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2019年11月19日 星期二

佛山照明(000541)公告正文

粤照明B:2010年年度报告(英文版)

公告日期:2011-04-28

           FOSHAN ELECTRICAL AND LIGHTING CO., LTD.

                         Annual Report of Fiscal Year 2010
Important notes: The Board of Directors, Supervisory Committee, as well as the directors,
supervisors and senior executives of Foshan Electrical and Lighting Co., Ltd. (hereinafter
referred to as ―the Company‖) hereby guarantee that there are no significant omissions,
fictitious or misleading statements carried in the Report and we will accept individual and joint
responsibilities for the authenticity, accuracy and completeness of the Report.
None director, supervisor or senior management staff is unable to guarantee demur at the
factuality, exactness or completeness of the contents in this Report.
The accounting data and financial statements enclosed in this report are with the audit carried
out by GP Certified Public Accountants taking the precedence. This report was prepared in both
Chinese and English. Should there be any difference in interpretation of the two versions, the
Chinese version shall prevail.
GP Certified Public Accountants has issued Audit Report for the Company with unqualified
opinion.
Chairman of the Board as well as General Manager, concurrently the person in charge of
accounting affairs Zhong Xincai and Financial Department Manager Wang Shuqiong declare
herein: to guarantee the authenticity and completeness of the Financial Statements in this
Annual Report.


                                          Contents
I.      Brief introduction of the Company……………………………………………2
II.     Abstract of accounting data and business data ……………………………….3
III.    Changes in Shares Capital and Particulars about Shareholders………...……..4
IV.     Directors, Supervisors and Senior Executives and employees………..……10
V.      Corporate Governance Structure…………………………………………..…16
VI.     Brief Introduction of Shareholders’ General Meeting……………………….19
VII.    Report of the Board of Directors……………………………………………20
VIII.   Report of the Supervisory Committee…………………………………..……32
IX.     Significant Events………………………………………………………… 34
X.      Financial Report…………………………………………………………… 40
XI.     Documents Available for Reference………………………………………….123




                                                1
                        I. Brief introduction of the Company
1. Legal Company Name in Chinese: 佛山电器照明股份有限公司
   Abbreviation: 佛山照明
   Legal Company Name in English: Foshan Electrical and Lighting Co., Ltd.
   Abbreviation: FSL
2. Legal representative: Zhong Xincai
3. Secretary of Board of Directors: Zhou Xiangfeng
   Address: No. 64, Fenjiang North Road, Chancheng District, Foshan City
   Telephone No: (0757) 82966062, 82810239
   Facsimile No: (0757) 82816276
   E-mail: fsldsh@126.com
4. Registered and Office Address: No. 64, Fenjiang North Road, Chancheng District, Foshan
   City, Guangdong Province
   Post Code: 528000
   Website: www.Chinafsl.Com
   E-mail: gzfsligh@pub.foshan.gd.cn
5. Newspapers for Disclosing the Information of the Company: China Securities Journal,
   Securities Times and Hong Kong Ta Kung Pao
   Website appointed by China Securities Regulatory Commission for publishing Annual
   Report: http://www.cninfo.com.cn
   Place for preparation of Annual Report: Secretariat of Board of Directors in Office Building
   of the Company, located at No. 64, Fenjiang North Road, Chancheng District, Foshan City
6. Stock Exchange Listed with: Shenzhen Stock Exchange
   Stock Abbreviation: Foshan Lighting (A-share)
                          Yue Zhao Ming (B-share)
   Stock Code: 000541 (A-share)
                  200541 (B-share)
7. Other information of the Company:
   Initial registration date and place of the company: This Company was initially registered on
   20 Oct. 1992 at Guangdong Provincial Administration of Industry and Commerce
   Business License No: 440000400010049
   Tax Registration No: YUE WAI ZI 440601190352575
   Organization Code: 19035257-5
   Name and office place of public accounting firm engaged by the Company:
   GP Certified Public Accountants
   ADD: 10/F,Guangdong Holdings Tower, 555 DongFeng Road East, Guangzhou
   Tel: (020) 83859808
   Fax: (020) 83800977




                                               2
                         II. Abstract of accounting data and business date
1. Main accounting data for fiscal year of 2010
                                                                                                            Unit: RMB Yuan
                                                                                           Increase/decrease
                                            Fiscal year 2010       Fiscal year 2009                               Fiscal year 2008
                                                                                           than last year (%)
           Operating income               1,956,068,628.79 1,707,293,238.96                           14.57% 1,718,712,832.07
          Gross profit (Yuan)               324,258,231.10             270,066,348.22                 20.07%      274,541,109.51
Net profit attributable to shareholders
                                            263,776,242.98             212,179,203.83                 24.32%          224,160,595.11
       of listed company (Yuan)
Net profit attributable to shareholders
  of listed company after deducting         254,762,928.20             207,656,371.71                 22.68%      125,287,455.51
non-current gains and losses     (Yuan)
Net cash flows arising from operating
                                            210,629,139.93             488,562,140.20                -56.89%      126,162,565.41
           activities (Yuan)
                                                                                         Increase/decrease by
                                          By the end of fiscal By the end of fiscal                              By the end of fiscal
                                                                                          the end of this year
                                               year 2010                 year 2009                                      year 2008
                                                                                           than last year (%)
          Total assets (Yuan)             3,128,547,460.46 2,995,100,164.41                            4.46% 2,830,268,837.06
    Owner’s equity attributable to
   shareholders of listed company         2,766,913,027.29 2,660,099,988.21                            4.02% 2,601,745,087.26
                (Yuan)
         Share capital (Share)              978,563,745.00             978,563,745.00                  0.00%      698,974,104.00


2. Main accounting data and finance indicators in recent three years by the end of fiscal year of
this Statement (consolidated amount)
                                                                                                             Unit: RMB Yuan
                                                   Fiscal year          Fiscal year     Increase/decrease than last       Fiscal year
                                                      2010                 2009                  year (%)                    2008
 Basic earnings per share (Yuan/share)                     0.27                0.22                         22.73%                  0.32
 Diluted earnings per share (Yuan/share)                   0.27                0.22                         22.73%                  0.32
 Basic earnings per share after deducting
                                                           0.26                0.21                         23.81%                  0.19
 non-recurring gains and losses (Yuan/share)
 Weighted average return on net assets (%)              9.89%                8.06%                          1.83%              7.62%
 Weighted average return on net assets after
 deducting non-recurring gains and losses               9.55%                7.89%                          1.66%              4.54%
 (%)
 Net cash flow per share arising from
                                                           0.22                0.50                       -56.00%                   0.18
 operating activities (Yuan/share)
                                                   By the end           By the end       Increase/decrease by the         By the end
                                                  of fiscal year       of fiscal year    end of this year than last      of fiscal year
                                                      2010                 2009                  year (%)                    2008

 Net assets per share attributable to                      2.83                2.72                         4.04%                   3.72



                                                                   3
      shareholders of listed company
      (Yuan/share)


     Note: Deducted items of non-current gains and losses and corresponding amounts (after
     deducting income tax effect):
                                                                                                                                 Annotation (if
                                     Items of non-current gains and losses                                          Amount
                                                                                                                                   applicable)
      Gains and losses from disposal of non-current assets, including offset segment of withdrawn
                                                                                                                  3,196,962.59
       provision for assets impairment
      Government subsidies recorded into current gains and losses, excluding government subsidies
      with close relationship with the Company’s business and rationed government grants in line 3,992,076.51
      with the united standard and the state policy
      Gains and losses from changes in fair value due to transaction financial assets and liabilities,
      and investment income from disposal of transaction financial assets, transaction financial
                                                                                                                    182,978.40
      liabilities and financial assets available for sale, excluding valid hedging related to routine
      operation of the Company
      Capital occupation fee from non-financial enterprise recorded into current gains and losses                         0.00
      Impairment reserves reversal of account receivables individually taking the impairment tests                  225,016.27
      Profits and losses arising from business combination when the combined cost is less than the
                                                                                                                          0.00
      recognized fair value of net assets of the combined company
      Net amount of non-operating income and expense except the aforesaid items                                   3,320,283.04
      Subtotal                                                                                                   -1,428,941.77
      Less: Impact on income tax(―-‖ means decrease)                                                           -475,060.26
      Impact on minority interests                                                                                9,013,314.78




              III. Changes in Shares Capital and Particulars about Shareholders
     1. Changes in share capital
     (1) Changes in share capital of the Company
                                                                                                                    Unit: Share
                                     At the beginning of                                                                     At the end of
                                                                       Increase/decrease in the change (+,-)
                                         report period                                                                       report period
                                                                 Issuance                Capitalizatio
                                                 Proportion                     Bonus                                                  Proporti
                                     Amount                      of new                  n of public     Other Subtotal Amount
                                                      (%)                       shares                                                 on (%)
                                                                  shares                 reserve fund
I. Shares subject to trading                                                                                              145,690,
                                   143,287,826           14.64                                                                           14.89
moratorium                                                                                                                       417
1. Shares held by the State
2. Shares held by state-owned
corporation
3.   Other    shares   held   by                                                                                          4,286,18
                                     4,604,706            0.47                                                                             0.44
domestic corporation                                                                                                              9
 Including:   shares   held   by     4,291,253            0.44                                           -348,44 -348,440 3,942,81         0.40




                                                                            4
domestic            non-state-owned                                                                                  0                    3
corporation
 Shares      held       by    domestic
                                                  313,453          0.03                                      29,923      29,923   343,376         0.04
natural person
4.     Shares    held     by foreign                                                                                              140,219,
                                               137,400,677        14.04                                                                          14.33
investment                                                                                                                            817
Including:       shares       held        by                                                                                      131,815,
                                               131,815,685        13.47                                                                          13.47
foreign corporation                                                                                                                   685
Shares held by foreign natural                                                                              2,819,1 2,819,14 8,404,13
                                                 5,584,992         0.57                                                                           0.86
person                                                                                                              40       0            2
5.     Shares    held        by     senior                                                                                        1,184,41
                                                 1,282,443         0.13                                     -98,032 -98,032                       0.12
executives                                                                                                                                1
II. Shares not subject to trading                                                                                                 832,873,
                                               835,275,919        85.36                                                                          85.11
moratorium                                                                                                                            328
                                                                                                                                  616,056,
1. RMB ordinary shares                         615,635,911        62.91                                     420,512 420,512                      62.96
                                                                                                                                      423
2. Domestically listed foreign                                                                               -2,823, -2,823,1 216,816,
                                               219,640,008        22.45                                                                          22.16
shares                                                                                                          103         03        905
3. Overseas listed foreign shares
4. Others
                                                                                                                                  978,563,
III. Total shares                              978,563,745       100.00                                              0       0                  100.00
                                                                                                                                      745


        Changes in shares subject to trading moratorium
                                                                                                                                       Unit: Share
                                                                                Shares        Shares
                                                              Shares at the                                 Shares at                          Date of
                Name of shareholders                                          released in   increased in                     Reason
                                                             year-beginning                                the year-end                         release
                                                                              current year current year
OSRAM PROSPERITY Holding Company                                                                                          Commitment of        25 Apr.
                                                              131,815,685                                  131,815,685
Limited                                                                                                                    share reform          2011
Foshan      agency       of       Trust    Company      of
Guangdong Provincial Branch of Agricultural                    1,689,188                                    1,689,188      Share reform
Bank of China
Foshan Jingmei Chemical Factory                                 675,675                                      675,675       Share reform       Uncertain
Foshan Xinghua Group Co., Ltd.                                  337,838                                      337,838       Share reform         (Not
Foshan Southern Industrial Development Co.,                                                                                                   paying the
                                                                241,312        241,312                          0          Share reform
Ltd.                                                                                                                                          considerati
Foshan Hongtu E-education Center                                168,966                                      168,966       Share reform         on for
Zhongda Parts Operation Department of                                                                                                           share
                                                                111,488                                      111,488       Share reform
Liwan District, Guangzhou                                                                                                                     reform)
Foshan Tangtou Industry & Trade Company
                                                                101,353                                      101,353       Share reform
Sales Department
Foshan Jin Ge Mansion                                            87,973                                      87,973        Share reform




                                                                                   5
Foshan Xin Ji Industry Co., Ltd.                     67,567                                        67,567         Share reform
137 corporation units including Foshan Qilian
Industry Co., Ltd. and natural persons holding     1,123,346          77,205                      1,046,141       Share reform
shares before IPO
                                                                                                                 Shares held by
Natural persons including Zhong Xincai             1,282,443          98,032                      1,184,411          senior
                                                                                                                   executives
                                                                                                                 Shares held by
                                                                                                                                      6 Apr.
                Zhuang Jianyi                      5,584,992                         2,819,140    8,404,132      resigned senior
                                                                                                                                          2011
                                                                                                                   executives
                      Total                      143,287,826       416,549           2,819,140   145,690,417           -                 -


     (2) Issuance and listing of stocks
                                    Previous Issuance and Listing Stocks
                                                              (Unit: RMB Yuan, ten thousand shares)
                                    Issuing      Issuing                               Listing   Trading volume
  Year        Stock category                                    Quantity issued                                         Total share capital
                                     date         price                                 date        on listing
                                     Oct.                                             23 Nov.
 1993      Issuance of A-share                   10.23               1930                             1930                      7,717.0
                                     1993                                               1993

                                                               3858.5 (5 bonus
                                     Apr.                                              11 May                          11,575.5 (After bonus
 1994         Bonus A-share                        —         shares to every 10                      965
                                     1994                                               1994                                    share)
                                                                    shares)

                                                           1815.3036 (Rationed
                                     Jan.                                              22 Feb.                          13,390.8036 (After
            Rationed A-share                      8.00        3 shares to every 10                  481.1946
                                     1995                                               1995                                rationed share)
                                                                    shares)
                                                  H.K
                                     Jul.         5.61                                 8 Aug.                           18,390.8036 (After
 1995       Issuance of B-share                                      5000                             5000
                                     1995        (RMB                                   1995                           issuance of B-share)
                                                 6.02)
                                                                                                                        18,390.8036 (After
           Listing of employee       Aug.                                              29 Sep.
                                                  4.00               1157                             1157              listing of employee
                    shares           1992                                               1995
                                                                                                                                shares)
                                                           9195.4018 (Added 5
         Capitalization of public    Sep.                                              20 Sep.                          27,586.2054 (After
 1996                                              —         shares to every 10                     5278.3
          reserves of A /B-share     1996                                               1996                          capitalization of shares)
                                                                    shares)

 1997           A/B-share             —           —                 —                 —            —                    27,586.2054

 1998           A/B-share             —           —                 —                 —            —                    27,586.2054

 1999           A/B-share             —           —                 —                 —            —                    27,586.2054

                                     Jan.                                             14 Apr.                       27,586.2054 (Including of
 2000 Listing of rationed shares                  8.00             31.9554                          31.9554
                                     1995                                               2000                         listing of rationed shares)




                                                                           6
                                                       2758.6205 (Added 1
             Capitalization of      Jun.                                         23 Jun.                      30,344.8259 (After
                                              —        shares to every 10                   2758.6205
                A/B-share          2000                                           2000                        additional issuance)
                                                             shares)

       Additional issuance of      Dec.                                          23 Dec.                      35,844.8259 (After
                                             12.65            5500                             5500
                 A-share           2000                                           2000                        additional issuance)

2001           A/B-share            —        —               —                  —           —                35,844.8259

2002           A/B-share            —        —               —                  —           —                35,844.8259

2003           A/B-share            —        —               —                  —           —                35,844.8259

2004           A/B-share            —        —               —                  —           —                35,844.8259

2005           A/B-share            —        —               —                  —           —                35,844.8259

2006           A/B-share            —        —               —                  —           —                35,844.8259

                                                       107,534,477 (Every
             Capitalization of      Jun.                                         8 Jun.
2007                                          —       10 shares capitalize                 107,534,477           465,982,736
                A/B-share          2007                                           2007
                                                           to 3 shares)
                                                       232,991,368 (Every
             Capitalization of      Jun.                                         6 Jun.
2008                                          —       10 shares capitalize                 232,991,368           698,974,104
                A/B-share          2008                                           2008
                                                           to 5 shares)
                                                       279,589,641 (Every
             Capitalization of      Jun.                                         26 Jun.
2009                                          —       10 shares capitalize                 279,589,641           978,563,745
                A/B-share          2009                                           2009
                                                           to 4 shares)


2010           A/B-share            —        —               —                  —           —                978,563,745




   2. Introduction about shareholders
   (1) List of the top ten shareholders and the top ten shareholders of shares not subject to trading
   moratorium (as of 31 Dec. 2010)
                                                                                            Unit: Share
             Total number of shareholders                                                  150883
          Particulars about shares held by the top ten shareholders
                                                                              Proportion                  Non-tradabl      Shares
                                                          Nature of                        Total shares
                 Name of shareholders                                         of shares                    e shares      pledged or
                                                        shareholders                          held
                                                                                held                         held          frozen
                                                           Foreign
OSRAM PROSPERITY Holding Company Limited                                       13.47%      131815685      131815685             0
                                                         corporation
                                                           Foreign
Prosperity Lamps & Components Limited                                          10.50%      102751648          0                 0
                                                         corporation
China Construction Bank-China Advantage Growth         Funds, wealth
                                                                               2.37%        23147934          0                 0
Stock Fund                                              management




                                                                    7
                                                            products

DBS VICKERS (HONG KONG) LTD. A/C                            Foreign
                                                                             1.33%          12974881           0            0
CLIENTS                                                   corporation
                                                            Foreign
Taifook Securities Company Limited-Account Client                             1.11%         10885212           0            0
                                                          corporation
                                                            Foreign
EAST ASIA SECURITIES COMPANY LIMITED                                         0.97%          9527080            0            0
                                                          corporation
                                                         Funds, wealth
Industrial and Commercial Bank of China- Lion
                                                         management          0.86%          8458435            0            0
Stock Fund
                                                            products
                                                            Foreign
Zhuang Jianyi                                                                0.86%          8404132        8404132          0
                                                         natural person
                                                         Funds, wealth
Bank of China - E Fund Shenzhen Stock 100
                                                         management          0.74%          7238081            0            0
Exchange Trade Fund
                                                            products
Industrial and Commercial Bank of China -                Funds, wealth
Rongtong Securities SZSE 100 Index Investment            management          0.57%          5609888            0            0
Fund                                                        products
             Particulars about shares not subject to trading moratorium held by the top ten shareholders
                                                                               Shares held not subject to trading       Type of
                         Name of shareholders
                                                                                          moratorium                     share
Prosperity Lamps & Components Limited                                                     102751648                     A-share
China Construction Bank-China Advantage Growth Stock Fund                                  23147934                     A-share
DBS VICKERS (HONG KONG) LTD. A/C CLIENTS                                                   12974881                     B-share
Taifook Securities Company Limited-Account Client                                          10885212                     B-share
EAST ASIA SECURITIES COMPANY LIMITED                                                        9527080                     B-share
Industrial and Commercial Bank of China- Lion Stock Fund                                    8458435                     A-share
Bank of China -E Fund Shenzhen Stock 100 Exchange Trade Fund                                7238081                     A-share
Industrial and Commercial Bank of China-Rongtong Securities SZSE
                                                                                            5609888                     A-share
100 Index Investment Fund
Guangzhou Prosperity Lamps & Components Trade Co., Ltd.                                     4911140                     A-share
Bank of China- HFT Stock Fund                                                               4099736                     A-share
                                                        Among the top ten shareholders of the Company, Prosperity Lamps &
                                                        Components Limited and Zhuang Jianyi exist related relationship, and they
                                                        are acting-in-concert. Apart from this, it’s unknown whether there is any
 Explanation on associated relationship among the       associated relationship among other shareholders of the top ten
       top ten shareholders or acting-in-concert        shareholders and the top ten shareholders holding shares not subject to
                                                        trading moratorium, whether there is any action-in-concert among them
                                                        regarding to Administrative Measures on Information Disclosure of
                                                        Changes in Shareholding of Listed Companies.
   (2) Details of controlling shareholders
   There exists no controlling shareholder or actual controller at present.



                                                                   8
       The first principal shareholder of the Company is OSRAM PROSPERITY Holding Company
       Limited, which was established in Hong Kong in Jun. 2004 with registered capital of HKD
       500,000, when it had no substantial operations; currently held 13.47% equity of the Company.
       The second principal shareholder of the Company is Prosperity Lamps & Components Limited,
       which was established in Hong Kong in 1978 with registered capital of HKD 2 million and
       Legal Representative being Zhuang Jianyi, main business scope covering sales and exportation
       of lighting products, import and export trade; currently held 10.5% equity of the Company.

       (3) Illustration on relationship between the Company and its first principal shareholder

                                     OSRAM Germany


                                    100%

                                    Germany SIEMENS


                                    100%

                     OSRAM PROSPERITY Holding Company Limited


                                                  13.47%

                                           Foshan Electrical and Lighting Co., Ltd




               IV. Directors, Supervisors and Senior Executives and employees
       (I) Directors, supervisors and senior executives
       1. Basic information
Name         Title      Gender Age Beginning   Ending   Shares held   Shares   Reasons Total payment Whether receive



                                                          9
                                                 date of     date of         at    held at      for       received from      payment from
                                                office term office term year-begin year-end   change the Company in the shareholding
                                                                                                         the report period   companies or
                                                                                                           (RMB Ten          other related
                                                                                                            thousand;        parties or not
                                                                                                           before tax)
               Chairman of the
                  Board &
Zhong Xincai                      Male     67   Jun. 2007   Jun. 2013   876206     876206        -                 150.00         No
                  General
                  Manager
                 Executive
    Liu          Director &
                                  Male     48   Jun. 2007   Jun. 2013   351280     351280                           73.60         No
 Xingming      Deputy General
                  Manager
 Mr. Joerg
                  Director        Male     47 May 2008      Jun. 2013        -                                                    Yes
   Thaele
  Francis
  Michael         Director        Male     62   Jun. 2007   Jun. 2013        -                                                    Yes
  Piscitelli
 Ye Zaiyou        Director        Male     54   Jun. 2007   Jun. 2013                                                             No
                Independent
Liu Zhenping                      Male     62   Jun. 2010   Jun. 2013                                                             No
                   director
                Independent
Dou Linping                       Male     51   Jun. 2010   Jun. 2013                                                             No
                   director
                Independent
Zhang Haixia                      Female   36   Jun. 2007   Jun. 2013                                                             No
                   director
                Chairman of
Jiao Zhigang    Supervisory       Male     38   Jun. 2010   Jun. 2013    22880      22880                           17.60         No
                 Committee
     Ye
                 Supervisor       Male     37   Jun. 2010   Jun. 2013    20560      20560                           24.60         No
 Zhenghong
Yang Xudong      Supervisor       Male     45   Jun. 2010   Jun. 2013    3900       3900                            14.50         No
Zhuang Rujia     Supervisor       Male     52   Jun. 2010   Jun. 2013        -                                                    Yes
               Deputy General
 Xie Qing                         Male          Jun. 2010   Jun. 2012    12950      12950                           28.60         No
                   Manager
                                                                                              Purchase
               Deputy General                                                                  from
  Wei Bin                         Male     41 Sep. 2009     Sep. 2011    10400      15684                           32.60         No
                   Manager                                                                    secondar
                                                                                              y market
               Deputy General
 Zhao Yong                        Male     44 Sep. 2009     Sep. 2011    8700       8700                            32.60         No
                   Manager
               Deputy General
Zou Jianping     Manager /        Male     55 Sep. 2009     Sep. 2011        -                                      23.90         No
               Secretary to the



                                                                        10
                 Board of
                 Directors
 Wang            Financial
                                 Female      48     Jun. 2007     Jun. 2013    140013    140013                          59.60      No
Shuqiong          Manager
 Total              —             —        —        —            —        9838414   9856305      —                455.60       —


           Directors’ presence at the Board sessions
                                                            Times should                   Times of
                                                                              Times of                     Times of                 Whether
                                                            be present at                  presence                     Times of
                 Name              Position held                              personal                     commissio               successively
                                                             the Board                      through                      absence
                                                                              presence                     n presence              absent twice
                                                              session                    communication
                                  Chairman of the
             Zhong Xincai                                        9               4              5             0             0          No
                                         Board
             Liu Xingming        Executive Director              9               4              5             0             0          No
            Mr. Joerg Thaele            Director                 9               1              5             3             0          Yes
               Mr. Francis
                                        Director                 9               4              5             0             0          No
            Michael Piscitelli
               Ye Zaiyou                Director                 9               0              5             4             0          Yes
                                    Independent
              Liu Zhenping                                       7               2              5             0             0          No
                                         director
                                    Independent
              Dou Linping                                        7               2              5             0             0          No
                                         director
                                    Independent
              Zhang Haixia                                       7               2              5             0             0          No
                                         director
           Explanation on the directors’ absence from the Board sessions for successive twice
           Mr. Jeorg Thaele absented from the 1st Session, 3rd Session and 4th Session of the 6th Board of
           Directors as on-site sessions due to that his working place is in Germany and he was often on
           the business trip in other countries, and he entrusted the directors Mr. Francis Michael Piscitelli
           to act the voting right on his behalf.
           Director Mr. Ye Zaiyou absented from the 23rd Session of the 5th Board of Directors, the 1st
           Session, 3rd Session and 4th Session of the 6th Board of Directors as on-site sessions due to that
           he was on a long-term business trip in other place, and he entrusted the directors Mr. Zhong
           Xincai to act the voting right on his behalf.

           Board sessions held in this year                                                 9
           Including: on-site sessions                                                      4
           Sessions held by communication                                                   5
           Sessions held by on-site combining
                                                                                            0
           communication


           2. Main work experience and position of current directors, supervisors and senior executives
           (1) Work experience of directors
           Zhong Xincai: Male, born in Nanjing, Jiangsu Province in 1943,, of technical secondary school
           education, who is currently Chairman of the Board and concurrently General Manager of the
           Company. He was assigned to the Company after his graduation from Nanjing Radio Industrial


                                                                                11
School in 1964 and has been working here ever since. Successively since 1979 he acted as
chief of workshop, production and technical section chief, deputy factory director, and then the
factory director; since 1985 he acted as Manager of the Company; since 1992, he was
successively acted as Chairman of the Board, General Manager as well as Sectary of the Party
Committee. He has been engaged in production work of electric light source for over 40 years,
possessed rich professional knowledge in electric light source as well enterprise management
experience. He has been honorably awarded advanced worker by Ministry of Light Industry,
nationwide and provincial excellent enterpriser; provincial and municipal Party Representative,
and the Deputy to the Eighth and the Ninth Provincial People's Congresses.

Liu Xingming: Male, born in Xinhui, Guangdong Province in 1962, bachelor degree holder,
engineer, and is currently Executive Director and Deputy General Manager of the Company.
He joined the Company in 1983, and once worked as Chief of workshop, assistant to general
manager. He was Deputy General Manager of the Company from 1997 to 2005 and acted as
General Manager from Dec. 2005 to Nov. 2008; acted as Deputy General Manager of the
Company since Dec. 2008 and was in charge of sales business. Since 1995 he has been elected
as director of the Company.

Mr. Joerg Thaele: Male, born in 1963, German nationality, master degree holder, now is person
in charge of Low Intensity Discharge Lamp Department of OSRAM Germany. He studied
machinery engineering in Technical University of Munich from 1983 to 1989, and then he
studied business administration in Universit Augsburg and Pittsburgh University in
Pennsylvania and got master degree.

Mr. Francis Michael Piscitelli: Male, born in 1948, American nationality, is Vice CEO &
General Manager of OSRAM Asia-Pacific Co., Ltd. as well as member of IESNA. In the past
over 30 years, he has been in charge of the sales, marketing, plant management, routine
operation management and senior management for OSRAM operations in North America,
Latin America and Asia. During the last 11 years before he was assigned to work in Asia in
2006, he had been Vice President of Senior Sales for OSRAM Lighting Operation in North
America.

Ye Zaiyou: Male, born in Nanhai, Guangdong province in 1956,, junior middle school in
educational background, director of the Company from the 1st to 6th Board of Directors. He is
currently the Chairman of the Board of Nanhai Wuzhuang Global Ceramic Factory, also
sponsor shareholder of the Company.

Dou Linping (Independent Director): Male, born in Beijing in 1959, bachelor degree. Majoring
in Metal Materials and Heat Treatment at Beijing University of Technology from Sept. 1978 to
Jul. 1982; Working in Beijing Lamp Factory from Jul. 1982 to Mar. 1985 and Vice Section
Chief in the Design Section early in 1984; Chief of the Design Office in Beijing Lamps
Research Institute from Mar. 1985 to Dec. 1992 and Vice Director of the Institute since 1990;
Working in China Association of Lighting Industry since 1993 till now and currently Vice
Secretary General of the Association. He was elected as the independent director of the 6 th
Board of Directors in Jun. 2010.



                                               12
Liu Zhenping (Independent Director): Male, born in Shenyang, Liaoning Province in 1948.
Postgraduate from Chinese Academy of Social Sciences with a title of senior accountant.
Young intellectual in the Langjia Unit, Yuhong District, Shenyang from Sept. 1968 to Sept.
1971; Accountant, Chief Accountant and then Chief of the Financial Affairs at Accountancy
Office of Shenyang Bulb Factory from Sept. 1971 to Nov. 1983; Vice Chief (General
Accountant) in Shenyang Bulb Factory from Nov. 1983 to Sept. 1992; Factory Director and
Party Committee Secretary of Shenyang Bulb Factory from Sept. 1992 to Jan. 1998; GM, Party
Committee Secretary and Chairman of the Board of Shenyang Northeast Lighting Co., Ltd.
from Jan. 1998 to Jul. 2004; From Jul. 2004 till now, GM and Partner of Liaoning Huize
Certified Public Accountants Co., Ltd.; Vice President of China Association of Lighting
Industry, Chief of Electric Light Source Specialized Committee since 1992; Deputy to People’s
Congress and a member of the Politics and Law Committee under the Standing Committee of
the People’s Congress in Tiexi District, Shenyang from 1992 to 2007. He was elected as the
independent director of the 6th Board of Directors in Jun. 2010.

Zhang Haixia (Independent Director): Female, 36 years old, bachelor in economic law, lawyer.
she worked at Grandall Legal Group (Shenzhen) Office from Dec. 1998 to Feb. 2000; worked
in Southwest Securities Shenzhen Investment & Banking Department from Feb. 2000 to Oct.
2001; acted as Legal Affair Department Manager in Shenzhen Enterprising Investment Co., Ltd.
from Oct. 2001 to May 2004; since May 2004 she worked in Shenzhen Xintong Law Firm. She
is Independent Director of the 5th and 6th Board of Directors..

(2) Work experience of supervisors
Jiao Zhigang: Male, born in Shenqiu, Henan Province in May 1972, bachelor degree holder, is
Chairman of the Supervisory Committee of the Company. His administrative post is
management storage, motorcade and logistics of the Company, including domestic distribution.
He graduated from South China University of Technology in Jul. 1994, and at the same year he
entered Foshan Electrical and Lighting Co., Ltd. to work until now.

Ye Zhenghong: Male, born in Jun. 1973, college degree, is Supervisor of the Company. He
graduated from Shenyang Industrial College with Metallurgy Machinery major in Jul. 1995. He
was assigned to Foshan Electrical and Lighting Co., Ltd. in Jul. 1995; worked in Machine
Repair Shop form Jul. 1995 to Jun. 1997; worked in Machinery Dynamic Department from Jul.
1997 to Jan. 2001; acted as Equipment Management Director in T8 Fluorescent Lamp factory
from Feb. 2001 to Jan. 2005; acted as Director of Machine Repair Workshop from May 2005 to
Jan. 2007; acted as Chief Officer of Machinery Dynamic Department from May 2006 to Dec.
2007; and acted as factory director of T8 Fluorescent Lamp factory from Jan. 2008 till now.

Yang Xudong: Male, born in Oct. 1965, college degree, the Supervisor of the Company. He
graduated from Heilongjiang Electronic Industry School in Jul. 1987 and worked as a
technician in Heilongjiang Fularji Power Plant from Jul. 1987 to Jun. 1994; he worked in
Nanhai Power Plant I from Jun. 1994 to Jul. 2007; he has been serving as the Deputy Factory
Director in Gaoming Branch of the Company since Jul. 2007. He is also a Deputy to the 9 th
People’ Congress of Guangdong Province.



                                              13
Zhuang Rujia: Male, born in Chaoyang, Guangdong Province, 53 years old, graduated from
technical secondary school, the Supervisor of the Company. He consecutively acted as director
of Prosperity Lamps & Components Limited for more than twenty years, and was director of
Zhejiang Prosperity Lighting Electrical Co., Ltd. and Prosperity (Hangzhou) Lighting Electrical
Co., Ltd.; he has experience of several years in operating & running and marketing strategy of
lighting industry.

(3) Work experience of senior executives

Wei Bin, male, born in May 1969, nationality: Chenzhou City, Hunan Province, graduated from
South China University of Technology, bachelor’s degree and was an engineer. He worked in
the Company since 1991, studies in general bulbs workshop till Mar. 1992; from Mar. 1992 to
the end of 1996, he was responsible for development of products in research institute; from Jan.
1997 to Dec. 2004, he acted as director of energy saving lamp workshop; from Jan. to Dec.
2005, he acted as director of HID workshop; from 2006 to Nov. 2008, he acted as director of T5
workshop; from Nov. 2008 to Sep. 2009, he was acting as Head of Technology Department.
And he has been working as the Deputy General Manager of the Company since Sep. 2009.

Zhao Yong, male, born in Li County, Hunan Province in Oct. 1966, member of CPC, bachelor
degree, engineer, is the Deputy General Manager of the Company. He was graduated from
Foundry Major Machinery II Department in South China University of Technology in Jun.
1989. From Sep. to Dec. 2001, he trained in Lighting Resource and Lighting Engineering in
Fudan University; he worked in Foshan Industrial Arts Foundry Factory from Jun. 1989 to Jun.
1990; he worked as a maintenance worker in machine repair workshop from Jul. 1990 to Feb.
1992; he acted as a technician in automobile lamp from Feb. 1992 to Mar. 1994; he worked in
research institute of the Company from Mar. 1994 to Mar. 1995; he worked as technician of
single-end lamps from Apr. 1995 to Dec. 1997; he acted as assistant to director of automobile
lamp workshop from Jan. 1998 to May 2001; he acted as head of Technology Department from
May 2001 to Dec. 2005; he acted as Head of OEM Department from Jan. 2006 to Oct. 2008; he
was manager of Purchase Department from Oct. 2008 till now, and concurrently acted as
manager of Foshan Taimei Times Lamps and Lanterns Co., Ltd. since May 2009. And he has
been working as the Deputy General Manager of the Company since Sep. 2009.

Zou Jianping: Male, was born in 1955. He got a college degree from Wuxi College of
Electronics, now is the Deputy General Manager of the Company. He worked at Wuxi Xinfang
Iron Mine from Feb. 1971 to May 1975 and later at Wuxi Steel Mill during the period from
May 1975 to Aug. 1985. He served as Legal Representative and General Manager at Wuxi
Suburb Industrial Goods Wholesale Co., Ltd. from Aug. 1985 to Aug. 1995, then as Director of
Business Invitation Department of Administrative Commission of Wuxi Tai Lake Tourist Site
from Aug. 1995 to Dec. 1999, and later as General Manager of Beijing E.S. Wood
Environmental Protection Science & Technology Co., Ltd. (a wholly Japanese-invested
company) during the period from Dec. 1999 to Aug. 2004. And he held the position of GM in
Wuxi Chuangbo Investment Development Co., Ltd. from Aug. 2004 to May 2007, and the
position of Executive Deputy General Manager in Jiangsu Furui Pharmaceuticals Co., Ltd.
from May 2007 to Aug. 2009. And he has been working as the Deputy General Manager of the
Company since Sep. 2009, and currently as Secretary to the Board of Directors since Apr. 2010.

Xie Qing: Male, born in Apr. 1974, electric-light-source engineer, is the Deputy General
Manager of the Company. He graduated from Nanjing Radio Industrial School in Jul. 1994,



                                               14
and worked in the General Bulbs Workshop of the Company upon his graduation, and
successively became the Chief of the production line after three months, technician of the
General Bulbs Workshop in Mar. 1996, Chief of Middle-grade Lamp Workshop in May 1997,
Chief of Sing-end Lamps Workshop from 1998 to 2010, and Deputy General Manager of the
Company since Jun. 2010.

Wang Shuqiong: Female, born in Qinghai in Apr. 1962, a graduate of technical secondary
school, currently Financial Department Manager. She worked in Qinghai Bulb Factory in Jul.
1982, and then transferred to Qinghai Xining Financial Bureau in Dec. 1988. She joined
Foshan Electrical and Lighting Co., Ltd. in Apr. 1993 and worked herein until now.

3. Annual remuneration
(1) The remuneration to directors, directors and senior executives was confirmed according to
scheme decided by the Board of Directors, where the specific amount was decided in
accordance with different posts, positions, and personal achievements. Total amount of annual
remuneration for current directors, directors and senior executive is RMB 4.556 million.
(2) For current Independent Director Liu Zhenping, Dou Linping and Zhang Haixia, the
Company did not issue any allowance or other remuneration, except for reimbursement of their
travel and accommodation charges every time when they attended Board sessions.
(3) Directors Mr. Joerg Thaele, Francis Michael Piscitelli and Ye Zaiyou as well as Supervisors
Zhuang Rujia didn’t withdraw remuneration or allowances from the Company. Zhuang Rujia
withdrew his remuneration from Shareholder unit, while Mr. Joerg Thaele and Francis Michael
Piscitelli withdrew remunerations from related units. None other directors or supervisors
withdraw remunerations from shareholder units or other related units, but just drew
remuneration from their respective working unit.
(4) Engagement or disengagement of directors, supervisors and senior executives during the
reporting period.
During the reporting period, the office term of the 5th Board of Directors was expired and
re-elected the following members of the 6th Board of Directors: Zhong Xincai, Zhuang Jianyi,
Liu Xingming, Mr. Joerg Thaele, Mr. Francis Michael Piscitelli,Ye Zaiyou as directors, Liu
Zhenping, Dou Linping and Zhang Haixia as independent director.
During the reporting period, the office term of the 5th Supervisory Committee was expired and
re-elected the following members of the 6th Supervisory Committee: Jiao Zhigang, Ye
Zhenghong and Yang Xudong as staff supervisor, Chen Guanbiao and Zhuang Rujia as
shareholder supervisor.
During the reporting period, Lin Yihui’s office term as secretary to the Board of Directors was
expired and he didn’t decide to continue to take the post, so the Board of Director engaged the
Deputy General Manager Zou Jianping concurrently as the secretary to the Board of Directors.
During the reporting period, director Zhuang Jianyi resigned from his post as director for
personal reason, supervisor Chen Guanbiao resigned from his post as supervisor for personal
reason.
During the reporting period,Deputy General Manager Huang Guanxiong resigned from his
post as Deputy General Manager for personal reason.
During the reporting period, the Company engaged Xie Qing as the Deputy General Manager.

(II) Particulars about employees
Employees and professional structure: employees in active service are 8547, of which 7836 are
production staff, 198 are sales staff, 445 are technical staff, with 28 being financial staff, 40


                                               15
being administration staff. 830 employees are of or above technical secondary school or college
level in education. Retired employees have been arranged to communities for socialized
management.




                         V. Corporate Governance Structure
1. Particulars about corporate governance
(1) Regular operating and corporate governance structure of the Company in the report period
Since its listing, the Company has strictly followed relevant regulations and requirements of
Company Law, Securities Law, Code of Corporate Governance of Listed Companies and
Guidelines on Articles of Association of Listed Companies, set up governance structure of
responsible shareholders’ general meeting, the Board of Directors, the Supervisory Committee
and managers, who performed right of decision-making, execution and supervision respectively
according their duties. The Company also set up special committees of the Board of Directors
and system for independent directors, formulated Articles of Association, Rules for Procedure
of Shareholders’ General Meeting, Rules for Procedure of the Board of Directors, Rules for
Procedure of the Supervisory Committee and Work System for Independent Directors, which
were according to actuality and were operative, and revised and perfected according to new
laws and statutes the latest issued as well as relevant regulations issued by CSRC and Shenzhen
Stock Exchange. The Company strengthened information disclosure of principal shareholders
and persons acting-in-concert, forbidden shareholders of the Company to misapply their rights
and standardized related transactions. The Company separated from the principal shareholder in
personnel, assets, business, financial affairs and organizational, and was absolutely impendent.
At present, corporate governance structure of the Company is perfected, operating is regular
and governance performance is obviously.
(2) Continuously strengthening the construction of the corporate governance system
During the reporting period, in accordance with the requirements from Circular on Carrying out
the Special Activities for Inspecting Information Disclosure of Listed Company (GDZJ [2010]
No. 30), Guangdong Supervision Bureau of China Securities Regulatory Committee took out
the on-site inspection on the Company. Basing on the problems discovered from the on-site
inspection, the Company carried out reform and rectification, and revised the Management
System for Related Transaction, promulgated Accountability System for Material Errors on
Information Disclosure of Annual Report, Management System for Reporting and Submitting
Outside Information. The Company also carried out the trainings on directors, supervisors,
senior executives and other personnel. What’s more, the Company employed professional
institution to systematically analyze the corporate governance system, so as to improve the
compliance, suitability and effectiveness of the corporate governance, continuously
strengthened executive force and supervision & inspection force, standardized operation,
intensified the follow-up and implementation, further ensure the effective execution of various
system of the Company.


                                               16
2. Duty performance of independent directors
During the reporting period, the Company completed the Re-election for the Board of Directors,
the office term of the previous independent directors Liang Zhen, Wu Jianhong was expired on
27 May 2010, while independent director Zhang Haixia renewed her office term, the office
term of new independent directors Liu Zhenping and Dou Linping was started from 27 May
2010. During the office term, all the directors have been carrying out their duties sincerely as
independent directors, the Board of Directors convened nine sessions in 2010 and all the
independent directors attended the sessions on time. They prepared well and studied for
problems every time as they were noticed. During session time they sufficiently offered their
personal opinions, for solid maintenance of the overall interest of the Company.
During the reporting period, independent directors carefully examined and verified significant
events that need opinion from independent directors, and issued written letter on opinion of
independent directors.
Significant events include:
(1) Independent opinion on Guarantees in Annual Report, Opinion on Self-appraisal on Internal
Control of the Company, Special Opinion on Internal Control of Information Disclosure for the
Company, Opinion on Engagement of Audit Organ at the 23rd Session of the 5th Board of
Directors on 27 Apr. 2010.
(2) Opinion on Engagement of Senior Executives at the 1st Session of the 6th Board of Directors
on 27 May 2010.
(3) Pre-audit Opinion on the Related Transaction and Independent Directors’ Independent
Opinion on Related Transaction at the 3rd Session of the 6th Board of Directors on 13 Jul. 2010.
(4) Independent opinion on Guarantees in Semi-annual Report at the 4th Session of the 6th
Board of Directors on 17 Aug. 2010.
(5)The Proposal on Using Partial Idle Funds to Purchase New Shares and Independent Opinion
on Using Partial Idle Funds to Purchase Wealth Management Products from Securities Traders
at the 6th Session of the 6th Board of Directors on 18 Nov. 2010.

Independent directors presence at the Board sessions
                     Times should be       Times of     Times of
                                                                    Times of
      Name          present at the Board   personal    commission                Remarks
                                                                    absence
                          session          presence     presence

   Liang Zhen                2                2           0            0


   Wu Jianhong               2                2           0            0


   Liu Zhenping              7                7           0


   Dou Linping               7                7           0


   Zhang Haixia              9                9           0            0




                                                  17
3. Relationships between the Company and principal shareholders
The Company maintained strict separation from the first principal shareholder OSRAM
PROSPERITY Holding Company Limited in business, personnel, assets, organization,
financial affairs and so on, with the Company having its independent and complete business
and self-determination operation. In business, the Company has complete channels for supply
and sales; in personnel, it has own recruitment arrangement, with none from the first principal
shareholder serving in the Company; in assets, it has complete and clarified corporate property;
in organization, it is independent, for the Company is a complete legal person; in finance, the
Company has its own accounts, for independent operation and separate accounts.

4. Self-appraisal on internal control of the Company
(1) General appraisal on internal control of the Company
The internal control system was continuously perfected and supplemented according to laws,
statutes and actuality of the Company, specially in special campaign on governance
implemented in the latest two years, the Company teased and perfected current internal control
in the round, which made all systems actualized fully and effectively, was suitable for
requirement of actual administration and need for development, guaranteed order start of
operation and ensured development strategy was implemented completely and operation target
was realized adequately.
Along with development, the Company will further according to actuality, continue to perfect
internal control system, ensure the implementation and execution of systems, so as to promote
supervise and restrict health operation of the Company, and faithfully protect interest of
investors and the Company.
(Details of full text of self-appraisal on internal control of the Company please refer to
Self-appraisal Report on Internal Control 2010 of Foshan Electrical and Lighting Co., Ltd.
published on http://www.cninfo.com.cn at the same day.)
(2) Opinion of the Supervisory Committee on Self-appraisal on Internal Control of the
Company
According to relevant provisions in Guidelines of Shenzhen Stock Exchange for the Internal
Control of Listed Companies, the Supervisory Committee expressed opinion on self-appraisal
on internal control of the Company as follows:
During the report period, the Company complied with basic principles of internal control in
accordance with relevant regulations and requirements from China Securities Regulatory
Commission and Shenzhen Stock Exchange, set up and perfected internal control system
covering each links of the Company according to actuality, ensured routine production and
operation, protected safety and integrity of assets. The Company maintains complete
organization for Internal Control, with internal auditing department and personnel completely
allocated, ensuring key activities for internal control in the Company for proper implementation
and sufficient and effective supervision. The Supervisory Committee considered that the
self-appraisal on internal control of the Company is comprehensive, authentic and accurate,
which reflected the practical situation of internal control of the Company.
(3) Opinion of independent directors on Self-appraisal on Internal Control of the Company
According to relevant provisions in Guidelines for the Internal Control of Listed Companies
from Shenzhen Stock Exchange and Guiding Opinion on Establishment of System for



                                               18
Independent Director by Listed Companies, the independent directors expressed opinion on
self-appraisal on internal control of the Company as follows:
During the report period, the Company revised and formulated a series of administration
system in accordance with Guidelines for the Internal Control of Listed Companies. The
internal control system of the Company was relatively sound and perfect, which complied with
state laws and statutes as well as the requirements of regulatory departments. Key activities for
internal control were carried out according to internal control procedures of the Company, and
the Company proved maintaining strict, sufficient, effective internal control of subsidiaries,
associated transaction, external guarantee, significant investment and information disclosure,
which ensured normal conduction of business management and operation, and was reasonable,
standard, complete and effective. Independent director of the Company considered that
Self-appraisal on internal control was in accordance with the practical situation of the internal
control in the Company.

5. Report on Fulfillment of Social Responsibilities disclosed by the Company
For details please refer to Report on Social Responsibilities of Foshan Electrical and Lighting
Co., Ltd. in 2010 disclosed in website http://www.cninfo.com.cn on the same day.

6. Appraisal on senior executives of the Company and implementation of incentive mechanism
during the report period
During the report period, according to provisions of Foshan Electrical and Lighting Co., Ltd.
Plan on Implementation of Incentive Fund for Medium and Senior Executives reviewed and
approved by the Shareholder’s General Meeting, Remuneration & Appraisal Committee carried
out assessment on business performance of this fiscal year, withdrew RMB 15 million as
incentive fund, which shall be allotted to medium and senior executives as well as technical
backbones based on appraisal, while the Company shall lock up stocks purchased with the
assigned incentive fund.




            VI. Brief Introduction to Shareholders’ General Meeting
During the reporting period, Shareholders’ General Meeting of Fiscal Year 2009 was held on 27
May 2010. And resolutions made at the said session were published on China Securities Journal,
Securities Times and Hong Kong Ta Kung Pao and in website http://www.cninfo.com.cn dated
28 May 2010.




                          VII. Report of the Board of Directors
(I) Production and business operation
1. Business review for the reporting period
(1) General operation of the Company during the reporting period


                                               19
Looking back into the past year, international economic recovery was quite an uncertainty with
the continuous impact of the global financial crisis and frequent breakouts of sovereign debt
crisis in European countries. Raw material and labor costs were on the rise on the back of rising
inflation in China caused by continuous Renminbi appreciation. Meanwhile, competition in the
electric lighting sector both at home and abroad became fiercer. Under such unfavorable
circumstances, the Board of Directors of the Company, always keeping in mind the Company’s
long-term development and the spirit of being responsible for shareholders, gave full play to its
own competitive edges and carried out a series of effective measures such as strengthening
management, saving energy, reducing costs and appropriately increasing selling prices. As a
result, the electric lighting business (the main business) of the Company maintained healthy
development, with better sales and profits over last year. For 2010, the Company produced a
total of 1.118billion light bulbs, up 5% as compared to 2009; achieved main operating revenue
of RMB1.918billion, up 14.46% on a year-on-year basis, of which the export sales reached
RMB 732million, representing a year-on-year growth of 34.87%; achieved total profits of RMB
324 million, up 20.07% as compared to 2009; net profits of RMB 254million, up 24,32% as
compared to last year; and earnings per share after tax reaching RMB 0.27.

(2) Major advantages and difficulties and the stability of profitability
① Major advantages
The Company is one of the top leaders in the domestic electric lighting industry, with an
outstanding comprehensive capability. It demonstrates strong core competitiveness especially
through its distinct advantages on capital, talents, management, technology and its complete
range of power-saving products of electric lighting.
② Major difficulties
The restriction of international environmental protection rules on electric lighting products for
export led to an increasingly disordered and fierce competition in the domestic market, as well
as a decreasing profit rate of these products. Meanwhile, the rising prices of the main raw
materials, fuel oil and labor cost created a certain degree of pressure on the Company’s
operation.
③ Stability of profitability
Despite a growing pressure on its development, the industry of electric lighting still have
enormous potential due to the electric lighting products’ nature as daily consumables, the
improving living standard of the people along with China’s socio-economic development, and
the government’s policy support to energy-saving products. Therefore, the Company’s future
business and profitability are expected to enjoy great opportunities and stability.

(3) Major suppliers and customers
The combined purchase amount from the top five suppliers reached RMB 100.4million, taking
up 13.69% of the total purchase. And the combined sales amount to the top five customers
reached RMB315.6million, accounting for 16.14% of the total sales.

(4) There was no major change in the Company’s asset composition when compared with last
year.
(5) There was no major change in the Company’s main financial data when compared with last



                                               20
year.
(6) The cash flow structure had no major change from the previous year, and no critical
discrepancy from the net profit during the reporting period.

(7) Business performance and results of major controlled subsidiaries and joint ventures
Foshan Chanchang Lighting Appliances Co., Ltd. is a Sino-foreign joint venture among the
joint stock companies of the Company, where the Company holds 40% of its equity. With a
registered capital of US$ 1.8 million, Chanchang mainly produces Br-Wu lamps and other
special lighting products and fittings. The business license of the subsidiary has expired and the
liquidation procedure has commenced.

Foshan Chansheng Electronic Ballast Co., Ltd. is a Sino-foreign joint venture, established in
2003 with a registered capital of RMB 1.00 million, where the Company holds 75% of its total
equity. The main products of the subsidiary are ballasts, electronic transformers, etc.. The
subsidiary had total assets valuing RMB 7,132,300 as at 31 Dec. 2010 and generated operating
revenue of RMB 21,719,200 and net profits of RMB -1.20 million for the year then ended.

Foshan Chanchang Electric Appliances (Gaoming) Co., Ltd. is a Sino-foreign joint venture,
which was established in October 2005 with a registered capital of RMB 60 million, where the
Company holds 70% of the total equity. Main products of the subsidiary are electric lighting
products, lamps and related fittings. The subsidiary had total assets valuing RMB 100,311,600
as at 31 Dec. 2010 and generated operating revenue of RMB 136,463,800 and net profits of
RMB 0.15 million for the year then ended.

Foshan Lighting Taimei Times Lamps Co., Ltd. is a Sino-foreign joint venture, established in
December 2005 with a registered capital of RMB 500 thousand, where the Company holds
70% of its total equity. Major business of this subsidiary is R&D, production and sales of lamps,
household appliances and fittings, and other electric lighting products. The subsidiary had total
assets valuing RMB 45,607,300 as at 31 Dec. 2010 and generated operating revenue of RMB
120,070,700 and net profits of RMB 11,384,200 for the year then ended.

Foshan Gaoming Fuwan Landscape Resort Co., Ltd. was set up in December 2006 with a
registered capital of RMB 4.80 million, where the Company holds 100% of its equity. And the
business scope of this subsidiary covers mainly hotel and travel service. The subsidiary had
total assets valuing RMB 8,392,100 as at 31 Dec. 2010 and generated operating revenue of
RMB 20,316,400 and net profits of RMB 583,600 for the year then ended.

Foshan Lighting Lamps Co., Ltd. was established in Mar. 2009 with a registered capital of
RMB 5 million, among which the Company contributed RMB 3.5 million, accounting for 70%
of total equities of Foshan Lighting Lamps Co., Ltd.. Foshan Lighting Lamps Co., Ltd. is
mainly engaged in R&D and production of lamps of electric light source and related electrical,
metal and nonmetal fittings, domestic sale of the aforesaid products, providing relevant
technological service and undertaking projects. The subsidiary had total assets valuing RMB
38,916,400 as at 31 Dec. 2010 and generated operating revenue of RMB 243,397,900 and net



                                                21
profits of RMB 13,659,700 for the year then ended.

Nanjing Fozhao Lighting Components Co., Ltd. was established in Dec. 2002 with a registered
capital of RMB 41,683,200. The Company holds 100% of its equities. It specializes in R&D,
production and sale of products of electric light source, equipments of electric light source,
fittings, related materials, lamps and fittings, electrical fittings, and automobile fittings;
providing related technological consulting service; and self-operating and providing agent
service for import and export of various products and technologies, except for those restricted
from operation or prohibited from import and export by the government. The subsidiary had
total assets valuing RMB 114,986,300 as at 31 Dec. 2010 and generated operating revenue of
RMB 47,385,100 and net profits of RMB 2,665,300 for the year then ended.

FSL (Xinxiang) Lighting Co., Ltd. was established in Apr. 2009 with a registered capital of
RMB 10 million, which was all contributed by the Company. The Company holds 100% of its
equity. And it is mainly engaged in production and sale of equipments and products of electric
light source; and sale of components of electric light source, related materials, electrical
materials, automobile components, lamps and fittings (Where a license is required, it will be
obtained before operation.). The subsidiary had total assets valuing RMB 4.40 million as at 31
Dec. 2010 and generated no operating revenue with net profits of RMB -187,600 for the year
then ended.

Qinghai Fozhao Lithium Ion Battery Cathode Materials Co., Ltd. was incorporated on 25 Oct.
2010 with a registered capital of RMB 50 million, to which the Company contributed RMB
25.5 million, taking up 51% of the subsidiary’s total equity interests. The subsidiary is
principally engaged in producing and selling lithium ion battery cathode materials (Where a
license is required, it will be obtained before operation.). The subsidiary had total assets valuing
RMB 41,825,000 as at 31 Dec. 2010 and generated no operating revenue with net profits of
RMB -196,000 for the year then ended.

Qinghai Fozhao Lithium Energy Exploitation Co., Ltd. was incorporated on 13 Nov. 2009 with
a registered capital of 100 million, to which the Company contributed RMB 38 million, taking
up 38% of the subsidiary’s total equity interests. The subsidiary is principally engaged in
comprehensive exploitation and utilization of the bittern resource in salt lakes. The subsidiary
acquired in 2010 30% equity interests of Qinghai Salt Lake Fozhao Lanke Lithium Industry
Co., Ltd. and participated in projects of extracting lithium carbonate from bittern. And the
subsidiary generated no operating revenue for the reporting period.

Besides, the joint stock companies of the Company also include China Everbright Bank,
Xiamen Bank, Foshan Fo-chen Highway, Shenzhen Liangke Corp, Guangzhou Pearl River
Assets Management Co., Ltd. and Hefei Guoxuan High-tech Power Energy Co., Ltd., where the
Company holds a relatively small proportion of equity. And the Company is receiving
reasonable investment returns from these enterprises according to their economic performance.
And the shares of China Everbright Bank held by the Company were listed for trading with
Shanghai Stock Exchange on 18 Aug. 2010.



                                                 22
2. Outlook for future development of the Company
(1) Possible influence of industrial trends and market competition
① The current domestic market of electric light source is experiencing a growing competition,
which results in a considerable increase of operating expenses for enterprises of electric light
source, as well as a gradual decrease of the average profit rate in the industry. However, the
industry of electric light source still have enormous potential due to the improving living
standard of the people along with China’s socio-economic development, and the government’s
policy support to energy-saving products. Therefore, the Company’s future business and
profitability are expected to enjoy great opportunities and stability. As the next step, the
Company is to make good use of its leadership in the industry and its brand advantage as the
―King of Light in China‖, integrate industrial resources, expand prime operations and exert its
scale advantage. At the same time, the Company will also work to strengthen internal control,
lower cost expenses and improve profitability.
② Considering the adverse impact on small and medium enterprise of export restriction for
environmental protection and China’s tight monetary policy, the Company will take the
opportunity to exert its great advantage as a large enterprise, actively take part in the
international competition, and set up a national brand of solid recognition. On the basis of
consolidating the existing market share, the Company will endeavor to expand its shares in the
domestic and export market, and drive the enterprise into a wider space for development.
In 2011, the Company will try to maintain a stable development, comprehensively increase its
core competitiveness and realize its strategic goals step by step, by enhancing internal
management and properly adjusting its strategic layout. At the same time, it will further expand
its export business while maintaining its leading position in the domestic electric lighting
industry.

(2) Focuses of the Company in 2011
① to promote delicacy management, strengthen basic management and improve the
management mode so as to improve the overall operating efficiency.
② to improve the construction of Gaoming production base, so as to reach a strategic balance
among production bases, expand production capacity, improve the products’ responsiveness to
market changes and increase the market share.
③ to maintain and exert the Company’s comprehensive scale advantages, integrate its internal
resources, and strengthen resources sharing, so as to lower operating cost and improve
profitability.
④ to further adjust the product mix, vigorously develop and produce energy-saving products
and products with high added value such as metal halide lamps, LED lights, energy-saving
lights and automobile metal halide lamps, so as to improve profitability of products.
⑤ to continue to accelerate progress in new energy projects based on the new energy business
layout and try to make profits on those projects as soon as possible.
⑥ to continue to seek for breakthroughs of LED products in the commercial market.
⑦to exert the Company’s advantage as a leading brand, strengthen brand development, and
increase brand influence and identity for the healthy and rapid development of the Company, as
well as for expanding space for domestic and overseas sales.



                                               23
 ⑧ to keep on perfecting the corporate governance structure, regulating the operation, and
 improving management, so as to ensure the interests of investors and other interested parties.

 (3) Risks unfavorable for realizing the Company’s future development strategies and business
 goals as well as the countermeasures taken
 The prediction of the Company’s future development and the Company’s new business plan for
 2011 are based on the following assumptions: 1) that the related state laws, regulations and
 industrial policies will be free of critical changes; 2) that the steadily developing national
 economic as a whole will not experience major changes; 3) that no critical changes will happen
 to the environment of the industry where the Company is; 4) that no such force majeure or
 unforeseeable factors will happen that will cause serious damage to the Company’s business
 and assets. Under the said assumptions, the Company is expected to face the following main
 risks in the future operation:
 ① Market risk
 The current domestic market of electric light source is experiencing rising competition, which
 will lead to increasing operating expenses for the enterprises of electric light source, as well as
 a decreasing average profit rate in the industry. In view of that, the Company is to further
 strengthen its internal management for lowering cost expenses, and to expand its core business
 for exerting its scale advantage. At the same time, actions will also be taken to expand the
 secondary and third markets, so as to reduce business risks and provide a wider space for the
 Company’s survival and development.
 ② Investment risk
 In 2011, the Company is expected to maintain a fast development, which will involve more
 capital input. In order to minimize the investment risk and protect the legal rights and interests
 of shareholders, the Company is to further improve its decision-making on investment, perfect
 its risk early-warning mechanism, and adopt investigation in advance, supervision in process
 and assessment afterwards.
 ③ Risk concerning product quality
 Internationally advanced technologies and equipments are adopted in the Company, which
 helps develop a mature production technique and a rational production process. In addition,
 great attention has been paid to the quality of products. With a state-level testing and inspection
 center, the product quality standards adopted by the Company are in accordance with or higher
 than the national or international standards. However, due to their nature as one of the
 low-priced and perishable articles, products of electric light source must meet a high
 requirement in terms of environmental protection. In view of this, the Company will dedicate
 itself to strengthening and perfecting quality control, and ensure the consistency of product
 quality with related standards, so as to maintain a fine reputation in the market.

 3. Main business lines classified according to industries and products
                                                                                      Unit: (RMB) Ten Thousand
                            Main business lines classified according to industries
                                                 Gross        Increase/decrease   Increase/decrease      Increase/decrease
Industry or   Operating
                            Operating cost     profit rate      of operating         of operating cost    of gross profit
 product      revenue
                                                  (%)         revenue over last       over last year       rate over last



                                                         24
                                                                               year (%)                  (%)               year (%)

 Lighting
fixtures and           191,803.55          139,050.31       27.50%                 14.46%                     12.90%                  1%
   lamps
   Hotel
                           1,961.64           1,115.29      43.15%                   3.18%                    7.17%                -2.11%
 services
                                         Main business lines classified according to products
 Lighting
fixtures and           191,803.55          139,050.31       27.50%                 14.46%                     12.90%                  1%
   lamps
 The gross profit rate for 2010 was 27.5%, representing an increase of 3.77% as compared to
 26.5% for last year, which was mainly because the Company strictly controlled material and
 power consumption and appropriately increased selling prices of its products in the year to deal
 with rising raw material and labor costs.

 4. Main business lines by regions
                                                                                    Unit: (RMB) Ten Thousand
            Region                            Operating revenue                             Increase/decrease over last year (%)

   Domestic                                                         118,620.58                                               4.69%
   Overseas                                                          73,182.97                                             34.87%


 5. Items measured at fair value
                                                                                                                  Unit: (RMB) Yuan
                                                       Gain/loss                                 Impairment
                                                                      Accumulative fair
                                                       from fair                                  provision
                                       Opening                            value changes
               Items                                     value                                   withdrawn        Closing amount
                                        amount                            recorded in the
                                                      changes in                                   for this
                                                                             equities
                                                      this period                                   period
   Financial assets:
   Of which: 1. financial
   assets measured at their
   fair values and of which
                                      121,570.00      -13,088.30                                                   38,287,211.70
   the variation is recorded
   into the profits and losses
   of this period
        Of which: derivative
   financial assets
        2. Available-for-sale
                                                                          55,174,507.49                            95,740,001.28
   financial assets
   Subtotal of financial assets       121,570.00      -13,088.30          55,174,507.49                  0.00     134,027,212.98
   Financial liabilities
   Investment real estate




                                                                     25
Productive biological
assets
others
           total        121,570.00   -13,088.30        55,174,507.49    0.00   134,027,212.98
Notes: 1) Financial assets measured at their fair values and of which the variation is recorded
into the profits and losses of this period include bank wealth management products purchased
by Qinghai Fozhao Lithium Ion Battery Cathode Materials Co., Ltd.—one of the Company’s
controlled subsidiaries, with the closing balance at RMB 33,190,000. The said wealth
management products were redeemed on 4 Jan. 2011.

(Ⅱ) Investments of the Company
1. Funds raised
In the reporting period, there was no fund raising, or the application of funds raised in previous
periods.
2. Major projects invested with non-raised funds for the reporting period
Such projects include:
① The Company increased a capital contribution of RMB 8,769,260 to Qinghai Fozhao
Lithium Energy Exploitation Co., Ltd., making its total contribution in the subsidiary reach
RMB 38 million, accounting for 38% of the subsidiary’s total equity interests. With technology
and patent contribution, Qinghai Fozhao Lithium Energy Exploitation Co., Ltd. held 30%
equity interests of Qinghai Salt Lake Lanke Lithium Industry Co., Ltd.—a subsidiary under
QingHai Salt Lake Industry Group, taking part in exploitation of the bittern resource in salt
lakes, as well as in projects of lithium carbonate extraction.
② The Company acquired 20% equity interests of Hefei Guoxuan High-tech Power Energy
Co., Ltd. from Hefei Guoxuan Marketing & Planning Co., Ltd. with RMB 160 million. The
lithium-power-driven battery pack for battery-operated autos produced by Hefei Guoxuan
High-tech Power Energy has been successfully applied in Bus No.18 in Hefei.
③ The Company incorporated Qinghai Fozhao Lithium Ion Battery Cathode Materials Co.,
Ltd.. The total registered capital of the said subsidiary was RMB 50 million, to which the
Company contributed RMB 25.5 million, accounting for 51% of the subsidiary’s total equity
interests. The subsidiary is principally engaged in producing and selling lithium ion battery
cathode materials. Currently, it is installing its production equipments.
④ The Company took part in the capital increase and stock expansion launched by Xiamen
Bank. Originally, the Company had held 65,934,000 common shares of the bank, accounting
for 9.99% of the bank’s total shares. In the fourth quarter of 2010, the bank placed additional
three shares for every 10 shares held by its shareholders at a price of RMB 2.71 per share. The
Company subscribed for 19,780,200 shares with RMB 53,604,342. As a result, the Company
now holds 85,714,200 shares of the bank.

(Ⅲ) Routine work of Board of Directors
1. Sessions and resolutions made by Board of Directors during the reporting period
1. A total of nine sessions were held in the year by the Board of Directors. Details and
resolutions of the sessions were published respectively on China Securities Journal, Securities
Times and Ta Kung Pao (HK). And the dates of the sessions as well as the dates of their



                                                  26
information disclosure are as follows:
(1) The 22nd Session of the 5th Board of Directors was held on 18 Mar. 2010, and resolutions
made at the Session were disclosed on 20 Mar. 2010.
(2) The 23rd Session of the 5th Board of Directors was held on 27 Apr. 2010, and resolutions
made at the Session were disclosed on 29 Apr. 2010.
(3) The 1st Session of the 6th Board of Directors was held on 27 May 2010, and resolutions
made at the Session were disclosed on 28 May 2010.
(4) The 2nd Session of the 6th Board of Directors was held on 17 Jun. 2010, and resolutions
made at the Session were disclosed on 19 Jun. 2010.
(5) The 3rd Session of the 6th Board of Directors was held on 13 Jul. 2010, and resolutions made
at the Session were disclosed on 15 Jul. 2010.
(6) The 4th Session of the 6th Board of Directors was held on 17 Aug. 2010, and resolutions
made at the Session were disclosed on 18 Aug. 2010.
(7) The Special Session of the 6th Board of Directors was held on 3 Sep. 2010, and resolutions
made at the Session were disclosed on 4 Sep. 2010.
(8) The 5th Session of the 6th Board of Directors was held on 25 Oct. 2010, and resolutions
made at the Session were disclosed in the 3rd Quarterly Report on 26 Oct. 2010.
(9) The 6th Session of the 6th Board of Directors was held on 24 Nov. 2010, and resolutions
made at the Session were disclosed on 25 Nov. 2010.

2. Execution of resolutions made at Shareholders’ General Meeting by Board of Directors
The Board of Directors carefully implemented the resolutions made at the Shareholders’
General Meeting. The 7 resolutions (including the profit distribution plan) passed at the
Shareholders’ General Meeting in 2009 were fully executed. The plan of authorizing the Board
to set up a fund for encouraging the medium and senior management staff with equities is also
in progress.

(Ⅳ) Duty fulfillment of Audit Committee
1. Work of Audit Committee of Board of Directors
The Audit Committee of the Board is composed of three independent directors and two
directors, where the Chair Person is assigned to an independent director with professional
qualification in accounting.
According to the related provisions of China Securities Regulatory Commission and Shenzhen
Stock Exchange, as well as the Rules of Implementation for the Audit Committee of the Board,
the Audit Committee diligently carried out the following jobs.
1) The Committee carefully read over the Company audit plan for fiscal year 2010 and related
materials. After the Committee’s discussion with the registered accountants from GP Certified
Public Accountants Co., Ltd., who are in charge of the annual audit of the Company, the agenda
for the audit of fiscal year 2010 was finalized;
2) Before the presence of the registered accountants for the annual audit, the Committee read
through the initial accounting statements and gave their written review comments;
3) After the presence of the registered accountants for the annual audit, the Committee
communicated with them in regard to the problems found out during the audit and the time
schedule for the submission of the audit report;



                                               27
4) After the registered accountants for the annual audit issued their preliminary audit opinions,
the Committee once again reviewed the Company’s financial and accounting statements for
fiscal year 2010 and then offered their written review comments;
5) After the registered accountants from GP Certified Public Accountants Co., Ltd. had issued
their annual audit reports for fiscal year 2010 according to the domestic accounting standard,
the Committee convened a meeting to review and summarize the audit work for fiscal year
2010 carried out by registered accountants from GP Certified Public Accountants Co., Ltd., and
to conduct voting and make resolution regarding the Company’s accounting statements and the
proposal on employing auditors for the next fiscal year.

2. Review comments, summary reports and relevant resolutions by the Audit Committee
of the Board of Directors
1) Review comments on the financial and accounting statements submitted by the
Company before presence of the registered accountants for the annual audit
We have reviewed the financial statements submitted by the Company’s Financial Department
on 13 Jan. 2011, including the balance sheet as at 31 Dec. 2010, the profit statement, the
statement of changes in stockholders’ equity accounts and the cash flow statement as of the
fiscal year 2010, as well as the notes to the said financial statements. Special attention has been
paid to the authenticity and completeness of the accounting data, as well as whether the
financial statements are in strict compliance with the 38 specific rules, including the newly
issued Accounting Standards for Business Enterprises, and the Company’s regulations
concerning financial affairs.
Through inquiring related financial personnel and management personnel of the Company,
referring to the meeting minutes of shareholders’ meetings, the Supervisory Board, the Board of
Directors and relevant committees, as well as the related account books, records and slips, and
implementing the analyzing procedures upon critical financial data, we are of the opinion that:
All the Company’s transactions are truly and completely recorded with a proper accounting
policy and rational accounting estimates, and without findings of any critical misrepresentation
or omission of information; There are no findings concerning any large shareholder
misappropriating the capital of the Company; There are no findings of the Company’s irregular
external guaranty or abnormal affiliated transaction.
Since there is a period of time between this preliminary review of the financial statements and
the formal issuance of the auditor’s report and the financial statements, we hereby remind the
Company’s Financial Department to pay attention to dealing with the follow-up affairs after the
date of Balance Sheet in strict compliance with the New Accounting Standards for Business
Enterprises, so as to ensure the factuality, fairness and completeness of the financial statements.

2) Review comments of Audit Committee on financial and accounting statements of the
Company after issuance of the preliminary audit opinions by registered accountants for
the annual audit
We have reviewed the financial statements submitted by the Company on 15 Apr. 2011, on
which the registered accountants had issued their preliminary audit opinions, including the
balance sheet as at 31 Dec. 2010, the profit statement, the statement of changes in shareholders’
equity and the cash flow statement as of the fiscal year 2010, as well as the notes to the said



                                                28
financial statements.
Special attention has been paid to the authenticity and completeness of the accounting data, as
well as whether the financial statements are in strict compliance with the 38 specific rules,
including the newly issued Accounting Standards for Business Enterprises, and the Company’s
regulations concerning financial affairs. Meanwhile, the follow-up affairs after the date of
Balance Sheet have also been one of our focuses.
After our communication with the registered accountants regarding their preliminary audit
opinions, as well as our further referring to the supplementary account books and records, we
decide to maintain our original review comments on the Company’s financial statements and
believe that: The Company has handled the follow-up affairs after the date of Balance Sheet in
strict compliance with the New Accounting Standards for Business Enterprises; And the
Company has prepared its financial statements in accordance with the New Accounting
Standards for Business Enterprises and the related financial system of the Company, which are
a fair presentation of the financial position of the Company as at 31 Dec. 2010, as well as the
operating results and cash flows for the year then ended.

3) Summary report by Audit Committee of the audit work in 2010 performed by
registered accountants from GP Certified Public Accountants Co., Ltd.
We have examined the Working Plan for the 2010 Annual Audit submitted by the Company’s
Financial Department on 10 Jan. 2011, and had effective communication with the audit team
leader from GP Certified Public Accountants Co., Ltd. in regard to the said working plan on 18
Jan. 2011. As a result, we both agree that the working plan is made in detail with clear
responsibilities for every auditor, providing a firm guarantee for the smooth implementation of
audit in 2010.
According to the said working plan, 12 auditors (the project leader included) from GP Certified
Public Accountants Co., Ltd. came to the site and started their audit work on 12 Feb. 2011. On
15 Mar. 2011, they finished the site audit of all companies, of which the individual financial
statements were to be merged into the consolidated financial statements. And the project
manager conducted regular and effective communication with the members of the Audit
Committee and the Company in regard to the consolidated financial statements, accounting
adjustments, application of the accounting policy, and deficiencies of the accounting work.
Through the communication, all parties had a deeper understanding of the Company’s
operating conditions, financial affairs and implementation of the New Accounting Standards for
Business Enterprises, which provided the foundation for the audit team to draw a fair audit
conclusion.
During the on-site audit, each member of the Audit Committee paid close attention to any
possible problem arising in the audit process. They frequently communicated with the auditors
by phone with each other on the subjects as follows: 1. Whether all the transactions were
recorded and reported fully, truly and fairly; 2. Whether all the financial statements were
produced in accordance with the New Accounting Standard for Business Enterprises, the
regulations of the securities regulatory authorities and the requirements of the Company’s
financial system; 3. Whether the Financial Department’s activities were in line with relevant
laws and regulations and other external requirements, as well as management policies and
instructions and other internal requirements; 4. Whether the internal accounting control system



                                              29
of the Company was adequately implemented; 5. Whether all departments of the Company
fully cooperated with the auditors in providing ample and reasonable audit evidence.
The auditors gave positive replies concerning the aforesaid questions and issued a standard
unqualified auditor’s report.
In view of the above, we are of the opinion that: With ample time for auditing, excellent
professional skills and reasonable personnel allocation, the auditors concluded their work in
strict compliance with the Independent Auditing Criteria for Chinese Registered Accountants;
the auditor’s report issued presented a true and fair reflection of the Company’s financial
position as at 31 Dec. 2010, operating results and cash flows position for the year then ended,
and the audit conclusion was in compliance with the Company’s actual situation.

4) Resolution by Audit Committee on the 2010 annual audit and the employment of audit
agency
The Audit Committee of the Board of Foshan Electrical and Lighting Co., Ltd. held a session at
the meeting room at the 5th floor of the Company venue at 10:00 a.m., 15 Apr. 2011. Five
people were supposed to attend the session with an actual attendance of four (Joerg Thaele (Mr.
Thaele) was absent for a business trip). All members of the Audit Committee signed to approve
the following proposals:
1. 2010 annual financial and accounting report of the Company;
2. Summary report by the Audit Committee on the 2010 annual audit performed by GP
Certified Public Accountants Co., Ltd.;
3. GP Certified Public Accountants Co., Ltd. has been serving as the Company’s annual auditor
for more than ten years. And it performed competently, diligently and responsibly during the
2010 annual auditing. Therefore, the Audit Committee hereby proposes to renew the
employment of GP Certified Public Accountants Co., Ltd. as the annual auditor for the year
2011.
The above proposals shall be submitted to the Board of Directors of the Company for review
and approval.

(5) Duty fulfillment of the Remuneration and Appraisal Committee of the Board
The Remuneration and Appraisal Committee of the Board comprises five directors, among
which three are independent directors. And the Committee is chaired by Independent Director
Mr. Liu Zhenping.
During the reporting period, based on the completion status of the Company’s major financial
targets and business objectives in 2010, the work scopes and main responsibilities of the
Company’s present directors, supervisors and other senior executives, and the completion status
of indexes concerning the performance assessment of the Company’s directors, supervisors and
other senior executives, the Committee conducted an assessment in regard to the remuneration
of the directors, supervisors and other senior executives and expressed its assessment opinion
as follows:
The remuneration range for the directors, supervisors and other senior executives disclosed in
the 2010 Annual Report were decided and adopted in accordance with the relevant stipulations
in the Company’s Rules for Managing Remuneration; The Company’s withdrawal of the
encouragement fund was in line with the requirements of the Plan for Implementing the Equity



                                               30
Incentive Mechanism for Middle-and Top-Rank Management Personnel and the Specific Rules
for Implementing the Equity Incentive Mechanism, both of which had been approved by the
Shareholders’ General Meeting. In the Committee’s opinion, the Company’s encouragement to
its middle-and top-rank management personnel and its operational and technical professionals
was in accordance with relevant laws and regulations, which would promote the close
connection of interest among the management personnel, the Company and its shareholders.

(6) Preplan for profit distribution for the year 2010
In the year 2010, the parent company of the Company achieved a net profit of RMB
269,591,790.53. After 10% of the net profit, i.e. RMB26,959,179.05, is withdrawn as other
surplus reserve, profit distributable to shareholders for this year stands at RMB 575,715,515.70
(including retained profit of RMB 333,082,904.22 of last year).
Based on the total share capital of 978,563,745 shares as at the end of 2010, the Company’s
Board of Directors intends to distribute a cash dividend of RMB 2.5 (tax included. And
dividends for B share holders will be paid after being converted into HK dollars.) for every 10
shares to all holders of A and B shares. The actual total amount of dividend distributed will be
RMB 244,640,936.25, and the rest of the profit of RMB 331,074,579.45 will be carried down
into the next year for distribution.
The cash dividend paid to shareholders of B share will be converted into HK dollars by the
middle rate between RMB and HKD declared by the People’s Bank of China on the first
working day after the resolution of the Shareholders’ General Meeting.
The implementation of this profit distribution plan is subject to the review and approval of the
Shareholders’ General Meeting.

Distribution of cash dividends in the previous three years
                                                                               Unit: (RMB) Yuan
                                      Net profit attributable to        Proportion in net profit
             Cash dividend (tax       shareholders of the listed      attributable to shareholders
  Year                                                                                               Distributable profit of the year
                 included)            company in consolidated         of the listed company in
                                             statements                consolidated statements

  2009          215,284,023.90                       212,179,203.83                      101.46%                    567,958,536.01

  2008          153,774,302.88                       224,160,595.11                        68.60%                   527,878,059.71
  2007          272,599,901.15                       423,797,425.54                        64.32%                   576,317,365.16
Proportion of accumulative cash dividends for past three years in
                                                                                                                           223.80%
              latest average annual net profit (%)


 (7) Other matters that should be reported
1. China Securities Journal, Securities Times and Hong Kong’s Ta Kung Pao are designated by
the Company as the newspapers for disclosing information, which remained unchanged during
the reporting period.
2. Special statement and views of independent directors on the Company’s guarantees for
external parties
After examination, it is confirmed that the Company provides no guarantee for shareholders of



                                                               31
listed companies, shareholders’ holding subsidiary, shareholders’ subsidiaries, other related
parties upon which the Company holds less than 50% shares, non-corporate entities or
individuals.



                           VIII Report of Supervisory Board
1. Work of Supervisory Board during reporting period
The Supervisory Board convened three sessions during the reporting period. And the Chairman
of the Supervisory Board took part in the sessions held by the Board of Directors and the
management team meetings, participated in the discussion of the Company’s important
decisions, and examined and supervised the motions and procedures of the sessions held by the
Board of Directors, as well as the Shareholders’ General Meeting. Sessions held by the
Supervisory Board are specified as follows:
(1) On 16 Apr. 2010, the written notice on the 8th Session of the 5th Supervisory Board was
issued to all supervisors by manual delivery or fax. On 27 Apr. 2010, the session was convened
at the Administrative Conference Hall of the Company. Four supervisors were supposed to
attend the meeting and four of them were actually present. The session was in accordance with
the Company Law and the Articles of Association of the Company. Mr. Ye Zhenghong,
Chairman of the Supervisory Board, presided at the session, with the resolutions approved as
follows:
① The 2009 annual report on the work of the Supervisory Board;
② The 2009 annual report and its summary, including both versions in the Chinese language
and English language;
③ The 2009 final financial report, as well as the plan of profit distribution and turning capital
reserve to share capital.
④ The Proposal on Re-electing the Supervisory Board and Recommending Candidates for
Shareholder-Supervisors of the 6th Supervisory Board
(2) On 27 May 2010, the 1st Session of the 6th Supervisory Board was convened at the meeting
room at the 5th floor of the Company. The six newly-elected supervisors all attended the session,
at which Jiao Zhigang was elected as the Chairman of the Supervisory Board.
(3) On 17 Aug, 2010, the 2nd Session of the 6th Supervisory Board was convened at the meeting
room of Hong Kong Prosperity Lamps & Components Co., Ltd. Five supervisors were
supposed to attend the meeting and five of them were present in person. The session was in
accordance with the Company Law and the Articles of Association of the Company. And the
following proposals were reviewed and approved unanimously at the session:
① The full text and summary of 2010 Semi-annual Report (in both Chinese language and
English language);
② The Proposal on the Company’s not conducting profit distribution or turning reserves into
share capital for the first half of the year 2010.

2. Independent opinions from the Supervisory Board on the following matters:
(1) About the Company’s operation in accordance with the law. The Company has been
operating its business in strict compliance with the law and promoting an increasingly



                                               32
standardized operation. According to the requirements of relevant securities regulatory
authorities, it has established a series of rules and systems concerning the corporate governance,
so as to improve the Company’s corporate governance and standardized operation. The
Company enjoys a sound internal control system, where operation decisions concerning such
subjects as funds application, investment projects and operating management will be discussed
in the Board of Directors. In addition, investigations will be conducted before decision-making
to explore the feasibility. And the procedure of the Company’s decision-making is in line with
the law. What’s more, independent directors are asked for advices before a major decision is
made, so as to promote a better and more effective decision-making, which will lead to a better
economic performance of the Company. Up until now, the Supervisory Board finds that the
duty performance of the directors and managers has involved no act in violation of laws,
regulations and the Company’s Articles of Association, or act damaging the Company’s
interests. Observing laws and disciplines, they have been working hard in an honest and
innovative way, which greatly contributes to the Company’s development.
(2) About the inspection on the Company’s financial status. The Supervisory Board is of the
opinion that the audit report and the explanation on related matters provided by GP Certified
Public Accountants Co., Ltd. is a factual reflection of the Company’s financial position and
operating results.
(3) During the reporting period, the Company did not carry out any sales of its significant
assets. And the purchase of the related party’s assets was carried out with fair and reasonable
prices and in accordance with the law, which did no harm to the Company’s interests.
(4) GP Certified Public Accountants Co., Ltd. issued an unqualified audit report for the
Company’s 2010 financial statements.




                                               33
                                                                                 IX. Significant Events
        1. There was no significant lawsuit or arbitration case in the reporting period.
        2. Asset acquisition
                                                                Net profit
                                                                contributed
                                                                  to the           Net profit
                                                                Company          contributed to
                                                                 from the        the Company
                                                                                                                                             Whether the       Whether the
Counterparty or                                                  purchase           from the
                                                                                                                                           property rights      concerned
  the ultimate       Acquired                                   date to the      year-begin to            Related                                                                  Relation with the
                                   Purchase     Transaction                                                                                of the concerned     claims or
  controlling        assets or                                   year-end         the year-end       transaction or   Pricing principle                                          counterparty (applying
                                     date          price                                                                                    assets have all   liabilities have
  party of the     merged assets                                (applying         (applying for            not?                                                                  for related transaction)
                                                                                                                                                 been            all been
  transaction                                                       for            enterprise
                                                                                                                                             transferred?      transferred?
                                                                enterprise       merger under
                                                                merger not          the same
                                                                under the           control)
                                                                   same
                                                                 control)
                    20% equity
                                                                                                                        Based on the
Hefei Guoxuan      held by Hefei
                                                                                                                       equity transfer
Marketing and        Guoxuan
                                   2010/7/14   160,000,000.00                -                   -          No        agreement signed           Yes               Yes                 Unrelated
Planning    Co.,    High-tech
                                                                                                                      by both parties of
Ltd.               Power Energy
                                                                                                                       the transaction
                     Co., Ltd.




                                                                                                     34
  3. There existed no sale of significant assets in the report period.
  4. Related transactions:
  Related transactions in daily operation:
                                                                                    Unit: RMB Ten thousand
                                             Providing products and labor service    Receiving products and labor service
                                                      for related parties                    from related parties
             Related party                                         Proportion in
                                              Transaction                             Transaction          Transaction
                                                                   same kind of
                                                amount                                  amount               amount
                                                                    transactions
Prosperity Lamps and Components Co.,
                                                   6858.83                  3.51%          1702.98                  2.18%
Ltd.
Prosperity Electrical (China) Co., Ltd.
                                                    328.00                  0.17%          1307.52                  1.67%
Prosperity     (Hangzhou)        Lighting
                                                   1502.39                  0.77%             17.91                 0.02%
Appliance Co., Ltd.
OSRAM (China) Lighting Co., Ltd.
                                                  21,59.57                  1.10%              0.00                 0.00%
Prosperity   (Xinxiang)      Electro-optic
                                                       0.00                 0.00%           117.68                  0.15%
Machinery Co., Ltd.
Prosperity      (Xinxiang)       Lighting
                                                       4.64                 0.00%           163.51                  0.21%
Machinery Co., Ltd.

                 Total                            10853.43                  5.55%         33,09.60                  4.23%
  Among them: Volume of related transaction of the Company’s merchandise sold or
  service provided for the controlling shareholders and their related companies is RMB
  0.00.          .
  ● All transactions above are in compliance with the market price principal and are fair
  and just.
  ● Such related transactions are based on the needs for the Company’s operation,
  which benefit the Company’s long-term development, and are necessary.
  ●These related transactions will not have an impact on the Company’s independence.

  5. Significant Contracts: there were no such events as entrustment, contracting, lease
  of other companies’ assets by the Company and vice versa; the Company neither
  provided guarantee nor entrust others to manage cash assets.

  6. In the report period, neither the Company nor the shareholders holding over 5%
  (including 5%) shares of the Company made nor had ever made any commitment that
  affects the operation achievement and financial status of the Company.

  7. In the report period, the Company continued to engage GD Certified Public
  Accountant as its auditing agency. GD Certified Public Accountant has provided
  auditing services to the Company for 17 fiscal years in succession. Remuneration the
  Company paid the certified public accountant for the auditing work in this report
  period is RMB 620,000.



                                                            35
     8. In the reporting period, Guangdong Regulatory Bureau under CSRC initiated an
     investigation on Zhuang Jianyi, the former Chairman of the Board of the Company,
     and Zou Jianping, the former Secretary of the Board of the Company, who were all
     suspected of being involved in violating security laws and regulations.

     9. Securities investment in the report period
                                                                                                                                 Proportion
                                                                                            Shareholding                         to the total
                                                                                                                                                       Profits and
                                                                          Initial            amount at           Carrying            security
                  Security      Security      Short form of                                                                                            losses in the
        No.                                                             investment              the             value at the     investment
                  category       code              security                                                                                             reporting
                                                                       amount (Yuan)         period-end          period-end           of the
                                                                                                                                                          period
                                                                                               (share)                           period-end
                                                                                                                                       (%)
                                                  Titan Wind
         1         Stock        002531                                                                                               0.25%                   -
                                                   Energy                12,450.00             500.00            12,660.00

         2         Stock        601126        Sifang Shares                                                                          0.61%                   -
                                                                         23,000.00            1,000.00           31,110.00
                                                  Zhendong
         3         Stock        300158                                                                                               0.38%                   -
                                             Pharmaceutical              19,400.00             500.00            19,400.00

         4         Stock        601118       Hainan Rubber                                                                           0.59%                   -
                                                                         29,950.00            5,000.00           29,950.00
                                                  Hangzhou
         5         Stock        002534                                                                                               0.26%                   -
                                              Boiler Shares              13,000.00             500.00            13,000.00
                                                   Linzhou
         6         Stock        002535              Heavy                                                                            0.25%                   -
                                                                         12,500.00             500.00            12,500.00
                                                  Machinery

        Other security investment held at the period-end                                          -                                  97.67%                  -
                                                                       5,000,000.00                             4,978,675.00
             Profits and losses on investment of sold-out
                                                                               -                  -                  -                  -              196,066.70
                  securities in the reporting period
                                Total                                                             -                                      100%


               10. Share holding of other listed companies in the reporting period
                                                        Proportion                                    Profits
                                                              in the                                   and          Changes in
                                        Initial                               Carrying value
Security        Short form of                           company's                                 losses at       owner’s equity       Accounting           Stock
                                     investment                                    at the
 code              security                                   total                                    the        in the reporting             item          source
                                        amount                                 period-end
                                                          equities                                period-e            period
                                                                                                        nd
                                                                                                                                            Financial        Additi
                 Everbright                                                                                                                    asset             onal
601818                             30,828,816.00            0.06%             95,740,001.28              -        55,174,507.49
                    Bank                                                                                                                available for            issue
                                                                                                                                               sale



                                                                         36
            Total                30,828,816.00           -          95,740,001.28                   55,174,507.49              -            -


        11. Share holding of non-listed financial enterprises in the report period
                                                                                                   Profit        Changes
                                                              Proportion
                                                                                                    and         in owners’
                            Initial                             in the
Name of objective                          Number of                           Carrying value      loss           equity       Accounting       Stock
                          investment                          company's
    company                                equities held                      at the period-end   during          during           item         source
                            amount                               total
                                                                                                  report          report
                                                               equities
                                                                                                  period          period
Guangdong                                                                                                                                       Additi
Development                                                                                                                    Long-term         onal
                            500,000.00             229,792       <5.00%             500,000.00              -              -
Bank,           Foshan                                                                                                         investment       issue
Branch
                                                                                                                                                Additi
                                                                                                                               Long-term
Xiamen Bank              208,574,217.00      85,714,200             9.99%      208,574,217.00               -              -                     onal
                                                                                                                               investment
                                                                                                                                                issue
        Total            209,074,217.00      85,943,992                   -    209,074,217.00                                       -             -


           12. Researches by investors received in the reporting period
                                             Way of
                Date          Place                                                                Visitor
                                            reception
                                                 Field       Golden Eagle Asset Management Co., Ltd., GF Securities Co., Ltd., New China
          2010.1.13       The Company
                                            research                                    Asset Management Co., Ltd.
                                                 Field
          2010.1.14       The Company                                                      Everbright Securities
                                            research
                                                 Field
          2010.1.22       The Company                                                   United Bank of Switzerland
                                            research
                                                 Field           Guosen Securities Co., Ltd., Rising Securities Co., Ltd., Yinhua Fund
           2010.3.5       The Company
                                            research                                       Management Co., Ltd.
                                                 Field
          2010.3.17       The Company                               Xiangcai Securities Co., Ltd., Ping An Asset Management Co., Ltd.
                                            research
                                                 Field       CITIC Securities Co., Ltd., China Southern Fund Co., Ltd., Bosera Funds Co.,
          2010.3.18       The Company
                                            research                                                Ltd.
                                                 Field
          2010.3.19       The Company                                                  Everbright Securities Co., Ltd.
                                            research
                                                 Field
          2010.3.30       The Company                                                    Cinda Securities Co., Ltd.
                                            research
                                                             Shenyin & Wanguo Securities Co., Ltd., Guotai Asset Management Co., Ltd.,
                                                             AEGON-INDUSTRIAL Fund Management Co., Ltd., Guoyuan Securities Co.,
                                                 Field
          2010.3.31       The Company                        Ltd., GF Fund Management Co., Ltd., Rongtong Fund Management Co., Ltd.,
                                            research
                                                             Dacheng Fund Management Co., Ltd., Zhonghai Fund Co., Ltd., Harvest Fund
                                                                                                  Co., Ltd.
           2010.4.2       The Company            Field        Changsheng Fund Management Co., Ltd., China Post Fund Co., Ltd., China




                                                               37
                          research                             Galaxy Securities Co., Ltd.
                           Field     GF Securities Co., Ltd., China Merchants Fund Co., Ltd., China Southern Fund
2010.4.28   The Company
                          research                                      Co., Ltd.
                           Field
2010.4.29   The Company                            AEGON-INDUSTRIAL Fund Management Co., Ltd.
                          research
                           Field
2010.5.5    The Company                      Huan An Funds Co., Ltd., Dacheng Fund Management Co., Ltd.,
                          research
                           Field
2010.5.6    The Company                                           ICBC International
                          research
                           Field
2010.5.14   The Company                                    China Asset Management Co., Ltd.
                          research
                           Field
2010.5.19   The Company                                     Yinhua Fund, Essence Securities
                          research
                                     China Pacific Asset Management Co., Ltd., Genertec Investment Managers Ltd.,
                                        Hwabao Investment., China Pacific Asset Management Co., Ltd., Capital
                                       Fortune Asset Management Limited, Guangdong Xindaxing, Tianhong Fund
                           Field         Co., Ltd., Pangu Venture Capital, GF Securities, China Universal Asset
2010.5.20   The Company
                          research     Management Co., Ltd., Hongying Investment Co., Ltd., Essence Securities,
                                     Asset Management Department of Zhongshan Securities, Guangdong New Value
                                     Investment, China Post Fund, China Everbright, piimew, Cinda Funds, Dacheng
                                         Fund, China International Fund Management CO., Ltd., Fullgoal Fund
                           Field
2010.5.27   The Company                                          Sinolink General Fund
                          research
                           Field
2010.6.1    The Company                      Essence Securities, China Universal Asset Management Co., Ltd.
                          research
                           Field
2010.6.2    The Company                                              Dacheng Fund
                          research
                           Field
2010.6.3    The Company                                Ping An Securities, Lombarda China Fund
                          research
                           Field
2010.6.7    The Company                                          Rosefinch Investment
                          research
                           Field
2010.6.23   The Company                                 Sealand Securities, Everbright Securities
                          research
                           Field
2010.6.24   The Company                                    China Asset Management Co., Ltd.
                          research
                           Field
2010.6.30   The Company                                       Southern Metropolitan Daily
                          research
                           Field
2010.7.1    The Company                               Guangdong New Value Investment Co., Ltd.
                          research
                           Field
2010.7.7    The Company              Shenyin & Wanguo Securities, ICBC Credit Suisse Asset Management Co., Ltd.
                          research
                           Field
2010.7.14   The Company                                           Dongguan Securities
                          research




                                        38
                                                   Guosen Securities, Goldstate Securities, FCS, Citic international、Boyer Allan
                                                  Investment Management, Invesco Securities, China Post Fund Co., Ltd., Xiaoniu
                                      Field
  2010.7.20      The Company                       Asset Management Co., Ltd., ICBC Credit Suisse Asset Management Co., Ltd.,
                                     research
                                                    Guosen Asset Management Co., Ltd., ICBC Credit Suisse Asset Management
                                                                                       Co., Ltd.
                                      Field
  2010.8.11      The Company                                                    China Merchant Fund
                                     research
                                      Field
  2010.8.27      The Company                                                    KBC Goldstate Fund
                                     research
                                      Field
  2010.11.4      The Company                                                    GTJA Allianz Funds
                                     research
                                      Field       Hongyuan Securities, Northeast Securities Co., Ltd., Sinasafe Property Insurance
  2010.11.9      The Company
                                     research                             and Asset Management Co., Ltd.
                                      Field
 2010.11.25      The Company                          Soochow Securities, Huatai United Securities, Yunnan International Trust
                                     research
                                      Field
 2010.12.14      The Company                                   CITIC Securities, Guolian Securities, CITIC Securities
                                     research
                                                     Minisheng Securities, Sales Office of Industrial Securities at Jingtian Road,
                                                      Shenzhen, BOCOM Fund, Cowin Investment, China International Capital
                                                   Corporation Limited, Guangdong New Value Investment Co., Ltd., China Asset
                                                  Management Co., Ltd.,Beijing Golden Bloom Investment Management Co., Ltd,
                                                    Soochow Asset Management Co., Ltd., Guohai Securities Co., Ltd., Zhongyou
                                                   Asset Management Co., Ltd., Great Wall Fund, KBC Goldstate Fund, Shanghai
                                      Field        Hexi Investment, Shanghai Little Dolphin Investment, SWS Research Co., Ltd.,
 2010.12.16      The Company
                                     research     China Asset Management Co., Ltd., ICBC Credit Suisse Asset Management Co.,
                                                    Ltd., China Nature Asset Management Co., Ltd., Shanghai Elegant Investment
                                                    Co., Ltd., V. Stone Investment, SMC China Fund, Guotai Fund, Harfor Fund
                                                   Management Co., Ltd., HFT Fund, CCB Principal Asset Management Co., Ltd.,
                                                   Haitong Securities, Investment and Research Center of Guosen Securities, Bank
                                                    of China Investment Management, Zhonghai Fund, SWS Research Co., Ltd.,
                                                                               HFT Fund, Huaan Fund
                                      Field
 2010.12.27      The Company                                                    China Merchant Fund
                                     research
Content for research and provided materials: Introducing disclosed information of production, operation, and new energy projects of
the Company, and providing Annual Report 2009 of the Company for reference.




                                                      39
                                X Financial Report



                                   Auditor’s Report




                                       Guang-Kuai-Suo-Shen-Zi【2011】No.10005290019


All shareholders of Foshan Electrical and Lighting Co., Ltd.,


We have audited the accompanying financial statements of Foshan Electrical and
Lighting Co., Ltd. (the ―Company‖), which comprise the Company’s and consolidated
balance sheets as at 31 Dec. 2010, the Company’s and consolidated income statements,
the Company’s and consolidated cash flow statements, the Company’s and
consolidated statements of changes in shareholders’ equity for the year then ended,
and notes to the financial statements.


I. The management’s responsibility for the financial statements

The management of the Company is responsible for the preparation of these financial
statements in accordance with the Accounting Standards for Business Enterprises.
Such a responsibility includes: (a) designing, implementing and maintaining internal
control relevant to the preparation of financial statements that are free from material
misstatement, whether due to fraud or error; (b) selecting and applying appropriate
accounting policies; and (c) making accounting estimates that are reasonable in the
circumstances.

II. Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our
audit. We have conducted our audit in accordance with the Audit Standards for
Chinese Registered Accountants, which require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance as to
whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risks
assessments, the auditor considers the internal control related to the preparation of the


                                           40
financial statements so as to design proper audit procedures but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating
the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate,
which provides a basis for us to express auditing opinion.

III Audit opinion

In our opinion, the financial statements of the Company have been prepared according
to the Accounting Standards for Business Enterprises, which give a fair view of the
Company’s financial position as at 31 Dec. 2010 and the Company’s operating results
and cash flows for the year then ended in all material aspects.




GP Certified Public Accountants                   CPA: Wang Shaohua

                                                  CPA: Chen Danyan

     Guangzhou China                                   26 April 2011




                                          41
                                                     Balance Sheet
       Prepared by Foshan Electrical and Lighting Co., Ltd.             31 Dec. 2010        Unit: RMB Yuan
                                                  Closing balance                       Beginning balance
                Items
                                         Consolidation      Parent company      Consolidation      Parent company
Current assets:
  Monetary funds                         711,853,632.95      681,198,634.58 1,036,582,265.88       927,931,735.27
  Settlement funds reserve
  Lendings to banks and other
financial institutions
  Transactional financial assets          38,287,211.70          5,097,211.70       121,570.00          121,570.00
  Notes receivable                        79,964,518.10       74,911,048.10      54,093,298.72       51,333,256.72
  Accounts receivable                    317,185,505.67      332,564,283.12     284,367,231.84     304,213,230.54
  Accounts paid in advance                29,367,891.60       18,230,151.84      15,594,986.51       11,992,075.44
  Premium receivables
  Receivables from reinsurers
  Reinsurance contract reserve
receivables
  Interest receivable
  Dividend receivable                                            7,228,228.30
  Other accounts receivable               20,254,086.70       62,118,207.87      12,842,598.07       46,329,398.39
  Financial       assets   purchased
under agreements to resell
  Inventories                            365,413,882.78      339,343,349.75     234,240,250.37     202,292,392.67
  Non-current assets due within 1
year
  Other current assets
Total current assets                    1,562,326,729.50 1,520,691,115.26 1,637,842,201.39 1,544,213,659.03
Non-current assets:
  Loans and advances
  Available-for-sale        financial
                                          95,740,001.28       95,740,001.28
assets
  Held-to-maturity investments
  Long-term accounts receivable
  Long-term equity investment            443,373,689.60      598,850,689.60     254,124,296.23     385,904,686.07
  Investing property
  Fixed assets                           683,122,864.12      591,335,800.42     667,218,994.19     605,693,295.95
  Construction in process                100,914,324.93       72,198,935.48     184,971,615.68     128,488,231.78
  Engineering materials
  Fixed asset disposal
  Productive biological assets
  Oil and gas assets



                                                            42
  Intangible assets                         220,607,352.76    202,020,835.92   228,064,300.35   209,996,698.18
  Development expense
  Goodwill
  Long-term       expense       to    be
apportioned
  Deferred income tax assets                 22,462,498.27     22,323,210.28    22,878,756.57    22,419,642.96
  Other non-current assets
Total of non-current assets                1,566,220,730.96 1,582,469,472.98 1,357,257,963.02 1,352,502,554.94
Total assets                               3,128,547,460.46 3,103,160,588.24 2,995,100,164.41 2,896,716,213.97
Current liabilities:
  Short-term borrowings
  Borrowings from Central Bank
  Deposits and due to banks and
other financial institutions
  Borrowings from banks and
other financial institutions
  Transactional                financial
liabilities
  Notes payable
  Accounts payable                          192,615,874.39    214,720,055.92   140,739,081.85   120,577,073.98
  Accounts received in advance               22,598,645.79     37,156,710.99    31,482,851.09    29,945,697.96
  Financial assets sold under
agreements to repurchase
  Handling           charges         and
commissions payable
  Employee’s          compensation
                                             54,092,566.23     53,759,277.53    48,390,789.12    46,769,031.39
payable
  Taxes and fares payable                     -5,013,034.54    -3,412,797.35    22,246,390.83    21,042,745.31
  Interest payable
  dividend payable
  Other accounts payable                     30,383,813.76     28,785,087.45    36,391,801.59    26,152,530.24
  Due to reinsurers
  Insurance contract reserve
  Amount payable for acting
trading securities
  Amount payable for acting
underwriting securities
  Non-current        liabilities     due
within 1 year
  Other current liabilities
Total current liabilities                   294,677,865.63    331,008,334.54   279,250,914.48   244,487,078.88
Non-current liabilities:
  Long-term borrowings


                                                              43
    Debentures payable
    Long-term payables
    Specific-purpose             account
  payables
    Accrued liabilities
    Deferred income tax liabilities              9,736,677.79             9,736,677.79
    Other non-current liabilities               11,951,441.65         10,556,441.65        9,852,274.95           9,852,274.95
  Total non-current liabilities                 21,688,119.44         20,293,119.44        9,852,274.95           9,852,274.95
  Total liabilities                           316,365,985.07         351,301,453.98      289,103,189.43         254,339,353.83
  Owners’ equity (or shareholders’
  equity):
    Paid-in capital (or share capital)        978,563,745.00         978,563,745.00      978,563,745.00         978,563,745.00
    Capital surplus                           645,246,774.53         642,145,947.59      586,925,954.53         586,971,440.10
    Less: Treasury Stock
    Special reserve
    Surplus reserve                           555,433,925.97         555,433,925.97      528,474,746.92         528,474,746.92
    General risk provision
    Retained earnings                         587,668,581.79         575,715,515.70      566,135,541.76         548,366,928.12
    Foreign exchange difference
  Total owners' equity attributable
                                            2,766,913,027.29 2,751,859,134.26 2,660,099,988.21 2,642,376,860.14
  to holding company
  Minority interests                            45,268,448.10                             45,896,986.77
  Total owners’ equity                     2,812,181,475.39 2,751,859,134.26 2,705,996,974.98 2,642,376,860.14
  Total      liabilities   and   owners’
                                            3,128,547,460.46 3,103,160,588.24 2,995,100,164.41 2,896,716,213.97
  equity
       Person in charge of the Company: Zhong Xincai

       Person in charge of accounting affairs: Zhong Xincai

       Person in charge of accounting firm: Wang Shuqiong



                                                        Income Statement
       Prepared by Foshan Electrical and Lighting Co., Ltd.                     Jan.-Dec.2010        Unit: RMB Yuan
                                                             2010                                        2009
                 Items
                                             Consolidation          Parent company       Consolidation          Parent company
I. Total operating income                   1,956,068,628.79        1,772,030,634.65 1,707,293,238.96           1,673,251,075.36
Including: Sales                            1,956,068,628.79        1,772,030,634.65 1,707,293,238.96           1,673,251,075.36
Interest income
Premium income
Handling           charges        and
commission income
II. Total operating cost                    1,641,193,590.58        1,489,800,025.24 1,444,069,659.48           1,441,953,581.04

                                                                     44
Including: Cost of sales                   1,415,257,674.67   1,289,779,669.81 1,251,964,556.63      1,274,551,359.11
Interest expenses
Handling          charges           and
commission expenses
Surrender value
Claim expenses-net
Insurance contract reserve-net
Policy dividend payment
Amortized reinsurance expense
Taxes and associate charges                  16,804,303.00      15,046,920.44        13,611,596.29     11,468,786.16
Selling         and        distribution
                                             82,273,566.32      70,181,586.53        68,187,871.51     59,530,635.01
expenses
Administrative expenses                     126,143,052.54     111,971,977.04       112,108,470.90     99,196,391.32
Financial expense                             -2,009,654.77         -1,108,847.41    -5,000,641.11      -4,637,857.81
Asset impairment loss                          2,724,648.82         3,928,718.83      3,197,805.26      1,844,267.25
Add: gain/(loss) from change in
                                                 -13,088.30           -13,088.30
fair value (―-‖ means loss)
Gain/(loss) from investment (―-‖
                                              -1,113,040.95     26,709,085.71         2,990,764.19      4,212,358.35
means loss)
Including:        income          form
investment            on      affiliated
enterprises       and       jointly-run
enterprise
Foreign exchange difference (―-‖
means loss)
III. Business profit (―-‖ means
                                            313,748,908.96     308,926,606.82       266,214,343.67    235,509,852.67
loss)
Add: non-business income                     14,024,932.63          9,379,361.33      5,924,144.91      5,836,207.62
Less: non-business expense                     3,515,610.49         3,385,638.09      2,072,140.36      1,736,202.52
Including: loss on non-current
                                                907,255.24            802,178.25       935,623.28         621,666.56
asset disposal
IV. Total profit           (―-‖ means
                                            324,258,231.10     314,920,330.06       270,066,348.22    239,609,857.77
loss)
Less: Income tax expense                     53,160,785.14      45,328,539.53        43,829,502.02     38,135,668.80
V. Net profit     (―-‖ means loss)        271,097,445.96     269,591,790.53       226,236,846.20    201,474,188.97
Attributable to owners of parent
                                            263,776,242.98     269,591,790.53       212,179,203.83    201,474,188.97
company
Minority interests                             7,321,202.98                          14,057,642.37
VI. Earnings per share
(I) basic earnings per share                          0.27                  0.28              0.22              0.21
(II) diluted earnings per share                       0.27                  0.28              0.22              0.21
VII.      Other       Comprehensive
                                             55,185,225.24      55,174,507.49           -50,000.00
income



                                                               45
VIII.       Total     comprehensive
                                                    326,282,671.20        324,766,298.02       226,186,846.20          201,474,188.97
income
Attributable to: Owners of the
                                                    318,961,468.22        324,766,298.02       212,129,203.83          201,474,188.97
parent company
Minority shareholders                                 7,321,202.98                              14,057,642.37
        Person in charge of the Company: Zhong Xincai
        Person in charge of accounting affairs: Zhong Xincai
        Person in charge of accounting firm: Wang Shuqiong

                                                           Cash Flow Statement
        Prepared by Foshan Electrical and Lighting Co., Ltd.                           Jan.-Dec. 2010      Unit: RMB Yuan
                                                                       2010                                     2009
                     Items
                                                       Consolidation          Parent company    Consolidation          Parent company
1. Cash flows from operating activities:
Cash received from sales of goods or
                                                    2,273,670,653.10 1,898,771,124.80 1,830,708,486.71             1,787,981,934.21
rending of services
Net increase in customer bank deposits
and due to banks and other financial
institutions
Net increase in borrowings from central
bank
Net increase in borrowings from other
financial institutions
Premium        received      from        original
insurance contracts
Net cash received from reinsurance
Net increase in policy holder deposits
and investment funds
Net     increase       in       disposal      of
held-for-trading financial assets
Interest,      handling        charges       and
commissions received
Net increase in borrowings from banks
and other financial institutions
Net increase in buy-back business
Refund of taxes and fares received                     25,730,708.12           25,730,708.12     22,409,073.45           22,409,073.45
Other       cash    received     relating      to
                                                       16,742,833.83           17,192,879.51     25,291,305.29           29,501,180.84
operating activities
Sub-total      of    cash      inflows      from
                                                    2,316,144,195.05 1,941,694,712.43 1,878,408,865.45             1,839,892,188.50
operating activities
Cash paid for goods and services                    1,571,172,774.37 1,244,155,346.68 1,011,103,738.24             1,102,663,091.01
Net increase in loans and advances to
customers


                                                                         46
Net increase in deposits with central
bank and other financial institutions
Original insurance contract claims paid
Cash paid for interest, fees and
commissions
Dividends paid to policyholders
Cash paid to and on behalf of
                                                     282,303,937.85        236,547,648.41   209,337,880.00    176,033,716.34
employees
Taxes and fares paid                                 146,306,206.41        122,691,096.38   109,964,308.46     85,475,540.73
Other cash paid relating to operating
                                                     105,732,136.49        114,893,389.38    59,440,798.55     69,877,250.71
activities
Sub-total     of    cash     outflows        from
                                                    2,105,515,055.12 1,718,287,480.85 1,389,846,725.25       1,434,049,598.79
operating activities
Net cash flows from operating activities             210,629,139.93        223,407,231.58   488,562,140.20    405,842,589.71
2.   Cash     Flows        from    Investment
Activities:
Cash     received      from       withdrawing
                                                       1,628,996.70          4,959,386.54     2,186,653.39       6,686,653.39
investments
Cash received from investment income                     987,024.98         21,580,923.34     3,280,540.80       5,878,508.49
 Net cash received from disposal of
fixed assets, intangible assets and other              8,404,763.45          8,403,399.97     3,872,520.00       3,872,520.00
long-term assets
Net proceeds from sale of subsidiaries
and other operating units
Other    cash      received       relating     to
investment activities
Sub-total     of    cash      inflows        from
                                                      11,020,785.13         34,943,709.85     9,339,714.19     16,437,681.88
investment activities
Cash paid for acquiring fixed assets,
intangible assets and other long-term                 63,114,817.15         30,708,184.45   150,961,807.98    134,577,648.51
assets
Cash paid for investments                            263,513,002.00        255,823,002.00    80,412,789.08     88,912,789.08
Net increase in pledged loans
Net cash used for acquiring subsidiaries
and other operating units
Other cash paid relating to investment
activities
Sub-total     of    cash     outflows        from
                                                     326,627,819.15        286,531,186.45   231,374,597.06    223,490,437.59
investment activities
Net cash flows from investing activities            -315,607,034.02    -251,587,476.60 -222,034,882.87       -207,052,755.71
3.   Cash      Flows       from     Financing
Activities:
Cash     received          from     absorbing         16,521,015.20                           1,500,000.00


                                                                      47
investment
Including:          Cash    received      by
subsidiaries from increase in minority           16,521,015.20                            1,500,000.00
interests
Cash received from borrowings
Cash received from issuing debentures
Other proceeds relating to financing
activities
Sub-total      of    cash   inflows    from
                                                 16,521,015.20                            1,500,000.00
financing activities
Cash paid for settling debts
Cash paid for distribution of dividends
                                                232,982,797.46         215,284,023.90   155,497,414.03   153,839,823.53
or profit or reimbursing interest
Including: dividends or profit paid by
                                                 17,698,773.56                            1,657,590.50
 subsidiaries to minority interests
Other       cash    payments   relating   to
                                                                                           500,000.00
financing activities
Sub-total      of    cash   outflows   from
                                                232,982,797.46         215,284,023.90   155,997,414.03   153,839,823.53
financing activities
Net cash flows from financing activities       -216,461,782.26     -215,284,023.90 -154,497,414.03       -153,839,823.53
4. Effect of foreign exchange rate
                                                  -3,288,956.58         -3,268,831.77    -3,316,312.70     -3,316,805.53
changes on cash and cash equivalents
5. Net increase in cash and cash
                                               -324,728,632.93     -246,733,100.69      108,713,530.60    41,633,204.94
equivalents
Add : Cash and cash equivalents at
                                               1,036,582,265.88        927,931,735.27   927,868,735.28   886,298,530.33
year-begin
6. Cash and cash equivalents at the end
                                                711,853,632.95         681,198,634.58 1,036,582,265.88   927,931,735.27
of the year
        Person in charge of the Company: Zhong Xincai

        Person in charge of accounting affairs: Zhong Xincai

        Person in charge of accounting firm: Wang Shuqiong




                                                                  48
                                                                                           Statement of Changes in Owners’ Equity
Prepared by Foshan Electrical and Lighting Co., Ltd.                                                                                31 Dec. 2010                                                             Unit: RMB Yuan
                                                                                                              2010                                                                                                 2009
                                                                      Owners’ equity attributable to parent company                                                            Owners’ equity attributable to parent company

                                                         Paid-up                                                                                       Total of    Paid-up                                                                                        Total of
                       Items                                                     Less:               Surplus General                        Minority                                          Less:               Surplus General                     Minority
                                                        capital (or   Capital              Special                      Retained                       owners’   capital (or     Capital               Special                     Retained                      owners’
                                                                                treasury             public      risk               Others interests                                         treasury             public   risk                Others interests
                                                          share       reserve              reserve                       profits                       equity       share         reserve               reserve                      profits                      equity
                                                                                 stock               reserve reserve                                                                          stock               reserve reserve
                                                         capital)                                                                                                  capital)
I. balance at the end of last year                                                                   528,                                                                                                         508,                                  30,9
                                                                                                                                            45,89                                                                                   527,8                     2,632,
                                                        978,563 586,925                              474,               566,135                   2,705,99 698,974, 866,565,                                      327,                                  75,0
                                                                                                                                           6,986.                                                                                   78,05                    720,16
                                                        ,745.00 ,954.53                              746.               ,541.76                   6,974.98 104.00 595.53                                          328.                                  77.0
                                                                                                                                               77                                                                                    9.71                       4.34
                                                                                                      92                                                                                                           02                                      8
Add: Change of accounting policy

   Correction of errors in previous period

   Other
II. balance at the beginning of this year                                                            528,                                                                                                         508,                                  30,9
                                                                                                                                            45,89                                                                                   527,8                     2,632,
                                                        978,563 586,925                              474,               566,135                   2,705,99 698,974, 866,565,                                      327,                                  75,0
                                                                                                                                           6,986.                                                                                   78,05                    720,16
                                                        ,745.00 ,954.53                              746.               ,541.76                   6,974.98 104.00 595.53                                          328.                                  77.0
                                                                                                                                               77                                                                                    9.71                       4.34
                                                                                                      92                                                                                                           02                                      8
III. Increase/ decrease of amount in this year (“-”                                                26,9                                                                                                         20,1                                  14,9
means decrease)                                                                                                                                                                                                                     38,25                    73,276
                                                                      58,320,                        59,1               21,533,            -628,5 106,184, 279,589, -279,639                                      47,4                                  21,9
                                                                                                                                                                                                                                    7,482                     ,810.6
                                                                       820.00                        79.0                040.03             38.67 500.41 641.00 ,641.00                                           18.9                                  09.6
                                                                                                                                                                                                                                       .05                         4
                                                                                                        5                                                                                                            0                                     9
(I) Net profit                                                                                                          263,776            7,321, 271,097,                                                                          212,1               14,0 226,23
                                                                                                                        ,242.98             202.9 445.96                                                                            79,20               57,6 6,846.




                                                                                                                                   49
                                                                                       8                                 3.83   42.3      20
                                                                                                                                   7
(II)Gain/loss directly recognized to owners’ equity   55,185,                             55,185,2   -50,000.                         -50,00
                                                        225.24                                25.24         00                           0.00
Subtotal of (I)and (II)                                                                                                         14,0
                                                                                   7,321,                               212,1        226,18
                                                       55,185,          263,776           326,282,    -50,000.                  57,6
                                                                                    202.9                               79,20         6,846.
                                                        225.24          ,242.98            671.20           00                  42.3
                                                                                        8                                3.83            20
                                                                                                                                   7
(III) Input and reduced capital of owners                                          4,296,                                       1,00
                                                       3,135,5                            7,432,05                                    1,000,
                                                                                    461.8                                       0,00
                                                         94.76                                6.60                                   000.00
                                                                                        4                                       0.00
1. Input capital of owners                                                          16,51                                       1,00
                                                                                          16,510,2                                    1,000,
                                                                                   0,297.                                       0,00
                                                                                             97.45                                   000.00
                                                                                       45                                       0.00
2. Stock payment included in the owners’ equity

3. Others                                                                          -12,21
                                                       3,135,5                            -9,078,2
                                                                                   3,835.
                                                         94.76                               40.85
                                                                                       61
(IV) Profit distribution                                         26,9                                            20,1
                                                                        -242,24    -12,24                               -173,   -135, -153,9
                                                                 59,1                      -227,53               47,4
                                                                        3,202.9    6,203.                               921,7    732. 10,035
                                                                 79.0                     0,227.39               18.9
                                                                              5        49                               21.78      68     .56
                                                                    5                                               0
1. Withdrawing surplus public reserve                            26,9                                            20,1
                                                                                                                        -20,1
                                                                 59,1   -26,959                                  47,4
                                                                                                                        47,41
                                                                 79.0   ,179.05                                  18.9
                                                                                                                         8.90
                                                                    5                                               0
2. Withdrawing general risk reserve

                                                                        -215,28    -12,24 -227,53                       -153,   -135, -153,9
3. Distribution to all owners (shareholders)
                                                                        4,023.9    6,203. 0,227.39                      774,3    732. 10,035

                                                                              50
                                                                                       0        49                                                  02.88        68     .56
4. Other
(V)Internal carrying forward of owners’ equity                                                              279,589, -279,589
                                                                                                              641.00 ,641.00
1. New increase of capital (share capital) from                                                              279,589, -279,589
capital reserves
                                                                                                              641.00 ,641.00
2. New increase of capital (share capital) from
surplus reserves
3. Surplus reserves making up losses

4. Others

(VI) Special reserve

1. Appropriation in 2009

2. Use in 2009

IV. Balance at the end of this period

                                                                           555,                                                         528,                    45,8
                                                                                              45,26                                                 566,1             2,705,
                                                  978,563 645,246          433,   587,668           2,812,18 978,563, 586,925,          474,                    96,9
                                                                                             8,448.                                                 35,54            996,97
                                                  ,745.00 ,774.53          925.   ,581.79           1,475.39 745.00 954.53              746.                    86.7
                                                                                                 10                                                  1.76               4.98
                                                                            97                                                           92                        7
Person in charge of the Company: Zhong Xincai
Person in charge of accounting affairs: Zhong Xincai
Person in charge of accounting firm: Wang Shuqiong




                                                             Statement of Changes in Owners’ Equity (Parent Company)
            Prepared by Foshan Electrical and Lighting Co., Ltd.                              31 Dec. 2010                                     Unit: RMB Yuan
     Items                                                          2010                                                         2009


                                                                                        51
                                             Paid-up                                                                                     Paid-up                Less:
                                                                     Less:                         General                    Total                                                         General                Total
                                            capital (or   Capital              Special   Surplus             Retained                   capital (or   Capital   treas   Special   Surplus             Retained
                                                                    treasury                        risk                     owners’                                                        risk                owners’
                                              share       reserve              reserve   reserve              profit                      share       reserve   ury     reserve   reserve              profit
                                                                     stock                         reserve                    equity                                                        reserve               equity
                                             capital)                                                                                    capital)               stock
I. balance at the end of last year                                                        528,                                                                                     508,
                                                          586,9                                              548,3                                    866,56                                          520,8
                                            978,563                                       474,                           2,642,37       698,974                                    327,                          2,594,67
                                                          71,44                                              66,92                                     1,081.                                         14,46
                                            ,745.00                                       746.                           6,860.14       ,104.00                                    328.                          6,974.05
                                                           0.10                                               8.12                                        10                                           0.93
                                                                                           92                                                                                       02
Add: Change of accounting policy

  Correction of errors in previous
period
  Other
II. balance at the beginning of this year                                                 528,                                                                                     508,
                                                          586,9                                              548,3                                    866,56                                          520,8
                                            978,563                                       474,                           2,642,37       698,974                                    327,                          2,594,67
                                                          71,44                                              66,92                                     1,081.                                         14,46
                                            ,745.00                                       746.                           6,860.14       ,104.00                                    328.                          6,974.05
                                                           0.10                                               8.12                                        10                                           0.93
                                                                                           92                                                                                       02
III. Increase/ decrease of amount in this                                                 26,9                                                                                     20,1
year (―-‖ means decrease)                                55,17                                              27,34                                   -279,5                                           27,55
                                                                                          59,1                           109,482,       279,589                                    47,4                          47,699,8
                                                          4,507.                                             8,587.                                   89,641                                          2,467.
                                                                                          79.0                            274.12        ,641.00                                    18.9                             86.09
                                                              49                                                 58                                       .00                                             19
                                                                                             5                                                                                        0
(I) Net profit                                                                                               269,5                                                                                    201,4
                                                                                                                         269,591,                                                                                201,474,
                                                                                                             91,79                                                                                    74,18
                                                                                                                          790.53                                                                                  188.97
                                                                                                              0.53                                                                                     8.97
(II)Gain/loss directly recognized to                       55,17
owners’ equity                                                                                                          55,174,5
                                                          4,507.
                                                                                                                            07.49
                                                              49
Subtotal of (I)and (II)                                    55,17                                             269,5                                                                                    201,4
                                                                                                                         324,766,                                                                                201,474,
                                                          4,507.                                             91,79                                                                                    74,18
                                                                                                                          298.02                                                                                  188.97
                                                              49                                              0.53                                                                                     8.97



                                                                                                                        52
(III) Input and reduced capital of owners

1. Input capital of owners

2. Stock payment included in the
owners’ equity

3. Others

(IV) Profit distribution                     26,9                                           20,1
                                                    -242,                                          -173,
                                             59,1             -215,28                       47,4            -153,77
                                                    243,2                                          921,7
                                             79.0            4,023.90                       18.9           4,302.88
                                                    02.95                                          21.78
                                                5                                              0
1. Withdrawing surplus public reserve        26,9                                           20,1
                                                    -26,9                                          -20,1
                                             59,1                                           47,4
                                                    59,17                                          47,41      0.00
                                             79.0                                           18.9
                                                     9.05                                           8.90
                                                5                                              0
2. Withdrawing general risk reserve

                                                    -215,                                          -153,
3. Distribution to all owners                                 -215,28                                       -153,77
                                                    284,0                                          774,3
(shareholders)                                               4,023.90                                      4,302.88
                                                    23.90                                          02.88
4. Other
(V)Internal carrying forward of owners’                                          -279,5
equity                                                                  279,589
                                                                                  89,641
                                                                        ,641.00
                                                                                      .00
1. New increase of capital (share capital)                                        -279,5
from capital reserves                                                   279,589
                                                                                  89,641
                                                                        ,641.00
                                                                                      .00
2. New increase of capital (share capital)
from surplus reserves

3. Surplus reserves making up losses




                                                            53
4. Others

(VI) Special reserve

1. Appropriation in 2009

2. Use in 2009

IV. Balance at the end of this period

                                                               555,                                           528,
                                                  642,1               575,7                         586,97           548,3
                                        978,563                433,            2,751,85   978,563             474,           2,642,37
                                                  45,94               15,51                          1,440.          66,92
                                        ,745.00                925.            9,134.26   ,745.00             746.           6,860.14
                                                   7.59                5.70                             10            8.12
                                                                97                                             92
             Person in charge of the Company: Zhong Xincai
             Person in charge of accounting affairs: Zhong Xincai
             Person in charge of accounting firm: Wang Shuqiong




                                                                              54
I . Co mp a ny P ro file
Company History
Foshan Electrical & Lighting Co., Ltd. (hereinafter referred to as ―the Company‖), a joint-stock limited
company jointly founded by Foshan Electrical and Lighting Company, Nanhai Wuzhuang Color Glazed
Brick Field, and Foshan Poyang Printing Industrial Co. on Oct. 20, 1992 by raising funds under the
approval of YGS (1992) No. 63 Document issued by the Joint Examination Group for Experimental
Enterprises in Stock System of Guangdong Province and the Economic System Reform Commission of
Guangdong Province, is an enterprise with its shares held by both the corporate and the natural persons. As
approved by China Securities Regulatory Commission with Document (1993) No. 33, the Company
publicly issued 19.3 million shares of social public shares (A shares) to the public in Oct., 1993, and was
listed in Shenzhen Stock Exchange for trade on Nov. 23, 1993. The Company was approved to issue
50,000,000 B shares on Jul. 23, 1995. And, as approved to change into a foreign-invested stock limited
company on Aug. 26, 1996 by (1996) WJMZEHZ No. 466 Document issued by the Ministry of Foreign
Trade and Economic Cooperation of the People’s Republic of China. On Dec. 11, 2000, as approved by
China Securities Regulatory Commission with ZJGS Zi [2000] No. 175 Document, the Company
additionally issued 55,000,000 A shares. At approved by the Shareholders’ General Meeting 2006, 2007
and 2008, the Company implemented the plan of capitalization of capital reserve, after the transfer, the
registered capital of the Company has increased to RMB 978,563,745.00 Yuan. And the registration code
for corporate business license is QGYZZ No. 002889.
Legal representative: Mr. Zhong Xincai
Address: No. 64, Fenjiang North Road, Foshan, Guangdong Province


Business Scope of the Company
R&D and production of electro-optical source products, electro-optical source equipment and
electro-optical accessories, sale of those products on both the domestic and overseas markets, and the
relevant engineering consultation service. The main products of the Company include all kinds of
electro-optical source products.


Basic Organizational structure of the Company
Shareholders’ General Meeting is the highest authority organ of the Company, Board of Directors is an
executive organ to carry out the provisions formulated by the Shareholders’ General Meeting, Board of
supervisors is an internal supervision organ of the Company, and the General Manager is responsible for
routine operation and management. Up till the end of the reporting period, the Company owns eight
actually controlled subsidiaries, i.e. Foshan Chanchang Electric Appliance (Gaoming) Co., Ltd., Foshan
Chansheng Electronic Ballast Co., Ltd., Foshan Taimei Times Lamps and Lanterns Co., Foshan Gaoming
Fuwan Landscape Resort Co., Ltd., Nanjing Fozhao Lighting Components Co., Ltd., FSL (Xinxiang)
Lighting Co., Ltd., Foshan Lighting Lamps and Lanterns Co., Ltd. and Qinghai Fozhao Lithium Ion
Battery Cathode Materials Co., Ltd.. Meanwhile, the procedure to write off Foshan Chanchang Lighting
Components Co., Ltd.—a subsidiary actually controlled by the Company—has not been completed.


Approval and Issue of the Financial Report


                                                     55
The Financial Report was approved and authorized for issue by the Board of Directors on 26 Apr. 2011.


Statement of Compliance with Corporate Accounting Standards
The financial statements prepared by the Company is in compliance with the requirements of Accounting
Standard for Business Enterprises, which gives a true and fair view of the state of affairs of the Company
as for the financial status and operating results & cash flows.


II. Basis for preparation of financial statements

With going-concern assumption as the basis, the Company prepares its financial statement in light of the
actual transactions and matters, as well as the accounting standard for business enterprise-basic standard
promulgated by the Ministry of Finance of PRC in 15 Feb. 2006, other specific accounting standards, and
the relevant provisions of application guide and interpretation, as well as the following primary accounting
policies and accounting estimates.


III. Main accounting p olicies, accounting estimates and preparation methods of the
Company’s consolidated f inancial statements
Fiscal Year
A fiscal year starts on 1 January and ends on 31 Dec. according to the Gregorian calendar.


Recording Currency
Renminbi is the recording currency for the Company.


Accounting Basis and Principle
The accounting basis of the Company is the accrual system; generally by adopting of historical cost as the
accounting principle. And the Company adopts measurement replacement costs, net realizable values,
present values and fair values when the confirmed accounting elements accord with the requirements of the
accounting standard for business enterprise and can be reliably measured.


Accounting Method for Foreign Currency
Foreign currency shall be recognized by employing systematic and reasonable methods, and shall be
translated into the amount in the functional currency at the exchange rate which is approximate to the spot
exchange rate of the transaction date. On the balance sheet date, the foreign currency monetary items shall
be translated at the spot exchange rate. The balance of exchange arising from the difference between the
spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or
prior tot the balance sheet date shall be recorded into the profits and losses at the current period except that
the balance of exchange arising from foreign currency borrowings for the purchase and construction or
production of qualified assets shall be capitalized. The foreign currency non-monetary items measured at
the historical cost shall still be translated at the spot exchange rate on the transaction date.


Recognition Standards for Cash and Cash Equivalents


                                                       56
The term ―cash‖ refers to cash on hand and deposits that are available for payment at any time. The term
―cash equivalents‖ refers to short-term ( within 3 months from the purchase date) and highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of change in value.


Financial Instruments
Financial Assets Classification, Recognition and Measurement
—Financial assets shall be classified into the following four categories when they are initially recognized:
financial assets measured at fair value and of which variations are recorded in the profits and losses for the
current period, loans and the account receivables, financial assets available for sale and the investments
which will be held to their maturity. Financial assets, at their initial recognition, shall be measured at fair
value. As for financial assets measured at fair value and of which variations are recorded in the profits and
losses for the current period, the relevant trading expenses shall be directly recorded into the profits and
losses of the current period; for other categories of financial assets, the transaction expenses thereof shall
be included into the initially recognized amount.
——Financial assets measured at fair value and of which variations are recorded in the profits and losses
for the current period refer to financial assets held by the Company for the purpose of selling in the near
future, including transactional financial assets, or financial assets designated by the management in the
initial recognition to be measured at fair value with variations recorded in the gains and losses for the
current period. Financial assets measured at fair value and of which variations are recorded in the profits
and losses for the current period are subsequently measured at their fair values. Interest or cash dividends
arising from such assets during the holing period are recognized as investment gains. Gains or losses
arising from fair value changes are recorded in the gains and losses for the current period at the end of the
reporting period. When such assets are disposed, the difference between their fair values and initially
recognized amounts is recognized as investment gains and the gains and losses arising from fair value
changes are adjusted accordingly.
—— Loan and accounts receivable: the non-derivative financial assets for which there is no quoted price
in the active market and of which the recoverable amount is fixed or determinable shall be classified as
loan and accounts receivable. The Company shall make subsequent measurement on its loan and accounts
receivable on the basis of the post-amortization costs by adopting the actual interest rate, from which gains
and losses, when loan and accounts receivable are terminated from recognizing, or are impaired or
amortized, shall be recorded into the profits and losses of the current period.
—— Available-for-sale Financial Assets: the non-derivative financial assets which are designated as
available-for-sale financial assets when they are initially recognized as well as the non-derivative financial
assets other than loans and accounts receivables, investments held until their maturity; and transaction
financial assets. The Company shall make subsequent measurement on available-for-sale financial assets at
fair value, and the profits and losses arising from the change in the fair value shall be directly recorded into
the owner’s equity, until the said financial assets shall be transferred out when they are terminated from
recognizing or are impaired, which shall be recorded into the profits and losses of current period. Where
the intention of holding or the ability to hold changes, or the fair value can not be reliably measured any
more, or the term of holding has exceeded "two complete accounting years", which makes it no longer
suitable to measure the available-for-sale financial assets at its fair value, the Company concerned may
measure the said financial assets on the basis of post-amortization cost. And such post-amortization cost at
the re-classification day shall be the carrying amount of the financial assets. The gains or losses that are

                                                       57
related to the said financial assets and that are directly included in the owner’s equity shall be dealt with
according to the following provisions: (1) Where such financial asset has a fixed date of maturity, it shall
be amortized within the remaining period of the said financial asset by adopting the actual interest rate
method and be recorded into the profits and losses of the current period. The gap between the
post-amortization cost of the financial asset and the amount on the maturity date shall also be amortized
within the remaining period of the said financial asset by adopting the actual interest rate method and be
recorded into the profits and losses of the current period. If, during the subsequent accounting period, the
financial asset is impaired, the relevant profits and losses that were included in the owner’s equity shall be
transferred out and be recorded into the current profits and losses. (2) Where such financial asset does not
have a fixed date of maturity, it shall remain in the owner’s equity. Where such financial asset is
transferred out when it is impaired or determined from recognizing during the remaining period of
accounting that follows, and shall be recorded into the profits and losses of the current period.
—— Held-to-maturity Investments: non-derivative financial asset with a fixed date of maturity, a fixed or
determinable recoverable amount and which the Company’s management holds for a definite purpose or
the Company’s management is able to hold until its maturity. The Company shall make subsequent
measurement on its Held-to-maturity Investments on the basis of the post-amortization costs by adopting
the actual interest rate, from which gains and losses, when loan and accounts receivable are terminated
from recognizing, or are impaired or amortized, shall be recorded into the profits and losses of the current
period. Where part of the held-to-maturity investment is sold or the re-classified amount thereof is
considerably large, so that the remainder of the said investment is no longer suitable to be classified as a
held-to-maturity investment, the Company shall re-classify the remainder of the said investment as an
available-for-sale financial asset, and shall make subsequent measurement on it according to its fair value
on the re-classification day, and no longer re-classify the said financial asset as held-to-maturity
investment in the current fiscal year and the subsequent two complete accounting years. The gap between
the carrying amount of the said remnant part of the investment at the re-classification day and the fair value
shall be computed into the owner’s equity. And when the said available-for-sale financial asset is impaired
or transferred out when it is terminated from recognition, it shall be recorded into the profits and losses of
the current period.


Classification, Recognition and Measurement of Financial Liabilities
—— Financial liabilities shall be classified into the following two categories when they are initially
recognized: (1) the transactional financial liabilities; and (2) other financial liabilities. The financial
liabilities initially recognized by the Company shall be measured at their fair values. For the transactional
financial liabilities, the transaction expenses thereof shall be directly recorded into the profits and losses of
the current period; for other categories of financial liabilities, the transaction expenses thereof shall be
included into the initially recognized amount.
—— Transactional financial liabilities: such financial liabilities held by the Company for the purpose for
repurchasing at the fair value in the near future, and financial liabilities formed a part of combination of
financial instruments which are managed by way of short-term profit making in the near future, and
derivative financial liabilities (the designated derivative instruments which are effective hedging
instruments, or derivative instruments to financial guarantee contracts, and the derivative instruments
which are connected with the equity instrument investment for which there is no quoted price in the active
market, whose fair value cannot be reliably measured, and which shall be settled by delivering the said
equity instruments) shall be classified as transactional financial liabilities. Subsequent measurement of


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transaction financial liabilities shall be measured at fair value, and the profits and losses arising from the
change in the fair value shall be recorded into the profits and losses of the current period.
—— Other financial liabilities: The Company shall make subsequent measurement on its other financial
liabilities on the basis of the post-amortization costs by adopting the actual interest rate, from which gains
and losses, when other financial liabilities are terminated from recognizing or amortized, shall be recorded
into the profits and losses of the current period.


Determination of the Fair Value of Financial Instruments
—As for the financial instruments for which there is an active market, the quoted prices in the active
market shall be used to determine the fair values thereof. Where there is no active market for a financial
instrument, the Company concerned shall adopt value appraisal techniques to determine its fair value. The
value appraisal techniques mainly include the prices adopted by the parties, who are familiar with the
condition, in the latest market transaction upon their own free will, the current fair value obtained by
referring to other financial instruments of the same essential nature, the cash flow capitalization method
and the option pricing model, etc.


Impairment test of financial assets and withdrawal method of impairment provision
—The Company shall carry out an inspection, on the balance sheet day, on the carrying amount of the
financial assets other than those transactional financial assets. Where there is any objective evidence
proving that such financial asset has been impaired, an impairment provision shall be made.
—— Measurement for impairment of financial assets measured on the basis of the post-amortization costs
Where there is any objective evidence proving that a financial asset measured on the basis of
post-amortization costs is impaired, the carrying amount of the said financial asset shall be written down to
the current value of the predicted future cash flow (excluding the loss of future credits not yet occurred),
and the amount as written down shall be recognized as loss of the impairment of the asset and shall be
recorded into the profits and losses of the current period. An impairment test shall be made on the financial
assets with significant single amounts. With regard to the financial assets with insignificant single amounts,
an impairment test may be carried out by independent or combination. Where, upon independent test, the
financial asset has not been impaired, it shall be included in a combination of financial assets with similar
risk features so as to conduct another impairment test. The financial assets which have suffered from an
impairment loss in any single amount shall not be included in any combination of financial assets with
similar risk features for any impairment test. During the follow-up period, if there is any objective
evidence proving that the value of the said financial asset has been restored, and it is objectively related to
the events that occur after such loss is recognized, the impairment-related losses as originally recognized
shall be reversed and be recorded into the profits and losses of the current period. However, the reversed
carrying amount shall not be any more than the post-amortization costs of the said financial asset on the
day of reverse under the assumption that no provision is made for the impairment. Where any financial
asset measured on the basis of post-amortization costs is recognized as having loss, the relevant
impairment provision withdrawn shall be written off.
—— Available-for-sale financial assets
Where a available-for-sale financial asset is impaired, even if the recognition of the financial asset has not
been terminated, the accumulative losses arising from the decrease of the fair value of the owner’s equity
which was directly included shall be transferred out and recorded into the profits and losses of the current
period. The accumulative losses that are transferred out shall be the net amount obtained from the initially

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obtained costs of the sold financial asset after deducting the principals as taken back, the current fair value
and the impairment-related losses as was recorded into the profits and losses of the current period.


Calculation of bad-debt provisions for accounts receivables
—For accounts receivables with a significant single amount and for which bad-debt provisions are made
separately:
Definition or amount         Accounts receivable with a significant single amount refer to the top five accounts
criteria for an account      receivable with the largest balances or accounts accounting for over 10% of the total
receivable     with    a     balance of receivables.
significant       single
amount
Making          separate     Where there is objective evidence proving that the Company is not able to recover the full
bad-debt provisions for      amount of an account receivable according to the original terms in relation to the account,
accounts      receivable     an independent impairment test is carried out on the account receivable and the bad-debt
with     a    significant    provision is made according to the difference between the present value of the account’s
single amount                future cash flows and the account’s carrying amount. If the independent impairment test
                             shows that the account receivable has not been impaired, the balance of the account is put
                             into the corresponding group and the bad-debt provision is made using the balance
                             percentage method.
—Accounts receivable for which bad-debt provisions are made on the group basis

Grouping criteria:

                      Group name                                                      Criteria

                                                           Accounts    receivable    arising     from   other   common

Common transaction group                                   transactions than internal transactions are classified

                                                           according to credit risk features.

                                                           Accounts receivable arising from internal transactions

Internal transaction group                                 within the scope of the consolidation statements are

                                                           classified according to credit risk features.

Making bad-debt provisions for accounts receivable on the group basis:

                      Group name                                         Method for making provisions

Common transaction group                                                     Balance percentage method

                                                                The bad-debt provision is made according to the

Internal transaction group                                 difference between the present value of the group’s future

                                                                  cash flows and the group’s carrying amount.
—For receivable groups for which bad-debt provisions are made using the balance percentage method:

              Group name                       Provision ratio for account         Provision ratio for other receivables



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                                                receivables (%)                             (%)

   Common transaction groups                          6%                                    6%
—Accounts receivable with an insignificant single amount but for which the bad-debt provision is made
independently
——When can the bad-debt provision be made independently for an account receivable with an
insignificant amount
When there is conclusive evidence proving that obvious difference exists in the recoverability.
——Method for making bad-debt provisions for the said accounts receivables
The bad-debt provision is made according to the difference between the present value of the account’s
future cash flows and the account’s carrying amount.
As for other receivables (including notes receivable, prepayments, interest receivable, long-term
receivables, etc.), bad-debt provisions are made according to the differences between the present values of
their future cash flows and their carrying amounts.


Accounting Method of Inventory
Inventory category: raw materials, products in processing, materials for consigned processing, finished
products, semi-manufactured semi-finished products, and low-value consumption goods.
Accounting of inventory: raw materials and finished products shall be measured at actual cost, while
weighted average method shall be adopted when receiving or outgoing.
Inventory system: a perpetual inventory system
Recognition of provision for falling price of inventory and withdrawal: The Company shall make provision
for falling price of inventory on the basis of each item of inventory at the balance that net realizable value
is lower than carrying cost. For finished goods, merchandise inventories, and available for sale materials
which are applied directly for sales of stock inventory, the amount after deducting the estimated sale
expense and relevant taxes from the estimated sell price of the inventory shall be recognized as the net
realizable value. For material inventories which need to be processed, the amount after deducting the
estimated cost of completion, estimated sale expense and relevant taxes from the estimated sale price of
produced finished goods shall be recognized as the net realizable value.


Measurement Method of Long-term Investment
Measurement of long-term equity investment
— Long-term equity investment for the merger of enterprises
—— For the merger of enterprises under the same control, it shall, on the date of merger, regard the share
of the book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity
investment, and the direct relevant expenses occurred for the merger of enterprises shall be included into
the profits and losses of the current period.
—— For the merger of enterprises not under the same control, The combination costs shall be the fair
values, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equity
securities issued by the Company in exchange for the control on the acquiree, and all relevant direct costs
incurred to the acquirer for the business combination. Where any future event that is likely to affect the
combination costs is stipulated in the combination contract or agreement, if it is likely to occur and its



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effects on the combination costs can be measured reliably, the Company shall record the said amount into
the combination costs.
—— The cost of a long-term equity investment obtained by making payment in cash shall be the purchase
cost which is actually paid. The cost consists of the expenses directly relevant to the obtainment of the
long-term equity investment, taxes and other necessary expenses.
—— The cost of a long-term equity investment obtained on the basis of issuing equity securities shall be
the fair value of the equity securities issued.
—— The cost of a long-term equity investment of an investor shall be the value stipulated in the
investment contract or agreement except the unfair value stipulated in the contract or agreement.
—— The cost of a long-term investment obtained by the exchange of non-monetary assets (having
commercial nature) shall be recognized base on taking the fair value and relevant payable taxes as the cost
of the assets received.
—— The cost of a long-term equity investment obtained by recombination of liabilities shall be
recognized at the fair value.


Subsequent measurement of long-term equity investment and recognized method of investment income
—The long-term equity investment of the Company that is able to control the invested enterprise and
which of the Company that does not do joint control or does not have significant influences on the invested
entity, and has no offer in the active market and its fair value cannot be reliably measured, it shall be
measured by employing the cost method. Except for the declared but not distributed cash dividends or
profits included in the price or consideration actually paid when an investment is obtained, the dividends or
profits declared to distribute by the invested entity shall be recognized as the current investment income.
—A long-term equity investment of the Company that does joint control or significant influences over the
invested entity shall be measured by employing the equity method. If the cost of a long-term equity
investment is more than the Company's attributable share of the fair value of the invested entity's
identifiable net assets for the investment, the cost of the long-term equity investment may not be adjusted.
If the cost of a long-term equity investment is less than the Company's attributable share of the fair value
of the invested entity's identifiable net assets for the investment, the difference shall be included in the
current profits and losses and the cost of the long-term equity investment shall be adjusted simultaneously.
The Company shall recognize the net losses of the invested enterprise until the book value of the long-term
equity investment and other long-term rights and interests which substantially form the net investment
made to the invested entity are reduced to zero, unless the investing enterprise has the obligation to
undertake extra losses. The Company shall, on the ground of the fair value of all identifiable assets of the
invested entity when it obtains the investment, recognize the attributable share of the net profits and losses
of the invested entity after it adjusts the net profits of the invested entity.


Provision for impairment of long-term investment
—The Company shall conduct inspection to long-term investment item by item at the end of reporting
period. If the market price of long-term investment falls into sustained decline or the invested enterprise’s
operation status grow worse, which will cause that the recoverable amount is lower than carrying value,
moreover, such reduced value will not be restored in predicted future period, then the negative balance
between the recoverable amount and carrying value of long-term investment shall be measured as
provision for impairment of long-term investment. The recoverable amount shall be determined in light of
the higher one of the net amount of the fair value of the long-term equity investment minus the disposal

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expenses and the current value of the expected future cash flow of the long-term equity investment. Once
any loss of impairment of the long-term investment is recognized, it shall not be switched back in the
future accounting periods.


Fixed Assets and Depreciation
Recognition of fixed assets: Fixed assets of the Company refers to the tangible assets that simultaneously
possess the features as follows: they are held for the sake of producing commodities, rendering labor
service, renting or business management; and their useful life is in excess of one fiscal year and unit price
is higher.
Category of fixed assets: housing and building, machinery equipment, transportation vehicle and other.
Measurement of fixed assets and depreciation method: fixed assets shall be measured at actual cost.
Depreciation rate shall be recognized by employing the straight-line method and in accordance with
appraisal economical useful life and predicated net residuals. The appraisal economical useful life and
depreciation rate are listed as below:
         Categories                Useful life       Annual depreciation rate         Residuals rate
 Housing and Building                      3—25                 31.67%-4.75%                          5%
 Machinery equipments                       2—8                47.50%-11.88%                          5%
 Transportation vehicle                    5—10                    19%-9.50%                          5%
 Other                                      2—8                47.50%-11.88%                          5%
Provision for impairment of fixed assets: The Company shall carry out inspection to fixed assets item by
item every year. If the recoverable amount is lower than carrying value due to sustained decline of market
price of fixed assets or technological obsolescence, damage or long-term idle, then the provision for
impairment of fixed assets shall be withdrawn on the basis of the balance hereof. Once any loss of
impairment of the fixed assets is recognized, it shall not be switched back in the future accounting periods.
The recoverable amount shall be determined in light of the higher one of the net amount of the fair value of
the fixed assets minus the disposal expenses and the current value of the expected future cash flow of the
fixed assets. The current value of future cash flow of assets shall be recognized based on the amount after
the predicated future cash flow occurred in the process of continuous services and when the final disposal
is discounted by adopting proper discount rate.


Accounting Measurement of Construction in Progress
Construction in progress shall be measured at actual cost. Constructions in progress shall be carried down
to fixed assets by adopting provisional estimate when bringing to the expected conditions for use. After
completion and settlement procedures, the Company shall adjust the carrying value of fixed assets at the
actual cost. As for interests on borrowings incurred to special-borrowing loans or general borrowing for the
acquisition and construction or production of assets eligible for capitalization and the ancillary expense
incurred to special-borrowing loans, those incurred before a qualified asset under acquisition, construction
or production is ready for the intended use or sale shall be capitalized into capitalized cost, while those
incurred after a qualified asset under acquisition and construction or production is ready for the intended
use or sale shall be included into the profits and losses of the current period.
Provision for impairment of construction in progress: the Company shall carry out overall inspection to the
construction in progress at the end of the reporting period. If the construction in progress has been stopped
for a long time and cannot be continued restarting in the coming three years, and such construction in

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progress has already fallen behind, whatever in performance or in technology, resulting in an uncertainty to
economic benefit of the Company, and there is an obvious evidence shows that the construction in progress
has been impaired, then provision for impairment of the construction in progress shall be withdrawn based
on the negative balance between the recoverable amount of single construction in progress and carrying
value. Once any loss of impairment of the construction in progress is recognized, it shall not be switched
back in the future accounting periods.


Measurement of Intangible Assets and Amortization Method
Measurement of intangible assets
—— The cost of outsourcing intangible assets shall be measured at actual expenditures occurred for
reaching the expected use purpose.
—— The research expenditures for its internal research and development projects of the Company shall
be recorded into the profit or loss for the current period. The development expenditures for its internal
research and development projects of the Company may be confirmed as cost of intangible assets when
they satisfy capitalization conditions.
—— The cost invested into intangible assets by investors shall be determined according to the
conventional value in the investment contract or agreement, except for those of unfair value in the contract
or agreement.
—— The intangible assets received by the Company through accepting debtor’s non-cash assets for
compensation for debts, or by receivables, shall be measured at the fair value of the intangible assets
received.
—— The cost invested into intangible assets by non-monetary transaction shall be determined according
to the fair value of non-monetary assets and relevant payable taxes.
Amortization of intangible assets: Intangible assets with limited service life shall be amortized by the
straight-line method within its estimated service life. If it is unable to forecast the period when the
intangible asset can bring economic benefits to the Company, it shall be regarded as an intangible asset
with uncertain service life. Intangible assets with uncertain service life may not be amortized. The
Company’s intangible assets is mainly land use right, which is amortized averagely by the service life (50
years).
Provision for impairment of intangible assets: the Company shall made overall inspection to the intangible
asset at the end of reporting period. If the intangible assets have already been replaced by other new
technologies, resulting in the Company’s ability to create economic benefits suffering materials adverse
influence, or a sustained decline of market price of intangible assets and impossible to be recover within
the residual amortization years, or certain intangible asset has exceeded the term protected by law but still
part of useful value is remained, or there is an obvious evidence shows that the intangible assets has been
impaired, then provision for impairment of the intangible assets shall be withdrawn based on the balance
between the recoverable amount of single intangible assets and carrying value. Once any loss of
impairment of the intangible assets is recognized, it shall not be switched back in the future accounting
periods.


Measurement of Long-term Deferred Expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one year (one year
excluded) that have occurred but attributable to the current and future periods. Long-term deferred expense
shall be recoded into book in the light of the actual expenditure, and amortized averagely within benefit

                                                      64
period. In case of no benefit in the future accounting period, the amortized value of such project that fails
to be amortized shall be transferred into the profits and losses of the current period.


Measurement of Capitalization of Borrowing Costs
The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements:
(1) The asset disbursements have already incurred, which shall include the cash, transferred non-cash assets
or interest bearing debts paid for the acquisition and construction or production activities for preparing
assets eligible for capitalization; (2) The borrowing costs has already incurred; and (3) The acquisition and
construction or production activities which are necessary to prepare the asset for its intended use or sale
have already started.
To-be-capitalized amount of interests of borrowing: As for interests of borrowing occurred
special-borrowing loans or general borrowing for the acquisition and construction or production of assets
eligible for capitalization, those incurred before a qualified asset under acquisition, construction or
production is ready for the intended use or sale shall be capitalized based on the following methods:
—— As for special-borrowing loans for the acquisition and construction or production of assets eligible
for capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost
incurred of the specially borrowed loan at the present period minus the income of interests earned on the
unused borrowing loans as a deposit in the bank or as a temporary investment.
—— Where a general borrowing is used for the acquisition and construction or production of assets
eligible for capitalization, the Company shall calculate and determine the to-be-capitalized amount of
interests on the general borrowing by multiplying the weighted average asset disbursement of the part of
the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general
borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average
interest rate of the general borrowing.
Suspension of capitalization: Where the acquisition and construction or production of a qualified asset is
interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the
borrowing costs shall be suspended. The borrowing costs incurred during such period shall be recognized
as expenses, and shall be recorded into the profits and losses of the current period, till the acquisition and
construction or production of the asset restarts. If the interruption is a necessary step for making the
qualified asset under acquisition and construction or production ready for the intended use or sale, the
capitalization of the borrowing costs shall continue.


Recognition and Measurement of Estimated liabilities
Recognition of estimated debts: The obligation such as external guaranty, pending litigation or arbitration,
product quality assurance, layoff plan, loss contract, restructuring and disposal of fixed assets, pertinent to
a contingencies shall be recognized as an estimated debts when the following conditions are satisfied
simultaneously: ① That obligation is a current obligation of the enterprise; ② It is likely to cause any
economic benefit to flow out of the enterprise as a result of performance of the obligation; and ③ The
amount of the obligation can be measured in a reliable way.
The estimated debts shall be initially measured in accordance with the best estimate of the necessary
expenses for the performance of the current obligation. To determine the best estimate, the Company shall
take into full consideration of the risks, uncertainty, time value of money, and other factors pertinent to the
Contingencies. If the time value of money is of great significance, the best estimate shall be determined
after discounting the relevant future outflow of cash. If there is a sequent range for the necessary expenses

                                                       65
and if all the outcomes within this range are equally likely to occur, the best estimate shall be determined
in accordance with the middle estimate within the range. In other cases, the best estimate shall be
conducted in accordance with the following situations, respectively: ① If the Contingencies concern a
single item, it shall be determined in the light of the most likely outcome. ② If the Contingencies concern
two or more items, the best estimate should be calculated and determined in accordance with all possible
outcomes and the relevant probabilities. ③ When all or some of the expenses necessary for the liquidation
of an estimated debts of an enterprise is expected to be compensated by a third party, the compensation
should be separately recognized as an asset only when it is virtually certain that the reimbursement will be
obtained. The Company shall check the book value of the estimated debts on the balance sheet date. The
Company shall, subject to change, make adjustment to carrying value to reflect the current best estimate.

Employee Compensation
The employee compensation refers to all kinds of payments and other relevant expenditures given by the
Company during the accounting period of an employee' providing services to the Company, including:
wages, bonuses, allowances and subsidies for the employees; welfare expenses for the employees; social
insurances such as medical insurance, endowment insurance, unemployment insurance, work injury
insurance, maternity insurance and other, which are paid by the Company to the employee, and housing
accumulation fund. If the Company cancels the labor relationship with any employee prior to the
expiration of the relevant labor contract or brings forward any compensation proposal for the purpose of
encouraging the employee to accept a layoff (the cancellation of labor relationship or proposal on
voluntary layoff will execute it soon, and The Company is unable to unilaterally withdraw the plan on the
cancellation of labor relationship or the layoff), the Company shall recognize the estimated liabilities
incurred hereof, and shall simultaneously record them into the profit or loss for the current period.


Recognition of revenue
No revenue shall be realized unless the following conditions are met simultaneously: a. The significant
risks and rewards of ownership of the goods or products have been transferred to the buyer by the
enterprise; b. The Company retains neither management right nor effective control over the sold goods or
products; c. The relevant revenue has been received or valid evidence has been obtained, d. relevant cost
related to sales of goods and products can be measured in a reliable way.
Revenue from providing services shall be recognized by adopting the percentage-of-completion method
when following conditions shall be met simultaneously: The amount of revenue can be measured in a
reliable way; The relevant economic benefits are likely to flow into the enterprise; The schedule of
completion under the transaction can be confirmed in a reliable way; and the costs incurred or to be
incurred in the transaction can be measured in a reliable way. If the Company can not measure the result of
a transaction concerning the providing of labor services in a reliable way, and the cost of labor services
incurred is expected to be compensated, the revenue from the providing of labor services shall be
recognized in accordance with the amount of the cost of labor services incurred. If the cost of labor
services incurred is not expected to compensate in full, the revenue shall be recognized in accordance with
the amount of the cost of labor service can be compensated; if all cost of labor services incurred is not
expected to compensate and no revenue from the providing of labor services may be recognized.
The revenue from abalienating of right to use the Company’s assets may be recognized when the following
conditions are met simultaneously: a. the relevant economic benefits are likely to flow to the Company;
and b. the amount of revenues can be measured in a reliable way. The user charge receivable should be


                                                     66
measured and confirmed as operating revenue in accordance with the period and method of charging as
stipulated in the relevant contract or agreement.


Government Subsidies
No government subsidy may be recognized unless the following conditions are met simultaneously: (1)
The Company can meet the conditions for the government subsidies; and (2) The Company can obtain the
government subsidies.
If a government subsidy is a monetary asset, it shall be measured in the light of the received or receivable
amount. If a government subsidy is a non-monetary asset, it shall be measured at its fair value. If its fair
value cannot be obtained in a reliable way, it shall be measured at its nominal amount.
The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed
within the useful lives of the relevant assets, and included in the current profits and losses. But the
government subsidies measured at their nominal amounts shall be directly included in the current profits
and losses. The government subsidies pertinent to incomes shall be treated respectively in accordance with
the circumstances as follows: (1) Those subsidies used for compensating the related future expenses or
losses of the enterprise shall be recognized as deferred income and shall included in the current profits and
losses during the period when the relevant expenses are recognized; or (2) Those subsidies used for
compensating the related expenses or losses incurred to the enterprise shall be directly included in the
current profits and losses.


Accounting Treatment of Income Tax
Income tax shall be measured by adopting balance sheet approach. On the balance sheet day, deferred
income tax assets and relevant deferred income tax income shall be recognized based on the deductible
temporary difference and result calculated at the applicable income tax rate; deferred income tax liabilities
and relevant deferred income tax expense shall be recognized based on taxable temporary difference and
result calculated at the applicable income tax rate.


Method for Profit Distribution
In accordance with the Articles of Association, the Company’s profit shall be distributed in order as
follows:
—— Making up losses in the previous year;
—— Appropriating 10% net profit as statutory public reserve, if accumulative appropriated amount
reaches over 50% of registered capital, the Company may no longer appropriate;
—— Appropriating discretionary public reserve after approval by the Shareholders’ General Meeting;
—— Retained profit shall be distributed according to the resolution of the Shareholders’ General
Meeting.


Business Combinations
The term "business combinations" refers to a transaction or event bringing together two or more separate
enterprises into one reporting entity. The Company shall recognize assets and liabilities obtained for
business combinations on the combining date and acquisition date. The "combining date" or ―acquisition
date‖ refers to the date on which the combining party actually obtains control on the combined party.



                                                      67
In a business combination under the same control, the assets and liabilities that the combining party obtains
in a business combination shall be measured on the basis of their carrying amount in the combined party on
the combining date. As for the balance between the carrying amount of the net assets obtained by the
combining party and the carrying amount of the consideration paid by it, the additional paid-in capital shall
be adjusted. If the additional paid-in capital is not sufficient to be offset, the retained earnings shall be
adjusted.
In a business combination not under the same control, the combination costs shall be the fair values, on the
acquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by
the acquirer in exchange for the control on the acquiree. The positive balance between the combination
costs and the fair value of the identifiable net assets it obtains from the acquiree shall be recognized as
business reputation. The negative balance between the combination costs and the fair value of the
identifiable net assets it obtains from the acquiree shall be recorded into the profits and losses of the
current period after the reexamination.


Preparation methods for consolidated financial statements
The scope of consolidation of consolidated financial statements shall include the Company and all its
subsidiaries. The operating outcomes and financial status of the subsidiaries shall be included in the
consolidated financial statements from start date of the control to end date of the control.
The subsidiaries that the Company obtains due to business combination under the same control shall be
included into the scope of consolidation when preparing the consolidated financial statements of the
current period, and the beginning balance in the consolidated financial statement and prior comparison
sheet shall be adjusted accordingly.
As for the subsidiaries that the Company obtains due to business combination not under the same control,
their financial statements shall be adjusted based on the fair value of each identifiable asset and liability
determined on the combining date when preparing the consolidated financial statements of the current
period. Such combined subsidiaries shall be included into the scope of consolidation from the combining
date.
If the accounting period and accounting policies adopted by a subsidiary are different from those adopted
by the Company, when preparing the consolidated financial statement, necessary adjustments shall be
made to the financial statements of the subsidiary under the accounting period and accounting policies
adopted by the Company. Within the scope of consolidation, all significant transactions between the
enterprises, balance and unrealized profits and losses shall be offset when preparing the consolidated
financial statement. As for the unrealized losses occurred in the internal transaction, if there is a evidence
shows that such loss is impairment loss on relevant assets, it shall not be offset. The equity and profits &
losses attributable to minority shareholders of the subsidiary shall be particularly presented in the item of
―shareholder’s equity‖ in the consolidated balance sheets and in the item of ―net profit‖ in the consolidated
income statement respectively.
Change in accounting policies and accounting estimates and corrections of prior accounting errors
During the reporting period, there is no change in accounting policies or accounting estimates and no
correction of prior accounting errors.




                                                        68
IV. Major Taxes
VAT
VAT on sales is calculated based on 17% of sales revenue. VAT is calculated and paid based on the
difference of VAT on sales deducting deductable input VAT. Tax on exports managed by the Company, as
approved by the taxation departments, is paid by adopting the policy of ―tax exemption, tax deduction and
tax rebate‖ since 1 Jan. 2002.
Corporate Income Tax
The Company was identified as a high-tech enterprise in Dec. 2008, and won the ―Certificate of High-tech
Enterprise‖ with serial number GR200844000085 after approval by Department of Science and
Technology of Guangdong Province, Department of Finance of Guangdong Province, Guangdong
Provincial Bureau of State Taxation and Guangdong Provincial Bureau of Local Taxation on 16 Dec. 2008.
In accordance with relevant provisions in Corporate Income Tax Law of the People's Republic of China
and the Administration Measures for Identification of High-tech Enterprises promulgated in 2007, the
Company paid the corporate income tax based on a tax rate of 15% within three years since 1 Jan. 2008.
The subsidiaries of the Company, including Foshan Taimei Times Lamps and Lanterns Co., Ltd., and
Foshan Chanchang Electric Appliance (Gaoming) Co., Ltd., are all productive foreign funded enterprises,
so that the said three companies enjoy a preferential CIT policy of ―Two plus three‖ (Exemption of
enterprise income tax for the first two years of making profit, and 50% tax reduction for following three
years). Of which, year 2007 is the first profit-making year that Foshan Taimei Times Lamps and Lanterns
Co., Ltd. enjoys the said preferential policy of ―Two plus three‖, therefore, it should be allowed a 50%
reduction of income tax in 2010. Foshan Chanchang Electric Appliance (Gaoming) Co., Ltd. enjoys a
preferential CIT policy of ―Two plus three‖ since 2008, therefore the said company should be allowed a
50% reduction of the enterprise income tax in 2010, as at the rate of 12.5%..
The subsidiaries of the Company, including Foshan Chansheng Electronic Ballast Co., Ltd., Foshan
Gaoming Fuwan Landscape Resort Co., Ltd., Nanjing Fozhao Lighting Components Manufacturing Co.,
Ltd., Foshan Electrical & Lighting (Xinxiang) Co., Ltd., Foshan Lighting Lamps and Lanterns Co., Ltd.
and Qinghai Fozhao Lithium Ion Battery Cathode Materials Co., Ltd., whose enterprise income tax rate is
25%.


V. Subsidiaries controlled by the Company
The subsidiaries received by the Company through establishment or investment
                                                         Amount
  Name of                                 Registered   invested by
              Date of     Registration                               Equity       Legal                         Consolidated
  invested                                 capital           the                               Main business
             foundation      place                                   owned    representative                     statement
 company                                 (RMB’0000)    Company
                                                       (RMB’0000)
                                                                                               Manufacturing
Foshan                                                                                         bromine
Chanchang                                                                                      tungsten lamp,
Lighting       1989         Foshan        USD180         USD72       40%      Zhong Xincai     special              Yes
Components                                                                                     lighting
Co., Ltd.                                                                                      source
                                                                                               products   and


                                                        69
                                                                         ancillary
                                                                         devices
                                                                         Manufacturing
Foshan                                                                   electronic
Chansheng                                                                ballasts,
Electronic     2003   Foshan   RMB100    RMB75     75%    Zhong Xincai   electronic            Yes
Ballast Co.,                                                             transformers
Ltd.                                                                     and electronic
                                                                         triggers.
                                                                         Production
                                                                         and operation
                                                                         of          lamps,
Foshan                                                                   electric     light
Chanchang                                                                source
Electric                                                                 products       and
               2005   Foshan   RMB6000   RMB4200   70%    Zhong Xincai                         Yes
Appliance                                                                accessories,
(Gaoming)                                                                installation
Co., Ltd.                                                                and        related
                                                                         engineering
                                                                         and consulting
                                                                         business.
                                                                         Research,
                                                                         development,
                                                                         production
Foshan
                                                                         and sales of
Taimei
                                                                         lighting,
Times
               2005   Foshan   RMB50     RMB35     70%     Zhao Yong     household             Yes
Lamps and
                                                                         appliances and
Lanterns
                                                                         accessories
Co., Ltd.
                                                                         and          other
                                                                         lighting
                                                                         products.
                                                                         Making
                                                                         arrangement
                                                                         (tourist
Foshan
                                                                         industry,
Gaoming
                                                                         catering
Fuwan
               2006   Foshan   RMB480    RMB480    100%   Zhong Xincai   service, sauna,       Yes
Landscape
                                                                         foot-bathing,
Resort Co.,
                                                                         games,       retail
Ltd.
                                                                         of beverages,
                                                                         sports on the
                                                                         water, chess)
Foshan         2009   Foshan   RMB500    RMB507    100%   Zhong Xincai   R&D            and    Yes


                                         70
Lighting                                                                              production of
Lamps and                                                                             electric      light
Lanterns                                                                              source       lamp
Co., Ltd.                                                                             products       and
                                                                                      relevant
                                                                                      electric
                                                                                      engineering
                                                                                      materials,
                                                                                      metal material
                                                                                      and non-metal
                                                                                      material
                                                                                      Production
                                                                                      and sales of
                                                                                      electric      light
                                                                                      source
                                                                                      equipment and
                                                                                      electric      light
                                                                                      source
                                                                                      products, sales
                                                                                      of accessories
Foshan
                                                                                      of         electric
Electrical &
                                                                                      light      source,
Lighting       2009      Xinxiang    RMB1000       RMB500      100%    Zhong Xincai                         Yes
                                                                                      electric      light
(Xinxiang)
                                                                                      source
Co., Ltd.
                                                                                      materials,
                                                                                      electric
                                                                                      engineering
                                                                                      materials,
                                                                                      accessories for
                                                                                      motor
                                                                                      vehicles,
                                                                                      lamps          and
                                                                                      components
Qinghai                                                                               Production
Fozhao                                                                                and sales of
Lithium Ion                                                                           lithium        ion
Battery        2010      Qinghai     RMB5000      RMB2550      51%     Zhong Xincai   battery               Yes
Cathode                                                                               cathode
Materials                                                                             materials
Co., Ltd.                                                                             exploitation
—Foshan Chanchang Lighting Components Co., Ltd. was founded in 1989, and the Company holds 40%
equities of the said company. Under relevant provisions in the agreement signed between the Company and
foreign shareholder of Foshan Chanchang Lighting Components Co., Ltd., the Company owns the real
control right. Therefore, the said company is included into the scope of the consolidated financial


                                                   71
statements. Owing to expiration of the duration of joint venture ended 30 Nov. 2008, the Board of the said
subsidiary company decided to terminate its operation. As of 31 Dec. 2010, the cancellation of the
Company was not completely finished.
—Foshan Chanchang Electric Appliance (Gaoming) Co., Ltd., who is the Sino-foreign joint ventures
invested and established by the Company and Prosperity Lamps and Components Ltd, had obtained license
for business corporation on 23 Aug. 2005 through approval by Foreign Trade and Economic Cooperation
Bureau of Gaoming District, Foshan with document ―MWJMY Zi [2005] No. 79‖. The Company holds
70% equities of the said company, therefore the said subsidiary was included into the scope of the
consolidated financial statements since date of the foundation.
—Foshan Taimei Times Lamps and Lanterns Co., Ltd., who is the Sino-foreign joint ventures invested and
established by the Company and Reback North America Investment Limited, had obtained license for
Business Corporation on 5 Dec. 2005 through approval by Foreign Trade and Economic Cooperation
Bureau of Gaoming District, Foshan with document ―MWJMY Zi [2005] No. 97‖. The Company holds
70% equities of the said company, therefore the said subsidiary was included into the scope of the
consolidated financial statements since date of foundation.
—Foshan Gaoming Fuwan Landscape Resort Co., Ltd. is limited liability company, which is invested and
established by the Company, obtaining its license for Business Corporation on 23 Nov. 2006. And the
company holds 100% equities of this company. Therefore the said subsidiary was included into the scope
of the consolidated financial statements since date of foundation.
—Foshan Lighting Lamps and Lanterns Co., Ltd. is limited liability company, which is invested and
established by the Company together with Foshan Haozhiyuan Trading Co., Ltd., Shanghai Liangqi
Electric Co., Ltd, Changzhou Sanfeng Electrical & Lighting Co., Ltd., Henan Xingchen Electrical &
Lighting Co., Ltd., Foshan Hongbao Electrical & Lighting Co., Ltd., Hebei Jinfen Trading Co., Ltd.,
obtaining its license for Business Corporation on 27 Mar. 2009. The Company holds 60% equities of this
company. Therefore the said subsidiary was included into the scope of the consolidated financial
statements since date of the foundation. The said company had put into production in May 2009. On 25
Sep. 2009, the equity transfer agreement was signed between the Company and Foshan Haozhiyuan
Trading Co., Ltd., in which Foshan Haozhiyuan Trading Co., Ltd. transferred 10% equities of Foshan
Lighting Lamps and Lanterns Co., Ltd. to the Company. After transfer, the Company holds 70% equities
of Foshan Lighting Lamps and Lanterns Co., Ltd.. On 19 Dec. 2010, the Company signed Equity Transfer
Contract with Shanghai Liangqi Electric Co., Ltd, Changzhou Sanfeng Electrical & Lighting Co., Ltd.,
Henan Xingchen Electrical & Lighting Co., Ltd., Foshan Hongbao Electrical & Lighting Co., Ltd., and
Taizhou Luqiao Hengyu Lighting Equipment Trading Company. Since then, the above said minority
shareholder respectively transferred 6% of their holding equities of Foshan Lighting Lamps and Lanterns
Co., Ltd. to the Company, the Company held 100% equities of Foshan Lighting Lamps and Lanterns Co.,
Ltd. after the transfer.
—Foshan Electrical & Lighting (Xinxiang) Co., Ltd. is limited liability company with the registered
capital of RMB 10 million, which is invested and established by the Company, obtaining its license for
Business Corporation on 17 Apr. 2009. As at 31 Dec. 2009, the Company had invested RMB 5 million in
this company, holding 100% equities of this company. Therefore the said subsidiary was included into the
scope of the consolidated financial statements since date of foundation.
—Qinghai Fozhao Lithium Ion Battery Cathode Materials Co., Ltd. is limited liability company, which is
invested and established by the Company together with Hefei Lixin Energy Material Co., Ltd., Qinghai
Power New Energy Material Co., Ltd., Lithium Energy Holdings, Ltd. and Jianagsu Guogang


                                                    72
Communication Engineering Co., Ltd.. On 25 Oct. 2010, Qinghai Fozhao Lithium Energy Exploitation Co.,
Ltd. received Business License for Enterprise as a Legal Person, of which the Company holds 51% equities
of the company, and it was included into the scope of the consolidated financial statements since date of
foundation.
The subsidiary for business combination not under the same control
                                                                 Amount
   Name of                                   Registered       invested by
                 Date of     Registration                                      Equity       Legal                             Consolidated
   invested                                   capital              the                                   Main business
                foundation      place                                          owned    representative                         statement
  company                                   (RMB’0000)          Company
                                                             (RMB’0000)
                                                                                                         Production of
                                                                                                         energy-saving
                                                                                                         photoelectric
                                                                                                         source
                                                                                                         products,
                                                                                                         lamps        and
                                                                                                         lanterns, light
                                                                                                         source
Nanjing
                                                                                                         equipments,
Fozhao
                                                                                                         illumination
Lighting
                  2002         Nanjing      RMB4168.32         RMB7200         100%     Zhong Xincai     engineering;             Yes
Components
                                                                                                         technological
Manufacturing
                                                                                                         development
Co., Ltd.
                                                                                                         of
                                                                                                         energy-saving
                                                                                                         and production
                                                                                                         of       relevant
                                                                                                         components;
                                                                                                         sales           of
                                                                                                         self-production
                                                                                                         products
— In accordance with the equity transfer agreement signed between the Company and Prosperity Lamps
and Components Ltd on 27 Aug. 2008, Prosperity Lamps and Components Ltd. transferred 100% equities
of Nanjing Fozhao Lighting Components Manufacturing Co., Ltd.(used to known as ―Prosperity (Nanjing)
Lighting Components Co., Ltd.‖, and changed name to ―Nanjing Fozhao Lighting Components
Manufacturing Co., Ltd.‖ on 15 Nov. 2010.) to the Company. Therefore, Prosperity (Nanjing) Lighting
Components Co., Ltd. became the wholly-owned subsidiary of the Company. The said subsidiary was
included into the scope of the consolidated financial statements since merger date.
Change of consolidation scope and reason
— As above mentioned, the Company newly established and invested Qinghai Fozhao Lithium Ion Battery
Cathode Materials Co., Ltd. in 2010 and the said company was included into the scope of the consolidated
financial statements since date of foundation.
Subsidiaries that newly combined into consolidation scope in 2010
                 Name                                     Closing net assets                        Net profit in 2010


                                                            73
Qinghai Fozhao Lithium Ion Battery Cathode
                                                                  41,825,004.05                              -196,011.15
Materials Co., Ltd.
Minority interests and profits and losses of minority shareholders attributable to the holding
subsidiaries
                                                       As at 31 Dec. 2010 or Year 2010            As at 31 Dec. 2009 or Year 2009
                                                                         Profits and losses                          Profits and losses
                Name of company                                             of minority                                 of minority
                                                  Minority interests                          Minority interests
                                                                        shareholders as of                           shareholders as of
                                                                            this period                                 this period
Foshan Chanchang Lighting Components
Co., Ltd.                                                           -           159,168.79       16,018,380.78         5,210,345.27
Foshan Chansheng Electronic Ballast Co.,
Ltd.                                                     750,309.47         -300,083.27           1,426,643.71           148,920.44
FSL Modern Lamps and Lanterns Co.,
Ltd.                                                                -                     -                      -        -13,152.96
Foshan Chanchang Electric Appliance
(Gaoming) Co., Ltd.                                23,156,297.12                 44,999.55       23,313,133.53         5,929,448.61
Foshan      Taimei    Times    Lamps      and
Lanterns Co., Ltd.                                     4,947,589.52        3,415,262.58           2,312,326.92         1,455,579.18
Foshan Lighting Lamps and Lanterns Co.,
Ltd                                                                 -      4,097,900.79           2,826,501.83         1,326,501.83
Qinghai Fozhao Lithium Ion Battery
Cathode Materials Co., Ltd.                        16,414,251.99                -96,045.46                       -                    -

Total                                              45,268,448.10           7,321,202.98          45,896,986.77        14,057,642.37


VI. Notes to Main Items of Consolidated Financial Statements
1. Monetary Funds
                                       Closing amount                                              Opening amount
        Item         Amount in foreign     Exchange                               Amount in foreign    Exchange
                                                           Amount in RMB                                             Amount in RMB
                         currency               rate                                  currency            rate

Cash                                                              114,480.22                                                 38,646.25

Bank deposits                                                701,830,065.08                                          1,036,543,619.63
Of which:
                                                             694,505,957.79                                          1,018,422,651.20
RMB account
          HKD
                                  93.05         0.8509                  79.18                 93.05       0.8805                 81.93
      account
          USD
                           994,429.22           6.6227          6,585,806.34           2,638,180.25       6.8282        18,014,022.38
      account
          Euro
                              83,826.92         8.8065           738,221.77               10,907.73       9.7971           106,864.12
      Account
Other currency
                                                                9,909,087.65                                                          -
funds



                                                                   74
Of         which:
                                                             9,909,087.65                                                             -
RMB

        Total                                             711,853,632.95                                          1,036,582,265.88
—Closing monetary capital decreases RMB 324,728,632.93 compared to period-begin with a decrease of
47.67%, mainly due to the increase on external equity investment of the Company in 2010.
—All bank deposits are in the name of the Company or the subsidiaries which are within the scope of
consolidated financial statements.
—Other monetary capital are refundable deposit the Company deposited in exchange company under the
company name.

2. Tradable Financial Assets

                    Items                                 Closing balance                           Opening balance


           Tradable financial assets
                                                          38,287,211.70                                 121,570.00
—Tradable financial assets are detailed as follows:
                                                         Closing investment
            Item                Investment ratio                                 Closing market value        Impairment reserve
                                                              amount
     Stock investment             Less than 5%                    110,300.00                 118,620.00                           -
     Fund investment                                            5,000,000.00             4,978,591.70                             -
         Bank wealth
                                                               33,190,000.00            33,190,000.00
 management products
            Total                                              38,300,300.00            38,287,211.70                             -
—Tradable financial assets above were all shares acquired by the Company by subscription at the primary
market.

3. Notes Receivable
                     Item                                 Closing balance                           Opening balance

Bank acceptance bill                                                    79,964,518.10                             54,093,298.72

Total                                                                   79,964,518.10                             54,093,298.72
—Up till 31 Dec. 2010, there is no undue trade acceptance draft receivable discounted or pledged.
—Closing balance of notes receivable increases by RMB 25,871,219.38 as compared with the opening
amount, representing a growth of 5%, which is mainly because more customers adopted notes settlement in
the reporting period.
—There is no amount due from shareholders who hold 5% or more of voting shares of the Company in the
closing balance of notes receivable.

4. Accounts Receivable
Net account receivable as at 31 Dec. 2010 stands at RMB 317,185,505.67, which is classified as follows:
                                       Closing balance                                       Opening balance
          Item
                             Book balance          Bad debt provision         Book balance                Bad debt provision




                                                                75
                                           Proportion               Proportion                      Proportion                               Proportion
                          Amount                         Amount                        Amount                             Amount
                                              (%)                      (%)                             (%)                                       (%)
Significant single
amounts and make
independent                            -             -          -              -                -             -                          -                -
provision for
impairment losses

Accounts receivable that make provision for impairment loss according to ages combination

Balance
 combination           337,431,389.01               99.68     20,245,883.34            6.00 302,536,864.83 99.21 18,169,632.99                        6.00
Normal business
 combination           337,431,389.01               99.68     20,245,883.34            6.00 302,536,864.83 99.21 18,169,632.99                        6.00
Subtotal of
combination              1,085,613.12                0.32       1,085,613.12 100.00             2,403,246.60        0.79 2,403,246.60            100.00
Not significant
single amounts but
make independent
provision for
impairment losses 338,517,002.13                   100.00     21,331,496.46            6.30 304,940,111.43 100.00 20,572,879.59                       6.75

         Total

—Within the combination, analysis of accounts receivable that make provision for losses by balance
percentage method
                                      Closing balance                                                        Opening balance
                        Book balance                     Bad debt provision                  Book balance                   Bad debt provision
Account age                                                          Withdrawal                                                          Withdrawal
                                    Proportion                                                            Proportion
                     Amount                          Amount           proportion          Amount                           Amount            proportion
                                       (%)                                                                    (%)
                                                                         (%)                                                                    (%)
Within        1
year              326,532,449.48           96.77 19,591,946.97                     6 298,256,760.91               97.81 17,912,826.78                   6

1-2 years          10,296,197.99            3.05     617,771.88                    6     3,171,310.45              1.04    190,278.61                   6

2-3 years              437,722.27           0.13         26,263.34                 6       673,556.47              0.22      40,413.38                  6

Over 3 years           165,019.27           0.05          9,901.15                 6       435,237.00              0.93      26,114.22                  6

Total             337,431,389.01       100.00 20,245,883.34                        6 302,536,864.83                100 18,169,632.99                    6
—Not significant single amounts but make independent provision for impairment losses
   Content of accounts                                                                       Withdrawal
          receivable                Book balance              Bad debt provision             proportion                     Reason
                                                                                                    (%)
Guangzhou Yaotong
Lighting Appliances                                                                                                 Estimatedly uncollectible
Trading Co., Ltd.                          729,453.94                 729,453.94                    100.00%


                                                                        76
Jilin Changchun Haitian
Dongda
                                                                                                   Estimatedly uncollectible
Commerce&Trade Co.,
Ltd.                                   184,263.00             184,263.00             100.00%
Dongda Economic Trade
                                                                                                   Estimatedly uncollectible
Co., Ltd.                              117,772.19             117,772.19             100.00%
Shanghai Xianyi
Lighting Electric                                                                                  Estimatedly uncollectible
Appliance Co., Ltd.                     50,000.00               50,000.00            100.00%
Jilin Changchun Haitian
Dongda
                                                                                                   Estimatedly uncollectible
Commerce&Trade Co.,
Ltd.                                      4,123.99               4,123.99            100.00%

             Total                  1,085,613.12            1,085,613.12             100.00%
—Particulars on transfer back or collect this reporting period
                                                                                         Accumulated
                                  Reason for
   Content of accounts                               Basis for recognition of         withdrawal amount        Transfer back or
                                transfer back or
        receivable                                    provision for bad debts           before transfer        collect amount
                                    collect
                                                                                        back or collect
Chengdu              Shenxing     Recovery of        Deterioration of financial
Industrial Co., Ltd.              borrowings          circumstance of debtor                1,312,419.76              52,030.36
Jilin Changchun Haitian
Dongda                           Recovery of         Deterioration of financial
Commerce&Trade Co.,               borrowings          circumstance of debtor
Ltd.                                                                                          177,109.90            172,985.91

   Total                                                                                    1,489,529.66            225,016.27
—Particulars on actual cancellation of accounts receivable
                                                                                                                    Whether
                                        Nature of                                                                 arising due to
                                                         Cancellation
            Name of entity               amounts                                  Reason for cancellation            related
                                                            amount
                                        receivable                                                                transaction or
                                                                                                                       not
                                                                             The Court gave a verdict that
Chengdu Shenxing Industrial                                                  the executed temporary didn’t
                                          Loans          1,260,389.40                                                  No
Co., Ltd.                                                                    have assets for execution that
                                                                                  the case was cancelled.
Guangdong Qiguang Auto Light              Loans                                 Of long aging that estimated           No
                                                               78,600.00
Co., Ltd                                                                               irrecoverable
                                          Loans                                 Of long aging that estimated           No
Sichuan Shida Trade Co., Ltd.                                  65,829.38
                                                                                       irrecoverable
XIAMEN                  HENIALON          Loans                                 Of long aging that estimated           No
                                                               50,058.40
INDUSTRY CO.,LTD                                                                       irrecoverable
Other                                     Loans                21,281.96        Of long aging that estimated           No


                                                                77
                                                                                         irrecoverable
Total                                                      1,476,159.14
—Particulars on the top five debtors
                                                          Closing amount                                 Opening amount
                    Item
                                                      Amount                Proportion              Amount           proportion
Total and proportion of the top five units in
                    debt                                                       35.35%             84,863,180.23           27.83%
                                                     119,661,219.69
—Main entities
                             Relationship with the
                                                                                                                 Proportion to
  Ranking of entities              Company                 Amount in arrear                  Ages
                                                                                                              accounts receivable


        No. 1                     Non-related                   47,434,494.30            Within 1 year                    14.01%

        No. 2                     Non-related                   47,204,375.57            Within 1 year                    13.94%

        No. 3                     Non-related                   11,162,476.52            Within 1 year                     3.30%

        No. 4                     Non-related                       7,765,369.35         Within 1 year                     2.29%

        No. 5                     Non-related                       6,094,503.95         Within 1 year                     1.80%

        Total                                                  119,661,219.69                                             35.35%
—Please refer to Note Ⅷ for more details on amount due from shareholders who hold 5% or more of
voting shares of the Company in the closing balance of accounts receivable.

5. Prepayments
Balance of prepayments as at 31 Dec. 2010 stands at RMB 29,367,891.60, which is classified according to
ages as follows:
                                         Closing amount                                         Opening amount
   Account age
                              Amount                  Proportion (%)                 Amount                    Proportion (%)

Within 1 year                  28,823,861.60                        98.15                13,620,570.45                     87.34

1-2 years                                       -                       -                 1,480,386.06                       9.49

2-3 years                           50,000.00                        0.17                  494,030.00                        3.17

Over 3 years                       494,030.00                        1.68                             -                           -

Total                          29,367,891.60                     100.00                  15,594,986.51                    100.00
—Arrears of the top five entities in the closing balance of prepayments total RMB 15,337,536.44,
accounting for 52.23% of the prepayment balance. Details are as follows:
                 Relationship with the
 Customer                                            Amount                 Account age        Proportion in total prepayments
                        Company

   Unit 1        Non-related supplier                  4,350,000.00      Within 1 year                                    14.81%

   Unit 2        Non-related supplier                  3,500,000.00      Within 1 year                                    11.92%

   Unit 3        Non-related supplier                  3,312,000.00      Within 1 year                                    11.28%


                                                               78
   Unit 4            Non-related supplier                   3,000,000.00      Within 1 year                              10.22%

   Unit 5            Non-related supplier                   1,175,536.44      Within 1 year                                 4.00%

   Total                                                  15,337,536.44                                                  52.23%
—The balance of prepayments has increased by RMB13,772,905.09 compared with the period-begin, a
decrease of 88.32%, which was mainly because the Company increased prepayments for materials
considering the supply and demand condition of raw materials and the continuous rising price of raw
materials.
—Some accounts in the closing balance of prepayments have an age over one year, which was mainly
because the Company prepaid for land payment for Nanjing Land and Resources Bureau.
—There is no amount due from shareholders who hold 5% or more of voting shares of the Company in the
balance of prepayments.

6. Other Receivables
Net amount of other receivables as at 31 Dec. 2010 stands at RMB 20,254,086.70, which is detailed as
follows according to types:
                                         Closing balance                                           Opening balance

       items                 Book balance               Bad debts provision             Book balance            Bad debts provision
                                       Proportion                   Proportion                                              Proportion
                          Amount                        Amount                     Amount        Proportion (%) Amount
                                            (%)                        (%)                                                     (%)
Significant single
amounts and make
independent
provision for
impairment losses

Accounts receivable that make provision for impairment loss according to ages combination

Normal business
 combination           21,546,983.92         99.51 1,292,897.22             6.00 13,646,670.85          99.23 804,072.78            6.00
Subtotal of
combination            21,546,983.92         99.51 1,292,897.22             6.00 13,646,670.85          99.23 804,072.78            6.00
Not significant
single amounts but
make independent
provision for
impairment losses         106,552.50          0.49     106,552.50         100.00   106,552.50             0.77 106,552.50      100.00

       Total
                       21,653,536.42        100.00 1,399,449.72             6.46 13,753,223.35         100.00 910,625.28            6.62
—Within the combination, analysis of accounts receivable that make provision for losses by balance
percentage method
                                    Closing balance                                               Opening balance
Account age
                        Book balance                 Bad debts provision            Book balance             Bade debts provision




                                                                     79
                                                                    Withdrawal                                                       Withdrawal
                                      Proportion                                                     Proportion
                      Amount                          Amount        proportion        Amount                            Amount       proportion
                                          (%)                                                           (%)
                                                                        (%)                                                             (%)
Within          1
year                 19,307,484.75        89.61% 1,158,527.27           6            7,078,992.81         51.47         410,012.09       6

1-2 years              741,965.77          3.44%      44,517.94         6            4,762,515.42         34.63         285,750.93       6

2-3 years              447,478.66          2.08%      26,848.72         6             1,111,466.62         8.08          66,688.00       6

Over 3 years          1,050,054.74         4.87%      63,003.29         6              693,696.00          5.82          41,621.76       6

Total                21,546,983.92       100.00% 1,292,897.22           6           13,646,670.85           100         804,072.78       6
—Particulars on actual cancellation of other accounts receivable in reporting period
  Name of entity             Nature of          Cancellation         Reason for           Whether arising from related transaction or not
                             accounts             amount             cancellation
Balance of partial                                                    Long-term
                               Rent              1,048.37                                                         No
        accounts                                                    irrecoverable
—Particulars of other accounts receivable on top five units in debt
                                                                     Closing balance                              Opening balance
                        Item
                                                               Amount               Proportion            Amount                 proportion
       Total of the top five units in debt and
                     proportion                                15,742,698.16              72.70%          7,199,375.89                  52.35%

—Main units of other accounts receivable
                                                                                                                              Proportion to
  Ranking of             Relationship with the
                                                                  Amount in arrear                       Ages                    accounts
        units                  Company
                                                                                                                                 receivable

        No. 1          Non-related relationship                     11,419,032.74                                                 52.74%
                                                                                                     Within 1 year

        No. 2            Related relationship                        1,787,079.84                                                  8.25%
                                                                                                     Within 1 year

                       Non-related relationship                        953,156.47                                                  4.40%
        No. 3                                                                                        Within 1 year
                      Non-related relationship
        No. 4                                                          860,814.09                    Over 1 year                   3.98%
                      Non-related relationship
        No. 5                                                          722,615.02                    Over 1 year                   3.34%

        Total                                                       15,742,698.16                                                 72.70%
—Bad debt provisions for closing other receivables with significant single amounts or insignificant but
being conducted an independent impairment test on:
                                                       Book                 Ages           Bad debt        Withdrawal              Reasons
                    Customer
                                                      balance                                                   ratio
Fangcheng County Yuli Glass Tube Co.,                                                                                            Estimatedly
                                                     106,552.50         Over 3 years       106,552.50             100.00
Ltd.                                                                                                                             uncollectible
                     Total                           106,552.50                            106,552.50




                                                                        80
—The balance of other receivables has increased by RMB 7,900,313.07 compared with the period-begin,
an increase of 57.44%, which was mainly because increase in export tax refund amount of accounts
receivable.
—There is no amount due from shareholders who hold 5% or more of voting shares of the Company in the
balance of other receivables.
—Please refer to Note Ⅷ for more details of related parties’ accounts receivable in closing balance of
other accounts receivable.

7. Inventory
Net inventory as at 31 Dec. 2010 stands at RMB 365,413,882.78, which is detailed as follows according to
types:
                                    Closing balance                                              Opening balance
        Items                           Falling price                                                Falling price
                    Book balance                          Book value            Book balance                            Book value
                                          reserve                                                      reserve

Raw materials         75,949,966.31                 -      75,949,966.31          45,832,042.31                    -     45,832,042.31

Goods in process       4,144,854.25                 -       4,144,854.25           5,337,431.41                    -      5,337,431.41

Finished goods       192,492,121.88      143,155.25      192,348,966.63          112,419,662.88        143,155.25       112,276,507.63
Self-made
half-finished         92,304,692.71                 -      92,304,692.71          70,093,927.94                    -     70,093,927.94
goods
Low-value
fugitive items             665,402.88               -           665,402.88              700,341.08                 -        700,341.08

Total                365,557,038.03      143,155.25      365,413,882.78          234,383,405.62        143,155.25       234,240,250.37
—Provisions for inventory price falling
                    Opening book           Provision for this              Decrease in this period
        Item           balance                  period              Transferring back       Writing off          Closing book balance
Finished
products                   143,155.25                           -                    -                      -              143,155.25

Total                      143,155.25                           -                    -                      -              143,155.25
—The balance of inventories increased RMB131,173,632.41compared with the year-begin, an increase of
56.00%, mainly due to the Company increased storage in the reporting period in response to the general
rising price of raw materials and good performance of sales at the period-end.

8. Financial assets available for sale
Particulars on financial assets available for sale
                    Item                                  Fair value at period-end                      Fair value at year-begin
   Tradable shares with trading moratorium                                                                                              -
                                                                             95,740,001.28
                   Total                                                                                                                -
                                                                             95,740,001.28
—On 18 Aug. 2010, China Everbright Bank listed on Shanghai Stock Exchange with shares of 24,176,768.00
owned by the Company turned into tradable shares with trading moratorium. Up to 31 Dec. 2010, the fair value of


                                                                    81
China Everbright Bank was RMB 95,740,001.28, and the change in fair value was RMB 64,911,185.28. In
accordance with relevant regulations, the Company made provision for deferred income tax liabilities of
RMB 9,736,677.79, of which the difference of RMB 55,174,507.49 recorded into capital reserve.

9. Long-term equity investment
Net amount of long-term equity investment as at 31 Dec. 2010 stands at RMB 443,373,689.60, which is
detailed as follows according to types:
                             Opening amount                                                                  Closing amount
                                                         Increase in this       Decrease in this
        Items                           Impairment
                          Amount                             period                 period             Amount         Impairment reserve
                                          reserve

Stock investment        11,850,000.00 5,850,000.00                          -                      - 11,850,000.00          5,850,000.00
Investment        to
affiliated
enterprises             29,230,000.00                -       8,770,000.00           1,296,132.63 36,703,867.37                              -

Other investments 222,193,201.04 3,298,904.81             213,604,342.00          31,828,816.00 403,968,727.04              3,298,904.81

Total                  263,273,201.04 9,148,904.81        222,374,342.00          33,124,948.63 452,522,594.41              9,148,904.81
Particulars on category of long-term equity investment are listed as follows:
—Stock investment
Name of invested           Stock        Number of        Proportion in           Invested            Closing market        Impairment
    company               nature          stock           registered              amount                 value               reserve
Shenzhen                 Corporate
                                          650,000         capital
                                                         Less thanof5%           5,850,000.00                         -    5,850,000.00
Zhonghao                  shares                           invested
Chengdu Hongbo
(Group) Ltd.             Corporate
                                         5,000,000         company               6,000,000.00                         -                 -
Industrial      Co.,       shares
Ltd.
Total                                                                           11,850,000.00                         -    5,850,000.00

—A full-amount impairment reserve has been withdrawn for the investment to Shenzhen Zhonghao
(Group) Ltd. for its inability to offset debts with assets.




                                                                   82
—Investment to affiliated entities
                                     Equity-holding    Voting rights ratio in    Total closing        Total closing           Closing net assets         Total operating
          Invested entity                                                                                                                                                          Net profit in 2010
                                       ratio (%)        invested entity (%)     assets amount       liabilities amount             amount                revenue in 2010
Qinghai FSL Lithium Energy
                                         38%                   38%               97,036,671.00             447,154.35             96,589,516.65                            -              -3,410,875.35
Exploitation Co., Ltd.
—In 2010, Qinghai Lithium Energy Exploitation Co., Ltd. increased capital, of which the registered capital of RMB 76.923 million increased to RMB 100 million.
The company acquired shares of 876.926 according to original holding proportion of 38% etc. at RMB 1 per share.
—Other equity investment
                                                                                                                                               Explanation
                                                                                                                                                       for
                                                                                                                Equity-ho         Voting      equity-holdin
                                                                                                                                                                                    Impairmen
                            Accoun                                                                              lding ratio        rights          g ratio and                                          Cash
                                         Initial         Opening         Increase/decrea         Closing                                                          Impairment         t reserve
    Invested entity          ting                                                                                     in          ratio in     voting rights                                         bonus for
                                     investment cost      balance               se               balance                                                            reserve           for this
                            method                                                                               invested         invested          ratio in                                         this period
                                                                                                                                                                                      period
                                                                                                                entity (%)       entity (%)         invested
                                                                                                                                               entity are not
                                                                                                                                                   in accord
Guangzhou Zhujiang          Cost
Asset Management            method    10,000,000.00    10,000,000.00                   -    10,000,000.00         15.38%           15.38%          In accord     -3,298,904.81                   -               -
Company Limited
Guangdong                   Cost
Development Bank            method       500,000.00       500,000.00                   -          500,000.00     少于 5%          少于 5%          In accord                   -                 -               -
Foshan Branch
Foshan Fochen Road          Cost
Development Company         method    20,757,600.00    12,175,627.38       -1,000,000.00    11,175,627.38           7.66%            7.66%         In accord                   -                 -               -
Limited
                            Cost
China Everbright Bank                 30,828,816.00    30,828,816.00      -30,828,816.00                    -       0.06%            0.06%         In accord                   -                 -   987,024.98
                            method



                                                                                             83
Shenzhen Liangke        Cost
Venture Capital         method     13,718,882.66    13,718,882.66                 -    13,718,882.66    18.50%       18.50%     In accord                 -            -            -
Company Limited
Xiamen Commercial       Cost
                                  154,969,875.00   154,969,875.00     53,604,342.00   208,574,217.00     9.99%        9.99%     In accord                 -            -            -
Bank                    method
Hefei Guoxuan           Cost
High-tech Power         method    160,000,000.00                 -   160,000,000.00   160,000,000.00    18.00%       18.00%     In accord                 -            -            -
Energy Co., Ltd.
         Total                                                                                                                                -3,298,904.81                987,024.98
—Revenue from Foshan Fochen Road Development Company Limited has been recorded into unified collection and allocation system of road-bridge tolls. The
Company regards such investments balances as right to earnings, which shall be amortized within the remaining period of business of this company. During the
report period, an investment cost of RMB 1,000,000.00 was amortized.
—The Company invested RMB 30,828,816.00 to acquired 24,176,768.00 shares of China Everbright Bank. On 18 Aug. 2010, China Everbright Bank listed on Shanghai
Exchange, since then, holding shares of the Company turned into tradable shares with trading moratorium and accordingly be transferred into available-for-sale financial assets.
—In 2010, Xiamen Commercial Bank increased capital that with a total shares from 660 million to 858 million. The Company acquired 19,780,200 shares of Xiamen
Commercial Bank according to original holding proportion of 9.99