Auditor’s Report
Su Gong W[2021]No. 443To the Shareholders of Weifu High-Technology Group Co., Ltd.:
I. Auditing opinionsWe have audited the financial statement under the name of Weifu High-Technology Group Co., Ltd. (hereinafterreferred to as WFHT), including the consolidated and parent Company’s balance sheet of 31 December 2020 andprofit statement, and cash flow statement, and statement on changes of shareholders’ equity for the year ended,and notes to the financial statements for the year ended.
In our opinion, the Company’s financial statements have been prepared in accordance with the EnterprisesAccounting Standards and Enterprises Accounting System, and they fairly present the financial status of theCompany and of its parent company as of 31 December 2020 and its operation results and cash flows for the yearended.
II. Basis of opinionWe conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Ourresponsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of theFinancial Statements” section of the auditor’s report. We are independent of the Company in accordance with theCertified Public Accountants of China’s Code of Ethics for Professional Accountants, and we have fulfilled ourother ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
III. Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit ofthe financial statements of the current period. These matters were addressed in the context of our audit of thefinancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
公证天业会计师事务所(特殊普通合伙)
Gongzheng Tianye Certified Public Accountants, SGP
中国 . 江苏 . 无锡 Wuxi . Jiangsu . China总机:86(510)68798988 Tel:86(510)68798988传真:86(510)68567788 Fax:86(510)68567788电子信箱:mail@gztycpa.cn E-mail:mail@gztycpa.cn
these matters.Revenue recognition is the key audit matter that we identified in auditing.
1. Matter description
As described in the 25. Revenue in Note III and 42. Operation revenue and operation cost in Note V carried in thefinancial statement, WFHT achieved an operation revenue of 12,883,826,300 Yuan for year of 2020, 46.67%increase over year of 2019.
As one of the biggest source of profits for WFHT, operating revenue has a significant effect on the generalfinancial statement, in which there are certain of inherent risks existed for the reason that the managementmanipulate the timing of recognition so as to achieve specific objectives or anticipations. Therefore, we will takethe Revenue recognition as the key auditing matter.
2. The solution to the matter in auditing
(1)The Company has tested the design and execution of key internal control related to revenue recycling so as toconfirm the validity of internal control; (2) The Company should make sure whether the recognition condition andmethod of major operating revenue are compliance with the accounting standards for business enterprise; it alsoshould pay an attention to that whether the cyclical and occasional revenue is compliance with the decidedrevenue recognition principle and methods; (3) Combining with status and data of the industry where WFHT islocated, the Company should make a judgment on the rationality of fluctuation of the revenue composition; (4)The Company should carry out the procedure of account receivable and revenue letter of confirmation, and makea judgment on the rationality of the timing of revenue recognition; (5) Combining with the procedure of letter ofconfirmation, the Company should make a random inspection on sales contracts or orders, delivery lists, logisticsbills, customs declaration, sales invoices, signing-off sheet and other documents related to revenue to verify theauthenticity of revenue; (6) Referring to the recorded revenue before and after the Balance Sheet Date, theCompany should select some samples and check out the supportive documents such as delivery lists, customsdeclaration and receipt forms to make a judgment on whether the income has been recorded at the appropriateaccounting period.IV. Other information
The management of WFHT is responsible for other information which includes the information covered in theCompany’s 2020 annual report excluding the financial statement and our audit report.
Our audit opinions on the financial statements do not cover other information, and we do not issue any form ofauthentication conclusions on other information.
In combination with our audit of the financial statements, it is our responsibility to read other information and, inthe process, consider whether there is material inconsistency or material misstatement between the otherinformation and the financial statements or what we learned during the audit.
Based on the work we have carried out, if we determine that there is a material misstatement of other information,we should report that fact and i this regard we have noting to report.
V. Responsibilities of management and those charged with governance for the financial statementsThe management is responsible for the preparation of the financial statements in accordance with the AccountingStandards for Enterprise to secure a fair presentation, and for the design, establishment and maintenance of theinternal control necessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability tocontinue as a going concern, disclosing matters related to going concern (if applicable) and using the goingconcern assumption unless the management either intends to liquidate the Company or to cease operations, or hasno realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI. Responsibilities of the auditor for the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an audit report that includes our audit opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordancewith the CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud orerror and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of the financial statements.As part of an audit in accordance with the CAS, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for audit opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern assumption and, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company’s ability to continue as a going concern. If we conclude that a materialuncertainty exists, we are required by the CAS to draw users’ attention in audit report to the related disclosures in
the financial statements or, if such disclosures are inadequate, to modify audit opinion. Our conclusions are basedon the information obtained up to the date of audit report. However, future events or conditions may cause theCompany to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financialstatements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Company to express audit opinion on the financial statements. We are responsible for thedirection, supervision and performance of the group audit. We remain solely responsible for audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control that weidentify during our audit.
We also provide the governance with a statement of our compliance with the ethical requirements relating to ourindependence and communicate with the governance on all relationships and other matters that may reasonably beconsidered to affect our independence, as well we the relevant precautions (if applicable).
From the matters communicated with those charged with governance, we determine those matters that were ofmost significance in the audit of the financial statements of the current period and are therefore the key auditmatters. We describe these matters in the auditor’s report unless law or regulation precludes public disclosureabout the matter or when, in extremely rare circumstances, we determine that a matter should not becommunicated in the auditor’s report because of the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.
Jiangsu Gongzheng Tianye CPA Chinese CPA: Bai Lingjing(Special General Partnership) (engagement partner)Wuxi China Chinese CPA: Zhang Qianqian
16 April 2021
Financial Statement
Statement in Financial Notes are carried in RMB/CNY
1. Consolidated Balance Sheet
Prepared by Weifu High-Technology Group Co., Ltd.
December 31, 2020
In RMB
Item | December 31, 2020 | December 31, 2019 |
Current assets: | ||
Monetary funds | 1,963,289,832.33 | 1,596,893,711.87 |
Settlement provisions | ||
Capital lent | ||
Transaction financial assets | 3,518,432,939.10 | 3,940,885,674.32 |
Derivative financial assets | ||
Note receivable | 1,657,315,723.56 | 1,812,141,371.94 |
Account receivable | 2,824,780,352.41 | 2,310,666,475.89 |
Receivable financing | 1,005,524,477.88 | 23,873,317.86 |
Accounts paid in advance | 151,873,357.76 | 139,241,917.78 |
Insurance receivable | ||
Reinsurance receivables | ||
Contract reserve of reinsurance receivable | ||
Other account receivable | 54,209,580.88 | 43,730,023.31 |
Including: Interest receivable | 655,052.98 | |
Dividend receivable | 49,000,000.00 | 1,070,000.00 |
Buying back the sale of financial assets | ||
Inventories | 2,877,182,174.64 | 2,418,744,835.82 |
Contractual assets | ||
Assets held for sale | ||
Non-current asset due within one year | ||
Other current assets | 2,137,921,113.61 | 1,012,055,605.74 |
Total current assets | 16,190,529,552.17 | 13,298,232,934.53 |
Non-current assets: | ||
Loans and payments on behalf | ||
Debt investment | ||
Other debt investment | ||
Long-term account receivable | ||
Long-term equity investment | 4,801,488,290.97 | 5,322,405,953.35 |
Investment in other equity instrument | 285,048,000.00 | 285,048,000.00 |
Other non-current financial assets | 1,805,788,421.00 | 1,043,589,987.43 |
Investment real estate | 20,886,681.62 | 22,410,511.87 |
Fixed assets | 2,882,230,191.08 | 2,845,176,078.20 |
Construction in progress | 243,795,493.04 | 247,857,777.25 |
Productive biological asset | ||
Oil and gas asset | ||
Right-of-use assets | ||
Intangible assets | 454,412,947.69 | 430,594,372.12 |
Expense on Research and Development | ||
Goodwill | 257,800,696.32 | 1,784,086.79 |
Long-term expenses to be apportioned | 15,062,171.09 | 18,536,000.25 |
Deferred income tax asset | 198,393,501.50 | 212,476,501.54 |
Other non-current asset | 195,259,441.73 | 230,235,982.45 |
Total non-current asset | 11,160,165,836.04 | 10,660,115,251.25 |
Total assets | 27,350,695,388.21 | 23,958,348,185.78 |
Current liabilities: | ||
Short-term loans | 302,238,600.05 | 312,153,969.81 |
Loan from central bank | ||
Capital borrowed | ||
Trading financial liability | ||
Derivative financial liability | ||
Note payable | 2,462,592,372.82 | 1,745,218,439.52 |
Account payable | 4,100,984,240.39 | 3,312,254,229.84 |
Accounts received in advance | 4,071,236.87 | 113,737,432.61 |
Contractual liability | 81,717,387.25 | |
Selling financial asset of repurchase | ||
Absorbing deposit and interbank deposit | ||
Security trading of agency | ||
Security sales of agency | ||
Wage payable | 332,421,811.82 | 314,343,737.66 |
Taxes payable | 67,493,690.29 | 129,538,411.86 |
Other account payable | 361,556,257.42 | 65,266,262.39 |
Including: Interest payable | 4,862.22 | |
Dividend payable | ||
Commission charge and commission payable | ||
Reinsurance payable | ||
Liability held for sale | ||
Non-current liabilities due within one year | 36,914,242.02 | |
Other current liabilities | 222,871,087.33 | |
Total current liabilities | 7,972,860,926.26 | 5,992,512,483.69 |
Non-current liabilities: | ||
Insurance contract reserve | ||
Long-term loans | 3,050,640.97 | |
Bonds payable | ||
Including: Preferred stock |
Perpetual capital securities | ||
Lease liability | ||
Long-term account payable | 39,479,218.17 | 35,108,263.11 |
Long-term wages payable | 181,980,293.94 | 58,392,053.61 |
Accrual liability | ||
Deferred income | 328,204,476.73 | 365,116,022.98 |
Deferred income tax liabilities | 30,653,933.12 | 22,566,051.72 |
Other non-current liabilities | ||
Total non-current liabilities | 583,368,562.93 | 481,182,391.42 |
Total liabilities | 8,556,229,489.19 | 6,473,694,875.11 |
Owner’s equity: | ||
Share capital | 1,008,950,570.00 | 1,008,950,570.00 |
Other equity instrument | ||
Including: Preferred stock | ||
Perpetual capital securities | ||
Capital public reserve | 3,294,242,368.28 | 3,391,527,806.33 |
Less: Inventory shares | 303,627,977.74 | |
Other comprehensive income | 13,916,619.47 | 134,871.67 |
Reasonable reserve | 2,333,490.03 | 3,247,757.06 |
Surplus public reserve | 510,100,496.00 | 510,100,496.00 |
Provision of general risk | ||
Retained profit | 13,756,102,424.62 | 12,076,443,635.56 |
Total owner’ s equity attributable to parent company | 18,282,017,990.66 | 16,990,405,136.62 |
Minority interests | 512,447,908.36 | 494,248,174.05 |
Total owner’ s equity | 18,794,465,899.02 | 17,484,653,310.67 |
Total liabilities and owner’ s equity | 27,350,695,388.21 | 23,958,348,185.78 |
Legal Representative: Wang XiaodongPerson in charge of accounting works: Ou JianbinPerson in charge of accounting institute: Ou Jianbin
2. Balance Sheet of Parent Company
In RMB
Item | December 31, 2020 | December 31, 2019 |
Current assets: | ||
Monetary funds | 1,157,684,053.05 | 965,770,877.82 |
Trading financial assets | 3,452,348,980.19 | 3,758,789,072.68 |
Derivative financial assets | ||
Note receivable | 422,246,979.39 | 202,403,993.13 |
Account receivable | 982,782,279.22 | 768,500,929.93 |
Receivable financing |
Accounts paid in advance | 75,650,090.49 | 89,116,730.45 |
Other account receivable | 197,335,714.63 | 250,014,956.74 |
Including: Interest receivable | 897,777.78 | 804,929.68 |
Dividend receivable | 1,070,000.00 | |
Inventories | 725,276,241.43 | 565,144,234.49 |
Contractual assets | ||
Assets held for sale | ||
Non-current assets maturing within one year | ||
Other current assets | 2,057,772,839.50 | 938,616,881.51 |
Total current assets | 9,071,097,177.90 | 7,538,357,676.75 |
Non-current assets: | ||
Debt investment | ||
Other debt investment | ||
Long-term receivables | ||
Long-term equity investments | 5,978,128,303.88 | 6,331,363,630.04 |
Investment in other equity instrument | 209,108,000.00 | 209,108,000.00 |
Other non-current financial assets | 1,805,788,421.00 | 1,043,589,987.43 |
Investment real estate | ||
Fixed assets | 1,758,198,856.53 | 1,646,333,216.50 |
Construction in progress | 154,741,266.85 | 136,573,912.28 |
Productive biological assets | ||
Oil and natural gas assets | ||
Right-of-use assets | ||
Intangible assets | 208,112,706.57 | 203,663,423.60 |
Research and development costs | ||
Goodwill | ||
Long-term deferred expenses | ||
Deferred income tax assets | 76,508,392.85 | 105,137,877.84 |
Other non-current assets | 117,013,906.01 | 172,646,721.05 |
Total non-current assets | 10,307,599,853.69 | 9,848,416,768.74 |
Total assets | 19,378,697,031.59 | 17,386,774,445.49 |
Current liabilities | ||
Short-term borrowings | 102,088,888.89 | 116,126,459.33 |
Trading financial liability | ||
Derivative financial liability | ||
Notes payable | 448,901,718.36 | 284,054,137.00 |
Account payable | 1,265,845,068.26 | 930,273,146.35 |
Accounts received in advance | 12,010,730.30 | |
Contractual liability | 6,209,575.73 | |
Wage payable | 216,870,819.60 | 213,626,754.45 |
Taxes payable | 32,974,322.59 | 56,540,307.59 |
Other accounts payable | 339,096,991.12 | 11,976,576.21 |
Including: Interest payable |
Dividend payable | ||
Liability held for sale | ||
Non-current liabilities due within one year | ||
Other current liabilities | 182,611,991.54 | |
Total current liabilities | 2,594,599,376.09 | 1,624,608,111.23 |
Non-current liabilities: | ||
Long-term loans | ||
Bonds payable | ||
Including: preferred stock | ||
Perpetual capital securities | ||
Lease liability | ||
Long-term account payable | ||
Long term employee compensation payable | 176,245,345.03 | 50,058,386.76 |
Accrued liabilities | ||
Deferred income | 285,714,239.98 | 322,971,778.82 |
Deferred income tax liabilities | ||
Other non-current liabilities | ||
Total non-current liabilities | 461,959,585.01 | 373,030,165.58 |
Total liabilities | 3,056,558,961.10 | 1,997,638,276.81 |
Owners’ equity: | ||
Share capital | 1,008,950,570.00 | 1,008,950,570.00 |
Other equity instrument | ||
Including: preferred stock | ||
Perpetual capital securities | ||
Capital public reserve | 3,407,732,016.61 | 3,488,221,286.39 |
Less: Inventory shares | 303,627,977.74 | |
Other comprehensive income | ||
Special reserve | ||
Surplus reserve | 510,100,496.00 | 510,100,496.00 |
Retained profit | 11,698,982,965.62 | 10,381,863,816.29 |
Total owner’s equity | 16,322,138,070.49 | 15,389,136,168.68 |
Total liabilities and owner’s equity | 19,378,697,031.59 | 17,386,774,445.49 |
3. Consolidated Profit Statement
In RMB
Item | 2020 | 2019 |
I. Total operating income | 12,883,826,306.60 | 8,784,356,960.30 |
Including: Operating income | 12,883,826,306.60 | 8,784,356,960.30 |
Interest income | ||
Insurance gained | ||
Commission charge and commission income | ||
II. Total operating cost | 12,193,088,999.51 | 7,870,700,853.45 |
Including: Operating cost | 10,429,284,441.97 | 6,670,354,380.54 |
Interest expense | ||
Commission charge and commission expense | ||
Cash surrender value | ||
Net amount of expense of compensation | ||
Net amount of withdrawal of insurance contract reserve | ||
Bonus expense of guarantee slip | ||
Reinsurance expense | ||
Tax and extras | 65,323,781.87 | 66,634,636.66 |
Sales expense | 406,353,445.10 | 259,650,752.33 |
Administrative expense | 782,824,422.63 | 514,028,451.76 |
R&D expense | 532,581,209.78 | 417,924,908.28 |
Financial expense | -23,278,301.84 | -57,892,276.12 |
Including: Interest expenses | 11,466,886.33 | 21,770,516.39 |
Interest income | 51,622,216.58 | 79,299,239.77 |
Add: other income | 80,342,497.11 | 91,170,663.57 |
Investment income (Loss is listed with “-”) | 1,964,805,688.57 | 1,614,540,714.83 |
Including: Investment income on affiliated company and joint venture | 1,659,752,704.14 | 1,378,264,061.18 |
The termination of income recognition for financial assets measured by amortized cost(Loss is listed with “-”) | -946,468.33 | -2,214,159.11 |
Exchange income (Loss is listed with “-”) | ||
Net exposure hedging income (Loss is listed with “-”) | ||
Income from change of fair value (Loss is listed with “-”) | 383,325,765.19 | 25,019,666.32 |
Loss of credit impairment (Loss is listed with “-”) | -11,184,647.60 | -52,825,875.25 |
Losses of devaluation of asset (Loss is listed with “-”) | -178,837,472.85 | -169,460,299.73 |
Income from assets disposal (Loss is listed with “-”) | 11,454,408.60 | 32,154,460.21 |
III. Operating profit (Loss is listed with “-”) | 2,940,643,546.11 | 2,454,255,436.80 |
Add: Non-operating income | 66,467,021.62 | 2,413,561.54 |
Less: Non-operating expense | 4,158,888.17 | 6,126,427.17 |
IV. Total profit (Loss is listed with “-”) | 3,002,951,679.56 | 2,450,542,571.17 |
Less: Income tax expense | 180,215,749.00 | 147,805,810.06 |
V. Net profit (Net loss is listed with “-”) | 2,822,735,930.56 | 2,302,736,761.11 |
(i) Classify by business continuity | ||
1.continuous operating net profit (net loss listed with ‘-”) | 2,822,735,930.56 | 2,302,736,761.11 |
2.termination of net profit (net loss listed with ‘-”) | ||
(ii) Classify by ownership | ||
1.Net profit attributable to owner’s of parent company | 2,772,769,377.96 | 2,268,026,432.78 |
2.Minority shareholders’ gains and losses | 49,966,552.60 | 34,710,328.33 |
VI. Net after-tax of other comprehensive income | 13,839,596.07 | 203,603.86 |
Net after-tax of other comprehensive income attributable to owners of parent company | 13,781,747.80 | 134,871.67 |
(I) Other comprehensive income items which will not be reclassified |
subsequently to profit of loss | ||
1.Changes of the defined benefit plans that re-measured | ||
2.Other comprehensive income under equity method that cannot be transfer to gain/loss | ||
3.Change of fair value of investment in other equity instrument | ||
4.Fair value change of enterprise's credit risk | ||
5. Other | ||
(ii) Other comprehensive income items which will be reclassified subsequently to profit or loss | 13,781,747.80 | 134,871.67 |
1.Other comprehensive income under equity method that can transfer to gain/loss | ||
2.Change of fair value of other debt investment | ||
3.Amount of financial assets re-classify to other comprehensive income | ||
4.Credit impairment provision for other debt investment | ||
5.Cash flow hedging reserve | ||
6.Translation differences arising on translation of foreign currency financial statements | 13,781,747.80 | 134,871.67 |
7.Other | ||
Net after-tax of other comprehensive income attributable to minority shareholders | 57,848.27 | 68,732.19 |
VII. Total comprehensive income | 2,836,575,526.63 | 2,302,940,364.97 |
Total comprehensive income attributable to owners of parent Company | 2,786,551,125.76 | 2,268,161,304.45 |
Total comprehensive income attributable to minority shareholders | 50,024,400.87 | 34,779,060.52 |
VIII. Earnings per share: | ||
(i) Basic earnings per share | 2.79 | 2.25 |
(ii) Diluted earnings per share | 2.79 | 2.25 |
As for the enterprise combined under the same control, net profit of 0 Yuan achieved by the merged party beforecombination while 0 Yuan achieved last periodLegal Representative: Wang XiaodongPerson in charge of accounting works: Ou JianbinPerson in charge of accounting institute: Ou Jianbin
4. Profit Statement of Parent Company
In RMB
Item | 2020 | 2019 |
I. Operating income | 4,536,417,803.79 | 3,832,925,360.42 |
Less: Operating cost | 3,236,311,612.73 | 2,641,612,915.27 |
Taxes and surcharge | 38,086,034.27 | 31,863,942.28 |
Sales expenses | 126,442,956.05 | 52,567,986.14 |
Administration expenses | 533,649,297.97 | 292,983,915.45 |
R&D expenses | 205,001,982.50 | 197,574,348.21 |
Financial expenses | -34,275,071.44 | -71,470,479.91 |
Including: interest expenses | 4,163,923.00 | 6,984,512.71 |
Interest income | 40,948,820.72 | 74,450,739.86 |
Add: other income | 58,782,085.85 | 67,874,015.41 |
Investment income (Loss is listed with “-”) | 1,816,759,403.42 | 1,646,209,064.39 |
Including: Investment income on affiliated Company and joint venture | 1,457,471,604.06 | 1,310,687,436.86 |
The termination of income recognition for financial assets measured by amortized cost (Loss is listed with “-”) | ||
Net exposure hedging income (Loss is listed with “-”) | ||
Changing income of fair value (Loss is listed with “-”) | 383,241,806.28 | 22,923,064.68 |
Loss of credit impairment (Loss is listed with “-”) | 2,076,529.99 | -6,132,833.36 |
Losses of devaluation of asset (Loss is listed with “-”) | -82,232,381.43 | -43,916,712.41 |
Income on disposal of assets (Loss is listed with “-”) | -520,470.69 | 1,887,302.76 |
II. Operating profit (Loss is listed with “-”) | 2,609,307,965.13 | 2,376,636,634.45 |
Add: Non-operating income | 30,937,706.44 | 562,276.63 |
Less: Non-operating expense | 3,493,103.39 | 3,810,717.52 |
III. Total Profit (Loss is listed with “-”) | 2,636,752,568.18 | 2,373,388,193.56 |
Less: Income tax | 162,713,161.17 | 143,606,161.28 |
IV. Net profit (Net loss is listed with “-”) | 2,474,039,407.01 | 2,229,782,032.28 |
(i)continuous operating net profit (net loss listed with ‘-”) | 2,474,039,407.01 | 2,229,782,032.28 |
(ii) termination of net profit (net loss listed with ‘-”) | ||
V. Net after-tax of other comprehensive income | ||
(I) Other comprehensive income items which will not be reclassified subsequently to profit of loss | ||
1.Changes of the defined benefit plans that re-measured | ||
2.Other comprehensive income under equity method that cannot be transfer to gain/loss | ||
3.Change of fair value of investment in other equity instrument | ||
4.Fair value change of enterprise's credit risk | ||
5. Other | ||
(II) Other comprehensive income items which will be reclassified subsequently to profit or loss | ||
1.Other comprehensive income under equity method that can transfer to gain/loss | ||
2.Change of fair value of other debt investment | ||
3.Amount of financial assets re-classify to other comprehensive income | ||
4.Credit impairment provision for other debt investment | ||
5.Cash flow hedging reserve | ||
6.Translation differences arising on translation of foreign currency |
financial statements | ||
7.Other | ||
VI. Total comprehensive income | 2,474,039,407.01 | 2,229,782,032.28 |
VII. Earnings per share: | ||
(i) Basic earnings per share | ||
(ii) Diluted earnings per share |
5. Consolidated Cash Flow Statement
In RMB
Item | 2020 | 2019 |
I. Cash flows arising from operating activities: | ||
Cash received from selling commodities and providing labor services | 11,908,396,653.71 | 8,145,939,987.84 |
Net increase of customer deposit and interbank deposit | ||
Net increase of loan from central bank | ||
Net increase of capital borrowed from other financial institution | ||
Cash received from original insurance contract fee | ||
Net cash received from reinsurance business | ||
Net increase of insured savings and investment | ||
Cash received from interest, commission charge and commission | ||
Net increase of capital borrowed | ||
Net increase of returned business capital | ||
Net cash received by agents in sale and purchase of securities | ||
Write-back of tax received | 32,138,413.08 | 51,722,970.47 |
Other cash received concerning operating activities | 102,573,818.52 | 143,912,897.80 |
Subtotal of cash inflow arising from operating activities | 12,043,108,885.31 | 8,341,575,856.11 |
Cash paid for purchasing commodities and receiving labor service | 8,277,296,527.38 | 5,020,827,379.58 |
Net increase of customer loans and advances | ||
Net increase of deposits in central bank and interbank | ||
Cash paid for original insurance contract compensation | ||
Net increase of capital lent | ||
Cash paid for interest, commission charge and commission | ||
Cash paid for bonus of guarantee slip | ||
Cash paid to/for staff and workers | 1,295,921,487.63 | 1,222,358,828.87 |
Taxes paid | 788,150,479.38 | 501,167,008.38 |
Other cash paid concerning operating activities | 899,929,156.91 | 548,552,586.05 |
Subtotal of cash outflow arising from operating activities | 11,261,297,651.30 | 7,292,905,802.88 |
Net cash flows arising from operating activities | 781,811,234.01 | 1,048,670,053.23 |
II. Cash flows arising from investing activities: | ||
Cash received from recovering investment | 8,051,178,224.52 | 11,384,917,612.00 |
Cash received from investment income | 2,462,910,424.30 | 1,230,657,039.85 |
Net cash received from disposal of fixed, intangible and other long-term assets | 42,851,678.36 | 147,609,697.19 |
Net cash received from disposal of subsidiaries and other units | ||
Other cash received concerning investing activities | 65,102,250.70 | 70,025,432.83 |
Subtotal of cash inflow from investing activities | 10,622,042,577.88 | 12,833,209,781.87 |
Cash paid for purchasing fixed, intangible and other long-term assets | 492,683,539.12 | 589,522,818.28 |
Cash paid for investment | 9,246,030,000.00 | 13,384,156,157.81 |
Net increase of mortgaged loans | ||
Net cash received from subsidiaries and other units obtained | 297,302,758.31 | 49,930,740.75 |
Other cash paid concerning investing activities | 14,579,308.94 | 25,115,357.50 |
Subtotal of cash outflow from investing activities | 10,050,595,606.37 | 14,048,725,074.34 |
Net cash flows arising from investing activities | 571,446,971.51 | -1,215,515,292.47 |
III. Cash flows arising from financing activities | ||
Cash received from absorbing investment | 312,640,853.85 | 14,022,428.73 |
Including: Cash received from absorbing minority shareholders’ investment by subsidiaries | 10,161,653.85 | 14,022,428.73 |
Cash received from loans | 395,691,406.43 | 809,517,778.36 |
Other cash received concerning financing activities | 5,730,135.13 | 845,291.11 |
Subtotal of cash inflow from financing activities | 714,062,395.41 | 824,385,498.20 |
Cash paid for settling debts | 371,154,665.80 | 841,746,769.02 |
Cash paid for dividend and profit distributing or interest paying | 1,120,464,009.41 | 1,258,933,561.00 |
Including: Dividend and profit of minority shareholder paid by subsidiaries | 15,748,768.80 | 26,271,705.11 |
Other cash paid concerning financing activities | 449,251,421.46 | 146,064,936.00 |
Subtotal of cash outflow from financing activities | 1,940,870,096.67 | 2,246,745,266.02 |
Net cash flows arising from financing activities | -1,226,807,701.26 | -1,422,359,767.82 |
IV. Influence on cash and cash equivalents due to fluctuation in exchange rate | -2,003,139.41 | 5,029,521.42 |
V. Net increase of cash and cash equivalents | 124,447,364.85 | -1,584,175,485.64 |
Add: Balance of cash and cash equivalents at the period -begin | 820,498,653.85 | 2,404,674,139.49 |
VI. Balance of cash and cash equivalents at the period -end | 944,946,018.70 | 820,498,653.85 |
6. Cash Flow Statement of Parent Company
In RMB
Item | 2020 | 2019 |
I. Cash flows arising from operating activities: | ||
Cash received from selling commodities and providing labor services | 4,470,039,778.75 | 3,928,802,469.74 |
Write-back of tax received | ||
Other cash received concerning operating activities | 61,033,856.80 | 77,926,941.80 |
Subtotal of cash inflow arising from operating activities | 4,531,073,635.55 | 4,006,729,411.54 |
Cash paid for purchasing commodities and receiving labor service | 2,312,159,843.14 | 2,163,992,101.67 |
Cash paid to/for staff and workers | 730,528,257.00 | 645,107,564.57 |
Taxes paid | 562,371,147.42 | 320,098,914.24 |
Other cash paid concerning operating activities | 341,484,021.47 | 180,660,925.40 |
Subtotal of cash outflow arising from operating activities | 3,946,543,269.03 | 3,309,859,505.88 |
Net cash flows arising from operating activities | 584,530,366.52 | 696,869,905.66 |
II. Cash flows arising from investing activities: | ||
Cash received from recovering investment | 7,324,178,224.52 | 10,054,917,612.00 |
Cash received from investment income | 2,434,385,770.96 | 1,289,170,321.39 |
Net cash received from disposal of fixed, intangible and other long-term assets | 810,004.53 | 42,777,932.53 |
Net cash received from disposal of subsidiaries and other units | ||
Other cash received concerning investing activities | 214,831,510.69 | 171,801,850.24 |
Subtotal of cash inflow from investing activities | 9,974,205,510.70 | 11,558,667,716.16 |
Cash paid for purchasing fixed, intangible and other long-term assets | 262,442,259.33 | 360,473,332.45 |
Cash paid for investment | 8,853,827,446.85 | 11,870,526,196.52 |
Net cash received from subsidiaries and other units obtained | ||
Other cash paid concerning investing activities | 112,342,336.68 | 204,000,000.00 |
Subtotal of cash outflow from investing activities | 9,228,612,042.86 | 12,434,999,528.97 |
Net cash flows arising from investing activities | 745,593,467.84 | -876,331,812.81 |
III. Cash flows arising from financing activities | ||
Cash received from absorbing investment | 302,479,200.00 | |
Cash received from loans | 102,000,000.00 | 231,500,000.00 |
Other cash received concerning financing activities | ||
Subtotal of cash inflow from financing activities | 404,479,200.00 | 231,500,000.00 |
Cash paid for settling debts | 116,000,000.00 | 227,500,000.00 |
Cash paid for dividend and profit distributing or interest paying | 1,097,442,763.44 | 1,217,748,704.04 |
Other cash paid concerning financing activities | 400,017,180.33 | |
Subtotal of cash outflow from financing activities | 1,613,459,943.77 | 1,445,248,704.04 |
Net cash flows arising from financing activities | -1,208,980,743.77 | -1,213,748,704.04 |
IV. Influence on cash and cash equivalents due to fluctuation in exchange rate | -2,070,408.32 | 5,250,115.02 |
V. Net increase of cash and cash equivalents | 119,072,682.27 | -1,387,960,496.17 |
Add: Balance of cash and cash equivalents at the period -begin | 532,115,862.26 | 1,920,076,358.43 |
VI. Balance of cash and cash equivalents at the period -end | 651,188,544.53 | 532,115,862.26 |
7. Statement of Changes in Owners’ Equity (Consolidated)
Current Period
In RMB
Item | 2020 | ||||||||||||||
Owners’ equity attributable to the parent Company | Minority interests | Total owners’ equity | |||||||||||||
Share capital | Other equity instrument | Capital reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Provision of general risk | Retained profit | Other | Subtotal | |||||
Preferred stock | Perpetual capital securities | Other | |||||||||||||
I. Balance at the end of the last year | 1,008,950,570.00 | 3,391,527,806.33 | 134,871.67 | 3,247,757.06 | 510,100,496.00 | 12,076,443,635.56 | 16,990,405,136.62 | 494,248,174.05 | 17,484,653,310.67 | ||||||
Add: Changes of accounting policy |
Error correction of the last period | |||||||||||||||
Enterprise combine under the same control | |||||||||||||||
Other | |||||||||||||||
II. Balance at the beginning of this year | 1,008,950,570.00 | 3,391,527,806.33 | 134,871.67 | 3,247,757.06 | 510,100,496.00 | 12,076,443,635.56 | 16,990,405,136.62 | 494,248,174.05 | 17,484,653,310.67 | ||||||
III. Increase/ Decrease in this year (Decrease is listed with “-”) | -97,285,438.05 | 303,627,977.74 | 13,781,747.80 | -914,267.03 | 1,679,658,789.06 | 1,291,612,854.04 | 18,199,734.31 | 1,309,812,588.35 | |||||||
(i) Total comprehensive income | 13,781,747.80 | 2,772,769,377.96 | 2,786,551,125.76 | 50,024,400.87 | 2,836,575,526.63 | ||||||||||
(ii) Owners’ devoted and decreased capital | -97,285,438.05 | 303,627,977.74 | -400,913,415.79 | -16,046,487.85 | -416,959,903.64 | ||||||||||
1.Common shares | -96,389,202.59 | 302,479,200.00 | -398,868,402.59 | 25,079,496.04 | -373,788,906.55 |
invested by shareholders | |||||||||||||||
2. Capital invested by holders of other equity instruments | |||||||||||||||
3. Amount reckoned into owners equity with share-based payment | 6,280,461.58 | 6,280,461.58 | 204,375.92 | 6,484,837.50 | |||||||||||
4. Other | -7,176,697.04 | 1,148,777.74 | -8,325,474.78 | -41,330,359.81 | -49,655,834.59 | ||||||||||
(III) Profit distribution | -1,095,767,216.49 | -1,095,767,216.49 | -15,748,768.80 | -1,111,515,985.29 | |||||||||||
1. Withdrawal of surplus reserves | |||||||||||||||
2. Withdrawal of general risk provisions | |||||||||||||||
3. Distribution for owners (or shareholders) | -1,093,241,270.00 | -1,093,241,270.00 | -15,748,768.80 | -1,108,990,038.80 | |||||||||||
4. Other | -2,525,946.49 | -2,525,946.49 | -2,525,946.49 | ||||||||||||
(IV) Carrying forward internal |
owners’ equity | |||||||||||||||
1. Capital reserves conversed to capital (share capital) | |||||||||||||||
2. Surplus reserves conversed to capital (share capital) | |||||||||||||||
3. Remedying loss with surplus reserve | |||||||||||||||
4.Carry-over retained earnings from the defined benefit plans | |||||||||||||||
5.Carry-over retained earnings from other comprehensive income | |||||||||||||||
6. Other | |||||||||||||||
(V) | -914,267.03 | -914,267.03 | -29,409.91 | -943,676.94 |
Reasonable reserve | |||||||||||||||
1. Withdrawal in the report period | 21,673,368.09 | 21,673,368.09 | 2,158,529.38 | 23,831,897.47 | |||||||||||
2. Usage in the report period | 22,587,635.12 | 22,587,635.12 | 2,187,939.29 | 24,775,574.41 | |||||||||||
(VI)Others | 2,656,627.59 | 2,656,627.59 | 2,656,627.59 | ||||||||||||
IV. Balance at the end of the report period | 1,008,950,570.00 | 3,294,242,368.28 | 303,627,977.74 | 13,916,619.47 | 2,333,490.03 | 510,100,496.00 | 13,756,102,424.62 | 18,282,017,990.66 | 512,447,908.36 | 18,794,465,899.02 |
Last Period
In RMB
Item | 2019 | ||||||||||||||
Owners’ equity attributable to the parent Company | Minority interests | Total owners’ equity | |||||||||||||
Share capital | Other equity instrument | Capital reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Provision of general risk | Retained profit | Other | Subtotal | |||||
Preferred stock | Perpetual capital securities | Other |
I. Balance at the end of the last year | 1,008,950,570.00 | 3,416,022,795.14 | -19,809,442.95 | 1,618,490.50 | 510,100,496.00 | 10,996,945,870.13 | 15,913,828,778.82 | 538,142,268.53 | 16,451,971,047.35 | ||||||
Add: Changes of accounting policy | 19,809,442.95 | 1,584,556.37 | 21,393,999.32 | 21,393,999.32 | |||||||||||
Error correction of the last period | |||||||||||||||
Enterprise combine under the same control | |||||||||||||||
Other | |||||||||||||||
II. Balance at the beginning of this year | 1,008,950,570.00 | 3,416,022,795.14 | 1,618,490.50 | 510,100,496.00 | 10,998,530,426.50 | 15,935,222,778.14 | 538,142,268.53 | 16,473,365,046.67 | |||||||
III. Increase/ Decrease in this year (Decrease is listed with “-”) | -24,494,988.81 | 134,871.67 | 1,629,266.56 | 1,077,913,209.06 | 1,055,182,358.48 | -43,894,094.48 | 1,011,288,264.00 | ||||||||
(i) Total comprehensive income | 134,871.67 | 2,268,026,432.78 | 2,268,161,304.45 | 34,779,060.52 | 2,302,940,364.97 | ||||||||||
(ii) Owners’ devoted and decreased capital | -24,494,988.81 | 567,732.83 | -23,927,255.98 | -52,813,665.23 | -76,740,921.21 |
1.Common shares invested by shareholders | 14,022,428.73 | 14,022,428.73 | |||||||||||||
2. Capital invested by holders of other equity instruments | |||||||||||||||
3. Amount reckoned into owners equity with share-based payment | |||||||||||||||
4. Other | -24,494,988.81 | 567,732.83 | -23,927,255.98 | -66,836,093.96 | -90,763,349.94 | ||||||||||
(III) Profit distribution | -1,210,740,684.00 | -1,210,740,684.00 | -26,271,705.11 | -1,237,012,389.11 | |||||||||||
1. Withdrawal of surplus reserves | |||||||||||||||
2. Withdrawal of general risk provisions | |||||||||||||||
3. Distribution for owners (or shareholders) | -1,210,740,684.00 | -1,210,740,684.00 | -26,271,705.11 | -1,237,012,389.11 | |||||||||||
4. Other | |||||||||||||||
(IV) Carrying |
forward internal owners’ equity | |||||||||||||||
1. Capital reserves conversed to capital (share capital) | |||||||||||||||
2. Surplus reserves conversed to capital (share capital) | |||||||||||||||
3. Remedying loss with surplus reserve | |||||||||||||||
4.Carry-over retained earnings from the defined benefit plans | |||||||||||||||
5.Carry-over retained earnings from other comprehensive income |
6. Other | |||||||||||||||
(V) Reasonable reserve | 1,061,533.73 | 1,061,533.73 | 412,215.34 | 1,473,749.07 | |||||||||||
1. Withdrawal in the report period | 19,156,254.11 | 19,156,254.11 | 2,508,506.58 | 21,664,760.69 | |||||||||||
2. Usage in the report period | 18,094,720.38 | 18,094,720.38 | 2,096,291.24 | 20,191,011.62 | |||||||||||
(VI)Others | 20,627,460.28 | 20,627,460.28 | 20,627,460.28 | ||||||||||||
IV. Balance at the end of the report period | 1,008,950,570.00 | 3,391,527,806.33 | 134,871.67 | 3,247,757.06 | 510,100,496.00 | 12,076,443,635.56 | 16,990,405,136.62 | 494,248,174.05 | 17,484,653,310.67 |
8. Statement of Changes in Owners’ Equity (Parent Company)
Current Period
In RMB
Item | 2020 | |||||||||||
Share capital | Other equity instrument | Capital public reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Retained profit | Other | Total owners’ equity | |||
Preferred stock | Perpetual capital securities | Other | ||||||||||
I. Balance at the end of the last year | 1,008,950,570.00 | 3,488,221,286.39 | 510,100,496.00 | 10,381,863,816.29 | 15,389,136,168.68 | |||||||
Add: Changes of accounting policy | ||||||||||||
Error correction of the last period | ||||||||||||
Other | ||||||||||||
II. Balance at the beginning of this year | 1,008,950,570.00 | 3,488,221,286.39 | 510,100,496.00 | 10,381,863,816.29 | 15,389,136,168.68 | |||||||
III. Increase/ Decrease in this year (Decrease is listed with “-”) | -80,489,269.78 | 303,627,977.74 | 1,317,119,149.33 | 933,001,901.81 | ||||||||
(i) Total comprehensive income | 2,474,039,407.01 | 2,474,039,407.01 | ||||||||||
(ii) Owners’ devoted and | -80,489,269.78 | 303,627,977.74 | -384,117,247.52 |
decreased capital | ||||||||||||
1.Common shares invested by shareholders | -96,389,202.59 | 302,479,200.00 | -398,868,402.59 | |||||||||
2. Capital invested by holders of other equity instruments | ||||||||||||
3. Amount reckoned into owners equity with share-based payment | 6,484,837.50 | 6,484,837.50 | ||||||||||
4. Other | 9,415,095.31 | 1,148,777.74 | 8,266,317.57 | |||||||||
(III) Profit distribution | -1,093,241,270.00 | -1,093,241,270.00 | ||||||||||
1. Withdrawal of surplus reserves | ||||||||||||
2. Distribution for owners (or shareholders) | -1,093,241,270.00 | -1,093,241,270.00 | ||||||||||
3. Other | ||||||||||||
(IV) Carrying forward internal owners’ equity | ||||||||||||
1. Capital reserves conversed to capital (share capital) | ||||||||||||
2. Surplus reserves conversed to |
capital (share capital) | ||||||||||||
3. Remedying loss with surplus reserve | ||||||||||||
4.Carry-over retained earnings from the defined benefit plans | ||||||||||||
5.Carry-over retained earnings from other comprehensive income | ||||||||||||
6. Other | ||||||||||||
(V) Reasonable reserve | -1,177,442.02 | -1,177,442.02 | ||||||||||
1. Withdrawal in the report period | 5,849,756.55 | 5,849,756.55 | ||||||||||
2. Usage in the report period | 7,027,198.57 | 7,027,198.57 | ||||||||||
(VI)Others | 1,177,442.02 | -63,678,987.68 | -62,501,545.66 | |||||||||
IV. Balance at the end of the report period | 1,008,950,570.00 | 3,407,732,016.61 | 303,627,977.74 | 510,100,496.00 | 11,698,982,965.62 | 16,322,138,070.49 |
Last period
In RMB
Item | 2019 | |||||||||||
Share capital | Other equity instrument | Capital public reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Retained profit | Other | Total owners’ equity | |||
Preferred stock | Perpetual capital securities | Other | ||||||||||
I. Balance at the end of the last year | 1,008,950,570.00 | 3,488,221,286.39 | -19,809,442.95 | 510,100,496.00 | 9,340,610,451.36 | 14,328,073,360.80 | ||||||
Add: Changes of accounting policy | 19,809,442.95 | 1,584,556.37 | 21,393,999.32 | |||||||||
Error correction of the last period | ||||||||||||
Other | ||||||||||||
II. Balance at the beginning of this year | 1,008,950,570.00 | 3,488,221,286.39 | 510,100,496.00 | 9,342,195,007.73 | 14,349,467,360.12 | |||||||
III. Increase/ Decrease in this year (Decrease is listed with “-”) | 1,039,668,808.56 | 1,039,668,808.56 | ||||||||||
(i) Total comprehensive income | 2,229,782,032.28 | 2,229,782,032.28 | ||||||||||
(ii) Owners’ devoted and decreased capital | ||||||||||||
1.Common shares invested by shareholders |
2. Capital invested by holders of other equity instruments | ||||||||||||
3. Amount reckoned into owners equity with share-based payment | ||||||||||||
4. Other | ||||||||||||
(III) Profit distribution | -1,210,740,684.00 | -1,210,740,684.00 | ||||||||||
1. Withdrawal of surplus reserves | ||||||||||||
2. Distribution for owners (or shareholders) | -1,210,740,684.00 | -1,210,740,684.00 | ||||||||||
3. Other | ||||||||||||
(IV) Carrying forward internal owners’ equity | ||||||||||||
1. Capital reserves conversed to capital (share capital) | ||||||||||||
2. Surplus reserves conversed to capital (share capital) | ||||||||||||
3. Remedying loss with surplus reserve | ||||||||||||
4.Carry-over retained earnings from the defined benefit plans |
5.Carry-over retained earnings from other comprehensive income | ||||||||||||
6. Other | ||||||||||||
(V) Reasonable reserve | ||||||||||||
1. Withdrawal in the report period | 5,898,191.19 | 5,898,191.19 | ||||||||||
2. Usage in the report period | 5,898,191.19 | 5,898,191.19 | ||||||||||
(VI)Others | 20,627,460.28 | 20,627,460.28 | ||||||||||
IV. Balance at the end of the report period | 1,008,950,570.00 | 3,488,221,286.39 | 510,100,496.00 | 10,381,863,816.29 | 15,389,136,168.68 |
Notes to Financial StatementI. Basic information of the Company
1. Historical origin of the Company
By the approval of STGS (1992) No. 130 issued by Jiangsu Economic Restructuring Committee, WeifuHigh-Technology Group Co., Ltd. (hereinafter referred to “the Company” or “Company”) was established as acompany of limited liability with funds raised from targeted sources, and registered at Wuxi Administration forIndustry & Commerce in October 1992. The original share capital of the Company totaled 115.4355 millionYuan, including state-owned share capital amounting to 92.4355 million Yuan, public corporate share capitalamounting to 8 million Yuan and inner employee share capital amounting to 15 million Yuan.
Between year of 1994 and 1995, the Company was restructured and became a holding subsidiary of WuxiWeifu Group Co., Ltd (hereinafter referred to as “Weifu Group”).
By the approval of Jiangsu ERC and Shenzhen Securities Administration Office in August 1995, the Companyissued 68 million special ordinary shares (B-share) with value of 1.00 Yuan for each, and the total value ofthose shares amounted to 68 million Yuan. After the issuance, the Company’s total share capital increased to
183.4355 million Yuan.
By the approval of CSRC in June 1998, the Company issued 120 million RMB-ordinary shares (A-share) atShenzhen Stock Exchange through on-line pricing and issuing. After the issuance, the total share capital of theCompany amounted to 303.4355 million Yuan.
In the middle of 1999, deliberated and approved by the Board and Shareholders’ General Meeting, theCompany implemented the plan of granting 3 bonus shares for each 10 shares. After that, the total share capitalof the Company amounted to 394.46615 million Yuan, of which state-owned shares amounted to 120.16615million Yuan, public corporate shares 10.4 million Yuan, foreign-funded shares (B-share) 88.40 million Yuan,RMB ordinary shares (A-share) 156 million Yuan and inner employee shares 19.5 million Yuan.
In the year 2000, by the approval of the CSRC and based upon the total share capital of 303.4355 millionshares after the issuance of A-share in June 1998, the Company allotted 3 shares for each 10 shares, with aprice of 10 Yuan for each allotted share. Actually 41.9 million shares was allotted, and the total share capitalafter the allotment increased to 436.36615 million Yuan, of which state-owned corporate shares amounted to
121.56615 million Yuan, public corporate shares 10.4 million Yuan, foreign-funded shares (B-share) 88.4million Yuan and RMB ordinary shares (A-share) 216 million Yuan.
In April 2005, Board of Directors of the Company has examined and approved 2004 Profit Pre-distributionPlan, and examined and approved by 2004 Shareholders’ General Meeting , the Company distributed 3 sharesfor each 10 shares to the whole shareholders totaling to 130,909,845 shares in 2005.
According to the Share Merger Reform Scheme of the Company that passed by related shareholders’ meetingof Share Merger Reform and SGZF [2006] No.61 Reply on Questions about State-owned Equity Managementin Share Merger Reform of Weifu High-Technology Co., Ltd. issued by State-owned Assets Supervision &Administration Commission of Jiangsu Province, the Weifu Group etc. 8 non-circulating shareholders arrangedpricing with granting 1.7 shares for each 10 shares to circulating A-share shareholders (totally granted47,736,000 shares), so as to realize the originally non-circulating shares can be traded on market whensatisfied certain conditions, the scheme has been implemented on April 5, 2006.
On 27 May 2009, Weifu Group satisfied the consideration arrangement by dispatching 0.5 shares for each 10shares based on the number of circulating A share as prior to Share Merger Reform, according to the aforesaidShare Merger Reform, with an aggregate of 14,039,979 shares dispatched. Subsequent to implementation ofdispatch of consideration shares, Weifu Group then held 100,021,999 shares of the Company, representing
17.63% of the total share capital of the Company.
Pursuant to the document (XGZQ(2009)No.46) about Approval for Merger of Wuxi Weifu Group Co., Ltd. byWuxi Industry Development Group Co., Ltd. issued by the State-owned Assets Supervision and AdministrationCommission of Wuxi City Government, Wuxi Industry Development Group Co., Ltd. (hereinafter referred toas Wuxi Industry Group) acquired Weifu Group. After the merger, Weifu Group was then revoked, and itsassets and credits & debts were transferred to be under the name of Wuxi Industry Group. Accordingly, WuxiIndustry Group became the first largest shareholder of the Company since then.
In accordance with the resolutions of shareholders' meeting and provisions of amended constitution, andapproved by [2012] No. 109 document of China Securities Regulatory Commission, in February 2012, theCompany issued RMB ordinary shares (A-share) of 112,858,000 shares to Wuxi Industry Groups and overseasstrategic investor privately, Robert Bosch Co., Ltd. (ROBERT BOSCHGMBH) (hereinafter referred to asRobert Bosch Company), face value was ONE Yuan per share, added registered capital of RMB 112,858,000,and the registered capital after change was RMB 680,133,995. Wuxi Industry Group is the first majorityshareholder of the Company, and Robert Bosch Company is the second majority shareholder of the Company.
In March 2013, the profit distribution pre-plan for year of 2012 was deliberated and approved by the Board,and also passed in Annual General Meeting 2012 of the Company in May 2013. On basis of total share capital680,133,995 shares, distribute 5-share for every 10 shares held by whole shareholders, 340,066,997 shares intotal are distributed. Total share capital of the Company amounting RMB 1,020,200,992 up to 31 December2013.
Deliberated and approved by the company’s first extraordinary general meeting in 2015, the company hasrepurchased 11,250,422 shares of A shares from August 26, 2015 to September 8, 2015, and has finished thecancellation procedures for above repurchase shares in China Securities Depository and Clearing CorporationLimited Shenzhen Branch on September 16, 2015; after the cancellation of repurchase shares, the company’spaid-up capital (share capital) becomes 1,008,950,570 Yuan after the change.
2. Registered place, organization structure and head office of the Company
Registered place and head office of the Company: No.5 Huashan Road, Xinwu District, Wuxi
Unified social credit code: 91320200250456967N
The Company sets up Shareholders’ General Meeting, the Board of Directors (BOD) and the Board ofSupervisors (BOS)
The Company sets up Administration Department, Technology Centre, organization & personnel department,Office of the Board, compliance department, IT department, Strategy & new business Department, marketdevelopment department, Party-masses Department, Finance Department, Purchase Department,Manufacturing Quality Department, MS (Mechanical System) division, AC(Automobile Components) divisionand DS (Diesel System ) division etc. and subsidiaries such as Wuxi Weifu Leader Catalytic Converter Co.,Ltd., Nanjing Weifu Jinning Co., Ltd., IRD Fuel Cells A/S and Borit NV etc.
3. Business nature and major operation activities of the Company
Operation scope of parent company: Technology development and consulting service in the machineryindustry; manufacture of engine fuel oil system products, fuel oil system testers and equipment, manufacturingof auto electronic parts, automotive electrical components, non-standard equipment, non-standard knife tooland exhaust after-treatment system; sales of the general machinery, hardware & electrical equipment, chemicalproducts & raw materials (excluding hazardous chemicals), automobile components and vehicles (excludingnine-seat passenger car); internal combustion engine maintenance; leasing of the own houses; import andexport business in respect of diversified commodities and technologies (other than those commodities andtechnologies limited or forbidden by the State for import and export) by self-operation and works as agent forsuch business. Research and test development of engineering and technical; R&D of the energy recoverysystem; manufacture of auto components and accessories; general equipment manufacturing (excluding specialequipment manufacturing), (any projects that needs to be approved by laws can only be carried out aftergetting approval by relevant authorities)
Major subsidiaries respectively activate in production and sales of engine accessories, automobile components,mufflers, purifiers and fuel cell components etc.
4. Relevant party offering approval reporting of financial statements and date thereofFinancial statements of the Company were approved by the Board of Directors for reporting dated 16 April2021.
5. Scope of consolidate financial statement
Name of subsidiary | Short name of subsidiary | Shareholding ratio (%) | Proportion of votes (%) | Registered capital (in 10 thousand Yuan) | Business scope | Statement consolidate (Y/N) | |
Directly | Indirectly | ||||||
Nanjing Weifu Jinning Co., Ltd. | Weifu Jinning | 80.00 | -- | 80.00 | 34,628.70 | Internal-combustion engine accessories | Y |
Wuxi Weifu Leader Catalytic Converter Co., Ltd. | Weifu Leader | 94.81 | -- | 94.81 | 50,259.63 | Purifier and muffler | Y |
Weifu Mashan Pump Glib Co., Ltd. | Weifu Mashan | 100.00 | -- | 100.00 | 16,500 | Internal-combustion engine accessories | Y |
Wuxi Weifu Chang’an Co., Ltd. | Weifu Chang’an | 100.00 | -- | 100.00 | 21,000 | Internal-combustion engine accessories | Y |
Wuxi Weifu International Trade Co. Ltd. | Weifu International Trade | 100.00 | -- | 100.00 | 3,000 | Trade | Y |
Wuxi Weifu Schmidt Power System Spare Parts Co., Ltd. | Weifu Schmidt | 66.00 | -- | 66.00 | 7,600 | Internal-combustion engine accessories | Y |
Ningbo Weifu Tianli Supercharging Technique Co., Ltd. | Weifu Tianli | 98.83 | 1.17 | 100.00 | 11,136 | Internal-combustion engine accessories | Y |
Wuxi Weifu Autocam Fine Machinery Co. Ltd. | Weifu Autocam | 51.00 | -- | 51.00 | USD2,110 | Automobile components | Y |
Wuxi Weifu Leader Catalytic Purifier (Wuhan) Co., Ltd. | Weifu Leader (Wuhan) | -- | 60.00 | 60.00 | 1,000 | Purifier and muffler | Y |
Weifu Leader (Chongqing)Automobile components Co., Ltd. | Weifu Leader (Chongqing) | -- | 100.00 | 100.00 | 5,000 | Purifier and muffler | Y |
Nanchang Weifu Leader Automobile Components Co., Ltd | Weifu Leader (Nanchang) | -- | 100.00 | 100.00 | 5,000 | Purifier and muffler | Y |
Wuxi Weifu Autosmart Seating System Co., Ltd. | Autosmart Seating | -- | 66.00 | 66.00 | 10,000 | Smart car device | Y |
Wuxi Weifu Electric Drive Technology Co., Ltd. | Weifu Electric Drive | 80.00 | -- | 80.00 | USD2,000 | Wheel motor | Y |
Weifu Holding ApS | SPV | 100.00 | -- | 100.00 | DKK38 | Investment | Y |
IRD Fuel Cells A/S | IRD | -- | 100.00 | 100.00 | DKK8,560 | Fuel cell components | Y |
IRD FUEL CELLS LLC | IRD America | -- | 100.00 | 100.00 | USD300 | Fuel cell components | Y |
Borit NV | Borit | -- | 100.00 | 100.00 | EURO316.09 | Fuel cell components | Y |
Name of subsidiary | Short name of subsidiary | Shareholding ratio (%) | Proportion of votes (%) | Registered capital (in 10 thousand Yuan) | Business scope | Statement consolidate (Y/N) | |
Directly | Indirectly | ||||||
Borit Inc. | Borit Inc. | -- | 100.00 | 100.00 | USD0.1 | Fuel cell components | Y |
Compared with the previous period, the scope of consolidated financial statement have increase the follow enterprises includingAutosmart Seating, Borit and Borit Inc. Of which, the Autosmart Seating was the subsidiary jointly established by the Companyand Qiqiong Automobile Technology (Shanghai) Co., Ltd. Found more in the description of 5. Other reasons of change ofconsolidation scope carried in Note VI; Borit is the subsidiary acquired in the Period through SPV, found more in the descriptionof 1.Enterprise combine not under the same control carried in Note VI; and Borit Inc. is the wholly-owned subsidiary of Boritestablished in the U.S.A.
On 1 January 2020, the former wholly-owned subsidiary - Wuxi Weifu ITM Supercharging Technique Co., Ltd was merger byabsorption.II. Basis of preparation of financial statements
1. Preparation base
The financial statement were stated in compliance with Accounting Standard for Business Enterprises –BasicNorms issued by Ministry of Finance, the specific 42 accounting rules revised and issued dated 15 February2006 and later, the Application Instruments of Accounting Standards and interpretation on Accountingstandards and other relevant regulations (together as “Accounting Standards for Business Enterprise”), as wellas the Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No.15 –General Provision of Financial Report (Amended in 2014) issued by CSRC in respect of the actualtransactions and proceedings, on a basis of ongoing operation.
In line with relevant regulations of Accounting Standards of Business Enterprise, accounting of the Companyis on accrual basis. Except for certain financial instruments, the financial statement measured on historical cost.Assets have impairment been found, corresponding depreciation reserves shall accrual according to relevantrules.
2. Going concern
The Company comprehensively assessed the available information, and there are no obvious factors thatimpact sustainable operation ability of the Company within 12 months since end of the reporting period.
III. Major Accounting Policies and EstimationSpecific accounting policies and estimation attention:
The Company and its subsidiaries are mainly engaged in the manufacture and sales of engine fuel oil systemproducts, automobile components, mufflers, purifiers and fuel cell components etc., in line with the realoperational characteristics and relevant accounting standards, many specific accounting policies and estimationhave been formulated for the transactions and events with revenue recognized concerned. As for theexplanation on major accounting judgment and estimation, found more in Note III- 31.Critical accountingjudgments and estimates
1. Statement on observation of Accounting Standard for Business Enterprises
Financial statements prepared by the Company were in accordance with requirements of Accounting Standardfor Business Enterprises, which truly and completely reflected the financial information of the Company dated31 December 2020, such as financial status, operation achievements and cash flow for the year of 2020.
2. Accounting period
Accounting period of the Company consist of annual and mid-term, mid-term refers to the reporting periodshorter than one annual accounting year. The company adopts Gregorian calendar as accounting period,namely form each 1 January to 31 December.
3. Business cycles
Normal business cycle is the period from purchasing assets used for process by the Company to the cash andcash equivalent achieved. The Company’s normal business cycle was one-year (12 months).
4. Recording currency
The Company’s reporting currency is the RMB Yuan.
5. Accounting Treatment Method for Business Combinations under the same/different controlBusiness combination is the transaction or events that two or two above independent enterprises combined as areporting entity. Business combination including enterprise combined under the same control and businesscombined under different control.
(1) The business combination under the same control
Enterprise combination under the same control is the enterprise who take part in the combination are have thesame ultimate controller or under the same controller, the control is not temporary. The assets and liabilityacquired by combining party are measured by book value of the combined party on combination date. Balanceof net asset’s book value acquired by combining party and combine consideration paid (or total book value ofthe shares issued), shall adjusted capital reserve (share premium); if the capital reserves (share premium) is not
enough for deducted, adjusted for retained earnings. Vary directly expenses occurred for enterprisecombination, the combining party shall reckoned into current gains/losses while occurring. Combination day isthe date when combining party obtained controlling rights from the combined party.
(2) Combine not under the same control
A business combination not involving entities under common control is a business combination in which all ofthe combining entities are not ultimately controlled by the same party or parties both before and after thecombination. As a purchaser, fair value of the assets (equity of purchaser held before the date of purchasingincluded) for purchasing controlling right from the purchaser, the liability occurred or undertake on purchasingdate less the fair value of identifiable net assets of the purchaser obtained in combination, recognized asgoodwill if the results is positive; if the number is negative, the acquirer shall firstly review the measurementof the fair value of the identifiable assets obtained, liabilities incurred and contingent liabilities incurred, aswell as the combination costs. After that, if the combination costs are still lower than the fair value of theidentifiable net assets obtained, the acquirer shall recognize the difference as the profit or loss in the currentperiod. Other directly expenses cost for combination shall be reckoned into current gains/losses. Difference ofthe fair value of assets paid and its book values, reckoned into current gains/losses. On purchasing date, theidentifiable assets, liability or contingency of the purchaser obtained by the Company recognized by fair value,that required identification conditions; Acquisition date refers to the date on which the acquirer effectivelyobtains control of the purchaser.
6. Preparation method for consolidated financial statement
(1) Recognition principle of consolidated scope
On basis of the financial statement of the parent company and owned subsidiaries, prepared consolidatedstatement in line with relevant information. The scope of consolidation of consolidated financial statements isascertained on the basis of effective control. Once certain elements involved in the above definition of controlchange due to changes of relevant facts or circumstances, the Company will make separate assessment.
(2) Basis of control
Control is the right to govern an invested party so as to obtain variable return through participating in theinvested party’s relevant activities and the ability to affect such return by use of the aforesaid right over theinvested party. Relevant activates refers to activates have major influence on return of the invested party’s.
(3) Consolidation process
Subsidiaries are consolidated from the date on which the company obtains their actual control, and arede-consolidated from the date that such control ceases. All significant inter-group balances, investment,transactions and unrealized profits are eliminated in the consolidated financial statements. For subsidiariesbeing disposed, the operating results and cash flows prior to the date of disposal are included in theconsolidated income statement and consolidated cash flow statement; for subsidiaries disposed during the
period, the opening balances of the consolidated balance sheet would not be restated. For subsidiaries acquiredfrom a business combination not under common control, their operating results and cash flows subsequent tothe acquisition date are included in the consolidated income statement and consolidated cash flow statement,and the opening balances and comparative figures of the consolidated balance sheet would not be restated. Forsubsidiaries acquired from a business combination under common control, their operating results and cashflows from the date of commencement of the accounting period in which the combination occurred to the dateof combination are included in the consolidated income statement and consolidated cash flow statement, andthe comparative figures of the consolidated balance sheet would be restated.
In preparing the consolidated financial statements, where the accounting policies or the accounting periods areinconsistent between the company and subsidiaries, the financial statements of subsidiaries are adjusted inaccordance with the accounting policies and accounting period of the company.
Concerning the subsidiary obtained under combination with different control, adjusted several financialstatement of the subsidiary based on the fair value of recognizable net assets on purchased day while financialstatement consolidation; concerning the subsidiary obtained under combination with same control, consideredcurrent status of being control by ultimate controller for consolidation while financial statement consolidation.
The unrealized gains and losses from the internal transactions occurred in the assets the Company sold to thesubsidiaries fully offset "the net profit attributable to the owners of the parent company". The unrealized gainsand losses from the internal transactions occurred in the assets the subsidiaries sold to the Company aredistributed and offset between "the net profit attributable to the owners of the parent company" and "minorityinterest" according to the distribution ratio of the Company to the subsidiary. The unrealized gains and lossesfrom the internal transactions occurred in the assets sold among the subsidiaries are distributed and offsetbetween "the net profit attributable to the owners of the parent company" and "minority interest" according tothe distribution ratio of the Company to the subsidiary of the seller.
The share of the subsidiary’s ownership interest not attributable to the Company is listed as “minority interest”item under the ownership interest in the consolidated balance sheet. The share of the subsidiary’s current profitor loss attributable to the minority interests is listed as "minority interest" item under the net profit item in theconsolidated income statement. The share of the subsidiary’s current consolidated income attributable to theminority interests is listed as the “total consolidated income attributable to the minority shareholders” itemunder the total consolidated income item in the consolidated income statement. If there are minorityshareholders, add the "minority interests" item in the consolidated statement of change in equity to reflect thechanges of the minority interests. If the losses of the current period shared by a subsidiary’s minorityshareholders exceed the share that the minority shareholders hold in the subsidiary ownership interest in thebeginning of the period, the balance still charges against the minority interests.
When the control over a subsidiary is ceased due to disposal of a portion of an interest in a subsidiary, the fairvalue of the remaining equity interest is re-measured on the date when the control ceased. The differencebetween the sum of the consideration received from disposal of equity interest and the fair value of theremaining equity interest, less the net assets attributable to the company since the acquisition date, isrecognized as the investment income from the loss of control. Other comprehensive income relating to originalequity investment in subsidiaries shall be treated on the same basis as if the relevant assets or liabilities weredisposed of by the purchaser directly when the control is lost, namely be transferred to current investmentincome other than the relevant part of the movement arising from re-measuring net liabilities or net assetsunder defined benefit scheme by the original subsidiary. Subsequent measurement of the remaining equityinterests shall be in accordance with relevant accounting standards such as Accounting Standards for businessEnterprises 2 – Long-term Equity Investments or Accounting Standards for business Enterprises 22 –Financial Instruments Recognition and Measurement.
The company shall determine whether loss of control arising from disposal in a series of transactions should beregarded as a bundle of transactions. When the economic effects and terms and conditions of the disposaltransactions met one or more of the following situations, the transactions shall normally be accounted for as abundle of transactions: ①The transactions are entered into after considering the mutual consequences of eachindividual transaction; ② The transactions need to be considered as a whole in order to achieve a deal incommercial sense; ③The occurrence of an individual transaction depends on the occurrence of one or moreindividual transactions in the series; ④ The result of an individual transaction is not economical, but it wouldbe economical after taking into account of other transactions in the series. When the transactions are notregarded as a bundle of transactions, the individual transactions shall be accounted as “disposal of a portion ofan interest in a subsidiary which does not lead to loss of control” and “disposal of a portion of an interest in asubsidiary which lead to loss of control”. When the transactions are regarded as a bundle of transactions, thetransactions shall be accounted as a single disposal transaction; however, the difference between theconsideration received from disposal and the share of net assets disposed in each individual transactions beforeloss of control shall be recognized as other comprehensive income, and reclassified as profit or loss arisingfrom the loss of control when control is lost.
7. Joint arrangement classification and accounting treatment for joint operations
In accordance with the Company’s rights and obligation under a joint arrangement, the Company classifiesjoint arrangements into: joint ventures and joint operations.The company confirms the following items related to the share of interests in its joint operations, and inaccordance with the provisions of the relevant accounting standards for accounting treatment:
(1) Recognize the assets held solely by the Company, and recognize assets held jointly by the Company inappropriation to the share of the Company;
(2) Recognize the obligations assumed solely by the Company, and recognize obligations assumed jointly by
the Company in appropriation to the share of the Company;
(3) Recognize revenue from disposal of the share of joint operations of the Company;
(4) Recognize fees solely occurred by Company;
(5) Recognize fees from joint operations in appropriation to the share of the Company.
8. Recognition standards for cash and cash equivalent
Cash refers to stock cash, savings available for paid at any time; cash and cash equivalent refers to the cashheld by the Company with short terms(expired within 3 months since purchased), and liquid and easy totransfer as known amount and investment with minor variation in risks.
9. Foreign currency business and conversion
The occurred foreign currency transactions are converted into the recording currency in accordance with themiddle rate of the market exchange rate published by the People's Bank of China on the transaction date.Thereinto, the occurred foreign currency exchange or transactions involved in the foreign currency exchangeare converted in accordance with the actual exchange rate in the transactions.
At the balance sheet date, the account balance of the foreign currency monetary assets and liabilities isconverted into the recording currency amount in accordance with the middle rate of the market exchange ratepublished by the People's Bank of China on the transaction date. The balance between the recording currencyamount converted according to exchange rate at the balance sheet date and the original recording currencyamount is disposed as the exchange gains or losses. Thereinto, the exchange gains or losses occurred in theforeign currency loans related to the purchase and construction of fixed assets are disposed according to theprinciple of capitalization of borrowing costs; the exchange gains and losses occurred during the start-up areincluded in the start-up costs; the rest is included in the current financial expenses.
At the balance sheet date, the foreign currency non-monetary items measured with the historical costs areconverted in accordance with the middle rate of the market exchange rate published by the People's Bank ofChina on the transaction date without changing its original recording currency amount; the foreign currencynon-monetary items measured with the fair value are converted in accordance with the middle rate of themarket exchange rate published by the People's Bank of China on the fair value date, and the generatedexchange gains and losses are included in the current profits and losses as the gains and losses from changes infair value.
The following displays the methods for translating financial statements involving foreign operations into thestatements in RMB: The asset and liability items in the balance sheets for overseas operations are translated atthe spot exchange rates on the balance sheet date. Among the owners’ equity items, the items other than
“undistributed profits” are translated at the spot exchange rates of the transaction dates. The income andexpense items in the income statements of overseas operations are translated at the average exchange rates ofthe transaction dates. The exchange difference arising from the above mentioned translation are recognized inother comprehensive income and is shown separately under owner’ equity in the balance sheet; such exchangedifference will be reclassified to profit or loss in current year when the foreign operation is disposed accordingto the proportion of disposal.
The cash flows of overseas operations are translated at the average exchange rates on the dates of the cashflows. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
10. Financial instrument
Financial instrument is the contract that taken shape of the financial asses for an enterprise and of the financialliability or equity instrument for other units.
(1) Recognition and termination of financial instrument
A financial asset or liability is recognized when the group becomes a party to a financial instrument contract.The recognition of a financial assets shall be terminated if it meets one of the following conditions:
① the contractual right to receive the cash flow of the financial assets terminates; and
② the financial assets is transferred and the company transfers substantially all the risks and rewards ofownership of the financial asset to the transferring party;
③the financial asset was transferred and control, although the company has neither transferred nor retainedalmost all the risks and rewards of the ownership of a financial asset, it relinquishes control over the financialasset.
If all or part of the current obligations of a financial liability has been discharged, the financial liability or part ofit is terminated for recognition. When the Company (debtor) and the creditor sign an agreement to replace theexisting financial liabilities with new financial liabilities, and the new financial liabilities and the existingfinancial liabilities are substantially different from the contract terms, terminated the recognition of the existingfinancial liabilities and recognize the new financial liabilities at the same time.
Financial assets are traded in the normal way and their accounting recognition and terminated the recognition ofproceed on a trade date basis.
(2) Classification and measurement of financial assets
At the initial recognition, according to the business model of managing financial assets and the contractual cashflow characteristics of financial assets, the Company classifies the financial assets into the financial assetsmeasured at amortized cost, the financial assets measured at fair value and whose changes are included in othercomprehensive income, and the financial assets measured at fair value and whose changes are included in
current profit or loss. Financial assets are measured at fair value at initial recognition, but if the receivables orreceivables financing arising from the sale of goods or the provision of services do not include a significantfinancing component or do not consider a financing component that does not exceed one year, it shall beinitially measured in accordance with the transaction value. For financial assets measured at fair value andwhose changes are included in the current profit or loss, related transaction costs are directly included in thecurrent profit and loss; for other types of financial assets, related transaction costs are included in the initiallyrecognized amount.
The business model for managing financial assets refers to how the Company manages financial assets togenerate cash flows. The business model determines whether the cash flow of financial assets managed by theCompany is based on contract cash flow, selling financial assets or both. The Company determines the businessmodel for managing financial assets based on objective facts and based on the specific business objectives offinancial assets management determined by key management personnel.
The Company evaluates the contractual cash flow characteristics of financial assets to determine whether thecontractual cash flows generated by the relevant financial assets on a specific date are only payments for theprincipal and the interest based on the outstanding principal amount. The principal is the fair value of thefinancial assets at initial recognition; the interest includes the time value of money, the credit risk associated withthe outstanding principal amount for a specific period, and other basic borrowing risks, costs and considerationof profit. In addition, the Company evaluates the contractual terms that may result in changes in the timedistribution or the amount of contractual cash flows of the financial assets to determine whether they meet therequirements of the above contractual cash flow characteristics.
Only when the Company changes its business model of managing financial assets, all affected financial assetsare reclassified on the first day of the first reporting period after the business model changes, otherwise thefinancial assets are not allowed to be reclassified after initial recognition.
① Financial assets measured at amortized cost
The Company classifies the financial assets that meet the following conditions and haven’t been designated asfinancial assets measured at fair value and whose changes are included in current profit or loss as financial assetsmeasured at amortized cost:
A. the group's business model for managing the financial assets is to collect contractual cash flows; andB. the contractual terms of the financial assets stipulate that cash flow generated on a specific date is only paid
for the principal and interest based on the outstanding principal amount.After initial recognition, such financial assets are measured at amortized cost by using the effective interestmethod. Gains or losses arising from financial assets which are measured at amortized cost and are not acomponent of any hedging relationship are included in current profit or loss when being terminated for
recognition, amortized by effective interest method, or impaired.
② Financial assets measured at fair value and whose changes are included in other comprehensive incomeThe Company classifies the financial assets that meet the following conditions and haven’t been designated asfinancial assets measured at fair value and whose changes are included in current profit or loss as financial assetsmeasured at fair value and whose changes are included in other comprehensive income:
A. the Group's business model for managing the financial assets is targeted at both the collection of contractualcash flows and the sale of financial assets; andB. the contractual terms of the financial asset stipulate that the cash flow generated on a specific date is onlythe payment of the principal and the interest based on the outstanding principal amount.
After initial recognition, such financial assets are subsequently measured at fair value. Interests, impairmentlosses or gains and exchange gains and losses calculated by using the effective interest method are included inprofit or loss for the period, and other gains or losses are included in other comprehensive income. When beingterminate for recognition, the accumulated gains or losses previously included in other comprehensive incomeare transferred from other comprehensive income and included in current profit or loss.
③Financial assets measured at fair value and whose changes are included in current profit or lossExcept for the above financial assets measured at amortized cost and measured at fair value and whose changesare included in other comprehensive income, the Company classifies all other financial assets as financial assetsmeasured at fair value and whose changes are included in current profit or loss. In the initial recognition, inorder to eliminate or significantly reduce accounting mismatch, the Company irreversibly designates part of thefinancial assets that should be measured at amortized cost or measured at fair value and whose changes areincluded in the other comprehensive income as the financial assets measured at fair value and whose changes areincluded in current profit or loss.
After the initial recognition, such financial assets are subsequently measured at fair value, and the gains or losses(including interests and dividend income) are included in the current profit and loss, unless the financial assetsare part of the hedging relationship.
However, for non-trading equity instrument investments, the Company irreversibly designates them as thefinancial assets that are measured at fair value and whose changes are included in other comprehensive incomein the initial recognition. The designation is made based on a single investment and the relevant investment is inline with the definition of equity instruments from the issuer's perspective. After initial recognition, suchfinancial assets are subsequently measured at fair value. Dividend income that meets the conditions is includedin profit or loss, and other gains or losses and changes in fair value are included in other comprehensive income.When it is terminated for recognition, the accumulated gains or losses previously included in other
comprehensive income are transferred from other comprehensive income and included in retained earnings.
(3) Classification and measurement of financial liabilities
The financial liabilities of the Company are classified as financial liabilities measured at fair value and whosechanges are included in current profit or loss and financial liabilities measured at amortized cost at the initialrecognition. For financial liabilities that are not classified as financial liabilities measured at fair value andwhose changes are included in current profit or loss, the related transaction expenses are included in the initialrecognition amount.
①Financial liability measured by fair value and with variation reckoned into current gains/lossesFinancial liability measured by fair value and with variation reckoned into current gains/losses includingtradable financial liability and the financial liabilities that are designated as fair value in the initial recognitionand whose changes are included in current profit or loss. For such financial liabilities, the subsequentmeasurement is based on fair value, and the gains or losses arising from changes in fair value and the dividendsand interest expenses related to these financial liabilities are included in current profit or loss.
②Financial liability measured by amortized cost
Other financial liabilities are subsequently measured at amortized cost by using the effective interest method.The gain or loss arising from recognition termination or amortization is included in current profit or loss.
③Distinctions between financial liabilities and equity instruments
Financial liabilities are liabilities that meet one of the following conditions:
A. Contractual obligations to deliver cash or other financial assets to other parties.B. Contractual obligations to exchange financial assets or financial liabilities with other parties under potentiallyadverse conditions.C. Non-derivative contracts that must be settled or that can be settled by the company's own equity instrumentsin the future, and the enterprise will deliver a variable amount of its own equity instruments according to thecontract.D. Derivative contracts that must be settled or that can be settled by the company's own equity instruments in thefuture, except for derivatives contracts that exchange a fixed amount of cash or other financial assets with a fixedamount of their own equity instruments.
An equity instrument is a contract that proves it has a residual equity in the assets of an enterprise after deductingall liabilities.
If the Company cannot unconditionally avoid performing a contractual obligation by delivering cash or otherfinancial assets, the contractual obligation is consistent with the definition of financial liability.
If a financial instrument is required to be settled or can be settled by the Company's own equity instruments, it isnecessary to consider whether the Company's own equity instruments used to settle the instrument are asubstitute for cash or other financial assets, or to make the instrument holder enjoy the residual equity in theassets of the issuer after deducting all liabilities. In the former case, the instrument is the Company's financialliability; if it is the latter, the instrument is the Company's equity instrument.
(4) Fair value of financial instruments
The company uses valuation techniques that are applicable under current circumstances and that have sufficientavailable data and other information support to determine the fair value of related financial assets and financialliabilities. The company divides the input values used by valuation techniques into the following levels and usesthem in sequence:
① The first-level input value is the unadjusted quotation of the same assets or liabilities that can be obtained onthe measurement date in the active market;
② The second-level input value is the direct or indirect observable input value of the relevant assets or liabilitiesother than the first-level input value, including quotations of similar assets or liabilities in an active market;quotations of same or similar assets or liabilities in an active market; other observable input value other thanquotations, such as interest rate and yield curves that are observable during the normal quote interval; market-validated input value, etc.;
③ The third-level input value is the unobservable input value of the relevant assets or liabilities, including theinterest rate that cannot be directly observed or cannot be verified by observable market data, stock volatility,future cash flow of the retirement obligation assumed in the business combination, and financial forecastingmade by its own data, etc.
(5) Impairment of financial assets
On the basis of expected credit losses, the Company performs impairment treatment on financial assetsmeasured at amortized cost and creditors’ investment etc. measured at fair value and whose changes areincluded in other comprehensive income and recognize the provisions for loss.
①Measurement of expected credit losses
Expected credit loss refers to the weighted average of credit losses of financial instruments weighted by therisk of default. Credit loss refers to the difference between all contractual cash flows that the Companydiscounts at the original actual interest rate and are receivable in accordance with contract and all cash flowsexpected to be received, that is, the present value of all cash shortages. Among them, for the purchase orsource of financial assets that have suffered credit impairment, the Company discounts the financial assets atthe actual interest rate adjusted by credit.
When measuring expected credit losses, the Company individually evaluates credit risk for financial assetswith significantly different credit risks, such as receivables involving litigation and arbitration with the otherparty, or receivables having obvious indications that the debtor is likely to be unable to fulfill its repaymentobligations, and so on.
Except for the financial assets that separately assess the credit risks, the Company classified the accountreceivable according to their characteristic of risks, calculated the expected credit losses on basis of portfolio.Basis for determining the portfolio as follow:
A - Note receivableNote receivable 1: bank acceptanceNote receivable 2: trade acceptance
B - Account receivableAccount receivable 1: receivable from clientsAccount receivable 2: receivable from internal related party
C-Receivable financingReceivable financing 1: bank acceptanceReceivable financing 2: trade acceptance
D - Other account receivablesOther account receivables 1: receivable from internal related partyOther account receivables 2: receivable from othersAs for the note receivable, account receivable, receivable financing and other account receivable classified inportfolio, by referring to the experience of historical credit loss, the expected credit loss is calculated bycombining the current situation and the forecast of future economic conditions.
Except for the above-mentioned financial assets adopting simplified metering method, the Company assessesat each balance sheet date whether its credit risk has increased significantly since initial recognition. If creditrisk has not increased significantly since initial recognition, it is in the first stage, the Company measures theloss provisions based on the amount equivalent to the expected credit loss in the next 12 months; if the creditrisk has increased significantly since initial recognition but no credit impairment has occurred, it is in thesecond stage, the Company measures the loss provisions based on the amount equivalent to the expected creditloss for the entire duration; if credit impairment occurs after initial recognition, it is in the third stage, theCompany measures the loss provisions based on the amount equivalent to the expected credit loss for the entireduration. For financial instruments with low credit risks at the balance sheet date, the Company assumes thattheir credit risks have not increased significantly since initial recognition.
The Company evaluates the expected credit losses of financial instruments based on individual items andportfolios. When assessing expected credit losses, the Company considers reasonable and evidence-basedinformation about past events, current conditions, and forecasts of future economic conditions.
When the Company no longer reasonably expects to be able to fully or partially recover the contractual cashflow of a financial asset, the Company directly writes down the book balance of the financial asset.
②Assessment of a significant increase in credit risk:
The Company determines the relative changes in default risk of the financial instrument occurred in the expectedduration and assess whether the credit risks of financial instrument has increased significantly since the initialrecognition by comparing the risk of default of the financial instrument on the balance sheet date with the risk ofdefault of financial instrument on the initial recognition date. When determining whether the credit risk hasincreased significantly since the initial recognition, the Company considers reasonable and evidence-basedinformation that can be obtained without unnecessary additional costs or effort, including forward-lookinginformation. The information considered by the Company includes:
A. The debtor fails to pay the principal and interest according to the contractual maturity date;B. Serious worsening of external or internal credit rating (if any) of the financial instruments that have occurredor are expected;C. Serious deterioration of the debtor’s operating results that have occurred or are expected;D. Changes in existing or anticipated technical, market, economic or legal circumstances that will have amaterial adverse effect on the debtor's ability to repay the company.
Based on the nature of financial instruments, the Company assesses whether credit risk has increasedsignificantly on the basis of a single financial instrument or combination of financial instruments. Whenconducting an assessment based on a combination of financial instruments, the Company can classify financialinstruments based on common credit risk characteristics, such as overdue information and credit risk ratings.
The Company believes that financial assets are subject to default in the following circumstances:
The debtor is unlikely to pay the full amount to the Company, and the assessment does not consider theCompany to take recourse actions such as realizing collateral (if held).
③Financial assets with credit impairment
On the balance sheet date, the Company assesses whether the credit of financial assets measured at amortizedcost and the credit of debt investments measured at fair value and whose changes are included in othercomprehensive income has been impaired. When one or more events that adversely affect the expected futurecash flows of a financial asset occur, the financial asset becomes a financial asset that has suffered credit
impairment. Evidence that credit impairment has occurred in financial assets includes the following observableinformation:
A. The issuer or the debtor has significant financial difficulties;B. The debtor breaches the contract, such as default or overdue repayment of interest or principal;C. The Company gives concessions to the debtor that will not be made in any other circumstances for economicor contractual considerations relating to the financial difficulties of the debtor;D. The debtor is likely to go bankrupt or carry out other financial restructurings;E. The financial difficulties of the issuer or the debtor have caused the active market of the financial asset todisappear.
④ Presentation of expected credit loss provisions
In order to reflect the changes in the credit risk of financial instruments since the initial recognition, theCompany re-measures the expected credit losses on each balance sheet date, and the resulting increase orreversal of the loss provisions shall be included in current profit and loss as impairment losses or gains. Forfinancial assets measured at amortized cost, the loss provisions are written off against the book value of thefinancial assets listed in the balance sheet; for debt investments measured at fair value and whose changes areincluded in other comprehensive income, the Company recognizes the loss provisions in other comprehensiveincome and does not deduct the book value of the financial asset.
⑤Write-off
If the Company no longer reasonably expects that the financial asset contract cash flow can be fully or partiallyrecovered, directly write down the book balance of the financial asset. Such write-downs constitute thetermination of recognition for related financial assets. This usually occurs when the Company determines thatthe debtor has no assets or sources of income to generate sufficient cash flow to repay the amount that will bewritten down. However, according to the Company's procedures for recovering the due amount, the financialassets that have been written down may still be affected by the execution activities.
If the financial assets that have been written down are recovered afterwards, they shall be included in the profit orloss of the period being recovered as the reversal of the impairment loss
(6) Transfer of financial assets
The transfer of financial assets refers to the transfer or delivery of financial assets to the other party (thetransferee) other than the issuer of the financial assets.
For financial assets that the Company has transferred almost all risks and rewards of ownership of financialassets to the transferee, terminate the recognition of the financial assets; if almost all the risks and rewards ofownership of financial assets have been retained, do not terminate the recognition of the financial assets.
If the Company has neither transferred nor retained almost all the risks and rewards of ownership of financialassets, dispose as following situations: If the control of the financial assets is abandoned, terminate therecognition of the financial assets and determine the resulting assets and liabilities. If the control of the financialassets is not abandoned, determine the relevant financial assets according to the extent to which they continue tobe involved in the transferred financial assets, and determine the related liabilities accordingly.
(7) Balance-out between the financial assets and liabilities
As the Group has the legal right to balance out the financial liabilities by the net or liquidation of the financialassets, the balance-out sum between the financial assets and liabilities is listed in the balance sheet. In addition,the financial assets and liabilities are listed in the balance sheet without being balanced out.
11.Receivables financing
The note receivable and account receivable which are measured at fair value and whose changes are includedin other comprehensive income are classified as receivables financing within one year(including one year)from the date of acquisition. Relevant accounting policy found more in 10. Financial Instrument in Note V.
12. Inventory
(1) Classification of inventories
The Company’s inventories are categorized into stock materials, product in process and stock goods etc.
(2) Pricing for delivered inventories
The cost of inventory at the time of acquisition and delivery is calculated according to the standard costmethod, and the difference in cost that it should bear is carried forward at the end of the period, and thestandard cost is adjusted to the actual cost.
(3) Recognition evidence for net realizable value of inventories and withdrawal method for inventoryimpairment provisionInventories as at period-end are priced at the lower of costs and net realizable values; at period end, on thebasis of overall clearance about inventories, inventory impairment provision is withdrew for uncollectible partof costs of inventories which result from destroy of inventories, out-of-time of all and part inventories, or salesprice lowering than cost. Inventory impairment provision for stock goods and quantity of raw materials issubject to the difference between costs of single inventory item over its net realizable value. As for other rawmaterials with large quantity and comparatively low unit prices, inventory impairment provision is withdrawnpursuant to categories.As for finished goods, commodities and materials available for direct sales, their net realizable values aredetermined by their estimated selling prices less estimated sales expenses and relevant taxes. For materialinventories held for purpose of production, their net realizable values are determined by the estimated selling
prices of finished products less estimated costs, estimated sales expenses and relevant taxes accumulated tillcompletion of production. As for inventories held for implementation of sales contracts or service contracts,their net realizable values are calculated on the basis of contract prices. In the event that inventories held by acompany exceed order amount as agreed in sales contracts, net realizable values of the surplus part arecalculated on the basis of normal sale price.
(4) Inventory system
Perpetual Inventory System is adopted by the Company and takes a physical inventory.
(5) Amortization of low-value consumables and wrappage
①Low-value consumables
The Company adopts one-off amortization method to amortize the low-value consumables.
②Wrappage
The Company adopts one-off amortization method to amortize the wrappage at the time of receipt.
13. Assets held for sale
The Company classifies non-current assets or disposal groups that meet all of the following conditions asheld-for-sale: according to the practice of selling this type of assets or disposal groups in a similar transaction,the non-current assets or disposal group can be sold immediately at its current condition; The sale is likely tooccur, that is, the Company has made resolution on the selling plan and obtained definite purchasecommitment, the selling is estimated to be completed within one year. Those assets whose disposal is subjectto approval from relevant authority or supervisory department under relevant requirements are subject to thatapproval.
Where the Company loses control over its subsidiary due to disposal of investment in the subsidiary, whetheror not the Company retains part equity investment after such disposal, investment in the subsidiary shall beclassified in its entirety as held for sale in the separate financial statement of the parent company subject to thatthe investment in the subsidiary proposed to be disposed satisfies the conditions for being classified as held forsale, and all the assets and liabilities of the subsidiary shall be classified as held for sale in consolidatedfinancial statement.
The purchase commitment identified refers to the legally binding purchase agreement entered into between theCompany and other parties, which sets out certain major terms relating to transaction price, time andadequately stringent punishment for default, which render an extremely minor possibility for materialadjustment or revocation of the agreement.
Assets held for sale are measured at the lower of heir carrying value and fair value less selling expense. If the
carrying value is higher than fair value less selling expense, the excess shall be recognized as impairment lossand recorded in profit or loss for the period, and allowance for impairment shall be provided for in respect ofthe assets. In respect of impairment loss recognized for disposal group held for sale, carrying value of thegoodwill in the disposal group shall be deducted first, and then deduct the carrying value of the non-currentassets within the disposal group applicable to this measurement standard on a pro rata basis according to theproportion taken by their carrying value.
If the net amount of fair value of non-current assets held for sale less sales expense on subsequent balancesheet date increases, the amount previously reduced for accounting shall be recovered and reverted from theimpairment loss recognized after the asset is classified under the category of held for sale, with the amountreverted recorded in profit or loss for the period. Impairment loss recognized before the asset is classifiedunder the category of held for sale shall not be reverted.If the net amount of fair value of the disposal groupheld for sale on the subsequent balance sheet date less sales expenses increases, the amount reduced foraccounting in previous periods shall be restored, and shall be reverted in the impairment loss recognized inrespect of the non-current assets which are applicable to relevant measurement provisions after classificationinto the category of held for sale, with the reverted amount charged in profit or loss for the current period. Thewritten-off carrying value of goodwill shall not be reverted.
The non-current assets in the non-current assets or disposal group held for sale is not depreciated or amortized,and the debt interests and other fees in the disposal group held for sale continue to be recognized.
If the non-current assets or disposal group are no longer classified as held for sale since they no longer meetthe condition of being classified as held for sale or the non-current assets are removed from the disposal groupheld for sale, they will be measured at the lower of the following:
(i)The amount after their book value before they are classified as held for sale is adjusted based on thedepreciation, amortization or impairment that should have been recognized given they are not classified as heldfor sale;(ii) The recoverable amount.
14. Long-term equity investment
Long-term equity investments refer to long-term equity investments in which the Company has control, jointcontrol or significant influence over the invested party. Long-term equity investment without control or jointcontrol or significant influence of the Group is accounted for as available-for-sale financial assets or financialassets measured by fair value and with variation reckoned into current gains/losses. As for other accountingpolicies found more in “10. Financial instrument” in Note III.
(1) Determination of initial investment cost
Investment costs of the long-term equity investment are recognized by the follow according to different way of
acquirement:
①For a long-term equity investment acquired through a business combination involving enterprises undercommon control, the initial investment cost of the long-term equity investment shall be the absorbing party’sshare of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimatecontrolling party on the date of combination. The difference between the initial cost of the long-term equityinvestment and the cash paid, non-cash assets transferred as well as the book value of the debts borne by theabsorbing party shall offset against the capital reserve. If the capital reserve is insufficient to offset, theretained earnings shall be adjusted. If the consideration of the merger is satisfied by issue of equity securities,the initial investment 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 controllingparty on the date of combination. With the total face value of the shares issued as share capital, the differencebetween the initial cost of the long-term equity investment and total face value of the shares issued shall beused to offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earningsshall be adjusted. 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 a basket”. If they belong to“transactions in a basket”, these transactions will be accounted for a transaction in obtaining control. If theyare not belong to “transactions in a basket”, the initial investment cost of the long-term equity investment shallbe the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financialstatements of the ultimate controlling party on the date of combination. The difference between the initial costof the long-term equity investment and the aggregate of the carrying amount of the long-term equityinvestment before merging and the carrying amount the additional consideration paid for further shareacquisition on the date of combination shall offset against the capital reserve. If the capital reserve isinsufficient to offset, the retained earnings shall be adjusted. Other comprehensive income recognized as aresult of the previously held equity investment accounted for using equity method on the date of combinationor recognized for available-for-sale financial assets will not be accounted for.
② For the long-term equity investment obtained by business combination not under the same control, the fairvalue of the assets involved, the equity instruments issued and the liabilities incurred or assumed on thetransaction date, plus the combined cost directly related to the acquisition is used as the initial investment costof the long-term equity investment. The identifiable assets of the combined party and the liabilities (includingcontingent liabilities) assumed by the combined party on the combining date are all measured at fair value,regardless of the amount of minority shareholders’ equity. The amount of the combined cost exceeding the fairvalue of the identifiable net assets of the combined party obtained by the Company is recorded as goodwill,and the amount below the fair value of the identifiable net assets of the combining party is directly recognizedin the consolidated income statement. (For business combination resulted in an enterprise not under commoncontrol by acquiring equity of the acquire under common control through a stage-up approach with several
transactions, these transactions will be judged whether they shall be treat as “transactions in a basket”. If theybelong to “transactions in a basket”, these transactions will be accounted for a transaction in obtaining control.If they are not belong to “transactions in a basket”, the initial investment cost of the long-term equityinvestment accounted for using cost method shall be the aggregate of the carrying amount of equity investmentpreviously held by the acquire and the additional investment cost. For previously held equity accounted forusing equity method, relevant other comprehensive income will not be accounted for. For previously heldequity investment classified as available-for-sale financial asset, the difference between its fair value andcarrying amount, as well as the accumulated movement in fair value previously included in the othercomprehensive income shall be transferred to profit or loss for the current period.)
③Long-term investments obtained through other ways:
A. Initial investment cost of long-term equity investment obtained through cash payment is determinedaccording to actual payment for purchase;B. Initial investment cost of long-term equity investment obtained through issuance of equity securities isdetermined at fair value of such securities;C. Initial investment cost of long-term equity investment (exchanged-in) obtained through exchange withnon-monetary assets, which is of commercial nature, is determined at fair value of the assets exchanged-out;otherwise determined at carrying value of the assets exchanged-out if it is not of commercial nature;D. Initial investment cost of long-term equity investment obtained through debt reorganization is determined atfair value of such investment.
(2) Subsequent measurement on long-term equity investment
①Presented controlling ability on invested party, the investment shall use cost method for measurement.
②Long-term equity investments with joint control (excluding those constitute joint ventures) or significantinfluence on the invested party are accounted for using equity method.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds theinvestor’s interest in the fair value of the invested party’s identifiable net assets at the acquisition date, noadjustment shall be made to the initial investment cost. Where the initial investment cost is less than theinvestor’s interest in the fair value of the invested party’s identifiable net assets at the acquisition date, thedifference shall be charged to profit or loss for the current period, and the cost of the long term equityinvestment shall be adjusted accordingly.
Under the equity method, investment gain and other comprehensive income shall be recognized based on theGroup’s share of the net profits or losses and other comprehensive income made by the invested party,respectively. Meanwhile, the carrying amount of long-term equity investment shall be adjusted. The carryingamount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividenddistributed by the invested party. In respect of the other movement of net profit or loss, other comprehensive
income and profit distribution of invested party, the carrying value of long-term equity investment shall beadjusted and included in the capital reserves. The Group shall recognize its share of the invested party’s netprofits or losses based on the fair values of the invested party’s individual separately identifiable assets at thetime of acquisition, after making appropriate adjustments thereto. In the event of in-conformity between theaccounting policies and accounting periods of the invested party and the Company, the financial statements ofthe invested party shall be adjusted in conformity with the accounting policies and accounting periods of theCompany. Investment gain and other comprehensive income shall be recognized accordingly. In respect of thetransactions between the Group and its associates and joint ventures in which the assets disposed of or sold arenot classified as operation, the share of unrealized gain or loss arising from inter-group transactions shall beeliminated by the portion attributable to the Company. Investment gain shall be recognized accordingly.However, any unrealized loss arising from inter-group transactions between the Group and an invested party isnot eliminated to the extent that the loss is impairment loss of the transferred assets. In the event that the Groupdisposed of an asset classified as operation to its joint ventures or associates, which resulted in acquisition oflong-term equity investment by the investor without obtaining control, the initial investment cost of additionallong-term equity investment shall be the fair value of disposed operation. The difference between initialinvestment cost and the carrying value of disposed operation will be fully included in profit or loss for thecurrent period. In the event that the Group sold an asset classified as operation to its associates or jointventures, the difference between the carrying value of consideration received and operation shall be fullyincluded in profit or loss for the current period. In the event that the Company acquired an asset which formedan operation from its associates or joint ventures, relevant transaction shall be accounted for in accordancewith “Accounting Standards for Business Enterprises No. 20 “Business combination”. All profit or loss relatedto the transaction shall be accounted for.
The Group’s share of net losses of the invested party shall be recognized to the extent that the carrying amountof the long-term equity investment together with any long-term interests that in substance form part of theinvestor’s net investment in the invested party are reduced to zero. If the Group has to assume additionalobligations, the estimated obligation assumed shall be provided for and charged to the profit or loss asinvestment loss for the period. Where the invested party is making profits in subsequent periods, the Groupshall resume recognizing its share of profits after setting off against the share of unrecognized losses.
③Acquisition of minority interest
Upon the preparation of the consolidated financial statements, since acquisition of minority interest increasedof long-term equity investment which was compared to fair value of identifiable net assets recognized whichare measured based on the continuous measurement since the acquisition date (or combination date) ofsubsidiaries attributable to the Group calculated according to the proportion of newly acquired shares, thedifference of which recognized as adjusted capital surplus, capital surplus insufficient to set off impairmentand adjusted retained earnings.
④Disposal of long-term equity investments
In these consolidated financial statements, for disposal of a portion of the long-term equity investments in asubsidiary without loss of control, the difference between disposal cost and disposal of long-term equityinvestments relative to the net assets of the subsidiary is charged to the owners’ equity. If disposal of a portionof the long-term equity investments in a subsidiary by the parent company results in a change in control, itshall be accounted for in accordance with the relevant accounting policies as described in Note III.-6“Preparation Method of the Consolidated Financial Statements”.
On disposal of a long-term equity investment otherwise, the difference between the carrying amount of theinvestment and the actual consideration paid is recognized through profit or loss in the current period.
In respect of long-term equity investment accounted for using equity method with the remaining equity interestafter disposal 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 relevantasset or liability by invested party on pro rata basis at the time of disposal. The owners’ equity recognized forthe movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profitdistribution of invested party) shall be transferred to profit or loss for the current period on pro rata basis.
In respect of long-term equity investment accounted for using cost method with the remaining equity interestafter disposal also accounted for cost equity method, other comprehensive income measured and reckonedunder equity method or financial instrument before control of the invested party unit acquired shall beaccounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liabilityby invested party on pro rata basis at the time of disposal and shall be transferred to profit or loss for thecurrent period on pro rata basis; among the net assets of invested party unit recognized by equity method(excluding net profit or loss, other comprehensive income and profit distribution of invested party) shall betransferred to profit or loss for the current period on pro rata basis.In the event of loss of control over invested party due to partial disposal of equity investment by the Group, inpreparing separate financial statements, the remaining equity interest which can apply common control orimpose significant influence over the invested party after disposal shall be accounted for using equity method.Such remaining equity interest shall be treated as accounting for using equity method since it is obtained andadjustment was made accordingly. For remaining equity interest which cannot apply common control orimpose significant influence over the invested party after disposal, it shall be accounted for using therecognition and measurement standard of financial instruments. The difference between its fair value andcarrying amount as at the date of losing control shall be included in profit or loss for the current period. Inrespect of other comprehensive income recognized using equity method or the recognition and measurementstandard of financial instruments before the Group obtained control over the invested party, it shall beaccounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liabilityby invested party at the time when the control over invested party is lost. Movement of other owners’ equity
(excluding net profit or loss, other comprehensive income and profit distribution under net asset of investedparty accounted for and recognized using equity method) shall be transferred to profit or loss for the currentperiod at the time when the control over invested party is lost. Of which, for the remaining equity interest afterdisposal accounted for using equity method, other comprehensive income and other owners’ equity shall betransferred 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 otherowners’ equity shall be fully transferred.
In the event of loss of common control or significant influence over invested party due to partial disposal ofequity investment by the Group, the remaining equity interest after disposal shall be accounted for using therecognition and measurement standard of financial instruments. The difference between its fair value andcarrying amount as at the date of losing common control or significant influence shall be included in profit orloss for the current period. In respect of other comprehensive income recognized under previous equityinvestment using equity method, it shall be accounted for in accordance with the same accounting treatmentfor direct disposal of relevant asset or liability by invested party at the time when equity method was ceased tobe used. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income andprofit distribution under net asset of invested party accounted for and recognized using equity method) shall betransferred to profit or loss for the current period at the time when equity method was ceased to be used.
The Group disposes its equity investment in subsidiary by a stage-up approach with several transactions untilthe control over the subsidiary is lost. If the said transactions belong to “transactions in a basket”, eachtransaction shall be accounted for as a single transaction of disposing equity investment of subsidiary and lossof control. The difference between the disposal consideration for each transaction and the carrying amount ofthe corresponding long-term equity investment of disposed equity interest before loss of control shall initiallyrecognized as other comprehensive income, and subsequently transferred to profit or loss arising from loss ofcontrol for the current period upon loss of control.
(3) Impairment test method and withdrawal method for impairment provision
Found more in Note III-21.”impairment of long-term assets”
(4) Criteria of Joint control and significant influence
Joint control is the Company’s contractually agreed sharing of control over an arrangement, which relevantactivities of such arrangement must be decided by unanimously agreement from parties who share control. Allthe participants or participant group whether have controlling over such arrangement as a group or not shall bejudge firstly, than judge that whether the decision-making for such arrangement are agreed unanimity by theparticipants or not.
Significant influence is the power of the Company to participate in the financial and operating policy decisions
of an invested party, but to fail to control or joint control the formulation of such policies together with otherparties.While recognizing whether have significant influence by invested party, the potential factors of votingpower as current convertible bonds and current executable warrant of the invested party held by investors andother parties shall be thank over.
15. Investment real estate
Investment real estate is stated at cost. During which, the cost of externally purchased propertiesheld-for-investment includes purchasing price, relevant taxes and surcharges and other expenses which aredirectly attributable to the asset. Cost of self construction of properties held for investment is composed ofnecessary expenses occurred for constructing those assets to a state expected to be available for use. Propertiesheld for investment by investors are stated at the value agreed in an investment contract or agreement, butthose under contract or agreement without fair value are stated at fair value.
The Company adopts cost methodology amid subsequent measurement of properties held for investment,while depreciation and amortization is calculated using the straight-line method according to their estimateduseful lives.
The basis of provision for impairment of properties held for investment is referred to Note III-“21.Impairmentof long-term assets”
16. Fixed assets
(1) Recognition conditions
Fixed assets refer to the tangible assets for production of products, provision of labor, lease or operation, witha service life excess one year and has more unit value.
(2) Depreciation methods
Category | Years of depreciation (years) | Scrap value rate(%) | Yearly depreciation rate(%) |
House and Building | 20~35 | 5 | 2.71~4.75 |
Machinery equipment | 10 | 5 | 9.50 |
Transportation equipment | 4~5 | 5 | 19.00~23.75 |
Electronic and other equipment | 3~10 | 5 | 9.50~31.67 |
For the fixed assets with impairment provision, the depreciation amount shall be calculated after deducting theaccumulated amount of impairment provision for fixed assets
(3) Recognition basis, valuation and depreciation method for financial lease assets
The Company affirms those that conform to below one or several criteria as the finance lease fixed assets:
① Agreed in the lease contract (or made a reasonable judgment according to the correlated conditions on thelease commencement date), the ownership of lease fixed assets can be transferred to the Company after theexpiry of the lease period;
② The Company has the option to purchase or lease the fixed assets, and the purchase price is estimated to bemuch less than the fair value of the lease of fixed assets when exercises the options, so whether the Companywill exercise the option can be reasonably determined on the lease commencement date;
③ Even though the fixed asset ownership is not transferred, the lease term accounts for 75% of the service lifeof the lease fixed assets;
④ The present value of the Company’s of minimum lease payment on the lease commencement date isequivalent to 90% or more of the fair value of the lease fixed assets on the lease commencement date; thepresent value of the leaser’s of minimum lease payment on the lease commencement date is equivalent to 90%or more of the fair value of the lease fixed assets on the lease commencement date;
⑤ The leased assets with special properties can only be used by the Company without major modifications.The fixed assets rented by finance leases is calculated as the book value according to the lower one betweenthe fair value of leased assets on the lease commencement date and the present value of the minimum leasepayments.
(4) The impairment test method of fixed assets and the method of provision for impairment see NoteIII-“21.Impairment of long-term assets”.
17. Construction in progress
From the date on which the fixed assets built by the Company come into an expected usable state, the projectsunder construction are converted into fixed assets on the basis of the estimated value of project estimates orpricing or project actual costs, etc. Depreciation is calculated from the next month. Further adjustments aremade to the difference of the original value of fixed assets after final accounting is completed upon completionof projects.
The basis of provision for impairment of properties held for construction in process is referred to NoteIII-“21.Impairment of long-term assets”
18. Contract assets and contract liabilities
Applicable from 1 Jan. 2020.The Company presents the contract assets or contract liabilities in the balance sheet based on the relationshipbetween the performance obligation and the customer’s payment.
(1) Contract assets
Confirmation method and standard of contract assets: contract assets refer to the right of a company to receiveconsideration after transferring goods or providing services to customers, and this right depends on otherfactors besides the passage of time. The company's unconditional (that is, only depending on the passage oftime) right to collect consideration from customers are separately listed as receivables.
Method for determining expected credit losses of contract assets: the method for determining expected creditlosses of contract assets is consistent with the method for determining expected credit losses of accountsreceivable.Accounting treatment method of expected credit losses of contract assets: if the contract assets are impaired,the company shall debit the "asset impairment loss" subject and credit the "contract asset impairmentprovision" subject according to the amount that should be written down. When reversing the provision forasset impairment that has already been withdrawn, make opposite accounting entries.
(2) Contract liabilities
The Company lists the obligation to transfer goods or provide labor services to customers for the considerationreceived or receivable from customers as contract liabilities, such as the amount that the company has receivedbefore the transfer of the promissory goods.
19. Borrowing costs
(1) Recognition of capitalization of borrowing costs
Borrowing costs comprise interest occurred, amortization of discounts or premiums, ancillary costs andexchange differences in connection with foreign currency borrowings. The borrowing costs of the Company,which incur from the special borrowings occupied by the fixed assets that need more than one year (includingone year) for construction, development of investment properties or inventories or from general borrowings,are capitalized and recorded in relevant assets costs; other borrowing costs are recognized as expenses andrecorded in the profit or loss in the period when they are occurred. Relevant borrowing costs start to becapitalized when all of the following three conditions are met:
①Capital expenditure has been occurred;
②Borrowing costs have been occurred;
③ Acquisition or construction necessary for the assets to come into an expected usable state has been carriedout.
(2) Period of capitalization of borrowing costs
Borrowing costs arising from purchasing fixed asset, investment real estate and inventory, and occurred aftersuch assets reached to its intended use of status or sales, than reckoned into assets costs while satisfy the abovementioned capitalization condition; capitalization of borrowing costs shall be suspended and recognized ascurrent expenditure during periods in which construction of fixed assets, investment real estate and inventoryare interrupted abnormally, when the interruption is for a continuous period of more than 3 months, until theacquisition, construction or production of the qualifying asset is resumed; capitalization shall discontinue whenthe qualifying asset is ready for its intended use or sale, the borrowing costs occurred subsequently shallreckoned into financial expenses while occurring for the current period.
(3) Measure of capitalization for borrowing cost
In respect of the special borrowings borrowed for acquisition, construction or production and development of
the assets qualified for capitalization, the amount of interests expenses of the special borrowings actuallyoccurred in the period less interest income derived from unused borrowings deposited in banks or lessinvestment income derived from provisional investment, are recognized.
With respect to the general borrowings occupied for acquisition, construction or production and developmentof the assets qualified for capitalization, the capitalized interest amount for general borrowings is calculatedand recognized by multiplying a weighted average of the accumulated expenditure on the assets in excess ofthe expenditure on the some assets of the special borrowings, by a capitalization rate for general borrowings.The capitalization rate is determined by calculation of the weighted average interest rate of the generalborrowings.
20. Intangible assets
(1) Measurement, use of life and impairment testing
① Measurement of intangible assets
The intangible assets of the Company including land use rights, patented technology and non-patentstechnology etc.The cost of a purchased intangible asset shall be determined by the expenditure actually occurred and otherrelated costs.The cost of an intangible asset contributed by an investor shall be determined in accordance with the valuestipulated in the investment contract or agreement, except where the value stipulated in the contract oragreement is not fair.The intangible assets acquired through exchange of non-monetary assets, which is commercial in substance, iscarried at the fair value of the assets exchanged out; for those not commercial in substance, they are carried atthe carrying amount of the assets exchanged out.The intangible assets acquired through debt reorganization, are recognized at the fair value.
② Amortization methods and time limit for intangible assets:
Land use right of the company had average amortization by the transfer years from the beginning date of transfer(date of getting land use light); Patented technology, non-patented technology and other intangible assets of theCompany are amortized by straight-line method with the shortest terms among expected useful life, benefityears regulated in the contract and effective age regulated by the laws. The amortization amount shall count inrelevant assets costs and current gains/losses according to the benefit object.As for the intangible assets as trademark, with uncertain benefit terms, amortization shall not be carried.Impairment testing methods and accrual for depreciation reserves for the intangible assets found more in NoteIII-“21. Impairment of long-term assets”.
(2)Internal accounting policies relating to research and development expenditures
Expenses incurred during the research phase are recognized as profit or loss in the current period; expensesincurred during the development phase that satisfy the following conditions are recognized as intangible assets(patented technology and non-patents technology):
①It is technically feasible that the intangible asset can be used or sold upon completion;
②there is intention to complete the intangible asset for use or sale;
③ The products produced using the intangible asset has a market or the intangible asset itself has a market;
④there is sufficient support in terms of technology, financial resources and other resources in order tocomplete the development of the intangible asset, and there is capability to use or sell the intangible asset;
⑤ the expenses attributable to the development phase of the intangible asset can be measured reliably.If the expenses incurred during the development phase did not qualify the above mentioned conditions, suchexpenses incurred are accounted for in the profit or loss for the current period.The development expenditurereckoned in gains/losses previously shall not be recognized as assets in later period. The capitalized expensesin development stage listed as development expenditure in balance sheet, and shall be transfer as intangibleassets since such item reached its expected conditions for service.
21. Impairment of long-term assets
The Company will judge if there is any indication of impairment as at the balance sheet date in respect ofnon-current non-financial assets such as fixed assets, construction in progress, intangible assets with a finiteuseful life, investment properties measured at cost, and long-term equity investments in subsidiaries, jointcontrolled entities and associates. If there is any evidence indicating that an asset may be impaired, recoverableamount shall be estimated for impairment test. Goodwill, intangible assets with an indefinite useful life andintangible assets beyond working conditions will be tested for impairment annually, regardless of whetherthere is any indication of impairment.
If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount, theimpairment provision will be made according to the difference and recognized as an impairment loss. Therecoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of thefuture cash flows expected to be derived from the asset. An asset’s fair value is the price in a sale agreement inan 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 market for an asset, fairvalue shall be based on the best available information. Costs of disposal are expenses attributable to disposalof the asset, including legal fee, relevant tax and surcharges, transportation fee and direct expenses incurred toprepare the asset for its intended sale. The present value of the future cash flows expected to be derived fromthe asset over the course of continued use and final disposal is determined as the amount discounted using anappropriately selected 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 smallestgroup of assets capable of generating cash flows independently.
For the purpose of impairment testing, the carrying amount of goodwill presented separately in the financialstatements shall be allocated to the asset groups or group of assets benefiting from synergy of businesscombination. If the recoverable amount is less than the carrying amount, the Group shall recognize animpairment loss. The amount of impairment loss shall first reduce the carrying amount of any goodwillallocated to the asset group or set of asset groups, and then reduce the carrying amount of other assets (otherthan goodwill) within the asset group or set of asset groups, pro rata on the basis of the carrying amount ofeach asset.
An impairment loss recognized on the aforesaid assets shall not be reversed in a subsequent period in respectof the part whose value can be recovered.
22. Long-term deferred expenses
Long-term expenses to be amortized of the Company the expenses that are already charged and with thebeneficial term of more than one year are evenly amortized over the beneficial term. For the long-termdeferred expense items cannot benefit the subsequent accounting periods, the amortized value of such items isall recorded in the profit or loss during recognition.
23. Employee compensation
(1) Accounting treatment for short-term compensation
During the accounting period when the staff providing service to the Company, the short-term remunerationactual occurred shall recognized as liability and reckoned into current gains/losses. During the accountingperiod when staff providing service to the Company, the actual short-term compensation occurred shallrecognized as liabilities and reckoned into current gains/losses, except for those in line with accountingstandards or allow to reckoned into capital costs; the welfare occurred shall reckoned into current gains/lossesor relevant asses costs while actually occurred. The employee compensation shall recognize as liabilities andreckoned into current gains/losses or relevant assets costs while actually occurred. The employee benefits thatbelong to non-monetary benefits are measured in accordance with the fair value; the social insurancesincluding the medical insurance, work-injury insurance and maternity insurance and the housing fund that theenterprise pays for the employees as well as the labor union expenditure and employee education fundswithdrawn by rule should be calculated and determined as the corresponding compensation amount anddetermined the corresponding liabilities in accordance with the specified withdrawing basis and proportion,and reckoned in the current profits and losses or relevant asset costs in the accounting period that theemployees provide services.
(2) Accounting treatment for post-employment benefit
The post-employment benefit included the defined contribution plans and defined benefit plans.Post-employment benefits plan refers to the agreement about the post-employment benefits between theenterprise and employees, or the regulations or measures the enterprise established for providingpost-employment benefits to employees. Thereinto, the defined contribution plan refers to thepost-employment benefits plan that the enterprise doesn’t undertake the obligation of payment after depositingthe fixed charges to the independent fund; the defined benefit plans refers to post-employment benefits plansexcept the defined contribution plan.
(3)Accounting for retirement benefits
When the Company terminates the employment relationship with employees before the end of the employmentcontracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, theCompany shall recognize employee compensation liabilities arising from compensation for staff dismissal andincluded in profit or loss for the current period, when the Company cannot revoke unilaterally compensationfor dismissal due to the cancellation of labor relationship plans and employee redundant proposals; and theCompany recognize cost and expenses related to payment of compensation for dismissal and restructuring,whichever is earlier.The early retirement plan shall be accounted for in accordance with the accountingprinciples for compensation 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 employees stop renderingservices to the scheduled retirement date, shall be recognized (as compensation for termination of employment)in the current profit or loss by the Group if the recognition principles for provisions are satisfied.
(4)Accounting for other long-term employee benefits
Except for the compulsory insurance, the Company provides the supplementary retirement benefits to theemployees satisfying some conditions, the supplementary retirement benefits belong to the defined benefitplans, and the defined benefit liability confirmed on the balance sheet is the value by subtracting the fair valueof plan assets from the present value of defined benefit obligation. The defined benefit obligation is annuallycalculated in accordance with the expected accumulated welfare unit method by the independent actuary byadopting the treasury bond rate with similar obligation term and currency. The service charges related to thesupplementary retirement benefits (including the service costs of the current period, the previous service costs,and the settlement gains or losses) and the net interest are reckoned in the current profits and losses or otherasset costs, the changes generated by recalculating the net liabilities of defined benefit plans or net assetsshould be reckoned in other consolidated income.
24. Share-based payment
The Company’s share-based payment is a transaction that grants equity instruments or assumes liabilitiesdetermined on the basis of equity instruments in order to obtain services provided by employees or otherparties. The Company’s share-based payment is classified as equity-settled share-based payment andcash-settled share-based payment.
(1) Equity-settled share-based payment and equity instruments
Equity-settled share-based payment in exchange for services provided by employees shall be measured at thefair value of the equity instruments granted to employees. If the Company uses restricted stocks forshare-based payment, employees contribute capital to subscribe for stocks, and the stocks shall not be listed forcirculation or transfer until the unlocking conditions are met and unlocked; if the unlocking conditionsspecified in the final equity incentive plan are not met, the Company shall repurchase the stocks at thepre-agreed price. When the Company obtains the payment for the employees to subscribe for restricted stocks,it shall confirm the share capital and capital reserve (share capital premium) according to the obtainedsubscription money, and at the same time recognize a liability in full for the repurchase obligation andrecognize treasury shares. On each balance sheet date during the waiting period, the Company makes the bestestimate of the number of vesting equity instruments based on the changes in the latest obtained number ofvested employees, whether they meet the specified performance conditions, and other follow-up information.On this basis, the services obtained in the current period are included in related costs or expenses based on thefair value on the grant date, and the capital reserve shall be increased accordingly.
For share-based payments that cannot be vested in the end, costs or expenses shall not be recognized, unlessthe vesting conditions are market conditions or non-vesting conditions. At this time, regardless of whether themarket conditions or the non-vesting conditions are met, as long as all non-market conditions in the vestingconditions are met, it is deemed as vesting.
If the terms of equity-settled share-based payment are modified, at least the services obtained should beconfirmed in accordance with the unmodified terms. In addition, any modification that increases the fair valueof the equity instruments granted, or a change that is beneficial to employees on the modification date, isrecognized as an increase in services received.
If the equity-settled share payment is cancelled, it will be treated as an accelerated vesting on the cancellationday, and the unconfirmed amount will be confirmed immediately. If an employee or other party can choose tomeet the non-vesting conditions but fails to meet within the waiting period, it shall be treated as cancellation ofequity-settled share-based payment. However, if a new equity instrument is granted and it is determined on thedate of grant of the new equity instrument that the new equity instrument granted is used to replace thecancelled equity instrument, the granted substitute equity instruments shall be treated in the same way as themodification of the original equity instrument terms and conditions.
(2) Cash-settled share-based payment and equity instruments
Cash-settled share-based payments are measured at the fair value of the liabilities calculated and determinedon the basis of shares or other equity instruments undertaken by the Company. If it’s vested immediately afterthe grant, the fair value of the liabilities assumed on the date of the grant is included in the cost or expense, andthe liability is increased accordingly. If the service within the waiting period is completed or the specifiedperformance conditions are met, the service obtained in the current period shall be included in the relevantcosts or expenses based on the best estimate of the vesting situation within the waiting period and the fairvalue of the liabilities assumed to increase the corresponding liabilities. On each balance sheet date andsettlement date before the settlement of the relevant liabilities, the fair value of the liabilities is remeasured,and the changes are included in the current profit and loss.
25. Accrual liabilities
(1) Recognition principle
An obligation related to a contingency, such as guarantees provided to outsiders, pending litigation orarbitration, product warranties, redundancy plans, onerous contracts, reconstructing, expected disposal of fixedassets, etc. shall be recognized as an estimated liability when all of the following conditions are satisfied:
① the obligation is a present obligation of the Company;
② it is Contingent that an outflow of economic benefits will be required to settle the obligation;
③ the amount of the obligation can be measured reliably.
(2) Measurement method: Measure on the basis of the best estimates of the expenses necessary for paying offthe contingencies
26. Revenue
Accounting policies applicable as of 1 January 2020:
(1)Accounting policies used in revenue recognition and measurement
1)Revenue recognition principle
On the starting date of the contract, the company evaluates the contract, identifies each individual performanceobligation contained in the contract, and determines whether each individual performance obligation isperformed within a certain period of time or at a certain point in time.When one of the following conditions is met, it belongs to the performance obligation within a certain periodof time, otherwise, it belongs to the performance obligation at a certain point in time: ① The customerobtains and consumes the economic benefits brought by the company's performance while the companyperforms the contract; ②The customer can control the goods or services under construction during thecompany’s performance; ③The goods or services produced during the company’s performance haveirreplaceable uses, and the company has the right to collect payment for the performance part that has beencompleted so far during the entire contract period.
For performance obligations performed within a certain period of time, the company recognizes revenue inaccordance with the performance progress during that period. When the performance progress cannot bereasonably determined, if the cost incurred is expected to be compensated, the revenue shall be recognizedaccording to the amount of the cost incurred until the performance progress can be reasonably determined.For performance obligations performed at a certain point in time, revenue is recognized at the point when thecustomer obtains control of the relevant goods or services. When judging whether the customer has obtainedcontrol of the goods, the company considers the following signs:① The company has the current right toreceive payment for the goods, that is, the customer has the current payment obligation for the goods; ②Thecompany has transferred the legal ownership of the goods to the customer, that is, the customer has the legalownership of the goods; ③The company has transferred the goods to the customer in kind, that is, thecustomer has physically taken possession of the goods; ④ The company has transferred the main risks andrewards of the ownership of the goods to the customer, that is, the customer has obtained the main risks andrewards of the ownership of the goods; ⑤ The customer has accepted the goods; ⑥Other signs that thecustomer has obtained control of the goods.
2)Revenue measurement principle
①The company measures revenue based on the transaction price allocated to each individual performanceobligation. The transaction price is the amount of consideration that the company expects to be entitled toreceive due to the transfer of goods or services to customers, and does not include payments collected onbehalf of third parties and payments expected to be returned to customers.
②If there is variable consideration in the contract, the company shall determine the best estimate of thevariable consideration according to the expected value or the most likely amount, but the transaction priceincluding the variable consideration shall not exceed the amount of cumulatively recognized revenue that isunlikely to be significantly turned back when the relevant uncertainty is eliminated.
③ If there is a significant financing component in the contract, the company shall determine the transactionprice based on the amount payable that the customer is assumed to pay in cash when obtaining the control ofthe goods or services. The difference between the transaction price and the contract consideration shall beamortized by the effective interest method during the contract period. On the starting date of the contract, if thecompany expects that the customer pays the price within one year after obtaining control of the goods orservices, the significant financing components in the contract shall not be considered.
④If the contract contains two or more performance obligations, the company will allocate the transaction priceto each individual performance obligation based on the relative proportion of the stand-alone selling price ofthe goods promised by each individual performance obligation on the starting date of the contract.
(2) The Company's standard for the revenue recognition of the sales of goods and the specific judgmentstandard for the confirmation time:
The time when the Company’s domestic sales revenue is confirmed: The company delivers the goodsaccording to the order. On the reconciliation date agreed with the buyer, check the goods received andinspected by the buyer during the period from the last reconciliation date to this reconciliation date with thebuyer, and the risks and rewards are transferred to the buyer after checking, the Company issues an invoice to
the buyer according to the type, quantity and amount confirmed in the reconciliation, and confirms therealization of sales revenue on the reconciliation day.The time when the Company’s foreign sales revenue is confirmed: After the customs review is completed, theCompany will confirm the realization of the sales revenue according to the export date specified on thecustoms declaration.Accounting policies applicable for year of 2019:
(1) Concrete judging criteria for time of recognized
The major risks and remuneration entitled to the ownership of goods are transferred to buyer; neither retain thecontinued management right generally related to ownership, nor exercise effective control over the soldproducts; the relevant economic benefits are probable to flow into the Company; the relevant income and costscan be measured reliably.Concrete judging criteria for time of recognized the income from goods sales:
The Company's domestic sales revenue recognition time: The company delivers goods as agreed, checks thegoods that the buyers have received and inspected during the period of the last reconciliation date and thisreconciliation date with the buyers on the reconciliation date as agreed, and transfers the risks andremunerations to the buyers after checking, the Company issues the invoices to the buyers in accordance withthe recognized varieties, quantities and amounts and affirms the sales revenue realization on the reconciliationdate.The Company's overseas sales revenue recognition time: After checking by the customs, the Company affirmsthe sales revenue realization according to the date of departure on the customs declaration.
(2) Recognition of revenue of assets using right alienation
Revenue from use by others of enterprise assets shall be recognized only when the associated economic benefitcan flow into the Company, and the amount of revenue can be measured reliably, revenue measured by thefollow:
① Interest income amount: calculated and determined in accordance with the time that others use theenterprises cash and the actual interest rate.
② Royalty revenue amount: calculated and determined in accordance with the charging time and method of therelevant contract or agreement as agreed.The basis that the Company confirms the revenue from transferring the right to use assets.Rental income: the revenue realization is confirmed after collecting the rent on the date as agreed in the rentalcontract (or agreement). For the rent not received on the date as agreed in the contract or agreement but can bereceived, and of which the amount of revenue can be measured reliably can also be recognized as revenue.
(3) When confirming the incomes of labor services and construction contracts according to the percentage ofcompletion method, determine the basis and method of the contract completion plan.For the service transaction results can be estimated reliably on the balance sheet date, the service revenue isdetermined and recognized by adopting the percentage of completion method. The completion progress ofservice transaction is determined by the proportion of incurred costs in the estimated total cost.The total service revenue is determined by the received or receivable contract or agreement costs, except that
the received or receivable contract or agreement costs are not fair. On the balance sheet date, the service revenueof the current period is determined by multiplying the total service revenue by the completion progress anddeducting the amount accumulated in the previous accounting period and confirmed to render the servicerevenue. Meanwhile, the labor costs of the current period are carried forward by multiplying the total estimatedcosts of labor services by the completion progress and deducting the amount accumulated in the previousaccounting period with confirmed service costs.For the service transaction results cannot be estimated reliably on the balance sheet date, respectively dispose asfollowing circumstances:
①The incurred labor costs estimated to be compensated are confirmed to render the service revenue accordingto the incurred labor costs, and are carried forward by the equivalent amount.
②The incurred labor costs estimated not to be compensated are reckoned in the current profits or losses, andare not confirmed to render the service revenue.
27. Government grants
(1) Types
Government grants are transfer of monetary assets or non-monetary assets from the government to the Groupat no consideration. Government grants are classified into government grants related to assets and governmentgrants related to income.As for the assistance object not well-defined in government’s documents, the classification criteria forassets-related or income-related grants are as: whether the grants turn to long-term assets due to purchasing forconstruction or other means.
(2) Recognition and measure
The government grants shall be recognized while meet the additional conditions of the grants and amount isactually can be obtained.If a government grant is in the form of a transfer of monetary asset, the item shall be measured at the amountreceived or receivable. If a government grant is in the form of a transfer of non-monetary asset, the item shallbe measured at fair value. If the fair value can not be reliably acquired, than measured by nominal amount.
(3) Accounting treatment
A government grant related to an asset shall be recognized as deferred income, and reckoned into currentgains/losses according to the depreciation process in use life of such assets.A government grant related to income, if they making up relevant expenses and losses for later period, thanrecognized deferred income, and should reckoned into current gain/loss during the period while relevantexpenses are recognized; if they making up relevant expenses and losses that occurred, than reckoned intocurrent gains/losses.A government grant related to daily operation activity of the Company should reckoned into other income;those without related to daily operation activity should reckoned into non-operation income and expenses.The financial discount funds received by the Company shall write down relevant borrowing costs.
28. Deferred income tax assets/Deferred income tax liabilities
(1) Deferred income tax assets or deferred income tax liabilities are realized based on the difference betweenthe carrying values of assets and liabilities and their taxation bases (as for the ones did not recognized as assetsand liability and with taxation basis recognized in line with tax regulations, different between tax base and itsbook value) at the tax rates applicable in the periods when the Company recovers such assets or settles suchliabilities.
(2) Deferred income tax assets are realized to the extent that it is probable to obtain such taxable income whichis used to set off the deductible temporary difference. As at the balance sheet date, if there is obvious evidenceshowing that it is probable to obtain sufficient taxable income to set off the deductible temporary difference infuture periods, deferred income tax assets not realized in previous accounting periods shall be realized.
(3) On balance sheet date, re-review shall be made in respect of the carrying value of deferred income taxassets. If it is impossible to obtain sufficient taxable income to set off the benefits of deferred income tax assetsin future periods, then the carrying value of deferred income tax assets shall be reduced accordingly. If it isprobable to obtain sufficient taxable income, then the amount reduced shall be switched back.
(4) Current income tax and deferred income tax considered as income tax expenses or incomes reckoned intocurrent gains/losses, excluding the follow income tax:
①Enterprise combination;
②Transactions or events recognized in owner’s equity directly
29. Lease
(1) Accounting for operating lease
The rental fee paid for renting the properties by the company are amortized by the straight-line method andreckoned in the current expenses throughout the lease term without deducting rent-free period. The initial directcosts related to the lease transactions paid by the company are reckoned in the current expenses.When the lessor undertakes the expenses related to the lease that should be undertaken by the company, thecompany shall deduct the expenses from the total rental costs, share by the deducted rental costs during thelease term, and reckon in the current expenses.Rental obtained from assets leasing, during the whole leasing period without rent-free period excluded, shallbe amortized by straight-line method and recognized as leasing revenue. The initial direct costs paid withleasing transaction concerned are reckoned into current expenditure; the amount is larger is capitalized whenincurred, and accounted for as profit or loss for the current period on the same basis as recognition of rentalincome over the entire lease period.When the company undertakes the expenses related to the lease that should be undertaken by the lessor, thecompany shall deduct the expenses from the total rental income, and distribute by the deducted rental costsduring the lease term.
(2) Accounting treatment for financing lease
Assets lease-in by financing: On the beginning date of the lease, the entry value of leased asset shall be at thelower of the fair value of the leased asset and the present value of minimum lease payment at the beginningdate of the lease. Minimum lease payment shall be the entry value of long-term accounts payable, withdifference recognized as unrecognized financing expenses. Unrecognized financing expenses shall be reckonedin financial expenses and amortized and using effective interest method during the leasing period. The initialdirect costs incurred by the Company shall be reckoned into value of assets lease-in.Finance leased assets: on the lease commencement date, the company affirms the balance among the financelease receivables, the sum of unguaranteed residual value and its present value as the unrealized financingincome, and recognizes it as the rental income during the period of receiving the rent. For the initial directcosts related to the rental transaction, the company reckons in the initial measurement of the finance leasereceivables, and reduces the amount of income confirmed in the lease term.
30.Changes of important accounting policy and estimation
(1)Changes of important accounting policies
Implementation of new revenue standard:
The Ministry of Finance revised the Accounting Standards for Business Enterprise No.14- Revenue in 2017,which go into effect on 1 January 2020. The revised standard requires that the cumulative impact of the firstimplementation of the standard be adjusted by the amount of opening retained earnings and other related itemsin the financial statement for the period of first-time implementation for comparable periods.Main impact on the financial statement of the Company on 1 Jan. 2020 while implementing the new revenuestandard:
Consolidated financial statement: In RMB/CNY
Item | 2019-12-31 | Reclassify | Remeasurement | 2020-1-1 |
Account receivable | 2,310,666,475.89 | 115,015,466.40 | -- | 2,425,681,942.29 |
Other current liability | -- | 115,015,466.40 | -- | 115,015,466.40 |
-- | ||||
Account received in advance | 113,737,432.61 | -110,874,750.61 | -- | 2,862,682.00 |
Contract liability | -- | 98,565,613.54 | -- | 98,565,613.54 |
Other current liability | -- | 12,309,137.07 | -- | 12,309,137.07 |
Financial statement of parent company: In RMB/CNY
Item | 2019-12-31 | Reclassify | Remeasurement | 2020-1-1 |
Account receivable | 768,500,929.93 | 79,739,079.11 | -- | 848,240,009.04 |
Other current liability | -- | 79,739,079.11 | -- | 79,739,079.11 |
Account received in advance | 12,010,730.30 | -12,010,730.30 | -- | -- |
Contract liability | -- | 10,628,964.87 | -- | 10,628,964.87 |
Other current liability | -- | 1,381,765.43 | -- | 1,381,765.43 |
(2)Changes of important accounting estimate
Nil
(3) Adjustment the financial statements at the beginning of the first year of implementation of new financialinstrument standards since 2020:
Consolidate balance sheetIn RMB/CNY
Item | 2019-12-31 | 2020-1-1 | Adjustments |
Current assets: | |||
Monetary funds | 1,596,893,711.87 | 1,596,893,711.87 | |
Financial assets measured at fair value and whose changes are included in current profit or loss | |||
Transaction financial asset | 3,940,885,674.32 | 3,940,885,674.32 | |
Derivative financial assets | |||
Note receivable | 1,812,141,371.94 | 1,812,141,371.94 | |
Account receivable | 2,310,666,475.89 | 2,425,681,942.29 | 115,015,466.40 |
Receivables financing | 23,873,317.86 | 23,873,317.86 | |
Account paid in advance | 139,241,917.78 | 139,241,917.78 | |
Other account receivables | 43,730,023.31 | 43,730,023.31 | |
Inventory | 2,418,744,835.82 | 2,418,744,835.82 | |
Contract assets | |||
Assets held for sale | |||
Non-current asset due within one year | |||
Other current assets | 1,012,055,605.74 | 1,012,055,605.74 | |
Total current assets | 13,298,232,934.53 | 13,413,248,400.93 | 115,015,466.40 |
Non-current assets: | |||
Creditors’ investment | |||
Other creditors’ investment | |||
Long-term account receivables | |||
Long-term equity investment | 5,322,405,953.35 | 5,322,405,953.35 | |
Other equity instrument investment | 285,048,000.00 | 285,048,000.00 | |
Other non-current financial assets | 1,043,589,987.43 | 1,043,589,987.43 | |
Investment real estate | 22,410,511.87 | 22,410,511.87 | |
Fixed assets | 2,845,176,078.20 | 2,845,176,078.20 | |
Construction in progress | 247,857,777.25 | 247,857,777.25 | |
Productive biological assets | |||
Oil and gas assets |
Item | 2019-12-31 | 2020-1-1 | Adjustments |
Intangible assets | 430,594,372.12 | 430,594,372.12 | |
Development expenses | |||
Goodwill | 1,784,086.79 | 1,784,086.79 | |
Long-term deferred expenses | 18,536,000.25 | 18,536,000.25 | |
Deferred income tax assets | 212,476,501.54 | 212,476,501.54 | |
Other non-current assets | 230,235,982.45 | 230,235,982.45 | |
Total non-current assets | 10,660,115,251.25 | 10,660,115,251.25 | |
Total assets | 23,958,348,185.78 | 24,073,363,652.18 | 115,015,466.40 |
Current liabilities: | |||
Short-term borrowings | 312,153,969.81 | 312,153,969.81 | |
Financial liability measured by fair value and with variation reckoned into current gains/losses | |||
Transaction financial liability | |||
Derivative financial liability | |||
Note payable | 1,745,218,439.52 | 1,745,218,439.52 | |
Account payable | 3,312,254,229.84 | 3,312,254,229.84 | |
Account received in advance | 113,737,432.61 | 2,862,682.00 | -110,874,750.61 |
Contract liability | 98,565,613.54 | 98,565,613.54 | |
Employee compensation payable | 314,343,737.66 | 314,343,737.66 | |
Taxes payable | 129,538,411.86 | 129,538,411.86 | |
Other account payable | 65,266,262.39 | 65,266,262.39 | |
Liability held for sale | |||
Non-current liabilities due within one year | |||
Other current liability | 127,324,603.47 | 127,324,603.47 | |
Total current liabilities | 5,992,512,483.69 | 6,107,527,950.09 | 115,015,466.40 |
Non-current liabilities: | |||
Long-term borrowings | |||
Bonds payable |
Including: preferred stock | |||
Perpetual capital securities | |||
Long-term account payable | 35,108,263.11 | 35,108,263.11 | |
Long-term employee compensation payable | 58,392,053.61 | 58,392,053.61 | |
Accrual liabilities | |||
Deferred income | 365,116,022.98 | 365,116,022.98 | |
Deferred income tax liabilities | 22,566,051.72 | 22,566,051.72 | |
Other non-current liabilities | |||
Total non-current liabilities | 481,182,391.42 | 481,182,391.42 | |
Total liabilities | 6,473,694,875.11 | 6,588,710,341.51 | 115,015,466.40 |
Item | 2019-12-31 | 2020-1-1 | Adjustments |
Owners’ equity: | |||
Paid-in capital (or share capital) | 1,008,950,570.00 | 1,008,950,570.00 | |
Other equity instrument | |||
Including: preferred stock | |||
Perpetual capital securities | |||
Capital reserve | 3,391,527,806.33 | 3,391,527,806.33 | |
Less: Inventory shares | |||
Other comprehensive income | 134,871.67 | 134,871.67 | |
Reasonable reserve | 3,247,757.06 | 3,247,757.06 | |
Surplus reserve | 510,100,496.00 | 510,100,496.00 | |
Retained profit | 12,076,443,635.56 | 12,076,443,635.56 | |
Total owners’ equity attributable to parent company | 16,990,405,136.62 | 16,990,405,136.62 | |
Minority interests | 494,248,174.05 | 494,248,174.05 | |
Total owners’ equity | 17,484,653,310.67 | 17,484,653,310.67 | |
Total liabilities and owner’s equity | 23,958,348,185.78 | 24,073,363,652.18 | 115,015,466.40 |
Balance sheet of parent companyIn RMB/CNY
Item | 2019-12-31 | 2020-1-1 | Adjustments |
Current assets: | |||
Monetary funds | 965,770,877.82 | 965,770,877.82 | |
Financial assets measured at fair value and whose changes are included in current profit or loss | |||
Transaction financial asset | 3,758,789,072.68 | 3,758,789,072.68 | |
Derivative financial assets | |||
Note receivable | 202,403,993.13 | 202,403,993.13 | |
Account receivable | 768,500,929.93 | 848,240,009.04 | 79,739,079.11 |
Receivables financing | |||
Account paid in advance | 89,116,730.45 | 89,116,730.45 | |
Other account receivables | 250,014,956.74 | 250,014,956.74 | |
Inventory | 565,144,234.49 | 565,144,234.49 | |
Contract assets | |||
Assets held for sale | |||
Non-current asset due within one year | |||
Other current assets | 938,616,881.51 | 938,616,881.51 | |
Total current assets | 7,538,357,676.75 | 7,618,096,755.86 | 79,739,079.11 |
Non-current assets: | |||
Creditors’ investment | |||
Other creditors’ investment | |||
Long-term account receivables |
Item | 2019-12-31 | 2020-1-1 | Adjustments |
Long-term equity investment | 6,331,363,630.04 | 6,331,363,630.04 | |
Other equity instrument investment | 209,108,000.00 | 209,108,000.00 | |
Other non-current financial assets | 1,043,589,987.43 | 1,043,589,987.43 | |
Investment real estate | |||
Fixed assets | 1,646,333,216.50 | 1,646,333,216.50 | |
Construction in progress | 136,573,912.28 | 136,573,912.28 | |
Productive biological assets | |||
Oil and gas assets | |||
Intangible assets | 203,663,423.60 | 203,663,423.60 | |
Development expenses | |||
Goodwill | |||
Long-term deferred expenses | |||
Deferred income tax assets | 105,137,877.84 | 105,137,877.84 | |
Other non-current assets | 172,646,721.05 | 172,646,721.05 | |
Total non-current assets | 9,848,416,768.74 | 9,848,416,768.74 | |
Total assets | 17,386,774,445.49 | 17,466,513,524.60 | 79,739,079.11 |
Current liabilities: | |||
Short-term borrowings | 116,126,459.33 | 116,126,459.33 | |
Financial liability measured by fair value and with variation reckoned into current gains/losses | |||
Transaction financial liability | |||
Derivative financial liability | |||
Note payable | 284,054,137.00 | 284,054,137.00 | |
Account payable | 930,273,146.35 | 930,273,146.35 | |
Account received in advance | 12,010,730.30 | -12,010,730.30 | |
Contract liability | 10,628,964.87 | 10,628,964.87 | |
Employee compensation payable | 213,626,754.45 | 213,626,754.45 | |
Taxes payable | 56,540,307.59 | 56,540,307.59 | |
Other account payable | 11,976,576.21 | 11,976,576.21 | |
Liability held for sale | |||
Non-current liabilities due within one year | |||
Other current liability | 81,120,844.54 | 81,120,844.54 | |
Total current liabilities | 1,624,608,111.23 | 1,704,347,190.34 | 79,739,079.11 |
Non-current liabilities: | |||
Long-term borrowings | |||
Bonds payable | |||
Including: preferred stock | |||
Perpetual capital securities | |||
Long-term account payable | |||
Long-term employee compensation payable | 50,058,386.76 | 50,058,386.76 | |
Accrual liabilities |
Item | 2019-12-31 | 2020-1-1 | Adjustments |
Deferred income | 322,971,778.82 | 322,971,778.82 | |
Deferred income tax liabilities | |||
Other non-current liabilities | |||
Total non-current liabilities | 373,030,165.58 | 373,030,165.58 | |
Total liabilities | 1,997,638,276.81 | 2,077,377,355.92 | 79,739,079.11 |
Owners’ equity: | |||
Paid-in capital (or share capital) | 1,008,950,570.00 | 1,008,950,570.00 | |
Other equity instrument | |||
Including: preferred stock | |||
Perpetual capital securities | |||
Capital reserve | 3,488,221,286.39 | 3,488,221,286.39 | |
Less: Inventory shares | |||
Other comprehensive income | |||
Reasonable reserve | |||
Surplus reserve | 510,100,496.00 | 510,100,496.00 | |
Retained profit | 10,381,863,816.29 | 10,381,863,816.29 | |
Total owners’ equity | 15,389,136,168.68 | 15,389,136,168.68 | |
Total liabilities and owner’s equity | 17,386,774,445.49 | 17,466,513,524.60 | 79,739,079.11 |
31. Critical accounting judgments and estimates
In the process of applying the Company's accounting policies, due to the inherent uncertainty of businessactivities, the Company needs to judge, estimate and assume the book value of the report items cannot beaccurately measured. These judgments, estimates and assumptions are made on the basis of the historicalexperience of the Company’s management and by considering other relevant factors, which shall impact thereported amounts of income, expenses, assets and liabilities and the disclosure of contingent liabilities on thebalance sheet date. However, the actual results caused by the estimated uncertainties may differ from themanagement's current estimates of the Company so as to carry out the significant adjustments to the book valueof the assets or liabilities to be affected.The Company regularly reviews the aforementioned judgments, estimates and assumptions on the basis ofcontinuing operations, the changes in accounting estimates only affect the current period, of which the impactsare recognized in the current period; the changes in accounting estimates not only affect the current period butalso the future periods, of which the impacts are recognized in the current and future periods.On the balance sheet date, the important areas of the financial statements that the Company needs to judge,estimate and assume are as follows:
(1) Provision for bad debts
The Company has used the expected credit loss model to assess the impairment of financial instruments. Theapplication of the expected credit loss model requires significant judgements and estimates, and must considerall reasonable and evidence-based information, including forward-looking information. In making suchjudgments and estimates, the Company infers the expected changes in debtors’ credit risks based on historical
repayment data combined with economic policies, macroeconomic indicators, industry risks and other factors.
(2) Inventory impairment
According to the inventory accounting policies, the Company measures by the comparison between the cost andthe net realizable value, if the cost is higher than the net realizable value and the old and unsalable inventories,the Company calculates and withdraws the inventory impairment. The inventory devalues to the net realizablevalue by evaluating the inventory’s vendibility and net realizable value. To identify the inventory impairment,the management needs to obtain the unambiguous evidences, and consider the purpose to hold the inventory,and judge and estimate the impacts of events after the balance sheet date. The actual results and the differencesbetween the previously estimated results shall affect the book value of inventory and the provision or return ofthe inventory impairment during the period estimated to be changed.
(3) Preparation for the impairment of non-financial & non-current assets
The Company checks whether the non-current assets except for the financial assets may decrease in value atthe balance sheet date. For the intangible assets with indefinite service life, in addition to the annual impairmenttest, the impairment test is also needed when there is a sign of impairment. For the other non-current assetsexcept for the financial assets, the impairment test is needed when it indicates that the book amounts may not berecoverable.When the book value of the asset or group of assets exceeds its recoverable amount, i.e. the higher between thenet amount by subtracting the disposal costs from the fair value and the present value of expected future cashflows, it indicates the impairment.As for the net amount by subtracting the disposal costs from the fair value, refer to the sales agreement pricesimilar to the assets in the fair trade or the observable market price, and subtract the incremental costsdetermination directly attributable to the disposal of the asset.When estimating the present value of the future cash flow, the Company needs to make significant judgmentsto the output, price, and related operating expenses of the asset (or asset group) and the discount rate used forcalculating the present value. When estimating the recoverable amount, the Company shall adopt all therelevant information can be obtained, including the prediction related to the output, price, and related operatingexpenses based on the reasonable and supportable assumptions.The Company tests whether its business reputation decreases in value every year, which requires to estimatingthe present value of the asset group allocated with goodwill or the future cash flow combined by the assetgroup. When estimating the present value of the future cash flow, the Company needs to estimate the futurecash flows generated by the asset group or the combination of asset group, and select the proper discount rateto determine the present value of the future cash flows.
(4) Depreciation and amortization
The Company depreciates and amortizes the investment property, fixed assets and intangible assets accordingto the straight-line method in the service life after considering the residual value. The Company regularlyreviews the service life to determine the depreciation and amortization expense amount to be reckoned in eachreporting period. The service life is determined by the Company based on the past experience of similar assetsand the expected technological updating. If the previous estimates have significant changes, the depreciation and
amortization expense shall be adjusted in future periods.
(5) Fair value of financial instrument
Financial instruments that do not have active markets to provide quotes need to use valuation techniques todetermine fair value. Valuation techniques include the latest transaction information, discounted cash flowmethods, and option pricing models. The Company has established a set of work processes to ensure thatqualified personnel are responsible for the calculation, verification and review of fair value. The valuationmodel used by the Company uses the market information as much as possible and uses the Company-specificinformation as little as possible. It should be noted that part of the information used in the valuation modelrequires management’s estimation (such as discount rate, target exchange rate volatility, etc.). The Companyregularly reviews the above estimates and assumptions and makes adjustments if necessary.
(6) Income tax
In the Company’s normal business activities, the final tax treatment and calculation of some transactions havesome uncertainties. Whether some projects can be disbursed from the cost and expenses before taxes requiresneeds to get approval from the tax authorities. If the final affirmation of these tax matters differs from theinitially estimated amount, the difference shall have an impact on its current and deferred income taxes duringthe final identification period.
IV. Taxation
1. Major taxes and tax rates
Tax | Basis | Tax rate |
VAT | General taxpayers of the company and domestic subsidiaries calculate output tax at the tax rates of 13%, 9%, 6%, and 5% of taxable income, and calculate and pay value-added tax based on the difference after deducting the input VAT that is allowed to be deducted in the current period. | 13%, 9%, 6%, Collection rate 5% |
City maintaining & construction tax | Turnover tax payable | 7% |
Educational surtax | Turnover tax payable | 5%.4.5% |
Corporation income tax | Taxable income | Except for overseas subsidiaries which calculate and pay the taxes according to the statutory tax rate of the country or region where they are located, the corporate income tax of domestic companies is calculated and paid at 15%、20% or 25% of the taxable income. |
2. Preferential taxation
The Company, Weifu Jinning, Weifu Leader and Weifu Tianli are accredited as a high-tech enterprise in 2020,and enjoy a preferential income tax rate of 15% from 1 January 2020 to 31 December 2022.The State Administration of Taxation announced the first item of Announcement of the State Administration ofTaxation on the Enterprise Income Tax Issues Concerning the Implementation of the Western DevelopmentStrategy No. 12 of 2012 that from January 1, 2011 to December 31, 2020, the enterprises located in the westregion and mainly engaged in the industrial projects stipulated in the Catalogue of Encouragement Industriesinthe Western Region, and whose main business income accounting for more than 70% of the total income of theenterprise in the current year can pay the corporate income tax at the tax rate of 15%. In 2020, Weifu Leader(Chongqing) paid its corporate income tax at the tax rate of 15%.According to the provision of the State Administration of Taxation on the Announced the Cancellation of 22Tax Non-administrative Review (No. 58 documents in 2015) dated 18 August 2015, the enterprise that benefitfrom the 15% tax incentive for western development do not need to approve only to file, and Weifu Leader(Chongqing) has passed the tax filing audit in 2020.In 2020, Weifu Leader (Wuhan) met the standards of small and low-profit enterprises, and the part of taxableincome that did not exceed 1 million yuan was included in the taxable income at a reduced rate of 25%, andthe corporate income tax was paid at the tax rate of 20%; while the part of the taxable income exceeding 1million yuan but not exceeding 3 million yuan was included in the taxable income at a reduced rate of 50%,and the corporate income tax was paid at the tax rate of 20%.V. Notes to major items in consolidated financial statements
(Monetary unit refers to RMB/CNY below unless otherwise specified.The end of the period refers toDecember 31, 2020, the beginning of the period refers to January 1, 2020, the current period refers to2020, and the last period refers to 2019.)
1. Monetary funds
Item | Ending balance | Opening balance |
Cash on hand | 507.66 | 93,165.33 |
Cash in bank | 1,905,945,511.04 | 1,531,405,488.52 |
Other Monetary funds | 57,343,813.63 | 65,395,058.02 |
Total | 1,963,289,832.33 | 1,596,893,711.87 |
Including: Total amount saving aboard | 33,723,245.25 | 31,442,836.86 |
Total amount with restriction on use for mortgage, pledge or freeze | 57,343,813.63 | 34,946,900.21 |
Other explanation:
The ending balance of other monetary funds includes bank acceptance bill deposit 51,045,344.11 yuan, Mastercard deposit215,720.00 yuan, in-transit foreign exchange funds 2,656,627.59 yuan, letter of credit guarantee deposit 587,241.00 yuan, andfrozen dividends 2,838,880.93 yuan. The in-transit foreign exchange fund of 2,656,627.59 yuan is the final payment of theinvestment in Protean Holding Corp; as of December 31, 2020, the amount is still in the foreign exchange supervisionaccount.The frozen dividend of 2,838,880.93 Yuan represents the part of dividends distributed by SDEC(stock code:600841) andMiracle Automation (stock code:002009) from 2017 to 2020 held by the Company as financial assets available for sale.According to the notices numbered Yue 03MC [2016]2490 and Yue 03MC [2016]2492 served by Guangdong Shenzhen
Intermediate People’s Court, these dividends were frozen.
2. Transaction financial asset
Item | Ending balance | Opening balance |
Financial assets measured by fair value and with variation reckoned into current gains/losses | 3,518,432,939.10 | 3,940,885,674.32 |
Including: SDEC share | 140,395,956.00 | 91,822,332.00 |
Miracle Automation share | 47,712,300.00 | 36,031,500.00 |
Financial products | 3,330,324,683.10 | 3,813,031,842.32 |
Other | -- | -- |
Total | 3,518,432,939.10 | 3,940,885,674.32 |
3. Note receivable
(1) Classification of notes receivable:
Item | Ending balance | Opening balance |
Bank acceptance bill | 1,312,571,695.46 | 1,755,135,175.42 |
Trade acceptance bill | 344,744,028.10 | 57,006,196.52 |
Total | 1,657,315,723.56 | 1,812,141,371.94 |
Category | Ending balance | ||||
Book balance | Bad debt reserve | Book value | |||
Amount | Ratio (%) | Amount | Accrual ratio (%) | ||
Note receivable with bad debt provision accrual on portfolio | 1,657,315,723.56 | 100.00 | -- | -- | 1,657,315,723.56 |
Portfolio 1: bank acceptance bill | 1,312,571,695.46 | 79.20 | -- | -- | 1,312,571,695.46 |
Portfolio 2: trade acceptance bill | 344,744,028.10 | 20.80 | -- | -- | 344,744,028.10 |
Total | 1,657,315,723.56 | 100.00 | -- | -- | 1,657,315,723.56 |
On December 31, 2020, the company accrued bad debt provisions according to the expected credit losses for the entire duration,bank acceptance bills and trade acceptance bill do not need to accrue bad debt provisions.The company believed that the bankacceptance bills held did not have significant credit risk and would not cause significant losses due to bank defaults.The tradeacceptance bill held by the Company did not have significant credit risk, because these bills were mainly issued by largestate-owned enterprises and listed companies with good reputation, and based on historical experience, there had been no majordefaults, so they did not accrue bad debt provisions for the receivable bank acceptance bills and trade acceptance bill.
(2) Notes receivable already pledged by the Company at the end of the period:
Item | Amount pledge at period-end |
Bank acceptance bill | 677,962,881.14 |
Trade acceptance bill | 203,951,495.81 |
Total | 881,914,376.95 |
(3) Notes endorsement or discount and undue on balance sheet date
Item | Amount derecognition at period-end | Amount not derecognition at period-end |
Bank acceptance bill | 883,989,936.32 | -- |
Trade acceptance bill | 33,750,000.00 | -- |
Total | 917,739,936.32 | -- |
(4) Notes transfer to account receivable due for failure implementation by drawer at period-end:
Item | Amount transfer to account receivable at period-end |
Trade acceptance bill | 7,300,000.00 |
Other explanation:
The trade acceptance bill that the company transferred to the accounts receivable due to in 2018 the failure of the drawer to performthe agreement at the end of the period were the bills of the subsidiaries controlled by Baota Petrochemical Group Co., Ltd. and thebills accepted by Baota Petrochemical Group Finance Co., Ltd. (hereinafter referred to as “BDbills”); In 2018, the amounttransferred to account receivable was 7 million yuan, and 1.7 million yuan has been recovered in 2019, this year, an increase of 2million yuan was added.
4. Account receivable
(1) Classification of account receivable:
Category | Ending balance | |||||
Book balance | Bad debt reserve | Book value | ||||
Amount | Ratio (%) | Amount | Accrual ratio (%) | |||
Account receivable with bad debt provision accrual on a single basis | 80,362,095.35 | 2.74 | 80,362,095.35 | 100.00 | -- | |
Account receivable with bad debt provision accrual on portfolio | 2,847,529,398.11 | 97.26 | 22,749,045.70 | 0.80 | 2,824,780,352.41 | |
Total | 2,927,891,493.46 | 100.00 | 103,111,141.05 | 3.52 | 2,824,780,352.41 |
Category | Opening balance | ||||
Book balance | Bad debt reserve | Book value | |||
Amount | Ratio (%) | Amount | Accrual ratio (%) | ||
with bad debt provision accrual on a single basis | 64,818,802.14 | 2.58 | 64,818,802.14 | 100 | -- |
with bad debt provision accrual on portfolio | 2,448,486,812.37 | 97.42 | 22,804,870.08 | 0.93 | 2,425,681,942.29 |
Total | 2,513,305,614.51 | 100.00 | 87,623,672.22 | 3.49 | 2,425,681,942.29 |
①Bad debt provision accrual on single basis:
Account receivable(by unit) | Ending balance | |||
Book balance | Bad debt reserve | Accrual ratio (%) | Accrual causes | |
Hubei Meiyang Auto Industry Co., Ltd. | 20,139,669.45 | 20,139,669.45 | 100.00 | Have difficulty in collection |
Hunan Leopaard Auto Co., Ltd. | 8,910,778.54 | 8,910,778.54 | 100.00 | Have difficulty in collection |
BD bills | 7,300,000.00 | 7,300,000.00 | 100.00 | Have difficulty in collection |
Jiangxi Dorcen Automobile Industry Co., Ltd. | 7,287,632.16 | 7,287,632.16 | 100.00 | Have difficulty in collection |
Linyi Zotye Automobile components | 6,193,466.77 | 6,193,466.77 | 100.00 | Have difficulty in collection |
Account receivable(by unit) | Ending balance | |||
Book balance | Bad debt reserve | Accrual ratio (%) | Accrual causes | |
Manufacturing Co., Ltd. | ||||
Changchun FAW Sihuan Engine Manufacturing Co., Ltd | 5,852,415.65 | 5,852,415.65 | 100.00 | Have difficulty in collection |
Tongling Ruineng Purchasing Co., Ltd. | 4,320,454.34 | 4,320,454.34 | 100.00 | Have difficulty in collection |
Brilliance Automotive Group Holdings Co., Ltd. | 3,469,091.33 | 3,469,091.33 | 100.00 | Have difficulty in collection |
Zhejiang Zotye Auto Manufacturing Co., Ltd. | 3,217,763.27 | 3,217,763.27 | 100.00 | Have difficulty in collection |
Jiangxi Dorcen Automobile Co., Ltd. | 2,518,959.01 | 2,518,959.01 | 100.00 | Have difficulty in collection |
Dongfeng Chaoyang Diesel Co., Ltd. | 1,953,054.31 | 1,953,054.31 | 100.00 | Have difficulty in collection |
Jiangsu Kawei Auto Industrial Group Co., Ltd. | 1,932,476.26 | 1,932,476.26 | 100.00 | Have difficulty in collection |
Wuxi Kipor Machinery Co., Ltd | 1,820,798.21 | 1,820,798.21 | 100.00 | Have difficulty in collection |
Fujian Zhao’an Country Minyue Bianjie Agricultural Machinery Automobile components Co., Ltd. | 1,111,007.12 | 1,111,007.12 | 100.00 | Have difficulty in collection |
Jiangsu Jintan Automobile Industry Co., Ltd. | 1,059,798.43 | 1,059,798.43 | 100.00 | Have difficulty in collection |
Other custom | 3,274,730.50 | 3,274,730.50 | 100.00 | Have difficulty in collection |
Total | 80,362,095.35 | 80,362,095.35 | 100.00 |
②Bad debt provision accrual on portfolio:
Account age | Ending balance | ||
Book balance | Bad debt reserve | Accrual ratio (%) | |
Within 6 months | 2,708,236,852.25 | -- | -- |
6 months to one year | 112,424,780.47 | 11,242,478.05 | 10.00 |
1-2 years | 16,733,198.33 | 3,346,639.68 | 20.00 |
2-3 years | 3,291,064.86 | 1,316,425.77 | 40.00 |
Over 3 years | 6,843,502.20 | 6,843,502.20 | 100.00 |
Total | 2,847,529,398.11 | 22,749,045.70 | 0.80 |
③In the portfolio, there is no account receivable bad debt reserves are accrued by other methods
④By account age (Including single provision and portfolio provision):
Account age | Ending Book balance |
Within one year | 2,822,428,153.44 |
Including: within 6 months | 2,708,470,485.40 |
6 months to one year | 113,957,668.04 |
1-2 years | 54,617,379.30 |
2-3 years | 35,820,608.24 |
Over 3 years | 15,025,352.48 |
Total | 2,927,891,493.46 |
(2) Bad debt provision accrual collected or switch back:
Category | Opening balance | Amount changed in the period | Ending balance | ||||
Accrual | Collected or reversal | Written-off | Conversion of foreign currency financial statement | Increase in business combination | |||
Bad debt reserve | 87,623,672.22 | 17,176,890.53 | 931,854.92 | 988,058.21 | 23,670.92 | 206,820.51 | 103,111,141.05 |
Important bad debt provision collected or switch back: nil
(3) Account receivable actual charge off in the Period
Item | Amount charge off | Resulted by related transaction (Y/N) |
Anhui Quanchai Power Co., Ltd. | 143,750.00 | N |
Zhejiang Gonow Automobile Co., Ltd. | 138,571.90 | N |
Chongqing Tuopu Diesel Engine Factory | 134,197.30 | N |
Fuzhou Haominxing Automobile components Co., Ltd. | 129,739.47 | N |
Shanghai Yangma Generator Co., Ltd. | 104,496.00 | N |
Retail enterprise | 337,303.54 | N |
Total | 988,058.21 |
(4) Top 5 receivables at ending balance by arrears party
Name | Ending balance of account receivable | Ratio in total ending balance of account receivables (%) | Ending balance of bad debt reserve |
Bosch Automobile Diesel System Co., Ltd. | 549,543,387.12 | 18.77 | -- |
Robert Bosch Company | 205,738,695.62 | 7.03 | 84,473.87 |
Custom 3 | 220,253,622.18 | 7.52 | 7,236.15 |
Custom 4 | 183,940,277.82 | 6.28 | 85,495.24 |
Custom 5 | 171,736,086.39 | 5.87 | 8,253,890.59 |
Total | 1,331,212,069.13 | 45.47 | 8,431,095.85 |
(5) Account receivable derecognition due to financial assets transfer
Nil
(6) Assets and liabilities resulted by account receivable transfer and continues involvementNil
5. Receivables financing
(1)Classification of receivables financing:
Item | Ending balance | Opening balance |
Note receivable | 1,005,524,477.88 | 23,873,317.86 |
Including: bank acceptance bill | 1,005,524,477.88 | 23,873,317.86 |
Trade acceptance bill | -- | -- |
Total | 1,005,524,477.88 | 23,873,317.86 |
Other explanation: During the management of enterprise liquidity, the company will discount or endorsetransfers before the maturity of some bills, the business model for managing bills receivable is to collect
contractual cash flows and sell the financial asset, so it is classified as financial assets measured at fair valueand whose changes are included in other comprehensive income, which is listed in receivables financing.
(2) Notes receivable already pledged by the Company at the end of the period:
Item | Amount pledge at period-end |
Bank acceptance bill | 646,892,501.28 |
Trade acceptance bill | -- |
Total | 646,892,501.28 |
6. Account paid in advance
(1) Account age of account paid in advance
Account age | Ending balance | Opening balance | ||
Amount | Ratio (%) | Amount | Ratio (%) | |
Within one year | 146,877,271.37 | 96.71 | 118,030,952.47 | 84.77 |
1-2 years | 2,799,827.49 | 1.84 | 19,644,713.49 | 14.11 |
2-3 years | 1,254,109.33 | 0.83 | 683,098.16 | 0.49 |
Over 3 years | 942,149.57 | 0.62 | 883,153.66 | 0.63 |
Total | 151,873,357.76 | 100.00 | 139,241,917.78 | 100.00 |
Explanation on reasons of failure to settle on important advance payment with age over one year:
Nil
(2) Top 5 advance payment at ending balance by prepayment object
Total year-end balance of top five advance payment by prepayment object amounted to 61,951,950.89 Yuan,takes 40.79 percent of the total advance payment at year-end.
7. Other account receivables
Item | Ending balance | Opening balance |
Interest receivable | -- | 655,052.98 |
Dividend receivable | 49,000,000.00 | 1,070,000.00 |
Other account receivables | 5,209,580.88 | 42,004,970.33 |
Total | 54,209,580.88 | 43,730,023.31 |
(1)Interest receivable
1) Category of interest receivable
Item | Ending balance | Opening balance |
Time deposit | -- | -- |
Interest of fund occupation | -- | 655,052.98 |
Total | -- | 655,052.98 |
2) Significant overdue interest
Nil
(2) Dividend receivable
1) Category of dividend receivable
Invested enterprise | Ending balance | Opening balance |
Wuxi Weifu Environment Catalyst Co., Ltd. | 49,000,000.00 | -- |
Weifu Precision Machinery Manufacturing Co., | -- | 1,070,000.00 |
Invested enterprise | Ending balance | Opening balance |
Ltd. | ||
Total | 49,000,000.00 | 1,070,000.00 |
2) Important dividend receivable with account age over one year
Nil
(3) Other account receivables
1) Other account receivables classification by nature
Nature | Ending balance | Opening balance |
Intercourse funds from units | -- | 35,441,483.88 |
Protean Holdings Corp. equity disposal fund | -- | 10,654,092.89 |
Cash deposit | 5,650,143.62 | 3,625,917.96 |
Staff loans and petty cash | 766,301.05 | 1,346,241.81 |
Other | 1,651,737.93 | 300,206.93 |
Total | 8,068,182.60 | 51,367,943.47 |
2) Accrual of bad debt provision
Bad debt reserve | Phase I | Phase II | Phase III | Total |
Expected credit losses over next 12 months | Expected credit losses for the entire duration (without credit impairment occurred) | Expected credit losses for the entire duration (with credit impairment occurred) | ||
Balance on Jan. 1, 2020 | 7,848,301.94 | -- | 1,514,671.20 | 9,362,973.14 |
Balance of Jan. 1, 2020 in the period | -- | -- | -- | -- |
--transfer-in phase I | -- | -- | -- | -- |
--transfer-in phase II | -- | -- | -- | |
-- switch back phase II | -- | -- | -- | -- |
-- switch back phase I | -- | -- | -- | -- |
Current accrual | 33,302.78 | -- | 31,823.40 | 65,126.18 |
Current reversal | 5,056,807.33 | -- | 68,706.86 | 5,125,514.19 |
Current written-off | -- | -- | 1,445,964.34 | 1,445,964.34 |
Other change | 1,980.93 | -- | -- | 1,980.93 |
Balance on Dec. 31, 2020 | 2,826,778.32 | -- | 31,823.40 | 2,858,601.72 |
By account age (Including single provision and portfolio provision)
Account age | Ending Book balance |
Within one year | 5,306,591.79 |
Including: Within 6 months | 4,338,058.39 |
6 months to one year | 968,533.40 |
1-2 years | 80.00 |
2-3 years | 47,365.81 |
Over 3 years | 2,714,145.00 |
Total | 8,068,182.60 |
3) Bad debt provision accrual, collected or switch back
Category | Opening balance | Amount changed in the period | Ending balance | ||||
Accrual | Collected or reversal | Written-off | Conversion of foreign currency financial statement | Increase in business combination | |||
Bad debt reserve | 9,362,973.14 | 65,126.18 | 5,125,514.19 | 1,445,964.34 | 1,980.93 | -- | 2,858,601.72 |
4) Other receivables actually written-off during the reporting period
Item | Amount charge off |
American HESS Company | 1,445,964.34 |
5) Top 5 other receivables at ending balance by arrears party
Name | Nature | Ending balance | Account age | Ratio (%) | Ending balance of bad debt reserve |
Ningbo Jiangbei High-Tech Industry Park Development Construction Co., Ltd. | Deposit margin | 1,767,000.00 | Over 3 years | 21.90 | 1,767,000.00 |
Wuxi China Resources Gas Co., Ltd. | Deposit margin | 1,026,000.00 | Within 6 months | 12.73 | -- |
Zhenkunxing Industrial Supermarket (Shanghai) Co., Ltd. | Deposit margin | 1,000,000.00 | Within 6 months | 12.39 | -- |
Chongqing Airport Group Co., Ltd. | Deposit margin | 636,710.00 | 6 months to one year | 7.89 | 63,671.00 |
Nanjing Chimbusco City Gas Development Co., Ltd. | Deposit margin | 575,640.00 | Over 3 years | 7.13 | 575,640.00 |
Total | 5,005,350.00 | 62.04 | 2,406,311.00 |
6) Other account receivables related to government grants: Nil
7) Other receivable for termination of confirmation due to the transfer of financial assets: Nil
8) The amount of assets and liabilities that are transferred other receivable and continued to be involved: Nil
8. Inventory
(1) Category of inventory
Item | Ending balance | Opening balance | ||||
Book balance | Depreciation reserve | Book value | Book balance | Depreciation reserve | Book value | |
Raw materials | 584,188,987.86 | 73,833,368.32 | 510,355,619.54 | 495,927,678.66 | 81,069,128.03 | 414,858,550.63 |
Goods in process | 415,445,852.86 | 14,589,096.65 | 400,856,756.21 | 243,525,007.82 | 13,963,866.92 | 229,561,140.90 |
Finished goods | 2,124,817,656.18 | 158,847,857.29 | 1,965,969,798.89 | 1,937,368,868.87 | 163,043,724.58 | 1,774,325,144.29 |
Total | 3,124,452,496.90 | 247,270,322.26 | 2,877,182,174.64 | 2,676,821,555.35 | 258,076,719.53 | 2,418,744,835.82 |
(2) Inventory depreciation reserve
Inventory category | Opening balance | Current increased | Ending balance | |||
Increase in business combination | Accrual | Resell | Conversion of foreign currency financial statement | |||
Raw materials | 81,069,128.03 | 192,731.93 | 32,396,791.38 | 39,951,549.94 | 126,266.92 | 73,833,368.32 |
Goods in process | 13,963,866.92 | -- | 8,567,123.76 | 7,941,894.03 | -- | 14,589,096.65 |
Finished goods | 163,043,724.58 | -- | 101,436,883.33 | 105,666,604.29 | 33,853.67 | 158,847,857.29 |
Total | 258,076,719.53 | 192,731.93 | 142,400,798.47 | 153,560,048.26 | 160,120.59 | 247,270,322.26 |
① Net realizable value of the inventory refers to: during the day-to-day activities, results of the estimated saleprice less costs which are going to happen by estimation till works completed, sales price estimated andrelevant taxes.
② Accrual basis for inventory depreciation reserve:
Item | Accrual basis for inventory impairment provision | Specific basis for recognition |
Raw materials | The materials sold due to finished goods manufactured, its net realizable value is lower than the book value | Results from the estimated sale price of such inventory less the cost what will happen, estimated sales expenses and relevant taxes till the goods completed |
Goods in process | The goods in process sold due to finished goods manufactured, its net realizable value is lower than the book value | Results from the estimated sale price of such inventory less the cost what will happen, estimated sales expenses and relevant taxes till the goods completed |
Finished goods | Accrual basis for inventory impairment provision | Specific basis for recognition |
③ Reasons of write-off for inventory falling price reserves:
Item | Reasons of write-off |
Raw materials | Used for production and the finished goods are realized sales |
Goods in process | Goods in process completed in the Period and corresponding finished goods are realized sales in the Period |
Finished goods | Sales in the Period |
(3) Explanation on capitalization of borrowing costs at ending balance of inventoryNil
9. Other current assets
Item | Ending balance | Opening balance |
Structured deposits | 1,925,000,000.00 | 965,000,000.00 |
Receivable export tax rebates | 5,286,965.71 | 5,383,485.34 |
VAT refund receivable | -- | 1,648,669.86 |
Prepaid taxes and VAT retained | 200,524,304.70 | 36,067,254.77 |
Input tax to be deducted and certification | 178,073.42 | 764,895.21 |
Other | 6,931,769.78 | 3,191,300.56 |
Total | 2,137,921,113.61 | 1,012,055,605.74 |
10. Long-term equity investments
The invested entity | Opening balance | Current changes (+, -) | Ending balance | Ending balance of depreciation reserves | |||||||
Additional investment | Capital reduction | Investment gain/loss recognized under equity | Other comprehensive income adjustment | Other equity change | Cash dividend or profit announced to issued | Provision for impairment | Other | ||||
Associated enterprise | |||||||||||
Wuxi Weifu Environment Catalyst Co., Ltd. | 578,366,832.27 | -- | -- | 147,950,344.01 | -- | -- | 49,000,000.00 | -- | -- | 677,317,176.28 | -- |
Bosch Automobile Diesel System Co., Ltd. | 3,417,092,136.65 | -- | -- | 1,185,178,731.75 | -- | -- | 1,801,681,159.00 | -- | -- | 2,800,589,709.40 | -- |
Zhonglian Automobile Electronic Co., Ltd. | 1,261,232,635.30 | -- | -- | 307,716,221.01 | -- | -- | 331,400,000.00 | -- | -- | 1,237,548,856.31 | -- |
Weifu Precision Machinery Manufacturing Co., Ltd. | 61,536,602.82 | -- | -- | 16,917,467.83 | -- | -- | 3,600,000.00 | -- | -- | 74,854,070.65 | -- |
Shinwell Automobile Tech. (Wuxi) Co., Ltd. | 4,177,746.31 | -- | -- | -3,194,996.20 | -- | -- | -- | -- | -- | 982,750.11 | -- |
Changchun Xuyang Weifu Auto Parts Technology Co., Ltd. | -- | 10,200,000.00 | -- | -4,271.78 | -- | -- | -- | -- | -- | 10,195,728.22 | -- |
Total | 5,322,405,953.35 | 10,200,000.00 | -- | 1,654,563,496.62 | -- | -- | 2,185,681,159.00 | -- | -- | 4,801,488,290.97 | -- |
11. Other equity instrument investment
Item | Ending balance | Opening balance |
Wuxi Xidong Science & Technology Industrial Park | 5,000,000.00 | 5,000,000.00 |
Beijing Zhike Industry Investment Holding Group Co., Ltd. | 75,940,000.00 | 75,940,000.00 |
Rare earth Catalysis Innovation Research Institute (Dongying) Co., Ltd. | 4,108,000.00 | 4,108,000.00 |
Wuxi Xichang Microchip Semi-Conductor | 200,000,000.00 | 200,000,000.00 |
Total | 285,048,000.00 | 285,048,000.00 |
12. Other non-current financial assets
Item | Ending balance | Opening balance |
Tradable financial assets holding for over one year | 1,467,000,000.00 | 1,000,246,703.43 |
Equity instrument investment | 338,788,421.00 | 43,343,284.00 |
Total | 1,805,788,421.00 | 1,043,589,987.43 |
13. Investment real estate
(1) Investment real estate measured by cost
Item | House and Building | Land use right | Construction in progress | Total |
I. original book value | ||||
1.Opening balance | 65,524,052.61 | -- | -- | 65,524,052.61 |
2.Current increased | -- | -- | -- | -- |
(1) outsourcing | -- | -- | -- | -- |
(2) Inventory\fixed assets\construction in process transfer-in | -- | -- | -- | -- |
(3) increased by combination | -- | -- | -- | -- |
3.Current decreased | -- | -- | -- | -- |
(1) disposal | -- | -- | -- | -- |
(2) other transfer-out | -- | -- | -- | -- |
4.Ending balance | 65,524,052.61 | -- | -- | 65,524,052.61 |
II. Accumulated depreciation and accumulated amortization | ||||
1.Opening balance | 43,113,540.74 | -- | -- | 43,113,540.74 |
2.Current increased | 1,523,830.25 | -- | -- | 1,523,830.25 |
(1) accrual or amortization | 1,523,830.25 | -- | -- | 1,523,830.25 |
(2) Inventory\fixed assets\construction in process transfer-in | -- | -- | -- | -- |
3.Current decreased | -- | -- | -- | -- |
(1) disposal | -- | -- | -- | -- |
(2) other transfer-out | -- | -- | -- | -- |
4.Ending balance | 44,637,370.99 | -- | -- | 44,637,370.99 |
III. Depreciation reserves |
Item | House and Building | Land use right | Construction in progress | Total |
1.Opening balance | -- | -- | -- | -- |
2.Current increased | -- | -- | -- | -- |
(1) accrual | -- | -- | -- | -- |
3. Current decreased | -- | -- | -- | -- |
(1) disposal | -- | -- | -- | -- |
(2) other transfer-out | -- | -- | -- | -- |
4.Ending balance | -- | -- | -- | -- |
IV. Book value | ||||
1.Ending Book value | 20,886,681.62 | -- | -- | 20,886,681.62 |
2.Opening Book value | 22,410,511.87 | -- | -- | 22,410,511.87 |
(2) Investment real estate measured at fair value
Nil
14. Fixed assets
(1) Fixed assets
Item | House and Building | Machinery equipment | Transportation equipment | Electronic and other equipment | Total |
I. original book value | |||||
1.Opening balance | 1,577,727,234.03 | 2,892,177,324.22 | 33,031,605.81 | 518,844,612.28 | 5,021,780,776.34 |
2.Current increased | 7,563,975.38 | 498,442,904.87 | 1,083,968.58 | 44,140,463.89 | 551,231,312.72 |
(1) Purchase | -- | 5,768,487.05 | -- | 5,779,483.65 | 11,547,970.70 |
(2) Construction in progress transfer-in | 7,563,975.38 | 406,156,147.42 | 1,083,968.58 | 26,833,999.90 | 441,638,091.28 |
(3) increased by combination | -- | 86,518,270.40 | -- | 11,526,980.34 | 98,045,250.74 |
3.Current decreased | 696,619.88 | 32,375,566.33 | 3,834,292.89 | 31,182,407.69 | 68,088,886.79 |
(1) disposal or scrapping | 696,619.88 | 32,375,566.33 | 3,834,292.89 | 31,182,407.69 | 68,088,886.79 |
(2)Other | -- | -- | -- | -- | -- |
4.Conversion of foreign currency financial statement | -- | 1,445,729.23 | -- | 209,033.22 | 1,654,762.45 |
5.Ending balance | 1,584,594,589.53 | 3,359,690,391.99 | 30,281,281.50 | 532,011,701.70 | 5,506,577,964.72 |
II. Accumulated depreciation | |||||
1.Opening balance | 373,468,771.98 | 1,466,289,636.27 | 24,572,383.79 | 259,549,999.99 | 2,123,880,792.03 |
2.Current increased | 47,226,786.07 | 341,600,542.42 | 1,505,443.82 | 50,929,896.22 | 441,262,668.53 |
(1) accrual | 47,226,786.07 | 295,932,176.04 | 1,505,443.82 | 44,560,750.98 | 389,225,156.91 |
(2)Increase in business combination | -- | 45,668,366.38 | -- | 6,369,145.24 | 52,037,511.62 |
3.Current decreased | 552,514.41 | 7,100,470.77 | 3,475,517.46 | 19,546,483.92 | 30,674,986.56 |
(1) disposal or scrapping | 552,514.41 | 7,100,470.77 | 3,475,517.46 | 19,546,483.92 | 30,674,986.56 |
(2)Other | -- | -- | -- | -- | -- |
Item | House and Building | Machinery equipment | Transportation equipment | Electronic and other equipment | Total |
4.Conversion of foreign currency financial statement | -- | 833,283.96 | -- | 135,316.83 | 968,600.79 |
5.Ending balance | 420,143,043.64 | 1,801,622,991.88 | 22,602,310.15 | 291,068,729.12 | 2,535,437,074.79 |
III. Depreciation reserves | |||||
1.Opening balance | -- | 45,370,341.62 | 73,319.90 | 7,280,244.59 | 52,723,906.11 |
2.Current increased | -- | 36,436,674.38 | -- | -- | 36,436,674.38 |
(1) accrual | -- | 36,436,674.38 | -- | -- | 36,436,674.38 |
(2)Other | -- | -- | -- | -- | -- |
3.Current decreased | 35,943.60 | -- | 213,938.04 | 249,881.64 | |
(1) disposal or scrapping | -- | 35,943.60 | -- | 213,938.04 | 249,881.64 |
(2)Other | -- | -- | -- | -- | -- |
4. Conversion of foreign currency financial statement | -- | -- | -- | -- | -- |
5. Ending balance | -- | 81,771,072.40 | 73,319.90 | 7,066,306.55 | 88,910,698.85 |
IV. Book value | |||||
1.Ending Book value | 1,164,451,545.89 | 1,476,296,327.71 | 7,605,651.45 | 233,876,666.03 | 2,882,230,191.08 |
2.Opening Book value | 1,204,258,462.05 | 1,380,517,346.33 | 8,385,902.12 | 252,014,367.70 | 2,845,176,078.20 |
(2) Temporarily idle fixed assets: nil
(3) Fixed assets acquired by financing lease:
Item | Original book value | Accumulated depreciation | Impairment provision | Book value |
Mechanical equipment | 28,328,331.83 | 16,449,611.12 | -- | 11,878,720.71 |
(4) Fixed assets acquired by operating lease: nil
(5) Fixed assets without property certification held
Item | Book value | Reasons for without the property certification |
Plant and office building of Weifu Chang’an | 34,117,284.65 | Still in process of relevant property procedures |
15. Construction in progress
Item | Ending balance | Opening balance |
Construction in progress | 243,795,493.04 | 247,857,777.25 |
Engineering materials | -- | -- |
Total | 243,795,493.04 | 247,857,777.25 |
(1) Construction in progress
Item | Ending balance | Opening balance | ||||
Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
Technical transformation of parent company | 123,249,079.40 | -- | 123,249,079.40 | 98,032,515.22 | -- | 98,032,515.22 |
Technical transformation of Weifu Autocam | 20,720,304.97 | -- | 20,720,304.97 | 44,412,832.62 | -- | 44,412,832.62 |
Technical transformation of Weifu Leader | 27,031,547.25 | -- | 27,031,547.25 | 25,051,156.03 | -- | 25,051,156.03 |
Other Item | 72,794,561.42 | -- | 72,794,561.42 | 80,361,273.38 | -- | 80,361,273.38 |
Total | 243,795,493.04 | -- | 243,795,493.04 | 247,857,777.25 | -- | 247,857,777.25 |
(2) Changes of major projects under construction
Item | Opening balance | Current increased | Fixed assets transfer-in in the Period | Other decreased in the Period | Ending balance |
Technical transformation of parent company | 98,032,515.22 | 258,248,011.11 | 233,031,446.93 | -- | 123,249,079.40 |
Technical transformation of Weifu Autocam | 44,412,832.62 | 59,344,058.68 | 83,036,586.33 | -- | 20,720,304.97 |
Technical transformation of Weifu Leader | 25,051,156.03 | 49,714,021.24 | 47,733,630.02 | -- | 27,031,547.25 |
Total | 167,496,503.87 | 367,306,091.03 | 363,801,663.28 | -- | 171,000,931.62 |
Cont.:
Item | Proportion of project investment in budget (%) | Progress | Accumulated amount of interest capitalization (%) | including: interest capitalized amount of the year | Interest capitalization rate of the year (%) | Source of funds |
Technical transformation of parent company | -- | -- | -- | -- | -- | Accumulated funds of the company |
Technical transformation of Weifu Autocam | -- | -- | -- | -- | -- | Accumulated funds of the company |
Technical transformation of Weifu Leader | -- | -- | -- | -- | -- | Accumulated funds of the company |
Total | -- | -- | -- | -- | -- |
(3) The provision for impairment of construction projects
Nil
16. Intangible assets
(1) Intangible assets
Item | Land use right | Computer software | Trademark and trademark license | Patent and non-patent technology | Total |
I. original book value | |||||
1.Opening balance | 380,986,757.11 | 81,823,603.48 | 41,597,126.47 | 105,086,673.46 | 609,494,160.52 |
2.Current increased | 25,763.33 | 15,790,128.41 | -- | 75,384,836.56 | 91,200,728.30 |
(1) Purchase | -- | 15,019,691.80 | -- | 2,842,372.92 | 17,862,064.72 |
(2) internal R&D | -- | -- | -- | -- | -- |
(3)Increase in business combination | -- | 770,436.61 | -- | 72,542,463.64 | 73,312,900.25 |
(4)Other | 25,763.33 | -- | -- | -- | 25,763.33 |
3.Current decreased | -- | -- | -- | -- | -- |
Item | Land use right | Computer software | Trademark and trademark license | Patent and non-patent technology | Total |
(1) Disposal or scrap | -- | -- | -- | -- | -- |
(2)Other | -- | -- | -- | -- | -- |
4.Conversion of foreign currency financial statement | -- | 71,130.87 | -- | 4,607,818.10 | 4,678,948.97 |
5.Ending balance | 381,012,520.44 | 97,684,862.76 | 41,597,126.47 | 185,079,328.12 | 705,373,837.79 |
II. accumulated amortization | |||||
1.Opening balance | 88,200,675.16 | 54,519,248.03 | 9,709,000.00 | 9,823,965.21 | 162,252,888.40 |
2.Current increased | 7,052,263.90 | 19,718,966.93 | -- | 44,226,916.11 | 70,998,146.94 |
(1) accrual | 7,052,263.90 | 19,034,067.57 | -- | 11,059,695.32 | 37,146,026.79 |
(2)Increase in business combination | -- | 684,899.36 | -- | 33,167,220.79 | 33,852,120.15 |
3.Current decreased | -- | -- | -- | -- | -- |
(1) Disposal or scrap | -- | -- | -- | -- | -- |
(2)Other | -- | -- | -- | -- | -- |
4.Conversion of foreign currency financial statement | -- | 35,743.41 | -- | 1,027,211.35 | 1,062,954.76 |
5.Ending balance | 95,252,939.06 | 74,273,958.37 | 9,709,000.00 | 55,078,092.67 | 234,313,990.10 |
III. Depreciation reserves | |||||
1.Opening balance | -- | -- | 16,646,900.00 | -- | 16,646,900.00 |
2.Current increased | -- | -- | -- | -- | -- |
(1) accrual | -- | -- | -- | -- | -- |
(2)Increase in business combination | -- | -- | -- | -- | -- |
3.Current decreased | -- | -- | -- | -- | -- |
(1) Disposal or scrap | -- | -- | -- | -- | -- |
(2)Other | -- | -- | -- | -- | -- |
4.Conversion of foreign currency financial statement | -- | -- | -- | -- | -- |
5.Ending balance | -- | -- | 16,646,900.00 | -- | 16,646,900.00 |
IV. Book value | |||||
1.Ending Book value | 285,759,581.38 | 23,410,904.39 | 15,241,226.47 | 130,001,235.45 | 454,412,947.69 |
2.Opening Book value | 292,786,081.95 | 27,304,355.45 | 15,241,226.47 | 95,262,708.25 | 430,594,372.12 |
(2) Land use right without property certification held: nil
17. Goodwill
Item | Opening balance | Increase in this period | Ending balance | |
Increase in business combination under different control | Conversion of foreign currency financial statement |
Merged with Weifu Tianli | 1,784,086.79 | -- | -- | 1,784,086.79 | |
Merged with Borit | -- | 247,766,648.21 | 8,249,961.32 | 256,016,609.53 | |
Total | 1,784,086.79 | 247,766,648.21 | 8,249,961.32 | 257,800,696.32 |
Other explanation:
(1) Goodwill formed by the merger of Weifu Tianli:
In 2010, the Company controlling and combine Weifu Tianli by increasing the capital, the goodwill is the number thatcombination cost greater than the fair value of identical net assets of Weifu Tianli. At the end of the period, the companyconducted an impairment test on goodwill to estimate the present value of future cash flows and the recoverable amount of thegoodwill-related asset group, that is to estimate the present value of future cash flow based on the management's financial budgetfor the next five years and the discount rate of 15.05%, the cash flow of the year after the five years of financial budget has remainedstable. The asset group identified during the goodwill impairment test did not change.The key parameters determined by the goodwill impairment test are as follows: The current value of the expected future cash flowof the asset group related to goodwill is measured by using 20%~24% of gross profit margin and 4%~14% of the operating incomegrowth rate in the forecast period as key parameters. The management determines these parameters based on historical conditionsprior to the forecast period and forecasts of market development. After the above tests, the company's goodwill does not need tomake provisions for impairment.
(2) Goodwill formed by the merger of Borit:
In this period, the company acquired 100.00% equity of Borit in the form of cash purchase, the goodwill was the part that the costof the merger was greater than the fair value share of the identifiable net assets of Borit.According to the “Assets AppraisalReport” (Wanlong PBZi (2021) No. 40016) issued by Wanlong (Shanghai) Assets Appraisal Co., Ltd, appointed by the Company,the recoverable value of the assets group where the goodwill of the merged with Borit is 391,332,500 yuan, higher than thecarrying value of 339,171,600 yuan, and there is no impairment loss of goodwill.
18. Long-term deferred expenses
Item | Opening balance | Increase in business combination | Current increased | Amortized in the Period | Conversion of foreign currency financial statement | Ending balance |
Remodeling costs etc. | 18,536,000.25 | -- | 9,099,137.73 | 12,637,958.88 | 64,991.99 | 15,062,171.09 |
19. Deferred income tax assets/Deferred income tax liabilities
(1) Deferred income tax assets that are not offset
Item | Ending balance | Opening balance | ||
Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
Bad debt reserve | 104,259,030.38 | 15,779,756.63 | 94,527,571.76 | 14,302,572.39 |
Inventory depreciation reserve | 225,684,043.14 | 35,799,261.60 | 237,900,564.04 | 38,773,864.59 |
Depreciation reserves of fixed assets | 55,397,599.68 | 8,523,566.97 | 19,197,534.00 | 3,095,824.19 |
Depreciation reserves of intangible assets | 16,646,900.00 | 2,497,035.00 | 16,646,900.00 | 2,497,035.00 |
Other equity instrument investment | 10,000,000.00 | 1,500,000.00 | 10,000,000.00 | 1,500,000.00 |
Change of fair value of transaction financial asset | -- | -- | 16,517,403.00 | 2,477,610.45 |
Deferred income | 323,924,836.18 | 48,935,725.44 | 362,993,022.12 | 54,664,953.32 |
Item | Ending balance | Opening balance | ||
Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
Internal un-realized profit | 19,551,845.38 | 3,457,610.51 | 22,481,656.04 | 4,568,190.39 |
Payable salary, accrued expenses etc. | 981,477,549.10 | 151,813,641.23 | 622,348,855.94 | 96,720,511.00 |
Depreciation assets, amortization difference | 89,867,140.23 | 14,608,530.41 | 49,220,776.87 | 7,779,059.56 |
Deductible loss of subsidiary | 9,703,095.17 | 2,425,773.79 | 21,714,524.19 | 4,101,171.83 |
Equity incentive | 6,330,515.63 | 987,908.92 | -- | -- |
Total | 1,842,842,554.89 | 286,328,810.50 | 1,473,548,807.96 | 230,480,792.72 |
(2) Deferred income tax liabilities that are not offset
Item | Ending balance | Opening balance | ||
Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
The difference between the fair value and taxation basis of Weifeu Tianli assets in a merger not under the same control | 11,271,189.48 | 1,690,678.40 | 12,011,409.46 | 1,801,711.40 |
The difference between the fair value and taxation basis of IRD assets in a merger not under the same control | 86,905,585.08 | 19,119,228.72 | 94,383,365.10 | 20,764,340.32 |
The difference between the fair value and taxation basis of Borit assets in a merger not under the same control | 39,376,104.10 | 9,844,026.00 | -- | -- |
Change of fair value of available-for-sale financial asset | 366,808,362.19 | 55,023,506.38 | 18,231,842.32 | 2,734,776.35 |
Accelerated depreciation of fixed assets | 211,571,729.76 | 32,911,802.62 | 98,019,924.32 | 15,269,514.83 |
Total | 715,932,970.61 | 118,589,242.12 | 222,646,541.20 | 40,570,342.90 |
(3) Deferred income tax assets and deferred income tax liabilities listed after off-set
Item | Trade-off between the deferred income tax assets and liabilities | Ending balance of deferred income tax assets or liabilities after off-set | Trade-off between the deferred income tax assets and liabilities at period-begin | Opening balance of deferred income tax assets or liabilities after off-set |
Deferred income tax assets | -87,935,309.00 | 198,393,501.50 | -18,004,291.18 | 212,476,501.54 |
Deferred income tax liabilities | -87,935,309.00 | 30,653,933.12 | -18,004,291.18 | 22,566,051.72 |
(4) Details of unrecognized deferred income tax assets
Item | Ending balance | Opening balance | Note |
Bad debt reserve | 1,710,712.39 | 2,459,073.60 | There were uncertainties in the potential of generating enough taxable income. |
Inventory depreciation reserve | 21,586,279.12 | 20,176,155.49 | There were uncertainties in the potential of generating enough taxable income. |
Loss from subsidiary | 193,713,240.35 | 103,734,801.82 | There were uncertainties in the potential of generating enough taxable income. |
Depreciation reserves of fixed assets | 33,513,099.17 | 33,526,372.11 | There were uncertainties in the potential of generating enough taxable income. |
Item | Ending balance | Opening balance | Note |
Other equity instrument investment | 46,600,000.00 | 48,633,106.95 | Uncertainty in obtaining evidence required by tax authorities |
Equity incentive | 154,321.87 | -- | There were uncertainties in the potential of generating enough taxable income. |
Total | 297,277,652.90 | 208,529,509.97 |
(5) Deductible losses of un-recognized deferred income tax assets expired on the followed year
Maturity year | Ending balance | Opening balance | Note |
2020 | -- | 23,567,088.89 | Subsidiaries have operating losses |
2021 | 12,343,844.69 | 43,218,245.04 | Subsidiaries have operating losses |
2022 | 3,781,066.93 | 9,901,777.74 | Subsidiaries have operating losses |
2023 | 1,171,973.53 | 7,882,026.39 | Subsidiaries have operating losses |
2024 | 18,520,699.71 | 19,165,663.76 | Subsidiaries have operating losses |
2025 | 12,151,503.80 | -- | Subsidiaries have operating losses |
No expiration period | 145,744,151.69 | -- | Oversea subsidiaries have operating losses |
Total | 193,713,240.35 | 103,734,801.82 |
20. Other non-current assets
Item | Ending balance | Opening balance |
Engineering equipment paid in advance | 195,259,441.73 | 230,235,982.45 |
21. Short-term borrowings
(1) Category of short-term borrowings
Item | Ending balance | Opening balance |
Credit loan | 301,958,184.49 | 305,835,808.28 |
Bill financing | -- | 5,976,347.95 |
Interest payable | 280,415.56 | 341,813.58 |
Total | 302,238,600.05 | 312,153,969.81 |
(2) Overdue short-term loans without payment
Overdue short-term loans without payment 0 yuan at period-end
22. Note payable
(1) Note payable
Type | Ending balance | Opening balance |
Bank acceptance bill | 2,462,592,372.82 | 1,745,218,439.52 |
Other explanation:
Margin saving 51,045,344.11 Yuan was provided for the bank acceptance bill, 1,528,806,878.23 Yuan waspledge for not receivable.
(2) Notes expired at year-end without paid was 0.00 Yuan.
23. Account payable
Item | Ending balance | Opening balance |
Within one year | 3,986,993,867.21 | 3,214,392,402.81 |
1-2 years | 87,605,077.14 | 74,021,217.00 |
Item | Ending balance | Opening balance |
2-3 years | 13,824,720.43 | 5,854,811.50 |
Over 3 years | 12,560,575.61 | 17,985,798.53 |
Total | 4,100,984,240.39 | 3,312,254,229.84 |
24. Accounts received in advance
(1) Accounts received in advance
Item | Ending balance | Opening balance |
Within one year | 4,071,236.87 | 2,862,682.00 |
Total | 4,071,236.87 | 2,862,682.00 |
(2) Important accounts received in advance with account age over one year
Nil
25. Contract liabilities
(1) List of contract liabilities:
Item | Ending balance | Opening balance |
Within one year | 77,554,320.04 | 96,736,917.15 |
1-2 years | 2,763,605.96 | 654,710.65 |
2-3 years | 255,602.59 | 243,585.27 |
Over 3 years | 1,143,858.66 | 930,400.47 |
Total | 81,717,387.25 | 98,565,613.54 |
(2) Important contract liabilities with account age over 1 year:
Nil
26. Wage payable
(1) Wage payable
Item | Opening balance | Increase in business combination | Withdraw increase | Add: reclassification of long-term staff remuneration payable | Payment in the Period | Conversion of foreign currency financial statement | Ending balance |
I. Short-term compensation | 161,202,257.62 | 2,723,108.82 | 1,327,754,754.46 | -223,910,852.76 | 1,083,683,592.15 | 140,646.32 | 184,226,322.31 |
II. Post-employment welfare- defined contribution plans | 27,587,740.03 | 81,963.88 | 103,295,134.68 | 16,441,504.89 | 97,479,526.53 | 4,280.47 | 49,931,097.42 |
III. Dismissed welfare | 2,249,529.82 | -- | 1,061,967.00 | 2,598,717.94 | 4,264,943.44 | -- | 1,645,271.32 |
IV. Other welfare due within one year | 106,180,000.00 | -- | -- | 81,282,389.60 | 103,312,389.60 | -- | 84,150,000.00 |
V. Other short-term welfare-Housing subsidies, employee | 17,124,210.19 | -- | 2,525,946.49 | -- | 7,181,035.91 | -- | 12,469,120.77 |
Item | Opening balance | Increase in business combination | Withdraw increase | Add: reclassification of long-term staff remuneration payable | Payment in the Period | Conversion of foreign currency financial statement | Ending balance |
benefits and welfare funds | |||||||
Total | 314,343,737.66 | 2,805,072.70 | 1,434,637,802.63 | -123,588,240.33 | 1,295,921,487.63 | 144,926.79 | 332,421,811.82 |
Reclassification of long-term staff remuneration payable:
①An amount of RMB 223,910,852.76 in short-term remuneration is reclassified into long-term staff remuneration payable,which represents the incentive fund of RMB 223,910,852.76 provided for in this period.
②An amount of RMB 97,723,894.49 is recorded in post office benefits - defined benefit plan and incentive fund payable withinone year, which represents the difference between the incentive fund of RMB 101,270,000.00 expected to be paid in 2021 andthe beginning balance of incentive fund payable within one year, post office benefits-defined benefit plan and the actual amountpaid in this period.
(2) Short-term compensation
Item | Opening balance | Increase in business combination | Withdraw increase in the Period | Reclassification of long-term staff remuneration payable | Payment in the Period | Conversion of foreign currency financial statement | Ending balance |
1. Wages, bonuses, allowances and subsidies | 141,247,196.85 | 2,048,841.14 | 1,106,219,433.65 | -223,910,852.76 | 870,419,048.20 | 137,619.94 | 155,323,190.62 |
2. Welfare for workers and staff | -- | 658,404.45 | 75,696,847.48 | -- | 76,356,937.24 | 1,797.66 | 112.35 |
3. Social insurance | 8,701,447.13 | -- | 58,977,657.61 | -- | 50,181,099.40 | 80.34 | 17,498,085.68 |
Including: Medical insurance | 7,575,173.65 | -- | 49,025,390.01 | -- | 42,349,121.51 | -- | 14,251,442.15 |
Work injury insurance | 541,230.02 | -- | 3,737,026.16 | -- | 2,616,665.94 | 80.34 | 1,661,670.58 |
Maternity insurance | 585,043.46 | -- | 6,215,241.44 | -- | 5,215,311.95 | -- | 1,584,972.95 |
4. Housing accumulation fund | 679,677.00 | -- | 70,474,436.00 | -- | 70,137,926.00 | -- | 1,016,187.00 |
5. Labor union expenditure and personnel education expense | 10,573,936.64 | -- | 15,609,816.31 | -- | 15,817,413.27 | 749.88 | 10,367,089.56 |
6. Short-term paid absences | -- | 15,863.23 | 776,563.41 | -- | 771,168.04 | 398.50 | 21,657.10 |
Total | 161,202,257.62 | 2,723,108.82 | 1,327,754,754.46 | -223,910,852.76 | 1,083,683,592.15 | 140,646.32 | 184,226,322.31 |
(3) Post-employment welfare- Defined contribution plans
Item | Opening balance | Increase in business combination | Withdraw increase in the Period | Increase in reclassification of long-term staff remuneration payable | Payment in the Period | Conversion of foreign currency financial statement | Ending balance |
1. Basic endowment insurance | 9,782,749.83 | 65,608.24 | 73,924,898.32 | -- | 53,932,701.22 | 4,280.47 | 29,844,835.64 |
2. Unemployment insurance | 412,974.22 | -- | 2,215,497.53 | -- | 1,715,942.59 | -- | 912,529.16 |
3. Enterprise annuity | 17,392,015.98 | 16,355.64 | 27,154,738.83 | 16,441,504.89 | 41,830,882.72 | -- | 19,173,732.62 |
Total | 27,587,740.03 | 81,963.88 | 103,295,134.68 | 16,441,504.89 | 97,479,526.53 | 4,280.47 | 49,931,097.42 |
Post-employment welfare- defined contribution plans:
The Company participates in the pension insurance and unemployment insurance plans established bygovernment authorities by laws, a certain percentage of the social security fee regulated by the governmentwill pay by the Company monthly for the plans.Other than the aforesaid monthly contribution, the Companytakes no further payment obligation. The relevant expenditure is included in current profit or loss or cost ofrelevant assets when occurs. Found more of enterprise annuity in Note XIV-4.” Annuity plan”
(4) Dismiss welfare
The wages payable resulted from the implementation of inner retirement plan, the amount paid in the year2,598,717.94 yuan re-classified into the wage payable from long-term wages payable.
27. Taxes payable
Item | Ending balance | Opening balance |
Value-added tax | 28,744,351.90 | 61,749,095.75 |
Corporation income tax | 21,458,320.79 | 50,686,013.43 |
City maintaining & construction tax | 1,983,996.80 | 4,348,399.47 |
Educational surtax | 1,417,140.56 | 3,105,999.62 |
Individual income tax | 7,184,934.79 | 2,689,642.51 |
Other (including stamp tax and local funds) | 6,704,945.45 | 6,959,261.08 |
Total | 67,493,690.29 | 129,538,411.86 |
28. Other account payable
Item | Ending balance | Opening balance |
Interest payable | 4,862.22 | -- |
Dividend payable | -- | -- |
Other account payable | 361,551,395.20 | 65,266,262.39 |
Total | 361,556,257.42 | 65,266,262.39 |
(1)Interest payable
Item | Ending balance | Opening balance |
Other | 4,862.22 | -- |
Total | 4,862.22 | -- |
(2) Other account payable
1) Classification of other accounts payable according to nature of account
Item | Ending balance | Opening balance |
Deposit and margin | 12,759,592.29 | 14,458,865.71 |
Social insurance and reserves funds that withholding | 8,853,543.93 | 8,434,584.35 |
Intercourse funds from units | 30,982,145.98 | 37,055,997.50 |
Restricted stock repurchase obligations | 302,479,200.00 | -- |
Other | 6,476,913.00 | 5,316,814.83 |
Total | 361,551,395.20 | 65,266,262.39 |
2) Significant other payable with over one year age
Item | Ending balance | Note |
Nanjing Jidian Industrial Group Co., Ltd. | 4,500,000.00 | Intercourse funds |
29. Non-current liabilities due within one year
Item | Ending balance | Opening balance |
Long-term loans due within one year | 33,271,589.84 | -- |
Finance lease payments due within one year | 3,615,985.51 | -- |
Interest payable | 26,666.67 | -- |
Total | 36,914,242.02 | -- |
30. Other current liabilities
Item | Ending balance | Opening balance |
Rebate payable | 213,477,951.00 | 115,015,466.40 |
Pending sales tax | 9,393,136.33 | 12,309,137.07 |
Total | 222,871,087.33 | 127,324,603.47 |
31. Long-term borrowings
Item | Ending balance | Opening balance |
Credit loan | 3,050,640.97 | -- |
Total | 3,050,640.97 | -- |
32. Long-term account payable
Item | Ending balance | Opening balance |
Long-term account payable | 15,339,090.00 | 16,818,181.00 |
Interest payable of long-term account payable | 12,793.00 | 25,000.00 |
Special accounts payable | 18,265,082.11 | 18,265,082.11 |
Finance lease payments | 5,862,253.06 | -- |
Total | 39,479,218.17 | 35,108,263.11 |
(1) Long-term account payable listed by nature
Item | Item | Ending balance | Opening balance |
Hi-tech Branch of Nanjing Finance Bureau (note ①) | Financial support funds (2005) | -- | 1,140,000.00 |
Hi-tech Branch of Nanjing Finance Bureau (note ②) | Financial support funds (2006) | 1,250,000.00 | 1,250,000.00 |
Hi-tech Branch of Nanjing Finance Bureau (note ③) | Financial support funds (2007) | 1,230,000.00 | 1,230,000.00 |
Loan transferred from treasury bond (note ④) | 339,090.00 | 678,181.00 | |
Hi-tech Branch of Nanjing Finance Bureau (note ⑤) | Financial support funds (2008) | 2,750,000.00 | 2,750,000.00 |
Hi-tech Branch of Nanjing Finance Bureau (note ⑥) | Financial support funds (2009) | 1,030,000.00 | 1,030,000.00 |
Hi-tech Branch of Nanjing Finance Bureau (note ⑦) | Financial support funds (2010) | 960,000.00 | 960,000.00 |
Hi-tech Branch of Nanjing Finance Bureau (note ⑧) | Financial support funds (2011) | 5,040,000.00 | 5,040,000.00 |
Hi-tech Branch of Nanjing Finance Bureau (note ⑨) | Financial support funds (2013) | 2,740,000.00 | 2,740,000.00 |
Total | 15,339,090.00 | 16,818,181.00 |
Long-term payable explanation:
Note ①: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use,the term is from 20 October 2005 to 20 October 2020. Provided that the operation period in the zone is lessthan 15 years, financial supporting capital will be reimbursed. This support fund has expired fifteen years inthe current period, so it is transferred to other income.Note ②: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use,the term is from 20 July 2006 to 20 July 2021. Provided that the operation period in the zone is less than 15years, financial supporting capital will be reimbursed.Note ③: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use,the term is from 17 September 2007 to 17 September 2022. Provided that the operation period in the zone isless than 15 years, financial supporting capital will be reimbursed.Note ④: Loan transferred from treasury bond: Weifu Jinning received 1.87 million Yuan of special funds frombudget of the central government, and 1.73 million Yuan of special funds from budget of the local government.The non-operating income transferred in was 1.87 million Yuan in 2011 which was confirmed not to return, ifthe Company pays back special funds of 3.73 million Yuan to the local government in 11 years since 2012,then the Company needs to repay the principal of 339,091.00 Yuan each year.Note ⑤: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use,the term is from 10 November 2008 to 10 November 2023. Provided that the operation period in the zone isless than 15 years, financial supporting capital will be reimbursed.Note ⑥: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use,the term is from 27 October 2009 to 27 October 2024. Provided that the operation period in the zone is lessthan 15 years, financial supporting capital will be reimbursed.Note ⑦: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use,the term is from 27 December 2010 to 27 December 2025. Provided that the operation period in the zone is
less than 15 years, financial supporting capital will be reimbursed.Note ⑧: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use,the term is from 28 December 2011 to 28 December 2026. Provided that the operation period in the zone isless than 15 years, financial supporting capital will be reimbursed.Note ⑨: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use,the term is from 18 December 2013 to 18 December 2028. Provided that the operation period in the zone isless than 15 years, financial supporting capital will be reimbursed.
(2) Special accounts payable
Item | Ending balance | Opening balance |
Removal compensation of subsidiary Weifu Jinning | 18,265,082.11 | 18,265,082.11 |
Other explanation: In line with regulation of the house acquisition decision of People’s government of Xuanwu District, NanjingCity, Ning Xuan Fu Zheng Zi (2012) No.001, part of the lands and property of Weifu Jingning needs expropriation in order tocarry out the comprehensively improvement of Ming Great Wall. According to the house expropriation and compensationagreement in state-owned lands signed between Weifu Jinning and House Expropriation Management Office of Xuanwu District,Nanjing City, 19.7067 million yuan in total are compensate, including operation losses from lessee 1.4416 million yuan in total.The above compensation was received in last period and is making up for the losses from lessee, and the above lands andproperty have not been collected up to 31 December 2020.
33. Long-term wages payable
Item | Ending balance | Opening balance |
I. Post-employment welfare-defined contribution plans net indebtedness | -- | -- |
II. Dismiss welfare | 5,734,948.91 | 8,333,666.85 |
III. Other long-term welfare - incentive fund | 277,515,345.03 | 171,888,386.76 |
Less: incentive fund paid within one year | 101,270,000.00 | 121,830,000.00 |
Other long-term benefits - incentive fund balances | 176,245,345.03 | 50,058,386.76 |
Total | 181,980,293.94 | 58,392,053.61 |
34. Deferred income
Item | Opening balance | Increase in this period | Increase in business combination | Decrease in this period | Conversion of foreign currency financial statement | Ending balance |
Government grand | 365,116,022.98 | 22,969,181.27 | 1,197,109.35 | 61,127,665.71 | 49,828.84 | 328,204,476.73 |
Item with government grants involved:
Item | Opening balance | New-added government subsidy amount in the period | Increase in business combination | Amount reckoned in other income | Conversion of foreign currency financial statement | Ending balance | Assets related/Income related |
Industrialization project for injection VE pump system with electronically controlled high | 2,163,000.86 | -- | -- | 721,000.30 | -- | 1,442,000.56 | Assets related/Income related |
Item | Opening balance | New-added government subsidy amount in the period | Increase in business combination | Amount reckoned in other income | Conversion of foreign currency financial statement | Ending balance | Assets related/Income related |
pressure for less-emission diesel used | |||||||
Appropriation on reforming of production line technology and R&D ability of common rail system for diesel by distributive high-voltage | 7,100,000.00 | -- | -- | -- | -- | 7,100,000.00 | Assets related |
Fund of industry upgrade (2012) | 26,657,526.17 | -- | -- | 26,015,356.44 | -- | 642,169.73 | Income related |
Fund of industry upgrade (2013) | 60,520,000.00 | -- | -- | -- | -- | 60,520,000.00 | Income related |
Appropriation on central basic construction investment | 1,428,571.45 | -- | -- | 714,285.72 | -- | 714,285.73 | Assets related |
R&D and industrialization of the high-pressure variable pump of the common rail system of diesel engine for automobile | 6,870,714.16 | -- | -- | 1,543,095.28 | -- | 5,327,618.88 | Assets related |
Research institute of motor vehicle exhaust after-treatment technology | 1,836,712.58 | -- | -- | 622,985.37 | -- | 1,213,727.21 | Assets related |
Fund of industry upgrade (2014) | 36,831,000.00 | -- | -- | -- | -- | 36,831,000.00 | Income related |
New-built assets compensation after the removal of parent company | 124,849,393.92 | -- | -- | 20,764,119.52 | -- | 104,085,274.40 | Assets related |
Fund of industry upgrade (2016) | 40,000,000.00 | -- | -- | -- | -- | 40,000,000.00 | Income related |
Guiding capital for the technical reform from State Hi-Tech Technical Commission | 8,147,430.27 | -- | -- | 1,552,110.44 | -- | 6,595,319.83 | Assets related |
Implementation of the variable cross-section turbocharger for diesel engine | 8,972,771.42 | -- | -- | 1,609,982.67 | -- | 7,362,788.75 | Assets related |
Item | Opening balance | New-added government subsidy amount in the period | Increase in business combination | Amount reckoned in other income | Conversion of foreign currency financial statement | Ending balance | Assets related/Income related |
Demonstration project for intelligent manufacturing | 1,148,441.34 | -- | -- | 299,341.74 | -- | 849,099.60 | Assets related |
The 2nd batch of provincial special funds for industry transformation of industrial and information in 2019 | -- | 5,000,000.00 | -- | -- | -- | 5,000,000.00 | Assets related |
Municipal technological reform fund allocation in 2020 | -- | 4,770,000.00 | -- | -- | -- | 4,770,000.00 | Assets related |
Strategic cooperation agreement funding for key enterprise of smart manufacturing in high-tech zone | -- | 4,060,000.00 | -- | -- | -- | 4,060,000.00 | Assets related |
Other | 38,590,460.81 | 9,139,181.27 | 1,197,109.35 | 7,285,388.23 | 49,828.84 | 41,691,192.04 | Assets related/Income related |
Total | 365,116,022.98 | 22,969,181.27 | 1,197,109.35 | 61,127,665.71 | 49,828.84 | 328,204,476.73 |
Other explanation:
(1) Appropriation on industrialization project of electrical control and high voltage jet VE system of lowemissions diesel: in September 2009, Weifu Jinning signed “Project Contract of Technology OutcomeTransferring Special Capital in Jiangsu Province” with Nanjing Technical Bureau, according to which WeifuJinning received appropriation 6.35 million Yuan in 2009, 4.775 million Yuan received in 2010 and 0.875million Yuan received in 2011. According to the contract, the attendance date of this project was: from Octoberof 2009 to March of 2012. This contract agreed 62% of newly increased investment in project would be spentin fixed assets investment which are belongs to the government grand with assets/income concerned. In 2013,accepted by the science & technology agency of Jiangsu Province, and 4,789,997.04 Yuan with income relatedwas reckoned into current operation revenue directly; the 7,210,002.96 Yuan with assets related was amortizedduring the predicted service period of the assets, and 721,000.30 Yuan amortized in the Period.
(2) The appropriation for research and development ability of distributive high-pressure common rail systemfor diesel engine use and production line technological transformation project: according to XCJ No. [2010] 59,the Company has received special funds of 7.1 million Yuan appropriated by Finance Bureau of Wuxi New
District in 2011 and used for the Company’s research and development ability of distributive high-pressurecommon rail system for diesel engine use and production line technological transformation project; thisappropriation belongs to government subsidies related to assets, and will be amortized according to thedepreciation process of the underlying assets when the project is completed.
(3) Industry upgrading funds (2012): In accordance with the document Xi Xin Guanjing Fa [2012] No.216 andDocument Xi Xin Guancai Fa [2012] No. 85, the Company received funds of 60.4 million Yuan appropriatedfor industry upgrading this year. Current write off: 26,015,356.44 Yuan.
(4) Industry upgrading funds (2013): In accordance with the document Xi Xin Guan Jing Fa [2013] No.379, XiXin Guan Jing Fa [2013] No.455, Xi Xin Guan Cai Fa [2013] No.128 and Xi Xin Guan Cai Fa [2013] No.153,the Company received funds of 60.52 million Yuan appropriated for industry upgrading in 2013.
(5) Appropriation for investment of capital construction from the central government: In accordance with thedocument Xi Caijian [2012] No.43, the Company received appropriation of 5 million Yuan for investment ofcapital construction from the central government in 2012. The project has passed the acceptance check incurrent period, this appropriation should be amortized within the surplus service life of current assets, andamortization amount of current period is 714,285.71 Yuan.
(6) R&D and industrialization of the high pressure variable pump of the common rail system of diesel enginefor automobile: the Company received appropriated for the project in 2013 with 8.05 million Yuan in line withdocuments of Xi Ke Ji [2013] No.186, Xi Ke Ji [2013] No.208, Xi Cai Gong Mao [2013] No.104, Xi CaiGong Mao [2013] No.138, Xi Ke Ji [2014] No.125, Xi Cai Gong Mao [2014] No.58, Xi Ke Ji [2014] No. 246and Xi Cai Gong Mao [2014] No.162. Received 3 million Yuan in 2014 and 0.45 million Yuan in 2015; andbelongs to government grant with assets concerned, and shall be amortized according to the depreciationprocess, amount of 1,543,095.28 Yuan amortizes in the year.
(7) Vehicle exhaust after-treatment technology research institute project: in 2012, the subsidiary Weifu Leaderhas applied for equipment purchase assisting funds to Wuxi Huishan Science and Technology Bureau andWuxi Science and Technology Bureau for the vehicle exhaust after-treatment technology research instituteproject. This declaration has been approved by Wuxi Huishan Science and Technology Bureau and WuxiScience and Technology Bureau in 2012, and the company has received appropriation of 2.4 million Yuan in2012, and received appropriation of 1.6 million Yuan in 2013. This appropriation belongs to governmentsubsidies related to assets and will be amortized according to the depreciation process, amount of 622,985.37Yuan amortizes in the year.
(8) Industry upgrading funds (2014): In accordance with the document Xi Xin Guan Jing Fa [2014] No.427and Xi Xin Guan Cai Fa [2014] No.143, the Company received funds of 36.831 million Yuan appropriated forindustry upgrading in 2014.
(9) New-built assets compensation after the removal of parent company: policy relocation compensationreceived by the Company, and will be amortized according to the depreciation of new-built assets, amount of20,764,119.52 Yuan amortizes in the year.
(10) Fund of industry upgrade (2016): In accordance with the document Xi Xin Guan Jing Fa [2016] No.585and Xi Xin Fa [2016] No.70, the Company received funds of 40 million Yuan appropriated for industry
upgrading in 2016.
(11) Guilding capital for the technical reform from State Hi-Tech Technical Commission: In accordance withthe document Xi Jing Xin ZH [2016] No.9 and Xi Cai GM [2016] No.56, the Company received a 9.74 millionYuan for the guiding capital of technical reform (1st batch) from Wuxi for year of 2016, and belongs togovernment grant with assets concerned, and shall be amortized according to the depreciation process, amountof 1,552,110.44 Yuan amortize in the year.
(12) Implementation of the variable cross-section turbocharger for diesel engine: In accordance with thedocument YCZ Fa[2016] NO.623 and “Strong Industrial Base Project Contract for year of 2016”, subsidiaryWeifu Tianli received a specific subsidy of 16.97 million Yuan (760,000 Yuan received in the period), thefund supporting strong industrial base project (made-in-China 2025) of central industrial transformation andupgrading 2016 from Ministry of Industry and Information Technology; and belongs to government grant withassets concerned, and shall be amortized according to the depreciation process, amount of 1,609,982.67 Yuanamortize in the year.
(13) Demonstration project for intelligent manufacturing: under the Notice Relating to Selection of theIntelligent Manufacturing Model Project in Huishan District in 2016 (HJXF[2016]No.36), a fiscal subsidy of3,000,000 Yuan was granted by relevant government authority in Huishan district to our subsidiary WeifuLeader in 2017 to be utilized for transformation and upgrade of Weifu Leader’s intelligent manufacturingfacilities. This subsidy belongs to government grant related to assets which shall be amortized based on thedepreciation progress of the assets. Amortization for the year amounts to 299,341.74 Yuan.
(14) The 2
ndbatch of provincial special funds for industry transformation of industrial and information in 2019:
according to XCGM [2019] No. 121, the Company received a special fund of 5 million yuan in 2020, thissubsidy wasrelated to the"Weifu High-Technology New Factory Internet Construction" projects, and belongedto government subsidies related to assets.
(15) Municipal technological reform fund allocation in 2020: according to XGXZH [2020] No. 16, theCompany received 4.77 million yuan of municipal technological transformation fund project allocation in2020, which was related to key technological transformation projects and belonged to government subsidiesrelated to assets.
(16) Strategic cooperation agreement funding for key enterprise of smart manufacturing in high-tech zone:
according to XXGXF [2020] No. 61, the Company received a related grant of 4.06 million yuan in 2020, thissubsidy was related to the intelligent transformation project and belonged to the government subsidiesrelatedto assets.
35. Share capital
Item | Opening balance | Change during the year (+, -) | Ending balance | ||||
New shares issued | Bonus share | Shares transferred from capital reserve | Other -repurchase | Subtotal | |||
Total shares | 1,008,950,570 | -- | -- | -- | -- | -- | 1,008,950,570 |
36. Capital reserve
Item | Opening balance | Increase in this period | Decrease in this period | Ending balance |
Share capital premium | 3,346,333,817.41 | -- | 103,565,899.63 | 3,242,767,917.78 |
Other Capital reserve | 45,193,988.92 | 6,280,461.58 | -- | 51,474,450.50 |
Total | 3,391,527,806.33 | 6,280,461.58 | 103,565,899.63 | 3,294,242,368.28 |
Other explanation:
(1) Share capital premium has 103,565,899.63 yuan declined in the Period, mainly due to the following:
①the difference between the long-term equity investment newly acquired by the company to purchaseminority of IRD and the net assets that the company should enjoy continuously calculated from the date ofpurchase based on the newly increased shareholding ratio is 7,176,697.04 yuan;
② the difference between the repurchase cost of 398,868,402.59 yuan(19,540,000 shares repurchased for usein the restricted share incentive plan) and the amount of subscription money 302,479,200.00 yuan is96,389,202.59 yuan.
(2) Other Capital reserve increase 6,280,461.58 yuan in the period, mainly resulted by the share paymentsettled by equity 6,484,837.50 yuan deducted 204,375.92 yuan attributable to minority’s shareholder.
37. Treasury stocks
Item | Opening balance | Increase in this period | Decrease in this period | Ending balance |
Stock repurchases | -- | 400,017,180.33 | 398,868,402.59 | 1,148,777.74 |
Repurchase obligation of restricted stock incentive plan | -- | 302,479,200.00 | -- | 302,479,200.00 |
Total | -- | 702,496,380.33 | 398,868,402.59 | 303,627,977.74 |
Other explanation:
(1) Stock repurchase: increased 400,017,180.33 yuan in the Period, mainly refers to the repurchase of 19,596,277.00 shares byway of centralized competitive bidding for the implementation of restricted stock incentive plan; decreased 398,868,402.59 yuanin the Period, mainly refers to the 19,540,000.00 shares awarded to incentive object for the implementation of restricted stockincentive plan.
(2) Repurchase obligation of restricted stock incentive plan: increased 302,479,200.00 yuan in the Period, mainly refers to therepurchase obligation recognized in accordance with the subscription paid by the incentive object for the implementation ofrestricted stock incentive plan.
38. Other comprehensive income
Item | Opening balance | Current period | Ending balance | |||
Account before income tax in the year | Less: income tax expense | Belong to parent company after tax | Belong to minority shareholders after tax | |||
Other comprehensive income items which will be reclassified subsequently to profit or loss | 134,871.67 | 13,839,596.07 | -- | 13,781,747.80 | 57,848.27 | 13,916,619.47 |
Including: Conversion difference of foreign currency financial statement | 134,871.67 | 13,839,596.07 | -- | 13,781,747.80 | 57,848.27 | 13,916,619.47 |
Total | 134,871.67 | 13,839,596.07 | -- | 13,781,747.80 | 57,848.27 | 13,916,619.47 |
39. Reasonable reserve
Item | Opening balance | Accrual in the period | Used in the period | Ending balance |
Safety production costs | 3,247,757.06 | 21,673,368.09 | 22,587,635.12 | 2,333,490.03 |
Other explanation:
(1) Instructions for the withdrawing of special reserves (safe production cost): According to the CQ [2012] No. 16 - AdministrativeMeasures on the Withdrawing and Use of Enterprise Safety Production Expenses jointly issued by the Ministry of Finance and theState Administration of Work Safety, in the current period, the Company adopted excess retreat method for quarterly withdrawalby taking the actual operating income of the previous period as the withdrawing basis.
(2) Among the above safety production costs, including the safety production costs accrual by the Company in line withregulations and the parts enjoy by shareholders of the Company in safety production costs accrual by subsidiary in line withregulations.
40. Surplus reserve
Item | Opening balance | Increase in this period | Decrease in this period | Ending balance |
Statutory surplus reserves | 510,100,496.00 | -- | -- | 510,100,496.00 |
Withdrawal of the statutory surplus reserves: Pursuit to the Company Law and Articles of Association, the Company extractedstatutory surplus reserve on 10 percent of the net profit. No more amounts shall be withdrawal if the accumulated statutorysurplus reserve takes over 50 percent of the registered capital.
41. Retained profit
Item | Current period | Last period | Ratio for withdrawal or distribution |
Retained profits at the end of last year before adjustment | 12,076,443,635.56 | 10,996,945,870.13 | -- |
Total retained profit at beginning of the adjustment (+ for increased, -for decreased) | -- | 1,584,556.37 | -- |
Retained profits at the beginning of the year after adjustment | 12,076,443,635.56 | 10,998,530,426.50 | -- |
Add: The net profits belong to owners of patent company of this period | 2,772,769,377.96 | 2,268,026,432.78 | -- |
Less: Withdraw legal surplus reserves | -- | -- | -- |
Less: Withdraw employee motivation and welfare fund | 2,525,946.49 | -- | -- |
Cash dividend payable | 1,093,241,270.00 | 1,210,740,684.00 | 11 Yuan / 10-shares in the Year; 12 Yuan / 10-shares in last Year |
Common dividend transfer as share capital | -- | -- | -- |
Add: Net effect of disposal other equity instrument investment | 2,656,627.59 | 20,627,460.28 | |
Retained profit at period-end | 13,756,102,424.62 | 12,076,443,635.56 |
42. Operating income and cost
Item | Current period | Last Period | ||
Income | Cost | Income | Cost | |
Main operating | 12,430,431,489.90 | 10,124,574,480.95 | 8,354,743,964.67 | 6,322,810,707.67 |
Other business | 453,394,816.70 | 304,709,961.02 | 429,612,995.63 | 347,543,672.87 |
Total | 12,883,826,306.60 | 10,429,284,441.97 | 8,784,356,960.30 | 6,670,354,380.54 |
43. Taxes and surcharges
Item | Current period | Last Period |
City maintaining & construction tax | 22,768,800.74 | 24,124,239.92 |
Educational surtax | 16,259,673.98 | 17,320,175.67 |
Property tax | 16,993,056.48 | 16,236,869.24 |
Land use tax | 4,516,628.41 | 5,991,933.84 |
Vehicle use tax | 29,923.52 | 31,410.44 |
Stamp duty | 4,508,905.03 | 2,720,462.05 |
Other taxes | 246,793.71 | 209,545.50 |
Total | 65,323,781.87 | 66,634,636.66 |
44. Sales expenses
Item | Current period | Last Period |
Salary and fringe benefit | 58,727,035.03 | 53,193,376.14 |
Consumption of office materials and business travel charge | 9,260,423.14 | 12,114,381.29 |
Transportation charge | -- | 36,110,291.16 |
Warehouse charge | 24,982,242.41 | 13,540,499.34 |
Three guarantees and quality cost | 272,364,223.21 | 102,034,286.75 |
Business entertainment fee | 25,842,735.05 | 26,297,874.14 |
Other | 15,176,786.26 | 16,360,043.51 |
Total | 406,353,445.10 | 259,650,752.33 |
45. Administration expenses
Item | Current period | Last Period |
Salary and fringe benefit | 295,394,722.09 | 261,541,676.32 |
Depreciation charger and long-term assets amortization | 65,638,800.42 | 55,145,177.10 |
Consumption of office materials and business travel charge | 16,772,265.23 | 19,603,194.54 |
Incentive fund | 187,658,444.76 | 71,880,000.00 |
Share-based payment | 3,878,656.31 | -- |
Other | 213,481,533.82 | 105,858,403.80 |
Total | 782,824,422.63 | 514,028,451.76 |
46. R&D expenses
Item | Current period | Last Period |
Technological development expenses | 532,581,209.78 | 417,924,908.28 |
Total | 532,581,209.78 | 417,924,908.28 |
47. Financial expenses
Item | Current period | Last Period |
Interest expenses | 11,466,886.33 | 21,770,516.39 |
Note discount interest expenses | 8,075,178.10 | 1,205,789.22 |
Less: interest income | 51,622,216.58 | 79,299,239.77 |
Gains/losses from exchange | 5,138,503.01 | -5,453,798.20 |
Handling charges | 3,663,347.30 | 3,884,456.24 |
Total | -23,278,301.84 | -57,892,276.12 |
48. Other income
Item | Current period | Last Period | Amount reckoned into current non-recurring gains/losses |
Government grants with routine operation activity concerned | 80,342,497.11 | 91,170,663.57 | 80,342,497.11 |
Other | -- | -- | -- |
Total | 80,342,497.11 | 91,170,663.57 | 80,342,497.11 |
Government grant reckoned into other income:
Government grant item | Current period | Last Period | Assets/Income related |
Industrialization project for injection VE pump system with electronically controlled high pressure for less-emission diesel used | 721,000.30 | 721,000.30 | Assets/Income related |
Key laboratory (engineering center) of the pollution control from motor vehicle exhausting in Jiangsu province | 170,000.00 | 170,000.00 | Assets/Income related |
Grants for key laboratory in Wuxi City | 70,000.00 | 70,000.00 | Assets/Income related |
Supporting funds for technical improvement for annual output as 140,000 pieces of packaging line of catalytic reduction system for commercial vehicles (2014) | 259,000.00 | 259,000.00 | Assets related |
Technical transformation for annual output as 300,000 sets of four-cylinder engine supercharger | 129,710.11 | 179,357.35 | Assets related |
Annual output of 150000 gasoline engine superchargers | 96,514.62 | 100,000.00 | Assets related |
Depreciation/amortization compensation for the assets newly established after parent company relocated | 20,764,119.52 | 22,726,281.60 | Assets related |
Central capital investment allocation from Wuxi Finance Bureau (R&D center) | 714,285.72 | 714,285.71 | Assets related |
Provincial special guiding funds for scientific and technological innovation and achievement conversion | 328,571.44 | 328,571.43 | Assets related |
Technical reform of catalytic reduction system for 180,000 commercial vehicles annually | 233,555.56 | 233,555.56 | Assets related |
Development and industrialization of high pressure variable pump for common rail system of vehicle diesel engine | 1,543,095.28 | 1,543,095.28 | Assets related |
Business development funds support allocation from Finance bureau of the new district | 200,000.00 | 200,000.00 | Assets related |
Demonstration of intelligent manufacturing | 299,341.74 | 301,588.76 | Assets related |
Research institute of motor vehicle exhaust post-treatment | 622,985.37 | 635,758.63 | Assets related |
Implementation scheme of the variable section turbocharger for diesel engine | 1,609,982.67 | 1,935,949.61 | Assets related |
Special funds for technical transformation | 83,794.37 | 91,041.11 | Assets/Income related |
Funds for technical reform of boiler wheel supercharger for annual output of 200,000 gasoline engines | 275,572.17 | 420,568.53 | Assets related |
Annual output of 150,000 gasoline engine turbochargers | 717,082.83 | 700,701.44 | Assets related |
Guiding capital for the technical reform from State Hi-Tech Technical Commission | 1,552,110.44 | 1,592,569.73 | Assets related |
National high-quality development fund for manufacturing industry | -- | 4,850,000.00 | Income related |
Government grant item | Current period | Last Period | Assets/Income related |
Industrial upgrading fund | 26,015,356.44 | 33,742,473.83 | Income related |
Financing for mergers and acquisition of IRD project | -- | 1,370,000.00 | Income related |
Funds for R&D of Science & Technology in Wuxi for 2015 | 420,000.00 | 1,020,000.00 | Assets/Income related |
Intelligent transformation and technology transformation guiding fund | 3,740,000.00 | 5,110,000.00 | Income related |
Special fund for policy guidance | -- | 1,000,000.00 | Income related |
Stable subsidy | 4,125,376.68 | 2,291,128.53 | Income related |
Weifu Jinning Financial Support Fund | 1,140,000.00 | -- | Income related |
Generation subsidy for distributed PV projects | 968,800.00 | -- | Income related |
Wuxi City Intellectual Property Project Operation Service System Construction Fund | 1,050,000.00 | -- | Income related |
"Work for training" subsidy | 1,269,900.00 | -- | Income related |
Wuxi Mayor Quality Award | 1,000,000.00 | -- | Income related |
e-store | 1,162,700.27 | -- | Income related |
Training subsidy | 1,005,934.35 | 317,400.00 | Income related |
Other | 8,053,707.23 | 8,546,336.17 | Assets/Income related |
Total | 80,342,497.11 | 91,170,663.57 |
49. Investment income
Item | Current period | Last Period |
Income of long-term equity investment calculated based on equity | 1,659,752,704.14 | 1,378,264,061.18 |
Investment income of financial products | 263,460,954.90 | 236,832,172.54 |
Investment income from holding financial assets available for sales | 683,211.60 | 1,383,668.59 |
Dividend income from holding other equity instrument investment | -- | 900,000.00 |
Other | 40,908,817.93 | -2,839,187.48 |
Total | 1,964,805,688.57 | 1,614,540,714.83 |
50. Income from change of fair value
Item | Current period | Last Period |
Changes in the fair value of wealth management products | 8,223,219.19 | 18,231,842.32 |
Changes in the fair value of the stocks of listed companies held-excluding the stocks of listed companies that are included in other equity instrument investments | 375,102,546.00 | 6,787,824.00 |
Other | -- | -- |
Total | 383,325,765.19 | 25,019,666.32 |
51. Credit impairment loss
Item | Current period | Last Period |
Bad debt loss | -11,184,647.60 | -52,825,875.25 |
Total | -11,184,647.60 | -52,825,875.25 |
52. Assets impairment loss
Item | Current period | Last Period |
Loss on inventory valuation | -142,400,798.47 | -169,460,299.73 |
Impairment loss on fixed assets | -36,436,674.38 | -- |
Total | -178,837,472.85 | -169,460,299.73 |
53. Income from assets disposal
Item | Current period | Last Period | Amount reckoned into current non-recurring gains/losses |
Income from disposal of non-current assets | 12,962,146.98 | 34,050,815.11 | 12,962,146.98 |
Losses from disposal of non-current assets | -1,507,738.38 | -1,896,354.90 | -1,507,738.38 |
Total | 11,454,408.60 | 32,154,460.21 | 11,454,408.60 |
54. Non-operating income
Item | Current period | Last Period | Amount reckoned into current non-recurring gains/losses |
Periodic reduction or exemption of part of social insurance premiums | 60,373,772.69 | -- | 60,373,772.69 |
Periodic reduction of kinetic energy costs | 5,759,525.46 | -- | 5,759,525.46 |
Other | 333,723.47 | 2,413,561.54 | 333,723.47 |
Total | 66,467,021.62 | 2,413,561.54 | 66,467,021.62 |
55. Non-operating expense
Item | Current period | Last Period | Amount reckoned into current non-recurring gains/losses |
Total non-current assets disposal losses | 738,248.83 | 3,161,855.50 | 738,248.83 |
Including: fixed assets disposal losses | 738,248.83 | 3,161,855.50 | 738,248.83 |
Intangible assets disposal losses | -- | -- | -- |
Donation | 3,107,003.70 | 73,332.31 | 3,107,003.70 |
Local fund | -- | 2,734,286.52 | -- |
Other | 313,635.64 | 156,952.84 | 313,635.64 |
Total | 4,158,888.17 | 6,126,427.17 | 4,158,888.17 |
56. Income tax expense
(1) Income tax expense
Item | Current period | Last Period |
Payable tax in current period | 170,925,337.68 | 147,179,544.24 |
Adjusted the previous income tax | -2,349,322.00 | 5,674,478.65 |
Increase/decrease of deferred income tax assets | -54,432,577.63 | -12,918,338.05 |
Item | Current period | Last Period |
Increase/decrease of deferred income tax liability | 66,072,310.95 | 7,870,125.22 |
Income tax expense | 180,215,749.00 | 147,805,810.06 |
(2) Adjustment on accounting profit and income tax expenses
Item | Current period |
Total profit | 3,002,951,679.56 |
Income tax measured by statutory/applicable tax rate | 450,442,751.93 |
Impact by different tax rate applied by subsidies | 4,347,476.78 |
Adjusted the previous income tax | -2,349,322.00 |
Impact by non-taxable revenue | -248,721,266.24 |
Impact on cost, expenses and losses that unable to deducted | 37,323,520.03 |
Impact by the deductible losses of the un-recognized previous deferred income tax | -34,045,025.55 |
The deductible temporary differences or deductible losses of the un-recognized deferred income tax assets in the Period | 11,968,364.43 |
Impact on additional deduction | -41,288,278.77 |
Other | 2,537,528.39 |
Total | 181,266,656.28 |
57. Other comprehensive income
See Note V. 38 “Other comprehensive income”
58. Items of ash flow statement
(1) Refunds of taxes
Item | Current period | Last Period |
VAT refund actually received for export commodities | 28,006,851.01 | 40,712,905.08 |
Rebate of allowance for VAT | 2,805,702.10 | 3,171,001.83 |
Rebate of income tax | 1,325,859.97 | 7,839,063.56 |
Total | 32,138,413.08 | 51,722,970.47 |
(2) Other cash received in relation to operation activities
Item | Current period | Last Period |
Interest income | 52,277,269.56 | 77,690,762.13 |
Government grants | 41,044,012.67 | 30,510,895.39 |
Margin on operation bill | -- | 27,804,815.03 |
Other | 9,252,536.29 | 7,906,425.25 |
Total | 102,573,818.52 | 143,912,897.80 |
(3) Other cash paid in relation to operation activities
Item | Current period | Last Period |
Cash cost | 840,363,837.09 | 525,923,320.71 |
Other | 59,565,319.82 | 22,629,265.34 |
Total | 899,929,156.91 | 548,552,586.05 |
(4) Cash received from other investment activities
Item | Current period | Last Period |
Received the disposal payment | 10,654,092.89 | -- |
Received investment funds in transit at the end of 2019 | 30,448,157.81 | -- |
Import equipment letter of credit guarantee | -- | 1,450,000.00 |
Cash from Weifu Electronic Drive merger not under the same control | -- | 67,622,008.17 |
Intercourse funds from units | 24,000,000.00 | -- |
Other | -- | 953,424.66 |
Total | 65,102,250.70 | 70,025,432.83 |
(5) Cash paid related with investment activities
Item | Current period | Last Period |
Margin paid by L/C for purchase of equipment | 587,241.00 | -- |
Trading losses on forward foreign exchange and RMB options | -- | 1,115,357.50 |
Intercourse funds from units | 13,992,067.94 | 24,000,000.00 |
Total | 14,579,308.94 | 25,115,357.50 |
(6) Other cash received in relation to financing activities
Item | Current period | Last Period |
Borrowings received by Weifu Leader | 5,470,000.00 | -- |
Borrowings received by IRD | 260,135.13 | 845,291.11 |
Total | 5,730,135.13 | 845,291.11 |
(7) Cash paid related with financing activities
Item | Current period | Last Period |
Account paid for purchasing minority equity of Weifu Tianli | -- | 132,522,000.00 |
Account paid for purchasing minority equity of IRD | 48,507,056.85 | -- |
National debt paid transfer to loans | 351,298.00 | 339,091.00 |
Borrowing return by Weifu Leader | -- | 5,470,000.00 |
Borrowing return by IRD | -- | 7,733,845.00 |
Payments from finance leases | 375,886.28 | -- |
Repurchase of A shares | 400,017,180.33 | -- |
Total | 449,251,421.46 | 146,064,936.00 |
59. Supplementary information to statement of cash flow
(1) Supplementary information to statement of cash flow
Item | Current period | Last Period |
1. Net profit adjusted to cash flow of operation activities: | ||
Net profit | 2,822,735,930.56 | 2,302,736,761.11 |
Add: Assets impairment provision | 190,022,120.45 | 222,286,174.98 |
Depreciation of fixed assets, consumption of oil assets and depreciation of productive biology assets | 390,748,987.16 | 315,650,455.35 |
Amortization of intangible assets | 37,146,026.79 | 24,276,364.81 |
Amortization of long-term deferred expenses | 12,637,958.88 | 6,293,470.69 |
Loss from disposal of fixed assets, intangible assets and other long-term assets | -11,454,408.60 | -32,154,460.21 |
Losses on scrapping of fixed assets | 738,248.83 | 3,161,855.50 |
Gain/loss of fair value changes | -383,325,765.19 | -25,019,666.32 |
Financial expenses | 17,798,991.04 | 15,026,154.36 |
Item | Current period | Last Period |
Investment loss | -1,957,024,490.66 | -1,613,945,471.30 |
Decrease of deferred income tax asset | -54,432,577.63 | -12,918,338.05 |
Increase of deferred income tax liability | 66,072,310.95 | 7,870,125.22 |
Decrease of inventory | -591,321,045.44 | -1,130,561,363.05 |
Decrease of operating receivable accounts | -1,326,286,166.68 | -1,110,387,668.48 |
Increase of operating payable accounts | 1,562,204,812.18 | 2,074,881,909.55 |
Other | 5,550,301.37 | 1,473,749.07 |
Net cash flows arising from operating activities | 781,811,234.01 | 1,048,670,053.23 |
2. Net change of cash and cash equivalents: | ||
Balance of cash at period end | 944,946,018.70 | 820,498,653.85 |
Less: Balance of cash equivalent at year-begin | 820,498,653.85 | 2,404,674,139.49 |
Add: Balance of cash equivalent at year-end | -- | -- |
Less: Balance of cash equivalent at year-begin | -- | -- |
Net increase of cash and cash equivalents | 124,447,364.85 | -1,584,175,485.64 |
(2) Net cash payment for the acquisition of a subsidiary in the period
Item | Amount |
Cash and cash equivalent paid in the period for enterprise combination occurred in the period | 318,708,001.47 |
Less: Cash and cash equivalent held by subsidiary on purchasing date | 21,405,243.16 |
Add: Cash or cash equivalent paid in the period arising from enterprise combination occurred previous | -- |
Net cash paid for subsidiary obtained | 297,302,758.31 |
(3) Constitution of cash and cash equivalent
Item | Ending balance | Opening balance |
I. Cash | 944,946,018.70 | 820,498,653.85 |
Including: Cash on hand | 507.66 | 93,165.33 |
Bank deposit available for payment at any time | 944,945,511.04 | 820,405,488.52 |
Other monetary fund available for payment at any time | -- | -- |
II. Cash equivalent | -- | -- |
Including: bond investment due within 3 months | -- | -- |
III. Balance of cash and cash equivalents at the period-end | 944,946,018.70 | 820,498,653.85 |
Including: Cash and cash equivalent with restricted in use for parent company or subsidiary of the Group | -- | -- |
Other explanation:
The difference between bank deposits available for payment at any time and the bank deposits in Note V. 1"Monetary Funds" is the company's fixed deposits in the bank.
60. Assets with ownership or use right restricted
Item | Ending Book value | Restriction reason |
Monetary funds | 587,241.00 | Letter of Credit Margin |
Monetary funds | 51,045,344.11 | Cash deposit paid for bank acceptance |
Monetary funds | 2,838,880.93 | Court freeze |
Monetary funds | 215,720.00 | Mastercard deposit |
Note receivable | 881,914,376.95 | Notes pledge for bank acceptance |
Item | Ending Book value | Restriction reason |
Receivables financing | 646,892,501.28 | Notes pledge for bank acceptance |
Transactional financial assets | 174,611,992.62 | In accordance with the civil ruling No.(2016)Y03MC2490 and No.(2016) Y03MC2492 of Guangdong Shenzhen Intermediate People's Court (Hereinafter referred to as Shenzhen Intermediate People's Court), the property with the value of 217 million Yuan under the name of the Company and other seven respondents and the third party Shenzhen Hejun Chuangye Holdings Co., Ltd. (Hereinafter referred to as Hejun Company) was frozen. As of the end of the reporting period, 4.71 million shares of Miracle Automation and 11,739,102 shares of SDEC held by the Company were frozen. |
Total | 1,758,106,056.89 |
61. Item of foreign currency
(1) Item of foreign currency
Item | Closing balance of foreign currency | Rate of conversion | Ending RMB balance converted |
Monetary funds | |||
Including: USD | 11,596,564.24 | 6.5249 | 75,666,419.10 |
EUR | 3,694,505.41 | 8.025 | 29,648,405.15 |
HKD | 11,548,347.98 | 0.84164 | 9,719,551.59 |
DKK | 9,616,906.23 | 1.0786 | 10,372,795.06 |
Account receivable | |||
Including: USD | 2,190,411.21 | 6.5249 | 14,292,214.10 |
EUR | 1,290,945.42 | 8.025 | 10,359,837.00 |
JPY | 12,179,808.00 | 0.063236 | 770,202.34 |
DKK | 2,239,065.57 | 1.0786 | 2,415,056.12 |
Other account receivables | |||
Including: EUR | 70,143.68 | 8.025 | 562,903.03 |
DKK | 462,081.08 | 1.0786 | 498,400.65 |
Short-term borrowings | |||
Including: EUR | 4,981,278.48 | 8.025 | 39,974,759.80 |
Account payable | |||
Including: USD | 812,035.19 | 6.5249 | 5,298,448.41 |
EUR | 1,031,866.82 | 8.025 | 8,280,731.24 |
JPY | 15,780,699.00 | 0.063236 | 997,908.28 |
CHF | 103,580.75 | 7.4006 | 766,559.70 |
DKK | 2,865,734.26 | 1.0786 | 3,090,980.97 |
GBP | 59,450.00 | 8.8903 | 528,528.34 |
Other account payable | |||
Including: EUR | 255.00 | 8.025 | 2,046.38 |
DKK | 402,113.23 | 1.0786 | 433,719.33 |
(2) Explanation on foreign operational entity:
Subsidiary of the Company IRD was established in Denmark in 1996. The 66% equity of IRD were requiredby the Company in cash in April 2019, and in October 2020, increasing the shareholding to 34.00% by cashpurchase. After the increase in holdings, the company acquired 100.00% of the company's equity.Book-keeping currency of IRD was Danish krone, and IRD mainly engaged in the R&D, production and salesof fuel cell components.Subsidiary Borit was established in Belgium in 2010. the Company acquired 100% equity of Borit by cashacquisition in November 2020. Borit is denominated in Euro and engaged in the R&D, production and sales offuel cell components.
62. Government grants
(1) Government grants
Category | Amount | Item | Amount reckoned in current gain/loss |
The second batch of provincial-level industrial and information industry transformation special funds in 2019 | 5,000,000.00 | Deferred income | -- |
Municipal technological reform fund allocation in 2020 Appropriations for Municipal Technical Reform Fund Projects in 2020 | 4,770,000.00 | Deferred income | -- |
Strategic cooperation agreement funding for key enterprise of smart manufacturing in high-tech zone Strategic cooperation agreement funds for key intelligent manufacturing enterprises in the high-tech zone | 4,060,000.00 | Deferred income | -- |
2020 Wuxi Science and Technology Development Fund 19th Batch of Science and Technology Development Plan Project Funds | 1,000,000.00 | Deferred income | -- |
Intelligent transformation of Automobile components manufacturing process | 1,310,000.00 | Deferred income | -- |
e-store | 1,162,700.27 | Deferred income, other income | 1,162,700.27 |
Anione | 1,410,199.51 | Deferred income, other income | 211,192.07 |
Annual output of 150,000 gasoline engine turbochargers | 1,095,300.00 | Deferred income, other income | 717,082.83 |
Neptune | 918,551.27 | Deferred income | -- |
Development of variable nozzle turbocharger meeting the requirements of National VI B | 800,000.00 | Deferred income | -- |
Pegasus | 528,530.85 | Deferred income, other income | 528,530.85 |
HighPem2 Gas | 356,327.63 | Deferred income, other income | 356,327.63 |
Job stabilization subsidy | 4,125,376.68 | Other income | 4,125,376.68 |
Intelligent transformation and technical transformation guidance funds | 3,740,000.00 | Other income | 3,740,000.00 |
Wuxi City Intellectual Property Project Operation Service System Construction Fund | 1,050,000.00 | Other income | 1,050,000.00 |
Category | Amount | Item | Amount reckoned in current gain/loss |
"Work for training" subsidy | 1,269,900.00 | Other income | 1,269,900.00 |
Training subsidy | 1,005,934.35 | Other income | 926,294.35 |
2019 Wuxi Mayor Quality Award | 1,000,000.00 | Other income | 1,000,000.00 |
Distributed photovoltaic project power generation subsidies | 968,800.00 | Other income | 968,800.00 |
Service charge for three agencies | 682,632.28 | Other income | 682,632.28 |
The second batch of supporting project funds (manufacturing taxation top 30) | 350,000.00 | Other income | 350,000.00 |
2019 Quality Special Award | 350,000.00 | Other income | 350,000.00 |
Huishan District Support Fund | 340,000.00 | Other income | 340,000.00 |
Special subsidies for enterprise vocational education in Binhu District in the third quarter of 2019 | 324,300.00 | Other income | 324,300.00 |
Vocational Appraisal Guidance Center Collection | 303,600.00 | Other income | 303,600.00 |
Technology plan subsidy | 300,000.00 | Other income | 300,000.00 |
2020 Wuxi Smart Manufacturing Project Support Fund | 300,000.00 | Other income | 300,000.00 |
Subsidies for manufacturing individual champion enterprises | 200,000.00 | Other income | 200,000.00 |
Intellectual property reward | 114,670.00 | Other income | 114,670.00 |
In 2019, the integration of industrialization and industrialization, and the provincial-level segmentation project reward for enterprise cloud | 180,000.00 | Other income | 180,000.00 |
2019 Huishan District "Pioneer Talent Program" Talent Award | 150,000.00 | Other income | 150,000.00 |
2019 corporate postdoctoral subsidy funds | 120,000.00 | Other income | 120,000.00 |
2019 tax contribution incentives for key enterprises | 100,000.00 | Other income | 100,000.00 |
Supporting funding for key talent programs above the provincial level | 100,000.00 | Other income | 100,000.00 |
Other | 1,557,189.83 | Deferred income, other income | 998,816.62 |
Total | 41,044,012.67 |
(2) Government grants rebate
Not applicable
VI. Changes of consolidation scope (unit: RMB)
1. Enterprise combine not under the same control
(1) Enterprise combine not under the same control occurred in the period
Purchaser | Time point for equity obtained | Cost of equity obtained | Ratio of equity obtained | Acquired way Equity obtained way | Purchasing date | Standard to determine the purchasing date | Income of purchaser from purchasing date to period-end | Net profit of purchaser from purchasing date to period-end |
Borit | 2020-11-30 | 318,708,001.47 | 100% | Cash purchase | 2020-11-30 | Obtained controlling rights | 9,143,241.73 | -5,166,510.61 |
(2) Combination cost and goodwill
Combination cost | Borit |
--Cash | 318,708,001.47 |
--Fair value of the equity prior to the purchasing date | -- |
Total combination cost | 318,708,001.47 |
Less: shares of fair value of identifiable net assets acquired | 70,941,353.26 |
Goodwill/merger cost is less than the shares of fair value of identifiable net assets acquired | 247,766,648.21 |
(3) Identifiable assets and liability on purchasing date under the purchaser
Item | Borit | |
Fair value on purchasing date | Book value on purchasing date | |
Assets: | ||
Monetary funds | 21,405,243.16 | 21,405,243.16 |
Account receivable | 2,306,622.48 | 2,306,622.48 |
Account paid in advance | 478,370.09 | 478,370.09 |
Other account receivables | 748,859.12 | 748,859.12 |
Inventory | 12,692,549.70 | 11,925,135.80 |
Fixed assets | 46,007,739.12 | 28,314,172.77 |
Construction in progress | 950,331.98 | 950,331.98 |
Intangible assets | 39,460,780.10 | 13,349,057.73 |
Deferred tax assets | 1,388,436.59 | 1,388,436.59 |
Liability: | ||
Account payable | 7,894,432.49 | 7,894,432.49 |
Contract liabilities | 3,067,697.93 | 3,067,697.93 |
Payroll payable | 2,805,072.70 | 2,805,072.70 |
Taxes payable | 273,570.08 | 273,570.08 |
Other account payable | 13,935,900.17 | 13,935,900.17 |
Non-current liabilities due within one year | 872,471.02 | 872,471.02 |
Item | Borit | |
Fair value on purchasing date | Book value on purchasing date | |
Long term loan | 6,201,616.25 | 6,201,616.25 |
Long-term payables | 7,106,533.43 | 7,106,533.43 |
Deferred income | 1,197,109.35 | 1,197,109.35 |
Deferred income tax liabilities | 11,143,175.66 | -- |
Net assets | 70,941,353.26 | 37,511,826.30 |
Less: Minority interests | -- | -- |
Net assets acquired | 70,941,353.26 | 37,511,826.30 |
(4) Gains or losses arising from re-measured by fair value for the equity held before purchasing dateNot applicable.
2. Enterprise combine under the same control
Nil
3. Reverse purchase
Nil
4. Disposal of subsidiaries
Nil
5. Other reasons for consolidation range changed
In the reporting period, Weifu Leader- subsidiary of the company established the Autosmart Seating jointly with QiqiongAutomobile Technology (Shanghai) Co., Ltd. According to the Article of Association under the name of Autosmart Seating,Weifu Leader holds 66.00% equity of Autosmart Seating while 34.00% held by Qiqiong Automobile Technology (Shanghai) Co.,Ltd.
VII. Equity in other entity (Unit: RMB)
1. Equity in subsidiary
(1) Constitute of enterprise group
Subsidiary | Main operation place | Registered place | Business nature | Directly Share-holding ratio (%) | Indirectly Share-holding ratio (%) | Proportion of voting rights (%) | Acquired way |
Weifu Jinning | Nanjing | Nanjing | Spare parts of internal-combustion engine | 80.00 | -- | 80.00 | Enterprise combines under the same control |
Weifu Leader | Wuxi | Wuxi | Automobile exhaust purifier, muffler | 94.81 | -- | 94.81 | Enterprise combines under the same control |
Weifu Mashan | Wuxi | Wuxi | Spare parts of internal-combustion engine | 100.00 | -- | 100.00 | Investment |
Weifu Chang’an | Wuxi | Wuxi | Spare parts of internal-combustion | 100.00 | -- | 100.00 | Investment |
Subsidiary | Main operation place | Registered place | Business nature | Directly Share-holding ratio (%) | Indirectly Share-holding ratio (%) | Proportion of voting rights (%) | Acquired way |
engine | |||||||
Weifu International Trade | Wuxi | Wuxi | Trading | 100.00 | -- | 100.00 | Enterprise combines under the same control |
Weifu Schmidt | Wuxi | Wuxi | Spare parts of internal-combustion engine | 66.00 | -- | 66.00 | Investment |
Weifu Tianli | Ningbo | Ningbo | Spare parts of internal-combustion engine | 98.83 | 1.17 | 100.00 | Enterprise combines not under the same control |
Weifu Autocam | Wuxi | Wuxi | Spare parts of internal-combustion engine | 51.00 | -- | 51.00 | Enterprise combines not under the same control |
Weifu Leader (Wuhan) | Wuhan | Wuhan | Automobile exhaust purifier, muffler | -- | 60.00 | 60.00 | Investment |
Weifu Leader (Chongqing) | Chongqing | Chongqing | Automobile exhaust purifier, muffler | -- | 100.00 | 100.00 | Investment |
Weifu Leader (Nanchang) | Nanchang | Nanchang | Automobile exhaust purifier, muffler | -- | 100.00 | 100.00 | Investment |
Autosmart Seating | Wuxi | Wuxi | Smart car equipment | -- | 66.00 | 66.00 | Investment |
Weifu Electric Drive | Wuxi | Wuxi | Hub Motor | 80.00 | -- | 80.00 | Enterprise combines not under the same control |
SPV | Denmark | Denmark | Investment | 100.00 | -- | 100.00 | Investment |
IRD | Denmark | Denmark | Fuel cell components | -- | 100.00 | 100.00 | Enterprise combines not under the same control |
IRD America | America | America | Fuel cell components | -- | 100.00 | 100.00 | Enterprise combines not under the same control |
Borit | Belgium | Belgium | Fuel cell components | -- | 100.00 | 100.00 | Enterprise combines not |
Subsidiary | Main operation place | Registered place | Business nature | Directly Share-holding ratio (%) | Indirectly Share-holding ratio (%) | Proportion of voting rights (%) | Acquired way |
under the same control | |||||||
Borit Inc. | America | America | Fuel cell components | -- | 100.00 | 100.00 | Enterprise combines not under the same control |
(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 |
Weifu Jinning | 20.00 | 21,848,100.90 | 15,748,768.80 | 199,246,408.99 |
Weifu Schmidt | 34.00 | 4,996,898.99 | -- | 16,239,171.33 |
Weifu Leader | 5.19 | 11,252,872.88 | -- | 107,011,846.40 |
Weifu Autocam | 49.00 | 22,118,036.30 | -- | 177,267,298.23 |
Total | 60,215,909.07 | 15,748,768.80 | 499,764,724.95 |
(3) Main finance of the important non-wholly-owned subsidiary
Subsidiary | Ending balance | |||||
Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
Weifu Jinning | 1,182,876,680.02 | 293,436,809.97 | 1,476,313,489.99 | 433,667,329.34 | 42,293,914.58 | 475,961,243.92 |
Weifu Schmidt | 213,435,154.59 | 47,533,838.59 | 260,968,993.18 | 212,812,487.33 | -- | 212,812,487.33 |
Weifu Leader | 4,942,039,786.72 | 1,200,764,541.57 | 6,142,804,328.29 | 4,204,615,377.36 | 20,388,995.29 | 4,225,004,372.65 |
Weifu Autocam | 323,378,083.30 | 360,083,668.37 | 683,461,751.67 | 321,531,075.82 | -- | 321,531,075.82 |
Total | 6,661,729,704.63 | 1,901,818,858.50 | 8,563,548,563.13 | 5,172,626,269.85 | 62,682,909.87 | 5,235,309,179.72 |
Subsidiary | Opening balance | |||||
Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
Weifu Jinning | 999,097,495.08 | 334,721,775.17 | 1,333,819,270.25 | 318,915,621.86 | 47,104,930.82 | 366,020,552.68 |
Weifu Schmidt | 141,991,506.20 | 49,208,881.93 | 191,200,388.13 | 157,822,785.29 | -- | 157,822,785.29 |
Weifu Leader | 3,941,739,116.15 | 1,095,110,196.65 | 5,036,849,312.80 | 3,351,853,614.37 | 22,204,377.06 | 3,374,057,991.43 |
Weifu Autocam | 245,057,798.53 | 323,114,477.06 | 568,172,275.59 | 254,234,583.00 | -- | 254,234,583.00 |
Total | 5,327,885,915.96 | 1,802,155,330.81 | 7,130,041,246.77 | 4,082,826,604.52 | 69,309,307.88 | 4,152,135,912.40 |
Subsidiary | Current period | |||
Operation Income | Net profit | Total comprehensive income | Cash flow from operation activity | |
Weifu Jinning | 685,608,389.43 | 110,875,256.44 | 110,875,256.44 | 42,395,588.51 |
Weifu Schmidt | 252,434,907.65 | 14,694,274.89 | 14,694,274.89 | -2,270,586.10 |
Weifu Leader | 6,427,844,701.00 | 245,276,849.88 | 245,276,849.88 | 41,415,937.03 |
Subsidiary | Current period | |||
Operation Income | Net profit | Total comprehensive income | Cash flow from operation activity | |
Weifu Autocam | 485,081,038.09 | 50,518,929.75 | 50,518,929.75 | 86,836,060.40 |
Total | 7,850,969,036.17 | 421,365,310.96 | 421,365,310.96 | 168,376,999.84 |
Subsidiary | Last Period | |||
Operation Income | Net profit | Total comprehensive income | Cash flow from operation activity | |
Weifu Jinning | 591,679,134.25 | 124,990,228.55 | 124,990,228.55 | 73,403,344.49 |
Weifu Schmidt | 221,352,114.68 | 5,093,231.61 | 5,093,231.61 | 19,622,886.37 |
Weifu Leader | 3,020,424,650.65 | 33,406,696.55 | 33,406,696.55 | 112,342,744.56 |
Weifu Autocam | 417,638,897.85 | 23,573,670.87 | 23,573,670.87 | 125,547,456.63 |
Total | 4,251,094,797.43 | 187,063,827.58 | 187,063,827.58 | 330,916,432.05 |
(4) Significant restrictions on the use of enterprise group assets and pay off debts of the enterprise groupNil
2. Transaction that has owners’ equity shares changed in subsidiary but still with controlling rights
(1) Owners equity shares changed in subsidiary
In October 2020, the company purchased the equity held by minority shareholders of IRD with 48,507,056.85yuan in cash. After this transaction, the company's shareholding in IRD was changed from 66.00% to
100.00%.
(2) Impact on minority’s interest and owners’ equity attributable to parent company
Item | IRD |
Cost of acquisition——Cash | 48,507,056.85 |
Less: Net assets share of the subsidiary calculated according to the equity ratio obtained | 41,330,359.81 |
Balance | 7,176,697.04 |
Including: Capital reserve adjustment | 7,176,697.04 |
3. Equity in joint venture and associated enterprise
(1)Associated enterprise:
Associated enterprise | Enterprise abbreviation | Main operation place | Registered place | Business nature | Share-holding ratio (%) | Accounting treatment on investment for joint venture and associated enterprise | |
Directly | Indirectly | ||||||
Wuxi Weifu Environment Catalyst Co., Ltd. | Weifu Environment | Wuxi | Wuxi | Catalyst | -- | 49.00 | Equity method |
Bosch Automobile Diesel System Co., Ltd. | Bosch Diesel System | Wuxi | Wuxi | Internal-combustion engine accessories | 32.50 | 1.50 | Equity method |
Zhonglian Automobile Electronic Co., Ltd. | Zhonglian Automobile | Shanghai | Shanghai | Internal-combustion engine accessories | 20.00 | -- | Equity method |
Weifu Precision Machinery Manufacturing Co., Ltd. | Weifu Precision Machinery | Wuxi | Wuxi | Internal-combustion engine accessories | 20.00 | -- | Equity method |
Shinwell Automobile | Shinwell | Wuxi | Wuxi | Automobile | -- | 45.00 | Equity |
Associated enterprise | Enterprise abbreviation | Main operation place | Registered place | Business nature | Share-holding ratio (%) | Accounting treatment on investment for joint venture and associated enterprise | |
Directly | Indirectly | ||||||
Tech. (Wuxi) Co., Ltd. | Automobile Tech. (Wuxi) | components | method | ||||
Changchun Xuyang Weifu Auto Parts Technology Co., Ltd. | Changchun Xuyang | Changchun | Changchun | Automobile components | -- | 34.00 | Equity method |
(2) Main financial information of the important associated enterprise
Item | Ending balance/Current period | ||
Weifu Environmental Protection | Bosch Diesel System | Zhonglian Automobile | |
Current assets | 4,446,438,334.10 | 11,965,249,225.12 | 201,344,601.39 |
Including: cash and cash equivalents | 223,157,715.58 | 10,675,106.71 | 194,215,134.17 |
Non -current assets | 363,513,166.84 | 2,995,027,302.84 | 5,985,689,857.38 |
Total assets | 4,809,951,500.94 | 14,960,276,527.96 | 6,187,034,458.77 |
Current liabilities | 3,251,776,146.44 | 7,423,648,562.76 | 3,687,897.36 |
Non-current liabilities | 175,895,402.90 | -- | 2,638,609.61 |
Total liabilities | 3,427,671,549.34 | 7,423,648,562.76 | 6,326,506.97 |
Minority shareholders’ equity | -- | -- | -- |
Attributable to parent company shareholders’ equity | 1,382,279,951.60 | 7,536,627,965.20 | 6,180,707,951.80 |
Share of net assets calculated by shareholding ratio | 677,317,176.28 | 2,562,453,508.17 | 1,236,141,590.36 |
Adjustment items | -- | -- | -- |
--Goodwill | -- | 267,788,761.35 | 1,407,265.96 |
--Unrealized profit of internal trading | -- | -29,652,559.84 | -- |
--Other | -- | -0.28 | -0.01 |
Book value of equity investment in joint venture | 677,317,176.28 | 2,800,589,709.40 | 1,237,548,856.31 |
Fair value of the equity investment of joint ventures with public offers concerned | -- | -- | -- |
Operation income | 7,458,886,474.12 | 15,742,669,081.61 | 23,790,158.00 |
Financial expenses | 173,107,842.23 | 41,669,303.63 | -7,539,295.05 |
Income tax expense | 27,279,920.00 | 678,258,481.92 | 4,780,141.71 |
Net profit | 296,484,991.05 | 3,511,327,740.19 | 1,538,581,105.06 |
Net profit of the termination of operation | -- | -- | -- |
Other comprehensive income | -- | -- | -- |
Total comprehensive income | 296,484,991.05 | 3,511,327,740.19 | 1,538,581,105.06 |
Dividends received from joint venture in the year | -- | 1,801,681,159.00 | 331,400,000.00 |
Other explanation: Adjustment item for other “-0.28”: the differential tail;
Item | Opening balance/Last Period |
Weifu Environmental Protection | Bosch Diesel System | Zhonglian Automobile | |
Current assets | 3,285,078,665.28 | 10,878,760,988.82 | 175,292,101.34 |
Including: cash and cash equivalents | 52,542,261.45 | 36,763,894.06 | 27,062,362.95 |
Non -current assets | 323,188,749.54 | 3,059,116,036.23 | 6,129,564,645.28 |
Total assets | 3,608,267,414.82 | 13,937,877,025.05 | 6,304,856,746.62 |
Current liabilities | 2,401,381,614.27 | 4,613,514,567.69 | 3,030,820.85 |
Non-current liabilities | 26,545,326.53 | -- | 2,699,079.03 |
Total liabilities | 2,427,926,940.80 | 4,613,514,567.69 | 5,729,899.88 |
Minority shareholders’ equity | -- | -- | -- |
Attributable to parent company shareholders’ equity | 1,180,340,474.02 | 9,324,362,457.36 | 6,299,126,846.74 |
Share of net assets calculated by shareholding ratio | 578,366,832.27 | 3,170,283,235.50 | 1,259,825,369.35 |
Adjustment items | -- | -- | -- |
--Goodwill | -- | 267,788,761.35 | 1,407,265.96 |
--Unrealized profit of internal trading | -- | -20,979,859.92 | -- |
--Other | -- | -0.28 | -- |
Book value of equity investment in joint venture | 578,366,832.27 | 3,417,092,136.65 | 1,261,232,635.31 |
Fair value of the equity investment of joint ventures with public offers concerned | -- | -- | -- |
Operation income | 3,729,583,492.29 | 14,224,084,504.12 | 23,049,985.98 |
Financial expenses | 105,866,567.08 | 4,653,984.37 | -545,753.01 |
Income tax expense | -21,899,596.61 | 708,163,353.13 | 4,124,733.74 |
Net profit | 26,414,017.30 | 3,152,063,841.44 | 1,399,783,397.92 |
Net profit of the termination of operation | -- | -- | -- |
Other comprehensive income | -- | -- | -- |
Total comprehensive income | 26,414,017.30 | 3,152,063,841.44 | 1,399,783,397.92 |
Dividends received from joint venture in the year | -- | 858,896,776.94 | 105,200,000.00 |
(3) Excess loss occurred in joint venture or associated enterprise
Nil
(4) Unconfirmed commitment with joint venture investment concerned
Nil
(5) Intangible liability with joint venture or associated enterprise investment concernedNil
4. Financial summary for non-important Joint venture and associated enterprise
Item | Ending balance / Current period | Opening balance / Last Period |
Joint venture: | ||
Total book value of investment | -- | -- |
Amount based on share-holding ratio |
Item | Ending balance / Current period | Opening balance / Last Period |
--Net profit | -- | -910,094.79 |
--Other comprehensive income | -- | -- |
--Total comprehensive income | -- | -910,094.79 |
Associated enterprise: | ||
Total book value of investment | 86,032,548.98 | 65,714,349.12 |
Amount based on share-holding ratio | ||
--Net profit | 13,773,166.19 | 6,501,430.20 |
--Other comprehensive income | -- | -- |
--Total comprehensive income | 13,773,166.19 | 6,501,430.20 |
5. Major conduct joint operation
Nil
6. Structured body excluding in consolidate financial statement
NilVIII. Risk related with financial instrument
Main financial instrument of the Company including monetary funds, structured deposits, account receivable,equity instrument investment, financial products, loans, and account payable etc., more details of the financialinstrument can be found in relevant items of Note V. Risks concerned with the above-mentioned financialinstrument, and the risk management policy takes for lower the risks are as follow:
Aims of engaging in the risk management is to achieve equilibrium between the risk and benefit, lower theadverse impact on performance of the Company to minimum standards, and maximized the benefit forshareholders and other investors. Base on the risk management targets, the basic tactics of the riskmanagement is to recognized and analyzed the vary risks that the Company counted, established an appropriaterisk exposure baseline and caring risk management, supervise the vary risks timely and reliably in order tocontrol the risk in a limited range.
In business process, the risks with financial instrument concerned happen in front of the Company mainlyincluding credit exposure, market risk and liquidity risk. BOD of the Company takes full charge of the riskmanagement target and policy-making, and takes ultimate responsibility for the target of risk management andpolicy. Compliance department and financial control department manager and monitor those risk exposures toensuring the risks are control in a limited range.
1. Credit Risk
Credit risk refers to the risk that one party of a financial instrument fails to perform its obligations, andresulting in the financial loss of other party. The company's credit risk mainly comes from monetary funds,structured deposits, note receivable, account receivable, other account receivables. The management hasestablished an appropriate credit policy and continuously monitors the exposure to these credit risks.
The monetary funds and structured deposits held by the Company are mainly deposited in financial institutions
such as commercial banks, the management believes that these commercial banks have higher credit and assetstatus, and have lower credit risks.The Company adopts quota policies to avoid credit risks to any financialinstitutions.For accounts receivable, other receivables and bills receivable, the Company sets relevant policies to controlthe credit risk exposure. To prevent the risks, the company has formulated a new customer credit evaluationsystem and an existing customer credit sales balance analysis system. The new customer credit evaluationsystem aims at new customers, the company will investigate a customer’s background according to theestablished process to determine whether to give the customer a credit line and the credit line size and creditperiod. Accordingly, the company has set a credit limit and a credit period for each customer, which is themaximum amount that does not require additional approval. The analysis system for credit sales balance ofexisting customers means that after receiving a purchase order from an existing customer, the company willcheck the order amount and the balance of the accounts owed by the customer so far,if the total of the twoexceeds the credit limit of the customer, the company can only sell to the customer on the premise ofadditional approval, otherwise the customer must be required to pay the corresponding amount in advance. Inaddition, for the credit sales that have occurred, the company analyzes and audits the monthly statements forrisk warning of accounts receivable to ensure that the company’s overall credit risk is within a controllablerange.The maximum credit risk exposure of the Company is the carrying amount of each financial asset on thebalance sheet.
2. Market risk
Market risk of the financial instrument refers to the fair value of financial instrument or future cash flow due tofluctuations in the market price changes and produce, mainly includes the IRR, FX risk and other price risk.
(1) Interest rate risk (IRR)
IRR refers to the fluctuate risks on Company’s financial status and cash flow arising from rates changes inmarket. IRR of the Company mainly related with the bank loans. In order to lower the fluctuate of IRR, theCompany, in line with the anticipative change orientation, choose floating rate or fixed rate, that is the rate infuture period will goes up prospectively, than choose fixed rate; if the rate in future period will declineprospectively, than choose the floating rate. In order to minor the bad impact from difference between theexpectation and real condition, loans for liquid funds of the Company are choose the short-term period, andagreed the terms of prepayment in particular.
(2) Foreign exchange (FX) risk
FX risks refer to the losses arising from exchange rate movement. The FX risk sustain by the Company mainlyrelated with the USD, EUR, SF, JPY, HKD, DKK except for the USD, EUR, SF, JPY, HKD and DKK carriedout for the equipment purchasing of parent company and Autocam, material purchasing of parent company,technical service and trademark usage costs of parent company, the import and export of Weifu InternationalTrade, operation of IRD and operation of Borit, other main business of the Company are pricing and settle
with RMB (Yuan). In consequence of the foreign financial assets and liabilities takes minor ratio in total assets,the Company has small FX risk of the financial instrument, considered by management of the Company.End as 31st December 2020, except for the follow assets or liabilities listed with foreign currency, assets andliabilities of the Company are carried with RMB
① Foreign currency assets of the Company till end of 31st December 2020
Item | Ending foreign currency balance | Convert rate | Ending RMB balance converted | Ratio in assets (%) |
Monetary funds | ||||
Including: USD | 11,596,564.24 | 6.5249 | 75,666,419.10 | 0.28 |
EUR | 3,694,505.41 | 8.025 | 29,648,405.15 | 0.11 |
HKD | 11,548,347.98 | 0.84164 | 9,719,551.59 | 0.04 |
DKK | 9,616,906.23 | 1.0786 | 10,372,795.06 | 0.04 |
Account receivable | ||||
Including: USD | 2,190,411.21 | 6.5249 | 14,292,214.10 | 0.05 |
EUR | 1,290,945.42 | 8.025 | 10,359,837.00 | 0.04 |
JPY | 12,179,808.00 | 0.063236 | 770,202.34 | 0.00 |
DKK | 2,239,065.57 | 1.0786 | 2,415,056.12 | 0.01 |
Other account receivables | ||||
Including: USD | 70,143.68 | 8.025 | 562,903.03 | 0.00 |
DKK | 462,081.08 | 1.0786 | 498,400.65 | 0.00 |
Total ratio in assets | 0.57 |
② Foreign currency liability of the Company till end of 31st December 2020:
Item | Ending foreign currency balance | Convert rate | Ending RMB balance converted | Ratio in assets(%) |
Short-term borrowings | ||||
Including: EUR | 4,981,278.48 | 8.025 | 39,974,759.80 | 0.47 |
Account payable | ||||
Including: USD | 812,035.19 | 6.5249 | 5,298,448.41 | 0.06 |
EUR | 1,031,866.82 | 8.025 | 8,280,731.24 | 0.10 |
JPY | 15,780,699.00 | 0.063236 | 997,908.28 | 0.01 |
CHF | 103,580.75 | 7.4006 | 766,559.70 | 0.01 |
DKK | 2,865,734.26 | 1.0786 | 3,090,980.97 | 0.04 |
GBP | 59,450.00 | 8.8903 | 528,528.34 | 0.01 |
Other account payable | ||||
Including: EUR | 255.00 | 8.025 | 2,046.38 | 0.00 |
DKK | 402,113.23 | 1.0786 | 433,719.33 | 0.01 |
Total ratio in liabilities | 0.71 |
③ Other pricing risk
The equity instrument investment held by the Company with classification as transaction financial asset and
other non-current financial assets are measured on fair value of the balance sheet date. The fluctuation ofexpected price for these investments will affect the gains/losses of fair value changes for the Company.
Furthermore, on the premise of deliberated and approved in 10
th session of 8
thBOD, the Company exerciseentrust financing with the self-owned idle capital; therefore, the Company has the risks of collecting noprincipal due to entrust financial products default. Aims at such risk, the Company formulated a “ManagementMechanism of Capital Financing”, and well-defined the authority approval, investment decision-making,calculation management and risk controls for the entrust financing in order to guarantee a security funds andprevent investment risk efficiently. In order to lower the adverse impact from unpredictable factors, theCompany choose short-term and medium period for investment and investment product’s term is up to 3 yearsin principle; in variety of investment, the Company did not invest for the stocks, derivative products, securityinvestment fund and the entrust financial products aims at security investment as well as other investment withsecurities concerned.
3. Liquidity risk
Liquidity risk refers to the capital shortage risk occurred during the clearing obligation implemented by theenterprise in way of cash paid or other financial assets. The Company aims at guarantee the Company has richcapital to pay the due debts, therefore, a financial control department is established for collectively controllingsuch risks. On the one hand, the financial control department monitoring the cash balance, the marketablesecurities which can be converted into cash at any time and the rolling forecast on cash flow in future 12months, ensuring the Company, on condition of reasonable prediction, owes rich capital to paid the debts; onthe other hand, building a favorable relationship with the banks, rationally design the line of credit, creditproducts and credit terms, guarantee a sufficient limit for bank credits in order to satisfy vary short-termfinancing requirements.IX. Disclosure of fair value
1. Ending fair value of the assets and liabilities measured by fair value
In RMB/CNY
Item | Ending fair value | |||
First-order | Second-order | Third-order | Total | |
I. Sustaining measured by fair value | ||||
(I) Financial assets measured by fair value and with variation reckoned into current gains/losses | 188,108,256.00 | 326,848,122.00 | 4,809,264,982.10 | 5,324,221,360.10 |
1. Transaction financial asset | 188,108,256.00 | -- | 3,330,324,683.10 | 3,518,432,939.10 |
(1)financial products | -- | -- | 3,330,324,683.10 | 3,330,324,683.10 |
(2) Equity instrument investment | 188,108,256.00 | -- | -- | 188,108,256.00 |
2. Other non-current financial assets | -- | 326,848,122.00 | 1,478,940,299.00 | 1,805,788,421.00 |
(1)financial products | -- | -- | 1,467,000,000.00 | 1,467,000,000.00 |
(2) Equity instrument investment | -- | 326,848,122.00 | 11,940,299.00 | 338,788,421.00 |
Item | Ending fair value | |||
First-order | Second-order | Third-order | Total | |
(II) Financial assets measured by fair value and with variation reckoned into other comprehensive income | -- | -- | 1,290,572,477.88 | 1,290,572,477.88 |
1. Receivables financing | -- | -- | 1,005,524,477.88 | 1,005,524,477.88 |
2. Other equity instrument investment | -- | -- | 285,048,000.00 | 285,048,000.00 |
Total asset non-sustaining measured by fair value | 188,108,256.00 | 326,848,122.00 | 6,099,837,459.98 | 6,614,793,837.98 |
Total liability non-sustaining measured by fair value | -- | -- | -- | -- |
II. Non-persistent measure | ||||
Total asset non-sustaining measured by fair value | -- | -- | -- | -- |
Total liability non-sustaining measured by fair value | -- | -- | -- | -- |
2. Recognized basis for the market price sustaining and non-persistent measured by fair value onfirst-orderOn 31 December 2020, the financial assets available for sale-equity instrument investment held by the Company refers to theSDEC (stock code: 600841) and Miracle Automation (Stock code: 002009), determining basis of the market price at period-endrefers to the closing price of 31 December 2020.
3. The qualitative and quantitative information for the valuation technique and critical parameter thatsustaining and non-persistent measured by fair value on second-orderOn 31 December 2020, other non-current financial assets-equity instrument investment held by the Company refers to theGuolian Securities (stock code: 601456), determining basis of the market price at period-end refers to the closing price andliquidity discounts of 31 December 2020.
4. The sustaining and non-persistent measured by fair value on first-order
(1) Fair value of wealth management products
The fair value of wealth management products is determined by the Company using discounted cash flowvaluation techniques.Among them, the important unobservable input values are mainly the expectedannualized rate of return and the risk factor of wealth management products.
(2) Financing of accounts receivable
For this part of financial assets, the Company uses discounted cash flow valuation techniques to determine itsfair value. Among them, important unobservable input values mainly include discount rate and contractualcash flow maturity period. The cash flow with a contract expiration period of 12 months (inclusive) shall notbe discounted, and the cost shall be regarded as its fair value.
(3) Fair value of equity instrument investment and other equity instrument investment
Due to the lack of market liquidity for this part of financial assets, the Company uses the replacement costmethod to determine its fair value.Among them, the important unobservable input values mainly include thefinancial data of the invested company, etc.X. Related party and related transactions
1. Parent company of the enterprise
Parent company | Relationship | Company type | Registration place | Legal representative | Business nature | Registered capital (in 10 thousand Yuan) |
Wuxi Industry Group | Parent company | State-run proprietorship | Wuxi | Jiang Guoxiong | Operation of state-owned assets | 517,265.71 |
Parent company | Share-holding ratio on the enterprise for parent company (%) | Voting right ratio on the enterprise (%) | Ultimate controller of the enterprise | Uniform social credit code |
Wuxi Industry Group | 20.22 | 20.22 | State-owned Assets Supervision & Administration Commission of Wuxi Municipality | 913202001360026543 |
Explanation on parent company of the enterprise | ||||
Wuxi Industry Group is an enterprise controlled by the State-owned Assets Management Committee of Wuxi Municipal People’s Government. Its business scope includes foreign investment by using its own assets, house leasing services, self-operating and acting as an agent for the import and export business of various commodities and technologies (Except for goods and technologies that are restricted by the state or prohibited for import and export), domestic trade (excluding national restricted and prohibited items). (Projects that are subject to approval in accordance with the law can be operated only after being approved by relevant departments). |
2. Subsidiary of the Enterprise
Found more in Note VII. 1.” Equity in subsidiary”
3. Joint venture and associated enterprise
Found more in Note VII.3. “Equity in joint venture and associated enterprise”Other associated enterprise or joint ventures which has related transaction with the Company in the period oroccurred previous: nil
4. Other related party
Other related party | Relationship with the Enterprise |
Robert Bosch Company | Second largest shareholder of the Company |
Key executive | Director, supervisor and senior executive of the Company |
5. Related transaction
(1) Goods purchasing, labor service providing and receiving
①Goods purchasing/labor service receiving
Related party | Content of related transaction | Current period | Last Period |
Weifu Precision Machinery | Goods and labor | 34,570,825.03 | 37,649,400.25 |
Bosch Diesel System | Goods and labor | 29,740,591.61 | 42,492,806.04 |
Weifu Environment | Goods | 3,051,418,777.65 | 1,663,362,526.18 |
Robert Bosch Company | Goods and labor | 150,855,622.37 | 173,854,905.98 |
Shinwell Automobile Tech. (Wuxi) Co., Ltd. | Goods | 1,733,572.01 | 11,195,174.16 |
②Goods sold/labor service providing
Related party | Content of related transaction | Current period | Last Period |
Weifu Precision Machinery | Goods and labor | 6,092,391.01 | 1,428,332.05 |
Bosch Diesel System | Goods and labor | 2,961,684,269.09 | 2,670,139,591.68 |
Weifu Environment | Goods and labor | 29,663,885.81 | 29,810,340.60 |
Robert Bosch Company | Goods and labor | 860,611,502.90 | 730,599,270.85 |
Shinwell Automobile Tech. (Wuxi) Co., Ltd. | Goods | 103,329.66 | 1,241,682.55 |
(2) Related trusteeship management/contract & entrust management/ outsourcing
Nil
(3) Related lease
①As a lessor for the Company:
Lessee | Assets type | Lease income recognized in the Period | Lease income recognized at last Period |
Weifu Environmental Protection | Workshop | 2,508,057.00 | 2,508,057.00 |
②Explanation on related lease
Weifu Leader entered into the house leasing contract with Weifu Environment, as for the plant locates at No.9Linjiang Road, Wuxi new district, owed by Weifu Leader, rent-out to Weifu Environment, agreements aremade as: Rental from 1 January 2020 to 31 December 2020 was 2,508,057.00 Yuan
(4) Related guarantee
Nil
(5) Related party’s borrowed/lending funds:
This year, Weifu Lida received 5.47 million yuan of borrowed funds from Wuxi Industry Group.
(6) Related party’s assets transfer and debt reorganization
Nil
(7) Remuneration of key manager
Item | Current period (in ten thousand yuan) | Last Period (in ten thousand yuan) |
Remuneration of key manager | 1,698.60 | 537.00 |
(8) Other related party transactions
Related party | Name | Current period | Last Period |
Weifu Precision Machinery | Payable for technical services | 54,783.81 | -- |
Weifu Precision Machinery | Purchase of fixed assets | 145,200.00 | -- |
Bosch Diesel System | Payable for technical services | 184,740.27 | 337,369.76 |
Bosch Diesel System | Purchase of fixed assets | 447,692.06 | 5,720,900.23 |
Bosch Diesel System | Technology royalties paid etc. | 295,419.00 | -- |
Robert Bosch Company | Technology royalties paid etc. | 5,072,260.23 | 3,489,339.19 |
Robert Bosch Company | Payable for technical services | -- | 702,303.80 |
Robert Bosch Company | Purchase of fixed assets | 22,927,889.53 | 6,150,100.00 |
Weifu Environmental Protection | House rental fee payable | -- | 214,285.71 |
Weifu Environmental Protection | Purchase of fixed assets | 30,000.00 | 148,668.39 |
Weifu Environmental Protection | Payable for technical services | 64,433.96 | -- |
Weifu Environmental Protection | Sales of fixed assets | 9,426.00 | -- |
Wuxi Industry Group | Interest paying | 89,564.40 |
6. Receivable/payable items of related parties
(1) Receivable item
Item | Related party | Ending balance | Opening balance | ||
Book balance | Bad debt reserve | Book balance | Bad debt reserve | ||
Account receivable | Weifu Precision Machinery | 160,565.87 | -- | 243,544.57 | -- |
Other account receivables | Weifu Precision Machinery | -- | -- | 1,070,000.00 | -- |
Account receivable | Bosch Diesel System | 549,543,387.12 | 547,423,047.70 | -- | |
Account receivable | Robert Bosch Company | 205,738,695.62 | 84,473.87 | 155,195,576.42 | 135,534.13 |
Other account receivables | Robert Bosch Company | -- | -- | 7,600,000.00 | 1,520,000.00 |
Account receivable | Weifu Environmental Protection | 642,390.75 | -- | 3,925,564.95 | -- |
Other account receivables | Weifu Environmental Protection | 49,000,000.00 | -- | -- | -- |
(2) Item of payment in advance
Item | Related party | Ending balance | Opening balance |
Other non- current asset | Weifu Precision Machinery | -- | 53,788.00 |
Other non- current asset | Bosch Diesel System | -- | 183,842.03 |
Account paid in advance | Robert Bosch Company | 2,970,930.93 | 5,954,823.56 |
Other non- current asset | Robert Bosch Company | -- | 6,600,000.00 |
(3) Payable item
Item | Related party | Ending balance | Opening balance |
Account payable | Weifu Precision Machinery | 12,825,011.74 | 10,556,782.28 |
Other account payable | Weifu Precision Machinery | 29,000.00 | 29,000.00 |
Account payable | Weifu Environmental Protection | 850,384,640.88 | 553,049,630.17 |
Account payable | Bosch Diesel System | 7,178,387.17 | 5,664,266.10 |
Account payable | Robert Bosch Company | 5,370,249.46 | 12,297,410.48 |
Account payable | Shinwell Automobile Tech. (Wuxi) Co., Ltd. | 19,320.30 | 2,212,768.26 |
Other current liabilities | Bosch Diesel System | 169,620,804.78 | 69,164,600.47 |
Other current liabilities | Weifu Precision Machinery | 74,778.76 | |
Other account payable | Wuxi Industry Group | 5,474,862.22 | -- |
(4) Advance payments and contract liabilities:
Item | Related party | Ending balance | Opening balance |
Contract liabilities | Weifu Precision Machinery | 619,469.03 | -- |
Contract liabilities | Bosch Diesel System | 0.36 | -- |
Contract liabilities | Robert Bosch Company | 18,094.85 | 854,162.51 |
Contract liabilities | Weifu Environmental Protection | -- | 5,812,521.86 |
7. Undertakings of related party
Nil
XI.Share-based payment
1. Overall situation of share-based payment
Total amount of various equity instruments granted by the company in the current period | Fair value on the grant date 509,994,000.00 yuan |
Total amount of various equity instruments exercised by the company in the current period | -- |
Total amount of various equity instruments invalidated by the company in the current period | -- |
The scope of the exercise price of the stock options issued by the company at the end of the period and the remaining period of the contract | The grant price is 15.48 yuan per share; the exercise time is from the first trading day 24 months after the completion of the registration of the restricted stocks granted in the first tranche to the last trading day within 60 months from the date of completion of the registration of the restricted stock granted in the first tranche, so the remaining period of the contract is 4 years and 11 months. |
The scope of the exercise price of other equity instruments issued by the company at the end of the period and the remaining period of the contract | N/A |
2. Share-based payment settled by equity
Method for determining the fair value of equity instruments on the grant date | Determine based on the closing price of the restricted stock on the grant date |
Basis for determining the number of vesting equity instruments | Unlocking conditions |
Reasons for the significant difference between estimate in the current period and estimate in the prior period | Not Applicable |
Cumulative amount of equity-settled share-based payments included in the capital reserve | 6,484,837.50 |
Total amount of expenses confirmed by equity-settled share-based payments in the current period | 6,484,837.50 |
Other explanation:
This restricted stock incentive plan has been reviewed and approved by the company's second extraordinary general meeting ofshareholders in 2020. The overview of this restricted stock incentive plan is as follows:
(1) Stock source: the company's A-share common stock repurchased from the secondary market.
(2) Grant date: November 12, 2020.
(3) Grant objects and number of grants: 19,540,000 restricted stocks were granted to 601 incentive objects of the company and itssubsidiaries.
(4) Grant price: 15.48 yuan/share.
(5) Grant registration completion date: December 4, 2020.
(6) Lifting the restrictions on sales:
Unlock period | Unlock time | Ratio of unlocked quantity to granted quantity |
Phase I unlocked | Starting from the first trading day 24 months after the | 4/10 |
completion of the registration of the first grant and ending on the last trading day within 36 months | ||
Phase II unlocked | Starting from the first trading day 36 months after the completion of the registration of the first grant and ending on the last trading day within 48 months | 3/10 |
Phase III unlocked | Starting from the first trading day 48 months after the completion of the registration of the first grant and ending on the last trading day within 60 months | 3/10 |
(7) Performance appraisal requirements at the company level:
Unlock conditions | Performance appraisal requirements |
The first batch of unlock conditions | 1. the weighted average ROE for year of 2021 is not less than 10%; 2. the growth rate of self-operating profit in 2021 will not be less than 6% compared with the year of 2019, the absolute amount will not be less than 845 million yuan; 3. the cash dividends for year of 2021 shall be no less than 50% of the profit available for distribution of the current year. |
The second batch of unlocking conditions | 1. the weighted average ROE for year of 2022 is not less than 10%; 2. the growth rate of self-operating profit in 2022 will not be less than 12% compared with the year of 2019, the absolute amount will not be less than 892 million yuan; 3. the cash dividends for year of 2022 shall be no less than 50% of the profit available for distribution of the current year. |
The third batch of unlocking conditions | 1. the weighted average ROE for year of 2023 is not less than 10%; 2. the growth rate of self-operating profit in 2023 will not be less than 20% compared with the year of 2019, the absolute amount will not be less than 958 million yuan; 3. the cash dividends for year of 2023 shall be no less than 50% of the profit available for distribution of the current year. |
Other explanation: self-operating profit refers to the net profit attributable to the owners of the parent company after deductingnon-recurring gains and losses, and deducting the investment income from Bosch Diesel System and CNEMS.
XII. Undertakings or contingency
1. Important undertakings
Important undertakings on balance sheet dateNil
2. Contingency
NilXIII. Events after balance sheet date
1. Important non adjustment matters
Nil
2. Profit distribution
Profit or dividend plans to distributed | The profit distribution plan for 2020: with the total share capital of the company at the end of 2020 (1,008,950,570 shares), excluding the shares |
already repurchased on the repurchase account (56,277 shares of A-stock), that is the 1,008,894,293 shares as the base, distribute 15.00 Yuan (tax included) in cash for every 10 shares to all shareholders without bonus shares and capitalization of capital reserve. (In accordance with the Company Laws, shares of the company held by a listed company through a special securities account for repurchase shall not be entitled to participate in profit distribution and capitalization of capital reserves).The remaining undistributed profits will be carried forward to the next year. The proposed cash dividend is 1,513,341,400 Yuan (tax included), | ||
Profit or dividend declare to distributed which have been approved | The profit distribution plan needs to submit for deliberation on Annual General Meeting |
3. Sales return
Important sales returns: Nil
4. Other events after balance sheet date
(1)The Proposal on External Investment was deliberated and approved by the 22
nd session of 9
thBOD dated 26Feb. 2021. the Company intends to invest in Qingdao Shangqi HuiZhu Zhanxing Industry Investment Fund(Limited Partnership) with its own funds of 150 million yuan.
(2) According to the resolution of the 23
rdsession of the 9
thboard of directors of the company held on April 16,2021, the company plans to use its own idle funds for entrusted financial management in 2021, with the totalinvestment amount not exceeding 9.5 billion Yuan, and the above amount can be rolled
XIV. Other important events
1. Previous accounting errors collection
Nil
2. Debt restructuring
Nil
3. Assets replacement
Nil
4. Pension plan
The Enterprise Annuity Plan under the name of WFHT has deliberated and approved by 8
th
session of 7
thBOD:
in order to mobilize the initiative and creativity of the employees, established a talent long-term incentivemechanism, enhance the cohesive force and competitiveness in enterprise, the Company carried out the abovementioned annuity plan since the date of reply of plans reporting received from labor security administrationdepartment. Annuity plans are: the annuity fund are paid by the enterprise and employees together; theenterprise’s contribution shall not exceed 8% of the gross salary of the employees of the enterprise per year,the combined contribution of the enterprise and the individual employee shall not exceed 12% of the totalsalary of the employees of the enterprise. In accordance with the State’s annuity policy, the Company will
adjusted the economic benefits in due time, in principle of responding to the economic strength of theenterprise, the amount paid by the enterprise at current period control in the 8 percent of the total salary of lastyear, the maximum annual allocation to employees shall not exceed five times the average allocation toemployees and the excess shall not be counted towards the allocation. The individual contribution is limited to1% of one’s total salary for the previous year. Specific paying ratio later shall be adjusted correspondingly inline with the operation condition of the Company.In December 2012, the Company received the Reply on annuity plans reporting under the name of WFHTfrom labor security administration department, later, the Company entered into the Entrusted ManagementContract of the Annuity Plan of WFHT with PICC.
5. Segment
(1) Recognition basis and accounting policy for reportable segment
Determine the operating segments in line with the internal organization structure, management requirementand internal reporting system. Operating segment of the Company refers to the followed components that havebeen satisfied at the same time:
① The component is able to generate revenues and expenses in routine activities;
② Management of the Company is able to assess the operation results regularly, and determine resourcesallocation and performance evaluation for the component;
③ Being analyzed, financial status, operation results and cash flow of the components are able to require bythe CompanyThe Company mainly engaged in the manufacture of fuel system of internal combustion engine and fuel cellcomponents products, auto components, muffler and purifier etc., based on the product segment, the Companydetermine three reporting segments as auto fuel injection system and fuel cell components, air managementsystem and automotive post processing system. Accounting policy for the three reporting segments are sharesthe same policy state in Note IIISegment assets exclude transaction financial asset, other account receivables-dividend receivable, othernon-current financial assets, other equity instrument investment, long term equity investment and otherundistributed assets, since these assets are not related to products operation.
(2) Financial information for reportable segment
Item | Automotive fuel injection system and fuel cell parts product division | Product segment of automotive post processing system | Product segment of air management system | Less: offset of segment | Add: investment/income measured by equity, income of financial products or possession and disposal income, the retained assets or gains/losses as the financial assets available for sale or possession and disposal income | Total |
Operating revenue | 5,993,310,683.00 | 6,427,844,701.00 | 697,872,646.74 | 235,201,724.14 | -- | 12,883,826,306.60 |
Operating cost | 4,448,683,801.55 | 5,731,947,799.03 | 446,496,408.80 | 197,843,567.41 | -- | 10,429,284,441.97 |
Total Profit | 524,729,824.97 | 96,006,636.11 | 71,788,594.68 | -524,839.83 | 2,309,901,783.97 | 3,002,951,679.56 |
Net profit | 452,179,859.49 | 101,778,469.69 | 55,671,416.42 | -393,128.74 | 2,212,713,056.22 | 2,822,735,930.56 |
Total assets | 11,471,288,383.40 | 5,342,888,369.35 | 1,013,319,278.74 | 881,624,474.24 | 10,404,823,830.96 | 27,350,695,388.21 |
Total liabilities | 3,923,773,971.66 | 4,225,004,372.65 | 592,960,211.88 | 186,744,801.93 | 1,235,734.93 | 8,556,229,489.19 |
6. Major transaction and events makes influence on investor’s decision
Nil
XV. Notes to major items in consolidated financial statements of parentcompany
(Monetary unit refers to RMB/CNY below unless otherwise specified.The end of the period refers toDecember 31, 2020, the beginning of the period refers to January 1, 2020, the current period refers to2020, and the last period refers to 2019.)
1. Account receivable
(1) Classification of account receivable:
Category | Ending balance | ||||
Book balance | Bad debt reserve | Book value | |||
Amount | Ratio (%) | Amount | Accrual ratio (%) | ||
Account receivable with bad debt provision accrual on a single basis | 11,107,123.51 | 1.11 | 11,107,123.51 | 100.00 | -- |
Account receivable with bad debt provision accrual on portfolio | 985,882,139.36 | 98.89 | 3,099,860.14 | 0.31 | 982,782,279.22 |
Including: receivables from customers | 836,329,626.26 | 83.89 | 3,099,860.14 | 0.37 | 833,229,766.12 |
Receivables from internal related parties | 149,552,513.10 | 15.00 | -- | -- | 149,552,513.10 |
Total | 996,989,262.87 | 100.00 | 14,206,983.65 | 1.42 | 982,782,279.22 |
Category | Opening balance | ||||
Book balance | Bad debt reserve | Book value | |||
Amount | Ratio (%) | Amount | Accrual ratio (%) | ||
Account receivable with bad debt provision accrual on a single basis | 9,107,123.51 | 1.06 | 9,107,123.51 | 100.00 | -- |
Account receivable with bad debt provision accrual on portfolio | 851,956,578.91 | 98.94 | 3,716,569.87 | 0.44 | 848,240,009.04 |
Including: receivables from customers | 715,722,790.25 | 83.12 | 3,716,569.87 | 0.52 | 712,006,220.38 |
Receivables from internal related parties | 136,233,788.66 | 15.82 | -- | -- | 136,233,788.66 |
Total | 861,063,702.42 | 100.00 | 12,823,693.38 | 1.49 | 848,240,009.04 |
①Bad debt provision accrual on single basis:
Account receivable(by unit) | Ending balance | |||
Account receivable | Bad debt reserve | Accrual ratio (%) | Accrual causes | |
BD bills | 7,300,000.00 | 7,300,000.00 | 100.00 | Have difficulty in collection |
Changchun FAW Sihuan Engine Manufacturing Co., Ltd | 1,475,731.65 | 1,475,731.65 | 100.00 | Have difficulty in collection |
Wuxi Kipor Machinery Co., Ltd | 1,220,384.74 | 1,220,384.74 | 100.00 | Have difficulty in collection |
Fujian Zhao’an Country Minyue Bianjie Agricultural Machinery Automobile components Co., Ltd. | 1,111,007.12 | 1,111,007.12 | 100.00 | Have difficulty in collection |
Account receivable(by unit) | Ending balance | |||
Account receivable | Bad debt reserve | Accrual ratio (%) | Accrual causes | |
Total | 11,107,123.51 | 11,107,123.51 | 100.00 |
②Bad debt provision accrual on portfolio:
Account age | Ending balance | ||
Book balance | Bad debt reserve | Accrual ratio (%) | |
Within 6 months | 822,921,167.68 | -- | -- |
6 months to one year | 8,783,211.93 | 878,321.19 | 10.00 |
1-2 years | 2,434,208.25 | 486,841.65 | 20.00 |
2-3 years | 760,568.50 | 304,227.40 | 40.00 |
Over 3 years | 1,430,469.90 | 1,430,469.90 | 100.00 |
Total | 836,329,626.26 | 3,099,860.14 | 0.37 |
③In the portfolio, receivables from internal related parties
Name | Amount | Bad debt reserveAccrual ratio (%) |
Weifu Leader | 68,976,711.20 | -- |
Weifu International Trade | 22,530,615.85 | -- |
Weifu Tianli | 2,563,953.76 | -- |
Weifu Schmidt | 55,481,232.29 | -- |
Total | 149,552,513.10 | -- |
④By account age (Including single provision and portfolio provision):
Account age | Ending Book balance |
Within one year | 976,000,464.78 |
Including: within 6 months | 965,950,994.85 |
6 months to one year | 10,049,469.93 |
1-2 years | 7,690,636.18 |
2-3 years | 10,292,548.30 |
Over 3 years | 3,005,613.61 |
Total | 996,989,262.87 |
(2) Bad debt provision accrual collected or switch back:
Category | Opening balance | Amount changed in the period | Ending balance | |||
Accrual | Collected or reversal | Written-off | Absorption and merger increase | |||
Bad debt reserve | 12,823,693.38 | 1,336,214.96 | -- | 210,660.88 | 257,736.19 | 14,206,983.65 |
Total | 12,823,693.38 | 1,336,214.96 | -- | 210,660.88 | 257,736.19 | 14,206,983.65 |
Important bad debt provision collected or switch back: nil
(3) Account receivable actual charge off in the Period
Item | Amount charge off | Resulted by related transaction (Y/N) |
Fuzhou Haominxing Automobile components Co., Ltd. | 129,739.47 | N |
Kunming Yunnei Power Co., Ltd. | 47,449.10 | N |
Xinxiang Xincheng Machinery Equipment Co., Ltd. | 28,895.81 | N |
Other customers | 4,576.50 | N |
Total | 210,660.88 |
(4) Top 5 receivables at ending balance by arrears party
Name | Ending balance of account receivable | Ratio in total ending balance of account receivables (%) | Ending balance of bad debt reserve |
Bosch Diesel System | 548,842,896.72 | 55.05 | -- |
Weifu Leader | 68,976,711.20 | 6.92 | -- |
Weifu Schmidt | 55,481,232.29 | 5.56 | -- |
Custom 4 | 49,207,860.47 | 4.94 | 703,826.23 |
Custom 5 | 45,023,657.85 | 4.52 | 102,723.13 |
Total | 767,532,358.53 | 76.99 | 806,549.36 |
2. Other account receivables
Item | Ending balance | Opening balance |
Interest receivable | 897,777.78 | 804,929.68 |
Dividend receivable | -- | 1,070,000.00 |
Other account receivables | 196,437,936.85 | 248,140,027.06 |
Total | 197,335,714.63 | 250,014,956.74 |
(1)Interest receivable
1) Category of interest receivable
Item | Ending balance | Opening balance |
Interest receivable of unified-borrowing & unified-lending | 897,777.78 | 149,876.70 |
Interest of fund occupation | -- | 655,052.98 |
Total | 897,777.78 | 804,929.68 |
2) Significant overdue interest
Nil
(2) Dividend receivable
1) Details of dividend receivable
The invested entity | Ending balance | Opening balance |
Weifu Precision Machinery | -- | 1,070,000.00 |
2) Important dividend receivable with account age over one year
Ni
(3)Other account receivables
1) Other account receivables classification by nature
Nature | Ending balance | Opening balance |
Staff loans and petty cash | 483,650.21 | 462,664.16 |
Balance of related party in the consolidate scope | 194,745,396.72 | 216,403,060.04 |
Margin | 1,030,340.00 | -- |
Intercourse funds of unit | -- | 24,000,000.00 |
Protean Holdings Corp. equity disposal fund | -- | 10,654,092.89 |
Other | 263,534.00 | 117,939.00 |
Total | 196,522,920.93 | 251,637,756.09 |
2) Accrual of bad debt provision
Bad debt reserve | Phase I | Phase II | Phase III | Total |
Expected credit losses over next 12 months | Expected credit losses for the entire duration (without credit impairment occurred) | Expected credit losses for the entire duration (with credit impairment occurred) | ||
Balance on Jan. 1, 2020 | 3,497,729.03 | -- | -- | 3,497,729.03 |
Balance of Jan. 1, 2020 in the period | -- | -- | -- | -- |
--transfer-in phase I | -- | -- | -- | -- |
--transfer-in phase II | -- | -- | -- | -- |
-- switch back phase II | -- | -- | -- | -- |
-- switch back phase I | -- | -- | -- | -- |
Current accrual | 52,664.34 | -- | -- | 52,664.34 |
Current reversal | 3,465,409.29 | -- | -- | 3,465,409.29 |
Current written-off | -- | -- | -- | -- |
Other change | -- | -- | -- | -- |
Balance on Dec. 31, 2020 | 84,984.08 | -- | -- | 84,984.08 |
By account age (Including single provision and portfolio provision)
Account age | Ending Book balance |
Within one year | 160,889,115.00 |
Including: Within 6 months | 71,626,274.30 |
6 months to one year | 89,262,840.70 |
1-2 years | 35,552,695.72 |
2-3 years | 43,570.21 |
Over 3 years | 37,540.00 |
Total | 196,522,920.93 |
3) Bad debt provision accrual, collected or switch back
Category | Opening balance | Amount changed in the period | Ending balance | |||
Accrual | Collected or reversal | Written-off | Conversion different of foreign currency financial statement | |||
Bad debt reserve | 3,497,729.03 | 52,664.34 | 3,465,409.29 | -- | -- | 84,984.08 |
Total | 3,497,729.03 | 52,664.34 | 3,465,409.29 | -- | -- | 84,984.08 |
4) Other receivables actually written-off during the reporting period
Nil
5) Top 5 other receivables at ending balance by arrears party
Item | Nature | Ending balance | Account age | Ratio (%) | Ending balance of bad debt reserve |
Weifu Leader | Balance of related party in the consolidate scope | 100,000,000.00 | Within one year | 50.88 | -- |
Weifu Chang’an | Balance of related party in the consolidate scope | 54,192,781.00 | Within one year | 27.58 | -- |
Weifu Schmidt | Balance of related party in the consolidate scope | 21,000,000.00 | 1-2 years | 10.68 | -- |
Weifu Mashan | Balance of related party in the consolidate scope | 19,552,615.72 | Within 2 years | 9.95 | -- |
Zhenkunxing Industrial Supermarket (Shanghai) Co., Ltd. | Margin | 1,000,000.00 | Within 6 months | 0.51 | -- |
Total | 195,745,396.72 | 99.60 | -- |
6) Other account receivables related to government grants:
Nil
7) Other receivable for termination of confirmation due to the transfer of financial assets:
Nil
8) The amount of assets and liabilities that are transferred other receivable and continued to be involved:
Nil
无锡威孚高科技集团股份有限公司 2020年度财务报表附注
3. Long-term equity investments
Item | Ending balance | Opening balance | ||||
Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
Investment for subsidiary | 1,978,302,303.40 | -- | 1,978,302,303.40 | 1,731,814,008.11 | -- | 1,731,814,008.11 |
Investment for associates and joint venture | 3,999,826,000.48 | -- | 3,999,826,000.48 | 4,599,549,621.93 | -- | 4,599,549,621.93 |
Total | 5,978,128,303.88 | -- | 5,978,128,303.88 | 6,331,363,630.04 | -- | 6,331,363,630.04 |
(1) Investment for subsidiary
The invested entity | Opening balance | Increase in this period | Decrease in this period | Ending balance | Impairment accrual in the period | Ending balance of depreciation reserves |
Weifu Jinning | 178,639,593.52 | 569,165.62 | -- | 179,208,759.14 | -- | -- |
Weifu Leader | 460,113,855.00 | 731,784.39 | -- | 460,845,639.39 | -- | -- |
Weifu Mashan | 168,693,380.51 | 154,321.87 | -- | 168,847,702.38 | -- | -- |
Weifu Chang’an | 220,902,037.30 | 144,365.63 | -- | 221,046,402.93 | -- | -- |
Weifu International Trade | 32,849,254.85 | 59,737.50 | -- | 32,908,992.35 | -- | -- |
Weifu ITM | 167,000,000.00 | -- | 167,000,000.00 | -- | -- | -- |
Weifu Schmidt | 50,160,000.00 | 84,628.12 | -- | 50,244,628.12 | -- | -- |
Weifu Tianli | 234,941,100.00 | 243,928.12 | -- | 235,185,028.12 | -- | -- |
Weifu Autocam | 82,454,467.99 | -- | -- | 82,454,467.99 | -- | -- |
Weifu Electronic Drive | 53,832,280.23 | 54,759.38 | -- | 53,887,039.61 | -- | -- |
SPV | 82,228,038.71 | 411,445,604.66 | -- | 493,673,643.37 | -- | -- |
Total | 1,731,814,008.11 | 413,488,295.29 | 167,000,000.00 | 1,978,302,303.40 | -- | -- |
(2) Investment for associates and joint venture
Enterprise | Nature | Opening balance | Current changes (+, -) | Ending balance | Ending balance of depreciation reserves |
Bosch Diesel System | Associated enterprise | 3,276,853,986.35 | -589,329,306.82 | 2,687,524,679.53 | -- |
无锡威孚高科技集团股份有限公司 2020年度财务报表附注
Zhonglian Automobile | Associated enterprise | 1,261,232,635.30 | -23,683,778.99 | 1,237,548,856.31 | -- |
Weifu Precision Machinery | Associated enterprise | 61,463,000.28 | 13,289,464.36 | 74,752,464.64 | -- |
Total | Associated enterprise | 4,599,549,621.93 | -599,723,621.45 | 3,999,826,000.48 | -- |
Current changes (+, -):
Item | Bosch Diesel System | Zhonglian Automobile | Weifu Precision Machinery |
Additional investment | -- | -- | -- |
Capital reduction | -- | -- | -- |
Investment gain/loss recognized under equity | 1,132,865,918.69 | 307,716,221.01 | 16,889,464.36 |
Other comprehensive income adjustment | -- | -- | -- |
Other equity change | -- | -- | -- |
Cash dividend or profit announced to issued | -1,722,195,225.51 | -331,400,000.00 | -3,600,000.00 |
Impairment accrual | -- | -- | -- |
Other | -- | -- | -- |
Total | -589,329,306.82 | -23,683,778.99 | 13,289,464.36 |
4. Operating income and cost
5. Investment income
Item | Current period | Last Period |
Investment income in subsidiaries | 62,995,075.18 | 105,086,820.44 |
Investment income in joint ventures and associated enterprises | 1,457,471,604.06 | 1,310,687,436.86 |
Investment income from holding transaction financial asset | 683,211.60 | 1,383,668.59 |
Investment income from holding other equity instrument investment | -- | 900,000.00 |
Investment income of financial products | 258,702,394.98 | 228,151,138.50 |
Other | 36,907,117.60 | -- |
Total | 1,816,759,403.42 | 1,646,209,064.39 |
Item | Current period | Last Period | ||
Income | Cost | Income | Cost | |
Main business | 4,164,444,997.29 | 2,955,881,019.87 | 3,470,103,915.90 | 2,330,022,370.30 |
Other business | 371,972,806.50 | 280,430,592.86 | 362,821,444.52 | 311,590,544.97 |
Total | 4,536,417,803.79 | 3,236,311,612.73 | 3,832,925,360.42 | 2,641,612,915.27 |
XVI. Supplementary Information
1. Current non-recurring gains/losses
Item | Amount | Note |
Gains/losses from the disposal of non-current asset | 10,719,959.77 | |
Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to enterprise’s business) | 146,475,795.26 | |
Profit and loss of assets delegation on others’ investment or management | 271,684,174.09 | |
Except for effective hedge business relevant to normal operation of the Company, gains and losses arising from fair value change of tradable financial assets and tradable financial liabilities, and investment income from disposal of tradable financial assets, tradable financial liabilities and financial assets available for sale | 375,102,546.00 | |
Switch-back of impairment of account receivable that practice impairment test independent | 3,078,424.43 | |
Other non-operating income and expenditure except for the aforementioned items | -3,090,715.87 | |
Impact on income tax | -116,175,046.47 | |
Impact on minority shareholders’ equity | -5,011,845.35 | |
Total | 682,783,291.86 |
Note: “+” refers to income and revenue while “-” stands for losses or expenses for the above mentioned numbers
2. ROE and earnings per share
Profits during report period | Weighted average ROE (%) | Earnings per share (RMB) | |
Basic earnings per share | Diluted earnings per share | ||
Net profits belong to common stock stockholders of the Company | 15.78 | 2.79 | 2.79 |
Net profits belong to common stock stockholders of the Company after deducting nonrecurring gains and losses | 11.90 | 2.10 | 2.10 |
3. Difference of the accounting data under accounting rules in and out of China
(1) Difference of the net profit and net assets disclosed in financial report, under both IAS (InternationalAccounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)Not applicable
(2) Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rulesand Chinese GAAP (Generally Accepted Accounting Principles)Not applicable
4. Supplementation for change of accounting policy
Found more in the explanation on 30. Change of the important accounting policy and estimation in Note III