Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 FOSHAN ELECTRICAL AND LIGHTING CO., LTD. INTERIM REPORT 2022 August 2022 1 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 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 Foshan Electrical and Lighting Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee the factuality, accuracy and completeness of the contents of this Report and its summary, and shall be jointly and severally liable for any misrepresentations, misleading statements or material omissions therein. Wu Shenghui, the Company’s legal representative, Tang Qionglan, the Company’s Chief Financial Officer (CFO), and Liang Yuefei, the person-in-charge of the Company’s accounting organ (equivalent to accounting manager) hereby guarantee that the Financial Statements carried in this Report are factual, accurate and complete. All the Company’s directors have attended the Board meeting for the review of this Report and its summary. Any plans for the future and other forward-looking statements mentioned in this Report and its summary shall NOT be considered as absolute promises of the Company to investors. Therefore, investors are reminded to exercise caution when making investment decisions. The Company has described in detail in this Report the risk of macro-economic fluctuations and intensified market competition, the risk of rising raw material prices, the risk of exchange rate fluctuations, and the risk of the recoverability of accounts receivable. Please refer to the section headed “Risks Facing the Company and Countermeasures” in Item X of Part III of this Report. The Company has no interim dividend plan, either in the form of cash or stock. This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese versions shall prevail. 2 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 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 ............................................................................... 9 Part IV Corporate Governance ...................................................................................................... 34 Part V Environmental and Social Responsibility ......................................................................... 35 Part VI Significant Events ............................................................................................................... 45 Part VII Share Changes and Shareholder Information ............................................................... 76 Part VIII Preferred Shares ............................................................................................................. 83 Part IX Bonds ................................................................................................................................... 84 Part X Financial Statements ........................................................................................................... 85 3 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Documents Available for Reference 1. The financial statements signed and stamped by the Company’s legal representative, Chief Financial Officer, and the person-in-charge of the Company’s accounting organ. 2. The originals of all the Company’s announcements and documents disclosed to the public during the Reporting Period on the media designated by the CSRC for information disclosure. 4 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Definitions Term Definition Foshan Electrical and Lighting Co., Ltd. and its consolidated subsidiaries, The “Company”, “listed company”, “FSL” or “we” except where the context otherwise requires Rising Group Guangdong Rising Holdings Group Co., Ltd. Electronics Group Guangdong Electronics Information Industry Group Ltd. Hong Kong Rising Investment Rising Investment Development Limited Hongkong Wah Shing Hongkong Wah Shing Holding Company Limited Guangdong Rising Capital Investment Co., Ltd. (formerly known as Rising Capital “Guangdong Rising Finance Holding Co., Ltd.”) Shenzhen Rising Investment Shenzhen Rising Investment Development Co., Ltd. NationStar Optoelectronics Foshan NationStar Optoelectronics Co., Ltd. (stock code: 002449) NationStar Semiconducto Foshan NationStar Semiconductor Technology Co., Ltd. Sigma Foshan Sigma Venture Capital Co., Ltd. Nanning Liaowang Nanning Liaowang Auto Lamp Co., Ltd. CSRC China Securities Regulatory Commission SZSE Shenzhen Stock Exchange General meeting General meeting of Foshan Electrical and Lighting Co., Ltd. Board of Directors The board of directors of Foshan Electrical and Lighting Co., Ltd. Supervisory Committee The supervisory committee of Foshan Electrical and Lighting Co., Ltd. Annual report auditor Zhongzheng Tiantong Certified Public Accountants LLP Expressed in the Chinese currency of Renminbi, expressed in tens of thousands RMB, RMB’0,000, RMB’00,000,000 of Renminbi, expressed in hundreds of millions of Renminbi 5 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Part II Corporate Information and Key Financial Information I Corporate Information Stock name FSL, FSL-B Stock code 000541, 200541 Stock exchange for stock Shenzhen Stock Exchange listing Company name in Chinese 佛山电器照明股份有限公司 Abbr. (if any) 佛山照明 Company name in English (if FOSHAN ELECTRICAL AND LIGHTING GO.,LTD any) Abbr. (if any) FSL Legal representative Wu Shenghui II Contact Information Board Secretary Securities Representative Name Huang Zhenhuan Huang Yufen No. 64, Fenjiang North Road, No. 64, Fenjiang North Road, Address Chancheng District, Foshan City, Chancheng District, Foshan City, Guangdong Province, P.R.China Guangdong Province, P.R.China Tel. (0757)82810239 (0757)82966028 Fax (0757)82816276 (0757)82816276 Email address fsldsh@chinafsl.com fslhyf@163.com III Other Information 1. Contact Information of the Company Indicate by tick mark whether any change occurred to the registered address, office address and their zip codes, website address and email address of the Company in the Reporting Period. □ Applicable Not applicable No change occurred to the said information in the Reporting Period, which can be found in the 2021 Annual Report. 2. Media for Information Disclosure and Place where this Report is Kept Indicate by tick mark whether any change occurred to the information disclosure media and the place for keeping the Company’s periodic reports in the Reporting Period. □ Applicable Not applicable The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing the Company’s periodic reports and the place for keeping such reports did not change in the Reporting Period. The said information can be found in the 2021 Annual Report. 6 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 3. Other Information Indicate by tick mark whether any change occurred to other information in the Reporting Period. □ Applicable Not applicable IV Key Financial Information Indicate by tick mark whether there is any retrospectively restated datum in the table below. Yes □ No Reason for retrospective restatement: Business combination involving entities under common control. H1 2021 Change (%) H1 2022 Before Restated Restated Operating revenue 4,348,268,999.31 1,955,342,116.20 3,626,200,260.17 19.91% (RMB) Net profit attributable to the listed company’s 160,664,433.28 110,555,542.93 122,377,552.60 31.29% shareholders (RMB) Net profit attributable to the listed company’s shareholders before 160,862,524.18 98,950,507.51 91,188,366.07 76.41% exceptional gains and losses (RMB) Net cash generated from/used in operating 150,034,906.39 45,779,640.52 446,213,006.20 -66.38% activities (RMB) Basic earnings per 0.1191 0.0820 0.0907 31.31% share (RMB/share) Diluted earnings per 0.1180 0.0812 0.0899 31.26% share (RMB/share) Weighted average 2.68% 1.82% 1.69% 0.99% return on equity (%) 31 December 2021 Change (%) 30 June 2022 Before Restated Restated Total assets (RMB) 14,393,387,239.50 9,699,592,528.61 16,317,843,693.47 -11.79% Equity attributable to the listed company’s 5,373,874,037.57 5,800,558,588.34 6,986,502,976.72 -23.08% shareholders (RMB) V 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 Differences under CAS and IFRS □ Applicable Not applicable No such differences for the Reporting Period. 7 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 2. Net Profit and Equity Differences under CAS and Foreign Accounting Standards □ Applicable Not applicable No such differences for the Reporting Period. XI Exceptional Gains and Losses Applicable □ Not applicable Unit: RMB Item Amount Note Gain or loss on disposal of non-current assets (inclusive of impairment -5,723,365.37 allowance write-offs) Government subsidies charged to current profit or loss (exclusive of government subsidies consistently given in the 31,578,978.53 Company’s ordinary course of business at fixed quotas or amounts as per government policies or standards) Capital occupation charges on non- financial enterprises that are recognized 213,042.31 in profit or loss Current profit or loss on subsidiaries obtained in business combinations involving entities under common control 9,568,639.83 from the period-beginning to combination dates, net Gain or loss on fair-value changes on held-for-trading financial assets and liabilities & income from disposal of held-for-trading financial assets and -8,997,858.09 liabilities and available-for-sale financial assets (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) Non-operating income and expense other 6,044,307.77 than the above Less: Income tax effects 4,010,901.27 Non-controlling interests effects (net of 28,870,934.61 tax) Total -198,090.90 Details of other items that meet the definition of exceptional gain/loss: □ Applicable Not applicable No such cases for the Reporting Period. Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item 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. 8 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Part III Management Discussion and Analysis I Principal Activity of the Company in the Reporting Period (I) Principal business The Company has been committed to the R&D, production and sale of high-quality and energy-efficient lighting products in order to provide integrated lighting solutions for customers. It has become the controlling shareholder of Nanning Liaowang Auto Lamp Co., Ltd. ("Nanning Liaowang") and Foshan NationStar Optoelectronics Co., Ltd. ("NationStar Optoelectronics") through M&A since 2021. At present, the principal business of the Company mainly includes the R&D, production and sale of general lighting products, electrical products, automotive lighting products, and LED packaging products. The general lighting business of the Company mainly covers LED light sources, LED luminaries, traditional lighting products and comprehensive lighting solutions for home lighting, commercial lighting, industrial lighting, municipal road lighting and landscape lighting. Over recent years, the Company has been exploring new fields, including smart lighting, healthy lighting, marine lighting, and animal and plant lighting. Electrical products mainly include switches, sockets, smart control panels, and smart door locks. Based on its own automotive light sources and modules, the Company, relying on its majority-owned subsidiary Nanning Liaowang, has expanded the automotive lighting business into the automotive light assembly sector, involving basically all the lights that an automobile requires, such as headlights, rear light combos, fog lights, backup lights, interior lights, and license plate lights. The main clients of Nanning Liaowang include SAIC- GM-Wuling Automobile, Chongqing Changan Automobile, Bestune, SAIC Maxus Automotive, Dongfeng Liuzhou Motor, Dongfeng Sokon, and other whole-automobile manufacturers. Additionally, Nanning Liaowang is an original equipment manufacturer ("OEM") of HASCO Vision. The Company conducts LED packaging business mainly by relying on its majority-owned subsidiary NationStar Optoelectronics (stock code: 002449). The LED packaging business mainly involves components (including components for display, lighting, indicating and non-visual lighting), modules (including display and backlight modules as well as mini backlight modules), and LED epitaxial wafers and chips (including epitaxial wafers and LED chips with various power ratings and specifications) that are widely used for consumer electronics, home appliances, computers, communications, display and lighting products, general lighting, automotive lights, sterilization and purification, plant lighting, and other fields. (II) Industry development The increasingly stable lighting market, coupled with the impacts of the recurring COVID-19 and high raw material prices, has shrunk the profits of enterprises to some extent. Moreover, the industry reshuffle is still in progress. Enterprises with advantages in technology, fund and brand are gradually expanding their market shares, and high-quality resources are being channeled to leading enterprises. Meanwhile, the guidance of national policies such as the "carbon emission peak and carbon neutrality" goals, new infrastructure 9 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 construction, new urbanization, and major project construction, and the constantly expanding lighting application market, have also brought new development opportunities for the lighting industry. As automotive lights are core parts of an automobile, the automotive light industry development is closely linked to the development of the automotive industry. According to the statistics of the China Association of Automobile Manufacturers ("CAAM"), hit by the sporadic COVID-19 cases, the automobile output and sales in China for H1 2022 reached 12,117,000 and 12,057,000, respectively, representing a certain decline year on year. Nevertheless, supported by the 50% reduction in the vehicle purchase tax and policies unveiled by local governments to boost automobile consumption, the growth of automobile output and sales recovered significantly. For instance, the output and sales of alternative fuel vehicles hit a record high, with a market penetration of 21.6% and increasing the prosperity index. With the development of automotive industry technologies, the increasingly electronic and smart automotive light-related technologies enable automotive lights to carry more functions in addition to traditional lighting to facilitate driving and transmit signals, thereby improving driving safety and making driving more comfortable. As the penetration of smart automotive lights with a higher value per automobile increases, the automotive light industry will witness another round of expedited growth. The development of information technologies, such as 5G commercialization, Internet of Things ("IoT"), and smart cities, has increased consumers' attention to and demand for visual experience and set the trend towards large-size display terminals with ultra-high definition ("UHD"). With the emergence of a constant stream of new application sub-industries, the small spacing industry will usher in rapid growth. Meanwhile, the industrialized application of Mini/Micro LED, a new generation of core display technology, has entered a critical stage. With the constant increase in the number of investor enterprises, the industry chain participation scope is being continuously expanded. Additionally, the joint support of governments, enterprises, and funds will take the Mini/Micro LED industry onto the "fast track" and give the LED packaging industry a fresh impetus for development. (III) Business models 1. Procurement model The Company's procurement department should ensure that the procured materials and products meet the prescribed requirements and that procurement activities are under control. Besides, it should consider the needs of each department and the reasonable stock quantity before carrying out any procurement, determine suppliers by means of bidding, price negotiation, and price comparison, and follow up on the procurement orders. There should be several backup suppliers of each principal raw material to ensure fair procurement price, timely material supply, and high quality. 2. Production model For routine products, the production plan for the next month is prepared based on the analysis of the sales of each month and changes in the future market demand and the safe stock benchmark. Each production department produces products as planned so as to control the stock and meet the sales demand. For customized products, the make-to-order strategy is implemented to effectively control the stock quantity of raw materials, reduce the funds that are tied up, and improve the Company's operational efficiency. 10 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 3. Sales model In terms of general lighting, for domestic sales, the Company adopts the model of agency distribution and direct supply to engineering projects. For channels, the Company boasts hardware distribution, home, engineering, industrial lighting, commercial distribution, and e-commerce & retail sale channels. For foreign sales, the Company adopts the models of OEM and independent brands. The sale of products of independent brands abroad is carried out mainly via agencies. In terms of automotive lighting, in the factory-installed market, the model of supplying automotive light products directly to OEMs is mainly adopted; in the aftermarket, products are mainly sold by agencies. In terms of LED packaging, the direct sale model is mainly adopted, in which products are sold through direct communication with clients. (IV) Main driving forces for growth Closely following the development trends in the industry, the Company upholds the overall idea of "stabilizing the fundamentals and expanding new businesses", continuously strengthens the innovation driver and refines the business portfolio. Additionally, it promotes the change of the marketing model, intensifies management improvement, and vigorously explores market segments. Since 2021, the Company has acquired Nanning Liaowang and NationStar, which has provided strong support for the Company to rapidly enter the OEM market and make the automobile vehicle lamp business of the Company stronger and bigger, as well as to strengthen integration upstream and downstream of the industrial chain of LED. Meanwhile, with the evolution of the industrial competition model, consumers are getting increasingly concerned with product quality and brand. As a result, companies with weak competitiveness will be gradually elbowed out of the market while large enterprises or enterprises with core competitiveness will have more market opportunities. By virtue of its advantages in technology, brand, channel and scale, the Company has continued to promote the technical upgrading of main products, improve product quality, beef up market expansion and optimize the business portfolio through sustained spending on R&D and technical innovation. Meanwhile, it has gained an advantageous position in the process of enhancing market concentration by increasing the level of production automation, effectively controlling purchase costs and ramping up production efficiency. II Core Competitiveness Analysis During the Reporting Period, through continued accumulation, the Company’s core competitiveness has been further enhanced, which is mainly reflected in the following aspects: Channel advantage The Company has been sticking to the market strategy of deeply cultivating and refining channels. Over years of development and experience, the Company has been equipped with six major sales channels in domestic market (hardware distribution, home, engineering, industrial lighting, commercial distribution, and e-commerce & retail sales channels), forming a marketing network covering the whole country; in foreign market, the Company has made active steps to develop international market business, sold products to more than 120 countries and regions in North America, Europe, Southeast Asia, Africa and Oceania, and kept improving overseas sales channel. By virtue of its powerful and comprehensive sales channels, the Company has enabled its products to enter market rapidly, substantially enhancing its market development abilities and competitiveness. Nanning Liaowang is one of the leading enterprises in the Chinese automotive light industry. 11 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 It has accumulated stable whole-automobile manufacturing clients of domestically-owned brands and has been developing such clients of joint-venture brands. Its client entities are increasingly diverse, and the market share of its micro automotive lights ranks first in China. NationStar Optoelectronics has an excellent client structure. It has established a long-term cooperative relationship with industry-leading display manufacturers and internationally famous home appliance enterprises, and is widely recognized by end clients and the market. Brand advantage The Company has accumulated more than 60 years' experience in the lighting industry and enjoyed continuously increasing influence and brand value for its "FSL". For 17 consecutive years, the Company has been included in the list of "China's 500 Most Valuable Brands". In 2022, the value of FSL brand reached RMB26.529 billion. In recent years, with the enhancement of its development positioning, product design and user experience, the Company has initiated the strategy of brand upgrading and carried out promotion by centering around the new "Professional, Healthy, Fashionable and Intelligent". In addition, it has accelerated brand building through high-end mainstream media platform, Internet emerging media and offline terminal advertising respectively, maximized the brand and product communication effect, formed a comprehensive and diversified publicity position, and driven the transition of “FSL” from an industrial brand to a popular brand to maintain the brand vitality and competitiveness. The brand "FSL" has become one of the most influential and popular industrial brands in China, and the powerful brand influence has played a key role in driving the sustained growth of the Company’s sales. Nanning Liaowang strictly abides by the national industry standards when producing automotive lights of the "Liaowang" brand. It has been hailed as a high-quality supplier of related OEMs several times. NationStar Optoelectronics has been awarded honors such as "National High-tech Enterprise Certification", "Brand Power", "Top 10 LED Packaging Brands", "2020 Invisible Champion Enterprise in the Manufacturing Industry in Foshan", and "Award for Annual Innovative Products in LED Display Supply Chain", which constantly enhances its image of professionalism and brand advantages. R&D technical advantage The Company values the R&D of new products and the development of innovation and R&D teams, and has established a systematic and scientifically independent science and technology innovation system, and a team of well-structured, collaborative and efficient talents. It has further increased spending on technology and independent product innovation and introduced first-class R&D equipment and facilities from home and abroad to provide high-quality conditions for scientific and technological innovation. The Company is a national high- tech company, and its testing center has the CNAS-approved qualification. In addition, the Company has built innovative platforms such as "Guangdong Engineering Technology Development Center", "Guangdong Industrial Design Center", "Guangdong Enterprise Technology Center", and "Lighting Research Institute". Besides, the Company has won the titles of "National IP Advantaged Enterprise" and "Guangdong IP Demonstration Enterprise". The Company has built a "Guangdong Province Doctor Workstation" to explore and intensify efforts in the cutting-edge technology of LEDs, strengthen key technology research and basic research, and form technical barriers with proprietary intellectual property rights in lighting, spectroscopic, electrical, IoT, AI and many other fields. The Company and its majority-owned subsidiaries have been cumulatively granted 1,845 valid patents. Also, they have led or participated in the formulation or revision of 113 standards at all levels. The Company actively integrates internal and external resources and collaborates with Tsinghua University, Fudan University, Sun Yat-sen University, South China University of Technology, Institute of Deep-Sea Science and Engineering, CAS and other scientific research institutes to establish in-depth industrial 12 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 and research cooperation, so as to promote key technological breakthroughs and transformation of scientific and technological achievements. Meanwhile, the Company has formed a smooth R&D talent cultivation channel to provide a strong guarantee for the Company to maintain technological leadership and continuous product innovation. Nanning Liaowang boasts provincial-level enterprise technology centers, provincial-level R&D centers, Guangxi Engineering Technology Research Center for Automotive Lighting Parts, and the Shanghai R&D center. In recent years, Nanning Liaowang has increased R&D investment, especially in the R&D investment and marketing of the ultra-thin and ultra-compact LED module, multi-pixel ADB module, close shot projection module, ultra HD module, laser headlight module, and interactive headlight and control system. Besides, the R&D of smart, interactive rear lights, OLED rear lights, and the RGB interior ambient light and control system is strengthened. These efforts enable the R&D capacity of Nanning Liaowang to be constantly enhanced. NationStar Optoelectronics has successfully created 14 R&D platforms, including the National- and local-joint Engineering Laboratory for Semiconductor Lighting Materials and Components. Besides, it has won honors such as "National Intellectual Property Demonstration Enterprise", "China Award for Excellent Patents", "Guangdong Science and Technology Progress Award (first/second prize)", and "2021 Advanced Technology Golden Globe Award for Innovative Technologies". Moreover, it has constantly made breakthroughs and surmounted technological challenges in emerging areas such as Mini/Micro LED, the third generation of semiconductor, smart wear, non-visual light source, automotive components, and new optoelectronic components. Scale advantage As one of the enterprises to first step into the industry of producing and selling lighting products, the Company forms a capability of mass manufacturing by years of experience accumulation. After years of continuous investment, the Company has greatly improved its production automation level. The large-scale and centralized production brings obvious economic benefits to the Company, which not only shows in manufacture cost of products, but also shows in aspects such as raw material procurement and price negotiation. With manufacturing bases in Nanning, Liuzhou, Chongqing, Qingdao, and Indonesia, Nanning Liaowang has an annual production capacity of more than five million sets of automotive lights. It is the largest automotive light manufacturer in southwestern China. NationStar Optoelectronics began engaging in LED packaging in 1976. It is included in the first batch of enterprises that have produced LED products and the first Chinese enterprise to go public with LED packaging as its principal business. Besides, it is one of the largest LED manufacturers in China. Advantage of a vertical and integrated LED industrial chain By controlling NationStar Optoelectronics, whose business covers the entire LED industry chain, including upstream LED chip manufacturing, midstream LED packaging, and downstream LED application products, the Company has optimized the industry chain and enhanced its competitiveness and visibility in the industry. III Analysis of Principal Operations (I) Overview During the Reporting Period, the Company acted on the general principle of seeking progress while maintaining stability and conscientiously implemented various key tasks and measures relating to production and operation. 13 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Through management enhancement inside and market expansion outside, the Company achieved a steady, high quality year-on-year increase in operating revenue and profit. During the Reporting Period, the Company recorded operating revenue of RMB4348.269 million, up 19.91% year on year, and a net profit attributable to its shareholders of RMB160.6644 million, increasing by 31.29% year on year. During the Reporting Period, the Company mainly focused on the following tasks: 1. The Company focused on operational improvement as well as cost reduction and efficiency improvement. First, the Company made efforts to reduce costs. In H1 2022, based on the forecast of the price trend, the Company reduced the procurement cost of raw materials through negotiation, the introduction of new suppliers, large-quantity procurement for lower prices, and replacement with new materials. Additionally, measures such as robot assembling line, automated production, setting quotas for material consumption, and process and procedure optimization were employed to reduce manufacturing costs. Second, the Company made efforts to improve efficiency. Aside from striving to improve product quality, the Company also raised the sales prices of products pari passu, which effectively increased the gross profit margin on product sales. Third, the Company made efforts to reduce stocks. A stock control mechanism was established to supervise the stock reduction monthly in strict compliance with the baseline, cordon, and top prohibitions and to push ahead with the clearance of the backlog of products. Fourth, the Company made efforts to strengthen management. Based on the arrangements for benchmarking management improvement and "three refinements in management", as well as the realities, the Company formulated the "three refinements in management" plan with "five optimizations, six decreases, and seven reductions" at the core, clarified the task list and division of duties, defined the promotion junctures, and quantified the short- and medium-term goals. 2. The Company enhanced its competitive awareness and expanded the incremental market. First, the Company made all-around efforts to pave the way for its development in sub-fields. In terms of marine lighting, attention was paid to deep-sea lighting, fish-collecting lighting, and aquaculture lighting. In H1 2022, the Company built sales outlets and experiencing zones (halls) in coastal provinces in China and Southeast Asian markets. Besides, the Company sped up its cooperation with large enterprises and aquaculture demonstration bases, and the marine lighting market was gradually laid out. In terms of smart lighting, the "Scan to Connect" light smart product line, microwave sensor light, and other smart products and solutions were rolled out. In terms of healthy lighting, the Company launched the third generation of high-quality products in an iterative manner from the perspectives of eyesight protection, rhythm health, disinfection, and sterilization. Besides, the Company was the first enterprise to roll out the visible light "photocatalysis" disinfection product line and combine the functions of "eyesight protection and disinfection". Second, the Company vigorously expanded project sources. Concentrating on the fore-end planning and design of projects and technological innovation and application, the Company strengthened its cooperation with design institutes by signing framework agreements on strategic cooperation with them, which expanded project sources. Third, the Company expanded and strengthened the automotive light business. Nanning Liaowang proactively progressed towards the middle- and high-end markets by strengthening product R&D and optimizing product structure. Besides, it secured multiple new automobile OEM clients. During the Reporting Period, Nanning Liaowang had 19 new projects to develop automotive lights for new automotive models, five of which have entered the mass production stage. The new projects laid a solid foundation for the future development of Nanning Liaowang. 14 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 3. The Company stuck to the innovation-driven development strategy and constantly improved its technological strength. First, a constant stream of new products was developed and launched. Based on the market demand, the Company formulated more than 300 plans for the R&D and upgrading of new products. Additionally, it rolled out over 100 differentiated, functional new products, three of which were awarded the Guangdong Certificate for Famous and High-quality High-tech Products. Second, the industry-university-research cooperation was intensified. Four external R&D teams were engaged by the Company to facilitate its R&D and innovation. The Company also cooperated with multiple well-known research institutes and universities to research 12 core technologies in the fields such as new materials, new technologies, and smart control. Third, the development and application of new automotive light technologies were strengthened. Nanning Liaowang strengthened the development and application of technologies such as the 24-pixel ADB module, the laser headlight module, static projector light, microlens array-based ("MLA-based") projector light, and LED high and low beam lens modules of different specifications, thereby accelerating the creation of middle- and high-end products. Fourth, the development of NationStar Optoelectronics in the fields of the third generation of semiconductors, automotive components, and new optoelectronic components and applications was expedited. Additionally, the Company constantly strengthened the creation and reserves of independent intellectual property rights in core fields, such as "Mini LED backlight", thereby promoting the transformation of technological achievements. Five of the Company's products were named the "2021 Guangdong Famous and High-quality High-tech Products", and the "Core Technologies and Application of LED Epitaxial Chips for Lighting Communications" project the Company participated in was awarded the "2021 Guangdong Science and Technology Progress Award (second prize)". (II)Year-on-year changes in key financial data: Unit: RMB H1 2021/31 December H1 2022/30 June 2022 Change (%) Main reason for change 2021 Operating revenue 4,348,268,999.31 3,626,200,260.17 19.91% Cost of sales 3,588,065,798.35 3,009,499,337.22 19.22% Selling expense 109,839,926.73 96,772,619.15 13.50% Administrative expense 177,742,698.77 139,620,767.72 27.30% Exchange rate Finance costs -24,000,645.39 -3,652,008.27 -557.19% fluctuations in the current period Income tax expense 41,141,912.01 43,339,378.75 -5.07% R&D expense 220,198,594.10 175,562,285.94 25.42% Affected by the market environment, collection Net cash generated of customer payments from/used in operating 150,034,906.39 446,213,006.20 -66.38% activities did not keep pace with payment to suppliers in the current period. Increase in cash generated from investing activities in Net cash generated the same period of last from/used in investing 121,925,617.82 533,469,077.41 -77.14% activities year as a result of the sale of the Gotion High-tech shares, as well as higher cash 15 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 payments for the construction and acquisition of fixed assets in the current period Payment for the acquisition of equity interests in subsidiary NationStar Net cash generated Optoelectronics under from/used in financing -790,808,665.96 -338,996,739.08 -133.28% common control, and activities increased cash used in other financing activities in the current period Decreased net cash Net increase in cash generated from -498,894,554.15 631,920,871.55 -178.95% and cash equivalents financing activities in the current period Redemption of wealth Held-for-trading management products 64,068,462.40 348,248,125.61 -81.60% financial assets upon maturity in the current period Decrease in input VAT withheld for Other current assets 54,343,517.04 125,675,148.17 -56.76% authentication and offsetting output VAT in the current period The combination of NationStar Optoelectronics, which was under common control with the Other non-current Company, was 49,992,676.97 499,349,770.41 -89.99% assets completed in the current period, and the prepayment for equity transfer made in the prior period was carried forward. Repayment of some Short-term borrowings 65,115,000.00 226,779,997.01 -71.29% short-term borrowings in the current period Changes in the fair value of forward forex Held-for-trading 6,544,500.00 9,367.37 69,764.86% settlement contracts as financial liabilities a result of exchange rate fluctuations Advances from Decrease in advances 4,959,545.56 8,106,923.79 -38.82% customers of rentals New long-term Long-term borrowings 556,590,467.75 / N/A borrowings in the current period Decreased liabilities of Other non-current subsidiary to be 11,334.19 22,653.46 -49.97% liabilities liquidated and de- registered New long-term Total non-current 943,420,783.03 422,440,916.99 123.33% borrowings in the liabilities current period Combination of Capital reserves 7,245,971.54 994,114,567.16 -99.27% NationStar 16 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Optoelectronics under common control in the current period Retirement of Treasury stock 82,165,144.15 250,600,874.54 -67.21% inventory shares in the current period Acquisition of subsidiary NationStar Optoelectronics under common control and Surplus reserves 86,780,516.19 741,353,347.96 -88.29% retirement of inventory shares in the current period, resulting in a charge to surplus reserves Total equity Combination of NationStar attributable to owners 5,373,874,037.57 6,986,502,976.72 -23.08% Optoelectronics under of the Company as the common control in the parent current period Acquisition of subsidiary Nanning Liaowang not under common control in Q3 2021, and increased R&D expense 208,176,593.76 144,120,095.18 44.45% R&D investments in the current period with the expanded R&D team and more R&D projects Increased interest on Interest expense 6,688,232.76 2,871,203.53 132.94% borrowings in the current period Increased dividend income from investments in other Return on investment 19,613,744.86 5,493,482.75 257.04% equity instruments and gains on forward forex settlement contracts in the current period Increased net profits of Share of profit or loss associates attributable of joint ventures and 650,457.40 75,266.51 764.21% to owners of the associates Company as the parent in the current period Changes in the fair value of forward forex Gain on changes in fair -10,766,595.97 1,929,788.30 -657.92% settlement contracts as value a result of exchange rate fluctuations Increased allowance Credit impairment loss -17,052,498.84 1,681,781.89 -1,113.95% for expected credit loss (“-” for loss) in the current period More assets were Asset disposal income disposed of and 82,362.19 1,782,280.34 -95.38% (“-” for loss) liquidized in the same period of last year Carryforwards of payables of subsidiary NationStar Non-operating income 8,961,693.96 3,948,332.41 126.97% Optoelectronics that it does not need to pay in the current period Increase in losses on Non-operating expense 7,844,063.02 3,694,645.11 112.31% the disposal of fixed 17 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 assets in the current period Net profit attributable Increased net profit in to owners of the 160,664,433.28 122,377,552.60 31.29% the current period Company as the parent Decreased amount of changes in the fair Other comprehensive value of investments in -128,025,149.83 -243,003,831.01 47.32% income, net of tax other equity instruments in the current period Other comprehensive Decreased amount of income, net of tax changes in the fair value of investments in attributable to owners -128,036,703.73 -243,003,831.01 47.31% other equity of the Company as the instruments in the parent current period Changes in the fair YoY decrease in value of investments in changes in the fair -128,132,332.34 -242,940,301.27 47.26% other equity value of shares of listed instruments companies’ stocks held Differences arising from the translation of Fluctuations of the foreign currency- 95,628.61 -63,529.74 250.53% RMB against foreign denominated financial currencies statements Other comprehensive Acquisition of subsidiary Nanning income, net of tax 11,553.90 / N/A Liaowang not under attributable to non- common control in Q3 controlling interests 2021 Decreased amount of changes in the fair Total comprehensive value of investments in 102,285,521.93 -48,001,351.54 313.09% income other equity instruments in the current period Decreased amount of Total comprehensive changes in the fair income attributable to value of investments in 32,627,729.55 -120,626,278.41 127.05% owners of the other equity Company as the parent instruments in the current period Material changes to the profit structure or sources of the Company in the Reporting Period: □ApplicableNot applicable No such changes in the Reporting Period. Breakdown of operating revenue: Unit: RMB H1 2022 H1 2021 As % of total As % of total Change (%) Operating revenue operating revenue Operating revenue operating revenue (%) (%) 4,348,268,999.3 3,626,200,260.1 Total 100% 100% 19.91% 1 7 By operating division Lighting products 2,582,524,778.7 1,896,058,034.8 59.39% 52.29% 36.20% and luminaries 9 4 Electronic 1,351,047,633.4 31.07% 1,448,541,391.3 39.95% -6.73% 18 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 component 5 6 manufacturing Export trade and 414,696,587.07 9.54% 281,600,833.97 7.77% 47.26% other By product category General lighting 1,794,373,850.4 1,755,458,345.6 41.27% 48.41% 2.22% products 8 0 LED packaging 1,285,748,494.9 1,383,007,531.6 29.57% 38.14% -7.03% and components 5 3 Auto lamps 788,150,928.31 18.13% 140,599,689.24 3.88% 460.56% Epitaxial and chip 57,483,341.92 1.32% 53,378,576.23 1.47% 7.69% products Trade and other 422,512,383.65 9.72% 293,756,117.47 8.10% 43.83% By operating segment 3,277,500,277.8 2,690,507,780.3 Domestic 75.37% 74.20% 21.82% 1 8 1,070,768,721.5 Overseas 24.63% 935,692,479.79 25.80% 14.44% 0 Operating Division, Product Category or Operating Segment Contributing over 10% of Operating Revenue or Operating Profit: Applicable □ Not applicable Unit: RMB YoY change in YoY change in YoY change in Operating Gross profit Cost of sales operating cost of sales gross profit revenue margin revenue (%) (%) margin (%) By operating division Lighting 2,582,524,77 2,087,165,69 products and 19.18% 36.20% 35.25% 0.57% luminaries 8.79 5.22 Electronic 1,351,047,63 1,128,493,11 component 16.47% -6.73% -5.73% -0.89% 3.45 2.05 manufacturing Export trade 414,696,587. 372,406,991. 10.20% 47.26% 38.35% 5.79% and other 07 08 By product category General 1,794,373,85 1,432,729,05 lighting 20.15% 2.22% 0.54% 1.33% products 0.48 4.18 LED packaging 1,285,748,49 1,059,578,82 and 17.59% -7.03% -5.18% -1.61% components 4.95 3.49 788,150,928. 654,436,641. Auto lamps 16.97% 460.56% 453.78% 1.02% 31 04 Epitaxial and 57,483,341.9 61,414,693.3 -6.84% 7.69% -9.52% 20.32% chip products 2 0 422,512,383. 379,906,586. Trade and other 10.08% 43.83% 35.23% 5.71% 65 34 By operating segment 3,277,500,27 2,644,676,04 Domestic 19.31% 21.82% 22.68% -0.57% 7.81 5.09 1,070,768,72 943,389,753. Overseas 11.90% 14.44% 10.49% 3.15% 1.50 26 Data of principal operations of the latest period adjusted according to the changed statistical caliber in the Reporting Period: 19 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 □ Applicable Not applicable IV Analysis of Non-Principal Operations Applicable □ Not applicable Unit: RMB As % of profit before Amount Source/Reason Recurrent or not tax Dividend income from other equity investments Return on investment 19,613,744.86 7.23% held during the period, Not and gains on forward forex settlement contracts Gain/loss on changes in Gain/loss on changes -10,766,595.97 -3.97% fair value of financial Not in fair value instruments Inventory valuation Asset impairments -23,388,143.98 -8.62% Not allowances Carryforward of subsidiary NationStar’s Non-operating income 8,961,693.96 3.30% payables that it no longer Not needs to make payment for Loss on retirement of Non-operating expense 7,844,063.02 2.89% Not non-current assets Receipt of continuing Other income 37,771,447.80 13.91% Not government grants Allowances for doubtful Credit impairment loss -17,052,498.84 -6.28% Not accounts Gains or losses on the Asset disposal income 82,362.19 0.03% disposal of non-current Not assets V Analysis of Assets and Liabilities 1. Significant Changes in Asset Composition Unit: RMB 30 June 2022 31 December 2021 Reason for Change in As % of total As % of total significant Amount Amount percentage (%) assets assets change Monetary 1,839,439,63 2,381,911,65 12.78% 14.60% -1.82% assets 6.83 5.35 Accounts 2,186,178,54 1,981,538,84 15.19% 12.14% 3.05% receivable 3.84 4.26 Contract assets 8,089,556.63 0.06% 8,561,303.10 0.05% 0.01% 1,819,669,43 1,969,998,98 Inventory 12.64% 12.07% 0.57% 0.66 8.39 Investment 42,165,255.3 43,347,824.3 0.29% 0.27% 0.02% property 7 4 Long-term 180,115,189. 181,545,123. equity 1.25% 1.11% 0.14% investments 99 09 3,337,546,19 3,360,339,91 Fixed assets 23.19% 20.59% 2.60% 7.41 0.95 Construction in 1,094,362,24 7.60% 1,087,261,05 6.66% 0.94% 20 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 progress 6.23 2.63 Right-of-use 11,363,508.0 14,126,206.0 0.08% 0.09% -0.01% assets 5 8 Short-term 65,115,000.0 226,779,997. 0.45% 1.39% -0.94% borrowings 0 01 Contract 161,528,315. 140,228,127. 1.12% 0.86% 0.26% liabilities 35 84 New long-term Long-term 556,590,467. borrowing in 3.87% 0.00 0.00% 3.87% borrowings 75 the current period Lease liabilities 7,287,442.67 0.05% 8,065,560.58 0.05% 0.00% 2. Major Assets Overseas □ Applicable Not applicable 3. Assets and Liabilities at Fair Value Applicable □ Not applicable Unit: RMB Gain/loss on fair- Cumulative Impairment Purchased value fair-value allowance Sold in the Beginning in the Other Ending Item changes in changes for the Reporting amount Reporting changes amount the charged to Reporting Period Period Reporting equity Period Period Financial assets 1. Held- for-trading financial assets 20,000,00 196,602.7 30,000,00 50,196,60 (exclusive 0.00 4 0.00 2.74 of derivative financial assets) 2. - Derivative 5,825,678 1,397,612 4,428,066 financial .18 .10 assets .08 4. Investment - 1,504,980 887,185,5 190,031,7 1,164,717 s in other 150,230,8 equity ,024.07 27.04 40.66 ,479.92 03.49 instruments Subtotal of - 1,530,805 887,185,5 30,000,00 190,031,7 1,216,311 financial 154,462,2 assets ,702.25 27.04 0.00 40.66 ,694.76 66.83 - Total of the 1,530,805 887,185,52 30,000,00 190,031,7 1,216,311 154,462,2 above ,702.25 7.04 0.00 40.66 ,694.76 66.83 Financial - 8,821,116 27,945,02 6,544,500 9,367.37 liabilities 6,535,132 .35 5.71 .00 21 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 .63 Details about other changes: Note: Gain/loss on fair-value changes recorded in equity in the current period was inclusive of value-added taxes payable arising from the sale of shares of the stocks including Gotion High-tech, Xiamen Bank, etc. Significant changes to the measurement attributes of the major assets in the Reporting Period: □ Yes No 4. Restricted Asset Rights as at the Period-End Unit: RMB Item Ending carrying Reason for restriction value Monetary assets 448,713,603.58 Security deposits for notes and performance bonds Notes receivable 821,993,782.57 In pledge for notes pool Fixed assets 265,763,688.91 Intangible assets 11,119,256.27 As mortgage and guarantee for related party, see XIV (III) “Guarantees” in Part X Long-term 1,081,877.32 prepaid expense Total 1,548,672,208.65 —— VI Investments Made 1. Total Investment Amount Applicable □ Not applicable Investment amount in the Reporting Investment amount in the same period of Change (%) Period (RMB) last year (RMB) 1,174,459,163.98 278,111,603.14 322.30% 2. Major Equity Investments Made in the Reporting Period Applicable □ Not applicable Unit: RMB Statu Inves Whet s as tment her Nam Date Share on retur invol Discl e of Inves Inves Fundi Inves Predi of Main holdi Prod the n in ved osure inves tment ted ng Partn tment cted discl busin ng uct date the in index tee meth amou Reso ers Durat retur osure esses perce type of the curre any (if enter ods nt urces ion n (if ntage balan nt legal any) prise any) ce perio actio sheet d ns Fosh Deve 1,517 Majo Own 26 Anno Self- 13,64 13,64 an lopm Acqu ,098, 21.48 Long rity- ershi Febru unce funde None 3,659 3,659 No Natio ent, ired 116.6 % -term owne p ary ment d .24 .24 nStar produ 2 d transf 2022 No. 22 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Opto ction subsi erred, 2022- electr and diary toget 014 her onics mark on with Co., eting relate Com Ltd. of d pletio LED credit n of and or’s Trans comp rights fers onent and of liabili s ties Asset s in Majo r Asset Acqu isitio ns discl osed on http:/ /ww w.cni nfo.c om.c n Anno unce ment No. 2022- 014 on Proje Com ct Own pletio inves ershi n of tment p Fosh Trans and transf an fers relate erred, Sigm Whol toget of d a ly- her 26 Asset plann Self- Vent Acqu 100.0 Long owne with Febru s in ing, funde None No ure ired 0% -term d relate ary Majo consu d Capit subsi d 2022 r lting diary credit al Asset and or’s Co., rights Acqu mana Ltd. and isitio geme liabili ns nt ties discl servi osed ces on http:/ /ww w.cni nfo.c om.c n 1,517 13,64 13,64 Total - - - - - - - - - - - ,098, 3,659 3,659 23 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 116.6 .24 .24 2 3. Major Non-Equity Investments Ongoing in the Reporting Period □ Applicable Not applicable 4. Financial Investments (1) Securities Investments Applicable □ Not applicable Unit: RMB Gain/ Accu Loss mulat on ed Purch Meas Begin Sold Gain/l Endin Initial fair- fair- ased Securi Securi Securi ureme ning in oss in g Accou Fundi invest value value in ty ty ty nt carryi Repor Repor carryi nting ng ment chang chang Repor type code name metho ng ting ting ng title source cost es in es ting d value Period Period value Repor charg Period ting ed to Period equity Invest Dome - ments sticall Gotio 83,01 Fair 887,4 698,2 9,344, 1,715, 781,3 in Self- y/Ove 00207 n value 96,81 4,485. 64,21 86,38 286.9 644.1 00,86 other funde rseas 4 High- metho 9,062. 13 8.75 4.47 4 8 9.60 equity d listed tech d 21 instru stock ments Invest Dome - ments sticall 152,9 Fair 575,9 188,8 180,6 14,33 341,8 Xiam in Self- y/Ove 60118 value 53,41 en 57,60 55,94 99,14 87,45 9,628. 56,74 other funde rseas 7 metho 1,741. Bank 6.83 4.40 2.57 3.72 75 9.40 equity d listed d 28 instru stock ments Fosha n Invest Dome branc ments sticall h of Fair in Self- y/Ove Guan 500,0 value 500,0 500,0 N/A other funde rseas gdong 00.00 metho 00.00 00.00 equity d listed Devel d instru stock opme ments nt Bank Held- Dome for- sticall 1,176, Fair 1,558, - 1,397, Lifan tradin y/Ove 60177 value Techn 008.7 778.1 161,1 612.1 g Other rseas 7 metho ology 4 8 66.08 0 financ listed d ial stock assets - 237,6 1,465, 887,1 190,0 16,05 1,125, 150,3 Total 48,10 -- 478,9 85,52 0.00 31,74 5,272. 055,2 -- -- 91,96 0.70 41.33 7.04 0.66 93 31.10 9.57 24 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (2) Investments in Derivative Financial Instruments Applicable □ Not applicable Unit: USD’0,000 Endin g invest Actua Relati Relate Purch Impai Initial Sold ment l onshi d- Type Begin ased rment Endin Opera invest Begin in as % gain/l p with party of Endin ning in allow g ting ment ning Repor of the oss in the transa deriva g date invest Repor ance invest party amou date ting Comp Repor Comp ction tive ment ting (if ment nt Period any’s ting any or not Period any) endin Period g net assets Fosha n branc h of Gener 16 Not 22 the al 180.0 Septe 180.0 180.0 relate Not March 7.10 Agric forwa 0 mber 0 0 d 2022 ultural rd 2021 Bank of China Fosha n branc h of Gener 22 Not 24 the al 280.0 Septe 280.0 280.0 relate Not March 12.09 Agric forwa 0 mber 0 0 d 2022 ultural rd 2021 Bank of China Fosha n branc h of the Indust Gener 28 Not 1 rial al 350.0 Septe 350.0 350.0 relate Not April 11.28 and forwa 0 mber 0 0 d 2022 Com rd 2021 merci al Bank of China Fosha n branc h of Gener 12 Not 14 the al 360.0 Octob 360.0 360.0 relate Not April 11.54 Agric forwa 0 er 0 0 d 2022 ultural rd 2021 Bank of China Fosha 20 Gener n Not al 700.0 Octob 1 June 700.0 700.0 branc relate Not -16.18 forwa 0 er 2022 0 0 h of d rd 2021 the 25 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Indust rial and Com merci al Bank of China Fosha n branc h of the Indust Gener 3 Not rial al 260.0 Nove 7 June 260.0 260.0 relate Not -6.02 and forwa 0 mber 2022 0 0 d Com rd 2021 merci al Bank of China Fosha n branc h of the Indust Gener 29 Not rial al 1,000. Dece 5 July 1,000. 1,000. relate Not and forwa 00 mber 2022 00 00 d Com rd 2021 merci al Bank of China Fosha n Forwa branc Not 28 27 rd 1,000. 1,000. 1,000. h of relate Not March April 8.78 d option 00 00 00 Minsh 2022 2022 s eng Bank Fosha n branc h of Gener 27 31 Not the al 1,000. 1,000. 1,000. relate Not April Augus Agric forwa 00 00 00 d 2022 t 2022 ultural rd Bank of China Fosha n branc h of the Gener 30 Not 27 Indust al 1,000. Septe 1,000. 1,000. relate Not April rial forwa 00 mber 00 00 d 2022 and rd 2022 Com merci al Bank 26 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 of China Fosha n branc Gener 21 Not 27 h of al 1,000. Octob 1,000. 1,000. relate Not April the forwa 00 er 00 00 d 2022 Bank rd 2022 of China Fosha n branc h of Gener 30 Not 27 the al 1,000. Nove 1,000. 1,000. relate Not April Agric forwa 00 mber 00 00 d 2022 ultural rd 2022 Bank of China Fosha n branc Gener Not 29 30 h of al relate Not 0.05 April May 0.05 0.05 China forwa d 2022 2022 Merch rd ants Bank Fosha n branc h of Gener 11 15 Not the al 500.0 500.0 500.0 relate Not May Augus Agric forwa 0 0 0 d 2022 t 2022 ultural rd Bank of China Fosha n branc Gener Not 12 16 h of al 400.0 400.0 400.0 relate Not May Augus the forwa 0 0 0 d 2022 t 2022 Bank rd of China Fosha n branc Gener 29 24 Not h of al Dece Januar relate Not 98.83 98.83 98.83 0.00 China forwa mber y d Merch rd 2021 2022 ants Bank Fosha n Gener 29 24 branc Not al 130.8 Dece Januar 130.8 130.8 h of relate Not 0.75 forwa 4 mber y 4 4 China d rd 2021 2022 Merch ants 27 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Bank Fosha n branc Gener 29 Not 24 h of al Dece relate Not 69.50 March 69.50 69.50 1.16 China forwa mber d 2022 Merch rd 2021 ants Bank Fosha n branc h of Gener 16 16 Not al 129.8 129.8 129.8 Bank relate Not May June 2.47 forwa 8 8 8 of d 2022 2022 rd Com munic ations 9,459. 3,429. 6,029. 3,559. 5,900. Total -- -- 0.00% 32.97 10 17 93 10 00 Funding source All self-funded Legal matters involved (if N/A applicable) Disclosure date of announcement on board’s approving derivative 27 August 2021 investment (if any) Risk analysis of the forward foreign exchange settlement: 1. Market risk: Given the unpredictability of economic changes at home and abroad, the foreign exchange hedging business faces market risk, to some extent. 2. Foreign currency risk: When the foreign currency trend greatly deviates from the Company's judgment of such trend, the expenses after locking the exchange rate might exceed that before doing so, resulting in losses to the Company. 3. Internal control risk: Imperfect internal control policies probably triggers risks to the foreign exchange hedging business, as it is highly professional and complex. 4. Trading default risk: If the counterparty of foreign exchange hedging defaults by failing to pay hedging earnings to the Company as agreed, the actual exchange loss of the Company will not be offset. 5. Collection forecast risk: Marketing departments forecast collection based on the actual and expected orders of customers. In practice, customers may adjust such orders. As a result, the Company's collection forecast will not be accurate, leading to delivery risks. Adopted risk control measures: 1. The Company will strengthen the research and analysis of the exchange rate. When the exchange rate fluctuates greatly, it will adjust the business Analysis of risks and control strategy in a timely manner to stabilize the export business and avoid exchange losses to the measures associated with utmost. 2. The Management System for Forward Settlement and Sales of Foreign derivative investments held in Exchanges approved by the Board of Directors of the Company stipulates that all forward Reporting Period (including but foreign exchange settlement businesses of the Company shall be based on the normal not limited to market risk, liquidity production and operation, and relied on specific business operations to avoid and prevent risk, credit risk, operational risk, various exchange rate risks. However, speculative transaction and interest arbitrage are not legal risk, etc.) allowed. At the same time, the system clearly defines the operating principles, approval authority, responsible department and responsible person, internal operation procedures, information isolation measures, internal risk reporting system, risk management procedures, and information disclosure related to the forward settlement business as well. In fact, the system is conducive to strengthen the management of the Company’s forward foreign exchange settlement business and prevent investment risks. 3. In order to prevent any delay in the forward exchange settlement, the Company will strengthen the management of accounts receivable, actively collect receivables, and avoid any overdue receivables. In the meantime, the Company plans to increase the export purchases and purchase corresponding credit insurance so as to reduce the risk of default and customer default. 4. The Company’s forward foreign exchange settlement transactions must be based on the Company’s foreign exchange earnings prediction. Besides, the Company shall strictly control the scale of its forward foreign exchange settlement business, and manage all risks that the Company may face within a controllable range. 5. The internal audit department of the Company shall check the actual signing and execution situation of all trading contracts on a regular or irregular basis. 28 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 The Company carries out recognition and measurement in accordance with the Accounting Standard for Business Enterprises No. 22—Recognition and Measurement of Financial Changes in market prices or fair Instruments, the Accounting Standard for Business Enterprises No. 24—Hedges, the value of derivative investments in Accounting Standard for Business Enterprises No. 37—Presentation of Financial Instrument Reporting Period (fair value and other applicable regulations. Fair value is arrived at based on the price provided by analysis should include pricing service providers such as banks or the price obtained. Fair value measurement and measurement method and related recognition are carried out on a monthly basis. Changes in the fair value of forward assumptions and parameters) exchange settlement contracts entered into by the Company are mainly attributable to difference arising from exchange rate fluctuations. Major changes in accounting policies and specific accounting principles adopted for derivative N/A investments in Reporting Period compared to last reporting period Opinions of the Independent Directors: The forward foreign exchange settlement transactions conducted by the Company are based on normal production and operation, are supported by specific businesses, aim to avoid and prevent foreign exchange risks associated with export businesses, do not involve speculative operations and are consistent Opinion of independent directors with the needs of the Company's operation and development. The Company has established on derivative investments and risk relevant business management policies and risk control and prevention measures. The risk is control controllable. The proposal was passed following a lawful, valid decision-making procedure, has no negative impact on the Company's normal operation and business development and does not undermine the interest of the Company and its shareholders. Therefore, the Company's conducting forward foreign exchange settlement transactions is approved. 5. Use of Funds Raised □ Applicable Not applicable No such cases in the Reporting Period VII Sale of Major Assets and Equity Investments 1. Sale of Major Assets Applicable □ Not applicable Relat ionsh Net ip Ratio profit betw of the Exec contri een net Credi uted buted the Own profit tor’s as to the trans ershi contri rights sched Com actio p of Effec buted and uled Trans pany Relat n the Index t on by liabili or actio from ed- party asset to Trans the the Prici ties not; Date n the party and invol Discl discl actio Asset Com sale ng invol if of price perio trans the ved osure osed n sold pany of the princi ved not, sale (RM d- actio Com has date infor party (see asset ple have give B’0,0 begin n or pany been matio note to the been reaso 00) to the not (appli all n 3) Com all ns date cable transf pany’ transf and of for erred s erred meas sale relate or not total or not ures (RM d- profit taken B’0,0 party (%) 00) trans actio ns) Centr Part The Mark 27 Anno H1 19,00 1,605 0.00 alize of the sale et Not N/A Yes Yes N/A Augu unce 2022 3.17 .53 % d Com woul price st ment 29 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 biddi pany’ d not s of 2021 No. ng on s affect the 2021- the share the stock 056 secon holdi Com s on dary ngs pany’ when Boar mark in s reduc d et Gotio busin ing Resol n ess the ution High- conti share s tech nuity holdi Rega Co., or ngs rding Ltd. mana the and geme Interi Xiam nt m en stabil Repo Bank ity. rt discl osed on http:/ /ww w.cni nfo.c om.c n 2. Sale of Major Equity Investments □ Applicable Not applicable VIII Major Subsidiaries Applicable □ Not applicable Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit: Unit: RMB Relationshi Principal Registered Operating Operating Name p with the Total assets Net assets Net profit activity capital revenue profit Company Foshan NationStar Manufactur 618,477,1 6,101,325 3,786,714 1,664,781 81,262,91 72,886,51 Optoelectro Subsidiary ing 69.00 ,692.05 ,929.67 ,497.45 0.87 7.52 nics Co., Ltd. Nanning Liaowang Manufactur 35,055,70 2,210,764 933,562,9 700,818,1 21,631,99 18,187,08 Subsidiary Auto Lamp ing 0.00 ,023.92 26.07 99.55 7.34 7.80 Co., Ltd. FSL Zhida Electric Manufactur 50,000,00 171,220,3 68,296,87 105,086,0 6,761,930 5,704,490 Subsidiary Technology ing 0.00 96.28 0.08 95.87 .94 .75 Co., Ltd. FSL Chanchang Manufactur 72,782,94 265,552,5 181,016,4 171,314,9 17,314,00 13,733,78 Optoelectro Subsidiary nics Co., ing 4.00 03.77 43.99 04.10 4.49 9.66 Ltd. 30 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Subsidiaries obtained or disposed in the Reporting Period: Applicable □ Not applicable How the subsidiary was obtained or Name Impact on overall operations and performance disposed of in the Reporting Period Foshan NationStar Optoelectronics These two subsidiaries combined increased Acquired Co., Ltd. the Company’s operating revenue and net profit attributable to the Company as the Foshan Sigma Venture Capital Co., Acquired parent by RMB1,630 million and Ltd. RMB13.6437 million, respectively. Information about major majority- and minority-owned subsidiaries: —In a major asset restructuring in February 2022, the Company acquired a 21.32% interest in Foshan NationStar Optoelectronics Co., Ltd. (NationStar) from Rising Group and its acting-in-concert party. Upon the conclusion of the transaction, the Company eventually holds a 21.48% interest in NationStar, and NationStar has become a majority-owned subsidiary of the Company. The Company has included NationStar in its consolidated financial statements since Q1 2022. —Nanning Liaowang Auto Lamp Co., Ltd. signed an equity agreement with its existing shareholders in July 2021, and acquired Nanning Liaowang through equity acquisition and capital increase and share expansion. Upon the conclusion of the transaction, the Company eventually holds a 53.79% interest in Nanning Liaowang, and Nanning Liaowang has become a majority-owned subsidiary of the Company. The Company has included Nanning Liaowang in its consolidated financial statements from the date when the Company obtained actual control of it. —FSL Zhida Electric Technology Co., Ltd. (FSL Zhida) was incorporated by the Company, Foshan Zhibida Enterprise Management Co., Ltd. and Dongguan Baida Semiconductor Material Co., Ltd. on a joint investment basis. FSL Zhida obtained its business license on 21 October 2016. Holding a stake of 51% in it, the Company has included FSL Zhida in its consolidated financial statements since the date of FSL Zhida’s incorporation. —FSL Chanchang Optoelectronics Co., Ltd. (renamed on 19 June 2018 from “Foshan Chanchang Electric Appliances (Gaoming) Co., Ltd.”), which is a Sino-foreign joint venture invested and established by the Company and Prosperity Lamps and Components Ltd, had obtained license for business corporation on 23 August 2005 through approval by Foreign Trade and Economic Cooperation Bureau of Gaoming District, Foshan with document “MWJMY Zi [2005] No. 79”. The Company holds 70% equities of the said company; therefore the said subsidiary was included into the scope of the consolidated financial statements since the date of foundation. On 23 August 2016, the Company and Prosperity Lamps and Components Ltd signed the equity transfer agreement. The Company purchased 30% equity of Foshan Chanchang Electric Appliances (Gaoming) Co., Ltd. 31 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 held by Prosperity Lamps and Components Ltd. After the purchasing, the Company held 100% equity of FSL Chanchang Optoelectronics Co., Ltd. IX Structured Bodies Controlled by the Company □ Applicable Not applicable X Risks Facing the Company and Countermeasures 1. Risks of macro economic fluctuations and fiercer market competition At present, the global Covid-19 pandemic has not been entirely controlled, global economic growth is still under great pressure and uncertainty, which may have an adverse impact on the development of the industry. Meanwhile, the lighting industry is a fully competitive industry. And as market demand slows down in growth, the Company could be facing fiercer competition. Countermeasures: The Company will continue to increase R&D investments in a bid to develop new products and enter new segment markets. It will also accelerate the introduction of new manufacturing processes, technologies and products to the market for more market share and higher added value on its products. At the same time, by optimizing marketing network and strengthening the business focus and expansion on domestic and foreign major customers, the Company will improve service quality, increase core competitive capacity of the Company constantly. 2. Risk of raw material price fluctuations The main raw materials of the Company and its subsidiaries include chips, lamp beads, electronic components, aluminum substrates, plastic parts, metal materials, etc., and the price fluctuations of main raw materials will have an impact on the Company's production costs. If the price of raw materials continues to rise in the future, it may adversely affect the Company's production and operation. Countermeasures: The Company will pay attention to market dynamics, collect information, analyze and pre- judge supply of main raw materials and price trends, so as to make excellent sourcing plans. By enhancing negotiation, increasing quantity of qualified suppliers, perfecting supply chain management, and promoting alternative materials, the Company is able to decrease procurement costs. 3. Risk of exchange rate fluctuations Overseas sales account for around 25% of the Company’s total sales, which are mainly settled in USD. If RMB experiences significant appreciation, the price competitiveness of overseas sales could be undermined and 32 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 exchange losses may increase, which will produce adverse impacts on the Company’s net profit. Countermeasures: By knowing and analyzing exchange rate policies and fluctuation trend of settlement currencies in time, intensifying settlement currency management, ,and carrying out foreign exchange hedging business when the timing is right, the Company can relatively lock in exchange rates and minimize the risks brought by exchange rate fluctuations. 4. Risk associated with the recoverability of accounts receivable Receivables grow along with the Company's business. Customers who fail to repay loans timely or become insolvent, due to changes in macroeconomic trends, market environments, and their business, will place the Company at the risk of non-performing receivables. Countermeasures: In order to reduce the receivable collection risk, the Company can constantly optimize the receivable risk management system, regularly assess customers' credit profiles, and enhance customer risk assessment. Meanwhile, it can reinforce contract approval and management, double its effort to collect receivables, and incorporate the collection of receivables into the performance assessment system for business departments. 33 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Part IV Corporate Governance I Annual and Extraordinary General Meeting Convened during the Reporting Period 1. General Meeting Convened during the Reporting Period Investor Convened Disclosure Meeting Type participati Resolutions of the meeting date date on ratio 18 Resolutions of the First The First Extraordinary Extraordinary 19 January 43.49% January Extraordinary General Meeting of General Meeting of 2022 General Meeting 2022 2022 2022 The 2021 Annual General Annual General 26 April 27 April Resolutions of the 2021 Annual 43.20% Meeting Meeting 2022 2022 General Meeting Resolutions of the Second The Second Extraordinary Extraordinary 30 June 42.99% 1 July 2022 Extraordinary General Meeting of General Meeting of 2022 General Meeting 2022 2022 2. Extraordinary General Meetings Convened at the Request of Preference Shareholders with Resumed Voting Rights □ Applicable Not applicable II Change of Directors, Supervisors and Senior Management Applicable □ Not applicable Name Office title Type of change Date of change Reason for change Mr. Xu Xiaoping has Deputy General resigned as Deputy Xu Xiaoping Resigned 13 May 2022 Manager General Manager for job adjustment. Mr. Cheng Ke has Cheng Ke Director Resigned 7 June 2022 resigned as Director for job adjustment. Elected by a general Hu Fengcai Director Elected 30 June 2022 meeting as Director III Interim Dividend Plan □ Applicable Not applicable The Company has no interim dividend plan, either in the form of cash or stock. IV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for Employees □ Applicable Not applicable No such cases in the Reporting Period. 34 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Part V Environmental and Social Responsibility I Major Environmental Issues Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protection authorities. Yes □ No Name of Major and Discharge Pollutant Total Company or Discharge Outlet Outlet Total Actual Excessive Characterist Concentrati Discharge Discharge Subsidiary Method Quantity Distribution Discharge Discharge ic Pollutants on Standards Approved Company Emission Foshan Standards Electrical Discharged for Air and in an SO2: 289 Pollutants SO2: 39.937 Lighting SO2 1 In the plant / None organized mg/m3 in Glass t/y Co., Ltd. manner Industry Gaoming (DB44/215 Branch 9-2019) Emission Foshan Standards Electrical Discharged for Air and in an Oxynitride: Pollutants Oxynitride: Lighting Oxynitride 1 In the plant / None organized 550mg/m3 in Glass 83.549 t/y Co., Ltd. manner Industry Gaoming (DB44/215 Branch 9-2019) Xylene, SO2, nitrogen Integrated Liuzhou oxide, Discharged Emission Discharged Guige benzene, upon Standards in an Lighting toluene, 1 In the plant reaching of Air No limit No limit None organized Technology particulate applicable Pollutants manner Co., Ltd. matter, standards (GB16297- volatile 1996) organic matter Integrated Liuzhou Discharged Emission Discharged Guige Volatile upon Standards in an un- Lighting organic 2 In the plant reaching of Air No limit No limit None organized Technology compounds applicable Pollutants manner Co., Ltd. standards (GB16297- 1996) Discharge Limits of Wastewater: Water Chemical Pollutants Foshan Discharged COD: 16 oxygen (DB44/26- NationStar by mg/L; demand 2001) of Optoelectro standards 1 In the plant Ammonia / / None ("COD") Guangdong nics Co., after nitrogen: and Province: Ltd. treatment 0.124 mg/L ammonia Standard nitrogen Class II for Time Period II. Exhaust Total Emission Foshan gases: Total Discharged VOCs: 1.04 Standard of NationStar volatile by mg/m Volatile Optoelectro organic standards 8 In the plant Benzene: Organic / / None nics Co., compounds after 0.134 Compounds Ltd. ("VOCs"), treatment mg/m for benzene, Toluene and Furniture 35 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 toluene, xylene: Manufacturi xylene, and 0.382 ng particulate mg/m (DB44/814- matters Particulate 2010) of matters: Guangdong 0.175 Province: mg/m Discharge limits for VOCs through exhaust funnels for Time Period II. PH: Six to nine Discharge Wastewater: COD: 90 Limits of PH, mg/L Water suspended Foshan BOD5: 20 Pollutants COD: 3.129 solids, Discharged COD: 0.506 NationStar mg/L (DB44/26- t/a COD, five- by t/a Semiconduc Suspended 2001) of Ammonia day standards 1 In the plant Ammonia None tor solids: 60 Guangdong nitrogen: biochemical after nitrogen: Technology mg/L Province: 0.201 oxygen treatment 0.0012 t/a Co., Ltd Ammonia Standard t/a demand nitrogen: 10 Class I for ("BOD5"), mg/L Time Period and fluoride Fluoride: 10 II. mg/L Sulfur Emission dioxide: Limits of 500 mg/m Air nitrogen Pollutants Exhaust oxide: 120 (DB44/247- gases: mg/m 2001) of Particulate particulate Guangdong matters, matters: 120 Province: sulfur mg/m Standard dioxide, ammonia Class II for nitrogen gas: 20 Time Period oxide, mg/m II. Emission SO2:0.25 benzene, Foshan odor Standard of t/a; toluene, Discharged NationStar concentratio Volatile NOX:11.9 xylene, total by Semiconduc n: 6000 Organic 6 VOCs, odor standards 6 In the plant / None tor mg/m Compounds t/a concentratio after Technology hydrogen for 总 n, ammonia treatment Co., Ltd. chloride: Furniture VOCs: gas, sulfuric 100 mg/m Manufacturi 2.45t/a acid mist, fluoride: 9 ng hydrogen mg/m (DB44/814- chloride, chlorine: 65 2010) of fluoride, mg/m Guangdong chlorine, sulfuric acid Province: and mist: 35 Discharge hydrogen mg/m limits for sulfide benzene: 1 VOCs mg/m through toluene and exhaust xylene: 20 funnels for 36 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 mg/m Time Period total VOCs: II. 30 mg/m Emission Standard for Foshan Noise of Daytime: NationStar Industrial Discharged 60; Semiconduc Enterprises Noise by / / nighttime: / / None tor at Boundary standards 50, Unit: dB Technology (GB12348- (A) Co., Ltd. 2008): Standard Class II Construction and operation of pollution control facilities: Date of Date of Designed Actual Operation Total investment No. Facility construction operation Operator Processes capacity capacity hours (RMB’0,000) (MM/YYYY) (MM/YYYY) (m3/h) (m3/h) (h/d) Semi-dry flue gas Desulfurization, desulphurization denitration, and November December Independent 1 500 (SDFGD) + 60000 60000 24 dust removal 2015 2015 operations electric system precipitation + SCR denitration Dry filter+RTO RTO oxidation November March 2017 Independent 2 360 catalytic 10000 10000 24 furnace 2016 operations combustion Filter cotton+ Activated activated carbon carbon November Independent 3 60 March 2019 adsorption 60712 60712 24 adsorption 2019 operations device+22.5m device vent Method for Edwards treating September November Independent 4 419.28 combustion 44000 26008 24 MOCVD 2012 2012 operations treatment exhaust gas Method for Water spraying treating acid and September November Independent and activated 5 696.81 85000 33595 24 alkali exhaust 2012 2012 operations carbon gases absorption Method for UV photolysis treating organic September November Independent and activated 6 696.81 60000 24466 24 exhaust gas 2012 2012 operations carbon absorption Wastewater Physiochemical September December Independent 7 treatment 356.7 and biochemical 1080t/d 245.6t/d 24 2012 2012 operations station processing Wastewater Independent Coagulation and 8 treatment 39.5 April 2017 May 2017 600t/d 200t/d 24 operations sedimentation station Method for treating the Independent Plasma 9 exhaust gases of 28 May 2016 June 2016 90000 90000 24 operations purification the plant in the west Method for treating the UV photolysis Independent 10 exhaust gases of 50 July 2018 August 2018 and plasma 70500 70500 24 operations the plant in the purification east 37 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Assessment of the environmental impact of construction projects and other administrative licenses of environmental protection: Document name of administrative No. Approver Date of approval Approval No. license of environmental protection Approval for Environmental Environmental Impact Report on New Project of Protection Bureau of 1 3 November 2004 / Foshan Electrical and Lighting Co., Gaoming District, Ltd. Gaoming Branch Foshan City Environmental Protection Environmental Acceptance Opinions on Phase I of Protection Bureau of 2 28 August 2008 MHY [2008] No. 26 Foshan Electrical and Lighting Co., Gaoming District, Ltd. Gaoming Branch Foshan City Acceptance Opinions on Flue Gas Environmental Emission Continuous Monitoring Protection Bureau of 3 System of Foshan Electrical and 22 February 2010 MHY [2010] No. 8 Gaoming District, Lighting Co., Ltd. Gaoming Foshan City Branch Approval for Environmental Environmental Impact Report on Energy-saving Protection Bureau of 4 Lamp Expansion Project of Foshan 30 August 2013 MHGYB [2013] No. 030 Gaoming District, Electrical and Lighting Co., Ltd. Foshan City Gaoming Branch Letter of Environmental Protection Environmental Transport Acceptance Opinions on Energy- and Urban Management MGY 5 saving Lamp Expansion Project of Bureau of Gaoming 19 February 2014 [2014] No. 2 Foshan Electrical and Lighting Co., District (Environmental Ltd. Gaoming Branch Protection) Approval from Environmental Protection Bureau of Gaoming Environmental District, Foshan City, of Protection Bureau of 6 Environmental Impact Report on 13 February 2015 MHS [2015] No. 14 Gaoming District, Expansion Project of Foshan Foshan City Electrical and Lighting Co., Ltd. Gaoming Branch Approval from Environmental Protection Bureau of Gaoming Environmental District, Foshan City, of Kiln Protection Bureau of 7 Expansion and Flue Gas Control 26 November 2015 MHS [2015] No. 157 Gaoming District, and Remediation Project of Foshan Foshan City Electrical and Lighting Co., Ltd. Gaoming Branch Letter from Environmental Protection Bureau of Gaoming District, Foshan City of Environmental Environmental Protection Protection Bureau of 8 Acceptance Opinions on Kiln 24 December 2015 MHY [2015] No. 83 Gaoming District, Expansion and Flue Gas Control Foshan City and Remediation Project of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch Approval from Environmental Protection Bureau of Gaoming District, Foshan City, of Environmental Environmental Impact Report on Protection Bureau of 9 New LED Luminaries R&D 30 September 2017 MHS [2017] No. 138 Gaoming District, Production Base Construction Foshan City Project of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch Approval from Environmental Environmental Protection Bureau of Gaoming Protection Bureau of 10 District, Foshan City, of 14 January 2019 MHS [2019] No. 11 Gaoming District, Environmental Impact Report on Foshan City Glass Kiln (Change) Construction 38 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Project of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch Letter from Foshan Municipal Ecology and Environment Bureau of Environmental Protection Acceptance Opinions on Solid Ecology and Waste Pollution Prevention and 11 Environment Bureau of 12 September 2019 FMHY [2019] No. 126 Control Facility for New LED Foshan City Luminaries R&D Production Base Construction Project (Phase I) of Foshan Electrical and Lighting Co., Ltd. Ecology and 12 Sewage Discharge License Environment Bureau of 1 June 2020 91440600784850061B001U Foshan City Reply on the Environmental Impact Report of Liuzhou Guige Lighting Technology Co., Ltd. with Liuzhou Environmental 13 25 September 2015 LHS Zi [2015] No. 134 an Annual Output of 1.35 Million Protection Bureau Sets of Auto Parts (Motor Vehicle Lamps) Reply on Completion Acceptance of Environmental Protection Liuzhou Liudong New Facilities of Liuzhou Guige Area Administrative 14 Lighting Technology Co., Ltd. with 28 October 2019 LDSPHB Zi [2019] No. 70 Examination and an Annual Output of 1.35 Million Approval Bureau Sets of Auto Parts (Motor Vehicle Lamps) (Solid Waste) Liuzhou Liudong New Area Administrative 15 Sewage Discharge License 18 July 2020 914502000836092085001V Examination and Approval Bureau Approval from Foshan Environmental Protection Bureau to the Report on the Influence of Foshan Environmental 16 Environment Change of the 14 July 2016 F.H. [2016] No. 746 Protection Bureau Epitaxial Chip Project (Phase I) of Foshan NationStar Semiconductor Technology Co., Ltd. Letter of Opinions from Foshan Environmental Protection Bureau on the Acceptance Inspection of the Changed Completion Foshan Environmental 17 3 May 2017 F.H.H. [2017] No. 426 Environment of the Epitaxial Chip Protection Bureau Project (Phase I) of Foshan NationStar Semiconductor Technology Co., Ltd. Foshan Municipal 18 Sewage Discharge License Ecology and 2 January 2020 91440600570160743B001Q Environment Bureau Approval to the Report on the Environmental Influence of Changing the Protection and Urban 19 Environment for the Expanded Management Bureau of 5 September 2014 CB [2014] 0036 Project of Foshan NationStar Chancheng District, Optoelectronics Co., Ltd. Foshan City Application for the Acceptance Environmental Inspection of the Changed Protection and Urban Completion Environment of the 20 Management Bureau of 29 December 2014 C.H.Y.B [2014] No. 46 Expanded Project of Foshan Chancheng District, NationStar Optoelectronics Co., Foshan City Ltd. Approval to the Report on the Environmental 21 Environmental Influence of the Protection and Urban 19 December 2014 CB [2014] 0073 Project of Production Expansion of Management Bureau of 39 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Small Spacing and Outdoor SMD Chancheng District, LED Display Components Foshan City Opinions on the Acceptance Inspection of the Completion Environmental Environment for the Project of Protection Bureau of 22 20 May 2016 C.H.Y.B. 2016-4-032 Production Expansion of Small Chancheng District, Spacing and Outdoor SMD LED Foshan City Display Components Approval to the Report on the Environmental Influence of the Project of the Innovation in Environmental Packaging Technology and Protection Bureau of 23 1 November 2016 CB 2016-4-205 Technological Transformation of Chancheng District, Key Packaging Equipment of Foshan City LEDs with High Color Rendering Index for Illumination Approval to the Report on the Environmental Influence of the Project of the Innovation in Environmental Packaging Technology and Protection Bureau of 24 1 November 2016 CB 2016-4-206 Technological Transformation of Chancheng District, Key Packaging Equipment of Foshan City LEDs with Small Spacing for Display Opinions on the Acceptance Inspection of the Completion Environment of the Project of the Environmental Innovation in Packaging Protection Bureau of 25 Technology and Technological 11 April 2017 C.H.Y.B. 2017-4-110 Chancheng District, Transformation of Key Packaging Foshan City Equipment of LEDs with High Color Rendering Index for Illumination Opinions on the Acceptance Inspection of the Completion Environment of the Project of the Environmental Innovation in Packaging Protection Bureau of 26 11 April 2017 C.H.Y.B. 2017-4-111 Technology and Technological Chancheng District, Transformation of Key Packaging Foshan City Equipment of LEDs with Small Spacing for Display Approval to the Report on the Environmental Influence of the Project (Phase II) of the Innovation Environmental in Packaging Technology and Protection Bureau of 27 8 December 2017 CB 2017-4-065 Technological Transformation of Chancheng District, Key Packaging Equipment of Foshan City LEDs with High Color Rendering Index for Illumination Approval to the Report on the Environmental Influence of the Project (Phase II) of the Innovation Environmental in Packaging Technology and Protection Bureau of 28 8 December 2017 CB 2017-4-064 Technological Transformation of Chancheng District, Key Packaging Equipment of Foshan City LEDs with Small Spacing for Display Foshan Municipal Sewage discharge registration 29 Ecology and 19 January 2020 914406001935264036001X receipt of fixed pollution source Environment Bureau Opinions on the Acceptance Inspection of the Completion Independent acceptance 30 Environment of the Project (Phase / / inspection II) of the Innovation in Packaging Technology and Technological 40 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Transformation of Key Packaging Equipment of LEDs with High Color Rendering Index for Illumination Opinions on the Acceptance Inspection of the Completion Environment of the Project (Phase II) of the Innovation in Packaging Independent acceptance 31 / / Technology and Technological inspection Transformation of Key Packaging Equipment of LEDs with Small Spacing for Display Contingency plan for environmental emergencies The Company formulated the Contingency Plan for Environmental Emergencies of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch (Including Risk Assessment Report and Material Survey of Environmental Emergencies in August 2017, had it reviewed by experts on 13 September 2017, and had it filed with the Foshan Municipal Ecology and Environment Bureau Gaoming Sub-bureau (Filing No.: 440608-2017-094-L) on 24 October 2017. This document was revised in August 2020, reviewed by experts again on 7 September 2020, and filed with the Foshan Municipal Ecology and Environment Bureau Gaoming Sub-bureau (Filing No.: 440608-2020-056-M) on 25 September 2020. In June 2018, Liuzhou Guige Lighting Technology Co., Ltd. completed the preparation of the Emergency Plan for Environmental Emergencies of Liuzhou Guige Lighting Technology Co., Ltd. (including the Risk Assessment Report for Environmental Emergencies and the Investigation Report for Emergency Resources for Environmental Emergencies), which was reviewed by experts and released, and filed with Liudong Branch of Liuzhou Environmental Protection Bureau on 29 August 2018 (No. 450203-2018-022-1). In August 2021, the Emergency Plan for Environmental Emergencies of Liuzhou Guige Lighting Technology Co., Ltd. (including the Risk Assessment Report for Environmental Emergencies and the Investigation Report for Emergency Resources for Environmental Emergencies) was updated and compiled, passed the expert review and released, and on 27 December 2021, the Emergency Plan was filed with the Ecological Environment Bureau of Liudong New Area, Liuzhou City (No. 450203-2021-0019-L). NationStar formulated the Contingency Plan for Environmental Emergencies of NationStar (Including Risk Assessment Report and Material Survey of Environmental Emergencies) in May 2019, and had it filed with the Foshan Municipal Ecology and Environment Bureau Chancheng Sub-bureau (Filing No.: 440604-2020-032-L) on 2 April 2020. 41 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 NationStar Optoelectronics formulated the Contingency Plan for Environmental Emergencies of Foshan NationStar Semiconductor Technology Co., Ltd. (including Risk Assessment Report and Material Survey of Environmental Emergencies) in May 2020, had it reviewed by experts on 1 July 2020, and had it filed with the Foshan Municipal Ecology and Environment Bureau Gaoming Sub-bureau (Filing No.: 440600-2020-047-M) on 12 August 2020. Environmental self-monitoring plan Foshan Electrical and Lighting Co., Ltd. Gaoming Branch developed an environmental self-monitoring plan, numbered: FSLFMF001, at the beginning of the year. It entrusted a third-party environmental testing agency, GD Veizhong Testing Technique Co., Ltd. (Veizhong Testing), to perform the annual inspection of the exhaust outlet. All the inspection results were lower than the standard limits. Meanwhile, it accepted the annual supervision and monitoring by local environmental protection departments. All the monitoring results were lower than the standard limits. Liuzhou Guige Lighting Technology Co., Ltd. has put in place the Self-monitoring Plan of Liuzhou Guige Lighting Technology Co., Ltd. It entrusted a third-party environmental testing agency, Guangxi Zhongzhen Testing Technology Co., Ltd., to perform the annual inspection of the exhaust outlet. All the inspection results were lower than the standard limits. Meanwhile, it accepted the annual supervision and monitoring by local environmental protection departments. All the monitoring results were lower than the standard limits. NationStar Optoelectronics, following the self-monitoring plan, entrusted a third-party environmental testing agency, GD Veizhong Testing Technique Co., Ltd. (Veizhong Testing), to perform the annual inspection of the wastewater and exhaust outlets. All the inspection results were lower than the standard limits. Meanwhile, it accepted the annual supervision and monitoring by local environmental protection departments. All the monitoring results were lower than the standard limits. Foshan NationStar Semiconductor Technology Co., Ltd. prepared an environmental self-monitoring plan at the beginning of the year. It entrusted a third-party environmental testing agency, Guangdong Zhonghui Mobile Laboratory Testing Technology Co., Ltd., to perform the quarterly inspection of the exhaust outlet. All the inspection results were lower than the standard limits. Meanwhile, it accepted the annual supervision and monitoring by local environmental protection departments. All the monitoring results were lower than the standard limits. 42 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Administrative punishments received with respect to environmental issues in the Reporting Period: Impact on the The Reason for Incompliance Punishment Company’s Rectification Company/subsidiary punishment operations N/A N/A N/A N/A N/A N/A Other environment-related information that should be disclosed: None. Measures taken during the Reporting Period to reduce carbon emissions and the impact: Applicable □ Not applicable During the Reporting Period, the Company reduced energy consumption under the same output value by selecting high-efficiency and energy-saving equipment, equipment renovation, energy control, etc. The Company insists on constantly publicizing environmental protection knowledge to employees, improving their awareness of environmental protection, and realizing the sustainable development goal of harmonious coexistence between enterprises and the environment through the joint efforts of all employees. Other relevant information: None. II Social Responsibility We have always attached importance to the accomplishment of our social value. With “provide returns for shareholders, provide a platform for employees, create value for customers and create prosperity for the society” as our mission, we take on the social responsibilities to protect the interests of our creditors, employees, customers, suppliers and community. We have been utilizing resources in a scientific, rational way, effectively protecting the natural environment and safeguarding social safety so as to promote common, harmonious and sustainable development of the Company and the society. 1. Protection of the rights and interests of our shareholders and creditors We continuously improve our corporate governance structure, regulate our operation and enhance our management on information disclosure and investor relations. We treat all our investors fairly and justly, ensure their rights to know about, participate in and vote on the significant events of the Company, and safeguard the legal rights and interests of all our shareholders, especially our minority shareholders. 2. Protection of the rights and interests of our employees Considering employees the most valuable resource for our survival and development, we constantly improve our 43 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 employment system, improve the compensation packages for our employees and attach importance to talent cultivation so as to provide opportunities and space for the sustainable development of our employees as well as realize the common development of the employees and the Company. We also pay attention to the health of our employees, attach importance to production safety and labor protection, and improve the working and living conditions for our employees so as to formulate harmonious and stable labor relations. 3. Protection of the rights and interests of our customers and consumers We have been upholding the “Customer First” principle in our provision of quality products and services to customers. We operate honestly and disallow any unfair trade practice against commercial ethics, market rules and the fair competition principle. We also improve our product quality and after-sales services and try to build a win-win relationship with our customers. 4. Protection of the rights and interests of our suppliers We respect and protect the legal rights and interests of our suppliers, carefully protect their secret and proprietary information, encourage and push them to continuously improve the quality of their products and services through creating an environment for open and fair competition among them so as to realize mutual benefits and mutual development of the suppliers and the Company. 5. Production Safety, Environmental Protection and Sustainable Development The Company sees production safety, environmental protection and energy conservation as an important part of its strategy of sustainable development. It implements accountability systems in relation environmental protection and production safety in strict accordance with the applicable laws and regulations. In addition, it is ISO9001-(a quality management system), IATF16949-(a quality management system), ISO14001-(an environment management system), ISO45001-(a management system for occupational health and safety) and ISO50001-(an energy management system) certified. In 2018, upon the review and publication by the Ministry of Industry and Information Technology, the Company was certified as one of the second batch of National Demonstration Entity of Green Factory. 6. Public relations and welfare We attach importance to the realization of our social value and see creating a prosperous society as a commitment that we should take on, trying to boost the local economy through our own development. We have been granted by the local government the title of “Foshan Over-100-Million Tax Payer” for many years due to our contributions in boosting the harmonious development of the Company and the community. 44 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Part VI Significant Events I Commitments of the Company’s De Facto 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 Date of Type of commit Term of Commitment Promisor Details of commitment Fulfillment commitment ment commitment making 1. FSL does not disclose the relevant insider information of this trading or make use of the insider information for insider trading; 2. As of the issuance date of the Report on Major Asset Purchase and Related Party Trading of Foshan Electrical and Lighting Co., Ltd. (Draft), FSL has not been placed on file for From the time investigation or criminal when the investigation due to suspected Company insider trading related to this Commitments plans the About trading, and has not been subject 27 major asset made during absence of to administrative punishment by FSL October restructuring Expired asset insider the CSRC or criminal 2021 to the date restructuring trading responsibility investigated by when the judicial organs according to law major asset for insider trading related to any restructuring major asset restructuring, and has is completed. not been prohibited from engaging in any major asset restructuring of listed companies according to Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed Companies in the last 36 months. 1. They promise that there will be no share reduction plan from the date of issuance of this Letter of Commitments to the completion of this trading, and they will not About non- reduce its FSL shares (if any) in Commitments reduction of Directors any other way. 2. If FSL FSL shares 28 Until this made during and senior implements ex-rights behaviors during Septemb trading is Expired asset management such as share conversion, share major asset er 2021 completed restructuring of FSL offering and share allotment from restructurin the date of issuance of this Letter g of Commitments to the completion of this trading, the newly added shares obtained by them will also be subject to the above commitments related to not 45 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 reducing share holdings. 3. Where FSL or any other investor suffers a loss as a result of my violation of the aforesaid commitment, I shall be liable for compensation to FSL and investors according to law. They promise that they have the right to enter into this Letter of Commitments, and once this Letter of Commitments is entered into by them, it will constitute an effective, legal and binding responsibility upon them, and this Letter of Commitments will remain valid and irrevocable. They promise to strictly fulfill all commitments in this Letter of Commitments. In case of violation of this Letter of Commitments, they will bear relevant legal responsibilities. 1. They do not disclose the relevant insider information of this trading or make use of the insider information for insider trading; 2. They have not been placed on file for investigation or criminal investigation due to suspected insider trading related to this trading, and have not been From the time subject to administrative when the punishment by the CSRC or Company criminal responsibility Commitments plans the Directors About investigated by judicial organs 27 major asset made during and senior absence of according to law for insider October restructuring Expired asset management insider trading related to major asset 2021 to the date restructuring of FSL trading restructuring, and has not been when the prohibited from engaging in any major asset major asset restructuring of listed restructuring companies according to Article 13 is completed. of the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed Companies in the last 36 months. 3. In case of violation of the above commitments, they will bear all losses caused to the listed company and its shareholders. 1. They promise that there will be no share reduction plan from the Rising date of issuance of this Letter of Group, Commitments to the completion Rising of this trading, and they will not Capital, reduce its FSL shares in any other Electronics About non- way (except the transfer or Commitments Group, reduction of transfer between Rising Group Hongkong FSL shares 28 Until the made during and its wholly-owned Wah Shing, during Septemb completion of Expired asset subsidiaries). 2. If FSL Hong Kong major asset er 2021 this trading restructuring implements ex-rights behaviors Rising restructurin such as share conversion, share Investment g offering and share allotment from and the date of issuance of this Letter Shenzhen of Commitments to the Rising completion of this trading, the Investment newly added shares obtained by them will also be subject to the 46 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 above commitments related to not reducing share holdings. 3. Where FSL or any other investor suffers a loss as a result of our violation of the aforesaid commitment, we shall be liable for compensation to FSL and investors according to law. 1. During the preliminary negotiation between the listed company and the counterparty on this trading, necessary and sufficient confidentiality measures were taken to limit the scope of knowledge of relevant sensitive information. According to the requirements of the SZSE, the listed company has completed the submission and online reporting of the memorandum of trading process, relevant materials of insider information insiders. The listed company has hired independent financial advisers, legal advisers, audit institutions, valuation institutions and other intermediaries, and signed confidentiality agreements or appointment agreements with About confidentiality clauses with the explanation above intermediaries, clearly Rising of Commitments stipulating the scope of Group, confidentiali confidential information and the 27 Until the made during Electronics ty measures confidentiality responsibilities of October completion of Expired asset Group, and and each intermediary. 2021 this trading restructuring Rising confidentiali 2. In communicating with the Capital ty system transaction counterparties, the adopted for listed company made clear to this trading them that they shall be strictly confidential about the relevant information, shall not leak the information to others, and shall not trading in shares of the listed company with the information. 3. When discussing the problems, solutions, suggestions, ideas and solutions with respect to the transaction, the transaction counterparties did not leak the restructuring information to any other irrelevant entities or individuals. 4. Before the listed company discloses information in relation to the transaction, the transaction counterparties strictly abided by the confidentiality obligation and did not conduct any insider trading using the information. About They are not subject to any Commitments compliance securities and futures crimes as Rising of this stipulated in Article 6 of Several 27 Until the made during Group and major asset Provisions on the Reduction of October completion of Expired asset Rising restructurin Shares by Shareholders, Directors 2021 this trading restructuring Capital g with and Supervisors of Listed Several Companies. During the period 47 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Provisions when the CSRC or the judicial on the organ filed a case for Reduction of investigation, and less than six Shares by months after the administrative Shareholder penalty decision and criminal s, Directors judgment were made, there was and no situation that the shares of Supervisors NATIONSTAR could not be of Listed reduced due to violation of the Companies rules of stock exchanges and public censure by stock exchanges for less than three months. 2. In case of any violation or losses caused to NATIONSTAR, investors, parties to the trading and intermediaries participating in this trading, they will be liable for compensation according to law. 1. As of the date of issuance of the Letter of Commitments, Sigma has signed the Maximum Guarantee Contract (Contract No.: XYYBZ (BY) No. 201906280001-1) and the Maximum Pledge Contract for Stocks of Listed Companies (Contract No.: XXYZZ (BY) No. 201906280001-2) with Guangzhou Branch of Industrial Bank Co., Ltd. Sigma will provide the maximum guarantee and pledge guarantee for the debt of Electronics Group, with the guarantee amount of RMB400 million (in words: RMB Four Hundred Million), and the guarantee will be valid from June 28, 2019 to June 27, 2022. Electronics Group promises that on the date of issuance of this Commitments About the Letter of Commitment, all the 27 Until the made during Electronics release of loans involved in the Maximum October completion of Expired asset Group credit Guarantee Contract and the 2021 this trading restructuring guarantee Maximum Pledge Contract for Stocks of Listed Companies have been repaid, there is no debt based on the guarantee under the above contracts, and 39,876,500 shares of NATIONSTAR held by Sigma have been released from pledge. At the same time, Electronics Group further makes an irrevocable commitment that it will not add any new loans to Guangzhou Branch of Industrial Bank Co., Ltd. as a borrower before the expiration date of the Maximum Guarantee Contract and the Maximum Pledge Contract for Stocks of Listed Companies, so as to ensure that Sigma will not actually assume any guarantee responsibilities due to the above guarantee contracts. 2. Electronics Group promises that it will not arrange for Sigma 48 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 to add any form of guarantee before the completion of the delivery of Sigma's equity in this trading. 3. In case of any violations of the above commitments, Electronics Group shall solve and eliminate the above situation within ten days, and bear corresponding legal responsibilities to Sigma and FSL. They promise that they will not disclose the relevant insider information of this trading or make use of the insider information for insider trading; 2. As of the issuance date of the Report on Major Asset Purchase and Related Party Trading of Foshan Electrical and Lighting Co., Ltd. (Draft), they have not been placed on file for investigation or criminal investigation due to suspected Key insider trading related to this From the date management trading, and have not been subject of the Commitments personnel of About to administrative punishment by issuance of Rising 27 made during absence of the CSRC or criminal the letter of Group, October Expired asset insider responsibility investigated by commitment Electronics 2021 restructuring trading judicial organs according to law until the Group, and for insider trading related to any completion of Rising major asset restructuring, and this trading Capital have not been prohibited from engaging in any major asset restructuring of listed companies according to Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed Companies in the last 36 months; 3. In case of violation of the above commitments, they will bear all losses caused to the listed company and its shareholders. Whether the commitments Yes were timely performed Specific reasons for failing to fulfill commitments N/A on time and plans for next step II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its Related Parties for Non-Operating Purposes □ Applicable Not applicable No such cases in the Reporting Period. 49 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 III Irregularities in the Provision of Guarantees □ Applicable Not applicable No such cases in the Reporting Period. IV Engagement and Disengagement of Independent Auditor Are the interim financial statements audited? □Yes No These interim financial statements are unaudited. V Explanations Given by the Board of Directors and the Supervisory Committee Regarding the Independent Auditor's “Modified Opinion” on the Financial Statements of the Reporting Period □ Applicable Not applicable VI Explanations Given by the Board of Directors Regarding the Independent Auditor's “Modified Opinion” on the Financial Statements of Last Year □ Applicable Not applicable VII Insolvency and Reorganization □ Applicable Not applicable No such cases in the Reporting Period. VIII Legal Matters Significant lawsuits and arbitrations □ Applicable Not applicable No such cases in the Reporting Period. Other legal matters Applicable □ Not applicable Basic Amount Whether Lawsuit Execution of information on involved there are (arbitratio Lawsuit (arbitration) lawsuit Date of Disclosure lawsuit (RMB’0,0 accrued n) results and influences (arbitration) disclosure index (arbitration) 00) liabilities progress judgment Foshan An The second instance Electrical and applicatio judgment reads the Lighting Co., n for defendant should pay No payment Ltd. sued Jiang compulsor RMB11,220,800 and 1,325.57 No has been Zhenghao of y liquidated damages to executed yet. Beijing enforceme the company. Jiang Zhong'ao nt has Zhenghao should be Zhengshi been jointly and severally 50 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Lighting made. liable for the debt. Electric Appliance Co., Ltd. for a dispute over a purchase and sales contract. Foshan Electrical and An The first instance Lighting Co., applicatio judgment reads that the Ltd. sued n for defendant should pay Chongqing Yufo compulsor RMB1,745,100 and No payment Lighting and 174.51 No y interest to plaintiff FSL. has been Electrical Co., enforceme The second instance executed yet. Ltd. for a nt has determined that the dispute over a been defendant withdrew its purchase and made. appeal. sales contract. The first instance judgment: The first Huang Weijian instance confirmed that and the other 11 the employment persons sued Procedure relationship between the Foshan Lighting s for the plaintiff (12 persons) Lamps & second 41.21 No and the defendant had N/A Components instance terminated in June 2021 Co., Ltd. for a are in and rejected other suits dispute over process. of the plaintiff. The economic plaintiff refused to compensation. accept the judgment and instituted an appeal. The first instance judgments: 1. The first instance confirmed the termination of the house purchase and sales contract between the defendant and the plaintiff. 2. The defendant should return Ye Jinxiu sued RMB436,000 and the Foshan Kelian interest to the plaintiff, Procedure New Energy and Shenzhen s for the Technology Co., Chuanglian Real Estate second Ltd. for a 72.43 No Agency Co., Ltd. N/A instance dispute over a should be jointly and are in house purchase severally liable for the process. and sales RMB152,900 that the contract. judgments required to return. 3. The defendant should pay off the loan principal and interest of RMB214,700 to Bank of China, Foshan Fenjiang Sub-branch. Both parties refused to accept the judgments and instituted an appeal. 51 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 The first instance judgments: 1. The first instance confirmed the termination of the house purchase and sales contract between the defendant and the plaintiff. 2. The defendant should return Yu Qiuhong RMB428,700 and the sued Foshan interest to the plaintiff, Kelian New Procedure and Shenzhen Energy s for the Chuanglian Real Estate Technology Co., second 72.47 No Agency Co., Ltd. N/A Ltd. for a instance should be jointly and dispute over a are in severally liable for the house purchase process. RMB149,800 that the and sales judgments required to contract. return. 3. The defendant should pay off the loan principal and interest of RMB222,000 to Bank of China, Foshan Fenjiang Sub-branch. Both parties refused to accept the judgments and instituted an appeal. The first instance judgments: 1. The first instance confirmed the termination of the house purchase and sales contract between the defendant and the plaintiff. 2. The defendant should return Zhong Junying RMB483,500 and the sued Foshan interest to the plaintiff, Kelian New Procedure and Shenzhen Energy s for the Chuanglian Real Estate Technology Co., second 77.08 No Agency Co., Ltd. N/A Ltd. for a instance should be jointly and dispute over a are in severally liable for the house purchase process. RMB206,700 that the and sales judgments require to contract. return. 3. The defendant should pay off the loan principal and interest of RMB214,700 to Bank of China, Foshan Fenjiang Sub-branch. Both parties refused to accept the judgments and instituted an appeal. Mudanjiang Procedure The first instance Huaguang s for the judgments: 1. The 82.51 No N/A Lighting Co., second Company should pay an Ltd. sued instance indemnity of 52 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Foshan are in RMB533,500 and the Electrical and process. interest to the plaintiff. Lighting Co., 2. The Company should Ltd. for a pay RMB80,000 to the dispute over the plaintiff as the liability for tort. authentication fee. 3. The plaintiff should return to the Company the authenticated product that was removed from the shelf in 2019. The Company refused to accept the judgments and instituted an appeal. Tianjin Zhongtong New Technology Development Co., Ltd. sued Procedure Foshan s for the Electrical and first Lighting Co., 33.95 No No suit results. N/A instance Ltd. and Tianjin are in Jinsheng Bida process. Hardware Co., Ltd. for a dispute over a purchase and sales contract. In accordance with the Yu Fangjun arbitration award, made an Foshan Lighting Lamps arbitration & Components Co., request for Procedure Ltd. should pay Yu economic s for the Fangjun RMB29,400 as compensation first 2.94 No economic N/A from Foshan instance compensation. Foshan Lighting Lamps are in Lighting Lamps & & Components process. Components Co., Ltd. Co., Ltd. for an refused to accept the employment judgment and brought a dispute. lawsuit to court. Cai Haiming made an arbitration request for The economic arbitration compensation 5.99 No procedure No arbitration results. N/A from Foshan s are in Electrical and process. Lighting Co., Ltd. for an employment dispute. FSL Zhida Procedure Electric 3.6 No s for the No suit results. N/A Technology Co., first 53 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Ltd. sued instance Qianxinan are in Wanshunda process. Trading Co., Ltd. for a dispute over a purchase and sales contract. Shenzhen Chuanglian Real Estate Agency Co., Ltd. sued Foshan Kelian Procedure New Energy s for the Technology Co., first 572 No No suit results. N/A Ltd. for a instance dispute over the are in contract for the process. sales of commercial properties through the agency. Liang Guohao sued Foshan Kelian New Procedure Energy s for the Technology Co., first 62.3 No No suit results. N/A Ltd. for a instance dispute over a are in house purchase process. and sales contract. Shenzhen Secket Electrician Technology Co., Ltd. sued FSL Zhida Electric Technology Co., Ltd. (FSL Zhida), Chengdu Procedure ArGangle s for the Insulated first 600 No No suit results. N/A Electrical instance Manufacturing are in Co., Ltd., process. Chengdu ArGangle Yuanhu Technology Co., Ltd., and Zhejiang Tmall Network Co., Ltd. for a dispute over 54 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 patent infringement. Guangzhou Cm Punk Optoelectronics Co., Ltd. sued Foshan Procedure NationStar s for the Optoelectronics first Co., Ltd. for a 436.13 No No suit results. N/A instance dispute over a are in purchase and process. sales contract (NationStar Optoelectronics filed a counter- claim.) Foshan NationStar Optoelectronics Procedure Co., Ltd. sued s for the Guangdong first 8.74 No No suit results. N/A VEELK instance Optoelectronic are in Technology Co., process. Ltd. for a contract dispute. Foshan NationStar Optoelectronics Procedure Co., Ltd. sued s for the Deng Jun of first Shenzhen 18.8 No No suit results. N/A instance HOXLED are in Optoelectronic process. Technology Co., Ltd. for a contract dispute. Foshan NationStar Optoelectronics Procedure Co., Ltd. filed s for the for bankruptcy first 44 No No suit results. N/A of Shenzhen instance Ledtek Opto are in Electronics process. Technology Co., Ltd. Shaanxi The first instance Electronic judgments: In Information Procedure accordance with the Group s for the judicial discretion of the Optoelectronics second court, each party should 168 No N/A Technology Co., instance be liable for 50% of the Ltd. sued are in damages. Foshan Foshan process. NationStar NationStar Semiconductor Semiconductor Technology Co., Ltd. 55 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Technology Co., should pay Shaanxi Ltd. for a Electronic Information dispute over a Group Optoelectronics chip purchase Technology Co. and sales RMB54,800 as contract. compensation. The plaintiff refused to accept the judgment and instituted an appeal. IX Punishments and Rectifications □ Applicable Not applicable X Credit Quality of the Company as well as its Controlling Shareholder and De Facto Controller Applicable □ Not applicable In the Reporting Period, the Company and its controlling shareholder and de facto controller were not involved in any unsatisfied court judgments, large-amount overdue liabilities or the like. XI Major Related-Party Transactions 1. Continuing Related-Party Transactions Applicable □ Not applicable Obtai nable As % Appro marke of Index Relati ved Over t price Trans Total total to onshi Type Specif Pricin transa the Metho for Relate action value value Disclo disclo p with of ic g ction appro d of same- d price( (RMB of all sure sed the transa transa princi line ved settle type party RMB’ ’0,000 same- date infor Comp ction ction ple (RMB line or ment transa 0,000) ) type matio any ’0,000 not ctions transa n ) (RMB ctions ’0,000 ) Purch asing produ Fosha cts Bank n and transf Natio Under 30 www. receiv Purch ers or nStar same ing ase of Marke 1,785. 10,50 Dece cninfo Optoe actual 1,785. 0.55% Not bank 1,785. labor materi t price 99 0 mber .com. lectro contro 99 accept 99 servic als 2021 cn nics ller ance e Co., from notes Ltd. relate d party Guan Under Purch Bank 30 www. Purch gdong same asing ase of Marke 275.7 transf 275.7 Dece cninfo Fengh actual produ 275.7 0.08% 2,610 Not materi t price 0 ers or 0 mber .com. ua contro cts als bank 2021 cn Adva ller and 56 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 nced receiv accept Techn ing ance ology labor notes Holdi servic ng e Co., from Ltd. relate d party Purch asing Share produ Prosp holder cts Bank erity that and transf Lamp holds receiv Purch 30 www. ers or s& over ing ase of Marke Dece cninfo 77.35 77.35 0.02% 600 Not bank 77.35 Comp 5% labor materi t price mber .com. onents shares servic als accept 2021 cn Limit of the e ance ed Comp from notes any relate d party A Purch comp asing Hangz any produ hou contro cts Bank Times lled and transf Lighti by a receiv Purch ers or ng ing ase of Marke relate 22.23 22.23 0.01% bank 22.23 N/A and labor materi t price Electr d servic als accept ical indivi e ance Co., dual from notes Ltd. of the relate Comp d party any Purch asing Guan produ gdong cts Bank Electr and transf Under 30 www. onic receiv Purch ers or same Techn ing ase of Marke Dece cninfo actual 85.46 85.46 0.83% 97 Not bank 85.46 ology labor equip t price mber .com. contro accept Resea servic ment 2021 cn ller ance rch e Institu from notes te relate d party Purch asing Jiang produ men cts Bank Dongj and transf iang Under Recei 30 www. receiv ers or Envir same ving ing Marke Dece cninfo onme actual labor 50.24 50.24 0.86% 300 Not bank 50.24 labor t price mber .com. ntal contro servic accept servic 2021 cn Techn ller e ance e ology from notes Co, relate Ltd. d party Fosha Under Purch Recei Marke 14.82 14.82 0.25% Bank 14.82 N/A 57 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 n same asing ving t price transf Fulon actual produ labor ers or g contro cts servic bank Envir ller and e onme receiv accept ntal ing ance Techn labor notes ology servic Co., e Ltd. from relate d party Sellin g Share produ Prosp holder Bank cts erity that transf and 30 www. Lamp holds Sellin ers or provid s& over g Marke 1,148. 1,148. 1,148. Dece cninfo ing 0.26% 4,000 Not bank Comp 5% produ t price 74 74 74 mber .com. labor accept onents shares cts 2021 cn servic ance Limit of the e to ed Comp notes relate any d party Sellin g Natio produ nStar cts Bank Optoe Under and transf Sellin ers or lectro same provid g Marke 1,146. 1,146. nics actual ing 0.26% bank 1,146. N/A produ t price 22 22 (Germ contro labor accept 22 cts any) ller servic ance Co., e to notes Ltd. relate d party Sellin Guan g gdong produ New Bank cts Electr transf Under and 30 www. onics Sellin ers or same provid Infor g Marke 815.9 815.9 Dece cninfo actual ing 0.19% 5,000 Not bank 815.9 matio produ t price 6 6 mber .com. contro labor accept 6 n cts 2021 cn ller servic ance Impor e to t& notes relate Expor d t Ltd. party Sellin g Shenz produ hen Bank cts Zhong transf Under and 30 www. jin Sellin ers or same provid Lingn g Marke Dece cninfo actual ing 60.71 60.71 0.01% 1,550 Not bank 60.71 an produ t price mber .com. contro labor accept Nonfe cts 2021 cn ller servic ance met e to Co. notes relate Ltd. d party Under Sellin Sellin Marke Guan 53.82 53.82 0.01% Bank 53.82 N/A same g g t price 58 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 gzhou actual produ produ transf Wans contro cts cts ers or ller and hun bank provid Invest ing accept ment labor ance Mana servic notes geme e to nt relate Co., d party Ltd. Sellin g Guan produ gdong cts Bank Yixin Under and transf Sellin 30 www. Chang same provid ers or g Marke Dece cninfo cheng actual ing 44.12 44.12 0.01% 1,000 Not bank 44.12 produ t price mber .com. Const contro labor accept cts 2021 cn ructio ller servic ance n e to notes Group relate d party Guan Sellin gzhou g produ Sheng cts Bank du Under and transf Invest Sellin ers or same provid g Marke ment actual ing 28.19 28.19 0.01% bank 28.19 N/A produ t price Devel contro labor accept cts opme ller servic ance e to nt notes relate Co., d Ltd. party Guan Sellin gdong g Zhong produ jin Bank cts Lingn transf Under and an Sellin ers or same provid Junpe g Marke actual ing 12.29 12.29 0.00% bank 12.29 N/A ng produ t price contro labor accept Intelli cts ller servic ance gent e to Equip notes relate ment d Co., party Ltd. Sellin g produ Guan Bank cts gdong transf Under and 30 www. Rising Sellin ers or same provid South g Marke Dece cninfo actual ing 7.00 7 0.00% 600 Not bank 7.00 Const produ t price mber .com. contro labor accept ructio cts 2021 cn ller servic ance n Co., e to Ltd. notes relate d party Guan Under Sellin Sellin Marke 12,00 Bank 30 www. 4.44 4.44 0.00% Not 4.44 gdong same g g t price 0 transf Dece cninfo 59 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Zhong actual produ produ ers or mber .com. nan contro cts cts bank 2021 cn Const ller and accept ructio provid n Co., ing ance Ltd. labor notes servic e to relate d party A Sellin comp g any produ Prosp Bank contro cts erity transf lled and Electr Sellin ers or by a provid ical g Marke relate ing 4.13 4.13 0.00% bank 4.13 N/A (Chin produ t price d labor accept a) cts indivi servic ance Co., dual e to Ltd. notes of the relate Comp d any party Sellin Guan g gdong produ Electr cts Bank onics Under and transf Sellin ers or Infor same provid g Marke matio actual ing 2.78 2.78 0.00% bank 2.78 N/A produ t price n contro labor accept cts Indust ller servic ance ry e to notes Group relate Ltd. d party Guan Sellin gdong g Zhong produ jin Bank cts Lingn transf Under and an Sellin ers or same provid Junpe g Marke actual ing 0.59 0.59 0.00% bank 0.59 N/A ng produ t price contro labor accept Intelli cts ller servic ance gent e to Equip notes relate ment d Co., party Ltd. 5,640. -- 38,25 Total -- -- -- -- -- -- -- 78 7 Large-amount sales return in detail N/A In December 2021, the Company estimated the total value of its continuing transactions with related parties Guangdong Fenghua Advanced Technology Holding Co., Ltd., Prosperity Lamps & Components Limited and its majority-owned subsidiaries, Guangdong Give the actual situation in the Rising Investment Group and its majority-owned subsidiaries, Guangdong Huajian Reporting Period (if any) where an Enterprise Group Co., Ltd. and its majority-owned subsidiaries, Shenzhen Zhongjin estimate had been made for the Lingnan Nonfemet Co. Ltd. and its majority-owned subsidiaries, Guangdong Construction total value of continuing related- party transactions by type to occur Engineering Group Co., Ltd. and its majority-owned subsidiaries, Guangzhou Rising Non- in the Reporting Period ferrous Metal Group Co., Ltd. and its majority-owned subsidiaries, Guangdong Rising Real Estate Group Co., Ltd. and its majority-owned subsidiaries, Guangdong Electronic Technology Research Institute, Guangdong Rising Property Group Co., Ltd. and its majority-owned subsidiaries, Foshan NationStar Optoelectronics Co., Ltd. and its majority- 60 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 owned subsidiaries. In January 2022, the Company’s subsidiary NationStar estimated the total value of its continuing transactions with related parties Guangdong Fenghua Advanced Technology Holding Co., Ltd., Electronics Group and its majority-owned subsidiaries, and Dongjiang Environment and its majority-owned subsidiaries. Concerning the purchases from related parties, the actual amount in 2022 was RMB23.1179 million, accounting for 14.26% of the estimate for 2022. As for the sales to related parties, the actual amount in 2022 was RMB33.2899 million, accounting for 11.42% of the estimate for 2022. Reason for any significant difference between the transaction N/A price and the market reference price (if applicable) 2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests Applicable □ Not applicable Estimat Book ed Transac Content value of value of Transac tion of the Related Related the tion Settlem gains Date of Disclos Related related Pricing transfer relation party transfer price ent and disclos ure party party policy red ship name red (RMB’ method losses ure index transact assets assets 0,000) (RMB’ ion (RMB’ (RMB’ 0,000) 0,000) 0,000) Refer to the valuatio n in the Valuati on Report on the Valuati Announ on cement Project on The in Compa which Comple ny Foshan tion of acquire Electric Transfe Rising Guangd d al and r of Group ong 46,260, Lightin Assets is the 50,099. Rising 021 g Co., 25 in a actual Equity Holdin shares Ltd. 27,824. 60- 53,245. 1,364.3 controll acquisit Cash Februar Major gs of Plans to 28 55,974. 28 7 er of ion y 2022 Asset Group Nation Purchas 63 the Acquisi Co., Star e Compa Ltd. Optoele 52,051, tion ny ctronics 945 disclose held by Shares d on Rising of http://w Group Foshan Nation ww.cni Star nfo.co Optoele m.cn/ ctronics Co., Ltd. Held by Guangd ong Rising Holdin 61 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 gs Group Co., Ltd. and Guangd ong Rising Finance Holdin g Co., Ltd. issued by China United Internat ional Apprais al Consult ing Co., Ltd., and shall be determi ned by both parties through negotiat ion Refer to the valuatio n in the Valuati on Report on the Announ Valuati cement on on The Project Comple Compa in tion of ny which Transfe acquire Rising Foshan d r of Guangd Capital Electric 5,791,9 Assets ong is a al and 6,272.6 24 25 in a Rising wholly- Equity Lightin shares 5- Capital owned acquisit g Co., 3,483.7 6,666.5 Cash Februar Major of 7,008.2 Investm subsidi ion Ltd. y 2022 Asset Nation 3 ent Co., ary of Plans to Acquisi Star Ltd. Rising Purchas Optoele tion Group e ctronics disclose 52,051, held by d on 945 Rising Shares http://w Capital of ww.cni Foshan nfo.co Nation m.cn/ Star Optoele ctronics Co., Ltd. Held by Guangd 62 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 ong Rising Holdin gs Group Co., Ltd. and Guangd ong Rising Finance Holdin g Co., Ltd. issued by China United Internat ional Apprais al Consult ing Co., Ltd., and shall be determi ned by both parties through negotiat ion The Compa Announ ny cement acquire on d 100% of Comple equity tion of Guangd Electro of Value Transfe ong nics Sigma of r of Electro Group (holdin shares Assets nics is a g of 86,372. Equity 25 in a Informa wholly- 79,753, Nation 47,969. 55- 91,798. acquisit Cash Februar Major tion owned 050 Star 53 96,501. 02 ion y 2022 Asset Industr subsidi shares Optoele 19 y ary of of ctronics Acquisi Group Rising Nation held by tion Ltd. Group Star Sigma disclose Optoele d on ctronics http://w ) held by ww.cni Electro nfo.co nics m.cn/ Group Reasons for considerable differences between the transaction price and the None book value or estimated value (if applicable) Upon the acquisition, the Company and its wholly-owned subsidiary combined holds Impact on the Company's operating a total of 132,819,895 shares in NationStar, accounting for 21.48% of NationStar’s 63 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 results and financial conditions total share capital. As such, the Company has become the controlling shareholder of NationStar and Sigma, which have been included in the Company’s consolidated financial statements. During the Reporting Period, NationStar and Sigma combined increased the Company’s operating revenue, net profit attributable to the Company as the parent, total assets and equity attributable to the Company as the parent by RMB1,630 million, RMB13.6437 million, RMB5,237 million and RMB5.1575 million respectively. The actual performance during the Reporting Period if the related-party N/A transaction is conditioned on the performance. 3. Related 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 Non-operating amounts due to and from related parties or not □ Yes No No such cases in the Reporting Period. 5. Transactions with Related Finance Companies Applicable □ Not applicable Deposit business: Daily Actual amount Beginning Ending maximum Interest rate Total Total Related party Relationship balance balance limits range deposited in withdrawn (RMB’0,000) (RMB’0,000) (RMB’0,000) (RMB’0,000) (RMB’0,000) Guangdong Controlled Rising by the same 0.35%- 120,000 88,648.74 227,604.43 270,726.35 45,526.82 Finance Co., controlling 3.30% Ltd. shareholder Loan business: N/A Credit or other financial business: Total amount Actual amount Related party Relationship Type of business (RMB’0,000) (RMB’0,000) Guangdong Rising Controlled by the same Credit granting 100,000 0 Finance Co., Ltd. controlling shareholder 64 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 6. Transactions with Related Parties by Finance Company Controlled by the Company □ Applicable Not applicable No finance company controlled by the Company was involved in making deposits, borrowing, credit granting or any other financial business with any related party. 7. Other Major Related-Party Transactions Applicable □ Not applicable 1. Other non-continuing related-party transactions Transaction Relationship Disclosu Related Type of Specific Pricing amount Method of Disclosure with the re party transaction transaction principle (RMB’0,00 settlement date Company website 0) Purchasing Bank Guangdong products and transfers 9 July 2021 Under same www.cni Zhongnan receiving Receiving Market and 12 actual 4,224.71 or bank nfo.com. Construction labor service labor service price March controller acceptance cn Co., Ltd. from related 2022 party notes Purchasing Bank Guangdong products and transfers Yixin Under same www.cni receiving Receiving Market 6 May Changcheng actual 1,454.35 or bank nfo.com. labor service labor service price 2021 Construction controller acceptance cn from related Group notes party www.cni nfo.com. Guangdong Purchasing Bank cn Zhongren products and transfers (announ Under same 1 receiving Receiving Market cement Group actual 724.26 or bank December labor service labor service price of Construction controller acceptance 2020 from related subsidiar Co., Ltd. party notes y NationSt ar) Purchasing Bank Shenzhen products and Under same transfers Yuepeng receiving Receiving Market actual 47.08 or bank N/A Construction labor service labor service price controller acceptance Co., Ltd. from related party notes 2. The Company put out to tender the EPC project for the smart LED plants 1~3 at the Gaoming production base in November 2021. Upon bidding, review, and announcement, the consortium composed of Guangdong Yixin Changcheng Construction Group Co., Ltd. (primary) and Guangdong Architectural Design & Research Institute Co., Ltd. (member) won the project at RMB129,991,380. Guangdong Yixin Changcheng Construction Group Co., Ltd. is a tier-2 wholly owned subsidiary of Guangdong Rising Holdings Group Co., Ltd. which is the controlling shareholder of the Company. The Company had a related-party transaction regarding the "EPC 65 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 project for the smart LED plants 1~3 at the Gaoming production base of Foshan Electrical and Lighting Co., Ltd." won by the consortium of Guangdong Yixin Changcheng Construction Group Co., Ltd., in accordance with relevant regulations. 3. The Company put out to tender the EPC project for the plant and ancillary facilities at Mei’an High-tech Zone, Hainan Province of Fozhao (Hainan) Technology Co., Ltd. in January 2022. Upon bidding, review, and announcement, the consortium composed of Guangdong Zhongnan Construction Co., Ltd. (primary) and Guangdong Architectural Design & Research Institute Co., Ltd. (member) won the project at the offer of RMB179,051,600. Guangdong Zhongnan Construction Co., Ltd. is a tier-2 wholly owned subsidiary of Guangdong Rising Holdings Group Co., Ltd. which is the controlling shareholder of the Company. The Company had a related-party transaction regarding the "EPC project for the plant and ancillary facilities at Mei’an High-tech Zone, Hainan Province of Fozhao (Hainan) Technology Co., Ltd." won by the consortium of Guangdong Zhongnan Construction Co., Ltd., in accordance with relevant regulations. Index to the current announcement about the said related-party transaction disclosed: Title of announcement Disclosure date Disclosure website Announcement on a Related-Party 28 January 2022 www.cninfo.com.cn Transaction Due to a Call for Public Bids Announcement on a Related-Party 12 March 2022 www.cninfo.com.cn Transaction Due to a Call for Public Bids XII Major 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 Details of leases: Lease Purp Lessor Lessee Leased asset amount Start date End date ose (RMB) Foshan Hi-Tech 1846.81m(reserve land for road in planning Empl NationS 121,890.0 Industries zone) east to Foshan–Kaiping Expressway, 2021-12-2 2023-12-1 oyee tar 0/year Development north to Jihua First Road, and west to parki 66 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Company NationStar Phase II in Chancheng District, ng Foshan City space Rooms 707, 709, 711, 713, 715 and 717 Guangdong Great New (240min total) on 7/F, Great Wall Building, 230,400.0 Offic Wall Building Electron 2021-12-16 2022-12-15 4-8 Siyouxinma Road, Yuexiu District, 0/year e Co., Ltd. ics Guangzhou City Guangdong Great New Room 710 (38min total) on 7/F, Great Wall 36,936.00/ Offic Wall Building Electron Building, 4-8 Siyouxinma Road, Yuexiu 2022-5-16 2023-5-15 year e Co., Ltd. ics District, Guangzhou City Exhibition Hall 2612 (111.35m on 26/F, 193,565.7 Offic Wu Changqing FSL Tower C, Building 2, Courtyard 58, Xinhua 2021-1-1 2022-12-31 6/year e West Street, Tongzhou District, Beijing Xiongxing Village (Datang and Hongnidun) 46.227 mu in Xiongxing Village (Datang and 369,816.0 Offic FSL 2007-8-1 2022-7-30 Wuzhuang Hongnidun) 0/year e Village Committee Xiongxing Village (Jintang and Damiao) 10,071.68/ Offic FSL 2.162 mu in Xiongxing Village (Malutang) 2004-7-1 2022-7-30 Wuzhuang year e Village Committee Zhuangbulin Village 1,365,360/ Offic Wuzhuang FSL 170.67 mu in Zhuangbulin Village 2008-07-01 2023-06-30 year e Village Committee Zhuangbuliang Village 524,336.0 Offic Wuzhuang FSL 65.542 mu in Zhuangbuliang Village 2008-07-01 2023-06-30 0/year e Village Committee Rongxing Village Wuzhuang 273,744.0 Offic FSL 34.218 mu in Rongxing Village 2008-07-01 2023-06-30 Village 0/year e Committee Shenzhen Zhongshan Flower Lamp Post-sales Fenghua Warehouse (2/F, Tower B, 12 Fuqing Second 180,000.0 Offic FSL 2020-12-01 2023-11-30 Logistics Co., Road, Yongxing Industrial Zone, Henglan 0/year e Ltd. Town, Zhongshan City) Shenzhen Zhongshan Warehouse (Plant 6, Yongyi Sixth Fenghua 1,324,800. Offic FSL Road, Yongxing Industrial Zone, Henglan 2021-10-01 2027-09-30 Logistics Co., 00/year e Town, Zhongshan City) Ltd. Guangxi Liuzhou Empl Dongcheng Liuzhou 600,033.6 oyee Investment Guige 5-19/F, Tower 5, Anhe Huating 2021-11-09 2022-11-08 0 /year dormi Development Lighting tory Group Co., Ltd. Guangxi Liuzhou Empl Dongcheng Liuzhou 80,004.48 oyee Investment Guige 20-21/F, Tower 5, Anhe Huating 2021-11-01 2022-10-30 /year dormi Development Lighting tory Group Co., Ltd. Guangxi Liuzhou Liuzhou 80,004.48 Empl 22-23/F, Tower 5, Anhe Huating 2022-04-22 2023-04-21 Dongcheng Guige /year oyee 67 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Investment Lighting dormi Development tory Group Co., Ltd. Guangxi Liuzhou Empl Dongcheng Liuzhou 40,002.24 oyee Investment Guige 24/F, Tower 5, Anhe Huating 2021-09-01 2022-08-31 /year dormi Development Lighting tory Group Co., Ltd. Guangxi Liuzhou Empl Dongcheng Liuzhou 5,661.12 oyee Investment Guige Room 1705, Tower 7, Anhe Huating 2022-05-23 2023-05-22 /year dormi Development Lighting tory Group Co., Ltd. Guangxi Liuzhou Empl Dongcheng Liuzhou 4,473.60 oyee Investment Guige Room 803, Tower 10, Anhe Huating 2021-09-01 2022-08-31 /year dormi Development Lighting tory Group Co., Ltd. Guilin CEKE 5/F, Scientific Research Building, Liuzhou Communication Information Industry Land Lot D-04, 23,657.16 Guige 2020-08-01 2022-07-31 Equipment Co., Chaoyang Village, Qixing District, Guilin /year Offic Lighting Ltd. City e Stora ge of GAC Business Liuzhou 223,496.1 finish Logistics Co., Guige GAC Business Logistics Warehouse 2021-07-01 2022-06-30 6 /year ed Ltd. Lighting produ cts Used Car Export Headquarters Base, south to Qingdao Free Guihua First Road, east to Guihua Second Distri Trade Qingdao Road, north to Guihua Third Road, and west 947,611.1 butio International 2022-01-01 2022-12-31 Guige to Guihua Fourth Road, Free Trade Town 0 /year n Logistics Co., Prefecture, Qianwan Bonded Port Zone, center Ltd. Qingdao City Ware Kunshan Yuanan 280m(E-1, Warehouse 3, Fengshu Bishan Nanning housi Logistics Co., Logistics Park) at 992 Biqing North Road, 57,120.00 Liaowan 2021-05-01 2024-04-30 ng of Ltd. (Bishan Biquan Street, Bishan District, Chongqing /year g mater branch) City ials Changan Nanning Ware Minsheng APLL Liaowan housi 100mat 5 Jiaodao East Avenue, Doudian 54,000.00 Logistics Co., g 2021-01-01 2022-12-31 ng of Town, Fangshan District, Beijing /year Ltd. (Beijing mater branch) ials Ware Hebei Haiji Road Nanning housi 200mat 26 Jiaodao West Avenue, Doudian 91,584.00 Transport Service Liaowan 2022-08-01 2023-07-31 ng of Town, Fangshan District, Beijing /year Co., Ltd. g mater ials Changan Nanning Ware Minsheng APLL Liaowan housi 100 mat 266 Changkong Road, Shuangfeng 42,000.00 Logistics Co., g 2022-01-01 2023-12-31 ng of Street, Yubei District, Chongqing City /year Ltd. (Yubei mater branch) ials Ware Nanning 270 mat 200 meters south to the junction of Hefei Shicheng 87,480.00 housi Liaowan Dabieshan Road and Huolong Road, Shushan 2021-12-01 2022-12-01 Storage Co., Ltd. /year ng of g District, Hefei City mater 68 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 ials Changan Nanning Ware Minsheng APLL Liaowan 700 m at 2 Xiangyuan Road, Chang’an housi 193,200.0 Logistics Co., g Industrial Park, Dingqu Road, Dingzhou City, 2021-01-01 2022-12-31 ng of 0 /year Ltd. (Hebei Hebei Province mater branch) ials Ware Chongqing Nanning housi Sumisho Yunxin 200 mwithin Yudong Dajiang Factory, 67,920.00 Liaowan 2021-12-01 2022-11-30 ng of Logistics Co., Banan District, Chongqing City /year g mater Ltd. ials Nanning Ware Liuzhou 800mopposite the Nanshuangying Industrial Liaowan housi Yuanhong Car Park, Guandong Road, Guantang Industrial g 2022-01-01 2022-12-31 ng of Transport Co., Park, Liudong New District, Liuzhou City, 211,200.0 mater Ltd. Guangxi Province 0 /year ials Liaoning Anji- Ware lianhe Nanning 139mat West Gate 3 of Dongfeng Liuqi, 6 housi 37,687.44 Automotive Liaowan Boyuan Avenue, Yufeng District, Liuzhou 2022-01-01 2022-12-31 ng of /year Logistics Co., g City, Guangxi Province mater Ltd. ials Logis Chongqing Chongqi 3709.86mworkshop space on 1/F of the tics Jinshun Auto ng plant of Chongqing Jinshun Company, 10 1,001,664. 2020-11-01 2023-10-31 wareh Parts Technology Guinuo Baoyun Road, Longxing Town, Yubei 00/year ousin Co., Ltd. Lighting District, Chongqing City g Logis Chongqing Chongqi 817mworkshop space on 2/F of the plant of tics Jinshun Auto ng Chongqing Jinshun Company, 10 Baoyun 147,060.0 2022-04-01 2023-10-30 wareh Parts Technology Guinuo Road, Longxing Town, Yubei District, 0/year ousin Co., Ltd. Lighting Chongqing City g Logis Chongqing Chongqi 400mworkshop space on 2/F of the plant of tics Jinshun Auto ng Chongqing Jinshun Company, 10 Baoyun 72,000.00/ 2022-05-01 2023-10-30 wareh Parts Technology Guinuo Road, Longxing Town, Yubei District, year ousin Co., Ltd. Lighting Chongqing City g Lease items with a greater-than-10% impact on the Company’s gross profit during the Reporting Period: □ Applicable Not applicable No such cases in the Reporting Period. 2. Major guarantees Applicable □ Not applicable Unit: RMB'0,000 Guarantees provided by the Company and its subsidiaries for external parties (exclusive of those for subsidiaries) Disclosure Actual date of the Type Collater Counter Line of Actual guaran Term of Having Guarantee guarantee of Obligor guarante occurren tee al (if guarantee guarante expired for a related line guaran e ce date amoun any) (if any) e or not party or not announceme tee t nt 69 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Total actual Total approved line for amount of such such guarantees in the guarantees in Reporting Period (A1) the Reporting Period (A2) Total actual Total approved line for balance of such such guarantees at the guarantees at end of the Reporting the end of the Period (A3) Reporting Period (A4) Guarantees provided by the Company as the parent for its subsidiaries Disclosure Actual date of the Type Collater Counter Line of Actual guaran Term of Having Guarantee guarantee of Obligor guarante occurren tee al (if guarantee guarante expired for a related line guaran e ce date amoun any) (if any) e or not party or not announceme tee t nt Total actual Total approved line for amount of such such guarantees in the guarantees in Reporting Period (B1) the Reporting Period (B2) Total actual Total approved line for balance of such such guarantees at the guarantees at end of the Reporting the end of the Period (B3) Reporting Period (B4) Guarantees provided between subsidiaries Disclosure Actual date of the Type Collater Counter Line of Actual guaran Term of Having Guarantee guarantee of Obligor guarante occurren tee al (if guarantee guarante expired for a related line guaran e ce date amoun any) (if any) e or not party or not announceme tee t nt Foshan NationS tar 12 June 20 Joint- Semico 30,000.0 12 June 10,00 2018-27 September liabilit None None Yes No nductor 0 2018 0.00 May 2017 y Technol 2022 ogy Co., Ltd. Nanning 30 Liaowa Decemb 1 Joint- ng Auto 24 June 20,000.0 4,770. er 2019- February liabilit None None Yes No Lamp 2021 0 00 1 2021 y Co., Februar Ltd. y 2022 Liuzhou 30 Guige Decemb 26 Joint- Lighting 1,000. er 2019- January liabilit None None Yes No Technol 00 26 2021 y ogy Co., January Ltd. 2022 Liuzhou 24 June 15,000.0 30 Guige 2021 0 Joint- Decemb Lighting 21 April 2,000. liabilit None None er 2019- Yes No Technol 2021 00 y 21 April ogy Co., 2022 Ltd. Liuzhou 22 April 2,000. Joint- 30 None None Yes No Guige 2021 00 liabilit Decemb 70 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Lighting y er 2019- Technol 22 April ogy Co., 2022 Ltd. Nanning Liaowa ng Auto Lamp Co., Ltd.、 23 June Liuzhou 2020-24 Guige 24 June April Foreshi 11 2021、19 4,500. Secure 2022, 25 ne 4,500.00 February Yes None No No January 00 d April Technol 2022 2022 2022-31 ogy Co., Decemb Ltd.、 er 2025 Liuzhou Guige Lighting Technol ogy Co., Ltd. Nanning Liaowa 15 June 11 ng Auto 24 June 5,000. Secure 2020-15 8,100.00 February Yes None No No Lamp 2021 00 d June 2022 Co., 2023 Ltd. Nanning Liaowa ng Auto Lamp Co., Ltd.、 30 Liuzhou Decemb Guige er 2019- Foreshi 23 April 7 May 1,500. Secure ne Yes None 2022, 24 No No 2022 00 d Technol April ogy Co., 2022-31 Ltd.、 Decemb Liuzhou er 2025 Guige Lighting Technol 24 June ogy Co., 2021、19 Ltd. 9,100.00 January Nanning 2022 Liaowa ng Auto Lamp Co., 30 Ltd.、 Decemb Liuzhou er 2019- Guige 23 April Foreshi 7 May 2,000. Secure Yes None 2022, 24 No No ne 2022 00 d April Technol 2022-31 ogy Co., Decemb Ltd.、 er 2025 Liuzhou Guige Lighting Technol ogy Co., 71 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Ltd. Total actual Total approved line for amount of such such guarantees in the 15,000.00 guarantees in 32,770.00 Reporting Period (C1) the Reporting Period (C2) Total actual Total approved line for balance of such such guarantees at the guarantees at 15,000.00 13,000.00 end of the Reporting the end of the Period (C3) Reporting Period (C4) Total guarantee amount (total of the three kinds of guarantees above) Total actual Total guarantee line guarantee approved in the amount in the 15,000.00 32,770.00 Reporting Period Reporting (A1+B1+C1) Period (A2+B2+C2) Total actual guarantee Total approved balance at the guarantee line at the 15,000.00 end of the 13,000.00 end of the Reporting Reporting Period (A3+B3+C3) Period (A4+B4+C4) Total actual guarantee amount (A4+B4+C4) 2.42% as % of the Company’s net assets Of which: Balance of guarantees provided for shareholders, actual controller and their related parties (D) Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E) Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) Total of the three amounts above (D+E+F) Joint responsibilities possibly borne or already borne in the Reporting Period for undue guarantees (if any) Provision of external guarantees in breach of the prescribed procedures (if any) Note: Chongqing Guinuo Lighting Technology Co., Ltd. (referred to as “Chongqing Guinuo”), Qingdao Guige Lighting Technology Co., Ltd. (referred to as “Qingdao Lighting”), Liuzhou Guige Foreshine Technology Co., Ltd. (referred to as “Liuzhou Foreshine”), and Liuzhou Guige Lighting Technology Co., Ltd. (referred to as “Liuzhou Lighting”) are all wholly-owned subsidiaries of Nanning Liaowang Auto Lamp Co., Ltd. (referred to as “Nanning Liaowang”). As of 30 June 2022, guarantees between Nanning Liaowang and its subsidiaries and collaterals are set out in “3. Other” under “XIV Commitments and contingencies” in Part X of this Report. 3. Cash Entrusted for Wealth Management Applicable □ Not applicable Unit: RMB’0,000 Provision for Unrecovered Type Funding source Amount Undue amount impairment on overdue amount unrecovered 72 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 overdue amount Bank financial Self-owned funds 37,191 6,191 0 0 products Total 37,191 6,191 0 0 High-risk wealth management transactions with a significant single amount, or with low security, low liquidity or no principal protection: Applicable □ Not applicable Unit: RMB’0,000 Inde x to trans Typ Actu Pres actio Ann Allo e of al Rec crib Plan n ualiz wan weal Dete Exp gain eipt/ ed for sum Sour ed ce Typ th Begi Use rmin ecte /loss pay proc mor mar ce Endi yiel for Trus e of man Prin nnin of atio d in men edur e y of ng d imp tee trust age cipal g prin n of yiel Rep t of e trans and prin date rate airm ee men date cipal yiel d (if ortin such exec actio othe cipal for ent t d any) g gain uted n or r refer (if prod Peri /loss or not infor ence any) uct od not mati on (if any) Prin Subj Fosh cipal ect an - to bran prot Self- 5 21 actu To ch ecte own Febr Ban 2,00 July Othe al 2.30 64.8 62.3 be of d ed uary Yes Yes k 0 202 r inve % 6 3 recei Ping with fund 202 float s 2 stme ved An 1 ing nt Ban yiel peri k d od Subj Fosh Prin ect an cipal - to bran Self- 11 prot 12 actu To ch own Apri Ban ecte 3,00 July Othe al 2.30 21.2 18.5 be of ed l Yes Yes k d 0 202 r inve % 6 5 recei Ban fund 202 with 2 stme ved k of s 2 float nt Chin ing yiel peri a d od Not prin cipal 3 Cred Wit Indu - Self- Sept 22 itor,s hdra To stria prot own Ban 1,19 emb July right wal 3.00 50.7 be l ecte ed Yes Yes k 1 er 202 s at % 8 recei Ban d fund with s 202 2 asset any ved k float 1 s time ing yiel d Total 6,19 -- -- -- -- -- -- 136. 80.8 -- 0 -- -- -- 73 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 1 9 8 Situation where the principal is expectedly irrecoverable or an impairment may be incurred: □ Applicable Not applicable 4. Other Significant Contracts □ Applicable Not applicable No such cases in the Reporting Period. XIII Other Significant Events Applicable □ Not applicable Retirement of shares: The Company held the 26th Meeting of the Ninth Board of Directors on 14 January 2022, where the Proposal on Retirement of Some Shares in the Company's Repurchase Special Securities Account was deliberated and approved. The Board of Directors agreed to use the repurchased 13 million A shares for the equity incentive plan. After deducting the 13 million A shares used for the equity incentive plan, the remaining 18,952,995 repurchased A shares and 18,398,512 repurchased B shares would be retired, totalling 37,351,507 shares. On 8 February 2022, the above-mentioned shares were retired, and the total share capital of the Company was changed from 1,399,346,154 shares to 1,361,994,647 shares. XIV Significant Events of Subsidiaries Applicable □ Not applicable 1. Expropriation of land and above-ground housing of Nanjing Fozhao The Company held the 24th Meeting of the Ninth Board of Directors on 15 December 2021, where the Proposal on Expropriation of Land and Above-ground Housing of the Wholly-owned Subsidiary Nanjing Fozhao Lighting Equipment Manufacturing Co., Ltd., was deliberated and adopted. The Board of Directors agreed that Nanjing Lishui District People's Government expropriates the land use rights and above-land housing of Nanjing Fozhao Lighting Equipment Manufacturing Co., Ltd. (hereinafter referred to as "Nanjing Fozhao"), a wholly-owned subsidiary of the Company, at a compensation amount of RMB183,855,895, and Nanjing Fozhao signed an expropriation and compensation agreement with Lishui County House Dismantling, Moving & Resettling Development Co., Ltd., the implementing unit of the housing expropriation. As of 30 June 2022, Nanjing Fozhao 74 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 has received 30% of the compensation, that is, RMB55,160,000.00, and the land use right certificate and house ownership certificate of the assets involved have been cancelled. As of the date of this report, the site handover is still in progress. 2. Cancellation of FSL LIGHTING GmbH On 22 October 2021, FSL held an office meeting of the general manager, where the proposal for cancellation of its wholly-owned subsidiary FSL LIGHTING GmbH was deliberated and adopted. As of the end of the reporting period, the Company is handling the relevant procedures for liquidation and cancellation. 3. Acquisition of NationStar and Sigma The Company has completed in February 2022 the major asset restructuring involving the acquisition of a 21.32% stake held by Rising Group and its acting-in-concert parties in NationStar Optoelectronics. Upon the acquisition, the Company eventually holds a 21.48% interest in NationStar. NationStar and Sigma have become majority- owned subsidiaries of the Company. For further information, see “2. Business combinations involving entities under common control” under Note VIII to the financial statements. 75 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Part VII Share Changes and Shareholder Information I Share Changes 1. Share Changes Unit: share Before Increase/decrease in the Reporting Period (+/-) After Shares as Shares as dividend dividend Percentag New converted Percentag Shares converted Other Subtotal Shares e (%) issues from e (%) from capital profit reserves 1. 13,169,19 - - 10,765,86 Restricted 0.94% 0.79% 6 2,403,332 2,403,332 4 shares 1.1 Shares held by the state 1.2 Shares held by - - 2,415,539 0.17% 1 0.00% state-own 2,415,538 2,415,538 legal person 1.3 Shares held by 1,826,025 0.13% 12,206 12,206 1,838,231 0.13% other domestic investors Among which: shares held by 1,338,434 0.10% 1,338,434 0.10% domestic legal person Shares held by domestic 487,591 0.03% 12,206 12,206 499,797 0.04% natural person 1.4 Oversea 8,927,632 0.64% 8,927,632 0.66% sharehold ings Among 76 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 which: shares held by oversea legal person Shares held by oversea 8,927,632 0.64% 8,927,632 0.66% natural person 2. - - 1,386,176 1,351,228 Unrestrict 99.06% 34,948,17 34,948,17 99.21% ,958 ,783 ed shares 5 5 2.1 RMB - - 1,073,038 1,056,488 ordinary 76.68% 16,549,66 16,549,66 77.57% ,507 ,844 shares 3 3 2.2 Domestic - - 313,138,4 294,739,9 ally listed 22.38% 18,398,51 18,398,51 21.64% 51 39 foreign 2 2 shares 2.3 Oversea listed foreign shares 2.4 Other - - 3. Total 1,399,346 1,361,994 100.00% 37,351,50 37,351,50 100.00% shares ,154 ,647 7 7 Reasons for share changes: Applicable □ Not applicable 1. During the Reporting Period, the Company has deregistered a total of 37,351,507 shares, including the repurchased A shares of 18,952,995 and the repurchased B shares of 18,398,512, resulting in the decrease in total share capital of the Company of 37,351,507 shares. 2. During the Reporting Period, 12,206 restricted shares were added, given the locking, as stipulated, of the shares held by some directors and senior management personnel who had left the post. 3. 2,415,538 shares, restricted due to the reform of shareholder structure, were lifted into non-restricted during the Reporting Period. Approval of share changes: Applicable □ Not applicable 77 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 1. The Company held the 26th Meeting of the 9th Board of Directors on 14 January 2022, where the Proposal on Cancelling Some Shares of the Company's Repurchase Special Securities Account was deliberated and adopted. Meanwhile, the Board of Directors agreed to deregister a total of 37,351,507 shares, including the repurchased A shares of 18,952,995 and the repurchased B shares of 18,398,512. On 8 February 2022, the above-mentioned shares for cancellation were canceled, and the total share capital of the Company was changed from 1,399,346,154 shares to 1,361,994,647 shares. 2. During the Reporting Period, the application for the addition of 12,206 restricted shares, given the locking, as stipulated, of the shares held by some directors and senior management personnel who had left the post was approved by Shenzhen Stock Exchange and China Securities Depository and Clearing Corporation Limited (CSDC). 3. The lifting of 2,415,538 shares, restricted due to the reform of shareholder structure, into non-restricted during the Reporting Period was approved by Shenzhen Stock Exchange and CSDC. Transfer of share ownership: □Applicable Not applicable Progress on any share repurchase: □Applicable Not applicable Progress on reducing the repurchased shares by means of centralized bidding: □Applicable Not applicable Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinary shareholders and other financial indicators of the prior year and the prior accounting period, respectively: □Applicable Not applicable Other information that the Company considers necessary or is required by the securities regulator to be disclosed: □Applicable Not applicable 2. Changes in Restricted Shares Applicable □ Not applicable Unit: share Restricted Restricted Restricted Restricted Restricted Name of the shares amount shares shares amount Restricted shares relieved shares relieved shareholders at the period- increased of the at the period- reasons of the period date begin period end Foshan Branch 2,415,538 2,415,538 0 0 Pre-IPO 26 April 2022 78 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 of ABC restricted shares Shares of the Company held by him cannot be transferred within six Locked for months after Cheng Ke 8,662 0 2,888 11,550 resignation of resignation, and director relevant provisions shall be carried out when the lock- in period expires Shares of the Company held by him cannot be transferred within six Locked for months after resignation of Xu Xiaoping 27,952 0 9,318 37,270 resignation, and senior relevant management provisions shall be carried out when the lock- in period expires Total 2,452,152 2,415,538 12,206 48,820 -- -- II. Issuance and Listing of Securities □Applicable Not applicable III. Total Number of Shareholders and Their Shareholdings Unit: share Total number of ordinary Total number of preference shareholders shareholders at the period- 68,196 with resumed voting rights at the period- 0 end end (if any) (see Note 8) Shareholding of ordinary shareholders holding more than 5% shares or the top 10 of ordinary shareholders Total Increase/de Shares in pledge, marked Non- Shareholdi ordinary crease in Restricted or frozen Name of Nature of restricted ng shares held the ordinary shareholder shareholder ordinary Status of percentage at the Reporting shares held Amount shares held shares period-end Period Hongkong Wah Shing Foreign 188,496,43 188,496,43 Holding legal 13.84% In pledge 92,363,251 Company person 0 0 Limited Prosperity Foreign Lamps & 146,934,85 146,934,85 legal 10.89% Component 7 7 person s Limited Guangdong State- 9.01% 122,694,24 122,694,24 In pledge 32,532,815 79 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Electronics owned 6 6 Informatio legal n Industry person Group Ltd. Guangdong State- Rising owned Holdings 6.10% 83,130,898 83,130,898 legal Group Co., person Ltd. Essence Internation al Foreign Securities legal 2.65% 36,138,459 552,422 36,138,459 (Hong person Kong) Co., Ltd. Central State- Huijin owned Asset 2.43% 33,161,800 33,161,800 legal Manageme person nt Co., Ltd. Rising Foreign Investment legal 1.87% 25,482,252 25,482,252 Developme person nt Limited China Merchants State- Securities owned 1.06% 14,448,307 14,448,307 (Hong legal Kong) Co., person Ltd Foreign Zhuang natural 0.87% 11,903,509 8,927,632 2,975,877 Jianyi person DBS VICKERS Foreign (HONG legal 0.72% 9,744,456 9,744,456 KONG) person LTD A/C CLIENTS Strategic investors or general corporations becoming top-ten Naught shareholders due to placing of new shares (if any) (see Note 3) Among the top 10 shareholders, Hongkong Wah Shing Holding Company Limited, Guangdong Rising Holdings Group Co., Ltd., Guangdong Electronics Information Industry Group Ltd. and Related or acting-in- Rising Investment Development Limited are acting-in-concert parties; and Prosperity Lamps & concert parties among the Components Limited and Zhuang Jianyi are acting-in-concert parties. Apart from that, it is unknown shareholders above whether there is among the top 10 shareholders any other related parties or acting-in-concert parties as defined in the Administrative Measures for the Acquisition of Listed Companies. Above shareholders involved in entrusting/being entrusted Naught with voting rights and giving up voting rights Special account for share repurchases (if any) As of the period-end, the Company had 13,000,000 A-shares of it in its special account for share among the top 10 repurchases, accounting for 0.95% of the Company’s total share capital. shareholders (see note 11) Top 10 unrestricted shareholders Type of shares Name of shareholder Unrestricted shares at the Period-end Type Shares 80 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 RMB- Hongkong Wah Shing denominate 188,496,43 Holding Company 188,496,430 d ordinary 0 Limited stock RMB- Prosperity Lamps & denominate 146,934,85 146,934,857 Components Limited d ordinary 7 stock RMB- Guangdong Electronics denominate 122,694,24 Information Industry 122,694,246 d ordinary 6 Group Ltd. stock RMB- Guangdong Rising denominate 83,130,898 83,130,898 Holdings Group Co., Ltd. d ordinary stock Domestical Essence International ly listed Securities (Hong Kong) 36,138,459 36,138,459 Co., Ltd. foreign stock RMB- Central Huijin Asset denominate 33,161,800 33,161,800 Management Co., Ltd. d ordinary stock Domestical Rising Investment ly listed 25,482,252 25,482,252 Development Limited foreign stock Domestical China Merchants ly listed Securities (Hong Kong) 14,448,307 14,448,307 Co., Ltd foreign stock Domestical DBS VICKERS (HONG ly listed KONG) LTD A/C 9,744,456 9,744,456 CLIENTS foreign stock RMB- denominate Zhang Shaowu 9,600,050 9,600,050 d ordinary stock Related or acting-in- concert parties among the Among the top 10 unrestricted ordinary shareholders, Hong Kong Wah Shing Holding Company top 10 unrestricted Limited, Guangdong Rising Holdings Group Co., Ltd., Guangdong Electronics Information Industry ordinary shareholders, as Group Ltd., and Rising Investment Development Limited are acting-in-concert parties; Apart from well as between the top 10 that, it is unknown whether there is among the top 10 shareholders any other related parties or unrestricted ordinary acting-in-concert parties as defined in the Administrative Measures for the Acquisition of Listed shareholders and the top Companies. 10 ordinary shareholders Top 10 ordinary shareholders involved in None securities margin trading (if any) (see note 4) Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the Company conducted any promissory repo during the Reporting Period. □Yes No No such cases in the Reporting Period. 81 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 IV Change in Shareholdings of Directors, Supervisors and Senior Management □Applicable Not applicable No changes occurred to the shareholdings of the directors, supervisors and senior management in the Reporting Period. See the 2021 Annual Report for more details. V Change of the Controlling Shareholder or the Actual Controller Change of the controlling shareholder in the Reporting Period □Applicable Not applicable No such cases in the Reporting Period. Change of the actual controller in the Reporting Period □Applicable Not applicable No such cases in the Reporting Period. 82 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Part VIII Preference Shares □Applicable Not applicable No preference shares in the Reporting Period. 83 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Part IX Bonds □Applicable Not applicable 84 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Part X Financial Statements I Auditor’s Report Whether the interim report has been audited? □Yes No The interim report of the Company has not been audited. II Financial Statements Currency unit for the financial statements and the notes thereto: RMB 1. Consolidated Balance Sheet Prepared by Foshan Electrical and Lighting Co., Ltd. 30 June 2022 Unit: RMB Item 30 June 2022 1 January 2022 Current assets: Monetary assets 1,839,439,636.83 2,381,911,655.35 Settlement reserve Interbank loans granted Held-for-trading financial assets 64,068,462.40 348,248,125.61 Derivative financial assets Notes receivable 1,413,792,273.37 1,690,356,491.64 Accounts receivable 2,186,178,543.84 1,981,538,844.26 Accounts receivable financing Prepayments 38,244,161.07 33,474,104.32 Premiums receivable Reinsurance receivables Receivable reinsurance contract reserve Other receivables 31,235,165.53 37,523,072.02 Including: Interest receivable Dividends receivable Financial assets purchased under resale agreements Inventories 1,819,669,430.66 1,969,998,988.39 Contract assets 8,089,556.63 8,561,303.10 Assets held for sale 17,147,339.84 23,831,992.10 Current portion of non-current assets Other current assets 54,343,517.04 125,675,148.17 Total current assets 7,472,208,087.21 8,601,119,724.96 Non-current assets: Loans and advances to customers Investments in debt obligations Investments in other debt obligations Long-term receivables Long-term equity investments 180,115,189.99 181,545,123.09 Investments in other equity 1,164,717,479.92 1,504,980,024.07 instruments Other non-current financial assets 85 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Investment property 42,165,255.37 43,347,824.34 Fixed assets 3,337,546,197.41 3,360,339,910.95 Construction in progress 1,094,362,246.23 1,087,261,052.63 Productive living assets Oil and gas assets Right-of-use assets 11,363,508.05 14,126,206.08 Intangible assets 364,277,890.38 368,954,162.34 Development costs Goodwill 421,831,593.46 421,831,593.46 Long-term prepaid expense 174,834,483.73 152,726,512.56 Deferred income tax assets 79,972,630.78 82,261,788.58 Other non-current assets 49,992,676.97 499,349,770.41 Total non-current assets 6,921,179,152.29 7,716,723,968.51 Total assets 14,393,387,239.50 16,317,843,693.47 Current liabilities: Short-term borrowings 65,115,000.00 226,779,997.01 Borrowings from the central bank Interbank loans obtained Held-for-trading financial liabilities 6,544,500.00 9,367.37 Derivative financial liabilities Notes payable 1,607,406,305.48 2,067,111,789.71 Accounts payable 2,228,681,333.31 2,429,896,658.92 Advances from customers 4,959,545.56 8,106,923.79 Contract liabilities 161,528,315.35 140,228,127.84 Financial assets sold under repurchase agreements Customer deposits and interbank deposits Payables for acting trading of securities Payables for underwriting of securities Employee benefits payable 140,988,596.59 167,784,089.64 Taxes payable 77,374,922.57 90,981,474.60 Other payables 297,828,933.33 333,128,771.81 Including: Interest payable Dividends payable 15,646.07 15,646.07 Handling charges and commissions payable Reinsurance payables Liabilities directly associated with assets held for sale Current portion of non-current 30,383,518.75 27,600,186.15 liabilities Other current liabilities 9,952,101.27 10,577,082.29 Total current liabilities 4,630,763,072.21 5,502,204,469.13 Non-current liabilities: Insurance contract reserve Long-term borrowings 556,590,467.75 Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities 7,287,442.67 8,065,560.58 Long-term payables Long-term employee benefits payable Provisions 18,378,155.88 17,418,343.01 Deferred income 108,223,263.15 116,761,570.35 Deferred income tax liabilities 252,930,119.39 280,172,789.59 Other non-current liabilities 11,334.19 22,653.46 Total non-current liabilities 943,420,783.03 422,440,916.99 86 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Total liabilities 5,574,183,855.24 5,924,645,386.12 Owners’ equity: Share capital 1,361,994,647.00 1,399,346,154.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 7,245,971.54 994,114,567.16 Less: Treasury stock 82,165,144.15 250,600,874.54 Other comprehensive income 754,018,430.97 982,972,358.89 Specific reserve Surplus reserves 86,780,516.19 741,353,347.96 General reserve Retained earnings 3,245,999,616.02 3,119,317,423.25 Total equity attributable to owners of the 5,373,874,037.57 6,986,502,976.72 Company as the parent Non-controlling interests 3,445,329,346.69 3,406,695,330.63 Total owners’ equity 8,819,203,384.26 10,393,198,307.35 Total liabilities and owners’ equity 14,393,387,239.50 16,317,843,693.47 Legal representative: Wu Shenghui Chief Financial Officer: Tang Qionglan Person-in-charge of the Company’s accounting organ: Liang Yuefei 2. Balance Sheet of the Company as the Parent Unit: RMB Item 30 June 2022 1 January 2022 Current assets: Monetary assets 424,568,145.97 1,017,365,290.91 Held-for-trading financial assets 304,385,804.11 Derivative financial assets Notes receivable 66,011,888.67 72,114,026.44 Accounts receivable 1,187,803,897.82 1,058,935,664.33 Accounts receivable financing Prepayments 10,173,470.35 9,292,256.82 Other receivables 447,027,739.63 511,056,231.24 Including: Interest receivable Dividends receivable Inventories 451,972,910.39 617,905,747.50 Contract assets 8,089,556.63 8,561,303.10 Assets held for sale Current portion of non-current assets Other current assets 3,364,413.79 36,097,001.14 Total current assets 2,599,012,023.25 3,635,713,325.59 Non-current assets: Investments in debt obligations Investments in other debt obligations Long-term receivables Long-term equity investments 2,476,746,428.40 1,243,081,889.11 Investments in other equity 1,123,657,619.00 1,474,860,785.15 instruments Other non-current financial assets Investment property 42,165,255.37 43,347,824.34 Fixed assets 556,849,101.34 576,386,630.08 Construction in progress 159,339,701.41 120,514,314.18 Productive living assets Oil and gas assets 87 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Right-of-use assets 8,374,369.62 9,827,757.94 Intangible assets 121,933,831.47 123,089,721.51 Development costs Goodwill Long-term prepaid expense 30,088,478.45 31,897,595.21 Deferred income tax assets 30,707,247.51 31,373,123.07 Other non-current assets 12,476,726.67 460,618,564.04 Total non-current assets 4,562,338,759.24 4,114,998,204.63 Total assets 7,161,350,782.49 7,750,711,530.22 Current liabilities: Short-term borrowings 127,596,999.82 Held-for-trading financial liabilities 6,544,500.00 Derivative financial liabilities Notes payable 302,876,558.69 445,480,718.92 Accounts payable 895,575,614.41 949,520,447.82 Advances from customers 4,571,428.58 6,857,142.86 Contract liabilities 60,532,518.14 64,120,388.15 Employee benefits payable 36,712,883.94 51,520,068.31 Taxes payable 17,175,805.06 57,207,865.54 Other payables 190,933,919.17 223,535,108.76 Including: Interest payable Dividends payable Liabilities directly associated with assets held for sale Current portion of non-current 2,561,186.34 2,800,876.97 liabilities Other current liabilities 6,598,016.36 5,920,593.62 Total current liabilities 1,524,082,430.69 1,934,560,210.77 Non-current liabilities: Long-term borrowings 336,484,109.53 Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities 5,813,183.28 7,026,880.97 Long-term payables Long-term employee benefits payable Provisions Deferred income Deferred income tax liabilities 132,200,329.05 173,532,376.03 Other non-current liabilities Total non-current liabilities 474,497,621.86 180,559,257.00 Total liabilities 1,998,580,052.55 2,115,119,467.77 Owners’ equity: Share capital 1,361,994,647.00 1,399,346,154.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 17,742,717.33 22,568,665.93 Less: Treasury stock 82,165,144.15 250,600,874.54 Other comprehensive income 754,235,498.30 984,695,765.83 Specific reserve Surplus reserves 300,561,517.94 741,353,347.96 Retained earnings 2,810,401,493.52 2,738,229,003.27 Total owners’ equity 5,162,770,729.94 5,635,592,062.45 Total liabilities and owners’ equity 7,161,350,782.49 7,750,711,530.22 Legal representative: Wu Shenghui Chief Financial Officer: Tang Qionglan 88 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Person-in-charge of the Company’s accounting organ: Liang Yuefei 3. Consolidated Income Statement Unit: RMB Item H1 2022 H1 2021 1. Revenue 4,348,268,999.31 3,626,200,260.17 Including: Operating revenue 4,348,268,999.31 3,626,200,260.17 Interest income Insurance premium income Handling charge and commission income 2. Costs and expenses 4,084,194,362.54 3,409,104,001.88 Including: Cost of sales 3,588,065,798.35 3,009,499,337.22 Interest expense Handling charge and commission expense Surrenders Net insurance claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium expense Taxes and surcharges 24,369,990.32 22,743,190.88 Selling expense 109,839,926.73 96,772,619.15 Administrative expense 177,742,698.77 139,620,767.72 R&D expense 208,176,593.76 144,120,095.18 Finance costs -24,000,645.39 -3,652,008.27 Including: Interest expense 6,688,232.76 2,871,203.53 Interest income 12,905,461.82 14,130,946.82 Add: Other income 37,771,447.80 33,569,233.15 Return on investment (“-” for loss) 19,613,744.86 5,493,482.75 Including: Share of profit or loss 650,457.40 37,460.99 of joint ventures and associates Income from the derecognition of financial assets at amortized cost (“-” for loss) Exchange gain (“-” for loss) Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” -10,766,595.97 1,929,788.30 for loss) Credit impairment loss (“-” for -17,052,498.84 1,681,781.89 loss) Asset impairment loss (“-” for -23,388,143.98 -23,464,653.80 loss) Asset disposal income (“-” for 82,362.19 1,782,280.34 loss) 3. Operating profit (“-” for loss) 270,334,952.83 238,088,170.92 Add: Non-operating income 8,961,693.96 3,948,332.41 Less: Non-operating expense 7,844,063.02 3,694,645.11 4. Profit before tax (“-” for loss) 271,452,583.77 238,341,858.22 Less: Income tax expense 41,141,912.01 43,339,378.75 5. Net profit (“-” for net loss) 230,310,671.76 195,002,479.47 5.1 By operating continuity 5.1.1 Net profit from continuing 230,310,671.76 195,002,479.47 operations (“-” for net loss) 5.1.2 Net profit from discontinued 89 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 operations (“-” for net loss) 5.2 By ownership 5.2.1 Net profit attributable to 160,664,433.28 122,377,552.60 owners of the Company as the parent 5.2.1 Net profit attributable to non- 69,646,238.48 72,624,926.87 controlling interests 6. Other comprehensive income, net of -128,025,149.83 -243,003,831.01 tax Attributable to owners of the -128,036,703.73 -243,003,831.01 Company as the parent 6.1 Items that will not be -128,132,332.34 -242,940,301.27 reclassified to profit or loss 6.1.1 Changes caused by remeasurements on defined benefit schemes 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 6.1.3 Changes in the fair value of -128,132,332.34 -242,940,301.27 investments in other equity instruments 6.1.4 Changes in the fair value arising from changes in own credit risk 6.1.5 Other 6.2 Items that will be reclassified to 95,628.61 -63,529.74 profit or loss 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 6.2.2 Changes in the fair value of investments in other debt obligations 6.2.3 Other comprehensive income arising from the reclassification of financial assets 6.2.4 Credit impairment allowance for investments in other debt obligations 6.2.5 Reserve for cash flow hedges 6.2.6 Differences arising from the translation of foreign currency- 95,628.61 -63,529.74 denominated financial statements 6.2.7 Other Attributable to non-controlling 11,553.90 interests 7. Total comprehensive income 102,285,521.93 -48,001,351.54 Attributable to owners of the 32,627,729.55 -120,626,278.41 Company as the parent Attributable to non-controlling 69,657,792.38 72,624,926.87 interests 8. Earnings per share 8.1 Basic earnings per share 0.1191 0.0907 8.2 Diluted earnings per share 0.1180 0.0899 Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before the combinations was RMB9,568,639.83, with the amount for the same period of last year being RMB 89,810,090.36. Legal representative: Wu Shenghui Chief Financial Officer: Tang Qionglan Person-in-charge of the Company’s accounting organ: Liang Yuefei 4. Income Statement of the Company as the Parent Unit: RMB Item H1 2022 H1 2021 90 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 1. Operating revenue 1,809,179,992.86 1,797,795,292.73 Less: Cost of sales 1,476,364,107.19 1,485,965,900.74 Taxes and surcharges 10,450,725.11 11,528,913.49 Selling expense 60,671,112.08 58,577,327.98 Administrative expense 65,659,865.20 69,674,599.21 R&D expense 80,982,862.27 66,804,608.38 Finance costs -11,830,352.67 -3,595,436.39 Including: Interest expense 4,427,927.34 Interest income 3,313,721.07 7,925,093.81 Add: Other income 5,635,099.60 5,739,842.06 Return on investment (“-” for loss) 21,542,755.12 11,964,194.51 Including: Share of profit or loss 650,457.40 37,460.99 of joint ventures and associates Income from the derecognition of financial assets at amortized cost (“-” for loss) Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” -10,811,400.00 1,940,000.00 for loss) Credit impairment loss (“-” for -9,623,686.25 2,978,976.42 loss) Asset impairment loss (“-” for -6,552,785.39 -9,907,597.40 loss) Asset disposal income (“-” for 1,781,700.24 loss) 2. Operating profit (“-” for loss) 127,071,656.76 123,336,495.15 Add: Non-operating income -667,333.19 2,012,089.62 Less: Non-operating expense 4,998,457.51 226,124.51 3. Profit before tax (“-” for loss) 121,405,866.06 125,122,460.26 Less: Income tax expense 15,251,135.30 18,362,006.98 4. Net profit (“-” for net loss) 106,154,730.76 106,760,453.28 4.1 Net profit from continuing 106,154,730.76 106,760,453.28 operations (“-” for net loss) 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income, net of -129,543,043.34 -242,940,301.27 tax 5.1 Items that will not be reclassified -129,543,043.34 -242,940,301.27 to profit or loss 5.1.1 Changes caused by remeasurements on defined benefit schemes 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 5.1.3 Changes in the fair value of -129,543,043.34 -242,940,301.27 investments in other equity instruments 5.1.4 Changes in the fair value arising from changes in own credit risk 5.1.5 Other 5.2 Items that will be reclassified to profit or loss 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 5.2.2 Changes in the fair value of investments in other debt obligations 5.2.3 Other comprehensive income arising from the reclassification of financial assets 5.2.4 Credit impairment allowance for investments in other debt obligations 91 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 5.2.5 Reserve for cash flow hedges 5.2.6 Differences arising from the translation of foreign currency- denominated financial statements 5.2.7 Other 6. Total comprehensive income -23,388,312.58 -136,179,847.99 7. Earnings per share 7.1 Basic earnings per share 7.2 Diluted earnings per share Legal representative: Wu Shenghui Chief Financial Officer: Tang Qionglan Person-in-charge of the Company’s accounting organ: Liang Yuefei 5. Consolidated Cash Flow Statement Unit: RMB Item H1 2022 H1 2021 1. Cash flows from operating activities: Proceeds from sale of commodities 4,002,503,578.81 3,946,336,085.43 and rendering of services Net increase in customer deposits and interbank deposits Net increase in borrowings from the central bank Net increase in loans from other financial institutions Premiums received on original insurance contracts Net proceeds from reinsurance Net increase in deposits and investments of policy holders Interest, handling charges and commissions received Net increase in interbank loans obtained Net increase in proceeds from repurchase transactions Net proceeds from acting trading of securities Tax rebates 145,624,893.13 93,570,819.45 Cash generated from other operating 119,333,795.35 89,817,744.05 activities Subtotal of cash generated from 4,267,462,267.29 4,129,724,648.93 operating activities Payments for commodities and services 3,065,999,967.63 2,761,223,153.05 Net increase in loans and advances to customers Net increase in deposits in the central bank and in interbank loans granted Payments for claims on original insurance contracts Net increase in interbank loans granted Interest, handling charges and commissions paid Policy dividends paid Cash paid to and for employees 702,961,459.58 622,589,181.75 Taxes paid 182,912,490.66 122,117,306.79 Cash used in other operating activities 165,553,443.03 177,582,001.14 Subtotal of cash used in operating 4,117,427,360.90 3,683,511,642.73 activities Net cash generated from/used in 150,034,906.39 446,213,006.20 92 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment 502,992,240.66 315,735,017.52 Return on investment 21,038,833.14 454,878,942.50 Net proceeds from the disposal of fixed assets, intangible assets and other long- 232,233.41 7,762,670.18 lived assets Net proceeds from the disposal of subsidiaries and other business units Cash generated from other investing activities Subtotal of cash generated from 524,263,307.21 778,376,630.20 investing activities Payments for the acquisition of fixed assets, intangible assets and other long- 330,641,926.08 215,505,442.11 lived assets Payments for investments 71,695,763.31 29,402,110.68 Net increase in pledged loans granted Net payments for the acquisition of subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 402,337,689.39 244,907,552.79 activities Net cash generated from/used in 121,925,617.82 533,469,077.41 investing activities 3. Cash flows from financing activities: Capital contributions received Including: Capital contributions by non-controlling interests to subsidiaries Borrowings raised 687,436,000.00 Cash generated from other financing 53,126,214.00 1,339,606.80 activities Subtotal of cash generated from 740,562,214.00 1,339,606.80 financing activities Repayment of borrowings 309,876,000.00 Interest and dividends paid 159,400,451.54 36,111,859.97 Including: Dividends paid by 23,912,623.05 subsidiaries to non-controlling interests Cash used in other financing activities 1,062,094,428.42 304,224,485.91 Subtotal of cash used in financing 1,531,370,879.96 340,336,345.88 activities Net cash generated from/used in -790,808,665.96 -338,996,739.08 financing activities 4. Effect of foreign exchange rates 19,953,587.60 -8,764,472.98 changes on cash and cash equivalents 5. Net increase in cash and cash -498,894,554.15 631,920,871.55 equivalents Add: Cash and cash equivalents, 1,886,894,463.37 1,325,464,361.36 beginning of the period 6. Cash and cash equivalents, end of the 1,387,999,909.22 1,957,385,232.91 period Legal representative: Wu Shenghui Chief Financial Officer: Tang Qionglan Person-in-charge of the Company’s accounting organ: Liang Yuefei 6. Cash Flow Statement of the Company as the Parent Unit: RMB Item H1 2022 H1 2021 1. Cash flows from operating activities: Proceeds from sale of commodities 1,647,925,557.33 1,850,655,815.39 and rendering of services 93 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Tax rebates 66,177,691.70 63,217,537.03 Cash generated from other operating 49,023,640.18 51,058,701.35 activities Subtotal of cash generated from 1,763,126,889.21 1,964,932,053.77 operating activities Payments for commodities and services 1,182,528,555.48 1,436,749,486.58 Cash paid to and for employees 279,898,010.00 314,880,615.57 Taxes paid 111,471,325.43 24,295,009.50 Cash used in other operating activities 63,008,054.83 110,890,242.14 Subtotal of cash used in operating 1,636,905,945.74 1,886,815,353.79 activities Net cash generated from/used in 126,220,943.47 78,116,699.98 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment 492,992,240.66 262,773,600.62 Return on investment 23,125,665.53 454,663,109.72 Net proceeds from the disposal of fixed assets, intangible assets and other long- 42,771.45 1,720,784.40 lived assets Net proceeds from the disposal of subsidiaries and other business units Cash generated from other investing activities Subtotal of cash generated from 516,160,677.64 719,157,494.74 investing activities Payments for the acquisition of fixed assets, intangible assets and other long- 59,178,832.68 53,582,153.85 lived assets Payments for investments 1,166,664,444.95 49,402,110.68 Net payments for the acquisition of subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 1,225,843,277.63 102,984,264.53 activities Net cash generated from/used in -709,682,599.99 616,173,230.21 investing activities 3. Cash flows from financing activities: Capital contributions received Borrowings raised 382,336,000.00 Cash generated from other financing activities Subtotal of cash generated from 382,336,000.00 financing activities Repayment of borrowings 197,016,000.00 Interest and dividends paid 135,641,014.35 Cash used in other financing activities 220,895,890.55 Subtotal of cash used in financing 332,657,014.35 220,895,890.55 activities Net cash generated from/used in 49,678,985.65 -220,895,890.55 financing activities 4. Effect of foreign exchange rates 15,401,360.65 -7,632,408.62 changes on cash and cash equivalents 5. Net increase in cash and cash -518,381,310.22 465,761,631.02 equivalents Add: Cash and cash equivalents, 861,826,014.29 803,264,792.72 beginning of the period 6. Cash and cash equivalents, end of the 343,444,704.07 1,269,026,423.74 period Legal representative: Wu Shenghui Chief Financial Officer: Tang Qionglan Person-in-charge of the Company’s accounting organ: Liang Yuefei 94 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 7. Consolidated Statements of Changes in Owners’ Equity H1 2022 Unit: RMB H1 2022 Equity attributable to owners of the Company as the parent Other equity Oth Non Tota instruments Less er - l Item Shar Capi : com Spe Surp Gen Reta cont Pref Perp own e tal Trea preh cific lus eral ined Oth Subt rolli erre etua ers’ capi Oth rese sury ensi rese rese rese earn er otal ng d l equi tal er rves stoc ve rve rves rve ings inter shar bon ty k inco ests es ds me 1,3 3,1 6,9 3,4 10, 994 250 982 741 1. Balance as 99, 19, 86, 06, 393 ,11 ,60 ,97 ,35 at the end of 346 317 502 695 ,19 4,5 0,8 2,3 3,3 the period of ,15 ,42 ,97 ,33 8,3 prior year 67. 74. 58. 47. 4.0 3.2 6.7 0.6 07. 16 54 89 96 0 5 2 3 35 Add: Adjustment for change in accounting policy Adjustment for correction of previous error Adjustment for business combination under common control Other adjustments 2. Balance as 1,3 3,1 6,9 3,4 10, 994 250 982 741 at the 99, 19, 86, 06, 393 ,11 ,60 ,97 ,35 beginning of 346 317 502 695 ,19 4,5 0,8 2,3 3,3 the ,15 ,42 ,97 ,33 8,3 Reporting 67. 74. 58. 47. 4.0 3.2 6.7 0.6 07. Period 16 54 89 96 0 5 2 3 35 - - - - - - - 3. Increase/ 126 1,6 38, 1,5 37, 986 168 228 654 decrease in ,68 12, 634 73, 351 ,86 ,43 ,95 ,57 the period (“- 2,1 628 ,01 994 ” for ,50 8,5 5,7 3,9 2,8 92. ,93 6.0 ,92 decrease) 7.0 95. 30. 27. 31. 77 9.1 6 3.0 0 62 39 92 77 5 9 - 160 32, 69, 102 128 3.1 Total ,66 627 657 ,28 ,03 comprehensi 4,4 ,72 ,79 5,5 ve income 6,7 33. 9.5 2.3 21. 03. 28 5 8 93 73 3.2 Capital - - - - - - - increased 37, 986 168 654 1,5 6,7 1,5 and reduced 351 ,86 ,43 ,57 10, 40, 17, 95 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 by owners ,50 8,5 5,7 2,8 357 912 098 7.0 95. 30. 31. ,20 .62 ,11 0 62 39 77 4.0 6.6 0 2 3.2.1 Ordinary shares increased by owners 3.2.2 Capital increased by holders of other equity instruments 3.2.3 Share-based payments included in owners’ equity - - - - - - 1,5 - 1,5 37, 986 168 654 10, 6,7 17, 3.2.4 351 ,86 ,43 ,57 357 40, 098 Other ,50 8,5 5,7 2,8 ,20 912 ,11 7.0 95. 30. 31. 4.0 .62 6.6 0 62 39 77 0 2 - - - - 134 134 24, 159 3.3 Profit ,89 ,89 282 ,18 distribution 9,4 9,4 ,86 2,3 64. 64. 3.7 28. 70 70 0 40 3.3.1 Appropriatio n to surplus reserves 3.3.2 Appropriatio n to general reserve - - - - 3.3.3 134 134 24, 159 Appropriatio ,89 ,89 282 ,18 n to owners (or 9,4 9,4 ,86 2,3 shareholders) 64. 64. 3.7 28. 70 70 0 40 3.3.4 Other - 3.4 100 100 Transfers ,91 ,91 0.0 within 7,2 owners’ 7,2 0 24. equity 24. 19 19 3.4.1 Increase in capital (or share capital) from capital reserves 96 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 3.4.2 Increase in capital (or share capital) from surplus reserves 3.4.3 Loss offset by surplus reserves 3.4.4 Changes in defined benefit schemes transferred to retained earnings 3.4.5 - Other 100 100 comprehensi ,91 ,91 0.0 ve income 7,2 transferred to 7,2 0 24. retained 24. 19 earnings 19 3.4.6 Other 3.5 Specific reserve 3.5.1 Increase in the period 3.5.2 Used in the period 3.6 Other 1,3 3,2 5,3 3,4 8,8 4. Balance as 82, 754 86, 61, 7,2 45, 73, 45, 19, at the end of 165 ,01 780 994 45, 999 874 329 203 the ,14 8,4 ,51 Reporting ,64 971 ,61 ,03 ,34 ,38 4.1 30. 6.1 Period 7.0 .54 6.0 7.5 6.6 4.2 5 97 9 0 2 7 9 6 H1 2021 Unit: RMB H1 2021 Equity attributable to owners of the Company as the parent Other equity Oth Non Tota instruments Less er - l Item Shar Capi : com Spe Surp Gen Reta cont Pref Perp own e tal Trea preh cific lus eral ined Oth Subt rolli erre etua ers’ capi Oth rese sury ensi rese rese rese earn er otal ng d l equi tal er rves stoc ve rve rves rve ings inter shar bon ty k inco ests es ds me 1. Balance as 1,39 15,1 2,34 741, 1,75 6,26 48,2 6,31 at the end of 9,34 57,5 9,38 567, 8,46 3,92 58,8 2,18 the period of prior year 6,15 14.9 8,53 039. 2,06 1,30 34.5 0,13 4.00 0 3.61 55 2.48 4.54 3 9.07 Add: Adjustment for change in 97 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 accounting policy Adjustment for correction of previous error Adjustment 991 for business 1,16 2,77 3,93 ,44 - 169, combination 1,14 4,02 5,17 4,7 121, 825, under 7,99 2,48 0,47 common 57. 812. 049. 4.67 2.92 7.59 control 70 33 30 Other adjustments 2. Balance as at the 10,2 1,39 1,00 2,34 741, 1,92 7,42 2,82 beginning of 47,3 9,34 6,60 9,26 567, 8,28 5,06 2,28 the 50,6 Reporting 6,15 2,27 6,72 039. 7,11 9,29 1,31 16.6 Period 4.00 2.60 1.28 55 1.78 9.21 7.45 6 3. Increase/ - - - decrease in - 220, - 470, 44,1 598, 358, 314, the period (“- 9,40 708, 187, 342, 45,5 ” for - 873, 828, 682, 2,11 001. 889. 967. 30.3 decrease) 384. 417. 887. 0.68 24 31 80 9 43 86 47 - - - 3.1 Total 122, 72,6 243, 120, 48,0 comprehensi 377, 24,9 ve income 003, 626, 01,3 552. 26.8 831. 278. 51.5 60 7 01 41 4 3.2 Capital - - - 220, - increased 230, 725, 229, 9,40 708, 187, and reduced - 298, 095. 572, by owners 2,11 001. 889. 001. 44 905. 0.68 24 31 23 79 3.2.1 - - Ordinary 220, 220, 220, shares 708, increased by 708, 708, 001. owners 001. 001. 24 24 24 3.2.2 Capital increased by holders of other equity instruments 3.2.3 Share-based payments included in owners’ equity 3.2.4 - - - 725, - Other 9,40 187, 9,58 095. 8,86 2,11 889. 9,99 44 4,90 98 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 0.68 31 9.99 4.55 - - - - 3.3 Profit 29,2 37,1 7,90 7,90 distribution 04,4 08,6 4,13 4,13 91.9 30.1 8.22 8.22 2 4 3.3.1 Appropriatio n to surplus reserves 3.3.2 Appropriatio n to general reserve 3.3.3 - - Appropriatio - - 29,2 37,1 n to owners 7,90 7,90 (or 04,4 08,6 4,13 4,13 shareholders) 91.9 30.1 8.22 8.22 2 4 3.3.4 Other 3.4 - Transfers 355, 355, within 869, owners’ 869, 553. equity 553. 42 42 3.4.1 Increase in capital (or share capital) from capital reserves 3.4.2 Increase in capital (or share capital) from surplus reserves 3.4.3 Loss offset by surplus reserves 3.4.4 Changes in defined benefit schemes transferred to retained earnings 3.4.5 Other - comprehensi 355, 355, ve income 869, transferred to 869, 553. retained 553. 42 earnings 42 3.4.6 Other 3.5 Specific 99 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 reserve 3.5.1 Increase in the period 3.5.2 Used in the period 3.6 Other 4. Balance as at the end of 1,39 997, 220, 1,75 741, 2,39 7,06 2,86 9,93 the 9,34 200, 708, 0,39 379, 8,63 6,24 6,42 2,66 Reporting 6,15 161. 001. 3,33 150. 0,07 0,88 6,84 7,72 Period 4.00 92 24 6.85 24 9.58 1.35 7.84 9.19 Legal representative: Wu Shenghui Chief Financial Officer: Tang Qionglan Person-in-charge of the Company’s accounting organ: Liang Yuefei 8. Statements of Changes in Owners’ Equity of the Company as the Parent H1 2022 Unit: RMB H1 2022 Other equity instruments Other Capita Less: compr Specif Surplu Retain Total Item Share Prefer Perpet l Treasu ehensi ic s ed owner Other capital red ual Other reserv ry ve reserv reserv earnin s’ shares bonds es stock incom e es gs equity e 1. Balance as 1,399 2,738 5,635 22,56 250,6 984,6 741,3 at the end of ,346, ,229, ,592, 8,665 00,87 95,76 53,34 the period of 154.0 003.2 062.4 prior year .93 4.54 5.83 7.96 0 7 5 Add: Adjustment for change in accounting policy Adjustment for correction of previous error Other adjustments 2. Balance as at the 1,399 2,738 5,635 22,56 250,6 984,6 741,3 beginning of ,346, ,229, ,592, 8,665 00,87 95,76 53,34 the 154.0 003.2 062.4 Reporting .93 4.54 5.83 7.96 0 7 5 Period 3. Increase/ - - - - - - decrease in 72,17 37,35 4,825 168,4 230,4 440,7 472,8 the period (“- 2,490 ” for 1,507 ,948. 35,73 60,26 91,83 21,33 .25 decrease) .00 60 0.39 7.53 0.02 2.51 - - 3.1 Total 106,1 129,5 23,38 comprehensi 54,73 ve income 43,04 8,312 0.76 3.34 .58 3.2 Capital - - - - - increased 100 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 and reduced 37,35 4,825 168,4 440,7 314,5 by owners 1,507 ,948. 35,73 91,83 33,55 .00 60 0.39 0.02 5.23 3.2.1 Ordinary shares increased by owners 3.2.2 Capital increased by holders of other equity instruments 3.2.3 Share-based payments included in owners’ equity - - - - - 3.2.4 37,35 4,825 168,4 440,7 314,5 Other 1,507 ,948. 35,73 91,83 33,55 .00 60 0.39 0.02 5.23 - - 3.3 Profit 134,8 134,8 distribution 99,46 99,46 4.70 4.70 3.3.1 Appropriatio n to surplus reserves 3.3.2 - - Appropriatio 134,8 134,8 n to owners (or 99,46 99,46 shareholders) 4.70 4.70 3.3.3 Other 3.4 - Transfers 100,9 100,9 within 17,22 0.00 owners’ 17,22 4.19 equity 4.19 3.4.1 Increase in capital (or share capital) from capital reserves 3.4.2 Increase in capital (or share capital) from surplus reserves 3.4.3 Loss offset by surplus reserves 3.4.4 Changes in defined benefit schemes 101 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 transferred to retained earnings 3.4.5 Other - comprehensi 100,9 100,9 ve income 17,22 0.00 transferred to 17,22 4.19 retained 4.19 earnings 3.4.6 Other 3.5 Specific reserve 3.5.1 Increase in the period 3.5.2 Used in the period 3.6 Other 4. Balance as 1,361 2,810 5,162 at the end of 17,74 82,16 754,2 300,5 ,994, ,401, ,770, the 2,717 5,144 35,49 61,51 Reporting 647.0 493.5 729.9 .33 .15 8.30 7.94 Period 0 2 4 H1 2021 Unit: RMB H1 2021 Other equity instruments Other Capita Less: compr Specif Surplu Retain Total Item Share Prefer Perpet l Treasu ehensi ic s ed owner Other capital red ual Other reserv ry ve reserv reserv earnin s’ shares bonds es stock incom e es gs equity e 1. Balance as 1,399 7,426 2,349 741,5 1,591 6,089 at the end of the period of ,346, ,635. ,389, 67,03 ,884, ,614, prior year 154.0 62 658.2 9.55 733.4 220.8 0 3 9 9 Add: Adjustment for change in accounting policy Adjustment for correction of previous error Other adjustments 2. Balance as at the 1,399 7,426 2,349 741,5 1,591 6,089 beginning of ,346, ,635. ,389, 67,03 ,884, ,614, the Reporting 154.0 62 658.2 9.55 733.4 220.8 Period 0 3 9 9 3. Increase/ - - - decrease in 220,7 598,8 187,8 462,6 357,0 the period (“- 08,00 09,85 89.31 30,00 75,73 ” for decrease) 1.24 4.69 6.70 8.54 102 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 - - 3.1 Total 242,9 106,7 136,1 comprehensi ve income 40,30 60,45 79,84 1.27 3.28 7.99 3.2 Capital - - increased 220,7 187,8 220,8 and reduced 08,00 89.31 95,89 by owners 1.24 0.55 3.2.1 Ordinary shares increased by owners 3.2.2 Capital increased by holders of other equity instruments 3.2.3 Share-based payments included in owners’ equity - - 3.2.4 220,7 187,8 220,8 Other 08,00 89.31 95,89 1.24 0.55 3.3 Profit distribution 3.3.1 Appropriatio n to surplus reserves 3.3.2 Appropriatio n to owners (or shareholders) 3.3.3 Other 3.4 - Transfers 355,8 355,8 within 69,55 69,55 owners’ equity 3.42 3.42 3.4.1 Increase in capital (or share capital) from capital reserves 3.4.2 Increase in capital (or share capital) from surplus reserves 3.4.3 Loss offset by surplus reserves 3.4.4 Changes in 103 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 defined benefit schemes transferred to retained earnings 3.4.5 - Other 355,8 355,8 comprehensi 69,55 69,55 ve income transferred to 3.42 3.42 retained earnings 3.4.6 Other 3.5 Specific reserve 3.5.1 Increase in the period 3.5.2 Used in the period 3.6 Other 4. Balance as at the end of 1,399 7,426 220,7 1,750 741,3 2,054 5,732 the ,346, ,635. 08,00 ,579, 79,15 ,514, ,538, Reporting 154.0 62 1.24 803.5 0.24 740.1 482.3 Period 0 4 9 5 Legal representative: Wu Shenghui Chief Financial Officer: Tang Qionglan Person-in-charge of the Company’s accounting organ: Liang Yuefei III Company profile Foshan Electrical and Lighting Co., Ltd. (hereinafter referred to as “the Company”), a joint-stock limited company jointly founded by Foshan Electrical and Lighting Company, Nanhai Wuzhuang Color Glazed Brick Field, and Foshan Poyang Printing Industrial Co. on 20 October 1992 by raising funds under the approval of YGS (1992) No. 63 Document issued by the Joint Examination Group for Experimental Enterprises in Stock System of Guangdong Province and the Economic System Reform Commission of Guangdong Province, is an enterprise with its shares held by both the corporate and the natural persons. As approved by China Securities Regulatory Commission with Document (1993) No. 33, the Company publicly issued 19.3 million shares of social public shares (A shares) to the public in October 1993, and was listed in Shenzhen Stock Exchange for trade on 23 November 1993. The Company was approved to issue 50,000,000 B shares on 23 July 1995. And, as approved to change into a foreign-invested stock limited company on 26 August 1996 by (1996) WJMZEHZ No. 466 Document issued by the Ministry of Foreign Trade and Economic Cooperation of the People’s Republic of China. On 11 December 2000, as approved by China Securities Regulatory Commission with ZJGS Zi [2000] No. 175 Document, the Company additionally issued 55,000,000 A shares. At approved by the Shareholders’ General Meeting 2006, 2007, 2008, 2014 and 2017 the Company implemented the plan of capitalization of capital reserve, after the transfer, the registered capital of the Company has increased to RMB1,399,346,154.00. The Company held the 26th Meeting of the 9th Board of Directors on 14 January 2022, where the Proposal on Cancelling Some Shares of the Company's Repurchase Special Securities Account was deliberated and adopted. The repurchased 13 million A shares were used for the equity incentive plan. The 104 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 remaining 18,952,995 A shares and the repurchased 18,398,512 B shares, totaling 37,351,507 shares, were all deregistered. On 8 February 2022, it was confirmed by Shenzhen Branch of CSDC that the number of repurchased public shares canceled this time was 37,351,507, accounting for 2.67% of the total share capital of the Company before the cancellation, including 18,952,995 A shares and 18,398,512 B shares. Upon the cancellation of the shares, the total share capital of the Company was changed from 1,399,346,154 shares to 1,361,994,647 shares. The Company's registered capital was changed to RMB1,361,994,647.00. Credibility code of the Company: 91440000190352575W. Legal representative: Mr. Wu Shenghui Address: No. 64, Fenjiang North Road, Foshan, Guangdong Province Main business of the company and its subsidiaries (hereinafter referred to as “the Company”): lighting products, electro technical products, vehicle lamp products, epitaxy and chip products, LED packaging and component products, trade and application products. The business term of the Company is long-term, which was calculated from the date of issuance of License of Business Corporation. The Financial Report was approved and authorized for issue by the Board of Directors on 30 August 2022. The consolidation scope of the financial statement during the Reporting Period including the Company and FSL Chanchang Optoelectronics Co., Ltd. ( referred to as “Chanchang Company”), Foshan Taimei Times Lamps and Lanterns Co., Ltd. ( referred to as “Taimei Company”), Nanjing Fozhao Lighting Components Co., Ltd. ( referred to as “Nanjing Fozhao”), FSL (Xinxiang) Lighting Co., Ltd. ( referred to as “Xinxiang Company”), Foshan Lighting Lamps & Components Co., Ltd. ( referred to as “Lamps & Components Company”), FSL Zhida Electric Technology Co., Ltd ( referred to as “Zhida Company”), FSL LIGHTING GMBH (referred to as “FSL LIGHTING”), Foshan Hortilite Optoelectronics Co.,Ltd. (referred to as “Hortilite Company”), Fozhao (Hainan) Technology Co., Ltd. (referred to as “Hainan Technology”), Foshan Kelian New Energy Technology Co., Ltd. (referred to as “Foshan Kelian”), Nanning Liaowang Auto Lamp Co., Ltd. (referred to as “Nanning Liaowang”), Foshan NationStar Optoelectronics Co., Ltd. (referred to as “NationStar Optoelectronics”) and Foshan Sigma Venture Capital Co., Ltd. (referred to as “Sigma”) in total 14 subsidiaries and Liuzhou Guige Lighting Technology Co., Ltd. (referred to as “Liuzhou Lighting”), Liuzhou Guige Foreshine Technology Co., Ltd. (referred to as “Liuzhou Foreshine”), Chongqing Guinuo Lighting Technology Co., Ltd. (referred to as “Chongqing Guinuo”), Qingdao Guige Lighting Technology Co., Ltd. (referred to as “Qingdao Lighting”), Indonesia Liaowang Auto Lamp Co., Ltd. (referred to as “Indonesia Liaowang”), Foshan NationStar Electronic Manufacturing Co., Ltd. (referred to as “NationStar Electronic Manufacturing”), Foshan NationStar Semiconductor Technology Co., Ltd. (referred to as “NationStar Semiconductor”), Nanyang Baoli Vanadium Industry Co., Ltd. (referred to as “Baoli Vanadium Industry”), Guangdong New Electronic Information Ltd. (referred to as “New Electronic”) and NationStar Optoelectronics (Germany) Co., Ltd. (referred to as “Germany NationStar”) in total ten sub-subsidiary. Given that Nanyang Baoli Vanadium Industry Co., Ltd. (Baoli Vanadium), a subsidiary of NationStar Optoelectronics, is in a state of non-continuous operations, the Interim Report 2022 of Baoli Vanadium for the current period was formulated at fair value or costs whichever was lower. Compared with the previous period, the consolidation scope of the current financial statements added two subsidiaries of NationStar Optoelectronics and Sigma, and five sub-subsidiaries of NationStar Electronic Manufacturing, NationStar Semiconductor, Baoli Vanadium Industry, New Electronic and Germany NationStar. For details, please refer to Note VIII “Changes in the Scope of Consolidation" and Note IX "Interests in Other Subjects". 105 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 IV Basis for Preparation of Financial Statements 1. Preparation Basis The financial statements of the Company are based on the continuing operation, and are confirmed and measured according to the actual transactions and events, the Accounting Standards for Business Enterprises - Basic Standards, other various specific accounting standards, the application guide, the interpretation of accounting standards for business enterprises (hereinafter referred to as the Accounting Standards for Business Enterprises). And based on the following important accounting policies, and accounting estimations, they are prepared according to the relevant regulations of Rules for the Information Disclosure of Companies Publicly Issuing Securities No. 15 - General Provisions on Financial Reporting of China Securities Regulatory Commission (Revised in 2014). Except the Cash Flow Statement prepared under the principle of cash basis, the rest of financial statement of the Company are prepared under the principle of accrual basis. The Company didn’t find anything like being suspicious of the ability of continuing operation within 12 months from the end of the Reporting Period with all available information. 2. Continuation The Company has no matters affecting the continuing operation of the Company and is expected to have the ability to continue to operate in the next 12 months. The financial statements of the Company are prepared on the basis of continuing operation. V Important Accounting Policies and Estimations Reminders of the specific accounting policies and accounting estimations: The Company confirmed the specific accounting policies and estimations according to production and operation features, mainly reflecting in the method of provision for expected credit loss of accounts receivables (Note 12. Accounts Receivable), depreciation of fixed assets and amortization of intangible assets (Note 24. Fixed Assets and Note 30. Intangible Assets), and recognition of revenue (Note 39. Revenue), etc. 1. Statement of Compliance with the Accounting Standards for Business Enterprises The financial statements prepared by the Company are in compliance with the Accounting Standards for Business Enterprises, which factually and completely present the Company’s and the consolidated financial positions, business results and cash flows, as well as other relevant information. 2. Fiscal Year A fiscal year starts on January 1st and ends on December 31st according to the Gregorian calendar. 3. Operating Cycle An operating cycle for the Company is 12 months, which is also the classification criterion for the liquidity of its assets and liabilities. 106 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 4. Recording Currency Renminbi is the recording currency for the statements of the Company, and the financial statements are listed and presented by Renminbi. 5. Accounting Treatment Methods for Business Combinations under the Same Control or not under the Same Control 1. Business Combinations under the Same Control For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the book value among final controller’s consolidated financial statement of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment. The difference between the initial cost of the long- term equity investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger, regard the share of the book value among final controller’s consolidated financial statement of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. 2. Business Combinations not under the Same Control The Company measured the paid assets as the consideration of business combination and liabilities happened or undertaken by fair value. The difference between fair value and its book value shall be included into the current losses and gains. The Company distributed combined cost on the purchasing date. The difference of the combination cost greater than the fair value of the identifiable net assets of the acquiree acquired is recognized as goodwill; the difference of the combination cost less than the fair value of the identifiable net assets of the acquiree acquired is included into current losses and gains. As for the assets other than intangible assets acquired from the acquiree in a business combination (not limited to the assets which have been recognized by the acquiree), if the economic benefits brought by them are likely to flow into the Company and their fair values can be measured reliably, they shall be separately recognized and measured in light of their fair values; intangible asset whose fair value can be measured reliably shall be separately recognized as an intangible asset and shall measured in light of its fair value; As for the liabilities other than contingent liabilities acquired from the acquiree, if the performance of the relevant obligations is likely to result in any out-flow of economic benefits from the Company, and their fair values can be measured reliably, they shall be separately recognized and measured in light of their fair values; As for the contingent liabilities of the acquiree, if their fair values can be measured reliably, they shall separately recognized as liabilities and shall be measured in light of their fair values. 6. Methods for Preparing Consolidated Financial Statements 1. Principle of Determining the Scope of Consolidation The scope of consolidation of the consolidated financial statements of the Company is determined on the basis of control. Control means that the investors has the right to invest in the investee and enjoy a variable return through 107 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 the participation of the relevant activities of the investee, and has the ability to use the power over the investee to affect the amount of its return. The Company includes the subsidiaries with actual right of control (including separate entity controlled by the Parent Company) into consolidated financial statements. 2. Principles, Procedures and Methods for the Preparation of Consolidated Statements (1) Principles, Procedures and Methods for the Preparation of Consolidated Statements All subsidiaries included into the scope of consolidated financial statements adopted same accounting policies and fiscal year with the Company. If the accounting policies and fiscal year of the subsidiaries are different to the Company’s, necessary adjustment should be made in accordance with the Company’s accounting policies and fiscal year when consolidated financial statements are prepared. The consolidated financial statements are based on the financial statements of the Parent Company and subsidiaries included into the consolidated scope. The consolidated financial statements are prepared by the Company who makes adjustment to long-term equity investment to subsidiaries by equity method according to other relevant materials after the offset of the share held by the Parent Company in the equity capital investment of the Parent Company and owner’s equity of subsidiaries and the significant transactions and intrabranch within the Company. For the balance formed because the current loss shared by the minority shareholders of the subsidiary is more than the share enjoyed by the minority shareholders of the subsidiary in the initial shareholders’ equity, if the Articles of Corporation or Agreement didn’t stipulate that minority shareholders should be responsible for it, then the balance need to offset the shareholders’ equity of the Company; if the Articles of Corporation or Agreement stipulated that minority shareholders should be responsible for it, then the balance need to offset the minority shareholders’ equity. (2) Treatment Method of Increasing or Disposing Subsidiaries during the Reporting Period During the Reporting Period, if the subsidiaries were added due to Business combinations under the same control, then initial book balance of consolidated balance sheet need to be adjusted; the income, expenses, and profits of subsidiaries from the combination’s period-begin to the end of the reporting period need to be included into consolidated income statement; the cash flow of subsidiaries from the combination’s period-begin to the end of the reporting period need to be included into consolidated cash flow statement. if the subsidiaries were added due to Business combinations not under the same control, then initial book balance of consolidated balance sheet doesn’t need to be adjusted; the income, expenses, and profits of subsidiaries from the purchasing date to the end of the reporting period need to be included into consolidated income statement; the cash flow of subsidiaries from purchasing date to the end of the reporting period need to be included into consolidated cash flow statement. During the Reporting Period, if the Company disposed the subsidiaries, then the income, expenses, and profits of subsidiaries from period-begin to the disposal date need to be included into consolidated income statement; the cash flow of subsidiaries from period-begin to the disposal date need to be included into consolidated cash flow statement. 7. Classification of Joint Arrangements and Accounting Treatment of Joint Operations A joint arrangement refers to an arrangement jointly controlled by two participants or above and be divided into joint operations and joint ventures. When the Company is the joint venture party of the joint operations, should recognize the following items related to the interests share of the joint operations: (1) Recognize the assets individually held and the assets jointly held by recognizing according to the holding share; 108 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (2) Recognize the liabilities undertook individually and the liabilities jointly held by recognizing according to the holding share; (3) Recognize the revenues occurred from selling the output share of the joint operations enjoy by the Company; (4) Recognize the revenues occurred from selling the assets of the joint operations according to the holding share; (5) Recognize the expenses individually occurred and the expenses occurred from the joint operations according to the holding share of the Company. When the Company is the joint operation party of the joint ventures, should recognize the investment of the joint ventures as the long-term equity investment and be measured according g to the said methods of the notes of the long-term equity investment of the financial statement. 8. Recognition Standard for Cash and Cash Equivalents In the Company’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used for cover, and short-term (usually due within 3 months since the day of purchase) and high circulating investments, which are easily convertible into known amount of cash and whose risks in change of value are minimal. 9. Foreign Currency and Accounting Method for Foreign Currency 1. Foreign Currency Business Foreign currency shall be recognized by employing systematic and reasonable methods, and shall be translated into the amount in the functional currency at the exchange rate which is approximate to the spot exchange rate of the transaction date. On the balance sheet date, the foreign currency monetary items shall be translated at the spot exchange rate. The balance of exchange arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or prior to the balance sheet date shall be recorded into the profits and losses at the current period except that the balance of exchange arising from foreign currency borrowings for the purchase and construction or production of qualified assets shall be capitalized. The foreign currency non-monetary items measured at the historical cost shall still be translated at the spot exchange rate on the transaction date. 2. Translation of Foreign Currency Financial Statements The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet date. Among the owner’s equity items, except for the items as “undistributed profits”, other items shall be translated at the spot exchange rate at the time when they are incurred. The revenues and the expenses items of the income statement should be translated according to the spot rate on the exchange date. The difference of the foreign currency financial statements occurred from the above translation should be listed under the “other comprehensive income” item of the owners’ equity of the consolidated financial statement. As for the foreign currency items which actually form into the net investment of the foreign operation, the exchange difference occurred from the exchange rate changes should be listed under the “other comprehensive income” of the owners’ equity among the consolidated financial statement when compile the consolidated financial statement. When disposing the foreign operation, as for the discounted difference of the foreign financial statement related to the foreign operation should be transferred in the current gains and losses according to the proportion. The foreign cash flow adopts the spot exchange rate on the occurring date of the cash flow. And the influenced amount of the exchange rate changes should be individually listed among the cash flow statement. 109 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 10. Financial Instruments Financial instruments refer to the contracts that constitute a company’s financial assets and the financial liabilities or equity instruments of other units. 1. Recognition and derecognition of financial instruments When the Company becomes a party to a financial instrument, it shall recognize a financial asset or financial liability. A financial asset (or part of a financial asset or part of a group of similar financial assets) that meets the following conditions should be derecognized, or in other words, be written off from its account and balance sheet: 1) The right to receive cash flow from the financial asset has expired; 2) The right to receive cash flow from the financial asset has been transferred, or the “transfer” agreement specifies the obligation to duly pay the full amount of cash flow received to a third party; and (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. A financial liability that has been fulfilled, canceled or expired should be derecognized. If a financial liability is replaced with another financial liability by the same creditor on almost entirely different terms materially, or the terms for an existing liability have been almost fully revised materially, such replacement or revision should be treated as derecognition of the original liability and recognition of the new liability, and the difference should be included into current profits/losses. A financial asset traded in a conventional manner should be recognized and derecognized by trade-date accounting. The trading of financial assets in a conventional manner means that financial assets are received or delivered by the deadline as specified in regulations or general practice according to contract provisions. Trade date refers to the date committed by the Company to buy or sell a financial asset. 2. Classification and measurement of financial assets The Company classifies the financial assets when initially recognized into financial assets measured at amortized cost, financial assets measured by the fair value and the changes recorded in other comprehensive income and financial assets at fair value through profit or loss based on the business model for financial assets management and characteristics of contractual cash flow of financial assets. Financial assets initially recognized shall be measured at their fair values. For accounts receivable and notes receivable excluding major financing or without regard to financing over one year generated from ales of commodities or provision of labor services, the initial measurement shall be conducted based on the transaction price. For financial assets at fair value through profit or loss, the transaction expenses thereof shall be directly included into the current profit or loss; for other financial assets, the transaction expenses thereof shall be included into the initially recognized amount. The subsequent measurement of financial assets depends on the classification thereof: (1) Debt instrument investments measured at amortized cost Financial assets meeting the following conditions at the same time shall be classified as financial assets measured at amortized cost: the business mode of the Company to manage such financial assets targets at collecting the contractual cash flow. The contract of such financial assets stipulates that the cash flow generated in the specific date is the payment of the interest based on the principal and outstanding principal amount. The interest income for this kind of financial assets shall be recognized by effective interest method, and the gains or losses generated from the derecognition, modification or impairment shall all be included into the current profit or loss. This kind of financial assets mainly consist of monetary capital, accounts receivable and notes receivable, other receivables, investments in debt obligations and long-term receivables. The Company presents the investments in debt 110 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 obligations due within one year since the balance sheet date and long-term receivables as current portion of non- current assets and the original investments in debt obligations with maturity date within one year as other current assets. (2) Investments in debt instruments measured at fair value and changes thereof recorded into other comprehensive income Financial assets meeting the following conditions at the same time shall be classified as financial assets measured at fair value and changes thereof recorded into other comprehensive income: the business mode of the Company to manage such financial assets takes contract cash flow collected as target and selling as target. The contract of such financial assets stipulates that the cash flow generated in the specific date is the payment of the interest based on the principal and outstanding principal amount. The interest income for this kind of financial assets shall be recognized by effective interest method. All changes in fair value should be included into other comprehensive income except for interest income, impairment losses and exchange differences, which should be recognized as current profits/losses. When a financial asset is derecognized, the cumulative gains or losses included into other comprehensive income previously should be transferred out and included into current profits/losses. Such financial assets should be presented as other credit investments. Other credit investments that will mature within one year from the date of balance sheet should be presented as non-current assets due within one year, and other credit investments with the original maturity date coming within one year should be presented as other current assets. (3) Equity instrument investment measured at fair value with changes included into other comprehensive income The Company irrevocably chooses to designate part of non-trading equity instrument investments as financial assets measured at fair value with changes included into other comprehensive income. Only related dividend income (excluding the dividend income confirmed to be recovered as part of investment costs) will be recognized into current profits/losses, while subsequent changes in fair value will be recognized into other comprehensive income without the withdrawal of impairment provisions required. When a financial asset is derecognized, the cumulative gains or losses included into other comprehensive income previously should be recognized into retained earnings. Such financial assets should be presented as other equity investments. A financial asset that meets one of the following conditions is classified as a trading financial asset: The financial asset has been acquired in order to be sold or repurchased in the near future; the financial asset is part of an identifiable financial instrument portfolio under centralized management, and there is evidence proving that the company has recently adopted a short-term profit model; it is a derivative instrument, but derivative instruments that are designated as and are effective hedging instruments and those conforming with financial guarantee contracts are excluded. (4) Financial assets at fair value through profit or loss The Company classifies financial assets except for above-mentioned financial assets measured with amortized cost and financial assets measured with fair value whose change is included into other comprehensive income into financial assets at fair value through profit or loss. The subsequent measurement of such kind of financial assets shall be conducted by fair value method and all changes in fair value shall be recorded into the current profit or loss. Such financial assets shall be presented as trading financial assets, and those will due over one year since the balance sheet date and expectedly held over one year shall be presented as other non-current financial assets. 3. Classification and measurement of financial liabilities The Company’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value through profit or loss, other financial liabilities and derivative instruments designated as effective hedging instruments. For financial liabilities at fair value through profit or loss, relevant transaction costs are immediately recognized in profit or loss for the current period, and transaction costs relating to other financial liabilities are 111 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 included in the initial recognition amounts. The subsequent measurement of financial liabilities depends on the classification thereof: (1) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include trading financial liabilities (including the derivative instruments belonging to financial liabilities) and financial liabilities designated at the initial recognition to be measured by the fair value and their changes are recorded in the current profit or loss. A financial liability that meets one of the following conditions is classified as a trading financial liability: The financial liability has been undertaken in order to be sold or repurchased in the near future; the financial liability is part of an identifiable financial instrument portfolio under centralized management, and there is evidence proving that the company has recently adopted a short-term profit model; it is a derivative instrument, but derivative instruments that are designated as and are effective hedging instruments and those conforming with financial guarantee contracts are excluded. Trading financial liabilities (including derivative instruments classified as financial liabilities) should be subsequently measured at fair value, and all changes in fair value should be recorded into current profits/losses, except for those related to hedging accounting. (2) Other financial liabilities For such kind of financial liabilities, the subsequent measurement shall be conducted by effective interest method based on the amortized cost. 4. Impairment of financial instruments Based on expected credit losses, the Company carries out impairment treatment on financial assets measured at amortized cost and debt instrument investments measured at fair value with changes included into other comprehensive income, rental receivables, contract assets and financial assets and recognizes bad debt provision. Credit losses refer to the difference between all contract cash flows discounted by the original actual interest rate receivable according to contracts and all cash flows expected to be received by the Company, which is the present value of all cash shortfalls. The financial assets purchased by or originating from the Company with credit impairment should be discounted by the actual interest rate of the financial assets after credit adjustment. In respect of receivable accounts that do not contain significant financing components, the Company uses the simplified measurement method to measure bad debt provision by the amount equivalent to the expected credit losses of the whole duration. In respect of receivable accounts that contain significant financing components, the Company opts to use the simplified measurement method to measure bad debt provision by the amount equivalent to the expected credit losses for the whole duration. For other financial assets and financial guarantee contracts than the above using the simplified measurement method, the Company on the balance sheet date assesses whether their credit risks have increased substantially since the initial recognition. If the credit risks have not increased substantially since the initial recognition and are in the first stage, the Company will measure bad debt provision by the amount equivalent to the expected credit losses for the next 12 months and calculate interest income by the book balance and the actual interest rate; if the credit risks have increased obviously without credit impairment since the initial recognition and are in the second stage, the Company will measure bad debt provision by the amount equivalent to the expected credit losses for the whole duration and calculate interest income by the book balance and the actual interest rate; if the credit risks have increased substantially with credit impairment since the initial recognition and are in the third stage, the Company will measure bad debt provision by the amount equivalent to the expected credit losses for the whole duration and calculate interest income by the amortized cost and the actual interest rate. For financial instruments with only low credit risks on the balance sheet date, the Company assumes that their credit risks have not increased substantially since the initial recognition. 112 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 The Company 1) assesses expected credit losses of financial assets with credit impairment based on individual items; 2) assesses expected credit losses of financial assets that are not derecognized but with changes in contract cash flows due to revision of or renegotiation on contracts by the Company and the counterparty, based on individual items; 3) assesses expected credit losses of other financial assets based on age combination. The Company considers related past matters, current conditions, the reasonableness of the forecast on future economic conditions and well-founded information when assessing expected credit losses. The Company’s information of the judgment standards for remarkable increase in credit risks, definition of assets with incurred credit impairment and assumption of measurement on expected credit losses is disclosed in this Note 12 Accounts Receivable. When no longer reasonably expects to recover all or partial contractual cash flow of financial assets, the Company directly writes down the carrying amount of the financial assets. 5. Financial instruments offset a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet when the following conditions are met at the same time: When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously. 6. Financial guarantee contract A financial guarantee contract refers to a contract in which a specific debtor shall compensate the contract holder suffering the losses when the debtor is unable to repay the debt in due course according to the debt instrument terms. Financial guarantee contracts are measured at fair value at the initial recognition. After the initial recognition, all financial guarantee contracts should be subsequently measured by the higher amount between the amount of bad debt provision for expected credit losses recognized on the balance sheet date and the balance of the initially recognized amount deducting the cumulative amortization recognized according to the income recognition principle, except for the financial guarantee contracts designated as financial liabilities measured at fair value with changes recorded into current profits/losses. 7. Derivative financial instruments The Company uses derivative financial instruments, which are initially measured at the fair value on the signature date of the derivative transaction contract and subsequently measured at their fair value. A derivative financial instrument with a positive fair value is recognized as an asset and that with a negative fair value is recognized as a liability. Gains or losses from changes in the fair value of derivative instruments are directly recognized into current profits/losses. For the financial assets that are not derecognized but with changes in contract cash flows due to revision of or renegotiation on contracts by the Company and the counterparty, the Company recalculates the book balance of the financial assets according to the renegotiated or revised contract cash flows by the discounted value of the original actual interest rate (or the actual interest rate after credit adjustment). Relevant gains or losses are recorded into current profits/losses. Costs or expenses for the revision of financial assets are adjusted to the revised book balance of financial assets and amortized in the remaining period of the revised financial assets. 8. Transfer of financial assets As for the Company transferred nearly all of the risks and rewards related to the ownership of a financial asset to the transferee, should derecognize the financial assets; as for maintained nearly all of the risks and rewards related to the ownership of a financial asset, should continue to recognize the transferred financial assets. 113 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Where the Company does not transfer or retain nearly all of the risks and rewards related to the ownership of a financial asset, it shall deal with it according to the circumstances as follows, respectively: (1) If it gives up its control over the financial asset, it shall stop recognizing the financial asset and recognize the assets and liabilities generated; (2) If it does not give up its control over the financial asset, it shall, according to the extent of its continuous involvement in the transferred financial asset, recognize the related financial asset and recognize the relevant liability accordingly. 11. Notes Receivable The Company will always measure the provision for notes receivable whether including major financing components or not based on the amount similar to that of expected credit losses for the whole existence period and the amount increased or reversed of impairment for losses generated shall be recorded into the current profit or loss as gains or losses of impairment. The bill risk portfolio determined by the Company and basis thereof are as follows: Item Basis Group 1 Bank acceptance bills Group 2 Commercial acceptance bills For notes receivable classified into the Group 1 with low credit risks, no bad debt provision will be withdrawn. For notes receivable classified into the Group 2, the bad debt provision shall be withdrawn based on aging with reference to the Group 1 of accounts receivable. 12. Accounts Receivable The Company withdraws the impairment loss for accounts receivable excluding significant financing component with the simplified method. 1. Accounts Receivable with Significant Single Amount for which the Expected Credit Loss is Made Individually Definition or amount criteria for an account Making separate expected credit loss for accounts receivable with a significant receivable with a significant single amount single amount Making separate expected credit loss for For an account receivable with a significant single amount, the impairment test accounts receivable with a significant single shall be carried out on it separately. If there is any objective evidence of amount impairment, the impairment loss is recognized and the expected credit loss is made according to the difference between the present value of the account receivable’s future cash flows and its carrying amount. 2. Accounts Receivable for which the Expected Credit Loss is Withdrawn by Credit Risk Characteristics Group name Withdrawal method of expected credit loss Common transaction group Aging analysis method Internal transaction group Other methods In the groups, those adopting aging analysis method to withdraw expected credit loss: Aging Withdrawal proportion of expected credit loss Within 1 year (including 1 year) 3% 1 to 2 years 10% 2 to 3 years 30% 3 to 4 years 50% 4 to 5 years 80% Over 5 years 100% 114 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 3. Accounts Receivable with an Insignificant Single Amount but for which the Expected Credit Loss is Made Independently Reason of individually withdrawing expected credit loss There are definite evidences indicate the obvious difference of thee return ability Withdrawal method for expected credit loss Recognizing the impairment loss and withdrawing the expected credit loss according to the difference between the present value of the account receivable’s future cash flows and its carrying amount. 13. Accounts Receivable Financing Not applicable 14. Other Receivables Recognition method and accounting treatment for expected credit losses of other receivables Recognition method and accounting treatment for expected credit losses of other receivables Refer to Note 12 Accounts Receivable for details about the recognition method and accounting treatment for expected credit losses of other receivables which is the same as that of accounts receivable. 15. Inventories 1. Classification of Inventory Inventory refers to finished products, goods in process, and materials consumed in the production process or the provision of labor services held by the Company for sale in daily activities, mainly including raw materials, goods in process, materials in transit, finished products, commodities, turnover materials, and commissioned processing materials. Turnover materials include low-value consumables and packaging. 2. Pricing Method of Inventory Sent Out The inventory is valued at actual cost when acquired, and inventory costs include procurement costs, processing costs and other costs. The weighted average method is used when receiving or sending out inventory. 3. Basis for Determining the Net Realizable Value of Inventory and the Method of Withdrawal for Inventory Impairment Net realizable value refers to the estimated selling price of the inventory minus the estimated cost to be incurred at the time of completion, the estimated selling expenses and the relevant taxes and fees in daily activities. In determining the net realizable value of inventory, the conclusive evidence obtained is used as the basis and the purpose of holding the inventory and the impact of the events after the balance sheet date should be taken into account. For finished products, the materials used for sale and other goods used for direct sale, the net realizable value is determined by the estimated selling price of the inventory minus the estimated selling expenses and related taxes in the process of normal production and operation. For materials inventory needs to be processed, the net realizable value is determined by the estimated selling price of the finished products minus the estimated cost to be incurred, the estimated sales costs and the relevant taxes and fees in the process of normal production and operation. 4. Inventory System The inventory system of the Company is perpetual inventory. 115 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 5. Amortization Method of Turnover Materials Low-value consumables are amortized in one-off method. The packaging is amortized in one-off method. 16. Contract Assets The Company presents the right possessed to collect consideration from customers unconditionally (only depending on the passing of time) as accounts receivable, and the right to charge the consideration through transferring any commodity to clients which depends on other factors except the passing of time as contract assets. As for the recognition method and accounting treatment for expected losses of contract assets, please refer to Note 12. Accounts Receivable. 17. Contract Cost The assets related to contract costs of the Company include contract acquisition costs and contract performance costs. They are presented in inventories, other current assets, and other non-current assets, respectively, in accordance with their liquidity. The incremental cost incurred by the acquisition of a contract would be recognized as an asset in the form of a contract acquisition cost, if it was expected to be recovered. Or if the amortization period of the asset does not exceed a year, the asset would be recognized as profit and loss of the current period, when it occurred. Costs incurred for performing a contract, which was not within the scope of other accounting standards for enterprises and met the following conditions, should be recognized as an asset in the form of a contract performance cost: (1) The costs were directly related to a current or expected contract, including direct labor, direct materials, manufacturing overhead (or similar), costs that are explicitly chargeable to the customer, and other costs incurred solely because of the contract; (2) The costs increased the future resources of the Company to perform performance obligations; (3) The costs were expected to be recovered. Assets related to contract costs were amortized on the same basis as the revenue recognition related to the assets, and recognized as profit and loss of the current period. For assets related to contract costs, if the book value was higher than the difference between the following two items, the Company would set aside impairment provisions for the extra portion and recognize the impairment provisions as impairment losses on assets: (1) The remaining consideration that the Company expected to obtain due to the transfer of commodities related to the assets; (2) Estimated costs to be incurred for the transfer of the related commodities. If the result of (1) minus (2) was higher than the book value of the assets, due to the subsequent changes in the factors of impairment in previous periods, the asset impairment provisions set aside should be reversed and recognized as profit and loss of the current period. However, the book value of the assets, upon the reversal, should not exceed the book value of the assets on the reversal date supposing that impairment provisions were not set aside. 116 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 18. Assets Held for Sale 1. Assets Held for Sale When a company relies mainly on selling (including the exchanges of non-monetary assets with commercial substance) instead of continuing to use a non-current asset or disposal group to recover its book value, the non- current asset or disposal group is classified as asset held for sale. The non-current assets mentioned above do not include investment properties that are subsequently measured by the fair value model, biological assets measured by fair value less net selling costs, assets formed from employee remuneration, financial assets, deferred income tax assets and rights generated from insurance contracts. Disposal group refers to a group of assets that are disposed of together as a whole through sale or other means in a transaction, and the liabilities directly related to these assets transferred in the transaction. In certain circumstances, the disposal group includes goodwill obtained in business combination. The Company recognizes non-current assets or disposal groups that meet both of the following conditions as held for sale: ① Assets or disposal groups can be sold immediately under current conditions based on the practice of selling such assets or disposal groups in similar transactions; ② Sales are highly likely to occur, that is, the Company has already made a resolution on a sale plan and obtained a certain purchase commitment, and the sale is expected to will be completed within one year, and the sale has been approved if relevant regulations require relevant authority or regulatory authority of the Company to approve it. Non-current assets or disposal groups specifically obtained by the Company for resale will be classified by the Company as a held-for-sale category on the acquisition date when they meet the stipulated conditions of “expected to be sold within one year” on the acquisition date, and may well satisfy the category of held-for-sale within a short time (which is usually 3 months). If one of the following circumstances cannot be controlled by the Company and the transaction between non- related parties fails to be completed within one year, and there is sufficient evidence that the Company still promises to sell the non-current assets or disposal groups, the Company should continue to classify the non- current assets or disposal groups as held-for-sale: ①The purchaser or other party unexpectedly sets conditions that lead to extension of the sale. The Company has already acted on these conditions in a timely manner and it is expected to be able to successfully deal with the conditions that led to the extension of the sale within one year after the conditions were set. ②Due to unusual circumstances, the non-current assets or disposal groups held for sale failed to be sold within one year. In the first year, the Company has taken necessary measures for these new conditions and the assets or disposal groups meet the conditions of held-for-sale again. If the Company loses control of a subsidiary due to the sale of investments to its subsidiaries, whether or not the Company retains part of the equity investment after the sale, when the proposed sale of the investment to the subsidiary meets the conditions of held- for-sale, the investment to the subsidiary will be classified as held-for- sale in the individual financial statement of the parent company, and all the assets and liabilities of the subsidiary will be classified as held-for-sale in the consolidated financial statement. When the company initially measures or re-measures non-current assets or disposal groups held for sale on the balance sheet date, if the book value is higher than the fair value minus the net amount of the sale costs, the book value will be written down to the net amount of fair value minus the sale costs, and the amount written down will be recognized as impairment loss of assets and included in the current profit and loss, and provision for impairment of held-for-sale assets will be made. For the confirmed amount of impairment loss of assets of the disposal groups held for sale, the book value of goodwill of the disposal groups will be offset first, and then the book value of various non-current assets in the disposal groups will be offset according to the proportions. If the net amount that the fair value of the non-current assets or disposal groups held for sale on the follow-up 117 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 balance sheet date minus the sale costs increases, the previous written-down amount will be restored, and reversed to the asset impairment loss confirmed after the assets being classified as held-for-sale. The reversed amount will be included in the current profit or loss. The book value of goodwill that has been deducted cannot be reversed. Non-current assets held for sale or non-current assets in the disposal group are not subject to depreciation or amortization. Interest and other expenses of liabilities in the disposal group held for sale will be confirmed as before. When a non-current asset or disposal group ceases be classified as held-for-sale or a non-current asset is removed out from the held-for-sale disposal group due to failure in meeting the classification conditions for the category of held-for-sale, it will be measured by one of the followings whichever is lower: ① The book value before being classified as held for sale will be adjusted according to the depreciation, amortization or impairment that would have been recognized under the assumption that it was not classified as held for sale; ② The recoverable amount. 2. Termination of Operation Termination of operation refers to a separately identifiable constituent part that satisfies one of the following conditions that has been disposed of by the Company or is classified as held-for-sale: (1) This constituent part represents an independent main business or a separate main business area. (2) This constituent part is part of an associated plan that is intended to be disposed of in an independent main business or a separate major business area. (3) This constituent part is a subsidiary that is specifically acquired for resale. 3. Presentation In the balance sheet, the Company distinguishes the non-current assets held for sale or the assets in the disposal group held for sale separately from other assets, and distinguish the liabilities in the disposal group held for sale separately from other liabilities. The non-current assets held for sale or the assets in the disposal group held for sale are not be offset against the liabilities in the disposal group held for sale. They are presented as current assets and current liabilities respectively. The Company lists profit and loss from continuing operations and profit and loss from operating profits in the income statement. For the termination of operations for the current period, the Company restates the information originally presented as profit or loss of continuing operation in the current financial statements to profit or loss of termination of the comparable accounting period. If the termination of operation no longer meets the conditions of held-for-sale, the Company restates the information originally presented as a profit and loss of termination in the current financial statements to profit or loss of continuing operation of the comparable accounting period. 19. Investments in Debt Obligations Not applicable 20. Other Investments in Debt Obligations Not applicable 21. Long-term Receivables Not applicable 118 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 22. Long-term Equity Investments Long-term equity investment refers to the Company’s long-term equity investment with control, joint control or significant influence on the investee. Joint control refers to the control that is common to an arrangement in accordance with the relevant agreement, and the relevant activities of the arrangement must be agreed upon by the participant who has shared the control. Significant influence refers to the Company has the power to participate in decision-making on the financial and operating policies of the investee, but can’t control or jointly control the formulation of these policies with other parties. 1. Investment Cost Recognition for Long-term Equity Investments (1) For the merger of enterprises under the same control, it shall, on the date of merger, regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment, and the direct relevant expenses occurred for the merger of enterprises shall be included into the profits and losses of the current period. (2) For the merger of enterprises not under the same control, The combination costs shall be the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by the Company in exchange for the control on the acquiree, and all relevant direct costs incurred to the acquirer for the business combination. Where any future event that is likely to affect the combination costs is stipulated in the combination contract or agreement, if it is likely to occur and its effects on the combination costs can be measured reliably, the Company shall record the said amount into the combination costs. (3) The cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which is actually paid. The cost consists of the expenses directly relevant to the obtainment of the long-term equity investment, taxes and other necessary expenses. (4) The cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the equity securities issued. (5) The cost of a long-term investment obtained by the exchange of non-monetary assets (having commercial nature) shall be recognized base on taking the fair value and relevant payable taxes as the cost of the assets received. (6) The cost of a long-term equity investment obtained by recombination of liabilities shall be recognized at the fair value. 2. Subsequent Measurement of Long-term Equity Investment and Recognized Method of Profit/Loss The long-term equity investment with joint control (except for the common operator) or significant influence on the investee is accounted by equity method. In addition, the Company's financial statements use cost method to calculate long-term equity investments that can control the investee. (1) Long-term Equity Investment Accounted by Cost Method When the cost method is used for accounting, the long-term equity investment is priced at the initial investment cost, and the cost of the long-term equity investment is adjusted according to additional investment or recovered investment. Except the price actually paid when acquired investment or cash dividends or profits that have been declared but not yet paid included in the consideration, current investment income is recognized by the cash dividends or profits declared by the investee. (2) Long-term Equity Investment Accounted by Equity Method When the equity method is used for accounting, if the initial investment cost of the long-term equity investment is greater than the fair value of the investee’s identifiable net assets, the initial investment cost of the long-term equity investment shall not be adjusted; if the initial investment cost is less than the fair value of the investee’s 119 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 identifiable net assets, the difference shall be recorded into the current profits and losses, and the cost of the long- term equity investment shall be adjusted at the same time. When the equity method is used for accounting, the investment income and other comprehensive income shall be recognized separately according to the net profit or loss and other comprehensive income realized by the investee, and the book value of the long-term equity investment shall be adjusted at the same time. The part entitled shall be calculated according to the profits or cash dividends declared by the investee, and the book value of the long-term equity investment shall be reduced accordingly. For other changes in the owner’s equity other than the net profit or loss, other comprehensive income and profit distribution of the investee, the book value of the long-term equity investment shall be adjusted and included in the capital reserve. When the share of the net profit or loss of the investee is recognized, the net profit of the investee shall be adjusted and recognized according to the fair value of the identifiable assets of the investee when the investment is made. If the accounting policies and accounting periods adopted by the investee are inconsistent with the Company, the financial statements of the investee shall be adjusted according to the accounting policies and accounting periods of the Company and the investment income and other comprehensive income shall be recognized accordingly. For the transactions between the Company and associates and joint ventures, if the assets made or sold don’t constitute business, the unrealized gains and losses of the internal transactions are offset by the proportion attributable to the Company, and the investment gains and losses are recognized accordingly. However, the loss of unrealized internal transactions incurred by the Company and the investee attributable to the impairment loss of the transferred assets shall not be offset. If the assets made to associates or joint ventures constitute business, and the investor makes long-term equity investment but does not obtain the control, the fair value of the investment shall be taken as the initial investment cost of the new long-term equity investment, and the difference between initial investment and the book value of the investment is fully recognized in profit or loss for the current period. If the assets sold by the Company to joint ventures or associates constitute business, the difference between the consideration and the book value of the business shall be fully credited to the current profits and losses. If the assets purchased by Company from joint ventures or associates constitute business, conduct accounting treatment in accordance with the provisions of Accounting Standard for Business Enterprises No. 20 - Business combination, and the profits or losses related to the transaction shall be recognized in full. When the net loss incurred by the investee is recognized, the book value of the long-term equity investment and other long-term equity that substantially constitute the net investment in the investee shall be written down to zero. In addition, if the Company has an obligation to bear additional losses to the investee, the estimated liabilities are recognized in accordance with the obligations assumed and included in the current investment losses. If the investee has realized net profit in later period, the Company will resume the recognition of the income share after the income share has made up the unrecognized loss share. (3) Acquisition of Minority Interests In the preparation of the consolidated financial statements, capital reserve shall be adjusted according to the difference between the long-term equity investment increased due to the purchase of minority interests and the share of the net assets held by the subsidiary from the date of purchase (or the date of combination) calculated according to the proportion of the new shareholding ratio, and retained earnings shall be adjusted if the capital reserve is insufficient to offset. (4) Disposal of Long-term Equity Investment In the consolidated financial statements, the parent company partially disposes of the long-term equity investment in the subsidiary without the loss of control, and the difference between the disposal price and the net assets of the subsidiary corresponding to the disposal of the long-term equity investment is included in the shareholders’ equity. If the disposal of long-term equity investment in subsidiaries results in the loss of control over the subsidiaries, 120 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 handle in accordance with the relevant accounting policies described in NotesⅥ. “Principles, Procedures and Methods for the Preparation of Consolidated Statements” . In other cases, the difference between the book value and the actual acquisition price shall be recorded into the current profits and losses for the disposal of the long-term equity investment. For long-term equity investment accounted by the equity method and residual equity after disposal still accounted by the equity method, other comprehensive income originally included in the shareholders’ equity shall be treated in the same basis of the investee directly disposing related assets or liabilities by corresponding proportion. The owner’s equity recognized by the change of the owner’s equity of the investee other than the net profit or loss, other comprehensive income and profit distribution is carried forward proportionally into the current profits and losses. For long-term equity investment accounted by the cost method and residual equity after disposal still accounted by the cost method, other comprehensive income accounted by equity method or recognized by financial instrument and accounted and recognized by measurement criteria before the acquisition of the control over the investee is treated in the same basis of the investee directly disposing related assets or liabilities, and carried forward proportionately into the current profits and losses. Other changes of owner’s equity in net assets of the investee accounted and recognized by the equity method other than the net profit or loss, other comprehensive income and profit distribution are carried forward proportionally into the current profits and losses. 3. Impairment Provisions for Long-term Equity Investments For the relevant testing method and provision making method, see Notes 31. Impairment of Long-term Assets. 23. Investment Property Measurement model for investment property Cost method measurement Method for depreciation or amortization The Company's investment real estates include leased land use rights, leased buildings, and land use rights held and ready to be transferred after appreciation. Investment real estate is initially measured according to cost, and then measured by cost model. 1. Recognition of investment real estate Investment real estate can only be recognized if it meets the following conditions at the same time: (1) Economic benefits related to investment real estate are likely to flow into enterprises. (2) The cost of the investment real estate can be measured reliably. 2. Initial measurement of investment real estate (1) The cost of purchased investment real estate includes the purchase price, relevant taxes and fees and other expenses directly attributable to the asset. (2) The cost of self-construction of investment real estate consists of the necessary expenses incurred before the construction of the asset reaches the predetermined serviceable condition. (3) The cost of investment real estate acquired by other means shall be determined in accordance with relevant accounting standards. (4) Subsequent expenditures related to investment real estate, if they meet the confirmation conditions of investment real estate, shall be included in the cost of investment real estate; those that do not meet the recognition conditions are included in the current profits and losses when they occur. 3. Subsequent measurement of investment real estate The Company adopts the cost model to carry out subsequent measurement of investment real estate on the balance 121 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 sheet date. According to the relevant provisions of Accounting Standard for Business Enterprises No.4-Fixed Assets and Accounting Standard for Business Enterprises No.6-Intangible Assets, the investment real estate is amortized or depreciated according to the life average method within the expected useful life. 4. Conversion of investment real estate The Company has conclusive evidence that the use of real estate has changed, and the investment real estate is converted into other assets, or other assets are converted into investment real estate, and the book value before the conversion of real estate is taken as the recorded value after the conversion. 24. Fixed Assets (1) Recognition Conditions Fixed assets of the Company refers to the tangible assets that simultaneously possess the features as follows: they are held for the sake of producing commodities, rendering labor service, renting or business management; and their useful life is in excess of one accounting year and unit price is higher. No fixed assets may be recognized unless it simultaneously meets the conditions as follows: ① The economic benefits pertinent to the fixed asset are likely to flow into the Company; and ② The cost of the fixed asset can be measured reliably. The Company's fixed assets are initially measured at cost. Specifically, the costs of purchased fixed assets include the purchase price, relevant taxes and fees, and other expenditures incurred before the fixed assets reach the pre- determined serviceable condition that can be directly attributable to the assets. The costs of self-built fixed assets contain the necessary expenditures incurred before the assets built reach their pre-determined serviceable condition. If the amount paid for the purchase of fixed assets witnesses postponed payment due to that the normal credit conditions are exceeded and is actually financing in nature, the costs of such fixed assets shall be determined on the basis of the present value of the purchase price. The difference between the actual amount paid and the present value of the purchase price, except for the difference that should be capitalized, shall be recognized as profit and loss of the current period during the credit period. (2) Depreciation Method Category of fixed Expected net salvage Method Useful life Annual deprecation assets value Housing and building Average method of 3—30 years 1%-5% 31.67%-3.17% useful life Machinery equipments Average method of 2—10 years 1%-5% 47.50%-9.50% useful life Transportation vehicle Average method of 5—10 years 1%-5% 19.00%-9.50% useful life Average method of Electronic equipment 2—8 years 1%-5% 47.50%-11.88% useful life (3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease A finance lease refers to a lease where all the risks and rewards, related to the ownership of the leasehold property, are substantially transferred, regardless of whether the ownership is eventually transferred or not. The policy for the accrual of the depreciation of the leasehold property for the fixed assets acquired under the finance lease was consistent with that adopted for the Company's self-owned fixed assets. Where it could be reasonably certain that the Company would obtain the ownership of the leasehold property at the end of the lease term, the leasehold property would be depreciated within the service life. Where it could not be reasonably 122 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 certain that the Company could obtain ownership of the leased property at the end of the lease term, the leased property would be depreciated within the lease term or the service life of the leased property whichever was shorter. 25. Construction in Progress 1. Pricing of Construction in Progress The constructions are accounted according to the actual costs incurred. The constructions shall be carried forward into fixed assets at the actual cost when reach intended usable condition. The borrowing expenses eligible for capitalization incurred before the delivery of the construction are included in the construction cost; after the delivery, the relevant interest expense shall be recorded into the current profits and losses. 2. Standard and Time of Construction in Progress Carrying Forward into Fixed Assets The Company’s construction in progress is carried forward into fixed assets when the construction completes and reaches intended usable condition. The criteria for determining the intended usable condition shall meet one of the following: (1) The physical construction (including installation) of fixed assets has been completed or substantially completed; (2) Has been produced or run for trial, and the results indicate that the assets can run normally or can produce stable products stably, or the results of the trial operation show that it can operate normally; (3) The amount of the expenditure on the fixed assets constructed is little or almost no longer occurring; (4) The fixed assets purchased have reached the design or contract requirements, or basically in line with the design or contract requirements. 3. Provision for Impairment of Construction in Progress Please refer to Note 31 Impairment of Long-term Assets, for details of impairment test methods and impairment provision methods of construction in progress. 26. Borrowing Costs The borrowing costs refer to interest and other related costs incurred by the Company as a result of borrowings, including interest on borrowings, amortization of discounts or premiums, ancillary expenses and exchange differences arising from foreign currency borrowings. The borrowing costs incurred by the Company directly attributable to the acquisition, construction or production of assets eligible for capitalization are capitalized and included in the cost of the relevant assets. Other borrowing costs are recognized as expenses according to the amount at the time of occurrence, and are included in the current profits and losses. 1. Principle of capitalization of borrowing costs Borrowing costs can be capitalized when all the following conditions are met: Asset expenditure has already occurred; borrowing costs have already occurred; construction or production activities necessary to bring the assets to the intended useable or sellable status have already begun. 2. Capitalization period of borrowing costs Capitalization period refers to the period from the capitalization of borrowing costs starting to the end of capitalization, excluding the period when capitalization is suspended. If assets that meet the conditions of capitalization are interrupted abnormally in the course of construction or production, and the interruption time exceeds 3 consecutive months, the capitalization of borrowing costs shall be suspended. The borrowing costs incurred during the interruption are recognized as expenses and included in current profits and losses until the acquisition or construction of the assets is resumed. The capitalization of the borrowing costs continues if the interruption is a procedure necessary for the purchase or production of assets 123 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 eligible for capitalization to meet the intended useable or sellable status. The borrowing costs shall cease to be capitalized when the purchased or produced assets that meet the conditions of capitalization meet the intended useable or sellable status. The borrowing costs incurred after the assets eligible for capitalization meet the intended useable or sellable status can be included in the current profits and losses when incurred. 3. Calculation method of capitalized amount of borrowing costs During the period of capitalization, the capitalization amount of interests (including amortization of discounts or premiums) for each accounting period is determined in accordance with the following provisions: (1) For special borrowings for the acquisition or construction of assets eligible for capitalization, the interest expenses actually incurred in the current period of borrowings shall be recognized after deducting the interest income obtained by depositing the unused borrowing funds into the bank or investment income obtained from temporary investment. (2) Where the general borrowing is occupied for the acquisition or construction of assets eligible for capitalization, the Company multiplies the weighted average of the asset expenditure of the accumulated asset expenditure exceeding the special borrowing by the capitalization rate of the general borrowing to calculate the amount of interest that should be capitalized for general borrowings. The capitalization rate is determined based on the weighted average interest rate of general borrowings. 27. Living Assets Not applicable 28. Oil and Gas Assets Not applicable 29. Right-of-use Assets On the start date of the lease term, the Company recognizes its right to use the leasehold property in the lease term as right-of-use assets, including: The initial measurement amount of the lease obligation; the lease payment paid on or before the start date of the lease term. If there is a lease incentive, the amount related to the lease incentive taken should be deducted. the initial direct cost incurred by the lessee; the estimated cost that the lessee will use to pull down and remove the leasehold property, and restore the site of the leasehold property or restore the leasehold property to the state agreed in the lease clauses. Then, the Company will depreciate the right-of-use assets with the straight-line method. If it is reasonably certain that the ownership of the leasehold property will be obtained at the end of the lease term, the Company will depreciate the leasehold property over its remaining service life. If it is not reasonably certain that the ownership of the leasehold property will be obtained at the end of the lease term, the Company will depreciate the leased asset(s) over the lease term or the remaining service life, whichever is shorter. When the Company re-calculates the lease obligation using the present value (PV) of the changed lease payment and correspondingly adjusts the book value of the right-of-use assets, if the book value is already reduced to zero, yet the lease obligation still needs to be reduced further, the Company will include the remaining amount in the current profit or loss. 124 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 30. Intangible Assets (1) Pricing Method, Useful Life and Impairment Test 1. Recognition Criteria of Intangible Assets Intangible assets are identifiable non-monetary assets that are owned or controlled by the Company without physical form. The intangible assets are recognized when all the following conditions are met: (1) Conform to the definition of intangible assets; (2) Expected future economic benefits related to the assets are likely to flow into the Company; (3) The costs of the assets can be measured reliably. 2. Initial Measurement of Intangible Assets Intangible assets are initially measured at cost. Actual costs are determined by the following principles: (1) The cost of the acquisition of intangible assets, including the purchase price, relevant taxes and other expenses directly attributable to the intended use of the asset. The payment of purchase price of intangible assets exceeding normal credit terms is deferred, and the cost of intangible assets having financing nature in essence shall be recognized based on the present value of the purchase price. The difference between the actual payment price and the present value of the purchase price shall be recorded into the current profits and losses in the credit period except that can be capitalized in accordance with the Accounting Standard for Business Enterprises No. 17 - Borrowing Cost. (2) The cost of investing in intangible assets shall be recognized according to the value agreed upon in the investment contract or agreement, except that the value of the contract or agreement is unfair. 3. Subsequent Measurement of Intangible Assets The Company shall determine the useful life when it obtains intangible assets. The useful life of intangible assets is limited, and the years of the useful life or output that constitutes the useful life or similar measurement units shall be estimated. The intangible assets are regarded as intangible assets with uncertain useful life if the term that brings economic benefits to the Company is unforeseeable Intangible assets with limited useful life shall be amortized by straight line method from the time when the intangible assets are available until can’t be recognized as intangible assets; intangible assets with uncertain useful life shall not be amortized. The Company reviews the estimated useful life and amortization method of intangible assets with limited useful life at the end of each year, and reviews the estimated useful life of intangible assets with uncertain useful life in each accounting period. For intangible assets that evidence shows the useful life is limited, the useful life shall be estimated and the intangible assets shall be amortized in the estimated useful life. 4. Recognition Criteria and Withdrawal Method of Intangible Asset Impairment Provision The impairment test method and withdrawal method for impairment provision of intangible assets are detailed in Note 31: Long-term asset impairment under Note V. (2) Accounting Policy for Internal Research and Development Expenditures The expenditures in internal research and development projects of the Company are classified into expenditures in research stage and expenditures in development stage. The expenditures in research stage are included in the current profits and losses when incurred. The expenditures in development stage are recognized as intangible assets when meeting the following conditions: (1) The completion of the intangible assets makes it technically feasible for using or selling; (2) Having the intention to complete and use or sell the intangible assets; (3) The way in which an intangible asset generates economic benefits, including the proof that the products 125 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 produced with the intangible asset have market or the proof of its usefulness if the intangible asset has market and will be used internally; (4) Having sufficient technical, financial resources and other resources to support the development of the intangible assets and the ability to use or sell the intangible assets; (5) Expenditure attributable to the development stage of intangible assets can be measured reliably. The cost of self-developed intangible assets includes the total expenditure incurred since meeting intangible assets recognition criterion until reaching intended use. Expenditures that have been expensed in previous periods are no longer adjusted. Non-monetary assets exchange, debt restructuring, government subsidies and the cost of intangible assets acquired by business combination are recognized according to relevant provisions of Accounting Standard for Business Enterprises No. 7 - Non-monetary assets exchange, Accounting Standard for Business Enterprises No. 12 - Debt restructuring, Accounting Standards for Business Enterprises No. 16 - Government subsidies, Accounting Standard for Business Enterprises No. 20 - Business combination respectively. 31. Impairment of Long-term Assets For non-current non-financial assets such as fixed assets, construction in progress, intangible assets with limited useful life, investment real estate measured in cost mode and long-term equity investments in subsidiaries, joint ventures and associates, the Company determines whether there is indication of impairment at balance sheet date. If there is indication of impairment, then estimate the amount of its recoverable value and test the impairment. Goodwill, intangible assets with uncertain useful life and intangible assets that have not yet reached useable state shall be tested for impairment every year, whether or not there is any indication of impairment. If the impairment test results indicate that the recoverable amount of the asset is lower than its book value, the impairment provision shall be made at the difference and included in the impairment loss. The recoverable amount is the higher of the fair value of the asset minus the disposal cost and the present value of the expected future cash flow of the asset. The fair value of the asset is recognized according to the price of the sales agreement in the fair trade; if there is no sales agreement but there is an active market, the fair value is recognized according to the buyer’s bid of the asset; if there is no sales agreement or active market, the fair value of asset shall be estimated based on the best information that can be obtained. Disposal costs include legal costs related to disposal of assets, related taxes, handling charges, and direct costs incurred to enable the asset reaching sellable status. The present value of the expected future cash flows of the assets is recognized by the amount discounted at appropriate discount rate according to the expected future cash flows arising from the continuing use of the asset and the final disposal. The provision for impairment of assets is calculated and recognized on the basis of individual assets. If it is difficult to estimate the recoverable amount of individual assets, the recoverable amount of the asset group shall be recognized by the asset group to which the asset belongs. The asset group is the smallest portfolio of assets that can generate cash inflows independently. The book value of the goodwill presented separately in the financial statements shall be apportioned to the asset group or portfolio of asset groups that is expected to benefit from the synergies of the business combination when the impairment test is conducted. The corresponding impairment loss is recognized if the test results indicate that the recoverable amount of the asset group or portfolio of asset groups containing the apportioned goodwill is lower than its book value. The amount of the impairment loss shall offset the book value of the goodwill apportioned to the asset group or portfolio of asset groups, and offset the book value of other assets in proportion according to the proportion of the book value of other assets except the goodwill in the asset group or portfolio of asset groups. 126 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Once the impairment loss of the above asset is recognized, the portion that the value is restored will not be written back in subsequent periods. 32. Long-term Prepaid Expense Long-term prepaid expense refers to general expenses with the apportioned period over one year (one year excluded) that have occurred but attributable to the current and future periods. Long-term deferred expense shall be amortized averagely within benefit period. In case of no benefit in the future accounting period, the amortized value of such project that fails to be amortized shall be transferred into the profits and losses of the current period. The amortization period of various expenses is as follows: Item Amortization Period Expenditure on improvement of rented fixed assets 3-5 years Fixed repair expenditure 5 years Mould 3 years Wrap-around boxes 2 years 33. Contract Liabilities The Company’s obligation of transferring commodities to customers due to consideration received or receivable from clients. If the client has paid the contract consideration or the Company has obtained the unconditional right of collection before the Company transfers commodities to the customer, the Company shall present the accounts received or receivable as contract liabilities at the earlier time between the time when the client actually conducts payment and the deadline of payment. Contract assets and contract liabilities under the same contract shall be presented based on the net amount, while those not under the same contract shall not be offset. 34. Payroll (1) Accounting Treatment of Short-term Compensation Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and benefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing fund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-term compensation actually happened during the accounting period when the active staff offering the service for the Group should be recognized as liabilities and is included in the current gains and losses or relevant assets cost. Of which the non-monetary benefits should be measured according to the fair value. (2) Accounting Treatment of the Welfare after Demission Welfare after demission mainly includes defined contribution plans and defined benefit plans. Of which defined contribution plans mainly include basic endowment insurance, unemployment insurance, annuity funds, etc., and 127 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 the corresponding payable and deposit amount should be included into the relevant assets cost or the current gains and losses when happen. (3) Accounting Treatment of the Demission Welfare If an enterprise cancels the labor relationship with any employee prior to the expiration of the relevant labor contract or brings forward any compensation proposal for the purpose of encouraging the employee to accept a layoff, and should recognize the payroll liabilities occurred from the demission welfare base on the earlier date between the time when the Group could not one-sided withdraw the demission welfare which offered by the plan or layoff proposal owning to relieve the labor relationship and the date the Group recognizes the cost related to the reorganization of the payment of the demission welfare and at the same time includes which into the current gains and losses. But if the demission welfare is estimated that could not totally pay after the end of the annual report within 12 months, should be disposed according to other long-term payroll payment. (4) Accounting Treatment of the Welfare of Other Long-term Staffs The inside employee retirement plan is treated by adopting the same principle with the above dismiss ion welfare. The group would recorded the salary and the social security insurance fees paid and so on from the employee’s service terminative date to normal retirement date into current profits and losses (dismiss ion welfare) under the condition that they meet the recognition conditions of estimated liabilities. The other long-term welfare that the Group offers to the staffs, if met with the setting drawing plan, should be accounting disposed according to the setting drawing plan, while the rest should be disposed according to the setting revenue plan. 35. Lease Liabilities On the start date of the lease term, the Company recognizes the PV of the unpaid lease payment as a lease obligation, except for the short-term and low-value asset leases. It will regard the interest rate implicit in lease as the rate of discount, when calculating the PV of the lease payment. The incremental lending rate of the lessee will be deemed as the rate of discount, if the interest rate implicit in lease cannot be confirmed. The Company calculates the interest charge of the lease obligation in each period in the lease term at a fixed periodic interest rate and includes it in the current profit or loss, unless such interest charge is stipulated to be included in the underlying asset cost. Variable lease payments that are not included in the measurement of the lease obligation should be included in the current profit or loss when they are actually incurred, unless such payments are stipulated to be included in the underlying asset cost. The Company will re-calculate the lease obligation using the PV of the changed lease payment, if the actual fixed payment, the estimated payable of the residual value of the guarantee, the index or rate used to confirm the lease payment, or the assessment result of the call option, the renewal option, or the termination option, or the actual exercise changes, after the start date of the lease term. 36. Provisions 1. Recognition of Provisions The obligation such as external guaranty, pending litigation or arbitration, product quality assurance, layoff plan, 128 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 loss contract, restructuring and disposal of fixed assets, pertinent to a contingencies shall be recognized as an provisions when the following conditions are satisfied simultaneously: ① That obligation is a current obligation of the enterprise; ② It is likely to cause any economic benefit to flow out of the enterprise as a result of performance of the obligation; and ③ The amount of the obligation can be measured in a reliable way 2. Measurement of Provisions The provisions shall be initially measured in accordance with the best estimate of the necessary expenses for the performance of the current obligation. If there is a sequent range for the necessary expenses and if all the outcomes within this range are equally likely to occur, the best estimate shall be determined in accordance with the middle estimate within the range. In other cases, the best estimate shall be conducted in accordance with the following situations, respectively: ① If the Contingencies concern a single item, it shall be determined in the light of the most likely outcome. ② If the Contingencies concern two or more items, the best estimate should be calculated and determined in accordance with all possible outcomes and the relevant probabilities. ③ When all or some of the expenses necessary for the liquidation of an provisions of an enterprise is expected to be compensated by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the reimbursement will be obtained. The Company shall check the book value of the provisions on the balance sheet date. The amount of compensation is not exceeding the book value of the recognized provisions. 37. Share-based Payment Not applicable 38. Other Financial Instruments such as Preferred Shares and Perpetual Bonds Not applicable 39. Revenue The Accounting Policy Adopted for Recognition and Measurement of Revenue 1. Accounting policies adopted in revenue recognition and measurement The Company recognizes revenue when it has satisfied its performance obligations under the contract, i.e., when the customer has obtained control of relevant goods or services. Obtaining control of relevant goods or services means being able to direct the use of them and obtain substantially all of the benefits from them. Where the contract contains two or more performance obligations, the Company, at the inception date of the contract, allocates the transaction price to each performance obligation in accordance with the relative proportion of the stand-alone selling price of the goods or services promised by each performance obligation. The Company measures revenue on the basis of the transaction price allocated to each performance obligation. Transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties and amounts expected to be returned to the customer. The Company determines the transaction price in accordance with the terms of the contract, with past business practices taken into account. When determining the transaction price, it considers the impact of variable consideration, the existence of a significant financing component in the contract, non-cash consideration, consideration payable to a customer and other factors. The transaction price is recognized only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the relevant uncertainty is resolved. Where a contract contains a significant 129 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 financing component, the Company determines the transaction price on the basis of the amount presumably payable in cash when the customer obtains control of the goods or services, and uses the actual interest method to amortize the difference between the transaction price and the contract consideration during the contract period. A performance obligation is satisfied over time if one of the following conditions is met; otherwise, it is treated as satisfied at a point in time: (1) The customer simultaneously receives and consumes the benefits provided by the Company's performance as the Company performs. (2) The customer can control the goods as they are created during the Company's performance. (3) The goods produced by the Company's performance have no alternative use, and the Company has the right to collect payment for performance completed to date during the entire contract period. Where a performance obligation is to be satisfied over time, the Company recognizes revenue in accordance with the progress of performance during that period, except when the progress cannot be reasonably determined. In determining the progress of performance, the Company takes into account the nature of the goods or services and adopts the output methods or the input methods. Where the performance progress cannot be reasonably determined, and the costs incurred are expected to be recovered, the Company recognizes revenue according to the amount of the costs incurred until the progress can be reasonably determined. Where the performance obligation is to be satisfied at a certain point in time, the Company recognizes revenue at the point when the customer obtains control of the relevant goods or services. When judging whether the customer has obtained control of goods or services, the Company considers the following indicators: (1) The Company has a present right to receive payment for the goods or services, i.e., the customer has a present obligation to pay for the goods or services. (2) The Company has transferred the legal ownership of the goods to the customer, i.e., the customer has obtained the legal ownership of the goods. (3) The Company has transferred physical possession of the goods to the customer, i.e., the customer has taken physical possession of the goods. (4) The Company has transferred significant risks and rewards of ownership of the goods to the customer, i.e., the customer has obtained significant risks and rewards of ownership of the goods. (5) The customer has accepted the goods or services. 2. Specific methods (1) Recognition of domestic sales revenue: Under the conventional settlement mode, the Company has delivered goods that have passed inspection to the purchaser as required by the purchaser; the amount of revenue has been determined, a sales invoice has been issued and the payment has been received or is expected to be recovered. Under the consignment sales settlement mode, the Company recognizes sales revenue when the product is issued and the settlement notice is issued after the customer inspection is qualified. (2) Recognition of export sales revenue: The Company has produced goods according to the requirements stipulated in the sales contract, and completed the export declaration procedures after the goods have passed inspection; the freight company has shipped the goods, the amount of revenue has been determined, an export sales invoice has been issued, and the payment has been received or is expected to be recovered. Differences in accounting policies for the recognition of revenue caused by different business models for the same type of business 130 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 40. Government Subsidies 1. Category of Government Subsidies Government subsidies refer to the monetary assets and non-monetary assets obtained by the Company from the government, which mainly include government subsidies related to assets and government subsidies related to income. 2. Distinction Standard of Government Subsidies Related to Assets with Government Subsidies Related to Income The government subsidies related to assets refer to the government subsidies obtained for acquisition, construction or otherwise formation of long-term assets. The government subsidies related to income refer to the government subsidies except the government subsidies related to assets. The specific standard of classifying the government subsidies as subsidies related to assets: government subsidies for acquisition, construction or otherwise formation of long-term assets. The specific criteria that the Company classifies government subsidies as income related is: other government subsidies other than asset-related government subsidies. If the government documents do not specify the subsidy object, the bases that the Company classified the government subsidies as assets-related subsidies or income-related subsidies were as follows: (1) If the specific items for which the subsidy is targeted are stipulated in government documents, divide according to the relative proportion of the amount of expenditure that forms assets and the amount of expenditure included in the cost in the budget for that particular project, and the proportion shall be reviewed at each balance sheet date and changed as necessary; (2) if the government documents only have a general statement of the purpose and do not specify a specific project, the subsidy is recognized as government subsidy related to income. 3. Measurement of Government Subsidies If a government subsidy is a monetary asset, it shall be measured according to the amount received or receivable. If a government subsidy is a non-monetary asset, it shall be measured at its fair value, and shall be measured at a nominal amount (RMB1) when the fair value cannot be obtained reliably. For confirmed government subsidies that need to be returned, if there is relevant deferred income, the book balance of related deferred income shall be written off and the excess shall be charged to profit or loss for the Current Period; for other circumstances, it shall be directly charged to profit or loss for the Current. 4. Accounting Treatment for Government Subsidies The Company adopts the gross method to confirm government subsidies. The government subsidies related to assets are recognized as deferred income, and are charged to the current profit or loss in a reasonable and systematic manner within the useful lives of the relevant assets (subsidies related to the daily activities of the Company are included in other income; while subsidies unrelated to the daily activities of the Company are included in non-operating income). Government subsidies measured at nominal amounts are directly charged to profit or loss for the Current Period. Where the relevant assets are sold, transferred, scrapped or damaged before the end of their useful lives, the balance of related undistributed deferred income shall be transferred to the profit or loss of the asset disposal in the Current Period. Government subsidies related to income shall be treated as follows: (1) government subsidies used to compensate the relevant costs, expenses or losses of the Company in the subsequent period shall be recognized as deferred income, and shall be included in the current profit and loss during the period of confirming the relevant costs, expenses or losses (subsidies related to the daily activities of the Company are included in other income; while subsidies unrelated to the daily activities of the Company are included in non-operating income); 131 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (2) government subsidies used to compensate the relevant costs, expenses or losses incurred by the Company shall be directly included in the current profits and losses (subsidies related to the daily activities of the Company are included in other income; while subsidies unrelated to the daily activities of the Company are included in non- operating income). For government subsidies that include both assets-related and income-related parts, they should be distinguished separately for accounting treatment; for government subsidies that are difficult to be distinguished, they should be classified as income-related. 41. Deferred Income Tax Assets/Deferred Income Tax Liabilities The income tax of the Company includes the current income tax and deferred income tax. Both are recorded into the current gains and losses as income tax expenses or revenue, except in the following circumstances: (1) The income tax generated from the business combination shall be adjusted into goodwill; (2) The income tax related to the transaction or event directly included in shareholders’ equity shall be recorded into shareholders’ equity. At the balance sheet date, the Company recognizes the deferred income tax assets or deferred income tax liabilities in accordance with the balance sheet liability method for the temporary difference between the book value of assets or liabilities and its tax base. The Company recognizes all taxable temporary differences as deferred income tax liabilities unless taxable temporary differences arise in the following transactions: (1) The initial recognition of goodwill or the initial recognition of the assets or liabilities arising from a transaction with the following characteristics: the transaction is not a business combination and neither the accounting profit nor the taxable income is incurred at the time of the transaction; (2) The time of write-back of taxable temporary differences related to the investments in subsidiaries, associates and joint ventures can be controlled and the temporary differences are likely to not be written back in the foreseeable future. The Company recognizes the deferred income tax assets arising from deductible temporary differences, subject to the amount of taxable income obtained to offset the deductible temporary differences, unless the deductible temporary differences arise in the following transactions: (1) The transaction is not a business combination, and the transaction does not affect the accounting profit or the amount of taxable income; (2) The deductible temporary differences related to the investments in subsidiaries, associates and joint ventures are not met simultaneously: Temporary differences are likely to be written back in the foreseeable future and are likely to be used to offset the taxable income of deductible temporary differences in the future. At the balance sheet date, the Company measures the deferred income tax assets and deferred income tax liabilities at the applicable tax rate of the period expected to recover the asset or pay off the liabilities according to tax law, and reflects the income tax effect of expected assets recovery or liabilities payoff method at the balance sheet date. At the balance sheet date, the Company reviews the book value of the deferred income tax assets. If it is likely that sufficient taxable income will not be available to offset the benefit of the deferred income tax assets in the future period, the book value of the deferred income tax assets will be written down. If it is probable that sufficient taxable income will be available, the amount of write-down will be written back. 132 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 42. Lease (1) Accounting Treatment of Operating Lease As the lessee: On the start date of the lease term, the Company deems the right-of-use assets and lease obligations of all the operating leases, except for the simplified short-term lease and low-value leases. See Note 29. Right-of-use Assets and 35. Lease Liabilities for the general accounting treatment of the Company as the lessee. Lease change A lease change refers to a change in the scope, consideration, and term of lease outside the original contract clauses, including the addition or termination of the one or several rights to use lease assets, and the extension or reduction of the lease term specified in the contract. When the lease changes and the following conditions are met, the Company will regard the lease charge as a separate lease for accounting treatment: (1) The lease change expands the scope of lease through the increase of one or several rights to use the lease assets; (2) The increased consideration and the separate price of the expanded part of the scope of lease are the same, upon adjustment, according to the contract. If the lease change is not deemed as a separate lease for accounting treatment, the Company will re-amortize the consideration of the changed contract, re-confirm the lease term, and re-calculate the PV of the lease obligation using the changed lease payment and the revised rate of discount, on the date when the lease change takes effect. The Company will correspondingly reduce the book value of the right-of-use assets and include the profit or loss of the lease terminated in part or whole in the current profit or loss, if the lease change narrows the scope of lease or shortens the lease term. The Company will correspondingly adjust the book value of the right-of-use assets, if other lease changes result in the re-calculation of the lease obligation. Short-term and low-value asset leases The Company chooses not to confirm the right-of-use assets and lease obligations of the short-term and low-value asset leases, and include the relevant lease payment in each period in the lease term in the current profit or loss or the underlying asset cost on a straight-line basis. A short-term lease refers to the lease whose lease term does not exceed 12 months and that does not include the call option on the start date of the lease term. A low-value asset lease refers to the lease where the value will be low when the single lease asset is the new asset. For the leasehold property that is underleased or expected to be underleased, the original lease does not belong to low-value asset lease. As the lessor: The Company classifies lease into finance and operating leases on the start date of the lease term. A finance lease refers to the lease where almost all the risks and remuneration, related to the ownership of the leasehold property, is transferred, no matter whether the ownership is finally transferred or not. An operating lease refers to all leases other than finance leases. The lease receivable of the operating lease in each period in the lease term is deemed as a rental on a straight-line basis. The Company capitalizes the initial direct cost related to the operating finance, amortize and include it in the current profit or loss on the basis same as the recognition of rentals in the lease term. Variable lease payments that are not included in the lease receivable are included in the current profit or loss when they are actually incurred. If an operating lease changes, the Company will regard it as a new lease for accounting treatment from the effective date of the change. The advance receipt or the lease receivable related to the lease prior to the change 133 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 is recognized as the payment receivable of the new lease. (2) Accounting Treatments of Financial Lease As the lessee: For financing leased assets, on the beginning date of the lease term, the lower of the fair value of the leased asset and the present value of the minimum lease payment amount on the lease commencement date is taken as the recorded value of the leased asset, the minimum lease payment amount is regarded as the recorded value of long- term payables, and the difference is regarded as unrecognized financing expense, which is apportioned by the effective interest rate method in each period of the lease term. The contingent rentals are included in the profit or loss for the current period upon actual incurrence thereof. As the lessor: The Company confirms the finance lease receivable of the finance lease and finally confirms the finance leasehold property on the start date of the lease term. It recognizes the net investment in the lease as the entry value of the finance lease, when initially calculating the finance lease receivable. The net investment in the lease is the sum of the net value of the unguaranteed residual value and the lease receivable not received on the start date of the lease term at the interest rate implicit in lease. The Company calculates and confirms the interest income at a fixed periodic interest rate in each period in the lease term. 43. Other Significant Accounting Policies and Estimates Naught 44. Changes in Main Accounting Policies and Estimates (1) Change of Accounting Policies □Applicable Not applicable (2) Changes in Accounting Estimates □Applicable Not applicable 45. Other Naught VI. Taxes 1. Main Taxes and Tax Rates Category of taxes Tax basis Tax rate Sales volume from goods selling or taxable VAT 3%, 6%, 9%, 13% service Urban maintenance and construction tax Turnover tax payable 7%, 5% Enterprise income tax Taxable income 10%, 15%, 25% 134 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Educational surtax Turnover tax payable 3% Local educational surtax Turnover tax payable 2% Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate Name Income tax rate The Company, Zhida Company, Chanchang Company, Nanning Liaowang, Chongqing Guinuo, Liuzhou Lighting, Liuzhou 15% Foreshine, Headquarters of NationStar Optoelectronics, NationStar Semiconductor, Germany NationStar FSL Lighting GmbH 15% Indonesia Liaowang 10% Other subsidiaries 25% 2. Tax Preference 1. The Company passed the re-examination for High-tech Enterprises in 2020, as well as won the “Certificate of High-tech Enterprise” after approval by Department of Science and Technology of Guangdong Province, Department of Finance of Guangdong Province, Guangdong Provincial Bureau of State Taxation and Guangdong Provincial Bureau of Local Taxation. In accordance with relevant provisions in Corporate Income Tax Law of the People’s Republic of China and the Administration Measures for Identification of High-tech Enterprises promulgated in 2007, the Company paid the corporate income tax based on a tax rate of 15% within three years since 1 January 2020. 2. Zhida Company and Chanchang Company passed the examination for High-tech Enterprises respectively in December 2019 and December 2021, and thus Zhida Company and Chanchang Company paid the corporate income tax based on a tax rate of 15% within three years respectively since 1 January 2019 and 1 January 2021 in accordance with relevant provisions in Corporate Income Tax Law of the People’s Republic of China and the Administration Measures for Identification of High-tech Enterprises promulgated in 2007. 3. According to the Decision on Tax Matters approved by the Local Taxation Bureau of Nanning High-tech Industrial Development Zone (NGDSSB [2015] No. 1), Nanning Liaowang will enjoy the preferential tax reduction and exemption of enterprise income tax in the western development from 1 January 2015, and the enterprise income tax will be levied at a reduced rate of 15%. 4. After being examined and filed by the competent tax authorities, Chongqing Guinuo will enjoy the preferential tax reduction and exemption of enterprise income tax in the western development from 1 January 2019, and the enterprise income tax will be levied at a reduced rate of 15%. 5. According to the letter (LFGH Zi [2020] No. 196) issued by Liuzhou Development and Reform Commission on 17 August 2020, Liuzhou Guige Photoelectric is determined to be in line with the encouraged industries in the western region, and the enterprise income tax will be paid at a reduced rate of 15% from 1 January 2020. 6. According to the letter (GKGH [2021] No. 237) jointly issued by the Science and Technology Department of Guangxi Zhuang Autonomous Region, Finance Department of Guangxi Zhuang Autonomous Region and Guangxi Zhuang Autonomous Region Tax Service, State Taxation Administration on 30 November 2021, Liuzhou Guige Foreshine is recognized as a high-tech enterprise (the certificate has not been obtained yet), and the preferential tax rate of income tax for high-tech enterprises is 15%. 7. NationStar Optoelectronics, a subsidiary of the Company, was recognized as a high-tech enterprise on 16 December 2008, and its certificate number was GR200844000097. It was re-recognized as a high-tech enterprise in 2020, and its new certificate number is GR202044006337 dated 9 December 2020. Its corporate income tax 135 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 rate for 2020-2022 is 15%. 8. Foshan NationStar Semiconductor Technology Co., Ltd., a wholly owned subsidiary of NationStar Optoelectronics, was recognized as a high-tech enterprise on 10 October 2015 and its certificate number was GR201544001238. It was re-recognized as a high-tech enterprise in 2021, and its new certificate number is GR202144008779 dated 20 December 2021. Its corporate income tax rate for 2021-2023 is 15%. 3. Other Pay in accordance with the relevant provisions of the tax law VII. Notes to Main Items of Consolidated Financial Statements 1. Monetary Assets Unit: RMB Item Ending balance Beginning balance Cash on hand 68,284.86 24,635.14 Bank deposits 1,399,979,420.13 1,800,849,053.18 Other monetary assets (Note 1) 436,039,030.34 578,254,717.74 Unexpired interest (Note 2) 3,352,901.50 2,783,249.29 Total 1,839,439,636.83 2,381,911,655.35 Of which: Total amount deposited 38,119,429.22 27,310,928.58 overseas Total amount with restrictions on use due to mortgage, 448,713,603.58 247,425,015.48 pledge or freeze Other notes Note 1: Other monetary assets were security deposits for notes and performance bonds, as well as investments placed with security firm and the balance with e-commerce platforms, of which the security deposits for notes and performance bonds were restricted assets (see “81. Assets with Restricted Ownership or Right of Use” in Note “VII Notes to Consolidated Financial Statements”). Note 2: Unexpired interest did not belong to cash and cash equivalents. 2. Trading Financial Assets Unit: RMB Item Ending balance Beginning balance Financial assets at fair value through 64,068,462.40 348,248,125.61 profit or loss Including: Equity instrument investments 1,397,612.10 1,558,778.18 Wealth management products 62,670,850.30 342,422,447.43 Others 4,266,900.00 Including: Total 64,068,462.40 348,248,125.61 3. Derivative Financial Assets Naught 136 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 4. Notes Receivable (1) Notes Receivable Listed by Category Unit: RMB Item Ending balance Beginning balance Bank acceptance bill 1,372,158,706.47 1,659,553,102.56 Commercial acceptance bill 41,633,566.90 30,803,389.08 Total 1,413,792,273.37 1,690,356,491.64 Unit: RMB Ending balance Beginning balance Carrying amount Bad debt provision Carrying amount Bad debt provision Categor Withdra Withdra y Carrying Carrying Proporti wal Proporti wal Amount Amount value Amount Amount value on proporti on proporti on on Of which: notes receivab le withdra 1,415,0 1,413,7 1,690,9 1,690,3 1,287,6 628,640 wn bad 79,909. 100.00% 100.00% 92,273. 85,132. 100.00% 100.00% 56,491. 36.09 .59 debt 46 37 23 64 provisio n by group Of which: Bank 1,372,1 1,372,1 1,659,5 1,659,5 acceptan 58,706. 96.97% 0.00 0.00% 58,706. 53,102. 98.14% 0.00 0.00% 53,102. ce bill 47 47 56 56 Commer cial 42,921, 1,287,6 41,633, 31,432, 628,640 30,803, 3.03% 100.00% 1.86% 100.00% acceptan 202.99 36.09 566.90 029.67 .59 389.08 ce bill 1,415,0 1,413,7 1,690,9 1,690,3 1,287,6 628,640 Total 79,909. 100.00% 100.00% 92,273. 85,132. 100.00% 100.00% 56,491. 36.09 .59 46 37 23 64 Withdrawal of bad debt provision by group: Unit: RMB Ending balance Name Carrying amount Bad debt provision Withdrawal proportion Within 1 year 42,921,202.99 1,287,636.09 3.00% Total 42,921,202.99 1,287,636.09 Note: Please refer to the relevant information of disclosure of bad debt provision of other receivables if adopting the general mode of expected credit loss to withdraw bad debt provision of notes receivable. □Applicable Not applicable 137 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (2) Bad Debt Provision Withdrawn, Reversed or Collected during the Reporting Period Withdrawal of bad debt provision: Unit: RMB Beginning Increase/decrease Category Reversed or Ending balance balance Withdrawn Verified Other collected Notes receivable withdrawn bad debt provision separately Notes receivable withdrawn bad 628,640.59 658,995.50 1,287,636.09 debt provision by group Total 628,640.59 658,995.50 1,287,636.09 For commercial acceptance bills, there is difference in withdrawal proportion of bad debts between the Company as the Parent and the majority-owned subsidiary NationStar. The Company unified the accounting estimates in the consolidated financial statements and complementally withdrew the bad debt provision of RMB429,212.03 for notes receivable. Of which, bad debt provision collected or reversed with significant amount: □Applicable Not applicable (3) Notes Receivable Pledged by the Company at the Period-end Unit: RMB Item Amount pledged at the period-end Bank acceptance bill 821,993,782.57 Total 821,993,782.57 (4) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on the Balance Sheet Date at the Period-end Unit: RMB Amount of recognition termination at the Amount of not recognition termination at Item period-end the period-end Bank acceptance bill 675,292,723.41 Total 675,292,723.41 (5) Notes Transferred to Accounts Receivable because Drawer of the Notes Fails to Executed the Contract or Agreement Naught (6) The Actual Write-off Notes Receivable Naught 138 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 5. Accounts Receivable (1) Accounts Receivable Disclosed by Category Unit: RMB Ending balance Beginning balance Carrying amount Bad debt provision Carrying amount Bad debt provision Categor Withdra Withdra y Carrying Carrying Proporti wal Proporti wal Amount Amount value Amount Amount value on proporti on proporti on on Account s receivab le withdra 33,512, 33,367, 144,991 33,512, 31,123, 2,389,1 wn bad 1.45% 99.57% 1.60% 92.87% debt 866.15 874.59 .56 866.15 709.17 56.98 provisio n separatel y Of which: Account s receivab le 2,284,4 2,186,0 2,063,2 1,979,1 withdra 98,441, 84,056, 74,693. 98.55% 4.31% 33,552. 05,995. 98.40% 4.07% 49,687. wn bad 141.68 307.99 debt 96 28 27 28 provisio n by group Of which: (1) 2,284,4 2,186,0 2,063,2 1,979,1 General 98,441, 84,056, 74,693. 98.55% 4.31% 33,552. 05,995. 98.40% 4.07% 49,687. business 141.68 307.99 portfolio 96 28 27 28 (2) Internal business portfolio 2,317,9 2,186,1 2,096,7 1,981,5 131,809 115,180 Total 87,560. 100.00% 5.69% 78,543. 18,861. 100.00% 5.49% 38,844. ,016.27 ,017.16 11 84 42 26 Individual withdrawal of bad debt provision: Unit: RMB Ending balance Name Carrying amount Bad debt provision Withdrawal proportion Withdrawal reason Involved in the lawsuit, the Company won the lawsuit in the second Customer A 11,220,827.14 11,220,827.14 100.00% instance, which had not yet executed completely Existing pending Customer B 9,111,336.51 9,111,336.51 100.00% litigation matters Customer C 6,024,216.41 6,024,216.41 100.00% Less likely to be 139 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 recovered Existing pending Customer D 4,702,051.28 4,702,051.28 100.00% litigation matters The compensation amount of the customer Customer E 815,484.27 815,484.27 100.00% lawsuit is large, and less likely to be recovered Existing pending Customer F 526,858.54 526,858.54 100.00% litigation matters The customer had executed bankruptcy liquidation in Customer G 523,448.92 523,448.92 100.00% December 2020, thus the accounts were unrecoverable. Expected to be Customer H 395,321.00 395,321.00 100.00% unrecoverable In the processing of customer complaints, Customer I 193,322.08 48,330.52 25.00% the possibility of bad debts is greater Total 33,512,866.15 33,367,874.59 Withdrawal of bad debt provision by group: Unit: RMB Ending balance Name Carrying amount Bad debt provision Withdrawal proportion Credit risk group 2,284,474,693.96 98,441,141.68 4.31% Total 2,284,474,693.96 98,441,141.68 Please refer to the relevant information of disclosure of bad debt provision of other receivables if adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable. □Applicable Not applicable Disclosure by aging Unit: RMB Aging Ending balance Within 1 year (including 1 year) 2,141,771,714.41 1 to 2 years 97,849,610.15 2 to 3 years 12,018,016.13 Over 3 years 66,348,219.42 3 to 4 years 29,532,295.52 4 to 5 years 21,599,874.05 Over 5 years 15,216,049.85 Total 2,317,987,560.11 (2) Bad Debt Provision Withdrawn, Reversed or Collected during the Reporting Period Bad debt provision withdrawn in the Reporting Period: Unit: RMB Beginning Increase/decrease Category Ending balance balance Withdrawn Reversed or Verified Other 140 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 collected Bad debt provision 31,123,709.1 33,367,874.5 2,244,165.42 separately 7 9 accrued Bad debt provision 84,056,307.9 14,385,162.7 98,441,141.6 withdrawn 329.04 according to 9 3 8 groups 115,180,017. 16,629,328.1 131,809,016. Total 329.04 16 5 27 For common business group, there is difference in withdrawal proportion of expected credit losses between the Company as the Parent and the majority-owned subsidiary NationStar. The Company unified the accounting estimates in consolidated financial statements and complementally withdrew bad debt provision of RMB6,019,862.42 for accounts receivable. The amount of expected credit loss accrued in the current period is RMB16,527,279.88, and the amount of expected credit loss recovered or reversed in the current period is RMB0.00, which is RMB102,048.27 different from the amount of credit impairment loss accrued in the current period of RMB16,629,328.15, which is caused by the translation difference of foreign currency statement of Indonesia Liaowang at the end of the period. (3) Accounts Receivable with Actual Verification for the Reporting Period Unit: RMB Item Amount Other retails accounts 329.04 Of which, verification of significant accounts receivable: Unit: RMB Whether occurred Name of the entity Nature Amount Reason Procedure because of related- party transactions The approval procedure is carried out Other retails Payment for goods 329.04 Unrecoverable according to the Not accounts Company’s rules for managing bad debt. Total 329.04 (4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party Unit: RMB Proportion to total ending Ending balance of accounts Ending balance of bad debt Name of units balance of accounts receivable provision receivable (%) No. 1 152,875,068.03 6.60% 4,586,252.04 No. 2 89,987,854.53 3.88% 2,699,635.64 No. 3 79,809,077.83 3.44% 2,394,272.33 No. 4 71,161,243.67 3.07% 2,134,837.31 No. 5 55,652,405.43 2.40% 1,669,572.16 Total 449,485,649.49 19.39% 141 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (5) Derecognition of Accounts Receivable due to the Transfer of Financial Assets Naught (6) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of Accounts Receivable Naught 6. Accounts Receivable Financing Naught Increase or decrease of accounts receivable financing and changes in fair value thereof □Applicable Not applicable If the depreciation reserve for accounts receivable financing was withdrawn in accordance with the general model of expected credit losses, the information related to depreciation reserve shall be disclosed by reference to the disclosure method of other receivables: □Applicable Not applicable 7. Prepayment (1) Listed by Aging Unit: RMB Ending balance Beginning balance Aging Amount Proportion Amount Proportion Within 1 year 28,409,430.08 74.28% 26,325,276.67 78.64% 1 to 2 years 7,056,500.42 18.45% 4,740,160.27 14.16% 2 to 3 years 229,005.90 0.60% 553,744.18 1.65% Over 3 years 2,549,224.67 6.67% 1,854,923.20 5.54% Total 38,244,161.07 33,474,104.32 (2) Top 5 of the Ending Balance of the Prepayments Collected according to the Prepayment Target Unit: RMB Name of Relationship with the Proportion to total prepayments Ending balance Prepayment time units Company (%) No. 1 Non-related party 2,731,478.94 7.14% 1 to 2 years No. 2 Non-related party 1,436,720.69 3.76% Within 1 year No. 3 Non-related party 1,407,273.77 3.68% Within 1 year 142 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 No. 4 Non-related party 1,327,340.00 3.47% Within 1 year No. 5 Non-related party 1,083,340.97 2.83% Within 1 year Total —— 7,986,154.37 20.88% —— 8. Other Receivables Unit: RMB Item Ending balance Beginning balance Other receivables 31,235,165.53 37,523,072.02 Total 31,235,165.53 37,523,072.02 (1) Interest Receivable 1) Category of Interest Receivable Naught 2) Significant Overdue Interest Naught 3) Withdrawal of Bad Debt Provision □Applicable Not applicable (2) Dividends Receivable 1) Category of Dividends Receivable Naught 2) Significant Dividends Receivable Aged over 1 Year Naught 3) Withdrawal of Bad Debt Provision □Applicable Not applicable (3) Other Receivables 1) Other Receivables Disclosed by Account Nature Unit: RMB Nature Ending carrying amount Beginning carrying amount VAT export tax refunds 5,260,428.72 4,674,335.06 Performance bond 15,114,786.48 12,056,403.00 Staff borrow and petty cash 2,342,223.49 4,018,439.87 143 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Rent, water & electricity fees 1,458,352.75 2,564,557.87 Other 38,298,697.53 45,643,798.95 Total 62,474,488.97 68,957,534.75 2) Information of Withdrawal of Bad Debt Provision Unit: RMB First stage Second stage Third stage Expected loss in the Bad debt provision Expected loss in the Total Expected credit loss of duration (credit duration (credit the next 12 months impairment not impairment occurred) occurred) Balance of 1 January 890,724.80 6,224,279.95 24,319,457.98 31,434,462.73 2022 Balance of 1 January 2022 in the Current Period Withdrawal of the -234,354.72 103,008.43 -131,346.29 Current Period Verification of the 6,100.00 27,693.00 30,000.00 63,793.00 Current Period Balance of 30 June 650,270.08 6,299,595.38 24,289,457.98 31,239,323.44 2022 Changes of carrying amount with significant amount changed of loss provision in the current period □Applicable Not applicable Disclosure by aging Unit: RMB Aging Ending balance Within 1 year (including 1 year) 22,573,384.78 1 to 2 years 8,058,085.07 2 to 3 years 5,938,709.25 Over 3 years 25,904,309.87 3 to 4 years 2,907,396.35 4 to 5 years 1,049,775.73 Over 5 years 21,947,137.79 Total 62,474,488.97 3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period Bad debt provision withdrawn in the Reporting Period: Unit: RMB Increase/decrease Beginning Category Reversed or Ending balance balance Withdrawn Verified Other collected Other 31,434,462.7 31,239,323.4 -131,346.29 63,793.00 receivables 3 4 31,434,462.7 31,239,323.4 Total -131,346.29 63,793.00 3 4 For common business group, there is difference in withdrawal proportion of expected credit losses between the Company as the Parent and the majority-owned subsidiary NationStar. The Company unified the accounting 144 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 estimates in consolidated financial statements and complementally withdrew bad debt provision of RMB11,531.29 for other receivables. The amount of expected credit loss accrued in the current period is RMB-133,776.54, and the amount of expected credit loss recovered or reversed in the current period is RMB0.00, which is RMB2,430.55 different from the amount of credit impairment loss accrued in the current period of RMB-131,346.29, which is caused by the translation difference of foreign currency statement of Indonesia Liaowang at the end of the period. Of which bad debt provision revered or recovered with significant amount: Naught 4) Particulars of the Actual Verification of Other Receivables during the Reporting Period Unit: RMB Item Amount Bid security and deposit 32,743.00 Others 31,050.00 Of which significant actual verification of other receivables: Unit: RMB Whether occurred Name of the entity Nature Amount Reason Procedure because of related- party transactions The approval procedure shall be carried out according to the Litigation costs are Company’s rules Other retails Bid security and 32,743.00 high and there is a for managing bad Not accounts deposit risk of losing debts regarding to verification application before accounts can be verified The approval procedure shall be carried out according to the Litigation costs are Company’s rules Other retails Other 31,050.00 high and there is a for managing bad Not accounts risk of losing debts regarding to verification application before accounts can be verified Total 63,793.00 145 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 5) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party Unit: RMB Proportion to total ending balance of Ending balance of Name of the entity Nature Ending balance Aging other receivables bad debt provision (%) No. 1 Intercourse 20,000,000.00 Over 5 years 32.01% 20,000,000.00 accounts No. 2 VAT export tax 4,496,365.98 Within 1 year 7.20% 172,842.34 refunds No. 3 Intercourse 2,673,256.53 Within 2 years 4.28% 428,945.80 accounts No. 4 Performance bond 1,946,000.00 Within 1 year 3.11% 122,223.17 No. 5 Intercourse 1,712,634.80 Within 3 years 2.74% 583,800.00 accounts Total 30,828,257.31 49.34% 21,307,811.31 6) Accounts Receivable Involving Government Grants Naught 7) Derecognition of Other Receivables due to the Transfer of Financial Assets Naught 8) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of Other Receivables Naught 9. Inventory Whether the Company needs to comply with disclosure requirements for real estate industry No (1) Category of Inventory Unit: RMB Ending balance Beginning balance Falling price Falling price reserves of reserves of inventory or inventory or Item Carrying depreciation Carrying depreciation Carrying value Carrying value amount reserves of amount reserves of contract contract performance performance cost cost 358,341,044. 352,004,114. 381,168,885. 14,729,292.6 366,439,592. Raw materials 6,336,930.47 72 25 07 4 43 Goods in 12,237,323.8 12,237,323.8 317,007,606. 317,007,606. process 2 2 13 13 Inventory 1,192,382,48 133,644,653. 1,058,737,82 1,223,620,51 135,963,343. 1,087,657,16 goods 0.34 16 7.18 1.60 21 8.39 146 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Revolving 5,434,655.63 5,434,655.63 3,231,115.87 3,231,115.87 materials 69,802,063.2 66,611,234.8 93,671,492.2 90,140,697.8 Goods in transit 3,190,828.40 3,530,794.31 6 6 0 9 Semi-finished 304,323,618. 303,995,116. 100,723,505. 100,345,745. 328,502.08 377,760.65 goods 44 36 66 01 20,649,158.5 20,649,158.5 Others 5,177,062.67 5,177,062.67 6 6 1,963,170,34 143,500,914. 1,819,669,43 2,124,600,17 154,601,190. 1,969,998,98 Total 4.77 11 0.66 9.20 81 8.39 (2)Falling Price Reserves of Inventory and Depreciation Reserves of Contract Performance Cost Unit: RMB Increase Decrease Beginning Item Reversal or Ending balance balance Withdrawal Other Other write-off 14,729,292.6 Raw materials 592,123.14 8,984,485.31 6,336,930.47 4 Inventory 135,963,343. 19,075,837.9 21,394,528.0 133,644,653. goods 21 9 4 16 Semi-finished 377,760.65 90,386.67 139,645.24 328,502.08 goods Goods in transit 3,530,794.31 -339,965.91 3,190,828.40 154,601,190. 19,418,381.8 30,518,658.5 143,500,914. Total 81 9 9 11 Item Basis for withdrawal of falling price Reasons for reversal or write-off of falling Note reserves of inventory price reserves of inventory The lower one between the inventory Sales or scrap of raw materials Raw materials cost and net realizable value The lower one between the inventory Sales or scrap of products Inventory goods cost and net realizable value Goods in transit The lower one between the inventory Sales or scrap of products cost and net realizable value Reasons for the provision for inventory depreciation: Provisions are set for the stagnancy of a few raw materials; some inventory products become idle due to classification. (3) Notes to the Ending Balance of Inventories Including Capitalized Borrowing Expense Naught (4) Amortization Amount of Contract Performance Cost during the Reporting Period Naught 10. Contract Assets Unit: RMB Ending balance Beginning balance Item Carrying Depreciation Carrying value Carrying Depreciation Carrying value 147 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 amount reserves amount reserves Contract assets 8,794,261.68 704,705.05 8,089,556.63 8,826,085.67 264,782.57 8,561,303.10 Total 8,794,261.68 704,705.05 8,089,556.63 8,826,085.67 264,782.57 8,561,303.10 If the bad debt provision for contract assets in accordance with the general model of expected credit losses, the information related to the bad debt provision shall be disclosed by reference to the disclosure method of other receivables: □Applicable Not applicable 11. Held-for-Sale Assets Unit: RMB Ending Estimated Depreciation Ending Estimated Item carrying Fair value disposal reserves carrying value disposal time amount expense Houses, buildings and 17,147,339.8 17,147,339.8 183,855,895. 55,718,333.9 31 December land involved 4 4 00 5 2022 in expropriation 17,147,339.8 17,147,339.8 183,855,895. 55,718,333.9 Total -- 4 4 00 5 Other notes: Note: For details, see Part X-XVI.Other Major Events-8.Other: "Demolition Matters of Nanjing Fozhao" of this Report. The estimated disposal costs include employee resettlement fees, compensation for the termination of the original tenant's contract, and taxes related to the proceeds of demolition. 12. Current Portion of Non-current Assets Naught 13. Other Current Assets Unit: RMB Item Ending balance Beginning balance Input tax of VAT to be certified and 40,618,746.09 111,605,177.04 deducted Advance payment of enterprise income 10,323,874.76 10,562,615.78 tax Others 3,400,896.19 3,507,355.35 Total 54,343,517.04 125,675,148.17 14. Investments in debt obligations Naught 15. Other Investments in Debt Obligations Naught 148 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 16. Long-term Accounts Receivable (1) List of Long-term Receivables Naught (2) Derecognition of Long-term Receivables due to the Transfer of Financial Assets Naught (3) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of Long-term Receivables Naught 17. Long-term Equity Investment Unit: RMB Increase/decrease Gains Ending Beginni and Cash balance Adjust Withdra Ending ng losses bonus of Investe Additio Reduce ment of Change wal of balance balance recogni or depreci es nal d other s of depreci (carryin (carryin zed profits Other ation investm investm compre other ation g value) g value) under announ reserve ent ent hensive equity reserve the ced to s income s equity issue method I. Joint ventures Jiangsu Fozhao Contrac t Energy 4,804, Manage 965.64 ment Develo pment Co., Ltd. Shenzh en Primatr onix 181,54 180,11 650,45 2,080, (Nanho 5,123. 5,189. ) 7.40 390.50 09 99 Electro nics Ltd. 181,54 180,11 Subtota 650,45 2,080, 4,804, 5,123. 5,189. l 7.40 390.50 965.64 09 99 II. Associated enterprises 181,54 180,11 650,45 2,080, 4,804, Total 5,123. 5,189. 7.40 390.50 965.64 09 99 149 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Other notes 1. The Company's subsidiary, NationStar Optoelectronics, entered into the Contribution Agreement of Jiangsu Fozhao Contract Energy Management Development Co., Ltd. with the natural persons, Ye Zongcai and Zhao Qiaoyue, on 3 August 2012, to jointly establish Jiangsu Fozhao Contract Energy Management Development Co., Ltd. (Jiangsu Fozhao) with the registered capital of RMB20 million, wherein NationStar Optoelectronics contributed RMB5 million, representing 25.00% of the total investment. 2. Jiangsu Fozhao has been in the red since its establishment, so its production and operations have been stopped. Additionally, its cash realizable value is quite low. Up to now, impairment provisions have been set aside to fully cover the long-term equity investment of Jiangsu Fozhao, in line with relevant regulations, such as the No. 8 Accounting Standards for Business Enterprises— Asset Impairment. 18. Other Equity Instrument Investment Unit: RMB Item Ending balance Beginning balance Non-listed equity investment 41,559,860.92 41,559,860.92 Listed equity investment 1,123,157,619.00 1,463,420,163.15 Total 1,164,717,479.92 1,504,980,024.07 Disclosure of non-trading equity instrument investment by items Unit: RMB Reason for Amount of assigning to Reason for other measure in fair other Dividend comprehensive value and the comprehensive Accumulative Accumulative Item income income changes income gains losses recognized transferred to included in transferred to retained other retained earnings comprehensive earnings income Not satisfied with the Gotion High- 698,286,384. Sale of 1,715,644.18 6,804,316.24 condition of tech 47 trading equity shareholdings instrument Not satisfied with the Stock of 14,339,628.7 188,899,142. 94,112,907.9 Sale of condition of Xiamen Bank 5 57 5 trading equity shareholdings instrument Beijing Guangrong Lianmeng Not satisfied with the Semiconductor 601,263.41 condition of Not applicable lighting trading equity Industry instrument Investment Center(L.P.) 150 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 19. Other Non-current Financial Assets Naught 20. Investment Property (1)Investment Property Adopting the Cost Measurement Mode Applicable □ Not applicable Unit: RMB Construction in Item Houses and buildings Land use right Total progress I. Original carrying value 1. Beginning balance 49,792,377.90 49,792,377.90 2. Increased amount of the period (1) Outsourcing (2) Transfer from inventories/fixed assets/construction in progress (3) Enterprise combination increase 3. Decreased amount of the period (1) Disposal (2) Other transfer 4. Ending balance 49,792,377.90 49,792,377.90 II. Accumulative depreciation and accumulative amortization 1. Beginning balance 6,444,553.56 6,444,553.56 2. Increased amount of 1,182,568.97 1,182,568.97 the period (1) Withdrawal or 1,182,568.97 1,182,568.97 amortization 3. Decreased amount of the period (1) Disposal (2) Other transfer 4. Ending balance 7,627,122.53 7,627,122.53 III. Depreciation reserves 1. Beginning balance 2. Increased amount of the period (1) Withdrawal 3. Decreased amount of the period (1) Disposal (2) Other transfer 4. Ending balance IV. Carrying value 1. Ending carrying 42,165,255.37 42,165,255.37 value 2. Beginning carrying 43,347,824.34 43,347,824.34 value 151 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (2) Investment Property Adopting the Fair Value Measurement Mode □Applicable Not applicable (3) Investment Property Failed to Accomplish Certification of Property Naught Other notes In October 2021, the Company held the 20th meeting of the ninth Board of Directors, where the Proposal on Changing Some Self-used Real Estate into Investment Real Estate and Measuring by Cost Model was deliberated and adopted, and the K2 and K3 buildings of Gaoming Fuwan Standard Workshop were changed from fixed assets projects to investment real estate projects, measured by cost model, and depreciation was accrued by the same method as fixed assets. 21. Fixed Assets Unit: RMB Item Ending balance Beginning balance Fixed assets 3,336,828,807.79 3,360,175,223.96 Disposal of fixed assets 717,389.62 164,686.99 Total 3,337,546,197.41 3,360,339,910.95 (1) List of Fixed Assets Unit: RMB Houses and Machinery Transportation Electronic Item Other Total buildings equipment equipment equipment I. Original carrying value 1. Beginning 1,737,595,30 4,469,670,84 42,703,535.6 61,090,328.9 83,460,720.9 6,394,520,72 balance 0.29 1.25 6 8 7 7.15 2. Increased 227,234,238. 231,114,447. amount of the 894,770.78 534,994.18 2,246,529.05 203,915.31 period 39 71 (1) 23,124,224.5 25,309,983.0 21,554.42 534,994.18 1,582,994.99 46,214.90 Purchase 7 6 (2) Transfer from 204,110,013. 205,804,464. 873,216.36 663,534.06 157,700.41 construction in 82 65 progress (3) Enterprise combination increase 3. Decreased 128,375,789. 132,802,155. amount of the 2,990,815.72 1,188,796.00 246,754.89 period 06 67 (1) 125,062,387. 129,484,460. Disposal or 2,986,522.62 1,188,796.00 246,754.89 scrap 40 91 (2) Equipment 1,239,430.79 1,239,430.79 transformation (3) Others 2,073,970.87 4,293.10 2,078,263.97 4. Ending 1,738,490,07 4,568,529,29 40,247,714.1 62,148,062.0 83,417,881.3 6,492,833,01 152 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 balance 1.07 0.58 2 3 9 9.19 II. Accumulative depreciation 1. Beginning 663,293,540. 2,232,542,16 31,417,598.5 45,052,211.2 60,223,768.3 3,032,529,28 balance 68 5.32 1 2 2 4.05 2. Increased 36,832,884.6 192,945,811. 236,835,122. amount of the 1,090,607.05 2,142,857.84 3,822,961.11 period 0 92 52 (1) 36,832,884.6 192,945,811. 236,835,122. 1,090,607.05 2,142,857.84 3,822,961.11 Withdrawal 0 92 52 3. Decreased 115,883,809. 118,680,980. amount of the -690,268.32 2,296,635.98 951,698.38 239,105.20 period 56 80 (1) 112,711,842. 115,509,013. Disposal or -690,268.32 2,296,635.98 951,698.38 239,105.20 scrap 37 61 (2) Others 3,171,967.19 3,171,967.19 4. Ending 700,816,693. 2,309,604,16 30,211,569.5 46,243,370.6 63,807,624.2 3,150,683,42 balance 60 7.68 8 8 3 5.77 III. Depreciation reserves 1. Beginning 1,815,791.11 428.03 1,816,219.14 balance 2. Increased amount of the 3,529,839.60 3,529,839.60 period (1) 3,529,839.60 3,529,839.60 Withdrawal 3. Decreased amount of the 25,273.11 25,273.11 period (1) Disposal or 25,273.11 25,273.11 scrap 4. Ending 5,320,357.60 428.03 5,320,785.63 balance IV. Carrying value 1. Ending 1,037,673,37 2,253,604,76 10,036,144.5 15,904,263.3 19,610,257.1 3,336,828,80 carrying value 7.47 5.30 4 2 6 7.79 2. Beginning 1,074,301,75 2,235,312,88 11,285,937.1 16,037,689.7 23,236,952.6 3,360,175,22 carrying value 9.61 4.82 5 3 5 3.96 (2) List of Temporarily Idle Fixed Assets Unit: RMB Original carrying Accumulated Depreciation Item Carrying value Note value depreciation reserves T5, T8, energy- saving lamp 6,962,212.78 5,382,345.77 1,536,408.16 43,458.85 production line 153 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (3) Fixed Assets Leased out by Operation Lease Naught (4) Fixed Assets Failed to Accomplish Certification of Property Other notes The Company's Fuwan Standard Workshop J3, Fuwan Standard Workshop K1, Building 8 of Gaoming Family Dormitory, Fuwan Staff Dormitory Building 7, Family Dormitory Building 3 to 6, Staff Village Dormitory Building A, Staff Village Dormitory Building 2, 3, 5, 6, 10 to 13, Staff Dormitory Building 1 to 4, Fuwan Energy Saving Lamp Workshop 2, Glass Workshop 8, Glass Workshop 9, Fluorescent Lamp Workshop, Standard Workshop A and led Workshop have been completed and put into use and carried forward fixed assets. As of 30 June 2022, the relevant real estate licenses are being processed. In addition, the ownership of two parking spaces of Nanning Liaowang at No. 155 Kerui Jiangyun and No. 160 Kerui Jiangyun, are being processed. The management believed that there are no substantive legal barriers to the handling of these title certificates, and it will not have a significant adverse impact on the normal operation of the Company. (5) Proceeds from Disposal of Fixed Assets Unit: RMB Item Ending balance Beginning balance Scrap equipment 717,389.62 164,686.99 Total 717,389.62 164,686.99 22. Construction in progress Unit: RMB Item Ending balance Beginning balance Construction in progress 1,094,362,246.23 1,087,261,052.63 Total 1,094,362,246.23 1,087,261,052.63 (1) List of Construction in Progress Unit: RMB Ending balance Beginning balance Item Carrying Depreciation Carrying Depreciation Carrying value Carrying value amount reserves amount reserves Construction in 1,095,681,04 1,094,362,24 1,088,579,85 1,087,261,05 1,318,800.00 1,318,800.00 progress 6.23 6.23 2.63 2.63 1,095,681,04 1,094,362,24 1,088,579,85 1,087,261,05 Total 1,318,800.00 1,318,800.00 6.23 6.23 2.63 2.63 (2) Changes in Significant Construction in Progress during the Reporting Period Unit: RMB Propor Accum Of Capital Transf Other tion of ulative which: ization Beginn Increas erred decrea Ending accum Job amoun amoun rate of Capital ing ed Item Budget in sed balanc ulative schedu t of t of interes resour balanc amoun fixed amoun e invest le interes capital ts for ces e t assets t ment t ized the in capital interes Report 154 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 constr ization ts for ing uctions the Period to Report budget ing Period Kelian 726,7 501,5 29,32 530,9 36,64 80.00 80.23 Buildi 38,90 94,85 9,889 24,74 0,953 Other ng % % 0.00 2.04 .54 1.58 .02 15th and 16th floors 115,7 106,1 2,896 109,0 100.0 98.00 office 52,76 95,22 ,780. 92,00 Other buildin 0% % 3.00 2.94 26 3.20 gs of R&F Center Gaomi ng R&D 71,69 53,53 53,66 Works 130,6 84.00 88.00 0,000 1,061 1,728 Other hop 66.92 % % 11, 12, .00 .32 .24 13, 14 and 18 FSL intellig ent 89,68 23,80 23,80 manuf 30.00 33.00 0,000 8,849 8,849 Other acturin % % g .00 .57 .57 factory project Gaomi ng 115,0 22,20 16,76 38,97 40.00 25.00 office 00,00 9,451 6,092 5,543 Other buildin % % 0.00 .41 .08 .49 g Overh aul of Gaomi ng No. 8 tank furnac 10,89 6,242 1,055 7,297 e Work 68.00 75.00 0,000 ,799. ,044. ,844. Other order: % % 20029 .00 53 70 23 Gaomi ng tank furnac e The Renov ation Project of the Pipe 8,000 3,428 3,626 Netwo 198,1 46.00 52.00 ,000. ,042. ,155. Other rk for 13.21 % % Rain 00 56 77 and Sewag e Divers ion in 155 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 the Gaomi ng Distric t Produc tion Base, Foshan City, Guang dong Provin ce The Project of the MES Contra 814,4 814,4 80.00 ct of 0.00% Other the 89.37 89.37 % Circuit Board Works hop The Circul ar Autom atic Downl ight Assem bly Line. Work 450,0 497,8 497,8 102.0 99.00 -0.01 Other Order 00.00 89.31 89.30 0% % No.: 21007 Gaomi ng Ceilin g Downl ight Works hop The Project of Reloca tion and Renov ation 1,874 303,3 649,3 952,6 52.00 60.00 of the ,500. Other Haloge 08.37 43.04 51.41 % % 00 n Lamp Works hop (forme rly T8 III) The 2,250 411,2 411,2 21.00 30.00 PLM Other system ,978. 39.71 39.71 % % 156 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 00 A batch of machi nery and equip ment from Chong qing 14,67 594,7 594,7 98.24 98.24 Guinu 6,705 0.00 Other o 23.15 23.15 % % .40 Lighti ng Techn ology Co., Ltd. (Chon gqing Guinu o) The LED R&D and Produc tion Base on 16,55 7,348 12,01 17,96 1,401 85.02 Jihua 0,000 ,850. 4,860 2,468 ,241. Other Secon % .00 20 .18 .80 58 d Road. Others (spora dic equip ment) The Project of Produc tion Expan sion of Packag 913,4 107,9 85,47 173,7 19,69 ing 93.33 12,50 86,24 1,636 58,74 9,139 Other Comp % onents 0.00 4.68 .87 2.29 .26 and Chips of New- genera tion LEDs The Project 1,714 of the 234,3 9,542 3,433 240,4 ,546, 15.43 Geely 19,70 ,742. ,628. 28,81 Other Industr 700.0 % 1.33 29 26 5.36 ial 0 Park 157 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 The Project of Produc 20,39 2,217 4,033 3,323 2,927 tion 58.95 0,000 ,699. ,628. ,893. ,433. Other Expan % sion of .00 14 27 77 64 Chips and LEDs The sporad ic equip ment of Foshan 14,15 4,793 4,652 Nation 370,1 511,1 67.08 7,853 ,237. ,186. Other Star 15.00 66.05 % Semic .80 86 81 onduct or Techn ology Co., Ltd. 3,836 1,072 1,035 166,5 203,7 36,64 ,060, ,253, ,030, Total 03,33 25,64 0,953 900.2 243.7 931.7 1.07 3.08 .02 0 7 6 (3) List of the Withdrawal of the Depreciation Reserves for Construction in Progress Unit: RMB Item Amount withdrawn Reason for withdrawal Oxidation line engineering 1,318,800.00 Idleness Total 1,318,800.00 -- (4) Engineering Materials Naught 23. Productive Living Assets (1) Productive Living Assets Adopting Cost Measurement Mode □Applicable Not applicable (2) Productive Living Assets Adopting Fair Value Measurement Mode □Applicable Not applicable 24. Oil and Gas Assets □Applicable Not applicable 158 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 25. Right-of-use Assets Unit: RMB Item Houses and buildings Land use right Total I. Original carrying value 1. Beginning balance 17,864,418.29 25,688,364.03 43,552,782.32 2. Increased amount of the 1,426,984.46 1,426,984.46 period (1) Leased in 1,426,984.46 1,426,984.46 3. Decreased amount of the 255,370.07 255,370.07 period (1)Disposal 255,370.07 255,370.07 4. Ending balance 19,036,032.68 25,688,364.03 44,724,396.71 II. Accumulated amortization 1. Beginning balance 5,377,288.39 24,049,287.85 29,426,576.24 2. Increased amount of the 3,701,364.73 612,660.58 4,314,025.31 period (1) Withdrawal 3,701,364.73 612,660.58 4,314,025.31 3. Decreased amount of the 379,712.89 379,712.89 period (1) Disposal 379,712.89 379,712.89 4. Ending balance 8,698,940.23 24,661,948.43 33,360,888.66 III. Depreciation reserves 1. Beginning balance 2. Increased amount of the period (1) Withdrawal 3. Decreased amount of the period (1) Disposal 4. Ending balance IV. Carrying value 1. Ending carrying value 10,337,092.45 1,026,415.60 11,363,508.05 2. Beginning carrying value 12,487,129.90 1,639,076.18 14,126,206.08 26. Intangible Assets (1) List of Intangible Assets Unit: RMB Non-patent Software use Item Land use right Patent Others Total technology right I. Original carrying value 1. Beginning 449,104,554. 19,301,370.3 29,895,792.5 24,344,062.2 522,645,779. balance 53 9 2 6 70 2. Increased amount of the 1,687,660.31 1,687,660.31 period (1) 1,687,660.31 1,687,660.31 Purchase (2) Internal R&D (3) Business combination 159 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 increase 3. Decreased amount of the 1,141,509.42 5,421.50 1,146,930.92 period (1) 1,141,509.42 5,421.50 1,146,930.92 Disposal 4. Ending 449,104,554. 18,159,860.9 31,578,031.3 24,344,062.2 523,186,509. balance 53 7 3 6 09 II. Accumulated amortization 1. Beginning 96,525,621.7 18,579,985.3 13,864,588.5 24,332,807.8 153,303,003. balance 8 3 5 3 49 2. Increased amount of the 4,633,012.89 222,875.07 1,284,927.22 6,138.70 6,146,953.88 period (1) 4,633,012.89 222,875.07 1,284,927.22 6,138.70 6,146,953.88 Withdrawal 3. Decreased amount of the 929,952.53 929,952.53 period (1) 929,952.53 929,952.53 Disposal 4. Ending 101,158,634. 17,872,907.8 15,149,515.7 24,338,946.5 158,520,004. balance 67 7 7 3 84 III. Depreciation reserves 1. Beginning 388,613.87 388,613.87 balance 2. Increased amount of the period (1) Withdrawal 3. Decreased amount of the period (1) Disposal 4. Ending 388,613.87 388,613.87 balance IV. Carrying value 1. Ending 347,945,919. 16,039,901.6 364,277,890. 286,953.10 5,115.73 carrying value 86 9 38 2. Beginning 352,578,932. 15,642,590.1 368,954,162. 721,385.06 11,254.43 carrying value 75 0 34 The proportion of intangible assets formed from the internal R&D of the Company at the period-end to the ending balance of intangible assets was 0%. (2) Land Use Right with Certificate of Title Uncompleted Naught 27. Development Costs Naught 160 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 28. Goodwill (1) Original Carrying Value of Goodwill Unit: RMB Name of the Increase Decrease invested units Beginning Formed by or events Ending balance balance business Disposal generating goodwill combination Nanning 16,211,469.8 16,211,469.8 Liaowang Auto 2 2 Lamp Co., Ltd. Foshan NationStar 405,620,123. 405,620,123. Optoelectronics 64 64 Co., Ltd. 421,831,593. 421,831,593. Total 46 46 (2) Depreciation Reserves of Goodwill Naught Other notes: In 2014, Guangdong Electronics Information Industry Group Ltd., a wholly-owned subsidiary of Guangdong Rising Holdings Group Co., Ltd., acquired NationStar. The difference between the fair value and NationStar’s equity attributable to its shareholders on the date of acquisition resulted in a goodwill of RMB405,620,123.64. 29. Long-term Prepaid Expense Unit: RMB Amortization Other decreased Item Beginning balance Increased amount amount of the Ending balance amount period Expense on maintenance and decoration 53,715,154.13 3,937,631.77 8,835,275.10 48,817,510.80 Mould 85,904,279.61 92,939,851.70 55,913,148.49 7,976,283.18 114,954,699.64 Boarding box 2,991,248.46 1,769,090.34 1,222,158.12 Other 10,115,830.36 3,197,070.34 3,472,785.53 9,840,115.17 Total 152,726,512.56 100,074,553.81 69,990,299.46 7,976,283.18 174,834,483.73 30. Deferred Income Tax Assets/Deferred Income Tax Liabilities (1) Deferred Income Tax Assets that Had not Been Off-set Unit: RMB Ending balance Beginning balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Provision for 343,849,141.56 52,131,048.21 336,887,150.45 51,499,888.34 impairment of assets Unrealized profit of 15,842,184.29 2,376,327.64 21,677,239.37 3,251,585.91 internal transactions 161 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Deductible loss 32,499,529.28 6,913,494.03 36,016,962.39 7,312,677.73 Depreciation of fixed 59,870,010.69 8,980,501.62 63,273,361.51 9,491,004.25 assets Payroll payable 36,470,119.42 5,470,517.91 51,262,888.11 7,689,433.22 Change in fair value of trading financial 6,698,629.55 1,004,794.43 154,129.55 23,119.43 liabilities Accrued liabilities 17,418,343.01 2,612,751.45 17,418,343.01 2,612,751.45 Others 1,262,443.60 466,005.70 1,625,953.13 364,138.46 Lease liabilities 114,035.93 17,189.79 114,035.93 17,189.79 Total 514,024,437.33 79,972,630.78 528,430,063.45 82,261,788.58 (2) Deferred Income Tax Liabilities Had not Been Off-set Unit: RMB Ending balance Beginning balance Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax difference liabilities difference liabilities Assets assessment appreciation from business consolidation 91,030,799.80 13,654,619.97 93,485,366.87 14,022,805.03 not under the same control Changes in fair value of other investments in 881,335,527.03 132,200,329.05 1,152,615,606.86 172,892,341.03 equity instruments Changes in fair value of trading financial 816,070.56 178,835.44 4,912,265.32 776,194.13 assets One-off depreciation of 712,642,232.89 106,896,334.93 616,542,996.01 92,481,449.40 fixed assets Total 1,685,824,630.28 252,930,119.39 1,867,556,235.06 280,172,789.59 (3) Deferred Income Tax Assets or Liabilities Listed by Net Amount after Off-set Unit: RMB Mutual set-off amount Amount of deferred Mutual set-off amount Amount of deferred of deferred income tax income tax assets or of deferred income tax income tax assets or Item assets and liabilities at liabilities after off-set assets and liabilities at liabilities after off-set the period-end at the period-end the period-begin at the period-begin Deferred income tax 79,972,630.78 82,261,788.58 assets Deferred income tax 252,930,119.39 280,172,789.59 liabilities (4) List of Unrecognized Deferred Income Tax Assets Naught (5) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years Naught 162 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 31. Other Non-current Assets Unit: RMB Ending balance Beginning balance Item Carrying Depreciation Carrying Depreciation Carrying value Carrying value amount reserve amount reserve Prepayments for equity 10,000,000.0 10,000,000.0 465,129,434. 10,000,000.0 455,129,434. acquisition 0 0 98 0 98 (note) Prepayments 49,249,379.0 49,249,379.0 43,316,448.1 43,316,448.1 for construction and equipment 4 4 3 3 Assets of subsidiaries to 743,297.93 743,297.93 903,887.30 903,887.30 be cleared and cancelled 59,992,676.9 10,000,000.0 49,992,676.9 509,349,770. 10,000,000.0 499,349,770. Total 7 0 7 41 0 41 Other notes: Notes: 1. The other non-current assets of RMB455 million at the beginning of the period was the advance payment for the equity acquisition (such payment accounted for 30% of the total price of the equity acquisition) paid by NationStar Optoelectronics to the original shareholders of NationStar Optoelectronics, in accordance with the Share Transfer Agreement. The merger under the same control for the current period has been completed. 2. The Company's subsidiary, NationStar Optoelectronics, entered into the Capital Injection Agreement with Nanyang Xicheng Technology Co., Ltd. (Xicheng Tech). The Company paid RMB10 million for capital injection. Later, the agreement was re- signed to change the investment method. In order to address issues related to the above payment, NationStar Optoelectronics filed a lawsuit with the court, claiming the return of the above payment for capital injection. Currently, the court has rejected the claim. As of the end of the Reporting Period, the impairment provision had been set aside in full. 32. Short-term Borrowings (1) Category of Short-term Borrowings Unit: RMB Item Ending balance Beginning balance Mortgage loans 65,000,000.00 Guarantee loans 97,700,000.00 Credit loans 128,914,000.00 Interest from short-term borrowings 115,000.00 165,997.01 Total 65,115,000.00 226,779,997.01 Notes of short-term borrowings category: List of short-term borrowings as of 30 June 2022 was as follows: Unit: RMB Borrowing contract number Loan balance Term of borrowing Conditions of Annual interest rate (%) loan XY WYZH2022050700423 15,000,000.00 2022-5-7 to 2023-5-7 Mortgage 2.97 163 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 XY WYZH2022021100248 30,200,000.00 2022-2-11 to 2023-2-11 Mortgage 2.76 XY WYZH2022021100314 19,800,000.00 2022-2-11 to 2023-2-11 Mortgage 2.76 Total 65,000,000.00 —— —— —— Note: see Note XIV-3. Others in Part X for details about guarantees of short-term borrowings. (2) List of the Short-term Borrowings Overdue but not Returned Naught 33. Held-for-trading Financial Liabilities Unit: RMB Item Ending balance Beginning balance Including: Financial liabilities designated to be measured at fair value through profit or 6,544,500.00 9,367.37 loss Including: Other 6,544,500.00 9,367.37 Total 6,544,500.00 9,367.37 34. Derivative Financial Liabilities Naught 35. Notes Payable Unit: RMB Item Ending balance Beginning balance Bank acceptance bill 1,607,406,305.48 2,067,111,789.71 Total 1,607,406,305.48 2,067,111,789.71 The total amount of the due but not paid notes payable at the end of the period was of RMB0.00. 36. Accounts Payable (1) List of Accounts Payable Unit: RMB Item Ending balance Beginning balance Accounts payable 2,228,681,333.31 2,429,896,658.92 Total 2,228,681,333.31 2,429,896,658.92 (2) Significant Accounts Payable Aging over One Year Unit: RMB Item Ending balance Unpaid/ Un-carry-over reason Supplier A 32,217,532.68 No settlement yet for quality dispute 164 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Supplier B 11,091,509.09 No settlement yet for quality dispute Supplier C 2,568,149.78 No settlement yet for quality dispute Supplier D 2,525,721.16 No settlement yet for quality dispute Supplier E 2,110,178.88 No settlement yet for quality dispute Supplier F 1,257,661.77 No settlement yet for quality dispute Total 51,770,753.36 37. Advances from Customer (1) List of Advances from Customers Unit: RMB Item Ending balance Beginning balance Advances from customers 4,959,545.56 8,106,923.79 Total 4,959,545.56 8,106,923.79 (2) Significant Advances from Customers Aging over One Year Naught 38. Contract Liabilities Unit: RMB Item Ending balance Beginning balance Contract liabilities 161,528,315.35 140,228,127.84 Total 161,528,315.35 140,228,127.84 Significant changes in amount of carrying value and the reason in the Reporting Period Naught 39. Employee Benefits Payable (1) List of Employee Benefits Payable Unit: RMB Item Beginning balance Increase Decrease Ending balance I. Short-term salary 167,333,777.54 640,377,296.30 667,411,966.26 140,299,107.58 II. Post-employment benefit-defined 450,312.10 50,630,612.22 50,391,435.31 689,489.01 contribution plans III. Termination 34,907.78 34,907.78 benefits Total 167,784,089.64 691,042,816.30 717,838,309.35 140,988,596.59 (2) List of Short-term Salary Unit: RMB Item Beginning balance Increase Decrease Ending balance 1. Salary, bonus, 164,406,249.14 563,033,208.86 589,519,439.23 137,920,018.77 allowance, subsidy 2. Employee welfare 793,469.95 31,796,269.92 31,922,739.41 667,000.46 3. Social insurance 477,866.35 25,494,234.34 25,735,883.50 236,217.19 165 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Of which: Medical 405,051.37 24,376,859.15 24,626,222.78 155,687.74 insurance premiums Work -related injury 68,516.97 1,074,573.06 1,066,858.59 76,231.44 insurance Mater 4,298.01 42,802.13 42,802.13 4,298.01 nity insurance 4. Housing fund 162,954.71 14,238,109.71 14,130,367.52 270,696.90 5. Labor union budget and employee 1,493,237.39 5,815,473.47 6,103,536.60 1,205,174.26 education budget Total 167,333,777.54 640,377,296.30 667,411,966.26 140,299,107.58 (3) List of Defined Contribution Plans Unit: RMB Item Beginning balance Increase Decrease Ending balance 1. Basic pension 435,529.62 48,061,567.85 47,833,007.93 664,089.54 benefits 2. Unemployment 14,782.48 739,364.37 728,747.38 25,399.47 insurance 3. Annuity 1,829,680.00 1,829,680.00 Total 450,312.10 50,630,612.22 50,391,435.31 689,489.01 Other notes: The Company participates in the scheme of pension insurance and unemployment insurance established by government agencies as required. According to the scheme, fees are paid to it on a monthly basis and at the rate of stipulated by government agencies. In addition to the above monthly deposit fees, the Company no longer assumes further payment obligations. Corresponding expenses are recorded into the current profits or losses or the cost of related assets when incurred. (4) Termination Benefits Unit: RMB Beginning Item Increase Decrease Ending balance balance 1. Compensation for termination of 34,907.78 34,907.78 labor relations 2. Estimated internal staff expenditure Total 34,907.78 34,907.78 40. Taxes Payable Unit: RMB Item Ending balance Beginning balance VAT 43,758,037.53 18,987,452.44 Corporate income tax 19,928,441.78 55,204,098.83 Personal income tax 982,742.53 3,520,595.97 Urban maintenance and construction tax 3,373,803.44 2,527,033.79 VAT of land 6,392,510.40 Education surcharge 2,358,869.88 1,870,243.81 Property tax 3,891,553.04 829,364.85 Land use tax 2,379,358.66 545,215.31 Other 702,115.71 1,104,959.20 Total 77,374,922.57 90,981,474.60 166 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 41. Other Payables Unit: RMB Item Ending balance Beginning balance Dividends payable 15,646.07 15,646.07 Other payables 297,813,287.26 333,113,125.74 Total 297,828,933.33 333,128,771.81 (1) Interest Payable Naught (2) Dividends Payable Unit: RMB Item Ending balance Beginning balance Ordinary share dividends 15,646.07 15,646.07 Total 15,646.07 15,646.07 (3) Other Payables 1) Other Payables Listed by Nature Unit: RMB Item Ending balance Beginning balance Payments for demolition 37,232,380.44 54,990,047.00 Performance bond 67,505,949.95 56,777,893.86 Relevant expense of sales 13,665,427.58 11,266,922.58 Account current 9,773,968.09 186,628,343.72 Other 169,635,561.20 23,449,918.58 Total 297,813,287.26 333,113,125.74 2) Significant Other Payables Aging over One Year Unit: RMB Item Ending balance Reason for not repayment or carry-over Unit A 5,752,000.00 Unsettled for involving in lawsuits Unit B 120,352,181.20 Unsettled Total 126,104,181.20 42. Liabilities Held for sale Naught 43. Current Portion of Non-current Liabilities Unit: RMB Item Ending balance Beginning balance Current portion of long-term borrowings 20,122,394.84 19,423,561.38 (note) Current portion of lease liabilities 10,261,123.91 8,176,624.77 167 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Total 30,383,518.75 27,600,186.15 44. Other Current Liabilities Unit: RMB Item Ending balance Beginning balance Pending changerover output VAT 9,952,101.27 10,577,082.29 Total 9,952,101.27 10,577,082.29 45. Long-term Borrowings (1) Category of Long-term Borrowings Unit: RMB Item Ending balance Beginning balance Credit borrowings 555,550,952.38 Interest of long-term borrowings 1,039,515.37 Total 556,590,467.75 Notes: List of long-term borrowings as of 30 June 2022: Unit: RMB Borrowing contract number Loan balance Term of borrowing Conditio Annual ns of interest loan rate 2022.01.06 to Credit 3.2689 China Development Bank 4410202101100001613 US$40,000,000.00 2025.01.06 loans % 2022.02.22 to Credit 3.2689 China Development Bank 4410202101100001613 US$10,000,000.00 2025.01.06 loans % Project Loan of China Development Bank 2022.06.29 to Credit 20,000,000.00 2.80% 4410202201100001709 2023.12.10 loans Project Loan of China Development Bank 2022.06.29 to Credit 20,000,000.00 2.80% 4410202201100001709 2024.06.10 loans Project Loan of China Development Bank 2022.06.29 to Credit 20,000,000.00 2.80% 4410202201100001709 2024.12.10 loans Project Loan of China Development Bank 2022.06.29 to Credit 20,000,000.00 2.80% 4410202201100001709 2025.06.10 loans Project Loan of China Development Bank 2022.06.29 to Credit 20,000,000.00 2.80% 4410202201100001709 2025.12.10 loans Project Loan of China Development Bank 2022.06.29 to Credit 20,000,000.00 2.80% 4410202201100001709 2026.06.10 loans Project Loan of China Development Bank 2022.06.29 to Credit 20,000,000.00 2.80% 4410202201100001709 2026.12.10 loans Project Loan of China Development Bank 2022.06.29 to Credit 30,000,000.00 2.80% 4410202201100001709 2027.06.29 loans Project Loan of China Development Bank 2022.05.30 to Credit 119,047.62 3.40% 4410202201100001708 2023.12.10 loans Project Loan of China Development Bank 2022.05.30 to Credit 119,047.62 3.40% 4410202201100001708 2024.06.10 loans 168 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Project Loan of China Development Bank 2022.05.30 to Credit 119,047.62 3.40% 4410202201100001708 2024.12.10 loans Project Loan of China Development Bank 2022.05.30 to Credit 8,333,333.33 3.40% 4410202201100001708 2025.06.10 loans Project Loan of China Development Bank 2022.05.30 to Credit 8,333,333.33 3.40% 4410202201100001708 2025.12.10 loans Project Loan of China Development Bank 2022.05.30 to Credit 8,333,333.33 3.40% 4410202201100001708 2026.06.10 loans Project Loan of China Development Bank 2022.05.30 to Credit 8,333,333.33 3.40% 4410202201100001708 2026.12.10 loans Project Loan of China Development Bank 2022.05.30 to Credit 16,190,476.20 3.40% 4410202201100001708 2027.05.30 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 5,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2024.11.27 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 5,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2025.05.27 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 10,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2025.11.27 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 10,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2026.05.27 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 10,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2026.11.27 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 10,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2027.05.27 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 10,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2027.11.27 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 10,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2028.05.27 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 10,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2028.11.27 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 10,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2029.05.27 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 5,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2029.11.27 loans Construction Project Loan of Guangzhou Branch of 2022.06.28 to Credit 5,000.00 3.70% Minsheng Bank GGDZ No. ZH2200000071614 2030.05.27 loans US$50,000,000.00 Total 219,980,952.38 46. Bonds Payable (1) List of Bonds Payable Naught (2) Increase/Decrease of Bonds Payable (Excluding Other Financial Instrument Classified as Financial Liabilities such as Preferred Shares and Perpetual Bonds) Naught (3) Notes to the Conditions and Time of the Shares Transfer of the Convertible Corporate Bonds Naught 169 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (4) Notes to Other Financial Instruments Classified as Financial Liabilities Naught 47. Lease Liabilities Unit: RMB Item Ending balance Beginning balance Lease liabilities 11,403,854.44 15,921,272.74 Less: current portion of lease liabilities -4,116,411.77 -7,855,712.16 Total 7,287,442.67 8,065,560.58 Analysis on maturity date of lease liabilities Unit: RMB Item Ending balance Beginning balance 1 to 2 years 2,902,042.05 2,983,039.14 3 to 5 years 4,385,400.62 4,095,243.05 Over 5 years - 987,278.39 Total 7,287,442.67 8,065,560.58 48. Long-term Payables Unit: RMB Item Ending balance Beginning balance Long-term payables 0.00 0.00 (1) Long-term Payables Listed by Nature Unit: RMB Item Ending balance Beginning balance Principal and interest of financing lease 6,341,995.19 19,423,561.38 borrowings (note) Less: Current portion of long-term 6,341,995.19 19,423,561.38 payables Total 0.00 0.00 Other notes: Note: The ending balance is generated from the financial leasing business of Nanning Liaowang. (2) Specific Payables Naught 170 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 49. Long-term Employee Benefits Payable (1) List of Long-term Payroll Payable Naught (2) Changes in Defined Benefit Plans Naught 50. Provisions Unit: RMB Item Ending balance Beginning balance Reason for formation Withdrawal of customers’ Product quality assurance 18,378,155.88 17,418,343.01 claims for quality and product quality assurance expenses Total 18,378,155.88 17,418,343.01 51. Deferred Income Unit: RMB Reason for Item Beginning balance Increase Decrease Ending balance formation Government grants 116,761,570.35 13,164,706.27 21,703,013.47 108,223,263.15 Total 116,761,570.35 13,164,706.27 21,703,013.47 108,223,263.15 Item involving government grants: Unit: RMB Amount Amount recorded recorded Amount into non- Related to Amount of into other offset cost Beginning operating Other Ending assets/relat Item newly income in in the balance income in changes balance ed to subsidy the Reporting the income Reporting Period Reporting Period Period The Project of the Innovation in Packaging Technology and Technologi cal Transforma 4,590,348 328,521.6 4,261,827 Related to tion of Key .80 0 .20 assets Packaging Equipment of LEDs with High Color Rendering Index for Illuminatio n 171 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 The Project of the Innovation in Packaging Technology and Technologi 2,340,610 269,756.2 2,070,854 Related to cal Transforma .65 2 .43 assets tion of Key Packaging Equipment of LEDs with Small Spacing for Display The Project of the Innovation in Packaging Technology and Technologi cal 3,959,107 240,686.7 3,718,420 Related to Transforma .65 0 .95 assets tion of Key Packaging Equipment of LEDs with Small Spacing for Display (Phase II) The Industrializ ation and Related to Application 2,299.50 1,971.00 328.50 of High- assets power LEDs The Key Technology in the Industrializ ation of LED Indoor Related to 30,448.12 7,314.36 23,133.76 Lighting assets Sources with High Reliability and Directional ity The Light- converting Films and Component 1,322,376 294,038.4 1,028,337 Related to s of Highly .26 6 .80 assets Efficient White-light LEDs The 774,741.6 164,174.1 610,567.4 Related to Structural Design of 4 6 8 assets 172 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Epitaxial Wafers and Chips of Highly Efficient LEDs and the R&D of Key Technology in Industrializ ation The Research and Implement ation of Standard Related to 97,557.92 18,744.12 78,813.80 Optical assets Component s of LEDs for Illuminatio n The Industrializ ation of LED Flip- chips and Light 475,956.8 421,370.3 Related to 54,586.51 Source 1 0 assets Modules for the Backlight of Large- size LCDs The Central R&D Institute of Related to 48,196.60 4,709.40 43,487.20 NationStar assets Optoelectro nics The R&D and Industrializ ation of the Optical Related to Component 37,559.42 37,559.42 s of LEDs income with Integrated Circuits (ICs) The Research and Industrializ ation of LED Flip- chips with Related to 52,662.57 4,034.71 48,627.86 Combined assets Electrodes and Chip Scale Package (CSP) with Thin Film 173 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Substrates The Research and Industrializ ation of Near Ultraviolet 294,305.0 266,973.6 Related to 27,331.38 LED Flip- 0 2 assets chips with High Density and Power and Their Packaging The Research and Industrializ ation of the Fluorescent Coating Process of High- 131,956.7 122,657.4 Related to 9,299.22 quality 0 8 assets LEDs and the Key Packaging Technology of Highly Efficient White-light LEDs The Projects of the Production Expansion and Technologi cal 22,197,60 2,032,275 20,165,32 Related to Transforma 0.80 .84 4.96 assets tion of Component s of Small- spacing and Outdoor LED Displays The Key Packaging Technology Related to and 13,476.00 3,978.60 9,497.40 Industrializ assets ation of LED Chips The R&D of Chip-on- Board (COB) Integrated Related to 1,100,000 1,106,061 Packaging 84,920.52 78,858.84 assets/inco and .00 .68 me Systems of LED Displays with High 174 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Density and Small Spacing The Research on the Key Technology in the Packaging and Application Related to 36,008.52 2,512.62 33,495.90 of Full- assets spectrum White-light LEDs and LEDs for Wide Color Gamut Backlight The Research and Application of Epitaxial Wafers, Chips, and Packaging 603,919.6 363,472.5 240,447.0 Related to of Near Ultraviolet 2 9 3 income Silica- based AlGaN Vertical LEDs with High Power The Technology Research on Color Micro-LED 116,348.9 Related to Displays 36,348.91 80,000.00 and Ultra- 1 income high Brightness Micro Displays The Research and Industrializ ation of 1,537,498 769,003.7 768,494.3 Related to New and High- .09 8 1 income performanc e Display Component s The Research on the Key Technology 367,534.4 1,800,000 1,029,372 1,138,161 Related to of High- lumen 8 .00 .73 .75 income Compound Reflex LED Chips 175 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 for Automobil es and High- density Matrix Packaging The Technology Research and Industrializ ation of the Micro 340,000.0 108,309.9 275,444.7 Related to 43,754.74 Display 0 7 7 income Module Based on Highly Efficient Color Conversion New Ceramic Substrates for the Packaging 192,775.8 181,939.5 Related to 10,836.30 with 0 0 assets Inorganic Materials of Power Electronics The Research on the Key Technology and Innovative 1,067,475 253,944.7 813,530.6 Related to Application .44 6 8 income of Deep Ultraviolet Solid-state Light Sources The Key Labs of Semicondu ctor Micro Display 1,216,601 489,875.6 726,725.8 Related to Enterprises .56 8 8 income in Guangdong Province (for 2020) The R&D and Industrializ ation of Quantum Dot Light- emitting 355,431.4 268,290.4 Related to 87,141.04 Materials 8 4 income and Component s with Low Environme ntal Pollution 176 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 The Demonstrat ion of Industrial Internet of Related to 957,037.0 374,369.8 582,667.2 Things assets/inco (IIOT) 7 5 2 me Application s for LED Production Control The Guangdong -Hong Kong- Macao Joint Lab 873,271.8 348,873.5 524,398.3 Related to of 5 5 0 income Intelligent Micro-nano Photoelectr ic Technology 6,867,900 500,000.0 268,537.6 7,099,362 Related to Others .00 0 4 .36 assets The Subsidy for Metal- organic 42,090,26 9,999,999 32,090,26 Related to Chemical 1.19 .60 1.59 assets Vapor Deposition (MOCVD) The Project of Resource Conservati 6,059,215 904,683.7 5,154,532 Related to on and .88 2 .16 assets Environme ntal Protection The Technology R&D Center of Related to 66,000.28 10,999.98 55,000.30 Epitaxial assets Wafers and Chips of LEDs The Research and Industrializ ation of LED Chips Related to for 75,000.00 7,500.00 67,500.00 Displays assets with Micro Spacing and Key Packaging Technology The Key Technology Related to 67,666.64 6,000.00 61,666.64 R&D of assets New High- 177 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 voltage High-speed LEDs for the Conductivit y and Illuminatio n of Optical Communic ation Devices The R&D Project of Wafer-level Growth of GaN 662,368.6 310,611.4 351,757.2 Related to Nanowire 8 1 7 income Arrays and Ultraviolet Detector Chips The Research on the Key Technology of Full- color 2,096,708 502,006.2 402,926.5 2,195,788 Related to Micro-LED .45 7 4 .18 income Displays with High Brightness and Contrast The Visible Light Communic ation and Positioning 540,000.0 518,824.6 Related to System for 21,175.39 the 0 1 income Industrial Internet of Things (IIOT) The Project of the Innovation in Packaging Technology and Technologi cal Transforma 6,822,700 190,473.9 6,632,226 Related to tion of Key .00 7 .03 assets Packaging Equipment of LEDs with High Color Rendering Index for Illuminatio n (Phase II) The 2,100,000 2,100,000 Related to Research 178 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 on the Key .00 .00 income Technology of 4K/8K Full-color Micro-LED Displays with Ultra- High Definition (UHD) The First Batch of Special Funds for the Industrial and Informatio n Developme nt for the Guangxi Zhuang 2,166,666 199,999.9 1,966,666 Related to Autonomo us Region .85 8 .87 assets for 2017 (technical transformat ion) for Liuzhou Guige Photoelectr ic Technology Co., Ltd. (Liuzhou Guige) The Innovation Fund for Enterprises 900,000.0 825,000.0 Related to in Liudong 75,000.00 New Area 0 0 assets for 2017 for Liuzhou Guige The Project of the First Batch of Support Funds for 1,800,000 150,000.0 1,650,000 Related to Enterprises in Liuzhou .00 0 .00 assets City for 2017 for Liuzhou Guige The Project of the First Batch of Support Funds for 405,999.8 377,999.8 Related to 28,000.02 Enterprises 9 7 assets in Liuzhou City for 2018 for Liuzhou 179 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Guige The Project of Support Funds for Enterprises 916,666.6 100,000.0 816,666.6 Related to in Liuzhou City for 5 2 3 assets 2020 for Liuzhou Guige The Project of the Third Batch of Special Funds of Innovation- driven 712,000.0 664,000.0 Related to Developme 48,000.00 nt for the 0 0 assets Guangxi Zhuang Autonomo us Region for 2018 for Liuzhou Guige The Project of Financial Support for Developing Liuzhou City into an Industrial 737,333.3 658,333.3 Related to 79,000.02 Internet of 2 0 assets Things (IIOT) Demonstrat ion City for 2021 for Liuzhou Guige The Second Batch of Support Funds for the "Technolog ical Transforma tion of 1,966,666 100,000.0 1,866,666 Related to Thousands .66 2 .64 assets of Enterprises " in the Guangxi Zhuang Autonomo us Region for 2021 Funding for 352,000.0 328,000.0 Related to innovative 24,000.00 projects 0 0 income The Special 108,000.0 102,000.0 Related to Fund of the 6,000.00 Science 0 0 income 180 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 and Technology Department of the Guangxi Zhuang Autonomo us Region for Innovation- driven Developme nt for 2020 The Fund for the Project of the Manageme nt 576,000.0 544,000.0 Related to Committee 31,999.98 of the 4 6 income Liuzhou High-tech Industrial Developme nt Zone The Fund for the Intelligent Transforma tion and 623,333.3 589,333.2 Related to Upgrading 34,000.02 Projects of 0 8 income Automobil e Enterprises for 2021 The Second Batch of Special Funds for the Industrial 2,100,000 150,000.0 1,950,000 Related to and Informatio .00 0 .00 assets n Developme nt of the City for 2019 The 14th Batch of Industrial 1,050,000 975,000.0 Related to 75,000.00 Support .00 0 assets Funds for 2019 116,761,5 13,164,70 21,703,01 108,223,2 Total 0.00 0.00 0.00 70.35 6.27 3.47 63.15 52. Other Non-current Liabilities Unit: RMB Item Ending balance Beginning balance Liabilities of subsidiaries to be cleared 11,334.19 22,653.46 and cancelled 181 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Total 11,334.19 22,653.46 53. Share Capital Unit: RMB Increase/decrease (+/-) Beginning Ending balance New shares Bonus issue balance Bonus shares Other (note) Subtotal issued from profit - - The sum of 1,399,346,15 1,361,994,64 37,351,507.0 37,351,507.0 shares 4.00 7.00 0 0 Other notes: Item/Investor Beginning balance Ending balance Increase Decrease Invested amount Proportion Invested amount Proportion Restricted shares 13,169,196.00 0.94% 2,403,332.00 10,765,864.00 0.79% Unrestricted shares 1,386,176,958.00 99.06% 34,948,175.00 1,351,228,783.00 99.21% Total 1,399,346,154.00 100.00% 37,351,507.00 1,361,994,647.00 100.00% Note: Other decrease in share capital was due to deregistration of treasury shares. For details, please refer to Part VI-XIII. Other Significant Events-Cancellation of Shares of this Report. 54. Other Equity Instruments (1) The Basic Information of Other Financial Instruments such as Preferred Stock and Perpetual Bond Outstanding at the End of the Period Naught (2) Changes in Financial Instruments such as Preferred Stock and Perpetual Bond Outstanding at the End of the Period Naught 55. Capital Reserves Unit: RMB Item Beginning balance Increase Decrease Ending balance Capital premium 979,245,995.62 979,245,995.62 0.00 (premium on stock) Other capital reserves 14,868,571.54 7,622,600.00 7,245,971.54 Total 994,114,567.16 986,868,595.62 7,245,971.54 Other notes, including changes and reason of change: 1. The cancellation of treasury shares offset the capital reserve of RMB4,825,948.60. 2. Due to the merger of NationStar Optoelectronics under the same control in the current period, the opening balance of the capital reserve, upon retroactive adjustment, was RMB982,042,647.02. The merger in the current period decreased by RMB982,042,647.02. 182 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 56. Treasury Shares Unit: RMB Item Beginning balance Increase Decrease (note) Ending balance Treasury shares (A- 201,955,572.33 119,790,428.18 82,165,144.15 share) Treasury shares (B- 48,645,302.21 48,645,302.21 share) Total 250,600,874.54 168,435,730.39 82,165,144.15 Other notes, including changes and reason of change: Note: The decrease in treasury shares for the Reporting Period was due to deregistration of treasury shares. For details, please refer to Part VI-XIII. Other Significant Events-Cancellation of Shares of this Report. 57. Other Comprehensive Income Unit: RMB Reporting Period Less: Less: Recorded Recorded in other in other comprehen comprehen Attributabl Income sive sive e to owners Attributabl Beginning before income in income in Less: of the e to non- Ending Item balance taxation in prior period prior period Income tax Company controlling balance the Current and and expense as the interests Period transferred transferred parent after after tax to profit or to retained tax loss in the earnings in Current the Current Period Period I. Other comprehen sive income that - - - may not 983,157,2 100,917,2 754,107,6 150,743,9 22,611,58 229,049,5 subsequentl 54.51 24.19 97.98 y be 20.40 8.06 56.53 reclassified to profit or loss Changes in fair value - - - 983,157,2 100,917,2 754,107,6 of other 150,743,9 22,611,58 229,049,5 54.51 24.19 97.98 equity 20.40 8.06 56.53 instrument investment II. Other comprehen sive income that - may 107,182.5 - 184,895.6 95,628.61 11,533.90 subsequentl 1 89,267.01 y be 2 reclassified to profit or loss - 107,182.5 - Differences 184,895.6 95,628.61 11,533.90 1 89,267.01 arising 2 183 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 from translation of foreign currency- denominate d financial statements Total of other - - - 982,972,3 100,917,2 754,018,4 comprehen 150,636,7 22,611,58 228,953,9 11,533.90 58.89 24.19 30.97 sive 37.89 8.06 27.92 income 58. Specific Reserve Naught 59. Surplus Reserves Unit: RMB Item Beginning balance Increase Decrease Ending balance Statutory surplus 699,673,077.00 612,892,560.81 86,780,516.19 reserves Discretionary surplus 41,680,270.96 41,680,270.96 0.00 reserves Total 741,353,347.96 654,572,831.77 86,780,516.19 Notes including changes and reasons thereof: The decrease in surplus reserves for the Reporting Period is mainly due to the de-registration of treasury shares and the combination of NationStar under the same control in the Reporting Period. 60. Retained Earnings Unit: RMB Item Reporting Period Same period of last year Beginning balance of retained earnings 3,119,317,423.25 1,758,462,062.48 before adjustments Beginning balance of total retained earnings of adjustments (“+” for 169,825,049.30 increase, “-“ for decrease) Beginning balance of retained earnings 3,119,317,423.25 1,928,287,111.78 after adjustments Add: Net profit attributable to owners of 160,664,433.28 293,738,869.27 the Company as the parent Dividend of ordinary shares 134,899,464.70 143,751,806.92 payable Add: Others (note) -100,917,224.19 -1,041,043,249.12 Ending retained earnings 3,245,999,616.02 3,119,317,423.25 List of adjustment of beginning retained earnings: (1) RMB0.00 beginning retained earnings was affected by retrospective adjustment conducted according to the Accounting Standards for Business Enterprises and relevant new regulations. (2) RMB0.00 beginning retained earnings was affected by changes in accounting policies. (3) RMB0.00 beginning retained earnings was affected by correction of significant accounting errors. (4) RMB169,825,049.30 beginning retained earnings was affected by changes in combination scope arising from same control. 184 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (5) RMB0.00 beginning retained earnings was affected totally by other adjustments. Other notes: Note: Refer to the accumulative change of fair value which was transferred into retained earnings from other comprehensive income when stocks were sold in the Reporting Period. 61. Operating Revenue and Cost of Sales Unit: RMB Reporting Period Same period of last year Item Operating revenue Cost of sales Operating revenue Cost of sales Main operations 4,200,923,124.71 3,480,433,322.74 3,563,272,369.88 2,954,407,457.50 Other operations 147,345,874.60 107,632,475.61 62,927,890.29 55,091,879.72 Total 4,348,268,999.31 3,588,065,798.35 3,626,200,260.17 3,009,499,337.22 Relevant information of revenue: Category of contracts Segment 1 Segment 2 Total Types of products 4,348,268,999.31 4,348,268,999.31 Of which: General lighting products 1,794,373,850.48 1,794,373,850.48 LED packaging and 1,285,748,494.95 1,285,748,494.95 component products Vehicle lamp products 788,150,928.31 788,150,928.31 Epitaxy and chip products 57,483,341.92 57,483,341.92 Trade and other products 422,512,383.65 422,512,383.65 By operating places 4,348,268,999.31 4,348,268,999.31 Of which: Domestic 3,277,500,277.81 3,277,500,277.81 Overseas 1,070,768,721.50 1,070,768,721.50 Information related to performance obligations: Naught Information related to transaction value assigned to residual performance obligations: The amount of revenue corresponding to performance obligations of contracts signed but not performed or not fully performed yet was RMB282,686,589.87 at the period-end. 62. Taxes and Surtaxes Unit: RMB Item Reporting Period Same period of last year Urban maintenance and construction tax 7,260,191.27 7,329,896.91 Education surcharge 3,981,871.52 4,354,217.61 Property tax 7,097,473.37 4,823,023.37 Land use tax 2,985,827.87 2,550,114.66 Vehicle and vessel use tax 13,021.56 7,800.88 Stamp duty 3,644,570.41 2,268,530.04 Local education surcharge 997,922.28 911,424.77 VAT of land (note) -2,047,738.45 403,671.24 Environmental protection tax 34,492.30 93,522.65 Others 402,358.19 988.75 185 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Total 24,369,990.32 22,743,190.88 Other notes: Note: It was mainly because of the land appreciation tax accrued for the sale of real estate in the previous period. The over-accrued land appreciation tax of RMB2,047,738.45 was released, when the actual payment was made this year. 63. Selling Expense Unit: RMB Item Reporting Period Same period of last year Employee benefits 55,164,807.55 47,774,786.46 Business propagandize fees and 18,529,841.39 12,593,620.80 advertizing fees Sales promotion fees 5,847,930.26 4,687,482.20 Business travel charges 2,109,153.50 3,945,263.27 Dealer meeting expense 516,954.49 201,586.16 Commercial insurance premium 2,387,669.16 2,132,533.15 Other 25,283,570.38 25,437,347.11 Total 109,839,926.73 96,772,619.15 64. Administrative Expense Unit: RMB Item Reporting Period Same period of last year Employee benefits 109,407,584.44 83,987,194.14 Depreciation charge 19,194,923.21 15,037,827.30 Office expenses 10,061,100.07 8,318,762.66 Rent of land and management charge 298,021.09 1,842,382.96 Amortization of intangible assets 5,701,115.82 6,144,160.12 Utilities 3,880,679.53 372,571.56 Engineering decoration cost 2,822,639.45 3,786,630.64 Intermediary agency fee 3,536,961.00 2,870,509.21 Others 22,839,674.16 17,260,729.13 Total 177,742,698.77 139,620,767.72 65. Development Costs Unit: RMB Item Reporting Period Same period of last year Employee benefits 97,286,487.05 73,244,875.54 Expense on equipment debugging 3,503,274.86 5,213,427.98 Certification and testing fee 4,983,719.59 4,174,101.50 Material consumption 27,204,093.78 6,478,539.00 Charges related to patents 1,323,834.59 944,967.99 Depreciation and long-term prepaid 21,427,223.15 17,196,866.49 expense Other 52,447,960.74 36,867,316.68 Total 208,176,593.76 144,120,095.18 Other notes: 1. In respect of R&D expense incurred by the Company, expense other than that on bench-scale and pilot-scale 186 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 production is included in R&D expense; and sales revenue of products from bench-scale and pilot-scale production is included in core business revenue and the relevant costs are included in cost of sales of core business. 2. The R&D expense stood at RMB64,056,498.58 in the current period, up 44.45% year-on-year, primarily driven by acquisition of Nanning Liaowang, a subsidiary not under the same control in Q3 2021. 66. Finance Costs Unit: RMB Item Reporting Period Same period of last year Interest expense 6,688,232.76 2,871,203.53 Less: Interest income 12,905,461.82 14,130,946.82 Foreign exchange gains or losses -18,641,308.34 5,974,891.14 Handling charge and others 857,892.01 1,632,843.88 Total -24,000,645.39 -3,652,008.27 67. Other Income Unit: RMB Sources Reporting Period Same period of last year Government grants related to assets in 14,936,360.57 14,387,027.62 carry-over deferred income Government grants related to income in 5,665,652.84 5,523,368.01 carry-over deferred income Foshan's funds for promotion of robot 2,000,000.00 application and industrial development The Support Fund of the Foshan Municipal Financial Bureau for Promoting the Digital Intelligent 2,000,000.00 Transformation of the Manufacturing Industry in Foshan City for 2021 The Special Fund for Promoting High- 1,842,190.69 1,762,092.60 quality Economic Development The Special Support Fund for the Industrial Internet of Things (IIOT) Development in Foshan City for 2021 1,320,000.00 (the Special Project of IIOT Demonstration) (the First Batch) The Subsidy of the Chancheng District Human Resources and Social Security Bureau, Foshan City, for the Skill 1,148,000.00 Training of Millions of Workers for March 2022 The Subsidy for Stabilizing Employment 1,126,686.47 Service Charges Returned by the 1,110,028.50 470,437.25 Taxation Administration The Special Support Fund for the Industrial Internet of Things (IIOT) 892,500.00 Development in Foshan City The Special Fund for the Vocational Skill 848,000.00 Improvement Campaign The L.J.C.Y. [2021] No. 557 Industrial Support Fund of the Finance Bureau of 610,000.00 Liang Jiang New Area, Chongqing The Support Fund of the Administration of the Chancheng Park of the Foshan 450,000.00 High-tech Industrial Development Zone for Champion Manufacturing Enterprises 187 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 in a Single Item for 2020 The First Batch of Subsidies for the Special Project of SME Development 427,200.00 and the Auxiliary Project of Industrial Chain Collaboration for 2022 The N.C.G.J. [2021] No. 452 "Fund for Specialized and Refined Projects" in Nanning City of the Management 300,000.00 Committee of the Nanning New & High- tech Industrial Development Zone The Subsidy for Employees' On-the-job 2,968,000.00 Training The R&D Subsidy for High-tech 1,034,800.00 Enterprises The Municipal Support Fund for the Industrial Design Development of 1,000,000.00 Foshan City The Support Fund Granted by the Administration of the Chancheng Park of the Foshan High-tech Industrial 1,000,000.00 Development Zone to the Smart Factory Project in the Zone for 2020 The Social Subsidy Granted by the Chancheng District Human Resources and Social Security Bureau, Foshan City, 553,814.44 to Support People with Employment Difficulties The Municipal Special Fund for the 451,043.00 Intellectual Property Rights for 2020 The Incentive for Developing Technological Innovation Platforms in Nanhai District for 2020 – Large 366,752.33 Outstanding Enterprises – R&D Subsidies The Special Fund Granted by the Administration of the Chancheng Park of the Foshan High-tech Industrial 300,000.00 Development Zone to Leading Enterprises for 2020 The Reward Granted by the Administration of the Chancheng Park of the Foshan High-tech Industrial Development Zone for Enterprises First 300,000.00 Recognized as Champion Manufacturing Enterprises in a Single Item in the Zone for 2020 Other 3,094,828.73 3,451,897.90 Total 37,771,447.80 33,569,233.15 68. Investment Income Unit: RMB Item Reporting Period Same period of last year Long-term equity investment income 650,457.40 37,460.99 accounted by equity method Investment income from disposal of 285,376.51 87,850.30 trading financial assets Dividend income from holding of other 16,055,272.93 equity instrument investment Income received from financial products 673,400.56 4,952,121.46 and structural deposits Other 1,949,237.46 416,050.00 188 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Total 19,613,744.86 5,493,482.75 69. Net Gain on Exposure Hedges Naught 70. Gain on Changes in Fair Value Unit: RMB Sources Reporting Period Same period of last year Held-for-trading financial assets 35,436.66 1,993,168.20 Held-for-trading financial liabilities -10,802,032.63 -63,379.90 Total -10,766,595.97 1,929,788.30 71. Credit Impairment Loss Unit: RMB Item Reporting Period Same period of last year Bad debt loss on other receivables 133,776.54 -750,332.27 Bad debt loss on accounts receivable -16,527,279.88 2,085,332.87 Bad debt loss on notes receivable -658,995.50 346,781.29 Total -17,052,498.84 1,681,781.89 72. Asset Impairment Loss Unit: RMB Item Reporting Period Same period of last year II. Loss on inventory valuation and -19,418,381.89 -23,464,653.80 contract performance cost V. Loss on impairment of fixed assets -3,529,839.61 XII. Loss on impairment of contract -439,922.48 assets Total -23,388,143.98 -23,464,653.80 73. Assets Disposal Income Unit: RMB Sources Reporting Period Same period of last year Disposal income of fixed assets 82,362.19 1,782,280.34 74. Non-operating Income Unit: RMB Amount recorded in the Item Reporting Period Same period of last year current non-recurring profit or loss Government grants 976,090.45 976,090.45 Total income from disposal of 43,160.43 1,674,379.33 43,160.43 non-current assets 189 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Of which: Income from 43,160.43 1,674,379.33 43,160.43 disposal of fixed assets Income from default money 165,006.53 35,284.41 165,006.53 Other 7,777,436.55 2,238,668.67 7,777,436.55 Total 8,961,693.96 3,948,332.41 8,961,693.96 75. Non-operating Expense Unit: RMB Amount recorded in the Item Reporting Period Same period of last year current non-recurring profit or loss Donations 1,340.00 Total loss on disposal of non- 5,943,227.86 3,146,405.63 5,943,227.86 current assets Of which: loss on disposal of 5,731,670.97 2,735,764.32 5,731,670.97 fixed assets Loss on disposal of intangible 211,556.89 211,556.89 assets Losses on inventories 41,677.65 1.88 41,677.65 Penalty 249,481.71 249,481.71 Delaying payment 336,802.22 191,967.71 336,802.22 Other 1,272,873.58 354,929.89 1,272,873.58 Total 7,844,063.02 3,694,645.11 7,844,063.02 76. Income Tax Expense (1) List of Income Tax Expense Unit: RMB Item Reporting Period Same period of last year Current income tax expense 25,578,945.18 38,957,223.88 Deferred income tax expense 15,562,966.83 4,382,154.87 Total 41,141,912.01 43,339,378.75 (2) Adjustment Process of Accounting Profit and Income Tax Expense Unit: RMB Item Reporting Period Profit before taxation 271,452,583.77 Current income tax expense accounted at statutory/applicable 40,717,887.57 tax rate Influence of applying different tax rates by subsidiaries 2,902,251.69 Influence of income tax before adjustment -922,149.05 Influence of non-deductable costs, expenses and losses -192,347.46 The effect of using deductible losses of deferred income tax 1,142,128.81 assets that have not been recognized in the previous period Investment income and dividend -2,505,859.55 Income tax expense 41,141,912.01 190 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 77. Other Comprehensive Income Refer to Note VII Notes to Main Items of Consolidated Financial Statements-57 for details. 78. Cash Flow Statement (1) Cash Generated from Other Operating Activities Unit: RMB Item Reporting Period Same period of last year Deposit interest 12,342,006.20 16,315,569.45 Income from insurance compensation 5,333.08 24,207.40 Margin income 13,542,994.58 21,824,603.85 Rental income from property and 4,954,716.14 6,351,181.05 equipment, utility Income from subsidy 35,542,460.08 13,780,707.93 Income from waste 16,645,457.85 12,948,191.88 Other 36,300,827.42 18,573,282.49 Total 119,333,795.35 89,817,744.05 (2) Cash Used in Other Operating Activities Unit: RMB Item Reporting Period Same period of last year Administrative and R&D expense paid in 50,240,726.64 43,554,740.48 cash Selling expense paid in cash 34,362,534.37 89,858,190.79 Finance costs paid in cash 820,402.36 1,255,552.49 Returned cash deposit 12,156,399.92 13,794,280.53 Other 67,973,379.74 29,119,236.85 Total 165,553,443.03 177,582,001.14 (3) Cash Generated from Other Investing Activities Naught (4) Cash Used in Other Investing Activities Naught (5) Cash Generated from Other Financing Activities Unit: RMB Item Reporting Period Same period of last year Cash deposit collected 53,126,214.00 1,339,606.80 Total 53,126,214.00 1,339,606.80 191 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (6) Cash Used in Other Financing Activities Unit: RMB Item Reporting Period Same period of last year Payment for cash deposit of bank 121.82 83,291,518.32 acceptance bills Intermediary fee for financing 125,624.96 37,077.04 Cash paid for acquisition under the same 1,061,968,681.64 control Repurchase of treasury shares 220,895,890.55 Total 1,062,094,428.42 304,224,485.91 79. Supplemental Information for Cash Flow Statement (1) Supplemental Information for Cash Flow Statement Unit: RMB Supplemental information Reporting Period Same period of last year 1. Reconciliation of net profit to net cash flows generated from operating activities: Net profit 230,310,671.76 195,002,479.47 Add: Provision for impairment of assets 40,440,642.82 21,782,871.91 Depreciation of fixed assets, oil-gas 236,835,122.52 191,592,791.52 assets, and productive living assets Depreciation of right-of-use assets 4,314,025.31 1,290,954.05 Amortization of intangible assets 6,146,953.88 7,375,589.07 Amortization of long-term prepaid 69,990,299.46 8,701,088.44 expenses Loss from disposal of fixed assets, intangible assets and other long-term -82,362.19 -1,782,280.34 assets (gains: negative) Losses from scrapping of fixed 5,688,510.54 -628,095.29 assets (gains: negative) Losses from changes in fair value 10,766,595.97 -1,929,788.30 (gains: negative) Finance costs (gains: negative) 6,688,232.76 2,871,203.53 Investment loss (gains: negative) -19,613,744.86 -5,493,482.75 Decrease in deferred income tax 2,289,157.80 2,232,103.26 assets (increase: negative) Increase in deferred income tax 27,242,670.20 2,150,051.61 liabilities (“-” for decrease) Decrease in inventory (“-” for 129,815,588.18 -170,321,475.30 increase) Decrease in operating receivables (“- -206,126,131.90 -337,116,154.02 ” for increase) Increase in operating payables (“-” -394,671,325.86 530,485,149.34 for decrease) Others Net cash generated from/used in 150,034,906.39 446,213,006.20 operating activities 2. Significant investing and financing activities without involvement of cash receipts and payments Transfer of debts into capital Current portion of convertible corporate bonds Fixed assets leased in for financing 192 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 3.Net increase/decrease of cash and cash equivalents: Ending balance of cash 1,387,999,909.22 1,957,385,232.91 Less: Beginning balance of cash 1,886,894,463.37 1,325,464,361.36 Add: Ending balance of cash equivalents Less: Beginning balance of cash equivalents Net increase in cash and cash -498,894,554.15 631,920,871.55 equivalents (2) Net Cash Paid For Acquisition of Subsidiaries Unit: RMB Amount Cash or cash equivalents paid in the Reporting Period for 1,061,968,681.64 business combination occurring in the Reporting Period Of which: Foshan NationStar Optoelectronics Co., Ltd. 1,061,968,681.64 Of which: Of which: Net payments for acquisition of subsidiaries 1,061,968,681.64 (3) Net Cash Received from Disposal of the Subsidiaries Naught (4) Cash and Cash Equivalents Unit: RMB Item Ending balance Beginning balance Including: Cash on hand 68,284.86 24,635.14 Bank deposit on demand 1,386,515,662.37 1,787,545,524.78 Other monetary assets on 1,415,961.99 99,324,303.45 demand III. Ending balance of cash and cash 1,387,999,909.22 1,886,894,463.37 equivalents 80. Notes to Items of the Statements of Changes in Owners’ Equity Notes to the name of “Other” of ending balance of the same period of last year adjusted and the amount adjusted: Not applicable 81. Assets with Restricted Ownership or Right of Use Unit: RMB Item Ending carrying value Reason for restriction Security deposit of notes, letter of Monetary assets 448,713,603.58 guarantee, etc. Notes receivable 821,993,782.57 Pledged for notes pool Related-party mortgage guarantee, see Fixed assets 265,763,688.91 Part X-Note XIV-(III) Others for details 193 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Related-party mortgage guarantee, see Intangible assets 11,119,256.27 Part X-Note XIV-(III) Others for details Related-party mortgage guarantee, see Long-term deferred expense 1,081,877.32 Part X-Note XIV-(III) Others for details Total 1,548,672,208.65 82. Foreign Currency Monetary Items (1) Foreign Currency Monetary Items Unit: RMB Ending foreign currency Ending balance converted to Item Exchange rate balance RMB Monetary assets 264,308,864.20 Of which: USD 33,219,428.25 6.7114 222,948,870.76 EUR 680,375.82 7.0084 4,768,345.90 HKD 51,801.82 0.8552 44,300.40 IDR 81,036,246,474.50 0.000451 36,547,347.16 Accounts receivable 481,373,296.47 Of which: USD 69,644,148.32 6.7114 467,409,737.03 EUR 1,591,497.91 7.0084 11,153,853.95 HKD 42,850.39 0.8552 36,645.23 IDR 6,229,945,609.76 0.000451 2,809,705.47 Long-term borrowings 335,570,000.00 Of which: USD 50,000,000.00 6.7114 335,570,000.00 EUR HKD Other receivables 90,529.27 Of which: USD 13,488.88 6.7114 90,529.27 Contract liabilities: 12,568,074.98 Of which: USD 1,859,199.25 6.7114 12,477,829.85 EUR 12,876.71 7.0084 90,245.13 prepayments 4,402,438.13 Of which: USD 655,964.20 6.7114 4,402,438.13 Accounts payable 22,857,965.67 Of which: USD 1,141,727.22 6.7114 7,662,588.06 EUR 1,119,961.13 7.0084 7,849,135.58 IDR 33,692,633,281.60 0.000451 15,195,377.61 Other non-current assets 642,634.75 Of which: EUR 91,694.93 7.0084 642,634.75 Other non-current liabilities 838,740.08 Of which: EUR 119,676.40 7.0084 838,740.08 Lease liabilities 272,954.84 Of which: IDR 605,221,374.72 0.000451 272,954.84 (2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, Recording Currency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency, Relevant Reasons Shall Be Disclosed. □Applicable Not applicable 83. Arbitrage Qualitative and quantitative information of relevant arbitrage instruments, hedged risk in line with the type of arbitrage to disclose: 194 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Naught 84. Government Grants (1) Basic Information on Government Grants Unit: RMB Amount recorded in the Sources Amount Listed items current profit or loss Handling charge returned 167,848.10 Other income 167,848.10 from tax bureau Subsidy for stabilizing 285,643.24 Other income 285,643.24 employment The Subsidy of the Chancheng District Economy and Technology Promotion Bureau, Foshan City, for 6,900.00 Other income 6,900.00 Enterprises Organized by Foshan City to Participate in Important Professional Exhibitions in China for 2021 The Support Fund of the Administration of the Chancheng Park of the Foshan High-tech Industrial 450,000.00 Other income 450,000.00 Development Zone for Champion Manufacturing Enterprises in a Single Item for 2020 The Fund of the Organization Department of the Chancheng District Party Committee, 150,000.00 Other income 150,000.00 Foshan City, China, for Competitive Talent Support Projects The Auxiliary Fund of the Organization Department of the Chancheng District Party 250,000.00 Other income 250,000.00 Committee, Foshan City, China, for Competitive Talent Support Projects The Support Fund of the Foshan Municipal Financial Bureau for Promoting the Digital Intelligent 2,000,000.00 Other income 2,000,000.00 Transformation of the Manufacturing Industry in Foshan City for 2021 The Subsidy of the Chancheng District Human Resources and Social Security 1,148,000.00 Other income 1,148,000.00 Bureau, Foshan City, for the Skill Training of Millions of Workers for March 2022 The Subsidy Granted by the Chancheng District Economy and Technology Promotion Bureau, Foshan City, for 26,056.34 Other income 26,056.34 Promoting the Project of Export Credit Insurance under the Special Provincial Project of Promoting High-quality 195 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Economic Development (for the Direction of Promoting Foreign Trade Development) for 2021 The Special Fund for the Vocational Skill Improvement 848,000.00 Other income 848,000.00 Campaign The Special Support Fund for the Industrial Internet of Things (IIOT) Development in Foshan City for 2021 (the 1,320,000.00 Other income 1,320,000.00 Special Project of IIOT Demonstration) (the First Batch) The Municipal Support Fund for the Premiums of Short- 51,962.00 Other income 51,962.00 term Export Credit Insurance for 2022 The Provincial Fund for Export Credit Insurance for 65,029.00 Other income 65,029.00 2022 The R&D of Chip-on-Board (COB) Integrated Packaging and Systems of LED Displays 1,100,000.00 Deferred income 1,100,000.00 with High Density and Small Spacing The Research on the Key Technology of High-lumen Compound Reflex LED Chips 1,800,000.00 Deferred income 685,856.47 for Automobiles and High- density Matrix Packaging The Technology Research and Industrialization of the Micro Display Module Based on 340,000.00 Deferred income 106,747.34 Highly Efficient Color Conversion Others 500,000.00 Deferred income The Research on the Key Technology of Full-color 502,006.27 Deferred income Micro-LED Displays with High Brightness and Contrast The Project of the Innovation in Packaging Technology and Technological Transformation of Key Packaging Equipment 6,822,700.00 Deferred income 190,473.97 of LEDs with High Color Rendering Index for Illumination (Phase II) The Research on the Key Technology of 4K/8K Full- color Micro-LED Displays 2,100,000.00 Deferred income with Ultra-High Definition (UHD) The G.G.X.T.Z. [2017] No. 106 First Batch of Special Funds for the Industrial and Information Development for the Guangxi Zhuang 199,999.98 Other income 199,999.98 Autonomous Region for 2017 (technical transformation) for Liuzhou Guige Photoelectric Technology Co., Ltd. (Liuzhou Guige) The L.D.G.F. [2016] No. 36 Innovation Fund for 75,000.00 Other income 75,000.00 Enterprises in Liudong New 196 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Area for 2017 for Liuzhou Guige The L.G.X.T. [2017] No. 164 Project of the First Batch of Support Funds for Enterprises 150,000.00 Other income 150,000.00 in Liuzhou City for 2017 for Liuzhou Guige The L.G.X.T. [2018] No. 122 Project of the First Batch of Support Funds for Enterprises 28,000.02 Other income 28,000.02 in Liuzhou City for 2018 for Liuzhou Guige The L.G.X.T. [2020] No. 134 Project of Support Funds for 100,000.02 Other income 100,000.02 Enterprises in Liuzhou City for 2020 for Liuzhou Guige The G.K.J.Z. [2018] No. 242 Project of the Third Batch of Special Funds of Innovation- driven Development for the 48,000.00 Other income 48,000.00 Guangxi Zhuang Autonomous Region for 2018 for Liuzhou Guige The L.G.X.T. [2021] No. 72 Project of Financial Support for Developing Liuzhou City into an Industrial Internet of 79,000.02 Other income 79,000.02 Things (IIOT) Demonstration City for 2021 for Liuzhou Guige The L.C.Y.ZH. [2021] No. 280 Second Batch of Support Funds for the "Technological Transformation of Thousands 100,000.02 Other income 100,000.02 of Enterprises" in the Guangxi Zhuang Autonomous Region for 2021 The Reward of the Bureau of Industry and Information Technology of Liuzhou City 31,800.00 Other income 31,800.00 for Controlled Use of Electricity The Subsidy of the Social Insurance Management 173,672.78 Other income 173,672.78 Center of Liuzhou City for Stabilizing Employment The Second Batch of Special Funds for the Industrial and 150,000.00 Other income 150,000.00 Information Development of the City for 2019 The 14th Batch of Industrial 75,000.00 Other income 75,000.00 Support Funds for 2019 The L.J.C.Y. [2021] No. 557 Industrial Support Fund of the 610,000.00 Other income 610,000.00 Finance Bureau of Liang Jiang New Area, Chongqing The One-time Subsidy of Yubei District to Support People with Employment 36,000.00 Other income 36,000.00 Difficulties for the First Quarter of 2022 The Subsidy for Stabilizing 841,043.23 Other income 841,043.23 Employment The Special Support Fund for the Industrial Internet of 892,500.00 Other income 892,500.00 Things (IIOT) Development in Foshan City 197 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 The Fund of Foshan City for Promoting the Robot 2,000,000.00 Other income 2,000,000.00 Application and Industry Special funds for promoting high-quality economic 1,842,190.69 Other income 1,842,190.69 development Others 383,364.86 Other income 383,364.86 Total 27,749,716.57 16,668,088.08 (2) Return of Government Grants □Applicable Not applicable 85. Other Naught VIII. Changes of Consolidation Scope 1. Business Combination Not under the Same Control (1) Business Combination Not under the Same Control in the Reporting Period Naught (2) Combination Cost and Goodwill Naught (3) The Identifiable Assets and Liabilities of Acquiree on Purchase Date Naught (4) Gains or losses from Re-measurement of Equity Held before the Purchase Date at Fair Value Whether there is a transaction that through multiple transaction step by step to realize business combination and gaining the control during the Reporting Period □Yes No (5) Notes to Reasonable Consideration or Fair Value of Identifiable Assets and Liabilities of the Acquiree that Cannot Be Determined on the Acquisition Date or during the Period-end of the Merger Naught (6) Other Notes Naught 198 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 2. Business Combination under the Same Control (1) Business Combination under the Same Control during the Reporting Period Unit: RMB Income Net profits from the from the Income of Net profits Recognitio period- period- the of the Proportion Combined Combinatio n basis of begin to the begin to the acquiree acquiree of the Basis party n date combinatio combinatio combinatio during the during the equity n date n date of n date of period of period of the the comparison comparison acquiree acquiree Under the The actual control of control has the achieved Foshan Company’s and the NationStar actual 28 industrial 453,644,78 9,568,639.8 580,345,83 29,049,597. Optoelectro 21.48% controller February and 0.94 3 0.39 07 nics Co., both before 2022 commercial Ltd. and after changes the have been combinatio completed n Under the The actual control of control has the achieved Foshan Company’s and the Sigma actual 28 industrial Venture 100.00% controller February 0.00 -700.00 0.00 0.00 and Capital both before 2022 commercial Co., Ltd. and after changes the have been combinatio completed n Other notes: The Company held the 19th meeting of the ninth Board of Directors and the Third Extraordinary General Meeting in 2021 on 27 October 2021 and 31 December 2021 respectively, where the untport on Major Asset Purchase and Related Party Trading of Foshan Electrical and Lighting Co., Ltd. (Draft) and Its Summary" and other proposals related to this trading was deliberated and adopted. It was agreed that the Company will purchase 100% equity of Sigma held by Electronics Group (Sigma holds 79,753,050 shares of NationStar Optoelectronics) and 52,051,945 tradable shares of NationStar Optoelectronics held by Rising Group and Rising Capital in total by paying cash. Before the spin-off, FSL held 1,014,900 shares of NationStar Optoelectronics, accounting for 0.16% of the total share capital of NationStar Optoelectronics. Upon completion of the spin-off, FSL and its wholly-owned subsidiary will hold 132,819,895 shares of NationStar Optoelectronics in total, accounting for 21.48% of the total share capital of NationStar Optoelectronics, making FSL the controlling shareholder of NationStar Optoelectronics. As of the end of February 2022, the Company has paid 100% of the equity acquisition amount, and the industrial and commercial change registration of Sigma has been completed. As the Company, NationStar Optoelectronics and Sigma are all controlled by the actual controller Guangdong Rising Holdings Group Co., Ltd. before and after the equity change and such control is not temporary, the merger falls under the previous data of retrospective adjustment of business combination under the same control. 199 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (2) Combination Cost Unit: RMB Foshan NationStar Optoelectronics Co., Ltd. and Foshan Sigma Combination cost Venture Capital Co., Ltd. --Cash 1,517,098,116.62 --Carrying value of non-cash assets --Carrying value of debts issued or assumed --Face value of equity securities issued --Contingent consideration Contingent consideration and changes thereof: Naught Other notes: Naught (3) The Carrying Value of Assets and Liabilities of the Combined Party on the Combination Date Unit: RMB Foshan NationStar Optoelectronics Co., Ltd. Foshan Sigma Venture Capital Co., Ltd. Period-end of the last Period-end of the last Combination date Combination date period period Assets: Monetary assets 921,042,415.96 997,688,184.63 4,226.45 4,926.45 Accounts receivable 525,596,155.73 554,384,717.05 Inventories 894,257,346.12 905,045,064.13 Fixed assets 2,035,468,559.47 2,037,263,584.35 Intangible assets 103,117,840.45 103,886,463.82 Held-for-trading 20,000,000.00 20,000,000.00 financial assets Notes receivable 1,000,511,991.86 1,102,333,515.11 Prepayments 13,259,667.27 13,354,147.30 Other receivables 2,748,733.29 3,451,162.14 Other current assets 41,339,558.12 39,981,159.43 Long-term equity 16,852,876.19 16,852,876.19 73,096,690.00 73,096,690.00 investments Other investments in 41,059,860.92 41,059,860.92 equity instruments Construction in 326,952,490.30 356,665,733.21 progress Right-of-use assets 574,365.58 629,067.08 Long-term prepaid 26,736,143.96 27,487,572.51 expense Deferred income tax 28,064,526.77 28,064,526.77 assets Other non-current 30,051,607.66 29,197,939.66 assets Liabilities: 200 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Borrowings Accounts payable 717,846,900.05 899,927,502.97 Held-for-trading 2,224.02 9,367.37 financial liabilities Notes payable 1,184,541,823.20 1,247,131,988.05 Contract liabilities 75,559,067.88 55,409,842.62 Employee benefits 50,815,459.88 78,858,200.44 payable Taxes payable 9,532,874.37 8,970,415.15 Other payables 31,251,670.01 34,566,878.65 Current portion of non- 323,784.42 320,912.61 current liabilities Other current liabilities 1,983,259.30 2,538,611.14 Lease liabilities 166,405.64 202,757.36 Provisions 8,545,934.02 9,746,394.32 Deferred income 100,184,002.53 102,346,903.64 Deferred income tax 92,481,449.40 92,481,449.40 liabilities Net assets 3,754,399,284.93 3,744,834,350.58 73,100,916.45 73,101,616.45 Less: Non-controlling -117,113.13 -117,113.13 interests Net assets acquired 3,754,516,398.06 3,744,951,463.71 73,100,916.45 73,101,616.45 Contingent liabilities of the combined party undertaken in the business combination: Naught Other notes: Naught 3. Counter Purchase Basic information of trading, the basis of transactions constitute counter purchase, the retain assets , liabilities of the listed companies whether constituted a business and its basis, the determination of the combination costs, the amount and calculation of adjusted rights and interests in accordance with the equity transaction process: Naught 4. Disposal of Subsidiary Whether there is a single disposal of the investment to the subsidiary and lost control? □Yes No Whether there are several disposals of the investment to the subsidiary and lost controls? □Yes No 5. Changes in Combination Scope for Other Reasons Note to changes in combination scope for other reasons (such as newly establishment or liquidation of subsidiaries, etc.) and relevant information: Naught 201 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 6. Other Naught IX. Equity in Other Entities 1. Equity in Subsidiary (1) Subsidiaries Main operating Registration Nature of Holding percentage Name Way of gaining place place business Directly Indirectly Foshan Lighting Lamps Production and Newly Foshan Foshan 100.00% & Components sales established Co., Ltd. FSL Chanchang Production and Newly Optoelectronics Foshan Foshan 100.00% sales established Co., Ltd. Foshan Taimei Times Lamps Production and Newly Foshan Foshan 70.00% and Lanterns sales established Co., Ltd. Foshan Electrical & Production and Newly Lighting Xinxiang Xinxiang 100.00% sales established (Xinxiang) Co., Ltd. Nanjing Fozhao Lighting Production and Components Nanjing Nanjing 100.00% Acquired sales Manufacturing Co., Ltd. FSL Zhida Electric Production and Newly Foshan Foshan 51.00% Technology sales established Co., Ltd. FSL Production and Newly LIGHTING Germany Germany 100.00% sales established GMBH Foshan Haolaite Production and Newly Foshan Foshan 51.00% 10.53% Lighting Co., sales established Ltd. Foshan Kelian New Energy Property Foshan Foshan 100.00% Acquired Technology development Co., Ltd. Fozhao Haikou Haikou Production and (Hainan) sales Newly 100.00% Technology established Co., Ltd. Nanning Manufacturing Liaowang Auto Nanning Nanning of vehicle 53.79% Acquired Lamp Co., Ltd. lamps Liuzhou Guige Manufacturing Lighting Liuzhou Liuzhou of vehicle 53.79% Acquired Technology lamps Co., Ltd. Liuzhou Guige Manufacturing Foreshine Liuzhou Liuzhou of automotive 53.79% Acquired Technology electronic 202 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Co., Ltd. products Chongqing Guinuo Manufacturing Lighting Chongqing Chongqing of vehicle 53.79% Acquired Technology lamps Co., Ltd. Qingdao Guige Manufacturing Lighting Qingdao Qingdao of vehicle 53.79% Acquired Technology lamps Co., Ltd. Indonesia Manufacturing Liaowang Auto Indonesia Indonesia of vehicle 53.79% Acquired Lamp Co., Ltd. lamps Foshan Sigma Business Venture Capital Foshan Foshan 100.00% Acquired services Co., Ltd. Foshan NationStar Electronic Foshan Foshan 21.48% Acquired Optoelectronics manufacturing Co., Ltd. (note) Foshan NationStar Electronic Semiconductor Foshan Foshan 21.48% Acquired manufacturing Technology Co., Ltd. Foshan NationStar Electronic Electronic Foshan Foshan 21.48% Acquired manufacturing Manufacturing Co., Ltd. Nanyang Baoli Vanadium Henan Nanyang Mining 12.89% Acquired Industry Co., Ltd. NationStar Optoelectronics Germany Germany Trade 21.48% Acquired (Germany) Co., Ltd. Guangdong New Electronic Guangzhou Guangzhou Trade 21.48% Acquired Information Ltd. Notes to holding proportion in subsidiary different from voting proportion: Naught Basis of holding half or less voting rights but still controlling the investee and holding more than half of the voting rights but not controlling the investee: Naught Significant structural entities and controlling basis in the scope of combination: Naught Basis of determining whether the Company is the agent or the principal: Naught 203 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (2) Significant Non-wholly-owned Subsidiary Unit: RMB Shareholding The profit or loss Declaring dividends Balance of non- Name proportion of non- attributable to the non- distributed to non- controlling interests at controlling interests controlling interests controlling interests the period-end Foshan Taimei Times Lamps and Lanterns 30.00% 477,109.34 11,927,661.32 Co., Ltd. FSL Zhida Electric 49.00% 2,795,200.47 27,421,966.35 Technology Co., Ltd. Foshan Haolaite 38.47% 779,318.55 14,010,834.93 Lighting Co., Ltd. Nanning Liaowang 46.21% 8,404,253.27 431,399,428.14 Auto Lamp Co., Ltd. Foshan NationStar Optoelectronics Co., 78.52% 57,190,356.85 24,282,863.70 2,960,569,455.95 Ltd. Holding proportion of non-controlling interests in subsidiary different from voting proportion: Naught Other notes: Note: NationStar Electronic Manufacturing, NationStar Semiconductor, Baoli Vanadium Industry, New Electronic and Germany NationStar are subsidiaries of Foshan NationStar Optoelectronics Co., Ltd. (3) The Main Financial Information of Significant Not Wholly-owned Subsidiary Unit: RMB Ending balance Beginning balance Curren Non- Curren Non- Name Non- Total Non- Total Curren Total t current Curren Total t current current liabiliti current liabiliti t assets assets liabiliti liabilit t assets assets liabiliti liabilit assets es assets es es y es y Foshan Taimei Times 72,20 14,83 87,03 47,28 47,28 135,8 17,57 153,4 115,2 115,2 Lamps 0,481 9,246 9,728 0,856 0,856 29,00 3,437 02,44 33,93 33,93 and Lanter .63 .40 .03 .96 .96 8.12 .36 5.48 8.88 8.88 ns Co., Ltd. FSL Zhida Electri 162,0 9,189 171,2 102,9 102,9 126,7 12,49 139,2 76,67 76,67 c 30,80 ,591. 20,39 23,52 23,52 77,94 4,211 72,15 9,776 9,776 Techn ology 4.64 64 6.28 6.20 6.20 3.85 .78 5.63 .30 .30 Co., Ltd. Foshan Haolai te 70,05 11,01 81,06 44,64 44,64 60,89 12,88 73,77 39,38 39,38 Lighti 2,380 3,852 6,232 6,073 6,073 0,648 7,936 8,585 4,209 4,209 ng .13 .14 .27 .89 .89 .90 .38 .28 .45 .45 Co., Ltd. Nanni 1,302 907,8 2,210 1,238 38,34 1,277 1,346 817,3 2,164 1,305 23,05 1,328 ng ,936, 27,65 ,764, ,851, 9,871 ,201, ,863, 63,83 ,227, ,420, 8,696 ,478, Liaow ang 371.9 1.95 023.9 226.0 .81 097.8 737.1 9.98 577.1 077.1 .78 773.9 204 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Auto 7 2 4 5 4 2 9 7 Lamp Co., Ltd. Foshan Nation 3,532 2,575 6,107 1,884 2,314 3,636 2,641 6,277 2,327 2,532 Star 430,5 204,7 ,251, ,215, ,467, ,089, ,651, ,237, ,107, ,345, ,733, ,511, Optoel 61,95 77,50 904.8 720.1 624.9 421.5 376.7 949.7 624.5 574.3 719.0 223.7 ectroni 5.17 4.72 1 7 8 8 5 9 1 0 0 2 cs Co., Ltd. 5,139 3,518 8,657 3,317 3,786 5,306 3,501 8,808 3,864 4,092 468,9 227,8 ,471, ,086, ,558, ,791, ,702, ,599, ,427, ,026, ,451, ,287, Total 11,82 36,20 943.1 062.3 005.4 104.6 931.6 287.8 050.0 337.8 720.8 922.3 6.98 1.50 8 0 8 7 5 0 1 1 2 2 Unit: RMB Reporting Period Same period of last year Total Cash flows Total Cash flows Name Operating comprehen from Operating comprehen from Net profit Net profit revenue sive operating revenue sive operating income activities income activities Foshan Taimei - Times 70,083,07 1,590,364 1,590,364 72,063,89 1,288,012 63,872.30 63,872.30 86,882.37 Lamps and 7.58 .47 .47 8.77 Lanterns .25 Co., Ltd. FSL Zhida - Electric 105,086,0 5,704,490 5,704,490 3,913,866 79,244,53 3,263,540 3,263,540 5,139,161 Technology 95.87 .75 .75 .98 9.01 .44 .44 Co., Ltd. .29 Foshan Haolaite 33,735,75 2,025,782 2,025,782 7,961,319 41,436,03 1,291,186 1,291,186 1,463,433 Lighting 9.76 .55 .55 .24 5.13 .52 .52 .79 Co., Ltd. Nanning Liaowang 700,818,1 18,187,08 18,351,56 48,642,33 Auto Lamp 99.55 7.80 1.07 2.49 Co., Ltd. Foshan NationStar - 1,664,781 78,987,83 78,905,75 1,729,170 89,810,09 89,803,97 400,434,4 Optoelectro 6,407,001 ,497.45 6.08 6.10 ,417.10 0.36 7.04 51.27 nics Co., .17 Ltd. 2,574,504 106,495,5 106,577,9 52,822,50 1,921,914 94,428,68 94,422,57 396,845,6 Total ,630.21 61.65 54.94 5.29 ,890.01 9.62 6.30 06.14 (4) Significant Restrictions on Using the Assets and Liquidating the Liabilities of the Company Naught (5) Financial Support or Other Supports Provided to Structural Entities Incorporated into the Scope of Consolidated Financial Statements Naught 205 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 2. The Transaction of the Company with Its Owner’s Equity Share Changed but Still Controlling the Subsidiary (1) Note to the Owner’s Equity Share Changed in Subsidiary Naught (2) The Transaction’s Influence on the Equity of Non-controlling Interests and the Owner's Equity Attributable to the Company as the Parent Naught 3. Equity in Joint Ventures or Associated Enterprises (1) Significant Joint Ventures or Associated Enterprises Naught (2) Main Financial Information of Significant Joint Ventures Naught (3) Main Financial Information of Significant Associated Enterprises Naught (4) Summary Financial Information of Insignificant Joint Ventures or Associated Enterprises Unit: RMB Beginning balance/Same period of last Ending balance/Reporting Period year Joint ventures: The total of following items according to the shareholding proportions Associated enterprises: Total carrying value of investment 180,115,189.99 181,545,123.09 The total of following items according to the shareholding proportions --Net profit 650,457.40 37,460.99 --Total comprehensive income 650,457.40 37,460.99 (5) Note to the Significant Restrictions on the Ability of Joint Ventures or Associated Enterprises to Transfer Funds to the Company Naught (6) The Excess Loss of Joint Ventures or Associated Enterprises Naught 206 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (7) The Unrecognized Commitment Related to Investment to Joint Ventures Naught (8) Contingent Liabilities Related to Investment to Joint Ventures or Associated Enterprises Naught 4. Significant Common Operation Naught 5. Equity in the Structured Entity Excluded in the Scope of Consolidated Financial Statements Naught 6. Other Naught X. The Risk Related to Financial Instruments The financial instruments of the Company included: equity investment, notes receivable, accounts receivable, accounts payable, etc. The details of each financial instrument see relevant items of Note V. The main risks of the Company due to financial instruments were credit risk, liquidity risk and market risk. The operating management of the Company was responsible for the risk management target and the recognition of the policies. (I) Credit risk Credit risk was one party of the contract failed to fulfill the obligations and causes loss of financial assets of the other party. The credit risk the Company faced was selling on credit which leads to customer credit risk. The Company will evaluate credit risk of new customer, and set credit limit, once the balance of account receivable over credit limit, require the customer to pay or producing and delivering goods shall be approved by the management of the Company. The Company through monthly aging analysis of account receivable and monitoring the collection situation of the customer ensured the overall credit risk of the Company was in control scope. Once appear abnormal situation, the Company should conduct necessary measures to requesting the payment timely. (II) Liquidity Risk Liquidity risk is referred to their risk of incurring capital shortage when performing settlement obligation in the way of cash payment or other financial assets. The policies of the Company are to ensure that there was sufficient cash to pay the due liabilities. The liquidity risk is centralized controlled by the Financial Department of the Company. The financial department through supervising the balance of the cash and securities can be convert to cash at any time and the rolling prediction of cash flow in future 12 months to ensure the Company have sufficient cash to pay the liabilities under the case of all reasonable prediction, Each financial liability of the Company was estimated due within 1 year. (III) Market risk 207 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Market risk was referred to risk of the fair value or future cash flow of financial instrument changed due to the change of market price, including: exchange rate risk, interest rate risk and other price risk. 1. Exchange rate risk Exchange rate risk refers to the risk of loss due to exchange rate changes. The Company's exposure to foreign exchange risk is mainly related to the US dollar and the euro. As of 30 June 2022, the Company's assets and liabilities were in RMB, except for the balances of usd, euro, Hong Kong dollar and rupiah as set out in this Note VII-82, Foreign Currency Monetary Items. Foreign exchange risk arising from the assets and liabilities of such foreign currency balances may have a certain impact on the Company's operating results. The Company made efforts to avoid exchange rate risk through forward exchange settlement, improving operation management and promoting the international competitiveness of the Company, etc. 2. Interest rate risk Interest rate risk is refers to fluctuation risk of the fair value or future cash flow of financial instrument change due to the change of market interest rates. The interest rate risk faced by the Company mainly comes from bank borrowings. By establishing a good bank-enterprise relationship, the Company reasonably designed the credit line, credit variety and credit period, ensured sufficient credit line of banks, and met various short-term financing needs of the Company with preferential loan interest rates. As of 30 June 2022, the Company's fixed interest rate loan balance was RMB620,550,952.38, accounting for 100% of the total loan balance, and the risks in this part were controllable. 3. Other price risk Naught XI. The Disclosure of Fair Value 1. Ending Fair Value of Assets and Liabilities at Fair Value Unit: RMB Ending fair value Item Fair value Fair value Fair value measurement items at measurement items measurement items Total level 1 at level 2 at level 3 I. Consistent fair value measurement -- -- -- -- (I) Trading financial assets 1,397,612.10 62,670,850.30 64,068,462.40 1. Financial assets at fair value 1,397,612.10 62,670,850.30 through profit or loss 64,068,462.40 (III) Other equity instrument 1,123,157,619.00 41,559,860.92 investment 1,164,717,479.92 Total assets measured at fair value on 1,124,555,231.10 62,670,850.30 41,559,860.92 a recurring basis 1,228,785,942.32 (VII) Refer as financial liabilities measured by fair value and the 6,544,500.00 changes included in the current gains 6,544,500.00 and losses Total liabilities of consistent fair 6,544,500.00 value measurement 6,544,500.00 II. Inconsistent fair value -- -- -- -- measurement 208 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level 1 In line with the market price of shares on the balance sheet date and forward foreign exchange option rate. 3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for Consistent and Inconsistent Fair Value Measurement Items at Level 2 Items measured at fair value level 2 are bank's wealth management products, which are measured at the contractual expected yield rate as a reasonable estimate of the fair value. 4. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for Consistent and Inconsistent Fair Value Measurement Items at Level 3 (1) Because the business environment, operation conditions and financial conditions of the invested company, China Guangfa Bank has not changed significantly, the Company takes investment costs as the reasonable estimation of fair value to measure. (2) Because the business environment, operation conditions and financial conditions of the invested company, Shenzhen Zhonghao (Group) Co., Ltd. were deteriorated, the Company takes zero element as the reasonable estimation of fair value to measure. (3) Since there is no significant change in the operating environment, operation status and financial condition of the investees, including Foshan Nanhai District United Guangdong New Light Source Industrial Innovation Center and Beijing Guangrong Lianmeng Semiconductor Lighting Industry Investment Center, and Guangdong Rising Finance Co., Ltd., the Company's investment cost is measured as a reasonable estimate of the fair value. 5. Sensitiveness Analysis on Unobservable Parameters and Adjustment Information between Beginning and Ending Carrying Value of Consistent Fair Value Measurement Items at Level 3 Naught 6. Explain the Reason for Conversion and the Governing Policy when the Conversion Happens if Conversion Happens among Consistent Fair Value Measurement Items at Different Levels Naught 7. Changes in the Valuation Technique in the Current Period and the Reason for Such Changes Naught 8. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value Financial assets and liabilities not measured at fair value include: monetary assets, accounts receivable and accounts payable, etc. There is small difference between the carrying value of above financial assets and liabilities 209 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 and fair value. 9. Other Naught XII. Related Party and Related-party Transactions 1. The parent company of the Company Proportion of Proportion of share voting rights held by the owned by the Name Registration place Nature of business Registered capital Company as the Company as the parent against the parent against the Company (%) Company (%) Hongkong Wah Hong Kong Investment HKD110,000 Shing Holding 13.84% 13.84% Company Limited Guangdong Guangzhou Production and RMB462 million Electronics sales Information 9.01% 9.01% Industry Group Ltd. Guangdong Rising Guangzhou Investment RMB10 billion Holdings Group 6.10% 6.10% Co., Ltd. Rising Investment Hong Kong Investment RMB200 million Development and HKD1 million 1.87% 1.87% Limited Notes: Information on parent company of the Company Hongkong Wah Shing Holding Company Limited (hereinafter referred to as "Hongkong Wah Shing"), the largest shareholder of the Company, is a wholly-owned subsidiary of Guangdong Electronics Information Industry Group Ltd. (hereinafter referred to as "Electronics Group"), and Electronics Group, Shenzhen Rising Investment Development Co., Ltd. (hereinafter referred to as "Shenzhen Rising"), Guangdong Rising Holdings Group Co., Ltd. (renamed Guangdong Rising Capital Investment Co., Ltd. on 13 December 2021, hereinafter referred to as “Rising Capital”) and Rising Investment Development Limited (hereinafter referred to as “Rising Investment”) are wholly-owned subsidiaries of Guangdong Rising Holdings Group Co., Ltd. (hereinafter referred to as “Rising Holdings Group”). According to the relevant provisions of the Company Law and the Measures for the Administrative Measures on Acquisition of Listed Companies, Electronics Group, Shenzhen Rising, Rising Capital and Rising Investment are concerted actors, and Rising Holdings Group becomes the actual controller of the Company. On 15 December 2021, Shenzhen Rising and Rising Capital transferred all their shares of the Company to Rising Holdings Group. After the transfer, Rising Holdings Group, Electronics Group and Rising Investment acted in concert with each other. As of 30 June 2022, the above-mentioned persons acting in concert held a total of 419,803,826.00 A and B shares of the Company, accounting for 30.82% of the total share capital of the Company. The final controller of the Company is Guangdong Rising Holdings Group Co., Ltd. 210 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 2. Subsidiaries of the Company Refer to Note IX Equity in Other Entities-1. Equity in Subsidiaries for details. 3. Information on the Joint Ventures and Associated Enterprises of the Company Refer to Note IX Equity in Other Entities-3. Equity in Joint Ventures or Associated Enterprises for details of significant joint ventures or associated enterprises of the Company. Information on other joint venture or associated enterprise of occurring related-party transactions with the Company in Reporting Period, or forming balance due to related-party transactions made in previous period: Naught 4. Information on Other Related Parties Name Relationship with the Company Prosperity Lamps & Components Limited Shareholder owning over 5% shares Foshan NationStar Optoelectronics Co., Ltd. (note) Under same actual controller NationStar Optoelectronics (Germany) Co., Ltd. (note) Under same actual controller Guangdong New Electronics Information Import& Export Ltd. Under same actual controller (note) Guangdong Fenghua Advanced Technology (Holding) Co., Ltd. Under same actual controller Guangdong Electronic Technology Research Institute Under same actual controller Guangdong Zhongnan Construction Co., Ltd. Under same actual controller Guangdong Yixin Changcheng Construction Group Under same actual controller Guangdong Zhongren Group Construction Co., Ltd Under same actual controller Shenzhen Yuepeng Construction Co., Ltd. Under same actual controller Foshan Fulong Environmental Technology Co., Ltd. Under same actual controller Jiangmen Dongjiang Environmental Company Limited Under same actual controller Zhuhai Doumen District Yongxingsheng Environmental Industry Waste Recovery and Comprehensive Treatment Co., Under same actual controller Ltd. Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd. Under same actual controller Guangdong Zhongjin Lingnan Equipment Technology Co., Ltd. Under same actual controller Guangdong Rising South Construction Co., Ltd. Under same actual controller Guangdong Electronics Information Industry Group Ltd. Under same actual controller Guangdong Zhongjin Lingnan Junpeng Intelligent Equipment Under same actual controller Co., Ltd. Guangdong Rising Rare Metals and New Photoelectric Under same actual controller Materials Co., Ltd. Guangdong Heshun Property Management Co., Ltd. Under same actual controller Guangdong Zhongjin Construction and Installation Under same actual controller Engineering Co., Ltd. Guangzhou Huajian Engineering Construction Co., Ltd. Under same actual controller Guangdong Heshun Property Management Co., Ltd. The Under same actual controller Pinnacle Branch Guangdong Zhongjin Lingnan Engineering Technology Co., Under same actual controller Ltd. Guangdong Huajian Enterprise Group Co., Ltd. Under same actual controller Guangdong Rising Capital Investment Co., Ltd. Under same actual controller Guangdong Fenghua Advanced Technology (Holding) Co., Ltd. Under same actual controller MTM Semiconductor Equipment Co., Ltd. Under same actual controller Dongguan Hengjian Environmental Protection Technology Co., Under same actual controller Ltd. Shenzhen Longgang Dongjiang Industrial Waste Treatment Under same actual controller Co., Ltd. Guangdong Electronic Technology Research Institute Under same actual controller Guangzhou Wanshun Investment Management Co., Ltd. Under same actual controller 211 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Guangdong The Great Wall Building Co., Ltd. Under same actual controller Guangzhou Shengdu Investment Development Co., Ltd. Under same actual controller Guangdong Rising Finance Co., Ltd. Under same actual controller Hangzhou Times Lighting Electric Appliances Co., Ltd. Enterprise controlled by related natural person Prosperity (China) Electrical Company Limited Enterprise controlled by related natural person Nanning Ruixiang Industrial Investment Co., Ltd. Enterprise significantly affected by related natural person Guangdong Fenghua Advanced Technology (Holding) Co., Ltd. Under same actual controller Nanning Ruixiang Industrial Investment Co., Ltd. Enterprise controlled by related natural person Other notes: Note: Foshan NationStar Optoelectronics Co., Ltd. and its majority-owned subsidiaries NationStar Optoelectronics (Germany) Co., Ltd. and Guangdong New Electronics Information Import& Export Ltd. have been included into the Company’s consolidation scope in Q1 2022. For details, please refer to Note VIII Change in Consolidation Scope-2. Business Combination under the Same Control. 5. List of Related-party Transactions (1) Information on Acquisition of Goods and Reception of Labor Service Information on acquisition of goods and reception of labor service Unit: RMB The approval trade Whether exceed Same period of Related party Content Reporting Period credit trade credit or not last year Foshan NationStar Purchase of Optoelectronics 17,859,909.28 105,000,000.00 Not 26,696,615.70 Co., Ltd. materials Guangdong Fenghua Advanced Purchase of Technology 2,757,010.92 26,100,000.00 Not 6,161,558.19 (Holding) Co., materials Ltd. Prosperity Lamps Purchase of & Components 773,460.05 6,000,000.00 Not 1,317,138.04 Limited materials Hangzhou Times Lighting Electric Purchase of 222,265.48 218,592.85 Appliances Co., materials Ltd. MTM Semiconductor Purchase of 128,389.38 Equipment Co., materials Ltd. Guangdong Zhongnan Receiving labor 42,247,083.75 Construction Co., service Ltd. Guangdong Yixin Changcheng Receiving labor 14,543,474.14 Construction service Group Guangdong Zhongren Group Receiving labor 7,242,570.34 20,000,000.00 Not Construction Co., service Ltd Guangdong Electronic Purchase of 854,625.55 970,000.00 Not 142,300.89 Technology equipment Research Institute 212 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Jiangmen Dongjiang Receiving labor 502,352.82 3,000,000.00 Not 306,333.03 Environmental service Company Limited Shenzhen Yuepeng Receiving labor Construction Co., 470,768.94 377,087.49 Ltd. service Foshan Fulong Environmental Receiving labor 148,191.03 25,471.70 Technology Co., service Ltd. Zhuhai Doumen District Yongxingsheng Environmental Receiving labor Industry Waste 5,660.38 Recovery and service Comprehensive Treatment Co., Ltd. Guangdong Electronic Receiving labor 2,734.91 Technology service Research Institute Guangdong Fenghua Receiving labor Semiconductor 169.90 Technology Co., service Ltd. Total 87,621,712.30 161,070,000.00 35,381,882.56 Information of sales of goods and provision of labor service Unit: RMB Related party Content Reporting Period Same period of last year Prosperity Lamps & Sale of products 11,487,387.08 11,719,058.86 Components Limited NationStar Optoelectronics Sale of products 11,462,187.43 (Germany) Co., Ltd. Guangdong New Electronics Information Import& Export Sale of products 8,159,622.95 28,197,238.34 Ltd. Shenzhen Zhongjin Lingnan Sale of products 607,072.04 951,402.66 Nonfemet Co., Ltd. Guangzhou Wanshun Investment Management Co., Sale of products 538,207.40 Ltd. Guangdong Yixin Changcheng Construction Sale of products 441,210.96 2,881,672.01 Group Guangzhou Shengdu Investment Development Co., Sale of products 281,946.91 Ltd. Guangdong Zhongjin Lingnan Equipment Technology Co., Sale of products 122,855.75 108,659.28 Ltd. Guangdong Rising South Sale of products 69,965.06 Construction Co., Ltd. Guangdong Zhongnan Sale of products 44,383.37 Construction Co., Ltd. Prosperity (China) Electrical Sale of products 41,285.35 21,069.56 Company Limited Guangdong Electronics Information Industry Group Sale of products 27,796.46 8,013.27 Ltd. Guangdong Zhongjin Lingnan Sale of products 5,884.96 213 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Junpeng Intelligent Equipment Co., Ltd. Guangdong Rising Rare Metals and New Photoelectric Sale of products 7,990,158.39 Materials Co., Ltd. Guangdong Heshun Property Sale of products 692,679.04 Management Co., Ltd. Guangdong Zhongjin Construction and Installation Sale of products 108,592.02 Engineering Co., Ltd. Guangdong Rising Holdings Sale of products 21,203.54 Group Co., Ltd. Guangzhou Huajian Engineering Construction Sale of products 6,145.47 Co., Ltd. Total 33,289,805.72 52,705,892.44 (2) Information on Related-party Trusteeship/Contract Lists of trusteeship/contract: Naught Associated hosting/ Contracting situation Naught Lists of entrust/contractee Unit: RMB Charge Name of the Name of the recognized in entruster/contra entrustee/ Type Start date Due date Pricing basis this Reporting ctee contractor Period Guangdong Foshan Zhongren NationStar 30 December 31 December Group Optoelectronics 2020 2022 Construction Co., Ltd. Co., Ltd. Foshan Kelian Guangdong New Energy Zhongnan 23 December 23 June 2021 Technology Construction 2022 Co., Ltd. Co., Ltd. Fozhao Guangdong (Hainan) Zhongnan 30 March 2022 24 April 2023 Technology Construction Co., Ltd. Co., Ltd. Guangdong Foshan Yixin Electrical and 28 February Changcheng 28 May 2021 Lighting Co., 2023 Construction Ltd. Group Co., Ltd. Guangdong Foshan Zhongren Electrical and 17 January Group 28 March 2022 Lighting Co., 2022 Construction Ltd. Co., Ltd. Notes to entrust/contractee: 1. The Company’s subsidiary Foshan NationStar Optoelectronics Co., Ltd. entered into the General Contracting Contract of NationStar Optoelectronics for the Survey, Design, and Construction of the Geely Industrial Park with Guangdong Zhongren Group Construction Co., Ltd., Guangdong Architectural Design & Research Institute Co., Ltd., and CSIC International Engineering Co., Ltd. on 30 December 2020. The above parties take 214 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 charge of the survey, design, and construction of the Geely Industrial Park. The total price of the contract is RMB509,292,500, and the planned total construction period is 720 calendar days. The overall project must be completed, accepted, and filed by 31 December 2022. The project is in progress now. 2. The Company’s subsidiary Foshan Kelian New Energy Technology Co., Ltd. entered into the General Contracting Contract for Design and Construction of the Foshan Kelian Building Decoration Engineering with Guangdong Zhongnan Construction Co., Ltd. and Guangdong Architectural Design & Research Institute Co., Ltd. on 23 June 2021. The above parties take charge of the survey, design and construction of Kelian Building. The total price of the contract is RMB189,070,200, and the planned total construction period is 240 calendar days. The overall project is expected to be completed, accepted and filed by 23 December 2022. Among them, except for the self-used layers, the construction period shall be counted from the date when the construction actually begins. The project is in progress now. 3. The Company’s subsidiary Fozhao (Hainan) Technology Co., Ltd. entered into the General Contracting Contract for Design and Construction of FSL Hainan Industrial Park Phase I with Guangdong Zhongnan Construction Co., Ltd. and Guangdong Architectural Design & Research Institute Co., Ltd. on 30 March 2022. The above parties take charge of the design and construction of FSL Hainan Industrial Park. The total price of the contract is RMB179,051,600, and the planned total construction period is 390 calendar days (50 days for design and 340 days for construction). The project is in progress now. 4. The Company entered into the General Contracting Contract of Foshan Electrical and Lighting Co., Ltd. for the Design and Construction of the Office Buildings of Gaoming Headquarters Production Base Phase II with Guangdong Yixin Changcheng Construction Group Co., Ltd. and Guangdong Architectural Design & Research Institute Co., Ltd. on 28 May 2021. The above parties take charge of the design and construction of Gaoming office buildings. The total price of the contract is RMB175,025,600, and the planned total construction period is 650 calendar days (90 days for design and 560 days for construction). The overall project must be completed, accepted and filed by 28 February 2023. The project is in progress now. 5. The Company entered into the General Contracting Contract of Foshan Electrical and Lighting Co., Ltd. for the Construction of the Renovation Project of the Pipe Network for Rain and Sewage Diversion in Gaoming Production Base with Guangdong Zhongren Group Construction Co., Ltd. on 17 January 2022. The above parties take charge of the renovation construction of the Pipe Network for Rain and Sewage Diversion in Gaoming Production Base. The total price of the contract is RMB7,227,200, and the planned total construction period is 70 calendar days. The overall project was completed on 28 March 2022. At present, the project has been completed and the sewage discharge permission shall be applied for from the governing department before settlement. (3) Information on Related-party Lease The Company was lessor: Naught The Company was lessee: The Company served as the lessee: Rental expenses Variable lease of short-term payments not Income expense lease simplified included in the of lease Increased right- Paid rent treated and low- measurement of liabilities of-use assets Type value asset lease lease liabilities undertaken Name of (if applicable) (if applicable) of assets lessor The The The The The leased Report same Report same Report same Report same Report same ing period ing period ing period ing period ing period Period of last Period of last Period of last Period of last Period of last year year year year year Guangd Operati 109,714 1,557.4 54,673. 215 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 ong ng lease .21 6 41 Great Wall Buildin g Co., Ltd. Notes to related-party lease Naught (4) Information on Related-party Guarantee Naught (5) Information on Inter-bank Lending of Capital of Related Parties Naught (6) Information on Assets Transfer and Debt Restructuring by Related Party Naught (7) Information on Remuneration for Key Management Personnel Unit: RMB Item Reporting period Same period of last year Chairman of the Board 380,814.62 481,467.44 General Manager 355,594.62 471,367.44 Chairman of the Supervisory Committee 335,628.62 454,632.08 Secretary of the Board 227,878.62 32,696.24 Chief Financial Officer 336,094.62 432,129.14 Other 2,924,372.07 3,599,472.96 Total 4,560,383.17 5,471,765.30 (8) Other Related-party Transactions (8.1) Share acquisition from related parties In October 2021, Electronics Group signed the Equity Transfer Agreement with the Company on Foshan Sigma Venture Capital Co., Ltd., and transferred its 100% equity of Sigma (Sigma holds 79,753,050 shares of NationStar Optoelectronics) to the Company at a consideration of RMB917,980,229.67. In the same month, Rising Holdings Group and Rising Capital respectively signed the Share Transfer Agreement on Foshan NationStar Optoelectronics Co., Ltd. with the Company, and transferred their total 52,051,945 tradable shares of NationStar Optoelectronics with unlimited selling conditions to the Company at a consideration of RMB599,117,886.95 (RMB11.51/share). As of 30 June 2022, the Company has paid 100% of the equity acquisition amount. For details of the equity acquisition, please refer to Note VIII-2. Business Combination under the Same Control. (8.2) Related-party deposits and loans In accordance with the Financial Service Agreement signed by the Company in 2021 and the Financial Service Agreement renewed by the Company’s majority-owned subsidiary Foshan NationStar Optoelectronics Co., Ltd. 216 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 in 2022, the total maximum daily deposit balance of the Company deposited in Guangdong Rising Finance Co., Ltd. does not exceed RMB1.2 billion. As of 30 June 2022, the balance of the Company’s deposit in Guangdong Rising Finance Co., Ltd. is RMB455,268,213.16, and the undue interest income receivable is RMB956,827.44. 6. Accounts Receivable and Payable of Related Party (1) Accounts Receivable Unit: RMB Ending balance Beginning balance Item Related party Carrying amount Bad debt provision Carrying amount Bad debt provision Guangdong Rising Deposit interest 956,827.44 1,514,111.47 Finance Co., Ltd. NationStar Accounts Optoelectronics 11,887,227.13 receivable (Germany) Co., Ltd. Guangdong New Electronics Accounts Information 9,876,694.00 10,627,013.80 318,810.41 receivable Import& Export Ltd. Guangdong Rising Accounts Rare Metals and 6,455,385.93 193,661.58 6,455,385.93 193,661.58 receivable New Photoelectric Materials Co., Ltd. Guangdong Yixin Accounts Changcheng 4,920,512.43 400,060.74 5,752,518.74 172,575.56 receivable Construction Group Prosperity Lamps Accounts & Components 4,011,147.66 120,334.43 7,536,111.98 226,083.36 receivable Limited Shenzhen Accounts Zhongjin Lingnan 1,464,123.60 43,923.71 2,621,178.80 78,635.36 receivable Nonfemet Co., Ltd. Guangdong Zhongjin Lingnan Accounts Equipment 703,256.00 50,670.65 670,784.00 46,301.49 receivable Technology Co., Ltd. Guangdong Heshun Property Accounts Management Co., 669,790.40 20,093.71 669,790.40 20,093.71 receivable Ltd. The Pinnacle Branch Guangzhou Shengdu Accounts Investment 318,600.00 receivable Development Co., Ltd. Guangdong Accounts Zhongnan 218,038.46 6,541.15 1,095,727.04 32,871.81 receivable Construction Co., Ltd. Guangdong Rising Accounts South 66,698.32 2,000.95 receivable Construction Co., Ltd. Accounts Guangzhou 44,823.00 9,591.98 44,823.00 4,445.48 receivable Huajian 217 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Engineering Construction Co., Ltd. Guangdong Accounts Heshun Property 2,303.60 230.36 2,303.60 69.11 receivable Management Co., Ltd. Guangdong Zhongjin Lingnan Accounts Engineering 10,118.00 303.54 receivable Technology Co., Ltd. Prosperity (China) Prepayments Electrical 39,428.00 Company Limited Guangdong The Other receivables Great Wall 53,041.92 1,060.84 45,600.00 912.00 Building Co., Ltd. Guangdong New Electronics Other receivables Information 8,865.50 8,865.50 265.97 Import& Export Ltd. Guangdong Other receivables Huajian Enterprise 7,060,000.00 211,800.00 Group Co., Ltd. Guangdong Electronics Other non-current Information 275,394,068.90 assets Industry Group Ltd. Guangdong Rising Other non-current Holdings Group 159,735,852.51 assets Co., Ltd. Guangdong Rising Other non-current Capital Investment 19,999,513.57 assets Co., Ltd. Total 41,696,763.39 848,170.10 499,243,767.24 1,306,829.38 (2) Accounts Payable Unit: RMB Item Related party Ending carrying amount Beginning carrying amount Foshan NationStar Notes payable 2,655,311.08 5,816,952.78 Optoelectronics Co., Ltd. Foshan NationStar Accounts payable 21,058,724.95 13,989,061.63 Optoelectronics Co., Ltd. Guangdong Zhongnan Accounts payable 2,268,254.52 12,370,475.74 Construction Co., Ltd. Guangdong Fenghua Accounts payable Advanced Technology 2,110,641.52 872,962.28 (Holding) Co., Ltd. Prosperity Lamps & Accounts payable 773,460.05 1,337,304.32 Components Limited Hangzhou Times Lighting Accounts payable 238,275.04 178,185.14 Electric Appliances Co., Ltd. Guangdong Yixin Accounts payable Changcheng Construction 26,170.28 3,698,122.01 Group Prosperity (China) Electrical Accounts payable 567,218.00 Company Limited Guangdong Zhongren Group Other payables 73,816,998.27 163,292,707.38 Construction Co., Ltd Other payables Guangdong Huajian 1,726,264.40 1,726,264.40 218 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Enterprise Group Co., Ltd. Guangdong Electronic Other payables 660,625.55 -194,000.00 Technology Research Institute Shenzhen Yuepeng Other payables 140,000.00 298,300.64 Construction Co., Ltd. Dongjiang Environmental Other payables Company Limited and its 47,816.00 118,352.30 holding subsidiary Guangdong Fenghua Other payables Advanced Technology 30,000.00 30,000.00 (Holding) Co., Ltd. Nanning Ruixiang Industrial Other payables 120,352,181.20 120,352,181.20 Investment Co., Ltd. Guangdong Electronic Other payables 391,025.00 Technology Research Institute Foshan NationStar Other payables 230,354.07 240,354.07 Optoelectronics Co., Ltd. Contract liabilities, other Prosperity (China) Electrical 21,369.20 59,428.00 current liabilities Company Limited Contract liabilities, other Guangdong Rising South 9,936.00 3,233.00 current liabilities Construction Co., Ltd. Contract liabilities, other Guangdong Heshun Property 2,303.60 2,303.60 current liabilities Management Co., Ltd. Total 226,168,685.73 325,150,431.49 7. Commitments of Related Party 1. Commitment on Avoidance of Horizontal Competition (1) Commitment maker: Electronics Group and Hong Kong Rising Investment Contents of Commitment: Electronics Group and its acting-in-concert parties Hong Kong Rising Investment have made more commitments as follows to avoid horizontal competition with the Company: 1. They shall conduct supervision and restraint on the production and operation activities of themselves and their relevant enterprises so that besides the enterprise above that is in horizontal competition with the Company for now, if the products or business of them or their relevant enterprises become the same with or similar to those of the Company or its subsidiaries in the future, they shall take the following measures: (1) If the Company thinks necessary, they and their relevant enterprises shall reduce and wholly transfer their relevant assets and business; and (2) If the Company thinks necessary, it is given the priority to acquire first, by proper means, the relevant assets and business of them and their relevant enterprises. 2. All the commitments made by them to eliminate or avoid horizontal competition with the Company are also applicable to their directly or indirectly controlled subsidiaries. They are obliged to urge and make sure that other subsidiaries execute what’s prescribed in the relevant document and faithfully honor all the relevant commitments. 3. If they or their directly or indirectly controlled subsidiaries break the aforesaid commitments and thus cause a loss for the Company, they shall compensate the Company on a rational basis. Date of commitment making: 4 December 2015 Term of commitment: Long-standing Fulfillment: In execution (2) Commitment maker: Rising Group Contents of Commitment: 1. The Promisor will take active measures to avoid any business or activity that competes or may compete with the principal business of the Company and its auxiliary enterprises, and urge the Promisor to control enterprises to avoid any business or activity that competes or may compete with the principal business of the Company and its auxiliary enterprises. 2. If the Promisor and its controlled enterprises are given the opportunity to engage in new business that constitutes or may constitute horizontal competition with the 219 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 principal businesses of the Company and its auxiliary enterprises, the Promisor will make every effort to make the business opportunity first available to the Company or its auxiliary enterprises on reasonable and fair terms and conditions on the premise that conditions permit and in the interest of the listed company. Date of commitment making: 4 November 2021 Term of commitment: Long-standing Fulfillment: In execution (3)Commitment maker: Rising Group, Rising Capital, and Hongkong Wah Shing Contents of Commitment: 1. They shall conduct supervision and restraint on the production and operation activities of themselves and their relevant enterprises so that besides the enterprise above that is in horizontal competition with FSL for now, if the products or business of them or their relevant enterprises become the same with or similar to those of FSL or its subsidiaries in the future, they shall take the following measures: (1) If FSL thinks necessary, they and their relevant enterprises shall reduce and wholly transfer their relevant assets and business; and (2) If FSL thinks necessary, it is given the priority to acquire first, by proper means, the relevant assets and business of them and their relevant enterprises. 2. All the commitments made by them to eliminate or avoid horizontal competition with FSL are also applicable to their directly or indirectly controlled subsidiaries. They are obliged to urge and make sure that other subsidiaries execute what’s prescribed in the relevant document and faithfully honor all the relevant commitments. 3. If they or their directly or indirectly controlled subsidiaries break the aforesaid commitments and thus cause a loss for FSL, they shall compensate FSL on a rational basis. Date of commitment making: 27 October 2021. Term of commitment: Long-standing. Fulfillment: In execution. 2. Commitment on Reduction and Regulation of Related-party Transactions (1) Commitment maker: Electronics Group and Hong Kong Rising Investment Contents of Commitment: Electronics Group and its acting-in-concert parties Hongkong Wah Shing and Hong Kong Rising Investment have made a commitment that during their direct or indirect holding of the Company’s shares, they shall 1. Strictly abide by the regulatory documents of the CSRC and the SZSE, the Company’s Articles of Association, etc. and not harm the interests of the Company or other shareholders of the Company in their production and operation activities by taking advantage of their position as the controlling shareholder and actual controller; 2. make sure that they or their other controlled subsidiaries, branch offices, jointly-run or associated companies (the “Relevant Enterprises” for short) will try their best to avoid or reduce related-party transactions with the Company or the Company’s subsidiaries; 3. strictly follow the market principle of justness, fairness and equal value exchange for necessary and unavoidable related-party transactions between them and their Relevant Enterprises and the Company, and withdraw from voting when a related-party transaction with them or their Relevant Enterprises is being voted on at a general meeting or a board meeting, and execute the relevant approval procedure and information disclosure duties pursuant to the applicable laws, regulations and regulatory documents. Where the aforesaid commitments are broken and a loss is thus caused for the Company, its subsidiaries or the Company’s other shareholders, they shall be obliged to compensate. Date of commitment making: 4 December 2015 Term of commitment: Long-standing Fulfillment: In execution (2) Commitment maker: Rising Group Contents of Commitment: 1. Strictly abide by the regulatory documents of the CSRC and the SZSE, the Company’s Articles of Association, etc; and not harm the interests of the Company or other shareholders of the Company in their production and operation activities by taking advantage of their position as the controlling 220 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 shareholder and actual controller; 2. make sure that they or their other controlled subsidiaries, branch offices, jointly-run or associated companies (the "Relevant Enterprises" for short) will try their best to avoid or reduce related-party transactions with the Company or the Company’s subsidiaries; 3. strictly follow the market principle of justness, fairness and equal value exchange for necessary and unavoidable related-party transactions between them and their Relevant Enterprises and the Company, and withdraw from voting when a related-party transaction with them or their Relevant Enterprises is being voted on at a general meeting or a board meeting, and execute the relevant approval procedure and information disclosure duties pursuant to the applicable laws, regulations and regulatory documents. Date of commitment making: 4 November 2021 Term of commitment: Long-standing Fulfillment: In execution (3)Commitment maker: Rising Group, Rising Capital, and Hongkong Wah Shing Contents of Commitment: They have made a commitment that during their direct or indirect holding of FSL activities of themselvesstrictly abide by the regulatory documents of the CSRC and the SZSE,FSL’s Articles of Association, etc. and not harm the interests of the Company or other shareholders of FSL in their production and operation activities by taking advantage of their position as the controlling shareholder and actual controller; 2. make sure that they or their other controlled subsidiaries, branch offices, jointly-run or associated companies (the "Relevant Enterprises" for short) will try their best to avoid or reduce related-party transactions with FSL or FSL’s subsidiaries; 3. strictly follow the market principle of justness, fairness and equal value exchange for necessary and unavoidable related-party transactions between them and their Relevant Enterprises and FSL, and withdraw from voting when a related-party transaction with them or their Relevant Enterprises is being voted on at a general meeting or a board meeting, and execute the relevant approval procedure and information disclosure duties pursuant to the applicable laws, regulations and regulatory documents. Where the aforesaid commitments are broken and a loss is thus caused for FSL, its subsidiaries or FSL’s other shareholders, they shall be obliged to compensate. Date of commitment making: 27 October 2021. Term of commitment: Long-standing. Fulfillment: In execution. 3. Commitment on Independence (1) Commitment maker: Electronics Group and Hong Kong Rising Investment Contents of Commitment: In order to ensure the independence of FSL in business, personnel, asset, organization and finance, Electronics Group and Hong Kong Rising Investment have made the following commitments: 1. They will ensure the independence of FSL in business: (1) They promise that FSL will have the assets, personnel, qualifications and capabilities for it to operate independently as well as the ability of independent, sustainable operation in the market. (2) They promise not to intervene in FSL’s business activities other than the execution of their rights as FSL’s shareholders. (3) They promise that they and their related parties will not be engaged in business that is substantially in competition with FSL’s business. And (4) They promise that they and their related parties will try their best to reduce related-party transactions between them and FSL; for necessary and unavoidable related-party transactions, they promise to operate fairly following the market-oriented principle and at fair prices, and execute the transaction procedure and the duty of information disclosure pursuant to the applicable laws, regulations and regulatory documents. 2.They will ensure the independence of FSL in personnel: (1) They promise that FSL’s GM, deputy GMs, CFO, Company Secretary and other senior management personnel will work only for and receive remuneration from FSL, not holding any positions in them or their other controlled subsidiaries other than director and supervisor. (2) They promise FSL’s absolute independence from their related 221 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 parties in labor, human resource and salary management. And (3) They promise to follow the legal procedure in their recommendation of directors, supervisors and senior management personnel to FSL and not to hire or dismiss employees beyond FSL’s Board of Directors and General Meeting. 3. They will ensure the independence and completeness of FSL in asset: (1) They promise that FSL will have a production system, an auxiliary production system and supporting facilities for its operation; legally have the ownership or use rights of the land, plants, machines, trademarks, patents and non-patented technology in relation to its production and operation; and have independent systems for the procurement of raw materials and the sale of its products. (2) They promise that FSL will have independent and complete assets all under FSL’s control and independently owned and operated by FSL. And (3) They promise that they and their other controlled subsidiaries will not illegally occupy FSL’s funds and assets in any way, or use FSL’s assets to provide guarantees for the debts of themselves or their other controlled subsidiaries with. 4. They will ensure the independence of FSL in organization: (1) They promise that FSL has a sound corporate governance structure as a joint-stock company with an independent and complete organization structure. (2) They promise that the operational and management organs within FSL will independently execute their functions according to laws, regulations and FSL’s Articles of Association. 5. They will ensure the independence of FSL in finance: (1) They promise that FSL will have an independent financial department and financial accounting system with normative, independent financial accounting rules. (2) They promise that FSL will have independent bank accounts and not share bank accounts with its related parties. (3) They promise that FSL’s financial personnel do not hold concurrent positions in its related parties. (4) They promise that FSL will independently pay its tax according to law. And (5) They promise that FSL can make financial decisions independently and that they will not illegally intervene in FSL’s use of its funds. Date of commitment making: 4 December 2015 Term of commitment: Long-standing Fulfillment: In execution (2) Commitment maker: Rising Group Contents of Commitment: To maintain the independence of the Company, the Promisor has made the following commitments: 1. It will ensure the personnel independence of the Company. It promises to ensure personnel independence with the Company, and GM, deputy GMs, CFO, Secretary of the Board of Directors and other senior management personnel of the Company will not hold positions other than directors and supervisors in the enterprises wholly owned, controlled or actually controlled by it and its subsidiaries (hereinafter referred to as "subsidiaries"), and will not receive salaries from it or its subsidiaries. the Company: To maintain the independence of the Company, the Promisor has made the following commitments: 1. It will ensure the personnel independence of the Company. It promises to ensure personnel independence with the Company, and GM, depnd (2) It promises that it and its subsidiaries will not illegally occupy the Company’s funds and assets in any way. 3. It will ensure the financial independence of the Company: (1) It promises that the Company will have an independent financial department and financial accounting system. (2) It promises that the Company will have a standardized and independent financial accounting system. (3) It promises that the Company will have independent bank accounts and not share bank accounts with it. (4) It promises that the Company’s financial personnel do not hold concurrent positions in it or its subsidiaries. And (5) It promises that the Company can make financial decisions independently and that they will not illegally intervene in the Company’s use of its funds. 4. It will ensure the independence of the Company in organization: (1) It promises that the Company can operate independently with an independent and complete organization structure. (2) It promises that the office and production and business premises of the Company are separated from those of Rising Holdings Group. And (3) It promises that the Board of Directors, the Supervisory Committee and various functional departments of the Company operate independently, and there is no subordinate relationship with the functional departments of 222 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Rising Holdings Group. And 5, It will ensure the independence of the Company in business: (1) It promises that the Company will have independence in business. And (2) It promises that the Company will have the assets, personnel, qualifications and capabilities for it to operate independently as well as the ability of independent, sustainable operation in the market. Date of commitment making: 4 November 2021 Term of commitment: Long-standing Fulfillment: In execution 4. Commitment on effective performance of measures to fill up returns Commitment maker: Rising Group, Rising Capital, Electronics Group, Hongkong Wah Shing, Hong Kong Rising Investment and Shenzhen Rising Investment Contents of Commitment: 1. They promise not to interfere in the operation and management activities of the listed company beyond their authority and not to encroach on the interests of the listed company. 2. From the date of issuance of these commitments to the completion of this trading of the listed company, if the CSRC makes new regulatory requirements on measures to fill up returns and commitments of relevant personnel, and the above commitments cannot meet these new regulatory requirements of the CSRC, they promise to issue supplementary commitments according to the latest regulations of the CSRC at that time. 3. They promise to earnestly fulfill the measures to fill up returns formulated by the listed company and any commitments made by them. If they violate these commitments and causes losses to the listed company or investors, they are willing to bear the compensation responsibility for the listed company or investors according to law. As one of the subjects responsible for the measures to fill up returns, if they violate the above commitments or refuses to fulfill the above commitments, they agree that the securities regulatory agencies such as the CSRC and the SZSE will punish them or take relevant regulatory measures in accordance with the relevant regulations and rules they formulated or issued. Date of commitment making: 27 October 2021. Term of commitment: Long-standing. Fulfillment: In execution. 5. Commitment on non-reduction of FSL shares during major asset restructuring Commitment maker: Rising Group, Rising Capital, Electronics Group, Hongkong Wah Shing, Hong Kong Rising Investment and Shenzhen Rising Investment Contents of Commitment: 1. They promise that there will be no share reduction plan from the date of issuance of this Letter of Commitments to the completion of this trading, and they will not reduce its FSL shares in any other way (except the transfer or transfer between Rising Holdings Group and its wholly-owned subsidiaries). 2. If FSL implements ex-rights behaviors such as share conversion, share offering and share allotment from the date of issuance of this Letter of Commitments to the completion of this trading, the newly added shares obtained by them will also be subject to the above commitments related to not reducing share holdings. Date of commitment making: 28 September 2021. Term of commitment: Until the completion of this trading. Fulfillment: Complete 6. Commitment on compensation for possible violations of laws and regulations by NationStar Optoelectronics Commitment maker: Rising Holdings Group, Electronics Group, and Rising Capital Contents of Commitment: If NationStar Optoelectronics is subject to administrative penalties such as accountability and fines by relevant competent departments after the completion of this trading due to the illegal acts of NationStar Optoelectronics before the completion of this acquisition, they promise to fully bear the losses of NATIONSTAR or FSL, as well as the expenses and fees under punishment or recourse, to ensure that 223 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 NationStar Optoelectronics or FSL will not suffer any economic losses. Date of commitment making: 27 October 2021. Term of commitment: Long-standing. Fulfillment: In execution. 7. Commitment on explanation of confidentiality measures and confidentiality system adopted for this trading Commitment maker: Rising Group, Electronics Group, and Rising Capital Contents of Commitment: 1. During the preliminary negotiation between the listed company and the counterparty on this trading, necessary and sufficient confidentiality measures were taken to limit the scope of knowledge of relevant sensitive information. According to the requirements of the SZSE, the listed company have completed the submission and online reporting of the memorandum of trading process, relevant materials of insider information insiders. The listed company have hired independent financial advisers, legal advisers, audit institutions, valuation institutions and other intermediaries, and signed confidentiality agreements or appointment agreements with confidentiality clauses with the above intermediaries, clearly stipulating the scope of confidential information and the confidentiality responsibilities of each intermediary. Date of commitment making: 27 October 2021. Term of commitment: Until the completion of this trading. Fulfillment: Complete. 8. Commitment on the truthfulness, accuracy and completeness of the information provided during this major asset restructuring (1) Commitment maker: Rising Group, Electronics Group, and Rising Capital Contents of Commitment: 1. They promise that the information provided is true, accurate and complete, and there are no false records, misleading statements or material omissions. 2. They have provided relevant information and documents (including but not limited to original written materials, duplicate materials or oral testimony, etc.) related to this trading to the intermediaries. They promise that the copies or photocopies of the documents and materials provided are consistent with the originals, and that the signatures and seals of the documents and materials are authentic, and the signatories of the documents have been legally authorized and effectively signed the documents; that there are no false records, misleading statements or material omissions. 3. They promise that the explanations and confirmations issued by them are true, accurate and complete, and there are no false records, misleading statements or material omissions. 4. During this trading, they will disclose the information about this trading in a timely manner in accordance with relevant laws and regulations, the CSRC and the SZSE, and ensure the authenticity, accuracy and completeness of such information. 5. They shall bear legal responsibility for the authenticity, accuracy and completeness of the information, documents, materials, explanations and confirmations provided. In case of any violation or losses caused to the listed company, investors, parties to the trading and intermediaries participating in this trading, they will be liable for compensation according to law. 6. Where the information provided or disclosed by them in this trading is suspected of false records, misleading statements or material omissions, and they are filed for investigation by the judicial organ or by the CSRC, the shares with interests in the listed company will not be transferred until the investigation conclusion is formed. Date of commitment making: 27 October 2021. Term of commitment: Long-standing. Fulfillment: In execution. (2) Commitment maker: NationStar Optoelectronics Contents of Commitment: NationStar Optoelectronics has provided the necessary, true, accurate, complete and effective documents, materials or oral statements and explanations for this trading at this stage, and there is no 224 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 concealment, falsehood or material omission. The copies or photocopies of the documents provided are consistent with the original materials or originals. The signatures and seals on the documents and materials provided are authentic, and NationStar Optoelectronics has fulfilled the legal procedures required for such signatures and seals and obtained legal authorization. All the facts stated and explained are consistent with the facts that happened. Date of commitment making: 27 October 2021. Term of commitment: Long-standing. Fulfillment: In execution. (3)Commitment maker: Sigma Contents of Commitment: 1. Sigma has provided relevant information and documents (including but not limited to original written materials, duplicate materials or oral testimony, etc.) related to this trading to the intermediaries providing professional services of auditing, valuation, legal and financial consultancy for this trading. Sigma promises that the copies or photocopies of the documents and materials provided are consistent with the originals, and that the signatures and seals of the documents and materials are authentic, and the signatories of the documents have been legally authorized and effectively signed the documents; that the provided information and documents are authentic, accurate and complete and that there are no false records, misleading statements or material omissions. FSL also promises to bear individual and joint and several liability. 2. Sigma promises that the information provided is true, accurate and complete. In case of any losses caused to investors due to any false presentations, misleading statements or material omissions in the information provided, Sigma will be liable for compensation according to law. Date of commitment making: 27 October 2021 Term of commitment: Long-standing.. Fulfillment: In execution. 9. Commitment on the clarity of the underlying assets of this major asset restructuring (1) Commitment maker: Electronics Group Contents of Commitment: Electronics Group promises that the 100% equity of Sigma it held is clear in ownership and is not subject to any dispute or potential dispute, and there is no situation affecting its legal existence; and there is no pending or potential litigation, arbitration and any other administrative or judicial procedure that may lead to the seizure, freezing, expropriation or restriction of transfer of the above-mentioned equity by the relevant judicial or administrative organs. There is no entrusted shareholding or trust shareholding, restriction or prohibition of transfer of the above-mentioned equity controlled by Electronics Group. Date of commitment making: 27 October 2021. Term of commitment: Long-standing. Fulfillment: In execution. (2) Commitment maker: Rising Group Contents of Commitment: Rising Group promises that 46,260,021 shares of NationStar Optoelectronics it held is clear in ownership and is not subject to any dispute or potential dispute, and there is no situation affecting its legal existence; the above shares are not subject to any other pledges, guarantees or third-party interests or restrictions and there is no pending or potential litigation, arbitration and any other administrative or judicial procedure that may lead to the seizure, freezing, expropriation or restriction of transfer of the above-mentioned equity by the relevant judicial or administrative organs. There is no entrusted shareholding or trust shareholding, restriction or prohibition of transfer of the above-mentioned equity controlled by Rising Group. Date of commitment making: 27 October 2021. Term of commitment: Long-standing. Fulfillment: In execution. 225 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (3) Commitment maker: Rising Capital Contents of Commitment: Rising Capital promises that 5,791,924 shares of NationStar Optoelectronics it held is clear in ownership and is not subject to any dispute or potential dispute, and there is no situation affecting its legal existence; the above shares are not subject to any other pledges, guarantees or third-party interests or restrictions and there is no pending or potential litigation, arbitration and any other administrative or judicial procedure that may lead to the seizure, freezing, expropriation or restriction of transfer of the above-mentioned equity by the relevant judicial or administrative organs. There is no entrusted shareholding or trust shareholding, restriction or prohibition of transfer of the above-mentioned equity controlled by Rising Group. Date of commitment making: 27 October 2021. Term of commitment: Long-standing. Fulfillment: In execution. (4)Commitment maker: Sigma Contents of Commitment: Among 79,753,050 shares of tradable shares with unlimited selling conditions of NationStar Optoelectronics held by Sigma, 39,876, 500 shares were pledged for Guangdong Electronics Information Industry Group Ltd. As of the date of issuance of this commitment, the pledge of the above shares has been released. However, the Maximum Pledge Contract for Stocks of Listed Companies (No.: XYYZZ (BY) No.201906280001-2) signed by Sigma and Guangzhou Branch of Industrial Bank Co., Ltd. has not been dissolved. Guangdong Electronics Information Industry Group Ltd. has promised that it will not add any new loans to Guangzhou Branch of Industrial Bank Co., Ltd. as a borrower during the validity period of the guarantee, and that it will not substantially assume any guarantee responsibility due to the Maximum Pledge Contract for Stocks of Listed Companies. Except as aforesaid, the asset ownership of Sigma is clear, there is no dispute or potential dispute, and there is no situation affecting the legal existence. There is no entrusted shareholding or trust shareholding, restriction or prohibition of transfer of the above-mentioned equity controlled by Rising Holdings Group. Date of commitment making: 27 October 2021 Term of commitment: Long-standing. Fulfillment: In execution. 10. Commitment on compliance of this major asset restructuring with Several Provisions on the Reduction of Shares by Shareholders, Directors and Supervisors of Listed Companies Commitment maker: Rising Group and Rising Capital Contents of Commitment: 1. They are not subject to any securities and futures crimes as stipulated in Article 6 of Several Provisions on the Reduction of Shares by Shareholders, Directors and Supervisors of Listed Companies. During the period when the CSRC or the judicial organ filed a case for investigation, and less than six months after the administrative penalty decision and criminal judgment were made, there was no situation that the shares of NATIONSTAR could not be reduced due to violation of the rules of stock exchanges and public censure by stock exchanges for less than three months. 2. In case of any violation or losses caused to NATIONSTAR, investors, parties to the trading and intermediaries participating in this trading, they will be liable for compensation according to law. Date of commitment making: 27 October 2021. Term of commitment: Until the completion of this trading. Fulfillment: Complete. 11. Commitment on the release of credit guarantee Commitment maker: Electronics Group Contents of Commitment: 1. As of the date of issuance of the Letter of Commitments, Sigma has signed the 226 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Maximum Guarantee Contract (Contract No.: XYYBZ (BY) No.201906280001-1) and the Maximum Pledge Contract for Stocks of Listed Companies (Contract No.: XYYZZ (BY) No.201906280001-2) with Guangzhou Branch of Industrial Bank Co., Ltd. Sigma will provide the maximum guarantee and pledge guarantee for the debt of Electronics Group, with the guarantee amount of RMB400 million (in words: RMB Four Hundred Million), and the guarantee will be valid from 28 June 2019 to 27 June 2022. Electronics Group promises that on the date of issuance of this Letter of Commitment, all the loans involved in the Maximum Guarantee Contract and the Maximum Pledge Contract for Stocks of Listed Companies have been repaid, there is no debt based on the guarantee under the above contracts, and 39,876,500 shares of NationStar Optoelectronics held by Sigma have been released from pledge. At the same time, Electronics Group further makes an irrevocable commitment that it will not add any new loans to Guangzhou Branch of Industrial Bank Co., Ltd. as a borrower before the expiration date of the Maximum Guarantee Contract and the Maximum Pledge Contract for Stocks of Listed Companies, so as to ensure that Sigma will not actually assume any guarantee responsibilities due to the above guarantee contracts. 2. Electronics Group promises that it will not arrange for Sigma to add any form of guarantee before the completion of the delivery of Sigma's equity in this trading. 3. In case of any violations of the above commitments, Electronics Group shall solve and eliminate the above situation within ten days, and bear corresponding legal responsibilities to Sigma and FSL. Date of commitment making: 27 October 2021 Term of commitment: Until the completion of this trading. Fulfillment: Complete. 12. Commitment on no ownership dispute in equity Commitment maker: Sigma Contents of Commitment: 1. Sigma promises that all its registered capital has been paid in. 2. Sigma promises that all existing shareholders contribute their own funds to hold shares, there is no situation such as holding shares on behalf of them, and there is no dispute or potential dispute between shareholders over their shares. Date of commitment making: 27 October 2021 Term of commitment: Long-standing. Fulfillment: In execution. 13.About absence of insider trading Commitment maker: Key management personnel of Rising Group, Electronics Group, and Rising Capital Contents of Commitment: They promise that they will not disclose the relevant insider information of this trading or make use of the insider information for insider trading; 2. As of the issuance date of the Report on Major Asset Purchase and Related Party Trading of Foshan Electrical and Lighting Co., Ltd. (Draft), they have not been placed on file for investigation or criminal investigation due to suspected insider trading related to this trading, and have not been subject to administrative punishment by the CSRC or criminal responsibility investigated by judicial organs according to law for insider trading related to any major asset restructuring, and have not been prohibited from engaging in any major asset restructuring of listed companies according to Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed Companies in the last 36 months; 3. In case of violation of the above commitments, they will bear all losses caused to the listed company and its shareholders. Date of commitment making: 27 October 2021 Term of commitment: From the date of the issuance of the letter of commitment until the completion of this trading Fulfillment: Complete. 8. Other Naught 227 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 XIII. Stock Payment 1. The Overall Situation of Stock Payment □Applicable Not applicable 2. The Stock Payment Settled in Equity □Applicable Not applicable 3. The Stock Payment Settled in Cash □Applicable Not applicable 4. Modification and Termination of the Stock Payment Naught 5. Other Naught XIV. Commitments and Contingency 1. Significant Commitments Significant commitments on the balance sheet date Naught 2. Contingency (1) Significant Contingency on Balance Sheet Date Refer to VIII Legal Matters in Part VI of this Report for details. (2) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make Relevant Statements There was no significant contingency in the Company. 3. Other As of 30 June 2022, guarantees of subsidiaries were as follows (RMB’0,000): Principal Principal debtor Guarantor Type of guarantee Guarantee amount Guarantee balance debtee Nanning Nanning Kuang Linchang, Liang Xiaoling, Yang Joint-liability Liaowang (note Branch of Shiyue, Gu Hanhua, Qingdao Lighting, guarantee 20,000.00 0.00 1) Industrial Liuzhou Lighting, Chongqing Guinuo Bank 228 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Nanning Far Eastern Nanning Liaowang, Qingdao Lighting, Joint-liability Liaowang (note International Liuzhou Lighting, Kuang Linchang, guarantee 2) Financial Liang Xiaoling, Yang Shiyue, Gu 2,600.00 375.01 Leasing Co., Hanhua Ltd. Liuzhou Lighting Nanning Nanning Liaowang, Liuzhou Lighting, Joint-liability (note 3) Branch of Kuang Linchang, Liang Xiaoling, Yang guarantee 15,000.00 0.00 Industrial Shiyue, Gu Hanhua Bank Chongqing Far Eastern Nanning Liaowang, Qingdao Lighting, Joint-liability Guinuo (note 4) International Liuzhou Lighting, Kuang Linchang, guarantee Financial Liang Xiaoling, Yang Shiyue, Gu 3,999.00 757.06 Leasing Co., Hanhua Ltd. Nanning Liaowang, Nanning Liuzhou Branch of Nanning Liaowang Auto Lamp Co., Mortgage 4,500.00 4,500.00 Foreshine, Industrial Ltd. Liuzhou Lighting Bank (note 5) Nanning Nanning Liaowang (note Branch of Chongqing Guinuo Lighting Mortgage 8,100.00 5,000.00 6) Industrial Technology Co., Ltd. Bank Nanning Nanning Liaowang, Branch of Liuzhou Guige Lighting Technology Liuzhou Fuxuan, Mortgage 9,100.00 3,500.00 Industrial Co., Ltd. Liuzhou Lighting Bank (note 7) Foshan Branch NationStar of China Foshan NationStar Optoelectronics Co., Joint-liability Semiconductor 30,000.00 0.00 Merchants Ltd. guarantee (note 8) Bank Total —— —— —— 93,299.00 14,132.07 Note 1: Nanning Liaowang and Nanning Branch of Industrial Bank signed the Working Capital Loan Contract (XYGCBLJ Zi (2021) No.1001), with a loan amount of RMB47.7 million (from 1 February 2021 to 1 February 2022). This guarantee has been terminated. Kuang Linchang, Liang Xiaoling, Yang Shiyue, Gu Hanhua, Qingdao Lighting, Liuzhou Guige Lighting and Chongqing Guinuo jointly assume joint and several guarantee liabilities for all creditor's rights balances under the maximum principal limit of RMB200 million, and the guarantee amount is valid from 30 December 2019 to 30 December 2024. This guarantee has been terminated on 1 February 2022. Note 2: On 18 May 2020, Nanning Liaowang and Far East International Financial Leasing Co., Ltd. (hereinafter referred to as "Far East Leasing") signed the Sale Lease Contract (Contract No.: IFELC20DE24MZT-L-01), with a financing loan amount of RMB26 million, and the actual loan amount obtained was RMB24 million (the difference with the financing loan amount was RMB2 million as a deposit, which was withheld by Far East Leasing), and the loan term of finance lease is 30 months. Liuzhou Guige Lighting, Qingdao Lighting, Yang Shiyue, Gu Hanhua, Kuang Linchang and Liang Xiaoling provide joint and several liability guarantee for this financing loan. Nanning Liaowang signed the Ownership Transfer Agreement with Far East Leasing. According to the General Terms and Conditions of the Sale and Return Lease Contract: Under the condition that Party B (Nanning Liaowang, the same below) enjoys all the rights under this contract and does not affect Party B's normal use, Party A (Far East Leasing, the same below) may transfer its ownership of the leased items to any third party, or mortgage the leased items and other guarantees, and the validity of the contract will not be affected. Party A undertakes not to adversely affect Party B's rights (especially the performance of this contract) due to the transfer/mortgage. Party B shall perform this contract according to the contract, and Party A shall guarantee that Party B shall have the right to use the leased items and the ownership after the expiration of the lease period according to the contract. 229 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Note 3: Liuzhou Guige Lighting and Nanning Branch of Industrial Bank signed loan contracts numbered WYZH2021012600174, WYZH2021042100164 and WYZH2021042100146, borrowing RMB10 million (from 26 January 2021 to 26 January 2022), RMB20 million (from 21 April 2021 to 21 April 2022), and RMB20 million (from 22 April 2021 to 22 April 2022) respectively. This guarantee has been terminated. Nanning Liaowang, Kuang Linchang, Liang Xiaoling, Yang Shiyue and Gu Hanhua provide joint and several liability guarantee with the maximum balance of principal creditor's rights not exceeding RMB150 million exposure, and the guarantee amount is valid from 30 December 2019 to 30 December 2024. This guarantee has been terminated on 22 April 2022. Note 4: On 21 June 2020, Chongqing Guinuo signed the Sale and Return Lease Contract with Far East Leasing (Contract No.: IFELC20DE2XZXM-L-01), with a financing loan amount of RMB39.9 million and an actual loan amount of RMB35.99 million (the difference with the financing loan amount is RMB4 million as a deposit, which is withheld by Far East Leasing), and the loan term of finance lease is 30 months. This financial lease loan is mortgaged by Chongqing Guinuo with 28 fixed assets and 104 molds owned by itself. Chongqing Guinuo signed the Ownership Transfer Agreement with Far East Leasing, and Nanning Liaowang, Liuzhou Guige Lighting, Qingdao Lighting, Liang Xiaoling, Yang Shiyue, Gu Hanhua and Kuang Linchang provided joint and several liability guarantee for the lease loan. According to the General Terms and Conditions of the Sale and Return Lease Contract: Under the condition that Party B (Chongqing Guinuo, the same below) enjoys all the rights under this contract and does not affect Party B's normal use, Party A (Far East Leasing, the same below) may transfer its ownership of the leased items to any third party, or mortgage the leased items and other guarantees, and the validity of the contract will not be affected. Party A undertakes not to adversely affect Party B's rights (especially the performance of this contract) due to the transfer/mortgage. Party B shall perform this contract according to the contract, and Party A shall guarantee that Party B shall have the right to use the leased items and the ownership after the expiration of the lease period according to the contract. Note 5: Nanning Liaowang Auto Lamp Co., Ltd. (Nanning Liaowang) and Nanning Branch of Industrial Bank Co., Ltd. entered into the Maximum Financing Agreement (X.Y.G.CH.B.R.Z.Z. [2022] No. (01)) to conduct a bill transaction of RMB45 million. Nanning Liaowang provides mortgage guarantee with the immovable property owned as collateral, and the balance of its creditor's rights does not exceed the maximum mortgage principal of RM72,344,400 in the original guarantee contract. The mortgage amount is valid from 23 June 2020 to 23 June 2025. This guarantee has been terminated on 24 April 2022. In the new guarantee contract, Nanning Liaowang provides mortgage guarantee with the immovable property owned as collateral, and the balance of its creditor’s rights does not exceed the maximum mortgage principal of RMB69,139,100. The mortgage amount is valid from 25 April 2022 to 31 December 2025 and the guarantee amount is RMB45 million. The mortgaged real estate is a) YG (2017) NNSBDCQZ No.0065501; b) EG (2017) NNSBDCQZ No.0065499; c) SG (2017) NNSBDCQZ No.0065498; d) SG (2017) NNSBDCQZ No.0065497. Note 6: Nanning Liaowang and Nanning Branch of Industrial Bank Co., Ltd. entered into the Working Capital Loan Contracts, numbered WYZH2022021100314 and WYZH2022021100248, with the loan amounts of RMB19.8 million (from 11 February 2022 to 11 February 2023) and RMB30.2 million (from 11 February 2022 to 11 February 2023), respectively. Chongqing Guinuo Lighting Technology Co., Ltd. (Chongqing Guinuo) provide mortgage guarantee with the immovable property owned as collateral, and the balance of its creditor's rights does not exceed the maximum mortgage principal of RM122,294,700. The guarantee amount is RMB81 million and valid from 15 June 2020 to 15 June 2023. The mortgaged real estate is a) YY (2020) LJXQBDCQ No.000436821, b) EY (2020) LJXQBDCQ No.000437330, c) SY (2020) LJXQBDCQ No.000437429 and d) SY (2020) LJXQBDCQ No.000437448. Note 7: Liuzhou Guige Photoelectric Technology Co., Ltd. (Liuzhou Guige) and Nanning Branch of Industrial 230 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Bank Co., Ltd. entered into the Working Capital Loan Contract, numbered WYZH2022050700423, with a loan of RMB15 million (from 7 May 2022 to 7 May 2023). Liuzhou Guige and Nanning Branch of Industrial Bank Co., Ltd. entered into the Agreement on Banker's Acceptance Financing Business Cooperation (X.Y.G.CH.B.SH.X. [2022] No. 1002), with a loan of RMB15 million (from 7 May 2022 to 7 May 2023), to conduct a bill transaction of RMB20 million. In the original guarantee contract, Liuzhou Guige provides mortgage guarantee with the immovable property owned as collateral, and the balance of its creditor's rights does not exceed RMB150 million. The mortgage amount is valid from 30 December 2019 to 30 December 2024. The guarantee has been terminated on 23 April 2022. In the new guarantee contract, Liuzhou Guige provides mortgage guarantee with the immovable property owned as collateral, and the balance of its principal creditor's rights does not exceed RMB139,943,700. The guarantee amount is RMB91 million and valid from 24 April 2022 to 31 December 2025. The mortgaged real estate is: a) YG (2019) LZSBDCQ No.0191988, located at No.1 Factory Building, No.12 Hengsi Road, Cheyuan; b) EG (2019) LZSBDCQ No.0191991, located in the mold center of No.12 Hengsi Road, Cheyuan; c) SG (2019) LZSBDCQ No.0191994, located in the logistics gate guard room at No.12 Hengsi Road, Cheyuan; d) SG (2019) LZSBDCQ No.0191995, located in the guard room of Gate 12, Hengsi Road, Cheyuan. Note 8: Foshan NationStar Optoelectronics Co., Ltd. convened the 9th Meeting of the 4th Board of Directors on 18 September 2017, on which, the Proposal on Providing Guarantee for the Company’s Wholly-owned Subsidiary was reviewed and approved and the Company was agreed to provide a credit guarantee not exceeding RMB300 million for the corporation overdraft conducted by its wholly-owned subsidiary NationStar Semiconductor at China Merchants Bank. NationStar Semiconductor signed the Credit Agreement, numbered 757XY2018015331 with Foshan Branch of China Merchants Bank which agreed to provide the credit line of RMB100 million for NationStar Semiconductor within the credit period stipulated in the Credit Agreement (from 28 May 2018 to 27 May 2019). The guarantor Foshan NationStar Optoelectronics Co., Ltd. has given the Letter of Irrevocable Guarantee for Maximum Amount, numbered 757XY201801533101 to undertake joint liability guarantee for the principal debtor valid from 12 June 2018 to 27 May 2022. This guarantee has expired on 27 May 2022. XV. Events after Balance Sheet Date 1. Significant Non-adjusted Events Naught 2. Profit Distribution Naught 3. Sales Return Naught 4. Notes to Other Events after Balance Sheet Date 1. About the equity transfer of the sub-subsidiary NationStar Optoelectronics (Germany) Co., Ltd. Haolaite, a holding subsidiary of the Company, acquired 100% of the equities of NationStar Optoelectronics (Germany) Co., Ltd., a wholly-owned subsidiary of NATIONSTAR, the holding subsidiary, by means of payment in cash. On 20 June 2022, an equity transfer agreement was entered into by both parties. On 13 July 231 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 2022, Haolaite paid RMB258,700 for the transfer of the 100% equities. On 21 July 2022, NationStar Optoelectronics (Germany) Co., Ltd. completed the application for transfer of domestic entities. As of the date of this report, the change of NationStar Optoelectronics (Germany) Co., Ltd.'s overseas equities is still underway. 2. About the acquisition of the equities of Guangdong Fenghua Semiconductor Technology Co., Ltd. by the holding subsidiary and its connected transaction In order to speed up the expansion of 3rd-general semiconductor business of NATIONSTAR, a holding subsidiary of the Company, the Board of Directors agreed to NATIONSTAR's acquisition of 99.87695% of the equities of Guangdong Fenghua Semiconductor Technology Co., Ltd. (hereinafter referred to as "Fenghua Semiconductor") held by Guangdong Fenghua Advanced Technology (Holding) Co., Ltd. (hereinafter referred to as "Fenghua Advanced Technology") at RMB268,819,300. Guangdong Rising Holdings Group is the holding shareholder of the Company and Fenghua Advanced Technology, so Fenghua Advanced Technology is the connected legal person of the Company according to the Stock Listing Rules of Shenzhen Stock Exchange, and this transaction constitutes a connected transaction but does not constitute a significant assets spin-off under the Administrative Measures for the Material Asset Reorganizations of Listed Companies. The Company convened the 33rd Meeting of the Ninth Board of Directors on 12 August 2022, at which the Proposal on Holding Subsidiary's Acquisition of the Equities of Guangdong Fenghua Semiconductor Technology Co., Ltd. and Its Connected Transaction was deliberated and approved with seven votes of assent, zero votes of dissent, zero votes of abstention and two votes of withdrawal. Connected directors Mr. Hu Fengcai and Mr. Huang Zhiyong recused themselves from voting according to law. Independent directors of the Company expressed ex-ante approval and independent opinions on the connected transactions in relation to this acquisition. Meanwhile, the Company convened the 3rd Extraordinary General Meeting in 2022 on 29 August 2022, at which the Proposal on Holding Subsidiary's Acquisition of the Equities of Guangdong Fenghua Semiconductor Technology Co., Ltd. and Its Connected Transaction was deliberated and approved, and connected persons having an interest in the connected transaction recused themselves from voting. XVI. Other Significant Events 1. The Accounting Errors Correction in Previous Period (1) Retrospective Restatement Naught (2) Prospective Application Naught 2. Debt Restructuring Naught 232 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 3. Assets Replacement (1) Non-monetary Assets Exchange Naught (2) Other Assets Replacement Naught 4. Pension Plans In accordance with provisions of Measures for Enterprise Annuity (RSBL No. 36), Measures for Managing Enterprise Annuity Fund (RSBL No. 11) and other policies, the Company has formulated the Enterprise Annuity Plan of Foshan Electrical and Lighting Co., Ltd. (hereinafter referred to as the “Plan”). The Plan adopts the corporate trusteeship mode. The collected enterprise annuity fund will be managed by the trustee entrusted by Foshan Electrical and Lighting Co., Ltd. with the Enterprise Annuity Fund Trusteeship Contract. And the trustee of the enterprise annuity fund will entrust eligible account managers, custodians and investment managers to provide unified related services. The expenses required shall be jointly borne by the Company and the employees. The payment channels of the Company shall be implemented according to relevant regulations of the state, and the part that shall be paid by employees themselves will be withheld and paid by the Company from their salaries. The Plan has been filed at Chancheng District Human Resources and Social Security Bureau of Foshan City and implemented since 1 June 2022. The management of the enterprise annuity fund is subject to the supervision and inspection of relevant state departments. 5. Discontinued Operations Naught 6. Segment Information (1) Determination Basis and Accounting Policies of Reportable Segment Naught (2) The Financial Information of Reportable Segment Naught (3) If there Was no Reportable Segment, or the Total Amount of Assets and Liabilities of Each Reportable Segment Could not Be Reported, Relevant Reasons Shall Be Clearly Stated Naught (4) Other notes Naught 233 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 7. Other Significant Transactions and Events with Influence on Investors’ Decision-making Naught 8. Other (I) Demolition Matters of Nanjing Fozhao According to the Decision of Nanjing Lishui District People's Government on House Expropriation on State- owned Land of Honglan Street Affordable Housing Project in Lishui District (NLFZ Zi [2020] No.18), The house owned by Nanjing Fozhao, a wholly-owned subsidiary of the Company, located at 688 Jinniu North Road, Honglan Street, Lishui District, Nanjing (the total construction area of the house is 44,558.09 square meters, which is an industrial house; The land use right covers an area of 135,882.4 square meters, which is industrial land) belongs to the expropriation scope, and the compensation, relocation fee, loss fee of production and business suspension and other rewards of the expropriated assets total RMB183,855,895.00. As of 30 June 2022, Nanjing Fozhao has received 30% of the compensation, that is, RMB55,160,000.00, and the land use right certificate and house ownership certificate of the assets involved have been cancelled. As of the date of this report, the site handover is still in progress. After the demolition work is completed, Nanjing Fozhao plans to carry out liquidation and cancellation. XVII. Notes of Main Items in the Financial Statements of the Company as the Parent 1. Accounts Receivable (1) Category of Accounts Receivable Unit: RMB Ending balance Beginning balance Carrying amount Bad debt provision Carrying amount Bad debt provision Withdra Withdra Item Carrying Carrying Proporti wal Proporti wal Amount Amount value Amount Amount value on proporti on proporti on on Account s receivab le for which 11,220, 11,220, 11,220, 8,976,6 2,244,1 bad debt 0.89% 100.00% 0.00 1.00% 80.00% provisio 827.14 827.14 827.14 61.72 65.42 n separatel y accrued Of which: Account s receivab le for 1,247,2 1,187,8 1,108,6 1,056,6 59,424, 51,950, which 28,261. 99.11% 4.76% 03,897. 41,819. 99.00% 4.69% 91,498. bad debt 363.55 320.95 37 82 86 91 provisio n accrued 234 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 by group Of which: (1) Commo 1,216,4 1,157,0 1,022,0 59,424, 51,950, 970,055 n 49,379. 96.66% 4.89% 25,016. 05,643. 91.26% 5.08% business 363.55 320.95 ,322.61 92 37 56 portfolio (2) Internal 30,778, 30,778, 86,636, 86,636, 2.45% 7.74% business 881.45 881.45 176.30 176.30 portfolio 1,258,4 1,187,8 1,119,8 1,058,9 70,645, 60,926, Total 49,088. 100.00% 5.61% 03,897. 62,647. 100.00% 5.44% 35,664. 190.69 982.67 51 82 00 33 Individual withdrawal of bad debt provision by single item: Unit: RMB Ending balance Name Carrying amount Bad debt provision Withdrawal proportion Reason for withdrawal Involved in the lawsuit; the Company won in Customer A 11,220,827.14 11,220,827.14 100.00% the second instance judgment and not executed completely Total 11,220,827.14 11,220,827.14 Withdrawal of bad debt provision by group: Unit: RMB Ending balance Name Carrying amount Bad debt provision Withdrawal proportion Credit risk portfolio 1,247,228,261.37 59,424,363.55 4.76% Total 1,247,228,261.37 59,424,363.55 Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable. □Applicable Not applicable Disclosure by aging Unit: RMB Aging Ending balance Within 1 year (including 1 year) 1,156,764,405.89 1 to 2 years 55,152,654.80 2 to 3 years 5,573,526.47 Over 3 years 40,958,501.35 3 to 4 years 21,341,828.20 4 to 5 years 5,682,589.42 Over 5 years 13,934,083.73 Total 1,258,449,088.51 (2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period: Unit: RMB Category Beginning Changes in the Reporting Period Ending balance 235 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 balance Reversal or Withdrawal Write-off Withdrawal recovery Bad debt provision 11,220,827.1 8,976,661.72 2,244,165.42 0.00 withdrawn 4 separately Bad debt provision 51,950,320.9 59,424,363.5 7,474,298.96 256.36 withdrawn by 5 5 group 60,926,982.6 70,645,190.6 Total 9,718,464.38 0.00 256.36 7 9 Of which significant amount of reversed or recovered bad debt provision: Naught (3) Accounts Receivable with Actual Verification during the Reporting Period Unit: RMB Item Amount Other driblet small amount 256.36 Of which, verification of significant accounts receivable: Unit: RMB Whether occurred Name of the entity Nature Amount Reason Procedure because of related- party transactions The approval procedure is carried out Other retails Payment for goods 256.36 Unrecoverable according to the Not accounts Company’s rules for managing bad debt. Total -- 256.36 (4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party Unit: RMB Proportion to total ending Ending balance of accounts Ending balance of bad debt Name of units balance of accounts receivable provision receivable (%) No. 1 152,875,068.03 12.15% 4,586,252.04 No. 2 89,987,854.53 7.15% 2,699,635.64 No. 3 31,396,709.13 2.49% 941,901.27 No. 4 29,155,889.38 2.32% 874,676.68 No. 5 26,766,896.54 2.13% 803,006.90 Total 330,182,417.61 26.24% (5) Derecognition of Accounts Receivable due to the Transfer of Financial Assets Naught 236 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 (6) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of Accounts Receivable Naught 2. Other Receivables Unit: RMB Item Ending balance Beginning balance Other receivables 447,027,739.63 511,056,231.24 Total 447,027,739.63 511,056,231.24 (1) Interest Receivable 1) Category of Interest Receivable Naught 2) Significant Overdue Interest Naught 3) Information of Withdrawal of Bad Debt Provision □Applicable Not applicable (2) Dividend Receivable 1) Category of Dividend Receivable Naught 2) Significant Dividends Receivable Aging over 1 Year Naught 3) Information of Withdrawal of Bad Debt Provision □Applicable Not applicable (3) Other Receivables 1) Other Receivables Disclosed by Account Nature Unit: RMB Nature Ending carrying amount Beginning carrying amount VAT export tax refunds 4,496,365.98 4,674,335.06 Performance bond 8,637,137.38 5,597,832.99 Staff borrow and petty cash 1,813,413.90 3,486,778.81 237 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Rent, water & electricity fees 1,456,935.93 2,564,557.87 Other intercourse 433,601,839.90 497,805,458.10 Total 450,005,693.09 514,128,962.83 2) Information of Withdrawal of Bad Debt Provision Unit: RMB First stage Second stage Third stage Expected loss in the Bad debt provision Expected loss in the Total Expected credit loss of duration (credit duration (credit the next 12 months impairment not impairment occurred) occurred) Balance of 1 January 763,248.72 2,309,482.87 3,072,731.59 2022 Balance of 1 January 2022 in the Current Period Withdrawal of the -282,481.64 187,703.51 -94,778.13 Current Period Balance of 30 June 480,767.08 2,497,186.38 2,977,953.46 2022 Changes of carrying amount with significant amount changed of loss provision in the current period □Applicable Not applicable Disclosure by aging Unit: RMB Aging Ending balance Within 1 year (including 1 year) 439,945,369.74 1 to 2 years 6,150,154.66 2 to 3 years 867,074.45 Over 3 years 3,043,094.24 3 to 4 years 2,114,385.69 4 to 5 years 489,061.25 Over 5 years 439,647.30 Total 450,005,693.09 3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period Information of bad debt provision withdrawn: Unit: RMB Changes in the Reporting Period Beginning Category Reversal or Ending balance balance Withdrawal Write-off Other recovery Other 3,072,731.59 -94,778.13 2,977,953.46 receivables Total 3,072,731.59 -94,778.13 2,977,953.46 Of which the bad debt provision reversed or recovered with significant amount during the Reporting Period: Naught 4) Particulars of the Actual Verification of Other Receivables during the Reporting Period Naught 238 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party Unit: RMB Proportion to total ending balance of Ending balance of Name of the entity Nature Ending balance Aging other receivables bad debt provision (%) No. 1 Internal business 420,598,696.63 Within 1 year 93.47% group No. 2 VAT export tax 4,496,365.98 Within 1 year 1.00% 134,890.98 refunds No. 3 Internal business 4,116,845.26 Within 2 years 0.91% group No. 4 Intercourse 2,673,256.53 Within 1 year 0.59% 80,197.70 accounts No. 5 Performance bond 1,500,000.00 Within 1 year 0.33% 45,000.00 Total 433,385,164.40 96.30% 260,088.68 6) Accounts Receivable Involving Government Grants Naught 7) Derecognition of Other Receivables due to the Transfer of Financial Assets Naught 8) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of Other Receivables Naught 3. Long-term Equity Investment Unit: RMB Ending balance Beginning balance Item Carrying Depreciation Carrying Depreciation Carrying value Carrying value amount reserve amount reserve Investment to 2,296,631,23 2,296,631,23 1,061,536,76 1,061,536,76 subsidiaries 8.41 8.41 6.02 6.02 Investment to joint ventures 180,115,189. 180,115,189. 181,545,123. 181,545,123. and associated 99 99 09 09 enterprises 2,476,746,42 2,476,746,42 1,243,081,88 1,243,081,88 Total 8.40 8.40 9.11 9.11 (1) Investment to Subsidiaries Unit: RMB Beginning Increase/decrease Ending Ending balance Depreciation balance balance of Investee Additional Reduced (carrying reserves Other (carrying depreciation value) investment investment value) reserve withdrawn FSL 82,507,350 82,507,350 Chanchang 239 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Optoelectron .00 .00 ics Co., Ltd. Foshan Taimei Times Lamps and 350,000.00 350,000.00 Lanterns Co., Ltd. Nanjing Fozhao Lighting 72,000,000 72,000,000 Components .00 .00 Manufacturin g Co., Ltd. Foshan Electrical & 35,418,439 35,418,439 Lighting (Xinxiang) .76 .76 Co., Ltd. Foshan Haolaite 16,685,000 16,685,000 Lighting Co., .00 .00 Ltd. Foshan Lighting 15,000,000 15,000,000 Lamps & Components .00 .00 Co., Ltd. FSL Zhida Electric 25,500,000 25,500,000 Technology .00 .00 Co., Ltd. FSL Lighting 195,812.50 195,812.50 GMBH Foshan Kelian New 170,000,00 170,000,00 Energy Technology 0.00 0.00 Co., Ltd. Fozhao (Hainan) 150,000,00 23,000,000 173,000,00 Technology 0.00 .00 0.00 Co., Ltd. Nanning Liaowang 493,880,16 493,880,16 Auto Lamp 3.76 3.76 Co., Ltd. Foshan NationStar 1,212,090, 1,212,090, Optoelectron 245.94 245.94 ics Co., Ltd. Foshan Sigma Venture 4,226.45 4,226.45 Capital Co., Ltd. 1,061,536, 1,235,094, 2,296,631, Total 766.02 472.39 238.41 (2) Investment to Joint Ventures and Associated Enterprises Unit: RMB Beginni Increase/decrease Ending Ending Investe ng balance balance e balance Additio Reduce Gains Adjust Change Cash Withdra (carryin of Other (carryin nal d and ment of s of bonus wal of g value) depreci 240 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 g value) investm investm losses other other or impair ation ent ent recogni compre equity profits ment reserve zed hensive announ provisi under income ced to on the issue equity method I. Joint ventures II. Associated enterprises Shenzh enPrim atronix 181,54 180,11 (Nanho 650,45 2,080, 5,123. 5,189. ) 7.40 390.50 Electro 09 99 nics Ltd. 181,54 180,11 Subtota 650,45 2,080, 5,123. 5,189. l 7.40 390.50 09 99 181,54 180,11 650,45 2,080, Total 5,123. 5,189. 7.40 390.50 09 99 (3) Other Notes Naught 4. Operating Revenue and Cost of Sales Unit: RMB Reporting Period Same period of last year Item Operating revenue Cost of sales Operating revenue Cost of sales Main business 1,743,824,866.67 1,430,083,022.73 1,712,892,634.56 1,415,558,525.32 Other business 65,355,126.19 46,281,084.46 84,902,658.17 70,407,375.42 Total 1,809,179,992.86 1,476,364,107.19 1,797,795,292.73 1,485,965,900.74 Relevant information of revenue: Naught Information related to performance obligations: Naught Information related to transaction value assigned to residual performance obligations: The amount of revenue corresponding to performance obligations of contracts signed but not performed or not fully performed yet was RMB0.00 at the period-end. 5. Investment Income Unit: RMB Item Reporting Period Same period of last year Long-term equity investment income 2,653,342.25 accounted by cost method Long-term equity investment income 650,457.40 37,460.99 accounted by equity method 241 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 Investment income from disposal of 6,754,363.94 long-term equity investment Dividend income from holding of other 16,055,272.93 investments in equity instruments Investment income from financial 449,147.49 4,756,319.58 products and structural deposits Other 1,734,535.05 416,050.00 Total 21,542,755.12 11,964,194.51 6. Other Naught XVIII. Supplementary Materials 1. Items and Amounts of Non-recurring Profit or Loss Applicable □ Not applicable Unit: RMB Item Amount Note Gain/Loss arising from disposal of non- -5,723,365.37 current assets Government grants recognized in the current period, except for those acquired in the ordinary course of business or 31,578,978.53 granted at certain quotas or amounts according to the government’s unified standards Capital occupation charges on non- financial enterprises that are recorded 213,042.31 into current profit or loss Current net profit or loss of subsidiaries acquired in business combination under 9,568,639.83 the same control from period-beginning to combination date Gain/loss from change of fair value of trading financial assets and liabilities, and investment gains from disposal of trading financial assets and liabilities, -8,997,858.09 and available-for-sale financial assets, other than valid hedging related to the Company’s common businesses Other non-operating income and 6,044,307.77 expenses other than the above Less: Income tax effects 4,010,901.27 Non-controlling interests effects 28,870,934.61 Total -198,090.90 -- Others that meets the definition of non-recurring gain/loss: □Applicable Not applicable No such cases in the Reporting Period. Explain the reasons if the Company classifies any extraordinary gain/loss item mentioned in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains and Losses as a recurrent gain/loss item □Applicable Not applicable 242 Foshan Electrical and Lighting Co., Ltd. Interim Report 2022 2. Return on Equity and Earnings Per Share EPS (Yuan/share) Profit as of Reporting Period Weighted average ROE (%) EPS-basic EPS-diluted Net profit attributable to ordinary shareholders of the 2.68% 0.1191 0.1180 Company Net profit attributable to ordinary shareholders of the 2.68% 0.1192 0.1181 Company after deduction of non-recurring profit or loss 3. Differences between Accounting Data under Domestic and Overseas Accounting Standards (1) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under International and Chinese Accounting Standards □Applicable Not applicable (2) Differences of Net profit and Net assets Disclosed in Financial Reports Prepared under Overseas and Chinese Accounting Standards □Applicable Not applicable (3) Explain Reasons for the Differences between Accounting Data under Domestic and Overseas Accounting Standards; for any Adjustment Made to the Difference Existing in the Data Audited by the Foreign Auditing Agent, Such Foreign Auditing Agent’s Name Shall Be Clearly Stated Naught 4. Other Naught Wu Shenghui, legal representative Foshan Electrical and Lighting Co., Ltd. 30 August 2022 243