DIVIDEND

This is a balance sheet showing the financial position of a company as at January 1,

2021 and changes in its equity during the year ended December 31, 2021. The
analysis is as follows:

1. Share capital: The company had RMB 409,000 in share capital as at January 1,
2021, and there were no changes during the year. This represents the nominal
value of the shares issued by the company.
2. Treasury shares: The company had RMB (36,224,000) in treasury shares as at
January 1, 2021. During the year, the company purchased RMB 7,006,824 of its
own shares and cancelled RMB 6,699,318 of its own shares, resulting in a net
increase of RMB 307,506,000 in treasury shares. Treasury shares represent the
company's own shares that have been repurchased and are held by the
company.
3. Share premium: The company had RMB 64,655,891 in share premium as at
January 1, 2021. During the year, the company received RMB 1,776,318,000 in
share consideration for the acquisition of Zimi International Incorporation and
RMB 649,543,000 from the exercise of share options and restricted stock units.
The company also released RMB 698,434,000 of ordinary shares from Share
Scheme Trusts. These transactions resulted in a net increase of RMB
4,938,265,000 in share premium.
4. Other reserves: The company had RMB 8,158,661,000 in other reserves as at
January 1, 2021. During the year, the company accounted for RMB
379,814,000 of other reserves of investments accounted for using the equity
method. The company also made an appropriation of RMB 929,149,000 to
statutory reserves and RMB 21,176,000 to general reserves. There were other
minor changes resulting in a net decrease of RMB 9,125,000 in other reserves.
5. Retained earnings: The company had RMB 50,912,959,000 in retained earnings
6. as at January 1, 2021. During the year, the company recorded a profit of RMB
19,339,321,000. After making appropriations to statutory and general reserves,
the company had a balance of RMB 123,691,696,000 in retained earnings as at
December 31, 2021.
Leasing
The given information provides details about the lease assets and liabilities
of a company for the years ending on December 31, 2020 and December
31, 2021.

(i) The consolidated balance sheet shows the right-of-use assets related to
different categories, namely land use rights, servers and other equipment,
properties, and other assets. The total value of the right-of-use assets has
increased from RMB 5,365,624 in 2020 to RMB 9,291,440 in 2021. This
increase indicates that the company has acquired more assets on lease
during 2021. The lease liabilities are also shown in the balance sheet, with a
current liability of RMB 1,532,625 and a non-current liability of RMB
1,748,529 in 2021. This indicates that the company has lease obligations
that are due in the short term as well as long term.

(ii) The consolidated income statement shows the expenses related to

leases. The depreciation charge of right-of-use assets has increased from
RMB 496,616 in 2020 to RMB 1,055,170 in 2021. This increase is due to the
increase in the value of right-of-use assets during the year. The interest
expense related to leases has also increased from RMB 42,335 in 2020 to
RMB 91,954 in 2021. This indicates that the company has taken more lease
obligations in 2021, resulting in higher interest expenses. The expenses
related to short-term leases not included in lease liabilities have decreased
from RMB 845,298 in 2020 to RMB 453,836 in 2021. This decrease may be
due to the company taking fewer short-term leases during the year. The
expenses related to variable lease payments not included in lease liabilities
have increased from RMB 116,951 in 2020 to RMB 183,806 in 2021. This
increase may be due to the company taking more leases with variable
payments during the year.

Overall, the information suggests that the company has increased its lease
obligations during 2021, resulting in higher expenses related to leases.
However, it has also acquired more assets on lease, which may have
contributed to the growth of the business.
Working capital
looking at the given financial data, we can see that the company has generated RMB
12,227,783 and RMB 23,831,802 in cash from operations in the two respective
periods. These figures represent the cash generated by the company's core business
operations before changes in working capital are taken into account.

The adjustments made to the profit before income tax in the two periods are
primarily related to non-operational items such as depreciation, amortization, credit
loss allowance, interest income and expense, gains/losses on investments, and
foreign exchange losses. These adjustments need to be considered while analyzing
the company's financial health, but they are not directly related to the company's
working capital.

The changes in working capital in the two periods can be summarized as follows:

1. Increase in inventories: RMB 13,746,697 in the first period and RMB 11,602,421
in the second period.
2. Increase in trade receivables: RMB 7,548,686 in the first period and RMB
4,272,814 in the second period.
3. Decrease in loan receivables: RMB 3,706,922 in the first period and RMB
727,548 in the second period.
4. Increase/decrease in prepayments and other receivables: RMB (4,370,414) in
the first period and RMB 3,624,788 in the second period.
5. Decrease/increase in restricted cash: RMB 1,007,208 in the first period and
RMB (2,407,001) in the second period.
6. Increase in trade payables: RMB 2,456,421 in the first period and RMB
10,341,399 in the second period.
7. Decrease/increase in advance from customers: RMB (2,713,524) in the first
period and RMB 3,765,667 in the second period.
8. Increase in warranty provision: RMB 1,328,677 in the first period and RMB
609,431 in the second period.
9. Increase in other payables and accruals: RMB 4,068,696 in the first period and
RMB 3,534,327 in the second period.
10. Increase/decrease in other non-current liabilities: RMB 86,306 in the first
period and RMB (784) in the second period.

Based on the above analysis, we can see that the company had a significant increase
in trade payables in the second period, which could indicate that the company is
taking longer to pay its suppliers. On the other hand, the company had a significant
decrease in loan receivables in the second period, which could indicate that the
company is recovering its loans faster.
International finance
Foreign exchange risk The transactions of the Company are denominated and settled in its
functional currency, US$. The Group’s subsidiaries operate in mainland China and overseas,
and they are exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to US$ and RMB. Therefore, foreign exchange risk primarily arose
from recognized assets and liabilities in the Group’s subsidiaries in mainland China when
receiving or to receive foreign currencies from, or paying or to pay foreign currencies to
overseas business partners, and recognized assets and liabilities in the Group’s overseas
subsidiaries when receiving or to receive foreign currencies from, or paying or to pay foreign
currencies to business partners in mainland China. For the Group’s subsidiaries whose
functional currency is RMB, if RMB had strengthened/weakened by 5% against US$ with all
other variables held constant, the profit before income tax for the year ended December 31,
2021 would have been approximately RMB152,246,000 (2020: RMB233,314,000)
higher/lower, as a result of net foreign exchange gains (2020: net foreign exchange gains) on
translation of net monetary liabilities (2020: net monetary liabilities) denominated in US$.
For the Company and the Group’s subsidiaries whose functional currency is US$, if RMB had
strengthened/weakened by 5% against US$ with all other variables held constant, the profit
before income tax for the year ended December 31, 2021 would have been approximately
RMB70,048,000 (2020: RMB11,743,000) lower/higher, as a result of net foreign exchange
losses on translation of net monetary liabilities denominated in RMB.