Hangzhou Robam Appliances Co., Ltd.
2019 Semiannual Report
August 2019
Create China’s new kitchenth anniversary
Section 1: Important Notes, Contents and Definitions
The board of directors, the board of supervisors and the directors, supervisors andsenior management of the Company shall guarantee that the contents of thesemiannual report are authentic, accurate and complete, free from false records,misleading statements or major omissions, and shall bear individual and joint legalliabilities.Ren Jianhua, the head of the Company, Zhang Guofu, the head of accounting work,and Zhang Guofu, the head of accounting body (accountant in charge), guaranteethe authenticity, accuracy and completeness of the financial report in the semiannualreport.All directors of the Company personally attended the board meeting to review thisreport.The company plans not to distribute cash dividends, not to send bonus stocks, notto convert reserved funds into share capital.
Contents
Definitions ...... 3
Section 2: Company Profile and Major Financial Indicators ...... 4
Section 3: Business Summary ...... 7
Section 4: Discussion and Analysis of Operation ...... 9
Section 5: Important Matters ...... 18
Section 6: Changes in Shares and Shareholders ...... 25
Section 7: Preferred Shares ...... 29
Section 8: Directors, Supervisors and Senior Management ...... 30
Section 9: Corporate Bonds ...... 31
Section 10: Financial Report ...... 32
Section 11: Reference file directory ...... 131
Definitions
| Terms | Refers to | Definition |
| Company, company, Robam | Refers to | Hangzhou Robam Appliances Co., Ltd. |
| Mingqi | Refers to | Hangzhou Mingqi Electric Co., Ltd. |
| Kinde Intelligent | Refers to | Shengzhou Kinde Intelligent Kitchen Electric Co., Ltd. |
| This group | Refers to | Robam, Mingqi, Beijing Robam Electric Appliance Sales Co., Ltd., Shanghai Robam Electric Appliance Sales Co., Ltd. and Kinde Intelligent |
| Robam Group | Refers to | Hangzhou Robam Industrial Group Co., Ltd., controlling shareholder of the Company |
| Reporting period | Refers to | 2019 semiannual |
| CMM | Refers to | China Market Monitor Co., Ltd., authoritative domestic home appliance market research company |
| AVC | Refers to | Beijing All View Cloud Data Technology Co.,Ltd. |
Section 2: Company Profile and Major Financial IndicatorsI. Company profile
| Stock abbreviation | Robam | Stock code | 002508 |
| Stock exchange for stock listing | Shenzhen Stock Exchange | ||
| Company name in Chinese | 杭州老板电器股份有限公司 | ||
| Company short name in Chinese (if any) | 老板电器 | ||
| Company name in foreign language (if any) | HANGZHOU ROBAM APPLIANCES CO.,LTD. | ||
| Company short name in foreign language (if any) | ROBAM | ||
| Legal representative of the company | Ren Jianhua | ||
II. Contact person and contact information
| Secretary to the board of directors | Securities affairs representative | |
| Name | Wang Gang | |
| Contact address: | No. 592 Linping Av., Yuhang Economic Development Zone, Hangzhou, China | |
| Tel | 0571-86187810 | |
| Fax | 0571-86187769 | |
| wg@robam.com |
III. Other information
1. Contact information
Whether the Company's registered address, office address and postal code, company website and Email addresschanged during the reporting period
□ Applicable √ Not applicable
No change in the Company's registered address, office address and postal code, company website and Email addresschanged during the reporting period, as shown in 2018 annual report.
2. Information disclosure and keeping place
Whether the information disclosure and keeping place changed during the reporting period
□ Applicable √ Not applicable
No change in the name of the information disclosure newspaper selected by the Company, URL of the website designatedby the CSRC to publish the semiannual report and the place for keeping the Company’s annual report, as shown in 2018
annual report.IV. Major Accounting Data and Financial Indicators
Whether the Company needs to retroactively adjust or restate the accounting data of the previous years
□Yes √No
| Reporting period | Amount for corresponding period last year | Increase / decrease this year compared to the previous year | |
| Operating income (yuan) | 3,527,413,882.96 | 3,496,662,565.47 | 0.88% |
| Net profits attributable to shareholders of listed companies (yuan) | 670,403,994.20 | 660,339,506.06 | 1.52% |
| Net profits attributable to shareholders of the listed company after deduction of non-recurring profits and losses (yuan) | 622,539,579.01 | 596,465,164.81 | 4.37% |
| Net cash flow from operating activities (yuan) | 658,691,084.58 | 1,121,788,027.98 | -41.28% |
| Basic EPS (yuan/share) | 0.71 | 0.70 | 1.43% |
| Diluted EPS (yuan/share) | 0.71 | 0.70 | 1.43% |
| Weighted average return on net assets | 10.51% | 12.07% | -1.56% |
| End of the reporting period | End of previous year | Increase / decrease at the end of this reporting period compared to the end of the previous year | |
| Total assets (yuan) | 9,451,869,196.46 | 9,455,361,508.83 | -0.04% |
| Net assets attributable to shareholders of listed companies (yuan) | 5,960,135,662.02 | 6,045,384,387.57 | -1.41% |
V. Differences in Accounting Data under Domestic and Foreign Accounting
Standards
1. Differences between net profits and net assets in financial statements disclosed according
to the International Accounting Standards (IAS) and Chinese Accounting Standardssimultaneously
□ Applicable √ Not applicable
No difference between net profits and net assets in financial statements disclosed according to the InternationalAccounting Standards (IAS) and Chinese Accounting Standards during the reporting period.
2. Differences between net profits and net assets in financial statements disclosed according
to the Overseas Accounting Standards and Chinese Accounting Standards simultaneously
□ Applicable √ Not applicable
No difference between net profits and net assets in financial statements disclosed according to the Overseas AccountingStandards and Chinese Accounting Standards during the reporting period.
VI. Non-recurring Profit and Loss Items and Amount
√ Applicable □ Not applicable
Unit: CNY
| Item | Amount | Description |
| Profits and losses on the disposal of non-current assets (including the write-off part of the provision for asset impairment) | -1,171,725.00 | |
| Government subsidies included into the current profits and losses, except those government subsidies, which are closely related to the business of a company and enjoyed in accordance with a certain standard quota or quantity of the state | 58,069,181.84 | |
| Profits and losses from investment or management assets entrusted to others | 2,894,637.83 | |
| Income and expenditure other than those mentioned above | -1,328,772.96 | |
| Less: Amount affected by income tax | 9,538,352.16 | |
| Amount of minority shareholders' equity affected (after tax) | 1,060,554.36 | |
| Total | 47,864,415.19 | -- |
Explain the non-recurrent profit and loss items defined by the Company according to the Interpretative Announcement No.1 on Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses and defined fromthe non-recurrent profit and loss items enumerated in the Interpretative Announcement No. 1 on Information Disclosure ofPublic Securities Issuing Companies - Non-recurrent Profits and Losses
□ Applicable √ Not applicable
No definition of non-recurrent profit and loss items defined and enumerated in the Interpretative Announcement No. 1 onInformation Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses as non-recurrent profitand loss items during the reporting period.
Section 3: Business SummaryI. Main Business of the Company during Reporting Period
Does the Company need to follow the disclosure requirements of special industriesNoDedicated to creating a new quality kitchen for millions of families, the Company takes foot in the kitchenfield and focuses on the development, production, sales and comprehensive services of kitchenappliances, including range hooks, stoves, disinfection cabinets, steam ovens, ovens, dishwashers,water purifiers, water heaters, microwaves and integrated stoves. After 40 years of development andgrowth, the Company has become the manufacturer with the longest history, the highest market shareand the largest production capacity in the Chinese kitchen appliance industry.
II. Significant Changes in Prime Assets
1. Significant Changes in Prime Assets
| Prime assets | Significant changes |
| Equity assets | No significant change in the Company’s equity assets during the reporting period |
| Fixed assets | No significant change in the Company’s fixed assets during the reporting period |
| Intangible assets | No significant change in the Company’s intangible assets during the reporting period |
| Construction in progress | No significant change in the Company’s construction in progress during the reporting period |
2. Major overseas assets
□ Applicable √ Not applicable
III. Analysis of Core CompetitivenessDoes the Company need to follow the disclosure requirements of special industriesNoNo significant change in the Company's core competitiveness during the reporting period: TheCompany's core competitiveness is mainly reflected in the high-end positioned the brand capacity,
continuous innovative research and development capacity, comprehensive and efficient operationcapacity, as shown in the 2018 annual report.
Section 4: Discussion and Analysis of OperationI. Overview
In the first half of 2019, the international political and geopolitical situation was complicated, the domesticreal estate industry was affected by the increasingly strict regulatory policy of "one policy for one city",and the kitchen appliance industry as a whole continued depression. According to the retail monitoringreport published by The Yee, the sales amount of range hoods, gas stoves and disinfection cabinets, asthe main kitchen appliances, was increased by -5.86%, -4.09% and -17.72% respectively.In the face of the sluggish market, the company, as the leading enterprise in the kitchen applianceindustry, established the working policy of "practicing internal skills to keep out the winter and seekingimprovement in stability to promote growth" for 2019 at the end of last year, and strove to ensure thecompany's stable performance and steady increase of market share. During the reporting period, thecompany achieved the operating income of 3,527,413,882.96 yuan, an increase of 0.88%, and realizedthe net profits attributable to shareholders of listed companies of 670,403,994.20 yuan, an increase of
1.52%.
According to the retail monitoring report published by The Yee, the market share and market position ofthe retail sales of company's major product categories as of the end of June 2019 are shown in thefollowing table:
| Range hood | Gas stoves | Built-in microwave oven | Built-in disinfection cabinet | Built-in steam oven | Built-in steam oven- oven | Built-in oven | Built-in dishwasher | |
| Retail sales share | 25.54% | 23.13% | 34.95% | 26.58% | 31.67% | 17.39% | 25.92% | 8.00% |
| Market position | 1 | 1 | 1 | 2 | 2 | 2 | 3 | 3 |
In the first half of 2019, the marketing sector practiced innovation for customer requirements centered onthe customer, and made concerted efforts with multiple channels to ensure the company's performancegrowth in the face of the overall industry downturn. In terms of retail, the company, in the face of overallKA channel downturn, continued to optimize the franchised store system, strengthened the integration ofmultiple channels, realized the coordinated online and offline development and adhered to provide
customers with quality services and actively explore the primary and secondary stock market. In terms ofe-commerce, the company actively embraced the changes in customer demand for products andoptimized the operating efficiency with the focus on “deepening customer operation and creatingextreme efficiency”. In terms of real estate channels, benefiting from the national real estate refineddecoration policy, the company continued to deepen the cooperation with the real estate developerssuch as Evergrande, Vanke, Country Garden and Sunac with differentiated products and high-qualitybrand services and continued to boost the development of strategic real estate channel customersthrough the central purifier system. The real estate channel sales increased 80% year-on-year.According to the monthly real estate refined decoration monitoring data published by AVC, the marketshare of ROBAM range hood was 37.8%, firmly ranking first in the industry. In terms of innovation, thecompany actively explored the new retail mode, developed the innovative channels and regional outletsand stimulated the vitality of the home decoration market through in-depth cooperation with the cabinetcompanies such as OPPEIN and SCHMIDT and the family decorating companies such as ikongjian,Gold Mantis and Dongyirisheng. In terms of overseas development, the company made its firstappearance at the 2019 Decorex SA exhibition in South Africa, made positive progress in thedevelopment of overseas markets in Asia Pacific, Australia and New Zealand, and steadily promotedbrand globalization.In the first half of 2019, the technology sector was committed to building an innovation-oriented R&Dmechanism, creating an open innovation platform, building an efficient organization and creating afirst-class technical team in the industry, and made remarkable achievements in new category expansion,patent development and national standard establishment. In the first half of the year, the companyapplied for 274 patents, including 64 invention patents and obtained 237 patents licenses, including 8invention patents. The range hood 27X6 and steam oven-oven C906 won the "German Red Dot Award"and "American IDEA Award", while the range hood 700X, gas stove 666B, steam ovens S228 and SZ01won the “American IDEA Award”. Meanwhile, the company led the establishment of industry standardssuch as Environment Friendly Range Hoods, Steam Oven-Oven, Minimum Allowable Values of EnergyEfficiency and Energy Efficiency Grades for Electric Ovens, Zhejiang Manufacturing Standard forDishwashers and Electric Steam Ovens, in which, the Zhejiang Manufacturing Standard for Dishwasherswon the standard innovation award. Moreover, the company actively created the second type of Chinese
style steam ovens, such as SZ01 lower built-in steam oven, ST01 desktop steam oven and C906/905steam oven-oven, to meet different customer needs with diverse product forms, inherit and carry forwardChina's excellent cooking and food culture, and meet the people's demand for health, nutrition andcooking efficiency of high-quality life.In the first half of 2019, the production sector strove to build a first-class manufacturing benchmark inthree directions: "comprehensively build the industry-leading supply chain system", "technology-drivencomprehensive innovation", "deepen lean production and build a sustainable and efficient organization",improved the delivery consistency and timeliness and promoted supply chain collaboration projects;reduced WIP and sluggish inventory, started pull production projects, formed a systematic and scientificcontrol system, and promoted the efficient operation capacity of production system informatization.Moreover, Maoshan Intelligent Manufacturing Park project of the company was constructed smoothlyand, after its completion, it will promote the iteration of the company's intelligent and integrated high-endkitchen electric appliances and upgrading of the intelligent manufacturing, laying a solid foundation forthe company's long-term development.In the first half of 2019, the brand sector fully implemented the concept of "creating a new Chinesekitchen", creating a high-tech, high-end, professional and young brand image. The company participatedin 2019 AWE and created the exhibition theme of “Robam 40 years, creating new Chinese kitchen”.Robam exclusively sponsors the CCTV column Chinese Flavor and serves as the food creator ofChinese Restaurant 3 to transmit Chinese cooking culture; held the press conference of "Steamed flavorof China. Exploring flavor of ten cities" and offline activities such as "Lei Jiayin, a high-power player inthe kitchen, is challenged to cook 100 steamed dishes", invited cooking masters and intangible culturalheritage inheritors to create a steam culture tour of "one city, one flavor and one inheritor", publishedChina’s Steamed Flavor Map - 100 Steamed Dishes, Long Volume of China's Steaming Feast, etc andcooperated with local TV stations, print media and local transportation media (high-speed rail, airport,subway, etc.) to occupy the commanding heights of brand communication, continuously interact withconsumers, enhance brand exposure, and convey brand value.In the first half of 2019, Mingqi put forward the new strategic layout of “big business recruitment, Suningcooperation, engineering layout and home decoration integration" based on the core channel idea of"strengthening counties, piloting cities and digging towns"; with "focus on the oven, expand Shuangshui
and innovate new retail of integrated stove" as the new category promotion model, the company shippedup to 14% gas heaters and purifiers in the first half of the year and won TOP10 integrated stove in onlineand offline activities of Jingdong 618; promoted and completed more than a thousand light blastingactivities around the "monthly activities and weekly blasting" and created a new high sales volume ofnationwide linkage activities in “Mingqi tenth anniversary celebration, Gratitude to regular customers”.In the first half of 2019, the company continued to be recognized by the capital market in terms ofcorporate governance, internal management and shareholder returns, and won the "Best Board Award","Best New Media Operator Award" and "Best Board Secretary Award" at the “Tianma Award - The 10
th
Listed Company Investor Relations Selection” of Securities Times, the 13
thChina listed company valueselection "Top 50 SMEs Board Value", "Excellent SMEs Board Secretary", "Outstanding Board Secretaryof Information Disclosure" and other awards at the 13
th
Chinese Listed Companies Value Appraisal.
II. Main business analysisOverviewSee “I. Overview” in “Discussion and Analysis of Operation”.Year-on-year changes of major financial data
Unit: CNY
| Reporting period | Amount for corresponding period last year | Year-on-year increase / decrease | Reason for change | |
| Operating income | 3,527,413,882.96 | 3,496,662,565.47 | 0.88% | - |
| Operating cost | 1,599,401,962.81 | 1,628,645,402.72 | -1.80% | - |
| Selling expenses | 990,044,906.61 | 964,745,068.44 | 2.62% | - |
| Management costs | 116,171,528.77 | 124,693,829.53 | -6.83% | - |
| Financial expenses | -29,604,970.87 | -48,077,669.39 | -38.42% | Due to the decrease of current interest income. |
| Income tax expenses | 123,074,038.15 | 119,107,939.33 | 3.33% | - |
| Net cash flow from operating activities | 658,691,084.58 | 1,121,788,027.98 | -41.28% | Due to the decrease of current payment collection. |
| Net cash flow from investment activities | 482,830,282.28 | -441,770,458.03 | -209.29% | Due to the maturity of financial products and recovery of investment in current period |
| Net cash flow from financing activities | -759,219,240.00 | -711,574,618.75 | 6.70% | - |
| Net increase of cash and cash equivalents | 382,418,542.61 | -31,289,816.70 | -1,322.18% | - |
Major changes in profit composition or profit sources during the reporting period
□ Applicable √ Not applicable
There were no major changes in profit composition or profit sources during the reporting period.Operating income composition
Unit: CNY
| Reporting period | Amount for corresponding period last year | Year-on-year increase / decrease | |||
| Amount | Proportion in operating income | Amount | Proportion in operating income | ||
| Total operating income | 3,527,413,882.96 | 100% | 3,496,662,565.47 | 100% | 0.88% |
| By industry | |||||
| Home and kitchen & bath appliances | 3,452,212,044.04 | 97.87% | 3,394,298,971.47 | 97.07% | 1.71% |
| Other | 75,201,838.92 | 2.13% | 102,363,594.00 | 2.93% | -26.53% |
| By product | |||||
| Range hood | 1,883,974,091.22 | 53.41% | 1,905,204,155.73 | 54.49% | -1.11% |
| Gas stoves | 850,003,518.67 | 24.10% | 865,060,383.59 | 24.74% | -1.74% |
| Sterilizer cabinet | 246,351,583.63 | 6.98% | 226,617,162.05 | 6.48% | 8.71% |
| Steamer | 116,909,353.95 | 3.31% | 128,667,439.58 | 3.68% | -9.14% |
| Integrated stove | 80,702,117.50 | 2.29% | 0.00 | 0.00% | N/A |
| Oven | 73,247,652.48 | 2.08% | 102,160,542.02 | 2.92% | -28.30% |
| Dish-washing machine | 61,326,597.24 | 1.74% | 50,589,214.40 | 1.45% | 21.22% |
| Other small home appliances | 54,757,728.20 | 1.55% | 58,023,584.46 | 1.66% | -16.09% |
| Water purifier | 40,407,985.49 | 1.15% | 45,272,776.51 | 1.29% | -10.75% |
| Steam oven-oven | 27,487,524.98 | 0.78% | 0.00 | 0.00% | N/A |
| Water heaters | 10,325,410.18 | 0.29% | 0.00 | 0.00% | N/A |
| Microwave ovens | 6,718,480.50 | 0.19% | 12,703,713.13 | 0.36% | -47.11% |
| Other | 75,201,838.92 | 2.13% | 102,363,594.00 | 2.93% | -26.53% |
| By region | |||||
| East China | 1,546,877,053.21 | 43.85% | 1,527,413,040.86 | 43.68% | 1.27% |
| South China | 435,621,166.26 | 12.35% | 393,192,402.00 | 11.24% | 10.79% |
| North China | 428,733,427.16 | 12.15% | 401,949,680.90 | 11.50% | 6.66% |
| Central China | 348,689,600.83 | 9.89% | 325,691,194.94 | 9.31% | 7.06% |
| Southeast China | 286,581,351.82 | 8.12% | 314,798,893.62 | 9.00% | -8.96% |
| Northeast China | 207,137,172.65 | 5.87% | 235,940,373.77 | 6.75% | -12.21% |
| Northwest China | 178,363,060.47 | 5.06% | 185,196,486.39 | 5.30% | -3.69% |
| East China - other | 75,201,838.92 | 2.13% | 102,363,594.00 | 2.93% | -26.53% |
| Overseas regions | 20,209,211.64 | 0.57% | 10,116,898.99 | 0.29% | 99.76% |
Industries, products or regions that account for more than 10% of the company's operating income or profit
√ Applicable □ Not applicable
Unit: CNY
| Operating income | Operating cost | Gross margin ratio | Year-on-year increase / decrease of operating income | Year-on-year increase / decrease of operating cost | Year-on-year increase / decrease of gross margin ratio | |
| By industry | ||||||
| Home and kitchen & bath appliances | 3,527,413,882.96 | 1,599,401,962.81 | 54.66% | 0.88% | -1.80% | 2.31% |
| By product | ||||||
| Range hood | 1,883,974,091.22 | 781,140,530.80 | 58.54% | -1.11% | -5.59% | 3.48% |
| Gas stoves | 850,003,518.67 | 375,049,496.40 | 55.88% | -1.74% | -4.39% | 2.24% |
| By region | ||||||
| East China | 1,546,877,053.21 | 702,390,471.53 | 54.59% | 1.27% | -4.38% | 5.17% |
| South China | 435,621,166.26 | 203,889,819.04 | 53.20% | 10.79% | 7.66% | 2.63% |
| North China | 428,733,427.16 | 171,634,176.79 | 59.97% | 6.66% | 5.09% | 1.01% |
In the case that the statistical standards for main business data of the company are adjusted during the reporting period,the main business data of the company in the latest period are subject to those after the adjustment of the statisticalstandards at the end of the reporting period
□ Applicable √ Not applicable
Reasons for more than 30% year-on-year changes in the relevant data
□ Applicable √ Not applicable
III. Non-main business analysis
□ Applicable √ Not applicable
IV. Analysis of assets and liabilities
1. Major changes in asset composition
Unit: CNY
| End of the reporting period | End of the same period last year | Proportion change | Description of major changes | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Monetary capital | 2,578,726,413.49 | 27.28% | 2,549,948,329.74 | 29.63% | -2.35% | - |
| Accounts receivable | 490,952,083.71 | 5.19% | 419,798,154.58 | 4.88% | 0.31% | - |
| Inventory | 1,216,207,972.47 | 12.87% | 1,237,011,412.07 | 14.37% | -1.50% | - |
| Investment properties | 117,081.74 | 0.00% | 126,068.54 | 0.00% | 0.00% | - |
| Long-term equity investment | 2,687,049.11 | 0.03% | 4,470,840.99 | 0.05% | -0.02% | - |
| Fixed assets | 839,262,550.21 | 8.88% | 816,697,803.79 | 9.49% | -0.61% | - |
| Construction in progress | 236,345,778.78 | 2.50% | 65,701,351.18 | 0.76% | 1.74% | - |
2. Assets and liabilities measured with fair value
□ Applicable √ Not applicable
3. Limitation on the assets and rights as of the end of the reporting periodN/AV. Analysis of investment
1. Overall situation
□ Applicable √ Not applicable
2. Significant equity investments acquired during the reporting period
□ Applicable √ Not applicable
3. Significant ongoing non-equity investments during the reporting period
□ Applicable √ Not applicable
4. Financial assets measured with fair value
□ Applicable √ Not applicable
5. Securities investments
□ Applicable √ Not applicable
The company had no securities investments in the reporting period.
6. Derivatives investment
□ Applicable √ Not applicable
The company had no derivatives investments in the reporting period.
7. Use of funds raised
□ Applicable √ Not applicable
No funds raised are used in the reporting period.
8. Major projects not funded by raised funds
□ Applicable √ Not applicable
The company had no major projects that were not funded by raised funds in the reporting period.
VI. Sales of major assets and equities
1. Sales of major assets
□ Applicable √ Not applicable
The company did not sell major assets in the reporting period.
2. Sales of major equities
□ Applicable √ Not applicable
VII. Analysis of main holding and joint-stock companies
√ Applicable □ Not applicable
Joint-stock companies that affect the net profits of the company by more than 10% and main subsidiaries
Unit: CNY
| Company name | Company type | Main business | Registered capital | Total assets | Net assets | Operating income | Operating profit | Net profit |
| Hangzhou Mingqi Electric Co., Ltd. | Subsidiary | Production and sales of kitchen electric appliance products | 50,000,000.00 | 164,055,432.76 | 82,905,602.49 | 122,272,884.50 | 4,763,583.23 | 3,578,808.97 |
| Shanghai Robam Electric Appliance Sales Co., Ltd. | Subsidiary | Sales of kitchen electric appliance products | 5,000,000.00 | 62,575,581.68 | 7,504,056.34 | 151,651,589.33 | 199,141.13 | -1,764,645.58 |
| Beijing Robam Electric Appliance Sales Co., Ltd. | Subsidiary | Sales of kitchen electric appliance products | 5,000,000.00 | 64,556,366.03 | 37,582,507.37 | 101,723,557.06 | 2,130,056.76 | 1,529,368.85 |
| Shengzhou Kinde Intelligent Kitchen Electric Co., Ltd. | Subsidiary | Production and sales of integrated kitchen products | 32,653,061.00 | 273,865,037.19 | 203,044,188.29 | 90,517,727.14 | 18,745,444.72 | 14,311,880.56 |
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √ Not applicable
VIII. Structured entities controlled by the company
□ Applicable √ Not applicable
IX. Estimate of business performance for January - September 2019It is estimated that the change rate of the net profits attributable to shareholders of listed companies inJanuary - September 2019 ranges from 2% to 10%
X. Risks faced by the company and countermeasures
Section 5: Important MattersI. Information about the annual general meeting of shareholders and
extraordinary general meeting of shareholders held during the reporting period
1. General meeting of shareholders during the reporting period
| Meeting session | Meeting type | Investor participation proportion | Convening date | Date of disclosure | Disclosure index |
| Annual general meeting of shareholders in 2018 | Annual general meeting of shareholders | 61.68% | May 16, 2019 | May 17, 2019 | cninfo Announcement of Resolutions of 2018 Annual General Meeting of Shareholders (Announcement No.: 2019-025) |
2. The preferred shareholders with voting rights restored request an extraordinary generalmeeting of shareholders
□ Applicable √ Not applicable
II. Profit distribution or share capital increase from accumulation fund during the
reporting period
□ Applicable √ Not applicable
The company plans not to distribute cash dividends, not to send bonus stocks, not to convert reserved funds into sharecapital in half a year.III. Commitments fulfilled or not fully fulfilled by the Company’s actual controller,
shareholders, related parties, acquirer and other commitment parties during thereporting period
√ Applicable □ Not applicable
| Commitment reason | Commitment party | Commitment type | Commitment content | Commitment time | Time limit for acceptance | Degree of performance |
| Share structure reform commitment | ||||||
| Commitment made in the acquisition report or equity change report |
| Commitment made at the time of asset restructuring | |||||||
| Commitment made at the time of IPO or refinancing | Directors, supervisors and senior management directly or indirectly holding shares of the company | Commitment to restriction on sales of shares | After the expiry of the 36-month sales restriction period, the shares transferred each year during his/her tenure shall not exceed 25% of the total number of shares held directly or indirectly in the Company; the company shares directly or indirectly held shall not be transferred within six months after the resignation | November 23, 2010 | Long-term | Strict performance | |
| Hangzhou Robam Industrial Group Co., Ltd.; Ren Jianhua | Commitment on avoiding horizontal competition | 1. The Company/I and other enterprises under the control of the Company/me do not, and will not, directly or indirectly, engage in any activities that constitute horizontal competition with the existing and future business of Robam and its holding subsidiaries; 2. If any business opportunity obtained the Company/I and other enterprises under the control of the Company/me from any third party constitutes or may constitute substantial competition with the business of Robam, the Company/I will immediately notify Robam and transfer such business opportunity to Robam; 3. The Company/I and other enterprises under the control of the Company/me commit not to provide technical information, process flow, marketing channels or other trade secrets to other companies, enterprises, organizations or individuals whose business constitutes competition with the business of Robam. | November 23, 2010 | Long-term | Strict performance | ||
| Equity incentive commitment | |||||||
| Other commitments made to minor shareholders of the Company | Company | Dividend | The cumulative profits distributed in cash for three consecutive years shall not be less than 40% of the annual average distributable profits realized in the three years. | April 10, 2018 | Three years | Strict performance | |
| Whether the commitment is fulfilled on time | Yes | ||||||
IV. Appointment of and dismissal of accounting firms
Whether the semiannual financial report has been audited
□Yes √No
The Company's semiannual report is unaudited.
V. Statement of the board of directors and the board of supervisors on the
"non-standard audit report" of the accounting firm during the reporting period
□ Applicable √ Not applicable
VI. Statement of the board of directors on the "non-standard audit report" for the
previous year
□ Applicable √ Not applicable
VII. Bankruptcy reorganization
□ Applicable √ Not applicable
No bankruptcy reorganization of the Company during the reporting period.
VIII. Litigation mattersMajor litigation and arbitration matters
□ Applicable √ Not applicable
No major litigation or arbitration matters of the Company during the reporting period.Other litigation matters
□ Applicable √ Not applicable
IX. Media questioning
□ Applicable √ Not applicable
No common media questioning on the Company during the reporting period.X. Punishment and rectification
□ Applicable √ Not applicable
No punishment or rectification of the Company during the reporting period.XI. Credit conditions of the company, its controlling shareholders and actual
controllers
□ Applicable √ Not applicable
XII. Implementation of the company's equity incentive plan, employee stock
ownership plan or other employee incentive measures
√ Applicable □ Not applicable
1. Implementation of the initial restricted stock incentive plan
(1) The Company’s first extraordinary general meeting of shareholders in 2015 on January 13, 2015
reviewed and adopted the Proposal on the Initial Restricted Stock Incentive Plan (Draft) ofHangzhou Robam Appliances Co., Ltd. and its Summary and the Proposal on Requesting theGeneral Meeting of Shareholders of Hangzhou Robam Appliances Co., Ltd. to Authorize theBoard of Directors to Handle the Issues Related to the Company’s Restricted Stock Incentive Plan.
(2) On January 21, 2015, the Company’s 15
th meeting of the third Board of Directors and the 4
th
meeting of the third Board of Supervisors reviewed and adopted the Proposal on GrantingRestricted Stocks to Incentive Objects.
(3) On February 13, 2015, the Company completes the registration on first granting of restricted
stocks involved in the Initial Restricted Stock Incentive Plan (Draft) of Hangzhou RobamAppliances Co., Ltd.
(4) On January 4, 2016, the Company’s 12
th meeting of the third Board of Directors and the 10
th
meeting of the third Board of Supervisors reviewed and adopted the Proposal on Adjusting theNumber of Restricted Stocks Reserved and the Proposal on Issues Related to Granting RestrictedStocks Reserved to Incentive Objects.
(5) On January 22, 2016, the Company’s 13
th
meeting of the third Board of Directors and the 11
th
meeting of the third Board of Supervisors reviewed and adopted the Proposal on First Granting ofUnlocking of the Restricted Stocks in First Unlocking Period in Restricted Stock Incentive Plan.
(6) On February 05, 2016, the Company completes the registration on granting of restricted stocks
reserved involved in the Initial Restricted Stock Incentive Plan (Draft) of Hangzhou RobamAppliances Co., Ltd.
(7) On April 7, 2016, the Company’s 14
th
meeting of the third Board of Directors and the 12
th
meetingof the third Board of Supervisors reviewed and adopted the Proposal on the Cancellation of PartialIncentive Stock Repurchase in Initial Restricted Share Incentive Plan.
(8) On January 23, 2017, the Company’s 19
th
meeting of the third Board of Directors and the 16
th
meeting of the third Board of Supervisors reviewed and adopted the Proposal on the Cancellationof Partial Incentive Stock Repurchase in Initial Restricted Stock Incentive Plan, the Proposal onFirst Granting of Unlocking in Second Unlocking Period in Restricted Stock Incentive Plan and theProposal on Reserved Granting of Unlocking in First Unlocking Period in Restricted StockIncentive Plan.
(9) On February 6, 2018, the Company’s 4
th
meeting of the fourth Board of Directors and the 4
th
meeting of the fourth Board of Supervisors reviewed and adopted the Proposal on First Grantingof Unlocking in Third Unlocking Period in Restricted Stock Incentive Plan and the Proposal onReserved Granting of Unlocking in Second Unlocking Period in Restricted Stock Incentive Plan.
(10) On January 21, 2019, the Company’s 9
th meeting of the fourth Board of Directors and the 9
th
meeting of the fourth Board of Supervisors reviewed and adopted the Proposal on ReservedGranting of Unlocking in Third Unlocking Period in Restricted Stock Incentive Plan.
XIII. Major related transactions
1. Related transactions related to daily operation
□ Applicable √ Not applicable
No related transactions related to daily operation of the Company during the reporting period, not constituting majorrelated transactions, as shown in XII. Related parties and related transactions in Section 10.
2. Related transactions arising from the acquisition or sale of assets or equity
□ Applicable √ Not applicable
No Related transactions arising from the acquisition or sale of assets or equity of the Company during the reportingperiod.
3. Related transactions of joint foreign investment
□ Applicable √ Not applicable
No related transactions of joint foreign investment of the Company during the reporting period.
4. Related claims and debts
□ Applicable √ Not applicable
No related claims and debts of the Company during the reporting period.
5. Other major related transactions
□ Applicable √ Not applicable
No other major related transactions of the Company during the reporting period.
XIV. Major contracts and their performance
1. Trusteeship, contracting and lease
(1) Trusteeship
□ Applicable √ Not applicable
No trusteeship of the Company during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
No contracting of the Company during the reporting period.
(3) Lease
√ Applicable □ Not applicable
Lease description
① The Company as the lessor
| Name of lessee | Type of leased assets | Lease income recognized in the current period | Lease income recognized in the previous period |
| Hangzhou Robam Industrial Group Co., Ltd. | House | 14,400.00 | 14,400.00 |
② The Company as the lessee
| Name of lessor | Type of leased assets | Lease fee recognized in the current period | Lease fee recognized in the previous period |
| Hangzhou Robam Industrial Group Co., Ltd. | House | 275,012.28 | 275,012.28 |
Project bringing the profits or losses more than 10% of the total profits of the Company in the reporting period to theCompany
□ Applicable √ Not applicable
No lease project bringing the profits or losses more than 10% of the total profits of the Company in the reporting period tothe Company during the reporting period.
2. Major guarantee
□ Applicable √ Not applicable
No guarantee of the Company during the reporting period.
3. Other major contracts
□ Applicable √ Not applicable
No other major contracts of the Company during the reporting period.XV. Social responsibility
1. Major environmental issues
Whether the listed company and its subsidiaries are key pollutant discharging units announced by environmentalprotection authoritiesNot applicable
2. Implementation of social responsibility for targeted poverty alleviation
(1) Targeted poverty alleviation planning
No targeted poverty alleviation carried out temporarily in the Company’s semiannual report.
(2) Semiannual targeted poverty alleviation summary
(3) Targeted poverty alleviation effect
(4) Follow-up targeted poverty alleviation programs
XVI. Description of other important events
□ Applicable √ Not applicable
No other important events to be described during the reporting period.XVII. Major events of subsidiaries
□ Applicable √ Not applicable
Section 6: Changes in Shares and ShareholdersI. Change in shares
1. Change in shares
Unit: share
| Before this change | Increase / decrease (+, -) | After this change | |||||||
| Quantity | Proportion | New issue of shares | Share donation | Share capital increase from reserved funds | Other | Subtotal | Quantity | Proportion | |
| I. Restricted shares | 14,497,669 | 1.53% | -374,400 | -374,400 | 14,123,269 | 1.49% | |||
| 3. Other domestic holdings | 14,497,669 | 1.53% | -374,400 | -374,400 | 14,123,269 | 1.49% | |||
| Domestic natural person shareholding | 14,497,669 | 1.53% | -374,400 | -374,400 | 14,123,269 | 1.49% | |||
| II. Unrestricted shares | 934,535,156 | 98.47% | 365,625 | 365,625 | 934,900,781 | 98.51% | |||
| 1. RMB common share | 934,535,156 | 98.47% | 365,625 | 365,625 | 934,900,781 | 98.51% | |||
| III. Total amount of shares | 949,032,825 | 100.00% | -8,775 | -8,775 | 949,024,050 | 100.00% | |||
Causes for change in shares
√ Applicable □ Not applicable
(1) On January 8, 2019, the Company completed the repurchase of canceled restricted stocks and
repurchased 8,775 restricted stocks of the incentive object. The total capital stocks decreased from949,032,825 to 949,024,050.
(2) On February 18, 2019, the Company reserved to grant unlocking of the restricted stock incentive plan
in the third unlocking period and the number of restricted stocks that could be unlocked and listed was365,625, accounting for 0.0385% of the Company's total capital stock.
Approval of changes in shares
√ Applicable □ Not applicable
(1) On February 6, 2018, the Company’s 4
th meeting of the fourth Board of Directors and the 4
thmeeting of
the fourth Board of Supervisors reviewed and adopted the Proposal on First Granting of Unlocking inThird Unlocking Period in Restricted Stock Incentive Plan and the Proposal on Reserved Granting ofUnlocking in Second Unlocking Period in Restricted Stock Incentive Plan.
(2) On August 22, 2018, the Company’s 7
th meeting of the fourth Board of Directors and the 7
thmeeting ofthe fourth Board of Supervisors reviewed and adopted the Proposal on the Partial Repurchase ofCanceled Initial Restricted Stocks in Initial Restricted Share Incentive Plan.
(3) On January 21, 2019, the Company’s 9
th meeting of the fourth Board of Directors and the 9
th
meeting ofthe fourth Board of Supervisors reviewed and adopted the Proposal on Reserved Granting of Unlockingin Third Unlocking Period in Restricted Stock Incentive Plan.
Transfer of share changes
□ Applicable √ Not applicable
Implementation progress of share repurchase
□ Applicable √ Not applicable
Implementation progress of reducing repurchased shares by centralized competitive bidding
□ Applicable √ Not applicable
Influence of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders ofthe company and other financial indexes in the most recent year and the most recent period
□ Applicable √ Not applicable
Other information the company deems necessary or required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in restricted shares
□ Applicable √ Not applicable
3. Securities issuance and listing
Not applicableII. Number and shareholding of the company's shareholders
Unit: share
| Total number of common shareholders at the end of the reporting period | 67,606 | Total number of preferred shareholders with voting rights restored at the end of the reporting period (if any) (see Note 8) | 0 | |||||
| Shareholding of common shareholders holding more than 5% shares or top 10 common shareholders | ||||||||
| Shareholder's | Shareholder | Shareholding | Number of | Increase or | Number | Number of | Pledge or freeze | |
| name | nature | ratio | common shares held at the end of the reporting period | decrease during the reporting period | of common shares held with limited sales conditions | common shares held with unlimited sales conditions | Status of shares | Quantity | ||
| Hangzhou Robam Industrial Group Co., Ltd. | Domestic non-state legal person | 49.68% | 471,510,000 | 471,510,000 | ||||||
| Hong Kong Securities Clearing Co. Ltd. | Overseas legal person | 9.00% | 85,408,035 | -15,115,749 | 85,408,035 | |||||
| Shen Guoying | Domestic natural person | 1.29% | 12,240,000 | 12,240,000 | ||||||
| China Merchants Bank Co. Ltd.－Everbright PGIM Advantageous Hybrid Securities Investment Fund | Other | 1.16% | 10,980,236 | 10,980,236 | 10,980,236 | |||||
| China Construction Bank Co., Ltd.－Anxin Value Selected Stock Securities Investment Fund | Other | 1.01% | 9,579,475 | 3,328,043 | 9,579,475 | |||||
| Hangzhou Jinchuang Investment Co., Ltd. | Domestic non-state legal person | 1.00% | 9,451,985 | 9,451,985 | ||||||
| Shenzhen Guoshi Capital Management Co., Ltd. - Guoshi Capital - Robam Agent Holding Stage 2 Structured Private Equity Fund | Other | 0.88% | 8,311,165 | 8,311,165 | ||||||
| SSF - Six Combinations | Other | 0.77% | 7,306,072 | 7,306,072 | 7,306,072 | |||||
| Hangzhou Yinchuang Investment Co., Ltd. | Domestic non-state legal person | 0.74% | 7,020,000 | 7,020,000 | ||||||
| GIC | Overseas legal person | 0.68% | 6,449,837 | 2,389,601 | 6,449,837 | |||||
| Description of the above-mentioned shareholder association or concerted action | The actual controller of the Company’s controlling shareholder Hangzhou Robam Industrial Group Co., Ltd. and the shareholder Hangzhou Jinchuang Investment Co., Ltd. is Mr. Ren Jianhua, and the natural person shareholder Shen Guo Ying is the wife of Ren Jianhua. The above shareholders have the possibility of acting in unison. | |||||||||
| Shareholding of top 10 common shareholders with unlimited sales conditions | ||||||||||
| Shareholder's name | Number of common shares with unlimited sales conditions held at the end of the reporting period | Share type | ||||||||
| Share type | Quantity | |||||||||
| Hangzhou Robam Industrial Group Co., Ltd. | 471,510,000 | RMB common share | 471,510,000 | |||||||
| Hong Kong Securities Clearing | 85,408,035 | RMB common share | 85,408,035 | |||||||
| Co. Ltd. | |||
| Shen Guoying | 12,240,000 | RMB common share | 12,240,000 |
| China Merchants Bank Co. Ltd.－Everbright PGIM Advantageous Hybrid Securities Investment Fund | 10,980,236 | RMB common share | 10,980,236 |
| China Construction Bank Co., Ltd.－Anxin Value Selected Stock Securities Investment Fund | 9,579,475 | RMB common share | 9,579,475 |
| Hangzhou Jinchuang Investment Co., Ltd. | 9,451,985 | RMB common share | 9,451,985 |
| Shenzhen Guoshi Capital Management Co., Ltd. - Guoshi Capital - Robam Agent Holding Stage 2 Structured Private Equity Fund | 8,311,165 | RMB common share | 8,311,165 |
| SSF - Six Combinations | 7,306,072 | RMB common share | 7,306,072 |
| Hangzhou Yinchuang Investment Co., Ltd. | 7,020,000 | RMB common share | 7,020,000 |
| GIC | 6,449,837 | RMB common share | 6,449,837 |
| Description of the association or concerted action between top 10 common shareholders with unlimited sales conditions, and between top 10 common shareholders with unlimited sales conditions and top 10 common shareholders | The actual controller of the Company’s controlling shareholder Hangzhou Robam Industrial Group Co., Ltd. and the shareholder Hangzhou Jinchuang Investment Co., Ltd. is Mr. Ren Jianhua, and the natural person shareholder Shen Guo Ying is the wife of Ren Jianhua. The above shareholders have the possibility of acting in unison. | ||
Whether the Company’s top 10 common shareholders and op 10 common shareholders with unlimited sales conditionsagreed on a repurchase transaction during the reporting period
□Yes √No
The Company’s top 10 common shareholders and op 10 common shareholders with unlimited sales conditions did notagree on a repurchase transaction during the reporting periodIII. Changes in controlling shareholder or actual controller
Change of controlling shareholders during the reporting period
□ Applicable √ Not applicable
No change in controlling shareholders during the reporting period.Changes in actual controller during the reporting period
□ Applicable √ Not applicable
No change in actual controller during the reporting period.
Section 7: Preferred Shares
□ Applicable √ Not applicable
No preferred shares of the Company during the reporting period.
Section 8: Directors, Supervisors and Senior ManagementI. Equity changes of directors, supervisors and senior management
□ Applicable √ Not applicable
No equity change of the Company’s directors, supervisors and senior management during the reporting period, as shownin the 2018 annual report.II. Change of directors, supervisors and senior management
□ Applicable √ Not applicable
No change of the Company’s directors, supervisors and senior management during the reporting period, as shown in the2018 annual report.
Section 9: Corporate Bonds
Whether the Company has bonds publicly issued and listed on the stock exchange that have not expired or expired butnot paid in full on the date of approval of the semiannual reportNo
Section 10: Financial ReportI. Audit Report
Whether the semiannual report is audited
□Yes √No
The Company's semiannual financial report is unaudited.II. Financial statementsUnit of statements in financial notes: CNY
1. Consolidated Balance Sheet
Unit: Hangzhou Robam Appliances Co., Ltd.
June 30, 2019
Unit: yuan
| Item | June 30, 2019 | December 31, 2018 |
| Current assets: | ||
| Monetary capital | 2,578,726,413.49 | 2,196,706,808.35 |
| Deposit reservation for balance | ||
| Lending funds | ||
| Trading financial assets | ||
| Financial assets measured with fair value and with the changes included in current profit and loss | ||
| Derivative financial assets | ||
| Notes receivable | 1,472,778,184.35 | 1,268,146,296.01 |
| Accounts receivable | 490,952,083.71 | 446,773,135.47 |
| Receivables financing | ||
| Advances to suppliers | 48,706,380.11 | 59,485,930.70 |
| Premiums receivables | ||
| Reinsurance accounts receivable | ||
| Provision of cession receivable | ||
| Other receivables | 87,328,253.55 | 70,182,460.52 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Redemptory monetary capital for sale | ||
| Inventory | 1,216,207,972.47 | 1,347,112,731.03 |
| Contract assets | ||
| Assets held for sales | ||
| Non-current assets due within a year | ||
| Other current assets | 1,978,829,070.91 | 2,591,760,176.09 |
| Total current assets | 7,873,528,358.59 | 7,980,167,538.17 |
| Non-current assets: | ||
| Loans and advances | ||
| Debt investment | ||
| Available-for-sale financial assets | 119,948,534.00 | |
| Other debt investments | ||
| Held-to-maturity investment | ||
| Long-term receivables | ||
| Long-term equity investment | 2,687,049.11 | 2,617,851.16 |
| Other equity instrument investments | 119,948,534.00 | |
| Other non-current financial assets | ||
| Investment properties | 117,081.74 | 121,575.14 |
| Fixed assets | 839,262,550.21 | 842,877,466.95 |
| Construction in progress | 236,345,778.78 | 184,440,655.49 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 190,282,031.65 | 193,974,179.90 |
| Development expenditure | ||
| Goodwill | 80,589,565.84 | 80,589,565.84 |
| Long-term unamortized expenses | 1,446,968.60 | 4,933,280.77 |
| Deferred income tax assets | 97,394,605.70 | 39,564,040.41 |
| Other non-current assets | 10,266,672.24 | 6,126,821.00 |
| Total non-current assets | 1,578,340,837.87 | 1,475,193,970.66 |
| Total assets | 9,451,869,196.46 | 9,455,361,508.83 |
| Current liabilities | ||
| Short-term borrowing | ||
| Borrowings from central bank | ||
| Borrowing funds | ||
| Trading financial liabilities | ||
| Financial liabilities measured with fair value and with the changes included in current profit and loss | ||
| Derivative financial liabilities | ||
| Notes payable | 453,858,650.24 | 411,414,985.01 |
| Accounts payable | 1,350,756,288.30 | 1,195,563,149.37 |
| Advance from customers | 1,114,184,967.13 | 1,170,088,458.14 |
| Financial assets sold for repurchase |
| Deposits from customers and interbank | ||
| Acting trading securities | ||
| Acting underwriting securities | ||
| Payroll payable | 8,241,460.47 | 107,349,495.30 |
| Tax payable | 156,798,287.38 | 113,248,653.85 |
| Other payables | 228,982,475.40 | 234,490,187.04 |
| Including: Interest payable | ||
| Dividends payable | ||
| Fees and commissions payable | ||
| Dividend payable for reinsurance | ||
| Contract liabilities | ||
| Liabilities held for sales | ||
| Non-current liabilities due within a year | ||
| Other current liabilities | ||
| Total current liabilities | 3,312,822,128.92 | 3,232,154,928.71 |
| Non-current liabilities | ||
| Reserve fund for insurance contracts | ||
| Long-term borrowing | ||
| Bonds payable | ||
| Including: preferred stock | ||
| Perpetual bond | ||
| Lease liabilities | ||
| Long-term payable | ||
| Long-term payroll payable | ||
| Estimated liabilities | ||
| Deferred income | 76,668,389.06 | 82,021,091.35 |
| Deferred income tax liabilities | 9,766,459.36 | 10,337,139.79 |
| Other non-current liabilities | ||
| Total non-current liabilities | 86,434,848.42 | 92,358,231.14 |
| Total liabilities | 3,399,256,977.34 | 3,324,513,159.85 |
| Owner's equity: | ||
| Capital stock | 949,024,050.00 | 949,024,050.00 |
| Other equity instruments | ||
| Including: preferred stock | ||
| Perpetual bond | ||
| Capital reserve | 401,799,332.67 | 401,689,801.42 |
| Minus: treasury stock | 3,456,989.00 | |
| Other comprehensive income | ||
| Special reserve | ||
| Surplus reserves | 474,516,412.50 | 474,516,412.50 |
| General risk preparation | ||
| Undistributed profit | 4,134,795,866.85 | 4,223,611,112.65 |
| Total owners' equities attributable | 5,960,135,662.02 | 6,045,384,387.57 |
| to the owners of parent company | ||
| Minority equity | 92,476,557.10 | 85,463,961.41 |
| Total owners' equities | 6,052,612,219.12 | 6,130,848,348.98 |
| Total liabilities and owners' equities | 9,451,869,196.46 | 9,455,361,508.83 |
| Legal representative: Ren Jianhua | Head of accounting work: Zhang Guofu | Head of accounting body: Zhang Guofu |
2. Balance sheet of parent company
Unit: yuan
| Item | June 30, 2019 | December 31, 2018 |
| Current assets: | ||
| Monetary capital | 2,425,741,262.62 | 2,017,251,340.16 |
| Trading financial assets | ||
| Financial assets measured with fair value and with the changes included in current profit and loss | ||
| Derivative financial assets | ||
| Notes receivable | 1,472,578,184.35 | 1,261,896,296.01 |
| Accounts receivable | 457,184,560.25 | 438,002,392.66 |
| Receivables financing | ||
| Advances to suppliers | 54,947,245.23 | 48,995,796.40 |
| Other receivables | 66,587,170.91 | 64,301,240.95 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventory | 1,146,254,684.56 | 1,267,525,767.58 |
| Contract assets | ||
| Assets held for sales | ||
| Non-current assets due within a year | ||
| Other current assets | 1,830,000,000.00 | 2,448,736,487.97 |
| Total current assets | 7,453,293,107.92 | 7,546,709,321.73 |
| Non-current assets: | ||
| Debt investment | ||
| Available-for-sale financial assets | 119,948,534.00 | |
| Other debt investments | ||
| Held-to-maturity investment | ||
| Long-term receivables | ||
| Long-term equity investment | 229,192,982.84 | 224,608,888.64 |
| Other equity instrument investments | 119,948,534.00 |
| Other non-current financial assets | ||
| Investment properties | 453,723.04 | 470,485.36 |
| Fixed assets | 812,032,765.31 | 815,345,909.65 |
| Construction in progress | 236,270,778.78 | 184,365,655.49 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 159,876,618.67 | 161,743,355.41 |
| Development expenditure | ||
| Goodwill | ||
| Long-term unamortized expenses | 1,446,968.60 | 4,933,280.77 |
| Deferred income tax assets | 96,519,807.28 | 38,723,474.50 |
| Other non-current assets | 10,266,672.24 | 6,126,821.00 |
| Total non-current assets | 1,666,008,850.76 | 1,556,266,404.82 |
| Total assets | 9,119,301,958.68 | 9,102,975,726.55 |
| Current liabilities | ||
| Short-term borrowing | ||
| Trading financial liabilities | ||
| Financial liabilities measured with fair value and with the changes included in current profit and loss | ||
| Derivative financial liabilities | ||
| Notes payable | 453,448,650.24 | 409,057,910.01 |
| Accounts payable | 1,296,818,010.42 | 1,158,684,039.60 |
| Advance from customers | 1,044,743,117.02 | 1,067,652,543.09 |
| Contract liabilities | ||
| Payroll payable | 52,779.70 | 88,814,022.76 |
| Tax payable | 149,939,253.77 | 99,200,231.67 |
| Other payables | 207,494,253.19 | 215,230,256.63 |
| Including: Interest payable | ||
| Dividends payable | ||
| Liabilities held for sales | ||
| Non-current liabilities due within a year | ||
| Other current liabilities | ||
| Total current liabilities | 3,152,496,064.34 | 3,038,639,003.76 |
| Non-current liabilities | ||
| Long-term borrowing | ||
| Bonds payable | ||
| Including: preferred stock | ||
| Perpetual bond | ||
| Lease liabilities | ||
| Long-term payable | ||
| Long-term payroll payable | ||
| Estimated liabilities |
| Deferred income | 76,668,389.06 | 82,021,091.35 |
| Deferred income tax liabilities | ||
| Other non-current liabilities | ||
| Total non-current liabilities | 76,668,389.06 | 82,021,091.35 |
| Total liabilities | 3,229,164,453.40 | 3,120,660,095.11 |
| Owner's equity: | ||
| Capital stock | 949,024,050.00 | 949,024,050.00 |
| Other equity instruments | ||
| Including: preferred stock | ||
| Perpetual bond | ||
| Capital reserve | 401,754,349.66 | 401,644,818.41 |
| Minus: treasury stock | 3,456,989.00 | |
| Other comprehensive income | ||
| Special reserve | ||
| Surplus reserves | 474,516,412.50 | 474,516,412.50 |
| Undistributed profit | 4,064,842,693.12 | 4,160,587,339.53 |
| Total owners' equities | 5,890,137,505.28 | 5,982,315,631.44 |
| Total liabilities and owners' equities | 9,119,301,958.68 | 9,102,975,726.55 |
3. Consolidated Statement of Income
Unit: yuan
| Item | 2019 semiannual | 2018 semiannual |
| I. Total operating income | 3,527,413,882.96 | 3,496,662,565.47 |
| Including: Operating income | 3,527,413,882.96 | 3,496,662,565.47 |
| Interest revenue | ||
| Premium earned | ||
| Fee and commission income | ||
| II. Total operating costs | 2,813,102,211.83 | 2,813,539,570.29 |
| Including: Operating costs | 1,599,401,962.81 | 1,628,645,402.72 |
| Interest expenditure | ||
| Fee and commission expense | ||
| Surrender value | ||
| Net payments for insurance claims | ||
| Net reserve fund extracted for insurance contracts | ||
| Bond insurance expense | ||
| Reinsurance costs | ||
| Taxes and surcharges | 29,458,998.38 | 33,709,271.63 |
| Selling expenses | 990,044,906.61 | 964,745,068.44 |
| Management costs | 116,171,528.77 | 124,693,829.53 |
| Research and development expenses | 107,629,786.13 | 109,823,667.36 |
| Financial expenses | -29,604,970.87 | -48,077,669.39 |
| Including: interest expenditure | 201,831.98 | |
| Interest revenue | 30,307,927.32 | 48,117,978.17 |
| Plus: other incomes | 56,839,181.84 | 59,524,135.08 |
| Income from investment (loss expressed with “-”) | 39,858,974.49 | 40,770,279.62 |
| Including: Income from investment of joint venture and cooperative enterprise | 69,197.95 | 655,604.04 |
| Income from derecognition of financial assets measured at amortized cost (loss expressed with “-”) | ||
| Exchange gain (loss expressed with “-”) | ||
| Net exposure hedging gain (loss expressed with “-”) | ||
| Income from fair value changes (loss expressed with “-”) | ||
| Credit impairment losses (loss expressed with “-”) | -8,952,029.23 | |
| Assets impairment losses (loss expressed with “-”) | -8,585,478.93 | |
| Income from disposal of assets (loss expressed with “-”) | -296,672.23 | 62,757.28 |
| III. Operating profits (loss expressed with “-”) | 801,761,126.00 | 774,894,688.23 |
| Plus: Non-operating income | 1,611,946.09 | 5,676,533.87 |
| Less: non-operating expenditure | 2,882,444.05 | 1,127,717.43 |
| IV. Total profits (total loss expressed with “-”) | 800,490,628.04 | 779,443,504.67 |
| Less: Income tax expenses | 123,074,038.15 | 119,107,939.33 |
| V. Net profits (net loss expressed with “-”) | 677,416,589.89 | 660,335,565.34 |
| (I) Classified by business continuity | ||
| 1. Net profits from going concern (net loss expressed with “-”) | 677,416,589.89 | 660,335,565.34 |
| 2. Net profits from discontinuing operation (net loss expressed with “-”) | ||
| (II) Classified by ownership | ||
| 1. Net profit attributable to owners of parent company | 670,403,994.20 | 660,339,506.06 |
| 2. * Minority interest income | 7,012,595.69 | -3,940.72 |
| VI. Net amount of other comprehensive income after tax | ||
| Net amount of other comprehensive income after tax attributed to parent company owners |
| (I) Other comprehensive income that can't be reclassified into profit and loss | ||
| 1. Remeasure the variation of net indebtedness or net asset of defined benefit plan | ||
| 2. Other comprehensive income that can't be reclassified into profit and loss in the invested enterprise under equity method | ||
| 3. Fair value change of other equity instrument investments | ||
| 4. Fair value change of enterprise credit risks | ||
| 5. Other | ||
| (II) Other comprehensive income that will be reclassified into profit and loss | ||
| 1. Other comprehensive income that will be reclassified into profit and loss in the invested enterprise under equity method | ||
| 2. Fair value change of other debt investments | ||
| 3. Changes in fair value through profit and loss of available-for-sale financial assets | ||
| 4. Amount of financial assets reclassified into other comprehensive income | ||
| 5. Held-to-maturity investment reclassified into available-for-sale financial assets | ||
| 6. Provision for credit impairment of other debt investments | ||
| 7. Cash flow hedging reserve | ||
| 8. Balance arising from the translation of foreign currency financial statements | ||
| 9. Others | ||
| Net amount of other comprehensive income after tax attributed to minority shareholders | ||
| VII. Total comprehensive income | 677,416,589.89 | 660,335,565.34 |
| Total comprehensive income attributed to parent company | 670,403,994.20 | 660,339,506.06 |
| owners | ||
| Total comprehensive income attributed to minority shareholders | 7,012,595.69 | -3,940.72 |
| VIII. Earnings per share | ||
| (I) Basic earnings per share | 0.71 | 0.70 |
| (II) Diluted earnings per share | 0.71 | 0.70 |
In case of business combination involving enterprises under common control in this period, the net profits achieved by thecombined enterprise before combination were RMB and achieved by the combined enterprise in previous period wereRMB .
| Legal representative: Ren Jianhua | Head of accounting work: Zhang Guofu | Head of accounting body: Zhang Guofu |
4. Income statement of parent company
Unit: yuan
| Item | 2019 semiannual | 2018 semiannual |
| I. Operating income | 3,259,793,326.67 | 3,291,884,090.12 |
| Subtract: Operating costs | 1,507,498,151.92 | 1,571,657,758.11 |
| Taxes and surcharges | 26,332,164.95 | 30,909,092.03 |
| Selling expenses | 867,885,223.87 | 858,436,066.98 |
| Management costs | 81,117,115.96 | 85,492,885.38 |
| Research and development expenses | 103,711,169.47 | 109,823,667.36 |
| Financial expenses | -27,805,458.39 | -47,426,377.03 |
| Including: interest expenditure | 201,831.98 | |
| Interest revenue | 28,247,326.34 | 47,277,406.17 |
| Plus: other incomes | 51,909,682.29 | 59,231,536.08 |
| Income from investment (loss expressed with “-”) | 36,964,336.66 | 40,770,279.62 |
| Including: Income from investment of joint venture and cooperative enterprise | 765,101.56 | 655,604.04 |
| Income from derecognition of financial assets measured at amortized cost (loss expressed with “-”) | ||
| Net exposure hedging gain (loss expressed with “-”) | ||
| Income from fair value changes (loss expressed with “-”) | ||
| Credit impairment losses (loss expressed with “-”) | -9,148,426.64 | |
| Assets impairment losses (loss expressed with “-”) | -7,645,493.34 | |
| Income from disposal of assets (loss expressed with “-”) | -296,672.23 | 62,757.28 |
| II. Operating profit (loss to be filled out with the minus sign "-") | 780,483,878.97 | 775,410,076.93 |
| Plus: Non-operating income | 1,525,524.06 | 395,132.79 |
| Less: non-operating expenditure | 1,093,261.57 | 1,114,385.16 |
| III. Total profit (total loss to be filled out with the minus sign "-") | 780,916,141.46 | 774,690,824.56 |
| Less: Income tax expenses | 117,441,547.87 | 116,548,116.05 |
| IV. Net profit (net loss to be filled out with the minus sign "-") | 663,474,593.59 | 658,142,708.51 |
| (I) Net profits from going concern (net loss expressed with “-”) | ||
| (II) Net profits from discontinuing operation (net loss expressed with “-”) | ||
| V. Net amount of other comprehensive income after tax | ||
| (I) Other comprehensive income that can't be reclassified into profit and loss | ||
| 1. Remeasure the variation of net indebtedness or net asset of defined benefit plan | ||
| 2. Other comprehensive income that can't be reclassified into profit and loss in the invested enterprise under equity method | ||
| 3. Fair value change of other equity instrument investments | ||
| 4. Fair value change of enterprise credit risks | ||
| 5. Other | ||
| (II) Other comprehensive income that will be reclassified into profit and loss | ||
| 1. Other comprehensive income that will be reclassified into profit and loss in the invested enterprise under equity method | ||
| 2. Fair value change of other debt investments | ||
| 3. Changes in fair value through |
| profit and loss of available-for-sale financial assets | ||
| 4. Amount of financial assets reclassified into other comprehensive income | ||
| 5. Held-to-maturity investment reclassified into available-for-sale financial assets | ||
| 6. Provision for credit impairment of other debt investments | ||
| 7. Cash flow hedging reserve | ||
| 8. Balance arising from the translation of foreign currency financial statements | ||
| 9. Others | ||
| VI. Total comprehensive income | 663,474,593.59 | 658,142,708.51 |
| VII. Earnings per share | ||
| (I) Basic earnings per share | ||
| (II) Diluted earnings per share |
5. Consolidated Statement of Cash Flow
Unit: yuan
| Item | 2019 semiannual | 2018 semiannual |
| I. Cash flow from financing activities: | ||
| Cash from selling commodities or offering labor | 3,607,783,677.83 | 4,289,207,480.55 |
| Net increase of customer deposit and deposit from other banks | ||
| Net increase of borrowings from central bank | ||
| Net increase of borrowing funds from other financial institutions | ||
| Cash from obtaining original insurance contract premium | ||
| Cash received from insurance premium of original insurance contract | ||
| Net increase of deposit and investment of insured | ||
| Cash from interest, handling |
| charges and commissions | ||
| Net increase of borrowing funds | ||
| Net increase of repurchase of business funds | ||
| Net cash from acting trading securities | ||
| Refund of tax and levies | 533,442.61 | 136,806.08 |
| Other cash received related to operating activities | 95,145,745.57 | 147,143,124.04 |
| Subtotal cash inflows from operating activities | 3,703,462,866.01 | 4,436,487,410.67 |
| Cash paid for selling commodities or offering labor | 1,516,314,982.52 | 1,731,391,225.74 |
| Net increase of customer loans and advances | ||
| Net increase of amount due from central bank and interbank | ||
| Cash paid for original insurance contract claims payment | ||
| Net increase of financial assets held for trading | ||
| Net increase of lending funds | ||
| Cash paid for interest, handling charges and commissions | ||
| Cash paid for policy dividend | ||
| Cash paid to and for employees | 354,764,621.08 | 350,023,153.85 |
| Taxes and fees paid | 402,678,055.37 | 392,338,495.82 |
| Other cash paid related to operating activities | 771,014,122.46 | 840,946,507.28 |
| Subtotal cash outflows from operating activities | 3,044,771,781.43 | 3,314,699,382.69 |
| Net cash flow from operating activities | 658,691,084.58 | 1,121,788,027.98 |
| II. Cash flow from investment activities: | ||
| Cash from investment withdrawal | 1,718,000,000.00 | 1,219,875,796.46 |
| Cash from investment income | 47,573,034.00 | 35,783,979.45 |
| Net cash from disposal of fixed assets, intangible assets and other long-term assets | 171,800.00 | 62,135.92 |
| Net cash received from the disposal of subsidiaries and other business entities | ||
| Other cash received related to investment activities | ||
| Subtotal cash inflows from investment activities | 1,765,744,834.00 | 1,255,721,911.83 |
| Cash paid for the purchase and construction of fixed assets, intangible assets and other long | 151,414,551.72 | 67,492,369.86 |
| term assets | ||
| Cash paid for investment | 1,126,500,000.00 | 1,600,000,000.00 |
| Net cash received from reinsurance business | ||
| Net cash paid for obtaining subsidiaries and other business units | 5,000,000.00 | |
| Other cash paid related to investment activities | 30,000,000.00 | |
| Subtotal cash outflows from investment activities | 1,282,914,551.72 | 1,697,492,369.86 |
| Net cash flow from investment activities | 482,830,282.28 | -441,770,458.03 |
| III. Cash flow from financing activities: | ||
| Receipts from equity securities | ||
| Including: Cash received from subsidies’ absorption of minority shareholders’ investment | ||
| Cash received from borrowings | ||
| Cash from issuance of bonds | ||
| Other cash received related to financing activities | 200,000.00 | |
| Subtotal cash inflows from financing activities | 200,000.00 | |
| Cash repayments of amounts borrowed | ||
| Cash paid for distribution of dividends or profits and for interest expenses | 759,219,240.00 | 711,774,618.75 |
| Including: Dividends and profits paid by subsidiaries to minority shareholders | ||
| Other cash paid related to financing activities | ||
| Subtotal cash outflows from financing activities | 759,219,240.00 | 711,774,618.75 |
| Net cash flow from financing activities | -759,219,240.00 | -711,574,618.75 |
| IV. Impact of exchange rate movements on cash and cash equivalents | 116,415.75 | 267,232.10 |
| V. Net increase of cash and cash equivalents | 382,418,542.61 | -31,289,816.70 |
| Plus: Balance of cash and cash equivalents at the beginning of the period | 2,177,219,858.85 | 2,562,788,024.38 |
| Plus: Balance of cash and cash equivalents at the beginning of the period | 2,559,638,401.46 | 2,531,498,207.68 |
6. Cash flow statement of parent company
Unit: yuan
| Item | 2019 semiannual | 2018 semiannual |
| I. Cash flow from financing activities: | ||
| Cash from selling commodities or offering labor | 3,369,769,326.89 | 4,034,591,294.81 |
| Refund of tax and levies | ||
| Other cash received related to operating activities | 80,284,290.10 | 125,906,164.99 |
| Subtotal cash inflows from operating activities | 3,450,053,616.99 | 4,160,497,459.80 |
| Cash paid for selling commodities or offering labor | 1,472,285,266.95 | 1,726,122,568.02 |
| Cash paid to and for employees | 278,362,198.01 | 281,546,075.14 |
| Taxes and fees paid | 361,186,090.14 | 353,930,726.47 |
| Other cash paid related to operating activities | 670,991,974.83 | 705,935,571.54 |
| Subtotal cash outflows from operating activities | 2,782,825,529.93 | 3,067,534,941.17 |
| Net cash flow from operating activities | 667,228,087.06 | 1,092,962,518.63 |
| II. Cash flow from investment activities: | ||
| Cash from investment withdrawal | 1,500,000,000.00 | 1,219,875,796.46 |
| Cash from investment income | 44,678,396.17 | 35,783,979.45 |
| Net cash from disposal of fixed assets, intangible assets and other long-term assets | 171,800.00 | 62,135.92 |
| Net cash received from the disposal of subsidiaries and other business entities | ||
| Other cash received related to investment activities | ||
| Subtotal cash inflows from investment activities | 1,544,850,196.17 | 1,255,721,911.83 |
| Cash paid for the purchase and construction of fixed assets, intangible assets and other long term assets | 136,533,684.66 | 67,277,073.11 |
| Cash paid for investment | 909,500,000.00 | 1,600,000,000.00 |
| Net cash paid for obtaining subsidiaries and other business units | ||
| Other cash paid related to investment activities | 30,000,000.00 | |
| Subtotal cash outflows from investment activities | 1,046,033,684.66 | 1,697,277,073.11 |
| Net cash flow from investment activities | 498,816,511.51 | -441,555,161.28 |
| III. Cash flow from financing |
| activities: | ||
| Receipts from equity securities | ||
| Cash received from borrowings | ||
| Cash from issuance of bonds | ||
| Other cash received related to financing activities | 200,000.00 | |
| Subtotal cash inflows from financing activities | 200,000.00 | |
| Cash repayments of amounts borrowed | ||
| Cash paid for distribution of dividends or profits and for interest expenses | 759,219,240.00 | 711,774,618.75 |
| Other cash paid related to financing activities | ||
| Subtotal cash outflows from financing activities | 759,219,240.00 | 711,774,618.75 |
| Net cash flow from financing activities | -759,219,240.00 | -711,574,618.75 |
| IV. Impact of exchange rate movements on cash and cash equivalents | 116,426.36 | 267,284.88 |
| V. Net increase of cash and cash equivalents | 406,941,784.93 | -59,899,976.52 |
| Plus: Balance of cash and cash equivalents at the beginning of the period | 2,000,183,395.66 | 2,411,423,559.90 |
| Plus: Balance of cash and cash equivalents at the beginning of the period | 2,407,125,180.59 | 2,351,523,583.38 |
7. Consolidated statement of change in equity
Current amount
Unit: yuan
| Item | 2019 semiannual | ||||||||||||||
| Owners' equities attributable to the owners of parent company | Minority equity | Total owners' equities | |||||||||||||
| Capital stock | Other equity instruments | Capital reserve | Minus: treasury stock | Other comprehensive income | Special reserve | Surplus reserves | General risk preparation | Undistributed profit | Other | Subtotal | |||||
| Preferred stock | Perpetual bond | Others | |||||||||||||
| I. Ending balance in previous year | 949,024,050.00 | 401,689,801.42 | 3,456,989.00 | 474,516,412.50 | 4,223,611,112.65 | 6,045,384,387.57 | 85,463,961.41 | 6,130,848,348.98 | |||||||
| Plus: Changes in accounting policies | |||||||||||||||
| Prior period error correction | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Beginning balance in current year | 949,024,050.00 | 401,689,801.42 | 3,456,989.00 | 474,516,412.50 | 4,223,611,112.65 | 6,045,384,387.57 | 85,463,961.41 | 6,130,848,348.98 | |||||||
| III. Increase / decrease in the current period (less to | 109,531.25 | -3,456,989.00 | -88,815,245.80 | -85,248,725.55 | 7,012,595.69 | -78,236,129.86 | |||||||||
| be filled out with the minus sign "-) | |||||||||||||||
| (I) Total comprehensive income | 670,403,994.20 | 670,403,994.20 | 7,012,595.69 | 677,416,589.89 | |||||||||||
| (II) Owner’s invested and decreased capital | 109,531.25 | -3,456,989.00 | 3,566,520.25 | 3,566,520.25 | |||||||||||
| 1. Common stock invested by the owner | |||||||||||||||
| 2. Capital invested by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based payment included in the owner’s equity | 109,531.25 | -3,456,989.00 | 3,566,520.25 | 3,566,520.25 | |||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | -759,219,240.00 | -759,219,240.00 | -759,219,240.00 | ||||||||||||
| 1. Withdrawal of surplus reserves | |||||||||||||||
| 2. Withdrawal of general risk preparation | |||||||||||||||
| 3. Distribution of owners (or shareholders) | -759,219,240.00 | -759,219,240.00 | -759,219,240.00 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal transfer of owner’s equity | |||||||||||||||
| 1. Capital surplus transfer to paid-in capital (or capital stock) | |||||||||||||||
| 2. Earned surplus transfer to paid-in capital (or capital stock) | |||||||||||||||
| 3. Earned surplus covering the deficit | |||||||||||||||
| 4. Carryforward retained earnings in variation of defined benefit plan | |||||||||||||||
| 5. Carryforward retained earnings of other comprehensive income | |||||||||||||||
| 6. Other | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Draw in this current | |||||||||||||||
| 2. Use in this current | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of current period | 949,024,050.00 | 401,799,332.67 | 474,516,412.50 | 4,134,795,866.85 | 5,960,135,662.02 | 92,476,557.10 | 6,052,612,219.12 |
Last term amount
Unit: yuan
| Item | 2018 semiannual | ||||||||||||||
| Owners' equities attributable to the owners of parent company | Minority equity | Total owners' equities | |||||||||||||
| Capital stock | Other equity instruments | Capital reserve | Minus: treasury | Other comprehensive | Special rese | Surplus reserves | General risk prepar | Undistributed profit | Other | Subtotal | |||||
| Prefe | Perpe | Oth | |||||||||||||
| rred stock | tual bond | ers | stock | income | rve | ation | |||||||||
| I. Ending balance in previous year | 949,032,825.00 | 399,598,507.63 | 24,153,010.00 | 474,516,412.50 | 3,461,806,065.78 | 5,260,800,800.91 | -3,329,595.92 | 5,257,471,204.99 | |||||||
| Plus: Changes in accounting policies | |||||||||||||||
| Prior period error correction | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Beginning balance in current year | 949,032,825.00 | 399,598,507.63 | 24,153,010.00 | 474,516,412.50 | 3,461,806,065.78 | 5,260,800,800.91 | -3,329,595.92 | 5,257,471,204.99 | |||||||
| III. Increase / decrease in the current period (less to be filled out with the minus sign "-) | 1,521,486.54 | -20,332,210.00 | -51,435,112.69 | -29,581,416.15 | -3,940.72 | -29,585,356.87 | |||||||||
| (I) Total comprehensive income | 660,339,506.06 | 660,339,506.06 | -3,940.72 | 660,335,565.34 | |||||||||||
| (II) Owner’s invested and decreased capital | 1,521,486.54 | -20,332,210.00 | 21,853,696.54 | 21,853,696.54 | |||||||||||
| 1. Common stock invested by the owner | |||||||||||||||
| 2. Capital invested by other equity instrument holders | |||||||||||||||
| 3. Amount of | 1,521,486.54 | -20,332,210.00 | 21,853,696.54 | 21,853,696.54 |
| share-based payment included in the owner’s equity | |||||||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | -711,774,618.75 | -711,774,618.75 | -711,774,618.75 | ||||||||||||
| 1. Withdrawal of surplus reserves | |||||||||||||||
| 2. Withdrawal of general risk preparation | |||||||||||||||
| 3. Distribution of owners (or shareholders) | -711,774,618.75 | -711,774,618.75 | -711,774,618.75 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal transfer of owner’s equity | |||||||||||||||
| 1. Capital surplus transfer to paid-in capital (or capital stock) | |||||||||||||||
| 2. Earned surplus transfer to paid-in capital (or capital stock) | |||||||||||||||
| 3. Earned surplus covering the deficit |
| 4. Carryforward retained earnings in variation of defined benefit plan | |||||||||||||||
| 5. Carryforward retained earnings of other comprehensive income | |||||||||||||||
| 6. Other | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Draw in this current | |||||||||||||||
| 2. Use in this current | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of current period | 949,032,825.00 | 401,119,994.17 | 3,820,800.00 | 474,516,412.50 | 3,410,370,953.09 | 5,231,219,384.76 | -3,333,536.64 | 5,227,885,848.12 |
8. Statement of change in equity of parent company
Current amount
Unit: yuan
| Item | 2019 semiannual | |||||||||||
| Capital stock | Other equity instruments | Capital reserve | Minus: treasury stock | Other comprehensive income | Special reserve | Surplus reserves | Undistributed profit | Other | Total owners' equities | |||
| Preferred stock | Perpetual bond | Others | ||||||||||
| I. Ending balance in previous year | 949,024,050.00 | 401,644,818.41 | 3,456,989.00 | 474,516,412.50 | 4,160,587,339.53 | 5,982,315,631.44 | ||||||
| Plus: Changes in accounting policies | ||||||||||||
| Prior period error correction | ||||||||||||
| Others | ||||||||||||
| II. Beginning balance in | 949,024, | 401,644,8 | 3,456,989. | 474,516,4 | 4,160,5 | 5,982,315,63 | ||||||
| current year | 050.00 | 18.41 | 00 | 12.50 | 87,339.53 | 1.44 | ||||||
| III. Increase / decrease in the current period (less to be filled out with the minus sign "-) | 109,531.25 | -3,456,989.00 | -95,744,646.41 | -92,178,126.16 | ||||||||
| (I) Total comprehensive income | 663,474,593.59 | 663,474,593.59 | ||||||||||
| (II) Owner’s invested and decreased capital | 109,531.25 | -3,456,989.00 | 3,566,520.25 | |||||||||
| 1. Common stock invested by the owner | ||||||||||||
| 2. Capital invested by other equity instrument holders | ||||||||||||
| 3. Amount of share-based payment included in the owner’s equity | 109,531.25 | -3,456,989.00 | 3,566,520.25 | |||||||||
| 4. Others | ||||||||||||
| (III) Profit distribution | -759,219,240.00 | -759,219,240.00 | ||||||||||
| 1. Withdrawal of surplus reserves | ||||||||||||
| 2. Distribution of owners (or shareholders) | -759,219,240.00 | -759,219,240.00 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal transfer of owner’s equity | ||||||||||||
| 1. Capital surplus transfer to paid-in capital (or capital stock) | ||||||||||||
| 2. Earned surplus transfer to paid-in capital (or capital stock) | ||||||||||||
| 3. Earned surplus covering the deficit | ||||||||||||
| 4. Carryforward retained earnings in variation of defined benefit plan | ||||||||||||
| 5. Carryforward retained earnings of other comprehensive income | ||||||||||||
| 6. Other | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Draw in this current | ||||||||||||
| 2. Use in this current | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Balance at the end of current period | 949,024,050.00 | 401,754,349.66 | 474,516,412.50 | 4,064,842,693.12 | 5,890,137,505.28 |
Last term amount
Unit: yuan
| Item | 2018 semiannual | |||||||||||
| Capital stock | Other equity instruments | Capital reserve | Minus: treasury stock | Other comprehensive income | Special reserve | Surplus reserves | Undistributed profit | Other | Total owners' equities | |||
| Preferred stock | Perpetual bond | Others | ||||||||||
| I. Ending balance in previous year | 949,032,825.00 | 399,553,524.62 | 24,153,010.00 | 474,516,412.50 | 3,430,203,861.03 | 5,229,153,613.15 | ||||||
| Plus: Changes in accounting policies | ||||||||||||
| Prior period error correction | ||||||||||||
| Others | ||||||||||||
| II. Beginning balance in current year | 949,032,825.00 | 399,553,524.62 | 24,153,010.00 | 474,516,412.50 | 3,430,203,861.03 | 5,229,153,613.15 | ||||||
| III. Increase / decrease in the current period (less to be filled out with the minus sign "-) | 1,521,486.54 | -20,332,210.00 | -53,631,910.24 | -31,778,213.70 | ||||||||
| (I) Total comprehensive income | 658,142,708.51 | 658,142,708.51 | ||||||||||
| (II) Owner’s invested and decreased capital | 1,521,486.54 | -20,332,210.00 | 21,853,696.54 | |||||||||
| 1. Common stock invested by the owner | ||||||||||||
| 2. Capital invested by other equity instrument holders | ||||||||||||
| 3. Amount of share-based payment included in the owner’s equity | 1,521,486.54 | -20,332,210.00 | 21,853,696.54 | |||||||||
| 4. Others | ||||||||||||
| (III) Profit distribution | -711,774,618.75 | -711,774,618.75 | ||||||||||
| 1. Withdrawal of surplus reserves | ||||||||||||
| 2. Distribution of owners (or shareholders) | -711,774,618.75 | -711,774,618.75 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal transfer of owner’s equity | ||||||||||||
| 1. Capital surplus transfer to paid-in capital (or capital stock) | ||||||||||||
| 2. Earned surplus transfer to paid-in capital (or capital stock) | ||||||||||||
| 3. Earned surplus covering the deficit | ||||||||||||
| 4. Carryforward retained earnings in variation of defined benefit plan | ||||||||||||
| 5. Carryforward retained earnings of other comprehensive income | ||||||||||||
| 6. Other | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Draw in this current | ||||||||||||
| 2. Use in this current | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Balance at the end of current period | 949,032,825.00 | 401,075,011.16 | 3,820,800.00 | 474,516,412.50 | 3,376,571,950.79 | 5,197,375,399.45 |
III. Basic status of company
Hangzhou Robam Appliances Co., Ltd. (the "Company”) is a limited liability company established by HangzhouRobam Home Appliances & Kitchen Sanitary Co., Ltd. by means of overall change with the approval of HangzhouAdministration for Industry and Commerce, Zhejiang Province in August 2008 and now headquartered at No.592,Linping Av., Yuhang Economic Development Zone, Hangzhou, China.The financial statements were approved by the Board of Directors of the Company on August 26, 2019.Six subsidiaries are incorporated into the scope of consolidation of the Company in 2019. Please refer to "Interestsin other entities" in Note 8 for details. The scope of consolidation is not changed in the current period compared tothe previous period.
The Company and its subsidiaries are mainly engaged in the production and sales of kitchen appliances.IV. Preparation basis of financial statements
1. Preparation basis
This company’s financial statement is based on going-concern assumption and worked out according to actual
transactions and matters, Accounting Standard for Business Enterprises--Basic Standard(issued by No.33 Decree
of the Ministry of Finance and revised by No.76 Decree of the Ministry of Finance) issued by the Ministry of
Finance, 42 special accounting standards enacted and revised on and after Feb 15, 2006, guideline for application
of accounting standard for business enterprises, ASBE interpretations and other relevant regulations(hereinafter
collectively referred to as “Accounting Standard for Business Enterprises”) and No.15 of Compilation Rules for
Information Disclosure by Companies Offering Securities to the Public-- General Provisions of Financial Reports
(revised in 2014) issued by China Securities Regulatory Commission.
According to the relevant provisions of the accounting standards for enterprises, the company's accounting is
based on the accrual basis. Except for some financial instruments and investment real estate, the financial
statements are based on historical cost. In case of impairment of assets, the relevant provisions shall be set aside
for impairment.
2. Going concern
The Company has no events or circumstances that cause serious doubts about the going concern assumption for
the 12 months from the end of the reporting period.V. Significant accounting policy and accounting estimate
Specific accounting policy and accounting estimate:
The Company and its subsidiaries are engaged in the production and sales of kitchen appliances. The specific
accounting policies and estimates developed by the Company and its subsidiaries for income recognition and other
transactions according to the actual production and operation characteristics and the provisions of the relevant
accounting standards for enterprises are detailed in “Income” in the notes. Statement of material accounting
judgments and estimates made by the management is shown in “Material accounting judgments and estimates”.
1. Statement on complying with corporate accounting standards
The Company’s financial statements comply with the requirements of the Accounting Standards for Business
Enterprises and truly and completely reflect the Company's financial position as of June 30, 2019, the semiannual
business performance, cash flows and other relevant information for the year 2019. Moreover, the Company’s
financial statements meet the disclosure requirements for relevant financial statements and their notes in No.15 of
Compilation Rules for Information Disclosure by Companies Offering Securities to the Public-- General Provisions
of Financial Reports revised by China Securities Regulatory Commission in all significant terms.
2. Accounting period
The accounting period of the Company is classified into annual period and interim period. The interim period refers
to the reporting period shorter than a complete accounting year. The fiscal year of the Company runs from 1January to 31 December of each calendar year.
3. Operating cycle
Normal operating cycle refers to the period from the purchase of assets for processing to the realization of cash orcash equivalents. The Company takes 12 months as an operating cycle, which is used as the liquidity classificationstandard for assets and liabilities.
4. Accounting standard money
RMB is the currency in the main economic environment where the Company and its domestic subsidiaries operate,and is the accounting standard money for the Company and its domestic subsidiaries. The Company’s currencyused for compilation of the financial statements is RMB.
5. Accounting process method of business combination involving enterprises under and not
under common controlBusiness combination refers to a transaction or event that combines two or more separate businesses into onereporting entity. It is divided into business combination involving enterprises under common control and businesscombination not involving enterprises under common control.
(1) Business combination involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which all of thecombining enterprises are ultimately controlled by the same party or the same parties both before and after thebusiness combination and on which the control is not temporary. As for business combination under commoncontrol, the party that obtains the control right over the other enterprises participating in the combination on thecombination date shall be the combining party, and the other enterprise participating in the combination shall be thecombined party. Combination date means the date on which the combining party actually acquires control over thecombined party.Assets and liabilities acquired by the combining party shall be measured at the book value of the combined partyon the combination date. The difference between the book value of the net assets obtained and the considerationpaid for the combination (or total par value of issued shares) is adjusted against capital reserve (capital stockpremium); if the capital reserve (capital stock premium) is not sufficient to absorb the difference, the retainedearnings shall be adjusted.The direct cost for the business combination of the combining party shall be recorded into the profits and losses atthe current period.
(2) Business combination not involving enterprises under common control
A business combination involving enterprises not under common control is a business combination in which thecombining enterprises are not ultimately controlled by the same party or the same parties both before and after thebusiness combination. As for business combination not under common control, the party that obtains the controlright over the other enterprises participating in the combination on the acquiring date shall be the acquirer, and theother enterprise participating in the combination shall be the acquiree. Acquiring date means the date on which theacquirer actually acquires control over the acquiree.For the business combination not involving enterprises under common control, the combined cost includes the fair
value of the assets paid, liabilities incurred or assumed and equity securities issued by the acquirer on theacquiring date for acquisition of the control right of the acquiree. The intermediary expenses incurred by theacquirer in respect of auditing, legal services, valuation and consultancy services, etc. and other associatedadministrative expenses attributable to the business combination are recognized in the current profit and loss whenthey are incurred. Transaction costs associated with the issue of equity or debt securities for the businesscombination are included in the initially recognized amounts of the equity or debt securities. The contingentconsideration involved shall be included in the combined cost at its fair value on the acquiring date, and theconsolidated goodwill shall be adjusted accordingly if new or further evidence of the existing situation on theacquiring date occurs within 12 months after the acquiring date requires adjustment of the contingent consideration.The combined costs incurred by the acquirer and the net identifiable assets acquired in the combination shall bemeasured at the fair value on the acquiring date. Where the cost of combination exceeds the acquirer’s interest inthe fair value of the acquiree’s net identifiable assets, the difference is recognized as goodwill. Where the cost ofcombination is less than the acquirer’s interest in the fair value of the acquiree’s net identifiable assets, theacquirer first reassesses the measurement of the fair values of the acquiree's identifiable assets, liabilities andcontingent liabilities and measurement of the cost of combination. If after reassessment, the cost of combination isstill less than the acquirer's interest in the fair value of the acquiree’s net identifiable assets, the difference isincluded in the current profit and loss.Where the deductible temporary difference acquired by the acquirer from the acquiree was not recognized on theacquiring date due to noncompliance with the conditions for the recognition of deferred income tax assets, relevantdeferred income tax assets shall be recognized and the goodwill shall be reduced within 12 months after theacquiring date if new or further information is obtained indicating that the relevant circumstances of the acquiringdate already exist and that the economic benefits arising from the deductible temporary difference of the acquireeon the acquiring date are expected to be realized. Where goodwill is insufficient to be offset, the difference shall berecognized as current profit and loss. Except above circumstances, the deferred income tax assets recognizedrelated to the business combination are included in current profit and loss.The merger of enterprises under different controls that is realized by steps through several times of exchangetransaction shall be judged whether to belong a package deal according to the Notice of the Ministry of Finance onPrinting and Issuing No.5 Interpretation of ASBE (CK [2012] No.19) and the criteria for “package deal” in Article 51(see Note IV 5 (2)) of Accounting Standard for Business Enterprises No.33 - Consolidated Financial Statements. Incase that it belongs to a package deal, each transaction shall be subject to accounting treatment according to theprevious paragraphs and Note IV. 13 “Long-term equity investment” ; in case that it doesn’t belong to a packagedeal, the individual financial statements and the consolidated financial statements shall be distinguished andsubject to the relevant accounting treatment respectively:
In the individual financial statements, the sum of the book value of the equity investment held in the acquireebefore the acquiring date and newly increased investment cost on the acquiring date shall be considered as initialcost of the investment. Other related comprehensive gains in relation to the equity interests that the Companyholds in the acquiree before the acquiring date shall be subject to accounting treatment when disposing of theinvestment through adopting the basis for the direct disposal of relevant assets or debts (that is, except for thecorresponding share in the change caused by the remeasurement of the net liabilities or net assets of the definedbenefit plan by the acquirer calculated in accordance with the equity method, the remaining amount is transferredinto the current investment gains).In the consolidated financial statements, as for the equity interests held in the acquiree before the acquiring date,they shall be re-measured according to their fair values at the acquiring date; the difference between their fairvalues and book value shall be recorded into the investment gains for the period including the acquiring date.
Other related comprehensive gains in relation to the equity interests held in the acquiree before the acquiring dateshall be subject to accounting treatment through adopting the basis for the direct disposal of relevant assets ordebts (that is, except for the corresponding share in the change caused by the remeasurement of the net liabilitiesor net assets of the defined benefit plan by the acquirer calculated in accordance with the equity method, theremaining amount transferred into current investment gains on the acquiring date).
6. Methods for preparing consolidated financial statements
(1) Determination principle of scope of consolidated financial statements
The scope of consolidation in the consolidated financial statements is determined on the basis of control. Controlmeans that the Company has the power over the investee, enjoys variable returns by participating in the relevantactivities of the investee, and has the ability to use the power to influence the amount of returns. The Company andall subsidiaries shall be included in the scope of consolidation. A subsidiary refers to the entity controlled by theCompany.Relevant elements involved in the above definition will be reevaluated by the Company if they are changed by thechange in relevant facts and circumstances.
(2) Preparation of consolidated financial statements
The Company starts to incorporate the subsidiary into the scope of consolidation from the date of acquiring theactual control right of the net assets and the production and operation decisions of the subsidiary; and stopsincorporating from the date of loss of the actual control right. For a subsidy disposed of, the business performanceand cash flow prior to the date of disposal have been properly included in the consolidated income statement andconsolidated cash flow statement; the opening balance of the consolidated balance sheet shall not be adjusted forthe subsidiary disposed of in the current period. For a subsidiary added in the business combination not undercommon control, the business performance and cash flow after the acquiring date have been properly included inthe consolidated income statement and consolidated cash flow statement and the opening balance and contrastnumber in the consolidated financial statements shall not be adjusted. For a subsidiary added in the businesscombination under common control and the combined party in consolidation by merger, their businessperformance and cash flows from the beginning of the combination period to the combination date have beenproperly included in the consolidated income statement and consolidated cash flow statement and the contrastnumber in the consolidated financial statements shall be adjusted.In preparing the consolidated financial statements, where the accounting policies and the accounting periods of theCompany and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordancewith the accounting policies and the accounting period of the Company. For the subsidiary acquired in the businesscombination not under common control, its financial statements are adjusted on the basis of the fair value of thenet identifiable assets on the acquiring date.All significant current balances, transactions and unrealized profits of the Company shall be set off when theconsolidated financial statements are prepared.The portion of subsidiaries’ equity and the portion of subsidiaries’ current net profits and losses for the period notattributable to Company are recognized as minority interests and minority interest income and presentedseparately in the consolidated financial statements under equity and net profits respectively. The share of thesubsidiaries’ current net profits and losses attributable to the minority interests shall be presented in theconsolidated income statement under minority interest income. If the minority shareholders' share of thesubsidiary's losses exceeds their share of the subsidiary's initial shareholders' equity, the minority interests shallstill be offset.
When the Company loses the control right over the original subsidiary due to disposal of part of the equityinvestment or other reasons, the residual equity shall be re-measured at its fair value on the date of losing thecontrol right. The difference between the sum of the consideration acquired by disposal of the equity and the fairvalue of the residual equity, and the share of the net assets of the original subsidiary continuously calculated fromthe acquiring date according to the original shareholding ratio, shall be included in the investment income in theperiod of lose of the control right. Other comprehensive income related to the equity investment of the originalsubsidiary is subject to accounting treatment through adopting the basis for the direct disposal of relevant assets ordebts (that is, except for the change caused by the remeasurement of the net liabilities or net assets of the definedbenefit plan by the original subsidiary, the remaining amount transferred into current investment income).Subsequently, the residual equity of this part shall be further measured in accordance with the AccountingStandards for Business Enterprises No. 2 - Long-term Equity Investments or Accounting Standards for BusinessEnterprises No.22 - Recognition and Measurement of Financial Instruments and other relevant provisions, asshown in Note IV. 13 "Long-term equity investment" or Note IV. 9 "Financial instruments".For disposal of the equity investment in the subsidiary by steps through several times of transaction till loss of thecontrol right, the Company shall distinguish whether the deals for disposal of the subsidiary’s equity investmentuntil the loss of the control right are package deals. If the terms, conditions, and economic impact of the disposal ofdeals relating to the equity investment in the subsidiary comply with one or more of the following cases, multipledeals shall be accounted for as a package deal: ① These deals are made simultaneously or with each other inmind; ② These deals as a whole will lead to a complete business outcome; ③ The occurrence of one dealdepends on the occurrence of at least one other deal; ④ A single deal is uneconomic, but when consideredtogether with other deals, it is economic. If they don’t belong to a package deal, each deal shall be subject toaccounting treatment as appropriate respectively according to the applicable principles of “disposal of part oflong-term equity investment in the subsidiary before losing control rights” (see Note IV. 13. (2) ④) and “lose thecontrol right over the original subsidiary due to disposal of part of the equity investment or other reasons” (see thepreceding paragraph). If the deals for disposal of the subsidiary’s equity investment until the loss of the control rightbelong to a package deal, the deals shall be subject to accounting treatment as a deal for disposal of subsidiaryand loss of the control right; however, the difference between the disposal price and the share of net assets of thesubsidiary corresponding to the disposal of investment before the loss of control right is recognized as othercomprehensive income in the consolidated financial statements and transferred into the current profit and loss inthe period of loss of control right.
7. Joint venture arrangements classification and Co-operation accounting treatment
A joint venture arrangement is an arrangement of which two or more parties have joint control. According to therights and obligations in the joint venture arrangement, the Company divides the joint venture arrangement intojoint management and joint venture. Joint management means the joint venture arrangement in which theCompany enjoys the assets and assumes the liabilities related to the arrangement. Joint venture means the jointventure arrangement in which the Company has rights only to the net assets of the arrangement.The Company's investment in the joint venture shall be accounted by the equity method and shall be treated inaccordance with the accounting policy described in Note IV. 13. (2) ② "long-term equity investment measured byemploying the equity method".When as a joint venture party, the Company confirms the following items in joint management: confirm the assetheld solely and the asset held jointly as per share; confirm the liability borne solely and the liability borne jointly asper share; confirm the income from selling the enjoyed joint management output share; confirm the income from
selling the joint management output as per share; confirm the expense incurred solely and the expense incurred byjoint management as per share.The company outputs or sells the asset to joint management (except the asset constitutes the business), andbefore the joint management sells the asset to the third party, the part belonging to other participants in the profitand loss incurred by the deal is only confirmed. In case that the asset confirms to the asset impairment lossspecified in Accounting Standards for Business Enterprises No. 8 - Asset Impairment, the Company shall confirmthe full loss; in the case of the asset purchased from joint management, the Company shall confirm the part loss asper share.
8. Determining standards of cash and cash equivalents
The cash and cash equivalents represent the cash on hand, deposits readily available for payment, short-term(generally due within three months from the date of purchase), highly liquid investments that are readily convertibleinto known amounts of cash and that are subject to an insignificant risk of change in value.
9. Foreign currency transaction and foreign currency statement translation
(1) Translations denominated in foreign currencies
A foreign currency transaction of the Company is translated as bookkeeping currency amount, on initial recognition,by applying the spot exchange rate on the date of transaction (generally the middle rate of the foreign exchangerate published by the People's Bank of China on the day), but the foreign exchange transactions or transactionsinvolving foreign exchange of the Company shall be translated into the bookkeeping currency amount at the actualexchange rate.
(2) Translation of foreign currency monetary items and non-monetary items in foreign currency
At the balance sheet date, foreign currency monetary items are translated using the spot exchange rates at thebalance sheet date. Exchange differences arising therefrom are recognized in current profit and loss, except: ①the exchange differences related to a specific-purpose borrowing denominated in foreign currency that qualify forcapitalization are treated according to the capitalization of borrowing costs; ② the exchange differences causedby changes in the book balance other than the amortized cost of foreign currency monetary items available for saleare charged to other comprehensive income.Non-monetary items in foreign currency measured by the historical cost are still measured according to thebookkeeping currency amount converted by the spot rate on the transaction date. Non-monetary items in foreigncurrency measured by fair value are converted by the spot rate on the recognition date of the fair value. Thedifference between the bookkeeping currency amount after conversion and the original bookkeeping currencyamount is treated as the fair value change (including exchange rate change) and charged to current profit and lossor recognized as other comprehensive income.
(3) Translation of financial statements denominated in foreign currencies
Where the overseas operations are involved in the preparation of the consolidated financial statements, for aforeign currency monetary item which constitutes a net investment in overseas operations, the exchangedifference resulting from the change of exchange rate shall be recognized as other comprehensive income as the“translation differences” or shall be included in the current profit and loss on disposal of overseas operations.Financial statements of a foreign operation are translated into RMB using the following method: the asset andliability items in the foreign currency balance sheets shall be translated at a spot exchange rate on the balancesheet date. Among the shareholder's equity items, except the ones as "undistributed profits", others shall be
translated at the spot exchange rate at the time when they are incurred. The income and expense items in theincome statement are converted at the spot rate on the date of transaction. The undistributed profit at thebeginning of the period is the undistributed profit at the end of the period after the translation of the previous year;the undistributed profit at the end of the period shall be calculated and presented in the items of profit distributionafter translation; the difference between the asset and liability items and the total number of stockholder's equityitem after translation shall be recognized as other comprehensive income as the “translation differences. Upondisposal of foreign operation and loss of control right, the Company transfers the translation differences of foreigncurrency statements presented in stockholder's equity in the balance sheet and relating to that foreign operation, tothe current profit and loss in full or in proportion to the weight in the foreign operation.The spot exchange rate on the date of the cash flows shall be based on for the translation of cash flows in a foreigncurrency and in an overseas subsidiary. The effect of a change in exchange rate on cash shall be separatelypresented as the reconciling item in the cash flow statement.The opening balance and the actual amount previous period shall be presented according to the amount aftertranslation of the financial statements for the previous period.On disposal of the Company’s entire interest in a foreign operation or loss of control right over the foreign operationdue to disposal of part of equity investment or other reasons, the Company transfers the translation differences offoreign currency statements presented in stockholder's equity in the balance sheet and relating to that foreignoperation, to the current profit and loss in full.When the proportion of the overseas operation interests held is reduced due to the disposal of part of equityinvestment or other reasons, but the control right of overseas operation is not lost, the converted difference of theforeign currency financial statements related to the overseas operation disposal part will belong to the minorityequity, and will not be transferred into the current profit and loss. Upon disposal of part of the equity of an overseasoperation as a joint venture or cooperative enterprise, the converted difference of the foreign currency statementsrelated to the overseas operation shall be transferred to the current profit and loss according to the proportion ofdisposing the overseas operation.
10. Financial instruments
The Company recognizes a financial asset or financial liability when becoming a party of the financial instrumentcontract.
(1) Classification, recognition and measurement of financial assets
According to the business model of managing financial assets and the contractual cash flow characteristics offinancial assets, the financial assets of the Company are classified into: financial assets measured at the amortizedcost; financial assets measured at fair value of which changes are recorded into other comprehensive income;financial assets at fair value through profit or loss (“FVTPL”).The financial assets are measured at fair value upon initial recognition. For the financial assets measured with fairvalue and with the changes included in current profit and loss, relevant transaction costs are directly charged to thecurrent profit and loss; for other types of financial assets, relevant transaction costs are charged to initiallyrecognized amount. For accounts receivable or notes receivable arising from selling commodities or offering labor,not containing or taking into account material financing elements, the Company shall take the amount ofconsideration expected to be entitled to receive as the initial recognized amount.
① Financial assets measured at the amortized cost
The Company's business model for managing financial assets at amortized cost is to collect contractual cash flows
and the contractual cash flow characteristics of such financial assets are consistent with the basic lendingarrangements. That is, the cash flow generated on a specific date is only for the payment of the principal and theinterest based on the outstanding principal amount. Such financial assets are subsequently measured at theamortized cost by means of effective interest method. The gain or loss generated in amortization or impairment ischarged to current profit and loss.
② Financial assets measured at fair value of which changes are recorded into other comprehensive income
The Company's business model for managing such financial assets is to collect contractual cash flows and to selland the contractual cash flow characteristics of such financial assets are consistent with the basic lendingarrangements. Such financial assets are measured at fair value and their changes are recorded into othercomprehensive income, but impairment losses or gains, exchange gains and losses and interest incomecalculated in by effective interest method are charged to current profit and loss.The Company designates some non-transactional equity instruments as the financial assets measured at fair valueof which changes are recorded into other comprehensive income. Relevant dividends income of such financialassets are recorded into the current profit and loss and the change in the fair value is recorded into othercomprehensive income. When the financial assets are derecognized, the accumulated gains or losses previouslyrecorded in other comprehensive income will be transferred from other comprehensive income to retainedearnings, not included in current profit and loss.
③ FVTPL
The above financial assets measured at the amortized cost and the financial assets measured at fair value ofwhich changes are recorded into other comprehensive income are classified as financial assets at fair valuethrough profit or loss (“FVTPL”). In addition, in order to eliminate or significantly reduce the accounting mismatchon initial recognition, some financial assets are designated as FVTPL. Such financial assets are subsequentlymeasured at the fair value and the change in the fair value is recorded into current profit and loss.
(2) Classification, recognition and measurement of financial liabilities
Financial liabilities, upon initial recognition, are divided into those measured with fair value and with the changesincluded in current profit and loss and other financial liabilities. For the financial liabilities measured with fair valueand with the changes included in current profit and loss, relevant transaction costs are directly charged to thecurrent profit and loss; for other financial liabilities, relevant transaction costs are charged to initially recognizedamount.
① Financial liabilities measured with fair value and with the changes included in current profit and loss
Financial liabilities measured with fair value and with the changes included in current profit and loss, including thetrading financial liabilities (including derivative instruments belonging to financial liabilities) and the financialliabilities measured with fair value and with the changes included in current profit and loss upon initial recognition.The trading financial liabilities (including derivative instruments belonging to financial liabilities) are subsequentlymeasured at the fair value. Except with respect to hedging, the change in the fair value is recorded into currentprofit and loss.As for a financial liability measured with fair value and with the changes included in current profit and loss, thechange in the fair value caused by the credit risk change of the Company is recorded into other comprehensiveincome and when the liability is derecognized, the accumulated change amount of the fair value caused by thecredit risk change and recorded into other comprehensive income is transferred to retained earnings. The restchanges in the fair value of the derivative instruments are recorded into the current profit and loss. If the treatmentof the influence of the credit risk change of such financial liability by above method will cause or enlarge theaccounting mismatch in the profits and losses, all profits or losses (including the amount affected by the credit risk
changes of the Company) of the financial liability will be recorded into current profit and loss.
② Other financial liabilities
The financial liabilities, other than the financial liabilities and financial guarantee contracts formed by the transfer offinancial assets not conforming to the derecognition conditions or by continuing to involve in the transferredfinancial assets, are classified as financial liabilities measured at amortized cost, and shall be further measured atthe amortized cost. Profits or losses arising from the derecognition or amortization are recorded into current profitand loss.
(3) Recognition basis and measurement method for transfer of financial assets
The financial asset is derecognized when meeting any of the following conditions: ① The contract right to chargethe cash flow of the financial asset is terminated; ② The financial asset has been transferred and almost all risksand remuneration of the financial asset ownership are transferred to the transferee; ③ The financial asset hasbeen transferred and the enterprise does neither transfer nor retain almost all risks and remuneration of thefinancial asset ownership but gives up the control over the financial asset.If the enterprise does neither transfer nor retain almost all risks and remuneration of the financial asset ownership,nor give up the control over the financial asset, relevant financial asset is recognized according to the degree of thetransferred financial assets continued to be involved and relevant liability is recognized accordingly. The degree ofthe transferred financial assets continued to be involved refers to the risk level faced by the enterprise due to thefinancial asset value change.If the overall transfer of the financial asset meets the de-recognition conditions, the difference of the book value ofthe transferred financial asset from the sum of the consideration received and the cumulative amount of the fairvalue changes originally included in other comprehensive income is charged to the current profit and loss.If the partial transfer of the financial asset meets the de-recognition conditions, the book value of the transferredfinancial asset is distributed between the derecognized and non-derecognized part according to the relative fairvalue and the difference of the sum of the consideration received from transfer and the cumulative amount of thefair value changes in the derecognized part originally included in other comprehensive income from the distributedbook value is charged to current profit and loss.For the financial asset sold in the form of attached right of recourse or endorsement transfer of the held financialasset, the Company shall determine whether almost all risks and remuneration in the financial asset ownershiphave been transferred. If almost all risks and remuneration in the financial asset ownership have been transferredto the transferee, the Company de-recognizes the financial asset; if almost all risks and remuneration in thefinancial asset ownership have been reserved, the Company does not de-recognize the financial asset; if almost allrisks and remuneration in the financial asset ownership are neither transferred nor reserved, the Companycontinues to judge whether the enterprise has reserved control over the asset and performs accounting treatmentaccording to the principles in above-mentioned paragraphs.
(4) De-recognition of financial liabilities
The Company derecognizes a financial liability (or part of it) only when the present obligation is discharged. Anagreement between the Company (borrower) and a lender to replace the original financial liability with a new onewith substantially different terms is accounted for as the derecognition of the original financial liability and therecognition of a new financial liability. When the Company makes material alteration to the contract terms of theoriginal financial liability (or part of it), it derecognizes the original financial liability and recognizes a new oneaccording to the altered terms.When a financial liability (or part of it) is derecognized, the difference between the book value of the derecognizedpart and the consideration paid (including non-cash asset transferred out or the liability undertaken) is charged to
current profit and loss.
(5) Offset of financial assets and financial liabilities
The financial asset and financial liability are listed in the balance sheet in the form of amount after mutual offsetwhen the Company has the legal right to offset the recognized financial asset and financial liability, may executethe legal right currently and plans to settle with net amount or realize the financial asset and pay off the financialliability simultaneously. Besides, the financial assets and financial liabilities are listed respectively in the balancesheet and not mutually offset.。
(6) Fair value determination method of financial assets and financial liabilities
Fair value refers to the price received by the market participant from sell of an asset or paid by the marketparticipant for transfer of a liability in the orderly transaction in the date of measurement. If an active market existsfor a financial instrument, the fair value of such instrument is recognized by the quotation in the active market.Quotation in the active market refers to the price easily obtained from the exchanges, brokers, trade associationsand pricing services regularly and representing the actual market transaction price in the fair transaction. If anactive market is not available for a financial instrument, its fair value is recognized by means of valuationtechniques, including reference to the price used by the parties familiar with the situation and willing to trade in therecent market transaction and reference to the current fair value, discounted cash flow method and options pricingmodel of other financial instruments identical essentially. Upon valuation, the Company adopts valuationtechniques applicable to the current situation and supported by sufficient available data and other information,selects input values consistent with the asset or liability characteristics considered by market participants in thetransaction of related assets or liabilities, and gives priority to relevant observable input values. The Company usesnon-inputable values when relevant observable input values cannot be obtained or are not practicable to obtain.
(7) Equity instruments
The equity instrument refers to the contract proving that the Company has the residual equity in the assets afterdeducting all liabilities. The Company issues (including refinancing), repurchases, sells or cancels equityinstruments as changes in equity, and transaction costs related to equity transactions are deducted from the equity.The Company does not recognize the fair value change of the equity instruments.Dividends paid on the Company's equity instruments during their existence (including the "interest" generated bythe instruments classified as equity instruments) shall be distributed as profits.
11. Accounts receivable
The financial assets for which the Company needs to confirm the impairment loss are the financial assetsmeasured at the amortized cost, debt instrument investments measured at fair value of which changes arerecorded into other comprehensive income, and lease receivables, mainly including notes receivable, accountsreceivable, other receivables, equity investments, other equity investments and long-term receivables. In addition,for the contract assets and part of the financial guarantee contracts, the provision for impairment is withdrawn andcredit impairment loss is recognized in accordance with the accounting policies mentioned in this part.
(1) Recognition of provision for impairment
On the basis of the expected credit loss, the Company shall calculate and withdraw the provision for impairmentand recognize the credit impairment loss for the above items in accordance with the applicable expected credit lossmeasurement methods.Credit loss refers to the difference between all contract cash flows discounted by the Company at the originaleffective interest rate and receivable according to the contract and all expected cash flows received, that is, the
present value of all cash shortage. The financial assets purchased or originated that have suffered from creditimpairment shall be discounted at the effective interest rate of the financial assets through credit adjustment.The general method for the measurement of expected credit losses is as follows: on each balance sheet date, theCompany evaluates whether the credit risks of financial assets (including contract assets and other applicableitems, similarly hereinafter) have increased significantly since the initial recognition. If so, the Company shallmeasure the loss provision according to the amount equivalent to the expected credit loss in the whole duration; ifnot, the Company shall measure the loss provision according to the amount equivalent to the expected credit lossin the next 12 months. The Company takes into account all reasonable and substantiated information, includingforward-looking information, in assessing expected credit loss.For a financial instrument with low credit risk on the balance sheet date, the Company assumes that the credit riskhas not increased significantly since the initial recognition, and chooses to measure the loss provision according tothe expected credit loss in the next 12 months.
(2) Criteria for judging whether the credit risk increases significantly after the initial confirmation
If the probability of default of a financial asset in the expected duration determined on the balance sheet date issignificantly higher than that in the expected duration determined upon initial recognition, the credit risk of thefinancial asset has significantly increased. Except for special cases, the Company determines whether the creditrisk has significantly increased after initial recognition by reasonably estimating the default risk changes in thewhole duration through the default risk changes in the next 12 months.
(3) Combination method to assessing expected credit risk on a combination basis
The Company makes single assessment of the credit risks for the notes receivable, accounts receivable and otherreceivables with significantly different credit risks and the following features, such as accounts receivable fromrelated parties; accounts receivable in dispute with the other party or involving litigation or arbitration; accountsreceivable with obvious signs that the debtor is likely to be unable to perform the repayment obligations.In addition to the financial assets that are subject to single assessment of credit risks, the Company dividesfinancial assets into different groups based on common risk characteristics, and evaluates credit risk on the basisof combination.
(4) Accounting treatment method of financial assets impairment
At the end of the period, the Company calculates the expected credit loss of various financial assets. If theexpected credit loss is greater than the carrying amount of the current impairment provision, the difference isrecognized as an impairment loss; if it is less than the carrying amount of the current impairment provision, thedifference is recognized as an impairment gain.
(5) Recognition of credit losses on financial assets
For financial assets that are subject to single assessment of credit risks, the Company shall always measure theloss provision according to the amount equivalent to the expected credit loss within the duration.Based on the credit risk characteristics, the financial assets without credit impairment in the single assessment aredivided into different combinations:
① Recognition basis for credit risk characteristic combination
| Item | Basis for recognition of combination |
| Combination 1 (aging combination) | Except for accounts receivable and other receivables which have been separately measured for loss provision, the Company determines loss provision based on forward-looking information and expected credit losses of a combination of the same or similar accounts receivable and other receivables that have similar credit risk characteristics and are divided by aging in previous years. Commercial acceptance is divided according to the credit risk of the |
acceptor, which is the same as the combination division of "accountsreceivable"Combination 2 (combination of financialassets with extremely low credit risk)
| Combination 2 (combination of financial assets with extremely low credit risk) | Banker's acceptance with extremely low credit risk |
| Combination 3 (combination of related parties in the consolidation scope) | Receivables of related parties |
Aging analysis is based on the date of entry.
② When the credit risk assessment is implemented by combination, the Company shall measure the expected credit
loss based on the expected duration and recognize the loss provision of the financial assets according to thecombination structure of financial assets and similar credit risk characteristics (the cash payment on account abilityof the debtor in accordance with the terms of the contract) and combined with the historical experience of defaultlosses and current economic conditions and forward-looking information.Accrual method of loss provisions measured by different combinations:
| Item | Accrual method |
| Combination 1 (aging combination) | Calculate the expected credit loss according to the expected credit loss rate of accounts receivable with different aging |
| Combination 2 (combination of financial assets with extremely low credit risk) | The expected credit loss rate is 0 and the expected credit loss is 0 |
| Combination 3 (combination of related parties in the consolidation scope) | The expected credit loss rate is 0 and the expected credit loss is 0 |
③ The expected credit loss rate of each combination is shown as follows:
Combination 1 (aging combination): expected credit loss rate
| Aging | Expected credit loss rate of accounts receivable (%) | Expected credit loss rate of other receivables (%) |
| Within 1 year (including 1 year, the same below) | 5.00 | 5.00 |
| 1-2 years | 10.00 | 10.00 |
| 2-3 years | 20.00 | 20.00 |
| 3-4 years | 50.00 | 50.00 |
| 4-5 years | 80.00 | 80.00 |
| More than 5 years | 100.00 | 100.00 |
(Continued)
| Aging | Accruing proportion of notes receivable (%) |
| Within 6 months (including 6 months) | 1.00 |
| More than 6 months: | 2.00 |
Combination 2 (combination of financial assets with extremely low credit risk): the expected credit loss rate is 0combined with the historical experience of default losses and current economic conditions and forward-lookinginformation;Combination 3 (combination of related parties): the expected credit loss rate is 0 combined with the historicalexperience of default losses and current economic conditions and forward-looking information;Combination 4 (margin combination): the expected credit loss rate is 0 combined with the historical experience ofdefault losses and current economic conditions and forward-looking information.
12. Other receivables
See accounts receivable in this note for details
13. Inventory
Does the Company need to follow the disclosure requirements of special industriesNo
(1) Classification of inventories
Inventories include goods shipped in transit, merchandise inventory, raw materials, work in progress, low pricedand easily worn articles and wrappage.
(2) Pricing methods for inventory obtaining and shipping
The inventories are price according to the actual cost when obtained, including purchase cost, processing cost andother costs, and are priced by the weighted average method when received and issued.
(3) Recognition of net realizable value of inventories and accrual method of falling price reserves
The net realizable value of inventories is the amount of the estimated sale price of the inventories subtracted by theestimated cost about to occur in completion, estimated selling expenses and related taxes in daily activities. Thenet realizable value of inventories is recognized on the basis of the unambiguous evidence and with considerationto the purpose of the inventories held and the influence of the post-balance sheet events.The inventories are measured on the balance sheet date according to the cost of inventories or net realizable value,whichever is lower. The inventory falling price reserves are withdrawn when the net realizable value is lower thanthe cost. The inventory falling price reserves are withdrawn according to the difference between the cost of a singleinventory item and its net realizable value.If the influence factors writing down the inventory value before have disappeared after withdrawal of the inventoryfalling price reserves, resulting in the net realizable value of the inventories higher than the book value, the amountwritten down is recovered and written back within the originally withdrawn amount of inventory falling pricereserves and the amount written back is included in current profits and losses.
(4) The perpetual inventory system is adopted for the inventories.
(5) Amortization methods of low priced and easily worn articles and wrappage
The low priced and easily worn articles and the wrappage are amortized by one-off amortization method whenreceived.
14. Assets held for sales
If the Company recovers the book value of an asset mainly through the sale (including the non-monetary assetsexchange of commercial nature, the same hereinafter) rather than continuous use of a non-current asset ordisposal group, such asset is classified as an asset held for sales when meeting the following conditionssimultaneously: a non-current asset or disposal group is immediately available for sales in the present condition,as is the practice of selling such asset or disposal group in a similar deal; the Company has made a resolution onthe sale plan and gained definitive purchase commitments; the sale is expected to be finished within one year. Thedisposal group refers to a group of assets disposed of as a whole in a deal by sale or otherwise together, andliabilities directly related to those assets transferred in the deal. Where the asset group or asset group combinationto which the disposal group belongs has shared the goodwill acquired in the business combination in accordance
with the Accounting Standards for Business Enterprises No. 8 - Asset Impairment, the disposal group shall containthe goodwill allocated to the disposal group.Upon initial measurement or remeasurement of the non-current asset and disposal group held for sale on thebalance sheet date, if the book value is higher than the net amount of the fair value minus the selling expense, thebook value is written down to the net amount of the fair value minus the selling expense, the amount written downis recognized as the assets impairment loss and included in the current profit and loss. The provision forimpairment of available for sale assets is withdrawn. The assets impairment loss recognized for the disposal groupshall first offset the book value of goodwill in the disposal group and then offset proportionally the book value of thenon-current assets in the disposal group applying the Accounting Standards for Business Enterprises No. 42 -Non-current Assets and Disposal Groups Held for Sale and Discontinued Operations (“held for sale criteria”).Where the net amount of the fair value of the held for sale disposal group minus the selling expense is increasedon the balance sheet date, the amount written down previously should be recovered and written back in the assetsimpairment loss amount recognized for the non-current assets applying the held for sale criteria after classified asasset held for sales. The amount written back is recorded into current profit and loss and its book value isincreased proportionally according to the proportion of the book value of the non-current assets applying the heldfor sale criteria, except goodwill, in the disposal group; the book value of the goodwill written down and the assetsimpairment loss recognized for the non-current assets applying the held for sale criteria before classified as heldfor sale category shall not be written back.The depreciation or amortization is not withdrawn for the non-current assets held for sale or for those in thedisposal group, and the interest and other expenses on liabilities held for sale in the disposal group continue to berecognized.The non-current assets or disposal group, if no longer meeting the classification conditions for held for salecategory, are not classified as the held for sale category and the non-current assets shall be removed from thedisposal group held for sale and measured according to the lower of the following two: (1) amount after adjustmentaccording to the depreciation, amortization, or impairment that would have been recognized if it had not beenclassified as held for sale category, as for the book value before classified as held for sale category; (2)recoverable amount.
15. Long-term equity investment
Long-term equity investment referred to in this part refers to the long-term equity investment in which the Companyhas control, joint control or significant influence over the investee. Long-term equity investment, in which theCompany has no control, joint control or significant influence over the investee, is calculated as available-for-salefinancial assets or FVTPL and its accounting policies are shown in Note IV. 9 “Financial instruments”.Joint control refers to the Company's common control over an arrangement in accordance with the relevantagreement, and the related activities of the arrangement can only be decided upon the unanimous consent of theparties sharing the control. Significant influence means that the company has the power to participate in theformulation of financial and operating policies of the investee, but not the power to control or jointly control theformulation of these policies together with other parties.
(1) Recognition of investment cost
For the long-term equity investment acquired through business combination under common control, the share ofthe book value of the owner’s equity of the combining party in the consolidated financial statements of the finalcontrolling party, on the combination date, is regarded as the initial cost of the long-term equity investment. Thedifference between the initial cost of the long-term equity investment and the payment in cash, non-cash assets
transferred as well as the book value of the debts borne by the merging party shall offset against the capitalreserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. Where equitysecurities are issued as consideration for combination, the share of the book value of the owner’s equity of thecombining party in the consolidated financial statements of the final controlling party, on the combination date, isregarded as the initial cost of the long-term equity investment and the total par value of the issued shares isregarded as the capital stock. The difference between the initial cost of long-term equity investment and the totalpar value of the issued shares is adjusted against capital reserve; if the capital reserve is not sufficient to absorbthe difference, the retained earnings shall be adjusted. If the Company acquires the equity of the combined partyunder common control by steps through several deals and finally forms business combination under commoncontrol, such deals shall be judged whether to belong to “package deal”: if so, the deals shall be subject toaccounting treatment as a deal to obtain the control right. If not, the share of the book value of the owner’s equity ofthe combining party in the consolidated financial statements of the final controlling party, on the combination date,is regarded as the initial cost of the long-term equity investment. The difference between the initial cost of thelong-term equity investment and the sum of the book value of the long-term equity investment before thecombination plus the book value of the new consideration for shares on the combination date is adjusted againstcapital reserve; if the capital reserve is not sufficient to absorb the difference, the retained earnings shall beadjusted. The other comprehensive income of the equity investment held before the combination date, which isaccounted by the equity method or recognized for the available-for-sale financial assets, shall not be subject toaccounting treatment for the time being.For the long-term equity investment acquired through business combination not under common control, thecombined cost on the acquiring date is the initial investment cost of the long-term equity investment and includesthe sum of the fair values of the assets paid by the acquired, liabilities incurred or assumed and equity securitiesissued. If the Company acquires the equity of the acquiree by steps through several deals and finally formsbusiness combination under common control, such deals shall be judged whether to belong to “package deal”: if so,the deals shall be subject to accounting treatment as a deal to obtain the control right. If not, the sum of the bookvalue of the equity investment held in the acquiree and newly increased investment cost shall be considered asinitial cost of the long-term equity investment that calculates according to cost method. Where the equity originallyheld is accounted for by the equity method, other relevant comprehensive income shall not be subject toaccounting treatment for the time being. If the original equity investment is an available-for-sale financial asset, thedifference between its fair value and book value, as well as the change in the accumulated fair value that wasoriginally recorded in other comprehensive income, shall be transferred to the current profit and loss.The intermediary expenses incurred by the combining party or acquirer in respect of auditing, legal services,valuation and consultancy services, etc. and other associated administrative expenses attributable to the businesscombination are recognized in the current profit and loss when they are incurred.Equity investments other than long-term equity investments formed by business combination shall be initiallymeasured at cost, which shall be recognized depending on the acquiring method of the long-term equityinvestments, according to the cash purchase price actually paid by the Company, fair value of equity securitiesissued by the Company, conventional value in the investment contract or agreement, fair value or original bookvalue of the assets surrendered in the exchange of non-monetary assets and fair value of the long-term equityinvestments. Expenses, taxes and other necessary expenses directly related to the acquisition of long-term equityinvestment are also included in the investment cost. Where the Company can exert significant influence on theinvestee or implement joint control but does not control the investee through additional investment, the long-termequity investment cost is the sum of the fair value of the original equity investment recognized according to theAccounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments
and the additional investment cost.
(2) Subsequent measurement and recognition methods of profits and losses
The company employs the equity method to account the long-term equity investment that the invested entity hascontrol over (except those constituting joint operators) or has significant impact on the invested entity. Moreover,the long-term equity investment that can control the investee can be checked by the cost method in the Company’sfinancial statements.
① Long-term equity investment checked by cost method
Under the cost method, a long-term equity investment is measured at initial investment cost and the cost ofadjusting long-term equity investment is added or recovered. Except for cash dividends or profits already declaredbut not yet paid that are included in the price or consideration actually paid upon acquisition of the investment,investment income is recognized in the period in accordance with the attributable share of cash dividends or profitdistributions declared by the investee.
② Long-term equity investment checked by equity method
For checking by the equity method, the initial investment cost of the long-term equity investment is not adjusted if itis greater than the fair value share of the net identifiable assets of the investee in the investment; if the initialinvestment cost of the long-term equity investment is smaller than the fair value share of the net identifiable assetsof the investee in the investment, the balance is charged to current profit and loss and the cost of the long-termequity investment is adjusted.Under the equity method, the Company recognizes the investment income and other comprehensive incomeaccording to its share of net profit or loss and other comprehensive income of the investee, and adjusts the bootvalue of the long-term equity investment accordingly; the Company decreases the book value of the long-termequity investment accordingly in accordance with the share of the profit distribution or cash dividends declared bythe investee; for changes in owners’ equity of the investee other than those arising from its net profit or loss, othercomprehensive income and profit distribution, the Company adjusts the book value of the long-term equityinvestment and records in the capital reserves. The share of the net profits and losses of the investee to beenjoyed shall be recognized after adjustment of the new profits of the investee on the basis of the fair value of theidentifiable assets of the investee when the investment is obtained. Where the accounting policies and accountingperiods adopted by the investee are inconsistent with those of the Company, the financial statements of theinvestee shall be adjusted according to the accounting policies and accounting periods of the Company, and theinvestment income and other comprehensive income shall be recognized accordingly. Where the assets investedor sold for the deals of the Company with joint ventures and cooperative enterprises do not constitute a business,the part of the unrealized internal deal profits and losses attributable to the Company is offset according to theenjoyed proportion and the profit and loss on investments are recognized on this basis. However, unrealizedinternal deal loss between the Company and the investee is not offset if attributable to the impairment loss oftransferred assets. Where the assets invested by the Company in a joint venture or cooperative enterpriseconstitute a business and the investor thus acquires long-term equity investment but does not acquire the controlright, the fair value of the invested business is the initial investment cost of the new long-term equity investment,and the difference between the initial investment cost and the book value of the invested business is fully recordedinto the current profit and loss. Where the assets sold by the Company to a joint venture or cooperative enterpriseconstitute a business, the difference between the acquired consideration and the book value of the business is fullyrecorded into the current profit and loss. Where the assets purchased by the Company from a joint venture orcooperative enterprise constitute a business, the Company shall make accounting treatment according to theAccounting Standards for Business Enterprises No. 20 - Business Combination and recognize any gains or lossesassociated with the deal in full.
The net loss of the investee to be shared is recognized within the limit of the book value of long-term equityinvestment and other long-term equity substantially constituting the net investment of the investee written down tozero. Moreover, if the Company has the obligation to bear the additional loss of the investee, the estimatedliabilities are recognized according to the expected obligation and charged to the current investment loss. If theinvestee achieves the net profits in the later periods, the Company recovers to recognize the gain sharing amountafter making up for the unrecognized loss sharing amount with the gain sharing amount.
③ Acquisition of minority equity
In preparing the consolidated financial statements, the difference between the long-term equity investmentincreased for purchase of minority equity and the share of the net assets to be enjoyed and continuously calculatedfrom the acquiring date (or combination date) according to the increased shareholding ratio is adjusted againstcapital reserve; if the capital reserve is not sufficient to absorb the difference, the retained earnings shall beadjusted.
④ Disposal of long-term equity investment
In consolidated financial statement, when the parent company disposes of part of long-term equity investment inthe subsidiary before losing control rights, the difference between the disposal price and the disposal of long-termequity investment that corresponds to the net assets of the subsidiary shall be included in the stockholder's equity;when the parent company loses its control rights over the subsidiary because of the disposal of part equityinvestment, the accounting treatment shall be conducted according to relevant accounting policies in the Note IV. 5
(2) “Preparation of consolidated financial statements”.
On disposal of the long-term equity investment in the other circumstances, the balance between the book value ofthe equity disposed of and the actual price obtained is charged to current profit and loss.Where the residual equity after disposal of the long-term equity investment measured by employing the equitymethod is still measured by the equity method, on disposal, the other comprehensive income originally recordedinto the stockholder's equity shall be subject to accounting treatment in proportion through adopting the basis forthe direct disposal of relevant assets or debts. The owner's equity recognized due to changes in the owner's equityof the investee other than net profit and loss, other comprehensive income and profit distribution shall be carriedforward into current profit and loss in proportion.Where the residual equity after disposal of the long-term equity investment measured by employing the costmethod is still measured by the cost method, the other comprehensive income recognized for accounting by usingequity method or financial instrument recognition and measurement standard before acquisition of the control overthe investee shall be subject to accounting treatment in proportion through adopting the basis for the directdisposal of relevant assets or debts and carried forward into current profit and loss in proportion; the changes inowners’ equity of the investee other than net profit and loss, other comprehensive income and profit distribution inthe net assets of the investee recognized for accounting by using equity method shall be carried forward intocurrent profit and loss in proportion.When the Company loses its control rights over the investee before of the disposal of part equity investment, onpreparing of individual financial statement, in case of disposed residual equity with joint control or significant impacton the investee, the Company shall calculate with equity method and adjust the residual equity with equity methodsince the time of obtaining; in case of the disposed residual equity being not be able to jointly control or have asignificant impact on the investee, the Company shall conduct accounting treatment according to relevantregulations in Recognition and Measurement of Financial Instruments, and account the balance between the fairvalue on the date losing control and book value into current profit and loss. Other comprehensive incomerecognized for accounting by using equity method or financial instrument recognition and measurement standard
before acquisition of the control over the investee shall be subject to accounting treatment through adopting thebasis for the direct disposal of relevant assets or debts on loss of the control over the investee; the changes inowners’ equity of the investee other than net profit and loss, other comprehensive income and profit distribution inthe net assets of the investee recognized for accounting by using equity method shall be carried forward intocurrent profit and loss. Where the residual equity after disposal is calculated by equity method, the othercomprehensive income and other owner’s equity are carried forward in proportion; where the residual equity afterdisposal is subject to accounting treatment according to the financial instrument recognition and measurementstandard, the other comprehensive income and other owner’s equity are carried forward in full.Where the Company loses its joint control or significant influence over the investee due to disposal of part of equityinvestment, the residual equity after disposal is calculated according to the financial instrument recognition andmeasurement standard, and the balance between the book value and the fair value on the date of loss of the jointcontrol or significant influence is recorded into current profit and loss. Other comprehensive income of the originalequity investment recognized by the equity method shall be subject to accounting treatment through adopting thebasis for the direct disposal of relevant assets or debts when the equity method is terminated. The owner’s equityrecognized for the changes in the owner’s equity of the investee other than the net profit and loss, othercomprehensive income and profit distribution is fully carried forward into the current investment income when theequity method is terminated.If the deals for disposal of the subsidiary’s equity investment by steps through several times of transaction until theloss of the control right belong to a package deal, the deals shall be subject to accounting treatment as a deal fordisposal of the equity investment in the subsidiary and loss of the control right; the difference between eachdisposal price and the book value of the long-term equity investment corresponding to the equity disposed ofbefore the loss of control right is recognized as other comprehensive income and then transferred into the currentprofit and loss in the period of loss of control right.
16. Investment properties
Measurement mode of investment propertiesCost methodMethod of depreciation or amortizationInvestment properties refer to the properties held for rent gain or capital gain or the both thereof, including theleased land use right, land use right held for transfer after appreciation and leased building. In addition, the vacantbuildings held by the Company for operation and lease may also be presented as investment properties if theboard of directors (or similar body) makes a written resolution to use them for operation and lease and the intentionof holding them is not changed in the short term.The investment properties are initially measured by cost. Subsequent expenditure related to investment properties,if the economic benefits related may flow in and the cost can be reliably measured, is included in the cost ofinvestment properties. The other subsequent expenditure is charged to current profit and loss in occurrence.The investment properties are subsequently measured by the Company in the cost mode and depreciated oramortized according to the policy consistent with the house, building or land use right.See Note IV. 20 “Long-term assets impairment” for the impairment test method and accrual method of provision forimpairment of investment properties.In case of conversion of self-use property or inventory to investment property or conversion of investment propertyto self-use property, the book value before conversion shall be recognized as the entry value after conversion.
If an investment property is disposed of, or withdraws permanently from use and it is expected that no economicbenefit will be obtained from the disposal, the investment property shall be derecognized. The income from sale,transfer, scrap or damage disposal of investment properties is included in current profits and losses after deductingthe book value and related taxes.
17. Fixed assets
(1) Recognition conditions
The fixed assets refer to the tangible assets which are held for production of goods, provision of labor, lease oroperating management and whose service life exceeds a fiscal year. The fixed assets can be recognized onlywhen the economic benefits related to the fixed assets are likely to flow to the Company and when the cost of thefixed assets can be reliably measured. The fixed assets are initially measured according to the cost and theinfluence of the expected disposal cost factors.
(2) Depreciation method for fixed assets
The depreciation of the fixed assets is calculated and distilled by the straight-line depreciation method in theservice life from the next month after reaching the expected serviceable conditions. The service life, expected netresidual value and yearly depreciation of various fixed assets are as follows:
| Category | Depreciation method | Depreciation life (year) | Residual rate (%) | Yearly depreciation (%) |
| Houses and building | Straight-line method | 20.00 | 5.00 | 4.75 |
| Machinery equipment | Straight-line method | 10.00 | 5.00 | 9.50 |
| Transportation equipment | Straight-line method | 5.00 | 5.00 | 19.00 |
| Other equipment | Straight-line method | 5.00 | 5.00 | 19.00 |
The expected net residual value is the amount acquired by the Company from the asset disposal after deductingthe expected disposal costs assuming that the expected service life of the fixed asset is expired and the fixed assetis in the expected state at the end of life.
(3) Impairment test method and accrual method of provision for impairment of fixed assets
See Note IV. 20 “Long-term assets impairment” for the impairment test method and accrual method of provision forimpairment of fixed assets.
(4) Recognition basis and valuation methods of fixed assets under financing lease
Finance lease is the lease substantially transferring all risks and remuneration related to the asset ownership andits ownership may be transferred or not finally. The depreciation of the fixed assets under financing lease iscalculated and withdrawn according to the depreciation policy consistent with the own fixed assets. Where it canbe reasonably determined that the ownership of the leased assets can be acquired upon the expiration of the leaseterm, depreciation shall be calculated and withdrawn within the service life of the leased assets; where it isimpossible to reasonably determine that the ownership of the leased assets can be acquired upon the expiration ofthe lease term, the depreciation shall be calculated and withdrawn within a shorter period of the lease term and theservice life of the leased assets.
(5) Other description
Subsequent expenditure related to fixed assets, if the economic benefits related may flow in and the cost can bereliably measured, is included in the fixed asset cost and the book value of the replaced part is derecognized. The
other subsequent expenditure is charged to current profit and loss upon occurrence.When the fixed assets are disposed of or cannot generate economic benefits through expected use or disposal,the fixed assets are derecognized. The income from sale, transfer, scrap or damage disposal of fixed assets isincluded in current profits and losses after deducting the book value and related taxes.The Company shall review the service life, estimated residual value and depreciation method of the fixed assets atleast at the end of each year and handle any change as the accounting estimate change.
18. Construction in progress
The cost of the construction in progress is confirmed according to the actual engineering cost, including allconstruction expenditures incurred during construction, the price costs that shall be capitalized before theconstruction reaches the intended serviceable condition and other related costs. The construction in progress iscarried forward as the fixed assets when reaching the intended serviceable condition.See “Long-term assets impairment” for the impairment test method and accrual method of provision for impairmentof construction in progress.
19. Borrowing costs
Borrowing costs include interest on borrowings, amortization at a discount or premium, auxiliary expenses as wellas the balance of exchange from the foreign currency loans. The construction or production borrowing costsdirectly attributable to the assets meeting the capitalization conditions start capitalizing when the expenditure toacquire and the borrowing costs have occurred and the construction or production activities required to make theassets reach the usable or marketable status have started; stop capitalizing when the construction or productionassets meeting the capitalization conditions reach the usable or marketable status. The other borrowing costs arerecognized as costs in the period of occurrence.The amount of the interest expenses incurred from the special borrowing actually in the current period subtractedby the interest income from the unused borrowing funds in the bank or the investment income from the temporaryinvestment is capitalized; the capitalization amount of the general borrowing is recognized according to theweighted average of the expenditure to acquire of the accumulated expenditure to acquire exceeding the specialborrowing multiplied by the general borrowing occupied. The capitalization rate is calculated and recognizedaccording to the weighted average interest rate of the general borrowing.The balance of exchange of the special borrowing in foreign currency is fully capitalized during the capitalization;the balance of exchange of the general borrowing in foreign currency is charged to the current profit and loss.Assets meeting the capitalization conditions refer to the fixed assets, investment properties, inventories and otherassets which can reach the intended usable or marketable status only after quite a long time of construction orproduction activities.In case of abnormal interrupt of the assets meeting the capitalization conditions for more than 3 consecutivemonths in the construction or production process, the capitalization of the borrowing costs is suspended until theasset construction or production activities resume.
20. Intangible assets
(1) Valuation method, service life and impairment test
(1) Intangible assets
Intangible assets refer to the identifiable non -monetary assets without physical form owned or controlled bythe Company.The intangible assets are initially measured according to the cost: The expenditure related to intangibleassets, if the economic benefits related may flow in the Company and the cost can be reliably measured, isincluded in the cost of intangible assets. The other expenditure of items is charged to current profit and loss inoccurrence.The land use right acquired is generally checked as intangible assets. The relevant land use right expenditureand building construction cost of the self-developed and constructed plants and other buildings are checkedas intangible assets and fixed assets respectively. Relevant price of the purchased houses and buildings isallocated between the land use right and the buildings and that different to distribute reasonably is fullytreated as the fixed assets.The amount of the original value of intangible assets with limited service life minus the estimated residualvalue and accumulated amount of provision for impairment withdrawn is amortized averagely by stages bythe straight-line method in the expected service life. Intangible assets with uncertain service life may not beamortized.The service life and amortization methods of the intangible assets with limited service life are reviewed at theend of each period and any change shall be treated as the accounting estimate change. Moreover, theservice life of the intangible assets with uncertain service life shall be reviewed. If there is evidence that theperiod of economic benefits brought by the intangible assets to the enterprise is foreseeable, the service lifeof the intangible assets is estimated and the intangible assets are amortized according to the amortizationpolicy of the intangible assets with limited service life.
(2) Accounting policy of expenditure for internal research and development
The expenditure of the Company's internal R&D projects is classified into the expenditure at the research stageand the expenditure at the development stage.The expenditure at the research stage is charged to the current profit and loss in occurrence.The expenditure at the development stage can be recognized as intangible assets only when meeting the followingconditions and charged to the current profit and loss if not meeting the following conditions:
① Technically feasible to complete the intangible assets, so that they can be used or sold;
② It is intended to finish and use or sell the intangible assets;
③ Ways of intangible assets to generate economic benefits, including those can prove that the products generated by
the intangible assets can be sold or the intangible assets themselves can be sold and prove that the intangibleassets to be used internally are useful;
④ It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the
support of sufficient technologies, financial resources and other resources; and
⑤ The development expenditures of the intangible assets can be reliably measured.
If the expenditure at the research stage and the expenditure at the development stage cannot be distinguished, the
R&D expenditure incurred is fully charged to the current profit and loss.
(3) Impairment test method and accrual method of provision for impairment of intangible assetsSee Note IV. 20 “Long-term assets impairment” for the impairment test method and accrual method of provision forimpairment of intangible assets.
21. Long-term assets impairment
On the balance sheet date, the Company judges the impairment signs of the fixed assets, construction in progress,intangible assets with limited service life, investment properties measured through the cost method, long-termequity investments in subsidiaries, joint ventures and cooperative enterprises and other non-current non-financialassets and will estimate the recoverable amount and conduct impairment test in case of impairment signs. Thegoodwill, intangible assets with uncertain service life and intangible assets that have not yet reached the usablestate shall be subject to impairment test every year regardless of whether there are signs of impairment.If the impairment test results show that recoverable amount of the asset is below its book value, the provision forimpairment is withdrawn according to the balance and charged to the impairment loss. The recoverable amount isdetermined according to the higher of the net amount of the assets fair value subtracted by the disposal costs andthe present value of the expected future cash flow of the assets. The assets fair value is recognized according tothe sales agreement price in the fair transaction; if there is no sales agreement but there is assets active market,the fair value is recognized according to the buyer's price of the asset; if there is no sales agreement or activemarket, the fair value is estimated on the basis of the best information available. The disposal costs include legalexpenses, related expenses of taxation and carriage expenses related to assets disposal as well as the directexpenses incurred for the assets to reach the marketable conditions. The current value of the future cash flow of anasset is determined by the discounted cash with an appropriate discount rate, on the basis of the expected futurecash flow generated during the continuous use or final disposal of an asset. The provision for impairment of assetsis calculated and recognized on the basis of single asset. The Company recognizes the recoverable amount of theasset group based on the asset group to which the asset belongs if the recoverable amount of the single asset isdifficult to estimate. An asset group is the smallest group of assets that can generate cash inflows independently.The book value of the goodwill separately presented in the financial statements is amortized to the asset group orasset group combination expected to benefit from the synergies of the business combination during the impairmenttest. If the test results show that the recoverable amount of the asset group or asset group combination containingthe amortized goodwill is lower than its book value, the corresponding impairment loss shall be recognized. Theamount of impairment loss shall first offset the book value of goodwill amortized to the asset group or asset groupcombination, and then offset the book value of other assets proportionally according to the proportion of the bookvalue of assets other than goodwill in the asset group or asset group combination.The impairment loss of above assets will not be transferred back to the part whose value is recovered in thesubsequent period once recognized.
22. Long-term unamortized expenses
Long-term unamortized expenses refer to the expenses that have occurred but shall be burdened in the reportingperiod and later periods with the apportionment period more than one year. The Company's long-term unamortizedexpenses mainly include advertising endorsement fees, decoration costs and so on. Long-term unamortizedexpenses are amortized by the straight-line method in the expected benefit period.
23. Employee compensation
(1) Short-term compensation accounting method
The Company’s employee compensation mainly includes short-term compensation, post-employment benefits,dismission welfare and other long-term employee services and benefits. Where:
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services andbenefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing fund,labor union expenditure and personnel education fund, non-monetary benefits, etc. The short-term compensationactually happened during the accounting period when the active staff offering the service for the Company shall berecognized as liabilities and is included in the current gains and losses or relevant assets cost. The non-monetarybenefits are measured as per the fair value.
(2) Post-employment benefits accounting method
Post-employment benefits mainly include basic endowment insurance and unemployment insurance. Thepost-employment benefit plans include defined contribution plan. If a defined contribution plan is adopted, thecorresponding amount payable shall be recorded into the cost of relevant assets or current profit and loss whenoccurred.
(3) Termination benefits accounting method
The Company puts forward compensation for an employee to terminate the labor relationship with the employeebefore expiry of the employee labor contract or to encourage the employee to accept the reduction voluntarily.When failing to unilaterally withdraw the dismission welfare due to termination of labor relation plan or downsizingsuggestions, or when recognizing the costs related to restructuring involving payment of dimission welfare(whichever comes first), the Company recognizes the employee compensation liabilities from the dismissionwelfare and includes in current profit and loss. Where the dismission welfare is not expected to be fully paid within12 months after the end of the annual reporting period, the relevant provisions on other long-term employeebenefits shall apply.
(4) Other long-term employee benefits accounting method
The internal retirement plan of employees is treated according to the same principle with above dismissal welfare.The wages to be paid to the internal retirees and the social insurance premium to be paid in the period from thedate when the retirees stop providing services to the normal retirement date are charged to the current profit andloss (dismissal welfare) when meeting the recognition conditions of estimated liabilities. The other long-termemployee benefits that the company offers to the staffs, if meeting with the setting drawing plan, are accountedaccording to the setting drawing plan, while the rest are disposed of according to the setting revenue plan.
24. Estimated liabilities
The estimated liabilities are recognized when the obligation related to contingencies meets the following conditionssimultaneously: (1) The obligation is the current obligation undertaken by the Company; (2) Performance of theobligation is likely to lead to the outflow of economic benefits; (3) The amount of the obligation can be reliably
measured.On the balance sheet date, the Company shall take into full consideration of the risks, uncertainty, time value ofmoney, and other factors pertinent to the contingencies to measure the estimated liabilities in accordance with thebest estimate of the necessary expenses for the performance of the current obligation.When all or some of the expenses necessary for the liquidation of an estimated liabilities is expected to becompensated by a third party, the compensation shall be separately recognized as an asset only when it is virtuallycertain that the reimbursement will be obtained. Besides, the amount recognized for the reimbursement shall notexceed the book value of the estimated liabilities.
25. Share-based payment
(1) share-based payment accounting method
The term share-based payment refers to a transaction in which the company grants equity instruments orundertakes equity-instrument-based liabilities in return for services from employee or other parties. Theshare-based payments shall consist of equity-settled share-based payments and cash-settled share-basedpayments.
① Equity-settled share-based payments
The equity-settled share-based payment in return for employee services is measured at the fair value of the equityinstruments granted to the employees. The amount of such fair value, under the situation that the rights can onlybe exercised after the service is finished and the set performance is achieved within the waiting period, and basingon the optimum estimation for the number of equity instrument which exercise rights within the waiting period, willbe measured according to straight-line method and counted into relevant costs and expenses. When the rights canbe exercised immediately after being granted, the payment will be counted into relevant costs and expenses, andthe capital reserve will be increased correspondingly.On each and every balance sheet date within the waiting period, the Company will make optimum estimationsaccording to the newly-obtained subsequent information after the changes occurred in the number of employeeswho exercise rights so as to modify the predicted number of the equity instrument of exercising rights. Theinfluence from above-mentioned estimations will be counted into relevant costs and expenses at the current period,and the corresponding adjustment will be made for the capital reserve.If the fair value of the other parties’ service can be reliably measured, the share-based payment settled by equitieswhich is used for exchanging the service of other parties will be measured according to that fair value on date ofacquisition. If not, but the fair value of the equity instrument can be reliably measured, the payment will be countedaccording to the fair value of the equity instrument on date of service acquisition, and it will be counted into relevantcosts and expenses, and the equity of the shareholders will be increased correspondingly.
② Share-based payment settled by cash
The share-based payment settled by cash will be measured according to the fair value of the liability confirmedbasing on the shares borne by the company and other equity instruments. If the rights can be exercisedimmediately after being granted, the payment will be counted into relevant costs or expenses and the liability willbe increased correspondingly. If the rights can only be exercised after the situation that service within the waitingperiod is completed and set performance is achieved, the service obtained at the current period, according to thefair value amount of the liability borne by the company, and basing on the optimum estimation for the condition ofexercising rights, will be counted into costs or expenses on each and every balance sheet date during the waitingperiod, and the liability will be increased correspondingly.
Each and every balance sheet date and settlement before relevant liability settlement, the fair value of liability willbe remeasured, of which changes occurred will be counted into the current period.
(2) Relevant accounting treatment of modification and termination for share-based payment plan
When the Company modifies the share payment plan, if the fair value of the equity instrument granted is increasedafter the modification, the increase in the service obtained will be correspondingly confirmed according to theincrease in the fair value of equity instrument. The increase in the fair value of equity instrument means thebalance between the equity instrument before modification and the equity instrument after modification onmodification date. If decrease occurred in the total fair value of the equity instrument after the modification ormethods which are unbeneficial to employees are adopted in the modification, accounting treatment will stillcontinue to be made for the service obtained, and such changes will be regarded as changes that have neveroccurred unless the company has canceled partial or all granted equity instruments.During the waiting period, if the granted equity instrument is canceled, the company will treat the canceled equityinstrument as the accelerated exercise of power, and immediately include the balance that shall be recognized inthe remaining waiting period into the current profit and loss, and simultaneously confirm the capital reserve. If theemployee or other party can choose to satisfy the non-exercisable condition but not satisfied in the waiting period,then the company will treat it as cancellation of the granted equity instrument.
(3) Accounting treatment involving the share payment transaction between the company and the shareholders or the
actual controller of the companyWhere involves the share payment transaction between the company and the shareholders or the actual controllerof the company and one of the parties of the settlement company and the service-accepting company is within thecompany and the other is not within the company, then the company performs the accounting treatment in theconsolidated financial statements of the company according to the following provisions:
① If the settlement company settles in its own equity instrument, then it treats the equity payment transaction as the
equity-settled equity payment; otherwise, it treats as the cash-settled equity payment.If the settlement company is an investor to the service-accepting company, it shall be recognized as a long-termequity investment in the service-accepting company in accordance with the fair value of the equity instrument orthe fair value of the liability it is assumed to bear on the grant date, and the capital reserve (other capital reserve) orliabilities shall be recognized at the same time.
② If the service-accepting company has no settlement obligation or confers its own equity tools on the employees of
the company, then such equity payment transaction shall be treated as equity-settled equity payment; if theservice-accepting company has the settlement obligation and confers the employees of the company with not itsown equity instrument, then such equity payment transaction shall be treated as cash-settled equity payment;In the case of the equity payment transaction occurs between the companies within the company, and theservice-accepting company and the settlement company are not the same company, then the confirmation andmeasurement of the equity payment transaction shall be carried out respectively in the financial report of theservice-accepting company and the settlement company, with the same analogy of the above-said principle.
26. Preferred shares, perpetual bonds and other financial instruments
(1) Distinction between perpetual bonds and preferred shares
The financial instrument such as perpetual bonds and preferred shares issued by the Company, which meets thefollowing conditions, shall be regarded as an equity instrument:
① The financial instrument does not include contractual obligations to deliver cash or other financial assets to other
parties or to exchange financial assets or financial liabilities with other parties under potentially adverse conditions;
② If the financial instrument that shall or may be settled with the enterprise's own equity instrument in the future is a
non-derivative instrument, it does not include the contractual obligations to deliver a variable number of its ownequity instruments for settlement; if it is a derivative instrument, it can only be settled by a fixed amount of cash orother financial assets in exchange for a fixed number of the Company’s own equity instruments.Except for financial instruments that can be classified as equity instruments according to the above conditions,other financial instruments issued by the Company shall be classified as financial liabilities.A financial instrument issued by the Company is recognized as a liability according to the fair value of the liabilitycomponent if it is a compound instrument, and the amount of the balance between the amount received actuallyand the fair value of the liability component is recognized as “other equity instruments”. Transaction costs incurredin issuing compound instruments shall be apportioned between the liability component and the equity componentin proportion to the total issuance price respectively.
(2) Accounting treatment method of perpetual bonds and preferred shares
The interest, dividends, gains or losses related to perpetual bonds and preferred shares classified as financialliabilities, as well as gains or losses from redemption or refinancing, shall be recorded into current profit and lossexcept for the borrowing costs eligible for capitalization (see “Borrowing costs” in the note).The issuance (including refinancing), repurchase, sales or cancellation of financial instrument such as perpetualbonds and preferred shares classified as equity instruments is handled as the equity changes, and relevanttransaction costs are deducted from the equity. The distribution of equity instrument holders by the Company shallbe treated as profit distribution.The Company does not recognize the fair value change of the equity instruments.
27. Income
Does the Company need to follow the disclosure requirements of special industriesNoAccounting policies for income recognition and measurement
(1) Income from selling commodities
The income from sale of goods can be recognized only meeting the following conditions: the Company hastransferred the main risks and rewards on the property in the goods to the buyer; the Company neither retains theright to continue to manage related to the property, nor effectively controls goods that have been sold; the incomeamount can be measured reliably; related economic benefits are likely to flow to the Company; the costs related,incurred or to be incurred can be measured reliably.Agency mode: according to the commission sales contract signed by the company and the regional agency, thecompany shall recognize the income after receiving the consignment sale list or sales list summary sheet from theagency;E-commerce: after the customer places an order, the company will deliver the goods and receive the payment. Thecompany recognizes the income according to the time when the order is completed. The platform shall beresponsible for delivery and collection of payment, and the company shall settle and recognize the incomeaccording to the sales list provided by the platform;TV shopping: TV shopping platform informs the company of delivery according to the customer order, and thecompany recognizes the income according to the sales list provided by TV shopping platform;Project type: deliver goods according to the customer order, the company recognizes the income according to the
receipt form after the customer receives goods;Distribution mode: deliver goods according to the customer order, the company recognizes the income accordingto the receipt form after the customer receives goods;Export revenue from customs declaration: the revenue is recognized according to the export date on the customsdeclaration.
(2) Income from offering labor
The Company recognizes the income from offering labor at the balance sheet date with the percentage ofcompletion method when the results of the labor transactions can be estimated reliably. The completion scheduleof the labor transaction is recognized according to the proportion of the costs incurred in the total estimated costs.The results of the labor transactions can be estimated reliably when ① the income amount can be measuredreliably; ② related economic benefits are likely to flow to the Company; ③ the completion schedule of the labortransactions can be recognized reliably; and ④ the costs incurred or to be incurred in the transactions can bemeasured reliably.If the results of the labor transactions cannot be estimated reliably, the income from offering labor is recognizedaccording to the labor cost amount incurred and expected to be compensated, and the labor cost incurred isconsidered as current expenses. If the labor cost incurred is expected not to be compensated, the income is notrecognized.If the part of selling commodities and the part of offering labor can be distinguished and independently measuredwhen the contract or agreement signed by the Company with other enterprises includes selling commodities andoffering labor, the two parts shall be disposed of respectively; if they cannot be distinguished, or if they can bedistinguished but cannot be independently measured, the contract shall be fully treated as the part of sellingcommodities.
(3) Interest revenue
The interest income amount is recognized according to the time when others use the Company’s monetary capitaland the effective interest rate.Differences in income recognition accounting policies caused by different business modes for the same business
28. Government subsidies
The government subsidies refer to the monetary assets and non-monetary assets obtained by the Company fromthe government free of charge, excluding the capital invested by the government as an investor with thecorresponding owner's equity, and are classified into asset related government subsidies and the income relatedgovernment subsidies. The government subsidies acquired by the Company for acquisition or construction or forformation of long-term assets in other ways are defined as asset related government subsidies; the othergovernment subsidies are defined as income related government subsidies. The government subsidies withoutsubsidy objects specified in government documents are classified into income related government subsidies andasset related government subsidies in the following ways: (1) If the government documents specify the specificproject targeted by subsidies, the division shall be made according to the relative proportion of the amount ofexpenditure forming assets and the amount of expenditure recorded into expenses in the budget of the specificproject. The division proportion shall be reviewed on each balance sheet date and changed if necessary; (2) If thepurpose is only described in general terms and the specific project is not specified in the government documents,the subsidies shall be regarded as income related government subsidies. The government subsidies as themonetary assets are measured according to the amount received or receivable. The government subsidies not as
the monetary assets are measured according to the fair value and measured according to the nominal amount ifthe fair value cannot be obtained reliably. The government subsidies measured by nominal amount are directlyincluded in current profits and losses.The Company shall recognize and measure the government subsidies according to the amount actually receivedwhen actually received. However, if there is evidence at the end of period that the Company can meet relevantconditions stipulated in the financial support policy and can be expected to receive the financial support fund, thegovernment subsidies are measured according to receivables. Government subsidies measured according toreceivables shall also meet the following conditions: (1) The amount of the subsidies receivable has beenconfirmed by the competent government departments, or can be reasonably calculated according to the relevantprovisions of the officially issued financial fund management measures, and it is expected that there is no materialuncertainty about the amount; (2) The government subsidies are based on the financial support projects andfinancial fund management measures officially issued by local financial departments and made public voluntarily inaccordance with the Regulations on Government Information Disclosure and the management measures shouldbe universal (any enterprise meeting the specified conditions can apply for the subsidies), rather than specific tospecific enterprises; (3) In the approval document of the relevant subsidies, the time limit for the appropriation ofthe subsidies has been clearly promised, and the appropriation of the subsidies is guaranteed by thecorresponding financial budget, so it can be reasonably guaranteed that the subsidies can be received within thespecified time limit; and (4) Other relevant conditions (if any) that shall be met according to the specific situation ofthe Company and the subsidies.Where the government subsidies pertinent to assets are recognized as deferred income, they are included byinstallments in the current profit and loss in a reasonable and systematic manner within the useful lives of therelevant assets. The income related government subsidies, if used to compensate for related costs or losses insubsequent periods, are recognized as the deferred income and charged to the current profit and loss whenrelated costs or losses are recognized, and, if used to compensate for related costs or losses incurred, are directlycharged to the current profit and loss.Government subsidies including asset related part and income related part are subject to accounting treatmentrespectively by distinguishing different parts; if it is difficult to distinguish, the government subsidies shall beclassified as the income related government subsidies as a whole.The government subsidies pertinent to the daily activities of the Company shall be included in other income orused to offset relevant costs and expenses according to the substance of the economic business. The governmentsubsidies irrelevant with the daily activities of the Company shall be included in non-operating revenues andexpenditures.The recognized government subsidies needing to be returned are disposed of accordingly: for those with relateddeferred income, the book balance of related deferred income is written down and the excess is accounted into thecurrent profits and losses; in the other cases, they are directly accounted into the current profits and losses.
29. Deferred income tax assets and deferred income tax liabilities
(1) Current income tax
The current income tax liability (or asset) formed in the current and previous periods is measured according to theexpected payable (or returnable) income tax amount calculated as per the tax law on the balance sheet date. Thetaxable income for calculation of the current income tax expense is calculated after corresponding adjustment tothe pre-tax accounting profit in the current year according to relevant tax law.
(2) Deferred income tax assets and deferred income tax liabilities
For the temporary differences generated from the balance between the book value and tax base of some assetsand liabilities as well as the balance between the book value and tax base of the items not recognized as assetsand liabilities but with the tax base determinable according to tax law, the deferred income tax assets and liabilitiesare recognized by the balance sheet liability method.For the taxable temporary differences related to the initial recognition of reputation and related to the initialrecognition of the assets or liabilities incurred in the transaction that is not business merger and will not affect theaccounting profits and income tax payable (or deductible loss) upon occurrence, relevant deferred income taxliabilities are not recognized. Moreover, for the taxable temporary difference related to the investment of thesubsidiaries, associated enterprises and joint ventures, relevant deferred income tax liabilities are not recognized ifthe Company can control the temporary difference write-back time and the temporary difference will probably notbe written back in the foreseeable future. Except for the above exceptions, the Company recognizes the deferredincome tax liabilities from all other taxable temporary differences.For the deductible temporary differences related to the initial recognition of the assets or liabilities incurred in thetransaction that is not business merger and will not affect the accounting profits and income tax payable (ordeductible loss) upon occurrence, relevant deferred income tax assets are not recognized. Moreover, for thedeductible temporary difference related to the investment of the subsidiaries, associated enterprises and jointventures, relevant deferred income tax assets are not recognized if it is not likely to write back the temporarydifference in the foreseeable future or to obtain the income tax payable used to offset the deductible temporarydifference in the future. Except for the above exceptions, the Company recognizes the deferred income tax assetsby deductible temporary differences within the limit of the income tax payable that may be obtained in the futureand used to offset the deductible temporary differences.For the deductible loss and tax deduction that can be carried forward to the subsequent year, the correspondingdeferred income tax assets are recognized within the limit of the future taxable income amount that is possiblyobtained to deduct the deductible loss and tax deduction.The deferred income tax assets and deferred income tax liabilities are measured on the balance sheet dateaccording to the tax law and the applicable tax rate in the period of expected recovery of relevant assets ofliquidation of relevant liabilities.The book value of the deferred income tax assets is reviewed on the balance sheet date. If it is likely not to obtainsufficient income tax payable to deduct the interests of the deferred income tax assets in the future, the book valueof the deferred income tax assets is written down. If it is likely to obtain sufficient income tax payable, the amountwritten down is written back.
(3) Income tax expenses
The income tax expenses include current income tax and deferred income tax.Except for that the current income tax and deferred income tax related to the transactions and matters recognizedas other comprehensive income or directly included in the owner’s equipment are included in other comprehensiveincome or the stockholder's equity and that the deferred income tax generated from the business combinationadjusts the book value of the goodwill, the other current income tax and deferred income tax expenses or benefitsare charged to current income and loss.
(4) Income tax offset
When the Company has the legal right to settle with net amount and intends to settle with net amount or obtain theassets and liquidate the liabilities simultaneously, the income tax assets and income tax liabilities of the Companyin the current period are presented by the net amount after offset.When the Company has the legal right to settle the income tax assets and income tax liabilities of the Company in
the current period with net amount and the deferred income tax assets and deferred income tax liabilities arerelated to the income tax levied by the same tax collection and management department from the same subject oftax payment or from different subjects of tax payment but the subject of tax payment involved intends to settle thecurrent income tax assets and liabilities with the net amount or obtain the assets and liquidate the liabilitiessimultaneously in each future important period when the deferred income tax assets and liabilities are written back,the Company's deferred income tax assets and deferred income tax liabilities are presented by the net amountafter offset.
30. Leased
(1) Accounting treatment method of operating lease
(2) Accounting treatment method of finance lease
Finance lease is the lease substantially transferring all risks and remuneration related to the asset ownership andits ownership may be transferred or not finally. The lease other than the finance lease is operating lease.
(1) Operating lease recorded by the Company as the lessee
The rental expense of operating lease is charged to relevant asset cost or current profit and loss by thestraight-line method in each period of the lease term. The initial direct costs are charged to the current profitand loss. The contingent rental is charged to the current profit and loss in actual occurrence.
(2) Operating lease recorded by the Company as the lessor
The rental income of operating lease is recognized as current profit and loss by the straight-line method ineach period of the lease term. The initial direct costs of large amount are capitalized in occurrence andcharged to the current profit and loss according to the same basic installment with the rental incomerecognition in the whole lease term; the other initial direct costs of small amount are charged to the currentprofit and loss in occurrence. The contingent rental is charged to the current profit and loss in actualoccurrence.
(3) Finance lease recorded by the Company as the lessee
Upon commencement of the lease term, the lower of the fair value of the leased asset on the leasecommencement date and the present value of the minimum lease payment is deemed as the entry value ofthe leased asset and the minimum lease payment is deemed as the entry value of the long-term payables,and their balance is deemed as the unrecognized finance fees. Moreover, the initial direct costs attributable tothe lease project in the lease negotiation and lease contract signing process is also charged to the value ofthe leased asset. The balance of the minimum lease payment deducting the unrecognized finance fees islisted as the long-term liabilities and the long-term liabilities due within a year respectively.The unrecognized finance fees of the current period are recognized by the effective interest method in thelease term. The contingent rental is charged to the current profit and loss in actual occurrence.
(4) Finance lease recorded by the Company as the lessor
Upon commencement of the lease term, the sum of the minimum lease collection on the leasecommencement date and the initial direct costs is deemed as the entry value of the lease financingreceivables and the non-guarantee remaining sum is recorded; the balance of the sum of minimum leasecollection, initial direct costs as well as the non-guarantee remaining sum and the sum of their present valueis recognized as the unrealized financing income. The balance of the lease financing receivables after
deducting the unrealized financing income is listed as the long-term claims and the long-term claims duewithin a year respectively.The unrealized financing income of the current period are recognized by the effective interest method in thelease term The contingent rental is charged to the current profit and loss in actual occurrence.
31. Other significant accounting policy and accounting estimate
(1) Termination of operation
Termination of operation refers to a separate component of the Company that meets one of the following conditionsand has been disposed of or classified as available-for-sale: ① This component represents an independent majorbusiness or a separate major area of business; ② This component is part of an associated plan to dispose of anindependent major business or a separate major area of business; ③ This component is a subsidiary acquiredspecifically for resale.See Note IV. 12 “Assets held for sales and disposal group” for the accounting treatment method for termination ofoperation.
(2) Repurchase of shares
The gains or losses are not recognized when the consideration and transaction costs paid in the share repurchaseare used to reduce the stockholder’s equity in the repurchase, transfer or cancellation of the Company’s shares.The transferred treasury stock is recorded into the capital reserve according to the difference between the amountreceived actually and the carrying amount of the capital reserve; if the capital reserve is not sufficient to absorb thedifference, the surplus reserve and undistributed profit are offset. The treasury stock is canceled according to theface value of the stock and the number of stocks canceled, and the capital reserve shall be offset according to thedifference between the book balance and face value of the stock canceled. If the capital reserve is insufficient, thesurplus reserve and undistributed profit shall be offset.
32. Significant accounting policy and accounting estimate change
(1) Changes in significant accounting policies
√ Applicable □ Not applicable
① Changes in accounting policies resulting from the implementation of new financial instrument standards
The Ministry of Finance issued the Accounting Standards for Business Enterprises No.22 - Recognition andMeasurement of Financial Instruments (2017 Revision) (CK [2017] No.7), Accounting Standards for BusinessEnterprises No.23 - Transfer of Financial Assets (2017 Revision) (CK [2017] No.8), Accounting Standards forBusiness Enterprises No.24 - Hedging (2017 Revision) (CK [2017] No.9) on March 31, 2017 and issued theAccounting Standards for Business Enterprises No.37 - Presentation of Financial Instruments (2017 Revision) (CK[2017] No.14) on May 2, 2017 (the above standards are collectively referred to as the “new financial instrumentstandards”), requiring the domestic listed enterprises to implement the new financial instrument standards fromJanuary 1, 2019.After adoption of resolution of the Company’s 11
th
meeting of the 4
thBoard of Directors on August 26, 2019, theCompany implements the above new financial instrument standards from January 1, 2019.All recognized financial assets under the new financial instrument standards are subsequently measured at
amortized cost or fair value. On the implementation date of the new financial instrument standards, the Companyevaluates the business model of managing financial assets based on the facts and circumstances on the date,evaluates the contractual cash flow characteristics of financial assets according to the facts and circumstances oninitial recognition of the financial assets and classifies the financial assets into financial assets measured at theamortized cost, financial assets measured at fair value of which changes are recorded into other comprehensiveincome and FVTPL. Where, when the financial assets measured at fair value of which changes are recorded intoother comprehensive income are derecognized, the accumulated gains or losses previously recorded in othercomprehensive income will be transferred from other comprehensive income to retained earnings, not included incurrent profit and loss.Under the new financial instrument standards, the Company withdraws the provision for impairment for thefinancial assets measured at the amortized cost, debt instrument investments measured at fair value of whichchanges are recorded into other comprehensive income, lease receivables, contract assets and financialguarantee contracts based on the expected credit loss, and recognizes the credit impairment loss.The Company retroactively applies the new financial instrument standards and does not restate if the earlycomparison of the financial statement data involved in the classification and measurement (including impairment)is inconsistent with the new financial instrument standards. Therefore, for the cumulative impact of the firstimplementation of the standards, the Company adjusts the retained earnings or other comprehensive earnings atthe beginning of 2019 and the amount of other relevant items in the financial statements. The financial statementsof 2018 are not restated.The major changes and influences of the implementation of the new financial instrument standards on theCompany are as follows:
—— The Company designates some non-transactional equity investments to be held on and after January 1, 2019as the financial assets measured at fair value of which changes are recorded into other comprehensive income,and presented as other equity instrument investments.On the first implementation date, the book value of the original financial assets is adjusted to a reconciliationstatement of the book value of the new financial assets classified and measured in accordance with the newfinancial instrument standards.Impact on consolidated financial statements
| Item | December 31, 2018 (before change) | Reclassification | Remeasurement | January 1, 2019 (after change) |
| Available-for-sale financial assets (original standards) | 119,948,534.00 |
| Less: those transferred to other equity instrument investments | 119,948,534.00 | |||
| Other equity instrument investments | —— |
| Plus: those transferred from available-for-sale financial assets (original standards) | 119,948,534.00 | |||
| Amount presented according to new financial instrument standards | 119,948,534.00 |
Impact on the Company’s financial statements
| Item | December 31, 2018 (before change) | Reclassification | Remeasurement | January 1, 2019 (after change) |
| Available-for-sale financial assets (original standards) | 119,948,534.00 | |||
| Less: those transferred to other equity instrument investments | 119,948,534.00 | |||
| Other equity instrument investments | —— | |||
| Plus: those transferred from available-for-sale financial assets (original standards) | 119,948,534.00 | |||
| Amount presented according to new financial instrument standards | 119,948,534.00 |
(2) Significant accounting estimate change
□ Applicable √ Not applicable
(3) Adjustment of relevant items in financial statements at the beginning of the first
implementation year as a result of first implementation of new financial instrumentstandards, new income standards and new release standardsSee Note 32: Significant accounting policy and accounting estimate change/(1) Changes in significant accountingpolicies
(4) Retrospective adjustment of early comparative data description as a result of first
implementation of new financial instrument standards and new release standards
□ Applicable √ Not applicable
33. Other
Due to the inherent uncertainty of operating activities during the use of the accounting policies, 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 past experience of the Company's managementand other relevant factors and will affect the reported amounts of income, expenses, assets and liabilities and thedisclosure of contingent liabilities on the balance sheet date. However, the actual results caused by the uncertaintyof these estimates may be different from the current estimates of the Company's management, resulting in asignificant adjustment of the carrying amount of the assets or liabilities to be affected in the future.The Company shall periodically review the aforementioned judgments, estimates and assumptions on the basis ofgoing concern. If the accounting estimate change only affects the change period, the influence number shall berecognized in the change period; if it affects both the current and future periods of the change, the influencenumber shall be recognized 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 items in the financialstatements in the following important areas:
(1) Provision for bad debt
The allowance method is used for the accounting of the bad debt loss according to the accounting policies of thereceivables. The impairment of receivables is based on assessing the collectability of receivables. The
management shall judge and estimate the appraisal of impairment of receivables. The difference between theactual result and the original estimate will affect the book value of the receivables and the accrual or write-back ofprovision for bad debt of receivables during the period when the estimate is changed.
(2) Depreciation reserves for inventories
According to the inventory accounting policies, the Company measures the inventories according to the cost ofinventories or net realizable value, whichever is lower, and withdraws the inventory falling price reserves for theobsolete and unmarketable inventories and the inventories with the cost higher than the net realizable value. Theimpairment of inventory to net realizable value is based on the evaluation of inventory marketability and netrealizable value. For appraisal of the inventory impairment, the management is required to make judgments andestimates based on conclusive evidence and taking into account such factors as the purpose of holding inventoryand the impact of post-balance sheet events. The difference between the actual result and the original estimate willaffect the book value of the inventory and the accrual or write-back of inventory falling price reserves during theperiod when the estimate is changed.
(3) Financial assets impairment
The Company evaluates the impairment of financial instruments by using the expected credit loss model, whichrequires major judgment and estimates and requires considering all reasonable and substantiated information,including forward-looking information. In making such judgments and estimates, the Company deduces theexpected changes of the debtor's credit risks based on historical data combined with economic policies,macroeconomic indicators, industrial risks, external market environment, technical environment, changes incustomer conditions and other factors.
(4) Fair value of financial instruments
The fair value of the financial instruments that do not have active trading markets is determined by the Companythrough various valuation methods, including discount cash flow model analysis. During the valuation, theCompany needs to estimate future cash flow, credit risk, market volatility and correlation, and select an appropriatediscount rate. These relevant assumptions are uncertain, and their changes will have an impact on the fair value offinancial instruments. Where an equity instrument investment or contract is quoted publicly, the Company shall nottake the cost as the best estimate of its fair value.
(5) Provision for impairment of long-term assets
On the balance sheet date, the Company judges whether there is any sign of possible impairment of non-currentassets other than financial assets. The intangible assets with uncertain service life, in addition to the annualimpairment test, shall also be subject to the impairment test when there are signs of impairment. A non-currentasset other than financial assets shall be subject to the impairment test when there is an indication that its bookamount is not recoverable.An impairment occurs when the book value of an asset or asset group is higher than the recoverable amount, i.e.the higher of the net amount of the fair value subtracted by the disposal costs and the present value of theexpected future cash flow.The net amount of the fair value subtracted by the disposal costs is recognized by reference to the salesagreement price or observable market price of a similar asset in a fair transaction subtracted by the incrementalcost directly attributable to the disposal of the asset.When estimating the present value of future cash flows, the Company shall make important judgments about theoutput, selling price, related operating costs of the asset (or asset group) and discount rate used in calculating thepresent value. In estimating recoverable amounts, the Company will use all relevant information available,including projections of the output, selling price and related operating costs based on reasonable and supportable
assumptions.The Company shall test goodwill impairment at least annually. This requires an estimate of the present value of thefuture cash flows of the asset group or asset group combination that has been allocated goodwill. When estimatingthe present value of future cash flows, the Company needs to estimate the cash flow generated by future assetgroup or asset group combination, and select the appropriate discount rate to determine the present value of futurecash flows.
(6) Depreciation and amortization
The Company withdraws depreciation and amortization of the investment properties, fixed assets and intangibleassets by straight-line method within their service life after considering the residual value. The Companyperiodically reviews the service life to determine the amount of depreciation and amortization charges to beincluded in each reporting period. The service life is determined by the Company based on the previousexperience of similar assets and the expected technical update. Depreciation and amortization costs will beadjusted for future periods in the event of significant changes in previous estimates.
(7) Deferred income tax assets
The Company recognizes deferred income tax assets according to all unutilized tax losses to the extent that theCompany is likely to have sufficient taxable profits to offset losses. Therefore, the Company’s management isrequired to estimate the time of amount of future taxable profits based on a lot of judgments and combine the taxplanning strategies to determine the amount of deferred income tax assets to be recognized.
(8) 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 presented before tax needs the approval of taxauthorities. The difference between the final determination result of these tax matters and the original estimatedamount, if any, will affect the current income tax and deferred income tax during the final determination period.VI. Tax
1. Main tax categories and tax rates
| Tax category | Taxation basis | Tax rate |
| Added value tax | The output tax on taxable income shall be calculated at the rate of 13%, and the VAT shall be calculated on the difference after deducting the input tax allowed to be deducted in the current period. | 13% |
| Urban maintenance and construction tax | 7% of the turnover tax actually paid | 7% |
| Corporate income tax | 25% of the income tax payable. | 25% |
| Education surcharge | 3% of the turnover tax actually paid | 3% |
| Surcharge for local education | 1%-2% of the turnover tax actually paid | 1%-2% |
| Land use tax | Taxable land area actually occupied (m2) *5~10 yuan/m2 | 5-10 yuan/m2 |
| Housing property tax | For taxation according to price, original value of taxable property * (1-30%) *1.2%, for taxation according to rent, rental income *12%. | 0.84%, 12% |
2. Tax preference
On November 13, 2017, the Science Technology Department of Zhejiang Province, Zhejiang Provincial
Department of Finance, Zhejiang Provincial Tax Service of State Taxation Administration and Zhejiang LocalTaxation Bureau jointly issued a high-tech enterprise certificate (No. GR201,733,000,884) and the Companypassed the high-tech enterprise identification for 3 years. According to relevant regulations, after passing thehigh-tech enterprise identification, the Company can enjoy the relevant preferential policies of the state onhigh-tech enterprises for three consecutive years (i.e., the income tax preference period is from January 1, 2017 toDecember 31, 2019), and the enterprise income tax shall be levied at the rate of 15%;On October 3, 2018, the General Office of the People's Government of Zhejiang Province issued a document(ZZBF [2018] No. 99), stipulating that class A enterprises were fully exempted from the urban land use tax fromJanuary 1, 2018 to December 31, 2019. Robam is a class A enterprise and enjoys the preferential policy of fullexemption from the urban land use tax.
3. Other
VII. Notes to items in consolidated financial statements
1. Monetary capital
Unit: yuan
| Item | Ending balance | Beginning balance |
| Cash on hand | 459,629.14 | 380,338.61 |
| Bank deposit | 2,559,178,772.32 | 2,176,839,520.24 |
| Other monetary capital | 19,088,012.03 | 19,486,949.50 |
| Total | 2,578,726,413.49 | 2,196,706,808.35 |
Other descriptionNote: Other monetary capital is guarantee deposit.
2. Notes receivable
(1) Classified presentation of notes receivable
Unit: yuan
| Item | Ending balance | Beginning balance |
| Bank acceptance bill | 895,269,110.24 | 994,646,272.00 |
| Trade acceptance | 577,509,074.11 | 273,500,024.01 |
| Total | 1,472,778,184.35 | 1,268,146,296.01 |
(2) Trade acceptance with provision for bad debt provision withdrawn by employing aging
analysis
Unit: yuan
| Name | Ending balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
| Within 6 months (including 6 months) | 68,744,956.88 | 687,449.57 | 1.00% |
| More than 6 months: | 519,848,537.55 | 10,396,970.75 | 2.00% |
| Total | 588,593,494.43 | 11,084,420.32 | -- |
(3) Notes receivable endorsed or discounted by the company at the end of the period and not
expired yet on the balance sheet date
Unit: yuan
| Item | Amount with recognition terminated at the end of the period | Amount with recognition not terminated at the end of the period |
| Bank acceptance bill | 20,302,368.02 | |
| Total | 20,302,368.02 |
3. Accounts receivable
(1) Classified disclosure of accounts receivable
Unit: yuan
| Category | Ending balance | Beginning balance | ||||||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |||||
| Amount | Proportion | Amount | Accruing proportion | Amount | Proportion | Amount | Accruing proportion | |||
| Accounts receivable of provision for bad debt by single item | 1,311,713.82 | 0.25% | 1,311,713.82 | 100.00% | 3,091,619.79 | 0.65% | 3,091,619.79 | 100.00% | ||
| Where: | ||||||||||
| Accounts receivable of provision for bad debt by combination | 522,380,833.82 | 99.75% | 31,428,750.11 | 6.02% | 490,952,083.71 | 474,397,041.21 | 99.35% | 27,623,905.74 | 5.82% | 446,773,135.47 |
| Where: | ||||||||||
| Aging combination | 522,380,833.82 | 99.75% | 31,428,750.11 | 6.02% | 490,952,083.71 | 474,397,041.21 | 99.35% | 27,623,905.74 | 5.82% | 446,773,135.47 |
| Total | 523,692,547.64 | 100.00% | 32,740,463.93 | 6.25% | 490,952,083.71 | 477,488,661.00 | 100.00% | 30,715,525.53 | 6.43% | 446,773,135.47 |
1). Provision for bad debt by combination:
Unit: yuan
| Name | Ending balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
| Within 1 year | 484,560,347.99 | 24,228,017.40 | 5.00% |
| 1~2 years | 27,666,423.06 | 2,766,642.30 | 10.00% |
| 2~3 years | 5,875,823.81 | 1,175,164.76 | 20.00% |
| 3~4 years | 1,968,487.70 | 984,243.85 | 50.00% |
| 4~5 years | 175,347.31 | 140,277.85 | 80.00% |
| More than 5 years | 2,134,403.95 | 2,134,403.95 | 100.00% |
| Total | 522,380,833.82 | 31,428,750.11 | -- |
2). Disclosure by aging
Unit: yuan
| Aging | Year-end balance |
| Within 1 year (including 1 year) | 460,332,330.59 |
| Within 1 year | 460,332,330.59 |
| 1~2 years | 24,899,780.76 |
| 2~3 years | 4,700,659.05 |
| More than 3 years | 1,019,313.31 |
| 3~4 years | 984,243.85 |
| 4~5 years | 35,069.46 |
| Total | 490,952,083.71 |
(2) Provision, recovery or reversal of bad debt reserves in the current period
The amount of provision for bad debts was 2,024,938.40 yuan and the amount of provision for baddebts recovered or reversed was 0.00 yuan in the current period.
(3) Accounts receivable with top 5 ending balances by debtor
The total amount of accounts receivable with top 5 ending balances by debtor in the current periodwas 288,362,076.82 yuan, accounting for 55.06% of the total ending balance of accountsreceivable. The total amount of ending balance of bad debt provision withdrawn accordingly was14,624,364.62 yuan.
4. Advances to suppliers
(1) Presentation of advances to suppliers by aging
Unit: yuan
| Aging | Year-end balance | Beginning balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 47,009,891.82 | 96.52% | 58,293,082.84 | 97.99% |
| 1~2 years | 605,946.43 | 1.24% | 127,306.00 | 0.22% |
| 2~3 years | 1,090,541.86 | 2.24% | 1,065,541.86 | 1.79% |
| Total | 48,706,380.11 | -- | 59,485,930.70 | -- |
(2) Advances to suppliers with top 5 ending balances by prepayment object
The total amount of advances to suppliers with top 5 ending balances by prepayment object in thecurrent period was 37,779,893.38 yuan, accounting for 77.57% of the total number of endingbalance of advances to suppliers.
5. Other receivables
Unit: yuan
| Item | Ending balance | Beginning balance |
| Other receivables | 87,328,253.55 | 70,182,460.52 |
| Total | 87,328,253.55 | 70,182,460.52 |
1) Other receivables classified by nature
Unit: yuan
| Nature of payment | Ending book balance | Beginning book balance |
| Deposit and margin | 48,756,522.49 | 34,993,888.42 |
| Collection by third party | 29,739,414.77 | 30,291,539.08 |
| Imprest | 11,784,981.45 | 2,883,138.90 |
| Withheld amount | 4,517,505.69 | 2,554,065.31 |
| Other | 472,203.11 | 5,987,699.55 |
| Total | 95,270,627.51 | 76,710,331.26 |
2) Disclosure by aging
Unit: yuan
| Aging | Ending balance |
| Within 1 year (including 1 year) | 67,648,487.49 |
| Within 1 year | 67,648,487.49 |
| 1~2 years | 17,960,856.09 |
| 2~3 years | 1,100,062.62 |
| More than 3 years | 618,847.35 |
| 3~4 years | 501,964.98 |
| 4~5 years | 116,882.37 |
| Total | 87,328,253.55 |
3) Provision, recovery or reversal of bad debt reserves in the current period
The amount of provision for bad debts was 1,414,503.22 yuan and the amount of provision for baddebts recovered or reversed was 0.00 yuan in the current period.
4) Other accounts receivable with top 5 ending balances by debtor
Unit: yuan
| Unit name | Nature of payment | Ending balance | Aging | Proportion in total other ending balance receivable | Ending balance of bad debt provision |
| Alipay (China) Network Technology Co., Ltd. | Collection by third party | 29,739,414.77 | Within 1 year | 31.22% | 1,486,970.74 |
| Management Committee of Hangzhou Yuhang Economic and Technical Development Zone | Margin and deposit | 14,778,000.00 | 1-2 years | 15.51% | 1,477,800.00 |
| Financial management team of Shengzhou Sanjiang Subdistrict Office | Margin and deposit | 13,416,000.00 | Within 1 year | 14.08% | 670,800.00 |
| Hangzhou Maishang Technology Co., Ltd. | Margin and deposit | 3,000,000.00 | Within 1 year | 3.15% | 150,000.00 |
| Liang Xiaoming | Imprest | 2,577,682.68 | Within 1 year | 2.71% | 128,884.13 |
| Total | -- | 63,511,097.45 | -- | 66.66% | 3,914,454.87 |
6. Inventory
(1) Inventory classification
Unit: yuan
| Item | Ending balance | Beginning balance | ||||
| Book balance | Falling price reserves | Book value | Book balance | Falling price reserves | Book value | |
| Raw materials | 112,131,726.22 | 112,131,726.22 | 58,785,060.73 | 58,785,060.73 | ||
| Work in process | 47,550,168.76 | 47,550,168.76 | 42,489,335.72 | 42,489,335.72 | ||
| Merchandise inventory | 233,814,327.88 | 233,814,327.88 | 289,182,037.49 | 289,182,037.49 | ||
| Semi-finished products shipped in transit | 775,807,603.14 | 775,807,603.14 | 902,710,838.63 | 902,710,838.63 | ||
| Low priced and easily worn articles and wrappage | 46,904,146.47 | 46,904,146.47 | 53,945,458.46 | 53,945,458.46 | ||
| Total | 1,216,207,972.47 | 1,216,207,972.47 | 1,347,112,731.03 | 1,347,112,731.03 | ||
7. Other current assets
Unit: yuan
| Item | Ending balance | Beginning balance |
| Bank financial products | 1,978,500,000.00 | 2,570,000,000.00 |
| Prepaid tax | 18,854,992.34 | |
| Pending deduct VAT on purchase | 329,070.91 | 2,905,183.75 |
| Total | 1,978,829,070.91 | 2,591,760,176.09 |
8. Long-term equity investment
Unit: yuan
| Invested unit | Beginning balance (book value) | Increase or decrease in current period | Ending balance (book value) | Balance of impairment provision at the end | |||||||
| Further investment | Capital reduction | Investment gains and losses | Adjustment of other comprehensive | Changes in other equity | Declared payment of cash | Provision for impairment | Others | ||||
| recognized by the equity method | income | dividends or profits | of period | ||||||||
| I. Cooperative enterprise | |||||||||||
| De Dietrich Trade (Shanghai) Co., Ltd. | 2,617,851.16 | 69,197.95 | 2,687,049.11 | ||||||||
| Subtotal | 2,617,851.16 | 69,197.95 | 2,687,049.11 | ||||||||
| II. Joint venture | |||||||||||
| Total | 2,617,851.16 | 69,197.95 | 2,687,049.11 | ||||||||
9. Other equity instrument investments
Unit: yuan
| Item | Ending balance | Beginning balance |
| Suzhou Industrial Park Ruican Investment Enterprise (limited partnership) | 100,000,000.00 | 100,000,000.00 |
| Shanghai MXCHIP Information Technology Co., Ltd. | 19,948,534.00 | 19,948,534.00 |
| Total | 119,948,534.00 | 119,948,534.00 |
10. Investment properties
(1) Investment properties using cost measurement mode
√ Applicable □ Not applicable
Unit: yuan
| Item | Houses and buildings | Land use right | Construction in progress | Total |
| I. Original book value | ||||
| 1. Beginning balance | 189,197.82 | 189,197.82 | ||
| 2. Amount increased in current period | ||||
| (1) Purchased | ||||
| (2) Transfer from inventory/fixed assets/construction in progress | ||||
| (3) Increase by business combination | ||||
| 3. Amount decreased in current period | ||||
| (1) Disposal | ||||
| (2) Other transfer-out | ||||
| 4. Ending balance | 189,197.82 | 189,197.82 | ||
| II. Accumulated depreciation and amortization |
| 1. Beginning balance | 67,622.68 | 67,622.68 | ||
| 2. Amount increased in current period | 4,493.40 | 4,493.40 | ||
| (1) Accrual or amortization | 4,493.40 | 4,493.40 | ||
| 3. Amount decreased in current period | ||||
| (1) Disposal | ||||
| (2) Other transfer-out | ||||
| 4. Ending balance | 72,116.08 | 72,116.08 | ||
| III. Provision for impairment | ||||
| 1. Beginning balance | ||||
| 2. Amount increased in current period | ||||
| (1) Provision | ||||
| 3. Amount decreased in current period | ||||
| (1) Disposal | ||||
| (2) Other transfer-out | ||||
| 4. Ending balance | ||||
| IV. Book value | ||||
| 1. Ending book value | 117,081.74 | 117,081.74 | ||
| 2. Beginning book value | 121,575.14 | 121,575.14 |
11. Fixed assets
Unit: yuan
| Item | Ending balance | Beginning balance |
| Fixed assets | 839,262,550.21 | 842,877,466.95 |
| Total | 839,262,550.21 | 842,877,466.95 |
(1) Fixed assets
Unit: yuan
| Item | Houses and building | Machinery equipment | Transportation equipment | Other equipment | Total |
| I. Original book value | |||||
| 1. Beginning balance | 679,043,141.03 | 492,599,119.52 | 19,153,855.34 | 71,671,959.22 | 1,262,468,075.11 |
| 2. Amount increased in current period | 2,217,299.08 | 37,374,927.04 | 768,008.86 | 1,944,796.97 | 42,305,031.95 |
| (1) Purchase | 117,272.72 | 1,677,253.27 | 768,008.86 | 1,882,598.69 | 4,445,133.54 |
| (2) Transfer from construction in progress | 2,100,026.36 | 35,697,673.77 | 62,198.28 | 37,859,898.41 | |
| (3) Increase by business combination | |||||
| 3. Amount decreased in current period | 267,625.88 | 1,067,092.29 | 1,334,718.17 | ||
| (1) Disposal or scrap | 1,067,092.29 | 1,067,092.29 | |||
| (2) Other | 267,625.88 | 267,625.88 | |||
| 4. Ending balance | 680,992,814.23 | 528,906,954.27 | 19,921,864.20 | 73,616,756.19 | 1,303,438,388.89 |
| II. Accumulated depreciation | |||||
| 1. Beginning balance | 178,025,829.50 | 191,398,003.31 | 10,519,209.44 | 39,647,565.91 | 419,590,608.16 |
| 2. Amount increased in current period | 15,640,526.19 | 24,083,380.03 | 1,298,796.64 | 4,178,665.07 | 45,201,367.93 |
| (1) Provision | 15,640,526.19 | 24,083,380.03 | 1,298,796.64 | 4,178,665.07 | 45,201,367.93 |
| 3. Amount decreased in current period | 616,137.41 | 616,137.41 | |||
| (1) Disposal or scrap | 616,137.41 | 616,137.41 | |||
| 4. Ending balance | 193,666,355.69 | 214,865,245.93 | 11,818,006.08 | 43,826,230.98 | 464,175,838.68 |
| III. Provision for impairment | |||||
| 1. Beginning balance | |||||
| 2. Amount increased in current period | |||||
| (1) Provision | |||||
| 3. Amount decreased in current period | |||||
| (1) Disposal or scrap | |||||
| 4. Ending balance | |||||
| IV. Book value | |||||
| 1. Ending book value | 487,326,458.54 | 314,041,708.34 | 8,103,858.12 | 29,790,525.21 | 839,262,550.21 |
| 2. Beginning book value | 501,017,311.53 | 301,201,116.21 | 8,634,645.90 | 32,024,393.31 | 842,877,466.95 |
12. Construction in progress
Unit: yuan
| Item | Ending balance | Beginning balance |
| Construction in progress | 236,345,778.78 | 184,440,655.49 |
| Total | 236,345,778.78 | 184,440,655.49 |
(1) Construction in progress
Unit: yuan
| Item | Ending balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Maoshan intelligent base infrastructure project | 205,897,083.05 | 205,897,083.05 | 116,239,899.42 | 116,239,899.42 | ||
| Automated assembly line | 7,606,837.60 | 7,606,837.60 | 7,606,837.60 | 7,606,837.60 | ||
| Automatic line equipment | 5,086,206.90 | 5,086,206.90 | 5,086,206.90 | 5,086,206.90 | ||
| Management software | 4,191,653.38 | 4,191,653.38 | 4,163,334.80 | 4,163,334.80 | ||
| Other sporadic projects | 2,578,513.67 | 2,578,513.67 | 4,663,411.54 | 4,663,411.54 | ||
| Riveting equipment | 2,119,658.12 | 2,119,658.12 | 2,119,658.12 | 2,119,658.12 | ||
| Project of production department 3 | 2,008,547.08 | 2,008,547.08 | 5,299,145.30 | 5,299,145.30 | ||
| Project of production department 2 | 1,801,724.14 | 1,801,724.14 | 11,143,604.48 | 11,143,604.48 | ||
| Cutting machine | 1,435,896.56 | 1,435,896.56 | 1,435,896.56 | 1,435,896.56 | ||
| Cleaning line | 1,085,470.11 | 1,085,470.11 | 1,085,470.11 | 1,085,470.11 | ||
| Roll forming equipment | 786,324.79 | 786,324.79 | 786,324.79 | 786,324.79 | ||
| Dispensing equipment project | 713,675.21 | 713,675.21 | 713,675.21 | 713,675.21 | ||
| Automatic line equipment for host panel polishing | 521,367.50 | 521,367.50 | 521,367.50 | 521,367.50 | ||
| Automatic polishing equipment | 512,820.67 | 512,820.67 | 512,820.67 | 512,820.67 | ||
| Outdoor elevator project | 0.00 | 0.00 | 1,472,079.01 | 1,472,079.01 | ||
| Side suction punch press | 0.00 | 0.00 | 4,102,564.65 | 4,102,564.65 | ||
| Homemade platform production line | 11,238,433.60 | 11,238,433.60 | ||||
| Spraying line | 3,914,529.92 | 3,914,529.92 | ||||
| Pipe installation engineering | 809,090.91 | 809,090.91 | ||||
| Workshop decoration engineering | 1,017,299.09 | 1,017,299.09 | ||||
| Call center project | 509,005.31 | 509,005.31 | ||||
| Total | 236,345,778.78 | 236,345,778.78 | 184,440,655.49 | 184,440,655.49 |
(2) Current changes in major projects under construction
Unit: yuan
| Item name | Budget number | Beginning balance | Amount increased in current period | Amount carried forward to fixed assets in current period | Other decreases in current period | Ending balance | Proportion of total project input to the budget | Progress of works | Accumulated amount of interest capitalization | Including: interest capitalization funds in the current period | Interest capitalization rate in the current period | Source of funds |
| Maoshan intelligent base infrastructure project | 549,550,000.00 | 116,239,899.42 | 89,766,175.72 | 108,992.09 | 205,897,083.05 | 37.47% | 37.47 | Other | ||||
| Automated assembly line | 8,900,000.00 | 7,606,837.60 | 7,606,837.60 | 85.47% | 85.47 | Other | ||||||
| Automatic line equipment | 5,900,000.00 | 5,086,206.90 | 5,086,206.90 | 86.21% | 86.21 | Other | ||||||
| Management software | 5,036,150.00 | 4,163,334.80 | 161,061.94 | 132,743.36 | 4,191,653.38 | 85.87% | 85.87 | Other | ||||
| Other sporadic projects | 5,350,200.00 | 4,663,411.54 | 264,557.48 | 2,349,455.35 | 2,578,513.67 | 92.11% | 92.11 | Other | ||||
| Riveting equipment | 2,480,000.00 | 2,119,658.12 | 2,119,658.12 | 85.47% | 85.47 | Other | ||||||
| Project of production department 3 | 6,167,094.00 | 5,299,145.30 | 3,290,598.22 | 2,008,547.08 | 85.93% | 85.93 | Other | |||||
| Project of production department 2 | 12,926,581.00 | 11,143,604.48 | 9,341,880.34 | 1,801,724.14 | 86.21% | 86.21 | Other | |||||
| Cutting machine | 1,665,640.00 | 1,435,896.56 | 1,435,896.56 | 86.21% | 86.21 | Other | ||||||
| Cleaning line | 1,270,000.00 | 1,085,470.11 | 1,085,470.11 | 85.47% | 85.47 | Other | ||||||
| Roll forming equipment | 920,000.00 | 786,324.79 | 786,324.79 | 85.47% | 85.47 | Other | ||||||
| Dispensing | 827,863.25 | 713,675.21 | 713,675.21 | 85.47% | 85.47 | Other |
| equipment project | ||||||||||||
| Automatic line equipment for host panel polishing | 610,000.00 | 521,367.50 | 521,367.50 | 86.21% | 86.21 | Other | ||||||
| Automatic polishing equipment | 594,872.00 | 512,820.67 | 512,820.67 | 86.21% | 86.21 | Other | ||||||
| Homemade platform production line | 11,239,038.82 | 11,238,433.60 | 605.22 | 11,239,038.82 | 100.00% | 100.00 | Other | |||||
| Spraying line | 4,580,000.00 | 3,914,529.92 | 3,914,529.92 | 100.00% | 100.00 | Other | ||||||
| Outdoor elevator project | 1,644,000.00 | 1,472,079.01 | 1,472,079.01 | 100.00% | 100.00 | Other | ||||||
| Side suction punch press | 4,758,975.00 | 4,102,564.65 | 4,102,564.65 | 100.00% | 100.00 | Other | ||||||
| Pipe installation engineering | 890,000.00 | 809,090.91 | 809,090.91 | 100.00% | 100.00 | Other | ||||||
| Workshop decoration engineering | 1,037,645.07 | 1,017,299.09 | 1,017,299.09 | 100.00% | 100.00 | Other | ||||||
| Call center project | 1,374,153.85 | 509,005.31 | 509,005.31 | 100.00% | 100.00 | Other | ||||||
| Fixed asset equipment | 559,900.00 | 0.00 | 482,672.40 | 482,672.40 | 100.00% | 100.00 | Other | |||||
| Total | 628,282,112.99 | 184,440,655.49 | 90,675,072.76 | 38,660,957.38 | 108,992.09 | 236,345,778.78 | -- | -- | -- |
13. Intangible assets
(1) Intangible assets
Unit: yuan
| Item | Land use right | Patent right | Nonpatented technology | Software | Trademark | Total |
| I. Original book value | ||||||
| 1. Beginning balance | 168,051,179.95 | 7,300,000.00 | 42,242,921.55 | 24,500,000.00 | 242,094,101.50 | |
| 2. Amount increased in current period | 2,725,964.18 | 2,725,964.18 | ||||
| (1) Purchase | 1,914,547.15 | 1,914,547.15 | ||||
| (2) Internal R&D | ||||||
| (3) Increase by business combination | ||||||
| Transfer from construction in progress | 811,417.03 | 811,417.03 | ||||
| 3. Amount decreased in current period |
| (1) Disposal | ||||||
| 4. Ending balance | 168,051,179.95 | 7,300,000.00 | 44,968,885.73 | 24,500,000.00 | 244,820,065.68 | |
| II. Accumulated amortization | ||||||
| 1. Beginning balance | 17,861,002.07 | 561,538.46 | 28,472,381.07 | 1,225,000.00 | 48,119,921.60 | |
| 2. Amount increased in current period | 1,678,156.15 | 561,538.46 | 2,953,417.82 | 1,225,000.00 | 6,418,112.43 | |
| (1) Provision | 1,678,156.15 | 561,538.46 | 2,953,417.82 | 1,225,000.00 | 6,418,112.43 | |
| 3. Amount decreased in current period | ||||||
| (1) Disposal | ||||||
| 4. Ending balance | 19,539,158.22 | 1,123,076.92 | 31,425,798.89 | 2,450,000.00 | 54,538,034.03 | |
| III. Provision for impairment | ||||||
| 1. Beginning balance | ||||||
| 2. Amount increased in current period | ||||||
| (1) Provision | ||||||
| 3. Amount decreased in current period | ||||||
| (1) Disposal | ||||||
| 4. Ending balance | ||||||
| IV. Book value | ||||||
| 1. Ending book value | 148,512,021.73 | 6,176,923.08 | 13,543,086.84 | 22,050,000.00 | 190,282,031.65 | |
| 2. Beginning book value | 150,190,177.88 | 6,738,461.54 | 13,770,540.48 | 23,275,000.00 | 193,974,179.90 |
14. Goodwill
(1) Original book value of goodwill
Unit: yuan
| Investee name or goodwill forming matter | Beginning balance | Increase in current period | Decrease in current period | Ending balance | ||
| Shengzhou Kinde Intelligent Kitchen Electric Co., Ltd. | 80,589,565.84 | 80,589,565.84 | ||||
(2) Provision for impairment of goodwill
Not applicable
15. Long-term unamortized expenses
Unit: yuan
| Item | Beginning balance | Amount increased in current period | Amortization amount in current period | Other decreases | Ending balance |
| Brand endorsement fee | 4,609,402.37 | 3,457,053.36 | 1,152,349.01 | ||
| Consulting fee | 235,849.05 | 94,339.62 | 141,509.43 | ||
| Training membership fee | 88,029.35 | 31,069.18 | 56,960.17 | ||
| Office allowance | 27,184.47 | 27,184.47 | |||
| Service charge | 68,965.52 | 68,965.52 | |||
| Total | 4,933,280.77 | 96,149.99 | 3,582,462.16 | 1,446,968.60 |
16. Deferred income tax assets and deferred income tax liabilities
(1) Unoffset deferred income tax assets
Unit: yuan
| Item | Ending balance | Beginning balance | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Recognition for provisional estimate cost | 499,357,694.39 | 74,903,654.16 | 118,518,358.59 | 18,037,753.80 |
| Recognition for deferred income | 76,668,389.06 | 11,500,258.36 | 82,021,091.35 | 12,303,163.70 |
| Provision for impairment of assets | 51,767,258.20 | 8,644,284.73 | 42,817,028.98 | 7,321,390.08 |
| Unrealized profit of internal transaction | 9,385,633.80 | 2,346,408.45 | 6,284,756.04 | 1,571,189.01 |
| Recognition for equity incentive | 2,091,925.29 | 330,543.82 | ||
| Total | 637,178,975.45 | 97,394,605.70 | 251,733,160.25 | 39,564,040.41 |
(2) Unoffset deferred income tax liabilities
Unit: yuan
| Item | Ending balance | Beginning balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Appreciation of assets appraisal for business combination not under common control | 35,946,839.96 | 8,986,709.99 | 37,844,785.88 | 9,461,196.47 |
| Taxable temporary differences due to the pretax deduction of fixed assets | 3,118,997.48 | 779,749.37 | 3,503,773.28 | 875,943.32 |
| Total | 39,065,837.44 | 9,766,459.36 | 41,348,559.16 | 10,337,139.79 |
(3) Deferred income tax assets or liabilities presented as net amount after offset
Unit: yuan
| Item | Ending offset amount of deferred income tax assets and liabilities | Ending balance of deferred income tax assets and liabilities after offset | Beginning offset amount of deferred income tax assets and liabilities | Beginning balance of deferred income tax assets and liabilities after offset |
| Deferred income tax assets | 97,394,605.70 | |||
| Deferred income tax liabilities | 9,766,459.36 |
(4) Details of unrecognized deferred income tax assets
Unit: yuan
| Item | Ending balance | Beginning balance |
| Deductible temporary differences | 6,454,297.91 | 21,542,361.53 |
| Deductible loss | 5,257.50 | 73,605.00 |
| Total | 6,459,555.41 | 21,615,966.53 |
(5) Deductible losses on unrecognized deferred income tax assets will expire in the following
year
Unit: yuan
| Year | Ending amount | Beginning amount | Remark |
| 2019 | 15,088,524.40 | ||
| 2020 | 6,367,784.94 | 6,367,784.94 | |
| 2021 | 39,785.54 | 39,785.54 | |
| 2022 | 39,552.31 | 39,552.31 | |
| 2023 | 6,714.34 | 6,714.34 | |
| 2024 | 460.78 | ||
| Total | 6,454,297.91 | 21,542,361.53 | -- |
Other description:
17. Other non-current assets
Unit: yuan
| Item | Ending balance | Beginning balance |
| Advances for equipment purchase | 10,266,672.24 | 6,126,821.00 |
| Total | 10,266,672.24 | 6,126,821.00 |
Unit: yuan
18. Notes payable
Unit: yuan
| Type | Ending balance | Beginning balance |
| Banker's acceptance bill | 453,858,650.24 | 411,414,985.01 |
| Total | 453,858,650.24 | 411,414,985.01 |
19. Accounts payable
(1) Presentation of accounts payable
Unit: yuan
| Item | Ending balance | Beginning balance |
| Payment for materials | 729,004,532.93 | 798,811,442.97 |
| Costs | 564,755,910.52 | 313,379,353.95 |
| Project payment | 36,756,214.98 | 27,333,856.60 |
| Payment for equipment | 20,239,629.87 | 56,038,495.85 |
| Total | 1,350,756,288.30 | 1,195,563,149.37 |
(2) Important accounts payable with the aging more than 1 year
Other description:
As of June 30, 2019, the Company's important accounts payable with an age of more than one yearwas 14,314,074.23 yuan, mainly for unpaid balance payment for project warranty period.
20. Advance from customers
(1) Presentation of advance from customers
Unit: yuan
| Item | Ending balance | Beginning balance |
| Proceeds from sale | 1,114,184,967.13 | 1,170,088,458.14 |
| Total | 1,114,184,967.13 | 1,170,088,458.14 |
21. Payroll payable
(1) Presentation of payroll payable
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance |
| I. Short-term compensation | 102,462,299.09 | 247,064,330.64 | 342,000,596.64 | 7,526,033.09 |
| II. Welfare after dismission - defined contribution plan | 4,887,196.21 | 22,267,547.92 | 26,439,316.75 | 715,427.38 |
| III. Dismission welfare | 117,873.00 | 117,873.00 | ||
| Total | 107,349,495.30 | 269,449,751.56 | 368,557,786.39 | 8,241,460.47 |
(2) Presentation of short-term compensation
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance |
| 1. Wages, bonuses, allowances and subsidies | 98,110,801.60 | 202,254,173.03 | 293,846,369.59 | 6,518,605.04 |
| 2. Employee welfare expenses | 11,771,507.96 | 11,771,507.96 | ||
| 3. Social insurance premium | 3,719,338.20 | 16,489,945.36 | 19,743,588.71 | 465,694.85 |
| Including: medical insurance premium | 3,202,053.86 | 14,406,245.48 | 17,195,250.59 | 413,048.75 |
| Industrial injury insurance premium | 168,342.28 | 517,558.89 | 675,174.37 | 10,726.80 |
| Birth insurance premium | 348,942.06 | 1,566,140.99 | 1,873,163.75 | 41,919.30 |
| 4. Housing fund | 259,780.00 | 11,787,075.62 | 11,840,999.62 | 205,856.00 |
| 5. Labor union expenditure and personnel education fund | 372,379.29 | 4,761,628.67 | 4,798,130.76 | 335,877.20 |
| Total | 102,462,299.09 | 247,064,330.64 | 342,000,596.64 | 7,526,033.09 |
(3) Presentation of defined contribution plans
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance |
| 1. Basic endowment insurance | 4,717,818.43 | 21,514,473.24 | 25,543,531.85 | 688,759.82 |
| 2. Unemployment insurance premium | 169,377.78 | 753,074.68 | 895,784.90 | 26,667.56 |
| Total | 4,887,196.21 | 22,267,547.92 | 26,439,316.75 | 715,427.38 |
Other description:
The Company shall participate in the endowment insurance and unemployment insurance plans set upby the government according to the regulations. According to the plans, the Company shall pay
14.00%~21.00% and 0.50%~1.00% of the basic salary respectively to the plans. In addition to theabove monthly deposit fee, the Company will not undertake further payment obligations. Thecorresponding expenditure is charged to the current profit and loss or the costs of relevant assets inoccurrence.
22. Tax payable
Unit: yuan
| Item | Ending balance | Beginning balance |
| Added value tax | 30,951,635.69 | 50,107,891.95 |
| Corporate income tax | 121,100,255.91 | 51,608,992.28 |
| Individual income tax | 686,754.73 | 1,907,601.56 |
| Urban maintenance and construction tax | 2,181,680.64 | 3,503,535.91 |
| Housing property tax | 10,889.45 | 2,717,027.16 |
| Education surcharge | 935,006.03 | 1,567,040.95 |
| Surcharge for local education | 604,478.25 | 915,440.20 |
| Disabled person employment security fund | 187,682.04 | 586,878.75 |
| Stamp duty | 139,904.64 | 302,283.09 |
| Land use tax | 31,962.00 | |
| Total | 156,798,287.38 | 113,248,653.85 |
23. Other payables
Unit: yuan
| Item | Ending balance | Beginning balance |
| Other payables | 228,982,475.40 | 234,490,187.04 |
| Total | 228,982,475.40 | 234,490,187.04 |
1) Other payables listed by nature
Unit: yuan
| Item | Ending balance | Beginning balance |
| Sales margin payable | 213,232,802.53 | 207,277,172.48 |
| Other | 8,383,013.26 | 9,534,323.01 |
| Deposit payable | 6,352,408.61 | 8,266,061.00 |
| Collections for others | 1,014,251.00 | 5,955,641.55 |
| Equity incentive repurchase obligation | 3,456,989.00 | |
| Total | 228,982,475.40 | 234,490,187.04 |
2) Important other payable with the aging more than 1 year
Unit: yuan
| Item | Ending balance | Reasons for failure of payment or carryover |
| Sales margin payable | 205,571,275.52 | The sale is not over |
| Total | 205,571,275.52 | -- |
24. Deferred income
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance | Causes |
| Government subsidies | 82,021,091.35 | 5,352,702.29 | 76,668,389.06 | Asset related | |
| Total | 82,021,091.35 | 5,352,702.29 | 76,668,389.06 | -- |
Projects involving government subsidies:
Unit: yuan
| Liability item | Beginning balance | Amount of additional subsidy in current period | Amount included in current non-operating income | Amount included in other income in current period | Amount offsetting the cost in the current period | Other alterations | Ending balance | Asset/income related |
| Production and construction project of annual production of 2.25 million | 30,052,414.32 | 1,286,890.62 | 28,765,523.70 | Asset related |
| kitchen appliances | ||||||||
| Intelligent manufacturing, integrated standardization and new mode application project | 29,669,623.74 | 1,982,257.55 | 27,687,366.19 | Asset related | ||||
| Construction project of kitchen appliance R&D, design and test center | 14,140,102.73 | 1,182,583.62 | 12,957,519.11 | Asset related | ||||
| Production and construction project of annual production of 1 million kitchen appliances | 4,570,409.00 | 571,891.98 | 3,998,517.02 | Asset related | ||||
| New-generation environmentally friendly and energy-saving kitchen appliances and production line | 1,102,977.83 | 95,325.42 | 1,007,652.41 | Asset related | ||||
| Digital intelligent manufacturing workshop project of intelligent household appliances | 900,502.44 | 79,713.36 | 820,789.08 | Asset related | ||||
| Recycling transformation project | 635,297.13 | 45,805.08 | 589,492.05 | Asset related | ||||
| Project of annual production of 2.25 million digital workshops | 335,798.77 | 51,853.02 | 283,945.75 | Asset related | ||||
| Academician expert workstation | 349,389.68 | 23,127.84 | 326,261.84 | Asset related | ||||
| Subsidies for investment project of annual production of 150,000 range hoods | 206,754.51 | 29,441.40 | 177,313.11 | Asset related | ||||
| Kitchen appliance R&D, design and test center project | 57,821.20 | 3,812.40 | 54,008.80 | Asset related | ||||
| Total | 82,021,091.35 | 5,352,702.29 | 76,668,389.06 | Asset related |
25. Capital stock
Unit: yuan
| Beginning balance | Increase / decrease (+, -) | Ending balance | |||||
| New issue of shares | Share donation | Share capital increase from reserved funds | Other | Subtotal | |||
| Total amount of shares | 949,024,050.00 | 949,024,050.00 | |||||
26. Capital reserve
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance |
| Capital premium (capital stock premium) | 400,222,714.56 | 1,576,618.11 | 401,799,332.67 | |
| Other capital surplus | 1,467,086.86 | 109,531.25 | 1,576,618.11 | 0.00 |
| Total | 401,689,801.42 | 1,686,149.36 | 1,576,618.11 | 401,799,332.67 |
Other description, including current increase / decrease and change reasons:
Note: The restricted stock cost to be recognized in January - June 2019 in the Company’s initialrestricted stock incentive plan was 109,531.25 yuan.
27. Treasury stock
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance |
| Repurchase obligations recognized for issuance of restricted stock | 3,456,989.00 | 3,456,989.00 | ||
| Total | 3,456,989.00 | 3,456,989.00 |
Other description, including current increase / decrease and change reasons:
Note: On January 22, 2019, the Company’s 9
th
meeting of the fourth Board of Directors and the 9
th
meeting of the fourth Board of Supervisors reviewed and adopted the Proposal on Reserved Grantingof Unlocking in Third Unlocking Period in Restricted Stock Incentive Plan. The grant date of thereserved restricted stock incentive determined by the Company was January 4, 2016. As of January 04,2019, the lockup period of this reserved restricted stock had expired. The unlocking conditions for thethird unlocking period have been satisfied. The 27 incentive objects who agree to meet the assessmentrequirements can unlock 365,625.00 restricted stocks in the third unlocking period. The restrictedstocks unlocked were listed and circulated on February 18, 2019, and the repurchase obligation wasreduced by 3,456,989.00 yuan. The Company's initial restricted stock incentive plan has been fullyunlocked.
28. Surplus reserves
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance |
| Statutory surplus reserves | 474,516,412.50 | 474,516,412.50 | ||
| Total | 474,516,412.50 | 474,516,412.50 |
Description of surplus reserves, including current increase / decrease and change reasons:
Note: According to the Company Laws and the articles of association, the Company makes provisionfor legal surplus reserves at 10% of the net profit. The Company may stop drawing if the accumulativelegal surplus reserves have already accounted for over 50 percent of the Company's registered capital.The Company may withdraw discretionary surplus reserves after withdrawing the legal surplusreserves. Upon approval, the discretionary surplus reserves can be used to make up for the losses ofthe previous year or increase the capital stock.
29. Undistributed profit
Unit: yuan
| Item | Current period | Prior period |
| Undistributed profit at the end of previous period before adjustment | 4,223,611,112.65 | 3,461,806,065.78 |
| Undistributed profits at the beginning of the period after adjustment | 4,223,611,112.65 | 3,461,806,065.78 |
| Plus: Net profits attributable to the owners of parent company in the current period | 670,403,994.20 | 1,473,579,665.62 |
| Common stock dividends payable | 759,219,240.00 | 711,774,618.75 |
| Undistributed profits at the end of the period | 4,134,795,866.85 | 4,223,611,112.65 |
30. Operating income and operating cost
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | ||
| Income | Cost | Income | Cost | |
| Main business | 3,452,212,044.04 | 1,571,078,316.27 | 3,394,298,971.47 | 1,584,187,817.12 |
| Other businesses | 75,201,838.92 | 28,323,646.54 | 102,363,594.00 | 44,457,585.60 |
| Total | 3,527,413,882.96 | 1,599,401,962.81 | 3,496,662,565.47 | 1,628,645,402.72 |
31. Taxes and surcharges
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Urban maintenance and construction tax | 16,545,646.34 | 17,342,827.79 |
| Education surcharge | 7,090,991.29 | 7,432,640.50 |
| Housing property tax | 6,285.71 | 2,655,060.03 |
| Land use tax | 438,294.95 |
| Vehicle and vessel use tax | 9,593.34 | 17,162.85 |
| Stamp duty | 1,150,321.15 | 868,191.86 |
| Surcharge for local education | 4,656,160.55 | 4,955,093.65 |
| Total | 29,458,998.38 | 33,709,271.63 |
Other description:
Note: Refer to the notes and taxes for details of various taxes and additional payment standards.
32. Selling expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Advertising and promotion expenses | 315,539,234.97 | 332,636,379.11 |
| Sales and service fees | 287,199,474.84 | 270,688,704.09 |
| Promotion fees | 96,455,563.19 | 88,412,307.25 |
| Employee compensation | 94,393,030.18 | 76,367,596.61 |
| Freight | 77,729,895.46 | 84,366,924.08 |
| Booth decoration fee | 77,617,108.92 | 70,393,486.00 |
| Other | 25,982,648.71 | 25,811,034.10 |
| Business entertainment expenses | 7,209,763.53 | 7,624,654.89 |
| Office allowance | 6,268,845.59 | 5,345,652.51 |
| Admission fee | 1,649,341.22 | 3,098,329.80 |
| Total | 990,044,906.61 | 964,745,068.44 |
33. Management costs
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Employee compensation | 54,695,776.71 | 56,096,409.98 |
| Depreciation and amortization | 19,729,326.75 | 17,569,714.07 |
| Maintenance expense | 6,479,908.47 | 11,845,324.50 |
| Consulting service charge | 1,095,493.56 | 1,011,586.62 |
| Traveling expense | 2,981,161.71 | 3,369,261.70 |
| Office allowance | 1,936,101.78 | 3,273,809.64 |
| Rental fees | 3,845,066.25 | 3,021,166.58 |
| Equity incentive fee | 109,531.25 | 1,521,486.54 |
| Other | 25,299,162.29 | 26,985,069.90 |
| Total | 116,171,528.77 | 124,693,829.53 |
34. Research and development expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Direct investment | 49,233,260.11 | 54,181,636.19 |
| Employee compensation | 43,596,381.82 | 41,244,964.67 |
| Depreciation and amortization | 7,682,242.02 | 6,545,732.90 |
| Design fee | 3,116,230.90 | 1,490,413.91 |
| Other expenses | 4,001,671.28 | 6,360,919.69 |
| Total | 107,629,786.13 | 109,823,667.36 |
35. Financial expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Less: Interest revenue | 30,307,927.32 | 48,117,978.17 |
| Exchange gain or loss | 35,598.30 | -319,870.79 |
| Interest expenditure | 201,831.98 | |
| Other | 465,526.17 | 360,179.57 |
| Total | -29,604,970.87 | -48,077,669.39 |
36. Other income
Unit: yuan
| Other sources of income | Amount incurred in current period | Amount incurred in previous period |
| Second batch of financial support funds for enterprise cultivation in 2017 | 45,262,300.00 | |
| Performance award of Shanghai Hongkou District Finance Bureau | 4,090,000.00 | 100,000.00 |
| Intelligent manufacturing, integrated standardization and new mode application project | 1,982,257.55 | |
| Production and construction project of annual production of 2.25 million kitchen appliances | 1,286,890.62 | 1,226,439.78 |
| Construction project of kitchen appliance R&D, design and test center | 1,182,583.62 | |
| Supporting funds for industrial chain improvement in Hangzhou IIT special fund in 2018 | 958,500.00 | |
| Production and construction project of annual production of 1 million kitchen appliances | 571,891.98 | 571,891.98 |
| Social insurance tax refund in 2018 | 533,442.61 | |
| Subsidy funds for cloud demonstration enterprises in 2017 | 300,000.00 | |
| Job subsidies and social insurance subsidies | 229,477.50 | 292,599.00 |
| New-generation environmentally friendly and energy-saving kitchen appliances and production line | 95,325.42 | 95,325.42 |
| Digital intelligent manufacturing workshop of intelligent household appliances | 79,713.36 | 71,553.00 |
| Third-generation commission charges of Hongkou District Tax Bureau | 76,579.44 | |
| Project of annual production of 2.25 million digital workshops | 51,853.02 | 51,853.02 |
| Recycling transformation project | 45,805.08 | 41,491.24 |
| Smart electricity subsidy | 32,000.00 | |
| Subsidies for investment project of annual production of 150,000 range hoods | 29,441.40 | 29,441.40 |
| Expert workstation | 23,127.84 | 23,127.84 |
| Patent subsidy | 4,180.00 | |
| Kitchen appliance R&D, design and test center | 3,812.40 | 3,812.40 |
| Patent for invention | 15,000.00 | |
| Special application subsidy | 252,000.00 | |
| Subsidies for R&D input and advertising in 2016 | 56,749,600.00 | |
| Total | 56,839,181.84 | 59,524,135.08 |
37. Investment income
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Investment income from purchasing financial products | 39,789,776.54 | 32,787,830.58 |
| Investment income from available-for-sale financial assets during the holding period | 7,326,845.00 | |
| Investment income from disposal of available-for-sale financial assets | ||
| Long-term equity investment gains measured by employing the equity method | 69,197.95 | 655,604.04 |
| Total | 39,858,974.49 | 40,770,279.62 |
38. Credit impairment loss
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Loss on bad debts of notes receivable | -5,510,787.60 | |
| Loss on bad debts of accounts receivable | -2,026,738.41 | |
| Loss on bad debts of other receivables | -1,414,503.22 | |
| Total | -8,952,029.23 |
39. Assets impairment losses
Whether new income standards have been implemented
□Yes √No
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| I. Loss on bad debts | -8,585,478.93 | |
| Total | -8,585,478.93 |
40. Income from disposal of assets
Unit: yuan
| Source of income from disposal of assets | Amount incurred in current period | Amount incurred in previous period |
| Income from disposal of non-current assets | -296,672.23 | 62,757.28 |
41. Non-operating income
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | Amounts recorded in the non-recurring gains and losses of the current period |
| Government grants unrelated to the daily activities of the Company | 1,230,000.00 | 5,249,847.36 | 1,230,000.00 |
| Other | 381,946.09 | 426,686.51 | 381,946.09 |
| Total | 1,611,946.09 | 5,676,533.87 | 1,611,946.09 |
Unit: yuanOther description:
| Subsidized project | Amount included in current non-operating income | Amount included in previous non-operating income | Asset/income related |
| Subsidies for mass entrepreneurship and innovation platform project in 2018 | 1,000,000.00 | Income related | |
| Subsidies for municipal technical standardization construction in 2018 | 100,000.00 | Income related | |
| Subsidies for skilled talent cultivation | 70,000.00 | 50,000.00 | Income related |
| Recognition awards of key enterprises | 60,000.00 | 60,000.00 | Income related |
| Performance award of Shanghai Hongkou District Finance Bureau | 5,020,000.00 | Income related | |
| Third-generation commission charges of Hongkou District Tax Bureau | 55,847.36 | Income related | |
| Mass entrepreneurship and innovation role model | 50,000.00 | Income related | |
| On-site home appliance service specifications | 14,000.00 | Income related | |
| Total | 1,230,000.00 | 5,249,847.36 |
42. Non-operating expenditure
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | Amounts recorded in the non-recurring gains and losses of the current period |
| Loss on exchange of non-monetary assets | 1,171,725.00 | 27,611.09 | 1,171,725.00 |
| External donations | 1,000,000.00 | 1,000,000.00 | 1,000,000.00 |
| Other | 710,719.05 | 100,106.34 | 710,719.05 |
| Total | 2,882,444.05 | 1,127,717.43 | 2,882,444.05 |
Other description:
43. Income tax expenses
(1) Income tax expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Current income tax expenses | 181,475,283.87 | 179,468,158.68 |
| Deferred income tax expenses | -58,401,245.72 | -60,360,219.35 |
| Total | 123,074,038.15 | 119,107,939.33 |
(2) Accounting profit and income tax expense adjustment process
Unit: yuan
| Item | Amount incurred in current period |
| Total profit | 800,490,628.04 |
| Income tax expenses calculated at the appropriate/applicable tax rate | 120,073,594.21 |
| Impact of different tax rates applied on subsidiaries | 2,595,535.02 |
| Impact of income tax before adjustment | 415,814.43 |
| Impact of non-deductible costs, expenses and losses | 722,405.53 |
| Impact of temporary difference or deductible losses on unrecognized deferred income tax assets in the current period | 115.20 |
| Impact of weighted deduction of R&D costs | -734,740.62 |
| Impact of equity incentive | 1,314.38 |
| Income tax expenses | 123,074,038.15 |
44. Cash flow statement items
(1) Other cash received related to operating activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Income from deposit interest | 30,307,927.32 | 48,081,953.15 |
| Government subsidies | 52,163,036.94 | 62,659,046.36 |
| Deposit | 3,811,603.20 | 19,666,990.28 |
| Other payments | 8,863,178.11 | 16,735,134.25 |
| Total | 95,145,745.57 | 147,143,124.04 |
(2) Other cash paid related to operating activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Sales and service fees | 250,501,946.66 | 273,500,396.33 |
| Advertising and promotion expenses | 212,494,851.46 | 260,865,731.53 |
| Other | 81,682,101.67 | 78,979,716.67 |
| Freight | 63,243,609.00 | 63,365,744.98 |
| Booth decoration fee | 63,178,712.44 | 60,179,905.03 |
| Technical development expense | 60,213,336.23 | 61,712,909.58 |
| Promotion fees | 22,361,177.73 | 23,277,687.24 |
| Rental fees | 10,821,751.44 | 8,433,842.54 |
| Intermediary consulting fee | 6,516,635.83 | 10,630,573.38 |
| Total | 771,014,122.46 | 840,946,507.28 |
(3) Other cash paid related to investment activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Earnest money for investment | 30,000,000.00 | |
| Total | 30,000,000.00 |
45. Further information on cash flow statement
(1) Further information on cash flow statement
Unit: yuan
| Further information | Current amount | Last term amount |
| Reconciliation from net profits to cash flows from operating activities: | -- | -- |
| Net profit | 677,416,589.89 | 660,335,565.34 |
| Plus: Provision for impairment of assets | 8,952,029.23 | 8,585,478.93 |
| Depreciation of fixed assets, oil and gas assets and productive biological assets | 45,201,367.93 | 40,971,576.82 |
| Amortization of intangible assets | 6,418,112.43 | 4,556,986.64 |
| Amortization of long-term deferred expenses | 3,582,462.16 | 3,473,561.22 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (gains expressed with “-”) | 1,468,397.23 | -62,757.28 |
| Loss on retirement of fixed assets (gains expressed with “-”) | 27,611.09 | |
| Financial expenses (gains expressed with “-”) | -116,415.75 | 267,232.10 |
| Investment losses (gains expressed with “-”) | -39,858,974.49 | -40,770,279.62 |
| Decreased in deferred income tax assets (increase expressed with “-”) | -57,830,565.29 | -60,360,219.35 |
| Increase in deferred income tax liabilities (decrease expressed with “-”) | -570,680.43 | |
| Decrease in inventories (increase expressed with “-”) | 130,904,758.56 | -124,109,202.78 |
| Decrease in operating receivables (increase expressed with “-”) | -298,690,566.84 | -146,955,942.28 |
| Increase in operating payables (decrease expressed with “-”) | 187,057,740.99 | 772,191,994.53 |
| Other | -5,243,171.04 | 3,636,422.62 |
| Net cash flow from operating activities | 658,691,084.58 | 1,121,788,027.98 |
| 2. Significant investment and financing activities not involving cash deposit and withdrawal: | -- | -- |
| 3. Net changes in cash and cash equivalents: | -- | -- |
| Ending balance of cash | 2,559,638,401.46 | 2,531,498,207.68 |
| Less: Beginning balance of cash | 2,177,219,858.85 | 2,562,788,024.38 |
| Net increase of cash and cash equivalents | 382,418,542.61 | -31,289,816.70 |
(2) Composition of cash and cash equivalents
Unit: yuan
| Item | Ending balance | Beginning balance |
| I. Cash | 2,559,638,401.46 | 2,177,219,858.85 |
| Including: cash on hand | 459,629.14 | 380,338.61 |
| Bank deposit readily available for payment | 2,559,178,772.32 | 2,176,839,520.24 |
| III. Balance of cash and cash equivalents at end of period | 2,559,638,401.46 | 2,177,219,858.85 |
Other description:
46. Notes to items in statement of owner's equity
State the name of "other" items and the amount of adjustment to the ending balance of previous year:
47. Assets with ownership or use rights restricted
Unit: yuan
| Item | Ending book value | Causes for restriction |
| Monetary capital | 19,088,012.03 | Guarantee deposit |
| Total | 19,088,012.03 | -- |
48. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: yuan
| Item | Ending balance in foreign currency | Conversion exchange rate | Ending balance converted to RMB |
| Monetary capital | -- | -- | |
| Including: USD | 2,745,813.05 | 6.8747 | 18,876,640.96 |
| Euro | 350.00 | 7.8170 | 2,735.95 |
| AUD | 3.28 | 4.8171 | 15.80 |
| Accounts receivable | -- | -- | |
| Including: USD | 1,556,424.84 | 6.8747 | 10,699,953.85 |
| Euro | |||
| AUD | 589.60 | 7.8170 | 4,608.90 |
49. Government subsidies
(1) Basic information of government subsidies
Unit: yuan
| Type | Amount | Presented item | Amount recorded in current profit and loss |
| Second batch of financial support funds for enterprise cultivation in 2017 | 45,262,300.00 | Other income | 45,262,300.00 |
| Performance award of Shanghai Hongkou District Finance Bureau | 4,090,000.00 | Other income | 4,090,000.00 |
| Subsidies for mass entrepreneurship and innovation platform project in 2018 | 1,000,000.00 | Non-operating income | 1,000,000.00 |
| Supporting funds for industrial chain improvement in Hangzhou IIT special fund in 2018 | 958,500.00 | Other income | 958,500.00 |
| Social insurance tax refund in 2018 | 533,442.61 | Other income | 533,442.61 |
| Subsidy funds for cloud demonstration enterprises in 2017 | 300,000.00 | Other income | 300,000.00 |
| Job subsidies and social insurance subsidies | 186,916.50 | Other income | 186,916.50 |
| Job subsidies and social insurance subsidies | 21,622.00 | Other income | 21,622.00 |
| Job subsidies and social insurance subsidies | 20,939.00 | Other income | 20,939.00 |
| Subsidies for municipal technical standardization construction in 2018 | 100,000.00 | Non-operating income | 100,000.00 |
| Third-generation commission charges of Hongkou District Tax Bureau | 76,579.44 | Other income | 76,579.44 |
| Subsidies for skilled talent cultivation | 50,000.00 | Non-operating income | 50,000.00 |
| Subsidies for skilled talent cultivation | 20,000.00 | Non-operating income | 20,000.00 |
| Recognition awards of key enterprises | 60,000.00 | Non-operating income | 60,000.00 |
| Smart electricity subsidy | 32,000.00 | Other income | 32,000.00 |
| Patent subsidy | 4,180.00 | Other income | 4,180.00 |
VIII. Consolidation scope changes
Not applicableIX. Interests in other entities
1. Interests in a subsidiary
(1) Composition of enterprise group
| Subsidiary name | Main operation site | Registration place | Business nature | Shareholding ratio | Way of obtaining | |
| Direct | Indirect | |||||
| Beijing Robam Electric Appliance Sales Co., Ltd. | Beijing | Beijing | Sales of kitchen electric appliance products | 100.00% | Business combination under common control | |
| Shanghai Robam Electric Appliance Sales Co., Ltd. | Shanghai | Shanghai | Sales of kitchen electric appliance products | 100.00% | Business combination under common control | |
| Hangzhou Mingqi Electric Co., Ltd. | Hangzhou | Hangzhou | Sales of kitchen electric appliance products | 100.00% | Acquisition by establishment | |
| Dize Home Appliance Trading (Shanghai) Co., Ltd. | Shanghai | Shanghai | Sales of kitchen electric appliance products | 51.00% | Acquisition by investment | |
| Shengzhou Kinde Intelligent Kitchen Electric Co., Ltd. | Shengzhou | Shengzhou | Production and sales of kitchen electric appliance products | 51.00% | Business combination not under common control | |
| Hangzhou Robam Fuchuang Investment Management Co., Ltd. | Hangzhou | Hangzhou | Assets and investment management | 100.00% | Acquisition by establishment | |
(2) Important non-wholly owned subsidiary
Unit: yuan
| Subsidiary name | Minority shareholding ratio | Current profits and losses attributable to minority shareholders | Current dividends declared to minority shareholders | Ending balance of minority equity |
| Shengzhou Kinde Intelligent Kitchen Electric Co., Ltd. | 49.00% | 7,012,821.47 | 95,809,668.83 | |
| Dize Home Appliance Trading (Shanghai) Co., Ltd. | 49.00% | -225.78 | -3,333,111.73 |
(3) Main financial information of important non-wholly owned subsidiaries
Unit: yuan
| Subsidiary name | Ending balance | Beginning balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Shengzhou Kinde Intelligent Kitchen Electric Co., Ltd. | 212,856,487.39 | 61,008,549.80 | 273,865,037.19 | 61,054,389.54 | 9,766,459.36 | 70,820,848.90 | 186,230,007.04 | 54,982,900.77 | 241,212,907.81 | 49,657,712.19 | 10,345,778.88 | 60,003,491.07 |
| Dize Home Appliance Trading (Shanghai) Co., Ltd. | 5,486.41 | 3,817.31 | 9,303.72 | 6,811,572.56 | 6,811,572.56 | 5,842.75 | 3,921.75 | 9,764.50 | 6,811,572.56 | 6,811,572.56 | ||
Unit: yuan
| Subsidiary name | Amount incurred in current period | Amount incurred in previous period | ||||||
| Operating income | Net profit | Total comprehensive income | Cash flow from financing activities | Operating income | Net profit | Total comprehensive income | Cash flow from financing activities | |
| Shengzhou Kinde Intelligent Kitchen Electric Co., Ltd. | 90,517,727.14 | 14,311,880.56 | 14,311,880.56 | 26,511,914.94 | ||||
| Dize Home Appliance Trading (Shanghai) Co., Ltd. | -5,718.28 | -5,718.28 | -345.73 | -50,102.29 | -50,102.29 | -3,389.42 | ||
3. Equity in joint venture arrangement or joint venture
(1) Important cooperative enterprises or joint ventures
| Name of cooperative enterprise or joint venture | Main operation site | Registration place | Business nature | Shareholding ratio | Accounting treatment method of investment in cooperative enterprises or joint ventures | |
| Direct | Indirect | |||||
| De Dietrich Trade (Shanghai) Co., Ltd. | Shanghai | Shanghai | Sales of kitchen appliances | 51.00% | Equity method | |
(2) Summary of financial information of unimportant cooperative enterprises and joint
ventures
Unit: yuan
| Ending balance/amount incurred in current period | Beginning balance/amount incurred in previous period | |
| Cooperative enterprise: | -- | -- |
| Total book value of investment | 2,687,049.11 | 2,617,851.16 |
| Total number of following items by shareholding ratio | -- | -- |
| - Net profit | 69,197.95 | -1,197,385.79 |
| - Total comprehensive income | 69,197.95 | -1,197,385.79 |
| - Joint venture: | -- | -- |
| Total number of following items by shareholding ratio | -- | -- |
Unit: yuan
X. Risks associated with financial instruments
The main financial instruments of the Company include accounts receivable, accounts payable,etc. The detailed description of the financial instruments is shown in Note VI. Related items. Themanagement of the Company shall manage and monitor these risk exposures to ensure that theabove risks are controlled within the limited scope.Risk management objective and policyThe Company’s risk management is to strike an appropriate balance between risks and benefits,minimize the negative impact of risks on the Company's business performance and maximize theinterests of shareholders and other equity investors. Based on this risk management objective, thebasic strategy of the Company's risk management is to determine and analyze various risks facedby the Company, establish an appropriate bottom line for risk tolerance, make risk managementand timely and reliably supervise various risks to control the risks within the limited scope.
1. Credit risk
The largest credit risk exposure that may cause financial losses of the Company on June 30, 2019mainly comes from the loss of financial assets of the Company caused by the failure of the otherparty to fulfill its obligations.In order to reduce credit risks, the Company shall assign special personnel to determine the creditlimit, conduct credit examination and approval, and implement other monitoring procedures toensure that necessary measures are taken to recover overdue claims. Moreover, the Companyshall review the recovery of each single receivable on each balance sheet date to ensure thatadequate bad debt provisions are withdrawn for unrecoverable amounts. Therefore, theCompany's management believes that the Company's credit risk has been greatly reduced.The Company's working capital is deposited in banks with high credit rating, so the credit risk ofworking capital is low.The analysis of a financial asset that has suffered a single impairment includes the factorsconsidered in judging the impairment of the financial asset.On the balance sheet date, the Company individually determined the receivables from determined
separately that the unit amount of receivables of Oriental Home Building Materials CommercialCo., Ltd. and Laox (Beijing) Commercial and Trading Co. Ltd. that have suffered impairment.Oriental Home Building Materials Commercial Co., Ltd. was insolvent; Laox (Beijing) Commercialand Trading Co. Ltd. is less likely to recover due to its business adjustment; the Company haswithdrawn the provision for bad debt in full.There is no significant credit concentration risk due to the Company's risk exposure to multipleparties and customers.The Company has adopted the necessary policies to ensure that all sales customers have goodcredit records. The Company has no significant credit concentration risk.
2. Liquidity risk:
When managing liquidity risks, the Company shall maintain sufficient cash and cash equivalentsas deemed by the management and monitor them to meet the Company's operational needs andreduce the impact of cash flow fluctuations.
3. Foreign exchange risk
Foreign exchange risk refers to the risk of loss due to exchange rate movement. The foreignexchange risk borne by the Company is mainly related to USD (which shall be modified accordingto the actual situation), and the main business activities of the Company are denominated andsettled in RMB. On June 30, 2019, the Company's assets and liabilities were RMB balance, exceptthat the assets or liabilities mentioned in the following table were foreign currency balance. Theforeign exchange risks arising from the assets and liabilities of such foreign currency balance mayhave an impact on the Company's business performance.
| Item | Closing balance | Opening balance |
| Monetary capital | ||
| Including: USD | 2,745,813.05 | 2,812,009.15 |
| Euro | 350.00 | 3.78 |
| AUD | 3.28 | 3.27 |
| Accounts receivable | ||
| Including: USD | 1,556,424.84 | 1,544,658.61 |
| Euro | 589.60 | |
| AUD | 30.00 | 30.00 |
The Company pays close attention to the exchange rate movement on its foreign exchange risks,and has not taken any measures to avoid foreign exchange risks.
XI. Fair value disclosure
Not applicableXII. Related parties and related transactions
1. Parent company of the Company
| Parent company name | Registration place | Business nature | Registered capital | Shareholding ratio of the parent company in the Company | Voting right ratio of the parent company in the Company |
| Hangzhou Robam Industrial Group Co., Ltd. | Hangzhou, Zhejiang | Investment and industrial management | RMB 60 million | 49.68% | 49.68% |
Parent company of the Company: the final controller of the Company is Ren Jianhua
2. Subsidiaries of the Company
See Note 1. Interests in a subsidiary for the details of the subsidiaries.
3. Cooperative enterprises and joint ventures
See the note for important cooperative enterprises or joint ventures of the Company.
Other cooperative enterprises or joint ventures that made related party transactions with the Company in the
current period, or formed the balance of related party transactions with the Company in the previous periods are as
follows:
| Name of cooperative enterprise or joint venture | Relationship with the Company |
| De Dietrich Trade (Shanghai) Co., Ltd. | Cooperative enterprise |
Other description
4. Situation of other related parties
| Name of other related parties | Relationship of other related parties with the Company |
| Hangzhou Amblem Kitchen Ware Co., Ltd. | Controlled by the same parent company |
| Hangzhou Yuhang Robam Gas Station Co., Ltd. | Controlled by the same parent company |
| Hangzhou Nbond Nonwoven Co., Ltd. | Controlled by the same parent company |
| Hangzhou Yuhang Matt Spray Painting Factory | Controlled by the sister of the actual controller |
| Garden Hotel Hangzhou | Greatly influenced by the parent company |
| Hangzhou Bonyee Daily Necessity Technology Co., Ltd. | Controlled by the same parent company |
| Shaoxing Kinde Electric Appliance Co., Ltd. | Other shareholders of subsidiaries controlled by the company |
Other description
5. Related transaction
(1) Related transaction of purchases and sales of goods, provision and acceptance of services
Purchase of goods/acceptance of services
Unit: yuan
| Related party | Related transaction content | Amount incurred in current period | Approved transaction quota | Whether the transaction quota is exceeded | Amount incurred in previous period |
| Hangzhou Yuhang Matt Spray Painting Factory | Paint processing | 5,504,169.36 | No | 5,613,662.24 | |
| Hangzhou Amblem Kitchen Ware Co., Ltd. | Display panels, booths and cabinets | 1,697,016.55 | No | 3,648,378.90 | |
| Hangzhou Bonyee Daily Necessity Technology Co., Ltd. | Material | 1,746,291.56 | No | 932,164.48 | |
| Hangzhou Yuhang Robam Gas Station Co., Ltd. | Fuel | 565,621.34 | No | 1,660,547.31 | |
| Garden Hotel Hangzhou | Conference service | No | 958.49 |
Selling commodities/offering labor
Unit: yuan
| Related party | Related transaction content | Amount incurred in current period | Amount incurred in previous period |
| Hangzhou Amblem Kitchen Ware Co., Ltd. | Sales of kitchen electric appliance products | 5,836,683.25 | 6,122,603.15 |
| De Dietrich Trade (Shanghai) Co., Ltd. | Sales of kitchen electric appliance products | 1,924,894.92 | |
| Hangzhou Nbond Nonwoven Co., Ltd. | Sales of kitchen electric appliance products | 724.14 | 307.69 |
(2) Related-party lease
The Company as the lessor:
Unit: yuan
| Name of lessee | Type of leased assets | Lease income recognized in the current period | Lease income recognized in the previous period |
| Hangzhou Robam Industrial Group Co., Ltd. | House | 14,400.00 | 14,400.00 |
The Company as the lessee:
Unit: yuan
| Name of lessor | Type of leased assets | Lease fee recognized in the current period | Lease fee recognized in the previous period |
| Hangzhou Robam Industrial Group Co., Ltd. | House | 275,012.28 | 275,012.28 |
6. Accounts receivable and payable by related parties
(1) Receivables
Unit: yuan
| Item name | Related party | Ending balance | Beginning balance | ||
| Book balance | Provision for bad debt | Book balance | Provision for bad debt | ||
| Accounts receivable | |||||
| Shaoxing Kinde Electric Appliance Co., Ltd. | 5,847,688.80 | 292,384.44 | |||
| Hangzhou Amblem Kitchen Ware Co., Ltd. | 2,435,912.33 | 124,782.87 | |||
(2) Payables
Unit: yuan
| Item name | Related party | Ending book balance | Beginning book balance |
| Accounts payable | |||
| Hangzhou Yuhang Matt Spray Painting Factory | 3,627,878.50 | 4,224,367.40 | |
| Hangzhou Yuhang Robam Gas Station Co., Ltd. | 1,291,034.96 | 1,238,869.31 | |
| Hangzhou Amblem Kitchen Ware Co., Ltd. | 683,600.21 | 916,666.81 | |
| Hangzhou Bonyee Daily Necessity Technology Co., Ltd. | 1,091,272.24 | 148,644.89 | |
| Other payables | |||
| Hangzhou Yuhang Matt Spray Painting Factory | 200,000.00 | 200,000.00 |
7. Related party commitment
8. Other
XIII. Share-based payment
1. Overall status of share-based payment
√ Applicable □ Not applicable
Unit: yuan
| Total amount of equity instruments granted by the company during the current period | 0.00 |
| Total amount of equity instruments exercised by the company during the current period | 109,531.25 |
| Total amount of equity instruments invalidated by the company during the current period | 0.00 |
Other descriptionThe Company’s second meeting of the third Board of Supervisors on September 9, 2014 reviewedand adopted the Proposal on the Initial Restricted Stock Incentive Plan (Draft) (hereinafter referredto as the “plan” or “plan draft”). The number of restricted stocks to be granted under the plan was
4.5million, and the actual number of restricted stocks granted was 4.48 million, accounting for
1.40% of the total 320 million stocks of the Company on the announcement date of the plan draftabstract. Where, 4.07 million stocks were planned to the granted in the first time and 4.05 millionstocks were granted actually, accounting for 1.27% of the total stocks of the Company on theannouncement date of the plan draft abstract; 430,000 stocks were reserved, accounting for
0.13% of the total stocks of the Company on the announcement date of the plan draft abstract and
9.60% of the total restricted stocks granted this time. The reserved part will be granted within oneyear after the first grant date of the plan.The plan shall be valid for up to five years from the date of the initial grant of restricted stocks.
(1) The incentive object shall be locked up within 12 months from the date of receiving therestricted stocks. During the lockup period, the restricted stocks granted to the incentiveobject under the plan are locked and non-transferable;
(2) Upon the expiration of 12 months from the date of the initial grant of the incentive plan, therestricted stock first granted under this plan shall be unlocked by the incentive object in threetimes over the next 36 months. During the unlocking period, if the unlocking conditionsstipulated in this plan are satisfied, the incentive object may apply for unlocking in three times:
the first unlocking period is the first year after the expiration of the lockup period and theincentive object may apply for unlocking 30% of the total number of restricted stocks granted;the second unlocking period is the second year after the expiration of the lockup period andthe incentive object may apply for unlocking 40% of the total number of restricted stocksgranted; the third unlocking period is the third year after the expiration of the lockup periodand the incentive object may apply for unlocking 30% of the total number of restricted stocksgranted. Upon the expiration of 12 months from the date of the corresponding grant date, therestricted stocks reserved shall be unlocked by the incentive object in three times over thenext 36 months. The first unlocking period is the first year after the expiration of the lockupperiod and the incentive object may apply for unlocking 30% of the total number of restrictedstocks granted; the second unlocking period is the second year after the expiration of thelockup period and the incentive object may apply for unlocking 40% of the total number ofrestricted stocks granted; the third unlocking period is the third year after the expiration of thelockup period and the incentive object may apply for unlocking 30% of the total number ofrestricted stocks granted.The incentive objects of the plan are the Company's directors, middle and senior management, aswell as the core business (technical) personnel identified by the Company. The price of restricted
stock granted to incentive objects for the first time is 15.16 yuan per stock.For the restricted stock granted in the plan for the first time, the performance conditions of theincentive object for each application for the unlocking of the underlying stocks are as follows:
(1) Taking the net profit in 2013 as a fixed basic number, the net profit growth rate of theCompany in 2014, 2015 and 2016 shall be no less than 30%, 65% and 110% respectively;
(2) The return on equity in 2014, 2015 and 2016 shall be no less than 20%;
(3) During the lockup period, the net profits attributable to shareholders of listed companies and
the net profits attributable to shareholders of the listed company after deduction ofnon-recurring profits and losses shall not be negative and not be lower than the average levelof the last three fiscal years before the grant date.For the restricted stock reserved to grant in the plan, the performance conditions of the incentiveobject for each application for the unlocking of the underlying stocks are as follows:
(1) Taking the net profit in 2013 as a fixed basic number, the net profit growth rate of theCompany in 2015, 2016 and 2017 shall be no less than 65%, 110% and 160% respectively;
(2) The return on equity in 2015, 2016 and 2017 shall be no less than 20%;
(3) During the lockup period, the net profits attributable to shareholders of listed companies andthe net profits attributable to shareholders of the listed company after deduction ofnon-recurring profits and losses shall not be negative and not be lower than the average levelof the last three fiscal years before the grant date. The above indexes of net profit growth rateand return on equity are calculated based on the net profit after deducting non-recurringprofits and losses. The net profits and net assets each year refer to the net profits attributableto shareholders of listed companies and net assets attributable to shareholders of listedcompanies. If the Company conducts public offering or non-public offering and otherbehaviors affecting the Company’s net assets, the newly increased net assets and the netprofits generated from such net assets shall not be subject to the assessment calculation ofthe year and the next year. In case of capital surplus transfer to capital stock, distribution ofstock dividends, stock split or drawing back, stock allotment or dividend distribution of theCompany in the period from the announcement date of the plan to completion of the restrictedstock registration by the incentive object, the grant price and quantity of the restricted stockswill be adjusted accordingly.On January 4, 2016, the Company’s 12
th
meeting of the third Board of Directors reviewed andadopted the Proposal on Granting Reserved Restricted Stocks to Incentive Objects. On January 4,2016, 645,000 reserved restricted stocks were granted to 29 incentive objects, at the grant price of
21.25 yuan per stock.
In this equity incentive plan, the fair value on the grant date was recognized in stages as theadministrative expenses for each year according to the unlocking ratio during the waiting period,where, the administrative expenses were 109,500 yuan from January to June 2019.
2. Equity-settled share-based payments
□ Applicable √ Not applicable
3. Share-based payment settled by cash
□ Applicable √ Not applicable
4. Modification and termination of share-based payment
5. Other
XIV. Commitment and contingencies
1. Important commitment issues
Important commitments on balance sheet date
1. Major commitment issues
The Company had no major commitment issues to be disclosed as of June 30, 2019.
2. Contingencies
The Company had no other significant contingencies to be disclosed as of June 30, 2019.
2. Contingencies
(1) Important contingencies on balance sheet date
The Company had no post-balance sheet events to be disclosed as of June 30, 2019.
(2) Explanation even if the Company has no important contingencies to be disclosed
The Company has no important contingencies to be disclosed.
3. Other
XV. Notes on main items of parent company's financial statement
1. Accounts receivable
(1) Classified disclosure of accounts receivable
Unit: yuan
| Category | Ending balance | Beginning balance | ||||||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |||||
| Amount | Proportion | Amount | Accruing proportion | Amount | Proportion | Amount | Accruing proportion | |||
| Where: | ||||||||||
| Accounts receivable of provision for bad debt by combination | 483,696,102.62 | 100.00% | 26,511,542.37 | 5.48% | 457,184,560.25 | 461,115,475.92 | 100.00% | 23,113,083.26 | 5.01% | 438,002,392.66 |
| Where: | ||||||||||
| Aging combination | 460,276,971.62 | 95.16% | 26,511,542.37 | 5.76% | 433,765,429.25 | 409,499,536.92 | 88.81% | 23,113,083.26 | 5.64% | 386,386,453.66 |
| Accounts from related parties in the consolidation scope | 23,419,131.00 | 4.84% | 23,419,131.00 | 51,615,939.00 | 11.19% | 51,615,939.00 | ||||
| Total | 483,696,102.62 | 100.00% | 26,511,542.37 | 5.48% | 457,184,560.25 | 461,115,475.92 | 100.00% | 23,113,083.26 | 5.01% | 438,002,392.66 |
1) Receivables with provision for bad debt provision withdrawn by employing aging analysis
Unit: yuan
| Name | Ending balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
| Within 1 year | 430,598,216.00 | 21,529,910.80 | 5.00% |
| 1~2 years | 22,964,703.57 | 2,296,470.36 | 10.00% |
| 2~3 years | 3,891,870.70 | 778,374.14 | 20.00% |
| 3~4 years | 1,792,623.19 | 896,311.59 | 50.00% |
| 4~5 years | 95,413.40 | 76,330.72 | 80.00% |
| More than 5 years | 934,144.76 | 934,144.76 | 100.00% |
| Total | 460,276,971.62 | 26,511,542.37 | -- |
2) Disclosure by aging
Unit: yuan
| Aging | Ending balance |
| Within 1 year (including 1 year) | 432,487,436.20 |
| 1~2 years | 20,668,233.21 |
| 2~3 years | 3,113,496.56 |
| More than 3 years | 915,394.28 |
| 3~4 years | 896,311.60 |
| 4~5 years | 19,082.68 |
| Total | 457,184,560.25 |
(2) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
The amount of provision for bad debts was 3,398,459.11 yuan and the amount of provision for baddebts recovered or reversed was 0.00 yuan in the current period.
(3) Accounts receivable with top 5 ending balances by debtor
The total amount of accounts receivable with top 5 ending balances by debtor in the current periodwas 269,822,786.64 yuan, accounting for 55.78% of the total ending balance of accountsreceivable. The total amount of ending balance of bad debt provision withdrawn accordingly was13,683,232.06 yuan.
2. Other receivables
Unit: yuan
| Item | Ending balance | Beginning balance |
| Other receivables | 66,587,170.91 | 64,301,240.95 |
| Total | 66,587,170.91 | 64,301,240.95 |
1) Other receivables classified by nature
Unit: yuan
| Nature of payment | Ending book balance | Beginning book balance |
| Collection by third party | 29,739,414.77 | 30,291,539.08 |
| Deposit and margin | 30,438,085.65 | 29,692,522.35 |
| Associated contact | 4,064,000.00 | 4,064,000.00 |
| Imprest | 7,164,851.45 | 1,239,473.08 |
| Withheld amount | 4,213,981.30 | 2,232,820.64 |
| Other | 410,173.41 | 5,986,841.54 |
| Total | 76,030,506.58 | 73,507,196.69 |
2) Disclosure by aging
Unit: yuan
| Aging | Ending balance |
| Within 1 year (including 1 year) | 48,269,430.16 |
| 1~2 years | 17,307,526.04 |
| 2~3 years | 684,532.48 |
| More than 3 years | 325,682.22 |
| 3~4 years | 265,524.23 |
| 4~5 years | 60,157.99 |
| Total | 66,587,170.90 |
3) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
The amount of provision for bad debts was 237,379.94 yuan and the amount of provision for bad debtsrecovered or reversed was 0.00 yuan in the current period.
5) Other accounts receivable with top 5 ending balances by debtor
Unit: yuan
| Unit name | Nature of payment | Ending balance | Aging | Proportion in total other ending balance receivable | Ending balance of bad debt provision |
| Alipay (China) Network Technology Co., Ltd. | Collection by third party | 29,739,414.77 | Within 1 year | 39.12% | 1,486,970.74 |
| Management | Margin and deposit | 14,778,000.00 | 1-2 years | 19.44% | 1,477,800.00 |
| Committee of Hangzhou Yuhang Economic and Technical Development Zone | |||||
| Dize Home Appliance Trading (Shanghai) Co., Ltd. | Other | 4,064,000.00 | More than 5 years | 5.35% | 4,064,000.00 |
| Hangzhou Maishang Technology Co., Ltd. | Margin and deposit | 3,000,000.00 | Within 1 year | 3.95% | 150,000.00 |
| Liang Xiaoming | Imprest | 2,577,682.68 | Within 1 year | 3.39% | 128,884.13 |
| Total | -- | 54,159,097.45 | -- | 71.23% | 7,307,654.87 |
3. Long-term equity investment
Unit: yuan
| Item | Ending balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Investment in subsidiaries | 246,905,933.73 | 20,400,000.00 | 226,505,933.73 | 242,391,037.48 | 20,400,000.00 | 221,991,037.48 |
| Investment in associated enterprises and joint enterprises | 2,687,049.11 | 2,687,049.11 | 2,617,851.16 | 2,617,851.16 | ||
| Total | 249,592,982.84 | 20,400,000.00 | 229,192,982.84 | 245,008,888.64 | 20,400,000.00 | 224,608,888.64 |
(1) Investment in subsidiaries
Unit: yuan
| Invested unit | Beginning balance (book value) | Increase or decrease in current period | Ending balance (book value) | Balance of impairment provision at the end of period | |||
| Further investment | Capital reduction | Provision for impairment | Others | ||||
| Shengzhou Kinde Intelligent Kitchen Electric Co., Ltd. | 162,320,000.00 | 162,320,000.00 | |||||
| Hangzhou Mingqi Electric Co., Ltd. | 51,892,142.06 | 9,638.75 | 51,901,780.81 | ||||
| Dize Home Appliance Trading (Shanghai) Co., Ltd. | 625,642.50 | 5,257.50 | 630,900.00 | 20,400,000.00 | |||
| Shanghai Robam Electric Appliance Sales Co., Ltd. | 5,838,272.10 | 5,838,272.10 | |||||
| Beijing Robam Electric Appliance Sales Co., Ltd. | 1,314,980.82 | 4,500,000.00 | 5,814,980.82 | ||||
| Total | 221,991,037.48 | 4,514,896.25 | 226,505,933.73 | 20,400,000.00 |
(2) Investment in associated enterprises and joint enterprises
Unit: yuan
| Invested entity | Beginning balance (book value) | Increase or decrease in current period | Ending balance (book value) | Balance of impairment provision at the end of period | |||||||
| Further investment | Capital reduction | Investment gains and losses recognized by the equity method | Adjustment of other comprehensive income | Changes in other equity | Declared payment of cash dividends or profits | Provision for impairment | Others | ||||
| I. Cooperative enterprise | |||||||||||
| De Dietrich Trade (Shanghai) Co., Ltd. | 2,617,851.16 | 69,197.95 | 2,687,049.11 | ||||||||
| Subtotal | 2,617,851.16 | 69,197.95 | 2,687,049.11 | ||||||||
| II. Joint venture | |||||||||||
| Total | 2,617,851.16 | 69,197.95 | 2,687,049.11 | ||||||||
(3) Other description
4. Operating income and operating cost
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | ||
| Income | Cost | Income | Cost | |
| Main business | 3,187,683,518.21 | 1,477,699,188.18 | 3,195,476,651.47 | 1,528,626,555.40 |
| Other businesses | 72,109,808.46 | 29,798,963.74 | 96,407,438.65 | 43,031,202.71 |
| Total | 3,259,793,326.67 | 1,507,498,151.92 | 3,291,884,090.12 | 1,571,657,758.11 |
5. Investment income
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Investment income from purchasing financial products | 36,895,138.71 | 32,787,830.58 |
| Investment income from available-for-sale financial assets during the holding period | 7,326,845.00 | |
| Investment income from disposal of available-for-sale financial assets | ||
| Long-term equity investment gains measured by employing the equity method | 69,197.95 | 655,604.04 |
| Total | 36,964,336.66 | 40,770,279.62 |
6. Other
XVI. Further information
1. Current non-recurring gain and loss statement
√ Applicable □ Not applicable
Unit: yuan
| Item | Amount | Description |
| Profit and loss on disposal of non-current assets | -1,171,725.00 | |
| Government subsidies included into the current profits and losses, except those government subsidies, which are closely related to the business of a company and enjoyed in accordance with a certain standard quota or quantity of the state | 58,069,181.84 | |
| Profits and losses from investment or management assets entrusted to others | 2,894,637.83 | |
| Income and expenditure other than those mentioned above | -1,328,772.96 | |
| Less: Amount affected by income tax | 9,538,352.16 | |
| Amount of minority shareholders' equity affected | 1,060,554.36 | |
| Total | 47,864,415.19 | -- |
Explain the non-recurrent profit and loss items defined by the Company according to the Interpretative Announcement No.1 on Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses and defined fromthe non-recurrent profit and loss items enumerated in the Interpretative Announcement No. 1 on Information Disclosure ofPublic Securities Issuing Companies - Non-recurrent Profits and Losses.
□ Applicable √ Not applicable
2. Return on net assets and earnings per share
| Reporting profit | Weighted average return on net assets | Earnings Per Share | |
| Basic EPS (yuan/share) | Diluted EPS (yuan/share) | ||
| Net profit attributable to common shareholders of the company | 10.51% | 0.71 | 0.71 |
| Net profit attributable to common shareholders of the company after deduction of non-recurring profits and losses | 9.76% | 0.66 | 0.66 |
Section 11: Reference file directory
I. Financial statements containing signatures of the legal representative, the head of accounting
work, and the head of accounting body with seals.II. Original copies of the documents and announcement of the company published on the newspaper
designated by the CSRC in the reporting period.III. 2019 semiannual report of the company signed by the legal representative.IV. Other relevant information.V. Reference files kept at: board office.