Guangdong Dongfang Precision Science & Technology Co., Ltd.
Annual Report 2021
March 2022
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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 management 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 collectively and individually accept legal
responsibility for such contents.
Tang Zhuolin, the Company’s legal representative, Shao Yongfeng, the Company’s Chief
Financial Officer, and Yao Bin, 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.
Apart from the following director, other directors of the Company attended in person the
board meeting for the approval of this Report.
The name of director Reasons for not
The post of director who Consignee’s
who did not attend in attending the meeting in
did not attend in person name
person person
Peng Xiaowei Independent Director Personal Work He Weifeng
The future development strategies, business plans and other forward-looking statements
mentioned 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 Management 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 ........................................................... 2
Part II Corporate Information and Key Financial Information ................................................... 6
Part III Management Discussion and Analysis ............................................................................. 11
Part IV Corporate Governance ...................................................................................................... 75
Part V Environmental and Social Responsibilities ..................................................................... 103
Part VI Significant Events ............................................................................................................. 105
Part VII Share Changes and Shareholder Information ............................................................. 119
Part VIII Preference Shares.......................................................................................................... 129
Part IX Corporate Bonds .............................................................................................................. 130
Part X Corporate Financial Statement ........................................................................................ 131
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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 Group Fosber S.p.A.
Fosber Asia Guangdong Fosber Intelligent Equipment Co., Ltd.
Fosber America Fosber America, Inc.
Fosber Tianjin Fosber Machinery (Tianjin) Co., Ltd.
Tirua Group Tirua Group Industrial, S.L.
Tirua America Tirua America Inc.
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
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.
Yinglian Digital Foshan Yinglian Digital Printing Equipment Co., Ltd.
Jaten Robot Guangdong Jaten Robot & Automation Co., Ltd.
Hainan Yineng Hainan Yineng Investment Co., Ltd.
Dongfang Digicom Dongfang Digicom Technology Co., Ltd.
Dongfang Digicom (Guangdong) Dongfang Digicom Technology (Guangdong) Co., Ltd.
Corrugated board is a multi-layer paper-bonding object composed of at least one
sandwich layer of wavy medium (commonly known as "corrugated paper",
Corrugated board
"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.
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Corrugated box printing and packaging machinery include corrugated box
printing and packaging line and stand-alone products that 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
Corrugated box printing and packaging machinery
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.
Corrugator 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 corrugator 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, glue machine and
Corrugator lines
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.
Corrugator 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 2021 to 31 December 2021
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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
Zip code 528225
25/F, Hisense Southern Building, 1777 Chuangye Road, Nanshan District, Shenzhen City,
Office address
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
25/F, Hisense Southern Building, 1777 25/F, Hisense Southern Building, 1777
Chuangye Road, Nanshan District, Chuangye Road, Nanshan District,
Office address
Shenzhen City, Guangdong Province, Shenzhen City, Guangdong Province,
China China
Tel. 0755-36889712 0755-36889712
Fax 0755-36889822 0755-36889822
Email address ir@vmtdf.com ir@vmtdf.com
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
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information disclosure
Website designated by the CSRC for publication of
http://www.cninfo.com.cn
this Report
Securities Department of the Company, 25/F, Hisense Southern Building,
Place where this Report is lodged 1777 Chuangye Road, Nanshan District, Shenzhen City, Guangdong
Province, China
IV Change to Company Registered Information
Organization 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 Lin Hongyan
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
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VI Key Financial Information
Indicate whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2021-over-2020
2021 2020 2019
change (%)
Operating revenue (RMB) 3,524,734,783.94 2,916,270,143.13 20.86% 9,973,503,602.19
Net profit attributable to the listed
467,333,661.79 389,180,624.08 20.08% 1,838,018,805.50
company’s shareholders (RMB)
Net profit attributable to the listed
company’s shareholders before
380,806,233.00 263,426,429.87 44.56% 438,715,870.86
exceptional gains and losses
(RMB)
Net cash generated from/used in
306,659,276.02 550,996,031.75 -44.34% 281,297,787.01
operating activities (RMB)
Basic earnings per share
0.35 0.26 34.62% 1.01
(RMB/share)
Diluted earnings per share
0.35 0.26 34.62% 1.01
(RMB/share)
Weighted average return on equity
11.72% 6.20% 5.52% 36.87%
(%)
Change of 31
December 2021 over
31 December 2021 31 December 2020 31 December 2019
31 December 2020
(%)
Total assets (RMB) 6,357,168,835.19 6,323,236,687.05 0.54% 6,273,516,157.31
Equity attributable to the listed
3,681,970,298.39 4,158,538,499.75 -11.46% 4,337,064,607.87
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
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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.
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 636,432,223.23 764,126,740.95 1,071,169,589.35 1,053,006,230.41
Net profit attributable to the listed company’s
64,628,103.90 126,489,416.56 129,754,201.64 146,461,939.69
shareholders
Net profit attributable to the listed company’s
51,969,185.59 104,053,646.97 119,708,244.58 105,075,155.86
shareholders before exceptional gains and losses
Net cash generated from/used in operating
57,536,376.72 148,487,451.53 -82,307,806.29 182,943,254.06
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 2021 2020 2019 Note
Gain or loss on disposal of non-current
assets (inclusive of impairment allowance -65,995.13 -52,742.69 -95,745,648.97
write-offs)
Government grants through profit or loss
(exclusive of government grants given in the
14,700,007.84 10,749,683.55 22,854,061.39
Company’s ordinary course of business at
fixed quotas or amounts as per the
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government’s uniform standards)
Gain equal to the amount by which
investment costs for the Company to acquire
subsidiaries, associates and joint ventures
866,489.40
are lower than the Company’s enjoyable fair
value of identifiable net assets of investees
when making investments
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
73,435,063.51 96,118,955.74 1,473,114,508.83
assets and liabilities and other debt
investments (exclusive of the effective
portion of hedges that arise in the
Company’s ordinary course of business)
Non-operating income and expenses other
4,779,490.65 33,173,454.66 9,007,522.57
than the above
Other gains and losses that meet the
0.00 1,229,987.66
definition of exceptional gain/loss
Less: Income tax effects 6,017,410.70 15,906,631.40 9,881,032.32
Non-controlling interests effects (net
303,727.38 425,002.71 46,476.86
of tax)
Total 86,527,428.79 125,754,194.21 1,399,302,934.64 --
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss
Items:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
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Part III Management Discussion and Analysis
I Industry Overview for the Reporting Period
Dongfang Precision operates in the "corrugated packaging machinery" industry. With the strategic vision of
"intelligent manufacturing", the Company is committed to the R&D, design and production of corrugated packaging
machinery, and provides customers in the industry with production lines, equipment, software and supporting services
necessary for the production and processing of corrugated packaging products.
According to the Guidelines for the Industry Classification of Listed Companies of the CSRC, the Company is
assigned to "Manufacturing Industry - Specialised Equipment Manufacturing Industry". According to the SWS Industry
Classification Version 2021, the Company is assigned to "Machinery Equipment - Specialised Equipment - Printing and
Packaging Machinery".
(I) Industry overview
1. Corrugated packaging machinery is closely related to the downstream corrugated packaging industry
Corrugated packages are very common and widely-used packaging products in food and beverage, clothing, shoes
and hats, home appliance and furniture, pharmaceutical and daily chemicals, e-commerce and express and logistics
industries. The consumption and production of corrugated packages are closely related to the "big consumption"
industry. As consumer goods are in rigid demand in the national economy, higher economic and social development
levels, better quality of life of people and higher public consumption level are the fundamental driving forces for greater
demand for corrugated packages, as well as the fundamental driving forces for higher capacity of corrugated packages
and greater demand for corrugated packaging machinery.
Nowadays, carbon emission reduction and carbon neutrality are the necessary solutions for global climate
problems, and green circular economy is an important way to implement it. Corrugated packages are degradable,
recyclable and more environmentally friendly than plastic packages. Since 2020, when China enforced the "most strict
plastic ban in history", governments at all levels have introduced specific measures to reduce the use of plastic products
in the packaging industry, which is expected to further promote the growth of the domestic market's demand for
corrugated packages.
Compared with mature markets in Europe and the United States, the packaging industry market in China is more
scattered. With the continuous improvement of concentration, continuous aggregation of market shares to medium- and
large-sized enterprises and continuous improvement of the comprehensive strength of leading packaging enterprises, the
demand for middle- and high-end capacity and machinery of the corrugated packaging industry market will soon grow
rapidly. For economic, environmental and policy considerations, primary and secondary plants in the corrugated
packaging industry prefer production lines and machinery with higher production efficiency, stability and reliability and
degree of intelligence.
2. The corrugated packaging machinery industry gradually marches toward digitalization and intelligence
The development of the corrugated packaging machinery industry experienced mechanization, electrification and
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automation stages, and is now heading intelligence and digitalization. After years of rises in labor price, land price and
other production factor prices, as well as tightening environmental regulations and labor shortage and the epidemic
shock over the past two years, the printing and packaging industry is facing the change of packaging and printing
demand of terminal customers toward "small size of single batches + multiple batches + customization", and it has
become a consensus that the production capacity is upgrading toward "intelligence, digitalization and automation". In
the post-epidemic era, practitioners in the industry have perceived more deeply the importance of "intelligent plants"
and "industrial interconnection". Leading medium- and large-sized enterprises have taken positive measures to
accelerate digital and intelligent production.
As estimated, there are over 6,000 corrugator lines in the domestic market, and more corrugated box printing and
packaging machinery. In the next five to ten years, these production lines and machinery will be replaced by more
intelligent ones with higher production efficiency, stability and reliability.
(II) The Company’s position in the industry
Medium- and high-end corrugated packaging machinery integrates servo CNC, mechanical-electrical design,
machine finishing and information-based production management, and is highly technological and valuable, falling
under the technology-intensive and capital-intensive industry. Since its establishment, Dongfang Precision has been
targeting middle- and high-end markets. Always pursuing high product quality and excellent customer service, it has
been a reliable partner for large- and medium-sized enterprises in the global corrugated packaging industry over the
years.
It is estimated that the global market size of the corrugated packaging machinery industry is about RMB30 billion
to RMB40 billion. Most of the first-tier manufacturers are from the United States and developed countries in Europe,
including BHS (Germany) and Fosber Group (a wholly-owned subsidiary of Dongfang Precision) engaging in
corrugator lines and Bobst (Switzerland), Gopfert (Germany), Dongfang Precision (China) and Dongfang Precision
(Europe) engaging in corrugated box printing and packaging lines. By the size of revenue, Dongfang Precision has the
overall market share of its corrugated packaging machinery business is about 10% in the global industry market,
ranking first among domestic enterprises of the same type and second in the global market of the same type in
corrugated packaging machinery sector.
II Principal Activities of the Company in the Reporting Period
(I) Overview
The Company's principal businesses in 2021 are as follows:
[Table 1: Principal Businesses of Dongfang Precision]
Principal Main functions and application fields
business/product
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Corrugator lines. It is used for the production of corrugated boards of different specifications, and is the
core and key machinery for corrugated packaging production. They are widely used in large- and
medium-sized enterprises (primary and secondary plants) producing corrugated boards in the industrial
chain.
A corrugator line is composed of two process sections, namely wet-end equipment and dry-end equipment,
independent of each other. The former makes corrugated base paper into three-layer, five-layer and
seven-layer corrugated boards, and the latter longitudinally cuts, presses, transversely cuts and stacks
corrugated boards as required by orders.
Intelligent corrugated
Corrugated box printing and packaging machinery. It is used to produce and process corrugated boards into
packaging machinery
corrugated boxes of different specifications as required by customers, and it includes such processes as
corrugated paper feeding, printing, slotting, die cutting and box stitching. Corrugated box printing and
packaging machinery is composed of the corrugated box printing line, the corrugated box printing machine
and the supporting pre-printing and post-printing machines for the printing unit including the paper feeding
unit, slotting and die cutting unit, waste discharging unit, box pasting and stitching unit and the counting
and stacking unit. The printing and packaging machinery is the core of corrugated box production, and is
widely used by all kinds of enterprises (primary plants, secondary plants and tertiary plants) that process
and produce corrugated boxes in the corrugated packaging industry chain.
The Company has built an enterprise- and industry-level intelligent plant platform for customers in the
Corrugated packaging
corrugated packaging industry to help the customers realise a digital and network-based equipment layer,
industry
connect business, cash, and information flows, and promote comprehensive digitalisation of the production and
Intelligent plant
solutions operation layer, as well as data-based reasonable management and decision-making, in order to promote
intelligent transformation, and enhance enterprise competitiveness in all respects.
Outboard motors are a kind of detachable power units that are mounted on the stern plate of a boat to drive the
Outboard power
boat to sail, and can be applied to boats shorter than 24m in inland rivers, lakes and coastal waters. They are
products
widely used in water recreation, fishing, water traffic, emergency rescue, shore landing and maritime patrol.
(II) Intelligent corrugated packaging machinery business
1. Overview of the intelligent corrugated packaging machinery business
The Company's core business is intelligent corrugated packaging machinery, in which it provides medium-
and large-sized enterprise customers in the global corrugated packaging industry with core and key production
lines and machines making up the production lines necessary for the corrugated packaging production and
processing.
The Company has become a one-stop production line and machinery supplier with leading comprehensive
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strength in the industry for corrugated packaging enterprise customers, and provides machinery products for the
production and printing of corrugated boards and paper feeding/slotting/die cutting/waste discharging/pasting and
stitching/counting/stacking of corrugated boxes of corrugator plants and corrugated box plants.
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[Figure 1 Relationship between Corrugated Packaging Production and Industrial Value Chain and the Company's Intelligent Corrugated Packaging Machinery
Products]
Intelligent high-speed corrugator lines
Corrugated base paper
Kraft paper High-precision corrugator lines
Corrugator
Corrugated box printing and packaging lines (top printing fixed type)
Corrugated boxes
Corrugated box printing and packaging lines (bottom printing open-close type)
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2. Main products in intelligent corrugated packaging machinery business
(1) Corrugator lines
The Company's corrugator line business is mainly operated by the wholly-owned subsidiary Fosber Group
(consisting of Fosber Italy, Fosber America, QCorr, Tirua Group, etc.) and the holding subsidiary Fosber Asia.
The subsidiary Fosber Group owns S-Line, C-Line and Quantum-Line products, and its main customer
groups are in Europe, North America and Latin America. The subsidiary Fosber Asia owns Pro-Line and E-Line
products, and its main customer groups are in China, Southeast Asia and South Asia.
The Company's middle- and high-end corrugator line products are ahead of those of domestic brands of
enterprises of the same type in overall performance including velocity, width, intelligence, precision and stability,
and run stably and are provided with good technical support, being greatly competitive in the global industry
market.
(2) Corrugated box printing and packaging lines
The Company's corrugated box printing and packaging line business is mainly operated by Dongfang
Precision (China) and Dongfang Precision (Europe).
Dongfang Precision (China) owns integrated corrugated box printing and packaging line products including
Dongfang Star I top printing fixed type FFG inline, Dongfang Star II top printing open-close type FFG inline,
Super Star I bottom printing die cutter stripper vacuum stacker converting line, Super Star II bottom printing
open-close type FFG inline and Super Star III bottom printing open-close type/FFG & stitcher line, covering
different types and specifications as fixed type/open-close type and top printing/bottom printing. Besides,
Dongfang Precision (China) also sells the main assemblies of the integrated line products up to dozens of different
specifications, as well as corrugated box printing and packaging machinery products of different market
positioning. Its integrated line products and single machine products are marketed in over 30 countries and
regions in Europe, America, Asia, Africa, Latin America and Oceania.
Dongfang Precision (Europe) owns high-end integrated corrugated box printing and packaging lines
including FD quickset top printing FFG inline and HGL quickset bottom printing FFG inline and quickset bottom
printing FFG/die cutter stripper line, and sells them in the European market. These lines can feed paper without
crushing and be separately controlled by the servo, is fully automatic, and is capable of high-resolution printing.
Besides, it also sells pre-printing and post-printing machines of different specifications that are applicable to
integrated line products, including paper feeders, waste dischargers, intelligent stackers and folder gluer.
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[Table 2 Main Product Matrix of the Intelligent Corrugated Packaging Machinery Business of Dongfang Precision - Corrugator Lines]
Product type Brand Product image Main characteristics
Width: 2.5m to 2.8m;
Velocity: 250 to 470m/min
Pro/Care, Pro/Quality, etc.
Industrial Production
Information System 4.0
Width: 1.8m to 2.5m;
Innovation
Compact body and high
flexibility
More suitable for the production
of light corrugated boards
Corrugator lines
Width: 2.2m to 2.8m;
Velocity: 180 to 320m/min
The world's top three
professional suppliers of
corrugating rolls and pressure
rolls, with leading processing
and tungsten carbide processing
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technologies
[Table 3 Main Product Matrix of the Intelligent Corrugated Packaging Machinery Business of Dongfang Precision - Corrugated Box Printing and Packaging
Lines]
Product type Brand Product image Main characteristics
Top printing fixed type
Dongfang Star I top printing fixed type FFG inline Full servo control
Model change without
suspension
2min quick order change
Energy-saving, efficient and
intelligent
Dongfang Star II top printing open-close type FFG inline
Top printing open-close type
Servo motor control
Require only 2 to 3 operators
for one integrated line
Integrated
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Product type Brand Product image Main characteristics
corrugated box Efficient, stable, thorough
printing and cleaning
packaging lines Accurate counting and
automatic stacking
Suitable for special-shaped
Super Star I bottom printing die cutter stripper vacuum stacker converting line
boxes, machine-packed boxes
and pre-printed boxes, and
can cut dies by continuous
clicks once after being
powered on, which solves the
industry pain point
Require only 2 to 3 operators
for one integrated line
A professional die cutter FFG
line
Super Star II bottom printing open-close type FFG inline Suitable for efficient
production of boxes requiring
slotting or die cutting
Servo motor control
Require only 2 to 3 operators
for one integrated line
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Product type Brand Product image Main characteristics
A well-established bottom
printing FFG & stitcher
Super Star III bottom printing open-close type/FFG & stitcher line All-in-one control and easy
operation
One machine for multiple
Integrated purposes supporting order
corrugated box changes
printing and Fewer processes and lower
packaging lines labor costs
High-end bottom printing
fixed type line
Driven by spindle servo
Quick order change
Complete pre-printing and
post-printing supporting units
High-end bottom printing
open-close type line
Servo motor control
Require only 2 to 3 operators
for one integrated line
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3. Business model of intelligent corrugated packaging machinery business
A. R&D model
Both the corrugator line business represented by the subsidiaries Fosber Group and Fosber Asia and the
corrugated box printing and packaging machinery business represented by Dongfang Precision (China) and
Dongfang Precision (Europe) are equipped work industry-leading independent design and R&D capabilities.
The Company keeps building a high-level R&D innovation management mechanism, and has an R&D team
composed of industry-leading experts, and secure the leading position of its technology in the industry with
long-term and short-term product R&D plans, market-oriented R&D mechanism and refined R&D talent incentive
policies.
B. Procurement and production model
The Company purchases steel plates, metal components and electric components from external suppliers,
while producing core machining components and corrugating rolls by itself.
It produces most of the machinery products according to orders, and purchases raw materials from suppliers,
compiles annual, quarterly and monthly production plans and reasonably arranges production according to sales
contracts and raw materials on hand only after receiving customers' orders and requiring customers to pay part of
the down payment. In production and operation management, the Company promotes "lean production" to
accurately control BOM costs and manufacturing costs and continuously improve operational efficiency.
In general cases, orders of corrugator lines will be delivered in 4 to 6 months, and orders of corrugated box
printing and packaging machinery will be delivered in 2 to 3 months.
C. Marketing model
In terms of the marketing method, the Company sells products through direct selling and distribution. In
the domestic market, the Company sells products through direct selling. In overseas markets, the subsidiaries
Fosber Group and Fosber Asia sell through direct selling and Dongfang Precision (China) and Dongfang Precision
(Europe) sell through agency distribution in some overseas markets.
Direct selling allows the Company to directly face customers to ensure accurate demand information, prompt
information transmission and information feedback to the Company's R&D and production departments, so that
customers can be timely provided with overall solutions. Due to the complexity of products, the Company has an
outstanding after sales service team that is responsible for on-site installation, commissioning, training and after
sales services, which can provide 7*24h prompt response and support as required by customers.
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In terms of the types of products being sold, the Company sells production lines, single machines,
accessories, software and services. Integrated lines and single machines are sold only once, and the amount of
each sale is large. Accessories, software and services are sold multiple times during the lifecycle of machines.
In the industry market, the continuously increasing holding of the Company's machinery boosts ceaseless
sales of the Company's accessories, software and services, and high-quality technical support and services drives
the sales of production lines and machines, which is fully evidenced by the high re-purchase rate of the
Company's middle- and high-end machinery products, so the two support and facilitate each other.
In terms of the settlement method of sales payment, 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 corrugator lines and corrugated box printing and packaging machinery products. In general cases, 80% to
90% of the sales payment can be collected upon the delivery of products.
(III) Overall solution business for intelligent plants in the corrugated packaging industry
Dongfang Digicom, established in 2020, is the key carrier of the implementation of the Group's
"digitalisation and intellectualisation strategy". Adhering to the purpose and mission of "making the industry more
intelligent and manufacturing simpler" and with the vision of "to become a world-leading supplier of overall
solutions of intelligent plants and industrial Internet services in the packaging industry", it is specialized in
building an enterprise-level and industry-level industrial Internet platform for the corrugated packaging industry
that integrates new information technologies including IoT, cloud computing, big data, 5G and AI.
Aiming at the current situation that most domestic corrugated packaging enterprises are poorly capable of
production resources integration and in labor shortage, have unreasonable workshop layout and have a large room
for production efficiency improvement, the intelligent logistics business team of Dongfang Digicom provides
corrugated packaging enterprises in China with tailor-made intelligent logistics solutions for intelligent plants
based on years of profound experience in global and domestic industry markets and ERP, APS, WMS/WC and
MES technologies and in combination with advanced international technical concepts and the distinctive
characteristics of the carton packaging market in China.
The Company enjoys a whole-industrial-chain layout in the corrugated packaging machinery sector, and the
most complete and rich product base in the industry. With nearly 30 years of profound experience in Know-How
in the corrugated packaging machinery sector, it is the firm foundation and solid support for Dongfang Digicom.
With an unswerving strategic focus, the Company continues resources input and import of talents specialized in
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industrial Internet, and has developed the unique and core technical R&D force of Dongfang Digicom to output
solutions with completely independent intellectual property rights.
Figure 2 Dongfang Digicom's Overall Solutions for Intelligent Plants in the Corrugated Packaging Industry
Intelligent industry
Supply chain Business Business Second-hand
Online mall machinery market
finance synergy operation
Intelligent Decision-making Operation analysis Abnormality monitoring Visualized (Web/app...) Energy monitoring
operation analysis and handling
Intelligent Design and manufacturing integration Network-based synergetic manufacturing Quality control Cost management
plant
Intelligent scheduling Intelligent dispatching Intelligent collection Smart monitoring
Printer production management
Intelligent system
manufacturing
Accessory management Basic data Order plan
management
Production Equipment
Data Integrated management management
Data warehouse Data cleansing Real-time Data exchange Data modeling Algorithm
middle computing channel analysis
office Quality control Report management
Tool Low-level code Procedure guide Report engine Application Basic services Customized
platform development integration development
IoT Hardware integration platform Edge computing
platform
Printer Flat-pressing FFG & stitcher Corrugator Other Printer Flat-pressing FFG & stitcher Corrugator Other Printer Flat-pressing FFG & stitcher Corrugator Other
flat die cutter lines machinery flat die cutter lines machinery flat die cutter lines machinery
Plant 1 Plant 1 Plant 1
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[Figure 3 Application Model of the Overall Solution Business for Intelligent Plants in the Corrugated Packaging Industry]
DFDS
platform
(data
application)
APP Large screen dashboard Data report
Bog data Data processing Data analysis
Data cleansing Data storage
platform
Fast moving consumer goods
Pharmaceuticals industry
Equipment access Data collection Data storage Rules Engine
IOT
Electronics industry
Appliance industry
Other industries
Light industry
Border gateway (edge acquisition terminal + intelligent sensing terminal)
Corrugated packaging enterprises
Internet of Machines Internet of Internet of
Things Persons
Equipment
Smart Smart Intelligent
Printer Flat-pressing flat die FFG & stitcher Corrugator lines Visual sensor for RFID/bar Field
cutter inspection electric water environmental code tag operators
meter meter monitoring
Overall solution for intelligent corrugated packaging plants
End-market application
Whole-plant intelligent logistics
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(IV) Outboard power product business
The subsidiary Parsun Power mainly engages in the design, R&D, production and marketing of outboard
motors, and is committed to becoming a world-class outboard power supplier. Parsun Power is the leading
enterprise in the outboard motor industry in China, and enjoyed the first market share in the industry from 2018 to
2020.
1. Industry situation and market position of Parsun Power
Parsun Power falls under the outboard motor industry in the marine auxiliary equipment industry. Outboard
motors are the key equipment for small- and medium-sized ships, and are widely used in water recreation, fishing,
water traffic, emergency rescue, shore landing and maritime patrol, as shown below:
[Table 4 Fields and Scenarios of the Application of Outboard Motors]
Field of
Specific scenario Legend
application
Recreational fishing,
Recreational recreational sailing and
recreational water sports
Fishing, water traffic and
Commercial
waterway maintenance
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Emergency rescue and
Official and maritime patrol
military Beach landing and water
reconnaissance
According to the report by Global Market Insights Research Private Limited, the size of the global outboard
motor market in 2020 was USD9,105 million, which is expected to reach USD13,191 million by 2027, with a
compound annual growth rate of 5.04% from 2021 to 2027. In 2020, the size of the outboard motor market in
China was USD228 million, which is expected to reach USD424 million by 2027, with a compound annual
growth rate of 8.91% from 2021 to 2027, significantly higher than that 5.04% of the global market.
Worldwide, the outboard motor industry is dominated by Japanese and American brands, including Yamaha,
Japan (an outboard motor brand under Yamaha Motor) and Mercury, USA (an outboard motor brand under
Bentfield Group).
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 a broad market space for domestic substitution.
Meanwhile, with the increasing attention to global environmental protection and climate changes and the
implementation of China's carbon emission reduction and carbon neutrality policies, the global development trend
of outboard motor products toward medium- and high-horsepower and new-energy ones is more and more
definitive.
After years of development, Parsun Power has become a leading enterprise among domestic outboard motor
brands, its market share has been ranking the first nationwide for years, and its products are being exported to tens
of countries and regions in Europe, Africa, Oceania, South America, North America, the Middle East and
Southeast Asia. Parsun Power has realized a complete product line layout of "gasoline-diesel-electric power", and
has been marching toward high-horsepower diesel outboard motors and electric outboard motors with its years of
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experience in products and technology and leading market share in the field of petrol outboard motors. In the
future, it will raise funds through a spin-off listing, and will improve its core competitiveness to become a
professional supplier of aquatic power products in China with global competitiveness.
2. Main products of Parsun Power in outboard motor business
Parsun Power provides outboard motor products from 2hp to 115hp. The output power of an outboard motor
increases with its horsepower, so as the size or velocity of the boat assembled to it.
By the source of engine 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 a number of proprietary technologies and
applied them to products.
In recent years, Parsun Power has developed medium- and high-horsepower outboard motors leading the
Chinese market and with domestic substitution characteristics, 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.
Electric outboard motors are powered by batteries. They convert electric power into kinetic power through
motors, and are characterized by zero emissions, low noise and easy operation, and are mainly used in scenic
spots and other sectors requiring stricter environmental protection. Parsun Power's electric outboard motors are
divided into 7hp motors and 9.9hp motors, which are being sold in developed countries such as the United States.
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 to 300hp of OXE Marine (a Swedish brand) in the domestic market.
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In general, 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 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.
3. Business model of Parsun Power's outboard motor business
Parsun Power runs its outboard motor business through "Design and R&D + Production + Marketing". In
terms of sales model, Parsun Power gives priority to distribution, with direct selling as a supplement.
III Core Competitiveness Analysis
In the Reporting Period, the Company had no significant adverse changes in its core competitiveness.
Analysis of the Company's core competitiveness is as follows:
(I) 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. A full-coverage layout in the
corrugated packaging production and processing value chain has been established.
Processes in the corrugated packaging production and processing value chain covered by the Company's
business units include:
1. Corrugator production:
Fosber Group, Fosber Asia and QuantumCorrugated are the business units of the Company engaging in it.
They serve large- and medium-sized enterprises in domestic and foreign corrugated board production and
processing industries, and supply middle- and high-end corrugator line products of different specifications,
different types and different market positioning.
Fosber Group has middle- and high-end corrugator lines and leading industrial Internet technologies in the
front rank of the global industry market, and also has corrugating roll production lines and high-speed corrugator
lines suitable for industrial digital printing, having a complete industrial layout in the core production line and
machinery sector in the field of corrugator production and processing.
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Specifically, Tirua Group, a subsidiary of Fosber Group, is a time-honored, prestigious and professional
corrugating roll supplier in Spain, and its corrugating roll products are one of the key components of corrugator
lines, and QCorr, another subsidiary of Fosber Group, has the independently-developed Quantum high-speed
corrugator line that has the unique design fitting the embedding of industrial digital printing technology.
2. Corrugated box printing and packaging: Dongfang Precision (China) and Dongfang Precision (Europe)
are the business units of the Company engaging in it. They serve domestic and foreign corrugated box production
and processing industry markets, and supply middle- and integrated high-end corrugated box printing and
packaging lines and single machine products covering all units and all specifications of the production lines. In
terms of corrugated box printing and packaging machinery, Dongfang Precision's products are divided into fixed
type/open-close type, top printing/bottom printing and integrated line/single machine products, and has the riches
product portfolio among domestic enterprises of the same type.
3. Overall solution for intelligent corrugated packaging plants: Dongfang Digicom is the business unit of
the Company engaging in it. It provides customers in the corrugated packaging production and processing
industry market with the overall solution for intelligent plants covering order management, production
management, cost analysis, intelligent decision-making, intelligent logistics and supply chain management and
equipment management, as well as the solution for intelligent whole-plant logistics.
With the full-coverage industry chain layout, the Company has the most complete and richest corrugated
packaging line and machinery product portfolio in the industry, making it capable of meeting the demands for
integrated line and single machine products of different market positioning, different customer types and dozens
of specifications and models, second to none in China.
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Figure 4 Business Divisions and Entities of Dongfang Precision
(II) Industry-leading technology level and capability of continuous R&D and innovation
The Company's overall R&D strength and technology level are at the forefront among domestic enterprises
of the same type, with 284 technicians specialized in R&D. As at 31 December 2021, the Company was holding
nearly 300 licensed patents at home and abroad. In 2021, the Company was awarded the Provincial Industrial
Design Center of Guangdong and the Provincial Demonstration Enterprise of Intellectual Property Right in
Guangdong.
Its subsidiary Fosber Group is one of the two companies with the strongest comprehensive technical strength
in the field of high-speed and wide corrugator lines worldwide. Fosber's middle- and high-end corrugator lines are
internationally leading in the industry in velocity, width, precision, stability, reliability, failure rate and
intelligence, and its high-technology-content and high-quality machinery products and technical support services
have won the praise of domestic and foreign enterprise customers.
In the course of design and R&D of high-end corrugator lines, Fosber Group proactively practices the
industrial Internet technology and applies sensors, VR, big data and algorithms, and has launched the PRO
information-based intelligent production management system for corrugator lines with tens of years of
Know-How experience in the middle- and high-end corrugator line industry, realizing full automation and
intelligence of the whole process of corrugator production and processing. Through over 200 sensors in corrugator
lines, it monitors the temperature, humidity, heat, folds and other data of corrugator lines in real time, and also
monitors the dashboard dynamically in the production process. Through data-based production performance
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analysis and cost analysis, it helps customers improve production efficiency. Through the self-diagnosis system, it
identifies abnormal operations and sends alerts, and searches solutions in the database and outputs the solutions
automatically. 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.
Figure 5 How Fosber Group's PRO Information-based Intelligent Production Management System Works
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 a number
of China-leading core technologies and accumulated rich scientifically innovative achievements after long-term
R&D input and technical accumulation. As at the end of the Reporting Period, it has got 53 licensed patents and
won two second prizes of the China Machinery Industry Science and Technology Award, and 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.
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(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
management. The core management team has a broad vision, can promptly keep up with the general development
trend of the intelligent corrugated packaging machinery 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 talents" and "cultural
orientation" 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 in the industry worldwide
Dongfang Precision corrugated box printing and packaging machinery, Fosber corrugator lines, Tirua
corrugating rolls, Quantum corrugator lines and Parsun outboard motors of the Company are enjoying
considerable brand recognition and industry influence at home and abroad.
The Company has become an influential enterprise in the industry, as evidenced by its honors like the "Top
500 Private Manufacturers of China", the "Champion in Single Aspect", and the "Leader in Industry Segment".
In the business segment of "intelligent corrugated packaging machinery", the Company has established good
partnerships with domestically leading enterprises in the corrugated packaging industry including Nine Dragons
Paper, Shanying Intl, Yuen Foong Yu, HXPP, MYS, XTL, Great Shengda, Forest Packing Co., Ltd., UCPS and
Zhengye International, and large international groups in the corrugated packaging industry including International
Paper, Smurfit Kappa, DS Smith, APP Sinar Mas and Mpact.
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 solutions for intelligent plants as well as
middle- and high-end production lines and machinery. The Company has seized opportunities and formed a better
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competitive edge by virtue of its stable business partnership during the above industry changes.
(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 generally competitive in the world
when it is operated as a group.
Figure 6 Global Layout of the Company's Business Assets and Marketing Network
(VI) Strong strategic control and integration of business segments
Since listing, the Company has been making full use of the platform of listed companies to carry out
industrial mergers and acquisitions of appropriate subject matters in the corrugated packaging machinery industry
chain. The Company attaches great importance to post-investment integration. Over the years, the Company has
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developed strong strategic control and integration of its business segments through successful practices in
acquiring target companies in the corrugated packaging machinery industry chain, and has accumulated rich
experience in control and integration.
Strategic control is the core capability that the Company relies on to manage its various business entities.
After years of practice, the Company adjusted the strategic development plans, business models, product mixes,
market strategies and core management teams of the target 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 a 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 the legal person governance
standardization policy, the "three-board" operation mechanism and the strategic and financial control system, and
implemented decentralized authorization management, complete audits and management incentives, forming a set
of measures for integrated and effective post-investment control to secure the effective implementation of the
strategic plan.
In 2014, the Company acquired the shareholding right of Fosber Group, and took a number of effective
measures in the acquisition, helped Fosber Group adjust its strategic plan and business strategy and standardize
the authorization management system, and implemented the performance incentive policy and strengthened
financial control over the core management. Such measures have successfully stimulated Fosber Group's business
vitality. From 2015 to 2021, the compound annual growth rate of the operating revenue of Fosber Group was
about 14%, and the same of its net profit was 30%.
In 2015, the Company acquired the shareholding right of Parsun Power, 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 talents for a more powerful core team. These measures enabled Parsun Power
to realize continuous and stable growth. From 2017 to 2021, the compound annual growth rate of the operating
revenue of Parsun Power was about 20%.
In 2019 and 2020, the Company acquired the relevant business assets of Tirua Group, a nearly century-old
corrugating roll manufacturer, and those of Agnati, a once splendent Italian corrugator line manufacturer. The
Company fully streamlined the development strategies, R&D systems, product sequences, marketing and team
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building of these two companies, based on which it adjusted and optimized the business strategies and output
management, effectively stimulating the vitality of the two old European companies and the enthusiasm of their
manager teams. The operating revenue and profit of the two companies significantly increased in 2021 compared
with the same period in the previous year.
Relying on its strong strategic control and integration of business segments, based on "mutual respect and
mutual trust" and with an open mind seeking common ground while putting aside differences, the Company
effectively integrated all its business entities and continuously released the synergy with the industry chain, and
has become a successful example among domestic private enterprises in integration after domestic and foreign
industrial mergers and acquisitions. The valuable experience and accumulation in industry chain mergers,
acquisitions and integrations lay a solid foundation and provide strong support for the Company to promote the
implementation of the five-year strategic planning and realize steady and sustainable development.
IV Core Business Analysis
(I) Overview
In 2021, the world economy was in gradual recovery, while China's economy experienced strong growth,
with GDP up by over 8% year-on-year, exceeding RMB100 trillion for the second consecutive year. And
investments in the manufacturing sector and high-tech industries grew well in the country.
2021 marked the first year of China's "14th Five-Year Plan". Under the strong leadership of the Board of
Directors and the management team, Dongfang Precision took active actions and seized opportunities to promote
the steady and sound development of all the business divisions.
In 2021, the Company recorded operating revenue of approximately RMB3,524 million, up by 20.86%
year-on-year, and a net profit attributable to its shareholders of approximately RMB467 million, up by 20.08%
year-on-year. In the Reporting Period, the Company recorded basic earnings per share of RMB0.35/share, up by
34.62% year-on-year, and weighted average return on equity of 11.72%, up by 5.52% year-on-year.
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(II) Analysis of the performance of the business divisions in the Reporting Period
In the Reporting Period, the main business divisions of the Company and the changes in their operating
revenue are as follows:
[Table 5 Operating Revenue of the Three Main Business Divisions of Dongfang Precision 2021Vs2020]
Operating revenue in Operating revenue in
Business division 2021 2020 Change (%)
(RMB'0,000) (RMB'0,000)
Corrugator lines 252,217.41 215,017.30 +17%
Corrugated box printing and
66,275.31 50,730.87 +31%
packaging lines
Outboard power products 46,873.16 34,622.82 +35%
1. The division of corrugator lines: The trend of steady development continued, and the business
quality steadily improved
The business entities of the corrugator line division include the wholly-owned subsidiary Fosber Group
(including Fosber Italy, Fosber America, QCorr and Tirua Group) and the holding subsidiary Fosber Asia.
The corrugator line division is an important component of the Company's core corrugated packaging
machinery business, contributes to the majority of the Company's total revenue from principal business, and has
been steadily growing for consecutive years. From 2018 to 2021, the compound annual growth rate of the
operating revenue from it was about 16%.
(1) Fosber Group
Fosber Group's businesses, assets and team members are located in Europe and the United States. All
member companies adopt localized management and operation, and have their product design, development and
production and manufacturing in local regions in Europe and the United States. Their main products are
corrugator lines and corrugating rolls of different market positioning, and their finished products are eventually
used for the production and processing of corrugated packaging products of different models.
Corrugated packages are rigid consumer goods in European and American countries. The official
introduction of the plastic ban in Europe in July 2021 accelerated the development of the era of "replacing plastics
with paper" in the packaging industry in European and American countries. Amazon and other companies had
pledged to use cardboard boxes instead of one-off plastic packages in Europe. The increase in the demand for
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corrugated packaging products in Europe and America will be conducive to the increase in the demand for
corrugated packaging lines and production machinery.
Since most of the downstream end users of foreign subsidiaries are in the daily consumer goods industry, so
the business is less negatively affected by geopolitics, international trade and other factors, which together with
product characteristics of high-tech, high quality and high stability and world-leading technical support services,
enable the Company to realize steady and sustainable development in the global market.
In 2021, the monetary policy in American and European countries continued to get loose, and the
macroeconomy recovered. Benefiting from these positive changes, Fosber Group recorded growth in both the
operating revenue and number of orders, with the overall business quality and internal synergy steadily
improving.
In 2019 and 2020, Fosber Group acquired the relevant business assets of Tirua Group, a nearly century-old
high-end corrugating roll and pressure roll manufacturer, and those of Agnati, a once splendent Italian corrugator
line manufacturer. A series of post-investment integration, operational adjustment, and other measures were taken
after the acquisitions, and the acquisitions bore fruits in 2021: The operating results of Tirua Group and QCorr
both improved from the same period last year, the order sales of Tirua Group's corrugating roll products grew
year-on-year, positive progress was made in the order sales of QCorr's Quantum high-speed corrugator lines and
the operational efficiency of the two companies was improved.
(2) Fosber Asia
In 2021, the subsidiary Fosber Asia took full advantage of development opportunities and increased its
business development efforts in the domestic and Southeast Asian markets. Coupled with the impact of the low
performance base under the pandemic in the same period last year, its operating results grew significantly
year-on-year. In the same year, the Company increased its shareholding in Fosber Asia, with the shareholding up
to 89.2% from 56.4%.
Fosber Asia's Pro-Line and E-Line corrugator lines are developed based on the characteristics of customer
demands in Chinese and Southeast Asian industry markets, and are produced in the plants located in Nanhai
District, Foshan City, with the import substitution rate of parts standing at around 90%. Fosber Asia has
established a stable supply chain system in China. Taking full advantage of China's industry chain and supply
chain advantages with the most complete industrial categories and the most complete supporting facilities in the
world, Fosber Asia is able to provide industrial customers in the Chinese and Southeast Asian industry markets
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
with high-quality and high-end corrugator line products made in China.
In the Reporting Period, the number of orders and shipments of Pro-Line products grew rapidly. In 2021, all
orders on high-end lines had been delivered to industry-leading downstream customers, and the first batch of
customers in the Chinese market placed new orders on the same products, proving that the products and services
were recognized by customers in the industry. Positive progress has also been made in market expansion in
Southeast Asia, and orders on integrated lines have been delivered to customers in the industry in Thailand and
India.
With the successive launch of its new middle- and high-end intelligent corrugator lines made in China and
the continuous growth of its market share in China and Southeast Asia, Fosber Asia is expected to have positive
growth of operating results in the next few years. The Company's increase of its shareholding in Fosber Asia fully
shows its confidence in the development of Fosber Asia.
2. The division of corrugated box printing and packaging lines: The total operating revenue rapidly
grew year-on-year
In 2021 and in corrugated box printing and packaging machinery business, Dongfang Precision (China)
overcame difficulties including rising prices of shipping positions, fluctuating prices of raw materials and limited
traffic due to the pandemic, and saw steady growth of operating revenue and number of orders. In the year, it
steadily promoted its cooperation with large- and medium-sized customers in the downstream industry, such as
Shanying Intl, MYS, HXPP, XTL and Great Shengda, first sold its machinery in several emerging market
countries along the Belt and Road Initiative, and had rapid growth of sales of its machinery in Asian markets
outside China. A good and stable momentum of growth was also maintained in parts and service sales business.
In 2021, Dongfang Precision (Europe) made positive progress in the expansion of the American and African
markets while consolidating its market share in Europe, with its high-end corrugated box printing and packaging
machinery highly recognized by large- and medium-sized enterprise customers in Europe and America.
3. The division of outboard power products: The sales of products grew rapidly and the business
efficiency continued to improve.
In 2021, the subsidiary Parsun Power saw rapid year-on-year growth in the number of orders and shipments
of outboard motors and general utility small gasoline motor products owing to the continuously increasing
demand for water recreations of overseas countries during the pandemic.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Parsun Power actively seized market opportunities, intensified its marketing to domestic and foreign
customers, continuously increased R&D input and optimized the product structure. In the Reporting Period,
Parsun Power saw an increase of over 50% year-on-year in the sales revenue from medium- and high-horsepower
outboard motors, realized the mass production of independently-developed 115hp gasoline outboard motors, and
broke the long-term monopoly of internationally well-known brands in the 115hp sector.
Since 2021, Parsun Power has been making breakthroughs in the agency sales of OXE Marine
high-horsepower diesel outboard motors in the domestic market, and the diesel outboard motors it has been selling
are mainly used in commercial transportation and official law enforcement.
In the Reporting Period, Parsun Power actively improved the level of operations management, and recruited
outstanding talents in R&D, sales, production, and operation. As a result, the comprehensive strength of the team
was further enhanced, and the development foundation was further consolidated. Furthermore, by implementing
lean management, as well as improving operational efficiency and capacity utilization, Parsun Power achieved
steady improvement in shipment quality, providing support for the shipment growth of medium- and
high-horsepower models.
4. The business of overall solutions for intelligent plants: Set sail and forge ahead steadily
The subsidiary Dongfang Digicome undertakes the overall solution business for intelligent corrugated
packaging plants. In 2021, Dongfang Digicom completed team building, and had the number of team members
increased from 3 at the beginning of the year to over 40 at the end of 2021, most of which were technical experts
in software R&D with experience in the Internet or high-end manufacturing industry. Besides, Dongfang Digicom
also completed the organizational structure and internal mechanism required for normal operation as an
independent company.
In 2021, Dongfang Digicom investigated the demand of downstream industry customers for industrial
Internet solutions, and got a clearer roadmap for product R&D, with steady progress in the R&D of solution
products.
5. Epitaxial business: The implementation of the "1+N" model was promoted, and the development
space of emerging industries was expanded
During the Reporting Period, the main progress of the Company's epitaxial development business is as
follows:
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
A. High-end manufacturing sector: The Company invested in three enterprises in the high-end core
parts manufacturing sector
a) Investment in Guizhou Aerospace Xinli Technology Co., Ltd.
In the Reporting Period, the Company invested in Guizhou Aerospace Xinli Technology Co., Ltd. through
direct equity participation. Aerospace Xinli is affiliated to China Aerospace Science and Technology Corporation
("CASC"), and mainly engages in the R&D, production and manufacturing of high-quality alloy steel castings and
forgings, non-ferrous castings and structures and new aerospace materials that are widely used in nuclear energy,
nuclear power, aviation and aerospace. It is a domestically renowned manufacturer of nuclear-level parts and
components qualified for the R&D of national defense equipment. Aerospace Xinli undertakes not only the
manufacturing of the magnets supports, shield cladding and other critical equipment for the International
Thermonuclear Experimental Reactor (ITER) Project, one of the world's largest international research cooperation
projects, but also the R&D and production of grade I nuclear mechanical equipment components of most of
China's nuclear power plants, with in-depth participation in the home-manufacturing process of China's nuclear
power construction. It has realized the R&D and home-manufacturing of dozens of alloy materials and critical
components for nuclear power equipment, and its products have covered nuclear fission reactors of the second,
third and fourth generations, many of which are the first in China. Aerospace Xinli has successfully replaced
imported materials and components with the ones made in China, and has become a "little giant" enterprise
highlighted by CASC.
b) Investment in Chengdu Dajin Aero-Tech Co., Ltd. (formerly known as "Sichuan Dajin Stainless
Steel Co., Ltd.)
In the Reporting Period, the Company indirectly invested in Chengdu Dajin Aero-Tech Co., Ltd. ("Dajin
Aero-Tech") by making a capital contribution to Tianjin Hangchuang Zhijin Investment Partnership (Limited
Partnership). Dajin Aero-Tech is specialized in the precision machining and manufacturing of critical parts for
aircraft engines, and has the qualification for the R&D of national defense equipment. Its core products are the
critical parts for aircraft engines, which are characterized by complex structures, great difficulties in testing and
high tolerance. Dajin Aero-Tech enjoys a leading position in its segmentation, and is one of the private enterprises
with strong comprehensive strength in the aviation engine parts industry in China. It is not only an important
supplier of China's major aero-engine models but also the core supplier for the main maintenance plants of the
aero-engines of air forces, and has been shouldering the great mission of acting as strong support for Aero Engine
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Corporation of China, the main force in the whole-machine manufacturing of China's aero-engine industry. While
enjoying a firm position in the aviation field, Dajin Aero-Tech has been gradually using the advanced
manufacturing technologies it has accumulated in the fields of aerospace, missiles, rail transportation and
petroleum machinery manufacturing.
c) Investment in Sichuan Tengdun Technology Co., Ltd.
In the Reporting Period, the Company directly invested in Sichuan Tengdun Technology Co., Ltd. ("Tengdun
Technology") by making a capital contribution to Qingdao Zhongjun Xinghan No. 2 Equity Investment Fund
Center (Limited Partnership). Tengdun Technology is a state-level high-tech enterprise specialized in high-end
UAVs. It is the only private military UAV assembly manufacturer in China, and aims at "creating the future of
commercialization of China's UAVs with aviation and intelligent technologies". The core team of the company is
composed of the chief scientists of the Science and Technology Commission of the Central Military Commission,
the former director of the China Helicopter Research & Development Institute, chief experts of Aviation Industry
Corporation of China and other outstanding experts in the industry, and once led or participated in the whole
process of R&D and production of several key models at home and abroad including the second-generation
models, third-generation models, fourth-generation models and over ten UAV systems. The company's R&D team
gathers top experts in over 60 scientific sectors, and represents the top level in China.
Successively, Tengdun Technology has developed five large- and medium-sized high-end UAVs with
independent intellectual property rights, undertaken a number of major national programs to tackle key problems
and demonstration projects, and continuously explored new scenarios for the application of UAVs, making
multiple breakthroughs "from 0 to 1".
The Twin-Tailed Scorpion double-engine large-sized long-endurance UAV independently developed by
Tengdun Technology is the first large-sized double-engine fixed-wing UAV independently designed and
developed in China, ahead of foreign products of the same type. In October 2021, the Twin-Tailed Scorpion UAV
attracted extensive attention from both domestic and foreign media in the 13th China International Aviation &
Aerospace Exhibition in Zhuhai.
B. Other sectors: The Company invested in 3 companies in the consumer and innovative
pharmaceutical sectors
d) Investment in SF Intra-City (09699.HK)
In the Reporting Period, the Company indirectly invested in SF Intra-City by making a capital contribution to
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
the establishment of Jiaxing Fengrong Equity Investment Partnership (Limited Partnership). SF Intra-City is the
largest independent third-party instant logistics service provider in China, a holding subsidiary of SF Holding
(Stock code: 002352), and has been listed on the main board of the Hong Kong Stock Exchange at the end of
2021.
e) Investment in Nanjing Profeta Intelligent Technology Co., Ltd.
In the Reporting Period, the subsidiary Yineng Investment invested in Nanjing Profeta Intelligent
Technology Co., Ltd. ("Profeta") through direct equity participation. Profeta is a state-level high-tech enterprise
specialized in the digitalization and innovation of oral technologies. It has established close strategic cooperation
with Peking University Hospital of Stomatology for the joint development of innovative products, intelligent
software and automatic equipment by integrating industries, colleges and research institutes and sharing scientific
research achievements, so as to solve the contradiction between the rapidly growing healthcare needs of the aging
society and the absolute shortage of dental professionals.
Profeta is the only company in China that integrated dental design software, typesetting and slicing software
and metal 3D printer, and has independent intellectual property rights. Its products can fully replace imported ones,
and are China's first, filling in domestic blanks and breaking the monopoly of foreign companies.
f) Investment in Xuanzhu Biopharmaceutical Co., Ltd.
In the Reporting Period, the subsidiary Yineng Investment indirectly invested in Xuanzhu Biopharmaceutical
Co., Ltd. ("Xuanzhu Biopharm") by making a capital contribution to Jiangmen Yifeng Yihe Venture Capital
Partnership (Limited Partnership). Xuanzhu Biopharm is a holding subsidiary of Sichuan Pharmaceutical
Holdings, a large pharmaceutical and medical beauty group, and is specialized in innovative drugs. Xuanzhu
Biopharm has an excellent R&D team bringing together nearly 400 overseas scientists, and has formed a complete
R&D system and independent R&D capability in the field of innovative drugs. It has two R&D platforms of small
molecule and large molecule, and is capable of developing and industrializing innovative drugs for tumors,
metabolism, anti-infection, digestion and other segmentations.
C. Impacts of epitaxial business on the overall development of the Company
The business purpose of Yineng Investment, the subsidiary, is to focus on the industries related to its
principal business and seek investment opportunities in high-end machinery manufacturing, large consumption
and bio-pharmaceuticals while carrying out industrial mergers and acquisitions based on industries, assisted by
capital, guided by its strategic planning and driven by circulation.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
In the Reporting Period, Yineng Investment's team was responsible for promoting initiated projects and, in
addition to the aforesaid six investment projects, increased its shareholding in the industrial M&A project of
Fosber Asia. With the minds of domineering entry and positive actions, Yineng Investment promoted the
implementation of the "1+N" development model, and made positive contributions to the Company's layout in
relevant industries.
The aforesaid equity investment projects are in line with the Company's overall strategic planning and the
purpose of epitaxial business and conducive to the Company's expansion of the development space of emerging
industries, enable the Company to fully participate in the industries that the country encourages to develop in the
"14th Five-Year Plan" and share benefits in the process of growth and development along with the subject matters
of the investments, and power the Company's improvement overall profitability.
The aforesaid equity investments do not constitute related-party transactions or major assets restructuring,
and exert no significant impacts on the Company's operating results or financial condition in the Reporting Period.
(III) Capital operation: The capabilities to create value and seek returns for shareholders were
improved
1. Initiation of the spin-off listing of the subsidiary Parsun Power
In the Reporting Period, the Management of the Company initiated the preliminary preparation for the
spin-off listing of Parsun Power on the Shenzhen Stock Exchange with the approval and authorization of the
Board of Directors. After nearly one year of preliminary preparation, the Company's Board of Directors approved
the plan for the spin-off listing of Parsun Power in mid-March 2022, and the subsequent work will be advanced
after the plan is approved by the Company's annual general meeting.
2. Repurchase and retirement of shares of nearly RMB1 billion to improve the earnings per share
In the Reporting Period, the Company actively promoted and completed the annual share repurchase in 2020
initiated in July 2020, and repurchased a total of 212 million shares through centralized bidding, with the total
amount paid of about RMB990 million, in line with the repurchase plan.
In June 2021, the Company retired the aforesaid 212 million repurchased shares with the Shenzhen office of
China Securities Depository and Clearing Corporation Limited. After the retirement, the total share capital
changed from 1.54 billion shares to 1.33 billion shares, down 13.77%, which is conducive to the improvement of
the earnings per share (EPS).
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
In October 2021, as approved by the general meeting, the Company initiated the new annual share repurchase
in 2021. As at the end of 2021, the Company has repurchased approximately 56,797,700 shares through
centralized bidding at the cost of about RMB335 million, accounting for 4.26% of the Company's current total
share capital.
The proposal and initiation of the share repurchase plan fully reflect the Company's recognition of its own
value, confidence in its future development and high attention to the return for shareholders.
3. Equity incentives were steadily promoted to stimulate the internal power
In the Reporting Period, the Company, as scheduled, steadily promoted the restricted share incentive plan
initiated in 2020. In February 2021, it granted a total of 4.24 million incentive shares to 18 key personnel and
management personnel, and in June 2021, a total of 4.31 million incentive shares were exercised for public trading
by 37 awardees in the first unlocking period under the incentive plan.
Steady promotion of equity incentives is beneficial to the Company's sustainable and healthy development
and gathering of internal power, so as to "stabilize the team, boost the morale, gather talents and improve
performance". By closely binding the interests of the Company's key personnel with the Company's future
performance and the improvement of the capability to seek returns for shareholders, the Company will see
continuous improvement in its business performance and the ability to create value.
4. Idle funds were proactively managed with controllable risks
In 2021, the Company and its subsidiary Yineng Investment invested temporarily idle funds on the account
book in securities or entrusted to wealth management business under the premise of complying with laws and
regulations, not affecting the development of the Company principal business and ensuring the capital demand
and capital security in daily operation with the approval and authorization of the general meeting and the Board of
Directors of the Company and in accordance with the Policy for Securities Investment Management. The proactive
management of idle funds is conducive to improving capital utilization efficiency, increasing the return on net
assets, and enhancing the capability to create value.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
(IV) Analysis of key financial indicators
1. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2021 2020
As a % of total As a % of total
Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%) (%)
Total 3,524,734,783.94 100% 2,916,270,143.13 100% 20.86%
By operating division
Intelligent manufacturing 3,524,734,783.94 100.00% 2,916,270,143.13 100.00% 20.86%
By product category
Complete lines and individual
machine units for intelligent 2,061,999,014.24 58.50% 1,707,235,536.74 58.54% 20.78%
corrugated packaging machinery
Parts for intelligent corrugated
693,308,371.22 19.67% 556,259,860.62 19.07% 24.64%
packaging machinery
Software and services related to
intelligent corrugated packaging 300,695,762.82 8.53% 306,546,506.92 10.51% -1.91%
machinery
Outboard motors and general
468,731,635.66 13.30% 346,228,238.85 11.87% 35.38%
utility small gasoline motors
By operating segment
Mainland China 528,007,403.05 14.98% 349,869,885.20 12.00% 50.92%
Other countries and regions 2,996,727,380.89 85.02% 2,566,400,257.93 88.00% 16.77%
By sales mode
Direct selling 3,096,762,855.79 87.86% 2,700,416,408.47 92.60% 14.68%
Distribution selling 427,971,928.15 12.14% 215,853,734.66 7.40% 98.27%
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Operating
Revenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
YoY change in YoY change in
Gross profit YoY change in
Operating revenue Cost of sales operating gross profit
margin cost of sales (%)
revenue (%) margin (%)
By operating division
Intelligent manufacturing 3,524,734,783.94 2,555,072,059.79 27.51% 20.86% 21.72% -0.51%
By product category
Complete lines and
individual machine units
2,061,999,014.24 1,567,772,384.89 23.97% 20.78% 19.47% 0.83%
for intelligent corrugated
packaging machinery
Parts for intelligent
corrugated packaging 693,308,371.22 394,697,198.83 43.07% 24.64% 39.00% -5.88%
machinery
Software and services
related to intelligent
300,695,762.82 231,464,311.51 23.02% -1.91% 0.92% -2.16%
corrugated packaging
machinery
Outboard motors and
general utility small 468,731,635.66 361,138,164.56 22.95% 35.38% 32.00% 1.97%
gasoline motors
By operating segment
Mainland China 528,007,403.05 353,097,535.89 33.13% 50.92% 49.12% 0.81%
Other countries and
2,996,727,380.89 2,201,974,523.90 26.52% 16.77% 18.24% -0.91%
regions
By sales mode
Direct selling 3,096,762,855.79 2,248,309,271.48 27.40% 14.68% 14.93% -0.16%
Distribution selling 427,971,928.15 306,762,788.31 28.32% 98.27% 114.61% -5.46%
Note:
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 2021 2020 Change (%)
Intelligent Unit sales Unit 327,755 289,152 13.35%
manufacturing Output Unit 309,027 288,738 7.03%
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Inventory Unit 29,079 7,854 270.24%
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
At the end of the year, the inventory increased by about 270%, mainly due to the increase of sales in 2021, and the increase of
inventory reserves to cope with the increased orders.
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
2021 2020
Operating
Item As a % of total As a % of total Change (%)
division Cost of sales Cost of sales
cost of sales (%) cost of sales (%)
Intelligent
Cost of sales 2,555,072,059.79 100.00% 2,099,148,826.36 100.00% 21.72%
manufacturing
Unit: RMB
2021 2020
Product category Item As a % of total As a % of total Change (%)
Cost of sales Cost of sales
cost of sales (%) cost of sales (%)
Complete lines
and individual
machine units for
intelligent Cost of sales 1,567,772,384.89 61.36% 1,312,266,465.90 62.51% 19.47%
corrugated
packaging
machinery
Parts for
intelligent
corrugated Cost of sales 394,697,198.83 15.45% 283,953,498.63 13.53% 39.00%
packaging
machinery
Software and
services related to
intelligent Cost of sales 231,464,311.51 9.06% 229,344,819.77 10.93% 0.92%
corrugated
packaging
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
machinery
Outboard motors
and general utility
Cost of sales 361,138,164.56 14.13% 273,584,042.06 13.03% 32.00%
small gasoline
motors
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
Dongfang Digicom Technology (Guangdong) Co., Ltd. (“Digicom Guangdong”) has been incorporated by the Company in
February 2021 with a registered capital of RMB8 million. The Company has its 100% ownership in an indirect way.
Suzhou Parsun Power Technology Co., Ltd. (“Parsun Power Technology”) has been incorporated by the Company’s subsidiary
Parsun Power with a registered capital of RMB10 million. The Company has its 69.55% ownership in an indirect way.
Tianjin Hangchuang Zhijin Investment Partnership (Limited Partnership) (“Tianjin Hangchuang Fund”) has been established
jointly by the Company and AVIC Innovation Capital Management Co., Ltd. in March 2021. As the sole limited partner of the Fund,
the Company has made a capital contribution of RMB20 million, equivalent to approximately 95% ownership. 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 the absolute majority 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.
(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) 633,943,286.53
Total sales to top five customers as a % of total sales of the Reporting Period (%) 17.99%
Total sales to related parties among top five customers as a % of total sales of the Reporting Period (%) 0.00%
Top five customers:
Sales revenue contributed for
No. Customer As a % of total sales revenue (%)
the Reporting Period (RMB)
1 Customer A 263,362,372.19 7.47%
2 Customer B 130,868,995.76 3.71%
3 Customer C 111,965,823.90 3.18%
4 Customer D 64,415,975.20 1.83%
5 Customer E 63,330,119.49 1.80%
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Sales revenue contributed for
No. Customer As a % of total sales revenue (%)
the Reporting Period (RMB)
Total -- 633,943,286.53 17.99%
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 279,015,637.64
Total purchases from top five suppliers as a % of total purchases of the Reporting Period (%) 10.92%
Total purchases from related parties among top five suppliers as a % of total purchases of the Reporting Period
0.00%
(%)
Top five suppliers:
Purchase in the Reporting
No. Supplier As a % of total purchases (%)
Period (RMB)
1 Supplier A 154,609,666.50 6.05%
2 Supplier B 38,048,680.68 1.49%
3 Supplier C 34,455,510.20 1.35%
4 Supplier D 26,258,213.44 1.03%
5 Supplier E 25,643,566.82 1.00%
Total -- 279,015,637.64 10.92%
Other information about major suppliers:
□ Applicable √ Not applicable
2. Expenses
Unit: RMB
2021 2020 Change (%) Reason for any significant change
Selling expenses 185,327,678.18 181,549,459.69 2.08% No significant impact.
Administrative expenses 272,090,728.08 246,973,016.40 10.17% No significant impact.
Mainly due to the increase in interest
Finance costs -5,996,474.46 7,919,670.28 -175.72%
income and reduced exchange losses.
R&D expenses 99,557,565.46 82,082,274.75 21.29% Mainly due to the increase in R&D.
3. R&D Investments
√ Applicable □ Not applicable
Objectives to be Expected impact on the
Main R&D projects Purpose Project progress
achieved Company
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
To introduce the world-leading Further enrich the Company's
Localization of a high-end corrugator line and make product portfolio which can
Mass production for
world-leading it localized to meet the needs of Promote as become a new profit growth
sales in the domestic
high-end corrugator Chinese customers for the planned point for the Company's
market
line highest-end and highest-speed corrugated box printing and
corrugator line. packaging machinery.
To achieve the fastest small order Further improve the
switch in Asia in response to the utilization of corrugator line,
characteristics of orders with Mass production for improve the accuracy of the
Smart fast order Promote as
"Small Quantity + Multi-batch + sales in the domestic machine, upgrade the product
switching system planned
Diversified Demands" and market library to have advantage in
frequent switch for production the market competition.
order in the Chinese market.
A complete set of To introduce a complete set of Further enrich the Company's
fixed forming high-performance, cost-effective product portfolio which can
corrugated box fixed corrugated box printing and Promote as Mass production for become a new profit growth
printing and packaging line with model change planned sales in the world point for the Company's
packaging without suspension and quick corrugated box printing and
machinery order change. packaging machinery.
Further enrich the Company's
A complete set of To introduce a complete set of product portfolio which can
Mass production for
forming corrugated high-performance, cost-effective Sales have been become a new profit growth
sales in the domestic
box printing and corrugated box bottom printing achieved. point for the Company's
market
stapling machinery machinery + fold gluer line. corrugated box printing and
packaging machinery.
Meet the demand for high
To make up the blank market of horsepower outboard motors
High horsepower high horsepower outboard motors, Promote as Mass production for in domestic and international
outboard motors and further enhance the planned sales in the world markets, becoming a new
competitiveness of products. profit growth point for the
Company.
To develop a battery-powered
outboard motor to further enhance Meet market demand and
Electric outboard Promote as Mass production for
product competitiveness in the become a new profit growth
motors planned sales in the world
new energy outboard motor point for the Company.
market.
Details about R&D personnel:
2021 2020 Change (%)
Number of R&D personnel 284 236 20.34%
R&D personnel as a % of total 15.33% 13.98% 1.35%
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
employees
Educational background of
R&D personnel
Bachelor’s degree 109 85 28.24%
Master’s degree and above 41 36 13.89%
Other 134 115 16.52%
Age structure of R&D
—— —— ——
personnel
Under 30 68 44 54.55%
30-40 113 89 26.97%
Other 103 103 0.00%
Details about R&D investments:
2021 2020 Change (%)
R&D investments (RMB) 99,557,565.46 98,696,270.15 0.87%
R&D investments as a % of
2.82% 3.38% -0.56%
operating revenue
Capitalized R&D investments
0.00 16,613,995.40 -100.00%
(RMB)
Capitalized R&D investments
as a % of total R&D 0.00% 16.83% -16.83%
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
It is mainly due to the fact that the Company had no project in which R&D expenses were capitalized in 2021.
4. Cash Flows
Unit: RMB
Item 2021 2020 Change (%)
Subtotal of cash generated from operating activities 3,506,294,160.56 3,274,395,655.64 7.08%
Subtotal of cash used in operating activities 3,199,634,884.54 2,723,399,623.89 17.49%
Net cash generated from/used in operating
306,659,276.02 550,996,031.75 -44.34%
activities
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Item 2021 2020 Change (%)
Subtotal of cash generated from investing activities 7,120,320,577.02 2,321,860,300.51 206.66%
Subtotal of cash used in investing activities 5,814,962,692.72 3,505,386,890.24 65.89%
Net cash generated from/used in investing activities 1,305,357,884.30 -1,183,526,589.73 210.29%
Subtotal of cash generated from financing activities 598,858,984.67 557,812,012.95 7.36%
Subtotal of cash used in financing activities 1,757,363,205.25 1,311,605,832.73 33.99%
Net cash generated from/used in financing
-1,158,504,220.58 -753,793,819.78 53.69%
activities
Net increase in cash and cash equivalents 398,702,538.96 -1,366,123,500.61 -129.18%
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 RMB 306,659,300, primarily because the company's revenue
growth during the reporting period.
(2) Net cash used in investing activities was RMB 1,305,357,900, primarily because the company's redemption of
large-value wealth management products during the reporting period.
(3) Net cash used in financing activities was RMB 1,158,504,200, primarily because the company's payment of loan
deposits, acquisition of minority shareholders' equity and implementation of share repurchase during the reporting
period.
(4) Net decrease in cash and cash equivalents was RMB 398,702,500, primarily because the inflow of net cash flows
from the company's operating activities and investment activities during the reporting period.
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
income from securities
investment in the current
Return on investment 98,673,106.02 20.54% period and the income Yes
from by the associates
companies under the
equity method.
Mainly due to the
comprehensive impact of
Gain/loss on changes in securities investment and
-21,357,785.81 -4.45% Yes
fair value changes in fair value of
minority shareholders'
options.
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Amount As a % of gross profit Primary source/reason Recurrent or not
Asset impairment loss -10,936,754.10 -2.28% No significant impact. No
Non-operating income 5,750,547.04 1.20% No significant impact. No
Non-operating expenses 1,462,018.81 0.30% No significant impact. No
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Indicate whether the Company has adopted the new accounting standards governing revenue and leases since 2020 and restated the
beginning amounts of relevant financial statement line items in the year.
Applicable.
Unit: RMB
31 December 2021 1 January 2021 Change in
As a % of As a % of percentage Reason for any significant change
Amount Amount
total assets total assets (%)
Mainly due to the transfer of some
large-denomination certificates of
Cash and bank deposit, the redemption of some wealth
1,664,336,339.35 26.18% 885,711,053.88 14.01% 12.17%
balances management products and securities
investments, and the sale of part of the
equity of Parsun.
Accounts Mainly due to the increase in sales this
741,135,648.09 11.66% 469,635,423.58 7.43% 4.23%
receivable year.
Contract assets 24,414,117.64 0.38% 29,504,693.97 0.47% -0.09% No major changes.
Inventories 867,280,013.47 13.64% 734,120,595.26 11.61% 2.03% No major changes.
Investment
0.00% 0.00% 0.00% No major changes.
property
Long-term equity
84,777,596.67 1.33% 72,671,204.73 1.15% 0.18% No major changes.
investments
Fixed assets 544,180,159.09 8.56% 571,413,480.14 9.04% -0.48% No major changes.
Construction in
12,298,259.58 0.19% 9,062,038.52 0.14% 0.05% No major changes.
progress
Mainly due to the implementation of
Right-of-use
80,386,832.91 1.26% 98,686,849.28 1.56% -0.30% the new lease-related accounting
assets
standards.
Short-term
228,312,880.73 3.59% 39,533,281.84 0.63% 2.96% No major changes.
borrowings
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Contract liability 405,842,932.51 6.38% 362,792,713.35 5.74% 0.64% No major changes.
Long-term
325,026,188.49 5.11% 353,412,388.29 5.59% -0.48% No major changes.
borrowings
Mainly due to the implementation of
Lease obligation 65,213,555.87 1.03% 82,805,889.63 1.31% -0.28% the new lease-related accounting
standards.
Major Assets Overseas
√ Applicable □ Not applicable
As a % of the
Control measures Any material
Asset value Management Company’s
Asset Source Location to protect asset Return impairment
(RMB) model net asset
safety risk or not
value
100% interest Producing and
Operation
of Fosber M&A 728,952,924.02 Italy marketing by Good 18.90% Not
management
S.p.A. itself
Producing and
100% interest Operation
M&A 26,129,838.13 Italy marketing by Good 0.68% Not
of EDF S.R.L management
itself
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Cumulative
Gain/loss on Impairment
fair-value
fair-value allowance Purchased in the Closing
Item Opening amount changes Sold in the period Other changes
changes in the for the period amount
recognized
period period
in equity
Financial assets
1. Financial assets held
for trading (exclusive
1,635,465,408.96 14,650,064.50 5,607,824,747.18 6,569,326,837.06 86,635,637.36 775,249,020.94
of derivative financial
assets)
2. Derivative financial
831,021.35 12,841,980.43 -736,501.15 12,936,500.63
assets
Subtotal of financial
1,636,296,430.31 27,492,044.93 5,607,824,747.18 6,569,326,837.06 85,899,136.21 788,185,521.57
assets
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Cumulative
Gain/loss on Impairment
fair-value
fair-value allowance Purchased in the Closing
Item Opening amount changes Sold in the period Other changes
changes in the for the period amount
recognized
period period
in equity
Other non-current
5,948,588.15 25,029,844.93 132,412,131.04 -867,044.71 162,523,519.41
financial assets
Total of the above 1,642,245,018.46 52,521,889.86 5,740,236,878.22 6,569,326,837.06 85,032,091.49 950,709,040.98
Financial liabilities 110,145,525.05 73,879,675.67 104,771,579.02 36,121,968.12 -5,749,568.14 246,925,243.48
Particulars about other changes:
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
405,032,563.61 Used to obtain bank acceptance bills and letters of
Cash and bank balances
guarantee.
Fixed assets 4,533,314.25 Used by subsidiaries to obtain bank loans.
Other non-current assets 300,150,000.00 Used by subsidiaries as margin for bank loan.
Total 709,715,877.86
VII Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
Total investment amount in 2021 (RMB) Total investment amount in 2020 (RMB) Change (%)
1,608,856,907.68 1,861,603,704.43 -13.58%
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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4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
Cumulative
Gain/loss on
fair-value Closing
Security Security Initial Measurement Opening carrying fair-value Purchased in the Sold in the Gain/loss in Accounting Funding
Security type changes carrying
code name investment cost method amount changes in the period period the period title source
recognized amount
period
in equity
Domestically/ Financial
overseas listed - - 0.00 Fair value 0.00 0.00 0.00 3,924,621,914.69 4,001,955,994.34 77,334,079.65 0 assets held for Self-funded
stocks trading
Financial
Trust products - - 504,767,340.61 Fair value 504,767,340.61 5,951,168.61 0.00 110,000,000.00 615,247,090.20 7,111,322.60 6,631,573.01 assets held for Self-funded
trading
Financial
Funds - - 619,890,000.00 Fair value 619,890,000.00 8,055,849.06 0.00 300,000,000.00 301,136,060.92 9,253,985.66 628,007,924.74 assets held for Self-funded
trading
Financial
Others - - 511,639,089.70 511,639,089.70 643,046.83 0.00 1,273,202,832.49 1,650,987,691.60 6,755,292.60 140,609,523.19 assets held for Self-funded
trading
Total 1,636,296,430.31 -- 1,636,296,430.31 14,650,064.50 0.00 5,607,824,747.18 6,569,326,837.06 100,454,680.51 775,249,020.94 -- --
Disclosure date of the board
The company held its board meeting on March 29, 2021 to consider and approve the resolutions related to securities investment in 2021. The securities investment is valid for
announcement approving the
12 months from the date of approval at the general meeting of shareholders, and the announcement date of the resolutions of the board is March 30, 2021.
securities investments
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Cumulative
Gain/loss on
fair-value Closing
Security Security Initial Measurement Opening carrying fair-value Purchased in the Sold in the Gain/loss in Accounting Funding
Security type changes carrying
code name investment cost method amount changes in the period period the period title source
recognized amount
period
in equity
Disclosure date of the general
The company held a general meeting of shareholders on April 19, 2021 to approve the resolutions related to securities investment in 2021. The announcement date of the
meeting announcement approving
resolutions of the general meeting of shareholders is April 20, 2021.
the securities investments (if any)
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(2) Investments in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Use of Raised Funds
□ Applicable √Not applicable
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
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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 yuan
Relationshi
Principal Registere Operating Operating
Name p with the Total assets Net assets Net profit
activities d capital revenue profit
Company
R&D,
processing,
manufacturin
g and
marketing of
Fosber EUR1.56 1,860,272,746.0 728,952,924.0 2,149,242,698.1 276,192,997.5 221,879,267.7
Subsidiary corrugator
Group million 8 2 5 1 2
lines and
parts, as well
as provision
of after-sales
services
Production of
general utility
small
gasoline
motors,
shipboard
Shunyi power
RMB10 246,784,791.7
Investmen Subsidiary (outboard 409,633,798.32 468,680,560.33 66,707,243.30 59,276,316.98
million 2
t motors) and
its
accessories,
as well as
provision of
after-sales
service
Subsidiaries acquired or disposed of in the Reporting Period:
□ Applicable √ Not applicable
X Structured Bodies Controlled by the Company
√ Applicable □ Not applicable
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In March 2021, the Company held the 3rd meeting of the M&A Review Committee in 2021 and approved to
establish 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; AVIC Innovation Capital Management Co., Ltd.,
as the GP of the Fund, Fund manager and managing partner, subscribed for the Partnership's contribution share of
RMB1,000,000. 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.).
Investment decision and management of Tianjin Hangchuang Fund: As the GP and managing partner of the Fund,
AVIC Innovation Capital Management Co., Ltd. served as the Fund Manager and was responsible for all matters
including management, control, operation and decision making of the Fund's operation, investment and other activities.
The distribution mechanism of Tianjin Hangchuang Fund:
During the existence and liquidation period, distributions will be made to the extent of the cash balance in the Fund
custody account in the following order, after all partnership expenses are paid.
1. Distribution is made first to all partners until the total accumulated paid-in capital is recovered by them.
If the cash balance of the custody account is insufficient to return the total accumulated paid-in capital of all
partners, the cash balance shall be distributed in proportion to the ratio of the paid-in capital held by each
partner to the total accumulated paid-in capital of the partnership on the date of distribution of such assets, and
the portion of the paid-in capital not fully returned shall be made up at the next distribution until the balance of
the total accumulated paid-in capital of all partners is zero.
2. If there are still surplus funds after the distribution of step 1 above, if the accumulated surplus funds do not
meet the accrued benchmark for performance compensation, the fund manager will not receive any
compensation. All surplus funds will be distributed according to the ratio of the paid-in capital held by each
partner to the total accumulated paid-in capital of the partnership on the date of distribution of such assets.
If there are still surplus funds after the distribution of step 1 above, if the accumulated surplus funds meet the
accrued benchmark for performance compensation, the fund manager will first distribute the income to all
partners in proportion to their paid-in amounts based on the accrued benchmark for performance compensation,
then withdraw 10% of the surplus funds after distributing the income as performance compensation, and the
rest portion will be distributed to all partners in proportion to their paid-in amounts.
3. The accrued benchmark for performance compensation is that the yield of paid-in capital fund of all partners
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accounts for 8% of the annual yield.
Loss sharing mechanism of Tianjin Hangchuang Fund:
The limited partners of the Fund are liable for the partnership's debts to the extent of their subscribed capital
contributions. The general partner has unlimited joint liability for the debts of the partnership.
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 the absolute majority 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.
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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
According to its strategic plan for the third five-year period (2018-2022), based in China and with a global
vision, the Company will adhere to the strategic idea of "1+N", with the strategy of "a wealth of talents" and
"culture orientation" as the solid support, and promote the five strategies of "industrial cluster", "epitaxial
development", "globalization", "digital operation" and "synergy" 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".
Figure 7 The Company's strategic plan for the third five-year period (2018-2022)
To become an industrial group with
high influence in its areas, trust from customers and shareholders, and
respect from employees
"1+N" development model
Industrial Epitaxial Globalization Digital
cluster strategy development strategy operation Synergy strategy
strategy strategy
Focus on the core Follow the guidance Accelerate
Balanced layout of Focus on providing
business of of the Group's organizational
global marketing, stable and efficient
"corrugated strategic plans, capacity
global operation, overall solution for
packaging arrange for capital development for
and industry formed intelligent plants in
machinery" and operations, and group control and
by mainstream the corrugated
expand the business facilitate the Group's markets and packaging industry realize close synergy
of "Outboard power robust development between various
potential markets
equipment" with industries as entities
the body and capital
as the wings
"A wealth of talents" strategy × cultural orientation strategy
Details are as follows:
Industrial cluster strategy: Focus on the core business and strengthen the endogenous growth
constantly, meanwhile, promote the subsidiary Parsun Power to further expand and strengthen
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
"outboard power products" as the main business.
Epitaxial development strategy: Use such means as "Industrial M&A + Financial investment"
to accumulate momentum for the Company's development; at the same time, strengthen the building of
market capitalization, capital operation, strategic and financial investment, etc.
Globalization strategy: Contribute to the globalization of marketing network, management
operation and industrial distribution, including assets, business, talents and operation management.
The digital operation strategy consists of internal level and external level. Internally, it
realizes the information and digital upgrade of product, operation and management to release
management benefits and support overall business operation efficiency; externally, it relies on
Dongfang Precision's industry accumulation and industrial Internet technology to build an industrial
Internet platform solution for the intelligent factory of corrugated packaging industry and an intelligent
logistics system for the entire plant to help promote the digital and intelligent upgrade of the corrugated
packaging industry.
Synergy strategy: Based on building the organizing ability for group operation, strengthening
the synergy of internal business entities and optimizing the internal supporting synergistic mechanism, a
three-tier group operation structure of "Group Headquarters + Industrial Segments + Profit Units" is
built.
A wealth of talents strategy: Strengthen the leadership of Middle and Senior Management,
optimize the talent management system and set up talent teams at all levels.
Cultural orientation strategy: Strengthen the Company's unified values, mission and vision,
and lead the joint development of its business entities in all sectors based on the corporate culture.
(II) The Company's main business plan for 2022
1. Core business: Improve industrial synergy constantly and release growth potential
In 2021, as the operating performances of the Company's domestic business entities grew quickly, the
problem of the contradiction between the existing production capacity and the continuous growth of sales orders
was gradually emerging.
For most of 2021, the subsidiary Fosber Asia was at full production and full sales status. For many years,
Fosber Asia has been renting the plant and office space of its parent company, Dongfang Precision, and the
production capacity of existing site can no longer meet the needs of business development in the coming years. It
is imperative to expand production capacity for Fosber Asia in 2022. The Company has initiated the work to
actively coordinate with the authorities for new industrial land for Fosber Asia in Guangdong Province to promote
new production capacity, which will be the cornerstone of Fosber Asia's growth for many years to come.
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In 2021, the subsidiary Parsun Power, with adequate orders and fast-growing production and sales, has
encountered a capacity bottleneck to a certain extent. In 2022, Parsun Power will start to build a new production
base with greater production scale, so as to meet the needs of future business growth, and transform and upgrade
its own manufacturing status, improve and optimize production efficiency and capacity structure, further
strengthening its comprehensive competition.
The corrugated packaging machinery, as the Company's core business, covers all the key processes in the
corrugated packaging production and processing value chain. The industrial chain is well arranged, and the
products, technologies, sales networks and supply chains of each business entity 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 reach industrial synergy.
In 2022, the Company will continue to promote the interaction and exchange of products and technologies
between the high-end corrugator line business of Fosber Group and QCorr and the corrugator line business of
Fosber Asia for China and Asia-Pacific markets, and support Fosber Asia in introducing Europe-leading solutions
and technologies for product design to create new products for China and Asia-Pacific markets; support Dongfang
Precision (China) in sharing supply chain and production and processing resources with Fosber Group, Fosber
Asia and Dongfang Precision (Europe) to achieve complementary advantage and resource sharing, which can
reduce order delivery costs, and improve production and operation efficiency, reaching "low price with brand
quality" for overall competition. The Company will also support the integration of the corrugator lines of Fosber
Group and QCorr, and the corrugated box printing and packaging business of Dongfang Precision (China) with
industrial digital printing technology to explore new models, technologies and products, providing new energy for
the corrugated packaging machinery business.
2. Enter the field of digital printing for corrugated packaging
(1) Plate printing technology Vs digital printing technology
The Company's corrugated box printing machinery adopt plate printing technology, the principle of which is
to first make a printing plate for the text and images to be printed, and then transfer the text or images via ink from
the printing plate to paper or other materials through professional printing machinery. The most widely used and
most mature technology in the field of corrugated packaging is plate printing. In recent years, we cannot ignore
the fact that digital printing technology, and its application in the packaging field have been developing quickly.
At the technical level, the printing plates are not adopted for digital printing, which allows graphic
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
information to be transferred to printing machinery via the network and imaged directly on the package.
Compared with the plate printing technology, digital printing has no plate, which you can print on demand, and
print variable data/any pattern with high precision. The technology is environmental with low carbon.
Currently, the application of digital printing in the packaging field, especially in the corrugated packaging
industry, is still not mature. The printing quality, production efficiency and other key indicators of digital printing
technology are still not equal to those of traditional printing machinery. In terms of sales and market share, the
machinery adopting digital printing technology is still far behind that using traditional plate printing.
However, there is a consensus in the industry that digital printing is the trend of technological development
in the field of corrugated packaging printing. In the future, after the industrial digital printing technology is further
developed and its defects in printing quality and production efficiency are solved, its own features such as flexible
production, agile response time, and diverse printing graphics are expected to be fully tapped to meet the unique
"small batch + multiple varieties + personalization + customization" printing needs of China's corrugated
packaging industry.
(2) The status of digital printing technology
The application of digital printing technology is widely developed worldwide. Manufacturers in the United
States, Europe and Japan started early with mature technology and a stable market, and are dominant in many
application areas, in which the United States HP (Hewlett-Packard), the EFI and other companies have
overwhelming advantages in the industry of corrugated packaging digital printing machinery.
In China, the application of digital printing technology is in its initial stage. It is growing fast in the textile
printing, corrugated packaging fields with good trends, and Atexco, Hanglory Group, Shenzhen Wonder and other
well-known enterprises have emerged.
As the digital printing technology, especially the Single Pass technology is becoming more mature, and the
cost of printhead ink is reducing, the digital printing machinery have got obvious advantages gradually, narrowing
the cost difference compared with the traditional printing even in medium-sized orders. There are not more than
ten companies in the world that can produce Single Pass digital printing machinery. EFI, HP, and Shenzhen
Wonder are the first to apply high-speed inkjet printing technology to corrugated packaging industry and have
gained widespread recognition from customers.
Apart from the corrugated packaging field, the digital printing technology with great potential has a wide
range of applications in such fields as printed products (advertising, labels, posters), textile printing, garment and
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daily necessities printing, home decoration, ceramics, glass, electronics, automotive and even 3D printing.
(3) Dongfang Precision's development in the digital printing field in 2022
The Company has recognized the great prospect of digital printing technology in the corrugated packaging
industry earlier, and cooperated with business partners to set up a joint venture in 2017 to explore and promote the
application and development of digital printing in the corrugated packaging industry. At the beginning of 2022,
the Company worked with Shenzhen Wonder, which was the first to promote digital printing in the corrugated
packaging printing machinery industry in China, in the form of capital increment and acquisition.
Shenzhen Wonder has a complete digital printing matrix, whose machinery is exported to Europe, America,
Middle East, Latin America, Southeast Asia, etc. It also occupies a market stock of more than 1,300 units in more
than 80 countries worldwide.
The Company's cooperation with Shenzhen Wonder is a crucial step into the field of industrial digital
printing. This cooperation will further improve the Company's product matrix of corrugated packaging printing
machinery, providing customers with more comprehensive "one-stop" products and services, and also help
Shenzhen Wonder to develop the technology and seize the market of digital printing for corrugated packaging.
The Company will give full play to its advantage of a well-developed industrial chain in the subsequent
cooperation process for the sharing of resources and complementary advantages in the Group, providing important
support for the sustainable development of the Company and adequate guarantee for the overall performance
growth.
According to The Future of Inkjet Printing to 2023 issued by Smithers Pira, the market size of inkjet printing
is expected to reach USD109 billion in 2023 in the global printing material and packaging fields, with a
compound annual growth rate of nearly 10% between 2013 and 2023; in the package field, the overall growth of
inkjet printing is more rapid: the market size of inkjet printing for packaging is expected to reach USD11.13
billion in 2023, with a compound annual growth rate of more than 12% between 2013 and 2023, which gives
Shenzhen Wonder and other companies which are researching industrial digital printing a broad room for growth;
the current market size of industrial digital printing in China's packaging field is relatively small with a low base,
which also indicates that higher growth will occur to the limit of its capacity. Dongfang Precision invested in
Shenzhen Wonder, which is expected to create a second growth curve for the Company's corrugated packaging
machinery business. In the future, its industrial digital jet printing line machinery business will become an
important driver to promote the Company's development.
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3. Promote the implementation of digitalization and intellectualization strategy
Based on multiple years of manufacturing experience in the field of corrugated packaging machinery, deep
understanding of downstream customers' production processes, and mature practices of the production
management system, the Company will promote the digital upgrade of corrugated packaging machinery. Through
organic combination of the massive data related to the production techniques and production equipment to the
algorithm analysis and processing, the Company will integrate hardware and software for output, meet the needs
for capacity upgrade of downstream customers in the corrugated packaging industry, and facilitate the continual
concentration improvement of the corrugated packaging industry.
Meanwhile, the Company will continue to invest resources and actively promote the development and
application of products of "intelligent plant solution for industry".
4. Spin-off listing of subsidiary Parsun Power
The spin-off listing of subsidiary Parsun Power is conducive to strengthening the capital and enhancing the
risk prevention capability, and also helps further tap its development and innovation potential to realize its
intrinsic value.
After Parsun Power is listed, it will accelerate the rapid growth of its main business and operating
performance, which will be reflected in the overall performance of Dongfang Precision at the same time, thus
enhancing the profitability and robustness of the Company; besides, the value of the equity held by the Company
in Parsun Power is expected to be further increased and the liquidity will also be significantly improved.
The spin-off listing of Parsun Power will exert a positive impact on the benefits of shareholders (especially
minority shareholders), creditors and other stakeholders of Dongfang Precision.
5. Epitaxial business: Make a difference for seeking industrial synergy and expanding new
development
In 2021, the Company proposed the "1+N" strategic model with the co-development and mutual promotion
of "Endogeny+ Epitaxy" business. "1" represents the Company's main business of corrugated packaging
machinery and 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 incubation and
cultivation of subsidiaries and joint-stock companies.
In 2022, the subsidiary, Yineng Investment, will take advantage of industries related to the main business of
Dongfang Precision, focus on high-quality companies in the industrial chain of China and the world. It will also
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carry out M&A 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 industrial synergy;
conduct management output and provide resource support for the target company of industrial M&A to help it
become bigger, stronger and more professional.
During industry M&A, 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, artificial intelligence,
biomedicine and big consumption area and other strategic emerging industries of hard science and technology,
and will aim at enterprises with extensive industrial development opportunities and favorable industrial
advantages. It will obtain good investment returns and at the same time create new industrial development
opportunities for the Group.
(III) Possible risks and countermeasures
1. Risk of fluctuations in the prices of raw materials
The raw materials required for the Company's corrugated packaging machinery mainly include various types
of steel plates, steel parts and electrical parts. In 2021, the prices of iron ore and base metals in bulk commodities
were once highly volatile, resulting in certain fluctuations in the costs of the Company's main business. Looking
ahead to 2022, the bulk commodity market is subject to a combination of macroeconomic and industry cycles,
monetary policy, international trade, even geopolitics, the Covid-19 and other factors, and price trends will
represent a certain degree of uncertainty.
Countermeasures:
The Company will pay attention to the market prices of steel and other important raw materials constantly,
and conduct dynamic analysis and judgment; in terms of procurement, it will strengthen proactive management
and collaboration by adopting countermeasures such as proper adjustment of payment settlement and entering into
long-term purchase agreements for important raw materials to control the fluctuation of procurement prices; it will
give full play to the Group's internal allocation ability brought about by the globalization of business assets, and
reach allocation efficiency and reduce overall costs through rational planning and management of internal
transactions and sharing of high-quality supply chain resources.
2. Integration risk due to epitaxial business
Epitaxial business includes industrial M&A, equity investment and other forms. The Company will arrange
high-end equipment manufacturing through equity control, investment and other different forms, expecting to
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
gradually develop new performance growth points in the future.
In the next few years, the Company will continue to expand upstream and downstream in the industry chain
involving its core business in the world, and arrange in the key industries supported by the national 14th
Five-Year Plan, such as high-end equipment manufacturing, artificial intelligence, biomedicine and big
consumption. Among the business entities of its subordinate companies, there are old European companies with
nearly 100 years of history and profound track record, as well as international companies with multinational
distribution of business and assets and customers around the world, and domestic private companies with roots in
the Chinese market and years of hard-working to be leaders in their niche industries.
During the integration, the new member companies are different from Dongfang Precision in cultural
background, language differences, business practices, corporate culture, laws and regulations, fiscal and tax
policies, internal management mechanisms, etc., which bring about certain challenges to the post-investment
management and integration work.
Countermeasures:
Promote the implementation of the "globalization" strategy and bring in talents capable of
handling international business;
Promote the implementation of the "a wealth of talents" strategy, improve the synthetic ability
of the management team and the backbone team of key business, and build a prudent backbone team
with a broad vision that highly identifies with the purpose and culture of the Company, and is capable of
winning battles;
Promote the "synergy" strategy and seek common ground with an open mind on the premise
of "mutual respect and trust";
Carry out the post-investment management mechanism of "combination of strategic control +
authorized management" to form a unique and effective integration and control mode in the run-in
process, which reaches a better industrial synergy and the positive development of each business entity;
3. 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.
Based on its own attributes, there are certain risks of carrying out the above business due to fluctuations in
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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
funds, the progress of project investment and the performance of the capital market, and timely takes
corresponding preservation measures to control investment risks.
4. Potential risk of exchange rate fluctuations
The revenues and costs of the Company's overseas business entities are priced in Euros or U.S. dollars, and
exchange rate fluctuations exert little impact on the operations of the overseas business entities, but on the
presentation of overseas assets in the consolidated financial statements. There are many factors for exchange rate
changes, and there is a certain degree of uncertainty in its fluctuation. When the depreciation of the Euro or the
US dollar occurs, it will have an adverse impact once the company cannot take effective measures to reduce
losses.
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.
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XII Communications with the Investment Community such as Researches, Inquiries and Interviews
√ Applicable □ Not applicable
Type of the Main discussions and
Way of Index to the relevant
Date Place communication Communication party materials provided by the
communication information
party Company
Ming Ya Fund: He Ming; ICBC Credit Suisse Asset: Zhang
Jisheng, Shi Zhengtong, Xu Lingling; Western Leadbank
Fund: Wen Zhenyu; AEGON-INDUSTRIAL Fund: Zhao
Sui; China Life AMP Asset: Sun Nan; CCB Principal Asset:
Introduced the Company's
Wang Siyuan; E Fund: Ji Bin; Huafu Fund: Zhu Chenghui,
operation, competitive www.cninfo.com.cn,
Yang Linyan; Morgan Stanley Huaxin Fund: Zhang Wei;
advantages, industry Dongfang Precision:
Conference Room CICC: Guo Weixiu, Zou Jing; Guosen Securities: Li He;
20 April 2021 By phone Institution direction and future Record on Investor
of the Company Founder Securities: Zhang Xiaoguo; Huatai Securities:
strategic planning, and Relation Activities on 20
Huang Jinglun; Shenwan Hongyuan Securities : Liu
answered investors' April 2021
Jianwei; Industrial Securities: Ding Zhigang; Dongguan
questions
Securities: Wang Quanyong; China Merchants Securities:
Dai Deshun; Shengang Securities: Xia Shuyu; Cinda
Securities: Luo Zheng; China Everwin Asset: Sang
Yongliang and other investors
Introduced the Company's
operation, competitive www.cninfo.com.cn,
advantages, industry Dongfang Precision:
Conference Room
18 June 2021 By phone Institution Capital Investment Trust, Taiwan: Le Yu, Yang Shuting direction and future Record on Investor
of the Company
strategic planning, and Relation Activities on 18
answered investors' June 2021
questions
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
E Fund: Yin Ming;China Asset Management: Li Pingzhu;
Western Leadbank Fund: Wen Zhenyu; ICBC Credit Suisse
Asset: Li Jianfeng; Harfor Fund: Yang Linyan; Truvalue
Asset Management: Li Han; Fuanda Fund: Wu Zhanfeng; Introduced the Company's
New China Fund: Zhou Xiaodong; Rongtong Fund: Sun operation, competitive www.cninfo.com.cn,
Weidang; Manulife Teda Fund: Wang Peng; Mutual Benefits advantages, industry Dongfang Precision:
Conference Room
20 August 2021 By phone Institution Asset: Zhang Shusheng; Changsheng Fund: Wu Da; direction and future Record on Investor
of the Company
Zhonghai Fund: Yu Zhong; Morgan Stanley Huaxin Fund: strategic planning, and Relation Activities on 20
Zhang Wei; Value Partners Goldstate Fund: Xu Yong, Hou answered investors' August 2021
Bin; Bank of Beijing Scotiabank Asset: Liu Xiaochen; questions
Zhong Ou Asset: Zhou Yuxiong; Citic-prudential Fund: Sun
Haozhong; CICC: Huang Yuning, Wang Zilin, Zou Jing,
Xiao Xueyang; China Securities: Wei Yu and other investors
Introduced the Company's
operation, competitive www.cninfo.com.cn,
advantages, industry Dongfang Precision:
24 November Conference Room Zheshang Securities: Wang Huajun, Lin Ziyao; Harvest
By phone Institution direction and future Record on Investor
2021 of the Company Fund: Dong Fuyan
strategic planning, and Relation Activities on 24
answered investors' November 2021
questions
CIB Fund, Bosera Funds, Essence Securities, Everbright
Pramerica Fund, Maxwealth Fund, China Securities, Introduced the Company's
www.cninfo.com.cn,
Shanghai Dongkai Investment, Qingli Investment operation, competitive
002611 Dongfang
(Shanghai), Yuancheng Investment, Chongyang Investment, advantages, industry
Conference Room Precision: Record on
3 December 2021 By phone Institution Shanghai Tourmaline Asset, Life Insurance Asset direction and future
of the Company Investor Relation
Management, Yinfan Investment, Yingdong Private Fund, strategic planning, and
Activities on 3 December
Shanghai Licheng Asset Management, Beijing Sunshine answered investors'
2021
Tianhong Asset Management, China Life Asset questions
Management, Beijing Xin'an Linshi Asset, Windsor Capital,
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Funding Capital (Beijing), Aviva-cofco and so on. 32 people
in total.
Introduced the Company's
www.cninfo.com.cn,
operation, competitive
002611 Dongfang
advantages, industry
Conference Room Huaxi Securities, BOC Investment Management, SWS MU Precision: Record on
9 December 2021 By phone Institution direction and future
of the Company Fund Investor Relation
strategic planning, and
Activities on 9 December
answered investors'
2021
questions
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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 Guidelines on Standardized Operation of Listed Companies on
Shenzhen Stock Exchange, 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 securities 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 and
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,
including one supervising employee representative, and the number of members and composition of it met legal and regulatory
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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. 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 Independence 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
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
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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 and 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 and
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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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
Notes
meeting date
ratio
1. Reviewed and approved the Proposal on the
Repurchase and Retirement of Some Restricted
The First
Shares; 2. Reviewed and approved the Proposal on
Extraordinary Extraordinary
14 January 15 January the Change of Business Scope and Revision of
General General 31.32%
2021 2020 ; 3. Reviewed and
Meeting of Meeting
approved the Proposal on the Provision of
2021
Guarantee for Wholly-owned Overseas
Subsidiaries
1. Reviewed and approved the Proposal on the
Report on the Work of the Board of Directors for
2020 (including the Report of the Independent
Directors for 2020); 2. Reviewed and approved the
Proposal on the Report on the Work of the
Supervisory Committee for 2020; 3. Reviewed and
approved the Proposal on the Annual Report and
its Summary for 2020; 4. Reviewed and approved
the Proposal on the Report on the Financial
The 2020 Accounts for 2020; 5. Reviewed and approved the
Annual
Annual Proposal on the Financial Budget Report for 2021;
General 31.87% 19 April 2021 20 April 2021
General 6. Reviewed and approved the Proposal on the
Meeting
Meeting Profit Distribution Proposal for 2020; 7. Reviewed
and approved the Proposal on the Special Report
on the Deposit and Use of Raised Funds for 2020;
8. Reviewed and approved the Proposal on the
Self-Evaluation Report on Internal Control for
2020; 9. Reviewed and approved the Proposal on
the Appointment of the Audit Institution for 2021;
10. Reviewed and approved the Proposal on the
Use of Own Funds for Securities Investment for
2021.
1. Reviewed and approved, by item-by-item
The Second
voting, the Proposal on the Repurchase of Some
Extraordinary Extraordinary
22 September 23 September Public Shares; 2. Reviewed and approved the
General General 31.60%
2021 2021 Proposal on the Request to the Company's General
Meeting of Meeting
Meeting to Authorize the Board of Directors for
2021
Handling Matters Related to the Share
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Repurchase; 3. Reviewed and approved the
Proposal on the Repurchase and Retirement of
Some Restricted Shares; 4. Reviewed and
approved the Proposal on the Change of
Registered Capital and the Revision of .
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 2021
V Directors, Supervisors and Senior Management
1. General Information
Restricted Increase Decrease
Opening Other Closing Reason
Start of End of Share shares in the in the
Name Office title Incumbent/Former Gender Age shareholding increase/decrease shareholding for share
tenure tenure options granted period period
(share) (share) (share) change
(share) (share) (share)
Chairman 22
Tang 22 July
of the Incumbent Male 59 September 270,737,568 270,737,568
Zhuolin 2010
Board 2023
Director 22
22 July
Qiu Yezhi and General Incumbent Female 50 September 31,176,518 9,000,000 7,794,130 23,382,388
2010
Manager 2023
Director
22
Xie and Deputy 16 June
Incumbent Male 48 September 1,000,000 1,000,000 1,000,000
Weiwei General 2016
2023
Manager
Director,
Board 22
Zhou 29 January
Secretary Incumbent Male 49 September 1,200,000 1,200,000 1,200,000
Wenhui 2019
and Vice 2023
President
Chief
Financial 29 22
Shao
Officer and Incumbent Male 47 December September 800,000 800,000
Yongfeng
Vice 2020 2023.
President
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Mai Independent 16 June 15 June
Incumbent Male 51
Zhirong Director 2016 2022
Peng Independent 16 June 15 2022
Incumbent Male 51
Xiaowei Director 2016 June
He Independent 16 June 15 June
Incumbent Male 61
Weifeng Director 2016 2022
Chairman
22
Chen of the 19 May
Incumbent Female 37 September. 480 480
Huiyi Supervisory 2017
2023
Committee
22
Zhao Employee 16 June
Incumbent Male 51 September
Xiuhe Supervisor 2016
2023
22 22
He
Supervisor Incumbent Male 40 September September 614,088 614,088
Baohua
2020 2023
Total -- -- -- -- -- -- 304,728,654 0 12,000,000 0 7,794,130 297,734,524 --
Indicate whether any in-service director, supervisor or senior management resigned during the Reporting Period.
□ Yes √ No
Changes of directors, supervisors and senior management:
□ Applicable √ Not applicable
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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
Tang Zhuolin, male, Chinese, born in 1963, has no right of permanent residence abroad. Member of the 12 th 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 Industry Association, Vice President of
Foshan Machinery Equipment Industry Association, Honorary President of Nanhai District Machinery Equipment Industry
Association, Vice President of Foshan High-tech Zone Chamber of Commerce, and Vice President of Foshan Nanhai District Listing
Association. Served as the Company's General Manager and Chief Engineer since 1996, and currently the Chairman of the Board of
the Company, Director of the subsidiary Fosber S.p.A., Director of the subsidiary Suzhou Parsun Power Machine Co., Ltd., Director
of the subsidiary Guangdong Fosber Intelligent Equipment Co., Ltd., Director & Manager of the subsidiary Dongfang Yineng
International Holding Co., Ltd., and Supervisor of Dongfang Digicom Technology Co., Ltd.
Qiu Yezhi, female, Chinese, born in 1972, has no right of permanent residence abroad, MBA, National Model Worker, Member of
the 12th 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. Served successively as the Company's Director of the General Manager's
Office, General Manager of Operations and General Manager since 1996, and as the Company's General Manager and Board
Secretary from July 2010 to October 2013. Currently the Company's Director and General Manager, Vice Chairman of the Board of
the subsidiary Fosber S.p.A., Director of the subsidiary Fosber America, Inc., Director of the subsidiary Suzhou Parsun Power
Machine Co., Ltd., and Chairman of the Board of the subsidiary Guangdong Fosber Intelligent Equipment Co., Ltd.
Xie Weiwei, male, Chinese, born in 1974, 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, Executive Director of the subsidiary
Foshan Yinglian Digital Printing Equipment Co., Ltd., and Director of the joint-stock company Guangdong Jaten Robot &
Automation Co., Ltd.
Zhou Wenhui, male, Chinese, born in 1973, has no right of permanent residence abroad, master. Once served as the Investment
Director of Beijing Taiying Investment Management Co., Ltd., Head of the Fortune Centre of Beijing Administrative Headquarters
of Guosen Securities, Investment Director of Beijing Zhongcai Venture Investment Co., Ltd., and Chief Manager of Avichina
Industry And Technology Co., Ltd. Currently the Company's Director, Board Secretary, and Vice President.
Mai Zhirong, male, Chinese, born in 1971, has no right of permanent residence abroad, Certified public accountant, certified public
assets estimator and certified tax agent. Graduated with a bachelor's degree from the Party School of Guangdong Provincial
Committee of the Communist Party of China in 1999, and graduated from China Central Radio and Television University with a
bachelor's degree in accounting in 2007. Once served as an accountant in Guangdong Development Bank Nanhai Branch, auditor of
Nanhai Audit Office, and currently the Vice Director of FoShan JunLang Certified Public Accountants Firm Co., Ltd., Independent
Director of Shenzhen Magic Decoration Co., Ltd., and Independent Director of Dongfang Precision.
Peng Xiaowei, male, Chinese, born in 1971, has no right of permanent residence abroad. Graduated from Shanghai University of
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Electric Power with a bachelor's degree in industrial chemistry in 1995, assigned to work in the electric power authority in Foshan
after graduation, rated as a chemical engineer in 2001, and passed the 1st national judicial examination in 2002. Served as a full-time
lawyer and partner in Guangzhou Kingpound Law Firm. Currently a senior partner of Beijingshi Yingke Law Firm Guangzhou
Office and Independent Director of Dongfang Precision.
He Weifeng, male, Chinese, born in 1961, has no right of permanent residence abroad. Master in mechanical engineering from
Guangdong University of Technology, and currently an associate professor of Guangdong University of Technology, Independent
Director of Guangdong Jinma Rides Co., Ltd., and Independent Director of Dongfang Precision. Engaged in teaching and research of
packaging engineering and printing technology for 30 years. Designed and developed bag packing machine, pillow-type packing
machine, box making machine and other packaging and printing machines and devices.
2. Members of the Supervisory Committee
Chen Huiyi, female, Chinese, born in 1985, with a university degree, has no right of permanent residence abroad. Once served as the
assistant of the Quality Control Department of Dongfang Plastic Products Co., Ltd. Joined Dongfang Precision in 2010, and currently
the Chairman of the Company's Supervisory Committee and Secretary to the Company's General Manager.
He Baohua, female, Chinese, born in 1982, 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 Company's supervisor and Senior Project Manager of the Project Management Department.
Zhao Xiuhe, male, Chinese, born in 1971, 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
Qiu Yezhi, currently the Company's General Manager. Her resume is detailed in "1. Members of the Board of Directors".
Xie Weiwei, currently the Company's Deputy General Manager. His resume is detailed in "1. Members of the Board of Directors".
Shao Yongfeng, male, Chinese, born in 1975, 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
Tianda 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.
Zhou Wenhui, currently the Company's Board Secretary. His resume is detailed in "1. Members of the Board of Directors".
Offices held concurrently in shareholding entities:
□ Applicable √ Not applicable
Offices held concurrently in other entities:
√ Applicable □ Not applicable
83 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Remuneration or
Name Other entity Office held in the entity Start of tenure End of tenure allowance from
the entity or not
Dongfang Precision
Tang Zhuolin Director 5 February 2013 Not
(HK)
Dongfang Precision
Tang Zhuolin Director 29 October 2013 Not
(Netherland)
Tang Zhuolin Fosber Group Director 26 March 2014 Yes
Dongfang Precision
Tang Zhuolin Chairman of the Board 15 June 2016 Yes
(Europe)
Tang Zhuolin Fosber Asia Director 30 September 2014 Yes
Tang Zhuolin Parsun Power Director 24 May 2015 Not
Legal Representative,
Tang Zhuolin Shunyi Investment Executive Director and 2 July 2015 Not
General Manager
Legal Representative,
Tang Zhuolin Yineng Investment Executive Director and 10 October 2020 Yes
General Manager
Tang Zhuolin Dongfang Digicom Supervisor 26 October 2020 Yes
Dongfang Digicom
Tang Zhuolin Supervisor 26 February 2021 Not
(Guangdong)
Dongfang Yineng Legal Representative,
Tang Zhuolin International Holding Executive Director and 15 February 2022 Not
Co., Ltd. Manager
Shenzhen Xianglin Legal Representative,
Tang Zhuolin Venture Capital Co., Executive Director and 26 May 2016 Not
Ltd. General Manager
Shenzhen Zhiquan
Tang Zhuolin Venture Capital Co., Supervisor 26 May 2016 Not
Ltd.
Shenzhen Shenghui
Tang Zhuolin Venture Capital Co., Supervisor 16 May 2016 Not
Ltd.
Qiu Yezhi Fosber Group Vice Chairman of the Board 26 March 2014 Yes
Qiu Yezhi Fosber America Director 1 September 2017 Yes
Qiu Yezhi Tirua Group Director 30 May 2019 Yes
Qiu Yezhi Tirua S.L.U. Director 30 May 2019 Not
Qiu Yezhi QCorr Director 3 February 2020 Yes
Qiu Yezhi Fosber Asia Legal Representative and 15 July 2020 Yes
84 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Remuneration or
Name Other entity Office held in the entity Start of tenure End of tenure allowance from
the entity or not
Chairman of the Board
Dongfang Precision
Qiu Yezhi Director 15 June 2016 Yes
(Europe)
Qiu Yezhi Parsun Power Director 24 May 2015 Not
Qiu Yezhi Yineng Investment Supervisor 10 October 2020 Not
Legal Representative,
Qiu Yezhi Dongfang Digicom Executive Director and 26 October 2020 Not
General Manager
Dongfang Digicom Legal Representative and
Qiu Yezhi 26 February 2021 Not
(Guangdong) Executive Director
Shenzhen Xianglin
Qiu Yezhi Venture Capital Co., Supervisor 26 May 2016 Not
Ltd.
Shenzhen Shenghui Legal Representative,
Qiu Yezhi Venture Capital Co., Executive Director and 18 May 2015 Not
Ltd. General Manager
Legal Representative,
Foshan Jingmu Trading
Qiu Yezhi Executive Director and 16 June 2021 Not
Co., Ltd.
Manager
Xie Weiwei Parsun Power Director 24 May 2015 6 December 2021 Not
Xie Weiwei Shunyi Investment Supervisor 2 July 2015 Not
Xie Weiwei Jaten Robot Director 23 March 2016 Yes
Legal Representative and
Xie Weiwei Yinglian Digital 22 September 2020 Not
Executive Director
Foshan Nanhai District
Xie Weiwei Machinery Equipment Branch Secretary 23 November 2020 Yes
Trade Association
FoShan JunLang
Certified Public
Mai Zhirong Deputy Director 1 January 2000 Yes
Accountants Firm Co.,
Ltd.
Shenzhen Magic Design
Mai Zhirong & Decoration Independent Director 20 January 2021 Yes
Engineering Co., Ltd.
Legal Representative,
Foshan Xinshengda Tax
Mai Zhirong Executive Director and 4 November 2002 Not
Agents Co., Ltd.
Manager
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Remuneration or
Name Other entity Office held in the entity Start of tenure End of tenure allowance from
the entity or not
Foshan Tianshun Legal Representative,
Mai Zhirong Management Consulting Executive Director and 9 January 2000 Not
Co., Ltd. Manager
Beijing Yingke
Peng Xiaowei Senior Partner 1 July 2015 Yes
(Guangzhou) Law Firm
Guilin Hengtong Energy
Peng Xiaowei Vice Chairman of the Board 10 May 2016 Not
Development Co., Ltd.
Guangdong University
He Weifeng Associate Professor 1 July 1985 1 December 2021 Yes
of Technology
Guangdong Jinma
He Weifeng Entertainment Independent Director 19 October 2020 19 October 2023 Yes
Corporation Limited
Nanjing Profeta
15 September
Zhou Wenhui Intelligent Technology Director 15 September 2021 Not
2024
Co., Ltd.
Zhou Wenhui Yineng Investment General Manager 1 January 2021 Yes
Shao Yongfeng Dongfang Digicom Chief Financial Officer 1 January 2021 Yes
Shao Yongfeng Yineng Investment Chief Financial Officer 1 January 2021 Yes
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
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
Incumbent/Forme
Name Office title Gender Age remuneration from any related
r
from the party or not
86 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Company
Chairman of the
Tang Zhuolin Male 59 Incumbent 405.62 Yes
Board
Director and
Qiu Yezhi Female 50 Incumbent 415.31 Yes
General Manager
Director and
Xie Weiwei Deputy General Male 48 Incumbent 95.01 Yes
Manager
Director, Board
Zhou Wenhui Secretary and Male 49 Incumbent 171.58 Not
Vice President
Chief Financial
Shao Yongfeng Officer and Vice Male 47 Incumbent 118.14 Not
President
Independent
Mai Zhirong Male 51 Incumbent 20.00 Not
Director
Independent
Peng Xiaowei Male 51 Incumbent 20.00 Not
Director
Independent
He Weifeng Male 61 Incumbent 20.00 Not
Director
Chairman of the
Chen Huiyi Supervisory Female 37 Incumbent 27.87 Not
Committee
Employee
Zhao Xiuhe Male 51 Incumbent 24.25 Not
Supervisor
He Baohua Supervisor Male 40 Incumbent 34.35 Not
Total -- -- -- -- 1,352.13 --
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. Reviewed and approved the Proposal on the Report on the Work
of the Board of Directors for 2020 (including the Report of the
th
The 5 Meeting of Independent Directors for 2020); 2. Reviewed and approved the
th
the 4 Board of 26 March 2021 29 March 2021 Proposal on the Report on the Work of the Supervisory Committee
Directors for 2020; 3. Reviewed and approved the Proposal on the Annual
Report and its Summary for 2020; 4. Reviewed and approved the
Proposal on the Report on the Financial Accounts for 2020; 5.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Reviewed and approved the Proposal on the Financial Budget
Report for 2021; 6. Reviewed and approved the Proposal on the
Profit Distribution Proposal for 2020; 7. Reviewed and approved
the Proposal on the Self-Evaluation Report on Internal Control for
2020; 8. Reviewed and approved the Proposal on the Summary
Report of the Audit Committee of the Board of Directors on the
Annual Audit Work of Ernst & Young Hua Ming Accounting Firm
(Special General Partnership) for 2020 and the Proposed
Appointment of the Audit Institution for 2021; 9. Reviewed and
approved the Proposal on the Special Report on the Deposit and
Use of Raised Funds for 2020; 10. Reviewed and approved the
Proposal on the Use of Own Funds for Securities Investment; 11.
Reviewed and approved the Proposal on Authorizing the
Management to Apply for Comprehensive Credit from Banks for
2021; 12. Reviewed and approved the Proposal on the
Deliberation of the Revised Rolling Draft of the Company's
Five-Year Strategic Plan; 13. Reviewed and approved the Proposal
on the Convening of the 2020 Annual General Meeting.
The 6th
1. Reviewed and approved the Proposal on the Report for the First
(Extraordinary)
19 April 2021 20 April 2021 Quarter of 2021; 2. Reviewed and approved the Proposal on the
Meeting of the 4th
Change of Accounting Policy.
Board of Directors
The 7th Reviewed and approved the Proposal on Authorising the
(Extraordinary) Management of the Company and its Subsidiary to Initiate
th
7 June 2021 8 June 2021
Meeting of the 4 Preliminary Preparation for the Spin-off and Domestic Listing of
Board of Directors the Subsidiary.
1. Reviewed and approved the Proposal on the Satisfaction of
Unlocking Conditions in the First Unlocking Period for the First
The 8th
Grant of the 2020 Restricted Share Incentive Plan; 2. Reviewed
(Extraordinary)
18 June 2021 19 June 2021 and approved the Proposal on the Repurchase and Retirement of
Meeting of the 4th
Some Restricted Shares; 3. Reviewed and approved the Proposal
Board of Directors
on the Change of Registered Capital and the Revision of .
The 9th Meeting of
Reviewed and approved the Proposal on the Semi-Annual Report
the 4th Board of 26 July 2021 27 July 2021
and its Summary for 2021.
Directors
1. Reviewed and approved, by item-by-item voting, the Proposal
on the Repurchase of Some Public Shares; 2. Reviewed and
The 10th
approved the Proposal on the Request to the Company's General
(Extraordinary)
31 August 2021 1 September 2021 Meeting to Authorize the Board of Directors for Handling Matters
Meeting of the 4th
Related to the Share Repurchase; 3. Reviewed and approved the
Board of Directors
Proposal on the Repurchase and Retirement of Some Restricted
Shares; 4. Reviewed and approved the Proposal on the Change of
88 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Registered Capital and the Revision of .
5. Reviewed and approved the Proposal on the Convening of the
Second Extraordinary General Meeting for 2021.
The 11th
(Extraordinary) Reviewed and approved the Proposal on the Deferred Convening
th
7 September 2021 8 September 2021
Meeting of the 4 of the Second Extraordinary General Meeting for 2021.
Board of Directors
The 12th
(Extraordinary) Reviewed and approved the Proposal on the Report for the Third
th
28 October 2021 29 October 2021
Meeting of the 4 Quarter of 2021.
Board of Directors
2. Attendance of Directors at Board Meetings and General Meetings
Attendance of directors at board meetings and general meetings
Total number Board The director
Board
of board Board meetings Board failed to attend
meetings General
meetings the meetings attended by meetings the two
Director attended meetings
director was attended on way of director failed consecutive
through a attended
eligible to site telecommunica to attend board meetings
proxy
attend tion or not
Tang Zhuolin 8 3 5 0 Not 3
Qiu Yezhi 8 3 5 0 Not 3
Xie Weiwei 8 3 5 0 Not 3
Zhou Wenhui 8 3 5 0 Not 3
Mai Zhirong 8 2 5 1 0 Not 2
Peng Xiaowei 8 3 5 0 Not 3
He Weifeng 8 3 5 0 Not 3
Why any director failed to attend two consecutive board meetings:
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
89 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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, the Guidelines for the Standardized Operation of Listed Companies on the
Shenzhen Stock Exchange, the Articles of Association, the Rules of Procedure for the Board of 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.
90 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
VII Performance of Duty by Special Committees under the Board in the Reporting Period
Particulars
Number of Important Other
Date of about
Committee Members meetings Contents opinion and performance
meeting objections (if
convened suggestions of duties
any)
Reviewed Proposal on <2020 Audit Report of Guangdong Dongfang Precision
Science & Technology Co., Ltd.>; reviewed Proposal on ; reviewed Proposal on ; reviewed Proposal on ; reviewed
Proposal on the Proposed Appointment of an Audit Institution 2021.
Reviewed Proposal on ; reviewed Proposal on the ; reviewed Proposal on the ; reviewed Proposal
the Board of Directors 2021
He Weifeng on the ;
reviewed Proposal on the .
Reviewed the Proposal on the Results of 2020 Annual Performance Appraisal for
Remuneration and Peng
Awardees of the 2020 Restricted Share Incentive Plan; reviewed the Proposal on the
Appraisal Committee Xiaowei, Qiu 16 June
1 Satisfaction of Conditions for the First Unlocking Period for the First Grant of the
of the Board of Yezhi, He 2021
2020 Restricted Share Incentive Plan; reviewed the Proposal on the Repurchase and
Directors Weifeng
Retirement of Some Restricted Shares.
Mai Zhirong, Reviewed Proposal on ; reviewed Proposal on the ; reviewed Proposal on the ; reviewed
Proposal on the .
Reviewed Proposal on ; reviewed Proposal on the ; reviewed Proposal on the ; reviewed Proposal on the
.
92 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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
513
the period-end
Number of in-service employees of principal subsidiaries at the
1,339
period-end
Total number of in-service employees at the period-end 1,852
Total number of paid employees in the Reporting Period 2,140
Number of retirees to whom the Company as the parent or its
3
major subsidiaries need to pay retirement pensions
Functions
Function Employees
Production&Operation 1,111
Marketing 211
Technical 284
Financial 67
Administrative 179
Total 1,852
Educational backgrounds
Educational background Employees
Senior high school and below 916
Junior college 475
Bachelor’s degree 337
Master’s degree and above 124
Total 1,852
2. Employee Remuneration Policy
Domestic business entities:
The remuneration policy in 2021 continued to be based on posts and performance and subject to total control.
93 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
A comprehensive remuneration system was established and further improved to retain and attract talents needed for
the Company's sustainable development.
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, 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.
3. Training Plan
1. Overall status: 112 training sessions were carried out at the Group headquarters and domestic branches and
subsidiaries in 2021, totaling 710 hours of lectures. The number of training hours per capita was about 8.6 hours,
totaling 2,642 training attendees.
2. In 2021, the Company set up a team of more than 60 internal trainers to instruct and contribute to the team
growth; meanwhile, the Company introduced external online and offline training resources to implement the
training effectively and conveniently, empower core employees and share training resources in the Group.
3. The wisdom of Senior Management was shared to inherit the corporate culture of Dongfang Precision. The
Company built an interactive platform between Senior Management and grassroots employees, and completed a
series of six "Voice of Boss" sharing activities.
4. The Company empowered the team of internal trainers, improved their curriculum development and
teaching skills, preparing instructors and curriculum database for internal training and talent team construction.
5. Operation of Talent Development Project: a total of 40 trainees with a year of hands-on learning and
mentor coaching.
4. Labor Outsourcing
√ Applicable □ Not applicable
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Total hours of labor outsourced 145,714
Total payment for labor outsourcing (RMB yuan) 1,844,312.02
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
Article 183 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 procedures 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
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
Indicate whether the Company fails to put forward a cash dividend proposal for shareholders despite the facts that the Company has
made profits in the Reporting Period and the profits of the Company as the parent distributable to shareholders are positive.
□ Applicable √ Not applicable
Final dividend plan for the Reporting Period:
□ Applicable √ Not applicable
The Company planed not to distribute cash dividends, neither give away bonus shares, nor capitalize from public reserve
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees
√ Applicable □ Not applicable
1. Equity Incentives
In order to refine its long-term incentive mechanism, boost the enthusiasm of management personnel and key employees of all
95 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
levels, effectively promote long-term development, and achieve the objective of “Promoting Team Stability and Morale, Attract
Talent and Improve Operating Performance”, the Company launched the 2020 Restricted Share Incentive Plan in the first quarter of
2020. The plan was approved at the First Extraordinary General Meeting of 2020 on 27 March 2020. For details, see the Summary of
the 2020 Restricted Share Incentive Plan (Draft) disclosed by the Company on www.cninfo.com.cn dated 12 March 2020.
1. On 27 March 2020, the Proposal on the Grant of Restricted Shares to Awardees was approved at the 44 th (Extraordinary)
Meeting of the 3rd Board of Directors. The date for the first grant of the restricted shares was 27 March 2020. In June 2020, the
Company completed the ownership transfer of the 22,600,000 restricted shares granted to 40 awardees at RMB1.00/share in the first
grant, the listing date of which is 24 June 2020. For details, see the Announcement on the Completion of the Ownership Transfer of
the First Grant under the 2020 Restricted Share Incentive Plan disclosed by the Company on www.cninfo.com.cn dated 29 June
2020.
2. On 29 December 2020, the Proposal on the Grant of Reserved Restricted Shares to Awardees was approved at the Fourth
(Extraordinary) Meeting of the Fourth Board of Directors. The date for the grant of the reserved restricted shares was 29 December
2020. In February 2021, the Company completed the ownership transfer of the 4,240,000 restricted shares to 18 awardees at
RMB1.00/share, the listing date of which is 25 February 2021. For details, see the Announcement on the Completion of the
Ownership Transfer of the Grant of Reserved Restricted Shares under the 2020 Restricted Share Incentive Plan disclosed by the
Company on www.cninfo.com.cn dated 26 February 2021.
3. On 14 January 2021, the Proposal on the Repurchase and Retirement of Certain Restricted Shares was approved at the First
Extraordinary General Meeting of 2021. As two awardees resigned from the Company and were disqualified for the equity incentives,
the Company decided to repurchase and retire the 900,000 restricted shares that had been granted to them but were still locked up.
The repurchase and retirement of these restricted shares was completed on 24 February 2021. For details, see the Announcement on
the Completion of the Repurchase and Retirement of Certain Restricted Shares disclosed by the Company on www.cninfo.com.cn
dated 26 February 2021.
4. On 18 June 2021, the Proposal on the Satisfaction of the Unlocking Conditions for the First Unlocking Period for the First
Grant under the 2020 Restricted Share Incentive Plan and the Proposal on the Repurchase and Retirement of Certain Restricted
Shares were approved at the 8th (Extraordinary) Meeting of the 4th Board of Directors and the 6th (Extraordinary) Meeting of the 4th
Supervisory Committee. On 25 June 2021, 4,310,000 shares held by 37 awardees were unlocked for public trading in the first
unlocking period for the first grant under the 2020 Restricted Share Incentive Plan.
5. On 18 June 2021, the Proposal on the Repurchase and Retirement of Certain Restricted Shares was approved at the 8th
(Extraordinary) Meeting of the 4th Board of Directors. Due to an awardee failing to meet the 2020 performance appraisal standard,
the Company decided to repurchase and retire the 30,000 restricted shares that had been granted to the awardee. The repurchase and
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
retirement of these restricted shares was completed on 26 October 2021. For details, see the Announcement on Completion of the
Repurchase and Retirement of Certain Restricted Shares disclosed by the Company on www.cninfo.com.cn dated 28 October 2021.
6. On 31 August 2021, the Proposal on the Repurchase and Retirement of Certain Restricted Shares was approved at the 10th
(Extraordinary) Meeting of the 4th Board of Directors. As one awardee resigned from the Company and were disqualified for the
equity incentives, the Company decided to repurchase and retire the 120,000 restricted shares that had been granted to the awardee
but were still locked up. The repurchase and retirement of these restricted shares was completed on 26 October 2021. For details, see
the Announcement on the Completion of the Repurchase and Retirement of Certain Restricted Shares disclosed by the Company on
www.cninfo.com.cn dated 28 October 2021.
Equity incentives received by directors and senior management:
√ Applicable □ Not applicable
Unit: share
Exercise
price for
Restricted
exercised Market
Exercisabl Exercised Unlocked shares Grant
shares in price at the
e shares in shares in Opening shares in newly price Closing
the period-end
Name Office title the the restricted the granted in (RMB restricted
Reporting (RMB
Reporting Reporting shares Reporting the yuan/share shares
Period yuan/share
Period Period Period Reporting )
(RMB )
Period
yuan/share
)
Director
and
Qiu Yezhi 9,000,000 1,800,000 0 1 7,200,000
General
Manager
Director
and
Xie
Deputy 1,000,000 200,000 0 1 800,000
Weiwei
General
Manager
Director,
Board
Zhou
Secretary 1,200,000 240,000 0 1 960,000
Wenhui
and Vice
President
Shao Chief
0 0 800,000 1 800,000
Yongfeng Financial
97 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Officer
and Vice
President
Total -- 0 0 -- -- 11,200,000 2,240,000 800,000 9,760,000
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 Implementation 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 enterprise internal control. The Supervisory Committee
supervised the establishment and implementation of internal controls by the Board of Directors.
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
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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 full disclosure
of the internal control 15 March 2022
assessment report
Index of full disclosure
of the internal control Published on www.cninfo.com.cn
assessment report
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
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
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
Qualitative criteria
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
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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
defect is related to the profit report, it was measured
by the revenue 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 revenue, the defect was
A quantitative judgment was made based on the determined as a general defect. If it exceeds 0.5% and
pretax profit of the Company. The misstatement is less than 1% of the revenue, it was determined as
exceeding 5% of the total pretax profit was an important defect. If it exceeds 1% of the revenue, it
Quantitative criteria determined as a significant misstatement, that was determined as a significant defect.
exceeding 3% of the total pretax profit was If the loss that may result from or results from an
determined as an important misstatement, and others internal control defect is related to asset management,
were determined as general misstatements. 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 0
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
defects in financial
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 2021, 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 15 March 2022
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.
√ Yes □ No
XV Rectifications of Problems Identified by Self-inspection in the Special Action for Listed
Company Governance
During the Reporting Period, the Company carried out special self-inspection activities on governance according to
the unified deployment of regulatory authorities, and the results of the self-inspection are as follows:
(I) Overview of corporate governance
In strict accordance with the requirements of the Company Law, the Securities Law, the Code of Corporate
Governance for Listed Companies, the Listing Rules of Shenzhen Stock Exchange and other relevant laws and
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regulations, the Company has continuously improved its corporate governance structure, established and improved its
internal control system to standardize its operations and enhance information disclosure. It also actively developed
investor relations management, and complied with the requirements of laws and regulations in all aspects of corporate
governance.
(II) Problems in corporate governance and rectification
1. Due to other arrangements, there were circumstances where some directors or senior management did not attend
(preside) the General Meeting as required.
Rectification: The Company strengthened training, educated the requirements of relevant laws and regulations to
facilitate the participation of directors, supervisors and senior management in General Meetings via video, telephone
and Internet.
2. There were circumstances where independent directors were unable to attend the board meeting in person
Rectification: The Company strengthened training, educated the requirements of relevant laws and regulations to
facilitate the participation of independent directors in board meeting via video, telephone and Internet.
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Part V Environmental and Social Responsibilities
I Significant Environmental Issues
Whether the listed company and its subsidiaries fell into major pollutant-discharge enterprises and institutions published by national
environmental protection authorities.
□ Yes √ No
The Company and its subsidiaries did not fall into major pollutant-discharge enterprises and institutions published by national
environmental protection authorities, and the Company was not administratively punished for environmental issues in the Reporting
Period. For other environmental information, please refer to “II Social Responsibilities” below.
Measures taken to reduce carbon emissions in the Reporting Period and the impact:
□ Applicable √ Not applicable
Reason for the non-disclosure of other environmental information:
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 responsibilities 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.
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(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
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: First, Dongfang Precision and Parsun Power were granted the National Pollutant Discharge
Permit and met post-licensing regulatory requirements as required. Second, Dongfang Precision and Parsun Power commissioned the
qualified third party environmental protection agencies to compile the Contingency Plans for Environmental Emergencies, and filed
them. Third, the Company completed its environmental protection facilities (e.g., the waste gas treatment facility and the waste water
treatment facility), and passed the qualification re-examination on OHSAS18001:2007 Occupational Health and Safety Management
Systems and ISO14001:2005 Environmental Management System. Fourth, the Company commissioned a third party to install and
operate 24h online wastewater flow monitoring equipment, and also commissioned a third party testing agency to test waste water,
waste gas and noise every quarter. It also required environmental equipment operators to carry out regular inspections everyday. Fifth,
Parsun Power commissioned a third party to implement annual environmental monitoring, and tested the activated carbon adsorption
equipment before and after maintenance (including replacement of activated carbon). It also divided pollutants and wastes into
industrial waste water, waste gas, solid waste, hazardous waste and domestic waste, and disposed of them, and earnestly fulfilled its
responsibility of environmental protection.
(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 won honorary titles including "Top 500 Private Manufacturing Enterprises in China",
"Leading Enterprises in Subdivided Industries in Foshan", and "Guangdong Provincial Industrial Design Center"; Fosber Asia won
honorary titles including "Guangdong Demonstration Enterprise of Intellectual Property"; and Parsun Power won honorary titles
including "Leading Enterprise in China's Internal Combustion Engine Industry", "2021 China Shipbuilding Industry Best Technology
Innovation Award", "2021 China Shipbuilding Industry Outstanding Contribution Award", and in July 2021 was shortlisted as a
national "little giant" enterprise with the quality of specialization, refinement, characteristics and novelty.
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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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
Undertaking 1. I will conduct all related-party transactions, unavoidable or arising from a reasonable reason,
on horizontal between me and companies controlled by me and Dongfang Precision and its controlling subsidiaries in
Undertakings Tang Zhuolin, In normal
competition, a fair and reasonable manner and on an equal, mutually beneficial, equivalent and compensable basis in 25 April Long-term
made in asset Tang progress of
related-party strict accordance with market principles. For all related-party transactions between me and companies 2017 effective
reorganization Zhuomian fulfilment
transactions controlled by me and Dongfang Precision and its controlling subsidiaries, I will sign agreements and go
and capital through procedures according to law and fulfil the obligation of information disclosure in accordance
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
occupation 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
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.
When the Company is conducting major asset reorganization by acquiring 100% of Beijing Pride's
equity, former shareholders of Beijing Pride, namely Pulead, Qinghai Puren, BAIC Capital, Foton and
Pulead; BAIC
CATL, undertake that: 1. None of them has signed any agreement on concerted action as of the date of In normal
Capital; Other July 28, Long-term
signature of the Agreement to Purchase Assets by Issuing Shares and Paying Cash, nor will them do so progress of
Foton; CATL; undertakings 2016 effective
in the future, although BAIC Capital and Foton are subject to a concerted action relation and so as fulfilment
Qinghai Puren
Pulead and Qinghai Puren. 2. They will not attempt to change any member of the Board of Directors of
Dongfang Precision through a general meeting of shareholders.
1. The undertaker and companies controlled by it are not engaging in any business the same as, similar
Undertaking to or competing with the business of the listed company and companies controlled by it, and they will
on horizontal neither, in any way, engage in or assist others in engaging in any business that competes or may
Tang Zhuolin, competition, compete with the business of the listed company and companies controlled by it, nor merge or 25 In normal
Long-term
Tang related-party substantially invest in (or jointly hold), directly or indirectly, other companies engaging in any business November progress of
effective
Zhuomian transactions that competes or may compete with the business of the listed company and companies controlled by it. 2019 fulfilment
and capital 2. If the listed company engages in a new business sector, the undertaker will not engage in any
occupation business that competes with such a new business of the listed company, except with the prior written
consent of the listed company. 3. If any business opportunity obtained by the undertaker from any third
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
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 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
Undertaking unavoidable or arising from a reasonable reason, it will conduct following the principle of voluntary,
on horizontal fair and reasonable market pricing and according to normal market trading conditions, sign agreements
Tang Zhuolin, competition, and go through procedures according to law, abide by relevant laws, regulations, normative documents 25 In normal
Long-term
Tang related-party and articles of association of the listed company, perform internal decision-making and approval November progress of
effective
Zhuomian transactions procedures according to law, and timely perform the obligation of information disclosure, so as to 2019 fulfilment
and capital ensure that the related-party transactions are fairly and reasonably priced and conducted under fair
occupation 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.
1. I will not overstep my authority to intervene in the operation and management of Dongfang
Tang Zhuolin, 25 In normal
Other Precision, will not occupy the interests of Dongfang Precision, and will earnestly take corresponding Long-term
Tang November progress of
undertakings measures to fill up the diluted spot returns of Dongfang Precision. 2. After the CSRC and Shenzhen effective
Zhuomian 2019 fulfilment
Stock Exchange otherwise release the measures to fill up diluted spot returns and opinions and
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
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 this 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
Tang Zhuolin, 25 In normal
Other the independence of the listed company in terms of staffing, asset, business, organization and finance. Long-term
Tang November progress of
undertakings 2. This letter of undertaking shall be effective and irrevocable as of the date when it is officially signed effective
Zhuomian 2019 fulfilment
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 losses caused thereby.
He Weifeng, I, as a director/senior executive of the Company, will faithfully and diligently perform my duties,
Mai Zhirong, safeguard the legitimate rights and interests of the Company and all shareholders, and make the
Peng following undertakings to ensure that the Company's measures to fill up returns will be effectively
25 In normal
Xiaowei, Qiu Other implemented. Long-term
November progress of
Yezhi, Tang undertakings 1. I will not transfer benefits to other organizations or individuals for free or under unfair conditions, effective
2019 fulfilment
Zhuolin, Xie nor will I damage the interests of the Company in other ways. 2. I will constrain my consumption
Weiwei, Zhou behaviour on the position. 3. I will not use the Company's assets to engage in any investment or
Wenhui consumption activities unrelated to my performance of duties. 4. I will link the remuneration system
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
formulated by the Board of Directors or the Remuneration Committee to the implementation of the
Company's measures to fill up returns. 5. If the Company has an equity incentive program, I will link
the exercise conditions of the equity incentive program to be announced to the implementation of the
Company's measures to 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.
Undertaking
Before the fact that I am (or the Company is) a major shareholder of the issuer is changed, I (or the
on horizontal
Company) will not, directly or indirectly, in any way (including but not limited to sole proprietorship,
Tang Zhuolin, competition, In normal
joint venture and holding stocks or interests in other companies or enterprises), engage in any business 18 August Long-term
Tang related-party progress of
or activity that competes or may compete with the business of the issuer. I (The Company) shall 2010 effective
Zhuomian transactions fulfilment
Undertakings compensate the issuer for any loss caused to it as a result of the failure to fulfil the undertaking to avoid
and capital
made in IPO or horizontal competition.
occupation
refinancing
If relevant government or judicial authorities decide that Dongfang Precision or Weike Dongmeng need
Tang Zhuolin, to make a supplementary payment for employees' public housing provision, or Dongfang Precision or In normal
Other 14 August Long-term
Tang Weike Dongmeng is subject to any late fee, fine or loses for failing to pay the public housing provision progress of
undertakings 2011 effective
Zhuomian for some employees, I will unconditionally and in full bear such supplementary payment, late fees and fulfilment
fines.
Undertakings
related to equity
incentives
Undertakings
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Fulfilment
Cause of Parties of Types of Date of Term of
Contents of undertakings of
undertakings undertakings undertakings undertakings undertakings
undertakings
made to
minority
shareholders of
the Company
Whether the
undertakings
Yes
were timely
performed
Where the
Company failed
to fulfill an
undertaking on
time, it shall
Not applicable
explain in detail
the reasons for
failing to do so
and the
subsequent plan
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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 Regarding 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 Independent Auditor's “Modified Opinion” on
the Financial Statements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies and Estimates and Correction of Material
Accounting Errors
□ Applicable √ Not applicable
On 7 December 2018, the Ministry of Finance issued the Circular on the Revision and Issue of the Accounting Standard No. 21
for Business Enterprises—Leases (CK [2018] No. 35, hereinafter, the “New Lease Standard”). As required by the Ministry of
Finance, companies listed both domestically and overseas, as well as those listed overseas and adopting the International Financial
Reporting Standards or China’s Accounting Standards for Business Enterprises in the preparation of their financial statements, shall
adopt the New Lease Standard starting from 1 January 2019; while the other companies adopting China’s Accounting Standards for
Business Enterprises shall adopt the New Lease Standard starting from 1 January 2021.
Therefore, the Company has adopted the New Lease Standard starting from 1 January 2021. Regarding this accounting policy
change, the Company shall adopt the revised Accounting Standard No. 21 for Business Enterprises—Leases issued by the Ministry of
Finance on 7 December 2018. As for other unchanged accounting policies, the Company shall be subject to the Accounting Standards
for Business Enterprises—Basic Standard, other accounting standards, the guide for the implementation of accounting standards, the
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
explanatory circular regarding the accounting standards, and other applicable regulations issued previously by the Ministry of
Finance.
In April 2021, the Proposal on Change of Accounting Policy was approved at the 6 th Extraordinary Meeting of the 4th Board of
Directors.
Save as disclosed above, there were no other changes to the Company’s accounting policies or estimates, nor there was
correction of any material accounting error, during the Reporting Period.
VII YoY Changes to the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
Dongfang Digicom Technology (Guangdong) Co., Ltd. (“Digicom Guangdong”) has been incorporated by the Company in
February 2021 with a registered capital of RMB8 million. The Company has its 100% ownership in an indirect way.
Suzhou Parsun Power Technology Co., Ltd. (“Parsun Power Technology”) has been incorporated by the Company’s subsidiary
Parsun Power with a registered capital of RMB10 million. The Company has its 69.55% ownership in an indirect way.
Tianjin Hangchuang Zhijin Investment Partnership (Limited Partnership) (“Tianjin Hangchuang Fund”) has been established
jointly by the Company and AVIC Innovation Capital Management Co., Ltd. in March 2021. As the sole limited partner of the Fund,
the Company has made a capital contribution of RMB20 million, equivalent to approximately 95% ownership. 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 the absolute majority 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.
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 RMB3.786 million
How many consecutive years the domestic independent auditor
2 years
has provided audit service for the Company
Names of the certified public accountants from the domestic
Feng Xingzhi and Lin Hongyan
independent auditor writing signatures on the auditor’s report
How many consecutive years the certified public accountants
2 years
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 2021.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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
No such cases in the Reporting Period.
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
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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.
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 Line of Actual Actual Type of Security (if Counter Term of Having Guarante
Obligor
date of the guarantee occurrence guarantee guarantee any) -guarant guarantee expired or e for a
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
guarantee date amount ees (if not related
line any) party or
announcem 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
date when
the
Dongfang
guarantee
Precision 11 January 16 March Joint
32,402.01 32,402.01 - - took Yes Not
(Netherland 2020 2020 liability
effect to
)
18
February
2021
From the
date when
Dongfang the
30 Joint
Precision 4 February guarantee
December 17,760.46 17,760.46 liability; Deposits - Not Not
(Netherland 2021 took
2020 Pledge
) effect to 3
February
2022
From the
date when
Dongfang the
Joint
Precision 30 June guarantee
5 June 2020 25,268.95 24,186 liability; Deposits - Not Not
(Netherland 2020 took
Pledge
) effect to
29 June
2023
Total approved line for Total actual amount of
such guarantees in the 17,760.46 such guarantees in the 17,760.46
Reporting Period (B1) Reporting Period (B2)
Total approved line for Total actual balance of
such guarantees at the 75,431.42 such guarantees at the 43,029.41
end of the Reporting end of the Reporting
115 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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
guarantee
15 May 29 April Joint
QCorr 1,804.93 1,804.93 - - took Yes Not
2020 2020 liability
effect to
15
February
2021
From the
date when
the
15 May 30 April Joint guarantee
QCorr 2,165.91 2,165.91 - - Not Not
2020 2020 liability took
effect to
30 June
2024
Total approved line for Total actual amount of
such guarantees in the 0 such guarantees in the 0
Reporting Period (C1) Reporting Period (C2)
Total approved line for Total actual balance of
such guarantees at the such guarantees at the
3,970.84 2,165.91
end of the Reporting end of the Reporting
Period (C3) Period (C4)
Total guarantee amount (total of the three kinds of guarantees above)
Total guarantee line approved in Total actual guarantee
the Reporting Period 17,760.46 amount in the Reporting 17,760.46
(A1+B1+C1) Period (A2+B2+C2)
Total actual guarantee
Total approved guarantee line at
balance at the end of the
the end of the Reporting Period 79,402.26 45,195.32
Reporting Period
(A3+B3+C3)
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4) as % of the 12.27%
116 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Company’s net assets
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 45,195.32
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) 45,195.32
Joint liability possibly borne or already borne in
the Reporting Period for outstanding guarantees (if Not applicable
any)
Guarantees provided in breach of prescribed
Not applicable
procedures (if any)
Particulars about complex guarantees:
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 41,380 1,000 0 0
product
Securities firm’s
wealth management Self-funded 80,000 60,000 0 0
product
Trust product Self-funded 50,000 662.07 0 0
Total 171,380 61,662.07 0 0
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
117 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
(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
XVII Significant Events of Subsidiaries
□ Applicable √ Not applicable
118 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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
divide dividend
Percentage New nd converted Percentage
Shares Other Subtotal Shares
(%) issues conver from (%)
ted capital
from reserves
profit
1. Restricted shares 242,746,130 15.71% 0 0 0 -1,570,000 -1,570,000 241,176,130 18.10%
1.1 Shares held by the
0 0.00% 0 0 0 0 0 0 0.00%
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 other
241,446,130 15.63% 0 0 0 -1,710,000 -1,710,000 239,736,130 17.99%
domestic investors
Including: Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
domestic corporations
Shares held by domestic
241,446,130 15.63% 0 0 0 -1,710,000 -1,710,000 239,736,130 17.99%
individuals
1.4 Shares held by overseas
1,300,000 0.08% 0 0 0 140,000 140,000 1,440,000 0.11%
investors
Including: Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
overseas corporations
Shares held by overseas
1,300,000 0.08% 0 0 0 140,000 140,000 1,440,000 0.11%
individuals
2. Unrestricted shares 1,302,380,827 84.29% 0 0 0 -211,618,790 -211,618,790 1,090,762,037 81.89%
2.1 RMB-denominated ordinary
1,302,380,827 84.29% 0 0 0 -211,618,790 -211,618,790 1,090,762,037 81.89%
shares
2.2 Domestically listed foreign
0 0.00% 0 0 0 0 0 0 0.00%
shares
119 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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%
3. Total shares 1,545,126,957 100.00% 0 0 0 -213,188,790 -213,188,790 1,331,938,167 100.00%
Reasons for share changes:
√ Applicable □ Not applicable
1. Repurchase and retirement of shares in the Reporting Period
The Company launched the 2020 Share Repurchase Plan in June 2020, with 212,138,790 shares cumulatively repurchased under
the Plan. And the said shares were retired in June 2021.
2. Repurchase and retirement of certain restricted shares
In the first grant under the 2020 Restricted Share Incentive Plan, the Company repurchased and retired a total of 1,050,000
restricted shares that had been granted to four employees but were still in lockup due to the resignation of three of them and the other
failing to meet the annual performance requirement for the first unlocking period.
3. Completion of the ownership transfer of the grant of reserved restricted shares under the 2020 Restricted Share Incentive Plan
In February 2021, the Company completed the ownership transfer of the 4,240,000 reserved restricted shares under the 2020
Restricted Share Incentive Plan to 18 awardees.
4. Unlocking for public trading of shares in the first unlocking period for the first grant under the Restricted Share Incentive
Plan
In June 2021, the shares were unlocked for public trading in the first unlocking period for the first grant under the 2020
Restricted Share Incentive Plan, which involved 4,310,000 shares held by 37 awardees.
Approval of share changes:
√ Applicable □ Not applicable
In the Reporting Period, with respect to share changes involved in the “unlocking for public trading of shares in the first
unlocking period for the first grant under the 2020 Restricted Share Incentive Plan” and the “ownership transfer of the grant of
reserved restricted shares 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 general meeting and the Board of Directors,
and obtained approval from 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 certain
restricted shares” and the “ownership transfer of the grant of reserved restricted shares under the 2020 Restricted Share Incentive
Plan”, 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
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
Increase in
Opening Unlocked in the Closing restricted Reason for
Shareholder restricted shares Date of unlocking
restricted shares period shares restriction
in the period
Participated in the
Restricted Share
Qiu Yezhi 25,632,388 0 1,800,000 23,382,388 25 June 2021
Incentive Plan of
the Company
Participated in the
Restricted Share
Xie Weiwei 1,000,000 0 200,000 800,000 25 June 2021
Incentive Plan of
the Company
Participated in the
Restricted Share
Zhou Wenhui 1,200,000 0 240,000 960,000 25 June 2021
Incentive Plan of
the Company
The other 35
awardees of the Participated in the
first grant of the Restricted Share
11,400,000 0 3,120,000 8,280,000 25 June 2021
2020 Restricted Incentive Plan of
Share Incentive the Company
Notes
Plan
Participated in the
Restricted Share
Shao Yongfeng 0 800,000 800,000 09 March 2022
Incentive Plan of
the Company
The other 17
awardees of the Participated in the
reserved grant of Restricted Share
0 3,440,000 0 3,440,000 09 March 2022
the 2020 Restricted Incentive Plan of
Share Incentive the Company
Plan
Total 39,232,388 4,240,000 5,360,000 37,662,388 -- --
Notes:
Explanation of changes in the restricted shares held by “the other awardees of the first grant of the 2020 Restricted Share Incentive
Plan”:
1. There were a total of 40 awardees in the first grant of the 2020 Restricted Share Incentive Plan, including three director and senior
management, as well as 37 other awardees.
121 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
2. On 24 February 2021, the Company repurchased and retired the 900,000 restricted shares of two resigned awardees. Therefore, the
total awardees in the first grant of the 2020 Restricted Share Incentive Plan changed to 38, including three director and senior
management, as well as 35 other awardees.
3. In June 2021, the Company unlocked the 20% shares for the first unlocking period in the first grant of the 2020 Restricted Share
Incentive Plan. Among the 35 awardees, one employee didn’t satisfy the unlocking conditions, 30,000 restricted shares of whom
were not unlocked.
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
Following the repurchase and retirement of 212,138,790 public shares in the Reporting Period, the total share capital of the
Company decreased from 1,544,226,957 shares to 1,332,088,167 shares.
In the first grant under the 2020 Restricted Share Incentive Plan, the Company repurchased and retired a total of 1,050,000
restricted shares that had been granted to four employees but were still in lockup due to the resignation of three of them and the other
failing to meet the annual performance requirement for the first unlocking period.
Affected by the matters above, the closing net assets experienced a decreased compared to the beginning of the 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
preference
Number of shareholders
Number of Number of preference
ordinary with resumed
ordinary shareholders with
shareholders at the voting rights at
shareholder 54,863 52,442 resumed voting rights at 0 0
month-end prior the month-end
s at the the period-end (if any)
to the disclosure prior to the
period-end (see note 8)
of this Report disclosure of this
Report (if any)
(see note 8)
122 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
5% or greater shareholders or top 10 shareholders
Increase/decreas Shares in pledge, marked or
Total shares Unrestricte
Name of Nature of Shareholdin e in the Restricted frozen
held at the d shares
shareholder shareholder g percentage Reporting shares held
period-end held Status Shares
Period
Domestic 270,737,56 203,053,17 187,000,00
Tang Zhuolin 20.33% 67,684,392 质押
individual 8 6 0
Tang Domestic
7.27% 96,885,134 -39,000,000 0 96,885,134
Zhuomian individual
Pulead
Technology State-owned
3.96% 52,749,558 -16,704,820 0 52,749,558
Industry Co., corporation
Ltd.
Luzhou
Industrial
Development State-owned
2.39% 31,770,010 0 31,770,010
Investment corporation
Group Co.,
Ltd.
Contemporar
Domestic
y Amperex
non-state-owne 2.36% 31,438,168 -15,052,200 0 31,438,168
Technology
d corporation
Co., Ltd.
Huarong
Securities－
China
Merchants
Securities－
Huarong Other 2.36% 31,372,549 0 31,372,549
Youzhi
Collective
Asset
Management
Plan No. 1
Hong Kong
Securities
Overseas
Clearing 2.13% 28,366,536 18,241,867 0 28,366,536
corporation
Company
Limited
Qinghai Domestic
2.00% 26,628,340 0 26,628,340
Puren non-state-owne
123 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Intelligent d corporation
Technology
R & D Center
(Limited
Partnership)
Domestic
Qiu Yezhi 1.76% 23,382,388 -7,794,130 23,382,388 0
individual
Shengji
Equity
Investment State-owned
1.47% 19,607,843 0 19,607,843 质押 19,607,843
Fund corporation
(Shanghai)
Co., Ltd.
Strategic investor or general
corporation becoming a top-10
None
shareholder in a rights issue (if
any) (see note 3)
Mr. Tang Zhuolin and Mr. Tang Zhuomian are brothers. On 18 August 2010, they signed the
Related or acting-in-concert
Agreement on Acting in Concert. Pulead Technology Industry Co., Ltd. and Qinghai Puren Intelligent
parties among the
Technology R & D Center (Limited Partnership) are acting-in-concert parties. Apart from that, the
shareholders above
Company is not aware of any related or acting-in-concert parties among the other shareholders above.
Above shareholders entrusting
or entrusted with voting rights, None
or waiving voting rights
Top 10 shareholders including
the special account for As of 31 December 2021, there were 64,957,798 shares in the Company’s special account for
repurchase (if any) (see note repurchase, accounting for 4.88% of its total share capital.
10)
Top 10 unrestricted shareholders
Shares by type
Name of shareholder Unrestricted shares held at the period-end
Type Shares
RMB-denominate
Tang Zhuomian 96,885,134 96,885,134
d ordinary stock
RMB-denominate
Tang Zhuolin 67,684,392 67,684,392
d ordinary stock
Pulead Technology Industry RMB-denominate
52,749,558 52,749,558
Co., Ltd. d ordinary stock
Luzhou Industrial
RMB-denominate
Development Investment 31,770,010 31,770,010
d ordinary stock
Group Co., Ltd.
124 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Contemporary Amperex RMB-denominate
31,438,168 31,438,168
Technology Co., Ltd. d ordinary stock
Huarong Securities－China
Merchants Securities－ RMB-denominate
31,372,549 31,372,549
Huarong Youzhi Collective d ordinary stock
Asset Management Plan No. 1
Hong Kong Securities RMB-denominate
28,366,536 28,366,536
Clearing Company Limited d ordinary stock
Qinghai Puren Intelligent
RMB-denominate
Technology R & D Center 26,628,340 26,628,340
d ordinary stock
(Limited Partnership)
Shengji Equity Investment RMB-denominate
19,607,843 19,607,843
Fund (Shanghai) Co., Ltd. d ordinary stock
RMB-denominate
JIC Investment Co., Ltd. 12,984,216 12,984,216
d ordinary stock
Related or acting-in-concert
parties among top 10
Mr. Tang Zhuolin and Mr. Tang Zhuomian are brothers. On 18 August 2010, they signed the
unrestricted public
Agreement on Acting in Concert. Pulead Technology Industry Co., Ltd. and Qinghai Puren Intelligent
shareholders, as well as
Technology R & D Center (Limited Partnership) are acting-in-concert parties. Apart from that, the
between top 10 unrestricted
Company is not aware of any related or acting-in-concert parties among the other shareholders above.
public shareholders and top 10
shareholders
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
overseas listed companies in the Reporting Not applicable
Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
3. Actual Controller and Acting-in-Concert Parties
Nature of the actual controller: domestic individual
Type of the actual controller: 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
Change of the actual controller in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Ownership and control relationship between the actual controller and the Company:
Tang Zhuolin Tang Zhuomian
20.33% 7.27%
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
126 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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
127 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Shares
repurchased
Disclosure date Number of As % of Shares as % of total
Amount to be
of the shares to be total share Repurchase period Purpose repurchased shares under
used
repurchase plan repurchased capital (share) the equity
incentive plan
(if any)
Not lower
than RMB500
million
26 June 2020-24
17 June 2020 (inclusive) and Retirement 212,138,790
June 2021
no more than
RMB1 billion
(inclusive)
Shares of not
lower than 80% of
the repurchased
number are to be
retired, which will
Not lower reduce the
than RMB500 Company’s
million 23 September registered capital
1 September
(inclusive) and 2021-22 September accordingly; and 56,797,735
2021
no more than 2022 shares of no more
RMB1 billion than 20% of the
(inclusive) repurchased
number are to be
used for equity
incentives or
employee stock
ownership plans.
Progress on reducing the repurchased shares by way of centralized bidding:
□ Applicable √ Not applicable
128 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Part VIII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
129 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Part IX Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of this
Report’s approval or were due but could not be redeemed in full
Not applicable.
130 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Part X Corporate Financial Statement
一、Auditor’s Report
Type of Audit Opinion Standard Unreserved opinion
Signing date of the Auditor’s Report 24 March 2022
Name of the Audit Institution Ernst & Young Hua Ming LLP
Document number of the Auditor’s report Ernst & Young Hua Ming (2022) Auditor’s Report No.
61276890_G01
Name of the Chinese Certified Public Accountant Feng Xingzhi, Lin Hongyan
Auditor’s Report
Ernst & Young Hua Ming (2022) Auditor’s Report No. 61276890_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 2021, 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 2021, 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 sufficient 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.
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.
III. Key Audit Matter (Cont’d)
Key audit matter: How our audit addressed the key audit matter:
Impairment of goodwill
The carrying amount of goodwill amounted to The procedures performed to address this
131 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
RMB432,207,416.82 as at 31 December 2021 matter are as follows:
and the impairment allowance for goodwill
was RMB125,238,269.06. (1) Assessing the identification of asset
groups by the Group's management and
The Group's management performs goodwill the goodwill allocated to the asset groups;
impairment testing at the end of each year. The (2) Obtaining reports on the assessment of
assessment of goodwill impairment testing was goodwill impairment issued by the
based on the recoverable amount of the independent third-party asset appraisal
relevant asset groups to which the goodwill institution engaged by the management
is allocated, and the recoverable amount of with securities and futures-related
such asset groups was determined by the business qualification;
present value of the asset groups’ expected (3) Assessing the rationality of the major
future cash flows. In a goodwill impairment assumptions and assessment methods used
test, the forecasting of future cash flows by the Group's management when
involved significant judgments and estimates, forecasting the recoverable amount of
including sales growth rate, gross margin and asset groups, including the discount rate
discount rate. Because goodwill had a large and long-term growth rate;
carrying value and exerted a significant impact
(4) Assessing the forecast sales revenue and
on the financial statements, we identified
operating performance for future years
goodwill impairment as a key audit matter.
and comparing them with historical
operating performance; and
The accounting policies on and disclosures of (5) Checking the adequacy of the Group's
goodwill were set out in Item 16 of Note III, disclosures in the notes to the financial
Item 33 of Note III, and Item 19 of Note V to statements.
the financial statements.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
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 financial 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 professional 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 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 accounting estimates and related
disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting 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 professional skepticism throughout the
audit. We also: (cont’d)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
(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 internal 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.
Ernst & Young Hua Ming LLP Chinese Certified Public Accountant: Feng Xingzhi
(Engagement Partner)
Chinese Certified Public Accountant: Lin Hongyan
Beijing, China 14 March 2022
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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Assets Note V 31 December 2021 31 December 2020
Current assets
Cash and bank balances 1 1,664,336,339.35 885,711,053.88
Financial assets held for trading 2 788,185,521.57 1,636,296,430.31
Notes receivable 3 13,272,025.04 12,744,582.88
Accounts receivable 4 741,135,648.09 469,635,423.58
Receivables financing 5 30,692,449.25 56,737,978.04
Prepayments 6 34,177,802.36 29,109,416.21
Other receivables 7 71,363,166.84 79,103,472.64
Inventories 8 867,280,013.47 734,120,595.26
Contract assets 9 24,414,117.64 29,504,693.97
Current portion of non-current assets 10 108,385,000.00 2,556,000.00
Other current assets 11 32,124,006.99 22,271,217.65
Total current assets 4,375,366,090.60 3,957,790,864.42
Non-current assets
Long-term receivables 12 143,750.00 1,475,000.00
Long-term equity investments 13 84,777,596.67 72,671,204.73
Other non-current financial assets 14 162,523,519.41 5,948,588.15
Fixed assets 15 544,180,159.09 571,413,480.14
Construction in progress 16 12,298,259.58 9,062,038.52
Right-of-use assets 17 80,386,832.91 -
Intangible assets 18 293,718,987.62 332,387,182.69
Goodwill 19 306,969,147.76 324,904,239.97
Long-term prepaid expenses 20 11,962,127.07 12,096,981.78
Deferred tax assets 21 180,245,522.94 98,947,059.25
Other non-current assets 22 304,596,841.54 936,540,047.40
Total non-current assets 1,981,802,744.59 2,365,445,822.63
Total assets 6,357,168,835.19 6,323,236,687.05
The accompanying notes to the financial statements form an integral part of the financial statements.
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Liabilities and equity Note V 31 December 2021 31 December 2020
Current liabilities
Short-term borrowings 23 228,312,880.73 39,533,281.84
Financial liabilities held for trading 24 110,746,939.04 41,408,109.80
Notes payable 25 149,191,690.00 104,855,187.97
Accounts payable 26 619,265,856.18 503,042,561.05
Contract liabilities 27 405,842,932.51 362,792,713.35
Employee benefits payable 28 103,809,783.58 92,623,562.93
Tax payable 29 60,701,346.24 36,369,777.05
Other payables 30 100,018,273.09 81,743,851.64
Current portion of non-current liabilities 31 38,495,724.83 226,597,528.74
Other current liabilities 32 12,836,473.00 20,532,046.04
Total current liabilities 1,829,221,899.20 1,509,498,620.41
Non-current liabilities
Long-term borrowings 33 325,026,188.49 353,412,388.29
Lease liabilities 34 65,213,555.87 -
Long-term employee benefits payable 35 16,083,170.32 18,451,652.74
Provisions 36 117,932,721.59 105,450,257.63
Deferred income 37 12,190,311.66 16,861,488.27
Deferred tax liabilities 21 1,747,137.95 19,296,386.16
Other non-current liabilities 38 136,178,304.44 68,737,415.25
Total non-current liabilities 674,371,390.32 582,209,588.34
Total liabilities 2,503,593,289.52 2,091,708,208.75
The accompanying notes to the financial statements form an integral part of the financial statements.
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Liabilities and equity Note V 31 December 2021 31 December 2020
Equity
Share capital 39 1,331,938,167.00 1,545,126,957.00
Capital surplus 40 3,238,765,859.94 4,002,393,061.81
Less: Treasury stock 41 494,335,503.94 579,403,185.12
Other comprehensive income 42 (33,322,662.98) 20,026,089.70
Special reserve 43 11,252,639.19 10,057,438.97
Surplus reserves 44 51,830,974.45 51,830,974.45
Retained earnings 45 (424,159,175.27) (891,492,837.06)
Total equity attributable to owners of the parent 3,681,970,298.39 4,158,538,499.75
Non-controlling interests 171,605,247.28 72,989,978.55
Total equity 3,853,575,545.67 4,231,528,478.30
Total liabilities and equity 6,357,168,835.19 6,323,236,687.05
The financial statements have been signed by:
Legal representative: Tang Zhuolin
Chief Financial Officer: Shao Yongfeng
Head of Accounting Department: Yao Bin
The accompanying notes to the financial statements form an integral part of the financial statements.
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Note V 2021 2020
Operating revenue 46 3,524,734,783.94 2,916,270,143.13
Less: Cost of sales 46 2,555,072,059.79 2,099,148,826.36
Taxes and surcharges 47 11,496,506.72 10,253,512.61
Selling expenses 48 185,327,678.18 181,549,459.69
Administrative expenses 49 272,090,728.08 246,973,016.40
R&D expenses 50 99,557,565.46 82,082,274.75
Finance costs 51 (5,996,474.46) 7,919,670.28
Including: Interest expenses 13,182,088.01 15,535,719.53
Interest income 24,674,196.61 20,887,321.27
Add: Other income 52 14,892,566.89 10,894,164.69
Investment income 53 98,673,106.02 55,115,521.94
Including: Share of profit of joint ventures and
associates 3,880,256.70 2,889,349.81
Gain/loss on changes in fair value 54 (21,357,785.81) 45,122,771.27
Credit impairment loss 55 (12,726,636.46) (7,964,362.42)
Asset impairment loss 56 (10,936,754.10) (5,368,019.60)
Gain/loss on disposal of assets 57 424,968.29 (17,854.18)
Operating profit 476,156,185.00 386,125,604.74
Add: Non-operating income 58 5,750,547.04 35,801,786.91
Less: Non-operating expenses 59 1,462,018.81 1,746,731.36
Gross profit 480,444,713.23 420,180,660.29
Less: Income tax expenses 61 (11,946,472.42) 23,083,339.30
Net profit 492,391,185.65 397,097,320.99
Net profit classified by continuing operations
Net profit from continuing operations 492,391,185.65 397,097,320.99
Net profit classified by attribution of ownership
Net profit attributable to owners of the parent 467,333,661.79 389,180,624.08
Net profit attributable to non-controlling
interests 25,057,523.86 7,916,696.91
The accompanying notes to the financial statements form an integral part of the financial statements.
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Note V 2021 2020
Other comprehensive income, net of tax (58,062,617.01) (4,890,047.66)
Other comprehensive income attributable to
owners of the parent, net of tax (53,348,752.68) (4,944,995.62)
Other comprehensive income that will not be
reclassified to profit or loss (368,435.04) (471,953.04)
Changes caused by remeasurements on defined
benefit schemes 42 (368,435.04) (471,953.04)
Other comprehensive income that will be
reclassified to profit or loss (52,980,317.64) (4,473,042.58)
Differences arising from the translation of
foreign currency-denominated financial
statements 42 (52,980,317.64) (4,473,042.58)
Other comprehensive income attributable to
non-controlling interests, net of tax 42 (4,713,864.33) 54,947.96
Total comprehensive income 434,328,568.64 392,207,273.33
Including:
Total comprehensive income attributable to
owners of the parent 413,984,909.11 384,235,628.46
Total comprehensive income attributable to
non-controlling interests 20,343,659.53 7,971,644.87
Earnings per share 62
Basic earnings per share 0.35 0.26
Diluted earnings per share 0.35 0.26
The accompanying notes to the financial statements form an integral part of the financial statements.
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2021
Equity attributable to owners of the parent Non-controlling Total equity
Other
Less: Treasury Surplus
Share capital Capital surplus comprehensive Special reserve Retained earnings Subtotal interests
stock reserves
income
At 31 December 2020
I.
and 1 January 2021 1,545,126,957.00 4,002,393,061.81 579,403,185.12 20,026,089.70 10,057,438.97 51,830,974.45 (891,492,837.06 ) 4,158,538,499.75 72,989,978.55 4,231,528,478.30
II. Changes for the year
（I） Total comprehensive income
- - - (53,348,752.68) - - 467,333,661.79 413,984,909.11 20,343,659.53 434,328,568.64
Owner’s contributions and
（II）
reduction in capital
Share-based payments
1.
included in equity - 15,243,506.90 - - - - 15,243,506.90 - 15,243,506.90
2. Others (213,188,790.00) (778,870,708.77) (85,067,681.18) - - - - (906,991,817.59) 78,271,609.20 (828,720,208.39)
（III） Special reserve
1. Provision in the period - - - - 4,513,399.49 - - 4,513,399.49 - 4,513,399.49
2. Utilisation in the period - - - - (3,318,199.27) - - (3,318,199.27) - (3,318,199.27)
III.
At 31 December 2021
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
The accompanying notes to the financial statements form an integral part of the financial statements.
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2020
Equity attributable to owners of the parent Non-controlling Total equity
Other
Less: Treasury Surplus
Share capital Capital surplus comprehensive Special reserve Retained earnings Subtotal interests
stock reserves
income
At 31 December 2019
I. 1,838,647,096.00 3,862,377,838.84 160,088,925.60 24,971,085.32 - 51,830,974.45 (1,280,673,461.14 ) 4,337,064,607.87 65,018,333.68 4,402,082,941.55
and 1 January 2020
II. Changes for the year
（I） Total comprehensive income - - - (4,944,995.62) - - 389,180,624.08 384,235,628.46 7,971,644.87 392,207,273.33
Owner’s contributions and
（II）
reduction in capital
Share-based payments
1. - 25,070,406.59 - - - 25,070,406.59 - 25,070,406.59
included in equity
2. Others (293,520,139.00) 114,944,816.38 419,314,259.52 - - - (597,889,582.14) - (597,889,582.14)
（III） Special reserve
1. Provision in the period - - - - 11,315,076.12 - - 11,315,076.12 - 11,315,076.12
2. Utilisation in the period - - - - (1,257,637.15) - - (1,257,637.15) - (1,257,637.15)
III. At 31 December 2020 1,545,126,957.00 4,002,393,061.81 579,403,185.12 20,026,089.70 10,057,438.97 51,830,974.45 (891,492,837.06 ) 4,158,538,499.75 72,989,978.55 4,231,528,478.30
The accompanying notes to the financial statements form an integral part of the financial statements.
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Note V 2021 2020
I. Cash flows from operating activities
Proceeds from sale of goods and rendering of services 3,421,895,227.97 3,103,763,332.58
Receipts of taxes and surcharges refunds 45,064,378.48 124,817,383.44
Cash generated from other operating activities 63 39,334,554.11 45,814,939.62
Subtotal of cash generated from operating activities 3,506,294,160.56 3,274,395,655.64
Payments for goods and services 2,241,460,975.24 1,711,801,451.73
Cash payments to and on behalf of employees1 602,036,898.56 556,619,112.99
Payments of all types of taxes and surcharges 135,039,721.24 183,936,558.09
Cash used in other operating activities 63 221,097,289.50 271,042,501.08
Subtotal of cash used in operating activities 3,199,634,884.54 2,723,399,623.89
Net cash generated from/used in operating activities 64 306,659,276.02 550,996,031.75
II. Cash flows from investing activities
Proceeds from disinvestment 7,023,027,591.06 2,240,344,499.76
Investment income 93,945,208.58 79,136,616.01
Net proceeds from the disposal of fixed assets,
intangible assets and other long-lived assets 928,029.29 2,379,184.74
Cash generated from other investing activities 63 2,419,748.09 -
Subtotal of cash generated from investing activities 7,120,320,577.02 2,321,860,300.51
Payments for the acquisition of fixed assets,
intangible assets and other long-lived assets 66,321,945.54 150,682,489.97
Payments for investments 5,718,640,747.18 3,341,970,650.85
Net payments for the acquisition of subsidiaries and
64
other business units 30,000,000.00 11,529,999.39
Cash used in other investing activities 63 - 1,203,750.03
Subtotal of cash used in investing activities 5,814,962,692.72 3,505,386,890.24
Net cash generated from/used in investing activities 1,305,357,884.30 (1,183,526,589.73)
The accompanying notes to the financial statements form an integral part of the financial statements.
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Note V 2021 2020
III. Cash flows from financing activities
Borrowings raised 405,333,187.33 395,061,988.80
Cash generated from other financing activities 63 193,525,797.34 162,750,024.15
Subtotal of cash generated from financing activities 598,858,984.67 557,812,012.95
Repayment of borrowings 390,598,473.42 470,644,665.84
Interest and dividends paid 9,707,118.35 15,149,309.55
Cash used in other financing activities 63 1,357,057,613.48 825,811,857.34
Subtotal of cash used in financing activities 1,757,363,205.25 1,311,605,832.73
Net cash generated from/used in financing activities (1,158,504,220.58 ) (753,793,819.78 )
Effect of foreign exchange rates changes on cash
IV.
and cash equivalents (54,810,400.78 ) 20,200,877.15
V. Net increase/(decrease) in cash and cash equivalents 398,702,538.96 (1,366,123,500.61 )
Add: Cash and cash equivalents, beginning of the
period 860,601,236.78 2,226,724,737.39
VI. Cash and cash equivalents, end of the period 64 1,259,303,775.74 860,601,236.78
The accompanying notes to the financial statements form an integral part of the financial statements.
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Assets Note XV 31 December 2021 31 December 2020
Current assets
Cash and bank balances 526,602,901.98 134,020,813.88
Financial assets held for trading 652,931,497.75 1,539,762,030.97
Accounts receivable 1 154,703,065.67 153,517,438.90
Receivables financing 14,939,923.99 53,245,689.47
Prepayments 8,893,984.77 2,641,946.74
Other receivables 2 444,140,266.79 68,388,543.22
Inventories 145,283,359.74 123,156,907.36
Contract assets 17,681,315.64 4,470,173.25
Current portion of non-current assets 108,385,000.00 2,556,000.00
Other current assets 713,296.22 18,942.75
Total current assets 2,074,274,612.55 2,081,778,486.54
Non-current assets
Long-term receivables 143,750.00 1,475,000.00
Long-term equity investments 3 566,779,845.04 464,794,856.81
Other non-current financial assets 110,672,495.38 -
Fixed assets 316,780,357.65 329,230,669.84
Construction in progress 2,040,059.06 351,261.61
Right-of-use assets 17,226,122.41 -
Intangible assets 58,297,372.40 58,215,631.98
Long-term prepaid expenses 4,449,274.82 3,475,004.06
Deferred tax assets 109,447,418.03 32,570,759.90
Other non-current assets 300,150,000.00 935,660,189.00
Total non-current assets 1,485,986,694.79 1,825,773,373.20
Total assets 3,560,261,307.34 3,907,551,859.74
The accompanying notes to the financial statements form an integral part of the financial statements.
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Liabilities and equity 31 December 2021 31 December 2020
Current liabilities
Trading financial liabilities 5,861,200.00 -
Notes payable 45,445,513.50 55,312,772.43
Accounts payable 61,109,554.88 53,044,344.90
Contract liabilities 21,697,782.14 22,116,154.74
Employee benefits payable 13,205,296.64 16,961,090.03
Tax payable 2,850,207.94 5,181,895.95
Other payables 195,636,226.94 50,884,934.80
Non-current liabilities that mature
within one year 4,875,266.03 -
Other current liabilities 1,275,327.99 2,253,619.05
Total current liabilities 351,956,376.06 205,754,811.90
Non-current liabilities
Lease liabilities 13,331,936.29 -
Provisions 1,635,363.75 -
Deferred income 12,190,311.66 13,306,971.66
Deferred tax liabilities - 3,894,304.65
Other non-current liabilities 12,262,010.40 -
Total non-current liabilities 39,419,622.10 17,201,276.31
Total liabilities 391,375,998.16 222,956,088.21
The accompanying notes to the financial statements form an integral part of the financial statements.
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Liabilities and equity 31 December 2021 31 December 2020
Equity
Share capital 1,331,938,167.00 1,545,126,957.00
Capital surplus 3,162,960,902.13 3,846,323,477.68
Less: Treasury stock 494,335,503.94 579,403,185.12
Special reserve 5,067,104.62 3,835,986.08
Surplus reserves 51,830,974.45 51,830,974.45
Retained earnings (888,576,335.08) (1,183,118,438.56 )
Total Equity 3,168,885,309.18 3,684,595,771.53
Total liabilities and Equity 3,560,261,307.34 3,907,551,859.74
The accompanying notes to the financial statements form an integral part of the financial statements.
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Note XV 2021 2020
Operating revenue 4 486,757,300.91 357,820,756.14
Less: Cost of sales 4 256,366,100.99 216,587,418.89
Taxes and surcharges 5,401,743.28 6,495,820.00
Selling expenses 19,942,732.31 23,483,006.93
Administrative expenses 84,898,110.60 91,133,067.04
R&D expenses 21,950,643.65 19,296,267.24
Finance costs (11,086,061.90) (1,835,233.85)
Including: Interest expenses 2,969,649.37 2,455,764.90
Interest income 17,285,245.87 13,510,226.63
Add: Other income 4,618,346.17 5,823,069.02
Investment income 5 58,085,312.56 112,497,262.90
Including: Share of profit or loss of joint
ventures and associates 3,880,256.70 2,889,349.81
Gain on changes in fair value 34,139,842.44 53,243,450.97
Credit impairment loss 613,952.31 (2,413,082.66)
Asset impairment loss 43,279.19 1,060,243.12
Gain/loss on disposal of assets 275,491.34 22,458.25
Operating profit 207,060,255.99 172,893,811.49
Add: Non-operating income 4,248,968.31 3,530,930.90
Less: Non-operating expenses 188,495.98 1,282,131.90
Gross profit 211,120,728.32 175,142,610.49
Less: Income tax expenses (83, 421,375.16) (24,252,321.59)
Net profit 294,542,103.48 199,394,932.08
Including: Net profit from continuing operations 294,542,103.48 199,394,932.08
Total comprehensive income 294,542,103.48 199,394,932.08
The accompanying notes to the financial statements form an integral part of the financial statements.
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2021
Share capital Capital surplus Less: Treasury Special reserve Surplus reserves Retained earnings Total equity
stock
At 31 December 2020
I.
and 1 January 2021 1,545,126,957.00 3,846,323,477.68 579,403,185.12 3,835,986.08 51,830,974.45 (1,183,118,438.56) 3,684,595,771.53
II. Changes for the year
（I） Total comprehensive income - - - - - 294,542,103.48 294,542,103.48
Owner’s contributions and
（II）
reduction in capital
Share-based payments
1.
included in equity - 14,068,075.26 - - - - 14,068,075.26
2. Others (213,188,790.00) (697,430,650.81) (85,067,681.18) - - - (825,551,759.63)
（III） Special reserve - - - - - - -
1. Provision in the period - - - 1,615,641.49 - - 1,615,641.49
2. Amount utilised in the period - - - (384,522.95) - - (384,522.95)
III. At 31 December 2021 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
The accompanying notes to the financial statements form an integral part of the financial statements.
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2020
Share capital Capital surplus Less: Treasury Special reserve Surplus reserves Retained earnings Total equity
stock
At 31 December 2019
I.
and 1 January 2020 1,838,647,096.00 3,608,591,602.42 160,088,925.60 - 51,830,974.45 (1,382,513,370.64) 3,956,467,376.63
II. Changes for the year
（I） Total comprehensive income - - - - - 199,394,932.08 199,394,932.08
Owner’s contributions and
（II）
reduction in capital
Share-based payments
1.
included in equity - 24,893,737.26 - - - - 24,893,737.26
2. Others (293,520,139.00) 212,838,138.00 419,314,259.52 - - (499,996,260.52)
（III） Special reserve
1. Provision in the period - - - 3,835,986.08 - - 3,835,986.08
III. At 31 December 2020 1,545,126,957.00 3,846,323,477.68 579,403,185.12 3,835,986.08 51,830,974.45 (1,183,118,438.56) 3,684,595,771.53
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. Annual Report 2021
2021 2020
I. Cash flows from operating activities
Proceeds from sale of goods and rendering of services 535,230,797.30 378,382,646.38
Receipts of taxes and surcharges refunds 13,605,552.69 98,380,978.71
Cash generated from other operating activities 31,866,204.03 17,427,644.21
Subtotal of cash generated from operating activities 580,702,554.02 494,191,269.30
Payments for goods and services 293,904,947.16 225,072,281.14
Cash payments to and on behalf of employees 84,307,393.88 87,707,753.20
Payments of all types of taxes and surcharges 11,302,053.75 95,006,648.05
Cash used in other operating activities 15,808,751.20 70,685,343.49
Subtotal of cash used in operating activities 405,323,145.99 478,472,025.88
Net cash generated from/used in operating activities (175,379,408.03) 15,719,243.42
II. Cash flows from investing activities
Proceeds from disinvestment
2,866,282,671.15 2,227,653,619.05
Investment income 63,507,216.86 96,889,333.09
Net proceeds from the disposal of fixed assets, intangible
assets and other long-lived assets 449,580.00 498,906.24
Subtotal of cash generated from investing activities 2,930,239,468.01 2,325,041,858.38
Payments for the acquisition of fixed assets, intangible
assets and other long-lived assets 6,558,484.63 8,426,821.45
Payments for investments
1,888,592,448.78 3,226,936,725.61
Net payments for the acquisition of subsidiaries and
other business units 120,000,001.00 11,529,999.39
Subtotal of cash used in investing activities 2,015,150,934.41 3,246,893,546.45
Net cash generated from/used in investing activities 915,088,533.60 (921,851,688.07 )
The accompanying notes to the financial statements form an integral part of the financial statements.
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2021 2020
III. Cash flows from financing activities
Borrowings raised 129,418,000.00 -
Cash generated from other financing activities 254,961,825.36 155,256,887.17
Subtotal of cash generated from financing activities 384,379,825.36 155,256,887.17
Repayment of borrowings 129,418,000.00 90,000,000.00
Interest and dividends paid 2,005,101.64 2,336,895.39
Cash used in other financing activities 1,313,154,399.85 800,939,572.04
Subtotal of cash used in financing activities 1,444,577,501.49 893,276,467.43
Net cash generated from/used in financing activities (1,060,197,676.13) (738,019,580.26)
IV. Net increase/(decrease) in cash and cash equivalents 30,270,265.50 (1,644,152,024.91)
Add: Cash and cash equivalents, beginning of the period 126,339,870.71 1,770,491,895.62
V. Cash and cash equivalents, end of the period 156,610,136.21 126,339,870.71
The accompanying notes to the financial statements form an integral part of the financial statements.
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I. 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.
Business scope of the Company:
General items: Network and information security software development; manufacturing of special printing
equipment; computer system services; information system integration services; information consulting services
(excluding licensing information consulting services); manufacturing of material handling equipment;
manufacturing of special equipment for pulping and papermaking; manufacturing of industrial robots;
manufacturing of special-purpose equipment (excluding manufacturing of special licensing equipment);
manufacturing of industrial control computers and systems; sales of intelligent material handling equipment;
software sales; intelligent control system integration; AI universal application system; domestic freight
forwarding; information technology consulting services; socio-economic consulting services; environmental
protection consulting services; technology intermediary services. (Except for items subject to approval according
to law, business activities shall be conducted independently in accordance with the business license) Licensed
items: import and export agency; import and export of goods; import and export of technologies. (Business
activities that require approval according to law shall be subject to the approval by relevant authorities. Specific
business items are indicated in the approval documents or permit documents of relevant authorities.) The
Company belongs to the special-purpose equipment manufacturing industry.
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 14 March
2022.
The consolidation scope for consolidated financial statements is determined based on the concept of control. For
details of changes during the period, please refer to Note VI.
II. 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”).
The financial statements are prepared on a going concern basis.
In the preparation of the financial statements, all items are recorded by using historical cost as the basis of
measurement except for some financial instruments. Impairment allowance is made according to relevant
regulations if the assets are impaired.
III. Principal Accounting Policies and Accounting Estimates
1. Statement of compliance
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The financial statements present truly and completely the financial positions of the Group and the Company as at
31 December 2021, 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. 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. The acquirer is the entity that obtains control of the other entities
participating in the combination at the combination date, and the other entities participating in the combination are
the acquirees. The combination date is the date on which the combining party effectively obtains control of the
parties being combined.
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.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
4. Business combination (cont’d)
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 acquirer is the entity that obtains control of the other entities participating in the combination at
the acquisition date, and the other entities participating in the combination are the acquirees. The acquisition date
is the date on which the acquirer effectively obtains control of the acquiree.
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.
Where a business combination not involving entities under common control realized step by step through multiple
transactions, the long-term equity investments held by the acquiree prior to the purchase date shall be remeasured
at the fair value of the long-term equity investments on the purchase date, and the difference between the fair
value and their carrying value shall be recognized in profit or loss. For other comprehensive income of the
long-term equity investments under the equity method held by the acquiree prior to the purchase date, accounting
treatment shall be performed on the same basis as the direct disposal of relevant assets or liabilities by the
invested entity, and other changes in equity than net profit and loss, other comprehensive income and the
distribution of profits shall be converted into current profits and losses on the purchase date. The changes in the
fair value of the equity instrument investments held by the acquiree prior to the purchase date and accumulated in
other comprehensive income prior to the purchase date shall be transferred to retained profits and losses.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
5. 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).
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.
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.
6. 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.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
7. 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.
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.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
8. 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.
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.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
8. Financial instruments (cont’d)
Classification and measurement of financial assets (cont’d)
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.
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:
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
8. Financial instruments (cont’d)
Classification and measurement of financial liabilities (cont’d)
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.
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 VIII.3.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
8. Financial instruments (cont’d)
Impairment of financial instruments (cont’d)
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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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
9. 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. If the factors
that give rise to the allowance in prior years are not in effect in the current period, as a result that the net realisable
value of the inventories is higher than cost, allowance should be reversed within the impaired cost, and recognized
in profit or loss.
Net realisable 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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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
10. 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. For long-term equity investments acquired by way of debt restructuring, the initial investment cost
shall be determined in accordance with “CAS No. 12 — Debt Restructuring.”
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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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
10. 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.
On disposal of the long-term equity investments, the difference between carrying value and market price is
recognized in profit or loss for the current period. For long-term equity investments under equity method, when
the use of the equity method is discontinued, other comprehensive income previously accounted for under the
equity method 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 net-off of profit and loss, other
comprehensive income and profit distribution of the investee shall be transferred in full to current profit and loss.
If the equity method remains in use, other comprehensive income previously accounted for under the equity
method shall be dealt with on the same basis as if the relevant assets or liabilities were disposed of directly by the
investee and transferred to current profit and loss on a pro-rata basis. Equity recognized as a result of changes in
shareholders’ equity other than the net-off of profit and loss, other comprehensive income and profit distribution
of the investee shall be transferred to current profit and loss on a pro-rata basis.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
11. 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.
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.
12. 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.
Construction in progress is transferred into fixed assets when it is ready for its intended use.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
13. Borrowing costs
Borrowing costs are interest and other costs incurred by the Group in connection with the borrowings of funds,
which include borrowing interest, amortisation of discount or premium on debt, other supplementary costs and
certain foreign exchange differences that occurred from the borrowings in foreign currencies.
14. Right-of-use assets
The right-of-use assets of the Group mainly include buildings and vehicles
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.
When the Group remeasures the lease liability at the present value of the changed lease payments and adjusts the
carrying amount of the right-of-use assets accordingly, if the carrying amount of the right-of-use asset is reduced
to zero, and there is a further reduction in the measurement of the lease liability, the Group recognize the
remaining amount of the remeasurement in profit or loss.
15. Intangible assets
Intangible assets are recognized only when it is probable that economic benefits relating to such intangible assets
would flow into the Group and that their cost can be reliably measured. Intangible assets are initially measured at
cost, provided that intangible assets which are acquired in a business combination not under common control and
whose fair value can be reliably measured shall be separately recognized as intangible assets at fair value.
Useful life of an intangible asset is determined by the period over which it is expected to bring economic benefits
to the Group. For an intangible asset with no foreseeable limit to the period over which it is expected to bring
economic benefits to the Group, it is treated as an intangible asset with indefinite useful life.
Useful life of respective intangible assets is as follows:
Useful life
Land use rights 40-50 years
Land ownership (overseas) Indefinite
Trademarks 5-10 years
Trademarks (overseas) Uncertain
Patents 5-10 years
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
15. Intangible assets (cont’d)
Property in land acquired by the Group is normally accounted for as intangible assets. Property in land and
buildings relating to plants constructed by the Group are accounted for as intangible assets and fixed assets,
respectively. The costs for acquiring land and buildings are apportioned between the property in land and
buildings, or accounted for as fixed assets if they cannot be apportioned.
The straight-line amortisation method is used during the useful life period for intangible assets with definite useful
lives. The Group reviews, at least at each year end, useful lives and amortization method for intangible assets with
definite lives and makes adjustment when necessary.
For intangible assets with indefinite useful life, 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.
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.
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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:
The Group assesses at each balance sheet date whether there is an indication that a non-financial asset may be
impaired. If any such indication exists, the Group makes an estimate of the asset’s recoverable amount and
performs a test of impairment for the asset. For goodwill generated from business consolidation and intangible
assets with indefinite useful lives, tests for impairment are performed at least annually regardless of whether there
are indications of impairment. Intangible assets which are not yet ready for use are also tested annually for
impairment.
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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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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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
18. Employee benefits (cont’d)
Retirement benefits (defined benefit schemes) (cont’d)
recognizerecognize
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. 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. 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, 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.
20. 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.
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
21. Share-based payments
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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.
No expenses are recognized for awards that do not ultimately vest due to non-fulfillment of nonmarket conditions
and/or vesting conditions. For the market or non-vesting condition under the share-based payments agreement, it
should be treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied,
provided that other performance condition and/or vesting conditions are satisfied.
22. 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 title 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.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
22. Revenue generating from contracts with customers (cont’d)
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.
Principal/agent
When the Group obtains control of trade goods or services from a third party and then transfers it to a customer, or
has the ability to direct the third party to provide the service to the customer on the Group’s behalf, the Group is
entitled to determine the transaction price of the goods or services by itself, i.e., the Group controls the trade
goods or services before they are transferred to the customer. Thus, the Group is a principal and recognizes
revenue in the gross amount of consideration received or receivable. Otherwise, the Group is an agent and
recognizes revenue in the amount of any fee or commission to which it expects to be entitled from the customer.
The amount is the net amount of the gross consideration received or receivable after paying the other party the
consideration received in exchange for the goods or services to be provided by that party.
23. 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.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
23. Contract assets and contract liabilities (Cont’d)
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.
24. 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.
25 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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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
25. 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.
26. Income tax
Income taxes include current and deferred tax. Income taxes are recognized in current profit or loss as income tax
expenses or income tax benefit, except for the adjustment made for goodwill in a business combination and
income tax from transactions or items that directly related to equity.
For the current period’s deferred tax assets and liabilities arising in current and prior periods, the Group measures
them at the amount expected to be paid or recovered according to the relevant taxation regulations.
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.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
26. Income tax (cont’d)
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.
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.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
27. Leases
Identification of 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. To assess whether a contract conveys the right to control the use of an identified asset
for a period of time, the Group assesses whether, throughout the period of use, the customer has both of the right
to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of
the identified asset.
Identification of separate lease components
For a contract that contains multiple separate lease components, the Group separates the contract and accounts for
each separate lease component. The right to use an underlying asset is a separate lease component if both:
(1) The lessee can benefit from use of the underlying asset either on its own or together with other resources that
are readily available to the lessee;
(2) The underlying asset is neither highly dependent on, nor highly interrelated with, the other underlying assets in
the contract.
Assessment of lease term
The lease term is the non-cancellable period for which the Group has the right to use an underlying asset. The
Group has an option to extend the lease, that is, the Group has the right to extend the lease, and is reasonably
certain to exercise that option, the lease term also includes periods covered by an option to extend the lease. The
Group has an option to terminate the lease, that is, the Group has the right to terminate the lease, but is reasonably
certain not to exercise that option, the lease term includes periods covered by an option to terminate the lease. The
Group reassesses whether it is reasonably certain to exercise an extension option, purchase option, or not to
exercise a termination option, upon the occurrence of either a significant event or a significant change in the
circumstances that is within the control of the Group and affect whether the Group is reasonably certain to
exercise the corresponding option.
As lessee
For general accounting practice of the Group as a lessee, please see Items 14 and 19 of Note III.
Lease modifications
A change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and
conditions of the lease, for example, adding or terminating the right to use one or more underlying assets, or
extending or shortening the contractual lease term.
The Group accounts for a lease modification as a separate lease if both:
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
27. Leases (Cont’d)
(1) the modification increases the scope of the lease by adding the right to use one or more underlying assets;
(2) the consideration for the lease increases by an amount commensurate with the stand-alone price for the
increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the
particular contract.
For a lease modification that is not accounted for as a separate lease, at the effective date of the lease modification
the Group remeasures the lease liability by discounting the revised lease payments using a revised discount rate.
The revised discount rate is determined as the interest rate implicit in the lease for the remainder of the lease term,
if that rate can be readily determined, or the lessee’s incremental borrowing rate at the effective date of the
modification, if the interest rate implicit in the lease cannot be readily determined.
For a lease modification that is not accounted for as a separate lease, the Group accounts for the remeasurement of
the lease liability by:
(1) decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for
lease modifications that decrease the scope of the lease. The Group recognizes in profit or loss any gain or loss
relating to the partial or full termination of the lease.
(2) making a corresponding adjustment to the right-of-use asset for all other lease modifications.
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 that transfers substantially all the risks and rewards incidental to ownership of a leased asset on its
commencement date is a finance lease. And all the other leases are operating leases.
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.
For any modification to an operating lease, the Group treats it as a new lease from the effective date of the
modification, and the received or receivable lease payments related to the lease prior to the modification are
treated as lease payments of the new lease.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
28. 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.
29. Profit distribution
The Company’s cash dividends are recognized as liabilities upon the approval by the general meeting.
30. 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.
31. 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.
32. 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 Group measures assets or liabilities at fair value with the assumption that the orderly transaction of asset
disposal or the transfer of liabilities takes place in the major market for the relevant assets or liabilities. Where
there is no major market, the Group assumes such transaction takes place in the most favourable market for the
relevant assets or liabilities. The major market (or most favourable market) is a trading market which the Group
has access to on the measurement date. The Group adopts assumptions used by market participants when they
price the asset or liability with the aim of maximising its economic benefits.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
32. Fair value measurement (cont’d)
The Group adopts valuation techniques that are appropriate in the current circumstances and supported by
sufficient usable data and other information. Observable input will be used first and foremost. Unobservable input
will only be used when it is not possible or practicable to obtain observable input.
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.
33. 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.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
33. Significant accounting judgements and estimates (cont’d)
Judgement (cont’d)
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.
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.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
33. Significant accounting judgements and estimates (cont’d)
Estimation uncertainty (cont’d)
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.19.
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.
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.
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III. Principal Accounting Policies and Accounting Estimates (Cont’d)
33. Significant accounting judgements and estimates (cont’d)
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.
Provisions (cont’d)
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.
34. Changes to accounting policies and accounting estimates
Changes to accounting policies
New leases standard
In 2018, the Ministry of Finance issued the revised “CAS No. 21—Leases” (hereinafter, the “New Leases
Standard”. The New Leases Standard introduces a single model similar to current accounting treatment of finance
leases, requiring the lessor to recognize right-of-use assets and lease liabilities for all the leases, except for
short-term leases and leases of low-value assets, and recognize depreciation and interest expense, respectively.
The Group has adopted the New Leases Standard since 1 January 2021. For contracts signed prior to the date of
initial application, the Group did not reassess whether they were, or contained, a lease. According to the
transitional requirements, data of the comparable periods shall not be adjusted.
（1） The Group recognized lease liabilities based on the present value of the remaining lease payments
discounted at incremental borrowing rate at the date of initial application for lease previously classified as
operating leases. The right-of-use assets were recognized based on the amount equal to the lease
liabilities, adjusted for any related prepaid and accrued lease payments previously recognized;
（2） The Group performed impairment tests and corresponding accounting treatment on the right-of-use assets
in accordance with Note III 16.
For operating leases of low-value assets and operating leases for which the lease term ends within 12 months, the
Group applied a simplified approach and did not recognize the right-of-use assets and lease liabilities. For leases
previously classified as operating leases, the Group also applied the available practical expedients wherein it:
（1） Used a single discount rate to a portfolio of leases with reasonably similar characteristics; and Excluded
the initial direct costs from the measurement of the right-of-use asset at the date of initial application;
（2） The Group accounted for the changes in leases before the date of initial application based on the final
arrangement for such changes.
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
34. Changes to accounting policies and accounting estimates (cont’d)
Changes to accounting policies (cont’d)
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New leases standard (cont’d)
For the outstanding minimum lease payments for significant operating leases disclosed in 2020 financial
statements, the Group adjusted its difference with lease liabilities included in the balance sheet as at 1 January
2021 based on the present value of the minimum lease payments discounted using the incremental borrowing rate
as the lessee.
Present value of minimum lease payments for significant operating leases
as at 31 December 2020 112,179,044.42
Less: Simplification 206,887.72
Including: Short-term leases 206,887.72
Weighted average incremental borrowing rate 1.91%
Present value of operating lease payments as at 1 January 2021 98,612,229.28
Lease liabilities as at 1 January 2021 98,612,229.28
The effects of the adoption of the New Leases Standard on the balance sheet as of 1 January 2021 are as follows:
Consolidated balance sheet
As per the former
Carrying amount Effect
standard
Right-of-use assets 98,686,849.28 - 98,686,849.28
Prepayments 74,620.00 - 74,620.00
Non-current liabilities that
mature within one year 15,806,339.65 - 15,806,339.65
Lease liabilities 82,805,889.63 - 82,805,889.63
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
34. Changes to accounting policies and accounting estimates (cont’d)
Company balance sheet
As per the former
Carrying amount Effect
standard
Right-of-use assets 22,526,467.81 - 22,526,467.81
Prepayments 4,319,265.50 - 4,319,265.50
Non-current liabilities that
mature within one year 18,207,202.31 - 18,207,202.31
The effects of the adoption of the New Leases Standard on the financial statements of 2021 are as follows:
Consolidated balance sheet
As per the former
Carrying amount Effect
standard
Right-of-use assets 80,386,832.91 - 80,386,832.91
Prepayments 17,153,078.58 - 17,153,078.58
Non-current liabilities that
mature within one year 65,213,555.87 - 65,213,555.87
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
34. Changes to accounting policies and accounting estimates (cont’d)
Changes to accounting policies (cont’d)
New leases standard (cont’d)
Consolidated income statement
As per the former
Carrying amount Effect
standard
Cost of sales 7,483,805.24 7,291,186.88 192,618.36
Selling expenses 202,204.69 190,864.07 11,340.62
G&A 9,356,585.13 9,114,584.99 242,000.14
Financial cost 2,127,250.02 - 2, 127,250.02
19,169,845.08 16, 596,635.94 2, 573,209.14
Company balance sheet
As per the former
Carrying amount Effect
standard
Right-of-use assets 17,226,122.41 - 17,226,122.41
Prepayments 4,875,266.03 - 4,875,266.03
Non-current liabilities that
mature within one year 13,331,936.29 - 13,331,936.29
Company income statement
As per the former
Carrying amount Effect
standard
G&A 5,300,345.40 5,276,574.33 23,771.07
Financial cost 957,308.84 - 957,308.84
6,257,654.24 5,276,574.33 981,079.91
In addition, the cash paid by the Group for repayment of the principal and interest of the lease liability is included
in the statements of cash flows as cash outflows from financing activities, and the payments for short-term leases
and leases of low-value assets accounted for using the simplified approach and variable lease payments not
included in the measurement of the lease liability are still included in cash outflows from operating activities.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
III. Principal Accounting Policies and Accounting Estimates (Cont’d)
34. Changes to accounting policies and accounting estimates (cont’d)
Changes to accounting policies (cont’d)
New leases standard (cont’d)
Adjustment of scope of application for COVID-19-related rent concessions
The Group does not have any rent concessions applicable to the Provisions on the Accounting Treatment for
COVID-19-Related Rent Concessions and any rent concessions subject to the Notice on the Adjustment of Scope
of Application for the Provisions on the Accounting Treatment for COVID-19-Related Rent Concessions issued in
May 2021.
Accounting treatment on lease modification due to benchmark interest rate reform
According to the Accounting Standards for Business Enterprises Interpretation No.14, if the basis for determining
the contractual cash flows of financial assets or financial liabilities accounted for using the effective interest
method is changed only because of benchmark interest rate reform, and the basis of determination before and after
the change is economically equivalent, the Group will recalculate the effective interest rate based on the future
cash flows after the change and make subsequent measurement on this basis. The Group’s implementation of the
above standards since 1 January 2021 had no significant effect during the reporting period.
Changes to accounting estimates
No changes occurred to the major accounting estimates of the Company in the Reporting Period.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
IV. Taxation
1. Principal tax items and tax rates
Value-added tax (VAT) – The output tax of the taxable income is calculated at the rate of 13% and 6% and
VAT is levied according to the difference after deducting the input tax which is
allowed to be deducted in the current period.
City maintenance
and construction tax – Levied at 7% of the turnover tax actually paid
Education surcharge – Levied at 3% of the turnover tax actually paid
Local education
Surcharge – Levied at 2% of the turnover tax actually paid
Corporate income tax – Corporate income tax of the Group’s subsidiaries located in Mainland China shall
be levied at 25% of the taxable income (except for the preferential taxation as
described in Note IV 2). Subsidiaries located in Hong Kong shall calculate and pay
the corporate income tax at 16.5% of the taxable income, and subsidiaries
registered overseas shall apply the corporate income tax rate as required by the
local tax law. The details are as follows:
IV. Taxation (Cont’d)
1. Principal tax items and tax rates (Cont’d)
Name of subsidiaries Income tax rate
Dong Fang Precision (Netherland) Cooperatief U.A.（“Dongfang Precision
20%
(Netherland)”）
Fosber S.p.A.（“Fosber Group”） 24%
Fosber America, Inc.（“Fosber America”） 21%
EDF Europe s.r.l.（“Italy EDF”） 24%
Tirua Group Industrial, S.L.（“Tirua Group”） 28%
Tirua America inc. (“Tirua America”) 21%
Quantum Corrugated S.r.l. (Italy QCorr) 24%
Tirua S.L.U. 28%
Tratatamientos Industriales Tirua S.A.U. 28%
Tirua France SARL 15%
SCI Candan 15%
Property tax – Ad valorem tax: levied at 1.2% of the remaining value after deducting 30% from the original
value of the property; Tax levied from rent: levied at 12% of the rental income.
2. Tax concessions
On 9 December 2020, 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.: GR202044007667) 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 2021.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Suzhou Parsun Power Machine Co., Ltd. ("Parsun Power"), 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 7 November 2019 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 2021.
Guangdong Fosber Intelligent Equipment Co., Ltd. ("Fosber Asia"), 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 2021.
V. Notes to the Consolidated Financial Statements
1. Cash and bank balances
2021 2020
Cash on hand 233,281.32 217,540.96
Cash at banks 999,389,151.51 860,383,695.82
Other cash balances 664, 713,906.52 25,109,817.10
1,664,336,339.35 885,711,053.88
Of which: total restricted amount as
collateral, pledge or frozen 405,032,563.61 25,109,817.10
As at 31 December 2021, cash and bank balances of the Group amounting to RMB456,521,434.93
(31 December 2020：RMB514,387,073.67) were deposited outside Mainland China. The fund
deposited abroad with restrictions on repatriation was equivalent to RMB16,374,076.37 (31
December 2020: RMB6,556,936.03).
Current bank deposits earn interest income based on interest rates for current deposits. The period
for short-term time deposits is usually 7 days, based on the Group’s cash requirement. The
short-term time deposits earn interest income based on the corresponding interest rates for time
deposits.
2. Financial assets held for trading
2021 2020
Financial assets at fair value through profit or loss
Asset management plans 628,007,924.74 619,890,000.00
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Investments in bank’s wealth management
140,609,523.19
products 510,808,068.35
Investments in trust products 6,631,573.01 504,767,340.61
Derivative financial assets 12,936,500.63 831,021.35
788,185,521.57 1,636,296,430.31
V. Notes to the Consolidated Financial Statements (cont’d)
3. Notes receivable
2021 2020
Bank acceptance notes 13,272,025.04 12,744,582.88
Notes receivable that were endorsed or discounted but undue at the balance sheet date are as
follows:
2021 2020
Derecognized Un-derecogniz Derecognized Un-derecogniz
ed ed
Bank acceptance
notes - 9,391,823.29 - 12,744,582.88
As at 31 December 2021, there’s no need to establish impairment allowances for notes receivable in
the management’s opinion.
4. Accounts receivable
Accounts receivable are interest-free. The aging of accounts receivable is analyzed as follows:
2021 2020
Within 1 year 688,188,131.13 370,599,129.84
1-2 years 51,234,902.10 98,325,978.68
2-3 years 12,623,284.90 11,243,789.03
3-4 years 8,127,517.87 3,745,116.89
4-5 years 2,115,679.86 2,233,437.77
Over 5 years 5,074,242.03 7,280,302.29
767,363,757.89 493,427,754.50
Less: allowances for doubtful accounts
receivable 26,228,109.80 23,792,330.92
741,135,648.09 469,635,423.58
V. Notes to the Consolidated Financial Statements (cont’d)
4. Accounts receivable (cont’d)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
2021
Gross amount Allowance Carrying amount
Percentag
Amount Percentage Amount
e
（%） （%）
Accounts receivable for which
allowances are established
individually 7,038,180.40 0.92 7,038,180.40 100.00 -
Accounts receivable for which
allowances are established by
group with similar credit risk
characteristics 760,325,577.49 99.08 19,189,929.40 2.52 741,135,648.09
767,363,757.89 100.00 26,228,109.80 741,135,648.09
2020
Gross amount Allowance Carrying amount
Percentag
Amount Percentage Amount
e
（%） （%）
Accounts receivable for which
allowances are established 6,914,949.57 1.40 6,914,949.57 100.00 -
individually
Accounts receivable for which
allowances are established by
486,512,804.93 98.60 16,877,381.35 3.47 469,635,423.58
group with similar credit risk
characteristics
493,427,754.50 100.00 23,792,330.92 469,635,423.58
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
4. Accounts receivable (cont’d)
As at 31 December 2021, accounts receivable for which allowances are established individually are
as follows:
ECL
Gross amount Allowance Reason for allowance
（%）
Customer’s inability to
Customer 1
4,027,086.20 4,027,086.20 100.00 settle the amount due
Customer’s inability to
Customer 2
939,000.00 939,000.00 100.00 settle the amount due
Customer’s inability to
Customer 3
641,600.00 641,600.00 100.00 settle the amount due
Customer’s inability to
Customer 4
608,800.00 608,800.00 100.00 settle the amount due
Customer’s inability to
Customer 5
515,595.00 515,595.00 100.00 settle the amount due
Customer’s inability to
Other companies
306,099.20 306,099.20 100.00 settle the amount due
7,038,180.40 7,038,180.40
As at 31 December 2020, accounts receivable for which allowances are established individually are
as follows:
ECL
Gross amount Allowance Reason for allowance
（%）
Customer’s inability to
Customer 2 981,949.40 981,949.40 100.00
settle the amount due
Customer’s inability to
Customer 3 641,600.00 641,600.00 100.00
settle the amount due
Customer’s inability to
Customer 4 608,800.00 608,800.00 100.00
settle the amount due
Customer’s inability to
Customer 5 515,595.00 515,595.00 100.00
settle the amount due
Customer’s inability to
Customer 11 283,000.00 283,000.00 100.00
settle the amount due
Customer’s inability to
Other companies 3,884,005.17 3,884,005.17 100.00
settle the amount due
6,914,949.57 6,914,949.57
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
4. Accounts receivable (cont’d)
Accounts receivable for which allowances are established by group with similar credit risk
characteristics are as follows:
2021 2020
Gross amount Gross amount
estimated to be in ECL (%) Lifetime ECL estimated to be in ECL (%) Lifetime ECL
default default
Within 1 year 688,188,131.13 1.02 7,024,121.70 370,599,129.84 1.47 5,441,450.45
1-2 years 51,234,902.10 3.93 2,011,112.67 98,325,978.68 2.77 2,728,063.22
2-3 years 8,596,198.70 4.90 421,019.36 8,134,737.57 3.76 305,603.55
3-4 years 8,127,517.87 69.96 5,686,380.04 2,247,572.49 70.63 1,587,572.49
4-5 years 661,084.86 80.10 529,552.80 2,233,437.77 82.51 1,842,743.05
Over 5 years 3,517,742.83 100.00 3,517,742.83 4,971,948.58 100.00 4,971,948.59
760,325,577.49 19,189,929.40 486,512,804.93 16,877,381.35
Movements in allowances for doubtful accounts receivable are as follows:
Effect of
Established in Reversed in Written off
Opening balance exchange rate Closing balance
the period the period in the period
movements
2021 23,792,330.92 10,210,960.55 (1,713,874.29 ) (5,062,385.81) (998,921.57) 26,228,109.80
2020 17,373,408.69 9,075,792.17 (239,910.02 ) (3,513,686.10) 1,096,726.18 23,792,330.92
In 2021, provision for bad debts of RMB10,210,960.55 (2020: RMB9,075,792.17), and write-off of
bad debts of RMB5,062,385.81 (2020: RMB3,513,686.10). The reason for the write-off was that the
receivables were recognized as uncollectible.
Top 5 of accounts receivable are as follows:
As a % of the
closing balance of
2021 Allowance
total accounts
receivable
Customer 6 71,357,633.89 9.30 632,103.65
Customer 7 57,526,895.71 7.50 393,080.22
Customer 8 45,503,030.02 5.93 423,960.57
Customer 9 18,669,670.80 2.43 295,183.15
Customer 10 18,391,174.99 2.40 187,589.98
211,448,405.41 27.56 1, 931,917.57
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
4. Accounts receivable (cont’d)
Top 5 of accounts receivable are as follows:
2020 As a % of the Allowance
closing balance of
total accounts
receivable
Customer 15 25,622,677.43 5.19 378,382.84
Customer 16 19,590,573.00 3.97 5,877.17
Customer 6 15,235,021.13 3.09 224,983.15
Customer 8 13,085,372.40 2.65 193,238.21
Customer 17 12,611,094.90 2.56 186,234.32
86,144,738.86 17.46 988,715.69
5. Receivables financing
2021 2020
Bank acceptance notes 30,692,449.25 56,737,978.04
Notes receivable that were endorsed or discounted but undue at the balance sheet date are as
follows:
2021 2020
Derecognized Un-derecognized Derecognized Un-derecognized
Bank acceptance notes 24,598,786.91 - 25,235,099.85 -
6. Prepayments
The aging of prepayments is analyzed as follows:
2021 2020
Percentage Carrying amoun Percentage
Carrying amount
(%) t (%)
Within 1 year 33,901,158.84 99.19 28,618,261.25 98.31
1-2 years 38,710.83 0.11 374,977.19 1.29
2-3 years 144,972.14 0.43 34,633.52 0.12
Over 3 years 92,960.55 0.27 81,544.25 0.28
34,177,802.36 100.00 29,109,416.21 100.00
V. Notes to the Consolidated Financial Statements (cont’d)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
6 Prepayments (cont’d)
Top 5 of prepayments are as follows:
As a % of total
2021
prepayments
Supplier 1 6,146,589.78 17.98
Supplier 2 5,383,577.05 15.75
Supplier 3 5,297,682.90 15.50
Supplier 4 3,702,992.69 10.83
Supplier 5 1,859,780.28 5.44
22,390,622.70 65.50
2020 As a % of total
prepayments
Supplier 6 4,128,436.87 14.18
Supplier 1 2,385,384.54 8.19
Supplier 5 2,076,789.75 7.13
Supplier 2 1,927,579.27 6.62
Supplier 7 1,129,647.15 3.88
11,647,837.58 40.00
7. Other receivables
2021 2020
Interest receivables - 587,074.81
Other receivable 71,363,166.84 78,516,397.83
71,363,166.84 79,103,472.64
Interest receivables
2021 2020
Other interest - 587,074.81
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
7. Other receivables (cont’d)
Other receivables
The aging of other receivables is analyzed as follows:
2021 2020
Within 1 year 29,975,763.18 30,013,923.50
1-2 years 6,571,130.64 5,888,491.67
2-3 years 178,398.25 43,587,563.89
3-4 years 38,260,742.08 2,032,852.58
4-5 years 1,495,285.41 153,038.14
Over 5 years 168,531.88 202,302.18
76,649,851.44 81,878,171.96
Less: allowances for doubtful other
receivables 5,286,684.60 3,361,774.13
71,363,166.84 78,516,397.83
Other receivables are classified by nature as follows:
2021 2020
Amount for transfer of equity investments
37,903,425.00 42,131,250.00
Prepaid service charges
10,386,867.47 11,152,973.97
Security deposits 5,452,788.82 6,202,941.33
Export tax refunds 912,287.93 3,079,666.37
Employee loans and petty cash 4,537,207.00 2,579,209.29
Others 17,457,275.22 16,732,131.00
76,649,851.44 81,878,171.96
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
7 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:
2021
Stage 1 Stage 2 Stage 3 Total
Financial assets
with credit
12-month ECL Lifetime ECL
impairment
(lifetime ECL)
Opening balance 2,861,774.13 500,000.00 - 3,361,774.13
Established in the
period 4,229,550.20 - - 4,229,550.20
Written off in the
period (1,969,247.27) - - (1,969,247.27)
Other changes (335,392.46) - - (335,392.46)
Closing balance 4,786,684.60 500,000.00 - 5,286,684.60
2020
Stage 1 Stage 2 Stage 3 Total
Financial assets
with credit
12-month ECL Lifetime ECL
impairment
(lifetime ECL)
Opening balance 2,779,738.01 2,460,000.00 - 5,239,738.01
Established in the 137,497.51 - - 137,497.51
period
Reversed in the
(110,541.29 ) (1,960,000.00) - (2,070,541.29)
period
Other changes 55,079.90 - - 55,079.90
Closing balance 2,861,774.13 500,000.00 - 3,361,774.13
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
7 Other receivables (cont’d)
Movements in allowances for doubtful other receivables are as follows:
Effect of
Decrease due t
Opening Established in Reversed in exchange Closing
o disposal of
balance the period the period rate balance
subsidiaries
movements
2021 3,361,774.13 4,229,550.20 (1,969,247.27) (335,392.46) 5,286,684.60
2020 5,239,738.01 137,497.51 (2,070,541.29) - 55,079.90 3,361,774.13
In 2021, the Group accrued RMB4,229,550.20 of provision (2020: RMB137,497.51), wrote off
RMB1,969,247.27 of provision (2020: RMB0) because other receivables were confirmed uncollectable.
As at 31 December 2021, top 5 of other receivables are as follows:
As a % of
Closing
2021 total other Nature Age balance of
receivables allowance
Amount for
transfer of
Entity 1 3-4 years
equity
37,903,425.00 49.45 investments 1,899,115.81
Warranty
Entity 2 1-2 years
1,630,000.00 2.13 deposits -
Prepaidservice Within 1
Entity 3
1,500,000.00 1.96 charges year -
Prepaidservice Within 1
Entity 4
1,000,020.00 1.30 charges year -
Security depo Within 1
Entity 5
919,717.58 1.20 sits year -
42,953,162.58 56.04 1,899,115.81
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
7 Other receivables (cont’d)
As at 31 December 2020, top 5 of other receivables are as follows:
As a % of
Closing
2021 total other Nature Age balance of
receivables allowance
Amount for
transfer of
Entity 1 42,131,250.00 51.46 2-3 years 2,110,947.04
equity
investments
Amount in Within 1
Entity 6 3,233,312.63 3.95 -
insurance year
Security Within 1
Entity 7 1,934,522.55 2.36 -
deposits year
Warranty Within 1
Entity 2 1,630,000.00 1.99 -
deposits year
Within 1
Entity 8 1,494,884.38 1.83 Compensation -
year
50,423,969.56 61.59 2,110,947.04
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
8. Inventories
2021
Gross amount Valuation allowance Carrying amount
Work-in-progress
332,359,371.92 16,467,899.02 315,891,472.90
Raw materials
365,907,967.74 9,445,201.52 356,462,766.22
Finished goods 80,356,852.12 7,117,802.59 73,239,049.53
Product deliveries 48,592,282.34 - 48,592,282.34
Semi-finished goods 72,050,412.10 1,004,893.76 71,045,518.34
Materials consigned for
processing 2,048,924.14 - 2,048,924.14
901,315,810.36 34,035,796.89 867,280,013.47
2020
Gross amount Valuation allowance Carrying amount
Work-in-progress 347,787,856.58 27,512,393.21 320,275,463.37
Raw materials 313,339,147.74 8,477,773.27 304,861,374.47
Finished goods 80,477,465.24 2,209,825.73 78,267,639.51
Product deliveries 15,786,304.74 - 15,786,304.74
Semi-finished goods 14,676,986.94 114,428.27 14,562,558.67
Materials consigned for
367,254.50 - 367,254.50
processing
772,435,015.74 38,314,420.48 734,120,595.26
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
8 Inventories (cont’d)
Movements in inventory valuation allowances are as follows:
2021
Established in Decrease in the period Closing
Opening balance
the period balance
Reversed or Others
written off
Raw materials
8,477,773.27 4,613,526.07 (3,923,240.80) 277,142.98 9,445,201.52
Work-in-progress
27,512,393.21 467,938.75 (11,312,154.94) (200,278.00) 16,467,899.02
Finished goods
2,209,825.73 5,107,721.38 (199,744.52) - 7,117,802.59
Semi-finished goods
114,428.27 1,004,893.76 (114,428.27) - 1,004,893.76
38,314,420.48 11,194,079.96 (15,549,568.53) 76,864.98 34,035,796.89
2020
Established in Decrease in the period Closing
Opening balance
the period balance
Reversed or Others
written off
Raw materials 13,394,596.44 2,492,323.28 (7,602,705.84) 193,559.39 8,477,773.27
Work-in-progress
25,945,105.34 2,389,567.83 (893,336.11) 71,056.15 27,512,393.21
Finished goods 103,897.01 2,105,928.72 - - 2,209,825.73
Semi-finished goods
244,188.37 - (129,760.10) - 114,428.27
39,687,787.16 6,987,819.83 (8,625,802.05) 264,615.54 38,314,420.48
31 Basis for determining the net Basis for provision for Reasons for reversal of provision
December realizable value write-down of inventories for write-down of inventories in
2021 the period
Market prices of raw materia Scrapped, defective and
ls unpopular materials
Raw Market prices of related finis Market prices of related Market prices of related finished
materials hed goods finished goods declined goods rebounded
Work-in-pro Market prices of related Market prices of related Market prices of related finished
gress finished goods finished goods declined goods rebounded
Finished
goods Market price/contract price Market price declined Market price rebounded
As at 31 December 2021, the Group has no inventories with restricted ownership (31 December 2020: Nil).
V. Notes to the Consolidated Financial Statements (cont’d)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
9. Contract assets
2021 2020
Impairment Carrying Impairment Carrying
Gross amount allowance amount Gross amount allowance amount
Contract
assets 25,144,462.49 730,344.85 24,414,117.64 30,566,218.02 1,061,524.05 29,504,693.97
When the Group hands over equipment to customers, the control over the equipment is considered
transferredand the final payment for the equipment is recorded in contract assets.
Movements in impairment allowances for contract assets are as follows:
Established in Reversed
Opening balance Other decreases Closing balance
the period in the period
2021 1,061,524.05 - (257,325.86) (73,853.84)- 730,344.85
2020 - 1,061,524.05 - - 1,061,524.05
Contract assets for which impairment allowances are established by aging analysis are as follows:
2021 2020
Gross amount Gross amount
estimated to be ECL (%) Lifetime ECL estimated to be ECL (%) Lifetime ECL
in default in default
Within 1 year 24,414,117.64 - - 28,834,169.15 2.98 859,913.56
1-2 years 730,344.85 100 730,344.85 1,732,048.87 11.64 201,610.49
25,144,462.49 730,344.85 30,566,218.02 1,061,524.05
V. Notes to the Consolidated Financial Statements (cont’d)
10. Current portion of non-current assets
2021 2020
Current portion of long-term receivables 4,595,000.00 2,556,000.00
Current portion of large-amount deposit
certificates
103,790,000.00 -
108,385,000.00 2,556,000.00
As at 31 December 2021, there’s no need to establish impairment allowances for the current portion
of non-current assets in the management’s opinion.
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V. Notes to the Consolidated Financial Statements (cont’d)
11. Other current assets
2021 2020
Overpaid value-added tax (VAT) 18,681,339.03 13,120,049.59
Tax repayments 8,202,256.30 4,547,579.26
Input VAT to be deducted 3,358,040.70 1,041,284.86
Others 1,882,370.96 3,562,303.94
32,124,006.99 22,271,217.65
12. Long-term receivables
2021 2020
Provision for Gross amoun Provision for Carrying
Gross amount Carrying amount
bad debts t bad debts amount
Amounts receivable by
installment for selling goods 143,750.00 - 143,750.00 1,475,000.00 - 1,475,000.00
143,750.00 - 143,750.00 1,475,000.00 - 1,475,000.00
As at 31 December 2021, there’s no need to establish impairment allowances for long-term
receivables in the management’s opinion.
13. Long-term equity investments
2021
Opening Change in the period
balance Return on Closing balance
Additional investment under the Other equity
investment equity method changes
Associates
Jaten Robot 70,900,088.92 - 3,880,256.70 - 74,780,345.62
Talleres Tapre 1,771,115.81 - (177,733.72) 1,593,382.09
Profeta (Note) - 8,403,868.96 - - 8,403,868.96
72,671,204.73 8,403,868.96 3,880,256.70 (177,733.72) 84,777,596.67
Note: The Group invested in Nanjing Profeta Intelligent Technology Co., Ltd. (“Profeta”) in
September 2021, and the Group has appointed one of the five members in Profeta’s Board of
Directors, and owned a substantive participation right of 20%, having a significant impact on
accounting as a joint venture.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
13. Long-term equity investments(cont’d)
2020
Opening Change in the period
balance Return on Closing
Additional investment under Other equity balance
investment the equity method changes
Joint venture
Yinglian Digital 10,510,735.47 - (173,998.13) (10,336,737.34) -
Associates
Jaten Robot 60,136,740.98 7,700,000.00 3,063,347.94 - 70,900,088.92
Talleres Tapre 1,724,878.58 - - 46,237.23 1,771,115.81
72,372,355.03 7,700,000.00 2,889,349.81 (10,290,500.11) 72,671,204.73
As at 31 December 2021, there’s no need to establish impairment allowances for long-term equity
investments in the management’s opinion.
14. Other non-current financial assets
2021 2020
Financial assets at fair value
through profit or loss 162,523,519.41 5,948,588.15
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.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
15. Fixed assets
Fixed assets
2021
Transportation
Buildings and Machinery Other
Total
constructions equipment
facility
Gross amount
Opening balance 589,751,776.97 450,190,483.35 29,625,946.16 54,535,783.13 1,124,103,989.61
Purchases 1,189,374.97 14,276,894.12 5,288,470.83 6,120,000.21 26,874,740.13
Transfers from
construction in progress 8,331,019.81 8,331,019.81
Disposal or retirement
(901,617.54) (2,788,942.24) (3,467,463.79) (2,680,584.25) (9,838,607.82)
Effect of exchange rate
movements (15,055,595.51) (21,959,177.72) (611,771.38) (103,743.20) (37,730,287.81)
Closing balance 574,983,938.89 448,050,277.32 30,835,181.82 57,871,455.89 1,111,740,853.92
Accumulated depreciation
Opening balance 170,382,986.59 335,115,748.64 19,447,337.09 27,744,437.15 552,690,509.47
Provision 17,854,660.74 21,711,968.56 2,982,429.17 6,792,822.21 49,341,880.68
Disposal or retirement
(901,613.73) (2,321,838.53) (3,216,478.16) (2,410,169.00) (8,850,099.42)
Effect of exchange rate
movements (7,420,388.13) (17,723,492.54) (185,551.49) (292, 163.74) （25,621,595.90)
Closing balance 179,915,645.47 336,782,386.13 19,027,736.61 31,834,926.62 567,560,694.83
Carrying amount
Closing 395,068,293.42 111,267,891.19 11,807,445.21 26,036,529.27 544,180,159.09
Opening 419,368,790.38 115,074,734.71 10,178,609.07 26,791,345.98 571,413,480.14
As at 31 December 2021, the Group has no fixed assets subject to operating leases.
As at 31 December 2021, the Group has no fixed assets without certificates of title.
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V. Notes to the Consolidated Financial Statements (cont’d)
15. Fixed assets (cont’d)
2020
Buildings and Transportation
Machinery Other
Total
equipment
constructions facility
Gross amount
Opening balance 574,397,960.97 445,755,180.38 24,705,378.27 51,277,596.06 1,096,136,115.68
Purchases 18,554,719.59 6,955,576.72 6,139,464.77 4,762,868.47 36,412,629.55
Transfers from
construction in progress 217,313.22 1,366,637.17 - - 1,583,950.39
Business combinations not
involving entities under
common control 533,490.07 - 57,954.86 335,446.46 926,891.39
Disposal or retirement (2,095,875.70) (356,538.41) (1,067,149.73) (1,258,232.95) (4,777,796.79)
Effect of exchange rate
movements (1,855,831.18) (3,530,372.51) (209,702.01) (581,894.91) (6,177,800.61)
Closing balance 589,751,776.97 450,190,483.35 29,625,946.16 54,535,783.13 1,124,103,989.61
Accumulated depreciation
Opening balance 152,930,326.96 316,051,462.47 17,885,349.67 23,514,075.83 510,381,214.93
Provision 16,573,413.49 20,824,324.68 1,464,543.61 4,871,188.93 43,733,470.71
Disposal or retirement (830,361.22) (222,091.59) (383,473.93) (1,163,823.40) (2,599,750.14)
Effect of exchange rate
movements 1,709,607.36 (1,537,946.92) 480,917.74 522,995.79 1,175,573.97
Closing balance 170,382,986.59 335,115,748.64 19,447,337.09 27,744,437.15 552,690,509.47
Carrying amount
Closing 419,368,790.38 115,074,734.71 10,178,609.07 26,791,345.98 571,413,480.14
Opening 421,467,634.01 129,703,717.91 6,820,028.60 27,763,520.23 585,754,900.75
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
16. Construction in progress
Construction in progress
2021 2020
Gross amoun Impairment Carrying Impairment allowanc Carrying
Gross amount
t allowance amount e amount
Plants and buildings
11,582,347.78 - 11,582,347.78 384,832.84 - 384,832.84
Equipment installation 715,911.80 - 715,911.80 8,431,327.70 - 8,431,327.70
Software installation - - - 245,877.98 - 245,877.98
12,298,259.58 - 12,298,259.58 9,062,038.52 - 9,062,038.52
Movements in substantial construction in progress in 2021 are as follows:
Transferred to
Increase in Funding Input as a %
Budget Opening balance fixed assets in Other decrease Closing balance
the period source of budget
the period
Equipment installation
of Fosber Group 12,021,450.00 8,426,602.70 8,087,962.73 -338,639.97 - Self-funded -
Dongfang Precision - Plant
Construction Project 7,759,142.53 - 2,035,342.08 - 2,035,342.08 Self-funded 26.23
Yinglian - Plant
Construction Project 50,000,000.00 - 8,548,699.09 - 8,548,699.09 Self-funded 17.10
Others - 635,435.82 1,324,587.30 243,057.08 -2,747.63 1,714,218.41 Self-funded -
-
69,780,592.53 9,062,038.52 11,908,628.47 8,331,019.81 341,387.60 12,298,259.58
Movements in substantial construction in progress in 2020 are as follows:
Transferred to
Increase in Input as a % of
Budget Opening balance fixed assets in Closing balance Funding source
the period budget
the period
Equipment installation
of Fosber Group 12,021,450.00 3,481,834.40 4,944,768.30 - 8,426,602.70 Self-funded 97.27
Electromobile parking
canopy 71,825.45 - 71,825.45 71,825.45 - Self-funded 100.00
Equipment installation and
renovation of Dongfang
Precision 6,331,807.41 83,070.80 9,230.09 92,300.89 - Self-funded 101.99
Equipment installation and
engineering of Parsun
Power 3,501,238.53 1,274,336.28 - 1,274,336.28 - Self-funded 136.40
Triangle stud advertising
board of Dongfang
Precision 38,360.21 - 38,360.21 38,360.21 - Self-funded 100.00
5 flagpoles and base 107,127.56 - 107,127.56 107,127.56 - Self-funded 100.00
Others - - 635,435.82 - 635,435.82 Self-funded -
22,071,809.16 4,839,241.48 5,806,747.43 1,583,950.39 9,062,038.52
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V. Notes to the Consolidated Financial Statements (cont’d)
17. Right-of-use assets
2021
Buildings Vehicles Total
Cost
Opening balance - - -
Changes to accounting
policies (Note) 92,921,046.07 5,765,803.21 98,686,849.28
Increase - 5,381,480.29 5,381,480.29
Effect of exchange rate
movements (6,665,691.06) (578,592.08) (7,244,283.14)
Closing balance 86,255,355.01 10,568,691.42 96,824,046.43
Accumulated depreciation
Opening balance - - -
Provision 12,822,890.19 4,219,704.87 17,042,595.06
Effect of exchange rate
movements (377,997.79) (227,383.75) (605,381.54)
Closing balance 12,444,892.40 3,992,321.12 16, 437,213.52
Carrying amount
Closing 73,810,462.61 6,576,370.30 80,386,832.91
Opening - - -
Note: As described in Note III. 34, the Group has initially implemented the new lease standard since January 1,
2021.
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V. Notes to the Consolidated Financial Statements (cont’d)
18. Intangible assets
2021
Land use Land Patented Trademarks
and Total
rights ownership technologies
software
Gross amount
Opening balance 114,739,730.08 17,169,515.99 94,087,773.87 188,146,579.45 414,143,599.39
Purchases - - 270,088.07 7,126,949.32 7,397,037.39
Effect of exchange rate
movements - (1,722,942.21) (10,544,336.46) (16,071,668.93) (28,338,947.60)
Closing balance 114,739,730.08 15,446,573.78 83,813,525.48 179,201,859.84 393,201,689.18
Accumulated depreciation
Opening balance 19,772,711.70 - 44,892,936.80 17,090,768.20 81,756,416.70
Provision 2,446,243.21 - 12,676,060.37 8,714,845.76 23,837,149.34
Effect of exchange rate
movements - - (5,155,276.21) (955,588.27) (6,110,864.48)
Closing balance 22,218,954.91 - 52,413,720.96 24,850,025.69 99,482,701.56
Carrying amount
Closing 92,520,775.17 15,446,573.78 31,399,804.52 154,351,834.15 293,718,987.62
Opening 94,967,018.38 17,169,515.99 49,194,837.07 171,055,811.25 332,387,182.69
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
18. Intangible assets (cont’d)
2020
Land use Land Patented Trademarks
and Total
rights ownership technologies
software
Gross amount
Opening balance 98,846,238.53 16,721,290.00 64,977,998.71 143,285,687.75 323,831,214.99
Purchases - - 16,817,293.95 2,084,555.61 18,901,849.56
Business combination not
involving entities under
common control 15,893,491.55 - 10,049,768.04 42,454,332.31 68,397,591.90
Disposal - - - (1,863,472.69) (1,863,472.69)
Effect of exchange rate
movements - 448,225.99 2,242,713.17 2,185,476.47 4,876,415.63
Closing balance 114,739,730.08 17,169,515.99 94,087,773.87 188,146,579.45 414,143,599.39
Accumulated depreciation
Opening balance 17,530,690.04 - 38,222,325.59 18,195,769.83 73,948,785.46
Provision 2,242,021.66 - 13,354,915.20 7,696,803.78 23,293,740.64
Disposal - - - (1,828,439.08) (1,828,439.08)
Effect of exchange rate
movements - - (6,684,303.99) (6,973,366.33) (13,657,670.32)
Closing balance 19,772,711.70 - 44,892,936.80 17,090,768.20 81,756,416.70
Carrying amount
Closing 94,967,018.38 17,169,515.99 49,194,837.07 171,055,811.25 332,387,182.69
Opening 81,315,548.49 16,721,290.00 26,755,673.12 25,089,917.92 249,882,429.53
As at 31 December 2021, intangible assets arising from internal R&D accounted for 5.15% of the
carrying amount of total intangible assets (31 December 2020: 8.13%).
As at 31 December 2021, the Group has no intangible assets without certificates of title.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
19. Goodwill
2021 2020
Gross amount of goodwill 432,207,416.82 457,212,401.52
Less: impairment allowances 125,238,269.06 132,308,161.55
306,969,147.76 324,904,239.97
2021
Increase in the perio Decrease in the perio
Opening balance Closing balance
d d
Exchange rate
Business acquisition
movements
Fosber Group 164,757,896.55 - (16,533,272.97) 148,224,623.58
Parsun Power 208,031,946.10 - 208,031,946.10
Italy EDF 70,453,107.20 - (7,069,892.49) 63,383,214.71
Italy QCorr 13,969,451.67 - (1,401,819.24) 12,567,632.43
457,212,401.52 - (25,004,984.70) 432,207,416.82
2020
Increase in the perio
Opening balance Increase in the period Closing balance
d
Exchange rate
Business acquisition
movements
Fosber Group 160,456,740.18 - 4,301,156.37 164,757,896.55
Parsun Power 208,031,946.10 - - 208,031,946.10
Italy EDF 68,613,864.09 - 1,839,243.11 70,453,107.20
Italy QCorr - 13,969,451.67 - 13,969,451.67
437,102,550.37 13,969,451.67 6,140,399.48 457,212,401.52
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
19. Goodwill (cont’d)
Movements in impairment allowances for goodwill are as follows:
2021
Opening balance Decrease in the period Closing balance
Exchange rate movements
Parsun Power 61,855,054.35 - 61,855,054.35
Italy EDF 70,453,107.20 (7,069,892.49) 63,383,214.71
132,308,161.55 (7,069,892.49) 125,238,269.06
2020
Opening balance Increase in the period Closing balance
Exchange rate movements
Parsun Power 61,855,054.35 - 61,855,054.35
Italy EDF 68,613,864.09 1,839,243.11 70,453,107.20
130,468,918.44 1,839,243.11 132,308,161.55
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
According to the impairment test results of goodwill, the Group did not need to establish
impairment allowances for goodwill for the period under review.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
19. Goodwill (cont’d)
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 454.59 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 17.68%
(18.14% in 2020).
Power machine business asset group of Parsun Power
The power machine business asset group is the asset group owned by Parsun Power, consistent with the asset
group combination determined on the purchase date and during impairment tests of the previous years. The
carrying amount of the power machine business asset group was RMB 283.51 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 14.35%
(15.22% in 2020).
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 71.36 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 17.02% (17.54% in 2020).
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.
The following describes the key assumptions made by the management in determining cash flow forecasting for
goodwill impairment testing:
Budget gross margin — Developed based on the average gross margin of historical operating 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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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
20. Long-term prepaid expenses
2021
Amortization
Opening Increase in Other Closing
in the perio
balance the period decreases balance
d
Plant decoration
expenditures 3,502,191.47 1,304,963.59 (1,190,005.86) (546,189.53) 3,070,959.67
Office decoration
expenditures 2,796,808.88 28,712.87 (359,199.20) (3,173.77) 2,463,148.78
Amortization of
moulds 5,513,088.39 2,733,991.28 (4,033,802.96) - 4,213,276.71
Amortization of lease
assets 144,783.00 17,326.73 (104,191.18) - 57,918.55
Internet access for
offices 73,997.11 1,153,953.03 (259,253.37) - 968,696.77
CE certification fee
66,112.93 88,453.76 (60,557.47) - 94,009.22
Expenditures on
supporting
engineering for plants - 1,291,609.07 (197,491.70) - 1,094,117.37
12,096,981.78 6,619,010.33 (6,204,501.74) (549,363.30) 11,962,127.07
2020
Amortization
Opening Increase in Other Closing
in the perio
balance the period decreases balance
d
Plant decoration
expenditures 4,902,531.76 1,515,943.84 (848,603.11) (2,067,681.02) 3,502,191.47
Office decoration
expenditures 2,966,362.95 356,216.82 (525,770.89) - 2,796,808.88
Amortization of
moulds 675,195.52 7,655,819.08 (2,817,926.21) - 5,513,088.39
Amortization of lease
assets 86,864.45 66,849.37 (8,930.82) - 144,783.00
Internet access for
offices 38,384.58 44,160.03 (8,547.50) - 73,997.11
CE certification fee 28,066.04 58,528.62 (20,481.73) - 66,112.93
Expenditures on
supporting
engineering for plants 1,831.03 - (1,831.03) - -
8,699,236.33 9,697,517.76 (4,232,091.29) (2,067,681.02) 12,096,981.78
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
21. Deferred tax assets/liabilities
Deferred tax assets and liabilities before offsetting:
2021 2020
Deductible Deductible
temporary Deferred temporary Deferred
differences tax assets differences tax assets
Deferred tax assets
Deductible loss 487,263,663.55 110,651,029.11 186,910,770.30 37,446,876.20
Provisions—after-sales maintenance
service charges 110,759,543.46 27,917,753.88 78,705,949.88 21,163,160.85
Deferred income 50,391,274.95 10,996,777.94 56,359,912.05 13,526,378.24
Accrued expenses 25,860,319.66 3,911,857.71 36,599,312.14 6,231,125.47
Asset impairment allowances 27,487,561.72 6,769,391.56 32,623,867.53 5,685,957.19
Equity incentive expenses 40,413,913.40 5,628,337.80 25,006,448.74 3,838,878.64
Credit impairment loss 29,574,977.76 7,004,793.92 10,520,932.53 1,526,582.59
Changes in fair value of financial
products at fair value through profit or
loss 8,785,171.84 1,422,118.28
Impact of the new lease standard 1,957,313.78 438,435.98 - -
Internal unrealized profit 11,859,951.60 2,846,388.38 20,339,730.05 5,084,932.51
Others 83,873,243.64 25,583,084.08 22,754,231.10 3,021,049.28
896, 441,763.52 25,583,084.08 478,606,326.16 98,947,059.25
2021 2020
Deductible Deductible
temporary Deferred temporary Deferred
differences tax liabilities differences tax liabilities
Deferred tax liabilities
Financial assets at fair value through
profit or loss 35,395,813.71 5,204,143.87 25,962,030.97 4,202,658.70
Increase in value in asset valuation 31,042,086.34 6, 347,331.46 56,319,751.75 10,574,995.95
Depreciation difference of fixed
assets 14,439,128.26 3,888,612.02 10,059,939.38 2,577,333.08
Others 46,011,729.25 7,809,378.02 8,046,763.80 1,941,398.43
126,888,757.56 23,249,465.37 100,388,485.90 19,296,386.16
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
21. Deferred tax assets/liabilities (cont’d)
Deferred tax assets and liabilities are offset and presented as a net amount:
2021
Offset amount Offset balance
Deferred tax assets 21,502,327.42 180,245,522.94
Deferred tax liabilities 21,502,327.42 1,747,137.95
Deductible temporary differences and deductible losses not recognized as deferred tax assets are as
follows:
2021 2020
Deductible temporary differences 8,615,142.53 34,063,872.36
Deductible losses 869,889,774.71 1,233,078,267.55
878,504,917.24 1,267,142,139.91
Deductible temporary differences and tax losses not recognized as deferred tax assets will expire as
follows:
2021 2020
2021 - 34,063,872.36
2022 8,615,142.53 -
2024 834,076,473.87 1,233,078,267.55
2026 35,813,300.84 -
878,504,917.24 1,267,142,139.91
The Company has accrued deferred tax assets of RMB103,248,656.87 (2020: RMB23,178,618.80) for the
accumulated deductible losses of RMB461,185,229.48 based on the forecast of its profits in the next five
years.
22. Other non-current assets
2021 2020
Security deposits for loans 300,150,000.00 295,075,000.00
Large-amount deposit certificates - 640,000,000.00
Others 4,446,841.54 1,465,047.40
304,596,841.54 936,540,047.40
V. Notes to the Consolidated Financial Statements (cont’d)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
23. Short-term borrowings
2021 2020
Guaranteed loan 176,738,256.00 16,560,239.29
Credit loan 51,574,624.73 10,935,542.55
Pledge loan - 12,037,500.00
228,312,880.73 39,533,281.84
As at 31 December 2021, the annual interest rates of the above borrowings ranged from 0.4% to
3.61% (31 December 2020: 0.5%-2.1%).
As at 31 December 2021 and 31 December 2020, the Group has no borrowings overdue.
24. Financial liabilities held for trading
2021 2020
Financial liabilities at fair value through
profit or loss
Non-controlling interests put options 110,746,939.04 41,408,109.80
Non-controlling interests put options related to the non-controlling interests of Fosber Asia and
Tiruna. As at 31 December 2021, the Group recognized derivative financial liabilities of RMB
110,746,939.04 (31 December 2020: RMB 41,408,109.80) according to the assessment results.
25. Notes payable
2021 2020
Bank acceptance notes 149,191,690.00 104,855,187.97
As at 31 December 2021, outstanding notes payable upon maturity were nil (31 December 2020:
nil).
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
26. Accounts payable
Accounts payable are interest-free.
2021 2020
Purchases of inventories 618,943,392.87 489,841,770.00
Others 322,463.31 13,200,791.05
619,265,856.18 503,042,561.05
As at 31 December 2021, substantial accounts payable with aging over 1 year were nil.
27. Contract liabilities
2021 2020
Contract liabilities 405,842,932.51 362,792,713.35
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 30
to 180 days after relevant products are delivered and the control over the equipment is transferred.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
28. Employee benefits payable
2021
Increase in Decrease in
Opening balance Closing balance
the period the period
Short-term benefits 84,647,882.17 547,373,917.72 535,634,004.98 96,387,794.91
Retirement benefits (defined
contribution schemes) 7,975,680.76 65,849,201.49 66,402,893.58 7,421,988.67
92,623,562.93 613,223,119.21 602,036,898.56 103,809,783.58
2020
Increase in Decrease in
Opening balance Closing balance
the period the period
Short-term benefits 98,755,045.52 491,379,271.20 505,486,434.55 84,647,882.17
Retirement benefits (defined
7,922,284.43 64,154,421.47 64,101,025.14 7,975,680.76
contribution schemes)
106,677,329.95 555,533,692.67 569,587,459.69 92,623,562.93
Short-term benefits are as follows:
2021
Opening Increase in Decrease in Closing
balance the period the period balance
Salaries, bonuses, allowances and
subsidies 79,573,190.90 489,454,279.60 478,441,950.90 90,585,519.60
Employee welfare 4,218,192.78 24,650,214.29 24,268,554.32 4,599,852.75
Social security contributions 112,446.62 29,193,688.77 28,718,208.43 587,926.96
Including: medical insurance 120,597.45 19,562,582.16 19,106,256.48 576,923.13
Work injury insurance (8,150.83) 9,051,922.98 9,032,857.42 10,914.73
Maternity insurance - 579,183.63 579,094.53 89.10
Housing funds - 3,209,806.66 3,194,057.02 15,749.64
Labour union funds and employee
education funds 744,051.87 865,928.40 1,011,234.31 598,745.96
84,647,882.17 547,373,917.72 535,634,004.98 96,387,794.91
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
28. Employee benefits payable (cont’d)
2020
Opening Increase in Decrease in Closing
balance the period the period balance
Salaries, bonuses, allowances and
94,103,058.39 437,899,372.05
subsidies 452,429,239.54 79,573,190.90
Employee welfare 3,860,673.44 29,398,912.60
29,041,393.26 4, 218,192.78
Social security contributions 89,969.07 20,980,727.76
20,958,250.21 112,446.62
Including: medical insurance 89,969.07 18,744,618.90
18,713,990.52 120,597.45
Work injury insurance - 1,698,741.96
1,706,892.79 (8,150.83)
Maternity insurance - 537,366.90 537,366.90 -
Housing funds - 2,386,750.21 2,386,750.21 -
Labour union funds and employee
701,344.62 713,508.58
education funds 670,801.33 744,051.87
98,755,045.52 491,379,271.20 505,486,434.55 84,647,882.17
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
28. Employee benefits payable (cont’d)
Defined contribution schemes are as follows:
2021
Increase in Decrease in Closing
Opening balance
the period the period balance
Basic endowment
insurance 7,975,680.76 65,468,209.37 66,022,036.98 7,421,853.15
Unemployment insurance - 380,992.12 380,856.60 135.52
7,975,680.76 65,849,201.49 66,402,893.58 7,421,988.67
2020
Increase in Decrease in Closing
Opening balance the period the period balance
Basic endowment
7,922,284.43 63,872,178.72 63,818,782.39 7,975,680.76
insurance
Unemployment insurance - 282,242.75 282,242.75 -
7,922,284.43 64,154,421.47 64,101,025.14 7,975,680.76
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
29. Tax payable
2021 2020
Value-added tax 25,459,136.69 2,698,793.65
Corporate income tax 22,054,501.83 18,169,790.66
Individual income tax 11,666,453.95 14,556,028.94
City maintenance and construction tax 691,680.71 365,856.73
Education surcharge 494,057.61 261,326.23
Property tax 239,225.19 211,158.56
Stamp duties 55,317.40 51,466.90
Land use tax 34,530.60 34,530.60
Others 6,442.26 20,824.78
60,701,346.24 36,369,777.05
30. Other payables
2021 2020
Other payables 100,018,273.09 81,743,851.64
Other payables
2021 2020
Accrued expenses 47,435,654.91 31,242,050.82
Repurchase obligation of restricted shares 25,790,000.00 22,600,000.00
Payables for settled lawsuit 3,440,221.96 10,224,904.52
Security deposits 3,583,099.39 1,327,227.21
Others 19,769,296.83 16,349,669.09
100,018,273.09 81,743,851.64
As at 31 December 2021, substantial other payables with aging over 1 year were nil.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
31. Current portion of non-current liabilities
2021 2020
Current portion of long-term borrowings 21,342,646.25 226,597,528.74
Of which: Pledge loan 240,946.37 -
Mortgate loan - 14,528,676.67
Guaranteed loan 10,273,279.33 197,026,297.17
Credit loan 10,828,420.55 15,042,554.90
Current portion of lease liabilities 17,153,078.58 -
38,495,724.83 226,597,528.74
32. Other current liabilities
2021 2020
Endorsed notes receivable 9,391,823.29 11,800,000.00
Output tax to be written off 3,429,923.76 8,562,086.01
Others 14,725.95 169,960.03
12,836,473.00 20,532,046.04
33. Long-term borrowings
2021 2020
Guaranteed loan 298,477,313.32 478,735,065.94
Credit loan 45,450,825.31 33,230,968.87
Pledge loan 2, 440,696.11 4,427,994.38
Mortgage loan - 63,615,887.84
346,368,834.74 580,009,917.03
Of which: Current portion of long-term
borrowings (21,342,646.25) (226,597,528.74)
325,026,188.49 353,412,388.29
As at 31 December 2021, the annual interest rates of the above borrowings ranged from 0.0% to
2.4% (31 December 2020: 0.7%-2.4%). The mortgage loans for the period have been fully repaid in
advance.
As at 31 December 2021 and 31 December 2020, the Group has no loans overdue.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
34. Lease liabilities
2021
Lease payments 82,366,634.45
Less: Current portion of non-current liabilities 17,153,078.58
65,213,555.87
35. Long-term employee benefits payable
2021 2020
Net liabilities of defined benefit schemes 16,083,170.32 18,451,652.74
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 2021 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:
2021 2020
Separation rate 2.50% 2.50%
Inflation rate 1.75% 0.80%
Discount rate 0.44% 0.00%
The quantitative sensitivity analysis of key assumptions used is as follows:
2021
Increase/(decrease Increase/(decrease)
Increase ) in obligations of Decrease in obligations of
% defined benefit % defined benefit
scheme scheme
Separation rate 1.00% (94,653.95) 1.00% 106,274.92
Inflation rate 0.25% 118,117.68 0.25% (115,757.71)
Discount rate 0.25% (187,124.73) 0.25% 194,398.22
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
35. Long-term employee benefits payable (cont’d)
2020
Increase/(decrease Increase/(decrease)
Increase ) in obligations of Decrease in obligations of
% defined benefit % defined benefit
scheme scheme
Separation rate 1.00% (104,620.64) 1.00% 117,877.54
Inflation rate 0.25% 136,446.11 0.25% (133,629.09)
Discount rate 0.25% (215,694.58) 0.25% 224,325.07
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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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
36. Provisions
2021
Increase in Decrease in
Opening balance Closing balance
the period the period
Product quality warranty 104,845,110.36 50,180,309.14 43,818,254.64 111,207,164.86
Others 605,147.27 6,544,276.17 423,866.71 6,725,556.73
105,450,257.63 56,724,585.31 44,242,121.35 117,932,721.59
2020
Increase in Decrease in
Opening balance Closing balance
the period the period
Product quality
warranty 77,837,671.98 66,245,447.16 39,238,008.78 104,845,110.36
Others 812,794.50 593,929.04 801,576.27 605,147.27
78,650,466.48 66,839,376.20 40,039,585.05 105,450,257.63
37. Deferred income
2021
Increase in Decrease in
Opening balance Closing balance
the period the period
Government grants 16,861,488.27 - 4,671,176.61 12,190,311.66
2020
Increase in Decrease in
Opening balance Closing balance
the period the period
Government grants 18,275,808.90 - 1,414,320.63 16,861,488.27
224 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
37. Deferred income (cont’d)
As at 31 December 2021, liabilities in relation to government grants are as follows:
Recognized in
other income
Asset/income-
Opening balance of non-operating Closing balance
related
income in the
period
Compensation for demolition of old plant at Jinfeng
Asset-related
Road 3,554,516.61 3,554,516.61 -
Industrial revitalization and technological renovation
funds (4 Mitsubishi machining centers and 3
Asset-related
vertical machining centers)
13,306,971.66 1,116,660.00 12,190,311.66
16,861,488.27 4,671,176.61 12,190,311.66
As at 31 December 2020, liabilities in relation to government grants are as follows:
Recognized in
other income
Asset/income-
Opening balance of non-operating Closing balance
related
income in the
period
Compensation for demolition of old plant at Jinfeng
3,852,177.24 297,660.63 3,554,516.61 Asset-related
Road
Industrial revitalization and technological renovation
funds (4 Mitsubishi machining centers and 3
14,423,631.66 1,116,660.00 13,306,971.66 Asset-related
vertical machining centers)
18,275,808.90 1,414,320.63 16,861,488.27
225 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
38. Other non-current liabilities
2021 2020
Non-controlling interests put options 136,178,304.44 68,737,415.25
Non-controlling interests put options related to non-controlling interests in Italy QCorr and Parsun
Power. As at 31 December 2021, the Group recognized other non-current liabilities of RMB
136,178,304.44 according to the assessment results (31 December 2020: RMB 68,737,415.25).
39. Share capital
2021
Opening balance Decrease in the period Closing balance
Total share capital 1,545,126,957.00 213,188,790.00 1,331,938,167.00
For the current year, the total number of shares cancelled by the Company was 213,188,790 shares,
and the total number of shares of the Company changed from 1,545,126,957 shares to
1,331,938,167 shares after the cancellation.
2020
Opening balance Decrease in the period Closing balance
Total share capital 1,838,647,096.00 293,520,139.00 1,545,126,957.00
226 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
40. Capital surplus
2021
Increase in Decrease in
Opening balance the period the period Closing balance
(Note 1) (Note 2)
Share premium 3,976,935,100.86 17,140,596.95 796,011,305.72 3,198,064,392.09
Others 25,457,960.95 15,243,506.90 - 40,701,467.85
4,002,393,061.81 32,384,103.85 796,011,305.72 3,238,765,859.94
2020
Increase in Decrease in
Opening balance Closing balance
the period the period
Share premium 3,862,090,284.37 293,520,138.00 178,675,321.51 3,976,935,100.86
Others 287,554.47 25,170,406.48 - 25,457,960.95
3,862,377,838.84 318,690,544.48 178,675,321.51 4,002,393,061.81
Notes:
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 15,243,506.90.
(2) The Company acquired 32.8% non-controlling interests of its subsidiary Fosber Asia in the
period, increasing other capital surplus by RMB 17,140,596.95.
Note 2: Decreases of capital surplus in the period are as follows:
(1) Dongfang Precision sold 25.41% shares of Parsun Power to strategic investors, reducing
other capital surplus by RMB 98,580,654.91.
(2) The Company retired a total of 213,188,790 shares in the period (as described in Item
39 of Note V), reducing other capital surplus by RMB 697,265,572.70.
(3) The Company repurchsed shares in the period, which resulted in payment of
related commissions and charges, reducing other capital surplus by RMB 165,078.11.
227 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
41. Treasury shares
2021
Increase in Decrease in
Opening balance the period the period Closing balance
(Note) (Note)
Share repurchase 579,403,185.12 825,386,681.52 910,454,362.70 494,335,503.94
2020
Increase in Decrease in
Opening balance Closing balance
the period the period
Share repurchase 160,088,925.60 499,996,259.52 80,682,000.00 579,403,185.12
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 39 of Note V).
42. Other comprehensive income
Cumulative balance of other comprehensive income attributable to shareholders of the Company in
the consolidated balance sheet:
2021
1 January 2021 Change 31 December 2021
Changes due to remeasurement of
defined benefit schemes (279,123.15) (368,435.04) (647,558.19)
Differences arising from the translation
of foreign currency-denominated
financial statements 20,349,184.92 (52,980,317.64) (32,631,132.72)
Others (43,972.07) - (43,972.07)
20,026,089.70 (53,348,752.68) (33,322,662.98)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
42. Other comprehensive income (cont’d)
Cumulative balance of other comprehensive income attributable to shareholders of the Company in
the consolidated balance sheet: (cont’d)
2020
1 January 2020 Change 31 December 2020
Changes due to remeasurement of
defined benefit schemes 192,829.89 (471,953.04) (279,123.15)
Differences arising from the translation
of foreign currency-denominated
financial statements 24,822,227.50 (4,473,042.58) 20,349,184.92
Others (43,972.07) - (43,972.07)
24,971,085.32 (4,944,995.62) 20,026,089.70
Other comprehensive income:
2021
Before tax Less: Income tax Attributable to owners Attributable to
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 (368,435.04) - (368,435.04) -
Other comprehensive
income that will be
reclassified to profit or
loss
Differences arising from
the translation of
foreign
currency-denominated
financial statements (57,694,181.97) - (52,980,317.64) (4,713,864.33)
(58,062,617.01) - (53,348,752.68) (4,713,864.33)
229 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
2020
Before tax Less: Income tax Attributable to owners Attributable to
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 (471,953.04) - (471,953.04) -
Other comprehensive income
that will be reclassified to
profit or loss
Differences arising from the
translation of foreign
currency-denominated
financial statements (4,418,094.62) - (4,473,042.58) 54,947.96
(4,890,047.66) - (4,944,995.62) 54,947.96
230 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
43. Special reserve
2021
Provision in Ultilisation in
Opening balance Closing balance
the period the period
Expenses for Safety Production 10,057,438.97 4,513,399.49 (3,318,199.27) 11,252,639.19
2020
Opening Provision in Ultilisation in
Closing balance
balance the period the period
Expenses for Safety Production - 11,315,076.12 (1,257,637.15) 10,057,438.97
44. Surplus reserves
2021
Opening and
closing balance
Statutory surplus reserves 51,830,974.45
2020
Opening and
closing balance
Statutory surplus reserves 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.
231 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
45. Retained earnings
2021 2020
Opening retained earnings (891,492,837.06) (1,280,673,461.14)
Net profit attributable to owners of the parent 467,333,661.79 389,180,624.08
Closing retained earnings (424,159,175.27) (891,492,837.06)
V. Notes to the Consolidated Financial Statements (cont’d)
46. Operating revenue and costs
2021 2020
Revenue Costs Revenue Costs
Principal operations
3,471,892,485.62 2,522,244,108.28 2,894,873,363.35 2,080,364,453.60
Other operations 52,842,298.32 32,827,951.51 21,396,779.78 18,784,372.76
3,524,734,783.94 2,555,072,059.79 2,916,270,143.13 2,099,148,826.36
Operating revenue is as follows:
2021 2020
Revenue arising from contracts with customers 3,523,514,431.39 2,916,270,143.13
Others 1,220,352.55 -
3,524,734,783.94 2,916,270,143.13
Breakdown of operating revenue arising from contracts with customers is as follows:
2021
Total
Principal operating segment
Mainland China 528,007,403.05
Other regions 2,995,507,028.34
3,523,514,431.39
232 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Principal product type
Goods 3,224,038,841.57
Services 299,475,589.82
3,523,514,431.39
By revenue recognition time 3,523,514,431.39
Revenue recognition at a point of time 3,224,038,841.57
Sale of goods 3,224,038,841.57
Revenue recognition for a period of time 299,475,589.82
Rendering of services 299,475,589.82
V. Notes to the Consolidated Financial Statements (cont’d)
46. Operating revenue and costs (cont’d)
Breakdown of operating revenue arising from contracts with customers is as follows: (cont’d)
2020
Total
Principal operating segment
Mainland China 349,869,885.20
Other regions 2,566,400,257.93
2,916,270,143.13
Principal product type
Goods 2,729,552,600.03
Services 185,778,640.47
Others 938,902.63
2,916,270,143.13
By revenue recognition time 2,916,270,143.13
Revenue recognition at a point of time 2,730,491,502.66
Sale of goods 2,729,552,600.03
Others 938,902.63
Revenue recognition for a period of time 185,778,640.47
Rendering of services 185,778,640.47
Revenue recognized that was included in contract liabilities at the beginning of the year:
233 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
2021
Sales payment in advance 312,794,330.81
234 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
46. Operating revenue and costs (cont’d)
Information about contractual performance obligations is as follows:
Sale of goods
Contractual performance obligations are fulfilled when delivering manufactured goods to
customers, and normally the payment in advance for some customers are needed.
Rendering of services
Contractual performance obligations are fulfilled during the rendering of services.
The expected time for recognizing in revenue the total transaction price allocated to outstanding
contractual performance obligations as at the period-end is as follows:
2021 2020
Within 1 year 405,842,932.51 362,792,713.35
47. Taxes and surcharges
2021 2020
Property tax 4,612,247.54 4,294,158.43
City maintenance and construction tax 2,928,855.08 2,716,008.16
Education surcharge 1,664,857.56 1,936,200.03
Stamp tax 780,312.71 664,645.73
Local education surcharge 734,432.96 17,767.13
Land use tax 548,091.99 502,833.69
Vehicle and vessel tax 19,943.53 18,971.12
Environmental protection tax 5,852.88 14,309.42
Others 201,912.47 88,618.90
11,496,506.72 10,253,512.61
235 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
48. Selling expenses
2021 2020
Commissions and agency fees 59,870,536.49 46,237,284.80
Employee benefits 48,815,734.92 43,931,435.42
Product quality warranties 42,420,792.60 47,189,521.93
Advertising and exhibition expenses 8,916,532.18 5,721,645.33
Travel expenses 8,279,440.26 5,554,250.47
Transportation expenses and miscellaneous
expenses associated with import and export 2,712,663.72 18,155,627.53
Office expenses 1,816,870.39 1,116,817.49
Depreciation and amortization expenses 1,170,873.85 751,809.90
Other expenses 11,324,233.77 12,891,066.82
185,327,678.18 181,549,459.69
49. Administrative expenses
2021 2020
Employee benefits 137,770,894.42 111,656,352.56
Depreciation and amortization expenses 33,075,924.90 22,744,937.96
Intermediary expenses 26,331,269.13 26,178,807.52
Equity incentives 15,243,506.90 25,170,406.50
Office expenses 14,704,181.88 5,745,654.54
Travel and reception expenses 9,799,959.60 7,528,061.79
Conference expenses 4,146,471.59 3,414,455.48
Property management expenses 2,789,669.82 2,819,585.82
Maintenance expenses 1,405,398.19 1,381,900.99
Car expenses 1,232,050.28 4,085,837.67
Materials consumption 722,185.83 333,855.16
Rental expenses 544,034.30 10,221,040.37
Other expenses 24,325,181.24 25,692,120.04
272,090,728.08 246,973,016.40
236 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
50. R&D expenses
2021 2020
Employee benefits 51,438,135.36 46,765,354.71
Depreciation and amortization expenses 17,208,658.35 16,012,422.17
Material expenses 22,383,588.65 9,923,238.87
Utilities 1,269,392.10 966,570.27
Assembly testing and debugging expenses 87,859.47 250,665.58
Other expenses 7,169,931.53 8,164,023.15
99,557,565.46 82,082,274.75
51. Finance costs
2021 2020
Interest expenses 13,182,088.01 15,535,719.53
Less: Interest income 24,674,196.61 20,887,321.27
Exchange losses 2,528,095.79 10,763,678.85
Discounted interest 7,238.89 10,780.11
Others 2,960,299.46 2,496,813.06
(5,996,474.46) 7,919,670.28
237 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
52. Other income
2021 2020
Government grants related to routine activities 14,700,007.84 10,699,683.55
Refund of handling charges for individual income
tax withheld 192,559.05 194,481.14
14,892,566.89 10,894,164.69
Government grants related to routine activities are as follows:
Asset/income-rel
2021 2020
ated
Compensation for demolition of the old plant in Jinfeng Road 3,554,516.61 297,660.63 Asset-related
Foreign government subsidies 2,902,405.18 1,503,212.44 Income-related
Immediate VAT refund for embedded software 1,526,488.01 - Income-related
4 Mitsubishi gantry processing centres and 3 fixed-beam-type gantry
Asset-related
processing centres 1,116,660.00 1,116,660.00
Project subsidy funds for overseas R&D institutions in 2020 1,000,000.00 - Income-related
Special funds for promoting foreign economic cooperation in Foshan
Income-related
City in 2021 1,000,000.00 -
Municipal technology innovation award for key industries in 2017/2018
Income-related
from the Scientific and Technological Innovation Bureau 400,000.00 -
Award for stabilizing employment positions and benefiting enterprises
Income-related
from High-tech Zone Economic and Development Commission 300,000.00 -
Manufacturing Champion in 2020 awarded by Nanhai Park
Income-related
Administration 300,000.00 -
Subsidy funds after R&D expenses for high-tech enterprises 259,500.00 - Income-related
Subsidies for gazelle companies 250,000.00 - Income-related
Special awards for high-tech enterprises in 2020 200,000.00 - Income-related
Funds for quality improvement of industrial products in Foshan City in
Income-related
2021 200,000.00 -
Subsidies for National and Provincial Intellectual Property
Income-related
Demonstration Enterprise 200,000.00 -
Special funds for business development of Suzhou High-tech Zone
Income-related
Bureau of Commerce 182,600.00 -
Special funds for leading enterprises in 2020 150,000.00 - Income-related
Subsidies for leading enterprises identification in Foshan High-tech
Income-related
Zone 150,000.00 -
Subsidies from Suzhou High-tech Zone Bureau of Commerce in 2019 111,958.59 - Income-related
Subsidies for high-tech enterprises identification in Foshan City in
Income-related
2020 100,000.00 -
Subsidies for economic development from High-tech Zone Economic
Income-related
Development Committee 100,000.00 -
Intellectual property thematic funds of 2019 patent subsidies of Nanhai
Income-related
District Administration for Market Regulation 100,000.00 40,894.00
R&D expenses for high-tech enterprises of Foshan Science and
Income-related
Technology Bureau 74,700.00 -
Award for R&D of enterprises from Technology and Innovation Bureau 55,000.00 - Income-related
2020 enterprise rewards for highly skilled leading talent 50,000.00 - Income-related
2021 enterprise rewards for highly skilled leading talent 50,000.00 - Income-related
Patent subsidies for foreign invention of Administration for Market
Income-related
Regulation 50,000.00 -
Subsidies for work-based training of Suzhou Labor and Employment
Income-related
Management Service Center 45,518.59 -
238 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
52. Other income (cont’d)
Government grants related to routine activities are as follows: (cont’d)
Asset/income-rel
2021 2020
ated
Government subsidies for the projects with excellent technology
staying in Suzhou 39,300.00 - Income-related
Special funds for environmental protection support and reward of
Nanhai Branch of Foshan Ecological Environment Bureau in 2020 37,633.00 - Income-related
Funds for invention patent annual fee of Foshan Administration for
Market Regulation 35,630.00 - Income-related
Special funds for intellectual property in 2020 31,626.00 - Income-related
Special funds for export credit insurance in Nanhai District, Foshan
City in 2021 of Nanhai District Economic Promotion Bureau, Foshan
City 23,992.00 - Income-related
Funds for invention patents in China of Foshan “Fuchitong” 21,000.00 - Income-related
Special funds for business development 20,103.00 - Income-related
Special funds for business development of Suzhou High-tech Zone
Bureau of Commerce 20,000.00 - Income-related
Provincial promotion of high-quality economic development in 2020
of Nanhai District Economic Promotion Bureau, Foshan City
Special funds for development, for the purposes of foreign economic
and trade development and the development of modern service
industry 16,363.24 7,857.27 Asset-related
Subsidies for stabilizing employment positions of Foshan Social
Insurance Fund Administration in 2020 14,274.14 Income-related
Subsidies for work-based training 4,000.00 144,500.00 Income-related
Funds for invention patents in China of Administration for Market
Regulation 3,000.00 Income-related
Subsidies for stabilizing employment positions 1,739.48 209,237.83 Income-related
Award for trademark registration of “Branded Project” of
Administration for Market Regulation of Nanhai District, Foshan City 1,000.00 - Income-related
Pandemic-related subsidies 1,000.00 - Income-related
Support incentives for four types of enterprises above designated size
or qualification levels or limits - 300,000.00 Income-related
Financial rewards for provincial-level industrial information industry
transformation and upgrading in 2019 - 20,000.00 Income-related
2019 subsidy funds after R&D expenses for high-tech enterprises in
Foshan City - 207,200.00 Income-related
Trademark subsidies of the whole district in 2019 - 41,600.00 Income-related
2019 provincial special funds for business development (3rd batch),
small and medium-sized development enterprises - 33,000.00 Asset-related
2019 enterprise rewards for highly skilled leading talent in Suzhou
High-tech Zone - 50,000.00 Income-related
2019 domestic and foreign patent subsidies of Suzhou High-tech Zone - 5,300.00 Income-related
Special funds for the construction of municipal-level advanced
manufacturing bases in Suzhou in 2020 (a cultivation project for
proprietary, elaborate, unique and innovative enterprises) - 400,000.00 Income-related
Fiscal subsidies - 50,000.00 Income-related
Allowances for the unemployment insurance refund project of
affected enterprises, Nanhai District Human Resources and Social
Security Bureau, Foshan City - 1,451,918.40 Income-related
A project of the special funds for foreign economic and trade
development in 2019 (small- and medium-sized foreign trade
enterprises exploiting the international market) of Nanhai District
Economic Promotion Bureau, Foshan City - 2,240,000.00 Income-related
Electricity subsidy from Nanhai District Economic Promotion Bureau,
Foshan City - 103,040.00 Income-related
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
52. Other income (cont’d)
Government grants related to routine activities are as follows: (cont’d)
2020 special funds for municipal economic and technological
development (the Industry and Information Technology Bureau part)
of Nanhai District Economic Promotion Bureau, Foshan City - Energy
conservation project - 40,000.00 Income-related
Scientific research subsidies for Craftsman of the City—Nanhai of
Nanhai District Human Resources and Social Security Bureau, Foshan
City - 50,000.00 Income-related
Subsidy funds for enterprise personnel increase of Nanhai District
Human Resources and Social Security Bureau, Foshan City - 4,000.00 Income-related
Support funds for Nanhai District Administration for Market
Regulation, Foshan City to promote civilized patent work - 234,120.00 Income-related
Administration for Market Regulation - Special funds for promoting
invention in 2017-2018 - 5,000.00 Income-related
Subsidies for import and export credit insurance - 126,310.64 Income-related
Economic Promotion Bureau - 2019 subsidies for R&D expenses of
high-tech enterprises - 23,200.00 Income-related
Awards from Technology and Innovation Bureau - 300,000.00 Income-related
Subsidies for high-tech enterprises identification from Science and
Technology Bureau in 2019 - 300,000.00 Income-related
Special funds for foreign trade and economic development in 2019
under the central finance of Nanhai District Economic Promotion
Bureau - 69,772.00 Asset-related
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
52. Other income (cont’d)
Government grants related to routine activities are as follows: (cont’d)
Asset/income-r
2021 2020
elated
Trademark subsidies - 1,600.00 Income-related
Business development (4th batch) small and medium-sized
Income-related
development projects - 59,700.00
Special funds for business development (credit insurance) - 196,700.00 Income-related
Special funds for information transformation and upgrading - 1,000,000.00 Income-related
Pandemic-related subsidies - 1,000.00 Income-related
Intellectual property manufacturing awards - 50,000.00 Income-related
Provincial-level short-term insurance premiums transferred by
China Export & Credit Insurance Corporation Guangdong Asset-related
Branch Support funds - 16,200.34
14,700,007.84 10,699,683.55
53. Investment income
2021 2020
Income from financial assets held for trading 94,792,849.32 50,996,184.47
Income from long-term equity investments
measured at equity method 3,880,256.70 2,889,349.81
Income from remeasurement of former equity
investments at fair value in business
combination not under common control - 1,229,987.66
98,673,106.02 55,115,521.94
V. Notes to the Consolidated Financial Statements (cont’d)
54. Gains and losses on changes in fair value
2021 2020
Changes in fair value of non-controlling
interests call/put options (50,864,345.69) (9,284,348.20)
Financial assets at fair value through
profit or loss 29,506,559.88 54,407,119.47
(21,357,785.81) 45,122,771.27
55. Credit impairment loss
2021 2020
241 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Loss on doubtful accounts receivable 8,497,086.26 8,835,882.15
Allowances losses for other receivables 4,229,550.20 (1,933,043.78)
Impairment loss on contract assets - 1,061,524.05
12,726,636.46 7,964,362.42
56. Asset impairment loss
2021 2020
Inventory valuation loss 11,194,079.96 5,368,019.60
Reversed impairment loss on contract assets (257,325.86) -
10,936,754.10 5,368,019.60
V. Notes to the Consolidated Financial Statements (cont’d)
57. Gains and losses on disposal of assets
2021 2020
Gain/(loss) on disposal of fixed assets 424,968.29 (17,854.18)
58. Non-operating income
Recognized in
2021 2020 exceptional gains
and losses of 2021
Performance compensation - 29,939,067.65 -
Negative goodwill arising from
acquisition of Yinglian
Digital - 866,489.40 -
Others 5,750,547.04 4,996,229.86 5,750,547.04
5,750,547.04 35,801,786.91 5,750,547.04
59. Non-operating expenses
Recognized in
2021 2020 exceptional gains and
losses of 2021
Donations 83,988.03 1,570,997.47 83,988.03
Loss on disposal of non-current
assets 501,064.13 36,036.61 501,064.13
Others 876,966.65 139,697.28 876,966.65
1,462,018.81 1,746,731.36 1,462,018.81
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
60. Expenses by nature
Supplementary information of the Group’s cost of sales, selling expenses, administrative expenses,
and R&D expenses by nature is as follows:
2021 2020
Raw materials consumed 1,859,784,815.80 1,608,964,713.25
Employee benefits 613,223,119.21 555,533,692.67
Transportation expenses and 125,384,252.47 92,798,948.87
miscellaneous expenses associated with
import and export
Depreciation and amortization expenses 96,426,126.81 71,259,302.64
Commissions and agency fees 59,870,536.49 46,237,284.80
Product quality warranties 42,420,792.60 47,189,521.93
Intermediary expenses 26,331,269.13 26,802,166.28
Utilities 18,322,758.67 6,107,516.69
Equity incentives 15,243,506.90 25,170,406.50
Travel and business reception expenses 85,673,533.80 61,319,861.28
Technology licensing expenses 9,350,533.75 3,134,512.00
Advertising and exhibition expenses 8,916,532.18 5,751,215.66
Rental expenses 544,034.30 21,367,612.26
Office and other expenses 150,556,219.40 38,116,822.37
3,112,048,031.51 2,609,753,577.20
V. Notes to the Consolidated Financial Statements (cont’d)
61. Income tax expenses
2021 2020
Current income tax expenses 88,328,101.49 71,205,843.29
Deferred tax expenses (100,274,573.91) (48,122,503.99)
(11,946,472.42) 23,083,339.30
Reconciliation between income tax expenses and gross profit is as follows:
2021 2020
Gross profit 480,444,713.23 420,180,660.29
Income tax calculated at applicable tax rates (Note) 72,066,706.98 63,027,099.04
Different tax rates for specific provinces or enacted
by local authority 38,186,704.25 43,500,706.27
Adjustment to current income tax in previous
periods (8,715,965.71) (1,018,718.96)
Income not subject to tax (13,811,012.93) (42,505,290.40)
Over-deduction for R&D (5,813,981.03) (4,685,800.11)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Expenses not deductible for tax 995,625.70 1,554,762.28
Utilization and recognition of deductible losses of
previous periods (100,238,844.22) (39,750,597.61)
Effect of unrecognized deductible temporary
differences and deductible losses 5,384,294.54 2,961,178.79
Income tax expenses (11,946,472.42) 23,083,339.30
Note: 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.
V. Notes to the Consolidated Financial Statements (cont’d)
62. Earnings per share
2021 2020
RMB/share RMB/share
Basic earnings per share
Continuing operations 0.35 0.26
Diluted earnings per share
Continuing operations 0.35 0.26
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 potentially dilutive ordinary shares issued in the current period are assumed to have been
converted on the date of issue.
V. Notes to the Consolidated Financial Statements (cont’d)
62. Earnings per share(cont’d)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Calculations of basic and diluted earnings per share are as follows:
2021 2020
Earnings
Net profit attributable to ordinary shareholders of
the Company for the period 467,333,661.79 389,180,624.08
Shares
Weighted average number of ordinary shares in
issue of the Company 1,327,715,640.50 1,479,259,197.75
Shares
Weighted average number of ordinary shares in
issue of the Company 1,327,715,640.50 1,479,259,197.75
Diluting effect——weighted average number of
ordinary shares
Restricted shares 12,915,588.73 3,331,777.08
Adjusted weighted average number of ordinary
shares in issue of the Company 1,340,631,229.23 1,482,590,974.83
V. Notes to the Consolidated Financial Statements (cont’d)
63. Notes to cash flow statement line items
2021 2020
Cash generated from other operating activities
Government grants 10,221,390.28 9,827,504.69
Interest income 24,674,196.61 21,022,181.82
Letter of guarantee received - 4,984,585.99
Current accounts and others 4,438,967.22 9,980,667.12
39,334,554.11 45,814,939.62
Cash used in other operating activities
Selling expenses in cash 105,107,763.31 136,866,214.37
Administrative expenses in cash 74,613,114.65 87,401,319.27
R&D expenses in cash 17,901,111.33 19,304,497.87
Security deposits 187,068.49 3,445,334.38
Letter of guarantee paid 2,171,914.25 5,520,385.99
Current accounts and others 21,116,317.47 18,504,749.20
221,097,289.50 271,042,501.08
Cash generated from other investing activities
Performance compensation 2,419,748.09 -
Cash used in other investing activities
Acquisition of Italy QCorr’s business asset
group - 1,203,750.03
245 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
V. Notes to the Consolidated Financial Statements (cont’d)
63. Notes to cash flow statement line items (cont’d)
2021 2020
Cash generated from other financing activities
Disposal of equity to non-controlling interests 100,000,000.00 -
Security deposits for bank acceptance notes 93,525,797.34 16,125,930.69
Security deposits recovered for internal
guarantees for external loans - 124,024,093.46
Share subscription - 22,600,000.00
193,525,797.34 162,750,024.15
Cash used in other financing activities
Share repurchase 828,741,759.63 500,096,259.41
Security deposits paid for loans 355,075,000.00 290,000,000.00
Security deposits for bank acceptance notes 120,056,676.70 35,715,597.93
Purchase of non-controlling interests 36,121,968.12 -
Lease and interest payments 17,062,209.03 -
1,357,057,613.48 825,811,857.34
V. Notes to the Consolidated Financial Statements (cont’d)
64. 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:
2021 2020
Net profit 492,391,185.65 397,097,320.99
Add: Asset impairment allowances 10,936,754.10 5,368,019.60
Depreciation of fixed assets 49,341,880.68 43,733,470.71
Depreciation of right-of-use assets 17,042,595.06 -
Amortization of intangible assets 23,837,149.34 23,293,740.64
Credit impairment loss 12,726,636.46 7,964,362.42
Amortization of long-term prepaid expenses 6,204,501.74 4,232,091.29
Loss and gain on disposal of fixed assets,
intangible assets and other long-lived assets (424,968.29) 17,854.18
Loss on retirement of fixed assets 490,962.41 34,888.51
Loss and gain on changes in fair value 21,357,785.81 (45,122,771.27)
Finance costs 13,182,088.01 16,797,042.44
Investment income (98,673,106.02) (55,115,521.94)
Increase in deferred tax assets (81,298,463.69) (49,922,037.64)
Decrease/(increase) in deferred tax liabilities (17,549,248.21) 2,380,693.25
Increase in inventories (128,880,794.62) (61,314,527.47)
Increase/(decrease) in operating receivables (397,793,709.49) 62,978,697.08
Increase in operating payables 374,249,103.02 188,515,269.99
Others 9,518,924.06 10,057,438.97
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Net cash generated from/used in operating activities 306,659,276.02 550,996,031.75
V. Notes to the Consolidated Financial Statements (cont’d)
64. Supplemental information on statement of cash flows (cont’d)
(1) Supplemental information on statement of cash flows (cont’d)
Substantial investing and financing activities not involving cash:
2021 2020
Transfer of endorsed bank acceptance notes received for
selling goods and rendering services 53,118,728.50 72,886,689.73
Acquisition of right-of-use assets by assuming lease
liabilities 80,386,832.91 -
133,505,561.41 72,886,689.73
Net change in cash and cash equivalents:
2021 2020
Closing balance of cash 1, 259,303,775.74 860,601,236.78
Less: Opening balance of cash 860,601,236.78 2,226,724,737.39
Add: Closing balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net increase/(decrease) in cash and cash equivalents 398,702,538.96 (1,366,123,500.61)
(2) Information on subsidiaries and other business units acquired or disposed of
Information on subsidiaries and other business units acquired
2021 2020
Prices for acquiring subsidiaries and other business
units 30,000,000.00 11,566,725.00
Cash and cash equivalents paid to acquire
subsidiaries and other business units 30,000,000.00 11,566,725.00
Less: cash and cash equivalents held by subsidiaries
and other business units acquired - 36,725.61
Net payments for the acquisition of subsidiaries and
other business units 30,000,000.00 11,529,999.39
(3) Cash and cash equivalents
2021 2020
Cash 1,259,303,775.74 860,601,236.78
Including: cash on hand 233,281.32 217,540.96
Bank deposits readily available 999,389,151.51 860,383,695.82
Other cash and bank balances readily available 259,681,342.91 -
Cash equivalents - -
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Closing balance of cash and cash equivalents 1,259,303,775.74 860,601,236.78
V. Notes to the Consolidated Financial Statements (cont’d)
65. Assets with restricted ownership or right of use
2021 2020
Cash and bank balances 405,032,563.61 25,109,817.10 Note 1
Fixed assets 4,533,314.25 211,239,552.11 Note 2
Intangible assets - 52,551,947.63 Note 3
Other non-current assets 300,150,000.00 295,075,000.00 Note 4
709,715,877.86 583,976,316.84
Note 1: As at 31 December 2021, cash and bank balances in the carrying amount of
RMB405,032,563.61 were used as security deposits for bank acceptance notes and letter of
guarantee and the like (31 December 2020: RMB25,109,817.10).
Note 2: As at 31 December 2021, the fixed assets in the carrying amount of RMB4,533,314.25
(31 December 2020: RMB0) was used as collateral for obtaining bank borrowings for
subsidiaries. As at 31 December 2021, the fixed assets in the carrying amount of
RMB211,239,552.11 was used as collateral for obtaining the credit line of bank borrowings,
the credit line was RMB600,000,000.00, and the borrowing balance under the credit line
contract was nil. As at 31 December 2020, the fixed assets pledge was relieved.
Note 3: As at 31 December 2020, property in land of the Company in the carrying amount of
RMB52,551,947.63 was also used as collateral for the bank credit line mentioned in Note 2
in Item 65 of Note V. The amortization of the property in land was RMB1,468,335.83 in
2020. As at 31 December 2021, the mortgage of the property in land was released.
Note 4: As at 31 December 2021, security deposits in the carrying amount of RMB
300,150,000.00 (31 December 2020: RMB 295,075,000.00) were used for loans of
subsidiaries, with the term expiring on 29 June 2023.
V. Notes to the Consolidated Financial Statements (cont’d)
66. Monetary items in foreign currencies
2021 2020
Original Original Exchange
Exchange rate RMB equivalent RMB equivalent
currency currency rate
Cash and bank balances 685,152,963.98 640,094,525.70
Including: USD 56,147,869.58 6.3757 357,981,972.08 42,130,977.17 6.5251 274,908,839.13
EUR 45,306,958.43 7.2197 327,102,647.78 45,296,299.56 8.0250 363,502,803.97
HKD 83,591.14 0.8176 68,344.12 162,041.47 0.8416 136,374.10
GBP - 8.6081 - 173,844.00 8.8903 1,545,525.31
AUD - 4.6266 - 196.00 5.0163 983.19
Accounts receivable 714,281,331.38 466,182,574.96
Including: USD 8,067,507.42 6.3757 51,436,007.06 8,332,673.76 6.5251 54,371,529.55
EUR 91,810,646.47 7.2197 662,845,324.32 51,316,018.12 8.0250 411,811,045.41
Contract assets 19,971,462.55 29,667,325.25
Including: USD 2,773,235.20 6.3757 17,681,315.66 1,410,488.00 6.5251 9,203,575.25
317,208.04 7.2197 2,290,146.89 2,550,000.00 8.0250 20,463,750.00
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
EUR
Other receivables 71,937,801.62
Including: USD 8,856,610.50 6.3757 210,931,472.20 - - -
EUR 21,394,847.52 7.2197 154,464,380.64 8,964,212.04 8.0250 71,937,801.62
Accounts payable 580,255,405.04 390,383,719.86
Including: USD 20,811,908.90 6.3757 132,690,487.57 - - -
EUR 61,992,176.61 7.2197 447,564,917.47 48,645,946.40 8.0250 390,383,719.86
Short-term borrowings 228,312,880.73 39,533,281.84
Including: EUR 31,623,596.65 7.2197 228,312,880.73 4,926,265.65 8.0250 39,533,281.84
Current portion of
non-current liabilities 32,455,649.04 226,597,528.74
Including: EUR 4,495,429.04 7.2197 32,455,649.04 28,236,452.18 8.0250 226,597,528.74
Long-term borrowings 325,026,188.49 353,412,388.29
Including: EUR 45,019,348.24 7.2197 325,026,188.49 44,038,926.89 8.0250 353,412,388.29
Lease liabilities 49,459,973.23
Including: EUR 6,850,696.46 7.2197 49,459,973.23 - - -
Other payables 18,820,269.40 34,280,083.33
Including: USD 397,040.50 6.3757 2,531,411.12 172,390.50 6.5251 1,124,865.25
EUR 2,256,168.30 7.2197 16, 288,858.28 4,131,491.35 8.0250 33,155,218.08
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
Settlement currency for local
Fosber Group Italy EUR
business activities
Settlement currency for local
Fosber America America USD
business activities
Settlement currency for local
Italy EDF Italy EUR
business activities
Settlement currency for local
Tirua Group Spain EUR
business activities
I. Changes to the Scope of Consolidation
1. Changes to the scope of consolidation for other reasons
Information about the newly established subsidiary:
In February 2021, the Company established Dongfang Hezhi Data Technology (Guangdong) Co., Ltd.
(hereinafter referred to as “Hezhi Guangdong”) with a registered capital of RMB 8 million and a
shareholding ratio of 100%.
VI. Changes to the Scope of Consolidation (cont’d)
1. Changes to the scope of consolidation for other reasons (cont’d)
Information about the newly established subsidiary: (cont’d)
In March 2021, the Company established Tianjin Hangchuang Zhijin Investment Partnership (Limited
Partnership) (hereinafter referred to as “Tianjin Hangchuang”), with a subscribed capital contribution of
RMB20 million and a shareholding ratio of 95.24%.
249 / 287
Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
In September 2019, Parsun Power, a subsidiary of the Company, established Suzhou Parsun Power
Technology Co., Ltd. (hereinafter referred to as “Parsun Power Technology”) with a registered
capital of RMB10 million and a shareholding ratio of 100%.
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 capital interest（%）
Direct Indirect
Subsidiaries acquired
by way of
incorporation or
investment
Dongfang Precision
HK HK Trading USD300,000 100.00 -
(HK)
Dongfang Precision
Netherland Netherland Trading EUR40,000 90.00 10.00
(Netherland)
Foshan, Guangdong, Foshan, Guangdong, Manufactur
Fosber Asia EUR4 million 89.20 -
China China ing
Manufacturi
Italy QCorr Italy Italy EUR375,000 - 60.00
ng
Suzhou High-Tech
Zone Jinquan
Business Suzhou, Jiangsu, Suzhou, Jiangsu,
Investment RMB9.65 million - 0.17
Management China China
Partnership (Limited
Partnership)*
Haikou, Hainan, Haikou, Hainan, Industrial
Dongfang Digicom RMB100 million 100.00 -
China China Internet
Haikou, Hainan, Haikou, Hainan,
Hainan Yineng Investment RMB100 million 100.00 -
China China
Foshan, Foshan, Industrial In
Hezhi Guangdong RMB8 million 100.00 -
Guangdong,China Guangdong,China ternet
Parsun Power Suzhou, Jiangsu. Suzhou, Jiangsu. Manufacturi
RMB10 millin - 69.55
Technology China China ng
Tianjin Hangchuang Tianjin, China Tianjin, China Investment RMB21 million 95.24% -
Subsidiaries acquired
in business
combinations not
under common
control
Manufactur
Fosber Group Italy Italy EUR1.56 million - 100.00
ing
Manufactur
Fosber America America America USD1.10 million - 100.00
ing
Manufactur
Fosber Tianjin Tianjin, China Tianjin, China USD500,000 - 100.00
ing
Suzhou, Jiangsu, Suzhou, Jiangsu, Manufactur
Parsun Power RMB85.3 million 7.83 61.72
China China ing
Suzhou, Jiangsu, Suzhou, Jiangsu,
Shunyi Investment Investment RMB10 million 100.00 -
China China
Manufactur
Italy EDF Italy Italy EUR100,000 - 100.00
ing
Manufactur
Tirua Group Spain Spain EUR10 million - 70.00
ing
Manufactur
Tirua S.L.U. Spain Spain EUR1.44 million - 70.00
ing
Tratatamientos
Manufactur
Industriales Tirua Spain Spain EUR270,000 - 70.00
ing
S.A.U.
Manufactur
Tirua France SARL France France EUR100,000 - 70.00
ing
Manufactur
SCI Candan France France EUR10,000 - 70.00
ing
Manufactur
Tirua America America America USD3 million - 85.00
ing
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Foshan, Guangdong, Foshan, Guangdong, Manufactur
Yinglian Digital RMB50 million 100.00 -
China China ing
VII. Interests in Other Entities (cont’d)
1. Interests in subsidiaries (cont’d)
*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.
VII. Interests in Other Entities (cont’d)
2. Interests in associates
Principal place Place of Business Registered The Company’s Accounting
of business registration nature capital interest (%) method
Direct Indirect
Associates
Guangdong Jaten Robot Equity
Foshan Foshan manufacturing RMB12.844 million 21.00 -
& Automation Co., Ltd. method
Equity
Talleres Tapre,S.L. Spain Spain manufacturing - 14.00
- method
Equity
Nanjing Profeta (Note) Nanjing manufacturing - 6.66
Nanjing RMB3.8613 million method
Note: The board of directors of Nanjing Profeta Intelligent Technology Co., Ltd. has 5 members. The Group
has appointed one of the directors, and he accordingly enjoys 20% of the substantive participation rights,
forming a significant influence.
The Group’s important associates, as the Group’s strategic partners, are engaged in the research and
development of intelligent logistics robot technology and are accounted for using the equity method. This
investment is strategic to the Group’s activities.
The table below presents financial information of Guangdong Jaten Robot & Automation Co., Ltd.
Such information is accounting policy difference-adjusted and reconciled to the carrying amounts of
the financial statements.
2021 2020
Current assets 330,487,248.69 237,153,222.57
Including: cash and cash equivalents 27,992,042.72 9,320,324.83
Non-current assets 112,183,506.48 112,043,388.53
Total assets 442,670,755.17 349,196,611.10
Current liabilities 231,913,001.95 148,070,950.71
Non-current liabilities 16,210,604.84 27,571,880.84
Total liabilities 248,123,606.79 175,642,831.55
Equity attributable to owners of the parent 194,547,148.38 173,553,779.55
Share of net assets based on the Company’s interest 40,854,901.16 36,446,293.71
Carrying amount of the investment 74,780,345.62 70,900,088.92
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Operating revenue 182,826,022.76 102,479,717.84
Income tax expenses - 2,574,241.97
Net profit 19,478,739.06 14,587,371.13
Total comprehensive income 19,478,739.06 14,587,371.13
VII. Interests in Other Entities (cont’d)
2. Interests in associates (cont’d)
The table below presents the aggregate financial information of associates insignificant to the
Group:
2021 2020
Associates
Total carrying amount of investments 9,997,251.05 1,771,115.81
Total amounts based on the Company’s interests:
Net loss (200,249.84) 76,960.49
Total comprehensive loss (200,249.84) 76,960.49
VIII. Risks Associated with Financial Instruments
1. Classification of financial instruments
The carrying amounts of various financial instruments as at the balance sheet date are as follows:
2021
Financial assets
At fair value
At fair value th
At amortized cos through other
rough profit or lo Total
t comprehensive
ss
income
As required by As required by
standard standard
Cash and bank balances - 1,664,336,339.35 - 1,664,336,339.35
Financial assets held for trading 788,185,521.57 - - 788,185,521.57
Notes receivable - 13,272,025.04 - 13,272,025.04
Accounts receivable - 741,135,648.09 - 741,135,648.09
Receivables financing - - 30,692,449.25 30,692,449.25
Other receivables - 70,220,378.02 - 70,220,378.02
Contract assets - 24,414,117.64 - 24,414,117.64
Current portion of non-current
assets - 108,385,000.00 - 108,385,000.00
Long-term receivables - 143,750.00 - 143,750.00
Other non-current financial assets 162,523,519.41 - - 162,523,519.41
Other non-current assets - 300,150,000.00 - 300,150,000.00
950,709,040.98 2,922,057,258.14 30,692,449.25 3,903,458,748.37
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
VIII. Risks Associated with Financial Instruments (cont’d)
1. Classification of financial instruments (cont’d)
The carrying amounts of various financial instruments as at the balance sheet date are as follows:
(cont’d)
2021 (cont’d)
Financial liabilities
At fair value throug
At amortized cost Total
h profit or loss
As required by standard
Short-term borrowings - 228,312,880.73 228,312,880.73
Financial liabilities held for trading 110, 746,939.04 - 110, 746,939.04
Notes payable - 149,191,690.00 149,191,690.00
Accounts payable - 619,265,856.18 619,265,856.18
Other payables - 100,018,273.09 100,018,273.09
Current portion of non-current
liabilities - 38,495,724.83 38,495,724.83
Long-term borrowings - 325,026,188.49 325,026,188.49
Lease liabilities - 65,213,555.87 65,213,555.87
Other current liabilities - 9,391,823.29 9,391,823.29
Other non-current liabilities 29,074,219.95 107,104,084.49 136,178,304.44
139,821,158.99 1, 642,020,076.97 1, 781,841,235.96
2020
Financial assets
At fair value
At fair value thro At amortized through other
Total
ugh profit or loss cost comprehensive
income
As required by As required by
standard standard
Cash and bank balances - 885,711,053.88 - 885,711,053.88
Financial assets held for
trading 1,636,296,430.31 - - 1,636,296,430.31
Notes receivable - 12,744,582.88 - 12,744,582.88
Accounts receivable - 469,635,423.58 - 469,635,423.58
Current portion of
non-current assets - 2,556,000.00 - 2,556,000.00
Long-term receivables - 1,475,000.00 - 1,475,000.00
Other non-current assets - 935,075,000.00 - 935,075,000.00
Receivables financing - - 56,737,978.04 56,737,978.04
Other receivables - 79,103,472.64 - 79,103,472.64
Contract assets - 29,504,693.97 - 29,504,693.97
Other non-current financial
assets 5,948,588.15 - - 5,948,588.15
1,642,245,018.46 2,415,805,226.95 56,737,978.04 4,114,788,223.45
VIII. Risks Associated with Financial Instruments (cont’d)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
1. Classification of financial instruments (cont’d)
The carrying amounts of various financial instruments as at the balance sheet date are as follows:
(cont’d)
2020 (cont’d)
Financial liabilities
At fair value throug
At amortized cost Total
h profit or loss
As required by standard
Short-term borrowings - 39,533,281.84 39,533,281.84
Financial liabilities held for trading 41,408,109.80 - 41,408,109.80
Notes payable - 104,855,187.97 104,855,187.97
Accounts payable - 503,042,561.05 503,042,561.05
Other payables - 81,743,851.64 81,743,851.64
Current portion of non-current
liabilities - 226,597,528.74 226,597,528.74
Long-term borrowings - 353,412,388.29 353,412,388.29
Other current liabilities 158,452.18 11,811,507.85 11,969,960.03
Other non-current liabilities 68,737,415.25 - 68,737,415.25
110,303,977.23 1,320,996,307.38 1,431,300,284.61
2. Transfer of financial assets
Financial assets already transferred but not wholly derecognized
On 31 December 2021, the carrying value of the bank acceptance notes (BAs) endorsed by the
Group to suppliers for the settlement of accounts payable was RMB9,391,823.29 (31 December
2020: RMB11,800,000.00). 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 2021, the carrying value of the accounts payable
settled with them totaled RMB9,391,823.29 (31 December 2020: RMB11,800,000.00).
Transferred financial assets that have been wholly derecognized but continue to be involved
On 31 December 2021, the carrying value of the BAs endorsed by the Group to suppliers for the
settlement of accounts payable was RMB23,598,786.91 (31 December 2020: RMB25,235,099.85).
On 31 December 2021, 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.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
In 2021, 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.
VIII. Risks Associated with Financial Instruments (cont’d)
3. Financial instrument risks
The Group is faced with various financial instrument risks in its routine activities, mainly including credit risk,
liquidity risk and market risk (including exchange rate risk and interest rate risk). The Group mainly has the
following instruments: cash and bank balances, equity investment, borrowings, notes receivable, accounts
receivable, notes payable and accounts payable. The risk management strategies adopted by the Group to lower
risks associated with these financial instruments are described below.
The Group's Board of Directors is fully responsible for the determination of risk management objectives and
policies and assumes ultimate responsibility for such risk management objectives and policies, but the Board of
Directors has authorized the Chief Executive's Office of the Group to design and implement procedures to ensure
the effective execution of risks management objectives and policies. The Board of Directors reviews the
effectiveness of the executed procedures and the rationality of the risk management objectives and policies
through the monthly reports submitted by the treasury supervisor. The internal auditors of the Group will also
audit the risk management policies and procedures and will report relevant findings to the Audit Committee.
The Group's overall goals for risk management are to develop risk management policies to minimize risks without
unduly affecting the competitiveness and strain capacity of the Group.
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 Company assesses whether or not the credit risk of the relevant financial instruments has increased
significantly since the initial recognition at each balance sheet date. While determining whether the credit risk has
significantly increased since initial recognition or not, the Company takes into account the reasonable and
substantiated information that is accessible without exerting undue extra cost or effort, including qualitative and
quantitative analysis based on the historical data of the Company, external credit risk rating, and forward-looking
information. Based on the single financial instrument or the combination of financial instruments with similar
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
characteristics of credit risk, the Company compares the risk of default of financial instruments on the balance
sheet date with that on the initial recognition date in order to determine changes in the risk of default during the
expected lifetime of financial instruments.
VIII. Risks Associated with Financial Instruments (cont’d)
3. Financial instrument risks (cont’d)
Credit risk (cont’d)
Definition of credit-impaired financial assets
The standard adopted by the Group to determine whether a credit impairment occurs is consistent with the internal
credit risk management objectives of the relevant financial instrument, taking into account quantitative and
qualitative criteria. When the Group assesses whether the credit impairment of debtor occurred, the principal
factors considered are as follows:
（1） Significant financial difficulty of the issuer or debtor;
（2） Debtors’ breach of contract, such as defaulting or becoming overdue on interest or principal payments;
（3） The creditor of the debtor, for economic or contractual reasons relating to the debtor’s financial difficulty,
having granted to the debtor a concession that the creditor would not otherwise consider;
（4） It is becoming probable that the debtor will enter bankruptcy or other financial restructuring;
（5） The disappearance of an active market for that financial asset because of financial difficulties of the issuer
or debtor;
（6） The purchase or origination of a financial asset at a deep discount that reflects the incurrence of credit
losses.
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.
Parameters of ECL measurement
Based on whether there is a significant increase in credit risk and whether there is an impairment of assets, the
Group measures the impairment loss for different assets with ECL of 12 months or the entire lifetime respectively.
The key measuring parameters of ECL include probability of default (PD), loss given default (LGD) and exposure
at default (EAD). The Group takes into account the quantitative analysis of historical statistics (such as ratings of
counterparties, manners of guarantees and types of collaterals, repayments, etc.) and forward-looking information.
The relevant definitions are as follows:
（1） PD refers to the possibility that the debtor will not be able to fulfil its obligations of repayment over
the next 12 months or throughout the entire remaining lifetime. The Group’s PD is adjusted based on
the results of the expected credit loss model, taking into account the forward-looking information to
reflect the debtor’s PD under the current macroeconomic environment;
（2） LGD refers to the Group’s expectation of the extent of the loss resulting from the default exposure.
Depending on the type of counterparty, the method and priority of the recourse, and the type of
collaterals, the LGD varies. The LGD is the percentage of loss of risk exposure at the time of default,
calculated over the next 12 months or over the entire remaining lifetime;
（3） EAD is the amount that the Company should be reimbursed at the time of the default in the next 12
months or throughout the entire remaining lifetime.
The assessment of a significant increase in credit risk and the calculation of ECL both involve
forward-looking information. Through the analysis of historical data, the Group identifies the key economic
indicators that affect the credit risk and ECL.
VIII. Risks Associated with Financial Instruments (cont’d)
3. Financial instrument risks (cont’d)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Credit risk (cont’d)
Credit risk exposures
2021
Carrying amount (unsecured) Carrying amount (secured)
12-month Lifetime 12-month Lifetime
ECL ECL ECL ECL
Accounts receivable - 26,228,109.80 - -
Contract assets - 730,344.85 - -
Other receivables 4,786,684.60 500,000.00 - -
4,786,684.60 27,458,454.65 - -
2020
Carrying amount (unsecured) Carrying amount (secured)
12-month Lifetime 12-month Lifetime
ECL ECL ECL ECL
Accounts receivable - 23,792,330.92 - -
Contract assets - 1,061,524.05 - -
Other receivables 2,861,774.13 500,000.00 - -
2,861,774.13 25,353,854.97 - -
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
VIII. Risks Associated with Financial Instruments (cont’d)
3. Financial instrument risks (cont’d)
Liquidity risk
The Group monitors its risk to the shortage of funds using a recurring liquidity planning tool. This
tool considers the maturity profile of its financial instruments and projected cash flows from
operations.
The maturity profile of financial liabilities based on undiscounted contractual cash flow is
summarized as follows:
2021
Within 1 month 1-3 months 3 months-1 year 1-5 years Over 5 years Total
Short-term borrowings 190,705,475.51 30,521,787.76 7,394,911.43 - - 228, 622,174.70
Financial liabilities held
for trading - - 110,746,939.04 - - 110,746,939.04
Notes payable - - 149,191,690.00 - - 149,191,690.00
Accounts payable - - 619,265,856.18 - - 619,265,856.18
Other payables - - 100,018,273.09 - - 100,018,273.09
Current portion of
non-current liabilities 1,430,597.18 2,498,486.89 37,889,311.44 - - 41,818,395.51
Long-term borrowings - - - 325,847,350.33 3,602,076.70 329,449,427.03
Lease liabilities - - - 65,213,555.87 - 65,213,555.87
Other current liabilities - - 9,391,823.29 - - 9,391,823.29
Other non-current
liabilities - - - 136,178,304.44 - 136,178,304.44
192,136,072.69 33,020,274.65 1,033,898,804.47 527,239,210.64 3,602,076.70 1,789,896,439.15
2020
Within 1 month 1-3 months 3 months-1 year 1-5 years Over 5 years Total
Short-term borrowings 4,023,064.35 12,877,525.22 22,859,189.31 - - 39,759,778.88
Financial liabilities held
for trading - - 41,408,109.80 - - 41,408,109.80
Notes payable - - 104,855,187.97 - - 104,855,187.97
Accounts payable - - 503,042,561.05 - - 503,042,561.05
Other payables - - 81,743,851.64 - - 81,743,851.64
Current portion of
non-current liabilities 26,404,832.93 513,616.88 227,400,672.81 - - 254,319,122.62
Long-term borrowings - - - 9,825,103.77 354,814,594.04 364,639,697.81
Other current liabilities - - 11,969,960.03 - - 11,969,960.03
Other non-current
liabilities - - - 68,737,415.25 - 68,737,415.25
30,427,897.28 13,391,142.10 993,279,532.61 78,562,519.02 354,814,594.04 1,470,475,685.05
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
VIII. Risks Associated with Financial Instruments (cont’d)
3. 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.
2021
Increase/
Increase/ (decrease) in
Increase/ Increase/
(decrease) in net other
(decrease) in (decrease) in
comprehensive
basis points total equity
profit or loss income net of
tax
Loans 0.5 (1,361,068.13 ) - (1,361,068.13)
Loans (0.5) 1,361,068.13 - 1,361,068.13
2020
Increase/
(decrease) in
Increase/ Increase/ Increase/
other
(decrease) in (decrease) in net (decrease) in
comprehensive
basis points profit or loss total equity
income net of
tax
Loans 0.5 (1,246,077.19 ) - (1,246,077.19)
Loans (0.5) 1,246,077.19 - 1,246,077.19
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
VIII. Risks Associated with Financial Instruments (cont’d)
3. Financial instrument risks (cont’d)
Market risk (cont’d)
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. Approximately 85%
(2020：76%) of the Group’s sales are priced in currencies other than the functional currencies of the
business units that incur the sales, and approximately 15% (2020：24%) of costs are priced in the
functional currencies of the business units.
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.
2021
Increase/
Increase/
Increase/ (decrease) in
(decrease) in Increase/
(decrease) in other
exchange rate (decrease) in
net profit or loss comprehensive
(%) total equity
income net of
tax
Stronger RMB against EUR 2 (1,228,442.79) - (1,228,442.79)
Weaker RMB against EUR (2 ) 1,228,442.79 - 1,228,442.79
Stronger RMB against USD 2 (5,522,074.97) - (5,522,074.97)
Weaker RMB against USD (2 ) 5,522,074.97 - 5,522,074.97
2020
Increase/
Increase/
Increase/ (decrease) in
(decrease) in Increase/
(decrease) in other
exchange rate (decrease) in
net profit or loss comprehensive
(%) total equity
income net of
tax
Stronger RMB against EUR 2 847,781.70 - 847,781.70
Weaker RMB against EUR (2 ) (847,781.70 ) - (847,781.70)
Stronger RMB against USD 2 (291,145.12 ) - (291,145.12)
Weaker RMB against USD (2 ) 291,145.12 - 291,145.12
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
VIII. Risks Associated with Financial Instruments (cont’d)
4. 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 2021 and 2020.
IX. Disclosure of Fair Values
1. Assets and liabilities measured at fair value
2021
Input applied in the measurement of fair value
Significant Significant
Quoted prices
observable unobservable Total
in active markets
inputs inputs
（Level 1） （Level 2） （Level 3）
Continuous measurement of fair
value
Financial assets held for trading 775,249,020.94 - 12,936,500.63 788,185,521.57
Receivables financing - 30,692,449.25 - 30,692,449.25
Other non-current financial assets 5,640,775.44 - 156,882,743.97 162,523,519.41
780,889,796.38 30,692,449.25 169,819,244.60 981, 401,490.23
Input applied in the measurement of fair value
Quoted prices Significant Significant
in active observable unobservable Total
markets inputs inputs
（Level 1） （Level 2） （Level 3）
Continuous measurement of fair
value
Financial liabilities held for trading - - 110, 746,939.04 110, 746,939.04
Other non-current liabilities - - 136,178,304.44 136,178,304.44
- - 246,925,243.48 246,925,243.48
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
IX. Disclosure of Fair Values (cont’d)
1. Assets and liabilities measured at fair value (cont’d)
2020
Input applied in the measurement of fair value
Significant Significant
Quoted prices
observable unobservable Total
in active markets
inputs inputs
（Level 1） （Level 2） （Level 3）
Continuous measurement of fair
value
Financial assets held for trading 1,636,296,430.31 - - 1,636,296,430.31
Receivables financing - 56,737,978.04 - 56,737,978.04
Other non-current financial assets 5,948,588.15 - - 5,948,588.15
1, 642,245,018.46 56,737,978.04 - 1,698,982,996.50
Input applied in the measurement of fair value
Quoted prices Significant Significant
in active observable unobservable Total
markets inputs inputs
（Level 1） （Level 2） （Level 3）
Continuous measurement of fair
value
Financial liabilities held for trading - - 41,408,109.80 41,408,109.80
Other non-current liabilities - - 68,737,415.25 68,737,415.25
- - 110,145,525.05 110, 145,525.05
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
IX. Disclosure of Fair Values (cont’d)
2 Assets and liabilities disclosed at fair value
2021
Input applied in the measurement of fair value
Quoted prices Significant Significant
in active observable unobservable Total
markets inputs inputs
（Level 1） （Level 2） （Level 3）
Long-term receivables - - 143,750.00 143,750.00
Long-term borrowings - 325,026,188.49 - 325,026,188.49
Current portion of non-current assets 4,595,000.00 4,595,000.00
Current portion of non-current liabilities 21,342,646.25 - 21,342,646.25
- 346,368,834.74 4,738,750.00 351,107,584.74
2020
Input applied in the measurement of fair value
Quoted prices Significant Significant
in active observable unobservable Total
markets inputs inputs
（Level 1） （Level 2） （Level 3）
Long-term receivables - - 1,475,000.00 1,475,000.00
Long-term borrowings - 353,412,388.29 - 353,412,388.29
Current portion of non-current assets - - 2,556,000.00 2,556,000.00
Current portion of non-current liabilities - - 226,597,528.74 226,597,528.74
- 353,412,388.29 230,628,528.74 584,040,917.03
IX. Disclosure of Fair Values (cont’d)
3. Estimation of fair value
Fair value of financial instruments
The management has assessed cash and bank balances, notes receivable, accounts receivable, notes
payable and accounts payable, and because the remaining maturity is not long, their fair value is
similar to their carrying value.
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 following methods and
assumptions are used to estimate the fair 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
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
similar contract terms, credit risks and remaining maturity serves as the discount rate. On 31
December 2021, the result of the self-default risk assessment of long- and short-term borrowings
was not significant.
The fair value of unlisted equity instruments is estimated by the discounted valuation model, and
the assumptions used are not supported by observable market prices or interest rates. The Group
needs to estimate the projected future cash flows (including projected future dividends and disposal
income). The Group believed that the fair value and its movements estimated by the valuation
technique was reasonable and the most appropriate value on the balance sheet date.
4. Unobservable inputs
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
Financial assets held Option pricing
12,936,500.63 Volatility 29.92%-42.52%
for trading model
Other non-current Option pricing
11,210,248.59 Volatility 12.64%-36.25%
financial assets model
Other non-current Comparison Liquidity
53,665,760.48 10.00%-20.00%
financial assets approach discount
Other non-current Liquidity
92,006,734.90 Market approach 10.00%-20.00%
financial assets discount
Financial liabilities Discounted cash Weighted
110,746,939.04 4.15%-12.60%
held for trading flow method average cost
Other non-current Discounted cash Weighted
136,178,304.44 0.51%-10.80%
liabilities flow method average cost
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
IX. 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:
2021
Purchase Disposal Closing Change in
Opening unrealized gains
Total current gains and losses and losses for the period of assets
Through Through other balance held at end of
profit or loss comprehensive period through
balance
income profit or loss
Financial assets
held for trading - 13,181,681.67 (245,181.04) - - 12,936,500.63 13,181,681.67
Other non-current
financial assets - 25,029,844.93 (559,232.00) 132,412,131.04 - 156,882,743.97 25,029,844.93
- 38,211,526.60 (804,413.04) 132,412,131.04 - 169,819,244.60 38,211,526.60
Change in
unrealized gains
Opening Total current gains and losses Purchase Disposal Settlement Closing and losses for the
period of
liabilities
held at end of
Through other
Through period through
balance comprehensive balance
profit or loss profit or loss
income
Financial
liabilities
held for
trading 41,408,109.80 95,161,739.92 (3,739,957.81) - (36,121,968.12) 14,039,015.25 110, 746,939.04 95,161,739.92
Other
non-curren
t l iabilities 68,737,415.25 (18,949,558.78) (4,342,115.80) 104,771,579.02 - (14,039,015.25) 136,178,304.44 (18,949,558.78)
110,145,525.05 76,212,181.14 (8,082,073.61) 104,771,579.02 (36,121,968.12) - 246,925,243.48 76,212,181.14
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
IX. Disclosure of Fair Values (cont’d)
5. Reconciliation in fair value measurement (cont’d)
Reconciliation of continuous fair value measurements categorized within Level 3 of the fair value
hierarchy: (cont’d)
2020
Change in
Opening Total current gains and losses Purchase Closing unrealized gains
and losses for the period of liabilities
held at end of
Through Through other
period through
balance profit or comprehensive Balance
profit or loss
loss income
Financial liabilities
- - - 41,408,109.80 41,408,109.80 -
held for traing
Other non-current l
- 9,284,348.20 2,967,855.23 56,485,211.82 68,737,415.25 9,284,348.20
iabilities
- 9,284,348.20 2,967,855.23 97,893,321.62 110,145,525.05 9,284,348.20
IX. 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:
2021
Gains and losses Gains and losses
relating to financial relating to
assets non-financial assets
Total gains and losses through profit or loss 38,211,526.60 -
Change in unrealized gains and losses for the period
of assets held at end of period through profit or loss 38,211,526.60 -
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:
2021
Gains and losses Gains and losses
relating to financial relating to
liabilities non-financial liabilities
Total gains and losses through profit or loss 76,212,181.14
Change in unrealized gains and losses for the period
of assets held at end of period through profit or loss 76,212,181.14
2020
Gains and losses Gains and losses
relating to financial relating to
liabilities non-financial liabilities
Total gains and losses through profit or loss 9,284,348.20
Change in unrealized gains and losses for the period 9,284,348.20
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
of assets held at end of period through profit or loss
IX. Disclosure of Fair Values (cont’d)
6. Transfers between levels of fair value measurement
No such transfers in the Reporting Period.
X. Relationships and Transactions with Related Parties
1. Controlling Shareholder
Interest in the
Relationship with the Company
Company (%)
Tang Zhuolin One of the Company’s controlling shareholders and actual
20.33
(individual) controllers
Tang Zhuomian One of the Company’s controlling shareholders and actual
7.27
(individual) controllers
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
Qiu Yezhi Director and General Manager
Director, Board Secretary and Vice
Zhou Wenhui
President
Xie Weiwei Director and Deputy General Manager
Mai Zhirong Independent Director
Peng Xiaowei Independent Director
He Weifeng Independent Director
Chairman of the Supervisory
Chen Huiyi
Committee
Zhao Xiuhe Supervisor
He Baohua Supervisor
Chief Financial Officer and Vice
Shao Yongfeng
President
X. Relationships and Transactions with Related Parties (cont’d)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
5. Major transactions between the Group and related parties
（1） Salary of key management
2021 2020
Salary of key management 13,521,226.06 12,521,009.78
XI. Share-based Payments
1. Overview
2021 2020
Total equity instruments granted 26,840,000.00 22,600,000.00
2021 2020
Total employee services exchanged with share-based
payments 40,413,913.40 25,170,406.50
Equity-settled share-based payments are as follows:
2021 2020
Cumulative amount of equity-settled share-based
payments recognized in capital surplus 40,413,913.40 25,170,406.50
Total costs of equity-settled share-based payments 15,243,506.90 25,170,406.50
The fair value of equity instruments at the date of grant was determined at that date. The fair value
of the first grant of restricted shares in 27 March 2020 was RMB4.38/share (RMB60.07 million),
and the fair value of the reserved restricted shares in 29 December 2020 was RMB4.44/share
(RMB14.59 million). The number of exercisable equity instruments at each balance sheet date
during the vesting period is determined taking into account the separation rate, the company
performance requirements and the individual performance requirements.
XI. Share-based Payments (cont’d)
2. Share-based payment plan
On 27 March 2020, the Company convened the 44th (Extraordinary) Meeting of the Third Board of
Directors, where the Proposal on Granting Restricted Shares to Awardees was approved, and the
Board of Directors agreed to grant 22.85 million restricted shares to 42 awardees. The grant date for
the first grant of restricted shares was 27 March 2020. On 8 June 2020, the Company approved the
Proposal on Adjusting Matters Related to the 2020 Restricted Share Incentive Plan, the number of
awardees was adjusted to 40, and the number of granted restricted shares was adjusted to 22.6
million. The exercise price of this restricted share grant was RMB1. As at 31 December 2020, the
accumulated amount of subscription funds received by the Company for the first grant of restricted
shares under this incentive plan totaled RMB22,600,000.00.
As authorized by the first Extraordinary Meeting of the Third Board of Directors in 2020, on
29 December 2020, the Company convened the 4th (Extraordinary) Meeting of the Fourth
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Board of Directors, where the Proposal on Granting Reserved Restricted Shares to Awardees
was approved, and the Board of Directors agreed to grant 4.24 million restricted shares to 18
awardees. The grant date was 29 December 2020. As at 31 December 2021, the accumulated
amount of subscription funds received by the Company for the reserved restricted shares under this
incentive plan totaled RMB4,240,000.00.
The maximum number of unexercised share options currently available under the plan is equal to
10% of the shares issued by the Company. According to the plan, the maximum number of shares in
the share options granted to each eligible grantee during any period spanning 12 months is 1% of
the shares issued by the Company at any time. Any grant of share options above this limit shall be
subject to the approval of the General Meeting.
The arrangements for unlocking the restricted shares under the restricted share incentive plan are as
follows:
Unlocking Percentage of
Time of unlocking
arrangements unlocking
From the first trading day 12 months after the date of listing of the
1st unlocking first grant of/reserved restricted shares to the day of the last trading
20%
period day within 24 months after the date of listing of the first grant of
restricted shares
From the first trading day 24 months after the date of listing of the
2nd unlocking first grant of/reserved restricted shares to the day of the last trading
40%
period day within 36 months from the date of listing of the first grant of
restricted shares
From the first trading day 36 months after the date of listing of the
3rd unlocking first grant of/reserved restricted shares to the day of the last trading
40%
period day within 48 months from the date of listing of the first grant of
restricted shares
XI. Share-based Payments (cont’d)
2. Share-based payment plan (cont’d)
The unlocking conditions of the restricted share incentive plan are as follows:
In addition to meeting the relevant requirements for granting, awardees must also meet the
following unlocking conditions on the sale of granted restricted shares:
Performance appraisal requirements at the company level:
Unlocking period Performance appraisal objectives
The adjusted average net profit for 2018 and 2019 is used
1st unlocking period as the base of the performance appraisal, and the growth
rate of net profit in 2020 shall not be less than 20%
The adjusted average net profit for 2018 and 2019 is used
2nd unlocking period as the base of the performance appraisal, and the growth
rate of net profit in 2021 shall not be less than 35%
The adjusted average net profit for 2018 and 2019 is used
3rd unlocking period as the base of the performance appraisal, and the growth
rate of net profit in 2022 shall not be less than 55%
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
The net profit during the appraisal period from 2020 to 2022 mentioned above refers to the audited
consolidated statement of net profit attributable to the shareholders of the Company excluding the
impact of share-based payments under this and other equity incentive plans. The base of
performance appraisal is the average net profit (the net profit attributable to shareholders of the
listed company in consolidated statements) of the Company for 2018 and 2019 after deducting the
relevant financial impacts of Beijing Pride New Energy Battery Technology Co., Ltd.
Performance appraisal requirements at the personal level:
The performance appraisal results of the awardees are divided into Levels A, B, C and D. The
non-resalable restricted shares of those awardees with appraisal results of Level D will be
repurchased and retired by the Company, and the repurchase price is the grant price.
XII. 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.
XIII. 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.
XIV. Other Significant Matters
1. Segment reporting
Operating segment
For management purposes, the Group divides its business in to two operating segments—domestic
and overseas.
2021
Item Domestic entities Overseas entities Offset Total
Operating
revenue 1,432,489,346.39 2,404,840,482.92 (312,595,045.37) 3, 524,734,783.94
Cost of sales 963,221,707.93 1,820,431,964.95 (228,581,613.09) 2,555,072,059.79
Total assets 5,013,665,276.72 2,480,339,949.36 (1,136,836,390.89) 6,357,168,835.19
Total liabilities 1,385,366,306.26 1,778,520,920.31 (660,293,937.05) 2,503,593,289.52
2020
Item Domestic entities Overseas entities Offset Total
Operating revenue 897,355,883.51 2,225,366,265.77 (206,452,006.15) 2,916,270,143.13
Cost of sales 621,843,057.98 1,671,361,093.30 (194,055,324.92) 2,099,148,826.36
Total assets 4,554,466,542.78 2,226,726,088.74 (457,955,944.47) 6,323,236,687.05
Total liabilities 649,833,167.78 1,592,859,685.18 (150,984,644.21) 2,091,708,208.75
XIV. Other Significant Matters (cont’d)
2. Leases
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(1) As lessee
2021
Interest expense on lease liabilities 2,127,205.02
Short term lease expense through profit or loss adopting
simplified approach 206,887.72
Total cash outflows related to lease 17,062,209.03
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.
Significant operating leases
According to the lease contracts signed with the lessors, minimum lease payments under irrevocable
operating leases falling due are as follows:
2020
Within 1 year (inclusive) 18,542,564.92
1-2 years (inclusive of 2 years) 17,856,537.46
2-3 years (inclusive of 3 years) 16,645,976.23
Over 3 years 59,133,965.81
112,179,044.42
Other information on lease
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.27; for lease liabilities, see Note V.31&34.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
XV. Notes to Major Items in the Company Financial Statements
1. Accounts receivable
Accounts receivable are interest-free. The aging of accounts receivable is analyzed as follows:
2021 2020
Within 1 year 114,456,911.82 113,429,366.77
1-2 years 38,918,748.38 41,024,601.08
2-3 years 2,987,247.70 438,024.56
3-4 years - 3,014,635.01
4-5 years 1,454,595.00 170,190.80
Over 5 years 1,556,499.20 2,094,629.83
159,374,002.10 160,171,448.05
Less: allowances for doubtful accounts
receivable 4,670,936.43 6,654,009.15
154,703,065.67 153,517,438.90
2021
Gross amount Allowance Carrying amount
Amount Percentage Amount Percentage
（%） （%）
Accounts receivable for
which allowances are
established individually 3,011,094.20 1.89 3,011,094.20 100 -
Accounts receivable for
which allowances are
established by group with
similar credit risk
characteristics 156,362,907.90 98.11 1,659,842.23 1.06 154,703,065.67
159,374,002.10 100.00 4,670,936.43 154,703,065.67
2020
Gross amount Allowance Carrying amount
Amount Percentage Amount Percentage
（%） （%）
Accounts receivable for
which allowances are 3,030,944.40 1.89 3,030,944.40 100.00 -
established individually
Accounts receivable for
which allowances are
established by group with 157,140,503.65 98.11 3,623,064.75 2.31 153,517,438.90
similar credit risk
characteristics
160,171,448.05 100.00 6,654,009.15 153,517,438.90
XV. Notes to Major Items in the Company Financial Statements (cont’d)
1. Accounts receivable (cont’d)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
As at 31 December 2021, accounts receivable for which allowances are established individually are
as follows:
ECL
Gross amount Allowance Reason for allowance
（%）
939,000.00 939,000.00 Customer’s inability to
Customer 2 100.00
settle the amount due
641,600.00 641,600.00 Customer’s inability to
Customer 3 100.00
settle the amount due
608,800.00 608,800.00 Customer’s inability to
Customer 4 100.00
settle the amount due
515,595.00 515,595.00 Customer’s inability to
Customer 5 100.00
settle the amount due
283,000.00 283,000.00 Customer’s inability to
Customer 11 100.00
settle the amount due
Customer’s inability to
23,099.20 23,099.20 100.00
Other companies settle the amount due
3,011,094.20 3,011,094.20
As at 31 December 2020, accounts receivable for which allowances are established individually are
as follows:
ECL
Gross amount Allowance Reason for allowance
（%）
Customer’s inability to
Customer 2 981,949.40 981,949.40 100.00
settle the amount due
Customer’s inability to
Customer 3 641,600.00 641,600.00 100.00
settle the amount due
Customer’s inability to
Customer 4 608,800.00 608,800.00 100.00
settle the amount due
Customer’s inability to
Customer 5 515,595.00 515,595.00 100.00
settle the amount due
Customer’s inability to
Customer 11 283,000.00 283,000.00 100.00
settle the amount due
3,030,944.40 3,030,944.40
Accounts receivable for provision for bad debts according to the combination of credit risk characteristics:
2021 2020
Estimated book ECL(%) Expected credit Estimated book ECL(%) Expected credit
balance of losses within the balance of default losses within
default exsisting period the exsisting
period
Within 1 year 114,456,911.82 0.34 390,298.12 113,429,366.77 1.03 1,170,806.97
1-2 years 38,918,748.38 0.94 365,205.21 41,024,601.08 1.71 699,477.21
2-3 years 2,987,247.70 30.27 904,338.90 438,024.56 37.50 164,269.33
3-4 years - - - 1,517,090.61 56.50 857,090.61
4-5 years - - - 170,190.80 100.00 170,190.80
Over 5 years - - - 561,229.83 100.00 561,229.83
156,362,907.90 1,659,842.23 157,140,503.65 3,623,064.75
XV. Notes to Major Items in the Company Financial Statements (cont’d)
1. Accounts receivable (cont’d)
Movements in allowances for doubtful accounts receivable are as follows:
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Established in the p Written off in the
Opening balance Reversed in the period Closing balance
eriod period
2021 6,654,009.15 84,975.11 (1,369,120.41) (698,927.42) 4,670,936.43
2020 2,668,130.50 3,985,878.65 - - 6,654,009.15
Top 5 of accounts receivable are as follows:
2021 As a % of the Allowance
closing balance of total
accounts receivable
Dongfang Precision (HK) 77,716,283.13 48.76 -
Dongfang Precision (Netherland) 33,917,508.35 21.28 -
Customer 12 7,126,000.00 4.47 145,370.40
Customer 13 4,558,625.50 2.86 92,995.96
Customer 14 2,730,000.00 1.71 55,692.00
126,048,416.98 79.08 294,058.36
2020 As a % of the Allowance
closing balance of total
accounts receivable
Dongfang Precision (HK) 72,788,759.87 45.44 -
Dongfang Precision (Netherland) 45,490,692.42 28.40 -
Customer 1 3,500,000.00 2.19 65,100.00
Customer 18 3,155,678.99 1.97 58,695.63
Customer 19 2,890,454.67 1.80 53,762.46
127,825,585.95 79.81 177,558.09
XV. Notes to Major Items in the Company Financial Statements (cont’d)
2. Other receivables
2021 2020
Other receivables 444,140,266.79 28,388,543.22
Dividends receivable - 40,000,000.00
444,140,266.79 68,388,543.22
The aging of other receivables is analyzed as follows:
2021 2020
Within 1 year 442,798,058.31 26,448,285.13
1-2 years 548,952.82 278,657.36
2-3 years 52,186.57 732,604.03
3-4 years 288,333.00 1,871,615.53
4-5 years 1,495,285.41 37,693.48
Over 5 years 112,475.22 174,712.23
445,295,291.33 29,543,567.76
Less: allowances for doubtful other 1,155,024.54 1,155,024.54
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
receivables
444,140,266.79 28,388,543.22
Other receivables are classified by nature as follows:
2021 2020
Internal transactions with related parties 438,222,987.97 16,386,270.48
Prepaid service charges 3,277,042.22 2,663,309.52
Security deposits 1,427,885.96 1,818,495.96
Employee loans and petty cash 1,722,721.94 806,740.89
Performance compensation 500,000.00 500,000.00
Others 144,653.24 7,368,750.91
445,295,291.33 29,543,567.76
XV. Notes to Major Items in the Company Financial Statements (cont’d)
2. 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:
2021
Stage 1 Stage 2 Stage 3 Total
Financial assets
with credit
12-month ECL Lifetime ECL
impairment
(lifetme ECL)
Opening and 655,024.54 500,000.00 1,155,024.54
-
closing balance
2020
Stage 1 Stage 2 Stage 3 Total
Financial assets
with credit
12-month ECL Lifetime ECL
impairment
(lifetime ECL)
Opening balance 527,286.39 2,460,000.00 - 2,987,286.39
Established in the
133,781.06 - - 133,781.06
period
Reversed in the
6,042.91 1,960,000.00 - 1,966,042.91
period
Closing balance 655,024.54 500,000.00 - 1,155,024.54
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
XV. Notes to Major Items in the Company Financial Statements (cont’d)
2. Other receivables (cont’d)
Movements in allowances for doubtful other receivables are as follows:
Established in Reversed in
Opening balance Closing balance
the period the period
2021 1,155,024.54 - - 1,155,024.54
2020 2,987,286.39 133,781.06 1,966,042.91 1,155,024.54
As at 31 December 2021, top 5 of other receivables are as follows:
As a % of
Closing
2021 total other Nature Age balance of
receivables allowance
Current Within 1
-
Hainan Yineng 412, 234,185.81 92.58 account year
Current Within 1
-
Yinglian Digital 15,156,527.09 3.40 account year
Current Within 1
-
Digicom Guangdong 4,704,601.17 1.06 account year
Current Within 1
-
Dongfang Digicom 3,065,170.33 0.69 account year
Current Within 1
-
Shunyi Investment 1,698,000.00 0.38 account year
436,858,484.40 98.11 -
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
As at 31 December 2020, top 5 of other receivables are as follows:
As a % of
total other Closing balance of
2020 Nature Age
receivables allowance
Dongfang Precision (Netherland) 11,970,591.46 40.52 Current account Within 1 year -
Fosber ASIA 2,479,766.39 8.39 Current account Within 1 year -
Shunyi Investment 1,698,000.00 5.75 Current account Within 1 year -
Entity 5 1,494,884.38 5.06 Current account Within 1 year -
Entity 6 768,814.00 2.60 Deposits 2-3 years 38,440.70
18,412,056.23 62.32 38,440.70
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
XV. Notes to Major Items in the Company Financial Statements (cont’d)
3. Long-term equity investments
2021
Opening Change in the period Period-end
Opening Write-off impairme Closing
impairment Additional Reduction Change in other eq nt Closing impairment
balance allowance investment in investment uity balance allowance
Subsidiaries
Dong Fang Precision (HK) Limited 1,856,010.00 - - - - - 1,856,010.00 -
Dongfang Precision (Netherland) 307,666.80 - - - - - 307,666.80 -
Guangdong Fosber Intelligent Equipment
Co., Ltd. 16,738,279.20 - 36,121,968.12 - 1,381,943.40 - 54,242,190.72 -
Suzhou Shunyi Investment Co., Ltd. 305,584,828.17 - - - - - 305,584,828.17 -
Suzhou Parsun Power Machine Co., Ltd. 106,359,575.73 (61,855,054.35) ) - 81,305,560.15 3,666,362.53 16,551,568.36 28,720,378.11 (45,303,485.99 )
Foshan Yinglian Digital Printing
Equipment Co., Ltd. 21,903,462.34 - - - - - 21,903,462.34 -
Dongfang Digicom Data Technology Co.,
Ltd. 3,000,000.00 - - - - - 3,710,751.60 -
Dongfang Digicom Data Technology
(Guangdong) Co., Ltd. - - 1.00 - 710,751.60 - 1.00 -
Hainan Yineng Investment Co., Ltd. - - 100,000,000.00 - - - 100,000,000.00 -
Italy EDF - - - - 977,696.67 - 977,696.67 -
Tianjin Hangchuang - - 20,000,000.00 - - - 20,000,000.00 -
455,749,822.24 (61,855,054.35 ) 156,121,969.12 (81,305,560.15) 6,736,754.20 16,551,568.36 537,302,985.41 (45,303,485.99 )
Opening Change in the period Period-end
Opening
impairment Additional Reduction Investment income Closing Closing
balance allowance investment in investment under equity method balance impairment allowance
Associates/joint ventures
Guangdong Jaten Robot & Automation
70,900,088.92 - - - 3,880,256.70 74,780,345.62 -
Co., Ltd.
XV. Notes to Major Items in the Company Financial Statements (cont’d)
3. Long-term equity investments (cont’d)
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
2020
Opening Change in the period Period-end
Opening
impairment Additional Reduction Impairment Closing Closing
balance allowance investment in investment allowance balance impairment allowance
Subsidiaries
Dong Fang Precision (HK) Limited 1,856,010.00 - - - - 1,856,010.00 -
Dongfang Precision (Netherland) 307,666.80 - - - - 307,666.80 -
Guangdong Fosber Intelligent Equipment
16,738,279.20 - - - - 16,738,279.20 -
Co., Ltd.
Suzhou Shunyi Investment Co., Ltd. 305,584,828.17 - - - - 305,584,828.17 -
Suzhou Parsun Power Machine Co., Ltd. 106,359,575.73 (61,855,054.35) - - - 106,359,575.73 (61,855,054.35)
Foshan Yinglian Digital Printing
- - 21,903,462.34 - - 21,903,462.34 -
Equipment Co., Ltd.
Dongfang Digicom - - 3,000,000.00 - - 3,000,000.00 -
430,846,359.90 (61,855,054.35) 24,903,462.34 - - 455,749,822.24 (61,855,054.35)
Opening Change in the period Period-end
Opening
impairment Additional Reduction Investment income Closing Closing
balance allowance investment in investment under equity method balance impairment allowance
Associates/joint ventures
Foshan Yinglian Digital Printing
10,510,735.47 - - 10,510,735.47 - - -
Equipment Co., Ltd.
Guangdong Jaten Robot & Automation
60,136,740.98 - 7,700,000.00 - 3,063,347.94 70,900,088.92 -
Co., Ltd.
70,647,476.45 - 7,700,000.00 10,510,735.47 3,063,347.94 70,900,088.92 -
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
XV. Notes to Major Items in the Company Financial Statements (cont’d)
4. Operating revenue and costs
2021 2020
Revenue Costs Revenue Costs
Principal operations 384,635,560.97 244,033,927.30 347,742,217.13 215,188,639.98
Other operations 102,121,739.94 12,332,173.69 10,078,539.01 1,398,778.91
486,757,300.91 256,366,100.99 357,820,756.14 216,587,418.89
Operating revenue is as follows:
2021 2020
Revenue arising from contracts with
customers 482,430,794.95 355,070,169.20
Lease revenue 4,326,505.96 2,750,586.94
486,757,300.91 357,820,756.14
Breakdown of operating revenue arising from contracts with customers is as follows:
2021
Reporting segments Total
Principal place of business
Mainland China 214,959,492.22
Other regions 267,471,302.73
482,430,794.95
XV. 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)
2021 (cont’d)
Principal product type
Goods 384,634,428.23
Services 59,271,971.21
Interest income 30,955,048.35
Others 7,569,347.16
482,430,794.95
By revenue recognition time
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Revenue recognition at a point of time 392,203,775.39
Sale of goods 384,634,428.23
Others 7,569,347.16
Revenue recognition for a period of time 90,227,019.56
Rendering of services 59,271,971.21
Interest income 30,955,048.35
XV. Notes to Major Items in the Company Financial Statements (cont’d)
4. Operating revenue and costs (cont’d)
Revenue recognized in the period included in the book value of contractual liabilities at the beginning of year
is as follows:
2021
Advances on sales 22,116,154.74
The Company’s information about contractual performance obligations is as follows:
Sale of manufactured goods
Contractual performance obligations are fulfilled when delivering manufactured goods to
customers, and normally the payment in advance for some customers are needed.
Rendering of services
Contractual performance obligations are fulfilled during the rendering of services.
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:
2021 2020
Within 1 year 21,697,782.14 22,116,154.74
5. Investment income
2021 2020
Dividends under cost method 18,992,000.00 58,868,681.95
Income from disposal of long-term equity
investments 21,681,323.17 -
Income from financial assets held for trading 13,531,732.69 50,739,231.14
Income from long-term equity investments
measured at equity method 3,880,256.70 2,889,349.81
58,085,312.56 112,497,262.90
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
XV. 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
2021 2020
Fosber Group Purchases of goods 4,134.82 5,055.07
Italy EDF Purchases of goods 1,423,463.44 1,368,331.66
1,427,598.26 1,373,386.73
Sales of goods and services to related parties
Nature of transaction 2021 2020
Sales of goods
Dongfang Precision (HK) Sales of goods 104,120,103.27 90,284,263.88
Dongfang Precision (Netherland) Sales of goods 34,585,113.86 48,316,946.34
Fosber ASIA Sales of goods 7,016,887.07 3,737,965.90
Italy EDF Sales of goods 8,028,881.97 7,827,461.53
153,750,986.17 150,166,637.65
Rendering of services
Hainan Yineng Rendering of services 45,999,823.31 -
Fosber ASIA Rendering of services 4,297,934.53 2,636,301.22
Italy EDF Rendering of services 631,728.39 -
Fosber ASIA Rendering of services 246,169.29 3,088,035.44
Yinglian Digital Rendering of services 105,216.14 -
Digicom Guangdong Rendering of services 9,312.91 -
51,344,849.78 5,724,336.66
XV. Notes to Major Items in the Company Financial Statements (cont’d)
6. Major transactions between the Company and related parties (cont’d)
(2) Interest income of related parties
Nature of transaction 2021 2020
Hainan Yineng Interest income 30,593,754.97 -
Yinglian Digital Interest income 227,996.66 -
Dongfang Digicom Interest income 56,624.19 -
Digicom Guangdong Interest income 76,672.53 -
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
30,955,048.35 -
(3) Interest expenses of related parties
Nature of transaction 2021 2020
Dongfang Precision (Netherland) Interest expenses 605,927.88 -
(4) Lending to and borrowing from related parties
Borrowing from related parties
2021
Borrowing amount Start date End date
Hainan Yineng 50,000,000.00 2021/10/29 2021/12/1
Hainan Yineng 50,000,000.00 2021/11/24 2021/12/1
Hainan Yineng 50,000,000.00 2021/11/24 2022/2/10
Dongfang Precision (Netherland) 88,751,250.00 2021/5/7 2022/5/6
Dongfang Precision (Netherland) 1,548,180.00 2021/6/2 2022/6/1
Dongfang Precision (Netherland) 773,152.06 2021/3/3 2022/3/2
241,072,582.06
XV. Notes to Major Items in the Company Financial Statements (cont’d)
6. Major transactions between the Company and related parties (cont’d)
(4) Lending to and borrowing from related parties(cont’d)
Lending to related parties
2021
Lending amount Start date End date
Hainan Yineng 200,010,000.00 2021/1/7 2026/1/6
Hainan Yineng 100,000,000.00 2021/1/5 2026/1/4
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
Hainan Yineng 30,000,000.00 2021/3/16 2026/3/15
Hainan Yineng 64,500,000.00 2021/6/21 2026/6/20
Hainan Yineng 35,500,000.00 2021/7/5 2026/7/4
Foshan Yinglian 5,545,083.84 2021/12/10 2022/12/9
Foshan Yinglian 3,377,458.98 2021/8/4 2022/8/3
Foshan Yinglian 911,263.10 2021/10/15 2022/10/14
Foshan Yinglian 463,213.20 2021/4/15 2022/4/14
Foshan Yinglian 239,012.32 2021/6/21 2022/6/20
Foshan Yinglian 192,577.32 2021/12/8 2022/12/7
Foshan Yinglian 114,770.60 2021/8/18 2022/8/17
Foshan Yinglian 92,227.10 2021/8/12 2022/8/11
Foshan Yinglian 58,874.20 2021/12/10 2022/12/9
Dongfang Digicom 1,000,000.00 2021/7/14 2026/7/13
Dongfang Digicom 950,000.00 2021/11/12 2026/11/11
Dongfang Digicom 1,000,000.00 2021/12/24 2026/12/23
Digicom Guangdong 600,000.00 2021/7/14 2026/7/13
Digicom Guangdong 1,000,000.00 2021/9/10 2026/9/9
Digicom Guangdong 950,000.00 2021/11/12 2026/11/11
Digicom Guangdong 950,000.00 2021/11/24 2026/11/23
Digicom Guangdong 1,000,000.00 2021/12/24 2026/12/23
448,454,480.66
XV. Notes to Major Items in the Company Financial Statements (cont’d)
6. Major transactions between the Company and related parties (cont’d)
(5) Guarantees for related parties
Provision of guarantees for related parties
2021
Having
Amount of Start End
expired or
guarantee date date
not
Dongfang Precision
(Netherland) 241,859,950.00 2020/6/29 2023/6/29 No
Dongfang Precision
(Netherland) 177,604,620.00 2021/2/3 2022/2/3 No
2020
Amount of Start End Having
guarantee date date expired or
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
not
Dongfang Precision
(Netherland) 273,542,500.00 2017/8/10 2020/8/17 Yes
Dongfang Precision
(Netherland) 360,162,000.00 2020/3/16 2021/2/18 No
Dongfang Precision
(Netherland) 268,837,500.00 2020/6/30 2023/6/29 No
7. Balances of amounts due from related parties
(1) Accounts receivable
2021 2020
Gross amount Allowance Gross amount Allowance
Dongfang Precision (HK) 77,716,283.13 - 72,788,759.87 -
Dongfang Precision 33,917,508.35 - 45,490,692.42 -
(Netherland)
Italy EDF 2,666,531.33 - - -
Fosber ASIA 1,934,399.54 - 849,666.09 -
Yinglian Digital 778,894.24 - 660,000.00 -
117,013,616.59 - 119,789,118.38 -
XV. Notes to Major Items in the Company Financial Statements (cont’d)
7. Balances of amounts due from related parties (cont’d)
(2) Other receivables
2021 2020
Gross amount Allowance Gross amount Allowance
Hainan Yineng 412,234,185.81 - - -
Yinglian Digital 15,156,527.09 - 237,912.63 -
Digicom Guangdong 4,704,601.17 - - -
Dongfang Digicom 3,065,170.33 - - -
Shunyi Investment 1,698,000.00 - 1,698,000.00 -
Suzhou High-Tech
Zone Jinquan
903,000.00 - - -
Business
Fosber ASIA
Management 447,649.04 - 2,479,766.39 -
Dongfang Precision
Partnership (Limited 13,854.53 - 11,970,591.46 -
(Netherland)
Partnership)
438,222,987.97 - 16,386,270.48 -
Except the borrowings receivable from related parties, all receivables from related parties are non-interest
bearing, unsecured, and have no fixed repayment period.
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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
XV. Notes to Major Items in the Company Financial Statements (cont’d)
8. Balances of amounts due to related parties
(1) Accounts payable
2021 2020
Italy EDF 88,980.71 -
Dongfang Precision (Netherland) 46,755.18 -
Dongfang Precision (HK) 5,852.89 -
Fosber Group - 19,745.16
141,588.78 19,745.16
(2) Other payables
2021 2020
Dongfang Precision (Netherland) 91,664,646.54 12,129.71
Hainan Yineng 50,000,000.00 -
Fosber ASIA 1,138,167.89 -
Yinglian Digital 11,020.46 28,313.20
Italy EDF - 5,956,620.45
Dongfang Precision (HK) - 3,947,502.90
Fosber Group - 363,915.30
142,813,834.89 10,308,481.56
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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Guangdong Dongfang Precision Science & Technology Co., Ltd. Annual Report 2021
1. Schedule of exceptional gains and losses
2021
Gain or loss on disposal of non-current assets (inclusive of impairment
allowance write-offs) (65,995.13)
Government grants through profit or loss 14,700,007.84
Gain or loss on fair-value changes on held-for-trading and derivative financial
assets and liabilities & income from disposal of held-for-trading and
derivative financial assets and liabilities and other debt investments 73,435,063.51
Non-operating income and expenses other than the above 4,779,490.65
Subtotal of non-recurring gain or loss 92,848,566.87
Income tax effects (6,017,410.70)
Subtotal of non-recurring gain or loss, net of tax 86,831,156.17
Non-controlling interests effects (net of tax) (303,722.38)
86,527,428.79
2. Return on equity (ROE) and earnings per share (EPS)
2021
Weighted average ROE (%) EPS
Basic Diluted
Net profit attributable to ordinary
shareholders of the Company 11.72 0.35 0.35
Net profit attributable to ordinary
shareholders of the Company before
exceptional gains and losses 9.55 0.29 0.28
2020
Weighted average ROE (%) EPS
Basic Diluted
Net profit attributable to ordinary
shareholders of the Company 6.20 0.26 0.26
Net profit attributable to ordinary
shareholders of the Company before
exceptional gains and losses 4.10 0.18 0.18
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