Section I Definitions [I. Definitions](index=6&type=section&id=I.%20Definitions) This section provides definitions of key terms used in the report, covering company names, related parties, business entities, and specific business concepts like the 2020 major asset restructuring, ensuring clear understanding of the report content - Company Name: **State Grid Yingda Co., Ltd.**, Stock Code: **600517**[11](index=11&type=chunk) - Controlling Shareholder: **State Grid Yingda International Holdings Group Co., Ltd.**[11](index=11&type=chunk) - 2020 Restructuring: The company's acquisition of **73.49%** equity in Yingda Trust and **96.67%** equity in Yingda Securities from Yingda Group and other transaction parties through share issuance[11](index=11&type=chunk) Section II Company Profile and Key Financial Indicators [I. Company Information](index=8&type=section&id=I.%20Company%20Information) This section outlines State Grid Yingda's basic registration information, including its Chinese name, abbreviation, foreign name, and legal representative - Company Chinese Name: **State Grid Yingda Co., Ltd.**, Chinese Abbreviation: **State Grid Yingda**, Legal Representative: **Tan Zhenyong**[13](index=13&type=chunk) [II. Contact Person and Information](index=8&type=section&id=II.%20Contact%20Person%20and%20Information) This section provides contact information for the company's Board Secretary and Securities Affairs Representative, facilitating communication for investors and relevant parties - Board Secretary: **Niu Xihong**, Securities Affairs Representative: **Zhong Hua**, Contact Number: **021-51796818**, Email: **600517@sgcc.com.cn**[14](index=14&type=chunk) [III. Brief Introduction to Basic Information](index=8&type=section&id=III.%20Brief%20Introduction%20to%20Basic%20Information) This section introduces the company's registered address, office address, website, and email - Company Registered and Office Address: **9th Floor, Building C, No. 211 Guoyao Road, China (Shanghai) Pilot Free Trade Zone**, Company Website: **www.gwydgf.com**[15](index=15&type=chunk) [IV. Information Disclosure and Document Availability](index=8&type=section&id=IV.%20Information%20Disclosure%20and%20Document%20Availability) This section specifies the designated media for company information disclosure and the location for annual report availability - Designated media for information disclosure: **Shanghai Securities News**, **China Securities Journal**, Designated website: **www.sse.com.cn**[16](index=16&type=chunk) [V. Company Stock Overview](index=8&type=section&id=V.%20Company%20Stock%20Overview) This section provides company stock listing information, including stock type, listing exchange, stock abbreviation, and code Company Stock Overview | Stock Type | Listing Exchange | Stock Abbreviation | Stock Code | Former Stock Abbreviation | | :--- | :--- | :--- | :--- | :--- | | A-share | Shanghai Stock Exchange | State Grid Yingda | 600517 | Zhixin Electric | [VI. Other Relevant Information](index=9&type=section&id=VI.%20Other%20Relevant%20Information) This section lists the accounting firm appointed by the company and the financial advisor responsible for continuous supervision during the reporting period - Domestic accounting firm appointed by the company: **ShineWing Certified Public Accountants (Special General Partnership)**[18](index=18&type=chunk) - Financial advisor performing continuous supervision during the reporting period: **China Securities Co., Ltd.**[18](index=18&type=chunk) [VII. Key Accounting Data and Financial Indicators for the Past Three Years](index=9&type=section&id=VII.%20Key%20Accounting%20Data%20and%20Financial%20Indicators%20for%20the%20Past%20Three%20Years) This section presents the company's key accounting data and financial indicators for the past three years, explaining the significant impact of the 2020 major asset restructuring on financial data Key Accounting Data (Unit: Yuan, Currency: RMB) | Indicator | 2020 | 2019 (Adjusted) | 2018 (Adjusted) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenue | 8,091,587,654.49 | 7,603,296,316.62 | 6,798,924,479.60 | 6.42 | | Net Profit Attributable to Shareholders of Listed Company | 1,176,009,762.34 | 952,752,773.09 | 532,718,877.97 | 23.43 | | Net Cash Flow from Operating Activities | -195,512,120.34 | 1,570,688,014.52 | -264,375,061.29 | -112.45 | | Net Assets Attributable to Shareholders of Listed Company | 17,269,918,410.89 | 13,988,802,736.94 | 13,029,007,117.95 | 23.46 | | Total Assets | 39,679,969,181.69 | 33,126,425,582.05 | 31,843,049,611.57 | 19.78 | Key Financial Indicators (Unit: Yuan/share) | Indicator | 2020 | 2019 (Adjusted) | 2018 (Adjusted) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | Basic Earnings Per Share | 0.21 | 0.18 | 0.10 | 16.67 | | Diluted Earnings Per Share | 0.21 | 0.18 | 0.10 | 16.67 | | Basic Earnings Per Share Excluding Non-recurring Gains and Losses | 0.23 | -0.01 | -0.01 | Not Applicable | | Weighted Average Return on Net Assets (%) | 7.45 | 7.05 | 3.99 | Increased by 0.40 percentage points | | Weighted Average Return on Net Assets Excluding Non-recurring Gains and Losses (%) | 7.96 | -0.50 | -0.24 | Increased by 8.46 percentage points | - During the reporting period, the company completed the acquisition of **73.49%** equity in Yingda Trust and **96.67%** equity in Yingda Securities through share issuance, and gained controlling interest in Yingda Factoring through capital increase, leading to a **significant increase** in the company's assets, net assets, revenue, and net profit attributable to shareholders of the listed company compared to pre-adjustment levels[22](index=22&type=chunk) [VIII. Differences in Accounting Data under Domestic and Overseas Accounting Standards](index=10&type=section&id=VIII.%20Differences%20in%20Accounting%20Data%20under%20Domestic%20and%20Overseas%20Accounting%20Standards) This section clarifies that the company has no differences in net profit and net assets attributable to shareholders of the listed company in financial reports disclosed simultaneously under International Accounting Standards and Chinese Accounting Standards - The company has no differences in accounting data under domestic and overseas accounting standards[23](index=23&type=chunk) [IX. Key Quarterly Financial Data for 2020](index=10&type=section&id=IX.%20Key%20Quarterly%20Financial%20Data%20for%202020) This section presents the company's key quarterly financial data for 2020, reflecting its quarterly operating performance during the reporting period Key Quarterly Financial Data for 2020 (Unit: Yuan, Currency: RMB) | Indicator | Q1 (Jan-Mar) | Q2 (Apr-Jun) | Q3 (Jul-Sep) | Q4 (Oct-Dec) | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenue | 973,954,491.61 | 1,749,775,646.13 | 2,207,793,140.02 | 3,160,064,376.73 | | Operating Revenue | 305,569,445.46 | 994,744,267.94 | 1,373,879,991.46 | 2,370,057,651.39 | | Interest Income | 137,656,889.12 | 213,482,792.60 | 219,371,489.55 | 212,100,897.65 | | Fee and Commission Income | 530,728,157.03 | 541,548,585.59 | 614,541,659.01 | 577,905,827.69 | | Net Profit Attributable to Shareholders of Listed Company | 241,428,009.63 | 327,636,656.60 | 386,817,042.38 | 220,128,053.73 | | Net Profit Attributable to Shareholders of Listed Company After Deducting Non-recurring Gains and Losses | 179,958,907.91 | 303,054,056.61 | 390,537,691.29 | 382,657,939.04 | | Net Cash Flow from Operating Activities | 1,395,779,806.34 | -2,377,749,738.29 | 389,037,467.68 | 500,219,624.93 | [X. Non-recurring Gains and Losses Items and Amounts](index=11&type=section&id=X.%20Non-recurring%20Gains%20and%20Losses%20Items%20and%20Amounts) This section lists the company's non-recurring gains and losses items and their amounts for 2020, noting the company's main business shifted to a "finance + manufacturing" dual-core model after the 2020 major asset restructuring Non-recurring Gains and Losses Items and Amounts (Unit: Yuan, Currency: RMB) | Non-recurring Gains and Losses Item | 2020 Amount | 2019 Amount | 2018 Amount | | :--- | :--- | :--- | :--- | | Gains/Losses from Disposal of Non-current Assets | -1,241,341.84 | 23,933,726.11 | 83,893.86 | | Government Grants Included in Current Profit/Loss | 36,645,602.76 | 33,829,869.78 | 52,903,561.28 | | Net Profit/Loss of Subsidiaries from Beginning of Period to Merger Date under Common Control | 18,241,389.21 | 1,191,086,483.58 | 663,171,302.55 | | Other Non-operating Income and Expenses Apart from the Above | -224,693,633.66 | 2,061,844.11 | 6,487,386.66 | | Impact on Minority Interests | 41,944,798.59 | -258,654,797.69 | -151,883,264.45 | | Income Tax Impact | 48,904,352.43 | -26,670,184.44 | -14,573,735.72 | | Total | -80,198,832.51 | 1,019,727,230.67 | 564,722,083.96 | - After the completion of the 2020 major asset restructuring, the company's main business shifted from electrical manufacturing to a **"finance + manufacturing" dual-core model**, with carbon asset business included in the main business from this year[26](index=26&type=chunk) [XI. Items Measured at Fair Value](index=11&type=section&id=XI.%20Items%20Measured%20at%20Fair%20Value) This section discloses the company's financial asset items measured at fair value, along with their opening and closing balances, current period changes, and impact on current profit Items Measured at Fair Value (Unit: Yuan, Currency: RMB) | Item Name | Opening Balance | Closing Balance | Current Period Change | Impact on Current Period Profit | | :--- | :--- | :--- | :--- | :--- | | Trading Financial Assets | 9,552,932,625.08 | 10,718,052,603.37 | 1,165,119,978.29 | 427,753,621.86 | | Other Debt Investments | 4,659,417,621.18 | 8,270,867,935.93 | 3,611,450,314.75 | 221,009,937.38 | | Other Equity Instrument Investments | 76,873,182.56 | 82,284,754.27 | 5,411,571.71 | 870,942.00 | | Total | 14,289,223,428.82 | 19,071,205,293.57 | 4,781,981,864.75 | 649,634,501.24 | Section III Company Business Overview [I. Description of Main Businesses, Business Models, and Industry Conditions during the Reporting Period](index=13&type=section&id=I.%20Description%20of%20Main%20Businesses,%20Business%20Models,%20and%20Industry%20Conditions%20during%20the%20Reporting%20Period) In 2020, State Grid Yingda successfully transformed into a "finance + manufacturing" dual-core business model through major asset restructuring, with operations covering trust, securities, futures, factoring, carbon assets, and power equipment; this section details the business models and overall industry conditions for each segment - In 2020, the company actively promoted transformation and development, completed major asset restructuring, and shifted its main business from electrical manufacturing to a **"finance + manufacturing" dual-core model**, covering trust, securities, futures, factoring, carbon assets, and power equipment[29](index=29&type=chunk) [(1) Main Businesses and Business Models](index=13&type=section&id=(1)%20Main%20Businesses%20and%20Business%20Models) This section elaborates on the business models of the company's six major business segments, including trust, securities, futures, factoring, carbon assets, and power equipment - Trust Business: Manages or disposes of assets as a trustee, collects fees, with investment scope covering finance, energy, and infrastructure[30](index=30&type=chunk) - Securities Business: A comprehensive securities company engaged in brokerage, credit trading, investment banking, proprietary trading, asset management, and STAR Market follow-on investments[31](index=31&type=chunk) - Futures Business: Engaged in futures brokerage, asset management, fixed income, and investment advisory services[32](index=32&type=chunk) - Factoring Business: Primarily engaged in accounts receivable factoring financing, earning interest spread income, covering areas such as grid electricity fees and equipment manufacturing[33](index=33&type=chunk) - Carbon Asset Business: Engaged in carbon auditing, carbon asset development, carbon trading, carbon finance, low-carbon and carbon market-related research, and green supply chain management[33](index=33&type=chunk) - Power Equipment Business: Engaged in R&D, production, sales, and technical services related to electrical and new material equipment, power operation and maintenance, and energy-saving and engineering services[34](index=34&type=chunk)[35](index=35&type=chunk) [(2) Industry Overview](index=14&type=section&id=(2)%20Industry%20Overview) This section analyzes the macroeconomic environment and development trends of the industries in which the company's various businesses operate, including trust, securities, futures, factoring, carbon assets, and power equipment - Trust Industry: Development focuses on quality and efficiency, with a decline in channel business scale, enhanced active management capabilities, and overall controllable risks[36](index=36&type=chunk) - Securities Industry: Multi-level development of capital markets, accelerated business transformation, serving the real economy and household wealth management, with overall improving operating conditions[37](index=37&type=chunk) - Futures Industry: Entered a rapid development stage, with increased trading volume and market margin, and full utilization of risk management functions[38](index=38&type=chunk) - Carbon Asset Industry: Carbon market construction is accelerating, the national carbon market has officially launched, and significant achievements have been made in addressing climate change[40](index=40&type=chunk) - Power Equipment Industry: Part of the electrical equipment manufacturing sector within the power industry, benefiting from the trend towards clean, low-carbon, intelligent, and efficient transformation[41](index=41&type=chunk) [II. Explanation of Significant Changes in the Company's Major Assets during the Reporting Period](index=14&type=section&id=II.%20Explanation%20of%20Significant%20Changes%20in%20the%20Company's%20Major%20Assets%20during%20the%20Reporting%20Period) During the reporting period, the company significantly increased its equity in Yingda Trust, Yingda Securities, and Yingda Factoring through share issuance for asset acquisition and capital increase, leading to a substantial growth in the company's asset scale - On February 28, 2020, the company completed the acquisition of **73.49%** equity in Yingda Trust and **96.67%** equity in Yingda Securities through share issuance, adding **25.07 billion yuan** in book value of assets and **13.24 billion yuan** in net assets[42](index=42&type=chunk) - On May 15, 2020, the company completed the supporting raised funds of **2.22 billion yuan**[42](index=42&type=chunk) - The company and Yingda Trust increased capital in Yingda Factoring; upon completion, the company holds **56%** equity and Yingda Trust holds **19%** equity in Yingda Factoring, adding **298.77 million yuan** in book value of assets and **52.38 million yuan** in net assets[43](index=43&type=chunk) [III. Analysis of Core Competitiveness during the Reporting Period](index=15&type=section&id=III.%20Analysis%20of%20Core%20Competitiveness%20during%20the%20Reporting%20Period) During the reporting period, the company's core competitive advantages in its "finance + manufacturing" dual-core business model became more prominent, accumulating significant advantages in the energy sector through industry-finance synergy, specialized operations, and risk management - The company possesses strong comprehensive service capabilities, fully leveraging the advantageous resources of State Grid Corporation as a shareholder to deeply serve the main power grid business and cultivate industry chain operations[44](index=44&type=chunk) - Strong synergistic effects have been formed, deepening industry-finance collaboration, strengthening the complementary advantages of finance, carbon assets, and manufacturing, and promoting financial services to empower industrial development[44](index=44&type=chunk) - Adhering to a compliant and stable operating model, strictly implementing regulatory policies, improving the comprehensive risk management system, and enhancing standardized operation levels[44](index=44&type=chunk) [(1) Efficient and Standardized Operation of "Finance + Manufacturing" Dual-Core Business](index=15&type=section&id=(1)%20Efficient%20and%20Standardized%20Operation%20of%20%22Finance%20%2B%20Manufacturing%22%20Dual-Core%20Business) Relying on its State Grid background, the company achieved efficient and standardized operation of its "finance + manufacturing" dual-core business through industry-finance synergy and strict compliance management, forming unique comprehensive service capabilities and competitive advantages - As a controlled subsidiary of State Grid Corporation, the company leverages advantageous resources such as shareholder assets, credit, data, and channels, accumulating first-mover advantages in finance, carbon assets, and manufacturing[44](index=44&type=chunk) - Deepening industry-finance synergy, strengthening the competitive advantage of financial businesses in the energy sector through industrial practice, and empowering industrial development through financial services[44](index=44&type=chunk) - Strictly implementing regulatory policies, strengthening related party transaction management, improving the comprehensive risk management system, and enhancing standardized operation levels[44](index=44&type=chunk) [(2) Competitive Advantages in Each Business Segment](index=15&type=section&id=(2)%20Competitive%20Advantages%20in%20Each%20Business%20Segment) Each of the company's business segments possesses unique competitive advantages, including trust's specialized experience in the power industry chain, securities' distinctive services in the energy sector, futures' mature business model, factoring's industry-finance synergy, carbon assets' professional qualifications, and power equipment's complete industry chain and technological leadership - Yingda Trust, relying on its industrial background and shareholder strength, holds an advantageous position in clean energy generation, supply chain finance, and possesses an experienced talent pool[45](index=45&type=chunk) - Yingda Securities has a rich variety of business types, has deeply cultivated the energy and power industry for many years, forming distinctive business features and industry influence[46](index=46&type=chunk) - Yingda Futures has established a mature business model, is familiar with the upstream and downstream of the energy industry chain, and continuously strengthens its marketing team[46](index=46&type=chunk) - Yingda Factoring possesses industry-finance and inter-finance synergy advantages, has established coordination mechanisms around the power grid industry chain, and built a sound risk management system[47](index=47&type=chunk) - Yingda Carbon Assets has accumulated rich business experience, holding membership qualifications for **8** carbon exchanges and the International Emissions Trading Association[47](index=47&type=chunk) - The power equipment segment has a relatively complete industry chain, focusing on amorphous alloy material applications and transformer development, with a solid technological foundation in high-voltage, ultra-high-voltage, and ultra-high-voltage fields[47](index=47&type=chunk) Section IV Management Discussion and Analysis [I. Management Discussion and Analysis](index=17

[Important Notice](index=3&type=section&id=%E4%B8%80%E3%80%81%20%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA) This section confirms the report's authenticity and completeness, with management assuming legal responsibility, and notes its unaudited status [Report Authenticity and Audit Status](index=3&type=section&id=1.1%20%E6%8A%A5%E5%91%8A%E7%9C%9F%E5%AE%9E%E6%80%A7%E4%B8%8E%E5%AE%A1%E8%AE%A1%E6%83%85%E5%86%B5) Company management guarantees the report's truthfulness and completeness, assuming legal responsibility, and confirms the report is unaudited - The company's board, supervisory board, and senior management guarantee the report's truthfulness and completeness[4](index=4&type=chunk) - The company's responsible person, chief accountant, and head of accounting guarantee the financial statements' truthfulness and completeness[4](index=4&type=chunk) - This company's Q3 2019 report is unaudited[4](index=4&type=chunk) [Company Overview](index=3&type=section&id=%E4%BA%8C%E3%80%81%20%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E6%83%85%E5%86%B5) This section provides an overview of the company's key financial performance and shareholder structure as of the reporting period [Key Financial Data](index=3&type=section&id=2.1%20%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%95%B0%E6%8D%AE) As of Q3 2019, total assets slightly increased by **0.66%**, revenue grew **6.70%**, and net profit attributable to shareholders reached **21.81 million Yuan**, turning losses into profit, with improved operating cash flow Key Financial Metrics for Q1-Q3 2019 | Metric | Q1-Q3 2019 | Q1-Q3 2018 | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue (Yuan) | 3,039,475,498.09 | 2,848,697,860.63 | 6.70 | | Net Profit Attributable to Shareholders (Yuan) | 21,806,492.65 | -150,117,792.76 | N/A | | Net Profit Attributable to Shareholders (Excl. Non-recurring Items) (Yuan) | -94,211,520.60 | -156,392,483.84 | N/A | | Net Cash Flow from Operating Activities (Yuan) | -372,867,591.15 | -817,246,794.29 | N/A | | Basic EPS (Yuan/share) | 0.02 | -0.11 | N/A | - The company's non-recurring gains and losses for the first three quarters totaled **97.75 million Yuan**, primarily from investment income on disposal of trading financial assets (**109 million Yuan**) and non-current asset disposal gains (**20.27 million Yuan**)[6](index=6&type=chunk)[7](index=7&type=chunk) [Shareholder Ownership](index=4&type=section&id=2.2%20%E8%82%A1%E4%B8%9C%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5) As of the reporting period, the company had **67,094** common shareholders, with the top two holding **31.57%** and **15.33%** respectively, all as unrestricted shares Top Ten Shareholders' Holdings | Shareholder Name | Shares Held at Period End | Percentage (%) | | :--- | :--- | :--- | | State Grid Electric Power Research Institute Co., Ltd. | 428,138,981 | 31.57 | | Shanghai Zhixin (Group) Co., Ltd. | 207,857,842 | 15.33 | | Shanghai Zhixin Electric Engineering Installation Co., Ltd. | 97,069,509 | 7.16 | | Central Huijin Asset Management Co., Ltd. | 25,902,300 | 1.91 | - Shanghai Zhixin (Group) Co., Ltd. holds **100%** of Shanghai Zhixin Electric Engineering Installation Co., Ltd., constituting a related party relationship[9](index=9&type=chunk) [Significant Events](index=5&type=section&id=%E4%B8%89%E3%80%81%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) This section details significant changes in financial statement items and provides updates on major ongoing corporate matters [Major Changes in Key Financial Statement Items and Indicators and Their Reasons](index=5&type=section&id=3.1%20%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%8A%A5%E8%A1%A8%E9%A1%B9%E7%9B%AE%E3%80%81%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87%E9%87%8D%E5%A4%A7%E5%8F%98%E5%8A%A8%E7%9A%84%E6%83%85%E5%86%B5%E5%8F%8A%E5%8E%9F%E5%9B%A0) Significant changes occurred across financial statements, including a **33.46%** decrease in monetary funds, a **39.49%** increase in inventory, substantial gains from fair value changes and asset disposal, and improved operating and investing cash flows - Key Balance Sheet Changes: - **Monetary funds** decreased by **33.46%**: primarily due to payments to suppliers and bill acceptance - **Notes receivable** decreased by **85.89%**: primarily due to reduced bill settlement methods and bill maturities - **Inventories** increased by **39.49%**: primarily due to increased procurement for recent projects - **Long-term equity investments** increased by **66.95%**: primarily due to equity investment in Wuhan Zuoling[10](index=10&type=chunk) - Key Income Statement Changes: - **Fair value change gains** increased by **139 million Yuan**: primarily due to the rise in fair value of carbon emission allowances - **Asset disposal gains** increased by **24123.47%**: primarily due to the sale of Chongqing Yadongya real estate - **Credit impairment losses** increased by **49.33 million Yuan**: primarily due to the reclassification of bad debt losses under new financial standards and increased provisions this period[11](index=11&type=chunk) - Key Cash Flow Statement Changes: - **Net cash from operating activities** increased by **444 million Yuan**: primarily due to increased collections this period - **Net cash from investing activities** increased by **85.40 million Yuan**: primarily due to the sale of Chongqing Yadongya real estate - **Net cash from financing activities** decreased by **458 million Yuan**: primarily due to reduced external borrowings this period[11](index=11&type=chunk) [Progress of Significant Matters](index=6&type=section&id=3.2%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9%E8%BF%9B%E5%B1%95%E6%83%85%E5%86%B5) The company is progressing a major asset restructuring to acquire controlling stakes in Yingda Trust and Yingda Securities, pending regulatory approval, while a subsidiary's liquidation is ongoing - The company plans to issue shares to acquire **73.49%** equity in Yingda International Trust Co., Ltd. and **96.67%** equity in Yingda Securities Co., Ltd., and raise supporting funds; this restructuring has been approved by the company's general meeting of shareholders and awaits regulatory approval[12](index=12&type=chunk) - The dissolution and liquidation of controlling subsidiary Chongqing Yadongya Group Transformer Co., Ltd. are underway, with its land and some properties already transferred externally, and remaining assets publicly listed for transfer[12](index=12&type=chunk) [Appendix](index=8&type=section&id=%E5%9B%9B%E3%80%81%20%E9%99%84%E5%BD%95) This section includes the company's financial statements and details on the adjustments made due to changes in accounting standards [Financial Statements](index=8&type=section&id=4.1%20%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section presents the company's consolidated and parent company financial statements for the third quarter of 2019 [Consolidated Balance Sheet](index=8&type=section&id=%E5%90%88%E5%B9%B6%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of September 30, 2019, total assets were **8.964 billion Yuan**, total liabilities **5.355 billion Yuan**, and parent equity **3.448 billion Yuan**, indicating a stable financial structure Consolidated Balance Sheet Key Items (Unit: Yuan) | Item | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | 8,963,517,675.73 | 8,904,738,006.14 | | Total Liabilities | 5,355,045,720.45 | 5,323,560,661.81 | | Total Equity Attributable to Parent Company Owners | 3,447,500,846.82 | 3,425,694,354.17 | [Consolidated Income Statement](index=13&type=section&id=%E5%90%88%E5%B9%B6%E5%88%A9%E6%81%AF%E8%A1%A8) In Q1-Q3 2019, total operating revenue reached **3.039 billion Yuan** (up **6.7%**), operating profit was **34.24 million Yuan**, and net profit attributable to parent shareholders was **21.81 million Yuan**, marking a significant turnaround Consolidated Income Statement Core Data (Unit: Yuan) | Item | Q1-Q3 2019 | Q1-Q3 2018 | | :--- | :--- | :--- | | Total Operating Revenue | 3,039,475,498.09 | 2,848,697,860.63 | | Operating Profit | 34,240,910.34 | -176,535,701.08 | | Total Profit | 35,601,700.12 | -175,515,965.51 | | Net Profit Attributable to Parent Company Shareholders | 21,806,492.65 | -150,117,792.76 | [Consolidated Cash Flow Statement](index=17&type=section&id=%E5%90%88%E5%B9%B6%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In Q1-Q3 2019, net operating cash flow improved to **-373 million Yuan**, investing cash flow turned positive to **38.83 million Yuan**, financing cash flow was **-39.75 million Yuan**, and period-end cash was **705 million Yuan** Consolidated Cash Flow Statement Overview (Unit: Yuan) | Item | Q1-Q3 2019 | Q1-Q3 2018 | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -372,867,591.15 | -817,246,794.29 | | Net Cash Flow from Investing Activities | 38,831,614.13 | -46,569,358.95 | | Net Cash Flow from Financing Activities | -39,745,783.04 | 417,806,379.16 | | Net Increase in Cash and Cash Equivalents | -373,588,619.06 | -445,813,697.73 | [Parent Company Financial Statements](index=10&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) The parent company reported a net loss of **56.08 million Yuan** in Q1-Q3 2019, contrasting with consolidated profits and indicating subsidiary-driven profitability, with net operating cash flow at **-318 million Yuan** Parent Company Income Statement and Cash Flow Statement Core Data (Unit: Yuan) | Item | Q1-Q3 2019 | Q1-Q3 2018 | | :--- | :--- | :--- | | Operating Revenue | 170,109,282.76 | 100,390,952.01 | | Net Profit | -56,081,831.04 | 55,675,788.57 | | Net Cash Flow from Operating Activities | -318,327,932.63 | -164,909,099.44 | [Accounting Standard Change Adjustments](index=20&type=section&id=4.2%20%E9%A6%96%E6%AC%A1%E6%89%A7%E8%A1%8C%E6%96%B0%E9%87%91%E8%9E%8D%E5%B7%A5%E5%85%B7%E5%87%86%E5%88%99%E8%B0%83%E6%95%B4) Effective January 1, 2019, the company adopted new financial instrument standards, retrospectively reclassifying certain financial assets without impacting opening retained earnings - In accordance with the new financial instrument standards, the company reclassified carbon emission allowances, originally recognized as 'financial assets measured at fair value with changes recognized in profit or loss,' to 'trading financial assets'[35](index=35&type=chunk) - The company reclassified equity investments, originally recognized as 'available-for-sale financial assets,' to 'other equity instruments investments'[35](index=35&type=chunk)

Financial Performance - The company achieved a net profit of CNY 35,380,187.54 for the year 2018, with a distributable profit of CNY 121,010,957.12 after statutory reserves[5]. - The company's operating revenue for 2018 was CNY 4,929,024,000.60, a decrease of 13.97% compared to CNY 5,729,542,306.07 in 2017[16]. - The net profit attributable to shareholders of the listed company was CNY 19,374,993.44, down 91.91% from CNY 239,431,972.47 in the previous year[16]. - The net profit after deducting non-recurring gains and losses was CNY -32,003,205.99, a decline of 122.00% compared to CNY 145,437,706.57 in 2017[16]. - The basic earnings per share for 2018 was CNY 0.01, a decrease of 94.44% from CNY 0.18 in 2017[17]. - The weighted average return on net assets was 0.56%, down 6.23 percentage points from 6.79% in the previous year[17]. - The company reported a total asset of CNY 8,904,738,006.14 at the end of 2018, a decrease of 1.97% from CNY 9,083,835,577.38 at the end of 2017[16]. - The company achieved a revenue of CNY 4.93 billion in 2018, a decrease of 13.98% year-on-year[36]. - The company reported a total revenue of RMB 5,729,789,061.37 for the year, with a slight adjustment to RMB 5,729,542,306.07 after accounting policy changes[88]. - The company reported a total transaction amount of 2,946,095,457.40 CNY from sales of goods and services, accounting for 60.06% of similar transactions[94]. Profitability Challenges - Due to changes in revenue structure and rising raw material prices, the company experienced a decrease in profit margins in 2018[5]. - The net profit for the year was CNY 8,208,203.94, a significant decline of 96.74% compared to CNY 251,458,950.13 in the previous year[181]. - The company reported a decrease in retained earnings of CNY 203,425,173.45, indicating challenges in profit distribution to shareholders[195]. - The financial expenses increased by 50.58% due to a rise in average interest-bearing liabilities[37]. - The company recognizes the risks associated with macroeconomic fluctuations and rising raw material prices, which could impact profitability[66]. Research and Development - The company plans to enhance product competitiveness through increased R&D efforts and aims for a comprehensive transformation and upgrade in 2019[5]. - The company reported a total R&D investment of ¥206,259,538.38, which represents 4.18% of its operating revenue[46]. - The number of R&D personnel is 489, accounting for 27.24% of the total workforce[46]. - The company applied for 138 patents, with 103 granted, including 44 invention patents[33]. - Research and development expenditures increased by 30%, totaling 150 million RMB, to support new technology initiatives[127]. Market Position and Strategy - The company is the largest specialized producer of amorphous transformers in China and a leader in the lightning monitoring and protection field[21]. - The company operates in the electric power operation and maintenance business, low-carbon energy-saving services, and carbon asset management, among other areas[21]. - The company adopts a direct sales model, primarily targeting state-owned enterprises and industries such as petrochemicals and telecommunications[22]. - The company aims to enhance its comprehensive energy technology service capabilities and maintain a leading position in the industry[65]. - The company is expanding its market presence in Southeast Asia, targeting a 25% increase in sales in that region over the next two years[127]. Corporate Governance and Compliance - The company is committed to ensuring the accuracy and completeness of its financial reports, as confirmed by its auditing firm, Ruihua Certified Public Accountants[4]. - The company has no significant litigation or arbitration matters reported for the year, indicating a stable legal standing[92]. - The company has retained Ruihua Certified Public Accountants for a five-year audit term, with an audit fee of RMB 700,000 for the year[90]. - The company emphasizes investor relations management, ensuring communication and interaction with investors, particularly minority shareholders[150]. - The company has established a governance structure that complies with relevant laws and regulations, ensuring effective decision-making and accountability[144]. Future Outlook - The company aims to achieve a revenue of 5.7 billion yuan and a total profit of 53 million yuan in 2019[66]. - The company anticipates rapid growth in carbon trading services as the national carbon market is expected to officially launch trading between 2020 and 2021, covering around 1,700 power generation enterprises[54]. - The company plans to implement a new marketing strategy aimed at increasing brand awareness, with a budget allocation of 50 million RMB[127]. - The company has a plan for future entrusted loans, although specific amounts and dates are not detailed[106]. - The company has outlined a positive outlook for the next fiscal year, projecting a revenue growth of 10% to 1.32 billion RMB[130]. Employee and Workforce Management - The total number of employees in the parent company is 118, while the total number of employees in major subsidiaries is 1,677, resulting in a combined total of 1,795 employees[139]. - The company has implemented a compensation policy that links salary distribution to business performance, individual work performance, personal ability, and job value, with adjustments based on external market levels[140]. - The company conducted a total of 131 training sessions in 2018, with 4,399 participants[141]. - The company aims to enhance employee sense of belonging and cohesion by improving the welfare guarantee system and standardizing welfare-related policies[140]. - The company has introduced new welfare projects, including medical subsidies for employees' direct relatives in some units[140]. Related Party Transactions - The company engaged in related party transactions with State Grid and its subsidiaries, with the highest transaction amount being 58,720,532.07 CNY for purchasing goods/services, representing 1.41% of similar transactions[93]. - The company has a significant reliance on related party transactions, with multiple subsidiaries contributing to the total transaction amounts, including 448,604,990.30 CNY from Guodian Nari Technology Co., Ltd., representing 9.15% of similar transactions[94]. - The company’s future outlook includes continued reliance on related party transactions for procurement and sales, as evidenced by the significant amounts reported[94]. - The company has established a framework agreement for related party transactions involving the sale and purchase of distribution transformers and related products, primarily based on market pricing[95]. - The company will ensure that any unavoidable related transactions are conducted at market prices and will not harm the interests of minority shareholders[82].