上海青浦消防(08115) - 2021 Q3 - 季度财报

Company Information The Company, listed on GEM of HKEX, primarily manufactures and sells fire-fighting equipment and aquarium products, with Liancheng Fire-Fighting Group as direct and Zhejiang Hengtai Real Estate as ultimate controlling company Company Overview The Company, incorporated in China with H shares listed on GEM of HKEX, primarily engages in manufacturing and selling pressure vessels, fire safety services, and aquarium products, with Liancheng Fire-Fighting Group as direct and Zhejiang Hengtai Real Estate as ultimate controlling company - The Company's H shares are listed on GEM of The Stock Exchange of Hong Kong Limited[9] - The Group's principal businesses include the production and sale of pressure vessels (fire-fighting equipment and pressure vessel products), provision of fire safety technical inspection services, sales of marine fire-fighting equipment and related services, trading of other products, and sales of aquarium products[10] - The Company's direct controlling company is Liancheng Fire-Fighting Group Co., Ltd., and the ultimate controlling company is Zhejiang Hengtai Real Estate Co., Ltd[10] Board of Directors and Management This report lists the Company's executive directors, independent non-executive directors, audit committee members, authorized representatives, company secretary, and auditor information - Executive Directors include Mr. Zhou Jinhui, Mr. Shi Huixing, and Mr. Zhou Guoping[3] - Independent Non-Executive Directors include Mr. Wang Guozhong, Mr. Yang Chunhe, and Mr. Song Zizhang[3] - The Audit Committee comprises Mr. Song Zizhang, Mr. Yang Chunzi, and Mr. Wang Guozhong[3] GEM Listing Characteristics and Directors' Responsibilities The GEM market provides a listing platform for small and medium-sized companies with high investment risks, where securities may face significant market volatility risks, and the Board assumes full responsibility for the accuracy, completeness, and non-misleading nature of this report's content - The GEM market provides a listing platform for small and medium-sized companies with higher investment risks, and securities may face significant market volatility risks[2] - The Company's directors jointly and individually assume full responsibility for this report, confirming that the information is accurate, complete, and free from misleading or fraudulent content[2] Unaudited Quarterly Results The Group's unaudited financial results for the nine months ended September 30, 2021, including the condensed consolidated statement of profit or loss and other comprehensive income, are presented with detailed notes Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group's unaudited results for the nine months ended September 30, 2021, show revenue of RMB 53,212 thousands and profit for the period of RMB 52,950 thousands, primarily driven by a significant increase in other income and gains Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Unaudited) | Indicator | For the 3 months ended Sep 30, 2021 (RMB thousands) | For the 3 months ended Sep 30, 2020 (RMB thousands) | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 18,062 | 19,466 | 53,212 | 48,380 | | Gross Profit | 5,192 | 5,638 | 16,459 | 14,563 | | Other Income and Gains | 54,412 | 230 | 58,588 | 1,511 | | Selling and Distribution Expenses | (716) | (393) | (1,719) | (1,883) | | Administrative Expenses | (3,812) | (3,402) | (10,621) | (9,209) | | Finance Costs | (120) | (15) | (352) | (45) | | Profit Before Tax | 54,956 | 2,058 | 62,355 | 2,058 | | Income Tax Expense | (8,185) | (266) | (9,405) | (266) | | Total Profit and Other Comprehensive Income for the Period | 46,771 | 1,792 | 52,950 | 1,792 | | Profit Attributable to Owners of the Company | 45,885 | 825 | 49,212 | 1,931 | | Profit Attributable to Non-Controlling Interests | 886 | 967 | 3,738 | 3,321 | | Basic Earnings Per Share (RMB cents) | 24.48 | 0.44 | 26.26 | 1.03 | Notes This section elaborates on the financial statement notes, including company background, accounting policies, revenue composition, profit before tax details, income tax calculation, earnings per share, dividend policy, equity changes, and related party transactions, with land resumption gains significantly impacting current period results General Information The Company, incorporated in China with H shares listed on GEM of HKEX, primarily engages in manufacturing and selling fire-fighting equipment, pressure vessels, and aquarium products, along with related services, with Liancheng Fire-Fighting Group as direct and Zhejiang Hengtai Real Estate as ultimate controlling company - The Company's H shares are listed on GEM of The Stock Exchange of Hong Kong Limited[9] - The Group's principal businesses include the production and sale of pressure vessels (including fire-fighting equipment products and pressure vessel products), provision of fire safety technical inspection services, sales of marine fire-fighting equipment and related services, trading of other products, and sales of aquarium products[10] - The Company's direct controlling company is Liancheng Fire-Fighting Group Co., Ltd., and the ultimate controlling company is Zhejiang Hengtai Real Estate Co., Ltd[10] Significant Accounting Policies The Group's unaudited condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards and GEM Listing Rules, using the historical cost convention, with investment properties measured at fair value, and no new standards or interpretations not yet effective have been applied in the current period - The financial statements are prepared in accordance with International Financial Reporting Standards and GEM Listing Rules, using the historical cost convention, except for investment properties[11] - The financial statements for the nine months ended September 30, 2021, are unaudited but have been reviewed by the Audit Committee[11] - The Group has not applied any new standards or interpretations that are not yet effective for the current accounting period[12] Revenue, Other Income and Gains The Group's revenue primarily derives from sales of pressure vessels, aquarium products, marine fire-fighting equipment, and inspection services, with other income and gains significantly increasing due to gains from land resumption and return of investment properties Revenue, Other Income and Gains Analysis (Unaudited) | Revenue Source | For the 3 months ended Sep 30, 2021 (RMB thousands) | For the 3 months ended Sep 30, 2020 (RMB thousands) | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Sales of pressure vessels | 6,222 | 5,718 | 14,377 | 14,377 | | Sales of aquarium products | 6,273 | 6,151 | 21,709 | 19,466 | | Sales of marine fire-fighting equipment | 2,724 | 2,670 | 6,570 | 6,570 | | Inspection service fees | 1,275 | 3,510 | 5,640 | 5,640 | | Gross rental income | 1,568 | 1,417 | 4,916 | 4,916 | | Total Revenue | 18,062 | 19,466 | 53,212 | 48,380 | | Other Income and Gains: | | | | | | Interest income | 16 | 131 | 91 | 91 | | Investment product income | 292 | – | 443 | – | | Fair value gain on investment properties | – | – | 3,700 | – | | Government grants | 107 | 99 | 324 | 324 | | Gain on land resumption and return of investment properties | 53,997 | – | 53,997 | – | | Total Other Income and Gains | 54,412 | 230 | 58,588 | 1,511 | | Total Revenue, Other Income and Gains | 72,474 | 19,696 | 111,800 | 49,891 | - A gain on land resumption and return of investment properties of approximately RMB 53.997 million was recognized upon completion of the land resumption on August 20, 2021[17][18] Profit Before Tax The Group's profit before tax is influenced by various factors, including amortization of intangible assets, depreciation of property, plant and equipment, staff costs, as well as fair value gains on investment properties and gains from land resumption Profit Before Tax Deductions/Additions (Unaudited) | Item | For the 3 months ended Sep 30, 2021 (RMB thousands) | For the 3 months ended Sep 30, 2020 (RMB thousands) | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Amortization of intangible assets | 45 | 45 | 135 | 135 | | Depreciation of property, plant and equipment | 157 | 9 | 446 | 27 | | Depreciation of right-of-use assets | 185 | 178 | 550 | 534 | | Interest on lease liabilities included in finance costs | 18 | 15 | 41 | 45 | | Staff costs | 1,143 | 2,138 | 6,108 | 6,414 | | Fair value gain on investment properties | – | – | (3,700) | – | | Gain on land resumption and return of investment properties | (53,997) | – | (53,997) | – | Income Tax Expense The Group has no assessable profits in Hong Kong, thus no Hong Kong profits tax provision, while China enterprise income tax is calculated at 25%, with some eligible small enterprises enjoying preferential rates of 5% or 10%, and current deferred tax primarily relates to fair value gains on investment properties and land resumption gains - The Group has no assessable profits in Hong Kong, hence no Hong Kong profits tax provision[25] - The PRC Enterprise Income Tax Law provides preferential tax rates for eligible small enterprises (5% on the first RMB 1 million, and 10% on the remaining amount not exceeding RMB 3 million), while other companies are taxed at 25%[25] - Deferred tax provided for the nine months ended September 30, 2021, primarily relates to tax provisions for fair value gains on investment properties and gains from land resumption[27] Earnings Per Share For the three and nine months ended September 30, 2021, the basic earnings per share attributable to ordinary equity holders of the Company were RMB 24.48 cents and RMB 26.26 cents, respectively, with no dilutive adjustments made due to the absence of potential dilutive ordinary shares Earnings Per Share (Unaudited) | Indicator | For the 3 months ended Sep 30, 2021 | For the 3 months ended Sep 30, 2020 | For the 9 months ended Sep 30, 2021 | For the 9 months ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Profit attributable to ordinary equity holders of the Company (RMB thousands) | 45,885 | 825 | 49,212 | 1,931 | | Number of ordinary shares issued | 187,430,000 | 187,430,000 | 187,430,000 | 187,430,000 | | Basic Earnings Per Share (RMB cents) | 24.48 | 0.44 | 26.26 | 1.03 | - No dilutive adjustments were made to the basic earnings per share amounts as the Group had no potential dilutive ordinary shares issued during the reporting period[28] Dividends For the nine months ended September 30, 2021, the Group neither paid nor declared any dividends - For the nine months ended September 30, 2021, the Group neither paid nor declared any dividends[30] Statement of Changes in Equity The Group's statement of changes in equity for the nine months ended September 30, 2021, shows total equity attributable to owners of the Company increased from RMB 63,967 thousands at the beginning of the period to RMB 119,079 thousands, primarily driven by profit for the period and transfers from asset revaluation reserve Statement of Changes in Equity (Unaudited) | Item | As of Sep 30, 2021 | As of Sep 30, 2020 | | :--- | :--- | :--- | | Total equity attributable to owners of the Company (RMB thousands) | 119,079 | 73,200 | | Non-controlling interests (RMB thousands) | 7,251 | 3,117 | | Total Equity (RMB thousands) | 126,330 | 76,318 | | Profit and total comprehensive income for the period (RMB thousands) | 49,212 | 1,651 | | Transfer from asset revaluation reserve (RMB thousands) | – | – | - Profit attributable to owners of the Company was RMB 49,212 thousands, and profit attributable to non-controlling interests was RMB 3,738 thousands[31] Related Party Transactions The Group engaged in significant related party transactions during the reporting period, including sales of trading goods to Liancheng Fire-Fighting Technology Group Co., Ltd., and provision of inspection services to Liancheng Fire-Fighting Engineering Co., Ltd. and Shanghai Petrochemical Fire-Fighting Engineering Co., Ltd Related Party Transactions (Unaudited) | Transaction Type | Related Party | For the 3 months ended Sep 30, 2021 (RMB thousands) | For the 3 months ended Sep 30, 2020 (RMB thousands) | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Sales of trading goods | Liancheng Fire-Fighting Technology Group Co., Ltd. | 15 | – | – | – | | Inspection service income | Liancheng Fire-Fighting Engineering Co., Ltd. | 8 | 9 | 8 | 9 | | Inspection service income | Shanghai Petrochemical Fire-Fighting Engineering Co., Ltd. | 5 | 27 | 23 | 48 | | Total | | 28 | 36 | 31 | 57 | - The Board believes that the above transactions were conducted in the ordinary course of the Group's business, and their prices and terms were comparable to those charged to and entered into with third parties[61] Business and Financial Review This section provides a comprehensive review of the Group's financial performance and business operations, highlighting key drivers of revenue and profit changes, cost structures, and strategic initiatives Financial Performance Review The Group's revenue increased by 10% year-on-year, primarily due to increased aquarium product sales, with gross profit margin remaining stable, while other income and gains significantly rose due to land resumption gains, and selling and distribution expenses, administrative expenses, and finance costs all increased, leading to a 908% surge in profit for the period, driven by fair value gains on investment properties and land resumption gains Revenue Revenue for the period was approximately RMB 53.212 million, an increase of approximately 10% compared to the same period, mainly due to increased sales of aquarium products to overseas distributors caused by global lockdowns Revenue Comparison | Indicator | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Revenue | 53,212 | 48,380 | 10% | - The increase in revenue was primarily due to increased sales of aquarium products to overseas market distributors as a result of increased demand caused by global lockdown conditions[63] Cost of Sales and Services and Gross Profit Cost of sales and services for the period was approximately RMB 36.753 million, an increase of approximately 9% year-on-year, consistent with revenue growth, resulting in a gross profit of approximately RMB 16.459 million and a stable gross profit margin of 31% Cost of Sales and Services and Gross Profit Comparison | Indicator | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Cost of sales and services | 36,753 | 33,817 | 9% | | Gross Profit | 16,459 | 14,563 | 13% | | Gross Profit Margin | 31% | 30% | 1 percentage point | - The main components of cost of sales and services are raw materials (including steel and aluminum) and labor costs[64] Other Income and Gains Other income and gains for the period were approximately RMB 58.588 million, a significant increase from the same period, primarily due to the recognition of a gain of approximately RMB 53.997 million from land resumption and return of investment properties Other Income and Gains Comparison | Indicator | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Other Income and Gains | 58,588 | 1,511 | 3789% | | Of which: Gain on land resumption | 53,997 | – | N/A | Selling and Distribution Expenses Selling and distribution expenses for the period were approximately RMB 1.719 million, an increase of approximately 59% compared to the same period, mainly due to additional expenses (such as salaries and office expenses) incurred by a subsidiary established in August 2020 Selling and Distribution Expenses Comparison | Indicator | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Selling and Distribution Expenses | 1,719 | 1,883 | -9% | | The increase in selling and distribution expenses was mainly due to additional expenses (such as salaries and office expenses) incurred by a subsidiary established in August 2020 during the period | | | | Administrative Expenses Administrative expenses for the period were approximately RMB 10.620 million, an increase of approximately 15% compared to the same period, primarily due to an impairment of other receivables of approximately RMB 696 thousands during the period Administrative Expenses Comparison | Indicator | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Administrative Expenses | 10,620 | 9,209 | 15% | | Of which: Impairment of other receivables | 696 | – | N/A | Finance Costs Finance costs for the period were approximately RMB 352 thousands, a significant increase of approximately 682% compared to the same period, mainly comprising interest expenses on bank borrowings used to acquire production plant properties Finance Costs Comparison | Indicator | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Finance Costs | 352 | 45 | 682% | - Finance costs primarily comprise interest expenses on bank borrowings used to finance part of the consideration for the acquisition of production plant properties in July 2020[69] Income Tax The effective tax rate for the period increased to 15% (compared to 8% in the same period), mainly due to the recognition of deferred tax of RMB 9.005 million on fair value gains on investment properties and land resumption gains Effective Tax Rate Comparison | Indicator | For the 9 months ended Sep 30, 2021 | For the 9 months ended Sep 30, 2020 | | :--- | :--- | :--- | | Effective Tax Rate | 15% | 8% | | Deferred Tax | 9,005,000 | – | - The increase in the effective tax rate was mainly due to the recognition of deferred tax during the period on fair value gains on investment properties and gains from land resumption and return of investment properties[70] Profit for the Period Profit for the period was approximately RMB 52.950 million, a significant increase of 908% compared to the same period, driven by fair value gains on investment properties and land resumption gains (net of deferred tax) Profit for the Period Comparison | Indicator | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Profit for the Period | 52,950 | 5,252 | 908% | | Fair value gain on investment properties | 3,700 | – | N/A | | Gain on land resumption (net of deferred tax) | 53,997 (net of 9,005) | – | N/A | Non-Controlling Interests Profit for the period attributable to non-controlling interests was approximately RMB 3.738 million, with the increase primarily due to higher profits from the aquarium products segment and property investment segment generated by its non-wholly owned subsidiaries Profit Attributable to Non-Controlling Interests Comparison | Indicator | For the 9 months ended Sep 30, 2021 (RMB thousands) | For the 9 months ended Sep 30, 2020 (RMB thousands) | | :--- | :--- | :--- | | Profit attributable to non-controlling interests for the period | 3,738 | 3,321 | - The increase in non-controlling interests was mainly due to the allocation of increased profits from the aquarium products segment and property investment segment generated by its non-wholly owned subsidiaries[72] Business Review The Company offers carbon dioxide, water-based, and dry powder fire extinguisher products, certified by the Fire Products Conformity Assessment Center and China Classification Society, with pressure cylinders obtaining manufacturing licenses in China and complying with US and EU quality standards - The Company's fire extinguisher products are categorized into three types: carbon dioxide, water-based, and dry powder fire extinguishers, offering a rich product portfolio[73] - Non-marine fire extinguishers have been awarded product type approval certificates by the Fire Products Conformity Assessment Center, while marine fire extinguishers have been awarded product type approval certificates by the Shanghai Branch of China Classification Society[73] - The Company's pressure cylinders have obtained manufacturing licenses in China and comply with US and EU quality standards or requirements[73] Significant Events and Outlook This section details significant events such as land resumption and the impact of the COVID-19 pandemic, along with the Group's business strategies and future prospects Land Resumption The Company's Chonggu factory in Qingpu District, Shanghai, was included in a redevelopment plan, and after valuation disputes and legal objections, a land resumption agreement was reached with government departments, resulting in compensation of approximately RMB 87 million, which has been fully received before the reporting date, improving the Group's working capital and reallocating idle resources - The Chonggu factory was included in the Chonggu Town redevelopment plan, and the Company had previously filed legal objections regarding the valuation[75][76] - The Company signed a land resumption agreement with the Qingpu District Chonggu Town Housing and Land Expropriation Office and the Construction Land Reduction Work Office, receiving total compensation of approximately RMB 87 million[77] - The land resumption was completed on August 20, 2021, and all compensation has been received before the reporting date, which improved the Group's working capital position and reallocated idle resources[78][80] Impact of COVID-19 and Business Strategies The COVID-19 pandemic kept the Group's overseas sales of pressure vessels at a minimum, but increased sales of aquarium products improved the situation, and the Company acquired new production plants to boost aquarium product capacity, planning to utilize capital increase channels to acquire profitable enterprises - The COVID-19 pandemic caused the Group's overseas sales of pressure vessels to remain at a minimum level, but increased sales of aquarium products improved the situation[81] - The Company's subsidiary, Shanghai Jino Biotechnology Co., Ltd., acquired six properties in Tianyi Health Industrial Park, Cixi City, Zhejiang Province, with a total floor area of approximately 3,233 square meters, for approximately RMB 12.817 million, to enhance aquarium product production capacity[81] Prospects The Group anticipates continued growth in aquarium product sales and plans to enhance its competitive advantage and profitability through business strategy adjustments, increased capacity at new production plants, and a prudent M&A strategy, aiming to become a leading fire-fighting equipment manufacturer and service provider in China - Aquarium product sales are expected to continue growing in 2021, benefiting from increased demand due to global lockdown measures in 2020[81] - The Company will enhance its competitive advantage and performance through business strategy adjustments, increased capacity at new production plants, and improved corporate image[82] - The Company will prudently consider utilizing capital increase channels to acquire relevant and profitable enterprises to accelerate profit growth, aiming to become a major fire-fighting equipment manufacturer and service provider in China[82] Shareholders and Corporate Governance This section outlines directors' and substantial shareholders' interests in the Company's securities, related party transactions, and adherence to corporate governance principles Directors' and Supervisors' Interests and Short Positions in Shares, Underlying Shares, and Debentures As of September 30, 2021, Mr. Zhou Jinhui held 133,170,000 shares of the Company through controlled corporations, representing 71.05% of the total issued share capital, being the only disclosed director's interest Directors' and Supervisors' Long Positions in the Company's Shares | Name | Capacity | Number of Shares | Approximate Percentage of Total Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhou Jinhui | Held by controlled corporation | 133,170,000 | 71.05% | - Mr. Zhou Jinhui indirectly holds shares in the Company through Liancheng Fire-Fighting Group Co., Ltd. and its wholly-owned subsidiary, Liancheng Fire-Fighting (Hong Kong) Co., Ltd[83] Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares, Underlying Shares, and Debentures As of September 30, 2021, Liancheng Fire-Fighting Group Co., Ltd., Zhejiang Hengtai Real Estate Co., Ltd., and Mr. Zhou Jinhui were substantial shareholders, holding approximately 70.36% of the Company's domestic shares and 0.69% of its H shares, respectively, with Liancheng's 131,870,000 domestic shares pledged to an independent third party as collateral for a loan Substantial Shareholders' Long Positions in the Company's Shares | Shareholder Name | Capacity | Number of Shares | Approximate Percentage of Total Issued Share Capital | | :--- | :--- | :--- | :--- | | Liancheng Fire-Fighting Group Co., Ltd. | Beneficial owner/Held by controlled corporation | 131,870,000 (Domestic Shares) / 1,300,000 (H Shares) | 70.36% / 0.69% | | Zhejiang Hengtai Real Estate Co., Ltd. | Held by controlled corporation | 131,870,000 (Domestic Shares) / 1,300,000 (H Shares) | 70.36% / 0.69% | | Mr. Zhou Jinhui | Held by controlled corporation | 131,870,000 (Domestic Shares) / 1,300,000 (H Shares) | 70.36% / 0.69% | - A total of 131,870,000 domestic shares of the Company held by Liancheng have been pledged to an independent third party as collateral for a loan of RMB 198 million[87] - As of September 30, 2021, the pledged shares represented approximately 70.36% and 100% of the Company's issued share capital and domestic shares, respectively[87] Directors' and Supervisors' Interests in Contracts Except for related party transactions disclosed in Note 9 of the report, none of the Company's directors or supervisors had any direct or indirect material interest in any significant contract entered into by the Company as of September 30, 2021, or for the nine-month period then ended - Except for related party transactions, none of the Company's directors or supervisors had any direct or indirect material interest in any significant contract entered into by the Company[90] Purchase, Sale or Redemption of the Company's Listed Securities For the nine months ended September 30, 2021, the Company neither purchased, sold, nor redeemed any of its listed securities - For the nine months ended September 30, 2021, the Company neither purchased, sold, nor redeemed any of its listed securities[90] Corporate Governance The Company is committed to good corporate governance, aiming to uphold responsible decision-making, enhance information transparency, respect shareholders' rights, and improve risk management, having complied with all code provisions of the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules for the nine months ended September 30, 2021, with all directors adhering to the Model Code for Securities Transactions by Directors - The Company is committed to good corporate governance, aiming to uphold responsible decision-making, enhance information transparency, respect shareholders' rights, and improve risk management[90] - For the nine months ended September 30, 2021, the Company complied with all code provisions of the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules[90] - All directors have consistently complied with the required standards for securities transactions by directors and the Model Code for Securities Transactions by Directors[90] Audit Committee The Company has established an Audit Committee, comprising three independent non-executive directors, whose primary responsibilities include reviewing and monitoring financial reporting processes and internal control systems, and the Committee has reviewed the Group's unaudited condensed consolidated financial statements for the nine months ended September 30, 2021 - The Audit Committee comprises three independent non-executive directors: Mr. Yang Chunbao, Mr. Wang Guozhong, and Mr. Song Zizhang[91] - The primary responsibilities of the Audit Committee are to review and monitor the Group's financial reporting processes and internal control systems, and to provide recommendations to the Board[91] - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the nine months ended September 30, 2021, and provided recommendations and opinions thereon[91]