Jifeng Automotive Interior GmbH

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Ningbo Jifeng Auto Parts Co., Ltd.

Ningbo / China

DISCLOSURE REPORT Consolidated financial statements Ningbo Jifeng Auto Parts Co., Ltd. 31 December 2022

Independent Auditors' Report

To the Shareholders of Ningbo Jifeng Auto Parts Co., Ltd.:

I. Audit opinion

We have audited the accompanying financial statements of Ningbo Jifeng Auto Parts Co., Ltd. (hereafter "the Company"), which comprise the consolidated and separate statement of financial position as of 31 December 2022, the consolidated and separate statement of comprehensive income, the consolidated and separate statement of cash flows, the consolidated and separate statement of changes in shareholders' equity for the year then ended, and the notes to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and separate financial position of the Company as of 31 December 2022, and the financial performance and cash Hows of the Company for the year then ended in accordance with Accounting Standards for Business Enterprises.

II. Basis for the audit opinion

We conducted our audit in accordance with the Chinese Standards on Auditing (CSAs). Our responsibilities under those standards are further described in the Section VI of our report. We are independent of the Company in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public Accountants, and we have fulfilled our other ethical responsibilities. We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our opinion.

III. Key audit matters

Key audit matters are those matters that, in our professional judgment, were of the most significance in our audit of the financial statements for the fiscal year 2022. These matters were addressed in the context of our audit of the financial statements and for the purpose of expressing an audit opinion on the financial statements as a whole. We do not express separate opinions on these matters.

A. Revenue recognition

I. Matter description

See Note 3.26 and Note 5.44 to the financial statements for disclosure applicable to this matter.

The Company reported revenue amounting to CNY 17.97 billion for the fiscal year 2022, which comprises revenue contributed by the Jifeng and Grammer segments as described in Note 14.1 to the financial statements.

As revenue is one of the key performance indicators, there is an inherent risk that management may manipulate revenue recognition for achievement of a particular or expected target. Therefore, we identified revenue recognition as a key audit matter.

2. Audit response

In response to the key audit matter associated with revenue recognition, we designed and implemented audit procedures as follow:

(1)	Understand and test the design and implementation of key controls applicable revenue recognition and evaluate the effectiveness of the controls.
(2)	Design and implement analytical procedures including monthly movement and of revenue, cost of sales and gross profit and analysis on revenue, cost of sales and gross profit associated with main products to assess the reasonableness of movement of performance indicators associated with revenue.
(3)	Examine the sales orders, shipping notes, goods acceptance notes and invoices associated with records sampled from the sale ledger and the goods shipping book and obtained external confirmation on sales transactions sampled from the sales ledger in order to assess the occurrence and completeness of revenue.
(4)	Examine the custom clearance forms, bills of lading, invoices associated with export records sampled from the sales ledger and cross check to data extracted from the electronic custom system to assess the occurrence of revenue arising from export sales.
(5)	Examine the goods acceptance notes and other supporting documents associated with sales records immediately before and after the statement date to assess whether revenue has been recorded in the correct period (the revenue cut-off procedure).
(6)	As the Group Auditor, we issued group audit instructions to component auditors, conducted discussion with component auditors on revenue recognition policies and the scope, timing, and results of component audits, and we reviewed the audit work papers of the significant component auditors.

B. Goodwill impairment

1. Matter description

The Company's consolidated goodwill amounts to CNY 1.66 billion as of 31 December 2022 as described in Note 5.18 to the financial statements.

The Company assesses impairment on goodwill at the statement date of each fiscal year. The assessment comprises:

(1)	engaging independent external appraiser to conduct valuation for the purpose of impairment assessment on goodwill;
(2)	establishing a model to estimate the present value of future cash flows associated with the asset group to which goodwill is allocated;
(3)	assessing the necessity of recognising impairment on goodwill.

As goodwill is a material item on the consolidated statement of financial position and the assessment of goodwill impairment involves management exercising judgement and estimates on future cash flows and discount rates, we identified goodwill impairment as a key audit matter.

2. Audit response

In response to the key audit matter associated with goodwill impairment, we designed and implemented audit procedures as follow:

(1)	Understand and test the design and implementation of key controls applicable goodwill impairment and evaluate the effectiveness of the controls.
(2)	Understand and evaluate management's identification of asset group(s) and goodwill impairment assessment policies and methods.
(3)	Evaluate the competence, professional qualification and objectivity (independence) of the external appraiser engaged by the Company for the assessment.
(4)	Obtain the valuation report issued by the external appraiser and evaluate the appropriateness of the methodology adopted and the reasonableness of key assumptions and significant inputs (such as risk-free interest rates, market risk premium, discount rates, revenue growth rates, gross profit margin rate and expense percentage which are particularly associated the discounted cash flow method) by the in-house valuation expert.
(5)	Assess the correctness of computation for goodwill impairment assessment.
(6)	Evaluate the appropriateness and sufficiency of disclosure in relation to goodwill impairment.

IV Other information

Management of the Company is responsible for other information. Other information comprises the information included in the Annual Report of the Company for the fiscal year 2022, but does not include the financial statements and our audit report.

Our opinion on the financial statements does not extend to cover the other information and we do not express any form of assurance on the other information.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

V. Responsibilities of management and those charged with governance for the financial statements

Management of the Company is responsible for the preparation and fair presentation of the financial statements in accordance with Accounting Standards of Business Enterprises, and for the design, implementation and maintenance of such internal controls as management determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In the course of preparation of the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

VI. Auditor's responsibilities for the audit of the financial statements

Our Objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audit report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of our audit in accordance with CSAs, we exercised professional judgment and maintained professional skepticism throughout the audit. We also:

(1)	Identified and assessed the risks of material misstatement of the financial statements, whether due to fraud or error, design and performed audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or override of internal control.
(2)	Obtained an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
(3)	Evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
(4)	Concluded on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our audit report to the related disclosure in the financial statements or. if such disclosure is inadequate, to modify our opinion. Our conclusion is based on the audit evidence obtained up to the date of our audit report. However, future events or conditions may cause the Company to cease to continue as a going concern.
(5)	Evaluated the overall presentation, structure and content of the financial statements and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
(6)	Obtained sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicated with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controls that we identified during our audit.

We also provided those charged with governance with a statement that we have had complied with relevant ethical requirements regarding independence, and communicated with them all relationships and other matters that may reasonably be thought to impair our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determined those matters that were of most significance in our audit of the financial statements for the fiscal year 2022 and are therefore the key audit matters. We describe these matters in our audit report unless law or regulation prohibits public disclosure of the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

(End of the Independent Auditors' Report. Below intentionally left blank for signature of the Independent Auditors' Report RSM Shen [2023] No. 518Z0339)

30 March 2023

RSM China CPA LLP

CICPA:

Wu Xiaolei, engagement partner

CICPA: Wang Ziqiang Beijing, China

CICPA: Wang lianqiang

Consolidated Statement of Financial Position

as of 31 December 2022

Prepared by: Ningbo Jifeng Auto Parts Co., Ltd.

Currency unit: CNY Yuan

Assets	Note	31/12/2022	31/12/2021
Current assets
Monetary funds	5.1	1,163,415,997.01	1,405,755,730.63
Financial assets held for trading
Derivative financial assets
Notes receivable	5.2	68,817,817.05	98,561,000.27
Accounts receivable	5.3	2,642,846,792.32	2,309,923,988.74
Receivables held for factoring	5.4	253,320,953.99	115,245,186.97
Prepayments	5.5	153,820,134.36	93,302,924.87
Other receivables	5.6	70,343,335.26	67,388,718.67
T/o: Interests receivable
Dividends receivable		-	-
Inventories	5.7	1,824,658,969.97	1,729,912,622.78
Contract assets	5.8	416,408,585.50	446,226,801.52
Held-for-sale assets
Non-current assets matured within 1 year	5.9	3,505,555.55	-
Other current assets	5.10	279,385,218.91	248,826,979.40
Total current assets		6,876,523,359.92	6,515,143,953.85
Non-current assets
Debt investments measured at amortised cost
Debt investments at fair value through other comprehensive income
Long-term receivables	5.11	33,608,354.57	43,000,562.84
Long-term equity investments	5.12	10,692,479.50	9,167,824.99
Equity investments at fair value through other comprehensive income
Other non-current financial assets
Investment properties
Fixed assets	5.13	3,504,187,670.70	3,539,655,189.39
Construction in progress	5.14	433,559,351.99	250,704,062.30
Biological assets held for production
Oil and gas assets
Right-of-use assets	5.15	543,797,112.44	568,349,046.68
Intangible assets	5.16	1,118,022,833.87	1,455,199,100.83
Development expenditure	5.17	137,142,122.68	86,893,755.88
Goodwill	5.18	1,662,495,923.92	2,598,360,620.58
Long-term prepaid expenses	5.19	33,462,758.30	44,861,707.51
Deferred tax assets	5.20	359,001,975.46	391,582,395.48
Other non-current assets	5.21	741,045,800.88	706,224,484.82
Total non-current assets		8,577,016,384.31	9,693,998,751.30








Total assets		15,453,539,744.23	16,209,142,705.15

Assets	Liabilities and equity	Note	31/12/2022	31/12/2021
Current assets	Current liabilities
Monetary funds	Short-term bank loans	5.22	2,135,001,506.93	1,638,487,947.89
Financial assets held for trading	Financial liabilities held for trading
Derivative financial assets	Derivative financial liabilities
Notes receivable	Notes payable	5,23	70,066,097.01	60,612,929.57
Accounts receivable	Accounts payable	5.24	2,811,911,266.45	2,279,321,177.38
Receivables held for factoring	Advanced receipts
Prepayments	Contract liabilities	5.25	102,863,409.70	62,839,790.53
Other receivables	Employee benefits payable	5.26	460,358,296.81	382,213,979.03
T/o: Interests receivable	Taxes payable	5.27	238,105,661.96	238,895,587.25
Dividends receivable	Other payables	5.28	334,065,924.17	322,623,670.18
Inventories	T/o: Interests payable
Contract assets	Dividends payable
Held-for-sale assets	Held-for-sale liabilities
Non-current assets matured within 1 year	Non-current liabilities due within 1 year	5.29	524,056,712.48	745,461,991.84
Other current assets	Other current liabilities	5.30	207,948,557.25	338.703.594,08
Total current assets	Total current liabilities		6,884,377,432.76	6,069,160,667.75
Non-current assets	Non-current liabilities
Debt investments measured at amortised cost	Long-term bank loans	5.31	2,557,036,496.61	2,630,503,752.41
Debt investments at fair value through other comprehensive income	Debt instruments payable	5.32	433,337,971.05	426,143,895.56
Long-term receivables	T/o: Preferred shares
Long-term equity investments	Perpetual debts
Equity investments at fair value through other comprehensive income	Lease liabilities	5.33	464,676,261.20	479,895,628.86
Other non-current financial assets	Long-term payables
Investment properties	Long-term employee benefits payable	5.34	869,703,837.33	1,075,538,029.42
Fixed assets	Provisions
Construction in progress	Deferred income	5.35	25,870,360.63	20,489,492.63
Biological assets held for production	Deferred tax liabilities	5.20	419,281,754.58	481,535,762.35
Oil and gas assets	Other non-current liabilities	5.36	24,095,628.38	27,352,525.03
Right-of-use assets	Total non-current liabilities		4,794,002,309.78	5,141,459,086.26
Intangible assets	Total liabilities		11,678,379,742.54	11,210,619,754.01
Development expenditure	Shareholders' equity
Goodwill	Share capital	5.37	1,116,786,419.00	1,118,967,523.00
Long-term prepaid expenses	Other equity instruments	5.38	-8,909,822.90	-8,931,251.42
Deferred tax assets	T/o: Preferred shares
Other non-current assets	Perpetual debts
Total non-current assets	Capital reserves	5.39	3,433,896,366.48	3,442,285,854.28
	Less: Treasury stocks	5.40	52,686,110.00	11,707,548.85
	Other comprehensive income	5.41	-109,678,073.41	-389,264,599.22
	Designated reserves
	Surplus reserves	5.42	221,996,279.40	221,996,279.40
	Retained earnings	5.43	-1,145,905,893.28	271,471,288.30
	Equity attributable to shareholders of the Company		3,455,499,165.29	4,644,817,545.49
	Non-controlling interests		319,660,836.40	353,705,405.65
	Total equity		3,775,160,001.69	4,998,522,951.14
Total assets	Total liabilities and equity		15,453,539,744.23	16,209,142,705.15

Consolidated Statement of Comprehensive Income for the year ended 31 December 2022

Prepared by: Ningbo Jifeng Auto Parts Co., Ltd.

Currency unit: CNY Yuan

Item	Note	Y/e 31/12/2022	Y/e 31/12/2021
A. Total revenue		17,966,801,927.35	16,831,990,786.93
T/o: Revenue	5.44	17,966,801,927.35	16,831,990,786.93
B. Total costs		17,869,487,332.03	16,661,302,900.95
T/o: Cost of sales	5.44	15,615,516,984,04	14,451,338,443.56
Taxes and surcharges	5.45	48,444,207.75	45,821,536.73
Selling expenses	5.46	261,776,729.40	297,249,874.55
Administrative expenses	5.47	1,367,574,767.42	1,352,886,062.35
R&D expenses	5.48	376,419,944.15	321,375,210.43
Financial costs	5.49	199,754,699.27	192,631,773.33
T/o: Interest expenses		271,428,367,33	262,811,432.83
Interest income		30,228,969.11	36,511,768.53
Add: Other income	5.50	22,928,432.02	22,172,505.86
Investment income	5.51	3,357,695.72	-20,370,405.42
T/o: Gain from joint ventures and associates measured at equity		1,704,957.63	3,329,113.20
Gain from derecognition of financial assets measured at amortised cost
Gain from hedging of net exposure	5.52	13,609,542.54	7,285,830.37
Gain from fair value measurement
Credit impairment loss (loss with "-" prefix)	5.53	-8,650,346.94	6,449,298.90
Asset impairment loss (loss with "-" prefix)	5.54	-1,567,357,546.52	-18,323,348.03
Gain from asset disposal	5.55	-5,405,803.83	2,895,363.24
C. Profit from operation		-1,444,203,431.69	170,797,130.90
Add: Non-operating income	5.56	10,254,173.22	24,266,061.52
Less: Non-operating expenses	5.57	877,162.15	1,700,855.53
D: Profit before tax		-1,434,826,420.62	193,362,336.89
Less: Income tax expenses	5.58	27,952,582.70	67,547,261.52
E. Net profit		-1,462,779,003.32	125,815,075.37
Net profit from:
a. Continuing operation		-1,462,779,003.32	125,815,075.37
b. Discontinued operation
Net profit attributable to:
a. Shareholders of the Company		-1,417,377,181.58	126,370,529.59
b. Non-controlling interests		-45,401,821.74	-555,454.22
F. After-tax other comprehensive income (OCI)		300,825,227.00	-240,369,239.94
a. After-tax OCI attributable to shareholders of the Company		279,586,525.81	-267,345,216.56
I. OCI not reclassifiable to profit or loss in future periods		141,808,919.78	71,530,607.22
1) Remeasurement of defined benefit plans		141,808,919.78	71,530,607.22
2) OCI of joint ventures and associates measured at equity
3) Change of fair value of equity investments at fair value through OCI
4) Change of fair value of the Company's own credit risk
2. OCI reclassifiable to profit or loss in future periods		137,777,606.03	-338,875,823.78
I) OCI of joint ventures and associates measured at equity
2) Change of fair value of debt invesments at fair value through OCI			-3,333,888.89
3) OCI upon reclassification of financial assets
4) Impairment of debt investments at fair value through OCI
5) Cashflow hedge reserve		11,133,796.35	1,192,850.71
6) Translation reserve		126,643,809.68	-355,121,780.98
7) Others			18,386,995.38
b. After-tax OCI attributable to non-controlling interests		21,238,701.19	26,975,976.62
G. Total comprehensive income		-1,161,953,776.32	-114,554,164.57
a. Attributable to shareholders of the Company		-1,137,790,655.77	-140,974,686.97
b. Attributable to non-controlling interests		-24,163,120.55	26,420,522.40
H. Earning per share (EPS)
a. Basic EPS (yuan/share)		-1.27	0.12
b. Diluted EPS (yuan/share)		-1.27	0.12

Consolidated Statement of Cash Flows for the year ended 31 December 2022

Prepared by: Ningbo Jifeng Auto Parts Co., Ltd.

Currency unit: CNY Yuan

Item	Note	Y/e 31/12/2022	Y/e 31/12/2021
A. Cash flows from operating activities
Cash received from sales of goods and rendering of services		19,934,949,434.60	19,004,240,467.37
Tax refund received		36,194,221.79	31,375,845.33
Other cash receipts in relation to operating activities	5.60	67,282,320.16	44,626,842.43
Cash inflows from operating activities		20,038,425,976.55	19,080,243,155.13
Cash paid for purchase of goods and services		13,351,826,722.28	12,664,592,145.73
Cash paid to and on behalf of employees		4,547,173,917.31	4,514,805,105.33
Taxes paid		309,404,444.77	499,792,717.30
Other cash payments in relation to operating activities	5.60	777,654,398.16	682,142,473.43
Cash outflows for operating activities		18,986,059,482.52	18,361,332,441.79
Net cash flows from operating activities		1,052,366,494.03	718,910,713.34
B. Cash flows from investing activities
Cash received from divestment		940,000,000.00	2,058,000,000.00
Investment income received		1,698,988.09	3,628,398.40
Net cash received from disposal of fixed assets, intangible assets and other non-current assets		19,524,745.68	54,793,494.36
Net cash received from disposal of subsidiaries and other operating units		-
Other cash receipts in relation to investing activities	5.60	7,519,412.24	17,304,064.59
Cash inflows from investing activities		968,743,146.01	2,133,725,957.35
Cash paid for acquisition of fixed assets, intangible assets and other non-current assets		852,598,278.28	740,288,322.18
Cash paid for investment		-	8,418,720.00
Cash paid for acquisition of subsidiaries and other operating units		-
Other cash payments in relation to investing activities	5.60	940,046,250.00	1,972,708,416.07
Cash outflows for investing activities		1,792,644,528.28	2,721,415,458.25
Net cash flows from investing activities		-823,901,382.27	-587,689,500.90
C. Cash flows from financing activities
Cash received from contribution by holders of the Company's equity instruments		1,470,000.00	34,434,447.40
T/o: Cash received from contribution by non-controlling shareholders of subsidiaries		1,470,000.00	34,434,447.40
Cash received from loans obtained		1,207,949,162.03	1,983,849,812.43
Other cash receipts in relation to financing activities	5.60	29,698,870.32	124,477,707.97
Cash inflows from financing activities		1,239,118,032.35	2,142,761,967.80
Cash paid for loan repayment		1,200,186,544.89	1,585,099,160.79
Cash paid for dividends, profit distribution and interests		242,202,830.02	416,953,509.12
T/o: Dividends and profit distribution paid by subsidiaries to the non-controlling shareholders		11,351,448.70	22,276,313.38
Other cash payments in relation to financing activities	5.60	194,761,195.31	180,801,350.36
Cash outflows for financing activities		1,637,150,570.22	2,182,854,020.27
Net cash flows from financing activities		-398,032,537.87	-40,092,052.47
D. Impact of exchange rate changes		-73,604,204.49	-114,432,910.85
E. Net increase of cash and cash equivalents		-243,171,630.60	-23,303,750.88
Add: Cash and cash equivalents as of 1 January		1,393,011,780.96	1,416,315,531.84
F. Cash and Cash equivalents as of 31 December		1,149,840,150.36	1,393,011,780.96

Consolidated Statement of Changes in Shareholders' Equity for the year ended 31 December 2022

Prepared by: Ningbo Jifeng Auto Parts Co., Ltd.

Currency unit: CNY Yuan

	Y/e 31/12/2022
	Equity attributable to shareholders of the Company
		Other equity instruments
	Share capital	Preferred shares	Perpetual debts	Others
A. Closing balance of the prior year	1,118,967,521,00			-8,931,251.42
Add: Change of accounting policies
Correction of prior period errors
Business combination under common control
Others
B. As of 1 January	1,118,967,523.00			-8,931,251.42
C. Current year movement	-2,181,104.00			21,428.52
a. Total comprehensive income
b. Contribution by holders of equity instruments	-2,181,104.00			21,428.52
1. Shareholders' contribution	156,471.00			21,428.52
2. Conbribution by holders of other equity instruments
3. Share-based payments recognised in equity
4. Others	-2.337.575.00
c. Appropriation
I. Transfer t0 surpläus reserves
2. Distribution to holders of equity instruments
3. Others
d. Transfer within equity
I. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
c. Designated reserves
I. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement
D. As of 31 December	1,116,786,419.00			-8,909,822.90

	Y/e 31/12/2022
	Equity attributable to shareholders of the Company

	Capital reserves	Less: Treasury stocks	Other comprehensive income	Designated reserves	Surplus reserves
A. Closing balance of the prior year	3,442,285,854.28	11,707,548.85	-389,264,599.22		221,996,279.40
Add: Change of accounting policies
Correction of prior period errors
Business combination under common control
Others
B. As of 1 January	3,442,285,854.28	11,707,548.85	-389,264,599.22		221,996,279.40
C. Current year movement	-8,389,487.80	40,978,561.15	279,586,525.81		-
a. Total comprehensive income			279,586,525.81
b. Contribution by holders of equity instruments	-8,389,487.80	40,978,561.15	-
1. Shareholders' contribution	987,532.19
2. Conbribution by holders of other equity instruments
3. Share-based payments recognised in equity
4. Others	-9,377,019.99	40,978,561.15
c. Appropriation					-
I. Transfer t0 surpläus reserves					-
2. Distribution to holders of equity instruments
3. Others
d. Transfer within equity
I. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
c. Designated reserves
I. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement
D. As of 31 December	3,433,896,366.48	52,686,110.00	-109,678,073.41		221,996,279.40

	Y/e 31/12/2022
	Equity attributable to shareholders of the Company

	Retained earnings	Subtotal	Non-controlling interests	Total equity
A. Closing balance of the prior year	271,471,288.30	4,644,817,545.49	353,705,405.65	4,998,522,951.14
Add: Change of accounting policies
Correction of prior period errors
Business combination under common control
Others
B. As of 1 January	271,471,288.30	4,644,817,545.49	353,705,405.65	4,998,522,951.14
C. Current year movement	-1,417,377,181.58	-1,189,318,380.20	-34,044,569.25	-1,223.362,949.45
a. Total comprehensive income	-1,417,377,181.58	-1,137,790,655.77	-24,163,120.55	-1,161,953,776.32
b. Contribution by holders of equity instruments		-51,527,724.43	1,470,000.00	-50,057,724.43
1. Shareholders' contribution		1,165,431.71	1,470,000.00	2,635,431.71
2. Conbribution by holders of other equity instruments
3. Share-based payments recognised in equity		-		.
4. Others		-52,693,156.14		-52,693,156.14
c. Appropriation	-	-	-11,351,448.70	-11.351,448.70
I. Transfer t0 surpläus reserves	.
2. Distribution to holders of equity instruments			-11,351,448.70	-11,351,448.70
3. Others
d. Transfer within equity
I. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
c. Designated reserves
I. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement		-		.
D. As of 31 December	(1,145,905,893.28)	3,455,499,165.29	319,660,836.40	3,775,160,001.69

	Y/e 31/12/2021
	Equity attributable to shareholders of the Company
		Other equity instruments
	Share capital	Preferred shares	Perpetual debts	Others
A. Closing balance of the prior year	1,021,249,621.00			-22,900,701.64
Add: Change of accounting policies
Correction of prior period errors
Business combination under common control
Others
B. As of 1 January	1,021,249,621.00			-22,900,701.64
C. Current year movement	97,717,902.00			13,969,450.22
a. Total comprehensive income
b. Contribution by holders of equity instruments	97,717,902.00			13,969,450.22
I. Shareholders' contribution	100,086,927.00			13,969,450.22
2. Contribution by holders of other equity instruments
3. Share-based payments recognised in equity
4. Others	-2,369,025,00
c. Appropriation
1. Transfer to surplus reserves
2. Distribution to holders of equity instruments
3. Others
d. Transfer within equity
I. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
e. Designated reserves
I. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement
D. As of 31 December	1,118,967,523.00			-8,931,251.42

	Y/e 31/12/2021
	Equity attributable to shareholders of the Company

	Capital reserves	Less: Treasury stocks	Other comprehensive income	Designated reserves
A. Closing balance of the prior year	2,854,777,350.69	23,582,348.80	-121,919,382.66
Add: Change of accounting policies
Correction of prior period errors
Business combination under common control
Others
B. As of 1 January	2,854,777,350.69	23,582,348.80	-121,919,382.66
C. Current year movement	587,508,503.59	-11,874,799.95	-267,345,216.56
a. Total comprehensive income			-267,345,216.56
b. Contribution by holders of equity instruments	633,280,168.84	-11,874,799.95
I. Shareholders' contribution	652,533,723.90
2. Contribution by holders of other equity instruments
3. Share-based payments recognised in equity	-7,460,215.38
4. Others	-11,793,339.68	-11,874,799.95
c. Appropriation
1. Transfer to surplus reserves
2. Distribution to holders of equity instruments
3. Others
d. Transfer within equity
I. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
e. Designated reserves
I. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement	-45,771,665.25
D. As of 31 December	3,442,285,854.28	11,707,548.85	-389,264,599.22

	Y/e 31/12/2021
	Equity attributable to shareholders of the Company

	Surplus reserves	Retained earnings	Subtotal	Non-controlling interests	Total equity
A. Closing balance of the prior year	207,378,775.29	354,442,722.68	4,269,446,036.56	297,667,184.11	4,567,113,220.67
Add: Change of accounting policies
Correction of prior period errors
Business combination under common control
Others
B. As of 1 January	207,378,775.29	354,442,722.68	4,269,446,036.56	297,667,184.11	4,567,113,220.67
C. Current year movement	14,617,504.11	-82,971,434.38	375,371,508.93	56,038,221.54	431,409,730.47
a. Total comprehensive income		126,370,529.59	-140,974,686.97	26,420,522.40	-114,554,164.57
b. Contribution by holders of equity instruments			756,842,321.01	12,291,067.27	769,133,388.28
I. Shareholders' contribution			766,590,101.12	33,800,000.00	800,390,101.12
2. Contribution by holders of other equity instruments
3. Share-based payments recognised in equity			-7,460,215,38		-7,460,215.38
4. Others			-2,287,564.73	-21,508,932.73	-23,796,497.46
c. Appropriation	14,617,504.11	-209,341,963.97	-194,724,459.86	-22,276,313.38	-217,000,773.24
1. Transfer to surplus reserves	14,617,504.11	-14,617,504.11
2. Distribution to holders of equity instruments		-194,724,459.86	-194,724,459.86	-22,276,313.38	-217.000,773.24
3. Others
d. Transfer within equity
I. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
e. Designated reserves
I. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement			-45,771,665.25	39,602,945.25	-6,168,720.00
D. As of 31 December	221,996,279.40	271,471,288.30	4,644,817,545.49	353,705,405.65	4,998,522,951.14

Statement of Financial Position as of 31 December 2022

Assets	Note	31/12/2022	31/12/2021
Current assets
Monetary funds		184,118,583.94	379,510,839.80
Financial assets held for trading
Derivative financial assets
Notes receivable		14,011,151.00	5,857,994.90
Accounts receivable	15.1	567,929,964.66	612,631,902.27
Receivables held for factoring		190,060,027.42	97,167,620.35
Prepayments		67,699,353.54	114,534,845.75
Other receivables	15.2	118,098,948.77	98,432,170.89
T/o: Interests receivable
Dividends receivable
Inventories		209,614,673.03	206,685,212.18
Contract assets
Held-for-sale assets
Non-current assets matured within 1 year		3,505,555.55	-
Other current assets		11,626,335.35	-
Total current assets		1,366,664,393.26	1,514,820,586.14
Non-current assets
Debt investments measured at amortised cost
Debt investments at fair value through other comprehensive income
Long-term receivables		153,400,000.00	156,905,555.55
Long-term equity investments	15.3	3,971,095,931.26	5,335,353,888.96
Equity investments at fair value through other comprehensive income
Other non-current financial assets
Investment properties		8,657,206.89	9,667,372.19
Fixed assets		275,271,033.76	259,488,133.55
Construction in progress		8,534,830.80	7,698,072.83
Biological assets held for production
Oil and gas assets
Right-of-use assets		-	98,211.13
Intangible assets		79,716,449.80	39,964,000.98
Development expenditure
Goodwill
Long-term prepaid expenses		5,144,082.95	6,891,698.18
Deferred tax assets		12,910,708.45	4,587,738.52
Other non-current assets		1,175,552.47	42,734,798.79
Total non-current assets		4,515,905,796.38	5,863,389,470.68






Total assets		5,882,570,389.64	7,378,210,056.82

Assets	Liabilities and equity	Note	31/12/2022	31/12/2021
Current assets	Current liabilities
Monetary funds	Short-term bank loans		9,989,148.33	141,871,150.83
Financial assets held for trading	Financial liabilities held for trading
Derivative financial assets	Derivative financial liabilities
Notes receivable	Notes payable		80,118,458.25	68,346,796.25
Accounts receivable	Accounts payable		494,288,258.87	468,076,353.63
Receivables held for factoring	Advanced receipts
Prepayments	Contract liabilities		34,866,368.51	4,487,001.18
Other receivables	Employee benefits payable		31,965,610.41	27,930,759.32
T/o: Interests receivable	Taxes payable		27,882,304.25	44,874,872.34
Dividends receivable	Other payables		129,302,571.65	96,093,891.40
Inventories	T/o: Interests payable
Contract assets	Dividends payable
Held-for-sale assets	Held-for-sale liabilities
Non-current assets matured within 1 year	Non-current liabilities due within 1 year		15,597,312.05	12,195,290.05
Other current assets	Other current liabilities		10,359,483.09	3,749,427.71
Total current assets	Total current liabilities		834,369,515.41	867,625,542.71
Non-current assets	Non-current liabilities
Debt investments measured at amortised cost	Long-term bank loans		641,070,000.00	628,000,000.00
Debt investments at fair value through other comprehensive income	Debt instruments payable		433,337,971.05	426,143,895.56
Long-term receivables	T/o: Preferred shares
Long-term equity investments	Perpetual debts
Equity investments at fair value through other comprehensive income	Lease liabilities
Other non-current financial assets	Long-term payables
Investment properties	Long-term employee benefits payable
Fixed assets	Provisions
Construction in progress	Deferred income		2,088,938.35	509,155.90
Biological assets held for production	Deferred tax liabilities		12,159,135.03	-
Oil and gas assets	Other non-current liabilities
Right-of-use assets	Total non-current liabilities		1,088,656,044.43	1,054,653,051.46
Intangible assets	Total liabilities		1,923,025,559.84	1,922,278,594.17
Development expenditure	Shareholders' Equity
Goodwill	Share capital		1,116,786,419.00	1,118,967,523.00
Long-term prepaid expenses	Other equity instruments		-8,909,822.90	-8,931,251.42
Deferred tax assets	T/o: Preferred shares
Other non-current assets	Perpetual debts
Total non-current assets	Capital reserves		3,290,759,044.94	3,299,148,532.74
	Less: Treasury stocks		52,686,110.00	11,707,548.85
	Other comprehensive income
	Designated reserves
	Surplus reserves		221,996,279.40	221,996,279.40
	Retained earnings		-608,400,980.64	836,457,927.78
	Total equity		3,959,544,829.80	5,455,931,462.65
Total assets	Total liabilities and equity		5,882,570,389.64	7,378,210,056.82

Statement of Comprehensive Income for the year ended 31 December 2022

Prepared by: Ningbo Jifeng Auto Parts Co., Ltd.

Currency unit: CNY Yuan

Item	Note	Y/e 31/12/2022	Y/e 31/12/2021
A. Revenue	15.4	1,799,579,586.64	1,614,325,639.68
Less: Cost of sales	15.4	1,454,009,309.37	1,215,645,621.29
Taxes and surcharges		11,980,688.51	9,923,296.53
Selling expenses		23,297,235.56	10,282,653.29
Administrative expenses		111,765,420.33	126,163,368.84
R&D expenses		81,274,035.20	59,285,271.24
Financial costs		38,899,970.78	50,283,541.47
T/o: Interest expenses		50,025,870.36	69,219,343.19
Interest income		10,250,944.75	33,178,381.41
Add: Other income		3,250,556.99	3,699,590.93
Investment income	15.5	15,288,459.79	28,561,193.71
T/o: Gain from joint ventures and associates measured at equity		-151,048.93
Gain from derecognition of financial assets measured at amortised cost
Gain from hedging of net exposure
Gain from fair value measurement
Credit impairment loss (loss with "-" prefix)		40,054.91	1,222,576.71
Asset impairment loss (loss with "-" prefix)		-1,547,301,551.15	-11,472,392.68
Gain from asset disposal		-1,568,400.89	2,994,536.60
B. Profit from operation		-1,451,937,953.46	167,747,392.29
Add: Non-operating income		34,679.91	161,441.93
Less: Non-operating expenses		186,423.29	1,261,476.18
C. Profit before tax		-1,452,089,696.84	166,647,358.04
Less: Income tax expenses		-7,230,788.42	20,472,316.93
D. Net profit		-1,444,858,908.42	146,175,041.11
Attributable to: Continuing operation		-1,444,858,908.42	146,175,041.11
Discontinued operation
E. After-tax other comprehensive income (OCI)		-	-3,333,888.89
a. OCI not reclassifiable to profit or loss in future periods
1. Remeasurement of defined benefit plans
2. OCI of joint ventures and associates measured at equity
3. Change of fair value of equity invesments at fair value through OCI
4. Change of fair value of the Company's own credit risk
b. OCI reclassi liable to profit or loss in future periods			-3,333,888.89
I. OCI of joint ventures and associates measured at equity
2. Change of fair value of debt invesments at fair value through OCI			-3,333,888.89
3. OCI upon reclassification of financial assets
4. Impairment of debt investments at fair value through OCI
5. Cashflow hedge reserve
6. Translation reserve
F. Total comprehensive income		-1,444,858,908.42	142,841,152.22

Statement of Cash Flows for the year ended 31 December 2022

Prepared by: Ningbo Jifeng Auto Parts Co., Ltd.

Currency unit: CNY Yuan

Item	Note	Y/e 31/12/2022	Y/e 31/12/2021
A. Cash flows from operating activities
Cash received from sales of goods and rendering of services		2,007,859,905.70	1,740,577,464.95
Tax refund received		-	69,863.81
Other cash receipts in relation to operating activities		8,239,962.27	76,624,637.10
Cash inflows from operating activities		2,016,099,867.97	1,817,271,965.86
Cash paid for purchase of goods and services		1,455,495,857.00	1,332,762,688.58
Cash paid to and on behalf of employees		186,018,867.17	162,911,674.98
Taxes paid		81,589,411.27	108,623,122.35
Other cash payments in relation to operating activities		77,563,723.47	106,185,166.57
Cash outflows for operating activities		1,800,667,858.91	1,710,482,652.48
Net cash flows from operating activities		215,432,009.06	106,789,313.38
B. Cash flows from investing activities
Cash received from divestment		860,000,000.00	1,850,000,000.00
Investment income received		15,438,091.35	58,329,846.58
Net cash received from disposal of fixed assets, intangible assets and other non-current assets		2,178,241.26	10,043,410.80
Net cash received from disposal of subsidiaries and other operating units		-
Other cash receipts in relation to investing activities		-	23,576,521.66
Cash inflows from investing activities		877,616,332.61	1,941,949,779.04
Cash paid for acquisition of fixed assets, intangible assets and other non-current assets		50,135,493.83	50,898,747.73
Cash paid for investment		170,707,397.00	749,471,939.62
Cash paid for acquisition of subsidiaries and other operating units		-
Other cash payments in relation to investing activities		860,000,000.00	1,751,613,841.67
Cash outflows for investing activities		1,080,842,890.83	2,551,984,529.02
Net cash flows from investing activities		-203,226,558.22	-610,034,749.98
C. Cash flows from financing activities
Cash received from contribution by holders of the Company's equity instruments		-
Cash received from loans obtained		488,480,000.00	1,031,700,000.00
Other cash receipts in relation to financing activities		11,057,419.20	65,149,134.59
Cash inflows from financing activities		499,537,419.20	1,096,849,134.59
Cash paid for loan repayment		603,710,000.00	493,700,000.00
Cash paid for dividends, profit distribution and interests		29,787,330.10	208,270,505.53
Other cash payments in relation to financing activities		78,174,496.40	11,673,295.96
Cash outflows for financing activities		711,671,826.50	713,643,801.49
Net cash flows from financing activities		-212,134,407.30	383,205,333.10
D. Impact of exchange rate changes		3,803,179.12	-12,555,860.17
E. Net increase of cash and cash equivalents		-196,125,777.34	-132,595,963.67
Add: Cash and cash equivalents as of 1 January		370,262,173.38	502,858,137.05
F. Cash and Cash equivalents as of 31 December		174,136,396.04	370,262,173.38

Statement of Changes in Shareholders' Equity for the year ended 31 December 2022

Prepared by: Ningbo Jifeng Auto Parts Co., Ltd.

Currency unit: CNY Yuan

	Year ended 31/12/2022
		Other equity instruments
	Share capital	Preferred shares	Perpetual debts	Others
A. Closing balance of the prior year	1,118,967,523.00			-8,931,251.42
Add: Change of accounting policies
Correction of prior period errors
Others
B. As of 1 January	1,118,967,523.00			.8,931,251.42
C. Current year movement	-2,181,104.00			21,428.52
a. Total comprehensive income
b. Contribution by holders of equity instruments	-2,181,104.00			21,428.52
I. Shareholders' contribution	156,471.00	-	-	21,428.52
2. Conbribution by holders of other equity instruments
3. Share-based payments recognised in equity
4. Others	-2,337,575.00	-	-	-
c. Appropriation
I. Transfer to surplus reserves
2. Distribution to holders of equity instruments
3. Others
d. Transfer within equity
1. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
e. Designated reserves
1. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement
D. As of 31 December	1,116,786,419.00			-8,909,822.90

	Year ended 31/12/2022

	Capital reserves	Less: Treasury stocks	Other comprehensive income	Designated reserves
A. Closing balance of the prior year	3,299,148,532.74	11,707,548.85	-
Add: Change of accounting policies
Correction of prior period errors
Others
B. As of 1 January	3,299,148,532.74	11,707,548.85	-
C. Current year movement	-8,389,487.80	40,978,561.15	-
a. Total comprehensive income			-
b. Contribution by holders of equity instruments	-8,389,487.80	40,978,561.15
I. Shareholders' contribution	987,532.19
2. Conbribution by holders of other equity instruments
3. Share-based payments recognised in equity
4. Others	-9,377,019.99	40,978,561.15
c. Appropriation	-
I. Transfer to surplus reserves
2. Distribution to holders of equity instruments
3. Others
d. Transfer within equity
1. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
e. Designated reserves
1. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement
D. As of 31 December	3,290,759,044.94	52,686,110.00

	Year ended 31/12/2022

	Surplus reserves	Retained earnings	Total equity
A. Closing balance of the prior year	221,996,279.40	836,457,927.78	5,455,931,462.65
Add: Change of accounting policies
Correction of prior period errors
Others
B. As of 1 January	221,996,279.40	836,457,927.78	5,455,931,462.65
C. Current year movement	-	-1,444,858,908.42	-1,496,386,632.85
a. Total comprehensive income		-1,444,858,908.42	-1,444,858,908.42
b. Contribution by holders of equity instruments			-51,527,724.43
I. Shareholders' contribution			1,165,431.71
2. Conbribution by holders of other equity instruments
3. Share-based payments recognised in equity			-
4. Others			-52,693,156.14
c. Appropriation	-	-	-
I. Transfer to surplus reserves	-	-
2. Distribution to holders of equity instruments			-
3. Others
d. Transfer within equity
1. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
e. Designated reserves
1. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement
D. As of 31 December	221,996,279.40	-608,400,980.64	3,959,544,829.80

	Y/e 31/12/2021
		Other equity instruments
	Share capital	Preferred shares	Perpetual debts	Others
A. Closing balance of the prior year	1,021,249,621.00			-22,900,701.64
Add: Change of accounting policies
Correction or prior period errors
Others
B. As of 1 January	1,021,249,621.00			-22,900,701.64
C. Current year movement	97,717,902.00			13,969,450.22
a. Total comprehensive income
b. Contribution by holders of equity instruments	97,717,902.00			13,969,450.22
1. Shareholders' contribution	100,086,927.00			13.969.450.22
2. Contribution by holders of other equity instruments
3. Share-based payments recognised in equity
4. Others	-2,369,025.00
c. Appropriation
I. Transfer to surplus reserves
2. Distribution to holders of equity instruments	--
3. Others
d. Transfer within equity
1. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
e. Designated reserves
1. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement
D. As of 31 December	1,118,967,523.00			-8,931,251.42

	Y/e 31/12/2021

	Capital reserves	Less: Treasury stocks	Other comprehensive income	Designated reserves
A. Closing balance of the prior year	2,665,321,980.97	23,582,348.80	3,333,888.89
Add: Change of accounting policies
Correction or prior period errors
Others
B. As of 1 January	2,665,321,980.97	23,582,348.80	3,333,888.89
C. Current year movement	633,826,551.77	-11,87-1,799.95	-3,333,888.89
a. Total comprehensive income			-3,333,888.89
b. Contribution by holders of equity instruments	633,826,551.77	-11,874,799.95
1. Shareholders' contribution	652,533,723.90
2. Contribution by holders of other equity instruments
3. Share-based payments recognised in equity	-7,460,215.38
4. Others	-11,246,956.75	-11,874,799.95
c. Appropriation
I. Transfer to surplus reserves
2. Distribution to holders of equity instruments
3. Others
d. Transfer within equity
1. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
e. Designated reserves
1. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement
D. As of 31 December	3,299,148,532.74	11,707,548.85

	Y/e 31/12/2021

	Surplus reserves	Retained earnings	Total equity
A. Closing balance of the prior year	207,378,775.29	899,624,850.64	4,750,426,066,35
Add: Change of accounting policies
Correction or prior period errors
Others
B. As of 1 January	207,378,775.29	899,624,850.64	4,750,426,066,35
C. Current year movement	14,617,504.11	-63,166,922.86	705.505.396.30
a. Total comprehensive income		146,175,041.11	142,841,152.22
b. Contribution by holders of equity instruments			757,388,703.94
1. Shareholders' contribution			766,590,101.12
2. Contribution by holders of other equity instruments
3. Share-based payments recognised in equity			-7,460,215.38
4. Others			-1,741,181.80
c. Appropriation	14,617,504.11	-209,341,963.97	-194,724,459.86
I. Transfer to surplus reserves	14,617,504.11	-14,617,504.11
2. Distribution to holders of equity instruments		-194,724,459.86	-194,724,459.86
3. Others
d. Transfer within equity
1. Capital reserves converted to share capital
2. Surplus reserves converted to share capital
3. Utilisation of surplus reserves to recover loss
4. Transfer of defined benefit plan (DBP) reserves to retained earnings
5. Transfer of non-DBP related OCI to retained earnings
6. Others
e. Designated reserves
1. Transfer to designated reserves
2. Utilisation of designated reserves
f. Other movement
D. As of 31 December	221,996,279.40	836,457,927.78	5,455,931,462.65

Notes to the Financial Statements for the Year Ended 31 December 2022

(Unless otherwise stated, all amounts are expressed in CNY Yuan.)

Note 1 Company profile

1.1 Company profile

Ningbo Jifeng Auto Parts Co., Ltd. (hereafter, Ningbo Jifeng, the Company, or Company) is a joint-stock limited liability company incorporated by Ningbo Jihong Holding Group Co., Ltd. (hereafter, JH Group) (previously knowned as Ningbo Jihong Investment Co., Ltd.), Wing Sing International Co., Ltd. (registered in Samoa; hereafter, WING SING), and Ningbo Junrun Hengrui Equity Investment LLP (hereafter, Junrun Hengrui) through reorganisation of a limited liability company. The reorgnisation was registered with the Administration Bureau of Industry and Commerce, Ningbo, Zhejiang (hereafter, Ningbo AIC) on 4 November 2011; upon registration, the Company's registered capital is CNY 180 million. The Company's renewed Business License (Code: 913302007503809970) was obtained on 5 July 2016. The Company's registered address is 17 Yingluohe Lu, Daqi, Beilun, Ningbo and the Company's legal representative is WANG Yiping.

Upon the approval (ZhengJianXuKe [2015] No. 181) issued by China Securities Regulatory Commission (hereafter, CSRC) on 30 January 2015, the Company issue to the public 60 million CNY ordinary shares (A-share) and became listed on the Main Board of Shanghai Stock Exchange (Code: 603997). Upon completion of the public issuance, the registered capital of the Company stood at CNY 420 million and total number of the Company's shares amounted to 420 million shares with face value at CNY 1.00 per share.

Upon approval by the 2016 Annual General Meeting held on 11 May 2017, the Company effected before tax dividend at CNY 0.24 per share for the 420 million shares totaling CNY 100.8 million and increased its share capital through bonus issue of 0.5 share per share for the 420 million shares totaling CNY 210 million by capitalising capital reserves. Upon completion of the distribution, total number of the Company's shares amounted to 630 million.

In accordance with the approval by the 2017 4th Extraordinary General Meeting held on 20 December 2017, the resolution of the 4th Meeting of the 3rd Term of the Board of Directors held 15 January 2018, and the resolution of the 12th Meeting of the 3rd Term of the Board of Directors held on 29 October 2018, the Company issued shares with restriction to qualified employees in two rounds; number of shares with restriction issue in the first and second round was 7,719.2 thousands and 1,929.8 thousands respectively. Upon the completion of grant, total number of the Company's share amounted to 639,649 thousands.

The Company repurchased and cancelled repurchased shares with restriction on 25 February 2019. Total number of the Company's shares reduced from 639,649 thousands by 235.8 thousands to 639,413.2 thousands. Resulting from the repurchase and cancellation, the registered capital of the Company reduced from CNY 639,649 thousands to CNY 639,413.2 thousands.

The approval (ZhengJianXuKe [2019] No. 1428) by the CSRC was obtained on 14 August 2019. In accordance with ZhengJianXuKe [2019] No. 1428: I. The Company's share issuance and convertible bond issuance plan as below for the purpose of asset acquisition is approved.

Investor	Security issued	Number of security issued
Ningbo Dongzheng Jihan Investment LLP (hereafter, DZ Jihan)	A-shares	227,404,479
Shanghai Merger Equity Investment Fund LLP (hereafter, Shanghai Merger Fund)	A-shares	50,065,876
Xinyu Runxin Gefeng Investment LLP (hereafter, Xinyu Runxin)	A-shares	39,525,691
Maanshan Guxin Junying Equity Investment Fund LLP (hereafter, Guxin Junying)	A-shares	23,715,415
Ningbo Meishan Tax-free Zone Lvmai Chengjin Investment LLP (hereafter, Lvmai Chengjin)	A-Shares	23,715,415
Guangzhou Liding Kaide Equity Investment Fund LLP (hereafter, Liding Kaide)	A-shares	19,762,845
DZ Jihan	Convertible bonds	4,000,000

II. Total proceeds from the planed issuance as above shall not exceed CNY 798 million. On 18 November 2019, the Company effected private issusance of 4 million convertible bonds at CNY 100 each (JFCB 01 Bond); total proceeds of the issuance amounted to CNY 400 million. On 10 December 2019, the Company effected private issuance of 384,189,721 shares at CNY 7.59 each for the acquisition of 100% shareholding in Ningbo Jiye Trading Co., Ltd. (hereafter, JYC) (previously known as Ningbo Jiye Investment Co., Ltd.).

On 18 November 2019, the Company effected private issuance of 7,182 thousands convertible bonds at CNY 100 each (JFCB 02 Bond).

Total number of shares of the Company reduced by 2.35 million by the Company's repurchase and cancellation of shares with restriction on 21 July 2020; reduced by 31,450 by the Company's repurchase and cancellation of shares with restriction on 18 March 2021; reduced by 2.34 million by the Company's repurchase and cancellation of shares with restriction on 3 June 2021; and reduced by2.34 million by the Company's repurchase and cancellation of shares with restriction on 27 June 2022.

7.18 million JFCB 02 bonds were exercised for conversion for 100.24 million shares of the Company in the period from 1 April 2021 through 12 January 2022. Total number of the Company's shares, as a result, increased by 100.24 million. The JFCB 02 Bond was delisted from the Shanghai Stock Exchange on 21 Jnuary 2022.

The Proposal for Repurchase and Cancellation of Shares with Restriction granted to Certain Plan Participants (hereafter, the 2022 April Proposal) was approved by the 13 th Meeting of the 4th Term of the Board of Directors and the 10th Meeting of the 4th Term of Supervisory Board. In accordance the 2022 April Proposal, 2.34 million shares with restriction granted to 31 plan participants were repurchased and cancelled as a result of failure in achieving the 2021 performance target as defined by the incentive plan governing these 2.34 milllion shares. Upon completion of the repurchase and cancellation, the registered capital of the Company stood at CNY 1,116.79 million.

As of the statement date, the Company's registered capital stood at CNY 1,116.79 million and the total number of shares of Company amounted to 1,116.79 million. Each share of the Company has the par value as CNY 1.00.

The Company's primary operations include design, development, manufacturing, process of and tenical advisory for auto parts, leasing of owned properties, development, manufacturing, processing and sales of moulds, testing devices, clipping devices, tooling devices and machinery equipments, development and sales of chemical materials and products (excluding dangerous chemicals), import and export of goods and technologies (excluding goods and technologies that are either prohibited from import or export or for which import or export are subject regulatory licensing), and provision of agency service for import and export of goods and technologies (excluding goods and technologies that are either prohibited from import or export or for which import or export are subject regulatory licensing).

The financial statements are approved by the Company's Board of Directors on 30 March 2023 for publication.

1.2 Scope of consolidation

1.2.1 Subsidiaries included in the Company's scope of consolidation as of the statement date

	Subsidiary	Abbreviation	Shareholding %
			Direct	Indirect
1	Changchun Jifeng Auto Parts. Co., Ltd.	Changchun Jifeng	100.00
2	Chengdu Jifeng Auto Parts. Co., Ltd.	Chengdu Jifeng	100.00
3	Guangzhou Jifeng Auto Parts. Co., Ltd.	Guangzhou Jifeng	100.00
4	Wuhan Jifeng Auto Parts. Co., Ltd.	Wuhan Jifeng	100.00
5	Wuhan Dongjun Jifeng Auto Parts. Co., Ltd.	Dongjun Jifeng		76.00
6	Ningbo Jifeng Sewing Co., Ltd.	Jifeng Sewing	100.00
7	Ningbo Yiqi Sihuan Jifeng Auto Parts Co., Ltd.	Yiqi Sihuan JF	55.00
8	Liuzhou Jifeng Auto Parts. Co., Ltd.	Liuzhou Jifeng	100.00
9	Shenyang Jifeng Auto Parts. Co., Ltd.	Shenyang Jifeng	100.00
10	Jifeng Automotive Interior GmbH	Jifeng DE	100.00
11	Jifeng Automotive Interior BH d.o.o.	Jifeng BA		100.00
12	Jifeng Automotive Interior CZ s.r.o.	Jifeng CZ		100.00
13	JIFENG AUTO PARTS CO., LTD	Jifeng US	100.00
14	Tianjin Jifeng Auto Parts. Co., Ltd.	Tianjin Jifeng	100.00
15	Guangzhou Huafeng Auto Parts. Co., Ltd.	Guangzhou Huafeng	51.00
16	Wuhan Jiheng Auto Parts. Co., Ltd.	Wuhan Jiheng	100.00
17	Shanghai Jiwen Corporate Management Co., Ltd.	Shanghai Jiwen	100.00
18	Ningbo Jifeng Technology Co., Ltd.	Jifeng Tech	100.00
19	Chongqing Jihan Technology Co., Ltd.	Chongqing Jihan	100.00
20	Ningbo Jiye Trading Co., Ltd.	JYC	100.00
21	Hefei Jifeng Auto Parts. Co., Ltd.	Hefei Jifeng	100.00
22	Jifeng Seating (Hefei) Co., Ltd. (previously known as Hefei Jiye Auto Parts. Co., Ltd.)	Hefei Seating (previously, JY Hefei)		100.00
23	Shanghai Jifeng Seating Co., Ltd.	Shanghai Seating	100.00
24	Jifeng Seating (Changzhou) Co., Ltd.	Changzhou Seating		100.00
25	Ningbo Jixin Automotive Technologcy Co., Ltd.	Ningbo Jixin	51.00
26	Jiye Auto Parts (Luxembourg) S. a r.l.	JYL		100.00
27	Jiye Auto Parts GmbH	JYDE		100.00
28	Jifeng Japan Ltd.	Jifeng JP	66.60
29	GRAMMER Aktiengesellschaft (Note)	Note		88.11
30	GRAMMER do Brasil Ltda.	Grammer Brazil		88.11
31	GRAMMER Seating Systems Limited	Grammer UK		88.11
32	Grammer Koltuk Sistemleri Sanayi ve Ticaret Anonim Șirketi	Grammer Turkey		87.58
33	GRAMMER, Inc.	Grammer Inc		88.11
34	GRAMMER CZ, s.r.o.	Grammer CZ		88.11
35	GRAMMER Japan Ltd.	Grammer Japan		88.11
36	GRAMMER AD	Grammer BG		87.09
37	GRAMMER System GmbH	Grammer System		88.11
38	GRAMMER Automotive Metall GmbH	Grammer Metal		88.11
39	GRAMMER AUTOMOTIVE SLOVENIJA proizvodnja delov notranie opreme d.o.o.	Grammer Slovenia		88.11
40	GRAMMER Industries, Inc.	GRAMMER Industries		88.11
41	GRAMMER Automotive Puebla S.A. de C.V.	Grammer Mexico		88.11
42	GRAMMER Automotive Polska Sp. z o.o.	Grammer Poland		88.11
43	Grammer Automotive Interior (Tianjin) Co., Ltd.	Grammer Tianjin		88.11
44	Grammer Automotive Interior (Changchun) Co., Ltd.	Grammer Changchun		88.11
45	Grammer Automotive Interior (Shanghai) Co., Ltd.	Grammer Shanghai		88.11
46	Grammer System doo Aleksinac	Grammer Serbia		88.11
47	GRAMMER Railway Interior GmbH	GRAMMER Railway		88.11
48	GRAMMER Deutschland GmbH (previously known as GRAMMER Technical Components GmbH)	GRAMMER Tech		88.11
49	GRAMMER Electronics NV	Grammer Belgium		88.11
50	Grammer Automotive Interior (Beijing) Co., Ltd.	Grammer Beijing		88.11
51	GRAMMER Automotive CZ s.r.o.	GRAMMER Auto CZ		88.11
52	GRAMMER Seats (Ningbo) Co., Ltd.	Grammer Ningbo		88.11
53	GRAMMER Automotive South Africa (Pty) Ltd.	Grammer ZA		88.11
54	GRAMMER S.A.	Grammer Argentina		88.11
55	GRAMMER Italia S.r.l.	Grammer Italy		88.11
56	GRAMMER Interior Components GmbH	GRAMMER Interior		88.11
57	GRAMMER Seats (Shaanxi) Co., Ltd.	Grammer Shaanxi		79.30
58	Grammer CZ Servicecenter s.r.o.	GRAMMER CZ Service		88.11
59	Grammer France S.A.R.L.	Grammer France		88.11
60	GrammPlast GmbH	GrammPlast		52.87
61	Toledo Molding & Die LLC	TMD LLC		88.11
62	TMD Mexico LLC	TMD Mexico		88.11
63	TMD International Holdings LLC	TMD Holding		88.11
64	Toledo Molding de Mexico S. de R.L de C.V.	TMD MX		88.11
65	Toledo Molding CZ s.r.o	TMD CZ		88.11
66	Grammer Automotive Interior (Shenyang) Co., Ltd.	Grammer Shenyang		88.11
67	Changchun GRAMMER FAWSN Vehicle Parts Co., Ltd.	Grammer FAWSN		43.17
68	Grammer (China) Holding Co., Ltd.	Grammer China Holding		88.11
69	Grammer Automotive Interior (Hefei) Co., Ltd.	Grammer Hefei		88.11
70	Grammer Automotive Interior (Harbin) Co., Ltd.	Grammer Harbin		52.87
71	Grammer Automotive Interior (Qingdao) Co., Ltd.	Grammer Qingdao		52.87
72	GeRuiMu (Haining) Automotive Parts Co., Ltd.	GRM Haining		100.00

Note: GRAMMER Aktiengesellschaft is individually referred to as Grammer AG or collectively with its subsidiaries referred to as the Grammer Group or Grammer Sub-group. JYDE has 86.20% shareholding in Grammer AG without exclusion of Grammer AG's treasury stock; with Grammer AG's treasury stock excluded, JYDE's shareholding is Grammer AG is 88.11%.

The Company and subsidiairies not within the Grammer Group are collectively referred to as the JF Sub-group.

See further details in Note 7.

1.2.2 Change of the scope of consolidation in the period

1.2.2.1 Subsidiaries included in the scope of consolidation for the first time

Subsidiary	Abbreviation	Period	Triggering event for consolidation
1 Shanghai Jifeng Seating Co., Ltd.	Shanghai Seating	Year ended 31/12/2022	Incorporation
2 Ningbo Jixin Automotive Technologcy Co., Ltd.	Ningbo Jixin	Year ended 31/12/2022	Incorporation
3 Jifeng Seating (Changzhou) Co., Ltd.	Changzhou Seating	Year ended 31/12/2022	Incorporation

1.2.2.2 No component was excluded from the scope of consolidation in the current reporting period.

Note 2 Basis of preparation for the financial statements

2.1 Basis of preparation

Based on going concern, according to actually occurred transactions and events, the Company prepares its financial statements in accordance with the Accounting Standards for Business Enterprises - Basic standards and concrete accounting standards, Accounting Standards for Business Enterprises - Application Guidelines, Accounting Standards for Business Enterprises - Interpretations and other relevant provisions (collectively known as "Accounting Standards for Business Enterprises" or ASBE(s)). At the same time, the Company discloses relevant financial information in accordance with Disclosure Rule for Companies with Publicly Traded Securities No. 15 - General Provisions for Financial Statements (Revised in 2014) issued by the CSRC.

2.2 Going concern

The Company has assessed its ability to continually operate for the next twelve months from the end of the reporting period, and no any matters that may result in doubt on its ability as a going concern were noted. Therefore, it is reasonable for the Company to prepare financial statements on the going concern basis.

Note 3 Significant account policies and accounting estimates

The following significant accounting policies and accounting estimates of the Company are formulated in accordance with the Accounting Standards for Business Enterprises. Activities not covered by this Note 3 are accouted for in accordance with relevant accounting policies of the Accounting Standards for Business Enterprises.

3.1 Statement of compliance with the Accounting Standards for Business Enterprises

The Company prepares its financial statements in accordance with the requirements of the Accounting Standards for Business Enterprises, truly and completely reflecting the Company's financial position as at 31 December 2022, and its operating results, changes in shareholders' equity, cash flows and other related information for the year then ended.

3.2 Accounting period

The accounting year of the Group is from January 1 to December 31.

3.3 Operating cycle

The normal operating cycle of the Group is twelve months.

3.4 Functional currency

The functional currency of the Company is CNY Yuan. An overseas subsidiary (or branch) not domiciled in Mainland China uses the currency prominent in its business activities as its functional currency.

3.5 Business combination under common control and business combination not under common control

3.5.1 Business combination under common control

The assets and liabilities that the Company obtains in a business combination under common control are measured at their carrying amounts as consolidated in the ultimate controller's consolidated statement of financial position at the combination date. If the accounting policy adopted by the acquired entity is different from that adopted by the Company, the Company, according to accounting policy it adopts, adjusts the relevant items in the financial statements of the acquired entity based on the principle of materiality, the Company's capital reserve (capital premium or share premium) is adjusted by the difference between the carrying amount of the net assets obtained by the Company and the carrying amount of the consideration paid for the combination; where the capital reserve (capital premium or share premium) is not sufficient to absorb the difference, the excess is adjusted to the Company's surplus reserves, and retained earnings if needed.

See Note 3.6.6 for business combination under common control through multiple transactions.

3.5.2 Business combination not under common control

The identifiable assets and liabilities that the Company obtains in a business combination not under common control are measured at their fair value at the acquisition date. If the accounting policy adopted by the acquired entity is different from that adopted by the Company, the Company, according to accounting policy it adopts, adjusts the relevant items in the financial statements of the acquired entity based on the principle of materiality. The Company recognises the excess of the cost of combination over the fair value of the identifiable net assets it obtains from the acquired entity as goodwill. Where the fair value of the identifiable net assets obtained by the Company is higher than the cost of combination, the Company review the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it obtains from the acquired entity as well as the cost of combination; where the excess remains upon the review, the Company recognises the excess through profit or loss for the period in which the combination occurs.

See Note 3.6.6 for business combination not under common control through multiple transactions.

3.5.3 Transaction costs of a business combination

The intermediary costs such as audit, legal services and valuation consulting and other related management costs that are directly attributable to the business combination are charged to profit or loss in the period in which they are incurred. The costs to issue equity or debt securities for the consideration of business combination are recorded as a part of the value of the respect equity or debt securities upon initial recognition.

3.6 Consolidated financial statements

3.6.1 Scope of consolidation

The scope of consolidation is determined on the basis of control. It not only includes subsidiaries determined based on voting power (or similar) or other arrangement, but also structured entities under one or several contract arrangements.

Control exists when the Company has all the following: power over the investee; exposure, or rights to variable returns from the Company's involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor's returns. Subsidiaries are the entities that controlled by the Company (including a legal entity, a divisible part of the investee, and a structured entity controlled by a legal entity). A structured entity (sometimes called a Special Purpose Entity) is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity.

3.6.2 Accounting policies applicable to an investing entity

Where an entity is an investing entity, it consolidates its subsidiaries to the extent that the subsidiaries which provide services to the investing entity; investment by the investing entity in other subsidiaries of the investing entity which are not consolidated by the investing entity is recognised as financial assets at fair value through profit or loss.

An entity is an investing entity is all of the following conditions are satisfied:

I.	the entity obtains funds from one or more investors for the purpose of providing those investors with investment management services;
II.	the entity commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and
III.	the entity measures and evaluates the performance of substantially all of its investments on a fair value basis.

Where a non-investing entity becomes an investing entity, subsidiaries excluded from consolidation upon the change in status are accounted for in accordance with the principle of partial disposal not giving rise to loss of control.

Where an investing entity becomes a non-investing entity, subsidiaries which were not previously consolidated are consolidated into the non-investing entity upon the change in status in accordance with the principle of business combination not under common control while their fair value as of the date of change in status is recognised by the non-investing entity as cost of combination.

3.6.3 Preparation of the consolidated financial statements

The consolidated financial statements are prepared by the Company based on the financial statements of the Company and its subsidiaries, and using other related information.

When preparing consolidated financial statements, the Company considers the entire group as an accounting entity, adopts uniform accounting policies and applies the requirements of Accounting Standard for Business Enterprises related to recognition, measurement and presentation. The consolidated financial statements reflect the overall financial position, operating results and cash flows of the group.

I.	Like items of assets, liabilities, equity, income, expenses and cash flows of the parent are combined with those of the subsidiaries.
II.	The carrying amount of the parent's investment in each subsidiary is eliminated (off-set) against the parent's portion of equity of each subsidiary.
III.	The impact of intragroup transactions between the Company and the subsidiaries or between subsidiaries are eliminated, and when intragroup transactions indicate an impairment of related assets, the losses are recognised in full.
IV.	Adjustments are made for special transactions from the perspective of the group.

3.6.4 Method of preparation of the consolidated financial statements when subsidiaries are acquired or disposal in the reporting period

3.6.4.1 Acquisition of subsidiaries or business

I. Subsidiaries or businesses acquired through business combination under common control When preparing the consolidated statements of financial position, the opening balances are adjusted. Related items of comparative financial statements are adjusted as well, deeming that the combined entity has always existed ever since the ultimate controlling party began to control. Incomes, expenses and profits of the subsidiary arising from the beginning of the reporting period to the end of the reporting period are included into the consolidated statement of comprehensive income. Related items of comparative financial statements are adjusted as well, deeming that the combined entity has always existed ever since the ultimate controlling party began to control.

Cash flows from the beginning of the reporting period to the end of the reporting period are included into the consolidated statement of cash flows. Related items of comparative financial statements are adjusted as well, deeming that the combined entity has always existed ever since the ultimate controlling party began to control.

II. Subsidiaries or businesses acquired through business combination not under common control When preparing the consolidated statements of financial position, the opening balances of the consolidated statements of financial position are not adjusted.

Incomes, expenses and profits of the subsidiary arising from the acquisition date to the end of the reporting period are included into the consolidated statement of comprehensive income.

Cash flows from the acquisition date to the end of the reporting period are included into the consolidated statement of cash flows.

3.6.4.2 Disposal of subsidiaries and business

When preparing the consolidated statements of financial position, the opening balances of the consolidated statements of financial position are not adjusted.

Incomes, expenses and profits incurred from the beginning of the subsidiary to the disposal date are included into the consolidated statement of comprehensive income.

Cash flows from the beginning of the subsidiary to the disposal date are included into the consolidated statement of cash flows.

3.6.5 Special consideration in consolidation elimination

3.6.5.1 Long-term equity investment held by the subsidiaries to the Company is recognised as treasury stock of the Company, which is offset with equity, represented as "treasury stock" under "equity" in the consolidated statement of financial position.

Long-term equity investment held by subsidiaries between each other is accounted for taking long-term equity investment held by the Company to its subsidiaries as reference. That is, the long-term equity investment is eliminated (off- set) against the portion of the corresponding subsidiary's equity.

3.6.5.2 Due to not belonging to share capital and capital reserve, and being different from retained earnings and undistributed profit, "Designated reserves" and "General risk reserves" is recovered based on the proportion attributable to owners of the parent company after longterm equity investment to the subsidiaries is eliminated with the subsidiaries' equity.

3.6.5.3 If temporary timing difference between the book value of the assets and liabilities in the consolidated statement of financial position and their tax basis is generated as a result of elimination of unrealised inter-company transaction profit or loss, deferred tax assets of deferred tax liabilities are recognised, and income tax expense in the consolidated statement of comprehensive income is adjusted simultaneously, excluding deferred taxes related to transactions or events directly recognised in equity or business combination.

3.6.5.4 Unrealised inter-company transactions profit or loss generated from the Company selling assets to its subsidiaries is eliminated against "net profit attributable to the shareholders of the parent company" in full. Unrealised inter-company transactions profit or loss generated from the subsidiaries selling assets to the Company is eliminated between "net profit attributable to the shareholders of the parent company" and "net profit attributable to noncontrolling shareholders" pursuant to the proportion of the Company in the related subsidiaries. Unrealised inter-company transactions profit or loss generated from the assets sales between the subsidiaries is eliminated between "net profit attributable to the shareholders of the parent company" and "net profit attributable to non-controlling shareholders" pursuant to the proportion of the Company in the selling subsidiaries.

3.6.5.5 If loss attributable to the non-controlling shareholders of a subsidiary in current period is more than the proportion of non-controlling interest in this subsidiary at the beginning of the period, non-controlling interest is still to be written down.

3.6.6 Accounting for special transactions

3.6.6.1 Acquiring shares from non-controlling shareholders

Where, the Company purchases non-controlling interests of its subsidiary, in the separate financial statements of the Company, the cost of the long-term equity investment obtained in purchasing non-controlling interests is measured at the fair value of the consideration paid. In the consolidated financial statements, difference between the cost of the long-term equity investment newly obtained in purchasing non-controlling interests and share of the subsidiary's net assets from the acquisition date or combination date continuingly calculated pursuant to the newly acquired shareholding proportion shall be adjusted into capital reserve (capital premium or share premium). If capital reserve is insufficient for offset, surplus reserve and retained earnings shall be offset in turn.

3.6.6.2 Gaining control over a subsidiary in stages through multiple transactions

I. Business combination under common control through multiple transactions

On the combination date, in the separate financial statement, initial cost of the long-term equity investment is determined according to the share of carrying amount of the acquiree's net assets in the ultimate controlling entity's consolidated financial statements after combination. The difference between the initial cost of the long-term equity investment and the carrying amount of the long -term investment held prior of control plus book value of additional consideration paid at acquisition date is adjusted into capital reserve (capital premium or share premium). If the capital reserve is not enough to absorb the difference, any excess is adjusted against surplus reserve and undistributed profit in turn.

In the consolidated financial statements, the assets and liabilities acquired during the combination are recognised at their carrying amounts in the ultimate controlling entity's consolidated financial statements on the combination date unless any adjustment is resulted from the difference in accounting policies. The difference between the carrying amount of the investment held prior of control plus book value of additional consideration paid on the acquisition date and the net assets acquired through the combination is adjusted into capital reserve (capital premium or share premium). If the capital reserve is not enough to absorb the difference, any excess is adjusted against retained earnings.

If the acquiring entity holds equity investment in the acquired entity prior to the combination date and the equity investment is accounted for under the equity method, related profit or loss, other comprehensive income and other changes in equity which have been recognised during the period from the later of the date of the Company obtaining original equity interest and the date of both the acquirer and the acquiree under common control of the same ultimate controlling party to the combination is offset against the opening balance of retained earnings at the comparative financial statements period respectively.

II. Business combination not under common control through multiple transactions

On the consolidation date, in the separate financial statements, the initial cost of long-term equity investment is determined according to the carrying amount of the original long-term investment plus the cost of new investment.

In the consolidated financial statements, the equity interest of the acquired entity held prior to the acquisition date is re-measured at its fair value on the acquisition date. Difference between the fair value of the equity interest and its book value is recognised as investment income. Other comprehensive income related to the equity interest held prior to the acquisition date calculated through equity method is transferred to current investment income of the acquisition period, excluding other comprehensive income resulted from the remeasurement of defined benefit plans. The Company discloses acquisition-date fair value of the equity interest held prior to the acquisition date, and the related gains or losses due to the remeasurement based on fair value.

3.6.6.3 Disposal of investment in subsidiaries without a loss of control

For partial disposal of a long-term equity investment in a subsidiary without a loss of control, when the Company prepares consolidated financial statements, difference between consideration received from the disposal and the corresponding share of subsidiary's net assets cumulatively calculated from the acquisition date or combination date is adjusted into capital reserve (capital premium or share premium). If the capital reserve is not enough to absorb the difference, any excess is adjusted against retained earnings.

3.6.6.4 Disposal of investment in subsidiaries with a loss of control

I. Loss of control through one single transaction

If the Company loses control in an investee through partial disposal of the equity investment, when the consolidated financial statements are prepared, the retained equity interest is remeasured at fair value at the date of loss of control. The difference between i) the fair value of consideration received from the disposal plus non-controlling interest retained; ii) share of the former subsidiary's net assets cumulatively calculated from the acquisition date or combination date according to the original proportion of equity interest, is recognised in current investment income when control is lost.

Moreover, other comprehensive income and other changes in equity related to the equity investment in the former subsidiary is transferred into current investment income when control is lost, excluding other comprehensive income resulted from the remeasurement of defined benefit plans.

II. Loss of control through multiple transactions

In the consolidated financial statements, whether the transactions should be accounted for as "a single transaction" needs to be decided firstly.

If the disposal through multiple transactions is not classified as "a single transaction", in the separate financial statements, for transactions prior to the date of loss of control, carrying amount of each disposal of long-term equity investment is de-recognised at upon disposal, and the difference between consideration received and the carrying amount of long-term equity investment corresponding to the equity interest disposed is recognised in current investment income; in the consolidated financial statements, the disposal transaction is accounted for in accordance with 3.6.6.3.

If the disposal through multiple transactions is classified as "a single transaction", these transactions should be accounted for as one single transaction of disposal of subsidiary resulting in loss of control. In the separate financial statements, for each transaction prior to the date of loss of control, difference between consideration received and the carrying amount of long-term equity investment corresponding to the equity interest disposed is recognised in other comprehensive income firstly, and transferred to profit or loss as a whole when control is lost; in the consolidated financial statements, for each transaction prior to the date of loss of control, difference between consideration received and proportion of the subsidiary's net assets corresponding to the equity interest disposed is recognised in profit or loss as a whole when control is lost.

In considering of the terms and conditions of the transactions as well as their economic impact, the presence of one or more of the following indicators may lead to account for multiple transactions as a single transaction:

i. The transactions are entered into simultaneously or in contemplation of one another.

ii. The transactions form a single transaction designed to achieve an overall commercial effect. iii. The occurrence of one transaction depends on the occurrence of at least one other transaction. iv. One transaction, when considered on its own merits, does not make economic sense, but when considered together with the other transaction or transactions would be considered economically justifiable.

3.6.6.5 Diluting equity share of parent company in its subsidiaries due to additional capital contribution by the subsidiaries' non-controlling shareholders.

Other shareholders (non-controlling shareholders) of the subsidiaries inject additional capital in the subsidiary, which results in the dilution of equity interest of parent company in the subsidiary. In the consolidated financial statements, difference between the share of the corresponding subsidiary's net assets calculated based on the parent's equity interest before and after the capital injection is adjusted into capital reserve (capital premium or share premium). If the capital reserve is not enough to absorb the difference, any excess is adjusted against retained earnings.

3.7 Joint arrangement

A joint arrangement is an arrangement of which two or more parties have joint control. Joint arrangement of the Company is classified as either a joint operation or a joint venture.

3.7.1 Joint operation

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.

The Company recognises the following items in relation to shared interest in a joint operation, and accounts for them in accordance with relevant accounting standards of the Accounting Standards for Business Enterprises:

I.	its assets, including its share of any assets held jointly;
II.	its liabilities, including its share of any liabilities incurred jointly;
III.	its revenue from the sale of its share of the output arising from the joint operation;
IV.	its share of the revenue from the sale of the output by the joint operation; and
V.	its expenses, including its share of any expenses incurred jointly.

3.7.2 Joint venture

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

The Company accounts for its investment in the joint venture by applying the equity method of long-term equity investment.

3.8 Cash and cash equivalents

Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents include short-term (generally within three months of maturity at acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

3.9 Foreign currency

3.9.1 Translation of a transaction denominated in a foreign currency

At the time of initial recognition of a foreign currency transaction, the amount in the foreign currency is translated into the amount in the functional currency at the spot exchange rate of the transaction date, or at an exchange rate which is determined through a systematic and reasonable method and is approximate to the spot exchange rate of the transaction date (hereinafter referred to as the approximate exchange rate).

3.9.2 Translation of monetary items denominated in foreign currencies on a balance-sheet date The foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. 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. The foreign currency non-monetary items measured at the historical cost are translated at the spot exchange rate on the transaction date; the foreign currency non-monetary items restated to a fair value measurement are translated at the spot exchange rate at the date when the fair value was determined, the difference between the restated functional currency amount and the original functional currency amount shall be recorded into the profits and losses at the current period.

3.9.3 Translation of financial statements denominated in a foreign currency

Before translating the financial statements of foreign operations, the accounting period and accounting policies are adjusted so as to conform to the Company's accounting period and accounting policies. The adjusted foreign operation financial statements denominated in foreign currency (other than functional currency) are translated in accordance with the following method:

I.	The asset and liability items in the statement of financial position shall be translated at the spot exchange rates at the date of that statement of financial position. The equity items except retained earnings are translated at the spot exchange rates when they are incurred.
II.	The income and expense items in the statement of comprehensive income are translated at the spot exchange rates or approximate exchange rate at the date of transaction.
III.	Foreign currency cash flows and cash flows of foreign subsidiaries are translated at the spot exchange rate or approximate exchange rate when the cash flows are incurred. The effect of exchange rate changes on cash is presented separately in the statement of cash flows as an adjustment item.
IV.	The differences arising from the translation of foreign currency financial statements are presented separately as "other comprehensive income" under the equity items of the consolidated statement of financial position.

When disposing a foreign operation involving loss of control, the cumulative amount of the exchange differences relating to that foreign operation recognised under other comprehensive income in the statement of financial position are reclassified into current profit or loss according to the proportion disposed.

3.10 Financial instruments

A financial instrument is any contract which gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.

3.10.1 Recognition and derecognition of a financial instrument

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, an entity becomes party to the contractual provisions of the instrument.

A financial asset can only be derecognised when the rights to the contractual cash flows from the financial asset distinguish; or the financial asset is transfer and the transfer meets the drecognition criteria defined by Note 3.10.6.

A financial liability (or a part of a financial liability) is derecognised in on of the following ways:

I.	a financial liability (or a part of the financial liability) is derecognised when the obligation associated with the financial liability (or the part of the financial liability) is released;
II.	Where an existing financial liability is replaced by a new financial liability by an agreement with the counter party and the new financial liability is substantially different from the existing financial liability, the existing financial liability is derecognised while the new financial liability is recognised;
III.	Where the contractual terms of a financial liability (or a part of a financial liability) are substantially altered, the financial liability is dercognised in full and a new financial liability reflecting the contractual terms after alteration is recognised.

Purchase or sale of a financial instrument in a regular-way is recognised and derecognised using trade date accounting. A regular-way purchase or sale of a financial instrument is a transaction under a contract whose terms require delivery of the instrument within the timeframe established generally by regulations or convention in the market place concerned. Trade date is the date on which the entity commits itself to purchase or sell aA financial instrument.

3.10.2 Classification and measurement of financial assets

A financial asset is recognised as one of the following upon initial recognition based on both the business model for managing the financial asset and the contractual cash flow characteristics of the financial asset:

I.	a financial asset at amortised cost;
II.	a financial asset at fair value through profit or loss (FVATPL); or
III.	a financial asset at fair value through other comprehensive income (FVATOCI).

Reclassification of a financial asset is permitted if, and only if, the objective of the entity's business model for managing the financial asset changes. In this circumstance, all affected financial assets are reclassified on the first day of the first reporting period after the changes in business model; otherwise a financial asset cannot be reclassified after initial recognition.

Financial assets shall be measured at initial recognition at fair value. For financial assets measured at fair value through profit or loss, transaction costs are recognised in current profit or loss. For financial assets not measured at fair value through profit or loss, transaction costs should be included in the initial measurement. Notes receivable or accounts receivable that arise from sales of goods or rendering of services are initially measured at the transaction price defined in the accounting standard of revenue where the transaction does not include a significant financing component.

Subsequent measurement of financial assets will be based on their categories:

I. Financial assets at amortised cost

A financial asset is classified as a financial asset at amortised cost when both the following conditions are satisfied:

i.	the financial asset is held within the business model whose objective is to hold the financial asset in order to collect contractual cash flows; and
ii.	the contractual term of the financial asset gives rise to cash flows on specified dates that are solely payment of principal and interest on the outstanding principal amount.

A financial asset at amortised cost is subsequently measured at amortised cost by adopting the effective interest rate method. Any gain or loss arising from derecognition, amortisation computed using the effective interest rate method, and impairment are recognised in current profit or loss.

II. Financial assets at fair value through other comprehensive income (FVATOCI)

A financial asset is classified as a FVATOCI when both the following conditions are satisfied:

i.	the financial asset is held within the business model whose objective is achieved by both collecting contractual cash flows and selling financial asset; and
ii.	the contractual term of the financial asset gives rise to cash flows on specified dates that are solely payment of principal and interest on the outstanding principal amount.

A FVATOCI is subsequently measured at fair value with changes in fair value recognised in other comprehensive income excep for the following gain or loss, which is recognised in current profit or loss:

i.	gain or loss arising from impairment or exchange differences; and
ii.	interest income calculated based on the effective interest rate

Where a non-trading equity instrument investment is irrevocably designated as a FVTAOCI, fair value change is recognised in other comprehensive income and dividend income is recognised in current profit or loss. Upon derecognised, cumulative gain or loss previously recognised in other comprehensive income is reclassified to retained earnings.

III Financial assets at fair value through profit or loss (FVATPL)

A financial asset which is neither a financial asset at amortised cost nor a FVATOCI is classified as a FVATPL. A FVATPL is subsequently measured as fair value with changes in fair value recognised in current profit or loss.

3.10.3 Classification and measurement of financial liabilities

The Company classified the financial liabilities as financial liabilities at fair value through profit or loss (FVLTPL), loan commitments at a below-market interest rate, financial guarantee contracts, and financial liablities at amortised cost.

Subsequent measurement of financial assets will be based on the classification:

I. Financial liabilities at fair value through profit or loss (FVLTPL)

Held-for-trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated as FVLTPL are classified as financial liabilities at FVLTPL. After initial recognition, any gain or loss (including interest expense) are recognised in current profit or loss except for those to which hedge accounting is applied. For a financial liability that is designated as a FVLTPL, changes in the fair value of the financial liability that is attributable to changes in the own credit risk of the issuer is recognised in other comprehensive income. At derecognition, cumulative gain or loss previously recognised under other comprehensive income is reclassified to retained earnings.

II. Loan commitments and financial guarantee contracts

A loan commitment is a commitment by the Company to provide a loan to customer under specified contract terms. The provision of impairment losses of loan commitments is recognised based on expected credit losses model.

A financial guarantee contract is a contract that requires the Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial guarantee contract liability shall be subsequently measured at the higher of the amount determined in accordance with the accounting policies applicable to impairment of a financial asset and the amount initially recognised less the cumulative amortisation calculated in accordance with the accounting policies applicable to revenue.

III. Financial liabilities at amortised cost

A financial liability at amortised cost is subsequently measured at its amortised cost calculated using the effective interest rate method.

Unless in exceptional case, financial liabilities and equity instruments are classified in the following ways:

I.

Where the issuer of a financial instrument has no unconditional right to avoid deliverying cash or another financial asset(s) to fulfill an obligation, this obligation meets the definition of a financial liability. A contract of a financial instrument may not explicitly comprise terms and conditions relating to a obligation of delivery cash or another financial asset(s), it may implicitly include such obligation through other terms and conditions.

II.

Where a financial instrument can only or may be settled by the issuer's own equity instruments:

i.	if the issuer's equity instruments are a substitution of cash or other financial asset(s), the financial instrument is the issuer's liability;
ii.	if the issuer's equity instruments enable the holder to share the issuer's residual interest after deducting all of the issuer's liabilities from all of the issuer's assets, the financial instrument is the issuer's equity instrument.

In certain cases, a financial instrument can only or may be settled by the issuer's own equity instruments and the settlement amount is calculated by multiplying the number of equity instruments deliverable with the fair value of the equity instrument at the settlement date, the instrument is the issuer's financial liablity regardless of whether the settlement amount is fixed or determinable wholly or partially by variables other than the market price of the issuer's own equity instrument (such as interest rate, market price of a commodity, or price of a financial instrument).

3.10.4 Derivatives and embedded derivatives

A financial derivative is initially measured at its fair value at the inception date of the derivative contract and subsequently measured at fair value. At initial recognition, a financial deriivative with fair value at positive amount is recognised as an asset and as a liability if the fair value is at negative amount.

Except for the change of fair value of the effective portion of a cash flow hedge, which is recognised other comprehensive income and reclassified to profit or loss upon cease of hedging effectiveness, change of fair value of a financial financial derivative in recognised in current profit or loss.

Where the non-derivative part of a hybrid instrument is a financial asset, the hybrid instrument is as a whole accounted for a financial asset.

Where the non-derivative part of a hybrid instrument is a non-financial asset, the derivative part is separately accounted for as a financial derivative if all of the following conditions are satisfied:

I.	the hybrid instrument is not accounted for at fair value through profit or loss;
II.	the economic characteristics and risks of the derivative part is not closely related to those of the non-derivative part; and
III.	a stand-alone instrument with characteristics similar to the derivative part is a financial derivative.

Where the fair value of the derivative part of a hybrid instrument with the non-derivative part being a non-financial asset cannot be inidividually measured either upon or subsequent to initial recognition, the hybrid instrument as a whole is accounted as either a FVATPL or FVLTPL.

3.10.5 Impairment of financial instruments

Impairment allowance for financial assets at amortised costs, FVATOCI, contract assets, lease receivables, loan commitments and financial guarantee contracts is recognised on the basis of their expected credit loss.

I. Measurement of expected credit loss

Expected credit loss are the weighted average of credit loss of a financial instrument with the respective risks of a default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (ie all cash shortfalls), discounted at the original effective interest rate or credit-adjusted effective interest rate in the case of purchased credit-impaired financial assets or financial assets with origninated credit impairment.

Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.

12-month expected credit losses are the portion of lifetime expected credit losses that represent the expected credit losses that result from default events on a financial instrument that are possible within the 12 months after the reporting date (or the expected lifetime, if the expected life of a financial instrument is less than 12 months).

At each reporting date, the Company classifies financial instruments into three stages and makes provisions for expected credit losses accordingly. A financial instrument of which the credit risk has not significantly increased since initial recognition is at stage

1.	The Company shall measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. A financial instrument with a significant increase in credit risk since initial recognition but is not considered to be credit-impaired is at stage
2.	The Company shall measure the loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses. A financial instrument is considered to be credit-impaired as at the end of the reporting period is at stage
3.	The Company shall measure the loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses.

The Company may assume that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date and measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.

For financial instrument at stage 1, stage 2 and those have low credit risk, the interest revenue shall be calculated by applying the effective interest rate to the gross carrying amount of a financial asset (ie, impairment loss not been deducted). For financial instrument at stage 3, interest revenue shall be calculated by applying the effective interest rate to the amortised cost after deducting of impairment loss.

For notes receivable, accounts receivable, accounts receivable financing and contract assets, no matter it contains a significant financing component or not, the Company shall measure the loss allowance at an amount equal to the lifetime expected credit losses.

i. Receivables and contract assets

For the notes receivable, accounts receivable, other receivables, accounts receivable financing, long-term receivables and contract assets which are demonstrated to be impaired by any objective evidence, or applicable for individual assessment, the Company shall individually assess for impairment and recognise the loss allowance for expected credit losses. If the Company determines that no objective evidence of impairment exists for notes receivable, accounts receivable, other receivables, accounts receivable financing, long-term receivables and contract assets, or the expected credit loss of a single financial asset cannot be assessed at reasonable cost, such notes receivable, accounts receivable, other receivables, accounts receivable financing, long-term receivables and contract assets shall be divided into several groups with similar credit risk characteristics and collectively calculated the expected credit loss. The determination basis of groups is as following:

A. Notes receivables:

	Group 1: Commercial acceptance
	Group 2: Bankers' acceptance

For each group, the Company calculates expected credit losses through default exposure and the lifetime expected credit losses rate, taking reference to historical experience for credit losses and considering current condition and expectation for the future economic situation.

B. Accounts receivable:

	Group 1: Related parties within the scope of consolidation
	Group 2: Portfolio by nature
	Group 3: Other clients

Impairment loss for accounts receivable and contract assets classified in Group 2 is recognised either by impairment assessment on individual item or impairment assess by portfolio. Accounts receivable are categories into different portfolios on the basis of similar risk characteristics, such as portfolio by status of overdue or portfolio by credit risk rating. Impairment loss is computed using the simplified expected credit risk model. The model considers historical credit loss rate and forward-looking credit loss rate applicable to a particular account receivable (or portfolio of accounts receivable). The historical credit loss rate of a particular account receivable (or portfolio of accounts receivable) is the average loss rate of each group computed on the basis of the actual amount written of in the last 5 years. The forward-looking credit loss rate applicable to a particular portfolio of accounts receivable is the weighted average credit loss rate computed on the basis of the defaut risk rate applicable to each group of clients within that portfolio. The credit loss for accounts receivable is computed on the basis of the balance of each age group and the overall credit loss rate. The credit loss for contract assets is computed on the basis of the balance of contract assets and the forward-looking credit loss rate.

Other receivable items (including notes receivable, other receivable, other current assets and long-term receivables) are individually assessed for expected credit loss.

Impairment allowance for a receivable arising from trading (including a lease receivable) or contract asset is measured at the expected credit loss over the life of the particular asset. The expected credit loss applicable to such particular asset is estimated by the historical credit loss matrix with adjustment by features of the debtor and assessment for current and expected general economic conditions on the balance-sheet date.

Impairment allowance for a financial instrument, which is not mentioned above, is measured at the expected credit loss over the life of the particular instrument except for a financial instrument with the following features, of which the impairment allowance is measured at the expected credit loss of the particular asset over the next twelve months from the balance-sheet date:

•	its credit risk is relatively low as of the balance-sheet date; and
•	its credit risk has not increased significantly since its initial recognition.

The expected credit loss for a portfolio of accounts receivable is computed using the life-time expected credit loss rate of the accounts receivable and the age groups of these accouns receivable while taking into consideration of their historical credit loss and the assessment for current and expected general economic conditions.

C. Other receivables:

	Group 1: Related parties within the scope of consolidation
	Group 2: Portfolio by nature
	Group 3: Age group portfolio

The expected credit loss for a portfolio of other receivables is computed using the expected credit loss rate over the next 12 months of the other receivables and their exposure to default risk while taking into consideration of their historical credit loss and the assessment for current and expected general economic conditions.

D. Receivables held for factoring:

	Group 1: Notes receivable
	Group 2: Accounts receivable

The expected credit loss for receivables held for factoring is computed using the life-time expected credit loss rate of the receivables and their exposure to default risk while taking into consideration of their historical credit loss and the assessment for current and expected general economic conditions.

E. Long-term receivables:

	Group 1: Overdue long-term receivables
	Group 2: Undue long-term receivables

The expected credit loss for Group 1 is computed using the life-time expected credit loss rate of the receivables and their exposure to default risk while taking into consideration of their historical credit loss and the assessment for current and expected general economic conditions. The expected credit loss for Group 2 is computed using the expected credit loss rate over the next 12 months of the receivables and their exposure to default risk while taking into consideration of their historical credit loss and the assessment for current and expected general economic conditions.

ii. Debt investments measured at amortised cost and debt investments at fair value through other comprehensive income

The expected credit loss for a debt investment measured at amortised cost or debt investment at fair value through other comprehensive income is computed using the expected credit loss rate over the next 12 months or the entire life of the investment and its exposure to default risk while taking into consideration of the counter party to the investment and the nature of the investment.

II. Low credit risk

If the financial instrument has a low risk of default, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfill its contractual cash flow obligations.

III. Significant increase in credit risk

The Company shall assess whether the credit risk on a financial instrument has increased significantly since initial recognition, using the change in the risk of a default occurring over the expected life of the financial instrument, through the comparison of the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition.

To make that assessment, the Company shall consider reasonable and supportable information, that is available without undue cost or effort, and that is indicative of significant increases in credit risk since initial recognition, including forward-looking information. The information considered by the Company are as following:

i.	significant changes in internal price indicators of credit risk as a result of a change in credit risk since inception;
ii.	existing or forecast adverse change in the business, financial or economic conditions of the borrower that results in a significant change in the borrower's ability to meet its debt obligations;
iii.	an actual or expected significant change in the operating results of the borrower; An actual or expected significant adverse change in the regulatory, economic, or technological environment of the borrower;
iv.	significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements, which are expected to reduce the borrower's economic incentive to make scheduled contractual payments or to otherwise have an effect on the probability of a default occurring;
v.	significant change that are expected to reduce the borrower's economic incentive to make scheduled contractual payments
vi.	expected changes in the loan documentation including an expected breach of contract that may lead to covenant waivers or amendments, interest payment holidays, interest rate step-ups, requiring additional collateral or guarantees, or other changes to the contractual framework of the instrument;
vii.	significant changes in the expected performance and behaviour of the borrower viii. contractual payments are not less than 30 days past due.

Depending on the nature of the financial instruments, the Company shall assess whether the credit risk has increased significantly since initial recognition on an individual financial instalment or a group of financial instruments. When assessed based on a group of financial instruments, the Company can group financial instruments on the basis of shared credit risk characteristics, for example, past due information and credit risk rating.

Generally, the Company shall determine the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due. The Company can only rebut this presumption if the Company has reasonable and supportable information that is available without undue cost or effort, that demonstrates that the credit risk has not increased significantly since initial recognition even though the contractual payments are more than 30 days past due.

IV. Credit-impaired financial asset

The Company shall assess at each reporting date whether the credit impairment has occurred for financial asset at amortised cost and debt investment at fair value through other comprehensive income. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidences that a financial asset is credit-impaired include observable data about the following events:

Significant financial difficulty of the issuer or the borrower; a breach of contract, such as a default or past due event; the lender(s) of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider; it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for that financial asset because of financial difficulties; the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.

V. Presentation of impairment of expected credit loss

In order to reflect the changes of credit risk of financial instrument since initial recognition, the Company shall at each reporting date remeasure the expected credit loss and recognise in profit or loss, as an impairment gain or loss, the amount of expected credit losses addition(or reversal). For financial asset at amortised cost, the loss allowance shall reduce the carrying amount of the financial asset in the statement of financial position; for debt investment at fair value through other comprehensive income, the loss allowance shall be recognised in other comprehensive income and shall not reduce the carrying amount of the financial asset in the statement of financial position.

VI. Write-off

The Company shall directly reduce the gross carrying amount of a financial asset when the Company has no reasonable expectations of recovering the contractual cash flow of a financial asset in its entirety or a portion thereof. Such write-off constitutes a derecognition of the financial asset. This circumstance usually occurs when the Company determines that the debtor has no assets or sources of income that could generate sufficient cash flow to repay the writeoff amount. Recovery of financial asset written off shall be recognised in profit or loss as reversal of impairment loss.

3.10.6 Transfer of financial assets

An entity may transfer a financial asset by either transferring the contractual rights to the cash flows of the financial asset to another party or transferring the financial asset to another party while retaining the contractual rights to the cash flows of the financial asset and assuming the contractual obligations to deliver cash flows received to one or multiple parties.

I. Derecognition of transferred assets

If the Company transfers substantially all the risks and rewards of ownership of the financial asset, or neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial asset, the financial asset shall be derecognised. Whether the Company has retained control of the transferred asset depends on the transferee's ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer, the Company has not retained control.

The Company judges whether the transfer of financial asset qualifies for derecognition based on the substance of the transfer.

If the transfer of financial asset qualifies for derecognition in its entirety, the difference between the following shall be recognised in profit or loss:

i.

the carrying amount of transferred financial asset;

ii.

the sum of consideration received and the part derecognised of the cumulative changes in fair value previously recognised in other comprehensive income (The financial assets involved in the transfer are classified as financial assets at fair value through other comprehensive income in accordance with Article 18 of the Accounting Standards for Business Enterprises - Recognition and Measurement of Financial Instruments).

If the transferred asset is a part of a larger financial asset and the part transferred qualifies for derecognition, the previous carrying amount of the larger financial asset shall be allocated between the part that continues to be recognised (For this purpose, a retained servicing asset shall be treated as a part that continues to be recognised) and the part that is derecognised, based on the relative fair values of those parts on the date of the transfer. The difference between following two amounts shall be recognised in profit or loss:

i.

the carrying amount (measured at the date of derecognition) allocated to the part derecognised

ii.

the sum of the consideration received for the part derecognised and part derecognised of the cumulative changes in fair value previously recognised in other comprehensive income (The financial assets involved in the transfer are classified as financial assets at fair value through other comprehensive income in accordance with Article 18 of the Accounting Standards for Business Enterprises - Recognition and Measurement of Financial Instruments).

II. Continuing involvement in transferred assets

If the Company neither transfers nor retains substantially all the risks and rewards of ownership of a transferred asset, and retains control of the transferred asset, the Company shall continue to recognise the transferred asset to the extent of its continuing involvement and also recognise an associated liability.

The extent of the Company's continuing involvement in the transferred asset is the extent to which it is exposed to changes in the value of the transferred asset.

III. Continue to recognise the transferred assets

If the Company retains substantially all the risks and rewards of ownership of the transferred financial asset, the Company shall continue to recognise the transferred asset in its entirety and the consideration received shall be recognised as a financial liability.

The financial asset and the associated financial liability shall not be offset. In subsequent accounting period, the Company shall continuously recognise any income (gain) arising from the transferred asset and any expense (loss) incurred on the associated liability.

3.10.7 Offsetting financial assets and financial liabilities

Financial assets and financial liabilities shall be presented separately in the statement of financial position and shall not be offset. When meets the following conditions, financial assets and financial liabilities shall be offset and the net amount presented in the statement of financial position:

The Company currently has a legally enforceable right to set off the recognised amounts; The Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

In accounting for a transfer of a financial asset that does not qualify for derecognition, the Company shall not offset the transferred asset and the associated liability.

3.10.8 Determination of fair value of financial instruments

See Note 3.11 for determination of fair value of financial instruments.

3.11 Determination of fair value

Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company determines fair value of the related assets and liabilities based on market value in the principal market, or in the absence of a principal market, in the most advantageous market price for the related asset or liability. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

The principal market is the market in which transactions for an asset or liability take place with the greatest volume and frequency. The most advantageous market is the market which maximizes the value that could be received from selling the asset and minimizes the value which is needed to be paid in order to transfer a liability, considering the effect of transport costs and transaction costs both.

If the active market of the financial asset or financial liability exists, the Company shall measure the fair value using the quoted price in the active market. If the active market of the financial instrument is not available, the Company shall measure the fair value using valuation techniques. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

3.11.1 Valuation techniques

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, including the market approach, the income approach and the cost approach. The Company shall use valuation techniques consistent with one or more of those approaches to measure fair value. If multiple valuation techniques are used to measure fair value, the results shall be evaluated considering the reasonableness of the range of values indicated by those results. A fair value measurement is the point within that range that is most representative of fair value in the circumstances.

When using the valuation technique, the Company shall give the priority to relevant observable inputs. The unobservable inputs can only be used when relevant observable inputs is not available or practically would not be obtained. Observable inputs refer to the information which is available from market and reflects the assumptions that market participants would use when pricing the asset or liability. Unobservable Inputs refer to the information which is not available from market and it has to be developed using the best information available in the circumstances from the assumptions that market participants would use when pricing the asset or liability.

3.11.2 Fair value hierarchy

To Company establishes a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs and second to the Level 2 inputs and the lowest priority to Level 3 inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.

3.12 Inventories

3.12.1 Classification of inventories

Inventories are finished goods or products held for sale in the ordinary course of business, goods in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services. The Group's inventories includs raw materials, semi-finished goods, finished goods, consignment stock, inventories on outsourced processing, costs for contract fulfillment, etc.

3.12.2 Measurement method applicable to issuance of inventories

Inventories are issued at the moving weighted average costs.

3.12.3 Inventory system

The perpetual inventory system is adopted. The inventories should be counted at least once a year, and surplus or losses of inventory stocktaking shall be included in current profit and loss.

3.12.4 Provision for impairment of inventory

Inventories are stated at the lower of cost and net realizable value. The excess of cost over net realisable value of the inventories is recognised as provision for impairment of inventory, and recognised in current profit or loss.

Net realizable value of the inventory should be determined on the basis of reliable evidence obtained, and factors such as purpose of holding the inventory and impact of post balance sheet event shall be considered.

3.12.4.1 In normal operation process, finished goods, products and materials for direct sale, their net realizable values are determined at estimated selling prices less estimated selling expenses and relevant taxes and surcharges; for inventories held to execute sales contract or service contract, their net realizable values are calculated on the basis of contract price. If the quantities of inventories specified in sales contracts are less than the quantities held by the Company, the net realizable value of the excess portion of inventories shall be based on general selling prices. Net realizable value of materials held for sale shall be measured based on market price.

3.12.4.2 For materials in stock need to be processed, in the ordinary course of production and business, net realisable value is determined at the estimated selling price less the estimated costs of completion, the estimated selling expenses and relevant taxes. If the net realisable value of the finished products produced by such materials is higher than the cost, the materials shall be measured at cost; if a decline in the price of materials indicates that the cost of the finished products exceeds its net realisable value, the materials are measured at net realisable value and differences shall be recognised at the provision for impairment.

3.12.4.3 Provisions for inventory impairment are generally determined on an individual basis. For inventories with large quantity and low unit price, the provisions for inventory impairment are determined on a category basis.

3.12.4.4 If any factor rendering write-downs of the inventories has been eliminated at the reporting date, the amounts written down are recovered and reversed to the extent of the inventory impairment, which has been provided for. The reversal shall be included in profit or loss.

3.12.5 Amortisation method of low-value consumables

A low-value consumable is amortised in full upon issuance. A packaging material is amortised in full upon issuance.

3.13. Contract assets and contract liabilities

Contract assets and contract liabilities are reocgnised on the basis of fulfilment of performance obligations and payment received from clients. A right to receive a promised consideration from a client resulting from goods transferred to or services provided to the client (where the right to consideration is dependent on factors other than the passage of time) is reocgnised a contract asset. A payment received from a client for which goods shall be transferred to or services shall be provided to the client is recognised as a contract liability.

See Note 3.10 for impairment of contract assets.

Contract assets and contract liabilities are presentd as line items on the statement of financial position. A contract asset and contract liability arising from one contract are presented on a net basis; while the net amount is a debit balance, it is presented in contract assets or other non-current assets depending on liquidity; while the net amount is a credit balance, it is presented in contract liabilities or other non-current liabilities depending on liquidity. Contract assets and contract liabilities arising from different contracts are not offset.

3.14 Contract costs

Costs for a contract include costs to fulfill the contract and costs to obtain the contract.

An asset is recognised for the costs incurred to fulfill a contract only if those costs meet all of the following criteria:

I.	the costs are directly associated with a contract or an anticipated contract, explicitly chargeable to the client under the contract, incurred only for the contract;
II.	the costs generate or enhance resouces of the Company that will be used in satisfying performance obligations in the future; and
III.	the costs are expected to be recovered.

An asset is recognised for the incremental costs incurred to obtain a contract with a client if those costs are expected to be recovered.

An asset recognised for the costs of a contract is amortised on a systematic basis that is consistent with recognition of revenue arising from the contract. Where the costs incurred to obtain a contract would be amortised for a period less than one year should they be recognised as an asset, the costs are recognised in the current profit or loss as incurred.

An impairment is recognised for an asset recognised for the costs of a contract to the extent that the carrying amount of the asset exceeds:

I.	the remaining amount of consideration that is expected to be received in exchange for the goods or services to which the asset relates; less
II.	the costs that relate directly to providing those goods or services and that have not been recognised as expenses.

Upon recognition of the impairment, further consideration is given for provision for an onerous contract, if necessary.

A reversal of some or all of an impairment loss previously recognised for an asset for the costs of a contract when the impairment conditions no longer exist or have improved. The increased carrying amount of the asset is cappted by the amount that would have been determined (net of amortisation) if no impairment loss had been recognised previously.

An asset recognised for the costs to fulfill a contract is presented in inventories if its amortisation is not longer than 1 year or an operating cycle upon initial recognition; otherwise, it is presented in other non-current assets.

An asset recognised for the costs to obtain a contract is presented in other current assets if its amortisation is not longer than 1 year or an operating cycle upon initial recognition; otherwise, it is presented in other non-current assets.

3.15 Long-term equity investments

Long-term equity investments refer to equity investments where an investor has control of, or significant influence over, an investee, as well as equity investments in joint ventures. Associates of the Company are those entities over which the Company has significant influence.

3.15.1 Determination basis of joint control or significant influence over the investee

Joint control is the relevant agreed sharing of control over an arrangement, and the arranged relevant activity must be decided under unanimous consent of the parties sharing control. In assessing whether the Company has joint control of an arrangement, the Company shall assess first whether all the parties, or a group of the parties, control the arrangement. When all the parties, or a group of the parties, considered collectively, are able to direct the activities of the arrangement, the parties control the arrangement collectively. Then the Company shall assess whether decisions about the relevant activities require the unanimous consent of the parties that collectively control the arrangement. If two or more groups of the parties could control the arrangement collectively, it shall not be assessed as have joint control of the arrangement. When assessing the joint control, the protective rights are not considered.

Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. In determination of significant influence over an investee, the Company should consider not only the existing voting rights directly or indirectly held but also the effect of potential voting rights held by the Company and other entities that could be currently exercised or converted, including the effect of share warrants, share options and convertible corporate bonds that issued by the investee and could be converted in current period.

If the Company holds, directly or indirectly 20% or more but less than 50% of the voting power of the investee, it is presumed that the Company has significant influence of the investee, unless it can be clearly demonstrated that in such circumstance, the Company cannot participate in the decision-making in the production and operating of the investee.

3.15.2 Determination of initial investment cost

3.15.2.1 Long-term equity investments arising from business combination

3.15.2.1.1 For a business combination involving enterprises under common control, if the Company makes payment in cash, transfers non-cash assets or bears liabilities as the consideration for the business combination, the share of carrying amount of the owners' equity of the acquiree in the consolidated financial statements of the ultimate controlling party is recognised as the initial cost of the long-term equity investment on the combination date. The difference between the initial investment cost and the carrying amount of cash paid, non-cash assets transferred and liabilities assumed shall be adjusted against the capital reserve; if capital reserve is not enough to be offset, undistributed profit shall be offset in turn.

3.15.2.1.2 For a business combination involving enterprises under common control, if the Company issues equity securities as the consideration for the business combination, the share of carrying amount of the owners' equity of the acquiree in the consolidated financial statements of the ultimate controlling party is recognised as the initial cost of the long-term equity investment on the combination date. The total par value of the shares issued is recognised as the share capital. The difference between the initial investment cost and the carrying amount of the total par value of the shares issued shall be adjusted against the capital reserve; if capital reserve is not enough to be offset, undistributed profit shall be offset in turn.

3.15.2.1.3 For business combination not under common control, the assets paid, liabilities incurred or assumed and the fair value of equity securities issued to obtain the control of the acquiree at the acquisition date shall be determined as the cost of the business combination and recognised as the initial cost of the long-term equity investment. The audit, legal, valuation and advisory fees, other intermediary fees, and other relevant general administrative costs incurred for the business combination, shall be recognised in profit or loss as incurred.

3.15.2.2 Long-term equity investments not arising from business combination

3.15.2.2.1 For long-term equity investments acquired by payments in cash, the initial cost is the actually paid purchase cost, including the expenses, taxes and other necessary expenditures directly related to the acquisition of long-term equity investments.

3.15.2.2.2 For long-term equity investments acquired through issuance of equity securities, the initial cost is the fair value of the issued equity securities.

3.15.2.2.3 For the long-term equity investments obtained through exchange of non-monetary assets, if the exchange has commercial substance, and the fair values of assets traded out and traded in can be measured reliably, the initial cost of long-term equity investment traded in with non-monetary assets are determined based on the fair values of the assets traded out together with relevant taxes. Difference between fair value and book value of the assets traded out is recorded in current profit or loss. If the exchange of non-monetary assets does not meet the above criterion, the book value of the assets traded out and relevant taxes are recognised as the initial investment cost.

3.15.2.2.4 For long-term equity investment acquired through debt restructuring, the initial cost is measured at the sum of the fair value of the debt instuments given away and taxes and other costs associated with the debt instruments. Difference between the fair value of the debt instruments and their carrying value is recognised in current profit or loss.

3.15.3 Subsequent measurement and recognition of profit or loss

Long-term equity investment to an entity over which the Company has ability of control shall be accounted for at cost method. Long-term equity investment to a joint venture or an associate shall be accounted for at equity method. In certain occasion, the Company may invest in an associate partly through a venture capital, mutual fund, trust, or investment linked insurance fund (collectively, an investment intermediate). In such case, the investment in the associate through an investment intermediate is accounted for by fair value through profit or loss; only the investment directly from the Company to the associate is accounted for by the equity method.

3.15.3.1 Cost method

For Long-term equity investment at cost method, cost of the long-term equity investment shall be adjusted when additional amount is invested or a part of it is withdrawn. The Company recognises its share of cash dividends or profits which have been declared to distribute by the investee as current investment income.

3.15.3.2 Equity method

If the initial cost of the investment is in excess of the share of the fair value of the net identifiable assets in the investee at the date of investment, the difference shall not be adjusted to the initial cost of long-term equity investment; if the initial cost of the investment is in short of the share of the fair value of the net identifiable assets in the investee at the date investment, the difference shall be included in the current profit or loss and the initial cost of the long-term equity investment shall be adjusted accordingly.

The Company recognises the share of the investee's net profits or losses, as well as its share of the investee's other comprehensive income, as investment income or losses and other comprehensive income respectively, and adjusts the carrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by the share of any profit or cash dividends declared to distribute by the investee. The investor's share of the investee's owners' equity changes, other than those arising from the investee's net profit or loss, other comprehensive income or profit distribution, shall be recognised in the investor's equity, and the carrying amount of the long-term equity investment shall be adjusted accordingly. The Company recognises its share of the investee's net profits or losses after making appropriate adjustments of investee's net profit based on the fair values of the investee's identifiable net assets at the investment date. If the accounting policy and accounting period adopted by the investee is not in consistency with the Company, the financial statements of the investee shall be adjusted according to the Company's accounting policies and accounting period, based on which, investment income or loss and other comprehensive income, etc., shall be adjusted. The unrealized profits or losses resulting from inter-company transactions between the company and its associate or joint venture are eliminated in proportion to the company's equity interest in the investee, based on which investment income or losses shall be recognised. Any losses resulting from inter-company transactions between the investor and the investee, which belong to asset impairment, shall be recognised in full.

Where the Company obtains the power of joint control or significant influence, but not control, over the investee, due to additional investment or other reason, the relevant long-term equity investment shall be accounted for by using the equity method, initial cost of which shall be the fair value of the original investment plus the additional investment. Where the original investment is classified as other equity investment, difference between its fair value and the carrying value, in addition to the cumulative gain or loss previously recorded in other comprehensive income, shall be recogised into current profit or loss at the time when the equity method becomes applicable.

If the Company loses the joint control or significant influence of the investee for some reasons such as disposal of equity investment, the retained interest shall be measured at fair value and the difference between the carrying amount and the fair value at the date of loss the joint control or significant influence shall be recognised in profit or loss. When the Company discontinues the use of the equity method, the Company shall account for all amounts previously recognised in other comprehensive income under equity method in relation to that investment on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities.

3.15.4 Impairment of long-term equity investments

See Note 3.21 for details.

3.16 Investment properties

3.16.1 Classification

Investment properties are properties to earn rentals or for capital appreciation or both, including:

I.	Land use right leased out;
II.	Land held for transfer upon appreciation;
III.	Buildings leased out.

3.16.2 Measurement

Investment properties are subsequently measured by the cost method. See Note 3.21 for impairment of investment properties.

The Company calculates the depreciation or amortization based on the net amount of investment property cost less the accumulated impairment and the net residual value using straight-line method. The estimated useful life and annual depreciation rates which are determined according to the categories, estimated economic useful lives and estimated net residual rates are listed as followings:

Category	Useful life in years	Scrap value rate (%)	Annual depreciation rate (%)
Houses and buildings	20.00	10.00	4.50
Land use rights	50.00	0.00	2.00

3.17 Fixed assets

Fixed assets refer to the tangible assets with higher unit price held for the purpose of producing commodities, rendering services, renting or business management with useful lives exceeding one year.

3.17.1 Recognition

Fixed assets will only be recognised at the actual cost paid when obtaining as all the following criteria are satisfied:

I.	It is probable that the economic benefits relating to the fixed assets will flow into the Company;
II.	The costs of the fixed assets can be measured reliably.

Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, if recognition criteria of fixed assets are satisfied, otherwise the expenditure shall be recorded in current profit or loss when incurred.

3.17.2 Depreciation

The Company begins to depreciate the fixed asset from the next month after it is available for intended use using the straight-line-method. The estimated useful life and annual depreciation rates which are determined according to the categories. The estimated economic useful lives and estimated net residual rates of fixed assets held by the JF Sub-group are listed as followings:

Category	Depreciation method	Useful life	Scrap value rate	Annual depreciation rate
		in years	(%)	(%)
Houses and buildings	Straight line	10-20	10.00	4.50 - 9.00
Machinery	Straight line	3 - 10	10.00	9,00 - 30,00
Transportation vehicles	Straight line	5-10	10.00	9.00- 18.00
Administrative and other devices	Straight line	3 - 10	10.00	9.00 - 30.00

As business practice of the Grammer Group differs from the JF Sub-group in nature, useful lives, scrap value and annual depreciation of fixed assets of the Grammer Group differ from the JF Sub-group. The depreciation policies applicable to the Grammer Group is not adjusted, which are presented as below:

Category	Depreciation method	Useful life	Scrap value rate	Annual depreciation rate
		in years	(%)	(%)
Houses and buildings	Straight line	10-40	0.00	2.50 - 10.00
Machinery, transportation vehicles, administrative and other devices	Straight line	2-25	0.00	4.00 - 50.00

Lands with permanent usage right is not amortised.

For the fixed assets with impairment provided, the impairment provision should be excluded from the cost when calculating depreciation.

At the end of reporting period, the Company shall review the useful life, estimated net residual value and depreciation method of the fixed assets. Estimated useful life of the fixed assets shall be adjusted if it is changed compared to the original estimation.

3.18 Construction in progress

3.18.1 Construction in progress is measured on an individual project basis.

3.18.2 Transfer to fixed assets

The initial book values of the fixed assets are stated at total expenditures incurred before they are ready for their intended use, including construction costs, original price of machinery equipment, other necessary expenses incurred to bring the construction in progress to get ready for its intended use and borrowing costs of the specific loan for the construction or the proportion of the general loan used for the constructions incurred before they are ready for their intended use. The construction in progress shall be transferred to fixed asset when the installation or construction is ready for the intended use. For construction in progress that has been ready for their intended use but relevant budgets for the completion of projects have not been completed, the estimated values of project budgets, prices, or actual costs should be included in the costs of relevant fixed assets, and depreciation should be provided according to relevant policies of the Company when the fixed assets are ready for intended use. After the completion of budgets needed for the completion of projects, the estimated values should be substituted by actual costs, but depreciation already provided is not adjusted.

3.19 Borrowing costs

3.19.1 Capitalisation

The Company shall capitalize the borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets when meet the following conditions:

I.	Expenditures for the asset are being incurred;
II.	Borrowing costs are being incurred, and;
III.	Acquisition, construction or production activities that are necessary to prepare the assets for their intended use or sale are in progress.

Other borrowing cost, discounts or premiums on borrowings and exchange differences on foreign currency borrowings shall be recognized into current profit or loss when incurred. Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted abnormally and the interruption is for a continuous period of more than 3 months.

Capitalization of such borrowing costs ceases when the qualifying assets being acquired, constructed or produced become ready for their intended use or sale. The expenditure incurred subsequently shall be recognised as expenses when incurred.

3.19.2 Capitalisation rate and capitalised amount

When funds are borrowed specifically for purchase, construction or manufacturing of assets eligible for capitalization, the Company shall determine the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the period less any interest income on bank deposit or investment income on the temporary investment of those borrowings.

Where funds allocated for purchase, construction or manufacturing of assets eligible for capitalization are part of a general borrowing, the eligible amounts are determined by the weighted-average of the cumulative capital expenditures in excess of the specific borrowing multiplied by the general borrowing capitalization rate. The capitalization rate will be the weighted average of the borrowing costs applicable to the general borrowing.

3.20 Intangible assets

3.20.2 Initial measurement

An intangible asset is initial measured at the actual cost of acquisition.

3.20.2 Useful lives

3.20.2.1 Intangible assets with define useful lives

Category	Useful life	Basis for useful life determination
	in years
Land use rights	50	Legal right to use
Client relationship	15	Period that the asset can generate economic benefits
Trademarks	15	Period that the asset can generate economic benefits
Technologies	13	Period that the asset can generate economic benefits
Concessions and industrial rights	3-12	Period that the asset can generate economic benefits

For intangible assets with finite useful life, the estimated useful life and amortisation method are reviewed annually at the end of each reporting period and adjusted when necessary. No change incur in current year in the estimated useful life and amortisation method upon review. 3.20.2.2 Assets of which the period to bring economic benefits to the Company are unforeseeable are regarded as intangible assets with indefinite useful lives. The Company reassesses the useful lives of those assets at every year end. If the useful lives of those assets are still indefinite, impairment test should be performed on those assets at the balance sheet date.

3.20.2.3 Amortisation

For intangible assets with finite useful lives, their useful lives should be determined upon their acquisition and systematically amortised on a straight-line basis [units of production method] over the useful life. The amortisation amount shall be recognized into current profit or loss according to the beneficial items. The amount to be amortised is cost deducting residual value. For intangible assets which has impaired, the cumulative impairment provision shall be deducted as well. The residual value of an intangible asset with a finite useful life shall be assumed to be zero unless: there is a commitment by a third party to purchase the asset at the end of its useful life; or there is an active market for the asset and residual value can be determined by reference to that market; and it is probable that such a market will exist at the end of the asset's useful life.

Intangible assets with indefinite useful lives shall not be amortised. The Company reassesses the useful lives of those assets at every year end. If there is evidence to indicate that the useful lives of those assets become finite, the useful lives shall be estimated and the intangible assets shall be amortised systematically and reasonably within the estimated useful lives.

3.20.3 Research and development expenditure

3.20.3.1 Preparation activities related to materials and other relevant aspects undertaken by the Company for the purpose of further development shall be treated as research phase. Expenditures incurred during the research phase of internal research and development projects shall be recognised in profit or loss when incurred.

3.20.3.2 Development activities after the research phase of the Company shall be treated as development phase.

3.20.4 Capitalisation of research and development expenditure

Expenditures arising from development phase on internal research and development projects shall be recognised as intangible assets only if all of the following conditions have been met:

I.	Technical feasibility of completing the intangible assets so that they will be available for use or sale;
II.	Its intention to complete the intangible asset and use or sell it;
III.	The method that the intangible assets generate economic benefits, including the Company can demonstrate the existence of a market for the output of the intangible assets or the intangible assets themselves or, if it is to be used internally, the usefulness of the intangible assets;
IV.	The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
V.	Its ability to measure reliably the expenditure attributable to the intangible asset.

3.21 Impairment of long-term assets

Impairment loss of long-term equity investment in subsidiaries, associates and joint ventures, investment properties subsequently measured at cost, fixed assets, constructions in progress, right-of-use assets, intangible assets, and goodwill (excluding inventories, investment properties subsequently measured at fair value, deferred tax assets and financial assets) shall be determined according to following method: The Company shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the Company shall estimate the recoverable amount of the asset and test for impairment. Irrespective of whether there is any indication of impairment, the Company shall test for impairment of goodwill acquired in a business combination, intangible assets with an indefinite useful life or intangible assets not yet available for use annually.

The recoverable amounts of the long-term assets are the higher of their fair values less costs to dispose and the present values of the estimated future cash flows of the long-term assets. The Company estimate the recoverable amounts on an individual basis. If it is difficult to estimate the recoverable amount of the individual asset, the Company estimates the recoverable amount of the groups of assets that the individual asset belongs to. Identification of a group of asset is based on whether the cash inflows from it are largely independent of the cash inflows from other assets or groups of assets.

If, and only if, the recoverable amount of an asset or a group of assets is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount and the provision for impairment loss shall be recognised accordingly.

For the purpose of impairment testing, goodwill acquired in a business combination shall, from the acquisition date, be allocated to relevant group of assets based on reasonable method; if it is difficult to allocate to relevant group of assets, good will shall be allocated to relevant combination of asset groups. The relevant group of assets or combination of asset groups is a group of assets or combination of asset groups that is benefit from the synergies of the business combination and is not larger than the reporting segment determined by the Company.

When test for impairment, if there is an indication that relevant group of assets or combination of asset groups may be impaired, impairment testing for group of assets or combination of asset groups excluding goodwill shall be conducted first, and calculate the recoverable amount and recognize the impairment loss. Then the group of assets or combination of asset groups including goodwill shall be tested for impairment, by comparing the carrying amount with its recoverable amount. If the recoverable amount is less than the carrying amount, the Company shall recognise the impairment loss. The mentioned impairment loss will not be reversed in subsequent accounting period once it had been recognised.

3.22 Long-term prepaid expenses

Long-term prepaid expenses are various expenses already incurred, which shall be amortised over current and subsequent periods with the amortisation period exceeding one year. Longterm prepaid expenses are evenly amortised over the beneficial period.

3.23 Employee benefits

Employee benefits refer to all forms of consideration or compensation given by the Company in exchange for service rendered by employees or for the termination of employment relationship. Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits. Benefits provided to an employee's spouse, children, dependents, family members of decreased employees, or other beneficiaries are also employee benefits.

According to liquidity, employee benefits are presented in the statement of financial position as "Employee benefits payable" and "Long-term employee benefits payable".

3.23.1 Short-term employee benefits

3.23.1.1 Salaries, wages, allowances and subsidies

The Company recognises, in the accounting period in which an employee provides service, actually occurred short-term employee benefits as a liability, with a corresponding charge to current profit except for those recognised as capital expenditure based on the requirement of accounting standards.

3.23.1.2 Welfare

The Company shall recognise the employee welfare based on actual amount when incurred into current profit or loss or related capital expenditure. Employee welfare shall be measured at fair value as it is a non-monetary benefits.

3.23.1.3 Social securities such as medical insurance, work-place injury insurance and maternity insurance, housing funds, labor union fund and employee education fund

Payments made by the Company of social insurance for employees, such as medical insurance, work-place injury insurance and maternity insurance, payments of housing funds, and labor union fund and employee education fund accrued in accordance with relevant requirements, in the accounting period in which employees provide services, is calculated according to required accrual bases and accrual ratio in determining the amount of employee benefits and the related liabilities, which shall be recognised in current profit or loss or the cost of relevant asset.

3.23.1.4 Short-term paid absences

The company shall recognise the related employee benefits arising from accumulating paid absences when the employees render service that increases their entitlement to future paid absences. The additional payable amounts shall be measured at the expected additional payments as a result of the unused entitlement that has accumulated. The Company shall recognise relevant employee benefit of non-accumulating paid absences when the absences actually occurred.

3.23.1.5 Short-term profit-sharing plan

The Company shall recognise the related employee benefits payable under a profit-sharing plan when all of the following conditions are satisfied:

I.	The Company has a present legal or constructive obligation to make such payments as a result of past events; and
II.	A reliable estimate of the amounts of employee benefits obligation arising from the profit-sharing plan can be made.

3.23.2 Post-employement benefits

3.23.2.1 Defined contribution plans

The Company shall recognise, in the accounting period in which an employee provides service, the contribution payable to a defined contribution plan as a liability, with a corresponding charge to the current profit or loss or the cost of a relevant asset.

When contributions to a defined contribution plan are not expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service, they shall be discounted using relevant discount rate (market yields at the end of the reporting period on high quality corporate bonds in active market or government bonds with the currency and term which shall be consistent with the currency and estimated term of the defined contribution obligations) to measure employee benefits payable.

3.23.2.2 Defined benefit plans

I. Present value of defined benefit obligation and current service costs

Based on the expected accumulative welfare unit method, the Company shall make estimates about demographic variables and financial variables in adopting the unbiased and consistent actuarial assumptions and measure defined benefit obligation, and determine the obligation period. The Company shall discount the obligation arising from defined benefit plan using relevant discount rate (market yields at the end of the reporting period on high quality corporate bonds in active market or government bonds with the currency and term which shall be consistent with the currency and estimated term of the defined benefit obligations) in order to determine the present value of the defined benefit obligation and the current service cost.

II. Net assets or liabilities of a defined benefit plan

The net defined benefit liability (asset) is the deficit or surplus recognised as the present value of the defined benefit obligation less the fair value of plan assets (if any). When the Company has a surplus in a defined benefit plan, it shall measure the net defined benefit asset at the lower of the surplus in the defined benefit plan and the asset ceiling.

III. Amount recognised as plan assets or charged to the current profit or loss

Service cost comprises current service cost, past service cost and any gain or loss on settlement. Other service cost shall be recognised in profit or loss unless accounting standards require or allow the inclusion of current service cost within the cost of assets. Net interest on the net defined benefit liability (asset) comprising interest income on plan assets, interest cost on the defined benefit obligation and interest on the effect of the asset ceiling, shall be included in profit or loss.

IV. Amount recognised in other comprehensive income

Changes in the net liability or asset of the defined benefit plan resulting from the remeasurements including:

i.	Actuarial gains and losses, the changes in the present value of the defined benefit obligation resulting from experience adjustments or the effects of changes in actuarial assumptions;
ii.	Return on plan assets, excluding amounts included in net interest on the net defined benefit liability or asset;
iii.	Any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset).

Remeasurements of the net defined benefit liability (asset) recognised in other comprehensive income shall not be reclassified to profit or loss in a subsequent period. However, the Company may transfer those amounts recognised in other comprehensive income within equity.

3.23.3 Termination benefits

The Company providing termination benefits to employees shall recognise an employee benefits liability for termination benefits, with a corresponding charge to the profit or loss of the reporting period, at the earlier of the following dates:

I.	When the Company cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; or
II.	When the Company recognises costs or expenses related to a restructuring that involves the payment of termination benefits.

If the termination benefits are not expected to be settled wholly before twelve months after the end of the annual reporting period, the Company shall discount the termination benefits using relevant discount rate (market yields at the end of the reporting period on high quality corporate bonds in active market or government bonds with the currency and term which shall be consistent with the currency and estimated term of the defined benefit obligations) to measure the employee benefits.

3.23.4 Other long-term employee benefits

3.23.4.1 Other long-term employee benefits satisfying the recognition conditions applicable to defined contribution plans

When other long-term employee benefits provided by the Company to the employees satisfies the conditions for classifying as a defined contribution plan, all those benefits payable shall be accounted for as employee benefits payable at their discounted value.

3.23.4.2 Other long-term employee benefits satisfying the recognition conditions applicable to defined benefit plans

At the end of the reporting period, the Company recognised the cost of employee benefit from other long-term employee benefits as the following components:

I.	Service costs;
II.	Net interest cost for net liability or asset of other long-term employee benefits;
III.	Changes resulting from the remeasurements of the net liability or asset of other long-term employee benefits.

In order to simplify the accounting treatment, the net amount of above items shall be recognised in profit or loss or relevant cost of assets.

3.24 Provisions

3.24.1 Recognition

A provision is recognised for an obligation associated with a contingent event when the following conditions are satisfied:

I.	The obligation is a present obligation assumed by the entity;
II.	It is probable that fulfillment of the obligation will result in outflows of economic benefits from the entity;
III.	The amount of the obligation can be reliably measured.

3.24.2 Measurement

A provision is initially measured at the best estimate of expenses required for the performance of relevant present obligations. The Company, when determining the best estimate, has had a comprehensive consideration of risks with respect to contingencies, uncertainties and the time value of money. The carrying amount of the provision shall be reviewed at the end of every reporting period. If conclusive evidences indicate that the carrying amount fails to be the best estimate of the provision, the carrying amount shall be adjusted based on the updated best estimate.

3.25 Share-based payments

3.25.1 Types of share-based payments

Share-based payments of the Company include equity-settled share-based payments and cash- settled share-based payments.

3.25.2 Determination of fair value of equity instruments

The fair value of shares granted to the employees can be determined by reference to the quotations in the active market, adjusted in accordance with the terms and conditions granted (excluding vesting conditions other than market conditions).

For share option granted to the employees, it is usually difficult to obtain its market price. If the share option with similar terms and conditions is not available, the Company estimates the fair value of those options using an applicable option pricing model.

3.25.3 Basis of best estimate of equity instruments expected to vest

Every balance sheet date during the vesting period, the Company makes best estimate according to the most updated number of employees that are eligible to exercise their options and revises the number of equity instruments expected to vest in order to make the best estimate of equity instruments expected to vest.

3.25.4 Accounting for implementation of share-based payment programs

I. Cash-settled share-based payment

i. For cash-settled share-based payment vested immediately after granting, the Company shall recognise relevant costs or expenses at the fair value of the liability borne at grant date and a corresponding increase in liability. Until the liability is settled, the Company shall remeasure the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognised in profit or loss.

ii. If the share instrument do not vest until services during the vesting period are completed or performance conditions are satisfied during the vesting period, at the end of each reporting period during the vesting period, the Company shall recognise relevant costs or expenses and the corresponding increase in liability for services received in the reporting period at the fair value of the liability borne, based on the best available estimate of the number expected to vest.

II. Equity-settled share-based payment

i. For equity-settled share-based payment transaction in which services are received, if the equity instrument granted vest immediately, the Company shall recognise relevant costs or expenses at the fair value of the equity instruments at grant date and the corresponding increase in capital reserve. ii. If the equity instrument do not vest until services during the vesting period are completed or performance conditions are satisfied , at the end of each reporting period during the vesting period, the Company shall recognise relevant costs or expenses and the corresponding increase in capital reserve for services received in the reporting period at the fair value of the equity instruments at grant date, based on the best available estimate of the number of equity instruments expected to vest.

3.25.5 Accounting for modification of share-based payment programs

When the Company modifies terms and conditions of the share-based payment program, if the modification increases the fair value of the equity instruments granted, the increased amount should be recognised for service received accordingly; if the quantity granted of the equity instruments is increased, the increased amount should be recgonised for service received accordingly as well. If the modification reduces the total fair value of the share-based payment arrangement, or the terms are changed in such a way that the arrangement is no longer for the benefit of the employee, the entity is still required to account for the services received as consideration for the equity instruments granted as if that modification had not occurred unless a part or all of the equity instruments are cancelled.

3.25.6 Accounting for termination of share-based payment programs

If a grant of equity instruments is cancelled or settled during the vesting period (other than a grant cancelled by forfeiture when the vesting conditions are not satisfied), the Company shall:

I.

Account for the cancellation or settlement as an acceleration of vesting, and therefore recognise immediately the amount that otherwise would have been recognised for services received over the remainder of the vesting period.

II.

Account for any payment made to the employee on the cancellation or settlement of the grant as the repurchase of an equity interest, and recognize any excess of the payment over the fair value of the equity instruments measured at the repurchase date as an expense. If the Company repurchases vested equity instruments, the payment made to the employee shall be accounted for as a deduction from equity, and recognize any excess of the payment over the fair value of the equity instruments measured at the repurchase date shall be recognised in current profit or loss.

3.26 Revenue

3.26.1 General policy

Revenue is gross economic inflows arising from the ordinary activities of the Group which result in increases in equity, other than those relating to contributions from holders of equity claims.

The Company recognises revenue when (or as) the Company satisfies a performance obligation by transferring a promised good or service (ie an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset. A customer has control of an asset when (or as) the customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

Where a contract include two or more performance obligations, the Company allocate the transaction price, upon inception of the contract, to each performance obligation identified in the contract on a relative stand-alone selling price basis, revenue associated with each performance obligation is measured at the allocated price.

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties. If the consideration promised in a contract includes a variable amount, the Company estimates the amount of consideration to which the Company will be entitled in exchange for transferring the promised goods or services to a customer to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Where a contract contains a significant financing component, the Company recognises revenue at an amount that reflects the price that a customer would have paid for the promised goods or services if the customer had paid cash for those goods or services when (or as) they transfer to the customer (ie the cash selling price); the difference between the amount of promised consideration and the cash selling price of the promised goods or services is amortised over the life of the contract using the effective interest rate method. The Company does not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company transfers control of a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

The Company transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:

I.	the customer simultaneously receives and consumes the benefits provided by the Company's performance as the entity performs;
II.	the Company's performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
III.	the Company's performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.

For each performance obligation satisfied over time, the Company recognises revenue over time by measuring the progress towards complete satisfaction of that performance obligation, unless the progress towards complete satisfaction cannot be reliably measured. The Company uses either the input method or output method to measure the progress towards complete satisfaction of a performance obligation. When the progress towards complete satisfaction of a performance obligation cannot be reliably measured, the Company recognises revenue only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation.

Where a performance obligation is satisfied at a point in time, the Company recognises revenue when (or as) the customer obtains control of the transferred asset (either goods or service). To determine the point in time at which a customer obtains control of a promised asset, the Company considers the following indicators:

I.	The Company has a present right to payment for the asset, ie. the customer has the present obligation to pay for the asset.
II.	The legal title to the asset has been transferred to the customer, ie. the customer has the legal title to the asset.
III.	The Company has transferred physical possession of the asset, ie. the customer has physical possession of the asset.
IV.	The significant risks and rewards of ownership of the asset has been transferred to the customer, ie. the customer has obtained the significant risks and rewards of ownership of the asset.
V.	The customer has accepted the asset.

3.26.2 Specific policies

3.26.2.1 Revenue arising from engineering prior to scheduled production

The Company is contracted by OEM clients to produce designated products. In such contractual relationship, the Company is contracted to provide mold engineering work for designated products prior to production and the Company is entitled to receive consideration from clients for such engineering work. The provision of engineering work prior to scheduled production constitutes a performance obligation. Revenue arising from this performance obligation is recognised over the period of the engineering work on the basis of progress of completion. The progress of completion is determined by the input method as the proportion of cost incurred to date to the total estimated cost. Where the outcome of performance of the obligation cannot be reliably measured, revenue is recognised to the extent of cost incurred until such time that the outcome of performance of the obligation can be reliably measured. Where a loss is expected resulting from performance of an obligation, the estimated loss is recognised immediately in the current profit or loss.

3.26.2.2 Revenue from sale of goods.

Revenue as rising from a performance obligation under which the Company is promised to transfer goods to a client is reocgnised when the client obtains control over the goods upon examination at delivery. Revenue arising from export sales from China is generally recognised upon VAT Export Invoice, Bill of Lading and Custom Clearance. Revenue arising from export sales from China under the DDP term is generally recognised upon VAT Export Invoice and customer acceptance of the goods. Revenue arising from export sales from China under the EXW and DAP terms is generally recognised upon customer acceptance of the goods.

3.26.2.3 Revenue from rendering of services

Where the Company is contracted to provide service to a customer, the provision of service is treated as a performance obligation satisfied over time if the service provided by the Company cannot be replaced by the customer and the Company has an enforceable right to payment for performance completed to date. Revenue associated with a contract of this kind is recognised over the life of the contract using the straight-line method.

3.27 Government grants

3.27.1 Recognition

A government grant shall not be recognised until there is reasonable assurance that:

I. The Company will comply with the conditions attaching to them; and II. The grants will be received.

3.27.2 Measurement

Monetary grants from the government shall be measured at amount received or receivable, and non-monetary grants from the government shall be measured at their fair value or at a nominal value of CNY 1.00 when reliable fair value is not available.

3.27.3 Accounting for government grant

3.27.3.1 Asset-related government grants

Government grants pertinent to assets mean the government grants that are obtained by the Company used for purchase or construction, or forming the long-term assets by other ways. Government grants pertinent to assets shall be recognised as deferred income and should be recognised in profit or loss on a systematic basis over the useful lives of the relevant assets. Grants measured at their nominal value shall be directly recognised in profit or loss of the period when the grants are received. When the relevant assets are sold, transferred, written off or damaged before the assets are terminated, the remaining deferred income shall be transferred into profit or loss of the period of disposing relevant assets.

3.27.3.2 Income-related government grants

Government grants other than related to assets are classified as government grants related to income. Government grants related to income are accounted for in accordance with the following principles:

If the government grants related to income are used to compensate the enterprise's relevant expenses or losses in future periods, such government grants shall be initially recognised as deferred income and reclassified to profit or loss in the period the respective expenses or losses are incurred;

If the government grants related to income are used to compensate the enterprise's relevant expenses or losses incurred, such government grants are directly recognised into current profit or loss.

For government grants comprised of part related to assets as well as part related to income, each part is accounted for separately; if it is difficult to identify different part, the government grants are accounted for as government grants related to income as a whole.

Government grants related to daily operation activities are recognised in other income in accordance with the nature of the activities, and government grants irrelevant to daily operation activities are recognised in non-operating income.

3.27.3.3 Loan interest subsidies

When loan interest subsidy is allocated to the bank, and the bank provides a loan at lower- market rate of interest to the Company, the loan is recognised at the actual received amount, and the interest expense is calculated based on the principal of the loan and the lower-market rate of interest.

When loan interest subsidy is directly allocated to the Company, the subsidy shall be recognised as offsetting the relevant borrowing cost.

3.27.3.4 Repayment of government grants

Repayment of the government grants shall be recorded by increasing the carrying amount of the asset if the book value of the asset has been written down, or reducing the balance of relevant deferred income if deferred income balance exists, any excess will be recognised into current profit or loss; or directly recognised into current profit or loss for other circumstances.

3.28 Deferred tax assets and deferred tax liabilities

Temporary differences are differences between the carrying amount of an asset or liability in the statement of financial position and its tax base at the balance sheet date. The Company recognises and measures the effect of taxable temporary differences and deductible temporary differences on income tax as deferred tax liabilities or deferred tax assets using liability method. Deferred tax assets and deferred tax liabilities shall not be discounted.

3.28.1 Recognition of deferred tax assets

Deferred tax assets should be recognised for deductible temporary differences, the carryforward of unused tax losses and the carryforward of unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, the carryforward of unused tax losses and the carryforward of unused tax credits can be utilised at the tax rates that are expected to apply to the period when the asset is realised, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that:

I.

is not a business combination; and

II.

at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). The Company shall recognise a deferred tax asset for all deductible temporary differences arising from investments in subsidiaries, associates and joint ventures, only to the extent that, it is probable that:

I.	the temporary difference will reverse in the foreseeable future; and
II.	taxable profit will be available against which the deductible temporary difference can be utilised.

At the end of each reporting period, if there is sufficient evidence that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized, the Company recognises a previously unrecognised deferred tax asset.

The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting period. The Company shall reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Any such reduction shall be reversed to the extent that it becomes probable that sufficient taxable profit will be available.

3.28.2 Recognition of deferred tax liabilities

A deferred tax liability shall be recognised for all taxable temporary differences at the tax rate that are expected to apply to the period when the liability is settled.

No deferred tax liability shall be recognised for taxable temporary differences arising from:

I.	the initial recognition of goodwill; or
II.	the initial recognition of an asset or liability in a transaction which: is not a business combination; and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss)

An entity shall recognise a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, associates, and joint ventures, except to the extent that both of the following conditions are satisfied:

I.	the Company is able to control the timing of the reversal of the temporary difference; and
II.	it is probable that the temporary difference will not reverse in the foreseeable future.

3.38.3 Recognition of deferred tax liabilities or assets involved in special transactions or events

3.28.3.1 Deferred tax liabilities or assets related to business combination

For the taxable temporary difference or deductible temporary difference arising from a business combination not under common control, a deferred tax liability or a deferred tax asset shall be recognised, and simultaneously, goodwill recognised in the business combination shall be adjusted based on relevant deferred tax expense (income).

3.28.3.2 Items directly recognised in equity

Current tax and deferred tax related to items that are recognised directly in equity shall be recognised in equity. Such items include: other comprehensive income generated from fair value fluctuation of other debt investments; an adjustment to the opening balance of retained earnings resulting from either a change in accounting policy that is applied retrospectively or the correction of a prior period (significant) error; amounts arising on initial recognition of the equity component of a compound financial instrument that contains both liability and equity component.

3.28.3.3 Unused tax losses and unused tax credits

3.28.3.3.1 Unsused tax losses and unused tax credits generated from daily operation of the Company itself

Deductible loss refers to the loss calculated and permitted according to the requirement of tax law that can be offset against taxable income in future periods. The criteria for recognising deferred tax assets arising from the carryforward of unused tax losses and tax credits are the same as the criteria for recognising deferred tax assets arising from deductible temporary differences. The Company recognises a deferred tax asset arising from unused tax losses or tax credits only to the extent that there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilised by the Company. Income taxes in current profit or loss shall be deducted as well.

3.28.3.3.2 Unsused tax losses and unused tax credits arising from a business combination

Under a business combination, the acquiree's deductible temporary differences which do not satisfy the criteria at the acquisition date for recognition of deferred tax asset shall not be recognised. Within 12 months after the acquisition date, if new information regarding the facts and circumstances exists at the acquisition date and the economic benefit of the acquiree's deductible temporary differences at the acquisition is expected to be realised, the Company shall recognise acquired deferred tax benefits and reduce the carrying amount of any goodwill related to this acquisition. If goodwill is reduced to zero, any remaining deferred tax benefits shall be recognised in profit or loss. All other acquired deferred tax benefits realised shall be recognised in profit or loss.

3.28.3.4 Temporary difference generated in consolidation elimination

When preparing consolidated financial statements, if temporary difference between carrying value of the assets and liabilities in the consolidated financial statements and their taxable bases is generated from elimination of inter-company unrealized profit or loss, deferred tax assets or deferred tax liabilities shall be recognised in the consolidated financial statements, and income taxes expense in current profit or loss shall be adjusted as well except for deferred tax related to transactions or events recognised directly in equity and business combination.

3.28.3.5 Share-based payment settled by equity

If tax authority permits tax deduction that relates to share-based payment, during the period in which the expenses are recognised according to the accounting standards, the Company estimates the tax base in accordance with available information at the end of the accounting period and the temporary difference arising from it. Deferred tax shall be recognised when criteria of recognition are satisfied. If the amount of estimated future tax deduction exceeds the amount of the cumulative expenses related to share-based payment recognised according to the accounting standards, the tax effect of the excess amount shall be recognised directly in equity.

3.29 Leases

3.29.1 Identifying a lease contract

Upon contract inception, the Company assesses whether a contract is a lease contract or a contract with embedded leasing arrangement. Where a party to a contract transfers the right to control the use of one or more identified assets over a period for consideration, the contract is either a lease contract or a contract with embedded leasing arrangement. A party to a contract transfers the use right of one or more identified assets over a period when the two conditions as follow are present:

I.	the counter party is entitled to obtain substantially all economic benefits arising from the use of the identified asset over the period specified by the contact; and
II.	the counter party is entitled to direct the use of the identified asset during the period period specified by the contract.

3.29.2 Identifying individual leases

Where a contract comprises multiple leases, the contract is separated and each lease is accounted for separately. A leasing arrangement in a contract is a separately identifiable lease if:

I.	the leasee can obtain economic benefits by using the assets covered by the leasing arrangement alone or in combination with other resources obtainable by the leasee; and
II.	the assets covered by the leasing arrangement has no close dependence on or close connection to other assets specified by the contract.

3.29.3 Accounting for a lease as the lessee

A lease which has a lease term of 12 months or less at the commencement date is a short-term lease. A lease for which the underlying asset is of low value when it is new is a low-value lease. Where an asset of low value when it is new obtained from a lease is intended to be subleased, the lease for which such asset is not a low-value lease.

The lease rentals for a short-term lease or a low-value lease are recognised as cost of a relevant asset or in profit or loss on a straight-line basis over its lease term.

A right to use asset and lease liability is recognised for a lease, which is neither a short-term lease nor a low-value lease, at its commencement.

3.29.3.1 Right-of-use asset

A right-of-use asset is an asset which represents a lessee's right to use an underlying asset for the lease term.

At the commencement date, a right-of-use asset is measured at cost. The cost of a right-of-use asset comprises:

I.	the amount of the initial measurement of the lease liability;
II.	any lease payments made at or before the commencement date, less any lease incentives received;
III.	any initial direct costs incurred by the lessee; and
IV.	an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories; such costs are measured in accordance with Note 3.24; where any of such costs are incurred to produce inventories, the part that is incurred to produce inventories

A right-of-use asset is depreciated on a straight-line basis. Where is reasonably expectable that the ownership of the underlying asset would be transferred to the leasee at the end of the lease term, the depreciation rate applicable to the righ-of-use asset is determined by the remaining useful life of the underlying asset and the scrap value rate applicable to the category to which the underlying asset belongs. Where transfer of ownership of the underlying asset at the end of the lease term cannot be reasonably expected, the right-of-use asset is depreciated over the shorter of the lease term and the remaining useful life of the underlying asset.

The depreciation method, estimated economic useful life, estimated net residual rate and annual depreciation rate applicable to each category of right-of-use assets are listed as followings:

Category	Depreciation method	Useful life	Scrap value rate	Annual depreciation rate
		in years	(%)	(%)
Houses and buildings	Straight line	2-25	0.00	4.00 - 50.00
Machinery	Straight line	2 - 7	0.00	14.29 - 50.00
Transportation vehicles	Straight line	2-5	0.00	20.00 - 50.00
Administrative and other devices	Straight line	2 - 7	0.00	14.29 - 50.00

3.29.3.2 Lease liability

At the commencement date, a lessee shall measure the lease liability at the present value of the lease payments that are not paid at that date. The lease payments comprise:

I.	fixed payments, or in-substance fixed payments, less any lease incentives receivable;
II.	variable lease payments that depend on an index or a rate;
III.	the exercise price of a purchase option if the lessee is reasonably certain to exercise that option;
IV.	payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease; and
V.	amounts expected to be payable by the lessee under residual value guarantees.

The lease payments shall be discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee shall use the lessee's incremental borrowing rate. The excess of the lease payments over its present value is initially recognised as unrealised financing costs and amortised over the lease term as interest expenses using the discount rate. A variable lease payment which is not included in the initial measurement of the lease liability is recognised in profit or loss when incurred.

After the commencement date, the lease liability and right-of-use asset is remeasured by the change in the present value of the lease payments if any of the following is present:

I.	there is a change in the (in-substance) fixed payment;
II.	there is change in the amounts expected to be payable by the lessee under residual value guarantees;
III.	there is a change in the index or rate which is applicable to determination of the variable lease payment;
IV.	there is a change in the expection of exercise of the call option, option for lease extension or termination opinion; or
V.	actual exercise of the call option, option for lease extension or termination opinion differs from the existing expectation.

3.29.4 Accounting for a lease as the lessor

A lease which substantially transfers all the risks and rewards incidental to ownership of an underlying asset is classified as a finance lease at its commencement; a lease which is not a finance lease is classified as an operating lease at it commencement.

3.29.4.1 Operating lease

When the Company as a lessor, lease income should be recognised over the lease terms on a straight-line basis. Initial direct costs relating to lease transactions incurred by the Company shall be capitalised and amortised over the lease terms on the same basis as the recognition of lease income. Contingent rental, if included in the lease contract, shall be recognised into profit or loss upon occurrence.

3.29.4.2 Finance lease

The sum of unguaranteed residual value and the present value by discounting lease rental receivable using the implicit interest rate is recognised as lease rental receivable at the commencement date; the underlying asset is derecognised at the commencement date. Over the lease term, interest income is computed using the implicit interest rate.

Contingent lease rentals are recognised in profit or loss upon receipt.

3.29.5 Accounting lease modification

3.29.5.1 Accounting for a lease modification as a separate lease

A lease modification is accounted for as a separate lease is both of following are satisfied:

I.	the modification increases the scope of the lease by adding the right touse one or more underlying assets; and
II.	the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

3.29.5.2 A lease modification is not accounted for as a separate lease

3.29.5.2.1 The Company as the lessee

At the effective date of the lease modification, the Company:

I.	redetermine the lease term of the modified lease;
II.	remeasure the lease liability by discounting the revised lease payments using a revised discount rate.

For the purpose of determining the present value of the revised lease payments, the revised discount rate is determined as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily determined, or the lessee's incremental borrowing rate at the effective date of the modification, if the interest rate implicit in the lease cannot be readily determined. The lease liability remeasurement is accounted for by:

I.	decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease. The lessee shall recognise in profit or loss any gain or loss relating to the partial or full termination of the lease; or
II.	making a corresponding adjustment to the carrying amount of the right-of-use asset for all other lease modifications.

3.29.5.2.2 the Company as the lessor

A modification of an operating lease is accounted for as a new lease at the effective date of the modification. Lease rentals received or receivable as of the effective date of the modification is treated as the lease rentals received or receivable for the new lease. For a modification to a finance lease that is not accounted for as a separate lease, the Company shall account for the modification as follows:

	if the lease would have been classified as an operating lease had the modification been in effect at the inception date, the Company shall account for the lease modification as a new lease from the effective date of the modification and measure the carrying amount of the underlying asset as the net investment in the lease immediately before the effective date of the lease modification;
	if the lease would have been classified as a finance lease had the modification been in effect at the inception date, the Company shall account for the lease modification according to the requirements in the modification or renegotiation of the contract.

3.29.6 Sale and lease back

The Company assesses, in accordance with Note 3.26, whether a sale and lease back of an asset constitute a sale of the asset.

3.29.6.1 The Company as the seller-lessee

If the transfer of the asset is not a sale, the Group shall continue to recognise the transferred asset and shall recognise a financial liability equal to the transfer proceeds. It shall account for the financial liability according to Note 3.10. If the transfer of the asset is a sale, the Group shall measure the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained by the Group. Accordingly, the Group shall recognise only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor.

3.29.6.2 The Company as the buyer-lessor

If the transfer of the asset is not a sale, the Group shall not recognise the transferred asset and shall recognise a financial asset equal to the transfer proceeds. It shall account for the financial asset according to Note 3.10. If the transfer of the asset is a sale, the Group shall account for the purchase of the asset applying applicable Accounting Standards of Business Enterprises, and for the lease applying the lessor accounting requirements.

3.30 Hedge accounting

3.30.1 Classification

The Company classifies hedge into fair value hedge, cash flow hedge, and net investment hedge in a foreign operation.

3.30.1.1 A fair value hedge is a hedge of the exposure to changes in fair values of a recognised asset or liability or an unrecognised firm commitment, or an identified portion of such an asset, liability or firm commitment, which is attributed to a particular risk and could affect the Company's profit or loss or other comprehensive income.

3.30.1.2 A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributed to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction which could affect the Company's profit or loss.

3.30.1.3 A net investment hedge in a foreign operation is a hedge of the foreign exchange risk arising from net investment in a foreign operation. The hedged exposure of a net investment hedge in a foreign operation is the translation difference between the functional currency of the foreign operation and that of the parent company.

3.30.2 Hedging instruments and hedged items

Hedging instrument refers to a financial instrument which is designated by the Company for hedging and by which it is expected that changes in its fair value or cash flow can offset the changes in fair value or cash flow of the hedged item, including:

I.

Derivatives measured at fair value through profit or loss except for written option. A written option does not qualify as a hedging instrument unless it is designated as an offset to a purchased option (including one that is embedded in a hybrid contract) Derivatives embedded in a hybrid contract but not separated cannot qualify as a single hedging instrument.

II.

A non-derivative financial asset or a non-derivative financial liability measured at fair value through profit or loss may be designated as a hedging instrument unless it is a financial liability designated as at fair value through profit or loss for which the amount of its change in fair value that is attributable to changes in the credit risk of that liability is presented in other comprehensive income.

The self-owned equity instruments are not financial assets or financial liabilities of the Company and therefore cannot be designated as hedging instruments.

A Hedged item refers to the item which exposes the Company to risk of changes in fair value or future cash flows and is designated as the hedged objectives and can be reliably measured. The Company designated following single item, a group of items or a component of such an item or group of items as hedged items:

I.	Recognised asset or liability;
II.	Unrecognised firm commitment. Firm commitment refers to a binding agreement for the exchange of a specified quantity of resource at a specified price on a specified future date or dates;
III.	Highly probable forecast transaction. Forecast transaction refers to an uncommitted but anticipated future transaction;
IV.	Net investment in a foreign operation

A component comprises less than the entire fair value change or cash flow variability of an item. In that case, an entity may designate only the following types of components (including combinations) as hedged items:

I.	Only changes in the cash flows or fair value of an item attributable to a specific risk or risks (risk component), provided that, based on an assessment within the context of the particular market structure, the risk component is separately identifiable and reliably measurable.
II.	One or more selected contractual cash flows.
III.	Component of a nominal amount, i.e. a specified part of the overall amount or quantity of an item, it could be a proportion of an entire item or a layer component. A layer component that includes a prepayment option is not eligible to be designated as a hedged item in a fair value hedge if the prepayment option's fair value is affected by changes in the hedged risk, unless the designated layer includes the effect of the related prepayment option when determining the change in the fair value of the hedged item.

3.30.3 Assessment of hedging relationship

At the inception of the hedge there is formal designation and documentation of the hedging relationship and the Company's risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Company will assess the hedging instrument's effectiveness. Hedge effectiveness is the degree to which changes in the fair value or cash flows of the hedged item that are attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument. An entity shall assess at the inception of the hedging relationship, and on an ongoing basis, whether a hedging relationship meets the hedge effectiveness requirements.

The Company shall discontinue the hedge accounting if: hedging instrument expires or is sold, terminated or exercised (the replacement or rollover of a hedging instrument into another hedging instrument is not an expiration or termination if such replacement or rollover is part of the entity's documented hedging strategy); or the hedging relationship no longer meets the risk management objective because of the changes of it; there is no longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts to dominate the value changes that result from that economic relationship; or the hedge no longer meets the other criteria for hedge accounting. If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for that designated hedging relationship remains the same, the Company shall rebalance the hedging relationship.

3.30.4 Recognition and measurement

When meet the strict criteria of hedge accounting method, it shall be accounted for as follows:

3.30.4.1 Fair value hedge

The gain or loss on the hedging instrument shall be recognised in profit or loss, or other comprehensive income, if the hedging instrument hedges a non-trading equity instrument for which an entity has elected to present changes in fair value in other comprehensive income. The gain or loss on the hedged item that are attributable to a hedged risk exposure shall be recognised in profit or loss and adjust the carrying amount of the hedged item not measured at fair value. If the hedged items are non-trading equity instrument (or a component thereof) designated as fair value through other comprehensive income, gain or loss attributable to a hedged risk exposure shall be recognised in other comprehensive income with no adjustment needed to the carrying amount already measured at fair value.

When a hedged item in a fair value hedge is a financial instrument (or a component thereof) measured at amortised cost, the adjustment of the carrying amount shall be amortised based on a recalculated effective interest rate at the date that amortisation begins and recognised in profit or loss. Amortisation may begin as soon as an adjustment exists and shall begin no later than when the hedged item ceases to be adjusted for hedging gains and losses. If the hedged item is a financial asset (or a component thereof) that is measured at fair value through other comprehensive income, amortisation applies in the same manner but to the amount that represents the cumulative gain or loss previously recognised instead of by adjusting the carrying amount.

When a hedged item is an unrecognised firm commitment (or a component thereof), the cumulative change in the fair value of the hedged item arising from the hedged risk subsequent to its designation is recognised as an asset or a liability with a corresponding gain or loss recognised in profit or loss. When acquire an asset or assume a liability, the initial carrying amount of the asset or the liability that results from the entity meeting the firm commitment is adjusted to include the cumulative change in the fair value of the hedged item that was recognised.

3.30.4.2 Cash flow hedge

The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge shall be included in the cash flow hedge reserve and recognised in other comprehensive income, and any remaining gain or loss on the hedging instrument (other gain or loss other than recognised in other comprehensive income) is hedge ineffectiveness that shall be recognised in profit or loss. Cash flow hedge reserve is determined based on the lower of the following two absolute amounts: i) the cumulative gain or loss on the hedging instrument from inception of the hedge; and ii) the cumulative change in present value of the hedged expected future cash flows from inception of the hedge.

If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast transaction for a non-financial asset or a non- financial liability becomes a firm commitment for which fair value hedge accounting is applied, the Company shall remove that amount from the cash flow hedge reserve of which previously recognised in other comprehensive income and include it directly in the initial cost or other carrying of the asset or the liability. For cash flow hedges other than above-mentioned, that amount shall be reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit or loss, for example, in the periods when a forecast sale occurs.

3.30.4.3 Hedge of net investment in overseas operation

For hedges of a net investment in a foreign operation, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge shall be recognised in other comprehensive income and the ineffective portion shall be recognised in profit or loss. The cumulative gain or loss on the hedging instrument recognised in other comprehensive income mentioned above shall be reclassified to profit or loss on the disposal or partial disposal of the foreign operation.

3.31 Share repurchase

3.31.1 If the Company reduces its registered capital through repurchase of the Company's share according to the approval required in relevant laws and regulations, the share capital shall be reduced at the par value of the shares deregistered, the difference between the consideration paid for repurchase (including the transaction cost) and the par value of the shares shall adjust the owner's equity. Any excess of the total par value shall offset the capital reserve (share premium), surplus reserve and retained earnings in turn. If the consideration paid is less than the total par value, the difference shall increase the capital reserve (share premium).

3.31.2 Before being deregistered or transfered, shares repurchased by the Company shall be treated as treasury stock and all expenditures of the repurchase shall be recognised as the cost of treasury stock.

3.31.3 Any excess of the income generated from transferring the treasury stock over their cost shall increase the capital reserve (share premium), and any less shall offset the capital reserve (share premium), surplus reserve and retained earnings in turn.

3.32 Restricted stock (or shares with restriction)

In the equity incentive plan, the Company shall grant restricted shares to the motivated target, and the motivated object first subscribes for the stock. If the subsequent unlocking conditions specified in the equity incentive plan are not met, the Company repurchases the stock at the price agreed in advance. If the restricted shares issued to employees are subject to the procedures for capital increase such as registration in accordance with relevant regulations, at grant date, the Company shall recognise the share capital and capital reserve (share premium) based on the received subscription fees from the employees; treasury stocks and other payables shall be recognised based on the repurchase obligation.

3.33 Significant accounting estimates and key assumptions

The Company continuously assess the appropriateness of significant accounting estimates and key assumptions based on historical experience and other factors, including reasonable expectation of future events. Significant accounting estimates and key assumptions which may lead to significant adjustment on the carry value of assets and liabilities in the next fiscal year are described below.

3.33.1 Classification of financial assets

Significant estimates adopted for classification of financial assets include business models and characteristics of contractual cash flows.

The Company determines the business models at a level that reflects how groups of financial assets are managed. In the determination of an applicable business model, the Company considers factors, including but not limited to:

(a)	how the performance of the business model and the financial assets held within that business model are evaluated and reported to the Company's key management personnel;
(b)	the risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way in which those risks are managed;
(c)	how managers of the business are compensated.

In assessing whether the contractual cash flows of a financial asset are consistent with a basic lending arrangement, the Company considers:

(a)

whether any contingent event, such as early repayment, would change the timing or amount of the contractual cash flows during the life of the financial asset;

(b)

whether the interest consists of consideration for the time value of money, the credit risk associated with the principal amount outstanding during a particular period of time and other basic lending risks and costs, as well as a profit margin, for example, whether an early repayment substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable compensation for the early termination of the contract.

3.33.2 Measurement of expected credit loss of receivables

The expected credit loss of a receivable is calculated on the basis of the default risk to which the receivable is exposed and its expected credit loss rate. The expected credit loss rate is in turn determined by taking into account of the probability of default and the expected default loss rate. In determining the expected default loss rate, the Company used historical information in relation to credit loss adjusted for current economic conditions and forward-looking information, which include the risk of economic decline, external market environment, technological environment and customer specific information. Key inputs in relation to the calculation of the expected credit loss are regularly mornitored and reviewd by the Company.

3.33.3 Goodwill impairment

Goodwill is assessed for impairment at least once a year. The assessment requires the recoverable amount of the asset group to which goodwill is allocated. In the determination of the recoverable amount of the asset group, future cash flows associated with the asset group are estimated and the appropriated discount rates for discounting the cash flows to the present value are established.

3.33.4 Deferred tax assets

Deferred tax assets are recognised for unused tax losses to the extent of sufficient future taxable income which can utilise the tax losses before expiry. Significant level of management judgement is necessary to estimate the timing and amount of available taxable income with in incorporation of tax planning in order to determine the amount of deferred tax assets recognised on unused tax losses.

3.33.5 Liablities arising from defined benefit plans

The Company has defined benefit plans, mostly in Germany. Provisions for retirement benefit obligations are calculated on the basis of benefit plans for the provision of old-age, invalidity and surviving dependents benefits. These defined benefit plans are recognised liabilities. Measurement of the obligation involves use of multiple assumptions, such as interest rates, discount rates, salary trends, inflation rates, and morality rates. Due the long-term nature of the plans, uncertainty exists in the adopted key assumptions.

3.34 Change of significant accounting policies and significant accounting estimates

3.34.1 Change of significant accounting policies

The ASBE Explanation No. 15 (Caikuai [2021] No. 35) (hereafter referred to as "the Explanation 15") was issued by the Ministry of Finance on 30 December 2021.

The Explanation 15 includes the following sections which became effective on 1 January 2022:

A.	Accounting for sales of products or by-products produced in a fixed asset's preparatory stage or internal development phase (hereafter referred to as "the Fixed Asset Section");
B.	Assessment of an onerous contract (hereafter referred to as "the Onerous Contract Section"). Adoption of the Fixed Asset Section and Onerous Contract Section of the Explanation 15 did not result in significant impact to the Company's financial statements.

The ASBE Explanation No. 16 (Caikuai [2022] No. 31) (hereafter referred to as "the Explanation 16") was issued by the Ministry of Finance on 30 November 2022.

The Explanation 16 includes the following section which becomes effective on 1 January 2023 with permission of early adoption:

Non-applicability of exemption on initial recognition on deferred taxes arising from assets and liabilities recognised upon a single transaction (hereafter referred to as "the DT Section").

The Explanation 16 includes the following section which became effective on the issue date of the Explanation 16:

1.	A. Accounting for the income tax impact of financial instruments classified as equity instruments by the issuer (hereafter referred to as "the Equity Section");
2.	B. Accounting for the conversion of a cash-settled share-based payment to an equity-settled share-based payment (hereafter referred to as "the SBP Section").

Adoption of the DT Section, Equity Section and SBP Section of the Explanation 16 did not result in significant impact to the Company's financial statements.

3.34.2 Change of significant accounting estimates

There was no change of significant accounting estimates in the reporting period.

Note 4 Taxation

4.1 Major taxes and tax rates

4.1.1 Taxes applicable to the JF Sub-group

Tax	Tax base	Tax rate
Corporate income tax (CIT)	Taxable income	Different CIT rates applies to components of the JF Sub-group, see below for details.
Value added tax (VAT)	Taxable revenue	13%, 10%, 9%, 6%, 5%, 19%, 21% (Note). The MiaoDiTui policy is applicable to goods export. The applicable tax refund rate is 13%.
Urban maintenance and construction tax	Taxes on transaction payable	7%, 5%, 1%
Education surcharge	Taxes on transaction payable	3%
Local Education surcharge	Taxes on transaction payable	2%
	Tax based on property value	1.2% on 70% of property cost
Property tax	Tax based on rental	12% of rental

The output VAT rates applicable to Jifeng DE and Jifeng CZ for the period is 19% and 21% respectively.

Different CIT rates applicable to the JF Sub-group:

Entity	CIT rate
Ningbo Jifeng	15.00%
Jifeng Tech	15.00%
Jifeng BA	10.00%
Jifeng DE	Federal income tax: 15.83
	State tax: 12.60
Jifeng CZ	19.00%
Jifeng US	State tax: 8.70
	Federal income tax: progressive from 15.00 to 39.00
Jifeng JP	34.59%
SMEs	20%, see Note 4.2.3 for details
Other subsidiaries	25.00%

4.1.2 Taxes applicable to the Grammer Sub-group

Territory	VAT	CIT
Argentina	21%	30%
Belgium	21%	25%
Brazil	Not applicable	34%
Bulgaria	20%	10%
China	13%	The CIT rate applicable to Grammer Changchun, Grammer Beijing, Grammer Tianjin and Grammer Shanghai is 15%. The CIT rate applicable to other Grammer Chinese entities is 25%.
Czech Republic	21%	19%
Germany	19%	Federal tax: 15-15.83% State tax; 10-17%
U.K.	20%	19%
Italy	22%	24%
Japan	Not applicable	34.08%
Mexico	16%	30%
Poland	23%	19%
SG	20%	15%
Slovenia	22%	19%
South Africa	15%	28%
Spain	21%	25%
Turkey	18%	23%
U.S.A.	Not applicable	21%

4.2 Preferential tax treatments

4.2.1 The Company's High-Tech Enterprise Status was renewed by YongGaoQiRenLing [2021] No. 1 and its renewed High-Tech Enterprise Certificate was issued on 1 December 2020. In accordance with the Article 28 of the Corporate Income Tax Law of the People's Republic of China, the CIT rate applicable to the Company for the current period is 15%.

4.2.2 Jifeng Tech's High-Tech Enterprise Status was renewed by YongGaoQiRenLing [2021] No. 1 and its renewed High-Tech Enterprise Certificate was issued on 1 December 2020. In accordance with the Article 28 of the Corporate Income Tax Law of the People's Republic of China, the CIT rate applicable to Jifeng Tech for the current period is 15%.

4.2.3 In accordance with CaiShui [2019] No. 13 jointly issued by the Ministry for Finance and State Administration of Taxation, the following preferential tax treatment are available for qualified small enterpises with small profit:

•	75% of the first CNY 1 million taxable income is exempted from CIT; the tax rate applicable to the remaining 25% is 20%;
•	50% of the taxable income over CNY 1 million but not over 3 millions is exempted from CIT; the tax rate applicable to the remaining 50% is 20%.

In accordance with MoF&SAT Announcement [2021] No. 12 jointly issued by the Ministry for Finance and State Administration of Taxation, CIT chargeagble on the first CNY 1 million taxable income of a qualified small entreprise with small profit computed in accordance with CaiShui [2019] No.13 is eligible for further 50% reduction.

Subsidiaries within the Company's scope of consolidation which qualify as small enterprises with small profit include Changchun Jifeng, Chengdu Jifeng, Guangzhou Jifeng, Wuhan Jifeng, Dongjun Jifeng, Jifeng Sewing, Liuzhou Jifeng, Wuhan Jiheng, Shanghai Jiwen, Grammer FAWSN, and Ningbo Jixin.

4.2.4 The renewed High-Tech Enterprise Certificate of Grammer Changchun was issued on 10 September 2020. The CIT rate applicable to the current period is 15%.

4.2.5 The renewed High-Tech Enterprise Certificate of Grammer Tianjin was issued on 9 October 2021. The CIT rate applicable to the current period is 15%.

4.2.6 The renewed High-Tech Enterprise Certificate of Grammer Beijing was issued on 1 December 2022. The CIT rate applicable to the current period is 15%.

4.2.7 The renewed High-Tech Enterprise Certificate of Grammer Shanghai was issued on 18 November 2021. The CIT rate applicable to the current period is 15%.

Note 5 Notes to the Consolidated Financial Statements

5.1 Monetary funds

	31/12/2022	31/12/2021
Cash in hand	312,325.20	387,980.14
Cash at bank	1,149,527,825.16	1,392,623,800.82
Other monetary funds	13,575,846.65	12,743,949.67
Total	1,163,415,997.01	1,405,755,730.63
T/o: Monetary funds deposited outside Mainland China	495,863,783.33	306,207,104.90
Monetary funds deposited in internal financial institution	94,272.58	93,986.37

Except for the other monetary funds as of 31 December 2022 comprising as presented below which were restricted cash, monetary funds as of 31 December 2021 were not subject limitation or potential risk of recovery due to collateral arrangements, pledging or freezing.

Presentation of restricted cash

	31/12/2022
Margin deposits for bankers' acceptance	9,814,687.90
Margin deposits for guarantee letters	3,761,158.75

5.2 Notes receivable

5.2.1 General disclosure

	31/12/2022
	Gross	Impairment allowance	Net
Bankers' acceptance	65,422,817.05		65,422,817.05
Commerial acceptance	3,400,000.00	5,000.00	3,395,000.00
Total	68,822,817.05	5,000.00	68,817,817.05

	31/12/2021
	Gross	Impairment allowance	Net
Bankers' acceptance	98,561,000.27		98,561,000.27
Commerial acceptance
Total	98,561,000.27		98,561,000.27

5.2.2 No note receivable was pledged as of the statement date.

5.2.3 Notes receivable transferred with endorsement or cashed with discount as of the statement date with pending maturity

	Amount derecognised	Amount not derecognised
Bankers' acceptance		33,394,493.76
Commerial acceptance		2,000,000.00
Total		35,394,493.76

These notes receivable were to be settled with banks with relatively low credit rating. Notes receivable transferred by cashing were not derecognised as the transfer neither removed recourse to the Group nor transferred credit risk and default risk associated with the transferred notes from the Group.

5.2.4 Impairment disclosure

	31/12/2022
	Gross		Impairment allowance		Net
	CNY	% of total	CNY	Impairment %
Impairment by individual assessment
Impairment by portfolio assessment	68,822,817.05	100.00	5,000.00	0.01	68,817,817.05
T/o: Commercial acceptance	3,400,000.00	4.94	5,000.00	0.15	3,395,000.00
Bankers' acceptance	65,422,817.05	95.06			65,422,817.05
Total	68,822,817.05	100.00	5,000.00	0.01	68,817,817.05

	31/12/2021
	Gross		Impairment allowance		Net
	CNY	% of total	CNY	Impairment %
Impairment by individual assessment
Impairment by portfolio assessment	98,561,000.27	100.00			98,561,000.27
T/o: Commercial acceptance
Bankers' acceptance	98,561,000.27	100.00			98,561,000.27
Total	98,561,000.27	100.00			98,561,000.27

The Company measured impairment allowance for notes receivable as of the statement dates on the basis of their life-time expected credit loss. The Company believes that bankers' acceptance were not subject to significant credit risk and hence were not subject significant loss arising from default by banks or other issuers.

See Note 3.10 for accounting policies for impairment allowance.

5.2.5 Movement of impairment allowance

		Movement
	31/12/2021	Provision
Commercial acceptance		5,000.00
Total		5,000.00

	Movement
	Reversal or recovery	Disposal or write-off	Others	31/12/2022
Commercial acceptance				5,000.00
Total				5,000.00

5.2.6 No note receivable was written off in the reporting period.

5.3 Accounts receivable

5.3.1 Disclosure by age group

Age group	31/12/2022	31/12/2021
Less than 1 year
T/o: Less than 3 months	2,558,441,047.59	2,211,179,005.66
3 to 12 months	95,206,226.35	81,698,091.47
Subtotal	2,653,647,273.94	2,292,877,097.13
1 to 2 years	15,504,297.95	31,638,113.41
2 to 3 years	4,213,582.94	5,336,657.58
Over 3 years	2,088,011.39	2,788,477.05
Gross	2,675,453,166.22	2,332,640,345.17
Less: Impairment allowance	32,606,373.90	22,716,356.43
Net	2,642,846,792.32	2,309,923,988.74

5.3.2 Impairment disclosure

	31/12/2022
	Gross		Impairment allowance
	CNY	% of total	CNY	Impairment %	Net
Impairment by individual assessment	1,397,638.51	0.05	1,397,638.51	100.00
Impairment by portfolio assessment	2,674,055,527.71	99.95	31,208,735.39	1.17	2,642,846,792.32
T/o: Portfolio by nature	1,901,157,327.49	71.06	26,865,322.73	1.41	1,874,292,004.76
Other clients	772,898,200.22	28.89	4,343,412.66	0.56	768,554,787.56
Total	2,675,453,166.22	100.00	32,606,373.90	1.22	2,642,846,792.32

	31/12/2021
	Gross		Impairment allowance
	CNY	% of total	CNY	Impairment %	Net
Impairment by individual assessment	2,014,302.51	0.09	2,014,302.51	100.00
Impairment by portfolio assessment	2,330,626,042.66	99.91	20,702,053.92	0.89	2,309,923,988.74
T/o: Portfolio by nature	1,642,733,036.07	70.42	13,848,872.15	0.84	1,628,884,163.92
Other clients	687,893,006.59	29.49	6,853,181.77	1.00	681,039,824.82
Total	2,332,640,345.17	100.00	22,716,356.43	0.97	2,309,923,988.74

Supplementary information on provision for impairment allowance

A. Impairment by individual assessment as of the statement date

	31/12/2022
	Gross	Impairment allowance	Impairment %	Reason for impairment
Client A	334,929.64	334,929.64	100.00
Client B	334,241.44	334,241.44	100.00	Clients in bankruptcy, liquidation application submitted to court
Client C	701,193.35	701,193.35	100.00
Client D	8,400.76	8,400.76	100.00
Client E	18,873.32	18,873.32	100.00
Total	1,397,638.51	1,397,638.51	100.00

B. Impairment allowance for Porfolio by nature as of the statement dates

	31/12/2022
	Gross	Impairment allowance	Impairment %
Portfolio by nature	1,901,157,327.49	26,865,322.73	1.41
T/o: On the basis of credit rating	1,882,908,729.09	8,616,724.33	0.46
Overdue	18,248,598.40	18,248,598.40	100.00
Total	1,901,157,327.49	26,865,322.73	1.41

	31/12/2021
	Gross	Impairment allowance	Impairment %
Portfolio by nature	1,642,733,036.07	13,848,872.15	0.84
T/o: On the basis of credit rating	1,636,183,317.01	7,299,153.09	0.45
Overdue	6,549,719.06	6,549,719.06	100.00
Total	1,642,733,036.07	13,848,872.15	0.84

C. Impairment allowance for Other clients as of the statement dates

	31/12/2022
Age group	Gross	Impairment allowance	Impairment %
Less than 1 year
T/o: Less than 3 months	710,655,527.05
3 to 12 months	55,591,456.11	2,779,572.81	5.00
Subtotal	766,246,983.16	2,779,572.81	0.36
1 to 2 years	6,346,008.96	1,269,201.79	20.00
2 to 3 years	21,140.08	10,570.04	50.00
Over 3 years	284,068.02	284,068.02	100.00
Total	772,898,200.22	4,343,412.66	0.56

	31/12/2021
Age group	Gross	Impairment allowance	Impairment %
Less than 1 year
T/o: Less than 3 months	615,762,738.62
3 to 12 months	55,301,348.55	2,765,067.44	5.00
Subtotal	671,064,087.17	2,765,067.44	0.41
1 to 2 years	15,898,097.96	3,179,619.59	20.00
2 to 3 years	44,653.44	22,326.72	50.00
Over 3 years	886,168.02	886,168.02	100.00
Total	687,893,006.59	6,853,181.77	1.00

See Note 3.10 for accounting policies for impairment allowance.

5.3.3 Movement of impairment allowance

		Movement
	31/12/2021	Provision
Impairment by individual assessment	2,014,302.51	785,187.95
Impairment by portfolio assessment	20,702,053.92	13,509,487.66
T/o: Portfolio by nature	13,848,872.15	12,306,785.89
Other clients	6,853,181.77	1,202,701.77
Total	22,716,356.43	14,294,675.61

	Movement
	Reversal or recovery	Disposal or write-off	Translation difference	31/12/2022
Impairment by individual assessment	1,345,131.43	56,720.52		1,397,638.51
Impairment by portfolio assessment	3,740,193.14	43,132.38	780,519.33	31,208,735.39
T/o: Portfolio by nature		43,132.38	752,797.07	26,865,322.73
Other clients	3,740,193.14		27,722.26	4,343,412.66
Total	5,085,324.57	99,852.90	780,519.33	32,606,373.90

5.3.4 Accounts receivable written off in the reporting period

	Amount
Accounts receivable written off	99,852.90

5.3.5 Top-5 accounts receivable as of the statement date

The aggregate gross amount of the top-5 accounts receivable as of the statement date amounted to CNY 1,048.91 million or 39.20% of the total gross accounts receivable, for which the aggregate amount of impairment allowance amounted to CNY 3.78 million.

5.3.6 Accounts receivable derecognised in the reporting period resulted from transfer of accounts receivable without recourse amounted to CNY 579.93 million.

5.3.7 No asset or liability as of the statement date was resulted from conintual involvement in transferred accounts receivable.

5.4 Receivables held for factoring

5.4.1 General disclosure

	Fair value as of 31/12/2022	Fair value as of 31/12/2021
Notes receivable	253,320,953.99	115,245,186.97
Total	253,320,953.99	115,245,186.97

5.4.2 Receivables held for factoring transferred with endorsement or cashed with discount as of the statement date with pending maturity

	Amount derecognised	Amount not derecognised
Bankers' acceptance	533,123,872.08
Total	533,123,872.08

These bankers' acceptance are to be settled with banks with high credit rating and hence are subject to minimum credit risk and default risk. Interest risk associated with the bankers' acceptance was passed to the banks accepting the transfer. The Company hence believes that substantial risks and rewards associated with the title of these bankers' acceptance were passed to the banks accepting the transfer. The bankers' acceptance were accordingly derecognised upon transfer.

5.5 Prepayments

5.5.1 Disclosure by age group

	31/12/2022		31/12/2021
Age group	CNY	%	CNY	%
Less than 1 year	151,658,276.92	98.60	92,359,767.15	98.99
1 to 2 years	2,057,816.76	1.34	504,263.92	0.54
2 to 3 years	35,423.48	0.02	4,611.00
Over 3 years	68,617.20	0.04	434,282.80	0.47
Total	153,820,134.36	100.00	93,302,924.87	100.00

5.5.2 Top-5 prepayments as of the statement date

The aggregate amount of the top-5 prepayments as of the statement date amounted to CNY 65.91 million or 42.85% of the total prepayments.

5.6 Other receivables

5.6.1 General Disclosure

	31/12/2022	31/12/2021
Other receivables	70,343,335.26	67,388,718.67
Total	70,343,335.26	67,388,718.67

5.6.2 Other receivables

5.6.2.1 Disclosure by age group

Age group	31/12/2022	31/12/2021
Less than 1 year
T/o: Less than 3 months	17,558,510.60	46,052,772.21
3 to 12 months	19,880,241.02	20,578,374.61
Subtotal	37,438,751.62	66,631,146.82
1 to 2 years	34,245,041.23	1,124,506.73
2 to 3 years	1,100,244.33	570,524.75
Over 3 years	2,408,548.87	1,870,828.53
Gross	75,192,586.05	70,197,006.83
Less: Impairment allowance	4,849,250.79	2,808,288.16
Net	70,343,335.26	67,388,718.67

5.6.2.2 Disclosure by nature

Nature	31/12/2022	31/12/2021
Insurance receivables	25,564,698.91	23,199,417.92
Margin deposits	18,503,764.81	16,879,797.64
Balance due from venders	11,461,851.43	13,008,099.88
Consideration for share disposal	7,442,394.18	7,442,394.18
Social security payment-on-behalf	1,460,416.75	795,582.98
Subsidis on bank loans	1,050,154.79	780,598.77
Petty cash	826,154.61	1,055,369.84
Loans	538,666.69	538,666.69
Claim for work injury	225,200.60	183,814.04
Others	8,119,283.28	6,313,264.89
Gross	75,192,586.05	70,197,006.83
Less: Impairment allowance	4,849,250.79	2,808,288.16
Total	70,343,335.26	67,388,718.67

5.6.2.3 Impairment disclosure

A. Disclosure by the 3-stage model as of the statement date

	Gross	Impairment allowance	Net
Stage 1	63,327,162.00	211,882.72	63,115,279.28
Stage 2	10,326,757.36	3,098,701.38	7,228,055.98
Stage 3	1,538,666.69	1,538,666.69
Total	75,192,586.05	4,849,250.79	70,343,335.26

Details of Stage 1 receivables as of the statement date

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by portfolio assessment	63,327,162.00	0.33	211,882.72	63,115,279.28
T/o: Portfolio by nature	54,048,222.81			54,048,222.81	Note
Age group portfolio	9,278,939.19	2.28	211,882.72	9,067,056.47	Note
Total	63,327,162.00	0.33	211,882.72	63,115,279.28

Note: Credit risk had not increased significantly.

Details of Stage 2 receivables as of the statement date

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by portfolio assessment	10,326,757.36	30.01	3,098,701.38	7,228,055.98
T/o: Age group portfolio	10,326,757.36	30.01	3,098,701.38	7,228,055.98	Note
Total	10,326,757.36	30.01	3,098,701.38	7,228,055.98

Note: Credit risk had increased significantly by no impairment was identified.

Details of Stage 3 receivables as of the statement date

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by individual assessment	1,538,666.69	100.00	1,538,666.69		Note
Total	1,538,666.69	100.00	1,538,666.69

Note: Credit impairment was present.

B. Disclosure by the 3-stage model as of 31 December 2021

	Gross	Impairment allowance	Net
Stage 1	66,631,146.82	404,476.52	66,226,670.30
Stage 2	2,027,193.32	865,144.95	1,162,048.37
Stage 3	1,538,666.69	1,538,666.69
Total	70,197,006.83	2,808,288.16	67,388,718.67

Details of Stage 1 receivables as of 31 December 2021

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by portfolio assessment	66,631,146.82	0.61	404,476.52	66,226,670.30
T/o: Portfolio by nature	50,804,819.80			50,804,819.80	Note
Age group portfolio	15,826,327.02	2.56	404,476.52	15,421,850.50	Note
Total	66,631,146.82	0.61	404,476.52	66,226,670.30

Note: Credit risk had not increased significantly.

Details of Stage 2 receivables as of 31 December 2021

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by portfolio assessment	2,027,193.32	42.68	865,144.95	1,162,048.37
T/o: Age group portfolio	2,027,193.32	42.68	865,144.95	1,162,048.37	Note
Total	2,027,193.32	42.68	865,144.95	1,162,048.37

Note: Credit risk had increased significantly by no impairment was identified.

Details of Stage 3 receivables as of the 31 December 2021

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by individual assessment	1,538,666.69	100.00	1,538,666.69		Note
Total	1,538,666.69	100.00	1,538,666.69

Note: Credit impairment was present.

See Note 3.10 for accounting policies for impairment allowance.

5.6.2.4 Movement of impairment allowance

		Movement
	31/12/2021	Provision	Reversal or recovery
Impairment by individual assessment	1,538,666.69
Impairment by portfolio assessment	1,269,621.47	2,039,347.35	9,595.93
T/o: Age group portfolio	1,269,621.47	2,039,347.35	9,595.93
Total	2,808,288.16	2,039,347.35	9,595.93

	Movement
	Disposal or write-off	Translation difference	31/12/2022
Impairment by individual assessment			1,538,666.69
Impairment by portfolio assessment		11,211.21	3,310,584.10
T/o: Age group portfolio		11,211.21	3,310,584.10
Total		11,211.21	4,849,250.79

5.6.2.5 No other receivable was written off in the reporting period.

5.6.2.6 Top-5 other receivables as of the statement date

Debtor	Nature	31/12/2022	Age	% of total gross other receivables	Impairment allowance
Top 1	Insurance receivable	23,646,694.58	1 to 2 years	31.45
Top 2	Margin deposit	10,767,658.74	Less than 1 year	14.32
Top 3	Consideration for share disposal	6,442,394.18	1 to 2 years	8.57	1,288,478.84
Top 4	Balance due from a vender	1,678,554.78	Less than 1 year	2.23
Top 5	Consideration for share disposal and loan	1,538,666.69	Over 3 years	2.05	1,538,666.69
Total		44,073,968.97		58.62	2,827,145.53

5.6.2.7 No other receivable as of the statement date was associated with government assistance.

5.6.2.8 No derecognition of other receivable in the reporting period was resulted from transfer of other receivable.

5.6.2.9 No asset or liability as of the statement date was resulted from conintual involvement in transferred other receivables.

5.7 Inventories

5.7.1 General disclosure

	31/12/2022
	Gross	Impairment allowance	Net
Raw materials	1,194,549,928.34	39,892,260.17	1,154,657,668.17
Semifinished goods	257,265,668.06	13,419,590.63	243,846,077.43
Finished goods	414,912,548.49	12,453,573.13	402,458,975.36
Consignment stock	12,680,002.43		12,680,002.43
Inventories on outsourced processing	3,801,930.07		3,801,930.07
Costs for contract fulfillment	7,214,316.51		7,214,316.51
Total	1,890,424,393.90	65,765,423.93	1,824,658,969.97

	31/12/2021
	Gross	Impairment allowance	Net
Raw materials	1,220,555,089.54	43,956,692.08	1,176,598,397.46
Semifinished goods	193,421,103.42	11,679,315.18	181,741,788.24
Finished goods	366,052,463.96	10,792,846.70	355,259,617.26
Consignment stock	4,214,337.97		4,214,337.97
Inventories on outsourced processing	4,974,969.91		4,974,969.91
Costs for contract fulfillment	7,123,511.94		7,123,511.94
Total	1,796,341,476.74	66,428,853.96	1,729,912,622.78

5.7.2 Movement of impairment allowance

		Increase
	31/12/2021	Provision	Other
Raw materials	43,956,692.08	21,219,961.55
Semifinished goods	11,679,315.18	10,569,384.64
Finished goods	10,792,846.70	7,307,620.70
Total	66,428,853.96	39,096,966.89

	Decrease
	Reversal or disposal	Other	Translation difference	31/12/2022
Raw materials	26,299,756.12		1,015,362.66	39,892,260.17
Semifinished goods	8,837,267.26		8,158.07	13,419,590.63
Finished goods	5,701,589.19		54,694.92	12,453,573.13
Total	40,838,612.57		1,078,215.65	65,765,423.93

5.7.3 Amortisation of costs for contract fulfilment during the reporting period amounted to CNY 5.05 million.

5.8 Contract assets

5.8.1 General disclosure

	31/12/2022
	Gross	Impairment allowance	Net
Completed contract performance	848,828,767.41	288,601.76	848,540,165.65
Total	848,828,767.41	288,601.76	848,540,165.65
T/o: Presented in other non-current assets	432,278,554.83	146,974.68	432,131,580.15
Due within 1 year	416,550,212.58	141,627.08	416,408,585.50

	31/12/2021
	Gross	Impairment allowance	Net
Completed contract performance	907,087,047.79	644,031.82	906,443,015.97
Total	907,087,047.79	644,031.82	906,443,015.97
T/o: Presented in other non-current assets	460,543,200.15	326,985.70	460,216,214.45
Due within 1 year	446,543,847.64	317,046.12	446,226,801.52

5.8.2 Impairment disclosure

	31/12/2022
	Gross		Impairment allowance
	CNY	% of total	CNY	Life-time expected credit loss %	Net
Impairment by individual assessment
Impairment by portfolio assessment	848,828,767.41	100.00	288,601.76	0.03	848,540,165.65
T/o: Portfolio by nature	848,828,767.41	100.00	288,601.76	0.03	848,540,165.65
Total	848,828,767.41	100.00	288,601.76	0.03	848,540,165.65

	31/12/2021
	Gross		Impairment allowance
	CNY	% of total	CNY	Life-time expected credit loss %	Net
Impairment by individual assessment
Impairment by portfolio assessment	907,087,047.79	100.00	644,031.82	0.07	906,443,015.97
T/o: Portfolio by nature	907,087,047.79	100.00	644,031.82	0.07	906,443,015.97
Total	907,087,047.79	100.00	644,031.82	0.07	906,443,015.97

5.8.3 Movement of impairment allowance

		Movement
	31/12/2021	Provision
Impairment by individual assessment
Impairment by portfolio assessment	317,046.12
T/o: Portfolio by nature	317,046.12
Total	317,046.12

	Movement
	Reversal or recovery	Disposal or write-off	Others	31/12/2022
Impairment by individual assessment
Impairment by portfolio assessment	176,497.23		1,078.19	141,627.08
T/o: Portfolio by nature	176,497.23		1,078.19	141,627.08
Total	176,497.23		1,078.19	141,627.08

5.9 Non-current assets matured within 1 year

	31/12/2022	31/12/2021
Long-term receivable due within 1 year	3,505,555.55
Less: Impairment allowance
Total	3,505,555.55

5.10 Other current assets

	31/12/2022	31/12/2021
Debit balance of VAT payable	153,979,022.52	121,262,114.29
Debit balance of CIT payable	29,176,411.24	43,364,293.35
Tax credits	45,106,038.68	36,146,085.04
Debit balance of custom duty payable	13,693,788.19	15,903,793.41
Hedging instrument - Foreign exchange forward contracts	24,403,729.51	8,926,206.06
Nomination fee due within 1 year	3,723,630.98	8,762,994.83
Prepaid long-term incentives	1,275,790.05	8,328,941.93
Prepaid expenses	5,537,076.70	3,425,742.17
Debit balance of other taxes payable	2,489,731.04	2,706,808.32
Total	279,385,218.91	248,826,979.40

5.11 Long-term receivables

5.11.1 General disclosure

	31/12/2022
	Gross	Impairment allowance	Net
Loan to a joint venture	41,447,217.89	16,960,044.27	24,487,173.62
Interest on a loan to a joint venture	714,249.10		714,249.10
Deposits	7,513,485.52		7,513,485.52
Others	4,399,001.88		4,399,001.88
Less: Long-term receivables due within 1 year	3,505,555.55		3,505,555.55
Total	50,568,398.84	16,960,044.27	33,608,354.57

	31/12/2021			Range of discount rates
	Gross	Impairment allowance	Net
Loan to a joint venture	44,570,851.94	17,986,445.11	26,584,406.83
Interest on a loan to a joint venture	142,174.74		142,174.74
Deposits	11,947,794.90		11,947,794.90
Others	4,326,186.37		4,326,186.37
Less: Long-term receivables due within 1 year
Total	60,987,007.95	17,986,445.11	43,000,562.84

5.11.2 Impairment disclosure

A. Disclosure by the 3-stage model as of the statement date

	Gross	Impairment allowance	Net
Stage 1	9,121,180.95		9,121,180.95
Stage 2
Stage 3	41,447,217.89	16,960,044.27	24,487,173.62
Total	50,568,398.84	16,960,044.27	33,608,354.57

Details of Stage 1 receivables as of the statement date

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by portfolio assessment	9,121,180.95			9,121,180.95
T/o: Portfolio by nature	9,121,180.95			9,121,180.95	Note
Total	9,121,180.95			9,121,180.95

Note: Credit risk had not increased significantly.

Details of Stage 3 receivables as of the statement date

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by individual assessment	41,447,217.89	40.92	16,960,044.27	24,487,173.62	Note
Total	41,447,217.89	40.92	16,960,044.27	24,487,173.62

Note: Credit impairment was present.

B. Disclosure by the 3-stage model as of 31 December 2021

	Gross	Impairment allowance	Net
Stage 1	16,416,156.01		16,416,156.01
Stage 2
Stage 3	44,570,851.94	17,986,445.11	26,584,406.83
Total	60,987,007.95	17,986,445.11	43,000,562.84

Details of Stage 1 receivables as of 31 December 2021

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by portfolio assessment	16,416,156.01			16,416,156.01
T/o: Portfolio by nature	16,416,156.01			16,416,156.01	Note
Total	16,416,156.01			16,416,156.01

Note: Credit risk had not increased significantly.

Details of Stage 3 receivables as of 31 December 2021

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by individual assessment	44,570,851.94	40.35	17,986,445.11	26,584,406.83	Note
Total	44,570,851.94	40.35	17,986,445.11	26,584,406.83

Note: Credit impairment was present.

5.11.3 Movement of impairment allowance

		Movement
	31/12/2021	Provision	Reversal or recovery
Impairment by individual assessment	17,986,445.11		2,593,755.52
Total	17,986,445.11		2,593,755.52

	Movement
	Disposal or write-off	Translation difference	31/12/2022
Impairment by individual assessment		1,567,354.68	16,960,044.27
Total		1,567,354.68	16,960,044.27

5.11.4 No derecognition of long-term receivable in the reporting period was resulted from transfer of long-term receivable.

5.11.5 No asset or liability as of the statement date was resulted from continual involvement in transferred long-term receivables.

5.12 Long-term equity investments

		Movement
Investee	31/12/2021	Contribution
A. Joint ventures
GRA-MAG Truck Interior Systems LLC (GRA-MAG)
Subtotal
B. Associates
ALLYGRAM Systems and Technologies Private Limited (ALLYGRAM)	6,917,824.99
Hefei Jifeng Smart Cabin Component Industrial Fund LLP (Smart Cabin Fund)	1,000,000.00
Ningbo Jihua Auto Electronic Technology Co., Ltd. (Ningbo Jihua)	1,250,000.00
Subtotal	9,167,824.99
Total	9,167,824.99

	Movement
Investee	Divestment	Investment income at equity	OCI adjustment	Other equity movement
A. Joint ventures
GRA-MAG Truck Interior Systems LLC (GRA-MAG)
Subtotal
B. Associates
ALLYGRAM Systems and Technologies Private Limited (ALLYGRAM)		1,856,006.56	-180,303.12
Hefei Jifeng Smart Cabin Component Industrial Fund LLP (Smart Cabin Fund)		4,451.08
Ningbo Jihua Auto Electronic Technology Co., Ltd. (Ningbo Jihua)		-155,500.01
Subtotal		1,704,957.63	-180,303.12
Total		1,704,957.63	-180,303.12

	Movement				Impairment allowance as of 31/12/2022
Investee	Cash dividends or profit appropriation	Provision for impairment	Others	31/12/2022
A. Joint ventures
GRA-MAG
Subtotal
B. Associates
ALLYGRAM				8,593,528.43
Smart Cabin Fund				1,004,451.08
Ningbo Jihua				1,094,499.99
Subtotal				10,692,479.50
Total				10,692,479.50

GRA-MAG is a joint venture of the Company. The carrying amount of the Company's investment in GRA-MAG had been reduced to zero due to investment loss at equity resulting from GRA-MAG's long-term historical loss.

5.13 Fixed assets

5.13.1 Disclosure by category

	31/12/2022	31/12/2021
Fixed assets	3,504,187,670.70	3,539,655,189.39
Fixed asset disposals
Total	3,504,187,670.70	3,539,655,189.39

5.13.2 Fixed assets

5.13.2.1 General disclosure

	Houses and buildings	Machinery	Transportation vehicles	Administrative and other devices	Total
A. Cost
1. As of 31/12/2021	2,109,680,721.22	2,913,167,272.43	25,720,632.88	1,744,532,833.90	6,793,101,460.43
2. Increase	35,121,266.61	368,443,901.51	8,190,041.24	164,952,731.99	576,707,941.35
(1) Purchase	19,414,193.59	234,668,508.06	8,190,041.24	118,235,443.38	380,508,186.27
(2) Transfer from construction in progress	15,707,073.02	133,775,393.45		46,717,288.61	196,199,755.08
3. Decrease	1,266,868.99	79,605,811.40	494,196.66	54,599,834.98	135,966,712.03
(1) Disposal or scrap	1,266,868.99	77,794,237.06	494,196.66	54,599,834.98	134,155,137.69
(2) Others		1,811,574.34			1,811,574.34
4. Translation difference	52,203,425.72	151,387,214.15	9,307.43	55,703,210.94	259,303,158.24
5. As of 31/12/2022	2,195,738,544.56	3,353,392,576.69	33,425,784.89	1,910,588,941.85	7,493,145,847.99
B. Accumulated depreciation
1. As of 31/12/2021	625,709,510.17	1,414,932,846.51	17,300,722.12	1,195,503,192.24	3,253,446,271.04
2. Increase	80,199,177.90	247,835,043.35	2,150,152.48	133,109,003.11	463,293,376.84
(1) Recognition	80,199,177.90	247,835,043.35	2,150,152.48	133,109,003.11	463,293,376.84
3. Decrease	1,107,262.60	61,445,159.17	437,065.30	43,141,229.05	106,130,716.12
(1) Disposal or scrap	1,107,262.60	60,775,987.63	437,065.30	43,141,229.05	105,461,544.58
(2) Others		669,171.54			669,171.54
4. Translation difference	21,435,888.20	79,761,682.82	7,961.51	34,797,628.66	136,003,161.19
5. As of 31/12/2022	726,237,313.67	1,681,084,413.51	19,021,770.81	1,320,268,594.96	3,746,612,092.95
C. Impairment allowance
1. As of 31/12/2021
2. Increase	6,183,817.90	228,630,358.74			234,814,176.64
(1) Recognition	6,183,817.90	228,630,358.74			234,814,176.64
3. Decrease
4. Translation difference	198,354.60	7,333,553.10			7,531,907.70
5. As of 31/12/2022	6,382,172.50	235,963,911.84			242,346,084.34
D. Net book value
1. As of 31/12/2022	1,463,119,058.39	1,436,344,251.34	14,404,014.08	590,320,346.89	3,504,187,670.70

5.13.2.2 Fixed assets as of the statement date with outstanding ownership registration

	Net book value as of 31/12/2022	Reason for outstanding ownership registration
Houses and buildings	47,931,803.43	Registration in progress

5.14 Construction in progress

5.14.1 Disclosure by category

	31/12/2022	31/12/2021
Construction in progress	433,559,351.99	250,704,062.30
Materials held for construction
Total	433,559,351.99	250,704,062.30

5.14.2 Construction in progress

5.14.2.1 General disclosure

	31/12/2022
	Gross	Impairment allowance	Net
Houses and buildings	11,574,865.36		11,574,865.36
Construction projects and machinery	316,406,159.73		316,406,159.73
Electronic devices	62,370,657.02		62,370,657.02
Others	43,207,669.88		43,207,669.88
Total	433,559,351.99		433,559,351.99

	31/12/2021
	Gross	Impairment allowance	Net
Houses and buildings	15,499,456.17		15,499,456.17
Construction projects and machinery	149,939,373.09		149,939,373.09
Electronic devices	71,405,596.00		71,405,596.00
Others	13,859,637.04		13,859,637.04
Total	250,704,062.30		250,704,062.30

5.14.2.2 Movement of substantial projects

Project	Budget	31/12/2021	Increase
Hefei Automotive Seating Production Plant (HF Seating Plant)	220,000,000.00		146,803,836.38
	220,000,000.00		146,803,836.38

Project	Transfer to fixed assets	Transfer to intangible assets	31/12/2022
Hefei Automotive Seating Production Plant (HF Seating Plant)			146,803,836.38
			146,803,836.38

Project	% of utilised budget	% of completion	Cumulative interest capitalisation
HF Seating Plant	66.73	66.73	1,078,977.09
Total	66.73	66.73	1,078,977.09

Project	T/o: Interest capitalised in the reporting period	Interest capitalisation rate for the reporting period	Source of funding
HF Seating Plant	1,078,977.09		Self funded and designated loan
Total	1,078,977.09

5.15 Right-of-use assets

	Houses and buildings	Machinery	Transportation vehicles	Administrative and other devices	Total
A. Cost
1. As of 31/12/2021	747,627,806.18	36,782,017.85	71,868,012.73	38,533,762.66	894,811,599.42
2. Increase	63,543,153.32	3,032,301.05	20,580,194.75	9,273,206.49	96,428,855.61
3. Decrease	40,838,996.74	5,845,209.01	21,394,728.02	2,433,351.52	70,512,285.29
4. Translation difference	41,746,818.62	1,774,469.53	2,647,388.65	2,153,726.57	48,322,403.37
5. As of 31/12/2022	812,078,781.38	35,743,579.42	73,700,868.11	47,527,344.20	969,050,573.11
B. Accumulated depreciation
1. As of 31/12/2021	235,746,083.61	29,746,290.31	40,860,253.15	20,109,925.67	326,462,552.74
2. Increase	110,620,228.38	4,993,534.55	18,205,077.99	8,360,930.65	142,179,771.57
3. Decrease	40,295,538.67	5,845,209.01	20,529,166.49	2,418,540.53	69,088,454.70
4. Translation difference	13,772,914.89	1,166,577.80	1,388,296.43	1,239,371.57	17,567,160.69
5. As of 31/12/2022	319,843,688.21	30,061,193.65	39,924,461.08	27,291,687.36	417,121,030.30
C. Impairment allowance
1. As of 31/12/2021
2.Increase	7,879,681.50				7,879,681.50
3. Decrease
4. Translation difference	252,748.87				252,748.87
5. As of 31/12/2022	8,132,430.37				8,132,430.37
D. Net book value
1. As of 31/12/2022	484,102,662.80	5,682,385.77	33,776,407.03	20,235,656.84	543,797,112.44
2. As of 31/12/2021	511,881,722.57	7,035,727.54	31,007,759.58	18,423,836.99	568,349,046.68

5.16 Intangible assets

	Land use rights	Client relationship	Trademarks
A. Cost
1. As of 31/12/2021	125,510,472.81	1,212,909,600.00	137,174,300.00
2. Increase	41,020,522.50
(1) Purchase	41,020,522.50
(2) Internal development
3. Decrease
(1) Disposal or scrap
(2) Deconsolidation
4. Translation difference		34,137,600.00	3,860,800.00
5. As of 31/12/2022	166,530,995.31	1,247,047,200.00	141,035,100.00
B. Accumulated amortisation
1. As of 31/12/2021	17,435,191.49	269,535,466.67	30,483,177.86
2. Increase	3,710,853.49	79,598,400.00	9,002,200.02
(1) Recognition	3,710,853.49	79,598,400.00	9,002,200.02
3. Decrease
(1) Disposal or scrap
4. Translation difference		11,124,213.33	1,258,095.56
5. As of 31/12/2022	21,146,044.98	360,258,080.00	40,743,473.44
C. Impairment allowance
1. As of 31/12/2021
2. Increase		285,534,220.02
(1) Recognition		285,534,220.02
3. Decrease
5. As of 31/12/2022		285,534,220.02
D. Net book value
1. As of 31/12/2022	145,384,950.33	601,254,899.98	100,291,626.56
2. As of 31/12/2021	108,075,281.32	943,374,133.33	106,691,122.14

	Technologies	Concessions and industrial rights	Total
A. Cost
1. As of 31/12/2021	323,526,357.11	317,555,973.75	2,116,676,703.67
2. Increase	3,922,651.08	9,931,803.63	54,874,977.21
(1) Purchase		9,062,449.88	50,082,972.38
(2) Internal development	3,922,651.08	869,353.75	4,792,004.83
3. Decrease		6,336,759.03	6,336,759.03
(1) Disposal or scrap		6,336,759.03	6,336,759.03
(2) Deconsolidation
4. Translation difference	9,280,076.94	8,467,462.05	55,745,938.99
5. As of 31/12/2022	336,729,085.13	329,618,480.40	2,220,960,860.84
B. Accumulated amortisation
1. As of 31/12/2021	79,362,902.91	264,660,863.91	661,477,602.84
2. Increase	26,440,284.67	18,971,736.27	137,723,474.45
(1) Recognition	26,440,284.67	18,971,736.27	137,723,474.45
3. Decrease		5,238,236.51	5,238,236.51
(1) Disposal or scrap		5,238,236.51	5,238,236.51
4. Translation difference	3,421,022.99	7,637,634.29	23,440,966.17
5. As of 31/12/2022	109,224,210.57	286,031,997.96	817,403,806.95
C. Impairment allowance
1. As of 31/12/2021
2. Increase			285,534,220.02
(1) Recognition			285,534,220.02
3. Decrease
5. As of 31/12/2022			285,534,220.02
D. Net book value
1. As of 31/12/2022	227,504,874.56	43,586,482.44	1,118,022,833.87
2. As of 31/12/2021	244,163,454.20	52,895,109.84	1,455,199,100.83

As of the the statement date, net value of intangible assets arising from internal development takes up 3.11% of the net value of total intangible assets.

5.17 Development expenditure

		Increase
	31/12/2021	Expenditure incurred	Other
S2900 seat top	52,894,968.02	31,234,119.00
MSG295_MSG297suspension	29,130,793.30	10,815,277.60
Project Alas	3,984,854.94
JLR armrest	883,139.62
Project Console 4U		2,781,694.01
Adaproq Process Chain		5,729,273.72
Total	86,893,755.88	50,560,364.33

	Decreases
	Reclassification to intangible assets	Transferred to P&L	Translation difference	31/12/2022
S2900 seat top			2,877,069.74	87,006,156.76
MSG295_MSG297suspension			1,300,622.14	41,246,693.04
Project Alas	3,922,651.08		-62,203.86
JLR armrest	869,353.75		-13,785.87
Project Console 4U			123,643.90	2,905,337.91
Adaproq Process Chain			254,661.25	5,983,934.97
Total	4,792,004.83		4,480,007.30	137,142,122.68

Capitalisation of development expenditure on a research and development project commences upon completion of the research phase of the project, at which the milestone activity is development commencement.

5.18 Goodwill

5.18.1 General disclosure

		Increase
Investee	31/12/2021	Business combination
Grammer AG	2,595,190,534.25
Wuhan Jiheng	3,162,720.85
Jifeng CZ	7,365.48
Total	2,598,360,620.58

	Decrease
Investee	Disposal	Other	Translation difference	31/12/2022
Grammer AG			73,042,798.06	2,668,233,332.31
Wuhan Jiheng				3,162,720.85
Jifeng CZ				7,365.48
Total			73,042,798.06	2,671,403,418.64

5.18.2 Impairment allowance

		Increase
Investee	31/12/2021	Provision	Other
Grammer AG		1,008,907,494.72
Total		1,008,907,494.72

	Decrease
Investee	Disposal	Other	31/12/2022
Grammer AG			1,008,907,494.72
Total			1,008,907,494.72

5.18.3 Asset groups associated with goodwill

As of the the statement date, impairment assessment on the goodwill arising from the acquisition of Grammer AG was performed on the basis of the statement-date recoverable amount the asset group comprising the operating assets of Grammer Group. This asset group is identical to the asset group to which the goodwill was allocated at the time of acquisition. The asset group had not changed since its initial identification.

5.18.4 Impairment assessment

Grammer Asset Group's value in use was determined on the basis of Grammer Asset Group's detailed forecasted cash flows for the next 5 years and further forecasted cash flows for periods starting from the 6th year from the statement date. The detailed forecasted cash flows for the next 5 years had been approved the Board of Directors and Supervisory Board of Grammer AG. It had been developed by taking into consideration factors such as historical profitability of Grammer Group, growth trend of vehicle part industry and inflation rate, etc. The further forecasted cash flows for periods starting from the 6th year from the statement date had been formulated by applying 2.4% perpetual growth rate to the level of forecast applicable the 5th year after the statement date.

A before-tax discount rate at 12.72%, which reflects the risk characteristic of Grammer Asset Group, was adopted by the Company.

The revenue growth rate applicable to the 5-year detailed forecast had been determined on the basis of historical experience, back logs and forecasted market growth. The gross profit margin rate applicable to the 5-year detailed forecast had taken into consideration the average gross profit margin rate for the two reporting years preceding the detailed forecast period and Grammer AG's expected cost reduction measures and market expansion.

5.18.5 Impact of impairment assessment

A before-tax discount rate at 12.72%, which reflects the risk characteristic of Grammer Asset Group, was adopted by the Company.

The Company conducted impairment assessment, in accordance with Accounting Regulatory Risk Alert No. 8 - Goodwil Impairment and ASBE 8 - Asset Impairment, on the goodwill arising from the acquisition of Grammer AG. Goodwil impairment amounting to CNY 1,008.91 million was recognised resulting from the impairment assessment.

5.19 Long-term prepaid expenses

	31/12/2021	Increase

Prepaid storage charge	2,444,293.81
Prepaid insurance	532,117.16
Software support	2,061,964.16	2,902,706.44
Lease-hold improvement	15,989,727.63	3,623,670.31
Prepayment for guarantee letters	335,154.55
Packaging	12,762,583.45	1,259,729.35
Arrangement fee for financing	8,472,530.27
Payment for land	1,557,651.92
Others	705,684.56	1,454,129.97
Total	44,861,707.51	9,240,236.07

	Decrease		Translation difference	31/12/2022
	Amortisation	Others
Prepaid storage charge	198,898.26		217,923.42	2,463,318.97
Prepaid insurance	190,476.70		6,510.03	348,150.49
Software support	3,701,354.09		-6,978.33	1,256,338.18
Lease-hold improvement	7,740,871.33		612,895.83	12,485,422.44
Prepayment for guarantee letters	335,154.55
Packaging	5,620,816.72		1,031,382.80	9,432,878.88
Arrangement fee for financing	3,574,402.90		79,582.07	4,977,709.44
Payment for land	171,484.58			1,386,167.34
Others	1,040,380.59		-6,661.38	1,112,772.56
Total	22,573,839.72		1,934,654.44	33,462,758.30

5.20 Deferred tax assets (DTA(s)) and deferred tax liabilities (DTL(s))

5.20.1 Deferred tax assets before offset

	31/12/2022		31/12/2021
	Deductible temporary difference	DTA	Deductible temporary difference	DTA
Recoverable tax loss	689,216,439.90	166,614,557.83	752,743,579.47	189,429,529.43
Lease liabilities	487,560,538.77	87,034,994.50	284,032,067.15	72,711,085.96
Pension plans	420,730,913.27	107,179,691.05	614,519,974.66	178,007,392.62
Liabilities	332,463,126.84	78,111,631.21	302,140,708.22	68,870,747.04
Fixed asset depreciation	109,413,015.18	38,726,964.47	86,493,190.75	27,762,525.51
Nomination fee	83,450,903.92	22,691,070.06	115,175,763.97	31,838,047.49
Accounts receivable	81,127,173.00	20,292,425.38	117,964,022.61	35,540,361.38
Asset impairment allowance	66,054,025.69	14,553,602.96	66,592,335.24	11,801,452.13
Credit impairment allowance	53,346,940.90	13,279,932.67	43,464,238.65	9,873,266.92
Unrealised profit	37,928,074.92	7,711,748.87	26,427,538.01	6,162,824.99
Exchange revaluation	37,653,912.92	10,873,108.46	6,698,813.08	1,674,703.28
Contract assets	13,631,606.32	2,049,544.34	24,556,911.35	3,682,321.35
Contract liabilities	13,275,523.74	3,867,932.15	12,035,315.42	3,482,415.08
Deferred income	11,964,470.19	2,739,788.74	10,175,137.61	2,492,868.82
Others	184,514,944.5	37,374,590.99	217,722,866.62	45,686,383.45
Total	2,622,331,610.06	613,101,583.68	2,680,742,462.81	689,015,925.45

5.20.2 Deferred tax liabilities before offset

	31/12/2022		31/12/2021
	Taxable temporary difference	DTL	Taxable temporary difference	DTL
Intangible asset fair value adjustment	894,541,926.54	260,026,166.37	1,259,436,555.48	346,345,052.76
Fixed asset depreciation	603,945,417.34	140,310,653.21	747,937,999.40	168,905,038.94
Nomination fee	183,677,852.97	52,744,930.22	379,664,279.58	89,096,664.39
Fixed asset appreciation	227,881,509.99	66,313,519.41	267,972,693.92	78,248,026.66
Right-of-use assets	250,888,490.73	60,029,170.45	210,268,022.81	34,156,976.75
Development expenditure	137,142,122.68	39,634,073.46	86,893,755.88	25,112,295.45
Intangible asset amortisation	46,198,217.73	10,148,172.49	80,002,591.19	20,397,602.56
Exchange revaluation	69,565,754.19	19,783,089.97	5,276,106.23	1,524,793.43
Others	102,565,252.12	24,391,587.22	47,799,368.46	15,182,841.38
Total	2,516,406,544.29	673,381,362.80	3,085,251,372.95	778,969,292.32

5.20.3 Offsetting

	Offset amount 31/12/2022	Post offset 31/12/2022	Offset amount 31/12/2021	Post offset 31/12/2021
DTAs	254,099,608.22	359,001,975.46	297,433,529.97	391,582,395.48
DTLs	254,099,608.22	419,281,754.58	297,433,529.97	481,535,762.35

5.20.4 Temporary differences and recoverable tax loss with no DTA recognised

	31/12/2022	31/12/2021
Deductible temporary differences	1,073,728.07	527,401.58
Recoverable tax loss	1,738,867,135.24	1,133,216,102.29
Total	1,739,940,863.31	1,133,743,503.87

5.20.5 Expiry of recoverable tax loss with no DTA recognised

Expiry in year	31/12/2022	31/12/2021	Note
2022		14,739,314.25
2023	6,517,680.24	49,001,208.96
2024	55,318,006.16	134,468,314.10
2025	84,311,314.41	101,628,892.20
2026	34,313,029.88	65,378,961.08
2027	30,280,628.55
After 5 years	207,628,003.82	97,593,464.99
Perpetual	1,320,498,472.18	670,405,946.71
Total	1,738,867,135.24	1,133,216,102.29

5.21 Other non-current assets

	31/12/2022	31/12/2021
Contract assets	432,278,554.83	460,543,200.15
Nomination fee	225,101,946.17	183,977,982.90
Prepayment for machinery	34,593,257.07	47,931,446.96
Costs for contract fulfillment	39,923,214.02	6,446,672.28
Debit balance of VAT payable	9,064,595.60	6,398,864.63
Others	231,207.87	1,253,303.60
Gross	741,192,775.56	706,551,470.52
Less: Impairment allowance	146,974.68	326,985.70
Net	741,045,800.88	706,224,484.82

5.22 Short-term bank loans

5.22.1 General disclosure

	31/12/2022	31/12/2021
Credit loans	2,120,756,172.50	1,604,243,678.99
Pre-mature notes receivable cashed	13,996,246.20	33,979,478.56
Interests on short-term loans	249,088.23	264,790.34
Total	2,135,001,506.93	1,638,487,947.89

5.22.2 No overdue bank loans as of the statement date.

5.23 Notes payable

	31/12/2022	31/12/2021
Bankers' acceptance	70,066,097.01	60,612,929.57
Total	70,066,097.01	60,612,929.57

No overdue note payable existed as of the statement date.

5.24 Accounts payable

5.24.1 Disclosure by nature

Nature	31/12/2022	31/12/2021
Materials and goods	2,166,214,328.72	1,828,467,518.42
Construction and machinery	347,194,521.81	229,577,195.49
Freight	106,463,667.37	90,249,904.84
Services	187,294,134.89	128,345,317.68
Others	4,744,613.66	2,681,240.95
Total	2,811,911,266.45	2,279,321,177.38

5.24.2 No significant account payable was aged over 1 year as of the statement date.

5.25 Contract liabilities

	31/12/2022	31/12/2021
Delivery for goods	66,251,788.26	37,637,982.37
Advanced receipts for projects	36,611,621.44	25,201,808.16
Total	102,863,409.70	62,839,790.53

5.26 Employee benefits payable

5.26.1 General disclosure

	31/12/2021	Increase	Decrease	Translation difference	31/12/2022
A. Short-term benefits	372,402,418.12	4,543,256,916.18	4,486,696,196.40	10,597,483.70	439,560,621.60
B. Post-employment benefits - Defined Obligation Plans	1,065,645.57	55,359,554.18	54,865,350.61		1,559,849.14
C. Termination benefits	7,735,157.34	16,869,695.96	7,171,334.13	648,791.47	18,082,310.64
D. Other long-term benefits due within 1 year	1,010,758.00	1,106,339.58	994,980.00	33,397.85	1,155,515.43
Total	382,213,979.03	4,616,592,505.90	4,549,727,861.14	11,279,673.02	460,358,296.81

5.26.2 Short-term benefits

	31/12/2021	Increase	Decrease	Translation difference	31/12/2022
A. Salaries, wages allowances and subsidies	319,594,701.73	3,767,237,467.72	3,723,668,428.25	8,666,484.92	371,830,226.12
B. Welfare	13,860,843.49	24,572,366.42	28,289,302.91	223,570.10	10,367,477.10
C. Social securities	37,419,243.01	712,541,605.70	696,629,575.15	1,707,428.68	55,038,702.24
T/o: Medical insurance	618,952.52	29,869,599.59	29,163,713.67		1,324,838.44
Work-place injury insurance	63,357.98	2,391,777.03	2,346,145.70		108,989.31
Maternity insurance	1,062.22	359,890.64	351,299.18		9,653.68
Foreign social securities	36,735,870.29	679,920,338.44	664,768,416.60	1,707,428.68	53,595,220.81
D. Housing funds	24,982.00	33,756,384.43	33,478,319.08		303,047.35
E. Union fund and education fund	1,502,647.89	5,149,091.91	4,630,571.01		2,021,168.79
Total	372,402,418.12	4,543,256,916.18	4,486,696,196.40	10,597,483.70	439,560,621.60

5.26.3 Post-employement benefits - Defined contribution plans

	31/12/2021	Increase	Decrease	31/12/2022
Post-employment benefits
A. Basic pension	1,028,286.58	53,503,925.43	53,024,126.05	1,508,085.96
B. Job-loss insurance	37,358.99	1,855,628.75	1,841,224.56	51,763.18
Total	1,065,645.57	55,359,554.18	54,865,350.61	1,559,849.14

5.26.4 Termination benefits

Recruitment and termination plans are established on the basis of the Company's human resource projection. The termination benefit defined by a termination agreement established on the basis of the level of remuneration and service period of the individual affected was implemented upon approval by the management.

5.27 Taxes payable

	31/12/2022	31/12/2021
VAT	106,375,630.65	96,001,218.22
CIT	76,175,136.64	80,621,546.81
Individual income tax (IIT)	33,343,405.51	46,674,445.65
Property tax	8,571,518.56	6,583,773.59
Federal income tax	6,659,996.27	2,352,855.61
Urban maintenance and construction tax	2,111,733.16	1,990,017.78
Education surcharge	1,081,114.29	1,023,203.12
Stamp duty	818,627.69	414,988.01
Urban land use tax	785,379.62	605,486.09
Local education surcharge	446,218.64	197,297.47
Catastrophe tax	83,470.51	855,072.39
Others	1,653,430.42	1,575,682.51
Total	238,105,661.96	238,895,587.25

5.28 Other payables

5.28.1 General disclosure

	31/12/2022	31/12/2021
Interests payable
Dividends payable
Other payables	334,065,924.17	322,623,670.18
Total	334,065,924.17	322,623,670.18

5.28.2 Other payables

	31/12/2022	31/12/2021
Accrues expenses	163,425,819.49	158,394,899.65
Price variance	38,339,909.45	57,253,679.38
Rebates	90,171,560.55	54,809,709.97
Compensation for volume variance	22,989,250.45	27,705,341.73
Share repurchase obligation		12,688,814.08
Professional fee	16,093,485.88	10,689,902.23
Repayable receipts	1,451,958.97	590,291.26
Others	1,593,939.38	491,031.88
Total	334,065,924.17	322,623,670.18

No significant other payable was aged over 1 year as of the statement date.

5.29 Non-current liabilities due within 1 year

	31/12/2022	31/12/2021
Long-term loans repayable in 1 year (Note 5.31)	365,983,089.12	601,705,878.68
Lease liabilities due within 1 year (Note 5.33)	134,629,813.74	120,452,424.97
Interests payable in 1 year on long-term loans	21,997,234.28	21,853,134.77
Interests payable in 1 year on debt instruments	1,446,575.34	1,450,553.42
Total	524,056,712.48	745,461,991.84

5.30 Other current liabilities

	31/12/2022	31/12/2021
Provision for compensation	38,948,149.30	120,854,579.67
Onerous contracts	75,299,619.71	94,692,466.15
Warranty	50,625,477.01	79,147,376.31
Pre-mature notes receivable transferred	21,398,247.56	22,500,650.28
Litigation	15,875,868.41	15,608,702.62
Hedging instrument - Foreign exchange forward contracts		2,203,264.51
Hedging instrument - Interest rate swap contracts		387,083.49
Others	5,801,195.26	3,309,471.05
Total	207,948,557.25	338,703,594.08

5.31 Long-term bank loans

	31/12/2022	31/12/2021	Range of interest rates for the reporting period
Loans with guarantee and intangible securities	668,061,000.00	721,970,000.00	Note
Credit loans	1,828,525,627.82	2,169,053,941.49	1.6% - 6.63%
Loans with securities by physical assets	381,851,822.64	310,106,021.23	1.70%-3.95% / EUR LIBOR + (1.5% - 1.875%)
Guaranteed loans	44,581,135.27	31,079,668.37	2.6% - 3.8% / EUR LIBOR + 0,6%
Total	2,923,019,585.73	3,232,209,631.09
T/o: Due within 1 year	365,983,089.12	601,705,878.68
Due after 1 year	2,557,036,496.61	2,630,503,752.41

Note: The interest rate applicable to this facility is EURIBOR plus 1.7% with the minimum interest rate not less than 1.7%.

5.32 Debt instruments payable

5.32.1 General disclosure

	31/12/2022	31/12/2021
JFCB 01 Bond (110801)	400,000,000.00	400,000,000.00
JFCB 02 Bond (110802)		1,100,000.00
JFCB 01 Bond - Interest adjustment	33,337,971.05	24,982,433.07
JFCB 02 Bond - Interest adjustment		61,462.49
Total	433,337,971.05	426,143,895.56

5.32.2 Movement

	Face value	Issue date	Term	Total issuance	31/12/2021
				(CNY)
JFCB 01 Bond	CNY 100.00 each	18/11/2019	6 years	400,000,000.00	424,982,433.07
JFCB 02 Bond	CNY 100.00 each	18/11/2019	6 years	718,200,000.00	1,161,462.49
Total				1,118,200,000.00	426,143,895.56

	Current period issuance	Current period nominal interest	Current period amortisation of discount / premium	Current period conversion	31/12/2022
	(CNY)	(CNY)	(CNY)	(CNY)
JFCB 01 Bond		12,000,000.00	8,355,537.98		433,337,971.05
JFCB 02 Bond			-61,462.49	1,100,000.00
Total		12,000,000.00	8,294,075.49	1,100,000.00	433,337,971.05

5.32.3 Supplementary information

Upon the approval (ZhengJianXuKe [2019] No. 1428) by the CSRC, on 18 November 2019, the Company effected private issusance of 11,182 thousand convertible bonds at CNY 100 each; total proceeds of the issuance amounted to CNY 1,118.2 millions. The term of the convertible bonds is 6 years with the expiry on 17 November 2025.

The convertible bond is subject to a nominal annual interest rate of 3%. The interest is payable annually with the 1st interest payment on 18 November 2020.

JFCB 01 Bond was issued to DZ Jihan. DZ Jihan is entitled to exercise conversion starting from 5 February 2021 to the expiry date of the bond (inclusively). Transfer of the Company's share acquired through conversion is prohibited for a 36-month period from the conversion date.

The conversion price of JFCB 01 Bond at issuance was CNY 7.90 per share. Following the cash dividend at CNY 0.312 per share for fiscal year 2018 declared on 20 May 2019, the cash dividend at CNY 0.2 per share for fiscal year 2019 declared on 7 May 2020 and the cash dividend at CNY 0.18 per share for the half year ended 30 June 2021 declared on 13 September 2021, the conversion price was adjusted to CNY 7.21 per share.

Holders of JFCB 02 Bond are entitled to exercise conversion starting from 24 December 2020 to the expiry date of the bond (inclusively). In accordance with the approval (Shanghai Stock Exchange ZiLvJianGuanJueDingShu [2020] No. 418) issued by the Shanghai Stock Exchange, JFCB 02 Bond became listed for trading on 24 December 2020.

The conversion price of JFCB 02 Bond at issuance was CNY 7.41 per share. Following the cash dividend at CNY 0.2 per share for fiscal year 2019 declared on 7 May 2020 and the cash dividend at CNY 0.18 per share for the half year ended 30 June 2021 declared on 13 September 2021, the conversion price was adjusted to CNY 7.03 per share.

Cumulatively 100.24 million JFCB 02 bonds were exercised for conversion for 100.24 million shares of the Company as of 12 January 2022. As the conversion of JFCB 02 bonds was fully completed on 12 January 2022, JFCB 02 bonds were delisted from the Shanghai Stock Exchange on 21 January 2022.

The conversion period of JFCB 01 Bond is from 5 February 2021 to 17 November 2025 inclusively. Holders of the JFCB 01 bonds are entitle to exercise conversion during the conversion period. In accordance with the Share Listing Rules of the Shanghai Stock Exchange and the Shanghai Stock Exchange Self-discipline Guidance No. 12 - Convertible Corporate Bonds, the JFCB 01 Bond was approved by the Shanghai Stock Exchange for listing and became listed on 26 December 2022.

5.33 Lease liabilities

	31/12/2022	31/12/2021
Minimum lease rentals payable	710,021,285.71	709,948,256.47
Less: Unrecognised financing costs	110,715,210.77	109,600,202.64
Total	599,306,074.94	600,348,053.83
T/o: Lease liabilities due within 1 year	134,629,813.74	120,452,424.97
Lease liabilities due after 1 year	464,676,261.20	479,895,628.86

5.34 Long-term employee benefits payable

5.34.1 General disclosure

	31/12/2022	31/12/2021
A. Post-employment benefits - Net liabilities of defined benefit plans	869,703,837.33	1,075,538,029.42
B. Termination benefits
C. Other long-term employee benefits
Total	869,703,837.33	1,075,538,029.42

5.34.2 Movement of define benefit plans

(1) Present value of plan obligation

	Year ended 31/12/2022	Year ended 31/12/2021
A. Brought forward from the previous reporting period	1,122,913,643.06	1,363,949,989.15
B. Costs recognised in P&L for the current period	44,869,089.84	42,888,164.43
1. Current service costs	26,788,667.92	30,446,647.59
2. Past service costs
3. Settlement gain (loss with "-")
4. Net interests	18,080,421.92	12,441,516.84
C. Costs recognised in OCI for the current period	-230,281,635.94	-114,569,877.30
1. Actuarial gain (loss with "-")	-230,281,635.94	-114,569,877.30
D. Other movements	-25,015,636.83	-37,458,638.48
1. Consideration payment upon settlement
2. Benefits paid	-25,029,653.48	-37,567,204.01
3. Others	14,016.65	108,565.53
E. Translation difference	15,254,677.15	-131,895,994.74
F. As of 31 December	927,740,137.28	1,122,913,643.06

(2) Present value of plan assets

	Year ended 31/12/2022	Year ended 31/12/2021
A. Brought forward from the previous reporting period	47,375,613.64	44,192,377.76
B. Costs recognised in P&L for the current period	554,537.89	305,848.57
1. Net interests	554,537.89	305,848.57
C. Costs recognised in OCI for the current period	-2,324,784.98	-85,680.74
1. Return from plan assets (excluding those recognised in Net interests)
2. Movement of plan asset ceiling (excluding those recognised in Net interests)
3. Others	-2,324,784.98	-85,680.74
D. Other movements	10,700,590.59	7,850,385.89
1. Employer contribution	10,700,590.59	10,263,714.04
2. Benefits paid		-2,409,279.31
3. Others		-4,048.84
E. Translation difference	1,730,342.81	-4,887,317.84
F. As of 31 December	58,036,299.95	47,375,613.64

(3) Movement of net liabilities of define benefit plans

	Year ended 31/12/2022	Year ended 31/12/2021
A. Brought forward from the previous reporting period	1,075,538,029.42	1,319,757,611.39
B. Costs recognised in P&L for the current period	44,314,551.95	42,582,315.86
C. Costs recognised in OCI for the current period	-227,956,850.96	-114,569,102.56
D. Other movements	-22,191,893.08	-172,232,795.27
E. As of 31 December	869,703,837.33	1,075,538,029.42

5.34.3 Impact on future timing and certainty of future cash flows by risks associated with defined benefit plans

Participants of the defined benefit plans are mainly domiciled in Germany. Monthly contribution to the plans are determined on the basis of benefits applicable to retirement, disability and dependents of the participants. Qualifying employees may participate in the plans by substituting certain monthly income by contribution to the plans. Prior to the retirement of a plan participant, the plan makes contribution to the participant's notional account; upon the participant's retirement, funds accumulated in the notional account are in full transformed to pension payment to the participant or benefits to the participant and his/her spouse. The Company's obligation towards the plans is subject to the impact of the legal, tax and economic environment of the territories in which the plan participants are domiciled and mainly on the basis of length of employment of and benefits payable to the plan participants. Other post-employment benefits are mainly applicable to entities outside Germany.

5.34.4 Significant actuarial assumption applicable to defined benefit plans

Defined benefit plans are remeasured by qualified independent actuaries using the projected unit credit method on an annual basis. The measurement involves the use of assumption on uncertainty. Management assumption on uncertainty on the statement date was made by management on the basis of estimation of future development, future market environment and future industrial standards. Significant assumptions adopted in the measurement of plan obligation are as follow:

	31/12/2022	31/12/2021
Interest rate	3.70%	1.20%
Salary trend	2.50%	2.30%
Committed individual income trend	2.50%	2.30%
Inflation rate / Pension trend	2.00%	1.50%

Significant assumptions adopted in the measurement of other benefits of defined benefit plans are as follow:

	31/12/2022	31/12/2021
Interest rate	3.70% - 19.22%	1.20%-14.61%
Salary trend	2.50% - 5.80%	2.30% - 4.50%
Inflation rate	2.00%- 15.19%	1.50% - 10.40%

5.34.5 Sensitivity

	Impact on present value of plan obligation
Discount factor increase by 1%	-100,933,847.73
Discount factor decrease by 1%	125,502,318.03
Future salary increase by 0.5%	10,065,444.98
Future salary decrease by 0.5%	-9,378,277.43
Inflation rate increase by 0.5%	47,566,863.64
Inflation rate decrease by 0.5%	-43,542,761.09
Mortality rate increase by 10%	-21,878,463.30
Mortality rate decrease by 10%	24,374,999.84

The sensitivity analysis applies to German entities only as defined benefit plans are mainly implemented in German entities. Present value of plan obligation showed in the sensitivity analysis is computed using the projected unit credit method. The sentivitity analysis is based on movement of single variable; as such, the result of analysis may not represent the actual development of the plans.

Estimated future cash outflows associated with the plans are presented below:

	31/12/2022	31/12/2021
Short-term (within 1 year)	31,955,467.66	26,781,803.26
Medium-term (between 1 to 5 years)	136,446,337.44	125,162,778.19
Long-term (after 5 years)	671,183,544.22	904,275,425.73

5.35 Deferred income

5.35.1 General disclosure

	31/12/2021	Increase	Decrease	31/12/2022	Source
Government grants	18,676,415.22	11,234,768.53	5,079,806.43	24,831,377.32	Government grant received
Insurance compensation for ice storm disaster	1,813,077.41		774,094.10	1,038,983.31	Compensation received
Total	20,489,492.63	11,234,768.53	5,853,900.53	25,870,360.63

5.35.2 Government grants

Grant	31/12/2021	Receipt	Reclassification to reduce cost or expense
Industrial Technology Renovation	509,155.90	2,664,800.00
Enterprise Supporting Fund	9,665,981.71
Subsidy for Tupelo Plant Activation	2,115,603.13
Subsidy for the Echo Building at Tachov	3,920,212.49
Subsidy for Construction of the Tachov Plant	21,485.83
Subsidy for Fire- resistant Composite Material and Automated Construction for Future Railway	250,660.76
Subsidy for Plants at Zwickau and Schmolln	1,164,645.91
Subsidy for the EU Active Collision Headrest Project	998,714.94
Subsidy for Innovative Headrest	29,954.55
Subsidy for Outer Utility Grids of HF Seating Plant		1,190,941.00
Subsidy for Project Promutes		1,376,156.84
German Automotive Sector Stimulus Plan		6,002,870.69	2,202,800.44
Total	18,676,415.22	11,234,768.53	2,202,800.44

Grant	Reclassification to other income	Translation difference	31/12/2022	Type
Industrial Technology Renovation	660,667.78		2,513,288.12	Asset related
Enterprise Supporting Fund	214,799.64		9,451,182.07	Asset related
Subsidy for Tupelo Plant Activation	183,516.95	188,265.21	2,120,351.39	Asset related
Subsidy for the Echo Building at Tachov	213,401.89	105,026.70	3,811,837.30	Asset related
Subsidy for Construction of the Tachov Plant	1,115.80	1,219.99	21,590.02	Asset related
Subsidy for Fire- resistant Composite Material and Automated Construction for Future Railway	71,070.00	3,895.91	183,486.67	Asset related
Subsidy for Plants at Zwickau and Schmolln	561,204.26	7,834.17	611,275.82	Asset related
Subsidy for the EU Active Collision Headrest Project	343,133.07	1,174.05	656,755.92	Asset related
Subsidy for Innovative Headrest	29,486.94	-467.61		Asset related
Subsidy for Outer Utility Grids of HF Seating Plant			1,190,941.00	Asset related
Subsidy for Project Promutes	1,087,299.93	12,839.44	301,696.35	Asset related
German Automotive Sector Stimulus Plan		168,902.41	3,968,972.66	Asset related
Total	3,365,696.26	488,690.27	24,831,377.32

5.36 Other non-current liabilities

	31/12/2022	31/12/2021
Contract liabilities	21,127,941.45	27,352,525.03
Others	2,967,686.93
Total	24,095,628.38	27,352,525.03

5.37 Share capital

		Movement
	31/12/2021	New issue	Bonus issue
Shares	1,118,967,523

	Movement
	Bond conversion	Others	Subtotal	31/12/2022
Shares	156,471	-2,337,575	-2,181,104	1,116,786,419

(1) 2.34 million shares with restriction granted to 31 plan participants (FENG Dian (the Company's Director and General Manager), LI Na (the Company's Director and Secretary of the Board), et. al.), comprising 1.86 million shares from immediate granting and 0.48 million shares from non-immediate granting, were repurchased and cancelled as a result of failure in achieving the 2021 performance target as defined by the incentive plan (the 2017 Share Incentive Plan (Draft) and its Extract) governing these 2.34 milllion shares.

(2) JFCB 02 bonds with total face value of CNY 1.10 million were converted to the Company's shares during the year ended 31 December 2022; 156,471 shares were issued in the year ended 31 December 2022 as a result of the conversion.

5.38 Other equity instruments

5.38.1 General information of outstanding other equity instruments as of the statement date

Outstanding other equity instrument	Issue date	Dividend or interest rate	Face value

JFCB 01 Bond	18/11/2019	Note	CNY 100 each

Outstanding other equity instrument	Total issuance	Total issuance	Expiry date or renewal date	Condition on conversion	Time for conversion
	(Qty.)	(CNY)
JFCB 01 Bond	4 million	400 million	17/11/2025	Voluntary conversion	Conversion starting on 5/2/2021

Note: The nominal annual interest rate is 3.00%.

5.38.2 Movement

Outstanding other equity instrument	31/12/2021		Increase
	Quantity	Book value	Quantity	Book value
JFCB 01 Bond	4,000,000.00	-8,909,822.89
JFCB 02 Bond	11,000.00	-21,428.53
Total	4,011,000.00	-8,931,251.42

Outstanding other equity instrument	Decrease		31/12/2022
	Quantity	Book value	Quantity	Book value
JFCB 01 Bond			4,000,000.00	-8,909,822.89
JFCB 02 Bond	11,000.00	-21,428.53
Total	11,000.00	-21,428.53	4,000,000.00	-8,909,822.89

5.39 Capital reserves

	31/12/2021	Increase	Decrease	31/12/2022
Share premium	3,431,684,959.29	987,532.19	9,377,019.99	3,423,295,471.49
Other capital reserve	10,600,894.99			10,600,894.99
Total	3,442,285,854.28	987,532.19	9,377,019.99	3,433,896,366.48

(1) Increase of share premium for CNY 987,532.19 during the period was resulted from the conversion of JFCB 02 bonds.

(2) Decrease of share premium for CNY 9,369,973.85 during the period was resulted from repurchase and cancellation of 2.34 million shares with restriction granted to 31 plan participants (FENG Dian (the Company's Director and General Manager), LI Na (the Company's Director and Secretary of the Board), et. al.), comprising 1.86 million shares from immediate granting and 0.48 million shares from non-immediate granting, were repurchased and cancelled as a result of failure in achieving the 2021 performance target as defined by the incentive plan (the 2017 Share Incentive Plan (Draft) and its Extract) governing these 2.34 milllion shares.

(2) Decrease of share premium for CNY 7,046.14 during the period was resulted from the charges and transactions costs associated with the share repurchase.

5.40 Treasury stocks

	31/12/2021	Increase	Decrease	31/12/2022
Treasury stocks	11,707,548.85	52,686,110.00	11,707,548.85	52,686,110.00

(1) 2.34 million shares with restriction granted to 31 plan participants (FENG Dian (the Company's Director and General Manager), LI Na (the Company's Director and Secretary of the Board), et. al.), comprising 1.86 million shares from immediate granting and 0.48 million shares from non-immediate granting, were repurchased and cancelled as a result of failure in achieving the 2021 performance target as defined by the incentive plan (the 2017 Share Incentive Plan (Draft) and its Extract) governing these 2.34 milllion shares. Upon completion of the repurchase and cancellation, outstanding shares with restriction granted by the incentive plan was reduced to zero. The 1.86 million shares from immediate granting were repurchased at CNY 5.138 each and the 0.48 million shares from non-immediate granting at CNY 3.638 each, treasury stocks were accordingly reduced by CNY 11.71 million.

(2) The Proposal for Share Repurchase by Collective Trading through Bidding was approved by the 14th Meeting of the 4th Term of the Board of Directors held on 5 May 2022. The Report on the Company's Share Repurchase by Collective Trading through Bidding (hereafter, the 2022 Repurchase Report) was published on 10 May 2022. In accordance with the 2022 Repurchase Report:

a.	consideration for total repurchase shall be not less than CNY 50.00 million and not exceeding CNY 100.00 million;
b.	the repurchase price shall not exceed CNY 10.00 per share;
c.	the repurchase window is from 5 May 2022 to 4 August 2022.

The Proposal for Uplifting the Share Repurchase Price (hereafter, the 2022 Repurchase Amendment Proposal) was approved by the 15th Meeting of the 4th Term of the Board of Directors held on 14 July 2022. In accordance with the 2022 Repurchase Amendment Proposal, the ceiling of the repurchase price was lifted to CNY 15.00 per share with no change to other aspects of the 2022 Repurchase Report.

The repurchase was concluded on 4 August 2022 with total number of shares repurchased amounting to 5.7 million, equivalent to 0.51% of the Company's total number of shares. The exercised repurchase prices were in the range from CNY 7.02 per share to CNY 13.83 per share inclusively. Total consideration made for the repurchase amounted to CNY 52.67 million (excluding charges and transaction costs). Treasury stocks, as a result, increased by CNY 52.67 million.

5.41 Other comprehensive income (OCI)

		Current reporting period
	31/12/2021	Before-tax result	Less: Reclassification to profit or loss	Less: Reclassification to retained earnings
A. OCI not reclassifiable to profit or loss in future periods	19,781,220.73	227,956,850.96
T/o: Remeasurement of defined benefit plans	19,781,220.73	227,956,850.96
B. OCI reclassifiable to profit or loss in future periods	-409,045,819.95	147,029,921.04
T/o: Cashflow hedge reserve	7,869,083.45	17,071,014.00
Net investment in overseas operation	-25,264,009.10	46,655,432.22
Translation reserve	-391,650,894.30	83,303,474.82
Total	-389,264,599.22	374,986,772.00

	Current reporting period
	Less: Tax impact	After-tax result attributable to shareholders of the Company	After-tax result attributable to non-controlling interests	31/12/2022
A. OCI not reclassifiable to profit or loss in future periods	67,004,796.00	141,808,919.78	19,143,135.18	161,590,140.51
T/o: Remeasurement of defined benefit plans	67,004,796.00	141,808,919.78	19,143,135.18	161,590,140.51
B. OCI reclassifiable to profit or loss in future periods	7,156,749.00	137,777,606.03	2,095,566.01	-271,268,213.92
T/o: Cashflow hedge reserve	4,434,768.00	11,133,796.35	1,502,449.65	19,002,879.80
Net investment in overseas operation	2,721,981.00	38,712,903.45	5,220,547.77	13,448,894.35
Translation reserve		87,930,906.23	-4,627,431.41	-303,719,988.07
Total	74,161,545.00	279,586,525.81	21,238,701.19	-109,678,073.41

5.42 Surplus reserves

	31/12/2021	Increase	Decrease	31/12/2022
Statutory surplus reserve	221,996,279.40			221,996,279.40
Total	221,996,279.40			221,996,279.40

5.43 Retained earnings

	Year ended 31/12/2022	Year ended 31/12/2021
Brought forward from the previous reporting period	271,471,288.30	354,442,722.68
Adjustments
As of 1 January	271,471,288.30	354,442,722.68
Add: Net profit attributable to shareholders of the Company	-1,417,377,181.58	126,370,529.59
Less: Transfer to statutory surplus reserve		14,617,504.11
Transfer to voluntary surplus reserve
Transfer to provision for general risks
Dividends on ordinary shares		194,724,459.86
Dividends converted to share capital
As of the end of the reporting period	-1,145,905,893.28	271,471,288.30

5.44 Revenue and cost of sales

	Year ended 31/12/2022		Year ended 31/12/2021
	Revenue	Cost of sales	Revenue	Cost of sales
Primary operation	17,883,020,882.50	15,541,124,144.05	16,760,167,136.26	14,397,096,465.04
Other operation	83,781,044.85	74,392,839.99	71,823,650.67	54,241,978.52
Total	17,966,801,927.35	15,615,516,984.04	16,831,990,786.93	14,451,338,443.56

Supplementary disclosure for revenue in accordance with the Shanghai Stock Exchange Selfdiscipline Guidance No. 2

	Year ended 31/12/2022		Year ended 31/12/2021
	CNY million	Remark	CNY million	Remark
Revenue	17,966.80		16,831.99
Total deduction	83.78		71.82
% of deduction	0.47%		0.43%
A. Revenue not arising from primary operation	-	-	-	-
Revenue arising from other operation	83.78	Revenue not arising from primary operation	71.82	Revenue not arising from primary operation
Subtotal	83.78		71.82
B. Revenue arising from transactions with no commercial substance	-	-	-	-
C. Other deduction	-	-	-	-
Revenue adjusted for deduction	17,883.02		16,760.17

5.45 Taxes and surcharges

	Year ended 31/12/2022	Year ended 31/12/2021
Unban maintenance and construction tax	22,385,865.80	24,533,725.89
Property tax	11,653,866.39	9,051,899.04
Stamp duty and flood safety fee	4,888,062.34	4,157,956.54
Land use tax	1,388,845.22	1,438,260.92
Others	8,127,568.00	6,639,694.34
Total	48,444,207.75	45,821,536.73

5.46 Selling expenses

	Year ended 31/12/2022	Year ended 31/12/2021
Personnel costs	176,140,958.83	175,657,311.05
Advertisement	22,640,911.35	21,693,058.70
Depreciation and amortisation	11,385,047.53	11,045,463.30
Lease	8,265,093.19	9,665,044.39
Travel	9,911,060.71	6,040,136.69
Professional services	5,616,236.54	5,619,919.64
Material costs	3,009,924.30	2,461,813.45
Others	24,807,496.95	65,067,127.33
Total	261,776,729.40	297,249,874.55

5.47 Administrative expenses

	Year ended 31/12/2022	Year ended 31/12/2021
Personnel costs	782,972,750.89	763,981,766.94
Professional services	83,592,251.11	111,725,380.00
Depreciation and amortisation	162,813,406.07	173,470,633.44
Insurance	57,345,219.35	62,418,607.43
Travel	29,279,743.79	21,265,950.69
Repairs	41,681,160.50	40,928,501.96
Lease	42,215,455.84	35,361,479.14
Communication	15,249,669.13	16,993,325.51
Share-based incentives		-7,460,215.38
Others	152,425,110.74	134,200,632.62
Total	1,367,574,767.42	1,352,886,062.35

5.48 R&D expenses

	Year ended 31/12/2022	Year ended 31/12/2021
Personnel costs	204,932,087.91	135,066,560.49
Professional services	47,425,491.79	34,488,506.48
Depreciation and amortisation	25,330,043.76	28,405,008.12
Material costs	26,268,854.99	13,945,921.42
Travel	11,282,842.25	10,625,688.52
Lease	11,487,626.55	11,088,561.30
Repairs	5,276,716.45	7,800,692.66
Outsourced processing	2,195,482.32	1,895,302.77
Others	42,220,798.13	78,058,968.67
Total	376,419,944.15	321,375,210.43

5.49 Financial costs

	Year ended 31/12/2022	Year ended 31/12/2021
Interest expenses	271,428,367.33	262,811,432.83
T/o: Interest expenses on lease liabilities	20,383,450.52	22,746,688.90
Less: Interest income	30,228,969.11	36,511,768.53
Net interest expenses	241,199,398.22	226,299,664.30
Exchange loss	204,251,683.84	257,211,225.84
Less: Exchange gain	255,125,867.24	301,299,882.17
Net exchange loss	-50,874,183.40	-44,088,656.33
Bank charges	9,429,484.45	10,420,765.36
Total	199,754,699.27	192,631,773.33

Note: Interests amounting to CNY 1,078,977.09 were capitalised in the year ended 31 December 2022, all of which were incurred on loans with designated usage.

5.50 Other income

	Year ended 31/12/2022	Year ended 31/12/2021	Type
A. Government grants recognised in other income	22,927,966.10	22,172,167.27
T/o: Reclassification from deferred income	3,365,696.26	2,354,082.69	Asset related
Government grants directly recognised in profit or loss	19,562,269.84	19,818,084.58	Income related
B. Other items associated with operation and recognised in other income	465.92	338.59
T/o: Reimbursement of individual income tax source deduction and payment on behalf	465.92	338.59
Total	22,928,432.02	22,172,505.86

5.51 Investment income

	Year ended 31/12/2022	Year ended 31/12/2021
Gain from long-term equity investments measured at equity	1,704,957.63	3,329,113.20
Investment income from disposal of long-term equity investments		-30,590,553.38
Investment income from disposal of debt investments at fair value through other comprehensive income		7,233,333.32
Investment income from disposal of financial assets held for trading	1,697,570.72	-342,298.56
Others	-44,832.63
Total	3,357,695.72	-20,370,405.42

5.52 Gain from hedging of net exposure

	Year ended 31/12/2022	Year ended 31/12/2021
Foreign exchange forward contracts	13,936,734.61	7,694,324.49
Interest rate swap contracts	-327,192.07	-408,494.12
Total	13,609,542.54	7,285,830.37

5.53 Credit impairment loss (loss with "-" prefix)

	Year ended 31/12/2022	Year ended 31/12/2021
Notes receivable	-5,000.00
Accounts receivable	-9,209,351.04	-5,284,624.38
Other receivables	-2,029,751.42	-636,933.80
Long-term receivables	2,593,755.52	12,370,857.08
Total	-8,650,346.94	6,449,298.90

5.54 Asset impairment loss (loss with "-"prefix)

	Year ended 31/12/2022	Year ended 31/12/2021
Inventories	-30,579,632.49	-18,403,348.46
Contract assets	176,497.23	24,954.19
Goodwill	-1,008,907,494.72
Fixed assets	-234,814,176.64
Intangible assets	-285,534,220.02
Right-of-use assets	-7,879,681.50
Other non-current assets	181,161.62	55,046.24
Total	-1,567,357,546.52	-18,323,348.03

5.55 Gain from asset disposal

	Year ended 31/12/2022	Year ended 31/12/2021
Gain or loss from disposal of fixed assets, construction in progress, biological assets and intangible assets not classified as held-for-sale	-5,405,803.83	2,895,363.24
Total	-5,405,803.83	2,895,363.24

5.56 Non-operating income

	Year ended 31/12/2022	Year ended 31/12/2021	Amount included in non-recurring gain or loss
Tax refund	9,324,469.28	21,881,860.49	9,324,469.28
Payable release	19,010.40	1,207,103.12	19,010.40
Others	910,693.54	1,177,097.91	910,693.54
Total	10,254,173.22	24,266,061.52	10,254,173.22

5.57 Non-operating expenses

	Year ended 31/12/2022	Year ended 31/12/2021	Amount included in nonrecurring gain or loss
Penalties and fines	138,407.78	1,565,440.05	138,407.78
Damage and scrap of non-current assets		27,693.25
Others	738,754.37	107,722.23	738,754.37
Total	877,162.15	1,700,855.53	877,162.15

5.58 Income tax expenses

5.58.1 General disclosure

	Year ended 31/12/2022	Year ended 31/12/2021
Current income tax expense	57,626,170.45	191,635,244.73
Deferred income tax expense	-29,673,587.75	-124,087,983.21
Total	27,952,582.70	67,547,261.52

5.58.2 Reconciliation between profit before tax and income tax expenses

	Year ended 31/12/2022	Year ended 31/12/2021
Profit before tax	-1,434,826,420.62	193,362,336.89
Income tax expenses calculated using the tax rate applicable to the Company	-215,223,963.04	29,004,350.54
Impact of different tax rates applicable to subsidiaries	-199,308,446.02	-8,843,304.06
Impact of tax adjustment for prior periods	-1,746,915.97	3,950,302.78
Impact on non-taxable income	-2,899,479.43	-8,483,207.07
Impact of non-deductible costs, expenses and losses	316,896,783.90	46,470,872.23
Impact of utilisation of prior period tax loss for which no DTA had been recognised	-82,818,904.41	-80,335,198.14
Impact of current period deductible temporary differences and recoverable tax loss for which no DTA had been recognised	206,188,292.11	69,259,765.10
Additional deduction for R&D expenses	-24,195,368.56	-10,513,067.05
Adjustment for withholding taxes	21,934,362.53	24,415,193.46
Impact of tax rate changes	2,019,288.01	991,939.77
Others	7,106,933.58	1,629,613.96
Income tax expenses	27,952,582.70	67,547,261.52

5.59 Other comprehensive income

See Note 5.41.

5.60 Notes to the consolidated statement of cash flows

5.60.1 Other cash receipts in relation to operating activities

	Year ended 31/12/2022	Year ended 31/12/2021
Government grants received	28,309,300.02	20,864,576.23
Bank interests received	28,718,846.92	22,064,876.44
Operating cash flows received from unrelated parties	10,254,173.22	1,212,216.58
Others		485,173.18
Total	67,282,320.16	44,626,842.43

5.60.2 Other cash payments in relation to operating activities

	Year ended 31/12/2022	Year ended 31/12/2021
Paid expenses	770,547,484.41	671,578,974.05
Operating cash flows paid to unrelated parties	7,106,913.75	10,563,499.38
Total	777,654,398.16	682,142,473.43

5.60.3 Other cash receipts in relation to investing activities

	Year ended 31/12/2022	Year ended 31/12/2021
Loan interests received from a joint venture	1,071,520.05	1,204,669.67
Loan repaid from a joint venture	6,447,892.19	8,813,564.55
Hedging settlement		7,285,830.37
Total	7,519,412.24	17,304,064.59

5.60.4 Other cash payments in relation to investing activities

	Year ended 31/12/2022	Year ended 31/12/2021
Payment for acquistion of structured deposits	940,000,000.00	1,958,000,000.00
Net cash reduced from disposal of subsidiaries		14,708,416.07
Others	46,250.00
Total	940,046,250.00	1,972,708,416.07

5.60.5 Other cash receipts in relation to financing activities

	Year ended 31/12/2022	Year ended 31/12/2021
Proceeds from sale-and-lease-back arrangements		1,529,740.00
Receipt of margin deposits from banks		86,949,403.26
Proceeds from note cashing with recourse	29,698,870.32	35,998,564.71
Total	29,698,870.32	124,477,707.97

5.60.6 Other cash payments in relation to financing activities

	Year ended 31/12/2022	Year ended 31/12/2021
Financial lease rentals paid	128,430,851.36	158,145,347.26
Financing arrangement fee paid		10,325,745.00
Payment for share repurchase	65,498,446.97	11,673,295.96
Payment for share issue costs		656,962.14
Payment for margin deposits to banks	831,896.98
Total	194,761,195.31	180,801,350.36

5.61 Supplementary information to the consolidated statement of cash flows

5.61.1 Supplementary information

	Year ended 31/12/2022	Year ended 31/12/2021
A. Reconciliation between net profit and net cash flows from operating activities
Net profit	-1,462,779,003.32	125,815,075.37
Add: Asset impairment loss	1,567,357,546.52	18,323,348.03
Credit impairment loss	8,650,346.94	-6,449,298.90
Fixed asset depreciation and investment property depreciation	463,293,376.84	461,167,015.33
Right-of-use asset depreciation	142,179,771.57	138,183,602.77
Intangible asset amortisation	137,723,474.45	150,220,668.65
Long-term prepared expense amortisation	22,573,839.72	16,760,735.69
Loss from disposal of fixed assets, intangible assets and other non-current assets (gain with "-")	5,405,803.83	-2,895,363.24
Loss from scrapping of fixed assets (gain with "-")
Loss from fair value measurement (gain with "-")
Financial costs (income with "-")	219,044,061.74	174,690,144.10
Investment loss (gain with "-")	-3,357,695.72	20,370,405.42
Decrease of DTA (increase with "-")	32,580,420.02	101,857,748.65
Increase of DTL (decrease with "-")	-62,254,007.77	-225,945,731.86
Decrease of inventories (increase with "-")	-126,404,195.33	-471,389,765.59
Decrease of operating receivables (increase with "-")	-572,673,374.45	-105,680,351.76
Increase of operating payables (decrease with "-")	681,026,128.99	323,882,480.68
Net cash flows from operating activities	1,052,366,494.03	718,910,713.34
B. Significant investing and financing activities not involving cash
Debt-to-equity conversion
Corporate bonds convertible within 1 year
Assets acquired through leasing (excluding leasing accounted for by the simplified approach)
C. Movement of cash and cash equivalents
Cash at of 31 December	1,149,840,150.36	1,393,011,780.96
Less: Opening balance of cash as of 1 January	1,393,011,780.96	1,416,315,531.84
Add: Cash equivalents as of 31 December
Less: Opening balance of cash equivalents as of 1 January
Net increase of cash and cash equivalents	-243,171,630.60	-23,303,750.88

5.61.2 Composition of cash and cash equivalents

	31/12/2022	31/12/2021
A. Cash	1,149,840,150.36	1,393,011,780.96
T/o: Cash in hand	312,325.20	387,980.14
Cash at bank usable on demand	1,149,527,825.16	1,392,623,800.82
Other monetary funds usable on demand
B. Cash equivalents
T/o: Investment in debt instruments matured in 3 months
C. Cash and cash equivalents as of 31 December	1,149,840,150.36	1,393,011,780.96
T/o: Cash and cash equivalents held by group companies with restriction on use

5.62 Assets with restriction on ownership or utilisation

	Book value as of 31/12/2022	Reason for restriction
Monetary funds	9,814,687.90	Margin deposits for bank acceptance
Monetary funds	3,761,158.75	Margin deposits for guarantee letters
Notes receivable	21,398,247.56	Transferred with recourse
Notes receivable	13,996,246.20	Cashed with recourse
Fixed assets	443,192,949.51	Securities for loans
Total	492,163,289.92	/

5.63 Foreign currencies

5.63.1 Monetary items denominated in foreign currencies

	Balance of foreign currency as of 31/12/2022	Exchange rate	CNY as of 31/12/2022
Monetary funds
JPY	594,379,918.78	0.0524	31,120,575.41
RSD	159,633,065.52	0.063	10,056,883.13
ARS	88,638,282.18	0.0391	3,465,756.83
TRY	40,988,038.99	0.3692	15,132,784.00
CZR	38,124,491.28	0.3057	11,654,656.99
USD	37,757,597.71	6.9646	262,966,565.01
BRL	24,434,700.51	1.3049	31,884,840.70
EUR	20,869,021.95	7.4229	154,908,663.02
ZAR	19,448,582.88	0.3692	7,180,416.80
PLN	3,320,533.29	0.6298	2,091,271.87
GBP	394,667.05	8.3941	3,312,874.69
BAM	295,616.61	3.786	1,119,204.49
BGN	112,862.06	3.7754	426,099.42
MXN	5,239.68	0.3577	1,874.23
Total			535,322,466.59
Accounts receivable
JPY	977,528,779.14	0.0524	51,222,508.03
CZR	250,877,042.83	0.3057	76,693,111.99
RSD	158,154,948.02	0.063	9,963,761.73
TRY	94,580,723.15	0.3692	34,919,202.99
EUR	63,966,097.39	7.4229	474,813,944.32
USD	55,676,673.30	6.9646	387,765,758.87
ARS	49,620,387.31	0.0391	1,940,157.14
BRL	33,035,035.60	1.3049	43,107,417.95
PLN	6,639,036.54	0.6298	4,181,265.21
ZAR	3,820,232.07	0.3692	1,410,429.68
BAM	647,233.73	3.786	2,450,426.90
GBP	149,979.38	8.3941	1,258,941.91
BGN	20,481.01	3.7754	77,324.01
Total			1,089,804,250.73

	Balance of foreign currency as of 31/12/2022	Exchange rate	CNY as of 31/12/2022
Other receivables
CZR	14,680,365.54	0.3057	4,487,787.74
RSD	7,420,038.77	0.0630	467,462.44
USD	4,496,804.52	6.9646	31,318,444.76
EUR	2,537,845.97	7.4229	18,838,176.85
BRL	596,223.35	1.3049	778,011.85
JPY	205,322.67	0.0524	10,758.91
ARS	173,189.30	0.0391	6,771.70
BAM	7,500.27	3.7860	28,396.02
BGN	6,920.00	3.7754	26,125.77
PLN	0.07	0.6298	0.04
Total			55,961,936.08
Long-term receivables
JPY	12,316,640.13	0.0524	645,391.94
USD	6,346,534.77	6.9646	44,201,076.06
CZR	116,010.50	0.3057	35,464.41
EUR	83,072.00	7.4229	616,635.15
Total			45,498,567.56
Short-term bank loans
EUR	258,168,902.08	7.4229	1,916,361,943.25
CZR	56,366,588.87	0.3057	17,231,266.22
PLN	3,187,625.46	0.6298	2,007,566.51
USD	2,478,595.74	6.9646	17,262,427.89
Total			1,952,863,203.87

	Balance of foreign currency as of 31/12/2022	Exchange rate	CNY as of 31/12/2022
Accounts payable
RSD	1,053,302,487.78	0.0630	66,358,056.73
CZR	744,497,156.15	0.3057	227,592,780.63
TRY	185,370,268.11	0.3692	68,438,702.99
EUR	76,204,973.27	7.4229	565,661,896.08
USD	74,036,066.96	6.9646	515,631,591.95
JPY	47,695,725.92	0.0524	2,499,256.04
PLN	32,334,620.56	0.6298	20,364,344.03
BRL	17,412,288.41	1.3049	22,721,295.15
ARS	15,865,255.84	0.0391	620,331.50
BGN	10,599,462.73	3.7754	40,017,211.59
ZAR	2,728,416.13	0.3692	1,007,331.24
BAM	1,696,512.84	3.7860	6,422,997.61
GBP	12,489.95	8.3941	104,841.89
Total			1,537,440,637.43
Other payables
CZR	101,530,526.75	0.3057	31,037,882.02
EUR	28,023,615.84	7.4229	208,016,498.02
ARS	6,422,680.88	0.0391	251,126.82
JPY	5,882,869.18	0.0524	308,262.35
USD	4,308,123.12	6.9646	30,004,354.28
TRY	4,119,009.23	0.3692	1,520,738.21
BRL	4,091,138.35	1.3049	5,338,526.43
ZAR	322,502.10	0.3692	119,067.78
PLN	266,073.60	0.6298	167,573.15
BAM	124,257.19	3.786	470,437.72
GBP	9,468.96	8.3941	79,483.40
Total			277,313,950.18

	Balance of foreign currency as of 31/12/2022	Exchange rate	CNY as of 31/12/2022
Non-current liabilities due within 1 year
EUR	46,623,530.34	7.4229	346,081,803.36
CZR	41,796,715.19	0.3057	12,777,255.83
JPY	24,050,397.61	0.0524	1,260,240.83
USD	13,993,359.64	6.9646	97,458,152.55
RSD	12,286,317.67	0.063	774,038.01
PLN	1,749,937.69	0.6298	1,102,110.76
BRL	935,894.34	1.3049	1,221,248.52
TRY	637,535.72	0.3692	235,378.19
BGN	108,144.06	3.7754	408,287.08
GBP	22,289.91	8.3941	187,103.73
Total			461,505,618.86
Long-term bank loans
EUR	233,455,440.84	7.4229	1,732,916,391.81
USD	7,500,011.22	6.9646	52,234,578.14
Total			1,785,150,969.95
Lease liabilities
CZR	394,054,625.77	0.3057	120,462,499.10
USD	30,034,494.92	6.9646	209,178,243.32
RSD	18,543,565.78	0.063	1,168,244.64
EUR	10,935,271.00	7.4229	81,171,423.11
PLN	6,048,634.98	0.6298	3,809,430.31
JPY	5,490,989.43	0.0524	287,727.85
TRY	658,512.66	0.3692	243,122.87
BRL	311,980.17	1.3049	407,102.92
GBP	37,955.84	8.3941	318,605.12
Total			417,046,399.24

5.63.2 Exchange rates applicable to major foreign operation

Location of major foreign operation	Period	Exchange rate applicable to the balance sheet	Exchange rate applicable to the income statement
Germany	Year ended 31/12/2022	7.4229	7.1070
U.S.A.	Year ended 31/12/2022	6.6946	6.6064
Germany	Year ended 31/12/2021	7.2197	7.6487
U.S.A.	Year ended 31/12/2021	6.3757	6.4545

5.64 Hedges

See Note 8 for details.

5.65 Government grants

5.65.1 Asset related government grants

	Grant amount	Presentation line item	Amount reclassified to profit or loss in the reporting period	Presentation line item of the impact of reclassification
Industrial Technology Renovation	4,939,904.00	Deferred income	362,411.73	Other income
Enterprise Supporting Fund	10,350,000.00	Deferred income	513,055.69	Other income
resistant Composite Material and Automated Construction for Future Railway	1,743,923.95	Deferred income	71,070.00	Other income
Subsidy for Construction of the Tachov Plant	1,064,525.27	Deferred income	1,115.79	Other income
Subsidy for Plants at Zwickau and Schmölln	49,037,416.74	Deferred income	561,204.25	Other income
Subsidy for the EU Active Collision Headrest Project	7,392,662.85	Deferred income	343,133.06	Other income
Shanghai Key Technology Renovation Projects	5,200,000.00	Deferred income		Other income
Subsidy for Innovative Headrest	3,116,199.08	Deferred income	29,487.01	Other income
Subsidy for Tupelo Plant Activation	4,601,302.22	Deferred income	183,516.95	Other income
Subsidy for the Echo Building at Tachov	5,975,529.32	Deferred income	213,401.88	Other income
Subsidy for Project Promutes	1,376,156.84	Deferred income	1,087,299.90	Other income
Total	94,797,620.27		3,365,696.26

5.65.2 Income related government grants

	Grant amount	Presentation line item	Amount recognised directly in profit or loss in the reporting period	Presentation line item in profit or loss
Kopa 35 C Zuschuss für Schungsprojekte	4,825,546.40	Other income	4,825,546.40	Other income
Hefei Subsidy for Headquarter Establishment	1,892,146.36	Other income	1,892,146.36	Other income
VAT Refund for Reemployment of Redundant Workers	1,889,550.00	Other income	1,889,550.00	Other income
Manufacturing Sector Designated Fund for High-qualify Development	1,560,000.00	Other income	1,560,000.00	Other income
Forschungszulage	1,398,268.92	Other income	1,398,268.92	Other income
Subsidy for Key Technology Breakthrough	800,000.00	Other income	800,000.00	Other income
Employment Stablisation Subsidy	615,617.01	Other income	615,617.01	Other income
Bonus on Establishment of Green Work Place	556,000.00	Other income	556,000.00	Other income
Subsidy for Strategical Emerging Enterprises	542,050.89	Other income	542,050.89	Other income
Subsidy on General Operation	433,789.96	Other income	433,789.96	Other income
Subsidy for COVID-19	395,845.69	Other income	395,845.69	Other income
Turkey national R&D fund	380,508.78	Other income	380,508.78	Other income
Subsidy on Job-loss Insurance	353,417.38	Other income	352,217.38	Other income
Regional Bonus on Cross-border Trading	341,000.00	Other income	341,000.00	Other income
Ningbo Subsidy for Plant Leasing	330,759.78	Other income	330,759.78	Other income
Internship Subsidy	303,646.58	Other income	303,646.58	Other income
Subsidy on Project JIT	250,194.83	Other income	250,194.83	Other income
SME Subsidy	221,837.90	Other income	221,837.90	Other income
Refund of Job-loss Insurance	196,316.66	Other income	196,316.66	Other income
Subsidy for Training Subsitituion by Employment	196,280.00	Other income	196,280.00	Other income
Governmental Subsidy COVID-19 Employment Stablisation	195,854.71	Other income	195,854.71	Other income
Employment Subsidy	186,394.72	Other income	186,394.72	Other income
Subsidy for Standardisation	180,000.00	Other income	180,000.00	Other income
One-off Employment Retention Training	151,452.84	Other income	151,452.84	Other income
Additional Deduction on VAT	139,863.43	Other income	139,863.43	Other income
Subsidy for Virtual Training	128,800.00	Other income	128,800.00	Other income
Subsidy for High-tech Enterprises	100,379.27	Other income	100,379.27	Other income
Beilun Green Plant Subsidy	100,379.27	Other income	100,379.27	Other income
Fiscal Subsidy by Shenyang Statistic Bureau	100,379.24	Other income	100,379.24	Other income
National Fiscal Subsidy on Beilun Technology Innovation Team	100,000.00	Other income	100,000.00	Other income
Designated Fund for Technological Projects	100,000.00	Other income	100,000.00	Other income
Subsidy for Hosting Standard Setting	100,000.00	Other income	100,000.00	Other income
Tianjin Subsidy for R&D	77,899.83	Other income	77,899.83	Other income
Subsidy for Diversity Management	62,882.74	Other income	62,882.74	Other income
Refund of Social Security	62,491.85	Other income	62,491.85	Other income
Subsidy on Job-loss and Employment Stablisation	56,552.76	Other income	56,552.76	Other income
Fiscal Subsidy on Post-Doctoral Station	50,000.00	Other income	50,000.00	Other income
Bonus Manufacturing Sector Output Achievement	50,000.00	Other income	50,000.00	Other income
Designated Fund for Services and Trading	50,000.00	Other income	50,000.00	Other income
Bonus for Job-loss Insurance	29,226.36	Other income	29,226.36	Other income
District Cross-border Trading Bonus	12,800.00	Other income	12,800.00	Other income
Subsidy on Investment and Commerce and Going-out Projects	12,000.00	Other income	12,000.00	Other income
Subsidy for Employment Expansion	12,000.00	Other income	12,000.00	Other income
Bonus for Scarce High-skilled Talents	10,200.00	Other income	10,200.00	Other income
Social Security Subsidy for Recruitment of Higher Education Graduates	7,229.00	Other income	7,229.00	Other income
Subsidy for Graduate Employment	1,506.68	Other income	1,506.68	Other income
Subsidy by Employment Service Administration for Job-loss	1,200.00	Other income	1,200.00	Other income
Refund of IIT Tax Bureau	465.92	Other income	465.92	Other income
Total	19,562,735.76		19,562,735.76

5.66 Leases - the Group as the lessee

	Year ended 31/12/2022
Expense recognised for short-term leases	618,309.00
Expense recognised for low-value leases	3,318,969.00
Interest expenses on lease liabilities	20,383,450.52
Variable lease rentals not included in the measurement of lease liabilities
Income from sublease of right-of-use assets
Total cash outflows associated with leases	117,875,669.05
Gain or loss arising from sale-and-lease-back arrangement

Note 6 Change of the Company's Scope of Consolidation

6.1 Disposal of subsidiaries

No subsidiary was disposed in the reporting period.

6.2 Other changes

Shanghai Seating was incorporated on 23 June 2022 with the registered capital at incorporation amounting CNY 200.0 million, which was fully subscribed by the Company. Shanghai Seating was included in the Company's scope of consolidation since incorporation. Ningbo Jixin was incorporated on 8 October 2022 with the registered capital at incorporation amounting CNY 5.1 million, 51% of which was subscribed by the Company. Ningbo Jixin was included in the Company's scope of consolidation since incorporation. Changzhou Seating was incorporated on 22 November 2022 with the registered capital at incorporation amounting CNY 50.0 million, which was fully subscribed by Shanghai Seating. Changzhou Seating was included in the Company's scope of consolidation since incorporation.

Note 7 Interests in Other Entities

7.1 Interests in subsidiaries

7.1.1 Composition of the Group

Subsidiary	Place of primary operation	Place of registration	Business

Changchun Jifeng	Changchun	Changchun	Manufacturing
Chengdu Jifeng	Chengdu	Chengdu	Manufacturing
Guangzhou Jifeng	Guangzhou	Guangzhou	Manufacturing
Wuhan Jifeng	Wuhan	Wuhan	Manufacturing
Dongjun Jifeng	Wuhan	Wuhan	Manufacturing
Jifeng Sewing	Ningbo	Ningbo	Manufacturing
Yiqi Sihuan JF	Ningbo	Ningbo	Manufacturing
Liuzhou Jifeng	Liuzhou	Liuzhou	Manufacturing
Shenyang Jifeng	Shenyang	Shenyang	Manufacturing
Jifeng DE	Germany	Germany	Manufacturing
Jifeng BA	Bosnia and Herzegovina	Bosnia and Herzegovina	Manufacturing
Jifeng CZ	Czech Republic	Czech Republic	Manufacturing
Hefei Jifeng	Hefei	Hefei	Manufacturing
Shanghai Seating	Shanghai	Shanghai	Manufacturing
Hefei Seating	Hefei	Hefei	Manufacturing
Changzhou Seating	Changzhou	Changzhou	Manufacturing
Ningbo Jixin	Ningo	Ningo	Manufacturing
Jifeng US	U.S.A.	U.S.A.	Manufacturing
Tianjin Jifeng	Tianjin	Tianjin	Manufacturing
Guangzhou Huafeng	Guangzhou	Guangzhou	Manufacturing
Wuhan Jiheng	Wuhan	Wuhan	Manufacturing
Shanghai Jiwen	Shanghai	Shanghai	Management consultancy
Jifeng Tech	Ningbo	Ningbo	Manufacturing
Chongqing Jihan	Chongqing	Chongqing	Manufacturing
JYC	Ningbo	Ningbo	Trading
JYL	Luxembourg	Luxembourg	Investment
JYDE	Germany	Germany	Investment
Jifeng JP	Japan	Japan	Management consultancy
Grammer AG	Germany	Germany	Automotives and commercial vehicle
Grammer Brazil	Brazil	Brazil	Automotives and commercial vehicle
Grammer UK	U.K.	U.K.	Distribution
Grammer Turkey	Turkey	Turkey	Commercial vehicle
Grammer Inc	U.S.A.	U.S.A.	Automotives and commercial vehicle
Grammer CZ	Czech Republic	Czech Republic	Automotives and commercial vehicle
Grammer Japan	Japan	Japan	Distribution
Grammer BG	Bulgaria	Bulgaria	Commercial vehicle
GRAMMER System	Germany	Germany	Automotives
GRAMMER Metal	Germany	Germany	Automotives
Grammer Slovenia	Slovenia	Slovenia	Automotives
GRAMMER Industries	U.S.A.	U.S.A.	Automotives
Grammer Mexico	Mexico	Mexico	Automotives
Grammer Poland	Poland	Poland	Automotives
Grammer Tianjin	Tianjin	Tianjin	Commercial vehicle
Grammer Changchun	Changchun	Changchun	Automotives
Grammer Shanghai	Shanghai	Shanghai	Automotives
Grammer Serbia	Serbia	Serbia	Automotives
GRAMMER Railway	Germany	Germany	Commercial vehicle
GRAMMER Tech	Germany	Germany	Commercial vehicle
Grammer Belgium	Belgium	Belgium	Commercial vehicle
Grammer Beijing	Beijing	Beijing	Automotives
GRAMMER Auto CZ	Czech Republic	Czech Republic	Automotives
Grammer Ningbo	Ningbo	Ningbo	Commercial vehicle
Grammer ZA	South Africa	South Africa	Automotives
Grammer Argentina	Argentina	Argentina	Commercial vehicle
Grammer Italy	Italy	Italy	Commercial vehicle
GRAMMER Interior	Germany	Germany	Automotives
Grammer Shaanxi	Shaanxi	Shaanxi	Commercial vehicle
GRAMMER CZ Service	Czech Republic	Czech Republic	Services
Grammer France	France	France	Distribution
GrammPlast	Germany	Germany	Distribution
TMD LLC	U.S.A.	U.S.A.	Automotives
TMD Mexico	U.S.A.	U.S.A.	Automotives
TMD Holding	U.S.A.	U.S.A.	Automotives
TMD MX	Mexico	Mexico	Automotives
TMD CZ	Czech Republic	Czech Republic	Automotives
Grammer Shenyang	Shenyang	Shenyang	Automotives
Grammer FAWSN	Changchun	Changchun	Automotives
Grammer China Holding	Hefei	Hefei	Investment
Grammer Hefei	Hefei	Hefei	Automotives
Grammer Harbin	Harbin	Harbin	Commercial vehicle
Grammer Qingdao	Qingdao	Qingdao	Commercial vehicle
GRM Haining	Haining	Haining	Manufacturing

Subsidiary	Shareholding %		Means of control acquisition
	Direct	Indirect
Changchun Jifeng	100.00		Business combination under common control
Chengdu Jifeng	100.00		Incorporation
Guangzhou Jifeng	100.00		Incorporation
Wuhan Jifeng	100.00		Incorporation
Dongjun Jifeng		76.00	Incorporation
Jifeng Sewing	100.00		Business combination not under common control
Yiqi Sihuan JF	55.00		Incorporation
Liuzhou Jifeng	100.00		Incorporation
Shenyang Jifeng	100.00		Incorporation
Jifeng DE	100.00		Incorporation
Jifeng BA		100.00	Incorporation
Jifeng CZ		100.00	Business combination not under common control
Hefei Jifeng	100.00		Incorporation
Shanghai Seating	100.00		Incorporation
Hefei Seating		100.00	Incorporation
Changzhou Seating		100.00	Incorporation
Ningbo Jixin	51.00		Incorporation
Jifeng US	100.00		Incorporation
Tianjin Jifeng	100.00		Incorporation
Guangzhou Huafeng	51.00		Incorporation
Wuhan Jiheng	100.00		Business combination not under common control
Shanghai Jiwen	100.00		Incorporation
Jifeng Tech	100.00		Incorporation
Chongqing Jihan	100.00		Incorporation
JYC	100.00		Business combination under common control
JYL		100.00	Business combination under common control
JYDE		100.00	Business combination under common control
Jifeng JP	66.60		Incorporation
Grammer AG		88.11	Business combination under common control
Grammer Brazil		88.11	Business combination under common control
Grammer UK		88.11	Business combination under common control
Grammer Turkey		87.58	Business combination under common control
Grammer Inc		88.11	Business combination under common control
Grammer CZ		88.11	Business combination under common control
Grammer Japan		88.11	Business combination under common control
Grammer BG		87.09	Business combination under common control
GRAMMER System		88.11	Business combination under common control
GRAMMER Metal		88.11	Business combination under common control
Grammer Slovenia		88.11	Business combination under common control
GRAMMER Industries		88.11	Business combination under common control
Grammer Mexico		88.11	Business combination under common control
Grammer Poland		88.11	Business combination under common control
Grammer Tianjin		88.11	Business combination under common control
Grammer Changchun		88.11	Business combination under common control
Grammer Shanghai		88.11	Business combination under common control
Grammer Serbia		88.11	Business combination under common control
GRAMMER Railway		88.11	Business combination under common control
GRAMMER Tech		88.11	Business combination under common control
Grammer Belgium		88.11	Business combination under common control
Grammer Beijing		88.11	Business combination under common control
GRAMMER Auto CZ		88.11	Business combination under common control
Grammer Ningbo		88.11	Business combination under common control
Grammer ZA		88.11	Business combination under common control
Grammer Argentina		88.07	Business combination under common control
Grammer Italy		88.11	Business combination under common control
GRAMMER Interior		88.11	Business combination under common control
Grammer Shaanxi		79.30	Business combination under common control
GRAMMER CZ Service		88.11	Business combination under common control
Grammer France		88.11	Business combination under common control
GrammPlast		52.87	Business combination under common control
TMD LLC		88.11	Business combination under common control
TMD Mexico		88.11	Business combination under common control
TMD Holding		88.11	Business combination under common control
TMD MX		88.11	Business combination under common control
TMD CZ		88.11	Business combination under common control
Grammer Shenyang		88.11	Incorporation
Grammer FAWSN		43.17	Incorporation
Grammer China Holding		88.11	Incorporation
Grammer Hefei		88.11	Incorporation
Grammer Harbin		52.87	Incorporation
Grammer Qingdao		52.87	Incorporation
GRM Haining		100.00	Incorporation

Note: In accordance with the Article of Association of Grammer FAWSN, Grammer China Holding had 51% voting right in Grammer FAWSN in the reporting period. The Company accordingly had the power to control the operation of Grammer FAWSN and therefore Grammer FAWSN was included in the Company's scope of consolidation.

7.1.2 Significant partially owned subsidiaries

Subsidiary	Non-controlling shareholding in %	Net profit attributable to non-controlling shareholders	Dividend payable to noncontrolling shareholders declared	Non-controlling interest as of the statement date
Grammer Group	11.89%	7,316,149.69		295,452,325.45

7.1.3 Key financial information of significant partially owned subsidiaries

	31/12/2022
Subsidiary	Current assets	Non-current assets	Total assets
Grammer Group	5,042,948,887.91	5,681,713,585.52	10,724,662,473.43

	31/12/2022
Subsidiary	Current liabilities	Non-current liabilities	Total liabilities
Grammer Group	5,768,963,033.86	2,734,846,085.73	8,503,809,119.59

	31/12/2021
Subsidiary	Current assets	Non-current assets	Total assets
Grammer Group	4,739,408,706.13	5,996,642,064.00	10,736,050,770.13

	31/12/2021
Subsidiary	Current liabilities	Non-current liabilities	Total liabilities
Grammer Group	5,295,419,767.77	3,101,375,714.12	8,396,795,481.89

	Year ended 31/12/2022
Subsidiary	Revenue	Net profit	Total comprehensive income	Cash flows from operating activities
Grammer Group	15,586,743,679.50	-556,079,530.70	-310,746,875.73	758,466,147.21

	Year ended 31/12/2021
Subsidiary	Revenue	Net profit	Total comprehensive income	Cash flows from operating activities
Grammer Group	14,650,734,229.23	11,822,047.79	-223,417,260.68	523,305,609.92

7.2 Changes in shareholding in subsidiaries not giving rise to loss of control

No such event occurred in the reporting period.

7.3 Interests in joint ventures and associates

7.3.1 Significant joint venture

	Place of primary operation	Place of registration	Nature of operation

Joint ventures
GRA-MAG	U.S.A.	U.S.A.	Automotives

	Shareholding in %		Accounting method
	Direct	Indirect
Joint ventures
GRA-MAG		44.06	At equity

88.11% shareholding in Grammer AG was held by the Company; 50% shareholding in GRA-MAG was held by Grammer AG. GRA-MAG was a significant joint venture of the Company.

7.3.2 Key financial information of GRA-MAG

	As of and for the year ended 31/12/2022	As of and for the year ended 31/12/2021
Current assets	105,953,264.67	78,838,432.57
Non-current assets	18,073,959.83	6,764,378.86
Total assets	124,027,224.50	85,602,811.43
Current liabilities	48,546,797.78	45,465,125.00
Non-current liabilities	139,221,269.85	133,468,586.75
Total liabilities	187,768,067.63	178,933,711.75
Non-controlling interest
Equity attributable to shareholders of GRA-MAG	-63,740,843.14	-93,330,900.32
Grammer AG's share of GRA-MAG's equity	-31,870,421.57	-46,665,450.16
Adjustments
Goodwill	15,164,984.70	14,749,847.10
Book value of investment in GRA-MAG
Fair value of publicly quoted investment in the joint venture	Not applicable	Not applicable
Revenue	435,425,769.11	301,986,057.54
Financial costs	5,148,980.22	5,331,518.69
Income tax expenses	539,449.73	426,636.84
Net profit	36,969,435.38	21,602,093.38
OCI	36,969,435.38	21,602,093.38
Dividend received from GRA-MAG

7.3.3 Aggregated financial information of non-significant associates

	As of and for the year ended 31/12/2022	As of and for the year ended 31/12/2021
Associates
ALLYGRAM - carrying value	8,593,528.43	6,917,824.99
Smart Cabin Fund - carrying value	1,004,451.08	1,000,000.00
Ningbo Jihua - carrying value	1,094,499.99	1,250,000.00
Total carrying value	10,692,479.50	9,167,824.99
Aggregation of proportionate share of net profit	1,704,957.63	3,329,113.20
Aggregation of proportionate share of OCI	-180,303.12	-220,173.58
Aggregation of proportionate share of total comprehensive income	1,524,654.51	3,108,939.62

7.3.4 Exccessive loss incurred by the joint venture and associates

	Cumulative loss not recognised as of 31/12/2021	Current period loss or gain not recognised	Cumulative loss not recognised as of 31/12/2022
GRA-MAG	-55,981,912.23	28,027,148.95	-27,954,763.28

7.3.5 Remittance of cash flows from the joint venture and associates to the Company was not subject to significant restriction.

Note 8 Risks associated with Financial Instruments

Risks related to the financial instruments of the Group arise from the recognition of various financial assets and financial liabilities during its operation, including credit risk, liquidity risk and market risk.

Management of the Company is responsible for determining risk management objectives and policies related to financial instruments. Operational management is responsible for the daily risk management through functional departments (for example, the Company's credit management department approves each credit sale upon satisfactory checking). Internal audit department is responsible for the daily supervision of implementation of the risk management policies and procedures, and report their findings to the audit committee in a timely manner. Overall risk management objective of the Company is to establish risk management policies to minimise the risks without unduly affecting the competitiveness and resilience of the Company.

8.1 Credit risk

Credit risk is the risk of one party of the financial instrument faces to a financial loss because the other party of the financial instrument fails to fulfill its obligation. The credit risk of the Group is related to monetary funds, notes receivable, accounts receivables, receivables held for factoring, other receivables, contract assets and long-term receivables. Credit risk of these financial assets is derived from the counterparty's breach of contract. The maximum risk exposure is equal to the carrying amount of these financial instruments.

Monetary funds of the Group has lower credit risk, as they are mainly deposited in financial institutions such as commercial banks, which the Company believes having higher reputation and financial position.

For notes receivable, accounts receivable, receivables held for factoring, other receivables, contract assets and long-term receivables, the Company establishes related policies to control their credit risk exposure. The Company assesses credit capability of its customers and determines their credit terms based on their financial position, possibility of the guarantee from third party, credit record and other factors (such as current market status, etc.). The Company monitors its customers' credit record periodically, and for those customers with inferior credit record, the Company takes measures such as written call, shortening or cancelling their credit terms so as to ensure the overall credit risk of the Company is controllable.

(1) Determination of significant increases in credit risk

The Company assesses at each reporting date as to whether the credit risk on financial instruments has increased significantly since initial recognition. When the Company determines whether the credit risk has increased significantly since initial recognition, it considers based on reasonable and supportable information that is available without undue cost or effort, including quantitative and qualitative analysis of historical information, external credit ratings and forward-looking information. The Company determines the changes in the risk of a default occurring over the expected life of the financial instrument through comparing the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition based on individual financial instrument or a group of financial instruments with the similar credit risk characteristics.

When met one or more of the following quantitative or qualitative criteria, the Company determines that the credit risk on financial instruments has increased significantly: the quantitative criteria applied mainly because as at the reporting date, the increase in the probability of default occurring over the lifetime is more than a certain percentage since the initial recognition; the qualitative criteria applied if the debtor has adverse changes in business and economic conditions, early warning list of customer, and etc.

(2) Definition of credit-impaired financial assets

The criteria adopted by the Company for determination of credit impairment are consistent with internal credit risk management objectives of relevant financial instruments in considering both quantitative and qualitative indicators.

When the Company assesses whether the debtor has incurred the credit impairment, the main factors considered are as following: Significant financial difficulty of the issuer or the borrower; a breach of contract, e.g., default or past-due event; a lender having granted a concession to the borrower for economic or contractual reasons relating to the borrower's financial difficulty that the lender would not otherwise consider; the probability that the borrower will enter bankruptcy or other financial re-organisation; the disappearance of an active market for the financial asset because of financial difficulties of the issuer or the borrower; the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.

Credit impairment of a financial asset may be resulted from composite effect of multiple variables instead of the impact of a single event.

(3) The parameter of expected credit loss measurement

The company measures impairment allowance for different assets with the expected credit loss of 12-month or the lifetime based on whether there has been a significant increase in credit risk or credit impairment has occurred. The key parameters for expected credit loss measurement include default probability, default loss rate and default risk exposure. The Company sets up the model of default probability, default loss rate and default risk exposure in considering the quantitative analysis of historical statistics (such as counterparties' ratings, guarantee method and collateral type, repayment method, etc.) and forward-looking information.

Relevant definitions are as follow:

Default probability refers to the probability of the debtor will fail to discharge the repayment obligation over the next 12 months or the entire remaining lifetime;

Default loss rate refers to the Company's expectation of the loss degree of default risk exposure. The default loss rate varies depending on the type of counterparty, recourse method and priority, and the collateral. The default loss rate is the percentage of the risk exposure loss when default has occurred and it is calculated over the next 12 months or the entire lifetime;

The default risk exposure refers to the amount that the company should be repaid when default has occurred in the next 12 months or the entire lifetime. Both the assessment of significant increase in credit risk of forward-looking information and the calculation of expected credit losses involve forward-looking information. Through historical data analysis, the Company identifies key economic indicators that have impact on the credit risk and expected credit losses for each business.

The Group's maximum exposure to credit risk is limited by the book value of each financial assets on the Company's consolidated statement of financial position. The Company does not offer guarantee in any kind which may expose the Group to credit risk.

The top-5 accounts receivable was equal to 39.20% (31/12/2021: 39.64%) of the consolidated gross accounts receivable. The top-5 other receivables was equal to 58.62% (31/12/2021: 61.60%) of the consolidated other receivables.

8.2 Liquidity risk

Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement by delivering cash or other financial assets. The Company is responsible for the capital management of all of its subsidiaries, including short-term investment of cash surplus and dealing with forecasted cash demand by raising loans. The Company's policy is to monitor the demand for short-term and long-term floating capital and whether the requirement of loan contracts is satisfied so as to ensure to maintain adequate cash and cash equivalents.

The maturity profile of the Group's financial liabilities as of the statement dates is as follows:

		31/12/2022
	Less than 1 year	1 to 4 years	After 4 years	Total
Short-term bank loans	2,135,001,506.93			2,135,001,506.93
Notes payable	70,066,097.01			70,066,097.01
Accounts payable	2,811,911,266.45			2,811,911,266.45
Other payables	334,065,924.17			334,065,924.17
Non-current liabilities due within 1 year	524,056,712.48			524,056,712.48
Other current liabilities	207,948,557.25			207,948,557.25
Long-term bank loans		1,933,991,287.34	623,045,209.27	2,557,036,496.61
Debt instruments payable		433,337,971.05		433,337,971.05
Lease liabilities		268,694,091.63	195,982,169.57	464,676,261.20
Total	6,083,050,064.29	2,636,023,350.02	819,027,378.84	9,538,100,793.15

		31/12/2021
	Less than 1 year	1 to 4 years	After 4 years	Total
Short-term bank loans	1,638,487,947.89			1,638,487,947.89
Notes payable	60,612,929.57			60,612,929.57
Accounts payable	2,279,321,177.38			2,279,321,177.38
Other payables	322,623,670.18			322,623,670.18
Non-current liabilities due within 1 year	745,461,991.84			745,461,991.84
Other current liabilities	338,703,594.08			338,703,594.08
Long-term bank loans		1,997,863,324.32	632,640,428.09	2,630,503,752.41
Debt instruments payable		426,143,895.56		426,143,895.56
Lease liabilities		274,224,320.43	205,671,308.43	479,895,628.86
Total	5,385,211,310.94	2,698,231,540.31	838,311,736.52	8,921,754,587.77

8.3 Market risk

8.3.1 Foreign currency risk

Foreign currency risk of the Group mainly arises from assets and liabilities denominated in currencies other than the functional currencies of the Company and its subsidiaries. The Group is exposed to foreign currency risk due to its global positioning and business activities. Fluctuation of foreign exchange rates may resulting in unexpectable and adverve movement in net revenue and cash flows. The Group reduces foreign currency risk by settlement in the functional currencies and overseas local purchase and production. Overseas operations are prohibited from financing in non-functional currencies or investment in financial instruments for the purpose of profit speculation.

The Group closely monitors impact of changes in foreign exchange rates on the Group's foreign exchange risk. In the period, the Company used PLN forward contracts and CZK forward contracts for the purpose cash flow hedging. Maturity dates of hedging instruments held by the Group as of the statement dates were as follow:

31/1/2022	1 to 6 months	7 to 12 months	Total
Nominal amount of foeign exchange contracts with high probability of exercise (kEUR)	24,028.00	7,800.00	31,828.00
Average forward rate (EUR / CZK)	26.636	26.924
Nominal amount of foeign exchange contracts with high probability of exercise (kEUR)	5,089.00	1,780.00	6,869.00
Average forward rate (EUR / PLN)	5.011	5.057

31/1/2021	1 to 6 months	7 to 12 months	Total
Nominal amount of foeign exchange contracts with high probability of exercise (kEUR)	26,710.00	23,811.00	50,521.00
Average forward rate (EUR / CZK)	26.020	26.039
Nominal amount of foeign exchange contracts with high probability of exercise (kEUR)	6,415.00	5,788.00	12,203.00
Average forward rate (EUR / PLN)	4.521	4.578

See Note 5.63 for major foreign exchange risk exposure as of statement date.

Sensitivity analysis

Impact of 10% change in foreign exchange rates in isolation on the net profit for the current period is as follow:

Foreign exchange rate	Impact on the current period net profit
USD:
Appreciation against CNY for 10%	40,555,289.50
Depreciation against CNY for 10%	-40,555,289.50
TRY:
Appreciation against CNY for 10%	2,730,222.28
Depreciation against CNY for 10%	-2,730,222.28
CZK:
Appreciation against CNY for 10%	25,473,725.28
Depreciation against CNY for 10%	-25,473,725.28
PLN:
Appreciation against CNY for 10%	1,828,497.49
Depreciation against CNY for 10%	-1,828,497.49
EUR:
Appreciation against CNY for 10%	4,898,743.08
Depreciation against CNY for 10%	-4,898,743.08

8.3.2 Interest risk

Interest rate risk of the Group primarily arises from its long-term interest-bearing debts, such as long-term loans and bonds payable, etc. Financial liabilities with floating interest rate make the Group subject to interest rate risk on cash flows, and financial liabilities with fixed interest rate make the Company subject to interest rate risk on fair value. The Company determines the relative proportion of the fixed interest contracts and floating interest contracts based on the current market environment.

Finance department of the Company's headquarter monitors interest rates of the Group continuously. Increase of the interest rates will result in the increase of the cost of new interestbearing debts and the interest expense of the unpaid interest-bearing debts with floating rates, and subsequently lead to significant negative impact on the financial performance of the Group. The management makes adjustment in accordance with the update market condition in a timely manner.

Impact of change in interest rate by 5% in isolation on the net profit for the current period is as follow:

Interest rate	Impact on the current period net profit
Increase of interest rate by 5%	-11,541,378.18
Decrease of interest rate by 5%	11,541,378.18

Note 9 Fair Value Disclosure

The level within the fair value measurement hierarchy of an item is determined by the level of the input which has the most significant influence on the item's fair value measurement.

	Level 1: Inputs consist of unadjusted quoted prices in active markets for identical assets or liabilities
	Level 2: Inputs for the assets or liabilities (other than those included in Level 1) that are either directly or indirectly observable.
	Level 3: Inputs are unobservable inputs for the assets or liabilities

9.1 Fair value of assets and liabilities measured by fair value as of the statement date

	Fair value as of 31/12/2022
	Level 1	Level 2	Level 3	Total
Continuously measured by fair value
A. Receivables held for factoring			253,320,953.99	253,320,953.99
B. Other current assets		24,403,729.51		24,403,729.51
Hedging instruments		24,403,729.51		24,403,729.51
Sum of assets		24,403,729.51	253,320,953.99	277,724,683.50

The fair value of financial instruments traded in an active market was based on quoted market prices. The fair value of financial instruments not traded in an active market was determined by using valuation techniques. Specific valuation techniques used include discounted cash flow and market approach to comparable company model. Inputs in the valuation techniques include risk-free interest rates, benchmark interest rates, exchange rates, credit spreads, liquidity premiums, discounts for lack of liquidity, etc.

9.2 Qualitative and quantitative information of key inputs and valuation techniques applicable to Level 2 financial instruments either continuously or discontinuously measured by fair value

	Fair value as of 31/12/2022	Valuation technique	Input
Derivative instruments
Other current assets (Hedging instrument - Foreign exchange forward contracts)	24,403,729.51	Brokerage quotation	Foreign exchange forward rate

9.3 Qualitative and quantitative information of key inputs and valuation techniques applicable to Level 3 financial instruments either continuously or discontinuously measured by fair value

As of the statement date, the Group's receivables held for factoring consisted solely pre-mature notes receivable. Issuers of the notes had healthy credit worthiness and were not subject to significant adverse change in either operation or financial ability. The Company expected low risk on recovery upon maturity and therefore used the carrying value as a reasonable approximation of the fair value.

Note 10 Related Party Disclosure

An entity or individual is a related party to the Company if the entity or individual:

a.	is controlled or jointly controlled by the Company;
b.	over which the Company has significant influence;
c.	controls or jointly controls the Company; or
d.	is subject to the same control or joint control over the Company.

10.1 Controlling shareholder of the Company

	Place of registration	Nature of business	Registered capital	Shareholding in the Company	Voting right in the Company
				in %	in %
JH Group	Ningbo	Investment in industries	CNY 17 millions	24.11	24.11

The Company's ultimate controllers were WANG Yiping, WU Bifeng and WANG Jimin.

24.11% shareholding in the Company was indirectly held by WANG Yiping, WU Bifeng and WANG Jimin through JH Group; 20.36% shareholding in the Company was indirectly held by WANG Yiping, WU Bifeng and WANG Jimin through DZ Jihan; 13.15% shareholding in the Company was indirectly held by WU Bifeng through WING SING. In total, WANG Yiping, WU Bifeng and WANG Jimin held 57.62% shareholding in the Company.

10.2 Subsidiaries

See Note 7 for details.

10.3 Joint ventures and associates

10.3.1 General disclosure

See Note 7 for details.

10.3.2 Joint ventures and associates having transaction with the Group in the period or balances with the the Group as of the statement date

	Relationship to the Company
GRA-MAG	Joint venture
ALLYGRAM	Associate
Ningbo Jihua	Associate

10.4 Other related parties

Related party	Relationship to the Company
WANG Yiping	De facto controller
WANG Jimin	De facto controller
Directors, members of the supervisory board, members of senior management	Key management personnel

10.5 Related party transactions

10.5.1 Goods and services

Purchase of goods and services

	Transaction	Year ended 31/12/2022	Year ended 31/12/2021
ALLYGRAM	Services	25,174,875.44	25,114,293.51
WANG Yiping	Services		59,659.86

Sales of goods and rendering of services

	Transaction	Year ended 31/12/2022	Year ended 31/12/2021
GRA-MAG	Goods	93,246,692.68	86,553,169.61

10.5.2 Leasing

The Group as the Lessee

Lessor	Leased item	Year ended 31/12/2022	Year ended 31/12/2021
WANG Jimin	Houses		60,000.00

10.5.3 Guarantee

The Group receiving guarantee

Guarantor	Guaranteed amount	Start date	Expiry date	Completion of guarantee
JH Group	EUR 90 million	31/1/2019	24/5/2026	No
JH Group	EUR 50 million	24/5/2021	24/5/2026	No

For the purpose of private tender offer to purchase 25.56% shareholding in Grammer AG held by JAP Capital, JYDE applied with Shanghai Pudong Development Bank (SPDB) for an offshore loan on 6 June 2018 for the amount of EUR 176 million. Commerzbank repaid the loan to SPDB on 31 January 2019 on behalf of JYDE and hence became the lender of this loan. As part of the repayment on-behalf arrangement, JYDE pledged its 84.23% shareholdering in Grammer AG to Commerzbank and the Company, JH Group and JYC provided joint and several liability guarantee. JYDE concluded a modification of the financing agreement with Commerzbank following a repayment of EUR 76 million. In accordance with the modified financing agreement, the remaining outstanding loan amounting to EUR 100 million was securied by JYDE's 86.20% shareholding in Grammer AG and jointly and severally guaranteed by the Company, JH Group and JYC. As of the statement date, EUR 10 million had been repaid by JYDE and EUR 90 million remained outstanding.

JYDE concluded a further modification of the financing agreement with Commerzbank on 3 November 2020. Per this version of the financing agreement, provided that JYDE completes a repayment not exceeding EUR 50 million, Commerzbank agrees to provide a credit facility up to the amount of the repayment at the terms identifical to the orginal financing agreement. On 24 May 2021, the Company, JH Group and JYC concluded a confirmation letter with Commerzbank that the Company, JH Group and JYC continues to provide joint and several guarantee for the credit facility per the financing agreement modified in November 2020. As of the statement date, the credit facility had not been used.

10.5.4 Lending

Related party	Amount	Start date	Due date	Remark
The Group as the lender
GRA-MAG	41,447,217.89	1/11/2019	Not specified	The loan was recognised as net investment in foreign operation for the period from 1999 to 31 October 2019. It was reclassified as loan receivable on 1 November 2019.
GRA-MAG	714,249.10	20/5/2022	30/9/2022	Interests

10.5.5 Key management remuneration

	Year ended 31/12/2022	Year ended 31/12/2021
	CNY million	CNY million
Key management remuneration	6.74	6.46

10.6 Balances with related parties

10.6.1 Receivables

		31/12/2022		31/12/2021
	Related party	Gross	Impairment allowance	Gross	Impairment allowance
Other receivable	Ningbo Jihua			1,200,000.00
Account receivable	GRA-MAG	14,227.540.39	13,373.91	17,108,796.05	16,082.24
Long-term receivable	GRA-MAG	42,161,466.99	16,960,044.27	44,713,026.68	17,986,445.11

10.6.2 Payables

	Related party	31/12/2022	31/12/2021
Account payable	ALLYGRAM	2,522,330.59	2,870,952.69

Note 11 Share-based Payments

11.1 General disclosure

	Year ended 31/12/2022	Year ended 31/12/2021
Number of equity instruments issued under SBPs in the period
Number of equity instruments exercised under SBPs in the period
Number of equity instruments expired under SBPs in the period	2,337,575.00	2,369,025.00

11.2 Equity-settled share-based payments

	Year ended 31/12/2022	Year ended 31/12/2021
Determination of fair value of equity instruments granted under SBPs as of the grant date	Excess of the closing price of the Company's share as of the the grant date over the grant price
Determination of the number exercisable equity instruments under SBPs	Estimated on the basis of the performance applicable to each vesting year
Significant deviation from last year's estimation	Not applicable
Cumulative equity-settled share-based payments recognised in capital reserves	10,600,894.99	10,600,894.99
Equity-settled share-based payments recognised in P&L for the current period		-7,460,215.38

Note 12 Commitments and Contingencies

12.1 Significant commitments

Capital commitment not recognised on the financial statements	31/12/2022	31/12/2021
Investment commitments	375,570,000.00	58,500,000.00

12.2 Contingencies

12.2.1 Contingent liabilities arising from and financial impact of pending litigation

An American subsidiary of Grammer AG has been and is still defendant in several lawsuits in the United States, some of which have been filed as class actions. Under the lawsuits, claims are being asserted for allegedly defective head restraints. The amount in dispute has not been set. Grammer Group successfully had some of these actions dismissed in the reporting period. Grammer Group is defending itself against the other actions that are still pending, although the outcome of the proceedings cannot been foreseen at present.

12.2.2 Contingent liabilities arising from and financial impact of guarantee among group companies and guarantee provided to third parties

Guarantor	Guaranteed person	Guarantee	Currency
The Company	Jifeng CZ	Guarantee on borrowing	EUR
The Company	Jifeng CZ	Guarantee on borrowing	EUR
The Company	Jifeng DE	Guarantee on borrowing	EUR
The Company	Jifeng CZ Jifeng DE	Performance guarantee	EUR
The Company	JYDE	Guarantee on borrowing	EUR
The Company	JYDE	Guarantee on borrowing	EUR
The Company	Hefei Seating	Guarantee on borrowing	CNY
The Company	Jifeng CZ	Guarantee on borrowing	EUR
The Company	JYC	Guarantee on borrowing	EUR
The Company	JYC	Guarantee on borrowing	CNY
The Company	Hefei Seating	Guarantee on borrowing	CNY
Grammer AG	Grammer Serbia	Guarantee on financing	RSD
Grammer AG	Grammer Serbia	Guarantee on financing	RSD
Grammer AG	Grammer Tianjin Grammer Changchun Grammer Beijing Grammer Shanghai Grammer Ningbo Grammer China Holding	Guarantee on financing	CNY
Grammer AG	Grammer Mexico	Quality guarantee	EUR
Grammer AG	TMD LLC	Guarantee on financing	USD
Grammer AG	Grammer Railway	Quality guarantee	EUR
Grammer AG	Grammer Railway	Performance guarantee	EUR
Grammer AG	Grammer Railway	Performance guarantee	EUR
Grammer AG	Grammer Railway	Performance guarantee	EUR
Grammer AG	Grammer Metal	Guarantee on financing	EUR
GRAMMER Interior GRAMMER System GRAMMER Tech	Grammer AG	Guarantee on financing	EUR
GRAMMER Interior GRAMMER System GRAMMER Tech TMD LLC Grammer Railway Grammer CZ	Grammer AG	Guarantee on financing	EUR
GRAMMER Interior GRAMMER System		Guarantee on
GRAMMER Tech Grammer Railway Grammer CZ	Grammer AG	financing	EUR
TMD LLC	Grammer AG	Guarantee on financing	EUR

Guarantor	Amount million	Startdate	Expiry date	Remark
The Company	6.00	9/10/2019	28/2/2024
The Company	3.00	15/9/2022	14/10/2023
The Company	2.00	15/9/2022	14/10/2023
The Company	24.00	1/8/2019	31/1/2025
The Company	90.00	24/1/2019	24/5/2026
The Company	50.00	24/5/2021	24/5/2026
The Company	150.00	5/9/2022	5/9/2035
The Company	6.00	20/9/2022	20/9/2025
The Company	7.00	15/11/2022	/
The Company	50.00	15/11/2022	/
The Company	200.00	29/11/2022	29/11/2035
Grammer AG	75.00	24/11/2022	26/7/2023
Grammer AG	117.58	24/11/2022	30/9/2025
Grammer AG	154.00	24/10/2022	30/9/2024
Grammer AG	4.80	5/11/2019	5 years after end of production of Volve 519/536
Grammer AG	7.50	29/5/2019	3/6/2024
Grammer AG	0.05	13/10/2020	30/3/2023
Grammer AG	0.57	13/10/2020	30/1/2023
Grammer AG	0.19	1/1/2022	30/12/2025
Grammer AG	0.45	1/1/2022	28/2/2023
Grammer AG	2.09	18/11/2021	28/2/2027
GRAMMER Interior GRAMMER System GRAMMER Tech	20.00	2/1/2020	15/1/2025
GRAMMER Interior GRAMMER System GRAMMER Tech TMD LLC Grammer Railway Grammer CZ	55.00	9/7/2019 12/8/2020	9/7/2031
GRAMMER Interior GRAMMER System		10/2/2020
GRAMMER Tech Grammer Railway Grammer CZ	385.00	12/8/2020	12/8/2025
TMD LLC	203.55	9/2/2020	9/2/2025

12.2.3 Performance guarantee

Performance guarantee extended by Grammer Group as of the statement date amounts to CNY 5.54 million.

Note 13 Post-balance-sheet-date Events

13.1 Nomination for Automotive Seat Assembly by Audi

As published by the Notice of the Board of Directors on 2 February 2023, Grammer Shanghai received the Nomination Letter from Audi AG for the development and supply of front and rear seat assembly for Model eQ5, eQ6 and E6. The nomination does not have significant impact on the Group performance for the fiscal year 2022.

13.2 Nomination for Automotive Seat Assembly

As published by the Notice of the Board or Directors on 1 March 2023, the Company received nomination from a new energy automotive manufacturer, of which the name was not disclosed in accordance with the confidentiality agreement, for the development and supply of seat assembly. The nomination does not have significant impact on the Group performance for the fiscal year 2022.

Note 14 Other Significant Matters

14.1 Segment reporting

14.1.1 Reporting segments

The Company identifies two operating segments according to its internal organisation structure, management requirements and internal reporting systems. Result of performance of the operating segments are regularly evaluated by the Company's management for the purpose of determining resource allocation and performance evaluation. Two reportable segments, Jifeng and Grammer, are identified. The reportable segments are determined on the basis of the Company's business acitivities. Business acitivities of the reportable segments comprise manufacturing and sales of automotive parts.

The financial information of these reportable segments are disclosed based on the accounting policies and measurement criteria adopted by each segment when it reports to the management, which are the same as that of the Company.

14.1.2 Segment reporting as of and for the year ended 31 December 2022

	Jifeng	Grammer	Elimination	Total
Revenue	2,534,400,526.25	15,586,743,679.50	-154,342,278.40	17,966,801,927.35
Cost of sales	1,925,085,990.19	13,813,657,977.49	-123,226,983.64	15,615,516,984.04
Total assets	10,257,721,683.17	10,724,662,473.43	-5,528,844,412.37	15,453,539,744.23
Total liabilities	3,381,539,715.51	8,503,809,119.59	-206,969,092.56	11,678,379,742.54

14.1.3 Segment reporting as of and for the year ended 31 December 2021

	Jifeng	Grammer	Elimination	Total
Revenue	2,265,452,370.81	14,650,734,229.23	-84,195,813.11	16,831,990,786.93
Cost of sales	1,583,452,051.80	12,943,067,786.19	-75,181,394.43	14,451,338,443.56
Total assets	10,996,231,903.54	10,736,050,770.13	-5,523,139,968.52	16,209,142,705.15
Total liabilities	3,001,633,222.12	8,396,795,481.89	-187,808,950.00	11,210,619,754.01

14.2 Other significant transactions and events relevant for investors' decision making

Pleging of the Company's shares by the ultimate controllers as of the statement date

Pledgor	Pledgee	Start date	Expiry date	Shares pledged
				(Qty. million)
JH Group	Agricultural Bank of China, Ningbo Beilun Branch	10/11/2020	5/11/2023	17.60
JH Group	Agricultural Bank of China, Ningbo Beilun Branch	16/11/2020	12/11/2023	4.40
JH Group	SPDB Ningbo Beilun Branch	9/12/2020	9/12/2023	15.00
JH Group	Bank of Communication, Ningbo Branch	1/12/2021	1/12/2024	16.40
JH Group	Bank of Communication, Ningbo Branch	16/12/2021	16/12/2024	24.60
JH Group	CITIC Bank Co., Ltd., Ningbo Branch	10/3/2022	10/3/2027	24.10
JH Group	Industrial Bank Co., Ltd., Ningbo Branch	7/6/2022	7/6/2027	24.00
JH Group	China Construction Bank, Ningbo Beilun Branch	2/9/2022	2/9/2027	30.00
JH Group	China Merchants Bank, Ningbo Branch	2/12/2022	1/12/2025	12.00
WING SING	SPDB Ningbo Beilun Branch	30/12/2019	30/12/2022	85.00
WING SING	SPDB Ningbo Beilun Branch	13/3/2020	13/3/2023	19.00
WING SING	China Construction Bank, Ningbo Beilun Branch	10/11/2022	10/11/2027	25.00
WING SING	Veken Holding Group Co., Ltd.	9/12/2022	Until deregistration of pledge	8.00
Total				305.10

Note 15 Notes to the Major Items of the Separate Financial Statements

15.1 Accounts receivable

15.1.1 Disclosure by age group

Age group	31/12/2022	31/12/2021
Less than 1 year
T/o: Less than 3 months	518,156,708.92	535,107,941.70
3 to 12 months	47,735,800.26	73,985,744.50
Subtotal	565,892,509.18	609,093,686.20
1 to 2 years	4,712,444.52	5,486,427.00
2 to 3 years	132,301.16	231,341.33
Over 3 years		1,904,409.03
Gross	570,737,254.86	616,715,863.56
Less: Impairment allowance	2,807,290.20	4,083,961.29
Net	567,929,964.66	612,631,902.27

15.1.2 Impairment disclosure

	31/12/2022
	Gross		Impairment allowance
	CNY	% of total	CNY	Impairment %
Impairment by individual assessment	669,171.08	0.12	669,171.08	100.00
Impairment by portfolio assessment	570,068,083.78	99.88	2,138,119.12	0.38	567,929,964.66
T/o: Related parties within the scope of consolidation	162,636,983.65	28.50			162,636,983.65
Other clients	407,431,100.13	71.38	2,138,119.12	0.52	405,292,981.01
Total	570,737,254.86	100.00	2,807,290.20	0.49	567,929,964.66

	31/12/2021
	Gross		Impairment allowance
	CNY	% of total	CNY	Impairment %	Net
Impairment by individual assessment	2,014,302.51	0.33	2,014,302.51	100.00
Impairment by portfolio assessment	614,701,561.05	99.67	2,069,658.78	0.34	612,631,902.27
T/o: Related parties within the scope of consolidation	291,478,225.17	47.26			291,478,225.17
Other clients	323,223,335.88	52.41	2,069,658.78	0.64	321,153,677.10
Total	616,715,863.56	100.00	4,083,961.29	0.66	612,631,902.27

Supplementary information on provision for impairment allowance

A. Impairment by individual assessment as of the statement date

	Gross	Impairment allowance	Impairment %	Reason for impairment
Client B	334,241.44	334,241.44	100.00	Clients in bankruptcy, liquidation application submitted to court
Client A	334,929.64	334,929.64	100.00
Total	669,171.08	669,171.08	100.00

B. Impairment allowance for Other clients as of the statement dates

	31/12/2022
Age group	Gross	Impairment allowance	Impairment %
Less than 1 year
T/o: Less than 3 months	373,420,301.36
3 to 12 months	31,135,884.40	1,556,794.22	5.00
Subtotal	404,556,185.76	1,556,794.22	0.38
1 to 2 years	2,853,774.29	570,754.86	20.00
2 to 3 years	21,140.08	10,570.04	50.00
Over 3 years
Total	407,431,100.13	2,138,119.12	0.52

	31/12/2021
Age group	Gross	Impairment allowance	Impairment %
Less than 1 year
T/o: Less than 3 months	282,705,793.94
3 to 12 months	40,306,170.96	2,015,308.55	5.00
Subtotal	323,011,964.90	2,015,308.55	0.62
1 to 2 years	174,617.54	34,923.51	20.00
2 to 3 years	34,653.44	17,326.72	50.00
Over 3 years	2,100.00	2,100.00	100.00
Total	323,223,335.88	2,069,658.78	0.64

See Note 3.10 for accounting policies for impairment allowance.

15.1.3 Movement of impairment allowance

		Movement
	31/12/2021	Provision	Reversal or recovery
Impairment by individual assessment	2,014,302.51	56,720.52	1,345,131.43
Impairment by portfolio assessment	2,069,658.78	68,460.34
T/o: Other clients	2,069,658.78	68,460.34
Total	4,083,961.29	125,180.86	1,345,131.43

	Movement
	Disposal or write-off	Others	31/12/2022
Impairment by individual assessment	56,720.52		669,171.08
Impairment by portfolio assessment			2,138,119.12
T/o: Other clients			2,138,119.12
Total	56,720.52		2,807,290.20

15.1.4 Accounts receivable written off in the reporting period

	Amount
Accounts receivable written off	56,720.52

15.1.5 Top-5 accounts receivable as of the statement date

The aggregate gross amount of the top-5 accounts receivable as of the statement date amounted to CNY 323.78 million or 56.73% of the total gross accounts receivable, for which the aggregate amount of impairment allowance amounted to CNY 0.92 million.

15.1.6 No derecognition of account receivable in the reporting period was resulted from transfer of account receivable.

15.1.7 No asset or liability as of the statement date was resulted from conintual involvement in transferred accounts receivable.

15.2 Other receivables

15.2.1 General Disclosure

	31/12/2022	31/12/2021
Other receivables	118,098,948.77	98,432,170.89
Total	118,098,948.77	98,432,170.89

15.2.2 Other receivables

15.2.2.1 Disclosure by age group

Age group	31/12/2022	31/12/2021
Less than 1 year
T/o: Less than 3 months	40,366,234.44	11,349,722.07
3 to 12 months	24,704,588.56	9,397,454.34
Subtotal	65,070,823.00	20,747,176.41
1 to 2 years	9,801,679.63	3,435,678.41
2 to 3 years	3,435,678.41	74,768,621.44
Over 3 years	43,132,450.68	1,642,481.92
Gross	121,440,631.72	100,593,958.18
Less: Impairment allowance	3,341,682.95	2,161,787.29
Net	118,098,948.77	98,432,170.89

15.2.2.2 Disclosure by nature

Nature	31/12/2022	31/12/2021
Operating balances	109,246,440.43	87,315,563.48
Consideration for share disposal	7,442,394.18	7,442,394.18
Margin deposits	1,658,239.74	1,718,064.42
Balance due from venders		1,678,050.00
Loans	538,666.69	538,666.69
Social security payment-on-behalf	565,289.31	305,118.00
Others	1,989,601.37	1,596,101.41
Gross	121,440,631.72	100,593,958.18
Less: Impairment allowance	3,341,682.95	2,161,787.29
Total	118,098,948.77	98,432,170.89

15.2.2.3 Impairment disclosure

A. Disclosure by the 3-stage model as of the statement date

	Gross	Impairment allowance	Net
Stage 1	112,561,556.47	3,625.46	112,557,931.01
Stage 2	7,340,408.56	1,799,390.80	5,541,017.76
Stage 3	1,538,666.69	1,538,666.69
Total	121,440,631.72	3,341,682.95	118,098,948.77

Details of Stage 1 receivables as of the statement date

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by portfolio assessment	112,561,556.47	0.003	3,625.46	112,557,931.01
T/o: Related parties within the scope of consolidation	109,246,440.43			109,246,440.43	Note
Age group portfolio	3,315,116.04	0.11	3,625.46	3,311,490.58	Note
Total	112,561,556.47	0.003	3,625.46	112,557,931.01

Note: Credit risk had not increased significantly.

Details of Stage 2 receivables as of the statement date

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by portfolio assessment	7,340,408.56	24.51	1,799,390.80	5,541,017.76
T/o: Age group portfolio	7,340,408.56	24.51	1,799,390.80	5,541,017.76	Note
Total	7,340,408.56	24.51	1,799,390.80	5,541,017.76

Note: Credit risk had increased significantly by no impairment was identified.

Details of Stage 3 receivables as of the statement date

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by individual assessment	1,538,666.69	100.00	1,538,666.69		Note
Total	1,538,666.69	100.00	1,538,666.69

Note: Credit impairment was present.

B. Disclosure by the 3-stage model as of 31 December 2021

	Gross	Impairment allowance	Net
Stage 1	98,458,461.25	339,886.04	98,118,575.21
Stage 2	596,830.24	283,234.56	313,595.68
Stage 3	1,538,666.69	1,538,666.69
Total	100,593,958.18	2,161,787.29	98,432,170.89

Details of Stage 1 receivables as of 31 December 2021

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by portfolio assessment	98,458,461.25	0.35	339,886.04	98,118,575.21
T/o: Related parties within the scope of consolidation	87,315,563.48			87,315,563.48	Note
Age group portfolio	11,142,897.77	3.05	339,886.04	10,803,011.73	Note
Total	98,458,461.25	0.35	339,886.04	98,118,575.21

Note: Credit risk had not increased significantly.

Details of Stage 2 receivables as of 31 December 2021

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by portfolio assessment	596,830.24	47.46	283,234.56	313,595.68
T/o: Age group portfolio	596,830.24	47.46	283,234.56	313,595.68	Note
Total	596,830.24	47.46	283,234.56	313,595.68

Note: Credit risk had increased significantly by no impairment was identified.

Details of Stage 3 receivables as of the 31 December 2021

	Gross	Impairment %	Impairment allowance	Net	Remark
Impairment by individual assessment	1,538,666.69	100.00	1,538,666.69		Note
Total	1,538,666.69	100.00	1,538,666.69

Note: Credit impairment was present.

See Note 3.10 for accounting policies for impairment allowance.

15.2.2.4 Movement of impairment allowance

		Movement
	31/12/2021	Provision
Impairment by individual assessment	1,538,666.69
Impairment by portfolio assessment	623,120.60	1,179,895.66
T/o: Age group portfolio	623,120.60	1,179,895.66
Total	2,161,787.29	1,179,895.66

	Movement
	Reversal or recovery	Disposal or write-off	Others	31/12/2022
Impairment by individual assessment				1,538,666.69
Impairment by portfolio assessment				1,803,016.26
T/o: Age group portfolio				1,803,016.26
Total				3,341,682.95

15.2.2.5 Top-5 other receivables as of the statement date

Debtor	Nature	31/12/2022	Age	% of total gross other receivables	Impairment allowance
Top 1	Related parties within the scope of consolidation	69,017,410.47	Within 3 years	56.83
Top 2	Related parties within the scope of consolidation	20,451,400.00	Within 2 years	16.84
Top 3	Related parties within the scope of consolidation	18,589,467.46	Less than 1 year	15.31
Top 4	Consideration for share disposal	6,442,394.18	1 to 2 years	5.30	1,288,478.84
Top 5	Consideration for share disposal and loan	1,538,666.69	Over 3 years	1.27	1,538,666.69
Total		116,039,338.80		95.55	2,827,145.53

15.2.2.6 No other receivable as of the statement date was associated with government assistance.

15.2.2.7 No derecognition of other receivable in the reporting period was resulted from transfer of other receivable.

15.2.2.8 No asset or liability as of the statement date was resulted from conintual involvement in transferred other receivables.

15.3 Long-term equity investments

	31/12/2022
	Gross	Impairment allowance	Net
Subsidiaries	5,503,811,285.96	1,534,814,305.77	3,968,996,980.19
Joint ventures and associates	2,098,951.07		2,098,951.07
Total	5,505,910,237.03	1,534,814,305.77	3,971,095,931.26

	31/12/2021
	Gross	Impairment allowance	Net
Subsidiaries	5,333,103,888.96		5,333,103,888.96
Joint ventures and associates	2,250,000.00		2,250,000.00
Total	5,335,353,888.96		5,335,353,888.96

15.3.1 Subsidiaries

Subsidiary	31/12/2021	Increase	Decrease
Changchun Jifeng	31,572,507.06
Chengdu Jifeng	15,000,000.00
Guangzhou Jifeng	12,000,000.00
Wuhan Jifeng	30,000,000.00
Jifeng Sewing	2,357,739.39
Yiqi Sihuan JF	550,000.00
Liuzhou Jifeng	500,000.00
Shenyang Jifeng	70,000,000.00
Jifeng DE	258,425,049.84	70,077,397.00
Tianjin Jifeng	80,000,000.00
Shanghai Jiwen	8,000,000.00
Jifeng Tech	20,000,000.00
Guangzhou Huafeng	19,953,087.30
Chongqing Jihan	80,000,000.00
Jifeng US	3,174,687.00
Wuhan Jiheng	13,769,496.46
JYC	4,665,362,644.36
Jifeng JP	438,677.55
Hefei Jifeng	22,000,000.00	62,000,000.00
Shanghai Seating		37,100,000.00
Ningbo Jixin		1,530,000.00
Total	5,333,103,888.96	170,707,397.00

Subsidiary	31/12/2022	Impairment allowance recognised in the reporting period	Cumulative impairment allowance as of 31/12/2022
Changchun Jifeng	31,572,507.06
Chengdu Jifeng	15,000,000.00
Guangzhou Jifeng	12,000,000.00
Wuhan Jifeng	30,000,000.00
Jifeng Sewing	2,357,739.39
Yiqi Sihuan JF	550,000.00
Liuzhou Jifeng	500,000.00
Shenyang Jifeng	70,000,000.00
Jifeng DE	328,502,446.84
Tianjin Jifeng	80,000,000.00
Shanghai Jiwen	8,000,000.00
Jifeng Tech	20,000,000.00
Guangzhou Huafeng	19,953,087.30
Chongqing Jihan	80,000,000.00
Jifeng US	3,174,687.00
Wuhan Jiheng	13,769,496.46
JYC	4,665,362,644.36	1,534,814,305.77	1,534,814,305.77
Jifeng JP	438,677.55
Hefei Jifeng	84,000,000.00
Shanghai Seating	37,100,000.00
Ningbo Jixin	1,530,000.00
Total	5,503,811,285.96	1,534,814,305.77	1,534,814,305.77

15.3.2 Joint ventures and associates


Investee	31/12/2021	Contribution	Divestment
A. Joint ventures
Subtotal
B. Associates
Smart Cabin Fund	1,000,000.00
Ningbo Jihua	1,250,000.00
Subtotal	2,250,000.00
Total	2,250,000.00

	Movement
Investee	Investment income at equity	OCI adjustment	Other equity movement
A. Joint ventures
Subtotal
B. Associates
Smart Cabin Fund	4,451.08
Ningbo Jihua	-155,500.01
Subtotal	-151,048.93
Total	-151,048.93

	Movement				Impairment allowance as of
Investee	Cash dividends or profit appropriation	Provision for impairment	Others	31/12/2022	31/12/2022
A. Joint ventures
Subtotal
B. Associates
Smart Cabin Fund				1,004,451.08
Ningbo Jihua				1,094,499.99
Subtotal				2,098,951.07
Total				2,098,951.07

15.4 Revenue and cost of sales

	Year ended 31/12/2022		Year ended 31/12/2021
	Revenue	Cost of sales	Revenue	Cost of sales
Primary operation	1,624,773,727.08	1,322,351,332.66	1,440,317,948.54	1,096,853,897.43
Other operation	174,805,859.56	131,657,976.71	174,007,691.14	118,791,723.86
Total	1,799,579,586.64	1,454,009,309.37	1,614,325,639.68	1,215,645,621.29

15.5 Investment income

	Year ended 31/12/2022	Year ended 31/12/2021
Gain from long-term equity investments measured at cost	13,873,992.85	24,506,425.23
Investment income from disposal of debt investments at fair value through other comprehensive income		7,233,333.32
Investment income from disposal of long-term equity investments		-2,937,064.84
Investment income from disposal of financial assets held for trading	1,564,098.50	-241,500.00
Gain from long-term equity investments measured at equity	-151,048.93
Others	1,417.37
Total	15,288,459.79	28,561,193.71

Note 16 Supplementary information

16.1 Non-recurring gain or loss

	Year ended 31/12/2022	Year ended 31/12/2021	Note
Gain or loss from disposal of non-current assets	-5,405,803.83	-27,695,190.15
Tax refund or tax exemption without proper approval or with approval by exceeded authority
Government grants included in current profit or loss (excluding government grants closely associated with the Company's operation and granted in accordance with national standard quota or quantity)	22,928,432.02	22,172,505.86
Fund usage fee charged to non-financial institutions recognised in current profit or loss
Excess of the fair value of net identifiable assets acquired in a business combination (or investment in a joint venture or associate) over the consideration for the combination (or investment in a joint venture or associate)
Gain or loss from non-monetary asset exchange
Gain or loss from assets with entrusted investment or management
Asset impairment allowance recognised as a result of force majeure, such as natural calamities
Gain or loss arising from debt reorganisation
Restructuring costs, such as employee placement cost, integration cost, etc.	-47,841,866.39	-10,483,444.98
Gain or loss arising from the excess of transaction price over fair price in unfair transactions
Net profit of acquiree in business combination under common control for the pre-combination period in the current period
Gain or loss arising from contingent event not related to the Company's normal operation
Gain or loss from changes in fair value of financial assets held for trading, derivative financial assets, financial liabilities held for trading and derivative financial liabilities and gain from disposal of financial assets held for trading, derivative financial assets, financial liabilities held for trading, derivative financial liabilities and other debt-like investments, excluding instruments held for effective hedging associated with the Company's operation	1,697,570.72	6,891,034.76
Reversal of impairment allowance for receivables previously recognised upon individual assessment	3,938,886.95	12,472,906.06
Gain or loss from entrusted lending
Change in fair value of investment properties subsequently measured by fair value
One-off adjustment to the current profit or loss in accordance with tax and accounting laws and regulations
Commission income from commissioned operation
Non-operating income and non-operating expenses not included in above categories	9,377,011.03	22,565,205.99
Other items falling into the definition of non-recurring gain or loss		6,918,187.96
Total non-recurring gain or loss	-15,305,769.50	32,841,205.50
Less: Impact on income tax	-4,554,916.22	3,618,240.20
Total non-recurring gain or loss (net of income tax)	-10,750,853.28	29,222,965.30
T/o: Attributable to non-controlling interests	-2,188,750.20	1,922,277.24
Attributable to shareholders of the Company	-8,562,103.08	27,300,688.06

16.2 Return on net assets (RONA) and earnings per share (EPS)

16.2.1 Year ended 31 December 2022

Not profit	Weighted average	EPS
Net profit	RONA in %	Basic EPS	Diluted EPS
Net profit attributable to shareholders of the Company	-36.24	-1.27	-1.27
Net profit post adjustment for non-recurring gain or loss attributable to shareholders of the Company	-36.03	-1.26	-1.26

16.2.1 Year ended 31 December 2021

Net profit	Weighted average	EPS
	RONA in %	Basic EPS	Diluted EPS
Net profit attributable to shareholders of the Company	2.87	0.12	0.12
Net profit post adjustment for non-recurring gain or loss attributable to shareholders of the Company	2.25	0.09	0.09

30 March 2023

Ningbo Jifeng Auto Parts Co., Ltd.