Dalian Refrigeration Co., Ltd.
2019 Semiannual Report
August, 2019
Section 1 Important Notice, Table of Contents, and Definitions
The directors and the Board of Directors, the supervisors and theSupervisory Board, and Senior staff members of Dalian Refrigeration Co.,Ltd. (hereinafter referred to as the Company) hereby confirm that there arenot any important omissions, fictitious statements or serious misleadingcarried in this report, and shall take all responsibilities, individual and/orjoint, for the reality, accuracy and completeness of the whole contents.
All directors have attended this Board meeting of the Company.
There is no significant risk having adverse influence on attainment of theCompany's future development strategy and business targets. Theparagraph "Discussion and Analysis of the Business situation" in Section 4of this Semiannual Report describes major risks , including the risk ofincreasing market competition risk, the market promotion for new productand new technology slow and the accounts receivable is on the high side. Seethe related sections for the countermeasures to be taken by the Company.
The Company plans to distribute no cash dividends, no bonus shares andconvert no reserve fund into capital stock.
Chairman of the Board of Directors of the Company Mr. Ji Zhijian,Financial Majordomo Mr. Ma Yun, and the head of Accounting DepartmentMrs. Mao Chunhua hereby confirm that the financial report of thesemi-annual report is true and complete.
This report is written respectively in Chinese and in English. In the event ofany discrepancy between the two above-mentioned versions, the Chineseversion shall prevail.
CONTENTS
Section 1 Important Notice, Table of Contents, and Definitions ...... 2
Section 2 About the Company ...... 5
Section 3 Summary of Main Accounting Data and Financial Indicators ...... 7
Section 4 Business discussion and analysis ...... 8
Section 5 Important Issues ...... 14
Section 6 Change in Share Capital and Shareholders' Information ...... 17
Section 7 Information on Preferred Stock ...... 20
Section 8 Information on the Company’s Directors, Supervisors, and Senior Managers ...... 21
Section 9 Information on Corporate Bonds ...... 22
Section 10 Financial Report ...... 23
Section 11 Contents of Reference Documents ...... 124
Definitions
Defined item MeaningReporting period Stands for
From Jan. 1, 2019 to Jun. 30, 2019
The Company, this
Company
Stands for
The Company, this
Dalian Refrigeration Co., Ltd.Wuxin Refrigeration Stands for
Wuhan New World Refrigeration Industry
Co., Ltd., one of the subsidiaries of
the Company where the Company holds 100% of its shares.
Co., Ltd., one of the subsidiaries ofBingshan Engineering
Company
Stands for
Bingshan Engineering
Dalian Bingshan Group Engineering Co., Ltd.,one of the subsi
diaries of the
Company where the Company holds 100% of its shares.Bingshan Service Company
diaries of the
Stands for
Company where the Company holds 100% of its shares.BingshanEngineering&Trading
Stands for
Bingshan Technology Service (Dalian) Co., Ltd. one of the subsidiaries of the
Dalian Bingshan Engineering&Tra
ding Co.,Ltd. one of the subsidiaries of the
Company where the Company holds 100% of its shares.Bingshan Guardian Stands for
ding Co.,Ltd. one of the subsidiaries of the
Dalian Bingshan Guardian Automation Co.,Ltd. one of the subsidiaries of the
Company where the Company holds 100% of its shares.Panasonic Compressor Stands for
Dalian Bingshan Guardian Automation Co.,Ltd. one of the subsidiaries of the
Panasonic Appliances
Compressor (Dalian) Co., Ltd. one of the
associated companies
| Compressor (Dalian) Co., Ltd. one of the | |
| of the Company, where the Company holds 40% of its | |
shares.Panasonic Cold-Chain Stands for
Panasonic Appliances Cold-
Chain (Dalian) Co., Ltd. one of the
associated companies
| Chain (Dalian) Co., Ltd. one of the | |
| of the Company, where the Company holds 40% of its | |
shares.Panasonic Refrigerating Stands for
Panasonic Appliances Air-conditioning and Refrigerating
(Dalian) Co., Ltd.
one of the associated companies
| (Dalian) Co., Ltd. | |
| of the Company, where the Company holds | |
40% of its shares.Panasonic
System
Stands for
Refrigerating
Panasonic Appliances
Refrigerating System (Dalian) Co., Ltd., one of the
associated company of the Company, where the Compan
| Refrigerating System (Dalian) Co., Ltd., one of the | |
| y holds 20% of its | |
sharesFuji-Bingshan Stands for
Dalian Fuji-
Bingshan Vending Machine Co., Ltd., one of the
associated companies of the
| Bingshan Vending Machine Co., Ltd., one of the | |
| Company, where the Company holds 49% of its | |
shares.
Technology
Stands for
Bingshan Metal
Dalian Bingshan Metal Technology Co.,Ltd., one of the associated companies
of the Companies, where the Company holds 49% of its shares.JingXue Stands for
Jiangsu JingXue Insulation Technology Co.,Ltd.,
one of the
associated companies of the Company, where the Company holds 29.212%
| one of the | |
| of | |
its shares.Bingshan Wisdom Park Stands for
Dalian Bingshan Wisdom Park Co., Ltd.,an indirect joint venture companyHua Hui Da Stands for
Dalian Bingshan Group Hua Hui Da Financial Leasing Co., Ltd.,an indirect
joint venture companyFuji Bingshan Contro
l
Systems
Stands for
l
Dalian Fuji Bingshan Control Systems Co., Ltd., an indirect joint venture
companyKelvins Stands for
Dalian Kelvins Technology Technology Co., Ltd.,an indirect joint venture
company
Section 2 About the Company
I. Company information
Short form of the stock DALENG GUFEN; DALENG-BStock code 000530; 200530Listed stock exchange Shenzhen Stock ExchangeLegal name in Chinese 大连冷冻机股份有限公司Short form of legal name 大冷股份Legal English name Dalian Refrigeration Co., Ltd.Abbreviation of legal English name DRCLegal representative Ji Zhijian
II. Contact persons and information
Secretary of the Board of Directors Authorized representative for securities affairs
Name Song Wenbao Du YuAddress
DALENG GUFEN Securities﹠Legal Affairs
No.106, Liaohe East Road, Dalian Economic and
Technological Development Zone
DALENG GUFEN Securities﹠LegalAffairsNo.106, Liaohe East Road, DalianEconomic and Technological Development Zone
| No.106, Liaohe East Road, Dalian Economic and | ||
Tel. 0411-87968130 0411-87968822Fax 0411-87968125 0411-87968125E-mail 000530@bingshan.com 000530@bingshan.com
III. Other situations
1. Contact of company
If the registered address, office address and zip code, website, email box of the Company had any change in thereport period
□ Applicable √ Not applicable
2. Information disclosure and place of preparation
If the information disclosure and the place of preparation had any change in the report period
□ Applicable √ Not applicable
The name of newspaper for information disclosure selected by the Company, the address of the website designatedby China Securities Regulatory Commission for carrying semi-annual report, the place where the semi-annualreport of the Company is prepared had no change in the report period. Refer to the Annual Report for 2018 fordetails.
IV. Main accounting data and financial indicators
Did the Company retroactively adjust or restate the accounting data of previous years due to change in theaccounting policy and correction of accounting mistakes?
□ Applicable √ Not applicable
2019.1-6 2018.1-6
Increase/decrease compared with the same
period of last yearOperating revenue
1,075,729,240.57
1,029,078,536.79
4.53%
Net profit attributable to shareholders of listed companies
108,373,919.30
59,017,542.28
83.63%
companies after the deduction of non-
Net profit belonging to the shareholders of listedrecurring profit and
loss
35,262,178.97
| recurring profit and | |
57,185,177.31
-38.34%
Net cash flow from operating activities
-77,776,037.88
-115,328,757.17
32.56%
Basic earnings per share
0.127
0.069
84.06%
Diluted earnings per share
0.127
0.069
84.06%
Weighted average return on net asset yield
3.16%
1.67%
Increase 1.49 percentage points
2019.6.30 2018.12.31
Increase/decrease compared with 2018.12.31
Total assets
5,607,305,672.24
5,568,279,452.26
0.70%
Owner's equity attributable to shareholders of listed
companies
3,419,054,562.97
Owner's equity attributable to shareholders of listed
3,377,633,617.02
1.23%
Net profit attributable to parent company increased significantly y-o-y, mainly due to (1)The Gain from change infair value of Guotai Junan has been recorded into the current profit and loss, which is about 40.46 millionyuan;(2)During the reporting period, the Company's exchangeable corporate bondholders exchanged a total of
8.3889 million shares, increasing the current investment income by about 40.57 million yuan. All profit above hasbeen recorded into the non-recurring gains and losses.
V.1.Difference of accounting data between as per Chinese accounting standards and as perInternational Accounting Standards
□ Applicable √ Not applicable
2. Difference of accounting data between as per Chinese accounting standards and as perForeign Accounting Standards
The difference of accounting data between as per Chinese Accounting Standards and as per InternationalAccounting Standards was 0.
VI. Non-recurring profits and losses and their amounts
itemAmount
Disposal gains and losses of non-current asset1,227,672.74
Government subsidies included in current profit or loss
1,815,838.84
Debt restructuring gains and losses
1,999,241.94
Income from changes in fair value during the period of holding financial assets
available for sale and income from disposal of financial assets available for sale
81,028,816.99
Income from changes in fair value during the period of holding financial assets
Other non-operating revenue or expense29,206.25
Influence on income tax12,949,627.58
Influence on minority shareholders39,408.85
Total73,111,740.33
Section 3 The Company's Business profile
I. The Company’s Main business during the reporting period
The Company is committed to developing industrial refrigeration and heating business field, commercialrefrigeration and refrigeration business field, air-conditioning and environment business field, core parts businessfield, engineering and service business field, have covered the key areas of the refrigeration industrial chain andforged the complete cold and hot industrial chain in China.
II. Major changes in main assets
1. Major changes in main assets
Main assets Explain for major changesMonetary funds
Significantly decreased compared to the beginning of the year, mainly due to the influence of n
cash flows arising from operating activitiesOther current assets
Significantly decreased compared to the beginning of the year, mainly
etdue to the decrease in the
amount of input tax to be deducted from VAT.Construction in progress
due to the decrease in the
Significantly increased compared to the beginning of the year,
| mainly due to the increased |
investment in equipment renovation in this period.
2. The main overseas assets
□ Applicable √ Not applicable
III. Analysis of core competenceThe Company closely focuses on main business of cold and heat; independent R&D and joint venture partnershipsare cooperate with each other effectively; capital resources integration and business model innovation are in apositive interaction; the community of business and interest are being created in two ways; the develop mode withBingshan characteristic are formed.The Company has the most integrated cold-heat industrial chain for offering kinds of comprehensive solutionservices, including design, manufacture, installation and maintenance etc., and can satisfy individual requirementspreferably.The Company possesses a mature and solid marketing networks and after-sale service network on/off-line, andcan offer high quality and high value-added services more initiative and faster for clients from around the city.After overall relocation reform, the new factory of intelligence, environment protection, high efficiency and safetyare put into used, which produces a strong comparative advantage for creating higher value to the customers.While move forward with transformation and upgrading for former business, the Company will implement thecultivation for new business, thus the sustainable healthy development will come more and more feasible.Core-competency of the Company further promoted in the reporting period.
Section 4 Business discussion and analysis
I. Summary
In the first half of 2019, the Company focused on “exploitation, pragmatism, collaboration and action”,strengthened strategic resources, strengthened market development, strengthened internal management, convertedrestriction into coordination, converted control into service, strengthened confidence, acted immediately, andstrived to achieve main business objectives. In the first half of 2019, the Company achieved operating income of1,075,729 thousand yuan, a year-on-year growth of 4.53%; achieved total profit of 120,536 thousand yuan, ayear-on-year increase of 94.53%.
During the reporting period, the Company’s BSMAU series modular ice water installation was selected as “2019Energy Saving and Environment-friendly Products Catalogue of the Chinese Association of Refrigeration”; thenational high-end equipment manufacturing standardization pilot work was promoted in an orderly manner;stainless steel pressure vessels achieved the first production and became the Company’s new business growthpoint.
During the reporting period, the Company’s subsidiary Wuhan New World Refrigeration accelerated the strategictransformation. The water vapor screw expander was selected as “2019 China Refrigeration Innovative Product”;the natural gas pipeline network pressure energy comprehensive utilization technology was selected as “2019Energy Saving and Environmental Protection Technology Catalogue of the Chinese Association of Refrigeration”;new product optimization and standardization work were actively implemented.
During the reporting period, the Company’s subsidiary, Bingshan Engineering Company continued to deepen thehot and cold market segment around the deep enthalpy energy solutions. After the low-speed wind tunnel and theicing wind tunnel projects, it successfully signed the wind tunnel drying system development project to helpChina’s aerospace equipment continue to improve the climatic and environmental adaptability.
During the reporting period, Bingshan Service Company, the Company’s subsidiary, quickly expanded itsproducer services. It actively promoted the compressor room hosting and transportation business, andcontinuously optimized the layout of national service networks. Bingshan sharing service platform was builtorderly, and began to provide services for a number of Bingshan-funded enterprises.
During the reporting period, the Company’s subsidiary, Bingshan Engineering & Trading, followed the nationalBelt and Road strategy, deepening the advantageous markets in Southeast Asia and opening up the emergingmarkets in Africa. It established the first overseas office in Africa to explore the aquatic product processingmarkets in neighboring countries.
During the reporting period, the Company’s subsidiary, Bingshan Guardian, focused on the automatic control ofthe Internet of Things in the field of freezing and refrigeration, and launched intelligent devices with edgecomputing capabilities such as BINGO-BOX. As a member of the Edge Computing Alliance, it undertook thedevelopment of the experimental platform for the “Freezing and Refrigeration IoT Test Bed Based on TSN andOPC-UA Technology”.
During the reporting period, Panasonic Compressor, the Company’s associated company, actively promoted thetransformation. Faced with the unfavorable situation of the shrinking total volume of the scroll compressor market,it made great efforts to consolidate the field of electric buses and rail transit, and increased investments in heatpump, freezing and refrigeration and other fields, and the sales of horizontal scroll compressors achieved rapidgrowth. The CO2 twin-rotor compressor for refrigeration and heat pump was selected as “2019 ChinaRefrigeration Innovative Product”.
During the reporting period, Panasonic Cold Chain, an associated company of the Company, further focused onthe new retail and new catering market. With the “Energy Management and Store Intelligent System”, it wasawarded the “2019 China Convenience Store Innovation Award” by the China Chain Store & FranchiseAssociation. The intelligent food collection cabinet has been successfully embedded in the Hema Fresh platformseries, and has accumulatively provided cold chain solutions for more than 30 stores. The overseas IoT smartcabinet business has made new breakthroughs, and it has successfully entered Australia after the United States andMexico.
During the reporting period, Panasonic Air-conditioning and Refrigeration, the Company’s associated company,actively deployed in emerging markets such as coking, petrochemical, and fermentation industries, and achievedbreakthroughs in transformation. The development of high-efficiency warm water and large temperaturedifference units has been completed, which can deeply recycle the industrial waste heat. The gas-firedwater-fluorine hybrid air-conditioning heat pump system was selected as “2019 China Refrigeration InnovationProduct”.
During the reporting period, Panasonic Refrigeration System, the Company’s associated company, strengthenedthe construction of quality projects to create an industry benchmark. The self-developed 80-horsepower CO2 unitwas sold to Japan; the 40-horsepower semi-closed piston refrigeration compressor was successfully launched; theheat pump assembly production line was established and commissioned.
During the reporting period, Fuji Bingshan, an associated company of the Company, further promoted thedevelopment of product intelligence, modularization, and diversification to quickly respond to customer needs. Italso innovated the marketing methods and promoted diversified sales. The construction of intelligent plantscontinued to be advanced and the quality assurance was effectively improved.
During the reporting period, Bingshan Metal, the Company’s associated company, continued to promotetechnological innovation and management progress, and spared no effort to develop the market and optimizecustomer group, and achieved better business performance.
During the reporting period, Jingxue Company, an associated company of the Company, applied for its initialpublic offering of shares and applied for listing on the GEM, which have been formally accepted by the ChinaSecurities Regulatory Commission.
During the reporting period, the Company actively promoted the cultivation and incubation of new businesseswhile the original business was undergoing transformation and upgrading. Bingshan Wisdom Park Company, anindirect joint venture company of the Company, cooperated in the comprehensive utilization of the old factoryarea and created an intelligent innovation industrial park to gather and search new kinetic energy for Bingshan.
Bingshan Huahuida, an indirect joint venture company of the Company, effectively expanded the financialleasing business around high-quality customers in Bingshan cold and hot business, and boosted the sales andpayment collection of the various funded enterprises of Bingshan. Fuji Bingshan Control, an indirect joint venturecompany of the Company, deeply explored the energy-saving potential, and helped the smart energy managementof Bingshan. Kelvin Technology, an indirect joint venture company of the Company, energized unmanned retailwith innovative technology, and the new retail model was rapidly promoted.
II. Analysis of main business
See the related content “Section 4 Business situation discussion and analysis” the “Summary”
Main financial data variations as compared to the same period of last year
Monetary unit: RMB YuanReport period
Same period of
last year
Increase or decreasefrom the same period
of last year
Reason for variationOperating revenue 1,075,729,240.57
1,029,078,536.79
4.53%
Operating cost 919,759,979.86
852,843,875.27
7.85%
Selling and distribution expenses
53,096,818.62
48,662,813.11
9.11%
Administrative expenses 85,942,095.21
81,515,156.00
5.43%
R&D expenses 28,549,864.17
27,614,336.67
3.39%
Financial expenses 5,467,587.19
8,639,264.80
-36.71%
interest expense decreasedIncome tax 13,766,605.84
3,440,444.25
300.14%
the tax payable income amount
increased
Net cash flow coming from
operating activities
-77,776,037.88
| Net cash flow coming from | ||
-115,328,757.17
32.56%
operating payments decreased
investment activities
-14,103,555.98
| Net cash flow coming from | ||
-7,756,831.93
-81.82%
redemption of bank financial
products in the last period
fund-raising activities
1,327,544.30
Net cash flow coming from
62,859,585.22
-97.89%
p
ayment of equity incentive
repurchase in the period
ayment of equity incentiveNet increase in cash and cash
equivalents
-90,285,250.23
| Net increase in cash and cash | ||
-61,261,801.17
-47.38%
Net cash flows arising from
financing activities decreased
Main business structure
Monetary unit: RMB yuan
Operating revenue
Operating costs
| Gross profit | |||
Increase/decrease ofoperating revenuesfrom the same period
of last year
of operati
| Increase/decrease | |
| ng costs | |
from the sameperiod of last year
Increase/decrease ofgross profit from thesame period of last
yearBy industry
Refrigeration and
air-conditioning
1,052,236,172.60
Refrigeration and
903,291,760.46
14.16%
4.16%
7.32%
Decrease 2.52
percentage points
Others23,493,067.97
16,468,219.40
29.90%
24.26%
47.46%
Decrease 11.03
percentage points
By product
Refrigeration and
air-conditioningequipment
1,052,236,172.60
| Refrigeration and | ||
903,291,760.46
14.16%
4.16%
7.32%
Decrease 2.52
percentage points
Others23,493,067.97
16,468,219.40
29.90%
24.26%
47.46%
Decrease 11.03percentage points
By regionNortheast China916,385,518.53
787,428,256.15
14.07%
3.31%
6.70%
Decrease 2.74percentage pointsCentral China150,700,485.95
124,514,129.48
17.38%
33.51%
42.73%
Decrease 5.33percentage pointEast China8,643,236.09
7,817,594.23
9.55%
-70.37%
-71.71%
Increase
4.31
percentage points
III. Analysis of the non-main business
□ Applicable √ Not applicable
IV. Analysis of assets & liabilities
1. Remarkable change in assets
Monetary unit: RMB yuan
30-6-2019 30-6-2018
Proportion increase/decrease.Amount
Proportionto the total
assets
Amount
Proportion tothe total assets
4.31
Monetary funds231,766,622.54
4.13%
320,888,697.16
5.75%
Decrease 1.62 percentage points
Accounts receivable
1,242,102,434.51
22.15%
1,128,713,203.97
20.24%
Increase 1.91 percentage points
Inventories506,818,620.94
9.04%
426,838,934.51
7.65%
Increase 1.39 percentage points
Investment property
97,846,891.45
1.74%
102,852,288.67
1.84%
Decrease 0.10 percentage points
Long-term equityinvestment
1,628,330,214.50
29.04%
1,547,271,618.09
27.74%
Increase 1.30 percentage points
Fixed assets926,981,106.12
16.53%
870,473,528.21
15.61%
Increase 0.92 percentage points
Construction inprogress
49,722,435.06
0.89%
99,096,551.25
1.78%
Decrease 0.89 percentage points
Short-term loans289,000,000.00
5.15%
410,000,000.00
7.35%
Decrease 2.20 percentage points
Long-term loans160,000,000.00
2.85%
160,000,000.00
2.87%
Decrease 0.02 percentage points
2. Assets & liabilities which are measured by fair value
√ Applicable □ Not applicable
Finance asset held available for sales in fair value Changes in fair value included in the rights and interests of thecumulative of the current period is 40,461,125.59 yuan，the current sale amount is 150,999,966.00 yuan, the finalnumber is 288,278,646.80 yuan.V. Analysis of investments
1.The overall situation
√ Applicable □ Not applicable
Investment in the report period (yuan)
Investment in the same period of last year (yuan)
Amount of variation
1,628,330,214.50 1,547,271,618.09 5.24%
2.The significant equity investment during the reporting period
□ Applicable √ Not applicable
3 The significant non-equity investment during the reporting period
□Applicable √Not applicable
4.The financial asset investment
(1) The securities investment
√ Applicable □ Not applicable
Stockcode
Stockabbreviation
Initialinvestment
cost
Accountingmeasurement
model
the beginning
Book value at
Changes in theprofit and loss
of the fairvalue in this
period
Accumulative change offair valuecredited to
equity
Current sale
amount
Report periodprofit and loss
ending
Accounting
subjects
Sourceof funds
Book value in the
601211
Guotai Jun’an
15,710,008.00
fair valuemeasurement
369,195,071.40
40,461,125.59
150,999,966.00
44,781,377.79
288,278,646.80
OtherNon-currentfinancial assets
Ownfunds
total15,710,008.00
--369,195,071.40
40,461,125.59
150,999,966.00
44,781,377.79
288,278,646.80
-- --
The amount sold in the current period is the amount of the exchangeable bondholder's exchange shares during thereporting period.
(2) Derivative investment
□Applicable √ Not applicable
During the reporting period, the Company does not exist derivative investment.
VI. The material assets and equity sale
1. The material assets sale
□Applicable √Not applicable
2. The material equity sale
□Applicable √Not applicable
VII. Analysis of major subsidiary companies and mutual shareholding companies
√ Applicable □ Not applicable
Company
name
Type The main business
registeredcapital
total assets
( yuan)
net assets( yuan)
Operating
income( yuan)
Operating
profit( yuan)
Net profit
( yuan)DalianBingshan
MetalTechnology
Co., Ltd
mutualshareholdingcompany
Pipe systemconnectors,high-speed rail
connectors,hydraulic valvebodies, automotive
engine parts, etc.
USD
18.0645
million
396,463,842.21
343,858,306.54
202,961,647.33
33,043,683.67
| 28,166,390.78 | ||
PanasonicCompressor
mutualshareholdingcompany
Refrigeration andair-conditioning
JPY 6,200
million
1,666,454,581.71
1,137,455,715.08
620,287,402.33
48,644,197.90
| 41,081,512.65 | ||
PanasonicCold-Chain
mutualshareholdingcompany
CommercialRefrigerationEquipment,RefrigerationStorage, StainlessSteel KitchenEquipment andElectricalAppliances
JPY 4,650
million
1,588,856,216.72
635,040,620.19
741,540,108.17
90,525,449.47
| 76,585,645.51 | ||
During the reporting period, the net profit of Panasonic Cold-Chain increased a lot year-on-year, mainly due to thetransfer of biological medical business income. In order to focus on the development of core business, new retail,new catering and other bright spots, Panasonic Cold-Chain integrated the non-main business biological medicalbusiness to sale as a whole to the Dalian Bingshan Group co.,Ltd , which as the main acquirer.
Subsidiary companies obtained or disposed in the reporting period
□Applicable √Not applicable
VIII. The structured corporate bodies which the Company controlled
□Applicable √Not applicable
IX.Estimation of the business performance for Jan.-Sept., 2019Estimation notice that the accumulated net profit from the beginning of year to the end of the next reportingperiod may be turned into loss or significantly change compared with the same period of the last year, andexplanation of the cause
□ Applicable √ Inapplicable
X. Main risks the company faces and response measures
(1)Increasing market competition risk
Countermeasures: focus on refrigeration and heating industries, deeply plough market segmentation and seek forbusiness blue sea; improve intelligent manufacturing and service-based manufacturing in an orderly manner;accelerate transformation and upgrading of the existing business; accelerate cultivation of new businesses; createthe iceberg cause and common interest.
(2)Risk of slow marketing of new products and technologies
Countermeasures: create differentiated competitiveness of new products and technologies; strengthen technologymarketing and service marketing, better satisfy individual needs of customers; make effective use of financeleasing, contract energy management, project companies and other innovative modes.
(3)Risk of high level of trade receivables
Countermeasures: effective inventory management and intensified management on trade receivables; enhancequality of contract through intensified customer credit assessment and contract appraisal; effective control ofincrease in trade receivables by reduction of guarantee deposits, taking bank credit instruments as guaranteedeposits and finance leasing; improve contract execution through stricter review on goods delivery, intensifiedcontrol on project construction and post-sale service; prepare special composition solutions through professionalcreditor’s right management institutions and accelerate settlement of trade receivables with relatively long aging.
Section 5 Important Issues
I. Shareholders’ general meeting convened in the reporting periodSession number of meeting The type of the meeting
The proportion ofparticipate investors
date Disclosing date
participate investors
Disclosing index
The 1
st
Meeting of 2019
Extraordinary Shareho
| Extraordinary Shareholders’ General | lders’ |
general meeting
30.31%
January17,2019
January 18,2019
http://www.cninfo.com.cn2018 Annual Shareholders’ General Meeting
Annual Shareholders’ General
Meeting
29.77%
May17,2019
Annual Shareholders’ General
May 18,2019
http://www.cnin
fo.com.cnThe 2
nd
Extraordinary Shareholde
rs’ General
Meeting of 2019
E
rs’ Generalxtraordinary Shareholders’
general meeting
29.85%
June5,2019
xtraordinary Shareholders’
June 6,2019
http://www.cnin
fo.com.cn
II. Profit distribution and dividend payment
□ Applicable √ Not applicable
III. Commitments of the Company or its shareholders holding 5% or higher of the shares in the reportingperiod or carried to the reporting period
□ Applicable √ Not applicable
IV. Engagement and dismissal of the accounting firm
□ Applicable √ Not applicable
V. Explain to the “non standard audit report” of this reporting period from the board ofdirectors, board of supervisors of the Company
□Applicable √Not applicable
VI. Explain to the “non standard audit report” last year from the board of directors of theCompany
□Applicable √Not applicable
VII. Bankruptcy restructuring related matters
□ Applicable √ Not applicable
There were no bankruptcy restructuring related matters to the Company in the reporting period.
VIII. Major lawsuit issues
□ Applicable √ Not applicable
The Company had no major lawsuit issues in the reporting period.
IX. Punishment and rectification
□ Applicable √ Not applicable
X. The credibility of companies and its controlling shareholder, actual controller
√ Applicable □ Not applicable
The controlling shareholder of the Company and the Company don’t exist situation such as unfulfilled the court’seffective judgments or failed to pay duly a large amount of debt during the reporting period.
XI. The implementation and effect of equity incentive
√Applicable □ Not applicable
According to resolution of the 1
stExtraordinary Shareholders’ General Meeting of 2019, the Company terminatedthe implementation of the 2016 restricted stock incentive plan and repurchased and cancelled a total of 12,221,580restricted shares.XII. Important associated transactions
1. Important associated transactions
In the reporting period, the total amount of normal associated transactions between the Company and associatedparties was 302,870 thousand-yuan, accounting for 39.33% of the budgeted amount for the year 2019. Thisincluded 121,750 thousand-yuan, accounting for 43.48% of the budgeted amount for the year 2019, for purchasingsupporting products for package projects from associated parties, and 181,120 thousand yuan, accounting for
36.96% of the budgeted amount for the year 2019, from selling supporting parts and components to associatedparties.
2. Associated transactions related to purchases or sales of assets
□ Applicable √ Not applicable
3. Important associated transactions with joint external investments
□ Applicable √ Not applicable
4.Current associated rights of credit and liabilities
□ Applicable √ Not applicable
5.Other associated transactions
□ Applicable √ Not applicable
XIII.Non-operation capital occupation by holding shareholders and their related parties inthe listed company
The company had no capital occupation by the holding shareholders and their related parties in the listed companywithin this reporting period.
XIV. Major contract and its performance
1. Hosting, contracting and leasing status
(1) the hosting status
□ Applicable √ Not applicable
(2) the contracting status
□ Applicable √ Not applicable
(3) the leasing status
√ Applicable □ Not applicable
The Company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co., Ltd., and rent # 6 workshopbuilding located on No. 106 Liaohe East Rd, Dalian Economic and Technology Development Zone to MHIBingshan Refrigeration (Dalian) Co., Ltd. The rental area is 15,259.04 square meters, and the rental term till 16thJuly, 2029. The annual rent fee for 2018 is RMB 4.2 million Yuan. In 2019, a revised agreement was signed tocollect rent of 4 million yuan per year. In 2019, the rent was deducted by 875,000 yuan at one time because someprojects were not used.The Company signed rental contract with Dalian Bingshan Wisdom Park Co., Ltd., and rent out the whole landand house of the Company’s old plant locating at No. 888, Southwest Road, Shahekou District, Dalian to DalianBingshan Wisdom Park Co., Ltd., with rental land area of 167,165.61 square meters and housing area of105,652.43 square meters. The lease term is from April 1, 2017 to December 31, 2036. The annual rent fee for2019 is RMB 7.86 million Yuan.
2. Guaranteeing status
√ Applicable □ Not applicable
Resolution of 2
nd
meeting of 7
th
session of the Board of directors agreed to provide guarantee to Dalian BingshanGroup Co., Ltd. for obtaining Development Fund of National Development Bank. Total amount of the loan wasRMB160 million with interest rate 1.2%, and the loan period was 10 years. The fund can only be used for coldchain green intelligent equipment and the development of service industry. When Dalian Bingshan Group Co., Ltd.receives the fund, it has transferred all the fund to the Company with the same conditions. The above guarantee toDalian Bingshan Group Co., Ltd. is to the Company itself actually.During the reporting period ,Wuxin Refrigeration, the subsidiary company of the Company, is responsible forproviding joint and several liabilities to its customers, Anhui Songze, for borrowing money from the bank. Theguarantee amount is 10 million yuan and the guarantee period are 3 years. Meanwhile, Anhui Songze providescounter-guarantee to Wuxin Refrigeration with the equipment and ownership of the project.
3.Other important contracts
□Applicable √Not applicable
XV. Social responsibilities
√Applicable □ Not applicable
1、Major environmental issues
2、Fulfillment of social responsibilities for targeted poverty alleviation
In the first half of 2019, the Company joined hands with the controlling shareholder and continued to carrythrough the fixed-point poverty alleviation at Songlin Village, Guangmingshan Town, Zhuanghe City. TheCompany will continue to pay attention to the construction and use of the cultural square in songlin village, andimplement the poverty alleviation work.
In the second half of 2019, the Company will innovate the support measures and continue to promote accuratepoverty alleviation planning.
(1) Continue to maintain close contact with songlin village, and timely on-site investigation, timelyunderstanding of the local needs for help, on the basis of helping build the villagers' cultural square, continue togive support in other aspects of infrastructure construction to benefit the people.
(2) Continuously organize volunteer teams, take the "bingshan love student support point" in songlin village asthe front, and carry out regular student support donation activities, actively alleviate poverty and give living andlearning supplies to help students with difficulties.
XVI. Other important matters
□ Applicable √ Not applicable
XVII. Other important matters of subsidiary company
□ Applicable √ Not applicable
Enterprise or
subsidiary
and features
Main pollutant
Way ofdischarge
discharge
outlet
Number of
Distribution ofthe discharge
outlet
Emission
concentration
Pollutantdischargestandardimplemente
d
Totaldischarg
e
Totalapproved
| concentration | ||
| emissions |
Excessiv
eemission
Dalian RefrigerationCo., Ltd.
COD sequence 1
Unifieddischarged
90 mg/L
DB211627-2008
1.54
tons
6 tons
Not over
Not overstandard
Dalian RefrigerationCo., Ltd.
Ammonianitrogen
sequence 1
Unifieddischarged
29.1mg/L
standard
DB211627-2008
0.19
tons
0.9 tons
Not over
standard
Not over
Dalian RefrigerationCo., Ltd.
Dust sequence 1
Unifieddischarged
10.6mg/m3
GB9078-19
1.60
tons
1.60
6.8 tons
Not over
standard
Not over
Section 6 Change in Share Capital and Shareholders' Information
I. Change in share capital
1. Change in share capital
items
Shares（before change）
Changes
Shares（after change）
number proportion number proportion
I. Non-circulating share capital with restrictedtrade conditions
16,043,275
1.88%
-12,078,745
3,964,530
0.47%
Other domestic shares 16,043,275
1.88%
-12,078,745
3,964,530
0.47%
II. Circulating share capital 839,390,812
98.12%
-142,835
839,247,977
99.53%
1. Domestically listed ordinary shares 597,890,812
69.89%
-142,835
597,747,977
70.89%
2. Domestically listed foreign shares 241,500,000
28.23%
241,500,000
28.64%
III. Total shares 855,434,087
100.00%
-12,221,580
843,212,507
100.00%
The reason for the Change in share capitalOn January 17, 2019, the Company appointed a new supervisor; on February 25, 2019, the cancellation ofrestricted stock repurchase in part of the Company's 2016 restricted stock incentive plan was completed.The things mentioned above in the report have caused the change of the total amount of shares and the structure ofstock.Approval of changes in shares
√Applicable □ Not applicable
The supervisor was elected by the 1
stExtraordinary Shareholders’ General Meeting of 2019 of the Company; thetermination of the Company's 2016 restricted stock incentive plan and the repurchase and cancellation of part ofrestricted stock was reviewed and approved by the 1
st
Extraordinary Shareholders’ General Meeting of 2019 of theCompany.The influence of change in share capital on the recent year and recent issue for basic earnings per share ,dilutedearnings per share and net assets per share.
(1)The basic earnings per share of 2018 is 0.13 yuan; According to the latest equity is adjusted for 0.13yuan;
(2)The diluted earnings per share of 2018 is 0.13 yuan; According to the latest equity is adjusted for 0.13 yuan;
(3)The net assets per share of 2018 is 3.95 yuan; According to the latest equity is adjusted for 4.01 yuan.
2. The restricted shares changes
√Applicable □ Not applicable
For details, please see the Chinese version of 2019 Semiannual Report.II. Securities issuance and listing
1. Securities issuance in the report period
□ Applicable √ Not applicable
III. Shareholders and actual controller
1. Number of shareholders and their shareholding
Total number of shareholders in the reporting period 54,558
Shareholding of top ten shareholdersName Nature Proportion
Total number
shareswith salerestriction
Number of
Number ofpledgedshares or
sharesfrozenDalian Bingshan Group Co., Ltd.Domestic non-state-owned legal person 20.27%
170,916,934
Sanyo Electric Co., Ltd. Overseas legal person 8.72%
73,503,150
Zhang Sufen Domestic natural person 0.77%
6,520,000
Lin Zhenming Foreign natural person 0.76%
6,400,000
Wu An Domestic natural person 0.53%
4,500,000
Sun Huiming Domestic natural person 0.52%
4,384,079
BOCI SECURITIES LIMITED Overseas legal person 0.41%
3,471,602
Dalian industrial developmentinvestment Co., Ltd.
Domestic non-state-owned legal person 0.40%
3,406,725
Xue Hong Domestic natural person 0.35%
2,940,000
Li Xiaohua Domestic natural person 0.32%
2,704,208
Shareholding of top ten shareholders without sale restrictionName
Number of shares without sale
restriction
Type of sharesDalian Bingshan Group Co., Ltd.170,916,934
RMB denominated ordinary shares
Sanyo Electric Co., Ltd. 73,503,150
Domestically listed foreign sharesZhang Sufen 6,520,000
RMB denominated ordinary shares
Lin Zhenming 6,400,000
Domestically listed foreign sharesWu An 4,500,000
Domestically listed foreign sharesSun Huiming 4,384,079
Domestically listed foreign sharesBOCI SECURITIES LIMITED 3,471,602
Domestically listed foreign sharesDalian industrial development investment Co., Ltd.
3,406,725
RMB denominated ordinary shares
Xue Hong 2,940,000
Domestically listed foreign sharesLi Xiaohua 2,704,208
RMB denominated ordinary shares
Notes to the associated relationship and uniform
actions of the above shareholders
Dalian Bingshan Group Co., Ltd. had the association relationship with SanyoElectric Co., Ltd. among the above shareholders. Sanyo Electric Co., Ltd.
holds 26.6% of Dalian Bingshan Group Co., Ltd.'s equity.If the company shareholders had any agreed repurchase transaction in the report period
□ Yes √ No
IV. Variation in controlling shareholders or actual controllers
Variation in controlling shareholders in the report period
□ Applicable √ Not applicable
There were no changes in the controlling shareholder in the reporting period.
Variation in actual controllers in the report period
□ Applicable √ Not applicable
Section 7 Information on Preferred Stock
□ Applicable √ Not applicable
In the reporting period, the Company didn’t own preferred stock.
Section 8 Information on the Company’s Directors, Supervisors,
and Senior Managers
I. Changes in shareholding by directors, supervisors and senior managers
√Applicable □ Not applicable
Name Position
Office-holding
state
Shares held atbeginning of
period(shares)
Increase onholding of sharesin this period
(shares)
Decrease inholding of sharesin this period
(shares)
Shares held at
the end of
period(shares)Ji Zhijian Chairman Incumbent 1,528,830
1,528,830
Ding Jie Vice Chairman,GM Incumbent 1,015,000
490,000
525,000
Xu Junrao Director Incumbent 995,349
995,349
Fan Yuekun Director DGM Incumbent 700,000
490,000
210,000
Yokoo Sadaaki Director Incumbent 0
Nishimoto Shigeyuki
Director Incumbent 0
Dai Dashuang Independent director Incumbent 0
Liu Jiwei Independent director Incumbent 0
Wang Yan Independent director Incumbent 0
Hu Xitang
Chairman of the board of
Supervisors
Incumbent 0
Zhao Huiming Supervisor Incumbent 190,447
190,447
Dai Yuling Supervisor Incumbent 0
Ma Yun Chief Financial Officer Incumbent 525,000
490,000
35,000
Song Wenbao Board secretary Incumbent 593,880
593,880
Takagi Toshiyuki Director Leaving 0
Shin Kudo Director Leaving 0
Watabe Shinichi Director Leaving 0
Mao Chunhua
Chairman of the board ofSupervisors
Leaving 0
Total -- -- 5,548,506
1,470,000
4,078,506
During the reporting period, the decrease of shares of some directors and senior managers of theCompany is due to the repurchase and logout of some restricted shares of the 2016 restricted stockincentive plan.
II. Changes of directors, supervisors, senior managers of the Company
Name Position held Type Date ReasonMao Chunhua Supervisor Leaving office Jan.17, 2019
Expiration of termShin Kudo Director Leaving office Jan.17, 2019
Expiration of termTakagi Toshiyuki
Director Leaving office May 8, 2019
Resign from the Company due to job changesWatabe Shinichi Director Leaving office May 8, 2019
Resign from the Company due to job changes
Section 9 Corporate Bonds
The Company’s non-public issuance of exchangeable corporate bonds was listed at the Shanghai StockExchange on August 6, 2018. As of August 1, 2018, according to the using plan disclosed in theprospectus, the raised funds of the Company’s non-public issuance of exchangeable corporate bonds havebeen used to repay bank loans. The special account for the Company's 2018 exchangeable corporatebonds fund raising was cancelled in March 2019. During the reporting period, the Company'sexchangeable corporate bondholders exchanged a total of 8.3889 million shares.
Section 10 Financial Report
I. The Company's semiannual financial report has not been audited.
II. Accounting statement
BALANCE SHEET
Prepared by Dalian Refrigeration Co., Ltd. June 30, 2019 Unit: RMB Yuan
Items
30-June-2019 31-Dec-2018Consolidation Parent Company
Consolidation Parent Company
Current assets:
Monetary funds
| 231,766,622.54 | 100,588,572.36 |
| 343,026,485.11 | 186,976,185.10 |
Transaction financial assets
Financial assets which are measured by fair value andwhich changes are recorded in current profit and loss
Derivative financial assets
Notes receivable
| 154,749,147.97 | 64,944,562.37 |
| 171,292,044.56 | 63,673,648.65 |
Accounts receivable
| 1,242,102,434.51 | 532,504,574.39 |
| 1,107,546,588.30 | 418,715,646.60 |
Accounts in advance
| 169,837,285.13 | 55,733,450.97 |
| 158,405,300.50 | 69,577,538.44 |
Other receivables
| 92,269,545.78 | 61,650,745.69 |
14,003,269.34
| 48,508,755.15 |
Interest receivables
| 318,886.12 | 318,886.12 |
Dividend receivable
| 56,591,452.20 | 56,591,452.20 |
| 33,450.00 |
Inventories
| 506,818,620.94 | 225,906,253.16 |
| 450,195,300.53 | 194,747,632.08 |
Assets held for sale
Non-current asset due within one year
Other current assets
| 10,919,417.09 | 502,579.11 |
| 18,266,589.12 | 8,056,055.09 |
Total current assets
| 2,408,463,073.96 | 1,041,830,738.05 |
| 2,297,241,063.27 | 955,749,975.30 |
Non-current assets:
Finance asset held available for sales
382,186,729.99
380,771,587.49
Held-to-maturity investment
Long-term account receivable
Long-term equity investment
| 1,628,330,214.50 | 2,211,259,839.98 |
| 1,619,693,570.97 | 2,201,953,842.42 |
Other non-current financial assets
| 301,270,305.39 | 299,855,162.89 |
Investment property
| 97,846,891.45 | 109,001,565.44 |
| 100,338,241.99 | 111,421,702.70 |
Fixed assets
| 926,981,106.12 | 703,919,706.11 |
| 953,298,058.11 | 725,516,578.53 |
Construction in progress 49,7
| 22,435.06 | 24,914,982.62 |
| 19,796,212.82 | 18,010,457.61 |
Productive biological asset
Oil and gas asset
Intangible assets
| 143,985,088.16 | 68,783,428.55 |
| 147,018,592.71 | 70,049,323.57 |
Expense on Research and Development
Goodwill
| 1,750,799.49 |
| 1,750,799.49 |
Long-term expenses to be apportioned
| 12,068,633.37 | 10,498,387.92 |
| 12,873,428.19 | 11,244,777.00 |
Deferred income tax asset
| 36,887,124.74 | 4,372,833.57 |
| 34,082,754.72 | 4,303,943.48 |
Other non-current asset
Total non-current asset
| 3,198,842,598.28 | 3,432,605,907.08 |
| 3,271,038,388.99 | 3,523,272,212.80 |
Total assets
| 5,607,305,672.24 | 4,474,436,645.13 |
| 5,568,279,452.26 | 4,479,022,188.10 |
Current liabilities:
Short-term loans
| 289,000,000.00 | 249,000,000.00 |
| 250,000,000.00 | 250,000,000.00 |
Financial liabilities which are measured by fair valueand which changes are recorded in current profit andloss
Derivative financial liabilities
Transaction financial liabilities
Notes payable
| 308,942,433.94 | 180,422,498.75 |
| 273,401,536.58 | 114,845,621.59 |
Accounts payable
| 917,599,819.45 | 297,925,638.95 |
| 859,489,558.61 | 297,954,195.20 |
Accounts received in advance
| 138,163,912.46 | 39,450,916.74 |
122,151,1
| 01.00 | 29,579,144.85 |
Wage payable
| 11,033,473.25 | 450,461.45 |
| 31,856,136.59 | 7,376,290.42 |
Taxes payable
| 20,355,341.17 | 13,558,523.93 |
| 13,608,212.32 | 3,399,150.12 |
Other accounts payable
| 78,521,779.11 | 48,137,952.52 |
30,439,9
| 63,313,958.43 | 31.10 |
Interest payable
| 297,917.07 | 297,917.07 |
| 1,369,527.78 | 1,369,527.78 |
Dividend payable
| 42,693,781.35 | 42,693,781.35 |
| 533,156.00 | 533,156.00 |
Liabilities held for sale
Non-current liabilities due within one year 1,472,720.00
2,999,57
| 4.93 |
Other current liabilities
Total current liabilities
| 1,765,089,479.38 | 828,945,992.34 |
| 1,616,820,078.46 | 733,594,333.28 |
Non-current liabilities:
Long-term loans
| 160,000,000.0 | 160,000,000.00 |
| 160,000,000.00 | 160,000,000.00 |
Bonds payable
| 25,000,034.00 | 25,000,034.00 |
| 176,000,000.00 | 176,000,000.00 |
Preferred stock
Perpetual bond
Long-term account payable 17,574,885.46
1,532,949.94
Long-term wage payable
Special payable
Anticipation liabilities
Deferred income
| 100,384,815.79 | 58,325,994.98 |
| 103,542,093.79 | 60,907,828.40 |
Deferred income tax liabilities
| 41,009,166.63 | 41,009,166.63 |
| 51,954,442.22 | 51,954,442.22 |
Other non-current liabilities
Total non-current liabilities 343,968
| ,901.88 | 284,335,195.61 |
| 493,029,485.95 | 448,862,270.62 |
Total liabilities
| 2,109,058,381.26 | 1,113,281,187.95 |
| 2,109,849,564.41 | 1,182,456,603.90 |
Shareholders’ equity
Share capital
| 843,212,507.00 | 843,212,507.00 |
| 855,434,087.00 | 855,434,087.00 |
Other equity instruments
Preferred stock
Perpetual bond
Capital public reserve
| 726,768,468.00 | 771,270,562.83 |
| 760,365,342.00 | 804,867,436.83 |
Less:Treasury stock
| 21,026,106.00 | 21,026,106.00 |
Other comprehensive income
| 2,501,459.77 | 1,539,359.10 |
| 296,909,965.55 | 295,947,864.88 |
Special preparation
Surplus public reserve
| 753,519,177.11 | 753,519,177.11 |
| 721,091,040.02 | 721,091,040.02 |
Generic risk reserve
Retained profit
| 1,093,052,951.09 | 991,613,851.14 |
| 764,859,288.45 | 640,251,261.47 |
Total owner’s equity attributable to parent company
| 3,419,054,562.97 | 3,361,155,457.18 |
| 3,377,633,617.02 | 3,296,565,584.20 |
Minority interests 79,192,728.01
| 80,796,270.83 |
Total owner’s equity
| 3,498,247,290.98 | 3,361,155,457.18 |
| 3,458,429,887.85 | 3,296,565,584.20 |
Total liabilities and shareholder’s equity
| 5,607,305,672.24 | 4,474,436,645.13 |
| 5,568,279,452.26 | 4,479,022,188.10 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
INCOME STATEMENT
Prepared by Dalian Refrigeration Co., Ltd. January-June, 2019 Unit: RMB Yuan
Items
January-June, 2019 January-June 2018Consolidation Parent Company
Consolidation Parent Company
I. Total sales
| 1,075,729,240.57 | 325,356,273.32 |
| 1,029,078,536.79 | 303,046,735.19 |
II. Total operating cost
| 1,101,546,628.92 | 328,308,008.76 | 1,028,009,367.58 |
Including: Operating cost
321,430,557.24919,759,979.86
| 919,759,979.86 | ,893,396.82 |
| 852,843,875.27 | 260,733,552.03 |
Taxes and associate charges
| 8,730,283.87 | 4,773,987.02 |
| 8,733,921.73 | 4,555,858.93 |
Selling and distribution expenses
| 53,096,818.62 | 5,371,238.79 |
48,66
| 2,813.11 | 281,553.90 |
Administrative expenses
| 85,942,095.21 | 24,161,373.15 |
| 81,515,156.00 | 38,446,055.18 |
R&D expenses
| 28,549,864.17 | 13,071,247.34 |
| 27,614,336.67 | 12,006,561.51 |
Financial expense
| 5,467,587.19 | 4,036,765.64 |
| 8,639,264.80 | 5,406,975.69 |
Including:interest expense
| 5,542,418.26 | 3,772,180.01 |
| 8,884,281.55 | 6,670,364.53 |
interest income
| 572,223.80 | 211,170.87 |
2,06
| 9,056.36 | 1,711,676.17 |
Add:Other income
| 2,035,436.84 | 109,637.40 |
Gain/(loss) from investment
| 117,127,421.73 | 120,796,775.76 |
| 66,613,044.44 | 73,950,865.14 |
Including: income from investment onaffiliated enterprise and jointly enterprise
| 72,239,478.13 | 72,908,832.16 | 55,473,486.44 | 56,407,982.41 |
Gain/(loss) from change in fair value
| 40,461,125.59 | 40,461,125.59 |
Assets impairment loss
(loss as “-“) -
-
| 16,863,134.42 | 3,112,743.25 |
-
| 8,083,861.40 | 4,287,358.03 |
Gain/(loss) from asset disposal
| 1,242,799.31 | 582,050.16 |
| 230,812.06 | 248,128.41 |
III. Operating profit118,18
| 6,260.70 | 142,704,225.48 |
| 59,938,801.71 | 60,102,529.53 |
Add: non-business income
| 2,472,365.13 | 200.07 |
| 2,176,863.94 | 251,000.07 |
Less: non-business expense
| 121,643.51 | 75,126.57 |
| 153,590.70 | 80,000.00 |
IV. Total profit
| 120,536,982.32 | 142,629,298.98 |
| 61,962,074.95 | 60,273,529.60 |
Less: Income tax
| 13,766,605.84 | 11,086,452.65 |
| 3,440,444.25 | 572,108.49 |
V. Net profit
| 106,770,376.48 | 131,542,846.33 |
59,701,
| 58,521,630.70 | 421.11 |
(I) Net profit from continuous operation
| 106,770,376.48 | 131,542,846.33 |
| 58,521,630.70 | 59,701,421.11 |
(II)Net profit from discontinuing operation
Net profit attributable to parent company
131,542,846
| 108,373,919.30 | .33 |
| 59,017,542.28 | 59,701,421.11 |
Minority shareholders’ gains and losses -
| 1,603,542.82 |
-
| 495,911.58 |
VI. After-tax net amount of other comprehensiveincomes
-
-
| 87,068,749.65 | 87,068,749.65 |
After-tax net amount of other comprehensiveincomes attributable to owners of the Company
-
-
| 87,068,749.65 | 87,068,749.65 |
(I) Other comprehensive incomes that will not bereclassified into gains and losses
1. Changes in net liabilities or assets with a
defined benefit plan upon re-measurement
2. Enjoyable shares in other comprehensive
incomes in invests that cannot be reclassified intogains and losses under the equity method
(II) Other comprehensive incomes that will bereclassified into gains and losses
-
-
| 87,068,749.65 | 87,068,749.65 |
1. Enjoyable shares in other comprehensive
incomes in invests that will be reclassified into gainsand losses under the equity method
2.
Changes in the fair value of other debtinvestments
3. Gains and losses on fair value changes of
available-for-sale financial assets
-
-
| 87,068,749.65 | 87,068,749.65 |
4. The amount of financial assets reclassified
into other comprehensive income
5. Held-to-maturity investments are reclassified
as saleable financial asset gains and losses
6.Others
After-tax net amount of other comprehensiveincomes attributable to minority shareholders
VII Total comprehensive income
| 106,770,376.48 | 131,542,846.33 |
-
-
| 28,547,118.95 | 27,367,328.54 |
| Total comprehensive income attributable to parent |
company
| 108,373,919.30 | 131,542,846.33 |
-
-
| 28,051,207.37 | 27,367,328.54 |
| Total comprehensive income attributable to |
minority shareholders
-1,603,54
| 2.82 |
-
| 495,911.58 |
VIII. Earnings per share
(I) basic earnings per share
| 0.127 |
| 0.069 |
(II) diluted earnings per share
| 0.127 |
| 0.069 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
CASH FLOW STATEMENT
Prepared by Dalian Refrigeration Co., Ltd. January -June, 2019 Unit: RMB Yuan
Items
January -June, 2019 January -June, 2018Consolidation
Parent Company
Consolidation Parent Company
I. Cash flows arising from operating activities:
| Cash received from selling commodities and providing |
labor services
| 618,147,609.49 | 227,740,556.29 |
| 632,708,032.41 | 213,979,631.33 |
Write-back of tax received
| 8,019,673.18 | 8,304,625.28 |
Other cash received concerning operating activities
| 17,779,038.66 | 4,348,684.15 |
| 18,524,029.58 | 4,274,956.26 |
Subtotal of cash inflow arising from operating activities
| 643,946,321.33 | 232,089,240.44 |
| 659,536,687.27 | 218,254,587.59 |
| Cash paid for purchasing commodities and receiving labor |
service
| 426,426,299.23 | 159,249,772.95 | 459,421,142.63 |
Cash paid to/for staff and workers 188,059
221,317,190.65,306.43
| ,306.43 | 66,691,776.09 |
| 189,833,832.63 | 70,455,961.47 |
Taxes paid
| 43,807,228.95 | 14,147,587.37 |
| 53,229,514.92 | 4,952,102.76 |
Other cash paid concerning operating activities
| 63,429,524.60 | 13,181,849.87 |
| 72,380,954.26 | 10,875,163.82 |
Subtotal of cash outflow arising from operating activities
| 721,722,359.21 | 253,270,986.28 |
| 774,865,444.44 | 307,600,418.70 |
Net cash flows arising from operating activities -
-
| 77,776,037.88 | 21,181,745.84 |
-
-
| 115,328,757.17 | 89,345,831.11 |
II. Cash flows arising from investing activities:
Cash received from recovering investment
Cash received from investment income
| 11,365,084.60 | 11,331,634.60 |
| 20,779,048.00 | 20,745,598.00 |
| Net cash received from disposal of fixed, intangible and |
other long-term assets
| 1,691,731.61 | 810,000.00 | 4,093,774.11 |
| Net cash received from disposal of subsidiaries and other |
units
Other cash received concerning investing activities
| 76,000,000.00 | 76,000,000.00 |
Subtotal of cash inflow from investing activities
| 13,056,816.21 | 12,141,634.60 | 100,872,822.11 |
96,745,598.00
| Cash paid for purchasing fixed, intangible and other |
long-term assets
23,937
| 27,160,372.19 | ,190.63 | 104,301,920.61 | 95,865,456.22 |
Cash paid for investment
| 4,327,733.43 |
| Net cash paid for achievement of subsidiaries and other |
business units
Other cash paid concerning investing activities
Subtotal of cash outflow from investing activities
| 27,160,372.19 | 23,937,190.63 |
| 108,629,654.04 | 95,865,456.22 |
Net cash flows arising from investing activities -
-
| 14,103,555.98 | 11,795,556.03 |
-7,756,8
| 31.93 | 880,141.78 |
III. Cash flows arising from financing activities
Cash received from absorbing investment
| Including: Cash received from absorbing minority |
shareholders' equity investment by subsidiaries
Cash received from loans
340,210,100.00
249,000,000.00
313,004,000.00
300,000,000.00
Cash received from issuing bonds
Other cash received concerning financing activities
| 38,323,050.64 | 30,116,287.80 |
Subtotal of cash inflow from financing activities
| 378,533,150.64 | 249,000,000.00 |
| 343,120,287.80 | 300,000,000.00 |
Cash paid for settling debts
| 303,180,583.85 | 250,000,000.00 |
| 249,904,100.00 | 230,000,000.00 |
| Cash paid for dividend and profit distributing or | interest |
paying
| 6,158,656.56 | 4,843,793.50 |
| 9,236,961.88 | 7,049,450.06 |
| Including: dividends or profit paid by subsidiaries to |
minority shareholders
Other cash paid concerning financing activities
| 67,866,365.93 | 47,566,389.36 |
21,11
| 9,640.70 | 3,446,078.94 |
Subtotal of cash outflow from financing activities
| 377,205,606.34 | 302,410,182.86 |
| 280,260,702.58 | 240,495,529.00 |
Net cash flows arising from financing activities
-
| 1,327,544.30 | 53,410,182.86 |
59,504,471.
| 62,859,585.22 | 00 |
IV. Influence on cash due to fluctuation in exchange rate
-
| 266,799.33 | 128.01 |
-
-
| 1,035,797.29 | 310.29 |
V. Net increase of cash and cash equivalents
-
-
| 90,285,250.23 | 86,387,612.74 |
-
-
| 61,261,801.17 | 28,961,528.62 |
| Add: Balance of cash and | cash equivalents at the period |
-begin
| 304,703,434.47 | 186,976,185.10 |
| 364,693,406.31 | 234,655,092.14 |
VI. Balance of cash and cash equivalents at the period–end
| 214,418,184.24 | 100,588,572.36 |
| 303,431,605.14 | 205,693,563.52 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY
Prepared by Dalian Refrigeration Company Limited 2019.01-06 Unit: RMB Yuan
Items
2019.01-06
Owners’ equity attributable to parent company
Total of
Minority equityowners’ equity
| share capital | owners’ equity |
Capital suplus
Lessen:
treasury
stock
Othercomprehensi
ve income
Special
preparationSurplus reserve
Retained
profits
I. balance a
Surplus reservet the end of last
year
855,434,087.00
t the end of last
760,365,342.00
21,026,106.00
296,909,965.55
21,026,106.00
| 721,091,040.02 | 764,859,288.45 | 80,796,270.83 | 3,458,429,887.85 |
policy
1. Change of accounting
-
294,408,505.78
294,408,505
| .78 |
previous period
2. Correction of errors in
this year
855,434,087.00
II. Balance at the beginning of
760,365,342.00
21,026,106.00
2,501,459.77
21,026,106.00
721,091,040.02
1,059,267,794.23
80,796,270.83
| 80,796,270.83 | 3,458,429,887.85 |
III. Increase/ decrease
amount in this year (“-
| of | |
| ” | |
means decrease)
-12,221,580.00
-
33,596,874.00
-
| 33,596,874.00 | 21,026,106.00 |
| 32,428,137.09 | 33,785,156.86 |
-
| 1,603,542.82 | 39,817,403.13 |
incomes
(I) Total comprehensive
| 108,373,919.30 |
-
| 1,603,542.82 | 106,770,376.48 |
(II)
reduced by owners
-
Capital increased and12,221,580.00
-
| 12,221,580.00 | 33,596,874.00 |
-
| 21,026,106.00 |
-
24,792,348.00
1. Common shares increased
by shareholders
-
1. Common shares increased
12,221,580.00
-
| 12,221,580.00 | 33,596,874.00 | 24,792,348.00 |
-
70,610,802.00
2. Capital increased by
h
| 2. Capital increased by |
| olders of other equity |
instruments
3. Amounts of share-
| based | |
| payments recognized in | |
owners’ equity
-
| 45,818,454.00 |
45,818,454.00
4. Other
(III) Profit distribution
| 32,428,137.09 |
-
| 74,588,762.44 |
-42,16
| 0,625.35 | ||
| 1. Withdrawing surplus |
public reserve
| 32,428,137.09 |
-
| 32,428,137.09 |
-
2. Distribution to all owners
(shareholders)
2. Distribution to all owners
-
| 42,160,625.35 |
-
3. Others
42,160,625.35
forward of owners’ equity
| (IV) Internal carrying | |
| 1. New increase of share | |
| capital from capital reserves | |
to share capital
2. Convert surplus reserves
losses
3. Surplus reserves make up
4. Others
(V) Specific reserve
1. Withdrawn for the period
| 1,025,336.49 | 1,025,336.49 |
2. Used in the period
-
| 1,025,336.49 |
-
(VI) Other
1,025,336.49
period
IV. Balance at the end of this843,212,507.00
| 843,212,507.00 | 726,768,468.00 |
2,501,459.77
| 753,519,177.11 | 1,093,052,951.09 | 79,192,728.01 | 3,498,247,290.98 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
Items
2018.01-06
Owners’ equity attributable to parent company
Minority
equity
Total of owners’equity
| share capital |
Capital suplus
Lessen:
treasury stock
Othercomprehensive
income
Specialreserve
| treasury stock |
Surplusreserve
Retained
profits
I. balance at the end of last
year
856,487,181.00
I. balance at the end of last
757,532,081.34
23,305,370.40
407,269,002.11
668,150,375.30
750,397,795.56
78,281,832.85
3,494,812,897.76
1. Change of accounti
policy
ng
previous period
2. Correction of errors in
the same control.
3. Merger of enterprises under
this year
856,487,181.00
II. Balance at the beginning of
757,532,081.34
23,305,370.40
407,269,002.11
668,150,375.30
750,397,795.56
78,281,832.85
3,494,812,897.76
amount in this year (“-
| III. Increase/ decrease of | |
| ” | |
means decrease)
-1,053,094.00
-444,219.58
-2,279,264.40
-87,068,749.65
36,726,596.18
-20,786,376.67
7,646,540.78
-62,700,038.54
incomes
(I) Total comprehensive
-87,068,749.65
59,017,542.28
-495,911.58
-28,547,118.95
(II) Capital increased and
reduced by owners
(II) Capital increased and
by shareholders
1. Common shares increased
| 2. Capital increased by | |
| holders of other equity | |
instruments
3. Amounts of share-
| based | |
| payments recognized in | |
owners’ equity
1,948,765.36
1,948,765.36
4. Other
(III) Profit distribution
36,726,596.18
-
| 79,803,918.95 |
-
-
| 1,140,000.00 | 44,217,322.77 |
public reserve
1. Withdrawing surplus
36,726,596.18
-36,726,596.18
preparation.
2. Withdrawing general risk
(shareholders)
3. Distribution to all owners
-
-
| 42,771,704.35 | 1,140,000.00 |
-
4. Others
43,911,704.35
-
| 305,618.42 |
-
(IV) Internal
| 305,618.42 | ||
| carrying |
forward of owners’ equity
| 1. New increase of share | |
| capital from capital reserves | |
to share capital
2. Convert surplus reserves
losses
3. Surplus reserves make up
4. Others
(V) Specific reserve
1. Withdrawn for the period
| 1,066,759.88 |
2. Used in the period
1,066,759.88
-
| 1,066,759.88 |
-
(VI) Other
1,066,759.88
period
855,434,087.00
IV. Balance at the end of this
757,087,861.76
21,026,106.00
| 320,200,252.46 | 704,876,971.48 | 729,611,418.89 | 85,928,373.63 | |||||||
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
STATEMENT OF CHANGES IN OWNERS’ EQUITY
Prepared by Dalian Refrigeration Company Limited 2019.01-06 Unit: RMB Yuan
Items
2019.01-06
Owners’ equity attributable to parent company
Total of owners’
equityshare capital
Otherequityinstrument
Capitalsuplus
Lessen:
treasury
stock
Othercomprehensive
income
Specialpreparation
Surplusreserve
Retained
profits
year
855,434,087.00
I. balance at the end of last
804,867,436.83
21,026,106.00
295,947,864.88
| 721,091,040.02 | 640,251,261.47 | 3,296,565,584.20 |
1. Change of accounting
policy
-
| 294,408,505.78 | 294,408,505.78 | |||||||
previous period
2. Correction of errors in
this year
855,434,087.00
II. Balance at the beginning of
804,867,436.83
21,026,106.00
1,539,359.10
721,091,040.02
934,659,767.25
3,296,565,584.20
III. Increase/ decrease of
amount in this year (“-
| III. Increase/ decrease of | |
| ” | |
means decrease)
-12,221,580.00
-
-
| 33,596,874.00 | 21,026,106.00 |
| 32,428,137.09 | 56,954,083.89 |
64,589,872.98(I) Total comprehensive
incomes
(I) Total comprehensive
131,542,
| 846.33 | 131,542,846.33 |
reduced by owners
-
(II) Capital increased and12,221,580.00
| 12,221,580.00 |
-
-
| 33,596,874.00 | 21,026,106.00 |
-
24,792,348.00
1. Common shares increased
by shareholders
-
1. Common shares increased
12,221,580.00
| 12,221,580.00 |
-
| 33,596,874.00 | 24,792,348.00 |
-70,610,802.00
2. Capital increased by
| 2. Capital increased by | |
| holders of other equity | |
instruments
3. Amounts of share-
| based | |
| payments recognized in | |
owners’ equity
-
| 45,818,454.00 |
4. Other
45,818,454.00
(III) Profit distribution
-74,588
| 32,428,137.09 | ,762.44 |
-
| 42,160,625.35 | ||
| 1. Withdrawing surplus |
public reserve
-
| 32,428,137.09 | 32,428,137.09 |
(shareholders)
2. Distribution to all owners
-
-
| 42,160,625.35 | 42,160,625.35 |
3. Others
(IV) Internal ca
forward of owners’ equity
| rrying | |
| 1. New increase of share | |
| capital from capital reserves | |
to share capital
2. Convert surplus reserves
losses
3. Surplus reserves make up
4. Others
(V) Specific reserve
1. Withdrawn for the period
| 1,025,336.49 |
2. Used in the period
1,025,336.49
-
| 1,025,336.49 |
-
(VI) Other
1,025,336.49
period
IV. Balance at the end of this843,212,507.00
| 843,212,507.00 | 771,270,562.83 |
| 1,539,359.10 | 753,519,177.11 | 991,613,851.14 | 3,361,155,457.18 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
Items
2018.01-06
Owners’ equity attributable to parent company
Total of owners’equityshare capital
instrument
| Other equity | |
Capital suplus
Lessen:
treasury
stock
Othercomprehensive
income
Specialpreparation
Surplusreserve
Retained
profits
I. balance at the end of last
year
856,487,181.00
I. balance at the end of last
802,034,176.17
23,305,370.40
406,306,901.44
668,150,375.30
573,846,640.63
3,283,519,904.14
1. Change of accounting
policy
1. Change of accounting
previous period
2. Correction of errors in
this year
856,487,181.00
II. Balance at the beginning of
802,034,176.17
23,305,370.40
406,306,901.44
668,150,375.30
573,846,640.63
3,283,519,904.14
III. Increase/ decrease of
amount in this year (“-
| III. Increase/ decrease of | |
| ” | |
means decrease)
-1,053,094.00
-444,219.58
-2,279,264.40
-87,068,749.65
36,726,596.18
-19,796,879.42
-69,357,082.07
(I) Total comprehensive
incomes
(I) Total comprehensive
-87,068,749.65
59,701,421.11
-27,367,328.54
reduced by owners
-1,053,094.00
(II) Capital increased and
-444,219.58
-2,279,264.40
781,950.82
1. Common shares increased
by shareholders
-1,053,094.00
1. Common shares increased
-2,392,984.94
-2,279,264.40
-1,166,814.54
2. Capital increased by
| 2. Capital increased by | |
| holders of other equity | |
instruments
3. Amounts of share-
| based | |
| payments recognized in | |
owners’ equity
1,948,765.36
1,948,765.36
4. Other
(III) Profit distribution
36,726,596.18
-79,498,300.53
-42,771,704.35
| 1. Withdrawing surplus |
public reserve
36,726,596.18
-36,726,596.18
(shareholders)
2. Distribution to all owners
-42,771,704.35
-42,771,704.35
3. Others
(I
forward of owners’ equity
| V) Internal carrying | |
| 1. New increase of share | |
| capital from capital reserves | |
to share capital
2. Convert surplus reserves
losses
3. Surplus reserves make up
4. Others
(V) Specific reserve
1. Withdrawn for the period
| 1,066,759.88 |
2. Used in the period
1,066,759.88
-
| 1,066,759.88 |
-
(VI) Other
1,066,759.88
period
855,434,087.00
IV. Balance at the end of this
801,589,956.59
21,026,106.00
319,238,151.79
704,876,971.48
554,049,761.21
3,214,162,822.07
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
III. General Information
Dalian Refrigeration Company Limited (the “Company”) was reorganized and reformed frommain part of former Dalian Refrigeration Factory. On December 8, 1993, the company went to thepublic as a listed company at Shenzhen Stock Exchange Market. On March 20, 1998, thecompany successfully went to the public at B share market and listed at Shenzhen StockExchange Market with total share capital of RMB350,014,975Yuan.According to the 13
th
meeting of the 6
thgeneration of board, extraordinary general meeting for2015 fiscal year and ' Restricted share incentive plan (draft)' , the Company planned to introduceA ordinary shares to incentive objectives, which was 10,150,000 number of shares would begranted to 41 share incentive objectives at granted price of RMB5.56Yuan per share. Up to March
th
,2015, the Company received new added share capital of RMB10,150,000Yuan and the sharecapital had been verified by DaHua Certified Public Accountants, and had been issued the capitalverification report Dahuayanzi [2015]000086 on March12
th
, 2015.The general meeting for 2015 fiscal year held on 21st April 2016 approved the profit distributionpolicy for the year of 2015, which agrees the profit distribution based on the total 360,164,975number of shares as share capital, paid share dividend of 5 common shares for every 10 sharesthrough capital reserve. The policy stated above was fully implemented on 5th May 2016, and theregistered capital was altered to 540,247,462.00Yuan.The 17
th
meeting of the 6
th
generation of board was held on 4
th
June 2015 and the 2
nd
interimshareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the proposalof non-public offering of ‘A shares’. China’s Securities Regulatory Commission issued SFClicense [2015]3137 on 30
th
December, 2015, approving that new non-public offering cannotexceeded 38,821,954 number of shares. The company implemented the post meeting proceduresfor China’s Securities Regulatory Commission, which is regarding adjustment of bottom price andthe number of the shares issued after the implementation of profit distribution policy of 2015 inMay, 2016, and accordingly revised the upper limit of non-public offering of share to58,645,096number of new ‘A shares’. The company issued the non-public offering of 58,645,096 number of‘A shares’ to 7 investors, and as a result, the total number of shares of the company is changed to598,892,558 shares, and the par value is 1yuan per share and the total share capital is598,892,558.00Yuan. The share capital stated above has been verified by DaHua Certified PublicAccountants, and has been issued the capital verification report Dahuayanzi [2016]000457 on 31stMay 2016.According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration CompanyLimited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting authorized theboard of directors to implement the Restricted Share Incentive Plan’ approved on the
rd
provisional general meeting held on 13th September 2016, the 9
th
meeting of the 7
th
generationof board deliberated and passed the ‘Proposal about granting the restricted shares to incentivetargets’ on September 20
th
, 2016 and set 20
thSeptember 2016 as share granted date, and granted12,884,000 number of restricted shares to 188 incentive targets at granted price of 5.62Yuan per
share. By 22
nd
November, 2016, the company has actually received the newly subscribedregistered share capital of 12,884,000Yuan subscribed by incentive targets. The share capitalstated above has been verified by DaHua Certified Public Accountants, and has been issued thecapital verification report Dahuayanzi [2016]001138 on 23
rd
November, 2016.On May 20
th
, 2017, the general meeting for 2016 fiscal year was held and profit appropriationscheme for 2016 FY was approved, which was every 10 shares will be increased by 4 sharesthrough capital reserve based on the total 611,776,558 number of shares. After the profitappropriation scheme, the registered capital was changed to RMB856,478,181.00Yuan.On December 18, 2017, the Company held the third extraordinary shareholders’ meeting of 2017which reviewed and approved the Proposal on Repurchasing and Cancelling Part RestrictedStocks of the 2016 Restricted Stock Incentive Plan”. On March 8, 2018, after the completion ofrepurchase and cancellation, the Company implemented the corresponding capital reductionprocedures according to law, and the registered capital of the Company was changed from856,487,181 Yuan to 855,908,981 Yuan.On May 4, 2018, the Company held the 21
st
meeting of the seventh board of directors whichreviewed and approved the Proposal on Repurchasing and Cancelling Party Restricted Stocks ofthe 2015 Restricted Stock Incentive Plan. On June 29, 2018, after the completion of repurchaseand cancellation, the Company implemented the corresponding capital reduction proceduresaccording to law, and the registered capital of the Company was changed from 855,908,981 Yuanto 855,434,087 Yuan.On December 10,2018, the Company held the 25
th
meeting of the seventh board of directorswhich reviewed and approved the Proposal on terminating the implementation of 2016 RestrictedStock Incentive Plan of the Company and logouting the restricted stock.On January 17,2019, the Company held the first extraordinary shareholders’ meeting of 2019which reviewed and approved the Proposal on terminating the implementation of 2016 RestrictedStock Incentive Plan of the Company and logouting the restricted stock. On March 4,2019, theCompany has completed the capital reduction process, and the registered capital of the Companywas changed from 855,434,087 Yuan to 843,212,507 Yuan.The old address of the Company’s registered office as same as head office is No.888 Xinan Road,Shahekou District, Dalian, China. In 2017, the Company relocated to new factory and changed itsaddress to No.16 East of Liao River RD, DDA, Dalian China as same as HQ’s address. The parentcompany of the Company is Dalian Bingshan Group Co., Ltd., and there is no ultimate controllerregulated by the relevant law, regulations and rules.The Company falls into industrial manufacturing sector, mainly engaged in industrial refrigeration,refrigerated and frozen food storage, and manufacture and installation of central air-conditioningand refrigeration equipment. The scope of business includes refrigeration equipment, valve,fixings refrigeration equipment, supported products processing and system design ofair-conditioning. The company also offers technical consultation, technical services, commercial
trade and material supply and marketing.This reporting period, entities within the consolidation scope has no change comparing to last yearIV. Financial Statements Preparation Basis
（1） Preparing basis
The Company’s financial statements are prepared on the basis of going concern assumption,according to the actual occurred transactions and events and in accordance with ‘AccountingStandards for Business Enterprises’ and relevant regulations, and also based on the note IV“Significant Accounting Policies, Accounting Estimates”.
（2） Going concern
The Company has the capacity to continually operate within 12 months at least since the end ofreport period, and hasn‘t the major issues impacting on the sustainable operation ability.V. Significant Accounting Policies and Accounting Estimates1, March 2017, the Ministry of Finance, respectively, revised and issued the accounting standards forenterprises No. 22 - recognition and measurement of financial instruments, the accounting standardsfor enterprises No. 23 - transfer of financial assets, the accounting standards for enterprises No. 24 -hedging accounting, the accounting standards for enterprises No. 37 - presentation of financialinstruments such as the four related financial instruments accounting standards (hereinafter generallyreferred to as the "rule of financial instruments), in domestic and at the same time, listed companiesand listed overseas and adopted international financial reporting standards accounting standards toprepare its financial report or enterprises, effective as of January 1, 2018; Other domestic listedenterprises shall take effect from January 1, 2019. In accordance with the above requirements, theCompany will implement the above four accounting standards from January 1, 2019.
2.On April 30, 2019, the Ministry of Finance issued the notice on revising and issuing the 2019annual general enterprise financial statement format (financial accounting [2019] No. 6), whichrevised the general enterprise financial statement format.The Company has prepared financial statements according to the requirements of the new financialstatement format. If the items of presentation of financial statements are changed, the Company hasadjusted the comparison data during the comparable period according to the relevant provisions ofthe accounting standards for enterprises No. 30 - presentation of financial statements.
1. Declaration for compliance with accounting standards for business enterprisesThe financial statements are prepared by the Group according to the requirements of AccountingStandard for Business Enterprise, and reflect the relative information for the financial position,operating performance, cash flow of the Group truly and fully.
2. Accounting period
The Group adopts the Gregorian calendar year as accounting period from Jan 1 to Dec 31.
3. Operating cycle
Normal operating cycle refers to the duration starting from purchasing the assets formanufacturing up to cash or cash equivalent realization. The group sets twelve months for oneoperating cycle and as the liquidity criterion for assets and liability.
4. Functional currency
The Group adopts RMB as functional currency.
5. Accounting for business combination under same control and not under same controlAs an acquirer, the assets and liabilities that The Group obtained in a business combination underthe same control should be measured on the basis of their carrying amount in the consolidatedfinancial statements on the combining date. As for the balance between the carrying amount of thenet assets obtained by the combining party and the carrying amount of the consideration paid by it,the capital surplus shall be adjusted. If the capital surplus is not sufficient to be offset, the retainedearnings shall be adjusted.For a business combination not under same control, the asset, liability and contingent liabilityobtained from the acquirer shall be measured at the fair value on the acquisition date. Thecombination cost shall be the fair value, on the acquisition date, of the assets paid, the liabilitiesincurred or assumed and equity securities issued by the acquirer in exchange for the control of theacquire, and sum of all direct expenses(if the combination is achieved in stages, the combinationcost shall be the sum of individual transaction). The difference when combination cost exceedsproportionate share of the fair value of identifiable net assets of acquire should be recognized asgoodwill. If the combination cost is less than proportionate share of the fair value of identifiablenet assets of acquiree, firstly, fair value of identifiable asset, liability or contingent liability shallbe reviewed, and so the fair value of non-monetary assets or equity instruments issued in thecombination consideration , after review, still the combination cost is less than proportionateshare of the fair value of identifiable net assets of acquire, the difference should be recognized asnon-operating income.
6. Method of preparation of consolidated financial statements
All subsidiaries controlled by the Group and structured entities are within the consolidation scope.If subsidiaries adopt different accounting policy or have different accounting period from theparent company, appropriated adjustments shall be made in accordance with the Group policy inpreparation of the consolidated financial statements.All significant intergroup transactions, outstanding balances and unrealized profit shall beeliminated in full when preparing the consolidated financial statements. Portion of the subsidiary’sequity not belonging to the parent, profit, loss for the current period, portion of othercomprehensive income and total comprehensive belonging to minority interest, shall bepresented separately in the consolidated financial statements under “minority interest ofequity”, ”minority interest of profit and loss”, “other comprehensive income attributed to minority
interest” and “total comprehensive income attributed to minority interest” title.If a subsidiary is acquired under common control, its operation results and cash flow shall beconsolidated since the beginning of the consolidation period. When preparing the comparativeconsolidated financial statements, adjustments shall be made to relevant items of comparativefigures as regarded that reporting entity established through consolidation has been always theresince the point when the ultimate controlling party starts to have the control.If a business consolidation under common control is finally achieved in stages, consolidationaccounting method shall be disclosed additionally for the period in which the control is obtained.For example, if a business consolidation under common control is finally achieved in stages, whenpreparing the consolidated financial statements, adjustments shall be made for the currentconsolidation status as if consolidation has always been there since the point when the ultimatecontrolling party starts to control. In preparation of comparative figures, asset and liability of theacquiree shall be consolidated into the Group’s comparative financial statements, but to the extentno earlier than the point when the Group and acquiree are both under ultimate control and relevantitems under equity in comparative financial statements shall be adjusted for net asset increased incombination. To avoid the duplicated computation of net asset of acquiree, for long-term equityinvestment held by the Group before the consolidation, relevant profit and loss, othercomprehensive income and movement in other net asset, recognized for the period between thecombination date and later date when original shareholding is obtained and when the Group andthe acquiree are under common control of same ultimate controlling party, shall be respectivelyused for writing down the opening balance of retained earnings of comparative financialstatements and profit and loss for the current period.If a subsidiary is acquired not under common control, its operation results and cash flow shall beconsolidated since the beginning of the consolidation period. In preparation of the consolidatedfinancial statements, adjustments shall be made to subsidiary’s financial statements based on thefair value of its all identifiable assets, liability or contingent liability on the acquisition date.If a business consolidation under non-common control is finally achieved in stages, consolidationaccounting method shall be disclosed additionally for the period in which the control is obtained.For example, if a business consolidation not under common control is finally achieved in stages,when preparing the consolidated financial statements, the acquirer shall remeasure its previouslyheld equity interest in the acquiree at its acquisition-date fair value and recognize the resultinggain or loss as investment income for the current period. Other comprehensive income, underequity method accounting rising from the interest held in acquiree in relation to the period beforethe acquisition, and changes in the value of its other equity other than net profit or loss, othercomprehensive income and profit appropriation shall be transferred to investment gain or lossfor the period in which the acquisition incurs, excluding the other comprehensive income fromthe movement on the remeasurement of ne asset or liability of defined benefit plan.When the Group partially disposes of the long –term equity investment in subsidiary withoutlosing the control over it, in the consolidated financial statements, the difference, between
disposals price and respective disposed value of share of net assets in the subsidiary since theacquisition date or combination date, shall be adjusted for capital surplus or share premium, noenough capital surplus, then adjusted for retained earnings.When the Group partially disposes of the long –term equity investment in subsidiary and lose thecontrol over it, in preparation of consolidated financial statements, remaining share of interest inthe subsidiary shall be remeasured on the date of losing control. Sum of the share disposalconsideration and fair value of remaining portion of shareholding minus the share of the net assetsin the subsidiary held based on the previous shareholding percentage since the acquisition date orcombination date, the balance of above is recognized as investment gain/loss for the period andgoodwill shall be written off accordingly. Other comprehensive income relevant to shareinvestment in subsidiary shall be transferred to investment gain /loss for the period on the date oflosing control.When the Group partially disposes of the long –term equity investment in subsidiary and lose thecontrol over it by stages, if all disposing transactions are bundled, each individual transaction shallbe seen as a transaction of disposal of a subsidiary by losing control. The difference between thedisposal price and the share of the net assets in the subsidiary held before the date of losingcontrol, shall be recognize as other comprehensive income until the date of losing control where itis transferred into investment gain/ loss for the current period.
7. Joint arrangement classification and joint operation accounting
The Group’s joint arrangement includes joint operation and joint venture. For joint operation, theGroup as a joint operator shall recognize its own assets and its share of any assets held jointly, itsliabilities and its share of any liabilities incurred jointly, its revenue from the sale of its share ofthe output arising from the joint operation, its share of the revenue from the sale of the output bythe joint operation; and its expenses, including its share of any expenses incurred jointly. When anentity enters into a transaction with a joint operation in which it is a joint operator, such as a saleor contribution of assets, it is conducting the transaction with the other parties to the jointoperation and, as such, the joint operator shall recognize gains and losses resulting from such atransaction only to the extent of the other parties’ interests in the joint operation.
8. Cash and cash equivalent
The cash listed on the cash flow statements of the Group refers to cash on hand and bank deposit.The cash equivalents refer to short-term (normally with original maturities of three months or less)and liquid investments which are readily convertible to known amounts of cash and subject to aninsignificant risk of changes in value.
9. Translation of foreign currency
(1) Foreign currency transaction
Foreign currency transactions are translated at the spot exchange rate issued by People’s Bank ofChina (“PBOC”) on the 1
st
day of the month when the transactions incurred. Monetary assets and
liabilities in foreign currencies are translated into RMB at the exchange rate prevailing at thebalance sheet day. Exchange differences arising from the settlement of monetary items are chargedas in profit or loss for the period. Exchange differences of specific borrowings related to theacquisition or construction of a fixed asset should be capitalized as occurred, before the relevantfixed asset being acquired or constructed is ready for its intended uses.
(2) Translation of foreign currency financial statements
The asset and liability items in the foreign currency balance sheet should be translated at a spotexchange rate at the balance sheet date. Among the owner’s equity items except “undistributedprofit”, others should be translated at the spot exchange rate when they are incurred. The incomeand expense should be translated at spot exchange rate when the transaction incurs. Translationdifference of foreign currency financial statements should be presented separately under the othercomprehensive income title. Foreign currency cash flows are translated at the spot exchange rateon the day when the cash flows incur. The amounts resulted from change of exchange rate arepresented separately in the cash flow statement.
10. Financial assets and financial liabilities
A financial asset or liability is recognized when the Company becomes a party to a financialinstrument contract.
(1) financial assets
1) classification, confirmation basis and measurement method of financial assetsAccording to the business model of financial assets and the contractual cash flow characteristicsof financial assets, the Company classifies financial assets as financial assets measured atamortized cost, financial assets measured at fair value and its changes included in othercomprehensive income, and financial assets measured at fair value and its changes included incurrent profit and loss.The Company classifies the financial assets that meet the following conditions as financial assetsmeasured by amortized cost: (1) the business model of managing the financial assets is to collectcontract cash flow as the target. (2) the contractual terms of the financial asset provide that thecash flow generated on a given date is only the payment of the principal and the interest based onthe outstanding principal amount. Such financial assets shall be initially measured according totheir fair value, and relevant transaction expenses shall be included in the initial recognizedamount; To carry on the follow-up measurement with the amortized cost. Unless it is designatedas a hedged item, the difference between the initial amount and the amount due shall be amortizedaccording to the effective interest rate method, and the amortization, impairment, exchange gainsor losses, as well as the profits or losses arising from the termination of recognition, shall berecorded into the current profits and losses.The Company classifies the financial assets that meet the following conditions at the same time asfinancial assets that are measured at fair value and whose changes are included into other
comprehensive income: the contractual terms of the financial asset provide that the cash flowgenerated on a given date is only the payment of the principal and the interest based on theoutstanding principal amount. Such financial assets shall be initially measured according to theirfair value, and relevant transaction costs shall be included in the initial recognized amount. Inaddition to the designated hedged item, other gains or losses of such financial assets, other thancredit impairment losses or gains, exchange gains or losses and interest on such financial assetscalculated according to the actual interest rate method, shall be counted into other comprehensiveincome; When the recognition of financial assets is terminated, the accumulated gains or lossespreviously recorded in other comprehensive income shall be transferred out of othercomprehensive income and recorded into current profits and losses.In addition to financial assets measured at amortized cost and financial assets measured at fairvalue and whose changes are included in other comprehensive income, the Company classifiesfinancial assets measured at fair value and whose changes are included in current profits andlosses. Such financial assets are initially measured in accordance with their fair value, and relevanttransaction costs are directly recorded into current profits and losses. Gains or losses of suchfinancial assets shall be recorded into current profits and losses.Where the contingent consideration recognized by the Company in the business combination notunder the same control constitutes financial assets, such financial assets are classified as financialassets measured at fair value and whose changes are recorded into current profits and losses.
2) confirmation basis and measurement method of financial asset transfer
The contractual right to receive the cash flow of the financial asset terminates; (1) the financialassets have been transferred, and the Company on the ownership of financial assets almost all therisks and rewards transferred to the transferee; (2) the financial assets have been transferred,although the Company has not transferred nor retained the ownership of financial assets almost allthe risks and rewards, but gave up the control of the financial assets.If the enterprise has neither transferred nor retained nearly all the risks and rewards of theownership of the financial asset, nor has given up its control over the financial asset, the relevantfinancial asset shall be recognized according to the extent of its continued involvement in thetransferred financial asset, and the relevant liabilities shall be recognized accordingly.Where the overall transfer of financial assets meets the conditions for termination of recognition,the difference between the book value of the transferred financial assets and the sum of theconsideration received for the transfer and the accumulated amount of changes in fair valueoriginally recorded in other comprehensive income shall be recorded into current profits andlosses.The transfer of a financial asset part meet the recognition criteria of termination, will be the entirebook value of the transferred financial asset, between the parts and not terminate qualificationrecognition has been stopped, apportion them according to their relative fair value, and will bereceived by transfer of value and share to terminate identified previously included in the other part
of the sum of the changes in fair value of the accumulative amount of comprehensive income, andapportion the carrying amount of the balance into the profits and losses of the current period.
3) test method and accounting treatment method of impairment of financial assetsThe Company takes into account all reasonable and justified information, includingforward-looking information, to estimate the expected credit losses of financial assets measured atamortized cost and financial assets measured at fair value and whose changes are included in othercomprehensive income in a single or combined manner. The measurement of expected creditlosses depends on whether the credit risk of financial assets increases significantly after the initialrecognition. If the credit risk of the financial instrument has increased significantly since the initialconfirmation, the Company shall measure the loss provision according to the amount equivalent tothe expected credit loss of the financial instrument during the whole duration; If the credit risk ofthe financial instrument does not increase significantly since the initial confirmation, the Companyshall measure the loss provision according to the amount equivalent to the expected credit loss ofthe financial instrument in the next 12 months. An increase or refunded amount of the lossprovision thus incurred is recorded as an impairment loss or gain in the current profit or loss. Inaddition to the financial assets measured by fair value and whose changes are recorded into thecurrent profits and losses, the Company shall check the carrying value of other financial assets onthe balance sheet date. If there is objective evidence that a certain financial asset has animpairment, the Company shall make an impairment provision.
(2) financial liabilities
1) classification, confirmation basis and measurement method of financial liabilitiesThe Company's financial liabilities are classified as financial liabilities and other financialliabilities measured at fair value and whose changes are recorded into current profits and losses atthe initial recognition.Financial liabilities measured at fair value and whose changes are included in current profit andloss include trading financial liabilities and financial liabilities designated as measured at fairvalue and whose changes are included in current profit and loss when initially recognized.According to the subsequent measurement of fair value, the profit or loss generated by the changeof fair value and the dividend and interest expenditure related to the financial liability are recordedinto the current profit and loss.Other financial liabilities shall be measured in accordance with the amortized cost using the realinterest rate method.
2) conditions for the termination of recognition of financial liabilities
When the present obligation of a financial liability has been discharged in whole or in part, therecognition of the discharged part of such financial liability or obligation shall be terminated. If anagreement is signed between the Company and its creditors to replace the existing financialliabilities by assuming the new financial liabilities, and the contract terms of the new financial
liabilities are substantially different from those of the existing financial liabilities, the existingfinancial liabilities shall be terminated and the new financial liabilities shall be recognized at thesame time. If the Company substantially modifies all or part of the contract terms of the existingfinancial liabilities, it shall terminate the recognition of the existing financial liabilities or partthereof and at the same time recognize the financial liabilities after the modified terms as a newfinancial liability. The difference between the book value of the part recognized after terminationand the consideration paid shall be recorded in current profits and losses.
(3) the method to determine the fair value of financial assets and financial liabilitiesThe financial assets and liabilities measured by fair value of the Company have financial assets orliabilities in active market, and the fair value is determined by the quotation of active market; Thefair value of financial assets or liabilities without active market is determined by valuationtechnique. At the time of valuation, the Company adopts valuation techniques that are applicablein the current situation and are supported by sufficient available data and other information. Theinput value used in the fair value measurement is divided into three levels. The input value of thefirst level is the unadjusted quotation of the same asset or liability that can be obtained on themeasurement date in the active market. The input value of the second level is the directly orindirectly observable input value of related assets or liabilities except the input value of the firstlevel. The input value of the third level is the unobservable input value of the related asset orliability. The level of the fair value measurement results is determined by the lowest level of theinput values that are of great significance to the fair value measurement as a whole.
(4) the offset of financial assets and financial liabilities
The financial assets and financial liabilities of the Company shall be shown separately in thebalance sheet and shall not be set off against each other. (1) the Company has the legal right tooffset the recognized amount, and such legal right is currently enforceable; (2) the Company plansto make net settlement or realize the financial assets and pay off the financial liabilities at thesame time.
11. Accounts receivable
The Group shall review the carrying amount of receivables fully at the balance sheet date. TheGroup shall calculate the full provision for bad debts for the following receivables: debtor hasbeen log-out, bankruptcy, minus net asset, significant poor cash flow and significant naturedisaster leads to discontinue production and the debtors could not pay for the debts within theforeseeable time. Other solid evidences indicates that the receivables could not be paid or be of aslim chance.The allowance method is applied to the potential loss of bad debt. The Group should make theimpairment test individually or group and accrue the bad debt provisions which shall be recordedinto current profit or loss at the end of the period. If there is defined evidence for the receivablesnot to or not likely to be received, which shall be recognized as the loss of bad debt and write offthe accrued bad debts provisions after going through the approval procedure of the Group.
(1) Individually significant amounts of accounts receivable accrued bad debt provision as perportfolioJudgment basis or amount standards ofindividually significant amounts
Top 5 of account receivables at year endThe accruing method of the receivableswith individually significant amounts
The bad debt provisions shall be accrued based on
the difference between current value of future cash
flow and the carrying amounts.
(2) Accounts receivable accrued bad debt provision by credit risk portfolio
The basis of portfolioInter-company
Accounts receivable due from subsidiaries
included in consolidated scopeAccounting aging
Other than accounts receivable due from
subsidiaries included in consolidated scope and
individual receivable with significant amount
without impairment, use the accounting aging of
the receivablesThe basis of bad debt provisionInter-company Individual identified methodAccounting aging Age analysis methodThe percentage of provision for bad debts based on the age of receivables as followings:
Accounting aging Accrual percentage of the
receivables (%)
Accrual percentage ofother receivables (%)Within 1 year 5 51-2 years 10 102-3 years 30 303-4 years 50 504-5 years 80 80Over 5 years 100 100
(3) Individually insignificant amount accounts receivable but accrued bad debt provision as perportfolioAccrual reason
The individual amount is not significant, but the accrued bad debt provisionon the basis of portfolio can not reflect its risk characteristicAccrual method
The bad debt provisions should be accrued based on the difference betweencurrent value of future cash flow and the carrying amount.
12. Inventories
Inventories are materials purchasing, raw material, variance of cost materials, low-valuableconsumable, materials processed on commission, working-in-progress, semi-finished goods,variance of semi-finished goods, and finished goods, engineering construction etc.
The inventories are processed on perpetual inventory system, and are measured at their actualcost on acquisition. Weighted average cost method is taken for measuring the inventorydispatched or used. Low value consumables and packaging materials is recognized in the incomestatement by one-off method.After yearend thorough inventory check, at the balance sheet date inventory impairment should beprovided or adjusted according to inventory category. For the finished goods, raw material heldfor sale etc which shall be sold directly, the net realizable value should be confirmed at theestimated selling price less estimated selling expenses and related tax and expenses. The rawmaterial held for production, its realizable value should be confirmed at the estimated selling priceof finished goods less estimated cost of completion, estimated selling expenses and related tax.The net realizable value of inventories held for execution of sale contracts or labor contracts shallbe calculated based on the contract price. If the quantities of inventories in the Group are morethan quantities if inventories subscribed in the sales contracts, the net realizable value of theexcessive part of the inventories should be calculated based on the general selling price. When theimpairment indicators disappear, impairment provision shall be reversed and
13. Held for sale
（1） Any non-current assets or disposal group shall be classified as held for sale if the followingcriteria are met: according to the similar transactions for selling such assets or disposal group ⑴in practice, the assets must be available for immediate sale under current condition. The sale is ⑵highly probable with decision made on a probable selling proposal and the firm purchasecommitment has been obtained, the sale is expected to be completed within one year. Certainregulations request that approvals must be given by relevant authority or supervision regulatorbefore the assets can be sold. Prior to the assets initially classified as held for sale or disposalgroup, the carrying amounts of the asset(or all the assets and liabilities in the disposal group) shallbe measured in accordance with applicable accounting standards. The Company shall recognize animpairment loss and account it in to income statement for the current period, for any initial orsubsequent write- down of the asset(or disposal group) to its fair value less costs to sell if thecarrying amount is higher than its fair value less costs to sell. In the meantime, provision for assetsimpairment shall be made.
（2） The Company acquires a non-current asset(or disposal group) exclusively with a view to itssubsequent resale, it shall be classified as held for sale at the acquisition date only if the conditionof “expected sale can be completed within one year” can be met and also other conditions ofclassified as held for sale can highly probably be met within a short period following theacquisition(usually with three months). When measuring a newly acquired asset(or disposal group)meeting the criteria to be classified as held for sale, it shall be measured at the lower of itscarrying amount had it not been so classified and fair value less costs to sell. Except thenon-current assets or disposal group acquired as part of a business combination, the differencebetween its fair value less costs to sale and initial carrying amount is recognized in the incomestatement.
（3） The Company that loss of control of a subsidiary due to a sale plan of its investment shallclassify its subsidiary planned for sale as a whole as held for sale in the single financial statementof the parent only if the investment in subsidiary meets the criteria of held for sale, regardless ofwhether the Company will retain a proportion of equity interest in its former subsidiary after sale,and classify all assets and liabilities of the subsidiary as held for sale in the consolidated financialstatements
（4） The Company shall recognize a gain for any subsequent increase in fair value less costs tosell of an asset and shall reverse the impairment to the extent that previously recognized whenbeing classified as held for sale, the revisable amount is recognized in the income statement forthe period. Any impairment from the period when the assets are not classified as held for sale cannot be reversed.
（5） The impairment loss recognised for a disposal group shall reduce the carrying amount ofgoodwill of disposal group first, and then reduce the carrying amount of the non-current assetsbased on its proportion on the book.The Company shall recognize a gain for any subsequent increase in fair value less costs to sell of adisposal group and shall reverse the impairment to the extent that previously recognized whenbeing classified as held for sale, in accordance with applicable measuring standards, the revisableamount is recognized in the income statement for the period. Any impairment from the periodwhen the assets are not classified as held for sale and reduced goodwill can not be reversed.For any subsequently reversed amount, after the impairment loss is recognized for held for saledisposal group, the Company shall increase the carrying amount of disposal group based on theproportion of carrying amount of non-current assets excluding goodwill.
（6） Non-current assets classified as held for sale or disposal group shall not be depreciated oramortized, interest and other expenses attributable to the liabilities of a disposal group classifiedas held for sale shall continue to be recognized.
（7） When held for sale assets or disposal group can not meet the criteria for held for saleclassification so that they are not recognized as held for sale or non-current asset will be removedfrom disposal group, they shall be measured at the lower of the following amounts: carrying ⑴amount of assets prior to it classified as held for sale, which is the amount after depreciation,amortization or impairment adjustment as it had not been classified as held for sale ;
recoverable amount.⑵When the Company derecognizes the held for sale assets or disposal group, the remainingunrecognized gain or loss shall be accounted in the income statement.
14. Long-term equity investment
Long term equity investments are the investment in subsidiary, in associated company and in jointventure.
Joint control is the contractual agreement sharing of control over an economic activity by allparticipants or participants’ combination and decisions or policies relating to the operating activityof the entity require the unanimous consent of the parties sharing the control.Significant influence exists when the entity directly or indirectly owned 20% or more but less than50% shares with voting rights in the investee company. If holding less than 20% voting rights, theentity shall also take other facts or circumstances into accounts when judging any significantinfluences. Factors and circumstances include: representation on the board of directors orequivalent governing body of the investee, participation in financial or operating activitiespolicy-making processes, material transactions between the investor and the investee, interchangeof managerial personnel or provision of essential technical information.When control exists over an investee, the investee is a subsidiary of an entity. The initialinvestment cost for long-term equity investment acquired through business combination undercommon control, is the carrying amount presented in the consolidated financial statements of theshare of net assets at the combination date in the acquired company. If the carrying amount of netassets at the combination date in the acquired company is negative, investment shall be recognizedat zero.If the equity of investee under common control is acquired by stages and business combinationincurs in the end, an entity shall disclose the accounting method for long-term equity investmentin the parent financial statement as a supplemental. For example, if the equity of investee undercommon control is acquired by stages and business combination incurs in the end, and it’s abundled transaction, the entity shall regard all transactions as a one for accounting. If it’s not abundled transaction, the carrying amount presented in the consolidated financial statements of theshare of net assets at the combination date in the acquired company since acquisition isdetermined as for the initial cost of long-term equity investment. The difference between the costinitially recognized and carrying amount of long-term equity investment prior to the businesscombination plus the newly paid consideration for further share acquired, and capital reserve shallbe adjusted accordingly. If no enough capital reserve is available for adjustment, retain earningsshall be adjusted.If long-term equity investment is acquired through business combination not under commoncontrol, initial investment cost shall be the combination cost.If the equity of investee not under common control is acquired by stages and businesscombination incursion the end, an entity shall disclose the accounting method for long-term equityinvestment in the parent financial statement as a supplemental. If the equity investment of investeenot under common control is acquired by stages and business combination incursion the end, andit’s a bundled transaction, the entity shall regard all transactions as a one for accounting. If it’s nota bundled transaction, the carrying amount of the equity investment held previously plus newlyincreased investment cost are taken as the initial investment cost under cost model. If equityinvestment is held under equity method before the acquisition date, other comprehensive incomeunder equity method previously shall not be adjusted accordingly. When disposing of the
investment, the entity shall adopt the same basis as the investee directly disposing of related assetsor liability for accounting treatment. Equity held prior to acquisition date as available for salefinancial assets under fair value model, accumulated change on fair value previously recorded inother comprehensive shall be transferred into investment gain/loss for the period.Apart from the long-term equity investments acquired through business combination mentionedabove, the cost of investment for the long-term equity investments acquired by cash payment isthe amount of cash paid. For long-term equity investment acquired by issuing equity instruments,the cost of investment is the fair value of the equity instrument issued. For long-term equityinvestment injected to the entity by the investor, the investment cost is the consideration asspecified in the relevant contract or agreement.The Group adopts cost method to account for investment in subsidiary and equity method forinvestment in joint venture and affiliate.Long-term equity investment subsequently measured under cost model shall increase the carryingamount of investment by adjusting the fair value of additional investment and relevant transactionexpenses. Cash dividend or profit declared by investee shall be recognized as investment gain/lossfor the period based on the proportion share in the investee.Long-term equity investment subsequently measured under equity method shall be adjusted for itscarrying amount according to the share of equity increase or decrease in the investee. The entityshall recognize its share of the investee’s net profits or losses based on the fair value of theinvestee’s individual identifiable assets at the acquisition date, after making appropriateadjustments thereto in conformity with the accounting policies and accounting period, andoffsetting the unrealized profit or loss from internal transactions entered into between the entityand its associates and joint ventures according to the shareholding attributable to the entity andaccounted for as investment income and loss based on such basis.On disposal of a long-term equity investment, the difference between the carrying value and theconsideration actually received is recognized as investment income for the period. For long-terminvestments accounted for under equity method, the movements of shareholder’s equity, other thanthe net profit or loss, of the investee company, previously recorded in the shareholder’s equity ofthe Company are recycled to investment income for the period on disposal.Where the entity has no longer joint control or significant influence in the investee company as aresult of partially disposal of the investment, the remaining investment will be changed to beaccounted for as available for sale financial assets, and the difference between the fair value ofremaining investment at the date of losing joint control or significant influence and its carryingamount shall be recognized in the profit or loss for the year. Other comprehensive incomerecognized from previous equity investment under equity model shall be accounted for on thesame basis as the investee directly disposing of related assets or liability when stopping usingunder equity model.Where the entity has no longer control over the investee company as a result of partially disposal
of the investment, the remaining investment will be changed to be accounted for using equitymethod providing remaining joint control or significant influence over the investee company. Thedifference between carrying amount of disposed investment and consideration received actuallyshall be recognized in the profit and loss for the period as investment gain or loss, and investmentshall be adjusted accordingly as if it was accounted for under equity model since acquisition.Where the entity has on longer joint control or significant influence in the investee as a result ofdisposal, the investment shall be changed to be accounted for as available for sale financial assets,and difference between the carrying amount and disposal consideration shall be recognized inprofit and loss for the period, and the difference between the fair value of remaining investment atthe date of losing control and its carrying amount shall be recognized in the profit or loss for theyear as investment gain or loss.If the entity loses its control through partially disposal of investment by stages and it’s not abundled transaction, the entity shall account for all transactions separately. If it’s a bundledtransaction, the entity shall regard all transactions as one disposal of subsidiary by losing control,but the difference between disposal consideration and carrying amount of the equity investmentdisposed prior to losing control, which arises from each individual transaction shall be recognizedas other comprehensive income until being transferred into profit and loss for the period by thetime of losing control.
15. Investment property
The investment property includes property and building and measured at cost modelCategory
Useful life
(years)
Estimated netresidual value rate
Annual depreciation rate
Housing and Buildings 40 3% 2.43%
16. Fixed assets
Recognition criteria of fixed assets: defined as the tangible assets which are held for the purposeof producing goods, rendering services, leasing or for operation & management, and have morethan one year of useful life.Fixed assets shall be recognized when the economic benefit probably flows into the Group and itscost can be measured reliably. Fixed assets include: building, machinery, transportation equipment,electronic equipment and others.All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and are stillbeing used and land is separately measured. Straight-line depreciation method is adopted by theGroup. Estimated net residual value rate, useful life, depreciation rate as follows:
No Category
Useful life
(years)
Estimated netresidual value rate
Annualdepreciation rate
1 Housing and Buildings 20-40
3%,5%,10%
2.25-4.85%
2 Machinery equipment 10-22
3%,5%,10%
4.09-9.7%
3 Transportation equipment 4-15
3%,5%,10%
6-24.25%
4 Electronic equipment 5
3%,5%,10%
18-19.4%
5 Others equipment 10-15
3%,5%,10%
6-9.7%
The Group should review the estimated useful life, estimated net residual value and depreciationmethod at the end of each year. If any change has occurred, it shall be regarded as a change in theaccounting estimates.
17. Construction in progress
The criteria and time spot of constructions in progress’s being transferred to fixed assets:
Constructions in progress are carried down to fixed assets on their actual costs when completingand achieving estimated usable status. The fixed assets that have been completed and reachedestimated usable status but have not yet been through completion and settlement procedures arecharged to an account according to their estimate values; adjustment will be conducted uponconfirmation of their actual values. The Group should withdraw depreciation in the next monthafter completion.
18. Borrowing costs
The borrowing cost includes the interest expenses of the borrowing, amortization of underflow oroverflow from borrowings, additional expenses and the foreign exchange profit and loss becauseof foreign currency borrowings. The borrowing costs incurred which can be directly attribute tothe fixed assets, investments properties, inventories requesting over 1 year purchasing ormanufacturing so to come into the expected condition of use or available for sale shall start to becapitalized when expenditure for the assets is being occurred, borrowing cost has occurred,necessary construction for bringing the assets into expected condition for use is in progress. Theborrowing costs shall stop to be capitalized when the assets come into the expected condition ofuse or available for sale. The borrowing costs subsequently incurred should be recorded into profitand loss when occurred. The borrowing costs should temporarily stop being capitalized whenthere is an unusual stoppage of over consecutive 3 months during the purchase or produce of thecapitalized assets, until the purchase or produce of the asset restart.The borrowing costs of special borrowings, deducting the interest revenue of unused borrowingskept in the bank or the investment income from transient investment should be capitalized. Thecapitalized amount of common borrowings should be calculated as follows: average assetsexpenditure of the accumulated assets expenditure excess the special borrowing, multiplied by thecapital rate. The capital rate is the weighted average rate of the common borrowings.
19. Intangible assets
The intangible assets of the Group refer to land use right and software. For acquired intangibleassets, the actual cost are measured at actual price paid and relevant other expenses. The costinvested into intangible assets by investors shall be determined according to the stated value in the
investment contract or agreement, except for those of unfair value in the contract or agreement.Land use right shall be amortized evenly within the amortization period since the remiseddate.ERP system software and other intangible assets are amortized over the shortest of theirestimated useful life, contractual beneficial period and useful life specified in the law.Amortization charge is included in the cost of assets or expenses, as appropriate, for the periodaccording to the usage of the assets. At the end of the year, for definite life of intangible assets,their estimated useful life and amortization method shall be assessed. Any change shall be treatedas change on accounting estimate.
20. Impairment of long-term assets
The Group assesses at each balance sheet date whether there is any indication that long-termequity investments, investment property, fixed assets, construction in progress and intangibleassets with definite useful life may be impaired. If there is any indication that an asset may beimpaired, the asset will be tested for impairment. Goodwill arising in a business combinationand intangible asset with infinite useful life are tested for impairment annually no matter there isany indication of impairment or not.Estimate of recoverable amount is the higher of its fair value less costs to sell and the presentvalue of the future cash flows expected to be derived from the asset.If the recoverable amount of an asset is less than its carrying amount, the carrying amount shall beimpaired and the difference is recognised as an impairment loss and charged to profit or loss forthe period. Once an impairment loss on the assets is recognised, it is not reversed in a subsequentperiod.After assets impairment loss is recognized, depreciation and amortisation of the impaired assetshall be adjusted in the following period so that the adjusted carrying amount(less expectedresidual value) can be depreciated and amortised systematically within the remaining life.When assessing goodwill for impairment, the carrying amount of goodwill shall be allocatedevenly to the assets group or assets portfolio. When testing the assets group or assets portfolioincluding goodwill, if there is any indication of impairment , ignoring the goodwill and testingthe assets group or assets portfolio alone so to work out the recoverable amount and comparing toits carrying amount and recognize the impairment loss. After that, testing the assets group or assetsportfolio with goodwill together, comparing the carrying amount of the assets group or assetsportfolio(including goodwill allocation) with recoverable amount , goodwill impairment shall berecognized when the recoverable amount is lower than its carrying amount.
21. Long-term deferred expenses
Long-term deferred expenses of the Group refer to leasing expenses, redecoration expense andothers. The expenses should be amortized evenly over the beneficial period. If the deferredexpense cannot take benefit for the future accounting period, the unamortized balance of thedeferred expenses should be transferred into the current profit or loss. Leasing expenses will be
amortized within 10 years and 30years; redecoration expense and others will be amortizedwithin 3 years.
22. Employee benefits
Employee’s benefit comprises short-term benefit, post-employment benefit, termination benefitand other long-term employee’s benefit.Short-term benefit includes salary, bonus, allowance, welfare, social insurance, housing funds,labour union expense, staff training expense, during the period in which the service rendered bythe employees, the actually incurred short term employee benefits shall be recognized as liabilityand shall be recognized in P&L or related cost of assets based on benefit objective allocated fromthe service rendered by employees.Post-employment benefits include the basic pension scheme and unemployment insurance etc.Based on the risk and obligation borne by the Group, post-employment benefits are classified intodefined contribution plan and defined benefit plan. For defined contribution plan, liability shall berecognized based on the contributed amount made by the Group to separate entity at the balancesheet date in exchange of employee service for the period and it shall be recorded into currentprofit and loss account or relevant cost of assets in accordance with beneficial objective.Termination benefits are employee’s benefit payable as a result of either an entity’s decision toterminate an employee’s employment before the contract due date or an employee’s decision toaccept voluntary redundancy in exchange for those benefits. An entity shall recognize thetermination benefits as a liability and an expense at the earlier date when the entity cannotunilateral withdraw the termination benefits due to employment termination plan or due toredundancy suggestion, or when the entity can recognize the restructuring cost or expense arisingfrom paying termination benefits.Other long-term employee’s benefit refers to all other employee benefits other than short-termbenefit, post-employment benefit and termination benefit.If other long-term employee’s benefit is qualified as defined contribution plan, contribution madeshall be recognized as liabilities accordingly for the period in which the service are rendered bythe employee and recognized in the profit or loss for the current period or relevant cost of assets.Except other long-term employee’s benefit mentioned above, obligation arising from definedbenefit plan shall be recognized in the profit or loss for the current period or relevant cost of assetsin accordance with the period when the service are rendered by the employee.
23. Contingent liabilities
When the Company has transactions such as commitment to externals, discounting the tradeacceptance, unsettled litigation or arbitration which meets the following criterion, provisionshould be recognized: It is the Company's present obligation; carrying out the obligation willprobably cause the Company's economic benefit outflow; the obligation can be reliably measured.Provision is originally measured on the best estimate of outflow for paying off the present
obligations, and to consider the risk, uncertainty, time value of monetary relevant to contingentitems. If the time value of monetary is significant, the best estimate will be determined bydiscounted cash outflow in the future. At each balance sheet date, the book value of provision isreviewed and adjustment will be made on the book value if there is any change, in order to reflectthe current best estimate.When compensation from the 3rd party is expected for full or partial contingent liabilitysettlement, the compensation shall be recognized as an asset separately and measured at no morethan the book value of contingent liability.
24. Share based payment
An equity-settled share-based payment in exchange for the employee’s services is measured at thefair value at the date when the equity instruments are granted to the employee. Such fair valueduring the vesting period of service or before the prescribed exercisable conditions are achieved isrecognised as relevant cost or expense on a straight-line during the vesting period based on thebest estimated quantity of exercisable equity instruments, accordingly increase capital reserve.A cash-settled share-based payment is measured at the fair value at the date at which the Groupincurred liabilities that are determined based on the price of the shares or other equity instruments.If it is immediately vested, the fair value of the liabilities at the date of grant is recognised asrelevant cost or expense, and corresponding liabilities. If it is exercisable only when the vestingperiod of service is expired or the prescribed conditions are achieve, the fair value of liabilitiesundertaken by the Group are re-measured at each balance sheet date based on the best estimate ofexercisable situation.The fair value of the liabilities is re-measured at each balance sheet date. Any changes arerecognised in the profit or loss for the year.If the granted equity instruments are cancelled within the vesting period, the equity instrumentshall be treated as accelerated vesting and the balance linked to the remaining vesting period shallbe recognized in the profit or loss account, accordingly be recognized in the capital reserve. Ifemployees or other parties can choose but fail to satisfy non-vesting conditions during the vestingperiod, the Company sees this as cancellation of granted equity instruments.
25. Principle of recognition of revenue
The revenue of the Group is mainly from selling goods, providing labor services and alienatingthe right of use assets and construction contracts. Recognition standards for revenue are as below:
The revenue from selling goods: Company has transferred all the significant risks and rewards ofthe ownership of the goods to the buyers, and retains neither continuing managerial involvementto the degree usually associated with ownership nor effective control over the goods sold. Therelative sale proceeds have been reliably measured, respective economic benefit probably inflowto the Company, and the incurred or incurring cost can be reliably measured, and then the revenuecan be recognized.
In the reporting period, revenue recognition point and principle: goods is dispatched fromwarehouse, client has no dispute on the quantity and quality of the goods, client collected orauthorized the agent to collect the good and sales amount is confirmed, have collected or expectedto collect the payment, cost of goods can be reliably measured, risk and reward is transferred sothe revenue is recognized.Complete sets of engineering projects, if selling products and building installation part can beseparated and can be measured separately, selling products will be treated as sales of products.Selling products and building installation will not be able to be distinguished, or can bedistinguished but can't be separately measured, selling products and building installation will beall treated as building installation.The service revenue should be recognized when the outcome of the services can be estimatedreliably.The outcome of the services can be estimated reliably means the following conditions must besatisfied at the same time:
Amount can be measured reliablyRelevant economic benefit probably flow into the CompanyThe stage of completion of the service can be estimated reliablyCost incurred or expect to incur in the transaction can be measured reliablyTotal service income shall be recognized according to the price agreed in the contract oragreement which has been settled or to be settled unless the price is not fair. Service revenue forthe current period shall be recognized based on the figure worked out on the total income multiplyby the percentage of completion of the service after deducting the service revenue recognized inthe prior period at the balance sheet and accordingly recognized the cost based on the figureworked out on the total cost multiply by the percentage of completion of the service afterdeducting the service cost recognized in the prior period.At the balance sheet date, if outcome of the service cannot be estimated reliably, the treatmentshall apply respectivelyCosts incurred may be probably recovered, revenue is recognized only to the extent of costsincurred that are expected to be recoverable, and costs shall be recognized as an expense in theperiod in which they are incurredCosts incurred are not probable of being recovered, then these cost incurred are recognized as anexpense immediately, no revenue shall be recognized.In the case that selling goods and rendering service are both included in the agreements orcontracts, when selling products and rendering service part can be separated and can be measuredseparately, selling products will be treated as sales of products. Selling products and renderingservice will not be able to be distinguished, or can be distinguished but can't be separately
measured; selling products and rendering service will be all treated as rendering service.Revenue from construction contractWhen the result of the construction contract is able to be evaluated reliably at the balance sheetdate, the income and cost of the contract are recognized on completion percentage basis.The result of the fixed price of construction contract can be estimated reliably means the followingconditions must be satisfied at the same time:
Amount can be measured reliablyRelevant economic benefit probably flow into the CompanyCost actually incurred can be well distinguished and measured reliablyThe stage of completion and the cost expected to incur for the completion of the contract can beestimated reliablyThe result of the cost plus of construction contract can be estimated reliably means the followingconditions must be satisfied at the same time:
Relevant economic benefit probably flow into the CompanyCost actually incurred can be well distinguished and measured reliablyConstruction contract income for the current period shall be recognized based on the figureworked out on the total contracted income multiply by the percentage of completion of theconstruction after deducting the revenue recognized in the prior period at the balance sheet dateand accordingly recognized the cost based on the figure worked out on the total expected costmultiply by the percentage of completion of the construction after deducting the construction costrecognized in the prior period. Construction contract income is recognized to the extend where thechange of the contract, claim for compensation and bonus can bring the income and can bemeasured reliably.If the result of the construction contract is not able to be evaluated reliably, the treatment shallapply respectivelyIf contract cost maybe recovered, the income is recognized at the cost actually recovered, and thecost of the contract is recognized as contract expenses of the current period when it is occurred.If contract cost may not be recovered, the cost of the contract shall be recognized as contractexpenses when incurred, and no contract revenue shall be recognized.In case the expected total cost is greater than the total income, the expected loss will berecognized as expense of the current period immediately..26 Government grants
A government grant shall be recognized when the Company complies with the conditionsattaching to the grant and when the Company is able to receive the grant.
Assets-related government grant is the government fund obtained by the Company for thepurpose of long-term assets purchase and construction or establishment in the other forms.Income-related grants are the grant given by the government apart from the assets-related grants.If no grant objective indicated clearly in the government documents, the Company shall judge itaccording to the principle mentioned above.Where a government grant is in the form of a transfer of monetary asset, it is measured at theamount received. Where a government grant is made on the basis of fixed amount or conclusiveevidence indicates relevant conditions for financial support are met and expect to probablyreceive the fund, it is measured at the amount receivable. Where a government grant is in theform of a transfer of non-monetary asset, it is measured at fair value. If fair value cannot bedetermined reliably, it is measured at a nominal amount of RMB1 Yuan.Assets-related government grants are recognized as deferred income ore directly offsetting thebook value of the asset, and Assets-related government grants recognized as deferred incomeshall be evenly amortized to profit or loss over the useful life of the related asset.Any assets are sold, transferred, disposed off or impaired earlier than their useful life expireddate, the remaining balance of deferred income which hasn’t been allocated shall be carriedforward to the income statement when the assets are disposed off.Income-related government grants that is a compensation for related expenses or losses to beincurred in subsequent periods are recognized as deferred income and credited to the relevantperiod when the related expense are incurred. Government grants relating to compensation forrelated expenses or losses already incurred are charged directly to the profit or loss for the period.Government grants related to daily business, shall be recognized as other income in accordancewith business nature, otherwise, shall be recognized as non-operating expenses.If any government grant already recognized needs to be returned to the government, theaccounting shall be differed according to the following circumstances:
1) originally recognized as offsetting of related assets' book value, assets book value shall be
adjusted
2) if any deferred income, book value of deferred income shall be offset, excessive portion
shall be accounted into income statement
3) Other situation, it shall be accounted into income statement directly.
27. Deferred tax assets and deferred tax liabilities
The deferred income tax assets or the deferred income tax liabilities should be recognizedaccording to the differences (temporary difference) between the carrying amount of the assets orliabilities and its tax base. Deferred tax assets shall be respectively recognized for deductible taxlosses that can be carried forward in accordance with tax law requirements for deduction oftaxable income in subsequent years. No deferred tax liabilities shall be recognized for anytemporary difference arising from goodwill initially recognition. No deferred tax assets or
liabilities shall be recognized for any difference arising from assets or liabilities initial recognitionon non-business combination with no effect on either accounting profit or taxable profit (ordeductible tax loss). At the balance sheet date, deferred tax assets and deferred tax liabilities aremeasured at the tax rates that are expected to apply to the period when the asset is realized orliability is settled.Deferred tax assets are recognized to the extent that it is probable that future taxable profit will beavailable to offset the deductible temporary difference, deductible loss and tax reduction.
28.Lease
The Company’s leasing business is operating lease.As a leasee, the lease premium shall be recognized in the cost of asset based on straight linemethod within the the period or directly to income statement.
29. Other significant accounting policies, accounting Estimates
When preparing the financial statements, the management needs to use accounting estimate andassumption, which will have effect on the application of accounting policy and amount of asset,liability, income and expense. The actual circumstance maybe differs from the estimates. Themanagement needs to continuously assess the key assumption involved by estimate and thejudgment on uncertainty. Effect on the accounting estimate shall be recognized during the periodwhen estimate is changed and in future.The following accounting estimate and key assumption will trigger the significant risk ofsignificant adjustment on the book value of asset and liability during the period of future.
（1） Impairment of receivable
Receivable is measured at amortized cost at the balance sheet date and assessed for anyimpairment indicator and the acutely amount of impairment. Objective evidence for impairmentincludes judgmental data of indicating significant decline of future cash flow of individual orgroup of receivable, indicating significant negative financial performance of debtors. Hadreceivable is recovered with certain proof, and in fact, it is relevant to the the matters subsequentto the the loss recognition, the impairment recognized before shall be reversed.
（2） Provision of inventory impairment
Inventory is periodically evaluated at the net realizable value and any cost higher than NRV shallbe recognized as inventory impairment loss. When evaluating the NRV, net realizable value isdetermined by deducting the expected selling expense and relative tax from the estimated sellingprice. When actual selling price or cost differs from the previous estimates, management willmake adjustment on NRV. Therefore, the results based on the present experience may differ fromthe actual results, which caused the adjustment on the carrying amount of inventory in the book.Provision for inventory impairment may vary with the above reasons. Any adjustment onprovision for inventory impairment will affect the income statement.
（3） Provision of goodwill impairment
Each year, goodwill shall be assessed for any impairment. Recoverable amount of assets groupor asset portfolio including goodwill shall be the present value of future cash flow, which needsestimates for calculation.If management adjust the gross profit margin adopted by the present value of future cash flowcalculation of assets group or asset portfolio, adjusted gross profit margin is lower than the marginapplied, the impairment is required.If management adjust the discounting rate before tax applied by the present value of future cashflow calculation of assets group or asset portfolio, adjusted discounting rate before tax is higherthan the rate applied, the impairment is required.If actual profit margin or discounting rate before tax is higher or lower than management’sestimate, any impairment recognized before can not be reversed.
（4） Provision of fixed asset impairment
At the balance sheet date, the management shall implement impairment test on buildings, plantand machinery etc which has any impairment indicator. The recoverable amount of FA is thehigher of PV of future cash flow and net value of fair value after disposal cost, the calculationneeds accounting estimate.If management adjust the gross profit margin adopted by the present value of future cash flowcalculation of assets group or asset portfolio, adjusted gross profit margin is lower than the marginapplied, the impairment is required.If management adjust the discounting rate before tax applied by the present value of future cashflow calculation of assets group or asset portfolio, adjusted discounting rate before tax is higherthan the rate applied, the impairment is required.If actual profit margin or discounting rate before tax is higher or lower than management’sestimate, any impairment recognized before can not be reversed.
（5） Recognition of deferred tax assets
Estimate on deferred tax assets needs making estimation of taxable income and applied tax rate inthe following years in future. Whether deferred tax asset can be realized depends on the enoughprobable taxable profit obtained in future. Tax rate change in future and the timing of temporarydifference reverse may also affect the income tax expense(income)and the balance of deferred tax.Any change of estimate described here will cause the deferred tax adjustment.
（6） Useful life span of fixed assets and intangible assets
At least every year end, the management shall review the useful life of FA and intangible assets.Expected useful life is based on the management’s experience on the same class of assets, withreference to the estimate applied in the industry in conjunction with expected technologydevelopment. When previous estimate significantly changed, depreciation and amortization in the
future shall be adjusted accordingly.
30. Changes in Accounting Policies, Accounting Estimates
(1) Change in significant accounting policies
1) March 2017, the Ministry of Finance, respectively, revised and issued the accountingstandards for enterprises No. 22 - recognition and measurement of financial instruments, theaccounting standards for enterprises No. 23 - transfer of financial assets, the accountingstandards for enterprises No. 24 - hedging accounting, the accounting standards forenterprises No. 37 - presentation of financial instruments such as the four related financialinstruments accounting standards (hereinafter generally referred to as the "rule of financialinstruments), in domestic and at the same time, listed companies and listed overseas andadopted international financial reporting standards accounting standards to prepare itsfinancial report or enterprises, effective as of January 1, 2018; Other domestic listedenterprises shall take effect from January 1, 2019. In accordance with the above requirements,the Company will implement the above four accounting standards from January 1, 2019.
2) On April 30, 2019, the Ministry of Finance issued the notice on revising and issuing the2019 annual general enterprise financial statement format (financial accounting [2019] No. 6),which revised the general enterprise financial statement format.The Company has prepared financial statements according to the requirements of the newfinancial statement format. If the items of presentation of financial statements are changed,the Company has adjusted the comparison data during the comparable period according to therelevant provisions of the accounting standards for enterprises No. 30 - presentation offinancial statements.
(2) Changes in accounting estimate
None( 3) New Financial Instruments Standards, New Income Standards and New Leasing Standardsfor the First Implementation Relevant to Financial Statements at the Beginning of the Year
| Before adjustment | After adjustment |
Consolidated Balance Sheet
31-Dec-2018
Consolidated Balance Sheet
1-Jan-2019
Finance asset held available for sales
382,186,729.99
Other non-current financial assets
382,186,729.99
Other comprehensive income296,909,965.55
Other comprehensive income2,501,459.77
Retained profit
764,859,288.45
Retained profit
1,059,267,794.23
Balance sheet of parent company
31-Dec-2018
Balance sheet of parent company
1-Jan-2019
Finance asset held available for sales
380,771,587.49
Othe non-current financial assets
380,771,587.49
Other comprehensive income
295,947,864.88
Other comprehensive income
1,539,359.10
Retained profit
640,251,261.47
Retained profit
934,659,767.25
According to the new financial instrument criteria, the original item of " Finance asset held availablefor sales " is adjusted to "other non-current financial assets"; Adjust the amount of othercomprehensive income 294,408,505.78 yuan, and adjust the amount of retained profit
294,408,505.78 yuan.VI. Taxation
1. The main applicable tax and rate to the Group as follows:
Tax Tax base Tax rateValue-added tax (VAT) Sales revenue or Purchase 17%,13%,11%,6%,5%,16%City construction tax Value-
tax
7%Education surcharge Value-
added tax payables, businessadded tax payables, business
tax
3%Local education surcharge Value-added tax payables,
business tax
2%Enterprise incometax(EIT)
Current period taxable profit 15%,25%Real estate tax
70% of cost of own property or
revenue from leasing property
1.2% or 12%
Land use tax Land using right area Fixed amount per square meterOther tax According to the relevant
provisions of the state and local
added tax payables, business
Notes for tax entities with different EIT rateTax entities EIT rate
Dalian Refrigeration Company 15%
Dalian Bingshan Group Engineering Co., Ltd. 25%Dalian Bingshan Group Sales Co., Ltd. 25%Dalian Bingshan Air-conditioning Equipment Co., Ltd. 15%Dalian Bingshan Guardian Automation Co., Ltd.
15%Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd.
25%Wuhan New World Refrigeration Industrial Co., Ltd.
15%Bingshan Technology Service （Dalian） Co.,Ltd.15%Dalian Bingshan Engineering&Trading Co.,Ltd
25%Dalian Universe Thermal Technology Co., Ltd.
15%Dalian New Meica Electronics Technology Co., Ltd
15%
2. Tax preference
The Company obtained the qualification of high and new technology enterprises on 29
th
November,2017 approved by Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State TaxBureau and Local tax Bureau.The Certificate No is GR201721200306, and the validity duration isthree years. According to the tax law, the Company can be granted for the preferential tax policy ofenterprise income tax rate of 15% in three years.
The Company’s subsidiary, Dalian Bingshan Air-conditioning Equipment Co., Ltd. obtained thequalification of high and new technology enterprises on 29
th
November, 2017 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR201721200279, and the validity duration is three years. Accordingto the tax law, it can be granted for the preferential tax policy of enterprise income tax rate of 15%in three years.The Company’s subsidiary, Dalian Bingshan Guardian Automation Co., Ltd. obtained thequalification of high and new technology enterprises on 16
th
November, 2018 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau.The Certificate No is GR20181200562, and the validity duration is three years. Accordingto the tax law, it can be granted for the preferential tax policy of enterprise income tax rate of 15%in three years.The Company’s subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd obtained thequalification of high and new technology enterprises on 15
th
November, 2018 approved by HubeiScience Technology Bureau, Hubei Finance Bureau, Hubei State Tax Bureau and Hubei Local taxBureau. The Certificate No is GR201842000605, and the validity duration is three years. Accordingto the tax law, it can be granted for the preferential tax policy of enterprise income tax rate of 15%in three years.The Company’s subsidiary, Bingshan Technology Service （Dalian） Co.,Ltd.. obtained thequalification of high and new technology enterprises on 29
th
November, 2017 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR2201721200155, and the validity duration is three years.According to the tax law, it can be granted for the preferential tax policy of enterprise income taxrate of 15% in three years.The Company’s subsidiary, Dalian Universe Thermal Technology Co., Ltd.. obtained thequalification of high and new technology enterprises on 29
th
November, 2017 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR2201721200108, and the validity duration is three years.According to the tax law,it can be granted for the preferential tax policy of enterprise income taxrate of 15% in three years.The Company’s subsidiary, Dalian New Meica Electrical Technology Co., Ltd obtained thequalification of high and new technology enterprises on 29
th
November, 2017 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR2201721200301, and the validity duration is three years.According to the tax law, it can be granted for the preferential tax policy of enterprise income taxrate of 15% in three years.VII. Notes to Consolidated Financial Statements
The following disclosure date on this financial statement without special indication, “opening”refers to January 1, 2019; “closing” refers to June 30, 2019; “current period” refers to the periodfrom January 1, 2019 to June 30, 2019; and “last period” refers to the period from January 1, 2018to June 30, 2018; with the currency unit RMB.
1. Cash and cash in bank
Item Closing Balance Opening BalanceCash on hand
78,153.94
74,387.33
Cash in bank
214,340,030.30
304,629,047.14
Other cash and cash equivalents
17,348,438.30
38,323,050.64
Total
231,766,622.54
343,026,485.11
Note: Other cash and cash equivalents is restricted, including deposit for bank acceptance notes of7,711,128.35 Yuan, guarantee deposit of 8,637,309.95Yuan, migrant deposit of 1,000,000.00Yuan,total of 17,348,438.30 Yuan. The closing balance of cash and cash in bank decreased 32.43%comparing with the opening balance, mainly due to the influence of net cash flows arising fromoperating activities.
2. Notes receivable
(1) Category of notes receivable
Items Closing Balance Opening Balance
Bank acceptance notes
73,910,827.42
50,386,649.84
Commercial acceptance notes
80,838,320.55
120,905,394.72
Total
154,749,147.97
171,292,044.56
(2) Pledged notes receivable up to June 30, 2019.
Items Closing pledged amount
Bank acceptance notes 29,013,709.30
Commercial acceptance notes
Total 29,013,709.30
(3) Notes receivable endorsed or discounted but not mature at the end of the reporting period.
Item Closing amount no more
recognized
Closing amount still
recognized
Bank acceptance notes 200,253,748.07
Commercial acceptance notes
Total 200,253,748.07
3. Accounts receivable
(1) Category of accounts receivable
Items
Closing BalanceBooking balanceProvision
Booking balance
Amount % Amount
%Accountsreceivable withsignificantindividual amountand separate baddebt provision
Accountsreceivable with baddebt provisionbased on thecharacters of creditrisk portfolio
1,444,801,399.21
100.00%
202,698,964.70
14.03%
1,242,102,434.51
Accountsreceivable withinsignificantindividual amountand separate baddebt provision
Total
1,444,801,399.21
100.00%
202,698,964.70
14.03%
1,242,102,434.51
(Continued)
Items
Opening balanceBooking balance Provision
Booking balanceAmount % Amount %Accountsreceivable withsignificantindividual amountand separate baddebt provision
Accountsreceivable with baddebt provisionbased on thecharacters of creditrisk portfolio
1,301,174,006.57
100.00%
193,627,418.27
14.88%
1,107,546,588.30
Accounts
receivable withinsignificantindividual amountand separate baddebt provision
Total
1,301,174,006.57
100.00%
193,627,418.27
14.88%
1,107,546,588.30
Items
Closing Balance
Booking balance
Provision
%
Expected credit losses within 1 year 775,309,916.81
38,765,495.84
5.00%
Expect credit losses of 1-2 years
460,205,744.74
46,020,574.48
10.00%
Expect credit losses of 2-3 years
87,846,886.11
26,354,065.84
30.00%
Expect credit losses of 3-4 years
50,008,726.43
25,004,363.22
50.00%
Expect credit losses of 4-5 years
24,378,299.00
19,502,639.20
80.00%
Expect credit losses more than 5 years
47,051,826.12
47,051,826.12
100.00%
Total
1,444,801,399.21
202,698,964.70
--
1) Accounts receivable with the bad debt provisions under accounting aging analysis method
Aging Closing BalanceWithin1 year775,309,916.81
11to 2 years
460,205,744.74
| 11to 2 years | |
87,846,886.11
| 22 to 3 years | |
More than 3 years 121,438,851.55
3 to 4 years50,008,726.43
4 to 5 years24,378,299.00
More than 5 years 47,051,826.12
Total1,444,801,399.21
2) Bad debt provision accrued and written-off (withdraw)
The bad debt provision has been accrued at the amount of 14,624,073.10Yuan during the reportperiod. Bad debt reversal or withdrawn incurred at the amount of 265,626.99 Yuan in the reportperiod.
3) Accounts receivable written off in current period
Item Written off amount
Receivable actually written off 5,818,153.66
(2) The top five significant accounts receivable categorized by debtors
Company
ClosingBalance
Aging
% of thetotal AR
ClosingBalance ofProvisionXinyi Yuanda construction andInstallation Engineering Co., Ltd.
32,748,744.00
1-2 years;2-3
years
2.27 5,750,623.20
Ningxia Wangwa Coal
29,847,967.00 Within 1 year 2.07 1,492,398.35
Shenzhen Zhaofude Tourismdevelopment
24,749,430.13 Within 1 year 1.71 1,237,471.51
Xiangyang Tongjitang Logistic
24,300,000.00 Within 1 year 1.68 1,215,000.00Dalian Thermal Power Co., ltd
22,320,000.00
Within 1 year
1.54 1,116,000.00
Total
133,966,141.13
9.27 10,811,493.06
4. Advances to suppliers
(1) Aging of advances to suppliers
Items
Closing Balance Opening BalanceAmount Percentage Amount PercentageWithin 1 year
121,778,186.62
71.70%
107,871,448.52
68.10%
1 to 2 years
26,886,437.49
15.83%
33,233,538.29
20.98%
2 to 3 years
18,508,823.51
10.90%
16,117,708.59
10.17%
Over 3 years
2,663,837.51
1.57%
1,182,605.10
0.75%
Total
169,837,285.13
158,405,300.50
Significant prepayment over 1 yearCompany
ClosingBalance
Aging
Unsettled Reasons
Dalian HOLLEY Coating Equipment Co., Ltd.
12,000,000
2-3 years
Contract is notfully implemented
Dalian Ganghe Trading Co.,Ltd
8,444,300.00
1-2 years
Contract is notfully implemented
Mitsubishi Heavy Industries Air ConditioningSystems (Shanghai) co. LTD
5,220,700.00
1-2 years
Contract is notfully implemented
Shanghai POMA Automation Equipment Co.,ltd
4,272,900.00
2-3 years
Contract is notfully implemented
Nanjing Bingshan Electromechanical equipmentCo., Ltd.
1,688,545.20
1-2 years
Contract is notfully implemented
Total
31,626,445.20
— —
(2) The top five significant advances to suppliers categorized by debtors
Company
ClosingBalance
Aging
% of the total
advances to
suppliersDalian HOLLEY Coating Equipment Co., Ltd.
12,000,000.00
2-3 years
7.07
Dalian Ganghe Trading Co., Ltd.
8,444,300.00
1-2 years
4.97
Nanjing Bingshan Electromechanical equipmentCo., Ltd.
6,264,103.80
Within 1year；1-2 years
3.69
DalianHeng Tong refrigeration EquipmentEgineering Co. LTD
5,550,000.00
Within 1 year
3.27
Mitsubishi Heavy Industries Air-conditioners(Shanghai)Co.,Ltd
5,220,700.00
1-2 years
3.07
Total
37,479,103.80
22.07
5. Other receivables
Items Closing Balance Opening BalanceInterest receivable
318,886.12
Dividend receivable56,591,452.20
33,450.00
Other receivable35,678,093.58
48,156,419.03
Total
92,269,545.78
48,508,755.15
(1) Interest receivable
Items Closing Balance Opening BalanceInterest on Term deposits
318,886.12
Bank financial product
Total
318,886.12
The closing balance of interest receivable decreased 100% comparing with the opening balance, mainlybecause of the Company received the interest accrued at the beginning of a term deposit.
(2). Dividends receivable
Company Closing
Balance
Opening Balance
Wuhan Steel and Electricity Co., Ltd.
33,450.00
Panasonic Appliances Air-conditioning and Refrigerating(Dalian) Co., Ltd
4,000,000.00
Panasonic Appliances Compressor (Dalian) Co. , Ltd.
45,350,000.00
Jiangsu JingXue Insulation Technology Co.,Ltd
2,921,200.00
Guotai Junan Securities Co., Ltd.
4,320,252.20
Total
56,591,452.20
33,450.00
The closing balance of dividends receivable inecreased 169,082.22% comparing with the openingbalance, mainly because of increased unexpired dividends receivable.
(3). Other receivables
1) Other receivables categorized by nature
Nature Closing Balance Opening BalanceGuarantee deposits25,896,196.37
30,393,406.84
Petty cash12,967,030.15
9,674,473.91
Receivables and Payables5,779,181.14
13,564,390.30
Others891,374.64
2,140,775.38
Total45,533,782.30
55,773,046.43
2) Provision for bad debts
Provision for bad debts
The first phase The second phase The third phase
Total
next 12 months
Expected Credit Lossfor the duration (NoCredit Devaluation)
Expected Credit Loss for
the duration (Creditimpairment has occurred)
Expected credit losses in the
Balance on January 1, 2019 7,616,627.40
7,616,627.40
The balance of January 1, 2019 inthe current period
—— —— —— ——Provision for bad debts 2,239,061.32
2,239,061.32
Balance on June 30, 2019 9,855,688.72
9,855,688.72
Other receivables accrued the bad debt provisions under accounting aging analysis method
Aging Closing BalanceWithin 1 year15,734,330.16
1-2 years14,145,493.27
2-3 years8,194,626.44
3-4 years4,294,128.71
4-5 years581,165.60
Over 5 years2,584,038.12
Total45,533,782.30
3)In the current period, RMB 2,239,061.32 Yuan were accrued provision for bad debts
4) Other receivables from the top 5 debtors
Name Category
ClosingBalance
Aging
% ofthe total
OR
Closing Balance
of ProvisionDalian Delta HK& China Gas Co.,Ltd Deposit
2,730,000.00
3-4 years,over 5 years
6.00
1,515,000.00
Huangmei Kanghong Ecological AgricultureDevelopment Co., Ltd.
Deposit
2,279,000.00
Within 1 year
5.01
113,950.00
Chengdu Silver low Cold Chain Logistics Co.,Ltd
Deposit 2,000,000.00
1-2 years
4.39
200,000.00
Dongying Huatai Fine Chemical Co., Ltd. Deposit 1,150,000.00
1-2 years
2.53
115,000.00
Jiangsu Fuqiang New Materials Co., Ltd. Deposit 1,100,000.00
1-2 years
2.42
110,000.00
Total
9,259,000.00
20.33
2,053,950.00
6. Inventories
(1) Categories of inventories
Item
Closing BalanceBook value Provision for decline Net book valueRaw materials109,783,390.30
1,095,201.13
108,688,189.17
Working in progress76,248,742.02
76,248,742.02
Finished goods214,331,919.10
88,460.00
214,243,459.10
Low-value consumable122,818.97
122,818.97
Self-manufacturedsemi-finished products
33,174,590.07
33,174,590.07
Constructing projects71,991,159.97
71,991,159.97
Materials on consignmentfor further processing
2,349,661.64
2,349,661.64
Total508,002,282.07
1,183,661.13
506,818,620.94
(Continue)
Item
Opening BalanceBook value Provision for decline Net book valueRaw materials93,238,803.85
1,095,201.13
92,143,602.72
Working in progress87,240,651.75
87,240,651.75
Finished goods188,490,721.70
88,460.00
188,402,261.70
Low-value consumable
143,386.78
143,386.78
Self-manufacturedsemi-finished products
24,660,370.80
24,660,370.80
Constructing projects52,606,275.99
52,606,275.99
Materials onconsignment for further
processing
4,998,750.79
4,998,750.79
Total451,378,961.66
1,183,661.13
450,195,300.53
(2) Provision for decline in the value of inventories
Item
OpeningBalance
Increase Decrease
ClosingBalanceAccrual Other
Reverse/Written- off
Otherstransferred
Raw materials
1,095,201.13
1,095,201.13
Finished goods
88,460.00
88,460.00
Total
1,183,661.13
1,183,661.13
(3) Accrual for provision for decline in the value of inventories
Item Basis for net realizable value recognition
Reasons for reverse/write-offRaw materials Lower of cost and NRVFinished goods Lower of cost and NRV
7. Other current assets
Item Closing Balance Opening BalancePrepaid income tax presentedat net amount after offsetting
665,685.54
664,806.52
VAT to be deducted
9,299,109.96
16,769,344.48
Prepaid turnover tax
3,020.15
Prepaid expenses
954,621.59
829,417.97
Total
10,919,417.09
18,266,589.12
The closing balance of the other current assets decreased 40.22% comparing with the openingbalance, mainly because the VAT to be deducted decreased.
8.Long-term equity investments
Investee
Beginning
balance
Increase/Decrease
Ending balance
Provision forimpairment
Increased
Decreased
Gains and
lossesrecognizedunder the
equitymethod
Adjustmen
t of othercomprehen
siveincome
Changeof otherequity
Cash bonus
or profitsannounced to
issue
Provision forimpairment of
the current
period
Others
Associates
Panasonic AppliancesAir-conditioning and Refrigeration(Dalian) Co., Ltd.
175,290,858.38
288,044.47
8,000,000.00
167,578,902.85
Dalian Honjo Chemical Co., Ltd. 8,832,597.83
381,197.74
647,634.60
8,566,160.97
Panasonic Appliances Cold-Chain(Dalian) Co., Ltd.
232,222,620.76
28,183,517.55
4,400,000.00
256,006,138.31
Keihin-Grand Ocean ThermalTechnology (Dalian) Co., Ltd.
61,750,687.77
2,485,379.54
64,236,067.31
Panasonic Appliances Compressor(Dalian) Co., Ltd.
483,899,674.59
15,117,996.66
45,350,000.00
453,667,671.25
MHI Bingshan Refrigeration(Dalian) Co.,Ltd.
13,783,339.36
-519,054.84
13,264,284.52
Beijing Huashang BingshanRefrigeration and Air-conditioningMachinery Co., Ltd.
1,268,139.59
-16,693.65
1,251,445.94
Dalian Fuji Bingshan VendingMachine Co., Ltd.
188,257,460.75
989,770.27
189,247,231.02
Jiangsu JingXue InsulationTechnology Co.,Ltd
174,966,773.04
9,607,307.14
2,921,200.00
181,652,880.18
Dalian Fuji Bingshan VendingMachine Sales Co., Ltd
13,774,267.89
-352,953.45
13,421,314.44
Wuhan Sikafu Power ControlEquipment Co., Ltd
5,236,380.63
-669,354.03
4,567,026.60
Panasonic AppliancesRefrigerating System (Dalian) Co.,Ltd.
30,721,588.82
2,397,347.27
2,284,000.00
30,834,936.09
Dalian Bingshan Metal TechnologyCo.,Ltd
172,593,561.16
15,097,772.32
187,691,333.48
Investee
Beginningbalance
Increase/Decrease
Ending balance
Provision forimpairment
Increased
Decreased
Gains and
lossesrecognizedunder the
equitymethod
Adjustmen
t of othercomprehen
siveincome
Changeof otherequity
Cash bonus
or profitsannounced to
issue
Provision forimpairment of
the current
period
Others
Dalian Bingshan GroupManagement and ConsultingCo.,ltd
57,095,620.40
-750,798.86
56,344,821.54
Total1,619,693,570.97
72,239,478.13
63,602,834.60
1,628,330,214.50
9.
Other non-current financial assets
9.
Item Closing Balance Opening BalanceMeasured as fair value method
288,278,646.80
369,195,071.40
Measured as cost method
12,991,658.59
12,991,658.59
Total
301,270,305.39
382,186,729.99
ock Exchange on 26
th
June 2015, and until 30 June, 2019, the Company held 15,710,008.00 shares of Guotai Junan Securities
Guotai Junan Securities Co., Ltd. was listed on Shanghai StCo., Ltd which was measured at fair value at the year end.
10. Investment property
(1) Investment property measured as cost method
Item
Property&
Building
Land-use-rights
TotalI. Initial Cost
1. Opening Balance
194,871,100.11
24,391,511.82
219,262,611.93
2. Increase
(1) Outsourcing
(2) Transferred from
Construction inprogress
3. Decrease
(1) Disposal
(2)Transferred to other
4. Closing Balance
194,871,100.11
24,391,511.82
219,262,611.93
II. AccumulatedDepreciation
1. Opening Balance
108,557,977.40
10,366,392.54
118,924,369.94
2. Increase
2,247,435.42
243,915.12
2,491,350.54
(1)Provision or
amortization
2,247,435.42
243,915.12
2,491,350.54
(2) Transferred from
Construction inprogress
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance
110,805,412.82
10,610,307.66
121,415,720.48
III. ImpairmentReserve
1. Opening Balance
2. Increase
(1)Provision or
amortization
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance
IV. Book Value
1. Closing book value
84,065,687.29
13,781,204.16
97,846,891.45
Note: The Company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co., Ltd., and rent # 6 workshopbuilding located on No. 106 Liaohe East Rd, Dalian Economic and Technology Development Zone to MHI BingshanRefrigeration (Dalian) Co., Ltd. The rental area is 15,259.04 square meters, and the rental term till 16th July, 2029. Theannual rent fee for 2018 is RMB 4.2 million Yuan. In 2019, a revised agreement was signed to collect rent of 4 millionyuan per year. In 2019, the rent was deducted by 875,000 yuan at one time because some projects were not used.The Company signed rental contract with Dalian Bingshan Wisdom Park Co., Ltd., and rent out the whole land andhouse of the Company’s old plant locating at No. 888, Southwest Road, Shahekou District, Dalian to Dalian BingshanWisdom Park Co., Ltd., with rental land area of 167,165.61 square meters and housing area of 105,652.43 square meters.The lease term is from April 1, 2017 to December 31, 2036. The annual rent fee for 2019 is RMB 7.86 million Yuan. On June 1
st
, 2017, the Company’s subsidiary, Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd., signed theleasing contract with Dalian Jingxue Energy Saving Technology Co. Ltd. and rented out # 7 building of workshop locatedon No.92, Tieshan West Rd, DDA, Dalian. The rental area is 3653.76 square metres, and annual rent is RMB 840 thousandYuan with the contracted date between June 1
st
, 2017 and May 31
st
,2022. Dalian Bingshan Ryosetsu Quick FreezingEquipment Co., Ltd. also rented out Room 201, # 4 building located on No.92, Tieshan West Rd, DDA, Dalian to DalianJingxue Energy Saving Technology Co., Ltd. The rental area is 25 square metres, and annual lease premium is RMB 15thousand Yuan with the contracted date between June 1
st
, 2017 and May 31
st
, 2022.
(2) Investment property without owner’s certificates
Items Book value Reasons
Economic and Technology Development Zone
26,774,944.94
# 6 building of workshop on No. 106 Liaohe East Rd, Dalian
Deed is in the progress
11. Fixed assets
(1) Fixed assets detail
Item
Property&
buildings
MachineryEquipment
Transportation
Equipment
OtherEquipment
TotalI. Initial Cost
1. Opening Balance
695,840,453.24
667,643,224.77
17,198,309.87
68,018,270.10
1,448,700,257.98
2. Increase
6,584,215.73
189,465.52
554,937.29
7,328,618.54
(1) Purchase
648,029.46
189,465.52
554,937.29
1,392,432.27
(2) Transferred
fromconstruction-in-progress
5,936,186.27
5,936,186.27
(3) Acquired from
businesscombination
3. Decrease
1,502,347.67
973,435.24
284,450.00
20,651.12
2,780,884.03
(1) Disposal
1,502,347.67
973,435.24
284,450.00
20,651.12
2,780,884.03
(2) Transferred to
Item
Property&
buildings
MachineryEquipment
Transportation
Equipment
OtherEquipment
Totalother
4. Closing Balance
694,338,105.57
673,254,005.26
17,103,325.39
68,552,556.27
1,453,247,992.49
II. AccumulatedDepreciation
1. Opening Balance
83,641,711.79
355,594,550.13
11,924,275.65
43,724,342.80
494,884,880.37
2. Increase
8,421,087.00
21,368,549.85
670,113.29
2,584,212.52
33,043,962.66
(1)Accrued
8,421,087.00
21,368,549.85
670,113.29
2,584,212.52
33,043,962.66
(2) Acquired from
businesscombination
3. Decrease
1,022,458.07
881,103.72
256,005.00
19,709.37
2,179,276.16
(1) Disposal
1,022,458.07
881,103.72
256,005.00
19,709.37
2,179,276.16
(2) Transferred to
other
4. Closing Balance
91,040,340.72
376,081,996.26
12,338,383.94
46,288,845.95
525,749,566.87
III. ImpairmentReserve
1. Opening Balance
517,319.50
517,319.50
2. Increase
(1)Accrued
3. Decrease
(1) Disposal
4. Closing Balance
517,319.50
517,319.50
IV. Book Value
1. Closing book
value
603,297,764.85
296,654,689.50
4,764,941.45
22,263,710.32
926,981,106.12
2. Opening book
value
612,198,741.45
311,531,355.14
5,274,034.22
24,293,927.30
953,298,058.11
(2)The situation of fixed assets leased through finance lease
Item
Initial Cost
Accumulated Depreciation
Impairment Reserve
Book Value
MachineryEquipment
2,527,482.76
135,528.90
2,391,953.86
(3) Fixed assets as pending certificate of ownership
Item Book value Reason for PendingOffice,Lianhe #1 plant,#2plant,Jiacu plant and dormitory
255,665,851.60
Deed is in the progress
Item Book value Reason for PendingNewly built plant
45,231,801.84
Deed is in the progressFunctional Lab plant
15,636,045.77
Deed is in the progressLianhe #3 plant
39,583,406.59
Land is pledged and deed can not be
grantedTotal
356,117,105.80
12. Construction-in-progress
(1) Construction in progress details
Item
Closing Balance Opening BalanceBook Balance Provision
Book Value Book Balance Provision
Book ValueBuildingsreconstruction
16,277,242.75
16,277,242.75
14,866,010.00
14,866,010.00
Improvementof machinery
7,218,750.87
7,218,750.87
3,342,959.00
3,342,959.00
Construction ofintelligentsoftware
2,064,452.50
2,064,452.50
1,587,243.82
1,587,243.82
Self-heatingcirculationequipmentfrom mine airreturn
24,161,988.94
24,161,988.94
Total49,722,435.06
49,722,435.06
19,796,212.82
19,796,212.82
(2) Change in the significant construction in progress
Name Opening Balance
Increase
Decrease
Closing
BalanceTransfer tofixed assets
Otherdecrease
Buildings reconstruction14,866,010.00
1,411,232.75
16,277,242.75
Improvement ofmachinery
3,342,959.00
9,811,978.14
5,936,186.27
7,218,750.87
Construction ofintelligent software
1,587,243.82
599,850.19
122,641.51
2,064,452.50
Self-heating circulationequipment from mine airreturn
24,161,988.94
24,161,988.94
Total19,796,212.82
35,985,050.02
5,936,186.27
122,641.51
49,722,435.06
(Continued)
Name
Budget
Percent ofinvestment
againstbudget
Progressofconstructio
n
Accumul
atedcapitaliz
edinterest
Including:
Accumulated
capitalizedinterest of the
year
Interestcapitalizationrate(%)
Source of
fundsBuildingsreconstruction
357,527,099.00
95.62%
95.62%
Selffinancing
Improvement ofmachinery
198,572,929.00
93.43%
93.43%
Selffinancing
Construction ofintelligentsoftware
5,360,000.00
40.80%
40.80%
Selffinancing
Self-heatingcirculationequipment frommine air return
27,000,000.00
82.10%
82.10%
SelffinancingTotal
588,460,028.00
—
—The ending balance of the company's construction projects increased by 151.17% compared with thebeginning balance, mainly due to the increase of equipment renovation investment in the current period.Other amounts reduced in the current period of the project under construction shall be transferred intoother intangible assets.
13. Intangible assets
(1) Intangible assets list
Item
Land use
right
Patenttechnology
Non Patenttechnology
Others TotalI. Initial Cost
1. Opening Balance
152,890,196.80
17,800,000.00
5,000,000.00
17,904,833.66
193,595,030.46
2. Increase
281,513.75
281,513.75
(1) Purchase
158,872.24
158,872.24
(2) Acquired from business
combination
(3)Transferred from
construction-in-progress
122,641.51
122,641.51
3. Decrease
84,905.59
84,905.59
(1) Disposal
84,905.59
84,905.59
(2) Transferred to other
4. Closing Balance
152,890,196.80
17,715,094.41
5,000,000.00
18,186,347.41
193,791,638.62
II.Accumulatedamortisation
1. Opening Balance
31,973,987.34
2,907,657.95
1,500,004.00
10,194,788.46
46,576,437.75
2. Increase
1,547,549.49
729,719.40
250,002.00
702,841.82
3,230,112.71
Item
Land use
right
Patenttechnology
Non Patenttechnology
Others Total
(1)Accrued
1,547,549.49
729,719.40
250,002.00
702,841.82
3,230,112.71
(2) Acquired from business
combination
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance
33,521,536.83
3,637,377.35
1,750,006.00
10,897,630.28
49,806,550.46
III. Impairment Reserve
1. Opening Balance
2. Increase
(1)Accrued
(2) Others
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance
IV. Book Value
1. Closing book value
119,368,659.97
14,077,717.06
3,249,994.00
7,288,717.13
143,985,088.16
2. Opening book value
120,916,209.46
14,892,342.05
3,499,996.00
7,710,045.20
147,018,592.71
14. Goodwill
(1) Original cost of goodwill
Name
OpeningBalance
Increased during
current year
Decreased during
current year
ClosingBalanceEnterprises mergerincrease
Other
Disposal
Other
Dalian Universe ThermalTechnology Co., Ltd.
1,440,347.92
1,440,347.92
Dalian Bingshan-P&ARecreation DevelopmentEngineering Co., Ltd.
310,451.57
310,451.57
Total 1,750,799.49
1,750,799.49
(2) Goodwill impairment provision
Goodwill calculation method:
In the year 2015, the book value of equity investment of Dalian Universe Thermal Technology Co.,Ltd. exceeds the fair value of the proportion of the acquired company’s identifiable net asset. Thedifference between the book value of equity investment of 48, 287,589.78 Yuan and the identifiable
net asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltd of 46,847,241.86Yuan on the acquisition date of July 31st 2015 is recognized as goodwill of 1,440,347.92 Yuan onthe group consolidated financial report at the end of the year.In the year 2016, the company purchases shares of Dalian Bingshan-P&A Recreation DevelopmentEngineering Co., Ltd. and gains control. The transferred price is based on the net asset of DalianBingshan-P&A Recreation Development Engineering Co., Ltd. on June 30th 2016. Negotiated withDalian Bingshan-P&A Recreation Development Engineering Co., Ltd.’s shareholder P&A WaterProject (China) Limited Company, the transfer price is the combination cost on the purchasing datewhich is 5,359,548.42 Yuan, the fair value of proportion of Dalian Bingshan-P&A RecreationDevelopment Engineering Co., Ltd’s identifiable net asset is 5,049,096.85 Yuan on the purchasingday, therefore, goodwill is 310,451.57Yuan on the purchasing date.The book value of goodwill from business combination of Dalian Universe Thermal Technology Co.,Ltd. and Dalian Bingshan-P&A Recreation Development Engineering Co., Ltd. which are not undersame control shall be allocated into the relevant asset group using the reasonable method sinceacquisition date and taken impairment test on relevant asset group where the goodwill is included.The obvious impairment indication of the goodwill hasn’t been found. Thus no goodwill impairmentprovision has been made.
15. Long-term repayments
Item
OpeningBalance
Increase
Amortization
OtherDecrease
ClosingBalanceEmployee’s dormitory use right
2,150,648.70
69,239.16
2,081,409.54
Renovation and rebuilding837,087.14
22,522.50
814,564.64
Lease637,740.00
53,145.00
584,595.00
Membership fee for Golf456,500.00
8,250.00
448,250.00
Technology entrance fee of coldand heat machinery
1,213,631.25
186,712.50
1,026,918.75
Greenland of new factory7,508,638.66
446,057.76
7,062,580.90
Service fee from Technologycenter
69,182.44
18,867.90
50,314.54
Total
12,873,428.19
804,794.82
12,068,633.37
16. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offsetting
Item Closing Balance Opening Balance
Deductibletemporarydifference
Deferred tax
assets
Deductible temporary
difference
Deferred tax
assetsProvision forimpairment of assets
174,744,531.58
34,540,914.11
158,842,386.89
31,736,544.09
Unrealized profit frominternal transaction
15,641,404.17
2,346,210.63
15,641,404.20
2,346,210.63
Total
190,385,935.75
36,887,124.74
174,483,791.09
34,082,754.72
(2) Deferred tax liabilities without offsetting
Item Closing Balance Opening Balance
Taxable temporarydifference
Deferred tax
liabilities
Taxable temporarydifference
Deferred tax
liabilitiesChanges in the fair valueof other non-currentfinancial assets
273,394,443.96
41,009,166.63
346,362,948.00
51,954,442.22
Total
273,394,443.96
41,009,166.63
346,362,948.00
51,954,442.22
(3) Unrecognized deferred tax assets details
Item Closing Balance Opening BalanceDeductible temporary difference
44,578,176.63
47,316,245.31
Deductible loss
19,918,227.26
50,277,991.93
Total
64,496,403.89
97,594,237.24
(4) Unrecognized deductible loss of deferred tax assets expired years
Year Closing Balance Opening Balance Notes2020 3,240,819.97
3,240,819.97
2021
31,012,868.08
2022
2023 16,677,407.29
16,024,303.88
2024
Total
19,918,227.26
50,277,991.93
17. Short-term loan
(1) Category of short term loan
Loan category Closing Balance Opening BalanceMortgage loan
40,000,000.00
Credit loan
249,000,000.00
250,000,000.00
Total289,000,000.00
250,000,000.00
18. Notes payable
Notes category Closing Balance Opening BalanceCommercial acceptance notes
31,174,188.00
36,839,166.88
Bank acceptance notes
277,768,245.94
236,562,369.70
Total
308,942,433.94
273,401,536.58
At the end of the reporting period , there is no unpaid notes payable which is due.
19. Accounts payable
(1) Accounts payable
Item Closing Balance Opening BalanceMaterial payments
707,294,582.04
610,777,680.58
Project payments
147,191,096.08
192,942,733.62
Equipment payments
60,212,279.08
51,953,768.99
Others
2,901,862.25
3,815,375.42
Total
917,599,819.45
859,489,558.61
(2) Accounts payable with age over 1 year
Name of company
ClosingBalance
Reason of unpaid or not
carried forwardHeilongjiang Longleng Technology Co., Ltd
9,413,290.00
Project is uncompletedcontract is not finishedXi 'an qitong new energy equipment Co., Ltd
7,724,134.58
Project is uncompletedcontract is not finishedLi xing kai (Beijing) energy system technologyCo., Ltd
6,136,305.82
Project is uncompletedcontract is not finishedWuhan KaiXing Economic Development Co., Ltd
5,083,946.00
Project is uncompletedcontract is not finishedTotal28,357,676.40
Project is uncompletedcontract is not finished
20. Received in advance
(1) Received in advance
Item Closing Balance Opening BalanceAdvanced on sales
138,163,912.46
122,151,101.00
Total
138,163,912.46
122,151,101.00
(2) Accounts received in advance aged over 1 year
Company Closing Balance ReasonDandong Port
5,000,000.00
Unsettled contract payments on sets projects
Total 5,000,000.00
21. Employee’s payable
(1) Category of employee’s payable
Item Opening
Balance
Increase Decrease Closing
BalanceShort-term employee’spayable
31,856,136.59
147,992,890.23
168,815,553.57
11,033,473.25
Post-employment benefit–defined contribution plan
19,506,233.60
19,506,233.60
Termination benefits
179,243.55
179,243.55
Total
31,856,136.59
167,678,367.38
188,501,030.72
11,033,473.25
(2) Short-term employee’s payables
Item Opening
Balance
Increase Decrease Closing
BalanceSalaries, bonus,allowance, andsubsidy
24,216,112.24
116,852,447.36
135,454,972.22
5,613,587.38
Welfare
4,769,883.17
3,905,452.82
4,617,290.04
4,058,045.95
Social insurance
10,337,267.36
10,337,267.36
Include: Medical
insurance
8,071,230.09
8,071,230.09
Supplemental
insurance
On-dutyinjuryinsurance
1,197,824.72
1,197,824.72
Maternityinsurance
1,068,212.55
1,068,212.55
Housing funds
1,727,088.11
14,398,423.83
16,066,304.48
59,207.46
Labor union andtraining expenses
1,143,053.07
2,057,158.75
1,897,579.36
1,302,632.46
Short-term leavewith pay
Short term profitshare plan
Others
442,140.11
442,140.11
Total
31,856,136.59
147,992,890.23
168,815,553.57
11,033,473.25
(3) Defined contribution plan
Item Opening
Balance
Increase Decrease Closing
BalancePension
18,875,207.33
18,875,207.33
Unemployment insurance
631,026.27
631,026.27
Total
19,506,233.60
19,506,233.60
The ending balance of wages payable decreased 65.36% over that of period-begin, mainly because theyear-end bonus for year of 2018 are paid in the report Period.
22. Tax payable
Item Closing Balance Opening BalanceValue-added tax794,883.34
5,008,187.41
Enterprise income tax16,161,706.52
4,011,845.57
Individual income tax178,778.50
2,477,602.40
City maintenance and construction tax116,664.70
308,110.57
Real estate tax1,824,336.57
887,197.28
Land use tax1,094,760.28
553,224.98
Education surcharge81,743.71
210,076.03
Green tax
574.22
557.18
Safeguard fund for disables 440.00
460.00
Stamp duty 101,453.33
150,950.90
Total 20,355,341.17
13,608,212.32
The closing balance of tax payable increased 49.58% comparing with the opening balance , mainlybecause the enterprise income tax payable by the Company increased during the current period.
23. Other accounts payable
ItemClosing Balance Opening BalanceInterest payable297,917.07
1,369,527.78
Dividend payable
42,693,781.35
533,156.00
Other accounts payable
35,530,080.69
61,411,274.65
Total
78,521,779.11
63,313,958.43
. (1) Interest payable
Item Closing Balance Opening Balance
Interest on corporate bond297,917.07
985,111.11
Interest on short term loan
384,416.67
Total297,917.07
1,369,527.78
The Closing Balance of interest payable by the Company decreased 78.25% comparing with theOpening Balance, mainly due to the Company pays interest on short term loan due at the currentperiod.
(2). Dividend payable
Item Closing Balance Opening BalanceOrdinary share dividend
42,693,781.35
533,156.00
Total42,693,781.35
533,156.00
The Company’s dividend payable at the end of the period increased 7907.75%compared with thebeginning of the period, mainly because the dividend payable did not reach the payment period.
（3）Other accounts payable
Other payables categorized by payments naturePayments nature
Closing Balance Opening BalanceRestricted share buy back
21,026,106.00
Loan from non-financial institutes8,080,000.00
6,100,000.00
Cash pledge and security deposit10,027,524.67
9,487,599.86
Payments nature
Closing Balance Opening BalanceApply for reimbursement and unpaid12,143,588.83
15,032,744.10
Receipts under custody1,528,790.49
4,362,549.92
Others3,750,176.70
5,402,274.77
Total
35,530,080.69
61,411,274.65
The Company’s Other accounts payable at the end of the period decreased 42.14% comparedwith the beginning of the period, mainly in accordance with the proposal on terminating theimplementation of the 2016 Restrictive Stock Incentive Plan and repurchase and cancellation ofRelevant Restrictive Stocks, which was deliberated and approved by the 1
st
ExtraordinaryShareholders’ General Meeting of 2019, the Company has fulfilled the corresponding capitalreduction procedures according to law, and has reduced the obligation of the Restrictive StockRepurchase.
24. Non-current liabilities due within one year
Item Closing Balance Opening Balance
Long-term accounts payable with one year
1,472,720.00
2,999,574.93
Total 1,472,720.00
2,999,574.93
The Long-term accounts payable with one year are financial leases payable. The closingbalance decreased 50.90% compared with the beginning of the period. The main reason is that theCompany pays the matured financial leases.
25.Long-term loan
(1) Category of long-term loan
CDB development fund give support to the Company’s intelligent and green equipment of coldchain and service industry base project and provide special fund to the Company’s holdingshareholder, Bingshan Group. The fund is 0.16 billion Yuan with 10year’s expiration at 1.2% rate.Once the fund arrived, Bingshan Group gave it to the Company at the same rate of 1.2% in lumpsum. The above fund needed to be warranted by the Company. The guarantee seems to be givenfor the holding shareholder, but it is for the Company itself in fact.
26. Bonds payable
(1)Bonds payable
Item Closing Balance Opening Balance
Exchangeable corporate bonds 25,000,034.00
176,000,000.00
Total25,000,034.00
176,000,000.00
(2) The changes of bond
Category Closing Balance Opening BalanceGuarantee loan 160,000,000.00
160,000,000.00
Total 160,000,000.00
160,000,000.00
Bond name Par value Issue date
Bond
term
| Bond | |
Issue Amount
Opening
balance
Issued
this year
Interest atpar value
Repay
Closing
balanceExchangeablecorporatebonds
176,000,000.00
2018.7.30 3 years
176,000,000.00
176,000,000.00
0.00
297,917.07
150,999,966.00
25,000,034.00
Total-- -- -- 176,000,000.00
176,000,000.00
0.00
297,917.07
150,999,966.00
25,000,034.00
(3) other notes:
Approved by the Shanghai Stock Exchange “Letter of No-Objection to the Non-public Issuanceof Convertible Corporate Bonds of Dalian Refrigeration Co., Ltd.” ([2018] No. 125), thecompany non-publicly issued 1.76 million number of convertible corporate bonds on July 30,2018, at a par value of 100Yuan, and raised a total of 176 million Yuan. The bond is based onsimple annual interest rate with a fixed interest rate of 1.3%. It is repayable once a year and paysinterest once a year. The relevant issuance costs are RMB 1,496,000.00.The term of the bond swap is from the first trading day after the 6 months of issuance of theconvertible corporate bonds to the maturity date of the convertible corporate bonds, which isfrom January 30, 2019 to July 2021. 29th. If the due date is on a statutoryOn the principal payment date of this bond, the company will pay all convertible bonds toinvestors at the price of 108% of the par value of the convertible bonds (excluding the lastannual interest).The closing balance decreased 85.80%compared with the beginning of the period. The mainreason is that the Company pays the matured financial leases.The total number of shares exchanged by the holders of "18 Da Leng EB" in this period is8,388,887.00 shares, and the exchange price is 18 yuan per share.
27. Long term accounts payable
Item Closing Balance Opening Balance
Long term accounts payable17,574,885.46
1,532,949.94
Total17,574,885.46
1,532,949.94
(1) Category by nature
Item Closing Balance Opening BalanceFinancial lease 856,524.11
856,524.11
Sale and leaseback 676,425.83
676,425.83
Supply Chain Financing 16,041,935.52
The Long term accounts payable increased 1,046.47% in the current period compared with theprevious period, mainly because of Wuxin Refrigeration, a subsidiary of the company, signed acommercial factoring contract.
28. Deferred income
(1) Category of deferred income
Item Opening
Balance
Increase
Decrease Closing
Balance
FormationBasisGovernment subsidy
103,532,328.40
3,153,831.42
100,378,496.98
Sale-leaseback contract
9,765.39
3,446.58
6,318.81
Total
103,542,093.79
3,157,278.00
100,384,815.79
—
(2) Government subsidy project
Asset related grant shall be offset the cost or expense within the asset’s useful life; incomerelated grant shall be booked into other income or offset cost or expense if it is relevant to daily
Governmentsubsidy item
OpeningBalance
Increase
Recorded intoother income
Offset costor expense
ClosingBalance
Related
withasset/equity
Subsidy fund for
highly effecti
| Subsidy fund for | |
| ve heat | |
| pump and related | |
system
2,049,280.00
275,839.98
1,773,440.02
AssetrelatedRelocationcompensation
42,332,000.00
556,998.00
41,775,002.00
AssetrelatedApplication of NH
and CO
instead
| of | |
| R22 screw | |
refrigerating
condensing unit
15,896,814.28
machine combined
709,421.76
15,187,392.52
AssetrelatedCompressor ICsystem
4,653,655.59
187,229.64
4,466,425.95
AssetrelatedUltrasonicintelligent defrosttechnology
4,305,677.93
147,416.76
4,158,261.17
AssetrelatedEco Compressorproject
27,637,021.90
1,276,925.28
26,360,096.62
AssetrelatedR290 replacementof R22 largeindustrial screwunit
4,877,498.70
4,877,498.70
AssetrelatedR290 replacementof R22 industrialdouble stage screwunit
1,780,380.00
1,780,380.00
Assetrelated
Total
103,532,328.40
556,998.00
2,596,833.42
100,378,496.98
activity, otherwise it shall be booked into non-operating expense.
29.Share capital
Item
Openingbalance
Increase/decrease（+、-）
ClosingbalanceNewshareissued
Sharedividen
d
Transfer
fromcapitalreserve
others
Subtotal
shares
Total
855,434,087.00 -12,221,580.00
-12,221,580.00 843,212,507.00
On January 17,2019, the Company held the first extraordinary shareholders’ meeting of 2019 whichreviewed and approved the Proposal on terminating the implementation of 2016 Restricted StockIncentive Plan of the Company and log outing the restricted stock. On March 4,2019, the Company hascompleted the capital reduction process, and the registered capital of the Company was changed from855,4348,087 Yuan to 843,212,507 Yuan.
30.Capital reserves
Items Opening
Balance
Increase Decrease Closing Balance
Share premium
693,218,918.20
33,596,874.00
659,622,044.20
Other capital reserves
67,146,423.80
67,146,423.80
Total
760,365,342.00
33,596,874.00
726,768,468.00
On January 17,2019, the Company held the first extraordinary shareholders’ meeting of 2019 whichreviewed and approved the Proposal on terminating the implementation of 2016 Restricted StockIncentive Plan of the Company and log outing the restricted stock. On March 4,2019, the Company hascompleted the capital reduction process, the Share premium decreased.
31. Treasury Share
Items
Opening Balance
Increase Decrease Closing
BalanceShare incentive buy-back
21,026,106.00
21,026,106.00
0.00
Total21,026,106.00
21,026,106.00
0.00
On January 17,2019, the Company held the first extraordinary shareholders’ meeting of 2019 whichreviewed and approved the Proposal on terminating the implementation of 2016 Restricted StockIncentive Plan of the Company and log outing the restricted stock. On March 4,2019, the Companyhas completed the capital reduction process, the Treasury Share decreased.
32. Other comprehensive income
Items
OpeningBalance
2019.1-6
ClosingBalanceAmount for theperiod before
income tax
Less：
Previouslyrecognized in profit or
loss in othercomprehensive income
Less：
income tax
After-tax attributeto the parentcompany
After-taxattribute tominorityshareholderI.Later can’t reclassified into profitand loss of other comprehensiveincome
II. Later reclassified into profit and lossof other comprehensive income
2,501,459.77
2,501,459.77
Proportional other comprehensiveincome of investee which is reclassifiedinto income statement under equitymethod
2,501,459.77
2,501,459.77
Other comprehensive income total2,501,459.77
2,501,459.77
33. Special Reserve
Items
OpeningBalance
Increase Decrease
ClosingBalanceSafety production cost
1,025,336.49
1,025,336.49
Total
1,025,336.49
1,025,336.49
34.Surplus reserves
Item Opening
Balance
Increase Decrease
ClosingBalanceStatutory surplus reserve
334,459,422.69
334,459,422.69
Discretionary surplus reserve
386,631,617.33
32,428,137.09
419,059,754.42
Total
721,091,040.02
32,428,137.09
753,519,177.11
The company made profit distribution within the reporting period. According to the 2018 annualmeeting, 20% of net profit in the 2018 fiscal annual report is provided for discretionary surplusreserve of 32,428,137.09 Yuan.
35. Undistributed profits
Item 2019-06-30 2018-06-30Closing balance of 2018
764,859,288.45
750,397,795.56
Add: Adjustments to the opening balance ofundistributed profits
294,408,505.78
Including: additional retrospective adjustmentsaccording to the new accounting standards
Change on accounting policy
Correction of prior period significant errors
Change on combination scope under samecontrol
Other factors
Opening balance of 2019
1,059,267,794.23
750,397,795.56
Add: net profit attributable to shareholders ofparent company in the year
108,373,919.30
59,017,542.28
Less: Provision for statutory surplus reserves
32,428,137.09
36,726,596.18
Provision for any surplus reserves
Provision of general risk
Dividends payable for common shares
42,160,625.35
42,771,704.35
Share dividends
Staff award fund
305,618.42
Closing balance of the current period
1,093,052,951.09
729,611,418.89
Due to the change of accounting policy, the undistributed profit at the beginning of theimpact period was 294,408,505.78 yuan.
36. Operating revenue and cost
Items
2019.01-06 2018.01-06
Sales revenue Cost of sales Sales revenue Cost of salesRevenue fromprinciple operation
1,052,236,172.60
903,291,760.46
1,010,172,413.37
841,675,852.36
Revenue fromother operation
23,493,067.97
16,468,219.40
18,906,123.42
11,168,022.91
Total
1,075,729,240.57
919,759,979.86
1,029,078,536.79
852,843,875.27
37.Operating taxes and surcharges
Items
2019.01-06 2018.01-06
City construction tax
1,253,720.56
1,103,174.98
Education surcharge
884,724.11
775,163.60
Property tax3,758,045.42
3,749,949.14
Land use tax2,185,948.32
2,450,463.10
Vehicle and vessel tax
10,907.04
11,988.44
Stamp duty633,223.16
641,528.66
Levee fee
108.77
Environmental Protection Tax
3,606.49
1,653.81
Total
8,730,283.87
8,733,921.73
38.Selling expenses
Items
2019.01-06 2018.01-06
Official business expense
3,988,847.51
4,539,930.14
Employee benefit
21,396,465.27
18,276,891.66
Depreciation expense
155,303.69
156,761.63
Transportation expense
12,587,418.44
12,038,705.09
Business entertaining expense
4,881,843.49
4,036,343.06
Travel expense
5,066,994.70
5,624,151.75
Maintenance and repair expense 3,484,274.34
2,196,454.74
Advertisement and bids expense
980,196.85
1,138,461.50
Other expense
555,474.33
655,113.54
Total
53,096,818.62
48,662,813.11
39.Administrative expenses
Items
2019.01-06 2018.01-06
Official expense
7,892,079.60
8,232,927.98
Items
2019.01-06 2018.01-06
Employee benefit
52,352,461.45
53,578,916.78
Depreciation expense
6,251,109.67
5,755,436.73
Business entertaining expense
2,081,570.86
1,782,386.28
Travel expense
4,064,689.71
3,109,980.56
Maintenance and repair expense
2,309,890.96
1,922,753.65
Advertisement expense
408,712.91
459,235.50
Insurance expense
533,710.46
532,158.46
Long-term assets amortization
3,801,155.48
3,106,842.37
Design consultant and test service expense
2,237,748.01
404,122.61
Safety production cost
1,031,715.77
1,254,520.04
Other expense
2,977,250.33
1,375,875.04
Total
85,942,095.21
81,515,156.00
40. R&D expenses
Items
2019.01-06 2018.01-06
Employee benefit21,344,115.07
21,662,725.31
Depreciation and amortization expense2,405,920.60
2,768,900.70
Raw material3,770,083.72
1,415,864.91
Entrust external R&D investment132,075.47
963,679.24
Other expense897,669.31
803,166.51
Total
28,549,864.17
27,614,336.67
41.Financial expenses
Items
2019.01-06 2018.01-06
Interest expenses
5,542,418.26
8,884,281.55
Less: Interest income
572,223.80
2,069,056.36
Add: Exchange loss
-570,799.89
643,842.13
Add: Others expenditure
1,068,192.62
1,180,197.48
Total
5,467,587.19
8,639,264.80
The financial expenses decreased 36.71% in the current period compared with the previousperiod, mainly because of the interest expense decreased.
42. Other income
Items
2019.01-06 2018.01-06
VAT refund
53,838.84
109,637.40
Grant given by the government for relocation
556,998.00
Government subsidy
1,424,600.00
Total
2,035,436.84
109,637.40
43. Investment income
Items
2019.01-06
2018.01-06
Long-term equity investment gain under equity method
72,239,478.13
55,473,486.44
Gain from disposing long-term equity investment
Gain from holding of other non-current financial assets
4,320,252.20
11,139,558.00
Gain from disposal other non-current financial assets
40,567,691.40
Total117,127,421.73
66,613,044.44
The Investment income increased 75.83% in the current period compared with the previousperiod, mainly because of the Impact of Stock Exchange of "18 Da Leng EB" holders in thecurrent period.
44. Fair value change income
Items 2019.01-06 2018.01-06Other non-current financial assets40,461,125.59
Total40,461,125.59
The Fair value change income increased 100% in the current period compared with theprevious period, mainly because of the Company implements the financial instrumentstandards in the current period.
45. Assets impairment losses
Items
2019.01-06 2018.01-06
Loss of bad debts
-16,863,134.42
-8,083,861.40
Provision for inventory impairment
Total
-16,863,134.42
-8,083,861.40
The Assets impairment losses increased 108.60% in the current period compared with theprevious period, mainly because of the increase in provision for bad debts againstreceivables in the current period.
46.Gain on assets disposal
Item2019.01-06 2018.01-06
Gains on disposal of non-current assets 1,242,799.31
230,812.06
Gain on non-current assets disposalincome not classified as held for sale
1,242,799.31
230,812.06
Including: gain on fixed assets disposal 1,242,799.31
230,812.06
Total 1,242,799.31
230,812.06
47.Non-operating income
(1)Non-operating income list
Item2019.01-06 2018.01-06
Amounts recognized intonon-recurring profit or loss
for the yearDebt restructuring gains 1,999,241.94
1,999,241.94
Government grant 337,400.00
850,600.00
337,400.00
Penalty and fine income 135,723.19
258,017.67
135,723.19
Others
1,068,246.27
Total 2,472,365.13
2,176,863.94
2,472,365.13
(2)Government grant details
Items2019.01-06 2018.01-06ExplanationsFostering fund in 2018 337,400.00
Related to gain
Fostering fund in 2017
300,600.00
Related to gain
Subsidy of Economic support policy
50,000.00
Related to gain
New high-tech Enterprise
300,000.00
Related to gain
Patent subsidy
150,000.00
Related to gain
Postdoctoral workstation
50,000.00
Related to gain
Other project was that the Company purchased the shareholding equity of Wuhan LanningEnergy Technology Co., Ltd. in the current period, and the amount of the merger cost less thanthe fair value of the identifiable net assets acquired on the purchase date, was recognized asnon-operating income.
48. Non-operating expenses
Item2019.01-06
2018.01-06
Amounts recognized intonon-recurring profit or loss for the year
Outward donation
60,000.00
60,000.00
60,000.00
Quality Claim
46,516.94
93,590.70
46,516.94
Non-current assets scrap loss
15,126.57
15,126.57
Total
121,643.51
153,590.70
121,643.51
49.Income tax expenses
(1) Income tax expenses
Items2019.01-06 2018.01-06
Current income tax expenses 16,570,975.86
4,709,435.95
Deferred income tax expenses -2,804,370.02
-1,268,991.70
Total13,766,605.84
3,440,444.25
(2) Adjustment process of accounting profit and income tax expense
Items2019.01-06
Total profits120,536,982.32
Current income tax expense accounted by tax and relevantregulations
18,080,547.35
Influence of different tax rate suitable to subsidiary1,977,530.38
Influence of income tax before adjustment-636,465.94
Influence of non taxable income-2,713,531.73
Influence of not deductable costs, expenses and losses1,696,591.16
Influence of deductable losses of deferred income tax assetsderecognized used in previous period
-4,638,065.38
Influence of deductible temporary difference or deductible losses ofdeferred income tax assets derecognized in reporting period.
Income tax expenses
13,766,605.84
The Company’s current income tax expenses increased 300.14% compared with the previous period,mainly due to the Influence of the increase of taxable income in the current period.
50. Other comprehensive income
Refer to the note VII.33 other comprehensive income for details.
51.Notes to cash flow statement
(1) Cash receipt/payment of other operating/investing/financing activities
1) Other cash received relating to operating activities
Items2019.01-06 2018.01-06
Government grants
1,762,000.00
950,600.00
Received travel expense refund
2,190,560.23
1,362,432.77
Deposit given back
11,938,968.66
12,317,606.04
Interest income859,925.57
2,999,084.48
Others
1,027,584.20
894,306.29
Total 17,779,038.66
18,524,029.58
2) Other cash paid relating to operating activities
Items
2019.01-06 2018.01-06
Business travel borrowing5,490,477.40
6,452,619.29
Deposit paid8,675,281.20
19,525,966.58
Expenditure
47,585,026.48
43,456,472.12
Payments to relate party
960,032.83
Bank handling charges
965,122.59
1,013,522.20
Others713,616.93
972,341.24
Total63,429,524.60
72,380,954.26
3) Others cash received relating to investing activities
Items2019.01-06 2018.01-06
Redemption of Bank Financial Products
76,000,000.00
Total
76,000,000.00
4) Others cash received relating to financing activities
Items2019.01-06 2018.01-06
Collection of guarantee money38,323,050.64
30,116,287.80
Refund fractional dividend
Interests on discount of bill acceptance
Total 38,323,050.64
30,116,287.80
5) Others cash played relating to financing activities
Items2019.01-06 2018.01-06
Interests on discount of bill acceptance136,500.00
216,469.74
Payment of guarantee money
17,348,438.30
17,457,092.02
Sale& leaseback and financial lease2,815,038.27
Repurchase the restricted stock
47,566,389.36
3,446,078.94
Note financing is due and is paid
Total 67,866,365.93
21,119,640.70
52.Supplementary information of consolidated cash flow statement
Items2019.01-06 2018.01-06
1. Adjusting net profit into cash flows of operating
activities:
—— ——Net profit 106,770,376.48
58,521,630.70
Add: Provision for impairment of assets 16,863,134.42
8,083,861.40
Depreciation of fixed assets, Amortization of mineralresources, and biological assets
33,043,962.66
31,496,581.95
Amortization of intangible assets 3,230,112.71
3,281,239.27
Amortization of long-term deferred expenses 804,794.82
828,379.74
Losses on disposal of fixed assets, intangible assets, andlong-term assets (income listed with”-”)
-1,242,799.31
-230,812.06
Losses on write-off of fixed assets (income listed with”-”) 15,126.57
Change of fair value profit or loss -40,461,125.59
Financial expense (income listed with”-”) 5,275,618.93
9,920,078.84
Investment loss (income listed with”-”) -117,127,421.73
-66,613,044.44
Decrease of deferred tax assets(increase listedwith”-”)
-2,804,370.02
-1,636,322.60
Increase of deferred tax liabilities(decreaselisted with”-”)
Decrease of inventories (increase listed with”-”) -56,623,320.41
-74,289,269.87
Decrease of operating receivables (increase listedwith”-”)
-109,300,254.90
-109,284,490.94
Increase of operating payables (decrease listedwith”-”)
83,780,127.49
22,644,645.48
Others
1,948,765.36
Net cash flows arising from operating activities -77,776,037.88
-115,328,757.17
2. Significant investment and financing activities
unrelated to cash income and expenses
Liabilities transferred to capital
Convertible bonds within 1 year
Financing leased fixed assets
3. Net increase (decrease) of cash and cash equivalent
Closing balance of cash 214,418,184.24
303,431,605.14
Less: Opening balance of cash 304,703,434.47
364,693,406.31
Add: Closing balance of cash equivalent
Less: Opening balance of cash equivalent
Net increase of cash and cash equivalent -90,285,250.23
-61,261,801.17
(2) Cash and cash equivalents
Items2019.6.30 2018.12.31
Cash 214,418,184.24
304,703,434.47
Including: Cash on hand 78,153.94
74,387.33
Bank deposit used for paying at any moment 214,340,030.30
304,629,047.14
Other monetary fund for paying at any moment
Deposit fund in central bank available for payment
Cash equivalent
Including: bonds investment with maturity in 3 months
Closing balance of cash and cash equivalents 214,418,184.24
304,703,434.47
Cash and cash equivalents restricted in the parentcompany or subsidiary
53.The assets with the ownership or use right restricted
Items 2019.6.30 ReasonsMonetary fund17,348,438.30
Guarantee moneyNotes Receivable
29,013,709.30
PledgeFixed assets64,583,406.59
Mortgage LoanIntangible assets
49,252,120.00
Mortgage LoanTotal160,197,674.19
Dalian Universe Thermal Technology Co., Ltd.and Dalian Bingshan Engineering&TradingCo.,Ltd. pledged the bank acceptance note to ICBC Dalian Economic and TechnologicalDevelopment Zone Branch as guarantee for issuing the commercial acceptance note.
Wuhan New World Refrigeration Industrial Co., Ltd signed the “maximum pledge contract”with GuangdaBank of China Wuhan branch. Property and land were pledged and Wuhan NewWorld Refrigeration Industrial Co., Ltd was granted for credit of 100 million Yuan.
54.Monetary category of foreign currency
(1) Monetary category of foreign currency
Item Closing Balance
(foreign currency)
Exchange
Rate
Closing Balance
(RMB)Cash—
—
9,747,221.34
Including：USD1,290,279.90
6.8747
8,870,287.22
Euro4,509.23
7.8170
35,248.65
GBP5,185.09
8.7113
45,168.87
JPY12,481,456.00
0.0638
796,516.60
Accounts receivable—
—
48,074,582.44
Including: USD6,081,736.57
6.8747
41,810,114.40
GBP136,790.86
8.7113
1,191,626.22
JPY79,491,692.00
0.0638
5,072,841.82
Accounts payable—
—
4,646,351.59
Including: USD364,005.37
6.8747
2,502,427.72
JPY41,946.28
8.7113
365,406.63
GBP27,869,456.56
0.0638
1,778,517.24
55.Government Grants
Category Amount Disclosure
Amountrecognized incurrent profit and
lossVAT refund
53,838.84
Other Income
53,838.84
Relocation compensation
556,998.00
Other Income
556,998.00
Special funds for processing tradefrom Economic Development Bureau
of JinPu new district
1,409,600.00
Other Income
1,409,600.00
Special fund subsidy for theconstruction of manufacturinginnovation center
15,000.00
Other Income
15,000.00
Fostering fund in 2018
337,400.00
Non-operating
income
337,400.00
Total
2,372,836.84
-
2,372,836.84
VIII. Change of Consolidation Scope
□Applicable √Not applicable
IX. Interest in other entity
1. Equity of subsidiaries
(1) Organization structure of group company
Name of subsidiaries
Mainbusinessaddress
Registered
address
Business nature
Shareholding (%)
Obtaining
methodDirect
Indirect
Dalian Bingshan GroupEngineering Co., Ltd.
Dalian Dalian Installation 100 EstablishDalian Bingshan Group SalesCo., Ltd.
Dalian Dalian Trading 100 EstablishDalian Bingshan Air-conditioningEquipment Co., Ltd.
Dalian Dalian Manufacturing 70
EstablishDalian Bingshan GuardianAutomation Co., Ltd.
Dalian Dalian Manufacturing 100
EstablishDalian Bingshan Ryosetsu QuickFreezing Equipment Co., Ltd.
Dalian Dalian Manufacturing 100
EstablishWuhan New World RefrigerationIndustrial Co., Ltd.
Wuhan Wuhan Manufacturing 100
Acquisition
Bingshan Technical Service（Dalian） Co.,Ltd.
Dalian Dalian Services 100
EstablishDalian New Meica Electronics
Dalian Dalian Electronic 100
Acquisition
Name of subsidiaries
Main
Registered
| business | address |
Business nature
Shareholding (%)
Obtaining
| method |
Technology Co., LtdDalian Universe ThermalTechnology Co., Ltd.
Dalian Dalian Manufacturing 55
Acquisition
Dalian Bingshan Engineering &Trading Co., Ltd.
Dalian Dalian Service 100
Acquisition
Wuhan New WorldAir-conditioning RefrigerationEngineering Co., Ltd
Wuhan Wuhan
Installation
100 EstablishWuhan Lanning EnergyTechnology Co., Ltd.
Wuhan Wuhan
Trading
54.55 Acquisition
Ningbo BingshanAir-conditioning RefrigerationEngineering Co., Ltd
Ningbo Ningbo Installation 51.00 EstablishDalian Bingshan -P&ARecreation DevelopmentEngineering Co., Ltd
Dalian DalianInstallation
100.00
Acquisition
Chengdu Bingshan RefrigerationEngineering Co., Ltd.
Chengdu
Chengdu
Services
51.00
Establish
1) All the proportion of shareholding in subsidiaries were the same with voting right
2) The company held over 50% voting right in subsidiaries and could control thesesubsidiaries with over 50% voting right
3) Change on the shareholding of the subsidiaries is explained in the Note II.change on thecombination scope
(2) There is no significant non-wholly-owned Subsidiary
2. Equity in joint venture arrangement or associated enterprise
(1) The important of joint ventures or affiliated companies
Name of joint ventures oraffiliated companies
Mainbusinessaddress
Registered
address
Business
nature
Shareholding (%)
Accounting
methodsDirect Indirect
Panasonic AppliancesCompressor (Dalian) Co., Ltd.
Dalian Dalian Manufacturing
Equitymethod
Dalian Bingshan MetalTechnology Co., Ltd.
Dalian Dalian Manufacturing
Equitymethod
Panasonic AppliancesCold-Chain (Dalian) Co., Ltd.
Dalian Dalian Manufacturing
EquitymethodThe Company assumes the affiliated as significant party either when the investment income frominvestee presents 10% of the parent’s net profit or the proportion of shareholding of the investee’s netasset represents 10% of the parent’s shareholder equity.
1) The Company has the same percentage of shareholding and voting right in joint-venture or
affiliated company.
2) The Company doesn’t have affiliated company which has significant influence although being
held less than 20% voting rights.
3) The Company doesn’t have joint venture or affiliated companies which have no significant
influence although being held 20% or more voting rights.
（2） The key financial information of affiliated companies
Items
30-06-2019/2019.01-06
Dalian BingshanMetal Technology
Co., Ltd.
PanasonicAppliancesCompressor (Dalian)
Co., Ltd.
PanasonicAppliancesCold-Chain (Dalian)
Co., Ltd.Current assets
348,869,737.30
1,350,509,101.63
1,343,635,261.96
Including: Cash andcash equivalents
Non-current assets47,594,104.91
315,945,480.08
245,220,954.76
Total assets396,463,842.21
1,666,454,581.71
1,588,856,216.72
Current liabilities52,605,535.67
528,998,866.63
952,340,955.51
Non-current liabilities
1,474,641.02
Items
30-06-2019/2019.01-06
Dalian BingshanMetal Technology
Co., Ltd.
PanasonicAppliancesCompressor (Dalian)
Co., Ltd.
PanasonicAppliancesCold-Chain (Dalian)
Co., Ltd.Total liabilities52,605,535.67
528,998,866.63
953,815,596.53
Minority interests
Equity to the parentcompany
343,858,306.54
1,137,455,715.08
635,040,620.19
Proportions of net assetsaccording to theshareholdingpercentage
168,490,570.20
454,982,286.03
254,016,248.08
Adjusting events
—Goodwill19,269,770.94
4,440,630.90
—Unrealized profits ofinsider trading
--Others
-69,007.66
-1,314,614.78
-2,450,740.67
Book value of equityinvestment of affiliatedcompanies
187,691,333.48
453,667,671.25
256,006,138.31
Operating income
202,961,647.33
620,287,402.33
741,540,108.17
Financial expense
Income tax expense
Net profit28,166,390.78
41,081,512.65
76,585,645.51
Total comprehensiveincome
28,166,390.78
41,081,512.65
76,585,645.51
Continued：
Items
31-12-2018/2018.01-06
Dalian BingshanMetal TechnologyCo., Ltd.
PanasonicCompressor(Dalian) Co., Ltd
Dalian FujiBingshan VendingMachine Co., Ltd.Current assets
336,224,040.64
1,376,419,885.42
456,023,899.41
Including: Cash and cashequivalents
Non-current assets50,280,554.61
326,931,005.88
279,107,770.84
Total assets386,504,595.25
1,703,350,891.30
735,131,670.25
Current liabilities73,598,900.93
484,391,688.87
273,539,622.63
Non-current liabilities
140,000.00
75,980,400.55
Total liabilities73,598,900.93
484,531,688.87
349,520,023.18
Minority interests
Equity to the parentcompany
312,905,694.32
1,218,819,202.43
385,611,647.07
Items
31-12-2018/2018.01-06
Dalian BingshanMetal TechnologyCo., Ltd.
PanasonicCompressor(Dalian) Co., Ltd
Dalian FujiBingshan VendingMachine Co., Ltd.Net assets calculatedaccording to theshareholding proportions
153,323,790.22
487,527,680.97
188,949,707.05
Adjusting events
—Goodwill19,269,770.94
226,689.30
—Unrealized profits ofinsider trading
--Others
-3,628,006.38
-918,935.60
Book value of equityinvestment of affiliatedcompanies
176,739,759.29
463,919,757.20
190,978,716.55
Operating income
227,720,485.87
770,577,003.95
239,919,017.35
Financial expense
Income tax expense
Net profit29,265,580.71
59,081,945.59
29,478,738.29
Total comprehensiveincome
29,265,580.71
59,081,945.59
29,478,738.29
（3） Summary financial information of insignificant affiliated companies
Items30-06-2019/2019.01-06 31-12-2018/2018.01-06
Total book value of investment of affiliatedcompanies
1,479,020,437.56
607,706,323.17
The total of following items according to theshareholding proportions
Net profit47,324,500.55
42,720,491.44
Other comprehensive income
Total comprehensive income47,324,500.55
42,720,491.44
（4） Significant restrictions of the ability of affiliated companies transferring funds to the
company.None
（5） Excessive loss of affiliated companies.
None
（6） Contingency related to joint venture or affiliated company need to be disclosed.
NoneX. Risk Related to Financial InstrumentsThe main financial instruments held by the group company are cash and cash in bank, accountsreceivable, accounts payable, other non-current financial assets and short term loan. The
detailed explanation is referred to this notes No.VI. The related risks of these financialinstruments and the risk management policy conducted to reduce these risks by the groupcompany are introduced as below. The Group management conducts to manage and monitorthese risks exposure and control these risks under certain risk level.
Objectives and policies of each risk managementThe objectives of risk management conducted by the group company are to reach the balancebetween risk and profit return by reducing the negative influence to operating performance tothe minimum level as well as maximizing the shareholders’ and other investors’ profits. Basedon these objectives, the basic risk management policy is to recognize and analyze all sorts ofrisk that the group company faced with, to set up the proper risk tolerance bottom lineconducting risk management, as well as to monitor these risks in a timely and effective manner,and to ensure these risks under the limit level.
(1) Market risk
1) Exchange rate risk
Most of the company’s business is located in China, and settled with RMB. But the companydefined exchange rate risk of assets, liabilities dominated in foreign currency and futuretransaction dominated in foreign currency (mainly including USD,JPY,HKD and GBP). Thefinancial department of the company monitors the company’s foreign currency transaction andthe scale of foreign assets and liabilities, and decreases exchange rate risk. During the currentyear the company didn’t agree any forward foreign exchange contract or currency swapcontract .As at 30 June 2019, the company’s assets and liabilities dominated in foreigncurrency are listed in RMB as following：
Items Closing Balance Opening balanceMonetary fund-USD
8,870,287.22
5,667,809.15
Monetary fund-EURO
35,248.65
29,231.51
Monetary fund- GBP
45,168.87
161,967.04
Monetary fund-JPY
796,516.60
2,567,812.86
Receivable- USD
41,810,114.40
38,855,616.42
Receivable - GBP
1,191,626.22
991,653.74
Receivable - JPY
5,072,841.82
4,984,342.22
Payables -USD
2,502,427.72
7,859,730.74
Payables - GBP
365,406.63
337,038.09
Payables -JPY
1,778,517.24
3,859,072.32
Dalian Refrigeration Company paid close attention to the effect on FX risk.
2) Interest rate risk
The interest risk of the Group incurred from bank loan, risk of a floating interest rate of financialliabilities that lead to the company facing cash flow interest rate risk, financial liabilities with a fixedinterest rate lead to the company facing cash flow interest rate risk. The company determined theproportion of fixed interest rate and floating interest rate according the current market circumstance. TheCompany and Dalian Bingshan Group Co.,Ltd borrowed long term loan RMB 160,000,000.00 withfixed interest rate.The financial department of the company continuously monitors the interest rates level, and themanagement would make some adjustment to lower the interest rate risk according to the latest marketsituation. Climbing interest rate will increase the cost of newly increased interest-bearing liability andinterest expense for unsettled interest-bearing liability at floating rate and have adverse effect on thebusiness performance.The sensitive analysis：
As at 30 June 2019, base on the assumption of interest rate change of 50 BP, the Company’s net profitwill increase or decrease RMB 1,423.80 thousand Yuan.
3) Price risk
Dalian Refrigeration Company sells steel products according to the market price, so there will be effecton the price variance.
(2)Credit risk
The credit risk of the company comes from monetary fund, notes receivable, accounts receivable, andother accounts receivable etc.The management made credit policies and monitored changes of this creditexposure.The company's working capital was in bank with higher credit rating, so there was no significant creditrisk, nor significant losses due to the default of other entity. Upper limit policy is adopted to avoid anycredit risk from financial institution.The company made relevant policy to control credit risk exposure from receivable, other receivable andnotes receivable. The company assesses the client’s credit background according to the client’s financialperformance, possibility of obtaining guarantee from the 3rd party, credit record and other factors suchas current market. The company will periodically monitor the credit situation of the client and willtake measures such as prompt letter, shorten credit period or cancel the credit to ensure the overall creditrisk within the controllable scope.As at 30 June 2019, the top five customers of receivable accounts balance is：133,966,141.13 Yuan.
(3) Liquidity risk
Liquidity risk was referred to the risk of shortage of funds incurred when the enterprise fulfill theobligation of settlement by cash or other financial assets. The way to manage the liquidity risk is toensure enough fund available to fulfill the liability by due date in prevention from unacceptable loss ofor reputation damage to the Company. The Company periodically analyze the liability structure andexpiry date and the financial department of the company continued to monitors the short term or longterm capital needs to ensure maintain plenty of cash flow. And the same time they also monitor thecondition of bank loan agreements and obtain commitments from banks to provide plenty of funds.The main fund comes from bank loan. By 30
June 2019, the credit limit still available is 391 millionYuan and short term credit limit available is 391 million Yuan.As at 30 June 2019, the Company’s financial assets and financial liabilities in line with non discountcash flow of the contracts as following： Currency unity: 10 thousand YuanClosing balanceItems
Within 1
year
1-2years
2-5years
Over 5
years
TotalFinancial AssetsCash and cash in bank
23,176.66
23,176.66
Notes receivable
15,474.91
15,474.91
Accounts receivable
124,210.24
124,210.24
Other Receivable
9,226.95
9,226.95
Other non-current financial assets
30,127.03
30,127.03
Financial Liabilities
Short-term loan
28,900.00
28,900.00
Notes Payable
30,894.24
30,894.24
Accounts payable
91,759.98
91,759.98
Other payable
7,852.18
7,852.18
Employee’s payable
1,103.35
1,103.35
Tax payable
2,035.53
2,035.53
Long-term loan
16,000.00
16,000.00
Bonds payable
2,500.00
2,500.00
XI. Disclosure of Fair Value
1. Amount and measurement level of the assets and liabilities measured at fair value at the year
end
Items
Fair value at the year endFirst levelmeasurement of fairvalue
Second levelmeasurement offair value
Third levelmeasurementof fair value
TotalFinancial assets Continuouslymeasured at FV available for sale
Available for sale asset 288,278,646.80
288,278,646.80
(1) Investment by debt instruments
(2) Investment by equity instruments
288,278,646.80
288,278,646.80
(3) Others
2. Basis for Market price of first level measurement of fair value
Equity instrument portion of other non-current financial assets is measured at the unadjustedclosing quoted price on stock market on June 28, 2019.
3. For continuous and discontinuous 2
nd
level of FV, valuation technique adopted and keyparameter quantitive and qualitive information.None.
4. For continuous and discontinuous 3
rd
level of FV, valuation technique adopted and keyparameter quantitive and qualitive information.None..
5. For continuous 3
rd
level of FV, adjusted information of opening and closing balance andsensitivity analysis of unobservable parameter.None
6. Assets continuously measured at fair value have switched among different level during the
year.None
7. Changes of valuation technique and reasons for changes
None
8. Assets and liability are disclosed at FV rather than measured at FV
NoneXII. Related Parties Relationship and Transactions(I) Related parties relationship
1. Parent company and ultimate controller
1) Parent company and ultimate controller
Parentcompany
Registered
address
Businessnature
Registeredcapital
Shareholdingpercentage
(%)
Votingpowerpercentage
(%)DalianBingshanGroup Co.,Ltd.
Dalian Manufacture
158,580,000.00
20.27 20.27
Dalian Bingshan Group Co., Ltd. is a sino –foreign joint venture located No.888 Xinan Road,Shahekou District, Dalian, China.The legal representative of Dalian Bingshan Group Co., Ltd. isMr.Ji Zhijian, and the registered capital is RMB158.58 million. The registered businessoperation period is from 3
rd
July 1985 to 2
nd
July 2035. The business scope include research,development, manufacture, sales, service and installment of refrigeration equipment, coolingand freezing equipment, different size of air-conditioners, petrochemical equipment, electronicand electronic- control products, home electronic appliance, environment protect equipmentand etc. (unless the licenses needed)
2. Subsidiaries
Referring to the content in the Note IX. 1. (1) Organization structure of group company.
3. Affiliated company and joint venture
The information of the affiliated company and joint venture please refers to the note IX. 3 ‘Thesignificant affiliated company and joint venture’. The company had transactions with relatedparties during the current period or last period, including:
Names of the joint ventures or affiliated company Relationships with the CompanyPanasonic Appliances Air-conditioning andRefrigeration (Dalian) Co., Ltd
Affiliated company of the CompanyPanasonic Appliances Cold-chain (Dalian) Co., Ltd Affiliated company of the CompanyPanasonic Appliances Compressor (Dalian) Co., Ltd Affiliated company of the CompanyDalian Honjo Chemical Co., Ltd Affiliated company of the CompanyKeinin-Grand Ocean Thermal Technology (Dalian)Co., Ltd
Affiliated company of the CompanyBeijing Huashang Bingshan Refrigeration andAir-conditioning Machinery Co., Ltd
Affiliated company of the CompanyDalian Fuji Bingshan Vending Machine Co., Ltd Affiliated company of the Company
Names of the joint ventures or affiliated company Relationships with the CompanyMHI Bingshan Refrigeration (Dalian) Co.,Ltd. Affiliated company of the CompanyDalian Fuji Bingshan Vending Machine Sales Co., Ltd
Affiliated company of the CompanyJiangsu JingXue Insulation Technology Co.,Ltd Affiliated company of the Company
Panasonic Refrigerating System (Dalian) Co., Ltd.Affiliated company of the CompanyDalian Bingshan Metal Technology Co.,Ltd Affiliated company of the CompanyWuhan Sikafu Power Control Equipment Co., Ltd
Affiliated wholly owned subsidiary of the
Company
4. Other related parties
Name of related party
Related party relationshipDalian Bingshan Group Refrigeration Equipment Co., Ltd
Affiliated company of DalianBingshan GroupDalian Spindle Cooling Towers Co., Ltd
Affiliated company of DalianBingshan GroupBAC Dalian Co., Ltd
Affiliated company of DalianBingshan GroupDalian Part Technology Co.,LTd Subsidiary of Dalian Bingshan GroupDalian Bingshan Group Mangement and ConsultingCo.,Ltd
Subsidiary of Dalian Bingshan GroupDalian Fuji Bingshan Intelligent Control System Co., Ltd.
Affiliated company of Subsidiary of
Dalian Bingshan GroupDalian Bingshan Huigu Development Co., Ltd.
Affiliated company of Subsidiary of
Dalian Bingshan GroupDalian Bingshan Group Huahuida Financial Leasing Co.,Ltd
Affiliated company of Subsidiary of
Dalian Bingshan Group
5. Related Party transactions
1. Purchase of goods, offer and receive labour services etc inter-group transactions
1) Purchase of goods/receive labour services
Related party Content
2019.1-6 2018.1-6Dalian Part Technology Co.,LTd
Purchases ofgoods
3,741,590.18
4,465,731.71
Panasonic Appliances Air-conditioning and Refrigeration (Dalian)
Co., Ltd.
36,142,649.15
15,480,374.25
Panasonic Appliances Cold-chain (Dalian) Co., Ltd
23,174,161.33
33,172,331.36
Panasonic Appliances Compressor (Dalian) Co., Ltd
1,773,477.15
10,529.91
Panasonic Refrigerating System (Dalian) Co., Ltd.10,227,269.49
9,125,437.07
Dalian Fuji Bingshan Vending Machine Co., Ltd14,488.80
Dalian Fuji Bingshan Vending Machine Sales Co., Ltd
456,410.26
Dalian Spindle Cooling Towers Co., Ltd1,704,026.65
1,260,037.60
Dalian Honjo Chemical Co., Ltd.
74,102.56
BAC Dalian Co., Ltd15,071,702.87
20,852,695.11
Dalian Bingshan Metal Technology Co., Ltd43,155.87
196,551.73
Beijing Huashang Bingshan Refrigeration and Air-
Machinery Co., Ltd
conditioning
Dalian Bingshan Group Refrigeration Equipment Co., Ltd12,608,423.94
11,153,346.84
Jiangsu JingXue Insulation Technology Co.,Ltd16,909,130.64
4,117,598.28
Dalian Bingshan Wisdom Park Co., Ltd342,045.83
Dalian Fuji Bingshan Intelligent Control System Co., Ltd.
Dalian Kelvins Technology Technology Co., Ltd
Total121,752,121.90
100,365,146.68
1) Sales of goods/ labour services provision
Related party
Conte
nt
2019.1-6 2018.1-6Dalian Part Technology Co.,LTd
Sales
ofgoods
2,424,649.57
1,026,891.85
Panasonic Appliances Air-conditioning and Refrigeration
(Dalian) Co., Ltd.
48,139,165.51
42,299,738.16
Panasonic Appliances Cold-chain (Dalian) Co., Ltd
73,431,383.81
81,412,904.44
Panasonic Appliances Compressor (Dalian) Co., Ltd
7,987,011.69
7,085,867.73
Panasonic Refrigerating System (Dalian) Co., Ltd.15,372,612.19
12,374,757.92
Dalian Fuji Bingshan Vending Machine Co., Ltd
14,649,557.64
21,933,607.05
Dalian Fuji Bingshan Vending Machine Sales Co., Ltd
393,571.69
438,157.96
MHI Bingshan Refrigeration (Dalian) Co.,Ltd.
1,785,687.98
2,748,243.46
Dalian Spindle Cooling Towers Co., Ltd
146,937.92
113,024.88
Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd.
425,682.00
417,336.00
BAC Dalian Co., Ltd
11,715,950.10
325,633.66
Beijing Huashang Bingshan Refrigeration and Air-
Machinery Co., Ltd.
32,657.62
conditioning
5,175,496.30
Dalian Bingshan Group Refrigeration Equipment Co., Ltd
3,803,139.47
2,917,141.96
Jiangsu JingXue Insulation Technology Co.,Ltd
70,553.57
Wuhan Sikafu Power Control Equipment Co., Ltd
258,666.59
68,969.06
Dalian Bingshan Group Huahuida Financial Leasing Co.,LTd
412,289.70
437,692.80
Dalian Bingshan Wisdom Park Co., Ltd
47,895.48
1,393,059.76
Dalian Fuji Bingshan Intelligent Control System Co., Ltd.
22,000.00
Total
181,119,412.53
180,168,522.99
2) Assets Lease
1) Assets rent out
Lessor Lessee
Category ofassets rent out
2019.-6-30Lease Income
2018-6-30Lease Income
TheCompany
MHI BingshanRefrigeration (Dalian)Co.,Ltd.
Plant2,000,000.00
2,000,000.00
TheCompany
Dalian BingshanWisdom Park Co., Ltd
Office3,722,293.19
3,717,948.50
TheCompany
Panasonic compressor(Dalian) Co., Ltd
Employeedormitory
45,714.28
TheCompany
Panasonic Refrigeration(Dalian) Co., Ltd.
Employeedormitory
35,122.60
TheCompany
Jiangsu JingXueInsulation TechnologyCo.,Ltd
Plant and office
493,160.97
423,031.46
Note: The Company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co., Ltd., and
rent # 6 workshop building located on No. 106 Liaohe East Rd, Dalian Economic and TechnologyDevelopment Zone to MHI Bingshan Refrigeration (Dalian) Co., Ltd. The rental area is 15,259.04square meters, and the rental term till 16
thJuly, 2029. The annual rent fee for 2018 is RMB 4.2million Yuan. In 2019, a revised agreement was signed to collect rent of 4 million yuan per year. In2019, the rent was deducted by 875,000 yuan at one time because some projects were not used.The Company signed rental contract with Dalian Bingshan Wisdom Park Co., Ltd., and rent out thewhole land and house of the Company’s old plant locating at No. 888, Southwest Road, ShahekouDistrict, Dalian to Dalian Bingshan Wisdom Park Co., Ltd., with rental land area of 167,165.61square meters and housing area of 105,652.43 square meters. The lease term is from April 1, 2017 toDecember 31, 2036. The annual rent fee for 2019 is RMB 7.86 million Yuan.Guarantee with related
companies.
The national development fund planned to support the company’s intelligent and green equipment ofcold chain and service industry base project, and provide the special fund to the controllingshareholder of the company, Bingshan Group.
3) Funds borrow from /lent to related party
Name of the related party Amount Starting date Ending date ExplanationDalian Bingshan Group Co., Ltd.160,000,000.00
2016.03.14 2026.03.13
Project fundinvestment
6.Balances with Related party
(1) Accounts receivable due from related parties
Item Related party
Closing Balance Opening BalanceBookBalance
Bad debtProvision
BookBalance
Bad debtProvisionAccountsreceivable
BAC Dalian Co.,Ltd
2,837,960.17
141,898.01
2,289,340.93
114,467.05
Accountsreceivable
Beijing HuashangBingshanRefrigeration andAir-conditioningMachinery Co.,Ltd
13,083,104.73
3,924,931.42
13,484,313.93
2,194,502.13
Accountsreceivable
Dalian FujiBingshan VendingMachine Co., Ltd.
13,894,359.19
694,717.96
6,255,865.97
312,793.30
Accountsreceivable
Dalian SpindleCooling TowersCo., Ltd
103,903.38
5,195.17
67,486.00
3,374.30
Accountsreceivable
MHI BingshanRefrigeration(Dalian) Co.,Ltd.
1,835,577.52
91,778.88
2,301,963.32
115,098.17
Accountsreceivable
PanasonicRefrigerationSystem (Dalian)Co., Ltd.
11,858,693.32
592,934.67
4,933,468.75
246,673.44
Accountsreceivable
PanasonicAppliances ColdChain (Dalian)Co., Ltd
10,552,500.47
527,625.02
20,911,809.84
1,045,590.49
Accountsreceivable
PanasonicAppliancesCompressor(Dalian) Co., Ltd
827,544.01
41,377.20
1,556,496.87
77,824.84
Accountsreceivable
PanasonicAppliancesAir-conditioningand Refrigeration
(Dalian) Co.,Ltd.
12,960,986.53
648,049.33
7,040,959.98
352,048.00
Accountsreceivable
Wuhan SikafuPower ControlEquipment Co.,Ltd
128,386.30
6,419.32
317,331.82
19,483.28
Accountsreceivable
Dalian FujiBingshanIntelligentControl SystemCo., Ltd.
280,000.00
14,000.00
280,000.00
14,000.00
Accountsreceivable
Dalian BingshanGroup HuahuidaFinancial LeasingCo.,LTd
1,935,465.61
96,773.28
1,935,465.61
96,773.28
Accountsreceivable
Dalian BingshanWisdom Park Co.,Ltd
4,630,000.00
231,500.00
700,000.00
35,000.00
Otherreceivable
Wuhan SikafuPower ControlEquipment Co.,Ltd
175,476.16
8,773.81
251,993.71
12,599.69
Prepayment
Jiangsu JingXueInsulationTechnologyCo.,Ltd
907,192.54
60,214.80
Prepayment
PanasonicAppliancesCompressor(Dalian) Co., Ltd
80.00
Prepayment
PanasonicAppliancesAir-conditioningand Refrigeration
(Dalian) Co.,Ltd.
530,350.00
5,052,007.00
Prepayment
Dalian BingshanGroup HuahuidaFinancial LeasingCo.,LTd
4,655,305.00
3,650,105.00
Prepayment
Dalian SpindleCooling TowersCo., Ltd
176,000.00
Prepayment
BAC Dalian Co.,Ltd
871,229.69
Prepayment
Dalian BingshanWisdom Park Co.,Ltd
187,886.00
Notesreceivable
BAC (Dalian)Co., Ltd
4,102,951.12
441,001.03
Notesreceivable
PanasonicRefrigerationSystem (Dalian)Co., Ltd.
4,518,622.68
4,210,388.96
Notesreceivable
PanasonicAppliances ColdChain (Dalian)Co., Ltd
32,086,738.26
50,565,030.10
Notesreceivable
PanasonicAppliancesAir-conditioningand Refrigeration
(Dalian) Co.,Ltd.
12,936,367.63
11,686,954.09
Notesreceivable
MHI BingshanRefrigeration(Dalian) Co.,Ltd.
589,860.00
Notesreceivable
Beijing HuashangBingshanRefrigeration andAir-conditioningMachinery Co.,Ltd
4,102,373.40
(1) Accounts Payable due from Related Party
Item Related party Closing Balance
Opening Balance
Accounts Payable
BAC Dalian Co., Ltd
22,613,596.72
9,295,740.00
Accounts Payable
Dalian Bingshan Group RefrigerationEquipment Co., Ltd.
3,207,343.52
6,137,617.64
Accounts Payable
Dalian Bingshan part TechnologyCo.,Ltd
825,234.01
1,551,409.98
Accounts Payable
Dalian Fuji Bingshan VendingMachine Co., Ltd.
62,674.56
134,547.35
Accounts Payable
Dalian Spindle Cooling Towers Co.,Ltd
4,374,436.70
2,562,898.70
Accounts Payable
Jiangsu JingXue InsulationTechnology Co.,Ltd
15,871,568.38
13,774,809.38
Accounts Payable
Dalian Fuji Bingshan IntelligentControl System Co., Ltd.
295,000.00
295,000.00
Accounts Payable
Dalian Fuji Bingshan VendingMachine Sales Co., Ltd
414,000.00
414,000.00
Accounts Payable
Panasonic Refrigeration System(Dalian) Co., Ltd.
39,324,474.21
31,395,663.27
Accounts Payable
Panasonic Appliances Cold Chain(Dalian) Co., Ltd
214,435.02
3,861,712.32
Accounts Payable
Panasonic Appliances Compressor(Dalian) Co., Ltd
1,696,000.00
1,696,000.00
Accounts Payable
Panasonic AppliancesAir-conditioning and Refrigeration
(Dalian) Co., Ltd.
19,721,310.94
6,409,209.89
Accounts Payable
Dalian Bingshan Metal TechnologyCo., Ltd
115,100.45
142,587.67
Other accountspayable
Jiangsu JingXue InsulationTechnology Co.,Ltd
70,000.00
Other accountspayable
MHI Bingshan Refrigeration(Dalian) Co.,Ltd.
170,000.00
Other accountspayable
Dalian BingshanWisdom ParkCo.,Ltd
500,000.00
AccountsReceived inAdvance
Panasonic Appliances Cold Chain(Dalian) Co., Ltd
829,875.04
AccountsReceived inAdvance
Dalian BingshanWisdom ParkCo.,Ltd
700,000.00
AccountsReceived inAdvance
Wuhan Sikafu Power ControlEquipment Co., Ltd
53,211.60
AccountsReceived inAdvance
Panasonic Refrigeration System(Dalian) Co., Ltd.
23,267.70
AccountsReceived inAdvance
Keinin-Grand Ocean ThermalTechnology (Dalian) Co., Ltd
59,596.18
59,596.18
Notes Payable BAC Dalian Co., Ltd
24,920,000.00
30,200,000.00
Notes Payable
Dalian Bingshan Group RefrigerationEquipment Co., Ltd.
19,810,553.03
26,838,133.04
Notes Payable
Dalian Bingshan Pate TechnologyCo.,Ltd
400,000.00
2,021,735.79
Notes Payable
Jiangsu JingXue InsulationTechnology Co.,Ltd
3,709,868.20
411,909.94
Notes Payable
Panasonic Appliances Cold Chain(Dalian) Co., Ltd
1,657,321.00
Notes Payable
Dalian Spindle Cooling Towers Co.,Ltd
6,256,661.88
Notes Payable
Panasonic Refrigeration System(Dalian) Co., Ltd.
2,075,770.74
8,334,675.20
(II) Related Party CommitmentNoneXIII. Share-Based Payment
1． General situation of share payment
□Applicable √Not applicable
2． Share payment settled by equity
□Applicable √Not applicable
3． Share Payments Settled in Cash
□Applicable √Not applicable
4. Modification and Termination of Share Payment
On December 10,2018, the Company held the 25
th
meeting of the seventh board ofdirectors which reviewed and approved the Proposal on terminating the implementation of 2016Restricted Stock Incentive Plan of the Company and log outing the restricted stock.On January 17,2019, the Company held the first extraordinary shareholders’ meeting of2019 which reviewed and approved the Proposal on terminating the implementation of 2016Restricted Stock Incentive Plan of the Company and log outing the restricted stock. On March4,2019, the Company has completed the capital reduction process, and the registered capital ofthe Company was changed from 855,434,087 Yuan to 843,212,507 Yuan.XIV.
(1)Contingency
As at 30 June 2019, the Group does not have any other contingencies for disclosure.
(2)Commitment
As at 30 June 2019, the Group does not have any other significant commitments.XV. Events after the Balance Sheet Date
1. Significant events had not adjusted
Not applicable.
2. Information about profit distribution
Not applicable.
3. Sales Return
There is no significant sales return after the balance sheet date.
4. Except the subsequent event disclosed above, the Company has no other significantsubsequent event.XVI. Other Significant Events
1. Error correction and effect in previous period.
The Company has no adjustment of prior period accounting error this year.
2. Debt Restructuring
The Company has no events of debt restructuring this year.
3. Asset exchange
(1) The exchange of non-monetary assets
None
(2) The exchange of other assets
None
4. Annuity Plan
None
5. Operation Termination
None
6. Segment Information
The management of the Company divided the Company into 3 segments based on thegeographic area: Northeast China, Central China, and East China. The Northeast is theCompany’s general headquarters and the registered address. The Central is the subsidiary of theCompany, Wuhan New World Refrigeration Industrial Co., Ltd, Chengdu Bingshan. The East isthe subsidiaries of the Company, and they are Ningbo Bingshan Air-conditioning RefrigerationEngineering Co., Ltd and Shanghai Bingshan Technical Service Co., Ltd.
(1) The basis and accounting policies of reporting segments
The internal organization structure, management requirements and internal report scheme are
the determination basis for the Company to set the operating segments. The segmentsare those satisfied the following requirements.
1).The segment can generates revenue and incur expenses.
2).The management personnel can regularly evaluate the operation results of segments and
allocate resource ,assess its performance .
3).The financial situation, operation results, cash flow and other accounting information of
segments can be acquired.The Company confirms the report segments based on the operating segments. The transfer priceamong segments is set base on the market price. The assets and related expenses in common useare allocated to different segments based on their proportion of revenue.
(2)The financial information of reporting segments
Amount unit ： YuanItems
30-06-2019/2019.01-06
NortheastChina
Central
China
EastChina
Offset Total1 Operating income
1,148,452,551.71
150,700,485.95
8,643,236.09
-232,067,033.18
1,075,729,240.57
2 Cost1,162,556,073.51
161,719,250.40
9,338,338.19
-232,067,033.18
1,101,546,628.92
Impairment on assets
Items
30-06-2019/2019.01-06
NortheastChina
Central
China
EastChina
Offset TotalDepreciation andamortization
31,233,798.77
5,809,671.04
35,400.38
37,078,870.19
3 Investment income fromassociates and joint venture
69,432,604.16
-669,354.03
68,763,250.13
4 Operating profits(loss)
132,490,396.86
-11,680,193.88
-749,448.66
-3,000,000.00
117,060,754.32
5 Income tax13,985,552.64
-207,384.95
-11,561.85
13,766,605.84
6 Net profit(loss)118,504,844.22
-11,472,808.93
-737,886.81
-3,000,000.00
103,294,148.48
7 Total assets6,068,196,486.67
671,738,576.32
14,227,645.28
-1,150,333,264.03
5,603,829,444.24
8 Total liabilities2,223,479,350.49
426,187,175.35
10,063,170.17
-550,671,314.75
2,109,058,381.26
7. Other important transactions and matters affect the investor's decision
The company hasn’t had other important transactions and matters affect the investor's decisionin this period.XVII. Notes to the Main Items of the Financial Statements of Parent Company
1. Accounts receivable
(1) Accounts receivable category
Item
Closing BalanceBooking balance ProvisionBookingbalanceAmount % Amount %Accountsreceivable with
significantindividual amount
and separate bad
debt provision
Accountsreceivable with bad
debt provision
based on thecharacters of credit
risk portfolio
Accounting age ascharacters
245,593,588.69
41.37%
61,159,532.65
24.90%
184,434,056.04
Related party
within
consolidation
scope
348,070,518.35
58.63%
348,070,518.35
Accountsreceivable with
Item
Closing BalanceBooking balance ProvisionBookingbalanceAmount % Amount %insignificantindividual amount
and separate baddebt provision
Total
593,664,107.04
100.00%
61,159,532.65
532,504,574.39
(Continued)
Item
Opening BalanceBooking balance ProvisionBookingbalanceAmount % Amount %Accounts receivable
with significantindividual amountand separate baddebt provision
Accounts receivable
with bad debtprovision based on
the characters ofcredit risk portfolio
Accounting age as
characters
218,079,693.09
45.47%
60,923,442.32
27.94%
157,156,250.77
Related party withinconsolidation scope
261,559,395.83
54.53%
261,559,395.83
Accounts receivable
with insignificantindividual amount
and separate baddebt provision
Total
479,639,088.92
100.00%
60,923,442.32
12.70%
418,715,646.60
Items
Closing Balance
Booking balance
Provision
%
Expected credit losses within 1 year 68,588,325.16
3,429,416.26
5.00%
Expect credit losses of 1-2 years
105,418,995.76
10,541,899.58
10.00%
Expect credit losses of 2-3 years
19,212,036.10
5,763,610.83
30.00%
Expect credit losses of 3-4 years
16,969,037.24
8,484,518.62
50.00%
Expect credit losses of 4-5 years
12,325,535.34
9,860,428.27
80.00%
Expect credit losses more than 5 years
23,079,659.09
23,079,659.09
100.00%
Total
245,593,588.69
61,159,532.65
--
(1)The bad debt provisions of accounts receivable in the portfolio is accrued under accountingaging analysis method:
Aging Closing BalanceWithin1 year68,588,325.16
11to 2 years
105,418,995.76
| 11to 2 years | |
19,212,036.10
| 22 to 3 years | |
More than 3 years52,374,231.67
3 to 4 years16,969,037.24
4 to 5 years12,325,535.34
More than 5 years23,079,659.09
Total245,593,588.69
(2) Bad debt provision accrued and reversed (withdraw)
The bad debt provision has been accrued in the amount of 2,889,548.29 Yuan.
(3) No accounts receivable written off in current period.
Item Written off amountReceivable actually written off 2,851,184.95
(4) The top five significant accounts receivable categorized by debtors
)Company
ClosingBalance
Aging
% of thetotal AR
ClosingBalance ofProvisionXinyi Yuanda Constructionand Installation EngineeringCo., Ltd.
32,748,744.00
1-2years,2-3years
5.52%
5,750,623.20
Ningxia Wangwa Coal29,847,967.00
Within 1 year
5.03%
1,492,398.35Dalian Thermal Power Co.,ltd
22,320,000.00
Within 1 year
3.76%
1,116,000.00
SINOPEC InternationalBusiness Ningbo Co., Ltd.
21,970,846.97
Within 1 year
3.70%
1,098,542.35Guangzhou Fuli EstateCo.,Ltd
17,126,861.21
Within 1 year,
1-2 years
2.88%
856,343.06
Total
124,014,419.18
20.89%
10,313,906.96
2. Other Receivables
Item Closing Balance Opening BalanceInterest receivable
318,886.12
Dividend receivable
56,591,452.20
Other receivable
5,059,293.49
13,684,383.22
Total
61,650,745.69
14,003,269.34
2.1 Interest receivable
(1) Interest receivable category
Item Closing Balance Opening BalanceInterest on term deposits
318,886.12
Interest on bank financial product
Total
318,886.12
2.2 Dividend receivable
Item
Closing Balance Opening Balance
Panasonic Refrigeration (Dalian) Co., Ltd.4,000,000.00
Panasonic Compressor (Dalian) Co., Ltd45,350,000.00
Jiangsu JingXue Insulation Technology Co.,Ltd
2,921,200.00
Guotai Junan Securities Co., Ltd.4,320,252.20
Total
56,591,452.20
2.3 Other receivable
(1) Other receivables categorized by nature
Nature Closing Balance Opening BalanceEquity transfer fund
8,588,400.00
Petty cash820,821.14
23,050.50
Guarantee deposits6,070,527.71
6,681,152.00
Others87,338.88
87,980.00
Total
6,978,687.73
15,380,582.50
(2) Provision for bad debts
Provision for bad debts
The first phase The second phase The third phase
Total
next 12 months
Expected Credit Lossfor the duration (NoCredit Devaluation)
Expected Credit Loss for
the duration (Creditimpairment has occurred)
Expected credit losses in the
Balance on January 1, 2019 1,696,199.28
1,696,199.28
The balance of January 1, 2019 inthe current period
——
——
——
——
Provision for bad debts 223,194.96
223,194.96
Balance on June 30, 2019 1,919,394.24
1,919,394.24
The bad debt provisions of other receivables in the portfolio is accrued under accountingaging analysis method
Aging
Closing Balance
Within1 year
2,747,372.73
1,261,822.00
| 11to 2 years | |
140,928.00
| 22 to 3 years | |
More than 3 years 2,828,565.00
3 to 4 years
2,430,000.00
4 to 5 years
More than 5 years
398,565.00
Total
6,978,687.73
(3) Bad debt provision accrued and reversed (withdraw) in the period.
The bad debt provision has been reversed by 223,194.96 Yuan.
(4) Other receivables from the top 5 debtors
Name Category
ClosingBalance
Aging
% of thetotal OR
ClosingBalance ofProvisionDalian Delta HK Chinagas Co., Ltd
Securitydeposit
2,730,000.00
3-4years，over 5years
39.12
1,515,000.00
Liaoning JingweiEngineeringManagement Co., Ltd.Dalian Branch
Securitydeposit
800,000.00
1-2 years
11.46
80,000.00
China petroleummaterials co. LTD
Securitydeposit
330,000.00
Within 1
year
4.73
16,500.00
Baotou dongshengtechnology co. LTD
Securitydeposit
300,000.00
Within 1
year
4.30
15,000.00
Jiangxi GanfengLithium Co., Ltd.
Securitydeposit
200,000.00
Within 1year
2.87
10,000.00
Total 4,360,000.00
62.48
1,636,500.00
3. Long-term equity investments
(1) Category of long-term equity investments
Item
Closing Balance Opening BalanceClosing Balance Provision
Book Value Opening Balance Provision Book ValueInvestment of subsidiaries
587,496,652.08
587,496,652.08
587,496,652.08
587,496,652.08
Investment of affiliates and JV
1,623,763,187.90
1,623,763,187.90
1,614,457,190.34
1,614,457,190.34
Total
2,211,259,839.98
2,211,259,839.98
2,201,953,842.42
2,201,953,842.42
(2) Investments of subsidiaries
Subsidiaries names Opening Balance Increase Decrease Closing BalanceDalian Bingshan Group Construction Co., Ltd93,749,675.77
93,749,675.77
Dalian Bingshan Group Sales Co., Ltd20,722,428.15
20,722,428.15
Dalian Bingshan Air-Conditioning Equipment Co., Ltd36,506,570.00
36,506,570.00
Dalian Bingshan Guardian Automation Co., Ltd.6,872,117.80
6,872,117.80
Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd.59,356,051.19
59,356,051.19
Dalian Universe Thermal Technology Co., Ltd.48,287,589.78
48,287,589.78
Wuhan New World Refrigeration Industrial Co., Ltd184,674,910.81
184,674,910.81
Bingshan Technical Service （Dalian） Co.,Ltd.22,024,000.00
22,024,000.00
Dalian New Meica Electronics Co., Ltd.43,766,243.72
43,766,243.72
Dalian Bingshan Engineering & Trading Co., Ltd.71,537,064.86
71,537,064.86
Total
587,496,652.08
587,496,652.08
(3) Joint ventures& affiliated companies
Investee Beginning balance
Increase/Decrease
Ending balance
Provision forimpairment
at year endIncreased
Decreased
recognizedunder the equity
method
| Gains and losses | Adjustment of |
othercomprehensive
income
sof other
equity
Cash bonus or
profitsannounced
Provision forimpairment of the
current period
Others
1. Affiliated companys
Change
Panasonic AppliancesAir-conditioning and
Refrigeration (Dalian) Co., Ltd.
175,290,858.38
288,044.47
8,000,000.00
167,578,902.85
Panasonic AppliancesCold-chain (Dalian) Co., Ltd
232,222,620.76
28,183,517.55
4,400,000.00
256,006,138.31
Panasonic AppliancesCompressor (Dalian) Co., Ltd
483,899,674.59
15,117,996.66
45,350,000.00
453,667,671.25
Dalian Honjo Chemical Co.,Ltd
8,832,597.83
381,197.74
647,634.60
8,566,160.97
Keinin-Grand Ocean ThermalTechnology (Dalian) Co., Ltd
61,750,687.77
2,485,379.54
64,236,067.31
Beijing Huashang BingshanRefrigeration andAir-conditioning MachineryCo., Ltd
1,268,139.59
-16,693.65
1,251,445.94
Dalian Fuji Bingshan VendingMachine Co., Ltd
188,257,460.75
989,770.27
189,247,231.02
MHI Bingshan Refrigeration(Dalian) Co.,Ltd.
13,783,339.36
-519,054.84
13,264,284.52
Dalian Fuji Bingshan VendingMachine Sales Co., Ltd
13,774,267.89
-352,953.45
13,421,314.44
Jiangsu JingXue InsulationTechnology Co.,Ltd
174,966,773.04
9,607,307.14
2,921,200.00
181,652,880.18
Panasonic RefrigerationSystem (Dalian) Co., Ltd.
30,721,588.82
2,397,347.27
2,284,000.00
30,834,936.09
Bingshan Metal TechnicalService （Dalian） Co.,Ltd.
172,593,561.16
15,097,772.32
187,691,333.48
Dalian Bingshan GroupMangement and ConsultingCompany
57,095,620.40
-750,798.86
56,344,821.54
Total 1,614,457,190.34
72,908,832.16
63,602,834.60
1,623,763,187.90
4. Operating revenue and cost
Item2019.01-06 2018.01-06Revenue Cost Revenue CostRevenue from main operation
304,851,204.51
262,956,736.05
289,931,982.40
253,608,635.31
Revenue from other operation
20,505,068.81
13,936,660.77
13,114,752.79
7,124,916.72
Total
325,356,273.32
276,893,396.82
303,046,735.19
260,733,552.03
5. Investment income
Items2019.01-06 2018.01-06
Income from long-term equity investments under cost method
3,000,000.00
6,403,324.73
Income from long-term equity investments under equity method72,908,832.16
56,407,982.41
Income from holding of financial assets available for sale4,320,252.20
11,139,558.00
Income from disposing available for sale financial investments40,567,691.40
Income from disposing long-term share equity investments
Total
120,796,775.76
73,950,865.14
XVIII. Supplementary Information to the Financial Statements
1. Non-operating profit or loss
itemAmount
Disposal gains and losses of non-current asset1,227,672.74
Government subsidies included in current profit or loss
1,815,838.84
Debt restructuring gains and losses
1,999,241.94
Income from changes in fair value during the period o
f holding financial assets
available for sale and income from disposal of financial assets available for sale
81,028,816.99
f holding financial assets
Other non-operating revenue or expense29,206.25
Influence on income tax12,949,627.58
Influence on minority shareholders39,408.85
Total73,111,740.33
2. Return on equity and earnings per share
Profit of report period
Weighted
averagereturn onnet assets
(%)
Earnings per share
(EPS)BasicEPS
DilutedEPSNet profit attributable to shareholders of parent company
3.16
0.127
0.127
Net profit after deducting non-recurring gains and lossesattributable to shareholders of parent company
1.03
0.041
0.041
Section 11 Reference Documents
1. The accounting statements bearing the signatures and seals of the legal representative, the
financial majordomo and the accountants in charge.
2. The original copies of all the Company's documents and the original copies of the bulletinspublished on the newspapers designated by the China Securities Regulatory Commission in thereport period.
3. Time for reference: from Monday to Friday 8:00 - 11:30 (am) 1:00 - 4:30 (pm)
Liaison persons: Mr. Song Wenbao,Ms Du YuTel: 0086-411-87968130Fax: 0086-411-87968125
Board of Directors of Dalian Refrigeration Co., Ltd.
24, August, 2019