HAINAN JINGLIANG HOLDINGS CO., LTD.
ANNUAL REPORT 2019
March，2020
Hainan Jingliang Holdings Co., Ltd. Annual Report 2019
HAINAN JINGLIANG HOLDINGS CO., LTD.
ANNUAL REPORT 2019
Part I Important Notes
This Annual Report is based on the full text of the 2019 Annual Report of Hainan Jingliang Holdings Co., Ltd.(together with its consolidated subsidiaries, the “Company”, except where the context otherwise requires). Inorder for a full understanding of the Company’s operating results, financial position and future development plans,investors should carefully read the aforesaid full text, which has been disclosed together with this Report on themedia designated by the China Securities Regulatory Commission (the “CSRC”).All the Company’s directors have attended the Board meeting for the review of this Report and its summary.Independent auditor’s modified opinion:
□ Applicable √ Not applicable
Board-approved final cash and/or stock dividend plan for ordinary shareholders for the Reporting Period:
□ Applicable √ Not applicable
The Company has no final dividend plan, either in the form of cash or stock.Board-approved final cash and/or stock dividend plan for preferred shareholders for the Reporting Period :
□ Applicable √ Not applicable
This Annual Report has been prepared in both Chinese and English. Should there be any discrepancies ormisunderstandings between the two versions, the Chinese version shall prevail.Part II Key Corporate Information
1. Stock Profile
Stock name
| Stock name | JLKG, JL-B | Stock code | 000505, 200505 | |
| Stock exchange for stock listing | Shenzhen Stock Exchange | |||
| Contact information | Board Secretary | Securities Representative | ||
| Name | Guan Ying | Gao Deqiu | ||
| Address | 15/F, Jing Liang Building, NO. 16 East Third Ring Middle Road, Chaoyang District, Beijing | 15/F, Jing Liang Building, NO. 16 East Third Ring Middle Road, Chaoyang District, Beijing | ||
| Fax | 010-51672010 | 010-51672010 | ||
| Tel. | 010-51672130 | 010-51672029 | ||
| Email address | 1124387865@qq.com | gaodeqiu_jl@163.com | ||
Hainan Jingliang Holdings Co., Ltd. Annual Report 2019
2. Principal Activities or Products in the Reporting Period
The Company is principally engaged in oils and oilseeds processing and trading, as well as food production. Itruns its oils and oilseeds processing and trading business primarily in Beijing City, Tianjin City and HebeiProvince under the brands of “Gu Chuan”, “Lv Bao”, “Gu Bi” and “Huo Niao”, with the main products beingsoybean oil, rapeseed oil, sunflower seed oil and sesame oil and paste, among others. As for its food productionbusiness, it primarily develops, produces and markets snack food and bread under the brands of “Little Prince”,“MS Dong”, “Jianqiang De Tudou” and “Gu Chuan”, among others, with the main products being potato chips,cakes and pastries and bread.In 2019, the oils industry was in face of increasing hardships and a heavy hit caused by external factors includingthe continued China-U.S. trade friction and African swine fever, Therefore, the oils and oilseeds division of theCompany took the initiative to adjust operating strategies, gave play to its industrial chain advantage, andstrengthened mutual support and information sharing among the links of the industrial china, which minimized thehit from the external factors. For the Reporting Period, the oils and oilseeds division recorded operating revenueof RMB6,451 million, and a gross profit of RMB105 million.In 2019, the snack food industry saw an influx of strategic products and fiercer competition on the consumermarket. The snack food business of the Company deepened the model of “Professional Production + CulturalCreativity + Internet”, pursued a market-oriented strategy, and vigorously promoted innovation in marketing,management, products and technology. The bread processing business enhanced channel marketing anddevelopment of new products. For the Reporting Period, the food division recorded operating revenue ofRMB0.94 billion, and a gross profit of RMB186 million.
3. Key Financial Information
(1) Key Financial Information of the Past Three Years
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
Unit: RMB
| 2019 | 2018 | 2019-over-2018 change (%) | 2017 | |
| Operating revenue | 7,440,286,465.54 | 7,409,124,303.41 | 0.42% | 7,917,639,044.13 |
| Net profit attributable to the listed company’s shareholders | 133,341,925.75 | 167,956,581.15 | -20.61% | 129,603,167.36 |
| Net profit attributable to the listed company’s shareholders before exceptional items | 104,483,092.09 | 127,425,177.20 | -18.00% | 63,818,849.21 |
| Net cash generated from/used in operating activities | 297,366,794.05 | 850,167,551.24 | -65.02% | -1,379,507,779.66 |
| Basic earnings per share (RMB/share) | 0.19 | 0.24 | -20.83% | 0.2 |
Hainan Jingliang Holdings Co., Ltd. Annual Report 2019
Diluted earnings per share(RMB/share)
| Diluted earnings per share (RMB/share) | 0.19 | 0.24 | -20.83% | 0.2 |
| Weighted average return on equity (%) | 5.70% | 7.69% | -1.99% | 5.01% |
| 31 December 2019 | 31 December 2018 | Change of 31 December 2019 over 31 December 2018 (%) | 31 December 2017 | |
| Total assets | 5,231,266,600.19 | 4,917,148,996.28 | 6.39% | 6,082,383,851.23 |
| Equity attributable to the listed company’s shareholders | 2,406,039,283.87 | 2,272,469,925.43 | 5.88% | 2,101,342,683.37 |
(2) Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 1,707,549,259.31 | 1,575,728,466.08 | 1,824,886,529.92 | 2,332,122,210.23 |
| Net profit attributable to the listed company’s shareholders | 26,311,530.50 | 25,199,373.91 | 33,840,967.80 | 47,990,053.54 |
| Net profit attributable to the listed company’s shareholders before exceptional items | 17,033,200.00 | 24,161,273.59 | 28,276,307.45 | 35,012,311.05 |
| Net cash generated from/used in operating activities | 172,926,738.46 | 47,665,555.75 | 226,153,437.87 | -149,378,938.03 |
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differsmaterially from what have been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
4. Share Capital and Shareholder Information at the Period-End
(1) Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well asHoldings of Top 10 Shareholders
Unit: share
| Number of ordinary shareholders at the period-end | 37,551 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 36,206 | Number of preferred shareholders with resumed voting rights at the period-end | 0 | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report | 0 | |||||
| Top 10 shareholders | ||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Restricted shares held | Shares in pledge or frozen | |||||||
| Status | Shares | |||||||||||
| BEIJING GRAIN GROUP CO., LTD. | State-owned legal person | 42.06% | 288,439,561 | 164,877,598 | ||||||||
| BEIJING STATE-OWNED CAPITAL OPERATION AND MANAGEMENT CENTER | State-owned legal person | 7.07% | 48,510,460 | 48,510,460 | ||||||||
Hainan Jingliang Holdings Co., Ltd. Annual Report 2019
CHINA DEVELOPMENTBANK CAPITAL CO., LTD.
| CHINA DEVELOPMENT BANK CAPITAL CO., LTD. | State-owned legal person | 2.97% | 20,393,051 | 0 | ||
| LI SHERYN ZHAN MING | Foreign natural person | 2.58% | 17,683,400 | 0 | ||
| GOLD BUFFALO RUNYING (TIANJIN) EQUITY INVESTMENT FUND MANAGEMENT CO., LTD.—GOLD BUFFALO RUNYING (TIANJIN) EQUITY INVESTMENT FUND (L.P.) | Other | 2.00% | 13,697,179 | 0 | ||
| XIE YU | Domestic natural person | 0.50% | 3,450,469 | 0 | ||
| MEI JIANYING | Domestic natural person | 0.38% | 2,604,203 | 0 | ||
| HU TIANGAO | Domestic natural person | 0.34% | 2,356,052 | 0 | ||
| ZHANG XIAOXIA | Domestic natural person | 0.28% | 1,949,250 | 0 | ||
| JI XIANGYAO | Domestic natural person | 0.28% | 1,909,713 | 0 | ||
| Related or acting-in-concert parties among the shareholders above | Beijing State-Owned Capital Operation And Management Center owns 100% of Beijing Grain Group Co., Ltd., and Beijing Grain Group Co., Ltd. is a shareholder of the Company (a 42.06% holding). Apart from that, the Company does not know whether there are any other related parties or acting-in-concert parties among the top 10 shareholders. | |||||
| Shareholders involved in securities margin trading (if any) | 1. Shareholder Xie Yu holds 3,450,469 shares in the Company through his account of collateral securities for margin trading in Guotai Junan Securities Co., Ltd. 2. Shareholder Ji Xiangyao holds 1,909,713 shares in the Company through his account of collateral securities for margin trading in Guotai Junan Securities Co., Ltd. 3. Shareholder Wang Xiaoxing holds 1,758,000 shares in the Company through his account of collateral securities for margin trading in Soochow Securities Co., Ltd. | |||||
(2) Number of Preferred Shareholders and Shareholdings of Top 10 of Them
□ Applicable √ Not applicable
No preferred shareholders in the Reporting Period.
Hainan Jingliang Holdings Co., Ltd. Annual Report 2019
(3) Ownership and Control Relations between the Actual Controller and the Company
The State-Owned Assets Supervision andAdministration Commission of the People’sGovernment of Beijing Municipality
42.06%
5. Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstandingbefore the date of this Report’s approval or were due but could not be redeemed in full?No.
Part III Operating Performance Discussion and Analysis
1. Business Overview of the Reporting Period
(1) Overall Performance
In face of the constant hits by unfavorable factors such as the China-U.S. trade friction and the African swinefever in 2019, the Company pursued progress amid stability in all the work. For the year under review, theCompany recorded operating revenue of RMB7.44 billion and a gross profit of RMB0.26 billion. By operatingdivision, the oils and oilseeds division reported operating revenue of RMB6.451 billion and a gross profit ofRMB105 million; and the food division posted operating revenue of RMB0.94 billion and a gross profit ofRMB186 million. The net profit attributable to the Company as the parent was RMB133 million, and earnings pershare were RMB0.19. The Company keeps growing in a steady manner.Beijing Jingliang Food Co., Ltd., a swapped-in asset in a major asset restructuring, achieved healthy growth
The State-Owned Assets Supervision andAdministration Commission of the People’sGovernment of Beijing MunicipalityBeijing State-Owned Capital Operation
and Management Center
Beijing State-Owned Capital Operation
and Management CenterBeijing Capital Agribusiness Group Co.,
Ltd.
Beijing Capital Agribusiness Group Co.,
Ltd.Beijing Grain Group Co., Ltd.
Beijing Grain Group Co., Ltd.Hainan Jingliang Holdings Co., Ltd.
Hainan Jingliang Holdings Co., Ltd.100%
100%100%
100%100%
100%100%
Hainan Jingliang Holdings Co., Ltd. Annual Report 2019
through proactive market expansion and stricter cost control. For the year under review, it registered operatingrevenue of RMB7.4 billion, a gross profit of RMB309 million and a net profit attributable to the Company as theparent before exceptional items of RMB155 million. The cumulative actual net profits attributable to theCompany as the parent before exceptional items for the past three years amount to RMB476 million, representing
107.55% of the three-year performance commitment. As such, it has smoothly fulfilled the performancecommitment as agreed upon in the Profit Compensation Agreement and the supplementary agreementbetween the Company and Beijing Grain Group Co., Ltd. and Beijing State-Owned Capital Operation andManagement Center.(II) Major Results Achieved
1. The Prominent Overall Effect on Oils and Oilseeds Division
In 2019, the Sino-US trade friction and African swine fever have led in more pervasive effects to oils and oilseedscrushing industry. Therefore, the oils and oilseeds division adjusted strategies proactively, and took five platformsof “Risk Control and R&D, Operation of Stocks, Import and Export Trade, Production Management and ProductMarketing” as supports, to realize the mutual support and information share among each node in the oils andoilseeds division, which has reduced maximally the effects generated from Sino-US trade war and turned lossesinto gains in oils and oilseeds crushing business in the second half year. Small-packed oils and oilseeds businesshas been further optimized. As the sales volume of high gross margin oils including sunflower oil of Gu Chuan,non-GMO soybean oil accounts for 65%, the sales volume has been improved, at the meantime exploring initiallythe integrated marketing mode, mining customers’ demands, innovating the marketing methods as well. Thehedging risk control and product development were strengthened in oils and oilseeds trade business to seize themarket opportunity, and thus the annual sales of oils and oilseeds has reached 0.4 million tons. Additionally, thewarehouse service business was expanded and the management service was innovated in oils warehousing, andthus the soybean reserves was increased over 0.1 million tons.
2. The Steady-state Growth of the Food Division
In 2019, the food division remained stable development under the continuous influx of strategic competitors andintensive competition in the terminal market. The snack food business was oriented by market demand,commands overall arrangements through innovative thinking, vigorously advances the innovation of marketing,management, products and technology, as well as improves product experience and continuous enhancement ofsales volume by carrying out new products promotion with web celebrities via certain activities such as livewebcast to reach consumers closely. Meanwhile, owing to emphasize the product development and reinforce theexpansion of retail channels in the bread processing business, the business sales in other channels was flatbasically with the KFC system sales, and the Green Tea system was increased by 84% year-on-year.
3. The Positive Intervention of Land Restoration Business
With the help of the important development opportunity in rural revitalization strategy, the Company intervenedin land restoration proactively. Over 700 mu of land was restored in the Reporting Period regarding theCaofeidian Project so that the Company has been familiar with the main procedures and key nodes of land
Hainan Jingliang Holdings Co., Ltd. Annual Report 2019
restoration by the operation of the project. There was no obvious progress in Xinyi Project for policy reasons inthe Reporting Period.
4. The Continuous Improvement of Management Work
In the principle of standardized operation and simplification with high efficiency, the Company constitutedexcellent management and control system and management team to ensure the stable and efficient corporateoperation. Firstly, the Company continued to promote the institutional system, establishing the interconnected andcomplementary system with four hierarchies of the company’s articles of association, regulations of shareholders’meeting, board of directors and board of supervisors, company level and department level. The well–establishedinner control system has been shaped based on the institutional system and accompanied by the sheets andprocedures. Secondly, the Company adheres to the economic analysis and the key work supervision mechanism,sticks to the monthly and quarterly analysis of the business operation, researches the solutions and supervises thejob schedule, which effectively guaranteed the completion of the annual operational indicators. Thirdly, theCompany carried on enhancing financial management with developing service and control simultaneously, whichpropelled the progress of business operation and project investment, and guaranteed the capital security.
2. Significant Change to Principal Activities in the Reporting Period
□ Yes √ No
3. Product Category Contributing over 10% of Principal Business Revenue or Profit
√ Applicable □ Not applicable
Unit: RMB
Product category
| Product category | Operating revenue | Operating profit | Gross profit margin | YoY change in operating revenue (%) | YoY change in operating profit (%) | YoY change in gross profit margin (%) |
| Oils and oilseeds | 6,451,212,047.10 | 289,288,375.24 | 4.48% | -0.32% | -17.78% | -0.95% |
| Food processing | 940,737,948.76 | 297,683,457.05 | 31.64% | 5.58% | 6.73% | 0.34% |
4. Business Seasonality that Calls for Special Attention
□ Yes √ No
5. Significant YoY Changes in Operating Revenue, Cost of Sales and Net Profit Attributable to the ListedCompany’s Ordinary Shareholders or Their Compositions
□ Applicable √ Not applicable
6. Possibility of Listing Suspension or Termination
□ Applicable √ Not applicable
Hainan Jingliang Holdings Co., Ltd. Annual Report 2019
7. Matters Related to Financial Reporting
(1) YoY Changes to Accounting Policies, Accounting Estimates or Measurement Methods
√ Applicable □ Not applicable
① The Ministry of Finance issued from 31 March 2017 the revised versions of certain accounting standards,including the Accounting Standard No. 22 for Business Enterprises—Recognition and Measurement of FinancialInstruments (CK [2017] No. 7), the Accounting Standard No. 23 for Business Enterprises—Transfer of FinancialAssets (CK [2017] No. 8), the Accounting Standard No. 24 for Business Enterprises—Hedge Accounting (CK[2017] No. 9), and the Accounting Standard No. 37 for Business Enterprises—Presentation of FinancialInstruments (CK [2017] No. 14), which were required to be applied, from 1 January 2019, to enterprises listeddomestically in China.
② The Ministry of Finance issued in May 2019 the revised versions of the Accounting Standard No. 7 forBusiness Enterprises—Exchange of Non-Monetary Assets (CK [2019] No. 8) and the Accounting Standard No. 12for Business Enterprises—Debt Restructuring (CK [2019] No. 9), which were required to be applied, from 10 and17 June 2019 respectively, to enterprises adopting China’s Accounting Standards for Business Enterprises.
(2) Retrospective Restatements due to Correction of Material Accounting Errors in the Reporting Period
□ Applicable √ Not applicable
No such cases.
(3) YoY Changes to the Scope of Consolidated Financial Statements
√ Applicable □ Not applicable
Beijing Jingliang Gu Bi Oils Co., Ltd. was newly included in, and Jingliang Misimi Catering Management(Tianjin) Co., Ltd. and Jingliang Xinchuang (Tianjin) Commercial Management Co., Ltd. were excluded from theconsolidated financial statements of the Reporting Period.
Hainan Jingliang Holdings Co., Ltd.Notes to the 2019 Financial Statements(Unless otherwise stated, the amount unit is RMB Yuan)I. Basic Information of the Company(I) Place of incorporation, form of organization and head office address
Hainan Jingliang Holdings Co., Ltd. (hereinafter referred to as "the Company" or "Company" or "Jingliang Holdings") isestablished in accordance with the Hainan Provincial People's Government General Office QFBH (1992) No.1, approved byQY (1992) SGZ No. 6 Document of the People's Bank of Hainan Province and re-registered by Hainan Pearl River EnterpriseCompany on January 11, 1992. The Company issued 81,880,000 shares in total upon re-registration, of which 60,793,600shares were converted from the net assets of the original company and 21,086,400 shares were newly issued. And the name ofthe Company is Hainan Pearl River Enterprise Co., Ltd. The business license registration number of the joint-stock company is20128455-6, and the holding parent company Guangzhou Pearl River Enterprise Group holds 36,393,600 shares, accountingfor 44.45%. Approved by ZGB (1992) No. 83 Document of the People's Bank of China in December 1992, the additional21,086,400 shares were listed on the Shenzhen Stock Exchange for trading. The industry involved is real estate.On March 25, 1993, in response to QGBH (1993) No.028 of Hainan Provincial Leading Group Office and SRYFZ (1993)No.099 of Shenzhen Special Economic Zone Branch of the People's Bank of China, the Company increased its share capital byconverting the original share capital into 139,196,000 shares (according to distribution of 10, delivery of 5 and transfer of 2),with the controlling shareholder Guangzhou Pearl River Enterprises Group holding 48,969,120 shares accounting for 35.18%at the end of 1993.
In 1994, the share capital was increased by 10 to 10, and the total share capital was 278,392,000 shares after the increase.The controlling shareholder, Guangzhou Pearl River Enterprises Group, holds 97,938,240 shares, accounting for 35.18%.
In 1995, the issuance of 50,000,000 B Shares was approved by SZBF (1995) No.45 and SZBF (1995) No.12. The sharecapital of the Company was increased by 10:1.5 on the basis of the share capital after the additional B shares were issued, andthe share capital of the Company after the increase was 377,650,800 shares. The holding parent company, Guangzhou PearlRiver Enterprises Group, held 112,628,976 shares, accounting for 29.82% of the total.
In 1999, Guangzhou Pearl River Enterprises Group transferred all 112,628,976 shares to Beijing Wanfa Real EstateDevelopment Co., Ltd.. After the transfer of shares was completed in June 1999, Beijing Wanfa Real Estate Development Co.,Ltd. held 112,628,976 shares of the Company, accounting for 29.82% of the total shares of the Company, and became thecontrolling shareholder of the Company.
On January 10, 2000, the name of the Company was changed to Hainan Pearl River Holding Co., Ltd. and the Business
License for Enterprise Legal Person was renewed by Industrial & Commerce Administration Bureau of Hainan Province.On August 17, 2006, the reform plan of the split share structure of the Company was implemented. The Companytransferred 49,094,604 shares of capital stock to all shareholders at the ratio of 10 to 1.3. The original non-tradableshareholders transferred the increased shares to the tradable A-share holders. Beijing Wanfa Real Estate Development Co., Ltd.reimbursed the consideration shares of the non-tradable shareholders who have not expressly expressed their opinions. Theconverted total share capital was 426,745,404 shares, and the original controlling shareholder Beijing Wanfa Real EstateDevelopment Co., Ltd. held 107,993,698 shares, accounting for 25.31%. Shareholders of non-tradable shares repaid 3,289,780shares in consideration of the split share structure in 2007. Shareholders of non-tradable shares repaid 1,196,000 shares inconsideration of the split share structure in 2009.
On 2 September 2016, Beijing Wanfa Real Estate Development Co., Ltd., the original controlling shareholder, transferredall of its 112,479,478 shares to Beijing Grain Group Co., Ltd. (hereinafter referred to as "Beijing Grain Group"). Uponcompletion of the share transfer in September 2016, Beijing Grain Group Co., Ltd. held 112,479,478 shares, accounting for
26.36% of the total shares of the Company. In November 2016, based on the confidence in the subject matter of the materialasset restructuring and the future development of the Company, Beijing Grain Group Co., Ltd. decided to increase itsshareholding through centralized bidding in the secondary market. After the increase, it held 123,561,963 shares of theCompany, accounting for 28.95% of the total number of shares, and became the largest shareholder of the Company.
The Company determined July 31, 2017 as the delivery date of material assets in accordance with the material assetsrestructuring plan and the delivery agreement. On September 14, 2017, approved pursuant to the resolution of the SecondExtraordinary General Meeting of Shareholders of the Company on November 18, 2016 and the Approval Reply of the ChinaSecurities Regulatory Commission dated July 28, 2017 On Approval of Hainan Pearl River Holding Co., Ltd. to PurchaseAssets and Raise Supporting Funds from Beijing Grain Group Co., Ltd. (ZJXK (2017) No.1391): 1) The Company purchasedassets from the original shareholders of Beijing Grain Food Co., Ltd. (hereinafter referred to as Beijing Grain Food) by issuing210,079,552 shares of the balance between the transaction price of the injected assets and the assets to be purchased (thedifference between the transaction price of the injected assets and the assets to be purchased was RMB 1,699.5436 millionyuan). The par value in the issuance was RMB 1.00 per share and the issuance price was RMB 8.09 per share; 2) The Companyhas issued 48,965,408 non-public shares of the Company to Beijing Grain Group for the purpose of purchasing the supportingfunds raised from the assets of the issuance of shares. The par value per share of the Company was RMB1.00 and the issuanceprice was RMB8.82 per share. The shareholder Beijing Grain Group conducted subscription in monetary funds. Uponcompletion of the issue, the registered capital was RMB 685,790,364.00 and the share capital was RMB 685,790,364.00.Beijing Grain Group, which accounted for 42.06% of the total number of shares, became the largest shareholder of theCompany.
On March 10, 2018, the Company completed the registration formalities for industrial and commercial changes such ascompany name, legal representative, registered capital and business scope, and obtained the Business License for EnterpriseLegal Person approved and renewed by Industrial & Commerce Administration Bureau of Hainan Province. The relevant
information after the change is listed as follows:
Company name: Hainan Jingliang Holdings Co., Ltd.Uniform Social Credit Code: 914600002012845568Type: Limited Company (Listed, State-controlled)Registered address: F29, Dihao Building, Pearl River Square, Binhai Avenue, Haikou CityOffice address: F29, Dihao Building, Pearl River Square, Binhai Avenue, Haikou CityLegal representative: Li ShaolingRegistered capital: 685,790,364 YuanDate of establishment: March 22, 1988Business term: from March 22, 1988 to September 20, 2025The parent company is Beijing Grain Group Co., Ltd..(II) The nature of the Company's business and its main business activities
1. Business scope of the Company
The Company belongs to manufacturing-agricultural and sideline food processing industry, mainly including: food,beverages, oils, oils and by-products, vegetable proteins and their products, organic fertilizers, microbial fertilizers, productionand marketing of agricultural fertilizers; land consolidation, soil remediation; agricultural comprehensive plantingdevelopment, animal husbandry and aquaculture, agricultural equipment production and marketing; computer networktechnology, investment in communication projects, research and development and application of high-tech products;investment and consultation of environmental protection projects; animation, graphic design; import and export trade in goodsand technology; rental of own premises. (General business projects shall be operated independently, and the permittedbusiness projects shall be operated on the basis of relevant permits or approval documents) (Projects subject to approval by therelevant departments shall not be allowed to engage in business activities until approved by the relevant departments inaccordance with the law.).
2. The nature of the Company's business and its main business activities
The Company and its subsidiaries are principally engaged in the processing, production and sales of foodstuffs,agricultural and sideline products, oils and fats, oils and snack foods.
3. Basic framework of the Company
The basic organizational structure of the Company: the shareholders' general meeting is the highest authority of theCompany, the board of directors is the executive body of the shareholders' general meeting, the board of supervisors is theinternal supervision body of the Company, and the general manager is responsible for the daily operation and management ofthe Company. The Company consists of the Office of the Board of Directors, the Office of the Board of Supervisors, theDepartment of Comprehensive Affairs, the Department of Securities Affairs, the Department of Strategic Investment, theDepartment of Finance (Settlement Center), the Department of Legal Affairs and Compliance, the Department of Human
Resources, the Department of Party and Mass Work, and the Department of Discipline Inspection and Supervision.On May 6, 2010, the Beijing Investment Consulting Branch of Hainan Jingliang Holdings Co., Ltd. (now renamed asHainan Pearl River Holding Co., Ltd.) was established with the unified social credit code of 91110107554875351W. Address:
Room 5078, Building 3, No.3, Xijing Road, Badachu High-tech Park, Shijingshan District, Beijing. Business scope includesinvestment consulting, hotel investment and management; Purchase and lease of construction equipment; Sales of buildingmaterials, hardware and electrical equipment, furniture, plastics, daily necessities, leather products, rubber products, fodder,no longer packaged seeds, cereals, legumes, potato, flowers, grass and ornamental plants, fertilizers, non-metallic ores, metalproducts, metal ores, metal materials, goods import and export; R&D and application of high-tech products. ("1 Without theapproval of the relevant departments, the funds shall not be raised in public; 2. Trading activities of securities products andfinancial derivatives shall not be publicly carried out; 3. Loans shall not be granted; 4. Guarantees shall not be provided to anyenterprise other than the invested enterprise; 5. The investment principal shall not be lost or the minimum income shall not beguaranteed to the investor"; The project subject to approval according to law shall be operated in accordance with the approvedcontents after obtaining the approval of the relevant departments.)
(III) Approval of financial statementsThese financial statements have been approved and reported by the Board of Directors of the Company in its resolutiondated March 26, 2020.(IV) Consolidated report scopeA total of 17 subsidiaries of the Company were included in the scope of consolidation in 2019, as detailed in Note 8"Interests in Other Entities". The consolidation scope of the Company for the current period is 1 more than that of the previousperiod, and 4 less than that of the previous period as detailed in Note 7, "Change in Consolidation Scope".II. Preparation Basis for Financial Statements
1. Preparation Basis
Based on the assumption of going concern and according to actual transactions and events, the Company's financialstatements are prepared in accordance with the Accounting Standards for Business Enterprises-Basic Standard(promulgation of Decree No. 33 of Ministry of Finance and revision of Decree No. 76 of Ministry of Finance), 42 specificaccounting standards, guidelines for the application of accounting standards for business enterprises, explanations ofaccounting standards for business enterprises and other relevant provisions promulgated and revised on February 15, 2006and thereafter (hereinafter collectively referred to as "Accounting Standards for Business Enterprises”), as well as thedisclosure provisions of the China Securities Regulatory Commission's Rules for Reporting Information Disclosure byCompanies Offering Securities to the Public No.15-General Provisions on Financial Reporting (revised in 2014)According to the relevant provisions of Accounting Standard for Business Enterprises, the Company’s accounting isbased on the accrual basis. Except for certain financial instruments, the financial statements are measured on the basis ofhistorical costs. Non current assets held for sale shall be valued at the lower of the fair value less estimated expenses and the
original book value when the conditions for holding for sale are met. If the assets are impaired, the correspondingimpairment reserves shall be withdrawn in accordance with the relevant provisions.
2. Going concern
These financial statements are presented on a going concern basis and the Company has a going concern capability for atleast 12 months from the end of the reporting period.III. Statement of Compliance of Accounting Standards for Business EnterprisesThe financial statements prepared by the Company conform to the requirements of the Accounting Standards forBusiness Enterprises and truly and completely reflect the Company's merger and the financial status of the parent companyas of December 31, 2019, the merger and parent company's operating results, the merger and parent company's cash flowand other relevant information in 2019. In addition, the Company's financial statements comply in all material respects withthe disclosure requirements of the financial statements and its notes in the Rules for Preparation and Reporting InformationDisclosure of Companies Offering Securities to the Public No.15-General Provisions on Financial Reports revised by ChinaSecurities Regulatory Commission in 2014.IV. Significant Accounting Policies and EstimatesThe Company and its subsidiaries are engaged in the processing, production and sales of food, agricultural and sidelineproducts, grease, oil and leisure food. According to the characteristics of actual production and operation and the provisionsof relevant accounting standards for business enterprises, the Company and its subsidiaries have formulated a number ofspecific accounting policies and accounting estimates for transactions and events such as revenue recognition. For details,please refer to the descriptions in Note IV, 25 “Revenue". For descriptions of the significant accounting judgments andestimates made by the management, please refer to Note IV, 31 “Significant Accounting Judgments and Estimates"
1. Accounting Period
The accounting period of the Company is divided into an annual period and an interim period. The accounting interimperiod refers to the reporting period shorter than a full accounting year. The fiscal year of the Company adopts the Gregoriancalendar year, that is, from January 1 to December 31 of each year.
2. Business Cycle
The normal business cycle is the period from the time the Company purchases assets for processing to the time when cashor cash equivalents are realized. The Company uses 12 months as an business cycle and uses it as a liquidity classificationstandard for assets and liabilities.
3. Bookkeeping Standard Currency
RMB is the currency in the main economic environment in which the Company and its domestic subsidiaries operate. TheCompany and its domestic subsidiaries use RMB as the bookkeeping standard currency. The offshore subsidiaries of theCompany determine USD as their bookkeeping standard currency based on the currencies in the main economic environmentin which they operate. The currency used by the Company in preparing these financial statements is RMB.
4. The Accounting Treatment of Business Combination under the Same Control and Different ControlBusiness Combination refers to the transaction or event in which two or more separate enterprises are merged to form onereporting entity. Business combination can be divided into business combination under the same control and businesscombination under different control.
(1) Business combination under the same control
Enterprises participating in the combination are ultimately controlled by the same party or multiple parties before andafter the combination, and the control is not temporary, so it is the business combination under the same control. In case ofbusiness combination under the same control, the party that obtains control of other enterprises participating in thecombination on the combination date shall be the combination party, and the other enterprises participating in the combinationshall be the merged party. The combination date refers to the date on which the combination party actually acquires controlover the merged party.
The assets and liabilities acquired by the combination party are measured at the book value of the merged party at the dateof consolidation, including goodwill that was formed during acquisition by end controller . If the difference between the bookvalue of the net assets acquired by the merging party and the book value of the merged consideration (or the total par value ofthe issued shares) paid by the merging party, and the capital reserve (share capital premium) shall be adjusted; If the capitalreserve (equity premium) is insufficient to offset, the retained earnings shall be adjusted.
The direct expenses incurred by the merging party for the purpose of business combination shall be included in the profitsand losses of the current period when they are incurred.
(2) Business combination under different control
If the enterprises participating in the merger are not ultimately controlled by the same party or multiple parties before andafter the merger, the enterprise merger is not under the same control. In case of business combination under different control,the party that obtains control of other enterprises participating in the combination on the date of purchase shall be thePurchaser, and the other enterprises participating in the combination shall be the Purchasee. Purchase date means the date onwhich the Purchaser actually acquires control of the Purchasee.
For business combination under different control, the merger cost includes the assets, liabilities and fair value of equitysecurities issued by the Purchaser in order to obtain the control over the Purchasee on the date of purchase, and theintermediary fees such as audit, legal service, appraisal and consultation and other management fees for the enterprise mergerare used to record into the profits and losses of the current period when incurred. The transaction costs of equity or debtsecurities issued by the Purchaser as a merger consideration are included in the initial recognition amount of the equity or debtsecurities. Contingent consideration involved shall be included in the consolidation cost at its fair value at the purchase date,and the consolidation goodwill shall be adjusted accordingly if new or further evidence of the existence of circumstances at thepurchase date appears within 12 months after the purchase date and the adjustment or consideration is required. Theconsolidation cost incurred by the Purchaser and the identifiable net assets acquired during the consolidation are measured atthe fair value at the date of purchase. The difference between the merger costs and the fair value shares of the identifiable net
assets of the Purchasee at the purchase date obtained in the merger is recognized as goodwill. If the combined cost is less thanthe fair value of the identifiable net assets of the Purchasee in the merger, first, the fair value of the identifiable assets,liabilities and contingent liabilities of the Purchasee and the measurement of the consolidation cost shall be re-checked. If theconsolidation cost is still smaller than the fair value share of the identifiable net assets of the Purchased obtained in theconsolidation after the re-check, the difference shall be recorded into the profits and losses of the current period.When the Purchaser acquires the deductible temporary difference of the Purchasee, if it fails to recognize the deferredincome tax assets on the date of purchase because it does not meet the recognition conditions for the deferred income tax, andwithin 12 months of the date of purchase, new or further information is obtained indicating that the relevant circumstances atthe purchase date already exist and the economic benefits from the temporary difference deductible by the purchaser on thepurchase date are expected to be realized, the relevant deferred income tax assets shall be recognized, and the goodwill shall bereduced. If the goodwill is not sufficiently offset, the difference shall be recognized as the current profit or loss; In addition tothe above circumstances, the deferred income tax assets related to the enterprise merger are recognized and included in thecurrent profits and losses.
Through multi-transaction and step-by-step business combination under different control, according to the Circular of theMinistry of Finance on Printing and Issuing the Interpretation of Accounting Standards for Business Enterprises No.5 (CK(2012) No.19) and Article 51 of the Accounting Standards for Business Enterprises No.33-Consolidated Financial Statementson the judgment criteria of "package deal" (see 5 (2) of Note 4), it is determined whether the multiple transactions belong to the"package deal". In the case of a "package deal", the accounting treatment shall be performed with reference to the descriptionin the preceding paragraphs of this section and Note 4, 13 "Long-term Equity Investments"; If the transaction is not a "packagedeal", the accounting treatment shall be distinguished between the individual financial statements and the consolidatedfinancial statements:
In the individual financial statements, the sum of the book value of the equity investment held by the Purchaser prior tothe purchase date and the cost of the new investment at the purchase date shall be taken as the initial investment cost of theinvestment; Where the equity of the Purchased held before the date of purchase involves other comprehensive income, theother consolidated income associated with the investment is accounted for on the same basis as the assets or liabilities directlydisposed of by the Purchaser (i.e., except for the corresponding share in the change caused by the acquisition of the net liabilityor net assets of the defined benefit plan remeasured in accordance with the equity method, the rest is transferred to the currentinvestment income).
In the consolidated financial statements, the equity of the Purchased held prior to the date of purchase is remeasuredaccording to the fair value of the equity at the date of purchase, and the difference between the fair value and the carrying valueis included in the investment income of the current period; Where the equity of the Purchasee held before the date of purchaseinvolves other comprehensive income, other consolidated income related thereto shall be accounted for on the same basis asthe direct disposal of the relevant assets or liabilities by the Purchaser (i.e., except for the corresponding share in the changecaused by the acquisition of the net liability or net asset of the defined benefit plan remeasured in accordance with the equity
method, the rest is converted into the investment income of the current period to which the acquisition date belongs).
5. Preparation Method of Consolidated Financial Statement
(1) Principles for determining the scope of the consolidated financial statement
The scope of consolidation of the consolidated financial statements is determined on a control basis. Control means thatthe Company has the authority over the Investee, enjoys a variable return by participating in the relevant activities of theInvestee, and has the ability to use its authority over the Investee to influence the amount of such return. The scope of themerger includes the Company and all its subsidiaries. Subsidiary refers to the main body controlled by the Company.
The Company will re-evaluate the above control definitions once the relevant facts and circumstances change, whichresults in the change of the relevant elements.
(2) Preparation method of consolidated financial statement
The Company begins to incorporate the net assets of the subsidiary and the actual control of the production and operationdecisions into the scope of the merger from the date when the subsidiary is acquired; Cease to be included in the scope of themerger as of the date of loss of effective control. For the subsidiaries disposed of, the operating results and cash flows prior tothe date of disposal have been appropriately included in the consolidated income statement and consolidated cash flowstatement; For subsidiaries disposed of in the current period, the opening amount of the consolidated balance sheet is notadjusted. The operating results and cash flows of subsidiaries increased by consolidation after purchase have been properlyincluded in the consolidated income statement and consolidated cash flow statement, and the opening and comparativeamounts in the consolidated financial statements have not been adjusted for subsidiaries that are not under the same control.The operating results and cash flows of the subsidiaries increased by consolidation under the same control from the beginningof the consolidation period to the consolidation date have been appropriately included in the consolidated profit statement andconsolidated cash flow statement, and the comparative amount of the consolidated financial statements has been adjusted atthe same time.
In the preparation of the consolidated financial statements, if the accounting policies or accounting periods adopted by thesubsidiaries are inconsistent with those adopted by the Company, necessary adjustments shall be made to the financialstatements of the subsidiaries in accordance with the accounting policies and accounting periods of the Company. Forsubsidiaries acquired through business combination under different control, the financial statements shall be adjusted on thebasis of the fair value of identifiable net assets at the date of purchase.
All significant transaction balances, transactions and unrealized profits within the Company are offset at the time ofpreparation of the consolidated financial statements.
The shareholders' equity and the portion of the net profit or loss of the subsidiary that is not owned by the Company forthe current period are separately presented as minority shareholders' equity and minority shareholders' profit or loss in theconsolidated financial statements under shareholders' equity and net profit. The shares of minority shareholders' equity in thenet profits and losses of subsidiaries for the current period are shown as "minority shareholders' profits and losses" under the
net profit item in the consolidated income statement. Losses shared by minority shareholders in a subsidiary exceed theminority shareholders' share in the shareholders' equity of the subsidiary at the beginning of the period, and still decrease by anumber of shareholders' equity.When the control of the original subsidiary is lost due to the disposal of part of the equity investment or other reasons, theresidual equity shall be revalued according to its fair value at the date of loss of control. The sum of consideration obtainedfrom the disposal of equity and the fair value of the remaining equity minus the difference between the shares of the net assetsof the original subsidiary that shall be continuously calculated from the purchase date according to the original shareholdingproportion shall be included in the investment income of the current period of loss of control. Other comprehensive incomerelated to the equity investment of the original subsidiary, in the event of loss of control, the accounting treatment is performedon the same basis as the direct disposal of the relevant assets or liabilities by the Purchased (i.e. converted to currentinvestment income, except for changes resulting from the re-measurement of the net liabilities or net assets of the DefinedBenefit Plan in the original subsidiary). Thereafter, the residual equity shall be subsequently measured in accordance with therelevant provisions of Accounting Standards for Business Enterprises No.2-Long-term Equity Investment or AccountingStandards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments, as detailed in Note IV,13-Long-term Equity Investment or Note IV, 9-Financial Instruments.
If the Company disposes of the equity investment in subsidiaries step by step until it loses control through multipletransactions. It is necessary to distinguish whether the transactions that dispose of the equity investment in subsidiaries until itloses control belong to a package deal or not. The terms, conditions and economic impact of the transactions for the disposal ofequity investments in subsidiaries are in accordance with one or more of the following circumstances and generally indicatethat multiple transactions should be accounted for as a package deal: ① These transactions were entered into simultaneouslyor taking into account each other's influence; ② Only when these transactions are taken together can a complete businessresult be achieved; ③ The occurrence of one transaction depends on the occurrence of at least one other transaction; ④ It isnot economical to consider a transaction alone, but it is economical to consider it in conjunction with other transactions. Fortransactions that are not part of the package deal, each transaction shall be accounted for in accordance with the principlesapplicable to the "partial disposal of long-term equity investments in subsidiaries without loss of control" (as detailed in 13 ofNote IV) and the "loss of control over existing subsidiaries as a result of the disposal of part of the equity investments or otherreasons" (as detailed in the preceding paragraph), as appropriate. If the transactions involving the disposal of equityinvestments in subsidiaries until the loss of control belong to a package deal, the transactions shall be accounted for as atransaction involving the disposal of subsidiaries and the loss of control; However, the difference between each disposal priceand the share of the subsidiary's net assets corresponding to the disposal investment prior to the loss of control is recognized inthe consolidated financial statements as other consolidated gains and transferred to the profit or loss for the current period ofloss of control in the event of loss of control.
6. Classification of Joint Venture Arrangements and Accounting Treatment of Joint Operation
A joint venture arrangement is an arrangement under the joint control of two or more participants. The Company divides
the joint venture arrangement into joint ventures and joint ventures in accordance with the rights and obligations it enjoys inthe joint venture arrangement. Joint operation refers to the joint venture arrangement in which the Company enjoys the assetsrelated to the arrangement and assumes the liabilities related to the arrangement. A joint venture refers to a joint venturearrangement in which the Company only has rights over the net assets of the arrangement.The Company's investment in the joint venture is accounted for using the equity method, and shall be treated inaccordance with the accounting policy described in Note IV, 13 "Long-term Equity Investment Accounted by the EquityMethod".The Company, as a joint venture party, recognizes the assets and liabilities held and assumed by the Company separately,and recognizes the assets and liabilities jointly held and assumed by the Company according to the shares of the Company;recognizes the revenue generated from the sale of the share of joint operating output enjoyed by the Company; recognizesrevenue generated from the sale of output from joint operations on the basis of the Company's share; confirms the expensesincurred by the Company individually and the expenses incurred by the joint operation according to the shares of theCompany.
When the Company invests or sells assets as a joint venture (such assets do not constitute business, the same below), orpurchases assets from the joint venture, the Company recognizes only the portion of the profits and losses attributable to theother participants in the joint venture that arises from the transaction prior to the sale of such assets to a third party. Where suchassets are impaired in accordance with the provisions of Accounting Standards for Business Enterprises No.8-Impairment ofAssets, the Company shall fully recognize such losses in the case where the assets are cast or sold by the Company to jointoperations; For the assets purchased by the Company from the joint operation, the Company recognizes the losses according tothe shares it assumes.
7. Determining Standards for Cash and Cash Equivalent
Cash and cash equivalents of the Company include cash on hand, deposits that can be used for payment at any time, andinvestments held by the Company with a short term (usually maturing within three months from the date of purchase), highliquidity, easy conversion into cash of a known amount, and little risk of value change.
8. Foreign Currency Business and Translation of Foreign Currency Statements
(1) Translation method for foreign currency transaction
At the time of initial confirmation, the foreign currency transactions occurring in the Company shall be converted into thebookkeeping functional currency amount at the spot exchange rate on the trading day, but the foreign currency exchangebusiness or transactions involving foreign currency exchange occurring in the Company shall be converted into thebookkeeping functional currency amount at the actual exchange rate.
(2) Translation method for foreign currency monetary items and foreign currency non-monetary item
On the balance sheet date, the foreign currency monetary items are converted at the spot exchange rate on the balancesheet date, and the exchange difference arising therefrom shall be: ① The exchange difference arising from the special foreigncurrency borrowings related to the acquisition and construction of assets eligible for capitalization shall be handled in
accordance with the principle of capitalization of borrowing costs; ② The exchange difference of the hedging instrumentsused for effective hedging of the net investment in overseas operations (the difference is included in other comprehensiveincome, and is not recognized as current profit or loss until the net investment is disposed of); ③ Except for the amortized cost,the exchange differences arising from the changes in the book balance of the available-for-sale monetary items in foreigncurrencies shall be included in the other comprehensive income, and shall be included in the profits and losses of the currentperiod.Where the preparation of the consolidated financial statements involves overseas operations, if there are foreign currencymonetary items constituting net investment in overseas operations, the exchange differences arising from exchange ratechanges shall be included in other comprehensive income; When disposing of overseas operations, the profits and losses shallbe transferred to the current disposal period.
Non-monetary items in foreign currencies measured at historical cost shall still be measured at the bookkeeping amountin functional currency translated at the spot exchange rate on the transaction date. For non-monetary items in foreigncurrencies measured at fair value, the spot exchange rate at the date of fair value determination shall be adopted for conversion.The difference between the converted amount in functional currency and the amount in original functional currency shall betreated as the change in fair value (including the change in exchange rate), and shall be recorded into the profits and losses ofthe current period or recognized as other comprehensive income.
(3) Translation method for financial statements in foreign currencies
Where the preparation of the consolidated financial statements involves overseas operations, if there are foreign currencymonetary items constituting net investment in overseas operations, the exchange differences arising from exchange ratechanges shall be as "foreign currency report conversion difference" and be confirmed as other comprehensive income; Whendisposing of overseas operations, the profits and losses shall be transferred to the current disposal period.
The foreign currency financial statements of overseas operations shall be converted into RMB statements in the followingways: the assets and liabilities in the balance sheet shall be converted at the spot exchange rate on the balance sheet date;Except for "undistributed profits", other items of shareholders' equity shall be converted at the spot exchange rate at the time ofoccurrence. The income and expense items in the profit statement shall be converted at the average exchange rate of thecurrent period on the date of transaction. The undistributed profit at the beginning of the period shall be the undistributed profitat the end of the period converted from the previous year; The undistributed profits at the end of the year shall be calculatedand listed according to the converted profits distribution items; The difference between the converted asset items and the totalamount of the liability items and shareholders' equity items shall be recognized as other comprehensive income as thetranslation difference in the foreign currency statements. In case of disposal of overseas operations and loss of control, thebalance in translation of the foreign currency statements related to the overseas operations as shown below in the shareholders'equity items in the balance sheet shall be transferred to the profits and losses of the disposal period in whole or in proportion tothe disposal of the overseas operations.
Cash flows in foreign currencies and cash flows of overseas subsidiaries shall be converted at the average exchange rate
of the current period on the date of occurrence of the cash flows. The effect of exchange rate changes on cash shall bepresented separately in the statement of cash flows as an reconciling item.Opening amounts and prior-period actual amounts shall be shown on the basis of amounts translated from theprior-period financial statements.When disposing of all the owner's equity of the Company's overseas operations or losing the control over overseasoperations due to the disposal of part of the equity investment or for other reasons, if the following items of shareholders'equity in the balance sheet are shown below, the balance in translation of the foreign currency statement attributable to theowner's equity of the parent company related to the overseas operation shall be transferred to the profits and losses of thecurrent disposal period.
In the event that the proportion of overseas business interests is reduced due to the disposal of part of the equityinvestment or for other reasons, but the control over overseas business operations is not lost, the balance in the translation ofthe foreign currency statements related to the disposal of part of overseas business operations shall be attributed to minorityshareholders' interests and shall not be transferred to the profits and losses of the current period. When disposing of part of theequity of an overseas operation as an associated enterprise or a joint venture, the balance of the translation of the foreigncurrency statements related to the overseas operation shall be transferred into the profits and losses of the current disposalperiod in the proportion of the overseas operation disposed of.
9. Financial instruments
A financial asset or financial liability is recognized when the Company becomes a party to a financial instrumentcontract.
(1) Classification, confirmation and measurement of financial assets
According to the business mode of managing financial assets and the contractual cash flow characteristics of financialassets, the Company divides financial assets into: Financial assets measured at amortized cost. Financial assets measured atfair value with changes included in other comprehensive income. Financial assets that are measured at fair value and whosemovements are included in the current profits and losses.
Financial assets are measured at fair value at initial recognition. For financial assets measured at fair value and whosechanges are included in current profits and losses, relevant transaction costs are directly included in current profits andlosses. For other types of financial assets, relevant transaction costs are included in the initial recognition amount. Accountsreceivable or notes receivable arising from the sale of products or the provision of labor services that do not contain or takeinto account significant financing components shall be initially recognized by the Company in accordance with the amountof consideration that the Company is expected to be entitled to receive.
① Financial assets measured at amortized cost
The Company's business model of managing financial assets measured in amortized cost is aimed at collectingcontractual cash flow, and the contractual cash flow characteristics of such financial assets are consistent with the basiclending arrangements, that is, the cash flow generated on a specific date is only the payment of principal and interest based
on the unpaid principal amount. For such financial assets, the Company adopts the effective interest rate method and carriesout subsequent measurement according to amortized cost. The profits or losses arising from amortization or impairment areincluded into the current profits and losses.
② Financial assets measured at fair value with changes included in other comprehensive income
The Company's business model for managing such financial assets is to collect and sell contractual cash flow, and thecontractual cash flow characteristics of such financial assets are consistent with the basic lending arrangements. TheCompany measures these financial assets at fair value and their changes are included in other comprehensive income, butimpairment loss or gain, exchange gain or loss and interest income calculated according to the effective interest rate methodare included into the current profit and loss.In addition, the Company designates some non tradable equity instrument investments as financial assets measured atfair value with changes included in other comprehensive income. The Company shall record the relevant dividend income ofsuch financial assets into the current profits and losses, and the change of fair value into other comprehensive income. Whenthe financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income willbe transferred from other comprehensive income to retained income and will not be included in current profits and losses.
③ Fair value through Profit and Loss Financial assets
The Company classifies the above financial assets measured at amortized cost and financial assets measured at fairvalue with changes included in other comprehensive income into financial assets measured at fair value with changesincluded in current profits and losses. In addition, during initial recognition, in order to eliminate or significantly reduceaccounting mismatch, the Company designated part of financial assets as financial assets measured at fair value withchanges included in current profit and loss. For such financial assets, the Company adopts fair value for subsequentmeasurement, and the changes in fair value are included into the current profit and loss.
(2) Classification, recognition and measurement of financial liabilities
Financial liabilities upon initial recognition are classified as financial liabilities which are measured at fair value andwhose changes are included in current profits and losses and other financial liabilities. For the financial liabilities measuredat fair value with the changes included into the current profits and losses, the relevant transaction costs are directly includedinto the current profits and losses, and the relevant transaction costs of other financial liabilities are included in the initialrecognition amount.
① Fair value through Profit and Loss Financial liabilities
Financial liabilities measured at fair value with changes included in current profits and losses, which includetransactional financial liabilities (including derivatives belonging to financial liabilities) and financial liabilities designatedto be measured at fair value with changes included in current profits and losses at initial recognition.
Trading financial liabilities (including derivatives belonging to financial liabilities) are subsequently measuredaccording to their fair values. Except for those related to hedge accounting, changes in fair values are included in current
profits and losses.Financial liabilities designated to be measured at fair value with changes included in current profits and losses. Changesin the fair value of this liability caused by changes in the Company's own credit risk are included in other comprehensiveincome. When the liability is derecognized, the accumulated change in fair value caused by changes in its own credit riskincluded in other comprehensive income is transferred to retained earnings. Changes in fair value are accounted into currentprofits and losses. If the above-mentioned treatment of the impact of changes in the credit risk of these financial liabilitieswill cause or expand accounting mismatch in profits and losses, the Company will include all profits or losses of thefinancial liabilities (including the impact amount of changes in the credit risk of the enterprise itself) into the current profitsand losses.
② Other financial liabilities
Except for financial liabilities and financial guarantee contracts formed by the transfer of financial assets that do notmeet the conditions for termination of recognition or continue to be involved in the transferred financial assets, otherfinancial liabilities are classified as financial liabilities measured at amortized cost and subsequently measured at amortizedcost. Gains or losses arising from termination of recognition or amortization are included in current profits and losses.
(3) Basis of Confirmation and Calculation of financial instruments
Financial assets shall be derecognized if they meet one of the following conditions: ① The termination of thecontractual right to receive cash flow from the financial asset. ② The financial asset has been transferred, and almost allrisks and rewards related to the ownership of the financial asset have been transferred to the transferee. ③ The financialasset has been transferred. Although the enterprise has neither transferred nor retained almost all risks and rewards in theownership of the financial asset, it has given up its control over the financial asset.
If the enterprise neither transfers nor retains almost all the risks and rewards of the ownership of the financial assets,and does not give up the control over the financial assets, the relevant financial assets shall be recognized according to theextent of continuous involvement in the transferred financial assets, and the relevant liabilities shall be recognizedaccordingly. The degree of continuous involvement in the transferred financial assets refers to the risk level faced by theenterprise due to the change in the value of the financial assets.
If the overall transfer of financial assets meets the conditions for termination of recognition, the difference between thebook value of the transferred financial assets and the sum of the consideration received due to the transfer and theaccumulated amount of changes in fair value originally included in other comprehensive income shall be included into thecurrent profits and losses.
If the partial transfer of financial assets meets the conditions for termination of recognition, the book value of thetransferred financial assets shall be apportioned according to its relative fair value between the derecognized part and thenon derecognized part, and the difference between the sum of the consideration received due to the transfer and theaccumulated change in fair value originally included in other comprehensive income that shall be apportioned to thederecognized part and the allocated aforesaid book amount shall be included into the current profits and losses.
For financial assets sold by the Company with recourse, or for endorsement and transfer of held financial assets, it isnecessary to determine whether almost all risks and rewards in the ownership of the financial assets have been transferred. Ifalmost all risks and rewards in the ownership of the financial asset have been transferred to the transferee, the recognition ofthe financial asset shall be terminated. If almost all risks and rewards on the ownership of a financial asset are retained, therecognition of the financial asset shall not be terminated. If almost all risks and rewards related to the ownership of financialassets have not been transferred or retained, it shall continue to judge whether the enterprise retains control over the assetsand carry out accounting treatment according to the principles mentioned in the preceding paragraphs.
(4) Termination of recognition of financial liabilities
If the current obligation of the financial liability (or part thereof) has been relieved, the Company terminates therecognition of the financial liability (or part thereof). The Company (the borrower) and the lender sign an agreement toreplace the original financial liabilities by assuming new financial liabilities. If the contract terms of the new financialliabilities and the original financial liabilities are substantially different, the original financial liabilities shall bederecognized and a new financial liability shall be recognized at the same time. If the Company makes any substantialmodification to the contract terms of the original financial liability (or part thereof), the original financial liability shall bederecognized and a new financial liability shall be recognized in accordance with the modified terms.
If financial liabilities (or part thereof) are derecognized, the Company shall include the difference between its bookvalue and the consideration paid (including transferred non-cash assets or liabilities assumed) into the current profits andlosses.
(5) Offset of financial assets and financial liabilities
When the Company has the legal right to offset the recognized amount of financial assets and financial liabilities, andsuch legal right is currently enforceable, and the Company plans to settle the financial assets on a net basis or realize thefinancial assets and settle the financial liabilities at the same time, the financial assets and financial liabilities are listed in thebalance sheet at a net amount after mutual offset. In addition, financial assets and financial liabilities shall be listedseparately in the balance sheet and shall not be offset against each other.
(6) The fair value determination method of financial assets and financial liabilities
Fair value refers to the price that market participants can receive from selling an asset or pay to transfer a liability in anorderly transaction on the measurement date. Where there is an active market for financial instruments, the Company adoptsquotations in the active market to determine their fair values. Quoted price in active market refers to the price easilyobtained from exchanges, brokers, industry associations, pricing service agencies, etc. on a regular basis, and represents theprice of market transactions actually occurred in fair trading. If there is no active market for financial instruments, theCompany uses evaluation techniques to determine their fair values. Evaluation techniques include reference to prices used inrecent market transactions by parties familiar with the situation and willing to trade, reference to current fair values of otherfinancial instruments that are substantially the same, discounting cash flow technique, option pricing model, etc. In valuation,the Company adopts valuation techniques that are applicable under current circumstances and are supported by sufficient
available data and other information, selects input values that are consistent with the characteristics of assets or liabilitiesconsidered by market participants in transactions related to assets or liabilities, and gives priority to the use of relevantobservable input values as much as possible. If the relevant observable input value cannot be obtained or it is notimpracticable to obtain it, the non-input value shall be used.
(7) Equity instruments
Equity instruments refer to contracts that can prove ownership of the Company's residual equity in assets afterdeducting all liabilities. The issuance (including refinancing), repurchase, sale or cancellation of equity instruments by theCompany are treated as changes in equity, and transaction costs related to equity transactions are deducted from equity. TheCompany does not recognize changes in the fair value of equity instruments.Dividends (including "interest" generated by instruments classified as equity instruments) distributed by the Company'sequity instruments during their existence shall be treated as profit distribution.
10. Impairment of financial assets
The financial assets of the Company that need to confirm the impairment loss are financial assets measured atamortized cost and debt instrument investment measured at fair value with changes included in other comprehensive income,mainly including notes receivable, accounts receivable, other receivables, debt investment, other debt investment, long-termreceivables, etc. In addition, for some financial guarantee contracts, impairment reserves and credit impairment losses arealso accrued in accordance with the accounting policies described in this part.
(1) Recognition method of impairment provision
On the basis of expected credit losses, the Company sets aside impairment reserves and recognizes credit impairmentlosses for the above items according to the applicable expected credit loss measurement method (general method orsimplified method).
Credit loss refers to the difference between all contractual cash flows receivable according to the contract and all cashflows expected to be collected by the Company discounted according to the original actual interest rate, i.e. the present valueof all cash shortages. Among them, for the financial assets that have been purchased or incurred credit impairment, theCompany discounts them according to the actual interest rate adjusted by credit.
The general method of measuring expected credit loss refers to the Company's assessment of whether the credit risk offinancial assets has increased significantly since the initial recognition on each balance sheet date. If the credit risk hasincreased significantly since the initial recognition, the Company will measure the loss reserve by an amount equivalent tothe expected credit loss during the entire period. If the credit risk has not increased significantly since the initial recognition,the Company will measure the loss reserve according to the amount equivalent to the expected credit loss in the next 12months. In assessing the expected credit loss, the Company takes into account all reasonable and evidence-basedinformation, including forward-looking information.
For financial instruments with low credit risk on the balance sheet date, the Company measures the loss reserve based
on the expected credit loss amount within the next 12 months or the entire duration according to whether the credit risk hasincreased significantly since the initial recognition.
(2) Criteria for judging whether credit risk has increased significantly since initial recognitionIf the default probability of a certain financial asset in the expected duration determined at the balance sheet date issignificantly higher than the default probability in the expected duration determined at the time of initial recognition, itindicates that the credit risk of the financial asset is significantly increased. Except for special circumstances, the Companyuses the change of default risk in the next 12 months as a reasonable estimate of the change of default risk in the entireduration to determine whether the credit risk has increased significantly since the initial recognition.Generally, if the overdue period is more than 90 days, the Company will consider that the credit risk of the financialinstrument has increased significantly, unless there is conclusive evidence that the credit risk of the financial instrument hasnot increased significantly since the initial recognition.The Company will consider the following factors when evaluating whether the credit risk has increased significantly1） Whether there is any significant change in the actual or expected operating results of the debtor;2） Whether there is any significant adverse change in the regulatory, economic or technological environment of thedebtor;
3） Whether there is any significant change in the value of the collateral or the quality of the guarantee or creditenhancement provided by the third party, which are expected to reduce the economic motivation of the debtor's repaymentaccording to the time limit stipulated in the contract or affect the probability of default;4） Whether there is any significant change in the expected performance and repayment behavior of the debtor;5） Whether there is any significant change in the Company's credit management methods for financial instruments,etc.
On the balance sheet date, if the Company judges that the financial instrument has only low credit risk, the Companyassumes that the credit risk of the financial instrument has not increased significantly since the initial recognition. If thedefault risk of a financial instrument is low, the borrower's ability to perform its contractual cash flow obligations in a shortperiod of time is strong, and even if there are adverse changes in the economic situation and operating environment for along period of time, it may not necessarily reduce the borrower's ability to perform its contractual cash obligations, then thefinancial instrument is considered to have low credit risk.
(3) Judgment criteria for financial assets with credit impairment:
When one or more events have an adverse impact on the expected future cash flow of a financial asset, the financialasset becomes a financial asset with credit impairment. The evidence of credit impairment of financial assets includes thefollowing observable information:
1）The issuer or debtor has major financial difficulties;
2）The debtor violates the contract, such as default or overdue payment of interest or principal, etc.;
3）The creditor gives concessions that the debtor will not make under any other circumstances due to economic orcontractual considerations related to the debtor's financial difficulties;
4）The debtor is likely to go bankrupt or undergo other financial restructuring;
5）The active market of the financial assets disappears due to the financial difficulties of the issuer or the debtor;
6）Purchase or generate a financial asset at a substantial discount, which reflects the fact that credit losses haveoccurred.
Credit impairment of financial assets may be caused by the combined action of multiple events, but may not be caused
by separately identifiable events.
(4) Portfolio approach to evaluate expected credit risk based on portfolio
The Company evaluates credit risks for financial assets with significantly different credit risks, such as: Accountsreceivable with related parties. Receivables in dispute with the other party or involving litigation or arbitration. Receivableswith obvious signs that the debtor is likely to be unable to perform the repayment obligation.In addition to the financial assets with individual credit risk assessment, the Company divides the financial assets intodifferent groups based on the common risk characteristics. The common credit risk characteristics adopted by the Companyinclude: Credit risk shall be assessed on the basis of the aging portfolio, the receivables portfolio between the finalcontrolling party and its subordinate units, the public maintenance fund and house selling fund portfolio deposited in thehousing provident fund management center, the deposit/margin portfolio, and the petty cash ledger portfolio formed by theemployee loan of the unit.
(5) Accounting treatment method for impairment of financial assets
At the end of the period, the Company calculates the estimated credit losses of various financial assets. If the estimatedcredit losses are greater than the book amount of its current impairment reserve, the difference is recognized as impairmentloss. If it is less than the carrying amount of the current impairment reserve, the difference is recognized as impairment gain.
(6) Methods for determining the credit loss of various financial assets
①Notes receivable
The Company measures the loss reserve for bills receivable according to the expected credit loss amount equivalent tothe entire duration. Based on the credit risk characteristics of bills receivable, they are divided into different portfolios:
Item
| Item | Basis for determining portfolio |
| Bank acceptance bills | The acceptor is a bank with less credit risk |
| Commercial acceptance bill | According to the acceptor's credit risk classification, it should be the same as the "receivable" portfolio classification. |
③ Accounts receivable and other receivables
For receivables that do not contain significant financing components, the Company measures the loss reserve accordingto the expected credit loss amount equivalent to the entire duration.
For receivables that contain significant financing components, the Company measures the loss reserve based onwhether the credit risk has increased significantly since the initial recognition, using the amount of expected credit losswithin the next 12 months or the entire duration.
According to whether the credit risk of other receivables has increased significantly since the initial recognition, theCompany measures impairment loss with an amount equivalent to the expected credit loss within the next 12 months or theentire duration.
In addition to the accounts receivable and other receivables that individually assess credit risk, they are divided intodifferent portfolios based on their credit risk characteristics:
Item
| Item | Basis for determining portfolio |
| Portfolio 1 | Aging portfolio. |
| Portfolio 2 | A portfolio of receivables between the ultimate controller and its subordinate units. |
| Portfolio 3 | The portfolio of public maintenance funds and house sales funds deposited in the housing provident fund management center. |
| Portfolio 4 | Deposit/margin portfolio. |
| Portfolio 5 | The portfolio of reserve fund ledger formed by the Company's staff loan. |
The accrual method of bad debt reserves for different portfolios:
| Item | Accrual method |
| Aging portfolio | According to the accrual proportion corresponding to the aging period |
| Portfolio of receivables between the ultimate controlling party and its subordinate units | No provision for bad debts |
| The portfolio of public maintenance funds and house sales funds deposited into the MPF Management Center | No provision for bad debts |
| Deposit/margin portfolio | No provision for bad debts |
| The portfolio of reserve fund ledger formed by the Company's staff loan. | No provision for bad debts |
a. In portfolio, the portfolio method of withdrawing bad debt reserves by aging analysis
| Aging | Expected loss rate of notes receivable (%) | Expected loss rate of accounts receivable (%) | Expected loss rate of other receivables (%) |
| Within 1 year (including 1 year, the same below) | |||
| Among them: Within the credit period (within 3 months) | 0 | 0 | 0 |
| Credit period~1 year | 2 | 2 | 2 |
| 1-2 years | 5 | 5 | 5 |
| 2-3years | 20 | 20 | 20 |
| 3-4years | 50 | 50 | 50 |
| 4-5years | 80 | 80 | 80 |
| More than 5 years | 100 | 100 | 100 |
b. In the portfolio, the description of the accrual method for accrual of bad debt reserves by other methods is given.
| Portfolio name | Expected loss rate of notes receivable (%) | Expected loss rate of accounts receivable (%) | Expected loss rate of other receivables (%) |
| Accounts receivable between the final controlling party and its subordinate u | - | - | - |
Portfolio name
| Portfolio name | Expected loss rate of notes receivable (%) | Expected loss rate of accounts receivable (%) | Expected loss rate of other receivables (%) |
| Public maintenance fund and house sale fund deposited into MPF Management Center | - | - | - |
| Deposit/margin | - | - | - |
| The reserve fund ledger formed by the Company's staff loan. | - | - | - |
11. Inventory
(1) Classification of inventory
Inventories mainly include raw materials, turnover materials, developed products, in transit materials inventory goods,reserve tanker storage commissioned processing, and manufacturing consignment, etc..
(2) Valuation method for obtaining and issuing inventory
Inventories are valued at actual cost when they are acquired. Inventory costs include purchase costs, processing costsand other costs. They are valued with weighted average method when they are used and issued.
(3) Confirmation of net realizable value of inventories and method of accrual of falling price reserve
Net Realizable Value refers to the amount of estimated selling price of inventories minus the estimated cost tillcompletion, estimated expenses for selling activity and related taxes and fees in daily activities. When determining the netrealizable value of inventories, solid evidence obtained shall be the basis, and the purpose of holding the inventories and theimpact of events after the balance sheet date shall be considered.
On the balance sheet date, inventories shall be measured at lower of cost and net realizable value. When the netrealizable value is lower than the cost, the provision for inventory devaluation shall be accrued. The provision for inventorydevaluation shall be accrued based on the difference between the cost of a single inventory item and its net realizable value.The provision for inventory devaluation of a large number of inventories with low unit prices shall be based on the type ofinventory; for inventories related to the product range produced and sold in same region, having the same or similar end useor purpose, and difficult to be separated from other items for measurement, their provision for inventory devaluation can becombined and accrued.
After the provision for inventory devaluation is accrued, if the factors cause the previous written-down inventory valuehave disappeared, and the situation results in the fact that the net realizable value of the inventories higher than the bookvalue, the amount of the provision for inventory devaluation that has been accrued shall be reversed and included in thecurrent period profit or loss.
(4) The Company adopts perpetual inventory system as its inventory system.
(5) Amortization method of low-value consumables and packaging materials
Low-value consumables are amortized on a one-off basis/ partial amortization method when theyare used; packaging materials are amortized on a one-off basis/ partial amortization method when they
are used
12. Held-for-sale assets
If the book value of a non-current asset or to-be-disposed portfolio is recovered by the Company mainly through saleactivities (including the exchange of non-monetary assets with commercial nature, the same below), the non-current asset orto-be-disposed portfolio falls into held-for-sale category. The specific criteria: both of the following conditions shall besatisfied: a non-current asset or to-be-disposed portfolio can be sold immediately under the current conditions based on thepractice of selling such asset or to-be-disposed portfolio in similar transactions; the Company has already decided on thesale plan and obtained confirmed purchase commitment; the sale is scheduled to be completed within one year. Among them,a Disposal Portfolio refers to a group of assets that will be disposed of as a whole through sale or other approaches in atransaction, and the liabilities directly associated with these assets transferred along with the assets in transaction. If theportfolio of assets or group of portfolios of assets is allocated goodwill acquired in business merger in accordance withAccounting Standards for Business Enterprises No. 8 - Asset Impairment, the Disposal Portfolio shall include the goodwillallocated to it.In the event that the book value of a non-current asset or to-be-disposed portfolio that has been designated asheld-for-sale category is higher than the net amount of fair value less sales expenses when the non-current asset orto-be-disposed portfolio is initially measured or measured on the balance sheet date, the book value shall be to the netamount of fair value minus sales expenses, and the written-down amount shall be recognized as asset impairment loss andincluded in current period profit or loss. The provision for impairment loss of the held-for-sale asset shall be accrued. For aDisposal Portfolio, the confirmed impairment loss shall deduct the book value of the goodwill in the Disposal Portfolio, thendeduct the book value of the non-current assets determined by the measurement on a pro-rata basis in accordance with theapplicable Accounting Standards for Business Enterprises No. 42 held-for-sale non-current assets, Disposal Portfolio andTermination of Operations (hereinafter referred to as the “Guide for Held-For-Sale”). In the event of an increase of the bookvalue of the held-for-sale Disposal Portfolio minus sales expenses on the subsequent the balance sheet date, the amountpreviously written down shall be recovered and be reversed within the mount of the asset impairment loss recognized in thenon-current assets measured by the measurement “Guide for Held-For-Sale” after being classified as held for sale asset, thereversal amount shall be included in the current period profit or loss, and the book value of all non-current assets (except forgoodwill) determined by the measurement on a pro-rata basis in accordance with the applicable “Guide for Held-For-Sale”shall be increased on a pro-rata basis. The book value of the goodwill that has been deducted and the impairment loss of theassets recognized before the classification of the held-for-sale non-current assets in accordance with the applicable “Guidefor Held-For-Sale” shall not be reversed.
In terms of the held-for-sale non-current assets or non-current assets in Disposal Portfolio, there is no accrual oramortization for depreciation, and the interest from and other expenses from the liabilities in held-for-sale Disposal Portfolioshall still be recognized.
When a non-current asset or Disposal Portfolio no longer meets the conditions for Held-For-Sale category, non-current
asset or Disposal Portfolio will no longer be classified as Held-For-Sale category by the Company or the non-current assetwill be removed from the Held-For-Sale Disposal Portfolio, and be measured based on one of the following two values,whichever is lower: (1) The book value before being classified as held-for-sale category adjusted based on the depreciation,amortization or impairment that should have be confirmed if it is not classified as held-for-sale category; (2) recoverableamount.
13. Long-term equity investment
The long-term equity investment refers to in this part refers to the long-term equity investment that the Company hascontrol, joint control or significant influence on the invested entity. The long-term equity investment of the Company thatdoes not have control, joint control or significant impact on the investee shall be accounted as a financial asset measured atfair value with its changes included into the current profits and losses. Among them, if it is non-transactional, the Companymay choose to designate it as a financial asset measured at fair value and its changes are included in the accounting of othercomprehensive income at the time of initial recognition. For details of its accounting policies, please refer to Note IV, 9“Financial Instruments".Joint control refers to the control that the Company shares with other party/parties for an arrangement in accordancewith relevant agreements, and relevant activities of the arrangement can only be decided based on the consensus of allparties sharing the control rights before making a decision. Significant Influence refers to power of the Company toparticipate in the decision-making of the financial and operating policies of the investee, but the Company cannot control orjointly control the development of these policies with other parties.
(1) Determination of investment cost
For a long-term equity investment obtained from a combination of businesses under the same control, the apportionedshare of the book value in the final controller's consolidated financial statements on the combination date in accordance withthe shareholders' equity shall be the initial investment cost of the long-term equity investment. The capital reserve shall beadjusted subject to the difference between the initial investment cost of the long-term equity investment and the cash paid,the non-cash assets transferred, and the book value of the debts assumed; if the capital reserve is insufficient for offsetting,the retained earnings shall be adjusted. Where the equity securities are issued as merger consideration, the apportioned shareof the book value in the final controller's consolidated financial statements on the combination date in accordance with theshareholders' equity shall be the initial investment cost of the long-term equity investment, and the total par value of theissued shares is taken as the share capital. The capital reserve shall be adjusted subject to the difference between the initialinvestment cost of the long-term equity investment and the total par value of the shares issued; if the capital reserve isinsufficient for offsetting, the retained earnings shall be adjusted. Where the equity of combined parties under the samecontrol is obtained through multiple transactions and a business combination under the same control is formed finally, itshall be treated differentially based on whether it is a “package deal”: if it belongs to a “package deal”, all transactions willbe treated as a transaction that obtains control. If it is not a “package deal”, the apportioned share of the book value in thefinal controller's consolidated financial statements on the combination date in accordance with the shareholders' equity shall
be the initial investment cost of the long-term equity investment. The capital reserve shall be adjusted subject to thedifference between the initial investment cost of the long-term equity investment and the sum of the book value of long-termequity investment before combination date and the book value of the new consideration for the new share on thecombination date. If the capital reserve is insufficient for offsetting, the retained earnings shall be adjusted. The equityinvestments that are held prior to the combination date and are recognized with equity recognized or as available-for-salefinancial asset as other comprehensive income will not be given accounting treatment for the moment.For a long-term equity investment obtained from a combination of businesses not under the same control, the initialinvestment cost of the long-term equity investment shall be based on the combination cost on the purchase date. Thecombination cost includes the assets paid by purchaser, the liabilities incurred or assumed, and the sum of the fair value ofissued equity securities. Where the equity of combined parties not under the same control is obtained through multipletransactions and a business combination under the same control is formed finally, it shall be treated differentially based onwhether it is a “package deal”: if it belongs to a “package deal”, all transactions will be treated as a transaction that obtainscontrol. If it is not a “package deal”, the initial investment cost of the long-term equity investment calculated by the costmethod shall be calculated based on the sum of the book value of the equity investment in the original holder and the newinvestment cost. The original share holding that measured using equity method, the relevant other comprehensive incomedoes temporarily not conduct accounting treatment.Intermediary expenses such as for auditing, legal services, assessment and other related expenses incurred by acombining party or a purchaser for business combination shall be recognized in current period profit or loss when incurred.
The equity investments other than formed by business combination shall be initially measured at cost. The cost will bedetermined based on the following amount according to different methods of the acquisition of long-term equity investment:
the purchase price in cash actually paid by the Company; the fair value of the equity securities issued by the Company, thevalue agreed in relevant investment contract or agreement; the fair value or original book value of the assets exchanged innon-monetary asset exchange transaction; the fair value of the long-term equity investment itself. Any expenses, taxes andother necessary expenses directly related to the acquisition of long-term equity investments shall also be included in the costof investment. The cost of long-term equity investment for the additional investment that can exert significant influence oninvestee or implement joint control but does not constitute control shall be the sum of the fair value of the originally heldequity investment recognized in accordance with the Accounting Standards for Business Enterprises No.. 22 – Recognitionand Measurement of Financial Instruments and the cost for new investment.
(2) Follow-up measurement and confirmation methods for profit and loss
The Equity Method shall be used to account for long-term equity investments that have joint control over the investedentity (except for those constituting joint operators) or have significant impact on the invested entity. In addition, thecompany's financial statements use the Cost Method to account for long-term equity investments, which can control thelong-term equity investment of the investee.
a. Long-term equity investment based on Cost Method
When accounting with Cost Method, long-term equity investment is priced at the initial investment cost, and the cost ofthe long-term equity investment is adjusted by adding or recovering the investment. Except for the actual payment at thetime of obtaining investment or the cash dividends or profits included in the consideration but not yet issued, the currentinvestment income shall be recognized according to the cash dividends or profits declared by the investee.b. Long-term equity investment accounted for by Equity MethodWhen accounting with Equity Method, if the initial investment cost of a long-term equity investment is greater than thefair value share of the identifiable net assets of the investee when investing, and the initial investment cost of the long-termequity investment shall not be adjusted; if the initial investment cost is less than the fair value share of the identifiable netassets of the investee when investing, the difference shall be included in the current profit and loss, and the cost of thelong-term equity investment shall be adjustedWhen accounting with Equity Method, the investment income and other comprehensive income are recognizedseparately according to the shares of the net profit or loss and other comprehensive income that should be enjoyed or shared,and the book value of the long-term equity investment should be adjusted at the same time. The book value of long-termequity investment is reduced accordingly by calculating the share that should be enjoyed according to the profit or cashdividend declared by the investee. The book value of long-term equity investment shall be adjusted and included in thecapital reserve for other changes in the owner's rights and interests of the invested entity other than the net profit and loss,other comprehensive income and profit distribution. When confirming the share of the net profit and loss of the investee, thenet profit of the investee shall be adjusted and confirmed on the basis of the fair value of the identifiable assets of theinvestee at the time of investment. If the accounting policies and periods adopted by the invested entity are inconsistent withthe Company, the financial statements of the invested entity shall be adjusted in accordance with the accounting policies andperiods of the Company, and the investment income and other comprehensive income shall be confirmed accordingly. Forthe transactions between the Company and the associates and joint ventures, the assets invested or sold do not constitute abusiness, and the unrealized gains and losses from internal transactions are offset against the portion of the Company that isattributable to the proportion of the shares, on this basis. investment profit and loss should be confirmed. However, theunrealized internal transaction losses incurred by the Company and the investee are not included in the impairment losses ofthe transferred assets. Where the assets invested by the Company into a joint venture or an associates constitute a business, ifthe investor obtains long-term equity investment but does not control, the fair value of the invested business shall be deemedas the initial investment cost of the new long-term equity investment, and the difference between the initial investment costand the book value of the invested business is fully recognized in the current profits and losses. If the assets sold by theCompany to a joint venture or an associate that constitute a business, the difference between the consideration valueobtained and the book value of the business shall be fully recognized in the profits and losses of the current period.
When confirming the net loss that incurred by the investee should be shared, the book value of the long-term equityinvestment and other long-term equity that substantially constitutes the net investment of the investee are reduced to zero. Inaddition, if the Company has an obligation to bear additional losses to the investee, the estimated liabilities shall be
recognized according to the estimated obligations and included in the current investment losses. If the investee achieves netprofit in the following period, the Company shall resume recognizing the share of income after making up for theunrecognized share of loss.For the long-term equity investment in the joint ventures and associates held by the Company for the first time beforethe implementation of the new accounting standards, if there is a debit balance of equity investments related to theinvestment, the current profits and losses shall be accounted for by the straight-line amortization of the original remainingperiod.
c. Acquisition of Minority EquityIn the preparation of the consolidated financial statements, if the difference between the long-term equity investmentadded by purchasing minority shares and the net assets share that should be continuously calculated by the subsidiarycompany from the purchase date (or the consolidation date) is calculated according to the proportion of newly added shares,the retained earnings shall be adjusted; and if the capital reserve is insufficient to offset, the retained earnings shall beadjusted.
d. Disposal of long-term equity investmentIn the consolidated financial statements, the parent company partially of disposes of the long-term equity investment ofthe subsidiary without losing control, the difference of the corresponding net assets in the subsidiary between the disposalprice and the disposal of the long-term equity investment is included in the shareholders' equity. it shall be treated inaccordance with the relevant accounting policies described in “Notes on the preparation of consolidated financialstatements” in Note IV.5 .
For the disposal of long-term equity investment in other cases, the difference between the book value of the disposedequity and the actual acquisition price shall be included in the current profits and losses.
If the long-term equity investment is accounted for by equity method, the remaining equity after disposal is stillaccounted for by equity method, when disposing, the other comprehensive income which were originally included inshareholder's rights and interests shall be accounted for on the same basis as the assets or liabilities directly disposed of bythe investee. The owner's equity recognized as a result of changes in the owner's equity of the investee other than net profitor loss, other comprehensive income and profit distribution, it should be carried forward to the current profit and loss
For the long-term equity investment accounted by Cost Method, the remaining equity is still accounted by Cost Methodafter disposal, other comprehensive income that recognized by equity method accounting or financial instrument recognitionand measurement criteria accounting before obtaining control over the investee shall be accounted for on the same basis asthe assets or liabilities directly disposed of by the investee, and shall be settled to the current profit and loss in proportion.Changes of the net assets of investee in the owner's equity other than net profit or loss, other comprehensive income andprofit distribution 's that recognized by equity method shall be settled to the current profit and loss in proportion.
Where the Company loses control over the investee due to disposal of part of its equity investment, when preparing
individual financial statements, if the remaining equity after disposal can exercise joint control or exert significant influenceon the investee, it shall be accounted for by equity method instead, and the remaining equity shall be adjusted by accountingby equity method when it is deemed to be acquired. If the remaining equity after disposal cannot be jointly controlled orexerts significant influence on the investee, it shall be accounted for according to the relevant provisions of the financialinstrument recognition and measurement criteria, and the difference between the fair value and the book value on the date ofloss of control. It is included in the current profit and loss. Before the Company obtains control over the investee, othercomprehensive income recognized by equity method accounting or financial instrument recognition and measurementcriteria is used to directly dispose of the relevant assets with the investee, accounting treatment based on the same basis asthe investee directly disposes of related assets or liabilities when the control of the investee is lost, Accounting is treated onthe same basis as the liabilities. Changes in the owner's equity other than net profit or loss, other comprehensive income andprofit distribution of the investee's net assets recognized by the equity method are carried forward to the current profit or losswhen the control of the investee is lost. Among them, the remaining equity after disposal is accounted for using the equitymethod. Where the remaining equity after disposal is accounted for by equity method, other comprehensive income andother owner's equity should be settled by proportion. If the remaining equity is accounted for using financial instrumentrecognition and measurement standard, all of other comprehensive income and other shareholder’s equity should be settled.If the Company loses its joint control or significant influence on the investee due to the disposal of part of the equityinvestment, the remaining equity after disposal shall be accounted for according to the financial instrument recognition andmeasurement criteria, and the difference between the fair value and the book value on the date of loss of joint control orsignificant influence is recognised in the current profit or loss. The other comprehensive income recognized in the originalequity investment by the equity method is accounted for on the same basis as the investee's direct disposal of related assetsor liabilities when the equity method is terminated, Owner's equity recognized as a result of changes in other owners' equityother than net profit or loss, other comprehensive income and profit distribution of the investee should be transferred tocurrent investment income when terminating the equity methodThe Company disposes of the equity investment in the subsidiaries step by step through multiple transactions until theloss of control. If the above-mentioned transactions are part of a package transaction, the transactions are treated as atransaction dealing with the equity investment of the subsidiary and losing control. The difference between the book value ofeach long-term equity investment corresponding to the disposal price and the disposal of the equity before loss of control isfirst recognized as other comprehensive income, and when the control is lost, it is transferred to the current profit and loss ofloss of control.14．Investment PropertyInvestment Property refers to property held for the purpose of earning rent or capital appreciation, or both, includingland use rights that have been leased, land use rights that are held and prepared for transfer after appreciation, and buildingsthat have been rented. Investment property is initially measured at cost. The expenses related to investment property, if theeconomic benefits related to this asset are highly probable to flow into the company and the cost canbe measured reliably,
then the expense will account for as the cost of investment property. Other expenses are accounted for in profit and losswhen incurred.The Company adopts the cost model to conduct subsequent measurement of investment property and depreciation oramortization according to the policy consistent with the building or land use rights.For details of the impairment test method and impairment provision method of property, please refer to Note IV. 20“Long-Term Asset Impairment”.
When the self-use property or inventory is converted into investment property or investmentproperty is converted intoself-use property, the book value before conversion is used as the recorded value after conversion.
When the use of investment property is changed to self-use, the investment property is converted into fixed assets orintangible assets from the date of change. When the use of self-use property changes to earn rent or capital appreciation, thefixed assets or intangible assets are converted into investment property from the date of change. In the case of investmentproperty measured by the cost model when the conversion occurs, the book value before conversion is used as the entryvalue after conversion; if it is converted into investment property measured by the fair value model, the fair value of theconversion date is used as the entry value after conversion.
When an investment real estate is disposed of, or permanently withdrawn from use and is not expected to obtaineconomic benefits from its disposal, the confirmation of the investment real estate shall be terminated. Disposal incomefrom the sale, transfer, retirement or damage of investment properties is charged to the current profit and loss after deductingits book value and related taxes and fees.
15. Fixed Assets
(1) Confirmation conditions for fixed assets
Fixed Assets refer to tangible assets held for the purpose of producing goods, providing labor services, renting oroperating management, and having a service life of more than one fiscal year. Fixed assets are recognized only when theeconomic benefits associated with them are likely to flow into the Company and their costs can be reliably measured. Fixedassets are initially measured at cost and taking into account the impact of projected abandonment costs.
(2) Depreciation methods for various types of fixed assets
Fixed assets are depreciated over their useful lives using the straight-line method from the month following thescheduled availability. The service life, estimated net residual value and annual depreciation rate of various fixed assets areas follows:
Category
| Category | Depreciation Method | Depreciation period (Year) | Residual rate(%) | Annual depreciation rate (%) |
| Buildings | straight-line depreciation | 8-50 | 5 | 1.90—12.00 |
| Electronic equipment | straight-line depreciation | 3-10 | 4、5 | 9.50—32.00 |
| Machinery equipment | straight-line depreciation | 5-28 | 4、5 | 3.39—19.20 |
Category
| Category | Depreciation Method | Depreciation period (Year) | Residual rate(%) | Annual depreciation rate (%) |
| Transport equipment | straight-line depreciation | 5-10 | 4、5 | 9.50—19.20 |
| Office equipment | straight-line depreciation | 3-10 | 4、5 | 9.50—32.00 |
| Other equipment | straight-line depreciation | 5-28 | 4、5 | 3.39—19.20 |
The estimated net residual value refers to the expected state after the estimated useful life of the fixed assets hasexpired and is at the end of its useful life. The amount currently obtained by the Company from the disposal of the assetsafter deducting the estimated disposal expenses.
(3) Impairment test method and Impairment provision method for fixed assets
For details of Impairment test method and impairment provision method for fixed assets, please refer to Note IV. 20“Long-Term Asset Impairment”.
(4) Recognition basis and valuation method of fixed assets acquired by finance lease
A finance lease is a lease that transfers substantially all the risks and rewards associated with ownership of an asset, andits ownership may or may not be transferred. If it is reasonable to determine the ownership of the leased asset at theexpiration of the lease term, the depreciation shall be calculated within the useful life of the leased asset; If it is notreasonable to determine the ownership of the leased asset at the expiration of the lease term, depreciation shall be calculatedwithin a relatively short period of the lease term and the service life of the leased assets.
(5) Others
The subsequent expenses related to fixed assets, if the economic benefits related to the fixed assets are likely to flow inand their costs can be reliably measured, are included in the cost of fixed assets and the book value of the replaced partshould be terminated. The subsequent expenditures other than mentioned as above are recognized in profit or loss in theperiod in which they are incurred.
The fixed asset is derecognized when the fixed asset is in disposal or is not expected to generate economic benefits byusing or disposal. The difference between the disposal income from the sale, transfer, retirement or damage of the fixedassets less the carrying amount and related taxes is recognized in profit or loss for the current period.
The Company reviews the useful life, estimated net residual value and depreciation method of fixed assets at least atthe end of the year, and changes as an accounting estimate if changes occur.
16. Construction in progress
The cost of construction in progress is determined based on actual project expenditure, including various projectexpenditures incurred during the construction period, capitalized borrowing costs before the project reaches the expectedusable status, and other related expenses. Construction in progress is carried forward to fixed assets when it is ready for itsintended use.
For details of the impairment test method and impairment provision method for construction in progress, please refer
to Note IV. 20 “Long-Term Asset Impairment”.
17. Borrowing Costs
Borrowing costs include interest on borrowings, amortization of discounts or premiums, ancillary expenses, andexchange differences arising from foreign currency borrowings. Borrowing costs directly attributable to the acquisition,construction or production of assets eligible for capitalization, capitalization is began when asset expenditures have occurred,borrowing costs have occurred, and the acquisition, construction or production activities necessary to bring the assets to theintended usable or saleable state have begun. And capitalization is stopped when the assets under construction or productionthat meet the capitalization conditions are ready for their intended use or saleable status. The remaining borrowing costs arerecognized as an expense in the period in which they are incurred.The interest expenses actually incurred in the current period of special borrowings shall be capitalized after subtractingthe interest income from the unused borrowing funds deposited into the bank or the investment income obtained from thetemporary investment. For the general borrowings, according to the accumulated asset expenditures exceed the specialborrowings. The capitalization amount is determined by multiplying the weighted average of which accumulated assetexpenditure exceeds the asset expenditure of the special borrowing portion by the capitalization rate of the generalborrowings used. The capitalization rate is determined based on the weighted average interest rate of general borrowings.During the capitalization period, the exchange differences of foreign currency special borrowings are all capitalized;the exchange differences of foreign currency general borrowings are included in the current profit and loss.Assets eligible for capitalization refer to assets such as fixed assets, investment property and inventories that require asubstantial period of acquisition, construction or production activities to achieve the intended use or sale status.If the assets eligible for capitalization are interrupted abnormally during the acquisition, construction or productionprocess and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspendeduntil the acquisition, construction or production of the assets resumes.
18. Intangible assets
(1) Intangible assets
Intangible assets refer to identifiable non-monetary assets without physical form owned or controlled by the Company.
Intangible assets are initially measured at cost. Expenditure related to intangible assets is included in the cost ofintangible assets if the relevant economic benefits are likely to flow to the Company and its costs can be measured reliably.Expenditure on other items other than this is recognised in profit and loss when incurred.
The acquired land use rights are usually accounted for as intangible assets. The related land use rights and buildingconstruction costs of self-developed and constructed buildings are accounted for as intangible assets and fixed assets,respectively. In the case of purchased houses and buildings, the relevant price is distributed between the land use rights andthe buildings. If it is difficult to allocate them reasonably, all of them are treated as fixed assets.
Since the intangible assets with limited useful life are available for use, the original value minus the estimated net
residual value and the accumulated amount of impairment reserve shall be amortized by the straight-line method during theirexpected service life. Intangible assets with uncertain service life shall not be amortized.
Among them, the useful life and amortization method of intellectual property are as follows:
Item
| Item | Useful life (year) | Amortization method |
| Trademark | 20 | Straight-line method |
At the end of the period, the useful life and amortization methods of intangible assets with limited useful life arereviewed, and if any change occurs, it is treated as a change of accounting estimate. In addition, the useful life of intangibleassets with uncertain service life is also reviewed. If there is evidence that the period for which the intangible assets bringeconomic benefits to the enterprise is foreseeable, the useful life of intangible assets is estimated and amortized according tothe amortization policy of intangible assets with limited useful life
(2) Research and development expenditure
The company's expenditure for internal research and development project is divided into research phase expenditureand development phase expenditure.
Expenditures for the research phase shall be recognized in profit or loss when incurred.
Expenditures for the development phase that meet the following conditions shall be recognized as intangible assets, andexpenditures in the development stage that fail to meet the following conditions are included in current profit and loss:
a. It is technically feasible to complete the intangible asset to enable it to be used or sold.
b. The intent to complete the intangible asset and use or sell it;
c. The way in which intangible assets generate economic benefits, including the ability to prove that the productsproduced from the intangible assets having a market or the intangible assets having a market, and the intangible assets willbe used internally, which can prove its usefulness;
d. sufficient technical, financial resources and other resources for supporting the development of the intangible assetsand the ability to use or sell the intangible assets.
e. Expenditure attributable to the development phase of the intangible asset can be reliably measured.
If it is impossible to distinguish the expenditures between research phase and development phase, all research anddevelopment expenditures incurred will be included in the current profit and loss.
(3) Impairment test method and Impairment provision method for intangible assets
For details of the impairment test method and impairment provision method, please refer to Note IV. 20 “Long-TermAsset Impairment”.
19．Long-term Deferred Expenses
The long-term deferred expenses are all expenses that have occurred but shall be borne by the reporting period andsubsequent periods with amortization period of more than one year. The company's long-term deferred expenses mainly
include lease of land use right and renovation costs of factory building. Long-term deferred expenses are amortized on astraight-line basis over the estimated benefit period.
20. Long-term assets impairment
For fixed assets, construction in progress, intangible assets with limited useful life, investment property measured bycost model, and non-current non-financial assets such as long-term equity investments in subsidiaries, joint ventures andassociates, the Company determines whether there is any indication of impairment on the balance sheet date. If there is anyindication of impairment, the recoverable amount is estimated and the impairment test is carried out. Goodwill, intangibleassets with uncertain service life and intangible assets that not yet ready for use are tested for impairment annually,regardless of whether there is any indication of impairment.If the result of the impairment test indicates that the recoverable amount of the asset is lower than its book value, theimpairment provision is made based on the difference and is included in the impairment loss. The recoverable amount is thehigher of the fair value of the asset less the disposal expense and the present value of the estimated future cash flow of theasset. The fair value of assets is determined according to the sale agreement price in a fair transaction. If there is no salesagreement but there is an active market for the asset, the fair value is determined according to the buyer's bid for the asset; ifthere is neither sales agreement nor active market for assets, the fair value of assets shall be estimated based on the bestinformation available. Asset disposal expenses include legal fee, taxes, transportation expenses and direct expenses incurredto make assets saleable. The present value of the estimated future cash flow of an asset is determined by the appropriatediscount rate discounting and the estimated future cash flow generated by the asset during its continuous use and finaldisposal. The asset impairment provision is calculated and confirmed based on individual assets. If it is difficult to estimatethe recoverable amount of an individual asset, the recoverable amount of the asset is determined by the asset group whichthe asset belongs to. An asset group is the smallest portfolio of assets that can generate cash inflows independently.The book value of the goodwill listed separately in the financial statements is amortized into asset groups or portfoliosthat are expected to benefit from the synergies of business combinations when impairment tests are conducted. The testresults show that the recoverable amount of the asset group or portfolio containing the assessed goodwill is lower than itsbook value, the corresponding impairment losses should be confirmed. The amount of impairment loss is first deducted fromthe book value of the goodwill amortized to the asset group or portfolio, and then deducted proportionally from the bookvalue of other assets according to the proportion of the book value of assets other than goodwill in the asset group orportfolio.Once the above asset impairment loss is confirmed, it will not be reversed to the part where the value is restored in thefuture period.
21. Employee Compensation
The Company's employee compensation mainly includes short-term employee remuneration, Post-employmentBenefits, Termination Benefits and benefits for other long-term employee. Among them:
Short-term employees remuneration mainly includes wages, bonuses, allowances and subsidies, employee welfare fees,
medical insurance premiums, maternity insurance premiums, work injury insurance premiums, housing fund, labor unionfunds, employee education funds, and non-monetary benefits. The Company recognizes the actual short-term employee'sremuneration as a liability in the accounting period in which employees provide services to the Company and recognizesthem in profit or loss or related asset costs. Non-monetary benefits are measured at fair value.Post-employment Benefits mainly include basic retirement security, unemployment insurance, and annuities. ThePost-employment Benefit Scheme includes a Defined Contribution Plan and a Defined Benefit Plan. If a DefinedContribution Plan is adopted, the corresponding amount of the deposit shall be included in the relevant asset cost or currentprofit and loss as incurred. (1) The Defined Contribution Plan is recognized as a liability based on a fixed fee paid to anindependent fund and is included in the current profit and loss or related asset costs; (2) The Defined Benefit Plan isaccounted for using the expected cumulative benefits unit method Specifically, the Company will convert the welfareobligation arising from the Defined Benefit Plan into the final value of the departure time according to the formuladetermined by the expected cumulative benefits unit method; then it is attributed to the employee's in-service period and isincluded in the current profit and loss or related asset cost.
If the labor relationship with the employee is terminated before the employee's labor contract expires, or if theemployee is encouraged to accept the reduction voluntarily, when cannot withdrawing unilaterally the dismissal benefitsprovided by the termination of the labor relationship plan or the reduction proposal, and when confirming the costsassociated with the restructuring involving the payment of the dismissal benefits, whichever is earlier, the Company willrecognize the employee compensation liabilities arising from the dismissal benefits, and included in the current profit andloss. However, if the dismissal benefits are not expected to be fully paid within 12 months after the end of annual reportingperiod, they shall be treated in accordance with other long-term employee compensations.
The internal retirement plan for employees shall be treated in the same way as the above-mentioned dismissal benefits.The company will pay the internal retired staff the salary and the social insurance premiums from the employee's lay-off tonormal retirement, and will include in the current profit and loss (dismissal benefits) when the conditions of the estimatedliabilities are met.
If the other long-term employee benefits provided by the Company to the employees are in line with the DefinedContribution Plan, they shall be accounted for Defined Contribution Plan, and otherwise accounted for the Defined BenefitPlan.
22. Estimated liabilities
When the obligations related to the contingencies meet the following conditions, they are recognized as estimatedliabilities: (1) The obligation is the current obligation assumed by the Company; (2) The performance of this obligation islikely to result in the outflow of economic benefits; (3) The amount of the obligation can be reliably measured.
On the balance sheet date, taking into account factors such as risks, uncertainties and time value of money related tocontingencies, the estimated liabilities are measured in accordance with the best estimate of the expenditure required toperform the relevant current obligations.
If all or part of the expenses required to discharge the estimated liabilities are expected to be compensated by the thirdparty, the compensation amount will be separately recognized as an asset when it is basically determined to be received, andthe confirmed compensation amount does not exceed the book value of the estimated liabilities.
(1) Loss Contract
A loss contract is a contract in which the cost of fulfilling a contractual obligation will inevitably occur more than theexpected economic benefit. If the contract to be executed becomes a loss contract, and the obligation arising from the losscontract satisfies the conditions for the recognition of the above-mentioned estimated liabilities, the portion of thecontract's estimated loss that exceeds the recognized impairment loss (if any) of the contracted asset is recognized as theestimated liability.
(2) Restructuring Obligations
For restructuring plans that are detailed, formal, and have been announced to the public, the amount of the estimatedliabilities are determined based on the direct expenses related to the reorganization, subject to the recognition conditions ofthe aforementioned estimated liabilities. For the restructuring obligation to the part of business sold, the obligation related tothe reorganization is confirmed only when the company promises to sell part of the business (that is, when the binding saleagreement is signed).
23. Share-based Payment
(1) Accounting Treatment of Share-based Payments
A share-based payment is a transaction that grants an equity instrument or assumes a liability determined based on anequity instrument in order to obtain services from employees or other parties. Share-based Payments include equity-settledshare payment and cash-settled share payment.
a) Equity-settled Share Payment
The equity-settled share payment in exchange for the services from employee is measured at the fair value of thegranting of employees' equity instruments at the grant date. If the fair value is vested in the completion of the waiting periodof service or the fulfillment of the required performance conditions, during the waiting period, the amount of the fair value iscalculated by the straight-line method into the relevant costs or expenses based on the best estimate of the number of vestingequity instruments; Or If the vesting right is granted immediately after the grant, the calculation of the amount of the fairvalue is included in the relevant cost or expense on the grant date, and the capital reserve is increased accordingly.
On each balance sheet date during the waiting period, the Company makes the best estimate based on the latestinformation on the changes in the number of employees with vesting rights and corrects the number of equity instrumentsthat are expected to be vested. The impact of the above estimates shall be included in the current related costs or expenses,and the capital reserve is adjusted accordingly.
In the case of equity-settled share-based payments in exchange for other parties' services, if the fair value of otherparties' services can be reliably measured, the fair value of other services shall be measured at the fair value on the date of
acquisition; If the fair value of the other party's services cannot be measured reliably, the fair value shall be measured at thefair value of the equity instrument at the date the service is acquired, and is included in the relevant cost or expense, whichincreases the shareholders' equity accordingly.b) Cash-settled Share PaymentThe cash-settled share payment is measured at the fair value of the liabilities determined by the Company based onshares or other equity instruments. If the vesting right is available immediately after the grant, the relevant costs or expensesshall be included on the date of grant, and the liabilities shall be increased accordingly; if vesting right is available after theservice is completed within the waiting period or met the required performance conditions, based on the best estimate of thevesting rights on each balance sheet date of the waiting period, according to the fair value of the liabilities assumed by thecompany, the services obtained in the current period are included in the cost or expense, and the liabilities are increasedaccordingly.The fair value of the liabilities shall be re-measured on each balance sheet date and settlement date before thesettlement of the relevant liabilities, and the changes shall be recorded in the profit and loss of the current period.
(2) Relevant Accounting Treatment of share-based payment plan’s modification and terminationWhen the Company modifies the share-based payment plan, if the modification increases the fair value of the equityinstruments granted, the increase in the fair value of the equity instruments is recognized accordingly. The increase in thefair value of equity instruments refers to the difference between the fair value of the equity instruments before and after themodification. If the modification reduces the total fair value of the share-based payment or adopts other methods that are notconducive to the employee, the service obtained shall continue to be accounted for, as if the change has never occurred,unless the Company cancels some or all of equity instruments.During the waiting period, if the granted equity instrument is cancelled, the Company will cancel the granted equityinstrument as an accelerated exercise, and the amount to be recognized in the remaining waiting period will be immediatelyincluded in the current profit and loss, and the capital reserve will be recognized. If the employee or other party can chooseto meet the non-vesting conditions but fails to meet the waiting period, the Company will treat it as a cancellation of theequity instrument.
(3) Accounting Treatment of Share Payment Transactions between the Company and its Shareholders or ActualControllersIn respect of the share-based payment transaction between the company and the shareholders or actual controllers ofthe company, If one of the settlement enterprise and the service receiving enterprise is in the company and the other isoutside the company, it shall be accounted for in the consolidated financial statements of the company according to thefollowing provisions:
a.) If the settlement enterprise settles with its own equity instrument, the share-based payment transaction shall betreated as equity-settled share-based payment; otherwise, it shall be treated as a cash-settled share-based payment.
If the settlement enterprise is an investor of a serviced enterprise, it shall be recognized as the long-term equityinvestment of the serviced enterprise according to the fair value of the equity instrument at the grant date or the fair value ofthe liability to be assumed, and the capital reserve (other capital reserve) or liabilities shall be recognized.
b.) If the serviced enterprise has no settlement obligation or grants its own employees the equity instruments, the sharepayment transaction shall be treated as equity-settled share payment; if the serviced enterprise has settlement obligation andgrants its employees other than its own equity instruments, the share payment transaction shall be treated as a cash-settledshare payment.
For the share based payment incurred between companies within the group, if the serviced enterprise and settlememtenterprise are not the same, then the payment should be recpgnized and measured in their individual financial statements,they should be accounted for using the above principles
24. Preferred Stock, Perpetual Capital Securities and Other Financial Instruments
(1) Distinction between perpetual capital securities and Preferred Stock
Financial instruments such as perpetual bonds and preferred stocks issued by the Company, as well as meeting thefollowing conditions, shall be used as equity instruments:
a.) The financial instrument does not include contractual obligations to deliver cash or other financial assets to otherparties or to exchange financial assets or financial liabilities with other parties under potentially adverse conditions.
b.) In the case of the financial instrument is to be settled or available with the company's own equity instruments in thefuture, if the financial instrument is a non-derivative, it does not include the contractual obligation to deliver a variableamount of its own equity instruments; if it is a derivative, the Company can only settle the financial instrument byexchanging a fixed amount of cash or other financial assets with a fixed amount of its own equity instruments.
Except for financial instruments that can be classified under the above conditions, other financial instruments issued bythe Company should be classified as financial liabilities.
If the financial instruments issued by the Company are compound financial instruments, they are recognized as aliability based on the fair value of the liability component, and are recognized as “other equity instruments” based on theamount actually received after deducting the fair value of the liability component. The transaction costs incurred in issuing acompound financial instrument are apportioned in proportion to their respective total issue price between the liabilitycomponent and the equity component.
(2) Accounting treatment methods such as perpetual capital securities and preferred stocks
Related interest, dividends, gains or losses of financial instruments such as perpetual capital securities and preferredstocks classified as financial liabilities, and gains or losses arising from redemption or refinancing, are included in thecurrent profits and losses except for borrowing costs that meet the capitalization conditions (see Note 4, 17 “BorrowingFees”).
When financial instruments such as perpetual capital securities and preferred stocks classified as equity instruments are
issued (including refinancing), repurchased, sold or cancelled, the Company shall treat it as a change in equity, and relatedtransaction costs are also deducted from equity. The Company's allocation of equity instrument holders is treated as profitdistribution.
The Company does not recognize changes in the fair value of equity instruments.
25. Revenue
(1) Commodity Sales Revenue
When the main risks and rewards of commodity ownership is transferred to the buyer without retaining the continuingmanagement rights usually associated with the ownership and without effectively controlling of the sold commodity, if theamount of revenue can be reliably measured, and the relevant economic benefits are likely flow into enterprise and therelevant costs incurred or will be incurred can be reliably measured, the sales revenue of commodities shall be confirmed.
The specific principles for the confirmation of the Company's sales revenue are as follows: a.) Wholesale Business:
When the commodity have been delivered to the customer and confirmed by the customer, and the Company has alreadyreceived the payment or has obtained the proof of request for payment, the sales revenue shall be confirmed; b.) RetailBusiness: When the payment has been received and the goods have been delivered to the customer, the sales revenue shallbe confirmed.
(2) Income from labor services
In the case the results of the labor service transaction can be reliably estimated, the labor income provided is confirmedon the balance sheet date according to the percentage of completion method. The completion progress of the labortransaction is determined by the ratio of the completed work or the proportion of the labor service provided to the total laborservice, or by the ratio of labor costs incurred to the estimated total cost.
Reliable estimates of results of the labor transactions provided mean that it can be simultaneously met a.) The amountof income can be measured reliably; b.) Relevant economic benefits are likely to flow into the enterprise; c.) The degree ofcompletion of the transaction can be determined reliably, d.) The costs that have occurred and will occur in the transactioncan be measured reliably.
The specific principles for the company's processing service revenue recognition are as follows: a.) ProcessingBusiness with incoming materials (receiving processing fee): The processing fee income is confirmed when the relevantgoods are processed and delivered to the customer, and the processing fee or the relevant processing fee is received.
If the result of the service transaction cannot be measured reliably, the service income provided will be confirmedaccording to the amount of the service cost that has occurred and is expected to be compensated, and the service cost thathas occurred will be recognized as the current cost. Income shall be not recognized if the incurred labor costs are notexpected to be compensated, labor costs that had already incurred should be recognized jinto profit and loss.
When the contract or agreement signed by the Company with other enterprises includes the sale of commodity and theprovision of labor services, if the sales of commodity and the provision of labor services can be distinguished and separately
measured, the sales of commodity and the provision of labor services shall be handled separately; If the sales of commodityand the labor service part cannot be distinguished, or if it can be distinguished but cannot be separately measured, thecontract shall be all treated as the sales of commodity.
(3) Revenue from charge for use
Revenue shall be recognized on an accrual basis in accordance with the relevant contract or agreement.
(4) Interest income
Interest income shall be calculated according to the time and actual interest rate of the use of the company's monetaryfunds by others.
26. Government grants
Government grant refers to the company's acquisition of monetary and non-monetary assets from the government freeof charge, excluding the capital invested by the government as an investor and enjoying the corresponding owner's rightsand interests. Government grants include assets-related grants and revenue-related grants. The company defines thegovernment grant obtained for the purchase and construction of long-term assets or for the formation of long-term assets inother ways as the government grant related to assets; the remaining government grant is defined as the government grantrelated to income. If the object of grants is not specified in government documents, the grants shall be divided intoincome-related government grants and assets-related government grants in the following ways: (1) If the governmentdocument clarifies the specific project for which the grant is targeted, the proportion of the expenditure amount of the assetsto be formed and the amount of the expenditures included in the expenses in the budget of the specific project are divided,and the proportion of grant division needs to be reviewed on each balance sheet day and changed if necessary. (2) Ingovernment documents, if the purpose is expressed only in general terms and no specific project is specified, the grant shallbe regarded as a government grant related to the income. Where a government grant is a monetary asset, it shall be measuredaccording to the amount received or receivable. If the government grants are non-monetary assets, they shall be measured atthe fair value; if the fair value cannot be obtained reliably, they shall be measured at the nominal amount. Governmentgrants measured in nominal amounts shall be recognized directly in current profits and losses.
The Company usually confirms and measures the government grant according to the amount when it is actuallyreceived. However, if there is conclusive evidence at the end of the period that the relevant conditions stipulated in thefinancial support policy can be met and the financial support funds are expected to be received, it shall be measuredaccording to the amount receivable. Government grants measured in accordance with the amount receivable shall meet thefollowing conditions at the same time: (1) The amount of the subvention receivable has been confirmed by the authorizedgovernment departments, or can be reasonably calculated according to the relevant provisions of the formally issuedfinancial fund management measures, and there is no significant uncertainty in the amount expected; (2) According to the"Regulations on the Openness of Government Information" that the local financial department officially released and inaccordance with the provisions of the "Regulations on the Openness of Government Information," the financial supportproject and its financial fund management measures should be inclusive (any eligible enterprise can apply for them), rather
than being specifically tailored to specific companies; (3) The relevant grant approval has clearly promised the paymentperiod, and the allocation of the payment is guaranteed by the corresponding budget, so it can be reasonably ensure that itcan be received within the prescribed time limit; (4) Other relevant conditions (if any) to be met in accordance with thespecific circumstances of the Company and the grants.Government grants related to assets are recognized as deferred earnings and are divided into current profits and lossesin a reasonable and systematic way during the service life of the assets concerned. The government grants related to revenue,which are used to compensate for the related cost or loss in the subsequent period, shall be recognized as deferred income,and shall be recognized in profit or loss in the period in which the related costs or losses are recognized; if it is used tocompensate the related costs or losses that has occurred, it shall be directly recognized in the current profit and loss.It includes government grants related to both assets and income, and different parts are separately classified foraccounting treatment; if it is difficult to distinguish, the whole is classified as government grants related to income.Government grants related to the daily activities of the Company shall be included in other income or cost deductionsaccording to the nature of the economic business; government subsidies unrelated to daily activities shall be included in thenon-operating revenues and expenses.When the recognized government grants need to be returned, if there are relevant deferred earnings balances, the bookbalance of related deferred earnings shall be deducted, and the excess part shall be included in the current profits and lossesor the book value of assets shall be adjusted, otherwise, the book value of assets shall be directly included in the currentprofits and losses.
27. Deferred Income Tax Assets / Deferred Income Tax Liabilities
(1) Current Income Tax
On the balance sheet date, the current income tax liabilities (or assets) formed in the current and previous periods aremeasured by the expected amount of income tax payable (or returned) in accordance with the provisions of the Tax Law.The amount of taxable income on which current income tax expenses are calculated is based on the correspondingadjustment of pre-tax accounting profits in the reporting period in accordance with the relevant tax laws.
(2) Deferred Income Tax Assets and Deferred Income Tax Liabilities
The difference between the book value of certain assets and liabilities and their tax basis, and the temporary differencebetween the book value of items that are not recognized as assets and liabilities but which can be determined as their taxbasis according to the tax law, are confirmed by the balance sheet liability method.
Taxable temporary differences which related to the initial recognition of goodwill and the initial recognition of an assetor liability arising from a transaction that is neither a business combination nor an accounting profit or taxable income (ordeductible loss), relevant deferred income tax liabilities shall not be recognized. In addition, for taxable temporarydifferences related to investments in subsidiaries, associates and joint ventures, if the Company is able to control theturnaround time of temporary differences, and the temporary difference is unlikely to be reversed in the foreseeable future,
the related deferred income tax liabilities shall not be recognized. Except for the above exceptions, the Company recognizesall other deferred income tax liabilities arising from taxable temporary differences.
Taxable temporary differences which related to the initial recognition of an asset or liability arising from a transactionthat is neither a business combination nor an accounting profit or taxable income (or deductible loss), relevant deferredincome tax liabilities shall not be recognized. In addition, for taxable temporary differences related to investments insubsidiaries, associates and joint ventures, if the temporary difference is unlikely to be reversed in the foreseeable future, orthe amount of taxable income used to offset the temporary difference is unlikely to be obtained in the future, the deferredincome tax assets concerned shall not be recognized. Except for the above exceptions, the Company recognizes otherdeferred income tax assets that can offset temporary differences, subject to the amount of taxable income that is likely to beobtained to offset temporary differences.For deductible losses and tax credits that can be carried forward in subsequent years, the corresponding deferredincome tax assets are recognized to the extent that it is probable that the future taxable income shall be used to offset thedeductible losses and tax credits.On the balance sheet date, the deferred income tax assets and deferred income tax liabilities shall be measured at theapplicable tax rates in the period in which the related assets are recovered or the related liabilities are recovered inaccordance with the tax laws.On the balance sheet date, the book value of deferred income tax assets is reviewed. and the book value of deferredincome tax assets is written down if it is likely that sufficient taxable income will not be available to offset the benefits ofdeferred income tax assets in the future. When it is possible to obtain sufficient taxable income, the amount written downshall be reversed.
(3) Income tax expenses
Income tax expenses include current income tax and deferred income tax.
In addition to recognizing that the current income tax and deferred income tax related to other transactions and mattersdirectly included in shareholder's rights and interests shall be recognized in other comprehensive income or shareholder'srights and interests, and the book value of adjusted goodwill from deferred income tax resulting from the merger ofenterprises, the other current income tax and deferred income tax expenses or gains shall be recognized in profit or loss forthe current period.
(4) Offset of Income Tax
When the company has legal rights to settle on a net basis, and intends to settle on a net basis or acquire assets and payoff liabilities at the same time, the company's current income tax assets and current income tax liabilities shall be presentedon a net basis after the offset.
When it has the legal right to settle current income tax assets and current income tax liabilities on a net basis, anddeferred income tax assets and deferred income tax liabilities are related to the income tax levied by the same tax
administration department on the same tax payer or to different tax payers, but in the future, during each important period ofdeferred income tax assets and liabilities being reversed, the taxpayer involved intends to settle the current income tax assetsand liabilities on a net basis, or acquire assets and pay off liabilities simultaneously, the deferred the income tax assets anddeferred income tax liabilities of the Company shall be presented on a net basis after offset.
28. Lease
Finance lease is a lease that essentially transfers all risks and rewards related to the ownership of assets. Its ownershipmay or may not be transferred eventually. Leases other than finance leases are operating leases.
(1) The Company records operating lease business as a lessee.
Rental expenses for operating leases shall be included in the related asset costs or current profits and losses in thestraight-line method during each period of the lease period. The initial direct costs shall be included in the current profits andlosses. Contingent rentals shall be recognized in profits and losses when incurred.
(2) The company records operating leasie business as a lessor
The rental income of operating lease shall be recognized as current profit and loss according to the straight-line methodduring each period of the lease period. The larger initial direct expenses are capitalized when occurring, and the profits andlosses of the current period shall be recorded in stages on the same basis as the recognized rental income during the wholelease period; the smaller initial direct expenses shall be recorded in the profits and losses of the current period whenoccurring. Contingent rentals shall be included in current profits and losses when actually occurring.
(3) The company records finane lease business as a lessee
At the beginning of the lease period, the lower of the fair value of the leased assets and the present value of theminimum lease payment on the lease start date is regarded as the entry value of the leased assets, and the lowest leasepayment shall be regarded as the entry value of the long-term payables, and the difference shall be regarded as theunrecognized financing cost. In addition, the initial direct costs attributable to the lease project shall also be included in thevalue of the leased assets when they occur during the lease negotiation and the signing of the lease contract. The balance ofthe minimum lease payment after deducting the unrecognized financing costs shall be presented as long-term liabilities andlong-term liabilities due within one year, respectively.
The unrecognized financing cost shall be calculated by the real interest rate method during the lease period. Contingentrentals shall be included in current profits and losses when actually occurring.
(4) The company records financie lease business as a lessor
At the beginning of the lease period, the sum of the minimum lease receipt and the initial direct cost on the lease startdate is regarded as the entry value of the financial lease receivable, and the unsecured balance shall be recorded. Thedifference between the sum of the minimum lease receivable, the initial direct cost and the unsecured balance and the sum ofits present value is recognized as the unrealized financing income. The balance of the receivable financial lease afterdeducting the unrealized financial income shall be presented as long-term claims and long-term claims maturing within one
year, respectively.
The unrealized financing income shall be calculated and confirmed by the real interest rate method during the leaseperiod. Contingent rentals shall be recognized in current profits and losses when actually occurring.
29. Other important accounting policies and accounting estimates
(1) Termination of business
Termination of operation refers to a component that meets one of the following conditions, can be separatelydistinguished and has been disposed of or classified as held for sale by the Company: ① This component represents anindependent major business or a separate major business area. ② This component is part of an associated plan to dispose ofan independent major business or a separate major business area. ③ This component is a subsidiary company acquiredspecifically for resale.
For the accounting treatment methods for termination of operations, please refer to the relevant descriptions in Note 4,12 “Assets held for sale and disposal group".
(2) Hedge accounting
In order to avoid some risks, the Company hedges some financial instruments as hedging instruments. For the hedgesmeeting the specified conditions, the Company adopts the hedge accounting method for treatment. The hedging of theCompany is fair value hedging.
At the beginning of hedging, the Company formally designates hedging instruments and hedged items, and prepareswritten documents on hedging relationship and risk management strategy and risk management objectives of the Companyengaged in hedging. In addition, the Company will continuously evaluate the effectiveness of hedging at the beginning andafter the hedging.
Fair value hedging
If a hedging instrument is designated as a fair value hedge and meets the conditions, the profits or losses arisingtherefrom shall be included into the current profits and losses. If the hedging instrument hedges the non-trading equityinstrument investment (or its components) that is measured at fair value and whose changes are included in othercomprehensive income, the gains and losses generated by the hedging instrument are included in other comprehensiveincome. The profit or loss of the hedged item due to the hedged risk exposure shall be included into the current profits andlosses, and the book value of the hedged item shall be adjusted at the same time. If the hedged item is measured at fair value,the gain or loss of the hedged item due to the hedged risk does not need to adjust the book value of the hedged item, and therelevant gains and losses are included into the current profits and losses or other comprehensive income.
When the Company cancels the designation of the hedging relationship, the hedging instrument has expired or beensold, the contract has been terminated or exercised, or no longer meets the conditions for the application of hedgeaccounting, the application of hedge accounting shall be terminated.
30. Changes in significant accounting policies and estimates
(1) Changes of accounting policies
①Changes in accounting policies resulting from the implementation of the new financial instruments standardsOn March 31, 2017, the Ministry of Finance respectively issued Accounting Standards for Business EnterprisesNo.22-Recognition and Measurement of Financial Instruments (Revised in 2017) (CK [2017] No. 7), Accounting Standardsfor Business Enterprises No.23-Transfer of Financial Assets (Revised in 2017) (CK [2017] No. 8), Accounting Standards forBusiness Enterprises No.24-Hedge Accounting (Revised in 2017) (CK [2017] No. 9). On May 2, 2017, it issued theAccounting Standards for Business Enterprises No.37-Presentation of Financial Instruments (2017 Revision) (CK [2017] No.
14). (The above criteria are collectively referred to as the "new financial instrument criteria"), requiring domestic listedenterprises to implement the new financial instrument criteria from January 1, 2019.After the resolution passed by the 34th meeting of the 8th Board of Directors of the Company on April 26, 2019, theCompany will implement the aforesaid new financial instrument standards from January 1, 2019.
All recognized financial assets under the new financial instrument standards are subsequently measured at amortizedcost or fair value. On the implementation date of the new financial instrument standard, the business model for managingfinancial assets will be evaluated based on the existing facts and circumstances of the Company on that date, the contractualcash flow characteristics on the financial assets will be evaluated based on the facts and circumstances at the time of initialrecognition of the financial assets, and the financial assets will be divided into three categories: Measured at amortized cost,measured at fair value with changes included in other comprehensive income and measured at fair value with changesincluded in current profits and losses. Among them, for equity instrument investments measured at fair value and whosechanges are included in other comprehensive income, when the financial asset is derecognized, the accumulated gains orlosses previously included in other comprehensive income will be transferred from other comprehensive income to retainedincome and not included into the current profits and losses.Under the new criteria for financial instruments, the Company, based on expected credit losses, accrues impairmentprovisions and recognizes credit impairment losses for financial assets measured in amortized cost, debt instrumentinvestments measured at fair value with its changes included in other comprehensive income, lease receivables, contractassets and financial guarantee contracts.According to new Financial Asset standard, except for some certain conditions, the company should adjust the type andmeasurement (including impairment) in retrospective method, the differences between the carrying amount under oldstandard and new standard (i.e. 1st January 2018) should be recorded in retained earning at the beginning of 2018 or in othercomprehensive income. Meanwhile, the company did not adjust for the comparative financial statements.On 1st January 2019, the result of the comparison of financial statements between old and new financial instrumentstandard shows below:
Old Standard
| Old Standard | New Standard | ||
| Item | Carrying Amount | 项目 | 账面价值 |
Old Standard
| Old Standard | New Standard | ||
| Other current asset | 223,300,000.00 | Trading financial asset | 223,300,000.00 |
| Notes and trade receivables | 97,775,710.11 | Trade receivable | 97,775,710.11 |
| Other receivable | 18,256,513.93 | Other receivable | 18,256,513.93 |
| Available for sale financial asset | 20,000,000.00 | Other equity instrument investment | 20,000,000.00 |
② On April 30, 2019, the Ministry of Finance issued Notice on Revising and Issuing the Format of FinancialStatements for General Enterprises in 2019 (CK (2019) No. 6), which revised the format of financial statements of generalenterprises. The major impacts of the Company's implementation of the above provisions are as follows:
| December 31, 2018 | Amount | January 1, 2019 | Amount |
| Notes receivable and accounts receivable | 97,775,710.11 | Notes receivable | |
| Accounts receivable | 97,775,710.11 | ||
| Notes payable and accounts payable | 140,564,713.11 | Notes payable | |
| Accounts payable | 140,564,713.11 |
③ The Ministry of Finance issued Accounting Standards for Business Enterprises No.7-Exchange of Non-monetaryAssets (Revised in 2019) (CK [2019] No. 8). The revised standards shall come into force on June 10, 2019. The exchange ofnon monetary assets between January 1, 2019 and the implementation date of the standards shall be adjusted in accordancewith the standards. For the exchange of non monetary assets before January 1, 2019 does not need to be retroactivelyadjusted in accordance with the provisions of these standards. The Company's implementation of the above standards has nosignificant impact during the reporting period.
④ The Ministry of Finance issued Accounting Standards for Business Enterprises No.12-Debt Restructuring (Revisedin 2019) (CK [2019] No. 9) on May 16, 2019. The revised standards shall come into force on June 17, 2019. The debtrestructuring between January 1, 2019 and the implementation date of the standards shall be adjusted in accordance with thestandards. For debt restructuring occurring before January 1, 2019, retrospective adjustment is not required in accordancewith the provisions of these standards. The Company's implementation of the above standards has no significant impactduring the reporting period.
31. Significant accounting judgments and estimates
In the process of applying accounting policies, due to the inherent uncertainty of business activities, the Companyneeds to judge, estimate and assume the book value of statement items that cannot be accurately measured. These judgments,estimates and assumptions are based on the Company's management's past historical experience and other relevant factors.These judgments, estimates and assumptions will affect the reported amounts of income, expenses, assets and liabilities andthe disclosure of contingent liabilities at the balance sheet date. However, the actual results caused by the uncertainty ofthese estimates may be different from the current estimates of the Company's management, resulting in a significant
adjustment to the carrying amount of the assets or liabilities affected in the future.
The Company reviews the aforesaid judgments, estimates and assumptions on a regular basis on the basis of goingconcern. If the change of accounting estimates only affects the current period of change, the number of impacts shall berecognized in the current period of change. If the change affects both the current and future periods, the number of impactswill be confirmed in the current and future periods of the change.On the balance sheet date, the Company needs to judge, estimate and assume the amount of financial statement items inthe following important areas:
(1) Impairment of financial assets
The Company uses the expected credit loss model to evaluate the impairment of financial instruments. The applicationof the expected credit loss model requires significant judgment and estimation, and all reasonable and basis information,including forward-looking information, shall be considered. In making these judgments and estimates, the Companydeduces the expected changes in the debtor's credit risk based on historical data and combined with economic policies,macroeconomic indicators, industry risks, external market environment, technological environment, changes in customerconditions and other factors.
(2) Inventory falling price reserves
According to the inventory accounting policy, the Company measures according to the lower of cost and net realizablevalue. For the inventory whose cost is higher than net realizable value and which is obsolete and unsalable, the Companymakes provision for inventory falling price. Impairment of inventories to net realizable value is based on the evaluation ofthe marketability of inventories and their net realizable value. The appraisal of impairment of inventories requires themanagement to make judgment and estimation on the basis of obtaining conclusive evidence and considering factors such asthe purpose of holding inventories and the influence of events after the balance sheet date. The difference between the actualresult and the original estimate will affect the book value of inventory and the accrual or reversal of inventory depreciationreserve during the period when the estimate is changed.
(3) Provision for impairment of long-term assets
On the balance sheet date, the Company judges whether there are signs of possible impairment for non-current assetsother than financial assets. For intangible assets with uncertain service life, in addition to the annual impairment test, theimpairment test is also carried out when there are signs of impairment. Other non-current assets other than financial assetsshall be tested for impairment when there are indications that their book amounts are not recoverable.
When the book value of an asset or asset group is higher than the recoverable amount, that is, the higher of the netamount of the fair value minus the disposal expenses and the present value of the estimated future cash flow, it indicates thatan impairment has occurred
The net amount of the fair value less the disposal expenses shall be determined by referring to the sales agreement priceor observable market price of similar assets in fair transactions, and deducting the incremental cost directly attributable to
the disposal of such assets.When estimating the present value of future cash flow, it is necessary to make a significant judgment on the output,sales price, related operating costs and the discount rate used in the calculation of the present value of the asset (or assetgroup). In estimating the recoverable amount, the Company will use all relevant information available, including forecastsof production, selling price and related operating costs based on reasonable and supportable assumptions.
The Company shall test whether goodwill is impaired at least every year. This requires an estimate of the present valueof the future cash flows of the asset group or portfolio of asset groups to which goodwill has been allocated. Whenpredicting the present value of future cash flow, the Company needs to predict the cash flow generated by the future assetgroup or asset group portfolio, and at the same time, select the appropriate discount rate to determine the present value offuture cash flow.
(4) Depreciation and amortization
After considering the residual value of investment real estate, fixed assets and intangible assets, the Company willaccrue depreciation and amortization on a straight-line basis during their service lives. The Company reviews the service liferegularly to determine the amount of depreciation and amortization expenses to be included in each reporting period. Theservice life is determined by the Company based on the past experience of similar assets and in portfolio with the expectedtechnological updates. If there is a significant change in previous estimates, the depreciation and amortization charges willbe adjusted in the future.
(5) Deferred income tax assets
To the extent that there is likely to be sufficient taxable profits to offset the losses, the Company recognizes deferredincome tax assets for all unused tax losses. This requires the Company's management to use a large number of judgments toestimate the time and amount of future taxable profits, combined with tax planning strategies, to determine the amount ofdeferred income tax assets to be recognized.
(6) Income tax
In the normal business activities of the Company, there are certain uncertainties in the final tax treatment andcalculation of some transactions. Whether some items can be paid before tax requires the approval of the tax authorities. Ifthere is a difference between the final determination result of these tax matters and the amount initially estimated, thedifference will have an impact on the current income tax and deferred income tax during the final determination period.
(7) Accrued liabilities
According to the terms of the contract, existing knowledge and historical experience, the Company estimates andmakes corresponding provision for product quality assurance, estimated contract losses, liquidated damages for delayeddelivery, etc. In the event that such contingencies have formed a current obligation and the performance of the currentobligations is likely to result in outflow of economic benefits from the Company, the Company recognizes the contingenciesas estimated liabilities based on the best estimate of the expenditure required to perform the relevant current obligations. The
recognition and measurement of the estimated liabilities depend to a large extent on the judgment of the management. In theprocess of judgment, the Company needs to evaluate the risks, uncertainties, time value of money and other factors relatedto these contingencies.
Among them, the Company will make an estimated liability for the after-sales quality maintenance commitmentsprovided to customers for the sale, maintenance and renovation of the goods sold. The Company's recent maintenanceexperience data have been taken into account when estimating liabilities, but the recent maintenance experience may notreflect the future maintenance situation. Any increase or decrease in this provision may affect the profit and loss in the futureyears.
(8) Fair value measurement
Certain assets and liabilities of the Company are measured at fair value in the financial statements. When estimating thefair value of an asset or liability, the Company adopts the available observable market data available. If the first level inputvalue cannot be obtained, the Company will employ a qualified third-party appraiser to perform the appraisal. The ValuationCommittee works closely with qualified external valuers to determine the appropriate valuation techniques and inputs to therelevant models. The CFO shall report the findings of the Valuation Committee to the Board of Directors of the Company ona quarterly basis to explain the reasons for the fluctuation of the fair value of the relevant assets and liabilities. Relevantinformation on valuation techniques and input values used in determining the fair values of various assets and liabilities isdisclosed in Note 10, Disclosure.
Section 5. Taxes
1. Main Taxes and Tax Rates
Types
| Types | Tax Basis | Tax Rate |
| Value Added Tax | After deducting the allowable amount of input tax deducted in the current period, the difference between the sales of goods, taxable services and taxable services income calculated in accordance with the provisions of the Tax Law is the taxable value-added tax. | 3%、5%、6%、9%、10%、13%、16% |
| Urban Maintenance & Construction Tax | According to the actual value-added tax | 5%、7% |
| extra charges of education funds | According to value added tax and consumption tax on the basis of actual payment | 3% |
| Local Extra Charges of Education Funds | According to value added tax and consumption tax on the basis of actual payment | 1.5%、2% |
| Corporate Taxes | According to taxable income | 15%、17%、25% |
| Property Tax | According to 70% of original value of the real estate (or rental income) as the tax base; according to the original value of the real estate deducted 30% at a time. | 1.2%、8%、12% |
| Land Value Increment Tax | According to Real Estates Income；According to the transfer of real estate amount of simple levy | 1.5%、5% |
The applicable VAT rates for taxable sales or import goods are 16%/10%, According to the announcement issued byMinistry of Finance, State Administration of Taxation and China Custom about the policy relating to deepening VAT reform
( Announcement by Ministry of Finance, State Administration of Taxation and China Custom (2018) No.39), from 1st April2019 onwards, the applicable rates are adjusted to 13%/9%. Meanwhile, the company can deduct VAT by additionaldeductible rate of 10% from 1st April 2019 to 31st December 2021 because of its business nature as service provider.Notes on tax payers of different enterprise income tax rates:
Tax Payers
| Tax Payers | Income Tax Rate |
| Jingliang (Singapore) International Trade Co., Ltd. | 17% |
| Beijing Guchuan Bread Food Co., Ltd. | 15% |
2. Tax Preferences and Approval Documents
Hangzhou Linan Little Angel Food Co., Ltd., a 4th tier subsidiary company of the Company, is a welfare enterprise. Itenjoys the preferential VAT policy of immediate refund upon payment of 35,000 yuan per person per year for Promoting theEmployment of Disabled Persons in 2015 and April 2016. Since May 2016, it has enjoyed the preferential VAT policy ofimmediate refund upon payment in Preferential Value-Added Tax Policies for Promoting the Employment of DisabledPersons (CaiShui [2016] No.52).In accordance with the relevant provisions of Ministry of Finance and State Administration of Taxation “Notice onPreferential Enterprise Income Tax Policies for Employment of Persons with Disabilities”(Cai Shui[2009] No.70),Hangzhou Linan Little Angel Food Co., Ltd. , a 4th tier subsidiary company of the Company: Where an enterprise employspersons with disabilities, on the basis of deduction according to the wages paid to the disabled workers, it may deduct theamount of taxable income according to 100% of the wages paid to the disabled workers.According to the announcement of Zhejiang Provincial Tax Bureau (No. 8, 2014), Hangzhou Linan Little Angel FoodCo., Ltd. , a 4th subsidiary company of the Company, can enjoy the preferential policy of reducing the urban land use tax byan annual quota of 2,000 yuan per person for the average number of actual resettlement, and the maximum amount ofreduction is the urban land use tax payable by the unit in the current year.According to the annountment No.10, 2018 issued by Shandong Provincial Tax Bureau, tax base of the stamp duties taxfor industrial enterprise’s contract is based on procurement and sales, tax rate is 50% of revenue. Linqing XIaowangzi FoodLimited paid stamp duties tax from January to September,2018 based on 130% of revenue, from October, 2018, computethis tax based on 50% of the revenueCompany’s level 4 subsidiary-Liaoning Xiaowangzi Food Limited, according to the Supplementary Announcement onLand Use Tax issued by Ministry of Finance and State Administration of Taxation (89) GSDZ No.140 Clause 13 states thatpublic land such as municipal street, square, public green etc. can be exempted from land use tax, when computing land usetax, the area used in the computation is total area less the area for afforest and street
Jingliang (Singapore) International Trade Co., Ltd., a 3rd tier subsidiary of the Company, levies taxes on the principleof territoriality. For the subsidiary newly established in Singaporean, during the first consecutive three audit year, can enjoythe first three-year government tax exemption plan. Singapore's tax exemption plan is as follows: the first SGD 100,000 of
annual income and the first SGD100,000: tax rate of 0. Parts of SGD100,001 to 300,000: tax rate 8.5%. Over $300,000 attax rate 17%.Beijing Guchuan Bread&Food Co., Ltd., a 3rd tier subsidiary of the Company, is a high-tech enterprise. On November30, 2018, it obtained the certificate of high-tech enterprise and the certificate number GR201811007245. It is valid for threeyears. It enjoys the preferential tax policy of paying enterprise income tax at the 15% tax rate according to the relevantprovisions of both “Law of the People's Republic of China on Tax Collection and Administration” and “Rules for theImplementation of the Tax Collection and Administration Law of the People's Republic of China”.The company level 4 subsidiary Jingliang (Hebei) Oil Industry Co., Ltd., according to the financial departmentdocuments, local taxation bureau in hebei province, hebei province document ji caishui [2019] no. 56 "about parts reservecommodity announcement concerning the tax policy, accounting books shall be exempt from stamp duty for funds, toundertake business book stand in the process of buying and selling contract commodity reserves shall be exempt from stampduty, other parties in the contract should pay the stamp duty shall also be subject to duty-payment according to the parties.Property tax and land use tax of cities and towns shall be exempted from the property tax and land use tax of cities andtowns that undertake the business of commodity reserve for their own use. The notice will be executed on January 1, 2019and will terminate on 31
stDecember., 2021.Jingliang (Hebei) Oil Industry Co., Ltd., a 4th subsidiary company of the Company, exempts the sale of ediblevegetable oil stored by the government from VAT according to “Notice of the Ministry of Finance and the StateAdministration of Taxation on the Levy and Exemption of Value Added Tax for Food Enterprises”（Cai Shui [1999] No.198）The company level 3 subsidiary Beijing day weikang grease DiaoXiao center co., LTD., according to the national taxadministration of the ministry of finance, the notice about food enterprises exempted from VAT tax word (1999), article 5,198, responsible for collection and storage of grain purchase and sale of state-owned grain enterprises and business duty-freeitems listed in the notice of other food business, and government reserves edible vegetable oil sales enterprises, whichshould be examined by the competent tax authorities deemed tax-exempt status, not reported to the competent tax authoritieswhere the audit determined that no exemption, From June 1, 2017 to December 31, 1999, the company will exempt ediblevegetable oil stored by the government from VAT.The level 2 subsidiary of the company-Jingliang Caofeidian Agricultural Development Limited, according to thedocument JTCFDST(2018) No. 1539765025415 issued by tax authority of Caofeidian District, Tangshan, affiliated to StateAdministration of Taxation, and also followed the rules in Law of the People's Republic of China on the Administration ofTax Collection, The Implementation Guideline of Law of the People's Republic of China on the Administration of TaxCollection, the rice under the brand of Tixiang produced by Caofeidian company if exempted from VAT.The level 2 subsidiary of the company-Jingliang Caofeidian Agricultural Development Limited, according to the rulesunder Clause 27 of Corporate Law and its Implementation Guideline Clause 86, the rice under the brand of Tixiangproduced by Caofeidian company if exempted from Corporation tax.
Section 6. Notes on Items in Consolidated Financial Statements
The following annotated items (including annotations of major items in the company's financial statements) refer toJanuary 1, 2019 at the beginning of the year, December 31, 2019 at the end of the period, December 31, 2018 at thebeginning of previous period, 2019 at the current period and 2018 at the last period, unless otherwise specified.1．Monetary funds
Items
| Items | Ending Balance | Beginning Balance |
| Cash in Treasury | 27,780.31 | 46,418.17 |
| Bank Deposits | 555,138,729.05 | 794,705,225.28 |
| Other Currency Funds | 2,002,003.03 | 130,118,373.33 |
| Total | 557,168,512.39 | 924,870,016.78 |
| Among them: the total amount of money deposited abroad | 76,673.88 |
The restricted monetary funds are as follows:
| Items | Ending Balance | Beginning Balance |
| Periodic Deposit Receipts (management expects to hold to maturity) | 57,000,000.00 | |
| Freezing of Litigation Preservation | 2,070,735.18 | |
| Total | 2,070,735.18 | 57,000,000.00 |
Note: The limited money fund at the end of the period is 2,070,735.18 yuan, see Section六、53 for details.2．Transactional financial assets
| Items | Ending Balance | Beginning Balance |
| Desiganated as fair value through profit and loss financial asset | 161,300,000.00 | |
| Among them: equity instrument investment | ||
| Other | 161,300,000.00 | |
| Total | 161,300,000.00 |
3．Derivative Financial Assets
| Items | Ending Balance | Beginning Balance |
| Futures Contracts | 88,792,254.00 | 71,260,414.60 |
| Total | 88,792,254.00 | 71,260,414.60 |
Note: The company's derivative financial assets are soybean oil, palm oil, vegetable oil and soybean meal futures contractspurchased.4．Accounts Receivable
（1）Disclosed according to aging
Aging
| Aging | Ending Balance |
| Within 1 Year | 81,502,115.68 |
| Among them: Within 3 months | 77,852,190.42 |
| 4-12 months | 3,649,925.26 |
| 1 to 2 years | 65,951.22 |
| 2 to 3 years | 235,232.47 |
| 3 to 4 years | 51,420.00 |
| 4 to 5 years | 223,844.00 |
| More than 5 years | 177,291.40 |
| Sub total | 82,255,854.77 |
| minus: provision for bad debts | 1,511,867.96 |
| Total | 80,743,986.81 |
（2）present according to the method of provision for bad debt
| Type(s) | Ending Balance | ||||
| Book Balance | Bad Debt Provision | Book Value | |||
| Amount | Ratio(%) | Amount | Provision Ratio(%) | ||
| Receivables with separate provision for bad debts | 1,325,135.40 | 1.61 | 1,325,135.40 | 100.00 | |
| Accounts Receivable for Bad Debt Provision Based on Portfolio | |||||
| Portfolio 1 - Age-based accounts receivable | 71,459,010.77 | 186,732.56 | 71,272,278.21 | ||
| Portfolio 2 - Related Party Accounts Receivable | 9,471,708.60 | 9,471,708.60 | |||
| Portfolio Total | 80,930,719.37 | 98.39 | 186,732.56 | 0.23 | 80,743,986.81 |
| Total | 82,255,854.77 | 100.00 | 1,511,867.96 | —— | 80,743,986.81 |
（Continued）
| Type(s) | Beginning Balanc | ||||
| Book Balance | Bad Debt Provision | Book Value | |||
| Amount | Ratio(%) | Amount | Provision Ratio(%) | ||
Type(s)
| Type(s) | Beginning Balanc | ||||
| Book Balance | Bad Debt Provision | Book Value | |||
| Amount | Ratio(%) | Amount | Provision Ratio(%) | ||
| Receivables with significant individual amounts and separate provision for bad debts | |||||
| Accounts Receivable for Bad Debt Provision Based on Credit Risk Characteristic Portfolio | |||||
| Portfolio 1 - Age-based accounts receivable | 94,766,012.02 | 446,302.71 | 94,319,709.31 | ||
| Portfolio 2 -Related Party Accounts Receivable | 3,456,000.80 | 3,456,000.80 | |||
| Portfolio Total | 98,222,012.82 | 99.57 | 446,302.71 | 0.45 | 97,775,710.11 |
| Receivables with minor amounts but separate provision for bad debts | 420,575.29 | 0.43 | 420,575.29 | 100.00 | |
| Total | 98,642,588.11 | 100.00 | 866,878.00 | —— | 97,775,710.11 |
A.Receivables with separate provision for bad debts at the end of the period
| Accounts Receivable (by unit) | Ending Balance | |||
| Accounts Receivable | Bad Debt Provision | Provision Ratio | Provision Reason | |
| Beijing Rongfa Lida Grain and Oil Trade Co., Ltd. | 163,143.00 | 163,143.00 | 100.00 | expected unrecoverable |
| Beijing Shunyi Longhua Shopping Center | 600.00 | 600.00 | 100.00 | expected unrecoverable |
| Beijing Guotai Ping'an Tianzhu Commercial Development Co., Ltd. | 1,809.60 | 1,809.60 | 100.00 | expected unrecoverable |
| Beijing Xidan spicy town food limited | 996,000.00 | 996,000.00 | 100.00 | expected unrecoverable |
| Beijing Guotai Ping'an Department Store Co., Ltd. | 10,862.90 | 10,862.90 | 100.00 | expected unrecoverable |
| Carrefour (Shanghai) Supply Chain Management Co., Ltd. Tianjin Branch | 875.90 | 875.90 | 100.00 | expected unrecoverable |
| Jiaozuo Yida Plant Oil Co., Ltd. | 151,844.00 | 151,844.00 | 100.00 | expected unrecoverable |
| Total | 1,325,135.40 | 1,325,135.40 | —— | —— |
B.In portfolio, Accounts Receivable with provision for bad debts is calculated by age analysis method
| Aging | Ending Balance | ||
| Accounts Receivable | Bad Debt Provision | Provision Ratio(%) | |
| Within 1 Year | 71,034,407.08 | 53,078.50 | |
| Among them: Within 3 months | 68,380,481.82 | 0 | |
| 4-12 months | 2,653,925.26 | 53,078.50 | 2 |
| 1 to 2 years | 65,951.22 | 3,297.57 | 5 |
Aging
| Aging | Ending Balance | ||
| Accounts Receivable | Bad Debt Provision | Provision Ratio(%) | |
| 2 to 3 years | 235,232.47 | 47,046.49 | 20 |
| 3 to 4 years | 51,420.00 | 25,710.00 | 50 |
| 4 to 5 years | 72,000.00 | 57,600.00 | 80 |
| More than 5 years | 100 | ||
| Total | 71,459,010.77 | 186,732.56 | —— |
（Continued）
| Aging | Beginning Balanc | ||
| Accounts Receivable | Bad Debt Provision | Provision Ratio(%) | |
| Within 1 Year | 89,378,513.14 | 136,814.78 | |
| Among them: Within 3 months | 82,537,774.17 | 0 | |
| 4-12 months | 6,840,738.97 | 136,814.78 | 2 |
| 1 to 2 years | 5,264,078.88 | 263,203.93 | 5 |
| 2 to 3 years | 51,420.00 | 10,284.00 | 20 |
| 3 to 4 years | 72,000.00 | 36,000.00 | 50 |
| 4 to 5 years | 80 | ||
| More than 5 years | 100 | ||
| Total | 94,766,012.02 | 446,302.71 | —— |
C.In portfolio, Accounts Receivable with provision for bad debts is calculated by other methods
| Items | Ending Balance | ||
| Accounts Receivable | Bad Debt Provision | Provision Ratio(%) | |
| Amount from Related Parties | 9,471,708.60 | ||
| Total | 9,471,708.60 | ||
（3） details of bad debt provision
| Items | Beginning Balance | The amount changed for the period | Ending Balance | ||
| addition | Write-off | Other deduct | |||
| Provision for bad | 866,878.00 | 1,182,781.60 | 243,283.89 | 294,507.75 | 1,511,867.96 |
Items
| Items | Beginning Balance | The amount changed for the period | Ending Balance | ||
| addition | Write-off | Other deduct | |||
| debt | |||||
| Total | 866,878.00 | 1,182,781.60 | 243,283.89 | 294,507.75 | 1,511,867.96 |
（4）Accounts receivable actually written off in the current period
| Items | Write-off Amount |
| Accounts Receivable actually Written Off | 243,283.89 |
Among them: important write off of account receivable
| Name of the company | Nature of receivable | Amount write off | Reason for write off | Process of wite off carried out | Whether come from related party transactions |
| Jiaozuo Yida Botanical Oil Limited | Loan | 243,283.89 | Lawsuit finished but no executable property | Lawsuit and approval | NO |
| Total | —— | 243,283.89 | —— | —— | —— |
（5）Accounts Receivable of the Top 5 Balances Collected by Debtors at the End of the Period
| Debtors | total ending balance of accounts receivable | Ratio of the total ending balance of accounts receivable (%) | Ending Balance of Bad Debt Provision |
| Yihai (Taizhou) Grain and Oil Industry Co., Ltd. | 24,980,000.00 | 30.37 | |
| Beijing Wumei Supermarket Co., Ltd. | 7,044,671.66 | 8.56 | 44,878.29 |
| China Storage Grains and Oils (Tianjin) Co., Ltd. | 4,534,358.65 | 5.51 | |
| Shanghai Laiyifen Co., Ltd. | 3,098,645.72 | 3.77 | |
| Beijing KFC Co., Ltd. | 2,910,889.35 | 3.54 | |
| Total | 42,568,565.38 | 51.75 | 44,878.29 |
5．Advanced Payment
(1) Advances are presented by age
| Aging | Ending Balance | Beginning Balance | ||
| Amount | Ratio(%) | Amount | Ratio(%) | |
| Within 1 Years | 138,172,859.10 | 99.85 | 119,883,849.19 | 99.75 |
| 1 to 2 years | 183,841.00 | 0.13 | 297,593.70 | 0.25 |
Aging
| Aging | Ending Balance | Beginning Balance | ||
| Amount | Ratio(%) | Amount | Ratio(%) | |
| 2 to 3 years | 23,100.00 | 0.02 | ||
| More than 3 years | ||||
| Total | 138,379,800.10 | —— | 120,181,442.89 | —— |
Note: The Company has no significant advance payments for more than one year in this year.
(2) Advance payment of the top five Ending Balances by prepaid objects
| Company Name | Ending Balance | Ratio of the total ending balance of prepayments (%) |
| Sinograin Oils Corporation | 52,925,042.20 | 38.25 |
| China Grain Reserve Dunhua Depot Co., Ltd. | 34,135,232.00 | 24.67 |
| China Grain Reserve Suiling Depot Co., Ltd. | 30,452,520.40 | 22.01 |
| China Grain Reserve Rizhao Storage Co., Ltd. | 2,683,990.40 | 1.94 |
| East Oak Investment Holdings (Shanghai) Co., Ltd. | 1,635,379.20 | 1.18 |
| Total | 121,832,164.20 | 88.05 |
6．Other Receivables
| Item(s) | Ending Balance | Beginning Balance |
| Interest Receivable | 3,927,438.90 | 2,400,877.51 |
| Dividend Receivable | ||
| Other Receivables | 15,292,658.44 | 15,855,636.42 |
| Total | 19,220,097.34 | 18,256,513.93 |
（1）Interest Receivable
A.Interest receivable classification
| Item(s) | Ending Balance | Beginning Balance |
| Time deposit interest | 3,927,438.90 | 2,400,877.51 |
| Sub total | 3,927,438.90 | 2,400,877.51 |
| Minus: provision for bad debts | ||
| Total | 3,927,438.90 | 2,400,877.51 |
（2）Other Receivables
A. Disclosed according to aging
Aging
| Aging | Ending Balance |
| Within 1 Year | 12,853,916.80 |
| Among them: Within 3 months | 10,985,505.27 |
| 4-12 months | 1,868,411.53 |
| 1 to 2 years | 936,934.75 |
| 2 to 3 years | 1,186,384.72 |
| 3 to 4 years | 175,922.00 |
| 4 to 5 years | 300,000.00 |
| More than 5 years | 77,400.00 |
| Sub total | 15,530,558.27 |
| minus: provision for bad debts | 237,899.83 |
| Total | 15,292,658.44 |
B. Classification of other receivables by nature of funds
| Nature of Funds | Book Balance at End of Period | Book Balance at Beginning of Year |
| Petty Cash (Employee and Department) | 114,271.85 | 233,548.14 |
| Guaranteed Deposit and Deposit | 5,772,303.92 | 2,191,122.17 |
| Intercourse Funds of Units | 5,736,772.70 | 12,033,774.63 |
| Personal Intercourse Funds | 833,000.00 | |
| Employee Receivables | 600,224.88 | 418,634.62 |
| Tax Refund Receivables | 2,366,765.34 | 1,169,522.00 |
| Other Receivables | 80,581.58 | 125,961.08 |
| Substitute Advance | 26,638.00 | |
| Sub total | 15,530,558.27 | 16,172,562.64 |
| minus: provision for bad debts | 237,899.83 | 316,926.22 |
| Total | 15,292,658.44 | 15,855,636.42 |
C. Details about bad debt provision
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
Expected credit loss
in the next 12
months
| Expected credit loss in the next 12 months | Expected credit loss for the whole period (no credit impairment) | Expected credit loss for the whole period (with credit impairment) | ||
| Amount on 1st January 2019 | 266,926.22 | 50,000.00 | 316,926.22 | |
| Carrying amount of other receivable on 1st January 2019 that in this period: | ||||
| ——Get into Stage 2 | ||||
| ——Get into Stage 3 | ||||
| ——Get back to Stage 2 | ||||
| ——Get back to Stage 1 | ||||
| Provision for the period | 112,886.19 | 112,886.19 | ||
| Reverse for the period | ||||
| Transfer for the period | ||||
| Write off for the period | ||||
| Other deduct | 191,912.58 | 191,912.58 | ||
| Carrying amount at the end of the period | 187,899.83 | 50,000.00 | 237,899.83 |
D. Details of bad debt provision
| Type | Carrying amount at the beginning | Amount changes for the period | Carrying amount at the end | ||
| addition | Write off | Other deduct | |||
| Bad debt provision | 316,926.22 | 112,886.19 | 191,912.58 | 237,899.83 | |
| Total | 316,926.22 | 112,886.19 | 191,912.58 | 237,899.83 | |
E. Other receivables according to top five of balance at end of period collected by debtors
| Name of Organization | Nature of Funds | Balance at End of Period | Aging | Proportion in overall ending balance of other receivables (%) | Ending balance of bad debt reserves |
| Beijing Yangu Grain and Oil Trading Co., Ltd. | Intercourse Funds of Units | 3,852,050.36 | Within 3 months | 24.80 | |
| State Taxation Administration of Linan District, Hangzhou, Zhejiang Province | Tax Refund Receivables | 2,190,843.34 | Within 3 months | 14.11 | |
| Tianjin Lingang Port Group Co., Ltd. | Intercourse Funds of Units | 1,853,125.71 | Within 3 months | 11.93 | |
| Missme Food and Beverage (Tianjin) Co., Ltd. | Intercourse Funds of Units | 1,510,637.87 | Within 1 year 1-2 years | 9.73 | 30,733.39 |
| Dalian Commodity Exchange | Guaranteed Deposit and Deposit | 600,000.00 | Within 3 months | 3.86 | |
| Total | — | 10,006,657.28 | — | 64.43 | 30,733.39 |
F. Receivables related to government grants
Name of the company
| Name of the company | Name of government grants | Carrying amount at the end | Aging at the end of the period | Time, amount and evidence of expected cpllection |
| Tax Bureau of Linan DIatrict, Hangzhou, Zhejiang Provice | Refund of VAT | 2,190,843.34 | Within 3 months | All amount will be collected in January 2020,the company always qualify for tax refund policy for disabled person |
| Total | —— | 2,190,843.34 | —— | —— |
7．Inventory
(1) Inventory Category
| Items | Balance at End of Period | ||
| Book Balance | Falling Price Reserves | Book Value | |
| Raw Materials | 186,791,440.87 | 186,791,440.87 | |
| Revolving Materials | 6,155,422.13 | 6,155,422.13 | |
| Stock goods | 943,448,494.73 | 170,341.46 | 943,278,153.27 |
| Develop Products | 16,497,730.12 | 11,673,694.67 | 4,824,035.45 |
| Commission processing | 4,599,271.17 | 4,599,271.17 | |
| Reserve Oil | 248,197,500.00 | 248,197,500.00 | |
| Development Cost | 18,909,838.76 | 18,909,838.76 | |
| In total | 1,424,599,697.78 | 11,844,036.13 | 1,412,755,661.65 |
(Continue)
| Items | Balance at Beginning of Year | ||
| Book Balance | Falling Price Reserves | Book Value | |
| Raw Materials | 201,025,950.79 | 67,131.25 | 200,958,819.54 |
| Revolving Materials | 3,454,520.07 | 3,454,520.07 | |
| Stock Goods | 711,226,691.70 | 5,292,085.61 | 705,934,606.09 |
| Develop Products | 16,497,730.12 | 11,673,694.67 | 4,824,035.45 |
| Materials in Transit | 53,773,706.64 | 53,773,706.64 | |
| Development Cost | 7,043,775.28 | 7,043,775.28 | |
| Reserve Oil | 248,197,500.00 | 248,197,500.00 | |
| In total | 1,241,219,874.60 | 17,032,911.53 | 1,224,186,963.07 |
(2) Inventory Falling Price Reserves
| Items | Balance at Beginning of Year | Increased Amounts in the Current Period | Decreased Amounts in the Current Period | Balance at End of Period | ||
| Accrual | Others | Recover or Charge Off | Others | |||
| Raw Materials | 67,131.25 | 67,131.25 | ||||
Items
| Items | Balance at Beginning of Year | Increased Amounts in the Current Period | Decreased Amounts in the Current Period | Balance at End of Period | ||
| Accrual | Others | Recover or Charge Off | Others | |||
| Stock Goods | 5,292,085.61 | 32,583.96 | 5,154,328.11 | 170,341.46 | ||
| Develop Products | 11,673,694.67 | 11,673,694.67 | ||||
| In total | 17,032,911.53 | 32,583.96 | 5,221,459.36 | 11,844,036.13 | ||
(3) Accrual Basis of Inventory Falling Price Reserves and Reason of Recovering or Charging Off in the CurrentPeriod
| Items | Specific Accrual Basis of Inventory Falling Price Reserves | Reason of Recovering Inventory Falling Price Reserves in the Current Period | Reason of Charging off Inventory Falling Price Reserves in the Current Period |
| Raw Materials | Sales Completed | ||
| Stock Goods | Market Quotes on the Website of Cofeed | Sales Completed |
(4) Additional Notes of Inventory
Book value of inventory used for mortgage at end of period is 4,824,035.45 Yuan, seeing Six、53.8．Other Current Assets
| Items | Balance at End of Period | Balance at Beginning of Year |
| Financial Products | 393,198,608.68 | 223,300,000.00 |
| Pre-paid Taxes and Fees | 1,369,643.50 | 6,207,985.16 |
| Pending Deduct VAT Input Tax | 69,764,662.41 | 59,155,031.47 |
| Fair Value Changes of Items Trapped at Hedging | 95,964,318.54 | 158,800.00 |
| In total | 560,297,233.13 | 288,821,816.63 |
9．Available-for-sale Financial Assets
| Items | Balance at End of Period | Balance at Beginning of Year | ||||
| Book Balance | Impairment Reserves | Book Value | Book Balance | Impairment Reserves | Book Value | |
| Available-for-sale Equity Instruments | 30,500,000.00 | 10,500,000.00 | 20,000,000.00 | |||
| Among them: calculated at cost | 30,500,000.00 | 10,500,000.00 | 20,000,000.00 | |||
| In total | 30,500,000.00 | 10,500,000.00 | 20,000,000.00 | |||
10．Long-term Equity Investment
（1）Long-term Equity Investment Classification
| Item | Carrying anmount at the end of the period | Carrying among at the beginning of the period |
Carryingamount
| Carrying amount | Bad debt provision | Book value | Carrying amount | Bad debt provision | Book value | |
| Investment in Joint Venture | 72,816,569.30 | 72,816,569.30 | 65,339,624.28 | 65,339,624.28 | ||
| Investment in associates | 125,484,764.49 | 125,484,764.49 | 117,487,601.83 | 117,487,601.83 | ||
| Total | 198,301,333.79 | 198,301,333.79 | 182,827,226.11 | 182,827,226.11 |
（2）Investment in Joint venture and associates
| Invested Unit | Balance at Beginning of Year | Increase or Decrease in the Current Period | ||||
| Additional Investment | Negative Investment | Confirmed Profit and Loss on Investment under Equity Law | Adjustment on Other Comprehensive Income | Other Changes in Equity | ||
| One Cooperative Enterprise | ||||||
| CP Group | 65,339,624.28 | 7,329,369.02 | 147,576.00 | |||
| Sub-total | 65,339,624.28 | 7,329,369.02 | 147,576.00 | |||
| Two Joint Venture | ||||||
| China Grain Reserves (Tianjin) Warehouse Logistics Co., Ltd. | 117,487,601.83 | 148,848.95 | ||||
| Jingliang Miss Me Food Management (Tianjin) Limited | 9,592,658.03 | -1,744,344.32 | ||||
| Sub-total | 117,487,601.83 | 9,592,658.03 | -1,595,495.37 | |||
| In total | 182,827,226.11 | 9,592,658.03 | 5,733,873.65 | 147,576.00 | ||
(Continue)
| Invested Unit | Increase or Decrease in the Current Period | Balance at End of Period | Ending Balance of Impairment Reserves | ||
| Announce to Distribute Case Dividends or Profits | Accrual of Impairment Reserves | Others | |||
| One Cooperative Enterprise | |||||
| CP Group | 72,816,569.30 | ||||
| Sub-total | 72,816,569.30 | ||||
| Two Joint Venture | |||||
| China Grain Reserves (Tianjin) Warehouse Logistics Co., Ltd. | 117,636,450.78 | ||||
| Jingliang Miss Me Food Management (Tianjin) Limited | 7,848,313.71 | ||||
| Sub-total | 125,484,764.49 | ||||
| In total | 198,301,333.79 | ||||
11．Other equity instruments investment
（1）Other equity instruments investment
the invested organization
| the invested organization | Ending Balance |
| Chongqing long jinbao network technology co. LTD | 20,000,000.00 |
| Total | 20,000,000.00 |
12．Investment Real Estate
(1) Investment Real Estate Adopting Cost Measurement Model
| Items | Buildings | Land Use Right | Projects under Construction | In total |
| One Original Book Value | ||||
| 1. Balance at Beginning of Year | 42,634,619.63 | 42,634,619.63 | ||
| 2. Increased Amounts in the Current Period | ||||
| 3. Decreased Amounts in the Current Period | ||||
| 4. Balance at End of Period | 42,634,619.63 | 42,634,619.63 | ||
| Two Accumulated Impairment and Accumulated Amortization | ||||
| 1. Balance at Beginning of Year | 8,785,674.23 | 8,785,674.23 | ||
| 2. Increased Amounts in the Current Period | 1,613,750.94 | 1,613,750.94 | ||
| (1) Accrual or Amortization | 1,613,750.94 | 1,613,750.94 | ||
| 3. Decreased Amounts in the Current Period | ||||
| 4. Balance at End of Period | 10,399,425.17 | 10,399,425.17 | ||
| Three Impairment Reserves | ||||
| 1. Balance at Beginning of Year | 453,843.72 | 453,843.72 | ||
| 2. Increased Amounts in the Current Period | ||||
| 3. Decreased Amounts in the Current Period | ||||
| 4. Balance at End of Period | 453,843.72 | 453,843.72 | ||
| Four Book Value | ||||
| 1. Book Value at End of Period | 31,781,350.74 | 31,781,350.74 | ||
| 2. Book Value at Beginning of Year | 33,395,101.68 | 33,395,101.68 |
(2) Instructions of Investment Real Estate
Book value of investment real estate used for mortgage at end of period is 5,476,357.73 Yuan, seeing Six 53.13．Fixed Assets
| Items | Balance at End of Period | Balance at Beginning of Year |
| Fixed Assets | 1,210,450,340.22 | 1,271,803,080.56 |
| Disposal of Fixed Assets | ||
| In total | 1,210,450,340.22 | 1,271,803,080.56 |
(1) Fixed Assets
①Fixed Assets Situation
Items
| Items | Buildings | Machinery Equipment | Transportation Equipment | Electronic Equipment | Office Equipment | Others | In total |
| One Original Book Value | |||||||
| 1. Balance at Beginning of Year | 1,077,389,877.09 | 351,603,267.61 | 22,251,285.06 | 13,665,889.56 | 2,203,862.02 | 367,808,765.17 | 1,834,922,946.51 |
| 2. Increased Amounts in the Current Period | 17,623,496.34 | 33,168,877.57 | 1,193,574.05 | 1,948,366.13 | 32,838.52 | 5,412,250.45 | 59,379,403.06 |
| (1) Purchase | 5,346,637.98 | 11,515,059.76 | 1,178,087.32 | 1,948,366.13 | 32,838.52 | 4,331,524.58 | 24,352,514.29 |
| (2) Roll-in of Project under Construction | 12,276,858.36 | 21,447,325.89 | 1,080,725.87 | 34,804,910.12 | |||
| (3) Other Roll-ins | 206,491.92 | 15,486.73 | 221,978.65 | ||||
| 3. Decreased Amounts in the Current Period | 22,691,392.00 | 6,360,914.60 | 3,899,775.00 | 695,951.02 | 77,803.41 | 1,672,976.35 | 35,398,812.38 |
| (1) Disposal or Scrap | 22,691,392.00 | 4,268,272.21 | 3,899,775.00 | 512,177.96 | 829,041.00 | 32,200,658.17 | |
| (2) Other Roll-outs | 2,092,642.39 | 183,773.06 | 77,803.41 | 843,935.35 | 3,198,154.21 | ||
| 4. Balance at End of Period | 1,072,321,981.43 | 378,411,230.58 | 19,545,084.11 | 14,918,304.67 | 2,158,897.13 | 371,548,039.27 | 1,858,903,537.19 |
| Three Accumulated Impairment | |||||||
| 1. Balance at Beginning of Year | 261,968,544.04 | 127,867,150.08 | 15,804,410.57 | 9,560,648.53 | 1,268,971.00 | 138,366,719.21 | 554,836,443.43 |
| 2. Increased Amounts in the Current Period | 39,734,352.33 | 29,045,002.27 | 1,155,221.11 | 2,324,855.65 | 196,599.86 | 24,152,596.97 | 96,608,628.19 |
| (1) Accrual | 39,734,352.33 | 29,045,002.27 | 1,155,221.11 | 2,324,855.65 | 196,599.86 | 24,152,596.97 | 96,608,628.19 |
| 3. Decreased Amounts in the Current Period | 2,522,978.28 | 2,923,809.66 | 3,702,974.14 | 511,154.83 | 23,292.82 | 978,247.96 | 10,662,457.69 |
| (1) Disposal or Scrap | 2,522,978.28 | 2,756,521.78 | 3,702,974.14 | 480,412.54 | 788,678.67 | 10,251,565.41 | |
| (2) Other Roll-outs | 167,287.88 | 30,742.29 | 23,292.82 | 189,569.29 | 410,892.28 | ||
| 4. Balance at End of Period | 299,179,918.09 | 153,988,342.69 | 13,256,657.54 | 11,374,349.35 | 1,442,278.04 | 161,541,068.22 | 640,782,613.93 |
| Three Impairment Reserves | |||||||
| 1. Balance at Beginning of Year | 7,499,295.92 | 784,126.60 | 8,283,422.52 | ||||
| 2. Increased Amounts in the Current Period | |||||||
| 3. Decreased Amounts in the Current Period | 612,839.48 | 612,839.48 | |||||
| 4. Balance at End of Period | 7,499,295.92 | 171,287.12 | 7,670,583.04 | ||||
| Four Book Value | |||||||
| 1. Book Value at End of Period | 765,642,767.42 | 224,251,600.77 | 6,288,426.57 | 3,543,955.32 | 716,619.09 | 210,006,971.05 | 1,210,450,340.22 |
| 2. Book Value at Beginning of Year | 807,922,037.13 | 222,951,990.93 | 6,446,874.49 | 4,105,241.03 | 934,891.02 | 229,442,045.96 | 1,271,803,080.56 |
②Temporarily Idle Fixed Assets Situation
| Items | Original Book Value | Accumulated Impairment | Impairment Reserves | Book Value | Notes |
| Buildings | 47,708.00 | 36,401.08 | 8,921.52 | 2,385.40 |
Machinery Equipment
| Machinery Equipment | 470,335.86 | 261,171.55 | 11,734.91 | 197,429.40 | |
| In total | 518,043.86 | 297,572.63 | 20,656.43 | 199,814.80 |
③Other Instructions of Fixed Assets
(1) Book value of fixed assets used for mortgage at end of period is 2,327,599.10 Yuan, seeing Six 53.
(2) Original value of fixed assets that are fully depreciated but continue to use is 40,418,335.04 Yuan.14．Project under Construction
| Items | Balance at End of Period | Balance at Beginning of Year |
| Project under Construction | 17,876,177.78 | 37,369,757.78 |
| Engineering materials | ||
| In total | 17,876,177.78 | 37,369,757.78 |
(1) Situation of Project under Construction
| Items | Balance at End of Period | Balance at Beginning of Year | ||||
| Book Balance | Impairment Reserves | Book Value | Book Balance | Impairment Reserves | Book Value | |
| Equipment Installation Engineering Type | 10,314,744.11 | 10,314,744.11 | 36,034,188.98 | 36,034,188.98 | ||
| Technical Transformation Type | 3,822,472.00 | 3,822,472.00 | 1,335,568.80 | 1,335,568.80 | ||
| Building Construction Type | 3,738,961.67 | 3,738,961.67 | ||||
| In total | 17,876,177.78 | 17,876,177.78 | 37,369,757.78 | 37,369,757.78 | ||
(2) Change Condition of Important Engineering Projects under Construction in the Current Period
| Project Name | Balance at Beginning of Year | Increased Amounts in the Current Period | Roll-in Fixed Assets Amount in the Current Period | Other Decreased Amounts in the Current Period | Balance at End of Period |
| Tianjin Grain and Oil Project | 9,408,554.52 | 2,819,374.59 | 12,227,929.11 | ||
| Plant No.2 Walnut Cake Production Line | 7,672,354.52 | 59,944.34 | 3,275,230.77 | 4,457,068.09 | |
| Molding Equipment | 766,735.78 | 1,276,478.10 | 1,194,841.30 | 848,372.58 | |
| Small Fried Potato Chips | 1,798,382.97 | 1,798,382.97 | |||
| 4D Overlaid Corn Flakes Production Line | 1,830,000.00 | 6,661,657.77 | 8,423,657.77 | 68,000.00 | |
| Squeezed and Baked Corn Flakes Production Line | 2,691,598.53 | 82,850.60 | 2,724,449.13 | 50,000.00 | |
| Leisure Plant No.2 Non-fried Potato Chips Production Line(7 lines) | 9,760,300.00 | 5,960,300.00 | 3,800,000.00 | ||
| One More Steamed Dried Cake Production Line | 1,227,344.82 | 6,156.00 | 1,233,500.82 | ||
| Leisure plant No.1 Gege Cube improvement | 299,000.00 | 299,000.00 | |||
| Plant No.3 side and slope control program | 403,041.51 | 1,484,647.39 | 1,887,688.90 |
Project Name
| Project Name | Balance at Beginning of Year | Increased Amounts in the Current Period | Roll-in Fixed Assets Amount in the Current Period | Other Decreased Amounts in the Current Period | Balance at End of Period |
| Pea crisp project technical renocation | 88,432.14 | 10,867.49 | 99,299.63 | ||
| Salad strip project technical renovation | 844,095.15 | 22,711.14 | 866,806.29 | ||
| Smart stick quality improvement technical renovation | 219,241.70 | 219,241.70 | |||
| Smart stick chicken starter improvement technical renovation | 360,593.71 | 360,593.71 | |||
| New stick product equipment input program | 1,717,083.99 | 1,717,083.99 | |||
| Wheat packaging automation and stater improvement renovation program | 217,699.11 | 217,699.11 | |||
| Bread workshop Flame retardant color steel plate | 2,764,384.39 | 2,764,384.39 | |||
| Bread workshop fire facilities | 974,577.28 | 974,577.28 | |||
| Total | 36,789,839.94 | 18,678,267.60 | 38,683,233.20 | 16,784,874.34 |
15．Intangible Assets
(1) Intangible Assets Situation
| Items | Software | Land Use Right | Trademark Right | Others | In total |
| One Original Book Value | |||||
| 1. Balance at Beginning of Year | 3,614,817.40 | 317,067,215.98 | 154,841,200.00 | 662,400.00 | 476,185,633.38 |
| 2. Increased Amounts in the Current Period | 3,035,611.88 | 26,820.00 | 3,062,431.88 | ||
| (1) Purchase | 3,035,611.88 | 26,820.00 | 3,062,431.88 | ||
| (3) Others | |||||
| 3. Decreased Amounts in the Current Period | 3,694,958.32 | 3,694,958.32 | |||
| (1) Disposal | 3,694,958.32 | 3,694,958.32 | |||
| (2) Others | |||||
| 4. Balance at End of Period | 3,614,817.40 | 316,407,869.54 | 154,841,200.00 | 689,220.00 | 475,553,106.94 |
| Two Accumulated Amortization | |||||
| 1. Balance at Beginning of Year | 2,879,015.55 | 48,654,170.18 | 40,607,519.97 | 92,140,705.70 | |
| 2. Increased Amounts in the Current Period | 497,854.58 | 6,823,321.57 | 7,713,925.84 | 447.00 | 15,035,549.01 |
| (1) Accrual | 497,854.58 | 6,823,321.57 | 7,713,925.84 | 447.00 | 15,035,549.01 |
| (2) Others | |||||
| 3. Decreased Amounts in the Current Period | 455,982.15 | 455,982.15 | |||
| (1) Disposal | 455,982.15 | 455,982.15 |
Items
| Items | Software | Land Use Right | Trademark Right | Others | In total |
| (2) Others | |||||
| 4. Balance at End of Period | 3,376,870.13 | 55,021,509.60 | 48,321,445.83 | 447.00 | 106,720,272.56 |
| Three Impairment Reserves | |||||
| 1. Balance at Beginning of Year | 662,400.00 | 662,400.00 | |||
| 2. Increased Amounts in the Current Period | |||||
| 3. Decreased Amounts in the Current Period | |||||
| 4. Balance at End of Period | 662,400.00 | 662,400.00 | |||
| Four Book Value | |||||
| 1. Book Value at End of Period | 735,801.85 | 268,413,045.80 | 114,233,680.03 | 383,382,527.68 | |
| 2. Book Value at Beginning of Year | 1,063,644.94 | 275,832,781.26 | 121,947,605.87 | 398,844,032.07 |
16．Goodwill
(1) Original Book Value of Goodwill
| Name of Invested Unit or Items Forming Goodwill | Balance at Beginning of Year | Increase in the Current Period | Decrease in the Current Period | Balance at End of Period | ||
| Formed by Enterprise Merger | Others | Disposal | Others | |||
| Acquire stock shares of Zhejiang Xiaowangzi Food Co., Ltd. | 191,394,422.51 | 191,394,422.51 | ||||
| In total | 191,394,422.51 | 191,394,422.51 | ||||
（2）Relevant information about the group or groups of assets that include goodwill
Currency Unit：’0000Yuan
| Item | Goodwill |
| Ending carrying amount of goodwill | 19,139.44 |
| Ending carrying amount of goodwill impairment | |
| Ending value of goodwill（Minority shareholders） | 31,694.01 |
| Ending carrying amount of group of assets | 54,071.82 |
| Ending book value of group of assets that include goodwill | 85,765.83 |
| Ending recoverable amount of group of assets | 111,023.60 |
| Impairment losses of goodwill incurred for the period |
Note: the fair value of groups of assets using equity method on 31
st
December 2019 is 1.1 billion Yuan, greater than the totalof fair value of recognizable net asset and goodwill which is 857.66 million Yuan
The component of group or groups of assets: impairment test for goodwill related asset as group of asset, main cash inis independent from cash in of other group of assets, this group of assets should be consistent with the group of assets thatwas recognized in the impairment test of goodwill on acquisition date and previous years.
(3) Recognition method of goodwill impairment loss and process, key assumptions and key parameters of goodwill test
1) At the end of the period, the company performed an impairment test on the asset group related to goodwill. Whenperforming an impairment test on a related asset group or asset group combination that includes goodwill, if there is animpairment of the asset group or asset group combination related to goodwill If there are signs, an impairment test isperformed on the asset group or combination of asset groups that does not include goodwill, and the recoverable amount iscalculated and compared with the book value to confirm the corresponding impairment loss. Then perform an impairmenttest on the asset group or asset group combination that includes goodwill, and compare the book value of the asset group orasset group combination that contains the distributed goodwill with its recoverable amount. If the relevant asset group orasset group combination is recoverable, The amount is lower than its book value, and the impairment loss of goodwill isrecognized.
2) Important key assumptions adopted and their basis: ① As for the actual situation of assets on the evaluation base date, itis assumed that the company continues to operate; ② Assume that the cash inflows rated as units after the evaluation basedate are uniform inflows, and cash outflows are uniform outflows; ③On the basis of the existing management methods andmanagement levels, the company's business scope and methods are consistent with the current direction; ④ There will be nomajor changes in the interest rates, exchange rates, taxation benchmarks and tax rates, and policy levy fees; ⑤Themanagement of the unit being assessed is responsible, stable and capable of performing its duties.
3）Key parameter
Item
| Item | Forecast period | Revenue growth rate over the forecast period | Revenue growth rate over the stable period | Profit margin | Pre-tax discount rate |
| Zhejiang Little Prince Food Co., Ltd. | 2020 to 2024 | 3.14% | 0 | Calculated based on forecasted revenue, costs, expenses, etc. | 16.80% |
(4) Impact of goodwill impairment test
After testing, the company's goodwill formed by the acquisition of the operating asset group of Zhejiang Little Prince FoodCo., Ltd. is not impaired.17．Long-term Unamortized Expenses
| Items | Balance at Beginning of Year | Increased Amounts in the Current Period | Amortized Amounts in the Current Period | Other Decreased Amounts | Balance at End of Period |
| Company’s Majuqiao Plant Transformation Expense | 16,182,332.83 | 15,674,872.89 | 619,824.55 | 15,674,872.96 | 15,562,508.21 |
Items
| Items | Balance at Beginning of Year | Increased Amounts in the Current Period | Amortized Amounts in the Current Period | Other Decreased Amounts | Balance at End of Period |
| House Renovation Expense | 179,747.95 | 21,088.75 | 158,659.20 | ||
| Woodland Rental Expense | 5,196,528.00 | 112,968.00 | 5,083,560.00 | ||
| Suzhou Gongfujia Animation Production Expense | 10,061,782.90 | 970,873.79 | 11,032,656.69 | ||
| BHG Mall Store Decoration Expense | 311,112.98 | 311,112.98 | |||
| Macao Center Store Decoration Expense | 370,325.10 | 370,325.10 | |||
| Heping Joy-City Decoration Expense | 1,172,432.06 | 1,172,432.06 | |||
| Longde Plaza Store Fire Engineering Funds | 57,420.51 | 57,420.51 | |||
| Longde Store No.2 Decoration Expense | 699,582.37 | 699,582.37 | |||
| Taikoo Li Store Decoration Expense | 258,935.92 | 258,935.92 | |||
| Information Disclosure Expense | 180,817.60 | 94,339.68 | 86,477.92 | ||
| Car Rental Fees in Ancient Coin Branch | 117,833.06 | 117,833.06 | |||
| Gold Island Building 412 renovation Expense | 30,783.50 | 13,192.92 | 17,590.58 | ||
| In total | 34,671,018.22 | 16,794,363.24 | 11,894,070.59 | 18,544,681.90 | 21,026,628.97 |
18．Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Details of Deferred Income Tax Assets Not Being Offset
| Items | Balance at End of Period | Balance at Beginning of Year | ||
| Deductible Temporary Difference | Deferred Income Tax Assets | Deductible Temporary Difference | Deferred Income Tax Assets | |
| Asset Impairment Reserves | 190,997.87 | 47,749.46 | 5,975,793.94 | 1,493,058.58 |
| Deductible Loss | 31,275,069.47 | 7,818,767.37 | 2,378,893.29 | 594,723.33 |
| Valuation of Financial Instruments and Derivative Financial Instruments | 8,344,697.92 | 2,086,174.48 | 10,651,429.16 | 2,662,857.29 |
| Deferred Income | 1,901,363.76 | 475,340.94 | 2,351,363.76 | 587,840.94 |
| Employee Pay Payable | 5,687,080.00 | 1,421,770.00 | 39,970,000.00 | 9,992,500.00 |
| Credit impairment Loss | 1,613,752.34 | 400,338.47 | ||
| In total | 49,012,961.36 | 12,250,140.72 | 61,327,480.15 | 15,330,980.14 |
(2) Details of Deferred Income Tax Liabilities Not Being Offset
| Items | Balance at End of Period | Balance at Beginning of Year |
Taxable TemporaryDifference
| Taxable Temporary Difference | Deferred Income Tax Liabilities | Taxable Temporary Difference | Deferred Income Tax Liabilities | |
| Valuation of Financial Instruments and Derivative Financial Instruments | 61,988,283.56 | 15,497,070.89 | 407,589.76 | 101,897.44 |
| Difference between fair value of identifiable net asset by acquiree confirmed by enterprise merger and its book value of net asset | 187,755,812.28 | 46,938,953.07 | 198,067,768.12 | 49,516,942.03 |
| In total | 249,744,095.84 | 62,436,023.96 | 198,475,357.88 | 49,618,839.47 |
（3）Details of Deferred Income Tax Liabilities after Offset
| Item | Offseting amount of deferred tax assets and liabilities | Carrying amount after offsetting between deferred tax assets and liabilities | offseting amount of deferred tax assets and liabilities at the end of last period | Carrying amount after offsetting between deferred tax assets and liabilitie at the end of last period |
| Deferred tax asset | 9,647,074.34 | 2,603,066.38 | 15,330,980.14 | |
| Deferred tax liabilities | 9,647,074.34 | 52,788,949.62 | 49,618,839.47 |
(4) Details of Deferred Income Tax Assets Not Being Confirmed
| Items | Balance at End of Period | Balance at Beginning of Year |
| Deductible Loss | 29,906.20 | -2,714,794.81 |
| Deductible temporary differences | 80,581,354.00 | 34,699,987.18 |
| In total | 80,611,260.20 | 31,985,192.37 |
(5) Deductible loss on deferred income tax assets not being confirmed will be due at the following years
| Year | Balance at End of Period | Balance at Beginning of Year | Notes |
| 2020 | 5,769,102.97 | 5,769,102.97 | |
| 2021 | 4,504,020.42 | 4,504,020.42 | |
| 2022 | 4,021,787.39 | 4,021,787.39 | |
| 2023 | 19,123,515.53 | 20,405,076.40 | |
| 2024 | 47,162,927.69 | ||
| 合计 | 80,581,354.00 | 34,699,987.18 |
19．Other Non-current Assets
| Items | Balance at End of Period | Balance at Beginning of Year |
| Equipment and Project Funds | 1,005,300.00 | 1,622,003.59 |
| Certificates of Deposit | 150,000,000.00 | |
| Less: part due within one year | ||
| In total | 151,005,300.00 | 1,622,003.59 |
Note: The book value of restricted other non current asset at the end of the period is 150,000,000.00Yuan, for details, pleaserefer to 6.53.20．Short-term Borrowings
(1) Classification of Short-term Borrowings
Items
| Items | Balance at End of Period | Balance at Beginning of Year |
| Guaranteed Loan | 310,000,000.00 | 370,000,000.00 |
| Fiduciary Loan | 1,019,238,701.60 | 1,067,715,080.91 |
| In total | 1,329,238,701.60 | 1,437,715,080.91 |
21．Notes and Accounts Payable
(1) Accounts Payable Listed by Nature of Funds
| Items | Balance at End of Period | Balance at Beginning of Year |
| Material Funds Payable | 117,367,304.89 | 121,681,815.91 |
| Project Funds Payable | 5,013,460.24 | 289,019.48 |
| Equipment Funds Payable | 5,511,888.97 | 15,527,703.10 |
| Loan Deposit | 583,301.20 | |
| Others | 2,675,759.33 | 2,482,873.42 |
| In total | 130,568,413.43 | 140,564,713.11 |
22．Accounts Collected in Advance
(1) List of Accounts Collected in Advance
| Items | Balance at End of Period | Balance at Beginning of Year |
| Sales Revenue Collected in Advance | 466,156,950.04 | 143,857,900.77 |
| Collect rent in advance | 983,521.42 | 769,003.41 |
| Collect the equipment payment in advance | 690,160.00 | |
| Land restoration bonus | 13,825,688.07 | |
| Others | 153,301.88 | |
| In total | 481,119,461.41 | 145,317,064.18 |
Note: There are no important accounts collected in advance with over one year of aging in the Company this current year.23．Wages Payable
(1) List of Wages Payable
| Items | Balance at Beginning of Year | Increase in the Current Period | Decrease in the Current Period | Balance at End of Period |
| One Short-term Compensation | 29,938,059.15 | 285,078,864.69 | 291,021,488.38 | 23,995,435.46 |
| Two After-service Welfare-Stated Drawings Plan | 1,402,397.44 | 26,469,433.23 | 26,707,124.71 | 1,164,705.96 |
| Three Dismission Welfare | 154,111.46 | 2,978,755.51 | 3,100,424.81 | 32,442.16 |
Items
| Items | Balance at Beginning of Year | Increase in the Current Period | Decrease in the Current Period | Balance at End of Period |
| In total | 31,494,568.05 | 314,527,053.43 | 320,829,037.90 | 25,192,583.58 |
(2) List of Short-term Compensation
| Items | Balance at Beginning of Year | Increase in the Current Period | Decrease in the Current Period | Balance at End of Period |
| 1. Wage, Bonus, Allowance and Subsidy | 25,667,018.98 | 237,159,430.65 | 242,646,388.27 | 20,180,061.36 |
| 2. Welfare Expense of Employee | 250,488.10 | 8,618,855.99 | 8,869,284.09 | 60.00 |
| 3. Social Insurance Expense | 910,019.83 | 15,105,066.12 | 15,168,653.56 | 846,432.39 |
| Among them: Medical Insurance Premiums | 340,442.01 | 12,883,614.26 | 12,661,621.58 | 562,434.69 |
| Industrial Injury Insurance Premiums | 131,267.02 | 1,152,303.64 | 1,143,876.18 | 139,694.48 |
| Birth Insurance Premiums | 45,767.66 | 947,196.76 | 942,193.37 | 50,771.05 |
| Others | 392,543.14 | 121,951.46 | 420,962.43 | 93,532.17 |
| 4. Housing Provident Funds | 189,641.00 | 11,997,177.06 | 11,881,697.99 | 305,120.07 |
| 5. Labor Union Expense and Personnel Education Fund | 2,914,225.62 | 4,815,715.17 | 5,066,179.15 | 2,663,761.64 |
| 6. Short-term Compensated Absences | 6,665.62 | 7,382,619.70 | 7,389,285.32 | |
| In total | 29,938,059.15 | 285,078,864.69 | 291,021,488.38 | 23,995,435.46 |
(3) List of Stated Drawings Plan
| Items | Balance at Beginning of Year | Increase in the Current Period | Decrease in the Current Period | Balance at End of Period |
| 1. Basic Pension Insurance | 1,331,134.58 | 24,149,593.20 | 24,396,575.28 | 1,084,152.50 |
| 2. Unemployment Insurance Expense | 51,379.22 | 893,535.58 | 898,727.03 | 46,187.77 |
| 3. Enterprise Annuity Charges | 19,883.64 | 1,426,304.45 | 1,411,822.40 | 34,365.69 |
| Total | 1,402,397.44 | 26,469,433.23 | 26,707,124.71 | 1,164,705.96 |
Notes: The Company joins pension insurance and unemployment insurance programs set by government agencies inaccordance with regulations. According to these programs, the Company deposits expenses of pension insurance programper month based on 14%, 20%, 19% ,18% and 16% of basic employee wage while depositing expenses of pension insuranceprogram per month based on 0.5%, 0.7%, 1% and 0.8% of basic employee wage. Except from above expenses depositedmonthly, the Company won’t undertake further payment obligation. Corresponding expenses are charged to costs of profitand loss in the current period or related assets when occurring.24．Taxes and Fees Payable
| Items | Balance at End of Period | Balance at Beginning of Year |
| VAT | 9,856,580.09 | 5,633,418.89 |
| Urban Maintenance and Construction Tax | 780,497.63 | 495,841.40 |
| Corporate Income Tax | 25,362,765.03 | 26,772,270.05 |
Items
| Items | Balance at End of Period | Balance at Beginning of Year |
| House Property Tax | 2,679,468.56 | 1,447,610.40 |
| Land Use Tax | 466,291.09 | 276,169.59 |
| Individual Income Tax | 7,588,240.51 | 482,771.95 |
| Educational Surtax | 297,757.24 | 174,446.12 |
| Local Educational Surtax | 250,647.90 | 168,441.14 |
| Stamp Tax | 552,502.89 | 317,916.69 |
| Resources Tax | 4,240.00 | 11,532.00 |
| Others | 3,630.47 | 3,401.61 |
| In total | 47,842,621.41 | 35,783,819.84 |
25．Other Accounts Payable
| Items | Balance at End of Period | Balance at Beginning of Year |
| Interest Payable | 24,604,524.69 | 26,972,826.90 |
| Dividends Payable | 11,013,302.88 | 11,197,317.01 |
| Other Accounts Payable | 60,553,568.66 | 73,118,565.08 |
| In total | 96,171,396.23 | 111,288,708.99 |
(1) Interest Payable
| Items | Balance at End of Period | Balance at Beginning of Year |
| Loan Interest between Enterprises | 21,082,795.47 | 21,082,795.47 |
| Bank Loan Interest | 3,521,729.22 | 5,890,031.43 |
| In total | 24,604,524.69 | 26,972,826.90 |
(2) Dividends Payable
| Items | Balance at End of Period | Balance at Beginning of Year |
| Dividend Payable for Corporate Shares | 3,213,302.88 | 3,397,317.01 |
| Dividends Payable for Minority Shareholders | 7,800,000.00 | 7,800,000.00 |
| In total | 11,013,302.88 | 11,197,317.01 |
(3) Other Accounts Payable
List of Other Accounts Payable by Nature of Funds
| Items | Balance at End of Period | Balance at Beginning of Year |
| Loan and Interest | 11,258,346.00 | 30,376,545.69 |
| Intercourse Funds of Related Parties | 7,852,823.90 | 817,333.26 |
| Intercourse Funds between Units | 12,791,535.12 | 20,356,775.13 |
| Personal Intercourse Funds | 2,930,547.58 | 776,050.31 |
| Various Insurances of Employee | 1,605,759.25 | 797,312.51 |
| Employee Loan Payable | 91,986.85 | |
| Guaranteed Deposit and Deposit | 21,235,322.03 | 15,199,146.39 |
Items
| Items | Balance at End of Period | Balance at Beginning of Year |
| Warehouse and Storage Charges | 701,645.19 | 2,568,894.01 |
| Others | 2,177,589.59 | 2,134,520.93 |
| In total | 60,553,568.66 | 73,118,565.08 |
26．Other Current Liabilities
| Items | Balance at End of Period | Balance at Beginning of Year |
| Fair Value Changes of Items Trapped at Hedging | 11,100,915.25 | |
| In total | 11,100,915.25 |
27．Deferred Income
| Items | Balance at Beginning of Year | Increase in the Current Period | Decrease in the Current Period | Balance at End of Period | Cause of Formation |
| Government Subsidy | 74,953,385.51 | 3,435,216.24 | 71,518,169.27 | ||
| In total | 74,953,385.51 | 3,435,216.24 | 71,518,169.27 | — |
Among them， items involving government subsidy
| Items Receiving Subsidy | Type | Balance at Beginning of Year | Increase in the Current Period | Decrease in the Current Period | Balance at End of Period | |||
| Charge to Non-operating Income | Charge to other Profits | Offset Cost Expense | Other Decreases | |||||
| Relocation Compensation | Financial Allocation | 5,001,929.60 | 384,763.82 | 4,617,165.78 | ||||
| Special Subsidy for Infrastructure Input | Financial Allocation | 12,113,871.01 | 908,692.06 | 11,205,178.95 | ||||
| Enterprise Supporting Infrastructure at Construction Stage of “Tianjin Harbor Industrial Park Administrative Committee” | Financial Allocation | 52,484,131.93 | 1,277,504.16 | 51,206,627.77 | ||||
| Tianjin Binhai New District’s Industrially Technical Renovation and Park Construction Funds as well as Expenditures for Science and Technology | Financial Allocation | 2,537,036.93 | 222,222.24 | 2,314,814.69 | ||||
| Fixed Assets Specially Formed by Science and Technology Commission of Guchuan Edible Oil | Financial Allocation | 934,065.92 | 77,838.84 | 856,227.08 | ||||
| Appropriation for Oil Tank’s Electric Heating System | Financial Allocation | 174,585.08 | 56,000.04 | 118,585.04 | ||||
| Cooking Oil Green and Cleaning Production | Financial Allocation | 357,765.04 | 58,195.08 | 299,569.96 | ||||
Items Receiving
Subsidy
| Items Receiving Subsidy | Type | Balance at Beginning of Year | Increase in the Current Period | Decrease in the Current Period | Balance at End of Period | |||
| Charge to Non-operating Income | Charge to other Profits | Offset Cost Expense | Other Decreases | |||||
| Equipment, Technical Study as well as Science and Technology Demonstration | ||||||||
| Maintenance Funds for Dangerous and Old Warehouse | Financial Allocation | |||||||
| In total | 74,953,385.51 | 3,435,216.24 | 71,518,169.27 | |||||
28．Long-term Wage Payable
(1) List of Long-term Wage Payable
| Items | Balance at End of Period | Balance at Beginning of Year |
| One Dismission Welfare | 43,582.87 | 275,406.52 |
| Two Other Long-term Welfare | 5,687,080.00 | 39,970,000.00 |
| In total | 5,730,662.87 | 40,245,406.52 |
29．Share Capital
| Items | Balance at Beginning of Year | Changes in the Current Period | Balance at End of Period | ||||
| New Share Issue | Share Donation | Share Transfer of Provident Fund | Others | Sub-total | |||
| 1. Shares with Restricted Conditions |
| (1) State Shareholding |
| (2) State-owned Legal-person Shareholding | 213,388,058.00 | 213,388,058.00 |
| (3) Other Domestic Capital Shareholding | 1,299,500.00 | 1,299,500.00 |
| Including: |
| Domestic Legal-person Shareholding | 1,299,500.00 | 1,299,500.00 |
| Domestic Natural Person Shareholding |
| (4) Foreign Shareholding |
| Including: |
| Foreign Legal-person Shareholding |
| Foreign Natural Person Shareholding |
| Total Shares with Restricted Conditions | 214,687,558.00 | 214,687,558.00 |
| 2. Tradable Shares without Restricted Conditions |
Items
| Items | Balance at Beginning of Year | Changes in the Current Period | Balance at End of Period | ||||
| New Share Issue | Share Donation | Share Transfer of Provident Fund | Others | Sub-total | |||
| (1) RMB Ordinary Shares | 406,127,806.00 | 406,127,806.00 |
| (2) Domestically Listed Foreign Shares | 64,975,000.00 | 64,975,000.00 |
| (3) Listed Foreign Shares Overseas |
| (4) Others |
| Total Tradable Shares without Restricted Conditions | 471,102,806.00 | 471,102,806.00 |
| In total | 685,790,364.00 | 685,790,364.00 |
30．Capital Reserves
| Items | Balance at Beginning of Year | Increase in the Current Period | Decrease in the Current Period | Balance at End of Period |
| Capital Premium (Stock Premium) | 1,243,771,440.74 | 39,757.12 | 1,243,731,683.62 | |
| Capital Reserves Roll-in Under Original System | 112,316,357.36 | 112,316,357.36 | ||
| Other Capital Reserves | 239,624,007.21 | 239,624,007.21 | ||
| In total | 1,595,711,805.31 | 39,757.12 | 1,595,672,048.19 |
Note：Changes of capital reserve is due to acquision of level 2 conmpany: Jingliang Countryside complex constructionand operation (xinyi) Limited ( Xinyi Company for short) 6% minority shareholding. This acquisition results in the capitalreserve that is formed by the differences between the long term euity investment of the acquisition of that shareholding andthe share of net asset that was calculated continuously from the date of acquisition.31．Other Comprehensive Incomes
| Items | Balance at Beginning of Year | Amounts Occurred in the Current Period | Balance at End of Period | ||||
| Amounts Occurred before Income Tax in the Current Period | Less: Other Comprehensive Incomes Charged at Earlier Stage and Current Roll-in Profit and Loss | Less: Income Tax Expense | Attributable to Parent Company After Tax | Attributable to Minority Shareholders After Tax | |||
| One Other comprehensive incomes that won’t be classified into profit and loss | |||||||
| Two Other comprehensive incomes that will be classified into profit and loss | 438.33 | 267,189.81 | 267,189.81 | 267,628.14 | |||
| Changes in fair value through profit and loss for | -421,278.00 | 147,576.00 | 147,576.00 | -273,702.00 | |||
Items
| Items | Balance at Beginning of Year | Amounts Occurred in the Current Period | Balance at End of Period | ||||
| Amounts Occurred before Income Tax in the Current Period | Less: Other Comprehensive Incomes Charged at Earlier Stage and Current Roll-in Profit and Loss | Less: Income Tax Expense | Attributable to Parent Company After Tax | Attributable to Minority Shareholders After Tax | |||
| available-for-sale financial assets | |||||||
| Converted difference between foreign currency financial statements | 421,716.33 | 119,613.81 | 119,613.81 | 541,330.14 | |||
| In total | 438.33 | 267,189.81 | 267,189.81 | 267,628.14 | |||
32．Surplus Reserves
| Items | Balance at Beginning of Year | Increase in the Current Period | Decrease in the Current Period | Balance at End of Period |
| Statutory Surplus Reserves | 84,487,609.05 | 84,487,609.05 | ||
| Free Surplus Reserves | 37,634,827.93 | 37,634,827.93 | ||
| In total | 122,122,436.98 | 122,122,436.98 |
Note: according to the rules in corporation law and articles of association, legal surplus reserve should be collected by10% of net profit. It should be stopped collecting when the accumulated amount of surplus reserve reaches 50%,.
After collecting legal surplus reserve, the company can collect random surplus reserve. Random surplus reserve can beused to compensate the losses of the previous years or increase capital after approval.33．Undistributed Profit
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Adjustment on undistributed profit at end of last year | -131,155,119.19 | -299,111,700.34 |
| Adjustment on total number of undistributed profit at beginning of period (increase+ and decrease-) | ||
| Adjusted undistributed profit at beginning of period | -131,155,119.19 | -299,111,700.34 |
| Add: net profit attributable to parent company in the current period | 133,341,925.75 | 167,956,581.15 |
| Less: withdrawal legal surplus reserves | ||
| Withdrawal free surplus reserves | ||
| Withdrawal general risk reserves | ||
| Ordinary stock dividends payable | ||
| Ordinary stock dividends transferred to capital | ||
| Undistributed profit at end of period | 2,186,806.56 | -131,155,119.19 |
34．Minority Interest
| Items | Balance at End of Period | Balance at Beginning of Period |
Sinograin Oils Corporation
| Sinograin Oils Corporation | 247,200,159.58 | 241,504,003.06 |
| Wang Yuecheng and other minority shareholders of Zhejiang Xiaowangzi Food Co., Ltd. | 262,136,908.18 | 233,004,494.15 |
| Missme Food and Beverage (Tianjin) Co., Ltd. | 8,860,128.93 | |
| Chaoxuntong (Tianjin) Commercial and Trading Co., Ltd. | 6,236,324.41 | |
| Hebei Provincial Oil Pool Co., Ltd. | 37,432,892.43 | 36,378,427.45 |
| Tangshan Caofeidian Agricultural Development Group Co., Ltd. | 24,033,762.48 | 24,343,101.44 |
| Xinyi Yaowan Tourism Industrial Park Development Co., Ltd. | 8,726,102.59 | 8,874,594.32 |
| Beijing Grain Xinniu Runying Equity Investment Fund (Limited Partnership) | 1,454,350.43 | 1,479,099.05 |
| ShiZhu Tujia Autonomous County Yujinzhu Agricultural Partnership Enterprise (General Partnership) | 5,916,396.21 | |
| Shanghai Heheng Management Consulting Co., Ltd. | 4,072,181.21 | |
| In total | 585,056,356.90 | 566,596,569.02 |
35．Operation Revenue and Operation Cost
| Items | Amounts in the Current Period | Amounts in the Prior Period | ||
| Revenue | Cost | Revenue | Cost | |
| Prime Business | 7,391,949,995.86 | 6,804,978,163.57 | 7,362,877,190.25 | 6,732,130,680.87 |
| Other Business | 48,336,469.68 | 9,085,593.97 | 46,247,113.16 | 13,184,527.25 |
| In total | 7,440,286,465.54 | 6,814,063,757.54 | 7,409,124,303.41 | 6,745,315,208.12 |
(1) Prime Business (Industry and Business-classified)
| Name of Industry (or Business) | Amounts in the Current Period | Amounts in the Prior Period | ||
| Revenue | Cost | Revenue | Cost | |
| Oil and Oil Seeds | 6,241,183,366.31 | 5,998,272,586.81 | 6,261,524,286.20 | 5,948,914,989.47 |
| Food Manufacturing Industry | 940,737,948.76 | 643,054,491.71 | 890,987,143.21 | 612,079,134.38 |
| Entrusted Processing | 71,331,610.24 | 71,432,530.75 | 40,032,627.87 | 45,729,804.67 |
| Oil Reserves Rotation | 97,333,028.72 | 62,456,156.20 | 162,393,266.25 | 124,332,375.00 |
| Transfer | 18,681,301.47 | 7,219,877.38 | 7,939,866.72 | 1,074,377.35 |
| Others | 22,682,740.36 | 22,542,520.72 | ||
| In total | 7,391,949,995.86 | 6,804,978,163.57 | 7,362,877,190.25 | 6,732,130,680.87 |
(2) Prime Business (Product-classified)
| Name of Product | Amounts in the Current Period | Amounts in the Prior Period | ||
| Revenue | Cost | Revenue | Cost | |
Name of Product
| Name of Product | Amounts in the Current Period | Amounts in the Prior Period | ||
| Revenue | Cost | Revenue | Cost | |
| Oil | 6,428,529,306.74 | 6,139,381,151.14 | 6,471,890,047.04 | 6,120,051,546.49 |
| Food Processing | 940,737,948.76 | 643,054,491.71 | 890,987,143.21 | 612,079,134.38 |
| Real Estate | 22,682,740.36 | 22,542,520.72 | ||
| In total | 7,391,949,995.86 | 6,804,978,163.57 | 7,362,877,190.25 | 6,732,130,680.87 |
(3) Prime Business (Region-classified)
| Name of Region | Amounts in the Current Period | Amounts in the Prior Period | ||
| Revenue | Cost | Revenue | Cost | |
| Beijing | 2,747,243,314.18 | 2,397,680,893.09 | 2,225,706,282.90 | 1,925,744,737.19 |
| Tianjin | 3,281,919,197.95 | 3,326,423,104.55 | 4,123,641,322.51 | 4,154,852,781.92 |
| Zhejiang | 660,855,948.74 | 432,813,437.59 | 640,002,204.15 | 429,029,230.87 |
| Shandong | 51,495,923.63 | 45,030,001.48 | 49,311,118.34 | 41,662,829.01 |
| Liaoning | 135,881,783.18 | 102,395,375.88 | 124,495,099.54 | 93,556,390.71 |
| Hebei | 514,553,828.18 | 500,635,350.98 | 199,721,162.81 | 87,284,711.17 |
| In total | 7,391,949,995.86 | 6,804,978,163.57 | 7,362,877,190.25 | 6,732,130,680.87 |
36．Tariff And Annex
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Urban Maintenance and Construction Tax | 6,093,645.72 | 5,842,393.58 |
| Educational Surtax | 2,682,713.53 | 2,582,618.40 |
| Local Educational Surtax | 1,788,475.73 | 1,721,744.55 |
| Increment Tax on Land Value | 197,624.76 | |
| House Property tax | 7,936,929.23 | 7,701,037.94 |
| Land Use Tax | 2,356,178.12 | 1,617,228.36 |
| Vehicle and Vessel Use Tax | 48,509.20 | 50,229.02 |
| Stamp Tax | 2,731,286.14 | 3,873,868.49 |
| Resources Tax | 118,258.80 | 120,234.70 |
| Other Taxes and Fees | 59,027.13 | 206,043.68 |
| In total | 23,815,023.60 | 23,913,023.48 |
Note: calculation and payment standard of various taxes and surcharges sees details of Appendix Five Tax.37．Sales Expenses
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Employee Compensation (including wage, bonus, welfare expenses, allowance as well as five social insurance and one housing fund) | 62,457,654.45 | 60,871,887.72 |
Items
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Advertising Expenses | 11,085,644.09 | 3,789,513.48 |
| Repair Costs | 988,553.17 | 1,173,945.20 |
| Packing Expenses | 1,327,097.49 | 935,608.04 |
| Transportation Fees | 20,843,864.55 | 22,687,770.57 |
| Terminal Charges | 1,781,254.51 | 1,602,968.80 |
| Water and Electricity Fees | 1,317,285.88 | 1,980,862.22 |
| Vehicle Fees | 1,078,366.27 | 1,346,716.81 |
| Warehousing Fees | 12,030,169.38 | 13,148,592.18 |
| Test and Detection Fees | 267,201.08 | 335,007.92 |
| Commercial Insurance Expenses | 10,435.78 | 94,070.40 |
| Sales Promotion Expenses | 45,368,001.12 | 42,389,425.67 |
| Business Entertainment Expenses | 550,474.52 | 529,236.42 |
| Labor Protection Fees | 79,030.24 | 183,948.99 |
| Commodity Wastage | 428,904.88 | 1,942,588.74 |
| Sample and Product Losses | 6,401,606.55 | 8,034,152.45 |
| Sales and Service Fees | 256,459.94 | |
| Impairment Costs | 16,706,266.82 | 16,234,000.42 |
| Travel Expenses | 7,459,494.17 | 7,760,499.91 |
| Operation Expenses | 3,367,394.63 | 4,904,111.74 |
| Lease fee | 2,110,200.00 | 2,998,804.40 |
| Other Expenses | 567,895.16 | 540,960.11 |
| In total | 196,226,794.74 | 193,741,132.13 |
38．Administration Expenses
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Employee Compensation (including wage, bonus, welfare expenses, allowance as well as five social insurance and one housing fund) | 102,691,365.80 | 112,048,014.99 |
| Workers Insurance Expenses | 1,263,337.27 | 760,974.77 |
| Company Expenses | 4,107,943.99 | 4,951,764.79 |
| Commercial Insurance Expenses | 721,834.71 | 694,285.64 |
| Vehicle Fees | 3,867,315.61 | 3,974,066.28 |
| Impairment Costs | 18,137,368.85 | 16,928,883.60 |
| Repair Costs | 2,999,695.40 | 3,408,236.67 |
| Taxes in Expenses | 303,532.72 | 474,740.91 |
| Amortization of Assets | 16,650,941.54 | 16,673,765.43 |
Items
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Material Consumption | 650,553.96 | 750,510.31 |
| Fees of Employing Agent | 9,421,510.94 | 12,852,608.04 |
| Information Network Fees | 1,862,267.09 | 2,243,950.07 |
| Labor Protection Fees | 340,774.62 | 642,947.95 |
| Environmental Protection Fees | 808,496.07 | 784,709.59 |
| Security Protection Fees | 852,488.34 | 864,173.31 |
| Conference Expenses | 48,425.82 | 1,440,724.47 |
| Business Entertainment Expenses | 1,980,884.01 | 1,613,099.59 |
| Travel Expenses | 1,582,115.44 | 1,364,003.13 |
| Office Expenses | 1,653,825.87 | 1,837,034.04 |
| Lease Fees | 3,636,177.17 | 4,331,135.37 |
| Consultation Service Fees | 161,320.75 | 151,569.02 |
| Other Expenses | 2,082,467.33 | 1,371,119.43 |
| In total | 175,824,643.30 | 190,162,317.40 |
39．Research and Development Expenses
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Salary | 5,613,787.98 | 960,739.29 |
| Material consumption | 693,150.43 | 319,906.28 |
| Inspection Expense | 234,065.50 | 148,830.20 |
| Depreciation | 357,576.09 | 10,189.26 |
| Design expense | 207,467.10 | 729,807.10 |
| Transportation Expense | 42,738.99 | 38,005.10 |
| Others | 312,902.48 | 535,086.99 |
| In total | 7,461,688.57 | 2,742,564.22 |
40．Financial Expenses
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Interest Expenses | 47,287,539.19 | 78,514,993.77 |
| Less: Interest Income | 14,712,048.02 | 11,149,346.83 |
| Exchange Profit and Loss | -163,503.06 | -19,437,870.30 |
| Service Charges | 747,948.92 | 560,042.66 |
| Others | ||
| In total | 33,159,937.03 | 48,487,819.30 |
41．Other Profits
Items
| Items | Amounts in the Current Period | Amounts in the Prior Period | Amounts Charged to Non-recurring Profit and Loss in the Current Period |
| Government Subsidy Related to Daily Corporate Activities | 20,745,415.25 | 16,475,771.21 | 8,037,681.90 |
| Return of Service Charges of Withholding Individual Income Tax | 64,036.13 | 72,743.16 | 64,036.13 |
| In total | 20,809,451.38 | 16,548,514.37 | 8,101,718.03 |
42．Investment Income
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Long-term equity investment income accounted with equity method | 7,478,217.97 | 8,330,122.46 |
| Investment income generated from disposing long-term equity investment | -357,650.19 | |
| Investment income from disposal of wealth management products | 8,242,426.95 | 15,846,716.82 |
| Investment income of financial assets that are measured as per fair value and for which the changes are included in the current profit and loss during the holding period | —— | -592,610.00 |
| Investment income of disposing financial assets that are measured as per fair value and for which the changes are included in the current profit and loss | —— | 7,396,982.64 |
| Investment income of disposing financial products | 2,340,631.67 | —— |
| Investment income obtained during the holding of transactional financial assets | 2,392,808.34 | —— |
| In total | 20,096,434.74 | 30,981,211.92 |
43．Profits on Changes in Fair Value
| Source of generating income with changes in fair value | Amounts in the Current Period | Amounts in the Prior Period |
| Financial assets that are measured as per fair value and for which the changes are included in the current profit and loss | 11,943,192.05 | 2,009,952.25 |
| Including: income with changes in fair value generated by derivative financial instruments | 11,943,192.05 | 2,009,952.25 |
| In total | 11,943,192.05 | 2,009,952.25 |
44．Credit impairment loss
| Items | Amounts in the Current Period |
| Accounts receivable bad debt loss | -1,182,781.60 |
| Other receivables bad debt loss | -112,886.19 |
| In total | -1,295,667.79 |
45．Loss from Asset Devaluation
Items
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Loss on Bad Debts | —— | 3,091,602.13 |
| Loss on Inventory Price Drop | -32,583.96 | -4,470,348.34 |
| In total | -32,583.96 | -1,378,746.21 |
46．Assets Disposal Income
| Items | Amounts in the Current Period | Amounts in the Prior Period | Amounts Charged to Non-recurring Profit and Loss |
| Gains or losses on disposal of fixed assets | -2,667,430.71 | -367,796.13 | -2,667,430.71 |
| Gains or losses on disposal of intangible assets | 12,052,586.13 | 12,052,586.13 | |
| In total | 9,385,155.42 | -367,796.13 | 9,385,155.42 |
47．Non-operating Income
| Items | Amounts in the Current Period | Amounts in the Prior Period | Amounts Charged to Non-recurring Profit and Loss |
| Government Subsidy Irrelevant to Daily Operation Activities | |||
| Asset Inventory Surplus Gains | 2.50 | 38,528.20 | 2.50 |
| Donation Gains | |||
| Demand Compensation Income | 172,020.83 | 4,382,340.61 | 172,020.83 |
| Tax Rebate | |||
| Relocation Compensation | 9,351,899.02 | 12,233,443.22 | 9,351,899.02 |
| Payables that aren’t able to pay | 16,679,043.74 | ||
| Other Gains | 1,684,640.56 | 2,572,582.46 | 1,684,640.56 |
| In total | 11,208,562.91 | 35,905,938.23 | 11,208,562.91 |
48．Non-operating Expenses
| Items | Amounts in the Current Period | Amounts in the Prior Period | Amounts Charged to Non-recurring Profit and Loss |
| Assets Damage and Abandonment Loss | 210,659.85 | 1,441,925.72 | 210,659.85 |
| Including: Fix Assests | 210,659.85 | 1,441,925.72 | 210,659.85 |
| External Donation Expenses | 5,250.00 | 20,000.00 | 5,250.00 |
| Amercement Outlay | 2,400.26 | 1,187.98 | 2,400.26 |
| Compensation and Default Money | 196.47 | 5,471,466.18 | 196.47 |
| Relocation Loss | 234,171.72 | 3,198,119.25 | 234,171.72 |
Items
| Items | Amounts in the Current Period | Amounts in the Prior Period | Amounts Charged to Non-recurring Profit and Loss |
| Others | 1,688,885.07 | 1,018,783.92 | 1,688,885.07 |
| In total | 2,141,563.37 | 11,151,483.05 | 2,141,563.37 |
49．Income Tax Expenses
(1) List of Income Tax Expenses
| Amounts in the Current Period | Amounts in the Prior Period | Amounts in the Current Period |
| Income Tax Expenses of the Current Period | 65,171,407.12 | 71,816,277.87 |
| Deferred Income Tax Expenses | 15,898,023.91 | -5,632,570.27 |
| Others | 81,069,431.03 | 66,183,707.60 |
(2) Accounting Profit and Income Tax Expense Adjustment Process
| Items | Amounts in the Prior Period |
| Total Profits | 259,707,602.14 |
| Income tax expenses calculated by statutory/applicable tax rate | 64,926,900.54 |
| Effect of subsidiary corporations being applicable to different tax rates | -772,184.46 |
| Adjustment on effect of income tax in the prior period | 94,976.38 |
| Effect of Non-taxable Incomes | -4,788,633.58 |
| Effect of Non-deductible cost, expense and loss | 12,015,552.86 |
| Effect of deductible loss on usage of unconfirmed deferred income tax assets in the prior period | -308,800.54 |
| Effect of deductible temporary difference or deductible loss on unconfirmed deferred income tax in the current period | 12,219,210.36 |
| Effect of income tax deductions | |
| Effect of R & D deduction | -451,992.05 |
| Effect of disability wage deductions | -2,009,978.12 |
| Effect of business combinations not under common control | |
| Tax rate adjustments cause changes in deferred income tax assets / liabilities at the beginning of the year | 140,785.42 |
| Others | 3,594.22 |
| Income Tax Expenses | 81,069,431.03 |
50．Other Comprehensive IncomesSee details of Appendix Six, 31.51．Item related to cash flows statement
(1) Receiving other cash related to operation activities
Items
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Intercourse Funds of Related Parties | 10,772,776.17 | 12,321,015.31 |
| Intercourse Funds of Other Units | 101,636,552.56 | 427,638,129.62 |
| Non-operating Income | 2,228,326.84 | 3,162,922.28 |
| Interest Income | 12,495,698.33 | 12,714,538.74 |
| Future Guarantee | 505,801,637.81 | 857,189,447.41 |
| Others | 9,827,734.85 | 7,844,959.19 |
| In total | 642,762,726.56 | 1,320,871,012.55 |
(2) Other Cash Payment Related to Operation Activities
| Items | Amounts in the Current Period | Amounts in the Prior Period |
| Intercourse Funds of Related Parties | 4,628,731.15 | 8,419,687.72 |
| Intercourse Funds of Other Units | 205,840,325.66 | 150,418,240.65 |
| Payment for Administration Expenses | 31,856,659.10 | 41,023,787.34 |
| Payment for Operating Expenses | 55,226,822.83 | 50,015,472.90 |
| Non-operating Expenses | 137,198.62 | 539,765.49 |
| Petty Cash Paid | 1,067,049.09 | 1,559,803.65 |
| Bank Charges | 741,832.78 | 590,054.94 |
| Future Guarantee | 356,196,432.00 | 787,350,321.68 |
| Others | 13,079,169.86 | 14,426,119.22 |
| In total | 668,774,221.09 | 1,054,343,253.59 |
52．Supplementary Materials of Cash Flows Statement
(1) Supplementary Materials of Cash Flows Statement
| Supplementary Materials | Amounts in the Current Period | Amounts in the Prior Period |
| 1. Adjusting net accounting profit to operating cash flow | ||
| Net Profit | 178,638,171.11 | 211,126,122.54 |
| Add: Assets Impairment Reserves | 32,583.96 | 1,378,746.21 |
| Credit impairment loss | 1,295,667.79 | |
| Fixed Assets Depreciation, Oil-and-gas Assets Depreciation and Productive Biological Assets Depreciation | 98,222,379.13 | 95,040,294.95 |
| Amortization of Intangible Assets | 15,035,549.01 | 18,678,695.83 |
| Amortization of Long-term Deferred Expenses | 11,894,070.59 | 4,159,473.31 |
| Losses on Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets (Fill in profit with symbol “－”) | -9,385,155.42 | 367,796.13 |
| Losses on Retirement of Fixed Assets (Fill in profit with symbol | 210,659.85 | 1,416,491.75 |
Supplementary Materials
| Supplementary Materials | Amounts in the Current Period | Amounts in the Prior Period |
| “－”) | ||
| Losses on Changes in Fair Value (Fill in profit with symbol “－”) | -11,943,192.05 | -2,009,952.25 |
| Financial Expenses (Fill in profit with symbol “－”) | 47,124,036.13 | 59,077,123.47 |
| Investment Losses (Fill in profit with symbol “－”) | -20,096,434.74 | -30,981,211.92 |
| Decrease in Deferred Income Tax Assets (Fill in increase with symbol “－”) | 3,080,839.42 | -1,151,908.07 |
| Increase in Deferred Income Tax Reliabilities (Fill in decrease with symbol “－”) | 12,817,184.49 | -6,566,836.68 |
| Decrease in Inventory (Fill in increase with symbol “－”) | -183,379,823.18 | 167,659,592.74 |
| Decrease in Items of Operating Receivables (Fill in increase with symbol “－”) | -549,567,530.18 | 217,514,117.22 |
| Increase in Items of Operating Receivables (Fill in decrease with symbol “－”) | 703,387,788.14 | 114,459,006.01 |
| Others | ||
| Net Cash Flows from Operating Activities | 297,366,794.05 | 850,167,551.24 |
| 2. Major investment and financing activities that do not involve cash payments | ||
| Conversion of Debt into Capital | ||
| Convertible Bonds Due Within One Year | ||
| Fixed Assets under Financing Lease | ||
| 3. Net change conditions in cash and cash equivalents | ||
| Cash balance at end of period | 555,097,777.21 | 867,870,016.78 |
| Less: cash balance at beginning of period | 867,870,016.78 | 1,014,438,663.43 |
| Add: balance of the cash equivalents at end of period | ||
| Less: balance of the cash equivalents at beginning of period | ||
| Cash and cash equivalent net increase quota | -312,772,239.57 | -146,568,646.65 |
(2) Net cash from subsidiary corporation paid in the current period
| Items | Amounts |
| Merge of enterprises occurred in the current period and cash or cash equivalents paid in the current period | 50,000,000.00 |
| Including: Beijing Jingliang Ancient Coin Oil Co., Ltd. | 50,000,000.00 |
| Beijing Grain (Caofeidian) Agricultural Development Co., Ltd. | |
| Receiving net cash paid by subsidiary corporation | 50,000,000.00 |
(3) Net cash received for disposal of subsidiaries during the current period
Items
| Items | Gold amount |
| Current period disposal of cash or cash equivalents received by the subsidiary during the current period | |
| Minus: cash and cash equivalents held by the company on the day of loss of control | 14,465.75 |
| Among them: Beijing grain honey honey catering management (tianjin) co., LTD | 14,465.75 |
| Plus: prior period disposal of cash or cash equivalents received by the subsidiary during the current period | |
| Dispose of the net cash received by the subsidiary | -14,465.75 |
(4) Composition of cash and cash equivalents
| Items | Balance at End of Period | Balance at Beginning of Period |
| One Cash | 555,097,777.21 | 867,870,016.78 |
| Including: cash in stock | 27,780.31 | 46,418.17 |
| Bank deposit available for payment at any time | 553,067,993.87 | 737,705,225.28 |
| Other currency funds available for payment at any time | 2,002,003.03 | 130,118,373.33 |
| Two Cash Equivalents | ||
| Including: bond investment maturing within three months | ||
| Three Balance of Cash and Cash Equivalents at End of Period | 555,097,777.21 | 867,870,016.78 |
| Including: restricted cash and cash equivalents used by parent company or intra-group affiliates |
53．Assets with restricted ownership or right to use
| Items | Book Value at End of Period | Reasons being Restricted |
| Currency Funds | 2,070,735.18 | Litigation freeze |
| Inventory | 4,824,035.45 | Loan Mortgage |
| Investment Real Estate | 5,476,357.73 | Loan Mortgage |
| Fixed Assets | 2,327,599.10 | Loan Mortgage |
| Other non-current assets | 150,000,000.00 | Estimated held-to-maturity fixed deposit receipt of management |
| In total | 164,698,727.46 | —— |
54．Monetary Items of Foreign Currency
(1) Monetary Items of Foreign Currency
| Items | Balance of Foreign Currency at End of Period | Exchange Rate Convert | Balance of Converting to RMB at End of Period |
| Currency Funds | 970,167.57 | 6.9762 | 6,768,083.00 |
| Including: US Dollars | 970,167.57 | 6.9762 | 6,768,083.00 |
Items
| Items | Balance of Foreign Currency at End of Period | Exchange Rate Convert | Balance of Converting to RMB at End of Period |
| Accounts receivable | 228,046.05 | 6.9762 | 1,590,894.85 |
| Including: US Dollars | 228,046.05 | 6.9762 | 1,590,894.85 |
| Notes and Accounts Payable | 19,265.39 | 6.9762 | 134,399.21 |
| Including: US Dollars | 19,265.39 | 6.9762 | 134,399.21 |
(2) Instruction of Operational Entity Overseas
The registrant and operating unit of the Company is Beijing Grain (Singapore) International Trade Co., Ltd. with mainbusiness place of Singapore and recording currency of US Dollars.55．HedgingPlease refer to 3 Derivative Financial Assets under Section VI of the Notes.56．Government Subsidies
（1）Basic conditions of government grants
| Type | Amount | Presentation item | Amount recorded in profit and loss |
| Grants on infrastructure improvement complementation fee | 154,434.00 | Other income | 154,434.00 |
| Steady post refund income | 17,019.32 | Other income | 17,019.32 |
| Social security refund by social security office | 4,095,438.49 | Other income | 4,095,438.49 |
| VAT refund income | 9,017,163.61 | Other income | 9,017,163.61 |
| Financial aid on food safety | 30,000.00 | Other income | 30,000.00 |
| Specific grant for smart electricity consumption of Jinnan sub district | 6,000.00 | Other income | 6,000.00 |
| Land use tax exemption for 2019 | 992,124.26 | Other income | 992,124.26 |
| VAT refund (not yet received) | 2,190,843.34 | Other income | 2,190,843.34 |
| Preferential taxation for retired soldiers | 44,250.00 | Other income | 44,250.00 |
| Grants for steady post | 108,612.79 | Other income | 108,612.79 |
| Financial subsidy | 400,000.00 | Other income | 400,000.00 |
| Supporting fund | 50,000.00 | Other income | 50,000.00 |
| Grants for commercial harbor construction fee of Tianjin | 204,033.20 | Other income | 204,033.20 |
| Preferntial of tax control system | 280.00 | Other income | 280.00 |
| Total | 17,310,199.01 | 17,310,199.01 |
VII. Change in Consolidation Scope
（1）Single disposal of an investment in a subsidiary that results in loss of control
Subsidiary name
| Subsidiary name | Equity disposal price | Equity disposal ratio (%) | Equity disposal method | When to lose control | Basis for determining when to lose control | The difference between the disposal price and share of the subsidiary's net assets at the level of the consolidated statement corresponding to the disposal of the investment |
| Jingliang Misimi Catering Management (Tianjin) Co., Ltd. | 542,000.00 | 3 | transfer | 2019.12.30 | State-owned assets property right registration | 43,679.55 |
（Continued）
| Subsidiary name | Proportion of remaining equity on the date of loss of control (%) | Book value of remaining equity on the date of loss of control | Fair value of remaining equity on the date of loss of control | Gain or loss arising from remeasurement of residual equity at fair value | Determination method and main assumptions of the fair value of remaining equity on the date of loss of control | The amount of other comprehensive income related to the original subsidiary's equity investment transferred to investment gains and losses |
| Jingliang Misimi Catering Management (Tianjin) Co., Ltd. | 48 | 7,855,655.68 | 7,848,313.71 | -7,341.97 | evaluation |
Note: The subsidiaries disposed in the current period include the wholly-owned subsidiaries of the above-mentioneddisposal subsidiaries, Mismi Australia Food Management (Beijing) Co., Ltd. (cancelled in March 2019) and Misami FoodManagement (Tianjin) Company Limited.
2、Changes in consolidation scope for other reasons
The second-level subsidiary of the company, Beijing jingliang food co. LTD, which established Beijing JingliangAncient Coin Oil and Fat Co., Ltd. in May 2019, and invested 50 million yuan in currency with the paid-up capitalaccounted for 100% of the paid-in capital of the invested unit in November 2019, is a wholly-owned subsidiary of thecompany.
Jingliang Xinchuang (Tianjin) Business Management Co., Ltd., a fourth-level subsidiary of the Company, completedtax deregistration on November 21, 2019 and industrial and commercial deregistration on December 20, 2019.
VIII. Equities in Other Entities
1. Equities in Subsidiaries
(1) Composition of the Group
| Name of Subsidiary | Principle Place of Business | Registered Place | Nature of Business | Shareholding Ratio (%) | Mode of Acquisition | |
| Direct | Indirect | |||||
| Beijing Jingliang Food Co., Ltd. | Beijing | Beijing | Investment Company | 100 | Merger under the same control | |
Name of Subsidiary
| Name of Subsidiary | Principle Place of Business | Registered Place | Nature of Business | Shareholding Ratio (%) | Mode of Acquisition | |
| Direct | Indirect | |||||
| Jingliang (Tianjin) Grain and Oil Industry Co., Ltd. | Tianjin | Tianjin | Agricultural Product and By Product Processing | 70 | Merger under the same control | |
| Beijing Jingliang Oil and Fat Co., Ltd. | Beijing | Beijing | Grain and oil trade | 100 | Merger under the same control | |
| Jingliang Xinchuang (Tianjin) Business Management Co., Ltd. | Tianjin | Tianjin | Business services | 51 | Merger under the same control | |
| Jingliang (Hebei) Oil Industry Co., Ltd. | Hebei | Hebei | Farm and Sideline Food Processing | 51 | Merger under the same control | |
| Beijing Guchuan Edible Oil Co., Ltd. | Beijing | Beijing | Grain and oil trade | 100 | Merger under the same control | |
| Beijing Eisen-Lubao Oil Co., Ltd. | Beijing | Beijing | Farm and Sideline Food Processing | 100 | Merger under the same control | |
| Beijing Tianweikang Oil Distribution Center Co., Ltd. | Beijing | Beijing | Warehousing | 100 | Merger under the same control | |
| Beijing Guchuan Bread Food Co., Ltd. | Beijing | Beijing | Food Processing | 100 | Merger under the same control | |
| Jingliang Missme Catering Management (Tianjin) Co., Ltd. | Tianjin | Tianjin | Food Processing | 51 | Merger under the same control | |
| Missmehui Catering Management (Tianjin) Co., Ltd. | Tianjin | Tianjin | Food Sales | 100 | Merger under the same control | |
| Missmeao Catering Management (Tianjin) Co., Ltd. | Beijing | Beijing | Food Sales | 100 | Merger under the same control | |
| Zhejiang Xiao Wang Zi Food Co., Ltd. | Hangzhou | Hangzhou | Food Processing | 69.7716 | Combination not under same control | |
| Hangzhou Lin'an Xiaotianshi Food Co., Ltd. | Hangzhou | Hangzhou | Food Processing | 69.7716 | Combination not under same control | |
| Liaoning Xiao Wang Zi Food Co., Ltd. | Liaoning | Liaoning | Food Processing | 69.7716 | Combination not under same control | |
| Linqing Xiao Wang Zi Food Co., Ltd. | Linqing | Linqing | Food Processing | 69.7716 | Combination not under same control | |
| Lin'an Chunmanyuan Agricultural Development Co., Ltd. | Hangzhou | Hangzhou | Food Processing | 69.7716 | Combination not under same control | |
| Jingliang (Singapore) International Trade Co., Ltd. | Singapore | Singapore | Grain trade | 100 | Establishment by investment | |
| Jingliang Rural Complex Construction and Operations (Xinyi) Co., Ltd. | Xinyi | Xinyi | Land remediation | 51 | Establishment by investment | |
| Jingliang (Caofeidian) Agricultural Development Co., Ltd. | Tangshan | Tangshan | Plantation | 51 | Establishment by investment | |
| Beijing jingliang guyuan oil and grease co. LTD | Beijing | Beijing | Business services | 100 | Establishment by investment | |
(2) Major non-wholly-owned subsidiaries
| Name of Subsidiary | Shareholding Ratio of Minority Shareholders (%) | Profit And Loss Attributable to Minority Shareholders for the Current Period | Dividends Distributed to Minority Shareholders for the Current Period | Balance of Minority Shareholder's Equity at the End of the Period |
| Jingliang (Tianjin) Grain and Oil Industry Co., Ltd. | 30 | 5,696,156.52 | 247,200,159.58 | |
| Zhejiang Xiao Wang Zi Food Co., Ltd. | 30.2284 | 37,970,467.73 | 8,838,053.70 | 262,136,908.18 |
| Jingliang (Hebei) Oil Industry Co., Ltd. | 30 | 3,063,464.98 | 2,009,000.00 | 37,432,892.43 |
| Jingliang Rural Complex Construction and Operations (Xinyi) Co., Ltd. | 49 | -106,463.45 | 14,252,634.23 |
Name of Subsidiary
| Name of Subsidiary | Shareholding Ratio of Minority Shareholders (%) | Profit And Loss Attributable to Minority Shareholders for the Current Period | Dividends Distributed to Minority Shareholders for the Current Period | Balance of Minority Shareholder's Equity at the End of the Period |
| Jingliang (Caofeidian) Agricultural Development Co., Ltd. | 49 | -309,338.96 | 24,033,762.48 |
(3) Important financial information on major non-wholly-owned subsidiaries
| Name of Subsidiary | Ending Balance | |||||
| Current Assets | Non-current Assets | Total Assets | Current Liabilities | Non-current Liabilities | Total Liabilities | |
| Jingliang (Tianjin) Grain and Oil Industry Co., Ltd. | 649,743,907.75 | 818,631,677.47 | 1,468,375,585.22 | 587,965,574.01 | 56,409,479.27 | 644,375,053.28 |
| Zhejiang Xiao Wang Zi Food Co., Ltd. | 361,264,401.11 | 509,389,952.91 | 870,654,354.02 | 122,737,979.36 | 22,409,424.73 | 145,147,404.09 |
| Jingliang (Hebei) Oil Industry Co., Ltd. | 311,637,220.63 | 87,738,015.01 | 399,375,235.64 | 322,979,490.79 | 2,086.83 | 322,981,577.62 |
| Jingliang Rural Complex Construction and Operations (Xinyi) Co., Ltd. | 28,561,809.81 | 473,290.08 | 29,035,099.89 | 3,596.00 | 3,596.00 | |
| Jingliang (Caofeidian) Agricultural Development Co., Ltd. | 67,396,596.62 | 556,027.91 | 67,952,624.53 | 18,904,129.67 | 18,904,129.67 | |
(Continued)
| Name of Subsidiary | Beginning balance | |||||
| Current Assets | Non-Current Assets | Total Assets | Current Liabilities | Non-current Liabilities | Total Liabilities | |
| Jingliang (Tianjin) Grain and Oil Industry Co., Ltd. | 643,318,329.95 | 864,787,149.34 | 1,508,105,479.29 | 648,070,966.90 | 55,021,168.86 | 703,092,135.76 |
| Zhejiang Xiao Wang Zi Food Co., Ltd. | 434,538,712.02 | 384,616,054.08 | 819,154,766.10 | 139,320,269.31 | 58,435,800.61 | 197,756,069.92 |
| Jingliang Missme Catering Management (Tianjin) Co., Ltd. | 13,594,754.60 | 5,617,783.27 | 19,212,537.87 | 1,130,642.10 | 1,130,642.10 | |
| Jingliang Xinchuang (Tianjin) Business Management Co., Ltd. | 13,018,932.12 | 6,647.74 | 13,025,579.86 | 293,084.18 | 293,084.18 | |
| Jingliang (Hebei) Oil Industry Co., Ltd. | 389,424,891.03 | 91,971,278.94 | 481,396,169.97 | 407,110,951.30 | 43,530.00 | 407,154,481.30 |
Name of Subsidiary
| Name of Subsidiary | Beginning balance | |||||
| Current Assets | Non-Current Assets | Total Assets | Current Liabilities | Non-current Liabilities | Total Liabilities | |
| Jingliang Rural Complex Construction and Operations (Xinyi) Co., Ltd. | 29,196,334.52 | 386,000.53 | 29,582,335.05 | 354.00 | 354.00 | |
| Jingliang (Caofeidian) Agricultural Development Co., Ltd. | 51,880,588.02 | 321,598.36 | 52,202,186.38 | 2,522,387.52 | 2,522,387.52 | |
(Continued)
| Name of Subsidiary | Last Term Amount | |||
| Operating Income | Net Profit | Total Comprehensive Income | Cash Flow from Operating Activities | |
| Jingliang (Tianjin) Grain and Oil Industry Co., Ltd. | 3,919,504,928.54 | 22,896,848.34 | 22,896,848.34 | 435,618,691.23 |
| Zhejiang Xiao Wang Zi Food Co., Ltd. | 816,635,284.45 | 116,951,262.54 | 116,951,262.54 | 168,379,658.04 |
| Jingliang Missme Catering Management (Tianjin) Co., Ltd. | 2,832,037.42 | -1,687,536.07 | -1,687,536.07 | -4,659,278.55 |
| Jingliang Xinchuang (Tianjin) Business Management Co., Ltd. | 358,518,101.34 | 1,382,769.51 | 1,382,769.51 | -2,896,047.51 |
| Jingliang (Hebei) Oil Industry Co., Ltd. | 333,656,272.19 | 7,628,706.23 | 7,628,706.23 | -84,637,445.91 |
| Jingliang Rural Complex Construction and Operations (Xinyi) Co., Ltd. | -418,018.95 | -418,018.95 | -609,445.51 | |
| Jingliang (Caofeidian) Agricultural Development Co., Ltd. | -320,201.14 | -320,201.14 | -8,935,818.31 | |
(Continued)
| Name of Subsidiary | Amount This Year | |||
| Operating income | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Jingliang (Tianjin) Grain and Oil Industry Co., Ltd. | 3,430,996,815.48 | 18,987,188.41 | 18,987,188.41 | 232,318,428.44 |
| Zhejiang Xiao Wang Zi Food Co., Ltd. | 851,434,597.05 | 133,345,867.36 | 133,345,867.36 | 133,234,182.94 |
| Jingliang Missme Catering Management (Tianjin) Co., Ltd. | ||||
| Jingliang Xinchuang (Tianjin) Business Management Co., Ltd. | -14,376.89 | -14,376.89 | -12,757,940.11 | |
| Jingliang (Hebei) Oil Industry Co., Ltd. | 568,997,293.50 | 6,251,969.35 | 6,251,969.35 | 43,354,962.74 |
| Jingliang Rural Complex Construction and Operations (Xinyi) Co., Ltd. | -550,477.16 | -550,477.16 | -4,040,549.63 | |
Name of Subsidiary
| Name of Subsidiary | Amount This Year | |||
| Operating income | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Jingliang (Caofeidian) Agricultural Development Co., Ltd. | 22,700,740.36 | -631,304.00 | -631,304.00 | 3,109,638.50 |
2. The share of owner's equity in the subsidiary has changed and it still controls the transactions of thesubsidiary.
None.
3. Equity in Joint Ventures or Affiliates
(1) Important Joint Ventures or Affiliates
| Name of Joint Venture or Affiliate | Principle Place of Business | Registered Place | Nature of Business | Shareholding Ratio (%) | Accounting Treatment Methods for Investment in Joint Ventures or Affiliates | |
| Direct | Indirect | |||||
| Beijing Zhengda Feed Co., Ltd. | Niulan Mountain, Shunyi District, Beijing | Niulan Mountain, Shunyi District, Beijing | Manufacturer | 50.00 | Equity method | |
| SINOGRAIN (Tianjin) Warehousing Logistics Co., Ltd. | No. 1, Lingang Economic Zone, Binhai New Area of Tianjin | No. 1, Lingang Economic Zone, Binhai New Area of Tianjin | Transportation and warehousing | 30.00 | Equity method | |
| Jingliang Missme Catering Management (Tianjin) Co., Ltd. | Tianjin Pilot Free Trade Zone (Dongjiang Free Trade Port Area) | Tianjin Pilot Free Trade Zone (Dongjiang Free Trade Port Area) | Manufacturer | 48.00 | Equity method | |
(2) Important financial information on major joint ventures
| Item | Beijing Zhengda Feed Co., Ltd. | Beijing Zhengda Feed Co., Ltd. |
| Ending Balance/Current Amount | Beginning Balance/Last Term Amount | |
| Current assets | 38,402,384.29 | 53,128,106.97 |
| Including: cash and cash equivalents | 2,851,108.24 | 4,164,426.47 |
| Non-current assets | 166,838,127.64 | 166,435,292.09 |
| Total assets | 205,240,511.93 | 219,563,399.06 |
| Current liabilities | 65,443,549.59 | 95,250,888.23 |
| Non-current liabilities | ||
| Total liabilities | 65,443,549.59 | 95,250,888.23 |
| Minority shareholder's equity | ||
| Shareholders' equity attributable to the parent company | 139,796,962.34 | 124,312,510.83 |
| Share of net assets based on shareholding ratio | 69,898,481.17 | 62,156,255.42 |
| Adjustments | 2,918,088.13 | 3,183,368.86 |
Item
| Item | Beijing Zhengda Feed Co., Ltd. | Beijing Zhengda Feed Co., Ltd. |
| Ending Balance/Current Amount | Beginning Balance/Last Term Amount | |
| -- Goodwill | ||
| -- Unrealized profits from internal transactions | ||
| -- Other | 2,918,088.13 | 3,183,368.86 |
| Book value of equity investment in joint ventures | 72,816,569.30 | 65,339,624.28 |
| Fair value of equity investment in joint ventures with open offers | ||
| Operating income | 269,935,049.46 | 412,682,400.89 |
| Financial costs | -2,443,395.79 | -2,079,697.84 |
| Income tax expense | 5,150,946.69 | 5,510,663.98 |
| Net profit | 15,189,299.51 | 16,057,882.06 |
| Net profit from discontinued operations | ||
| Other comprehensive income | 295,152.00 | -489,060.00 |
| Total comprehensive income | 15,484,451.51 | 15,568,822.06 |
| Dividends received from joint ventures in the current period |
(3) Important financial information on major affiliates
| Item | Ending Balance/Current Amount | Beginning Balance/Last Term Amount |
| SINOGRAIN (Tianjin) Warehousing Logistics Co., Ltd. | SINOGRAIN (Tianjin) Warehousing Logistics Co., Ltd. | |
| Current assets | 97,971,129.85 | 120,310,983.11 |
| Non-current assets | 384,616,624.25 | 349,183,791.13 |
| Total assets | 482,587,754.10 | 469,494,774.24 |
| Current liabilities | 10,362,807.69 | 19,419,434.80 |
| Non-current liabilities | 80,103,443.80 | 58,450,000.00 |
| Total liabilities | 90,466,251.49 | 77,869,434.80 |
| Minority shareholder's equity | ||
| Shareholders' equity attributable to the parent company | 392,121,502.61 | 391,625,339.44 |
| Share of net assets based on shareholding ratio | 117,636,450.78 | 117,487,601.83 |
| Adjustments | ||
| -- Goodwill | ||
| -- Unrealized profits from internal transactions |
Item
| Item | Ending Balance/Current Amount | Beginning Balance/Last Term Amount |
| SINOGRAIN (Tianjin) Warehousing Logistics Co., Ltd. | SINOGRAIN (Tianjin) Warehousing Logistics Co., Ltd. | |
| -- Other | ||
| Book value of equity investment in affiliates | 117,636,450.78 | 117,487,601.83 |
| Fair value of equity investment in affiliates with open offers | ||
| Operating income | 28,173,217.37 | 20,533,721.00 |
| Net profit | 496,163.17 | 5,017,654.54 |
| Net profit from discontinued operations | ||
| Other comprehensive income | ||
| Total comprehensive income | 496,163.17 | 5,017,654.54 |
| Dividends received from affiliates in the current period |
IX. Risks Related to Financial InstrumentsThe Company's principal financial instruments include equity investment, creditors' investment, borrowing, accountsreceivable, accounts payable, etc. See relevant items under Section VI of the Notes for details about financial instruments.The risks associated with these financial instruments and the risk management policies adopted by the Company to reducesuch risks are described below. The Company's management manages and monitors these risk exposures to ensure that suchrisks are controlled within the restricted range.
The Company adopts the sensitivity analysis technology to analyze the possible influences of reasonable and possiblechanges of risk variables on current profits and losses or shareholders' equity. Since a risk variable seldom changes by itselfand the correlation between variables will have a significant impact on the final amount of change caused by a risk variable,the following content is base on the assumption that each variable changes independently.
(1) Risk Management Objectives and Policies
The Company's engagement in risk management is aimed at striking a proper balance between risk and profit,minimizing the negative impact of risk on the Company's operating performance and maximizing the interests ofshareholders and other equity investors. In view of the above objectives of risk management, the Company's basic strategyfor risk management is to identify and analyze all risks faced by the Company, establish the appropriate bottom line for risktolerance and conduct risk management, carry out timely and reliable supervision of risks and thus control the risks within alimited range.
1. Market Risks
(1) Foreign Exchange Risk
Foreign exchange risk refers to the risk of loss caused by exchange rate movements. The Company's foreign exchangerisk is mainly related to US dollar. Apart from the Company's several subsidiaries that settle their purchasing and sellingbusinesses in US dollar, the Company's other main business activities are settled in RMB. As of December 31, 2018, theassets and liabilities of the Company are settled in RMB, except that the assets or liabilities mentioned in the following tableare settled in US dollar. Foreign exchange risks arising from assets and liabilities settled in such foreign currencies may havean impact on the Company's operating performance.
| Item | Ending Balance | Opening Balance |
Item
| Item | Ending Balance | Opening Balance |
| Cash and cash equivalents | 6,768,083.00 | 7,539,126.64 |
| Accounts receivable | 1,590,894.85 | |
| Accounts payable | 134,399.21 | 35,438,402.24 |
| Short-term loans | 29,017,580.91 |
Note: The Company pays close attention to the impact of exchange rate movements on the Group.
(2) Sensitivity analysis on foreign exchange risk:
The Company adopts the sensitivity analysis technology to analyze the possible influences of reasonable and possiblechanges of risk variables on current profits and losses or owner's equity. Since a risk variable seldom changes by itself andthe correlation between variables will have a significant impact on the final amount of change caused by a risk variable, thefollowing content is base on the assumption that each variable changes independently.
On the assumption that foreign currency assets and liabilities remain relatively stable and other variables remainunchanged, the possible reasonable changes in exchange rates have the following after-tax influences on current profits andlosses and equities:
| Item | Change in Exchange Rate | Current period | |
| Influence on Profits | Influence on Shareholders' Equity | ||
| All foreign currencies | Appreciate by 5% against RMB | 411,217.15 | 411,217.15 |
| All foreign currencies | Depreciate by 5% against RMB | -411,217.15 | -411,217.15 |
2. Credit Risk
On December 31, 2019, the largest credit risk exposure that may cause financial loss to the Company mainly comesfrom the loss on financial assets of the Company due to the failure of the other party to perform its obligations, including:
Book value of financial assets recognized in the consolidated balance sheet; for a financial instrument measured at fairvalue, its book value reflects its risk exposure instead of their biggest risk exposure, and its biggest risk exposure may varywith the change of its future fair value.
In order to reduce the credit risk, the Company sets relevant policies to control its exposure, sets corresponding creditperiods based on customer’s financial position, possibility of obtaining guarantees from third parties, credit records andother factors such as current market conditions and other credit qualifications for customer assessment, and implementsother monitoring procedures to ensure that necessary measures are taken to recover overdue credits. In addition, theCompany reviews the collection of individual account receivables on each balance sheet date in order to make sufficientprovision for bad debts for uncollectable amounts. Therefore, the Company's management believes that the Company'scredit risk has been greatly reduced.
The liquidity funds of the Company are deposited in banks with high credit rating, so the credit risk of liquidity funds islow.
3. Liquidity Risk
When managing liquidity risk, the Company keeps and monitors adequate cash and cash equivalents approved by itsmanagement in order to meet the Company's business needs and reduce the influences of cash flow fluctuations. TheCompany's management monitors the use of bank loans and ensures the performance of loan agreements.
The Company uses bank loans as its main source of funds. On December 31, 2019, the amount of bank loans that havenot been used by the Company was RMB 46.70 billion.
As of December 31, 2019, the undiscounted cash flow of Company's financial assets and liabilities under contracts isshown below by due date:
Item
| Item | Ending Balance | |||||
| Net Book Value | Original Book Value | Within One Year | 1 To 2 Years | 2 To 5 Years | Above Five Years | |
| Monetary funds | 557,168,512.39 | 557,168,512.39 | 557,168,512.39 | |||
| Transactional financial assets | 161,300,000.00 | 161,300,000.00 | 161,300,000.00 | |||
| Derivative financial assets | 88,792,254.00 | 88,792,254.00 | 88,792,254.00 | |||
| Notes payable and receivables | 80,743,986.81 | 82,255,854.77 | 82,255,854.77 | |||
| Other receivables | 19,220,097.34 | 19,457,997.1700 | 19,457,997.1700 | |||
| Investment in other equity instruments | 20,000,000.00 | 30,500,000.00 | 30,500,000.00 | |||
| Subtotal | 927,224,850.54 | 939,474,618.33 | 939,474,618.33 | |||
| Short-term loans | 1,329,238,701.60 | 1,329,238,701.60 | 1,329,238,701.60 | |||
| Notes payable and accounts payable | 130,568,413.43 | 130,568,413.43 | 130,568,413.43 | |||
| Other payables | 96,171,396.23 | 96,171,396.23 | 96,171,396.23 | |||
| Long-term loans | ||||||
| Subtotal | 1,555,978,511.26 | 1,555,978,511.26 | 1,555,978,511.26 | |||
(Continued)
| Item | Beginning balance | |||||||
| Net Book Value | Original Book Value | Within One Year | 1 to 2 Years | 2 to 5 Years | Above Five Years | |||
| Monetary funds | 924,870,016.78 | 924,870,016.78 | 924,870,016.78 | |||||
| Derivative financial assets | 71,260,414.60 | 71,260,414.60 | 71,260,414.60 | |||||
| Notes payable and receivables | 97,775,710.11 | 98,642,588.11 | 98,642,588.11 | |||||
| Other receivables | 18,256,513.93 | 18,573,440.150 | 18,573,440.150 | |||||
| Non-current assets due within one year | ||||||||
| Available-for-sale financial assets | 20,000,000.00 | 30,500,000.00 | 30,500,000.00 | |||||
Item
| Item | Beginning balance | |||||||
| Net Book Value | Original Book Value | Within One Year | 1 to 2 Years | 2 to 5 Years | Above Five Years | |||
| Subtotal | 1,132,162,655.42 | 1,143,846,459.64 | 1,143,846,459.64 | |||||
| Short-term loans | 1,437,715,080.91 | 1,437,715,080.91 | 1,437,715,080.91 | |||||
| Notes payable and accounts payable | 140,564,713.11 | 140,564,713.11 | 140,564,713.11 | |||||
| Other payables | 111,288,708.99 | 111,288,708.99 | 111,288,708.99 | |||||
| Subtotal | 1,689,568,503.01 | 1,689,568,503.01 | 1,689,568,503.01 | |||||
4. Interest Rate Risk
The Company's interest rate risk mainly arises from bank loans. The financial liabilities at floating interest rates bringthe Company the interest rate risk on cash flow, while the financial liabilities at fixed interest rates bring the Company theinterest rate risk on fair value. The Company decides the relative proportion of fixed interest rate contracts and floatinginterest rate contracts according to the current market environment.As of December 31, 2019, the Company's interest-bearing liabilities under floating rate contracts denominated in RMBamounted to RMB 513,364,201.60, and those under fixed rate contracts denominated in RMB amounted to RMB815,874,500.00.X. Disclosure of Fair Values
1. Fair values of assets and liabilities measured at fair value at the end of the period
| Item | Fair Values at the End of the Period | |||
| First Level Fair Value Measurement | Second Level Fair Value Measurement | Third Level Fair Value Measurement | Total | |
| I. Continuous fair value measurement | ||||
| （一）Transactional financial assets | 250,092,254.00 | 250,092,254.00 | ||
| (I) Financial assets that are measured at fair value and whose changes are included in the current profits and losses | 88,792,254.00 | 88,792,254.00 | ||
| (1)Derivative financial assets | ||||
| (II) Financial assets designated as fair value through profit or loss | 161,300,000.00 | 161,300,000.00 | ||
| (1) Investment in debt Instruments | ||||
| (2) Investment in equity instruments | ||||
| (3) Others | 161,300,000.00 | 161,300,000.00 | ||
| Total assets continuously measured at fair value | 250,092,254.00 | 250,092,254.00 | ||
2. Basis for determining market prices of continuous and non-continuous first level fair value measurementitems
Note: The Company makes offers for first level fair value measurement according to open contracts of the futuresexchange and the quote from the bank on financial product at the end of the period.
XI. Related Parties and Related-Party Transactions
1. Parent Company of the Company
Name of Parent Company
| Name of Parent Company | Registered Place | Nature of Business | Registered Capital (ten thousand Yuan) | Proportion of Shares Held by Parent Company in the Company (%) | Proportion of Voting Power Held by Parent Company in the Company (%) |
| Beijing Grain Group Co. Ltd. | Beijing | Investment Management | 90,000.00 | 42.06 | 42.06 |
Note: The ultimate controlling party of the Company is Beijing Capital Agribusiness Group Co., Ltd.
2. Subsidiaries of the Company
See 1. Equity in Subsidiaries under Section VIII of the Notes for details.
3. Joint Ventures and Affiliates of the Company
See 3. Equity in Joint Ventures or Affiliates under Section VIII of the Notes for details on major joint ventures oraffiliates.The information on other joint ventures or affiliates that have related party transactions with the Company in thecurrent period or have balances of related party transactions with the Company in the previous period is as follows:
| Name of Joint Venture or Affiliate | Relationship with the Company |
| Beijing Zhengda Feed Co., Ltd. | Joint venture |
| SINOGRAIN (Tianjin) Warehousing Logistics Co., Ltd. | Affiliate |
| Jingliang Missme Catering Management (Tianjin) Co., Ltd. | Affiliate |
4. Other Related Parties
| Name of Other Related Party | Relationship with the Company |
| Beijing Dahongmen Grain Purchasing & Storage Warehouse | Controlled by the ultimate controlling party |
| Beijing Daxing National Grain Purchasing & Storage Warehouse | Controlled by the ultimate controlling party |
| Beijing Southeast Suburb Grain Warehouse | Controlled by the ultimate controlling party |
| Beijing Guchuan Fuxing Food Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Guchuan Rice Industry Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Guchuan Food Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Hongyuanli Rations Supply Station | Controlled by the ultimate controlling party |
| Beijing Jingliang Dacang Grain and Oil Trade Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Jingliang Dagu Grain and Oil Trade Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Jingliang E-commerce Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Jingliang Dongfang Grain and Oil Trade Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Jingliang Gurun Trade Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Jingliang Biotechnology Industry Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Jingliang Logistics Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Jingliang Yunhe Grain and Oil Trade Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Jingliang Real Estate Co., Ltd. | Controlled by the ultimate controlling party |
Name of Other Related Party
| Name of Other Related Party | Relationship with the Company |
| Beijing Jingmen Liangshi State-owned Asset Management Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Juncheng Nuoyuan Grain and Oil Purchase and Sale Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Lanfeng Vegetable Distribution Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Grain Group Finance Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Longde Business Management Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Nanjiao Agricultural Production Management Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Niannian Haohe Rations Supply Station | Controlled by the ultimate controlling party |
| Beijing Sanyuan Petroleum Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Sanyuan Seed Technology Co., Ltd. Feed Branch | Controlled by the ultimate controlling party |
| Beijing Dahongmen Grain Purchasing & Storage Warehouse Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Dahongmen Oil Plant | Controlled by the ultimate controlling party |
| Beijing Haidian West Suburb Grain and Oil Supply Station | Controlled by the ultimate controlling party |
| Beijing Jingcheng Auto Driving Technical School | Controlled by the ultimate controlling party |
| Beijing Liangguan Grain and Oil Supply Station | Controlled by the ultimate controlling party |
| Beijing Institute of Food Science | Controlled by the ultimate controlling party |
| Beijing Longqing Xiadu Rations Supply Station | Controlled by the ultimate controlling party |
| Beijing Maliandao Grain and Oil Special Supply Station | Controlled by the ultimate controlling party |
| Beijing South Suburb Grain Purchasing & Storage Warehouse | Controlled by the ultimate controlling party |
| Beijing Nanyuan Vegetable Oil Plant | Controlled by the ultimate controlling party |
| Beijing Pinggu Grain and Oil Industry and Trade Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Food Supply Department No. 34 Supply Section | Controlled by the ultimate controlling party |
| Beijing Shunyi Grain and Oil Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Tiangu Grain and Oil Trade Co., Ltd. | Controlled by the ultimate controlling party |
| Supply Station of Beijing Tongzhou Grain and Oil Trading Company | Controlled by the ultimate controlling party |
| Beijing Nouthwest Suburb Grain Warehouse | Controlled by the ultimate controlling party |
| Beijing Northwest Suburb Grain Purchasing & Storage Warehouse | Controlled by the ultimate controlling party |
| Beijing Sesame Oil Plant | Controlled by the ultimate controlling party |
| Beijing Yonghe Xincheng Grain and Oil Supply Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Assistant Rations Supply Station | Controlled by the ultimate controlling party |
| Beijing Army Grain and Oil Supply Station | Controlled by the ultimate controlling party |
| Beijing Shounong Animal Husbandry Development Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Wuhuan Shuntong Supply Chain Management Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Xingshishang Trade Center | Controlled by the ultimate controlling party |
| Beijing Yuma Motor Vehicle Training Ground Co., Ltd. | Controlled by the ultimate controlling party |
| Beijing Yuanjishun Rations Supply Station | Controlled by the ultimate controlling party |
Name of Other Related Party
| Name of Other Related Party | Relationship with the Company |
| Beijing Zhibohui Architectural Design Institute Co., Ltd. | Controlled by the ultimate controlling party |
| Hebei Shounong Modern Agricultural Technology Co., Ltd. | Controlled by the ultimate controlling party |
| Jingliang (Tianjin) E-commerce Co., Ltd. | Controlled by the ultimate controlling party |
| Jingliang (Tianjin) Trade Development Co., Ltd. | Controlled by the ultimate controlling party |
| Jingliang Huayuan (Beijing) Agricultural High-tech Co., Ltd. | Controlled by the ultimate controlling party |
| Shandong Fukuan Bioengineering Co., Ltd. | Controlled by the ultimate controlling party |
| China Integrated Research Center for Meat Products | Controlled by the ultimate controlling party |
5. Related-party Transactions
(1) Related-party transactions for purchase and sale of goods and provision and acceptance of labor services
① Purchase of goods or acceptance of labor services
| Related Party | Related-party Transaction | Current Amount | Last Term Amount |
| Beijing Guchuan Food Co., Ltd. | Purchase of goods | 13,274,529.45 | 17,173,511.19 |
| Beijing Guchuan Rice Industry Co., Ltd. | Purchase of goods | 1,644,568.82 | 2,537,794.80 |
| Beijing Jingliang E-commerce Co., Ltd. | Purchase of goods | 2,615,077.63 | |
| Shandong Fukuan Bioengineering Co., Ltd. | Purchase of goods | 1,218,650.72 | 1,287,901.32 |
| Beijing Jingliang Dongfang Grain and Oil Trade Co., Ltd. | Purchase of goods | 158,104.64 | 221,825.63 |
| Beijing Grain Group Co. Ltd. | Purchase of goods | 32,075.47 | |
| Beijing Beishui Food Industry Limited | Purchase of goods | 23,237.58 | |
| Beijing Er Shang Dahongmen Poultry Food Limited | Purchase of goods | 101,205.53 | |
| Beijing Er Shang Gongyifu Food Limited | Purchase of goods | 70,286.43 | |
| Beijing Er Shang Longhe Food Limited | Purchase of goods | 35,615.04 | |
| Beijing Er Shang Moqi Zhonghong Food Linited | Purchase of goods | 3,173.10 | |
| Beijing Er Shang Wangzhihe Food Limited | Purchase of goods | 87,887.76 | |
| Beijing Liubiju Food Limited | Purchase of goods | 69,868.58 | |
| Beijing Sanyuan Food Co. Ltd | Purchase of goods | 316,219.35 | |
| Beijing WuhuanShuntong Supply Chain management Limited | Purchase of goods | 31,796.95 | |
| Beijing Yueshengzhai Halal Food Limited | Purchase of goods | 111,127.87 |
Note: The price of a related-party transaction shall be equal to the price charged for a unrelated-party transaction that is sameas or similar to such related-party transaction.
② Sale of goods/provision of labor services
| Related Party | Related-party Transaction | Current Amount | Last Term Amount |
Related Party
| Related Party | Related-party Transaction | Current Amount | Last Term Amount |
| Beijing Jingliang Dacang Grain and Oil Trade Co., Ltd. | Sale of goods | 20,288.29 | |
| Beijing Pinggu Grain and Oil Industry and Trade Co., Ltd. | Sale of goods | 2,672.73 | 6,486.48 |
| Beijing Jingliang Dongfang Grain and Oil Trade Co., Ltd. | Sale of goods | 6,752,881.06 | 6,365,528.55 |
| Beijing Guchuan Food Co., Ltd. | Sale of goods | 2,521,048.16 | 2,568,946.46 |
| Jingliang (Tianjin) E-commerce Co., Ltd. | Sale of goods | 113,831.89 | 112,739.62 |
| Beijing Guchuan Rice Industry Co., Ltd. | Sale of goods | 713,247.71 | 617,148.71 |
| Beijing Jingliang E-commerce Co., Ltd. | Sale of goods | 1,011,202.58 | 6,553,286.58 |
| Beijing Jingliang Logistics Co., Ltd. | Sale of goods | 46,842.97 | 1,351.35 |
| Beijing Haidian West Suburb Grain and Oil Supply Station | Sale of goods | 11,131,081.79 | |
| Beijing Assistant Rations Supply Station | Sale of goods | 5,968,090.31 | |
| Beijing Army Grain and Oil Supply Station | Sale of goods | 4,051,022.07 | |
| Beijing Longqing Xiadu Rations Supply Station | Sale of goods | 589,538.05 | |
| Beijing Maliandao Grain and Oil Special Supply Station | Sale of goods | 3,181,286.36 | |
| Beijing Jingliang Real Estate Co., Ltd. | Sale of goods | 260,904.42 | 39,835.13 |
| Beijing Nanyuan Vegetable Oil Plant | Sale of goods | 12,793.80 | |
| Beijing Grain Group Finance Co., Ltd. | Sale of goods | 2,068.97 | |
| Beijing Institute of Food Science | Sale of goods | 6,708.36 | 7,884.24 |
| Beijing Xingshishang Trade Center | Sale of goods | 6,837.84 | |
| Beijing Yuanjishun Rations Supply Station | Sale of goods | 66,666.67 | |
| Beijing Jingliang Yunhe Grain and Oil Trade Co., Ltd. | Sale of goods | 233,836.12 | 254,714.16 |
| Beijing Longde Business Management Co., Ltd. | Sale of goods | 77,727.27 | 19,819.20 |
| Beijing Hongyuanli Rations Supply Station | Sale of goods | 900,599.52 | |
| Beijing Guchuan Fuxing Food Co., Ltd. | Sale of goods | 347.27 | |
| Beijing Jingliang Dagu Grain and Oil Trade Co., Ltd. | Sale of goods | 88,822.07 | |
| Beijing Jingliang Biotechnology Industry Co., Ltd. | Sale of goods | 8,886.11 | 2,276.18 |
| Beijing Jingmen Liangshi State-owned Asset Management Co., Ltd. | Sale of goods | 2,863.64 | |
| Beijing Juncheng Nuoyuan Grain and Oil Purchase and Sale Co., Ltd. | Sale of goods | 1,881,534.61 | 2,066,703.52 |
| Beijing Lanfeng Vegetable Distribution Co., Ltd. | Sale of goods | 48,458.32 | |
| Beijing Nanjiao Agricultural Production Management Co., Ltd. | Sale of goods | 6,954.55 | |
| Beijing Sanyuan Petroleum Co., Ltd. | Sale of goods | 1,428.60 | 1,980.35 |
Related Party
| Related Party | Related-party Transaction | Current Amount | Last Term Amount |
| Beijing Sanyuan Seed Technology Co., Ltd. Feed Branch | Sale of goods | 21,335,658.32 | 6,115,726.92 |
| Beijing Jingcheng Auto Driving Technical School | Sale of goods | 5,189.66 | |
| Beijing Food Supply Department No. 34 Supply Section | Sale of goods | 951,982.83 | |
| Beijing Shunyi Grain and Oil Co., Ltd. | Sale of goods | 35,808.62 | |
| Beijing Yonghe Xincheng Grain and Oil Supply Co., Ltd. | Sale of goods | 1,011,374.44 | 791,985.23 |
| Beijing Shounong Animal Husbandry Development Co., Ltd. | Sale of goods | 13,002.86 | 12,883.33 |
| Beijing Capital Agribusiness Group Co., Ltd. | Sale of goods | 14,954.20 | 909.09 |
| Beijing Wuhuan Shuntong Supply Chain Management Co., Ltd. | Sale of goods | 2,623,304.40 | 102,800.01 |
| Beijing Yuma Motor Vehicle Training Ground Co., Ltd. | Sale of goods | 4,077.59 | |
| Beijing Zhibohui Architectural Design Institute Co., Ltd. | Sale of goods | 9,545.45 | 3,531.53 |
| Hebei Shounong Modern Agricultural Technology Co., Ltd. | Sale of goods | 14,391,575.42 | 7,127,624.97 |
| China Integrated Research Center for Meat Products | Sale of goods | 11,348.18 | 6,605.64 |
| Beijing Baijiayi Food Limited | Sale of goods | 537,436.35 | |
| Beijing Northern Jingtang Yangjiu Sales limited | Sale of goods | 69,201.68 | |
| Beijing Beishui Yongxing Seafood Sales Limited | Sale of goods | 780.53 | |
| Beijing Damofang Flour Limited | Sale of goods | 2,244.51 | |
| Beijing Daxing State Grain Reserves | Sale of goods | 18,927.28 | |
| Beijing Er Shang Dahongmen Poultry Food Limited | Sale of goods | 2,800.00 | |
| Beijing Er Shang Gongyifu Food Limited | Sale of goods | 89,716.61 | |
| Beijing Er Shang Groups Limited | Sale of goods | 1,506.90 | |
| Beijing Er Shang Longhe Food Limited | Sale of goods | 30,510.27 | |
| Beijing Er Shang Wangzhihe Food Limited | Sale of goods | 7,384,328.98 | |
| Beijing Er Shang Yihe Sunshine Property Management Limited | Sale of goods | 9,688.07 | |
| Beijing Hongyuan Lijun Grain and Oil Supply Limited | Sale of goods | 635,017.51 | |
| Beijing Jingliang Taihe Real Estate Limited | Sale of goods | 4,489.04 | |
| Beijing Jingliang Taiyu Real Estate Limited | Sale of goods | 2,244.51 | |
| Beijing Jingliaqng XInda Property Management Limited | Sale of goods | 12,120.37 | |
| Beijing Jingliang XIngye Asset Masnagement Limited | Sale of goods | 3,669.71 | |
| Beijing Liubiju Food Limited | Sale of goods | 2,727.27 | |
| Beijing Longsheng Zhongwang Breakfast Limited | Sale of goods | 1,830.27 | |
| Beijing Maisui Hotel Management Limited | Sale of goods | 31,872.10 |
Related Party
| Related Party | Related-party Transaction | Current Amount | Last Term Amount |
| Beijing Sanyuan Food Co., Ltd. | Sale of goods | 418,081.94 | |
| Beijing Northern Suburb Farm Limited | Sale of goods | 4,896.79 | |
| Beijing Beishui Jialun Seafood Market Limited | Sale of goods | 4,244.86 | |
| Beijing Dahongmen Grain Reserves Limited | Sale of goods | 6,789.00 | |
| Beijing Haidian Western Suburb Grain and Oil Supply Limited | Sale of goods | 12,209,419.51 | |
| Beijing Huacheng Commercial and Trade Limited | Sale of goods | 5,863.63 | |
| Beijing Jingliang Shengyuan Graim and Oil Sales Limited | Sale of goods | 72,318.18 | |
| Beijing Longqing Xiadu Military Grains Supply Limited | Sale of goods | 363,175.15 | |
| Beijing Maliandao Grain and Oil Special Supply Limited | Sale of goods | 3,139,992.55 | |
| Beijing Milk Limited | Sale of goods | 2,400.00 | |
| Beijing Food Supply No. 34 Supply Department Limited | Sale of goods | 1,509,710.74 | |
| Beijing yanqing farm co. LTD | Sale of goods | 3,000.00 | |
| Beijing zibin grain and oil supply co. LTD | Sale of goods | 3,366,310.21 | |
| Beijing sunong supply chain management co. LTD | Sale of goods | 2,784,256.97 | |
| Beijing shounong xiangshan convention center | Sale of goods | 64,267.89 | |
| Beijing aquatic products co. LTD | Sale of goods | 8,678.51 | |
| Beijing xing fashion trading co. LTD | Sale of goods | 16,438.70 | |
| Beijing Great Wall danyu livestock co. LTD | Sale of goods | 2,877.05 | |
| Beijing suojun grain and oil supply co. LTD | Sale of goods | 6,889,083.61 | |
| Beijing grain point to network (Beijing) trading co. LTD | Sale of goods | 2,025.69 |
Note: The price of a related-party transaction shall be equal to the price charged for a unrelated-party transaction that is sameas or similar to such related-party transaction.
(2) Related-party lease
① If the Company is the lessor,
| Name of Lessee | Type of Leased Asset | Lease Income Recognized in the Current Period | Lease Income Recognized in the Prior Period |
| Beijing Guchuan Food Co., Ltd. | Housing | 13,333,333.33 | 13,333,333.33 |
| Beijing Jingliang E-commerce Co., Ltd. | Vehicle leasing | 22,530.26 | 18,839.83 |
| Beijing Jingliang E-commerce Co., Ltd | Factory building | 459,905.62 |
① If the Company is the lessee,
| Name of Lessor | Type of Leased Asset | Lease fee recognized in the current period | Lease fee recognized in the prior period |
| Beijing Grain Group Co. Ltd. | House leasing | 629,912.61 | 2,141,034.06 |
Beijing Dahongmen Grain Purchasing &Storage Warehouse
| Beijing Dahongmen Grain Purchasing & Storage Warehouse | Vehicles, housing | 1,584,230.78 | |
| Beijing Daxing National Grain Purchasing & Storage Warehouse | Oil tank and office leasing | 1,935,963.30 | 1,918,363.64 |
| Beijing Dahongmen Oil Plant | Rent | 320,754.72 | |
| Jingliang (Tianjin) Trade Development Co., Ltd. | House leasing | 36,942.10 | |
| Beijing Jingliang Real Estate Limited | Rent | 1,408,464.67 | |
| Beijing Nanyuan Plant Oil Factory | Warehouse | 323,809.52 |
(3) Related-party guarantee
① If the Company is the guarantor,
| Guaranteed Party | Amount Guaranteed | Effective Date | Due Date | Whether the Guarantee Has Been Fulfilled |
| Jingliang (Singapore) International Trade Co., Ltd. | 268,000,000.00 | March 8, 2019 | The duration of guarantee is 2 years after the due date of the principal creditor’s right | No |
| Beijing Jingliang Oil and Fat Co., Ltd. | 200,000,000.00 | May 14, 2019 | The duration of guarantee is 2 years after the due date of the principal creditor’s righ | No |
| Beijing Jingliang Oil and Fat Co., Ltd. | 500,000,000.00 | May 30, 2019 | One year after the approval of shareholder’s meeting in 2018 | No |
| Jingliang (Tianjin) Grain and Oil Industry Co., Ltd. | 880,000,000.00 | May 30, 2019 | One year after the approval of shareholder’s meeting in 2018 | No |
| Jingliang (Singapore) International Trade Co., Ltd. | 220,000,000.00 | May 30, 2019 | One year after the approval of shareholder’s meeting in 2018 | No |
| Jingliang (Singapore) International Trade Co., Ltd. | 241,500,000.00 | June 11, 2019 | 2 years after the due date of secured debt | No |
(4) Related-party loans at call
The Company has no related-party loans at call this year.
(5) Related-party assets transfer and debt restructuring
| Related Party | Related-party Transaction | Current Amount | Last Term Amount |
| Beijing Sesame Oil Plant | Income from compensation for demolition | 2,963,947.53 | |
| Beijing Nanyuan Vegetable Oil Plant | Income from compensation for demolition | 9,174,312.22 | 9,090,908.89 |
| Beijing jingliang real estate co. LTD | Dispose of the property | 19,775,672.38 |
(6) Remuneration for key management staff
Unit: ten thousand yuan
Item
| Item | Current Amount | Last Term Amount |
| Remuneration for Key Management Staff | 715.23 | 473.98 |
(7) Other related-party transaction
| Related Party | Related-party Transaction | Current Amount | Last Term Amount |
| Beijing Jingliang Real Estate Co., Ltd. | Utilities, information network fees | 326,030.62 | 31,530.33 |
| Beijing Jingliang Dongfang Grain and Oil Trade Co., Ltd. | Income from trademark royalties | 5,282.64 | 11,722.64 |
| Beijing Dahongmen Grain Purchasing & Storage Warehouse Co., Ltd. | Power charge, telephone bill, etc. | 16,846.71 | 88,985.50 |
| Beijing Guchuan Food Co., Ltd. | Income from trademark royalties | 3,136,541.91 | 3,331,153.31 |
| Beijing Guchuan Rice Industry Co., Ltd. | Income from trademark royalties | 226,419.63 | 370,863.21 |
| Jingliang Huayuan (Beijing) Agricultural High-tech Co., Ltd. | Property fee | 2,834,846.17 | |
| Beijing Capital Agribusiness Group Co., Ltd. | Cost of transportation | 18,867.92 | |
| Beijing Guchuan Food Co., Ltd. | Service charge | 56,749.90 | 66,742.77 |
| Beijing Grain Group Co. Ltd. | Interest expense | 6,427,421.40 | |
| Beijing Grain Group Finance Co., Ltd. | Interest expense | 9,193,697.20 | 6,337,413.77 |
| Beijing Grain Group Co. Ltd. | Corporate publicity expenses | 16,037.74 | |
| Beijing Grains Group Limited | Award for new product and new techniques | 20,000.00 | |
| Beijing Daxing State Grain Reserves | Electricity fees | 36,546.21 | |
| Beijing Shounong Group Finance Limited | Interest income | 515,652.24 | |
| Beijing Grain Scientific Research Institute | Technical Service fee | 48,207.55 | |
| Beijing Yuanyisheng Grain and oil Limited | Technical Service fee | 4,358,490.73 | |
| Juye Jingcheng Grain Reserves Limited | Technical Service fee | 1,924,528.37 |
6. Related-party Receivables and Payables
(1) Receivables
| Item | Ending Balance | Beginning Balance | ||
| Book Balance | Provision for Bad Debts | Book Balance | Provision for Bad Debts | |
| Monetary funds | ||||
| Beijing Grain Group Finance Co., Ltd. | 326,474,443.01 | 98,494,825.91 | ||
| Total | 326,474,443.01 | 98,494,825.91 | ||
Item
| Item | Ending Balance | Beginning Balance | ||
| Book Balance | Provision for Bad Debts | Book Balance | Provision for Bad Debts | |
| Receivables: | ||||
| Beijing Guchuan Food Co., Ltd. | 139,100.00 | 370,505.00 | ||
| Beijing Jingliang E-commerce Co., Ltd. | 238,918.00 | 146,333.80 | ||
| Beijing Jingliang Dongfang Grain and Oil Trade Co., Ltd. | 1,122,310.00 | 1,067,408.00 | ||
| Beijing Haidian West Suburb Grain and Oil Supply Station | 7,800.00 | 436,300.00 | ||
| Beijing Assistant Rations Supply Station | 981,204.00 | 1,394,180.00 | ||
| Beijing Liangguan Grain and Oil Supply Station | 37,200.00 | |||
| Jingliang (Tianjin) E-commerce Co., Ltd. | 4,074.00 | |||
| Beijing Baijiayi Food Limited | 110,400.00 | |||
| Beijing Beishui Yongxing Seafood Sales Limited | 882.00 | |||
| Beijing Er Shang Gongyifu Food Limited | 17,226.00 | |||
| Beijing Guchuan Rice Limited | 11,397.00 | |||
| Beijing Junchenghuoyuan Grain and Oil Procurement and Sales Limited | 148,800.00 | |||
| Beijing Sanyuan Seed Science Co., Ltd. Feed Branch | 1,938,842.06 | |||
| Beijing Beishui Jialun Seafood Market Limited | 2,856.00 | |||
| Beijing Shounong Supply Chain Management Limited | 2,880,252.00 | |||
| Beijing Seafood Limited | 2,688.00 | |||
| Beijing Wuhuan Shuntong Supply Chain Management Limited | 289,880.00 | |||
| Hebei Shounong Modern Agriculature Technology Limited | 1,579,153.54 | |||
| Total | 9,471,708.60 | 3,456,000.80 | ||
(2) Payables
| Item | Ending Balance | Beginning balance |
| Short-term loans: |
Item
| Item | Ending Balance | Beginning balance |
| Beijing Grain Group Finance Co., Ltd. | 170,000,000.00 | 280,000,000.00 |
| Total | 170,000,000.00 | 280,000,000.00 |
| Payables: | ||
| Beijing Guchuan Food Co., Ltd. | 211,309.09 | |
| Beijing Jingliang Dongfang Grain and Oil Trade Co., Ltd. | 127.27 | |
| Shandong Fukuan Bioengineering Co., Ltd. | 56,187.93 | |
| Beijing er shang da hong men meat food co. LTD | 11,176.11 | |
| Beijing wuhuan shuntong supply chain management co. LTD | 10,495.41 | |
| Total | 21,671.52 | 267,624.29 |
| Advance receipts: | ||
| Beijing Guchuan Rice Industry Co., Ltd. | 11,988.00 | |
| Beijing Sanyuan Seed Technology Co., Ltd. Feed Branch | 0.01 | |
| Beijing Jingliang E-Commerce Limited | 153,301.88 | |
| Beijing Wuhuan Shuntong Supply Chain Management Limite | 7,524.00 | |
| Total | 160,825.88 | 11,988.01 |
| Other payables: | ||
| Beijing Grain Group Co. Ltd. | 1,137,030.30 | 561,790.30 |
| Beijing Jingliang E-commerce Co., Ltd. | 444,268.80 | 169,728.00 |
| Beijing Dahongmen Oil Plant | 47,025.76 | |
| Beijing nanyuan plant oil factory | 50,360.92 | |
| Jingliang (Tianjin) Trade Development Co., Ltd. | 38,789.20 | |
| Total | 1,631,660.02 | 817,333.26 |
7. Related-party Commitments
The Company has no related-party commitments this year.XII.Share based payment
There are no share based payments incurred this year for the company.XIII. Commitments and Contingencies
1. Major commitments
(1) Capital commitment
On December 21, 2018, the Company signed Agreement of Intent for Stock Acquisition with Wang Yuecheng. TheCompany intends to acquire 25.1149% of the stock shares of Zhejiang Xiao Wang Zi Food Co., Ltd. by cash and issuingshares to purchase assets. After the acquisition, the Company and its wholly-owned subsidiary Beijing Jingliang Food Co.,Ltd. (hereinafter referred to as "Jingliang Food") ultimately hold 94.8865% of the stock shares of Target Company. Since
Wang Yuecheng, the main counter party of this transaction, became the vice-general manager of the Company, according tothe relevant provisions of Rules of Shenzhen Stock Exchange for Flotation of Shares (revised in 2018), it constitutes arelated-party transaction of the Company. As of this financial report date,obtain the unconditional agreement by the ChinaSecurities Regulatory Commission after verification.
(2) Other commitments
1) Zhejiang Xiao Wang Zi Food Co., Ltd. (hereinafter referred to as "Zhejiang Xiao Wang Zi"), the holding subsidiaryof the Company, signed Animation Production Entrustment Contract with Jiangsu Kungfu Family Animation Co., Ltd.(hereinafter referred to as "Kung Fu Family Animation") on December 1, 2016. According to the Contract, entrusted byZhejiang Xiao Wang Zi, Kungfu Family Animation should produce animation Little Prince and Potato Boy,, apply forproject approval to the Radio, Film and Television Bureau, handle the animation publishing license with relevantdepartments and complete production, publication and commercial operation. According to the Contract, Zhejiang XiaoWang Zi should pay a total animation production fee of RMB 45 million (including tax) according to the actual completionprogress. As of the date of this financial report, the first phase of the animation has been produced and broadcast inyouman cartoon, kaoku children, guangdong jiajia cartoon film and television, local television stations and network platform,the company currently has no plan to promote the second phase.
2) The Supplement II to the Profits Compensation Agreement, which was considered and approved at the 7th meeting ofthe 8th Board of Directors of the Company, stipulates that Beijing Jingliang Food Co., Ltd. (hereinafter referred to as"Jingliang Food Company") has committed itself to realize the net profit of no less than RMB 130.1115 million in 2017,RMB 150.3937 million in 2018 and RMB 162.1605 million in 2019, respectively.
The actual net profit of Jingliang Food in the period of profit commitment should be calculated according to thefollowing criteria:
① The financial statements of Jingliang Food Company and its subsidiaries shall be prepared in accordance withAccounting Standards for Business Enterprises, other laws and regulations and the Company's accounting policies andaccounting estimates;
② Unless provided by the laws and regulations or the Company changes its accounting policies and accountingestimates, the accounting policies and accounting estimates of Jingliang Food Company and its subsidiaries shall not bechanged during the period of profit commitment without the approval of the competent authority of Jingliang FoodCompany;
③ Net profit refers to the net profit attributable to the shareholders of parent company after deduction of thenon-recurring gains and losses from the consolidated financial statements. If any share-based payments stipulated in theAccounting Standards for Business Enterprises occur before the completion of this transaction, the net profit for that yearshall be equal to the net profit after elimination of the influence of the above-mentioned share payments. The accumulatedcommitted net profit and the accumulated actual net profit for each year during the period of profit commitment of JingliangFood Company shall also be respectively equal to the accumulated committed net profit and the accumulated actual netprofit after elimination of the influence of the above-mentioned share payments.
2. Contingencies
As of December 31, 2019, the Company has no contingent liabilities that are Contingencies.
XIV. Events after the Balance Sheet Date
1. Major Non-Adjusting Events
As of the financial report date, the company has no important non-adjustment matters that need to be disclosed.
2. Distribution of Profits
On March 26, 2020, the seventh meeting of the ninth board of directors of the company held a meeting to approve noprofit distribution in 2019, which is subject to the approval of the general meeting of shareholders.
XV. Other Important Matters
1. Annuity Plan
On November 18, 2013, the controlling shareholder of Beijing Grain Group Co., Ltd. (hereinafter referred to as "BGG")received Reply of the State-owned Assets Supervision and Administration Commission of the People's Government of BeijingMunicipality to the Establishment of Enterprise Annuity Plan of Beijing Grain Group Co., Ltd. (Beijing State-owned Asset[2013] No. 224), providing that BGG's Request for Reporting of Enterprise Annuity (BGG Enterprise [2013] No. 258)complies with the requirements of Provisional Measures for Trial Implementation of Enterprise Annuity (Decree No. 20 ofthe Ministry of Labor and Social Security) and Guiding Opinions for the Trial Implementation of Enterprise Annuity Systemby State-owned Enterprises in Beijing (Beijing State-owned Asset Audit [2006] No. 77) and approving that thesupplementary old-age insurance and various commercial insurance established by the Company before the implementationof the annuity plan should be terminated automatically and all employees who have participated in the annuity plan will nolonger enjoy social benefits outside of overall planning after retirement.On November 20, 2013,BGG received Reply to the Filing of Annuity Plan of Beijing Grain Group Co., Ltd. (XichengHuman & Social [2013] No. 71) from Beijing Xicheng District Human Resources and Social Security Bureau, requestingthat BGG should strictly implement payment scope and standards and relevant democratic procedures stipulated in the planand actively cooperate in supervision and inspection of relevant departments after filing.
On March 14, 2014, the Company obtained the Certificate of Enterprise Annuity Participation Plan from Ping AnPension Insurance Co., Ltd. The details on the Certificate is listed as follows:
The Company's basic information: Name of Enterprise: Beijing Jingliang Food Co., Ltd.; Enterprise Annuity No.:
C0156482005; the Time of Participation Plan: November 18, 2013; Effective Time of the Plan: March 13, 2014; Plan No.of the Superior Enterprise: C0156482000; Name of the Superior Enterprise: Beijing Jingliang Food Co., Ltd.
Basic information of Annuity Plan: Name of the Plan: Ping An-CITIC Splendid Life Enterprise Annuity Plan;Trustee and Account Manager: Ping An Pension Insurance Co., Ltd; Trustee: CHINA CITIC BANK CORPORATIONLIMITED; Annuity Plan Registration No.: 99JH20120041; Annuity Plan No.: P0807; Plan Type: Collective Plan.
Portfolio: Portfolio Code: 9155; Name of Portfolio: Ping An-CITIC Splendid Life Bond Enhanced Portfolio;Investment Proportion: 100%; Investment Manager: CITIC Securities Co., Ltd.
2. Termination of business
（1）Details of termination of business
Item
| Item | Revenue | Expense | Total profir | Income tax expenses | Net profit | Termination profit or loss that belongs to the parent |
| Jingliang XInchuang (Tianjin) Commercial Management Limited | -14,376.89 | -14,376.89 | -14,376.89 | -14,376.89 |
（2）Continuing operation profit or loss that belongs to the parent for this period is 0.00 Yuan,(previous period 0.00 Yuan), Termination profit or loss that belongs to the parent is -14,376.89 Yuan,(previous period is 1,382,769.51 Yuan
3. Information on Divisions
(1) Basis of determination and accounting policies for reporting of divisions
The Company's businesses consist of food processing, oil and grease and so on according to its internal organizationalstructure, management requirements and internal reporting system. The Company's management regularly evaluates theoperating results of these divisions to determine the allocation of resources to them and evaluate their performance. Theinformation reported by divisions should be disclosed according to the accounting policies and measurement standardsadopted by such divisions when they are reporting to the management. These measurement bases should be consistent withthe accounting and measurement bases for preparation of financial statements.
(2) Reporting of the financial information on divisions
Item
| Item | Food Processing | Oil & Grease | Other | Offset Among Dvisions | Total |
| operating income | 940,762,992.09 | 6,716,523,248.25 | 81,445,801.06 | -298,445,575.86 | 7,440,286,465.54 |
| Operating costs | 643,054,491.71 | 6,411,193,730.77 | 35,799,455.29 | -275,983,920.23 | 6,814,063,757.54 |
| Operating profit | 186,824,427.06 | 96,116,452.21 | 60,784,043.42 | -93,084,320.09 | 250,640,602.60 |
| Net profit attributable to parent company | 137,197,686.13 | 75,642,139.78 | 54,089,066.84 | -133,586,967.00 | 133,341,925.75 |
| Total assets | 957,203,084.42 | 3,206,093,839.27 | 5,994,781,639.47 | -4,926,811,962.97 | 5,231,266,600.19 |
| Total liabilities | 150,932,075.27 | 1,903,850,841.35 | 1,602,921,033.22 | -1,417,532,990.42 | 2,240,170,959.42 |
3. Other
（1）The company held the 30th meeting of 8th Board of Director on 27th November 2018, it is necessary to apply 1billion RMB loan from its main shareholder: Beijing Grains Group Limited for developing soil remediation business, theduration for the loan is 3 years, the interest rate will be determined by the Benchmark interest rate of bank loans in the sameperiod, interest will be calculated according to the actual borrowing days, the company can pay back the loans at earlier dateif the actual situatiuons permits.
（2）As at financial reporting date, because of the issues related to employee placement and the ongoing equity deliveryof the shares of Hainan Pearl River Property and Hotel Management Limited, according to the agreement of asset delivery,all rights and obligations related to put in assets will be handed in to the receiver and will not be influenced by ownershiptransfer procedures. Therefore, this issue will not have significant negative impact for the company.
XVI. Notes to Main Financial Statement Items of Parent Company
1. Accounts Receivable
（1）Disclosed according to aging
| Aging | Ending Balance |
| Within 1 Year | |
| Among them: Within 3 months | |
| 4-12 months | |
| 1 to 2 years | |
| 2 to 3 years | 3,000.00 |
| 3 to 4 years | 51,420.00 |
| 4 to 5 years | 72,000.00 |
| More than 5 years | |
| Sub total | 126,420.00 |
| minus: provision for bad debts | 83,910.00 |
| Total | 42,510.00 |
（2）present according to the method of provision for bad debt
Type(s)
| Type(s) | Ending Balance | ||||
| Book Balance | Bad Debt Provision | Book Value | |||
| Amount | Ratio(%) | Amount | Provision Ratio(%) | ||
| Receivables with separate provision for bad debts | |||||
| Accounts Receivable for Bad Debt Provision Based on Portfolio | |||||
| Portfolio 1 - Age-based accounts receivable | 126,420.00 | 83,910.00 | 42,510.00 | ||
| Portfolio 2 - Related Party Accounts Receivable | |||||
| Portfolio Total | 126,420.00 | 100.00 | 83,910.00 | 66.37 | 42,510.00 |
| Total | 126,420.00 | —— | 83,910.00 | —— | 42,510.00 |
（Continued）
| Type(s) | Beginning Balanc | ||||
| Book Balance | Bad Debt Provision | Book Value | |||
| Amount | Ratio(%) | Amount | Provision Ratio(%) | ||
| Receivables with significant individual amounts and separate provision for bad debts | |||||
| Accounts Receivable for Bad Debt Provision Based on Credit Risk Characteristic Portfolio | |||||
| Portfolio 1 - Age-based accounts receivable | 126,420.00 | 46,434.00 | 79,986.00 | ||
| Portfolio 2 - Related Party Accounts Receivable | |||||
| Portfolio Total | 126,420.00 | 100.00 | 46,434.00 | 36.73 | 79,986.00 |
| Receivables with minor amounts but separate provision for bad debts | |||||
| Total | 126,420.00 | 100.00 | 46,434.00 | —— | 79,986.00 |
A. In portfolio, Accounts Receivable with provision for bad debts is calculated by age analysis method
| Aging | Ending Balance | ||
| Accounts Receivable | Bad Debt Provision | Provision Ratio(%) | |
| Within 1 Year | |||
| Among them: Within 3 months | 0 | ||
| 4-12 months | 2 | ||
| 1 to 2 years | 5 | ||
| 2 to 3 years | 3,000.00 | 600.00 | 20 |
| 3 to 4 years | 51,420.00 | 25,710.00 | 50 |
Aging
| Aging | Ending Balance | ||
| Accounts Receivable | Bad Debt Provision | Provision Ratio(%) | |
| 4 to 5 years | 72,000.00 | 57,600.00 | 80 |
| More than 5 years | 100 | ||
| Total | 126,420.00 | 83,910.00 | —— |
（Continued）
| Aging | Beginning Balanc | ||
| Accounts Receivable | Bad Debt Provision | Provision Ratio(%) | |
| Within 1 Year | |||
| Among them: Within 3 months | 0 | ||
| 4-12 months | 2 | ||
| 1 to 2 years | 3,000.00 | 150.00 | 5 |
| 2 to 3 years | 51,420.00 | 10,284.00 | 20 |
| 3 to 4 years | 72,000.00 | 36,000.00 | 50 |
| 4 to 5 years | 80 | ||
| More than 5 years | 100 | ||
| Total | 126,420.00 | 46,434.00 | —— |
（3） details of bad debt provision
| Items | Beginning Balanc | The amount changed for the period | Ending Balance | ||
| addition | Write-off | Other deduct | |||
| Provision for bad debt | 46,434.00 | 37,476.00 | 83,910.00 | ||
| Total | 46,434.00 | 37,476.00 | 83,910.00 | ||
（4）Accounts Receivable of the Top 5 Balances Collected by Debtors at the End of the Period
| Debtors | total ending balance of accounts receivable | Ratio of the total ending balance of accounts receivable (%) | Ending Balance of Bad Debt Provision |
| Hainan pearl river pipe pile co. LTD | 108,000.00 | 85.43 | 74,700.00 |
| Ceibs agricultural qinhuangdao development co. LTD | 18,420.00 | 14.57 | 9,210.00 |
Debtors
| Debtors | total ending balance of accounts receivable | Ratio of the total ending balance of accounts receivable (%) | Ending Balance of Bad Debt Provision |
| Total | 126,420.00 | 100.00 | 83,910.00 |
2. Other Receivables
| Item | Ending Balance | Beginning Balance |
| Interest receivable | ||
| Dividends receivable | ||
| Other receivables | 12,612,756.48 | 227,353.10 |
| Total | 12,612,756.48 | 227,353.10 |
（1）Other Receivables
A. Disclosed according to aging
| Aging | Ending Balance |
| Within 1 Year | 12,614,861.92 |
| Among them: Within 3 months | 12,509,590.07 |
| 4-12 months | 105,271.85 |
| 1 to 2 years | |
| 2 to 3 years | |
| 3 to 4 years | |
| 4 to 5 years | |
| More than 5 years | 50,000.00 |
| Sub total | 12,664,861.92 |
| minus: provision for bad debts | 52,105.44 |
| Total | 12,612,756.48 |
A. Classification of other receivables by nature of funds
| Nature of Funds | Book Balance at End of Period | Book Balance at Beginning of Year |
| Transactions between related parties | 12,200,000.00 | |
| Pretty cash (for employees, departments) | 105,271.85 | 207,462.10 |
| Receivables for employees | 18,590.07 | 24,040.24 |
| Other accounts | 341,000.00 | 50,000.00 |
| Sub total | 12,664,861.92 | 281,502.34 |
| minus: provision for bad debts | 52,105.44 | 54,149.24 |
| Total | 12,612,756.48 | 227,353.10 |
B. Details about bad debt provision
Provision for bad debt
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit loss in the next 12 months | Expected credit loss for the whole period (no credit impairment) | Expected credit loss for the whole period (with credit impairment) | ||
| Amount on 1st January 2019 | 4,149.24 | 50,000.00 | 54,149.24 | |
| Carrying amount of other receivable on 1st January 2019 that in this period: | ||||
| ——Get into Stage 2 | ||||
| ——Get into Stage 3 | ||||
| ——Get back to Stage 2 | ||||
| ——Get back to Stage 1 | ||||
| Provision for the period | ||||
| Reverse for the period | 2,043.80 | 2,043.80 | ||
| Transfer for the period | ||||
| Write off for the period | ||||
| Other deduct | ||||
| Carrying amount at the end of the period | 2,105.44 | 50,000.00 | 52,105.44 |
C. Details of bad debt provision
| Type | Carrying amount at the beginning | Amount changes for the period | Carrying amount at the end | ||
| addition | Write off | Other deduct | |||
| Bad debt provision | 54,149.24 | 2,043.80 | 52,105.44 | ||
| Total | 54,149.24 | 2,043.80 | 52,105.44 | ||
D. Other receivables according to top five of balance at end of period collected by debtors
| Name of Organization | Nature of Funds | Balance at End of Period | Aging | Proportion in overall ending balance of other receivables (%) | Ending balance of bad debt reserves |
| Beijing jingliang food co. LTD | intercourse funds | 12,200,000.00 | Within 3 months | 96.33 | |
| Ye Guangsheng | Personal payments | 191,000.00 | Within 3 months | 1.51 | |
| Chang-jun liu | Personal payments | 100,000.00 | Within 3 months | 0.79 | |
| Song Wang | A shot in the locker | 50,000.00 | More than 5 years | 0.39 | 50,000.00 |
Name of Organization
| Name of Organization | Nature of Funds | Balance at End of Period | Aging | Proportion in overall ending balance of other receivables (%) | Ending balance of bad debt reserves |
| Yan Yan | A shot in the locker | 46,000.00 | Within 1 year | 0.36 | 920.00 |
| Total | —— | 12,587,000.00 | —— | 99.38 | 50,920.00 |
3. Long-term Equity Investment
(1) Classification of long-term equity investment
| Item | Ending Balance | Beginning Balance | ||||
| Book Balance | Provision for Impairment | Book Value | Book Balance | Provision for Impairment | Book Value | |
| Investment in subsidiaries | 2,377,420,527.10 | 2,377,420,527.10 | 2,375,639,964.05 | 2,375,639,964.05 | ||
| Investment in joint ventures and affiliates | ||||||
| Total | 2,377,420,527.10 | 2,377,420,527.10 | 2,375,639,964.05 | 2,375,639,964.0 | ||
(2) Investment in subsidiaries
| Invested Entity | Beginning Balance | Current Increase | Current Decrease | Ending Balance | Current Provision for Impairment | Ending Balance of Provision for Impairment |
| Beijing Jingliang Food Co., Ltd. | 2,336,639,964.05 | 2,336,639,964.05 | ||||
| Jingliang Rural Complex Construction and Operations (Xinyi) Co., Ltd. | 13,500,000.00 | 1,780,563.05 | 15,280,563.05 | |||
| Jingliang (Caofeidian) Agricultural Development Co., Ltd. | 25,500,000.00 | 25,500,000.00 | ||||
| Total | 2,375,639,964.05 | 1,780,563.05 | 2,377,420,527.10 |
4. Operating income and operating costs
| Item | Current Amount | Last Term Amount | ||
| Income | Cost | Income | Cost | |
| Other businesses | 2,190,925.69 | |||
| Total | 2,190,925.69 | |||
XVII. Additional Information
1. Statement of Current Non-recurring Gains and Losses
| Item | Amount | Description |
| Profit and loss from disposal of non-current assets | 9,027,505.23 | |
| Government subsidies included into the current profits and losses (closely related to the Company's businesses, except for those that should be enjoyed in accordance with | 8,101,718.03 |
Item
| Item | Amount | Description |
| national unified standard quota or fixed quantity) | ||
| Funds occupation fees charged to non-financial enterprises which are included in current profits and losses | 2,086,164.77 | |
| Profit or loss arising from fair value changes due to trading financial assets and trading financial liabilities, and investment income from disposal of trading financial assets, trading financial liabilities and available-for-sale financial assets, except for the effective hedging business related to the Company's normal business activities. | 12,975,866.96 | |
| Other non-operating income and expenditure other than the above items | 9,066,999.54 | |
| Subtotal | 41,258,254.53 | |
| Change in income tax | -9,801,319.33 | |
| Change in minority shareholder's equity (after tax) | -2,598,101.54 | |
| Total | 28,858,833.66 |
Note: For the figures in the non-recurring profit and loss items, “+” indicates profit and income, and “-” indicates loss orexpenditure.
2. Return on Equity and Earnings per Share
| Current Profit | Weighted Return on Average Equity (ROAE) | EPS | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to the Company's common shareholders | 5.70 | 0.19 | 0.19 |
| Net profit attributable to common shareholders after deduction of non-recurring gains and losses | 4.47 | 0.15 | 0.15 |
Hainan Jingliang Holdings Co., Ltd.
28 March 2020