Shenzhen Nanshan Power Co., Ltd.
| Shenzhen Nanshan Power Co., Ltd. |
| Financial Statement |
| Semi-Annual Report (ended as 30 June 2018) |
Consolidated Balance Sheet
In RMB/CNY
Asset
| Asset | 2018-6-30 | 2017-12-31 | Liabilities and owners’ equity | 2018-6-30 | 2017-12-31 |
| Current assets: | Current liabilities: | ||||
| Monetary funds | 774,980,279.97 | 438,316,169.81 | Short-term loans | 911,500,000.00 | 515,850,000.00 |
| Notes receivable | 100,000.00 | 6,702,500.00 | Notes payable | - | 51,439,580.56 |
| Accounts receivable | 277,917,141.93 | 113,349,775.76 | Accounts payable | 54,333,872.94 | 15,094,912.60 |
| Accounts paid in advance | 58,522,566.11 | 119,069,891.55 | Accounts received in advance | - | - |
| Interest receivable | - | - | Wage payable | 46,502,561.49 | 48,337,588.25 |
| Dividend receivable | - | - | Taxes payable | 16,782,515.76 | 15,437,758.76 |
| Other receivables | 45,683,216.71 | 38,771,888.74 | Interest payable | 3,403,850.17 | 3,006,993.33 |
| Inventories | 69,716,098.15 | 77,834,903.89 | Dividend payable | - | - |
| Long-term debt investment due within 1 year | - | - | Other accounts payable | 86,175,436.00 | 83,214,183.57 |
| Other current assets | 401,276,677.02 | 452,184,523.24 | Long-term liabilities due within 1 year | - | 32,400,000.00 |
| Total current assets | 1,628,195,979.89 | 1,246,229,652.99 | Total current liabilities | 1,118,698,236.36 | 764,781,017.07 |
| Non-current assets: | Non-current liabilities: | ||||
| Financial assets available for sale | 60,615,000.00 | 60,615,000.00 | Long-term loans | 25,940,000.00 | 25,940,000.00 |
| Long-term account receivable | - | - | Accrual liabilities | 26,766,590.38 | 26,788,590.38 |
| Long-term equity investment | 17,177,769.09 | 18,254,673.40 | Deferred income | 39,925,363.48 | 41,948,231.12 |
| Investment property | 2,704,371.51 | 2,802,440.31 | Other non-current liabilities | - | - |
| Fixed assets | 1,414,281,661.43 | 1,420,620,565.05 | Total non-current liabilities | 92,631,953.86 | 94,676,821.50 |
| Construction in progress | 68,499,522.92 | 50,958,741.92 | Total liabilities | 1,211,330,190.22 | 859,457,838.57 |
| Disposal of fixed asset | 1,314.60 | - | Owners’ equity: | ||
| Intangible assets | 47,226,669.23 | 48,470,500.60 | Share capital | 602,762,596.00 | 602,762,596.00 |
| Long-term expenses to be apportioned | - | - | Capital public reserve | 362,770,922.10 | 362,770,922.10 |
| Deferred income tax asset | 2,922,036.65 | 2,922,036.65 | Other comprehensive income | - | - |
| Other non-current asset | 22,882,181.78 | 32,930,781.78 | Surplus public reserve | 332,908,397.60 | 332,908,397.60 |
| Total non-current asset | 1,636,310,527.21 | 1,637,574,739.71 | Retained profit | 690,188,264.91 | 660,176,169.69 |
| Total owner’s equity attributable to parent | 1,988,630,180.61 | 1,958,618,085.39 |
Company
| Company | |||||
| Minority interests | 64,546,136.27 | 65,728,468.74 | |||
| Total shareholders’ equity | 2,053,176,316.88 | 2,024,346,554.13 | |||
| Total assets | 3,264,506,507.10 | 2,883,804,392.70 | Total liabilities and shareholders’ equity | 3,264,506,507.10 | 2,883,804,392.70 |
Balance Sheet of the Company
In RMB/CNY
| Asset | 2018-6-30 | 2017-12-31 | Liabilities and owners’ equity | 2018-6-30 | 2017-12-31 |
| Current assets: | Current liabilities: | ||||
| Monetary funds | 513,661,278.18 | 159,883,551.05 | Short-term loans | 760,000,000.00 | 50,000,000.00 |
| Notes receivable | - | - | Notes payable | - | 38,863,779.64 |
| Accounts receivable | 136,717,345.45 | 17,599,743.80 | Accounts payable | 33,651,889.87 | 1,467,087.08 |
| Accounts paid in advance | 14,859,188.54 | 72,042,056.16 | Accounts received in advance | - | - |
| Interest receivable | - | - | Wage payable | 25,480,387.21 | 23,669,295.53 |
| Dividend receivable | - | - | Taxes payable | 7,639,768.86 | 5,703,576.67 |
| Other receivables | 1,244,150,689.68 | 913,646,990.47 | Interest payable | 1,116,698.61 | 175,740.00 |
| Inventories | 59,226,898.69 | 68,187,593.73 | Dividend payable | - | - |
| Long-term debt investment due within 1 year | - | - | Other accounts payable | 202,216,771.64 | 176,793,775.07 |
| Other current assets | 370,795,974.30 | 406,616,846.60 | Non current liabilities due within one year | - | - |
| Total current assets | 2,339,411,374.84 | 1,637,976,781.81 | Total current liabilities | 1,030,105,516.19 | 296,673,253.99 |
| Non-current assets: | Non-current liabilities: | ||||
| Financial assets available for sale | 60,615,000.00 | 60,615,000.00 | Long-term loans | - | - |
| Long-term equity investment | 691,982,849.76 | 691,982,849.76 | Deferred income | 22,340,902.29 | 23,665,762.95 |
| Investment property | - | - | Other non-current liabilities | - | - |
| Fixed assets | 269,752,767.00 | 220,519,962.58 | Total non-current liabilities | 22,340,902.29 | 23,665,762.95 |
| Construction in progress | 774,060.84 | 755,227.83 | Total liabilities | 1,052,446,418.48 | 320,339,016.94 |
| Disposal of fixed asset | - | - | Owners’ equity: | ||
| Intangible assets | 2,120,473.64 | 2,726,256.15 | Share capital | 602,762,596.00 | 602,762,596.00 |
| Long-term expenses to be apportioned | - | - | Capital public reserve | 289,963,039.70 | 289,963,039.70 |
Deferred incometax asset
| Deferred income tax asset | - | - | Other comprehensive income | - | - |
| Other non-current asset | - | 1,516,600.00 | Surplus public reserve | 332,908,397.60 | 332,908,397.60 |
| Total non-current asset | 1,025,245,151.24 | 978,115,896.32 | Retained profit | 1,086,576,074.30 | 1,070,119,627.89 |
| Total shareholders’ equity | 2,312,210,107.60 | 2,295,753,661.19 | |||
| Total assets | 3,364,656,526.08 | 2,616,092,678.13 | Total liabilities and shareholders’ equity | 3,364,656,526.08 | 2,616,092,678.13 |
Consolidated Profit Statement
In RMB/CNY
| Item | Jan.-Jun. 2018 | Jan.-Jun.2017 |
| I. Total operation income | 1,079,760,214.80 | 872,962,697.33 |
| Including: operation income | 1,079,760,214.80 | 872,962,697.33 |
| II. Total operation cost | 1,045,043,229.77 | 905,059,018.04 |
| Including: operation cost | 969,695,053.03 | 827,761,559.33 |
| Operation tax and surcharge | 4,722,002.73 | 3,494,481.47 |
| Sales expense | 1,650,238.04 | 1,413,079.30 |
| Management expense | 46,681,650.04 | 41,191,218.46 |
| Financial expense | 22,294,285.93 | 31,679,390.45 |
| Loss of assets impairment | - | -480,710.97 |
| Add: Changing income of fair value (Loss is listed with “-”) | - | - |
| Investment income (Loss is listed with “-”) | -1,076,904.31 | -1,019,420.00 |
| Including: Investment income on affiliated Company and joint venture | - | - |
| Other income | 4,136,805.38 | 3,489,863.10 |
| III. Operating profit (Loss is listed with “-”) | 37,776,886.10 | -29,625,877.61 |
| Add: Non-operating income | 4,775.00 | 5,796.00 |
| Incl: Gains of non-current asset scrap and damage | - | - |
| Less: Non-operating expense | 859,018.73 | 172,009.57 |
| Incl: Loss of non-current asset scrap and damage | 849,018.73 | 160,729.35 |
| IV. Total Profit (Loss is listed with “-”) | 36,922,642.37 | -29,792,091.18 |
| Less: Income tax expense | 8,092,879.62 | 920,495.87 |
| V. Net profit (Net loss is listed with “-”) | 28,829,762.75 | -30,712,587.05 |
| Net profit attributable to owner’s of parent Company | 30,012,095.22 | -22,629,201.38 |
Minority shareholders’ gains and losses
| Minority shareholders’ gains and losses | -1,182,332.47 | -8,083,385.67 |
| VI. Net after-tax of other comprehensive income | - | - |
| VII. Total comprehensive income | 28,829,762.75 | -30,712,587.05 |
| Total comprehensive income attributable to owners of parent Company | 30,012,095.22 | -22,629,201.38 |
| Total comprehensive income attributable to minority shareholders | -1,182,332.47 | -8,083,385.67 |
| VIII. Earnings per share: | - | - |
| (i) Basic earnings per share | 0.05 | -0.04 |
| (ii) Diluted earnings per share | 0.05 | -0.04 |
Profit Statement of the Company
In RMB/CNY
| Item | Jan.-Jun.2018 | Jan.-Jun.2017 |
| I. Operation income | 406,846,441.84 | 328,400,559.49 |
| Less: Operation cost | 373,230,061.12 | 353,421,168.22 |
| Tax and surcharge | 854,057.24 | 698,660.66 |
| Sales expense | - | - |
| Management expense | 21,014,208.00 | 19,400,916.35 |
| Financial expense | -9,527,151.94 | -10,302,383.72 |
| Loss of assets impairment | - | -480,710.97 |
| Add: Changing income of fair value (Loss is listed with “-”) | - | - |
| Investment income (Loss is listed with “-”) | ||
| Including: Investment income on affiliated Company and joint venture | - | - |
| Other income | 1,424,860.66 | 1,520,540.66 |
| II. Operating profit (Loss is listed with “-”) | 22,700,128.08 | -32,816,550.39 |
| Add: Non-operating income | 1,775.00 | 1,000.00 |
| Including: Disposal gains of non-current asset | - | - |
| Less: Non-operating expense | 759,974.53 | 159,602.00 |
| Incl: Loss of non-current asset scrap and damage | 759,974.53 | 159,602.00 |
| III. Total Profit (Loss is listed with “-”) | 21,941,928.55 | -32,975,152.39 |
| Less: Income tax expense | 5,485,482.14 | |
| IV. Net profit (Net loss is listed with “-”) | 16,456,446.41 | -32,975,152.39 |
| V. Other comprehensive income |
VI. Total comprehensive income
| VI. Total comprehensive income | 16,456,446.41 | -32,975,152.39 |
Consolidated Cash Flow Statement
In RMB/CNY
| Item | Jan.-Jun.2018 | Jan.-Jun.2017 |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 1,094,708,553.42 | 905,687,628.86 |
| Write-back of tax received | 1,532,247.09 | 1,458,413.85 |
| Other cash received concerning operating activities | 6,010,380.05 | 376,088,275.79 |
| Subtotal of cash inflow arising from operating activities | 1,102,251,180.56 | 1,283,234,318.50 |
| Cash paid for purchasing commodities and receiving labor service | 900,058,280.99 | 1,015,783,468.71 |
| Cash paid to/for staff and workers | 72,787,871.66 | 63,335,884.67 |
| Taxes paid | 50,929,658.40 | 247,951,334.11 |
| Other cash paid concerning operating activities | 25,884,735.23 | 21,612,486.28 |
| Subtotal of cash outflow arising from operating activities | 1,049,660,546.28 | 1,348,683,173.77 |
| Net cash flows arising from operating activities | 52,590,634.28 | -65,448,855.27 |
| II. Cash flows arising from investing activities: | ||
| Net cash received from disposal of fixed, intangible and other long-term assets | 262,500.00 | - |
| Other cash with investment concerned from disposal subsidiary and other operational unit | - | - |
| Other cash received concerning investing activities | - | - |
| Subtotal of cash inflow from investing activities | 262,500.00 | - |
| Cash paid for purchasing fixed, intangible and other long-term assets | 55,750,360.52 | 39,051,315.46 |
| Cash paid for investment | - | - |
| Other cash paid for acquiring subsidiary and other operation unit | - | - |
| Other cash paid concerning investing activities | - | - |
| Subtotal of cash outflow from investing activities | 55,750,360.52 | 39,051,315.46 |
| Net cash flows arising from investing activities | -55,487,860.52 | -39,051,315.46 |
III. Cash flows arising from financing activities
| III. Cash flows arising from financing activities | ||
| Cash received by absorbing investment | - | - |
| Cash received from loans | 910,000,000.00 | 229,440,000.00 |
| Other cash received concerning financing activities | 15,460,000.00 | 11,309,958.60 |
| Subtotal of cash inflow from financing activities | 925,460,000.00 | 240,749,958.60 |
| Cash paid for settling debts | 546,750,000.00 | 1,171,790,000.00 |
| Cash paid for dividend and profit distributing or interest paying | 23,763,614.59 | 33,385,928.70 |
| Other cash paid concerning financing activities | - | - |
| Subtotal of cash outflow from financing activities | 570,513,614.59 | 1,205,175,928.70 |
| Net cash flows arising from financing activities | 354,946,385.41 | -964,425,970.10 |
| IV. Influence on cash due to fluctuation in exchange rate | 74,950.99 | -156,704.62 |
| V. Net increase of cash and cash equivalents | 352,124,110.16 | -1,069,082,845.45 |
| Add: Balance of cash and cash equivalents at the period-begin | 411,613,377.07 | 1,389,482,327.86 |
| VI. Balance of cash and cash equivalents at the period-end | 763,737,487.23 | 320,399,482.41 |
Cash Flow Statement of the Company
In RMB/CNY
| Item | Jan.-Jun.2018 | Jan.-Jun.2017 |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 510,374,571.27 | 448,272,760.70 |
| Write-back of tax received | - | - |
| Other cash received concerning operating activities | 311,662,404.45 | 450,213,916.09 |
| Subtotal of cash inflow arising from operating activities | 822,036,975.72 | 898,486,676.79 |
| Cash paid for purchasing commodities and receiving labor service | 340,094,480.46 | 518,637,387.55 |
| Cash paid to/for staff and workers | 44,228,041.55 | 33,867,598.79 |
| Taxes paid | 10,150,486.72 | 226,823,834.53 |
| Other cash paid concerning operating activities | 726,578,528.72 | 348,786,679.61 |
| Subtotal of cash outflow arising from operating activities | 1,121,051,537.45 | 1,128,115,500.48 |
| Net cash flows arising from operating activities | -299,014,561.73 | -229,628,823.69 |
| II. Cash flows arising from investing activities: | ||
| Net cash received from disposal of fixed, intangible and other long-term assets | 262,500.00 | - |
| Other cash received from disposing subsidiary and other operation unit | - | |
| Other cash received concerning investing activities | - | - |
| Subtotal of cash inflow from investing activities | 262,500.00 | - |
| Cash paid for purchasing fixed, intangible and other long-term assets | 47,402,174.44 | 37,751.00 |
| Cash paid for investment | - | - |
| Net cash received from subsidiaries and other units obtained | - | - |
Other cash paid concerning investing activities
| Other cash paid concerning investing activities | - | - |
| Subtotal of cash outflow from investing activities | 47,402,174.44 | 37,751.00 |
| Net cash flows arising from investing activities | -47,139,674.44 | -37,751.00 |
| III. Cash flows arising from financing activities | ||
| Cash received from absorbing investment | - | - |
| Cash received from loans | 740,000,000.00 | - |
| Other cash received concerning financing activities | 11,660,000.00 | - |
| Subtotal of cash inflow from financing activities | 751,660,000.00 | - |
| Cash paid for settling debts | 30,000,000.00 | 680,500,000.00 |
| Cash paid for dividend and profit distributing or interest paying | 10,068,299.31 | 14,136,466.93 |
| Other cash paid concerning financing activities | - | - |
| Subtotal of cash outflow from financing activities | 40,068,299.31 | 694,636,466.93 |
| Net cash flows arising from financing activities | 711,591,700.69 | -694,636,466.93 |
| IV. Influence on cash due to fluctuation in exchange rate | 262.61 | -652.36 |
| V. Net increase of cash and cash equivalents | 365,437,727.13 | -924,303,693.98 |
| Add: Balance of cash and cash equivalents at the period-begin | 148,223,551.05 | 1,119,323,850.36 |
| VI. Balance of cash and cash equivalents at the period-end | 513,661,278.18 | 195,020,156.38 |
Consolidated Statement on Changes of Owners’ Equity
In RMB/CNY
Item
| Item | Jan.-Jun. 2018 | 2017 | ||||||||||
| Equity attributable to Shareholder of parent Company | Minority’s equity | Total owners’ equity | Equity attributable to Shareholder of parent Company | Minority’s equity | Total owners’ equity | |||||||
| Share capital | Capital reserve | Surplus reserves | Retained profit | Share capital | Capital reserve | Surplus reserves | Retained profit | |||||
| I. Balance at the end of last year | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 660,176,169.69 | 65,728,468.74 | 2,024,346,554.13 | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 644,271,987.22 | 81,255,574.45 | 2,023,969,477.37 |
| Add: Changes of accounting policy | - | - | - | - | - | - | - | - | - | - | - | - |
| II. Balance at the beginning of this year | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 660,176,169.69 | 65,728,468.74 | 2,024,346,554.13 | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 644,271,987.22 | 81,255,574.45 | 2,023,969,477.37 |
| III. Increase/ Decrease in this year | - | - | - | 30,012,095.22 | -1,182,332.47 | 28,829,762.75 | - | - | - | 15,904,182.47 | -15,527,105.71 | 377,076.76 |
| (i) Total comprehensive income | - | - | - | 30,012,095.22 | -1,182,332.47 | 28,829,762.75 | - | - | - | 15,904,182.47 | -15,527,105.71 | 377,076.76 |
| (ii) Owners’ devoted and decreased capital | - | - | - | - | - | - | - | - | - | - | - | - |
| 1. Owners’ devoted capital | - | - | - | - | - | - | - | - | - | - | - | - |
| 2. Other | - | - | - | - | - | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | - | - | - | - | - | - | - | - | - |
| 1. Withdrawal of surplus reserves | - | - | - | - | - | - | - | - | - | - | - | - |
| 2. Distribution for owners (or shareholders) | - | - | - | - | - | - | - | - | - | - | ||
| 3. Other | - | - | - | - | - | - | - | - | - | - | - | - |
| (IV) Carrying forward internal owners’ equity | - | - | - | - | - | - | - | - | - | - | - | - |
| (V) Other | - | - | - | - | - | - | - | - | - | - | - | - |
| IV. Balance at the end of the Period | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 690,188,264.91 | 64,546,136.27 | 2,053,176,316.88 | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 660,176,169.69 | 65,728,468.74 | 2,024,346,554.13 |
Statement on Changes of Owners’ Equity of the Company
In RMB/CNY
Item
| Item | Jan.- Jun.2018 | 2017 | ||||||||
| Share capital | Capital reserve | Surplus reserves | Retained profit | Total owners’ equity | Share capital | Capital reserve | Surplus reserves | Retained profit | Total owners’ equity | |
| I. Balance at the end of last year | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 1,070,119,627.89 | 2,295,753,661.19 | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 1,059,120,630.04 | 2,284,754,663.34 |
| Add: Changes of accounting policy | - | - | - | - | - | - | - | - | - | - |
| II. Balance at the beginning of this year | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 1,070,119,627.89 | 2,295,753,661.19 | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 1,059,120,630.04 | 2,284,754,663.34 |
| III. Increase/ Decrease in this year | - | - | - | 16,456,446.41 | 16,456,446.41 | - | - | - | 10,998,997.85 | 10,998,997.85 |
| (i) Total comprehensive income | - | - | - | 16,456,446.41 | 16,456,446.41 | - | - | - | 10,998,997.85 | 10,998,997.85 |
| (ii) Owners’ devoted and decreased capital | - | - | - | - | - | - | - | - | - | - |
| 1. Owners’ devoted and capital | - | - | - | - | - | - | - | - | - | - |
| 2. Other | - | - | - | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | - | - | - | - | - | - | - |
| 1. Withdrawal of surplus reserves | - | - | - | - | - | - | - | - | - | - |
| 2. Other | - | - | - | - | - | - | - | - | - | - |
| (IV) Carrying forward internal owners’ equity | - | - | - | - | - | - | - | - | - | - |
| 1. Capital reserves conversed to share capital) | - | - | - | - | - | - | - | - | - | - |
| 2. Surplus reserves conversed to share capital | - | - | - | - | - | - | - | - | - | - |
(V) Other
| (V) Other | - | - | - | - | - | - | - | - | - | - |
| IV. Balance at the end of the year | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 1,086,576,074.30 | 2,312,210,107.60 | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 1,070,119,627.89 | 2,295,753,661.19 |
Shenzhen Nanshan Power Co., Ltd.Notes to financial statement semi-annual 2018
I. Company Profile
Shenzhen Nanshan Power Co., Ltd (hereinafter called as “Company”) was reorganized to be a
joint-stock enterprise from a foreign investment enterprise on 25 November 1993, upon theapproval of General Office of Shenzhen Municipal Government with Document Shen Fu Ban Fu[1993] No.897.After approved by Document Shen Zhu Ban Fu [1993] No.897 issued by Shenzhen SecuritiesRegulatory Office, on 3 January 1994, the Company offered 40,000,000 RMB common sharesand 37,000,000 domestically listed foreign shares in and out of China. And the RMB commonshares (A-stock) and domestically listed foreign listed shares (B-stock) were listed in ShenzhenSecurities Exchange successively on July 1, 1994 and Nov. 28, 1994.Headquarter of the Company located on 16/F, 17/F, Han Tang Building, OCT, Nanshan District,Shenzhen City, Guangdong Province, P.R.C.The financial statement was approved and decided by the Broad of the Company on 9 August2018.Totally 9 subsidiaries included in consolidate scope for the half year of 2018.The Company together with its subsidiaries (hereafter referred as the Company) is mainlyengaged in businesses as production of power and heat, plant constructional, oil trader, propertydevelopmental, construction technology consultation and sludge drying.
II. Preparation basis of Financial Statements1. Basis of preparation
The Group’s financial statements have been prepared based on the going concern assumption.
The financial statements have been prepared based on actual transactions and events, inaccordance with the Accounting Standards for Business Enterprises- Basic Norms (Ministry ofFinance Order No.33 Issued, Ministry of Finance Order No.76 Revised) promulgated by theMinistry of Finance of PRC on 15 February 2006 and 41 specific accounting standards, thesubsequently promulgated application guidelines of the Accounting Standards for BusinessEnterprises, interpretations and other related rules of the Accounting Standards for Business
Enterprises (hereinafter referred to as “ASBEs”), and the disclosure requirements of the“Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares,No. 15- General Requirements for Financial Reports” (revised in 2010) of China Securities
Regulatory Commission.
The Group’s financial statements have been prepared on an accrual basis in accordance with the
ASBEs. Except for certain financial instruments, the financial statements are prepared under the
historical cost convention. In the event that depreciation of assets occurs, a provision forimpairment is made accordingly in accordance with the relevant regulations.
III. Declaration of obedience to corporate accounting principlesThe Financial Statements are up to requirements of corporate accounting principles, and also atrue and thorough reflection to the Group together with its financial information as financialposition on 30
th
June 2018, and the Company together with its operation results, and cash flowfor the semi-annual of 2018. In addition, the financial statements of the Group also comply with,
in all material respects, the disclosure requirements of the “Regulation on the Preparation of
Information Disclosures of Companies Issuing Public Shares, No. 15--General Requirements for
Financial Reports” revised by the China Securities Regulatory Commission in 2014 and the
notes thereto.
IV. The main accounting policies and accounting estimatesThe Company and its subsidiaries are mainly engaged in power and thermal generation,construction of power plant, fuel trading, real estate development, engineering technologyconsultancy and sludge desiccation operation. According to the actual production and operationcharacteristics, the Company and its subsidiaries establish certain specific accounting policiesand accounting estimates in respect of their transactions and matters such as sales revenuerecognition pursuant to relevant business accounting principles. Details are set out in Note 24Description of revenue items under section IV. For explanation on material accounting judgmentand estimate issued by the management, please refer to Note 30 Material accounting judgmentand estimate under section IV.1. Accounting periodAccounting period of the Group divide into annual and medium-term, and the medium-term is
the reporting period that shorter than one completed accounting year. The Group’s accounting
year is Gregorian calendar year, namely from 1
st
January to 31
st
December.2. Operating cycleNormal operating cycle refers to the period from purchase of assets used for processing torealization of cash or cash equivalents. Our operation cycle is 12 months which is also serving asthe standard for current or non- current assets and liabilities.3. Bookkeeping standard currency
RMB is the currency in the Group’s main business economic environment and the bookkeeping
standard one, which is adopted in preparation of the financial statements.4. Accounting treatment on enterprise combine under the same control and under thedifferent control
Enterprise combination refers to a trading or event that two or over two independent enterprise/scombined to one reporting body. The combination was divided into enterprise consolidationunder the same control and the one not under the same control.(1) Consolidation of enterprises under the same controlThe enterprises involved in the consolidation are all under the final control of one party orparties and the control is not temporary. That is the corporate consolidation under the commoncontrol. For a business combination involving enterprises under common control, the party that,on the combination date, obtains control of another enterprise participating in the combination isthe absorbing party, while that other enterprise participating in the combination is a party beingabsorbed. The combination date is the date on which one combining enterprise effectivelyobtains control of the other combining enterprises.Assets and liabilities obtained by the absorbing party are measured at their carrying amount atthe combination date as recorded by the party being merged. The difference between thecarrying amount of the net assets obtained and the carrying amount of the consideration paid forthe combination (or the aggregate nominal value of shares issued as consideration) is charged tothe capital reserve (share capital premium). If the capital reserve (share capital premium) is notsufficient to absorb the difference, any excess shall be adjusted against retained earnings.Cost incurred by the absorbing party that is directly attributable to the business combinationshall be charged to profit or loss in the period in which they are incurred.(2) Consolidation of enterprises not under the same controlThe enterprises involved in the consolidation are ones not under the same final control of thecommon party or parties before and after the consolidation. That is the corporate consolidationunder the different control. For a business combination not involving enterprises under commoncontrol, the party that, on the acquisition date, obtains control of another enterprise participatingin the combination is the acquirer, while that other enterprise participating in the combination isthe acquiree. The acquisition date is the date on which the acquirer effectively obtains control ofthe acquiree.For business combination involving entities not under common control, the cost of a businesscombination is the aggregate of the fair values, on the date of acquisition, of assets given,liabilities incurred or assumed, and equity instruments issued by the acquirer to be paid by theacquirer, in exchange for control of the acquire plus agency fee such as audit, legal service andevaluation consultation and other management fees charged to the profit or loss for the periodwhen incurred. As equity or bond securities are issued by the acquirer as consideration, anyattributable transaction cost is included in their initial costs. Involved or contingent considerationcharged to the combination cost according to its fair value on the date of acquisition, thecombined goodwill would be adjusted if new or additional evidence existed about the condition
on the date of acquisition within twelve months after the acquisition date, which is required toadjust the contingent consideration. The combination cost incurred by the acquirer and theidentifiable net assets acquired from the combination are measured at their fair values. Where the
cost of a business combination exceeds the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets on the acquisition date, the difference is recognized as goodwill. Where
the cost of a business combination is less than the acquirer’s interest in the fair value of theacquiree’s identifiable net assets, the acquirer shall first reassess the measurement of the fairvalue of the acquiree’s identifiable assets, liabilities and contingent liabilities and the
measurement of the cost of combination. If after such reassessment the cost of combination is
still less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the
difference is charged to profit or loss for the period.
Where the acquiree’s deductible temporary difference acquired by the acquirer is not yet
recognized as it does not satisfy the recognition conditions of the deferred income tax assets onthe acquisition date, but new or additional information proves that the relevant circumstanceshave already existed on the acquisition date within twelve months after the acquisition date,which estimates that the economic benefits incurred from the deductible temporary difference atthe acquisition date of acquirer can be realized, then the relevant deferred income tax assets willbe recognized, and the goodwill will be reduced at the same time, if the goodwill is not sufficientto be absorbed, any excess shall be recognized in the profit or loss for the period. Except asdisclosed above, the deferred income tax assets related to the business combination are chargedto the profit or loss for the period.For a business combination not under common control is finished by a stage-up approach withseveral transactions, these several transactions will be judged whether they fall within
“transactions in a basket” in accordance with the judgment standards on “transactions in abasket” as set out in the Notice of the Ministry of Finance on Issuing Accounting Standards for
Business Enterprises Interpretation No. 5 (Cai Kuai [2012] No. 19) and Article 51 of the
“Accounting Standards for Business Enterprise No.33- Consolidated Financial Statement” (seeNote IV. 5(2)). If they fall within “transactions in a basket”, they are accounted for with
reference to the descriptions as set out in the previous paragraphs of this section and Note IV. 13
“Long-term equity investments”, and if they do not fall within “transactions in a basket”, they
are accounted for in separate financial statements and consolidated financial statements:
In separate financial statement, the sum between carrying value of the equity investment prior toacquisition date and cost of additional investment made on the acquisition date is deemed to bethe initial investment cost of this investment. Other comprehensive income recognized for equityinvestment held prior to combination date under equity method shall be accounted for when theCompany disposes of this investment on the same basis as the investee directly disposes ofrelevant assets or liabilities, which means that other than the changes arising from re-measuring
the acquiree’s net liabilities or net assets under defined benefit plan under equity method, it shall
be included in investment income of the current period.In consolidated financial report, for equity of bought party held before purchasing, re-measuredby fair value on purchased date, and the difference of fair value and its book value shouldreckoned into current investment income; Other comprehensive income recognized for equityinvestment held prior to combination date under equity method shall be accounted for when theCompany disposes of this investment on the same basis as the investee directly disposes ofrelevant assets or liabilities, which means that other than the changes arising from re-measuring
the acquiree’s net liabilities or net assets under defined benefit plan under equity method, it shall
be included in investment income of the current period dated purchasing day.5. Preparation methods for corporate consolidated statements(1) Determining principle for consolidated financial report scopeThe scope is determined on the basis of control. Control refers to the Company possess rightsover the investee party, and enjoyed variable return through participate in the relevant activitiesof the investee party, and the Company has ability to impact the amount of returns by using therights over investee party. The consolidated scope includes the Group and all the subsidiaries.Subsidiary is referring to the enterprise or the subject controlled by the Company.Once change of relevant facts and conditions results in change to relevant factors involved in theabove definition, the Company will make further assessment.(2) Preparation methods for corporate consolidated statementsSubsidiaries are consolidated from the date on which the Group obtains net assets and theeffective control of decision making of production and operation are deconsolidated from thedate that such control ceases. For disposal of subsidiaries, the operating results and cash flows ofsuch subsidiaries before the date of disposal are properly included in the consolidated incomestatement and consolidated cash flow statements; for disposal of subsidiaries during thereporting period, no adjustment shall be made to the opening balance of the consolidated balancesheet. For those subsidiaries acquired through business combination not under common control,the operating results and cash flows after the acquisition date have been properly included in theconsolidated income statements and consolidated cash flow statements. No adjustments shall bemade to the opening balance and the comparative figures of the consolidated financial statements.For those subsidiaries acquired through business combination under common control andacquiree absorbed through combination, the operating results and cash flows from the beginningof the consolidation period to the consolidation date are also presented in the consolidatedincome statement and the consolidated cash flow statements. The comparative figures presentedin the consolidated financial statements are also adjusted accordingly.The financial statements of the subsidiaries are adjusted in accordance with the accounting
policies and accounting period of the Company in the preparation of the consolidated financialstatements, where the accounting policies and the accounting periods are inconsistent betweenthe Company and the subsidiaries. For subsidiaries acquired from business combination notunder common control, the financial statements of the subsidiaries will be adjusted according tothe fair value of the identifiable net assets at the acquisition date.All intra-group significant balances, transactions and unrealized profit are eliminated in theconsolidated financial statements.
As for the subsidiary’s shareholders’ equity and the parts that does not owned the Group incurrent net gains/losses, listed out independently as minority shareholders’ equity and minorityshareholders gains/losses in item of shareholders’ equity and net profit contained in consolidatedfinancial statement separately. The amount attributable to minority shareholders’ equity of
current net loss/gains of subsidiaries is listed in the net profit item of consolidated profit as
minority shareholders’ equity. When the share of losses attributable to the minor shareholdershas exceeded their shares in the owners’ equity at the beginning of term attributable to minorityshareholders in the subsidiary, the balance shall offset the minor shareholders’ equity.
For control rights loss in original subsidiary for partial equity investment disposal or otherreasons, the remained equity should re-measured based on the fair value at date of control losses.The difference between the net assets of original subsidiary share by proportion held thatsustainable calculated since purchased date and sum of consideration obtained by equity disposaland fair value of remain equity, reckoned into the current investment income of control rightsloss. Other comprehensive income relating to equity investment in original subsidiary shall beaccounted for, upon lost of control, under the same basis as the acquiree would otherwise adoptwhen relevant assets or liabilities are disposed directly by the acquiree, which means that other
than the changes arising from re-measuring the original subsidiary’s net liabilities or net assets
under defined benefit plan, it shall be included in investment income of the current period. The
remaining equity interests are measured subsequently according to “Accounting Standard forBusiness Enterprises No. 2 – Long-term Equity Investments” or “Accounting Standard forBusiness Enterprises No. 22 – Recognition and Measurement of Financial Instruments”. SeeNote IV.13 “Long-term equity investments” or Note IV.9 “Financial instruments” for details.
When the Company disposes of equity investment in a subsidiary by a stage-up approach withseveral transactions until the control over the subsidiary is lost, it shall determine whether theseseveral transactions related to the disposal of equity investment in a subsidiary until the control
over the subsidiary is lost fall within “transactions in a basket”. Usually, these several
transactions related to the disposal of equity investment in a subsidiary are accounted for astransactions in a basket when the terms, conditions and economic impacts of these several
transactions meet the following one or more conditions: ① these transactions are entered into at
the same time or after considering their impacts on each other; ② these transactions as a wholecan reach complete business results; ③ the occurrence of a transaction depends on at least theoccurrence of an other transaction; ④ an individual transaction is not deemed as economic, but
is deemed as economic when considered with other transactions. If they are not transactions in a
basket, each of which are accounted for in accordance with applicable rules in “partial disposalof long-term equity investment of a subsidiary without losing control over a subsidiary” (seeNote IV. 13 (2) ④) separately, and “the control over a subsidiary is lost due to partial disposal ofequity investment or other reasons” (see the preceding paragraph). When several transactions
related to the disposal of equity investment in a subsidiary until the control over the subsidiary islost fall within transactions in a basket, each of which is accounted for as disposal of a subsidiarywith a transaction until the control over a subsidiary is lost; however, the different between theamount of disposal prior to the loss of control and the net assets of a subsidiary attributable tothe disposal investment shall be recognized as other comprehensive income in consolidatedfinancial statements and transferred to profit or loss for the period at the time when the control islost.6. Classification of joint arrangement and accounting treatment on conduct joint operationJoint arrangement refers to such arrangement as jointly controlled by two or more participators.The Company classifies joint arrangement into joint operation and joint venture according to therights it is entitled to and obligations it assumes. Under joint operation, the Company is entitledto relevant assets under the arrangement and assumes relevant liabilities under the arrangement.Joint venture refers to such joint arrangement under which the Company is only entitled to thenet assets of the arrangement.Equity method is adopted for investment in joint ventures, and it is accounted for under the
accounting policies set out in Note 13(2) ② “long term equity investment under equity method”
under section IV.As a joint party under joint operation, the Company recognizes the assets and liabilities itseparately holds and assumes, the assets and liabilities it jointly holds and assumes under theproportion, the revenue from disposal of the output which the Company is entitled to under theproportion, the revenue from disposal of the output under the proportion and the separatelyoccurred expenses as well as expenses occurred for joint operations under its proportion.For injection to or disposal of assets of joint operations (other than those assets constitutingbusiness operation) or for purchase of assets from joint operations, gain or loss arising from thetransaction is only recognized to the extent it is attributable to other parties to the joint operationbefore the joint operation is sold to any third party. In case that asset occur asset impairment lossunder Business Accounting Principle No.8-Assets Impairment, the Company recognizes this lossin full in connection with injection to or disposal of assets of joint operations, and recognizes this
loss based on the proportion in connection with purchase of assets from joint operations.7. Determination criteria of cash and cash equivalentCash and cash equivalents of the Group include cash on hand, deposits readily available forpayment purpose and short-term (normally fall due within three months from the date ofacquisition) and highly liquid investments held the Group which are readily convertible intoknown amounts of cash and which are subject to insignificant risk of value change.8. Foreign currency business and foreign currency statement translation(1) Foreign currency business translation
Foreign currency transactions are translated into the Company’s functional currency at the spot
rate on transaction date (generally refers to the middle rate of prevailing foreign exchange ratereleased by the PBOC) when the transactions are initially measured. However, foreign currencyexchange business or transaction involving foreign currency exchange occurred by the Companyare translated into functional currency at the effective exchange rate adopted.(2) Translation of foreign currency monetary items and foreign currency non-monetary itemsOn balance sheet date, foreign currency monetary items are translated at the spot rate as ofbalance sheet date, and the exchange difference shall be included in current period gains and
losses, except ①exchange difference arising from foreign currency special borrowings relating
to purchasing assets satisfying capitalization conditions is stated under capitalization principle of
borrowing expenses; ②exchange difference arising from hedge instruments used as effective
hedging of net investment in overseas operation (such difference shall be included in othercomprehensive income and recognized as current period gains and losses when the net
investment is disposed); and ③exchange difference arising from change of carrying balance of
available for sale foreign currency monetary items other than amortized cost is included in othercomprehensive income.When preparing consolidated financial statement involving overseas operation, in case there isforeign currency monetary items which substantially constitute net investment in overseasoperation, the exchange difference arising from exchange rate fluctuation shall be included inother comprehensive income; and shall transfer to gains and losses from disposal for the currentperiod when the overseas operation is disposed of.Non-monetary items measured in historical cost are still measured by sum on the bookkeepingstandard currency at the current exchange rate. The items measured by the fair value areconverted at the current rate on the fair value recognition day. The difference is dealt as the fairvalue change and reckoned into the current loss/gain or recognized as the other consolidatedincome and reckoned into the reserve.(3) Translation of foreign currency financial statementWhen preparing consolidated financial statement involving overseas operation, in case there is
foreign currency monetary items which substantially constitute net investment in overseasoperation, the exchange difference arising from exchange rate fluctuation shall be included in
other comprehensive income as “translation difference of foreign currency statement”; and shall
transfer to gains and losses from disposal for the current period when the overseas operation isdisposed of.Foreign currency financial statement for overseas operation is translated into RMB statement bythe following means: assets and liabilities in balance sheet are translated at the spot rate as of
balance sheet date; owner’s equity items (other than undistributed profit) are translated at the
spot rate prevailing on the date of occurrence. Income and expense items in profit statement aretranslated at the spot rate prevailing on the date of transactions. Beginning undistributed profitrepresents the translated ending undistributed profit of previous year; ending undistributed profitis allocated and stated as several items upon translation. Upon translation, difference between
assets, liabilities and shareholders’ equity items shall be recorded as foreign currency financial
statement translation difference and recognized as other comprehensive income. In case ofdisposal of overseas operation where control is lost, foreign currency financial statement
translation difference relating to the overseas operation as stated under shareholders’ equity in
balance sheet shall be transferred to current gains and losses of disposal in full or under theproportion it disposes.Foreign currency cash flow and cash flow of overseas subsidiary are translated at the spot rateprevailing on the date of occurrence of cash flow. Influence over cash from exchange ratefluctuation is taken as adjustment items to separately stated in cash flow statement.The beginning figure and previous year actual figures are stated at the translated figures inprevious year financial statement.
If the Company loses control over overseas operation due to disposal of all the owners’ equity or
part equity investment in the overseas operation or other reasons, foreign currency financial
statement translation difference relating to the overseas operation attributable to owners’ equityof parent company as stated under shareholders’ equity in balance sheet shall be transferred to
current gains and losses of disposal in full.If the Company reduces equity proportion while not loses control over overseas operation due todisposal of part equity investment in the overseas operation or other reasons, foreign currencyfinancial statement translation difference relating to the disposed part will be vested to minorityinterests and will not transfer to current gains and losses. When disposing part equity interests ofoverseas operation which is the associate or joint venture, foreign currency financial statementtranslation difference relating to the overseas operation shall transfer to current disposal gainsand losses according to the disposed proportion.9. Financial instruments
Financial asset or financial liability is recognized when the Company becomes a party tofinancial instrument contract. Financial assets and liabilities are initially measured at fair value.For financial assets and liabilities at fair value through profit or loss, the relevant transaction feeshall be included in profit or loss directly. For other types of financial assets and liabilities, therelevant transaction fee is included in initial measurement amount.(1) Recognition of fair value for financial assets and financial liabilitiesFair value represents the price that market participator can receive for disposal of an asset or heshould pay for transfer of a liability in an orderly transaction happened on the measurement date.As for instrument in active market, the fair value is adopted according to the quotation in theactive market. Quote in active market refers to the price easy to obtain regularly from exchange;
broker’s agency, industry association and pricing service authority etc., and such quote represent
a price that actually occurred in market trading during the fair transaction. As for the instrumentsnot in the active market, the fair value is recognized by the estimation technology. Thetechnology is composed of the price in the latest fair trade, fair value according to thefundamentally same instruments, cash flow discount and stock price-setting model.(2) Classification, recognition and measurement of financial assetsBy way of buying and selling the financial assets in a regular way, recognition and derecognitionare carried out according to the accounts on the transaction day. Financial assets are divided intofinancial assets at fair value through profit or loss, held-to-maturity investments, loans andaccounts receivable and available for-sale financial assets when they are initially recognized.Financial assets are initially recognized at fair value. For financial assets classified as fair valuethrough profit or loss, relevant transaction costs are directly recognized in profit or loss for theperiod. For financial assets classified as other categories, relevant transaction costs are includedin the amount initially recognized.
① Financial assets carried at fair value through profit or loss for the current period
They include financial assets held for trading and financial assets designated as at fair valuethrough profit or loss for the current period.Financial assets may be classified as financial assets held for trading if one of the followingconditions is met: A. the financial assets is acquired or incurred principally for the purpose ofselling it in the near term; B. the financial assets is part of a portfolio of identified financialinstruments that are managed together and for which there is objective evidence of a recentpattern of short-term profit-taking; or C. the financial assets is a derivative, excluding thederivatives designated as effective hedging instruments, the derivatives classified as financialguarantee contract, and the derivatives linked to an equity instrument investment which has noquoted price in an active market nor a reliably measured fair value and are required to be settledthrough that equity instrument.
A financial asset may be designated as at fair value through profit or loss upon initial recognitiononly when one of the following conditions is satisfied: A. Such designation eliminates orsignificantly reduces a measurement or recognition inconsistency that would otherwise resultfrom measuring assets or recognizing the gains or losses on them on different bases; or B. Thefinancial asset forms part of a group of financial assets or a group of financial assets andfinancial liabilities, which is managed and its performance is evaluated on a fair value basis, in
accordance with the Group’s documented risk management or investment strategy, and
information about the grouping is reported to key management personnel on that basis.Financial assets carried at fair value through profit or loss for the current period is subsequentlymeasured at fair value. The gain or loss arising from changes in fair value and dividends andinterest income related to such financial assets are charged to profit or loss for the current period.
② Held-to-maturity investments
They are non-derivative financial assets with fixed maturity dates and fixed or determinablepayments that the Company has positive intent and ability to hold to maturity.Held-to-maturity investments are subsequently measured at amortized cost using the effectiveinterest method. Gain or loss on derecognition, impairment or amortization is recognizedthrough profit or loss for the current period.The effective interest method is a method of calculating the amortized cost of a financial assetand of allocating interest income or expense over each period based on the effective interest of afinancial asset or a financial liability (including a group of financial assets or financial liabilities).The effective interest is the rate that discounts future cash flows from the financial asset orfinancial liability over its expected life or (where appropriate) a shorter period to the carryingamount of the financial asset or financial liability.In calculating the effective interest rate, the Company will estimate the future cash flows(excluding future credit losses) by taking into account all contract terms relating to the financialassets or financial liabilities whilst considering various fees, transaction costs and discounts orpremiums which are part of the effective interest rate paid or received between the parties to thefinancial assets or financial liabilities contracts.
③ Loans and receivables
They are non-derivative financial assets with fixed or determinable payments that are not quotedin an active market. Financial assets, including bills receivable, accounts receivable, the Groupclassifies interest receivable, dividends receivable and other receivables as loans and receivables.Loans and receivables are measured subsequently at the amortized cost by using the effectiveinterest rate method. Gains or losses incurred at the time of derecognition, impairment oramortization are charged to profit or loss for the current period.
④ Available-for-sale financial assets
They include non-derivative financial assets that are designated in this category on initialrecognition, and the financial assets other than the financial assets at fair value through profitand loss, loans and receivables and held-to-maturity investments.The closing cost of available-for-sale debt instruments are determined based on amortized costmethod, which means the amount of initial recognition less the amount of principle alreadyrepaid, add or less the accumulated amortized amount arising from the difference between theamount initially recognized and the amount due on maturity using effective interest rate method,and less the amount of impairment losses recognized. The closing cost of available-for-saleequity instruments is equal to its initial acquisition cost.Available-for-sale financial assets are subsequently measured at fair value. The gain or loss onchange in fair value are recognized as other comprehensive income and charged to capitalreserves, except for impairment loss and exchange differences arising from foreign monetaryfinancial assets and amortized cost which are accounted for through profit or loss for the currentperiod. The financial assets will be transferred out of the financial assets on derecognition andaccounted for through profit or loss for the current period. However, equity instrumentinvestment which is not quoted in active market and whose fair value cannot be measuredreliably, and derivative financial asset which is linked to the equity instrument and whosesettlement is conditional upon delivery of the equity instrument, shall be subsequently measuredat cost.Interests received from available-for-sale financial assets held and the cash dividends declaredby the investee are recognized as investment income.(3) Impairment of financial assetsExcept for financial assets accounted at fair value and variation accounted into current gain/lossaccount, the Group undertakes inspection on the book value of other financial assets at eachbalance sheet day, whenever practical evidence showing that impairment occurred with them,impairment provisions are provided.The Group performs impairment test separately on individual financial assets with majoramounts; for financial assets without major amounts, the Group performs impairment testseparately or inclusively in a group of financial assets with similar characteristics of risks. Thosefinancial assets (individual financial assets with or without major amounts) tested separatelywith no impairment found shall be tested again along with the group of financial assets withsimilar risk characteristics. Financial assets confirmed for impairment individually shall not betested along with the group of financial assets with similar risk characteristics.
① Impairment of held-to-maturity investments and loans and receivables
The carrying amount of financial assets measured as costs or amortized costs are subsequentlyreduced to the present value discounted from its projected future cash flow. The reduced amount
is recognized as impairment loss and recorded as profit or loss for the period. After recognitionof the impairment loss from financial assets, if there is objective evidence showing recovery invalue of such financial assets impaired and which is related to any event occurring after suchrecognition, the impairment loss originally recognized shall be reversed to the extent that thecarrying value of the financial assets upon reversal will not exceed the amortized cost as at thereversal date assuming there is no provision for impairment.
② Impairment of available-for-sale financial assets
In the event that decline in fair value of the available-for-sale equity instrument is regarded as
“severe decline” or “non-temporary decline” on the basis of comprehensive related factors, it
indicates that there is impairment loss of the available-for-sale equity instrument.When the available-for-sale financial assets impair, the accumulated loss originally included inthe capital reserve arising from the decrease in fair value was transferred out from the capitalreserve and included in the profit or loss for the period. The accumulated loss that transferred outfrom the capital reserve is the balance of the acquired initial cost of asset, after deduction of theprincipal recovered, amortized amounts, current fair value and the impairment loss originallyincluded in the profit or loss.After recognition of the impairment loss, if there is objective evidence showing recovery invalue of such financial assets impaired and which is related to any event occurring after suchrecognition in subsequent periods, the impairment loss originally recognized shall be reversed.The impairment loss reversal of the available-for-sale equity instrument will be recognized asother consolidated income, and the impairment loss reversal of the available-for-sale debtinstrument will be included in the profit or loss for the period.When an equity investment that is not quoted in an active market and the fair value of whichcannot be measured reliably, or the impairment loss of a derivative financial asset linked to theequity instrument that shall be settled by delivery of that equity instrument, then it will not bereversed.(4) Recognition basis and measurement method for transfer of financial assetsAs for the financial assets up to the following conditions, the recognition termination is available:
①Termination of the contract right to take the cash flow of the financial assets; ② transferred tothe transferring-in part nearly all risk and compensation; ③ all risk and compensation neither
transferred nor retained, and with the give-up of the control over the financial assets.As for financial assets of almost all risk and compensation neither transferred nor retained, andwithout the give-up of the control over the financial assets, it was recognized according to theextension of the continual entry into the transferred financial assets and relevant liabilities arecorrespondingly recognized. The continual entry into the transferred financial assets is risk levelwhich the enterprise faces up to due to the assets changes.
As for the whole transfer of the financial assets up to the recognition termination conditions, thebook value of the transferred assets, together with the difference between the consideration valueand the accumulative total of the fair value change of the other consolidated income, is reckonedinto the current gain/loss.As for the partial transfer of the financial assets up to the recognition termination conditions, thebook value of the transferred assets is diluted on the relative fair value between the terminatedpart and the un-terminated part; and reckoned into the current loss/gain is the difference betweenthe sum of the consideration value and the accumulative sum of the valuation change ought to bediluted into the recognition termination part but into the other consolidated income, and theabove diluted book value, is reckoned into the current loss/gain.For financial assets that are transferred with recourse or endorsement, the Group needs todetermine whether the risk and rewards of ownership of the financial asset have beensubstantially transferred. If the risk and rewards of ownership of the financial asset have beensubstantially transferred, the financial assets shall be derecognized. If the risk and rewards ofownership of the financial asset have been retained, the financial assets shall not be derecognized.If the Group neither transfers nor retains substantially all the risks and rewards of ownership ofthe financial asset, the Group shall assess whether the control over the financial asset is retained,and the financial assets shall be accounted for according to the above paragraphs.(5) Categorizing and measuring of financial liabilitiesAt initial recognition, financial liabilities are classified into financial liabilities measured by fairvalue with changes counted into current gains/losses and other financial liabilities. Financialliabilities are initially recognized at fair value. For financial liabilities classified as fair valuethrough profit or loss, relevant transaction costs are directly recognized in profit or loss for theperiod. For financial liabilities classified as other categories, relevant transaction costs areincluded in the amount initially recognized.
① Financial liabilities at fair value through profit or loss for the period
The criteria for a financial liability to be classified as held for trading and designated as financialliabilities at fair value through profit or loss are the same as those for a financial asset to beclassified as held for trading and designated as financial assets at fair value through profit orloss.Financial liabilities at fair value through profit or loss for the period are subsequently measuredat fair value. The gain or loss arising from changes in fair value and dividends and interestincome related to such financial liabilities are included in profit or loss for the period.
② Other financial liabilities
Derivative financial liabilities which are linked to equity instruments that are not quoted in anactive market and the fair value of which cannot be measured reliably measured, and which shall
be settled by delivery of equity instruments are subsequently measured at cost. Other financialliabilities are subsequently measured at amortized cost using the effective interest method. Gainsor losses arising from derecognition or amortization is recognized in profit or loss for the period.
③ Financial Guarantee Contracts and loan commitment
Financial guarantee contracts other than those designated as financial liabilities at fair valuethrough profit or loss or loan commitment other than those designated measured by fair valueand with its variation for gains/losses reckoned as well as the loans lower than the market ratesare initially recognized at fair value, and shall be subsequently measured at the higher of thefollowing: the amount determined in accordance with Accounting Standard for Business
Enterprises No. 13 “Contingencies” and the amount initially recognized less cumulativeamortization recognized in accordance with the principles set out in “Accounting Standard forBusiness Enterprises No. 14- Revenue”.
(6) Termination recognition of financial liabilitiesOnly is released the whole or part of the current duties, the termination of the liabilities or part ofit is available. The Group (the creditor) signed the agreement with the debtor: the existingliabilities are replaced by the bearing of the new liabilities; and the contract terms arefundamentally different of the new liabilities and the existing ones; the termination of therecognition of the existing ones is available; and the recognition of new ones is available.As for the whole or partial termination of the recognition of the liabilities, the difference betweenthe book value of the part of recognition termination and the consideration value paid (includingthe non-cash assets transferred out or the liabilities newly beard) is reckoned into the currentloss/gain.(7) Derivatives and embedded derivativesDerivative instruments are initially recognized at fair value on the date on which a derivativecontract is entered into and are subsequently measured at fair value. Any gains or losses arisingfrom changes in fair value of derivatives are taken directly to profit or loss for the period, exceptfor derivative instruments that are designated as hedging instruments and which are highlyeffective in hedging, gains or losses arising from changes in their fair value are taken to theprofit or loss for the period in accordance with the hedge accounting requirement based on thenature of hedging relationships.For combined instruments contain embedded derivatives which are not designated as financialassets or financial liabilities at fair value through profit or loss, and the embedded derivative andthe main contract does not have a material relation in terms of risk and economic attributes, andwhen an individual instrument which is the same as the embedded derivative can be defined asderivative, the embedded derivative shall be separated from the combined instrument and treatedas an individual derivative. If the embedded derivative cannot be separately measured at
acquisition or subsequent balance sheet date, the combined instrument shall be designated asfinancial assets or financial liabilities at fair value through profit or loss.(8) Balance-out between the financial assets and liabilitiesAs the Group has the legal right to balance out the financial liabilities by the net or liquidation ofthe financial assets, the balance-out sum between the financial assets and liabilities is listed inthe balance sheet. In addition, the financial assets and liabilities are listed in the balance sheetwithout being balanced out.(9) Equity instrumentThe equity instrument is the contract to prove the holding of the surplus stock of the assets withthe deduction of all liabilities in the Group. The Company issues (including refinancing),repurchases, sells or cancels equity instruments as movement of equity. No fair value change ofequity instrument would be recognized by the Company. Transaction fees relating to equitytransactions are deducted from equity.
The Group’s all distribution (shares dividend excluded) to the holders of the stock instrumentwill decrease the shareholders’ equity. The Group does not recognize the fair value change sum
of the stock instrument.10. Account receivableAccount receivable included account receivable and other account receivable.(1) Recognition of bad debt provisionThe Group reviews carrying value of account receivables on balance sheet date, and makeimpairment provision for account receivables which are proven to be impaired by the following
objective evidences: ①debtor experiences material financial difficulties; ②debtor is in breach ofcontract terms (for instance: default or expiration of payment for principal or interest); ③ debtoris likely to face bankruptcy or other financing restructuring; ④other objective evidence showing
account receivables are impaired.(2) Provision for bad debt reserves
① Recognition criteria and accrual method on accounts with major amount and withdrawal bad
debt provision independentlyThe single account receivable above RMB 2 million is recognized as single substantive accountreceivableThe Company takes the independent impairment test on the single substantive account. As forthe account receivable without the impairment in the test, it is included in the account receivableportfolio of the similar credit risk characters for the impairment test. As for the accountreceivable with the recognition of impairment loss, it is not included in the account receivableportfolio of the similar credit risk characters for the impairment test
② Determination bases for account receivables for which bad debt provision is made according
to category of credit risks, and provision for bad debtThe Group determines categories of account receivables according to the similarity of credit riskcharacteristics. Account receivables consist of those with insignificant single amount and thosewith significant single amount which is not impaired based on separate impairment test. TheGroup is of the view that account receivables with insignificant single amount and those withsignificant single amount which is not impaired based on separate impairment test are exposed tolow credit risks, thus it is not necessary to make bad debt provision, unless there is evidenceshowing that account receivables have relatively substantial credit risks.
③ Account receivables with insignificant single amount for which bad debt provision is made
separatelyFor account receivables with insignificant single amount, if there is evidence showing thataccount receivables are exposed to relatively substantial credit risks, bad debt provision shall bemade for such account receivables under specific identification method.(3) Reversal of bad debtIf there is objective evidence showing recovery in value of account receivables impaired andwhich is related to any event occurring after such recognition, the impairment loss originallyrecognized shall be reversed to the extent that the carrying value of the account receivables uponreversal will not exceed the amortized cost as at the reversal date assuming there is no provisionfor impairment.11. Inventory(1) Categories of inventory
The Company’s inventory mainly consists of fuels, raw materials and developing products in
process and so on.(2) Valuation method of inventory deliveredThe inventories are initially measured at cost. The costs of developing products include land
grant fee, expenditures for auxiliary facilities, expenses on construction and installation,borrowing costs incurred before the completion of the subject project and other relatedexpenses during the course of the development. Other cost of inventories comprises purchasecosts, processing costs and other costs incurred in bringing the inventories to their presentlocation and condition.
The actual cost of the property development products delivered is recognized by the individualvaluation method. The actual cost of other inventories delivered is recognized by the weightedaverage method.(3) Recognition of net realizable value of inventory, and accrual methods of preparation fordepreciation
On the balance sheet day, the inventory is measured by the lower one between the cost andthe net realizable value. As the net realizable value is lower than the cost, the inventorydepreciation provision is accrued. The net realizable value is balance of the estimated saleprice less the estimated forthcoming cost upon the completion, the estimated sale expense,and the relevant tax in the daily activities. Upon the recognition of net realizable value of theinventory, the concrete evidence is based on and the purpose of holding the inventory and theinfluence of events after the balance sheet day are considered.
As for the inventory of large sum and lower price, the inventory depreciation provision isaccrued by the inventory categories. As for the inventory related to the product series producedand sold in the same district, of the same or similar final use or purpose and impossible to beseparated from the other items, the provision is consolidated and accrued. The provision forother inventory is accrued by the difference between the cost and net realizable value.Upon the accrual of the inventory depreciation provision, if the previous influence factors on theinventory deduction disappeared, which resulted in the net realizable value being higher than itsbook value; the accrual is transferred back within the previous accrual of the provision andreckoned into the current gain/loss.(4) The inventory system is perpetual inventory system.12. Non-current assets and disposal groups held for saleIf the Group takes back its book value mainly by selling (including the non-monetary assetsexchange with commercial substance, the same as below) rather than noncontiguous use of anon-current asset or disposal group, it shall be divided into the held-for-sale category. Thespecific criteria are to meet the following conditions: a certain non-current asset or disposalgroup can be sold immediately under the current conditions based on the practice of selling suchassets or disposal groups in similar transactions; the Company has made resolutions on the saleplan and has obtained decided purchase commitments; the sale is expected to be completedwithin one year. Thereinto, the disposal group refers to a set of assets that are disposed alongwith all the others as a whole by sale or other methods in a transaction and the liabilities that aredirectly related to those assets transferred in the transaction. The group of assets or asset groupsto which the disposal group belongs share the goodwill achieved in the business combination inaccordance with the Accounting Standards for Business Enterprises No. 8 - Impairment of Assets,the disposal group should include the goodwill assigned to the disposal group.When the initial measurement or the remeasurement at the balance sheet date of the Group isdivided into the non-current asset and disposal group held for sale, if the book value is higherthan the net amount after subtracting the selling fees from the fair value, write down the bookvalue to the net amount after subtracting the selling fees from the fair value, the write-downamount is recognized as asset impairment losses and is included in the current profits and losses,
meanwhile making provisions for impairment of assets held for sale. For the disposal group, therecognized assets impairment losses firstly offset the book value of goodwill in the disposalgroup, then offset the book value of various non-current assets specified by the measurementapplicable for Accounting Standards for Business Enterprises No. 42 - Non-current Assets,Disposal Group, and Discontinued Operation Held for Sale (Hereinafter referred to as theGuidelines Held for Sale) in the disposal group. If the net amount after subtracting the sellingfees from the fair value of the disposal group at the subsequent balance sheet date has anincrease, the amount of the previous write-down should be restored and transferred back in theamount of assets impairment loss recognized by non-current assets and applicable forheld-for-sale standards after being classified as the held-for-sale, the transferred amount shouldbe included in the current profits and losses, and increase its book value in proportion accordingto the proportion of book value of various non-current assets applicable for the measurement andspecification of held-for-sale standards in the disposal group except for the goodwill; the bookvalue of which the goodwill has been offset and the assets impairment losses confirmed beforethe non-current assets applicable for the measurement and specification of held-for-salestandards being classified as available-for-sale assets cannot be transferred back.The non-current assets held for sale or the non-current assets in the disposal group shall not beaccrued for depreciation or amortization, continue to confirm the indebted interest and otherexpenses in the disposal group held for sale.When the non-current assets or disposal groups no longer meet the requirements of held-for-salecategories, the Company shall not continue to classify them as the held-for-sale categories orremove the non-current assets from the held-for-sale disposal group, and measure according tothe lower one of the following: (1) For the book value before being classified as held-for-salecategory, the amount of the depreciation, amortization or impairment that should be confirmedwhen not being classified as held-for-sale category according to the assumptions after beingadjusted; (2) Recoverable amount.13. Long-term equity investmentLong-term equity investments under this section refer to long-term equity investments in whichthe Company has control, joint control or significant influence over the investee. Long-termequity investment without control or joint control or significant influence of the Group isaccounted for as available-for-sale financial assets or financial assets measured at fair value withany change in fair value charged to profit or loss. Details on its accounting policy please refer to
Note 9. “Financial instruments” under section IV.Joint control is the Company’s contractually agreed sharing of control over an arrangement,
which relevant activities of such arrangement must be decided by unanimously agreement fromparties who share control. Significant influence is the power of the Company to participate in the
financial and operating policy decisions of an investee, but to fail to control or joint control theformulation of such policies together with other parties.(1) Determination of investment costFor a long-term equity investment acquired through a business combination involvingenterprises under common control, the initial investment cost of the long-term equity investment
shall be the absorbing party’s share of the carrying amount of the owner’s equity under the
consolidated financial statements of the ultimate controlling party on the date of combination.The difference between the initial cost of the long-term equity investment and the cash paid,non-cash assets transferred as well as the book value of the debts borne by the absorbing partyshall offset against the capital reserve. If the capital reserve is insufficient to offset, the retainedearnings shall be adjusted. If the consideration of the merger is satisfied by issue of equitysecurities, the initial investment cost of the long-term equity investment shall be the absorbing
party’s share of the carrying amount of the owner’s equity under the consolidated financial
statements of the ultimate controlling party on the date of combination. With the total face valueof the shares issued as share capital, the difference between the initial cost of the long-termequity investment and total face value of the shares issued shall be used to offset against thecapital reserve. If the capital reserve is insufficient to offset, the retained earnings shall beadjusted. For business combination resulted in an enterprise under common control by acquiringequity of the absorbing party under common control through a stage-up approach with several
transactions, these transactions will be judged whether they shall be treat as “transactions in abasket”. If they belong to “transactions in a basket”, these transactions will be accounted for atransaction in obtaining control. If they are not belong to “transactions in a basket”, the initialinvestment cost of the long-term equity investment shall be the absorbing party’s share of thecarrying amount of the owner’s equity under the consolidated financial statements of the
ultimate controlling party on the date of combination. The difference between the initial cost ofthe long-term equity investment and the aggregate of the carrying amount of the long-termequity investment before merging and the carrying amount the additional consideration paid forfurther share acquisition on the date of combination shall offset against the capital reserve. If thecapital reserve is insufficient to offset, the retained earnings shall be adjusted. Othercomprehensive income recognized as a result of the previously held equity investment accountedfor using equity method on the date of combination or recognized for available-for-sale financialassets will not be accounted for.For a long-term equity investment acquired through a business combination involvingenterprises not under common control, the initial investment cost of the long-term equityinvestment shall be the cost of combination on the date of acquisition. Cost of combinationincludes the aggregate fair value of assets paid by the acquirer, liabilities incurred or borne andequity securities issued. For business combination resulted in an enterprise not under common
control by acquiring equity of the acquiree under common control through a stage-up approachwith several transactions, these transactions will be judged whether they shall be treat as
“transactions in a basket”. If they belong to “transactions in a basket”, these transactions will beaccounted for a transaction in obtaining control. If they are not belong to “transactions in abasket”, the initial investment cost of the long-term equity investment accounted for using cost
method shall be the aggregate of the carrying amount of equity investment previously held bythe acquiree and the additional investment cost. For previously held equity accounted for usingequity method, relevant other comprehensive income will not be accounted for. For previouslyheld equity investment classified as available-for-sale financial asset, the difference between itsfair value and carrying amount, as well as the accumulated movement in fair value previouslyincluded in the other comprehensive income shall be transferred to profit or loss for the currentperiod.Agent fees incurred by the absorbing party or acquirer for the acquisition such as audit, legalservice, and valuation and consultation fees, and other related administration expenses arecharged to profit or loss in the current period at the time such expenses incurred.The long-term equity investment acquired through means other than a business combinationshall be initially measured at its cost. Such cost is depended upon the acquired means oflong-term equity investments, which is recognized based on the purchase cost actually paid bythe Company in cash, the fair value of equity securities issued by the Group, the agreed value ofinvestment contract or agreement, the fair value or original carrying amounts of thenon-monetary asset exchange transaction which the asset will be transferred out of the Company,and the fair value of long-term equity investment itself. The costs, taxes and other necessaryexpenses that are directly attributable to the acquisition of the long-term equity investments arealso included in the investment cost. For additional equity investment made in order to obtainsignificant influence or common control over investee without resulted in control, the relevantcost for long-term equity investment shall be the aggregate of fair value of previously held
equity investment and additional investment cost determined according to “Accounting Standardfor Business Enterprises No. 22 – Recognition and measurement of Financial Instruments”.
(2) Follow-up measurement and gain/loss recognitionAs for the long-term equity investment with common control (except for the common operators)over or significant influence on the invested units, measured by the cost method. In addition,long-term equity investment to the invested units that control by the Company adopted the costmethod for calculation in financial statement.
① Long-term equity investment checked by the cost
Upon the cost check, the investment is valuated on the initial cost. In addition to the actual pricesor the announced but yet undistributed cash dividend or profit in consideration valuation, the
current investment return is recognized by the announced cash dividend or profit by the investedunits.
② Long-term equity investment checked by the equity
When equity basis is adopted, if the initial cost of the long-term equity investment is greater than
the share of fair value of the receiver’s recognizable net asset, the initial investment cost of the
long-term equity investment will not be adjusted; if the initial cost of the long-term equity
investment is less than the share of fair value of the receiver’s recognizable net asset, the balance
shall be counted into current income account, and the cost of long-term equity investment shallbe adjusted.Under the equity method, investment gain and other comprehensive income shall be recognized
based on the Group’s share of the net profits or losses and other comprehensive income made by
the investee, respectively. Meanwhile, the carrying amount of long-term equity investment shallbe adjusted. The carrying amount of long-term equity investment shall be reduced based on the
Group’s share of profit or cash dividend distributed by the investee. In respect of the other
movement of net profit or loss, other comprehensive income and profit distribution of investee,the carrying value of long-term equity investment shall be adjusted and included in the capital
reserves. The Group shall recognize its share of the investee’s net profits or losses based on thefair values of the investee’s individual separately identifiable assets at the time of acquisition,
after making appropriate adjustments thereto. In the event of inconformity between theaccounting policies and accounting periods of the investee and the Company, the financialstatements of the investee shall be adjusted in conformity with the accounting policies andaccounting periods of the Company. Investment gain and other comprehensive income shall berecognized accordingly. In respect of the transactions between the Group and its associates andjoint ventures in which the assets disposed of or sold are not classified as operation, the share ofunrealized gain or loss arising from inter-group transactions shall be eliminated by the portionattributable to the Company. Investment gain shall be recognized accordingly. However, anyunrealized loss arising from inter-group transactions between the Group and an investee is noteliminated to the extent that the loss is impairment loss of the transferred assets. In the event thatthe Group disposed of an asset classified as operation to its joint ventures or associates, whichresulted in acquisition of long-term equity investment by the investor without obtaining control,the initial investment cost of additional long-term equity investment shall be the fair value ofdisposed operation. The difference between initial investment cost and the carrying value ofdisposed operation will be fully included in profit or loss for the current period. In the event thatthe Group sold an asset classified as operation to its associates or joint ventures, the differencebetween the carrying value of consideration received and operation shall be fully included inprofit or loss for the current period. In the event that the Company acquired an asset whichformed an operation from its associates or joint ventures, relevant transaction shall be accounted
for in accordance with “Accounting Standards for Business Enterprises No. 20 “Businesscombination”. All profit or loss related to the transaction shall be accounted for.
Recognition of the share of net loss by the investment receiver shall be limited to when the bookvalue of long-term equity investment and other long-term equity forms substantial netinvestment has been reduced to zero. Beside, if the Company is responsible for other losses ofthe investment receiver, predicted liability shall be recognized upon the prediction ofresponsibilities and recorded into current investment loss account. If the receiver realized netprofit in the period thereafter, the share of gains is recovered after making up of share of losseswhich has not been recognized.For long equity investment in associate and joint venture held by the Company prior to firstimplementation of the new accounting principles on 1 January 2007, equity investment debtordifference relating to the investment (if any) shall be amortized and included in current gains andlosses against the remaining period under straight line method.
③ Acquisition of minority equity
When preparing consolidated financial statements, the difference between the increase inlong-term equity investment due to acquisition of minority interest of a subsidiary and the shareof net asset of the subsidiary since the acquisition date (or combination date) calculated underthe new ownership ratio shall be adjusted to the capital surplus, when capital surplus isinsufficient, the excess shall be adjusted to retained profits.
④ Disposal of long-term equity investment
In these consolidated financial statements, where the parent company disposes part of itssubsidiary without loss of control, the difference between the consideration received and theshare of net asset for the disposed portion of long-term equity investment shall be recognized in
shareholders’ equity; where the parent company disposes part of its subsidiary with loss of
control, the accounting treatment should be in accordance with the accounting policies stated at
Note IV 5 (2) “Preparation of consolidated financial statements”.
For disposal of long-term equity investment in other situations, the difference between theconsiderations received and the carrying amount of the disposed investment shall be recognizedin profit or loss.In respect of long-term equity investment at equity with the remaining equity interest afterdisposal also accounted for using equity method, other comprehensive income previously under
owners’ equity shall be accounted for in accordance with the same accounting treatment for
direct disposal of relevant asset or liability by investee on pro rata basis at the time of disposal.
The owners’ equity recognized for the movement of other owners’ equity (excluding net profit
or loss, other comprehensive income and profit distribution of investee) shall be transferred toprofit or loss for the current period on pro rata basis.
In respect of long-term equity investment at cost with the remaining equity interest after disposalis also accounted for at cost, other comprehensive income recognized due to measurement atequity or recognition and measurement for financial instruments prior to obtaining control overinvestee shall be accounted for in accordance with the same accounting treatment for directdisposal of relevant asset or liability by investee and carried forward to current gains and losses
on pro rata basis. The movement of other owners’ equity (excluding net profit or loss, other
comprehensive income and profit distribution of investee) shall be transferred to profit or lossfor the current period on pro rata basis.In the event of loss of control over investee due to partial disposal of equity investment by theGroup, in preparing separate financial statements, the remaining equity interest which can applycommon control or impose significant influence over the investee after disposal shall beaccounted for using equity method. Such remaining equity interest shall be treated as accountingfor using equity method since it is obtained and adjustment was made accordingly. Forremaining equity interest which cannot apply common control or impose significant influenceover the investee after disposal, it shall be accounted for using the recognition and measurementstandard of financial instruments. The difference between its fair value and carrying amount as atthe date of losing control shall be included in profit or loss for the current period. In respect ofother comprehensive income recognized using equity method or the recognition andmeasurement standard of financial instruments before the Group obtained control over theinvestee, it shall be accounted for in accordance with the same accounting treatment for directdisposal of relevant asset or liability by investee at the time when the control over investee is lost.
Movement of other owners’ equity (excluding net profit or loss, other comprehensive income
and profit distribution under net asset of investee accounted for and recognized using equitymethod) shall be transferred to profit or loss for the current period at the time when the controlover investee is lost. Of which, for the remaining equity interest after disposal accounted for
using equity method, other comprehensive income and other owners’ equity shall be transferred
on pro rata basis. For the remaining equity interest after disposal accounted for using therecognition and measurement standard of financial instruments, other comprehensive income
and other owners’ equity shall be fully transferred.
In the event of loss of common control or significant influence over investee due to partialdisposal of equity investment by the Group, the remaining equity interest after disposal shall beaccounted for using the recognition and measurement standard of financial instruments. Thedifference between its fair value and carrying amount as at the date of losing common control orsignificant influence shall be included in profit or loss for the current period. In respect of othercomprehensive income recognized under previous equity investment using equity method, itshall be accounted for in accordance with the same accounting treatment for direct disposal ofrelevant asset or liability by investee at the time when equity method was ceased to be used.
Movement of other owners’ equity (excluding net profit or loss, other comprehensive income
and profit distribution under net asset of investee accounted for and recognized using equitymethod) shall be transferred to profit or loss for the current period at the time when equitymethod was ceased to be used.The Group disposes its equity investment in subsidiary by a stage-up approach with severaltransactions until the control over the subsidiary is lost. If the said transactions belong to
“transactions in a basket”, each transaction shall be accounted for as a single transaction of
disposing equity investment of subsidiary and loss of control. The difference between thedisposal consideration for each transaction and the carrying amount of the correspondinglong-term equity investment of disposed equity interest before loss of control shall initiallyrecognized as other comprehensive income, and subsequently transferred to profit or loss arisingfrom loss of control for the current period upon loss of control.14. Investment real estateInvestment real estate is defined as the real estate with the purpose to earn rent or capitalappreciation or both, including the rented land use rights and the land use rights which are heldand prepared for transfer after appreciation, the rented buildings. Besides, vacant buildings heldby the Company for operating or lease purposes would be also stated as investment propertyprovided that board of directors (or similar authority) pass written resolution which definitelyexpresses that the buildings will be held for operating or lease purposes and the intention forholding will not change shortly.Investment real estate is measured according to the initial cost. The follow-up expenses that arerelated to investment real estate, if the economic interests related to the assets are is likely toinflow cost and its costs can be reliably measured, shall be included in the cost of investmentreal estate. The other follow-up expense shall be included in the current gains/losses.The Company adopts the cost model to have follow-up measurements of the investment realestate, and to conduct depreciation or amortization according to the policies that are in consistentwith the land use rights.Impairment test method and impairment provision method in relation to investment property is
detailed in Note IV.20 “Long term assets impairment”.
Where property for own use or inventory transfers to investment property, or investmentproperty transfers to property for own use, carrying value before such transfer shall be taken asbook value after such transfer.In the event that an investment property is converted to an owner-occupied property, suchproperty shall become fixed assets or intangible assets since the date of its conversion. In theevent that an owner-occupied property is converted to real estate held to earn rentals or forcapital appreciation, such fixed assets or intangible assets shall become an investment property
since the date of its conversion. Upon the conversion, investment property which is measured atcost is accounted for with the carrying value prior to conversion, and investment property whichis measured at fair value is accounted for with the fair value as of the conversion date.If an investment property is disposed of or if it withdraws permanently from use and noeconomic benefit will be obtained from the disposal, the recognition of it as an investmentproperty shall be terminated. When an investment property is sold, transferred, retired ordamaged, the amount of proceeds on disposal of the property net of the carrying amount andrelated tax and surcharges is recognized in profit or loss for the current period.
15. Fixed assets
(1) Recognition conditions for the fixed assetsFixed assets is defined as the tangible assets which are held for the purpose of producing goods,providing services, lease or for operation & management, and have more than one fiscal year ofservice life. The fixed assets recognized on the condition of economy benefit probably in-flowinto the Company and the cost should measured reliably only. Initial measurement shall beconducted on fixed assets according to the actual cost when obtain them and also considering theexpected costs for disposal.(2) Depreciation of various fixed assetsFrom the next month since reaching the intended use state, depreciations on fixed assets shall beaccounted by using the method of average life length except the steam turbine generating unitthat accounted by withdrawal the working volume method.Life expectancy, expected net impairment value and annual depreciation rate of all assets are asfollows:
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Item
| Item | Life expectancy | Salvage value rate | Annual depreciation rate |
| Houses and buildings | 20 years | 10% | 4.50% |
| Equipment (fuel machinery group excluded) | 15-20 years | 10% | 4.5%-6% |
| Equipment-fuel machinery group (note) | 10% | The work quantity method | |
| Transportation tools | 5 years | 10% | 18% |
| Other equipment | 5 years | 10% | 18% |
Estimated salvage value refers to the amount of value retrieved after deducting of predicteddisposal expense when the expected using life of a fixed asset has expired and in the expectedstate of termination.Note: gas turbine generator set is provided with depreciation under workload method, namely todetermine the depreciation amount per hour of gas turbine generator set based on equipmentvalue, predicted net remaining value and predicted generation hours. Details are set out asfollows:
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Name of the Company
| Name of the Company | Fixed assets | Depreciation amount (RMB/Hour) |
| The Company | Generating unit 1# | 391.26 |
| Generating unit 3# | 397.15 | |
| Shenzhen New Power Industrial Co., Ltd.(“New Power”) | Generating unit 10# | 411.15 |
| Shen Nan Dian (Zhongshan) Power Co., Ltd.(“Zhongshan Power”) | Generating unit 1# | 4,246.00 |
| Generating unit 3# | 4,160.83 | |
| Shen Nan Dian (Dongguan) Weimei Power Co., Ltd.(“Weimei Power”) | Generating unit 1# | 4,490.64 |
| Generating unit 3# | 4,217.56 |
(3) Impairment test on fixed asset and providing of impairment provision
Found more in Note IV-20.”Impairment of long-term assets”.
(4) Recognition basis and measurement method of fixed assets under finance leaseLeases are classified as finance leases whenever the terms of the lease transfer substantially allthe risks and rewards of ownership to the lessee. Title may or may not eventually be transferred.The depreciation policy for fixed asset held under finance lease is consistent with that for itsowned fixed asset. When a leased asset can be reasonably determined that its ownership will betransferred at the end of the lease term, it is depreciated over the period of expected use;otherwise, the leased asset is depreciated over the shorter period of the lease term and the periodof expected use.(5) Other remarksConcerning the follow-up expenses related to fixed assets, if the relevant economy benefit offixed assets probably in-flow into the Company and can be measured reliably, reckoned into costof fixed assets and terminated the recognition of the book value of the parts that been replaced.Others follow-up expenses should reckoned into current gains/losses while occurred.Terminated the recognition of fixed assts that in the status of disposal or pass through thepredicted usage or without any economy benefits arising from disposal. Income from treatmentof fixed asset disposing, transferring, discarding or damage, the balance after deducting of bookvalue and relative taxes is recorded into current income account.The Company re-reviews useful life, expected net residual value and depreciation method offixed assets at least at each year end. Any change thereof would be recorded as change ofaccounting estimates.16. Construction-in-progressCost of construction in process is determined at practical construction expenditures, including allexpenses during the construction, capitalized loan expenses before the construction reachesuseful status, and other relative expenses. It is transferred to fixed asset as soon as theconstruction reaches the useful status.Impairment testing method and accrual method for impairment reserves found in Note
IV-20”Impairment of long-term assets”
17. Borrowing expensesBorrowing expenses include interest, amortization of discounts or premiums related toborrowings, ancillary costs incurred in connection with the arrangement of borrowings, andexchange differences arising from foreign currency borrowings. Borrowing expenses that can bedirectly attributed for purchasing or construction of assets that are complying with capitalizingconditions start to be capitalized when the payment of asset and borrowing expenses havealready occurred, and the purchasing or production activities in purpose of make the asset usablehave started; Capitalizing will be terminated as soon as the asset that complying withcapitalizing conditions has reached its usable or saleable status. The other borrowing expensesare recognized as expenses when occurred.Interest expenses practically occurred at the current term of a special borrowing are capitalizedafter deducting of the bank saving interest of unused borrowed fund or provisional investmentgains; Capitalization amounts of common borrowings are decided by the weighted average ofexceeding part of accumulated asset expenses over the special borrowing assets multiply thecapitalizing rate of common borrowings adopted. Capitalization rates are decided by theweighted average of common borrowings.During the capitalization period, exchange differences on a specific purpose borrowingdenominated in foreign currency shall be capitalized. Exchange differences related togeneral-purpose borrowings denominated in foreign currency shall be included in profit or lossfor the current period.Qualifying assets are assets (fixed assets, investment property, inventories, etc.) that necessarilytake a substantial period of time for acquisition, construction or production to get ready for theirintended use or sale.Capitalization of borrowing costs shall be suspended during periods in which the acquisition,construction or production of a qualifying asset is interrupted abnormally, when the interruptionis for a continuous period of more than 3 months, until the acquisition, construction orproduction of the qualifying asset is resumed.18. Intangible assets(1) Intangible assetsAn intangible asset is an identifiable non-monetary asset without physical substance owned orcontrolled by the Company.An intangible asset shall be initially measured at cost. The expenditures incurred on anintangible asset shall be recognized as cost of the intangible asset only if it is probable thateconomic benefits associated with the asset will flow to the Company and the cost of the assetcan be measured reliably. Other expenditures on an item asset shall be charged to profit or losswhen incurred.
Land use right acquired shall normally be recognized as an intangible asset. Self-constructedbuildings (e.g. plants), related land use right and the buildings shall be separately accounted foras an intangible asset and fixed asset. For buildings and structures purchased, the purchaseconsideration shall be allocated among the land use right and the buildings on a reasonable basis.In case there is difficulty in making a reasonable allocation, the consideration shall berecognized in full as fixed assets.An intangible asset with a finite useful life shall be stated at cost less estimated net residual valueand any accumulated impairment loss provision and amortized using the straight-line methodover its useful life when the asset is available for use. Intangible assets with indefinite life arenot amortized.The Group shall review the useful life of intangible asset with a finite useful life and theamortization method applied at least at each financial year-end. A change in the useful life oramortization method used shall be accounted for as a change in accounting estimate. For anintangible asset with an indefinite useful life, the Group shall review the useful life of the assetin each accounting period. If there is evidence indicating that the useful life of that intangibleasset is finite, the Company shall estimate the useful life of that asset and apply the accountingpolicies accordingly.(2) Impairment test method of intangible assets & calculation method of depreciation reserve
Found more in Note IV-20”Impairment of long-term assets”.
19. Long-term expenses to be amortizedLong-term amortizable expenses are those already occurred and amortizable to the current termand successive terms for over one year. Long-term amortizable expenses are amortized bystraight-line method to the benefit period.20. Impairment of long-term assetsThe Group will judge if there is any indication of impairment as at the balance sheet date inrespect of non-current non-financial assets such as fixed assets, construction in progress,intangible assets with an infinite useful life, investment properties measured at cost, andlong-term equity investments in subsidiaries, joint ventures and associates. If there is anyevidence indicating that an asset may be impaired, recoverable amount shall be estimated forimpairment test. Goodwill, intangible assets with an indefinite useful life and intangible assetsbeyond working conditions will be tested for impairment annually, regardless of whether there isany indication of impairment.If the impairment test result shows that the recoverable amount of an asset is less than itscarrying amount, the impairment provision will be made according to the difference andrecognized as an impairment loss. The recoverable amount of an asset is the higher of its fairvalue less costs of disposal and the present value of the future cash flows expected to be derived
from the asset. An asset’s fair value is the price in a sale agreement in an arm’s length
transaction. If there is no sale agreement but the asset is traded in an active market, fair valueshall be determined based on the bid price. If there is neither sale agreement nor active marketfor an asset, fair value shall be based on the best available information. Costs of disposal areexpenses attributable to disposal of the asset, including legal fee, relevant tax and surcharges,transportation fee and direct expenses incurred to prepare the asset for its intended sale. Thepresent value of the future cash flows expected to be derived from the asset over the course ofcontinued use and final disposal is determined as the amount discounted using an appropriatelyselected discount rate. Provisions for assets impairment shall be made and recognized for theindividual asset. If it is not possible to estimate the recoverable amount of the individual asset,the Group shall determine the recoverable amount of the asset group to which the asset belongs.The asset group is the smallest group of assets capable of generating cash flows independently.For the purpose of impairment testing, the carrying amount of goodwill presented separately inthe financial statements shall be allocated to the asset groups or group of assets benefiting fromsynergy of business combination. If the recoverable amount is less than the carrying amount, theGroup shall recognize an impairment loss. The amount of impairment loss shall first reduce thecarrying amount of any goodwill allocated to the asset group or set of asset groups, and thenreduce the carrying amount of other assets (other than goodwill) within the asset group or set ofasset groups, pro rata on the basis of the carrying amount of each asset.An impairment loss recognized on the aforesaid assets shall not be reversed in a subsequentperiod in respect of the restorable value.21. Staff remunerationStaff remuneration includes short term staff remuneration, post office benefit, dismissal benefitand other long term staff benefits, among which:
Short term staff remuneration mainly consists of salary, bonus, allowance and subsidy, staffbenefits, medical insurance, maternity insurance, work related injury insurance, housing funds,labor unit fee and education fee, non-monetary benefits, etc. short term staff remunerationactually happened during the accounting period in which staff provides services to the Companyis recognized as liability, and shall be included in current gains and losses or relevant asset cost.Non-monetary benefits are measured at fair value.Post office benefits mainly consist of defined withdraw plan and defined benefit plan. Definedwithdraw plan mainly includes basic pension insurance, unemployment insurance and annuity,and the contribution payable is included in relevant asset cost or current gains and losses whenoccurs.When the Company terminates the employment relationship with employees before the end ofthe employment contracts or provides compensation as an offer to encourage employees to
accept voluntary redundancy, the Company shall recognize employee compensation liabilitiesarising from compensation for staff dismissal and included in profit or loss for the current period,when the Company cannot revoke unilaterally compensation for dismissal due to thecancellation of labor relationship plans and employee redundant proposals; and the Companyrecognize cost and expenses related to payment of compensation for dismissal and restructuring,whichever is earlier. However, if the compensation for termination of employment is notexpected to be fully paid within 12 months from the reporting period, it shall be accounted forother long-term staff remuneration.The early retirement plan shall be accounted for in accordance with the accounting principles forcompensation for termination of employment. The salaries or wages and the social contributionsto be paid for the employees who retire before schedule from the date on which the employeesstop rendering services to the scheduled retirement date, shall be recognized (as compensationfor termination of employment) in the current profit or loss by the Group if the recognitionprinciples for provisions are satisfied.For other long-term employee benefits provided by the Company to its employees, if satisfy withthe established withdraw plan, then the benefits are accounted for under the establishedwithdraw plan, otherwise accounted for under defined benefit scheme.22. Accrued liabilitiesWhen responsibilities connected to contingent issues meet the follow conditions at the same time,than recognized as accrued liability: (1) the liability is the current liability that undertaken by theCompany; (2) the liability has the probability of result in financial benefit outflow; and (3) theresponsibility can be measured reliably for its value.At balance sheet day, with reference to the risks, uncertainty and periodic value of currency thatconnected to the contingent issues, the predicted liabilities are measured according to the bestestimation on the payment to fulfill the current responsibility.If the expenses for clearing of predictive liability is fully or partially compensated by a thirdparty, and the compensated amount can be definitely received, it is recognized separated as asset.The compensated amount shall not be greater than the book value of the predictive liability.(1) Contact in lossContact in loss is identified when the inevitable cost for performance of the contractualobligation exceeds the inflow of expected economic benefits. When a contract in loss isidentified and the obligations thereunder are qualified by the aforesaid recognition criterion forcontingent liability, the difference of estimated loss under contract over the recognizedimpairment loss (if any) of the subject matter of the contract is recognized as contingent liability.(2) Restructuring obligationsFor detailed, official and publicly announced restructuring plan, the direct expenses attributable
to the restructuring are recognized as contingent liabilities, provided that the aforesaidrecognition criterion for contingent liability is met. For restructuring obligations arising fromdisposal of part business, the Company will recognize the obligations relating to restructuringonly when it undertakes to dispose part business (namely entering into finalized disposalagreement).23. Share-based Payments(1) Accounting treatmentShare-based payment refers to a transaction in which an enterprise grants equity instruments orundertakes equity-instrument- based liabilities in return for services from employee or otherparties. The share-based payments shall consist of equity-settled share-based payments andcash-settled share-based payments.
① Equity-settled Share-based Payment
The equity-settled share-based payment in return for employee services shall be measured at thefair value of the equity instruments granted to the employees as at the date of grant. For equityinstruments that cannot be exercised until the services are fully rendered during vesting period orspecified performance targets are met, within the vesting period, the fair value of suchinstrument shall, based on the best estimate of the number of exercisable instruments, becalculated with the straight- line method and recognized in relevant costs or expenses. For equityinstruments that may be exercised immediately after the grant, the fair value of such instrumentshall, on the date of the grant, be recognized in relevant costs or expenses with the increase inthe capital reserve accordingly.On each balance sheet date during the vest period, the Company makes the best estimate basedon subsequent information such as the latest available information about change of number ofexercisable employees, thus to amend the number of equity instruments which are expected to beexercisable. Impact of the above estimate is included in relevant cost or expense for the currentperiod, with corresponding adjustment in capital reserve.The equity-settled share-based payment in return for services from other parties, if the fair valueof services from other parties can be reliably measured, shall be measured at the fair value ofsuch services as at the date of acquisition; if the fair value of services from other parties cannotbe reliably measured but the fair value of equity instruments can be reliably measured, shall bemeasured at the fair value of such equity instruments as at the date of acquisition of suchservices recognized in relevant costs or expenses with the increase in the capital reserveaccordingly.
② Cash-settled Share-based Payment
The cash-settled share-based payment shall be measured at the fair value of liabilities identifiedon the basis of shares or other equity instruments undertaken by the Group. For the instruments
that may be exercised immediately after the grant, the fair value shall, on the date of the grant, berecognized in relevant costs or expenses and the liabilities shall be increased accordingly. Forinstruments that cannot be exercised until the services are fully provided during vesting period orspecified performance targets are met, on each balance sheet date within the vesting period, theservices acquired in the current period shall, based on the best estimate of the number ofexercisable instruments, be recognized in relevant costs or expenses and the correspondingliabilities at the fair value of the liability incurred by the Group.The Group shall, on each balance sheet date and on each account date prior to the settlement ofthe relevant liabilities, re-measure the fair values of the liabilities and include the changes in theprofit or loss for the period.(2) Accounting treatment in respect of the modification and termination of share-based paymentschemeIf any modification made by the Group to the share-based payment scheme increases the fairvalue of the equity instrument awarded, services obtained shall be increased accordingly. Theincrease in fair value of such equity instrument equals to the difference between the fair valuesbefore and after the date of modification. If any modification reduces the total fair value ofshare-based payment or is otherwise unfavorable to employees, services obtained shall be treatedas if such modification had never been made, unless the Group has canceled part or the entireequity instrument award.During the vesting period, where an equity instrument award is cancelled, it is treated as if it hadvested on the date of cancellation, and any expense not yet recognized for the award is includedimmediately into the profit or loss for the period and capital reserve is recognized. Whereemployees or other parties are permitted to choose to fulfill non-vesting conditions but have notfulfilled during the vesting period, equity instrument award are deemed cancelled.(3) Accounting for share based payment concerning the Company, its shareholders or actualcontrollersAs for share based payment concerning the Company, its shareholders or actual controllers, witheither the settlement entity or service-acceptance entity in the Company or not, it is accountedfor in our consolidated financial statement under the following provisions:
① for settlement entity making settlement with its own equity instruments, the transaction is
accounted for as equity settled share based payment, otherwise it shall be accounted for as cashsettled share based payment.If the settlement entity is an investor of the service-acceptance entity, the transaction isrecognized as long term equity investment in the service-acceptance entity based on the fairvalue of the equity instruments as at the grant date or the fair value of assumed liabilities, withrecognition of capital reserve (other capital reserve) or liabilities.
② If service-acceptance entity is not obliged to settle or grant its own equity instruments to its
employees, the share based payment transaction is accounted for as equity settled share basedpayment. If service-acceptance entity is obliged to settle or the equity instruments granted to itsemployee are not the own instruments of the entity, the share based payment transaction isaccounted for as cash settled share based payment.For intra-company share based payment transactions, if the service-acceptance entity andsettlement entity are not the same enterprise, the share based payment transaction shall berecognized and measured in the respective financial statement of the two entities under theaforesaid principles.24. IncomeWhen significant risks and rewards of ownership of goods have been transferred to buyer, nocontinuous management right regularly related to ownership is retained, no effective control isconducted on goods sold, moreover, amount of income may be measured in a reliable way,relevant economic profit may have flown into enterprise and relevant incurred cost or to beincurred may be measured in a reliable way, implementation of goods sales revenue will beconfirmed. Detail recognization according to specific revenue:
(1) Power sales revenueThe Group generates electricity by thermal power, and realizes sales through incorporation intoGuangdong power grid. As for power sales, the Group realizes revenue when it produceselectricity and obtains the grid power statistics table confirmed by the power bureau.(2) Revenue from providing labor serviceUnder the condition of service providing business can be estimated in a reliable way, relevanteconomic benefit is likely to flow into enterprise, completion degree of business may beestimated in a reliable way and relevant incurred cost and to be incurred may be measured in areliable way, the revenue from labor service providing recognized. Relevant service revenue maybe confirmed by the Company as percentage-of-completion method on balance sheet date.Completion degree of service business will be determined as share of incurred service cost inestimated general cost.
If result of service providing business can’t be estimated in a reliable way, service revenue
should be confirmed as amount of incurred service cost expected to be compensated, whereincurred service cost is taken as period charge. If no compensation is expected for incurred
service cost, income won’t be confirmed.
25. Government subsidyGovernment subsidy refers to the monetary asset and non-monetary asset that the Companyobtains from the government free of charge, excluding the capital that the government invests as
an investor and enjoys the corresponding owner's equity. Government subsidies are divided intothe asset-related government subsidy and the income-related government subsidy.If the government subsidy is a monetary asset, it shall be measured according to the received orreceivable amount. If the government subsidy is a non-monetary asset, it shall be measured atfair value. If the fair value cannot be obtained reliably, it shall be measured according to thenominal amount. Government subsidy measured by nominal amount is directly included in thecurrent profits and losses.The government subsidy related to the assets is recognized as deferred income and is recordedinto the current profits and losses or the book value of the relevant assets in a reasonable andsystematic manner within the useful life of the relevant assets. Revenue-related governmentgrants are used to compensate for the related costs or losses incurred during the subsequentperiod and are recognized as deferred income and are recognized in the current profit or loss orrelated expenses during the period of recognition of the relevant cost expense or loss; Incurredcosts or losses incurred, directly included in the current profits and losses or offset the relevantcosts.For the government subsidy containing both asset-related parts and income-related parts at thesame time, distinguish the different parts and make the accounting treatment, classify the partswhich are difficult to be distinguished as the income-related government subsidy.
The government subsidy related to the Company’s daily activities is included in other incomes or
offsets related costs in accordance with the essence of economic business; while the government
subsidy unrelated to the Company’s daily activities is included in non-operating income and
expenditure.When the recognized government subsidy needs to be refunded or has balance of relateddeferred income, offset the book balance of related deferred income, and include the excess partsin the current profits and losses or (the asset-related government subsidy for offsetting the bookvalue of underlying assets in initial recognition) adjust the book value of assets; directly includethese belong to other situations in the current profits and losses.The basis for confirming the relevant public subsidies of the Company and its subsidiaries is asfollows:
Shenzhen Shennandian Environmental Protection Co., Ltd. (Hereinafter referred to as the"Environmental Protection Company"), a subsidiary of the Company, is a sludge treatment unit,according to the (CS No. [2015] 78) notice of Ministry of Finance and the State Administrationof Taxation about printing and issuing the "comprehensive utilization of resources and laborservices VAT discounts directory", Environmental Protection Company can enjoy thevalue-added tax refund policy for sludge treatment with 70% recognized as the public subsidyincome.
26. Deferred income tax asset/ deferred income tax liability(1) Current income taxOn balance sheet date, current income tax liability (or asset) formed during and before currentperiod will be measured as amount of income tax payable (or repayable) as specified by tax law.Assessable income on which current income expense is based represents the profit before tax forthe year upon adjustment against relevant tax rules.(2) Deferred income tax asset & deferred income tax liabilityFor balance of book value of some asset/liability item and its tax base, or temporary differencederived from balance of book value and tax base of the item, which is not confirmed as asset orliability but tax base can be fixed as specified by tax law, deferred income tax asset & deferredincome tax liability will be confirmed in balance sheet liability approach.Deferred income tax liabilities are not recognized for taxable temporary differences related to:
the initial recognition of goodwill; and the initial recognition of an asset or liability in atransaction which is neither a business combination nor affects accounting profit or taxable profit(or deductible loss) at the time of the transaction. In addition, the Group recognizes thecorresponding deferred income tax liability for taxable temporary differences associated withinvestments in subsidiaries, associates and joint ventures, except when both of the followingconditions are satisfied: the Company able to control the timing of the reversal of the temporarydifference; and it is probable that the temporary difference will not reverse in the foreseeablefuture.Deferred income tax assets are not recognized for deductible temporary differences related to theinitial recognition of an asset or liability in a transaction which is neither a business combinationnor affects accounting profit or taxable profit (or deductible loss) at the time of the transaction.In addition, the Group recognizes the corresponding deferred income tax asset for deductibletemporary differences associated with investments in subsidiaries, associates and joint venturesto the extent that it is probable that taxable profits will be available against which the deductibletemporary differences can be utilized, except when both of the following conditions are satisfied:
it is not probable that the temporary difference will reverse in the foreseeable future; and it is notprobable that taxable profits will be available in the future, against which the temporarydifference can be utilized.For deductible loss and taxation decrease which can be carried over to following fiscal year,relevant deferred income tax asset may be confirmed subject to amount of taxable income whichis likely to be acquired to deduct deductible loss and taxation decrease in the future.On balance sheet day, those deferred income tax assets and income tax liabilities, according tothe tax law, calculation will be on tax rate applicable to retrieving period of assets or clearing ofliabilities.
On balance sheet day, verification will be performed on the book value of differed income taxassets. If it is not possible to obtain enough taxable income to neutralize the benefit of differedincome tax assets, then the book value of the differed income tax assets shall be reduced.Whenever obtaining of taxable income became possible, the reduced amount shall be restored.(3) Income tax expensesIncome tax expense includes current income tax and deferred income tax.Current deferred income tax and deferred income tax expenses or income shall reckoned intocurrent gains/losses other that those current income tax and deferred income tax with
transactions and events concerned, that reckoned into shareholder’s equity directly while
recognized as other comprehensive income; and the book value of the goodwill adjusted fordeferred income tax arising from enterprise combination.(4) Offset of income taxWhen the Group has a legal right to settle on a net basis and intends either to settle on a net basisor to realize the assets and settle the liabilities simultaneously, current tax assets and current taxliabilities are offset and presented on a net basis.When the Group has a legal right to settle current tax assets and liabilities on a net basis, anddeferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxationauthority on either the same taxable entity or different taxable entities which intend either tosettle current tax assets and liabilities on a net basis or to realize the assets and liabilitiessimultaneously, in each future period in which significant amounts of deferred tax assets orliabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offsetand presented on a net basis.27. LeasingFinance lease is too virtually transfer all risks and rewards related to ownership of asset, theownership is may transfer ultimately or not. Leases other than finance lease are operating leases.(1) Lease business with the Company as the renteeThe rental is reckoned into the relevant assets cost or the current loss/gain in the straight-linemethod. The initial direct expenses are reckoned into the current gain/loss, or the actual rentalinto the current loss/gain.(2) Lease business with the Company as the renterThe rental is reckoned into the relevant assets cost or the current loss/gain in the linear way. Theinitial direct substantive expenses are capitalized and reckoned into the current gain/loss, or theactual rental into the current loss/gain. The initial direct small expenses are reckoned into thecurrent actual gain/loss, or the actual rental into the current loss/gain.(3) Financing lease business with the Group recorded as lesseeOn the beginning date of the lease, the entry value of leased asset shall be at the lower of the fair
value of the leased asset and the present value of minimum lease payment at the beginning dateof the lease. Minimum lease payment shall be the entry value of long-term accounts payable,with difference recognized as unrecognized financing expenses. In addition, initial direct costsattributable to leased items incurred during the process of lease negotiation and signing of leaseagreement shall be included in the value of leased assets. The balance of minimum leasepayment after deducting unrecognized financing expenses shall be accounted for long-termliability and long-term liability due within one year.Unrecognized financing expenses shall be recognized as financing expenses for the currentperiod using effective interest method during the leasing period. Contingent rent shall beincluded in profit or loss for the current period at the time it incurred.(4) Financing lease business with the Group recorded as lessorOn the beginning date of the lease, the entry value of lease receivable shall be the aggregate ofminimum lease receivable and initial direct costs at the beginning date of the lease. Theunsecured balance shall be recorded. The aggregate of minimum lease receivable, initial directcosts and unsecured balance and the different between their present values shall be recognized asunrealised financing income. The balance of lease receivable after deducting unrecognizedfinancing income shall be accounted for long-term debt and long-term debt due within one year.Unrecognized financing income shall be recognized as financing income for the current periodusing effective interest method during the leasing period. Contingent rent shall be included inprofit or loss for the current period.28. Other main accounting policies and estimations(1) Discontinued operationThe discontinued operation refers to the component that meets one of following conditions andhas been disposed by the Company or classified as held-for-sale and can be individually
distinguished when operating and preparing the financial statements: ① the componentrepresents an independent main Business or a major operating area; ② the component is a partsthat intends to dispose or arrange an independent main business or a major operating area; ③ the
component is a subsidiary obtained only for re-sale.For details of the accounting treatment methods of discontinued operation, please refer to
Annotation IV. 12 “Classify as assets held for sale”.
(2) Debt restructures
① Obligation of recording debt restructuring as debtor
For debt liquidated with cash, balance between book value of debt to be restructured and amountof actual payment will be included in current gain and loss. On the contrary, for debt liquidatedwith non-cash asset, balance between book value of debt to be restructured and fair value ofnon-cash asset transferred will be included in current gain and loss. Balance between fair value
of non-cash asset transferred and book value of debt to be restructured will be included incurrent gains and loss.When debt is transferred to capital, balance between book value of debt to be restructured and
fair value of loaner’s share derived from disclaim will be included in current gains and loss.
When other terms of debt are modified, fair value of debt after modification will be taken asentry value of restructured debt. Balance between book value of debt prior to restructuring anddebt restructured will be included in current gain and loss.When combination of multiple modes is applied, book value of debt to be restructured will be
offset by cash for payment, fair value of non-cash asset transferred and fair value of loaner’s
share successively, then applicable method under modification mentioned above will be applied.
② Obligation of recording debt restructuring as loaner
For debt liquidated with cash, balance between book balance of credit to be restructured andcash received will be included in current gain and loss. On the contrary, for debt liquidated withnon-cash asset, balance between book balance of credit to be restructured and fair value ofnon-cash asset received will be included in current gain and loss.
When debt is transferred to capital, balance between fair value of loaner’s share and book
balance of credit to be restructured will be included in current gain and loss.When other terms of debt are modified, fair value of credit after modification will be taken asbook value of credit to be restructured. Balance between book balance of debt prior torestructuring and book value of credit restructured will be included in current gain and loss.When combination of multiple modes is applied, book balance of credit to be restructured will
be offset by cash received, fair value of] non-cash asset received and fair value of loaner’s share
successively, applicable method under modification mentioned above will be applied.When depreciation reserve has been accrued in credit to be restructured, accrual depreciationreserve will be offset by balances above. Remnant after offset will be included in current gainand loss.29. Changes in significant accounting policies and accounting estimates(1) Changes in accounting policiesNo changes of accounting policies in the period(2) Change of accounting estimateNo changes of accounting estimate in the period30. Major accounting judgment and estimationWhen using the accounting policies discussed in note IV, the Group needs to made judgment,estimation and assumption for carrying value of certain items which cannot be measuredadequately due to inherent uncertainty of economic activities. Such judgment, estimation and
assumption are based on historical experiences of the Group’s management, together with
consideration of other relevant factors. These judgments, estimations and assumption wouldaffect the reported amount of income, expense, asset and liability and disclosure of contingentliabilities on balance sheet date. However, actual results resulting from the uncertainty of theseestimates may differ from the current estimation made by management of the Company, whichwould in turn lead to material adjustments to the carrying value of assets or liabilities which willbe affected in future.The Group conducts regular re-review on the aforesaid judgment, estimation and assumption ona continued operation basis. If the change of accounting estimation only affect current period, theaffected amount is recognized in the period when change occurs. If the change affects currentand future periods both, the affected amount is recognized in the period when change occurs andfuture periods.On balance sheet date, major aspects in the statement need to judge, estimate and consumptionby the Company are as:
(1) Fixed assets are provided for depreciation by output methodThe Group recognizes depreciation for unit electricity based on values of power generationmachine sets, projected power sales volume and projected net remaining value, and provides fordepreciation according to depreciation of unit electricity and actual power sales volume. Takinginto account the prevailing industry policies, technologies, consumption, allocation method ofpower management authorities and past experiences, and the Group management believes that itis adequate for utilization life of such power generation machine sets, projected power salesvolume, projected net remaining value and provision method for depreciation. If the future actualpower sales volume differs substantially from the projected one, the Group would makeadjustment to unit electricity depreciation, which would bring affects to the depreciationexpenses included in profit and loss for the current and future periods.(2) The provisional estimated value of fixed assetsAs for the power generation machine sets and related buildings reaching the condition forintended use, due to the long construction period of power plant projects, high prices and longcompletion settlement time, they are accounted provisional based on project budget, projectpricing or project actual costs before process of project completion settlement. And upon suchsettlement, the Company adjusts the original provisional value according to the actual costs. Ifprovisional estimated values of power generation machine sets and related buildings differmaterially from the actual costs, the Company may have to make corresponding adjustments tothe values of fixed assets.(3) Provision for bad debtsThe Group use allowance method to state bad debt losses according to the accounting policies of
accounts receivable. Impairment of receivables is based on the assessment of the recoverabilityof accounts receivable. Identification of impairment of receivables requires managementjudgments and estimates. The differences between actual results and the original estimate willaffect the book value of accounts receivable as well as the recognition or reversal of provisionfor bad debts in the period in which the estimate is changed.(4) Allowance for inventoriesUnder the accounting policies of inventories and by measuring at the lower of cost and netrealizable value, the Group makes allowance for inventories that have costs higher than netrealizable value or become obsolete and slow moving. Write-down of inventories to their netrealizable values is based on the salability of the evaluated inventory and their net realizablevalues. Identification of inventories requires management to make judgments and estimates onthe basis of obtaining conclusive evidence, and considering the purpose of holding inventory andthe events after balance sheet date. The differences between actual results and the originalestimate will affect the book value of inventories as well as the recognition or reversal ofprovision for inventories in the period in which the estimate is changed.(5) Impairment provision for non-financial non-current assetsThe Company makes judgment on each balance sheet date on whether there is indication ofimpairment in respect of non-current assets other than financial assets. Intangible assets withindefinite useful life shall also be further tested for impairment when there is indication ofimpairment, in addition to the annual impairment test. Other non-current assets other thanfinancial assets would be test for impairment when there is indication showing its carrying valuein not likely to be recovered.Impairment exists when carrying value of asset or assets group is higher than recoverableamount, namely the higher of fair value less disposal cost and present value of expected futurecash flow.The calculation of the fair value less costs of disposal is based on available data from binding
sales transactions in an arm’s length transaction of similar assets or observable market prices less
incremental costs for disposing of the asset.
In assessing value in use, significant judgments are exercised over the asset’s production, selling
price, related operating expenses and discount rate to calculate the present value. All relevantmaterials which can be obtained are used for estimation of the recoverable amount, including theestimation of the production, selling price and related operating expenses based on reasonableand supportable assumptions.The Group determines whether goodwill is impaired at least on an annual basis. This requires anestimation of the value in use of the cash-generating units to which the goodwill is allocated.Estimating the value in use requires the Group to make an estimate of the expected future cash
flows from the cash-generating units and also to choose a suitable discount rate in order tocalculate the present value of those cash flows.(6) Depreciation and amortizationAssets such as investment properties, fixed assets and intangible assets are depreciated andamortized over their useful lives under straight line method after taking into account residualvalue. The estimated useful lives of the assets are regularly reviewed to determine thedepreciation and amortization costs charged in each reporting period. The useful lives of theassets are determined based on historical experience of similar assets and the estimated technicalchanges. If there have been significant changes in the factors used to determine the depreciationor amortization, the rate of depreciation or amortization is revised prospectively.(7) Deferred income tax assetsDeferred tax assets are recognized for all unused tax losses to the extent that it is probable thattaxable profit will be available against which the losses can be utilized. Significant managementjudgment is required to determine the amount of deferred income tax assets that can berecognized, based upon the likely timing and level of future taxable profits together with futuretax planning strategies.(8) Early retirement pension plan and supplementary social pension planExpense and liability resulted from early retirement pension plan and supplementary socialpension plan are determined based on a variety of assumptions, including the discount rate, the
growth rate of average medical cost, the growth rate of retired employees’ subsidies and other
factors. Differences between actual and estimated results will be recognized accordingly ascurrent expense. Although management believes that the assumptions are reasonable, thechanges in actual empirical value and assumptions will affect the amount of expenses and thebalance of liabilities resulted from early retirement pension plan and supplementary socialpension plan.(9) Projected liabilityProvision for product quality guarantee, estimated onerous contracts, and delay deliverypenalties shall be recognized in terms of contract, current knowledge and historical experience.If the contingent event has formed a practical obligation which probably results in outflow ofeconomic benefits from the Group, a projected liability shall be recognized on the basis of thebest estimate of the expenditures to settle relevant practical obligation. Recognition and
measurement of the projected liability significantly rely on the management’s judgments
inconsideration of the assessment of relevant risks, uncertainties, time value of money and otherfactors related to the contingent events.In addition, the Company would project liabilities for after-sale quality maintenancecommitment provided to customers in respect of goods sold, maintained and reconstructed by
the Company. Recent maintenance experience of the Company has been considered whenprojecting liabilities, while the recent maintenance experience may not reflect the futuremaintenance. Any increase or decrease of this provision may affect profit or loss for future years.
V. Taxes1. Main taxation items and its tax rate
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Taxation items
| Taxation items | Tax rate |
| VAT | Output tax calculated based on the 5%, 6%, 10% or 16% of the taxable income, VAT based on the difference after deducted the current input tax |
| City maintenance tax | Taxed by 5% and 7% of the turnover tax actually paid |
| Education surtax | Taxed by 3% of the turnover tax actually paid |
| Local education surtax | Taxed by 2% of the turnover tax actually paid |
| Enterprise income tax | Taxed by 16.5% to 25% of the taxable income amount |
| Real estate tax | As for the taxed by residual value, paid with the 1.2% of the residual value after original value deducted 30%; as for the taxed by house rental, taxed with 12% of the rental income |
| Land-use tax of town | 2.5 Yuan ~ 9Yuan per square meter for the land area actually occupied |
| Land VAT | Tax by the Value-added amount from transferring state-owned land use right, landing construction and its affiliates with four super-rate progressive tax rate |
Rate for the income tax for the Company and subsidiaries as:
| Taxpaying body | Rate of income tax |
| Shenzhen Nanshan Power Co., Ltd. (“The Company”) | 25% |
| Shenzhen New Power Industrial Co., Ltd. (“New Power”) | 25% |
| Shenzhen Shennan Power Gas Turbine Engineering Technique Co., Ltd. (“Engineering Company”) | 25% |
| Shenzhen Server Energy Co., Ltd. (“Shenzhen Server”) | 25% |
| Shenzhen Shennan Power Environment Protection Co., Ltd. (“Environment Protection Company”) | 25% |
| Shennandian (Zhongshan) Power Co., Ltd. (“Zhongshan Power”) | 25% |
| Shennandian (Dongguan) Weimei Power Co., Ltd. (“ Weimei Power”) | 25% |
| Shennan Energy (Singapore) Co., Ltd. (“ Singapore company”) | 17% |
| Zhongshan Shennandian Storage Co., Ltd. (“Shen Storage ”) | 25% |
| Hong Kong Syndisome Co., Ltd. (“Syndisome”) | 16.50% |
2. Taxes preferential and approvals
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Tax
| Tax | Name of the company | Relevant regulation and policies basis | Approval institution | Approval documents | Exemption range | Period of validity |
| VAT | Environment Protection Co., | ” Notice of adjustment and perfection on resources comprehensive usage and labor VAT policy”(CS No.115[2011]) | Not applicable | Not applicable | VAT free for sludge treatment | Not applicable |
| VAT | Environment Protection Co., | Notice on "contents of products with comprehensive utilization of resources and value-added tax privilege of labor service" (CS No. [2015] 78) | Shenzhen Provincial Office, SAT (Qianhai SAT) | SGSQHBA No.[2015]0002 | Resource comprehensive utilization of VAT refund | 2015-8-1 to 2018-7-31 |
| Enterprise income tax | SYNDISOME | ” Arrangement of avoidance of double-taxation and prevention of tax free in mainland China and Hong Kong Special Administrative Region”(GSH No. 884[2006]) | Not applicable | Not applicable | Levy income tax by 10% of total share interests | Not applicable |
| Enterprise income tax | SYNDISOME | ’Enterprise Income Tax Law of People’s Republic of China” | State Tax Bureau of Nanshan Distinct Shenzhen | Shen Guo Sui Nan Kou Jiao Bei Zi No.: [2011]0011 | No enterprise income tax should pay for the dividend before 31 December 2007 | Not applicable |
Note: "Notice about adjusting and improving the products with comprehensive utilization ofresources and value-added tax policy of labor service" (CS No. [2011] 115) has been abolishedsince July 1, 2015, the preferential policy of exempting environmental companies fromadded-value tax of labor services for sludge treatment has been abolished since August 2015, andenvironmental companies enjoy the drawback policy of added-value tax for comprehensiveutilization of resources in accordance with the notice about printing and distributing "contents ofproducts with comprehensive utilization of resources and value-added tax privilege of laborservice" (CS No. [2015] 78).
VI. Annotation of the items in consolidate financial statementWith respect to the notes item (including Main item annotations of Financial Statements)
disclosed below, unless otherwise specified, “year-beginning” refers to 1 January 2018 (in
RMB/CNY)1. Monetary fund
| Item | 30 June 2018 | Balance at year-begin |
| Cash on hand | 142,604.63 | 81,491.35 |
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Bank savings
| Bank savings | 430,415,610.30 | 337,821,258.42 |
| Other monetary fund | 344,422,065.04 | 100,413,420.04 |
| Total | 774,980,279.97 | 438,316,169.81 |
| Including: total amount saving aboard | 6,048,593.68 | 5,963,066.07 |
Note: among the above other monetary capital, there are totally 11,242,792.74 Yuan guaranteedraft margin and guarantee deposit included (on 31 December 2017: 26,702,792.74 Yuan).2. Note receivable
| Item | 30 June 2018 | Balance at year-begin |
| Bank acceptance | 100,000.00 | 6,702,500.00 |
3. Account receivable(1) Account receivable classified according to types:
| Type | 30 June 2018 | ||||
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
| Account receivable with individual major amount and withdrawal bad debt provision independently | 3,474,613.06 | 1.23 | 3,474,613.06 | 100.00 | 0.00 |
| Account receivable with bad debt provision accrual based on similar credit risk charateristics of a portfolio | 276,963,225.52 | 97.96 | - | - | 276,963,225.52 |
| Account receivable with individual minor amount but withdrawal bad debt provision independently | 2,292,027.78 | 0.81 | 1,338,111.37 | 58.38 | 953,916.41 |
| Total | 282,729,866.36 | 100.00 | 4,812,724.43 | 1.70 | 277,917,141.93 |
(Continued)
| Type | Amount at year-begin | ||||
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
| Account receivable with individual major amount and withdrawal bad debt provision independently | 3,474,613.06 | 2.94 | 3,474,613.06 | 100.00 | 0.00 |
| Account receivable with bad debt provision accrual based on similar credit risk charateristics of a portfolio | 106,116,231.59 | 89.81 | 0.00 | 0.00 | 106,116,231.59 |
| Account receivable with individual minor amount but withdrawal bad debt provision independently | 8,571,655.54 | 7.25 | 1,338,111.37 | 15.61 | 7,233,544.17 |
| Total | 118,162,500.19 | 100.00 | 4,812,724.43 | 4.07 | 113,349,775.76 |
(2) Age analysis of account receivable:
| Age | 30 June 2018 | Amount at year-begin | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1year | 276,960,336.52 | 97.96 | 112,392,970.35 | 95.12 |
| 1 to 2years | - | - | 0.00 | 0.00 |
| 2 to 3years | - | - | 442,000.00 | 0.37 |
| Over 3 years | 5,769,529.84 | 2.04 | 5,327,529.84 | 4.51 |
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Total
| Total | 282,729,866.36 | 100.00 | 118,162,500.19 | 100.00 |
(3) Bad debt provision withdrawal collected or switch back in the Period(4) No account receivable verified actually in the period(5) There are no account receivable of the shareholders or related party who hold over 5 %( 5%
included) voting rights in report period.(6)Balance of top five receivables in debtors at end of the period
Total balance of the top five receivables in debtors dated 30 June 2018 amounted as274,440,936.52 Yuan, takes 97.07% in total numbers of balance of receivables at period-end.4. Account paid in advance(1) Account paid in advance classified according to age:
| Account age | 30 June 2018 | Amount at year-begin | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1year | 58,460,979.67 | 99.90 | 119,008,304.61 | 99.94 |
| 1 to 2years | - | - | - | - |
| 2 to 3years | 19,082.24 | 0.03 | 18,304.20 | 0.02 |
| Over 3 years | 42,504.20 | 0.07 | 43,282.74 | 0.04 |
| Total | 58,522,566.11 | 100.00 | 119,069,891.55 | 100.00 |
(2) Top five account paid in advance by collectorTotal top five account paid in advance by collector on 30 June 2018 amount to 56,020,706.54Yuan, a 95.72% in total year-end account paid in advance5. Other account receivable(1) Other account receivable classified according to type:
| Type | 30 June 2018 | ||||
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
| Other account receivable with individual major amount and withdrawal bad debt provision independently | 20,341,666.46 | 26.24 | 20,341,666.46 | 100.00 | - |
| Other account receivable with bad debt provision accrual based on similar credit risk charateristics of a portfolio | 44,840,654.82 | 57.84 | - | 44,840,654.82 | |
| Other account receivable with individual minor amount but withdrawal bad debt provision independently | 12,345,315.87 | 15.92 | 11,502,753.98 | 93.18 | 842,561.89 |
| Total | 77,527,637.15 | 100.00 | 31,844,420.44 | 41.07 | 45,683,216.71 |
(Continued)
| Type | Amount at year-begin | ||||
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
| Other account receivable with individual major amount and withdrawal bad debt provision independently | 20,341,666.46 | 28.81 | 20,341,666.46 | 100.00 | - |
| Other account receivable with bad debt provision accrual based on similar credit risk charateristics of a portfolio | 37,929,326.85 | 53.71 | - | - | 37,929,326.85 |
- 58 -
Other account receivable with individual minor amount but withdrawalbad debt provision independently
| Other account receivable with individual minor amount but withdrawal bad debt provision independently | 12,345,315.87 | 17.48 | 11,502,753.98 | 93.18 | 842,561.89 |
| Total | 70,616,309.18 | 100.00 | 31,844,420.44 | 45.09 | 38,771,888.74 |
① Other account receivable with individual major amount and withdrawal bad debt provision
independently
| Other account receivable | Carrying amount | Bad debt provision | Proportion (%) | Reason |
| Huiyang County Kangtai Industrial Company | 14,311,626.70 | 14,311,626.70 | 100.00 | Un-collectible |
| Shandong Jinan Power Equipment Factory | 3,560,000.00 | 3,560,000.00 | 100.00 | Un-collectible |
| Individual income tax | 2,470,039.76 | 2,470,039.76 | 100.00 | Un-collectible |
| Total | 20,341,666.46 | 20,341,666.46 | 100.00 |
② Account receivable with individual minor amount but withdrawal bad debt provision
independently at period-end
| Item | Carrying amount | Bad debt provision | Withdrawal proportion (%) |
| Dormitory amount receivable | 2,083,698.16 | 1,736,004.16 | 83.31 |
| Deposit receivable | 1,769,842.84 | 1,312,974.95 | 74.19 |
| Bureau of Finance of Zhongshan Municipality | 219,192.00 | 219,192.00 | 100.00 |
| Administrative Office of Nanshan District Shenzhen | 50,000.00 | 12,000.00 | 24.00 |
| Individual | 7,498,997.87 | 7,498,997.87 | 100.00 |
| Other | 723,585.00 | 723,585.00 | 100.00 |
| Total | 12,345,315.87 | 11,502,753.98 | 93.18 |
(2)Bad debt provision withdrawal, collected or switch back in the Period(3) No other account receivable verified actually in the period
(4) Other account receivable classified according to age:
| Account age | 30 June 2018 | Amount at year-begin | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1year | 17,122,595.28 | 22.08 | 11,017,914.66 | 15.60 |
| 1 to 2years | 3,393,612.13 | 4.38 | 2,586,964.78 | 3.66 |
| 2 to 3years | - | - | 328,508.03 | 0.47 |
| Over 3 years | 57,011,429.74 | 73.54 | 56,682,921.71 | 80.27 |
| Total | 77,527,637.15 | 100.00 | 70,616,309.18 | 100.00 |
(5) There are no other account receivables of the shareholders who hold over 5 % ( 5% included)voting rights in report period.(6) Account receivable from related parties found more in Note X-5. Account receivable/payablewith related party
(7) Top five other account receivables at year-end balance listed by arrears party
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Name of the company
| Name of the company | Relationship | Amount | Duration | Proportion in total other account receivable (%) | Year-end balance of bad debt provision |
| Huidong Server Harbor Comprehensive Development Company | Related party | 23,711,275.01 | Over 3 years | 30.58 | - |
| Huiyang Kangtai Industrial Company | Non-related party | 14,311,626.70 | Over 3 years | 18.46 | 14,311,626.70 |
| Dongguang Feng Gas Storage and Transportation Co., Ltd. | Non-related party | 5,000,000.00 | Within 2 years | 6.45 | - |
| Shandong Jinan Generation Equipment Plant | Non-related party | 3,560,000.00 | Over 3 years | 4.59 | 3,560,000.00 |
| China National Machinery Equipment Engineering Ltd. | Non-related party | 3,424,972.03 | Within 2 years | 4.42 | |
| Total | 50,007,873.74 | 64.50 | 17,871,626.70 |
6. Inventory(1) Classification of inventory
| Item | 30 June 2018 | Amount at year-begin | ||||
| Book Balance | Depreciation provision | Book value | Book Balance | Depreciation provision | Book value | |
| Raw materials | 122,436,891.15 | 52,720,793.00 | 69,716,098.15 | 130,555,696.89 | 52,720,793.00 | 77,834,903.89 |
| Total | 122,436,891.15 | 52,720,793.00 | 69,716,098.15 | 130,555,696.89 | 52,720,793.00 | 77,834,903.89 |
(2) Inventory falling price reserve
| Type | Carrying balance at year-begin | Accrual | Decreased | Carrying balance on 30 June 2018 | |
| Switch back | Written-off | ||||
| Raw materials | 52,720,793.00 | - | - | - | 52,720,793.00 |
| Total | 52,720,793.00 | - | - | - | 52,720,793.00 |
(3) Accrual basis and reasons for switch back or written-off
| Item | Specific basis | Reasons for switch back | Reasons for written-off |
| Raw materials | Cost higher than the net realizable value | Not-applicable | Raw materials reception |
7. Other current assets
| Item | 30 June 2018 | Balance at year-begin |
| VAT input tax deductible | 394,094,957.94 | 446,786,369.31 |
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Enterprise income tax deductible
| Enterprise income tax deductible | 7,151,719.08 | 5,368,153.93 |
| Other | 30,000.00 | 30,000.00 |
| Total | 401,276,677.02 | 452,184,523.24 |
8. Financial assets available for sale(1) Financial assets available for sale
| Item | 30 June 2018 | Balance at year-begin | ||||
| Book Balance | Depreciation reserves | Book value | Book Balance | Depreciation reserves | Book value | |
| Equity instrument available for sale | 63,115,000.00 | 2,500,000.00 | 60,615,000.00 | 63,115,000.00 | 2,500,000.00 | 60,615,000.00 |
| Including: measured by cost | 63,115,000.00 | 2,500,000.00 | 60,615,000.00 | 63,115,000.00 | 2,500,000.00 | 60,615,000.00 |
| Total | 63,115,000.00 | 2,500,000.00 | 60,615,000.00 | 63,115,000.00 | 2,500,000.00 | 60,615,000.00 |
(2) Measured by cost
| Investee company | Book Balance | Depreciation reserves | ||||
| Year-begin | +,- | 30 June 2018 | Year-begin | +,- | 30 June 2018 | |
| CPI Jiangxi Nuclear Power Co., Ltd. | 60,615,000.00 | - | 60,615,000.00 | - | - | - |
| Shenzhen Petrochemical Products Bonded Trading Co., Ltd. | 2,500,000.00 | - | 2,500,000.00 | 2,500,000.00 | - | 2,500,000.00 |
| Total | 63,115,000.00 | - | 63,115,000.00 | 2,500,000.00 | - | 2,500,000.00 |
(Continued)
| Investee company | Shareholding ratio in investee company (%) | Cash bonus |
| CPI Jiangxi Nuclear Power Co., Ltd. | 5.00 | - |
| Shenzhen Petrochemical Products Bonded Trading Co., Ltd. | 4.00 | - |
9. Long-term equity investment
| Investee company | Balance at year-begin | +,- | 30 June 2018 | Balance of depreciation reserves on 30 June 2018 | |
| Investment gains/losses recognized by equity method | Other | ||||
| Affiliated business | |||||
| Huidong Server | 18,254,673.40 | -1,076,904.31 | - | 17,177,769.09 | - |
| Total | 18,254,673.40 | -1,076,904.31 | - | 17,177,769.09 | - |
10. Investment real estate
| Item | House, buildings | Land use right | Construction in process | Total |
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I. Original book value
| I. Original book value | ||||
| 1. Balance at year-begin | 9,708,014.96 | - | - | 9,708,014.96 |
| 2.Current increased | - | - | - | - |
| 3.Current decreased | - | - | - | - |
| 4. Balance on 30 June 2018 | 9,708,014.96 | - | - | 9,708,014.96 |
| II. accumulated depreciation and accumulated amortization | - | |||
| 1. Balance at year-begin | 6,905,574.65 | - | - | 6,905,574.65 |
| 2. Current increased | 98,068.80 | - | - | 98,068.80 |
| (1) accrual or amortization | 98,068.80 | - | - | 98,068.80 |
| 3. Current decreased | - | - | - | - |
| 4. Balance on 30 June 2018 | 7,003,643.45 | - | - | 7,003,643.45 |
| III. depreciation provision | - | |||
| 1. Balance at year-begin | - | - | - | - |
| 2. Current increased | - | - | - | - |
| 3.Current decreased | - | - | - | - |
| 4. Balance on 30 June 2018 | - | - | - | - |
| IV. Book value | - | |||
| 1. Balance on 30 June 2018 | 2,704,371.51 | - | - | 2,704,371.51 |
| 2. Book value at year-begin | 2,802,440.31 | - | - | 2,802,440.31 |
11. Fixed assets(1) Fixed assets
| Item | House and buildings | Machinery equipment | Transportation tools | Other equipment | Total |
| I. Original book value | |||||
| 1. Balance at year-begin | 450,244,770.68 | 4,040,500,312.08 | 21,308,218.22 | 48,167,921.16 | 4,560,221,222.14 |
| 2. Current increased | 36,801,321.17 | 17,301,918.19 | 3,284,554.59 | 742,308.57 | 58,130,102.52 |
| (1) Purchase | 36,801,321.17 | 864,957.27 | 3,284,554.59 | 742,308.57 | 41,693,141.60 |
| (2) Construction in process transfer-in | - | 16,436,960.92 | - | - | 16,436,960.92 |
| (3) increased by enterprise combination | - | - | - | - | - |
| 3. Current decreased | 583,553.00 | 57,562,794.22 | 890,442.00 | 13,146.00 | 59,049,935.22 |
| (1) Disposal or scrap | 583,553.00 | 57,562,794.22 | 890,442.00 | 13,146.00 | 59,049,935.22 |
| 4. Balance at 30 June 2018 | 486,462,538.85 | 4,000,239,436.05 | 23,702,330.81 | 48,897,083.73 | 4,559,301,389.44 |
| II. Accumulated depreciation |
- 62 -
1. Balance at year-begin
| 1. Balance at year-begin | 282,063,887.10 | 2,649,610,431.93 | 16,993,672.09 | 40,811,456.40 | 2,989,479,447.52 |
| 2. Current increased | 6,465,964.24 | 57,038,778.65 | 452,620.25 | 520,650.40 | 64,478,013.54 |
| (1) accrual | 6,465,964.24 | 57,038,778.65 | 452,620.25 | 520,650.40 | 64,478,013.54 |
| 3. Current decreased | 360,687.06 | 48,897,726.91 | 801,397.80 | 11,831.40 | 50,071,643.17 |
| (1) Disposal or scrap | 360,687.06 | 48,897,726.91 | 801,397.80 | 11,831.40 | 50,071,643.17 |
| 4. Balance at 30 June 2018 | 288,169,164.28 | 2,657,751,483.67 | 16,644,894.54 | 41,320,275.40 | 3,003,885,817.89 |
| III. impairment provision | |||||
| 1. Balance at year-begin | 14,860,025.13 | 135,261,184.44 | - | - | 150,121,209.57 |
| 2. Current increased | |||||
| (1) accrual | - | - | - | - | - |
| 3. Current decreased | 8,987,299.45 | - | - | 8,987,299.45 | |
| (1) Disposal or scrap | - | 8,987,299.45 | - | - | 8,987,299.45 |
| 4. Balance at 30 June 2018 | 14,860,025.13 | 126,273,884.99 | 0.00 | 0.00 | 141,133,910.12 |
| IV. Book value | |||||
| 1. Balance at 30 June 2018 | 183,433,349.44 | 1,216,214,067.39 | 7,057,436.27 | 7,576,808.33 | 1,414,281,661.43 |
| 2. Book value at year-begin | 153,320,858.45 | 1,255,628,695.71 | 4,314,546.13 | 7,356,464.76 | 1,420,620,565.05 |
(2) Idle fixed assets temporary
| Item | Original book value | Accumulated depreciation | Impairment provision | Book value | Note |
| Houses and buildings | 137,799,917.53 | 100,821,833.59 | 19,008,224.87 | 17,969,859.07 | Wharf, processing workshop of heavy oil |
| Equipment | 594,477,563.61 | 500,135,626.57 | 53,555,257.36 | 40,786,679.68 | Processing equipment of heavy oil and generation unit |
| Transport equipment | 256,300.00 | 230,670.00 | - | 25,630.00 | Idle vehicles |
| Total | 732,533,781.14 | 601,188,130.16 | 72,563,482.23 | 58,782,168.75 |
(3) Fixed assets without property license obtained
| Item | Book value | Reasons |
| Booster station | 5,567,100.88 | Procedures uncompleted |
| Steam turbine workshop | 2,014,811.08 | Procedures uncompleted |
| Chemical water tower | 3,327,665.86 | Procedures uncompleted |
| Treatment shop for heavy oil | 650,123.93 | Procedures uncompleted |
| Start-up boiler house | 146,191.99 | Procedures uncompleted |
| Fire pump room | 339,374.37 | Procedures uncompleted |
| Circulating water pump house | 2,134,592.90 | Procedures uncompleted |
| Comprehensive building | 3,557,285.99 | Procedures uncompleted |
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Production and inspection building
| Production and inspection building | 5,745,308.85 | Procedures uncompleted |
| Administrative building | 5,907,084.49 | Procedures uncompleted |
| Mail room of the main entrance | 239,379.05 | Procedures uncompleted |
| Turbine building and annex building | 10,745,357.65 | Procedures uncompleted |
| Plant’s ventilating system | 558,407.71 | Procedures uncompleted |
| Office building | 5,375,147.82 | Procedures uncompleted |
| Comprehensive building | 1,192,940.72 | Procedures uncompleted |
| Draft cooling tower | 3,452,423.42 | Procedures uncompleted |
| Chemical water workshop and foundation of water tank | 1,640,829.43 | Procedures uncompleted |
| Industry pool and industry pump house | 720,128.52 | Procedures uncompleted |
| Start-up boiler house | 120,327.67 | Procedures uncompleted |
| Oil treatment room and oil un-loading platform | 337,538.98 | Procedures uncompleted |
| Comprehensive building canteen | 314,580.33 | Procedures uncompleted |
| Total | 54,086,601.64 |
12. Fixed assets disposal
| Item | 30 June 2018 | Balance at year-begin |
| Fixed assets ready for disposal | 1,314.60 | - |
| Total | 1,314.60 | - |
13. Construction in process(1) Construction in process
| Item | 30 June 2018 | Amount at year-begin | ||||
| Book Balance | Impairment provision | Book value | Book Balance | Impairment provision | Book value | |
| Oil to Gas Works | 32,871,600.26 | 32,871,600.26 | - | 32,871,600.26 | 32,871,600.26 | - |
| Cogeneration of heat and electricity Project | 62,923,817.59 | - | 62,923,817.59 | 47,221,713.47 | - | 47,221,713.47 |
| Other technical innovation project | 5,575,705.33 | - | 5,575,705.33 | 3,737,028.45 | - | 3,737,028.45 |
| Total | 101,371,123.18 | 32,871,600.26 | 68,499,522.92 | 83,830,342.18 | 32,871,600.26 | 50,958,741.92 |
(2) Changes of significant projects in construction in the year
| Item | Budget | Amount at year-begin | Increase of this year | Transferred fixed assets in this year | Other decrease in the year | 30 June 2018 |
| Oil to Gas Works | 74,400,000.00 | 32,871,600.26 | - | - | - | 32,871,600.26 |
| Cogeneration of heat and electricity Project | 120,000,000.00 | 47,221,713.47 | 15,702,104.12 | - | - | 62,923,817.59 |
| Technological transformation project | - | 3,737,028.45 | 18,275,637.80 | 16,436,960.92 | - | 5,575,705.33 |
| Total | 194,400,000.00 | 83,830,342.18 | 33,977,741.92 | 16,436,960.92 | - | 101,371,123.18 |
(3) Impairment provision
| Item | Amount at year-begin | Increase | Decreased | 30 June 2018 | Reasons of accrual |
| Oil to Gas Works | 32,871,600.26 | - | - | 32,871,600.26 | In idle condition |
(4) Idle construction in progress temporary
| Item | 30 June 2018 | Amount at year-begin | ||||
| Book Balance | Impairment provision | Net book value | Book Balance | Impairment provision | Net book value | |
| Oil to Gas Works | 32,871,600.26 | 32,871,600.26 | - | 32,871,600.26 | 32,871,600.26 | - |
14. Intangible assets
- 65 -
Item
| Item | Land use right | Software | Total |
| I. Original book value | |||
| 1. Balance at year-begin | 91,253,625.27 | 3,678,109.85 | 94,931,735.12 |
| 2. Current increased | - | ||
| (1) purchase | - | - | |
| 3. Current decreased | - | ||
| (1) disposal | - | - | - |
| 4. Balance at 30 June 2018 | 91,253,625.27 | 3,678,109.85 | 94,931,735.12 |
| II. Accumulated amortization | |||
| 1. Balance at year-begin | 42,793,252.98 | 3,667,981.54 | 46,461,234.52 |
| 2. Current increased | 1,099,620.36 | 144,211.01 | 1,243,831.37 |
| (1) accrual | 1,099,620.36 | 144,211.01 | 1,243,831.37 |
| 3. Current decreased | - | ||
| (1) disposal | - | - | - |
| 4. Balance at 30 June 2018 | 43,892,873.34 | 3,812,192.55 | 47,705,065.89 |
| III. Impairment provision | |||
| 1. Balance at year-begin | - | - | - |
| 2. Current increased | |||
| (1) accrual | - | - | - |
| 3. Current decreased | |||
| (1) disposal | - | - | - |
| 4. Balance at 30 June 2018 | - | - | - |
| IV. Book value | |||
| 1. Balance at 30 June 2018 | 47,360,751.93 | -134,082.70 | 47,226,669.23 |
| 2. Book value at year-begin | 48,460,372.29 | 10,128.31 | 48,470,500.60 |
15. Deferred income tax assets
| Item | 30 June 2018 | Amount at year-begin |
| Deferred income tax assets: | ||
| Bad debt provision of account receivable | 1,159,926.83 | 1,159,926.83 |
| Other provision for bad debts of accounts receivable | 180,896.25 | 180,896.25 |
| Staff salary payable | 830,621.00 | 830,621.00 |
| Provision for devaluation of long-term equity investment | 625,000.00 | 625,000.00 |
| Others | 125,592.57 | 125,592.57 |
| Total | 2,922,036.65 | 2,922,036.65 |
16. Other non-current assets
| Item | 30 June 2018 | Amount at year-begin |
| Project of LNG(Note) | 22,882,181.78 | 22,882,181.78 |
| Account for engineering and equipment paid in advance | - | 10,048,600.00 |
- 66 -
Total
| Total | 22,882,181.78 | 32,930,781.78 |
Note: the project was jointly constructed by Weimei Power Company and Guangdong Dapeng LiquidNatural Gas Co., Ltd.(hereinafter referred to as Dapeng LNG). According to the contract signed betweenthe two parties, before the project involved by this construction acquired approval from the relevantnational authorities, the ownership belongs to both parties. After such approval, Dapeng LNG will
acquire LNG project. Thus, Weimei Power Company recorded it under the item of “other non-currentassets”.
17. Short-term loans
| Item | 30 June 2018 | Amount at year-begin |
| Guarantee loans | 100,000,000.00 | 465,850,000.00 |
| Credit loans | 811,500,000.00 | 50,000,000.00 |
| Total | 911,500,000.00 | 515,850,000.00 |
18. Note payable
| Type | 30 June 2018 | Amount at year-begin |
| Trade acceptance | - | - |
| Bank acceptance | - | 51,439,580.56 |
| Total | - | 51,439,580.56 |
19. Account payable(1) Details of account payable
| Item | 30 June 2018 | Amount at year-begin |
| Natural gas | 41,996,987.91 | - |
| Materials | 3,274,274.35 | 13,670,020.13 |
| Electricity | 1,777,099.99 | 811,442.78 |
| Engineering funds | 5,685,183.33 | 0.00 |
| Others | 1,600,327.36 | 613,449.69 |
| Total | 54,333,872.94 | 15,094,912.60 |
(2) There is no fund of shareholders with 5 %( including 5%) or more of the voting shares in the Group inthe report period.20. Wages payable(1) Wages payable
| Item | Balance at year-begin | Increase this year | Decrease this year | 30 June 2018 |
| I. Short-term remuneration | 44,460,199.34 | 73,010,147.23 | 75,842,903.46 | 41,627,443.11 |
| II. Post-employment welfare-defined contribution plans | 3,877,388.91 | 10,372,785.90 | 9,375,056.43 | 4,875,118.38 |
| III. Severance Pay | - | - | - | - |
| IV. Other welfare due within one year | - | - | - | - |
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Total
| Total | 48,337,588.25 | 83,382,933.13 | 85,217,959.89 | 46,502,561.49 |
(2) Short-term remuneration
| Item | Balance at year-begin | Increase this year | Decrease this year | 30 June 2018 |
| 1. Wages, bonuses, allowances and subsidies | 41,922,487.80 | 60,406,392.81 | 62,896,080.00 | 39,432,800.61 |
| 2. Welfare for employee | 0.00 | 642,162.22 | 641,787.22 | 375.00 |
| 3. Social insurance | 246,699.75 | 3,297,969.51 | 3,222,647.31 | 322,021.95 |
| Including: Medical insurance | 215,069.63 | 3,115,401.00 | 3,051,626.07 | 278,844.56 |
| Work injury insurance | 23,713.77 | 111,283.97 | 104,494.87 | 30,502.87 |
| Maternity insurance | 7,916.35 | 71,284.54 | 66,526.37 | 12,674.52 |
| Wages in arrears | - | - | - | - |
| 4. Housing provident fund | 698,573.20 | 7,892,093.10 | 7,854,454.80 | 736,211.50 |
| 5.Union funds and staff education expenses | 1,592,438.59 | 771,529.59 | 1,227,934.13 | 1,136,034.05 |
| Total | 44,460,199.34 | 73,010,147.23 | 75,842,903.46 | 41,627,443.11 |
(3) Defined contribution plans
| Item | Balance at year-begin | Increase this year | Decrease this year | 30 June 2018 |
| 1. Basic Endowment insurance | 541,656.23 | 7,758,457.20 | 7,600,353.85 | 699,759.58 |
| 2. Unemployment insurance | 13,335.68 | 98,581.70 | 91,564.58 | 20,352.80 |
| 3. Enterprise annuities | 3,322,397.00 | 2,515,747.00 | 1,683,138.00 | 4,155,006.00 |
| Total | 3,877,388.91 | 10,372,785.90 | 9,375,056.43 | 4,875,118.38 |
21. Taxes payable
| Item | 30 June 2018 | Amount at year-begin |
| VAT | 4,219,913.98 | 5,660,770.59 |
| Enterprise income tax | 7,219,203.43 | 3,959,377.93 |
| Individual income tax | 2,076,589.47 | 2,064,852.00 |
| Land-use tax of town | 566,975.50 | 1,405,156.40 |
| Real estate tax | 2,246,238.86 | 1,435,820.81 |
| Others | 453,594.52 | 911,781.03 |
| Total | 16,782,515.76 | 15,437,758.76 |
22. Interest payable
| Item | 30 June 2018 | Amount at year-begin |
| Long-term loan interest of installment and interest charges | 138,616.88 | 108,741.19 |
| Interest payable of short-term loan | 3,265,233.29 | 2,898,252.14 |
| Total | 3,403,850.17 | 3,006,993.33 |
23. Other account payable
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Item
| Item | 30 June 2018 | Amount at year-begin |
| Project expense | 21,722,183.53 | 24,040,896.76 |
| Quality guarantee deposit | 12,511,146.03 | 13,632,891.13 |
| Equipment amount | 3,910,071.02 | 439,237.63 |
| Material amount | 1,495,078.48 | - |
| Land use right charge | 752,198.28 | 423,005.75 |
| Fund of the Board | 481,370.27 | 479,659.27 |
| Accrued expenses | 29,567,922.10 | 34,865,705.80 |
| Other | 15,735,466.29 | 9,332,787.23 |
| Total | 86,175,436.00 | 83,214,183.57 |
24. Non-current liability due within one year
| Item | 30 June 2018 | Balance at year-begin |
| Long-term loans due within one year | - | 32,400,000.00 |
| Total | - | 32,400,000.00 |
25. Long-term loans
| Item | 30 June 2018 | Amount at year-begin |
| Guarantee loans | 25,940,000.00 | 58,340,000.00 |
| Credit loans | - | - |
| Less: Long-term loans due within one year | - | 32,400,000.00 |
| Total | 25,940,000.00 | 25,940,000.00 |
26. Accrued liabilities
| Item | 30 June 2018 | Amount at year-begin | Reason |
| Offering guarantee outside | 26,766,590.38 | 26,788,590.38 | Note |
Note: On 29 November 2013, Shenzhen Server and Jiahua Building Products (Shenzhen) Co., Ltd.(Jiahua Building) signed a supplementary term aiming at equity transfer over equity attribution anddivision of Yapojiao Dock, which belongs to Shenzhen Server, Huidong Server, and Huidong NianshanTown Government as well as its subordinate Nianshan Group. In order to solve this remaining historicproblem, Shenzhen Server saved RMB 12,500,000.00 in condominium deposit account as guarantee. Inaddition, Server pledged its 20% of equity holding from Huidong Server to Jiahua Architecture withpledge duration of 2 years. The amount of collateral on loans could not exceed RMB 15,000,000.00.Relevant losses with the event concerned predicted amounting to RMB 27,500,000.00. It was estimatedthat 27,500,000.00 Yuan will lost in related with the above mentioned events. In concerned with theattorney fees for deal with problems left over from history, totally 733,409.62 Yuan costs from 2014 to30 June 2018, the ending balance amounted as 26,766,590.38 Yuan
27. Deferred income
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Item
| Item | Amount at year-begin | Current increased | Current decreased | 30 June 2018 |
| Deferred income | 41,948,231.12 | - | 2,022,867.64 | 39,925,363.48 |
Including, items with government grants involved:
| Liability | Amount at year-begin | Current increase | Current decreased | 30 June 2018 | Assets /income related | |
| Amount reckoned in other revenue | Other changes | |||||
| Subsidy for energy-saving technology reform | 5,283,816.88 | - | 57,018.66 | - | 5,226,798.22 | Assets related |
| Subsidy for low-nitrogen transformation project | 917,121.50 | - | 189,986.86 | - | 727,134.64 | Assets related |
| Treasury subsidies for sludge drying | 3,336,250.00 | - | 127,500.00 | - | 3,208,750.00 | Assets related |
| Support fund of recycling economy for sludge drying | 8,745,279.79 | - | 323,501.46 | - | 8,421,778.33 | Assets related |
| Subsidy for project of low-nitrogen transformation for welcoming the Universidad | 22,894,446.91 | - | 1,276,992.42 | - | 21,617,454.49 | Assets related |
| Support fund of enterprise informationalization | 270,196.04 | - | 30,588.24 | - | 239,607.80 | Assets related |
| Funded of energy efficiency improvement for electric machine in SZ | 501,120.00 | 17,280.00 | - | 483,840.00 | Assets related | |
| Total | 41,948,231.12 | - | 2,022,867.64 | - | 39,925,363.48 | |
28. Share capital
| Item | Balance at year-begin | Changes in this year(+ -) | Balance at 30 June 2018 | ||||
| New shares issued | Bonus shares | Capitalizing from reserves | Other | Subtotal | |||
| Total shares | 602,762,596.00 | - | - | - | - | - | 602,762,596.00 |
29. Capital reserve
| Item | Balance at year-begin | Increase in the year | Decrease in the year | 30 June 2018 |
| Capital premium | 233,035,439.62 | - | - | 233,035,439.62 |
| Other capital reserve | 129,735,482.48 | - | - | 129,735,482.48 |
| Other | 362,770,922.10 | - | - | 362,770,922.10 |
30. Surplus reserve
| Item | Balance at year-begin | Increase in the year | Decrease in the year | 30 June 2018 |
| Legal surplus reserve | 310,158,957.87 | - | - | 310,158,957.87 |
| Discretionary surplus reserve | 22,749,439.73 | - | - | 22,749,439.73 |
| Total | 332,908,397.60 | - | - | 332,908,397.60 |
31. Retained profit
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Item
| Item | 30 June 2018 | Balance at year-begin |
| Retained profit of last year before adjusted | 660,176,169.69 | 644,271,987.22 |
| Total retained profit adjusted (increased with +, decreased with -) | - | - |
| Retained profit at beginning of the year after adjusted | 660,176,169.69 | 644,271,987.22 |
| Add: net profit attributable to shareholders of parent company | 30,012,095.22 | 15,904,182.47 |
| Retained profit at year-end | 690,188,264.91 | 660,176,169.69 |
32. Operating income and operating cost
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 | ||
| Income | Cost | Income | Cost | |
| Main business | 1,078,030,178.26 | 968,719,412.92 | 871,032,443.81 | 827,070,339.40 |
| Other business | 1,730,036.54 | 975,640.11 | 1,930,253.52 | 691,219.93 |
| Total | 1,079,760,214.80 | 969,695,053.03 | 872,962,697.33 | 827,761,559.33 |
33. Tax and surcharge
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| City maintenance tax | 2,286,803.77 | 1,076,429.84 |
| House duty | 1,275,543.49 | 918,709.23 |
| Stamp tax | 520,484.00 | 344,854.98 |
| Educational surcharge | 572,820.01 | 953,710.38 |
| Land use tax | 50,960.52 | 200,777.04 |
| Vehicle and vessel use tax | 15,390.94 | |
| Total | 4,722,002.73 | 3,494,481.47 |
34. Management expenses
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Salary | 23,190,344.99 | 20,156,152.48 |
| Leasing expenses | 3,092,069.50 | 3,014,660.30 |
| Entertainment expense | 1,558,869.52 | 1,654,048.96 |
| Expenses for agency appointment | 646,103.90 | 1,160,974.45 |
| Vehicles expenses | 1,861,732.77 | 1,837,717.51 |
| Expenses from the Board | 546,064.70 | 1,006,497.20 |
| Housing fund | 1,842,356.95 | 1,736,661.05 |
| Depreciation expense | 1,987,153.39 | 1,351,420.01 |
| Amortization of intangible assets | 935,811.89 | 938,591.10 |
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Item
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Specific expenses | 14,584.43 | 119,679.73 |
| Environmental expense | 874,452.57 | 900,528.44 |
| Sundry expenses | 1,387,173.86 | 1,283,195.42 |
| Expenses for enterprise culture | 103,725.00 | 87,511.70 |
| Property expense | 455,396.71 | 447,758.12 |
| Office expenses | 346,790.68 | 166,523.48 |
| Pension insurance | 2,015,878.90 | 2,184,952.61 |
| Communication charge | 647,596.16 | 598,622.04 |
| Business traveling charge | 259,624.12 | 216,806.54 |
| Stock charge | 29,929.33 | 40,377.36 |
| Medicare | 877,227.73 | 867,818.90 |
| Labor union dues | 290,467.56 | 457,849.20 |
| Personnel education fund | 61,044.53 | 141,084.34 |
| Others | 3,657,250.85 | 821,787.52 |
| Total | 46,681,650.04 | 41,191,218.46 |
35. Financial expenses
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Interest expenditure | 24,038,132.91 | 39,088,778.10 |
| Less : interest income | 2,187,166.10 | 7,910,187.73 |
| Exchange gains/losses | -73,770.20 | 184,715.46 |
| Others | 517,089.32 | 316,084.62 |
| Total | 22,294,285.93 | 31,679,390.45 |
36. Investment gains/losses
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Gains of long-term equity investment on Equity | -1,076,904.31 | -1,019,420.00 |
| Investment gains from long-term equity investment disposal | - | - |
| Total | -1,076,904.31 | -1,019,420.00 |
37. Assets impairment loss
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Loss on bad debt | - | -480,710.97 |
| Total | - | -480,710.97 |
38. Other income
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
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Item
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Government bond subsidy for sludge drying | 1,276,992.42 | 1,276,992.42 |
| Support fund of enterprise informationalization | 30,588.24 | 30,588.24 |
| Subsidy for energy-saving technology reform | 247,005.52 | 246,169.87 |
| Government bond subsidy for sludge drying | 127,500.00 | 127,500.00 |
| Support fund of recycling economy for sludge drying | 323,501.46 | 323,501.46 |
| Energy efficiency improvement for electric machine | 17,280.00 | 12,960.00 |
| VAT refund | 2,013,937.74 | 1,272,151.11 |
| Other | 100,000.00 | 200,000.00 |
| Total | 4,136,805.38 | 3,489,863.10 |
39. Non-operating income
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Gains of non-current assets damaged or scrapped | - | - |
| Others | 4,775.00 | 5,796.00 |
| Total | 4,775.00 | 5,796.00 |
40. Non-operating expense
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Expenses from external donation | - | 10,000.00 |
| Total loss from disposal of non-current assets | 849,018.73 | 160,729.35 |
| Other | 10,000.00 | 1,280.22 |
| Total | 859,018.73 | 172,009.57 |
41. Income tax expenses
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Current income tax measured by tax law and relevant regulation | 8,092,879.62 | 920,495.87 |
42. Cash flow statement(1) Cash received with other operating activities concerned
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Open credit received | - | 367,531,301.56 |
| Interest income | 2,166,649.41 | 7,910,187.73 |
| Others | 3,843,730.64 | 646,786.50 |
| Total | 6,010,380.05 | 376,088,275.79 |
(2) Cash paid for other operating activities
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
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Item
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Expense on agency appointment | 646,103.90 | 1,160,974.45 |
| Fund for the Board | 546,064.70 | 1,006,497.20 |
| Leasing expense | 3,547,466.21 | 3,462,418.42 |
| Entertainment expense | 1,558,869.52 | 1,654,048.96 |
| Vehicles expense | 1,861,732.77 | 1,837,717.51 |
| Enterprise culture | 103,725.00 | 87,511.70 |
| Communication fee | 647,596.16 | 598,622.04 |
| Environment protection fee | 874,452.57 | 900,528.44 |
| Others | 16,098,724.40 | 10,904,167.56 |
| Total | 25,884,735.23 | 21,612,486.28 |
(3) Cash received with financing activities concerned
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Deposit received | 15,460,000.00 | 11,309,958.60 |
43. Supplementary information on cash flow statement(1) Regulate the net profit into the cash flow of operating activities
| Supplementary information | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| 1. Regulate the net profit into the cash flow of operating activities | ||
| Net profit | 28,829,762.75 | -30,712,587.05 |
| Add: Asset impairment provision | - | -480,710.97 |
| Depreciation of fixed assets | 64,478,013.54 | 61,654,099.55 |
| Amortization of intangible assets | 1,243,831.37 | 1,305,344.19 |
| Amortization of long-term deferred expenses | - | - |
| Loss (gain) from disposing fixed assets, intangible assets and other long-term assets | - | - |
| Abandonment loss from fixed assets | 849,018.73 | 160,729.35 |
| Financial expenses(gain) | 24,038,132.91 | 39,088,778.10 |
| Investment loss(gain) | 1,076,904.31 | 1,019,420.00 |
| Decrease (increase) of deferred income tax assets | - | - |
| Decrease (increase)of inventory | 8,118,805.74 | -4,727,006.55 |
| Decrease (increase) of receivable operating items | -60,023,522.47 | 214,908,295.24 |
| Increase (decrease) of payable operating items | -16,020,312.60 | -347,665,217.13 |
| Net cash flow from operation activities | 52,590,634.28 | -65,448,855.27 |
| 2. Major investment and financing activities not involving cash income and expenditure: | ||
| Debt capitalization | - | - |
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Supplementary information
| Supplementary information | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Convertible company bond due within one year | - | - |
| Fixed assets acquired under finance leases | - | - |
| 3. Net change of cash and cash equivalents: | ||
| Year-end balance | 763,737,487.23 | 320,399,482.41 |
| Less: Balance of cash at period-begin | 411,613,377.07 | 1,389,482,327.86 |
| Net increase of cash and cash equivalents | 352,124,110.16 | -1,069,082,845.45 |
(2) Composition of cash and cash equivalent
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| I. Cash | 763,737,487.23 | 320,399,482.41 |
| Including: Cash on hand | 142,604.63 | 112,358.49 |
| Bank savings available for payment needed | 430,415,610.30 | 319,842,865.25 |
| Other monetary capital available for payment needed | 333,179,272.30 | 444,258.67 |
| II. Cash equivalent | ||
| III. Balance of cash and cash equivalent at period-end | 763,737,487.23 | 320,399,482.41 |
44. Assets of ownership or use right restricted
| Item | 30 June 2018 | Restricted reason |
| Monetary Fund | 11,242,792.74 | Deposit |
| Total | 11,242,792.74 |
45. Foreign currency
| Item | Foreign currency balance on 30 June 2018 | Conversion rate | RMB converted |
| Monetary fund | |||
| Including: USD | 855,607.48 | 6.6166 | 5,661,212.47 |
| Euro | 1,017.87 | 7.6516 | 7,788.30 |
| HKD | 599,173.75 | 0.8431 | 505,163.20 |
| SGD | 5,374.81 | 4.8386 | 26,006.56 |
VII. Change of consolidate scopeNo change of consolidate scope in the year.
VIII. Equity in other entity1. Equity in subsidiaries(1) Composition of the Group
| Subsidiary | Main operation place | Registration place | Business nature | Shareholding ratio (%) | Acquired way |
| Shenzhen Server (note ) | Shenzhen | Shenzhen | Trading | 50 | Establishment |
| New Power Company | Shenzhen | Shenzhen | Power | 100 | Establishment |
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Subsidiary
| Subsidiary | Main operation place | Registration place | Business nature | Shareholding ratio (%) | Acquired way |
| generation | |||||
| Zhongshan Power Company | Zhongshan | Zhongshan | Power generation | 80 | Establishment |
| Engineering Company | Shenzhen | Shenzhen | Engineering consulting | 100 | Establishment |
| Weimei Power Company | Dongguan | Dongguan | Power generation | 70 | Establishment |
| Environment Protection Company | Shenzhen | Shenzhen | Engineering | 100 | Establishment |
| Singapore company | Singapore | Singapore | Trading | 100 | Establishment |
| Shen Storage | Zhongshan | Zhongshan | Storage | 80 | Establishment |
| SYNDISOME | Hong Kong | Hong Kong | Import & export trading | 100 | Not under the same control |
Note : The Company holds 50% equity of Shenzhen Server, and takes majority voting rights in ShenzhenServer, thus, the Company owes substantial control; Shenzhen Server included in the consolidate scope ofthe financial statement.(2) Important non-wholly-owned subsidiary
| Subsidiary | Share-holding ratio of minority (%) | Gains/losses attributable to minority in the Period | Dividend announced to distribute for minority in the Period | Ending equity of minority |
| Zhongshan Power Company | 20 | 393,668.45 | - | -12,089,882.94 |
| Weimei Power Company | 30 | -319,787.79 | - | 29,838,229.72 |
(3) Main finance of the important non-wholly-owned subsidiary
| Subsidiary | Balance on 30 June 2018 | |||||
| Current assets | Non-current assets | Total assets | Current liability | Non-current liability | Total liability | |
| Zhongshan Power Company | 170,537,865.52 | 572,100,580.42 | 742,638,445.94 | 771,193,927.75 | 31,893,932.86 | 803,087,860.61 |
| Weimei Power Company | 221,277,012.49 | 510,258,816.85 | 731,535,829.34 | 632,075,063.61 | - | 632,075,063.61 |
(Continued)
| Subsidiary | Balance at year-begin |
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Current assets
| Current assets | Non-current assets | Total assets | Current liability | Non-current liability | Total liability | |
| Zhongshan Power Company | 168,596,429.57 | 592,847,484.20 | 761,443,913.77 | 791,720,732.32 | 32,140,938.38 | 823,861,670.70 |
| Weimei Power Company | 229,231,009.01 | 528,619,381.52 | 757,850,390.53 | 657,323,665.49 | - | 657,323,665.49 |
(Continued)
| Subsidiary | Current period | |||
| Operation Income | Net profit | Total comprehensive income | Cash flow from operation activity | |
| Zhongshan Power Company | 239,056,530.40 | 1,968,342.26 | 1,968,342.26 | 130,078,167.14 |
| Weimei Power Company | 249,516,171.77 | -1,065,959.31 | -1,065,959.31 | 28,275,188.27 |
(Continued)
| Subsidiary | Last period | |||
| Operation Income | Net profit | Total comprehensive income | Cash flow from operation activity | |
| Zhongshan Power Company | 230,866,147.88 | -13,385,377.59 | -13,385,377.59 | -14,568,572.01 |
| Weimei Power Company | 171,896,422.01 | -12,478,369.20 | -12,478,369.20 | -6,869,702.57 |
2. Equity in joint venture and cooperative enterprise(1) Joint venture or cooperative enterprise
| Joint venture and cooperative enterprise | Main operation place | Registered place | Business nature | Share-holding ratio (%) | Accounting treatment | |
| Directly | Indirectly | |||||
| Huidong Server | Huizhou | Huizhou | Wharf | 40 | Equity method | |
(2)Financial information for minor joint venture and cooperative enterprise
| Item | Closing balance/amount in the year | Opening balance/amount in last year |
| Joint venture | ||
| Total investment book value | 17,177,769.09 | 18,254,673.40 |
| Total of the follow counted by share-holding ratio | ||
| —Net profit | -1,076,904.31 | -1,019,420.00 |
| —Other comprehensive benefits | ||
| —Total comprehensive income | -1,076,904.31 | -1,019,420.00 |
Note: The 60% equity of Huidong Server, held by controlling subsidiary Shenzhen Server are transferredon 9 December 2013, the other 40% equity will re-measured by appraisal value when losing thecontrolling right.
IX. Risks associated with financial instrumentsThe Company's main financial instruments include equity investment, borrowings, accounts receivable,accounts payable, etc., see details of each financial instrument in related items of this annotation xi. Therisks associated with these financial instruments and the risk management policies adopted by theCompany to reduce these risks are described as below. The management of the Company manages andmonitors these risk exposures to ensure that the above risks are controlled within the limit range.The Company uses the sensitivity analysis technique to analyze the possible impact of the risk variableon the current profit and loss or the shareholders' equity. Since any risk variable rarely changes inisolation, and the correlation existing among the variables shall have a significant effect on the finalamount of changes about a certain risk variable, therefore, the following proceeds by assuming that thechange in each variable is independent.(i) Risk management objectives and policiesThe objective of the Company's risk management is to gain a proper balance between risks and profits,minimize the negative impact of risks on the Company's operating results, and maximize the benefits ofshareholders and other equity investors. Based on the risk management objective, the basic strategy of theCompany's risk management is to identify and analyze the risks faced by the Company, establishappropriate bottom line to bear the risks and carry out risk management, and timely and reliably supervisethe risks so as to control the risks within the limit range.1 Market risk(1) Foreign exchange risk
Foreign exchange risk refers to the risk of losses due to exchange rate changes. The Company’s foreign
exchange risk is mainly related to the US dollar. On June 30, 2018, except for the balance of foreigncurrency monetary items, the assets and liabilities of the Company are RMB balance. The foreignexchange risk arising from the assets and liabilities of such foreign currency balances may have animpact on the Company's operating results.(2) Interest rate risk - cash flow change riskThe Company's cash flow change risk of financial instruments arising from interest rate change is mainlyrelated to the floating interest rate bank loans (see details in annotation xi, 17, annotation xi, 25).Interest rate risk sensitivity analysis:
The interest rate risk sensitivity analysis is based on the following assumptions:
? Changes in market interest rates affect the interest income or expense of financial instruments with
variable interest rate;
? For financial instruments with fixed rate by fair value measurement, the changes in market interest rates
only affect their interest income or expense;
? For derivative financial instruments designated as hedging instruments, the changes in market interest
rates affect their fair value, and all interest rate hedging prediction is highly effective;
? Calculate the changes in fair value of derivative financial instruments and other financial assets and
liabilities by using the cash flow discount method at the market interest rate at the balance sheet date.On the basis of above assumptions, in case that other variables keep unchanged, the pre-tax effect ofpossible reasonable changes in interest rates on current profits and losses and shareholders' equity is asfollows:
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Rate changes
| Rate changes | The period | Last period | ||
| Net profit | Shareholder’ interest | Net profit | Shareholder’ interest | |
| 5% increased | 1,180,390.92 | 1,019,303.74 | 1,952,727.44 | 1,698,182.60 |
| 5% decreased | -1,180,390.92 | -1,019,303.74 | -1,952,727.44 | -1,698,182.60 |
2. Credit riskOn June 30, 2018, the maximum credit risk exposure that could cause financial loss to the Company ismainly due to the failure of the other party to fulfill the obligations, resulting in losses to the Company'sfinancial assets, including:
The book value of financial assets confirmed in the consolidated balance sheet; for the financialinstrument measured by fair value, the book value reflects its risk exposure but not the maximum riskexposure, and its maximum risk exposure will change with the changes in future fair value.To reduce the credit risk, the Company has set up a team to determine the credit lines, examine andapprove the credit, and perform other monitoring procedures to ensure that necessary measures are takento recover the expired claims. In addition, the Company reviews the recovery of each account receivableat each balance sheet date to ensure that sufficient provision for bad debts is made for uncollectible funds.As a result, the Company's management believes that the Company's credit risk has been greatly reduced.The company's working capital is deposited in banks with high credit ratings, so the credit risk ofworking capital is rather low.3. Liquidity riskIn managing the liquidity risk, the Company keeps the cash and cash equivalents that the managementconsiders to be sufficient and supervise them so as to meet the Company's operating needs and reduce the
impact of fluctuations in cash flows. The Company’s management monitors the use of bank loans and
ensures to comply with the loan agreement.The Company uses bank loans as the main source of funds.
X. Related party and related transactions1. Parent company of the Group
Share holding proportion of any shareholder of the Company didn't reach 50%, and couldn't form aholding relationship of the Company through any methods. The Company has no parent company.
2. Subsidiaries of the CompanyFound more in 1. Subsidiary in Note VIII3. Joint venture and affiliated enterprise of the GroupFound more in 2. Equity in joint venture or affiliate business in Note VIII4. Other related party
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Other related party
| Other related party | Relationship with the Group |
| Shenzhen Energy Group Co., Ltd. (“Energy Group ”) | Shareholders have major influence on the Company |
| Dongguan Weimei Ceramics Industrial Park Co., Ltd. (” Weimei Ceramics”) | Minority shareholders of the subsidiaries |
| Shenzhen Mawan Power Co., Ltd. (“Mawan Power Company”) | Subsidiary of ultimate controller of Energy Group |
| Shenzhen Moon Bay Oil Harbor Co., Ltd. (“Moon Bay Oil Company”) | Subsidiary of ultimate controller of Energy Group |
| Shenzhen Energy Group Holding Co., Ltd. (” Energy Holding”) | Subsidiary of ultimate controller of Energy Group |
| Shenzhen Pipe Energy Technology Development Co., ltd. (“Pipe Technology”) | Others Related party |
| Alltrust Insurance Co., Ltd. (“Alltrust Insurance”) | Other Related party |
| Director of the Company and other senior executives | Key management staff |
5. Account payable/receivable from related parties(1) Account receivable
| Item | Balance on 30 June 2017 | Balance at year-begin | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | |
| Other account receivable: | ||||
| Huidong Server | 10,794,801.42 | - | 11,022,401.44 | - |
| Huidong Server managed account | 12,916,473.59 | - | 12,829,734.22 | - |
| Total | 23,711,275.01 | - | 23,852,135.66 | - |
XI. Commitment1. Major commitmentTill the balance sheet day, the condition of irrevocable operating lease contract the Group externally
signed is as follow:
In RMB
| Item | 30 June 2018 | Amount at year-begin |
| Minimum lease payments of irrevocable operating lease: | ||
| The first year after balance sheet day | 765,519.21 | 1,517,717.46 |
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The second year after balance sheet day
| The second year after balance sheet day | 1,557,680.33 | 1,557,680.33 |
| The third year after balance sheet day | 1,557,680.33 | 1,557,680.33 |
| Subsequent years | 58,171,101.39 | 58,171,101.39 |
| Total | 62,051,981.26 | 62,804,179.51 |
2. ContingencyNil
XII. Events Occurring after the Balance Sheet DateNil
XIII. Other important events1. Segment information
(1) Determining basis and accounting policies of reportable segmentsAccording to the Group's internal organization structure, management requirements and internal reportingsystem, the Group's business is divided into three operating segments including power and heat supply, fueloil trade and other business, the Group's management periodically evaluates the operating results of thesesegments so as to determine the allocation of resources and assess their performances.Segmental reporting information is disclosed in accordance with the accounting policies and measurementstandards adopted by each segment for reporting to the management, the measurement basis keep pace withthe accounting and measurement basis used for preparing financial statements.(2) Financial information of reportable segment
| Item | Power supply and heat supply | Fuel oil trade | Other | Offset between segments | Total |
| Main business income | 1,029,148,179.65 | - | 48,881,998.61 | - | 1,078,030,178.26 |
| Main business cost | 996,279,249.67 | 30,632,792.14 | 58,192,628.89 | 968,719,412.92 | |
| Total assets | 5,054,109,796.39 | 131,265,061.01 | 516,005,766.66 | 2,436,874,116.96 | 3,264,506,507.10 |
| Total liabilities | 2,535,301,461.58 | 36,053,002.87 | 47,888,034.75 | 1,407,912,308.98 | 1,211,330,190.22 |
2. Other eventsNilXIV. Note to main items of financial statements of the Parent Company1. Account receivable(1) Classification of accounts receivable
| Category | 30 June 2018 | ||||
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
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Account receivable with individual major amount and withdrawal bad debtprovision independently
| Account receivable with individual major amount and withdrawal bad debt provision independently | - | - | - | - | - |
| Account receivable with bad debt provision accrual based on similar credit risk charateristics of a portfolio | 136,717,345.45 | 100.00 | - | - | 136,717,345.45 |
| Account receivable with individual minor amount but withdrawal bad debt provision independently | - | - | - | - | - |
| Total | 136,717,345.45 | 100.00 | - | - | 136,717,345.45 |
(Continued)
| Category | Amount at year-begin | ||||
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
| Account receivable with individual major amount and withdrawal bad debt provision independently | - | - | - | - | - |
| Account receivable with bad debt provision accrual based on similar credit risk charateristics of a portfolio | 17,599,743.80 | 100.00 | - | - | 17,599,743.80 |
| Account receivable with individual minor amount but withdrawal bad debt provision independently | - | - | - | - | - |
| Total | 17,599,743.80 | 100.00 | - | - | 17,599,743.80 |
(2) Age analysis of account receivable
| Age | 30 June 2018 | Amount at year-begin | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1year | 136,714,456.45 | 100.00 | 17,596,854.80 | 99.98 |
| 1 to 2years | - | - | - | - |
| 2 to 3years | - | - | - | - |
| Over 3 years | 2,889.00 | 0.00 | 2,889.00 | 0.02 |
| Total | 136,717,345.45 | 100.00 | 17,599,743.80 | 100.00 |
(3) Bad debt provision withdrawal ,collected or switch back in the period.(4) No account receivable verified actually in the period.
(5) There are no account receivable of the shareholders who hold over 5 % (5% included) votingrights in report period.(6) Top five account receivables at period-end balance listed by arrears party
The total amount of the Company’s top 5 year end balance of receivables in this year collected by debtors
is 136,717,345.45 Yuan, accounting for 100% of the total amount of year end balance of receivables; thetotal amount of year end balance of the corresponding provision for bad debts is 0.00 Yuan.2. Other account receivable(1) Other account receivable classified
| Category | 30 June 2018 | ||
| Book Balance | Bad debt provision | Book | |
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Amount
| Amount | Proportion (%) | Amount | Proportion (%) | value | |
| Other account receivable with individual major amount and withdrawal bad debt provision independently | 16,781,666.46 | 1.32 | 16,781,666.46 | 100.00 | - |
| Other account receivable with bad debt provision accrual based on similar credit risk charateristics of a portfolio | 1,243,346,127.79 | 97.79 | - | - | 1,243,346,127.79 |
| Other account receivable with individual minor amount but withdrawal bad debt provision independently | 11,352,538.87 | 0.89 | 10,547,976.98 | 92.91 | 804,561.89 |
| Total | 1,271,480,333.12 | 100.00 | 27,329,643.44 | 1,244,150,689.68 |
(Continued)
| Category | Amount at year-begin | ||||
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
| Other account receivable with individual major amount and withdrawal bad debt provision independently | 16,781,666.46 | 1.78 | 16,781,666.46 | 100.00 | - |
| Other account receivable with bad debt provision accrual based on similar credit risk charateristics of a portfolio | 912,842,428.58 | 97.01 | - | - | 912,842,428.58 |
| Other account receivable with individual minor amount but withdrawal bad debt provision independently | 11,352,538.87 | 1.21 | 10,547,976.98 | 92.91 | 804,561.89 |
| Total | 940,976,633.91 | 100.00 | 27,329,643.44 | 913,646,990.47 | |
① Other account receivable with individual major amount and withdrawal bad debt provision
independently
| Other account receivable | Book value | Bad debt provision | Accruing proportion (%) | Accrual reason |
| Huiyang Kangtai Industrial Company | 14,311,626.70 | 14,311,626.70 | 100.00 | Un-collectible |
| Individual income tax | 2,470,039.76 | 2,470,039.76 | 100.00 | Un-collectible |
| Total | 16,781,666.46 | 16,781,666.46 | 100.00 |
② Other account receivable with individual minor amount but withdrawal bad debt provision
independently
| Other account receivable | Book balance | Bad debt provision | Accruing proportion (%) |
| Dormitory amount receivable | 2,083,698.16 | 1,736,004.16 | 83.31 |
| Deposit receivable | 1,769,842.84 | 1,312,974.95 | 74.19 |
| Personal account receivable | 7,498,997.87 | 7,498,997.87 | 100.00 |
| Total | 11,352,538.87 | 10,547,976.98 | 92.91 |
(2) Bad debt provision accrual, collected or switch-back in the period(3) No other accounts receivable that had actually written off in the period(4) Other account receivable classified according to age:
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Age
| Age | 30 June 2018 | 1 January 2017 | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1year | 645,798,750.24 | 50.79 | 294,822,751.50 | 31.33 |
| 1 to 2years | 134,777,480.57 | 10.60 | 224,125,985.68 | 23.82 |
| 2 to 3years | 117,019,897.15 | 9.21 | 67,673,287.81 | 7.19 |
| Over 3 years | 373,884,205.16 | 29.40 | 354,354,608.92 | 37.66 |
| Total | 1,271,480,333.12 | 100.00 | 940,976,633.91 | 100.00 |
(5) Receivable from related parties
| Name of the company | Relationship with the Company | Amount | Year | proportion in total other account receivable (%) |
| Zhongshan Power Company | Subsidiary | 723,035,163.94 | Within 1year to Over 3 years | 56.87 |
| Weimei Power Company | Subsidiary | 503,565,940.68 | Within 1year to Over 3 years | 39.60 |
| Environment Protection Company | Subsidiary | 12,709,842.10 | 1 year | 1.00 |
| Singapore company | Subsidiary | 1,477,071.99 | Over 3 years | 0.12 |
| Engineering Company | Subsidiary | 954,698.92 | Within 1year | 0.08 |
| Total | 1,241,742,717.63 | 97.66 |
(6) Top 5 other account receivables at period-end listed by arrears party
| Name of the company | Relationship with the Company | Amount | Year | proportion in total other account receivable (%) | Balance of bad debts provision |
| Zhongshan Power Company | Related party | 723,035,163.94 | 1-3 years | 56.87 | |
| Weimei Power Company | Related party | 503,565,940.68 | 1-3 years | 39.60 | |
| Huiyang Kangtai Industrial Company | Non-related party | 14,311,626.70 | Over 3 years | 1.13 | 14,311,626.70 |
| Environment Protection Company | Related party | 12,709,842.10 | Within 1year | 1.00 | |
| Dormitory receivable | Non-related party | 2,083,698.16 | Over 3 years | 0.16 | 1,736,004.16 |
| Total | 1,255,706,271.58 | 98.76 | 16,047,630.86 |
3. Long-term investment(1) Category of long-term equity investment
| Item | 30 June 2018 | Balance at year-begin | ||||
| Book Balance | Impairment provision | Book value | Book Balance | Impairment provision | Book value | |
| Investment to subsidiary | 691,982,849.76 | - | 691,982,849.76 | 691,982,849.76 | - | 691,982,849.76 |
| Investment to joint venture and affiliate enterprise | - | - | - | - | - | - |
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Total
| Total | 691,982,849.76 | - | 691,982,849.76 | 691,982,849.76 | - | 691,982,849.76 |
(2) Investment to subsidiary
| Investee company | Balance at year-begin | Increased in the Year | Decreased in the Year | 30 June 2018 | Impairment provision accrual in the Year | Impairment provision Year-end balance |
| Shenzhen Server | 26,650,000.00 | - | - | 26,650,000.00 | - | - |
| New Power Company | 71,270,000.00 | - | - | 71,270,000.00 | - | - |
| Zhongshan Power Company | 410,740,000.00 | - | - | 410,740,000.00 | - | - |
| Engineering Company | 6,000,000.00 | - | - | 6,000,000.00 | - | - |
| Weimei Power Company | 115,319,049.76 | - | - | 115,319,049.76 | - | - |
| Singapore company | 6,703,800.00 | - | - | 6,703,800.00 | - | - |
| Environment Protection Company | 55,300,000.00 | - | - | 55,300,000.00 | - | - |
| Total | 691,982,849.76 | - | - | 691,982,849.76 | - | - |
4. Operation revenue/operation cost
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 | ||
| Revenue | Cost | Revenue | Cost | |
| Main business | 337,240,114.89 | 361,394,602.84 | 316,769,674.55 | 351,127,940.47 |
| Other business | 69,606,326.95 | 11,835,458.28 | 11,630,884.94 | 2,293,227.75 |
| Total | 406,846,441.84 | 373,230,061.12 | 328,400,559.49 | 353,421,168.22 |
5. Supplement of cash flow statement
| Supplement information | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| 1. Net profit adjusted as cash flow from operation activities: | ||
| Net profit | 16,456,446.41 | -32,975,152.39 |
| Add: Assets for impairment | - | -480,710.97 |
| Depreciation of fixed assets | 6,633,429.02 | 5,591,404.56 |
| Amortization of intangible assets | 605,782.51 | 665,244.42 |
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Amortization of long-term expenses to be amortized
| Amortization of long-term expenses to be amortized | - | - |
| Loss from disposal of fixed assets, intangible assets and other long-term assets | - | - |
| Abandonment loss from fixed assets | 759,974.53 | 159,602.00 |
| Financial expenses (income) | 1,326,830.82 | 16,331,788.60 |
| Decrease of inventory (increased) | -8,960,695.04 | 2,307,025.70 |
| Decrease of operational receivable (increased) | -356,617,560.94 | 58,970,055.19 |
| Increase of operational payable (decreased) | 40,781,230.96 | -280,198,080.80 |
| Other | - | - |
| Net cash flow from operation activities | -299,014,561.73 | -229,628,823.69 |
| 2. Major investment and financing activities not involved with cash income and expenses: | ||
| Conversion of debt into capital | - | - |
| Convertible bonds due within one year | - | - |
| Fixed assets under finance leases | - | - |
| 3. Net changes of cash and cash equivalent: | ||
| Balance of cash and cash equivalent at period-end | 513,661,278.18 | 195,020,156.38 |
| Less: period-beginning balance of cash and cash equivalent | 148,223,551.05 | 1,119,323,850.36 |
| Net increase of cash and cash equivalent | 365,437,727.13 | -924,303,693.98 |
XV. Supplementary information1. Statement of non-recurring gains/losses
| Item | Jan. – Jun. 2018 | Jan. – Jun. 2017 |
| Gains/losses from the disposal of non-current asset | -849,018.73 | -203,276.08 |
| Governmental subsidy calculated into current gains and losses, with closely related with the normal business of the Company, excluding the fixed-amount or fixed-proportion governmental subsidy according to the unified national standard) | 2,122,867.64 | 9,839,892.03 |
| Gain/loss of debt reorganization | - | - |
| Switch-back of the impairment reserves of receivables that has impairment test independently | - | - |
| Natural gas import VAT refund | - | - |
| Other non-operating income and expenditure except for the aforementioned items | -5,225.00 | 1,961,448.64 |
| Subtotal | 1,268,623.91 | 11,598,064.59 |
| Impact on income tax | -113,500.37 | -246,556.08 |
| Impact on minority shareholders’ equity (post-tax) | -47,401.10 | -1,737,656.57 |
| Total | 1,107,722.44 | 9,613,851.94 |
2. ROE and EPS
| Profit in the Period | Weighted average ROE (%) | EPS | |
| Basic EPS | Diluted EPS | ||
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Net profit attributable to shareholders of the listed company
| Net profit attributable to shareholders of the listed company | 1.52% | 0.05 | 0.05 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 1.46% | 0.05 | 0.05 |