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佛山照明(000541)公告正文

粤照明B:2016年年度报告(英文版)

公告日期:2017-03-30

Foshan Electrical and Lighting Co., Ltd.                  Annual Report 2016




      FOSHAN ELECTRICAL AND LIGHTING CO., LTD.
                                     ANNUAL REPORT 2016




                                           March 2017




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 Foshan Electrical and Lighting Co., Ltd.                                        Annual Report 2016




              Section I Important Statements, Contents and Definitions

The board of directors (the “Board”), the supervisory board (the “Supervisory Board”), as
well as the directors, supervisors and executive officers of Foshan Electrical and Lighting Co.,
Ltd. (the “Company”) hereby guarantee the factuality, accuracy and completeness of the
contents of this Report, and shall be jointly and severally liable for any false representation,
misleading statements or material omissions in this Report.
He Yong, head of the Company, Liu Xingming, accounting head for this Report, and Tang
Qionglan, head of the accounting department (head of accounting), hereby guarantee that the
Financial Report carried in this Report is factual, accurate and complete.
All directors attended the board meeting for the review of this Report.
Beijing Zhongzhengtiantong Certified Public Accountants LLP has issued a standard
auditor’s report with unqualified opinion for the Company.
The accounting data and financial report in this Report are subject to those audited by
Beijing Zhongzhengtiantong Certified Public Accountants LLP. This Report is prepared in
both Chinese and English. Should there be any understanding discrepancy between the two
versions, the Chinese version shall prevail.
The future plans and some other forward-looking statements, as well as the relevant
cautionary statements, involved in this Report shall not be considered as virtual promises of
the Company to investors. And investors are kindly reminded to be well aware of possible
risks.
The Company has described in detail in this Report the risk of market competition, the risk of
rising operating costs, the risk of falling prices of inventories and the risk of exchange rate
fluctuations. Please refer to “Possible risks” in “Outlook of the Company’s future
development” in “Section IV Performance Discussion and Analysis” of this Report.
The Board has considered and approved the following proposal for profit distribution: Based
on the total shares of 1,272,132,868, a cash dividend of RMB4.20 (tax inclusive) per 10 shares
will be distributed to all shareholders of the Company. No bonus shares will be granted, nor
will any capital reserve be converted into share capital.




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 Foshan Electrical and Lighting Co., Ltd.                                                                              Annual Report 2016




                                                  Table of Contents




Section I Important Statements, Contents and Definitions ............................................................ 2

Section II Corporate Profile and Financial Results ........................................................................ 5

Section III Business Profile ............................................................................................................. 10

Section IV Performance Discussion and Analysis ......................................................................... 14

Section V Significant Events ........................................................................................................... 39

Section VI Share Changes and Shareholders’ Profile ................................................................... 74

Section VII Preference Shares ........................................................................................................ 85

Section VIII Directors, Supervisors, Executive Officers and Staff .............................................. 86

Section IX Corporate Governance ................................................................................................. 99

Section X Corporate Bonds ........................................................................................................... 113

Section XI Financial Report .......................................................................................................... 114

Section XII Documents Available for Reference ......................................................................... 239




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 Foshan Electrical and Lighting Co., Ltd.                                                        Annual Report 2016




                                            Definitions


                     Term                                                   Definition

The Company, Company, FSL                     Foshan Electrical and Lighting Co., Ltd.

GRAM                                          Guangdong Rising Assets Management Co., Ltd.

Electronics Group                             Guangdong Electronics Information Industry Group Ltd.

GD Rising Finance                             Guangdong Rising Finance Holding Co., Ltd.

Shenzhen Rising Investment                    Shenzhen Rising Investment Development Co., Ltd.

Hong Kong Rising Investment                   Hong Kong Rising Investment Development Limited

CSRC                                          China Securities Regulatory Commission

SZSE                                          Shenzhen Stock Exchange

                                              Shareholders’ General Meeting of Foshan Electrical and Lighting Co.,
Shareholders’ General Meeting
                                              Ltd.

Board of Directors                            Board of Directors of Foshan Electrical and Lighting Co., Ltd.

Supervisory Board                             Supervisory Board of Foshan Electrical and Lighting Co., Ltd.

Annual report auditor                         Beijing Zhongzhengtiantong Certified Public Accountants LLP

Yuan, ten thousand, million, billion          RMB Yuan, RMB Ten Thousand, RMB million, RMB billion




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 Foshan Electrical and Lighting Co., Ltd.                                                                                Annual Report 2016




                     Section II Corporate Profile and Financial Results

I Corporate information

Stock name                         FSL / FSL B                                   Stock code                   000541/200541

Stock exchange                     Shenzhen Stock Exchange

Company name in Chinese            佛山电器照明股份有限公司

Abbr.                              佛山照明

Company name in English (if
                                   FOSHAN ELECTRICAL AND LIGHTING CO.,LTD
any)

Abbr. (if any)                     FSL

Legal representative               He Yong

Registered address                 No. 64, Fenjiang North Road, Chancheng District, Foshan City, Guangdong Province, P.R.China

Zip code                           528000

Office address                     No. 64, Fenjiang North Road, Chancheng District, Foshan City, Guangdong Province, P.R.China

Zip code                           528000

Company website                    www.chinafsl.com

Email                              gzfsligh@pub.foshan.gd.cn


II Contact information

                                                                Board Secretary                           Securities Representative

Name                                           Lin Yihui                                       Huang Yufen

                                               No. 64, Fenjiang North Road, Chancheng No. 64, Fenjiang North Road, Chancheng
Address                                        District,      Foshan     City,      Guangdong District,     Foshan     City,    Guangdong
                                               Province, P.R.China                             Province, P.R.China

Tel.                                           (0757)82810239                                (0757)82966028

Fax                                            (0757)82816276                                (0757)82816276

E-mail                                         fsl-yh@126.com                                  fslhyf@163.com


III Information disclosure and place where this Report is kept

Newspapers       designated   by     the    Company     for China Securities Journal, Securities Times, Securities Daily, Ta Kung Pao
information disclosure                                        (HK)

Website    designated    by    the     China     Securities
                                                              http://www.cninfo.com.cn
Regulatory Commission (CSRC) for the publication


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 Foshan Electrical and Lighting Co., Ltd.                                                                         Annual Report 2016


of this Report

                                                           Board Secretary’s Office, FSL Office Building, No. 64, Fenjiang North
Place where this Report is kept
                                                           Road, Chancheng District, Foshan City, Guangdong Province, P.R.China


IV Company registration and alteration

Credibility code                                 91440000190352575W

Changes in main business activities of the
                                                 No changes
Company after going public (if any)

Changes of controlling shareholder (if any) No changes


V Other information

The CPAs firm hired by the Company
Name                                      Beijing Zhongzhengtiantong Certified Public Accountants LLP

Office address                            13/F, Tower B, Jinyun Building, A43 Xizhimen Avenue North, Haidian District, Beijing

Accountants writing signatures            Tong Quanyong, Luo Dongri

Sponsor engaged by the Company to continuously perform its supervisory function during this Reporting Period

□ Applicable √ Not applicable


Financial advisor engaged by the Company to continuously perform its supervisory function during this Reporting
Period
□ Applicable √ Not applicable

VI Accounting and financial results

Indicate by tick mark whether the Company performed any retroactive adjustments to or restatement of its
accounting data due to changes of accounting policies or correction of accounting errors

□ Yes √ No
                                                  2016                   2015                   +/-%                   2014

Operating revenues (RMB Yuan)                  3,366,454,968.60       2,876,659,100.63                  17.03%      3,068,641,200.17

Net     profit        attributable   to
shareholders     of     the   Company          1,072,342,050.13          53,405,593.12             1,907.92%          266,125,048.97
(RMB Yuan)
Net    profit    attributable   to
shareholders of the Company
                                                351,237,317.17         150,093,497.33                  134.01%        306,310,907.76
before exceptional profit and loss
(RMB Yuan)
Net cash flows from operating
                                                289,978,768.48         188,325,189.43                   53.98%        305,638,745.34
activities (RMB Yuan)


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 Foshan Electrical and Lighting Co., Ltd.                                                                Annual Report 2016


Basic earnings per share (RMB
                                                      0.8429                0.0420        1,906.90%                0.2092
Yuan /share)

Diluted earnings per share (RMB
                                                      0.8429                0.0420        1,906.90%                0.2092
Yuan /share)

Weighted average return on equity
                                                      21.40%                 1.27%            20.13%                9.08%
(%)

                                          December 31, 2016     December 31, 2015      +/-%            December 31, 2014

Total assets (RMB Yuan)                      6,100,169,400.30      6,048,296,432.78           0.86%       3,736,704,336.40

Net     assets        attributable   to
shareholders     of     the   Company        4,990,466,577.12      5,023,546,888.12           -0.66%      3,044,585,720.58
(RMB Yuan)


VII Differences in accounting data under domestic and foreign accounting standards

1. Differences in the net profit and the net assets disclosed in the financial reports prepared under Chinese
and international accounting standards

□ Applicable √ Not applicable

No such differences for this Reporting Period.

2. Differences in the net profit and the net assets disclosed in the financial reports prepared under Chinese
and foreign accounting standards

□ Applicable √ Not applicable

No such differences for this Reporting Period.

VIII Financial results by quarter

                                                                                                          Unit: RMB Yuan

                                                 1Q                    2Q               3Q                    4Q

Operating revenues                             904,310,757.83        851,360,169.61   819,510,785.90        791,273,255.26

Net     profit        attributable   to
                                               107,776,865.30         99,148,947.42    73,179,107.88        792,237,129.53
shareholders of the Company
Net     profit   attributable      to
shareholders of the Company                    107,348,727.74         99,288,365.94    73,405,588.72         71,194,634.77
before exceptional profit and loss
Net cash flows from operating
                                               186,104,091.50        105,524,215.56    32,420,605.94        -34,070,144.52
activities

Indicate by tick mark whether there are any material differences between the financial indicators above or their
summations and those which have been disclosed in quarterly or semi-annual reports
□ Yes √ No


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 Foshan Electrical and Lighting Co., Ltd.                                                                    Annual Report 2016


IX Exceptional profit/loss
√ Applicable □ Not applicable

                                                                                                               Unit: RMB Yuan

                          Item                           2016             2015             2014                   Note

Profit/loss on disposal of non-current assets
(including       offset       asset    impairment    -5,776,457.37       -8,172,702.85    -1,287,703.94
provisions)

Government grants charged to the profit/loss
for this Reporting Period (except for the
government grants closely related to the
                                                        1,669,377.53      4,780,007.27    2,174,021.86
business of the Company and given at a
fixed quota or amount in accordance with
the State’s uniform standards)

Profit due to the situation where investment
costs     for    the      Company      to   obtain
subsidiaries, associates and joint ventures
                                                                                             -17,112.47
are lower than the enjoyable fair value of
identifiable net assets of investees when
making investments

Profit/loss     on     fair   value   changes   of
transactional financial assets and liabilities                                                            Mainly due to sale
& investment income from disposal of                                                                      through block trading
transactional financial assets and liabilities        853,216,065.17    19,472,654.77     2,962,781.37 of the Guoxuan
as well as financial assets available for sale,                                                           High-tech stock held
except for effective hedges related to routine                                                            by the Company
operations of the Company

Impairment provision reversal of accounts
receinable on which the impairment test is              3,535,749.69
carried out separately

Non-operating income and expense other
                                                       -4,774,788.19   -130,293,226.71   -51,945,691.06
than the above

Other gain and loss items that meet
                                                                           944,428.72     1,499,406.22
definition of extraordinary gain/loss

Less: Corporate income tax                            127,331,306.57    -16,925,475.37    -6,958,646.77

        Minority interests (after tax)                   -566,092.70       344,540.78       530,207.54

Total                                                 721,104,732.96    -96,687,904.21   -40,185,858.79             --

Explanation of why the Company classified an item as exceptional profit/loss according to the definition in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Exceptional Profit and Loss, or reclassified any exceptional profit/loss item given as an example in the
said explanatory announcement to recurrent profit/loss


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 Foshan Electrical and Lighting Co., Ltd.   Annual Report 2016


□ Applicable √ Not applicable
No such cases in this Reporting Period.




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 Foshan Electrical and Lighting Co., Ltd.                                                             Annual Report 2016




                                        Section III Business Profile

I Main business scope for this Reporting Period

Is the Company subject to any disclosure requirements for special industries?
No.

1. Main business and products

We have been engaged in production, R&D and sale of lighting products since our listing. Our products mainly

include conventional lighting products and LED lighting products. We have a wide variety of products with a

complete range of specifications, including fluorescent lamps, halogen lamps, energy saving lamps, motor vehicle

lamps, conventional lamps, LED light source, LED lamps, etc. With the most specifications in the lighting

industry, our products are widely used for indoor and outdoor lighting, landscape lighting, motor vehicle lighting

and so on. Upon years of development, we have won quite many honors such as the title of “The King of Lamps

in China”, and our “FSL” and “Fenjiang” brands have been certified as “Famous China Brands”.

While pushing diversified strategies, the Company set the electrical engineering business as the new engine for its

rapid development in 2016. Based on the existing electrical engineering equipment, the Company strived to

develop electrical engineering equipment covering lots of series of electrical engineering equipment and sockets.

In future, the Company would make efforts to create a strategic layout where the development of lighting products

keeping pace with electrical engineering equipment.

2. Main business model

(1) Procurement model

We mainly procure raw materials such as lamp beads, lamp holders, electronic components, aluminum substrate,

plastic parts, metal materials, quartz tubes and fuel by way of bids invitation. A bids invitation supervisory

committee consisting of personnel from several departments will be set up in the future. For every kind of our

main raw materials, we usually have a few suppliers to choose from in procurement so that the procurement prices

would be fair, the supply of raw materials in time and the good quality of the raw materials ensured.

(2) Production models

① Production of the conventional products

Concerning the conventional products, we analyze sales of every month and predict future market demand so as to

formulate a production plan for the coming month. And our workshops produce according to the plan to avoid


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 Foshan Electrical and Lighting Co., Ltd.                                                       Annual Report 2016



extra stock and at the same time ensure that there is enough for sale.

② Production according to orders

Different from the conventional lighting products which are of little variation in specifications, LED lighting

products are at a fast pace of renewal and different customers often have different requirements regarding the

products’ appearances and performance indexes. Therefore, we have to organize individualized production for

some orders for LED lighting products, export orders in particular. For this kind of orders, we formulate our

production plans based on them and then make procurement plans according to the production plans, which will

help effectively control the stock and the procurement prices of raw materials, reduce capital occupation and

improve our operating efficiency to the maximum.

③ Combination of independent production and outsourcing

With a high production capacity, we produce most of our products and parts on our own. Only a small portion of

parts and low-tech products is outsourced to sub-manufacturers, who will produce in strict accordance with our

requirements. We will also tag along their production processes and examine carefully the quality of the products

finished. In this way, our supply of products is guaranteed.

(3) Sales model

We mainly adopt a commercial agent model, selling our products to commercial agents through various channels

and setting up business divisions under the sales department to follow up the use of our products by customers and

provide relevant support. In terms of channels, besides consolidating wholesale, we will also focus on the

development of franchised stores, illumination engineering & commercial lighting, e-commerce & retail sales and

automotive lighting to minimize our weaknesses in this respect and expand the space for our survival.

3. Main driving force for business performance

(1) Rapid development of the industry

As the emerging industry involved in the country’s strategies, LEC industry rapidly developed in the world in

recent years due to its features of high efficiency and energy-saving, green environmental protection, as well as

long service life. Thanks to the rapid development of the LED industry, the Company achieved good business

performance.

(2) The Company’s own advantages

By right of the Company’s advantages in technology, brand, channel, and scale, the Company firmly grasped the

opportunities brought by the industry’s rapid development, consistently pushed forward the technology upgrade of

main products, reinforced market development, and optimized the sales structure of products through sustainable



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 Foshan Electrical and Lighting Co., Ltd.                                                                       Annual Report 2016



R&D input and technology innovation. And at the same time, by means of effective control on procurement and

manufacturing cost, the Company raised the efficiency of management and products, improved its comprehensive

competitiveness, overcame the difficulties and challenges resulted from the serious market situation, and kept the

sustainable growth of its operating revenue and profit.

4. Development stage and periodicity of the lighting industry as well as our position in the market

The recent years have witnessed the rapid rise of the LED lighting technology. Due to the sharp drop in their cost

and their remarkable performance in energy saving & emission reduction, LED lighting products have been

generally accepted by consumers, resulting in a higher and higher penetration rate as well as a fast-shrinking

market for conventional lighting products. However, after years of fast development and renewal, growth in LED

lighting has slowed down. Particularly the LED downstream with a low requirement for market access is suffering

from an obvious problem of structural overcapacity, leading to the disordered, cutthroat competition on the market.

Under the double hits by a macro economic downturn and fierce competition, large enterprises will expand

through mergers and acquisitions for stronger competitiveness, while some small and medium ones can only face

the fate of being washed out of the market due to lack of competitiveness, which is bringing the entire industry

into an integration phase. As a necessity for daily life, lighting products are mainly under the influence of the

macro economy and the real estate sector but are little affected by seasons and regions.

Generally speaking, China’s lighting industry is insufficiently centralized with no overwhelmingly superior

enterprises despite an enlarging market share of competitive brands. Upon years of development, we have become

a leading and quite competitive lighting enterprise with strong competitiveness in brand, production scale, channel,

R&D, etc.



II Significant changes in main assets

1. Significant changes in main assets


               Main assets                                            Reason for any significant change


Fixed assets                                No significant changes

Intangible assets                           No significant changes

                                            Increased 120.01% from the opening amount mainly due to increase in ongoing
Construction in progress
                                            construction projects

Available-for-sale financial assets         Mainly due to sale through block trading of some of the Guoxuan High-tech stock held



                                                                                                                                   12
 Foshan Electrical and Lighting Co., Ltd.                                                       Annual Report 2016


                                            by the Company


2. Main assets overseas

□ Applicable √ Not applicable

III Core competitiveness analysis

Is the Company subject to any disclosure requirements for special industries?
No.
The core competitiveness of the Company mainly reflects on fours aspects listed below:
Channel advantage
The Company has been sticking to the marketing strategy of deeply focusing and refining channels. Through years
of development and experience accumulation, the Company currently has four major sales channels, which contains
the circulation and wholesales channel, the exclusive shop channel, the E-business retail channel, and the
engineering commercial lighting channel, forming a marketing network covering the whole country. Replying on
strong and perfect sales channels, products of the Company can rapidly enter the market, which has significantly
improved the Company’s market development capability and competitiveness.
Brand advantage
The Company keeps focusing on the positioning, core value, and features of FSL brand, and continually improved
the brand recognition and reputation of FSL brand by product design, end sales, advertisement, special lighting
exhibition, and so on. At present, FSL and Fen Jiang among the three brands of the Company are both famous
trademarks in China. The FSL brand has become one of the most influential and popular brands in China, and the
powerful brand influence has become the main driver for continuous sales growth of the Company.
Technology advantage
The Company has always been attaching importance to R&D of new products and technologies, increasing the input
on independent innovation on technologies and products, and perfecting the improvement process for R&D and
technique of all products. The Company absorbs and trains technical talents, set up innovative incentive mechanism
and performance mechanism, and fully provides with supports in fund, talents, and mechanisms.
Scale advantage
As one of the enterprises to first step into the industry of producing and selling lighting products, the Company
possesses the manufacture culture of refining production and the large-scale manufacturing capability by years of
experience accumulation. The Company has production bases in Foshan, Nanjing and Xinxiang. The large-scale
and centralized production brings obvious economic benefits to the Company, which not only shows in manufacture
cost of products, but also shows in aspects such as raw material procurement and product pricing.




                                                                                                               13
 Foshan Electrical and Lighting Co., Ltd.                                                      Annual Report 2016




                   Section IV Performance Discussion and Analysis

I Overview


(I) Summary

In 2016, with great downward pressure and limited driving forces, the international and domestic economies both

slowed down in growth. In the lighting industry, despite a fast-growing LED market, LED enterprises were

excessive in number, causing increasingly fierce competition. In face of the unfavorable macro-environment and

the intense competition in the industry, the Company continued to follow the guideline of “Adjust the Structure,

Stabilize Growth, Attach Importance to Management and Improve Business Results”. Keeping in mind the targets

it set at the beginning of the year, as well as its development strategy, the Company beefed up product

development for a better product mix, strengthened marketing and improved management. As a result, the

business targets for the year have been excellently achieved. For the Reporting Period, the Company achieved

operating revenues of RMB 3366.4550million, up 17.03 % from the year earlier. To be specific, LED products

generated sales revenue of RMB 2045.6815million, representing a YoY increase of 44.43 %, while traditional

lighting products created sales revenue of RMB 1293.5391million, down 9.51 % from last year; the domestic sales

revenue stood at RMB 2147.7421million, a 11.66% increase from last year, while the overseas sales revenue

stood at RMB 1218.7129million, up 27.84% from the year earlier. The total profits stood at RMB 1273million

(including an investment income of RMB 853million from the sale of the Guoxuan High-tech stock in the

Reporting Period), up 2668.32 % year on year; and the net profits attributable to the shareholders of the listed

Company stood at RMB 1072million, representing a YoY rise of 1907.92 %.

(II) What we have done in 2016:

1. Reinforced R&D, and constantly launched new products

Based on LEC product’s features of short service life and rapid renewing, we focused on customers, insisted on

more input on R&D and product innovation, constantly built the competitive technology and R&D platform. We

put an emphasis on user survey and basic research, subdivided the product market via independent R&D and

external cooperation, continuously researched and developed new products, as well as launched them to the

market, so that our hard efforts would result to the transfer of our image as the wholesaler of big products in

circulation. In the Reporting Period, we spent R&D expense of RMB 110.07million, representing a year-on-year

increase of 18.49 %. We applied for 61patents, of which there’re 10 patents for invention, 33 patents of utility

models, 18 design patents. We accomplished 195 big series, of which there’re 1009 items in new product

                                                                                                              14
 Foshan Electrical and Lighting Co., Ltd.                                                       Annual Report 2016



development with specifications, and 269 items in technology and technique improvement with specifications.

The launch of new products enriched our product line, improved our market competitiveness, and brought growth

point for our sales revenue and profit.

2. Optimized channel construction, and expanded development space

In the Reporting Period, we continued to deeply dig in channel enlargement, and optimized channel construction.

In terms of domestic sales, we simultaneously promoted the core and emerging channels, and constantly

emphasized on developing new channels while keeping the advantaged channels, and as a result we achieved a

large growth of sales revenue in channels including exclusive shops, e-commerce, industrial mining, and motor

vehicles. In the Reporting Period, as for the exclusive chop channel, we newly increased 242exclusive shops,

contributing to 928 exclusive shops in total. As for the e-commerce channel, we conducted sales promotion while

keeping pace with Tmall and JD. In aspect of engineering commercial lighting, we organized special teams to

positively participate in engineering projects in various hidden channels. In terms of overseas sales, we made

breakthroughs in factors covering brand, client, product, and area. We strived to promote our FSL self-owned

brand, constantly improved the sales volume for our overseas self-owned brand, and successfully sold out our FSL

self-owned-brand products in 30 countries and regions in 2016, reaching a 66% year-on-year growth of sales

volume for FSL self-owned brand. We initiatively and deeply dug out customer demands, continuously intensify

our cooperation with the existing major customers, and sustainably conducted development of major customers.

We deeply developed LED business with the existing traditional customers, urged the constant optimization of

product structure in overseas sales, and reached 60% LED product sales in the whole overseas sales.

3. Implemented the precise production, and improved the operating efficiency

In the Reporting Period, we put forward the working subject for production management as “creating benefits via

precise production”. We saved human resources cost and improved production efficiency through improving the

production automation level. We cut down procurement cost through mechanisms such as sunshine procurement,

competitive bidding, and competitive negotiation. We also lowered cost and raised efficiency through optimizing

design, as well as introducing new materials and techniques. We strictly controlled waste and improved

production efficiency via enhancing the scheduling management, as well as the management and control on

production process. We decreased the risk of product’s market quality via executing the quality objective

appraisal system, as well as supervision and review on internal control of quality. We strictly implemented the

budget management system, utilized the idle fund to purchase the principal-protected financing products, so as to

improve the service efficiency of capital. In the Reporting Period, our gross margin increased by 1.17% as

compared with last year, and expense decreased by 6.76% as compared with last year.


                                                                                                               15
 Foshan Electrical and Lighting Co., Ltd.                                                                   Annual Report 2016



4. Established the subsidiary for electrical engineering, and increased our profit growth point

In Oct 2016, we established the subsidiary for electrical engineering. While based on our brand advantage,

channel advantage, as well as the abundant experience in production, operation, and management, we made great

efforts on electrical engineering equipment, and as a result, set the basis for our strategy of simultaneous

development of lighting products and electrical engineering equipment in future. In respect of product, we

organized the excellent R&D team in the industry, so that to lay the root for the extension of electrical engineering

equipment in later stage. In respect of channel, we depended on our current channel advantages, integrated

channel resources, applied incentive sales policy, and therefore aroused the enthusiasm of agencies. In the

Reporting Period, we gained sales revenue in electrical engineering equipment of RMB 70.16million, showing a

year-on-year increase of 90%.




II Analysis of main business

1. Overview

See “I Overview” in “Performance Discussion and Analysis”.

2. Revenues and costs

(1) Breakdown of operating revenues

                                                                                                             Unit: RMB Yuan

                                        2016                                     2015

                                             As a percentage of                       As a percentage of
                                                                                                                 +/-%
                            Amount           operating revenues      Amount           operating revenues
                                                    (%)                                      (%)

Operating revenues        3,366,454,968.60                 100%    2,876,659,100.63                 100%                17.03%

By business segment

Lighting fixtures and
                          3,366,454,968.60             100.00%     2,876,659,100.63             100.00%                 17.03%
lamps

By product

LED products              2,045,681,465.82                60.77%   1,416,365,037.13                49.24%               44.43%

Traditional lighting
                          1,293,539,060.72                38.42%   1,429,560,217.10                49.70%               -9.51%
products

Others                      27,234,442.06                 0.81%      30,733,846.40                 1.07%             -11.39%

By geographical segment


                                                                                                                             16
 Foshan Electrical and Lighting Co., Ltd.                                                                                   Annual Report 2016


China                       2,147,742,100.25                  63.80%      1,923,383,563.07                     66.86%                   11.66%

Overseas                    1,218,712,868.35                  36.20%        953,275,537.56                     33.14%                   27.84%


(2) Business segments, products or geographical segments contributing over 10% of the operating revenues
or profit

√ Applicable □ Not applicable

Is the Company subject to any disclosure requirements for special industries?
No.
                                                                                                                               Unit: RMB Yuan

                                                                                   Increase/decrease                        Increase/decrease
                                                                                                       Increase/decrease
                          Operating                           Gross profit rate      of operating                             of gross profit
                                          Operating cost                                               of operating cost
                           revenue                                  (%)            revenue over last                        rate over last year
                                                                                                       over last year (%)
                                                                                         year (%)                                  (%)

Classified by industry:

Lighting fixtures
                     3,366,454,968.60 2,518,164,099.97                 25.20%                 17.03%             15.22%                  1.17%
and lamps

Classified by product:

LED lighting
                     2,045,681,465.82 1,583,097,371.71                 22.61%                 44.43%             41.27%                  1.73%
products

Traditional
                     1,293,539,060.72     916,616,441.30               29.14%                 -9.51%            -12.12%                  2.10%
lighting products

Others                    27,234,442.06     18,450,286.96              32.25%                -11.39%            -15.56%                  3.34%

Classified by region:

China                2,147,742,100.25 1,594,275,715.11                 25.77%                 11.66%             10.37%                  0.87%

Overseas             1,218,712,868.35     923,888,384.86               24.19%                 27.84%             24.66%                  1.93%

Where the Company’s accounting standard of the main business data above changed during the reporting period, give the main
business data of the latest year adjusted according to the accounting standard at the end of the reporting period:
□ Applicable √ Inapplicable


(3) Whether revenue from physical sales is higher than service revenue

√ Yes □ No
  Business segment              Item                   Unit                       2016                  2015                     +/-%

                         Sales volume          Piece                              871,948,420            837,767,920                     4.08%
Lighting fixtures and
                         Output volume         Piece                              881,564,257            827,174,901                     6.58%
lamps
                         Inventory             Piece                              133,785,918            124,170,082                     7.74%

Reason for any over 30% YoY movements in the data above

                                                                                                                                                17
 Foshan Electrical and Lighting Co., Ltd.                                                                              Annual Report 2016


□ Applicable √ Not applicable

(4) Execution progress of major signed sales contracts in this Reporting Period

□ Applicable √ Not applicable

(5) Breakdown of operating costs

By business segment and product
                                                                                                                        Unit: RMB Yuan

                                                       2016                                  2015

                                                            As a percentage                       As a percentage
Business segment             Item                                                                                            +/-%
                                             Amount         of operating costs     Amount         of operating costs
                                                                   (%)                                   (%)

Lighting fixtures
                                       2,518,164,099.97              100.00% 2,185,558,581.31              100.00%               15.20%
and lamps

Lighting fixtures
                    Raw materials      1,696,469,566.51               67.37% 1,416,799,337.80               64.83%               19.70%
and lamps

Lighting fixtures
                    Labor cost          504,117,326.14                20.02%     427,667,401.28             19.57%               17.90%
and lamps

Lighting fixtures Depreciation and
                                        299,126,920.36                11.88%     319,242,900.55             14.61%               -6.30%
and lamps           other

Lighting fixtures
                    Others                  18,450,286.96                0.73%    21,848,941.68                1.00%            -15.60%
and lamps

                                                                                                                 Unit: RMB Yuan

                                                       2016                                  2015

                                                            As a percentage                       As a percentage
     Product                 Item                                                                                            +/-%
                                             Amount         of operating costs     Amount         of operating costs
                                                                   (%)                                   (%)

LED products        Raw materials      1,139,950,591.51               45.27%     713,381,463.13             32.64%               59.80%

LED products        Labor cost          264,639,920.23                10.51%     246,143,230.85             11.26%                  7.50%

                    Depreciation and
LED products                            178,506,859.97                   7.09%   161,101,174.91                7.37%             10.80%
                    other

LED products        Subtotal           1,583,097,371.71               62.87% 1,120,625,868.89               51.27%               41.30%

Traditional
                    Raw materials       556,518,975.00                22.10%     703,417,874.67             32.18%              -20.90%
lighting products

Traditional
                    Labor cost          239,477,405.91                   9.51%   181,524,170.43                8.31%             31.90%
lighting products

Traditional         Depreciation and    120,620,060.39                   4.79%   158,141,725.64                7.24%            -23.70%



                                                                                                                                        18
    Foshan Electrical and Lighting Co., Ltd.                                                                       Annual Report 2016


lighting products other

Traditional
                     Subtotal               916,616,441.30            36.40% 1,043,083,770.74              47.73%             -12.10%
lighting products

Others               Others                    18,450,286.96           0.73%    21,848,941.68               1.00%             -15.60%

-                    Total                 2,518,164,099.97         100.00% 2,185,558,581.31             100.00%               15.20%


(6) Changes in the scope of the consolidated financial statements for this Reporting Period


√ Yes □ No

One new entity is included in the consolidation scope for this Reporting Period, namely, FSL Zhida Electric

Technology Co., Ltd., newly incorporated with a registered capital of RMB50 million and in which the Company

holds a stake of 51%. Meanwhile, one entity is excluded from the consolidation scope as compared with 2015. A

creditor of subsidiary Suzhou Mont Lighting Co., Ltd. (Suzhou Mont) applied to the court for Suzhou Mont’s

bankruptcy. On June 2, 2016, the Suzhou Industrial Park court appointed Jiangsu Yingyuan Law Firm to be

Suzhou Mont’s custodian through the Decision (2016) Suzhou 0591 Civil Bankruptcy No. 03. And the control of

the Company over Suzhou Mont has ceased since that day. Pursuant to the accounting standards for business

enterprises, the Company has excluded Suzhou Mont from its consolidation scope since June 2016.

(7) Major changes in the business, products or services in this Reporting Period

□ Applicable √ Not applicable

(8) Main customers and suppliers

Main customers
Total sales to top five customers (RMB Yuan)                                                                          453,921,650.54

Total sales to top five customers as a percentage of the
                                                                                                                               13.48%
total sales for this Reporting Period (%)

Total sales to related parties among top five customers as
a percentage of the total sales for this Reporting Period                                                                       0.00%
(%)



Information about top five customers
                                                                                           As a percentage of the total sales for this
     No.                        Customer                       Sales amount (RMB Yuan)
                                                                                                     Reporting Period (%)

1             Customer A                                                  178,894,550.33                                        5.31%

2             Customer B                                                   99,856,231.03                                        2.97%



                                                                                                                                     19
    Foshan Electrical and Lighting Co., Ltd.                                                                    Annual Report 2016


3            Customer C                                                  68,775,707.72                                       2.04%

4            Customer D                                                  60,385,200.44                                       1.79%

5            Customer E                                                  46,009,961.02                                       1.37%

Total                              --                                   453,921,650.54                                      13.48%

Other information about the main customers

√ Applicable □ Not applicable

None of the top 5 customers are related parties of the Company.


Main suppliers
Total purchases from top five suppliers (RMB Yuan)                                                                 330,396,017.96

Total purchases from top five suppliers as a percentage of
                                                                                                                            15.42%
the total purchases for this Reporting Period (%)

Total purchases from related parties among top five
suppliers as a percentage of the total purchases for this                                                                    4.39%
Reporting Period (%)



Information about top five suppliers
                                                                                         As a percentage of the total purchases for
      No.                       Supplier                 Purchase amount (RMB Yuan)
                                                                                                this Reporting Period (%)

1              Supplier A                                                94,159,851.42                                       4.39%

2              Supplier B                                                70,306,793.68                                       3.28%

3              Supplier C                                                65,489,158.75                                       3.06%

4              Supplier D                                                55,099,273.74                                       2.57%

5              Supplier E                                                45,340,940.37                                       2.12%

Total                               --                                  330,396,017.96                                      15.42%

Other information about the main suppliers

√ Applicable □ Not applicable
Among the top 5 suppliers, the 1st supplier is a related party of the Company while the other 4 are not.

3. Expense

                                                                                                          Unit: RMB Yuan

                                        2016             2015                +/-%             Reason for any significant change

Selling expenses                   204,777,965.73      203,112,498.50               0.82%

Administrative expenses            211,412,262.47      241,585,514.09            -12.49%



                                                                                                                                  20
 Foshan Electrical and Lighting Co., Ltd.                                                       Annual Report 2016


Finance costs                    -28,457,453.89        -28,871,124.02      1.43%



4. R&D input


√ Applicable □ Not applicable

The Company always took science and technology as the first priority, paid attention to technology R&D,

constantly researched and developed new products and technologies meeting market demands, promoted the

optimization and upgrade of product structure, improved the technology content of products, and improved the

core competitiveness of the Company. Meanwhile, the Company strengthened the research on technique and

technology of products, so as to cut down product cost and improve quality. In the Reporting Period, the Company

totally spent R&D input of RMB 110.07million, occupying by3.27% of operating revenue of the Reporting

Period.


Information about R&D input:
                                             2016                       2015                    +/-%

Number of R&D personnel                                     259                      231                  12.12%
R&D personnel as a percentage
                                                          2.78%                    2.88%                  -0.10%
in the total employees
R&D input (RMB Yuan)                              110,070,467.56           92,891,920.00                  18.49%
R&D input as a percentage in
                                                          3.27%                    3.23%                   0.04%
operating revenues
Capitalized R&D input (RMB
                                                            0.00                    0.00                   0.00%
Yuan)
Capitalized R&D input as a
percentage in the total R&D                               0.00%                    0.00%                   0.00%
input

Reasons for any significant YoY change in the percentage of the R&D input in the operating revenues

□ Applicable √ Not applicable



Reason for any sharp variation in the percentage of the capitalized R&D input and rationale

□ Applicable √ Not applicable


5. Cash flows

                                                                                              Unit: RMB Yuan

                Item                         2016                       2015                    +/-%

Subtotal of cash inflows from
                                              3,266,614,809.01          2,904,539,258.69                  12.47%
operating activities

Subtotal of cash outflows from                2,976,636,040.53          2,716,214,069.26                   9.59%


                                                                                                               21
 Foshan Electrical and Lighting Co., Ltd.                                                      Annual Report 2016


operating activities

Net cash flows from operating
                                            289,978,768.48             188,325,189.43                    53.98%
activities

Subtotal of cash inflows from
                                            982,592,873.51              30,861,512.16                 3,083.88%
investing activities

Subtotal of cash outflows from
                                            720,093,967.08              68,596,503.73                  949.75%
investing activities

Net cash flows from investing
                                            262,498,906.43             -37,734,991.57                  795.64%
activities

Subtotal of cash inflows from
                                             10,000,000.00
financing activities

Subtotal of cash outflows from
                                             15,901,660.85             215,284,023.90                   -92.61%
financing activities

Net cash flows from financing
                                             -5,901,660.85            -215,284,023.90                    97.26%
activities

Net increase in cash and cash
                                            545,737,534.17             -56,155,127.23                 1,071.84%
equivalents

Explanation of why the data above varied significantly
√ Applicable □ Not applicable

1. The net cash flows from operating activities increased 53.98% from last year mainly because last year, the

compensations for false stock statements were paid as required by the judgment of the court.

2. The cash inflows from investing activities increased 3083.88% from last year mainly because of the sale

through block trading of some of the Guoxuan High-tech stock held by the Company.

3. The cash outflows from investing activities increased 949.75% from last year mainly because of the bank

wealth management products purchased and the investments made in external parties.

4. The net cash flows from investing activities increased 795.64% from last year mainly because of the sale

through block trading of some of the Guoxuan High-tech stock held by the Company.

5. The cash inflows from financing activities were the cash received from minority shareholder investments by

subsidiaries.

6. The cash outflows from financing activities decreased 92.61% from last year mainly because a smaller amount

of cash dividends were distributed.

7. The net cash flows from financing activities increased 97.26% from last year mainly because a smaller amount

of cash dividends were distributed.

8. The net increase in cash and cash equivalents increased 1071.84% from last year mainly because of the sale



                                                                                                              22
 Foshan Electrical and Lighting Co., Ltd.                                                                                 Annual Report 2016



through block trading of some of the Guoxuan High-tech stock held by the Company.


Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period

√ Applicable □ Not applicable

For the Reporting Period, the net operating cash flows stood at RMB 289,978,768.48 yuan while the net profits

stood at RMB 1,073,256,393.74 yuan, representing a difference of RMB-783,277,625.26 yuan, mainly because of

the sale through block trading of some of the Guoxuan High-tech stock held by the Company.


III Analysis of non-core business

√ Applicable □ Not applicable
                                                                                                                    Unit: RMB Yuan

                                                     As a percentage of
                             Amount                                                  Source/reason                   Recurring or not
                                                      total profit (%)

                                                                            Sale of tradable shares in
Investment income              882,079,521.77                    69.28% some investees & receipt of No
                                                                            bonuses from investees

                                                                            Bad-debt and inventory
Asset impairment                25,640,511.08                     2.01%                                       No
                                                                            falling price provisions

Non-operating                                                               Government            subsidies
                                 3,740,686.27                     0.29%                                       No
revenue                                                                     received and others

Non-operating                                                               Disposal of non-current
                                12,622,554.30                     0.99%                                       No
expense                                                                     assets


IV Analysis of assets and liabilities

1. Significant changes in the asset composition

                                                                                                                       Unit: RMB Yuan

                        December 31, 2016                 December 31, 2015

                                         As a                                As a       Change in
                                     percentage of                       percentage of percentag       Reason for any significant change
                      Amount                             Amount
                                      total assets                        total assets   e (%)
                                         (%)                                 (%)

                    1,479,283,642.                                                                   Sale of some of the Guoxuan High-tech
Monetary funds                             24.25% 935,241,205.20              15.46%       8.79%
                               54                                                                    stock

Accounts            595,257,954.0                                                                    Stop of the use of trade acceptance bills
                                            9.76% 366,401,130.72               6.06%       3.70%
receivable                      0                                                                    in settlement with customers




                                                                                                                                            23
 Foshan Electrical and Lighting Co., Ltd.                                                                                       Annual Report 2016


                          753,681,605.1
Inventories                                         12.36% 559,651,928.21             9.25%     3.11% Stock-up for growing sales
                                          9

                                                                                                         Mainly due to the acquisition of a
Long-term equity 210,394,932.6                                                                           32.85% stake in Primatronix (Nanho)
                                                     3.45%        382,637.52          0.01%     3.44%
investments                               9                                                              Electronics Ltd. at RMB0.18 billion in
                                                                                                         the Current Period

                          446,006,929.6
Fixed assets                                         7.31% 484,436,218.17             8.01%     -0.70%
                                          6

Construction         in                                                                                  More input to ongoing construction
                          71,479,325.91              1.17% 32,488,518.68              0.54%     0.63%
progress                                                                                                 projects


2. Assets and liabilities measured at fair value

√ Applicable □ Not applicable
                                                                                                                           Unit: RMB Yuan

                                              Profit/loss on
                                                               Cumulative fair     Impairment
                                                fair value                                       Purchased in        Sold in this
                          Opening                              value changes provided in this                                          Closing
        Item                               changes in this                                      this Reporting        Reporting
                           balance                               charged to        Reporting                                           balance
                                               Reporting                                           Period              Period
                                                                   equity            Period
                                                 Period

Financial assets

1.      Financial
assets at fair
value through
profit/loss                 51,600.00                                                                                   51,600.00
(excluding
derivative
financial assets)

2.
Available-for-sa 2,787,166,401.                                1,308,399,369.                                                        1,427,901,09
                                                                                                                    965,244,565.11
le       financial                   96                                       22                                                              6.63
assets

Subtotal       of 2,787,218,001.                               1,308,399,369.                                                        1,427,901,09
                                                                                                                    965,244,565.11
financial assets                     96                                       22                                                              6.63

Total    of    the 2,787,218,001.                              1,308,399,369.                                                        1,427,901,09
                                                                                                                    965,296,165.11
above                                96                                       22                                                              6.63

Financial
                                 0.00                                                                                                         0.00
liabilities
Significant changes in the measurement attributes of the main assets in this Reporting Period

□ Yes √ No




                                                                                                                                                 24
    Foshan Electrical and Lighting Co., Ltd.                                                                                          Annual Report 2016


3. Restricted asset rights as of the end of this Reporting Period

Not applicable.

V Investments made

1. Total investments made

√ Applicable □ Not applicable
Investments made in this Reporting Period Investments made in the prior year (RMB
                                                                                                                               +/-%
                     (RMB Yuan)                                          Yuan)

                                  220,507,350.00                                                  0.00                                                       -


2. Significant equity investments made in this Reporting Period

√ Applicable □ Not applicable
                                                                                                                                 Unit: RMB Yuan

                                              The                                                                                                   Index
                                             Compa Source                                   Progres                Profit/l                           to
                                 Amoun                                                                   Project              Lawsuit
               Main    Way of                 ny’s     of               Term of Type of s as of                   oss for              Disclos disclose
Investe                           t of                         Partner                                     ed                    s
           busines investm                   shareho investm             investm investm balance                   Reporti              ure date      d
     e                           investm                          s                                      earning              involve
                s        ent                  lding     ent                ent     ent          sheet                ng                 (if any) informa
                                   ent                                                                      s                   d
                                             percent funds                                      date               Period                          tion (if
                                              age                                                                                                   any)

           Product
           ion and
                                                                                            The
           operati
                                                                                            32.85%
           on of
                                                                                            stake in
           electric
                                                                                            Primatr
           al
                                                                                            onix
Primatr product
                                                                                            (Nanho
onix       ,                                          The
                                                                                            )
(Nanho commu                     180,00               Compa                      Equity                                                            www.c
                       Acquisi                                                              Electro                558,68               09/03/2
)          nication              0,000.0 32.85% ny’s          None      N/A     acquisit                   0.00              None                 ninfo.c
                       tion                                                                 nics                      6.07              016
Electro product                          0            own                        ion                                                               om.cn
                                                                                            Ltd. has
nics       , plastic                                  funds
                                                                                            been
Ltd.       product
                                                                                            transfer
           , mould
                                                                                            red to
           product
                                                                                            the
           , radio
                                                                                            Compa
           transmi
                                                                                            ny
           ssion
           equipm


                                                                                                                                                            25
Foshan Electrical and Lighting Co., Ltd.   Annual Report 2016


       ent,
       handset
       (mobile
       phone),
       LED
       lighting
       product
       ;
       Import
       and
       export,
       as well
       as the
       support
       ing
       busines
       s for
       the
       aforesai
       d
       commo
       dities
       ( not
       related
       to
       commo
       dities
       manage
       d by the
       State-tr
       ading
       busines
       s, and
       should
       be
       applied
       accordi
       ng to
       related
       state
       rules if
       the
       commo
       dity is


                                                          26
 Foshan Electrical and Lighting Co., Ltd.                                                                      Annual Report 2016


         related
         to
         quota,
         license
         manage
         ment,
         and
         other
         special
         rules);
         Leasing
         busines
         s of
         self-ow
         ned
         plants
         and the
         support
         ing
         dormito
         ries in
         NO.100
         Busha
         Road,
         Nanwa
         n
         Street,
         Longga
         ng
         District

         Product                                                            The
         ion and                                                            30%
Foshan operati                                                              stake in
Chanch on of                                                                Foshan
ang      lamps,                                                             Chanch
                                            The
Electric electric                                                           ang
                                            Compa                Equity                                                   www.c
Applia lighting Acquisi 40,507,                                             Electric          5,984,9           10/19/2
                                    30.00% ny’s    None   N/A   acquisit              0.00             None              ninfo.c
nces     product tion      350.00                                           Applian            09.62            016
                                            own                  ion                                                      om.cn
(Gaomi s and                                                                ces
                                            funds
ng)      accesso                                                            (Gaomi
Co.,     ries, as                                                           ng)
Ltd.     well as                                                            Co.,
         the                                                                Ltd. has
         related                                                            been


                                                                                                                                  27
 Foshan Electrical and Lighting Co., Ltd.                                                                                     Annual Report 2016


           installat                                                                transfer
           ion and                                                                  red to
           consulti                                                                 the
           ng                                                                       Compa
           service                                                                  ny

                                 220,50
                                                                                                           6,543,5
Total           --         --    7,350.0     --       --        --   --        --         --           0               --          --        --
                                                                                                            95.69
                                      0


3. Significant non-equity investments ongoing in this Reporting Period

□ Applicable √ Not applicable

4. Financial investments

(1) Securities investments

√ Applicable □ Not applicable
                                                                                                                            Unit: RMB Yuan
                                                     Profit/lo
                                                       ss on          Cumulat                                              Source
 Variety                                                                       Purchas         Profit/lo
                                       Account          fair          ive fair         Sold in
          Code of Name of Initial                                                ed in           ss in                        of
   of                                    ing Opening value             value            this             Closing Account
                                                                                  this           this
          securitie securitie investm measure book changes            changes          Reporti            book            investm
securitie                                                                      Reporti         Reporti
                                        ment   value in this          charged            ng               value ing title
             s         s      ent cost                                             ng             ng                         ent
    s                                   model        Reporti             to            Period
                                                                                Period          Period
                                                         ng            equity                                               funds
                                                      Period
                                                                                                                              Availabl
                       Guoxua
Domesti                                      Fair      2,708,5            1,259,5                                  1,355,3 e-for-sal
                       n           160,000                                                     965,244 869,297                            Own
c/overse 002074                              value     28,165.            31,308.                                  83,288. e
                       High-tec ,000.00                                                        ,565.11 ,039.05                            funds
as stock                                     method           00              90                                        49 financia
                       h
                                                                                                                              l asset

                                                                                                                              Availabl
Domesti                China                 Fair                                                                             e-for-sal
                                   30,828,             78,638,            48,868,                      3,523,8 72,517,                    Own
c/overse 601818 Everbrig                     value                                                                            e
                                    816.00                 236.96         060.32                           83.26     808.14               funds
as stock               ht Bank               method                                                                           financia
                                                                                                                              l asset

                                                                                                                              Availabl
Domesti                                                                                                                       e-for-sal
                       Xiamen 292,574 Cost            292,574                                                      292,574                Own
c/overse N/A                                                                                                                  e
                       Bank        ,133.00 method      ,133.00                                                     ,133.00                funds
as stock                                                                                                                      financia
                                                                                                                              l asset

                       Foshan                                                                                                 Availabl
Domesti                            500,000 Cost       500,000                                                      500,000                Own
           N/A         branch                                                                                                 e-for-sal
c/overse                               .00 method             .00                                                       .00               funds
                       of                                                                                                     e


                                                                                                                                                  28
 Foshan Electrical and Lighting Co., Ltd.                                                                       Annual Report 2016


as stock             Guangd                                                                                     financia
                     ong                                                                                        l asset
                     Develop
                     ment
                     Bank

                                                                                                                Held-for
                                          Fair
                                60,039,             60,039,                                 27,635.             -trading Own
Other      205007 7 Days                  value
                                 000.00             000.00                                      14              financia funds
                                          method
                                                                                                                l asset

                                                                                                                Held-for
                                          Fair
                                140,001            140,001                                  131,177             -trading Own
Other      205008 14 Days                 value
                                ,000.00             ,000.00                                     .73             financia funds
                                          method
                                                                                                                l asset

                                                                                                                Held-for
                                          Fair
           205010               19,841,             19,841,                                 45,661.             -trading Own
Other                28 days              value
                                 000.00             000.00                                      48              financia funds
                                          method
                                                                                                                l asset

                                                                                                                Held-for
                                          Fair
                                19,800,             19,800,                                 1,342.2             -trading Own
Bond       204001 GC001                   value
                                 198.00             198.00                                       3              financia funds
                                          method
                                                                                                                l asset

                                                                                                                Held-for
                                          Fair
                                79,803,             79,803,                                 26,965.             -trading Own
Bond       204004 GC004                   value
                                 192.00             192.00                                      79              financia funds
                                          method
                                                                                                                l asset

                                                                                                                Held-for
                                          Fair
                               238,911,            238,911,                                112,566.             -trading Own
Bond       204007 GC007                   value
                                 945.00             945.00                                      52              financia funds
                                          method
                                                                                                                l asset

                                                                                                                Held-for
                                          Fair
                                19,901,             19,901,                                 23,161.             -trading Own
Bond       204014 GC014                   value
                                 990.00             990.00                                      39              financia funds
                                          method
                                                                                                                l asset

                                                                                                                Held-for
Domesti                                   Fair
                                7,005.0             7,005.0                                 5,018.1             -trading Own
c/overse 300456 Navior                    value
                                      0                  0                                       0              financia funds
as stock                                  method
                                                                                                                l asset

                                1,062,2             3,658,5        1,308,3                            1,720,9
                                                                                    965,244 873,194
Total                           08,279.      --     45,864.   0.00 99,369.   0.00                     75,229.      --       --
                                                                                    ,565.11 ,450.69
                                     00                 96             22                                 63

Disclosure    date    of    the 01/23/2014



                                                                                                                                 29
 Foshan Electrical and Lighting Co., Ltd.                                                                                                Annual Report 2016


announcement about the
board’s consent for the
securities investment

Disclosure      date    of     the
announcement about the
general meeting’s consent
for       the          securities
investment (if any)

Note: The funds for the “pledged repo” and “reverse repo of government bonds” (“other” and “bond” in the table

above) were strictly controlled within the line approved by the board, without use out of line. In order to better use

the funds, we carried out repeated investment in the mature investment products above in multiple transactions. As

such, the single investment costs for the “other” and “bond” were their accumulative amounts which were

repeatedly invested within the first quarter of 2016.

On March 24, 2016, the Eighth Board convened a third meeting, which resolved on the termination of the said

securities investment since April 2016. And the Company no longer conducts such business from April 2016.

(2) Investment in derivative financial instruments

□ Applicable √ Not applicable
No such cases in this Reporting Period

5. Use of funds raised

□ Applicable √ Not applicable
No such cases in this Reporting Period.

VI Sale of major assets and equity interests

1. Sale of major assets

√ Applicable □ Not applicable
                                               Net                Ratio                         Relatio               Credito Execute
                                                                                                           Owners
                                              profit             of the                          nship                  r’s     d as
                                                                                                           hip of
                                             contrib               net                          betwee                 rights schedul                Index
                                Transac                Effect                        Related                 the
                                             uted to              profit                         n the                  and      ed or                 to
Transac                              tion              on the               Pricing -party                  asset
          Asset Date of                        the               contrib                        transact              liabiliti not; if Disclos disclose
  tion                               price             Compa                principl transact              involve
             sold       sale                 Compa               uted by                          ion                   es       not,     ure date     d
 party                          (RMB0                  ny (see                 e      ion or                d has
                                             ny from             the sale                        party                involve    give                informa
                                 ’000)                note 3)                         not                 been all
                                               the               of the                         and the               d have reasons                  tion
                                                                                                           transfer
                                             period-             asset to                       Compa                 been all   and
                                                                                                           red or
                                              begin                the                            ny                  transfer measur

                                                                                                                                                             30
 Foshan Electrical and Lighting Co., Ltd.                                                                                            Annual Report 2016


                                           to the                  Compa                      (applica        not   red or      es
                                          date of                   ny’s                     ble for                 not     taken
                                           sale                    total                      related-
                                          (RMB0                    profit                      party
                                           ’000)                   (%)                       transact
                                                                                               ions)

                                                                                                                                                  Indicati
                                                                                                                                                  ve
                                                                                                                                                  Announ
                                                       No                                                                                         cement
                                                       impact                                                                                     No.
                                                       on the                                                                                     2016-0
          Some                                         busines                                                                                    63 on
                                                                            Market
          of the                                       s                                                                                          Sale of
                     11/15/2                                                price
          Guoxua                                       continu                                                                                    Some
Block                016         96,524. 72,523.                            when                                                        12/09/2
          n                                            ity and 67.57%                 No      N/A           Yes     Yes      Yes                  of
trading              to7/12/         46           37                        reducin                                                     016
          High-te                                      manage                                                                                     Guoxua
                     2016                                                   g the
          ch                                           ment                                                                                       n
                                                                            stock
          stock                                        stability                                                                                  High-te
                                                       of the                                                                                     ch
                                                       Compa                                                                                      Stock
                                                       ny                                                                                         on
                                                                                                                                                  www.c
                                                                                                                                                  ninfo.c
                                                                                                                                                  om.cn


2. Sale of major equity interests

□ Applicable √ Not applicable

VII Main controlled and joint stock companies

√ Applicable □ Not applicable

Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
                                                                                                                                        Unit: RMB Yuan

                    Relationship          Main
  Company                              business             Registered                                        Operating      Operating
                      with the                                              Total assets   Net assets                                         Net profit
    name                                  scope               capital                                         revenues         profit
                     Company

Foshan
Chansheng                                                                   41,308,724.4 24,571,267.7 175,664,083.
                   Subsidiary       Manufacture 1,000,000.00                                                                7,851,031.25 5,718,636.29
Electronic                                                                             3                9             30
Ballast    Co.,



                                                                                                                                                           31
 Foshan Electrical and Lighting Co., Ltd.                                                                  Annual Report 2016


Ltd.

Foshan
Chanchang
Electric                                      72,782,944.0 114,266,729. 105,963,153. 66,246,503.3
                   Subsidiary   Manufacture                                                         7,912,810.13 5,992,538.34
Appliances                                    0                     01           40            4
(Gaoming)
Co., Ltd.

Foshan
Taimei Times                                               74,038,971.4 16,758,120.6 131,088,201.
                   Subsidiary   Manufacture 500,000.00                                              8,021,892.93 5,746,438.79
Lamps       Co.,                                                      2            0          96
Ltd.

FSL         New
Light Source                                  50,000,000.0 55,563,518.2 53,824,332.1 21,731,567.3
                   Subsidiary   Manufacture                                                          332,396.04     193,996.43
Technology                                    0                       5            2           5
Co., Ltd.

FSL
(Xinxiang)                                    35,418,439.7 53,791,708.3 44,370,799.3 45,581,638.6
                   Subsidiary   Manufacture                                                         5,296,288.75 3,819,950.09
Lighting Co.,                                 6                       9            6           3
Ltd.

Guangdong
Fozhao
                                              200,000,000. 223,762,603. 223,419,736.
Financing          Subsidiary   Finance                                                             4,817,241.98 3,612,931.48
                                              00                    36           10
Lease       Co.,
Ltd.

FSL Lighting
Equipment                                     15,000,000.0 84,110,568.3 45,083,516.0 149,397,618. 11,733,875.5
                   Subsidiary   manufacture                                                                        7,941,495.19
Co., Ltd.                                     0                       8            1          25              6


Nanjing
Fozhao
Lighting                                      41,683,200.0 62,553,979.8 45,465,065.0 42,824,302.6
                   Subsidiary   Manufacture                                                          114,351.94     249,386.72
Components                                    0                       7            5           6
Manufacturin
g Co., Ltd.

FSL Zhida
Electric                                      50,000,000.0 38,940,925.0 35,460,469.9
                   Subsidiary   Manufacture                                            433,033.67     -52,707.59     -39,530.09
Technology                                    0                       4            1
Co., Ltd.



Subsidiaries obtained or disposed in this Reporting Period

√ Applicable □ Not applicable

                                                                                                                             32
 Foshan Electrical and Lighting Co., Ltd.                                                                      Annual Report 2016


                                            How to obtain or dispose the subsidiary in Effect on overall production and operation
               Subsidiary
                                                      this Reporting Period                              results

                                                                                      Created new business and new profit
                                                                                      growth points to improve the Company’s
                                                                                      business structure, bettered the Company’s
FSL Zhida Electric Technology Co., Ltd.     Newly incorporated                        sustained development capability and
                                                                                      overall earnings, and laid a foundation for
                                                                                      the next step of the Company’s
                                                                                      development strategy

Suzhou Mont Lighting Co., Ltd.              Bankruptcy liquidation                    No great effects

Information about the main controlled and joint stock companies
—Foshan Chansheng Electronic Ballast Co., Ltd. was invested and established by the Company and Mr. Ma
Henglai and had set up and obtained license for business corporation on 26 Aug. 2003. The Company holds 75%
equities of the said company; therefore the said subsidiary was included into the scope of the consolidated
financial statements since the date of foundation.
On 24 Dec. 2013, the Company and Mr. Ma Henglai signed the equity transfer agreement. The Company
purchased 25% equity of Foshan Chansheng Electronic Ballast Co., Ltd. held by Mr. Ma Henglai. After the
purchasing, the Company held 100% equity of Foshan Chansheng Electronic Ballast Co., Ltd.
—Foshan Chanchang Electric Appliances (Gaoming) Co., Ltd., which is a Sino-foreign joint venture invested and
established by the Company and Prosperity Lamps and Components Ltd, had obtained license for business
corporation on 23 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
the date of foundation.
On 23 Aug. 2016, the Company and Prosperity Lamps and Components Ltd signed the equity transfer agreement.
The Company purchased 30% equity of Foshan Chanchang Electric Appliances (Gaoming) Co., Ltd. held by
Prosperity Lamps and Components Ltd. After the purchasing, the Company held 100% equity of Foshan
Chanchang Electric Appliances (Gaoming) Co., Ltd.
—Foshan Taimei Times Lamps Co., Ltd., which is a Sino-foreign joint venture 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 the date of
foundation.
—FSL New Light Source Technology Co., Ltd. (its predecessor was “Foshan Lighting Lamps and Lanterns Co.,
Ltd.” and it changed its name to “FSL New Light Source Technology Co., Ltd.” on 17 Dec. 2014), 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 Hongbang Electrical & Lighting Co., Ltd., Hebei Jinfen Trading Co., Ltd., obtaining its license for
Business Corporation on 27 Sept. 2009. The Company holds 60% equities of this company. Therefore the said
subsidiary was included into the scope of the consolidated financial statements since the date of foundation.



                                                                                                                                    33
 Foshan Electrical and Lighting Co., Ltd.                                                       Annual Report 2016


On 25 Sep. 2009 and 19 Nov. 2010, the equity transfer agreement was signed between the Company and the
minority shareholders, in which the minority shareholders respectively transferred their equities of Foshan
Lighting Lamps and Lanterns Co., Ltd. to the Company. After transfer, the Company holds 100% equities of
Foshan Lighting Lamps and Lanterns Co., Ltd.
—FSL (Xinxiang) Lighting Co., Ltd. is a limited liability company which is invested and established by the
Company, obtaining its license for Business Corporation on 17 Apr. 2009. The Company holds 100% equities of
the said company, therefore the said subsidiary was included into the scope of the consolidated financial
statements since date of foundation. On 27 Aug. 2013, the 3rd Session of the 7th Board of Directors reviewed and
approved to invest another RMB 2 million (land in an industrial park in Xinxiang, Henan Province and monetary
funds) in FSL (Xinxiang) Lighting, increasing the registered capital of FSL (Xinxiang) Lighting to RMB
35,418,439.76.
—FSL Lighting Equipment Co., Ltd. is a limited liability company invested and established by the Company with
the registered capital of RMB 15 million, which had obtained its license for Business Corporation on 8 May 2013.
And the Company holds 100% equities of this company. Therefore the said subsidiary was included into the scope
of the consolidated financial statements since the date of foundation.
—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. (formerly 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, Nanjing Fozhao Lighting Components Manufacturing Co., Ltd.
became a wholly-owned subsidiary of the Company. The said subsidiary was included into the scope of the
consolidated financial statements since the merger date.
—FSL Zhida Electric Technology Co., Ltd. was incorporated by the Company, Foshan Zhibida Enterprise
Management Co., Ltd. and Dongguan Baida Semiconductor Material Co., Ltd. on a joint investment basis. FSL
Zhida obtained its business license on October 21, 2016. Holding a stake of 51% in it, the Company has included
FSL Zhida in its consolidated financial statements since the date of FSL Zhida’s incorporation.



VIII Structured bodies controlled by the Company

□ Applicable √ Not applicable

IX Outlook for the future development of the Company

(I) Development trends in the industry

As the emerging industry, the LED lighting is now in the stage of rapid development. The LED light source is

honored as the third revolution in human being’s lighting history, and has aroused the development and research

upsurge in the globe due to its advantages of high efficiency and energy-saving, green environmental protection,

as well as long service life. After several years of rapid and disordered development in the LED industry, despite

the sustainable growth of utilized LEC led by newly increased demands and replacement needs, the LED industry,

especially in the downstream application fields, is facing with obvious structural over-capacity problem. The

                                                                                                               34
 Foshan Electrical and Lighting Co., Ltd.                                                        Annual Report 2016



supply of low-end products and repeatable products exceeds demand, together with the intense price competitions,

resulting in companies’ growth of revenue instead of profit. The supply of high-end products and specially used

products falls short of demand, giving rise to high prices and rich profit. In the years to come, with the industry

transformation and the intensified market competitions, the LED industry will step into a period with faster

integration speed. On one hand, as for middle and small enterprises, which don’t have the advantage in core

technology of product and sales channel, the pressure from competitions and surviving will be higher and higher.

On the other hand, the advantaged enterprises will continuously make efforts on technology breakthrough, brand

building, channel extension, as well as cost cut and efficiency improvement, so as to advance the cost

performance of products and the market competitiveness. With the dual promotion of surviving pressure and

demands for brand and scale effect, the LEC industry in future will step into the peak season of integration, when

the industry competitions will gradually tend to be rational, and transfer from price competitions in the past to

competitions in technology, product, brand, and service.



(II) Development strategy in future

The Company will adhere to the path of professional development, center around the main business of lighting

products, be oriented by market demand, take the motive as technology innovation, take the core as brand

operation, build the domestic and international market net with effective covering fraction by making qualified

products and improving efficiency, comprehensively improve the Company’s operation quality and the capability

of sustainable development, as well as devote itself to becoming the top 1 brand among lighting enterprises in the

country. And at the same time, the Company will preserve in multiple development strategies, strive to develop

the electrical engineering industry, and attempt to carry forward the strategic layout where the lighting business

and the electrical engineering industry keeping the same pace.



(III) Operation plan in 2017

1. To improve R&D innovation and strengthen company competitiveness

The Company will reinforce R&D input, as well as the innovation on science and technology, introduce

high-quality R&D talents, enhance the technology communication and cooperation with external institutions,

continuously improve the technology level to “high-grade, precision, and advanced” standard, and strengthen the

growth power generated from the internal part of the Company. The Company will positively and firmly propel

the work of science and technology innovation, as well as product R&D, put forth effort to improve the

technology content and quality level of products, so as to offer guarantee for the sustainable and rapid


                                                                                                                35
 Foshan Electrical and Lighting Co., Ltd.                                                         Annual Report 2016



development of the Company.

2. To sustainably improve the marketing capability, and improve market share
In respect of domestic sales, the Company will further deepen channel management, emphasize on strengthening
the construction of weak channels; adjust measures to local conditions and enlarge the force of market expansion,
develop multiple end-sales activities; reinforce the promotion of new products, and continuously improve market
share. In respect of overseas sales, the Company will continue to do a good job in management and service for
major clients, develop the potential value of major clients, and improve business performance for a single client;
continue to strengthen the development of major clients, enlarge client groups and market share; to seize
opportunities arising from the deep change of industries around the world and the re-division of labor to promote
the international recognition of the Company’s own brands ;intensify the sales of self-owned brand, enhance the
promotion of self-owned brand, improve the popularity and reputation of FSL in overseas market; innovate on the
overseas sales mode, sustainably optimize product sales structure, and prioritize the development of LED lighting
products.

3. To make great efforts on electrical engineering equipment, so as to increase profit growth point for the

Company

In 2017, the Company will make great efforts on electrical engineering equipment, fully take the advantage of

resource sharing and synergistic interaction, and make the business of electrical engineering equipment bigger and

stronger. By means of further enriching the product line, perfecting sales policy, enlarging sales channels, and

strengthen the promotion of brands,the Company will make electrical engineering equipment rapidly become the

key sales revenue source besides lighting products, increase profit growth point, and improve the comprehensive

competitiveness of the Company.

4. To strengthen expense control and cut down production cost

In the face of pressure from the uprising cost of raw materials, transportation, and human labor, the Company will

continue to strengthen procurement management, enlarge the bidding coverage, reinforce the management of

quotation review and approval, enhance market analysis, improve the ability of judgment on market conditions,

cut down procurement; continuously strengthen the thorough budget management, manage and control all kinds

of expenditure from the source, control expense and cut down cost via the reversed forcing mechanism; strengthen

the management and control on production process, further improve the production automation level, and

gradually develop to the trend of intellectualization, so as to decrease human labors and improve production

efficiency.



5. To value talent training, and perfect the human resources management system

The Company will positively train and introduce talents in R&D, production, marketing, and management, put

forth efforts to organizing a staff team featuring with “unity, innovation, high-efficiency, and professionalism”;


                                                                                                                 36
 Foshan Electrical and Lighting Co., Ltd.                                                            Annual Report 2016



continue to perfect the human resources management system, establish a remuneration appraisal system oriented

by performance; continuously improve the employee structure, improve the skill and profession level of

employees, urge the employees to develop to a direction of technicalization and professionalism, so as to meet the

long-term demand for the Company’s development.



(IV) Possible risks

1. Risks from the more and more intensified marketing competitions

The descending growth of domestic economy, the regulatory and control policy of real estate market, the weak

recovery of overseas economy, as well as the complexity and variety of political environment bring about the

uncertainty of market demand. At the same time, in an industry with sufficient competitions, the lighting products

are exposed to a market with low concentration and fierce competitions. In future, if the macro economy is further

in a downturn, and the market competitions keep fierce, the demands for the Company’s products may shrink, and

the product price may fall down, further causing effects on the Company’s business performance.



2. Risks from the price fluctuation of raw materials

The raw material cost of the Company’s lighting products accounts for about 65% of the operating cost, which

means the price fluctuation of raw materials will cause significant impact on the Company’s operating cost. Based

on the price fluctuation of raw materials, the Company will accordingly make product price adjustment, which has

hysteresis and is restricted by the supply and demand status in the market, as well as the Company’s bargain

ability. If there’s big price fluctuation of raw materials in future, and the product sales price of the Company can’t

be simultaneously adjusted in time, the profitability of the Company may therefore fluctuate.



3. Risk of loss from falling inventory price

As at the end of the Reporting Period, the net value of the Company’s inventory was RMB 753.6816million,

accounting for 22.27 % of the current assets. Inventory mainly contains raw materials, semi-finished products, and

finished products. As there’re plenty of product categories, standards, and models in the Company, the inventory

value is high. With the gradual increase of the Company’s sales revenue year after year, the raw materials and

inventory commodities reserved for production and sales will simultaneously increase, leading to high level of the

Company’s inventory. If there’re changes in price or demand in raw material market and product sales market, the

risk of loss from falling inventory price of the Company may happen.




                                                                                                                     37
 Foshan Electrical and Lighting Co., Ltd.                                                                 Annual Report 2016



4. Risks from fluctuation of the exchange rate

The RMB exchange rate in China is based on market supply and demand, reference to a basket of currencies,

managed floating exchange rate system. The fluctuation of the world economy, the tension upgrade in some hot

spot areas, as well we the currency policies in different countries, will bring about the fluctuation of exchange rate.

The export business of the Company accounts for one-third of the Company’s whole business, and is obtaining

scale enlargement year after year. If there’s large fluctuation of the exchange rate, the Company’s business

performance will be affected.


X Visits paid to the Company for purposes of research, communication, interview, etc.

1. In this Reporting Period

√ Applicable □ Not applicable
        Date of visit                 Way of visit                 Type of visitor      Index to main inquiry information

                                                                                     Investor             Relations-EasyIR-
01/28/2016                    One-on-one meeting            Institution
                                                                                     www.cninfo.com.cn

                                                                                     Investor             Relations-EasyIR-
03/29/2016                    One-on-one meeting            Institution
                                                                                     www.cninfo.com.cn

                                                                                     Investor             Relations-EasyIR-
05/06/2016                    One-on-one meeting            Institution
                                                                                     www.cninfo.com.cn

Times of visit                                                                                                               3

Number of visiting institutions                                                                                              7

Number of visiting individuals                                                                                              30

Number of other visitors                                                                                                     3

Significant undisclosed information disclosed,
                                                     None
revealed or leaked




                                                                                                                             38
 Foshan Electrical and Lighting Co., Ltd.                                                           Annual Report 2016




                                       Section V Significant Events

I Profit distribution and converting capital reserve into share capital for common
shareholders

Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, for common

shareholders in this Reporting Period

√ Applicable □ Not applicable

According to the CSRC Notice on Further Implementing Matters Related to Cash Dividend Distribution of Listed

Companies (Zheng-Jian-Fa [2012] No. 37) and the Guangdong CSRC Notice on Further Implementing

Regulations Related to Dividend Distribution of Listed Companies (Guang-Dong-Zheng-Jian [2012] No. 91), in

order to further standardize the dividend mechanism, promote a scientific, sustained and stable dividend

mechanism and protect legal rights and interests of investors, in 2012, the Company convened a general meeting

to revise the dividend-related contents in its Articles of Association and specify the dividend conditions, the

lowest dividend ratio, the decision-making procedure, etc.. Meanwhile, it formulated the Management Rules for

Profit Distribution and the Return for Shareholder Plan for the Coming Three Years (2015-2017), specifying the

arrangements and forms of dividends, the cash dividend planning and the distribution intervals, which further

improved the decision-making and supervision procedures for dividend distribution. According to the Company’s

Articles of Association, the profit distributed in cash shall not be less than 30% of the distributable profit achieved

in the year.



The Company’s proposal for profit distribution and converting capital reserve into share capital for the Reporting

Period was in compliance with relevant rules such as the Company’s Articles of Association.


                                            Special statement about cash dividend policy

In compliance with the Company’s Articles of Association and
                                                                    Yes
resolution of general meeting

Specific and clear dividend standard and ratio                      Yes

Complete decision-making procedure and mechanism                    Yes

Independent directors fulfilled their responsibilities and played
                                                                    Yes
their due role.


                                                                                                                    39
 Foshan Electrical and Lighting Co., Ltd.                                                                           Annual Report 2016


Minority interests have the chance to fully express their opinion
and desire and their legal rights and interests were fully Yes
protected.

In adjustment or alteration of the cash dividend policy, the
conditions and procedure were in compliance with applicable N/A
regulations and transparent.



Plans/proposals for profit distribution and converting capital reserve into share capital for common shareholders

for the past three years (including this Reporting Period):

For 2014, based on the total 978,563,745 shares of the Company as at December 31, 2014, a cash dividend of

RMB2.20 (tax included and dividends for B-share holders paid in the Hong Kong dollars) was distributed to the

A-share and B-share holders for every 10 shares they held, with the total distributed cash dividends reaching RMB

215,284,023.90; and 3 shares were increased, with capital reserve, to all the shareholders for every 10 shares they

held, with the increased shares totaling 293,569,123 shares.

For 2015, based on the total 1,272,132,868 shares of the Company as at December 31, 2015, a cash dividend of

RMB 0.125 yuan (tax included and dividends for B-share holders paid in the Hong Kong dollars) was distributed

to the A-share and B-share holders for every 10 shares they held, with the total distributed cash dividends reaching

RMB 15,901,660.85 yuan.

For 2016, based on the total 1,272,132,868shares of the Company as at December 31, 2016, a cash dividend of

RMB4.20(tax included and dividends for B-share holders to be paid in the Hong Kong dollars) will be distributed

to the A-share and B-share holders for every 10 shares they hold, with the total distributed cash dividends

reaching RMB534,295,804.56yuan.


Cash dividend distribution of the Company to common shareholders over the past three years (including this
Reporting Period)
                                                                                                                        Unit: RMBYuan

                                                    Net profit         Proportion in net
                                                  attributable to     profit attributable to
                                                     common                 common
                         Cash dividends         shareholders of the   shareholders of the                             Ratio of cash
                                                                                               Cash dividends in
       Year                                                                                                         dividends in other
                         (tax included)          Company in the         Company in the           other forms
                                                                                                                          forms
                                                   consolidated           consolidated
                                                statements for the     statements for the
                                                       year                 year (%)

2016                           534,295,804.56      1,072,342,050.13                 49.83%                   0.00                0.00%


                                                                                                                                         40
 Foshan Electrical and Lighting Co., Ltd.                                                                            Annual Report 2016


2015                          15,901,660.85           53,405,593.12                29.78%                     0.00                  0.00%

2014                         215,284,023.90          266,125,048.97                80.90%                     0.00                  0.00%

Indicate by tick mark whether the Company made profit in this Reporting Period and the profit distributable to

common shareholders of the Company was positive, but it did not put forward a proposal for cash dividend

distribution to its common shareholders

□ Applicable √ Not applicable


II Proposal for profit distribution and converting capital reserve into share capital for this
Reporting Period

√ Applicable □ Not applicable
Bonus shares for every 10 shares (share)                                                                                                0

Dividend for every 10 shares (RMB yuan) (tax
                                                                                                                                      4.20
inclusive)
Additional shares to be converted from capital
                                                                                                                                        0
reserve   for every 10 shares (share)

Total shares as the basis for the profit distribution                                                                       1,272,132,868
proposal (share)

Total cash dividends (RMB yuan) (tax included)                                                                             534,295,804.56

Distributable profit (RMB yuan)                                                                                           1,448,907,867.73

Percentage of cash dividends in the total profit to                                                                              100.00%
be distributed (%)

                                                          Cash dividend policy

Where the Company is at a mature stage of development and has plans for considerable spending, in profit distribution, cash
dividends shall reach at least 40% in the total profit to be distributed.

                   Details about the proposal for profit distribution and converting capital reserve into share capital

As audited by Beijing Zhongzhengtiantong Certified Public Accountants LLP, the after-tax net profits of RMB

1,054,858,446.87yuan of the Company without subsidiaries for 2016, plus the opening retained profits of RMB515,436,926.40

yuan, minus the distributed profits of RMB15,901,660.85yuan for 2015 (a cash dividend of RMB0.125yuan for every 10 shares)

and the statutory surplus reserve of RMB 105,485,844.69yuan for 2016, equals the closing profits distributable to shareholders of

RMB 1,448,907,867.73yuan. The Board of Directors has proposed to allocate profits for 2016 as follows: Based on the total

1,272,132,868 shares of the Company as at December 31, 2016, a cash dividend of RMB4.20yuan(tax included and dividends for

B-share holders to be paid in the Hong Kong dollars) will be distributed to the A-share and B-share holders for every 10 shares they

hold, with the total cash dividends to be distributed reaching RMB 534,295,804.56yuan. The retained profits of RMB

914,612,063.17yuan will be carried forward into the next year. The profit allocation preplan can be effective upon review and



                                                                                                                                        41
 Foshan Electrical and Lighting Co., Ltd.                                                                         Annual Report 2016



approval of the Shareholders’ General Meeting of the Company.


III Fulfillment of commitments

1. Commitments of the Company’s actual controller, shareholders, related parties and acquirer, as well as
the Company and other commitment makers, fulfilled in this Reporting Period or ongoing at the
period-end

√ Applicable □ Not applicable
                                                                                                Date of
                             Commitment           Type of                                                    Period of
     Commitment                                                          Contents             commitment                 Fulfillment
                                maker          commitment                                                   commitment
                                                                                                making

                                                                 Electronics        Group
                                                                 and                    its
                                                                 acting-in-concert
                                                                 parties       Shenzhen
                                                                 Rising      Investment
                                                                 and       Hong     Kong
                                                                 Rising      Investment
                                                                 have        made        a
                                                                 commitment            that
                                                                 within 12 months
                                                                 from the completion
                                                                 of their acquisitions,
                                                                 they       shall      not
                                                                 transfer or entrust
Commitments made in
                                                                 others to manage the
acquisition    documents Controlling
                                            About share lock-up shares directly or 2015-12-04              12 months     Fulfilled
or            shareholding shareholder
                                                                 indirectly held by
alteration documents
                                                                 them         in        the
                                                                 Company, nor shall
                                                                 they       allow       the
                                                                 Company                 to
                                                                 repurchase           those
                                                                 shares, except for
                                                                 the case where those
                                                                 shares       may       be
                                                                 transferred for no
                                                                 compensation due to
                                                                 any       business      or
                                                                 asset       integration
                                                                 with      their    actual
                                                                 controller or their



                                                                                                                                     42
Foshan Electrical and Lighting Co., Ltd.                                                                            Annual Report 2016


                                                                actual      controller’s
                                                                controlled
                                                                subsidiaries.

                                                                Electronics           Group
                                                                and                       its
                                                                acting-in-concert
                                                                parties          Shenzhen
                                                                Rising      Investment
                                                                and       Hong        Kong
                                                                Rising      Investment
                                                                have        made           a
                                                                commitment that the
                                                                business of Foshan
                                                                NationStar
                                                                Optoelectronics Co.,
                                                                Ltd.      that     is     in
                                           About avoidance of competition with the
                       Controlling
                                           horizontal           business         of      the 2015-12-04      24 months    Ongoing
                       shareholder
                                           competition          Company takes up
                                                                only a small part in
                                                                NationStar’s           total
                                                                business, they shall
                                                                gradually reduce or
                                                                eliminate                the
                                                                horizontal
                                                                competition               as
                                                                planned           through
                                                                business integration
                                                                or other ways or
                                                                arrangements within
                                                                the       coming          24
                                                                months.

                                                                Electronics           Group
                                                                and                       its
                                                                acting-in-concert
                                                                parties          Shenzhen
                                                                Rising      Investment
                                           About avoidance of
                       Controlling                              and       Hong        Kong
                                           horizontal                                           2015-12-04   Long-standing Ongoing
                       shareholder                              Rising      Investment
                                           competition
                                                                have      made        more
                                                                commitments               as
                                                                follows      to       avoid
                                                                horizontal
                                                                competition with the

                                                                                                                                     43
Foshan Electrical and Lighting Co., Ltd.                                    Annual Report 2016


                                           Company: 1. They
                                           shall              conduct
                                           supervision               and
                                           restraint        on       the
                                           production                and
                                           operation activities
                                           of themselves and
                                           their             relevant
                                           enterprises so that
                                           besides                    the
                                           enterprise above that
                                           is      in      horizontal
                                           competition with the
                                           Company for now, if
                                           the       products         or
                                           business of them or
                                           their             relevant
                                           enterprises become
                                           the same with or
                                           similar to those of
                                           the Company or its
                                           subsidiaries in the
                                           future,        they      shall
                                           take the following
                                           measures: (1) If the
                                           Company                 thinks
                                           necessary, they and
                                           their             relevant
                                           enterprises              shall
                                           reduce and wholly
                                           transfer                 their
                                           relevant assets and
                                           business; and (2) If
                                           the Company thinks
                                           necessary, it is given
                                           the          priority       to
                                           acquire         first,     by
                                           proper means, the
                                           relevant assets and
                                           business         of      them
                                           and their relevant
                                           enterprises. 2. All
                                           the          commitments
                                           made by them to


                                                                                           44
Foshan Electrical and Lighting Co., Ltd.                                                                        Annual Report 2016


                                                              eliminate or avoid
                                                              horizontal
                                                              competition with the
                                                              Company are also
                                                              applicable to their
                                                              directly or indirectly
                                                              controlled
                                                              subsidiaries.         They
                                                              are obliged to urge
                                                              and make sure that
                                                              other      subsidiaries
                                                              execute           what’s
                                                              prescribed       in     the
                                                              relevant       document
                                                              and faithfully honor
                                                              all     the      relevant
                                                              commitments. 3. If
                                                              they or their directly
                                                              or             indirectly
                                                              controlled
                                                              subsidiaries          break
                                                              the            aforesaid
                                                              commitments            and
                                                              thus cause a loss for
                                                              the Company, they
                                                              shall compensate the
                                                              Company          on       a
                                                              rational basis.

                                                              Electronics       Group
                                                              and                     its
                                                              acting-in-concert
                                                              parties        Shenzhen
                                                              Rising        Investment
                                                              and       Hong        Kong
                                           About reduction and Rising       Investment
                       Controlling         regulation       of have         made        a
                                                                                            2015-12-04   Long-standing Ongoing
                       shareholder         related-party      commitment             that
                                           transactions       during their direct or
                                                              indirect holding of
                                                              the           Company’s
                                                              shares, they shall 1.
                                                              strictly abide by the
                                                              regulatory
                                                              documents of the


                                                                                                                                 45
Foshan Electrical and Lighting Co., Ltd.                                Annual Report 2016


                                           CSRC         and       the
                                           SZSE,                  the
                                           Company’s Articles
                                           of Association, etc.
                                           and not harm the
                                           interests      of      the
                                           Company or other
                                           shareholders of the
                                           Company in their
                                           production            and
                                           operation activities
                                           by taking advantage
                                           of their position as
                                           the         controlling
                                           shareholder           and
                                           actual controller; 2.
                                           make        sure      that
                                           they or their other
                                           controlled
                                           subsidiaries, branch
                                           offices,     jointly-run
                                           or           associated
                                           companies             (the
                                           “Relevant
                                           Enterprises”          for
                                           short) will try their
                                           best to avoid or
                                           reduce related-party
                                           transactions with the
                                           Company         or     the
                                           Company’s
                                           subsidiaries;           3.
                                           strictly follow the
                                           market principle of
                                           justness,       fairness
                                           and     equal        value
                                           exchange               for
                                           necessary             and
                                           unavoidable
                                           related-party
                                           transactions
                                           between them and
                                           their          Relevant
                                           Enterprises and the


                                                                                       46
Foshan Electrical and Lighting Co., Ltd.                                                                             Annual Report 2016


                                                                Company,                  and
                                                                withdraw                 from
                                                                voting        when          a
                                                                related-party
                                                                transaction              with
                                                                them          or         their
                                                                Relevant Enterprises
                                                                is being voted on at
                                                                a general meeting or
                                                                a     board        meeting,
                                                                and       execute          the
                                                                relevant           approval
                                                                procedure                 and
                                                                information
                                                                disclosure              duties
                                                                pursuant           to      the
                                                                applicable               laws,
                                                                regulations               and
                                                                regulatory
                                                                documents.              Where
                                                                the                aforesaid
                                                                commitments                are
                                                                broken and a loss is
                                                                thus caused for the
                                                                Company,                   its
                                                                subsidiaries or the
                                                                Company’s               other
                                                                shareholders,            they
                                                                shall be obliged to
                                                                compensate.

                                                                In order to ensure
                                                                the independence of
                                                                the      Company            in
                                                                business, personnel,
                                                                asset,     organization
                                                                and                 finance,
                       Controlling                              Electronics             Group
                                           About independence                                    2015-12-04   Long-standing Ongoing
                       shareholder                              and                        its
                                                                acting-in-concert
                                                                parties        Shenzhen
                                                                Rising        Investment
                                                                and       Hong          Kong
                                                                Rising        Investment
                                                                have       made            the


                                                                                                                                      47
Foshan Electrical and Lighting Co., Ltd.                                  Annual Report 2016


                                           following
                                           commitments:             1.
                                           They will ensure the
                                           independence of the
                                           Company                  in
                                           business: (1) They
                                           promise        that     the
                                           Company will have
                                           the                  assets,
                                           personnel,
                                           qualifications          and
                                           capabilities for it to
                                           operate
                                           independently            as
                                           well as the ability of
                                           independent,
                                           sustainable
                                           operation        in     the
                                           market.        (2)    They
                                           promise         not      to
                                           intervene        in     the
                                           Company’s business
                                           activities other than
                                           the    execution         of
                                           their rights as the
                                           Company’s
                                           shareholders.           (3)
                                           They promise that
                                           they       and         their
                                           related parties will
                                           not be engaged in
                                           business        that      is
                                           substantially            in
                                           competition with the
                                           Company’s
                                           business. And (4)
                                           They promise that
                                           they       and         their
                                           related parties will
                                           try    their     best    to
                                           reduce related-party
                                           transactions
                                           between them and
                                           the Company; for


                                                                                         48
Foshan Electrical and Lighting Co., Ltd.                                   Annual Report 2016


                                           necessary                and
                                           unavoidable
                                           related-party
                                           transactions,           they
                                           promise to operate
                                           fairly following the
                                           market-oriented
                                           principle and at fair
                                           prices, and execute
                                           the           transaction
                                           procedure and the
                                           duty of information
                                           disclosure pursuant
                                           to      the   applicable
                                           laws,         regulations
                                           and           regulatory
                                           documents. 2. They
                                           will      ensure          the
                                           independence of the
                                           Company                    in
                                           personnel: (1) They
                                           promise          that     the
                                           Company’s              GM,
                                           deputy GMs, CFO,
                                           Company Secretary
                                           and      other       senior
                                           management
                                           personnel will work
                                           only for and receive
                                           remuneration            from
                                           the Company, not
                                           holding                  any
                                           positions in them or
                                           their                   other
                                           controlled
                                           subsidiaries            other
                                           than      director       and
                                           supervisor. (2) They
                                           promise                   the
                                           Company’s absolute
                                           independence from
                                           their related parties
                                           in      labor,      human
                                           resource and salary


                                                                                          49
Foshan Electrical and Lighting Co., Ltd.                                     Annual Report 2016


                                           management.               And
                                           (3) They promise to
                                           follow         the        legal
                                           procedure in their
                                           recommendation of
                                           directors,
                                           supervisors                and
                                           senior management
                                           personnel            to    the
                                           Company and not to
                                           hire      or         dismiss
                                           employees            beyond
                                           the          Company’s
                                           Board of Directors
                                           and                  General
                                           Meeting. 3. They
                                           will      ensure           the
                                           independence               and
                                           completeness of the
                                           Company in asset:
                                           (1) They promise
                                           that the Company
                                           will         have            a
                                           production system, a
                                           auxiliary production
                                           system                     and
                                           supporting facilities
                                           for    its     operation;
                                           legally        have        the
                                           ownership            or    use
                                           rights of the land,
                                           plants,         machines,
                                           trademarks, patents
                                           and        non-patented
                                           technology                  in
                                           relation         to         its
                                           production                 and
                                           operation; and have
                                           independent systems
                                           for the procurement
                                           of raw materials and
                                           the    sale          of     its
                                           products. (2) They
                                           promise         that       the


                                                                                            50
Foshan Electrical and Lighting Co., Ltd.                                     Annual Report 2016


                                           Company will have
                                           independent                and
                                           complete assets all
                                           under                       the
                                           Company’s control
                                           and      independently
                                           owned and operated
                                           by     the      Company.
                                           And           (3)         They
                                           promise that they
                                           and      their            other
                                           controlled
                                           subsidiaries will not
                                           illegally occupy the
                                           Company’s                funds
                                           and assets in any
                                           way,     or         use     the
                                           Company’s assets to
                                           provide        guarantees
                                           for     the     debts        of
                                           themselves or their
                                           other           controlled
                                           subsidiaries with. 4.
                                           They will ensure the
                                           independence of the
                                           Company                      in
                                           organization:               (1)
                                           They promise that
                                           the Company has a
                                           sound           corporate
                                           governance
                                           structure            as       a
                                           joint-stock company
                                           with an independent
                                           and                 complete
                                           organization
                                           structure. And (2)
                                           They promise that
                                           the operational and
                                           management organs
                                           within the Company
                                           will     independently
                                           execute                   their
                                           functions according


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Foshan Electrical and Lighting Co., Ltd.                                   Annual Report 2016


                                           to laws, regulations
                                           and the Company’s
                                           Articles                  of
                                           Association. And 5.
                                           They will ensure the
                                           independence of the
                                           Company                   in
                                           finance: (1) They
                                           promise          that    the
                                           Company will have
                                           an         independent
                                           financial department
                                           and               financial
                                           accounting          system
                                           with         normative,
                                           independent
                                           financial accounting
                                           rules.      (2)         They
                                           promise          that    the
                                           Company will have
                                           independent             bank
                                           accounts         and     not
                                           share bank accounts
                                           with       its      related
                                           parties.     (3)        They
                                           promise          that    the
                                           Company’s financial
                                           personnel         do     not
                                           hold         concurrent
                                           positions         in      its
                                           related parties. (4)
                                           They promise that
                                           the Company will
                                           independently            pay
                                           its tax according to
                                           law. And (5) They
                                           promise          that    the
                                           Company can make
                                           financial        decisions
                                           independently            and
                                           that they will not
                                           illegally intervene in
                                           the Company’s use
                                           of its funds.


                                                                                          52
 Foshan Electrical and Lighting Co., Ltd.                                                                     Annual Report 2016


                                                              The               profits
                                                              distributed by the
                                                              Company in cash
Other        commitments
                                             About       cash every year shall not
made        to        minority The Company                                                2009-05-27   Long-standing Ongoing
                                             dividends        be less than 30% of
interests
                                                              the       distributable
                                                              profits      it      has
                                                              achieved in the year.

Executed on time or not Yes

Specific     reasons       for
failing          to     fulfill
                                  N/A
commitments on time
and plans for next step


2. Where there had been an earnings forecast for an asset or project and this Reporting Period was still
within the forecast period, explain why the forecast has been reached for this Reporting Period.

□Applicable √ Not applicable

IV Occupation of the Company’s funds by the controlling shareholder or its related parties
for non-operating purposes

□ Applicable √ Not applicable
No such cases in this Reporting Period.

V Explanations given by the Board of Directors, the Supervisory Board and the independent
directors (if any) regarding the “modified auditor’s report” issued by the CPAs firm for this
Reporting Period

□ Applicable √ Not applicable

VI YoY changes in accounting policies, estimations and methods

√ Applicable □ Not applicable

On September 22, 2016, the 9th meeting of the 8th Board was convened, at which the Proposal on Accounting

Estimation Change was considered and approved. In order to present the recoverableness and risk changes of

accounts receivable in a more objective and fairer way and prevent financial risks, taken into account the actual

occurrence of bad debts on accounts receivable in the past, pursuant to the accounting standards for business

enterprises, the Company has changed the accounting estimations of the bad-debt provision percentages on

accounts receivable as follows:


                                                                                                                               53
 Foshan Electrical and Lighting Co., Ltd.                                                              Annual Report 2016


    Account age        Former bad-debt provision percentage Changed bad-debt provision percentage
                            Accounts          Other accounts         Accounts           Other accounts
                            receivable          receivable           receivable           receivable
Within 1 year                   6%                  6%                  3%                   3%
1-2 years                       6%                  6%                 10%                  10%
2-3 years                       6%                  6%                 30%                  30%
3-4 years                       6%                  6%                 50%                  50%
4-5 years                       6%                  6%                 80%                  80%
Over 5 years                    6%                  6%                 100%                 100%


The said change in accounting estimations increased the Company’s total profit for 2016 by RMB
7,956,755.73yuan.

VII Retroactive restatement due to correction of material accounting errors in this Reporting
Period

□ Applicable √ Not applicable
No such cases in this Reporting Period.

VIII YoY changes in the scope of the consolidated financial statements


√ Applicable □ Not applicable

1. As considered and approved at the sixth meeting of the eighth Board on July 19, 2016, the Company

incorporated FSL Zhida Electric Technology Co., Ltd. (FSL Zhida) through investment and thus holds a 51%

stake in it. FSL Zhida has been included in the Company’s consolidated financial statements since October 21,

2016, the date of its incorporation.

2. Suzhou Mont Lighting Co., Ltd. (Suzhou Mont), one of the Company’s controlled subsidiaries, was sued by its

creditor Suzhou LiftAll Electronics Co., Ltd. in the People’s Court of Suzhou Industrial Park, requesting the Court

to carry out bankruptcy liquidation on Suzhou Mont. The Court has ruled in favor of the plaintiff on May 9, 2016

and appointed Jiangsu Yingyuan Law Firm as the custodian of Suzhou Mont on June 3, 2016 (for details, see the

Progress    Announcement         on    Controlled   Subsidiary’s   Bankruptcy    and    Liquidation     disclosed    on

www.cninfo.com.cn dated June 6, 2016). And the control of the Company over Suzhou Mont has ceased since

that day. Pursuant to the accounting standards for business enterprises, the Company has excluded Suzhou Mont

from its consolidation scope since June 2016.


IX Engagement and disengagement of CPAs firm

Current CPAs firm

                                                                                                                      54
 Foshan Electrical and Lighting Co., Ltd.                                                                   Annual Report 2016


Name of the domestic CPAs firm                       Beijing Zhongzhengtiantong Certified Public Accountants LLP

The Company’s payment for the domestic CPAs firm
                                                                                                                         124
(RMB’0,000)

Consecutive years of the audit service provided by
                                                     1
the domestic CPAs firm

Names of the certified public accountants from the
                                                     Tong Quanyong, Luo Dongri
domestic CPAs firm

Name of the foreign CPAs firm (if any)               N/A

The Company’s payment for the foreign CPAs firm
                                                                                                                           0
(RMB’0,000) (if any)

Consecutive years of the audit service provided by
                                                     0
the foreign CPAs firm (if any)

Names of the certified public accountants from the
                                                     N/A
foreign CPAs firm (if any)


Indicate by tick mark whether the CPAs firm was changed in this Reporting Period.

√ Yes □ No


Indicate by tick mark whether the CPAs firm was changed during the audit.

□ Yes √ No


Indicate by tick mark whether the approval procedure was executed to change the CPAs firm.

√ Yes □ No

Details about the change of the CPAs firm

Pursuant to the applicable regulations and requirements of authorities, as considered and approved by the

company's 2015 annual general meeting of shareholders, the Company changed during this Reporting Period its

financial auditor and internal control auditor to Beijing Zhongzhengtiantong Certified Public Accountants LLP for

2016.



CPAs firm, financial advisor or sponsor engaged for internal control audit

√ Applicable □ Not applicable

In the Reporting Period, the Company engaged Beijing Zhongzhengtiantong Certified Public Accountants LLP as

its internal control auditor with the total audit fees of RMB 480000 yuan.




                                                                                                                           55
 Foshan Electrical and Lighting Co., Ltd.                                                             Annual Report 2016


X Possibility of listing suspension or termination after disclosure of this Report

□ Applicable √ Not applicable

XI Bankruptcy and restructuring

□ Applicable √ Not applicable
No such cases in this Reporting Period.

XII Significant litigations and arbitrations

√ Applicable □ Not applicable

In Mar. 2013, CSRC Guangdong administered an administrative punishment on the illegal information disclosure

of the Company. During the period from Sept. 2013 to May 2016, a total of 2,769 plaintiffs separately sued the

Company to Guangzhou Intermediate People’s Court for false securities statements, demanding civil

compensations of RMB386.845 million and HKD1.328 million in total from the Company for its illegal

information disclosure. As of January 13, 2017, all the 2,769 cases had been tried and the verdicts had taken effect.

According to the verdicts, the Company shall compensate the plaintiffs with a total of RMB182.7365 million and

HKD7.3582million and bear the legal fare of RMB 3.2332million. As of March 27, 2017, the Company had made

compensations       to    the    2,719      plaintiffs   (excluding   49   plaintiffs   who    were   overruled)    for

RMB190.1732million(including legal fees). Thus, these cases of false securities statements have all been closed.

They had an influence of RMB61.4383 million on the total profits of the Company in 2014 and RMB131.8899

million on that in 2015, and little influence on the financial results of 2016.


XIII Punishments and rectifications

□ Applicable √ Not applicable
No such cases in this Reporting Period.

XIV Credit conditions of the Company as well as its controlling shareholder and actual
controller

√ Applicable □ Not applicable

In the Reporting Period, the controlling shareholder and actual controller of the Company were in a good credit

position, without unsatisfied court judgments, large-amount overdue liabilities or the like.




                                                                                                                     56
 Foshan Electrical and Lighting Co., Ltd.                                                                                               Annual Report 2016


XV Implementation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees

□ Applicable √ Not applicable
No such cases in this Reporting Period.

XVI Significant related-party transactions

1. Related-party transactions relevant to routine operation

√ Applicable □ Not applicable
                                                                                                                              Obtaina
                                                                                  Proporti                                      ble
                                                                                   on in     Approv                           market
                                                                                                                                                      Index
             Relation                                         Transact Transact    total       ed                             price for
                                        Contents                                                        Over                                            to
 Related          ship       Type of                Pricing     ion      ion      amounts transacti                Mode of transacti
                                           of                                                          approve                            Disclos disclose
transactio with the transacti                       principl price(R amount          of      on line               settleme    on of
                                        transacti                                                      d line or                          ure date      d
 n party     Compan               on                  e       MB’0,0 (RMB’0 transacti        (’                    nt        the
                                           on                                                            not                                         informa
                   y                                            00)     ,000)      ons of RMB’0,                              same
                                                                                                                                                       tion
                                                                                   same       000)                            kind(R
                                                                                   kind                                         MB’
                                                                                                                               0,000)

                             Purchasi
             Corpora ng
             tion that products
Prosperity
             holds           and        Purchas
Lamps &                                                                                                                                              www.c
             over 5% receivin e                 of Market                                                          Remitta                03/28/2
Compone                                                       193.05    193.05     0.09%         650 No                       193.05                 ninfo.c
             shares          g labor material price                                                                nce                    016
nts                                                                                                                                                  om.cn
             of        the service s
Limited
             Compan from
             y               related
                             party

             Acting-i
                             Purchasi
             n-conce
                             ng
             rt party
                             products
             of          a
Prosperity                   and        Purchas
             corporat                                                                                                                                www.c
Electrical                   receivin e         of Market                                                          Remitta                03/28/2
             ion that                                         636.80     636.8     0.30%       1,500 No                       636.80                 ninfo.c
(China)                      g labor material price                                                                nce                    016
             holds                                                                                                                                   om.cn
Co., Ltd.                    service s
             over 5%
                             from
             shares
                             related
             of        the
                             party
             Compan



                                                                                                                                                              57
    Foshan Electrical and Lighting Co., Ltd.                                                                   Annual Report 2016


             y

             Acting-i
             n-conce Purchasi
             rt party ng
Hangzhou of            a products
Times        corporat and           Purchas
                                                                                                                          www.c
Lighting ion that receivin e              of Market                                         Remitta             03/28/2
                                                      174.93   174.93    0.08%    350 No              174.93              ninfo.c
and          holds      g labor material price                                              nce                 016
                                                                                                                          om.cn
Electrical over 5% service s
Co., Ltd. shares        from
             of      the related
             Compan party
             y

                        Purchasi
                        ng
Foshan                  products
             Under
NationSta               and         Purchas
             same                                                                                                         www.c
r                       receivin e        of Market 9,415.9    9,415.9                      Remitta 9,415.9 03/28/2
             actual                                                      4.39% 30,000 No                                  ninfo.c
Optoelect               g labor material price        9             9                       nce       9         016
             controll                                                                                                     om.cn
ronics                  service s
             er
Co., Ltd.               from
                        related
                        party

                        Purchasi
                        ng
Guangdo                 products
             Under
ng                      and         Purchas
             same                                                                                                         www.c
Fenghua                 receivin e        of Market                                         Remitta             03/28/2
             actual                                   854.51   854.51    0.40%   2,000 No             854.51              ninfo.c
Advanced                g labor material price                                              nce                 016
             controll                                                                                                     om.cn
Holding                 service s
             er
Co., Ltd.               from
                        related
                        party

                        Purchasi
                        ng
Guangdo                 products
             Under
ng                      and         Purchas
             same
Huayueba                receivin e        of Market                                         Remitta
             actual                                   139.17   139.17    0.06%        No              139.17              N/A
o New                   g labor material price                                              nce
             controll
Energy                  service s
             er
Co., Ltd.               from
                        related
                        party


                                                                                                                                  58
 Foshan Electrical and Lighting Co., Ltd.                                                                         Annual Report 2016


                           Selling
             Corpora
                           products
             tion that
Prosperity                 and
             holds
Lamps &                    providin                                                                                          www.c
             over 5%                  Selling   Market 2,634.3    2,634.3                      Remitta 2,634.3 03/28/2
Compone                    g labor                                          0.79%   4200 No                                  ninfo.c
             shares                   products price     9             9                       nce       9         016
nts                        service                                                                                           om.cn
             of      the
Limited                    to
             Compan
                           related
             y
                           party

             Acting-i
             n-conce
                           Selling
             rt party
Prosperity                 products
             of       a
(Hangzho                   and
             corporat
u)                         providin                                                                                          www.c
             ion that                 Selling   Market                                         Remitta             03/28/2
Lighting                   g labor                       13.25     13.25    0.00%    350 No              13.25               ninfo.c
             holds                    products price                                           nce                 016
and                        service                                                                                           om.cn
             over 5%
Electrical                 to
             shares
Co., Ltd.                  related
             of      the
                           party
             Compan
             y

             Acting-i
             n-conce
                           Selling
             rt party
                           products
             of       a
                           and
Prosperity corporat
                           providin                                                                                          www.c
Electrical ion that                   Selling   Market                                         Remitta             03/28/2
                           g labor                       29.59     29.59    0.01%    120 No              29.59               ninfo.c
(China)      holds                    products price                                           nce                 016
                           service                                                                                           om.cn
Co., Ltd. over 5%
                           to
             shares
                           related
             of      the
                           party
             Compan
             y

             An
                           Selling
             acting-i
                           products
             n-conce
                           and
OSRAM rt party
                           providin                                                                                          www.c
(China)      of                       Selling   Market                                         Remitta             03/28/2
                           g labor                       504.93   504.93    0.15%   1,300 No             504.93              ninfo.c
Lighting corporat                     products price                                           nce                 016
                           service                                                                                           om.cn
Co., Ltd. ion that
                           to
             held
                           related
             over 5%
                           party
             shares



                                                                                                                                     59
    Foshan Electrical and Lighting Co., Ltd.                                                                              Annual Report 2016


               of     the
               Compan
               y within
               the past
               12
               months

               An
               acting-i
               n-conce
               rt party
                             Selling
               of
                             products
               corporat
                             and
Osram          ion that
                             providin                                                                                                www.c
Asia           held                     Selling   Market                                               Remitta             03/28/2
                             g labor                       548.02   548.02    0.16%    2,500 No                  548.02              ninfo.c
Pacific        over 5%                  products price                                                 nce                 016
                             service                                                                                                 om.cn
Ltd.           shares
                             to
               of     the
                             related
               Compan
                             party
               y within
               the past
               12
               months

               A
                             Selling
               compan
Shanghai                     products
               y with a
Linxian                      and
               related
Mechanic                     providin                                                                                                www.c
               individu                 Selling   Market                                               Remitta             03/28/2
al       and                 g labor                       15.63     15.63    0.00%      70 No                   15.63               ninfo.c
               al in it                 products price                                                 nce                 016
Electrical                   service                                                                                                 om.cn
               as        a
Equipmen                     to
               senior
t Co., Ltd.                  related
               executiv
                             party
               e

                             Selling
                             products
Foshan
               Under         and
NationSta
               same          providin                                                                                                www.c
r                                       Selling   Market                                               Remitta             03/28/2
               actual        g labor                       14.00     14.00    0.00%     100 No                   14.00               ninfo.c
Optoelect                               products price                                                 nce                 016
               controll service                                                                                                      om.cn
ronics
               er            to
Co., Ltd.
                             related
                             party

                                                                    15,174.
Total                                               --        --               --     43,140      --      --        --        --        --
                                                                        26


                                                                                                                                             60
 Foshan Electrical and Lighting Co., Ltd.                                                                                          Annual Report 2016


Details of any sales return of a large
                                                  N/A
amount

                                                  In March 2016, the Company predicted the total amounts of its routine transactions with
                                                  related parties Foshan NationStar Optoelectronics Co., Ltd., Guangdong Fenghua Advanced
Give the actual situation in this Holding Co., Ltd., OSRAM (China) Lighting Co., Ltd., OSRAM (China) Lighting Co.,
Reporting Period (if any) where a Ltd., Osram Asia Pacific Ltd., Prosperity Lamps & Components Limited, Prosperity
forecast had been made for the total Electrical (China) Co., Ltd., Prosperity (Hangzhou) Lighting and Electrical Co., Ltd.,
amounts      of     routine     related-party Hangzhou Times Lighting and Electrical Co., Ltd. and Shanghai Linxian Mechanical and
transactions by type to occur in this Electrical Equipment Co., Ltd. Concerning the purchases from its related parties, the actual
Reporting Period                                  amount in 2016 was RMB114.1445million, accounting for 33.09% of the predicted. As for
                                                  the sales to its related parties, the actual amount in 2016 was RMB37.5980million,
                                                  accounting for 43.52% of the predicted.

Reason for any significant difference
between the transaction price and the N/A
market reference price (if applicable)


2. Related-party transactions regarding purchase or sales of assets or equity interests

√ Applicable □ Not applicable
                                                                     Book     Assessed
                                                                   value of   value of
             Relations        Type of   Contents                                           Price of                                         Index to
 Related                                                              the        the                             Profit/loss
             hip with           the         of the       Pricing                           transfer   Mode of                  Disclosur disclosed
transactio                                                         transferre transferre                         (RMB’0,
                   the      transactio transactio principle                                (RMB’0, settlement                     e date   informati
 n party                                                            d asset    d asset                              000)
             Company            n             n                                              000)                                                 on
                                                                   (RMB’0, (RMB’0,
                                                                     000)       000)

                                        The                                                                                                 Announc
                                        Company                                                                                             ement
                                        acquired                                                                                            No.
                                        the 30%                                                                                             2016-042
                                        stake held                                                                                          on
             Sharehold                  by                                                                                                  Acquisiti
Prosperity er        that               Prosperity                                                                                          on of
                                                        Accordin
Lamps & holds               Equity      Lamps &                                                                                             Stake in
                                                        g to the                                                               08/25/201
Compone over             5% acquisitio Compone                      2,976.52 4,050.74 4,050.74 In cash                     0                Controlle
                                                        assessed                                                               6
nts          shares of n                nts                                                                                                 d
                                                        value
Limited      the                        Limited                                                                                             Subsidiar
             Company                    in Foshan                                                                                           y&
                                        Chanchan                                                                                            Related-p
                                        g Electric                                                                                          arty
                                        Appliance                                                                                           Transacti
                                        s                                                                                                   on on
                                        (Gaoming                                                                                            www.cnin


                                                                                                                                                       61
 Foshan Electrical and Lighting Co., Ltd.                                                                              Annual Report 2016


                                     ) Co., Ltd.                                                                               fo.com.cn

Reason for any large difference between
the transfer price and the book value or           N/A
assessed value (if any)

                                                   After the acquisition, Foshan Chanchang Electric Appliances (Gaoming) Co., Ltd.
Effect on the Company’s business results          became a wholly-owned subsidiary of the Company. For the Reporting Period, Foshan
and financial position                             Chanchang Electric Appliances (Gaoming) Co., Ltd. achieved operating revenues of
                                                   RMB 66.2465million and net profit of RMB 5.9925million.

Performance of the asset in this Reporting
Period when a performance-related                  N/A
undertaking is involved in the transaction


3. Related-party transitions regarding joint investments

√ Applicable □ Not applicable
                 Relationship                                          Registered    Total assets of   Net assets of      Net profit of
                                                    Main business
Joint investor      with the        Investee                            capital of      investee         investee           investee
                                                     of investee
                   Company                                              investee     (RMB’0,000)      (RMB’0,000)      (RMB’0,000)

                                                   Production and
                                                   operation of
                                                   electrical
                                                   product,
                                                   communication
                                                   product, plastic
                                                   product, mould
                                                   product, radio
                                                   transmission
                                                   equipment,
Guangdong        Shareholder                       handset (mobile
                                  Primatronix
Electronics      that     holds                    phone), LED
                                  (Nanho)                             RMB63.33
Information      over      5%                      lighting                                17,094.32         1,356.06            -171.47
                                  Electronics                         million
Industry         shares of the                     product; Import
                                  Ltd.
Group Ltd.       Company                           and export, as
                                                   well as the
                                                   supporting
                                                   business for the
                                                   aforesaid
                                                   commodities
                                                   ( not related to
                                                   commodities
                                                   managed by the
                                                   State-trading
                                                   business, and


                                                                                                                                          62
 Foshan Electrical and Lighting Co., Ltd.                                                     Annual Report 2016


                                            should be
                                            applied
                                            according to
                                            related state
                                            rules if the
                                            commodity is
                                            related to quota,
                                            license
                                            management,
                                            and other
                                            special rules);
                                            Leasing
                                            business of
                                            self-owned
                                            plants and the
                                            supporting
                                            dormitories in
                                            NO.100 Busha
                                            Road, Nanwan
                                            Street,
                                            Longgang
                                            District

Progress on significant
ongoing construction            N/A
projects of investee (if any)


4. Credits and liabilities with related parties

□ Applicable √ Not applicable
No such cases in this Reporting Period.

5. Other significant related-party transactions


√ Applicable □ Not applicable

On December 23, 2016, the Company held the 11th meeting of the 8th Board of Directors, and the Proposal on

Signing the Financial Services Agreement with Guangdong Rising Finance Co., Ltd. was examined and approved

at the meeting. On the same day, the Company signed the Financial Services Agreement with Guangdong Rising

Finance Co., Ltd. (hereinafter referred to as “Rising Finance”), and Rising Finance would provide deposit and

settlement services for the Company. During the term of validity of the Agreement, the daily deposit balance of

the Company in Rising Finance Company shall not exceed RMB 150 million. During the Reporting Period, the



                                                                                                             63
 Foshan Electrical and Lighting Co., Ltd.                                                           Annual Report 2016



daily deposit balance held of the Company in Rising Finance Company was RMB 100 million, and the interest

income incurred and recognized in the Reporting Period was RMB 42000 yuan.


Index to the current announcements about the said related-party transactions disclosed
        Title of current announcement                Disclosure date                   Disclosure website

Announcement on Signing Financial Service
Agreement with Guangdong Rising Finance     12/24/2016                     www.cninfo.com.cn
Co., Ltd.


XVII Significant contracts and execution

1. Entrustment, contracting and leasing

(1) Entrustment

□ Applicable √ Not applicable
No such cases in this Reporting Period.

(2) Contracting

□ Applicable √ Not applicable
No such cases in this Reporting Period.

(3) Leasing


√ Applicable □ Not applicable

Particulars about leasing:

The Company and Shanghai Jiabao Industry & Commerce (Group) Co., Ltd. (hereinafter referred to as “Shanghai

Jiabao) signed , where Shanghai Jiabao agreed to license the Company to

exclusively use its trademarks “Hu Zi” (registration No.: 100940), “Lian He” (registration No.: 100950) and “Lian

He” (registration No.: 3603597) from 1 Jan. 2014 to 31 Dec. 2016; and the Company shall pay to Shanghai Jiabao

1% of the net sales of products produced by the Company and carrying the licensed trademarks as the license fee,

but it shall not be less than RMB1 million per year (for details, see the “Announcement No. 2014-002 on Signing

” disclosed on http://www.cninfo.com.cn dated 9 Jan. 2014).



Any leasing event incurring profit/loss over 10% of the total profits of the Company for this Reporting Period



                                                                                                                   64
    Foshan Electrical and Lighting Co., Ltd.                                                                                  Annual Report 2016



□ Applicable √ Not applicable

No such cases in this Reporting Period.


2. Significant guarantees

□ Applicable √ Not applicable
No such cases in this Reporting Period.

3. Entrusted cash management

(1) Entrusted cash management

√ Applicable □ Not applicable
                                                                                                                                Unit: RMB'0,000

                                                                                                                                            Actuall
                                                                                                                                                 y
                                                                                           Actual
                                                                                                                                            receive
                                                                                          principal   Amount                   Actual
               Related-p                                                       Method                                                       d/paid
                                                      Commenc                              amount     provided                profit/loss
                    arty     Product      Entrusted               Terminati       of                              Projected                 profit/l
    Trustee                                               ement                           recovered     for                     in this
               transactio      type       amount                      on date remunerat                           earnings                  oss in
                                                          date                             in this    impairme                Reporting
               n (yes/no)                                                        ion                                                         this
                                                                                          Reporting nt (if any)                Period
                                                                                                                                            Reporti
                                                                                           Period
                                                                                                                                                 ng
                                                                                                                                            Period

Xindache
                                                                              Principal
ng                          Guarantee
                                                                              repaymen
sub-branc                   d principal
                                                      04/05/201 07/07/201 t with                                                            Receiv
h of Bank No                and               3,000                                           3,000                                23.82
                                                      6           6           interest                                                      ed
of                          floating
                                                                              upon
Guangzho                    interest
                                                                              maturity
u

Foshan
                                                                              Principal
Dunhou                      Guarantee
                                                                              repaymen
sub-branc                   d principal
                                                      04/05/201 05/10/201 t with                                                            Receiv
h         of No             and               4,000                                           4,000                                 9.59
                                                      6           6           interest                                                      ed
China                       floating
                                                                              upon
Construct                   interest
                                                                              maturity
ion Bank

Sales                       Guarantee                                         Principal
Departme                    d principal               04/05/201 05/10/201 repaymen                                                          Receiv
               No                             5,000                                           5,000                                13.42
nt        of                and                       6           6           t with                                                        ed
Foshan                      floating                                          interest


                                                                                                                                                      65
    Foshan Electrical and Lighting Co., Ltd.                                               Annual Report 2016


branch of                interest                                     upon
Industrial                                                            maturity
and
Commerc
ial    Bank
of China

                                                                      Principal
Foshan                   Guarantee
                                                                      repaymen
branch of                d principal
                                                  04/15/201 05/20/201 t with                           Receiv
China          No        and              8,000                                    8,000       25.32
                                                  6         6         interest                         ed
Minsheng                 floating
                                                                      upon
Bank                     interest
                                                                      maturity

Guangzho
                                                                      Principal
u                        Guarantee
                                                                      repaymen
Huanshid                 d principal
                                                  04/08/201 07/08/201 t with                           Receiv
ong            No        and              8,000                                    8,000          63
                                                  6         6         interest                         ed
sub-branc                floating
                                                                      upon
h of SPD                 interest
                                                                      maturity
Bank

                                                                      Principal
                         Guarantee
Foshan                                                                repaymen
                         d principal
branch of                                         04/15/201 07/04/201 t with                           Receiv
               No        and             10,000                                   10,000       72.33
Huaxia                                            6         6         interest                         ed
                         floating
Bank                                                                  upon
                         interest
                                                                      maturity

                                                                      Principal
Foshan                   Guarantee
                                                                      repaymen
Jiangwan                 d principal
                                                  05/12/201 08/11/201 t with                           Receiv
sub-branc No             and              3,000                                    3,000       20.57
                                                  6         6         interest                         ed
h of Ping                floating
                                                                      upon
An Bank                  interest
                                                                      maturity

Foshan
                                                                      Principal
Dunhou                   Guarantee
                                                                      repaymen
sub-branc                d principal
                                                  05/16/201 11/14/201 t with                           Receiv
h         of No          and              8,000                                    8,000      123.66
                                                  6         6         interest                         ed
China                    floating
                                                                      upon
Construct                interest
                                                                      maturity
ion Bank

Sales                    Guarantee                                    Principal
Departme                 d principal              05/16/201 11/14/201 repaymen                         Receiv
               No                         5,000                                    5,000       73.55
nt        of             and                      6         6         t with                           ed
Foshan                   floating                                     interest



                                                                                                            66
    Foshan Electrical and Lighting Co., Ltd.                                              Annual Report 2016


branch of                interest                                     upon
Industrial                                                            maturity
and
Commerc
ial    Bank
of China

Sales
Departme
nt        of                                                          Principal
                         Guarantee
Foshan                                                                repaymen
                         d principal
branch of                                         06/06/201 12/05/201 t with                          Receiv
               No        and              3,000                                   3,000       42.63
Industrial                                        6         6         interest                        ed
                         floating
and                                                                   upon
                         interest
Commerc                                                               maturity
ial    Bank
of China

Xindache
                                                                      Principal
ng                       Guarantee
                                                                      repaymen
sub-branc                d principal
                                                  07/15/201 10/13/201 t with                          Receiv
h of Bank No             and              3,000                                   3,000       22.22
                                                  6         6         interest                        ed
of                       floating
                                                                      upon
Guangzho                 interest
                                                                      maturity
u

                                                                      Principal
Foshan                   Guarantee
                                                                      repaymen
Jiangwan                 d principal
                                                  07/14/201 10/13/201 t with                          Receiv
sub-branc No             and              3,000                                   3,000       22.44
                                                  6         6         interest                        ed
h of Ping                floating
                                                                      upon
An Bank                  interest
                                                                      maturity

Guangzho
                                                                      Principal
u                        Guarantee
                                                                      repaymen
Huanshid                 d principal
                                                  07/21/201 10/21/201 t with                          Receiv
ong            No        and              5,000                                   5,000        37.5
                                                  6         6         interest                        ed
sub-branc                floating
                                                                      upon
h of SPD                 interest
                                                                      maturity
Bank

                                                                      Principal
Foshan                   Guarantee
                                                                      repaymen
Jiangwan                 d principal
                                                  08/16/201 10/11/201 t with                          Receiv
sub-branc No             and              3,000                                   3,000       12.43
                                                  6         6         interest                        ed
h of Ping                floating
                                                                      upon
An Bank                  interest
                                                                      maturity



                                                                                                           67
    Foshan Electrical and Lighting Co., Ltd.                                                             Annual Report 2016


Foshan
                                                                             Principal
Dunhou                   Guarantee
                                                                             repaymen
sub-branc                d principal
                                                     11/16/201 12/28/201 t with                                      Receiv
h         of No          and                   500                                        500                 1.27
                                                     6           6           interest                                ed
China                    floating
                                                                             upon
Construct                interest
                                                                             maturity
ion Bank

                                                                             Principal
Foshan                   Guarantee
                                                                             repaymen
branch of                d principal                                                                                 To be
                                                     08/16/201 02/16/201 t with
China        No          and              3,000                                          3,000   49.07       36.08 receive
                                                     6           7           interest
Minsheng                 floating                                                                                    d
                                                                             upon
Bank                     interest
                                                                             maturity

Shenzhen
Chegong                                                                      Principal
                         Guarantee
miao                                                                         repaymen
                         d principal                                                                                 To be
sub-branc                                            09/06/201 03/06/201 t with
             No          and              5,000                                          5,000   61.99       40.06 receive
h of                                                 6           7           interest
                         floating                                                                                    d
China                                                                        upon
                         interest
Bohai                                                                        maturity
Bank

                                                                             Principal
Foshan                   Guarantee
                                                                             repaymen
Jiangwan                 d principal                                                                                 To be
                                                     10/19/201               t with
sub-branc No             and              6,000                  04/19/217               6,000   85.27       34.20 receive
                                                     6                       interest
h of Ping                floating                                                                                    d
                                                                             upon
An Bank                  interest
                                                                             maturity

Xindache
                                                                             Principal
ng                       Guarantee
                                                                             repaymen
sub-branc                d principal                                                                                 To be
                                                     10/28/201 06/02/201 t with
h of Bank No             and              3,000                                          3,000   53.51       16.02 receive
                                                     6           7           interest
of                       floating                                                                                    d
                                                                             upon
Guangzho                 interest
                                                                             maturity
u

Foshan
                                                                             Principal
Dunhou                   Guarantee
                                                                             repaymen
sub-branc                d principal                                                                                 To be
                                                     11/16/201 02/22/201 t with
h         of No          and              2,500                                          2,500   16.11        5.35 receive
                                                     6           7           interest
China                    floating                                                                                    d
                                                                             upon
Construct                interest
                                                                             maturity
ion Bank

Sales        No          Guarantee        5,000 11/17/201 02/16/201 Principal            5,000   36.15       17.88 To be



                                                                                                                             68
 Foshan Electrical and Lighting Co., Ltd.                                                               Annual Report 2016


Departme                 d principal                 6         2         repaymen                                   receive
nt of                    and                                             t with                                     d
Guangzho                 floating                                        interest
u branch                 interest                                        upon
of China                                                                 maturity
CITIC
Bank

Sales
Departme
nt        of                                                             Principal
                         Guarantee
Foshan                                                                   repaymen
                         d principal                                                                                To be
branch of                                            11/16/201 05/18/201 t with
               No        and                 5,000                                     5,000    66.07       16.34 receive
Industrial                                           6         7         interest
                         floating                                                                                   d
and                                                                      upon
                         interest
Commerc                                                                  maturity
ial     Bank
of China

                                                                         Principal
Foshan                   Guarantee
                                                                         repaymen
branch of                d principal                                                                                To be
                                                     11/18/201 02/21/201 t with
China          No        and                 5,000                                     5,000    40.90       18.68 receive
                                                     6         7         interest
Minsheng                 floating                                                                                   d
                                                                         upon
Bank                     interest
                                                                         maturity

                                                                         Principal
Foshan                   Guarantee
                                                                         repaymen
branch of                d principal                                                                                To be
                                                     11/18/201 02/21/201 t with
China          No        and                 5,500                                     5,500    44.99       20.37 receive
                                                     6         7         interest
Minsheng                 floating                                                                                   d
                                                                         upon
Bank                     interest
                                                                         maturity

Total                                     111,500        --        --        --      111,500   454.06      769.45       --

Source of entrusted cash               The Company’s own idle funds

Cumulative principals and
                                                                                                                             0
interest overdue

Lawsuits (if applicable)               N/A

Disclosure date of the
announcement about the board’s
                                       03/28/2016
consent for the cash management
entrustment (if any)

Disclosure date of the
announcement about the consent
of the shareholders’ meeting for
the cash management

                                                                                                                             69
 Foshan Electrical and Lighting Co., Ltd.                                                           Annual Report 2016


entrustment (if any)

Any plans for cash management
                                 Yes
entrustment in the future


(2) Entrusted loans

□ Applicable √ Not applicable
No such cases in this Reporting Period.

4. Other significant contracts

□ Applicable √ Not applicable
No such cases in this Reporting Period.

XVIII Social responsibilities

1. Targeted measures taken to help people lift themselves out of poverty

□ Applicable √ Not applicable

2. Other social responsibilities taken


We have always attached importance to the accomplishment of our social value. With “provide returns for

shareholders, provide a platform for employees, create value for customers and create prosperity for the society”

as our mission, we take on the social responsibilities to protect the interests of our creditors, employees, customers,

suppliers and community. We have been utilizing resources in a scientific, rational way, effectively protecting the

natural environment and safeguarding social safety so as to promote common, harmonious and sustainable

development of the Company and the society.

A. Protection of the rights and interests of our shareholders and creditors

We continuously improve our corporate governance structure, regulate our operation and enhance our

management on information disclosure and investor relations. We treat all our investors fairly and justly, ensure

their rights to know about, participate in and vote on the significant events of the Company, and safeguard the

legal rights and interests of all our shareholders, especially our minority shareholders.

B. Protection of the rights and interests of our employees

Considering employees the most valuable resource for our survival and development, we constantly improve our

employment system, improve the compensation packages for our employees and attach importance to talent

cultivation so as to provide opportunities and space for the sustainable development of our employees as well as


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 Foshan Electrical and Lighting Co., Ltd.                                                           Annual Report 2016



realize the common development of the employees and the Company. We also pay attention to the health of our

employees, attach importance to production safety and labor protection, and improve the working and living

conditions for our employees so as to formulate harmonious and stable labor relations.

C. Protection of the rights and interests of our customers and consumers

We have been upholding the “Customer First” principle in our provision of quality products and services to

customers. We operate honestly and disallow any unfair trade practice against commercial ethics, market rules and

the fair competition principle. We also improve our product quality and after-sales services and try to build a

win-win relationship with our customers.

D. Protection of the rights and interests of our suppliers

We respect and protect the legal rights and interests of our suppliers, carefully protect their secret and proprietary

information, encourage and push them to continuously improve the quality of their products and services through

creating an environment for open and fair competition among them so as to realize mutual benefits and mutual

development of the suppliers and the Company.

E. Environmental protection and sustainable development

As an active response to the government’s call for building an environment-friendly and resource-saving society,

we take on our responsibility of environmental protection and strictly abide by the government’s laws and

regulations in environmental protection. In the Reporting Period, we enhanced the R&D, promotion and sale of

environment-friendly and high-efficient products. We have passed the ISO14001 environmental management

system certification, passed the province’s voluntary clean production examination and won the title of “Clean

Production Enterprise in Guangdong Province”.

F. Public relations and welfare

We attach importance to the realization of our social value and see creating a prosperous society as a commitment

that we should take on, trying to boost the local economy through our own development. We have been granted by

the local government the title of “Foshan Over-100-Million Tax Payer” for many years due to our contributions in

boosting the harmonious development of the Company and the community.


Is the Company or any of its subsidiaries a heavily polluting business identified by the environmental protection

authorities of China?

No.



Indicate by tick mark whether a social responsibility report is released

                                                                                                                   71
 Foshan Electrical and Lighting Co., Ltd.                                                     Annual Report 2016



□ Yes √ No


XIX Other significant events

√ Applicable □ Not applicable

On August 23, 2016, the Company held the 1st Extraordinary Shareholders’ General Meeting in 2016, examined

and approved the Proposal on Authorizing the Reduction in Holding of Part of the Stocks of Guoxuan High-tech in

Due Time, and authorized the management of the Company to choose the time to reduce holding part of the stocks

of Guoxuan High-tech through block trading or aggregate auction in accordance with the laws and regulations

from the date of approval by the shareholders’ General Meeting to December 31, 2016. The reduction shall not

exceed 3650 shares, and the price shall be determined according to the market price when the reduction was

implemented.

From November 15, 2016 to December 7, 2016, the Company reduced holding 29,270,000 shares of Guoxuan

High-tech through the block trading, accounting for 3.34% of the total share capital of Guoxuan High-tech. The

total turnover was RMB 965.2446 million. After deducting costs and related taxes and fees, The company

achieved an investment income of RMB853.2161 million, contributing RMB725.2337 million to the net profit of

the Company for 2016. As of the end of the Reporting Period, the Company still holds 43,736,150 shares of

Guoxuan High-tech, accounting for 4.98% of the total share capital of Guoxuan High-tech.


XX Significant events of subsidiaries

√ Applicable □ Not applicable

During the Reporting Period, Suzhou Mont Lighting Co., Ltd. (hereinafter referred to as “Suzhou Mont”), a

subsidiary of the Company, was filed for bankruptcy liquidation by the creditor Suzhou Liftall Electronics Co.,

Ltd. with the Suzhou Industrial Park People’s Court. Suzhou Industrial Park People’s Court had accepted the

bankruptcy liquidation application and designated Jiangsu Yingyuan Law Firm as the administrator of Suzhou

Mont. The Company’s investment in Suzhou Mont was RMB 24.36 million, and the claims that hadn’t been

recognized by the judiciary were RMB 14,187,300, totaling RMB 38,547,300. In the year of 2015, the Company

has made provision for impairment of the aforesaid assets in full. (For details, please refer to Announcement on

Holding Subsidiary Suzhou Mont Lighting Co., Ltd. Being Filed for Bankruptcy Liquidation, Announcement on

the Court’s Acceptance of the Bankruptcy Liquidation Matters of the Holding Subsidiary and Announcement on

the Progress of Bankruptcy Liquidation of the Holding Subsidiary published on http://www.cninfo.com.cn on


                                                                                                             72
 Foshan Electrical and Lighting Co., Ltd.                                                   Annual Report 2016



April 19, 2016, May 10, 2016 and June 4, 2016).

The bankruptcy liquidation of Suzhou Mont did not have any significant impact on the Company’s operating and

performance in 2016.




                                                                                                           73
 Foshan Electrical and Lighting Co., Ltd.                                                                        Annual Report 2016




                   Section VI Share Changes and Shareholders’ Profile

I Share changes

1. Share changes

                                                                                                                            Unit: share

                                          Before                       Increase/decrease (+/-)                        After

                                                                              Increase
                                                Percentag   New      Bonus      from                                        Percentag
                                    Number                                                 Other     Subtotal   Number
                                                 e (%)      issues   shares    capital                                        e (%)
                                                                              reserve

                                   12,655,86                                                                    12,522,47
                                                   0.99%                                  -133,382 -133,382                    0.98%
1. Restricted shares                       1                                                                           9

1.3 Shares held by other
                                   4,539,832       0.36%                                  -133,382 -133,382 4,406,450          0.34%
domestic investors

Among which: Shares held
                                   3,959,926       0.31%                                   -99,251    -99,251 3,860,675        0.30%
by domestic corporations

                  Shares held by
                                     579,906       0.05%                                   -34,131    -34,131    545,775       0.04%
domestic individuals

1.4 Shares held by foreign
                                   8,116,029       0.64%                                                        8,116,029      0.64%
investors

                  Shares held by
                                   8,116,029       0.64%                                                        8,116,029      0.64%
foreign individuals

                                   1,259,477,                                                                   1,259,610
                                                  99.01%                                   133,382    133,382                 99.02%
2. Non-restricted shares                 007                                                                         ,389

                                   974,861,5                                                                    974,940,0
2.1 RMB common shares                             76.63%                                    78,457     78,457                 76.64%
                                          88                                                                          45

2.2    Domestically        listed 284,615,4                                                                     284,670,3
                                                  22.37%                                    54,925     54,925                 22.38%
foreign shares                            19                                                                          44

                                   1,272,132,                                                                   1,272,132
3. Total shares                                  100.00%                                                                     100.00%
                                         868                                                                         ,868

Reasons for any share changes

√ Applicable □ Not applicable

1. During this Reporting Period, the ownership of 17,564 restricted shares was transferred from domestic

corporations to domestic individuals, and these shares have been unlocked as non-restricted shares on October 27,



                                                                                                                                      74
 Foshan Electrical and Lighting Co., Ltd.                                                       Annual Report 2016



2016.

2. 114,618 restricted shares (81,687 shares held by domestic corporations and 32,931 shares by domestic

individuals) have been unlocked as non-restricted shares on October 27, 2016.

3. During this Reporting Period, the Company’s shares held by some new supervisors and outgoing directors and

executive officers were locked up or unlocked as stipulated, resulting in an increment of 31,889 non-restricted

shares.

4. During this Reporting Period, some supervisors and executive officers increased their shareholdings in the

Company, representing an increase of 13,125restricted shares.

5. Due to Item 2, 3 and 4 above, the Company’s restricted shares decreased by 133,382 shares in the Reporting

Period.


Approval of share changes

√ Applicable □ Not applicable

Upon the review and approval of the Shenzhen Stock Exchange and the Shenzhen branch of China Securities

Depository and Clearing Co., Ltd., 114,618 restricted shares became tradable on October 27, 2016 (for details, see

the Indicative Announcement No. 2016-057 on Unlocking Shares disclosed on www.cninfo.com.cn dated October

26, 2016).


Transfer of share ownership

□ Applicable √ Not applicable



Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders

of the Company and other financial indexes over the prior year and the prior period

□ Applicable √ Not applicable



Other contents that the Company considers necessary or is required by the securities regulatory authorities to

disclose

□ Applicable √ Not applicable




                                                                                                               75
 Foshan Electrical and Lighting Co., Ltd.                                                                              Annual Report 2016



2. Changes in restricted shares


√ Applicable □ Not applicable
                                                                                                                                  Unit: share

                                                                                                     Reason for
     Name of            Opening         Unlocked in this Increased in this Closing restricted                                  Date of
                                                                                                  lock-up/unlockin
   shareholder      restricted shares Reporting Period Reporting Period          shares                                       unlocking
                                                                                                            g

                                                                                                  Lock-up             of
Zhang Xuequan                   8,483                  0             1,425                9,908 executive                  Uncertain
                                                                                                  officer’s shares

                                                                                                  Lock-up             of
Ye Zhenghong                  21,996                   0            11,700            33,969 supervisor’s                 Uncertain
                                                                                                  shares

                                                                                                  Lock-up             of
                                                                                                  outgoing
Xie Qing                      22,912                   0             8,613            31,525                               05/27/2017
                                                                                                  executive
                                                                                                  officer’s shares

                                                                                                  Expiration          of
                                                                                                  lock-up             of
Pan Jie                       55,900              55,900                 0                    0                            06/26/2016
                                                                                                  outgoing
                                                                                                  director’s shares

Foshan
                                                                                                  Restricted shares
Enterpreneur
                              81,687              81,687                 0                    0 before going               10/27/2016
Directors
                                                                                                  public
Association

                                                                                                  Restricted shares
Zhou Zuliang                  13,174              13,174                 0                    0 before going               10/27/2016
                                                                                                  public

                                                                                                  Restricted shares
Han Yuqin                     10,977              10,977                 0                    0 before going               10/27/2016
                                                                                                  public

                                                                                                  Restricted shares
Chen Xianming                   4,390              4,390                 0                    0 before going               10/27/2016
                                                                                                  public

                                                                                                  Restricted shares
Zhang Sirui                     4,390              4,390                 0                    0 before going               10/27/2016
                                                                                                  public

                                                                                                  Lock-up             of
Lin Qing                            0                  0            15,398            15,398 supervisor’s                 Uncertain
                                                                                                  shares



                                                                                                                                          76
 Foshan Electrical and Lighting Co., Ltd.                                                                                     Annual Report 2016


Total                        223,909                 170,518                    37,136                 90,800       --                  --



II Issuance and listing of securities


1. Securities (excluding preference shares) issued in this Reporting Period


□ Applicable √ Not applicable

2. Changes in total shares of the Company and the shareholder structure, as well as the asset and liability

structures

□ Applicable √ Not applicable


3. Existing employee-held shares


□ Applicable √ Not applicable


III Shareholders and actual controller


1. Total number of shareholders and their shareholdings
                                                                                                                                        Unit: share

                                                                                                                 Total number of
                                                                                                                 preference
                                 Total number of
                                                                           Total number of                       shareholders
                                 common
                                                                           preference                            with     resumed
Total     number                 shareholders        at
                                                                           shareholders with                     voting rights at
of       common                  the            prior
                        85,213                                      85,567 resumed            voting            0 the           prior           0
shareholders at                  month-end
                                                                           rights        at      the             month-end
the period-end                   before             the
                                                                           period-end (if any)                   before          the
                                 disclosure of this
                                                                           (see note 8)                          disclosure of this
                                 Report
                                                                                                                 Report (if any)
                                                                                                                 (see note 8)

                                       5% or greater shareholders or the top 10 shareholders

                                                            Total      Increase/                                 Pledged or frozen shares
                                                                                    Number         Number
                                          Sharehold        shares      decrease
                                                                                         of             of
        Name of         Nature of            ing           held at      during
                                                                                    restricted non-restric
     shareholder       shareholder        percentag          the         this                                    Status             Number
                                                                                     shares       ted shares
                                            e (%)         period-en Reporting
                                                                                      held             held
                                                             d          Period




                                                                                                                                                77
 Foshan Electrical and Lighting Co., Ltd.                                                                         Annual Report 2016


Hong Kong Wah
                         Foreign                            171,360,3                     171,360,3
Shing         Holding                              13.47%               0             0               Pledged            83,966,592
                         corporation                              91                            91
Company Limited

Prosperity      Lamps
                         Foreign                            133,577,1                     133,577,1
&       Components                                 10.50%               0             0
                         corporation                              43                            43
Limited

Shenzhen        Rising
Investment               State-owned                        65,178,30                     65,178,30
                                                    5.12%               25641558      0
Development Co., corporation                                       5                             5
Ltd.

Guangdong
Electronics
                         State-owned                        60,357,72                     60,357,72
Information                                         4.74%               0             0               Pledged            29,575,287
                         corporation                               8                             8
Industry        Group
Ltd.

Central         Huijin
                         State-owned                        30,799,00                     30,799,00
Asset Management                                    2.42%               0             0
                         corporation                               0                             0
Co., Ltd.

Essence
International            Foreign                            23,794,84                     23,794,84
                               &nb