.00
194,468,511.87 257,300,725.57
Less: allowances for doubtful accounts
receivable 4,106,865.59 4,454,823.68
190,361,646.28 252,845,901.89
2023
Carrying
Gross amount Allowance amount
Amount Percentage Amount Percentage
(%) (%)
Accounts receivable
for which
allowances are
established
individually 2,477,303.19 1.27 2,477,303.19 100.00 -
Accounts receivable
for which
allowances are
established by
group with similar
credit risk
characteristics 191,991,208.68 98.73 1,629,562.40 0.85 190,361,646.28
194,468,511.87 100.00 4,106,865.59 190,361,646.28
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
1. Account Receivable (cont’d)
2022
Carrying
Gross amount Allowance amount
Amount Percentage Amount Percentage
(%) (%)
Accounts receivable
for which
allowances are
established
individually 3,004,100.00 1.17 3,004,100.00 100.00 -
Accounts receivable
for which
allowances are
established by
group with similar
credit risk
characteristics 254,296,625.57 98.83 1,450,723.68 0.57 252,845,901.89
257,300,725.57 100.00 4,454,823.68 252,845,901.89
As at 31 December 2023, accounts receivable for which allowances are established individually are as
follows:
2023 2022
Reason for
Gross amount Allowance ECL allowance Gross amount Allowance
(%)
Customer’s
inability to
Customer 1
settle the
939,000.00 939,000.00 100.00 amount due 939,000.00 939,000.00
Customer’s
inability to
Customer 2
settle the
641,600.00 641,600.00 100.00 amount due 641,600.00 641,600.00
Customer’s
Customer 3
inability to
settle the
608,800.00 608,800.00 100.00 amount due 608,800.00 608,800.00
Customer 4 - - - 516,000.00 516,000.00
Customer’s
Customer 5
inability to
settle the
283,000.00 283,000.00 100.00 amount due 283,000.00 283,000.00
Customer’s
inability to
settle the
Customer 6 4,903.19 4,903.19 100.00 amount due 15,700.00 15,700.00
2,477,303.19 2,477,303.19 3,004,100.00 3,004,100.00
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
1. Account Receivable (cont’d)
As at 31 December 2023, accounts receivable for provision for bad debts according to the combination of
credit risk characteristics:
Gross amount Allowance ECL(%)
Within 1 year 190,721,565.80 959,922.98 0.50
1-2 years 454,811.38 25,924.25 5.70
2-3 years 357,849.03 186,725.62 52.18
3-4 years 456,982.47 456,989.55 100.00
191,991,208.68 1,629,562.40
Movements in allowances for doubtful accounts receivable are as follows:
Opening balance Established in Reversed in the Written off Closing balance
the period period in the period
2023 4,454,823.68 178,838.72 526,796.81 - 4,106,865.59
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
1. Accounts receivable (cont’d)
As at 31 December 2023, the top five accounts receivable and contract assets were as follows:
Total closing
balance of
As a % of the provision for
closing bad debts of
balance of accounts
Total closing total accounts receivable and
Closing balance of balance of receivable provision for
accounts receivable Closing balance accounts receivable and contract impairment of
of contract assets and contract assets assets contract assets
Dongfang Precision
(Netherland) 97,801,222.50 - 97,801,222.50 44.88 -
Dongfang Precision
(HK) 56,041,392.75 - 56,041,392.75 25.72 -
Fosber Aisa 8,608,032.39 - 8,608,032.39 3.95 -
Customer 12 8,591,315.10 2,493,074.99 11,084,390.09 5.09 106,410.14
Customer 13 5,400,000.00 - 5,400,000.00 2.48 51,840.00
176,441,962.74 2,493,074.99 178,935,037.73 82.12 158,250.14
2. Other receivables
2023 2022
Dividends receivable 272,564,800.00 17,840,000.00
Other receivables 382,260,293.49 577,361,759.62
654,825,093.49 595,201,759.62
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
2. Other receivables (cont’d)
Other receivables
The aging of other receivables is analyzed as follows:
2023 2022
Within 1 year 288,812,991.16 139,336,039.54
1-2 years 68,762,598.71 437,233,397.22
2-3 years 24,699,392.06 117,761.18
3-4 years 117,761.18 24,092.04
4-5 years 4,400.00 217,983.00
Over 5 years 1,018,174.92 1,587,511.18
Less: allowances for doubtful other receivables 1,155,024.54 1,155,024.54
382,260,293.49 577,361,759.62
Other receivables are classified by nature as follows:
2023 2022
Internal transactions with related parties 378,012,519.05 562,762,515.20
Prepaid service charges 1,211,065.51 2,772,188.53
Security deposits 976,244.53 2,089,429.81
Employee loans and petty cash 1,451,110.72 1,806,931.45
Performance compensation 500,000.00 500,000.00
Others 1,264,378.22 8,585,719.17
383,415,318.03 578,516,784.16
2023
Gross amount Allowance Carrying amount
Amount Percentage Amount Percentage
(%) (%)
Accounts receivable
for which
allowances are
established by
group with similar
credit risk
characteristics 383,415,318.03 100.00 1,155,024.54 0.30 382,260,293.49
282 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
2. Other receivables (cont’d)
Other receivables (cont’d)
2022
Gross amount Allowance Carrying amount
Amount Percentage Amount Percentage
(%) (%)
Accounts receivable
for which
allowances are
established by
group with similar
credit risk
characteristics 578,516,784.16 100.00 1,155,024.54 0.20 577,361,759.62
Movements in allowances for doubtful other receivables that are established based on the 12-month ECL and
the lifetime ECL are as follows:
Stage 1 Stage 2 Stage 3
12-month ECL Lifetime ECL Financial assets
with credit
impairment
(lifetme ECL)
Opening and
closing balance 655,024.54 500,000.00 - 1,155,024.54
Movements in allowances for doubtful other receivables are as follows:
Established in Reversed in
Opening balance Closing balance
the period the period
2023 1,155,024.54 - - 1,155,024.54
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
2. Other receivables (cont’d)
Other receivables (cont’d)
As at 31 December 2023, top 5 of other receivables are as follows:
As a % of
total other Closing
receivables balance of
2023 Nature Age allowance
Current
Hainan Yineng 196,311,336.74 51.20 account Within 1 year -
Within 1 year;
Current
1-2 years;
account
Tirua Aisa 113,768,955.41 29.67 2-3years -
Within 1 year;
Current
Dongfang Digicom 1-2 years;
account
(Guangdong) 43,948,943.99 11.46 2-3years -
Within 1 year;
Current
1-2 years;
account
Dongfang Digicom 11,429,035.99 2.98 2-3years -
Within 1 year;
Current
Dongfang Precision 1-2 years;
account
(Netherland) 6,682,462.38 1.74 3-4years -
372,140,734.51 97.05 -
284 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
3. Long-term equity investments
Change in the period
Opening Opening Additional Reduction Closing Closing
balance impairment investment in investment Change in other balance impairment
allowance equity allowance
Subsidiaries
Dong Fang Precision
(HK) Limited 1,856,010.00 - - - - 1,856,010.00 -
Dongfang Precision
(Netherland) 967,767.81 - - - 634,626.49 1,602,394.30 -
Guangdong Fosber
Intelligent Equipment
Co., Ltd. 55,275,470.44 - 58,285,783.07 - 1,229,509.77 114,790,763.28 -
Suzhou Shunyi
Investment Co., Ltd. 337,141,253.48 (45,303,485.99) - - 2,961,590.28 340,102,843.76 (45,303,485.99)
Tirua (Guangdong)
Intelligent
Equipment
Manufacturing Co.,
Ltd. 21,903,462.34 - - - - 21,903,462.34 -
Dongfang Digicom Data
Technology Co., Ltd. 5,419,727.91 - - - (700,809.17) 4,718,918.74 -
Dongfang Digicom Data
Technology
(Guangdong) Co.,
Ltd. 470,213.33 - - - 393,227.64 863,440.97 -
Hainan Yineng
Investment Co., Ltd. 101,572,033.67 - - - 549,542.16 102,121,575.83 -
EDF 1,197,730.34 - - - 634,626.49 1,197,730.34 -
285 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
3. Long-term equity investments (cont’d)
Change in the period
Opening Opening Additional Reduction Closing Closing
balance impairment investment in investment Change in other balance impairment
allowance equity allowance
Subsidiaries
Tianjin Hangchuang 20,000,000.00 - - - - 20,000,000.00 -
Shenzhen Wonder
Printing System
Co.,Ltd 173,800,000.00 - - - - 173,800,000.00 -
Yineng International
Holdings Co., Ltd - - 28,643,514.64 - - 29,278,141.13 -
719,603,669.32 (45,303,485.99 ) 86,929,297.71 - 5,702,313.66 812,235,280.69 (45,303,485.99)
Associates/joint
ventures
Guangdong Jaten Robot
& Automation Co.,
Ltd. 86,533,484.12 - - 943,242.05 - 87,476,726.17 -
Nanjing Profeta
Intelligent Technology
Co., Ltd. - - 23,075,777.90 (1,696,611.12) 190,905.47 21,570,072.25 -
806,137,153.44 (45,303,485.99 ) 110,005,075.61 (753,369.07) 5,893,219.13 921,282,079.11 (45,303,485.99)
286 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
3. Long-term equity investments (cont’d)
Provision for impairment of long-term equity investments:
Opening Increase in the Decrease in Closing
balance period the period balance
Suzhou Shunyi Investment
Co., Ltd. (45,303,485.99) - - (45,303,485.99 )
(45,303,485.99) - - (45,303,485.99 )
4. Operating revenue and costs
2023 2022
Revenue Costs Revenue Costs
Principal
operations 449,768,458.48 261,527,056.85 451,368,550.29 269,503,960.08
Other
operations 50,812,763.86 4,488,287.82 69,673,546.95 3,323,764.83
500,581,222.34 266,015,344.67 521,042,097.24 272,827,724.91
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
4. Operating revenue and costs (cont’d)
Breakdown of operating revenue arising from contracts with customers is as follows:
2023
Reporting segments
Principal product type
Goods 449,117,581.31
Services 28,406,255.64
Interest income 15,725,104.30
Others 3,155,631.27
496,404,572.52
Principal operating segment
Mainland China 167,729,877.24
Other regions 328,674,695.28
496,404,572.52
By revenue recognition time
Revenue recognition at a point of time 452,273,212.58
Revenue recognition for a period of time 44,131,359.94
496,404,572.52
288 / 296
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
4. Operating revenue and costs (cont’d)
Breakdown of operating revenue arising from contracts with customers is as follows: (cont’d)
2022
Reporting segments
Principal product type
Goods 450,366,148.27
Services 26,023,502.28
Interest income 38,612,370.94
Others 3,955,930.63
518,957,952.12
Principal operating segment
Mainland China 152,236,401.33
Other regions 366,721,550.79
518,957,952.12
By revenue recognition time
Revenue recognition at a point of time 454,322,078.90
Revenue recognition for a period of time 64,635,873.22
518,957,952.12
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
4. Operating revenue and costs (cont’d)
Breakdown of operating cost arising from contracts with customers is as follows:
Reporting segments
Principal product type
Goods
Services 260,173,669.46
Reporting segments 3,320,346.69
Others 2,521,328.52
266,015,344.67
Principal operating segment
Mainland China 95,892,780.14
Other regions 170,122,564.53
266,015,344.67
By revenue recognition time
Revenue recognition at a point of time 262,694,997.98
Revenue recognition for a period of time 3,320,346.69
266,015,344.67
Revenue recognized in the period included in the book value of contractual liabilities at the beginning of
year is as follows:
2023 2022
Advances on sales 20,199,887.60 18,352,946.11
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
4. Operating revenue and costs (cont’d)
The expected time for recognizing in revenue the total transaction price allocated to outstanding (or partly
outstanding) contractual performance obligations as at the period-end is as follows:
2023 2022
Within 1 year 53,704,255.92 29,803,024.37
5. Investment income
2023 2022
Income from long-term equity investments measured
at equity method (753,369.07) 3,143,695.45
Income from financial assets held for trading 5,100,439.51 3,827,951.76
Dividends under cost method 316,721,550.00 17,840,000.00
321,068,620.44 24,811,647.21
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
6. Major transactions between the Company and related parties
(1) Transaction of goods and services with related parties
Purchases of goods and services from related parties
Nature of transaction 2023 2022
Fosber Group Purchases of goods 3,013.68 -
EDF Purchases of goods 7,358,768.72 2,868,721.41
Sales of goods and services to related parties
Nature of transaction 2023 2022
Dongfang Precision
(HK) Sales of goods 51,378,876.10 171,028,352.25
Dongfang Precision Sales of goods
(Netherland) 55,117,411.88 56,133,478.23
Fosber Asia Sales of goods 11,744,151.97 4,950,006.92
EDF Sales of goods 4,174,831.00 12,834,213.72
Tirua Asia Sales of goods 62,986.48 -
Dongfang Digicom Sales of goods
(Guangdong) 96,163.09 -
Yineng Investment Rendering of services 19,589,859.20 18,273,836.24
Fosber Asia Rendering of leasing 4,176,649.82 2,064,483.40
Fosber Asia Rendering of services 2,595,446.00 1,628,341.84
Tirua Asia Rendering of services 37,952.50 153,842.22
Dongfang Digicom Rendering of services
(Guangdong) 313,102.90 246,417.10
(2) Interest income of related parties
Nature of transaction 2023 2022
Yineng Investment Interest income 9,675,891.05 34,878,049.06
Tirua Asia Interest income 3,685,092.68 2,686,891.68
Dongfang Digicom Interest income 475,600.57 494,726.27
Dongfang Digicom Interest income
(Guangdong) 1,888,520.00 1,247,087.29
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
6. Major transactions between the Company and related parties (cont’d)
(3) Guarantees for related parties
Provision of guarantees for related parties
Amount of Start End Having
guarantee date date expired or not
Dongfang Precision (Netherland) 270,400,578.91 2023/6/15 2024/6/15 No
(4) Lending to and borrowing from related parties
Lending to related parties
2023
Borrowing amount Start date End date
Dongfang Digicom
(Guangdong) 17,000,000.00 2023/1/13-2023/10/19 2028/1/12-2028/10/18
Yineng Investment 3,000,000.00 2023/8/18-2023/12/15 2028/8/17-2028/12/14
Yineng Investment 60,000,000.00 2023/4/23-2023/11/23 2023/4/23-2023/11/24
Yineng Investment 35,000,000.00 2023/6/6 2024/1/2
Dongfang Digicom 4,500,000.00 2023/1/6-2023/12/15 2028/1/5-2028/12/14
Tirua Asia 56,810,508.70 2023/2/17-2023/11/24 2025/2/16-2025/11/23
Yineng International 25,000,000.00 2023/12/1 2023/12/4
2022
Borrowing amount Start date End date
Dongfang Digicom (Guangdong) 19,000,000.00 2022/1/14-2022/12/19 2027/1/13-2027/12/18
Yineng Investment 50,000,000.00 2022/11/24 2022/11/24
Dongfang Digicom (Guangdong) 6,594,298.45 2022/3/22 2027/3/22
Yineng Investment 3,000,000.00 2022/5/13-2022/10/14 2027/5/12-2027/10/13
Tirua Asia 35,007,925.89 2022/1/23-2022/12/19 2024/1/22-2024/12/18
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
7. Balances of amounts due from related parties
(1) Accounts receivable
Related parties 2023 2022
Gross amount Allowance Gross amount Allowance
Accounts receivable
Dongfang Precision (HK) 57,130,520.69 - 125,873,821.40 -
Dongfang Precision (Netherland) 97,801,222.50 - 86,838,377.31 -
EDF 1,202,127.69 - 11,999,515.22 -
Fosber Asia 8,608,032.39 - 2,033,754.02 -
Tirua Asia 660,000.00 - 941,966.99 -
Dongfang Digicom (Guangdong) 6,342.69 - - -
Other Receivables
Yineng Investment 196,311,336.74 - 466,903,350.55 -
Tirua Asia 113,768,955.41 - 53,013,045.29 -
Dongfang Digicom (Guangdong) 43,948,943.99 - 25,031,945.37 -
Dongfang Digicom 11,429,035.99 - 6,424,864.39 -
Shunyi Investment 1,698,000.00 - 1,698,000.00 -
Fosber Asia 3,530,740.08 - 1,280,118.38 -
Dongfang Precision (Netherland) 6,682,462.38 - 6,608,152.98 -
Yining International 1,000.00 - 1,000.00 -
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVI. Notes to Major Items in the Company Financial Statements (Cont’d)
7. Balances of amounts due from related parties (cont’d)
(2) Accounts payable
Related parties 2023 2022
Accounts payable
EDF 1,035,581.06 177,681.12
Dongfang Precision (Netherland) 51,212.19 51,212.19
Dongfang Precision (HK) 6,155.19 6,155.19
Tirua Asia 3,898.92 205,124.43
Dongfang Digicom (Guangdong) 1,386,775.94 1,130,000.00
Fosber Group 3,284.00 1,899.00
Fosber Asia 322,665.96 -
Other payables
Dongfang Precision (Netherland) 650,069.71 331,099.71
Yineng Investment - 68,000,000.00
Fosber Asia 1,015,465.78 1,015,465.78
Tirua Asia 15,332.33 171,706.39
EDF 56,189.26 56,189.26
Except the borrowings receivable from related parties, all payables to related parties are non-interest bearing,
unsecured, and have no fixed repayment period.
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Notes to the Financial Statements (Cont’d)
2023 Expressed in Renminbi Yuan
XVII. Supplementary information
1. Schedule of exceptional gains and losses
2023
Gain or loss on disposal of non-current assets (inclusive of impairment
allowance write-offs) 694,491.43
Government grants through profit or loss (Except for government grants
that are closely related to normal business, comply with nationa l
policies and regulations, enjoy according to the recognition criteria
and have a sustained impact on profit and loss) 15,747,293.82
Profit or loss from changes in fair value of financial assets and financial
liabilities held by non-financial enterprises and profit or loss from
disposal of financial assets and financial liabilities, except for effective
hedging business related to normal business operations 60,354,587.25
Reversal of impairment provision for receivables subject to separate
impairment test 516,000.00
Non-operating income and expenses other than the above (10,155,229.58)
Subtotal of non-recurring gain or loss 67,157,142.92
Income tax effects 3,743,887.17
Non-controlling interests effects (net of tax) (2,400,099.25)
68,500,930.84
2. Return on equity (ROE) and earnings per share (EPS)
Weighted average ROE (%) EPS
Basic Diluted
Net profit attributable to ordinary
shareholders of the Company 10.14 0.36 0.36
Net profit attributable to ordinary
shareholders of the Company before
exceptional gains and losses 8.53 0.30 0.30
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