Interim Report 2021 Contents
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IMPORTANT NOTICES 1. The Board of Directors, the Supervisory Committee and the directors, supervisors and senior management of the Company confirm that the information contained in this interim report is true, accurate and complete without any false and misleading statements or material omissions, and severally and jointly accept legal responsibility for the above. 2. All directors of the Company have attended the meetings of the Board. 3. The Interim Report has not been audited. 4. Mr. Wang Jun, the person in charge of the Company, Ms. Jiang Chi, the person in charge of accounting and Mr. Wang Yandong, the person in charge of the accounting firm (accountant in charge), have declared that they guarantee the trueness, accuracy and completeness of the financial statements contained in this Interim Report. 5. Resolutions of profit distribution or capitalisation from capital reserves of the Company for the Reporting Period examined and reviewed by the Board Nil 6. Declaration on risk in forward-looking statements √ Applicable □ Not Applicable The forward-looking statements involving future plans in this interim report, due to their uncertainties, do not constitute substantial undertakings of the Company to investors, who are advised to be cautious about investment risks. 7. Whether or not the controlling shareholders of the Company or its associates have misappropriated the Company’s funds No 8. Whether or not any external guarantees are provided in violation of any specified decision-making procedures No 9. Whether more than half of the directors cannot guarantee the authenticity, accuracy and completeness of the interim report disclosed by the Company No BEIJING JINGCHENG MACHINERY ELECTRIC COMPANY LIMITED 1 IMPORTANT NOTICES 10. IMPORTANT RISK WARNINGS 1. Risk associated with the implementation of This Acquisition and reorganisation In order to enhance the Company’s ongoing operation and profitability, the Company is implementing the acquisition of 80% equity interests in Qingdao BYTQ United Digital Intelligence Co., Ltd.. In the transaction, the listed company will acquire assets by way of issuing shares to 17 natural persons including Li Hong and Qingdao Eternal Economic Information Consulting Co., Ltd. and payment in cash, and raised supporting funds through non-public issuance of shares to no more than 35 target subscribers. The Company convened the fifth extraordinary meeting of the tenth session of the Board on 17 August 2020 for the consideration and approval of each resolution in relation to the proposal of the asset acquisition by way of share issuance and cash payment and raising of supporting funds. On 29 December 2020, the eighth extraordinary meeting of the tenth session of the Board was convened for the consideration and approval of each resolution in relation to the amendments to the proposal of the asset acquisition by way of share issuance and cash payment and raising of supporting funds. On 9 February 2021, the Company convened the first extraordinary general meeting of 2021, the first A share class meeting of 2021 and the first H share class meeting of 2021 to vote for the various resolutions in relation to the proposal of the asset acquisition by way of share issuance and cash payment and raising of supporting funds, and to agree and authorize the Board to handle the matters related to the proposal of the asset acquisition by way of share issuance and cash payment and raising of supporting funds of the Company. On 25 February 2021, the Company received the “CSRC Acceptance Notice of the Application for Administrative Permission” (Acceptance No.: 210440) 《中國證監會行政許可申請受理單》(受理序號:( 210440號)) issued by the CSRC. On 19 May 2021, the Listed Company Merger and Reorganization Vetting Committee of the CSRC convened the 10th working meeting of the MRVC for the year of 2021, at which the Asset Acquisition by way of Share Issuance of the Company and Cash Payment and Raising of Supporting Funds was vetted. In accordance with the vetting results of the meeting, the proposal of the asset acquisition by way of share issuance and cash payment and raising of supporting funds of the Company was not approved. On 9 June 2021, the Company received the “Decision of Disapproval for the Asset Acquisition by way of Share Issuance and Cash Payment and Raising of Supporting Funds of Beijing Jingcheng Machinery Electric Company Limited” (Zheng Jian Xu Ke [2021] No.1879) issued by the CSRC. On 11 June 2021, the eleventh extraordinary meeting of the tenth session of the Board was convened and the “Resolution in relation to Continuance of the Asset Acquisition by way of Share Issuance and Cash Payment and Raising of Supporting Funds of Beijing Jingcheng Machinery Electric Company Limited” was considered and approved. After study and investigation, the Board agreed to proceed with the proposal of the asset acquisition by way of share issuance and cash payment and raising of supporting funds. The asset acquisition by way of share issuance and cash payment and raising of supporting funds of the Company is subject to the approval of CSRC. Whether it will be approved by the CSRC and the time when such approval can be obtained remain uncertain. The Company will strictly keep the information confidential according to relevant progress, and perform information disclosure obligations in strict accordance with relevant laws and regulations, and announce the progress of the matter in a timely manner. 2. Risk associated with litigation involving a subsidiary of the Company On 2 June 2020, the Company published the “Announcement on litigation involving Beijing Tianhai Cryogenic Equipment Co., Ltd.” that Beijing Tianhai Cryogenic Equipment Co., Ltd., a subsidiary of the Company received the “Notice of Response to Claim” issued by the Shanghai No. 1 Intermediate People’s Court, and a civil writ filed to the Shanghai No. 1 Intermediate People’s Court by Shanghai Junzheng Logistics Co., Ltd. (herein after “Junzheng Company”); on 13 May 2021, the Company received a civil judgment from Shanghai No. 1 Intermediate People’s Court which handed down a first-instance judgment on the case; Junzheng Company does not agree with the first-instance judgment handed down by Shanghai No.1 Intermediate People’s Court and submitted an appeal to Shanghai High Court in accordance with the laws. After the filing of the case in Shanghai High Court, a panel of judges will be formed in accordance with the laws and the hearing will be held on 24 August 2021. The final judgment has not yet been made, and the impacts of the litigation on the current profits or subsequent profits of the Company cannot be estimated for the time being. The Company will actively respond to the lawsuit and safeguard the legal rights and interests of the Company. The Company will perform its information disclosure obligations in a timely manner based on the progress. Investors are advised to pay attention to the relevant announcement(s) and be aware of the investment risks. 3. Risk associated with COVID-19 Due to the impact of the pandemic, business operations are facing difficulties such as increased operating costs, market instability, transportation restrictions, and unfixed personnel. At the same time, the flow of personnel declined, making it more difficult for the Company to sell products in traditional ways, and increasing business pressure, which brought certain business risks to the Company. In response to the above-mentioned risks, the Company earnestly established and improved the epidemic prevention and control mechanism, comprehensively implemented and carried out epidemic prevention and control work. The Company will actively take effective measures in combination with the development trend of the epidemic situation inside and outside of the country to minimize the adverse impact that the epidemic may cause on the Company’s production and operation. 11. Others □ Applicable √ Not Applicable 2 INTERIM REPORT 2021 CONTENTS Section 1 DEFINITION . 4 Section 2 COMPANY PROFILE AND KEY FINANCIAL INDICATORS . 6 Section 3 MANAGEMENT DISCUSSION AND ANALYSIS . 10 Section 4 CORPORATE GOVERNANCE . 24 Section 5 ENVIRONMENTAL AND SOCIAL RESPONSIBILITY . 28 Section 6 IMPORTANT MATTERS . 34 Section 7 CHANGES IN SHARES AND INFORMATION OF SHAREHOLDERS . 44 Section 8 INFORMATION ABOUT PREFERENCE SHARE. 48 Section 9 CORPORATE BONDS . 49 Section 10 FINANCIAL REPORT . 50 Documents Available 1. Original copy of the interim report, which has been signed by the chairman. for Inspection 2. Original copy of the auditors’ report signed and chopped by the Company’s legal representative, the person in charge of accounting and the person in charge of the accounting firm. 3. The original copies of all documents and announcements of the Company publicly disclosed during the Reporting Period in Shanghai Securities News and the websites of Shanghai Stock Exchange and The Stock Exchange of Hong Kong Limited. 4. The Articles of Association of the Company. 5. The above documents are available for inspection at the Office of the Board of Directors of the Company, situated at No.2 Huo Xian Nan San Road, Huo Xian Town, Tongzhou District, Beijing, the People’s Republic of China. BEIJING JINGCHENG MACHINERY ELECTRIC COMPANY LIMITED 3 SECTION 1 DEFINITION Unless otherwise stated in context, the following terms should have the following meanings in this report: Definition of frequently used terms Company means Beijing Jingcheng Machinery Electric Company Limited (北京京城機電股份有限公司), a joint stock company incorporated in the PRC with