Securities Code: 002126 Securities Abbr.: YINLUN Public Announcement No.: 2020-021
ZHEJIANG YINLUN MACHINERY CO.,LTD.
Annual Report 2019 (Abstract)
I. Important NotesThis Abstract is extracted from 2019 Annual Report of Zhejiang Yinlun Machinery Co., Ltd. (“theCompany). In order to have a full understanding of the operating results, financial status andfuture development plan of the Company, investors are suggested to read the full report carefullyon the media designated by the China Securities Regulatory Commission (the “CSRC”).
Indicate by check mark if independent auditor issues Non-standard Audit Opinions
□ Applicable √ Not applicable
Indicate by check mark if there is a pre-arranged plan of profit distribution or transferring capitalreserve into common stock for the report period which has been reviewed and approved by theBoard of Directors
√ Applicable □ Not applicable
Indicate by check mark if transferring capital reserve into common stock
□Applicable √Not applicable
Pre-arranged profit distribution plan reviewed and approved by the Board of Directors：with785,304,065 shares as the base (the actual dividends shall be deducted from the number of sharesthat have been repurchased by the date of stock registration) ,distribute 0.8 Yuan cash dividendsper 10 common stocks (tax inclusive)，send bonus of 0 shares (tax inclusive), do not transfer toincrease capital stock with accumulation fund.
Indicate by check mark if preplan for preferred stocks profit distribution to shareholders for thereport period which has been reviewed and approved by the Board of Directors
□ Applicable √ Not applicable
II. Company Profile
1. Stock profile
| Stock abbr. | YINLUN | Stock code | 002126 | |
| Stock exchange | Shenzhen Stock Exchange | |||
| Contact Information | Board Secretary | Securities Representative | ||
| Name | Min Chen | Lifen Xu | ||
| Office add. | No.8,East Shifeng Road, Fuxi District, Tiantai, Zhejiang, China | No.8,East Shifeng Road, Fuxi District, Tiantai, Zhejiang, China | ||
| Tel. | 0576-83938250 | 0576-83938250 | ||
| 002126@yinlun.cn | 002126@yinlun.cn |
2. Brief introduction to main business or products in the report period
(1) Main business
Aiming at the goals of "energy saving, emission reduction, intelligence and safety", theCompany has been focusing on the development, production and sales of the products of heatexchange and exhaust gas after-treatment system with the media of oil, water, gas andelectricity. The Company is a national high-tech enterprise and a leading member ofStandardization Technical Committee of Internal Combustion Engine in Heat ExchangerStandard in China. It has a national technology research center, a national test and inspectioncenter, a provincial key enterprise research institute, a provincial engineering laboratory and anational postdoctoral research workstation. The Company has been continuously executingthe strategies for global footprint and layout in recent years with production bases as well asdevelopment centers located not only in Zhejiang, Shanghai, Hubei and Shandong, but also inNorth America and Europe.The main products include:
New energy vehicles: high and low temperature radiators, battery chillers, batterycooling plates, motor coolers, electric controller coolers, front-end cooling modules, PTCheaters, electronic fans, electronic water pumps, electronic valves heat pump air conditioningsystems，etc.;
Passenger vehicles: engine oil cooler & assembly, oil filter & assembly, EGR (exhaustgas recirculation) cooler & assembly, valves, inter-coolers, radiators, aluminum castingsfront-end cooling modules，etc.;
Commercial vehicles: engine oil cooler & assembly, oil filter & assembly, front-endcooling modules, aluminum castings, EGR cooler & assembly air conditioning systems，etc.;
Construction Equipment: front-end cooling modules, aluminum castings air conditioningsystems，etc.
Industrial and marine thermal management: ORC（waste heat recovery), industrial heatexchangers aluminum castings，etc.;
Agricultural machinery and other industry: cooling modules，etc.;
SCR, DPF and DOC systems (exhaust gas after-treatment).
The products of heat exchange and exhaust gas after-treatment are widely applied to theindustries of automobile, construction equipment, agricultural machinery, compressor, wind
power generation, train locomotive, marine and air conditioning.
(2) Key Customers
The key customers of new energy vehicles include GM, Ford, CATL, GEELY, GAC,BYD, Yutong, WM and JMC.The key customers of passenger vehicles include Ford, GM, Renault,MANN+HUMMEL, JLR, NISSAN , GEELY, GAC, Great Wall, CCAG, BYD and SAIC.The key customers of supercars include Ferrari, Audi, Benz, Lamborghini, Bentley,BMW, Mclaren and Ford.
The key customers of commercial vehicles mainly include Daimler, CMI, Navistar,SCANIA, FAW, DFM, CNHTC, Foton, Yuchai, FAWDE and Weichai.
The key customers of construction equipment include Caterpillar, John Deere, Sumitomo,XCMG, Lonking, SANY and KUBOTA.
The key customer of civil air conditioners is Gree.
(3) Business model
The Company is a national high-tech enterprise with capabilities of R&D, productionand sales.
It has the ability to actively provide the services of synchronous development andadvanced planning, and optimized solutions of the efficient heat exchange and exhaust gassystem for the customers. It could also develop the customized products based on therequirements of the technical specification, quality, development lead time and cost, andcould also make the purchase and production plans according to the ordered quantity.
With the agility, lean, informationization, automation, Intelligent IoT (Internet of Things)and error proofing technology as well as utilization of world advanced manufacturingtechnology and management method, the Company continuously improved product quality,reduced costs and shortened the delivery time constantly to achieve the world-classmanufacturing level. It also set up a rapid response system including design, production andservice to further develop the global market, technology and after-sales service constantly.
In order to provide end-to-end services to customers, the Company has set up a “goldentriangle” structure with the customer manager, project manager and technical manager to forma three-dimension sales network and service system. Up to now, the Company has more thantwo hundred domestic and foreign well-known customers, with the relatively high-qualitycustomer resource.
(4) Industrial updates and Company’s role
The main businesses of the Company are in manufacturing products of thermalmanagement and exhaust gas treatment. Any development of the automotive industry woulddirectly effect on the business development of the Company. During this report period, TheChinese automotive industry was in the process of transformation and under great pressuredue to the economic and trade conflicts between the United States and China, upgrade of theenvironmental protection standard, reduction of new energy subsidization and other factors.
According to the published data of 2019 by China Association of AutomobileManufactures (CAAM), the output and sales qualities of automobiles were 25.721 million and
25.769 million units, both dropped by 7.5% and 8.2% respectively comparing to the previousyear. The dropping rates increased by 3.3% and 5.4% respectively comparing to the previousyear.
As recovery of infrastructure investment, phase-out of vehicles with China III EmissionStandard, rapid development of new energy logistics vehicles and the strict excessivemeasures in emission control, the output and sales of commercial vehicles are better thanpassage cars and finished 4.36 million and 4.324 million units respectively, with 1.9%increase in output and 1.1% decrease in sales comparing to the previous year.
The output and sales of passenger vehicles were 21.36 million and 21.444 million unitsrespectively, 9.2% and 9.6% drops respectively comparing to the previous year. The outputand sales of new energy vehicles were 1,242,000 and 1,206,000 units respectively, 2.3% and
4.0% drops respectively comparing to the previous year.
In the medium and long terms, the automobile industry will lead the development of theauto-parts industry. Automotive industry is the strategic and foundational industry of thenational economy and it is one of the key industries to support the high-quality developmentof the trade. It is also an important indicator of the industrialization level, comprehensiveeconomic strength and technological innovation ability of a country. It is one of the industrieswith the highest degree of globalization.
The auto parts industry is the key to building an advanced country of automobiles. Bothcentral and local government have issued a series of policy systems to support thedevelopment of the enterprises in auto parts industry at multiple levels in finance, taxation,development support and key technology guidance for their upgrades and transformation.
The Company constantly emphasizes three strategic directions of "globalization,technology leading and comprehensive competitiveness", and is committed to providesolutions to automobile heat exchange and to build a world-class excellent enterprise for
providing high efficient heat exchange and exhaust system solutions. After sixty years ofgrowth, the Company has a number of high-quality client resources at both home and abroad,and became the suppliers to many global well-known engine makers and vehicle producerswith their great recognitions in its products.
3. Selected Financial Data
(1) Key accounting data and financial ratios for the past three years
Indicate by check mark if there is any retrospectively restated accounting data of previous years.
□ Yes √ No
Unit: Yuan
| 2019 | 2018 | Increase/decrease of current year over prior year | 2017 | |
| Revenue | 5,520,743,642.53 | 5,019,241,538.44 | 9.99% | 4,323,263,145.10 |
| Net profit attributable to shareholders | 317,677,156.02 | 349,122,610.13 | -9.01% | 310,981,695.04 |
| Net profit attributable to shareholders excluding non-recurring gains and losses | 172,855,258.34 | 304,010,155.58 | -43.14% | 292,930,675.17 |
| Net cash flows from operating activities | 688,584,828.23 | 304,839,058.43 | 125.88% | 277,730,471.27 |
| Basic EPS (RMB Yuan / share) | 0.40 | 0.44 | -9.09% | 0.41 |
| Diluted EPS (RMB Yuan / share) | 0.40 | 0.44 | -9.09% | 0.41 |
| Weighted average ROE (%) | 8.60% | 10.01% | -1.41% | 11.02% |
| As of Dec.31, 2019 | As of Dec.31, 2018 | Increase/decrease of current year over prior year | As of Dec.31, 2017 | |
| Total assets | 8,424,106,635.59 | 7,858,823,185.48 | 7.19% | 6,678,107,088.20 |
| Net assets attributable to shareholders | 3,729,627,295.93 | 3,605,604,813.61 | 3.44% | 3,367,060,150.80 |
(2) Key accounting data by quarter
Unit: Yuan
| Q1 | Q2 | Q3 | Q4 | |
| Revenue | 1,388,604,575.34 | 1,306,776,280.32 | 1,161,922,615.19 | 1,663,440,171.68 |
| Net profit attributable to shareholders | 108,914,529.07 | 92,810,995.34 | 54,078,857.42 | 61,872,774.19 |
| Net profit attributable to shareholders excluding non-recurring gains and losses | 76,835,017.15 | 62,898,575.65 | 23,086,489.08 | 10,035,176.46 |
| Net cash flows from operating activities | -5,475,532.39 | 243,142,437.58 | 104,696,183.58 | 346,221,739.46 |
Indicate by check mark if any material difference between the above financial indicators or theirsummations and those which have been disclosed in the Company’s Quarterly or Interim report.
□ Yes √ No
4. Capital and Shareholders
(1) Top 10 shareholders of common stock and preferred stock with resumed votingrightsUnit: Share
| Total number of shareholders of common stocks at the end of the reporting period | 30,556 | Total number of shareholders of common stocks at previous month-end of this report’s disclosure | 34,726 | Total number of shareholders of preferred stock with resumed voting right at the end of the reporting period | 0 | Total number of shareholders of preferred stock with resumed voting rights at previous month-end of this report’s disclosure | 0 | |||||
| Top 10 shareholders | ||||||||||||
| Name | Nature | Ownership | Quantity of stocks | Quantity of restricted stocks held | Pledged or frozen stocks | |||||||
| Status | Quantity | |||||||||||
| Tiantai Yinlun Industrial Development Co., Ltd. | Domestic non-state-owned corporate | 10.16% | 80,444,000 | Pledged | 30,000,000 | |||||||
| Hong Kong Securities Clearing Company Ltd.(HKSC) | Foreign corporate | 5.80% | 45,919,146 | |||||||||
| 1003 Portfolio of Basic Endowment Insurance Fund | Other | 4.90% | 38,801,674 | |||||||||
| Xiaomin Xu | Domestic natural person | 4.10% | 32,470,808 | 24,353,106 | ||||||||
| Ningbo Zhengqi Investment Management Center (Limited Partnership) | Domestic non-state-owned corporate | 4.04% | 32,000,000 | Pledged | 17,000,000 | |||||||
| 113 Portfolio of National Social Security Fund | Other | 2.78% | 22,000,094 | |||||||||
| China Construction Bank Co., Ltd.-Boshi Theme Industry Hybrid Securities Investment Fund (LOF) | Other | 2.27% | 18,000,000 | |||||||||
| Zhejiang Yinlun Machinery Co., Ltd.-Phase I ESOP | Other | 1.83% | 14,515,014 | |||||||||
| Bank of China-Dacheng | Other | 1.62% | 12,796,482 | |||||||||
| Lanchou Steady Securities Investment Fund | ||||||
| Tianjin Zhilian Chuanghe Enterprise Management Service Center (Limited Partnership) | Domestic non-state-owned corporate | 1.49% | 11,764,705 | |||
| Explanation on the above-mentioned shareholders’ affiliated relationship or concerted action | Xiaomin Xu is an executive director of Tiantai Yinlun Industrial Development Co., Ltd. and an executive partner of Ningbo Zhengqi Investment Management Center (Limited Partnership). The Company is not aware of any affiliation relationship between other shareholders. | |||||
| Explanation on the above-mentioned shareholders that are engaged in margin trading business | Not applicable | |||||
(2) Total number of and top 10 shareholders of preferred stocks
□ Applicable √ Not applicable
No shareholders holding preferred stocks noted in the reporting period
(3) The ownership and controlling relationship between the Company and its actualcontroller is in form of diagram
5. Bonds
Does the Company have any corporate bond that is publicly issued and listed on the stockexchange and that is immature or not fully redeemed as of the approved issuance date of theAnnual Report?None
III. Management Discussion and Analysis
1. Business review for the reporting period
In 2019, under the strong leadership of the Party Central Committee lead by Xi Jinping,entire Party and country had carried out the decision of the Central Committee, for stabledevelopment, the reformation on the supply structure as principle direction, and thehigh-quality economic. Chinese economy is still within a reasonable range, with stabledevelopment pace and the basic economic trend of long-term prosperity.
However, the Chinese automobile industry has been under great pressure during thetransformation and upgrading due to the economic and trade conflicts between the UnitedStates and China, upgrade of the environmental protection standards and reduction of newenergy subsidization. Some initiative adjustments and active measures were taken in themanufacturing enterprises last year, which demonstrated the ability of self-recovery andmaintained the industry as a whole in a reasonable range in the second half of last year.
The Company, as an auto parts manufacturer, was helped by the development of the autoindustry on one hand, while the market competition in the industry became more intensive onthe other hand. During the reporting period, the Company held the annual strategic seminarin Shanghai and discussed the direction given by the Chairman for "recognizing the situation,carrying out reforms and innovation, consolidating the foundation and growing steadily" andthe Company strategic objectives. After reviewed and summarized the development status ofthe Company, the development direction was defined with actions of catching opportunities,meeting challenges, promoting reforms, encouraging innovation, assigning responsibility andensuring the healthy development of the Company.
By focusing medium and long term goals and rapidly carrying out three strategicobjectives of "globalization, technology leading and comprehensive competitiveness", theCompany achieved the key strategic objectives of profits, efficiency, product reliability andpersonnel training, thus ensured annual sales and profit targets , with 5.521 billion Yuan ofgross revenue, 9.99% increase from the previous year; 3.99 million Yuan of total profits 13.42%decrease from the previous year; 3.18 million Yuan of net profit attributable to theshareholders 9.01% decrease from the previous year.
In terms of the technological development, the Company implemented the strategy oftechnology leading, made the strategies of product and technology planning and the road mapof the implementation. It built a global development structure and the system of process, alsoimproved the research, development and test verification systems. Also, the Companyimproved the development abilities on the fundamental research and infrastructureconstruction, established the database of development technology, and developed the rapid
design system to shorten the design time by 30-70% and reduced the design error rate by85%.The Company has been continuously planning and setting up on the prototypingfacilities, added a number of test benches and rigs to meet European and Japanese teststandards; Besides the Company introduced a number of industrial senior technical expertsand established some key project research groups such as “Skyhawk Group”, AirConditioning Group, Water To Air Group and Fox Group, in aiming to continuously improvethe granted rate of projects.In terms of the market development of projects, the Company identified the potentialprojects and made the business plans for key customers as well as the action plans; TheCompany also conducted sales and marking strategy and proposed the plan of increasing themarket shares and building teams for the key customersThe Company established and improved three communication channels, including thekey account communication mechanism, the links between the customers, design and projectmanagement and the links between Asia Pacific, North America and Europe markets for theopportunities and arrangement of resources at all divisions and headquarters. The Companyaccelerated the expansion to European market through the platform of Yinlun Europe, alsomade more breakthroughs in benchmarking customer of the new energy through the platformof Yinlun North American.During the reporting period, the Company has been granted for about 274 new projectssuccessfully, such as the cooling modules of Volvo, the heat pump air conditioner of JMC, thebattery cooling plate of CATL, the water to air cooler of MANN+HUMMEL, the water to aircooler of SAIC, the oil cooler of NISSAN, the heat pump air conditioner of GEELY/ Daimleron SMART platform for new energy vehicles, the cooling module of Caterpillar, theplate-and-bar cooler of John Deere, the retarder oil cooler of ZF, the cooling module ofCNHTC, the cooling module of FAW, the cooling module of BYD, the oil cooler and EGR ofGAC, the oil cooler of NISSAN and the electronic water valve of FAW.
According to the prediction of the customers, these mentioned new projects will havenearly 3.5 billion yuan of new annual sales revenue. By 2019, the Company has granted manynew energy projects from customers such as SAIC, Ford, Volvo, GEELY, GAC, CATL, BYD,WM and JMC. It is estimated that the total sales in the life cycle will exceed 6 billion yuan.On the globalization, the Company has implemented the global control for groupcorporation to raise management level to the global Company. The Company defined
functions, market positioning and business plan of all the global divisions to lay out the globalplatforms of the product lines. The Company also enhanced the ability of obtaining newprojects, developing new products and the prototyping and localizing the service for rapidresponse to further improve the level of global service.
The Company also further improved the global layout by acquiring Setrab AB in Sweden,a Company with great advantages in supplying cooling modules of high-end and low volumesupercar. Its relevant technology could be used to provide the design service for domestichigh-end electric supercars and consequently to gain the high-end customers in China. It alsocould provide the technical service platform to develop business in the European passengervehicle market. Its Polish factory could provide the product manufacturing service forEuropean business and become the production base for the European business development.
In terms of the operation management, the Company set up three product platforms,including passenger vehicle and new energy platform, commercial vehicle and constructionequipment platform and engine after-treatment product platform, and the new organizationalstructures to meet the needs for secondary taking off. Based on the three platforms, theCompany will use end-to-end approach and optimize the allocation and management of theresources with defined rights, responsibilities and benefits to improve the overall performanceof entire Company by developing the three platforms.
The Company established the product lines for strategic business development andimplemented the information platform and system, and through the product lines linked allthe elements, such as business development objectives, competitive strategies, markets,clients, technology, manufacturing bases, process quality equipment, supply chains, partners,university cooperation, A&M (acquisition and merger) and global resource integration. Byimplementing the product lines, the Company has carried out the three strategic directions of"globalization, technology leading and comprehensive competitiveness" around the productlines for the second takeoff, and made overall improvement in the comprehensivecompetitiveness of each product line with business development of the product lines, themarket guidance, technology driving and operational excellence.
To improve the comprehensive management ability, the Company has established aleading group for further reformation in charge of the top-level design, overall layout,resource coordination, overall implementation and supervision of the major structuraladjustments and the tasks associated. The group would discuss and study all the challengesand issues in different periods and is fully authorized to set up the special working teams,
assign high-quality resource to overcome the weakness of the Company more rapidly.In terms of human resource planning and personnel training, the Company has set upYinlun Business School of Taizhou Institute and Yinlun Class in a polytechnic school. TheCompany had the seminars for general managers and the classes of sales engineers,operational management, quality supervisors and managers, training for operationalexcellence and special training for black belt to continuously improve the quality and abilityof the employees. Through the class of general managers, a learning and sharing platform,with good atmosphere has been created for mutual learning, resource sharing and teamwork.
The Company will continue focusing on "The 4-3-3 Talent Project" to further promotetalent reservation, talent echelon structures and the human resource management system. Inorder to build a global human resource management system, the Company will also furtherenhance the performance rating and incentive programs, start up the major career paths andresume the assessment of professional titles.
2. Significant changes in main business in the reporting period
□ Applicable √ Not applicable
3. Products contributing to over 10% of the Company’s main business revenue or profit
√ Applicable □ Not applicable
Unit: Yuan
| Product | Revenue | Profit | Gross profit margin (%) | Revenue: +/-% over last year | Profit: +/-% over last year | Gross profit margin +/-% over last year |
| Heat Exchanger | 3,894,550,054.99 | 221,025,248.85 | 23.61% | 6.76% | -37.99% | -2.73% |
| Exhaust Treatment | 621,278,237.37 | -3,280,584.30 | 17.41% | 15.14% | -90.89% | 7.51% |
| Vehicle Air-condition | 660,289,937.72 | 81,321,395.40 | 30.25% | 36.64% | 90.60% | 4.85% |
4. Seasonal or periodic characteristics in operating performance that needs specialattention
□ Applicable √ Not applicable
5. Significant changes in revenues, costs and net profit attributable to shareholders withcommon shares or their composition comparing to prior reporting period
□ Applicable √ Not applicable
6. Listing suspension or termination
□ Applicable √ Not applicable
7. Matters related to financial statements
(1) Explanation on changes in accounting policy, accounting estimations and accountingmethods comparing to prior year financial statement
√ Applicable □ Not applicable
(1) Execute the notice of the ministry of finance on the revision and issuance of the format ofgeneral enterprise financial statements for 2019 and the notice on the revision and issuance of theformat of consolidated financial statements (version 2019)On April 30, the Ministry of Finance in 2019 and September 19, 2019, issued on the revisedprinted and distributed to 2019 annual general corporate financial statements format notice(financial accounting (2019) no. 6) and format on the revised printed and distributed to theconsolidated financial statements (2019 edition) notice (financial accounting (2019) no. 16), thegeneral corporate financial statements format was revised. The main effects of the Company'simplementation of the above provisions are as follows:
| Contents and reasons for changes in accounting policies | Name and amount of affected report items | |
| mergence | parent Company | |
| （1）The "notes receivable and accounts receivable" in the balance sheet is divided into "notes receivable" and "accounts receivable". Notes payable and accounts payable are divided into notes payable and accounts payable; The comparison data were adjusted accordingly. | "Notes receivable" and "accounts receivable" split into "notes receivable" and "accounts receivable", "notes receivable" balance at the end of last year 640,584,571.98 yuan, "accounts receivable" balance at the end of last year 1,650,836,734.53 yuan; Notes payable and accounts payable were split into notes payable and accounts payable, with a balance of 420,032,934.28 yuan at the end of last year for notes payable and 1,486,254,523.12 yuan at the end of last year for accounts payable. | "Notes receivable and accounts receivable" were divided into "notes receivable" and "accounts receivable". The balance of "notes receivable" at the end of last year was 285,025,458.06 yuan, and the balance of "accounts receivable" at the end of last year was 1,130,626,763.65 yuan. Notes payable and accounts payable were split into notes payable and accounts payable. The balance of notes payable at the end of last year was 148,163,000.00 yuan, and the balance of accounts payable at the end of last year was 930,027,626.20 yuan. |
(2)Implement accounting standard for business enterprises no. 22 -- recognition and measurementof financial instruments, accounting standard for business enterprises no. 23 -- transfer of financialassets, accounting standard for business enterprises no. 24 -- hedge accounting and accountingstandard for business enterprises no. 37 -- presentation of financial instruments (revised in 2017)In 2017, the ministry of finance revised the accounting standards for business enterprises no.22 -- recognition and measurement of financial instruments, accounting standards for businessenterprises no. 23 -- transfer of financial assets, accounting standards for business enterprises no.24 -- hedge accounting and accounting standards for business enterprises no. 37 -- presentation of
financial instruments. The revised guidelines stipulate that for financial instruments that have notbeen confirmed on the first execution date, if the previous recognition and measurement areinconsistent with the requirements of the revised guidelines, they should be adjusted retroactively.If the comparison of financial statement data in the earlier period is inconsistent with the revisedstandards, no adjustment is required. The Company will adjust the cumulative impact ofretroactive adjustments to retained earnings and other consolidated earnings at the beginning ofthe year.On the basis of the adjusted balance at the end of the previous year in accordance withfinance and accounting [2019] no. 6 and finance and accounting [2019] no. 16, the mainimplications of the implementation of the new financial instrument guidelines are as follows:
| Contents and reasons for changes in accounting policies | Name and amount of affected report items | |
| mergence | parent company | |
| （1）Investments that can be sold as equity instruments are reclassified as "financial assets measured at fair value and whose changes are booked into current profits and losses". | Financial assets available for sale: decrease by 91,025,077.69 yuan; Transaction financial assets: increase by 65,151,789.24 yuan; Other non-current financial assets: increase by 68,878,060.10 yuan; Deferred income tax liability: increase by 6,450,715.75 yuan; Other comprehensive income: decrease by 26,980,690.85 yuan; Retained earnings: increase by 63,534,746.75 yuan. | Financial assets available for sale: decrease by 91,025,077.69 yuan; Transaction financial assets: increase by 65,151,789.24 yuan; Other non-current financial assets: increase by 68,878,060.10 yuan; Deferred income tax liability: increase by 6,450,715.75 yuan; Other comprehensive income: decrease by 26,980,690.85 yuan; Retained earnings: increase by 63,534,746.75 yuan. |
| （2）Non-tradable investments in equity instruments available for sale are designated as "financial assets measured at fair value and whose changes are included in other comprehensive income". | Available for sale financial assets: decrease by 167,155,079.71yuan; Other equity instrument investment: increase by 171,436,761.11 yuan; Deferred income tax liability: increase by 642,252.21 yuan; Other comprehensive income: an increase by 3,639,429.19 yuan. | Available for sale financial assets: decrease by 96,275,000.00 yuan; Investment in other equity instruments: increase by 100,556,681.40 yuan; Deferred income tax liability: increase by 642,252.21 yuan; Other comprehensive income: increase by 3,639,429.19. |
| （3）Reclassify wealth management products in "other current assets" into "transactional financial assets". | Other current assets: decrease by 495,186,175.00 yuan; Transaction financial assets: increase by 495,186,175.00 yuan. | Other current assets: decrease by 251,000,000.00 yuan; Transaction financial assets: increase by 251,000,000.00 yuan. |
| （4）Reclassify "notes receivable" into "financial assets (debt instruments) that | Notes receivable: decrease by 640,584,571.98 yuan; Receivables financing: increase by | Notes receivable: decrease by 285,025,458.06 yuan; Receivables financing: increase |
| are measured at fair value and whose changes are included in other comprehensive income". | 640,584,571.98 yuan. | by 285,025,458.06 yuan. |
| （5）The "interest payable" only reflects the interest due on the relevant financial instrument but not yet paid on the balance sheet date. The "interest payable" is adjusted into the book balance of the corresponding financial instrument. | Other payables: decrease by 2,352,875.61 yuan; Short-term borrowing: an increase by 1,948,590.89 yuan; Non-current liabilities due within one year: increase by 79,826.39 yuan; Long-term borrowing: increase by 324,458.33 yuan. | Other payables: decrease by 1,684,162.64 yuan; Short-term borrowing: an increase by 1,456,294.58 yuan; Non-current liabilities due within one year: increase by 79,826.39 yuan; Long-term borrowing: increase by 148,041.67 yuan. |
On the basis of the adjusted balance at the end of the previous year in accordance with theprovisions of no. 6 and no. 16 [2019] of finance and accounting [2019], financial assets andfinancial liabilities are classified and the measurement results are compared as follows inaccordance with the provisions of the standards for the recognition and measurement of financialinstruments before and after the revision:
Mergence:
| Original financial instrument criteria | New financial instruments criteria | ||||
| List items | Measurement category | Book value | List items | Measurement category | Book value |
| Bank and Cash | amortized cost | 507,792,840.50 | Bank and Cash | amortized cost | 507,792,840.50 |
| Notes receivable | amortized cost | 640,584,571.98 | Notes receivable | amortized cost | |
| Accounts Receivable Financing | Measured at fair value and its changes are included in other comprehensive income | 640,584,571.98 | |||
| Accounts Receivable | amortized cost | 1,650,836,734.53 | Accounts Receivable | amortized cost | 1,650,836,734.53 |
| Accounts Receivable Financing | Measured at fair value and its changes are included in other comprehensive income | ||||
| Other receivable | amortized cost | 72,071,820.02 | Other receivable | amortized cost | 72,071,820.02 |
| Available for sale financial assets (include Other current assets) | Measured at fair value and its changes are included in other comprehensive | Bond investment (include Other current assets) | amortized cost | ||
| Other Bond investment | Measured at fair value and its changes are | ||||
| income (debt instrument) | (include Other current assets) | included in other comprehensive income | |||
| Measured at fair value and its changes are included in other comprehensive income (equity instrument) | 65,151,789.24 | Financial assets held for trading | Measured at fair value and its changes are included in the current profit and loss | 65,151,789.24 | |
| Other non-current financial assets | |||||
| Investment in other equity instruments | Measured at fair value and its changes are included in other comprehensive income | ||||
| Measured by cost (equity instrument) | 193,028,368.16 | Financial assets held for trading | Measured at fair value and its changes are included in the current profit and loss | ||
| Other non-current financial assets | 68,878,060.10 | ||||
| Measured at fair value and its changes are included in other comprehensive income | |||||
| Investment in other equity instruments | 171,436,761.11 | ||||
| Other Comprehensive Income | 3,639,429.19 | ||||
| Deferred Tax Liability | 7,092,967.96 | ||||
| include Other current assets - Financial products | amortized cost | 495,186,175.00 | Financial assets held for trading | Measured at fair value and its changes are included in the current profit and loss | 495,186,175.00 |
| Other current assets | amortized cost |
Parent Company:
| Original financial instrument criteria | New financial instruments criteria | ||||
| List items | Measurement category | Book value | List items | Measurement category | Book value |
| Bank and Cash | amortized cost | 162,457,416.51 | Bank and Cash | amortized cost | 162,457,416.51 |
| Notes receivable | amortized cost | 285,025,458.06 | Notes receivable | amortized cost | |
| Accounts | Measured at fair value | 285,025,458.06 |
| Receivable Financing | and its changes are included in other comprehensive income | ||||
| Accounts Receivable | amortized cost | 1,130,626,763.65 | Accounts Receivable | amortized cost | 1,130,626,763.65 |
| Accounts Receivable Financing | Measured at fair value and its changes are included in other comprehensive income | ||||
| Other receivable | amortized cost | 265,506,023.78 | Other receivable | amortized cost | 265,506,023.78 |
| Available for sale financial assets (include Other current assets) | Measured at fair value and its changes are included in other comprehensive income (debt instrument) | Bond investment (include Other current assets) | amortized cost | ||
| Other Bond investment (include Other current assets) | Measured at fair value and its changes are included in other comprehensive income | ||||
| Measured at fair value and its changes are included in other comprehensive income (equity instrument) | 65,151,789.24 | Financial assets held for trading | Measured at fair value and its changes are included in the current profit and loss | 65,151,789.24 | |
| Other non-current financial assets | |||||
| Investment in other equity instruments | Measured at fair value and its changes are included in other comprehensive income | ||||
| Measured by cost (equity instrument) | 122,148,288.45 | Financial assets held for trading | Measured at fair value and its changes are included in the current profit and loss | ||
| Other non-current financial assets | 68,878,060.10 | ||||
| Investment in other equity instruments | Measured at fair value and its changes are included in other comprehensive income | 100,556,681.40 | |||
| Other Comprehensive Income | 3,639,429.19 | ||||
| Deferred Tax Liability | 7,092,967.96 | ||||
| include Other | amortized cost | 251,000,000.00 | Financial assets held for trading | Measured at fair value and its changes are | 251,000,000.00 |
| current assets - Financial products | included in the current profit and loss | |||
| include Other current assets | amortized cost |
(3)Implementation of the accounting standards for business enterprises no. 7 - exchange ofnon-monetary assets (revised in 2019)The ministry of finance issued on May 9, 2019 by the accounting standards for enterprises no.7 - exchange of non-monetary assets (2019 revision) (finance and accounting) [2019] no. 8, therevised rules shall enter into force as of June 10, 2019, on January 1, 2019 solstice occur betweenthe date of the present standard non-monetary assets exchange, adjustments should be based onthese criteria. There is no need to retroactively adjust the non-monetary asset exchange beforeJanuary 1, 2019 in accordance with the provisions of this code. The Company's implementation ofthe above criteria has no material impact during the reporting period.
(4) implement the accounting standards for business enterprises no. 12 - debt restructuring(revised in 2019)The ministry of finance issued the accounting standard for business enterprises no. 12 - debtrestructuring (2019 amendment) (accounting [2019] no. 9) on May 16, 2019. The revised standardwill take effect from June 17, 2019. Debt restructuring prior to January 1, 2019 does not requireretroactive adjustment in accordance with the provisions of this code. The Company'simplementation of the above criteria has no material impact during the reporting period.
(2) Explanation on retrospective restatement due to significant accounting errorcorrection in the reporting period
□ Applicable √ Not applicable
(3) Explanation on changes of consolidation scope comparing to prior year’s financialstatement
√ Applicable □ Not applicable
1. The Company acquired 100% equity of Setrab AB in May 2019 through equity acquisition.Setrab AB has wholly-owned subsidiaries Scanrad, Setrab UK, Setrab GmbH and Setrab USA.In May 2019, Setrab AB is included in the merger scope along with the merger of enterprisesnot under the same control of Setrab AB. Setrab AB's wholly owned subsidiary, Setrab USA,was written off in August 2019 and will no longer be included in the consolidated statementsas of August 2019.
2. Tiantai Dacheng Technology Innovation Service Co., Ltd. was established in 2017 withregistered capital of 500,000 yuan and paid-in capital of 100,000 yuan. In July 2019, theCompany added capital to Tiantai Dacheng Technology Innovation Service Co., Ltd. TheCompany plans to invest 7.5 million yuan to subscribe for Tiantai Dacheng TechnologyInnovation Service Co., Ltd with an additional registered capital of 7.5 million yuan,accounting for 75% of the registered capital. Tiantai County Mechanical and ElectricalIndustry Association, the original shareholder, intends to increase its investment by 2 millionyuan, and subscribe for an additional registered capital of 2 million yuan by party a,accounting for 25% of the registered capital. The above transfer registration procedures havebeen completed on July 31, 2019.
3. The Company established a holding subsidiary Guangxi Yinlun Environmental Protection
Technology Co., Ltd. in December 2019, with a registered capital of 56,000,000.00 yuan, ofwhich the Company shall contribute 42,000,000.00 yuan, accounting for 75% of the registeredcapital. As of December 31, 2019, the Japanese Company has not contributed any capital,which shall be included in the consolidated statements from December 2019.
4. Tiantai Jiahe, a wholly-owned subsidiary, was written off in November 2019 and will no
longer be included in the consolidated statements from November 2019.