Bingshan Refrigeration & Heat Transfer
Technologies Co., Ltd.
2023 Semiannual Report
August, 2023
Section 1 Important Notice, Table of Contents, and Definitions
The directors and the Board of Directors, the supervisors and the SupervisoryBoard, and Senior staff members of Bingshan Refrigeration & Heat TransferTechnologies Co., Ltd.(hereinafter referred to as the Company) herebyconfirm that there are not any important omissions, fictitious statements orserious misleading carried in this report, and shall take all responsibilities,individual and/or joint, for the reality, accuracy and completeness of the wholecontents.
All directors have attended this Board meeting of the Company.
There is no significant risk having adverse influence on attainment of theCompany's future development strategy and business targets. The paragraph" Management discussion and analysis" in Section 3 of this SemiannualReport describes major risks , including the risk of increasing marketcompetition risk, the market promotion for new product and new technologyslow and the accounts receivable is on the high side. See the related sectionsfor the countermeasures to be taken by the Company.
The Company plans to distribute no cash dividends, no bonus shares andconvert no reserve fund into capital stock.
Chairman of the Board of Directors of the Company Mr. Ji Zhijian, FinancialMajordomo Mrs. Wang Jinxiu, and the head of Accounting Department Mr.Li Sheng hereby confirm that the financial report of the semi-annual report istrue and complete.
This report is written respectively in Chinese and in English. In the event ofany discrepancy between the two above-mentioned versions, the Chineseversion shall prevail.
CONTENTS
Section 1 Important Notice, Table of Contents, and Definitions ...... 2
Section 2 About the Company and Main Financia Indicators ...... 6
Section 3 Management Discussion and Analysis ...... 8
Section 4 Corporate Governance ...... 15
Section 5 Environmental and Social Responsibility ...... 16
Section 6 Important Items ...... 17
Section 7 Change in Share Capital and Shareholders' Information ...... 19
Section 8 Information on Preferred Stock ...... 21
Section 9 Bond Related Information ...... 22
Section 10 Financial Report ...... 23
Reference Documents
1. The accounting statements bearing the signatures and seals of the legal representative, the financial majordomoand the accountants in charge.
2. The original copies of all the Company's documents and the original copies of the bulletins published on thenewspapers designated by the China Securities Regulatory Commission in the report period.
3. Time for reference: from Monday to Friday 8:00 - 11:30 (am) 1:00 - 4:30 (pm)
Liaison persons: Mr. Song Wenbao, Ms Du YuTel: 0086-411-87968130Fax: 0086-411-87968125
Definitions
| Defined item | Stands for | Meaning |
| Reporting period | Stands for | From Jan. 1, 2023 to Jun. 30, 2023 |
| The Company, this Company | Stands for | Bingshan Refrigeration & Heat Transfer Technologies Co.,Ltd. |
| Bingshan Engineering Company | Stands for | Dalian Bingshan Group Engineering Co., Ltd.,one of the subsidiaries of the Company where the Company holds 100% of its shares. |
| Wuxin Refrigeration | Stands for | Wuhan New World Refrigeration Industry Co., Ltd., one of the subsidiaries of the Company where the Company holds 100% of its shares. |
| Sonyo Compressor | Stands for | Sonyo Compressor (Dalian) Co., Ltd. Formerly Panasonic Appliances Compressor (Dalian) Co., Ltd. one of the subsidiaries of the Company, where the Company holds100% of its shares. |
| Sonyo Refrigeration System | Stands for | Sonyo Refrigeration System (Dalian) Co., Ltd. Formerly Panasonic Appliances Refrigeration System (Dalian) Co., Ltd., one of the subsidiary of the Company, where the Company holds 100% of its shares indirectly. |
| Sonyo Refrigeration | Stands for | Sonyo Refrigeration (Dalian) Co., Ltd. Formerly Panasonic Refrigeration (Dalian) Co., Ltd., one of the subsidiary of the Company, where the Company holds 100% of its shares indirectly. |
| Bingshan Guardian | Stands for | Dalian Bingshan Guardian Automation Co., Ltd. one of the subsidiaries of the Company where the Company holds 100% of its shares. |
Section 2 About the Company and Main Financial Indicators
I. Company information
| Short form of the stock | Bingshan; Bingshan B |
| Stock code | 000530; 200530 |
| Listed stock exchange | Shenzhen Stock Exchange |
| Legal name in Chinese | 冰山冷热科技股份有限公司 |
| Short form of legal name | 冰山冷热 |
| Legal English name | Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. |
| Abbreviation of legal English name | Bingshan |
| Legal representative | Ji Zhijian |
II. Contact persons and information
| Secretary of the Board of Directors | Authorized representative for securities affairs | |
| Name | Song Wenbao | Du Yu |
| Address | No.106, Liaohe East Road, Dalian Economic and Technological Development Zone | No.106, Liaohe East Road, Dalian Economic and Technological Development Zone |
| Tel. | 0411-87968130 | 0411-87968822 |
| Fax | 0411-87968125 | 0411-87968125 |
| 000530@bingshan.com | 000530@bingshan.com |
III. Other situations
1. Contact of company
If the registered address, office address and zip code, website, email box of the Company had any change in thereport period
□ Applicable √ Not applicable
2. Information disclosure and place of preparation
If the information disclosure and the place of preparation had any change in the report period
□ Applicable √ Not applicable
The name of newspaper for information disclosure selected by the Company, the address of the website designatedby China Securities Regulatory Commission for carrying semi-annual report, the place where the semi-annual reportof the Company is prepared had no change in the report period. Refer to the Annual Report for 2022 for details.IV. Main accounting data and financial indicators
Did the Company retroactively adjust or restate the accounting data of previous years due to change in theaccounting policy and correction of accounting mistakes?
□ Applicable √ Not applicable
Unit: RMB Yuan
| 2023.1-6 | 2022.1-6 | Increase/decrease compared with the same period of last year | |
| Operating revenue | 2,327,536,713.05 | 1,291,858,908.71 | 80.17% |
| Net profit attributable to shareholders of listed companies | 57,414,399.22 | 29,568,351.52 | 94.18% |
| Net profit belonging to the shareholders of listed companies after the deduction of non-recurring profit and loss | 45,458,170.52 | 10,705,118.35 | 324.64% |
| Net cash flow from operating activities | -126,794,196.98 | -189,406,336.85 | 33.06% |
| Basic earnings per share | 0.07 | 0.04 | 75.00% |
| Diluted earnings per share | 0.07 | 0.04 | 75.00% |
| Weighted average return on net asset yield | 1.87% | 0.98% | Increase 0.89 percentage points |
| 2023.6.30 | 2022.12.31 | Increase/decrease compared with 2022.12.31 | |
| Total assets | 8,258,729,981.21 | 7,601,935,329.60 | 8.64% |
| Owner's equity attributable to shareholders of listed companies | 3,063,605,231.06 | 3,006,190,831.84 | 1.91% |
V.1.Difference of accounting data between as per Chinese accounting standards and as perInternational Accounting Standards
□ Applicable √ Not applicable
2. Difference of accounting data between as per Chinese accounting standards and as perForeign Accounting Standards
The difference of accounting data between as per Chinese Accounting Standards and as per InternationalAccounting Standards was 0.
VI. Non-recurring profits and losses and their amounts
| item | Amount |
| Disposal gains and losses of non-current asset | -493,693.67 |
| Government subsidies included in current profit or loss | 4,263,277.78 |
| Gains and losses on debt restructuring | 975,354.50 |
| Profit or loss arising from contingencies unrelated to the normal operation of the company | 3,290,560.80 |
| When the investment cost of a subsidiary, associate or joint venture is less than that of the investment, an enterprise shall enjoy the income generated by the fair value of the identifiable net assets of the invested entity | 4,364,003.20 |
| Allowance for impairment reversal of receivables tested separately for impairment | 1,037,705.78 |
| Other non-operating revenue or expense | 646,683.82 |
| Influence on income tax | 2,020,903.93 |
| Influence on minority shareholders | 106,759.58 |
| Total | 11,956,228.70 |
Section 3 Management discussion and analysis
I. The Company’s Main business during the reporting periodFocusing on the hot and cold industry, the Company is committed to the development of industrial refrigerationand heating business, commercial refrigeration business, air conditioning and environment business,engineering and service business and new business fields, covering the key areas of the hot and cold industrychain and creating a complete hot and cold industry chain.The Company's main products include piston and screw refrigeration compressors/units, as well as pressurevessels, combination warehouses, controlled atmosphere preservation warehouses, refrigeration stations, etc.The Company provides product sales and comprehensive solutions for both domestic and international markets,with self operated sales as the main focus and channel sales as the auxiliary.In the first half of 2023, rigid demands such as food safety, energy security, consumption upgrading, energyconservation and carbon reduction will benefit the refrigeration and air conditioning industry; At the sametime, the refrigeration and air conditioning industry is also facing issues such as intensified market competitionand difficulties in improving efficiency. Faced with opportunities and challenges, the Company focuses on thehot and cold industries, continuously delving into advantageous segmented markets such as cold chain logistics,petrochemicals, beer and dairy products, meat slaughter, ship refrigeration, ice and snow venues,polycrystalline silicon, and vigorously expanding new businesses such as CCUS, ORC, energy storage thermalmanagement, actively expanding and seizing the domestic market.
1. Industrial refrigeration and heating business
Industrial refrigeration is an important field reflecting the core technology of the Company. After years ofdevelopment, the Company has been close to the technical level of the main international competitors in thefield of industrial refrigeration, and has achieved catching up in some fields. Based on the traditionalrefrigeration, the Company realizes the balance of cold and heat through the utilization of heat, which greatlyimproves the energy utilization rate.During the reporting period, the Company signed many more projects with industry giants such as BASF andPetroChina, and the influence of Bingshan brand in the industry was significantly improved.
2. Commercial refrigeration business
Commercial refrigeration is the Company's core business. In China, the Company takes the lead in opening upthe green intelligent cold chain from the first kilometer of the field to the last 100 meters of the residentialcommunity, which is the competitive advantage of the Company.Focusing on food refrigeration, the Company has patented products pre-cooling from the field, all kinds ofquick freezing equipment and refrigeration facilities of various specifications, and China's leading experiencein the design and installation of large-scale ammonia and carbon dioxide refrigerators. On the basis ofabsorbing the relevant experience of Japan, Europe and the United States, combined with China's new needs,to provide newer products, better solutions and fresher experience for the field of food freezing andrefrigeration.During the reporting period, the Company successfully signed key projects such as Lianyungang Cold ChainLogistics Project, Red Star Cold Chain Direct Supply Center Expansion Project, and Luoyang WanbangAgricultural Products Cold Chain Logistics Park Project.
3. Air conditioning and environment business
In recent years, relying on the complete industrial chain, the Company has continuously carried outtransformation and upgrading in the field of air conditioning and environment, developed more energy-savingand environmental protection products around the blue sky project, and accelerated the transformation and
upgrading from air treatment to environmental governance.At present, the Company has developed a series of innovative products around the market segments ofcommercial air conditioning, central air conditioning and special air conditioning, and provides correspondingsolutions in different segments around these innovative products. For hospitals, electronic factories, high-endreal estate, rail transit and other fields, provide targeted solutions.
4. Engineering and service business
Cold and hot engineering and service are the Company's advantageous business fields. In recent years, theCompany has realized transformation and upgrading from the manufacturer of cold and hot equipment to theservice provider of comprehensive solution of cold and hot through the development of engineering and serviceindustry, and realized the dual wheel drive of the enterprise, and provided more professional and accurateservices to each segment market, and constantly created new value for customers and realized common growth.At present, the Company focuses on petrochemical technology, refrigeration, central air conditioning, ice andsnow engineering, artificial environment and other market segments. Relying on the enterprise's industrialchain, value chain and ecosystem, the Company provides services from consulting, planning, design tomanufacturing, installation, commissioning and service in the whole process and life cycle. At the same time,according to the needs of customers, promote the combination of industry and finance, and provide servicesfor customers through the form of project general contracting and financial leasing.
5. New business
With the deepening of China's economic transformation and upgrading, as well as the continuous introductionof environmental governance policies, the domestic industrial energy conservation and environmentalprotection industry is growing rapidly, the level of energy conservation and consumption reduction ofenterprises and the comprehensive utilization of resources is constantly improving, and the energy industrialstructure has changed. Strengthening the optimal utilization of energy has become a development trend. Forlow-grade energy recycling, the Company provides customers with a series of energy-saving, environmentalprotection, efficient new products, in line with the national strategic requirements of energy conservation,carbon reduction and sustainable development, and contributes professional wisdom to the national carbonpeak and carbon neutral strategy.During the reporting period, the Company made good progress in new businesses such as CCUS, ORC, andenergy storage thermal management.II. Analysis of core competenceThe Company focuses on main business of cold and heat; independent R&D and joint venture partnerships arecooperate with each other effectively; capital resources integration and business model innovation are in a positiveinteraction; the community of business and interest are being multi-storey created; the develop mode with Bingshancharacteristic are formed.The Company has the integrated cold-heat industrial chain for offering kinds of comprehensive solution services,including design, manufacture, installation and maintenance etc., and can satisfy individual requirements preferably.The Company possesses a mature and solid marketing networks and after-sale service network on/off-line, and canoffer high quality and high value-added services more initiative and faster for clients from around the city.
Following the technical route of cold and heat balance, the Company has independently developed a series ofenergy-saving, environment-friendly, efficient and intelligent cold and heat technologies and products, and activelyfulfilled the dual carbon responsibility.While promoting the transformation and upgrading of its inherent business in an orderly manner, the Companyactively cultivates new momentum for development, and the path of sustainable growth is increasingly clear.
During the reporting period, the Company focused on the hot and cold business, deeply cultivated the marketsegment, and steadily improved its sales force, product force, technical force, engineering force and service force,so as to further enhance its core competitiveness.III. Analysis of main businessIn the first half of 2023, the Company focused on hot and cold businesses, deeply cultivated segmented markets,solidly improved core competitiveness, effectively expanded industry influence, and continued to strengthenits main business. In the first half of 2023, the Company achieved an operating revenue of 2,327.54 millionyuan, an increase of 80.17% year-on-year; The net profit attributable to the shareholders of the listed companywas 57.41 million yuan, , an increase of 94.18% year-on-year.
During the reporting period, the Company adhered to principles of innovation and accelerated development.Effectively improving production capacity and efficiency, with monthly output reaching new highs. We haveindependently developed multiple highlight products such as CO
transcritical products, heat pump products,and energy storage products. The Company's CO
pressurized liquefaction device was selected as an innovativeproduct at the 2023 China Refrigeration Exhibition. The Company's falling film semi enclosed screw ice waterunit was selected for the "2022 China Refrigeration Society Energy Conservation and Ecological EnvironmentProduct and Technology Catalog".
During the reporting period, the subsidiary of the Company, Bingshan Engineering Company, and SonyoRefrigerator, collaborated efficiently and continued to deepen their efforts in segmented markets. In the fieldof product business, actively serve high-end customers, and sign many more projects with industry giants suchas BASF Germany and PetroChina; Signed the largest single crystal silicon project in Bingshan history, leadingthe polysilicon market. In the field of engineering, key projects such as Lianyungang Cold Chain LogisticsProject, Red Star Cold Chain Direct Supply Center Expansion Project, and Luoyang Wanbang AgriculturalProducts Cold Chain Logistics Park Project have successfully won the bid. In the field of energy industry,CCUS projects and energy storage thermal management projects have been rapidly promoted.
During the reporting period, the Company's subsidiary Wuhan New World Refrigeration continued to optimizeits products and solutions. Professional support for energy security，and the sales of underground coolingdevices in mines have increased significantly. The water vapor screw compressor unit was selected for the"2023 China Refrigeration Exhibition Innovative Products" and the "2022 China Refrigeration Society EnergyConservation and Ecological Environment Product and Technology Catalog".
During the reporting period, the Company's subsidiary Sonyo Compressor achieved independent innovationand qualitative growth. R290 DC variable frequency vortex compressor for heat pump hot water was selectedas an innovative product at the 2023 China Refrigeration Exhibition. Received the "Excellent Supplier Award"from Songz in 2022.
During the reporting period, the subsidiary of the Company, Bingshan Guardian, focused on energy-savingcontrol of cold and hot systems and innovative development. Develop the Battery management system in thecontrol system of all vanadium Flow battery, and cooperate deeply with key customers such as Rongke Powerand Kaifeng Times Power. Build a 5G fully connected factory, and rapidly promote Digital transformation.
During the reporting period, in order to further strengthen the main business of cooling and heating, the
Company acquired 100% equity of Panasonic Refrigeration after a major asset restructuring in 2022.
Main financial data variations as compared to the same period of last year
Monetary unit: RMB Yuan
| Report period | Same period of last year | Increase or decrease from the same period of last year | Reason for variation | |
| Operating revenue | 2,327,536,713.05 | 1,291,858,908.71 | 80.17% | |
| Operating cost | 1,941,335,530.42 | 1,131,915,209.09 | 71.51% | |
| Selling and distribution expenses | 98,211,645.02 | 55,209,408.15 | 77.89% | |
| Administrative expenses | 103,515,309.49 | 70,074,155.71 | 47.72% | |
| Financial expenses | 16,077,482.38 | 5,470,355.43 | 193.90% | |
| Income tax | 13,930,271.56 | 2,774,153.99 | 402.14% | |
| R&D expenses | 68,628,817.97 | 31,564,520.91 | 117.42% | |
| Net cash flow coming from operating activities | -126,794,196.98 | -189,406,336.85 | 33.06% | |
| Net cash flow coming from investment activities | -27,907,124.82 | 70,350,256.80 | -139.67% | Due to the investment income received in the same period last year more cash and Sonyo Compressor transferred to the subsidiary fixed assets investment |
| Net cash flow coming from fund-raising activities | 62,233,047.18 | 30,185,223.89 | 106.17% | Increase in Merger and acquisition loan |
| Net increase in cash and cash equivalents | -92,995,256.59 | -87,256,638.78 | -6.58% |
Sales income and costs
| Report period | Same period of last year | Increase or decrease from the same period of last year | |||
| Amount | Proportion to the Sales costs | Amount | Proportion to the Sales costs | ||
| Total sales income | 2,327,536,713.05 | 100% | 1,291,858,908.71 | 100% | 80.17% |
| By industry | |||||
| Refrigeration and air-conditioning equipment | 2,270,473,198.19 | 97.55% | 1,246,624,682.46 | 96.50% | 82.13% |
| Others | 57,063,514.86 | 2.45% | 45,234,226.25 | 3.50% | 26.15% |
| By product | |||||
| Industrial products | 1,585,107,993.25 | 68.10% | 912,396,566.62 | 70.63% | 73.73% |
| Installation project | 671,524,488.91 | 28.85% | 328,784,059.27 | 25.45% | 104.24% |
| Other products and services | 70,904,230.89 | 3.05% | 50,678,282.82 | 3.92% | 39.91% |
| Domestic sales | 2,089,711,721.20 | 89.78% | 1,215,091,356.98 | 94.06% | 71.98% |
| Foreign sales | 237,824,991.85 | 10.22% | 76,767,551.73 | 5.94% | 209.80% |
Main business structure
Monetary unit: RMB yuan
| Operating revenue | Operating costs | Gross profit | Increase/decrease of operating revenues from the same period of last year | Increase/decrease of operating costs from the same period of last year | Increase/decrease of gross profit from the same period of last year | |
| By industry | ||||||
| Refrigeration and air-conditioning | 2,270,473,198.19 | 1,911,835,081.08 | 15.80% | 82.13% | 73.63% | Increase 4.13 percentage points |
| By product | ||||||
| Industrial products | 1,585,107,993.25 | 1,290,637,579.53 | 18.58% | 73.73% | 64.52% | Increase 4.56 percentage points |
| Installation project | 671,524,488.91 | 618,792,865.52 | 7.85% | 104.24% | 97.77% | Increase 3.01 percentage points |
| Other products and services | 13,840,716.03 | 2,404,636.03 | 82.63% | 154.24% | -35.15% | Increase 50.75 percentage points |
| By region | ||||||
| Domestic sales | 2,032,651,206.34 | 1,723,655,767.34 | 15.20% | 73.75% | 67.07% | Increase 3.39 percentage points |
| Foreign sales | 237,824,991.85 | 188,179,313.74 | 20.87% | 209.80% | 171.03% | Increase11.31 percentage points |
IV. Analysis of the non-main business
□Applicable√Not applicable
V. Analysis of assets & liabilities
1. Remarkable change in assets
Monetary unit: RMB yuan
| 30-6-2023 | 31-12-2022 | Proportion increase/decrease. | |||
| Amount | Proportion to the total assets | Amount | Proportion to the total assets | ||
| Monetary funds | 935,314,724.32 | 11.33% | 1,006,165,899.18 | 13.24% | Decrease1.91 percentage points |
| Accounts receivable | 1,556,250,566.33 | 18.84% | 1,409,978,442.95 | 18.55% | Increase 0.29 percentage points |
| Contract assets | 295,009,088.87 | 3.57% | 225,790,875.78 | 2.97% | Increase 0.60percentage points |
| Inventories | 1,564,068,652.36 | 18.94% | 1,395,344,780.24 | 18.36% | Increase 0.58 percentage points |
| Investment property | 113,680,574.74 | 1.38% | 115,332,918.20 | 1.52% | Decrease 0.14 percentage points |
| Long-term equity investment | 560,434,511.74 | 6.79% | 562,987,771.94 | 7.41% | Decrease 0.62 percentage points |
| Fixed assets | 1,311,960,863.65 | 15.89% | 1,229,029,368.93 | 16.17% | Decrease 0.28 percentage points |
| Construction in progress | 120,460,980.49 | 1.46% | 115,577,902.54 | 1.52% | Decrease 0.06 percentage points |
| Right of use assets | 17,252,776.14 | 0.21% | 30,941,662.26 | 0.41% | Decrease 0.20 percentage points |
| Short-term loans | 285,525,821.90 | 3.46% | 274,052,990.15 | 3.61% | Decrease 0.15 percentage points |
| Contract liabilities | 778,394,477.23 | 9.43% | 647,645,820.57 | 8.52% | Increase 0.91 percentage point |
| Long-term loans | 739,400,000.00 | 8.95% | 715,100,000.00 | 9.41% | Decrease 0.46percentage points |
| Lease liabilities | 18,816,652.85 | 0.23% | 11,230,532.05 | 0.15% | Increase 0.08 percentage points |
2. The main overseas assets
□ Applicable √ Not applicable
3. Assets & liabilities which are measured by fair value
√ Applicable □ Not applicable
The beginning number is 148,267,008.72 yuan for other non-current financial assets measured by fair value.Changes in the profit and loss of the fair value in this period is 4,364,003.20 yuan, and the final number is152,631,011.92 yuan.
3. Restrictions on asset rights at the end of reporting period
√ Applicable □ Not applicable
| Items | 2023.6.30 | Reasons |
| Monetary fund | 106,646,177.74 | Guarantee money; Frozen funds in bank accounts |
| Notes Receivable | 142,360,499.62 | Pledge |
| Fixed assets | 62,207,555.51 | Pledge |
| Intangible assets | 5,587,198.75 | Pledge |
| Financing of receivables | 1,080,000.00 | Pledge |
| investment property | 32,981,247.79 | Pledge |
VI. Analysis of investments
1.The overall situation
√ Applicable □ Not applicable
| Investment in the report period (yuan) | Investment in the same period of last year (yuan) | Amount of variation |
| 560,434,511.74 | 1,207,390,848.39 | -53.58% |
2.The significant equity investment during the reporting period
□ Applicable √ Not applicable
3 The significant non-equity investment during the reporting period
□Applicable √Not applicable
4.The financial asset investment
(1) The securities investment
√ Applicable □ Not applicable
| Stock code | Stock abbreviation | Initial investment cost | Accounting measurement model | Book value at the beginning | Changes in the profit and loss of the fair value in this period | Accumulative change of fair value credited to equity | Current sale amount | Report period profit and loss | Book value in the ending | Accounting subjects | Source of funds |
| 601211 | Guotai Jun’an | 10,910,008.00 | fair value measurement | 148,267,008.72 | 4,364,003.20 | 10,146,307.44 | 152,631,011.92 | Other Non-current financial assets | Own funds | ||
| total | 10,910,008.00 | -- | 148,267,008.72 | 4,364,003.20 | 10,146,307.44 | 152,631,011.92 | -- | ||||
(2) Derivative investment
□Applicable √ Not applicable
During the reporting period, the Company does not exist derivative investment.VII. The material assets and equity sale
1. The material assets sale
□Applicable √Not applicable
2. The material equity sale
□Applicable √Not applicable
VIII. Analysis of major subsidiary companies and mutual shareholding companies
√ Applicable □ Not applicable
Unit: ten thousand yuan (except for registered capital)
| Company name | Type | The main business | registered capital | total assets | net assets | Operating income | Net profit |
| Sonyo Compressor | mutual shareholding company | Scroll Compressor | 442,396,700 yuan | 149,544 | 104,490 | 63,507 | 5,527 |
| Bingshan Metal Technology | mutual shareholding company | Pipe system connectors, high-speed rail connectors, hydraulic valve bodies, automotive engine parts, etc. | USD 18.0645 million | 41,330 | 34,653 | 23,305 | 2,822 |
Subsidiary companies obtained or disposed in the reporting period
√ Applicable □ Not applicable
The Company purchase 100 percent equity of Sonyo Refrigeration During the reporting period ,the equity transferhas been finished, Sonyo Refrigeration became a wholly-owned subsidiary of the Company.IX. The structured corporate bodies which the Company controlled
□Applicable √Not applicable
X. Main risks the company faces and response measures
(1)Increasing market competition risk
Countermeasures: focus on the hot and cold industry, deeply cultivate the market segmentation; rapidly improvethe engineering and manufacturing power; orderly improve the level of intelligent manufacturing and service-oriented manufacturing; speed up the transformation and upgrading of inherent undertakings; accelerate theimplementation of new kinetic energy cultivation; continue to build Bingshan enterprise and interest community.
(2)Risk of slow marketing of new products and technologies
Countermeasures: create differentiated competitiveness of new products and technologies; strengthen thetechnology marketing and service marketing, and cultivate the market segmentation professionally; appropriate useof financial leasing, contract energy management and other innovative models.
(3)Risk of high level of trade receivables
Countermeasures: strictly implement the project management system and further strengthen the management ofaccounts receivable; enhance quality of contract through intensified customer credit assessment and contractappraisal; effective control of increase in trade receivables by reduction of guarantee deposits, and taking bankcredit instruments as guarantee deposits; improve contract execution through stricter review on goods delivery,
intensified control on project construction and acceptance, and post-sale service; prepare special compositionsolutions and incentive policy to accelerate settlement of trade receivables with relatively long aging.
Section 4 Corporate governance
I. Shareholders’ general meeting convened in the reporting period
| Session number of meeting | The type of the meeting | The proportion of participate investors | date | Disclosing date | Disclosing index |
| 2022Annual Shareholders’ General Meeting | Annual Shareholders’ General Meeting | 29.44% | May 26,2023 | May 27,2023 | http://www.cninfo.com.cn |
II. Changes of directors, supervisors, senior managers of the Company
□ Applicable √ Not applicable
III. Profit distribution and dividend payment
□ Applicable √ Not applicable
IV．The implementation and effect of equity incentive
□ Applicable √ Not applicable
Section 5 Environmental and social responsibility
I．Major environmental issuesThe listed company and its subsidiaries whether belong to heavy pollution industry formulated by the stateenvironmental protection department
√Yes □ No
Bingshan Sonyo Compressor (Dalian) Co., Ltd., and Wuhan New World Refrigeration Industry Co., Ltd. are thekey pollutant discharge unit announced by the environmental protection departments.Administrative penalties imposed for environmental problems during the reporting period
□Yes √ No
Measures and effects taken by the Company to reduce carbon emissionsDuring the reporting period, the Company orderly promoted the construction of zero carbon factories by improvingenergy efficiency, adopting energy-saving technologies, and utilizing renewable energy.
During the reporting period, the Company implemented the green, energy-saving and efficient lean production modein the production process, continuously improved the operation mode, improved the operation efficiency, reducedthe operation cost, and continued to move forward towards intelligent manufacturing and green manufacturing.
During the reporting period, the phase I photovoltaic power generation project constructed by the Company usingthe roofs of some plants in the new plant area operated smoothly as a whole. The installed power of the project is
3.4 MW, the annual power generation is about 4.08 million kwh, and the annual carbon dioxide emission is reducedby about 4067 tons.
During the reporting period, based on energy-saving and carbon reduction technologies such as high-efficiencyenergy-saving compressors, green refrigerants and CCUS, the Company completed a number of energy-saving andcarbon reduction projects with customers, creating good economic and social benefitsII．Social responsibilitiesIn the first half of 2023, the Company continued to consolidate and expand the achievements of poverty alleviationand rural revitalization, connecting with Songlin Village, Guangshan Town, Zhuanghe City, and carrying out dailymaintenance of the air-conditioning equipment of the villagers' cultural activities center. In addition, the companyand investment enterprises jointly donated 250,000 yuan to support the construction of Bingshan Hope School andHope Book Corner to fulfill social welfare responsibilities.
Section 6 Important items
I. Commitments made by the actual controller, shareholders, related parties, purchasers,the company and other relevant parties that have completed their performance duringthe reporting period and have not completed their performance as of the end of thereporting period
□ Applicable √ Not applicable
II. Non-operation capital occupation by holding shareholders and their related partiesin the listed company
□ Applicable √ Not applicable
III. Foreign guarantee in violation of regulations
□ Applicable √ Not applicable
IV. Engagement and dismissal of the accounting firm
□ Applicable √ Not applicable
V. Explain to the “non standard audit report” of this reporting period from the boardof directors, board of supervisors of the Company
□Applicable √Not applicable
VI. Explain to the “non standard audit report” last year from the board of directors ofthe Company
□Applicable √Not applicable
VII. Bankruptcy restructuring related matters
□ Applicable √ Not applicable
VIII. Major lawsuit issues
□ Applicable √ Not applicable
The Company had no major lawsuit issues in the reporting period.IX. Punishment and rectification
□ Applicable √ Not applicable
X. The credibility of Companies and its controlling shareholder, actual controller
√ Applicable □ Not applicable
The controlling shareholder of the Company and the Company don’t exist situation such as unfulfilled thecourt’s effective judgments or failed to pay duly a large amount of debt during the reporting period.XI. Important associated transactions
1. Important associated transactions
In the reporting period, the total amount of normal associated transactions between the Company andassociated parties was 379,150 thousand yuan, accounting for 45.76% of the budgeted amount for theyear 2023. This included 109,530 thousand yuan, accounting for 42.54% of the budgeted amount for theyear 2023, for purchasing supporting products for package projects from associated parties, and 269,620thousand yuan, accounting for47.21% of the budgeted amount for the year 2023, from selling supportingparts and components to associated parties.
2.Associated transactions related to purchases or sales of assets
□ Applicable √ Not applicable
3.Important associated transactions with joint external investments
□ Applicable √ Not applicable
4.Current associated rights of credit and liabilities
□ Applicable √ Not applicable
5. Current associated rights of credit and liabilities with related financial companies orfinancial companies that the company holds
□ Applicable √ Not applicable
6. Other associated transactions
√ Applicable □ Not applicable
The Company purchase 100 percent equity of Sonyo Refrigeration during the reporting period, the equitytransfer has been finished, Sonyo Refrigeration became a wholly-owned subsidiary of the Company, whichconstitutes a related party transaction, has been completed.
XII．Major contract and its performance
1. Hosting, contracting and leasing status
(1) the hosting status
□ Applicable √ Not applicable
(2) the contracting status
□ Applicable √ Not applicable
(3) the leasing status
√ Applicable □ Not applicable
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 DevelopmentZone to MHI Bingshan Refrigeration (Dalian) Co., Ltd. The rental area is 15,259.04 square meters, and therental term till 16
thJuly, 2029. The annual rent fee for 2023 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 2023 is RMB 9.5106 million Yuan.On March 17, 2021, the Company signed a lease contract with Linde Hydrogenation Station Equipment(Dalian) Co., LTD., which will lease the 8,700 square meters of plant and office located at No. 106, EastLiaohe Road, Dalian Development Zone to Linde Hydrogenation Station Equipment (Dalian) Co., LTD.The lease term will be up to December 31, 2030, and the current rent is RMB 2.5724 million Yuan.
2. Guaranteeing status
√ Applicable □ Not applicable
China Development Fund provides support for the Company's cold chain green intelligent equipment andservice industrialization base project, and provides special funds to the controlling shareholder of theCompany, Bingshan Group. The above-mentioned special fund amount is 160 million yuan, with a term of10 years and a rate of 1.2%. After the above special funds are in place, Bingshan Group has fully allocatedthem to the Company in a one-time manner without increasing the rate. The implementation of the above-mentioned special funds requires the Company to provide guarantees and continue until the reportingperiod. This guarantee is in the form of a guarantee for the controlling shareholder, but in fact, it is aguarantee for the Company to obtain financial support for itself.The Company provided guarantees for its client Guizhou Waterfall Cold Chain Food Investment Co., Ltd.;s Liuyang Zhongjie Technology Investment Co., Ltd; Shandong Jiechuang Energy Technology Co., Ltd.,and Shaanxi Yiming Food Co., Ltd. based on financing leasing business, which lasted until the reportingperiod, with a guarantee amount of 25.705 million yuan. The project is currently being fulfilled normally,and the guaranteed shareholders and relevant natural persons have provided the Company with a fullamount of joint and several liability guarantee and counter guarantee. The overall risk of the Company'sguarantee is controllable.The Company provides guarantees for clients Jilin Fuyu Agricultural Technology Co., Ltd. providesguarantee based on financing leasing business. The guaranteed party has good qualifications, and theguaranteed party's shareholders and relevant natural or legal persons have provided full joint and severalliability guarantee and counter guarantee to the Company. The Company's guarantee risk is generallycontrollable and does not harm the legitimate rights and interests of the Company and small and medium-sized shareholders.The above guarantee matters have been reviewed by the board of directors and are being fulfilled normally.
3.Entrusted Financial Management
□ Applicable √ Not applicable
4. Major contract of daily operation
□ Applicable √ Not applicable
5. Other important contracts
□Applicable √Not applicable
XIII. Description of other important matters
□Applicable √Not applicable
XV. Major matters of the company's subsidiaries
□Applicable √Not applicable
Section 7 Change in Share Capital and Shareholders'
Information
I. Change in share capital
1. Change in share capital
| items | （before change） | Changes | （after change） | ||
| number | proportion | number | proportion | ||
| I. Non-circulating share capital with restricted trade conditions | 1,670,894 | 0.20% | 0 | 1,670,894 | 0.20% |
| Other domestic shares | 1,670,894 | 0.20% | 0 | 1,670,894 | 0.20% |
| II. Circulating share capital | 841,541,613 | 99.80% | 0 | 841,541,613 | 99.80% |
| 1. Domestically listed ordinary shares | 600,041,613 | 71.16% | 0 | 600,041,613 | 71.16% |
| 2. Domestically listed foreign shares | 241,500,000 | 28.64% | 0 | 241,500,000 | 28.64% |
| III. Total shares | 843,212,507 | 100.00% | 0 | 843,212,507 | 100.00% |
The reason for the Change in share capital
□ Applicable √ Not applicable
Approval of changes in shares
□ Applicable √ Not applicable
The influence of change in share capital on the recent year and recent issue for basic earnings pershare ,diluted earnings per share and net assets per share.
□ Applicable √ Not applicable
2. The restricted shares changes
□ Applicable √ Not applicable
II. Securities issuance and listing
1. Securities issuance in the report period
□ Applicable √ Not applicable
III. Shareholders and actual controller
1. Number of shareholders and their shareholding
| Total number of shareholders in the reporting period | 60,735 | Total number of shareholders as of the last month before disclosure of the annual report | -- | ||||||
| Shareholding of top ten shareholders | |||||||||
| Name | Nature | Proportion | Total number | Number of shares with sale restriction | Number of pledged shares or shares frozen | ||||
| Dalian Bingshan Group Co., Ltd. | Domestic non-state-owned legal person | 20.27% | 170,916,934 | ||||||
| Sanyo Electric Co., Ltd. | Overseas legal person | 8.72% | 73,503,150 | ||||||
| Zhang Sufen | Domestic natural person | 1.58% | 13,300,000 | ||||||
| Chen Xianlai | Domestic natural person | 0.83% | 7,000,000 | ||||||
| Lin Zhenming | Foreign natural person | 0.80% | 6,730,000 | ||||||
| Chen Yong | Domestic natural person | 0.50% | 4,177,700 | ||||||
| Wu Dafu | Domestic natural person | 0.47% | 4,000,000 | ||||||
| Xue Hong | Domestic natural person | 0.43% | 3,620,000 | ||||||
| Dalian industrial development investment Co., Ltd. | Domestic non-state-owned legal person | 0.40% | 3,406,725 | ||||||
| Chen Cirou | Domestic natural person | 0.40% | 3,374,280 | ||||||
| Shareholding of top ten shareholders without sale restriction | |||||||||
| Name | Number of shares without sale restriction | Type of shares | |||||||
| Dalian Bingshan Group Co., Ltd. | 170,916,934 | RMB denominated ordinary shares |
| Sanyo Electric Co., Ltd. | 73,503,150 | Domestically listed foreign shares |
| Zhang Sufen | 13,300,000 | RMB denominated ordinary shares |
| Chen Xianlai | 7,000,000 | RMB denominated ordinary shares |
| Lin Zhenming | 6,730,000 | Domestically listed foreign shares |
| Chen Yong | 4,177,700 | RMB denominated ordinary shares |
| Wu Dafu | 4,000,000 | RMB denominated ordinary shares |
| Xue Hong | 3,620,000 | Domestically listed foreign shares |
| Dalian industrial development investment Co., Ltd. | 3,406,725 | RMB denominated ordinary shares |
| Chen Cirou | 3,374,280 | Domestically listed foreign shares |
| Notes to the associated relationship and uniform actions of the above shareholders | Dalian Bingshan Group Co., Ltd. had the association relationship with Sanyo Electric Co., Ltd. among the above shareholders. Sanyo Electric Co., Ltd. holds 26.6% of Dalian Bingshan Group Co., Ltd.'s equity. | |
At the end of the reporting period, the total number of shareholders of the Company was 60,735, including53,498 A-share shareholders and 7,237 B-share shareholders.
If the Company shareholders had any agreed repurchase transaction in the report period
□ Yes √ No
IV. Changes in shareholding of directors, supervisors and senior managers
□ Applicable √ Not applicable
V. Variation in controlling shareholders or actual controllersVariation in controlling shareholders in the report period
□ Applicable √ Not applicable
There were no changes in the controlling shareholder in the reporting period.Variation in actual controllers in the report period
□ Applicable √ Not applicable
Section 8 Information on Preferred Stock
□ Applicable √ Not applicable
In the reporting period, the Company didn’t own preferred stock.
Section 9 Bond Related Information
□ Applicable √ Not applicable
In the reporting period, the Company didn’t own Bond.
Section 10 Financial ReportI. The Company's semiannual financial report has not been audited.
| BALANCE SHEET |
| Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. June 30, 2023 Unit: RMB Yuan |
Items
| Items | 30-June-2023 | 1-Jan-2023 | ||
| Consolidation | Parent Company | Consolidation | Parent Company | |
| Current assets: | ||||
Monetary funds
| Monetary funds | 935,314,724.32 | 121,338,274.25 | 1,006,165,899.18 | 361,446,559.26 |
| Financial assets which are measured by fair value and which changes are recorded in current profit and loss |
Derivative financial assets
| Derivative financial assets |
Transaction financial assets
| Transaction financial assets | ||||
| Notes receivable | 436,138,232.96 | 73,504,466.57 | 505,945,261.18 | 100,218,283.64 |
Accounts receivable
| Accounts receivable | 1,556,250,566.33 | 748,681,197.81 | 1,409,978,442.95 | 629,954,649.50 |
| Receivables financing | 289,036,299.90 | 46,450,544.61 | 58,792,792.70 | 12,451,483.74 |
Accounts paid in advance
| Accounts paid in advance | 181,132,850.78 | 86,549,600.31 | 171,991,468.12 | 61,446,678.23 |
Other receivables
| Other receivables | 56,174,612.60 | 41,937,269.90 | 51,394,474.24 | 36,021,805.53 |
| Interest receivables |
Dividend receivable
| Dividend receivable | 4,361,299.55 | 10,184,798.49 | 14,495.00 | |
| Inventories | 1,564,068,652.36 | 366,751,018.14 | 1,395,344,780.24 | 342,276,945.65 |
Contract assets
| Contract assets | 295,009,088.87 | 108,391,267.34 | 225,790,875.78 | 83,739,043.68 |
Assets held for sale
| Assets held for sale | ||||
| Non-current asset due within one year | 12,571,309.30 | 12,571,309.30 | 15,715,631.52 | 15,715,631.52 |
Other current assets
| Other current assets | 72,026,226.30 | 234,800.41 | 33,499,577.60 | 565,836.48 |
| Total current assets | 5,397,722,563.72 | 1,606,409,748.64 | 4,874,619,203.51 | 1,643,836,917.23 |
Non-current assets:
| Non-current assets: |
Finance asset held available for sales
| Finance asset held available for sales | ||||
| Held-to-maturity investment |
Long-term account receivable
| Long-term account receivable | 5,162,458.90 | 5,162,458.90 | 5,162,458.90 | 5,162,458.90 |
| Long-term equity investment | 560,434,511.74 | 2,861,738,379.20 | 562,987,771.94 | 2,720,998,153.80 |
Other Non-current financial assets
| Other Non-current financial assets | 154,314,864.51 | 152,999,722.01 | 149,950,861.31 | 148,635,718.81 |
Investment property
| Investment property | 113,680,574.74 | 88,683,297.10 | 115,332,918.20 | 90,986,890.03 |
| Fixed assets | 1,311,960,863.65 | 624,832,328.27 | 1,229,029,368.93 | 646,432,825.98 |
Construction in progress
| Construction in progress | 120,460,980.49 | 58,072,120.16 | 115,577,902.54 | 48,905,875.93 |
| Right of use assets | 17,252,776.14 | 13,737,818.45 | 30,941,662.26 | 14,975,625.90 |
Engineering material
| Engineering material |
Disposal of fixed asset
| Disposal of fixed asset | ||||
| Productive biological asset |
Oil and gas asset
| Oil and gas asset | ||||
| Intangible assets | 200,766,768.53 | 70,101,114.73 | 168,076,720.07 | 72,158,994.17 |
Expense on Research and Development
| Expense on Research and Development |
Goodwill
| Goodwill | 270,800,976.03 | - | 248,345,508.41 | - |
| Long-term expenses to be apportioned | 6,061,988.51 | 4,994,056.53 | 6,486,566.92 | 5,553,733.11 |
Deferred income tax asset
| Deferred income tax asset | 100,110,654.25 | 23,177,703.42 | 95,424,386.61 | 21,597,992.46 |
| Other non-current asset |
Total non-current asset
| Total non-current asset | 2,861,007,417.49 | 3,903,498,998.77 | 2,727,316,126.09 | 3,775,408,269.09 |
| Total assets | 8,258,729,981.21 | 5,509,908,747.41 | 7,601,935,329.60 | 5,419,245,186.32 |
Current liabilities:
| Current liabilities: |
Short-term loans
| Short-term loans | 285,525,821.90 | 229,000,000.00 | 274,052,990.15 | 234,980,000.00 |
| Financial liabilities which are measured by fair value and which changes are recorded in current profit and loss | ||||
| Derivative financial liabilities |
Transaction financial liabilities
| Transaction financial liabilities |
Notes payable
| Notes payable | 702,812,950.62 | 299,694,457.74 | 618,944,384.85 | 259,002,815.07 |
| Accounts payable | 1,772,786,424.04 | 417,924,008.98 | 1,586,098,060.59 | 406,794,291.57 |
Accounts received in advance
| Accounts received in advance | ||||
| Contract liabilities | 778,394,477.23 | 148,129,305.72 | 647,645,820.57 | 139,622,706.08 |
Wage payable
| Wage payable | 99,905,376.28 | 97,305.73 | 118,216,683.23 | 14,557,783.63 |
Taxes payable
| Taxes payable | 27,175,496.50 | 6,213,244.20 | 33,691,523.62 | 9,430,543.11 |
| Other accounts payable | 81,615,830.24 | 24,066,504.88 | 67,054,250.25 | 21,061,597.80 |
Interest payable
| Interest payable | ||||
| Dividend payable | 8,965,281.07 | 8,965,281.07 | 533,156.00 | 533,156.00 |
Liabilities held for sale
| Liabilities held for sale |
Non-current liabilities due within one year
| Non-current liabilities due within one year | 103,835,713.78 | 85,205,472.33 | 63,105,954.56 | 42,972,752.44 |
| Other current liabilities | 321,182,483.03 | 76,380,653.81 | 204,650,003.24 | 106,146,986.20 |
Total current liabilities
| Total current liabilities | 4,173,234,573.62 | 1,286,710,953.39 | 3,613,459,671.06 | 1,234,569,475.90 |
| Non-current liabilities: |
Long-term loans
| Long-term loans | 739,400,000.00 | 739,400,000.00 | 715,100,000.00 | 715,100,000.00 |
Bonds payable
| Bonds payable | ||||
| Preferred stock |
Perpetual bond
| Perpetual bond | ||||
| Lease liability | 18,816,652.85 | 11,714,291.84 | 11,230,532.05 | 12,613,986.87 |
Long-term account payable
| Long-term account payable | 27,261,665.26 | 8,079,947.11 | 31,009,644.16 | 12,908,810.87 |
Long-term wage payable
| Long-term wage payable | ||||
| Special Payable |
Anticipation liabilities
| Anticipation liabilities | 15,266,933.73 | 18,805,967.43 | ||
| Deferred income | 98,148,550.01 | 59,553,048.01 | 99,754,346.39 | 61,685,846.39 |
Deferred income tax liabilities
| Deferred income tax liabilities | 66,823,727.27 | 22,705,866.88 | 52,306,365.68 | 20,603,550.11 |
Other non-current liabilities
| Other non-current liabilities | ||||
| Total non-current liabilities | 965,717,529.12 | 841,453,153.84 | 928,206,855.71 | 822,912,194.24 |
Total liabilities
| Total liabilities | 5,138,952,102.74 | 2,128,164,107.23 | 4,541,666,526.77 | 2,057,481,670.14 |
| Shareholders’ equity |
Share capital
| Share capital | 843,212,507.00 | 843,212,507.00 | 843,212,507.00 | 843,212,507.00 |
Other equity instruments
| Other equity instruments | ||||
| Preferred stock |
Perpetual bond
| Perpetual bond | ||||
| Capital public reserve | 717,097,098.38 | 755,146,592.54 | 717,097,098.38 | 755,146,592.54 |
Less: Treasury stock
| Less: Treasury stock |
Other comprehensive income
| Other comprehensive income | 2,208,669.73 | 1,246,569.06 | 2,208,669.73 | 1,246,569.06 |
| Special preparation |
Surplus public reserve
| Surplus public reserve | 825,226,634.15 | 825,226,634.15 | 825,226,634.15 | 825,226,634.15 |
| Generic risk reserve |
Retained profit
| Retained profit | 675,860,321.80 | 956,912,337.43 | 618,445,922.58 | 936,931,213.43 |
| Total owner’s equity attributable to parent company | 3,063,605,231.06 | 3,381,744,640.18 | 3,006,190,831.84 | 3,361,763,516.18 |
Minority interests
| Minority interests | 56,172,647.41 | - | 54,077,970.99 | - |
Total owner’s equity
| Total owner’s equity | 3,119,777,878.47 | 3,381,744,640.18 | 3,060,268,802.83 | 3,361,763,516.18 |
| Total liabilities and shareholder’s equity | 8,258,729,981.21 | 5,509,908,747.41 | 7,601,935,329.60 | 5,419,245,186.32 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
| INCOME STATEMENT | ||||
| Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January-June, 2023 Unit: RMB Yuan | ||||
| Items | ||||
| January-June, 2023 | January-June, 2022 | |||
| Consolidation | Parent Company | Consolidation | Parent Company | |
I. Total sales
| I. Total sales | 2,327,536,713.05 | 561,507,191.57 | 1,291,858,908.71 | 468,001,628.25 |
| II. Total operating cost | 2,244,978,370.92 | 561,507,191.57 | 1,304,025,021.32 | 486,496,189.37 |
Including: Operating cost
| Including: Operating cost | 1,941,335,530.42 | 462,573,454.21 | 1,131,915,209.09 | 407,577,362.51 |
Taxes and associate charges
| Taxes and associate charges | 17,209,585.63 | 6,734,597.24 | 9,791,372.03 | 5,558,409.19 |
| Selling and distribution expenses | 98,211,645.02 | 24,951,968.65 | 55,209,408.15 | 20,533,128.73 |
Administrative expenses
| Administrative expenses | 103,515,309.49 | 31,968,790.92 | 70,074,155.71 | 34,892,044.21 |
| R&D expenses | 68,628,817.97 | 15,845,215.75 | 31,564,520.91 | 14,040,048.85 |
Financial expense
| Financial expense | 16,077,482.38 | 14,942,066.91 | 5,470,355.43 | 3,863,954.55 |
Including: interest expense
| Including: interest expense | 19,165,466.43 | 14,246,006.33 | 7,533,477.17 | 4,561,734.35 |
| interest income | 5,451,984.39 | 735,367.41 | 2,004,850.77 | 1,542,821.77 |
Add: Other income
| Add: Other income | 1,814,789.04 | 100,000.00 | 1,984,170.62 | 31,241.33 |
| Gain/(loss) from investment | 6,848,068.69 | 29,661,828.13 | 83,743,763.15 | 88,227,124.82 |
Including: income from investment onaffiliated enterprise and jointly enterprise
| Including: income from investment on affiliated enterprise and jointly enterprise | 90,409.95 | -183,975.05 | 16,955,402.09 | 16,926,568.63 |
Gain/(loss) from change in fair value (loss as “-“)
| Gain/(loss) from change in fair value (loss as “-“) | 4,364,003.20 | 4,364,003.20 | -29,425,921.52 | -29,425,921.52 |
| Credit impairment loss (loss as “-“) | -19,302,777.86 | -5,984,187.92 | -12,091,879.71 | -1,460,424.20 |
| Assets impairment loss (loss as “-“) | -4,905,134.78 | -1,472,892.79 | -775,665.61 | -632,818.79 |
Gain/(loss) from asset disposal (loss as “-“)
| Gain/(loss) from asset disposal (loss as “-“) | 51,209.01 | 0.00 | 67,260.20 | 1,451.76 |
III. Operating profit
| III. Operating profit | 71,428,499.43 | 31,159,848.51 | 31,335,614.52 | 38,277,333.61 |
| Add: non-business income | 4,268,645.77 | 9,639.35 | 1,610,684.35 | 20,000.08 |
Less: non-business expense
| Less: non-business expense | 2,257,797.99 | 70,000.00 | 332,644.57 | |
| IV. Total profit | 73,439,347.21 | 31,099,487.86 | 32,613,654.30 | 38,297,333.69 |
Less: Income tax
| Less: Income tax | 13,930,271.56 | 2,686,238.79 | 2,774,153.99 | 1,234,987.29 |
V. Net profit
| V. Net profit | 59,509,075.65 | 28,413,249.07 | 29,839,500.31 | 37,062,346.40 |
| (I) Net profit from continuous operation | 59,509,075.65 | 28,413,249.07 | 29,839,500.31 | 37,062,346.40 |
(II)Net profit from discontinuing operation
| (II)Net profit from discontinuing operation | ||||
| Net profit attributable to parent company | 57,414,399.22 | 28,413,249.07 | 29,568,351.52 | 37,062,346.40 |
Minority shareholders’gains and losses
| Minority shareholders’ gains and losses | 2,094,676.43 | 271,148.79 |
VI. After-tax net amount of other comprehensiveincomes
| 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 bereclassified into gains and losses
| (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
| 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 bereclassified into gains and losses
| (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 lossesunder the equity method
| 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
| 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
| 5. Foreign-currency financial statement translation difference |
、Others
| 6、Others | ||||
| …… |
After-tax net amount of other comprehensive incomesattributable to minority shareholders
| After-tax net amount of other comprehensive incomes attributable to minority shareholders |
VII Total comprehensive income
| VII Total comprehensive income | 59,509,075.65 | 28,413,249.07 | 29,839,500.31 | 37,062,346.40 |
| Total comprehensive income attributable to parent company | 57,414,399.22 | 29,568,351.52 | 37,062,346.40 |
Total comprehensive income attributable to minorityshareholders
| Total comprehensive income attributable to minority shareholders | 2,094,676.43 | 271,148.79 | ||
| VIII. Earnings per share |
(I) basic earnings per share
| (I) basic earnings per share | 0.07 | 0.04 |
(II) diluted earnings per share
| (II) diluted earnings per share | 0.07 | 0.04 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
| CASH FLOW STATEMENT |
| Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January -June, 2023 Unit: RMB Yuan |
Items
| Items | January -June, 2023 | January -June, 2022 | ||
| Consolidation | Parent Company | Consolidation | Parent Company | |
| I. Cash flows arising from operating activities: | ||||
Cash received from selling commodities and providinglabor services
| Cash received from selling commodities and providing labor services | 1,897,060,493.23 | 416,876,256.09 | 1,261,666,720.62 | 352,345,258.81 |
| Write-back of tax received | 9,988,890.50 | 11,560,593.20 | 4,006,659.69 |
Other cash received concerning operating activities
| Other cash received concerning operating activities | 52,698,239.72 | 7,689,232.01 | 27,127,455.59 | 5,384,314.18 |
Subtotal of cash inflow arising from operating activities
| Subtotal of cash inflow arising from operating activities | 1,959,747,623.45 | 424,565,488.10 | 1,300,354,769.41 | 361,736,232.68 |
| Cash paid for purchasing commodities and receiving labor service | 1,457,105,820.91 | 474,452,446.24 | 1,193,219,986.59 | 496,371,451.85 |
Cash paid to/for staff and workers
| Cash paid to/for staff and workers | 369,826,569.78 | 62,530,285.96 | 188,402,543.12 | 62,633,591.91 |
Taxes paid
| Taxes paid | 107,685,392.77 | 28,543,318.27 | 31,106,515.38 | 11,139,042.04 |
| Other cash paid concerning operating activities | 151,924,036.97 | 26,003,055.24 | 77,032,061.17 | 32,464,131.37 |
Subtotal of cash outflow arising from operating activities
| Subtotal of cash outflow arising from operating activities | 2,086,541,820.43 | 591,529,105.71 | 1,489,761,106.26 | 602,608,217.17 |
| Net cash flows arising from operating activities | -126,794,196.98 | -166,963,617.61 | -189,406,336.85 | -240,871,984.49 |
II. Cash flows arising from investing activities:
| II. Cash flows arising from investing activities: |
Cash received from recovering investment
| Cash received from recovering investment | 300,000.00 | 300,000.00 | ||
| Cash received from investment income | 5,796,799.24 | 24,022,304.24 | 76,499,887.00 | 76,474,242.00 |
Net cash received from disposal of fixed, intangible andother long-term assets
| Net cash received from disposal of fixed, intangible and other long-term assets | 434,242.64 | 30,000.00 | 361,191.28 | 5,000.00 |
Net cash received from disposal of subsidiaries and otherunits
| Net cash received from disposal of subsidiaries and other units | 0.00 | 5,605,792.62 | 25,888,200.00 | |
| Other cash received concerning investing activities | 0.00 |
Subtotal of cash inflow from investing activities
| Subtotal of cash inflow from investing activities | 6,231,041.88 | 24,052,304.24 | 82,766,870.90 | 102,667,442.00 |
Cash paid for purchasing fixed, intangible and otherlong-term assets
| Cash paid for purchasing fixed, intangible and other long-term assets | 22,081,215.68 | 6,203,763.76 | 12,416,614.10 | 9,320,136.74 |
| Cash paid for investment | 145,285,500.00 |
Net cash paid for achievement of subsidiaries and otherbusiness units
| Net cash paid for achievement of subsidiaries and other business units | 12,056,951.02 | |||
| Other cash paid concerning investing activities |
Subtotal of cash outflow from investing activities
| Subtotal of cash outflow from investing activities | 34,138,166.70 | 151,489,263.76 | 12,416,614.10 | 9,320,136.74 |
Net cash flows arising from investing activities
| Net cash flows arising from investing activities | -27,907,124.82 | -127,436,959.52 | 70,350,256.80 | 93,347,305.26 |
| III. Cash flows arising from financing activities |
Cash received from absorbing investment
| Cash received from absorbing investment |
Including: Cash received from absorbing minorityshareholders' equity investment by subsidiaries
| Including: Cash received from absorbing minority shareholders' equity investment by subsidiaries | ||||
| Cash received from loans | 345,525,821.90 | 316,000,000.00 | 240,850,000.00 | 229,000,000.00 |
Cash received from issuing bonds
| Cash received from issuing bonds | ||||
| Other cash received concerning financing activities | 6,600,000.00 | 95,778,131.09 | 21,144,709.02 |
Subtotal of cash inflow from financing activities
| Subtotal of cash inflow from financing activities | 352,125,821.90 | 316,000,000.00 | 336,628,131.09 | 250,144,709.02 |
Cash paid for settling debts
| Cash paid for settling debts | 252,466,250.00 | 246,450,000.00 | 237,845,000.00 | 237,845,000.00 |
| Cash paid for dividend and profit distributing or interest paying | 15,175,950.51 | 13,745,417.12 | 12,340,724.16 | 8,186,734.35 |
Including: dividends or profit paid by subsidiaries tominority shareholders
| Including: dividends or profit paid by subsidiaries to minority shareholders |
Other cash paid concerning financing activities
| Other cash paid concerning financing activities | 22,250,574.21 | 1,267,500.00 | 56,257,183.04 | 612,000.00 |
| Subtotal of cash outflow from financing activities | 289,892,774.72 | 261,462,917.12 | 306,442,907.20 | 246,643,734.35 |
Net cash flows arising from financing activities
| Net cash flows arising from financing activities | 62,233,047.18 | 54,537,082.88 | 30,185,223.89 | 3,500,974.67 |
| IV. Influence on cash due to fluctuation in exchange rate | -526,981.97 | 1,614,217.38 | -15.49 |
| V. Net increase of cash and cash equivalents | -92,995,256.59 | -239,863,494.25 | -87,256,638.78 | -144,023,720.05 |
Add: Balance of cash and cash equivalents at the period -begin
| Add: Balance of cash and cash equivalents at the period -begin | 921,663,803.17 | 361,032,768.50 | 438,969,337.87 | 369,932,989.19 |
VI. Balance of cash and cash equivalents at the period–end
| VI. Balance of cash and cash equivalents at the period–end | 828,668,546.58 | 121,169,274.25 | 351,712,699.09 | 225,909,269.14 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY
Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd 2023.01-06 Unit: RMB Yuan
| Items | 2023.01-06 | ||||||||
| 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 | ||||
| I. balance at the end of last year | 843,212,507.00 | 717,097,098.38 | 2,208,669.73 | 825,226,634.15 | 618,445,922.58 | 54,077,970.99 | 3,060,268,802.83 | ||
| 1. Change of accounting policy | |||||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 843,212,507.00 | 717,097,098.38 | 2,208,669.73 | 825,226,634.15 | 618,445,922.58 | 54,077,970.99 | 3,060,268,802.83 | ||
| III. Increase/ decrease of amount in this year (“-” means decrease) | 57,414,399.22 | 2,094,676.42 | 59,509,075.64 | ||||||
| (I) Total comprehensive incomes | 57,414,399.22 | 2,094,676.42 | 59,509,075.64 | ||||||
| (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 | |||||||||
| 1. Withdrawing surplus public reserve | |||||||||
| 2. Distribution to all owners (shareholders) | |||||||||
| 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 | |||||||||
| 2. Used in the period | |||||||||
| (VI) Other | |||||||||
| IV. Balance at the end of this period | 843,212,507.00 | 717,097,098.38 | 2,208,669.73 | 825,226,634.15 | 675,860,321.80 | 56,172,647.41 | 3,119,777,878.47 | ||
| Items | 2022.01-06 | ||||||||
| 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 | ||||
| I. balance at the end of last year | 843,212,507.00 | 720,215,866.78 | 2,178,681.73 | 809,471,199.64 | 627,764,582.32 | 46,654,771.50 | 3,049,497,608.97 | ||
| 1. Change of accounting policy | |||||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 843,212,507.00 | 720,215,866.78 | 2,178,681.73 | 809,471,199.64 | 627,764,582.32 | 46,654,771.50 | 3,049,497,608.97 | ||
| III. Increase/ decrease of amount in this year (“-” means decrease) | 336,172.00 | 21,136,226.45 | -880,172.94 | 19,919,881.51 | |||||
| (I) Total comprehensive incomes | 29,568,351.52 | 271,148.79 | 29,839,500.31 | ||||||
| (II) Capital increased and reduced by owners | 648,678.27 | 648,678.27 | |||||||
| 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 | 648,678.27 | 648,678.27 | |||||||
| (III) Profit distribution | -8,432,125.07 | -1,800,000.00 | -10,232,125.07 | ||||||
| 1. Withdrawing surplus public reserve | |||||||||
| 2. Distribution to all owners (shareholders) | -8,432,125.07 | -1,800,000.00 | -10,232,125.07 | ||||||
| 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 | |||||||||
| 2. Used in the period | |||||||||
| (VI) Other | -336,172.00 | -336,172.00 | |||||||
| IV. Balance at the end of this period | 843,212,507.00 | 719,879,694.78 | 2,178,681.73 | 809,471,199.64 | 648,900,808.77 | 45,774,598.56 | 3,069,417,490.48 | ||
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
STATEMENT OF CHANGES IN OWNERS’ EQUITY
| Items | 2023.01-06 | |
| Owners’ equity attributable to parent company | ||
Total of owners’equity
Total of owners’equityshare capital
| 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 | 755,146,592.54 | 1,246,569.06 | 825,226,634.15 | 936,931,213.43 | 3,361,763,516.18 | |||
| 1. Change of accounting policy | |||||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 843,212,507.00 | 755,146,592.54 | 1,246,569.06 | 825,226,634.15 | 936,931,213.43 | 3,361,763,516.18 | |||
| III. Increase/ decrease of amount in this year (“-” means decrease) | 19,981,124.00 | 19,981,124.00 | |||||||
| (I) Total comprehensive incomes | 28,413,249.07 | 28,413,249.07 | |||||||
| (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 | -8,432,125.07 | -8,432,125.07 | |||||||
| 1. Withdrawing surplus public reserve | |||||||||
| 2. Distribution to all owners (shareholders) | -8,432,125.07 | -8,432,125.07 | |||||||
| 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 | 1,403,878.98 | 1,403,878.98 | |||||||
| 2. Used in the period | -1,403,878.98 | -1,403,878.98 | |||||||
| (VI) Other | |||||||||
| IV. Balance at the end of this period | 843,212,507.00 | 755,146,592.54 | 1,246,569.06 | 825,226,634.15 | 956,912,337.43 | 3,381,744,640.18 |
Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd 2022.01-06 Unit: RMB Yuan
| Items | 2022.01-06 | ||||||||
| 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 | 755,146,592.54 | 1,216,581.06 | 809,471,199.64 | 803,564,427.95 | 3,212,611,308.19 | |||
| 1. Change of accounting policy | |||||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 843,212,507.00 | 755,146,592.54 | 1,216,581.06 | 809,471,199.64 | 803,564,427.95 | 3,212,611,308.19 | |||
| III. Increase/ decrease of amount in this year (“-” means decrease) | 28,630,221.33 | 28,630,221.33 | |||||||
| (I) Total comprehensive incomes | 37,062,346.40 | 37,062,346.40 | |||||||
| (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 | -8,432,125.07 | -8,432,125.07 | |||||||
| 1. Withdrawing surplus public reserve | |||||||||
| 2. Distribution to all owners (shareholders) | -8,432,125.07 | -8,432,125.07 | |||||||
| 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 | 641,750.97 | 641,750.97 | |||||||
| 2. Used in the period | -641,750.97 | -641,750.97 | |||||||
| (VI) Other | |||||||||
| IV. Balance at the end of this period | 843,212,507.00 | 755,146,592.54 | 1,216,581.060 | 809,471,199.64 | 832,194,649.28 | 3,241,241,529.52 | |||
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
II. Accounting statementIII. General InformationBingshan 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. On March20, 1998, the company successfully went to the public at B share market and listed at ShenzhenStock Exchange Market with total share capital of RMB350,014,975Yuan.According to the 13
th meeting of the 6
thgeneration of board, extraordinary general meeting for 2015fiscal year and ' Restricted share incentive plan (draft)' , the Company planned to introduce Aordinary shares to incentive objectives, which was 10,150,000 number of shares would be grantedto 41 share incentive objectives at granted price of RMB5.56Yuan per share. Up to March 12
th,2015,the Company received new added share capital of RMB10,150,000Yuan and the share capital hadbeen verified by DaHua Certified Public Accountants, and had been issued the capital verificationreport 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
ndinterimshareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the proposal ofnon-public offering of ‘A shares’. China’s Securities Regulatory Commission issued SFC license[2015]3137 on 30
thDecember, 2015, approving that new non-public offering cannot exceeded38,821,954 number of shares. The company implemented the post meeting procedures for China’sSecurities Regulatory Commission, which is regarding adjustment of bottom price and the numberof the shares issued after the implementation of profit distribution policy of 2015 in May, 2016, andaccordingly revised the upper limit of non-public offering of share to58,645,096 number of new ‘Ashares’. The company issued the non-public offering of 58,645,096 number of ‘A shares’ to 7investors, and as a result, the total number of shares of the company is changed to 598,892,558shares, and the par value is 1yuan per share and the total share capital is 598,892,558.00Yuan. Theshare capital stated above has been verified by DaHua Certified Public Accountants, and has beenissued the capital verification report Dahuayanzi [2016]000457 on 31st May 2016.According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration Company Limitedfor the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting authorized the board ofdirectors to implement the Restricted Share Incentive Plan’ approved on the 3
rdprovisional generalmeeting held on 13th September 2016, the 9
th meeting of the 7
thgeneration of board deliberated andpassed the ‘Proposal about granting the restricted shares to incentive targets’ on September 20
th
,2016 and set 20
thSeptember 2016 as share granted date, and granted 12,884,000 number ofrestricted shares to 188 incentive targets at granted price of 5.62Yuan per share. By 22
nd
November,
2016, the company has actually received the newly subscribed registered share capital of12,884,000Yuan subscribed by incentive targets. The share capital stated above has been verifiedby DaHua Certified Public Accountants, and has been issued the capital verification reportDahuayanzi [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 shares throughcapital reserve based on the total 611,776,558 number of shares. After the profit appropriationscheme, 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 Restricted Stocksof the 2016 Restricted Stock Incentive Plan”. On March 8, 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 856,487,181 Yuanto 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 repurchase andcancellation, the Company implemented the corresponding capital reduction procedures accordingto law, and the registered capital of the Company was changed from 855,908,981 Yuan to855,434,087 Yuan.On January 17,2019, the Company held the first extraordinary shareholders’ meeting of 2019 whichreviewed and approved the Proposal on terminating the implementation of 2016 Restricted StockIncentive Plan of the Company and logouting the restricted stock. On March 4,2019, the Companyhas completed the capital reduction process, and the registered capital of the Company was changedfrom 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 to BingshanRefrigeration & 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, technicalconsultation, technical promotion; Design, construction, installation repair and maintenance ofcomplete sets of refrigeration and air conditioning projects, mechanical and electrical installationprojects, steel structure projects, anti-corrosion and heat preservation works; Rental of premises;Transport of ordinary goods; Property management; Low temperature storage; Import and exportof goods and technologies. (With the exception of projects subject to approval according to law,independently carry out business activities according to law with the business license).During this reporting period, entities within the consolidation scope has change comparing to lastyear, decreasing 1 entities (Sonyo Refrigeration (Dalian) Co., Ltd.).IV. 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.V. Significant Accounting Policies and Accounting Estimates
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 for manufacturingup to cash or cash equivalent realization. The group sets twelve months for one operating cycle andas 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 consolidated
financial 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 identifiable netassets of acquiree, firstly, fair value of identifiable asset, liability or contingent liability shall bereviewed, 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 proportionate shareof the fair value of identifiable net assets of acquire, the difference should be recognized as non-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 the parentcompany, 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 comprehensiveincome and total comprehensive belonging to minority interest, shall be presented separately inthe consolidated financial statements under “minority interest of equity”, ”minority interest of profitand loss”, “other comprehensive income attributed to minority interest” and “total comprehensiveincome 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 current
consolidation 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 and theacquiree are under common control of same ultimate controlling party, shall be respectively usedfor writing down the opening balance of retained earnings of comparative financial statements andprofit 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 resulting gainor loss as investment income for the current period. Other comprehensive income, under equitymethod accounting rising from the interest held in acquiree in relation to the period before theacquisition, 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 loss forthe period in which the acquisition incurs, excluding the other comprehensive income from themovement 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 without losingthe control over it, in the consolidated financial statements, the difference, between disposals priceand respective disposed value of share of net assets in the subsidiary since the acquisition date orcombination date, shall be adjusted for capital surplus or share premium, no enough 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 share investment
in subsidiary shall be transferred to investment gain /loss for the period on the date of losing 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 accounting
The 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 of theoutput arising from the joint operation, its share of the revenue from the sale of the output by thejoint operation; and its expenses, including its share of any expenses incurred jointly. When an entityenters into a transaction with a joint operation in which it is a joint operator, such as a sale orcontribution of assets, it is conducting the transaction with the other parties to the joint operationand, as such, the joint operator shall recognize gains and losses resulting from such a transactiononly 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 the balancesheet day. Exchange differences arising from the settlement of monetary items are charged as inprofit or loss for the period. Exchange differences of specific borrowings related to the acquisitionor construction of a fixed asset should be capitalized as occurred, before the relevant fixed assetbeing 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 other
comprehensive income title. Foreign currency cash flows are translated at the spot exchange rate onthe day when the cash flows incur. The amounts resulted from change of exchange rate are presentedseparately 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 of thefollowing conditions are met: ①the financial asset is held within a business model whose objectiveis achieved by both collecting contractual cash flows and selling financial assets and ②thecontractual terms of the financial asset give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding. At initial recognition, thecompany shall measure this financial asset at its fair value and take any transaction costs that aredirectly attributable to the financial asset into account. A gain or loss on a financial asset that ismeasured at fair value through other comprehensive income and is not a hedged item shall berecognized in other comprehensive income apart from a gain or loss on credit loss, foreign exchangeand interest of the financial asset calculated by effective interest method. Accumulated gain or losspreviously in the other comprehensive income shall be out of it and accounted in the profit or lossaccount when the financial asset is derecognized.The company recognized interest revenue based on effective interest method. Interest revenue shallbe calculated by applying the effective interest rate to the gross carrying amount of a financial asset,except for: ①purchased or originated credit-impaired financial assets. For those financial assets,
the company shall apply the credit-adjusted effective interest rate to the amortized cost of thefinancial asset from initial recognition. ②financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For thosefinancial assets, the company shall apply the effective interest rate to the amortized cost of thefinancial asset in subsequent reporting periods.The company designates an investment as fair value measured through other comprehensive incomeif an equity instrument held is not for trading. Once the decision is made, it is an irrevocable election.At initial recognition, the company shall measure the equity instrument investment not for tradingat its fair value and take any transaction costs that are directly attributable to the financial asset intoaccount. Any other gain or loss (including foreign exchange gain or loss) shall be accounted in othercomprehensive income and shall not be subsequently transferred to profit or loss, unless thedividend received is accounted in profit or loss( excluding the recovered investment cost).Accumulated gain or loss previously in the other comprehensive income shall be out of it and intoretained 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: ①the rightsto receive cash flows from the asset is terminated, ②the financial asset has been transferred and thecompany transfers substantially all risks and rewards relating to the financial assets to thetransferee, ③the financial asset has been transferred to the transferee, the company has given up itscontrol of the financial asset although the company neither transfers nor retains all risks and rewardsof 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 the considerationreceived for transfer and the accumulated amount of changes in fair value in respect of the amountof partial derecognition (the contractual terms of the financial asset give rise on specified dates tocash flows that are solely payments of principal and interest on the principal amount outstanding) ,that was previously recorded under other comprehensive income is transferred into profit or loss forthe period.In the case where only part of the financial asset qualifies for derecognition, the carrying amount offinancial asset being transferred is allocated between the portions that to be derecognised and theportion that continued to be recognised according to their relative fair value. The difference betweenthe amount of consideration received for the transfer and the accumulated amount of changes in fair
value that was previously recorded in other comprehensive income for the asset partially qualifiedfor derecognition (the contractual terms of the financial asset give rise on specified dates to cashflows that are solely payments of principal and interest on the principal amount outstanding) andthe above-mentioned allocated carrying amount is charged to profit or loss 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 at fairvalue 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 are subsequentlymeasured at fair value. The net gain or loss arising from changes in fair value, dividends and interestpaid related to such financial liabilities are recorded in profit or loss for the period in which they areincurred.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 at amortizedcost except the followings: ①financial liability measured at fair value through profit or lossincluding 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 lossif 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 liability
The 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 used
for 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 for relevantasset 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 of payingcash or other financial liability, contractual obligation may indirectly be formed through other termsand conditions. ② the company’s own equity instrument shall also be considered whether it is thesubstitute of cash, financial asset or it is the remaining equity, after the issuer deducts liability,enjoyed by the equity holder , if it must or can be used to settle a financial asset. If the former, theinstrument is a financial liability of the issuer, otherwise it is an equity instrument of the issuer. Incertain circumstances, financial instrument contract is classified as financial liability, if financialinstrument contract specifies the company must or can use its own equity to settle the financialinstrument, the contractual amount of right or obligation equals to that of the numbers of own equityinstrument available or to be paid multiplied by fair value when settling, nevertheless the amountis fixed, or varied partially or fully based on the its own equity’s market 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 by payingcash, other financial asset or other means resulted in financial liability, the instrument shall beclassified 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 original effectiverate, of the difference between the contractual cash flows that are due to the company under thecontract; and the cash flows that the company expects to receive, that's the present value of the totalcash shortage. A financial asset shall be the present value, at credit adjusted effective rate, if it is apurchased or originated credit -impaired asset.The company adopts simplified approach for trade receivables, contract assets that do not contain asignificant financing component, and shall always measure the loss allowance at an amount equalto 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 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 and forecastsof 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 an amountequal to lifetime expected credit losses for notes receivables which do not contain a significantfinancing component and are generated in accordance with Revenue Standard- No 14 of AccountingStandard for Business Enterprise.
(2) Expected credit loss risk portfolio assessment method based on portfolio
The company separately assesses the credit risk of financial assets which have significantly differentthe credit risk, such as receivable with dispute or involved in litigation and arbitration; There areclear signs indicating the debtor is unlikely to fulfill the repayment obligations of the receivables,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 is dividedinto different categories and determined for expected credit loss accounting estimate policy.
| 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.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 and forecastsof future economic conditions.The company prepares the comparison table between receivables aging and fixed provision rate andwork 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 an amountequal to lifetime expected credit losses for trade receivables which do not contain a significantfinancing component and are generated in accordance with Revenue Standard- No 14 of AccountingStandard for Business Enterprise. For trade receivables which do contain a significant financingcomponent, the company chooses as its accounting policy to measure the loss allowance at anamount equal to lifetime expected credit losses.
(2) Expected credit loss risk portfolio assessment method based on portfolio
The company separately assesses the credit risk of financial assets which have significantly differentthe credit risk, such as receivable with dispute or involved in litigation and arbitration; There areclear signs indicating the debtor is unlikely to fulfill the repayment obligations of the receivables,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, basedon the counterparty as the common risk characteristics, it is divided into different categories anddetermined 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.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”, basedon the approved amount to be written off as it is assured as uncollectible receivable. If the amountto be written off is bigger than the provision for impairment loss, the difference is debit to “creditimpairment loss”
13. Receivables financing
In the process of managing enterprise liquidity, the Company carries out endorsement transfer ordiscount of most of the notes receivable before maturity, and terminates the confirmation of the
discounted or endorsed notes receivable based on the fact that the Company has transferred almostall the risks and rewards of the relevant notes receivable to the relevant counterparty. The company'sbusiness model of managing notes receivable is aimed at both collecting the contract cash flow andselling the financial asset, so it is classified as the financial asset measured at fair value and itschanges are included in other comprehensive income, and listed in the receivables financing.
14.Other receivable
(1) Recognition of provision for impairment
On the basis of expected credit loss, the company always measures the loss allowance at an amountequal to lifetime expected credit losses for trade receivables which do not contain a significantfinancing component and are generated in accordance with Revenue Standard- No 14 of AccountingStandard for Business Enterprise. For trade receivables which do contain a significant financingcomponent, the company chooses as its accounting policy to measure the loss allowance at anamount equal to lifetime expected credit losses.
(2) Expected credit loss risk portfolio assessment method based on portfolio
The company separately assesses the credit risk of financial assets which have significantly differentthe credit risk, such as receivable with dispute or involved in litigation and arbitration; There areclear signs indicating the debtor is unlikely to fulfill the repayment obligations of the receivables,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, basedon the counterparty as the common risk characteristics, it is divided into different categories anddetermined 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 on thisbasis.The company prepares the comparison table between receivables aging and expected credit loss ratewithin lifetime and work out the expected credit loss by reference to historical credit loss experiencein 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 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 and forecastsof future economic conditions.The company prepares the comparison table between receivables aging and fixed provision rate andwork 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 for impairmentloss, the difference is debit to “credit impairment loss”
15. 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 actual coston acquisition. Weighted average cost method is taken for measuring the inventory dispatched orused. Low value consumables and packaging materials is recognized in the income statement byone-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 held forsale etc which shall be sold directly, the net realizable value should be confirmed at the estimatedselling price less estimated selling expenses and related tax and expenses. The raw material held forproduction, its realizable value should be confirmed at the estimated selling price of finished goodsless estimated cost of completion, estimated selling expenses and related tax. The net realizablevalue of inventories held for execution of sale contracts or labor contracts shall be calculated basedon the contract price. If the quantities of inventories in the Group are more than quantities ifinventories subscribed in the sales contracts, the net realizable value of the excessive part of theinventories should be calculated based on the general selling price. When the impairment indicatorsdisappear, impairment provision shall be reversed and
16. 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 receive
payment 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 opposite accountingrecords.If the Company actually suffers a credit loss and determines that the relevant contract assets cannotbe recalled, and the write-off is approved, the Company shall debit "impairment provisions ofcontract assets" and credit "contract assets" according to the approved amount of write-off. If theamount of write-off is greater than the allowance for loss accrued, the difference shall be debited as"credit impairment loss".
17. 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 and acurrent 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 acquisition cost;if the amortization period of the asset does not exceed one year, it shall be recorded into the currentprofit and loss at the time of occurrence. Incremental cost is cost (such as sales commissions, etc.)that the Company would not incur without obtaining a contract. Expenses incurred by the Companyfor the acquisition of the contract, in addition to the incremental cost expected to be recovered (suchas travel expenses incurred whether the contract is acquired or not, etc.), shall be recorded into thecurrent profit and loss when incurred, except those clearly borne by 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 profit and
loss.
(3) Impairment of assets related to the contract cost
When determining the impairment loss of assets related to the contract cost, the Company shall firstdetermine the impairment loss of other assets related to the contract recognized in accordance withaccounting standards for other relevant enterprises. If the carrying value is higher than the residualconsideration expected to be obtained by the Company due to the transfer of the commodity relatedto the asset and the estimated cost to be incurred for the transfer of the commodity, the excess partshall be set aside for impairment loss and recognized as an asset impairment 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 shall notexceed the carrying amount of the asset under the circumstance of no provision for impairment ofthe asset.
18. Long-term receivables
(1) Confirmation method of impairment provisio
On the basis of expected credit losses, the Company will always measure its loss provision inaccordance with the amount equivalent to the expected credit losses in the entire duration for long-term receivables formed by transactions regulated by the Accounting Standards for Enterprises No.14 - Income Standards that do not contain significant financing components.Measurement of expected credit losses. Expected credit loss refers to the weighted average of thecredit loss of a financial instrument weighted by the risk of default. The credit loss herein refers tothe difference between all contractual cash flows receivable under the contract and all cash flowsexpected to be received by the Company discounted at the original effective interest rate, i.e. thepresent value of all cash shortfalls.
(2) A portfolio method to evaluate expected credit risk on the basis of portfolioThe Company evaluates the credit risk of financial assets with significantly different credit risks,such as: long-term receivables that have disputes with the other party or involve litigation orarbitration; Other receivables where there is a clear indication that the debtor is likely to be unableto meet its obligations, etc.Except for financial assets for which credit risk is assessed individually, the Company dividesfinancial assets into different groups based on common risk characteristics and evaluates credit riskon a portfolio basis.In addition to long-term receivables with single credit risk assessment, it is divided into differentcombinations based on the relationship between long-term receivables transaction objects as thecommon risk characteristics, and the expected credit loss accounting estimation policy isdetermined:
Accounting policy for expected credit loss of portfolio classificationThe related party portfolio management within the scope of the merger evaluates that such projectshave low credit riskOther related parties and combinations of non-related parties shall draw impairment provisions inaccordance with the expected loss rateWith reference to historical credit loss experience and combined with the current situation andforecast of future economic conditions, the company prepares a comparison table between the ageof long-term receivables and the expected credit loss rate of the entire duration to calculate theexpected credit loss.The Company's method of measuring expected credit losses on financial instruments reflects factorssuch as: an unbiased probability weighted average amount determined by evaluating a range ofpossible outcomes; Time value of money; Reasonable and evidence-based information about pastevents, current conditions, and projections of future economic conditions that are available at nounnecessary additional cost or effort at the balance sheet date.The Company calculates the expected credit loss of long-term receivables on the balance sheet date.If the expected credit loss is greater than the carrying amount of the current impairment provisionfor long-term receivables, the Company recognizes the difference as the impairment loss for long-term receivables, debits the "credit impairment loss" and credits the "bad debt provision". Instead,the company recognizes the difference as an impairment gain and makes the opposite accountingrecord.If the company decides that the related long-term receivables cannot be collected due to the actualcredit loss and is approved to cancel, the "bad debt reserve" and the "long-term receivables" shallbe debited and credited according to the approved amount of write-off. If the write-off amount isgreater than the loss provision already drawn, the difference will be debited to "credit impairmentloss" on a regular basis.
19. 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 or equivalentgoverning body of the investee, participation in financial or operating activities policy-making
processes, material transactions between the investor and the investee, interchange of managerialpersonnel or provision of essential technical information.When control exists over an investee, the investee is a subsidiary of an entity. The initial investmentcost for long-term equity investment acquired through business combination under common control,is the carrying amount presented in the consolidated financial statements of the share of net assetsat the combination date in the acquired company. If the carrying amount of net assets at thecombination date in the acquired company is negative, investment shall be recognized at 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 investment inthe 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 a bundledtransaction, the entity shall regard all transactions as a one for accounting. If it’s not a bundledtransaction, the carrying amount presented in the consolidated financial statements of the share ofnet assets at the combination date in the acquired company since acquisition is determined as forthe initial cost of long-term equity investment. The difference between the cost initially recognizedand carrying amount of long-term equity investment prior to the business combination plus thenewly paid consideration for further share acquired, and capital reserve shall be adjustedaccordingly. If no enough capital reserve is available for adjustment, retain earnings shall beadjusted.If long-term equity investment is acquired through business combination not under common control,initial investment cost shall be the combination cost.If the equity of investee not under common control is acquired by stages and business combinationincursion the end, an entity shall disclose the accounting method for long-term equity investment inthe parent financial statement as a supplemental. If the equity investment of investee not undercommon control is acquired by stages and business combination incursion 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 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 the investment,the entity shall adopt the same basis as the investee directly disposing of related assets or liabilityfor accounting treatment. Equity held prior to acquisition date as available for sale financial assetsunder fair value model, accumulated change on fair value previously recorded in othercomprehensive 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 is theamount of cash paid. For long-term equity investment acquired by issuing equity instruments, thecost of investment is the fair value of the equity instrument issued. For long-term equity investment
injected to the entity by the investor, the investment cost is the consideration as specified in therelevant 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 the investee’sindividual identifiable assets at the acquisition date, after making appropriate adjustments theretoin conformity with the accounting policies and accounting period, and offsetting the unrealizedprofit or loss from internal transactions entered into between the entity and its associates and jointventures according to the shareholding attributable to the entity and accounted for as investmentincome 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 the samebasis as the investee directly disposing of related assets or liability when stopping using under equitymodel.Where the entity has no longer control over the investee company as a result of partially disposal ofthe investment, the remaining investment will be changed to be accounted for using equity methodproviding remaining joint control or significant influence over the investee company. The differencebetween carrying amount of disposed investment and consideration received actually shall berecognized in the profit and loss for the period as investment gain or loss, and investment shall beadjusted accordingly as if it was accounted for under equity model since acquisition. Where theentity has on longer joint control or significant influence in the investee as a result of disposal, theinvestment shall be changed to be accounted for as available for sale financial assets, and differencebetween the carrying amount and disposal consideration shall be recognized in profit and loss for
the period, and the difference between the fair value of remaining investment at the date of losingcontrol and its carrying amount shall be recognized in the profit or loss for the year as investmentgain or loss.If the entity loses its control through partially disposal of investment by stages and it’s not a bundledtransaction, the entity shall account for all transactions separately. If it’s a bundled transaction, theentity shall regard all transactions as one disposal of subsidiary by losing control, but the differencebetween disposal consideration and carrying amount of the equity investment disposed prior tolosing control, which arises from each individual transaction shall be recognized as othercomprehensive income until being transferred into profit and loss for the period by the time of losingcontrol.
20. Investment property
The investment property includes property and building and measured at cost model
| Category | (years) | Estimated net residual value rate | Annual depreciation rate |
| Housing and Buildings | 40 | 3% | 2.43% |
21. Fixed assets
Recognition criteria of fixed assets: defined as the tangible assets which are held for the purpose ofproducing goods, rendering services, leasing or for operation & management, and have more thanone 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 | (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 the asset
belongs to the company when the lease term is due , (2) the company has the option to buy the assetand buy price is far lower than the fair value when exercising the option. (3) lease term is most ofthe asset life (4) no significant difference between the present value of minimum lease premium andfair 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 payment andthe 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 depreciated withinthe lower of the lease term and expected service life of the asset.
22. 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 month aftercompletion.
23. 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 because offoreign currency borrowings. The borrowing costs incurred which can be directly attribute to thefixed assets, investments properties, inventories requesting over 1 year purchasing or manufacturingso to come into the expected condition of use or available for sale shall start to be capitalized whenexpenditure for the assets is being occurred, borrowing cost has occurred, necessary constructionfor bringing the assets into expected condition for use is in progress. The borrowing costs shall stopto be capitalized when the assets come into the expected condition of use or available for sale. Theborrowing costs subsequently incurred should be recorded into profit and loss when occurred. Theborrowing costs should temporarily stop being capitalized when there is an unusual stoppage ofover consecutive 3 months during the purchase or produce of the capitalized assets, until thepurchase 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.
24. Right of use assets
The right to use assets refers to the right of the Company as the lessee to use the leased assets duringthe lease term.
(1) Initial measurement
On the commencement date of the lease term, the Company shall make an initial measurement ofthe right to use assets at the cost. The cost includes the following four items: (1) The initialmeasurement amount of lease liabilities; (2) The amount of the lease payment paid on or before thecommencement date of the lease term, if there is a lease incentive, will be deducted from the amountof the lease incentive already enjoyed; (3) The initial direct costs incurred, namely the incrementalcosts incurred to achieve the lease; (4) The cost expected to be incurred for the demolition andremoval of the leased asset, the restoration of the leased asset site or the restoration of the leasedasset to the state agreed in the lease terms, except those incurred for the production of inventory.
(2) Follow-up measurement
After the commencement of the lease term, the Company shall adopt the cost model to carry outsubsequent measurement of the right to use assets, that is, to measure the right to use assets at thecost minus accumulated depreciation and accumulated impairment losses. If the Company re-measures the lease liabilities in accordance with the relevant provisions of the lease standards, thebook value of the right to use assets shall be adjusted accordingly.Depreciation of usufruct assetsFrom the commencement date of the lease term, the Company shall make depreciation of theusufruct. The usuary-use asset is usually depreciated in the month in which the lease begins (if theenterprise chooses to depreciate in the month in which the lease begins, it needs to be depreciatedaccording to the specific situation described). The amount of depreciation deducted shall, accordingto the use of the usufruct, be included in the cost of the relevant asset or the current profit and loss.When determining the depreciation method of the right to use assets, the Company shall make adecision based on the expected consumption mode of the economic benefits related to the right touse assets, and shall calculate and deduct the depreciation of the right to use assets by the straightline method.In determining the depreciable life of the use-right assets, the Company shall follow the followingprinciples: Where the ownership of the leased assets is reasonably determined at the end of the leaseterm, depreciation shall be accrued during the remaining service life of the leased assets; Where itis not reasonably certain that ownership of the leased asset will be acquired at the end of the leaseterm, depreciation shall be accrued within the shorter period of the lease term or the remaininguseful life of the leased asset.Impairment of the right to use assetsIn case of impairment of the right to use assets, the Company shall carry out subsequent depreciationaccording to the book value of the right to use assets after deducting the impairment loss.
25. Intangible assets
The intangible assets of the Group refer to land use right and software. For acquired intangibleassets, 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 remised date.ERPsystem software and other intangible assets are amortized over the shortest of their estimated usefullife, contractual beneficial period and useful life specified in the law. Amortization charge isincluded in the cost of assets or expenses, as appropriate, for the period according to the usage ofthe assets. At the end of the year, for definite life of intangible assets, their estimated useful life andamortization method shall be assessed. Any change shall be treated as change on accountingestimate.
26. Impairment of long-term assets
The Group assesses at each balance sheet date whether there is any indication that long-term equityinvestments, investment property, fixed assets, construction in progress and intangible assets withdefinite useful life may be impaired. If there is any indication that an asset may be impaired, theasset will be tested for impairment. Goodwill arising in a business combination and intangibleasset with infinite useful life are tested for impairment annually no matter there is any indication ofimpairment or not.Estimate of recoverable amount is the higher of its fair value less costs to sell and the present valueof 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 for theperiod. Once an impairment loss on the assets is recognised, it is not reversed in a subsequent period.After assets impairment loss is recognized, depreciation and amortisation of the impaired asset shallbe adjusted in the following period so that the adjusted carrying amount(less expected residual value)can be depreciated and amortised systematically within the remaining life.When assessing goodwill for impairment, the carrying amount of goodwill shall be allocated evenlyto the assets group or assets portfolio. When testing the assets group or assets portfolio includinggoodwill, if there is any indication of impairment , ignoring the goodwill and testing the assetsgroup or assets portfolio alone so to work out the recoverable amount and comparing to its carryingamount and recognize the impairment loss. After that, testing the assets group or assets portfoliowith 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.
27. 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 the deferredexpenses should be transferred into the current profit or loss. Leasing expenses will be amortizedwithin 10 years and 30years; redecoration expense and others will be amortized within 3 years.
28. 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 the actualpayment made by the customer and the due payment.
29. 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 defined benefit plan
shall be recognized in the profit or loss for the current period or relevant cost of assets in accordancewith the period when the service are rendered by the employee.
30. Lease liability
(1) Initial measurement
The company shall initially measure the liabilities of the lease according to the present value of theoutstanding lease payments on the commencement date of the lease term.
1) Lease payment
The lease payment amount refers to the amount paid by the Company to the Lessor in connectionwith the right to use the leased assets during the lease term, including: (1) Fixed payment amount andsubstantial fixed payment amount, less the amount related to the lease incentive where there is a leaseincentive; (ii) variable lease payments dependent on indices or ratios, which are determined at theinitial measurement on the basis of the indices or ratios on the commencement date of the lease; (3)The exercise price of the purchase option when the Company reasonably determines that the purchaseoption will be exercised; (4) The term of the lease reflects the amount of money to be paid for thetermination of the lease option when the Company will exercise it; (5) The amount expected to be paidbased on the residual value of the guarantee provided by the Company.
2) Discount rate
When calculating the present value of the lease payments, the Company shall use the interest rateembedded in the lease as the discount rate, which is the interest rate at which the sum of the presentvalue of the lease receipts and the present value of the unsecured residual value of the lessor is equalto the sum of the fair value of the leased asset and the initial direct expenses of the Lessor. If thecompany is unable to determine the inherent interest rate of the lease, the incremental borrowing rateshall be used as the discount rate. Such incremental borrowing rate shall mean the interest rate payableby the Company during a similar period under similar mortgage conditions in order to acquire assetswith a value similar to that of the usuable-use assets under similar economic circumstances. Theinterest rate is related to: (1) the company's own situation, i.e., the company's solvency and creditstanding; ② The term of the "loan", i.e. the lease term; (3) The amount of "borrowed" funds, that is,the amount of lease liabilities; (4) "collateral conditions", that is, the nature and quality of theunderlying assets; (5) Economic environment, including the jurisdiction where the lessee is located,the valuation currency, the signing time of the contract, etc. The company's bank loan interestrate/related lease contract interest rate/the company's latest similar asset mortgage interest rate/theinterest rate of bonds issued by the enterprise in the same period...... Based on the above adjustmentfactors to obtain the incremental borrowing rate.
(2) Follow-up measurement
On the commencement date of the lease term, the Company shall carry out subsequent measurementof the lease liabilities according to the following principles: (1) Increase the carrying amount of thelease liabilities when recognizing the interest of the lease liabilities; (2) Reduce the carrying amount
of lease liabilities when paying the lease payment; (3) When the lease payment changes due torevaluation or lease change, the book value of the lease liability shall be measured again.The Company shall calculate the interest expense of the lease liability in each period of the leaseterm at a fixed periodic interest rate and record it into the current profit and loss, except for those thatshould be capitalized. The periodic interest rate refers to the discount rate used by the Company forthe initial measurement of lease liabilities, or the revised discount rate used by the Company for theremeasurement of lease liabilities due to changes in lease payments or changes in lease.
(3) Re-measurement
After the commencement of the lease term, in the event of any of the following circumstances, theCompany shall re-measure the lease liabilities according to the present value of the lease paymentsafter the change and adjust the book value of the usufruct accordingly. If the book value of the rightto use assets has been reduced to zero, but the lease liabilities still need to be further reduced, thecompany shall record the remaining amount into the profits and losses of the current period. (1)Changes in the substantial fixed payment amount (in this case, the original discount rate is used todiscount); (2) The estimated amount payable of the residual value changes (in this case, the originaldiscount rate is used to discount); (3) Any change in the index or rate used to determine the leasepayment (in which case the revised discount rate is used); (4) The evaluation result of the call optionchanges (in this case, the revised discount rate is used to discount); (5) Changes in the assessmentresult or actual exercise of the lease option to renew or terminate the lease option (in which case, therevised discount rate is used to discount the option).
31. Contingent liabilities
When the Company has transactions such as commitment to externals, discounting the trade
acceptance, unsettled litigation or arbitration which meets the following criterion, provision should
be recognized: It is the Company's present obligation; carrying out the obligation will probably
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 present
obligations, and to consider the risk, uncertainty, time value of monetary relevant to contingent
items. If the time value of monetary is significant, the best estimate will be determined by discounted
cash outflow in the future. At each balance sheet date, the book value of provision is reviewed and
adjustment will be made on the book value if there is any change, in order to reflect the current best
estimate.
When compensation from the 3rd party is expected for full or partial contingent liability settlement,
the compensation shall be recognized as an asset separately and measured at no more than the book
value of contingent liability.
32. Share based payment
An equity-settled share-based payment in exchange for the employee’s services is measured at the
fair value at the date when the equity instruments are granted to the employee. Such fair value during
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 the bestestimated 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 as relevantcost or expense, and corresponding liabilities. If it is exercisable only when the vesting period ofservice is expired or the prescribed conditions are achieve, the fair value of liabilities undertaken bythe Group are re-measured at each balance sheet date based on the best estimate of exercisablesituation.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 instrument shallbe treated as accelerated vesting and the balance linked to the remaining vesting period shall berecognized 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.
33. 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 the customerobtains 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 be entitledas a result of the transfer of goods or services to the customer, excluding payments received onbehalf of third parties. The trading price recognized by the Company shall not exceed the amountof accumulated recognized revenue that is highly unlikely to be materially reversed when therelevant uncertainties are eliminated. Refunds to customers are expected to be excluded from thetransaction price as liabilities. Where there is a significant financing element in the contract, theCompany shall determine the transaction price based on the amount payable by the assumedcustomer in cash upon acquisition of control over the goods or services. The difference between thetransaction price and the contract consideration shall be amortized over the term of the contractusing the effective interest rate method. On the commencement date of the contract, the Companyexpects that the interval between the customer's acquisition of control of the goods or services and
the customer's payment shall not exceed one year, regardless of the significant financing elementexisting 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 a certainpoint:
(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 for thecosts incurred, the revenue shall be recognized according to the amount of the cost incurred untilthe 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 shall recognizethe income according to the amount of the commission or handling charge to be entitled to becollected, 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 Company
judges 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 customer afterthe third party obtains the control right.
(2) The Company can lead a third party to provide services to customers on behalf of the Company.
(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 by providingsignificant 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 the goods.
(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 the customerupon receipt of the consideration receivable by the customer is shown as a contract liability.
34. Government grants
A government grant shall be recognized when the Company complies with the conditions attachingto 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 the purposeof long-term assets purchase and construction or establishment in the other forms. Income-relatedgrants are the grant given by the government apart from the assets-related grants. If no grantobjective indicated clearly in the government documents, the Company shall judge it according tothe 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 probably receivethe fund, it is measured at the amount receivable. Where a government grant is in the form of atransfer of non-monetary asset, it is measured at fair value. If fair value cannot be determinedreliably, 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 income shall
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 expired date,the remaining balance of deferred income which hasn’t been allocated shall be carried forward tothe 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, the accountingshall be differed according to the following circumstances:
1) originally recognized as offsetting of related assets' book value, assets book value shall beadjusted
2) if any deferred income, book value of deferred income shall be offset, excessive portionshall be accounted into income statement
3) Other situation, it shall be accounted into income statement directly.
35. Deferred tax assets and deferred tax liabilities
The deferred income tax assets or the deferred income tax liabilities should be recognized accordingto the differences (temporary difference) between the carrying amount of the assets or liabilities andits tax base. Deferred tax assets shall be respectively recognized for deductible tax losses that canbe carried forward in accordance with tax law requirements for deduction of taxable income insubsequent years. No deferred tax liabilities shall be recognized for any temporary difference arisingfrom goodwill initially recognition. No deferred tax assets or liabilities shall be recognized for anydifference arising from assets or liabilities initial recognition on non-business combination with noeffect on either accounting profit or taxable profit (or deductible tax loss). At the balance sheet date,deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to applyto the period when the asset is realized or liability 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.
36. Lease
(1) Accounting treatment of operating leases
(1) Identification of lease
A lease is a contract whereby the lessor assigns the right to the use of an asset to the lessee for acertain period of time in exchange for consideration. On the commencement date of the contract,the Company evaluates whether the contract is a lease or includes a lease. A contract is a lease or
includes a lease if a party assigns the right to control the use of one or more identified assets for acertain period of time in exchange for consideration. To determine whether the contract relinquishesthe right to control the use of the identified assets for a given period, the Company assesses whetherthe client under the contract is entitled to receive virtually all the economic benefits arising fromthe use of the identified assets during the use period and is entitled to dominate the use of theidentified assets during the use period.If the contract contains multiple separate leases at the same time, the company will divide thecontract and make accounting treatment for each separate lease. If the contract contains both leasingand non-leasing parts, the company shall split the leasing and non-leasing parts for accountingtreatment.
(2) The Company acts as the lessee
On the commencement date of the lease term, the Company shall recognize the right to use assetsand liabilities of the lease. The recognition and measurement of right to use assets and leaseliabilities are shown in "27. Right to use Assets" and "33. Lease liabilities ".
2) Lease change
Lease change refers to the change of lease scope, lease consideration and lease term beyond theterms of the original contract, including the increase or termination of the right to use one or moreleased assets, the extension or shortening of the lease term stipulated in the contract, etc. Theeffective date of the lease change means the date on which the parties agree on the lease change.
If the lease changes and the following conditions are met at the same time, the Company will treatthe lease change as a separate lease for accounting: (1) The lease change expands the lease scope orthe lease term by increasing the right to use one or more leased assets; (2) The increasedconsideration shall be equivalent to the amount of the individual price for the extended portion ofthe lease scope or the extended lease term adjusted for the circumstances of the contract.If the change of lease is not accounted for as a separate lease, the Company shall, on the effectivedate of the change of lease, apportion the consideration of the contract after the change in accordancewith relevant provisions of the lease standards and redefine the lease period after the change; Therevised discount rate is used to discount the changed lease payment amount to re-measure the leaseliabilities. When calculating the present value of the lease payment after the change, the Companyshall use the lease embedded interest rate during the remaining lease period as the discount rate; Ifit is not possible to determine the leasehold interest rate for the remaining lease term, the Companyshall use the lessee's incremental borrowing rate on the effective date of the lease change as thediscount rate. With respect to the impact of the above adjustment of lease liabilities, the Companywill make accounting treatment according to the following circumstances: (1) If the change of leaseresults in the reduction of the scope of lease or the shortening of lease term, the lessee shall reducethe book value of the right to use assets and record the profits or losses related to partial or completetermination of lease into the current profit and loss. (2) If the lease liabilities are remeasured due to
other lease changes, the lessee shall adjust the book value of the right to use assets accordingly.
3) Short-term leases and leases of low-value assets
For short-term leases with a lease term of no more than 12 months and low-value asset leases witha lower value when each leased asset is a new asset, the Company chooses not to recognize the rightto use assets and lease liabilities. The Company will include the lease payments for short-term leasesand leases of low-value assets into the cost of the relevant assets or current profits and losses duringeach period of the lease term in accordance with the straight-line method or other systematicallyreasonable method.
(3) Our company is the lessor
On the basis that this Contract is or includes a lease as assessed in (1), the Company, as the lessor,on the commencement date of the lease, divides the lease into a finance lease and an operating lease.If a lease substantially transfers almost all of the risks and rewards associated with ownership of theleased asset, the lessor classifies the lease as a finance lease and any lease other than finance leaseas an operating lease.The Company generally classifies a lease as a finance lease if it has one or more of the followingconditions: (1) At the end of the lease term, the ownership of the leased asset passes to the lessee;
(2) The lessee has the option to purchase the leased asset, and the purchase price entered into issufficiently low compared with the fair value of the leased asset at the time the option is expectedto be exercised, so that it can be reasonably determined on the commencement date that the lesseewill exercise the option; (3) Although the ownership of the asset is not transferred, the lease periodaccounts for most of the service life of the leased asset (no less than 75% of the service life of theleased asset); (4) On the lease commencement date, the present value of the lease receipts is almostequivalent to the fair value of the leased asset (not less than 90% of the fair value of the leasedasset). ; ⑤ The leased assets are special in nature, and only the lessee can use them if there is nomajor transformation. The Company may also classify a lease as a finance lease if it has one or moreof the following signs: (1) If the lessee cancels the lease, the lessee shall bear the loss caused to thelessor by the cancellation; (2) the profit or loss generated by the fluctuation of the fair value of theresidual asset belongs to the lessee; (3) The lessee has the ability to continue the lease at a rent farbelow the market level until the next period.
2) Accounting treatment of operating lease
Disposal of rentDuring each period of the lease term, the Company will use the straight-line method/othersystematic and reasonable methods to recognize lease receipts from operating leases as rentalincome.Incentives offeredIf the rent-free period is provided, the Company shall allocate the total rent by the straight linemethod/other reasonable method throughout the lease period without deducting the rent-free period,
and shall recognize the rental income during the rent-free period. If the Company bears certainexpenses of the Lessee, such expenses shall be deducted from the total rental income and distributedaccording to the balance of the rental income after deduction.Initial direct costThe initial direct expenses incurred by the Company in connection with the operating lease shall becapitalized to the cost of the underlying assets under lease and shall be booked into the currentprofits and losses in stages during the lease term on the same recognition basis as the rental income.DepreciationFor the fixed assets in the operating leased assets, the Company shall adopt the depreciation policyfor similar assets. Other operating leased assets shall be amortized in a systematic and reasonablemanner.Variable lease paymentsThe variable lease payments obtained by the Company in connection with the operating lease andnot included in the lease receipts shall be recorded into the current profit and loss when actuallyincurred.Changes in operating leasesIf an operating lease changes, the Company will treat it as a new lease as of the effective date of thechange, and the amount received in advance or receivable for the lease related to the lease beforethe change is regarded as the amount received for the new lease.
(2) Accounting treatment of finance lease
Initial measurementOn the commencement date of the lease term, the Company shall recognize the finance leasereceivable and terminate the recognition of the finance lease assets. In the initial measurement ofthe finance lease receivables, the Group shall take the net lease investment as the recorded value ofthe finance lease receivables.The net lease investment is the sum of the present value of the unsecured residual value and thelease receipts not yet received at the commencement of the lease period, discounted at the interestrate contained in the lease. Lease revenue refers to the amount of money that the lessor shouldcollect from the lessee for the assignment of the right to use the leased assets during the lease term,including: (1) the fixed amount and substantial fixed amount payable by the lessee; If there is a leaseincentive, the amount related to the lease incentive will be deducted; (ii) variable lease paymentsdependent on indices or ratios, which are initially measured according to the indices or ratios on thecommencement date of the lease; (3) the exercise price of the option to buy, provided that it isreasonably determined that the lessee will exercise the option; (4) the amount to be paid by thelessee to exercise the termination option, provided that the lease term reflects that the lessee willexercise the termination option; (5) Guarantee residual value provided to the lessor by the lessee,
the party related to the lessee and an independent third party who has the economic ability to performthe guarantee obligation.Subsequent measurementThe Company calculates and recognizes the interest income for each period of the lease term at afixed periodic interest rate. The periodic interest rate, it is to point to determine the net investmentin the lease use contains the discount rate (if relet, sublet's interest rate implicit in the lease cannotbe determined, using the original leasing of the discount rate (adjustments according to the initialdirect costs related to sublease)), or change in the financing lease is not as a separate leaseaccounting treatment, and meet if changes to take effect on the lease beginning date, The lease willbe classified as a financial lease at the revised discount rate determined in accordance with therelevant provisions.Accounting treatment of lease changesIf the finance lease changes and meets the following conditions at the same time, the Company willtreat the change as a separate lease for accounting: (1) The change expands the scope of lease byincreasing the right to use one or more leased assets; (2) The increased consideration shall beequivalent to the amount of the individual price of the expanded lease area adjusted for thecircumstances of the contract.If the change of financing lease is not as a single lease accounting treatment, and meet if changes totake effect on the lease beginning date, the lease will be classified as an operating lease terms, thegroup since the day of the effect of the change of it as a new lease accounting treatment, and priorto the effect of the change of the net investment in the lease as the book value of the leased asset.
37. 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 significantadjustment 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 any impairmentindicator and the acutely amount of impairment. Objective evidence for impairment includesjudgmental data of indicating significant decline of future cash flow of individual or group ofreceivable, indicating significant negative financial performance of debtors. Had receivable isrecovered with certain proof, and in fact, it is relevant to the the matters subsequent to the the lossrecognition, 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 will makeadjustment on NRV. Therefore, the results based on the present experience may differ from theactual 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 on provisionfor 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 group orasset 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’s estimate,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, plant andmachinery etc which has any impairment indicator. The recoverable amount of FA is the higher ofPV of future cash flow and net value of fair value after disposal cost, the calculation needsaccounting 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 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’s estimate,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 in
the 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.
38. Changes in Accounting Policies, Accounting Estimates
NoneVI. 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 | 5%、6%、9%、13% |
| 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% |
| Tax entities | EIT rate |
| Dalian Bingshan Guardian Automation Co., Ltd. | 15% |
| Dalian Bingshan-RYOSETSU Quick Freezing Equipment Co., Ltd. | 25% |
| Wuhan New World Refrigeration Industrial Co., Ltd. | 15% |
| Dalian Bingshan Engineering & Trading Co., Ltd | 25% |
| Dalian Universe Thermal Technology Co.,Ltd. | 15% |
| Chengdu Bingshan Refrigeration Engineering Co., Ltd. | 25% |
| Wuhan New World Air-conditioning Refrigeration Engineering Co., Ltd | 25% |
| Wuhan Lanning Energy Technology Co., Ltd | 25% |
| Sonyo Compressor(Dalian)Co.,Ltd. | 15% |
| Sonyo Refrigeration System (Dalian) Co., Ltd. | 15% |
| Sonyo Refrigeration (Dalian) Co., Ltd. | 15% |
2. Tax preference
The Company obtained the qualification of high and new technology enterprises on 3rd December,2020 approved by Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State TaxBureau and Local tax Bureau. The Certificate No. is GR202021200646, 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 3rd December, 2020 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No. is GR202021200672, and the validity duration is three years.According to the tax law, Bingshan Air-conditioning can be granted for the preferential tax policyof 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 16th November, 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, Bingshan Guardian can be granted for the preferential tax policy of enterpriseincome 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 15th November, 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.According to the tax law, Wuhan New World Refrigeration can be granted for the preferential taxpolicy of enterprise income tax rate of 15% in three years.The Company’s subsidiary, Dalian Universe Thermal Technology Co., Ltd. obtained thequalification of high and new technology enterprises on 3rd December, 2020 approved by Dalian
Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No. is GR202021200570, and the validity duration is three years.According to the tax law, Universe can be granted for the preferential tax policy of enterpriseincome tax rate of 15% in three years.The Company’s subsidiary, Sonyo Compressor(Dalian)Co.,Ltd.(hereinafter referred to as“ SonyoCompressor” obtained the qualification of high and new technology enterprises on 22nd October,2021 approved by Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State TaxBureau and Local tax Bureau. The Certificate No. is GR202121200268, 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, Sonyo Refrigeration System (Dalian) Co., Ltd.(hereinafter referred toas“ Sonyo Refrigeration System” obtained the qualification of high and new technology enterpriseson 9th October, 2020 approved by Dalian Science Technology Bureau, Dalian Finance Bureau,Dalian State Tax Bureau and Local tax Bureau. The Certificate No. is GR202021200465, and thevalidity duration is three years. According to the tax law, the Company can be granted for thepreferential tax policy of enterprise income tax rate of 15% in three years.The Company’s subsidiary, Sonyo Refrigeration (Dalian) Co., Ltd.(hereinafter referred toas“ Sonyo Refrigeration System” obtained the qualification of high and new technology enterpriseson 22th October, 2021 approved by Dalian Science Technology Bureau, Dalian Finance Bureau,Dalian State Tax Bureau and Local tax Bureau. The Certificate No. is GR202121200368, and thevalidity duration is three years. According to the tax law, the Company can be granted for thepreferential tax policy of enterprise income tax rate of 15% in three years.
(2) According to the Announcement of Ministry of Science and Technology, the Ministry of Finance andTax Administration on supporting Scientific and Technological Innovation by the accelerate Pre-taxDeduction (Announcement No. 28, 2022), equipment and appliances newly purchased by high and newtechnology entity within the period from October 1st, 2022 to December 31st,2022 are allowed for taxableincome deduction in full amount and also can be 100% accelerated deduction before income tax. Any entityqualifying for high and new technology during the Q4 in 2022 is subject to this tax preference. If deductionis not enough for this year, it can be carried forward to the following year. Equipment and appliances referto fixed assets beyond house and buildings. High and new technology criteria is in line with “Notice of theMinistry of Science and Technology and the Ministry of Finance and the State Administration of Taxationon Revising and Printing the Administrative Measures for the Identification of New and High TechnologyEnterprises” (Guokefahuo[2016]No.32). The Company and its subsidiaries, Dalian Universe ThermalTechnology Co.,Ltd, Sonyo Compressor , Sonyo Refrigeration System and Sonyo Refrigeration enjoythe tax preference.VII. Notes to Consolidated Financial Statements
1. Cash and cash in bank
| Item | Closing Balance | Opening Balance |
| Cash on hand | 48,506.18 | 80,702.47 |
| Cash in bank | 828,620,040.40 | 922,122,608.84 |
| Other cash and cash equivalents | 106,646,177.74 | 83,962,587.87 |
| Total | 935,314,724.32 | 1,006,165,899.18 |
Note: The total amount of restricted monetary funds at the end of the period was 106,646,177.74 Yuan,including 66,218,472.37 Yuan for bank acceptance, 37,235,734.79 Yuan for letter of credit, 3,191,970.58for migrant workers.
2. Notes receivable
(1) Category of notes receivable
| Items | Closing Balance | Opening Balance |
| Bank acceptance notes | 416,436,839.49 | 493,019,785.95 |
| Commercial acceptance notes | 19,701,393.47 | 12,925,475.23 |
| Total | 436,138,232.96 | 505,945,261.18 |
| Items | Closing Balance | Opening Balance | ||||||||
| Booking balance | Provision for bad debts | Book value | Booking balance | Provision for bad debts | Book value | |||||
| Amount | % | Amount | % | Amount | % | Amount | % | |||
| Including: | ||||||||||
| Notes receivable with provision for bad debts by combination | 436,599,273.18 | 100.00% | 461,040.22 | 0.00% | 436,138,232.96 | 506,921,135.95 | 100.00% | 975,874.77 | 0.19% | 505,945,261.18 |
| Including: | ||||||||||
| Bank acceptance bill | 416,436,839.49 | 95.12% | 416,436,839.49 | 416,436,839.49 | 97.26% | 493,019,785.95 | ||||
| trade acceptance draft | 20,162,433.69 | 4.88% | 461,040.22 | 2.29% | 19,701,393.47 | 13,901,350.00 | 2.74% | 975,874.77 | 7.02% | 12,925,475.23 |
| Total | 436,599,273.18 | 100.00% | 461,040.22 | 0.00% | 436,138,232.96 | 506,921,135.95 | 100.00% | 975,874.77 | 0.00% | 505,945,261.18 |
Provision for bad debts by combination:
| Items | Closing Balance | ||
| Booking balance | Bad debt provision | Provision ratio | |
| Trade acceptance draft | 20,162,433.69 | 461,040.22 | 2.29% |
Instructions for determining the basis for this combination:
If the bad debt provision for bills receivable is accrued according to the general model of expectedcredit loss, please refer to the disclosure method of other receivables to disclose the relevantinformation of bad debt provision:
?Applicable ?Not applicable
(2) Provision for bad debts for the current period:
Provision for bad debts in the current period:
| Category | Opening balance | Change during the year | Closing Balance | |||
| Accrued | Collected/reversed | Written-off | Others | |||
| Bad debt provision for notes receivable | 975,874.77 | 512,380.99 | 1,027,215.54 | 461,040.22 | ||
| Total | 975,874.77 | 512,380.99 | 1,027,215.54 | 461,040.22 | ||
Among them, the amount of bad debt provision recovered or reversed in the current period is important:
?Applicable ?Not applicable
(3)Notes receivable pledged by the company at the end of the period
| Items | Closing pledged amount |
| Bank acceptance notes | 142,360,499.62 |
| Total | 142,360,499.62 |
(4) 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 | 176,802,827.00 | |
| Trade acceptance draft | 290,000.00 | |
| Total | 177,092,827.00 |
3. Accounts receivable
(1) Category of accounts receivable
| Items | Closing Balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Bad debt provision on individual basis | 23,257,124.30 | 1.12% | 20,424,690.50 | 87.82% | 2,832,433.80 |
| Bad debt provision on group | 2,061,553,690.08 | 98.88% | 508,135,557.55 | 23.92% | 1,553,418,132.53 |
| Including: aging as characteristics of credit risk | 2,061,553,690.08 | 98.88% | 508,135,557.55 | 23.92% | 1,553,418,132.53 |
| Total | 2,084,810,814.38 | 100.00% | 528,560,248.05 | 24.63% | 1,556,250,566.33 |
(Continued)
| Items | Opening balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Bad debt provision on individual basis | 13,181,314.30 | 0.69% | 10,348,880.50 | 78.51% | 2,832,433.80 |
| Bad debt provision on group | 1,888,715,925.40 | 99.31% | 481,569,916.25 | 25.50% | 1,407,146,009.15 |
| Including: aging as characteristics of credit risk | 1,888,715,925.40 | 99.31% | 481,569,916.25 | 25.50% | 1,407,146,009.15 |
| Total | 1,901,897,239.70 | 100.00% | 491,918,796.75 | 25.86% | 1,409,978,442.95 |
1) Bad debt provisions on individual basis
| Name | Closing Balance | |||
| Accounts receivable | Provision for bad debts | (%) | Reason | |
| Wuxi Jinshang Hongyang electromechanical Equipment Co., LTD | 10,403,258.00 | 10,403,258.00 | 100.00% | not expected to be recovered |
| YIDU(SY)Cold Chain Logistics Evolution Co.,Ltd. | 635,135.70 | 635,135.70 | 100.00% | |
| Mudanjiang Zhongnong Batch Cold Chain Logistics Co. LTD | 914,911.20 | 914,911.20 | 100.00% | not expected to be recovered |
| Qingyang Haiyue Agriculture Co Ltd | 585,000.00 | 585,000.00 | 100.00% | not expected to be recovered |
| Chishui Nong Shang LV | 4,686,819.40 | 3,106,289.40 | 66.00% | Enforcement has been applied for and not expected to be recovered |
| Guizhou rural commercial tourism development Co., LTD | 6,032,000.00 | 4,780,096.20 | 79.00% | Enforcement has been applied for and not expected to be recovered |
| Total | 23,257,124.30 | 20,424,690.50 | — | |
Provision for bad debts by combination:
| Items | Closing Balance |
| Booking balance | Provision | % | |
| within 1 year | 1,218,732,907.83 | 69,377,372.05 | 4.85% |
| 1-2 years | 298,717,763.13 | 49,331,536.60 | 15.60% |
| 2-3 years | 123,975,715.30 | 30,826,384.10 | 26.65% |
| 3-4 years | 71,384,457.40 | 44,847,889.63 | 56.34% |
| 4-5 years | 125,639,035.01 | 90,648,563.76 | 72.75% |
| more than 5 years | 223,103,811.42 | 223,103,811.42 | 100.00% |
| Total | 2,061,553,690.08 | 508,135,557.55 |
Instructions for determining the basis for this combination:
If the bad debt provision for accounts receivable is accrued according to the general model ofexpected credit loss, please refer to the disclosure method of other receivables to disclose the relevantinformation of bad debt provision:
?Applicable ?Not applicable
Disclosure by age
| Aging | Closing Balance |
| Within1 year | 1,220,476,722.69 |
| 1to 2 years | 313,284,161.36 |
| 2 to 3 years | 130,922,626.50 |
| More than 3 years | 420,127,303.83 |
| 3 to 4 years | 71,384,457.40 |
| 4 to 5 years | 125,639,035.01 |
| More than 5 years | 223,103,811.42 |
| Total | 2,084,810,814.38 |
2) Bad debt provision accrued and written-off (withdraw)
Provision for bad debts in the current period:
| Category | Opening balance | Change during the period | Closing Balance | |||
| Accrued | Collected/reversed | Written-off | Others | |||
| Bad debt provision for accounts receivable | 491,918,796.75 | 24,630,411.14 | 4,635,130.33 | 3,983,646.00 | 20,629,816.49 | 528,560,248.05 |
3) Accounts receivable written off in current period
| Item | Written off amount |
| Receivable actually written off | 3,983,646.00 |
Among them, the important accounts receivable write-off situation:
| Company | The nature of accounts receivable | Written off amount | Reason for written off | Written off procedures performed | Whether the payment is caused by a related transaction |
| Chongqing Zhongji refrigeration equipment Co., LTD | Trade receivable | 1,113,700.00 | Non-asset payment | Board Resolution | No |
| Wudi Keyi Chemical Co., LTD | Trade receivable | 786,000.00 | Non-asset payment | Board Resolution | No |
| Yulin Huaneng coal technology Co., LTD | Trade receivable | 585,000.00 | Non-asset payment | General manager approval | No |
| Shanghai Hantest experimental Equipment Co., LTD | Construction | 430,470.00 | Non-asset payment | Board Resolution | No |
| Shandong Yucheng Dayu Fine chemical Co., LTD | Trade receivable | 352,550.00 | Non-asset payment | Board Resolution | No |
| Shenyang Chunhui Engineering Co., LTD | Trade receivable | 217,640.00 | Non-asset payment | Board Resolution | No |
| Total | 3,485,360.00 |
4. Receivables financing
| Items | Closing Balance | Opening Balance |
| Notes receivable | 289,036,299.90 | 58,792,792.70 |
| Total | 289,036,299.90 | 58,792,792.70 |
Increase and decrease of receivables in financing capital period and changes in fair value?Applicable ?Not applicableIf the provision for impairment of receivable financing is accrued according to the general model of
expected credit loss, please refer to the disclosure method of other receivables to disclose the relevantinformation of impairment provision:
?Applicable ?Not applicable
5. Accounts paid in advance
(1) Aging of accounts paid in advance
| Items | Closing Balance | Opening Balance | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 148,999,178.28 | 82.26% | 143,894,431.33 | 83.66% |
| 1 to 2 years | 22,598,148.49 | 12.48% | 18,707,868.78 | 10.88% |
| 2 to 3 years | 4,175,311.50 | 2.31% | 4,457,439.74 | 2.59% |
| Over 3 years | 5,360,212.51 | 2.96% | 4,931,728.27 | 2.87% |
| Total | 181,132,850.78 | 171,991,468.12 | ||
6. Other receivables
| Items | Closing Balance | Opening Balance |
| Dividends receivable | 4,361,299.55 | 14,495.00 |
| Other receivable | 51,813,313.05 | 51,379,979.24 |
| Total | 56,174,612.60 | 51,394,474.24 |
(1) Dividends receivable
1) Classification of Dividends Receivable
| Items(or Investee) | Closing Balance | Opening Balance |
| Keibin Ocean Cooling and Heating Industry (Dalian) Co., LTD | 2,000,000.00 | 0.00 |
| Jiangsu Jingxue Energy Saving Technology Co., Ltd. | 1,610,172.00 | 0.00 |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 751,127.55 | 0.00 |
| Wuhan Iron and Steel Co., Ltd. | 14,495.00 | |
| Total | 4,361,299.55 | 14,495.00 |
2)Provision for bad debts
?Applicable ?Not applicable
(2). Other receivables
1) Other receivables categorized by nature
| Nature | Closing Balance | Opening Balance |
| Receivables and Payables | 37,307,092.39 | 38,051,147.58 |
| Guarantee deposits | 36,418,813.60 | 37,147,665.19 |
| Petty cash | 5,587,886.14 | 5,099,052.90 |
| Others | 7,562,233.95 | 6,088,641.82 |
| Total | 86,876,026.08 | 86,386,507.49 |
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, 2023 | 2,334,895.21 | 32,671,633.04 | 35,006,528.25 | |
| The balance of January 1, 2023 in the current period | ||||
| Provision for current period | 553,801.19 | 271,665.35 | 825,466.54 | |
| Reversal for current period | 326,938.81 | 465,596.13 | 792,534.94 | |
| Others | 23,253.18 | 23,253.18 | ||
| Balance on June 30, 2023 | 2,585,010.77 | 32,477,702.26 | 35,062,713.03 |
Changes in book balances with significant changes in loss provisions in the current period?Applicable ?Not applicableDisclosure by age
| Aging | Closing Balance |
| Within 1 year | 27,603,905.60 |
| 1-2 years | 15,557,531.41 |
| 2-3 years | 8,066,097.57 |
| Over 3 years | 35,648,491.50 |
| 3-4 years | 6,588,361.07 |
| 4-5 years | 22,533,240.11 |
| Over 5 years | 6,526,890.32 |
| Total | 86,876,026.08 |
3) Provisions for bad debts accrued, recovered or reversed in the current periodProvision for bad debts in the current period:
| Category | Opening balance | Change during the year | Closing Balance | |||
| Accrued | Collected/reversed | Written-off | Others | |||
| Provision for bad debts of other receivables | 35,006,528.25 | 825,466.54 | 792,534.94 | 23,253.18 | 35,062,713.03 | |
| Total | 35,006,528.25 | 825,466.54 | 792,534.94 | 23,253.18 | 35,062,713.03 | |
4) Other receivables from the top 5 debtors
| Name | Category | Closing Balance | Aging | % of the total OR | Closing Balance of Provision |
| Hangzhou Zhonghong New Energy Technology Co., Ltd. | 5,145,000.00 | 2-3 years | 5.92% | 815,482.50 | |
| State Tax Bureau Dalian Shahekou District tax Bureau | 1,708,353.65 | Within 1 year | 1.97% | 62,695.68 | |
| Dalian Economic and Technological Development Zone State Taxation Bureau | Stock transfer | 1,431,475.60 | Within 2 year | 1.65% | |
| Wuyuan county Furun meat processing Co., LTD | Return payment | 1,331,766.93 | Within 3 year | 1.53% | 48,742.67 |
| Dalian Detai Ganghua Gas Co., LTD | Compensation payments | 1,100,000.00 | Over 5 years | 1.27% | 40,260.00 |
| Total | 10,716,596.18 | 12.34% | 967,180.85 |
7. Inventories
(1) Categories of inventories
| Item | Closing Balance | ||
| Book value | Provision for decline | Net book value | |
| Raw materials | 310,344,042.33 | 40,065,358.65 | 270,278,683.68 |
| Working in progress | 233,127,786.61 | 7,400,079.86 | 225,727,706.75 |
| Finished goods | 405,631,893.62 | 41,675,934.58 | 363,955,959.04 |
| Contract performance cost | 585,394,191.95 | 27,781,458.66 | 557,612,733.29 |
| goods shipped in transit | 96,153,672.86 | 732,047.12 | 95,421,625.74 |
| Low-value consumable | 7,541,035.21 | 333,360.41 | 7,207,674.80 |
| Self-manufactured semi-finished products | 39,116,568.17 | 39,116,568.17 | |
| Commissioned processing materials | 3,728,530.43 | 3,728,530.43 | |
| House acquired as payment for a debt | 2,708,646.00 | 1,149,186.00 | 1,559,460.00 |
| Total | 1,683,746,367.18 | 119,677,714.82 | 1,564,068,652.36 |
(Continue)
| Item | Opening Balance | ||
| Book value | Provision for decline | Net book value | |
| Raw materials | 257,330,026.33 | 17,594,044.66 | 239,735,981.67 |
| Working in progress | 219,325,436.31 | 7,091,948.88 | 212,233,487.43 |
| Finished goods | 358,865,793.97 | 20,733,013.07 | 338,132,780.90 |
| Contract performance cost | 518,190,428.65 | 24,029,331.96 | 494,161,096.69 |
| goods shipped in transit | 64,331,292.17 | 463,920.35 | 63,867,371.82 |
| Item | Opening Balance | ||
| Book value | Provision for decline | Net book value | |
| Low-value consumable | 161,125.34 | 161,125.34 | |
| Self-manufactured semi-finished products | 30,898,915.81 | 30,898,915.81 | |
| Commissioned processing materials | 15,134,850.12 | 540,289.54 | 14,594,560.58 |
| House acquired as payment for a debt | 2,708,646.00 | 1,149,186.00 | 1,559,460.00 |
| Total | 1,466,946,514.70 | 71,601,734.46 | 1,395,344,780.24 |
(2) Provision for impairment of inventories and provision for impairment of contract performancecosts
| Item | Opening Balance | Increase | Decrease | Closing Balance | ||
| Accrual | Other | Written- off | Others transferred | |||
| Raw materials | 17,594,044.66 | 31,757.02 | 22,790,431.86 | 350,874.89 | 40,065,358.65 | |
| Working in progress | 7,091,948.88 | 153,551.73 | 154,579.25 | 7,400,079.86 | ||
| Finished goods | 20,733,013.07 | 1,602,365.00 | 20,167,060.39 | 826,503.88 | 41,675,934.58 | |
| Contract performance cost | 24,029,331.96 | 11,574,524.36 | 7,822,397.66 | 27,781,458.66 | ||
| goods shipped in transit | 463,920.35 | 268,126.77 | 732,047.12 | |||
| Low-value consumable | 333,360.41 | 333,360.41 | ||||
| Self-manufactured semi-finished products | ||||||
| Commissioned processing materials | 540,289.54 | 540,289.54 | ||||
| House acquired as payment for a debt | 1,149,186.00 | 1,149,186.00 | ||||
| Total | 71,601,734.46 | 2,121,034.16 | 54,954,722.63 | 8,648,901.54 | 350,874.89 | 119,677,714.82 |
8. Contract assets
| Item | Closing Balance | Opening Balance | ||||
| Book value | Provision for decline | Net book value | Book value | Provision for decline | Net book value | |
| Unexpired warranty money | 259,311,583.05 | 34,795,601.71 | 224,515,981.34 | 210,149,278.14 | 31,927,565.84 | 178,221,712.30 |
| The time period method recognizes receipts pending settlement | 87,378,823.36 | 16,885,715.83 | 70,493,107.53 | 61,997,091.19 | 14,427,927.71 | 47,569,163.48 |
| Total | 346,690,406.41 | 51,681,317.54 | 295,009,088.87 | 272,146,369.33 | 46,355,493.55 | 225,790,875.78 |
If the provision for impairment of contract assets is accrued according to the general model of expectedcredit loss, please refer to the disclosure method of other receivables to disclose the relevantinformation of impairment provision:
?Applicable ?Not applicable
Provision for bad debt
| Item | Accrued | Collected/reversed | Written-off | reason |
| Unexpired warranty money | 326,312.49 | |||
| The time period method recognizes receipts pending settlement | 2,457,788.13 | |||
| Total | 2,784,100.62 | -- |
9. Non-current assets maturing within one year
| Item | Closing Balance | Opening Balance |
Long-term receivables due within one year
| Long-term receivables due within one year | 12,571,309.30 | 15,715,631.52 |
| Total | 12,571,309.30 | 15,715,631.52 |
10. Other current assets
| Item | Closing Balance | Opening Balance |
| Contract acquisition cost | 3,592,142.31 | |
| Prepaid income tax presented at net amount after offsetting | 13,546,207.88 | 9,010,312.91 |
| Input VAT to be deducted | 24,101,491.07 | 12,825,675.49 |
| Prepaid expenses | 234,800.41 | 16,919.61 |
| Prepaid turnover tax | 30,551,584.63 | 11,646,669.59 |
| Total | 72,026,226.30 | 33,499,577.60 |
11.Long term receivable
(1) Details
| Item | Closing Balance | Discounted rate | ||
| Carrying amount | Provision | Book value | ||
| Lease premium | - | - | - | |
| ---Unrealized financing income | - | - | - | |
| Goods sold by installments | 5,591,380.90 | 428,922.00 | 5,162,458.90 | 4.75% |
| Total | 5,591,380.90 | 428,922.00 | 5,162,458.90 | |
(Continued)
| Item | Opening Balance | Discounted rate | ||
| Carrying amount | Provision | Book value | ||
| Lease premium | - | - | - | |
| ---Unrealized financing income | - | - | - | |
| Goods sold by installments | 5,162,458.90 | 5,162,458.90 | 5,162,458.90 | 4.75% |
| Total | 5,162,458.90 | 5,162,458.90 | 5,162,458.90 | |
(2) Provision for bad debt
| Bad debt provision | 1st stage | 2nd stage | 3rd stage | Total |
| Expected credit loss within 12 months | Expected credit loss within the whole period (no impairment) | Expected credit loss within the whole period (impairment incurred) | ||
| Opening balance | ||||
| Opening balance during the year | ||||
| --transfer to the 2nd stage | ||||
| --transfer to the 3rd stage | ||||
| --reverse to the 2nd stage | ||||
| ----reverse to the 1st stage | ||||
| Accrued | 501,389.82 | - | - | 501,389.82 |
| Reverse | ||||
| Cancelation | ||||
| Written off | ||||
| Other | -72,467.82 | - | - | -72,467.82 |
| Closing balance | 428,922.00 | - | - | 428,922.00 |
12.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 | ||||
| Dalian Benzhuang Chemical Co., Ltd. | 9,819,096.80 | 1,717,629.40 | -1,645,994.10 | 9,890,732.10 | |||||||
| Songzhi Dayang Cooling and Heating Technology (Dalian) Co., Ltd. | 60,089,313.51 | -532,555.89 | 2,000,000.00 | 57,556,757.62 | |||||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd. | 111,101,339.93 | -15,573,573.93 | 95,527,766.00 | ||||||||
| Lingzhong Bingshan Refrigeration (Dalian) Co., Ltd. | 15,401,109.10 | 867,056.87 | 16,268,165.97 | ||||||||
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | |||||||||||
| Jiangsu Jingxue Energy Saving Technology Co., Ltd. | 140,124,248.76 | 2,326,132.50 | 1,610,172.00 | 140,840,209.26 | |||||||
| Dalian Bingshan Metal Technology Co., Ltd. | 175,313,807.46 | 13,760,359.73 | 189,074,167.19 | ||||||||
| Dalian Bingshan Group Huahuida Financial Leasing | 45,603,876.95 | 639,868.03 | 751,127.55 | 45,492,617.43 | |||||||
| Wuhan Scaf Power Control Equipment Co., Ltd. | 5,534,979.43 | 249,116.74 | 5,784,096.17 | ||||||||
| Total | 562,987,771.94 | 1,717,629.40 | 90,409.95 | 4,361,299.55 | 560,434,511.74 | ||||||
13. Other non-current financial assets
| Item | Closing Balance | Opening Balance |
| Financial assets classified as fair value through profit or loss | 154,314,864.51 | 149,950,861.31 |
| Total | 154,314,864.51 | 149,950,861.31 |
14. Investment property
| Item | Building | Land-use-rights | Construction in progress | Total |
| I. Initial Cost | ||||
| 1. Opening Balance | 230,594,490.07 | 26,094,438.38 | 256,688,928.45 | |
| 2. Increase | 2,277,713.41 | 2,277,713.41 | ||
| (1) Outsourcing | ||||
| (2)Inventory\fixed assets\construction-in-progress transfer | 2,277,713.41 | 2,277,713.41 | ||
| (3)Business combination increase | ||||
| 3. Decrease | ||||
| (1) Disposal | ||||
| (2)Transferred to other | ||||
| 4. Closing Balance | 232,872,203.48 | 26,094,438.38 | 258,966,641.86 | |
| II. Accumulated Depreciation and Accumulated Amortization | ||||
| 1. Opening Balance | 128,527,417.44 | 12,828,592.81 | 141,356,010.25 | |
| 2. Increase | 3,669,112.49 | 260,944.38 | 3,930,056.87 | |
| (1)Provision or amortization | 3,669,112.49 | 260,944.38 | 3,930,056.87 | |
| 3. Decrease | ||||
| (1) Disposal | ||||
| (2) Transferred to other | ||||
| 4. Closing Balance | 132,196,529.93 | 13,089,537.19 | 145,286,067.12 | |
| III. Impairment Reserve | ||||
| 1. Opening Balance | ||||
| 2. Increase | ||||
| (1)Provision | ||||
| 3. Decrease | ||||
| (1) Disposal | ||||
| (2) Transferred to other | ||||
| 4. Closing Balance | ||||
| IV. Book Value | ||||
| 1. Closing book value | 100,675,673.55 | 13,004,901.19 | 113,680,574.74 | |
| 2. Opening book value | 102,067,072.63 | 13,265,845.57 | 115,332,918.20 |
15. Fixed assets
| Items | Closing Book Value | Opening Book Value |
| Fixed asset | 1,311,960,863.65 | 1,229,029,368.93 |
| Total | 1,311,960,863.65 | 1,229,029,368.93 |
(1) Fixed assets detail
| Item | buildings | Machinery Equipment | Transportation Equipment | Other Equipment | Total |
| I. Initial Cost | |||||
| 1. Opening Balance | 833,131,692.61 | 1,700,788,050.58 | 21,850,467.55 | 215,907,705.08 | 2,771,677,915.82 |
| 2. Increase | 109,068,746.24 | 152,968,003.64 | 5,364,988.69 | 91,658,755.48 | 359,060,494.05 |
| (1) Purchase | 875,468.89 | 19,702,524.38 | 57,079.65 | 53,572,787.06 | 74,207,859.98 |
| (2) Transferred from construction-in-progress | 1,228,239.34 | 18,756,742.27 | 413,539.84 | 7,657,262.63 | 28,055,784.08 |
| (3) Acquired from business combination | 106,965,038.01 | 114,508,736.99 | 4,894,369.20 | 30,428,705.79 | 256,796,849.99 |
| 3. Decrease | 3,541,375.62 | 11,924,145.77 | 651,635.20 | 5,414,786.57 | 21,531,943.16 |
| (1) Dispose or scrap | 3,541,375.62 | 11,924,145.77 | 651,635.20 | 5,414,786.57 | 21,531,943.16 |
| 4. Closing Balance | 938,659,063.23 | 1,841,831,908.45 | 26,563,821.04 | 302,151,673.99 | 3,109,206,466.71 |
| II. Accumulated Depreciation | |||||
| 1. Opening Balance | 244,228,011.91 | 1,120,019,881.71 | 15,419,223.76 | 149,998,682.42 | 1,529,665,799.80 |
| 2. Increase | 88,750,448.09 | 133,322,894.49 | 3,933,017.59 | 42,519,513.37 | 268,525,873.54 |
| (1)Accrued | 11,713,758.60 | 34,260,692.30 | 572,045.72 | 16,125,980.92 | 62,672,477.54 |
| Business consolidation increase | 77,036,689.49 | 99,062,202.19 | 3,360,971.87 | 26,393,532.45 | 205,853,396 |
| 3. Decrease | 1,482,386.08 | 11,201,214.18 | 607,645.00 | 5,284,846.90 | 18,576,092.16 |
| (1) Disposal or scrap | 403,387.15 | 11,201,214.18 | 607,645.00 | 5,284,846.90 | 17,497,093.23 |
| Business consolidation increase | 1,078,998.93 | 1,078,998.93 | |||
| 4. Closing Balance | 331,496,073.92 | 1,242,141,562.02 | 18,744,596.35 | 187,233,348.89 | 1,779,615,581.18 |
| III. Impairment Reserve | |||||
| 1. Opening Balance | 201,250.96 | 8,839,885.62 | 286,519.26 | 3,655,091.25 | 12,982,747.09 |
| 2. Increase | 1,960,721.36 | 2,231,844.13 | 125,347.83 | 1,315,706.46 | 5,633,619.78 |
| Item | buildings | Machinery Equipment | Transportation Equipment | Other Equipment | Total |
| (1)Accrued | |||||
| Business consolidation increase | 1,960,721.36 | 2,231,844.13 | 125,347.83 | 1,315,706.46 | 5,633,619.78 |
| 3. Decrease | 816,020.05 | 115,136.79 | 125,347.83 | 55,188.15 | 986,344.99 |
| (1) Disposal or scrap | 816,020.05 | 115,136.79 | 55,188.15 | 986,344.99 | |
| 4. Closing Balance | 1,345,952.27 | 10,956,592.96 | 411,867.09 | 4,915,609.56 | 17,630,021.88 |
| IV. Book Value | |||||
| 1. Closing book value | 605,817,037.04 | 588,733,753.47 | 7,407,357.60 | 110,002,715.54 | 1,311,960,863.65 |
| 2. Opening book value | 588,702,429.74 | 571,928,283.25 | 6,144,724.53 | 62,253,931.41 | 1,229,029,368.93 |
16. Construction-in-progress
| Item | Closing book value | Opening book value |
| Construction-in-progress | 120,460,980.49 | 115,577,902.54 |
| Total | 120,460,980.49 | 115,577,902.54 |
(1) Construction in progress details
| Item | Closing Balance | Opening Balance | ||||
| Book Balance | Provision | Book Value | Book Balance | Provision | Book Value | |
| Renovation of buildings and ancillary facilities | 26,912,256.65 | 26,912,256.65 | 24,796,146.56 | 24,796,146.56 | ||
| Installation and renovation of machine tools and mechanical equipment | 87,088,739.77 | 87,088,739.77 | 82,341,565.62 | 82,341,565.62 | ||
| Smart Manufacturing Software | 6,459,984.07 | 6,459,984.07 | 3,575,525.17 | 3,575,525.17 | ||
| Dusty gas water waste heat power generation project | 9,164,665.19 | 4,300,000.00 | 4,864,665.19 | |||
| Total | 120,460,980.49 | 120,460,980.49 | 119,877,902.54 | 4,300,000.00 | 115,577,902.54 | |
(2) Change in the significant construction in progress
| Name | Budget | Opening Balance | Increase | Amount transferred to fixed assets | Other reductions | Closing Balance | Percent of investment against budget | of construction | Accumulated capitalized interest | Including: Accumulated capitalized interest of the year | rate(%) | Source of funds | |||
| Renovation of buildings and ancillary facilities | 27,271,836.00 | 24,796,146.56 | 2,116,110.09 | 26,912,256.65 | 99% | 99% | self-raised | ||||||||
| Installation and renovation of machine tools and mechanical equipment | 101,691,814.04 | 82,341,565.62 | 14,292,106.90 | 25,421.59 | 9,519,511.16 | 87,088,739.77 | 86% | 86% | self-raised | ||||||
| Smart Manufacturing Software | 7,535,456.22 | 3,575,525.17 | 3,925,456.22 | 1,040,997.32 | 6,459,984.07 | 86% | 86% | self-raised | |||||||
| Dusty gas water waste heat power generation project | 9,164,665.19 | 9,164,665.19 | |||||||||||||
| Total | 136,499,106.26 | 119,877,902.54 | 20,333,673.21 | 1,066,418.91 | 18,684,176.35 | 120,460,980.49 | 136,499,106.26 | 119,877,902.54 | |||||||
17.Right of use assets
| Item | Buildings | Mechanical equipment | Transportation Equipment | Electronic equipment | Land use right | Total |
| I. Initial Cost | ||||||
| 1. Opening Balance | 12,258,253.25 | 22,042,380.89 | 334,540.86 | 194,322.58 | 7,945,762.91 | 42,775,260.49 |
| 2. Increase | 344,683.94 | 7,579,035.02 | 7,923,718.96 | |||
| Rent | 344,683.94 | 344,683.94 | ||||
| Business consolidation increase | 7,579,035.02 | 7,579,035.02 | ||||
| 3. Decrease | 2,109,328.37 | 19,391,531.33 | 21,500,859.7 | |||
| Disposal or scrapping | 116,777.78 | 116,777.78 | ||||
| Allocation of fixed assets | 2,109,328.37 | 19,274,753.55 | 21,384,081.92 | |||
| 4. Closing Balance | 10,493,608.82 | 2,650,849.56 | 334,540.86 | 194,322.58 | 15,524,797.93 | 29,198,119.75 |
| Item | Buildings | Mechanical equipment | Transportation Equipment | Electronic equipment | Land use right | Total |
| II. Accumulated depreciation | ||||||
| 1. Opening Balance | 2,561,983.47 | 7,244,798.14 | 223,027.24 | 99,228.48 | 1,704,560.90 | 11,833,598.23 |
| 2. Increase | 3,328,309.38 | 2,794,264.34 | 55,756.80 | 24,807.12 | 1,426,820.64 | 7,629,958.28 |
| (1)Accrued | 3,328,309.38 | 2,794,264.34 | 55,756.80 | 24,807.12 | 1,426,820.64 | 7,629,958.28 |
| 3. Decrease | 7,518,212.90 | 7,518,212.90 | ||||
| (1) Disposal | 38,394.98 | 38,394.98 | ||||
| Allocation of fixed assets | 7,479,817.92 | 7,479,817.92 | ||||
| 4. Closing Balance | 5,890,292.85 | 2,520,849.58 | 278,784.04 | 124,035.60 | 3,131,381.54 | 11,945,343.61 |
| III. Impairment Reserve | ||||||
| 1. Opening Balance | ||||||
| 2. Increase | ||||||
| (1)Accrued | ||||||
| 3. Decrease | ||||||
| (1) Disposal | ||||||
| 4. Closing Balance | ||||||
| IV. Book Value | ||||||
| 1. Closing book value | 4,603,315.97 | 129,999.98 | 55,756.82 | 70,286.98 | 12,393,416.39 | 17,252,776.14 |
| 2. Opening book value | 9,696,269.78 | 14,797,582.75 | 111,513.62 | 95,094.10 | 6,241,202.01 | 30,941,662.26 |
18. Intangible assets
(1) Intangible assets list
| Item | Land use right | Patent technology | Non Patent technology | Others | Total |
| I. Initial Cost | |||||
| 1. Opening Balance | 173,151,420.72 | 17,630,188.82 | 5,773,680.00 | 59,376,795.82 | 255,932,085.36 |
| 2. Increase | 52,671,539.71 | 13,741,642.20 | 66,413,181.91 | ||
| (1) Purchase | 663,716.79 | 663,716.79 | |||
| (2) Internal R&D | |||||
| (3)Acquired from business combination | 52,671,539.71 | 13,000,642.22 | 65,672,181.93 | ||
| (4) Transfer of construction in progress | 77,283.19 | 77,283.19 | |||
| 3. Decrease | |||||
| (1) Disposal | |||||
| 4. Closing Balance | 225,822,960.43 | 17,630,188.82 | 5,773,680.00 | 73,118,438.02 | 322,345,267.27 |
| Item | Land use right | Patent technology | Non Patent technology | Others | Total |
| II.Accumulated amortization | |||||
| 1. Opening Balance | 47,596,987.88 | 9,040,676.05 | 4,273,700.00 | 26,944,001.36 | 87,855,365.29 |
| 2. Increase | 19,014,519.47 | 714,758.11 | 250,002.00 | 13,692,873.52 | 33,672,153.10 |
| (1)Accrued | 1,159,122.03 | 714,758.11 | 250,002.00 | 2,995,322.57 | 5,119,204.71 |
| Acquired from business combination | 17,855,397.44 | 10,697,550.95 | 28,552,948.39 | ||
| 3. Decrease | |||||
| (1) Disposal | |||||
| 4. Closing Balance | 66,611,507.35 | 9,755,434.16 | 4,523,702.00 | 40,636,874.88 | 121,527,518.39 |
| III. Impairment Reserve | |||||
| 1. Opening Balance | |||||
| 2. Increase | 50,980.35 | 50,980.35 | |||
| (1)Accrued | 50,980.35 | 50,980.35 | |||
| 3. Decrease | |||||
| 4. Closing Balance | |||||
| IV. Book Value | |||||
| 1. Closing book value | 159,211,453.08 | 7,874,754.66 | 1,249,978.00 | 32,430,582.79 | 200,766,768.53 |
| 2. Opening book value | 125,554,432.84 | 8,589,512.77 | 1,499,980.00 | 32,432,794.46 | 168,076,720.07 |
19. 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 Nevis Cooling and Heating Technology Co., Ltd. | 1,440,347.92 | 1,440,347.92 | ||||
| Dalian Bingshan Group Engineering Co., Ltd. | 310,451.57 | 310,451.57 | ||||
| Sonyo Compressor(Dalian)Co.,Ltd | 240,922,872.80 | 240,922,872.80 | ||||
| Sonyo Refrigeration System (Dalian) Co., Ltd. | 5,671,836.12 | 5,671,836.12 | ||||
| Sonyo Refrigeration (Dalian) Co., Ltd. | 22,455,467.62 | 22,455,467.62 | ||||
| Total | 248,345,508.41 | 22,455,467.62 | 270,800,976.03 | |||
20. Long-term unamortized expense
| Item | Opening Balance | Increase | Amortization | Other Decrease | Closing Balance |
| Employee’s dormitory use right | 1,596,735.42 | 69,239.16 | 1,527,496.26 | ||
| Renovation and rebuilding | 339,641.30 | 53,145.00 | 286,496.30 | ||
| Membership fee | 390,500.00 | 8,250.00 | 382,250.00 | ||
| New plant greening fee | 3,940,176.58 | 446,057.76 | 3,494,118.82 | ||
| Amortization of jigs and molds | 219,513.62 | 365,504.04 | 213,390.53 | 371,627.13 | |
| Total | 6,486,566.92 | 365,504.04 | 790,082.45 | 6,061,988.51 |
21. 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 | 104,845,345.79 | 16,661,111.30 | 110,205,587.05 | 18,013,430.31 |
| Unrealized profit from internal transaction | 0.00 | - | 13,034,503.47 | 1,955,175.52 |
| Deductible loss | 9,991,507.80 | 1,498,726.17 | 9,991,507.80 | 1,498,726.17 |
| Provision for credit impairment | 424,347,503.53 | 77,627,388.67 | 383,685,092.04 | 70,892,192.53 |
| Projected liabilities | 13,247,933.73 | 2,518,045.11 | 16,786,967.43 | 2,518,045.11 |
| Withholding sales rebates | 13,744,913.65 | 2,061,737.05 | 13,744,913.65 | 2,061,737.05 |
| Depreciation of fixed assets | 35,600,567.62 | 5,340,085.14 | 35,600,567.62 | 5,340,085.14 |
| Others | 41,655.78 | 6,248.37 | 845,210.65 | 126,781.60 |
| Total | 601,819,427.90 | 105,713,341.81 | 583,894,349.71 | 102,406,173.43 |
(2) Deferred tax liabilities without offsetting
| Item | Closing Balance | Opening Balance | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Revaluation increase in business combination asst not under same control | 294,119,069.25 | 44,117,860.39 | 211,352,103.77 | 31,702,815.57 |
| Changes in the fair value of other non-current financial assets | 151,372,445.87 | 22,705,866.88 | 137,357,000.73 | 20,603,550.11 |
| Depreciation of fixed assets | 37,351,250.43 | 5,602,687.56 | 46,545,245.48 | 6,981,786.82 |
| Total | 482,842,765.55 | 72,426,414.83 | 395,254,349.98 | 59,288,152.50 |
(2) Deferred income tax assets or liabilities shown net of offset
| Item | Deferred tax assets and liabilities at the end of the balance | The ending balance of a deferred tax asset or liability after offset | The amount of deferred tax assets and liabilities offset at the beginning of | The beginning balance of a deferred tax asset or liability after offset |
| the period | ||||
| Deferred tax assets | 5,602,687.56 | 100,110,654.25 | 6,981,786.82 | 95,424,386.61 |
| Deferred tax liabilities | 5,602,687.56 | 66,823,727.27 | 6,981,786.82 | 52,306,365.68 |
(4) Unrecognized deferred tax assets details
| Item | Closing Balance | Opening Balance |
| Deductible temporary difference | 345,264,828.47 | 173,990,137.06 |
| Deductible loss | 366,151,435.82 | 310,513,803.17 |
| Total | 711,416,264.29 | 484,503,940.23 |
(5) Unrecognized deductible loss of deferred tax assets expired years
| Year | Closing Balance | Opening Balance | Notes |
| 2024 | 7,735,166.14 | ||
| 2025 | 53,739,512.57 | 8,950,922.50 | |
| 2026 | 42,225,527.83 | 54,629,003.37 | |
| 2027 | 117,035,151.46 | 67,240,033.97 | |
| 2028 | 15,202,545.05 | 13,111,421.07 | |
| 2029 | 36,755,850.06 | 45,365,135.77 | |
| Total | 11,875,266.71 | 10,574,799.57 |
22. Short-term loan
(1) Category of short term loan
| Loan category | Closing Balance | Opening Balance |
| Pledge loan | 12,036,276.28 | |
| Mortgage loan | ||
| Credit loan | 285,525,821.90 | 262,016,713.87 |
| Total | 285,525,821.90 | 274,052,990.15 |
23. Notes payable
| Notes category | Closing Balance | Opening Balance |
| Commercial acceptance notes | 4,746,000.00 | 2,520,000.00 |
| Bank acceptance notes | 698,066,950.62 | 616,424,384.85 |
| Total | 702,812,950.62 | 618,944,384.85 |
24. Accounts payable
(1) Accounts payable
| Item | Closing Balance | Opening Balance |
| Material payments | 1,063,543,472.06 | 956,122,327.00 |
| Project payments | 614,366,140.16 | 567,873,401.74 |
| Equipment payments | 79,744,568.59 | 55,406,593.91 |
| Others | 15,132,243.23 | 6,695,737.94 |
| Item | Closing Balance | Opening Balance |
| Total | 1,772,786,424.04 | 1,586,098,060.59 |
25. Contract Liabilities
| Item | Closing Balance | Opening Balance |
| Received in advance due from unrealized revenue | 778,394,477.23 | 647,645,820.57 |
| Total | 778,394,477.23 | 647,645,820.57 |
26. Employee’s payable
(1) Category of employee’s payable
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Short-term employee’s payable | 118,200,459.60 | 312,421,926.55 | 339,070,529.12 | 91,551,857.03 |
| Post-employment benefit –defined contribution plan | 16,223.63 | 30,781,549.79 | 30,784,540.48 | 13,232.94 |
| Termination benefits | 8,924,648.35 | 584,362.04 | 8,340,286.31 | |
| Total | 118,216,683.23 | 352,128,124.69 | 370,439,431.64 | 99,905,376.28 |
(2) Short-term employee’s payables
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Salaries, bonus, allowance, and subsidy | 103,351,245.84 | 251,426,101.28 | 276,798,503.66 | 77,978,843.46 |
| Welfare | 10,816,934.54 | 10,816,934.54 | ||
| Social insurance | 9,001.71 | 21,778,536.32 | 20,318,662.08 | 1,468,875.95 |
| Include: Medical insurance | 7,733.56 | 16,379,028.85 | 15,135,669.79 | 1,251,092.62 |
| On-duty injury insurance | 1,268.15 | 2,124,705.49 | 2,002,293.15 | 123,680.49 |
| Maternity insurance | 1,872,000.96 | 1,777,898.12 | 94,102.84 | |
| Supplementary medical premium | 276,479.77 | 276,479.77 | ||
| Housing funds | 22,251,200.65 | 21,434,119.69 | 817,080.96 | |
| Labor union and training expenses | 3,426,187.27 | 4,625,127.60 | 5,710,154.03 | 2,341,160.84 |
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Reward bonus and welfare fund | 11,414,024.78 | 111,357.50 | 2,579,486.46 | 8,945,895.82 |
| Non-monetary benefits | 643,393.55 | 643,393.55 | ||
| Others | 769,275.11 | 769,275.11 | ||
| Total | 118,200,459.60 | 312,421,926.55 | 339,070,529.12 | 91,551,857.03 |
(3) List of setting withdrawal plans
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Basic retirement insurance | 12,626.24 | 29,818,176.80 | 29,818,176.80 | 12,626.24 |
| Unemployment Insurance Premium | 3,597.39 | 963,372.99 | 966,363.68 | 606.70 |
| Total | 16,223.63 | 30,781,549.79 | 30,784,540.48 | 13,232.94 |
27. Tax payable
| Item | Closing Balance | Opening Balance |
| Value-added tax | 9,102,274.89 | 23,058,922.64 |
| Enterprise income tax | 11,580,908.73 | 3,541,171.62 |
| Individual income tax | 355,195.94 | 818,322.16 |
| City maintenance and construction tax | 911,473.39 | 1,253,818.83 |
| Real estate tax | 2,548,359.19 | 2,212,510.37 |
| Land use tax | 1,281,345.85 | 1,122,457.62 |
| Education surcharge | 643,516.54 | 895,584.93 |
| Stamp duty | 743,420.17 | 787,688.77 |
| Green tax | 1,466.27 | 1,046.68 |
| Others | 7,535.53 | |
| Total | 27,175,496.50 | 33,691,523.62 |
28. Other accounts payable
| Item | Closing Balance | Opening Balance |
| Dividend payable | 8,965,281.07 | 533,156.00 |
| Other accounts payable | 72,650,549.17 | 66,521,094.25 |
| Total | 81,615,830.24 | 67,054,250.25 |
(1). Dividend payable
| Item | Closing Balance | Opening Balance |
| Ordinary share dividend | 8,965,281.07 | 533,156.00 |
| Total | 8,965,281.07 | 533,156.00 |
（2）Other accounts payable
Other payables categorized by payments nature
| Payments nature | Closing Balance | Opening Balance |
| Deposit and security deposit | 15,134,037.54 | 11,393,395.62 |
| Reimbursed but not paid | 20,694,347.64 | 21,409,586.91 |
| Trade mark and royalty | 3,505,028.04 | 3,505,028.04 |
| Collection | 599,732.03 | 700,531.82 |
| Others | 32,717,403.92 | 29,512,551.86 |
| Total | 72,650,549.17 | 66,521,094.25 |
29. Non-current liabilities due within one year
| Item | Closing balance | Opening balance |
| Long-term payable due within one year | 70,150,000.00 | 24,900,000.00 |
| Lease obligation due within one year | 23,641,977.37 | 29,809,686.93 |
| Lease liabilities due within one year | 10,043,736.41 | 8,396,267.63 |
| Total | 103,835,713.78 | 63,105,954.56 |
30. Other current liabilities
| Item | Closing balance | Opening balance |
| Notes payable endorsed not derecognized | 223,251,532.54 | 127,165,397.88 |
| Output Vat to be carried forward | 97,273,890.68 | 77,484,605.36 |
| Others | 657,059.81 | |
| Total | 321,182,483.03 | 204,650,003.24 |
31. Long-term loan
(1) Category of long-term loan
32. Lease liabilities
| Item | Closing Balance | Opening Balance |
| Lease liabilities | 60,542,859.17 | 23,357,885.20 |
| Less: Unrecognized financing charges | 35,847,471.46 | 3,731,085.52 |
| Reclassified to non-current liabilities due within one year | 5,878,734.86 | 8,396,267.63 |
| Total | 18,816,652.85 | 11,230,532.05 |
33. Long term accounts payable
| Item | Closing Balance | Opening Balance |
| Long term accounts payable | 27,261,665.26 | 31,009,644.16 |
| Total | 27,261,665.26 | 31,009,644.16 |
Category
| Category | Closing Balance | Opening Balance |
| Pledged loan | 639,400,000.00 | 585,100,000.00 |
| Guarantee loan | 100,000,000.00 | 130,000,000.00 |
| Total | 739,400,000.00 | 715,100,000.00 |
(1) Category by nature
| Item | Closing Balance | Opening Balance |
| Loans from financial leasing companies | 27,261,665.26 | 31,009,644.16 |
34. Provision
| Nature | Closing Balance | Opening Balance | Reason |
| Open litigation | 12,420,424.48 | 15,710,985.28 | litigation |
| Warranty | 2,846,509.25 | 3,094,982.15 | Service after sales |
| Total | 15,266,933.73 | 18,805,967.43 |
35. Deferred income
(1) Category of deferred income
| Item | Opening Balance | Increase | Decrease | Closing Balance | Formation Basis |
| Government subsidy | 99,754,346.39 | 1,144,402.00 | 2,750,198.38 | 98,148,550.01 | |
| Total | 99,754,346.39 | 1,144,402.00 | 2,750,198.38 | 98,148,550.01 | — |
(2) Government subsidy project
| Government subsidy item | Opening Balance | Increase | Recorded into Non-operating income | Amount included in other income | Offset cost or expense | Other changes | Closing Balance | equity |
| The Application of Using NH3 and CO2 to Replace the R22 Screw Refrigerator Combined Compression Condensing Unit | 20,506,438.28 | 966,476.04 | 19,539,962.24 | related | ||||
| Refrigeration Compressor Intelligent Manufacturing System Fund | 3,169,590.55 | 3,169,590.55 | related | |||||
| Ultrasonic intelligent defrosting technology | 3,006,353.02 | 222,412.20 | 2,783,940.82 | related | ||||
| testing APP | 20,000.00 | 184,384.86 | 164,384.86 | related | ||||
| Environmental protection and energy-saving refrigeration and air-conditioning compressor technology industrialization project | 17,421,621.34 | 1,276,925.28 | 16,144,696.06 | related | ||||
| R290 replaces R22 large industrial screw unit | 13,006,663.20 | 13,006,663.20 | related | |||||
| R290 replaces R22 in industrial twin-stage screw unit | 4,747,680.00 | 4,747,680.00 | related | |||||
| Relocation compensation | 37,876,000.00 | 557,002.00 | 38,433,002.00 | related | ||||
| Meat storage technology and equipment | 487,400.00 | 487,400.00 | Asset |
| related | ||||||||
| Dalian Science and Technology Progress Award | 50,000.00 | 50,000.00 | related | |||||
| State subsidies for enterprises with intellectual property advantages | 50,000.00 | 50,000.00 | related | |||||
| Total | 99,754,346.39 | 1,144,402.00 | 100,000.00 | 2,650,198.38 | 98,148,550.01 |
36. Share capital
| Item | Opening balance | Increase/decrease（+、-） | Closing balance | ||||
| Share dividend | Transfer from capital reserve | others | |||||
| Total shares | 843,212,507.00 | 843,212,507.00 | |||||
37. Capital reserves
| Items | Opening Balance | Increase | Decrease | Closing Balance |
| Capital premium (equity premium) | 659,622,044.20 | 659,622,044.20 | ||
| Other capital reserves | 57,475,054.18 | 57,475,054.18 | ||
| Total | 717,097,098.38 | 717,097,098.38 |
38. Other comprehensive income
| Items | Opening Balance | 2023.1-6 | Closing Balance | ||||||
| Amount before income tax for the current period | Less: included in other comprehensive income in the previous period and transferred to profit or loss in the current period | Less: included in other comprehensive income in the previous period and transferred to retained earnings in the current period | Less： income tax expense | After-tax attribute to the parent company | After-tax attribute to minority shareholder | ||||
| II.Other comprehensive income to be reclassified to profit or loss | 2,208,669.73 | 2,208,669.73 | |||||||
| Including: other comprehensive income that can be transferred to profit or loss under the equity method | 2,208,669.73 | 2,208,669.73 | |||||||
| Other comprehensive income total | 2,208,669.73 | 2,208,669.73 | |||||||
39. Surplus reserves
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Statutory surplus reserve | 362,972,224.98 | 362,972,224.98 | ||
| Discretionary surplus reserve | 462,254,409.17 | 462,254,409.17 | ||
| Total | 825,226,634.15 | 825,226,634.15 |
40. Undistributed profits
| Item | 2023-06-30 | 2022-06-30 |
| Closing balance of last year | 618,445,922.58 | 627,764,582.32 |
| Add: Adjustments to the opening balance of undistributed profits | - | |
| Including: additional retrospective adjustments according to the new accounting standards | - | - |
| Change on accounting policy | - | - |
| Correction of prior period significant errors | - | - |
| Change on combination scope under same control | - | - |
| Other factors | - | |
| Opening balance of current year | 618,445,922.58 | 627,764,582.32 |
| Add: net profit attributable to shareholders of parent company in the year | 57,414,399.22 | 18,255,330.45 |
| Less: Provision for statutory surplus reserves | 15,755,434.51- | |
| Provision for any surplus reserves | - | |
| Provision of general risk | - | - |
| Dividends payable for common shares | 8,432,125.07 | |
| Common stock dividends converted to equity | - | - |
| Others | 3,386,430.61 | |
| Closing balance of current year | 675,860,321.80 | 618,445,922.58 |
41. Operating revenue and cost
| Items | 2023.01-06 | 2022.01-06 | ||
| Sales revenue | Cost of sales | Sales revenue | Cost of sales | |
| Revenue from principle operation | 2,270,473,198.19 | 1,911,835,081.08 | 1,246,624,682.46 | 1,101,097,130.75 |
| Revenue from other operation | 57,063,514.86 | 29,500,449.34 | 45,234,226.25 | 30,818,078.34 |
| Total | 2,327,536,713.05 | 1,941,335,530.42 | 1,291,858,908.71 | 1,131,915,209.09 |
Income related information:
| Items | Division 1 | Total |
| Classified at products type | 2,270,473,198.19 | 2,270,473,198.19 |
| Manufacture products | 1,585,107,993.25 | 1,585,107,993.25 |
Installation work
| Installation work | 671,524,488.91 | 671,524,488.91 |
| Other products and service | 13,840,716.03 | 13,840,716.03 |
| Classified at geography location | ||
| domestic | 2,032,648,206.34 | 2,032,648,206.34 |
| overseas | 237,824,991.85 | 237,824,991.85 |
42. Operating taxes and surcharges
| Items | 2023.01-06 | 2022.01-06 |
| City construction tax | 5,012,891.14 | 1,300,268.55 |
| Education surcharge | 3,301,354.09 | 897,379.28 |
| Property tax | 4,723,080.56 | 4,341,262.13 |
| Land use tax | 2,298,123.17 | 2,192,079.15 |
| Vehicle and vessel tax | 25,563.36 | 4,923.36 |
| Stamp duty | 1,468,333.41 | 925,221.28 |
| Others | 380,239.90 | 130,238.28 |
| Total | 17,209,585.63 | 9,791,372.03 |
43. Selling expenses
| Items | 2023.01-06 | 2022.01-06 |
| Employee's salary | 59,354,505.34 | 36,733,989.97 |
| Official business expense | 8,819,360.04 | 2,682,974.83 |
| Maintenance and repair expense | 7,646,873.54 | 6,395,816.83 |
| Travel expense | 9,530,742.36 | 3,786,682.25 |
| Business entertaining expense | 5,902,755.80 | 2,049,748.87 |
| Advertisement and bids expense | 2,876,171.77 | 351,149.45 |
| Depreciation expense | 459,564.35 | 209,483.82 |
| Transportation expense | 1,630,180.10 | 1,311,116.86 |
| Other expense | 1,991,491.72 | 1,688,445.27 |
| Total | 98,211,645.02 | 55,209,408.15 |
44. Administrative expenses
| Items | 2023.01-06 | 2022.01-06 |
| Employee benefit | 53,003,618.73 | 42,406,947.67 |
| Official expense | 15,910,410.28 | 5,163,653.61 |
| Depreciation expense | 8,217,650.71 | 6,926,148.25 |
| Maintenance and repair expense | 6,583,200.78 | 2,564,900.40 |
| Long-term assets amortization | 4,936,405.08 | 3,734,356.74 |
| Travel expense | 2,422,233.31 | 1,593,342.93 |
| Design consultant and test service expense | 2,380,415.42 | 4,264,322.84 |
| Items | 2023.01-06 | 2022.01-06 |
| Safety production cost | 1,623,788.07 | 864,579.34 |
| Business entertaining expense | 867,329.66 | 599,513.97 |
| Insurance expense | 530,569.43 | 426,810.11 |
| Advertisement expense | 189,697.37 | 57,277.06 |
| Transportation expense | 6,098.57 | |
| Other tax | 1,067,493.02 | |
| Technology development expense | 25,630.70 | |
| Patent and trademark royalties | 4,282,306.43 | |
| Other expense | 1,468,461.93 | 1,472,302.79 |
| Total | 103,515,309.49 | 70,074,155.71 |
45. R&D expenses
| Items | 2023.01-06 | 2022.01-06 |
| Employee benefit | 47,345,348.39 | 25,441,289.49 |
| Raw material | 6,471,854.49 | 4,384,577.60 |
| Depreciation and amortization expense | 3,474,989.41 | 705,540.38 |
| Expenses for intermediate tests and product trial production | 4,825,843.30 | |
| Patent application maintenance expenses | 2,277,613.96 | |
| Consulting expenses | 1,428,004.16 | |
| Other expense | 2,805,164.26 | 1,033,113.44 |
| Total | 68,628,817.97 | 31,564,520.91 |
46. Financial expenses
| Items | 2023.01-06 | 2022.01-06 |
| Interest expenses | 19,165,466.43 | 7,533,477.17 |
| Less: Interest income | 5,451,984.39 | 2,004,850.77 |
| Add: Exchange loss | -1,094,669.21 | -2,344,388.03 |
| Others expenditure | 3,458,669.55 | 2,286,117.06 |
| Total | 16,077,482.38 | 5,470,355.43 |
47. Other income
| Items | 2023.01-06 | 2022.01-06 |
| Government subsidy | 1,615,317.51 | 741,847.00 |
| Personal income tax handling fee refund | 180,238.52 | 15,928.19 |
| Stable job subsidy | 19,233.01 | 98,244.00 |
| Others | 1,128,151.43 | |
| Total | 1,814,789.04 | 1,984,170.62 |
48. Investment income
| Items | 2023.01-06 | 2022.01-06 |
| Long-term equity investment income accounted for by the equity method | 90,409.95 | 16,955,402.09 |
| Debt Restructuring Proceeds | 975,354.50 | 2,834,620.63 |
| Investment income of other non-current financial assets during the holding period | 5,782,304.24 | 20,927,118.28 |
| Investment income from disposal of other non-current financial assets | 43,026,622.15 | |
| Total | 6,848,068.69 | 83,743,763.15 |
49. Income from changes in fair value (loss listed as“-“)
| Items | 2023.01-06 | 2022.01-06 |
| Other non-current financial assets | 4,364,003.20 | -29,425,921.52 |
| Total | 4,364,003.20 | -29,425,921.52 |
50. Credit impairment losses (loss listed as“-“)
| Items | 2023.01-06 | 2022.01-06 |
| Bad debt loss on notes receivable | 514,834.55 | -369,641.88 |
| Bad debt loss of accounts receivable | -19,995,280.81 | -11,270,943.86 |
| Bad debt losses of other receivables | -32,931.60 | -451,293.97 |
| Long-term receivables bad debt losses | 210,600.00 | |
| Total | -19,302,777.86 | -12,091,879.71 |
51 Assets impairment losses (loss listed as“-“)
| Items | 2023.01-06 | 2022.01-06 |
| Inventory depreciation loss and contract performance cost impairment loss | -2,121,034.16 | 782,759.18 |
| Impairment loss of construction in progress | -970,000.00 | |
| Impairment loss on contract assets | -2,784,100.62 | -588,424.79 |
| Total | -4,905,134.78 | -775,665.61 |
52. Gain on assets disposal
| Item | 2023.01-06 | 2022.01-06 |
| Gains on disposal of non-current assets | 51,209.01 | 67,260.20 |
| Including: gains on disposal of non-current assets not | 51,209.01 | 67,260.20 |
| classified as held for sale | ||
| Including: income from disposal of fixed assets | 51,209.01 | 67,260.20 |
| Total | 51,209.01 | 67,260.20 |
53. Non-operating income
| Item | 2023.01-06 | 2022.01-06 | Amounts recognized into non-recurring profit or loss for the year |
| Accept donations | 17,838.20 | 17,838.20 | |
| Government subsidy | 18,820.00 | 18,820.00 |
Debt restructuring gains
| Debt restructuring gains | 369,165.58 | ||
| Quality compensation | 31,535.00 | ||
| Gain on disposal of non-current asset | 48,523.49 | 48,523.49 | |
| Penalty | 1,042,969.59 | 1,042,969.59 | |
| Others | 3,159,314.49 | 1,209,983.77 | 3,140,494.49 |
| Total | 4,268,645.77 | 1,610,684.35 | 4,268,645.77 |
54. Non-operating expenses
| Item | 2023.01-06 | 2022.01-06 | Amounts recognized into non-recurring profit or loss for the year |
Outward donation
| Outward donation | 250,000.00 | ||
| Loss of non-current assets damaged and scrapped | 1,941,578.53 | 23,028.50 | |
| Estimated Loss from Pending Litigation | 227,145.65 | ||
| Others | 66,219.46 | 82,470.42 | |
| Total | 2,257,797.99 | 332,644.57 |
55. Income tax expenses
(1) Income tax expenses
| Items | 2023.01-06 | 2022.01-06 |
| Current income tax expenses | 16,860,971.82 | 1,929,837.77 |
| Deferred income tax expenses | -2,930,700.26 | 844,316.22 |
| Total | 13,930,271.56 | 2,774,153.99 |
(2) Adjustment process of accounting profit and income tax expense
| Items | 2023.01-06 |
| Consolidated total profit this year | 73,439,347.21 |
| Income tax expenses at applicable tax rate | 11,011,590.76 |
| Items | 2023.01-06 |
| Effect on subsidiary applied to different tax rate | -362,870.22 |
| Effect on prior period income tax | 653,856.36 |
| Effect on non-deductible cost, expense and loss | 812,029.61 |
| Effect on use of deductible loss from unrecognized deferred tax assets in the prior period | -578,552.43 |
| Effect on temporary difference or deductible loss from unrecognized deferred tax assets this year | 5,360,076.27 |
| R&D expenditure accelerated deduction | -310,915.84 |
| FA accelerated deduction | -2,914,469.51 |
| Income tax expenses | 13,930,271.56 |
56. Other comprehensive income(Refer to the note VII.38 other comprehensive income for details)
57. Notes to cash flow statement
(1) Other cash received related to operating activities
| Items | 2023.01-06 | 2022.01-06 |
| Deposit given back | 24,770,821.75 | 12,691,025.06 |
| Receivable from the related party | 6,570,520.22 | |
| Government grants | 2,325,523.26 | 383,420.00 |
| Interest income | 1,634,285.14 | 2,363,150.90 |
| Received travel expense refund | 241,258.21 | 128,547.91 |
| Others | 17,155,831.14 | 11,561,311.72 |
| Total | 52,698,239.72 | 27,127,455.59 |
(2) Other cash paid in connection with operating activities
| Items | 2023.01-06 | 2022.01-06 |
| Expenditure | 86,955,990.40 | 52,744,549.03 |
| Deposit paid | 50,746,582.86 | 17,291,456.00 |
| Business travel borrowing | 5,417,669.78 | 3,338,694.72 |
| Bank handling charges | 1,876,929.71 | 2,105,772.59 |
| Pay related parties | 1,796,642.94 | |
| Others | 5,130,221.28 | 1,551,588.83 |
| Total | 151,924,036.97 | 77,032,061.17 |
(3) Other cash received in connection with fundraising activities
| Items | 2023.01-06 | 2022.01-06 |
| Sale and leaseback financial lease sales | 6,600,000.00 | 12,000,000.00 |
| At the end of the year, the deposit not used as cash is due and recovered | 75,003,788.58 | |
| Other cash received in connection with fundraising activities | 8,774,342.51 | |
| Total | 6,600,000.00 | 95,778,131.09 |
(4) Other cash paid in connection with fundraising activities
| Items | 2023.01-06 | 2022.01-06 |
Sale and leaseback financial lease sales
| Sale and leaseback financial lease sales | 200,000.00 | 5,370,096.27 |
| Rent payable | 343,314.14 |
Finance lease deposit and handling fee
| Finance lease deposit and handling fee | 21,707,260.07 | |
| At the end of the year, the deposit not used as cash is due and recovered | 50,887,086.77 | |
| Total | 22,250,574.21 | 56,257,183.04 |
58. Supplementary Information to the Statement of Cash Flows
(1)Supplementary Information to the Statement of Cash Flows
| Items | 2023.01-06 | 2022.01-06 |
| 1. Adjusting net profit into cash flows of operating activities: | ||
| Net profit | 59,509,075.65 | 29,839,500.31 |
| Add: Provision for impairment of assets | 24,207,912.64 | 12,867,545.32 |
| Depreciation of fixed assets, Amortization of mineral resources, and biological assets | 66,602,534.41 | 36,744,922.14 |
| Depreciation of right of use assets | 7,629,958.28 | 3,213,658.50 |
| Amortization of intangible assets | 5,119,204.71 | 4,663,658.96 |
| Amortization of long-term deferred expenses | 790,082.45 | 714,838.01 |
| Losses on disposal of fixed assets, intangible assets, and long-term assets (income listed with”-”) | -51,209.01 | -67,260.20 |
| Losses on write-off of fixed assets (income listed with”-”) | 1,893,055.04 | 23,028.50 |
| Change of fair value profit or loss | -4,364,003.20 | 29,425,921.52 |
| Financial expense (income listed with”-”) | 19,165,466.43 | 7,533,477.17 |
| Investment loss (income listed with”-”) | -6,848,068.69 | -83,743,763.15 |
| with”-”) | 12,273,911.09 | -299,257.90 |
| listed with”-”) | -1,393,689.97 | -12,358,032.66 |
| Decrease of inventories (increase listed with”-”) | -169,798,737.23 | -39,470,963.36 |
| with”-”) | -373,658,442.52 | -363,642,152.27 |
| Increase in operating payable items (decreases are listed with "-") | 232,128,752.94 | 185,148,542.26 |
| Others | ||
| Net cash flows arising from operating activities | -126,794,196.98 | -189,406,336.85 |
| 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 | 828,668,546.58 | 351,712,699.09 |
| Less: Opening balance of cash | 921,663,803.17 | 438,969,337.87 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | -92,995,256.59 | -87,256,638.78 |
(2) Net cash paid to acquisition of subsidiary
| Items | Current year |
| Cash & cash equivalent paid for acquisition | 145,285,500.00 |
| -Sonyo Refrigeration (Dalian)Co.,Ltd. | 145,285,500.00 |
| Less: Cash & cash equivalent held by acquirees on acquisition date | 133,228,548.98 |
| -Sonyo Refrigeration (Dalian) Co., Ltd. | 133,228,548.98 |
| Net cash paid to acquisition of subsidiary | 12,056,951.02 |
(3) Cash and cash equivalents
| Items | Current year | Last year |
| Cash | 828,668,546.58 | 921,663,803.17 |
| Including: Cash on hand | 48,506.18 | 80,702.47 |
| Bank deposit used for paying at any moment | 828,620,040.40 | 921,581,100.70 |
| 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 | 828,668,546.58 | 921,663,803.17 |
| Cash and cash equivalents restricted in the parent company or subsidiary | - | - |
59.The assets with the ownership or use right restricted
| Items | 2023.6.30 | Reasons |
| Monetary fund | 106,646,177.74 | Margin, bank account frozen funds |
| Notes Receivable | 142,360,499.62 | Pledge |
| Fixed assets | 62,207,555.51 | Mortgage |
| Intangible assets | 5,587,198.75 | Mortgage |
| Financing of receivables | 1,080,000.00 | Pledge |
| Investment real estate | 32,981,247.79 | Mortgage |
| Total | 350,862,679.41 |
60. Monetary category of foreign currency
(1) Monetary category of foreign currency
| Item | Closing Balance (foreign currency) | Exchange Rate | Closing Balance (RMB) |
| Cash | |||
| Including：USD | 915,330.70 | 7.2258 | 6,613,996.57 |
| Euro | 112,722.27 | 7.8771 | 887,924.59 |
| HKD | |||
| JPY | 97,577,865.09 | 0.0501 | 4,888,065.57 |
| Item | Closing Balance (foreign currency) | Exchange Rate | Closing Balance (RMB) |
| Accounts receivable | |||
| Including: USD | 7,011,133.35 | 7.2258 | 50,661,047.36 |
| Euro | 2,024,138.60 | 7.8771 | 15,944,342.17 |
| HKD | |||
| GBP | 177,717.86 | 9.1432 | 1,624,909.94 |
| JPY | 102,853,780.00 | 0.0501 | 5,152,357.26 |
| Accounts payable | |||
| Including: USD | 414,829.23 | 7.2258 | 2,997,473.05 |
| GBP | 675,184.06 | 9.1432 | 6,173,342.91 |
| JPY | 47,038,712.02 | 0.0501 | 2,356,357.24 |
| Euro | 12,119,854.67 | 7.8771 | 95,469,307.25 |
| Other payables | |||
| JPY | 9,393,609.00 | 0.0501 | 470,563.45 |
61． Government Grants
(1) Basic information
| Category | Amount | Disclosure | Amount recognized in current profit and loss |
| Relocation compensation | 42,332,000.00 | Deferred income/other income | 1,114,000.00 |
| Environmental protection and energy saving refrigeration and air conditioning compressor technology industrialization project | 31,000,000.00 | Deferred income/cost of sales/expense | 1,276,925.28 |
| Application of combined compression NH3&Co2 replace R22 | 29,409,622.81 | Deferred income/cost of sales/expense | 966,476.04 |
| R290 replace R22 | 13,006,663.20 | Deferred income | - |
| Ultrasonic defrosting technology | 9,841,800.00 | Deferred income/cost of sales/expense/other income | 222,412.20 |
| Refrigeration Compressor Intelligent Manufacturing System Fund | 5,000,000.00 | Deferred income/cost of sales/expense | 184,384.86 |
| R290 replace R22 twin stage screw sets | 4,747,680.00 | Deferred income | - |
| Meat storage technology and | 487,400.00 | Deferred income |
| Category | Amount | Disclosure | Amount recognized in current profit and loss |
| equipment | |||
| Dalian Science and Technology Bureau energy conservation and environmental protection subsidy | 418,500.00 | Other Income | 418,500.00 |
| Export credit insurance premium support fund | 367,800.00 | Other Income | 367,800.00 |
| Dalian enterprise transformation of scientific and technological achievements project subsidy | 180,000.0 | Other Income | 180,000.0 |
| Shi Yan ran the science and Technology Bureau for 2023 | 100,000.00 | Other Income | 100,000.00 |
| Dalian Science and Technology Progress Award | 50,000.00 | Other Income | 50,000.00 |
| State subsidies for enterprises with intellectual property advantages | 50,000.00 | Other Income | 50,000.00 |
| Refrigeration machinery development and testing platform | 20,000.00 | Other Income | 15,000.00 |
| Subsidies for the identification of new and high-tech enterprises | 20,000.00 | Other Income | 20,000.00 |
| Job stabilization subsidy | 19,233.01 | Other Income | 19,233.01 |
| Shi Yan ran the science and Technology Bureau for 2022 | 15,500.00 | Other Income | 15,500.00 |
| Hongxin labor service stable post subsidy | 4,159.51 | Other Income | 4,159.51 |
| Pay for training on behalf of workers | 3,180.00 | Other Income | 3,180.00 |
| Research and development grants for key projects | 18,802 | Non-operating income | 18,802 |
| Total | 137,092,358.53 | Other Income | 4,487,370.90 |
VIII. Change of Consolidation Scope
1、Disposal of a subsidiary
Whether there is a situation in which the control right is lost after a single disposal of the investment in thesubsidiary? Yes ?NoWhether there is a situation in which the investment in the subsidiary is disposed of in stages through multipletransactions and the control is lost in the current period?Yes ? NoIX. 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 | ||
| Chengdu Bingshan Refrigeration Engineering Co., Ltd. | Chengdu | Chengdu | Service | - | 51.00 | Establish | |
| Dalian Bingshan Group Sales Co., Ltd. | Dalian | Dalian | Trading | 100 | Establish | ||
| Dalian Bingshan Air-conditioning Equipment Co., Ltd. | Dalian | Dalian | Manufacturing | 100 | 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 | ||
| Wuhan New World Air-conditioning Refrigeration Engineering Co., Ltd | Wuhan | Wuhan | Installation | 100 | Establish | ||
| Wuhan Lanning Energy Technology Co., Ltd. | Wuhan | Wuhan | Trading | 100 | Acquisition | ||
| Dalian Universe Thermal Technology Co.,Ltd. | Dalian | Dalian | Manufacturing | 55 | Acquisition | ||
| Dalian Bingshan Engineering & Trading Co., Ltd | Dalian | Dalian | Service | 100 | Acquisition | ||
| Sonyo Compressor(Dalian)Co.,Ltd. | Dalian | Dalian | Manufacturing | 100 | Acquisition | ||
| Sonyo Refrigeration System (Dalian) Co., Ltd. | Dalian | Dalian | Manufacturing | 100 | Acquisition | ||
| Sonyo Refrigeration (Dalian) Co., Ltd. | Dalian | Dalian | Manufacturing | 100 | Acquisition | ||
1) The company's shareholding ratio in subsidiaries is consistent with the voting rights ratio;2）The company holds more than half of the voting rights in its subsidiaries;3）The company holds more than half of the voting rights in its subsidiaries and can control the invested units.
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 | |||||
| Fuji Bingshan | Dalian | Dalian | Manufacturing | 49 | Equity method | |
| Jing Xue Insulation | Changzhou | Changzhou | Manufacturing | 14.91 | Equity method | |
| Bingshan Metal Technology | Dalian | Dalian | Manufacturing | 49 | Equity method | |
The investment income from the investee recognized by the company this year accounted for 10% of the net profitattributable to the owner of the parent company or the company's share of the net assets of the investee calculatedaccording to the shareholding ratio accounted for attributable to the parent company at the end of the year. Associateswith more than 10% of shareholders' equity are significant associates.
1) The shareholding ratio of the company in the joint venture is the same as the voting rights ratio;
2) The company does not have an associated enterprise that holds less than 20% of the voting rights but hassignificant influence;
3) The company has no associates that hold 20% or more of the voting rights but do not have significant influence.
（2） The key financial information of affiliated companies
| Items | 30-06-2023/2023.01-06 | ||
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Jing Xue Insulation | Bingshan Metal Technology | |
| Current assets | 392,953,074.08 | 1,412,248,730.10 | 371,483,253.15 |
| Non-current assets | 197,158,934.76 | 302,148,077.97 | 41,816,984.14 |
| Total assets | 590,112,008.84 | 1,714,396,808.07 | 413,300,237.29 |
| Current liabilities | 345,312,560.80 | 867,213,016.64 | 66,769,535.67 |
| Non-current liabilities | 50,307,454.75 | 38,312,160.00 | 0.00 |
| Total liabilities | 395,620,015.55 | 905,525,176.64 | 66,769,535.67 |
| Minority interests | 251,106.06 | ||
| Equity to the parent company | 194,491,993.29 | 808,620,525.37 | 346,530,701.62 |
| Proportions of net assets according to the shareholding percentage | 95,301,076.71 | 120,450,148.93 | 169,800,043.79 |
| Adjusting events | |||
| —Goodwill | 226,689.29 | 20,390,060.33 | 19,269,770.94 |
| —Unrealized profits of insider trading | |||
| --Others | |||
| Book value of equity investment of affiliated companies | 95,527,766.00 | 140,840,209.26 | 189,069,814.73 |
| Fair value of equity investment of affiliated companies | |||
| Operating income | 95,101,008.52 | 326,567,962.40 | 233,048,775.05 |
| Net profit | 2,717,196.06 | 15,601,156.92 | 28,223,484.22 |
| Net profit from closing | |||
| Other comprehensive income | |||
| Total comprehensive income | 2,717,196.06 | 15,601,156.92 | 28,223,484.22 |
| The current dividends received from joint ventures | |||
Continued：
| Items | 31-12-2022/2022.01-06 | ||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Jing Xue Insulation | Bingshan Metal Technology | |||
| Current assets | 447,012,221.67 | 1,357,769,579.89 | 331,577,731.99 | ||
| Non-current assets | 220,481,862.47 | 302,638,265.60 | 36,680,264.69 | ||
| Total assets | 667,494,084.14 | 1,660,407,845.49 | 368,257,996.68 | ||
| Current liabilities | 391,692,836.48 | 827,081,128.54 | 49,800,779.28 | ||
| Non-current liabilities | 49,526,450.43 | 29,830,925.61 | 0.00 | ||
| Items | 31-12-2022/2022.01-06 | ||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Jing Xue Insulation | Bingshan Metal Technology | |||
| Total liabilities | 441,219,286.91 | 856,912,054.15 | 49,800,779.28 | ||
| Minority interests | 449,591.20 | ||||
| Equity to the parent company | 226,274,797.23 | 803,046,200.14 | 318,457,217.40 | ||
| Net assets calculated according to the shareholding proportions | 110,874,650.64 | 119,734,188.43 | 156,044,036.52 | ||
| Adjusting events | |||||
| —Goodwill | 226,689.29 | 20,390,060.33 | 19,269,770.94 | ||
| —Unrealized profits of insider trading | |||||
| --Others | |||||
| Book value of equity investment of affiliated companies | 111,101,339.93 | 140,124,248.76 | 175,313,807.46 | ||
| Fair value of equity investment of affiliated companies | |||||
| Operating income | 83,225,183.80 | 274,830,181.17 | 240,379,163.49 | ||
| Net profit | -4,861,637.51 | 14,233,453.36 | 29,807,983.52 | ||
| Net profit from closing | |||||
| Other comprehensive income | |||||
| Total comprehensive income | -4,861,637.51 | 14,233,453.36 | 29,807,983.52 | ||
| The current dividends received from joint ventures | |||||
(3) Summary financial information of insignificant affiliated companies
| Items | 30-06-2023/2023.01-06 | 31-12-2022/2022.01-06 |
| Associates: | ||
| Total book value of investments | 77,435,611.67 | 307,002,623.96 |
| The total number of the following items based on shareholding ratio | ||
| Net profit | 247,249.62 | 11,494,152.42 |
| Total comprehensive income | 247,249.62 | 11,494,152.42 |
IX. Risk Related to Financial Instruments
一、Risks associated with financial instruments
The main financial instruments of the Company include borrowings, accounts receivable, accountspayable, other non-current financial assets, etc. Please refer to Note VI for the detailed description of eachfinancial instrument. The risks associated with these financial instruments and the risk management policiesadopted by the Company to reduce these risks are described below. The management of the company managesand monitors these risk exposures to ensure that the above risks are controlled within a limited range.
1. Various risk management objectives and policies
The company's goal in risk management is to achieve an appropriate balance between risks and benefits,minimize the negative impact of risks on the company's operating performance, and maximize the interests ofshareholders and other equity investors. Based on this risk management objective, the basic strategy of thecompany's risk management is to identify and analyze the various risks faced by the company, establish anappropriate risk tolerance bottom line and carry out risk management, and monitor various risks in a timelyand reliable manner. controlled within a limited range.
(1) Market risk
1.The main business of the company is located in China, and the main business is settled in RMB. However,the foreign currency assets and liabilities recognized by the company and future foreign currency transactions(foreign currency assets and liabilities and foreign currency transactions are mainly denominated in USD, JPY,EUR, HKD and GBP) still have foreign exchange risks. The company's financial department is responsible formonitoring the company's foreign currency transactions and the scale of foreign currency assets and liabilitiesto minimize foreign exchange risks. The company did not sign any forward foreign exchange contracts orcurrency swap contracts during the year. As of June 30, 2023, the foreign currency financial assets and foreigncurrency financial liabilities held by the company converted into RMB are listed as follows:
| Items | 30-06-2023 | 30-06-2022 |
| Monetary fund-USD | 6,613,996.57 | 3,524,626.68 |
| Monetary fund-JPY | 4,888,065.57 | 1,047,501.00 |
| Monetary fund-EURO | 887,924.59 | - |
| Monetary fund- GBP | 1,624,909.94 | - |
| Receivable - GBP | 1,624,909.94 | - |
| Receivable- USD | 50,661,047.36 | 35,850,695.71 |
| Receivable - JPY | 5,152,357.26 | 920,181.22 |
| Receivable - EURO | 15,944,342.17 | |
| Payables -USD | 2,997,473.05 | 5,414,277.32 |
| Payables -EURO | 95,469,307.25 | |
| Payables - JPY | 1,873,402.54 | 1,938,707.73 |
The Company paid close attention to the effect on FX risk.
2) Interest rate risk
The company's interest rate risk mainly arises from bank borrowings. Financial liabilities with floating interest ratesexpose the Company to cash flow interest rate risk, while financial liabilities with fixed interest rates expose theCompany to fair value interest rate risk. The company determines the relative proportion of fixed-rate and floating-ratecontracts based on the prevailing market conditions. As at June 30, 2023, the Company's interest-bearing debt consistedprimarily of RMB denominated fixed-rate borrowing contracts in the amount of $809.55 million ($74,000 million asat December 31, 2022).The company's finance department continuously monitors the company's interest rate levels. Rising interestrates will increase the cost of new interest-bearing debt and the company's unpaid interest on floating-rateinterest-bearing debt, and adversely affect the company's financial performance. The management will maketimely adjustments based on the latest market conditions. Adjustments to reduce interest rate risk.The sensitive analysis：
As of June 30, 2023, if the borrowing rate were to rise or fall by 50 basis points, while other factors remained constant,the company's net profit would decrease or increase by approximately RMB5.909 million.
3) Price risk
The price risk faced by the Company is mainly commodity price risk. The company sells products atmarket prices. As the national economy enters the "new normal", the manufacturing industry is under greatereconomic downward pressure, and the sharp fluctuations in the prices of bulk materials have a certain impacton the company's operations.
(2)Credit risk
The company's credit risk mainly comes from monetary funds, notes receivable, accounts receivable, and otherreceivables. Management has established appropriate credit policies and continuously monitors exposure tothese credit risks.
The monetary funds held by the company are mainly deposited in financial institutions such as commercialbanks. The management believes that these commercial banks have high reputation and asset status and havelow credit risk. The company adopts a limit policy to avoid credit risk to any financial institution.For accounts receivable, other receivables and notes receivable, the company sets relevant policies to controlcredit risk exposure. The company evaluates the customer's credit qualification and sets the correspondingcredit period based on the customer's financial situation, the possibility of obtaining guarantees from thirdparties, credit history and other factors such as current market conditions. The company will regularly monitorthe credit records of customers. For customers with bad credit records, the company will use written reminders,shorten the credit period or cancel the credit period, etc., to ensure that the company's overall credit risk iswithin a controllable range.As of June 30, 2023, the total amount of the top five accounts receivable of the company: 219,819,023.26 yuan.
(3) Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations on the due date. TheCompany's approach to managing liquidity risk is to ensure that there is sufficient liquidity to meet obligations whenthey fall due without causing unacceptable losses or damage to corporate reputation. The company regularly analyzesthe liability structure and term to ensure sufficient funds. The management of the Company monitors the use of bankborrowings and ensures compliance with loan agreements. At the same time, it conducts financing consultations withfinancial institutions to maintain a certain credit line and reduce liquidity risks.The Company uses bank borrowings as its main source of funds. As of June 30, 2023 the Company's unused bankborrowings amounted to RMB 686.33 million, of which the Company's unused short-term bank borrowings amountedto RMB 686.33 million.The financial assets and financial liabilities held by the Company are analyzed according to the maturity period of theundiscounted remaining contractual obligations as follows:
Unit: ten 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 | 93,531.47 | - | - | - | 93,531.47 |
| Notes receivable | 43,613.82 | - | - | - | 43,613.82 |
| Accounts receivable | 155,625.06 | - | - | - | 155,625.06 |
| Receivables financing | 28,903.63 | - | - | - | 28,903.63 |
| Other receivable | 5,181.33 | - | - | - | 5,181.33 |
| Closing balance |
Items
| Items | Within 1 year | 1-2 years | 2-5 years | Over 5 years | Total |
| Contract asset | 29,500.91 | - | - | - | 29,500.91 |
| Non-current assets maturing within one year | 1,257.13 | - | - | - | 1,257.13 |
| Long-term receivable | - | 516.25 | - | - | 516.25 |
| Other non-current financial assets | 15,431.49 | - | - | - | 15,431.49 |
| Financial Liabilities | 0 | - | |||
| Short-term loan | 28,552.58 | - | - | - | 27,405.30 |
| Notes Payable | 70,281.30 | - | - | - | 61,894.44 |
| Accounts payable | 177,278.64 | - | - | - | 158,609.81 |
| Other payable | 7,265.05 | - | - | - | 6,705.43 |
| Employee’s payable | 9,990.54 | - | - | - | 11,821.67 |
| Tax payable | 2,717.55 | - | - | - | 3,369.15 |
| Non-current liabilities due within one year | 10,383.57 | - | - | - | 6,310.60 |
| Long-term loan | 14,420.00 | 47,150.00 | 12,370.00 | 73,940.00 | |
| Lease liability | 758.62 | 321.88 | 391.62 | 409.55 | 1,881.67 |
| Long-term payables | 1,786.87 | 939.30 | - | 2,726.17 |
XI. Disclosure of Fair Value
1. Closing fair value of assets and liabilities measured at fair value
| 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 | -- | -- | -- | -- |
| Receivables Financing | 289,036,299.90 | 289,036,299.90 | ||
| Other non-current financial assets | 152,631,011.92 | 1,683,852.59 | 154,314,864.51 | |
| Non-continuous fair value measurement | -- | -- | -- | -- |
2. Determination basis for the market price of continuous and non-continuous first-level fair value
measurement itemsThe company's investment in some equity instruments in other non-current financial assets is the unadjustedclosing price on the stock public trading market on June 30, 2023.
3. Continuing and non-continuing Level 2 fair value measurement items, valuation techniques used andqualitative and quantitative information on important parameters
The financial instruments included in the second level of fair value measurement by the company are the
bank acceptance bills (accounts receivable financing) held at fair value and whose changes are included in
other comprehensive income. They are mainly large commercial banks with high credit ratings. Due to the
short remaining maturity period and extremely low credit risk, the book value of bank acceptance bills
receivable is close to the fair value on the balance sheet date.
4. Continuing and non-continuing Level 3 fair value measurement items, the valuation techniques usedand qualitative and quantitative information on important parameters
Continuous and non-continuous third-level fair value measurement items are mainly equity investments in
unlisted companies held by the company. There is no active market for the equity of the investee involved,
and there is no market transaction price for reference. The relevant observable input If it is not practical to
obtain the value, the company uses the third-level input value, that is, the unobservable input value. The
fair value measurement mainly adopts the price-to-book ratio method of comparable companies, and
considers the liquidity discount.
5. Continuous third-level fair value measurement items, adjustment information between the openingand closing book values and sensitivity analysis of unobservable parameters
Continued third-level fair value measurement items, reconciliation information between the book value at
the beginning of the year and the end of the year, and sensitivity analysis of unobservable parameters
6. Continued fair value measurement items, if there is a transfer between different levels in the currentperiod, the reason for the transfer and the policy for determining the time point of the transfer
None
7. Changes in valuation techniques during the period and reasons for the changes
None
8. Fair value of financial assets and financial liabilities not measured at fair value
NoneXII. Related Parties Relationship and Transactions
1. The parent company of the company
| 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 |
The registered address of Dalian Bingshan Group Co., Ltd. is located at No. 106, Liaohe East Road, DalianEconomic and Technological Development Zone. It is a Sino-foreign joint venture limited liability company.Its legal representative is Ji Zhijian. July 2nd. The company's business scope: research, development,manufacturing, sales, service and installation of products in the fields of industrial refrigeration products,refrigeration and refrigeration products, large, medium and small air-conditioning products, petrochemicalequipment products, electronic and electronic control products, household appliances products, environmentalprotection equipment products (involving Administrative licenses must be operated with a license).
? Registered capital of controlling shareholder and its changes
| Controlling shareholder | Initial balance | Increase | decrease | end of year balance |
| Dalian Bingshan Group Co., Ltd. | 158,580,000.00 | - | - | 158,580,000.00 |
? Controlling shareholders' holdings or interests and their changes
| Controlling shareholder | Shareholding amount | Shareholding ratio (%) | |||
| End of year balance | Initial balance | Year-end ratio | Ratio at the beginning of the year | ||
| Dalian Bingshan Group Co., Ltd. | 170,916,934.00 | 170,916,934.00 | 20.27 | 20.27 | |
2. Subsidiaries
Please refer to Note IX, 1. (1) Composition of the enterprise group for the details of the subsidiaries of theCompany.
3. Affiliated company and joint venture
For the important joint ventures or associates of the company, please refer to Note IX. 3. (1) Importantassociates.
Other joint ventures or associates that have related party transactions with the company in the current period,or have related party transactions with the company in the previous period and formed a balance are as follows:
| Names of the joint ventures or affiliated company | Relationships with the Company |
| Songzhi Dayang Cooling and Heating Technology (Dalian) Co., Ltd. | Affiliated company of the Company |
| Dalian Fuji Bingshan Vending Machine 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 |
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | Affiliated company of the Company |
| Dalian Honjo Chemical Co., Ltd. | Affiliated company of the Company |
| Dalian Bingshan Metal Technology Co.,Ltd. | Affiliated company of the Company |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | Affiliated company of the Company |
| Dalian Jingxue Freezing Equipment Co., Ltd. | Subsidiary of its affiliated company |
| Shanghai Jingxue Freezing Equipment Co., Ltd. | Subsidiary of its affiliated company |
| Jiangsu Jingxue Insulation Environmental Engineering Co.,Ltd. | Subsidiary of its affiliated company |
| Wuhan Sikafu Power Control Equipment Co., Ltd. | Affiliated company of its subsidiary |
4. Other related parties
| Name of related party | Related party relationship |
| Company under direct/indirect Control of Panasonic Co.,Ltd | Both parties are under the control of or significant influence by the same party |
| Sanyo Corporation | Both parties are under the control of or significant influence by the same party |
| Panasonic Corporation of China Co., Ltd | Directors of the Company also serve as directors |
| Dalian Spindle Environmental Facilities Co., Ltd. | Affiliated company of Dalian Bingshan Group |
| LINDE HYDROGEN FUELTECH (DALIAN) CO., LTD. | Affiliated company of Dalian Bingshan Group |
| Dalian Shentong Electric Co., Ltd. | Affiliated company of Dalian Bingshan Group |
| Dalian Fuji Bingshan Control System Co., Ltd. | Affiliated company of Dalian Bingshan Group |
| BAC Dalian Co., Ltd. | Affiliated company of Dalian Bingshan Group |
| Dalian Bingshan Huigu Development Co., Ltd. | Joint Venture of Dalian Bingshan Group |
| Name of related party | Related party relationship |
| Dalian Bingshan Part Technology Co.,LTD. | Subsidiary of Dalian Bingshan Group |
| Alphavita Bio-scientific (Dalian) Co., Ltd. | Subsidiary of Dalian Bingshan Group |
| Bingshan Technology Service （Dalian） Co., Ltd. | Subsidiary of Dalian Bingshan Group |
| SonyoCold Chain (Dalian) Co., Ltd. | Subsidiary of Dalian Bingshan Group’s Subsidiary(deregistered) |
| Dalian Zhonghuida Refrigeration Technology Co., Ltd | Directors and senior officers of the Company serve as directors and senior officers in Dalian Zhonghuida Refrigeration Technology Co., Ltd Company |
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 | 2023.1-6 | Approved Transaction Limit | Whether the transaction limit is exceeded | 2022.1-6 |
| Company under direct/indirect Control of Panasonic Co.,Ltd | Purchases of goods | 16,061,957.06 | 25,000,000.00 | No | |
| Panasonic Cold Chain (Dalian) Co., Ltd. | 5,702,273.24 | 15,000,000.00 | No | 2,058,376.71 | |
| Dalian Bingshan Group Co., Ltd. | 500,000.00 | No | 4,528.30 | ||
| Dalian Bingshan Pat Technology Co., Ltd | 17,854,202.15 | 30,000,000.00 | No | 2,981,051.00 | |
| Dalian BingshanGroup Huahuida Financial leasing Co., LTD | 1,000,000.00 | No | 330.19 | ||
| Bingshan Technology Service （Dalian） Co., Ltd. | 1,028,124.44 | 3,000,000.00 | No | 1,253,534.59 | |
| Dalian Fuji Bingshan Vending Machine Co., Ltd. | 206,432.86 | 3,000,000.00 | No | 1,003,270.93 | |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd. | 500,000.00 | No | 16,814.16 | ||
| Dalian Fuji Bingshan Control System Co., Ltd. | 8,276.00 | 3,000,000.00 | No | 0.00 | |
| Dalian Bingshan Metal Technology Co., Ltd. | 30,587,674.23 | 65,000,000.00 | No | 28,460.16 | |
| Jiangsu Jingxue Energy Saving Technology Co., Ltd. | 20,046,515.95 | 65,000,000.00 | No | 364,716.81 | |
| Dalian Spinde Environmental Equipment Co., Ltd. | 816,701.77 | 2,000,000.00 | No | 815,097.34 | |
| BAC Dalian Co., Ltd. | 9,666,650.44 | 35,000,000.00 | No | 21,233,858.40 | |
| Dalian Shentong Electric Co., Ltd. | 3,224,632.53 | 8,000,000.00 | No | ||
| Dalian Bingshan Huigu Development Co., Ltd. | 5,896.23 | 1,500,000.00 | No | 147,219.63 | |
| Dalian Honjo Chemical Co., Ltd | 3,063,274.33 | No | |||
| Alphavita Bio-scientific (Dalian) Co., Ltd. | 1,254,598.22 | No | 933,799.10 | ||
| Sonyo Refrigeration System (Dalian) Co., Ltd. | 32,295,394.82 | ||||
| Sonyo Compressor(Dalian)Co.,Ltd. | 2,352,071.11 |
2) Sales of goods/ labour services provision
| Related party | Content | 2023.1-6 | 2022.1-6 |
| Company under direct/indirect Control of Panasonic Co.,Ltd | Sales of goods | 131,295,821.04 | |
| Sonyo Cold Chain (Dalian) Co., Ltd. | 39,240,301.87 | 66,262,077.88 | |
| Dalian Bingshan Pat Technology Co., Ltd. | 750,927.00 | 624,768.48 | |
| Alphavita Bio-scientific (Dalian) Co., Ltd. | 2,791,630.38 | 7,771,926.75 | |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 26,645,039.63 | 8,700,007.96 | |
| Bingshan Technical Service (Dalian) Co., Ltd. | 18,019,442.13 | 19,222,103.24 | |
| Dalian Fuji Bingshan Vending Machine Co., Ltd. | 10,541,125.91 | 14,518,618.12 | |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd. | |||
| Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | 25,708.47 | 305,206.80 | |
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 5,233,706.75 | 5,075,605.89 |
| Jiangsu Jingxue Energy Saving Technology Co., Ltd. | 3,035,091.30 | ||
| Wuhan Scaf Power Control Equipment Co., Ltd. | 1,946.90 | 256,431.86 | |
| Dalian Spindle Environmental Facilities Co., Ltd | 3,277,492.69 | 2,315,455.64 | |
| BAC Dalian Co., Ltd. | 24,322,577.92 | 21,364,166.08 | |
| Dalian Shentong Electric Co., Ltd | 194,881.40 | ||
| Dalian Bingshan Huigu Development Co., Ltd | 6,689,927.98 | 4,003,216.37 | |
| Linde Hydrogen Refueling Station Equipment (Dalian) Co., Ltd. | 536,171.21 | 5,095,635.29 | |
| Dalian Honjo Chemical Co., Ltd | 54,351.13 | 91,981.13 | |
| Sonyo Refrigeration System (Dalian) Co., Ltd. | 11,925,729.23 | ||
| Sonyo Compressor(Dalian)Co.,Ltd. | 26,604,561.52 |
(2)Assets Lease
Assets rent out
| Lessee | Category of assets rent out | 2023.1-6 Lease Income | 2022.1-6 Lease Income |
| Dalian Jingxue Energy Saving Technology Co., Ltd. | Land, Office | 445,487.81 | 502,555.72 |
| Dalian Bingshan Huigu Development Co., Ltd. | Land ;house | 4,009,659.86 | 4,095,151.07 |
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | Land | 1,904,761.90 | 1,904,761.90 |
| Linde Hydrogen Refueling Station Equipment (Dalian) Co., Ltd. | Land | 398,985.66 | 5,033,480.00 |
| Bingshan Technology Service （Dalian） Co., Ltd. | Land | 147,436.30 | |
| Wuhan Skafe Power Equipment Control Co., Ltd. | Land | 540,784.41 | 330,415.59 |
| Sonyo Cold Chain (Dalian) Co., Ltd. | Land | 505,565.14 |
Description of related leases
| Lessor | Category of assets rent in | Current year Lease fees | Last year Lease fees |
| Dalian Bingshan Group Huahuida Financial Leasing Co. | FA | 15,428,358.65 | 11,510,637.33 |
(3) Related guarantees.
CDB Development Fund supports the company's cold chain green intelligent equipment and serviceindustrialization base project, and provides special funds to the company's controlling shareholder, BingshanGroup. For details, see "VII. 33 Long-term Loans".
(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 |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 5,060,000.00 | 2022-10-15 | 2024-09-15 | Factoring |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 13,805,309.73 | 2021-11-15 | 2026-11-15 | Sale and leaseback |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 32,833,000 | 2022-10-15 | 2024-09-15 | Factoring |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 12,000,000.00 | 2022-01-07 | 2025-01-06 | Sale and leaseback |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 10,000,000.00 | 2021-11-15 | 2026-11-15 | Sale and leaseback |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 20,000,000.00 | 2021-06-01 | 2024-05-01 | Factoring |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 5,481,000.00 | 2022-06-20 | 2024-06-10 | Factoring |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 5,063,480.54 | 2021-08-15 | 2023-07-15 | Factoring |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 2,145,251.09 | 2021-06-15 | 2024-05-15 | Sale and leaseback |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 6,600,000.00 | 2023-02-24 | 2025-02-23 | Sale and leaseback |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 499,200.00 | 2023-05-22 | 2024-05-21 | Factoring |
6. Receivables and payables of related parties
(1) Receivables
| Item | Related party | Closing Balance | Opening Balance | ||
| Book Balance | Bad debt Provision | Book Balance | Bad debt Provision | ||
| Accounts receivable | Sonyo Cold Chain (Dalian) Co., Ltd. | 93,953,936.92 | 5,497,926.62 | ||
| Accounts receivable | Company under direct/indirect Control of Panasonic Co.,Ltd | 17,554,541.91 | 150,068.26 | 145,605,125.57 | 11,219,927.46 |
| Accounts receivable | BAC Dalian Co., Ltd. | 18,256,893.20 | 1,281,633.90 | 17,739,655.64 | 1,245,323.82 |
| Accounts receivable | Dalian Fuji Bingshan Vending Machine Co., Ltd. | 10,718,224.88 | 771,285.99 | 7,292,421.55 | 548,862.49 |
| Accounts receivable | Bingshan Technical Service (Dalian) Co., Ltd. | 7,659,432.52 | 537,692.16 | 5,804,599.87 | 426,864.25 |
| Accounts receivable | Dalian Bingshan Pat Technology Co., Ltd. | 5,429,976.47 | 244,600.49 | 2,426,739.72 | 250,341.12 |
| Accounts receivable | Dalian Bingshan Huigu Development Co., Ltd | 3,605,323.61 | 291,170.65 | 1,139,243.27 | 255,895.91 |
| Accounts receivable | MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 3,699,628.26 | 259,713.90 | 3,981,739.22 | 279,518.10 |
| Accounts receivable | Bingshan Songyang Biotechnology (Dalian) Co., Ltd | 3,079,666.97 | 216,192.62 | 1,224,109.36 | 85,932.48 |
| Accounts receivable | Dalian Spinde Environmental Equipment Co., Ltd. | 2,253,035.56 | 188,463.68 | 750,121.11 | 52,658.50 |
| Accounts receivable | Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 1,025,000.00 | 71,955.00 | 2,411,867.26 | 169,313.08 |
| Accounts receivable | Linde Hydrogen Refueling Station Equipment (Dalian) Co., Ltd. | 842,611.29 | 59,151.31 | 841,284.21 | 59,058.15 |
| Accounts receivable | Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | 556,176.16 | 83,015.56 | 550,800.00 | 49,630.32 |
| Accounts receivable | Dalian Shentong Electric Co., Ltd | 89,277.33 | 6,267.27 | 94,897.33 | 6,661.79 |
| Contract assets | Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 138,450.00 | 9,719.19 | ||
| Contract assets | Sonyo Cold Chain (Dalian) Co., Ltd. | 131,130.00 | 22,790.42 | ||
| Contract assets | Dalian Bingshan Huigu Development Co., Ltd | 109,569.10 | 15,329.13 | 109,569.10 | 19,340.79 |
| Prepayment | Dalian Shentong Electric Co., Ltd | 9,722,818.40 | 8,402,006.53 | ||
| Prepayment | Bingshan Technical Service (Dalian) Co., Ltd. | 521,589.05 | 825,789.25 | ||
| Prepayment | BAC Dalian Co., Ltd. | 215,707.40 | 58,513.00 | ||
| Prepayment | Dalian Spinde Environmental Equipment Co., Ltd. | 82,355.00 | 36,455.00 | ||
| Prepayment | Dalian Bingshan Pat Technology Co., Ltd. | 40,160.00 | |||
| Other receivable | Dalian Fuji Bingshan Vending Machine Co., Ltd | 186,000.00 | 6,807.60 | 278,020.00 | 10,175.53 |
| Other receivable | Bingshan Technology Service （Dalian） Co., Ltd. | 100,000.00 | 7,020.00 | 100,000.00 | 69,410.00 |
| Other receivable | Dalian Bingshan Huigu Development Co., Ltd. | 100,000.00 | 7,020.00 |
(2) Accounts Payable due from Related Party
| Item | Related party | Closing Balance | Opening Balance |
| Accounts Payable | Jiangsu Jingxue Energy Saving Technology Co., Ltd. | 79,672,340.17 | 68,660,038.43 |
| Accounts Payable | BAC Dalian Co., Ltd. | 16,404,849.00 | 20,678,948.10 |
| Accounts Payable | Dalian Bingshan Metal Technology Co., Ltd. | 12,607,932.65 | 14,347,841.71 |
| Accounts Payable | Sonyo Cold Chain (Dalian) Co., Ltd. | 11,062,464.73 | |
| Accounts Payable | Dalian Bingshan Pat Technology Co., Ltd. | 6,639,432.57 | 7,264,112.80 |
| Accounts Payable | Dalian Honjo Chemical Co., Ltd | 5,374,200.49 | |
| Accounts Payable | Dalian Spinde Environmental Equipment Co., Ltd. | 1,962,638.00 | 1,247,400.00 |
| Accounts Payable | Company under direct/indirect Control of Panasonic Co.,Ltd | 1,746,276.66 | 11,517,452.19 |
| Accounts Payable | Dalian Shentong Electric Co., Ltd | 1,651,102.97 | 1,396,176.88 |
| Accounts Payable | Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | 868,928.95 | 1,942,256.73 |
| Accounts Payable | Bingshan Technical Service (Dalian) Co., Ltd. | 356,861.39 | 282,405.30 |
| Accounts Payable | Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 337,766.32 | |
| Other accounts payable | Company under direct/indirect Control of Panasonic Co.,Ltd | 2,991,025.17 | 4,502,046.38 |
| Other accounts payable | Sonyo Cold Chain (Dalian) Co., Ltd. | 74,770.64 | |
| Other accounts payable | Dalian Jingxue Energy Saving Technology Co., Ltd. | 70,000.00 | 666,864.48 |
| Other accounts payable | Jiangsu Jingxue Energy Saving Technology Co., Ltd. | 666,864.50 | |
| Contract liability | Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 12,334,181.42 | 4,206,191.86 |
| Contract liability | Linde Hydrogen Fueltech (Dalian) Co., Ltd | 2,303,585.62 | 2,274,454.09 |
| Contract liability | Company under direct/indirect Control of Panasonic Co.,Ltd | 309,517.97 | 1,299,686.95 |
| Contract liability | Dalian Fuji Bingshan Vending Machine Sales Co., Ltd. | 77,383.17 | |
| Contract liability | Dalian Spinde Environmental Equipment Co., Ltd. | 3,097.35 | |
| Non-current liabilities due within one year | Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 30,824,259.03 | 34,388,781.83 |
| Long-term payables | Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 22,022,390.82 | 31,009,644.16 |
(I) Related Party CommitmentNone
XIII. Commitments and Contingencies
1. Important Commitments
As of June 30, 2023, the company has no commitments that need to be disclosed.
2. Contingencies
(1) As of June 30, 2023, the Company's guarantee obligations under financing leasesThe Company sold refrigerating house equipment to Guizhou Pubu Cold Chain Food Investment Co.,Ltd(“Pubu Cold Chain”) in the form of financial leasing. The Company as a seller singed finance lease contractwith Huahuida as a buyer as well as a lessor and Pubu Cold Chain as a lessee. The contract price is
25.705million Yuan. In case the lease premium is delayed by the lessee, the Company needs to pay leasepremium on behalf of the lessee and be obliged to the buy back responsibility. Pubu Cold Chain issued anunconditional, irrevocable and joint liability counter guarantee, and the Company is the beneficiary. Guaranteescope covers the full liability because of the sales in the form of finance lease. As at 30 June 2023, the balanceof the guarantee obligation of the financial lease is RMB 10.993 million yuan.The Company sold water chiller and heat pump to Shangdong Jiechuang Energy Technology Co.,Ltd(“Shandong Jiechuang”) in the form of financial lease. The Company as a seller singed finance lease contractwith Huahuida as a buyer as well as a lessor and Shandong Jiechuang as a lessee. The contract price is
6.998million Yuan. Shandong Jiechuang had made 10% down payment, and remaining 6.2982million Yuan isunderlined the leasing contract amount. In case the lease premium is delayed by the lessee, the Company needsto pay lease premium on behalf of the lessee and be obliged to the buy back responsibility. Shandong Jiechuangissued an unconditional, irrevocable and joint liability counter guarantee, and the Company is the beneficiary.Guarantee scope covers the full liability because of the sales in the form of financial lease. As at 30 June 2023,the balance of the guarantee obligation of the financial lease is RMB5.6334 million Yuan.The Company sold refrigerating house equipment to Liuyang Zhongjie Technology Investment Co.,Ltd(“Liuyang Zhongjie”) in the form of financial lease. The Company as a seller singed finance lease contractwith Huahuida as a buyer as well as a lessor and Liuyang Zhongjie as a lessee. The contract price is
9.831million Yuan. In case the lease premium is delayed by the lessee, the Company needs to pay leasepremium on behalf of the lessee and be obliged to the buy back responsibility. Liuyang Zhongjie issued anunconditional, irrevocable and joint liability counter guarantee, and the Company is the beneficiary. Guaranteescope covers the full liability because of the sales in the form of financial lease. As at 30 June, 2023, thebalance of the guarantee obligation of the financial lease is RMB6.3871 million Yuan.The Company sold refrigerating house equipment to Shaanxi Yiming Food Co., LTD (“ Shaanxi Yiming”) inthe form of financial lease. The Company as a seller singed finance lease contract with Huahuida as a buyeras well as a lessor and Shaanxi Yiming as a lessee. The contract price is 12.70million Yuan. In case the leasepremium is delayed by the lessee, the Company needs to pay lease premium on behalf of the lessee and beobliged to the buy back responsibility. Shaanxi Yiming issued an unconditional, irrevocable andjoint liability counter guarantee, and the Company is the beneficiary. Guarantee scope covers the full liability
because of the sales in the form of financial lease. As at 30 June, 2023, the balance of the guarantee obligationof the financial lease is RMB 11.8364 million Yuan.The Company sold refrigerating house equipment to Jilin Fuyu Agricultural Technology Co., LTD (“ JilinFuyu ”) in the form of financial lease. The Company as a seller singed finance lease contract with Huahuidaas a buyer as well as a lessor andJilin Fuyu as a lessee. The contract price is 20.50 million Yuan. In case thelease premium is delayed by the lessee, the Company needs to pay lease premium on behalf of the lessee andbe obliged to the buy back responsibility. Jilin Fuyu issued an unconditional, irrevocable and joint liabilitycounter guarantee, and the Company is the beneficiary. Guarantee scope covers the full liability because of thesales in the form of financial lease. As at 30 June, 2023, The Company has not assumed any guaranteeobligation for this financial lease for this projectUntil 30 June, 2023, the balance of all guarantee obligation of the financial lease is RMB 34.8499million Yuan.There is no situation where the Company needs to undertake the liability as the lessees’ default.
（2）In April, 2020, Dalian Ruixing Iron Core Manufacturing Co.,Ltd( “Dalian Ruixing”) sued theCompany’s subsidiary, Sonyo Compressor(Dalian)Co.,Ltd for not fulfilling the purchase contract signed.Sonyo Compressor(Dalian)Co.,Ltd made a provision of 18,263,806.71Yuan based on the legal advice. InMarch 2021, Dalian Ruixing formally filed a lawsuit, the amount of litigation is 13,691,985.28 yuan.As of Until 30 June, 2023, no final judgment has been issued, and Sonyo Compressor made a provisionof 10,401,424.48 yuanUntil 30 June, 2023, the Company does not have any other contingencies for disclosure apart from theabove matters.XIV.Events after the Balance Sheet Date
(1)Sales return
The company did not have any significant sales returns after the balance sheet date.
(2)Other event
Except for the above-mentioned post-balance sheet events disclosed, the Company has no other significantpost-balance sheet events.XV. Other Significant EventsSegment InformationThe 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 and theregistered address. The Central is the subsidiary of the Company, Wuhan New World Refrigeration IndustrialCo., Ltd, Wuhan Lanning Energy Technology Co., Ltd, and Chengdu Bingshan Refrigeration EngineeringCo., Ltd. The East is the subsidiary of the Company, Ningbo Bingshan Air-conditioning Refrigeration
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 | 30-06-2023/2023.01-06 | ||||
| Northeast China | Central China | Offset | Total | ||
| 1 Operating income | 2,492,707,283.43 | 175,644,850.57 | -340,815,420.95 | 2,327,536,713.05 | |
| 2 Cost | 2,117,690,269.02 | 148,126,513.90 | -324,481,252.50 | 1,941,335,530.42 | |
| Impairment loss on assets | -3,843,013.26 | -723,096.58 | -339,024.94 | -4,905,134.78 | |
| Impairment loss on credit | -19,451,906.83 | -1,292,044.43 | 1,441,173.40 | -19,302,777.86 | |
| Depreciation and amortization | 50,657,005.42 | 3,916,133.49 | 54,573,138.91 | ||
| 3 Investment income from associates and joint venture | 3,387.24 | 249,116.74 | 2,814.27 | 255,318.25 | |
| 4 Operating profits(loss) | 114,118,423.43 | 1,716,059.57 | -42,395,135.79 | 73,439,347.21 | |
| 5 Income tax | 17,006,179.87 | -282,285.57 | -2,793,622.74 | 13,930,271.56 | |
| 6 Net profit(loss) | 97,112,243.56 | 1,998,345.14 | -39,601,513.05 | 59,509,075.65 | |
| 7 Total assets | 10,389,500,497.05 | 520,010,772.47 | -2,650,781,288.31 | 8,258,729,981.21 | |
| 8 Total liabilities | 5,521,189,617.76 | 422,235,213.73 | -804,472,728.75 | 5,138,952,102.74 | |
XVI. 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 debt provision | 861,673,723.29 | 1.00% | 112,992,525.48 | 0.13% | 748,681,197.81 | |
| Accounts receivable with bad debt provision based on the characters of credit risk portfolio | ||||||
| Accounting age as characters | 465,931,163.61 | 0.54% | 112,992,525.48 | 0.24% | 352,938,638.13 | |
| Related party within consolidation scope | 395,742,559.68 | 0.46% | 395,742,559.68 | |||
| Accounts receivable with insignificant individual amount and separate bad debt provision | ||||||
| Total | 861,673,723.29 | 1.00% | 112,992,525.48 | 0.13% | 748,681,197.81 | |
(Continued)
| Item | Opening Balance | ||||
| Booking balance | Provision | Booking balance | |||
| Amount | % | Amount | % | ||
| Accounts receivable with significant individual amount and separate bad debt provision | 737,611,736.89 | 100.00% | 107,657,087.39 | 0.15% | 629,954,649.50 |
| Accounts receivable with bad debt provision based on the characters of credit risk portfolio | |||||
| Accounting age as characters | 388,615,076.25 | 52.69% | 107,657,087.39 | 0.28% | 280,957,988.86 |
| Related party within consolidation scope | 348,996,660.64 | 47.31% | 348,996,660.64 | ||
| Accounts receivable with insignificant individual amount and separate bad debt provision | |||||
| Total | 737,611,736.89 | 100.00% | 107,657,087.39 | 0.15% | 629,954,649.50 |
(1)The bad debt provisions of accounts receivable in the portfolio is accrued under accounting aging analysismethod:
| Aging | Closing Balance |
| Within1 year | 677,048,404.74 |
| 1 to 2 years | 56,613,460.14 |
| 2 to 3 years | 58,375,681.75 |
| More than 3 years | 69,636,176.66 |
| 3 to 4 years | 1,733,408.83 |
| 4 to 5 years | 21,498,453.03 |
| More than 5 years | 46,404,314.80 |
| Total | 861,673,723.28 |
(2) Bad debt provision accrued and reversed (withdraw)
| Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/ reversed | Written-off | |||
| Bad debt provision | 107,657,087.39 | 6,094,358.09 | 758,920.00 | 112,992,525.48 | |
| Total | 107,657,087.39 | 6,094,358.09 | 758,920.00 | 112,992,525.48 | |
(3) No accounts receivable written off in current period.
| Item | Written off amount |
| Receivable actually written off | 758,920.00 |
(4) The top five significant accounts receivable categorized by debtors
Key debtors written off
| Company name | Nature | Amount | Reason | Procedures | Related party |
| Oben Food (Shanghai) Co., LTD | Trade receivable | 5,600.00 | Field expense | CEO approval | N |
| Fujian Binhai Chemical Co., LTD | Trade receivable | 94,540.00 | Customer money problem | CEO approval | N |
| Yulin Huaneng coal technology Co., LTD | Trade receivable | 585,000.00 | Court decision | CEO approval | N |
| Yichang Three Gorges Logistics Park Co. LTD | Trade receivable | 73,780.00 | Court decision | CEO approval | N |
| Total | — | 758,920.00 | — | — | — |
2. Other Receivables
| Item | Closing Balance | Opening Balance |
| Interest receivable | 0.00 | 0.00 |
| Dividend receivable | 10,184,798.49 | |
| Other receivable | 31,752,471.41 | 36,021,805.53 |
| Total | 41,937,269.90 | 36,021,805.53 |
2.1 Dividend receivable
| Item | Closing Balance | Opening Balance |
| Songzhi Dayang Cold and Heat Technology (Dalian) Co., LTD | 2,000,000.00 | |
| Dalian Bingshan Engineering & Trading Co., Ltd. | 2,986,802.05 | |
| Jiangsu Jingxue Insulation Technology Co., Ltd. | 1,610,172.00 | |
| Sonyo Refrigeration System (Dalian) Co., Ltd. | 2,836,696.89 | |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. | 751,127.55 | |
| Total | 10,184,798.49 |
2.2 Other receivable
(1) Other receivables categorized by nature
| Nature | Closing Balance | Opening Balance |
| Receivables and payables | 22,163,566.42 | 22,444,622.16 |
| Deposits | 9,776,414.85 | 13,733,003.58 |
| Petty cash | 658,142.66 | 589,402.48 |
| Total | 32,598,123.93 | 36,767,028.22 |
(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, 2023 | 596,484.59 | 148,738.10 | 745,222.69 | |
| The balance of January 1, 2023 in the current period | —— | —— | —— | —— |
| Provision for bad debts | 100,429.83 | 100,429.83 | ||
| Balance on June 30, 2023 | 696,914.42 | 148,738.10 | 845,652.52 |
The bad debt provisions of other receivables in the portfolio is accrued under accounting aging analysismethod
| Aging | Closing Balance |
| Within 1 year | 1,498,945.92 |
| 1 to 2 years | 5,561,329.35 |
| 2 to 3 years | 23,447,703.00 |
| More than 3 years | 2,090,145.66 |
| 3 to 4 years | 310,000.00 |
| 4 to 5 years | 279,835.11 |
| More than 5 years | 1,500,310.55 |
| Total | 32,598,123.93 |
(3) Bad debt provision accrued and reversed (withdraw) in the period.
| .Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/reversed | Written-off | |||
| Bad debt provision | 745,222.69 | 100,429.83 | 845,652.52 | ||
| Total | 745,222.69 | 100,429.83 | 845,652.52 | ||
(4) Other receivables from the top 5 debtors
| Name | Category | Closing Balance | Aging | % of the total OR | Closing Balance of Provision |
| Wuyuan county Furun meat processing Co., LTD | Receivable | 1,331,766.93 | 1 to 2 years | 4.09% | 48,742.67 |
| Dalian Delta HK China gas Co., Ltd. | Deposit | 1,100,000.00 | Over 5 years | 3.37% | 40,260.00 |
| Xinjiang Oriental Hope New Energy Co., LTD | Bid bond | 1,000,000.00 | 2 to 3 years | 3.07% | 36,600.00 |
| Ningxia Crystal New Energy Materials Co., Ltd. | Bid bond | 1,000,000.00 | 1 to 2 years | 3.07% | 36,600.00 |
| Chemical Co.,Ltd | Security deposit for fulfil the contract | 865,980.00 | 2 to 3 years | 2.66% | 31,694.87 |
| Total | 5,297,746.93 | 16.26% | 193,897.54 |
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 | 2,308,830,861.29 | 2,308,830,861.29 | 2,163,545,361.29 | 2,163,545,361.29 | ||
| Investment of affiliates and JV | 552,907,517.91 | 552,907,517.91 | 557,452,792.51 | 557,452,792.51 | ||
| Total | 2,861,738,379.20 | 2,861,738,379.20 | 2,720,998,153.80 | 2,720,998,153.80 | ||
(1) Investments of subsidiaries
| Subsidiaries names | Opening Balance | Increase | Decrease | Closing Balance |
| Dalian Bingshan Group Construction Co., Ltd | 193,749,675.77 | 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 | 45,272,185.00 | 45,272,185.00 | ||
| Dalian Bingshan Guardian Automation Co., Ltd. | 50,638,361.52 | 50,638,361.52 | ||
| 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 | ||
| Dalian Bingshan Engineering & Trading Co., Ltd | 71,537,064.86 | 71,537,064.86 | ||
| Sonyo Compressor(Dalian)Co.,Ltd | 1,380,455,603.23 | 1,380,455,603.23 | ||
| Sonyo Refrigeration System (Dalian) Co., Ltd | 108,851,490.98 | 108,851,490.98 | ||
| Sonyo Refrigeration (Dalian) Co., Ltd | 145,285,500.00 | 145,285,500.00 | ||
| Total | 2,163,545,361.29 | 145,285,500.00 | 2,308,830,861.29 |
(2) Joint ventures& affiliated companies
| Investee | Beginning balance | Increase/Decrease | Ending balance | 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 | |||||||||||
| Dalian Honjo Chemical Co., Ltd | 9,819,096.80 | -1,671,262.36 | 0.00 | 8,147,834.44 | |||||||
| Songzhi Ocean Thermal Technology (Dalian) Co., Ltd | 60,089,313.51 | -532,555.89 | 2,000,000.00 | 57,556,757.62 | |||||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd | 111,101,339.93 | -15,573,573.93 | 0.00 | 95,527,766.00 | |||||||
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 15,401,109.10 | 867,056.87 | 0.00 | 16,268,165.97 | |||||||
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 0.00 | 0.00 | 0.00 | ||||||||
| Jiangsu JingXue Insulation Technology Co.,Ltd | 140,124,248.76 | 2,326,132.50 | 1,610,172.00 | 140,840,209.26 | |||||||
| Bingshan Metal Technical Service （Dalian） Co.,Ltd. | 175,313,807.46 | 13,760,359.73 | 189,074,167.19 | ||||||||
| Dalian Bingshan Group Huahuida Finance Leasing Co. LTD | 45,603,876.95 | 639,868.03 | 751,127.55 | 45,492,617.43 | |||||||
| Total | 557,452,792.51 | 0.00 | 0.00 | -183,975.05 | 0.00 | 0.00 | 4,361,299.55 | 0.00 | 552,907,517.91 | ||
4. Operating revenue and cost
| Item | 2023.01-06 | 2022.01-06 | ||
| Revenue | Cost | Revenue | Cost | |
| Revenue from main operation | 533,710,281.94 | 442,877,817.72 | 385,929,620.18 | 336,469,117.09 |
| Revenue from other operation | 27,796,909.63 | 19,695,636.49 | 20,551,816.12 | 13,934,076.36 |
| Total | 561,507,191.57 | 462,573,454.21 | 406,481,436.30 | 350,403,193.45 |
5. Investment income
| Items | 2023.01-06 | 2022.01-06 |
| Income from long-term equity investments under cost method | 24,063,498.94 | 3,482,615.76 |
| Income from long-term equity investments under equity method | -183,975.05 | 16,926,568.63 |
| Investment income from disposal of long-term equity investment | 3,864,200.00 | |
| Income from holding and disposing of other non-current financial assets | 5,782,304.24 | 63,953,740.43 |
| Total | 29,661,828.13 | 88,227,124.82 |
XVII. Supplementary Information to the Financial Statements
1. Non-operating profit or loss
| item | Amount |
| Disposal gains and losses of non-current asset | -493,693.67 |
| Government subsidies included in current profit or loss | 4,263,277.78 |
| Gains and losses on debt restructuring | 975,354.50 |
| Profit or loss arising from contingencies unrelated to the normal operation of the company | 3,290,560.80 |
| When the investment cost of a subsidiary, associate or joint venture is less than that of the investment, an enterprise shall enjoy the income generated by the fair value of the identifiable net assets of the invested entity | 4,364,003.20 |
| Allowance for impairment reversal of receivables tested separately for impairment | 1,037,705.78 |
| Other non-operating revenue or expense | 646,683.82 |
| Influence on income tax | 2,020,903.93 |
| Influence on minority shareholders | 106,759.58 |
| Total | 11,956,228.70 |
2. Return on equity and earnings per share
| Profit of report period | Weighted average return on net assets (%) | Earnings per share (EPS) | |
| EPS | Diluted EPS | ||
| Net profit attributable to shareholders of parent company | 1.93% | 0.07 | 0.07 |
| Net profit after deducting non-recurring gains and losses attributable to shareholders of parent company | 1.54% | 0.05 | 0.05 |