深圳南山热电股份有限公司Shenzhen Nanshan Power Co., Ltd.
Semi-annual Report 2019
2019-046
August 2019
Section I. Important Notice, Contents and ParaphraseBoard of Directors, Supervisory Committee, all directors, supervisors and seniorexecutives of Shenzhen Nanshan Power Co., Ltd. (hereinafter referred to as theCompany) hereby confirm that there are no any fictitious statements, misleadingstatements, or important omissions carried in this semi-annual report, and shalltake all responsibilities, individual and/or joint, for the reality, accuracy andcompletion of the whole contents.President Li Xinwei - principal of the Company, Director GM Chen Yuhui, CFO- Dai Xiji and Deputy GM Wang Yi (acting manager of the financialmanagement dept.), the person in charge of accounting works (accountingprincipal), hereby confirm that the Financial Report of Semi-Annual Report2019 is authentic, accurate and complete.All directors are attended the Board Meeting for annual report deliberation.Concerning the forward-looking statements with future planning involved in thesemi-annual report, they do not constitute a substantial commitment forinvestors. Investors are advised to exercise caution of investment risks.The Company has no plans of cash dividend distributed, no bonus shares andhas no share converted from capital reserve either in the semi-annual year.The semi-annual report has been prepared in both Chinese and English, for anydiscrepancies, the Chinese version shall prevail. Please read the full semi-annual
report seriously.
Content
Section I Important Notice, Paraphrase ...... 2
Section II Company Profile and Main Financial Indexes ...... 6
Section III Summary of Company Business ...... 9
Section IV Discussion and Analysis of the Operation ...... 11
Section V Important Events ...... 20
Section VI Changes in shares and particular about shareholders ...... 33
Section VII Preferred Stock ...... 37
Section VIII Particulars about Directors, Supervisors, Senior Executives ...... 38
Section IX Corporate -bond ...... 39
Section X Financial report ...... 40
Section XI Documents available for reference ...... 41
Paraphrase
| Items | Refers to | Definition |
| Company, the Company, Shen Nan Dian, the Listed Company | Refers to | Shenzhen Nanshan Power Co., Ltd. |
| SASAC of Shenzhen Municipal | Refers to | State-owned Assets Supervision and Administration Commission of the People’s Government of Shenzhen Municipal |
| SZ Capital | Refers to | Shenzhen Capital Co., Ltd. |
| SZ Energy Group | Refers to | Shenzhen Energy Group Co., Ltd. |
| SZ Energy Gas Holding | Refers to | Shenzhen Energy Gas Investment Holding Co., Ltd. |
| Fuel Branch | Refers to | Fuel Branch of Shenzhen Energy Group Co., Ltd. |
| Nanshan Thermal Plant | Refers to | Nanshan Thermal Plant of Shenzhen Nanshan Power Co., Ltd. |
| New Power Company | Refers to | Shenzhen New Power Industrial Co., Ltd. |
| Shen Nan Dian (Dongguan) Company | Refers to | Shen Nan Dian (Dongguan) Weimei Power Co., Ltd |
| Dongguan Gaobu Power Plant | Refers to | Dongguan Gaobu Power Plant of Shen Nan Dian (Dongguan) Weimei Electric Power Co., Ltd |
| Shen Nan Dian Zhongshan Company | Refers to | Shen Nan Dian (Zhongshan) Electric Power Co., Ltd. |
| Zhongshan Nanlang Power Plant | Refers to | Zhongshan Nanlang Power Plant of Shen Nan Dian (Zhongshan) Electric Power Co., Ltd. |
| Shen Nan Dian Engineering Company | Refers to | Shenzhen Shennandian Turbine Engineering Technology Co., Ltd. |
| Shen Nan Dian Environment Protection Company | Refers to | Shenzhen Shennandian Environment Protection Co., Ltd. |
| Server Company | Refers to | Shenzhen Server Petrochemical Supplying Co., Ltd. |
| Syndisome Company | Refers to | Hong Kong Syndisome Co., Ltd. |
| Singapore Company | Refers to | Shen Nan Energy (Singapore) Co., Ltd. |
| Article of Association | Refers to | Article of Association of Shenzhen Nanshan Power Co., Ltd. |
| Yuan, ten thousand Yuan, one hundred million | Refers to | Except the special description of the monetary unit, the rest of the monetary unit is RMB Yuan, ten thousand Yuan |
| Reporting period | Refers to | 1 January 2019 to 30 June 2019 |
Section II. Company Profile and Main Financial Indexes
I. Company Profile
| Short form of the stock | Shen Nan Dian A, Shen Nan Diann B | Code for share | 000037, 200037 |
| Stock exchange for listing | Shenzhen Stock Exchange | ||
| Name of the Company (in Chinese) | 深圳南山热电股份有限公司 | ||
| Short form of the Company (in Chinese) (if applicable) | 深南电 | ||
| Foreign name of the Company (if applicable) | Shenzhen Nanshan Power Co., Ltd. | ||
| Legal representative | Chairman Li Xinwei | ||
| Secretary of the Board | Rep. of securities affairs | |
| Name | Zhang Jie | |
| Contact adds. | 16/F-17/F, Hantang Building, OCT, Nanshan District, Shenzhen, Guangdong Province | |
| Tel. | 0755-26003611 | |
| Fax. | 0755-26003684 | |
| investor@nspower.com.cn |
The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparationplace for semi-annual report have no change in reporting period, found more details in Annual Report 2018.
IV. Main accounting data and financial indexesWhether it has retroactive adjustment or re-statement on previous accounting data or not
□ Yes √ No
| Current period | Same period of last year | Increase/decrease in this report y-o-y | |
| Operating revenue (RMB) | 408,124,616.38 | 1,079,760,214.80 | -62.20% |
| Net profit attributable to shareholders of the listed Company (RMB) | -25,283,190.82 | 30,012,095.22 | -184.24% |
| Net profit attributable to shareholders of the listed Company after deducting non-recurring gains and losses (RMB) | -28,106,510.82 | 28,904,372.78 | -197.24% |
| Net cash flow arising from operating activities (RMB) | 56,217,376.89 | 52,590,634.28 | 6.90% |
| Basic earnings per share (RMB/Share) | -0.04 | 0.05 | -180.00% |
| Diluted earnings per share (RMB/Share) | -0.04 | 0.05 | -180.00% |
| Weighted average ROE | -1.43% | 1.46% | -2.89% |
| End of current period | End of last period | Increase/decrease in this report-end over that of last period-end | |
| Total assets (RMB) | 3,414,007,712.04 | 3,307,148,289.92 | 3.23% |
| Net assets attributable to shareholder of listed Company (RMB) | 1,952,588,660.69 | 1,977,871,851.51 | -1.28% |
Chinese GAAP (Generally Accepted Accounting Principles) in the period.VI. Items and amounts of extraordinary profit (gains)/loss
√Applicable □ Not applicable
In RMB
| Item | Amount | Note |
| Gains/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets) | -417,926.32 | Abandonment loss of fixed assets |
| Governmental subsidy calculated into current gains and losses (while closely related with the normal business of the Company, excluding the fixed-amount or fixed-proportion governmental subsidy according to the unified national standard) | 3,208,943.45 | Government subsidy with assets concerned are amortized |
| Other non-operating income and expenditure except for the aforementioned items | 57,041.53 | |
| Less: impact on income tax | 58,568.53 | |
| Impact on minority shareholders’ equity (post-tax) | -33,829.87 | |
| Total | 2,823,320.00 | -- |
Section III. Summary of Company BusinessI. Main businesses of the Company in the reporting periodDoes the Company need to comply with the disclosure requirement of the special industryNoThe Company is specialized in power and thermal supply, as well as providing technical consulting and technical services for powerplant (stations). The Company has three wholly-owned or holding gas turbine plants, which equipped with seven sets of 9E gas steamcombined cycle power generating units, with total installed capacity up to 1260 MW (Nanshan Thermal Plant: 3×180 MW,Zhongshan Nam Long Power Plant: 2×180 MW, Dongguan Gaobu Power Plant: 2×180 MW). These three gas turbine plants are alllocated in the power load center of Pearl River Delta area, which are the main peaking power sources in their areas. During thereporting period, the Company is specialized in business of gas-steam combined cycle power generation, and its subsidiary NanshanThermal Plant, Zhongshan Nam Long Power Plant and Dongguan Gaobu Power Plant are all in the state of normal production andoperation. Due to the current on-grid tariff policy and natural gas price level, The company’s gas turbine business is difficult.Therefore, on the basis of paying close attention to safety management, the company has actively responded to changes in the marketenvironment, implemented economic operation management in accordance with the principle of efficiency priority, activelyexpanded the channels for trading in power markets, and tried its best to reduce losses.In the first half of the year, the Companycompleted the electric quantity settlement of 1.127 billion KWH, among them, the subordinate power plants completed the actualon-grid power of 0.42 billion KWH, a decrease of 73.58% on a year-on-year basis; completed the contractual power transfer of 740million KWH, an increase of 53.21%.During the reporting period, the company not only strive to improve the operating efficiency of its main business of electric power,but also made great efforts to the operation and expansion of related businesses, the subordinate Shen Nan Dian EngineeringCompany is actively carrying out the technical consultation and technical service business of the gas turbine power stationconstruction project while actively carrying out the related work of the superior resettlement investment; Shen Nan DianEnvironment Protection Company uses the waste heat generated by the gas turbine to engage in the wet sludge drying business ofsewage treatment plant and realized the sludge reduction, harmless treatment, and comprehensive utilization of resources.II. Major changes in main assets
1. Major changes in main assets
| Major assets | Note of major changes |
| Equity assets | N/A |
| Fixed assets | N/A |
| Intangible assets | N/A |
| Construction in process | N/A |
| Monetary fund | Loans from the bank increased |
| Inventory | Increase in spare parts |
2. Main overseas assets
□ Applicable √ Not applicable
III. Core Competitiveness Analysis
Does the Company need to comply with the disclosure requirement of the special industryNoIn recent years, due to the impact of the macroeconomic situation and the common problems of gas turbine industry, the company’smain business has been facing increasing difficulties and challenges. However, the basic core competitiveness formed by theoperation and development for more than 20 years and the management innovations adopted by the company in the past two years orso have laid the necessary foundation for the company to survive and seek transformational development. (Found more other corecompetitiveness analysis in Annual Report 2018)
Section IV. Discussion and Analysis of the OperationI. IntroductionIn the first half of 2019, China's macro economy was generally smooth and stable, but the downward pressure has increased. Theeconomic operation of Guangdong Province has also continued to be stable, and the main leading indicators of the industrialeconomy are generally better than the same period last year. According to the statistics and analysis of relevant departments, fromJanuary to June, the whole province’s total electricity consumption reached 302.750 billion kwh, an increase of 3.31% on ayear-on-year basis, electricity demand continues to grow with a slower pace.
During the reporting period, the operating situation of the company's main power business was even more severe. Under the dualpressures of high natural gas prices and lowered feed-in tariffs, the company continued to adhere to the “1+5” strategic road map, andadopted a series of effective measures by scientific decision-making and active planning and efficient implementation to fully copewith changes in the external situation, and maximized the reduction of losses and the profits: First, the power business wasmarket-oriented, and scientific decision-making created benefits. Faced with the intensification of the marketization of power trading,the company actively responded to the trend and shifted its business focus from power generation to electricity market transactions, andcarefully formulated power marketing trading strategies to achieve more economic benefits under the existing conditions. Second,broadened the procurement channels for gas sources and strive to reduce fuel procurement costs. By strengthening communication withsuppliers and actively expanding gas procurement channels, we increased the market bargaining power and controlled the fuelprocurement costs while ensuring natural gas supply. Third, accelerated the integration of industry and finance and improved theeconomic efficiency. We kept up with changes in the external situation, conducted scientific financial analysis and calculationsdynamically, and strengthened the guiding role of finance in all aspects of the company's business activities; at the same time, westrengthened the overall management of funds within the system, took effective measures to reduce capital costs. Fourth, tracked thegovernment's relevant land policy trend to Qianhai and the related work progress, studied the corresponding work strategies, did theirutmost to protect the legitimate rights and interests of the company and shareholders. Fifth, further improved the company'sstandardized operation and governance level, and revised and improved the relevant basic systems in light of the company's actualsituation, and revised some provisions of the “Articles of Association” according to the revision of the “Guidelines for the Articles ofAssociation of Listed Companies” by the China Securities Regulatory Commission. Sixth, continuously strengthened the partybuilding work, and strictly implemented the “three majors and one big” decision-making system, and in accordance with theorganization regulations, the company’s party general branch was promoted to be the party committee, which marked the company'sparty building work entering a new stage.
During the reporting period, the Company achieved operating income of 408.1246 million Yuan, net profit attributable to parentCompany amounted as (25.2832) million Yuan, basic earnings per share comes to (0.04) Yuan.II. Main business analysis
Found more in “I. Introduction” in “Discussion and Analysis of the Operation”.Y-o-y changes of main financial data
In RMB
| Current period | Same period of last year | Y-o-y | Reasons for changes |
| increase/decrease | ||||
| Operating revenue | 408,124,616.38 | 1,079,760,214.80 | -62.20% | Mainly due to the decrease of income from generating |
| Operating costs | 382,997,137.69 | 969,695,053.03 | -60.50% | Mainly due to the decrease of costs from generating |
| Sales expenses | 2,566,269.52 | 1,650,238.04 | 55.51% | The disposal fee of sludge drying is increased |
| Administration expenses | 44,931,864.50 | 46,681,650.04 | -3.75% | Reducing the expenses for controlling the expenditures |
| Finance expenses | 10,639,267.42 | 22,294,285.93 | -52.28% | The interest rate of loans has fallen. |
| Income tax expenses | 1,157,865.76 | 8,092,879.62 | -85.69% | Total profit decreased |
| R & D revenue | 0.00 | 0.00 | - | |
| Net cash flow arising from operating activities | 56,217,376.89 | 52,590,634.28 | 6.90% | Cash received relating to other operating activities increased. |
| Net cash flow arising from investment activities | -20,841,164.69 | -55,487,860.52 | -62.44% | The expenditure on purchasing fixed assets is reduced |
| Net cash flow arising from financing activities | 79,547,879.58 | 354,946,385.41 | -77.59% | Net inflow from bank loans declined |
| Net increase of cash and cash equivalent | 114,927,228.73 | 352,124,110.16 | -67.36% | Net cash flow from financing activity decreased |
| Operating revenue | Operating cost | Gross profit ratio | Increase or decrease of operating revenue over same period of last year | Increase or decrease of operating cost over same period of last year | Increase or decrease of gross profit ratio over same period of last year | |
| According to industries | ||||||
| Energy industry | 347,598,428.46 | 342,690,376.68 | 1.41% | -66.22% | -63.47% | -7.44% |
| Engineering labor | 25,197,504.31 | 16,331,191.12 | 35.19% | 34.74% | 35.22% | -0.23% |
| Sludge drying | 34,487,375.32 | 23,877,501.09 | 30.76% | 14.27% | 28.68% | -7.76% |
| According to products | ||||||
| Power marketing | 347,598,428.46 | 342,690,376.68 | 1.41% | -66.22% | -63.47% | -7.44% |
| Engineering labor | 25,197,504.31 | 16,331,191.12 | 35.19% | 34.74% | 35.22% | -0.23% |
| Sludge drying | 34,487,375.32 | 23,877,501.09 | 30.76% | 14.27% | 28.68% | -7.76% |
| According to region | ||||||
| Shenzhen | 230,913,108.24 | 213,829,919.19 | 7.40% | -60.85% | -59.09% | -3.97% |
| Zhongshan | 66,182,545.11 | 58,766,456.60 | 11.21% | -72.32% | -72.61% | 0.95% |
| Dongguan | 110,187,654.74 | 110,302,693.10 | -0.10% | -55.79% | -52.34% | -7.24% |
| Amount | Ratio in total profit | Note | Whether be sustainable (Y/N) | |
| Investment income | -677,552.37 | 2.12% | Long-term equity investment income based on Equity | Y |
| Changes in fair value | - | 0.00% | ||
| Asset impairment | - | 0.00% | ||
| Non-operating income | 103,166.50 | -0.32% | Income from disposal of waste materials | N |
| Non-operating expenditure | 46,124.97 | -0.14% | Abandonment loss of fixed assets | N |
| End of the Period | End of same period of last year | Ratio changes | Notes of major changes | |||
| Amount | Ratio in total assets | Amount | Ratio in total assets | |||
| Monetary fund | 1,033,453,294.31 | 30.27% | 774,980,279.97 | 23.74% | 6.53% | Increase of the bank loans |
| Account receivable | 161,302,717.77 | 4.72% | 277,917,141.93 | 8.51% | -3.79% | Electricity charge receivable decreased |
| Inventory | 124,479,548.95 | 3.65% | 69,716,098.15 | 2.14% | 1.51% | Increase in spare parts |
| Investment real estate | 2,499,395.80 | 0.07% | 2,704,371.51 | 0.08% | -0.01% | Accumulated depreciation increased |
| Long-term equity investment | 15,371,492.58 | 0.45% | 17,177,769.09 | 0.53% | -0.08% | The investment losses recognized under the equity increased |
| Fixed assets | 1,410,660,332.99 | 41.32% | 1,414,281,661.43 | 43.32% | -2.00% | Increased by the technical innovation |
| Construction in process | 67,646,496.22 | 1.98% | 68,499,522.92 | 2.10% | -0.12% | |
| Short-term loans | 1,100,000,000.00 | 32.22% | 911,500,000.00 | 27.92% | 4.30% | Increase of the bank loans |
| Long-term loans | 21,940,000.00 | 0.64% | 25,940,000.00 | 0.79% | -0.15% | Repayment of long-term bank loans |
VI. Sales of major assets and equity
1. Sales of major assets
□ Applicable √ Not applicable
The Company has no sales of major assets in Period-end.
2. Sales of major equity
□ Applicable √ Not applicable
VII. Analysis of main Holding Company and stock-jointly companies
√Applicable □Not applicable
Particular about main subsidiaries and stock-jointly companies net profit over 10%
In RMB
| Name | Type | Main business | Register capital | Total assets | Net Assets | Operating revenue | Operating profit | Net profit |
| Shenzhen New Power Industrial Co., Ltd. | Subsidiary | Technology development regarding to application of remaining heat (excluding restricted items) and power generation with remaining heat. Add: power generation through burning machines. | RMB 113.85 million | 200,479,207.65 | 156,285,849.09 | 43,987,952.91 | -1,598,164.59 | -1,598,164.59 |
| Shenzhen Shen Nan Dian Environment Protection Co., Ltd. | Subsidiary | Sludge drying | RMB 79 million | 144,283,416.77 | 117,017,180.38 | 34,515,510.81 | 7,521,873.68 | 5,754,905.62 |
| Shenzhen Shennandian Turbine Engineering Technology | Subsidiary | Engaged in the technology consultant service of gas-steam | RMB 10 million | 56,868,270.24 | 32,709,205.57 | 25,197,504.31 | 6,547,211.92 | 4,910,167.68 |
| Co., Ltd. | combined cycle power plant (station), maintenance and overhaul of running equipment for gas-steam combined cycle power plant (station). Import and export of goods and technology (excluding distribution and monopolized commodity of the State) | |||||||
| Shenzhen Server Petrochemical Supplying Co., Ltd. | Subsidiary | Self-operation of fuel oil or import agent business; Trading(manufacture, storage and transportation excluded) of diesel, lubricating, liquefied petroleum gas, natural gas, compressed gas & liquefied gas and chemical products(chemical hazard excluded); investment, construction and technical assistance of relevant supporting facility of | RMB 53.3 million | 126,129,193.89 | 96,624,539.40 | 532,190.46 | -1,813,604.33 | -1,810,104.33 |
| liquefied petroleum gas and natural gas; import and export of cargo and technologies, domestic trading(monopolized commodity and commodity under special government control excluded); leasing business. Licensing project: fuel oil warehousing (refined oil products excluded); ordinary freight, cargo specific transportation (container) and cargo specific transportation (pot-type) | ||||||||
| Shen Nan Dian (Zhongshan) Electric Power Co., Ltd. | Subsidiary | Power generation by burning machines, power generation by remaining heat, power supply and heat supply (excluding pipeline network of heat supply), lease of dock and oil storage (excluding oil products, | RMB 746.8 million | 618,967,592.63 | -106,982,115.53 | 66,364,051.74 | -11,977,240.04 | -11,987,240.04 |
| dangerous chemicals and inflammable and explosive materials). | ||||||||
| Shen Nan Dian (Dongguan) Weimei Electric Power Co., Ltd | Subsidiary | Construction and operation of natural gas power plants. | US $ 35.04 million | 578,244,817.83 | 83,445,358.46 | 110,328,414.74 | -15,008,905.37 | -14,946,042.16 |
| Shen Nan Energy (Singapore) Co., Ltd. | Subsidiary | Oil product trading, spare part of the gas turbine agent | US $ 0.9 million | 150,050,704.85 | 147,385,826.52 | -1,937.01 | -1,937.01 | |
| CPI Jiangxi Nuclear Power Co., Ltd. | Stock jointly Company | Development, building & operating and management of the nuclear power project; producing electricity and relevant products; foreign trade operation (excluding the import and export business of cargo exercise state-run trading management); (except for the projects with special permission from the State) | RMB 1193.27 million | 3,827,070,322.62 | 1,202,824,770.83 | 7,895,454.77 | 2,618,698.16 | 2,618,698.16 |
VIII. Structured vehicle controlled by the Company
□ Applicable √ Not applicable
IX. Prediction of business performance from January – September 2019
Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or thewarning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable √ Not applicable
X. Risks and countermeasures
1. Safety production: various degrees of ageing signs of the power generating equipment in the subsidiary power plants of theCompany continue to emerging, potential failures and security risks are increasing by years, which raise higher demands onequipment management and service input, furthermore, the age structure of the Company is gradually ageing, we are facing greatchallenges in aspect of safety management. The Company shall strengthen the maintenance and regular examination of theequipment, enhance the security education and training of the employees, improve the responsibility system of the whole members’safety production, strictly implement safety management system, raise the awareness of safety and responsibility of personnel at alllevels, to ensure the normal operation of equipment and eliminate the potential failures and accidents in the bud.
2. Power marketing: In 2019, Nanshan Thermal Plant was included in the market-oriented power generation side. Henceforth, all threepower plants subordinate to the company have entered the power market transaction. The company has changed the power generationmode from the planned power generation to the marketing-oriented power generation. Although the company actively carried outpower marketing work in the first half of the year and obtained certain benefits through contract power transfer, due to the substantialdecline in the base power plan and the actual power generation scale and the continuous high fuel prices, the company's production andoperation are under tremendous pressure. With the continuous deepening of power trading in the province, the difficulty of powertransfer transactions in the second half of the year and the difficulty of alleviating the pressure of the main business through powermarketing will be further increased. At the same time, the speed-up of the implementation of the power spot trading policy inGuangdong Province will make the company face more intense market competition, and the company's power production andoperation will face greater uncertainty. The company will continue to adhere to the principle of “maximizing benefits”, earnestly carryout market research and analysis, do its utmost to improve the performance of power marketing, strengthen the construction of the spottrading teams of the company and its three subordinate power plants, and carefully study the spot trading rules in order to be wellprepared for the arrival of spot transactions.3.
3. Fuel supplying: Due to the international situation and the “South to North Gas Transmission” in winter, the natural gas prices areexpected to rise in the second half of the year. In addition, due to the sharp decline in power generation this year, the gas consumptionis far less than expected, so some of the gas may not be collected on time. In the second half of the year, on the basis of ensuring fuelsafety and stable supply, the company will continue to strengthen the contact and communication with natural gas suppliers, adoptcorresponding natural gas procurement strategies, minimize natural gas purchase prices, and strive to develop low-cost gas sources andenhance natural gas purchasing and bargaining power, and strive to further reduce overall procurement costs.The Company reminds investors to pay attention to the major risks and other risks that the Company may face in the semi-annualreport or in previous periodic reports so as to prudently make rational investment decisions.
Section V. Important EventsI. In the report period, the Company held annual shareholders’ general meeting andextraordinary shareholders’ general meeting
1. Shareholders’ General Meeting in the report period
| Session of meeting | Type | Ratio of investor participation | Opening date | Date of disclosure | Index of disclosure |
| Annual General Meeting (AGM) of 2018 | AGM | 38.59% | 2019-04-18 | 2019-04-19 | “Resolution Notice of Annual General Meeting 2018” No.:2019-019, released on “China Securities Journal” “Securities Times” “Hong Kong Commercial Daily” and Juchao Website |
| First extraordinary shareholders’ general meeting in 2019 | Extraordinary shareholders’ general meeting | 51.38% | 2019-06-03 | 2019-06-04 | “Resolution Notice of First extraordinary shareholders’ general meeting in 2019” No.:2019-030, released on “China Securities Journal” “Securities Times” “Hong Kong Commercial Daily” and Juchao Website |
III. Commitments that the committed party as the actual controller, shareholders, relatedparty, buyer and the Company have fulfilled during the reporting period and have not yetfulfilled by the end of reporting period
□ Applicable √ Not applicable
There are no commitments that the committed party as the actual controller, shareholders, related party, buyer and the Company havefulfilled during the reporting period and have not yet fulfilled by the end of reporting periodIV. Appointment and non-reappointment (dismissal) of CPAFinancial report has been audited or not
□ Yes √ No
Not been auditedV. Explanation from Board of Directors, Supervisory Committee for “Qualified Opinion”that issued by CPA
□ Applicable √ Not applicable
VI. Explanation from the Board for “Qualified Opinion” of last year’s
□ Applicable √ Not applicable
VII. Bankruptcy reorganization
□ Applicable √ Not applicable
No bankruptcy reorganization for the Company in Period.
VIII. Lawsuits
Material lawsuits and arbitration
□Applicable √Not applicable
There are no material lawsuits or arbitration in the periodOther lawsuits
□Applicable √Not applicable
IX. Penalty and rectification
□ Applicable √ Not applicable
No penalty and rectification for the Company in Period.
X. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable √ Not applicable
XI. Implementation of the Company’s stock incentive plan, employee stock ownership plan orother employee incentives
□ Applicable √ Not applicable
The Company has no equity incentive plan, employee stock ownership plans or other employee incentives in Period.XII. Major related transaction
1. Related transaction with routine operation concerned
√Applicable □ Not applicable
| Related party | Relationship | Type of related transaction | Content of related transaction | Pricing principle | Related transaction price | Related transaction amount (in 10 thousand Yuan) | Proportion in similar transactions | Trading limit approved (in 10 thousand Yuan) | Whether over the approved limited or not (Y/N) | Clearing form for related transaction | Available similar market price | Date of disclosure | Index of disclosure |
| Shenzhen Energy Gas Investment Holding Co., Ltd., Fuel Branch of Shenzhen Energy Group Co., Ltd. | Associated legal person | Purchase fuel | The Company, New Power Company and Shen Nan Dian (Dongguan) Company are entered into the Natural Gas Sales and Purchase | In principle, the price shall not be higher than the market price of natural gas with reference to the market standard | In principle, the price shall not be higher than the market price of natural gas with reference to the market standard | 1,583 | 100.00% | It is not expected to exceed the approval standard of the shareholders general meeting | No | By agreement | - | 2019-06-25 | The Notice of OEM for Equity Gas Purchase and Related Transaction (Notice No.: 2019-033) released on China Securit |
Contractwith SZEnergyGasHoldingrespectively,andenteredin thePurchase andSaleManagementServiceAgreement ofLNGwithFuelBranch
| ies Journal, Securities Times, Hong Kong Commercial Daily and Juchao Website | ||
| Detail of sales return with major amount involved | N/A | |
| Report the actual implementation of the daily related transactions which were projected about their total amount by types during the reporting period | Not applicable | |
| Reasons for major differences between trading price and market reference price | Not applicable | |
4. Contact of related credit and debt
√Applicable □ Not applicable
Whether has non-operational contact of related liability and debts or not
√ Yes □ No
Claim receivable from related party:
| Related party | Relationship | Causes | Whether has non-business capital occupying or not (Y/N) | Balance at period-begin (10 thousand Yuan) | Current newly added (10 thousand Yuan) | Current recovery (10 thousand Yuan) | Interest rate | Current interest (10 thousand Yuan) | Ending balance (10 thousand Yuan) |
| Shen Nan Dian Zhongshan Company | Subsidiary | Routine current account | N | 60,120.96 | 11,978.33 | 5,515.74 | 5.20% | 1,585.61 | 68,169.16 |
| Shen Nan Dian Dongguan Company | Subsidiary | Routine current account | N | 43,590.48 | 4,200 | 35,245.3 | 5.20% | 985.54 | 13,530.72 |
| Shen Nan Dian Environment Protection Company | Subsidiary | Routine current account | N | 570.35 | 995.76 | 1,566.11 | 0 | ||
| Shen Nan Dian Engineering Company | Subsidiary | Routine current account | N | 221.95 | 576.32 | 8.8 | 5.20% | 2.3 | 791.77 |
| Singapore Company | Subsidiary | Routine current account | N | 152.19 | 152.19 | ||||
| Influence on business performance and financial status of the Company from related liabilities | Current assets RMB (220.1209) million increased in the Period. | ||||||||
| Related party | Relationship | Causes | Balance at period-begin (10 thousand Yuan) | Current newly added (10 thousand Yuan) | Current recovery (10 thousand Yuan) | Interest rate | Current interest (10 thousand Yuan) | Ending balance (10 thousand Yuan) |
| New Power | Subsidiary | Routine | 5,080.21 | 5,287.52 | 5,013.68 | 5,354.05 |
| Company | current account | |||||||
| Server Company | Subsidiary | Routine current account | 7,000 | 68.51 | 3.92% | 137.79 | 7,069.27 | |
| Shen Nan Dian Environment Protection Company | Subsidiary | Routine current account | 1,035.5 | 3.92% | 12.89 | 1,048.39 | ||
| Syndisome Company | Subsidiary | Routine current account | 380.54 | 14.45 | 13.9 | 381.09 | ||
| Influence on business performance and financial status of the Company from related debts | Current liability RMB 13.9205 million increased in the Period | |||||||
(2) Contract
□ Applicable √ Not applicable
No contract for the Company in Period.
(3) Leasing
□ Applicable √ Not applicable
No leasing for the Company in Period.
2. Major guarantees
√Applicable □ Not applicable
(1) Guarantees
In 10 thousand Yuan
| Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries) | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening (Date of signing agreement) | Actual guarantee limit | Guarantee type | Guarantee term | Implemented (Y/N) | Guarantee for related party (Y/N) |
| Total approving external guarantee in report period (A1) | 0 | Total actual occurred external guarantee in report period (A2) | 0 | |||||
| Total approved external guarantee at the end of report period (A3) | 0 | Total actual balance of external guarantee at the end of report period (A4) | 0 | |||||
| Guarantee of the Company for the subsidiaries | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening (Date of signing agreement) | Actual guarantee limit | Guarantee type | Guarantee term | Implemented (Y/N) | Guarantee for related party (Y/N) |
| Shen Nan Dian Zhongshan | 2017-03-28 | 4,400 | 2017-05-27 | 2,194 | General assurance | Five years | N | Y |
| Company | |||||||||
| Shen Nan Dian (Dongguan) Company | 2018-03-22 | 12,000 | 2018-07-03 | 0 | General assurance | One years | N | Y | |
| Shen Nan Dian (Dongguan) Company | 2018-03-22 | 4,000 | 2018-12-24 | 4,000 | General assurance | One year | N | Y | |
| Shen Nan Dian (Dongguan) Company | 2019-03-28 | 20,000 | 2019-06-25 | 20,000 | General assurance | One year | N | Y | |
| Shen Nan Dian (Dongguan) Company | 2019-03-28 | 20,000 | 2019-06-27 | 10,000 | General assurance | One year | N | Y | |
| Total amount of approving guarantee for subsidiaries in report period (B1) | 40,000 | Total amount of actual occurred guarantee for subsidiaries in report period (B2) | 30,000 | ||||||
| Total amount of approved guarantee for subsidiaries at the end of reporting period (B3) | 60,400 | Total balance of actual guarantee for subsidiaries at the end of reporting period (B4) | 36,194 | ||||||
| Guarantee of the subsidiary for the subsidiaries | |||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening (Date of signing agreement) | Actual guarantee limit | Guarantee type | Guarantee term | Implemented (Y/N) | Guarantee for related party (Y/N) | |
| Total amount of approving guarantee for subsidiaries in report period (C1) | 0 | Total amount of actual occurred guarantee for subsidiaries in report period (C2) | 0 | ||||||
| Total amount of approved guarantee for subsidiaries at the end of reporting period (C3) | 0 | Total balance of actual guarantee for subsidiaries at the end of reporting period (C4) | 0 | ||||||
| Total amount of guarantee of the Company (total of three above mentioned guarantee) | |||||||||
| Total amount of approving guarantee in report period | 40,000 | Total amount of actual occurred guarantee in report | 30,000 | ||||||
| (A1+B1+C1) | period (A2+B2+C2) | ||
| Total amount of approved guarantee at the end of report period (A3+B3+C3) | 60,400 | Total balance of actual guarantee at the end of report period (A4+B4+C4) | 36,194 |
| The proportion of the total amount of actually guarantee in the net assets of the Company (that is A4+ B4+C4) | 18.53% | ||
| Including: | |||
| Amount of guarantee for shareholders, actual controller and its related parties (D) | 0 | ||
| The debts guarantee amount provided for the guaranteed parties whose assets-liability ratio exceed 70% directly or indirectly (E) | 36,194 | ||
| Proportion of total amount of guarantee in net assets of the Company exceed 50% (F) | 0 | ||
| Total amount of the aforesaid three guarantees (D+E+F) | 36,194 | ||
| Explanations on possibly bearing joint and several liquidating responsibilities for undue guarantees (if applicable) | N/A | ||
| Explanations on external guarantee against regulated procedures (if applicable) | N/A | ||
| The name of the contracting Company | The name of the contracted Company | contract object | The date of signature of the contract | The book value of the assets involved in the contract (in 10 thousand yuan) (if | The assessed value of the assets involved in the contract (in 10 thousand yuan) (if | Name of the evaluation organization (if applicable) | The base date evaluation (if applicable) | Pricing principles | Bargain price (in 10 thousand yuan) | Whether connected transaction (Y/N) | Incidence relation | The performance by the end of the term | The date of disclosure | Index |
| applicable) | applicable) | |||||||||||||
| Shen Nan Dian Zhongshan Company | CNOOC Refco Group Ltd Zhuhai Branch | Liquefied natural gas | 2014-05-31 | N/A | N/A | Composed of natural gas prices, the cost of integrated services and tax. | Composed of liquefied natural gas prices, the cost of integrated services and tax. | N | Not applicable | Completed | 2014-04-25 | Notice of Material Contract (Notice No.: 2014-030) released on China Securities Journal, Securities Times, Hong Kong Commercial Daily and Juchao website | ||
| The Company, New Power Co., | Shenzhen Gas Corporation Ltd. | Pipeline gas | 2018-05-14 | N/A | N/A | It was a framework agreement, the price of NG will make by the two parties according to the | It was a framework agreement, the price of NG will make by the two parties according to the | N | Not applicable | In progress | Fail to release for special disclosure condition un-qualified |
| supplementary agreement | supplementary agreement |
| Enterprise or subsidiary | Main pollutant and features | Way of discharge | Number of discharge outlet | Distribution of the discharge outlet | Emission concentration | Pollutant discharge standard implemented | Total discharge | Total approved emissions | Excessive emission |
| Shenzhen Nanshan Power Co., Ltd. | Oxynitride | Concentrate emission from boiler uptake | 2 | In plant area of Nanshan Thermal Plant | <15 mg/m? | Implementation of “Shenzhen Blue” emission standard<15 mg/m3 | 149.49 ton | 457.5 ton | 0 |
| Shenzhen New Power Industrial Co., Ltd. | Oxynitride | Concentrate emission from boiler uptake | 1 | In plant area of Nanshan Thermal Plant | <15 mg/m? | Implementation of “Shenzhen Blue” emission standard<15 mg/m3 | 55.87 ton | 228.75 ton | 0 |
| Shen Nan Dian (Dongguan) Weimei Electric Power Co., Ltd | Oxynitride | Concentrate emission from boiler uptake | 2 | In plant area of Dongguan Gaobu Power Plant | <25 mg/m? | GB13223 | 19.8 ton | 438.9 ton | 0 |
| Shen Nan Dian (Zhongshan) Electric | Oxynitride | Concentrate emission from boiler uptake | 2 | In plant area of Zhongshan Nam Long | <25 mg/m? | GB13223 | 42.6 ton | 324.50 ton | 0 |
| Power Co., Ltd. | Power Plant |
Announcement No.: 2019-001, 2019-002, 2019-003, 2019-005, 2019-016, and the "Detailed Equity Change Report" disclosed onwww.cninfo.com.cn.
2. “Shenzhen Blue” technical transformation project. During the reporting period, the company continued to promote the “ShenzhenBlue” technical transformation project. On March 15, 2019, the company completed the upgrade of the low-nitrogen burner of theremaining 9E gas-fired unit of Nanshan Thermal Plant, and the nitrogen oxide emission value after the upgrade is better than the15mg/m3 emission standard required by the government. At the end of June 2019, the company and the New Power Company receivedthe second batch of special subsidies of RMB 23,361,160 and RMB 14,736,113 for the improvement of atmospheric environmentalquality in Shenzhen from the Shenzhen Ecological Environment Bureau. So far, the subsidies for the “Shenzhen Blue” technicaltransformation project have been fully funded. (For details, please refer to the Announcement on the Receipt of ‘the Notice on theGeneral Office of Shenzhen Municipal People's Government’s Issuance of the "Shenzhen Blue" Sustainable Action Plan in 2018’, theAnnouncement on the “Shenzhen Atmospheric Environmental Quality Improvement Subsidy Measures (2018-2020)”, and theAnnouncement on Receiving the Special Subsidy Fund for the Improvement of Atmospheric Environment Quality in Shenzhen” whichthe company disclosed on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn,Announcement No.: 2018-015, 2018-028, 2019-036).
In addition to the above matters, the construction-aid project for Xinjiang in Guangdong Province participated in 2013 and thecollection for refunds of “technical reform benefit fund” and T102-0011, T102-0155 land related matters are no further progress orchanges in the periodXVII. Major event of the subsidiaries
□Applicable √Not applicable
Section VI. Changes in Shares and Particulars about ShareholdersI. Changes in Share Capital
1. Changes in Share Capital
In Share
| Before the Change | Increase/Decrease in the Change (+, -) | After the Change | |||||||
| Amount | Proportion | New shares issued | Bonus shares | Capitalization of public reserve | Others | Subtotal | Amount | Proportion | |
| I. Restricted shares | 14,138 | 0.0023% | 14,138 | 0.0023% | |||||
| 3. Other domestic shares | 14,138 | 0.0023% | 14,138 | 0.0023% | |||||
| Domestic nature person shares | 14,138 | 0.0023% | 14,138 | 0.0023% | |||||
| II. Unrestricted shares | 602,748,458 | 99.9977% | 602,748,458 | 99.9977% | |||||
| 1. RMB Ordinary shares | 338,894,012 | 56.2235% | 338,894,012 | 56.2235% | |||||
| 2. Domestically listed foreign shares | 263,854,446 | 43.7742% | 263,854,446 | 43.7742% | |||||
| III. Total shares | 602,762,596 | 100.00% | 602,762,596 | 100.00% | |||||
□ Applicable √ Not applicable
2. Changes of restricted shares
□ Applicable √ Not applicable
II. Securities issuance and listing
□ Applicable √ Not applicable
III. Number of shares and shares held
In Share
| Total common shareholders at period-end | 28,383 | Total preference shareholders with voting rights recovered at end of reporting period (if applicable) (see note 8) | 0 | ||||||
| Particulars about common shares held above 5% by shareholders or top ten common shareholders | |||||||||
| Shareholders | Nature of shareholder | Proportion of shares held | Number of common shares held at period-end | Changes in reporting period | Amount of restricted common shares held | Amount of un-restricted common shares held | Number of share pledged/frozen | ||
| State of share | Amount | ||||||||
| HONG KONG NAM HOI (INTERNATIONAL) LTD | Overseas corporate | 15.28% | 92,123,248 | 92,123,248 | |||||
| Shenzhen Guangju Industrial Co., Ltd. | State-owned corporate | 12.22% | 73,666,824 | 73,666,824 | |||||
| Shenzhen Energy Group Co., Ltd. | State-owned corporate | 10.80% | 65,106,130 | 65,106,130 | |||||
| Gaohua－HSBC－GOLDMAN, SACHS & CO.LLC | Overseas corporate | 2.13% | 12,839,723 | 12,839,723 | |||||
| BOCI SECURITIES | Overseas corporate | 1.58% | 9,500,745 | 9,500,745 | |||||
| LIMITED | |||||||||
| Liu Fang | Domestic nature person | 1.35% | 8,158,788 | 8,158,788 | |||||
| China Merchants Securities (HK) Co., Limited | State-owned corporate | 1.34% | 8,091,708 | 8,091,708 | |||||
| Zeng Ying | Domestic nature person | 1.26% | 7,595,000 | 7,595,000 | |||||
| Meiyi Investment Property Co., Ltd. | Domestic non-state-owned corporate | 0.86% | 5,206,000 | 5,206,000 | |||||
| LI SHERYN ZHAN MING | Overseas nature person | 0.73% | 4,407,010 | 4,407,010 | |||||
| Explanation on associated relationship among the aforesaid shareholders | 1. Shenzhen Energy Group Co., Ltd. holds indirectly 100% equities of Hong Kong Nam Hoi (International) Limited; 2. Among other social public shareholders, the Company did not know whether there were associated relationships or belonging to consistent actors. | ||||||||
| Particular about top ten common shareholders with un-restrict shares held | |||||||||
| Shareholders | Amount of un-restrict common shares held at period-end | Type of shares | |||||||
| Type | Amount | ||||||||
| HONG KONG NAM HOI (INTERNATIONAL) LTD | 92,123,248 | Domestically listed foreign shares | 92,123,248 | ||||||
| Shenzhen Guangju Industrial Co., Ltd. | 73,666,824 | RMB ordinary shares | 73,666,824 | ||||||
| Shenzhen Energy Group Co., Ltd. | 65,106,130 | RMB ordinary shares | 65,106,130 | ||||||
| Gaohua－HSBC－GOLDMAN, SACHS & CO.LLC | 12,839,723 | RMB ordinary shares | 12,839,723 | ||||||
| BOCI SECURITIES LIMITED | 9,500,745 | Domestically listed foreign shares | 9,500,745 | ||||||
| Liu Fang China Merchants Securities (HK) Co., Limited | 8,158,788 | RMB ordinary shares | 5,097,988 | ||||||
| Domestically listed foreign shares | 3,060,800 | ||||||||
| Zeng Ying | 8,091,708 | Domestically listed foreign shares | 8,091,708 | ||||||
| Meiyi Investment Property Co., Ltd. | 7,595,000 | Domestically listed foreign shares | 7,595,000 | ||||||
| Liu Fang | 5,206,000 | RMB ordinary shares | 5,206,000 | ||||||
Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-backagreement dealing in reporting period
□ Yes √ No
The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have nobuy-back agreement dealing in reporting period.IV. Changes of controlling shareholders or actual controller
Change of controlling shareholders in reporting period
□ Applicable √ Not applicable
No changes of controlling shareholder for the Company in reporting periodChange of actual controller in the period
□Applicable √Not applicable
Actual controller of the Company has no changes in the reporting period.
| LI SHERYN ZHAN MING | 4,407,010 | Domestically listed foreign shares | 4,407,010 |
| Expiation on associated relationship or consistent actors within the top 10 un-restrict shareholders and between top 10 un-restrict shareholders and top 10 shareholders | 1. 100% equity of HONG KONG NAM HOI (INTERNATIONAL) LIMITED was held by Shenzhen Energy Group Co., Ltd. 2. Among other social public shareholders, the Company did not know whether there were associated relationships or belonging to consistent actors. | ||
| Explanation on top 10 shareholders involving margin business (if applicable) (see note 4) | Among the top ten shareholders, Ms. Liu Fang holds 3,346,188 shares through credit transaction guarantee securities account | ||
Section VII. Preferred Stock
□ Applicable √ Not applicable
The Company had no preferred stock in the reporting period.
Section VIII. Directors, Supervisors and Senior ExecutivesI. Changes of shares held by directors, supervisors and senior executives
□ Applicable √ Not applicable
Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report2018.
II. Resignation and dismissal of directors, supervisors and senior executives
√Applicable □ Not applicable
| Name | Title | Type | Date | Reason |
| Huang Qing | Director | Be elected | 2019-06-03 | Change of director |
| Li Wenying | Director | Be elected | 2019-06-03 | Change of director |
| Li Zhiwei | Supervisor | Be elected | 2019-06-03 | Change of supervisor |
| Liao Junkai | Supervisor | Be elected | 2019-06-03 | Change of supervisor |
| Qiang Wenqiao | Director | Leave the office | 2019-05-15 | Change of work |
| Yu Chunling | Director | Leave the office | 2019-05-15 | Change of work |
| Xiong Qingsheng | Supervisor | Leave the office | 2019-05-15 | Change of work |
| Pan Sha | Supervisor | Leave the office | 2019-05-15 | Change of work |
Section IX. Corporation Bonds
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date whenannual report approved for released or fail to cash in full on dueNo
Section X. Financial ReportI. Auditing reportWhether the semi-annual report have been audited or not
□ Yes √ No
The financial report of the semi-annual report has not been audited.
Section XI. Documents Available for Reference
I. Original semi-annual Report of 2019 carried with the personnel signature of Legal Representative;II. Accounting Statements carried with the signature and seals of the person in charge of the Company (Legal Representative), person incharge of accounting (General Manager and CFO) and person in charge of accounting department (chief accountants).III. All the original Company’s documents and public notices disclosed in Securities Times, China Securities Journal and Hong KongCommercial Daily in the report period.IV. Place for inspection: Shenzhen Stock Exchange, Secretariat of the Board of Director of the Company.
Shenzhen Nanshan Power Co., Ltd.Legal Representative: Li Xinwei
16 August 2019
| Shenzhen Nanshan Power Co., Ltd. |
| Financial Statement |
| Semi-Annual Report (ended as 30 June 2019) |
Consolidated Balance Sheet
In RMB/CNY
| Asset | 2019-6-30 | 2018-12-31 | Liabilities and owners’ equity | 2019-6-30 | 2018-12-31 |
| Current assets: | Current liabilities: | ||||
| Monetary funds | 1,033,453,294.31 | 925,829,404.44 | Short-term loans | 1,100,000,000.00 | 1,000,000,000.00 |
| Notes receivable | - | Notes payable | - | - | |
| Accounts receivable | 161,302,717.77 | 132,430,024.97 | Accounts payable | 35,894,201.87 | 18,065,898.69 |
| Accounts paid in advance | 44,330,871.23 | 53,655,777.12 | Accounts received in advance | 140,760.00 | - |
| Other receivables | 40,936,219.42 | 40,133,297.74 | Wage payable | 46,532,594.17 | 44,912,599.66 |
| Including: interest receivable | - | - | Taxes payable | 10,994,450.16 | 16,000,039.55 |
| Dividend receivable | - | - | Other accounts payable | 56,349,009.34 | 63,091,881.43 |
| Inventories | 124,479,548.95 | 124,758,334.97 | Total current liabilities | 1,261,137.48 | 1,608,290.72 |
| Long-term debt investment due within 1 year | - | - | Non-current liabilities: | 1,249,911,015.54 | 1,142,070,419.33 |
| Other current assets | 379,237,254.12 | 390,108,844.11 | Long-term loans | ||
| Total current assets | 1,783,739,905.80 | 1,666,915,683.35 | Accrual liabilities | 21,940,000.00 | 25,940,000.00 |
| Non-current assets: | Deferred income | 26,726,232.38 | 26,726,232.38 | ||
| Financial assets available for sale | - | 60,615,000.00 | Other non-current liabilities | 111,700,588.88 | 75,612,259.33 |
| Long-term equity investment | 15,371,492.58 | 16,049,044.95 | Total non-current liabilities | - | - |
| Other equity instruments investment | 60,615,000.00 | - | Total liabilities | 160,366,821.26 | 128,278,491.71 |
| Investment property | 2,499,395.80 | 2,606,302.71 | Owners’ equity: | 1,410,277,836.80 | 1,270,348,911.04 |
| Fixed assets | 1,410,660,332.99 | 1,405,649,989.24 | Share capital | ||
| Construction in progress | 67,646,496.22 | 82,348,008.39 | Capital public reserve | 602,762,596.00 | 602,762,596.00 |
| Intangible assets | 44,755,155.22 | 45,987,255.24 | Other comprehensive income | 362,770,922.10 | 362,770,922.10 |
| Long-term expenses to be apportioned | 428,427.39 | - | Surplus public reserve | - | - |
| Deferred income tax asset | 2,071,324.26 | 2,071,324.26 | Retained profit | 332,908,397.60 | 332,908,397.60 |
| Other non-current asset | 26,220,181.78 | 24,905,681.78 | Total owner’s equity attributable to parent Company | 654,146,744.99 | 679,429,935.81 |
| Total non-current asset | 1,630,267,806.24 | 1,640,232,606.57 | Minority interests | 1,952,588,660.69 | 1,977,871,851.51 |
| Total shareholders’ equity | 51,141,214.55 | 58,927,527.37 | |||
| Total liabilities and shareholders’ equity | 2,003,729,875.24 | 2,036,799,378.88 | |||
| Total assets | 3,414,007,712.04 | 3,307,148,289.92 | Total current | 3,414,007,712.04 | 3,307,148,289.92 |
liabilities
Balance Sheet of the Company
In RMB/CNY
| Asset | 2019-6-30 | 2018-12-31 | Liabilities and owners’ equity | 2019-6-30 | 2018-12-31 |
| Current assets: | Current liabilities: | ||||
| Monetary funds | 888,912,474.59 | 766,041,463.01 | Short-term loans | 760,000,000.00 | 860,000,000.00 |
| Notes receivable | - | - | Notes payable | - | - |
| Accounts receivable | 65,350,406.33 | 50,415,180.20 | Accounts payable | 19,581,547.99 | 5,349,562.56 |
| Accounts paid in advance | 28,483,399.23 | 33,326,061.81 | Wage payable | 30,820,391.34 | 26,953,632.92 |
| Other receivables | 834,707,247.88 | 1,048,357,217.53 | Taxes payable | 1,232,652.74 | 11,962,377.72 |
| Including: interest receivable | - | - | Other accounts payable | 170,676,783.52 | 157,816,358.94 |
| Inventories | 109,110,903.52 | 111,279,675.08 | Including: Interest payable | 995,304.15 | 1,368,932.93 |
| Long-term debt investment due within 1 year | - | - | Total current liabilities | 982,311,375.59 | 1,062,081,932.14 |
| Other current assets | 360,414,164.28 | 362,678,678.87 | Non-current liabilities: | ||
| Total current assets | 2,286,978,595.83 | 2,372,098,276.50 | Long-term loans | - | - |
| Non-current assets: | Deferred income | 63,726,068.59 | 41,337,945.14 | ||
| Financial assets available for sale | - | 60,615,000.00 | Other non-current liabilities | - | - |
| Long-term equity investment | 303,341,165.00 | 303,341,165.00 | Total non-current liabilities | 63,726,068.59 | 41,337,945.14 |
| Other equity instruments investment | 60,615,000.00 | - | Total liabilities | 1,046,037,444.18 | 1,103,419,877.28 |
| Fixed assets | 305,507,990.16 | 284,572,482.22 | Owners’ equity: | ||
| Construction in progress | 9,640,479.40 | 16,490,240.75 | Share capital | 602,762,596.00 | 602,762,596.00 |
| Intangible assets | 922,800.49 | 1,518,096.75 | Capital public reserve | 289,963,039.70 | 289,963,039.70 |
| Long-term expenses to be apportioned | - | - | Other comprehensive income | - | - |
| Deferred income tax asset | - | - | Surplus public reserve | 332,908,397.60 | 332,908,397.60 |
| Other non-current asset | - | - | Retained profit | 695,334,553.40 | 709,581,350.64 |
| Total non-current asset | 680,027,435.05 | 666,536,984.72 | Total shareholders’ equity | 1,920,968,586.70 | 1,935,215,383.94 |
| Total assets | 2,967,006,030.88 | 3,038,635,261.22 | Total liabilities and shareholders’ equity | 2,967,006,030.88 | 3,038,635,261.22 |
| Item | Jan.-Jun. 2019 | Jan.-Jun.2018 |
| I. Total operation income | 408,124,616.38 | 1,079,760,214.80 |
| Including: operation income | 408,124,616.38 | 1,079,760,214.80 |
| II. Total operation cost | 443,959,972.56 | 1,045,043,229.77 |
| Including: operation cost | 382,997,137.69 | 969,695,053.03 |
| Operation tax and surcharge | 2,825,433.43 | 4,722,002.73 |
| Sales expense | 2,566,269.52 | 1,650,238.04 |
| Management expense | 44,931,864.50 | 46,681,650.04 |
| Financial expense | 10,639,267.42 | 22,294,285.93 |
| Including: Interest expenses | 23,542,971.21 | 24,038,132.91 |
| Interest income | -13,189,605.67 | -2,187,166.10 |
| Add: other income | 4,962,155.46 | 4,136,805.38 |
| Investment income (Loss is listed with “-”) | -677,552.37 | -1,076,904.31 |
| Including: Investment income on affiliated Company and joint venture | - | - |
| Losses of devaluation of asset (Loss is listed with “-”) | - | - |
| Income from assets disposal (Loss is listed with “-”) | -417,926.32 | - |
| III. Operating profit (Loss is listed with “-”) | -31,968,679.41 | 37,776,886.10 |
| Add: Non-operating income | 103,166.50 | 4,775.00 |
| Less: Non-operating expense | 46,124.97 | 859,018.73 |
| IV. Total Profit (Loss is listed with “-”) | -31,911,637.88 | 36,922,642.37 |
| Less: Income tax expense | 1,157,865.76 | 8,092,879.62 |
| V. Net profit (Net loss is listed with “-”) | -33,069,503.64 | 28,829,762.75 |
| Net profit attributable to owner’s of parent Company | -25,283,190.82 | 30,012,095.22 |
| Minority shareholders’ gains and losses | -7,786,312.82 | -1,182,332.47 |
| VI. Net after-tax of other comprehensive income | - | - |
| Net after-tax of other comprehensive income attributable to owners of parent company | - | - |
| Net after-tax of other comprehensive income attributable to minority shareholders | - | - |
| VII. Total comprehensive income | -33,069,503.64 | 28,829,762.75 |
| Total comprehensive income attributable to owners of parent Company | -25,283,190.82 | 30,012,095.22 |
| Total comprehensive income attributable to minority shareholders | -7,786,312.82 | -1,182,332.47 |
| VIII. Earnings per share: | - | - |
| (i) Basic earnings per share | -0.04 | 0.05 |
| (ii) Diluted earnings per share | -0.04 | 0.05 |
Profit Statement of the Company
In RMB/CNY
| Item | Jan.-Jun.2019 | Jan.-Jun.2018 |
| I. Operation income | 165,514,051.23 | 406,846,441.84 |
| Less: Operation cost | 172,328,135.53 | 373,230,061.12 |
| Tax and surcharge | 1,087,030.23 | 854,057.24 |
| Sales expense | - | - |
| Management expense | 24,673,677.93 | 21,014,208.00 |
| Financial expense | -14,339,507.18 | -9,527,151.94 |
| Including: interest expenses | 22,030,984.10 | 12,387,120.42 |
| Interest income | -36,594,234.59 | -22,440,357.89 |
| Add: other income | 1,973,036.55 | 1,424,860.66 |
| Investment income (Loss is listed with “-”) | - | - |
| Including: Investment income on affiliated Company and joint venture | - | - |
| Losses of devaluation of asset (Loss is listed with “-”) | - | - |
| Income on disposal of assets (Loss is listed with “-”) | -231,373.37 | - |
| II. Operating profit (Loss is listed with “-”) | -16,493,622.10 | 22,700,128.08 |
| Add: Non-operating income | 1,775.00 | |
| Less: Non-operating expense | 759,974.53 | |
| III. Total Profit (Loss is listed with “-”) | -16,493,622.10 | 21,941,928.55 |
| Less: Income tax expense | -2,246,824.86 | 5,485,482.14 |
| IV. Net profit (Net loss is listed with “-”) | -14,246,797.24 | 16,456,446.41 |
| V. Other comprehensive income | - | - |
| VI. Total comprehensive income | -14,246,797.24 | 16,456,446.41 |
| Item | Jan.-Jun.2019 | Jan.-Jun.2018 |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 428,898,326.58 | 1,094,708,553.42 |
| Write-back of tax received | 1,346,224.12 | 1,532,247.09 |
| Other cash received concerning operating activities | 70,033,512.82 | 6,010,380.05 |
| Subtotal of cash inflow arising from operating activities | 500,278,063.52 | 1,102,251,180.56 |
| Cash paid for purchasing commodities and receiving labor service | 333,819,040.13 | 900,058,280.99 |
| Cash paid to/for staff and workers | 66,444,597.80 | 72,787,871.66 |
| Taxes paid | 17,292,868.12 | 50,929,658.40 |
| Other cash paid concerning operating activities | 26,504,180.58 | 25,884,735.23 |
| Subtotal of cash outflow arising from operating activities | 444,060,686.63 | 1,049,660,546.28 |
| Net cash flows arising from operating activities | 56,217,376.89 | 52,590,634.28 |
| II. Cash flows arising from investing activities: | ||
| Net cash received from disposal of fixed, intangible and other long-term assets | 1,989,560.00 | 262,500.00 |
| Other cash with investment concerned from disposal subsidiary and other operational unit | - | - |
| Other cash received concerning investing activities | - | - |
| Subtotal of cash inflow from investing activities | 1,989,560.00 | 262,500.00 |
| Cash paid for purchasing fixed, intangible and other long-term assets | 22,830,724.69 | 55,750,360.52 |
| Cash paid for investment | - | - |
| Other cash paid for acquiring subsidiary and other operation unit | - | - |
| Other cash paid concerning investing activities | - | - |
| Subtotal of cash outflow from investing activities | 22,830,724.69 | 55,750,360.52 |
| Net cash flows arising from investing activities | -20,841,164.69 | -55,487,860.52 |
| III. Cash flows arising from financing activities | ||
| Cash received by absorbing investment | - | - |
| Cash received from loans | 730,000,000.00 | 910,000,000.00 |
| Other cash received concerning financing activities | 7,303,338.86 | 15,460,000.00 |
| Subtotal of cash inflow from financing activities | 737,303,338.86 | 925,460,000.00 |
| Cash paid for settling debts | 634,000,000.00 | 546,750,000.00 |
| Cash paid for dividend and profit distributing or interest paying | 23,755,459.28 | 23,763,614.59 |
| Other cash paid concerning financing activities | - | - |
| Subtotal of cash outflow from financing activities | 657,755,459.28 | 570,513,614.59 |
| Net cash flows arising from financing activities | 79,547,879.58 | 354,946,385.41 |
| IV. Influence on cash due to fluctuation in exchange rate | 3,136.95 | 74,950.99 |
| V. Net increase of cash and cash equivalents | 114,927,228.73 | 352,124,110.16 |
| Add: Balance of cash and cash equivalents at the period-begin | 914,956,611.70 | 411,613,377.07 |
| VI. Balance of cash and cash equivalents at the period-end | 1,029,883,840.43 | 763,737,487.23 |
Cash Flow Statement of the Company
In RMB/CNY
| Item | Jan.-Jun.2019 | Jan.-Jun.2018 |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 179,341,203.60 | 510,374,571.27 |
| Write-back of tax received | - | - |
| Other cash received concerning operating activities | 472,584,897.62 | 311,662,404.45 |
| Subtotal of cash inflow arising from operating activities | 651,926,101.22 | 822,036,975.72 |
| Cash paid for purchasing commodities and receiving labor service | 166,269,024.94 | 340,094,480.46 |
| Cash paid to/for staff and workers | 37,380,527.03 | 44,228,041.55 |
| Taxes paid | 9,889,753.49 | 10,150,486.72 |
| Other cash paid concerning operating activities | 180,626,305.78 | 726,578,528.72 |
| Subtotal of cash outflow arising from operating activities | 394,165,611.24 | 1,121,051,537.45 |
| Net cash flows arising from operating activities | 257,760,489.98 | -299,014,561.73 |
| II. Cash flows arising from investing activities: | ||
| Net cash received from disposal of fixed, intangible and other long-term assets | 1,794,800.00 | 262,500.00 |
| Other cash received from disposing subsidiary and other operation unit | - | - |
| Other cash received concerning investing activities | - | |
| Subtotal of cash inflow from investing activities | 1,794,800.00 | 262,500.00 |
| Cash paid for purchasing fixed, intangible and other long-term assets | 15,789,275.99 | 47,402,174.44 |
| Cash paid for investment | - | - |
| Net cash received from subsidiaries and other units obtained | - | - |
| Other cash paid concerning investing activities | - | - |
| Subtotal of cash outflow from investing activities | 15,789,275.99 | 47,402,174.44 |
| Net cash flows arising from investing activities | -13,994,475.99 | -47,139,674.44 |
| III. Cash flows arising from financing activities | ||
| Cash received from absorbing investment | - | - |
| Cash received from loans | 430,000,000.00 | 740,000,000.00 |
| Other cash received concerning financing activities | - | 11,660,000.00 |
| Subtotal of cash inflow from financing activities | 430,000,000.00 | 751,660,000.00 |
| Cash paid for settling debts | 530,000,000.00 | 30,000,000.00 |
| Cash paid for dividend and profit distributing or interest paying | 20,895,394.22 | 10,068,299.31 |
| Other cash paid concerning financing activities | - | - |
| Subtotal of cash outflow from financing activities | 550,895,394.22 | 40,068,299.31 |
| Net cash flows arising from financing activities | -120,895,394.22 | 711,591,700.69 |
| IV. Influence on cash due to fluctuation in exchange rate | 391.81 | 262.61 |
| V. Net increase of cash and cash equivalents | 122,871,011.58 | 365,437,727.13 |
| Add: Balance of cash and cash equivalents at the period-begin | 766,041,463.01 | 148,223,551.05 |
| VI. Balance of cash and cash equivalents at the period-end | 888,912,474.59 | 513,661,278.18 |
Consolidated Statement on Changes of Shareholders’ Equity
In RMB/CNY
| Item | Jan.-Jun. 2019 | ||||||
| Equity attributable to Shareholder of parent Company | Minority’s equity | Total owners’ equity | |||||
| Share capital | Capital reserve | Surplus reserves | Retained profit | Subtotal | |||
| I. Balance at the end of last year | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 679,429,935.81 | 1,977,871,851.51 | 58,927,527.37 | 2,036,799,378.88 |
| Add: Changes of accounting policy | - | - | - | - | - | - | - |
| II. Balance at the beginning of this year | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 679,429,935.81 | 1,977,871,851.51 | 58,927,527.37 | 2,036,799,378.88 |
| III. Increase/ Decrease in this year | - | - | - | -25,283,190.82 | -25,283,190.82 | -7,786,312.82 | -33,069,503.64 |
| (i) Total comprehensive income | - | - | - | -25,283,190.82 | -25,283,190.82 | -7,786,312.82 | -33,069,503.64 |
| (ii) Owners’ devoted and decreased capital | - | - | - | - | - | - | - |
| 1. Owners’ devoted capital | - | - | - | - | - | - | - |
| 2. Other | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | - | - | - | - |
| 1. Withdrawal of surplus | |||||||
| reserves | - | - | - | - | - | - | - |
| 2. Distribution for owners (or shareholders) | - | - | - | - | - | - | - |
| 3. Other | - | - | - | - | - | - | - |
| (IV) Carrying forward internal owners’ equity | - | - | - | - | - | - | - |
| (V) Other | - | - | - | - | - | - | - |
| IV. Balance at the end of the Period | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 654,146,744.99 | 1,952,588,660.69 | 51,141,214.55 | 2,003,729,875.24 |
| Item | Jan.-Jun. 2018 | ||||||
| Equity attributable to Shareholder of parent Company | Minority’s equity | Total owners’ equity | |||||
| Share capital | Capital reserve | Surplus reserves | Retained profit | Subtotal | |||
| I. Balance at the end of last year | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 660,176,169.69 | 1,958,618,085.39 | 65,728,468.74 | 2,024,346,554.13 |
| Add: Changes of accounting policy | - | - | - | - | - | - | - |
| II. Balance at the beginning of this year | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 660,176,169.69 | 1,958,618,085.39 | 65,728,468.74 | 2,024,346,554.13 |
| III. Increase/ Decrease in this year | - | - | - | 30,012,095.22 | 30,012,095.22 | -1,182,332.47 | 28,829,762.75 |
| (i) Total comprehensive income | - | - | - | 30,012,095.22 | 30,012,095.22 | -1,182,332.47 | 28,829,762.75 |
| (ii) Owners’ devoted and decreased capital | - | - | - | - | - | - | - |
| 1. Owners’ devoted and capital | - | - | - | - | - | - | - |
| 2. Other | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | - | - | - | - |
| 1. Withdrawal of surplus reserves | - | - | - | - | - | - | - |
| 2. Other | - | - | - | - | - | - | |
| (IV) Carrying forward internal owners’ equity | - | - | - | - | - | - | - |
| 1. Capital reserves conversed to share capital) | - | - | - | - | - | - | - |
| 2. Surplus reserves conversed to share capital | - | - | - | - | - | - | - |
| (V) Other | 602,762,596.00 | 362,770,922.10 | 332,908,397.60 | 690,188,264.91 | 1,988,630,180.61 | 64,546,136.27 | 2,053,176,316.88 |
| Item | Jan.-Jun. 2019 | Jan.-Jun. 2018 | ||||||||
| Share capital | Capital reserve | Surplus reserves | Retained profit | Total owners’ equity | Share capital | Capital reserve | Surplus reserves | Retained profit | Total owners’ equity | |
| I. Balance at the end of last year | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 709,581,350.64 | 1,935,215,383.94 | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 1,070,119,627.89 | 2,295,753,661.19 |
| Add: Changes of accounting policy | - | - | - | - | - | - | - | - | - | - |
| II. Balance at the beginning of this year | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 709,581,350.64 | 1,935,215,383.94 | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 1,070,119,627.89 | 2,295,753,661.19 |
| III. Increase/ Decrease in this year | - | - | - | -14,246,797.24 | -14,246,797.24 | - | - | - | 16,456,446.41 | 16,456,446.41 |
| (i) Total comprehensive income | - | - | - | -14,246,797.24 | -14,246,797.24 | - | - | - | 16,456,446.41 | 16,456,446.41 |
| (ii) Owners’ devoted and decreased capital | - | - | - | - | - | - | - | - | - | - |
| 1. Owners’ devoted capital | - | - | - | - | - | - | - | - | - | - |
| 2. Other | - | - | - | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | - | - | - | - | - | - | - |
| 1. Withdrawal of surplus reserves | - | - | - | - | - | - | - | - | - | - |
| 2. Distribution for owners (or shareholders) | - | - | - | - | - | - | - | - | - | - |
| 3. Other | - | - | - | - | - | - | - | - | - | - |
| (IV) Carrying forward | - | - | - | - | - | - | - | - | - | - |
| internal owners’ equity | ||||||||||
| (V) Other | - | - | - | - | - | - | - | - | - | - |
| IV. Balance at the end of the Period | - | - | - | - | - | - | - | - | - | - |
| I. Balance at the end of last year | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 695,334,553.40 | 1,920,968,586.70 | 602,762,596.00 | 289,963,039.70 | 332,908,397.60 | 1,086,576,074.30 | 2,312,210,107.60 |
Shenzhen Nanshan Power Co., Ltd.Notes to financial statement for Jan.-Jun. 2019(The amount unit is RMB unless otherwise stated)
I. Company ProfileShenzhen Nanshan Power Co., Ltd (hereinafter called as “Company”) was reorganized to be ajoint-stock enterprise from a foreign investment enterprise on 25 November 1993, upon the approvalof General Office of Shenzhen Municipal Government with Document Shen Fu Ban Fu [1993]No.897.After approved by Document Shen Zhu Ban Fu [1993] No.897 issued by Shenzhen SecuritiesRegulatory Office, on 3 January 1994, the Company offered 40,000,000 RMB common shares and37,000,000 domestically listed foreign shares in and out of China. And the RMB common shares(A-stock) and domestically listed foreign listed shares (B-stock) were listed in Shenzhen SecuritiesExchange successively on July 1, 1994 and Nov. 28, 1994.Headquarter of the Company located on 16/F, 17/F, Han Tang Building, OCT, Nanshan District,Shenzhen City, Guangdong Province, P.R.C.The financial statement was approved and decided by the Broad of the Company on 14 August 2019.Totally 9 subsidiaries included in consolidate scope for the year of 2019.
The Company together with its subsidiaries is mainly engaged in businesses as production of powerand heat, power plant construction, fuel trading, engineering consulting and sludge drying etc.II. Preparation basis of Financial StatementsThe Group’s financial statements have been prepared based on the going concern assumption andbased on actual transactions and events. In accordance with the Accounting Standards for BusinessEnterprises- Basic Norms (Ministry of Finance Order No.33 Issued, Ministry of Finance Order No.76Revised) promulgated by the Ministry of Finance of PRC on 15 February 2006 and 42 specificaccounting standards, the subsequently promulgated application guidelines of the AccountingStandards for Business Enterprises, interpretations and other related rules of the Accounting Standardsfor Business Enterprises (hereinafter referred to as “ASBEs”), and the disclosure requirements of the“Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares, No.15- General Requirements for Financial Reports” (revised in 2014) of China Securities RegulatoryCommission.The Group’s financial statements have been prepared on an accrual basis in accordance with theASBEs. Except for certain financial instruments, the financial statements are prepared under thehistorical cost convention. In the event that depreciation of assets occurs, a provision for impairmentis made accordingly in accordance with the relevant regulations.
III. Declaration of obedience to corporate accounting principlesThe Financial Statements are up to requirements of corporate accounting principles, and also a trueand thorough reflection to the Group together with its financial information as financial position on
thJune 2019, and the Company together with its operation results, and cash flow for the Jan.-Jun. of2019. In addition, the financial statements of the Group also comply with, in all material respects, thedisclosure requirements of the “Regulation on the Preparation of Information Disclosures ofCompanies Issuing Public Shares, No. 15--General Requirements for Financial Reports” revised bythe China Securities Regulatory Commission in 2014 and the notes thereto.
IV. The main accounting policies and accounting estimates
The Company and its subsidiaries are mainly engaged in power and thermal generation, constructionof power plant, fuel trading, engineering technology consultancy and sludge desiccation operation.According to the actual production and operation characteristics, the Company and its subsidiariesestablish certain specific accounting policies and accounting estimates in respect of their transactionsand matters such as sales revenue recognition pursuant to relevant business accounting principles.Details are set out in Note 22 Description of revenue items under section IV. For explanation onmaterial accounting judgment and estimate issued by the management, please refer to Note 28Material accounting judgment and estimate under section IV.
1. Accounting period
The Group’s accounting year is Gregorian calendar year, namely from 1
st January to 31
st
December.
2. Operating cycle
Normal operating cycle refers to the period from purchase of assets used for processing to realizationof cash or cash equivalents. Our operation cycle is 12 months which is also serving as the standard forcurrent or non- current assets and liabilities.
3. Bookkeeping standard currency
RMB is the currency in the Group’s main business economic environment and the bookkeepingstandard one, which is adopted in preparation of the financial statements.
4. Accounting treatment on enterprise combine under the same control and under the differentcontrolEnterprise combination refers to a trading or event that two or over two independent enterprise/scombined to one reporting body. The combination was divided into enterprise consolidation under thesame control and the one not under the same control.
(1) Consolidation of enterprises under the same control
The enterprises involved in the consolidation are all under the final control of one party or parties andthe control is not temporary. That is the corporate consolidation under the common control. For abusiness combination involving enterprises under common control, the party that, on the combination
date, obtains control of another enterprise participating in the combination is the absorbing party,while that other enterprise participating in the combination is a party being absorbed. Thecombination date is the date on which one combining enterprise effectively obtains control of theother combining enterprises.Assets and liabilities obtained by the absorbing party are measured at their carrying amount at thecombination date as recorded by the party being merged. The difference between the carrying amountof the net assets obtained and the carrying amount of the consideration paid for the combination (orthe aggregate nominal value of shares issued as consideration) is charged to the capital reserve (sharecapital premium). If the capital reserve (share capital premium) is not sufficient to absorb thedifference, any excess shall be adjusted against retained earnings.Cost incurred by the absorbing party that is directly attributable to the business combination shall becharged to profit or loss in the period in which they are incurred.
(2) Consolidation of enterprises not under the same control
The enterprises involved in the consolidation are ones not under the same final control of the commonparty or parties before and after the consolidation. That is the corporate consolidation under thedifferent control. For a business combination not involving enterprises under common control, theparty that, on the acquisition date, obtains control of another enterprise participating in thecombination is the acquirer, while that other enterprise participating in the combination is the acquiree.The acquisition date is the date on which the acquirer effectively obtains control of the acquiree.For business combination involving entities not under common control, the cost of a businesscombination is the aggregate of the fair values, on the date of acquisition, of assets given, liabilitiesincurred or assumed, and equity instruments issued by the acquirer to be paid by the acquirer, inexchange for control of the acquire plus agency fee such as audit, legal service and evaluationconsultation and other management fees charged to the profit or loss for the period when incurred. Asequity or bond securities are issued by the acquirer as consideration, any attributable transaction costis included in their initial costs. Involved or contingent consideration charged to the combination costaccording to its fair value on the date of acquisition, the combined goodwill would be adjusted if newor additional evidence existed about the condition on the date of acquisition within twelve monthsafter the acquisition date, which is required to adjust the contingent consideration. The combinationcost incurred by the acquirer and the identifiable net assets acquired from the combination aremeasured at their fair values. Where the cost of a business combination exceeds the acquirer’s interestin the fair value of the acquiree’s identifiable net assets on the acquisition date, the difference isrecognized as goodwill. Where the cost of a business combination is less than the acquirer’s interest inthe fair value of the acquiree’s identifiable net assets, the acquirer shall first reassess the measurementof the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities and themeasurement of the cost of combination. If after such reassessment the cost of combination is still lessthan the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference ischarged to profit or loss for the period.
Where the acquiree’s deductible temporary difference acquired by the acquirer is not yet recognizedas it does not satisfy the recognition conditions of the deferred income tax assets on the acquisitiondate, but new or additional information proves that the relevant circumstances have already existed onthe acquisition date within twelve months after the acquisition date, which estimates that theeconomic benefits incurred from the deductible temporary difference at the acquisition date ofacquirer can be realized, then the relevant deferred income tax assets will be recognized, and thegoodwill will be reduced at the same time, if the goodwill is not sufficient to be absorbed, any excessshall be recognized in the profit or loss for the period. Except as disclosed above, the deferred incometax assets related to the business combination are charged to the profit or loss for the period.
For a business combination not under common control is finished by a stage-up approach with severaltransactions, these several transactions will be judged whether they fall within “transactions in abasket” in accordance with the judgment standards on “transactions in a basket” as set out in theNotice of the Ministry of Finance on Issuing Accounting Standards for Business EnterprisesInterpretation No. 5 (Cai Kuai [2012] No. 19) and Article 51 of the “Accounting Standards forBusiness Enterprise No.33- Consolidated Financial Statement” (see Note IV. 5(2)). If they fall within“transactions in a basket”, they are accounted for with reference to the descriptions as set out in theprevious paragraphs of this section and Note IV. 12 “Long-term equity investments”, and if they donot fall within “transactions in a basket”, they are accounted for in separate financial statements andconsolidated financial statements:
In separate financial statement, the sum between carrying value of the equity investment prior toacquisition date and cost of additional investment made on the acquisition date is deemed to be theinitial investment cost of this investment. Other comprehensive income recognized for equityinvestment held prior to combination date under equity method shall be accounted for when theCompany disposes of this investment on the same basis as the investee directly disposes of relevantassets or liabilities, which means that other than the changes arising from re-measuring the acquiree’snet liabilities or net assets under defined benefit plan under equity method, it shall be included ininvestment income of the current period.
In consolidated financial report, for equity of bought party held before purchasing, re-measured byfair value on purchased date, and the difference of fair value and its book value should reckoned intocurrent investment income; Other comprehensive income recognized for equity investment held priorto combination date under equity method shall be accounted for when the Company disposes of thisinvestment on the same basis as the investee directly disposes of relevant assets or liabilities, whichmeans that other than the changes arising from re-measuring the acquiree’s net liabilities or net assetsunder defined benefit plan under equity method, it shall be included in investment income of thecurrent period dated purchasing day.
5. Preparation methods for corporate consolidated statements
(1) Determining principle for consolidated financial report scope
The scope is determined on the basis of control. Control refers to the Company possess rights over theinvestee party, and enjoyed variable return through participate in the relevant activities of the investeeparty, and the Company has ability to impact the amount of returns by using the rights over investeeparty. The consolidated scope includes the Group and all the subsidiaries. Subsidiary is referring tothe enterprise or the subject controlled by the Company.Once change of relevant facts and conditions results in change to relevant factors involved in theabove definition, the Company will make further assessment.
(2) Preparation methods for corporate consolidated statements
Subsidiaries are consolidated from the date on which the Group obtains net assets and the effectivecontrol of decision making of production and operation are deconsolidated from the date that suchcontrol ceases. For disposal of subsidiaries, the operating results and cash flows of such subsidiariesbefore the date of disposal are properly included in the consolidated income statement andconsolidated cash flow statements; for disposal of subsidiaries during the reporting period, noadjustment shall be made to the opening balance of the consolidated balance sheet. For thosesubsidiaries acquired through business combination not under common control, the operating resultsand cash flows after the acquisition date have been properly included in the consolidated incomestatements and consolidated cash flow statements. No adjustments shall be made to the openingbalance and the comparative figures of the consolidated financial statements. For those subsidiariesacquired through business combination under common control and acquiree absorbed throughcombination, the operating results and cash flows from the beginning of the consolidation period tothe consolidation date are also presented in the consolidated income statement and the consolidatedcash flow statements. The comparative figures presented in the consolidated financial statements arealso adjusted accordingly.The financial statements of the subsidiaries are adjusted in accordance with the accounting policiesand accounting period of the Company in the preparation of the consolidated financial statements,where the accounting policies and the accounting periods are inconsistent between the Company andthe subsidiaries. For subsidiaries acquired from business combination not under common control, thefinancial statements of the subsidiaries will be adjusted according to the fair value of the identifiablenet assets at the acquisition date.All intra-group significant balances, transactions and unrealized profit are eliminated in theconsolidated financial statements.As for the subsidiary’s shareholders’ equity and the parts that does not owned the Group in current netgains/losses, listed out independently as minority shareholders’ equity and minority shareholdersgains/losses in item of shareholders’ equity and net profit contained in consolidated financialstatement separately. The amount attributable to minority shareholders’ equity of current net loss/gains
of subsidiaries is listed in the net profit item of consolidated profit as minority shareholders’ equity.When the share of losses attributable to the minor shareholders has exceeded their shares in theowners’ equity at the beginning of term attributable to minority shareholders in the subsidiary, thebalance shall offset the minor shareholders’ equity.For control rights loss in original subsidiary for partial equity investment disposal or other reasons,the remained equity should re-measured based on the fair value at date of control losses. Thedifference between the net assets of original subsidiary share by proportion held that sustainablecalculated since purchased date and sum of consideration obtained by equity disposal and fair value ofremain equity, reckoned into the current investment income of control rights loss. Othercomprehensive income relating to equity investment in original subsidiary shall be accounted for,upon lost of control, under the same basis as the acquiree would otherwise adopt when relevant assetsor liabilities are disposed directly by the acquiree, which means that other than the changes arisingfrom re-measuring the original subsidiary’s net liabilities or net assets under defined benefit plan, itshall be included in investment income of the current period. The remaining equity interests aremeasured subsequently according to “Accounting Standard for Business Enterprises No. 2 –Long-term Equity Investments” or “Accounting Standard for Business Enterprises No. 22 –Recognition and Measurement of Financial Instruments”. See Note IV.13 “Long-term equityinvestments” or Note IV.9 “Financial instruments” for details.
When the Company disposes of equity investment in a subsidiary by a stage-up approach with severaltransactions until the control over the subsidiary is lost, it shall determine whether these severaltransactions related to the disposal of equity investment in a subsidiary until the control over thesubsidiary is lost fall within “transactions in a basket”. Usually, these several transactions related tothe disposal of equity investment in a subsidiary are accounted for as transactions in a basket when theterms, conditions and economic impacts of these several transactions meet the following one or moreconditions: ① these transactions are entered into at the same time or after considering their impactson each other; ② these transactions as a whole can reach complete business results; ③ theoccurrence of a transaction depends on at least the occurrence of an other transaction; ④ anindividual transaction is not deemed as economic, but is deemed as economic when considered withother transactions. If they are not transactions in a basket, each of which are accounted for inaccordance with applicable rules in “partial disposal of long-term equity investment of a subsidiarywithout losing control over a subsidiary” (see Note IV. 12 (2) ④) separately, and “the control over asubsidiary is lost due to partial disposal of equity investment or other reasons” (see the precedingparagraph). When several transactions related to the disposal of equity investment in a subsidiary untilthe control over the subsidiary is lost fall within transactions in a basket, each of which is accountedfor as disposal of a subsidiary with a transaction until the control over a subsidiary is lost; however,the different between the amount of disposal prior to the loss of control and the net assets of a
subsidiary attributable to the disposal investment shall be recognized as other comprehensive incomein consolidated financial statements and transferred to profit or loss for the period at the time when thecontrol is lost.
6. Classification of joint arrangement and accounting treatment on conduct joint operationJoint arrangement refers to such arrangement as jointly controlled by two or more participators. TheCompany classifies joint arrangement into joint operation and joint venture according to the rights it isentitled to and obligations it assumes. Under joint operation, the Company is entitled to relevant assetsunder the arrangement and assumes relevant liabilities under the arrangement. Joint venture refers tosuch joint arrangement under which the Company is only entitled to the net assets of the arrangement.Equity method is adopted for investment in joint ventures, and it is accounted for under theaccounting policies set out in Note 12(2) ② “long term equity investment under equity method”under section IV.As a joint party under joint operation, the Company recognizes the assets and liabilities it separatelyholds and assumes, the assets and liabilities it jointly holds and assumes under the proportion, therevenue from disposal of the output which the Company is entitled to under the proportion, therevenue from disposal of the output under the proportion and the separately occurred expenses as wellas expenses occurred for joint operations under its proportion.For injection to or disposal of assets of joint operations (other than those assets constituting businessoperation) or for purchase of assets from joint operations, gain or loss arising from the transaction isonly recognized to the extent it is attributable to other parties to the joint operation before the jointoperation is sold to any third party. In case that asset occur asset impairment loss under BusinessAccounting Principle No.8-Assets Impairment, the Company recognizes this loss in full in connectionwith injection to or disposal of assets of joint operations, and recognizes this loss based on theproportion in connection with purchase of assets from joint operations.
7. Determination criteria of cash and cash equivalent
Cash and cash equivalents of the Group include cash on hand, deposits readily available for paymentpurpose and short-term (normally fall due within three months from the date of acquisition) andhighly liquid investments held the Group which are readily convertible into known amounts of cashand which are subject to insignificant risk of value change.
8. Foreign currency business and foreign currency statement translation
(1) Foreign currency business translation
Foreign currency transactions are translated into the Company’s functional currency at the spot rate ontransaction date (generally refers to the middle rate of prevailing foreign exchange rate released by thePBOC) when the transactions are initially measured. However, foreign currency exchange business ortransaction involving foreign currency exchange occurred by the Company are translated intofunctional currency at the effective exchange rate adopted.
(2) Translation of foreign currency monetary items and foreign currency non-monetary items
On balance sheet date, foreign currency monetary items are translated at the spot rate as of balancesheet date, and the exchange difference shall be included in current period gains and losses, except ①exchange difference arising from foreign currency special borrowings relating to purchasing assetssatisfying capitalization conditions is stated under capitalization principle of borrowing expenses; ②exchange difference arising from hedge instruments used as effective hedging of net investment inoverseas operation (such difference shall be included in other comprehensive income and recognizedas current period gains and losses when the net investment is disposed); and ③exchange differencearising from change of carrying balance of available for sale foreign currency monetary items otherthan amortized cost is included in other comprehensive income.When preparing consolidated financial statement involving overseas operation, in case there is foreigncurrency monetary items which substantially constitute net investment in overseas operation, theexchange difference arising from exchange rate fluctuation shall be included in other comprehensiveincome; and shall transfer to gains and losses from disposal for the current period when the overseasoperation is disposed of.Non-monetary items measured in historical cost are still measured by sum on the bookkeepingstandard currency at the current exchange rate. The items measured by the fair value are converted atthe current rate on the fair value recognition day. The difference is dealt as the fair value change andreckoned into the current loss/gain or recognized as the other consolidated income and reckoned intothe reserve.
(3) Translation of foreign currency financial statement
When preparing consolidated financial statement involving overseas operation, in case there is foreigncurrency monetary items which substantially constitute net investment in overseas operation, theexchange difference arising from exchange rate fluctuation shall be included in other comprehensiveincome as “translation difference of foreign currency statement”; and shall transfer to gains and lossesfrom disposal for the current period when the overseas operation is disposed of.Foreign currency financial statement for overseas operation is translated into RMB statement by thefollowing means: assets and liabilities in balance sheet are translated at the spot rate as of balancesheet date; owner’s equity items (other than undistributed profit) are translated at the spot rateprevailing on the date of occurrence. Income and expense items in profit statement are translated atthe spot rate prevailing on the date of transactions. Beginning undistributed profit represents thetranslated ending undistributed profit of previous year; ending undistributed profit is allocated andstated as several items upon translation. Upon translation, difference between assets, liabilities andshareholders’ equity items shall be recorded as foreign currency financial statement translationdifference and recognized as other comprehensive income. In case of disposal of overseas operationwhere control is lost, foreign currency financial statement translation difference relating to theoverseas operation as stated under shareholders’ equity in balance sheet shall be transferred to currentgains and losses of disposal in full or under the proportion it disposes.
Foreign currency cash flow and cash flow of overseas subsidiary are translated at the spot rateprevailing on the date of occurrence of cash flow. Influence over cash from exchange rate fluctuationis taken as adjustment items to separately stated in cash flow statement.The beginning figure and previous year actual figures are stated at the translated figures in previousyear financial statement.If the Company loses control over overseas operation due to disposal of all the owners’ equity or partequity investment in the overseas operation or other reasons, foreign currency financial statementtranslation difference relating to the overseas operation attributable to owners’ equity of parentcompany as stated under shareholders’ equity in balance sheet shall be transferred to current gains andlosses of disposal in full.If the Company reduces equity proportion while not loses control over overseas operation due todisposal of part equity investment in the overseas operation or other reasons, foreign currencyfinancial statement translation difference relating to the disposed part will be vested to minorityinterests and will not transfer to current gains and losses. When disposing part equity interests ofoverseas operation which is the associate or joint venture, foreign currency financial statementtranslation difference relating to the overseas operation shall transfer to current disposal gains andlosses according to the disposed proportion.
9. Financial instruments
Financial asset or financial liability is recognized when the Company becomes a party to financialinstrument contract.
(1) Classification, recognition and measurement of financial assets
According to the business model of managing financial assets and the contractual cash flowcharacteristics of financial assets, the Company classifies the financial assets into the financial assetsmeasured at amortized cost, the financial assets measured at fair value and whose changes areincluded in other comprehensive income, and the financial assets measured at fair value and whosechanges are included in current profit or loss.Financial assets are measured at fair value on initial recognition. For financial assets measured at fairvalue and whose changes are included in current profit or loss, the related transaction expenses aredirectly included in current profit or loss. For other types of financial assets, the related transactioncosts are included in the initial recognition amount. For the accounts receivable or notes receivablearising from the sale of products or the provision of labor services that do not contain or consider thesignificant financing components, the Company uses the consideration amount that is expected to bereceived as the initial recognition amount.
①Financial assets measured at amortized cost
The Company's business model for managing financial assets measured at amortized cost is to collectcontractual cash flows, and the contractual cash flow characteristics of such financial assets areconsistent with the basic borrowing and lending arrangements, i.e. the cash flows generated on a
specific date are only the payment for the principal and the interest based on the outstanding principalamount. The Company adopts effective interest method for this type of financial assets which aresubsequently measured at amortized cost, the gains or losses arising from amortization or impairmentare included in current profit or loss.
② Financial assets measured at fair value and whose changes are included in other comprehensiveincomeThe Company's business model for managing such financial assets is to target at both the collection ofcontractual cash flows and the sale, and the contractual cash flow characteristics of such financialassets are consistent with the basic borrowing and lending arrangements. The Company adopts the fairvalue measurement for such financial assets and whose changes are included in the current profit andloss, but the impairment losses or gains, exchange gains and losses and interest income calculated byusing the effective interest method are included in current profit or loss.In addition, the Company designates part of non-trading equity instrument investments as financialassets measured at fair value and whose changes are included in other comprehensive income. TheCompany's related dividend income of such financial assets is included in the current profit and loss,and the changes in fair value are included in other comprehensive income. When the financial assetsare derecognized, the accumulated gains or losses previously included in other comprehensive incomeare transferred from other comprehensive income to retained earnings, which are not included incurrent profit or loss.
③Financial assets carried at fair value through profit or loss for the current periodThe Company classifies the financial assets except the above financial assets measured at amortizedcost and the above financial assets measured at fair value and whose changes are included in othercomprehensive income into the financial assets measured at fair value and whose changes areincluded in current profit or loss. In addition, at the time of initial recognition, the Companydesignates part of financial assets as financial assets measured at fair value and whose changes areincluded in current profit or loss in order to eliminate or significantly reduce accounting mismatch.For such financial assets, the Company adopts fair value for subsequent measurement, and changes infair value are included in current profit and loss.
(2) Classification, recognition and measurement of financial liabilities
At initial recognition, financial liabilities are classified into financial liabilities measured by fair valuewith changes counted into current gains/losses and other financial liabilities. For financial liabilitiesclassified as fair value through profit or loss, relevant transaction costs are directly recognized inprofit or loss for the period. For financial liabilities classified as other categories, relevant transactioncosts are included in the amount initially recognized.
① Financial liabilities at fair value through profit or loss for the period
Financial liabilities measured at fair value and whose changes are included in current profits or lossesinclude the trading financial liabilities (including derivatives belong to financial liabilities) and thefinancial liabilities that are designated as fair value in the initial recognition and whose changes areincluded in current profit or loss.Trading financial liabilities (including derivatives belong to financial liabilities) are subsequentlymeasured at fair value, in addition to those related to hedge accounting, the changes in fair value areincluded in current profit or loss.A financial liability designated to be measured at fair value and whose changes are included in currentprofit or loss, and of which the changes in fair value arising from changes in the Company's owncredit risk are included in other comprehensive income, when the liability is derecognized, itsaccumulated amount of changes in fair value included in other comprehensive income and thechanges arising from its own credit risk are transferred to retained earnings. The remaining changes infair value are included in the current profit and loss. If the effects of changes in the own credit risk ofthese financial liabilities are handled as described above, but the handling causes or expands theaccounting mismatch in the profit or loss, the Company will include all gains or losses of the financialliabilities (including the amount affected by changes in the credit risk of the enterprise itself) in thecurrent profit and loss.
② Other financial liabilities
Other financial liabilities, except for the financial liabilities whose transfer of financial assets doesn’tfit the derecognition condition or continue to be involved in the transferred financial assets, and thefinancial guarantee contract, are classified as financial liabilities measured at amortized cost, whichtakes follow-up measurement by amortized cost, the gains or losses arising from derecognition oramortization are included in current profit or loss.
(3) Recognition basis and measurement method for transfer of financial assets
As for the financial assets up to the following conditions, the recognition termination is available: ①Termination of the contract right to take the cash flow of the financial assets; ② transferred to thetransferring-in part nearly all risk and compensation; ③ all risk and compensation neither transferrednor retained, and with the give-up of the control over the financial assets.As for financial assets of almost all risk and compensation neither transferred nor retained, andwithout the give-up of the control over the financial assets, it was recognized according to theextension of the continual entry into the transferred financial assets and relevant liabilities arecorrespondingly recognized. The continual entry into the transferred financial assets is risk levelwhich the enterprise faces up to due to the assets changes.
As for the whole transfer of the financial assets up to the recognition termination conditions, the bookvalue of the transferred assets, together with the difference between the consideration value and theaccumulative total of the fair value change of the other consolidated income, is reckoned into thecurrent gain/loss.As for the partial transfer of the financial assets up to the recognition termination conditions, the bookvalue of the transferred assets is diluted on the relative fair value between the terminated part and theun-terminated part; and reckoned into the current loss/gain is the difference between the sum of theconsideration value and the accumulative sum of the valuation change ought to be diluted into therecognition termination part but into the other consolidated income, and the above diluted book value,is reckoned into the current loss/gain.For financial assets that are transferred with recourse or endorsement, the Group needs to determinewhether the risk and rewards of ownership of the financial asset have been substantially transferred. Ifthe risk and rewards of ownership of the financial asset have been substantially transferred, thefinancial assets shall be derecognized. If the risk and rewards of ownership of the financial asset havebeen retained, the financial assets shall not be derecognized. If the Group neither transfers nor retainssubstantially all the risks and rewards of ownership of the financial asset, the Group shall assesswhether the control over the financial asset is retained, and the financial assets shall be accounted foraccording to the above paragraphs.
(4) Termination recognition of financial liabilities
Only is released the whole (or part) of the current duties, the termination of the liabilities (or part of it)is available. The Group (the debtor) signed the agreement with the lender: the original liabilities arereplaced by the bearing of the new liabilities; and the contract terms are fundamentally different of thenew liabilities and the original ones; the termination of the recognition of the original ones is available;and the recognition of new ones is available.
If the Company makes substantial changes to the contractual terms of the original financial liabilities(or a part thereof), derecognize the original financial liabilities, and recognize a new financial liabilityin accordance with the revised terms.If the financial liability (or a part thereof) is derecognized, the Company includes the differencebetween the book value and the consideration paid (including the transferred non-cash assets orliabilities assumed) in current profit or loss.
(5) Balance-out between the financial assets and liabilities
As the Group has the legal right to balance out the financial liabilities by the net or liquidation of thefinancial assets, the balance-out sum between the financial assets and liabilities is listed in the balancesheet. In addition, the financial assets and liabilities are listed in the balance sheet without beingbalanced out.
(6) Method for determining the fair value of financial assets and financial liabilitiesFair value refers to the price that a market participant can get by selling an asset or has to pay fortransferring a liability in an orderly transaction that occurs on the measurement date. For a financialinstrument having an active market, the Company uses the quoted prices in the active market todetermine its fair value. Quotations in an active market refer to prices that are readily available fromexchanges, brokers, industry associations, pricing services, etc., and represent the prices of markettransactions that actually occur in an arm's length transaction. If there is no active market for afinancial instrument, the Company uses valuation techniques to determine its fair value. Valuationtechniques include reference to prices used in recent market transactions by parties familiar with thesituation and through voluntary trade, and reference to current fair values of other financialinstruments that are substantially identical, discounted cash flow methods, and option pricing models.At the time of valuation, the company adopts valuation techniques that are applicable in the currentcircumstances and that are sufficiently supported by data and other information, selects the inputvalue with characteristics consistent with the characteristics of assets or liabilities to be considered inthe transactions of the relevant assets or liabilities of the market participants, and uses the relevantobservable input values as much as possible. Use unallowable input values if the relevant observableinput values are not available or are not practicable.
(7) Equity instrument
The equity instrument is the contract to prove the holding of the surplus stock of the assets with thededuction of all liabilities in the Group. The Company issues (including refinancing), repurchases,sells or cancels equity instruments as movement of equity, transaction fees relating to equitytransactions are deducted from equity. No fair value change of equity instrument would be recognizedby the Company.The Company's equity instruments that distribute dividends during the existence period (including“interests” generated by instruments classified as equity instruments) are treated as profit distribution.
10. Impairment of financial assets
The financial assets that the Company needs to recognize impairment loss are financial assetsmeasured at amortized cost, debt instruments investment that are measured at fair value and whosechanges are included in other comprehensive income, and lease receivables, mainly including billsreceivable, account receivables, other receivables, debt investment, other debt investments, long-termreceivables, etc. In addition, for contract assets and some financial guarantee contracts, theimpairment provision is also made and credit impairment losses are recognized in accordance with theaccounting policies described in this section.
(1) Confirmation method of impairment provision
On the basis of expected credit losses, the Company makes provision for impairment and confirmscredit impairment losses for each of the above items in accordance with its applicable expected creditloss measurement method (general method or simplified method).
Credit loss refers to the difference between all contractual cash flows that the Company discounts atthe original actual interest rate and are receivable in accordance with contract and all cash flowsexpected to be received, that is, the present value of all cash shortages. Among them, for the purchaseor source of financial assets that have suffered credit impairment, the Company discounts the financialassets at the actual interest rate adjusted by credit.
The general method for measuring the estimated credit loss is that the Company assesses whether thecredit risk of the financial assets (including other applicable items such as contract assets, the samebelow) has been significantly increased since the initial recognition on each balance sheet date, if thecredit risk has increased significantly after the initial recognition, the Company shall measure the losspreparation according to the amount of expected credit loss in the whole duration; if the credit risk hasnot increased significantly since the initial recognition, the Company shall measure the losspreparation according to the amount equivalent to the expected credit loss in the next 12 months. TheCompany considers all reasonable and evidenced information, including forward-looking information,when evaluating expected credit losses.
(2) Judging criteria for whether credit risk has increased significantly since initial recognitionIf the probability of default of a financial asset within the estimated duration recognized on thebalance sheet is significantly higher than the probability of default within the estimated durationdecided at the initial recognition, it indicates that the credit risk of the financial asset is significantlyincreased. Except for special circumstances, the Company uses the change in default risk occurringwithin the next 12 months as a reasonable estimate of the change in default risk throughout theduration to determine whether the credit risk has increased significantly since the initial recognition.
(3) A combined approach to assessing expected credit risk on a portfolio basis
The Company evaluates credit risk individually for financial assets with significantly different creditrisks. In addition to financial assets that assess credit risk individually, the Company classifiesfinancial assets into different groups based on common risk characteristics and evaluates credit risk ona portfolio basis.
(4) Accounting treatment of financial assets impairment
At the end of the period, the Company calculates the estimated credit losses of various financial assets.If the estimated credit loss is greater than the carrying amount of its current impairment provision, the
difference is recognized as the impairment loss; if it is less than the carrying amount of the currentimpairment provision, the difference is recognized as an impairment gain.
(5) Methods for determining the credit losses of various financial assets
① Notes receivable
The Company measures the losses for the notes receivable in accordance with the expected credit lossamount for the entire duration of the period.
② Accounts receivable and contract assets
For receivables and contract assets that do not contain significant financing components, theCompany measures the loss provision based on the amount of expected credit losses equivalent to theentire duration of the period.In addition to accounts receivable and contract assets whose credit risk is assessed individually, theyare classified into different combinations based on their credit risk characteristics:
| Item | Basis |
| Portfolio 1: low risk | Take the account age of receivable as the credit risk characteristics |
| Item | Basis |
| Portfolio 1: low risk | Take the account age of receivable as the credit risk characteristics |
⑥Long-term account receivable(including the receivables with major financing componentscontained and except for the lease receivable)The Company measures the impairment loss based on the amount of expected credit losses in the next12 months or the entire duration based on whether the credit risk has increased significantly since theinitial recognition.
11. Inventory
(1) Categories of inventory
Inventory mainly consists of fuels and raw materials etc
(2) Valuation method of inventory delivered
The inventories are initially measured at cost.Cost of inventories comprises purchase costs,processing costs and other costs incurred in bringing the inventories to their present location andcondition.
The actual cost of inventories delivered is recognized by the weighted average method.
(3) Recognition of net realizable value of inventory, and accrual methods of preparation fordepreciationOn the balance sheet day, the inventory is measured by the lower one between the cost and the netrealizable value. As the net realizable value is lower than the cost, the inventory depreciationprovision is accrued. The net realizable value is balance of the estimated sale price less theestimated forthcoming cost upon the completion, the estimated sale expense, and the relevant taxin the daily activities. Upon the recognition of net realizable value of the inventory, the concreteevidence is based on and the purpose of holding the inventory and the influence of events afterthe balance sheet day are considered.As for the inventory of large sum and lower price, the inventory depreciation provision is accrued bythe inventory categories. As for the inventory related to the product series produced and sold in thesame district, of the same or similar final use or purpose and impossible to be separated from the otheritems, the provision is consolidated and accrued. The provision for other inventory is accrued by thedifference between the cost and net realizable value.Upon the accrual of the inventory depreciation provision, if the previous influence factors on theinventory deduction disappeared, which resulted in the net realizable value being higher than its bookvalue; the accrual is transferred back within the previous accrual of the provision and reckoned intothe current gain/loss.
(4) The inventory system is perpetual inventory system.
(5) Amortization for low-value consumables and packages
Amortization of low-value consumables and packages are based on one-time amortization method.
12. Long-term equity investments
Long-term equity investments under this section refer to long-term equity investments in which theCompany has control, joint control or significant influence over the investee. Long-term equityinvestment without control or joint control or significant influence of the Group is accounted for asavailable-for-sale financial assets or financial assets measured at fair value with any change in fairvalue charged to profit or loss. Details on its accounting policy please refer to 9. “Financialinstruments” under Note IV.Joint control is the Company’s contractually agreed sharing of control over an arrangement, whichrelevant activities of such arrangement must be decided by unanimously agreement from parties whoshare control. Significant influence is the power of the Company to participate in the financial andoperating policy decisions of an investee, but to fail to control or joint control the formulation of suchpolicies together with other parties.
(1) Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprisesunder common control, the initial investment cost of the long-term equity investment shall be theabsorbing party’s share of the carrying amount of the owner’s equity under the consolidated financialstatements of the ultimate controlling party on the date of combination. The difference between theinitial cost of the long-term equity investment and the cash paid, non-cash assets transferred as well asthe book value of the debts borne by the absorbing party shall offset against the capital reserve. If thecapital reserve is insufficient to offset, the retained earnings shall be adjusted. If the consideration ofthe merger is satisfied by issue of equity securities, the initial investment cost of the long-term equityinvestment shall be the absorbing party’s share of the carrying amount of the owner’s equity under theconsolidated financial statements of the ultimate controlling party on the date of combination. Withthe total face value of the shares issued as share capital, the difference between the initial cost of thelong-term equity investment and total face value of the shares issued shall be used to offset against thecapital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted.For business combination resulted in an enterprise under common control by acquiring equity of theabsorbing party under common control through a stage-up approach with several transactions, thesetransactions will be judged whether they shall be treat as “transactions in a basket”. If they belong to“transactions in a basket”, these transactions will be accounted for a transaction in obtaining control.If they are not belong to “transactions in a basket”, the initial investment cost of the long-term equityinvestment shall be the absorbing party’s share of the carrying amount of the owner’s equity under theconsolidated financial statements of the ultimate controlling party on the date of combination. Thedifference between the initial cost of the long-term equity investment and the aggregate of the
carrying amount of the long-term equity investment before merging and the carrying amount theadditional consideration paid for further share acquisition on the date of combination shall offsetagainst the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall beadjusted. Other comprehensive income recognized as a result of the previously held equity investmentaccounted for using equity method on the date of combination or recognized for available-for-salefinancial assets will not be accounted for.For a long-term equity investment acquired through a business combination involving enterprises notunder common control, the initial investment cost of the long-term equity investment shall be the costof combination on the date of acquisition. Cost of combination includes the aggregate fair value ofassets paid by the acquirer, liabilities incurred or borne and equity securities issued. For businesscombination resulted in an enterprise not under common control by acquiring equity of the acquireeunder common control through a stage-up approach with several transactions, these transactions willbe judged whether they shall be treat as “transactions in a basket”. If they belong to “transactions in abasket”, these transactions will be accounted for a transaction in obtaining control. If they are notbelong to “transactions in a basket”, the initial investment cost of the long-term equity investmentaccounted for using cost method shall be the aggregate of the carrying amount of equity investmentpreviously held by the acquiree and the additional investment cost. For previously held equityaccounted for using equity method, relevant other comprehensive income will not be accounted for.For previously held equity investment classified as available-for-sale financial asset, the differencebetween its fair value and carrying amount, as well as the accumulated movement in fair valuepreviously included in the other comprehensive income shall be transferred to profit or loss for thecurrent period.Agent fees incurred by the absorbing party or acquirer for the acquisition such as audit, legal service,and valuation and consultation fees, and other related administration expenses are charged to profit orloss in the current period at the time such expenses incurred.The long-term equity investment acquired through means other than a business combination shall beinitially measured at its cost. Such cost is depended upon the acquired means of long-term equityinvestments, which is recognized based on the purchase cost actually paid by the Company in cash,the fair value of equity securities issued by the Group, the agreed value of investment contract oragreement, the fair value or original carrying amounts of the non-monetary asset exchange transactionwhich the asset will be transferred out of the Company, and the fair value of long-term equityinvestment itself. The costs, taxes and other necessary expenses that are directly attributable to theacquisition of the long-term equity investments are also included in the investment cost. Foradditional equity investment made in order to obtain significant influence or common control overinvestee without resulted in control, the relevant cost for long-term equity investment shall be theaggregate of fair value of previously held equity investment and additional investment costdetermined according to “Accounting Standard for Business Enterprises No. 22 – Recognition andmeasurement of Financial Instruments”.
(2) Follow-up measurement and gain/loss recognition
As for the long-term equity investment with common control (except for the common operators) overor significant influence on the invested units, measured by the cost method. In addition, long-termequity investment to the invested units that control by the Company adopted the cost method forcalculation in financial statement.
① Long-term equity investment checked by the cost
Upon the cost check, the investment is valuated on the initial cost. In addition to the actual prices orthe announced but yet undistributed cash dividend or profit in consideration valuation, the currentinvestment return is recognized by the announced cash dividend or profit by the invested units.
② Long-term equity investment checked by the equity
When equity basis is adopted, if the initial cost of the long-term equity investment is greater than theshare of fair value of the receiver’s recognizable net asset, the initial investment cost of the long-termequity investment will not be adjusted; if the initial cost of the long-term equity investment is lessthan the share of fair value of the receiver’s recognizable net asset, the balance shall be counted intocurrent income account, and the cost of long-term equity investment shall be adjusted.Under the equity method, investment gain and other comprehensive income shall be recognized basedon the Group’s share of the net profits or losses and other comprehensive income made by theinvestee, respectively. Meanwhile, the carrying amount of long-term equity investment shall beadjusted. The carrying amount of long-term equity investment shall be reduced based on the Group’sshare of profit or cash dividend distributed by the investee. In respect of the other movement of netprofit or loss, other comprehensive income and profit distribution of investee, the carrying value oflong-term equity investment shall be adjusted and included in the capital reserves. The Group shallrecognize its share of the investee’s net profits or losses based on the fair values of the investee’sindividual separately identifiable assets at the time of acquisition, after making appropriateadjustments thereto. In the event of inconformity between the accounting policies and accountingperiods of the investee and the Company, the financial statements of the investee shall be adjusted inconformity with the accounting policies and accounting periods of the Company. Investment gain andother comprehensive income shall be recognized accordingly. In respect of the transactions betweenthe Group and its associates and joint ventures in which the assets disposed of or sold are notclassified as operation, the share of unrealized gain or loss arising from inter-group transactions shallbe eliminated by the portion attributable to the Company. Investment gain shall be recognizedaccordingly. However, any unrealized loss arising from inter-group transactions between the Groupand an investee is not eliminated to the extent that the loss is impairment loss of the transferred assets.In the event that the Group disposed of an asset classified as operation to its joint ventures orassociates, which resulted in acquisition of long-term equity investment by the investor withoutobtaining control, the initial investment cost of additional long-term equity investment shall be the fairvalue of disposed operation. The difference between initial investment cost and the carrying value of
disposed operation will be fully included in profit or loss for the current period. In the event that theGroup sold an asset classified as operation to its associates or joint ventures, the difference betweenthe carrying value of consideration received and operation shall be fully included in profit or loss forthe current period. In the event that the Company acquired an asset which formed an operation fromits associates or joint ventures, relevant transaction shall be accounted for in accordance with“Accounting Standards for Business Enterprises No. 20 “Business combination”. All profit or lossrelated to the transaction shall be accounted for.Recognition of the share of net loss by the investment receiver shall be limited to when the book valueof long-term equity investment and other long-term equity forms substantial net investment has beenreduced to zero. Beside, if the Company is responsible for other losses of the investment receiver,predicted liability shall be recognized upon the prediction of responsibilities and recorded into currentinvestment loss account. If the receiver realized net profit in the period thereafter, the share of gains isrecovered after making up of share of losses which has not been recognized.For long equity investment in associate and joint venture held by the Company prior to firstimplementation of the new accounting principles on 1 January 2007, equity investment debtordifference relating to the investment (if any) shall be amortized and included in current gains andlosses against the remaining period under straight line method.
③ Acquisition of minority equity
When preparing consolidated financial statements, the difference between the increase in long-termequity investment due to acquisition of minority interest of a subsidiary and the share of net asset ofthe subsidiary since the acquisition date (or combination date) calculated under the new ownershipratio shall be adjusted to the capital surplus, when capital surplus is insufficient, the excess shall beadjusted to retained profits.
④ Disposal of long-term equity investment
In these consolidated financial statements, where the parent company disposes part of its subsidiarywithout loss of control, the difference between the consideration received and the share of net assetfor the disposed portion of long-term equity investment shall be recognized in shareholders’ equity;where the parent company disposes part of its subsidiary with loss of control, the accountingtreatment should be in accordance with the accounting policies stated at Note IV 5 (2) “Preparation ofconsolidated financial statements”.For disposal of long-term equity investment in other situations, the difference between theconsiderations received and the carrying amount of the disposed investment shall be recognized inprofit or loss.In respect of long-term equity investment at equity with the remaining equity interest after disposalalso accounted for using equity method, other comprehensive income previously under owners’ equityshall be accounted for in accordance with the same accounting treatment for direct disposal ofrelevant asset or liability by investee on pro rata basis at the time of disposal. The owners’ equity
recognized for the movement of other owners’ equity (excluding net profit or loss, othercomprehensive income and profit distribution of investee) shall be transferred to profit or loss for thecurrent period on pro rata basis.In respect of long-term equity investment at cost with the remaining equity interest after disposal isalso accounted for at cost, other comprehensive income recognized due to measurement at equity orrecognition and measurement for financial instruments prior to obtaining control over investee shallbe accounted for in accordance with the same accounting treatment for direct disposal of relevantasset or liability by investee and carried forward to current gains and losses on pro rata basis. Themovement of other owners’ equity (excluding net profit or loss, other comprehensive income andprofit distribution of investee) shall be transferred to profit or loss for the current period on pro ratabasis.In the event of loss of control over investee due to partial disposal of equity investment by the Group,in preparing separate financial statements, the remaining equity interest which can apply commoncontrol or impose significant influence over the investee after disposal shall be accounted for usingequity method. Such remaining equity interest shall be treated as accounting for using equity methodsince it is obtained and adjustment was made accordingly. For remaining equity interest which cannotapply common control or impose significant influence over the investee after disposal, it shall beaccounted for using the recognition and measurement standard of financial instruments. Thedifference between its fair value and carrying amount as at the date of losing control shall be includedin profit or loss for the current period. In respect of other comprehensive income recognized usingequity method or the recognition and measurement standard of financial instruments before the Groupobtained control over the investee, it shall be accounted for in accordance with the same accountingtreatment for direct disposal of relevant asset or liability by investee at the time when the control overinvestee is lost. Movement of other owners’ equity (excluding net profit or loss, other comprehensiveincome and profit distribution under net asset of investee accounted for and recognized using equitymethod) shall be transferred to profit or loss for the current period at the time when the control overinvestee is lost. Of which, for the remaining equity interest after disposal accounted for using equitymethod, other comprehensive income and other owners’ equity shall be transferred on pro rata basis.For the remaining equity interest after disposal accounted for using the recognition and measurementstandard of financial instruments, other comprehensive income and other owners’ equity shall be fullytransferred.In the event of loss of common control or significant influence over investee due to partial disposal ofequity investment by the Group, the remaining equity interest after disposal shall be accounted forusing the recognition and measurement standard of financial instruments. The difference between itsfair value and carrying amount as at the date of losing common control or significant influence shallbe included in profit or loss for the current period. In respect of other comprehensive incomerecognized under previous equity investment using equity method, it shall be accounted for inaccordance with the same accounting treatment for direct disposal of relevant asset or liability by
investee at the time when equity method was ceased to be used. Movement of other owners’ equity(excluding net profit or loss, other comprehensive income and profit distribution under net asset ofinvestee accounted for and recognized using equity method) shall be transferred to profit or loss forthe current period at the time when equity method was ceased to be used.The Group disposes its equity investment in subsidiary by a stage-up approach with severaltransactions until the control over the subsidiary is lost. If the said transactions belong to “transactionsin a basket”, each transaction shall be accounted for as a single transaction of disposing equityinvestment of subsidiary and loss of control. The difference between the disposal consideration foreach transaction and the carrying amount of the corresponding long-term equity investment ofdisposed equity interest before loss of control shall initially recognized as other comprehensiveincome, and subsequently transferred to profit or loss arising from loss of control for the currentperiod upon loss of control.
13. Investment real estate
Investment real estate is defined as the real estate with the purpose to earn rent or capital appreciationor both, including the rented land use rights and the land use rights which are held and prepared fortransfer after appreciation, the rented buildings.
Investment real estate is measured according to the initial cost. The follow-up expenses that arerelated to investment real estate, if the economic interests related to the assets are is likely to inflowcost and its costs can be reliably measured, shall be included in the cost of investment real estate. Theother follow-up expense shall be included in the current gains/losses.The Company adopts the cost model to have follow-up measurements of the investment real estate,and to conduct depreciation or amortization according to the policies that are in consistent with theland use rights.Impairment test method and impairment provision method in relation to investment property isdetailed in Note IV.19 “Long term assets impairment”.
Where property for own use or inventory transfers to investment property, or investment propertytransfers to property for own use, carrying value before such transfer shall be taken as book valueafter such transfer.
If an investment property is disposed of or if it withdraws permanently from use and no economicbenefit will be obtained from the disposal, the recognition of it as an investment property shall beterminated. When an investment property is sold, transferred, retired or damaged, the amount ofproceeds on disposal of the property net of the carrying amount and related tax and surcharges isrecognized in profit or loss for the current period.
14. Fixed assets
(1) Recognition conditions for the fixed assets
Fixed assets is defined as the tangible assets which are held for the purpose of producing goods,providing services, lease or for operation & management, and have more than one fiscal year ofservice life. The fixed assets recognized on the condition of economy benefit probably in-flow into theCompany and the cost should measured reliably only. Initial measurement shall be conducted on fixedassets according to the actual cost when obtain them and also considering the expected costs fordisposal.
(2) Depreciation of various fixed assets
From the next month since reaching the intended use state, depreciation on fixed assets shall beaccounted by using the method of average life length except the steam turbine generating unit thataccounted by withdrawal the working volume method.Life expectancy, expected net impairment value and annual depreciation rate of all assets are asfollows:
| Item | Life expectancy | Salvage value rate | Annual depreciation rate |
| Houses and buildings | 20 years | 10% | 4.50% |
| Equipment (fuel machinery group excluded) | 15-20 years | 10% | 4.5%-6% |
| Equipment-fuel machinery group (note) | 10% | The work quantity method | |
| Transportation tools | 5 years | 10% | 18% |
| Other equipment | 5 years | 10% | 18% |
| Name of the Company | Fixed assets | Depreciation amount (RMB/Hour) |
| The Company | 1# Generating unit | 536.38 |
| 3# Generating unit | 599.69 | |
| 7# Generating unit | 4,214.73 | |
| Shenzhen New Power Industrial Co., Ltd.(“New Power ”) | 10# Generating unit | 2,134.37 |
| Shen Nan Dian (Zhongshan) Power Co., Ltd.(“Zhongshan Power”) | 1# Generating unit | 4,246.00 |
| 3# Generating unit | 4,160.83 |
| Shen Nan Dian (Dongguan) Weimei Power Co., Ltd(“Weimei Power ”) | 1# Generating unit | 4,490.64 |
| 3# Generating unit | 4,217.56 |
capitalized when the payment of asset and borrowing expenses have already occurred, and thepurchasing or production activities in purpose of make the asset usable have started; Capitalizing willbe terminated as soon as the asset that complying with capitalizing conditions has reached its usableor saleable status. The other borrowing expenses are recognized as expenses when occurred.Interest expenses practically occurred at the current term of a special borrowing are capitalized afterdeducting of the bank saving interest of unused borrowed fund or provisional investment gains;Capitalization amounts of common borrowings are decided by the weighted average of exceeding partof accumulated asset expenses over the special borrowing assets multiply the capitalizing rate ofcommon borrowings adopted. Capitalization rates are decided by the weighted average of commonborrowings.During the capitalization period, exchange differences on a specific purpose borrowing denominatedin foreign currency shall be capitalized. Exchange differences related to general-purpose borrowingsdenominated in foreign currency shall be included in profit or loss for the current period.Qualifying assets are assets (fixed assets, investment property, inventories, etc.) that necessarily take asubstantial period of time for acquisition, construction or production to get ready for their intendeduse or sale.Capitalization of borrowing costs shall be suspended during periods in which the acquisition,construction or production of a qualifying asset is interrupted abnormally, when the interruption is fora continuous period of more than 3 months, until the acquisition, construction or production of thequalifying asset is resumed.
17. Intangible assets
(1) Intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance owned orcontrolled by the Company.An intangible asset shall be initially measured at cost. The expenditures incurred on an intangibleasset shall be recognized as cost of the intangible asset only if it is probable that economic benefitsassociated with the asset will flow to the Company and the cost of the asset can be measured reliably.Other expenditures on an item asset shall be charged to profit or loss when incurred.Land use right acquired shall normally be recognized as an intangible asset. Self-constructedbuildings (e.g. plants), related land use right and the buildings shall be separately accounted for as anintangible asset and fixed asset. For buildings and structures purchased, the purchase considerationshall be allocated among the land use right and the buildings on a reasonable basis. In case there isdifficulty in making a reasonable allocation, the consideration shall be recognized in full as fixedassets.An intangible asset with a finite useful life shall be stated at cost less estimated net residual value andany accumulated impairment loss provision and amortized using the straight-line method over itsuseful life when the asset is available for use. Intangible assets with indefinite life are not amortized.
The Group shall review the useful life of intangible asset with a finite useful life and the amortizationmethod applied at least at each financial year-end. A change in the useful life or amortization methodused shall be accounted for as a change in accounting estimate. For an intangible asset with anindefinite useful life, the Group shall review the useful life of the asset in each accounting period. Ifthere is evidence indicating that the useful life of that intangible asset is finite, the Company shallestimate the useful life of that asset and apply the accounting policies accordingly.
(2) Impairment test method of intangible assets & calculation method of depreciation reserveFound more in Note IV-19“Long term assets impairment”.
18. Long-term expenses to be amortized
Long-term amortizable expenses are those already occurred and amortizable to the current term andsuccessive terms for over one year. Long-term amortizable expenses are amortized by straight-linemethod to the benefit period.
19. Long term assets impairment
The Group will judge if there is any indication of impairment as at the balance sheet date in respect ofnon-current non-financial assets such as fixed assets, construction in progress, intangible assets withan infinite useful life, investment properties measured at cost, and long-term equity investments insubsidiaries, joint ventures and associates. If there is any evidence indicating that an asset may beimpaired, recoverable amount shall be estimated for impairment test. Goodwill, intangible assets withan indefinite useful life and intangible assets beyond working conditions will be tested for impairmentannually, regardless of whether there is any indication of impairment.If the impairment test result shows that the recoverable amount of an asset is less than its carryingamount, the impairment provision will be made according to the difference and recognized as animpairment loss. The recoverable amount of an asset is the higher of its fair value less costs ofdisposal and the present value of the future cash flows expected to be derived from the asset. Anasset’s fair value is the price in a sale agreement in an arm’s length transaction. If there is no saleagreement but the asset is traded in an active market, fair value shall be determined based on the bidprice. If there is neither sale agreement nor active market for an asset, fair value shall be based on thebest available information. Costs of disposal are expenses attributable to disposal of the asset,including legal fee, relevant tax and surcharges, transportation fee and direct expenses incurred toprepare the asset for its intended sale. The present value of the future cash flows expected to bederived from the asset over the course of continued use and final disposal is determined as the amountdiscounted using an appropriately selected discount rate. Provisions for assets impairment shall bemade and recognized for the individual asset. If it is not possible to estimate the recoverable amountof the individual asset, the Group shall determine the recoverable amount of the asset group to whichthe asset belongs. The asset group is the smallest group of assets capable of generating cash flowsindependently.For the purpose of impairment testing, the carrying amount of goodwill presented separately in the
financial statements shall be allocated to the asset groups or group of assets benefiting from synergyof business combination. If the recoverable amount is less than the carrying amount, the Group shallrecognize an impairment loss. The amount of impairment loss shall first reduce the carrying amountof any goodwill allocated to the asset group or set of asset groups, and then reduce the carryingamount of other assets (other than goodwill) within the asset group or set of asset groups, pro rata onthe basis of the carrying amount of each asset.An impairment loss recognized on the aforesaid assets shall not be reversed in a subsequent period inrespect of the restorable value.
20. Staff remuneration
Staff remuneration includes short term staff remuneration, post office benefit, dismissal benefit andother long term staff benefits, among which:
Short term staff remuneration mainly consists of salary, bonus, allowance and subsidy, staff benefits,medical insurance, maternity insurance, work related injury insurance, housing funds, labor unit feeand education fee, non-monetary benefits, etc. short term staff remuneration actually happened duringthe accounting period in which staff provides services to the Company is recognized as liability, andshall be included in current gains and losses or relevant asset cost. Non-monetary benefits aremeasured at fair value.Post office benefits mainly consist of defined withdraw plan and defined benefit plan. Definedwithdraw plan mainly includes basic pension insurance, unemployment insurance and annuity, and thecontribution payable is included in relevant asset cost or current gains and losses when occurs.When the Company terminates the employment relationship with employees before the end of theemployment contracts or provides compensation as an offer to encourage employees to acceptvoluntary redundancy, the Company shall recognize employee compensation liabilities arising fromcompensation for staff dismissal and included in profit or loss for the current period, when theCompany cannot revoke unilaterally compensation for dismissal due to the cancellation of laborrelationship plans and employee redundant proposals; and the Company recognize cost and expensesrelated to payment of compensation for dismissal and restructuring, whichever is earlier. However, ifthe compensation for termination of employment is not expected to be fully paid within 12 monthsfrom the reporting period, it shall be accounted for other long-term staff remuneration.The early retirement plan shall be accounted for in accordance with the accounting principles forcompensation for termination of employment. The salaries or wages and the social contributions to bepaid for the employees who retire before schedule from the date on which the employees stoprendering services to the scheduled retirement date, shall be recognized (as compensation fortermination of employment) in the current profit or loss by the Group if the recognition principles forprovisions are satisfied.For other long-term employee benefits provided by the Company to its employees, if satisfy with theestablished withdraw plan, then the benefits are accounted for under the established withdraw plan,otherwise accounted for under defined benefit scheme.
21. Accrued liabilities
When responsibilities connected to contingent issues meet the follow conditions at the same time,than recognized as accrued liability: (1) the liability is the current liability that undertaken by theCompany; (2) the liability has the probability of result in financial benefit outflow; and (3) theresponsibility can be measured reliably for its value.At balance sheet day, with reference to the risks, uncertainty and periodic value of currency thatconnected to the contingent issues, the predicted liabilities are measured according to the bestestimation on the payment to fulfill the current responsibility.If the expenses for clearing of predictive liability is fully or partially compensated by a third party, andthe compensated amount can be definitely received, it is recognized separated as asset. Thecompensated amount shall not be greater than the book value of the predictive liability.
(1) Contact in loss
Contact in loss is identified when the inevitable cost for performance of the contractual obligationexceeds the inflow of expected economic benefits. When a contract in loss is identified and theobligations thereunder are qualified by the aforesaid recognition criterion for contingent liability, thedifference of estimated loss under contract over the recognized impairment loss (if any) of the subjectmatter of the contract is recognized as contingent liability.
(2) Restructuring obligations
For detailed, official and publicly announced restructuring plan, the direct expenses attributable to therestructuring are recognized as contingent liabilities, provided that the aforesaid recognition criterionfor contingent liability is met. For restructuring obligations arising from disposal of part business, theCompany will recognize the obligations relating to restructuring only when it undertakes to disposepart business (namely entering into finalized disposal agreement).
22. Income
When significant risks and rewards of ownership of goods have been transferred to buyer, nocontinuous management right regularly related to ownership is retained, no effective control isconducted on goods sold, moreover, amount of income may be measured in a reliable way, relevanteconomic profit may have flown into enterprise and relevant incurred cost or to be incurred may bemeasured in a reliable way, implementation of goods sales revenue will be confirmed. Detailrecognization according to specific revenue:
(1) Power sales revenue
The Group generates electricity by thermal power, and realizes sales through incorporation intoGuangdong power grid. As for power sales, the Group realizes revenue when it produces electricityand obtains the grid power statistics table confirmed by the power bureau.
(2) Revenue from providing labor service
Under the condition of service providing business can be estimated in a reliable way, relevanteconomic benefit is likely to flow into enterprise, completion degree of business may be estimated in
a reliable way and relevant incurred cost and to be incurred may be measured in a reliable way, therevenue from labor service providing recognized. Relevant service revenue may be confirmed by theCompany as percentage-of-completion method on balance sheet date. Completion degree of servicebusiness will be determined as share of incurred service cost in estimated general cost.If result of service providing business can’t be estimated in a reliable way, service revenue should beconfirmed as amount of incurred service cost expected to be compensated, where incurred service costis taken as period charge. If no compensation is expected for incurred service cost, income won’t beconfirmed.
(1) Specific criteria for revenue recognition of environmental protection companiesAt the end of each month, the company confirms the monthly income based on the initially confirmedsludge transportation volume and sludge treatment price, and revises the revenue confirmed lastmonth after checking with the relevant units in the next month, and the correction proportion isrelatively small.
(2) Specific standards for revenue recognition of engineering companies
① Debugging projects: When the debugging is successful, obtain the confirmation of successfuldebugging, and confirm the income according to the contract;
② Operation and maintenance and management projects: Temporarily estimate and confirm theincome every month according to the attendance time and labor service price of attendance staff, andadjust the temporarily estimated income after obtaining the monthly settlement statement sealed andsigned by suppliers, the confirmation of progress, and the attendance form.
23. Government subsidy
Government subsidy refers to the monetary asset and non-monetary asset that the Company obtainsfrom the government free of charge, excluding the capital that the government invests as an investorand enjoys the corresponding owner's equity. Government subsidies are divided into the asset-relatedgovernment subsidy and the income-related government subsidy.If the government subsidy is a monetary asset, it shall be measured according to the received orreceivable amount. If the government subsidy is a non-monetary asset, it shall be measured at fairvalue. If the fair value cannot be obtained reliably, it shall be measured according to the nominalamount. Government subsidy measured by nominal amount is directly included in the current profitsand losses.The government subsidy related to the assets is recognized as deferred income and is recorded into thecurrent profits and losses or the book value of the relevant assets in a reasonable and systematicmanner within the useful life of the relevant assets. Revenue-related government grants are used tocompensate for the related costs or losses incurred during the subsequent period and are recognized asdeferred income and are recognized in the current profit or loss or related expenses during the periodof recognition of the relevant cost expense or loss; Incurred costs or losses incurred, directly includedin the current profits and losses or offset the relevant costs.
For the government subsidy containing both asset-related parts and income-related parts at the sametime, distinguish the different parts and make the accounting treatment, classify the parts which aredifficult to be distinguished as the income-related government subsidy.The government subsidy related to the Company’s daily activities is included in other incomes oroffsets related costs in accordance with the essence of economic business; while the governmentsubsidy unrelated to the Company’s daily activities is included in non-operating income andexpenditure.When the recognized government subsidy needs to be refunded or has balance of related deferredincome, offset the book balance of related deferred income, and include the excess parts in the currentprofits and losses or (the asset-related government subsidy for offsetting the book value of underlyingassets in initial recognition) adjust the book value of assets; directly include these belong to othersituations in the current profits and losses.
24. Deferred income tax asset/ deferred income tax liability
(1) Current income tax
On balance sheet date, current income tax liability (or asset) formed during and before current periodwill be measured as amount of income tax payable (or repayable) as specified by tax law. Assessableincome on which current income expense is based represents the profit before tax for the year uponadjustment against relevant tax rules.
(2) Deferred income tax asset & deferred income tax liability
For balance of book value of some asset/liability item and its tax base, or temporary differencederived from balance of book value and tax base of the item, which is not confirmed as asset orliability but tax base can be fixed as specified by tax law, deferred income tax asset & deferredincome tax liability will be confirmed in balance sheet liability approach.Deferred income tax liabilities are not recognized for taxable temporary differences related to: theinitial recognition of goodwill; and the initial recognition of an asset or liability in a transaction whichis neither a business combination nor affects accounting profit or taxable profit (or deductible loss) atthe time of the transaction. In addition, the Group recognizes the corresponding deferred income taxliability for taxable temporary differences associated with investments in subsidiaries, associates andjoint ventures, except when both of the following conditions are satisfied: the Company able tocontrol the timing of the reversal of the temporary difference; and it is probable that the temporarydifference will not reverse in the foreseeable future.Deferred income tax assets are not recognized for deductible temporary differences related to theinitial recognition of an asset or liability in a transaction which is neither a business combination noraffects accounting profit or taxable profit (or deductible loss) at the time of the transaction. In addition,the Group recognizes the corresponding deferred income tax asset for deductible temporarydifferences associated with investments in subsidiaries, associates and joint ventures to the extent thatit is probable that taxable profits will be available against which the deductible temporary differences
can be utilized, except when both of the following conditions are satisfied: it is not probable that thetemporary difference will reverse in the foreseeable future; and it is not probable that taxable profitswill be available in the future, against which the temporary difference can be utilized.For deductible loss and taxation decrease which can be carried over to following fiscal year, relevantdeferred income tax asset may be confirmed subject to amount of taxable income which is likely to beacquired to deduct deductible loss and taxation decrease in the future.On balance sheet day, those deferred income tax assets and income tax liabilities, according to the taxlaw, calculation will be on tax rate applicable to retrieving period of assets or clearing of liabilities.On balance sheet day, verification will be performed on the book value of differed income tax assets.If it is not possible to obtain enough taxable income to neutralize the benefit of differed income taxassets, then the book value of the differed income tax assets shall be reduced. Whenever obtaining oftaxable income became possible, the reduced amount shall be restored.
(3) Income tax expenses
Income tax expense includes current income tax and deferred income tax.Current deferred income tax and deferred income tax expenses or income shall reckoned into currentgains/losses other that those current income tax and deferred income tax with transactions and eventsconcerned, that reckoned into shareholder’s equity directly while recognized as other comprehensiveincome; and the book value of the goodwill adjusted for deferred income tax arising from enterprisecombination.
(4) Offset of income tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or torealize the assets and settle the liabilities simultaneously, current tax assets and current tax liabilitiesare offset and presented on a net basis.When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferredtax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority oneither the same taxable entity or different taxable entities which intend either to settle current taxassets and liabilities on a net basis or to realize the assets and liabilities simultaneously, in each futureperiod in which significant amounts of deferred tax assets or liabilities are expected to be reversed,deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
25. Leasing
Finance lease is too virtually transfer all risks and rewards related to ownership of asset, theownership is may transfer ultimately or not. Leases other than finance lease are operating leases.
(1) Lease business with the Company as the rentee
The rental is reckoned into the relevant assets cost or the current loss/gain in the straight-line method.The initial direct expenses are reckoned into the current gain/loss, or the actual rental into the currentloss/gain.
(2) Lease business with the Company as the renter
The rental is reckoned into the relevant assets cost or the current loss/gain in the linear way. Theinitial direct substantive expenses are capitalized and reckoned into the current gain/loss, or the actualrental into the current loss/gain. The initial direct small expenses are reckoned into the current actualgain/loss, or the actual rental into the current loss/gain.
(3) Financing lease business with the Group recorded as lessee
On the beginning date of the lease, the entry value of leased asset shall be at the lower of the fairvalue of the leased asset and the present value of minimum lease payment at the beginning date of thelease. Minimum lease payment shall be the entry value of long-term accounts payable, with differencerecognized as unrecognized financing expenses. In addition, initial direct costs attributable to leaseditems incurred during the process of lease negotiation and signing of lease agreement shall beincluded in the value of leased assets. The balance of minimum lease payment after deductingunrecognized financing expenses shall be accounted for long-term liability and long-term liability duewithin one year.Unrecognized financing expenses shall be recognized as financing expenses for the current periodusing effective interest method during the leasing period. Contingent rent shall be included in profit orloss for the current period at the time it incurred.
(4) Financing lease business with the Group recorded as lessor
On the beginning date of the lease, the entry value of lease receivable shall be the aggregate ofminimum lease receivable and initial direct costs at the beginning date of the lease. The unsecuredbalance shall be recorded. The aggregate of minimum lease receivable, initial direct costs andunsecured balance and the different between their present values shall be recognized as unrealisedfinancing income. The balance of lease receivable after deducting unrecognized financing incomeshall be accounted for long-term debt and long-term debt due within one year.Unrecognized financing income shall be recognized as financing income for the current period usingeffective interest method during the leasing period. Contingent rent shall be included in profit or lossfor the current period.
26. Other main accounting policies and estimations
The discontinued operation refers to the component that meets one of following conditions and hasbeen disposed by the Company or classified as held-for-sale and can be individually distinguishedwhen operating and preparing the financial statements: ① the component represents an independentmain Business or a major operating area; ② the component is a parts that intends to dispose orarrange an independent main business or a major operating area; ③ the component is a subsidiaryobtained only for re-sale.
27. Changes in significant accounting policies and accounting estimates
(1) Changes in accounting policies
①Changes in accounting policies for execution of the new financial instrument standardsOn March 31, 2017, the Ministry of Finance revised and issued the Accounting Standards forBusiness Enterprises No. 22 - Recognition and Measurement of Financial Instruments (Revised in2017) (CK [2017] No. 7) and Accounting Standards for Business Enterprises No. 23 - Transfer ofFinancial Assets (Revised in 2017) (CK [2017] No. 8), Accounting Standards for Business EnterprisesNo. 24 - Hedge Accounting (Revised in 2017) (CK [2017] No. 9), and issued and revised theAccounting Standards for Business Enterprises No. 37 – Financial Instruments Presentation (Revisedin 2017) (CK [2017] No. 14) on May 2, 2017 (the above-mentioned four standards are collectivelyreferred to as the “New Financial Instruments Standards”), relevant accounting policy are adjustedcorrespondingly. On 15 June 2018, the Notice on Revising and Printing the Format of FinancialStatements for General Enterprises in 2018 was issued, revising the format of financial statements forgeneral enterprises. In accordance with the above mentioned requirement, the Company needs toadjust relevant contents with accounting policy concerned.On 14 August 2019, the Resolution of Implementation of New Financial Instrument Standards isdeliberated and approved by 5
th session of 8
th BOD and 5
th session of 8
thSupervisory Committee,agrees to carry out the above mentioned new financial instrument standards since 1 Jan. 2019
All recognized financial assets under the new financial instrument standard are subsequentlymeasured at amortized cost or fair value. On the implementation date of the new financial instrumentstandard, the business model of managing financial assets is evaluated based on the facts andcircumstances of the Company on the day, and the contractual cash flow characteristics of thefinancial assets are evaluated based on the facts and circumstances at the initial recognition of thefinancial assets. Financial assets are classified into three categories: those measured at amortized cost,those measured at fair value and the changes are included in other comprehensive income, and thosemeasured at fair value and the changes are included in current profit or loss. Among them, for theequity instrument investment measured at fair value and whose changes are included in othercomprehensive income, when the financial asset is derecognized, the accumulated gain or losspreviously included in other comprehensive income shall be transferred from other comprehensiveincome to retained earnings, but not included in the current profit and loss.
Under the new financial instrument standard, the Company makes the impairment provision andconfirms the credit impairment losses for financial assets measured at amortized cost, debt instrumentinvestments measured at fair value and whose changes are included in other comprehensive income,lease receivables, contract assets and the financial guarantee contracts based on expected credit losses.Main changes and influences of the Company for implementing the new financial instrumentstandards:
①Category and measuring contrast of the financial instrument after/before the date when initiallyimplementation
| 2018-12-31（before ） | 2019-1-1（after） | ||||
| Item | Measurement category | Book value | Item | Measurement category | Book value |
| Available-for-sale financial assets | measured by cost (equity instrument) | 60,615,000.00 | Other equity instrument investment | Measured by fair value and with its variation reckoned into other comprehensive income | 60,615,000.00 |
| Item | 2018-12-31（before） | Re-classified | 2019-1-1（after） |
| Measured by fair value and with its variation reckoned into other comprehensive income: | |||
| Available-for-sale financial assets (former standard) | 60,615,000.00 | ||
| Less: transfer to other equity instrument investment | 60,615,000.00 | ||
| Balance under new financial instrument standard | |||
| Other equity instrument investment | |||
| Add: transfer in from available-for-sale financial assets (former standard) | 60,615,000.00 | ||
| Balance under new financial instrument standard | 60,615,000.00 |
based on historical experiences of the Group’s management, together with consideration of otherrelevant factors. These judgments, estimations and assumption would affect the reported amount ofincome, expense, asset and liability and disclosure of contingent liabilities on balance sheet date.However, actual results resulting from the uncertainty of these estimates may differ from the currentestimation made by management of the Company, which would in turn lead to material adjustments tothe carrying value of assets or liabilities which will be affected in future.The Group conducts regular re-review on the aforesaid judgment, estimation and assumption on acontinued operation basis. If the change of accounting estimation only affect current period, theaffected amount is recognized in the period when change occurs. If the change affects current andfuture periods both, the affected amount is recognized in the period when change occurs and futureperiods.On balance sheet date, major aspects in the statement need to judge, estimate and consumption by theCompany are as:
(1) Fixed assets are provided for depreciation by output method
The Group recognizes depreciation for unit electricity based on values of power generation machinesets, projected power sales volume and projected net remaining value, and provides for depreciationaccording to depreciation of unit electricity and actual power sales volume. Taking into account theprevailing industry policies, technologies, consumption, allocation method of power managementauthorities and past experiences, and the Group management believes that it is adequate for utilizationlife of such power generation machine sets, projected power sales volume, projected net remainingvalue and provision method for depreciation. If the future actual power sales volume differssubstantially from the projected one, the Group would make adjustment to unit electricity depreciation,which would bring affects to the depreciation expenses included in profit and loss for the current andfuture periods.
(2) Provision for bad debts
The Group use allowance method to state bad debt losses according to the accounting policies ofaccounts receivable. Impairment of receivables is based on the assessment of the recoverability ofaccounts receivable. Identification of impairment of receivables requires management judgments andestimates. The differences between actual results and the original estimate will affect the book valueof accounts receivable as well as the recognition or reversal of provision for bad debts in the period inwhich the estimate is changed.
(3) Allowance for inventories
Under the accounting policies of inventories and by measuring at the lower of cost and net realizablevalue, the Group makes allowance for inventories that have costs higher than net realizable value orbecome obsolete and slow moving. Write-down of inventories to their net realizable values is basedon the salability of the evaluated inventory and their net realizable values. Identification of inventoriesrequires management to make judgments and estimates on the basis of obtaining conclusive evidence,
and considering the purpose of holding inventory and the events after balance sheet date. Thedifferences between actual results and the original estimate will affect the book value of inventories aswell as the recognition or reversal of provision for inventories in the period in which the estimate ischanged.
(4) provision for long term assets impairment
The Company makes judgment on each balance sheet date on whether there is indication ofimpairment in respect of non-current assets other than financial assets. Intangible assets withindefinite useful life shall also be further tested for impairment when there is indication of impairment,in addition to the annual impairment test. Other non-current assets other than financial assets wouldbe test for impairment when there is indication showing its carrying value in not likely to berecovered.Impairment exists when carrying value of asset or assets group is higher than recoverable amount,namely the higher of fair value less disposal cost and present value of expected future cash flow.The calculation of the fair value less costs of disposal is based on available data from binding salestransactions in an arm’s length transaction of similar assets or observable market prices lessincremental costs for disposing of the asset.In assessing value in use, significant judgments are exercised over the asset’s production, selling price,related operating expenses and discount rate to calculate the present value. All relevant materialswhich can be obtained are used for estimation of the recoverable amount, including the estimation ofthe production, selling price and related operating expenses based on reasonable and supportableassumptions.The Group determines whether goodwill is impaired at least on an annual basis. This requires anestimation of the value in use of the cash-generating units to which the goodwill is allocated.Estimating the value in use requires the Group to make an estimate of the expected future cash flowsfrom the cash-generating units and also to choose a suitable discount rate in order to calculate thepresent value of those cash flows.
(5) Depreciation and amortization
Assets such as investment real estate, fixed assets and intangible assets are depreciated and amortizedover their useful lives under straight line method after taking into account residual value. Theestimated useful lives of the assets are regularly reviewed to determine the depreciation andamortization costs charged in each reporting period. The useful lives of the assets are determinedbased on historical experience of similar assets and the estimated technical changes. If there havebeen significant changes in the factors used to determine the depreciation or amortization, the rate ofdepreciation or amortization is revised prospectively.
(6) Deferred income tax assets
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxableprofit will be available against which the losses can be utilized. Significant management judgment is
required to determine the amount of deferred income tax assets that can be recognized, based upon thelikely timing and level of future taxable profits together with future tax planning strategies.
(7) Accrued liabilities
Provision for product quality guarantee, estimated onerous contracts, and delay delivery penaltiesshall be recognized in terms of contract, current knowledge and historical experience. If thecontingent event has formed a practical obligation which probably results in outflow of economicbenefits from the Group, a accrued liabilities shall be recognized on the basis of the best estimate ofthe expenditures to settle relevant practical obligation. Recognition and measurement of the accruedliabilities significantly rely on the management’s judgments inconsideration of the assessment ofrelevant risks, uncertainties, time value of money and other factors related to the contingent events.In addition, the Company would project liabilities for after-sale quality maintenance commitmentprovided to customers in respect of goods sold, maintained and reconstructed by the Company. Recentmaintenance experience of the Company has been considered when projecting liabilities, while therecent maintenance experience may not reflect the future maintenance. Any increase or decrease ofthis provision may affect profit or loss for future years.V. Taxes
1. Main taxation items and its tax rate
| Taxation items | Tax rate |
| VAT | Output tax calculated based on the 5%, 6%, 9% or 13% of the taxable income, VAT based on the difference after deducted the current input tax |
| City maintenance tax | Taxed by 5% and 7% of the turnover tax actually paid |
| Education surtax | Taxed by 3% of the turnover tax actually paid |
| Local education surtax | Taxed by 2% of the turnover tax actually paid |
| Enterprise income tax | Taxed by 16.5% to 25% of the taxable income amount |
| Real estate tax | As for the taxed by residual value, paid with the 1.2% of the residual value after original value deducted 30%; as for the taxed by house rental, taxed with 12% of the rental income |
| Urban land use tax | 2 Yuan ~ 8 Yuan per square meter of the actual occupied are for the industrial land located in Nanshan District, Shenzhen City; 1 Yuan ~ 5 Yuan per square meter of the actual occupied are for the industrial land located in Dongguan City; 1 Yuan per square meter of the actual occupied are for the industrial land located in Zhongshan City; |
| Land VAT | Tax by the Value-added amount from transferring state-owned land use right, landing construction and its affiliates with four super-rate progressive tax rate |
Rate for the income tax for the Company and subsidiaries as:
| Taxpaying body | Rate of income tax |
| Shenzhen Nanshan Power Co., Ltd. (“The Company”) | 25% |
| Shenzhen New Power Industrial Co., Ltd. (“New Power ”) | 25% |
| Shenzhen Shennandian Turbine Engineering Technology Co., Ltd.(“Engineering Company”) | 25% |
| Shenzhen Server Petrochemical Supplying Co., Ltd. (“Shenzhen Server”) | 25% |
| Shenzhen Shennandian Environment Protection Co., Ltd.(“Environment Protection Company”) | 25% |
| Shen Nan Dian (Zhongshan) Electric Power Co., Ltd. (“Zhongshan Power”) | 25% |
| Shen Nan Dian (Dongguan) Weimei Power Co., Ltd (“Weimei Power ”) | 25% |
| Shen Nan Energy (Singapore) Co., Ltd.(“Singapore Company”) | 17% |
| Zhongshan Shennandian Storage Co., Ltd.(“Shen Storage”) | 25% |
| Hong Kong Syndisome Co., Ltd.(“Syndisome ”) | 16.50% |
| Tax | Name of the company | Relevant regulation and policies basis | Approval institution | Approval documents | Exemption range | Period of validity |
| VAT | Environment Protection Company | ” Notice of adjustment and perfection on resources comprehensive usage and labor VAT policy”(CS No.115[2011]) | Not applicable | Not applicable | VAT free for sludge treatment | Not applicable |
| VAT | Environment Protection Company | Notice on "contents of products with comprehensive utilization of resources and value-added tax privilege of labor service" (CS No. [2015] 78) | Shenzhen Provincial Office, SAT (Qianhai SAT) | SGSQHBA No.[2015]0002 | Resource comprehensive utilization of VAT refund | 1 Aug. 2015 to 31 Jul. 2021 |
| Enterprise income tax | Syndisome | “Enterprise Income Tax Law of People’s Republic of China” | State Tax Bureau of Nanshan Distinct Shenzhen | Shen Guo Sui Nan Kou Jiao Bei Zi No.: [2011]0011 | No enterprise income tax should pay for the dividend before 31 December 2007 | Not applicable |
exempting environmental companies from added-value tax of labor services for sludge treatment has been abolishedsince August 2015, and environmental companies enjoy the drawback policy of added-value tax for comprehensiveutilization of resources in accordance with the notice about printing and distributing "contents of products withcomprehensive utilization of resources and value-added tax privilege of labor service" (CS No. [2015] 78).
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VI. Annotation of the items in consolidate financial statement
With respect to the notes item (including Main item annotations of Financial Statements) disclosedbelow, unless otherwise specified, “year-begin” refers to 1 January 2019
1. Monetary fund
| Item | 30 June 2019 | Balance at year-begin |
| Cash on hand | 58,460.53 | 75,645.92 |
| Bank savings | 1,029,751,703.59 | 574,808,236.06 |
| Other monetary fund | 3,643,130.19 | 350,945,522.46 |
| Total | 1,033,453,294.31 | 925,829,404.44 |
| Including: total amount saving aboard | 6,207,117.62 | 6,240,695.02 |
| Account age | 30 June 2019 |
| Within one year | 160,734,145.01 |
| 1 to 2 years | - |
| 2 to 3 years | - |
| 3 to 4 years | - |
| 4 to 5 years | - |
| Over 5 years | 5,766,640.84 |
| Subtotal | 166,500,785.85 |
| Less: Bad debt provision | 5,198,068.08 |
| Total | 161,302,717.77 |
| Category | 30 June 2019 | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Accrual proportion (%) | ||
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| Account receivable with single provision for bad debts | 5,766,640.84 | 3.46 | 5,198,068.08 | 90.14 | 568,572.76 |
| Including: Shenzhen Petrochemical Products Bonded Trading Co., Ltd. | 3,474,613.06 | 2.09 | 3,474,613.06 | 100.00 | - |
| Project receivable | 1,937,145.51 | 1.16 | 1,368,572.75 | 70.65 | 568,572.76 |
| Oil-sales receivable | 146,915.10 | 0.09 | 146,915.10 | 100.00 | - |
| Dry mud-sales receivable Dry mud-sales receivable | 69,900.10 | 0.04 | 69,900.10 | 100.00 | - |
| Gas-supply income | 138,067.07 | 0.08 | 138,067.07 | 100.00 | - |
| Account receivable with bad debt provision accrual based on portfolio | 160,734,145.01 | 96.54 | - | - | 160,734,145.01 |
| Including: low risk | 160,734,145.01 | 96.54 | - | - | 160,734,145.01 |
| Total | 166,500,785.85 | 100.00 | 5,198,068.08 | 3.12 | 161,302,717.77 |
| Category | Amount at year-begin | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
| Account receivable with individual major amount and withdrawal bad debt provision independently | 3,474,613.06 | 2.52 | 3,474,613.06 | 100.00 | - |
| Account receivable with bad debt provision accrual based on similar credit risk characteristics of a portfolio | 131,861,452.21 | 95.81 | - | - | 131,861,452.21 |
| Account receivable with individual minor amount but withdrawal bad debt provision independently | 2,292,027.78 | 1.67 | 1,723,455.02 | 75.19 | 568,572.76 |
| Total | 137,628,093.05 | 100.00 | 5,198,068.08 | 3.78 | 132,430,024.97 |
| Account receivable (by unit) | Book amount | Bad debt provision | Accrual | Causes |
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| proportion (%) | ||||
| Shenzhen Petrochemical Products Bonded Trading Co., Ltd. | 3,474,613.06 | 3,474,613.06 | 100.00 | Uncollectible |
| Project receivable | 1,937,145.51 | 1,368,572.75 | 70.65 | Uncollectible |
| Oil-sales receivable | 146,915.10 | 146,915.10 | 100.00 | Uncollectible |
| Dry mud-sales receivable | 69,900.10 | 69,900.10 | 100.00 | Uncollectible |
| Gas-supply income | 138,067.07 | 138,067.07 | 100.00 | Uncollectible |
| Total | 5,766,640.84 | 5,198,068.08 | 90.14 |
| Category | Balance at year-begin | Current amount changed | Ending balance | ||
| Accrual | Collected or switch back | Rewrite or write-off | |||
| Withdrawal bad debt provision independently | 5,198,068.08 | - | - | - | 5,198,068.08 |
| Withdrawal bad debt provision by portfolio | - | - | - | - | - |
| Total | 5,198,068.08 | - | - | - | 5,198,068.08 |
| Account age | 30 June 2019 | Amount at year-begin | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within one year | 40,114,784.29 | 90.49 | 53,317,190.18 | 99.37 |
| 1 to 2 years | 4,122,500.00 | 9.30 | 277,000.00 | 0.52 |
| 2 to 3 years | 32,000.00 | 0.07 | - | - |
| Over 3 years | 61,586.94 | 0.14 | 61,586.94 | 0.11 |
| Total | 44,330,871.23 | 100.00 | 53,655,777.12 | 100.00 |
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4. Other account receivable
| Item | 30 June 2019 | Amount at year-begin |
| Interest receivable | - | - |
| Dividend receivable | - | - |
| Other account receivable | 40,936,219.42 | 40,133,297.74 |
| Total | 40,936,219.42 | 40,133,297.74 |
| Account age | 30 June 2019 |
| Within one year | 9,264,979.97 |
| 1 to 2 years | 1,843,924.80 |
| 2 to 3 years | 1,591,782.90 |
| 3 to 4 years | 3,000.00 |
| 4 to 5 years | 4,540,284.01 |
| Over 5 years | 55,536,668.18 |
| Subtotal | 72,780,639.86 |
| Less: Bad debt provision | 31,844,420.44 |
| Total | 40,936,219.42 |
| Nature | 30 June 2019 | Amount at year-begin |
| Current payments with related party | 22,909,878.94 | 23,138,899.40 |
| Other current payments | 49,870,760.92 | 48,838,818.78 |
| Subtotal | 72,780,639.86 | 71,977,718.18 |
| Less: Bad debt provision | 31,844,420.44 | 31,844,420.44 |
| Total | 40,936,219.42 | 40,133,297.74 |
| Bad debt provision | Phases I | Phases II | Phases III | Total |
| Expected credit losses over next 12 months | Expected credit losses for the entire duration (without credit | Expected credit losses for the entire duration (with |
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| impairment occurred) | credit impairment occurred) | |||
| Balance on Jan. 1, 2019 | - | 31,844,420.44 | - | 31,844,420.44 |
| Book balance of other account receivable dated 1 Jan. 2019: | - | - | - | - |
| ——Turn to phase II | - | - | - | - |
| ——Turn to phase III | - | - | - | - |
| ——Return to Phase II | - | - | - | - |
| ——Return to Phase I | - | - | - | - |
| Current accrual | - | - | - | - |
| Current switch back | - | - | - | - |
| Rewrite in the period | - | - | - | - |
| Write-off in the period | - | - | - | - |
| Other changes | - | - | - | - |
| Balance on Jun. 30, 2019 | - | 31,844,420.44 | - | 31,844,420.44 |
| Category | Balance at year-begin | Current amount changed | 30 June 2019 | ||
| Accrual | Collected or switch back | Rewrite or write-off | |||
| Withdrawal bad debt provision independently | 31,844,420.44 | - | - | - | 31,844,420.44 |
| Low risk | - | - | - | - | - |
| Total | 31,844,420.44 | - | - | - | 31,844,420.44 |
| Name of the company | Nature | Amount | Account age | Proportion in total other account receivable (%) | Year-end balance of bad debt provision |
| Huidong Server Harbor Comprehensive Development Company | Intercourse funds | 23,101,965.85 | Over 5 years | 31.74 | - |
| Huiyang Kangtai Industrial Company | Intercourse funds | 14,311,626.70 | Over 5 years | 19.66 | 14,311,626.70 |
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| Personal funds | Intercourse funds | 7,498,997.87 | Over 5 years | 10.30 | 7,498,997.87 |
| China National Machinery Equipment Engineering Ltd. | Intercourse funds | 4,540,284.01 | 4-5 years | 6.24 | - |
| Shandong Jinan Generation Equipment Plant | Intercourse funds | 3,560,000.00 | Over 5 years | 4.89 | 3,560,000.00 |
| Total | 53,012,874.43 | 72.84 | 25,370,624.57 |
| Item | 30 June 2019 | Amount at year-begin | ||||
| Book balance | Depreciation provision | Book value | Book balance | Depreciation provision | Book value | |
| Raw materials | 177,022,079.44 | 52,542,530.49 | 124,479,548.95 | 177,479,127.97 | 52,720,793.00 | 124,758,334.97 |
| Total | 177,022,079.44 | 52,542,530.49 | 124,479,548.95 | 177,479,127.97 | 52,720,793.00 | 124,758,334.97 |
| Category | Book balance at year-begin | Accrual in the year | Decreased in the year | Book balance on 30 Jun. 2019 | |
| Switch back | Written-off | ||||
| Raw materials | 52,720,793.00 | - | - | 178,262.51 | 52,542,530.49 |
| Total | 52,720,793.00 | - | - | 178,262.51 | 52,542,530.49 |
| Item | Specific basis | Reasons for switch back | Reasons for written-off |
| Raw materials | Cost higher than the net realizable value | Not applicable | Raw materials on sale |
| Item | 30 June 2019 | Balance at year-begin |
| VAT input tax deductible | 372,624,164.14 | 383,495,754.13 |
| Enterprise income tax deductible | 6,583,089.98 | 6,583,089.98 |
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| Other | 30,000.00 | 30,000.00 |
| Total | 379,237,254.12 | 390,108,844.11 |
| Item | Balance at year-begin | ||
| Book balance | Depreciation reserves | Book value | |
| Equity instrument available for sale | 63,115,000.00 | 2,500,000.00 | 60,615,000.00 |
| Including: measured by cost | 63,115,000.00 | 2,500,000.00 | 60,615,000.00 |
| Total | 63,115,000.00 | 2,500,000.00 | 60,615,000.00 |
| Invested enterprise | Balance at year-begin | Changes in the year (+,-) | Balance on Jun. 30, 2019 | Balance of depreciation reserves on Jun. 30, 2019 | |
| Investment gains/losses recognized by equity method | Other | ||||
| I. Joint venture | |||||
| Huidong Server | 16,049,044.95 | -677,552.37 | - | 15,371,492.58 | - |
| Total | 16,049,044.95 | -677,552.37 | - | 15,371,492.58 | - |
| Item | 30 June 2019 |
| CPI Jiangxi Nuclear Power Company | 60,615,000.00 |
| Shenzhen Petrochemical Products Bonded Trading Co., Ltd. | - |
| Total | 60,615,000.00 |
| Item | House, buildings | Land use | Constructio | Total |
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| right | n-in-progress | |||
| I. Original book value | ||||
| 1. Balance at year-begin | 9,708,014.96 | - | - | 9,708,014.96 |
| 2. Current increased | - | - | - | - |
| 3. Current decreased | - | - | - | - |
| 4. Balance on Jun. 30, 2019 | 9,708,014.96 | - | - | 9,708,014.96 |
| II. accumulated depreciation and accumulated amortization | - | |||
| 1. Balance at year-begin | 7,101,712.25 | - | - | 7,101,712.25 |
| 2. Current increased | 106,906.91 | - | - | 106,906.91 |
| (1) Accrual or amortization | 106,906.91 | - | - | 106,906.91 |
| 3. Current decreased | - | - | - | - |
| 4. Balance on Jun. 30, 2019 | 7,208,619.16 | - | - | 7,208,619.16 |
| III. Depreciation reserves | - | |||
| 1. Balance at year-begin | - | - | - | - |
| 2. Current increased | - | - | - | - |
| 3. Current decreased | - | - | - | - |
| 4. Balance on Jun. 30, 2019 | - | - | - | - |
| IV. Book value | - | |||
| 1. Balance on Jun. 30, 2019 | 2,499,395.80 | - | - | 2,499,395.80 |
| 2. Book value at year-begin | 2,606,302.71 | - | - | 2,606,302.71 |
| Item | 30 June 2019 | Balance at year-begin |
| Fixed assets | 1,410,659,018.39 | 1,405,648,674.64 |
| Disposal of fixed assets | 1,314.60 | 1,314.60 |
| Total | 1,410,660,332.99 | 1,405,649,989.24 |
| Item | Houses and buildings | Machinery equipment | Transportation tools | Other equipment | Total |
| I. Original book value |
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| 1. Balance at year-begin | 493,659,821.94 | 4,011,690,503.45 | 21,694,643.51 | 50,934,529.40 | 4,577,979,498.30 |
| 2. Current increased | -5,085.48 | 50,023,583.20 | 1,176,173.87 | 2,342,373.23 | 53,537,044.82 |
| (1) Purchase | -5,085.48 | 2,447,858.64 | 1,104,622.15 | 734,665.10 | 4,282,060.41 |
| (2) Construction in process transfer-in | - | 47,575,724.56 | 71,551.72 | 1,607,708.13 | 49,254,984.41 |
| (3) Increased by enterprise combination | - | - | - | - | - |
| 3. Current decreased | 1,505,808.74 | - | 8,651,158.68 | 0.00 | 10,156,967.42 |
| (1) Disposal or scrap | 1,505,808.74 | - | 8,651,158.68 | 0.00 | 10,156,967.42 |
| 4. Balance on Jun. 30, 2019 | 492,148,927.72 | 4,061,714,086.65 | 14,219,658.70 | 53,276,902.63 | 4,621,359,575.70 |
| II. Accumulated depreciation | |||||
| 1. Balance at year-begin | 295,042,092.71 | 2,680,198,815.48 | 14,840,509.71 | 41,115,495.64 | 3,031,196,913.54 |
| 2. Current increased | 6,958,177.29 | 36,322,306.31 | 708,187.24 | 813,158.11 | 44,801,828.95 |
| (1) Accrual | 6,958,177.29 | 36,322,306.31 | 708,187.24 | 813,158.11 | 44,801,828.95 |
| 3. Current decreased | - | - | 6,432,095.30 | - | 6,432,095.30 |
| (1) Disposal or scrap | - | - | 6,432,095.30 | - | 6,432,095.30 |
| 4. Balance on Jun. 30, 2019 | 302,000,270.00 | 2,716,521,121.79 | 9,116,601.65 | 41,928,653.75 | 3,069,566,647.19 |
| III. Depreciation reserves | |||||
| 1. Balance at year-begin | 14,860,025.13 | 126,273,884.99 | 141,133,910.12 | ||
| 2. Current increased | |||||
| (1) Accrual | - | - | - | - | - |
| 3. Current decreased | |||||
| (1) Disposal or scrap | - | - | - | - | - |
| 4. Balance on Jun. 30, 2019 | 14,860,025.13 | 126,273,884.99 | 0.00 | 0.00 | 141,133,910.12 |
| IV. Book value | |||||
| 1. Balance on Jun. 30, 2019 | 175,288,632.59 | 1,218,919,079.87 | 5,103,057.05 | 11,348,248.88 | 1,410,659,018.39 |
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| 2. Book value at year-begin | 183,757,704.10 | 1,205,217,802.98 | 6,854,133.80 | 9,819,033.76 | 1,405,648,674.64 |
| Item | Original book value | Accumulated depreciation | Depreciation reserves | Book value | Note |
| Houses and buildings | 137,799,917.53 | 101,022,772.20 | 19,008,224.87 | 17,768,920.46 | Wharf, processing workshop of heavy oil |
| Machinery equipment | 589,641,126.12 | 495,741,446.98 | 53,700,282.66 | 40,199,396.48 | Processing equipment of heavy oil and generation unit |
| Transportation tools | 256,300.00 | 230,670.00 | - | 25,630.00 | Idle vehicles |
| Total | 727,697,343.65 | 596,994,889.18 | 72,708,507.53 | 57,993,946.94 |
| Item | Book value | Reasons |
| Booster station | 5,567,100.88 | Procedures uncompleted |
| Steam turbine workshop | 2,014,811.08 | Procedures uncompleted |
| Chemical water tower | 3,327,665.86 | Procedures uncompleted |
| Treatment shop for heavy oil | 650,123.93 | Procedures uncompleted |
| Start-up boiler house | 146,191.99 | Procedures uncompleted |
| Fire pump room | 339,374.37 | Procedures uncompleted |
| Circulating water pump house | 2,134,592.90 | Procedures uncompleted |
| Comprehensive building | 3,557,285.99 | Procedures uncompleted |
| Production and inspection building | 5,745,308.85 | Procedures uncompleted |
| Administrative building | 5,907,084.49 | Procedures uncompleted |
| Mail room of the main entrance | 239,379.05 | Procedures uncompleted |
| Turbine building and annex building | 10,745,357.65 | Procedures uncompleted |
| Plant’s ventilating system | 558,407.71 | Procedures uncompleted |
| Office building | 5,375,147.82 | Procedures uncompleted |
| Comprehensive building | 1,192,940.72 | Procedures uncompleted |
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| Draft cooling tower | 3,452,423.42 | Procedures uncompleted |
| Chemical water workshop and foundation of water tank | 1,640,829.43 | Procedures uncompleted |
| Industry pool and industry pump house | 720,128.52 | Procedures uncompleted |
| Start-up boiler house | 120,327.67 | Procedures uncompleted |
| Oil treatment room and oil un-loading platform | 337,538.98 | Procedures uncompleted |
| Comprehensive building canteen | 314,580.33 | Procedures uncompleted |
| Total | 54,086,601.64 |
| Item | 30 June 2019 | Balance at year-begin |
| Fixed assets ready for disposal | 1,314.60 | 1,314.60 |
| Total | 1,314.60 | 1,314.60 |
12. Construction-in-progress
(1) Construction-in-progress:
| Item | 30 June 2019 | Amount at year-begin | ||||
| Book balance | Depreciation reserves | Net book value | Book balance | Depreciation reserves | Net book value | |
| Cogeneration of heat and electricity Project | 53,684,645.10 | - | 53,684,645.10 | 64,754,943.63 | 64,754,943.63 | |
| Oil to Gas Works | 32,871,600.26 | 32,871,600.26 | - | 32,871,600.26 | 32,871,600.26 | |
| Cogeneration of heat and electricity Project | 13,045,279.00 | - | 13,045,279.00 | 17,021,868.33 | 17,021,868.33 | |
| Other technical innovation project | 916,572.12 | - | 916,572.12 | 571,196.43 | 571,196.43 | |
| Total | 100,518,096.48 | 32,871,600.26 | 67,646,496.22 | 115,219,608.65 | 32,871,600.26 | 82,348,008.39 |
| Item | Budget | Amount at year-begin | Increase in the year | Transferred fixed assets in this year | Other decrease | 30 June 2019 |
| Cogeneration of heat and electricity Project | 120,000,000.00 | 64,754,943.63 | 4,734,970.23 | 15,805,268.76 | - | 53,684,645.10 |
| Oil to Gas Works | 74,400,000.00 | 32,871,600.26 | - | - | - | 32,871,600.26 |
| Cogeneration of heat and electricity Project | 17,021,868.33 | 29,381,371.90 | 33,357,961.23 | 13,045,279.00 | ||
| Technological transformation project | 571,196.43 | 437,130.11 | 91,754.42 | - | 916,572.12 | |
| Total | 194,400,000.00 | 115,219,608.65 | 34,553,472.24 | 49,254,984.41 | - | 100,518,096.48 |
| Item | Amount at year-begin | Increase in the year | Decreased in the year | 30 June 2019 | Reasons of accrual |
| Oil to Gas Works | 32,871,600.26 | - | - | 32,871,600.26 | In idle condition |
13. Intangible assets
| Item | Land use right | Software | Total |
| I. Original book value | |||
| 1. Balance at year-begin | 91,253,625.27 | 3,678,109.85 | 94,931,735.12 |
| 2. Current increased | - | ||
| (1) Purchase | - | - | |
| 3. Current decreased | - | ||
| (1) Disposal | - | - | - |
| 4. Balance on Jun. 30, 2019 | 91,253,625.27 | 3,678,109.85 | 94,931,735.12 |
| II. Accumulated amortization | |||
| 1. Balance at year-begin | 45,923,214.98 | 3,021,264.90 | 48,944,479.88 |
| 2. Current increased | 1,099,623.06 | 132,476.96 | 1,232,100.02 |
| (1) Accrual | 1,099,623.06 | 132,476.96 | 1,232,100.02 |
| 3. Current decreased | - | ||
| (1) Disposal | - | - | - |
| 4. Balance on Jun. 30, 2019 | 47,022,838.04 | 3,153,741.86 | 50,176,579.90 |
| III. Depreciation reserves | |||
| 1. Balance at year-begin | - | - | - |
| 2. Current increased | |||
| (1) Accrual | - | - | - |
| 3. Current decreased | |||
| (1) Disposal | - | - | - |
| 4. Balance on Jun. 30, 2019 | - | - | - |
| IV. Book value | |||
| 1. Balance on Jun. 30, 2019 | 44,230,787.23 | 524,367.99 | 44,755,155.22 |
| 2. Book value at year-begin | 45,330,410.29 | 656,844.95 | 45,987,255.24 |
| Item | 30 June 2019 | Amount at year-begin |
| Deferred income tax assets: | ||
| Bad debt provision of account receivable | 1,265,000.26 | 1,265,000.26 |
| Bad debt provision of other account receivable | 180,896.25 | 180,896.25 |
| Depreciation reserves of financial assets | 625,000.00 | 625,000.00 |
| available for sale | ||
| Other | 427.75 | 427.75 |
| Total | 2,071,324.26 | 2,071,324.26 |
| Item | 30 June 2019 | Amount at year-begin |
| Project of LNG(Note) | 22,882,181.78 | 22,882,181.78 |
| Account for engineering and equipment paid in advance | 3,338,000.00 | 2,023,500.00 |
| Total | 26,220,181.78 | 24,905,681.78 |
| Item | 30 June 2019 | Amount at year-begin |
| Guarantee loans | 760,000,000.00 | 860,000,000.00 |
| Credit loans | 340,000,000.00 | 140,000,000.00 |
| Total | 1,100,000,000.00 | 1,000,000,000.00 |
| Item | 30 June 2019 | Balance at year-begin |
| Materials | 22,387,785.64 | 8,545,427.20 |
| Electricity | 1,664,364.58 | 906,278.78 |
| Other | 11,842,051.65 | 8,614,192.71 |
| Total | 35,894,201.87 | 18,065,898.69 |
| Item | 30 June 2019 | Balance at year-begin |
| Rent of Dapeng received in advance | 140,760.00 | - |
| Total | 140,760.00 | - |
| Item | Balance at year-begin | Increase in the year | Decreased in the year | 30 June 2019 |
| I. Short-term remuneration | 44,673,492.37 | 62,726,004.44 | 63,834,377.62 | 43,565,119.19 |
| II. Post-employment welfare-defined contribution plans | 239,107.29 | 10,835,597.40 | 8,107,229.71 | 2,967,474.98 |
| III. Severance Pay | - | - | - | - |
| IV. Other welfare due within one year | - | - | - | - |
| Total | 44,912,599.66 | 73,561,601.84 | 71,941,607.33 | 46,532,594.17 |
| Item | Balance at year-begin | Increase in the year | Decreased in the year | 30 June 2019 |
| 1. Wages, bonuses, allowances and subsidies | 43,587,594.10 | 50,771,826.23 | 52,207,776.49 | 42,151,643.84 |
| 2. Welfare for employee | - | 459,636.70 | 459,636.70 | - |
| 3. Social insurance | 123,634.93 | 3,208,080.84 | 3,079,435.61 | 252,280.16 |
| Including: Medical insurance | 102,720.39 | 3,067,841.08 | 2,955,570.63 | 214,990.84 |
| Work injury insurance | 11,021.84 | 51,781.91 | 48,287.01 | 14,516.74 |
| Maternity insurance | 9,892.70 | 88,457.85 | 75,577.97 | 22,772.58 |
| Wages in arrears | - | - | - | - |
| 4. Housing provident fund | 503,857.94 | 7,633,455.56 | 7,377,201.60 | 760,111.90 |
| 5.Union funds and staff education expenses | 458,405.40 | 653,005.11 | 710,327.22 | 401,083.29 |
| Total | 44,673,492.37 | 62,726,004.44 | 63,834,377.62 | 43,565,119.19 |
| Item | Balance at | Increase in the | Decreased in the | 30 June 2019 |
| year-begin | year | year | ||
| 1. Basic Endowment insurance | 231,340.48 | 8,315,832.00 | 8,028,779.05 | 518,393.43 |
| 2. Unemployment insurance | 7,907.83 | 84,865.38 | 78,450.66 | 14,322.55 |
| 3. Enterprise annuities | -141.02 | 2,434,900.02 | - | 2,434,759.00 |
| Total | 239,107.29 | 10,835,597.40 | 8,107,229.71 | 2,967,474.98 |
| Item | 30 June 2019 | Amount at year-begin |
| Enterprise income tax | 3,071,495.66 | 11,215,405.89 |
| Real estate tax | 2,327,866.88 | 2,211,605.38 |
| Individual income tax | 1,020,866.44 | 1,251,539.31 |
| Urban land use tax | 566,975.54 | 603,884.89 |
| VAT | 3,753,007.01 | 508,589.03 |
| Other | 254,238.63 | 209,015.05 |
| Total | 10,994,450.16 | 16,000,039.55 |
| Item | 30 June 2019 | Amount at year-begin |
| Interest payable | 1,261,137.48 | 1,608,290.72 |
| Other account payable | 55,087,871.86 | 61,483,590.71 |
| Total | 56,349,009.34 | 63,091,881.43 |
| Item | 30 June 2019 | Amount at year-begin |
| Amortization of long-term loan’s interest and repayment of principal at maturity | 80,362.25 | 50,826.19 |
| Interest payable for short-term loans | 1,180,775.23 | 1,557,464.53 |
| Total | 1,261,137.48 | 1,608,290.72 |
| Item | 30 June 2019 | Amount at year-begin |
| Project expense | 30,042,087.84 | 30,866,827.67 |
| Quality guarantee deposit | 3,130,808.23 | 8,285,192.04 |
| Accrued expenses | 376,016.39 | 6,867,153.90 |
| Material amount | 2,053,923.88 | 5,453,034.68 |
| Equipment amount | 3,191,309.24 | 457,760.33 |
| Land use right charge | 219,349.98 | 348,534.19 |
| Other | 16,074,376.30 | 9,205,087.90 |
| Total | 55,087,871.86 | 61,483,590.71 |
| Item | 30 June 2019 | Reasons for unpaid or carried over |
| Interest on overdue payments | 6,892,178.73 | Un-liquidated |
| Guangdong Industrial Equipment Installation Company | 1,038,545.90 | Un-liquidated |
| Zhongshan Nanlang Construction Development Company | 860,190.12 | Un-liquidated |
| Harbin Steam Turbine Auxiliary Engine Co., Ltd. | 400,000.00 | Un-liquidated |
| Total | 9,190,914.75 | —— |
| Item | 30 June 2019 | Amount at year-begin |
| Guarantee loans | 21,940,000.00 | 25,940,000.00 |
| Credit loans | - | - |
| Less: Long-term loans due within one year | - | - |
| Total | 21,940,000.00 | 25,940,000.00 |
| Item | 30 June 2019 | Amount at year-begin | Reason |
| Offering guarantee outside | 26,726,232.38 | 26,726,232.38 | Note |
with the attorney fees for deal with problems left over from history, totally 773,767.62 Yuan costs from 2014 to 30 June2019, the ending balance amounted as 26,726,232.38 Yuan
24. Deferred income
| Item | Amount at year-begin | Increase in the year | Decreased in the year | 30 June 2019 |
| Government subsidy | 75,612,259.33 | 38,097,273.00 | 2,008,943.45 | 111,700,588.88 |
| Liability | Balance at year-begin | Increase in the year | Decreased in the year | 30 June 2019 | Assets /income related | |
| Amount reckoned in other income | Other decrease | |||||
| Subsidy for low-nitrogen transformation | 25,687,642.10 | - | 251,403.55 | - | 25,436,238.55 | Assets related |
| Information construction | 147,843.08 | - | 30,588.24 | - | 117,254.84 | Assets related |
| Support fund of recycling economy for sludge drying | 8,098,276.87 | - | 323,501.46 | - | 7,774,775.41 | Assets related |
| Treasury subsidies for sludge drying | 3,081,250.00 | - | 127,500.00 | - | 2,953,750.00 | Assets related |
| Special funds for energy conservation and emission reduction | 798,260.62 | - | 57,018.66 | - | 741,241.96 | Assets related |
| Funded of energy efficiency improvement for electric machine | 436,320.00 | - | 17,280.00 | - | 419,040.00 | Assets related |
| Subsidy for quality promotion of the air environment in Shenzhen | 32,732,666.66 | 38,097,273.00 | 1,201,651.54 | - | 69,628,288.12 | Assets related |
| Cogeneration of heat and electricity Project | 4,630,000.00 | - | - | - | 4,630,000.00 | Assets related |
| Total | 75,612,259.33 | 38,097,273.00 | 2,008,943.45 | - | 111,700,588.88 | |
25. Share capital
| Item | Balance at year-begin | Changes in the year (+,-) | Balance on Jun. 30, 2019 | ||||
| New shares issued | Bonus share | Shares transferred from capital reserve | Other | Subtotal | |||
| Total shares | 602,762,596.00 | - | - | - | - | - | 602,762,596.00 |
| Item | Balance at year-begin | Increase in the year | Decreased in the year | 30 June 2019 |
| Capital premium | 233,035,439.62 | - | - | 233,035,439.62 |
| Other capital reserve | 129,735,482.48 | - | - | 129,735,482.48 |
| Total | 362,770,922.10 | - | - | 362,770,922.10 |
| Item | Balance at year-begin | Increase in the year | Decreased in the year | 30 June 2019 |
| Statutory surplus reserve | 310,158,957.87 | - | - | 310,158,957.87 |
| Discretionary surplus reserves | 22,749,439.73 | - | - | 22,749,439.73 |
| Total | 332,908,397.60 | - | - | 332,908,397.60 |
| Item | 30 June 2019 | Balance at year-begin |
| Retained profit of last year before adjusted | 679,429,935.81 | 660,176,169.69 |
| Total retained profit adjusted (increased with +, decreased with -) | - | |
| Retained profit at beginning of the year after adjusted | 679,429,935.81 | 660,176,169.69 |
| Add: net profit attributable to shareholders of parent company | -25,283,190.82 | 19,253,766.12 |
| Retained profit at year-end | 654,146,744.99 | 679,429,935.81 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 | ||
| Income | Cost | Income | Cost | |
| Main business | 407,283,308.09 | 382,899,068.89 | 1,078,030,178.26 | 968,719,412.92 |
| Other business | 841,308.29 | 98,068.80 | 1,730,036.54 | 975,640.11 |
| Total | 408,124,616.38 | 382,997,137.69 | 1,079,760,214.80 | 969,695,053.03 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| City maintenance tax | 347,935.14 | 2,286,803.77 |
| Real estate tax | 1,299,068.45 | 1,275,543.49 |
| Stamp tax | 223,246.10 | 520,484.00 |
| Education surtax | 239,773.87 | 572,820.01 |
| Land use tax | 622,976.03 | 50,960.52 |
| Vehicle and vessel use tax | 21,056.56 | 15,390.94 |
| Environmental protection tax | 71,377.28 | - |
| Total | 2,825,433.43 | 4,722,002.73 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| Salary, welfare and social insurance | 211,222.62 | 350,272.34 |
| Communication charge | 3,600.00 | 1,800.00 |
| Entertainment expense | 115,344.00 | 57,273.00 |
| Vehicles expenses | 15,559.00 | 7,500.00 |
| Inspection charges | 5,707.55 | 6,509.45 |
| Labor insurance fee | 10,530.68 | 6,682.10 |
| Rental fee | 14,400.00 | 3,600.00 |
| Property insurance | 49,130.74 | 50,318.44 |
| Agency engagement fee | 37,735.85 | 37,735.85 |
| Sludge treatment costs | 2,091,758.08 | 1,125,046.86 |
| Other | 11,281.00 | 3,500.00 |
| Total | 2,566,269.52 | 1,650,238.04 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| Staff remuneration | 23,892,967.48 | 27,925,808.57 |
| Rental fee | 3,288,377.42 | 3,092,069.50 |
| Social expenses | 1,532,058.32 | 1,558,869.52 |
| Agency fee | 1,231,759.70 | 646,103.90 |
| Fleet cost | 1,007,200.26 | 1,861,732.77 |
| Board charges | 588,713.32 | 546,064.70 |
| Depreciation | 2,735,952.70 | 1,987,153.39 |
| Amortization of intangible assets | 924,080.54 | 935,811.89 |
| Specific expenses | - | 14,584.43 |
| Environmental expense | 985,970.24 | 874,452.57 |
| Sundry expenses | 1,636,173.21 | 1,387,173.86 |
| Expenses for enterprise culture | 416,397.26 | 103,725.00 |
| Property management expense | 473,682.63 | 455,396.71 |
| Office expenses | 351,693.34 | 346,790.68 |
| Communication charge | 555,998.52 | 647,596.16 |
| Business traveling charge | 309,115.10 | 259,624.12 |
| Stock charge | 86,822.94 | 29,929.33 |
| Labor union dues | 303,547.56 | 290,467.56 |
| Personnel education fund | 55,175.25 | 61,044.53 |
| Other | 4,556,178.71 | 3,657,250.85 |
| Total | 44,931,864.50 | 46,681,650.04 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| Interest expenditure | 23,542,971.21 | 24,038,132.91 |
| Less : interest income | 13,189,605.67 | 2,187,166.10 |
| Exchange gains/losses | -6,301.58 | -73,770.20 |
| Other | 292,203.46 | 517,089.32 |
| Total | 10,639,267.42 | 22,294,285.93 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 | Amount reckoned into |
| current non-recurring gain/loss | |||
| Specific subsidy for quality promotion of the air environment in Shenzhen | 1,201,651.54 | - | 1,201,651.54 |
| Subsidy for low-nitrogen transformation | 251,403.55 | 1,276,992.42 | 251,403.55 |
| Enterprise information construction subsidy | 30,588.24 | 30,588.24 | 30,588.24 |
| Subsidy for transformation of energy-saving technology | 57,018.66 | 247,005.52 | 57,018.66 |
| Treasury subsidies for sludge drying | 127,500.00 | 127,500.00 | 127,500.00 |
| Support fund of recycling economy for sludge drying | 323,501.46 | 323,501.46 | 323,501.46 |
| Funded of energy efficiency improvement for electric machine | 17,280.00 | 17,280.00 | 17,280.00 |
| VAT rebates | 1,753,212.01 | 2,013,937.74 | - |
| Special funds for the development of independent innovation industries | - | 100,000.00 | - |
| Supporting funds of office occupancy for listed companies | 1,000,000.00 | - | 1,000,000.00 |
| Reward to encouraging small and medium-sized enterprise to growth as a scale-sized company | 200,000.00 | - | 200,000.00 |
| Total | 4,962,155.46 | 4,136,805.38 | 3,208,943.45 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| Long-term equity investment income by equity | -677,552.37 | -1,076,904.31 |
| Investment income from disposal of long-term equity investments | - | - |
| Subtotal | -677,552.37 | -1,076,904.31 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 | Amount reckoned into current non-recurring gain/loss |
| Gain/loss from fixed assets disposal | -417,926.32 | - | -417,926.32 |
| Total | -417,926.32 | - | -417,926.32 |
37. Non-operating revenue
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| Gains from damage and scrap of the non-current assets | 98,666.50 | - |
| Other | 4,500.00 | 4,775.00 |
| Total | 103,166.50 | 4,775.00 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| Expenses from external donation | - | - |
| Losses from damage and scrap of the non-current assets | - | 849,018.73 |
| Other | 46,124.97 | 10,000.00 |
| Total | 46,124.97 | 859,018.73 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| Current income tax measured by tax law and relevant regulation | 1,157,865.76 | 8,092,879.62 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| Subsidy received | 39,297,273.00 | - |
| Deposit of natural gas collected | 13,431,789.29 | - |
| Interest income | 12,982,668.91 | 2,166,649.41 |
| Other | 4,321,781.62 | 3,843,730.64 |
| Total | 70,033,512.82 | 6,010,380.05 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| Expense on agency appointment | 1,231,759.70 | 646,103.90 |
| Fund for the Board | 588,713.32 | 546,064.70 |
| Leasing expense | 3,762,060.05 | 3,547,466.21 |
| Entertainment expense | 1,532,058.32 | 1,558,869.52 |
| Vehicles expense | 1,007,200.26 | 1,861,732.77 |
| Enterprise culture | 416,397.26 | 103,725.00 |
| Communication fee | 555,998.52 | 647,596.16 |
| Environment protection fee | 985,970.24 | 874,452.57 |
| Other | 16,424,022.91 | 16,098,724.40 |
| Total | 26,504,180.58 | 25,884,735.23 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| Deposit received | 7,303,338.86 | 15,460,000.00 |
| Supplementary information | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| 1. Regulate the net profit into the cash flow of operating activities | ||
| Net profit | -33,069,503.64 | 28,829,762.75 |
| Add: Asset impairment provision | - | - |
| Depreciation of fixed assets | 44,801,828.95 | 64,478,013.54 |
| Amortization of intangible assets | 1,232,100.02 | 1,243,831.37 |
| Amortization of long-term deferred expenses | 22,548.81 | - |
| Loss (gain) from disposing fixed assets, intangible assets and other long-term assets | 417,926.32 | - |
| Abandonment loss from fixed assets | - | 849,018.73 |
| Financial expenses(gain) | 23,542,971.21 | 24,038,132.91 |
| Investment loss(gain) | 677,552.37 | 1,076,904.31 |
| Decrease (increase) of deferred income tax assets | - | - |
| Decrease (increase)of inventory | 278,786.02 | 8,118,805.74 |
| Decrease (increase) of receivable operating items | 4,043,360.79 | -60,023,522.47 |
| Increase (decrease) of payable operating items | 14,269,806.04 | -16,020,312.60 |
| Net cash flow from operation activities | 56,217,376.89 | 52,590,634.28 |
| 2. Major investment and financing activities not involving cash income and expenditure: | ||
| Debt capitalization | - | - |
| Convertible company bond due within one year | - | - |
| Fixed assets acquired under finance leases | - | - |
| 3. Net change of cash and cash equivalents: | ||
| Ending balance of cash and cash equivalent | 1,029,883,840.43 | 763,737,487.23 |
| Less: Balance of cash and cash equivalent at period-begin | 914,956,611.70 | 411,613,377.07 |
| Net increase of cash and cash equivalents | 114,927,228.73 | 352,124,110.16 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 |
| I. Cash | 1,029,883,840.43 | 763,737,487.23 |
| Including: Cash on hand | 58,460.53 | 142,604.63 |
| Bank savings available for payment needed | 1,026,182,249.71 | 430,415,610.30 |
| Other monetary capital available for payment needed | 3,643,130.19 | 333,179,272.30 |
| II. Cash equivalent | ||
| III. Balance of cash and cash equivalent at period-end | 1,029,883,840.43 | 763,737,487.23 |
| Item | 30 June 2019 | Restricted reason |
| Monetary Fund | 3,569,453.88 | Deposit |
| Total | 3,569,453.88 |
| Item | Foreign currency balance on 30 June 2019 | Conversion rate | RMB converted |
| Monetary fund | |||
| Including: USD | 845,823.77 | 6.8747 | 5,814,787.00 |
| Euro | 976.71 | 7.8170 | 7,634.94 |
| HKD | 541,541.36 | 0.8797 | 476,404.20 |
| SGD | 4,784.81 | 5.0805 | 24,309.23 |
1. Equity in subsidiaries
(1) Composition of the Group
| Subsidiary | Main operation place | Registration place | Business nature | Shareholding ratio (%) | Acquired by |
| Shenzhen Server(note) | Shenzhen | Shenzhen | Trading | 50 | Establishment |
| New Power | Shenzhen | Shenzhen | Power generation | 100 | Establishment |
| Zhongshan Power | Zhongshan | Zhongshan | Power generation | 80 | Establishment |
| Engineering Company | Shenzhen | Shenzhen | Engineering consulting | 100 | Establishment |
| Weimei Power | Dongguan | Dongguan | Power generation | 70 | Establishment |
| Environment Protection Company | Shenzhen | Shenzhen | Engineering | 100 | Establishment |
| Singapore Company | Singapore | Singapore | Trading | 100 | Establishment |
| Shen Storage | Zhongshan | Zhongshan | Storage | 80 | Establishment |
| Syndisome | Hong Kong | Hong Kong | Import & export trading | 100 | Not under the same control |
| Subsidiary | Share-holding ratio of minority (%) | Gains/losses attributable to minority in the Period | Dividend announced to distribute for minority in the Period | Ending equity of minority |
| Zhongshan Power | 20 | -2,397,448.01 | - | -21,396,423.11 |
| Weimei Power | 30 | -4,483,812.65 | - | 25,033,607.53 |
| Subsidiary | Balance on Jun. 30, 2019 | |||||
| Current assets | Non-current assets | Total assets | Current liability | Non-current liability | Total liability | |
| Zhongshan Power | 76,433,540.69 | 542,534,051.94 | 618,967,592.63 | 698,273,292.30 | 27,676,415.86 | 725,949,708.16 |
| Weimei Power | 93,251,765.60 | 484,993,052.23 | 578,244,817.83 | 490,169,459.37 | 4,630,000.00 | 494,799,459.37 |
(Continued)
| Subsidiary | Balance at year-begin | |||||
| Current assets | Non-current assets | Total assets | Current liability | Non-current liability | Total liability | |
| Zhongshan Power | 98,062,301.06 | 554,996,045.40 | 653,058,346.46 | 716,297,767.96 | 31,755,453.99 | 748,053,221.95 |
| Weimei Power | 96,642,222.01 | 496,340,540.51 | 592,982,762.52 | 489,961,361.90 | 4,630,000.00 | 494,591,361.90 |
| Subsidiary | Current period | |||
| Operation Income | Net profit | Total comprehensive income | Cash flow from operation activity | |
| Zhongshan Power | 66,364,051.74 | -11,987,240.04 | -11,987,240.04 | 30,421,274.57 |
| Weimei Power | 110,328,414.74 | -14,946,042.16 | -14,946,042.16 | 13,837,122.59 |
| Subsidiary | Last period | |||
| Operation Income | Net profit | Total comprehensive income | Cash flow from operation activity | |
| Zhongshan Power | 239,056,530.40 | 1,968,342.26 | 1,968,342.26 | 130,078,167.14 |
| Weimei Power | 249,516,171.77 | -1,065,959.31 | -1,065,959.31 | 28,275,188.27 |
| Joint venture and cooperative enterprise | Main operation place | Registration place | Business nature | Shareholding ratio (%) | Accounting treatment | |
| Directly | Indirectly | |||||
| Huidong Server | Huizhou | Huizhou | Wharf | 40 | Equity method | |
| Item | Ending balance/amount in the year | Balance at year-begin/amount in last year |
| Joint venture | ||
| Total investment book value | 15,371,492.58 | 16,049,044.95 |
| Total of the follow counted by share-holding ratio | ||
| —Net profit | -677,552.37 | -1,076,904.31 |
| —Other comprehensive benefits | ||
| —Total comprehensive income | -677,552.37 | -1,076,904.31 |
Interest rate risk sensitivity analysis:
The interest rate risk sensitivity analysis is based on the following assumptions:
? Changes in market interest rates affect the interest income or expense of financial instruments withvariable interest rate;? For financial instruments with fixed rate by fair value measurement, the changes in market interestrates only affect their interest income or expense;? For derivative financial instruments designated as hedging instruments, the changes in marketinterest rates affect their fair value, and all interest rate hedging prediction is highly effective;? Calculate the changes in fair value of derivative financial instruments and other financial assets andliabilities by using the cash flow discount method at the market interest rate at the balance sheet date.On the basis of above assumptions, in case that other variables keep unchanged, the pre-tax effect ofpossible reasonable changes in interest rates on current profits and losses and shareholders' equity isas follows:
| Rate changes | The period | Last period | ||
| Impact on profit | Impact on shareholders’ equity | Impact on profit | Impact on shareholders’ equity | |
| 5% increased | -1,177,083.56 | -1,139,067.58 | -1,180,390.92 | -1,019,303.74 |
| 5% decreased | 1,177,083.56 | 1,139,067.58 | 1,180,390.92 | 1,019,303.74 |
the impact of fluctuations in cash flows. The Company’s management monitors the use of bank loansand ensures to comply with the loan agreement.The Company uses bank loans as the main source of funds.X. Related party and related transactions
1. Parent company of the Group
Share holding proportion of any shareholder of the Company didn't reach 50%, and couldn't form aholding relationship of the Company through any methods. The Company has no parent company.
2. Subsidiaries of the Company
Found more in 1. Subsidiary in Note VIII
3. Joint venture and affiliated enterprise of the Group
Found more in 2. Equity in joint venture or affiliate business in Note VIII
4. Other related party
| Other related party | Relationship with the Group |
| Shenzhen Energy Group Co., Ltd.(” Energy Group”) | Shareholders have major influence on the Company |
| Dongguan Weimei Ceramics Industrial Park Co., Ltd.(”Weimei Ceramics”) | Minority shareholders of the subsidiaries |
| Zhongshan Xingzhong Group Co., Ltd.(“Xingzhong Group”) | Minority shareholders of the subsidiaries |
| Shenzhen Mawan Power Co., Ltd. (“Mawan Power Company”) | Subsidiary of ultimate controller of Energy Group |
| Shenzhen Moon Bay Oil Harbor Co., Ltd. (“Moon Bay Oil Company”) | Subsidiary of ultimate controller of Energy Group |
| Shenzhen Energy Group Holding Co., Ltd. (” Energy Holding”) | Subsidiary of ultimate controller of Energy Group |
| Shenzhen Energy Gas Investment Holding Co., Ltd. | Subsidiary of ultimate controller of Energy Group |
| Fuel Branch of Shenzhen Energy Group Co., Ltd. | Subsidiary of ultimate controller of Energy Group |
| Director of the Company and other senior executives | Key management staff |
| Item | 30 June 2019 | Balance at year-begin | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | |
| Other account receivable: | ||||
| Huidong Server | 10,032,761.42 | - | 10,205,161.44 | - |
| Huidong Server managed account | 13,069,204.43 | - | 12,933,737.96 | - |
| Total | 23,101,965.85 | - | 23,138,899.40 | - |
| Item | 30 June 2019 | Balance at year-begin | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | |
| Account payable: | ||||
| Shenzhen Energy Gas Investment Holding Co., Ltd. | 9,152,657.73 | - | - | - |
| Fuel Branch of Shenzhen Energy Group Co., Ltd. | 5,371,135.54 | - | - | - |
| Total | 14,523,793.27 | - | - | - |
| Item | 30 June 2019 | Amount at year-begin |
| Minimum lease payments of irrevocable operating lease: | ||
| The first year after balance sheet day | 1,557,680.33 | 1,557,680.33 |
| The second year after balance sheet day | 1,557,680.33 | 1,557,680.33 |
| The third year after balance sheet day | 1,557,680.33 | 1,557,680.33 |
| Subsequent years | 55,834,580.91 | 56,613,421.07 |
| Total | 60,507,621.90 | 61,286,462.06 |
(1) Determining basis and accounting policies of reportable segments
According to the Group's internal organization structure, management requirements and internalreporting system, the Group's business is divided into three operating segments including power andheat supply, fuel oil trade and other business, the Group's management periodically evaluates theoperating results of these segments so as to determine the allocation of resources and assess theirperformances.Segmental reporting information is disclosed in accordance with the accounting policies andmeasurement standards adopted by each segment for reporting to the management, the measurementbasis keep pace with the accounting and measurement basis used for preparing financial statements.
(2) Financial information of reportable segment
| Item | Power supply and heat supply | Fuel oil trade | Other | Offset between segments | Total |
| Main business income | 347,598,428.46 | - | 59,684,879.63 | - | 407,283,308.09 |
| Main business cost | 375,590,956.77 | 40,208,692.21 | 32,900,580.09 | 382,899,068.89 | |
| Total assets | 4,364,697,648.99 | 126,129,193.89 | 351,202,391.86 | 1,428,021,522.70 | 3,414,007,712.04 |
| Total liabilities | 2,310,979,970.27 | 29,504,654.49 | 54,090,179.39 | 984,296,967.35 | 1,410,277,836.80 |
| Account age | 30 June 2019 |
| Within one year | 65,350,406.33 |
| 1 to 2 years | - |
| 2 to 3 years | - |
| 3 to 4 years | - |
| 4 to 5 years | - |
| Over 5 years | - |
| Subtotal | 65,350,406.33 |
| Less: Bad debt provision | - |
| Total | 65,350,406.33 |
(2) According to accrual method for bad debts
| Category | 30 June 2019 | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Accrual proportion (%) | ||
| Account receivable with single provision for bad debts | - | - | - | - | - |
| Including: | - | - | - | - | - |
| Account receivable with bad debt provision accrual based on portfolio | 65,350,406.33 | 100.00 | - | - | 65,350,406.33 |
| Including: Portfolio 1: low risk | 65,350,406.33 | 100.00 | - | - | 65,350,406.33 |
| Total | 65,350,406.33 | 100.00 | - | - | 65,350,406.33 |
| Category | Amount at year-begin | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
| Account receivable with individual major amount and withdrawal bad debt provision independently | - | - | - | - | - |
| Account receivable with bad debt provision accrual based on similar credit risk characteristics of a portfolio | 50,415,180.20 | 100.00 | - | - | 50,415,180.20 |
| Account receivable with individual minor amount but withdrawal bad debt provision independently | - | - | - | - | - |
| Total | 50,415,180.20 | 100.00 | - | - | 50,415,180.20 |
| Item | 30 June 2019 | Amount at year-begin |
| Interest receivable | - | |
| Dividend receivable | - | |
| Other account receivable | 834,707,247.88 | 1,048,357,217.53 |
| Total | 834,707,247.88 | 1,048,357,217.53 |
| Account age | 30 June 2019 |
| Within one year | 97,885,481.41 |
| 1 to 2 years | 188,885,190.40 |
| 2 to 3 years | 137,045,561.62 |
| 3 to 4 years | 36,000,000.00 |
| 4 to 5 years | - |
| Over 5 years | 402,220,657.89 |
| Subtotal | 862,036,891.32 |
| Less: Bad debt provision | 27,329,643.44 |
| Total | 834,707,247.88 |
| Nature | 30 June 2019 | Amount at year-begin |
| Intercourse funds between subsidiary | 831,083,348.18 | 1,046,559,260.31 |
| Other Intercourse funds | 30,953,543.14 | 29,127,600.66 |
| Subtotal | 862,036,891.32 | 1,075,686,860.97 |
| Less: Bad debt provision | 27,329,643.44 | 27,329,643.44 |
| Total | 834,707,247.88 | 1,048,357,217.53 |
| Bad debt provision | Phases I | Phases II | Phases III | Total |
| Expected credit losses over next 12 months | Expected credit losses for the entire duration (without credit impairment | Expected credit losses for the entire duration (with credit |
| occurred) | impairment occurred) | |||
| Balance on Jan. 1, 2019 | - | 27,329,643.44 | - | 27,329,643.44 |
| Book balance of other account receivable dated 1 Jan. 2019: | ||||
| ——Turn to phase II | ||||
| ——Turn to phase III | ||||
| ——Return to Phase II | ||||
| ——Return to Phase I | ||||
| Current accrual | ||||
| Current switch back | ||||
| Rewrite in the period | ||||
| Write-off in the period | ||||
| Other changes | ||||
| Balance on Jun. 30, 2019 | - | 27,329,643.44 | - | 27,329,643.44 |
| Category | Balance at year-begin | Current amount changed | 30 June 2019 | ||
| Accrual | Collected or switch back | Rewrite or write-off | |||
| Withdrawal bad debt provision independently | 27,329,643.44 | - | - | - | 27,329,643.44 |
| Portfolio 1:low risk | - | - | - | - | - |
| Total | 27,329,643.44 | - | - | - | 27,329,643.44 |
| Name of the company | Relationship with the Company | Amount | Account age | Proportion in total other account receivable (%) |
| Zhongshan Power | Subsidiary | 681,691,632.20 | Within one year to Over 5 years | 79.11 |
| Weimei Power | Subsidiary | 135,307,227.35 | 1-2 years | 15.70 |
| Engineering Company | Subsidiary | 7,917,625.70 | Within one year | 0.92 |
| Environment Protection Company | Subsidiary | 4,644,990.94 | Within one year | 0.54 |
| Singapore | Subsidiary | 1,521,871.99 | Over 5 years | 0.18 |
| Total | 831,083,348.18 | 96.45 |
| Item | 30 June 2019 | Balance at year-begin | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Investment to subsidiary | 691,982,849.76 | 388,641,684.76 | 303,341,165.00 | 691,982,849.76 | 388,641,684.76 | 303,341,165.00 |
| Investment to joint venture and affiliate enterprise | - | - | - | - | - | - |
| Total | 691,982,849.76 | 388,641,684.76 | 303,341,165.00 | 691,982,849.76 | 388,641,684.76 | 303,341,165.00 |
| Invested enterprise | Balance at year-begin | Increase in the year | Decreased in the year | 30 June 2019 | Impairment provision accrual in the Year | Year-end balance of depreciation reserves |
| Shenzhen Server | 26,650,000.00 | - | - | 26,650,000.00 | - | - |
| New Power | 71,270,000.00 | - | - | 71,270,000.00 | - | - |
| Zhongshan Power | 62,994,965.00 | - | - | 62,994,965.00 | - | 347,745,035.00 |
| Engineering Company | 6,000,000.00 | - | - | 6,000,000.00 | - | - |
| Weimei Power | 74,422,400.00 | - | - | 74,422,400.00 | - | 40,896,649.76 |
| Singapore Company | 6,703,800.00 | - | - | 6,703,800.00 | - | - |
| Environment Protection Company | 55,300,000.00 | - | - | 55,300,000.00 | - | - |
| Total | 303,341,165.00 | - | - | 303,341,165.00 | - | 388,641,684.76 |
| Item | Jan. – Jun. 2019 | Jan. – Jun. 2018 | ||
| Income | Cost | Income | Cost | |
| Main business | 127,282,753.58 | 166,390,507.99 | 337,240,114.89 | 361,394,602.84 |
| Other business | 38,231,297.65 | 5,937,627.54 | 69,606,326.95 | 11,835,458.28 |
| Total | 165,514,051.23 | 172,328,135.53 | 406,846,441.84 | 373,230,061.12 |
| Item | Jan. – Jun. 2019 |
| Gains/losses from the disposal of non-current asset | -417,926.32 |
| Governmental subsidy calculated into current gains and losses, with closely related with the normal business of the Company, excluding the fixed-amount or fixed-proportion governmental subsidy according to the unified national standard) | 3,208,943.45 |
| Gain/loss of debt reorganization | - |
| Switch-back of the impairment reserves of receivables that has impairment test independently | - |
| Natural gas import VAT refund | - |
| Other non-operating income and expenditure except for the aforementioned items | 57,041.53 |
| Subtotal | 2,848,058.66 |
| Impact on income tax | -58,568.53 |
| Impact on minority shareholders’ equity (post-tax) | 33,829.87 |
| Total | 2,823,320.00 |
| Profit in the Period | Weighted average ROE (%) | EPS | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to shareholders of the listed company | -1.29% | -0.04 | -0.04 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | -1.43% | -0.05 | -0.05 |