BINGSHAN REFRIGERATION & HEAT TRANSFER TECHNOLOGIES CO., LTD.
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(NOT AUDITED)
BALANCE SHEET
Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. June 30,2020 Unit: RMB Yuan
| Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. June 30, 2020 Unit: RMB Yuan | ||||
| Items | 30-June-2020 | 31-Dec-2019 | ||
| Consolidation | Parent Company | Consolidation | Parent Company | |
| Current assets: | ||||
| Monetary funds | 278,156,476.16 | 133,769,634.48 | 332,119,146.22 | 175,586,251.46 |
| Financial assets which are measured by fair value and which changes are recorded in current profit and loss | ||||
| Derivative financial assets |
| Transaction financial assets |
| Notes receivable | 60,975,736.49 | 2,518,410.28 | 119,947,326.41 | 12,692,689.97 |
| Accounts receivable | 1,103,804,469.19 | 509,511,590.91 | 1,030,342,541.88 | 526,554,114.61 |
| Accounts paid in advance | 154,500,443.00 | 45,366,088.98 | 142,786,528.57 | 44,560,934.56 |
| Other receivables | 87,733,054.65 | 57,405,718.74 | 38,731,228.57 | 5,981,993.82 |
| Interest receivables | 348,833.33 | 348,833.33 | 583,833.33 | 583,833.33 |
| Dividend receivable | 42,152,903.12 | 50,338,786.40 | 33,450.00 | - |
| Inventories | 608,821,170.24 | 242,105,637.81 | 539,497,213.39 | 212,558,464.52 |
| Contract assets | 94,445,717.61 | 72,977,228.68 |
| Assets held for sale | ||||
| Non-current asset due within one year |
| Other current assets | 11,714,155.30 | 245,006.96 | 14,172,130.45 | 32,843.40 |
| Total current assets | 2,400,151,222.64 | 1,063,899,316.84 | 2,217,596,115.49 | 977,967,292.34 |
| Non-current assets: |
| Finance asset held available for sales | ||||
| Held-to-maturity investment |
| Long-term account receivable | ||||
| Long-term equity investment | 1,628,442,791.08 | 2,311,152,962.49 | 1,662,181,009.14 | 2,244,411,383.88 |
| Other non-current financial assets | 284,146,396.67 | 282,731,254.17 | 303,469,706.51 | 302,054,564.01 |
| Investment property | 93,684,345.08 | 104,088,789.56 | 96,200,507.24 | 106,536,035.96 |
| Fixed assets | 957,684,403.68 | 748,876,456.86 | 992,435,172.94 | 776,349,872.24 |
| Construction in progress | 36,965,756.73 | 27,408,270.75 | 36,285,056.80 | 27,212,183.40 |
| Engineering material | ||||
| Disposal of fixed asset |
| Productive biological asset | ||||
| Oil and gas asset |
| Intangible assets | 139,166,688.92 | 67,174,298.87 | 141,540,378.10 | 68,221,989.91 |
| Expense on Research and Development | ||||
| Goodwill | 1,750,799.49 | 1,750,799.49 |
| Long-term expenses to be apportioned | 10,459,043.73 | 9,005,609.76 | 11,646,845.47 | 9,751,998.84 |
| Deferred income tax asset | 60,062,877.38 | 13,228,425.96 | 62,397,665.08 | 13,858,811.66 |
| Other non-current asset |
| Total non-current asset | 3,212,363,102.76 | 3,563,666,068.42 | 3,307,907,140.77 | 3,548,396,839.90 |
| Total assets | 5,612,514,325.40 | 4,627,565,385.26 | 5,525,503,256.26 | 4,526,364,132.24 |
| Current liabilities: | ||||
| Short-term loans | 382,693,600.00 | 366,093,600.00 | 355,252,000.00 | 308,082,000.00 |
| Financial liabilities which are measured by fair value |
and which changes are recorded in current profit andlossDerivative financial liabilities
| Derivative financial liabilities | ||||
| Transaction financial liabilities |
| Notes payable | 264,006,309.11 | 204,646,261.20 | 305,468,505.38 | 189,540,652.01 |
| Accounts payable | 940,681,481.86 | 321,427,663.26 | 814,331,684.02 | 293,479,043.69 |
| Accounts received in advance | 160,571,622.53 | 47,114,426.48 |
| Contract liabilities | 201,589,646.20 | 49,838,218.15 | ||
| Wage payable | 10,356,555.86 | 92,529.75 | 31,701,317.58 | 8,702,907.01 |
| Taxes payable | 8,930,118.03 | 6,394,749.72 | 8,184,018.69 | 5,156,115.24 |
| Other accounts payable | 61,043,778.19 | 36,375,922.22 | 55,921,060.69 | 18,817,980.14 |
| Interest payable | 5,180,733.92 | 5,180,733.92 | 6,396,385.83 | 6,386,700.29 |
| Dividend payable | 28,304,531.21 | 25,829,531.21 | 533,156.00 | 533,156.00 |
| Liabilities held for sale |
| Non-current liabilities due within one year | 10,276,677.27 | 14,174,643.42 |
| Other current liabilities | ||||
| Total current liabilities | 1,879,578,166.52 | 984,868,944.30 | 1,745,604,852.31 | 870,893,124.57 |
| Non-current liabilities: | ||||
| Long-term loans | 160,000,000.00 | 160,000,000.00 | 160,000,000.00 | 160,000,000.00 |
| Bonds payable | 25,000,034.00 | 25,000,034.00 | 25,000,034.00 | 25,000,034.00 |
| Preferred stock | ||||
| Perpetual bond |
| Long-term account payable | 397,771.84 | 397,771.84 | ||
| Long-term wage payable |
| Special Payable |
| Anticipation liabilities | ||||
| Deferred income | 107,775,664.96 | 64,380,164.96 | 99,157,538.52 | 55,744,166.29 |
| Deferred income tax liabilities | 38,316,709.52 | 38,316,709.52 | 41,215,205.99 | 41,215,205.99 |
| Other non-current liabilities |
| Total non-current liabilities | 331,490,180.32 | 287,696,908.48 | 325,770,550.35 | 281,959,406.28 |
| Total liabilities | 2,211,068,346.84 | 1,272,565,852.78 | 2,071,375,402.66 | 1,152,852,530.85 |
| Shareholders’ equity |
| Share capital | 843,212,507.00 | 843,212,507.00 | 843,212,507.00 | 843,212,507.00 |
| Other equity instruments | ||||
| Preferred stock |
| Perpetual bond | ||||
| Capital public reserve | 726,768,468.00 | 771,270,562.83 | 726,768,468.00 | 771,270,562.83 |
| Less: Treasury stock |
| Other comprehensive income | 2,501,459.77 | 1,539,359.10 | 2,501,459.77 | 1,539,359.10 |
| Special preparation |
| Surplus public reserve | 799,133,083.37 | 799,133,083.37 | 768,723,812.53 | 768,723,812.53 |
| Generic risk reserve |
| Retained profit | 959,048,791.02 | 939,844,020.18 | 1,038,358,782.59 | 988,765,359.93 |
| Total owner’s equity attributable to parent company | 3,330,664,309.16 | 3,354,999,532.48 | 3,379,565,029.89 | 3,373,511,601.39 |
| Minority interests | 70,781,669.40 | 74,562,823.71 |
| Total owner’s equity | 3,401,445,978.56 | 3,354,999,532.48 | 3,454,127,853.60 | 3,373,511,601.39 |
| Total liabilities and shareholder’s equity | 5,612,514,325.40 | 4,627,565,385.26 | 5,525,503,256.26 | 4,526,364,132.24 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization:Wang Jinxiu
| INCOME STATEMENT |
| Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January-June, 2020 Unit: RMB Yuan |
| Items | January-June, 2020 | January-June, 2019 | ||
| Consolidation | Parent Company | Consolidation | Parent Company | |
| I. Total sales | 873,403,414.46 | 421,537,668.16 | 1,075,729,240.57 | 325,356,273.32 |
| II. Total operating cost | 897,088,858.88 | 426,353,131.09 | 1,101,546,628.92 | 341,379,256.10 |
| Including: Operating cost | 748,075,096.12 | 359,831,813.22 | 919,759,979.86 | 276,893,396.82 |
| Taxes and associate charges | 8,020,491.83 | 4,653,637.89 | 8,730,283.87 | 4,773,987.02 |
| Selling and distribution expenses | 35,446,794.72 | 11,354,625.22 | 53,096,818.62 | 5,371,238.79 |
| Administrative expenses | 70,770,126.86 | 28,433,528.41 | 85,942,095.21 | 37,232,620.49 |
| R&D expenses | 24,715,021.28 | 14,305,119.21 | 28,549,864.17 | 13,071,247.34 |
| Financial expense | 10,061,328.07 | 7,774,407.14 | 5,467,587.19 | 4,036,765.64 |
| Including: interest expense | 9,635,047.81 | 7,801,791.24 | 5,542,418.26 | 3,772,180.01 |
| interest income | 719,172.42 | 538,148.04 | 572,223.80 | 211,170.87 |
| Add:Other income | 6,507,868.29 | 442,124.83 | 2,035,436.84 |
| Gain/(loss) from investment | 22,943,077.11 | 31,608,757.06 | 117,127,421.73 | 120,796,775.76 |
| Including: income from investment on affiliated enterprise and jointly enterprise | 16,816,173.99 | 17,295,970.66 | 72,239,478.13 | 72,908,832.16 |
| Exchange gains |
| Gain/(loss) from change in fair value (loss as “-“) | -19,323,309.84 | -19,323,309.84 | 40,461,125.59 | 40,461,125.59 |
| Credit impairment loss (loss as “-“) | -14,041,906.01 | -3,350,941.44 |
| Assets impairment loss (loss as “-“) | -16,863,134.42 | -3,112,743.25 |
| Gain/(loss) from asset disposal (loss as “-“) | 10,788.53 | 1,242,799.31 | 582,050.16 | |
| III. Operating profit | -27,588,926.34 | 4,561,167.68 | 118,186,260.70 | 142,704,225.48 |
| Add: non-business income | 1,280,059.12 | 2,472,365.13 | 200.07 | |
| Less: non-business expense | 93,891.78 | 44,972.15 | 121,643.51 | 75,126.57 |
| IV. Total profit | -26,402,759.00 | 4,516,195.53 | 120,536,982.32 | 142,629,298.98 |
| Less: Income tax | -1,492,259.17 | -2,268,110.77 | 13,766,605.84 | 11,086,452.65 |
| V. Net profit | -24,910,499.83 | 6,784,306.30 | 106,770,376.48 | 131,542,846.33 |
| (I) Net profit from continuous operation | -24,910,499.83 | 6,784,306.30 | 106,770,376.48 | 131,542,846.33 |
| (II)Net profit from discontinuing operation |
| Net profit attributable to parent company | -23,604,345.52 | 6,784,306.30 | 108,373,919.30 | 131,542,846.33 |
| Minority shareholders’ gains and losses | -1,306,154.31 | -1,603,542.82 |
| VI. After-tax net amount of other comprehensive incomes | ||||
| After-tax net amount of other comprehensive incomes attributable to owners of the Company | ||||
| (I) Other comprehensive incomes that will not be reclassified into gains and losses | ||||
| 1. Changes in net liabilities or assets with a defined benefit plan upon re-measurement |
| 2. Enjoyable shares in other comprehensive incomes in invests that cannot be reclassified into gains and losses under the equity method | ||||
| (II) Other comprehensive incomes that will be reclassified into gains and losses |
| 1. Enjoyable shares in other comprehensive incomes in invests that will be reclassified into gains and losses under the equity method |
| 2. Gains and losses on fair value changes of available-for-sale financial assets |
| 3. Gains and losses on reclassifying held-to-maturity investments into available-for-sale financial assets |
| 4. Effective hedging gains and losses on cash flows | ||||
| 5. Foreign-currency financial statement translation difference |
| 6.Others |
| …… | ||||
| After-tax net amount of other comprehensive incomes attributable to minority shareholders |
| VII Total comprehensive income | -24,910,499.83 | 6,784,306.30 | 106,770,376.48 | 131,542,846.33 |
| Total comprehensive income attributable to parent company | -23,604,345.52 | 6,784,306.30 | 108,373,919.30 | 131,542,846.33 |
| Total comprehensive income attributable to minority shareholders | -1,306,154.31 | -1,603,542.82 |
| VIII. Earnings per share | ||||
| (I) basic earnings per share | -0.028 | 0.127 |
| (II) diluted earnings per share | -0.028 | 0.127 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: :Wang Jinxiu
| CASH FLOW STATEMENT | ||||
| Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January -June, 2020 Unit: RMB Yuan | ||||
| Items | January -June, 2020 | January -June, 2019 | ||
| Consolidation | Parent Company | Consolidation | Parent Company | |
| I. Cash flows arising from operating activities: | ||||
| Cash received from selling commodities and providing labor services | 604,104,617.20 | 348,200,949.78 | 618,147,609.49 | 227,740,556.29 |
| Write-back of tax received | 13,929,886.75 | 8,601,797.19 | 8,019,673.18 |
| Other cash received concerning operating activities | 32,877,448.75 | 14,383,755.85 | 17,779,038.66 | 4,348,684.15 |
| Subtotal of cash inflow arising from operating activities | 650,911,952.70 | 371,186,502.82 | 643,946,321.33 | 232,089,240.44 |
| Cash paid for purchasing commodities and receiving labor service | 476,548,876.58 | 289,314,215.08 | 426,426,299.23 | 159,249,772.95 |
| Cash paid to/for staff and workers | 158,669,594.81 | 51,668,871.50 | 188,059,306.43 | 66,691,776.09 |
| Taxes paid | 31,669,562.21 | 14,614,702.80 | 43,807,228.95 | 14,147,587.37 |
| Other cash paid concerning operating activities | 62,374,607.85 | 17,567,587.34 | 63,429,524.60 | 13,181,849.87 |
| Subtotal of cash outflow arising from operating activities | 729,262,641.45 | 373,165,376.72 | 721,722,359.21 | 253,270,986.28 |
| Net cash flows arising from operating activities | -78,350,688.75 | -1,978,873.90 | -77,776,037.88 | -21,181,745.84 |
| II. Cash flows arising from investing activities: | ||||
| Cash received from recovering investment |
| Cash received from investment income | 14,561,842.05 | 14,528,392.05 | 11,365,084.60 | 11,331,634.60 |
| Net cash received from disposal of fixed, intangible and other long-term assets | 414,448.00 | 1,691,731.61 | 810,000.00 |
| Net cash received from disposal of subsidiaries and other units |
| Other cash received concerning investing activities | ||||
| Subtotal of cash inflow from investing activities | 14,976,290.05 | 14,528,392.05 | 13,056,816.21 | 12,141,634.60 |
| Cash paid for purchasing fixed, intangible and other long-term assets | 5,676,192.55 | 3,370,306.88 | 27,160,372.19 | 23,937,190.63 |
| Cash paid for investment | 100,000,000.00 | |||
| Net cash paid for achievement of subsidiaries and other business units |
| Other cash paid concerning investing activities |
| Subtotal of cash outflow from investing activities | 5,676,192.55 | 103,370,306.88 | 27,160,372.19 | 23,937,190.63 |
| Net cash flows arising from investing activities | 9,300,097.50 | -88,841,914.83 | -14,103,555.98 | -11,795,556.03 |
| III. Cash flows arising from financing activities |
| Cash received from absorbing investment | ||||
| Including: Cash received from absorbing minority shareholders' equity investment by subsidiaries |
| Cash received from loans | 276,601,600.00 | 266,011,600.00 | 340,210,100.00 | 249,000,000.00 |
| Cash received from issuing bonds | ||||
| Other cash received concerning financing activities | 36,847,200.56 | 38,323,050.64 |
| Subtotal of cash inflow from financing activities | 313,448,800.56 | 266,011,600.00 | 378,533,150.64 | 249,000,000.00 |
| Cash paid for settling debts | 254,287,177.09 | 208,000,000.00 | 303,180,583.85 | 250,000,000.00 |
| Cash paid for dividend and profit distributing or interest paying | 10,670,866.72 | 9,007,757.61 | 6,158,656.56 | 4,843,793.50 |
| Including: dividends or profit paid by subsidiaries to minority shareholders |
| Other cash paid concerning financing activities | 12,119,804.65 | 67,866,365.93 | 47,566,389.36 |
| Subtotal of cash outflow from financing activities | 277,077,848.46 | 217,007,757.61 | 377,205,606.34 | 302,410,182.86 |
| Net cash flows arising from financing activities | 36,370,952.10 | 49,003,842.39 | 1,327,544.30 | -53,410,182.86 |
| IV. Influence on cash due to fluctuation in exchange rate | 42,272.21 | 329.36 | 266,799.33 | -128.01 |
| V. Net increase of cash and cash equivalents | -32,637,366.94 | -41,816,616.98 | -90,285,250.23 | -86,387,612.74 |
| Add: Balance of cash and cash equivalents at the period -begin | 301,527,354.56 | 175,586,251.46 | 304,703,434.47 | 186,976,185.10 |
| VI. Balance of cash and cash equivalents at the period–end | 268,889,987.62 | 133,769,634.48 | 214,418,184.24 | 100,588,572.36 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Wang Jinxiu
CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITYPrepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd 2020.01-06 Unit: RMB Yuan
| Items | 2020.01-06 | ||||||||
| Owners’ equity attributable to parent company | Minority equity | Total of owners’ equity | |||||||
| share capital | Capital suplus | Lessen: treasury stock | Other comprehensive income | Special preparation | Surplus reserve | Retained profits | |||
| I. balance at the end of last year | 843,212,507.00 | 726,768,468.00 | 2,501,459.77 | 768,723,812.53 | 1,038,358,782.59 | 74,562,823.71 | 3,454,127,853.60 | ||
| 1. Change of accounting policy | |||||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 843,212,507.00 | 726,768,468.00 | 2,501,459.77 | 768,723,812.53 | 1,038,358,782.59 | 74,562,823.71 | 3,454,127,853.60 | ||
| III. Increase/ decrease of amount in this year (“-” means decrease) | 30,409,270.84 | -79,309,991.57 | -3,781,154.31 | -52,681,875.04 | |||||
| (I) Total comprehensive incomes | -23,604,345.52 | -1,306,154.31 | -24,910,499.83 | ||||||
| (II) Capital increased and reduced by owners | |||||||||
| 1. Common shares increased by shareholders | |||||||||
| 2. Capital increased by holders of other equity instruments | |||||||||
| 3. Amounts of share-based payments recognized in owners’ equity | |||||||||
| 4. Other | |||||||||
| (III) Profit distribution | 30,409,270.84 | -55,705,646.05 | -2,475,000.00 | -27,771,375.21 | |||||
| 1. Withdrawing surplus public reserve | 30,409,270.84 | -30,409,270.84 | - | ||||||
| 2. Distribution to all owners (shareholders) | -25,296,375.21 | -2,475,000.00 | -27,771,375.21 | ||||||
| 3. Others | |||||||||
| (IV) Internal carrying forward of owners’ equity | |||||||||
| 1. New increase of share capital from capital reserves | |||||||||
| 2. Convert surplus reserves to share capital | |||||||||
| 3. Surplus reserves make up losses | |||||||||
| 4. Others | |||||||||
| (V) Specific reserve | |||||||||
| 1. Withdrawn for the period | 1,127,227.68 | 1,127,227.68 | |||||||
| 2. Used in the period | -1,127,227.68 | -1,127,227.68 | |||||||
| (VI) Other | |||||||||
| IV. Balance at the end of this period | 843,212,507.00 | 726,768,468.00 | 2,501,459.77 | 799,133,083.37 | 959,048,791.02 | 70,781,669.40 | 3,401,445,978.56 | ||
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization:Wang Jinxiu
| Items | 2019.01-06 | ||||||||
| Owners’ equity attributable to parent company | Minority equity | Total of owners’ equity | |||||||
| share capital | Capital suplus | Lessen: treasury stock | Other comprehensive income | Special preparation | Surplus reserve | Retained profits | |||
| I. balance at the end of last year | 855,434,087.00 | 760,365,342.00 | 21,026,106.00 | 296,909,965.55 | 721,091,040.02 | 764,859,288.45 | 80,796,270.83 | 3,458,429,887.85 | |
| 1. Change of accounting policy | -294,408,505.78 | 294,408,505.78 | |||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 855,434,087.00 | 760,365,342.00 | 21,026,106.00 | 2,501,459.77 | 721,091,040.02 | 1,059,267,794.23 | 80,796,270.83 | 3,458,429,887.85 | |
| III. Increase/ decrease of amount in this year (“-” means decrease) | -12,221,580.00 | -33,596,874.00 | -21,026,106.00 | 32,428,137.09 | 33,785,156.86 | -1,603,542.82 | 39,817,403.13 | ||
| (I) Total comprehensive incomes | 108,373,919.30 | -1,603,542.82 | 106,770,376.48 | ||||||
| (II) Capital increased and reduced by owners | -12,221,580.00 | -33,596,874.00 | -21,026,106.00 | -24,792,348.00 | |||||
| 1. Common shares increased by shareholders | -12,221,580.00 | -33,596,874.00 | 24,792,348.00 | -70,610,802.00 | |||||
| 2. Capital increased by holders of other equity instruments | |||||||||
| 3. Amounts of share-based payments recognized in owners’ equity | -45,818,454.00 | 45,818,454.00 | |||||||
| 4. Other | |||||||||
| (III) Profit distribution | 32,428,137.09 | -74,588,762.44 | -42,160,625.35 | ||||||
| 1. Withdrawing surplus public reserve | 32,428,137.09 | -32,428,137.09 | - | ||||||
| 2. Distribution to all owners (shareholders) | -42,160,625.35 | -42,160,625.35 | |||||||
| 3. Others | |||||||||
| (IV) Internal carrying forward of owners’ equity | |||||||||
| 1. New increase of share capital from capital reserves | |||||||||
| 2. Convert surplus reserves to share capital | |||||||||
| 3. Surplus reserves make up losses | |||||||||
| 4. Others | |||||||||
| (V) Specific reserve | |||||||||
| 1. Withdrawn for the period | 1,025,336.49 | 1,025,336.49 | |||||||
| 2. Used in the period | -1,025,336.49 | -1,025,336.49 | |||||||
| (VI) Other | |||||||||
| IV. Balance at the end of this period | 843,212,507.00 | 726,768,468.00 | 2,501,459.77 | 753,519,177.11 | 1,093,052,951.09 | 79,192,728.01 | 3,498,247,290.98 | ||
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization:Wang Jinxiu
STATEMENT OF CHANGES IN OWNERS’ EQUITYPrepared by Dalian Refrigeration Company Limited 2020.01-06 Unit: RMB Yuan
| Items | 2020.01-06 | ||||||||
| Owners’ equity attributable to parent company | Total of owners’ equity | ||||||||
| share capital | Other equity instrument | Capital suplus | Lessen: treasury stock | Other comprehensive income | Special preparation | Surplus reserve | Retained profits | ||
| I. balance at the end of last year | 843,212,507.00 | 771,270,562.83 | 1,539,359.10 | 768,723,812.53 | 988,765,359.93 | 3,373,511,601.39 | |||
| 1. Change of accounting policy | |||||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 843,212,507.00 | 771,270,562.83 | 1,539,359.10 | 768,723,812.53 | 988,765,359.93 | 3,373,511,601.39 | |||
| III. Increase/ decrease of amount in this year (“-” means decrease) | 30,409,270.84 | -48,921,339.75 | -18,512,068.91 | ||||||
| (I) Total comprehensive incomes | 6,784,306.30 | 6,784,306.30 | |||||||
| (II) Capital increased and reduced by owners | |||||||||
| 1. Common shares increased by shareholders | |||||||||
| 2. Capital increased by holders of other equity instruments | |||||||||
| 3. Amounts of share-based payments recognized in owners’ equity | |||||||||
| 4. Other | |||||||||
| (III) Profit distribution | 30,409,270.84 | -55,705,646.05 | -25,296,375.21 | ||||||
| 1. Withdrawing surplus public reserve | 30,409,270.84 | -30,409,270.84 | - | ||||||
| 2. Distribution to all owners (shareholders) | -25,296,375.21 | -25,296,375.21 | |||||||
| 3. Others | |||||||||
| (IV) Internal carrying forward of owners’ equity | |||||||||
| 1. New increase of share capital from capital reserves | |||||||||
| 2. Convert surplus reserves to share capital | |||||||||
| 3. Surplus reserves make up losses | |||||||||
| 4. Others | |||||||||
| (V) Specific reserve | |||||||||
| 1. Withdrawn for the period | 1,127,227.68 | 1,127,227.68 | |||||||
| 2. Used in the period | -1,127,227.68 | -1,127,227.68 | |||||||
| (VI) Other | |||||||||
| IV. Balance at the end of this period | 843,212,507.00 | 771,270,562.83 | 1,539,359.10 | 799,133,083.37 | 939,844,020.18 | 3,354,999,532.48 | |||
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization:Wang Jinxiu
| Items | 2019.01-06 | ||||||||
| Owners’ equity attributable to parent company | Total of owners’ equity | ||||||||
| share capital | Other equity instrument | Capital suplus | Lessen: treasury stock | Other comprehensive income | Special preparation | Surplus reserve | Retained profits | ||
| I. balance at the end of last year | 855,434,087.00 | 804,867,436.83 | 21,026,106.00 | 295,947,864.88 | 721,091,040.02 | 640,251,261.47 | 3,296,565,584.20 | ||
| 1. Change of accounting policy | -294,408,505.78 | 294,408,505.78 | |||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 855,434,087.00 | 804,867,436.83 | 21,026,106.00 | 1,539,359.10 | 721,091,040.02 | 934,659,767.25 | 3,296,565,584.20 | ||
| III. Increase/ decrease of amount in this year (“-” means decrease) | -12,221,580.00 | -33,596,874.00 | -21,026,106.00 | 32,428,137.09 | 56,954,083.89 | 64,589,872.98 | |||
| (I) Total comprehensive incomes | 131,542,846.33 | 131,542,846.33 | |||||||
| (II) Capital increased and reduced by owners | -12,221,580.00 | -33,596,874.00 | -21,026,106.00 | -24,792,348.00 | |||||
| 1. Common shares increased by shareholders | -12,221,580.00 | -33,596,874.00 | 24,792,348.00 | -70,610,802.00 | |||||
| 2. Capital increased by holders of other equity instruments | |||||||||
| 3. Amounts of share-based payments recognized in owners’ equity | -45,818,454.00 | 45,818,454.00 | |||||||
| 4. Other | |||||||||
| (III) Profit distribution | 32,428,137.09 | -74,588,762.44 | -42,160,625.35 | ||||||
| 1. Withdrawing surplus public reserve | 32,428,137.09 | -32,428,137.09 | |||||||
| 2. Distribution to all owners (shareholders) | -42,160,625.35 | -42,160,625.35 | |||||||
| 3. Others | |||||||||
| (IV) Internal carrying forward of owners’ equity | |||||||||
| 1. New increase of share capital from capital reserves | |||||||||
| 2. Convert surplus reserves to share capital | |||||||||
| 3. Surplus reserves make up losses | |||||||||
| 4. Others | |||||||||
| (V) Specific reserve | |||||||||
| 1. Withdrawn for the period | 1,025,336.49 | 1,025,336.49 | |||||||
| 2. Used in the period | -1,025,336.49 | -1,025,336.49 | |||||||
| (VI) Other | |||||||||
| IV. Balance at the end of this period | 843,212,507.00 | 771,270,562.83 | 1,539,359.10 | 753,519,177.11 | 991,613,851.14 | 3,361,155,457.18 | |||
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization:Wang Jinxiu
Notes to Financial Statements
I. General Information
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd (the “Company”) was reorganizedand reformed from main part of former Dalian Refrigeration Factory. On December 8, 1993, theCompany went to the public as a listed Company at Shenzhen Stock Exchange Market. OnMarch 20, 1998, the company successfully went to the public at B share market and listed atShenzhen Stock Exchange Market with total share capital of RMB350,014,975Yuan.According to the 13
th meeting of the 6
th
generation of board, extraordinary general meeting for2015 fiscal year and ' Restricted share incentive plan (draft)' , the Company planned to introduceA ordinary shares to incentive objectives, which was 10,150,000 number of shares would begranted to 41 share incentive objectives at granted price of RMB5.56Yuan per share. Up to March
th,2015, the Company received new added share capital of RMB10,150,000Yuan and the sharecapital had been verified by DaHua Certified Public Accountants, and had been issued the capitalverification report Dahuayanzi [2015]000086 on March12
th, 2015.The general meeting for 2015 fiscal year held on 21st April 2016 approved the profit distributionpolicy for the year of 2015, which agrees the profit distribution based on the total 360,164,975number of shares as share capital, paid share dividend of 5 common shares for every 10 sharesthrough capital reserve. The policy stated above was fully implemented on 5th May 2016, and theregistered capital was altered to 540,247,462.00Yuan.The 17
thmeeting of the 6
th generation of board was held on 4
th June 2015 and the 2
nd
interimshareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the proposalof non-public offering of ‘A shares’. China’s Securities Regulatory Commission issued SFClicense [2015]3137 on 30
th
December, 2015, approving that new non-public offering cannotexceeded 38,821,954 number of shares. The company implemented the post meeting proceduresfor China’s Securities Regulatory Commission, which is regarding adjustment of bottom price andthe number of the shares issued after the implementation of profit distribution policy of 2015 inMay, 2016, and accordingly revised the upper limit of non-public offering of share to58,645,096number of new ‘A shares’. The company issued the non-public offering of 58,645,096 number of‘A shares’ to 7 investors, and as a result, the total number of shares of the company is changed to598,892,558 shares, and the par value is 1yuan per share and the total share capital is598,892,558.00Yuan. The share capital stated above has been verified by DaHua Certified PublicAccountants, and has been issued the capital verification report Dahuayanzi [2016]000457 on 31stMay 2016.According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration CompanyLimited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting authorized theboard of directors to implement the Restricted Share Incentive Plan’ approved on the
rdprovisional general meeting held on 13th September 2016, the 9
th meeting of the 7
thgeneration
of board deliberated and passed the ‘Proposal about granting the restricted shares to incentivetargets’ on September 20
th, 2016 and set 20
th
September 2016 as share granted date, and granted12,884,000 number of restricted shares to 188 incentive targets at granted price of 5.62Yuan pershare. By 22
ndNovember, 2016, the company has actually received the newly subscribedregistered share capital of 12,884,000Yuan subscribed by incentive targets. The share capitalstated above has been verified by DaHua Certified Public Accountants, and has been issued thecapital verification report Dahuayanzi [2016]001138 on 23
rdNovember, 2016.On May 20
th, 2017, the general meeting for 2016 fiscal year was held and profit appropriationscheme for 2016 FY was approved, which was every 10 shares will be increased by 4 sharesthrough capital reserve based on the total 611,776,558 number of shares. After the profitappropriation scheme, the registered capital was changed to RMB856,478,181.00Yuan.On December 18, 2017, the Company held the third extraordinary shareholders’ meeting of 2017which reviewed and approved the Proposal on Repurchasing and Cancelling Part RestrictedStocks of the 2016 Restricted Stock Incentive Plan”. On March 8, 2018, after the completion ofrepurchase and cancellation, the Company implemented the corresponding capital reductionprocedures according to law, and the registered capital of the Company was changed from856,487,181 Yuan to 855,908,981 Yuan.On May 4, 2018, the Company held the 21
stmeeting of the seventh board of directors whichreviewed and approved the Proposal on Repurchasing and Cancelling Party Restricted Stocks ofthe 2015 Restricted Stock Incentive Plan. On June 29, 2018, after the completion of repurchaseand cancellation, the Company implemented the corresponding capital reduction proceduresaccording to law, and the registered capital of the Company was changed from 855,908,981 Yuanto 855,434,087 Yuan.On January 17,2019, the Company held the first extraordinary shareholders’ meeting of 2019which reviewed and approved the Proposal on terminating the implementation of 2016 RestrictedStock Incentive Plan of the Company and logouting the restricted stock. On March 4,2019, theCompany has completed the capital reduction process, and the registered capital of the Companywas changed from 855,434,087 Yuan to 843,212,507 Yuan.On December 20
th
, 2019, the Company held the 7th meeting of the 8th Board of Directors andapproved to change the Company’s name from Dalian Refrigeration Company Limited toBingshan Refrigeration & Heat Transfer Technologies Co., Ltd.The old address of the Company’s registered office as same as head office is No.888 Xinan Road,Shahekou District, Dalian, China. In 2017, the Company relocated to new factory and changed itsaddress to No.16 Liaohe East RD, Dalian Economic&Technology Development Zone(‘DDZ’),Dalian China as same as HQ’s address. The parent company of the Company is Dalian BingshanGroup Co., Ltd., and there is no ultimate controller regulated by the relevant law, regulations andrules.The Company is in industrial manufacturing sector, mainly engaged in industrial refrigeration,
refrigerated and frozen food storage, and manufacture and installation of central air-conditioningand refrigeration equipment. The scope of business includes research and development, design,manufacture, sale, lease, installation and repair of refrigeration and heat equipment, accessories,spare parts, and energy-saving and environmental protection products; Technical services,technical consultation, technical promotion; Design, construction, installation repair andmaintenance of complete sets of refrigeration and air conditioning projects, mechanical andelectrical installation projects, steel structure projects, anti-corrosion and heat preservation works;Rental of premises; Transport of ordinary goods; Property management; Low temperature storage;Import and export of goods and technologies. (With the exception of projects subject to approvalaccording to law, independently carry out business activities according to law with the businesslicense).This reporting period, entities within the consolidation scope has no change comparing to lastyear.II. Financial Statements Preparation Basis
（1） Preparing basis
The Company’s financial statements are prepared on the basis of going concern assumption,according to the actual occurred transactions and events and in accordance with ‘AccountingStandards for Business Enterprises’ and relevant regulations, and also based on the note V“Significant Accounting Policies, Accounting Estimates”.
（2） Going concern
The Company has the capacity to continually operate within 12 months at least since the end ofreport period, and hasn‘t the major issues impacting on the sustainable operation ability.III. Significant Accounting Policies and Accounting EstimatesThe Ministry of Finance issued on July 5, 2017 about revision issued by the accounting standardsfor enterprises no. 14 - revenue income guidelines (hereinafter generally referred to as the"income guidelines"), in domestic and at the same time, listed companies and listed overseas andadopted international financial reporting standards or companies prepare financial statements onthe accounting standard for business enterprises, effective as of January 1, 2018; Other domesticlisted enterprises shall enter into force as of January 1, 2020; Non-listed enterprises thatimplement the accounting standards for Business Enterprises shall enter into force as of January 1,2021. In accordance with the above requirements, the Company will implement the relevantguidelines as of January 1, 2020.
1. Declaration for compliance with accounting standards for business enterprisesThe financial statements are prepared by the Group according to the requirements of AccountingStandard for Business Enterprise, and reflect the relative information for the financial position,operating performance, cash flow of the Group truly and fully.
2. Accounting period
The Group adopts the Gregorian calendar year as accounting period from Jan 1 to Dec 31.
3. Operating cycle
Normal operating cycle refers to the duration starting from purchasing the assets formanufacturing up to cash or cash equivalent realization. The group sets twelve months for oneoperating cycle and as the liquidity criterion for assets and liability.
4. Functional currency
The Group adopts RMB as functional currency.
5. Accounting for business combination under same control and not under same controlAs an acquirer, the assets and liabilities that The Group obtained in a business combination underthe same control should be measured on the basis of their carrying amount in the consolidatedfinancial statements on the combining date. As for the balance between the carrying amount of thenet assets obtained by the combining party and the carrying amount of the consideration paid by it,the capital surplus shall be adjusted. If the capital surplus is not sufficient to be offset, the retainedearnings shall be adjusted.For a business combination not under same control, the asset, liability and contingent liabilityobtained from the acquirer shall be measured at the fair value on the acquisition date. Thecombination cost shall be the fair value, on the acquisition date, of the assets paid, the liabilitiesincurred or assumed and equity securities issued by the acquirer in exchange for the control of theacquire, and sum of all direct expenses(if the combination is achieved in stages, the combinationcost shall be the sum of individual transaction). The difference when combination cost exceedsproportionate share of the fair value of identifiable net assets of acquire should be recognized asgoodwill. If the combination cost is less than proportionate share of the fair value of identifiablenet assets of acquiree, firstly, fair value of identifiable asset, liability or contingent liability shallbe reviewed, and so the fair value of non-monetary assets or equity instruments issued in thecombination consideration , after review, still the combination cost is less than proportionateshare of the fair value of identifiable net assets of acquire, the difference should be recognized asnon-operating income.
6. Method of preparation of consolidated financial statements
All subsidiaries controlled by the Group and structured entities are within the consolidation scope.If subsidiaries adopt different accounting policy or have different accounting period from theparent company, appropriated adjustments shall be made in accordance with the Group policy inpreparation of the consolidated financial statements.All significant intergroup transactions, outstanding balances and unrealized profit shall beeliminated in full when preparing the consolidated financial statements. Portion of the subsidiary’sequity not belonging to the parent, profit, loss for the current period, portion of other
comprehensive income and total comprehensive belonging to minority interest, shall bepresented separately in the consolidated financial statements under “minority interest ofequity”, ”minority interest of profit and loss”, “other comprehensive income attributed to minorityinterest” and “total comprehensive income attributed to minority interest” title.If a subsidiary is acquired under common control, its operation results and cash flow shall beconsolidated since the beginning of the consolidation period. When preparing the comparativeconsolidated financial statements, adjustments shall be made to relevant items of comparativefigures as regarded that reporting entity established through consolidation has been always theresince the point when the ultimate controlling party starts to have the control.If a business consolidation under common control is finally achieved in stages, consolidationaccounting method shall be disclosed additionally for the period in which the control is obtained.For example, if a business consolidation under common control is finally achieved in stages, whenpreparing the consolidated financial statements, adjustments shall be made for the currentconsolidation status as if consolidation has always been there since the point when the ultimatecontrolling party starts to control. In preparation of comparative figures, asset and liability of theacquiree shall be consolidated into the Group’s comparative financial statements, but to the extentno earlier than the point when the Group and acquiree are both under ultimate control and relevantitems under equity in comparative financial statements shall be adjusted for net asset increased incombination. To avoid the duplicated computation of net asset of acquiree, for long-term equityinvestment held by the Group before the consolidation, relevant profit and loss, othercomprehensive income and movement in other net asset, recognized for the period between thecombination date and later date when original shareholding is obtained and when the Group andthe acquiree are under common control of same ultimate controlling party, shall be respectivelyused for writing down the opening balance of retained earnings of comparative financialstatements and profit and loss for the current period.If a subsidiary is acquired not under common control, its operation results and cash flow shall beconsolidated since the beginning of the consolidation period. In preparation of the consolidatedfinancial statements, adjustments shall be made to subsidiary’s financial statements based on thefair value of its all identifiable assets, liability or contingent liability on the acquisition date.If a business consolidation under non-common control is finally achieved in stages, consolidationaccounting method shall be disclosed additionally for the period in which the control is obtained.For example, if a business consolidation not under common control is finally achieved in stages,when preparing the consolidated financial statements, the acquirer shall remeasure its previouslyheld equity interest in the acquiree at its acquisition-date fair value and recognize the resultinggain or loss as investment income for the current period. Other comprehensive income, underequity method accounting rising from the interest held in acquiree in relation to the period beforethe acquisition, and changes in the value of its other equity other than net profit or loss, othercomprehensive income and profit appropriation shall be transferred to investment gain or lossfor the period in which the acquisition incurs, excluding the other comprehensive income from
the movement on the remeasurement of ne asset or liability of defined benefit plan.When the Group partially disposes of the long –term equity investment in subsidiary withoutlosing the control over it, in the consolidated financial statements, the difference, betweendisposals price and respective disposed value of share of net assets in the subsidiary since theacquisition date or combination date, shall be adjusted for capital surplus or share premium, noenough capital surplus, then adjusted for retained earnings.When the Group partially disposes of the long –term equity investment in subsidiary and lose thecontrol over it, in preparation of consolidated financial statements, remaining share of interest inthe subsidiary shall be remeasured on the date of losing control. Sum of the share disposalconsideration and fair value of remaining portion of shareholding minus the share of the net assetsin the subsidiary held based on the previous shareholding percentage since the acquisition date orcombination date, the balance of above is recognized as investment gain/loss for the period andgoodwill shall be written off accordingly. Other comprehensive income relevant to shareinvestment in subsidiary shall be transferred to investment gain /loss for the period on the date oflosing control.When the Group partially disposes of the long –term equity investment in subsidiary and lose thecontrol over it by stages, if all disposing transactions are bundled, each individual transaction shallbe seen as a transaction of disposal of a subsidiary by losing control. The difference between thedisposal price and the share of the net assets in the subsidiary held before the date of losingcontrol, shall be recognize as other comprehensive income until the date of losing control where itis transferred into investment gain/ loss for the current period.
7. Joint arrangement classification and joint operation accountingThe Group’s joint arrangement includes joint operation and joint venture. For joint operation, theGroup as a joint operator shall recognize its own assets and its share of any assets held jointly, itsliabilities and its share of any liabilities incurred jointly, its revenue from the sale of its share ofthe output arising from the joint operation, its share of the revenue from the sale of the output bythe joint operation; and its expenses, including its share of any expenses incurred jointly. When anentity enters into a transaction with a joint operation in which it is a joint operator, such as a saleor contribution of assets, it is conducting the transaction with the other parties to the jointoperation and, as such, the joint operator shall recognize gains and losses resulting from such atransaction only to the extent of the other parties’ interests in the joint operation.
8. Cash and cash equivalent
The cash listed on the cash flow statements of the Group refers to cash on hand and bank deposit.The cash equivalents refer to short-term (normally with original maturities of three months or less)and liquid investments which are readily convertible to known amounts of cash and subject to aninsignificant risk of changes in value.
9. Translation of foreign currency
(1) Foreign currency transaction
Foreign currency transactions are translated at the spot exchange rate issued by People’s Bank ofChina (“PBOC”) on the 1
stday of the month when the transactions incurred. Monetary assets andliabilities in foreign currencies are translated into RMB at the exchange rate prevailing at thebalance sheet day. Exchange differences arising from the settlement of monetary items are chargedas in profit or loss for the period. Exchange differences of specific borrowings related to theacquisition or construction of a fixed asset should be capitalized as occurred, before the relevantfixed asset being acquired or constructed is ready for its intended uses.
(2) Translation of foreign currency financial statements
The asset and liability items in the foreign currency balance sheet should be translated at a spotexchange rate at the balance sheet date. Among the owner’s equity items except “undistributedprofit”, others should be translated at the spot exchange rate when they are incurred. The incomeand expense should be translated at spot exchange rate when the transaction incurs. Translationdifference of foreign currency financial statements should be presented separately under the othercomprehensive income title. Foreign currency cash flows are translated at the spot exchange rateon the day when the cash flows incur. The amounts resulted from change of exchange rate arepresented separately in the cash flow statement.
10. Financial assets and financial liabilities
The company shall recognize a financial asset or a financial liability when the company becomesparty to the contractual provisions of the instrument.
(1) Financial assets
1) Classification, recognition and measurement
The company shall classify financial assets as measured at amortized cost, fair value through othercomprehensive income or fair value through profit or loss on the basis of both the company’sbusiness model for managing the financial assets and the contractual cash flow characteristics ofthe financial asset.A financial asset shall be measured at amortized cost if both of the following conditions are met:
①the financial asset is held within a business model whose objective is to hold financial assets inorder to collect contractual cash flows;②the contractual terms of the financial asset give rise onspecified dates to cash flows that are solely payments of principal and interest on the principalamount outstanding. At initial recognition, the company shall measure the financial asset at its fairvalue and take any transaction costs that are directly attributable to the financial asset into account.After initial recognition, the company shall measure the financial asset at amortized cost. A gain orloss on a financial asset that is measured at amortized cost and is not a hedged item shall berecognized in profit or loss when the financial asset is derecognized, impaired, involved in foreignexchange or amortized for any difference arising between the initial recognized amount and dueamount by applying effective interest method.
A financial asset shall be measured at fair value through other comprehensive income if both ofthe following conditions are met: ①the financial asset is held within a business model whoseobjective is achieved by both collecting contractual cash flows and selling financial assets and
②the contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding. At initialrecognition, the company shall measure this financial asset at its fair value and take anytransaction costs that are directly attributable to the financial asset into account. A gain or loss on afinancial asset that is measured at fair value through other comprehensive income and is not ahedged item shall be recognized in other comprehensive income apart from a gain or loss on creditloss, foreign exchange and interest of the financial asset calculated by effective interest method.Accumulated gain or loss previously in the other comprehensive income shall be out of it andaccounted in the profit or loss account when the financial asset is derecognized.The company recognized interest revenue based on effective interest method. Interest revenueshall be calculated by applying the effective interest rate to the gross carrying amount of afinancial asset, except for: ①purchased or originated credit-impaired financial assets. For thosefinancial assets, the company shall apply the credit-adjusted effective interest rate to the amortizedcost of the financial asset from initial recognition. ②financial assets that are not purchased ororiginated credit-impaired financial assets but subsequently have become credit-impaired financialassets. For those financial assets, the company shall apply the effective interest rate to theamortized cost of the financial asset in subsequent reporting periods.The company designates an investment as fair value measured through other comprehensiveincome if an equity instrument held is not for trading. Once the decision is made, it is anirrevocable election. At initial recognition, the company shall measure the equity instrumentinvestment not for trading at its fair value and take any transaction costs that are directlyattributable to the financial asset into account. Any other gain or loss (including foreign exchangegain or loss) shall be accounted in other comprehensive income and shall not be subsequentlytransferred to profit or loss, unless the dividend received is accounted in profit or loss( excludingthe recovered investment cost). Accumulated gain or loss previously in the other comprehensiveincome shall be out of it and into retained earnings when the financial asset is derecognized.Apart from classified as the amortized cost financial assets and as fair value through othercomprehensive income financial assets, a financial asset is classified as fair value through profit orloss. At initial recognition, the company shall measure this financial asset at its fair value and takeany transaction costs that are directly attributable to the financial asset into account.A financial asset shall be classified as fair value through profit or loss if it is recognized contingentconsideration through business combination, which is not under same control situation.
2) Recognition and measurement of transfer of financial assets
A financial asset is derecognized when any one of the following conditions is satisfied: ①therights to receive cash flows from the asset is terminated, ②the financial asset has been
transferred and the company transfers substantially all risks and rewards relating to the financialassets to the transferee, ③the financial asset has been transferred to the transferee, the companyhas given up its control of the financial asset although the company neither transfers nor retains allrisks and rewards of the financial asset.In the case where the financial asset as a whole qualifies for the derecognition conditions, thedifference between the carrying value of transferred financial asset and the sum of theconsideration received for transfer and the accumulated amount of changes in fair value in respectof the amount of partial derecognition (the contractual terms of the financial asset give rise onspecified dates to cash flows that are solely payments of principal and interest on the principalamount outstanding) , that was previously recorded under other comprehensive income istransferred into profit or loss for the period.In the case where only part of the financial asset qualifies for derecognition, the carrying amountof financial asset being transferred is allocated between the portions that to be derecognised andthe portion that continued to be recognised according to their relative fair value. The differencebetween the amount of consideration received for the transfer and the accumulated amount ofchanges in fair value that was previously recorded in other comprehensive income for the assetpartially qualified for derecognition (the contractual terms of the financial asset give rise onspecified dates to cash flows that are solely payments of principal and interest on the principalamount outstanding) and the above-mentioned allocated carrying amount is charged to profit orloss for the period.
(2) Financial liabilities
1) Classification, basis for recognition and measurement
Financial liabilities of the company are classified at initial recognition as “financial liabilities atfair value through profit or loss” and “other financial liabilities” on initial recognition.Financial liabilities at fair value through profit or loss include financial liabilities held for tradingand those designated as fair value through profit or loss on initial recognition. They aresubsequently measured at fair value. The net gain or loss arising from changes in fair value,dividends and interest paid related to such financial liabilities are recorded in profit or loss for theperiod in which they are incurred.Other financial liabilities shall be subsequently measured at amortized cost by applying effectiveinterest method. The company shall classify a financial liability as a liability measured atamortized cost except the followings: ①financial liability measured at fair value through profit orloss including tradable financial liability (derivative instrument of financial liability included) anddesignated as financial liability measured at fair value through profit or loss ② financial assetstransfers that do not qualify for derecognition or financial liability is formed from continuinginvolvement in transferred assets ③ financial guarantee contract not in the above category of
①or ② and loan commitment which is not in the category ① at the below the market loan rate.The company shall account the financial liability as it measured at fair value through profit or loss
if the financial liability is formed by contingent consideration recognized by the buyer throughbusiness combination that is not under common control.
2) Financial liability derecognition
A financial liability is derecognized when the underlying present obligations or part of it aredischarged. Existing financial liability shall be derecognized and new financial liability shall berecognized when the company signs the agreement with creditor to undertake the new financialliability in replacement of existing financial liability, and the terms of agreement are different insubstance. Any significant amendment to the agreement as a whole or part o it is made, then theexisting liabilities or part of it shall be derecognized and financial liability after terms amendmentshall be recognized as a new financial liability. The difference between the carrying amount of thefinancial liability derecognized and the consideration paid is recognized in profit or loss for theperiod.
(3) Fair value measurement of financial asset and financial liabilityThe company uses the price in the primary market for financial assets and liability fair valuemeasurement, if no primary market exists, the price in the most advantageous market shall be usedfor fair value measurement and applicable valuation techniques which enough data is available forand supported by other information shall be adopted. Input for fair value measurement has 3 levels:
level 1 input is the unadjusted quoted price for identical asset or liability available at the activemarket on the measurement date; level 2 input is the directly or indirectly observable input forrelevant asset or liability apart from level 1 input; level 3 input is the unobservable input forrelevant asset or liability.
(4) Financial asset and financial liability offset
Financial asset and financial liability shall be presented in the balance sheet separately and cannotbe offset, unless the following conditions are all met: ①the company has the legal right torecognized offset amount and the right is enforceable. ②the company plans to receive or a legalobligation to pay cash at net amount.
(5) Distinguishment between financial liability and equity instrument and accountingfinancial liability and equity instrument shall be distinguished in accordance with the followingstandards: ① if the company cannot unconditionally avoid paying cash or financial asset to fulfil acontractual obligation, the contractual obligation is qualified or financial liability. For certainfinancial instrument, although there are no clear terms and conditions to include obligation ofpaying cash or other financial liability, contractual obligation may indirectly be formed throughother terms and conditions. ② the company’s own equity instrument shall also be consideredwhether it is the substitute of cash, financial asset or it is the remaining equity, after the issuerdeducts liability, enjoyed by the equity holder , if it must or can be used to settle a financial asset.If the former, the instrument is a financial liability of the issuer, otherwise it is an equityinstrument of the issuer. In certain circumstances, financial instrument contract is classified asfinancial liability, if financial instrument contract specifies the company must or can use its own
equity to settle the financial instrument, the contractual amount of right or obligation equals to thatof the numbers of own equity instrument available or to be paid multiplied by fair value whensettling, nevertheless the amount is fixed, or varied partially or fully based on the its own equity’smarket price(such as interest rate, certain commodity’s or financial instrument’s price variance).When classifying a financial instrument (or its component) in the consolidated statements, thecompany takes all terms and conditions agreed by the group member and instrument holder intoconsideration. If the group due to the instrument, as a whole, bears settlement obligation bypaying cash, other financial asset or other means resulted in financial liability, the instrument shallbe classified as financial liability.If a financial instrument or its component is financial liability, any gain or loss, interest, dividend,and any gain or loss from buy back or refinancing shall be accounted in profit or loss.If a financial instrument or its component is an equity instrument, when it was issued(includingrefinancing), bought back, sold or withdrawn, any change shall be regarded as equity change andno fair value change shall be recognized.
(6) Financial asset impairment
Based on expected credit loss, a financial asset measured at amortized cost, a debt instrumentinvestment measured at FVTOCI and a contractual asset shall all be subject to impairmentaccounting and be recognized for impairment loss allowance if any impairment.Expected credit loss is the weighted average of credit losses with the respective risks of a defaultoccurring as the weights. A credit loss herein is referred to as the present value, at originaleffective rate, of the difference between the contractual cash flows that are due to the companyunder the contract; and the cash flows that the company expects to receive, that's the present valueof the total cash shortage. A financial asset shall be the present value, at credit adjusted effectiverate, if it is a purchased or originated credit -impaired asset.The company adopts simplified approach for trade receivables, contract assets that do not containa significant financing component, and shall always measure the loss allowance at an amountequal to lifetime expected credit losses.Impairment requirements is to assess whether credit risk has been significantly increased sinceinitial recognition at each reporting date, if there have been significant increases in credit risk, thecompany shall measure the loss allowance for a financial instrument at an amount equal to thelifetime expected credit losses, at the reporting date, if the credit risk on a financial instrument hasnot increased significantly since initial recognition, the company shall measure the loss allowancefor that financial instrument at an amount equal to 12?month expected credit losses.When assessing expected credit losses, the company considers all reasonable and supportableinformation, including that which is forward-looking.The company shall measure expected credit losses of a financial instrument in a way that reflects:
an unbiased and probability?weighted amount that is determined by evaluating a range of possible
outcomes; The time value of money; and reasonable and supportable information that is availablewithout undue cost or effort at the reporting date about past events, current conditions andforecasts of future economic conditions.The company directly lowers the book value of the financial asset when contractual cash flowcannot be fully or partially recollected within rational expectation any longer.The company also assesses the expected credit loss of financial asset measured at amortized costbased on aging portfolio, other than pastdue credit loss assessment based on individual item.
11. Notes receivable
（1） Recognition of provision for impairment
On the basis of expected credit loss, the company always measures the loss allowance at anamount equal to lifetime expected credit losses for notes receivables which do not contain asignificant financing component and are generated in accordance with Revenue Standard- No 14of Accounting Standard for Business Enterprise.
(2) Expected credit loss risk portfolio assessment method based on portfolioThe company separately assesses the credit risk of financial assets which have significantlydifferent the credit risk, such as receivable with dispute or involved in litigation and arbitration;There are clear signs indicating the debtor is unlikely to fulfill the repayment obligations of thereceivables, etc.Apart from the financial asset to be assessed for credit risk separately, the company divides thefinancial assets into different group based on common characteristics of risk and assesses the riskbased on the portfolio.Based on the acceptor credit risk of notes receivable as the common risk characteristics, it isdivided into different categories and determined for expected credit loss accounting estimatepolicy.
| Portfolio category | Expected credit loss accounting estimate policy |
| Bank acceptance note portfolio | Lower credit risk assessed by the management |
| Commercial acceptance note portfolio | Same as receivables and provided for excepted credit loss allowance |
Referring to the experience of historical credit losses, the company prepares a table comparing theaging of notes receivable with the fixed reserve rate to calculate the expected credit losses on thisbasis.
| Aging | Provision ratio |
| Within 1 year | 6.79% |
| 1 year-2 years | 15.34% |
| 2 yeasr-3 years | 29.07% |
| 3 years－4 years | 46.81% |
| 4 years－5years | 72.92% |
| Over 5 years | 100.00% |
The Company prepares the comparison table between receivables aging and expected credit lossrate within lifetime and work out the expected credit loss by reference to historical credit lossexperience in combination with current situation and future forecast of economy condition.The company shall measure expected credit losses of a financial instrument in a way that reflects:
an unbiased and probability?weighted amount that is determined by evaluating a range of possibleoutcomes; The time value of money; and reasonable and supportable information that is availablewithout undue cost or effort at the reporting date about past events, current conditions andforecasts of future economic conditions.The company prepares the comparison table between receivables aging and fixed provision rateand work out the expected credit loss by reference to historical credit loss experience.On the balance sheet date, expected credit loss of receivable shall be calculated. If the expectedcredit loss is larger than the book value of the provision of receivable impairment, the differenceshall be recognized as receivable impairment loss, debit to “credit impairment loss”, credit to“provision for bad debt”. Alternatively, the difference is recognized as impairment gain andreversed journal entry shall be made.Actually incurred credit loss shall be debit to “provision for bad debt”, credit to “notes receivable”,based on the approved amount to be written off as it is assured as uncollectible receivable. If theamount to be written off is bigger than the provision for impairment loss, the difference is debit to“credit impairment loss”.
12. Accounts receivable
(1) Recognition of provision for impairment
On the basis of expected credit loss, the company always measures the loss allowance at anamount equal to lifetime expected credit losses for trade receivables which do not contain asignificant financing component and are generated in accordance with Revenue Standard- No 14of Accounting Standard for Business Enterprise. For trade receivables which do contain asignificant financing component, the company chooses as its accounting policy to measure theloss allowance at an amount equal to lifetime expected credit losses.
(2) Expected credit loss risk portfolio assessment method based on portfolioThe company separately assesses the credit risk of financial assets which have significantlydifferent the credit risk, such as receivable with dispute or involved in litigation and arbitration;There are clear signs indicating the debtor is unlikely to fulfill the repayment obligations of thereceivables, etc.Apart from the financial asset to be assessed for credit risk separately, the company divides thefinancial assets into different group based on common characteristics of risk and assesses the riskbased on the portfolio.
Apart from the trade receivables and other receivables to be assessed for credit risk separately,based on the counterparty as the common risk characteristics, it is divided into different categoriesand determined for expected credit loss accounting estimate policy.
| Portfolio category | Expected credit loss accounting estimate policy |
| Related parties portfolio within the consolidation | Lower credit risk assessed by the management |
| Other related parties and non-related parties portfolio | Provided for excepted credit loss allowance |
Referring to the experience of historical credit losses, the company prepares a table comparing theaging of accounts receivable with the fixed reserve rate to calculate the expected credit losses onthis basis.
| Aging | Provision ratio |
| Within 1 year | 6.79% |
| 1 year-2 years | 15.34% |
| 2 yeasr-3 years | 29.07% |
| 3 years－4 years | 46.81% |
| 4 years－5years | 72.92% |
| Over 5 years | 100.00% |
On the balance sheet date, expected credit loss of receivable shall be calculated. If the expectedcredit loss is larger than the book value of the provision of receivable impairment, the differenceshall be recognized as receivable impairment loss, debit to “credit impairment loss”, credit to“provision for bad debt”. Alternatively, the difference is recognized as impairment gain andreversed journal entry shall be made.Actually incurred credit loss shall be debit to “provision for bad debt”, credit to“receivable”,based on the approved amount to be written off as it is assured as uncollectiblereceivable. If the amount to be written off is bigger than the provision for impairment loss, thedifference is debit to “credit impairment loss”
13.Other receivable
(1) Recognition of provision for impairment
On the basis of expected credit loss, the company always measures the loss allowance at anamount equal to lifetime expected credit losses for trade receivables which do not contain asignificant financing component and are generated in accordance with Revenue Standard- No 14of Accounting Standard for Business Enterprise. For trade receivables which do contain asignificant financing component, the company chooses as its accounting policy to measure theloss allowance at an amount equal to lifetime expected credit losses.
(2) Expected credit loss risk portfolio assessment method based on portfolioThe company separately assesses the credit risk of financial assets which have significantlydifferent the credit risk, such as receivable with dispute or involved in litigation and arbitration;
There are clear signs indicating the debtor is unlikely to fulfill the repayment obligations of thereceivables, etc.Apart from the financial asset to be assessed for credit risk separately, the company divides thefinancial assets into different group based on common characteristics of risk and assesses the riskbased on the portfolio.Apart from the trade receivables and other receivables to be assessed for credit risk separately,based on the counterparty as the common risk characteristics, it is divided into different categoriesand determined for expected credit loss accounting estimate policy.
| Portfolio category | Expected credit loss accounting estimate policy |
| Related parties portfolio within the consolidation | Lower credit risk assessed by the management |
| Other related parties and non-related parties portfolio | Same as receivables and provided for excepted credit loss allowance |
Referring to the experience of historical credit losses, the company prepares a table comparing theaging of other receivable with the fixed reserve rate to calculate the expected credit losses onthis basis.
| Aging | Provision ratio |
| Within 1 year | 3.35% |
| 1 year-2 years | 7.49% |
| 2 yeasr-3 years | 22.71% |
| 3 years－4 years | 43.35% |
| 4 years－5years | 66.59% |
| Over 5 years | 100.00% |
The company prepares the comparison table between receivables aging and expected credit lossrate within lifetime and work out the expected credit loss by reference to historical credit lossexperience in combination with current situation and future forecast of economy condition.The company shall measure expected credit losses of a financial instrument in a way that reflects:
an unbiased and probability?weighted amount that is determined by evaluating a range of possibleoutcomes; The time value of money; and reasonable and supportable information that is availablewithout undue cost or effort at the reporting date about past events, current conditions andforecasts of future economic conditions.The company prepares the comparison table between receivables aging and fixed provision rateand work out the expected credit loss by reference to historical credit loss experience.On the balance sheet date, expected credit loss of receivable shall be calculated. If the expectedcredit loss is larger than the book value of the provision of receivable impairment, the differenceshall be recognized as receivable impairment loss, debit to “credit impairment loss”, credit to“provision for bad debt”. Alternatively, the difference is recognized as impairment gain andreversed journal entry shall be made.
Actually incurred credit loss shall be debit to “provision for bad debt”, credit to “notes receivable”,“receivable”, “other receivable” based on the approved amount to be written off as it is assured asuncollectible receivable. If the amount to be written off is bigger than the provision forimpairment loss, the difference is debit to “credit impairment loss”
14. Inventories
Inventories are materials purchasing, raw material, variance of cost materials, low-valuableconsumable, materials processed on commission, working-in-progress, semi-finished goods,variance of semi-finished goods, and finished goods, engineering construction etc.The inventories are processed on perpetual inventory system, and are measured at their actualcost on acquisition. Weighted average cost method is taken for measuring the inventorydispatched or used. Low value consumables and packaging materials is recognized in the incomestatement by one-off method.After yearend thorough inventory check, at the balance sheet date inventory impairment should beprovided or adjusted according to inventory category. For the finished goods, raw material heldfor sale etc which shall be sold directly, the net realizable value should be confirmed at theestimated selling price less estimated selling expenses and related tax and expenses. The rawmaterial held for production, its realizable value should be confirmed at the estimated selling priceof finished goods less estimated cost of completion, estimated selling expenses and related tax.The net realizable value of inventories held for execution of sale contracts or labor contracts shallbe calculated based on the contract price. If the quantities of inventories in the Group are morethan quantities if inventories subscribed in the sales contracts, the net realizable value of theexcessive part of the inventories should be calculated based on the general selling price. When theimpairment indicators disappear, impairment provision shall be reversed and
15. Contract assets
Contract assets are the rights of the Company to receive consideration for the goods it hastransferred to the customer, and such rights are subject to factors other than the passage of time. Ifthe Company sells two clearly distinguishable goods to a customer and is entitled to receivepayment for the delivery of one of the goods, but the payment is contingent on the delivery of theother goods, the Company regards the right to receive payment as a contract asset.The method for determining the expected credit loss of the contract assets shall refer to thedescription of notes receivable and accounts receivable in notes 11 and 12 above.Accounting method: the Company calculates the expected credit loss of the contract assets on thebalance sheet date. If the expected credit loss is greater than the carrying amount of the currentcontract assets impairment provision, the Company will recognize the difference as an impairmentloss and debit "credit impairment loss" and credit "Contract assets impairment provision". On thecontrary, the Company recognizes the difference as impairment gain and makes oppositeaccounting records.
If the Company actually suffers a credit loss and determines that the relevant contract assetscannot be recalled, and the write-off is approved, the Company shall debit "impairment provisionsof contract assets" and credit "contract assets" according to the approved amount of write-off. Ifthe amount of write-off is greater than the allowance for loss accrued, the difference shall bedebited as "credit impairment loss".
16. Contract Cost
(1) The method for determining the amount of assets related to the contract costThe Company's assets related to contract cost include contract performance cost and contractacquisition cost.Contract performance cost, that is, the cost of the Company to the contract, do not belong to otheraccounting standards for enterprises the scope of the specification, and satisfy the followingconditions at the same time, as the performance contract cost recognized as an asset: the cost anda current or expected is directly related to the contract, including direct materials, direct labor,manufacturing cost (or similar fee), specific cost borne by the customer and only other cost arisingfrom this contract; this cost increases the Company's future resources for performance obligations;the cost is expected to be recovered.Contract acquisition cost, that is, the incremental cost incurred by the Company to acquire thecontract is expected to be recovered, shall be recognized as an asset as the contract acquisitioncost; if the amortization period of the asset does not exceed one year, it shall be recorded into thecurrent profit and loss at the time of occurrence. Incremental cost is cost (such as salescommissions, etc.) that the Company would not incur without obtaining a contract. Expensesincurred by the Company for the acquisition of the contract, in addition to the incremental costexpected to be recovered (such as travel expenses incurred whether the contract is acquired or not,etc.), shall be recorded into the current profit and loss when incurred, except those clearly borneby the customer.
(2) Amortization of assets related to contract cost
The assets related to the contract cost of the Company shall be amortized on the same basis as thecommodity income recognition related to the assets and shall be recorded into the current profitand loss.
(3) Impairment of assets related to the contract cost
When determining the impairment loss of assets related to the contract cost, the Company shallfirst determine the impairment loss of other assets related to the contract recognized in accordancewith accounting standards for other relevant enterprises. If the carrying value is higher than theresidual consideration expected to be obtained by the Company due to the transfer of thecommodity related to the asset and the estimated cost to be incurred for the transfer of thecommodity, the excess part shall be set aside for impairment loss and recognized as an assetimpairment loss.
If the foregoing difference is higher than the carrying amount of the asset, the carrying amount ofthe asset shall be converted back to the original provision for impairment of the asset and recordedinto the current profit and loss. However, the carrying amount of the asset after conversion shallnot exceed the carrying amount of the asset under the circumstance of no provision forimpairment of the asset.
17. Held for sale
（1） Any non-current assets or disposal group shall be classified as held for sale if the followingcriteria are met: ⑴ according to the similar transactions for selling such assets or disposal groupin practice, the assets must be available for immediate sale under current condition. ⑵The sale ishighly probable with decision made on a probable selling proposal and the firm purchasecommitment has been obtained, the sale is expected to be completed within one year. Certainregulations request that approvals must be given by relevant authority or supervision regulatorbefore the assets can be sold. Prior to the assets initially classified as held for sale or disposalgroup, the carrying amounts of the asset(or all the assets and liabilities in the disposal group) shallbe measured in accordance with applicable accounting standards. The Company shall recognize animpairment loss and account it in to income statement for the current period, for any initial orsubsequent write- down of the asset(or disposal group) to its fair value less costs to sell if thecarrying amount is higher than its fair value less costs to sell. In the meantime, provision for assetsimpairment shall be made.
（2） The Company acquires a non-current asset(or disposal group) exclusively with a view to itssubsequent resale, it shall be classified as held for sale at the acquisition date only if the conditionof “expected sale can be completed within one year” can be met and also other conditions ofclassified as held for sale can highly probably be met within a short period following theacquisition(usually with three months). When measuring a newly acquired asset(or disposal group)meeting the criteria to be classified as held for sale, it shall be measured at the lower of itscarrying amount had it not been so classified and fair value less costs to sell. Except thenon-current assets or disposal group acquired as part of a business combination, the differencebetween its fair value less costs to sale and initial carrying amount is recognized in the incomestatement.
（3） The Company that loss of control of a subsidiary due to a sale plan of its investment shallclassify its subsidiary planned for sale as a whole as held for sale in the single financial statementof the parent only if the investment in subsidiary meets the criteria of held for sale, regardless ofwhether the Company will retain a proportion of equity interest in its former subsidiary after sale,and classify all assets and liabilities of the subsidiary as held for sale in the consolidated financialstatements
（4） The Company shall recognize a gain for any subsequent increase in fair value less costs tosell of an asset and shall reverse the impairment to the extent that previously recognized whenbeing classified as held for sale, the revisable amount is recognized in the income statement forthe period. Any impairment from the period when the assets are not classified as held for sale can
not be reversed.
（5） The impairment loss recognised for a disposal group shall reduce the carrying amount ofgoodwill of disposal group first, and then reduce the carrying amount of the non-current assetsbased on its proportion on the book.The Company shall recognize a gain for any subsequent increase in fair value less costs to sell of adisposal group and shall reverse the impairment to the extent that previously recognized whenbeing classified as held for sale, in accordance with applicable measuring standards, the revisableamount is recognized in the income statement for the period. Any impairment from the periodwhen the assets are not classified as held for sale and reduced goodwill can not be reversed.For any subsequently reversed amount, after the impairment loss is recognized for held for saledisposal group, the Company shall increase the carrying amount of disposal group based on theproportion of carrying amount of non-current assets excluding goodwill.
（6） Non-current assets classified as held for sale or disposal group shall not be depreciated oramortized, interest and other expenses attributable to the liabilities of a disposal group classifiedas held for sale shall continue to be recognized.
（7） When held for sale assets or disposal group can not meet the criteria for held for saleclassification so that they are not recognized as held for sale or non-current asset will be removedfrom disposal group, they shall be measured at the lower of the following amounts: ⑴carryingamount of assets prior to it classified as held for sale, which is the amount after depreciation,amortization or impairment adjustment as it had not been classified as held for sale ;⑵recoverable amount.When the Company derecognizes the held for sale assets or disposal group, the remainingunrecognized gain or loss shall be accounted in the income statement.
18. Long-term equity investment
Long term equity investments are the investment in subsidiary, in associated company and in jointventure.Joint control is the contractual agreement sharing of control over an economic activity by allparticipants or participants’ combination and decisions or policies relating to the operating activityof the entity require the unanimous consent of the parties sharing the control.Significant influence exists when the entity directly or indirectly owned 20% or more but less than50% shares with voting rights in the investee company. If holding less than 20% voting rights, theentity shall also take other facts or circumstances into accounts when judging any significantinfluences. Factors and circumstances include: representation on the board of directors orequivalent governing body of the investee, participation in financial or operating activitiespolicy-making processes, material transactions between the investor and the investee, interchangeof managerial personnel or provision of essential technical information.
When control exists over an investee, the investee is a subsidiary of an entity. The initialinvestment cost for long-term equity investment acquired through business combination undercommon control, is the carrying amount presented in the consolidated financial statements of theshare of net assets at the combination date in the acquired company. If the carrying amount of netassets at the combination date in the acquired company is negative, investment shall be recognizedat zero.If the equity of investee under common control is acquired by stages and business combinationincurs in the end, an entity shall disclose the accounting method for long-term equity investmentin the parent financial statement as a supplemental. For example, if the equity of investee undercommon control is acquired by stages and business combination incurs in the end, and it’s abundled transaction, the entity shall regard all transactions as a one for accounting. If it’s not abundled transaction, the carrying amount presented in the consolidated financial statements of theshare of net assets at the combination date in the acquired company since acquisition isdetermined as for the initial cost of long-term equity investment. The difference between the costinitially recognized and carrying amount of long-term equity investment prior to the businesscombination plus the newly paid consideration for further share acquired, and capital reserve shallbe adjusted accordingly. If no enough capital reserve is available for adjustment, retain earningsshall be adjusted.If long-term equity investment is acquired through business combination not under commoncontrol, initial investment cost shall be the combination cost.If the equity of investee not under common control is acquired by stages and businesscombination incursion the end, an entity shall disclose the accounting method for long-term equityinvestment in the parent financial statement as a supplemental. If the equity investment of investeenot under common control is acquired by stages and business combination incursion the end, andit’s a bundled transaction, the entity shall regard all transactions as a one for accounting. If it’s nota bundled transaction, the carrying amount of the equity investment held previously plus newlyincreased investment cost are taken as the initial investment cost under cost model. If equityinvestment is held under equity method before the acquisition date, other comprehensive incomeunder equity method previously shall not be adjusted accordingly. When disposing of theinvestment, the entity shall adopt the same basis as the investee directly disposing of related assetsor liability for accounting treatment. Equity held prior to acquisition date as available for salefinancial assets under fair value model, accumulated change on fair value previously recorded inother comprehensive shall be transferred into investment gain/loss for the period.Apart from the long-term equity investments acquired through business combination mentionedabove, the cost of investment for the long-term equity investments acquired by cash payment isthe amount of cash paid. For long-term equity investment acquired by issuing equity instruments,the cost of investment is the fair value of the equity instrument issued. For long-term equityinvestment injected to the entity by the investor, the investment cost is the consideration asspecified in the relevant contract or agreement.
The Group adopts cost method to account for investment in subsidiary and equity method forinvestment in joint venture and affiliate.Long-term equity investment subsequently measured under cost model shall increase the carryingamount of investment by adjusting the fair value of additional investment and relevant transactionexpenses. Cash dividend or profit declared by investee shall be recognized as investment gain/lossfor the period based on the proportion share in the investee.Long-term equity investment subsequently measured under equity method shall be adjusted for itscarrying amount according to the share of equity increase or decrease in the investee. The entityshall recognize its share of the investee’s net profits or losses based on the fair value of theinvestee’s individual identifiable assets at the acquisition date, after making appropriateadjustments thereto in conformity with the accounting policies and accounting period, andoffsetting the unrealized profit or loss from internal transactions entered into between the entityand its associates and joint ventures according to the shareholding attributable to the entity andaccounted for as investment income and loss based on such basis.On disposal of a long-term equity investment, the difference between the carrying value and theconsideration actually received is recognized as investment income for the period. For long-terminvestments accounted for under equity method, the movements of shareholder’s equity, other thanthe net profit or loss, of the investee company, previously recorded in the shareholder’s equity ofthe Company are recycled to investment income for the period on disposal.Where the entity has no longer joint control or significant influence in the investee company as aresult of partially disposal of the investment, the remaining investment will be changed to beaccounted for as available for sale financial assets, and the difference between the fair value ofremaining investment at the date of losing joint control or significant influence and its carryingamount shall be recognized in the profit or loss for the year. Other comprehensive incomerecognized from previous equity investment under equity model shall be accounted for on thesame basis as the investee directly disposing of related assets or liability when stopping usingunder equity model.Where the entity has no longer control over the investee company as a result of partially disposalof the investment, the remaining investment will be changed to be accounted for using equitymethod providing remaining joint control or significant influence over the investee company. Thedifference between carrying amount of disposed investment and consideration received actuallyshall be recognized in the profit and loss for the period as investment gain or loss, and investmentshall be adjusted accordingly as if it was accounted for under equity model since acquisition.Where the entity has on longer joint control or significant influence in the investee as a result ofdisposal, the investment shall be changed to be accounted for as available for sale financial assets,and difference between the carrying amount and disposal consideration shall be recognized inprofit and loss for the period, and the difference between the fair value of remaining investment atthe date of losing control and its carrying amount shall be recognized in the profit or loss for the
year as investment gain or loss.If the entity loses its control through partially disposal of investment by stages and it’s not abundled transaction, the entity shall account for all transactions separately. If it’s a bundledtransaction, the entity shall regard all transactions as one disposal of subsidiary by losing control,but the difference between disposal consideration and carrying amount of the equity investmentdisposed prior to losing control, which arises from each individual transaction shall be recognizedas other comprehensive income until being transferred into profit and loss for the period by thetime of losing control.
19. Investment property
The investment property includes property and building and measured at cost model
| Category | Useful life (years) | Estimated net residual value rate | Annual depreciation rate |
| Housing and Buildings | 40 | 3% | 2.43% |
20. Fixed assets
Recognition criteria of fixed assets: defined as the tangible assets which are held for the purposeof producing goods, rendering services, leasing or for operation & management, and have morethan one year of useful life.Fixed assets shall be recognized when the economic benefit probably flows into the Group and itscost can be measured reliably. Fixed assets include: building, machinery, transportation equipment,electronic equipment and others.All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and are stillbeing used and land is separately measured. Straight-line depreciation method is adopted by theGroup. Estimated net residual value rate, useful life, depreciation rate as follows:
| No | Category | Useful life (years) | Estimated net residual value rate | Annual depreciation rate |
| 1 | Housing and Buildings | 20-40 | 3%,5%,10% | 2.25-4.85% |
| 2 | Machinery equipment | 10-22 | 3%,5%,10% | 4.09-9.7% |
| 3 | Transportation equipment | 4-15 | 3%,5%,10% | 6-24.25% |
| 4 | Electronic equipment | 5 | 3%,5%,10% | 18-19.4% |
| 5 | Others equipment | 10-15 | 3%,5%,10% | 6-9.7% |
The Group should review the estimated useful life, estimated net residual value and depreciationmethod at the end of each year. If any change has occurred, it shall be regarded as a change in theaccounting estimates.Finance lease shall be recognized when one of the conditions are met, (1) the ownership of theasset belongs to the company when the lease term is due , (2) the company has the option to buythe asset and buy price is far lower than the fair value when exercising the option. (3) lease term is
most of the asset life (4) no significant difference between the present value of minimum leasepremium and fair value on the lease commencement date.On commencement date, leased asset shall be recognized at the lower of fair value and the PV ofminimum lease payment, long term payable shall be recognized at the minimum lease paymentand the difference is unrecognized financing expense.The depreciation policy of the leased fixed assets shall be consistent with that of the self-ownedfixed assets. If the ownership of asset can be reliably acquired by the lease term due date, leasedasset shall be depreciated through the expected service life, otherwise, it shall be depreciatedwithin the lower of the lease term and expected service life of the asset.
21. Construction in progress
The criteria and time spot of constructions in progress’s being transferred to fixed assets:
Constructions in progress are carried down to fixed assets on their actual costs when completingand achieving estimated usable status. The fixed assets that have been completed and reachedestimated usable status but have not yet been through completion and settlement procedures arecharged to an account according to their estimate values; adjustment will be conducted uponconfirmation of their actual values. The Group should withdraw depreciation in the next monthafter completion.
22. Borrowing costs
The borrowing cost includes the interest expenses of the borrowing, amortization of underflow oroverflow from borrowings, additional expenses and the foreign exchange profit and loss becauseof foreign currency borrowings. The borrowing costs incurred which can be directly attribute tothe fixed assets, investments properties, inventories requesting over 1 year purchasing ormanufacturing so to come into the expected condition of use or available for sale shall start to becapitalized when expenditure for the assets is being occurred, borrowing cost has occurred,necessary construction for bringing the assets into expected condition for use is in progress. Theborrowing costs shall stop to be capitalized when the assets come into the expected condition ofuse or available for sale. The borrowing costs subsequently incurred should be recorded into profitand loss when occurred. The borrowing costs should temporarily stop being capitalized whenthere is an unusual stoppage of over consecutive 3 months during the purchase or produce of thecapitalized assets, until the purchase or produce of the asset restart.The borrowing costs of special borrowings, deducting the interest revenue of unused borrowingskept in the bank or the investment income from transient investment should be capitalized. Thecapitalized amount of common borrowings should be calculated as follows: average assetsexpenditure of the accumulated assets expenditure excess the special borrowing, multiplied by thecapital rate. The capital rate is the weighted average rate of the common borrowings.
23. Intangible assets
The intangible assets of the Group refer to land use right and software. For acquired intangible
assets, the actual cost are measured at actual price paid and relevant other expenses. The costinvested into intangible assets by investors shall be determined according to the stated value in theinvestment contract or agreement, except for those of unfair value in the contract or agreement.Land use right shall be amortized evenly within the amortization period since the remiseddate.ERP system software and other intangible assets are amortized over the shortest of theirestimated useful life, contractual beneficial period and useful life specified in the law.Amortization charge is included in the cost of assets or expenses, as appropriate, for the periodaccording to the usage of the assets. At the end of the year, for definite life of intangible assets,their estimated useful life and amortization method shall be assessed. Any change shall be treatedas change on accounting estimate.
24. Impairment of long-term assets
The Group assesses at each balance sheet date whether there is any indication that long-termequity investments, investment property, fixed assets, construction in progress and intangibleassets with definite useful life may be impaired. If there is any indication that an asset may beimpaired, the asset will be tested for impairment. Goodwill arising in a business combinationand intangible asset with infinite useful life are tested for impairment annually no matter there isany indication of impairment or not.Estimate of recoverable amount is the higher of its fair value less costs to sell and the presentvalue of the future cash flows expected to be derived from the asset.If the recoverable amount of an asset is less than its carrying amount, the carrying amount shall beimpaired and the difference is recognised as an impairment loss and charged to profit or loss forthe period. Once an impairment loss on the assets is recognised, it is not reversed in a subsequentperiod.After assets impairment loss is recognized, depreciation and amortisation of the impaired assetshall be adjusted in the following period so that the adjusted carrying amount(less expectedresidual value) can be depreciated and amortised systematically within the remaining life.When assessing goodwill for impairment, the carrying amount of goodwill shall be allocatedevenly to the assets group or assets portfolio. When testing the assets group or assets portfolioincluding goodwill, if there is any indication of impairment , ignoring the goodwill and testingthe assets group or assets portfolio alone so to work out the recoverable amount and comparing toits carrying amount and recognize the impairment loss. After that, testing the assets group or assetsportfolio with goodwill together, comparing the carrying amount of the assets group or assetsportfolio(including goodwill allocation) with recoverable amount , goodwill impairment shall berecognized when the recoverable amount is lower than its carrying amount.
25. Long-term deferred expenses
Long-term deferred expenses of the Group refer to leasing expenses, redecoration expense andothers. The expenses should be amortized evenly over the beneficial period. If the deferred
expense cannot take benefit for the future accounting period, the unamortized balance of thedeferred expenses should be transferred into the current profit or loss. Leasing expenses will beamortized within 10 years and 30years; redecoration expense and others will be amortizedwithin 3 years.
26. Contract liabilities
Contract liabilities reflect the Company's obligation to transfer the goods to the customer onconsideration received or receivable from the customer. Where the customer has paid the contractconsideration or the Company has obtained the right to receive the contract considerationunconditionally before the transfer of the goods to the customer, the liability of the contract shall berecognized in accordance with the amount received or receivable at the earlier point between theactual payment made by the customer and the due payment.
27. Employee benefits
Employee’s benefit comprises short-term benefit, post-employment benefit, termination benefit
and other long-term employee’s benefit.
Short-term benefit includes salary, bonus, allowance, welfare, social insurance, housing funds,
labour union expense, staff training expense, during the period in which the service rendered by
the employees, the actually incurred short term employee benefits shall be recognized as liability
and shall be recognized in P&L or related cost of assets based on benefit objective allocated from
the service rendered by employees.
Post-employment benefits include the basic pension scheme and unemployment insurance etc.
Based on the risk and obligation borne by the Group, post-employment benefits are classified into
defined contribution plan and defined benefit plan. For defined contribution plan, liability shall be
recognized based on the contributed amount made by the Group to separate entity at the balance
sheet date in exchange of employee service for the period and it shall be recorded into current
profit and loss account or relevant cost of assets in accordance with beneficial objective.
Termination benefits are employee’s benefit payable as a result of either an entity’s decision to
terminate an employee’s employment before the contract due date or an employee’s decision to
accept voluntary redundancy in exchange for those benefits. An entity shall recognize the
termination benefits as a liability and an expense at the earlier date when the entity cannot
unilateral withdraw the termination benefits due to employment termination plan or due to
redundancy suggestion, or when the entity can recognize the restructuring cost or expense arising
from paying termination benefits.
Other long-term employee’s benefit refers to all other employee benefits other than short-term
benefit, post-employment benefit and termination benefit.
If other long-term employee’s benefit is qualified as defined contribution plan, contribution made
shall be recognized as liabilities accordingly for the period in which the service are rendered by
the employee and recognized in the profit or loss for the current period or relevant cost of assets.
Except other long-term employee’s benefit mentioned above, obligation arising from definedbenefit plan shall be recognized in the profit or loss for the current period or relevant cost of assetsin accordance with the period when the service are rendered by the employee.
28. Contingent liabilities
When the Company has transactions such as commitment to externals, discounting the tradeacceptance, unsettled litigation or arbitration which meets the following criterion, provisionshould be recognized: It is the Company's present obligation; carrying out the obligation willprobably cause the Company's economic benefit outflow; the obligation can be reliably measured.Provision is originally measured on the best estimate of outflow for paying off the presentobligations, and to consider the risk, uncertainty, time value of monetary relevant to contingentitems. If the time value of monetary is significant, the best estimate will be determined bydiscounted cash outflow in the future. At each balance sheet date, the book value of provision isreviewed and adjustment will be made on the book value if there is any change, in order to reflectthe current best estimate.When compensation from the 3rd party is expected for full or partial contingent liabilitysettlement, the compensation shall be recognized as an asset separately and measured at no morethan the book value of contingent liability.
29. Share based payment
An equity-settled share-based payment in exchange for the employee’s services is measured at thefair value at the date when the equity instruments are granted to the employee. Such fair valueduring the vesting period of service or before the prescribed exercisable conditions are achieved isrecognised as relevant cost or expense on a straight-line during the vesting period based on thebest estimated quantity of exercisable equity instruments, accordingly increase capital reserve.A cash-settled share-based payment is measured at the fair value at the date at which the Groupincurred liabilities that are determined based on the price of the shares or other equity instruments.If it is immediately vested, the fair value of the liabilities at the date of grant is recognised asrelevant cost or expense, and corresponding liabilities. If it is exercisable only when the vestingperiod of service is expired or the prescribed conditions are achieve, the fair value of liabilitiesundertaken by the Group are re-measured at each balance sheet date based on the best estimate ofexercisable situation.The fair value of the liabilities is re-measured at each balance sheet date. Any changes arerecognised in the profit or loss for the year.If the granted equity instruments are cancelled within the vesting period, the equity instrumentshall be treated as accelerated vesting and the balance linked to the remaining vesting period shallbe recognized in the profit or loss account, accordingly be recognized in the capital reserve. Ifemployees or other parties can choose but fail to satisfy non-vesting conditions during the vestingperiod, the Company sees this as cancellation of granted equity instruments.
30.Revenue
The revenue of the Company is mainly from sales of complete sets of equipment, engineeringinstallation.The Company has performed the performance obligations in the contract, that is, when thecustomer obtains the control right of the relevant goods or services, the revenue is recognized.If the contract contains two or more performance obligations, the Company shall, at the beginningof the contract, allocate the transaction price to each individual performance obligation accordingto the relative proportion of the individual selling price of the commodities or services committedby each individual performance obligation, and measure the income according to the transactionprice allocated to each individual performance obligation.The transaction price is the amount of consideration to which the Company is expected to beentitled as a result of the transfer of goods or services to the customer, excluding paymentsreceived on behalf of third parties. The trading price recognized by the Company shall not exceedthe amount of accumulated recognized revenue that is highly unlikely to be materially reversedwhen the relevant uncertainties are eliminated. Refunds to customers are expected to be excludedfrom the transaction price as liabilities. Where there is a significant financing element in thecontract, the Company shall determine the transaction price based on the amount payable by theassumed customer in cash upon acquisition of control over the goods or services. The differencebetween the transaction price and the contract consideration shall be amortized over the term ofthe contract using the effective interest rate method. On the commencement date of the contract,the Company expects that the interval between the customer's acquisition of control of the goodsor services and the customer's payment shall not exceed one year, regardless of the significantfinancing element existing in the contract.If one of the following conditions is met, the Company shall perform its performance obligationswithin a certain period of time; otherwise, the performance obligation shall be performed at acertain point:
(1) When the customer performs the performance of the Company, it will obtain and consume theeconomic benefits brought by the performance of the Company.
(2) The customer can control the commodities under construction during the performance of theCompany.
(3) The commodities produced by the Company during the performance of the contract shall haveirreplaceable uses, and the Company shall have the right to receive payment for the accumulatedperformance part which has been completed so far during the entire contract period.For the performance obligations performed within a certain period of time, the Company shallrecognize the income according to the performance progress within that period. If the performanceschedule cannot be reasonably determined and the Company is expected to be compensated forthe costs incurred, the revenue shall be recognized according to the amount of the cost incurred
until the performance schedule can be reasonably determined.For performance obligations performed at a certain point, the Company recognizes revenue at thepoint when the customer acquires control over the relevant goods or services. In determiningwhether the customer has acquired control over the goods or services, the Company considers thefollowing indications:
(1). The Company shall have the right to receive the present payment for the goods or services.
(2) The Company has transferred the legal ownership of the goods to the customer.
(3) The Company has transferred the physical goods to the customer.
(4) The Company has transferred to the customer the major risks and rewards in the ownership ofthe goods.
(5) The customer has accepted the goods or services, etc.
The Company determines whether it is the principal responsible person or the agent at the time ofthe transaction based on whether it has control over the commodity before transferring it to thecustomer. If the Company is able to control the commodity before transferring the commodity tothe customer, the Company shall be the main person responsible and shall recognize the incomeaccording to the total amount received or the consideration; otherwise, the Company shallrecognize the income according to the amount of the commission or handling charge to be entitledto be collected, which shall be the net amount after the total amount of consideration received orreceivable is deducted from the price paid to other relevant parties, or determined according to theproportion of the established commission amount. The circumstances under which the Companyjudges that it can control the goods before transferring them to the customer include:
(1) The Company shall transfer the control right of commodities or other assets to the customerafter the third party obtains the control right.
(2) The Company can lead a third party to provide services to customers on behalf of theCompany.
(3) After the Company acquires the control of the commodity by a third party, it transfers thecommodity to the customer by integrating it with other products into a group of outputs byproviding significant services.In the specific determination of the ownership of a commodity prior to its transfer to a customer, itis not limited to the legal form of the contract, but takes into account all relevant facts andcircumstances, including:
(1) The Company undertakes the main responsibility of transferring the goods to the customers.
(2) The Company shall bear the inventory risk of the goods before or after the transfer of thegoods.
(3) The Company shall have the right to determine the prices of the commodities to be traded.
(4) Other relevant facts and circumstances.
The Company's right to receive consideration for the goods or services it has transferred to thecustomer (and such right is subject to factors other than the passage of time) is shown as a contractasset, and the impairment of the contract asset is calculated on the basis of the expected credit loss.The Company has the right to collect the consideration unconditionally from the customer as anaccount receivable. The obligation of the Company to transfer the goods or services to thecustomer upon receipt of the consideration receivable by the customer is shown as a contractliability.
31. Government grants
A government grant shall be recognized when the Company complies with the conditionsattaching to the grant and when the Company is able to receive the grant.Assets-related government grant is the government fund obtained by the Company for thepurpose of long-term assets purchase and construction or establishment in the other forms.Income-related grants are the grant given by the government apart from the assets-related grants.If no grant objective indicated clearly in the government documents, the Company shall judge itaccording to the principle mentioned above.Where a government grant is in the form of a transfer of monetary asset, it is measured at theamount received. Where a government grant is made on the basis of fixed amount or conclusiveevidence indicates relevant conditions for financial support are met and expect to probablyreceive the fund, it is measured at the amount receivable. Where a government grant is in theform of a transfer of non-monetary asset, it is measured at fair value. If fair value cannot bedetermined reliably, it is measured at a nominal amount of RMB1 Yuan.Assets-related government grants are recognized as deferred income ore directly offsetting thebook value of the asset, and Assets-related government grants recognized as deferred incomeshall be evenly amortized to profit or loss over the useful life of the related asset.Any assets are sold, transferred, disposed off or impaired earlier than their useful life expireddate, the remaining balance of deferred income which hasn’t been allocated shall be carriedforward to the income statement when the assets are disposed off.Income-related government grants that is a compensation for related expenses or losses to beincurred in subsequent periods are recognized as deferred income and credited to the relevantperiod when the related expense are incurred. Government grants relating to compensation forrelated expenses or losses already incurred are charged directly to the profit or loss for the period.Government grants related to daily business, shall be recognized as other income in accordancewith business nature, otherwise, shall be recognized as non-operating expenses.If any government grant already recognized needs to be returned to the government, theaccounting shall be differed according to the following circumstances:
1) originally recognized as offsetting of related assets' book value, assets book value shall be
adjusted
2) if any deferred income, book value of deferred income shall be offset, excessive portion
shall be accounted into income statement
3) Other situation, it shall be accounted into income statement directly.
32. Deferred tax assets and deferred tax liabilities
The deferred income tax assets or the deferred income tax liabilities should be recognizedaccording to the differences (temporary difference) between the carrying amount of the assets orliabilities and its tax base. Deferred tax assets shall be respectively recognized for deductible taxlosses that can be carried forward in accordance with tax law requirements for deduction oftaxable income in subsequent years. No deferred tax liabilities shall be recognized for anytemporary difference arising from goodwill initially recognition. No deferred tax assets orliabilities shall be recognized for any difference arising from assets or liabilities initial recognitionon non-business combination with no effect on either accounting profit or taxable profit (ordeductible tax loss). At the balance sheet date, deferred tax assets and deferred tax liabilities aremeasured at the tax rates that are expected to apply to the period when the asset is realized orliability is settled.Deferred tax assets are recognized to the extent that it is probable that future taxable profit will beavailable to offset the deductible temporary difference, deductible loss and tax reduction.
33.Lease
The Company’s leasing business includes operating lease and financing lease.As an operating lease lessee and lesser, the lease premium shall be recognized in the cost of assetbased on straight line method within the period or directly to income statement.As a financing lease lessee, the lower of the fair value of leased assets and the present value of theminimum lease payments is recognized as the leased asset, the minimum lease payments arerecognized as the long-term payables, and the difference is recognized as unrecognized financeexpense at the inception of the lease. The company shall adopt the effective interest method toamortize and record as the financial costs during the assets lease term.
34. Other significant accounting policies, accounting Estimates
When preparing the financial statements, the management needs to use accounting estimate andassumption, which will have effect on the application of accounting policy and amount of asset,liability, income and expense. The actual circumstance maybe differs from the estimates. Themanagement needs to continuously assess the key assumption involved by estimate and thejudgment on uncertainty. Effect on the accounting estimate shall be recognized during the periodwhen estimate is changed and in future.The following accounting estimate and key assumption will trigger the significant risk of
significant adjustment on the book value of asset and liability during the period of future.
（1） Impairment of receivable
Receivable is measured at amortized cost at the balance sheet date and assessed for anyimpairment indicator and the acutely amount of impairment. Objective evidence for impairmentincludes judgmental data of indicating significant decline of future cash flow of individual orgroup of receivable, indicating significant negative financial performance of debtors. Hadreceivable is recovered with certain proof, and in fact, it is relevant to the the matters subsequentto the the loss recognition, the impairment recognized before shall be reversed.
（2） Provision of inventory impairment
Inventory is periodically evaluated at the net realizable value and any cost higher than NRV shallbe recognized as inventory impairment loss. When evaluating the NRV, net realizable value isdetermined by deducting the expected selling expense and relative tax from the estimated sellingprice. When actual selling price or cost differs from the previous estimates, management willmake adjustment on NRV. Therefore, the results based on the present experience may differ fromthe actual results, which caused the adjustment on the carrying amount of inventory in the book.Provision for inventory impairment may vary with the above reasons. Any adjustment onprovision for inventory impairment will affect the income statement.
（3） Provision of goodwill impairment
Each year, goodwill shall be assessed for any impairment. Recoverable amount of assets groupor asset portfolio including goodwill shall be the present value of future cash flow, which needsestimates for calculation.If management adjust the gross profit margin adopted by the present value of future cash flowcalculation of assets group or asset portfolio, adjusted gross profit margin is lower than the marginapplied, the impairment is required.If management adjust the discounting rate before tax applied by the present value of future cashflow calculation of assets group or asset portfolio, adjusted discounting rate before tax is higherthan the rate applied, the impairment is required.If actual profit margin or discounting rate before tax is higher or lower than management’sestimate, any impairment recognized before can not be reversed.
（4） Provision of fixed asset impairment
At the balance sheet date, the management shall implement impairment test on buildings, plantand machinery etc which has any impairment indicator. The recoverable amount of FA is thehigher of PV of future cash flow and net value of fair value after disposal cost, the calculationneeds accounting estimate.If management adjust the gross profit margin adopted by the present value of future cash flowcalculation of assets group or asset portfolio, adjusted gross profit margin is lower than the margin
applied, the impairment is required.If management adjust the discounting rate before tax applied by the present value of future cashflow calculation of assets group or asset portfolio, adjusted discounting rate before tax is higherthan the rate applied, the impairment is required.If actual profit margin or discounting rate before tax is higher or lower than management’sestimate, any impairment recognized before can not be reversed.
（5） Recognition of deferred tax assets
Estimate on deferred tax assets needs making estimation of taxable income and applied tax rate inthe following years in future. Whether deferred tax asset can be realized depends on the enoughprobable taxable profit obtained in future. Tax rate change in future and the timing of temporarydifference reverse may also affect the income tax expense(income)and the balance of deferred tax.Any change of estimate described here will cause the deferred tax adjustment.
（6） Useful life span of fixed assets and intangible assets
At least every year end, the management shall review the useful life of FA and intangible assets.Expected useful life is based on the management’s experience on the same class of assets, withreference to the estimate applied in the industry in conjunction with expected technologydevelopment. When previous estimate significantly changed, depreciation and amortization in thefuture shall be adjusted accordingly.
35. Changes in Accounting Policies, Accounting Estimates
The Ministry of Finance issued on July 5, 2017 about revision issued by the accounting standardsfor enterprises no. 14 - revenue income guidelines (hereinafter generally referred to as the"income guidelines"), in domestic and at the same time, listed companies and listed overseas andadopted international financial reporting standards or companies prepare financial statements onthe accounting standard for business enterprises, effective as of January 1, 2018; Other domesticlisted enterprises shall enter into force as of January 1, 2020; Non-listed enterprises thatimplement the accounting standards for Business Enterprises shall enter into force as of January 1,2021. In accordance with the above requirements, the Company will implement the relevantguidelines as of January 1, 2020.New Income Standards for the First Implementation Relevant to Financial Statements at theBeginning of the YearConsolidated balance sheet
| Item | 31-Dec-2019 | 1-Jan-2020 | The amount of adjustment |
| Notes receivable | |||
| Accounts receivable | 1,030,342,541.88 | 1,008,380,111.23 | -21,962,430.65 |
| Contract assets | 21,962,430.65 | +21,962,430.65 | |
| Deferred income tax assets | |||
| Accounts received in advance | 160,571,622.53 | -160,571,622.53 |
| Contract liabilities | 160,571,622.53 | +160,571,622.53 |
Balance sheet of parent company
| Item | 31-Dec-2019 | 1-Jan-2020 | The amount of adjustment |
| Notes receivable | |||
| Accounts receivable | 526,554,114.61 | 525,838,172.89 | -715,941.72 |
| Contract assets | 715,941.72 | +715,941.72 | |
| Deferred income tax assets | |||
| Accounts received in advance | 47,114,426.48 | -47,114,426.48 | |
| Contract liabilities | 47,114,426.48 | +47,114,426.48 |
Changes in accounting estimateNone
IV. Taxation
1. The main applicable tax and rate to the Group as follows:
| Tax | Tax base | Tax rate |
| Value-added tax (VAT) | Sales revenue or Purchase | 6%、9%、10%、13%、16% |
| City construction tax | Value-added tax payables | 7% |
| Education surcharge | Value-added tax payables | 3% |
| Local education surcharge | Value-added tax payables | 2% |
| Enterprise income tax(EIT) | Current period taxable profit | 15% or 25% |
| Real estate tax | 70% of cost of own property or revenue from leasing property | 1.2% or 12% |
| Land use tax | Land using right area | Fixed amount per square meter |
| Other tax | According to the relevant provisions of the state and local |
Notes for tax entities with different EIT rate
| Tax entities | EIT rate |
| Bingshan Refrigeration & Heat Transfer Technologies Co.,Ltd | 15% |
| Dalian Bingshan Group Engineering Co., Ltd. | 25% |
| Dalian Bingshan Group Sales Co., Ltd. | 25% |
| Dalian Bingshan Air-conditioning Equipment Co., Ltd. | 15% |
| Dalian Bingshan Guardian Automation Co., Ltd. | 15% |
| Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd. | 25% |
| Wuhan New World Refrigeration Industrial Co., Ltd. | 15% |
| Bingshan Technology Service （Dalian） Co.,Ltd. | 15% |
| Dalian Bingshan Engineering&Trading Co.,Ltd | 25% |
| Dalian Universe Thermal Technology Co., Ltd. | 15% |
| Dalian New Meica Electronics Technology Co., Ltd | 15% |
2. Tax preference
The Company obtained the qualification of high and new technology enterprises on 29
thNovember,2017 approved by Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State TaxBureau and Local tax Bureau.The Certificate No is GR201721200306, and the validity duration isthree years. According to the tax law, the Company can be granted for the preferential tax policy ofenterprise income tax rate of 15% in three years.
The Company’s subsidiary, Dalian Bingshan Air-conditioning Equipment Co., Ltd. obtained thequalification of high and new technology enterprises on 29
thNovember, 2017 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR201721200279, and the validity duration is three years. Accordingto the tax law, it can be granted for the preferential tax policy of enterprise income tax rate of 15%in three years.The Company’s subsidiary, Dalian Bingshan Guardian Automation Co., Ltd. obtained thequalification of high and new technology enterprises on 16
thNovember, 2018 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau.The Certificate No is GR20181200562, and the validity duration is three years. Accordingto the tax law, it can be granted for the preferential tax policy of enterprise income tax rate of 15%in three years.The Company’s subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd obtained thequalification of high and new technology enterprises on 15
thNovember, 2018 approved by HubeiScience Technology Bureau, Hubei Finance Bureau, Hubei State Tax Bureau and Hubei Local taxBureau. The Certificate No is GR201842000605, and the validity duration is three years. Accordingto the tax law, it can be granted for the preferential tax policy of enterprise income tax rate of 15%in three years.The Company’s subsidiary, Bingshan Technology Service （Dalian） Co.,Ltd.. obtained thequalification of high and new technology enterprises on 29
thNovember, 2017 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR2201721200155, and the validity duration is three years.According to the tax law, it can be granted for the preferential tax policy of enterprise income taxrate of 15% in three years.The Company’s subsidiary, Dalian Universe Thermal Technology Co., Ltd.. obtained thequalification of high and new technology enterprises on 29
thNovember, 2017 approved by Dalian
Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR2201721200108, and the validity duration is three years.According to the tax law,it can be granted for the preferential tax policy of enterprise income taxrate of 15% in three years.The Company’s subsidiary, Dalian New Meica Electrical Technology Co., Ltd obtained thequalification of high and new technology enterprises on 29
thNovember, 2017 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR2201721200301, and the validity duration is three years.According to the tax law, it can be granted for the preferential tax policy of enterprise income taxrate of 15% in three years.V. Notes to Consolidated Financial Statements
The following disclosure date on this financial statement without special indication, “opening”refers to January 1, 2020; “closing” refers to June 30, 2020; “current period” refers to the periodfrom January 1, 2020 to June 30, 2020; and “last period” refers to the period from January 1, 2019to June 30, 2019; with the currency unit RMB.
1. Cash and cash in bank
| Item | Closing Balance | Opening Balance |
| Cash on hand | 106,840.56 | 92,096.63 |
| Cash in bank | 268,783,147.06 | 301,435,257.93 |
| Other cash and cash equivalents | 9,266,488.54 | 30,591,791.66 |
| Total | 278,156,476.16 | 332,119,146.22 |
Note: Other cash and cash equivalents is restricted, including deposit for bank acceptance notes of6,636,005.82 Yuan,deposit to creditor of 69,000.00 Yuan,guarantee deposit of 2,561,482.72 Yuan, total of9,266,488.54 Yuan.
2. Notes receivable
(1) Category of notes receivable
| Items | Closing Balance | Opening Balance |
| Bank acceptance notes | 59,963,498.75 | 71,184,057.96 |
| Commercial acceptance notes | 1,012,237.74 | 48,763,268.45 |
| Total | 60,975,736.49 | 119,947,326.41 |
Categories according to bad debts provision
| Items | Closing Balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Bad debts provision based on | 61,049,474.22 | 100.00% | 73,737.73 | 0.12% | 60,975,736.49 |
| Items | Closing Balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| group | |||||
| Including: bank acceptance notes | 59,963,498.75 | 98.34% | 59,963,498.75 | ||
| Trade acceptance notes | 1,085,975.47 | 1.69% | 73,737.73 | 6.79% | 1,012,237.74 |
| Total | 61,049,474.22 | 100.00% | 73,737.73 | 0.12% | 60,975,736.49 |
(Continued)
| Items | Opening balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Bad debts provision based on group | 123,500,123.97 | 100.00% | 3,552,797.56 | 2.88% | 119,947,326.41 |
| Including: bank acceptance notes | 71,184,057.96 | 57.64% | 71,184,057.96 | ||
| Trade acceptance notes | 52,316,066.01 | 42.36% | 3,552,797.56 | 6.79% | 48,763,268.45 |
| Total | 123,500,123.97 | 100.00% | 3,552,797.56 | 2.88% | 119,947,326.41 |
Categories based on group
| Items | Closing Balance | ||
| Booking balance | Provision | Provision（%） | |
| Trade acceptance notes | 1,085,975.47 | 73,737.73 | 6.79 |
| Total | 1,085,975.47 | 73,737.73 | 6.79 |
(2) Provision for bad debts for the current period:
| Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/reversed | Written-off | |||
| Trade acceptance notes | 3,552,797.56 | 438,988.01 | 3,918,047.84 | 73,737.73 | |
| Total | 3,552,797.56 | 438,988.01 | 3,918,047.84 | 73,737.73 | |
(3) Notes receivable endorsed or discounted but not mature at the end of year:
| Item | Closing amount no more recognized | Closing amount still recognized |
| Bank acceptance notes | 197,699,977.38 |
| Item | Closing amount no more recognized | Closing amount still recognized |
| Total | 197,699,977.38 |
3. Accounts receivable
(1) Category of accounts receivable
| Items | Closing Balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Accounts receivable with significant individual amount and separate bad debt provision | 50,985,562.10 | 3.66% | 15,614,746.06 | 30.63% | 35,370,816.04 |
| Accounts receivable with bad debt provision based on the group | 1,340,314,231.72 | 96.34% | 271,880,578.57 | 20.28% | 1,068,433,653.15 |
| Including: aging as characteristics of credit risk | 1,340,314,231.72 | 96.34% | 271,880,578.57 | 20.28% | 1,068,433,653.15 |
| Total | 1,391,299,793.82 | 100.00% | 287,495,324.63 | 20.66% | 1,103,804,469.19 |
| Items | Opening balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Accounts receivable with significant individual amount and separate bad debt provision | 51,480,562.10 | 3.97% | 12,628,091.85 | 27.05% | 38,852,470.25 |
| Accounts receivable with bad debt provision based on the group | 1,244,625,041.06 | 96.03% | 275,097,400.08 | 22.10% | 969,527,640.98 |
| Including: aging as | 1,244,625,041.06 | 96.03% | 275,097,400.08 | 22.10% | 969,527,640.98 |
| characteristics of credit risk | |||||
| Total | 1,296,105,603.16 | 100.00% | 287,725,491.93 | 22.20% | 1,008,380,111.23 |
Accounts receivable with significant individual amount and separate bad debt provision:
| Items | Closing Balance | |||
| Booking balance | Provision | % | Reasons for the provision | |
| Accounts receivable with significant individual amount and separate bad debt provision | 50,985,562.10 | 15,614,746.06 | 30.63 | Difficulty in recouped |
| Total | 50,985,562.10 | 15,614,746.06 | -- | -- |
Accounts receivable with bad debt provision based on the group:
| Items | Closing Balance | ||
| Booking balance | Provision | % | |
| within 1 year | 700,318,861.85 | 47,551,650.72 | 6.79% |
| 1-2 years | 286,565,692.33 | 43,959,177.20 | 15.34% |
| 2-3 years | 185,647,956.24 | 53,967,860.88 | 29.07% |
| 3-4 years | 54,975,136.64 | 25,733,861.46 | 46.81% |
| 4-5 years | 44,824,801.87 | 32,686,245.52 | 72.92% |
| more than 5 years | 67,981,782.79 | 67,981,782.79 | 100.00% |
| Total | 1,340,314,231.72 | 271,880,578.57 | -- |
Accounts receivable with the bad debt provisions under accounting aging analysis method
| Aging | Closing Balance |
| Within1 year | 700,318,861.85 |
| 11to 2 years | 286,565,692.33 |
| 22 to 3 years | 185,647,956.24 |
| More than 3 years | 218,767,283.40 |
| 3 to 4 years | 54,975,136.64 |
| 4 to 5 years | 95,810,363.97 |
| More than 5 years | 67,981,782.79 |
| Total | 1,391,299,793.82 |
2) Bad debt provision accrued and written-off (withdraw)
| Category | Opening balance | Change during the period | Closing Balance | ||
| Accrued | Collected/reversed | Written-off | |||
| Bad debt provision | 287,725,491.93 | 10,086,373.98 | 10,000.00 | 10,326,541.28 | 287,495,324.63 |
| Total | 287,725,491.93 | 10,086,373.98 | 10,000.00 | 10,326,541.28 | 287,495,324.63 |
3) Accounts receivable written off in current period
| Item | Written off amount |
| Receivable actually written off | 10,326,541.28 |
The amount of account receivable written off in the current period is RMB 10,326,541.28, and thebad debt provision has been withdrawn RMB 9,375,298.26, and the amount affecting the profit in2020 is RMB 951,243.02.
4) The top five significant accounts receivable categorized by debtors
| Company | Closing Balance | % of the total AR | Closing Balance of Provision |
| Zhejiang Wankai New Materials Co.,Ltd | 50,985,562.10 | 3.64% | 15,614,746.06 |
| Xinyi Yuanda construction and Installation Engineering Co., Ltd. | 32,748,744.00 | 2.35% | 17,167,304.59 |
| Panasonic Appliances Cold-Chain (Dalian) Co., Ltd. | 31,658,836.68 | 2.28% | 2,149,635.01 |
| Shenzhen Zhaofude Tourism development | 24,749,430.13 | 1.78% | 7,194,659.34 |
| Xiangyang Tongjitang Logistic | 23,150,000.00 | 1.66% | 3,551,210.00 |
| Total | 163,292,572.91 | 11.71% |
4. Accounts paid in advance
(1) Aging of accounts paid in advance
| Items | Closing Balance | Opening Balance | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 116,719,429.98 | 75.55% | 112,706,836.54 | 78.93% |
| 1 to 2 years | 10,014,184.30 | 6.48% | 17,090,076.33 | 11.97% |
| 2 to 3 years | 20,656,290.68 | 13.37% | 4,786,466.74 | 3.35% |
| Over 3 years | 7,110,538.04 | 4.60% | 8,203,148.96 | 5.75% |
| Total | 154,500,443.00 | 142,786,528.57 | ||
Significant prepayment over 1 year
| Company | Closing Balance | Aging | Unsettled Reasons |
| Dalian Hengtong Refrigeration Equipment engineering Co., Ltd | 5,720,000.00 | 1-2 years 2-3 years | Contract is not fully implemented |
| Shanghai POMA Automation Equipment Co.,ltd | 4,272,900.00 | 4-5 years | Contract is not fully implemented |
| Dalian Shengda Construction Engineering Co. LTD | 2,875,228.35 | 1-2 years | Contract is not fully implemented |
| Yunnan Xinneng Technology Co., Ltd | 2,020,380.50 | 1-2 years | Contract is not fully implemented |
| Dalian Jingdian Steel Work Co., Ltd | 1,313,924.02 | 2-3years | Contract is not fully implemented |
| Total | 16,202,432.87 | — | — |
(2) The top five significant accounts paid in advance categorized by debtors
| Company | Closing Balance | Aging | % of the total advances to suppliers |
| Dalian Shentong Electric Co., Ltd. | 9,508,361.15 | Within 1 year | 6.15 |
| DalianHeng Tong refrigeration Equipment Egineering Co. LTD | 5,720,000.00 | 1-2 years; 2-3 years | 3.70 |
| Shanghai POMA Automation Equipment Co.,ltd | 4,272,900.00 | 4-5 years | 2.77 |
| Anhui Songze Energy Co. LTD | 4,000,000.00 | Within 1 year | 2.59 |
| Yunnan Xinneng Technology Co., Ltd | 2,716,733.26 | Within 1 year | 1.76 |
| Total | 26,217,994.41 | 16.97 |
5. Other receivables
| Items | Closing Balance | Opening Balance |
| Interest receivable | 348,833.33 | 583,833.33 |
| Dividend receivable | 42,152,903.12 | 33,450.00 |
| Other receivable | 45,231,318.20 | 38,113,945.24 |
| Total | 87,733,054.65 | 38,731,228.57 |
(1) Interest receivable
| Items | Closing Balance | Opening Balance |
| Interest on Term deposits | 348,833.33 | 583,833.33 |
| Total | 348,833.33 | 583,833.33 |
(2). Dividends receivable
| Company | Closing Balance | Opening Balance |
| Wuhan Steel and Electricity Co., Ltd. | 33,450.00 | |
| Panasonic Appliances Compressor (Dalian) Co. , Ltd. | 36,026,000.00 | |
| Guotai Junan Securities Co., Ltd. | 6,126,903.12 | |
| Total | 42,152,903.12 | 33,450.00 |
(3). Other receivables
1) Other receivables categorized by nature
| Nature | Closing Balance | Opening Balance |
| Guarantee deposits | 33,539,619.85 | 23,419,558.44 |
| Petty cash | 7,568,194.23 | 8,132,205.01 |
| Receivables and Payables | 10,532,968.99 | 13,757,372.35 |
| Others | 1,603,962.41 | 225,649.71 |
| Total | 53,244,745.48 | 45,534,785.51 |
2) Provision for bad debts
| Provision for bad debts | The first phase | The second phase | The third phase | Total |
| Expected credit losses in the next 12 months | Expected Credit Loss for the duration (No Credit Devaluation) | Expected Credit Loss for the duration (Credit impairment has occurred) | ||
| Balance on January 1, 2020 | 7,420,840.27 | 7,420,840.27 | ||
| The balance of January 1, 2020 in the current period | —— | —— | —— | —— |
| Provision for bad debts | 592,587.01 | 592,587.01 | ||
| Balance on June 30, 2020 | 8,013,427.28 | 8,013,427.28 |
Other receivables accrued the bad debt provisions under accounting aging analysis method
| Aging | Closing Balance |
| Within 1 year | 31,604,557.17 |
| 1-2 years | 8,547,197.14 |
| 2-3 years | 4,600,092.98 |
| Over 3 years | 8,492,898.19 |
| 3-4 years | 4,579,901.18 |
| 4-5 years | 1,881,400.00 |
| Over 5 years | 2,031,597.01 |
| Total | 53,244,745.48 |
3) Provision for bad debt
| Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/reversed | Written-off | |||
| Bad debt provision | 7,420,840.27 | 592,587.01 | 8,013,427.28 | ||
| Total | 7,420,840.27 | 592,587.01 | 8,013,427.28 | ||
4) Other receivables from the top 5 debtors
| Name | Category | Closing Balance | Aging | % of the total OR | Closing Balance of Provision |
| State Taxation Administration Dalian Shahekou District Bureau | Export tax refund | 5,408,818.28 | Within 1 year | 10.16 | 181,195.41 |
| Agriculture Bureau of Moyu County | Deposit | 2,049,000.00 | 2-3 years | 3.85 | 465,327.90 |
| Huangmei Kanghong Ecological Agriculture Development Co., Ltd. | Deposit | 2,279,000.00 | 1-2 years | 4.28 | 170,697.10 |
| Dalian Huali Coating Equipment Co., Ltd | Deposit | 1,650,000.00 | 3-4 years | 3.10 | 715,275.00 |
| Dalian Delta HK& China Gas Co.,Ltd | Deposit | 1,100,000.00 | Within 1 year | 2.07 | 36,850.00 |
| Total | 12,486,818.28 | 23.45 | 1,569,345.41 |
6. Inventories
(1) Categories of inventories
| Item | Closing Balance | ||
| Book value | Provision for decline | Net book value | |
| Raw materials | 112,475,735.09 | 1,089,032.88 | 111,386,702.21 |
| Working in progress | 104,046,721.36 | 104,046,721.36 | |
| Finished goods | 258,332,640.04 | 50,000.00 | 258,282,640.04 |
| Low-value consumable | 150,998.50 | 150,998.50 | |
| Self-manufactured semi-finished products | 34,848,590.82 | 0.00 | 34,848,590.82 |
| Materials on consignment for further processing | 914,331.28 | 914,331.28 | |
| Completed constructing projects not settled | 100,391,186.03 | 1,200,000.00 | 99,191,186.03 |
| Total | 611,160,203.12 | 2,339,032.88 | 608,821,170.24 |
(Continue)
| Item | Opening Balance | ||
| Book value | Provision for decline | Net book value | |
| Raw materials | 99,955,218.42 | 1,089,032.88 | 98,866,185.54 |
| Working in progress | 101,259,171.98 | 101,259,171.98 | |
| Finished goods | 225,850,272.78 | 50,000.00 | 225,800,272.78 |
| Low-value consumable | 137,722.99 | 137,722.99 | |
| Self-manufactured semi-finished products | 26,595,183.32 | 0.00 | 26,595,183.32 |
| Materials on consignment for further processing | 2,505,829.92 | 2,505,829.92 | |
| Completed constructing projects not settled | 85,532,846.86 | 1,200,000.00 | 84,332,846.86 |
| Total | 541,836,246.27 | 2,339,032.88 | 539,497,213.39 |
(2) Provision for decline in the value of inventories
| Item | Opening Balance | Increase | Decrease | Closing Balance | ||
| Accrual | Other | Reverse/ Written- off | Others transferred | |||
| Raw materials | 1,089,032.88 | 1,089,032.88 | ||||
| Finished goods | 50,000.00 | 50,000.00 | ||||
| Completed constructing projects not settled | 1,200,000.00 | 1,200,000.00 | ||||
| Total | 2,339,032.88 | 2,339,032.88 | ||||
(3) Accrual for provision for decline in the value of inventories
| Item | Basis for net realizable value recognition | Reasons for reverse/write-off |
| Raw materials | Lower of cost and NRV |
| Finished goods | Lower of cost and NRV | |
| Completed constructing projects unsettled | Lower of cost and NRV |
7. Contract assets
| Item | Closing Balance | Opening Balance | ||||
| Book value | Provision for decline | Net book value | Book value | Provision for decline | Net book value | |
| Contract assets | 102,887,603.42 | 8,441,885.81 | 94,445,717.61 | 23,562,311.61 | 1,599,880.96 | 21,962,430.65 |
| Total | 102,887,603.42 | 8,441,885.81 | 94,445,717.61 | 23,562,311.61 | 1,599,880.96 | 21,962,430.65 |
The amount and reasons for significant changes in the book value of the contract assets during thecurrent period:
| Item | Changes in the amount | reason |
| Contract assets | 72,483,286.96 | Newly signed contract |
| Total | 72,483,286.96 | —— |
Provision for bad debt
| Item | Accrued | Collected/reversed | Written-off | reason |
| Provision for impairment of contract assets | 6,842,004.85 | |||
| Total | 6,842,004.85 | -- |
8. Other current assets
| Item | Closing Balance | Opening Balance |
| Prepaid expenses | 599,467.91 | 119,323.70 |
| Prepaid income tax presented at net amount after offsetting | 739,817.03 | 926,962.16 |
| VAT to be deducted | 10,374,870.36 | 13,114,701.01 |
| Prepaid turnover tax | 11,143.58 | |
| Total | 11,714,155.30 | 14,172,130.45 |
9.Long-term equity investments
| Investee | Beginning balance | Increase/Decrease | Ending balance | Provision for impairment | |||||||
| Increased | Decreased | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Change of other equity | Cash bonus or profits announced to issue | Provision for impairment of the current period | Others | ||||
| Associates | |||||||||||
| Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 177,390,883.01 | -7,151,886.71 | 3,400,000.00 | 166,838,996.30 | |||||||
| Dalian Honjo Chemical Co., Ltd. | 8,535,439.50 | 202,736.66 | 8,738,176.16 | ||||||||
| Panasonic Appliances Cold-Chain (Dalian) Co., Ltd. | 267,179,066.77 | -5,126,459.68 | 262,052,607.09 | ||||||||
| Keihin-Grand Ocean Thermal Technology (Dalian) Co., Ltd. | 61,090,955.30 | 83,797.06 | 8,600,000.00 | 52,574,752.36 | |||||||
| Panasonic Appliances Compressor (Dalian) Co., Ltd. | 471,693,615.32 | 11,156,432.40 | 36,026,000.00 | 446,824,047.72 | |||||||
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 13,892,866.25 | 52,472.24 | 13,945,338.49 | ||||||||
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd. | 1,537,672.84 | -40,708.15 | 1,496,964.69 | ||||||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd. | 193,109,792.45 | -2,512,123.83 | 190,597,668.62 | ||||||||
| Jiangsu JingXue Insulation Technology Co.,Ltd | 185,385,615.80 | 5,010,588.30 | 190,396,204.10 | ||||||||
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 12,614,480.80 | -1,069,983.28 | 11,544,497.52 | ||||||||
| Wuhan Sikafu Power Control Equipment Co., Ltd | 5,266,277.34 | -479,796.67 | 4,786,480.67 | ||||||||
| Panasonic Appliances Refrigerating System (Dalian) Co., Ltd. | 33,975,371.41 | 2,290,230.84 | 2,528,392.05 | 33,737,210.20 | |||||||
| Dalian Bingshan Metal Technology Co.,Ltd | 172,730,683.19 | 13,479,968.92 | 186,210,652.11 | ||||||||
| Dalian Bingshan Group Management and Consulting Co.,ltd | 57,778,289.16 | 920,905.89 | 58,699,195.05 | ||||||||
| Total | 1,662,181,009.14 | 16,816,173.99 | 50,554,392.05 | 1,628,442,791.08 | |||||||
10. Other non-current financial assets
| Item | Closing Balance | Opening Balance |
| Measured as fair value method | 284,146,396.67 | 303,469,706.51 |
| Measured as cost method | ||
| Total | 284,146,396.67 | 303,469,706.51 |
11. Investment property
| Item | Property& Building | Land-use-rights | Total |
| I. Initial Cost | |||
| 1. Opening Balance | 194,717,932.54 | 24,391,511.82 | 219,109,444.36 |
| 2. Increase | |||
| (1) Outsourcing | |||
| (2) Transferred from Construction in progress | |||
| 3. Decrease | |||
| (1) Disposal | |||
| (2)Transferred to other | |||
| 4. Closing Balance | 194,717,932.54 | 24,391,511.82 | 219,109,444.36 |
| II. Accumulated Depreciation | |||
| 1. Opening Balance | 112,054,714.34 | 10,854,222.78 | 122,908,937.12 |
| 2. Increase | 2,272,247.04 | 243,915.12 | 2,516,162.16 |
| (1)Provision or amortization | 2,272,247.04 | 243,915.12 | 2,516,162.16 |
| (2) Transferred from Construction in progress | |||
| 3. Decrease | |||
| (1) Disposal | |||
| (2) Transferred to other | |||
| 4. Closing Balance | 114,326,961.38 | 11,098,137.90 | 125,425,099.28 |
| III. Impairment Reserve | |||
| 1. Opening Balance | |||
| 2. Increase | |||
| (1)Provision or amortization | |||
| 3. Decrease | |||
| (1) Disposal | |||
| (2) Transferred to other | |||
| 4. Closing Balance | |||
| IV. Book Value | |||
| 1. Closing book value | 80,390,971.16 | 13,293,373.92 | 93,684,345.08 |
| 2. Opening book value | 82,663,218.20 | 13,537,289.04 | 96,200,507.24 |
Note: The Company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co., Ltd., and rent # 6 workshop buildinglocated on No. 106 Liaohe East Rd, Dalian Economic and Technology Development Zone to MHI Bingshan Refrigeration (Dalian)Co., Ltd. The rental area is 15,259.04 square meters, and the rental term till 16th July, 2029. The annual rent fee for 2020 is RMB 4.0million Yuan.
In 2019, The annual rent fee for 2020 is RMB 4.0 million Yuan. The Company signed rental contract with Dalian BingshanWisdom Park Co., Ltd., and rent out the whole land and house of the Company’s old plant locating at No. 888, Southwest Road,Shahekou District, Dalian to Dalian Bingshan Wisdom Park Co., Ltd., with rental land area of 167,165.61 square meters and housingarea of 105,652.43 square meters. The lease term is from April 1, 2017 to December 31, 2036. The annual rent fee for 2020 is RMB
8.646 million Yuan.
On June 1
st
, 2017, the Company’s subsidiary, Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd., signed the leasingcontract with Dalian Jingxue Energy Saving Technology Co. Ltd. and rented out # 7 building of workshop located on No.92, TieshanWest Rd, DDA, Dalian. The rental area is 3653.76 square metres, and annual rent is RMB 840 thousand Yuan with the contracteddate between June 1
st, 2017 and May 31
st
,2022. Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd. also rented out Room201, # 4 building located on No.92, Tieshan West Rd, DDA, Dalian to Dalian Jingxue Energy Saving Technology Co., Ltd. The rentalarea is 25 square metres, and annual lease premium is RMB 15 thousand Yuan with the contracted date between June 1
st
, 2017 andMay 31st, 2022.
12. Fixed assets
| Items | Closing Book Value | Opening Book Value |
| Fixed asset | 957,684,403.68 | 992,435,172.94 |
| Fixed asset clearance | ||
| Total | 957,684,403.68 | 992,435,172.94 |
(1) Fixed assets detail
| Item | Property& buildings | Machinery Equipment | Transportation Equipment | Other Equipment | Total |
| I. Initial Cost | |||||
| 1. Opening Balance | 719,373,101.53 | 745,999,413.09 | 16,020,380.97 | 68,985,144.10 | 1,550,378,039.69 |
| 2. Increase | 54,455.45 | 7,019,358.99 | 1,258,849.55 | 803,331.45 | 9,135,995.44 |
| (1) Purchase | 54,455.45 | 6,968,916.51 | 1,258,849.55 | 803,331.45 | 9,085,552.96 |
| (2) Transferred from construction-in-progress | 50,442.48 | 50,442.48 | |||
| (3) Acquired from business combination | |||||
| 3. Decrease | 12,538,935.87 | 2,149,231.20 | 2,645,924.52 | 17,334,091.59 | |
| (1) Disposal | 12,538,935.87 | 2,149,231.20 | 2,645,924.52 | 17,334,091.59 | |
| (2) Transferred to other |
| Item | Property& buildings | Machinery Equipment | Transportation Equipment | Other Equipment | Total |
| 4. Closing Balance | 719,427,556.98 | 740,479,836.21 | 15,129,999.32 | 67,142,551.03 | 1,542,179,943.54 |
| II. Accumulated Depreciation | |||||
| 1. Opening Balance | 99,448,302.37 | 396,894,395.44 | 11,794,584.34 | 49,288,265.10 | 557,425,547.25 |
| 2. Increase | 8,817,596.81 | 24,271,080.85 | 529,003.13 | 2,739,353.00 | 36,357,033.79 |
| (1)Accrued | 8,817,596.81 | 24,271,080.85 | 529,003.13 | 2,739,353.00 | 36,357,033.79 |
| (2) Acquired from business combination | |||||
| 3. Decrease | 0.00 | 6,229,153.66 | 1,664,925.95 | 1,910,281.07 | 9,804,360.68 |
| (1) Disposal | 0.00 | 6,229,153.66 | 1,664,925.95 | 1,910,281.07 | 9,804,360.68 |
| (2) Transferred to other | |||||
| 4. Closing Balance | 108,265,899.18 | 414,936,322.63 | 10,658,661.52 | 50,117,337.03 | 583,978,220.36 |
| III. Impairment Reserve | |||||
| 1. Opening Balance | 517,319.50 | 517,319.50 | |||
| 2. Increase | |||||
| (1)Accrued | |||||
| 3. Decrease | |||||
| (1) Disposal | |||||
| 4. Closing Balance | 517,319.50 | 517,319.50 | |||
| IV. Book Value | |||||
| 1. Closing book value | 611,161,657.80 | 325,026,194.08 | 4,471,337.80 | 17,025,214.00 | 957,684,403.68 |
| 2. Opening book value | 619,924,799.16 | 348,587,698.15 | 4,225,796.63 | 19,696,879.00 | 992,435,172.94 |
(2)The situation of fixed assets leased through finance lease
| Item | Initial Cost | Accumulated Depreciation | Impairment Reserve | Book Value |
| Machinery Equipment | 2,527,482.76 | 469,126.14 | 2,058,356.62 |
13. Construction-in-progress
(1) Construction in progress details
| Item | Closing Balance | Opening Balance | ||||
| Book Balance | Provision | Book Value | Book Balance | Provision | Book Value | |
| Buildings reconstruction | 14,866,010.00 | 14,866,010.00 | 14,866,010.00 | 14,866,010.00 | ||
| Improvement | 1,058,255.11 | 1,058,255.11 | 502,148.95 | 502,148.95 | ||
| Item | Closing Balance | Opening Balance | ||||
| Book Balance | Provision | Book Value | Book Balance | Provision | Book Value | |
| of machinery | ||||||
| Construction of intelligent software | 12,203,165.20 | 12,203,165.20 | 12,161,571.62 | 12,161,571.62 | ||
| Financing lease item | 8,838,326.42 | 8,838,326.42 | 8,755,326.23 | 8,755,326.23 | ||
| Total | 36,965,756.73 | 36,965,756.73 | 36,285,056.80 | 36,285,056.80 | ||
(2) Change in the significant construction in progress
| Name | Opening Balance | Increase | Decrease | Closing Balance | ||
| Transfer to fixed assets | Other decrease | |||||
| Improvement of machinery | 502,148.95 | 556,106.16 | 1,058,255.11 | |||
| Construction of intelligent software | 12,161,571.62 | 401,612.39 | 360,018.81 | 12,203,165.20 | ||
| Financing lease item | 8,755,326.23 | 83,000.19 | 8,838,326.42 | |||
| Total | 21,419,046.80 | 1,040,718.74 | 360,018.81 | 22,099,746.73 | ||
(Continued)
| Name | Budget | Percent of investment against budget | Progress of construction | Accumulated capitalized interest | Including: Accumulated capitalized interest of the year | Interest capitalization rate(%) | Source of funds |
| Improvement of machinery | 3,490,428.31 | 30.32% | 30.32% | Self financing | |||
| Construction of intelligent software | 15,040,000.00 | 81.14% | 81.14% | Self financing | |||
| Financing lease item | 15,020,000.00 | 58.85% | 58.85% | Self financing | |||
| Total | 33,550,428.31 | — | — |
14. Intangible assets
(1) Intangible assets list
| Item | Land use right | Patent technology | Non Patent technology | Others | Total |
| I. Initial Cost | |||||
| 1. Opening Balance | 152,890,196.80 | 17,630,188.82 | 5,000,000.00 | 19,101,108.42 | 194,621,494.04 |
| 2. Increase | 360,018.81 | 360,018.81 | |||
| (1) Purchase | 360,018.81 | 360,018.81 | |||
| (2) Acquired from business combination |
| Item | Land use right | Patent technology | Non Patent technology | Others | Total |
| (3)Transferred from construction-in-progress | |||||
| 3. Decrease | |||||
| (1) Disposal | |||||
| 4. Closing Balance | 152,890,196.80 | 17,630,188.82 | 5,000,000.00 | 19,461,127.23 | 194,981,512.85 |
| II.Accumulated amortisation | |||||
| 1. Opening Balance | 35,069,090.32 | 4,437,851.45 | 2,000,004.00 | 11,574,170.17 | 53,081,115.94 |
| 2. Increase | 990,551.49 | 561,698.10 | 250,000.00 | 931,458.40 | 2,733,707.99 |
| (1)Accrued | 990,551.49 | 561,698.10 | 250,000.00 | 931,458.40 | 2,733,707.99 |
| 3. Decrease | |||||
| (1) Disposal | |||||
| 4. Closing Balance | 36,059,641.81 | 4,999,549.55 | 2,250,004.00 | 12,505,628.57 | 55,814,823.93 |
| III. Impairment Reserve | |||||
| 1. Opening Balance | |||||
| 2. Increase | |||||
| (1)Accrued | |||||
| 3. Decrease | |||||
| (1) Disposal | |||||
| 4. Closing Balance | |||||
| IV. Book Value | |||||
| 1. Closing book value | 116,830,554.99 | 12,630,639.27 | 2,749,996.00 | 6,955,498.66 | 139,166,688.92 |
| 2. Opening book value | 117,821,106.48 | 13,192,337.37 | 2,999,996.00 | 7,526,938.25 | 141,540,378.10 |
15. Goodwill
(1) Original cost of goodwill
| Name | Opening Balance | Increased during current year | Decreased during current year | Closing Balance | ||
| Enterprises merger increase | Other | Disposal | Other | |||
| Dalian Universe Thermal Technology Co., Ltd. | 1,440,347.92 | 1,440,347.92 | ||||
| Dalian Bingshan Group Engineering Co., Ltd. | 310,451.57 | 310,451.57 | ||||
| Total | 1,750,799.49 | 1,750,799.49 | ||||
(2) Goodwill impairment provision
In the year 2015, the book value of equity investment of Dalian Niweisi LengNuan Technology Co.,
Ltd exceeds the fair value of the proportion of the acquired company’s identifiable net asset. Thedifference between the book value of equity investment of 48, 287,589.78 Yuan and the identifiablenet asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltd of 46,847,241.86Yuan on the acquisition date of July 31st 2015 is recognized as goodwill of 1,440,347.92 Yuan onthe group consolidated financial report at the end of the year.In the year 2016, Dalian Bingshan Group Construction Co., Ltd purchases shares of Dalian BingshanBaoan Leisure Industry Co., Ltd and gains control. The transferred price is based on the net asset ofDalian BingshanBaoan Leisure Industry Co., Ltd on June 30
th, 2016. Negotiated with DalianBingshan Baoan Leisure Industry Co., Ltd’s shareholder Baoan Water Project (China) LimitedCompany, the transfer price is the combination cost on the purchasing date which is 5,359,548.42Yuan, the fair value of proportion of Dalian BingshanBaoan Leisure Industry Company’s identifiablenet asset is 5,049,096.85 Yuan on the purchasing day, therefore, goodwill is 310,451.57Yuan on thepurchasing date. Dalian Bingshan Group Construction Co., Ltd absorbed Dalian Bingshan BaoanLeisure Industry Co., Ltd in 2019.The book value of goodwill from business combination of Dalian Niweisi LengNuan Technology Co.,Ltd and Dalian Bingshan Group Engineering Co., Ltd which are not under same control shall beallocated into the relevant asset group using the reasonable method since acquisition date and takenimpairment test on relevant asset group where the goodwill is included. The obvious impairmentindication of the goodwill hasn’t been found. Thus no goodwill impairment provision has been made.
16. Long-term repayments
| Item | Opening Balance | Increase | Amortization | Other Decrease | Closing Balance |
| Employee’s dormitory use right | 2,012,170.38 | 69,239.16 | 1,942,931.22 | ||
| Renovation and rebuilding | 1,175,049.06 | 405,529.42 | 769,519.64 | ||
| Lease | 531,450.00 | 53,145.00 | 478,305.00 | ||
| Membership fee for Golf | 440,000.00 | 8,250.00 | 431,750.00 | ||
| Technology entrance fee of cold and heat machinery | 840,206.25 | 186,712.50 | 653,493.75 | ||
| Greenland of new factory | 6,616,523.14 | 446,057.76 | 6,170,465.38 | ||
| Service fee from Technology center | 31,446.64 | 18,867.90 | 12,578.74 | ||
| Total | 11,646,845.47 | 1,187,801.74 | 10,459,043.73 |
17. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offsetting
| Item | Closing Balance | Opening Balance | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Provision for impairment of assets | 2,856,352.38 | 260,452.84 | 2,856,352.38 | 560,452.86 |
| Unrealized profit from internal transaction | 14,598,643.89 | 2,189,796.58 | 14,598,643.87 | 2,189,796.58 |
| Provision for credit impairment | 290,189,157.73 | 57,612,627.96 | 300,299,010.72 | 59,647,415.64 |
| Total | 307,644,154.00 | 60,062,877.38 | 317,754,006.97 | 62,397,665.08 |
(2) Deferred tax liabilities without offsetting
| Item | Closing Balance | Opening Balance | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Changes in the fair value of other non-current financial assets | 255,444,730.13 | 38,316,709.52 | 274,768,039.93 | 41,215,205.99 |
| Total | 255,444,730.13 | 38,316,709.52 | 274,768,039.93 | 41,215,205.99 |
(3) Unrecognized deferred tax assets details
| Item | Closing Balance | Opening Balance |
| Deductible temporary difference | 59,426,067.14 | 11,851,149.26 |
| Deductible loss | 69,961,611.48 | 97,241,944.12 |
| Total | 129,387,678.62 | 109,093,093.38 |
(4) Unrecognized deductible loss of deferred tax assets expired years
| Year | Closing Balance | Opening Balance | Notes |
| 2020 | 3,240,819.97 | ||
| 2021 | |||
| 2022 | 716,158.09 | 716,158.09 | |
| 2023 | 52,903,288.00 | 16,927,871.66 | |
| 2024 | 16,342,165.39 | 76,357,094.40 | |
| 2025 | |||
| Total | 69,961,611.48 | 97,241,944.12 |
18. Short-term loan
(1) Category of short term loan
| Loan category | Closing Balance | Opening Balance |
| Mortgage loan | 16,600,000.00 | 47,170,000.00 |
| Credit loan | 366,093,600.00 | 308,082,000.00 |
| Total | 382,693,600.00 | 355,252,000.00 |
19. Notes payable
| Notes category | Closing Balance | Opening Balance |
| Commercial acceptance notes | 22,985,825.00 | 13,153,582.80 |
| Bank acceptance notes | 241,020,484.11 | 292,314,922.58 |
| Total | 264,006,309.11 | 305,468,505.38 |
20. Accounts payable
(1) Accounts payable
| Item | Closing Balance | Opening Balance |
| Material payments | 664,967,195.37 | 536,857,742.20 |
| Project payments | 256,212,791.53 | 207,388,636.82 |
| Equipment payments | 19,164,984.65 | 67,053,415.79 |
| Others | 336,510.31 | 3,031,889.21 |
| Total | 940,681,481.86 | 814,331,684.02 |
(2) Accounts payable with age over 1 year
| Name of company | Closing Balance | Reason of unpaid or not carried forward |
| Panasonic Refrigerating System (Dalian) Co., Ltd. | 13,774,637.70 | Project is uncompleted contract is not finished |
| Heilongjiang Longleng Technology Co., Ltd | 9,413,290.00 | Project is uncompleted contract is not finished |
| Wuhan KaiXing Economic Development Co., Ltd | 6,845,648.14 | Project is uncompleted contract is not finished |
| Binzhou Shanfu Refrigeration Co.,Ltd | 6,566,526.22 | Project is uncompleted contract is not finished |
| Total | 36,600,102.06 |
21. Contract Liabilities
| Item | Closing Balance | Opening Balance |
| Accounts received in advance | 201,589,646.20 | 160,571,622.53 |
| Total | 201,589,646.20 | 160,571,622.53 |
22. Employee’s payable
(1) Category of employee’s payable
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Short-term employee’s payable | 31,701,317.58 | 133,143,875.44 | 153,347,067.55 | 10,304,848.64 |
| Post-employment benefit –defined contribution plan | 4,709,599.79 | 4,657,892.57 | 51,707.22 | |
| Termination benefits | 206,650.00 | 206,650.00 | ||
| Total | 31,701,317.58 | 138,060,125.23 | 158,211,610.12 | 10,356,555.86 |
(2) Short-term employee’s payables
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Salaries, bonus, | 26,129,186.34 | 108,836,058.57 | 129,222,948.73 | 5,806,996.28 |
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| allowance, and subsidy | ||||
| Welfare | 4,142,390.78 | 4,959,663.22 | 4,464,050.23 | 3,258,602.73 |
| Social insurance | 6,701,840.32 | 6,687,262.77 | 136,001.66 | |
| Include: Medical insurance | 5,798,067.25 | 5,671,023.70 | 127,043.55 | |
| On-duty injury insurance | 197,631.88 | 197,631.88 | 9,440.65 | |
| Maternity insurance | 875,891.12 | 875,891.12 | ||
| Housing funds | 162,229.36 | 10,703,749.17 | 10,991,711.73 | -125,733.20 |
| Labor union and training expenses | 1,267,511.10 | 1,942,564.16 | 1,981,094.09 | 1,228,981.17 |
| Total | 31,701,317.58 | 133,143,875.44 | 153,347,067.55 | 10,304,848.64 |
(3) Defined contribution plan
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Pension | 3,558,913.37 | 3,508,880.97 | 50,032.40 | |
| Unemployment insurance | 34,398.23 | 32,723.41 | 1,674.82 | |
| Company annuity plan | 1,116,288.19 | 1,116,288.19 | ||
| Total | 4,709,599.79 | 4,657,892.57 | 51,707.22 |
23. Tax payable
| Item | Closing Balance | Opening Balance |
| Value-added tax | 4,431,168.46 | 2,486,893.96 |
| Enterprise income tax | 1,099,836.96 | 2,246,427.46 |
| Individual income tax | 90,640.38 | 244,461.02 |
| City maintenance and construction tax | 110,760.05 | 60,130.79 |
| Real estate tax | 1,897,782.33 | 1,853,410.62 |
| Land use tax | 1,100,471.22 | 1,094,760.28 |
| Stamp duty | 119,887.82 | 153,970.35 |
| Education surcharge | 79,114.30 | 42,950.57 |
| Green tax | 456.51 | 573.64 |
| Safeguard fund for disables | 440.00 | |
| Total | 8,930,118.03 | 8,184,018.69 |
24. Other accounts payable
| Item | Closing Balance | Opening Balance |
| Interest payable | 5,180,733.92 | 6,396,385.83 |
| Dividend payable | 28,304,531.21 | 533,156.00 |
| Other accounts payable | 27,558,513.06 | 48,991,518.86 |
| Total | 61,043,778.19 | 55,921,060.69 |
. (1) Interest payable
| Item | Closing Balance | Opening Balance |
| Interest on long term loan | 5,018,233.79 | 6,260,969.04 |
| Interest on corporate bond | 162,500.13 | 135,416.79 |
| Total | 5,180,733.92 | 6,396,385.83 |
(2). Dividend payable
| Item | Closing Balance | Opening Balance |
| Ordinary share dividend | 28,304,531.21 | 533,156.00 |
| Total | 28,304,531.21 | 533,156.00 |
（3）Other accounts payable
Other payables categorized by payments nature
| Payments nature | Closing Balance | Opening Balance |
| Loan from non-financial institutes | ||
| Cash pledge and security deposit | 9,850,863.02 | 9,620,594.19 |
| Apply for reimbursement and unpaid | 7,442,222.80 | 21,211,414.23 |
| Funds about related parties | 0.00 | 5,900,000.00 |
| Receipts under custody | 946,865.97 | 6,980,440.67 |
| Others | 9,318,561.27 | 5,279,069.77 |
| Total | 27,558,513.06 | 48,991,518.86 |
25. Non-current liabilities due within one year
| Item | Closing Balance | Opening Balance |
| Long-term accounts payable with one year | 10,276,677.27 | 14,174,643.42 |
| Total | 10,276,677.27 | 14,174,643.42 |
26. Long-term loan
(1) Category of long-term loan
CDB development fund give support to the Company’s intelligent and green equipment of cold chainand service industry base project and provide special fund to the Company’s holding shareholder, BingshanGroup. The fund is 0.16 billion Yuan with 10year’s expiration at 1.2% rate. Once the fund arrived, Bingshan
| Category | Closing Balance | Opening Balance |
| Guarantee loan | 160,000,000.00 | 160,000,000.00 |
| Total | 160,000,000.00 | 160,000,000.00 |
Group gave it to the Company at the same rate of 1.2% in lump sum. The above fund needed to be warrantedby the Company. The guarantee seems to be given for the holding shareholder, but it is for the Companyitself in fact.
27. Bonds payable
(1)Bonds payable
| Item | Closing Balance | Opening Balance |
| Exchangeable corporate bonds | 25,000,034.00 | 25,000,034.00 |
| Total | 25,000,034.00 | 25,000,034.00 |
(2)The changes of bond
| Bond name | Par value | Issue date | Bond term | Issue Amount | Opening balance | Issued this year | Interest at par value | Repay | Closing balance |
| Exchangeable corporate bonds | 176,000,000.00 | 2018.7.30 | 3 years | 176,000,000.00 | 25,000,034.00 | 0.00 | 25,000,034.00 | ||
| Total | -- | -- | -- | 176,000,000.00 | 25,000,034.00 | 0.00 | 25,000,034.00 |
(3)other notes:
Approved by the Shanghai Stock Exchange “Letter of No-Objection to the Non-public Issuance ofConvertible Corporate Bonds of Dalian Refrigeration Co., Ltd.” ([2018] No. 125), the companynon-publicly issued 1.76 million number of convertible corporate bonds on July 30, 2018, at a par valueof 100Yuan, and raised a total of 176 million Yuan. The bond is based on simple annual interest rate witha fixed interest rate of 1.3%. It is repayable once a year and pays interest once a year. The relevantissuance costs are RMB 1,496,000.00.The term of the bond swap is from the first trading day after the 6 months of issuance of the convertiblecorporate bonds to the maturity date of the convertible corporate bonds, which is from January 30, 2019to July 29, 2021.The total number of shares exchanged by the holders of "18 Da Leng EB" till Dec. 31, 2019 is8,388,887.00 shares, and the exchange price is 18 yuan per share
28. Long term accounts payable
| Item | Closing Balance | Opening Balance |
| Long term accounts payable | 397,771.84 | 397,771.84 |
| Total | 397,771.84 | 397,771.84 |
(1) Category by nature
| Item | Closing Balance | Opening Balance |
| Financial lease | 397,771.84 | 397,771.84 |
29. Deferred income
(1) Category of deferred income
| Item | Opening Balance | Increase | Decrease | Closing Balance | Formation Basis |
| Government subsidy | 99,154,666.29 | 11,295,411.67 | 2,674,413.00 | 107,775,664.96 | |
| Sale-leaseback contract | 2,872.23 | 2,872.23 | |||
| Total | 99,157,538.52 | 11,295,411.67 | 2,677,285.23 | 107,775,664.96 | — |
(2) Government subsidy project
| Government subsidy item | Opening Balance | Increase | Recorded into other income | Offset cost or expense | Closing Balance | Related with asset/ equity |
| Subsidy fund for highly effective heat pump and related system | 1,497,604.00 | 275,836.02 | 1,221,767.98 | Asset related | ||
| Relocation compensation | 41,218,000.00 | 41,218,000.00 | Asset related | |||
| Application of NH3 and CO2 instead of R22 screw refrigerating machine combined condensing unit | 14,477,971.01 | 787,005.30 | 13,690,965.71 | Asset related | ||
| Compressor IC system | 4,279,196.37 | 187,229.64 | 4,091,966.73 | Asset related | ||
| Ultrasonic intelligent defrost technology | 4,010,844.42 | 15,000.00 | 132,416.76 | 3,863,427.66 | Asset related | |
| Eco Compressor project | 25,083,171.79 | 1,276,925.28 | 23,806,246.51 | Asset related | ||
| R290 replacement of R22 large industrial screw unit | 4,877,498.70 | 8,129,164.50 | 13,006,663.20 | Asset related | ||
| R290 replacement of R22 industrial double stage screw unit | 1,780,380.00 | 2,967,300.00 | 4,747,680.00 | Asset related | ||
| Model innovation solution based on industrial Internet platform | 1,930,000.00 | 1,930,000.00 | Asset related | |||
| Product standardization pilot project | 7,547.17 | 7,547.17 | Income related | |||
| Quick pre-cooling red water circulation cooling device for poultry slaughtering | 191,400.00 | 191,400.00 | Asset related | |||
| Total | 99,154,666.29 | 11,295,411.67 | 15,000.00 | 2,674,413.00 | 107,775,664.96 |
Asset related grant shall be offset the cost or expense within the asset’s useful life; income related grantshall be booked into other income or offset cost or expense if it is relevant to daily activity, otherwise it shallbe booked into non-operating expense.
30. Share capital
| Item | Opening balance | Increase/decrease（+、-） | Closing balance | ||||
| New share issued | Share dividend | Transfer from capital reserve | others | Subtotal | |||
| Total shares | 843,212,507.00 | 843,212,507.00 | |||||
31. Capital reserves
| Items | Opening Balance | Increase | Decrease | Closing Balance |
| Share premium | 659,622,044.20 | 659,622,044.20 | ||
| Other capital reserves | 67,146,423.80 | 67,146,423.80 | ||
| Total | 726,768,468.00 | 726,768,468.00 |
32. Other comprehensive income
| Items | Opening Balance | 2020.1-6 | Closing Balance | ||||
| Amount for the period before income tax | Less：Previously recognized in profit or loss in other comprehensive income | Less：income tax | After-tax attribute to the parent company | After-tax attribute to minority shareholder | |||
| I.Later can’t reclassified into profit and loss of other comprehensive income | |||||||
| II. Later reclassified into profit and loss of other comprehensive income | 2,501,459.77 | 2,501,459.77 | |||||
| Proportional other comprehensive income of investee which is reclassified into income statement under equity method | 2,501,459.77 | 2,501,459.77 | |||||
| Other comprehensive income total | 2,501,459.77 | 2,501,459.77 | |||||
33. Special Reserve
| Items | Opening Balance | Increase | Decrease | Closing Balance |
| Safety production cost | 1,127,227.68 | 1,127,227.68 | ||
| Total | 1,127,227.68 | 1,127,227.68 |
34. Surplus reserves
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Statutory surplus reserve | 349,664,058.11 | 349,664,058.11 | ||
| Discretionary surplus reserve | 419,059,754.42 | 30,409,270.84 | 449,469,025.26 | |
| Total | 768,723,812.53 | 30,409,270.84 | 799,133,083.37 |
The Company made profit distribution within the reporting period. According to the 2019 annual meeting,20% of net profit in the 2019 fiscal annual report is provided for discretionary surplus reserve of30,409,270.84 Yuan.
35. Undistributed profits
| Item | 2020-06-30 | 2019-06-30 |
| Closing balance of 2019 | 1,038,358,782.59 | 764,859,288.45 |
| Add: Adjustments to the opening balance of undistributed profits | 294,408,505.78 | |
| Opening balance of 2020 | 1,038,358,782.59 | 1,059,267,794.23 |
| Add: net profit attributable to shareholders of parent company in the year | -23,604,345.52 | 108,373,919.30 |
| Less: Provision for statutory surplus reserves | 0.00 | |
| Provision for any surplus reserves | 30,409,270.84 | 32,428,137.09 |
| Dividends payable for common shares | 25,296,375.21 | 42,160,625.35 |
| Closing balance of the current period | 959,048,791.02 | 1,093,052,951.09 |
36. Operating revenue and cost
| Items | 2020.01-06 | 2019.01-06 | ||
| Sales revenue | Cost of sales | Sales revenue | Cost of sales | |
| Revenue from principle operation | 857,035,486.66 | 732,433,950.29 | 1,052,236,172.60 | 903,291,760.46 |
| Revenue from other operation | 16,367,927.80 | 15,641,145.83 | 23,493,067.97 | 16,468,219.40 |
| Total | 873,403,414.46 | 748,075,096.12 | 1,075,729,240.57 | 919,759,979.86 |
37. Operating taxes and surcharges
| Items | 2020.01-06 | 2019.01-06 |
| City construction tax | 822,185.02 | 1,253,720.56 |
| Education surcharge | 589,369.05 | 884,724.11 |
| Property tax | 3,835,774.27 | 3,758,045.42 |
| Land use tax | 2,189,549.16 | 2,185,948.32 |
| Vehicle and vessel tax | 11,571.44 | 10,907.04 |
| Stamp duty | 563,772.21 | 633,223.16 |
| Environmental Protection Tax | 8,270.68 | 3,606.49 |
| Levee fee | 108.77 | |
| Total | 8,020,491.83 | 8,730,283.87 |
38. Selling expenses
| Items | 2020.01-06 | 2019.01-06 |
| Official business expense | 2,994,176.07 | 3,988,847.51 |
| Employee benefit | 18,899,327.99 | 21,396,465.27 |
| Depreciation expense | 110,392.35 | 155,303.69 |
| Transportation expense | 5,215,850.58 | 12,587,418.44 |
| Business entertaining expense | 2,356,885.18 | 4,881,843.49 |
| Travel expense | 3,742,450.00 | 5,066,994.70 |
| Maintenance and repair expense | 1,890,493.88 | 3,484,274.34 |
| Advertisement and bids expense | 806,949.46 | 980,196.85 |
| Other expense | -569,730.79 | 555,474.33 |
| Total | 35,446,794.72 | 53,096,818.62 |
39. Administrative expenses
| Items | 2020.01-06 | 2019.01-06 |
| Official expense | 5,862,390.02 | 7,892,079.60 |
| Employee benefit | 44,701,524.40 | 52,352,461.45 |
| Depreciation expense | 5,681,960.08 | 6,251,109.67 |
| Business entertaining expense | 793,831.00 | 2,081,570.86 |
| Travel expense | 1,161,310.14 | 4,064,689.71 |
| Maintenance and repair expense | 3,332,999.96 | 2,309,890.96 |
| Advertisement expense | 100,998.04 | 408,712.91 |
| Insurance expense | 407,320.27 | 533,710.46 |
| Long-term assets amortization | 3,319,148.39 | 3,801,155.48 |
| Design consultant and test service expense | 3,623,329.62 | 2,237,748.01 |
| Safety production cost | 1,127,227.68 | 1,031,715.77 |
| Other expense | 658,087.26 | 2,977,250.33 |
| Total | 70,770,126.86 | 85,942,095.21 |
40. R&D expenses
| Items | 2020.01-06 | 2019.01-06 |
| Employee benefit | 21,428,261.05 | 21,344,115.07 |
| Depreciation and amortization expense | 2,110,399.66 | 2,405,920.60 |
| Raw material | 478,225.01 | 3,770,083.72 |
| Entrust external R&D investment | 6,283.00 | 132,075.47 |
| Other expense | 691,852.56 | 897,669.31 |
| Total | 24,715,021.28 | 28,549,864.17 |
41. Financial expenses
| Items | 2020.01-06 | 2019.01-06 |
| Interest expenses | 17,434,559.05 | 5,542,418.26 |
| Less: Interest income | 1,421,000.67 | 572,223.80 |
| Add: Exchange loss | -553,243.45 | -570,799.89 |
| Others expenditure | 2,375,420.28 | 1,068,192.62 |
| Total | 10,061,328.07 | 5,467,587.19 |
42. Other income
| Items | 2020.01-06 | 2019.01-06 |
| VAT refund | 53,838.84 | |
| Grant given by the government for relocation | 556,998.00 | |
| Government subsidy | 6,507,868.29 | 1,424,600.00 |
| Total | 6,507,868.29 | 2,035,436.84 |
43. Investment income
| Items | 2020.01-06 | 2019.01-06 |
| Long-term equity investment gain under equity method | 16,816,173.99 | 72,239,478.13 |
| Gain from holding of other non-current financial assets | 6,126,903.12 | 4,320,252.20 |
| Gain from disposal other non-current financial assets | 40,567,691.40 | |
| Total | 22,943,077.11 | 117,127,421.73 |
44. Fair value change income
| Items | 2020.01-06 | 2019.01-06 |
| Other non-current financial assets | -19,323,309.84 | 40,461,125.59 |
| Total | -19,323,309.84 | 40,461,125.59 |
45. Credit impairment losses (loss listed as“-“)
| Items | 2020.01-06 | 2019.01-06 |
| Bad debt loss on notes receivable | 3,479,059.83 | |
| Bad debt loss on receivable | -10,086,373.98 | |
| Bad debt loss on other receivable | -592,587.01 | |
| Bad debt loss on contract assets | -6,842,004.85 | |
| Total | -14,041,906.01 |
46. Assets impairment losses
| Items | 2020.01-06 | 2019.01-06 |
| Loss of bad debts | -16,863,134.42 | |
| Provision for inventory impairment | ||
| Total | -16,863,134.42 |
The Assets impairment losses increased 108.60% in the current period compared with the previousperiod, mainly because of the increase in provision for bad debts against receivables in the currentperiod.
47. Gain on assets disposal
| Item | 2020.01-06 | 2019.01-06 |
| Gains on disposal of non-current assets | 10,788.53 | 1,242,799.31 |
| Including: Gain on non-current assets disposal income not classified as held for sale | 10,788.53 | 1,242,799.31 |
| Including: gain on fixed assets disposal | 10,788.53 | 1,242,799.31 |
| Total | 10,788.53 | 1,242,799.31 |
48. Non-operating income
| Item | 2020.01-06 | 2019.01-06 | Amounts recognized into non-recurring profit or loss for the year |
| Debt restructuring gains | 162,560.00 | 1,999,241.94 | 162,560.00 |
| Government grant | 337,400.00 | ||
| Penalty and fine income | 216,492.50 | 135,723.19 | 216,492.50 |
| Others | 987,052.84 | 987,052.84 | |
| Total | 1,280,059.12 | 2,472,365.13 | 1,280,059.12 |
49. Non-operating expenses
| Item | 2020.01-06 | 2019.01-06 | Amounts recognized into non-recurring profit or loss for the year |
| Outward donation | 60,000.00 | ||
| Quality Claim | 48,522.19 | 46,516.94 | 48,522.19 |
| Non-current assets scrap loss | 44,972.15 | 15,126.57 | 44,972.15 |
| Total | 93,891.78 | 121,643.51 | 93,891.78 |
50. Income tax expenses
(1) Income tax expenses
| Items | 2020.01-06 | 2019.01-06 |
| Current income tax expenses | 1,427,499.91 | 16,570,975.86 |
| Deferred income tax expenses | -2,919,759.08 | -2,804,370.02 |
| Total | -1,492,259.17 | 13,766,605.84 |
(2) Adjustment process of accounting profit and income tax expense
| Items | 2020.01-06 | |
| Total profits | -26,402,759.00 | |
| Current income tax expense accounted by tax and relevant regulations | -3,960,413.85 | |
| Influence of different tax rate suitable to subsidiary | 414,712.69 | |
| Influence of income tax before adjustment | -641,993.37 | |
| Influence of non taxable income | -542,965.09 | |
| Influence of not deductable costs, expenses and losses | 3,826,755.46 | |
| Influence of deductible temporary difference or deductible losses of deferred income tax assets derecognized in reporting period. | -588,355.00 | |
| Income tax expenses | -1,492,259.17 | |
51. Other comprehensive income
Refer to the note VII.32 other comprehensive income for details.
52. Notes to cash flow statement
(1) Cash receipt/payment of other operating/investing/financing activities
1) Other cash received relating to operating activities
| Items | 2020.01-06 | 2019.01-06 |
| Government grants | 12,168,371.56 | 1,762,000.00 |
| Received travel expense refund | 1,063,272.24 | 2,190,560.23 |
| Deposit given back | 14,765,375.21 | 11,938,968.66 |
| Interest income | 314,336.56 | 859,925.57 |
| Others | 4,566,093.18 | 1,027,584.20 |
| Total | 32,877,448.75 | 17,779,038.66 |
2) Other cash paid relating to operating activities
| Items | 2020.01-06 | 2019.01-06 |
| Business travel borrowing | 8,230,047.29 | 5,490,477.40 |
| Deposit paid | 17,663,991.76 | 8,675,281.20 |
| Expenditure | 34,127,531.31 | 47,585,026.48 |
| Bank handling charges | 1,769,898.93 | 965,122.59 |
| Others | 583,138.56 | 713,616.93 |
| Total | 62,374,607.85 | 63,429,524.60 |
3) Others cash received relating to financing activities
| Items | 2020.01-06 | 2019.01-06 |
| Collection of guarantee money | 32,960,611.49 | 38,323,050.64 |
| Sale leaseback and financial lease | 3,886,589.07 | |
| Total | 36,847,200.56 | 38,323,050.64 |
4) Others cash played relating to financing activities
| Items | 2020.01-06 | 2019.01-06 |
| Payment of guarantee money | 9,266,488.54 | 17,348,438.30 |
| Sale& lease back and financial lease | 2,853,316.11 | 2,815,038.27 |
| Repurchase the restricted stock | 47,566,389.36 | |
| Note financing is due and is paid | 136,500.00 | |
| Total | 12,119,804.65 | 67,866,365.93 |
53. Supplementary information of consolidated cash flow statement
| Items | 2020.01-06 | 2019.01-06 |
| 1. Adjusting net profit into cash flows of operating activities: | —— | —— |
| Net profit | -24,910,499.83 | 106,770,376.48 |
| Add: Provision for impairment of assets | 15,147,375.91 | 16,863,134.42 |
| Depreciation of fixed assets, Amortization of mineral resources, and biological assets | 34,750,769.26 | 33,043,962.66 |
| Amortization of intangible assets | 2,373,689.18 | 3,230,112.71 |
| Amortization of long-term deferred expenses | 2,175,118.39 | 804,794.82 |
| Losses on disposal of fixed assets, intangible assets, and long-term assets (income listed with”-”) | -55,668.73 | -1,242,799.31 |
| Losses on write-off of fixed assets (income listed with”-”) | 45,369.59 | 15,126.57 |
| Change of fair value profit or loss | 19,323,309.84 | -40,461,125.59 |
| Financial expense (income listed with”-”) | 9,635,047.81 | 5,275,618.93 |
| Investment loss (income listed with”-”) | -22,943,077.11 | -117,127,421.73 |
| Decrease of deferred tax assets(increase listed with”-”) | 2,334,787.70 | -2,804,370.02 |
| Increase of deferred tax liabilities(decrease listed with”-”) | -2,898,496.47 | 0.00 |
| Decrease of inventories (increase listed with”-”) | -69,323,956.85 | -56,623,320.41 |
| Decrease of operating receivables (increase listed with”-”) | -147,581,069.09 | -109,300,254.90 |
| Increase of operating payables (decrease listed with”-”) | 103,576,611.65 | 83,780,127.49 |
| Others | 0.00 | |
| Net cash flows arising from operating activities | -78,350,688.75 | -77,776,037.88 |
| 2. Significant investment and financing activities unrelated to cash income and expenses | ||
| Liabilities transferred to capital | ||
| Convertible bonds within 1 year | ||
| Financing leased fixed assets | ||
| 3. Net increase (decrease) of cash and cash equivalent | ||
| Closing balance of cash | 268,889,987.62 | 214,418,184.24 |
| Less: Opening balance of cash | 301,527,354.56 | 304,703,434.47 |
| Net increase of cash and cash equivalent | -32,637,366.94 | -90,285,250.23 |
(1) Cash and cash equivalents
| Items | 2020.6.30 | 2020.1.1 |
| Cash | 268,889,987.62 | 301,527,354.56 |
| Including: Cash on hand | 106,840.56 | 92,096.63 |
| Bank deposit used for paying at any moment | 265,568,493.02 | 301,435,257.93 |
| Other monetary fund for paying at any moment | ||
| Deposit fund in central bank available for payment | ||
| Cash equivalent | ||
| Including: bonds investment with maturity in 3 months | ||
| Closing balance of cash and cash equivalents | 268,889,987.62 | 301,527,354.56 |
54. The assets with the ownership or use right restricted
| Items | 2020.6.30 | Reasons |
| Monetary fund | 9,266,488.54 | Guarantee money |
| Notes Receivable | 19,345,284.19 | Pledge |
| Fixed assets | 127,229,833.57 | Mortgage Loan |
Dalian Universe Thermal Technology Co., Ltd.and Dalian Bingshan Engineering&Trading Co.,Ltd. pledgedthe bank acceptance note to bank as guarantee for issuing the commercial acceptance note.Wuhan New World Refrigeration Industrial Co., Ltd signed the “maximum pledge contract” with Ever brightBank of China Wuhan branch. Property was pledged and Wuhan New World Refrigeration Industrial Co.,Ltd was granted for credit.
55. Monetary category of foreign currency
(1) Monetary category of foreign currency
| Item | Closing Balance (foreign currency) | Exchange Rate | Closing Balance (RMB) |
| Cash | — | — | 10,315,403.21 |
| Including：USD | 1,264,534.74 | 7.0795 | 8,962,273.69 |
| GBP | 18,152.31 | 8.7144 | 158,186.50 |
| JPY | 18,309,977.83 | 0.0658 | 1,204,943.02 |
| Accounts receivable | — | — | 45,614,023.00 |
| Including: USD | 6,173,806.55 | 7.0795 | 43,707,463.47 |
| GBP | 63,815.36 | 8.7144 | 556,122.57 |
| JPY | 20,521,015.00 | 0.0658 | 1,350,446.96 |
| Accounts payable | — | — | 8,980,047.26 |
| Including: USD | 911,800.72 | 7.0795 | 6,450,845.50 |
| GBP | 37,274.28 | 8.7144 | 324,822.99 |
| JPY | 33,497,124.47 | 0.0658 | 2,204,378.77 |
56. Government Grants
| Category | Amount | Disclosure | Amount recognized in current profit and loss |
| Dalian special fund subsidy for the construction of manufacturing Innovation Center in 2017 | 15,000.00 | Other Income | 15,000.00 |
| Featured carrier of mass entrepreneurship and innovation | 5,900,000.00 | Other Income | 5,900,000.00 |
| R290 replacement of R22 large industrial screw unit | 11,096,464.50 | Deferred Income | |
| Steady post subsidies | 136,538.60 | Other Income | 136,538.60 |
| Total | 17,148,003.10 | - | 6,051,538.60 |
57. Others
None
VI. Interest in other entity
1. Equity of subsidiaries
(1) Organization structure of group company
| Name of subsidiaries | Main business address | Registered address | Business nature | Shareholding (%) | Obtaining method | |
| Direct | Indirect | |||||
| Dalian Bingshan Group Engineering Co., Ltd. | Dalian | Dalian | Installation | 100 | Establish | |
| Name of subsidiaries | Main business address | Registered address | Business nature | Shareholding (%) | Obtaining method | |
| Dalian Bingshan Group Sales Co., Ltd. | Dalian | Dalian | Trading | 100 | Establish | |
| Dalian Bingshan Air-conditioning Equipment Co., Ltd. | Dalian | Dalian | Manufacturing | 70 | Establish | |
| Dalian Bingshan Guardian Automation Co., Ltd. | Dalian | Dalian | Manufacturing | 100 | Establish | |
| Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd. | Dalian | Dalian | Manufacturing | 100 | Establish | |
| Wuhan New World Refrigeration Industrial Co., Ltd. | Wuhan | Wuhan | Manufacturing | 100 | Acquisition | |
| Bingshan Technical Service （Dalian） Co.,Ltd. | Dalian | Dalian | Services | 100 | Establish | |
| Dalian New Meica Electronics Technology Co., Ltd | Dalian | Dalian | Electronic | 100 | Acquisition | |
| Dalian Universe Thermal Technology Co., Ltd. | Dalian | Dalian | Manufacturing | 55 | Acquisition | |
| Dalian Bingshan Engineering & Trading Co., Ltd. | Dalian | Dalian | Service | 100 | Acquisition | |
| Wuhan New World Air-conditioning Refrigeration Engineering Co., Ltd | Wuhan | Wuhan | Installation | 100 | Establish | |
| Wuhan Lanning Energy Technology Co., Ltd. | Wuhan | Wuhan | Trading | 54.55 | Acquisition | |
| Ningbo Bingshan Air-conditioning Refrigeration Engineering Co., Ltd | Ningbo | Ningbo | Installation | 51.00 | Establish | |
| Chengdu Bingshan Refrigeration Engineering Co., Ltd. | Chengdu | Chengdu | Services | 51.00 | Establish | |
1) All the proportion of shareholding in subsidiaries were the same with voting right
2) The company held over 50% voting right in subsidiaries and could control these subsidiaries withover 50% voting right
3) There is no change on the shareholding of the subsidiaries.
(2) There is no significant non-wholly-owned Subsidiary.
2. Equity in joint venture arrangement or associated enterprise
(1) The important of joint ventures or affiliated companies
| Name of joint ventures or affiliated companies | Main business address | Registered address | Business nature | Shareholding (%) | Accounting methods | |
| Direct | Indirect | |||||
| Panasonic Appliances Compressor (Dalian) Co., Ltd. | Dalian | Dalian | Manufacturing | 40 | Equity method | |
| Dalian Bingshan Metal Technology Co., Ltd. | Dalian | Dalian | Manufacturing | 49 | Equity method | |
The Company assumes the affiliated as significant party either when the investment income from investee presents10% of the parent’s net profit or the proportion of shareholding of the investee’s net asset represents 10% of theparent’s shareholder equity.
1) The Company has the same percentage of shareholding and voting right in joint-venture or affiliated company.
2) The Company doesn’t have affiliated company which has significant influence although being held less than20% voting rights.
3) The Company doesn’t have joint venture or affiliated companies which have no significant influence althoughbeing held 20% or more voting rights.
（2） The key financial information of affiliated companies
| Items | 30-06-2020/2020.01-06 | |
| Panasonic Appliances Compressor (Dalian) Co., Ltd. | Dalian Bingshan Metal Technology Co., Ltd. | |
| Current assets | 1,223,509,851.91 | 373,441,442.40 |
| Non-current assets | 306,353,358.57 | 43,583,860.17 |
| Total assets | 1,529,863,210.48 | 417,025,302.57 |
| Current liabilities | 410,377,576.67 | 78,301,526.66 |
| Non-current liabilities | ||
| Total liabilities | 410,377,576.67 | 78,301,526.66 |
| Minority interests | ||
| Equity to the parent company | 1,119,485,633.81 | 338,723,775.91 |
| Proportions of net assets according to the shareholding percentage | 447,794,253.52 | 165,974,650.20 |
| Adjusting events | ||
| —Goodwill | 19,269,770.94 | |
| —Unrealized profits of | ||
| Items | 30-06-2020/2020.01-06 | |
| Panasonic Appliances Compressor (Dalian) Co., Ltd. | Dalian Bingshan Metal Technology Co., Ltd. | |
| insider trading | ||
| --Others | -970,205.80 | 966,230.97 |
| Book value of equity investment of affiliated companies | 446,824,047.72 | 186,210,652.11 |
| Fair value of equity investment of affiliated companies | ||
| Operating income | 498,727,220.29 | 204,625,692.76 |
| Net profit | 30,316,392.38 | 25,242,882.57 |
| Net profit from closing | ||
| Other comprehensive income | 30,316,392.38 | 25,242,882.57 |
| Total comprehensive income | 30,316,392.38 | 25,242,882.57 |
Continued：
| Items | 31-12-2019/2019.01-06 | |
| Panasonic Appliances Compressor (Dalian) Co., Ltd. | Dalian Bingshan Metal Technology Co., Ltd. | |
| Current assets | 1,273,294,847.52 | 337,202,163.28 |
| Non-current assets | 321,031,252.89 | 45,671,841.16 |
| Total assets | 1,594,326,100.41 | 382,874,004.44 |
| Current liabilities | 407,886,858.98 | 69,393,111.10 |
| Non-current liabilities | ||
| Total liabilities | 407,886,858.98 | 69,393,111.10 |
| Minority interests | ||
| Equity to the parent company | 1,186,439,241.43 | 313,480,893.34 |
| Net assets calculated according to the shareholding proportions | 474,575,696.57 | 153,605,637.74 |
| Adjusting events | ||
| —Goodwill | 19,269,770.94 | |
| —Unrealized profits of insider trading | ||
| --Others | -2,882,081.25 | 144,725.49 |
| Book value of equity investment of affiliated companies | 471,693,615.32 | 172,730,683.20 |
| Fair value of equity investment of affiliated companies | ||
| Items | 31-12-2019/2019.01-06 | |
| Panasonic Appliances Compressor (Dalian) Co., Ltd. | Dalian Bingshan Metal Technology Co., Ltd. | |
| Operating income | 620,287,402.33 | 202,961,647.33 |
| Net profit | 41,081,512.65 | 28,166,390.78 |
| Net profit from closing | ||
| Other comprehensive income | 41,081,512.65 | 28,166,390.78 |
| Total comprehensive income | 41,081,512.65 | 28,166,390.78 |
（3） Summary financial information of insignificant affiliated companies
| Items | 30-06-2020/2020.01-06 | 31-12-2019/2019.01-06 |
| Total book value of investment of affiliated companies | 733,355,484.16 | 607,706,323.17 |
| The total of following items according to the shareholding proportions | ||
| Net profit | 3,936,888.40 | 47,324,500.55 |
| Other comprehensive income | ||
| Total comprehensive income | 3,936,888.40 | 47,324,500.55 |
（4） Significant restrictions of the ability of affiliated companies transferring funds to the company.
None
（5） Excessive loss of affiliated companies.
None
（6） Contingency related to joint venture or affiliated company need to be disclosed.
NoneXII. Risk Related to Financial Instruments
(1) Market risk
1) Exchange rate risk
Most of the Company’s business is located in China, and settled with RMB. But the company definedexchange rate risk of assets, liabilities dominated in foreign currency and future transaction dominated inforeign currency (mainly including USD, JPY, HKD and GBP). The financial department of the companymonitors the company’s foreign currency transaction and the scale of foreign assets and liabilities, anddecreases exchange rate risk. During the current year the company didn’t agree any forward foreignexchange contract or currency swap contract. As at 30 June 2020, the company’s assets and liabilitiesdominated in foreign currency are listed in RMB as following：
| Items | Closing Balance | Opening balance |
| Monetary fund-USD | 8,962,273.69 | 16,719,234.66 |
| Monetary fund-JPY | 1,204,943.02 | 1,142,608.46 |
| Monetary fund-EURO | 29,112.74 | |
| Monetary fund- GBP | 158,186.5 | 385,286.46 |
| Receivable - GBP | 556,122.57 | 1,281,698.98 |
| Receivable- USD | 43,707,463.47 | 43,923,973.48 |
| Receivable - EURO | 57,832.75 | |
| Receivable - JPY | 1,350,446.96 | 1,833,735.72 |
| Payables -USD | 6,450,845.5 | 5,245,528.61 |
| Payables -EURO | 10,394.62 | |
| Payables - JPY | 2,204,378.77 | 2,807,578.63 |
| Payables -GBP | 324,822.99 | 341,063.39 |
The Company paid close attention to the effect on FX risk.
2) Interest rate risk
The interest risk of the Group incurred from bank loan, risk of a floating interest rate of financial liabilities that leadto the company facing cash flow interest rate risk, financial liabilities with a fixed interest rate lead to the companyfacing cash flow interest rate risk. The company determined the proportion of fixed interest rate and floating interestrate according the current market circumstance. The Company and Dalian Bingshan Group Co., Ltd. borrowed longterm loan RMB 160,000,000.00 with fixed interest rate.The financial department of the company continuously monitors the interest rates level, and the management wouldmake some adjustment to lower the interest rate risk according to the latest market situation. Climbing interest ratewill increase the cost of newly increased interest-bearing liability and interest expense for unsettled interest-bearingliability at floating rate and have adverse effect on the business performance.The sensitive analysis：
As at 30 June 2020, base on the assumption of interest rate change of 50 BP, the Company’s net profit will increase ordecrease RMB 1,352.9 thousand Yuan.
3) Price risk
As at 30 June 2020, there will be effect on the price variance for financial assets valued in fair value.
(2)Credit risk
The credit risk of the company comes from monetary fund, notes receivable, accounts receivable, and other accountsreceivable etc. The management made credit policies and monitored changes of this credit exposure.The company's working capital was in bank with higher credit rating, so there was no significant credit risk, nor
significant losses due to the default of other entity. Upper limit policy is adopted to avoid any credit risk fromfinancial institution.The company made relevant policy to control credit risk exposure from receivable, other receivable and notesreceivable. The company assesses the client’s credit background according to the client’s financial performance,possibility of obtaining guarantee from the 3rd party, credit record and other factors such as current market. Thecompany will periodically monitor the credit situation of the client and will take measures such as prompt letter,shorten credit period or cancel the credit to ensure the overall credit risk within the controllable scope.As at 30 June 2020, the top five customers of receivable accounts balance is：163,292,572.91 Yuan.
(3) Liquidity risk
Liquidity risk was referred to the risk of shortage of funds incurred when the enterprise fulfill the obligation ofsettlement by cash or other financial assets. The way to manage the liquidity risk is to ensure enough fund availableto fulfill the liability by due date in prevention from unacceptable loss of or reputation damage to the Company. TheCompany periodically analyze the liability structure and expiry date and the financial department of the companycontinued to monitors the short term or long term capital needs to ensure maintain plenty of cash flow. And the sametime they also monitor the condition of bank loan agreements and obtain commitments from banks to provide plentyof funds.The main fund comes from bank loan. By 30
June 2020, the credit limit still available is 398 million Yuan and shortterm credit limit available is 398 million Yuan.As at 30 June 2020, the Company’s financial assets and financial liabilities in line with non discount cash flow ofthe contracts as following： Currency unity: 10 thousand Yuan
| Closing balance | |||||
| Items | Within 1 year | 1-2 years | 2-5 years | Over 5 years | Total |
| Financial Assets | |||||
| Cash and cash in bank | 27,815.65 | 27,815.65 | |||
| Notes receivable | 6,097.57 | 6,097.57 | |||
| Accounts receivable | 110,380.45 | 110,380.45 | |||
| Other receivable | 4,523.13 | 4,523.13 | |||
| Other non-current financial assets | 28,414.64 | 28,414.64 | |||
| Contract asset | 9,444.57 | 9,444.57 | |||
| Financial Liabilities | |||||
| Short-term loan | 38,269.36 | 38,269.36 | |||
| Notes Payable | 26,400.63 | 26,400.63 | |||
| Accounts payable | 94,068.15 | 94,068.15 | |||
| Other payable | 2,755.85 | 2,755.85 | |||
| Closing balance |
| Items | Within 1 year | 1-2 years | 2-5 years | Over 5 years | Total |
| Employee’s payable | 1,035.66 | 1,035.66 | |||
| Tax payable | 893.01 | 893.01 | |||
| Long-term loan | 16,000.00 | 16,000.00 | |||
| Bonds payable | 2,500.00 | 2,500.00 |
VIII. Disclosure of Fair Value
1. Amount and measurement level of the assets and liabilities measured at fair value at the year end
| Items | Fair value at the year end | |||
| First level measurement of fair value | Second level measurement of fair value | Third level measurement of fair value | Total | |
| Financial assets Continuously measured at FV available for sale | ||||
| Other non-current financial assets | 271,154,738.08 | 12,991,658.59 | 284,146,396.67 | |
| (1) Investment by debt instruments | ||||
| (2) Investment by equity instruments | 271,154,738.08 | 12,991,658.59 | 284,146,396.67 | |
| (3) Others | ||||
2. Basis for Market price of first level measurement of fair value
Equity instrument portion of other non-current financial assets is measured at the unadjusted closing quotedprice on stock market on June 30, 2020.
3. For continuous and discontinuous 2
ndlevel of FV, valuation technique adopted and key parameterquantitive and qualitive information.None.
4. For continuous and discontinuous 3
rdlevel of FV, valuation technique adopted and key parameterquantitive and qualitive information.It was valued by cost price.
5. For continuous 3
rd
level of FV, adjusted information of opening and closing balance and sensitivityanalysis of unobservable parameter.None
6. Assets continuously measured at fair value have switched among different level during the year.None
7. Changes of valuation technique and reasons for changes
None
8. Assets and liability are disclosed at FV rather than measured at FV
NoneIX. Related Parties Relationship and Transactions(I) Related parties relationship
1. Parent company and ultimate controller
1) Parent company and ultimate controller
| Parent company | Registered address | Business nature | Registered capital | Shareholding percentage (%) | Voting power percentage (%) |
| Dalian Bingshan Group Co., Ltd. | Dalian | Manufacture | 158,580,000.00 | 20.27 | 20.27 |
Dalian Bingshan Group Co., Ltd. is a sino –foreign joint venture located No.888 Xinan Road, ShahekouDistrict, Dalian, China.The legal representative of Dalian Bingshan Group Co., Ltd. is Mr.Ji Zhijian, and theregistered capital is RMB158.58 million. The registered business operation period is from 3
rd July 1985 to 2
nd
July 2035. The business scope include research, development, manufacture, sales, service and installment ofrefrigeration equipment, cooling and freezing equipment, different size of air-conditioners, petrochemicalequipment, electronic and electronic- control products, home electronic appliance, environment protectequipment and etc. (unless the licenses needed)
2. Subsidiaries
Referring to the content in the Note IX. 1. (1) Organization structure of group company.
3. Affiliated company and joint venture
The information of the affiliated company and joint venture please refers to the note IX. 3 ‘The significantaffiliated company and joint venture’. The company had transactions with related parties during the currentperiod or last period, including:
| Names of the joint ventures or affiliated company | Relationships with the Company |
| Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd | Affiliated company of the Company |
| Panasonic Appliances Cold-chain (Dalian) Co., Ltd | Affiliated company of the Company |
| Names of the joint ventures or affiliated company | Relationships with the Company |
| Panasonic Appliances Compressor (Dalian) Co., Ltd | Affiliated company of the Company |
| Dalian Honjo Chemical Co., Ltd | Affiliated company of the Company |
| Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd | Affiliated company of the Company |
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | Affiliated company of the Company |
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Affiliated company of the Company |
| MHI Bingshan Refrigeration (Dalian) Co., Ltd. | Affiliated company of the Company |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | Affiliated company of the Company |
| Jiangsu JingXue Insulation Technology Co., Ltd. | Affiliated company of the Company |
| Panasonic Refrigerating System (Dalian) Co., Ltd. | Affiliated company of the Company |
| Dalian Bingshan Metal Technology Co., Ltd. | Affiliated company of the Company |
| Wuhan Sikafu Power Control Equipment Co., Ltd. | Affiliated wholly owned subsidiary of the Company |
4. Other related parties
| Name of related party | Related party relationship |
| Dalian Bingshan Group Refrigeration Equipment Co., Ltd | Affiliated company of Dalian Bingshan Group |
| Dalian Spindle Cooling Towers Co., Ltd | Affiliated company of Dalian Bingshan Group |
| BAC Dalian Co., Ltd | Affiliated company of Dalian Bingshan Group |
| Dalian Bingshan Part Technology Co., Ltd. | Subsidiary of Dalian Bingshan Group |
| Dalian Bingshan Group Management and Consulting Co., Ltd | Subsidiary of Dalian Bingshan Group |
| Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | Affiliated company of Subsidiary of Dalian Bingshan Group |
| Dalian Bingshan Wisdom Park Co., Ltd. | Affiliated company of Subsidiary of Dalian Bingshan Group |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd | Affiliated company of Subsidiary of Dalian Bingshan Group |
5. Related Party transactions
1. Purchase of goods, offer and receive labour services etc inter-group transactions
1) Purchase of goods/receive labour services
| Related party | Content | 2020.1-6 | 2019.1-6 |
| Dalian Bingshan Part Technology Co., Ltd. | Purchases of goods | 1,386,362.74 | 3,741,590.18 |
| Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 12,544,723.07 | 36,142,649.15 | |
| Panasonic Appliances Cold-chain (Dalian) Co., Ltd | 19,945,469.77 | 23,174,161.33 |
| Panasonic Appliances Compressor (Dalian) Co., Ltd | 1,079,512.31 | 1,773,477.15 | |
| Panasonic Refrigerating System (Dalian) Co., Ltd. | 3,328,792.07 | 10,227,269.49 | |
| Dalian Fuji Bingshan Vending Machine Co., Ltd | 367,523.31 | 14,488.80 | |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 0.00 | ||
| Dalian Spindle Cooling Towers Co., Ltd | 1,307,075.22 | 1,704,026.65 | |
| BAC Dalian Co., Ltd | 16,350,334.91 | 15,071,702.87 | |
| Dalian Bingshan Metal Technology Co., Ltd | 70,809.38 | 43,155.87 | |
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | |||
| Dalian Bingshan Group Refrigeration Equipment Co., Ltd | 12,654,852.80 | 12,909,130.64 | |
| Jiangsu JingXue Insulation Technology Co.,Ltd | 7,480,038.96 | 16,629,233.61 | |
| Dalian Bingshan Wisdom Park Co., Ltd | 64,991.82 | 342,045.83 | |
| Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | |||
| Dalian Kelvins Technology Technology Co., Ltd | 24,458.00 | ||
| Total | 76,604,944.36 | 121,772,931.57 |
2) Sales of goods/ labour services provision
| Related party | Content | 2020.1-6 | 2019.1-6 |
| Dalian Bingshan Part Technology Co., Ltd. | Sales of goods | 697,339.29 | 2,424,649.57 |
| Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 24,550,377.53 | 48,139,165.51 | |
| Panasonic Appliances Cold-chain (Dalian) Co., Ltd | 61,605,326.43 | 73,431,383.81 | |
| Panasonic Appliances Compressor (Dalian) Co., Ltd | 3,787,087.37 | 7,987,011.69 | |
| Panasonic Refrigerating System (Dalian) Co., Ltd. | 8,265,834.12 | 15,372,612.19 | |
| Dalian Fuji Bingshan Vending Machine Co., Ltd | 12,025,828.33 | 14,649,557.64 | |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 45,419.30 | 393,571.69 | |
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 5,017,942.62 | 3,785,687.98 | |
| Dalian Spindle Cooling Towers Co., Ltd | 322,836.39 | 146,937.92 | |
| Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd. | 614,180.71 | 425,682.00 | |
| BAC Dalian Co., Ltd | 16,935,526.04 | 11,715,950.10 | |
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd. | 32,657.62 | ||
| Dalian Bingshan Group Refrigeration Equipment Co., Ltd | 983,506.99 | 3,803,139.47 | |
| Jiangsu JingXue Insulation Technology Co.,Ltd | |||
| Wuhan Sikafu Power Control Equipment Co., Ltd | 491,777.00 | 258,666.59 | |
| Dalian Bingshan Group Mangement and Consulting Co.,Ltd | |||
| Dalian Bingshan Group Huahuida Financial Leasing Co.,LTd | 145,152.00 | 412,289.70 | |
| Dalian Bingshan Wisdom Park Co., Ltd | 4,750,730.48 | 3,770,188.67 | |
| Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | 80,619.45 | 22,000.00 | |
| Dalian Kelvins Technology Technology Co., Ltd | |||
| Alphavita Bio-scientific (Dalian) Co., Ltd. | 394,317.76 | ||
| Total | 140,713,801.81 | 186,771,152.15 |
2. Assets Lease
Assets rent out
| Lessor | Lessee | Category of assets rent out | 2020-6-30 Lease Income | 2019-6-30 Lease Income |
| The Company | MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | Plant | 1,904,761.90 | 2,000,000.00 |
| The Company | Dalian Bingshan Wisdom Park Co., Ltd | Office | 4,095,276.17 | 3,722,293.19 |
| The Company | Panasonic compressor (Dalian) Co., Ltd | Employee dormitory | 45,714.28 | 45,714.28 |
| The Company | Panasonic Refrigeration (Dalian) Co., Ltd. | Employee dormitory | 28,183.50 | 35,122.60 |
| The Company | Jiangsu JingXue Insulation Technology Co.,Ltd | Plant and office | 502,555.72 | 493,160.97 |
Note: The Company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co., Ltd., and rent # 6workshop building located on No. 106 Liaohe East Rd, Dalian Economic and Technology Development Zoneto MHI Bingshan Refrigeration (Dalian) Co., Ltd. The rental area is 15,259.04 square meters, and the rentalterm till 16
th
July, 2029. The annual rent fee for 2020 is RMB 4 million Yuan.The Company signed rental contract with Dalian Bingshan Wisdom Park Co., Ltd., and rent out the wholeland and house of the Company’s old plant locating at No. 888, Southwest Road, Shahekou District, Dalianto Dalian Bingshan Wisdom Park Co., Ltd., with rental land area of 167,165.61 square meters and housingarea of 105,652.43 square meters. The lease term is from April 1, 2017 to December 31, 2036. The annualrent fee for 2020 is RMB 8.646 million Yuan.
3) Guarantee with related companies.
The national development fund planned to support the company’s intelligent and green equipment of coldchain and service industry base project, and provide the special fund to the controlling shareholder of thecompany, Bingshan Group.
4) Funds borrow from /lent to related party
| Name of the related party | Amount | Starting date | Ending date | Explanation |
| Dalian Bingshan Group Co., Ltd. | 160,000,000.00 | 2016.03.14 | 2026.03.13 | Project fund investment |
6. Balances with Related party
(1) Accounts receivable due from related parties
| Item | Related party | Closing Balance | Opening Balance | ||
| Book Balance | Bad debt Provision | Book Balance | Bad debt Provision | ||
| Accounts receivable | BAC Dalian Co., Ltd | 5,492,750.32 | 372,957.75 | 8,564,678.88 | 583,733.64 |
| Accounts receivable | Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | 7,334,855.23 | 498,036.67 | 6,717,761.21 | 1,638,415.37 |
| Accounts receivable | Dalian Fuji Bingshan Vending Machine Co., Ltd. | 14,149,812.29 | 960,772.25 | 2,683,672.86 | 182,221.39 |
| Accounts receivable | Dalian Spindle Cooling Towers Co., Ltd | 388,459.95 | 26,382.54 | 33,010.40 | 2,241.41 |
| Accounts receivable | MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 3,259,468.62 | 221,317.92 | 1,437,917.14 | 97,634.57 |
| Accounts receivable | Panasonic Refrigeration System (Dalian) Co., Ltd. | 7,351,697.59 | 499,180.27 | 6,491,662.21 | 441,319.35 |
| Accounts receivable | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 39,805,809.91 | 2,702,814.49 | 16,875,971.95 | 1,153,468.33 |
| Accounts receivable | Panasonic Appliances Compressor (Dalian) Co., Ltd | 70,037.32 | 4,755.53 | 296,902.58 | 20,159.69 |
| Accounts receivable | Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 3,599,818.68 | 244,427.69 | 3,101,660.89 | 210,602.77 |
| Accounts receivable | Wuhan Sikafu Power Control Equipment Co., Ltd | 128,100.00 | 8,697.99 | 9,739.50 | 661.31 |
| Accounts receivable | Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | 73,500.00 | 4,990.65 | 100,251.50 | 6,807.08 |
| Accounts receivable | Dalian Bingshan Group Huahuida Financial Leasing Co.,LTd | 311,170.61 | 21,128.48 | 1,935,465.61 | 296,900.42 |
| Accounts receivable | Dalian Bingshan Wisdom Park Co., Ltd | 5,023,000.00 | 341,061.70 | 920,000.00 | 62,468.00 |
| Other receivable | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 50,000.00 | 1,675.00 | ||
| Prepayment | Jiangsu JingXue Insulation Technology Co.,Ltd | 611,326.80 | 2,539,291.63 | ||
| Prepayment | Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 525,324.70 | 164,600.00 | ||
| Prepayment | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 225,650.00 | 468,800.00 | ||
| Prepayment | Panasonic Refrigeration System (Dalian) Co., Ltd. | 627,451.00 | 341,601.00 | ||
| Prepayment | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 3,938.00 | 3,938.00 | ||
| Prepayment | Dalian Spindle Cooling Towers Co., Ltd | 56,500.00 | |||
| Prepayment | Dalian Bingshan Part Technology Co., Ltd. | 2,800.00 | 2,800.00 | ||
| Notes receivable | BAC Dalian Co., Ltd | 8,401,389.26 | 11,317,936.09 | ||
| Notes receivable | Panasonic Refrigeration System (Dalian) Co., Ltd. | 1,207,293.52 | 4,692,378.47 | ||
| Notes receivable | Panasonic Appliances Compressor (Dalian) Co., Ltd | 641,874.30 | 1,859,495.23 | ||
| Notes receivable | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 10,810,000.00 | 43,270,000.00 | 1,548,120.00 | |
| Notes receivable | Dalian Fuji Bingshan Vending Machine Co., Ltd. | 355,486.76 | 12,607,409.17 | 856,043.08 |
| Notes receivable | Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 18,494,998.52 | 450,703.89 | ||
| Notes receivable | MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 2,541,450.00 | 11,908.12 | 886,450.00 | 60,189.96 |
| Notes receivable | Dalian Spindle Cooling Towers Co., Ltd. | 136,860.45 |
(2) Accounts Payable due from Related Party
| Item | Related party | Closing Balance | Opening Balance |
| Accounts Payable | BAC Dalian Co., Ltd | 23,167,547.00 | 6,536,883.20 |
| Accounts Payable | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 10,291,983.37 | 4,904,782.83 |
| Accounts Payable | Dalian Bingshan Part Technology Co., Ltd. | 682,968.81 | 2,033,644.49 |
| Accounts Payable | Dalian Fuji Bingshan Vending Machine Co., Ltd. | 415,301.34 | 60,519.99 |
| Accounts Payable | Dalian Spindle Cooling Towers Co., Ltd. | 3,470,669.00 | 2,235,874.00 |
| Accounts Payable | Jiangsu JingXue Insulation Technology Co.,Ltd | 8,739,794.38 | 7,827,836.00 |
| Accounts Payable | Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | 132,284.48 | 132,284.48 |
| Accounts Payable | Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 414,000.00 | 414,000.00 |
| Accounts Payable | Panasonic Refrigeration System (Dalian) Co., Ltd. | 26,322,849.32 | 22,882,950.32 |
| Accounts Payable | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 389,277.05 | |
| Accounts Payable | Panasonic Appliances Compressor (Dalian) Co., Ltd | 1,774,444.60 | 1,696,000.00 |
| Accounts Payable | Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 1,771,490.40 | 19,565,101.85 |
| Accounts Payable | Dalian Bingshan Metal Technology Co., Ltd. | 80,014.61 | 66,651.05 |
| Other accounts payable | Dalian Bingshan Group Co., Ltd | 5,900,000.00 | |
| Other accounts payable | Dalian BingshanWisdom Park Co., Ltd. | 500,000.00 | |
| Other accounts payable | MHI Bingshan Refrigeration (Dalian) Co., Ltd. | 170,000.00 | 170,000.00 |
| Accounts Received in Advance | Dalian Spindle Cooling Towers Co., Ltd. | 2,000,000.00 | 1,869,651.43 |
| Accounts Received in Advance | Dalian BingshanWisdom Park Co., Ltd. | 500,000.00 | 700,000.00 |
| Accounts Received in Advance | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 235,834.48 | 567,258.21 |
| Accounts Received in Advance | Wuhan Sikafu Power Control Equipment Co., Ltd. | 153,555.20 | 192,034.80 |
| Accounts Received in Advance | Panasonic Refrigeration System (Dalian) Co., Ltd. | ||
| Accounts Received in Advance | Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd. | ||
| Accounts Received in Advance | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 405,000.00 | |
| Notes Payable | BAC Dalian Co., Ltd | 21,304,454.00 | 21,758,609.00 |
| Notes Payable | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 6,986,259.12 | 10,722,797.72 |
| Notes Payable | Dalian Bingshan Metal Technology Co., Ltd. | 77,548.03 | |
| Notes Payable | Dalian Bingshan Pate Technology Co.,Ltd | 2,500,000.00 | 1,200,000.00 |
| Notes Payable | Jiangsu JingXue Insulation Technology Co.,Ltd | 627,084.00 | |
| Notes Payable | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 1,657,321.00 | 64,984.00 |
| Notes Payable | Dalian Spindle Cooling Towers Co., Ltd | 969,602.80 | |
| Notes Payable | Panasonic Refrigeration System (Dalian) Co., Ltd. | 92,728.65 |
(II) Related Party CommitmentNoneX. Share-Based Payment1． General situation of share payment
□Applicable √Not applicable
2． Share payment settled by equity
□Applicable √Not applicable
3． Share Payments Settled in Cash
□Applicable √Not applicable
4. Modification and Termination of Share Payment
□Applicable √Not applicable
XI. Events after the Balance Sheet Date
(1)Contingency
As at 30 June 2020, the Company does not have any other contingencies for disclosure.
(2)Commitment
As at 30 June 2020, the Company does not have any other significant commitments.
(3)Other event
Except the subsequent event disclosed above, the Company has no other significant subsequent event.XII. Other Significant Events
1. Error correction and effect in previous period.
The Company has no adjustment of prior period accounting error this year.
2. Debt Restructuring
The Company has no events of debt restructuring this year.
3. Asset exchange
(1) The exchange of non-monetary assets
None
(2) The exchange of other assets
None
4. Annuity Plan
None
5. Operation Termination
None
6. Segment Information
The management of the Company divided the Company into 3 segments based on the geographic area:
Northeast China, Central China, and East China. The Northeast is the Company’s general headquarters andthe registered address. The Central is the subsidiary of the Company, Wuhan New World RefrigerationIndustrial Co., Ltd, Wuhan Lanning Energy Technology Co., Ltd, and Chengdu Bingshan RefrigerationEngineering Co., Ltd. The East is the subsidiary of the Company, Ningbo Bingshan Air-conditioningRefrigeration Engineering Co., Ltd.
(1) The basis and accounting policies of reporting segments
The internal organization structure, management requirements and internal report scheme are the
determination basis for the Company to set the operating segments. The segments are those satisfiedthe following requirements.
1).The segment can generates revenue and incur expenses.
2).The management personnel can regularly evaluate the operation results of segments and allocate
resource ,assess its performance .
3).The financial situation, operation results, cash flow and other accounting information of segments
can be acquired.The Company confirms the report segments based on the operating segments. The transfer price amongsegments is set base on the market price. The assets and related expenses in common use are allocated todifferent segments based on their proportion of revenue.
(2)The financial information of reporting segments
Amount unit ： Yuan
| Items | 30-06-2020/2020.01-06 | ||||
| Northeast China | Central China | East China | Offset | Total | |
| 1 Operating income | 1,071,216,691.12 | 111,618,986.85 | 6,207,964.38 | -315,640,227.89 | 873,403,414.46 |
| 2 Cost | 1,088,054,189.71 | 117,228,210.68 | 7,446,686.38 | -315,640,227.89 | 897,088,858.88 |
| 3 Investment income from associates and joint venture | 17,295,970.66 | -479,796.67 | 16,816,173.99 | ||
| 4 Operating profits(loss) | -5,650,799.72 | -11,589,109.88 | -976,966.12 | -8,185,883.28 | -26,402,759.00 |
| 5 Income tax | -1,369,839.24 | -187,549.51 | 65,129.58 | -1,492,259.17 | |
| 6 Net profit(loss) | -4,280,960.48 | -11,401,560.37 | -1,042,095.70 | -8,185,883.28 | -24,910,499.83 |
| 7 Total assets | 6,147,995,276.91 | 87,700,536.25 | 14,227,645.28 | -1,137,409,133.03 | 5,612,514,325.40 |
| 8 Total liabilities | 2,246,648,187.20 | 395,140,368.46 | 10,063,170.17 | -440,783,378.99 | 2,211,068,346.84 |
XIII. Notes to the Main Items of the Financial Statements of Parent Company
1. Accounts receivable
(1) Accounts receivable category
| Item | Closing Balance | |||||
| Booking balance | Provision | Booking balance | ||||
| Amount | % | Amount | % | |||
| Accounts receivable with significant individual amount and separate bad | 50,985,562.10 | 8.66% | 15,614,746.06 | 30.63% | 35,370,816.04 | |
| Item | Closing Balance | |||||
| Booking balance | Provision | Booking balance | ||||
| Amount | % | Amount | % | |||
| debt provision | ||||||
| Accounts receivable with bad debt provision based on the characters of credit risk portfolio | ||||||
| Accounting age as characters | 296,912,703.73 | 50.41% | 63,879,809.05 | 21.52% | 233,032,894.68 | |
| Related party within consolidation scope | 241,107,880.19 | 40.93% | 241,107,880.19 | |||
| Accounts receivable with insignificant individual amount and separate bad debt provision | ||||||
| Total | 589,006,146.02 | 100.00% | 79,494,555.11 | 13.50% | 509,511,590.91 | |
(Continued)
| Item | Opening Balance | ||||
| Booking balance | Provision | Booking balance | |||
| Amount | % | Amount | % | ||
| Accounts receivable with significant individual amount and separate bad debt provision | 50,985,562.10 | 8.29% | 12,133,091.84 | 23.80% | 38,852,470.26 |
| Accounts receivable with bad debt provision based on the characters of credit risk portfolio | |||||
| Accounting age as characters | 266,070,550.78 | 43.21% | 77,679,396.59 | 29.20% | 188,391,154.19 |
| Related party within consolidation scope | 298,594,548.44 | 48.50% | 0.00% | 298,594,548.44 | |
| Accounts receivable with insignificant | |||||
| Item | Opening Balance | ||||
| Booking balance | Provision | Booking balance | |||
| Amount | % | Amount | % | ||
| individual amount and separate bad debt provision | |||||
| Total | 615,650,661.32 | 100.00% | 89,812,488.43 | 14.59% | 525,838,172.89 |
| Items | Closing Balance | ||
| Booking balance | Provision | % | |
| Expected credit losses within 1 year | 171,059,966.21 | 11,614,971.70 | 6.79% |
| Expect credit losses of 1-2 years | 47,523,394.62 | 7,290,088.73 | 15.34% |
| Expect credit losses of 2-3 years | 32,787,860.19 | 9,531,430.96 | 29.07% |
| Expect credit losses of 3-4 years | 14,339,773.14 | 6,712,447.81 | 46.81% |
| Expect credit losses of 4-5 years | 9,124,223.47 | 6,653,383.75 | 72.92% |
| Expect credit losses more than 5 years | 22,077,486.10 | 22,077,486.10 | 100.00% |
| Total | 296,912,703.73 | 63,879,809.05 | -- |
(1)The bad debt provisions of accounts receivable in the portfolio is accrued under accounting aging analysismethod:
| Aging | Closing Balance |
| Within1 year | 409,167,846.39 |
| 1 to 2 years | 40,440,142.12 |
| 2 to 3 years | 34,871,112.69 |
| More than 3 years | 104,527,044.82 |
| 3 to 4 years | 16,339,773.14 |
| 4 to 5 years | 62,109,785.57 |
| More than 5 years | 26,077,486.11 |
| Total | 589,006,146.02 |
(2) Bad debt provision accrued and reversed (withdraw)
The bad debt provision has been accrued in the amount of 2,764,420.71 Yuan.
(3) No accounts receivable written off in current period.
| Item | Written off amount |
| Receivable actually written off | 7,563,512.61 |
(4) The top five significant accounts receivable categorized by debtors
| Company | Closing Balance | % of the total AR | Closing Balance of Provision |
| Zhejiang Wankai New Material Co., Ltd. | 50,985,562.10 | 8.66% | 15,614,746.06 |
| Company | Closing Balance | % of the total AR | Closing Balance of Provision |
| Xinyi Yuanda Construction and Installation Engineering Co., Ltd. | 32,748,744.00 | 8.56% | 17,167,304.59 |
| SINOPEC International Business Ningbo Co., Ltd. | 21,269,111.33 | 3.61% | 3,262,681.68 |
| Ningxia Wangwa Coal | 18,002,800.00 | 3.06% | 2,761,629.52 |
| Yangmei Fengxi Fertilizer (Group) Co. LTD. Pinglu Branch | 16,700,000.00 | 2.84% | 1,133,930.00 |
| Total | 139,706,217.43 | 26.73% |
2. Other Receivables
| Item | Closing Balance | Opening Balance |
| Interest receivable | 348,833.33 | 583,833.33 |
| Dividend receivable | 50,338,786.40 | |
| Other receivable | 6,718,099.01 | 5,398,160.49 |
| Total | 57,405,718.74 | 5,981,993.82 |
2.1 Interest receivable
(1) Interest receivable category
| Item | Closing Balance | Opening Balance |
| Interest on term deposits | 348,833.33 | 583,833.33 |
| Interest on bank financial product | ||
| Total | 348,833.33 | 583,833.33 |
1.2 Dividend receivable
| Item | Closing Balance | Opening Balance |
| Guotai Junan Securities Co., Ltd. | 6,126,903.12 | |
| Panasonic Compressor (Dalian) Co., Ltd | 36,026,000.00 | |
| Dalian Bingshan Engineering & Trading Co., Ltd. | 5,160,883.28 | |
| Dalian Universe Thermal Technology Co., Ltd. | 3,025,000.00 | |
| Total | 50,338,786.40 |
2.3 Other receivable
(1) Other receivables categorized by nature
| Nature | Closing Balance | Opening Balance |
| Guarantee deposits | 2,765,156.58 | 3,848,019.79 |
| Petty cash | 542,344.30 | 117,661.57 |
| Equity transfer fund | 5,601,660.31 | 2,774,045.87 |
| Others | 68,554.00 |
| Nature | Closing Balance | Opening Balance |
| Guarantee deposits | 2,765,156.58 | 3,848,019.79 |
| Petty cash | 542,344.30 | 117,661.57 |
| Equity transfer fund | 5,601,660.31 | 2,774,045.87 |
| Others | 68,554.00 | |
| Total | 8,909,161.19 | 6,808,281.23 |
(2) Provision for bad debts
| Provision for bad debts | The first phase | The second phase | The third phase | Total |
| Expected credit losses in the next 12 months | Expected Credit Loss for the duration (No Credit Devaluation) | Expected Credit Loss for the duration (Credit impairment has occurred) | ||
| Balance on January 1, 2020 | 1,410,120.74 | 1,410,120.74 | ||
| The balance of January 1, 2020 in the current period | —— | —— | —— | —— |
| Provision for bad debts | 780,941.44 | 780,941.44 | ||
| Balance on June 30, 2020 | 2,191,062.18 | 2,191,062.18 |
The bad debt provisions of other receivables in the portfolio is accrued under accounting aging analysismethod
| Aging | Closing Balance |
| Within 1 year | 3,416,061.88 |
| 1 to 2 years | 1,547,247.31 |
| 2 to 3 years | 296,826.00 |
| More than 3 years | 3,649,026.00 |
| 3 to 4 years | 2,450,461.00 |
| 4 to 5 years | 1,100,000.00 |
| More than 5 years | 98,565.00 |
| Total | 8,909,161.19 |
(3) Bad debt provision accrued and reversed (withdraw) in the period.
The bad debt provision has been reversed by 780,941.44 Yuan.
(4) Other receivables from the top 5 debtors
| Name | Category | Closing Balance | Aging | % of the total OR | Closing Balance of Provision |
| Dalian Huali Coating Equipment Co., Ltd. | Equity transfer fund | 1,650,000.00 | 3-4 years | 18.52% | 188,572.50 |
| Dalian Delta HK China gas Co., Ltd. | Security deposit | 1,100,000.00 | Within 1 year | 12.35% | 3,685.00 |
| China petroleum materials Tianjin Co. ,Ltd. | Security deposit | 1,000,000.00 | Within 1 year | 11.22% | 1,675.00 |
| Dalian Changde Welding Co.,Ltd | Equity transfer fund | 780,000.00 | 3-4 years | 8.76% | 16,906.50 |
| Shandong Borun Co.,Ltd | Security deposit | 300,000.00 | Within 1 year | 3.37% | 502.50 |
| Total | 4,830,000.00 | 54.21% | 211,341.50 |
3. Long-term equity investments
Category of long-term equity investments
| Item | Closing Balance | Opening Balance | ||||
| Closing Balance | Provision | Book Value | Opening Balance | Provision | Book Value | |
| Investment of subsidiaries | 687,496,652.08 | 687,496,652.08 | 587,496,652.08 | 587,496,652.08 | ||
| Investment of affiliates and JV | 1,623,656,310.41 | 1,623,656,310.41 | 1,656,914,731.80 | 1,656,914,731.80 | ||
| Total | 2,311,152,962.49 | 2,311,152,962.49 | 2,244,411,383.88 | 2,244,411,383.88 | ||
(1) Investments of subsidiaries
| Subsidiaries names | Opening Balance | Increase | Decrease | Closing Balance |
| Dalian Bingshan Group Construction Co., Ltd | 93,749,675.77 | 100,000,000.00 | 193,749,675.77 | |
| Dalian Bingshan Group Sales Co., Ltd | 20,722,428.15 | 20,722,428.15 | ||
| Dalian Bingshan Air-Conditioning Equipment Co., Ltd | 36,506,570.00 | 36,506,570.00 | ||
| Dalian Bingshan Guardian Automation Co., Ltd. | 6,872,117.80 | 6,872,117.80 | ||
| Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd. | 59,356,051.19 | 59,356,051.19 | ||
| Dalian Universe Thermal Technology Co., Ltd. | 48,287,589.78 | 48,287,589.78 | ||
| Wuhan New World Refrigeration Industrial Co., Ltd | 184,674,910.81 | 184,674,910.81 | ||
| Bingshan Technical Service （Dalian） Co.,Ltd. | 22,024,000.00 | 22,024,000.00 | ||
| Dalian New Meica Electronics Co., Ltd. | 43,766,243.72 | 43,766,243.72 | ||
| Dalian Bingshan Engineering & Trading Co., Ltd. | 71,537,064.86 | 71,537,064.86 | ||
| Total | 587,496,652.08 | 100,000,000.00 | 687,496,652.08 |
(2) Joint ventures& affiliated companies
| Investee | Beginning balance | Increase/Decrease | Ending balance | Provision for impairment at year end | |||||||
| Increased | Decreased | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced | Provision for impairment of the current period | Others | ||||
| 1. Affiliated companies | |||||||||||
| Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 177,390,883.01 | -7,151,886.71 | 3,400,000.00 | 166,838,996.30 | |||||||
| Panasonic Appliances Cold-chain (Dalian) Co., Ltd | 267,179,066.77 | -5,126,459.68 | 262,052,607.09 | ||||||||
| Panasonic Appliances Compressor (Dalian) Co., Ltd | 471,693,615.32 | 11,156,432.40 | 36,026,000.00 | 446,824,047.72 | |||||||
| Dalian Honjo Chemical Co., Ltd | 8,535,439.50 | 202,736.66 | 8,738,176.16 | ||||||||
| Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd | 61,090,955.30 | 83,797.06 | 8,600,000.00 | 52,574,752.36 | |||||||
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | 1,537,672.84 | -40,708.15 | 1,496,964.69 | ||||||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd | 193,109,792.45 | -2,512,123.83 | 190,597,668.62 | ||||||||
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 13,892,866.25 | 52,472.24 | 13,945,338.49 | ||||||||
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 12,614,480.80 | -1,069,983.28 | 11,544,497.52 | ||||||||
| Jiangsu JingXue Insulation Technology Co.,Ltd | 185,385,615.80 | 5,010,588.30 | 190,396,204.10 | ||||||||
| Panasonic Refrigeration System (Dalian) Co., Ltd. | 33,975,371.41 | 2,290,230.84 | 2,528,392.05 | 33,737,210.20 | |||||||
| Bingshan Metal Technical Service （Dalian） Co.,Ltd. | 172,730,683.19 | 13,479,968.92 | 186,210,652.11 | ||||||||
| Dalian Bingshan Group Mangement and Consulting Company | 57,778,289.16 | 920,905.89 | 58,699,195.05 | ||||||||
| Total | 1,656,914,731.80 | 17,295,970.66 | 50,554,392.05 | 1,623,656,310.41 | |||||||
4. Operating revenue and cost
| Item | 2020.01-06 | 2019.01-06 | ||
| Revenue | Cost | Revenue | Cost | |
| Revenue from main operation | 401,973,100.61 | 346,387,083.54 | 304,851,204.51 | 262,956,736.05 |
| Revenue from other operation | 19,564,567.55 | 13,444,729.68 | 20,505,068.81 | 13,936,660.77 |
| Total | 421,537,668.16 | 359,831,813.22 | 325,356,273.32 | 276,893,396.82 |
5. Investment income
| Items | 2020.01-06 | 2019.01-06 |
| Income from long-term equity investments under cost method | 8,185,883.28 | 3,000,000.00 |
| Income from long-term equity investments under equity method | 17,295,970.66 | 72,908,832.16 |
| Income from holding of other non-current financial assets | 6,126,903.12 | 4,320,252.20 |
| Income from disposing other non-current financial assets | 40,567,691.40 | |
| Total | 31,608,757.06 | 120,796,775.76 |
XIV. Approval of Financial StatementsThe parent and consolidated financial statements of the Company were approved by the Boardof Directors of the Group on August 21, 2020.XV. Supplementary Information to the Financial Statements
1. Non-operating profit or loss
| item | Amount |
| Disposal gains and losses of non-current asset | 10,788.53 |
| Government subsidies included in current profit or loss | 151,538.60 |
| Income from changes in fair value during the period of holding financial assets available for sale and income from disposal of financial assets available for sale | -19,323,309.84 |
| Other non-operating revenue or expense | 1,186,167.34 |
| Influence on income tax | -2,681,482.01 |
| Influence on minority shareholders | 54,017.17 |
| Total | -15,347,350.53 |
2. Return on equity and earnings per share
| Profit of report period | Weighted average return on net assets (%) | Earnings per share (EPS) | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to shareholders of parent company | -0.70 | -0.028 | -0.028 |
| Net profit after deducting non-recurring gains and losses attributable to shareholders of parent company | -0.25 | -0.01 | -0.01 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd
August 22, 2020