Hangzhou Robam Appliances Co., Ltd.
Semi-Annual Report 2020
August 2020
Chapter 1 Important Notes, Contents and Interpretations
The Board of Directors, the Board of Supervisors, as well as the directors, supervisors and seniormanagement of Hangzhou Robam Appliances Co., Ltd. (the Company) hereby guarantee that there are nofalse representations, misleading statements, or material omissions in this Semi-Annual Report (“theReport”), and are severally and jointly liable for the authenticity, accuracy and completeness of theinformation contained herein.Ren Jianhua, the head of the Company, Zhang Guofu, the person in charge of the Company’s accounting,and Zhang Guofu, the head of the accounting department (the accountant in charge) hereby declare andwarrant that the financial report contained in the Report is authentic, accurate, and complete.All the directors attended a board meeting during which they reviewed the Report.The Company does not plan to distribute cash dividends or bonus shares, or convert capital reserve intocapital stock.
Contents
Semi-Annual Report 2020 ...... 2
Chapter 1 Important Notes, Contents and Interpretations ...... 5
Chapter 2 Company Profile and Major Financial Indicators ...... 8
Chapter 3 Overview of the Company’s Business ...... 9
Chapter 4 Discussion and Analysis of Operations ...... 19
Chapter 5 Significant Matters ...... 26
Chapter 6 Changes in Shares and Shareholders ...... 30
Chapter 7 Preferred Stocks ...... 30
Chapter 8 Convertible Bonds ...... 30
Chapter 9 Directors, Supervisors and Senior Management ...... 30
Chapter 10 Corporate Bonds ...... 30
Chapter 11 Financial Report ...... 31
Chapter 12 Documents Available for Future Inspection ...... 141
Interpretations
Page 4 of 141Item
| Item | refer(s) to | Contents |
| The Company, Company, Robam Appliances | refer to | Hangzhou Robam Appliances Co., Ltd. |
| MingQi | refers to | Hangzhou MingQi Electric Co., Ltd. |
| The Group | refers to | Robam Appliances, MingQi, Beijing Robam Appliances Sales Co. Ltd., Shanghai Robam Appliances Sales Co. Ltd., Kinde Intelligent |
| Robam Group | refers to | Hangzhou Robam Industrial Group Co., Ltd., controlling shareholder of the Company |
| The reporting period | refers to | the first half of 2020 |
| Kinde | refers to | Shengzhou Kinde Intelligent Kitchen Appliances Co., Ltd. |
| AVC | refers to | Beijing All View Cloud Data Technology Co., Ltd. |
Chapter 2 Company Profile and Major Financial Indicators
I. Company Profile
Page 5 of 141Stock abbreviation
| Stock abbreviation | Robam | Stock code | 002508 |
| Stocks traded on | Shenzhen Stock Exchange | ||
| Chinese name of the Company | 杭州老板电器股份有限公司 | ||
| Short Chinese name of the Company (if any) | 老板电器 | ||
| English name of the Company (if any) | HANGZHOU ROBAM APPLIANCES CO., LTD. | ||
| Short English name of the Company (if any) | ROBAM | ||
| Legal representative of the Company | Ren Jianhua | ||
II. Contact Person and Contact Information
| Secretary of the Board of Directors | Representative of securities affairs | |
| Name | Wang Gang | Jiang Yu |
| Contact address | No. 592, Linping Avenue, Yuhang Economic Development Zone, Hangzhou, Zhejiang Province | No. 592, Linping Avenue, Yuhang Economic Development Zone, Hangzhou, Zhejiang Province |
| Telephone | 0571-86187810 | 0571-86187810 |
| Fax | 0571-86187769 | 0571-86187769 |
| wg@robam.com | jy@robam.com |
III. Other Information
1. Contact information
Whether the registered address, office address and zip code as well as the website and email address of the Company changed duringthe reporting period?
□ Applicable √ Not Applicable
There are no changes in the registered address, office address and zip code as well as the website and email address of the Companyduring the reporting period. For details, please refer to the Annual Report 2019.
2. Information disclosure and filing location
Whether the information disclosure and filing locations changed during the reporting period?
□ Applicable √ Not Applicable
During the reporting period, there were no changes in the newspapers designated by the Company for information disclosure, thewebsite designated by China Securities Regulatory Commission (CSRC) for publishing the semi-annual report, and the location forfiling the semi-annual report of the Company. For details, please refer to the Annual Report 2019.
IV. Key Accounting Data and Financial IndicatorsWhether the Company needs to retroactively adjust or restate the accounting data of previous years?
□ Yes √ No
Page 6 of 141
| The reporting period | The same period last year | YoY change | |
| Operating Income (RMB) | 3,211,172,335.79 | 3,527,413,882.96 | -8.97% |
| Net profit attributable to shareholders of the listed company (RMB) | 612,317,249.29 | 670,403,994.20 | -8.66% |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains/losses (RMB) | 551,320,432.05 | 622,539,579.01 | -11.44% |
| Net cash flow from operating activities (RMB) | 407,687,133.56 | 658,691,084.58 | -38.11% |
| Basic earnings per share (EPS) (RMB/share) | 0.65 | 0.71 | -8.45% |
| Diluted EPS (RMB/share) | 0.65 | 0.71 | -8.45% |
| Weighted average return on net assets | 8.64% | 10.51% | -1.87% |
| End of the reporting period | End of last year | Change | |
| Total assets (RMB) | 10,753,455,626.61 | 10,651,922,572.87 | 0.95% |
| Net assets attributable to shareholders of the listed company (RMB) | 7,002,194,105.75 | 6,864,388,881.46 | 2.01% |
V. Differences in Accounting Data under Domestic and Foreign Accounting Standards
1. Whether there are differences in the net profit and net asset disclosed in the Financial Report underInternational Accounting Standards (IAS) and China’s accounting standards?
□ Applicable √ Not Applicable
There is no difference in the net profit and net asset disclosed in the Financial Report under IAS and China’s accounting standardsduring the reporting period.
2. Whether there are differences in the net profit and net asset disclosed in the Financial Report underforeign accounting standards and China’s accounting standards during?
□ Applicable √ Not Applicable
There is no difference in the net profit and net asset disclosed in the Financial Report under foreign accounting standards and China’saccounting standards during the reporting period.VI. Items and Amounts of Non-recurring Gains and Losses
√ Applicable □ Not Applicable
In RMB
Page 7 of 141Item
| Item | Amount | Description |
| Gains and losses on disposal of non-current assets (including the part written-off with provision for asset impairment accrued) | 11,388.98 | |
| Government subsidy included in current gains and losses (except the government subsidy closely related to the Company’s business and enjoyed by quota or ration in accordance with the unified national standard) | 73,756,234.28 | |
| Gains and losses from entrusting others with investment or asset management | 0.00 | |
| Other non-operating revenues and expenses except the above items | -1,138,951.47 | |
| Less: Affected amount of income tax | 11,320,206.38 | |
| Affected amount of minority shareholders’ equity (after tax) | 311,648.17 | |
| Total | 60,996,817.24 | -- |
During the reporting period, there is no circumstance that the items of non-recurring gains and losses defined and enumerated inaccordance with the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic - Non-current Gains and Losses are defined as recurring gains and losses.
Chapter 3 Overview of the Company’s BusinessI. Main Businesses during the Reporting Period
Dedicated to creating higher-quality kitchens for families, the Company focuses on the research and development (R&D),production, sales and comprehensive services of kitchen appliances, including range hoods, gas stoves, disinfection cabinets, steamovens, baking ovens, steaming-baking ovens, dishwashers, water purifiers, water heaters, microwaves and integrated stoves. After 41years of development and growth, ROBAM has become a leading company in the Chinese kitchen appliance industry, with thelongest history, the highest market share and the largest production capacity.II. Significant Changes in Major Assets
1. Significant changes in major assets
Page 8 of 141Major assets
| Major assets | Notes on significant changes |
| Equity assets | No significant change in the Company’s equity assets during the reporting period |
| Fixed assets | No significant change in the Company’s fixed assets during the reporting period |
| Intangible assets | No significant change in the Company’s intangible assets during the reporting period |
| Projects under construction | No significant change in the Company’s projects under construction during the reporting period |
2. Major overseas assets
□ Applicable √ Not Applicable
III. Analysis of Core Competitiveness
There is no significant change in the Company’s core competitiveness during the reporting period. The Company’score competitiveness is mainly reflected in its high-end brand positioning, R&D capability for continuous innovation,comprehensive and efficient operation capability, as shown in the Annual Report 2019.
Chapter 4 Discussion and Analysis of OperationsI. OverviewIn the first half of 2020, the COVID-19 caused serious impact on the production and operation of enterprises andresidents’ consumption, and the kitchen appliance industry was heavily hit, with an overall significant decline. In termsof the retail channel, as shown in AVC monthly data report based on offline retail monitoring (“AVC Offline Report”),the year-on-year (YoY) growths of the retail sales of the main categories of kitchen appliances, i.e. range hoods, gasstoves and disinfection cabinets, registered -28.0%, -27.1% and -31.1% respectively, a sharp decline due to theepidemic. In terms of the online channel, as shown in AVC monthly data report based on online retail monitoring(“AVC Online Report”), the retail sales of the kitchen appliance packages, range hoods and gas stoves increased by-6.0%, 7.2% and 11.4% respectively as compared with those of the same period last year, a slight impact of theepidemic due to the online transaction mode. In terms of the engineering channel, as shown in AVC half-yearmonitoring data analysis report of finely decorated commercial housing market (“AVC Fine Decoration Report”), thesize of the supporting facilities of range hoods decreased by 33.4% year on year, a sharp decline due to the fact that itwas impossible to carry out the construction during the epidemic.
The epidemic also caused severe impact and challenges to the Company. As a leader in the industry, the Companytook strict measures for epidemic prevention and control, and actively promoted the efficient resumption of work andproduction, implementing the annual business concept of “improving strength cross fiscal periods and making steadygrowth”–, in an effort to enhance our products and seizing more market share. As a result, the performance across allchannels improved greatly year-on-year from the second quarter onwards, with the operating income reaching RMB3,211,172,335.79 in the first half of 2020, down 8.97% YoY; and the net profits for shareholders of the listed companyof RMB 612,317,249.29, down 8.66% YoY, significantly higher than the average level of the industry.As of June 30, 2020, according to AVC Offline Report, the market shares and market rankings of the Company’s mainproduct categories in terms of offline retail sales are shown in the following table:
Page 9 of 141Range hood
| Range hood | Gas stove | Disinfection cabinet | Built-in electric steam oven | Built-in microwave oven | Built-in all-purpose oven | Built-in electric oven | Built-in dishwasher |
| 28.30% | 25.60% | 20.60% | 33.70% | 38.40% | 31.30% | 27.60% | 9.50% |
| 1 | 1 | 2 | 1 | 1 | 2 | 2 | 4 |
As of June 30, 2020, according to AVC Online Report, the market shares and market rankings of the Company’s main
product categories in terms of online retail sales are shown in the following table:
Page 10 of 141Kitchen appliancepackage
| Kitchen appliance package | 2-piece package of range hood and stove | Range hood | Gas stove | Built-in electric steam oven | Built-in all-purpose oven | Built-in disinfection cabinet | Built-in dishwasher |
| 26.40% | 27.0% | 15.70% | 6.6% | 24.0% | 8.20% | 8.30% | 8.1% |
| 1 | 1 | 2 | 4 | 2 | 3 | 3 | 4 |
As of June 30, 2020, according to AVC Fine Decoration Report, the market share of Robam appliances in the finedecoration channel was 34.8%, ranking No.1 in the industry.
In the first half of 2020, as for the marketing, the Company deepened its high-end brand positioning by centeringon customers and products, and adopting the market-oriented strategy, with all channels empowering each other forsynergetic development. For the retail channel, the Company continued to mainly promote the brand among keyaccounts, and improve the product system; enhanced direct sales in franchise stores and the building of the flatoperating system to increase the operation efficiency; and strengthened new marketing capabilities to build themanagement system of community-based operation and stock operation, further tapping market potentials. For thee-commerce channel, the Company continued to improve operation efficiency based on the concept of “deepening theoperation by category, restructuring user values, and enhancing brand building”. The structure of Category 1 has beenoptimized and supporting products of Category 2 and 3 have been increased. In addition, the Company focused on theexperience of old and new customers to discover customer values, and improved the brand’s natural search results tostrengthen brand positioning. For the engineering channel, the Company cooperated with leading real estate companies,and constantly optimized product and customer structures, to gradually increase the penetration rates of all categoriesand further promote the Center Clean System (CCS). As regards the innovation channel, the Company fully cooperatedwith leading whole house customization companies and home decoration companies, seized traffic-based platforms, andcooperated with designer teams to seek channel dividends and the market share of the existing stock by relying onproducts, contents and activities. For the overseas channel, the Company, in response to the enormous challenges posedby the epidemic, enhanced its positioning of “a global leader of high-end kitchen appliances”, and steadily promoted theinternationalization of the brand, gradually expanding its global presence.
In the first half of 2020, in terms of the technology, the Company applied the spirit of workmanship in innovation,and made remarkable achievements in fields such as new product development, talent training, technology patents, andstandard development. The Company independently developed several new products, including the 3-directionhigh-suction range hood 5915S and the dual chamber range hood 60X2, the steaming-baking oven CQ975 with acapacity of 40 liters and 50 automatic recipes, and dishwashers 775A and 776X more suitable for washing dishes for
Chinese cuisines. These products enriched the Company’s product categories, and their appearance design, performanceindicators and user experience have been optimized. The integrated range hood 5908S+90B8Z, the dual chamber ovenRQ035 and the dishwasher W735 won AWE 2020 Excellent Product Awards. In addition, the Company continuouslyintroduced high level technical experts, speeded up internal team building, and improved the building of different levelsof technical talents. It also placed high importance on R&D quality and efficiency, consistently optimized the productdevelopment cycle and increased successful product launch, and accumulated intelligent and integrated technologies. Inthe first half of 2020, it applied for 397 patents, including 122 invention patents, and obtained 157 patent licenses,including 8 invention patents. Meanwhile, the Company led the development of the Technical specification forgreen-design product assessment - household dishwashers. It also participated in the development of 2 nationalstandards, i.e. Range hood and General safety technique conditions of gas burning appliances; 6 group standards, e.g.Smart Kitchen and Assessment requirements for forerunner standard－Domestic gas instantaneous water heater; andthe standard of Range hood for products made in Zhejiang. The Company was awarded “Model Enterprise forIntellectual Property Rights” and the 2nd Prize of Science and Technology Progress assessed by China National LightIndustry Council.In the first half of 2020, with regard to the production, the Company focused on improving the manufacturingcapacity of multiple categories of kitchen appliances, particularly the 3 core business concepts of “QualityManufacturing, Precise Delivery, and Data-driven Development”. Firstly, it continued to promote technology-drivenintelligent manufacturing based on automated production and information, and balance production capacity structure tosteadily expand the capacity of all categories, thereby flexibly meeting the diversified demands of the market. Secondly,it established the cost control mechanism with comprehensive competitive advantages, and continuously refined theproduction modules, in an effort to achieve zero defects in quality, increase the process quality, and reduce themanufacturing cost. It integrated supply chain resources to build the supply chain ecology, which decreased thepurchase costs and expanded the purchase scale. Besides, the Company built an agile supply chain management systemand a data-driven lean operation system, and continuously enhanced the integration of automated production andinformation, thus realizing the online information interaction of projects, purchasers, and suppliers, and optimizing themechanism of resource allocation. The Maoshan Intelligent Manufacturing Park Project and the Unmanned DarkWorkshop Transformation Project are under smooth construction. After completion, they will promote the iteration andupgrading of products and the upgrading of intelligent manufacturing, laying a solid foundation for the long-termdevelopment of the Company.
In the first half of 2020, in terms of the brand, Robam comprehensively upgraded the concept of “creating newChinese kitchen” to develop into the No. 1 brand in the market of Chinese high-end kitchen appliances. The Companybuilt the brand system in a multi-dimensional manner, covering products, channels, culture, and events, to defineChinese new kitchen with the 4-piece package of “range hood, stove, steam oven and dishwasher”, and promote thechanges in Chinese cuisines via multiple online and offline channels. It upgraded the brand image system of channels,increased the coverage of new visual image of terminal stores, and upgraded the version 2.0 of the visual and electronicscenarios handbook of e-commerce shops. The Company inaugurated the Chinese Culinary College and invited SongWeilong as the spokesperson, and designed the Family Banquet, Longing for Kitchen Festival, Kitchen Carnival,Comprehensive Culinary Day and other theme activities, to create Robam’s Chinese culinary curves. It incorporated theclassic recipes in the recipes of its products through collaboration with culinary masters of the 8 major Chinese cuisines,restaurants in cities, and other parties. The Company also continued the interaction with consumers, established the 4satisfaction systems with full user contact points, and prepared the specific user research report. Robam served as thedelicious food creativity officer of the TV shows of “Back to the Goode Life Season 4” and “Chinese Restaurant Season4” to interpret Chinese cuisines and create Chinese tastes. It became the exclusive household kitchen appliance supplierfor 2022 Asian Games held in Hangzhou to support the promotion and brand building of the Games.In the first half of 2020, MingQi enhanced its transformation and upgrading, implemented the classifiedmanagement of offline channels, optimized the driving efficiency, and expanded online channels to enrich theapproaches to channel marketing and the promotion of product categories. Kinde maintained its high-end brand image,focused on channel building, shop operation and ability improvement, and smoothly pushed forward with theindustrialization of the intelligent integrated kitchen ecology, which will further improve the R&D and productioncapabilities for integrated products.In the first half of 2020, the Company continued to be recognized by the capital market in terms of corporategovernance, internal management, and shareholder returns, among others, and won the awards of “Best Board ofDirectors of SME Board”, “Best New Media Operator of SME Board”, “Best Company for Investor Relations” and“Best Board Secretary of SME Board” at the event of the 11th Chinese Listed Company Investor Relations TianmaAward held by Securities Times. It also won awards such as “Top 50 Most Valuable Listed Companies of SME Board”,“Top 10 Management Teams of SME Board”, and “Outstanding Board Secretary for Information Disclosure of ListedCompanies” at the event of the 14th Value Appraisal of Chinese Listed Companies. The Company will continue to makeefforts in the kitchen field and facilitate long-term value investment.
II. Analysis of Main Business
Please refer to the above section of “Overview” in this chapter for the overview of main business.Year-on-year changes in key financial data
In RMB
Page 13 of 141
| The reporting period | The same period last year | YOY change | Reason for change | ||
| Operating income | 3,211,172,335.79 | 3,527,413,882.96 | -8.97% | ||
| Operating costs | 1,450,728,576.58 | 1,599,401,962.81 | -9.30% | ||
| Sale expenses | 892,679,297.76 | 990,044,906.61 | -9.83% | ||
| Overhead cost | 116,085,321.98 | 116,171,528.77 | -0.07% | ||
| Financial expense | -47,782,493.84 | -29,604,970.87 | N/A | ||
| Income tax expense | 111,490,061.67 | 123,074,038.15 | -9.41% | ||
| R&D input | 117,824,032.62 | 107,629,786.13 | 9.47% | ||
| Net cash flow from operating activities | 407,687,133.56 | 658,691,084.58 | -38.11% | Due to the decrease in payment collection in the first quarter as a result of the epidemic | |
| Net cash flow from investment activities | 352,943,572.24 | 482,830,282.28 | -26.90% | ||
| Net cash flow from financing activities | -474,512,025.00 | -759,219,240.00 | N/A | ||
| Net increase in cash and cash equivalents | 286,659,233.75 | 382,418,542.61 | -25.04% | ||
Composition of operating income
In RMB
| The reporting period | The same period last year | YOY change | |||
| Value | % of operating income | Value | % of operating income | ||
| Total operating income | 3,211,172,335.79 | 100% | 3,527,413,882.96 | 100% | -8.97% |
| By industry | |||||
| Kitchen and bathroom appliances | 3,146,865,561.70 | 98.00% | 3,452,212,044.04 | 97.87% | -8.84% |
| Other operating income | 64,306,774.09 | 2.00% | 75,201,838.92 | 2.13% | -14.49% |
Page 14 of 141By product category
| By product category | |||||
| Category 1 | 2,637,225,698.75 | 82.13% | 2,980,329,193.52 | 84.49% | -11.51% |
| Incl: Range hood | 1,650,449,733.67 | 51.40% | 1,883,974,091.22 | 53.41% | -12.40% |
| Gas stove | 758,465,499.75 | 23.62% | 850,003,518.67 | 24.10% | -10.77% |
| Disinfection cabinet | 228,310,465.33 | 7.11% | 246,351,583.63 | 6.98% | -7.32% |
| Category 2 | 265,214,436.40 | 8.26% | 217,644,531.41 | 6.17% | 21.86% |
| Incl: All-purpose oven | 133,537,304.02 | 4.16% | 27,487,524.98 | 0.78% | 385.81% |
| Steam oven | 85,061,189.53 | 2.65% | 116,909,353.95 | 3.31% | -27.24% |
| Baking oven | 46,615,942.85 | 1.45% | 73,247,652.48 | 2.08% | -36.36% |
| Category 3 | 112,260,606.07 | 3.49% | 112,059,992.91 | 3.18% | 0.18% |
| Including: Dishwasher | 68,865,113.63 | 2.14% | 61,326,597.24 | 1.74% | 12.29% |
| Water purifier | 24,211,752.65 | 0.75% | 40,407,985.49 | 1.15% | -40.08% |
| Water heater | 19,183,739.79 | 0.60% | 10,325,410.18 | 0.29% | 85.79% |
| Integrated stove | 98,976,247.02 | 3.08% | 80,702,117.50 | 2.29% | 22.64% |
| Other small appliances | 33,188,573.46 | 1.04% | 61,476,208.70 | 1.74% | -46.01% |
| Other operating income | 64,306,774.09 | 2.00% | 75,201,838.92 | 2.13% | -14.49% |
| By region | |||||
| East China | 1,543,503,690.71 | 48.07% | 1,546,877,053.21 | 43.85% | -0.22% |
| South China | 451,116,850.34 | 14.05% | 435,621,166.26 | 12.35% | 3.56% |
| North China | 292,319,457.85 | 9.10% | 428,733,427.16 | 12.15% | -31.82% |
| Central China | 301,333,669.68 | 9.38% | 348,689,600.83 | 9.89% | -13.58% |
| Southwest China | 242,691,912.60 | 7.56% | 286,581,351.82 | 8.12% | -15.31% |
| Northeast China | 169,670,983.55 | 5.28% | 207,137,172.65 | 5.87% | -18.09% |
| Northwest China | 135,468,027.41 | 4.22% | 178,363,060.47 | 5.06% | -24.05% |
| East China-Others | 64,306,774.09 | 2.00% | 75,201,838.92 | 2.13% | -14.49% |
| Overseas | 10,760,969.56 | 0.34% | 20,209,211.64 | 0.57% | -46.75% |
Industries, products and regions accounting for more than 10% of the Company’s operating income or profit
In RMB
| Operating income | Operating costs | Gross margin | YoY change in operating income | YoY change in operating costs | YoY change in the gross margin |
Page 15 of 141By industry
| By industry | ||||||
| Kitchen and bathroom appliances | 3,146,865,561.70 | 1,429,892,268.93 | 54.56% | -8.84% | -8.99% | 0.07% |
| By product | ||||||
| Range hood | 1,650,449,733.66 | 686,351,807.72 | 58.41% | -12.40% | -12.13% | -0.12% |
| Gas stove | 758,465,499.75 | 323,033,918.27 | 57.41% | -10.77% | -13.87% | 1.53% |
| By region | ||||||
| East China | 1,543,503,690.71 | 687,677,137.40 | 55.45% | -0.22% | -2.09% | 0.85% |
| South China | 451,116,850.34 | 213,545,524.30 | 52.66% | 3.56% | 4.74% | -0.53% |
Main business data of the Company in the recent reporting period according to adjusted statistical caliber at the end of the reportingperiod is applied in case that the statistical caliber of such data is adjusted during the reporting period
□ Applicable √ Not Applicable
Description of reasons for relevant data increasing/decreasing by more than 30% year-on-year
□ Applicable √ Not Applicable
III. Analysis of Non-core Business
□ Applicable √ Not Applicable
IV. Analysis of Assets and Liabilities
1. Significant changes in assets composition
In RMB
| End of the reporting period | End of the same period last year | Change in percentage | Note on significant changes | |||
| Value | % of total assets | Value | % of total assets | |||
| Monetary capital | 4,351,296,343.79 | 40.46% | 2,578,726,413.49 | 27.28% | 13.18% | - |
| Accounts receivable | 772,891,855.63 | 7.19% | 490,952,083.71 | 5.19% | 2.00% | - |
| Inventory | 1,269,882,745.35 | 11.81% | 1,216,207,972.47 | 12.87% | -1.06% | - |
| Investment real estate | 108,094.94 | 0.00% | 117,081.74 | 0.00% | 0.00% | - |
| Long-term equity investment | 1,929,118.33 | 0.02% | 2,687,049.11 | 0.03% | -0.01% | - |
| Fixed assets | 799,578,416.63 | 7.44% | 839,262,550.21 | 8.88% | -1.44% | - |
| Projects under construction | 333,519,454.24 | 3.10% | 236,345,778.78 | 2.50% | 0.60% | - |
2. Assets and liabilities measured at fair value
□ Applicable √ Not Applicable
3. Restricted asset rights by the end of the reporting period
N/AV. Analysis of Investment
1. Overview
□ Applicable √ Not Applicable
2. Major equity investments obtained during the reporting period
□ Applicable √ Not Applicable
3. Major ongoing non-equity investments during the reporting period
□ Applicable √ Not Applicable
4. Financial assets measured at fair value
□ Applicable √ Not Applicable
5. Financial asset investment
(1) Securities investment
□ Applicable √ Not Applicable
The Company had no securities investment during the reporting period.
(2) Derivative investment
□ Applicable √ Not Applicable
The Company had no derivatives investment during the reporting period.
6. Use of the raised funds
□ Applicable √ Not Applicable
The Company did not use the raised funds during the reporting period.
7. Investment in important projects with non-raised funds
□ Applicable √ Not Applicable
During the reporting period, the Company did not invest in any important projects with non-raised funds.VI. Sale of Major Assets and Equities
1. Sale of major assets
□ Applicable √ Not Applicable
The Company did not sell major assets during the reporting period.
2. Sale of major equities
□ Applicable √ Not Applicable
VII. Analysis of Main Holding and Joint-stock Companies
√ Applicable □ Not Applicable
Main subsidiaries and joint-stock companies affecting more than 10% of the Company’s net profit
In RMB
Page 17 of 141Companyname
| Company name | Company type | Main business | Registered capital | Total assets | Net assets | Operating income | Operating profit | Net profit |
| MingQi | Subsidiary | Production and sales of kitchen appliances | 50,000,000.00 | 154,722,926.83 | 82,946,462.33 | 79,810,938.58 | -1,905,697.52 | -1,784,367.54 |
| Shanghai Robam | Subsidiary | Sales of kitchen appliances | 5,000,000.00 | 74,048,737.32 | 5,783,316.27 | 127,822,862.68 | -3,617,043.40 | -4,382,622.73 |
| Beijing Robam | Subsidiary | Sales of kitchen appliances | 5,000,000.00 | 62,654,721.76 | 40,704,303.78 | 58,348,724.71 | -834,028.26 | -740,150.84 |
| Kinde | Subsidiary | Production and sales of integrated stoves | 32,653,061.00 | 369,925,785.39 | 253,242,216.70 | 92,100,731.82 | 25,710,966.98 | 22,165,638.90 |
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √ Not Applicable
Description of main holding and joint-stock companiesVIII. Structured Entities Controlled by the Company
□ Applicable √ Not Applicable
IX. Prediction of Operating Results in January to September 2020
□ Applicable √ Not Applicable
X. Risks and ResponsesN/A
Chapter 5 Significant MattersI. Annual General Meeting of Shareholders and Extraordinary General Meeting ofShareholders during the Reporting Period
1. Shareholders’ meeting during the reporting period
Page 19 of 141Session of
meeting
| Session of meeting | Type of meeting | Proportion of attending investors | Date of meeting | Date of disclosure | Disclosure index |
| 2019 Annual General Meeting of Shareholders | Annual General Meeting of Shareholders | 65.33% | May 19, 2020 | May 20, 2020 | Announcement of Resolutions of the 2019 Annual General Meeting of Shareholders (Announcement No.2020-015) (www.cninfo.com.cn) |
2. Preferred shareholders with voting rights recovered requested to convene an extraordinary generalmeeting of shareholders
□ Applicable √ Not Applicable
II. Profit Distribution and Conversion of Capital Reserve into Capital Stock During theReporting Period
□ Applicable √ Not Applicable
The Company has no plans of distributing cash dividends or bonus shares, or converting capital reserve into capital stock for the firsthalf of 2020.
III. Commitments made by the Company’s actual controllers, shareholders, affiliates,purchasers and the Company itself and other relevant parties already fulfilled during thereporting period and not yet fulfilled at the end of the reporting period
√ Applicable □ Not Applicable
| Commitment | Committing party | Commitment type | Contents of commitment | Date of commitment | Commitment duration | Performance |
| Commitment made during initial | Directors, supervisors and senior management | Commitment on restriction for sales of | Upon the expiration of the above 36-month restricted sales period, the shares transferred by any of them each year shall not exceed 25% of | November 23, 2010 | Long-term commitment | Strict performance |
Page 20 of 141
publicofferingorre-financing
| public offering or re-financing | directly and indirectly holding shares of the Company | shares | the total shares of the Company held directly or indirectly by him/her; and shall not transfer the shares of the Company held directly or indirectly by him/her within half year after leaving the Company | |||
| Hangzhou Robam Industrial Group Co., Ltd.; Ren Jianhua | Commitment on avoiding horizontal competition | 1. The Company/I and other companies under the Company’s /my control do not and will not, directly or indirectly engage in any activities which are in horizontal competition with existing and future businesses of ROBAM and its holding subsidiaries; 2. If any business opportunities obtained from any third party by the Company/I and other companies under the Company’s /my control constitute or may constitute substantial competition with the businesses of ROBAM, the Company/I will immediately notify ROBAM and transfer such opportunities to ROBAM; 3. The Company/I and other companies under the Company’s /my control promise not to provide any technology information, technological process, sales channel and other commercial secrets for any other companies, enterprises, organizations or individuals whose businesses is in competition with those of ROBAM. | November 23, 2010 | Long-term commitments | Strict performance | |
| Other commitments made to small and medium shareholders of the Company | Company | Dividend | The total distributed profits for three (3) consecutive years shall be no less than 40% of the yearly average attributable profits achieved by the Company in such three (3) years. | April 10, 2018 | Three years | Strict performance |
Page 21 of 141
Whetherthecommitments areperformedon time
| Whether the commitments are performed on time | Yes |
IV. Appointment and Dismissal of Accounting FirmWhether the semi-annual financial report has been audited
□ Yes √ No
The semi-annual financial report of the Company has not been audited.V. Statements of the Board of Directors and the Board of Supervisors on the “Non-standardAudit Report” Issued by the Accounting Firm for the Reporting Period
□ Applicable √ Not Applicable
VI. Statements of the Board of Directors on the “Non-standard Audit Report” for the LastYear
□ Applicable √ Not Applicable
VII. Matters Related to Bankruptcy Reorganization
□ Applicable √ Not Applicable
The Company did not have any matters related to bankruptcy reorganization during the reporting period.
VIII. Litigation Matters
Material litigation and arbitration
□ Applicable √ Not Applicable
The Company had no major litigation and arbitration during the reporting period.Other litigation matters
□ Applicable √ Not Applicable
IX. Questions Raised by the Media
□ Applicable √ Not Applicable
No general question was raised by the media against the Company during the reporting period.
X. Punishment and Rectification
□ Applicable √ Not Applicable
There was no punishment or rectification during the reporting period.
XI. Integrity Conditions of the Company and its Controlling Shareholders
□ Applicable √ Not Applicable
XII. Implementation of the Equity Incentive Plan, Employee Stock Ownership Plan or otherEmployee Incentives
√ Applicable □ Not Applicable
1. Implementation of the Initial Restrictive Equity Incentive Plan
(1) On January 13, 2015, the Company reviewed and approved the Proposal on the Initial Restrictive Equity Incentive Plan(Draft) and its Summary of Hangzhou Robam Appliances Co., Ltd. and the Proposal on Requesting the General Meeting ofShareholders of Hangzhou Robam Appliances Co., Ltd. to Authorize the Board of Directors to Handle Matters Related to theRestrictive Equity Incentive Plan at the first Extraordinary General Meeting of Shareholders for 2015 of the Company.
(2) On January 21, 2015, the Company reviewed and approved the Proposal on Awarding Restrictive Stocks to IncentiveObjects at the fifth meeting of the third Board of Directors and the fourth meeting of the third Board of Supervisors.
(3) On February 13, 2015, the Company completed the registration for the first grant of restrictive stocks involved in the InitialRestrictive Equity Incentive Plan (Draft) of Hangzhou Robam Appliances Co., Ltd.
(4) On January 4, 2016, the Company reviewed and approved the Proposal on Adjustment to Number of Reserved RestrictiveStocks and the Proposal on Matters Concerning the Grant of Reserved Restrictive Stocks to Incentive Objects at the twelfth meetingof the third Board of Directors and the tenth meeting of the third Board of Supervisors.
(5) On January 22, 2016, the Company reviewed and approved the Proposal on Releasing the First Unlock Period for theInitial Grant of Restrictive Stocks under the Restrictive Equity Incentive Plan at the thirteenth meeting of the third Board of Directorsand the eleventh meeting of the third Board of Supervisors.
(6) On February 5, 2016, the Company completed the registration for the grant of reserved restrictive stocks involved in theInitial Restrictive Equity Incentive Plan (Draft) of Hangzhou Robam Appliances Co., Ltd.
(7) On April 7, 2016, the Company reviewed and approved the Proposal on the Repurchase and Cancellation of Some IncentiveShares under the Initial Restrictive Equity Incentive Plan at the fourteenth meeting of the third Board of Directors and the twelfthmeeting of the third Board of Supervisors.
(8) On January 23, 2017, the Company reviewed and approved the Proposal on the Repurchase and Cancellation of SomeIncentive Stocks under the Initial Restrictive Equity Incentive Plan, the Proposal on Releasing the Second Unlock Period for theInitial Grant of Restrictive Stocks under the Restrictive Equity Incentive Plan and the Proposal on Releasing the First Unlock Periodfor the Reserved Grant of Restrictive Stocks under the Restrictive Equity Incentive Plan at the nineteenth meeting of the third Boardof Directors and the sixteenth meeting of the third Board of Supervisors.
(9) On February 6, 2018, the Company reviewed and approved the Proposal on Releasing the Third Unlock Period for theInitial Grant of Restrictive Stocks under the Restrictive Equity Incentive Plan and the Proposal on Releasing the Second UnlockPeriod for the Reserved Grant of Restrictive Stocks under the Restrictive Equity Incentive Plan at the fourth meeting of the fourth
Board of Directors and the fourth meeting of the fourth Board of Supervisors.
(10) On January 21, 2019, the Company reviewed and approved the Proposal on Releasing the Third Unlock Period for theReserved Grant of Restrictive Stocks under the Restrictive Equity Incentive Plan at the ninth meeting of the fourth Board of Directorsand the ninth meeting of the fourth Board of Supervisors
2. Implementation of 2018 Employee Stock Ownership Plan
(1) On January 11, 2018, the Company reviewed and approved the Proposal on 2018 Employee Stock Ownership Plan of theCompany (Draft) and its Summary and the Proposal on Authorizing the Board of Directors to Handle Matters Concerning theEmployee Stock Ownership Plan at the third meeting of the fourth Board of Directors. On the same day, the Company reviewed andapproved the Proposal on 2018 Employee Stock Ownership Plan of the Company (Draft) and its Summary at the third meeting of thefourth Board of Supervisors.
(2) On February 2, 2018, the Company reviewed and approved the Proposal on 2018 Employee Stock Ownership Plan of theCompany (Draft) and its Summary and the Proposal on Authorizing the Board of Directors to Handle Matters Concerning theEmployee Stock Ownership Plan at the first Extraordinary General Meeting of Shareholders of 2018.
(3) On May 4, 2018, the Company completed the 2018 employee stock ownership plan (ESOP) at the purchase price of RMB
35.94/share, with 5,443,300 shares, accounting for 0.57% of the Company’s total shares.
(4) On July 22, 2020, the Company completed the ESOP. See details in the Announcement on the Completion of the EmployeeStock Ownership Plan (Announcement No. 2020-018).
XIII. Major Connected Transactions
1. Connected transactions concerning daily operations
□ Applicable √ Not Applicable
The Company had no connected transactions concerning daily operations during the reporting period.
2. Connected transactions related to the acquisition or sales of assets or equity
□ Applicable √ Not Applicable
The Company had no connected transactions related to the acquisition or sales of assets or equity during the reporting period.
3. Connected transactions related to joint outward investment
□ Applicable √ Not Applicable
The Company had no connected transactions related to joint outward investment during the reporting period.
4. Connected transactions on credit and debt
□ Applicable √ Not Applicable
The Company had no connected transactions on credit and debt during the reporting period.
5. Other major connected transactions
□ Applicable √ Not Applicable
There were no other major connected transactions during the reporting period.XIV. Non-operating Occupation of Funds of the Listed Company by the ControllingShareholder and its Affiliated Parties
□ Applicable √ Not Applicable
There was no non-operating occupation of funds of the listed company by the controlling shareholder and its affiliated parties duringthe reporting period.
XV. Major Contracts and Their Performance
1. Entrustment, contracting and leasing
(1) Entrustment
□ Applicable √ Not Applicable
The Company had no entrustment during the reporting period.
(2) Contracting
□ Applicable √ Not Applicable
There was no contracting during the reporting period.
(3) Lease
□ Applicable √ Not Applicable
There was no leasing during the reporting period.
2. Material guarantee
□ Applicable √ Not Applicable
The Company had no material guarantee during the reporting period.
3. Financial management entrusting
□ Applicable √ Not Applicable
There was no financial management entrusting during the reporting period.
4. Other material contracts
□ Applicable √ Not Applicable
The Company had no other material contracts during the reporting period.XVI. Social ResponsibilityWhether the listed company and its subsidiaries are the key pollution-discharging units announced by the environmental protectionauthorities.Not Applicable.XVII. Explanation of Other Significant Matters
□ Applicable √ Not Applicable
The Company had no other significant matters that need to be explained during the reporting period.XVIII. Significant Matters of Subsidiaries of the Company
□ Applicable √ Not Applicable
Chapter 6 Changes in Shares and ShareholdersI. Changes in Shares
1. Changes in shares
Unit: share
Page 26 of 141
| Before change | Change (+. -) | After change | |||||||
| Number | Percentage (%) | Issue of new shares | Bonus shares | Shares converted from capital reserve | Others | Sub-total | Number | Percentage (%) | |
| I. Shares subject to sales restrictions | 14,123,269 | 1.48% | 14,123,269 | 1.48% | |||||
| Shares held by other domestic investors | 14,123,269 | 1.48% | 14,123,269 | 1.48% | |||||
| Of which: shares held by domestic natural persons | 14,123,269 | 1.48% | 14,123,269 | 1.48% | |||||
| II. Shares without sales restrictions | 934,900,781 | 98.52% | 934,900,781 | 98.52% | |||||
| RMB ordinary shares | 934,900,781 | 98.52% | 934,900,781 | 98.52% | |||||
| III. Total shares | 949,024,050 | 100.00% | 949,024,050 | 100.00% | |||||
2. Changes in shares subject to sales restrictions
□ Applicable √ Not Applicable
II. Securities Issuance and Listing
□ Applicable √ Not Applicable
III. Number of Shareholders of the Company and Their Shareholdings
Unit: share
Page 27 of 141Total number of commonshareholders at the end ofthe reporting period
| Total number of common shareholders at the end of the reporting period | 53,846 | Total number of preference shareholders with voting rights recovered at the end of the reporting period (if any) (see Note 8) | 0 | |||||||
| Shareholdings of common shareholders holding more than 5% of the Company’s shares or top 10 common shareholders | ||||||||||
| Name of shareholder | Nature of shareholder | Shareholding ratio | Number of common shares held at the end of the reporting period | Change during the reporting period | Number of shares subject to sales restrictions | Number of shares without sales restrictions | Pledged or frozen shares | |||
| Status | Number | |||||||||
| Hangzhou Robam Industrial Group Co., Ltd. | Domestic non-state-owned corporation | 49.68% | 471,510,000 | 471,510,000 | ||||||
| Hong Kong Securities Clearing Company Limited | Overseas corporation | 14.35% | 136,218,189 | 1,142,792 | 136,218,189 | |||||
| Shen Guoying | Domestic natural person | 1.29% | 12,240,000 | 12,240,000 | ||||||
| Hangzhou Jinchuang Investment Co., Ltd. | Domestic non-state-owned corporation | 1.00% | 9,451,985 | 9,451,985 | ||||||
| Shenzhen Nuts Asset Management Company - Nuts Asset - Structured Private Equity Fund (Phase II) Held by Agents of ROBAM | Other | 0.88% | 8,311,165 | 8,311,165 | ||||||
| China Construction Bank Corporation – Essence Fund Selected Equity Securities Investment Fund | Other | 0.82% | 7,754,042 | -3,293,277 | 7,754,042 | |||||
| Hangzhou Yinchuang Investment Co., Ltd. | Domestic non-state-owned corporation | 0.67% | 6,318,000 | 6,318,000 | ||||||
| Aberdeen Standard Investments (Asia) Limited - Aberdeen Standard - China A-share Equity Fund | Other | 0.65% | 6,152,817 | -2,416,633 | 6,152,817 | |||||
| Ren Jianhua | Domestic | 0.62% | 5,923,150 | 4,442,362 | 1,480,788 | |||||
Page 28 of 141natural person
| natural person | ||||||||||
| Central Huijin Investment Limited | State-owned corporation | 0.60% | 5,685,810 | 5,685,810 | ||||||
| Strategic investor or general legal person who becomes one of the top 10 common shareholders due to rights issue (if any) (see Note 3) | ||||||||||
| Description of the associated relationship or consistent actions of the above shareholders | Mr. Ren Jianhua is the controlling shareholder of the Company, shareholder of Hangzhou Robam Industrial Group Co., Ltd., and the actual controller of Hangzhou Jinchuang Investment Co., Ltd.; and the natural person shareholder, Shen Guoying, is his wife. Therefore, there is a possibility that these shareholders will act in concert. | |||||||||
| Shareholdings of top 10 common shareholders not subject to sales restrictions | ||||||||||
| Name of shareholder | Number of shares without sales restrictions held at the end of the reporting period | Type of share | ||||||||
| Type of share | Number of shares | |||||||||
| Hangzhou Robam Industrial Group Co., Ltd. | 471,510,000 | RMB ordinary shares | 471,510,000 | |||||||
| Hong Kong Securities Clearing Company Limited | 136,218,189 | RMB ordinary shares | 136,218,189 | |||||||
| Shen Guoying | 12,240,000 | RMB ordinary shares | 12,240,000 | |||||||
| Hangzhou Jinchuang Investment Co., Ltd. | 9,451,985 | RMB ordinary shares | 9,451,985 | |||||||
| Shenzhen Nuts Asset Management Company - Nuts Asset - Structured Private Equity Fund (Phase II) Held by Agents of ROBAM | 8,311,165 | RMB ordinary shares | 8,311,165 | |||||||
| China Construction Bank Corporation – Essence Fund Selected Equity Securities Investment Fund | 7,754,042 | RMB ordinary shares | 7,754,042 | |||||||
| Hangzhou Yinchuang Investment Co., Ltd. | 6,318,000 | RMB ordinary shares | 6,318,000 | |||||||
| Aberdeen Standard Investments (Asia) Limited - Aberdeen Standard - China A-share Equity Fund | 6,152,817 | RMB ordinary shares | 6,152,817 | |||||||
| Central Huijin Investment Limited | 5,685,810 | RMB ordinary shares | 5,685,810 | |||||||
| Shenzhen Nuts Asset Management Company - Nuts Asset - ROBAM Win-win No. 1 Private Investment Fund | 5,443,324 | RMB ordinary shares | 5,443,324 | |||||||
Page 29 of 141
Description on associated relationship orconsistent actions among the top 10common shareholders not subject to salesrestrictions and between the top 10common shareholders not subject to salesrestrictions and the top 10 commonshareholders
| Description on associated relationship or consistent actions among the top 10 common shareholders not subject to sales restrictions and between the top 10 common shareholders not subject to sales restrictions and the top 10 common shareholders | Mr. Ren Jianhua is the controlling shareholder of the Company, shareholder of Hangzhou Robam Industrial Group Co., Ltd., and the actual controller of Hangzhou Jinchuang Investment Co., Ltd.; and the natural person shareholder, Shen Guoying, is his wife. Therefore, there is a possibility that these shareholders will act in concert. |
| Description on the top 10 common shareholders engaging in securities margin trading (if any) (see Note 4) |
Did any of the top 10 common shareholders and the top 10 common shareholders not subject to sales restrictions of the Companyhave any agreed repurchase trading during the reporting period?
□ Yes √ No
There was no agreed repurchase trading between the top 10 common shareholders and the top 10 common shareholders not subject tosales restrictions of the Company during the reporting period.
IV. Changes in the Controlling Shareholder and the Actual Controller
Changes in the controlling shareholder during the reporting period
□ Applicable √ Not Applicable
There was no change in the controlling shareholder of the Company during the reporting period.Changes in the actual controller during the reporting period
□ Applicable √ Not Applicable
There was no change in the actual controller of the Company during the reporting period.
Chapter 7 Preferred Shares
□ Applicable √ Not Applicable
The Company had no preferred shares during the reporting period.
Chapter 8 Convertible Bonds
□ Applicable √ Not Applicable
The Company had no convertible bond during the reporting period.
Chapter 9 Directors, Supervisors and Senior Management
I. Changes in the Shareholdings of Directors, Supervisors, and Senior Management
□ Applicable √ Not Applicable
There was no change in the shareholdings of directors, supervisors, and senior management of the Company during the reportingperiod. For details, please refer to the Annual Report 2019.
II. Changes in Directors, Supervisors, and Senior Management
□ Applicable √ Not Applicable
There was no change in directors, supervisors, and senior management of the Company during the reporting period. For details,please refer to the Annual Report 2019.
Note: On August 18, 2020, the Company held the first 2020 Extraordinary General Meeting of Shareholders, the first meeting of thefifth Board of Directors and the first meeting of the fifth Board of Supervisors, during which matters concerning the change in theterm of office of the Board of Directors, Board of Supervisors and senior management were reviewed and approved. For details,please refer to the Announcement on Resolutions of the First Meeting of the Fifth Board of Directors (Announcement No. 2020-024),the Announcement on Resolutions of the First Meeting of the Fifth Board of Supervisors (Announcement No. 2020-025), and theAnnouncement on Resolutions of the First Extraordinary General Meeting of Shareholders for 2020 (Announcement No. 2020-026).
Chapter 10 Corporate BondsWhether the Company has publicly issued corporate bonds that are listed on the stock exchange and have not matured or expired onthe date of approval of the semi-annual report but unpaid in fullNo
Chapter 11 Financial Report
I. Audit Report
Whether the semi-annual report has been audited
□ Yes √ No
The semi-annual financial report of the Company has not been audited.II. Financial StatementsThe financial statement notes are represented in RMB.
1. Consolidated Balance Sheet
Prepared by: Hangzhou Robam Appliances Co., Ltd.
June 30, 2020
In RMB
Page 31 of 141Item
| Item | June 30, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary capital | 4,351,296,343.79 | 4,054,121,726.23 |
| Deposit reservation for balance | ||
| Lendings to banks and other financial institutions | ||
| Financial assets held for trading | 925,000,000.00 | 1,360,000,000.00 |
| Derivative financial assets | ||
| Notes receivable | 1,571,911,271.01 | 986,693,149.40 |
| Accounts receivable | 772,891,855.63 | 725,630,901.28 |
| Accounts receivable financing | 408,972,104.07 | |
| Prepayments | 81,421,913.85 | 50,113,549.84 |
| Receivable premium | ||
| Reinsurance accounts receivable | ||
| Provision of cession receivable | ||
| Other receivables | 62,642,970.58 | 110,899,448.65 |
| Including: Interests receivable | ||
| Dividends receivable | 14,295,039.38 |
Page 32 of 141Redemptory monetary capitalfor sale
| Redemptory monetary capital for sale | ||
| Inventory | 1,269,882,745.35 | 1,339,176,925.20 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 2,339,831.76 | 16,189,237.81 |
| Total current assets | 9,037,386,931.97 | 9,051,797,042.48 |
| Non-current assets: | ||
| Loans and advances | ||
| Debt investment | 0.00 | 0.00 |
| Other debt investments | ||
| Long-term accounts receivable | ||
| Long-term equity investment | 1,929,118.33 | 4,168,338.79 |
| Investment in other equity instruments | 102,116,023.22 | 102,116,023.22 |
| Other non-current financial assets | ||
| Investment real estate | 108,094.94 | 112,588.34 |
| Fixed assets | 799,578,416.63 | 826,234,929.97 |
| Projects under construction | 333,519,454.24 | 272,211,720.62 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 237,055,359.56 | 219,733,270.51 |
| Development expenses | ||
| Goodwill | 80,589,565.84 | 80,589,565.84 |
| Long-term deferred expenses | 392,702.34 | 523,195.74 |
| Deferred income tax assets | 131,970,751.28 | 70,877,116.09 |
| Other non-current assets | 28,809,208.26 | 23,558,781.27 |
| Total non-current assets | 1,716,068,694.64 | 1,600,125,530.39 |
| Total assets | 10,753,455,626.61 | 10,651,922,572.87 |
| Current liabilities: |
Page 33 of 141Short-term loans
| Short-term loans | ||
| Borrowings from the central bank | ||
| Borrowings from banks and other financial institutions | ||
| Financial liabilities held for trading | ||
| Derivative financial liabilities | ||
| Notes payable | 554,767,283.02 | 603,308,648.96 |
| Accounts payable | 1,453,658,478.04 | 1,395,061,285.28 |
| Advance receipts | 1,092,261,332.25 | |
| Contract liabilities | 989,070,578.98 | |
| Financial assets sold for repurchase | ||
| Deposits from customers and interbank | ||
| Receivings from vicariously traded securities | ||
| Receivings from vicariously sold securities | ||
| Payroll payable | 33,283,722.07 | 122,070,325.03 |
| Taxes payable | 224,129,654.69 | 102,726,655.21 |
| Other payables | 246,029,775.35 | 241,641,864.89 |
| Including: Interests payable | ||
| Dividends payable | ||
| Fees and commissions payable | ||
| Dividends payable for reinsurance | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | ||
| Other current liabilities | ||
| Total current liabilities | 3,500,939,492.15 | 3,557,070,111.62 |
| Non-current liabilities: | ||
| Reserves for insurance contracts | ||
| Long-term loans |
Page 34 of 141Bonds payable
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term accounts payable | ||
| Long-term payroll payable | ||
| Estimated liabilities | ||
| Deferred income | 124,111,240.24 | 114,851,263.30 |
| Deferred income tax liabilities | 5,455,130.17 | 5,717,848.25 |
| Other non-current liabilities | ||
| Total non-current liabilities | 129,566,370.41 | 120,569,111.55 |
| Total liabilities | 3,630,505,862.56 | 3,677,639,223.17 |
| Owner’s equity | ||
| Capital stock | 949,024,050.00 | 949,024,050.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserve | 401,799,332.67 | 401,799,332.67 |
| Less: treasury share | ||
| Other comprehensive income | -15,157,634.16 | -15,157,634.16 |
| Special reserves | ||
| Surplus reserves | 474,516,412.50 | 474,516,412.50 |
| General risk reserves | ||
| Undistributed profits | 5,192,011,944.74 | 5,054,206,720.45 |
| Total owners’ equity attributable to the parent company | 7,002,194,105.75 | 6,864,388,881.46 |
| Minority interests | 120,755,658.30 | 109,894,468.24 |
| Total owner’s equity | 7,122,949,764.05 | 6,974,283,349.70 |
| Total liabilities and owner’s equity | 10,753,455,626.61 | 10,651,922,572.87 |
Legal representative: Ren JianhuaPerson in charge of accounting: Zhang GuofuHead of the accounting department: Zhang Guofu
2. Balance Sheet of the Parent Company
In RMB
Page 35 of 141Item
| Item | June 30, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary capital | 4,271,222,549.03 | 3,974,490,043.89 |
| Financial assets held for trading | 700,000,000.00 | 1,100,000,000.00 |
| Derivative financial assets | ||
| Notes receivable | 1,571,911,271.01 | 974,185,844.67 |
| Accounts receivable | 741,102,670.94 | 704,246,884.81 |
| Accounts receivable financing | 408,605,906.50 | |
| Prepayments | 56,568,629.78 | 41,005,526.82 |
| Other receivables | 51,740,494.70 | 105,766,154.95 |
| Including: Interests receivable | ||
| Dividends receivable | 14,295,039.38 | |
| Inventory | 1,205,514,806.83 | 1,268,289,683.46 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 12,064,254.50 | |
| Total current assets | 8,598,060,422.29 | 8,588,654,299.60 |
| Non-current assets: | ||
| Debt investment | ||
| Other debt investments | ||
| Long-term accounts receivable | ||
| Long-term equity investment | 228,435,052.06 | 230,674,272.52 |
| Investment in other equity instruments | 102,116,023.22 | 102,116,023.22 |
| Other non-current financial assets | ||
| Investment real estate | 420,198.40 | 436,960.72 |
| Fixed assets | 773,355,978.92 | 798,954,901.11 |
| Projects under construction | 324,159,531.39 | 271,619,361.89 |
| Productive biological assets |
Page 36 of 141Oil and gas assets
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 152,997,182.46 | 157,002,023.43 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 306,077.98 | 383,195.74 |
| Deferred income tax assets | 130,349,913.48 | 70,173,783.09 |
| Other non-current assets | 28,809,208.26 | 23,558,781.27 |
| Total non-current assets | 1,740,949,166.17 | 1,654,919,302.99 |
| Total assets | 10,339,009,588.46 | 10,243,573,602.59 |
| Current liabilities: | ||
| Short-term loans | ||
| Financial liabilities held for trading | ||
| Derivative financial liabilities | ||
| Notes payable | 534,559,168.76 | 601,960,648.96 |
| Accounts payable | 1,391,003,055.69 | 1,358,297,550.30 |
| Advance receipts | 983,128,543.51 | |
| Contract liabilities | 935,858,021.08 | |
| Payroll payable | 23,212,760.47 | 97,599,336.20 |
| Taxes payable | 218,793,099.39 | 96,425,637.42 |
| Other payables | 228,644,387.16 | 226,064,422.04 |
| Including: Interests payable | ||
| Dividends payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | ||
| Other current liabilities | ||
| Total current liabilities | 3,332,070,492.55 | 3,363,476,138.43 |
| Non-current liabilities: | ||
| Long-term loans | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds |
Page 37 of 141Lease liabilities
| Lease liabilities | ||
| Long-term accounts payable | ||
| Long-term payroll payable | ||
| Estimated liabilities | ||
| Deferred income | 106,869,820.24 | 114,851,263.30 |
| Deferred income tax liabilities | ||
| Other non-current liabilities | ||
| Total non-current liabilities | 106,869,820.24 | 114,851,263.30 |
| Total liabilities | 3,438,940,312.79 | 3,478,327,401.73 |
| Owner’s equity | ||
| Capital stock | 949,024,050.00 | 949,024,050.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserve | 401,754,349.66 | 401,754,349.66 |
| Less: treasury share | ||
| Other comprehensive income | -15,157,634.16 | -15,157,634.16 |
| Special reserves | ||
| Surplus reserves | 474,516,412.50 | 474,516,412.50 |
| Undistributed profits | 5,089,932,097.67 | 4,955,109,022.86 |
| Total owner’s equity | 6,900,069,275.67 | 6,765,246,200.86 |
| Total liabilities and owner’s equity | 10,339,009,588.46 | 10,243,573,602.59 |
3. Consolidated Income Statement
In RMB
| Item | Semi-annual 2020 | Semi-annual 2019 |
| I. Total operating income | 3,211,172,335.79 | 3,527,413,882.96 |
| Including: Operating income | 3,211,172,335.79 | 3,527,413,882.96 |
| Interest income | ||
| Earned premium | ||
| Fee and commission income | ||
| II. Total operating costs | 2,554,722,969.33 | 2,813,102,211.83 |
| Including: Operating costs | 1,450,728,576.58 | 1,599,401,962.81 |
Page 38 of 141Interest expenses
| Interest expenses | ||
| Fee and commission expenses | ||
| Surrender value | ||
| Net payments for insurance claims | ||
| Net allotment of reserves for insurance liabilities | ||
| Policy dividend expenditures | ||
| Reinsurance expenses | ||
| Taxes and surcharges | 25,188,234.23 | 29,458,998.38 |
| Selling expenses | 892,679,297.76 | 990,044,906.61 |
| Overhead costs | 116,085,321.98 | 116,171,528.77 |
| R&D expenses | 117,824,032.62 | 107,629,786.13 |
| Financial expenses | -47,782,493.84 | -29,604,970.87 |
| Including: Interest expenses | 139,284.26 | 201,831.98 |
| Interest income | 47,604,818.42 | 30,307,927.32 |
| Add: other income | 73,726,234.28 | 56,839,181.84 |
| Investment income (“-” for losses) | 24,102,232.36 | 39,858,974.49 |
| Including: Income from investment in joint ventures and affiliated enterprises | -2,239,220.46 | 69,197.95 |
| Gains on derecognition of financial assets measured at amortized cost | ||
| Exchange gains (“-” for losses) | ||
| Net exposure hedging gains (“-” for losses) | ||
| Gains from changes in fair value (“-” for losses) | ||
| Losses from credit impairment (“-” for losses) | -18,511,769.59 | -8,952,029.23 |
| Losses from asset impairment (“-” for losses) | ||
| Gains on disposal of assets (“-” for losses) | 11,388.98 | -296,672.23 |
| III. Operating profits (“-” for losses) | 735,777,452.49 | 801,761,126.00 |
| Add: non-operating income | 586,353.17 | 1,611,946.09 |
| Less: non-operating expenditure | 1,695,304.64 | 2,882,444.05 |
| IV. Total profits (“-” for total losses) | 734,668,501.02 | 800,490,628.04 |
| Less: income tax expenses | 111,490,061.67 | 123,074,038.15 |
| V. Net profits (“-” for losses) | 623,178,439.35 | 677,416,589.89 |
| (I) By operational sustainability |
Page 39 of 141
1. Net profits from continuing operations (“-” for net
losses)
| 1. Net profits from continuing operations (“-” for net losses) | 623,178,439.35 | 677,416,589.89 |
| 2. Net profits from discontinued operations (“-” for net losses) | ||
| (II) By ownership | ||
| 1. Net profits attributable to owners of the parent company | 612,317,249.29 | 670,403,994.20 |
| 2. Minority shareholders’ gains and losses | 10,861,190.06 | 7,012,595.69 |
| VI. After-tax net amount of other comprehensive income | ||
| After-tax net amount of other comprehensive income attributable to owners of the parent company | ||
| (I) Other comprehensive income that cannot be reclassified into gains and losses | ||
| 1. Changes in re-measured and defined benefit plans | ||
| 2. Other comprehensive income which cannot be transferred to gains or losses under the equity method | ||
| 3. Changes in fair value of the investment in other equity instruments | ||
| 4. Changes in fair value of the credit risk of the Company | ||
| 5. Others | ||
| (II) Other comprehensive income which will be reclassified into gains and losses | ||
| 1. Other comprehensive income which can be transferred into gains and losses under the equity method | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Amount of financial assets reclassified into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedge reserve | ||
| 6. Converted difference in foreign currency statements | ||
| 7. Others | ||
| After-tax net amount of other comprehensive income |
Page 40 of 141attributable to minority shareholders
| attributable to minority shareholders | ||
| VII. Total comprehensive income | 623,178,439.35 | 677,416,589.89 |
| Total comprehensive income attributable to owners of the parent company | 612,317,249.29 | 670,403,994.20 |
| Total comprehensive income attributable to minority shareholders | 10,861,190.06 | 7,012,595.69 |
| VIII. Earnings per share (EPS): | ||
| (I) Basic EPS | 0.65 | 0.71 |
| (II) Diluted EPS | 0.65 | 0.71 |
Legal representative: Ren JianhuaPerson in charge of accounting: Zhang GuofuHead of the accounting department: Zhang Guofu
4. Income Statement of the Parent Company
In RMB
| Item | Semi-annual 2020 | Semi-annual 2019 |
| I. Operating income | 2,980,914,680.77 | 3,259,793,326.67 |
| Less: operating costs | 1,349,585,204.35 | 1,507,498,151.92 |
| Taxes and surcharges | 22,974,970.25 | 26,332,164.95 |
| Selling expenses | 812,123,731.90 | 867,885,223.87 |
| Administrative expenses | 82,217,605.50 | 81,117,115.96 |
| R&D expenses | 112,943,235.17 | 103,711,169.47 |
| Financial expenses | -47,002,146.56 | -27,805,458.39 |
| Including: Interest expenses | 139,284.26 | 201,831.98 |
| Interest income | 46,641,570.65 | 28,247,326.34 |
| Add: other income | 68,634,379.72 | 51,909,682.29 |
| Investment income (“-” for losses) | 18,620,433.19 | 36,964,336.66 |
| Including: Income from investment in joint ventures and affiliated enterprises | -2,239,220.46 | 69,197.95 |
| Gains on derecognition of financial assets measured at amortized cost (“-” for losses) | ||
| Net exposure hedging gains (“-” for losses) | ||
| Gains from changes in fair value (“-” for losses) |
Page 41 of 141Losses from credit impairment (“-” for losses)
| Losses from credit impairment (“-” for losses) | -16,715,314.38 | -9,148,426.64 |
| Losses from asset impairment (“-” for losses) | ||
| Gains on disposal of assets (“-” for losses) | -3,117.74 | -296,672.23 |
| II. Operating profits (“-” for losses) | 718,608,460.95 | 780,483,878.97 |
| Add: non-operating income | 547,098.05 | 1,525,524.06 |
| Less: non-operating expenses | 1,556,999.22 | 1,093,261.57 |
| III. Total profits (“-” for total losses) | 717,598,559.78 | 780,916,141.46 |
| Less: income tax expenses | 108,263,459.97 | 117,441,547.87 |
| IV. Net profits (“-” for net losses) | 609,335,099.81 | 663,474,593.59 |
| (I) Net profits from going concern (“-” for net losses) | 609,335,099.81 | 663,474,593.59 |
| (II) Net profits from discontinued operations (“-” for net losses) | ||
| V. After-tax net amount of other comprehensive income | ||
| (I) Other comprehensive income that cannot be reclassified into gains and losses | ||
| 1. Changes in re-measured and defined benefit plans | ||
| 2. Other comprehensive income which cannot be transferred into gains or losses under the equity method | ||
| 3. Changes in fair value of the investment in other equity instruments | ||
| 4. Changes in fair value of the credit risk of the Company | ||
| 5. Others | ||
| (II) Other comprehensive income which will be reclassified into gains and losses | ||
| 1. Other comprehensive income which can be transferred into gains and losses under the equity method | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Amount of financial assets reclassified into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedge reserve | ||
| 6. Converted difference in foreign currency |
Page 42 of 141statements
| statements | ||
| 7. Others | ||
| VI. Total comprehensive income | 609,335,099.81 | 663,474,593.59 |
| VII. EPS: | ||
| (I) Basic EPS | ||
| (II) Diluted EPS |
5. Consolidated Cash Flow Statement
In RMB
| Item | Semi-annual 2020 | Semi-annual 2019 |
| I. Cash flow from operating activities: | ||
| Cash received for the sale of goods and rendering of services | 3,214,555,668.77 | 3,607,783,677.83 |
| Net increase in clients’ deposits and deposits from banks and other financial institutions | ||
| Net increase in borrowings from the central bank | ||
| Net increase in borrowings from other financial institutions | ||
| Cash received from receiving insurance premium of the original insurance contract | ||
| Net cash from receiving reinsurance premium | ||
| Net increase in deposits and investment of insured persons | ||
| Cash received from interests, fees and commissions | ||
| Net increase in borrowed funds | ||
| Net increase in repurchase business funds | ||
| Net cash received from vicariously traded securities | ||
| Refunds of taxes | 533,442.61 | |
| Cash received relating to other operating activities | 143,788,116.65 | 95,145,745.57 |
| Subtotal of cash inflow from operating activities | 3,358,343,785.42 | 3,703,462,866.01 |
| Cash paid for purchased products and received services | 1,594,931,903.80 | 1,516,314,982.52 |
| Net increase in loans and advances to customers | ||
| Net increase in deposits with the central bank and other financial institutions | ||
| Cash paid for claims of original insurance contract | ||
| Net increase in lending funds | ||
| Cash paid for interests, fees and commissions |
Page 43 of 141Cash paid for policy dividends
| Cash paid for policy dividends | ||
| Cash paid to and on behalf of employees | 363,952,500.04 | 354,764,621.08 |
| Cash paid for taxes | 277,030,839.79 | 402,678,055.37 |
| Cash paid related to other operating activities | 714,741,408.23 | 771,014,122.46 |
| Subtotal of cash outflow from operating activities | 2,950,656,651.86 | 3,044,771,781.43 |
| Net cash flow from operating activities | 407,687,133.56 | 658,691,084.58 |
| II. Cash flow from investing activities: | ||
| Cash received from sales of investments | 1,140,000,000.00 | 1,718,000,000.00 |
| Cash received from return on investments | 42,018,525.66 | 47,573,034.00 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets= | 35,000.00 | 171,800.00 |
| Net cash received from disposal of subsidiaries and other business entities | ||
| Cash received related to other investment activities | ||
| Subtotal of cash inflow from investment activities | 1,182,053,525.66 | 1,765,744,834.00 |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 124,109,953.42 | 151,414,551.72 |
| Cash paid to investments | 705,000,000.00 | 1,126,500,000.00 |
| Net increase in pledged loans | ||
| Net cash from subsidiaries and other operating entities | ||
| Cash paid related to other investment activities | 5,000,000.00 | |
| Subtotal of cash outflow from investment activities | 829,109,953.42 | 1,282,914,551.72 |
| Net cash flow from investment activities | 352,943,572.24 | 482,830,282.28 |
| III. Cash flow from financing activities: | ||
| Cash from acquiring investments | ||
| Including: Cash received by subsidiaries from investments of minority shareholders | ||
| Cash from acquiring debts | ||
| Other cashes received in relation to financing activities | ||
| Subtotal of cash inflow from financing activities | ||
| Cash repayments of debts | ||
| Cash paid for distribution of dividends, profits or interest expenses | 474,512,025.00 | 759,219,240.00 |
| Including: Dividends and profits paid by the subsidiaries to minority shareholders |
Page 44 of 141Other cashes paid in relation to financing activities
| Other cashes paid in relation to financing activities | ||
| Subtotal of cash outflow from financing activities | 474,512,025.00 | 759,219,240.00 |
| Net cash flow from financing activities | -474,512,025.00 | -759,219,240.00 |
| IV. Effect of change in exchange rate on cash and cash equivalents | 540,552.95 | 116,415.75 |
| V. Net increase in cash and cash equivalents | 286,659,233.75 | 382,418,542.61 |
| Plus: Opening balance of cash and cash equivalents | 4,029,296,265.50 | 2,177,219,858.85 |
| VI. Closing balance of cash and cash equivalents | 4,315,955,499.25 | 2,559,638,401.46 |
6. Cash Flow Statement of the Parent Company
In RMB
| Item | Semi-annual 2020 | Semi-annual 2019 |
| I. Cash flow from operating activities: | ||
| Cash received for the sale of goods and rendering of services | 3,026,131,726.09 | 3,369,769,326.89 |
| Refunds of taxes | ||
| Cash received relating to other operating activities | 109,796,058.70 | 80,284,290.10 |
| Subtotal for cash inflow from operating activities | 3,135,927,784.79 | 3,450,053,616.99 |
| Cash paid for purchased products and received services | 1,530,403,008.52 | 1,472,285,266.95 |
| Cash paid to and on behalf of employees | 293,387,839.45 | 278,362,198.01 |
| Cash paid for taxes | 253,274,191.18 | 361,186,090.14 |
| Cash paid related to other operating activities | 634,242,077.40 | 670,991,974.83 |
| Subtotal of cash outflow from operating activities | 2,711,307,116.55 | 2,782,825,529.93 |
| Net cash flow from operating activities | 424,620,668.24 | 667,228,087.06 |
| II. Cash flow from investment activities: | ||
| Cash received from sales of investments | 900,000,000.00 | 1,500,000,000.00 |
| Cash received from return on investments | 36,406,272.24 | 44,678,396.17 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 10,000.00 | 171,800.00 |
| Net cash received from disposal of subsidiaries and other business entities | ||
| Cash received related to other investment activities | ||
| Subtotal of cash inflow from investment activities | 936,416,272.24 | 1,544,850,196.17 |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 97,961,767.61 | 136,533,684.66 |
| Cash paid to investments | 500,000,000.00 | 909,500,000.00 |
Page 45 of 141Net cash from subsidiaries and other operating entities
| Net cash from subsidiaries and other operating entities | ||
| Cash paid related to other investment activities | ||
| Subtotal of cash outflow from investment activities | 597,961,767.61 | 1,046,033,684.66 |
| Net cash flow from investment activities | 338,454,504.63 | 498,816,511.51 |
| III. Cash flow from financing activities: | ||
| Cash from acquiring investments | ||
| Cash from acquiring debts | ||
| Other cashes received in relation to financing activities | ||
| Subtotal of cash inflow from financing activities | ||
| Cash repayments of debts | ||
| Cash paid for distribution of dividends, profits or interest expenses | 474,512,025.00 | 759,219,240.00 |
| Other cashes paid in relation to financing activities | ||
| Subtotal of cash outflow from financing activities | 474,512,025.00 | 759,219,240.00 |
| Net cash flow from financing activities | -474,512,025.00 | -759,219,240.00 |
| IV. Effect of change in exchange rate on cash and cash equivalents | 540,502.02 | 116,426.36 |
| V. Net increase in cash and cash equivalents | 289,103,649.89 | 406,941,784.93 |
| Plus: Opening balance of cashes and cash equivalents | 3,951,074,513.16 | 2,000,183,395.66 |
| VI. Closing balance of cash and cash equivalents | 4,240,178,163.05 | 2,407,125,180.59 |
7. Consolidated Statement of Changes in Owners’ Equity
Current amount
In RMB
| Item | Semi-annual 2020 | ||||||||||||||
| Owners’ equity attributable to the parent company | Minority interests | Total owners’ equity | |||||||||||||
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profits | Others | Sub-total | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Closing | 949,024,050.00 | 401,799,332.67 | -15,157,634.16 | 474,516,412.50 | 5,054,206,720.45 | 6,864,388,881.46 | 109,894,468.24 | 6,974,283,349.70 | |||||||
Page 46 of 141balance oflastyear
| balance of last year | |||||||||||||||
| Plus: Changes in accounting policies | |||||||||||||||
| Correction of errors of the previous period | |||||||||||||||
| Businesses combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of this year | 949,024,050.00 | 401,799,332.67 | -15,157,634.16 | 474,516,412.50 | 5,054,206,720.45 | 6,864,388,881.46 | 109,894,468.24 | 6,974,283,349.70 | |||||||
| III. Chang | 137,805,224.2 | 137,805,224.2 | 10,861,190.0 | 148,666,414.3 |
Page 47 of 141
e incurrentperiod( “-”fordecrease)
| e in current period ( “-” for decrease) | 9 | 9 | 6 | 5 | |||||||||||
| (I) Total comprehensive income | 612,317,249.29 | 612,317,249.29 | 10,861,190.06 | 623,178,439.35 | |||||||||||
| (II) Capital invested and decreased by the owners | |||||||||||||||
| 1. Common shares invested by the owners | |||||||||||||||
| 2. Capital invested by holders of other |
Page 48 of 141equityinstruments
| equity instruments | |||||||||||||||
| 3. Amount of share-based payments recognized in owners’ equity | |||||||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | -474,512,025.00 | -474,512,025.00 | -474,512,025.00 | ||||||||||||
| 1. Withdrawal of surplus reserve | |||||||||||||||
| 2. Appropriation of general risk reserve | |||||||||||||||
| 3. Distribution to | -474,512,025.00 | -474,512,025.00 | -474,512,025.00 |
Page 49 of 141
owners (orshareholders)
| owners (or shareholders) | |||||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-forward of owners’ equity | |||||||||||||||
| 1. Capital reserve converted into capital (or capital stock) | |||||||||||||||
| 2. Surplus reserve converted into capital (or capital stock) | |||||||||||||||
| 3. Surplu |
Page 50 of 141
sreservesmaking upforlosses
| s reserves making up for losses | |||||||||||||||
| 4. Changes of defined benefit plans carried forward to retained earnings | |||||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special |
Page 51 of 141reserve
| reserve | |||||||||||||||
| 1. Withdrawn in current period | |||||||||||||||
| 2. Used in current period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Closing balance of current period | 949,024,050.00 | 401,799,332.67 | -15,157,634.16 | 474,516,412.50 | 5,192,011,944.74 | 7,002,194,105.75 | 120,755,658.30 | 7,122,949,764.05 |
Amount of the previous period
In RMB
| Item | Semi-annual 2019 | ||||||||||||||
| Owners’ equity attributable to the parent company | Minority interests | Total owners’ equity | |||||||||||||
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profits | Others | Sub-total | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Closing balance of | 949,02 | 401,689, | 3,456,98 | 474,516, | 4,223,61 | 6,045,38 | 85,463,961 | 6,130,848, | |||||||
Page 52 of 141last year
| last year | 4,050.00 | 801.42 | 9.00 | 412.50 | 1,112.65 | 4,387.57 | .41 | 348.98 | |||||||
| Plus: Changes in accounting policies | |||||||||||||||
| Correction of errors of the previous period | |||||||||||||||
| Businesses combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of this year | 949,024,050.00 | 401,689,801.42 | 3,456,989.00 | 474,516,412.50 | 4,223,611,112.65 | 6,045,384,387.57 | 85,463,961.41 | 6,130,848,348.98 | |||||||
| III. Change in current period (“-” for decrease) | 109,531.25 | -3,456,989.00 | -88,815,245.80 | -85,248,725.55 | 7,012,595.69 | -78,236,129.86 | |||||||||
| (I) Total comprehensive income | 670,403,994.20 | 670,403,994.20 | 7,012,595.69 | 677,416,589.89 | |||||||||||
| (II) Capital invested and decreased by the owners | 109,531.25 | -3,456,989.00 | 3,566,520.25 | 3,566,520.25 | |||||||||||
| 1. Common shares invested by the owners |
Page 53 of 141
2. Capital
invested byholders ofother equityinstruments
| 2. Capital invested by holders of other equity instruments | |||||||||||||||
| 3. Amount of share-based payments recognized in owners’ equity | 109,531.25 | -3,456,989.00 | 3,566,520.25 | 3,566,520.25 | |||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | -759,219,240.00 | -759,219,240.00 | -759,219,240.00 | ||||||||||||
| 1. Withdrawal of surplus reserve | |||||||||||||||
| 2. Appropriation of general risk reserve | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -759,219,240.00 | -759,219,240.00 | -759,219,240.00 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-forward of owners’ equity | |||||||||||||||
| 1. Capital reserve converted into capital (or capital stock) | |||||||||||||||
| 2. Surplus |
Page 54 of 141
reserveconvertedinto capital(or capitalstock)
| reserve converted into capital (or capital stock) | |||||||||||||||
| 3. Surplus reserves making up for losses | |||||||||||||||
| 4. Changes of defined benefit plans carried forward to retained earnings | |||||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Withdrawn in current period | |||||||||||||||
| 2. Used in current period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Closing balance of current period | 949,024,050.00 | 401,799,332.67 | 474,516,412.50 | 4,134,795,866.85 | 5,960,135,662.02 | 92,476,557.10 | 6,052,612,219.12 |
8. Statement of Changes in Owners’ Equity of the Parent Company
Current amount
In RMB
Page 55 of 141
Item
| Item | Semi-annual 2020 | |||||||||||
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Others | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Others | ||||||||||
| I. Closing balance of last year | 949,024,050.00 | 401,754,349.66 | -15,157,634.16 | 474,516,412.50 | 4,955,109,022.86 | 6,765,246,200.86 | ||||||
| Plus: Changes in accounting policies | ||||||||||||
| Correction of errors of the previous period | ||||||||||||
| Others | ||||||||||||
| II. Opening balance of this year | 949,024,050.00 | 401,754,349.66 | -15,157,634.16 | 474,516,412.50 | 4,955,109,022.86 | 6,765,246,200.86 | ||||||
| III. Change in current period (“-” for decrease) | 134,823,074.81 | 134,823,074.81 | ||||||||||
| (I) Total comprehensive income | 609,335,099.81 | 609,335,099.81 | ||||||||||
| (II) Capital invested and | ||||||||||||
Page 56 of 141decreased bythe owners
| decreased by the owners | ||||||||||||
| 1. Common shares invested by the owners | ||||||||||||
| 2. Capital invested by holders of other equity instruments | ||||||||||||
| 3. Amount of share-based payments recognized in owners’ equity | ||||||||||||
| 4. Others | ||||||||||||
| (III) Profit distribution | -474,512,025.00 | -474,512,025.00 | ||||||||||
| 1. Withdrawal of surplus reserve | ||||||||||||
| 2. Distribution to owners (or shareholders) | -474,512,025.00 | -474,512,025.00 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal carry-forward of owners’ equity | ||||||||||||
| 1. Capital reserve converted into capital (or capital stock) | ||||||||||||
| 2. Surplus reserve |
Page 57 of 141converted intocapital (orcapital stock)
| converted into capital (or capital stock) | ||||||||||||
| 3. Surplus reserves making up for losses | ||||||||||||
| 4. Changes of defined benefit plans carried forward to retained earnings | ||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Withdrawn in current period | ||||||||||||
| 2. Used in current period | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Closing balance of current period | 949,024,050.00 | 401,754,349.66 | -15,157,634.16 | 474,516,412.50 | 5,089,932,097.67 | 6,900,069,275.67 |
Amount of the previous period
In RMB
| Item | Semi-annual 2019 | |||||||||||
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive incom | Special reserve | Surplus reserve | Undistributed profits | Others | Total owners’ equity | |||
| Preferre | Perpetual | Others | ||||||||||
Page 58 of 141dshar
es
| d shares | bonds | e | ||||||||||
| I. Closing balance of last year | 949,024,050.00 | 401,644,818.41 | 3,456,989.00 | 474,516,412.50 | 4,160,587,339.53 | 5,982,315,631.44 | ||||||
| Plus: Changes in accounting policies | ||||||||||||
| Correction of errors of the previous period | ||||||||||||
| Others | ||||||||||||
| II. Opening balance of this year | 949,024,050.00 | 401,644,818.41 | 3,456,989.00 | 474,516,412.50 | 4,160,587,339.53 | 5,982,315,631.44 | ||||||
| III. Change in current period (“-” for decrease) | 109,531.25 | -3,456,989.00 | -95,744,646.41 | -92,178,126.16 | ||||||||
| (I) Total comprehensive income | 663,474,593.59 | 663,474,593.59 | ||||||||||
| (II) Capital invested and decreased by the owners | 109,531.25 | -3,456,989.00 | 3,566,520.25 | |||||||||
| 1. Common shares invested by the owners | ||||||||||||
| 2. Capital invested by holders of |
Page 59 of 141other equityinstruments
| other equity instruments | ||||||||||||
| 3. Amount of share-based payments recognized in owners’ equity | 109,531.25 | -3,456,989.00 | 3,566,520.25 | |||||||||
| 4. Others | ||||||||||||
| (III) Profit distribution | -759,219,240.00 | -759,219,240.00 | ||||||||||
| 1. Withdrawal of surplus reserve | ||||||||||||
| 2. Distribution to owners (or shareholders) | -759,219,240.00 | -759,219,240.00 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal carry-forward of owners’ equity | ||||||||||||
| 1. Capital reserve converted into capital (or capital stock) | ||||||||||||
| 2. Surplus reserve converted into capital (or capital stock) | ||||||||||||
| 3. Surplus reserves making up |
Page 60 of 141for losses
| for losses | ||||||||||||
| 4. Changes of defined benefit plans carried forward to retained earnings | ||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Withdrawn in current period | ||||||||||||
| 2. Used in current period | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Closing balance of current period | 949,024,050.00 | 401,754,349.66 | 474,516,412.50 | 4,064,842,693.12 | 5,890,137,505.28 |
III. Basic Information of the Company
Hangzhou Robam Appliances Co., Ltd. (hereinafter referred to as ROBAM or the Company) is an incorporated companyestablished by overall changing Hangzhou Robam Home Appliances Co., Ltd. on November 7, 2000. Approved by China SecuritiesRegulatory Commission (ZJXK [2010] No.1512) in 2010, the Company for the first time offered 40 million ordinary shares in RMBto the public on November 23, 2010 (stock code: 002508), with the par value per share of RMB 1 and the issue price per share ofRMB 24.00.As of June 30, 2020, the total capital stocks of the Company reached RMB 949,024,050 after several equity changes. Theunified social credit code of the Company is 91330000725252053F; the legal representative is Ren Jianhua; and the address isNo.592, Linping Avenue, Yuhang Economic Development Zone, Yuhang District, Hangzhou.The Company is a manufacturing company, with major businesses covering research & development, production, sales andcomprehensive services of kitchen appliances. Its main products include range hoods, gas stoves, disinfection cabinets, steam ovens,
baking ovens, dishwashers, water purifiers, microwave ovens, integrated stoves, and purification tanks.
Its business mainly covers the manufacturing, processing and sales of range hoods, gas stoves, disinfection cabinets, bakingovens, steam ovens, microwave ovens, dishwashers, water purifiers, multi-purpose tanks, kitchen supplies and other kitchenappliances, as well as import and export business and technical service for household appliances. (For business subject to approvalaccording to law, relevant operating activities may not be carried out until they are approved by relevant authorities).The consolidated financial statements of the Company cover 6 companies, including Beijing ROBAM Appliances Sales Co.,Ltd., Shanghai ROBAM Appliances Sales Co., Ltd., Hangzhou MingQi Electric Co., Ltd., De Dietrich Household AppliancesTrading (Shanghai) Co., Ltd., Shengzhou Kinde Intelligent Kitchen Appliances Co., Ltd., and Hangzhou ROBAM FuchuangInvestment Management Co., Ltd.For details, see relevant contents in the section of “Interests in Other Entities” herein.
IV. Basis for Preparation of Financial Statements
1. Preparation basis
The financial statements of the Company are prepared on a going concern basis, and in light of the Company’sactual transactions and events, in accordance with the Accounting Standards for Business Enterprises promulgated bythe Ministry of Finance of China and relevant provisions, as well as the accounting policies and estimates stated in thesection of “Significant Accounting Policies and Estimates” herein.
2. Going concern
After taking into account of factors such as macro policy risks, market management risks, and the current andlong-term profitability, solvency, and financial flexibility of the Company, as well as the intention of the management tochange the operation policies, the management of the Company believes that there are no matters affecting theCompany’s going concern within 12 months from the end of the reporting period onwards.V. Significant Accounting Policies and Estimates
The specific accounting policies and estimates prepared by the Company according to its actual production andoperation include the operating cycle, the recognition and measurement of receivables and bad debts, measurement ofinventory delivered, fixed assets classification as well as depreciation methods, invisible asset amortization, conditionsfor the capitalization of R&D expenses, and revenue recognition and measurement.
1. Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company comply with the requirements of the Accounting Standards forBusiness Enterprises, and truthfully and completely reflect the financial status, business results, cash flow and otherrelevant information of the Company.
2. Accounting period
The Company’s accounting period is divided into annual and interim periods. An interim period refers to areporting period shorter than a full accounting year. The accounting year of the Company starts on January 1 and endson December 31 on the Gregorian calendar.
3. Operating cycle
The Company’s accounting period starts on January 1 and ends on December 31 on the Gregorian calendar.
4. Bookkeeping base currency
The Company adopts RMB as the bookkeeping base currency.
5. Accounting approaches to business combinations under or not under common control
The assets and liabilities acquired by the Company as the combining party in a business combination undercommon control shall be measured at the book value of the combined party in the final controller’s consolidatedstatements on the combination date. The capital reserve shall be adjusted against the difference between the book valueof the net assets acquired by the combining party and the book value of the combination consideration paid by it. If thecapital reserve is insufficient to offset the difference, the retained earnings shall be adjusted.
The identifiable assets, liabilities and contingent liabilities acquired from the acquiree in a business combinationnot under common control shall be measured at fair value on the acquisition date. The combination cost is the sum ofthe fair values of cash or non-cash assets paid, liabilities issued or undertaken, equity securities issued, among others,by the Company for the purpose of taking control over the acquiree on the acquisition date and all directly relatedexpenses incurred during the business combination (in case of business combination accomplished through multipletransactions step by step, the combination cost is the sum of the cost of every single transaction). If the combinationcost is greater than the fair value share of the acquiree’s identifiable net assets acquired from the acquiree in thecombination, the case is recognized as goodwill. Where the combination cost is less than the fair value share of theidentifiable net assets acquired from the acquiree, the fair values of the identifiable assets, debts and contingentliabilities acquired in the combination and those of non-cash assets subject to combination consideration or issuedequity securities shall be rechecked first, and then in case the combination cost is less than the fair value shares of theidentifiable net assets acquired from the acquiree, the difference shall be included in the non-operating income in theperiod of the combination.
6. Methods of preparing consolidated financial statements
All subsidiaries under the control of the Company are included into the consolidated financial statements.
The financial statements of subsidiaries are adjusted in accordance with the accounting policies and accountingperiod of the Company when preparing the consolidated financial statements, where the accounting policies andaccounting periods are inconsistent between the Company and its subsidiaries.
All major internal transactions, inter-company balances, and unrealized profits with the scope of consolidationshall be offset when preparing consolidated financial statements. The portion of owner’s equity of subsidiaries not held
by the parent company and net current profit & loss, other comprehensive incomes and the portion of totalcomprehensive incomes belonging to minority equity are presented under “minority equity, minority interest income,other comprehensive incomes belonging to minority shareholders and total comprehensive incomes belonging tominority shareholders, respectively”.
For a subsidiary acquired from business combinations under the same control, its operating results and cash flowsare included into the consolidated financial statements since the beginning of the consolidation year. When thecomparable consolidated financial statements are being prepared, relevant items in the financial statements of the lastyear are adjusted with the stated party formed after merging deemed to exist from the time of the ultimate controllingparty starting to control.For a subsidiary acquired through business combinations not under the same control, its operating results and cashflows shall be included into the consolidated financial statement since the date when the Company obtains control.When preparing the consolidated financial statements, the subsidiary's financial statements shall be adjusted on basis ofthe fair value of all identifiable assets, liabilities and contingent liabilities ascertained on the purchasing date.
For equity interests in an investee not under common control realized by two or more transactions, which finallybring about the business combination, equity interests in the investee before the acquisition date shall be re-measured atfair value on the acquisition date and the balance between the fair value and the book value shall be included in theinvestment gains for the current period when preparing the consolidated statements. If the related acquiree's equity heldbefore the acquiring date contains other comprehensive income and the other changes of owner's equity except for netprofits and losses, other comprehensive income and profit distributions, it shall be transferred to investment gains orlosses on the date of acquisition, excluding the other comprehensive income derived from changes of net liabilities ornet assets due to re-measurement on defined benefit plan by the investee.
Without losing any control right, the Company has partially disposed the long-term equity investment in thesubsidiary. In the consolidated financial statement, according to the difference between the disposal prices of part of theequity investment in the subsidiary and net assets of the subsidiary attributed to the Company as a result of disposal oflong-term equity investment continuously calculated from the purchase date or consolidation date in the subsidiary,capital premium or stock premium is adjusted, where the capital surplus is not sufficient to be offset, they are adjustedto the retained earnings.
Where the Company loses the controlling right of the invested party for such reason as disposing partial equityinvestment, the remaining equity is re-measured as per the fair value of such equity on the day of losing controllingright when preparing the consolidated financial statements. The balance from the sum of the consideration obtainedupon the disposal of equity and the fair value of the remaining equity less the appropriable share of the net asset of theformer subsidiaries calculated as per the former shareholding proportion from the purchase day or merging day isincluded in the investment income for the period when the right of control is lost and the goodwill is deducted. Othercomprehensive incomes related to former equity investment in subsidiaries shall be recognized as current investmentprofits & losses upon losing controls.
7. Classification of joint arrangement and accounting methods for joint operation
The joint arrangement of the Company includes the joint venture.
The Company, serving as one part of the joint venture, shall, in accordance with the provisions of the AccountingStandards for Business Enterprises No. 2 – Long-term Equity Investments, conduct accounting treatment of the
investment of the joint venture.
8. Recognition standard of cash and cash equivalents
Cash presented in the Company’s cash flow statement refers to cash on hand and deposits that areavailable for payment at any time. Cash equivalents presented in the cash flow statement refer to short-terminvestments (no more than three months) with high liquidity and that are readily convertible to knownamounts of cash and subject to an insignificant risk of changes in value.
9. Foreign currency business and conversion of foreign currency statement
1 Foreign currency transactionsThe Company translates the foreign-currency amount of the foreign-currency transactions into RMB amountbased on spot exchange rate applicable on the transaction date. On the balance sheet date, the monetary items inforeign currencies shall be converted at the spot rate on the said balance sheet date. The conversion differencesarising therefrom, except the exchange balance arising from the foreign currency borrowings special for acquisitionor production of qualifying assets which shall be processed according to the capitalization principle, shall bedirectly included in the current profit or loss. The foreign currency non-monetary items measured at fair value shallbe converted according to the spot rate of the date when the fair value is confirmed. If the difference between theconverted amount of booking base currency and the original amount of booking base currency belongs to thesalable financial asset, such difference shall be included in the capital reserve. If such difference belongs to theforeign currency non-monetary item which is measured at fair value and whose change is included in the profitsand losses of the current period, it shall be included into current profits and losses. The foreign currencynon-monetary items measured by historical cost shall be still translated according to the spot rate on the transactiondate, while RMB amount remains unchanged.
2 Translation of foreign currency financial statements
Assets and liabilities items in the balance sheets of the foreign operations are translated into RMB using thespot exchange rate at the balance sheet date, while the shareholders’ equity items, except for the "undistributedprofit items", are translated into RMB using the spot exchange rate at the date of transaction. The income andexpense items in the income statements of overseas operations are translated at the exchange rate approximate tothe spot rate at the date of transaction. The difference arisen from the above translation's are presented separatelyunder other comprehensive income. For monetary items denominated in foreign currencies that materiallyconstitute overseas net investment in overseas operations, exchange differences arising from changes in exchangerates, when preparing the consolidated financial statements, are also separately presented under the Shareholders’equity as foreign currency translation differences. In case of disposal of an overseas operation, foreign currencytranslation differences relating to the overseas operation are proportionately transferred to profits or losses of theperiod when the disposal was transacted. During the disposal of overseas operation, other comprehensive incomesrelated to the overseas operation are transferred in proportion into the disposal of current profits and losses.The foreign currency cash flow and the cash flow of overseas subsidiaries shall be converted using theexchange rate approximate to the spot rate of the transaction date of the cash flow. The effect of exchange ratechanges on cash is presented separately in the cash flow statement.
10. Financial instruments
The Company shall recognize a financial asset or a financial liability when it becomes a party to a financialinstrument contract.
Financial assetThe Company translates the foreign-currency amount of the foreign-currency transactions into RMB
amount
using spot exchange rate applicable at the transaction date.Based on the business model for management of financial assets and the contractual cash flow characteristicsof financial assets, the Company classifies the financial assets into three types: 1) the financial asset measured atamortized cost,; 2) the financial asset measured at the fair value with its changes included into other comprehensiveincomes; and 3) and the financial asset measured at the fair value with its changes included into current profits orlosses.
The financial assets meeting all of the following conditions can be classified as those measured at amortizedcost by the Company: ① the Company adopts the business management mode of financial assets for the purposeof collecting contractual cash flow. ② In accordance with the contract terms of the financial assets, the cash flowgenerated at the specific date is only the payment of the principal and the interest on the basis of the outstandingprincipal amount. Such financial assets are initially measured at their fair values, with related transaction costsincluded into the amount of initial recognition, and subsequent measurement conducted with the amortized cost.Apart from those designated as hedged items, the difference between the initial amount amortized with the effectiveinterest method and the amount due, profits or losses incurred upon amortization, impairment, exchange profits andlosses and derecognition shall be included into current profits and losses.Where the following conditions are reached at the same time, the financial assets can be classified by theCompany as those measured at fair value with the changes included into other comprehensive income: ① theCompany adopts the business management mode of the financial assets for the purpose of collecting contractualcash flow and selling the financial assets. ② In accordance with the contract terms of the financial assets, the cashflow generated at the specific date is only the payment of the principal and the interest on the basis of theoutstanding principal amount. Such financial assets are initially measured at their fair values, with relatedtransaction costs included into the amount of initial recognition. Apart from those designated as the hedged items,profits or losses incurred by such financial assets shall be included into the comprehensive incomes, except forcredit impairment losses or gains, exchange profits and losses and the interests calculated as per the actual interestrate for such financial assets. Upon derecognition of the financial assets, the accumulated gains or losses previouslyrecorded in other comprehensive incomes shall be transferred out of such other comprehensive incomes andincluded into the current profits and losses.The interest income is recognized by the Company using the effective interest method. The interest income isdetermined by multiplying the book balance of financial assets by the effective interest rate, except for conditionsbelow: ① For the financial assets purchased by or originating from the Company with credit impairment, sinceinitial confirmation, the interest income shall be determined as per the amortized cost of the financial asset and theeffect interest rate subject to credit adjustment. ② The financial assets purchased by or originating from theCompany with no credit impairment but having credit impairment during the follow-up period shall be subject tointerest income calculation based on the amortized cost and actual interest rate of the financial assets during thefollow-up period by the Company.
The non-trading equity instrument is designated by the Company as the financial asset which is measured atits fair value with changes included into current profits and losses. The designation shall not be canceled once it ismade. The non-trading equity instrument investment, designed by the Company to be measured at the fair valuewith their changes included into other comprehensive incomes, is initially measured at fair value, with relatedtransaction cost included into the amount of initial confirmation. Except that the obtained dividends (except thoseof the recovered investment cost) are included into current profits and losses, other related profits and losses(including exchange profits and losses) are completely included into the other comprehensive incomes and will notbe converted into current profits and losses subsequently. Upon derecognition, the accumulated gains or lossespreviously included into other comprehensive incomes are transferred from other comprehensive incomes andincluded into retained earnings.
Except for the financial assets classified to be measured by the amortized cost and those measured at fairvalue through other comprehensive income, other financial assets are classified by the Company as those measuredat fair value through current profits and losses. Such financial assets are initially measured at their fair values, withrelated transaction costs directly included into the current profits and losses. Profits or losses of such financialassets shall be included in the current profits and losses.
The financial asset formed by the contingent consideration confirmed during business combination not underthe same control are classified as those measured by its fair value by the Company, with changes included intocurrent profits and losses.
Recognition basis and measurement method for transfer of financial assets
Financial assets meeting one of the following conditions shall be derecognized by the Company: ① thecontractual right to collect the cash flow of the financial asset is terminated; ② The financial assets have beentransferred by the Company, and almost all risks and returns associated with the ownership of the financial asset aretransferred. ③ The financial assets have been transferred, and the Company had neither transferred nor retainedalmost all risks and rewards in the ownership of the financial assets, but given up the control over the financialassets.
For financial asset that is entirely transferred and meets the conditions of de-recognition, the differencebetween the book value of financial asset transferred and the sum of consideration received from such transfer andthe accumulated changes in fair value, directly included into other comprehensive income and corresponding to thederecognized amount (in accordance with the contract terms of the financial assets involved in such transfer, thecash flow generated at the specific date is only the payment of the principal and the interest on the basis of theoutstanding principal amount), is included into the current profits and losses.
For financial asset that is partially transferred and meets the conditions of derecognition, the overall bookvalue of transferred financial asset is split according to their relative fair value between the part derecognized andthe part not derecognized, and the difference between the following two amounts is recognized in current profitsand losses: the sum of consideration received due to transfer and the amount amortized to the derecognized part andcorresponding to the accumulative change of fair value which is firstly included into the other comprehensiveincome (in accordance with the contract terms of the financial assets, the cash flow generated at the specific date isonly the payment of the principal and the interest on the basis of the outstanding principal amount), and the overallbook value of aforesaid financial assets.Financial liabilities
Classification, recognition and measurement of financial liability
The Company’s financial liabilities are grouped, upon initial recognition, into financial liabilities measured atfair value, with the changes included in the current profit or loss and other financial liabilities.Financial liabilities measured at fair value with changes included in the current profits and losses includetrading financial liabilities and financial liabilities designated to be measured as at fair value with changes includedin the current profits and losses upon initial recognition. The net gain or loss arising from changes in fair value,dividends and interest paid related to such financial liabilities are recorded in profits and losses for the period inwhich they are incurred.Other financial liabilities are measured subsequently at the amortized cost by adopting the effective interestmethod. Apart from the following items, the Company will classify the financial liabilities as those measured atamortized cost: ① the financial liabilities measured at fair value with changes included into current profits andlosses include financial liabilities held for trading (including derivatives that are financial liabilities) and financialliabilities designated to be measured at fair value with changes included into current profits and losses. ② Thefinancial liabilities formed by transferring of the financial assets failed to meet the conditions for derecognition orformed by continuous involvement of transferred financial assets. ③ The financial guarantee contracts that do notfall under above ① and ② as well as loan commitments at a rate below the market rate of interest that do not fallunder above ①.
Where a contingent consideration is recognized by the Company as a financial liability in businesscombination not under common control, such financial liability shall be measured at fair value with changesincluded into the current profits and losses during accounting treatment.
Derecognition of financial liabilities
When the current obligation of the financial liabilities has been relieved in whole or part, the part of thefinancial liabilities or obligations that have been relieved upon confirmation is terminated. If the Company reachesan agreement with the creditor to replace the existing financial liabilities by undertaking new financial liabilitiesand the contract terms of the existing and new liabilities are different in substance, the existing financial liabilitiesshall be derecognized while the new liabilities shall be recognized. Where all or part of the contract terms of theexisting financial liabilities are subject to material modification, the Company shall derecognize all or part of theexisting financial liabilities while recognizing the financial liabilities with modified terms as new financialliabilities. The difference between the book value of the terminated part upon confirmation and the considerationspaid is included in the current profit and loss.Method for determining the fair value of financial assets and financial liabilities
The Company measures the fair value of financial assets and financial liabilities in the main market. If there isno major market, the Company measures the fair value of financial assets and financial liabilities with mostbeneficial price for the market and adopts evaluation techniques with much available data and other informationsupport that is applicable at that time. Input data for determining fair values has three levels. The first level is theunadjusted price available for the same asset or liability on the date of evaluation in an active market. The secondlevel inputs are directly or indirectly observable inputs of relevant assets or liabilities apart from inputs of the firstlevel. The inputs of the third level are unobservable inputs of relevant assets or liabilities. The Company givespriority of using the first-level inputs and takes the third-level inputs as the last. The lowest layer that hassignificant impact on the overall fair value evaluation determines which level this fair value evaluation result shallbelong to.
Investments in equity instruments of the Company are measured at fair value. However, under certain
circumstances, if recent information needed to determine the fair value is insufficient, or if the estimated amount ofthe fair value features an extensive distribution scope and the cost represents the best estimate of the fair value inthat distribution scope, the cost may represent the appropriate estimate on the fair value within that distributionscope.
Offsetting financial assets and financial liabilitiesFinancial assets and liabilities of the Company are presented separately in the balance sheet without offsetting.However, the net amount resulting from the offsetting between financial assets and financial liabilities shall bepresented in the balance sheet only if all of the following criteria are met: (1) The Company has the statutory rightto set off recognized amounts which is currently enforceable; (2) The Company intends either to settle on a netbasis, or to realize the financial assets and pay off the financial liabilities simultaneously.
Distinction and relevant treatment methods of financial liabilities and equity instrumentsThe Company distinguishes between financial liabilities and equity instruments according to the followingprinciples: (1) Where the Company cannot unconditionally avoid fulfilling certain contractual obligation bydelivering cash or other financial assets, then such contractual obligation is in line with the definition of thefinancial liability. Although certain financial instruments do not expressly contain terms and conditions for thecontractual obligation to deliver cash or other financial instruments, the contractual obligation may be indirectlyformed according to other terms and conditions. (2) Where a financial instrument must or is able to be settled bythe Company’s own equity instrument, the Company shall consider whether the Company’s own equity instrumentas the settlement instrument is a substitute of cash or other financial assets, or the residual interest in the assets ofan entity after deducting all of its liabilities. If it is the former case, the instrument is the issuer’s financial liability.If it is the latter case, the instrument shall be the equity instrument of the issuer. Under some circumstances, thecontract of a financial instrument may require that the financial instrument must or is able to be settled by theCompany’s own equity instrument. The amount of contractual right or contractual obligation equals to the amountof its own equity instrument receivable or payable multiplied by its fair value at the time of settlement. Whether theamount of such contractual right or obligation is fixed, or varies, wholly or partially, based on variables other thanthe market value of the Company’s own equity instrument (such as interest rates, the price of a commodity or theprice of a financial instrument), such contract is classified as financial liability.In classifying financial instruments (or components) in the consolidated statements, the Company shall takeinto account all the terms and conditions agreed between members of the Company and holders of the financialinstruments. If the Company, as a whole, undertakes the obligation to deliver cash, other financial assets or settle inother ways that cause the financial instrument to become a financial liability, the instrument shall be classified as afinancial liability.
If a financial instrument or any of its components is a financial liability, the relevant interests, dividends,gains or losses, and gains or losses from redemption or re-financing and so on are included in the current profits &losses of the Company.If a financial instrument or its component belongs to an equity instrument, for its issue (includingre-financing), repurchase, sale or cancellation, the Company will treat it as a change in equity and will notrecognize the change in fair value of equity instruments.
Impairment of financial instrumentsThe Company, based on expected credit losses, performed impairment accounting and recognized creditimpairment losses on financial assets measured at amortized cost, financial assets classified to be measured at the fair
value with the changes included into other comprehensive incomes as well as financial guarantee contracts.The expected credit loss is a weighted average of credit losses on financial instruments weighted at the risk ofdefault. Credit loss refers to the difference between all contractual cash flows discounted as per the original effectiveinterest rate and receivable from the contract and all cash flows expected to be received by the Company, namely, thepresent value of a shortage of cash. Among them, financial assets purchased or underlying with credit impairment of theCompany shall be discounted at the financial assets’ effective interest rate after credit adjustment.For account receivables arising from transactions scoped in ASBE on Revenue not containing significant financingcomponents, the Company takes the simplified measurement method to measure its loss provisions based on the amountof expected credit losses during the entire duration.
For financial assets purchased or underlying with credit impairment, the cumulative change in expected credit lossduring the entire duration since the date of balance sheet date after initial recognition will be recognized as provision forloss. On each date of balance sheet, the amount of change in expected credit loss during the entire duration is includedinto current profits and losses as impairment losses or gains. Even if the expected credit loss within the entire durationdetermined on the date of balance sheet is less than the amount of expected credit loss reflected by estimated cash flowupon initial recognition, any favorable change in expected credit loss will be recognized as impairment gains.In addition to other financial assets adopting the aforesaid simplified measurement method or financial assetspurchased or underlying with credit impairment, the Company shall assess whether the credit risk of relevant financialinstruments has increased significantly since the initial recognition on each balance sheet date, and shall respectivelyaccrue their provision for loss and recognize the expected credit loss and its change:
In the event that the credit risk has not increased significantly since the initial recognition and it is in Stage I, theCompany shall measure its loss provisions based on the amount of expected credit losses for the coming 12 months ofsuch financial instrument and calculate the interest on the basis of book balance and effective interest rate.
In the event that the credit risk of the financial instrument has increased significantly since the initial recognitionbut with no credit impairment and it is in Stage II, the Company shall measure its loss provisions based on the amountof the expected credit loss of the financial instrument during the entire duration and calculate the interest on the basisof book balance and effective interest rate.In case that credit impairment of the financial instrument has incurred since the initial recognition and it is inStage III, the Company shall measure the loss provisions of the financial instrument based on the amount of expectedcredit losses during the entire duration, and calculate the interest at amortized cost and effective interest rate.
Increases or reversals of the provisions for credit losses of the financial instrument are recorded in the currentprofits and losses as impairment losses or gains. Except for financial assets classified to be measured at fair valuethrough other comprehensive income, the book balance of financial assets is deducted with provision for credit losses.For financial assets classified to be measured at fair value, with the change included in other comprehensive incomes,the Company shall recognize the provision for credit loss in other comprehensive incomes, and shall not decrease thebook value of such financial assets listed in the balance sheet.Where the Company has measured the provisions for losses based on the amount of the expected credit loss overthe entire duration of such financial instruments in the prior accounting period, but on the current balance sheet date,such financial instruments no longer fall into the scope of significantly increased credit risk since initial recognition, theCompany measures the provisions for the losses of such financial instruments based on the amount equivalent to theexpected credit losses over the coming 12 months on the current balance sheet date, with resulting carrybacks ofprovisions for losses recorded in the current profits and losses as impairment gains.
① Significant increase in credit risk
The Company determines if there is a significant increase in credit risk of financial instruments since initialrecognition by comparing the risks of default of financial instruments on the balance sheet date and the date of initialrecognition based on reasonable and well-grounded forward-looking information available. For the financial guaranteecontract, when the Company applies the regulations on impairment of financial instruments, the date when theCompany becomes the party which makes the irrevocable undertaking is regarded as the date of initial recognition. TheCompany will take into account the following factors when it assesses whether the credit risk is significantly increased:
the operating results of the debtor have actually changed or are expected to significantly change or not; whether theregulatory, economic or technical environment where the debtor is located has significantly and adversely changed ornot; whether the value of the collateral as the debt pledge or the guarantee provided by the third party or creditenhancement quality has significantly changed or not, as these changes are expected to reduce the economic motives ofthe debtor to make repayments within the time limits prescribed in the Contract or to impact the default probability;whether the expected performance or repayment behavior of the debtor has significantly changed or not; whether theCompany has changed its management method for financial instrument credit or not, etc.
On the balance sheet date, if the Company determines that the financial instrument only carries low credit risks,then the Company will assume that the credit risks of the financial instrument have not increased significantly since theinitial recognition. If the risk of default on financial instruments is low, the borrower is highly capable of performing itscontractual cash flow obligations in the short term, and even if the economic situation and operating environment areadversely changed over a long period of time but not necessarily reducing the borrower’s performance of its contractualcash obligations, then the financial instrument is considered as having a lower credit risk.
② Credit-impaired financial assets
In case of one or more events adversely affecting the estimated future cash flows of a financial asset, the financialasset becomes a financial asset to which a credit impairment has happened. Evidence of a credit impairment on afinancial asset includes the following information: serious financial difficulties of the debtor; a breach of contract by thedebtor, such as a default or overdue payment of interest or principle; the creditor, for economic or contractualconsiderations relating to financial difficulties of the debtor, offers the debtor concessions that are impossible in anyother circumstances; it is probable that the debtor will enter bankruptcy or other financial restructuring; thedisappearance of an active market for that financial asset due to financial difficulties of the issuer or the debtor; thepurchase or origination of a financial asset at a large discount that reflects the incurred credit losses.
The credit impairment of financial assets may be caused by the joint effect of the above multiple events, and maynot be caused by individually identifiable events.
③ Determination of expected credit losses
In assessing the expected credit loss, the Company takes reasonable and well-founded information about pastevent, current condition and future economic status predictions into consideration based on the expected credit loss ofsingle and combined financial evaluation instruments.
The Company divides the financial instruments into different portfolios based on the common credit riskcharacteristics. See accounting policies of relevant financial instruments for single evaluation standards and combinedcredit risk characteristics.
The Company determines the expected credit losses of financial instruments under the following methods:
For financial assets, the credit loss is calculated as the present value of the difference between the contractual cashflows to be collected by the Company and cash flows expected to be collected.
For the financial guarantee contract, the credit loss is the expected payment made to the contract holder by theCompany for reimbursing the contract holder against the credit losses incurred by the contract holder, deducted by thepresent value of the differences between the amounts expected to be received by the Company from the contract holder,debtor or any other party.For financial assets which have been credit-impaired on the balance sheet date but are not purchased or underlyingwith credit impairment, the credit loss is calculated as the difference between the book balance of such financial assetsand present value of anticipated future cash flows discounted at the original effective interest rate.
11. Notes receivable
The Company, based on the acceptor credit risk of the notes receivable as common risk characteristics, divides thenotes receivable into different combinations and determines the accounting estimation policy of expected credit loss.
Page 71 of 141Combinationclassification
| Combination classification | Basis for determining combination | Provision method |
| Combination of bank acceptance | The acceptor is a banking financial institution. | The Company believed that there was no significant credit risk in the bank acceptance held by the Company and there will be no significant loss due to the default of the bank. |
| Combination of trade acceptance | The acceptor is a non-bank financial institution or enterprise like a finance company. | The company shall measure the bad-debt provision of receivable trade acceptance based on the expected credit loss during the entire duration. |
12. Accounts receivable
For the receivables arising from transactions regulated by the Accounting Standards for Business Enterprises No.14 - Revenue Standards (whether or not containing significant financing components) and the lease receivablesregulated by the Accounting Standards for Business Enterprises No. 21 - Leasing, the Company takes the simplifiedmeasurement method to measure its loss provisions based on the amount of expected credit losses during the entireduration.
For accounts receivable, the Company assesses whether the credit risk increases significantly on the basis of asingle financial instrument or a combination of financial instruments. The Company singly evaluates the credit risk ofreceivables with significantly different credit risks and the following characteristics: receivables in dispute with theother party or involved in litigation and arbitration; accounts receivable that there are obvious indications showing thatthe debtor is likely to be unable to fulfill the repayment obligation. The Company cannot obtain sufficient evidence ofsignificant increase in credit risk at the level of single financial instrument at reasonable cost, but it is feasible to assesswhether the credit risk increases significantly on the basis of the combination of financial instruments. When theassessment is performed on the combination of financial instruments, the Company can classify the financialinstruments based on the common credit risk characteristics.
The Company classifies the accounts receivable into the following combinations based on their credit riskcharacteristics:
Page 72 of 141Combination classification
| Combination classification | Basis for determining combination | Provision method |
| Credit loss that accrues accounts receivable by aging analysis method | Accounts receivable with the same aging have similar credit risk characteristics | Expected rates of credit loss |
| Related parties within the consolidation scope | Funds of subsidiaries within the consolidation scope of controlling shareholders | No expected credit loss under normal circumstances |
If there is objective evidence showing that the credit impairment of certain account receivable has incurred, theCompany shall singly withdraw the bad debt reserve of accounts receivable and confirm the expected credit loss.
For accounts receivable with credit loss accrued from receivables by aging analysis method, based on the actualcredit loss of previous years and considering the forward-looking information of the current period, the accountingestimate policies of the Company for measuring the expected credit loss are as follows:
| Age | Expected rates of credit loss |
| Within 1 year | 5.00% |
| 1-2 years | 10.00% |
| 2-3 years | 20.00% |
| 3-4 years | 50.00% |
| 4-5 years | 80.00% |
| Over 5 years | 100.00% |
The Company calculates the expected credit loss of receivables on the balance sheet date. If the expected creditloss is greater than the carrying amount of the current receivables impairment provision, the Company will recognizethe difference as impairment loss of receivables, debit "credit impairment loss" and credit "bad debt provision".Otherwise, the Company will recognize the difference as impairment gains and make opposite accounting records.
For the actual credit losses of the Company, if the relevant receivables are determined to be unrecoverable and areapproved to be written off, the Company shall debit "bad debt provision" and credit "accounts receivable" according tothe approved write-off amount. If the write-off amount is greater than the accrued loss provisions, the "creditimpairment loss" will be debited according to the difference.
13. Receivables financing
Where the following conditions are reached at the same time, the financial assets can be classified as thosemeasured at fair value with the changes included into other comprehensive income: the Company adopts the businessmanagement mode of the financial assets for the purpose of collecting contractual cash flow and selling the financialassets. As stipulated in contract terms of the financial assets, the cash flows generated on special dates are solely thepayments to principals and interests on the principal amount outstanding.
The Company transfers the accounts receivable held in the form of discount or endorsement, and such business ismore frequent and involves a large amount of money. Its business management model, in essence, is to collect and sellcontract cash flow. According to the relevant provisions of financial instrument standards, the accounts receivable isclassified into financial assets with changes measured at fair value and included in other comprehensive income.
14. Other receivables
The Company divides the process of credit impairment of other receivables into three stages and adopts differentaccounting treatment methods for the impairment of other receivables in different stages:
Credit risk has not increased significantly since initial recognition (Stage I)
For the financial instruments in this stage, the Company shall measure the loss provisions based on the expectedcredit loss in the next 12 months. The Company classifies other receivables based on aging as a credit risk characteristicand measure them on the basis of combination, which is equivalent to the expected credit loss in the next 12 months.Credit risk has increased significantly since initial recognition but has not been impaired (Stage II)
For the financial instruments in this stage, the Company shall measure the loss provisions based on the expectedcredit loss during the entire duration.Credit impairment after initial recognition (Stage III)
For the financial instruments in this stage, the Company shall measure the loss provisions based on theexpected credit loss during the entire duration.
15. Inventories
Inventories of the Company mainly include low-value consumables, raw materials, goods in-process, merchandiseinventory and goods shipped in transit.
The inventories are managed based on perpetual inventory system, and valued at actual cost on acquisition. Actualcost is calculated using weighted average method when the inventories are issued or consumed. Low-valueconsumables and packaging materials are amortized using one-off amortization method.
At the end of accounting period, inventory is valuated at cost or net realizable value, whichever is lower; provisionfor inventory depreciation reserves is made for the part of the cost uncollectible of inventory due to damage, fully orpartially out of date or selling price lower than the cost, etc. Inventory revaluation reserves of merchandise inventoriesand raw materials are generally accrued as the excess of the higher cost of individual inventory over its net realizablevalue. For raw and auxiliary materials of larger amount and lower unit price, inventory revaluation reserves shall beaccrued based on the category.
Net realizable values of stock goods, work in progress, or held-for-sale materials are determined by their estimatedselling price deducted by estimated selling expenses and related taxes. Net realizable values for material held forproduction are determined by the estimated selling price of finished goods deducted by the estimated cost to completion,selling expenses and the related taxes.
16. Long-term equity investments
Long-term equity investment of the Company mainly includes the investment to the subsidiaries, associatedenterprises and joint ventures.
The Company follows the basis to judge the joint control: all the participants or group of participants collectivelycontrol the arrangements, and the policies for activities related to such arrangement must be agreed by all suchparticipants.
Generally, it constitutes significant influence on an investee if the Company controls 20% (inclusive) or more (less
than 50%) voting shares of the investee directly or indirectly through a subsidiary. Where the Company controls lessthan 20% voting shares of the investee directly or indirectly through a subsidiary, significant effects on the investeeshall be judged based on the facts and circumstances in the case that appoint representative to the board of directors orsimilar organ of power under the investee, participate the development of financial and operating policies of theinvestee, conduct important trading with the investee, dispatch management personnel to the investee, or provide keytechnical data to the investee.
The one forming control over the investee is the subsidiary of the Company. For the long-term equity investmentacquired through business combination under the same control, the share of the combined party in the book value of netassets presented in consolidated financial statements of ultimate controlling party acquired at the date of combination isrecognized as initial investment cost of long-term equity investment. The book value of net assets for the combinedparty is negative on the combining date, and the long-term equity investment cost is determined as zero.In case that equity of the investee under the same control is obtained through multiple deals step by step to finallyform business combination, for package deals, the Company shall account each deal as a deal to obtain the control. If itis not a package deal, the share of the book value of combined party's net assets presented in consolidated financialstatements of ultimate controlling party acquired at the date of combination is recognized as initial investment cost oflong-term equity investment. The difference between initial investment cost and the sum of the book value of long-termequity investment before the combination is realized and the book value of consideration additionally paid to furtheracquire shares on the date of combination is adjusted against the capital surplus; if the capital surplus is not sufficient tobe offset, the remaining balance is adjusted against retained earnings.For long-term equity investments acquired through business combinations not under common control, thecombined cost is used as the initial investment cost.
In case that equity of the investee not under the same control is obtained through multiple deals step by step tofinally form business combination, for package deals, the Company shall account each deal as a deal to obtain thecontrol. If it is not a package deal, initial investment cost accounted using cost method will be the sum of the book valueof original equity investment and new investment cost. For equity held before the date of acquisition and accountedwith equity method, other related comprehensive income using equity method for accounting shall not be adjusted, andaccounting treatment should be applied to these investments on the same basis as those adopted by the investee fordirect disposal of related assets or liabilities. For equity held before the date of acquisition and accounted at fair value inthe available-for-sale financial assets, the accumulated change in fair value which is originally included in othercomprehensive income shall be transferred to the investment profit or loss for the current period on the combining date.
Apart from the long-term equity investments acquired through business combination mentioned above, thelong-term equity investments acquired by cash payment are used as the cost of investment based on the purchase priceactually paid. For long-term equity investments obtained by issuing equity securities, the fair value of the equitysecurities issued is recorded as the initial investment cost; for long-term equity investments obtained by exchange ofnon-monetary assets, the initial investment cost shall be determined in accordance with relevant provisions in theAccounting Standards for Business Enterprises No. 7 - Exchange of Non-Monetary Assets; the initial investment costshall be determined in accordance with the relevant provisions of the Accounting Standards for Business Enterprises No.12 - Debt Restructuring by the long-term equity investment of debt restructuring.
Investment in subsidiaries by the Company shall be calculated by cost method, while investment in joint venturesand associates by the Company shall be calculated by equity method.
For long-term equity investment calculated by cost method, the cost of long-term equity investment shall beadjusted when the investment is added or recovered. The cash dividends or profits declared to be distributed by the
investee shall be recognized as the current investment income.For long-term equity investment calculated by equity method in subsequent measurement, the book value of thelong-term equity investment shall be increased or decreased accordingly with the changes in owner’s equity of theinvestee. The shares of the net profits & losses of the investee attributable to the Company shall be recognized based onthe fair value of all identifiable net assets of the investee upon acquisition of the investment in accordance with theaccounting policies and accounting period of the Company, after deducting the parts of the profits & losses arising frominternal transactions between the associates and joint ventures attributable to the Company calculated on the basis ofshareholding ratio and adjusting the net profits of the investee.When disposing the long-term equity investment, the balance between the book value and the acquired priceactually shall be included in the current profit and loss. As for long-term equity investments calculated by the equitymethod, when other changes in owners’ equity other than net gain or loss of the investee are recorded in owners’ equity,the amount initially recorded in owners’ equity is proportionally transferred into current investment income.
If all transactions from step-by-step disposal of equity to loss of controlling interest do not belong to packagetransaction, the Company will conduct accounting treatment for each transaction. In case of package transaction, alltransactions shall be calculated as one transaction of disposing subsidiaries and losing control power for accountingtreatment. However, the difference between disposal cost of each transaction and book value of long-term equityinvestment corresponding to equity disposed before losing control power shall be recognized as other comprehensiveincome and then shall be transferred into current profits and losses of losing control power upon such loss.
17. Investment real estates
Measurement model of investment real estate - measurement by cost methodDepreciation or amortization methods
Leased houses and buildings are included into the investment real estates of the Company. Measurement is carriedout by cost model.
The investment real estates of the Company are depreciated or amortized by the composite life method. Theestimated service life, net residual value ratio and annual depreciation (amortization) rate of the investment real estateare as follows:
Page 75 of 141Type
| Type | Depreciation period (year) | Estimated residual value ratio (%) | Annual depreciation rate (%) |
| Houses and buildings | 20 years | 5.00% | 4.75% |
18. Fixed assets
(1) Recognition conditions
Fixed assets of the Company refer to tangible assets with service life over one year, which are held for producinggoods, rendering labor services, lease (exclusive of leased houses and buildings) or operation and management.Fixed assets are recognized when the economic benefits related thereto are likely to flow into the Company and theircosts can be measured in a reliable manner. Fixed assets include houses and buildings, machine and equipment,
transportation equipment and other equipment, and the actual cost at the time of acquisition is taken as the entry value.Among them, the cost of purchased fixed assets includes the purchase price, import duties and other related taxes, aswell as other expenditures that can be directly attributed to the fixed assets before the fixed assets reach thepredetermined serviceable state; the cost of the self-constructed fixed assets consists of necessary expenses incurredbefore the constructed assets are ready for the intended use; the fixed assets invested by investors shall be accounted forat the value agreed in the investment contract or agreement, or at the fair value if the value agreed in the investmentcontract or agreement is unfair; the fixed assets rented in by way of financial lease shall be accounted for at the fairvalue. For fixed assets obtained by financing lease, the lower of the fair value of rented assets and the present value ofthe minimum lease payment on the lease start date shall be recorded as the entry value.Except for the fixed assets for which depreciation has been calculated in full amount and which are still being used,the Company will calculate and withdraw the depreciation for all fixed assets. The fixed assets are depreciated by thecomposite life method.Processing of subsequent expenditure of fixed assets: The subsequent expenditure of fixed assets mainly includesrenovation/modification expenditure, repair expenditure, etc. When the relevant economic benefits are likely to flow inand the costs can be measured in a reliable manner, they shall be included into the cost of fixed assets. For the replacedpart, the book value shall be derecognized. All the other subsequent expenditures are recognized in profit or loss for thecurrent period in which they are incurred.
The Company will recheck the estimated service life, the estimated net residual value and the depreciation methodof the fixed assets on each balance sheet date. Changes, if any, are regarded as the accounting estimate changes.A fixed asset is derecognized when it is disposed of or no economic benefit is expected from the use or disposal of theasset. The amount of proceeds on sale and transfer of a fixed asset as well as disposal of a scrapped or damaged fixedasset less its carrying amount and related taxes, is recognized in profit and loss for the current period.
(2) Depreciation method
Page 76 of 141Type
| Type | Depreciation method | Depreciation period | Residual value rate | Annual depreciation rate |
| Houses and buildings | Composite life method | 20 years | 5.00% | 4.75% |
| Machine and equipment | Composite life method | 10 years | 5.00% | 9.50% |
| Transportation equipment | Composite life method | 5 years | 5.00% | 19.00% |
| Other equipment | Composite life method | 5 years | 5.00% | 19.00% |
19. Construction in progress
Construction in progress is measured at its actual cost. The self-operating works is measured according to thedirect material, direct wage, direct construction cost, etc.; the outsourced works is measured according to the projectprice payable; the project cost of the equipment installation works is determined according to the value of installedequipment, installation cost, commissioning cost and other expenditures incurred. The cost of construction in processshall also include borrowing costs that should be capitalized.
The fixed assets constructed by the Company shall be transferred into fixed assets at the estimated value based onproject budget, construction cost and actual project cost from the date when fixed assets get ready for intended use anddepreciation of such assets will be accrued in next month. Upon completion of the final accounts formalities, theoriginal value difference of the fixed assets will be adjusted.
20. Borrowing costs
Recognition principle of borrowing cost capitalization: The borrowing costs incurred by the Company that can bedirectly attributable to the acquisition, construction or production of qualifying assets, will be capitalized and incurredin the relevant asset cost; other borrowing costs are recognized as expenses based on the amount incurred, and includedin the current profit and loss. Qualifying assets are defined as assets that require a substantial amount of time (usuallymore than one year) for construction or production activities before the asset is ready for its intended use or sale. Theseinclude fixed assets, intangible assets and inventory.
Period of capitalizing the borrowing costs: The Company will start to capitalize the borrowing costs related to thequalifying assets when the asset expenditure has been incurred, the borrowing costs have been incurred, and theacquisition, construction or production activities necessary to prepare assets for their intended use or sale are in progress.Where the acquisition, construction or production of a qualifying asset are interrupted abnormally for a period lastingmore than 3 months, the capitalization of borrowing costs shall be suspended. Capitalization of borrowing costs shallcease once the acquisition, construction or production necessary to prepare the qualifying asset for its intended use orsale are complete.
Method for calculating the amount of borrowing costs to capitalize: If borrowing funds specifically for acquiring,constructing or producing qualifying assets, the amount of interest eligible for capitalization by the Company will be theactual interest costs incurred during the specific borrowing period minus the interest income obtained by depositing ortemporarily investing unspent borrowed funds. Where a general borrowing is used for the acquisition, construction orproduction of a qualifying asset, the Company shall calculate and determine its amount of interest to be capitalized bytaking the weighted average of the accumulative asset expenditure minus the asset expenditure of the specificborrowing, multiplied by the weighted average interest rate of the general borrowing used.
21. Intangible assets
(1) Valuation method, service life and impairment test
The intangible assets of the Company mainly include land use rights, software, trademarks and patents. As forintangible assets that are purchased, the actual cost is composed of the actual price paid and other relevant expenditures.For the intangible assets that are invested by investors, the actual cost is determined by the agreed value in theinvestment contract or agreement, but if the agreed value is not fair, the fair value will be taken as the actual cost.Intangible assets are amortized using the composite life method, and the classifications and amortization periods of theCompany’s intangible assets are as follows:
Page 77 of 141Type
| Type | Amortization period |
| Land use right | 50 years |
Page 78 of 141Patent
| Patent | 10 years |
| Software | 3-5 years |
| Trademark or domain name | 10 years |
The Company’s land use rights are amortized evenly according to the lease term, starting from the date of transfer.The Company’s patent rights, non-patented technologies, special software use rights and other intangible assets areamortized evenly by stages according to whichever period is the shortest: the asset’s estimated useful life, the beneficialperiod stipulated in the contract, or the period of legal validity. The amount of amortization is included into the currentprofits and losses or included into the relevant asset cost according to the beneficiaries.
At the end of each year, the Company shall review, and adjust in case of changes, the estimated useful lives andamortization methods used for intangible assets with limited useful lives; in each accounting period, the Companycarries out reviews of the estimated useful life of intangible assets whose useful life is uncertain. Where there isevidence showing that the useful life of these intangible assets is limited, the Company will estimate the useful lifethereof and amortize these intangible assets during the estimated useful life remaining.
(2) Accounting policies for internal R&D expenditures
The internal R&D expenditures of the Company can be divided into expenditures made at the research stage andthose made at the development stage, depending on the nature of the expenditure and the extent of uncertainty onwhether the R&D activities will finally form intangible assets.
For internally-generated intangible assets, expenditures at the research stage are included in the current profits andlosses when incurred; expenditures at the development stage are recognized as an asset, when the following conditionsare met:
It is technically feasible to complete the intangible assets so that they can be used or sold;There is an intention to complete and use or sell the intangible assets;There is a potential market for the products manufactured via the application of the intangible assets, or there is apotential market for the intangible assets themselves;There is sufficient support in terms of technological, financial and other resources in order to complete thedevelopment of the intangible assets, and there is the capability to use or sell the intangible asset;The expenditures made on the intangible assets during the development stage can be measured reliably.
Expenditures made in the development stage that fail to meet the above conditions shall be included in the currentprofits and losses when incurred. The development expenditures previously included in the profit and loss statementwill not be recognized as assets in subsequent periods. The expenditures incurred and capitalized at the developmentstage are recorded as development expenditures on the balance sheet and will be carried over as the intangible asset onthe date when the project is ready for its intended use.
If the expenditures made at the research and development stages cannot be distinguished, all the R&Dexpenditures incurred will be fully included in the current profits and losses. The costs of the intangible assets generatedby internal development activities only include the total expenditures incurred from the time when the capitalizationconditions are met to the point when the intangible assets are used for their intended purposes; for expenditures that arealready recorded as such in the profit and loss statement before the capitalization conditions are met duringdevelopment of the same intangible asset, no adjustments will be made.
22. Impairment of long-term assets
On each balance sheet date, the Company shall audit the projects of subsidiaries, joint ventures and associates,including long-term equity investments, fixed assets, projects under construction, and intangible assets with finite usefullives. If any of the signs listed below are identified, this is an indication that the asset may be impaired and theCompany will conduct an impairment test. Impairment tests are carried out on goodwill and intangible assets withuncertain useful lives at the end of each period, irrespective of whether there is any indication that the assets may beimpaired. If there is difficulty testing the recoverable amount of a single asset, a test shall be conducted on the assetgroup which the asset belongs to, or on a combination of asset groups.
After the impairment test, if the book value of the asset exceeds its recoverable amount, the difference shall berecognized as an impairment loss. Once such an impairment loss has been confirmed, it shall not be reversed in thesubsequent accounting period. The recoverable amount of an asset is the greater of its fair value less the net value ofasset disposal and present value of expected future cash flow.The following signs may indicate asset impairment:
Current market price of the asset drops substantially, with the drop in price being notably higher than the expecteddrop over time or due to the asset’s normal use;Significant changes occur in the current period, or are predicted to occur in the near future, with regard to theeconomic, technological or legal environment in which the enterprise conducts its business operations, or in theasset market, and these changes have or will have negative impacts on the enterprise;The market interest rate or other market investment return rates have risen in the current period, affecting theenterprise’s discount rate for calculating the asset’s present value of expected future cash flow, and leading to asubstantial decrease in recoverable amounts of the assets;There is any amount of evidence to prove the asset has been out of date or the physical asset has been damaged;The asset has been or will be left unused, terminated for use or disposed of ahead of schedule;There is evidence from the enterprise’s internal reports proving that the economic performance of the asset hasbeen lower or will be lower than expected. For example, the net cash flow generated by the assets or operatingprofits (or losses) realized is much lower (or higher) than the expected amounts;Other signs indicating that the asset may have been impaired.
23. Long-term deferred expenses
The long-term deferred expenses of the Company refer to the expenses that have been paid, but shall be borne inthe current and future periods with an amortization period of more than one year. Moreover, such expenses shall besubject to average amortization within the benefit period. If long-term deferred expense items cannot benefit the futureaccounting periods, the amortized value of such items yet to be amortized shall be fully transferred into the currentprofits and losses.
24. Contract liabilities
Contract liabilities reflect the obligations of the Company to transfer goods to the client for which consideration isreceived or receivable from the client. Before the Company transfers goods to the client, and the client has paid the
consideration in the contract or the Company has obtained the right of unconditionally collecting the consideration, thecontract liabilities are recognized according to the received or receivable amount either at the time of actual payment bythe client or when the payment is due―whichever is earlier.
25. Employee remuneration
(1) Accounting treatment method of short-term remuneration
Employee remuneration of the Company includes short-term remuneration, post-employment benefits, terminationbenefits and other long-term benefits.Short-term remunerations mainly include wages, bonuses, allowances and subsidies, employee welfare, housingfunds, labor union funds, employee education funds, medical insurance premiums, industrial injury insurance premiums,and maternity insurance premiums. In the accounting period during which the employee has rendered service, the actualshort-term remuneration incurred is recognized as a liability and recorded in the current profits and losses or relatedasset costs based on the beneficiary.
(2) Accounting treatment method of post-employment benefits
The post-employment benefits mainly include basic endowment insurance, unemployment insurance, enterpriseand annuity payments, which are classified into defined contribution plans according to the risks and obligationsundertaken by the Company. Moreover, the contributions paid into a separate entity in exchange for the employee’sservices during the accounting periods at the balance sheet date are recognized as a liability, and recorded in currentprofits and losses or relevant asset costs based on the beneficiary.
(3) Accounting treatment method of dismissal benefits
Dismissal benefits are required in instances when the Company terminates labor relationships with a certainemployee prior to the maturity of their labor contract. The Company shall recognize the employee remunerationliabilities incurred from termination benefits and include them into the current profits and losses. This occurs eitherwhen the Company cannot unilaterally withdraw the termination benefits provided by the plan on the termination of thelabor relationship or dismissal proposal, or when the Company recognizes the costs or expenses related to restructuringthe payment of termination benefits―whichever occurs earlier. The compensations paid exceeding one year will bediscounted then included in the current profits or losses.
(4) Accounting treatment method of other long-term employee benefits
Other long-term benefits mainly include long-term incentive plans and long-term benefits. The Company conductsaccounting treatment according to relevant provisions of the defined contribution plans.
25. Provisions
When obligations relating to contingencies such as external guarantee, pending litigation or arbitration, productquality assurance, layoff plans, loss contracts, restructuring obligations, environmental pollution control, commitments,and disposal obligation of fixed assets also meet the following conditions, the company recognizes it as a liability: the
obligation is currently being undertaken by the company; there is a high possibility that the fulfillment of the obligationwill result in the outflow of economic benefits from the enterprise; the amount of the obligation can be reliablymeasured.Provisions are initially measured according to the best estimate of the expenditure required to settle the presentobligation, taking into account factors relating to contingencies such as risks, uncertainties and the time value of money.Where the time value of money has a significant impact, the best estimate shall be ascertained after discounting thefuture relevant cash outflow. The book value of provisions is reviewed at the balance sheet date and adjusted to reflectthe current best estimate if there is any change.
For possible obligations arising from past transactions or events whose existence depends on whether one or moreuncertain future events occur; or for present obligations formed by past transactions or events, where the fulfillment ofthe obligation is not likely to cause an outflow of economic benefits from the Company, or the amount of the obligationcannot be reliably measured, the Company will disclose these possible or present obligations as contingent liabilities.
26. Share-based payment
Share-based payment refers to transactions in which equity instruments are granted or liabilities are incurred basedon equity instruments in order to obtain services provided by the employees or other parties. Share-based payments aredivided into equity-settled and cash-settled share-based payments.
Equity-settled share-based payments made in exchange for the service of employees are measured at the fair valueon the date at which the equity instrument is granted to employees. Where the right may only be exercised if the serviceis completed within the waiting period, or if specified performance conditions are met, the fair value shall be includedin relevant costs or expenses using the straight-line method and capital surplus shall be increased accordingly, based onthe best estimate of the number of vested equity instruments within the waiting period.
Cash-settled share-based payments shall be measured at the fair value of liabilities, and recognized on the basis ofshare options or other equity instruments undertaken by the Company. If excisable immediately after the grant, the fairvalue of the liabilities assumed shall be included in the relevant costs or expenses on the grant date, and the liabilitiesshall be increased accordingly. If it is necessary to complete the services within the waiting period or meet the specifiedperformance conditions before the right is excisable, on each balance sheet date of the waiting period, the servicesacquired in the current period shall be included in the costs or expenses based on the best estimation of the excisableright, and the liabilities shall be adjusted accordingly based on the fair values of the liabilities assumed by the Company.
On each balance sheet date and settlement date prior to the settlement of relevant liabilities, the fair value of theliabilities will be re-measured, with any changes recorded in the profits and losses at the current period.
27. Income
Accounting policies used for the recognition and measurement of income
The operating income of the Company is mainly the income generated from the sale of goods.
The Company recognizes the income upon fulfillment of its performance obligations within the contract, that is,when the client obtains control of the relevant goods or services.
If there are two or more performance obligations in the contract, at the beginning of the contract the Company willallocate the transaction price to each separate performance obligation according to the relative proportion of thestand-alone selling price of the goods or services promised by each performance obligation. The income shall be
measured according to the transaction price allocated to each separate performance obligation.The transaction price refers to the amount of consideration that the Company expects to collect for transfer ofgoods or services to the client, excluding the amount collected by third parties. The transaction price recognized by theCompany shall not exceed the amount of recognized accumulated income, which is not likely to be significantlyreversed once the relevant uncertainty is eliminated. The expected amount to be returned to the client will not beincluded into the transaction price as a liability. If there is significant financing in the contract, the Company shalldetermine the transaction price according to the amount payable in cash when the client obtains control of the goods orservices. The difference between the transaction price and the contract consideration shall be amortized by the effectiveinterest method during the contract period. On the contract start date, if the Company estimates that the time betweenthe client's acquisition of control over goods or services and the payment of the price by the client will not exceed oneyear, the significant financing in the contract shall not be considered.The performance obligations are to be fulfilled within a specified period once the Company meets one of thefollowing conditions; otherwise, the Company is to fulfill the performance obligations at a specified time point:
The client obtains and consumes the economic benefits while the Company is fulfilling the performanceobligations;The client can control goods or services still under construction while the Company is still in the process offulfilling the performance obligations.The goods generated while the Company is in the process of performing the contract are indispensable, and theCompany has the right to collect partial payments for the cumulative performance obligations that have beenfulfilled so far within the contract period.If the performance obligations are performed within the specified period, the Company will recognize the incomewithin this period in accordance with the progress of the contract’s performance. If the performance progress cannot bereasonably determined and the costs incurred by the Company are expected to be compensated, the revenue will beascertained according to the costs incurred, until the performance progress can be reasonably determined.If the performance obligations are performed at the specified time point, the Company will recognize the incomeat the time when the client obtains control over the relevant goods or services. In judging whether the client hasobtained control over goods or services, the Company shall consider the following signs:
The Company has the current right to collect payment for the goods or services.The Company has transferred legal ownership of the goods to the client.The Company has transferred physical possession of the goods to the client.The Company has transferred the main risks and rewards of ownership of the goods to the client.The client has accepted the goods or services.The Company’s income recognition methods:
The agency company method: According to the Sales Commission Contract signed between the Company and theregional agency company, the Company recognizes the income after receiving the commission sales list or summary ofsales lists from the commission sales company;E-commerce: After the client places an order, the Company will deliver the goods and collect the payment forgoods. The Company will recognize the income according to the time when the client confirms the receipt and the orderis completed (when the client confirms the receipt on the online platform or automatically confirms the receipt after 7days); b. The platform is responsible for the delivery and collection of payment, and the Company settles and
recognizes the income according to the sales list provided by the platform;TV shopping: The company is informed to deliver goods according to the client's order, and the Companyrecognizes the income according to the sales list provided by the TV shopping platform;
Project type: Delivery is executed in accordance with the client's order, and the Company recognizes the incomeaccording to the receipt after the client receives the goods;Export income from customs declaration: The income is recognized according to the export date of the customsdeclaration
28. Government grants
Government grants of the Company include fiscal appropriation. Government grants relating to assets refer togovernment grants obtained by the Company for the purpose of purchase, construction of long-term assets or thepurpose of forming the assets in other ways; income-related government grants refer to those other than asset-relatedgrants. In case the purpose of a grant is not expressly stipulated in the government document, the Company willcategorize the grant according to these above principles. If it is difficult to categorize the grant, it will be categorized asthe income-related government grant.
If a government grant is a monetary asset, it will be measured at the amount received; for the grant appropriatedaccording to the fixed quota or for the grant where there is concrete evidence showing that the Company is qualified toreceive governmental financial support and will be able to receive the support by the end of the accounting period, thegrant will be measured at the receivable; if the government grant is a non-monetary asset, it will be measured at the fairvalue, or measured at its nominal amount (RMB 1) if the fair value cannot be obtained reliably.
If a government grant relating to assets is recognized as deferred income, such grant is recognized in the currentprofit or loss based on equal division within the service life of the relevant asset.
If the relevant asset has been sold, transferred, retired or damaged before the end of the service life, the balance ofthe relevant deferred income that has not been allocated will be transferred into the current profit and loss of assetdisposal.
Government grants relating to income that compensate future costs, expenses or losses arerecognized as deferredincome, and recognized in profit or loss in reporting the related costs, expenses or losses. The government grantsrelating to the ordinary activities are included in other income or deducted against relevant costs and expensesaccording to the nature of the accounting event, otherwise, they are included in non-operating income.
If the Company obtains the subsidized loan as a result of preferential financial policy, there will be two situations:
the Ministry of Finance appropriates the interest subsidy to the lending bank, or the Ministry of Finance directlyappropriates the subsidy to the Company, and the accounting treatment for each of these situations is as follows:
(1) Where the Ministry of Finance appropriates the subsidy to the lending bank, and the bank provides theCompany with the loan at a discounted interest rate, the Company will use the actual amount of loan received as thebook value of the loan, and calculate the relevant borrowing costs based on the principal of the loan and the interestrate.
(2) Where the Ministry of Finance directly appropriate the interest subsidy to the Company, the Company willdeduct the corresponding interest subsidy against the borrowing costs.
Where the governmental grants recognized by the Company need to be returned, the accounting treatment will bedone as follows in the period they are returned:
1) Where the book value of relevant assets is deducted at the time of the initial recognition, the book value of assetswill be adjusted.
2) Where there is any deferred income concerned, the book balance of the deferred income will be deducted, but theexcessive part will be included in the current profit or loss.
3) For other circumstances, the government grants will be directly included in the current profit or loss.
29. Deferred income tax asset/deferred income tax liability
Deferred income tax asset and deferred tax liability of the Company are calculated and recognized based on thedifferences (temporary differences) between the tax base and the carrying amount of an asset or liability. For thedeductible loss and tax credits that can be deducted annually in the subsequent years according to tax laws, thecorresponding deferred income tax assets are recognized. Where the temporary differences arise from the initialrecognition of goodwill, the corresponding deferred income tax liabilities are not recognized. No deferred tax asset ordeferred tax liability is recognized where the temporary differences arising from the initial recognition of assets orliabilities in a transaction that is not a business combination affect neither accounting profit nor taxable profit (ordeductible loss). On the balance sheet date, the deferred income tax asset and liability are measured at the applicable taxrates during the period when the asset is realized or the liability is settled as expected.
The Company recognizes the deferred income tax asset to the extent that it is probable that the taxable income willbe available against which the deductible temporary differences, deductible losses and tax credits can be deducted.
30. Lease
A lease that transfers in substance all the risks and rewards incident to ownership of an asset is classified as afinance lease by the Company. A lease other than financial lease is an operating lease. The leases of the Company aremainly operating leases.
Lease payments and income under an operating lease are recognized on a straight-line basis over the lease term,and either included in the cost of the related asset or charged to profit or loss for the period.
31. Significant accounting policy and accounting estimate changes
(1) Significant accounting policy changes
√ Applicable □ Not Applicable
Page 84 of 141Contents and reasons for accounting policies changes
| Contents and reasons for accounting policies changes | Approval procedure | Remarks |
| The Ministry of Finance issued the revised Chinese Accounting Standards No. 14- Revenue (CK[2017] No. 22) (hereinafter referred to as CAS 14) on July 5, 2017, requiring enterprises listed at home and abroad at the same time and enterprises listed abroad that prepare financial statements according to the international financial reporting standards or CAS to implement CAS 14 as of January 1, 2018, and other enterprises listed at home to implement CAS 14 as of January 1, 2020. | Approved at the 2nd meeting of the 5th Board of Directors | See Notes for details |
Note:
According to the requirement relating to the transition from the old to the new CAS 14, the Company hasimplemented the new standards from January 1, 2020. The new standards stipulate that the unearned revenue related tothe performance obligation will be reclassified as the contract liability after the first application of the new CAS 14, andthe comparatives will not be adjusted. See Notes to the Financial Statements or the comparatives presented pursuant tothe CAS 14 at the beginning of the period;
(2) Significant accounting estimate changes
□ Applicable √ Not Applicable
(3) Relevant financial statement items at the beginning of 2020 when the new CAS 14 and the adjustmentsstipulated in the new CAS 21-Lease apply for the first time
ApplicableShould the balance sheet items be adjusted at the beginning of the year?
√ Yes □ No
Consolidated Balance Sheet
In RMB
Page 85 of 141Item
| Item | December 31, 2019 | January 1, 2020 | Adjusted figure |
| Current assets: | |||
| Unearned revenue | 1,092,261,332.25 | 0.00 | -1,092,261,332.25 |
| Contract liabilities | 1,092,261,332.25 | 1,092,261,332.25 |
Notes to adjustmentBalance Sheet of the Parent Company
In RMB
| Item | December 31, 2019 | January 1, 2020 | Adjusted figure |
| Unearned revenue | 983,128,543.51 | -983,128,543.51 | |
| Contract liabilities | 983,128,543.51 | 983,128,543.51 |
VI. Taxation
1. Main tax categories and tax rates
| Category | Tax base | Tax rate |
| Added-value tax | Income from sales of goods | 13% |
| Income from provision of technical services | 6% | |
| Rental income | 5% |
Page 86 of 141City maintenance and construction tax
| City maintenance and construction tax | Turnover tax paid actually | 7% |
| Education surcharge | Turnover tax paid actually | 3% |
| Local education surcharge | Turnover tax paid actually | 2% |
| House tax | 70% of the original value of the house | 1.2% |
| Rental income | 12% | |
| Land use tax | Total land area | RMB 5~10/m2 |
| Corporate income tax | Taxable income | 15%、25% |
2. Preferential tax policy
The Company obtained the Certificate of High-Tech Enterprise (Certificate No.: GR201733000884) jointly issuedby Zhejiang Provincial Department of Science and Technology, Zhejiang Provincial Department of Finance, ZhejiangProvincial Tax Service, State Taxation Administration, and Local Taxation Bureau of Zhejiang Province on November13, 2017. The certificate is valid for 3 years. According to the relevant provisions, after being identified as a high-techenterprise, the Company will enjoy the relevant preferential policies of the state on high-tech enterprises for threeconsecutive years (i.e., the Company is entitled to the preferential income tax policy from January 1, 2017 to December31, 2019), and the income tax shall be levied at the rate of 15%.According to the Notice on Managing the Application for the Hi-tech Enterprise Certification in 2020 issued bythe Leading Group on Hi-Tech Enterprise Accreditation in Zhejiang Province, the Company will take the applicationseriously in 2020; according to the Announcement of the State Taxation Administration on the Implementation ofPreferential Income Tax Policy for Hi-tech Enterprises (Announcement 2017 No. 24 of the State TaxationAdministration), before the recognition, the Company shall pay the income tax at the rate of 15% in 2020, when theCertificate will expire.
The subsidiary of the Company, Shengzhou Kinde Intelligent Kitchen Appliance Co., Ltd., obtained the Certificateof High-tech Enterprise (Certificate No.: GR201933002261) jointly issued by Zhejiang Provincial Department ofScience and Technology, Zhejiang Provincial Department of Finance, and Zhejiang Provincial Tax Service, StateTaxation Administration on December 4, 2019. After the recognition, it will enjoy the preferential tax policy of the stateon high-tech enterprises for three consecutive years (i.e., it is entitled to the preferential income tax policy from January1, 2019 to December 31, 2021), and its income tax shall be levied at the tax rate of 15%.
VII. Notes to items in the consolidated financial statements
1. Cash and cash equivalents
In RMB
| Item | Ending balance | Beginning balance |
Page 87 of 141Cash in hand
| Cash in hand | 353,643.65 | 218,775.77 |
| Deposit in bank | 4,315,601,855.60 | 4,029,077,489.73 |
| Other cash and cash equivalents | 35,340,844.54 | 24,825,460.73 |
| Total | 4,351,296,343.79 | 4,054,121,726.23 |
Note: The other cash and cash equivalents at the end of the accounting period are RMB 35,340,844.54, includingthe L/C margin of RMB 33,090,374.38, and the banker’s acceptance margin of RMB 2,250,470.16, the use of which areboth limited.
2. Financial assets held for trading
In RMB
| Item | Ending balance | Beginning balance |
| Financial assets measured at fair value through profit or loss | 925,000,000.00 | 1,360,000,000.00 |
| Including: financial products | 925,000,000.00 | 1,360,000,000.00 |
| Total | 925,000,000.00 | 1,360,000,000.00 |
3. Notes receivable
(1) Classified presentation of notes receivable
In RMB
| Item | Ending balance | Beginning balance |
| Banker’s acceptance | 725,726,566.09 | 359,876,143.64 |
| Trade acceptance | 846,184,704.92 | 626,817,005.76 |
| Total | 1,571,911,271.01 | 986,693,149.40 |
In RMB
| Type | Ending balance | Beginning balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage of provision (%) | Amount | Percentage of provision | Amount | Percentage of provision (%) | Amount | Percentage of provision | |||
| Including: | ||||||||||
| Notes receivable with a collective bad debt | 1,616,447,308.11 | 100.00% | 44,536,037.10 | 2.76% | 1,571,911,271.01 | 1,019,683,518.12 | 100.00% | 32,990,368.72 | 3.24% | 986,693,149.40 |
Page 88 of 141provision
| provision | ||||||||||
| Including: | ||||||||||
| Banker’s acceptance | 725,726,566.09 | 44.90% | 0.00 | 0.00% | 725,726,566.09 | 359,876,143.64 | 35.29% | 0.00 | 0.00% | 359,876,143.64 |
| Trade acceptance | 890,720,742.02 | 55.10% | 44,536,037.10 | 5.00% | 846,184,704.92 | 659,807,374.48 | 64.71% | 32,990,368.72 | 5.00% | 626,817,005.76 |
| Total | 1,616,447,308.11 | 100.00% | 44,536,037.10 | 2.76% | 1,571,911,271.01 | 1,019,683,518.12 | 100.00% | 32,990,368.72 | 3.24% | 986,693,149.40 |
Collective bad debt provision:
In RMB
| Name | Ending balance | ||
| Book balance | Bad debt provision | Percentage of provision | |
| A group of trade acceptances | 890,720,742.02 | 44,536,037.10 | 5.00% |
| Total | 890,720,742.02 | 44,536,037.10 | -- |
(2) Bad debt provision, and its recovery or reversal in the current period
Provision for bad debts in the current period:
In RMB
| Type | Beginning balance | Amount of change in the current period | Ending balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Trade acceptance | 32,990,368.72 | 11,545,668.38 | 0.00 | 0.00 | 44,536,037.10 | |
| Total | 32,990,368.72 | 11,545,668.38 | 0.00 | 0.00 | 44,536,037.10 | |
In RMB
4. Accounts receivable
(1) Classified disclosure of accounts receivable
In RMB
| Type | Ending balance | Beginning balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage of provisi | Amount | Percentage of provisi | Amount | Percentage of provisi | Amount | Percentage of provisi | |||
Page 89 of 141on (%)
| on (%) | on | on (%) | on | |||||||
| Accounts receivable with individual bad debt provisions | 4,216,329.97 | 0.51% | 4,216,329.97 | 100.00% | 0.00 | 4,216,329.97 | 0.55% | 4,216,329.97 | 100.00% | 0.00 |
| Including: | ||||||||||
| Accounts receivable with a collective bad debt provision | 819,173,671.61 | 99.49% | 46,281,815.98 | 5.65% | 772,891,855.63 | 768,561,756.12 | 99.45% | 42,930,854.84 | 5.59% | 725,630,901.28 |
| Including: | ||||||||||
| Total | 823,390,001.58 | 100.00% | 50,498,145.95 | 772,891,855.63 | 772,778,086.09 | 100.00% | 47,147,184.81 | 725,630,901.28 |
Individual bad debt provision: for each of the accounts receivable with significant credit risks, their bad debts are provided forindividually.
In RMB
| Name | Ending balance | |||
| Book balance | Bad debt provision | Percentage of provision | Reason for provision | |
| Accounts receivable that are small respectively whose bad debts are provided for individually | 4,216,329.97 | 4,216,329.97 | 100.00% | Expected to be irrecoverable |
| Total | 4,216,329.97 | 4,216,329.97 | -- | -- |
Collective bad debt provision: for multiple accounts receivable grouped by expected credit loss based on their age characteristics,their bad debts are provided for collectively.
In RMB
| Name | Ending balance | ||
| Book balance | Bad debt provision | Percentage of provision | |
| Within 1 year | 778,613,188.30 | 38,930,659.41 | 5.00% |
| 1-2 years | 30,833,566.51 | 3,083,356.65 | 10.00% |
| 2-3 years | 5,761,492.27 | 1,152,298.46 | 20.00% |
| 3-4 years | 1,316,179.41 | 658,089.71 | 50.00% |
| 4-5 years | 959,166.80 | 767,333.43 | 80.00% |
| Over 5 years | 1,690,078.32 | 1,690,078.32 | 100.00% |
Page 90 of 141Total
| Total | 819,173,671.61 | 46,281,815.98 | -- |
Disclosed based on the age of accounts receivable
In RMB
| Age | Ending balance |
| Within 1 year (including 1 year) | 778,613,188.30 |
| 1-2 years | 30,833,566.51 |
| 2-3 years | 5,761,492.27 |
| More than 3 years | 8,181,754.50 |
| 3-4 years | 1,316,179.41 |
| 4-5 years | 959,166.80 |
| More than 5 years | 5,906,408.29 |
| Total | 823,390,001.58 |
(2) Bad debt provision, and its recovery or reversal in the current period
Bad debt provision in the current period:
In RMB
| Type | Beginning balance | Amount of change in the current period | Ending balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Bad debt provision for accounts receivable | 47,147,184.81 | 3,367,587.99 | 0.00 | 16,626.85 | 50,498,145.95 | |
| Total | 47,147,184.81 | 3,367,587.99 | 0.00 | 16,626.85 | 50,498,145.95 | |
(3) Accounts receivable actually written off in the current period
In RMB
| Item | Written-off amount |
| Accounts receivable | 16,626.85 |
(4) Top five debtors with the biggest ending balances of accounts receivable:
In RMB
| Unit | Ending balance of accounts receivable | Proportion in the total ending balance of accounts receivable | Ending balance of bad debt provision |
Page 91 of 141Unit 1
| Unit 1 | 119,348,868.75 | 14.49% | 5,967,443.44 |
| Unit 2 | 99,552,093.92 | 12.09% | 4,977,604.70 |
| Unit 3 | 25,018,729.83 | 3.04% | 1,250,936.49 |
| Unit 4 | 19,014,384.28 | 2.31% | 950,719.21 |
| Unit 5 | 16,460,299.51 | 2.00% | 823,014.98 |
| Total | 279,394,376.29 | 33.93% |
5. Accounts receivable financing
In RMB
| Item | Ending balance | Beginning balance |
| Banker’s acceptance | 0.00 | 408,972,104.07 |
| Total | 408,972,104.07 |
Note: The Company discounts and endorses the banker’s acceptance according to its daily operation andmanagement needs. Based on the purpose of the acceptance of bill (including for obtaining of contract cash flow andsale), its management presents the balance of the above acceptance as an item of accounts receivable financing.
6. Advance payments
(1) Advance payments presented by age
In RMB
| Age | Ending balance | Beginning balance | ||
| Amount | Percentage (%) | Amount | Percentage (%) | |
| Within 1 year | 81,003,754.36 | 99.49% | 50,109,021.83 | 99.99% |
| 1-2 years | 418,159.49 | 0.51% | 4,528.01 | 0.01% |
| 2-3 years | 0.00 | 0.00% | 0.00 | 0.00% |
| Total | 81,421,913.85 | -- | 50,113,549.84 | -- |
(2) Top five payers with the biggest ending balances of advance payments
The advance payments balances of the top five payers by the end of the current period totaled RMB 48,272,364.08,accounting for 59.29% of the total.
7. Other receivables
In RMB
| Item | Ending balance | Beginning balance |
Page 92 of 141Dividend receivable
| Dividend receivable | 14,295,039.38 | |
| Other receivables | 62,642,970.58 | 96,604,409.27 |
| Total | 62,642,970.58 | 110,899,448.65 |
(1) Classification of dividends receivable
In RMB
| Project (or investee) | Ending balance | Beginning balance |
| Suzhou Industrial Park Ruican Investment Enterprise (Limited Partnership) | 0.00 | 14,295,039.38 |
| Total | 14,295,039.38 |
(2) Other receivables
1) Classification of other receivables by nature
In RMB
| Nature of receivable | Book balance at the end of the period | Initial book balance at the beginning of the period |
| Collections by a third party | 19,688,144.55 | 63,604,415.88 |
| Security/guarantee deposits | 39,360,440.06 | 37,167,812.49 |
| Petty cash | 10,158,865.54 | 3,137,976.93 |
| Withholdings | 4,507,395.40 | 2,502,348.12 |
| Others | 2,847,681.34 | 512,898.94 |
| Total | 76,562,526.89 | 106,925,452.36 |
2) Bad debt provision
In RMB
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| Expected credit loss over the next 12 months | Expected credit loss over the entire duration (without credit impairment) | Expected credit loss over the entire duration (with credit impairment) | ||
| Balance on January 1, 2020 | 10,321,043.09 | 10,321,043.09 | ||
| Balance on January 1, 2020 in the current | —— | —— | —— | —— |
Page 93 of 141period
| period | ||||
| Provision in the current period | 3,598,513.22 | 3,598,513.22 | ||
| Balance on June 30, 2020 | 13,919,556.31 | 13,919,556.31 |
Disclosed based on the age of accounts receivable
In RMB
| Age | Ending balance |
| Within 1 year (including 1 year) | 45,591,840.60 |
| 1-2 years | 9,333,044.59 |
| 2-3 years | 3,591,580.66 |
| More than 3 years | 18,046,061.04 |
| 3-4 years | 15,832,946.70 |
| 4-5 years | 691,219.96 |
| More than 5 years | 1,521,894.38 |
| Total | 76,562,526.89 |
3) Bad debt provision, and its recovery or reversal in the current period
Bad debt provision in the current period:
In RMB
| Type | Beginning balance | Amount of change in the current period | Ending balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Bad debt provision for other receivables | 10,321,043.09 | 3,598,513.22 | 13,919,556.31 | |||
| Total | 10,321,043.09 | 3,598,513.22 | 13,919,556.31 | |||
4) Top five debtors with the biggest ending balances of other receivables
In RMB
| Unit | Nature of receivable | Ending balance | Age | Proportion in the total ending balance of other accounts receivable | Ending balance of bad debt provision |
Page 94 of 141Unit 1
| Unit 1 | Security/guarantee deposits | 14,778,000.00 | 3-4 years | 19.30% | 7,389,000.00 |
| Unit 2 | Collections by a third party | 10,028,874.85 | Within 1 year | 13.10% | 501,443.74 |
| Unit 3 | Collections by a third party | 3,674,304.44 | Within 1 year | 4.80% | 183,715.22 |
| Unit 4 | Security/guarantee deposits | 3,000,000.00 | 1-2 years | 3.92% | 300,000.00 |
| Unit 5 | Withholdings | 2,079,271.91 | Within 1 year | 2.72% | 103,963.60 |
| Total | -- | 33,560,451.20 | -- | 43.84% | 8,478,122.56 |
8. Inventory
(1) Classification of inventories
In RMB
| Item | Ending balance | Beginning balance | ||||
| Book balance | Provision for obsolete inventory or for impairment of the cost of contract performance | Book value | Book balance | Provision for obsolete inventory or for impairment of the cost of contract performance | Book value | |
| Raw materials | 74,858,348.71 | 0.00 | 74,858,348.71 | 65,865,050.18 | 0.00 | 65,865,050.18 |
| Products in process | 49,896,392.26 | 0.00 | 49,896,392.26 | 48,635,094.61 | 0.00 | 48,635,094.61 |
| Merchandise inventory | 346,108,628.31 | 9,321,963.35 | 336,786,664.96 | 333,027,454.91 | 9,321,963.35 | 323,705,491.56 |
| Goods shipped in transit | 791,777,487.97 | 0.00 | 791,777,487.97 | 882,209,547.51 | 0.00 | 882,209,547.51 |
| Low cost consumables and packing materials | 16,563,851.45 | 0.00 | 16,563,851.45 | 18,761,741.34 | 0.00 | 18,761,741.34 |
| Total | 1,279,204,708.70 | 9,321,963.35 | 1,269,882,745.35 | 1,348,498,888.55 | 9,321,963.35 | 1,339,176,925.20 |
(2) Provision for obsolete inventory or for impairment of the cost of contract performance
In RMB
Page 95 of 141Item
| Item | Beginning balance | Increased amount in the current period | Decreased amount in the current period | Ending balance | ||
| Provision | Others | Reversals or write-off | Others | |||
| Merchandise inventory | 9,321,963.35 | 9,321,963.35 | ||||
| Total | 9,321,963.35 | 9,321,963.35 | ||||
9. Other current assets
In RMB
| Item | Ending balance | Beginning balance |
| Prepaid tax | 1,854,399.98 | 13,802,530.76 |
| Input tax to be deducted | 485,431.78 | 2,386,707.05 |
| Total | 2,339,831.76 | 16,189,237.81 |
10. Long-term equity investment
In RMB
| Investee | Beginning balance (book value) | Increase/decrease in the current period | Ending balance (book value) | Ending balance of impairment provision | |||||||
| Additional investment | Negative investment | Investment profit or loss recognized using the equity method | Adjustment of other comprehensive income | Other changes in equity | Cash dividends or profits declared and distributed | Provision for impairment | Others | ||||
| I. Joint venture | |||||||||||
| De Dietrich Trade (Shanghai) Co., | 4,168,338.79 | 0.00 | 0.00 | -2,239,220.46 | 0.00 | 0.00 | 0.00 | 0.00 | 1,929,118.33 | 1,929,118.33 | |
Page 96 of 141Ltd.
| Ltd. | |||||||||||
| Sub-total | 4,168,338.79 | 0.00 | 0.00 | -2,239,220.46 | 0.00 | 0.00 | 0.00 | 0.00 | 1,929,118.33 | 1,929,118.33 | |
| II. Associated companies | |||||||||||
| Total | 4,168,338.79 | 0.00 | 0.00 | -2,239,220.46 | 0.00 | 0.00 | 0.00 | 0.00 | 1,929,118.33 | 1,929,118.33 | |
11. Other equity instrument investments
In RMB
| Item | Ending balance | Beginning balance |
| Suzhou Industrial Park Ruican Investment Enterprise (Limited Partnership) | 100,000,000.00 | 100,000,000.00 |
| Shanghai MXCHIP Information Technology Co., Ltd. | 2,116,023.22 | 2,116,023.22 |
| Total | 102,116,023.22 | 102,116,023.22 |
12. Investment real estate
(1) Investment real estate under the cost measurement mode
√ Applicable □ Not Applicable
In RMB
| Item | Buildings | Total |
| I. Original book value | ||
| 1. Beginning balance | 189,197.82 | 189,197.82 |
| 2. Increased amount in the current period | 0.00 | |
| 3. Decreased amount in the current period | 0.00 | |
| 4. Ending balance | 189,197.82 | 189,197.82 |
| II Accumulated depreciation and amortization | ||
| 1. Beginning balance | 76,609.48 | 76,609.48 |
| 2. Increased amount in the current period | 4,493.40 | 4,493.40 |
| (1) Accrual or amortization | 4,493.40 | 4,493.40 |
| 3. Decreased amount in the current period | ||
| 4. Ending balance | 81,102.88 | 81,102.88 |
| III. Impairment provision | ||
| IV. Book value |
Page 97 of 141
1. Ending book value
| 1. Ending book value | 108,094.94 | 108,094.94 |
| 2. Beginning book value | 112,588.34 | 112,588.34 |
13. Fixed assets
In RMB
| Item | Ending balance | Beginning balance |
| Fixed assets | 799,578,416.63 | 826,234,929.97 |
| Total | 799,578,416.63 | 826,234,929.97 |
(1) Fixed assets
In RMB
| Item | Houses and buildings | Machine and equipment | Transportation equipment | Other equipment | Total |
| I. Original book value | |||||
| 1. Beginning balance | 680,992,814.23 | 558,412,953.51 | 19,702,302.79 | 72,532,134.33 | 1,331,640,204.86 |
| 2. Increased amount in the current period | 585,076.69 | 19,053,959.69 | 215,716.81 | 1,798,349.28 | 21,653,102.47 |
| (1) Purchase | 585,076.69 | 13,812,471.96 | 0.00 | 1,372,546.62 | 15,770,095.27 |
| (2) Transfer from construction in progress | 0.00 | 5,241,487.73 | 215,716.81 | 425,802.66 | 5,883,007.20 |
| 3. Decreased amount in the current period | 0.00 | 765,795.60 | 239,346.00 | 20,239.05 | 1,025,380.65 |
| (1) Disposal or retirement | 0.00 | 0.00 | 239,346.00 | 20,239.05 | 259,585.05 |
| 4. Ending balance | 681,577,890.92 | 576,701,117.60 | 19,678,673.60 | 74,310,244.56 | 1,352,267,926.68 |
| II. Accumulated depreciation | |||||
| 1. Beginning balance | 209,315,097.57 | 239,808,508.76 | 11,262,138.92 | 45,019,529.64 | 505,405,274.89 |
| 2. Increased amount in the current period | 15,703,959.67 | 26,369,625.24 | 1,426,868.64 | 4,037,412.32 | 47,537,865.87 |
| (1) Provision | 15,703,959.67 | 26,369,625.24 | 1,426,868.64 | 4,037,412.32 | 47,537,865.87 |
| 3. Decreased amount in the current period | 0.00 | 0.00 | 237,430.16 | 16,200.55 | 253,630.71 |
| (1) Disposal or retirement | 0.00 | 0.00 | 237,430.16 | 16,200.55 | 253,630.71 |
| 4. Ending balance | 225,019,057.24 | 266,178,134.00 | 12,451,577.40 | 49,040,741.41 | 552,689,510.05 |
Page 98 of 141III. Impairment provision
| III. Impairment provision | |||||
| 1. Beginning balance | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Increased amount in the current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decreased amount in the current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Ending balance | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| IV. Book value | |||||
| 1. Ending book value | 456,558,833.68 | 310,522,983.60 | 7,227,096.20 | 25,269,503.15 | 799,578,416.63 |
| 2. Beginning book value | 471,677,716.66 | 318,604,444.75 | 8,440,163.87 | 27,512,604.69 | 826,234,929.97 |
14. Construction in process
In RMB
| Item | Ending balance | Beginning balance |
| Construction in progress | 333,519,454.24 | 272,211,720.62 |
| Total | 333,519,454.24 | 272,211,720.62 |
(1) Construction in progress
In RMB
| Item | Ending balance | Beginning balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Construction of Maoshan Intelligent Manufacturing Base infrastructure | 317,050,589.91 | 317,050,589.91 | 259,945,664.42 | 0.00 | 259,945,664.42 | |
| Construction of the intelligent integrated kitchen industrialization base | 9,359,922.85 | 9,359,922.85 | 592,358.73 | 0.00 | 592,358.73 | |
| Management software | 3,574,118.78 | 3,574,118.78 | 3,574,118.78 | 0.00 | 3,574,118.78 | |
Page 99 of 141Project of theThirdProductionDepartment
| Project of the Third Production Department | 0.00 | 0.00 | 2,015,449.74 | 0.00 | 2,015,449.74 | |
| Cutting machine | 1,435,896.56 | 1,435,896.56 | 1,435,896.56 | 0.00 | 1,435,896.56 | |
| Project of the Second Production Department | 0.00 | 0.00 | 1,206,896.55 | 0.00 | 1,206,896.55 | |
| Glue dispenser | 713,675.21 | 713,675.21 | 713,675.21 | 0.00 | 713,675.21 | |
| Other smaller projects | 1,385,250.93 | 1,385,250.93 | 2,727,660.63 | 0.00 | 2,727,660.63 | |
| Total | 333,519,454.24 | 333,519,454.24 | 272,211,720.62 | 272,211,720.62 |
(2) Current changes in major projects under construction
In RMB
| Project | Budget | Beginning balance | Increased amount in the current period | Amount transferred into fixed assets in the current period | Other decreases in the current period | Ending balance | Proportion of accumulative construction investment in the budget | Project progress | Accumulated amount of capitalized interest | Including: amount of capitalized interest in the current period | Interest capitalization rate in the current period | Sources of funding |
| Construction of Maoshan Intelligent Manufacturing Base infrastructure | 549,550,000.00 | 259,945,664.42 | 57,104,925.49 | 0.00 | 0.00 | 317,050,589.91 | 57.69% | 57.69 | 0.00 | 0.00 | 0.00% | Other |
| Constr | 180,00 | 592,35 | 8,767, | 0.00 | 0.00 | 9,359, | 5.20% | 5.20 | 0.00 | 0.00 | 0.00% | Other |
Page 100 of 141
uctionof anintelligentintegratedkitchenindustrializationbase
| uction of an intelligent integrated kitchen industrialization base | 0,000.00 | 8.73 | 564.12 | 922.85 | ||||||||
| Management software | 3,574,118.78 | 0.00 | 0.00 | 0.00 | 3,574,118.78 | |||||||
| Project of the Third Production Department | 2,015,449.74 | 0.00 | 2,015,449.74 | 0.00 | 0.00 | |||||||
| Cutting machine | 1,435,896.56 | 0.00 | 0.00 | 0.00 | 1,435,896.56 | |||||||
| Project of the Second Production Department | 1,206,896.55 | 0.00 | 1,206,896.55 | 0.00 | 0.00 | |||||||
| Glue dispenser | 713,675.21 | 0.00 | 0.00 | 0.00 | 713,675.21 | |||||||
| Other smalle | 2,727, | 1,532, | 2,660, | 214,15 | 1,385, |
Page 101 of 141rprojects
| r projects | 660.63 | 410.49 | 660.91 | 9.28 | 250.93 | |||||||
| Total | 729,550,000.00 | 272,211,720.62 | 67,404,900.10 | 5,883,007.20 | 214,159.28 | 333,519,454.24 | -- | -- | -- |
15. Intangible assets
(1) Intangible assets
In RMB
| Item | Land use right | Software | Trademark | Patent | Total |
| I. Original book value | |||||
| 1. Beginning balance | 202,418,904.95 | 46,474,694.36 | 24,624,622.64 | 7,300,000.00 | 280,818,221.95 |
| 2.Increased amount in the current period | 23,237,775.00 | 867,928.69 | 0.00 | 0.00 | 24,105,703.69 |
| (1) Purchase | 23,237,775.00 | 867,928.69 | 0.00 | 0.00 | 24,105,703.69 |
| 3. Decreased amount in the current period | |||||
| 4. Ending balance | 225,656,679.95 | 47,342,623.05 | 24,624,622.64 | 7,300,000.00 | 304,923,925.64 |
| II. Accumulated amortization | |||||
| 1. Beginning balance | 21,274,593.91 | 34,447,626.59 | 3,678,115.56 | 1,684,615.38 | 61,084,951.44 |
| 2.Increased amount in the current period | 2,099,004.82 | 2,891,840.23 | 1,231,231.12 | 561,538.47 | 6,783,614.64 |
| (1) Provision | 2,099,004.82 | 2,891,840.23 | 1,231,231.12 | 561,538.47 | 6,783,614.64 |
| 3. Decreased amount in the current period | 0.00 | ||||
| 4. Ending balance | 23,373,598.73 | 37,339,466.82 | 4,909,346.68 | 2,246,153.85 | 67,868,566.08 |
| III. Impairment provision | |||||
| IV. Book value | |||||
| 1. Ending book value | 202,283,081.22 | 10,003,156.23 | 19,715,275.96 | 5,053,846.15 | 237,055,359.56 |
| 2. Beginning book value | 181,144,311.04 | 12,027,067.77 | 20,946,507.08 | 5,615,384.62 | 219,733,270.51 |
16. Goodwill
(1) Original book value of goodwill
In RMB
Page 102 of 141Name of investee or item that generates
goodwill
| Name of investee or item that generates goodwill | Beginning balance | Increase in the current period | Decrease in the current period | Ending balance | ||
| Generated by business combination | Disposal | |||||
| Shengzhou Kinde Intelligent Kitchen Appliance Co., Ltd. | 80,589,565.84 | 0.00 | 0.00 | 80,589,565.84 | ||
| Total | 80,589,565.84 | 80,589,565.84 | ||||
Shares of RMB 50 million of the original shareholders of Shengzhou Kinde Intelligent Kitchen Appliance Co., Ltd.(hereinafter referred to as "Shengzhou Kinde") were transferred to the Company in 2018, which completed a businesscombination (where the acquired company is not controlled by the same party after the combination) through a capitalincrease of RMB 112.32 million, so as to obtain 51.00% of Shengzhou Kinde's equity. China Alliance Appraisal Co., Ltd.appraised the fair value of Shengzhou Kinde's various identifiable assets and liabilities on June 30, 2018, and issued theZTHPBZ (2018) No. 020645 Valuation Report. The consideration of this business combination was RMB 162,320,000.00.The fair value of Shengzhou Kinde's net identifiable assets was RMB 160,255,753.26, 51 % of which is owned by theCompany. The goodwill value recognized was RMB 80,589,565.84.Procedures and parameters of goodwill impairment test and methods to recognize goodwill impairment loss
The recoverable amount of the group of assets was determined based on the estimated 5-year future cash flowapproved by the management. The cash flow beyond the five-year period was estimated according to a specificlong-term average growth rate and calculated based on the present value of the future cash flow.
Shengzhou Kinde operates independently as the subsidiary owned by the Company after the acquisition and wasconsidered as a combination of groups of assets. The Company engaged Zhonghe Assets Appraisal Co., Ltd. to valuatethe recoverable amounts of Shengzhou Kinde’s groups of assets as of December 31, 2019. In accordance with the Reportof the Valuation of Items of Recoverable Amounts of Groups of Assets of Shengzhou Kinde Intelligent Kitchen ApplianceCo., Ltd. Involved in the Goodwill Impairment Test to be Conducted by Hangzhou Robam Appliances Co., Ltd. (ReportNo.: ZHZBZ (2019) No. BJU3021) issued by Zhonghe Assets Appraisal Co., Ltd., the recoverable amount of ShengzhouKinde’s groups of assets was valuated at RMB 224.43 million and the combination of groups of assets (including thegoodwill) was valuated at RMB 216.4267 million by taking December 31, 2019 as the base date of the assets valuationaccording to the present value of the estimated future cash flow.
The pre-tax discount rate was used for the 2019 impairment test, and was calculated using the post-tax discount rate.The weighted average cost of capital (WACC) model was applied for the selection of the post-tax discount rate. Theestimated discount rate of the goodwill impairment test was determined to be 16.49% according to the market condition.
The gross margin relating to the 2019 impairment test was determined by the average gross margin achieved in theyear immediately before the budget year, and the average gross margin was properly improved based on the expectedefficiency improvement.
Effects of the goodwill impairment testShengzhou Kinde, as a combination of groups of assets, has a recoverable amount larger than its book valuecontaining the goodwill, therefore, no goodwill impairment exists and there is no need for the goodwill impairmentprovision.
17. Long-term deferred expenses
In RMB
Page 103 of 141Item
| Item | Beginning balance | Increased amount in the current period | Amount of amortization in the current period | Other decreases | Ending balance |
| Service fee | 234,663.25 | 67,726.11 | 90,117.79 | 0.00 | 212,271.57 |
| Consulting fee | 187,169.81 | 24,109.59 | 100,545.45 | 0.00 | 110,733.95 |
| Member training fee | 101,362.68 | 0.00 | 44,710.02 | 0.00 | 56,652.66 |
| Advertising expenses | 0.00 | 13,044.16 | 0.00 | 0.00 | 13,044.16 |
| Total | 523,195.74 | 104,879.86 | 235,373.26 | 392,702.34 |
18. Deferred income tax assets / deferred income tax liabilities
(1) Deferred income tax assets before offset
In RMB
| Item | Ending balance | Beginning balance | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Deferred income tax assets before offset recognized based on the provisional estimated expenses | 612,644,677.05 | 91,896,701.55 | 215,006,417.88 | 32,250,962.68 |
| Deferred income tax assets before offset recognized based on the deferred income | 106,869,820.24 | 16,030,473.04 | 114,851,263.30 | 17,227,689.50 |
| Asset impairment provision | 118,466,718.02 | 18,877,884.45 | 99,780,559.97 | 15,877,475.81 |
| Change of the fair value of other equity instrument investments | 17,832,510.78 | 2,674,876.62 | 17,832,510.78 | 2,674,876.62 |
| Unrealized profits of internal transactions | 9,963,262.47 | 2,490,815.62 | 8,075,375.65 | 2,018,843.91 |
| Accrued and unpaid salaries | 0.00 | 0.00 | 5,388,241.47 | 827,267.57 |
Page 104 of 141Total
| Total | 865,776,988.56 | 131,970,751.28 | 460,934,369.05 | 70,877,116.09 |
(2) Deferred income tax liabilities before offset
In RMB
| Item | Ending balance | Beginning balance | ||
| Taxable temporary difference | Deferred income tax liabilities | Taxable temporary difference | Deferred income tax liabilities | |
| Asset appraisal appreciation arising from business combination where the acquired company is not controlled by the same party after the combination | 31,955,478.40 | 4,793,321.76 | 33,942,653.74 | 5,091,398.06 |
| Temporary taxable difference incurred from pre-tax deduction of fixed assets | 4,412,056.07 | 661,808.41 | 4,176,334.57 | 626,450.19 |
| Total | 36,367,534.47 | 5,455,130.17 | 38,118,988.31 | 5,717,848.25 |
(3) Deferred income tax assets or liabilities presented in net amount after offset
In RMB
| Item | Amount of deferred income tax assets offset against deferred income tax liabilities at the end of the period | Ending balance of deferred income tax assets or liabilities after offset | Initial amount of deferred income tax assets offset against deferred income tax liabilities | Beginning balance of deferred income tax assets or liabilities after offset |
| Deferred income tax assets | 131,970,751.28 | 70,877,116.09 | ||
| Deferred income tax liabilities | 5,455,130.17 | 5,717,848.25 |
(4) Presentation of unrecognized deferred income tax assets
In RMB
| Item | Ending balance | Beginning balance |
| Deductible temporary differences | 0.00 | 0.00 |
| Deductible losses | 91,709.58 | 6,459,439.41 |
| Total | 91,709.58 | 6,459,439.41 |
(5) The deductible losses of unrecognized deferred income tax assets will be due in the following years
In RMB
Page 105 of 141
Year
| Year | Amount at the end of the period | Amount at the beginning of the period | Remarks |
| 2020 | 0.00 | 6,367,784.94 | |
| 2021 | 39,785.54 | 39,785.54 | |
| 2022 | 39,552.31 | 39,552.31 | |
| 2023 | 6,714.34 | 6,714.34 | |
| 2024 | 5,602.28 | 5,602.28 | |
| 2025 | 55.11 | 0.00 | |
| Total | 91,709.58 | 6,459,439.41 | -- |
Other remarks:
Note: The relevant deferred income tax assets are unrecognized due to the fact that the pre-tax recovery of the lossDe Dietrich Household Appliances Trading (Shanghai) Co., Ltd. (a subsidiary of the Company) in the following years isextremely uncertain.19 Other non-current assets
In RMB
| Item | Ending balance | Beginning balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Prepayments for equipment purchase and other items | 28,809,208.26 | 28,809,208.26 | 23,558,781.27 | 23,558,781.27 | ||
| Total | 28,809,208.26 | 28,809,208.26 | 23,558,781.27 | 23,558,781.27 | ||
20. Notes payable
In RMB
| Type | Ending balance | Beginning balance |
| Banker's acceptance | 554,767,283.02 | 603,308,648.96 |
| Total | 554,767,283.02 | 603,308,648.96 |
21. Accounts payable
(1) Presentation of accounts payable
In RMB
| Item | Ending balance | Beginning balance |
Page 106 of 141Payment for materials
| Payment for materials | 730,641,561.95 | 880,995,549.70 |
| Payment for expenses | 684,882,250.27 | 465,097,084.50 |
| Payment for construction | 25,079,714.24 | 33,887,108.65 |
| Payment for equipment | 13,054,951.58 | 15,081,542.43 |
| Total | 1,453,658,478.04 | 1,395,061,285.28 |
Note: As of June 30, 2020, the important accounts payable with an age of more than one year totaled RMB 88,985,765.46, mainlyinvolving the outstanding payment for expenses.
22. Contract liabilities
In RMB
| Item | Ending balance | Beginning balance |
| Advances on sales | 989,070,578.98 | 1,092,261,332.25 |
| Total | 989,070,578.98 | 1,092,261,332.25 |
23. Employee benefits payable
(1) Presentation of employee benefits
In RMB
| Item | Beginning balance | Increase in the current period | Decrease in the current period | Ending balance |
| I. Short-term benefits | 116,643,991.68 | 268,390,483.49 | 352,109,533.57 | 32,924,941.60 |
| II. Post employment benefits - defined contribution plan | 5,426,333.35 | 10,130,180.01 | 15,197,732.89 | 358,780.47 |
| III. Termination benefits | 0.00 | 480,580.86 | 480,580.86 | 0.00 |
| Total | 122,070,325.03 | 279,001,244.36 | 367,787,847.32 | 33,283,722.07 |
(2) Presentation of short-term benefits
In RMB
| Item | Beginning balance | Increase in the current period | Decrease in the current period | Ending balance |
| 1. Salaries, bonuses, subsidies and allowances | 112,088,149.01 | 227,361,141.17 | 308,231,142.81 | 31,218,147.37 |
| 2. Employee welfare | 0.00 | 11,308,734.93 | 11,308,734.93 | 0.00 |
Page 107 of 141
3. Social insurance
| 3. Social insurance | 3,930,546.68 | 11,576,114.16 | 14,412,187.07 | 1,094,473.77 |
| Including: medical insurance | 3,388,855.20 | 11,106,325.45 | 13,507,370.33 | 987,810.32 |
| work-related injury insurance | 172,761.56 | 304,395.47 | 467,065.74 | 10,091.29 |
| maternity insurance fee | 368,929.92 | 165,393.24 | 437,751.00 | 96,572.16 |
| 4. Housing funds | 272,101.00 | 12,686,112.28 | 12,771,033.28 | 187,180.00 |
| 5. Labor union and staff education expenses | 353,194.99 | 5,458,380.95 | 5,386,435.48 | 425,140.46 |
| Total | 116,643,991.68 | 268,390,483.49 | 352,109,533.57 | 32,924,941.60 |
(3) Presentation of defined contribution plans
In RMB
| Item | Beginning balance | Increase in the current period | Decrease in the current period | Ending balance |
| 1. Basic pensions | 5,228,962.74 | 9,768,102.39 | 14,663,706.24 | 333,358.89 |
| 2. Unemployment insurance | 197,370.61 | 362,077.62 | 534,026.65 | 25,421.58 |
| Total | 5,426,333.35 | 10,130,180.01 | 15,197,732.89 | 358,780.47 |
24. Taxes payable
In RMB
| Item | Ending balance | Beginning balance |
| Business income tax | 144,032,493.04 | 89,992,149.62 |
| VAT | 69,627,258.47 | 9,811,740.89 |
| Individual income tax | 1,653,849.00 | 1,190,263.26 |
| City maintenance and construction tax | 5,028,571.03 | 769,259.08 |
| Education surcharges | 3,591,836.53 | 549,470.80 |
| Stamp tax | 193,715.30 | 238,931.49 |
| Employment security fund for the disabled | 1,931.32 | 174,840.07 |
| Total | 224,129,654.69 | 102,726,655.21 |
25. Other payables
In RMB
Page 108 of 141Item
| Item | Ending balance | Beginning balance |
| Other payables | 246,029,775.35 | 241,641,864.89 |
| Total | 246,029,775.35 | 241,641,864.89 |
(1) Other payables
1) Other payables presented by nature
In RMB
| Item | Ending balance | Beginning balance |
| Security deposits payable | 236,990,060.35 | 233,004,717.16 |
| Guarantee deposits payable | 5,138,257.48 | 4,995,172.30 |
| Collections by a third party | 3,395,178.94 | 1,486,383.22 |
| Others | 506,278.58 | 2,155,592.21 |
| Total | 246,029,775.35 | 241,641,864.89 |
Note: As of June 30, 2020, the important accounts payable with an age of more than one year totaled RMB208,530,921.03, mainly involving the sales deposits.
26. Deferred income
In RMB
| Item | Beginning balance | Increase in the current period | Decrease in the current period | Ending balance | Cause of formation |
| Government grants | 114,851,263.30 | 17,241,420.00 | 7,981,443.06 | 124,111,240.24 | |
| Total | 114,851,263.30 | 17,241,420.00 | 7,981,443.06 | 124,111,240.24 | -- |
Projects with government grants:
In RMB
| Liability | Beginning balance | Amount included in other income in the current period | Ending balance | Related to assets / income |
| Construction of the kitchen appliances R&D, design and testing center | 11,774,935.49 | 1,182,583.62 | 10,592,351.87 | Related to assets |
| A kitchen appliances R&D, design and testing center | 50,196.40 | 3,812.40 | 46,384.00 | Related to assets |
| Construction of production line with an annual output of 1 million sets of kitchen appliances | 3,426,625.04 | 571,891.98 | 2,854,733.06 | Related to assets |
Page 109 of 141Subsidy for an investment in a production line with anannual output of 150,000 kitchen ventilators
| Subsidy for an investment in a production line with an annual output of 150,000 kitchen ventilators | 147,871.71 | 29,441.40 | 118,430.31 | Related to assets |
| Construction of production line with an annual output of 2.25 million sets of kitchen appliances | 27,478,633.08 | 1,286,890.62 | 26,191,742.46 | Related to assets |
| Construction of the digital workshop with an annual output of 2.25 million sets of kitchen appliances | 232,092.73 | 51,853.02 | 180,239.71 | Related to assets |
| Development of new generation of environmentally-friendly energy-saving kitchen appliances and their production line | 912,326.99 | 95,325.42 | 817,001.57 | Related to assets |
| Recycling-centered renewal project | 543,686.97 | 45,805.08 | 497,881.89 | Related to assets |
| Academician (expert) workstation | 303,134.00 | 23,127.84 | 280,006.16 | Related to assets |
| Construction of digital intelligent workshop for smart home appliances | 741,075.72 | 79,713.36 | 661,362.36 | Related to assets |
| Application of intelligent manufacturing, comprehensive standardization and new modes | 55,323,859.42 | 4,269,752.82 | 51,054,106.60 | Related to assets |
| Construction of production line with an annual output of 1.08 million sets of built-in kitchen appliances | 5,616,825.75 | 341,245.50 | 5,275,580.25 | Related to assets |
| Technological upgrading for manufacturing enterprises | 8,300,000.00 | 0.00 | 8,300,000.00 | Related to assets |
| Construction of an intelligent integrated kitchen industrialization base | 0.00 | 0.00 | 17,241,420.00 | Related to assets |
27. Capital stock
In RMB
| Beginning balance | Increase and decrease of this change (+, -) | Ending balance | |||||
| New shares issued | Bonus shares | Shares converted from capital reserve | Others | Sub-total | |||
| Total number of shares | 949,024,050.00 | 949,024,050.00 | |||||
In RMB
28. Capital reserve
In RMB
| Item | Beginning balance | Increase in the current | Decrease in the current | Ending balance |
Page 110 of 141period
| period | period | |||
| Capital (stock) premium | 401,799,332.67 | 0.00 | 0.00 | 401,799,332.67 |
| Total | 401,799,332.67 | 401,799,332.67 |
29. Other comprehensive incomes
In RMB
| Item | Beginning balance | Amount incurred in the current period | Ending balance | |||||
| Amount incurred before income tax in the current period | Minus: amount included in other comprehensive incomes previously and then transferred into the current profit or loss | Minus: amount included in other comprehensive incomes previously and then transferred into current retained earnings | Minus: income tax expenses | Net income after tax attributable to the parent company | Net income after tax attributable to minority shareholders | |||
| I. Other comprehensive incomes that cannot be reclassified into profit or loss | -15,157,634.16 | -15,157,634.16 | ||||||
| Changes in the fair value of other equity instrument investments | -15,157,634.16 | -15,157,634.16 | ||||||
| Total of other comprehensive incomes | -15,157,634.16 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -15,157,634.16 | |
30. Surplus reserve
In RMB
Page 111 of 141Item
| Item | Beginning balance | Increase in the current period | Decrease in the current period | Ending balance |
| Statutory surplus reserve | 474,516,412.50 | 0.00 | 0.00 | 474,516,412.50 |
| Total | 474,516,412.50 | 0.00 | 0.00 | 474,516,412.50 |
31. Undistributed profit
In RMB
| Item | Current period | Previous period |
| Undistributed profit at the end of previous period before adjustment | 5,054,206,720.45 | 4,223,611,112.65 |
| Undistributed profit at the beginning of the period after adjustment | 5,054,206,720.45 | 4,223,611,112.65 |
| Add: net profit attributable to the owner of the parent company in the current period | 612,317,249.29 | 1,589,814,847.80 |
| Dividends payable for ordinary shares | 474,512,025.00 | 759,219,240.00 |
| Undistributed profit at the end of the period | 5,192,011,944.74 | 5,054,206,720.45 |
32. Operating income and operating cost
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period | ||
| Income | Cost | Income | Cost | |
| Main business | 3,146,865,561.70 | 1,429,892,268.93 | 3,452,212,044.04 | 1,571,078,316.27 |
| Other businesses | 64,306,774.09 | 20,836,307.65 | 75,201,838.92 | 28,323,646.54 |
| Total | 3,211,172,335.79 | 1,450,728,576.58 | 3,527,413,882.96 | 1,599,401,962.81 |
33. Taxes and surcharges
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| City maintenance and construction tax | 14,140,538.08 | 16,545,646.34 |
| Education surcharges | 10,100,384.36 | 11,747,151.84 |
| House tax | 0.00 | 6,285.71 |
Page 112 of 141Vehicle and vessel usage tax
| Vehicle and vessel usage tax | 5,530.80 | 9,593.34 |
| Stamp tax | 918,951.81 | 1,150,321.15 |
| Environmental protection tax | 22,829.18 | 0.00 |
| Total | 25,188,234.23 | 29,458,998.38 |
34. Sales expense
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Marketing service expenses | 466,038,121.92 | 489,722,443.97 |
| Advertisement expenses | 143,181,868.92 | 165,539,234.97 |
| Employees' benefits | 85,640,734.54 | 94,393,030.18 |
| Freight charges | 73,404,730.65 | 79,208,767.96 |
| Promotional activity expenses | 32,884,532.32 | 29,940,447.26 |
| Booth decoration expenses | 40,103,399.65 | 61,152,015.64 |
| Material consumption | 28,609,979.15 | 33,420,048.82 |
| Intermediary service charges | 6,366,462.19 | 5,316,968.69 |
| Entertainment expenses | 5,123,361.43 | 7,209,763.53 |
| Rental fees | 4,526,440.07 | 9,631,385.03 |
| Travel expenses | 3,277,056.81 | 7,082,298.54 |
| Office expenses | 2,139,466.85 | 6,152,737.46 |
| Others | 1,383,143.26 | 1,275,764.56 |
| Total | 892,679,297.76 | 990,044,906.61 |
35. Administrative expenses
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Employee benefits | 63,047,359.21 | 54,695,776.71 |
| Depreciation and amortization | 19,591,719.73 | 19,729,326.75 |
| Others | 7,142,962.53 | 9,191,649.58 |
| Consulting service fees | 5,259,193.86 | 4,649,488.06 |
| Office expenses | 4,832,241.98 | 3,368,742.06 |
| Rental fees | 3,620,561.19 | 3,845,066.25 |
| Maintenance expenses | 2,753,334.17 | 6,479,908.47 |
Page 113 of 141Intermediary service charges
| Intermediary service charges | 2,179,344.35 | 2,025,361.28 |
| Material consumption | 2,017,310.49 | 4,574,832.36 |
| Entertainment expenses | 1,799,214.29 | 2,309,515.17 |
| Travel expenses | 1,589,147.21 | 2,981,161.71 |
| Freight charges | 1,266,512.10 | 969,812.74 |
| Transportation expenses | 986,420.87 | 1,241,356.38 |
| Stock ownership incentive expenses | 0.00 | 109,531.25 |
| Total | 116,085,321.98 | 116,171,528.77 |
36. R&D expenses
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Employee benefits | 51,250,613.00 | 43,596,381.82 |
| Direct input | 52,263,866.12 | 49,233,260.11 |
| Depreciation and amortization | 7,361,111.08 | 7,682,242.02 |
| Design fees | 1,288,405.08 | 3,116,230.90 |
| Other expenses | 5,660,037.34 | 4,001,671.28 |
| Total | 117,824,032.62 | 107,629,786.13 |
37. Financial expenses
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Interest expenses | 139,284.26 | 201,831.98 |
| Minus: interest income | 47,604,818.42 | 30,307,927.32 |
| Add: exchange gain/loss | -758,363.69 | 35,598.30 |
| Add: other expenses | 441,404.01 | 465,526.17 |
| Total | -47,782,493.84 | -29,604,970.87 |
38. Other incomes
In RMB
| Sources generating other incomes | Amount incurred in the current period | Amount incurred in the previous period |
Page 114 of 141Financial support fund to boost the corporate development
| Financial support fund to boost the corporate development | 53,859,120.00 | 45,262,300.00 |
| Application of intelligent manufacturing, comprehensive standardization and new modes | 4,269,752.82 | 1,982,257.55 |
| Performance reward offered by the Finance Bureau of Hongkou District | 3,400,000.00 | 4,090,000.00 |
| Post-specific allowance and social insurance allowance | 3,226,432.26 | 229,477.50 |
| Reward for obtaining large scale revenue of "Kunpeng Plan" of the manufacturing industry | 2,000,000.00 | 0.00 |
| Construction of the production line with an annual output of 2.25 million sets of kitchen appliances | 1,286,890.62 | 1,286,890.62 |
| Construction of the kitchen appliances R&D, design and testing center | 1,182,583.62 | 1,182,583.62 |
| Refund of individual income tax handling fee | 1,092,154.23 | 76,579.44 |
| Financial incentive for patent licensing | 572,000.00 | 0.00 |
| Construction of the production line with an annual output of 1 million sets of kitchen appliances | 571,891.98 | 571,891.98 |
| Reward for the development of high technologies | 500,000.00 | 0.00 |
| Reward for standardization, quality and branding-related projects | 458,000.00 | 0.00 |
| Construction of the production line with an annual output of 1.08 million sets of built-in kitchen appliances | 341,245.50 | 0.00 |
| Return of social insurance premium | 236,660.73 | 533,442.61 |
| Subsidy for the accounting center expenses | 200,000.00 | 0.00 |
| Subsidy for creating industry standards | 121,244.00 | 0.00 |
| Development of new generation of environmentally-friendly energy-saving kitchen appliances and their production line | 95,325.42 | 95,325.42 |
| Construction of digital intelligent workshop for smart home appliances | 79,713.36 | 79,713.36 |
| Reward for key enterprises in Hongkou District, Shanghai | 60,000.00 | 0.00 |
| Construction of the digital workshop with an annual output of 2.25 million sets of kitchen appliances | 51,853.02 | 51,853.02 |
| Recycling-centered renewal project | 45,805.08 | 45,805.08 |
| Subsidy for an investment in a production line with an annual output of 150,000 kitchen ventilators | 29,441.40 | 29,441.40 |
| Academician (expert) workstation | 23,127.84 | 23,127.84 |
| VAT exemption or reduction | 9,000.00 | 0.00 |
| Recruitment subsidy | 6,000.00 | 0.00 |
| Patent-related allowance | 4,180.00 | 4,180.00 |
| Construction of the kitchen appliances R&D, design and testing center | 3,812.40 | 3,812.40 |
Page 115 of 141Subsidy for industrial chain upgrading included in the special funds offeredby the Industry and Information Technology Department
| Subsidy for industrial chain upgrading included in the special funds offered by the Industry and Information Technology Department | 0.00 | 958,500.00 |
| Subsidy for model enterprises migrated to the Cloud | 0.00 | 300,000.00 |
| Subsidy for intelligent power utilization | 0.00 | 32,000.00 |
39. Investment income
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Income from wealth management products | 26,341,452.82 | 39,789,776.54 |
| Dividend income obtained during other equity instrument investments | 0.00 | 0.00 |
| Income from long-term equity investment measured by the equity method | -2,239,220.46 | 69,197.95 |
| Total | 24,102,232.36 | 39,858,974.49 |
40. Loss from credit impairment
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Notes receivable | -11,545,668.38 | -5,510,787.60 |
| Accounts receivable | -3,367,587.99 | -2,026,738.41 |
| Other receivables | -3,598,513.22 | -1,414,503.22 |
| Total | -18,511,769.59 | -8,952,029.23 |
41. Asset disposal income
In RMB
| Sources of asset disposal income | Amount incurred in the current period | Amount incurred in the previous period |
| Gains from disposal of non-current assets | 11,388.98 | -296,672.23 |
| Including: gains from disposal of fixed assets | 11,388.98 | -296,672.23 |
| Total | 11,388.98 | -296,672.23 |
42. Non-operating revenue
In RMB
| Item | Amount incurred in the | Amount incurred in the | Amount included in the |
Page 116 of 141current period
| current period | previous period | current non-recurring profit or loss | |
| Government grants | 30,000.00 | 1,230,000.00 | 30,000.00 |
| Others | 556,353.17 | 381,946.09 | 556,353.17 |
| Total | 586,353.17 | 1,611,946.09 | 586,353.17 |
Government grants included in the current profit or loss:
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period | Source of the grants and basis of the grant issuance | Related to assets / income |
| Outstanding corporate culture club | 30,000.00 | 0.00 | The YWMB (2019) No. 18 document | Related to income |
| Subsidy for the construction of the platform for Innovation and Entrepreneurship in 2018 | 0.00 | 1,000,000.00 | The YJX (2019) No. 16 document | Related to income |
| Subsidy for municipal-level technological standardization efforts in 2018 | 0.00 | 100,000.00 | The YSJ (2019) No. 18 document | Related to income |
| Subsidy for cultivation of skilled personnel | 0.00 | 70,000.00 | List of the fifth group of Highly-skilled Personnel Studios in Yuhang District; The YKG (2018) No. 31 document | Related to income |
| Reward for key enterprises | 0.00 | 60,000.00 | Commendation and rewards for key enterprises offered by the Investment Promotion Office of Hongkou District, Shanghai | Related to income |
| Total | 30,000.00 | 1,230,000.00 | — | — |
43. Non-operating expenditures
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period | Amount included in the current non-recurring profit or loss |
| Losses from non-current asset damage or retirement | 0.00 | 1,171,725.00 | 0.00 |
| External donations | 1,000,000.00 | 1,000,000.00 | 1,000,000.00 |
Page 117 of 141Others
| Others | 695,304.64 | 710,719.05 | 695,304.64 |
| Total | 1,695,304.64 | 2,882,444.05 | 1,695,304.64 |
44. Income tax expenses
(1) Presentation of income tax expenses
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Current income tax expense | 172,846,414.95 | 181,475,283.87 |
| Deferred income tax expense | -61,356,353.28 | -58,401,245.72 |
| Total | 111,490,061.67 | 123,074,038.15 |
(2) Adjustment of accounting profit and income tax expense
In RMB
| Item | Amount incurred in the current period |
| Total profit | 734,668,501.02 |
| Income tax expense calculated based on statutory/applicable tax rate | 110,200,275.15 |
| Effects of the subsidiaries’ application of different tax rates | -648,657.89 |
| Effects of the adjustment of income tax in previous period | 0.00 |
| Effects of the non-taxable income | 335,883.18 |
| Effects of the non-deductible costs, expenses and losses | 1,676,591.80 |
| Effects of using deductible losses of unrecognized deferred income taxes in the previous period | 0.00 |
| Effects of the deductible temporary difference or deductible losses of unrecognized deferred income tax assets in the current period | 475,057.13 |
| Income tax expenses | 111,490,061.67 |
45. Other comprehensive incomes
See Note "VII. Other Comprehensive Incomes".
46. Cash flow statement items
(1) Other cashes received in relation to operating activities
In RMB
Page 118 of 141Item
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Government grants | 83,007,211.22 | 52,163,036.94 |
| Interest income | 47,289,176.66 | 30,307,927.32 |
| Security/guarantee deposits | 3,445,820.00 | 3,811,603.20 |
| Petty cash | 2,060,756.89 | 0.00 |
| Collection and payment agency services | 6,405,232.50 | 0.00 |
| Other payments | 1,579,919.38 | 8,863,178.11 |
| Total | 143,788,116.65 | 95,145,745.57 |
(2) Other cashes paid relating to operating activities
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Period expense | 681,737,610.63 | 689,332,020.79 |
| Security/guarantee deposits | 9,872,837.56 | 0.00 |
| Petty cash | 8,607,467.00 | 0.00 |
| Payments or collections by another party | 5,850,848.09 | 0.00 |
| L/C margin | 7,628,855.25 | 0.00 |
| Others | 1,043,789.70 | 81,682,101.67 |
| Total | 714,741,408.23 | 771,014,122.46 |
47. Supplementary information of Cash Flow Statement
(1) Supplementary information of Cash Flow Statement
In RMB
| Supplementary information | Amount in the current period | Amount in the previous period |
| 1. Reconciliation of net profit to cash flow from operating activities: | -- | -- |
| Net profit | 623,178,439.35 | 677,416,589.89 |
| Add: asset impairment provision | 18,511,769.59 | 8,952,029.23 |
| Depreciation of fixed assets, depreciation of oil and gas | 47,537,865.87 | 45,201,367.93 |
Page 119 of 141assets, and depreciation of productive biological assets
| assets, and depreciation of productive biological assets | ||
| Amortization of intangible assets | 6,783,614.63 | 6,418,112.43 |
| Amortization of long-term deferred expenses | 235,373.08 | 3,582,462.16 |
| Loss from disposal of fixed assets, intangible assets and other long-term assets (profit shall be indicated with"-") | -11,388.98 | 1,468,397.23 |
| Financial expenses (profit shall be indicated with"-") | -540,552.95 | -116,415.75 |
| Loss from investment (profit shall be indicated with"-") | -24,102,232.36 | -39,858,974.49 |
| Decrease in deferred income tax assets (increase shall be indicated with “-”) | -61,093,635.20 | -57,830,565.29 |
| Increase in deferred income tax liabilities (decrease shall be indicated with “-”) | -262,718.08 | -570,680.43 |
| Decrease in inventories (increase shall be indicated with “-”) | 69,294,179.87 | 130,904,758.56 |
| Decrease in operating receivables (increase shall be indicated with"-") | -218,336,278.24 | -298,690,566.84 |
| Increase in operating payables (decrease shall be indicated with"-") | -62,765,374.17 | 187,057,740.99 |
| Others | 9,258,071.15 | -5,243,171.04 |
| Loss from credit assets impairment | ||
| Net cash flow from operating activities | 407,687,133.56 | 658,691,084.58 |
| 2. Non-cash flow-involved major investing and financing activities: | -- | -- |
| Conversion of debt into capital | 0.00 | 0.00 |
| Convertible bonds due within one year | 0.00 | 0.00 |
| Fixed assets acquired under financing leases | 0.00 | 0.00 |
| 3. Net increase/decrease in cash and cash equivalents: | -- | -- |
| Ending balance of cash | 4,315,955,499.25 | 2,559,638,401.46 |
| Minus: cash beginning balance | 4,029,296,265.50 | 2,177,219,858.85 |
| Add: ending balance of cash equivalents | 0.00 | 0.00 |
| Minus: beginning balance of cash equivalents | 0.00 | 0.00 |
| Net increase in cash and cash equivalents | 286,659,233.75 | 382,418,542.61 |
(2) Composition of cash and cash equivalents
In RMB
| Item | Ending balance | Beginning balance |
| I. Cash | 4,315,955,499.25 | 4,029,296,265.50 |
| Including: cash on hand | 353,643.65 | 218,775.77 |
Page 120 of 141deposits available for payment atany time
| deposits available for payment at any time | 4,315,601,855.60 | 4,029,077,489.73 |
| other monetary capital available for payment at any time | 0.00 | 0.00 |
| II. Cash equivalent | 0.00 | 0.00 |
| III. Balance of cash and cash equivalents at the end of the period | 4,315,955,499.25 | 4,029,296,265.50 |
48. Note to items in the Statement of Changes in Owner’s Equity
Name of the item under "Others" whose previous ending balance was adjusted, the adjusted amount and other matters: NA
49. Assets with limited ownership and right to use
In RMB
| Item | Ending book value | Reason for the limitation |
| Monetary capital | 35,340,844.54 | Guarantee deposit |
| Total | 35,340,844.54 | -- |
50. Monetary items in foreign currency
(1) Monetary items in foreign currency
In RMB
| Item | Ending balance in foreign currency | Exchange rate | Ending balance in RMB |
| Monetary capital | -- | -- | |
| Including: capital in USD | 1,955,343.36 | 7.0795 | 13,842,853.32 |
| capital in EURO | 350.00 | 7.9610 | 2,786.35 |
| capital in AUD | 3.29 | 4.8657 | 16.01 |
| Accounts receivable | -- | -- | |
| Including: receivables in USD | 2,461,764.35 | 7.0795 | 17,428,060.72 |
| receivables in EURO | 289.60 | 7.9610 | 2,305.51 |
| receivables in AUD | 30.00 | 4.8657 | 145.97 |
(2) Description for overseas operating entities, including the disclosure of the main business locationoverseas, bookkeeping base currency and selection basis for the important business entity overseas as wellas the reason for the change of bookkeeping base currency (if any).
□ Applicable √ Not Applicable
51. Government grants
(1) Basics of government grants
In RMB
Page 121 of 141
Type
| Type | Amount | Items | Amounts included in current profits and losses |
| Financial support fund to boost the corporate development | 53,859,120.00 | Other income | 53,859,120.00 |
| Construction of the intelligent integrated kitchen industrialization base | 17,241,420.00 | Deferred income | 0.00 |
| Application of intelligent manufacturing, comprehensive standardization and new modes | 4,269,752.82 | Other income | 4,269,752.82 |
| Performance reward offered by the Finance Bureau of Hongkou District | 3,400,000.00 | Other income | 3,400,000.00 |
| Post-specific allowance and social insurance allowance | 3,226,432.26 | Other income | 3,226,432.26 |
| Reward for obtaining large scale revenue of "Kunpeng Plan" of the manufacturing industry | 2,000,000.00 | Other income | 2,000,000.00 |
| Construction of the production line with an annual output of 2.25 million sets of kitchen appliances | 1,286,890.62 | Other income | 1,286,890.62 |
| Construction Program of Construction of the kitchen appliances R&D, design and testing center | 1,182,583.62 | Deferred income | 1,182,583.62 |
| Refund of individual tax handling fee | 1,092,154.23 | Other income | 1,092,154.23 |
| Financial incentive for patent licensing | 572,000.00 | Other income | 572,000.00 |
| Construction of the production line with an annual output of 1 million sets of kitchen appliances | 571,891.98 | Other income | 571,891.98 |
| Reward for the development of high technologies | 500,000.00 | Other income | 500,000.00 |
| Reward for standardization, quality and branding-related projects | 458,000.00 | Other income | 458,000.00 |
| Construction of production line with an annual output of 1.08 million sets of built-in kitchen appliances | 341,245.50 | Deferred income | 341,245.50 |
| Return of social insurance taxes and dues | 236,660.73 | Other income | 236,660.73 |
Page 122 of 141Subsidy for accounting center expenses
| Subsidy for accounting center expenses | 200,000.00 | Other income | 200,000.00 |
| Subsidy for creating industry standards | 121,244.00 | Other income | 121,244.00 |
| Development of new generation of environmentally-friendly energy-saving kitchen appliances and their production line | 95,325.42 | Deferred income | 95,325.42 |
| Construction of digital intelligent workshop for smart home appliances | 79,713.36 | Deferred income | 79,713.36 |
| Reward for key enterprises in Hongkou District, Shanghai | 60,000.00 | Other income | 60,000.00 |
| Construction of the digital workshop with an annual output of 2.25 million sets of kitchen appliances | 51,853.02 | Other income | 51,853.02 |
| Recycling-centered renewal project | 45,805.08 | Other income | 45,805.08 |
| Outstanding corporate culture club | 30,000.00 | Non-operational income | 30,000.00 |
| Subsidy for an investment in a production line with an annual output of 150,000 kitchen ventilators | 29,441.40 | Other income | 29,441.40 |
| Academician (expert) workstation | 23,127.84 | Deferred income | 23,127.84 |
| VAT exemption or reduction | 9,000.00 | Other income | 9,000.00 |
| Recruitment subsidy | 6,000.00 | Other income | 6,000.00 |
| Patent-related allowance | 4,180.00 | Other income | 4,180.00 |
| Construction of the kitchen appliances R&D, design and testing center | 3,812.40 | Deferred income | 3,812.40 |
(2) Return of government grants
□ Applicable √ Not Applicable
VIII. Changes in the scope of consolidated financial statementsThere is no change in the scope of consolidated financial statements of the Company during the reporting period.IX. Interests in Other Entities
1. Equity in subsidiaries
(1) Composition of the Robam conglomerate
| Subsidiary | Principal place of business | Registration place | Nature of business | Shareholding ratio | Acquisition method | |
| Direct | Indirect | |||||
| Beijing Robam | Beijing | Beijing | Sales of kitchen | 100.00% | 0.00% | Business |
Page 123 of 141ElectricApplianceSales Co., Ltd.
| Electric Appliance Sales Co., Ltd. | appliances | combination under common control | ||||
| Shanghai Robam Electric Appliance Sales Co., Ltd. | Shanghai | Shanghai | Sales of kitchen appliances | 100.00% | 0.00% | Business combination under common control |
| Hangzhou MingQi Electric Co., Ltd. | Hangzhou | Hangzhou | Sales of kitchen appliances | 100.00% | 0.00% | Acquisition upon its establishment |
| De Dietrich Household Appliances Trading (Shanghai) Co., Ltd. | Shanghai | Shanghai | Sales of kitchen appliances | 51.00% | 0.00% | Acquired through investment |
| Shengzhou Kinde Intelligent Kitchen Appliance Co., Ltd. | Shengzhou | Shengzhou | Production and sales of kitchen appliances | 51.00% | 0.00% | Business combination not under common control |
| Hangzhou Robam Fuchuang Investment Management Co., Ltd. | Hangzhou | Hangzhou | Asset, investment management, etc. | 100.00% | 0.00% | Acquisition upon its establishment |
(2) Major non-wholly owned subsidiaries
In RMB
| Subsidiary | Proportion of shares held by minority shareholders | Gains/losses attributable to minority shareholders in the current period | Dividend declared and distributed to minority shareholders in the current period | Balance of minority shareholders’ equity at the end of the period |
| Shengzhou Kinde Intelligent Kitchen Appliance Co., Ltd. | 49.00% | 10,861,163.06 | 0.00 | 124,088,686.19 |
| De Dietrich Household Appliances | 49.00% | 27.00 | 0.00 | -3,333,027.89 |
Page 124 of 141Trading (Shanghai) Co., Ltd.
(3) Main financial information of important partially-owned subsidiaries
In RMB
Trading (Shanghai) Co., Ltd.
Subsidiary
| Subsidiary | Ending balance | Beginning balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Shengzhou Kinde Intelligent Kitchen Appliance Co., Ltd. | 254,655,066.10 | 115,270,719.29 | 369,925,785.39 | 93,987,018.52 | 22,696,550.17 | 116,683,568.69 | 230,113,578.72 | 85,542,835.32 | 315,656,414.04 | 78,861,987.98 | 5,717,848.25 | 84,579,836.23 |
| De Dietrich Household Appliances Trading (Shanghai) Co., Ltd. | 5,657.52 | 3,817.31 | 9,474.83 | 6,811,572.56 | 0.00 | 6,811,572.56 | 5,602.41 | 3,817.31 | 9,419.72 | 6,811,572.56 | 0.00 | 6,811,572.56 |
In RMB
| Subsidiary | Amount incurred in the current period | Amount incurred in the previous period | ||||||
| Operating income | Net profit | Total comprehensive income | Operating cash flow | Operating income | Net profit | Total comprehensive income | Operating cash flow | |
| Shengzhou Kinde Intelligent | 92,100,731.82 | 22,165,638.90 | 22,165,638.90 | 27,412,195.88 | 90,517,727.14 | 14,311,880.56 | 14,311,880.56 | 26,511,914.94 |
Page 125 of 141KitchenApplianceCo., Ltd.
| Kitchen Appliance Co., Ltd. | ||||||||
| De Dietrich Household Appliances Trading (Shanghai) Co., Ltd. | 0.00 | 55.11 | 55.11 | 4.18 | 0.00 | -5,718.28 | -5,718.28 | -345.73 |
(4) Summary of the financial information of minor joint venture and associated company
In RMB
| Ending balance/amount incurred in current period | Beginning balance/ amount incurred in last period | |
| Joint venture: | -- | -- |
| Total book value of investments | 1,929,118.33 | 4,168,338.79 |
| Totals of the following items calculated as per respective shareholding proportion | -- | -- |
| -Net profit | -4,390,628.34 | 1,550,487.63 |
| -Other comprehensive incomes | 0.00 | 0.00 |
| -Total comprehensive income | -4,390,628.34 | 1,550,487.63 |
| Associated company: | -- | -- |
| Totals of the following items calculated as per respective shareholding proportion | -- | -- |
X. Risks Relating to Financial InstrumentsMajor financial instruments of the Company include accounts receivable, accounts payable, etc. See Note VII forthe details of various financial instruments. Risks related to these financial instruments and risk management policiesadopted by the Company to reduce such risks are outlined as follows. The management of the Company manages andmonitors such risk exposures to ensure to keep the risks above within limited scope.The Company's various risk management objectives and policies are outlined as follows:
Risk management conducted by the Company is to properly balance risk and income, minimize negative impactsof the risks on the Company’s business performance and maximize benefits of the shareholders and other equityinvestors. Based on the risk management objective, the Company’s basic risk management policy is to determine and
analyze all kinds of risks faced by the Company, establish appropriate risk bottom line for risk management, andmonitor all risks promptly and reliably to keep risks within a limited range.
1. Market risk - price risk
Since the Company sells its products at market prices, it may be affected by such price fluctuations.
2. Credit risk
As of June 30, 2020, the biggest credit risk exposure that may bring financial loss to the Company mainly comesfrom the Company’s financial assets loss caused by the other party’s failure to perform its obligations in the contract,particularly including the loss in the book value of recognized financial assets in the consolidated balance sheet.To reduce credit risk, the Company has a dedicated team responsible for determining the credit line, conductingcredit approval and implementing other monitoring procedures, to ensure that necessary measures are taken to recoverdue debt. In addition, the Company reviews the recovery of each account payable on each balance sheet date, so as toensure sufficient bad debt provisions for unrecoverable accounts. Therefore, the management of the Company holds thatthe credit risk faced by the Company has been significantly reduced.
The credit risk of the Company’s liquid capital is low since it is deposited at banks with relatively high creditrating.
Because the risk exposures of the Company are related to multiple contracting parties and multiple clients, theCompany has no major credit risk concentration.
The Company adopts necessary policies to ensure all of the clients involved in the sales of our products have goodcredit record. The Company has no major credit risk concentration.
3. Liquidity risk
Liquidity risk is faced by the Company where it cannot meet its financial obligations as they fall due. TheCompany manages the liquidity risk by ensuring capital liquidity to fulfill its due obligations to avoid unacceptablelosses or damages to corporate reputation. The Company periodically analyzes debt structure and term to ensure that ithas sufficient liquid capital.
4. Foreign exchange risk
The exchange rate risk borne by the Company is mainly associated with USD, Euro and HKD, etc. The foreignexchange risk borne by the Company is mainly associated with USD (which shall be changed according to relevantrealities). The Company's main business activities priced and settled in RMB. As of June 30, 2020, the Company'sbalances of assets and liabilities are in RMB (except for the balances of the assets and liabilities in foreign currency in"VII. 50 Monetary items in foreign currency" in this Note). Exchange risk resulting from the assets and liabilities whosebalances are in foreign currency may affect the Company’s performance.The Company pays close attention to the impact of change in exchange rate on the Company’s exchange risk. Currently,
the Company hasn’t adopted any measures to avoid foreign exchange risk.
XI. Disclosure of Fair Value
1. Fair value at end of the period of assets and liabilities measured at fair value
In RMB
Page 127 of 141
Item
| Item | Ending fair value | |||
| Fair value measurement (Level 1) | Fair value measurement (Level 2) | Fair value measurement (Level 3) | Total | |
| I. Continuous fair value measurement | -- | -- | -- | -- |
| (I) Financial assets held for trading | 0.00 | 0.00 | 925,000,000.00 | 925,000,000.00 |
| 1. Financial assets measured at fair value with changes included in current profit or loss | 0.00 | 0.00 | 925,000,000.00 | 925,000,000.00 |
| (III) Investment in other equity instruments | 0.00 | 0.00 | 102,116,023.22 | 102,116,023.22 |
| Total assets measured continuously at fair value | 0.00 | 0.00 | 1,027,116,023.22 | 1,027,116,023.22 |
| II. Non-continuous fair value measurement | -- | -- | -- | -- |
2. Valuation techniques adopted and qualitative and quantitative information on important parameters forthe items involved in Level 3 continuous and non-continuous fair value measurement
| Item | Fair value as of June 30, 2020 | Valuation techniques | Significant unobservable value | Relationship between unobservable value and fair value |
| Financial products | 925,000,000.00 | Optimal fair value estimation | Investment cost | — |
| Other equity instrument investments | 102,116,023.22 | Optimal fair value estimation | Investment cost | — |
XII. Related Party and Related Party Transactions
1. The Company's parent company
| Parent company | Registration place | Nature of business | Registered capital | Proportion of the | Proportion of |
Page 128 of 141Company's sharesheld by the parentcompany
| Company's shares held by the parent company | voting right of the parent company in the Company | ||||
| Hangzhou Robam Industrial Group Co., Ltd. | Hangzhou, Zhejiang | Investment and industrial management | RMB 60 million | 49.68% | 49.68% |
2. The Company's subsidiaries
See Note "VII. Composition of the Robam conglomerate” for more about the Company's subsidiaries.
3. The Company's joint ventures and associated companies
See Note “VII. Major non-wholly owned subsidiaries for more about the Company's important joint ventures or associatedcompanies.
4. Other related parties
| Name | Relation between other related parties and the Company |
| Name of other related parties | Relationship with the Company |
| Hangzhou Amblem Kitchen Ware Co., Ltd. | Controlled by the same parent company |
| Hangzhou Yuhang Robam Fuel Station Co., Ltd. | Controlled by the same parent company |
| Hangzhou Nbond Nonwovens Co., Ltd. | Controlled by the same parent company |
| Hangzhou Yuhang Yaguang Spray Coating Factory | Controlled by the actual controller’s younger sister |
| Hangzhou City Garden Hotel Co., Ltd. | Significantly influenced by the parent company |
| Hangzhou Bonyee Daily Necessity Technology Co., Ltd. | Controlled by the same parent company |
| Shaoxing Kinde Electric Appliances Co., Ltd. | Other shareholders of the subsidiaries owned by the Company |
5. Related transactions
(1) Related transactions regarding purchasing and selling goods and providing and accepting labor servicesTable of the purchasing of goods and receiving of labor services
In RMB
| Related parties | Description of the related transaction | Amount incurred in the current period | Trading limit approved | Whether exceeds the approved limited or not (Y/N) | Amount incurred in the previous period |
| Hangzhou Yuhang Yaguang Spray Coating | Receiving of labor services | 5,127,566.52 | No | 5,504,169.36 |
Page 129 of 141Factory
| Factory | |||||
| Hangzhou Bonyee Daily Necessity Technology Co., Ltd. | Purchase of goods | 1,387,629.65 | No | 1,746,291.56 | |
| Hangzhou Amblem Kitchen Ware Co., Ltd. | Receiving of labor service | 2,137,356.44 | No | 1,697,016.55 | |
| Hangzhou Yuhang Robam Fuel Station Co., Ltd. | Purchase of goods | 270,199.44 | No | 565,621.34 | |
| Hangzhou Nbond Nonwovens Co., Ltd. | Purchase of goods | 36,514.24 | No | 0.00 |
Goods Sales/labor service provision
In RMB
| Related parties | Contents of related transaction | Amount incurred in the current period | Amount incurred in the previous period |
| Shaoxing Kinde Electric Appliances Co., Ltd. | Sale of goods | 2,243,171.75 | 18,933,222.50 |
| Hangzhou Amblem Kitchen Ware Co., Ltd. | Sale of goods | 1,958,456.62 | 5,836,683.25 |
| Hangzhou Yuhang ROBAM Charity Foundation | Sale of goods | 556,814.16 | 0.00 |
| Hangzhou Nbond Nonwovens Co., Ltd. | Sale of goods | 0.00 | 724.14 |
(2) Related leasing
The Company acts as the lessor:
In RMB
| Lessee | Type of leased asset | Rental income recognized in the current period | Rental income recognized in the previous period |
| Hangzhou Robam Appliances Co., Ltd. | Housing | 14,400.00 | 14,400.00 |
The Company acts as the Lessee:
In RMB
Page 130 of 141Lessor
| Lessor | Type of leased asset | Rental fee recognized in the current period | Rental fee recognized in the previous period |
| Hangzhou Robam Industrial Group Co., Ltd. | Housing | 275,012.28 | 275,012.28 |
(3) Benefits of key management personnel
In RMB 10,000
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Total benefits | 302.31 | 323.11 |
6. Receivables and payables of related parties
(1) Receivables
In RMB
| Item | Related parties | Ending balance | Beginning balance | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | ||
| Accounts receivable | Hangzhou Amblem Kitchen Ware Co., Ltd. | 1,058,786.00 | 5% | 0.00 | |
| Advance payments | Hangzhou Amblem Kitchen Ware Co., Ltd. | 2,113,234.47 | 50,000.00 | ||
| Advance payments | Shaoxing Kinde Electric Appliances Co., Ltd. | 193,636.72 | 580,130.26 | ||
(2) Payables
In RMB
| Item | Related parties | Ending book balance | Beginning book balance |
| Accounts payable | Hangzhou Yuhang Yaguang Spray Coating Factory | 3,664,899.31 | 4,525,094.50 |
| Accounts payable | Hangzhou Yuhang Robam Fuel Station Co., Ltd. | 1,796,270.91 | 1,490,945.55 |
| Accounts payable | Shaoxing Kinde Electric Appliances Co., Ltd. | 0.00 | 57,552.91 |
| Accounts payable | Hangzhou Amblem Kitchen Ware Co., Ltd. | 0.00 | 1,841.61 |
| Accounts payable | Hangzhou Bonyee Daily Necessity | 1,343,881.12 | 0.00 |
Page 131 of 141Technology Co., Ltd.
| Technology Co., Ltd. | |||
| Accounts payable | Hangzhou Nbond Nonwovens Co., Ltd. | 41,261.10 | 0.00 |
| Deposit received | Hangzhou Amblem Kitchen Ware Co., Ltd. | 0.00 | 139,622.44 |
| Other accounts payable | Hangzhou Yuhang Yaguang Spray Coating Factory | 200,000.00 | 200,000.00 |
| Other accounts payable | Hangzhou Bonyee Daily Necessity Technology Co., Ltd. | 20,000.00 | 0.00 |
XIII. Share-based Payment
N/A
XIV. Commitments and Contingencies
1. Major commitments
As of the day of the Financial Statements submission, the Company has no other major events after the balance sheet date to disclose.
2. Contingencies
(1) Major contingencies on the balance sheet date
As of June 30, 2020, the Company has no major contingencies that need to be disclosed
(2) It's also necessary to make it clear hereby that the Company has no major contingencies that need tobe disclosed.The Company has no major contingency that need to be disclosed.XV. Events After the Balance Sheet Date
N/A
XVI. Other Significant EventsN/A
XVII. Notes to Main Items of the Financial Statements of the Parent Company
1. Accounts receivable
(1) Classified disclosure of accounts receivable
In RMB
Page 132 of 141
Type
| Type | Ending balance | Beginning balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage (%) | Amount | Percentage of provision | Amount | Percentage (%) | Amount | Percentage of provision | |||
| Including: | ||||||||||
| Accounts receivable with a collective bad debt provision | 782,923,881.35 | 100.00% | 41,821,210.41 | 741,102,670.94 | 743,804,053.68 | 100.00% | 39,557,168.87 | 704,246,884.81 | ||
| Including: | ||||||||||
| Accounts receivable grouped according to related parties | 27,514,867.21 | 3.51% | 0.00 | 0.00% | 27,514,867.21 | 22,246,710.00 | 2.99% | 0.00 | 0.00% | 22,246,710.00 |
| Multiple accounts receivable which are grouped by expected credit loss based on their age characteristics and with a collective bad debt provision | 755,409,014.14 | 96.49% | 41,821,210.41 | 5.54% | 713,587,803.73 | 721,557,343.68 | 97.01% | 39,557,168.87 | 5.48% | 682,000,174.81 |
| Total | 782,923,881.35 | 100.00% | 41,821,210.41 | 741,102,670.94 | 743,804,053.68 | 100.00% | 39,557,168.87 | 704,246,884.81 | ||
Collective bad debt provision: for multiple accounts receivable grouped by expected credit loss based on their age characteristics,their bad debts are provided for collectively.
In RMB
Page 133 of 141Name
| Name | Ending balance | ||
| Book balance | Bad debt provision | Percentage of provision | |
| Within 1 year | 719,348,374.03 | 35,967,418.70 | 5.00% |
| 1-2 years | 28,060,031.49 | 2,806,003.15 | 10.00% |
| 2-3 years | 5,285,512.82 | 1,057,102.56 | 20.00% |
| 3-4 years | 1,119,460.29 | 559,730.15 | 50.00% |
| 4-5 years | 823,398.29 | 658,718.63 | 80.00% |
| Over 5 years | 772,237.22 | 772,237.22 | 100.00% |
| Total | 755,409,014.14 | 41,821,210.41 | -- |
Collective bad debt provision: for multiple accounts receivable grouped according to related parties, their bad debts are provided forcollectively.
In RMB
| Name | Ending balance | ||
| Book balance | Bad debt provision | Percentage of provision | |
| Accounts receivable grouped according to related parties | 27,514,867.21 | 0.00 | 0.00% |
| Total | 27,514,867.21 | -- | |
Disclosed based on the age of accounts receivable
In RMB
| Age | Ending balance |
| Within 1 year (including 1 year) | 746,863,241.24 |
| 1-2 years | 28,060,031.49 |
| 2-3 years | 5,285,512.82 |
| More than 3 years | 2,715,095.80 |
| 3-4 years | 1,119,460.29 |
| 4-5 years | 823,398.29 |
| More than 5 years | 772,237.22 |
| Total | 782,923,881.35 |
(2) Bad debt provision, and its recovery or reversal in the current periodBad debt provision in the current period:
In RMB
Page 134 of 141Type
| Type | Beginning balance | Amount of change in the current period | Ending balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Bad debt provision for accounts receivable | 39,557,168.87 | 2,264,041.54 | 0.00 | 0.00 | 41,821,210.41 | |
2. Other receivables
In RMB
| Item | Ending balance | Beginning balance |
| Dividends receivable | 14,295,039.38 | |
| Other receivables | 51,740,494.70 | 91,471,115.57 |
| Total | 51,740,494.70 | 105,766,154.95 |
(1) Classification of dividends receivable
In RMB
| Project (or investee) | Ending balance | Beginning balance |
| Suzhou Industrial Park Ruican Investment Enterprise (Limited Partnership) | 14,295,039.38 | |
| Total | 14,295,039.38 |
(2) Other receivables
1) Classification of other receivables by nature
In RMB
| Nature | Book balance at the end of the period | Initial book balance at the beginning of the period |
| Collections by a third party | 19,688,144.56 | 63,604,415.88 |
| Security/guarantee deposits | 33,865,499.67 | 32,288,103.90 |
| Related transactions | 4,064,000.00 | 4,064,000.00 |
| Petty cash | 2,871,267.31 | 1,572,298.56 |
| Withholdings | 4,197,669.32 | 2,174,992.54 |
| Factoring | 2,221,438.07 | 0.00 |
| Others | 405,680.00 | 457,769.11 |
Page 135 of 141Total
| Total | 67,313,698.93 | 104,161,579.99 |
2) Bad debt provision
In RMB
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| Expected credit loss over the next 12 months | Expected credit loss over the entire duration (without credit impairment) | Expected credit loss over the entire duration (with credit impairment) | ||
| Balance on January 1, 2020 in the current period | —— | —— | —— | —— |
| Provision in the current period | 2,882,739.81 | 2,882,739.81 | ||
| Balance on June 30, 2020 | 15,573,204.23 | 15,573,204.23 |
Disclosed based on the age of accounts receivable
In RMB
| Age | Ending balance |
| Within 1 year (including 1 year) | 36,430,795.72 |
| 1-2 years | 7,731,566.55 |
| 2-3 years | 3,027,193.49 |
| More than 3 years | 20,124,143.17 |
| 3-4 years | 15,384,714.77 |
| 4-5 years | 293,583.46 |
| More than 5 years | 4,445,844.94 |
| Total | 67,313,698.93 |
3) Bad debt provision, and its recovery or reversal in the current period
Bad debt provision in the current period:
In RMB
| Type | Beginning balance | Amount of change in the current period | Ending balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Bad debt provision for | 12,690,464.42 | 2,882,739.81 | 0.00 | 0.00 | 15,573,204.23 | |
Page 136 of 141otherreceivables
| other receivables | ||||||
| Total | 12,690,464.42 | 2,882,739.81 | 15,573,204.23 |
4) Top five debtors with the biggest ending balances of other accounts receivable
In RMB
| Unit | Nature | Ending balance | Age | Proportion in the total ending balance of other accounts receivable | Ending balance of bad debt provision |
| Unit 1 | Security/guarantee deposits | 14,778,000.00 | 3-4 years | 21.95% | 7,389,000.00 |
| Unit 2 | Collections by a third party | 10,028,874.85 | Within 1 year | 14.90% | 501,443.74 |
| Unit 3 | Related transactions | 4,064,000.00 | Over 5 years | 6.04% | 4,064,000.00 |
| Unit 4 | Collections by a third party | 3,674,304.44 | Within 1 year | 5.46% | 183,715.22 |
| Unit 5 | Security/guarantee deposits | 3,000,000.00 | 1-2 years | 4.46% | 300,000.00 |
| Total | -- | 35,545,179.29 | -- | 52.81% | 12,438,158.96 |
3. Long-term equity investment
In RMB
| Item | Ending balance | Beginning balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Investment in subsidiaries | 246,905,933.73 | 20,400,000.00 | 226,505,933.73 | 246,905,933.73 | 20,400,000.00 | 226,505,933.73 |
| Investment in joint ventures and associated companies | 1,929,118.33 | 0.00 | 1,929,118.33 | 4,168,338.79 | 0.00 | 4,168,338.79 |
| Total | 248,835,052.06 | 20,400,000.00 | 228,435,052.06 | 251,074,272.52 | 20,400,000.00 | 230,674,272.52 |
(1) Investment in subsidiaries
In RMB
Page 137 of 141Investee
| Investee | Beginning balance (book value) | Increase/decrease in the current period | Ending balance (book value) | Ending balance of impairment provision | |||
| Additional investment | Negative investment | Impairment provision | Others | ||||
| Shengzhou Kinde Intelligent Kitchen Appliance Co., Ltd. | 162,320,000.00 | 0.00 | 0.00 | 0.00 | 162,320,000.00 | ||
| Hangzhou MingQi Electric Co., Ltd. | 51,901,780.81 | 0.00 | 0.00 | 0.00 | 51,901,780.81 | ||
| De Dietrich Household Appliances Trading (Shanghai) Co., Ltd. | 630,900.00 | 0.00 | 0.00 | 0.00 | 630,900.00 | 20,400,000.00 | |
| Shanghai Robam Electric Appliance Sales Co., Ltd. | 5,838,272.10 | 0.00 | 0.00 | 0.00 | 5,838,272.10 | ||
| Beijing Robam Electric Appliance Sales Co., Ltd. | 5,814,980.82 | 0.00 | 0.00 | 0.00 | 5,814,980.82 | ||
| Total | 226,505,933.73 | 226,505,933.73 | 20,400,000.00 | ||||
(2) Investment in joint ventures and associated companies
In RMB
| Investor | Beginning balance (book value) | Increase/decrease in the current period | Ending balance (book value) | Ending balance of impairment provision | |||||||
| Additional investment | Negative investment | Investment profit or loss recognized using the equity method | Adjustment of other comprehensive incomes | Other changes in equity | Cash dividends or profits declared and distributed | Provision for impairment loss | Others | ||||
| I. Joint venture | |||||||||||
| De | 4,168,3 | 0.00 | 0.00 | -2,239, | 0.00 | 0.00 | 0.00 | 0.00 | 1,929,1 | ||
Page 138 of 141
Dietrich Trade(Shanghai)Co.,Ltd.
| Dietrich Trade (Shanghai) Co., Ltd. | 38.79 | 220.46 | 18.33 | ||||||||
| Sub-total | 4,168,338.79 | 0.00 | 0.00 | -2,239,220.46 | 0.00 | 0.00 | 0.00 | 0.00 | 1,929,118.33 | ||
| Total | 4,168,338.79 | 2,239,220.46 | 1,929,118.33 | 0.00 |
4. Operating income and operating cost
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period | ||
| Income | Cost | Income | Cost | |
| Main business | 2,922,262,959.98 | 1,329,831,191.10 | 3,187,683,518.21 | 1,477,699,188.18 |
| Other businesses | 58,651,720.79 | 19,754,013.25 | 72,109,808.46 | 29,798,963.74 |
| Total | 2,980,914,680.77 | 1,349,585,204.35 | 3,259,793,326.67 | 1,507,498,151.92 |
5. Investment income
In RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Income from long-term equity investment measured by the equity method | -2,239,220.46 | 69,197.95 |
| Income from investments in financial assets held for trading | 20,859,653.65 | 36,895,138.71 |
| Dividend income obtained during other equity instrument investments | 0.00 | 0.00 |
| Total | 18,620,433.19 | 36,964,336.66 |
XVIII. Supplementary Information
1. Breakdown of non-recurring profits and losses in the current period
√ Applicable □ Not Applicable
In RMB
Page 139 of 141Item
| Item | Amount | Description |
| Gains and losses from disposal of non-current assets | 11,388.98 | |
| Government grants included into current profit or oss (except for the government grants closely related to the Company's business whose amount is stipulated in state standards) | 73,756,234.28 | |
| Profit and loss from entrusting others to invest or manage assets | 0.00 | |
| Non-operating incomes and expenses other than the above-mentioned items | -1,138,951.47 | |
| Less: Affected amount of income tax | 11,320,206.38 | |
| Affected amount of minority shareholders’ equity | 311,648.17 | |
| Total | 60,996,817.24 | -- |
It is necessary to explain the non-recurring gains or losses determined based on definitions in Explanatory Announcement No. 1 onInformation Disclosure for Publicly Listed Companies — Non-recurring Profit & Loss (referred to as “Announcement No.1”)and thereason why non-recurring profits or losses listed in the Announcement No. 1 are determined as recurring profits or losses.
□ Applicable √ Not Applicable
2. Return on equity and earnings per share (EPS)
| Profit within the Reporting Period | Weighted average return on equity | EPS | |
| Basic EPS (RMB/share) | Diluted EPS (RMB/share) | ||
| Net profit attributable to common stockholders of the Company | 8.64% | 0.65 | 0.65 |
| Net profit attributable to common shareholders of the Company after deducting non-recurring profits and losses | 7.78% | 0.58 | 0.58 |
3. Accounting data differences under domestic and foreign accounting standards
(1) Differences of net profits and net assets in the Financial Report disclosed as per the IAS and CAS;
□ Applicable √ Not Applicable
(2) Differences of net profits and net assets in the Financial Report disclosed as per the foreign accountingstandard and CAS;
□ Applicable √ Not Applicable
(3) Explanation of the reasons of accounting data differences under domestic and foreign accountingstandards shall be made, and where data audited by an overseas audit institution has been adjusted basedon the differences, the name of the overseas institution shall be indicated.
4. Others
Chapter 12 Documents Available for Future Inspection
I. Financial statements signed and sealed by the legal representative, the person in charge of accounting of theCompany, and the person in charge of the accounting firm.II. Original copies of documents and announcements of the Company published in the newspaper designated byChina Securities Regulatory Commission during the Reporting Period.III. The Semi-Annual Report 2020 signed by the legal representative on behalf of the Company.IV. Other documents.V. The preparation location of the above-mentioned documents available for future inspection: Board Office ofthe Company.