Bingshan Refrigeration & Heat Transfer
Technologies Co., Ltd.
2021 Semiannual Report
August, 2021
Section 1 Important Notice, Table of Contents, and Definitions
The directors and the Board of Directors, the supervisors and theSupervisory Board, and Senior staff members of Bingshan Refrigeration &Heat Transfer Technologies Co., Ltd.(hereinafter referred to as the Company)hereby confirm that there are not any important omissions, fictitiousstatements or serious misleading carried in this report, and shall take allresponsibilities, individual and/or joint, for the reality, accuracy andcompleteness of the whole contents.
All directors have attended this Board meeting of the Company.
There is no significant risk having adverse influence on attainment of theCompany's future development strategy and business targets. Theparagraph " Management discussion and analysis" in Section 3 of thisSemiannual Report describes major risks , including the risk of increasingmarket competition risk, the market promotion for new product and newtechnology slow and the accounts receivable is on the high side. See therelated sections for the countermeasures to be taken by the Company.
The Company plans to distribute no cash dividends, no bonus shares andconvert no reserve fund into capital stock.
Chairman of the Board of Directors of the Company Mr. Ji Zhijian,Financial Majordomo Mrs. Wang Jinxiu, and the head of AccountingDepartment Mr. Li Sheng hereby confirm that the financial report of thesemi-annual report is true and complete.
This report is written respectively in Chinese and in English. In the event ofany discrepancy between the two above-mentioned versions, the Chineseversion shall prevail.
CONTENTS
Section 1 Important Notice, Table of Contents, and Definitions ...... 2
Section 2 About the Company and Main Financia Indicators ...... 6
Section 3 Management Discussion and Analysis ...... 8
Section 4 Corporate Governance ...... 15
Section 5 Environmental and Social Responsibility ...... 16
Section 6 Important Items ...... 17
Section 7 Change in Share Capital and Shareholders' Information ...... 19
Section 8 Information on Preferred Stock ...... 21
Section 9 Bond Related Information ...... 22
Section 10 Financial Report ...... 23
Reference Documents
1. The accounting statements bearing the signatures and seals of the legal representative, the financialmajordomo and the accountants in charge.
2. The original copies of all the Company's documents and the original copies of the bulletins published on thenewspapers designated by the China Securities Regulatory Commission in the report period.
3. Time for reference: from Monday to Friday 8:00 - 11:30 (am) 1:00 - 4:30 (pm)Liaison persons: Mr. Song Wenbao, Ms Du YuTel: 0086-411-87968130Fax: 0086-411-87968125
Definitions
| Defined item | Stands for | Meaning |
| Reporting period | Stands for | From Jan. 1, 2021 to Jun. 30, 2021 |
| The Company, this Company | Stands for | Bingshan Refrigeration & Heat Transfer Technologies Co.,Ltd. |
| Bingshan Engineering Company | Stands for | Dalian Bingshan Group Engineering Co., Ltd.,one of the subsidiaries of the Company where the Company holds 100% of its shares. |
| Wuxin Refrigeration | Stands for | Wuhan New World Refrigeration Industry Co., Ltd., one of the subsidiaries of the Company where the Company holds 100% of its shares. |
| Bingshan Service Company | Stands for | Bingshan Technology Service (Dalian) Co., Ltd. one of the subsidiaries of the Company where the Company holds 100% of its shares. |
| Panasonic Compressor | Stands for |
| Panasonic Cold-Chain | Stands for |
| Panasonic Refrigerating System | Stands for | Panasonic Appliances Refrigerating System (Dalian) Co., Ltd., one of the associated companies of the Company, where the Company holds 20% of its shares |
| Jing Xue Insulation | Stands for | Jiangsu JingXue Insulation Technology Co.,Ltd., one of the associated companies of the Company, where the Company holds21.91% of its shares. |
Section 2 About the Company and Main Financial Indicators
I. Company information
| Short form of the stock | Bingshan; Bingshan B |
| Stock code | 000530; 200530 |
| Listed stock exchange | Shenzhen Stock Exchange |
| Legal name in Chinese | 冰山冷热科技股份有限公司 |
| Short form of legal name | 冰山冷热 |
| Legal English name | Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. |
| Abbreviation of legal English name | Bingshan |
| Legal representative | Ji Zhijian |
II. Contact persons and information
| Secretary of the Board of Directors | Authorized representative for securities affairs | |
| Name | Song Wenbao | Du Yu |
| Address | No.106, Liaohe East Road, Dalian Economic and Technological Development Zone | No.106, Liaohe East Road, Dalian Economic and Technological Development Zone |
| Tel. | 0411-87968130 | 0411-87968822 |
| Fax | 0411-87968125 | 0411-87968125 |
| 000530@bingshan.com | 000530@bingshan.com |
III. Other situations
1. Contact of company
If the registered address, office address and zip code, website, email box of the Company had any change in thereport period
□ Applicable √ Not applicable
2. Information disclosure and place of preparation
If the information disclosure and the place of preparation had any change in the report period
□ Applicable √ Not applicable
The name of newspaper for information disclosure selected by the Company, the address of the website designatedby China Securities Regulatory Commission for carrying semi-annual report, the place where the semi-annualreport of the Company is prepared had no change in the report period. Refer to the Annual Report for 2020 fordetails.IV. Main accounting data and financial indicators
Did the Company retroactively adjust or restate the accounting data of previous years due to change in theaccounting policy and correction of accounting mistakes?
□ Applicable √ Not applicable
Unit: RMB Yuan
| 2021.1-6 | 2020.1-6 | Increase/decrease compared with the same period of last year | |
| Operating revenue | 1,094,285,620.97 | 873,403,414.46 | 25.29% |
| Net profit attributable to shareholders of listed companies | -14,584,210.01 | -23,604,345.52 | 38.21% |
| Net profit belonging to the shareholders of listed companies after the deduction of non-recurring profit and loss | -11,882,674.61 | -8,256,994.99 | -43.91% |
| Net cash flow from operating activities | -28,887,836.28 | -78,350,688.75 | 63.13% |
| Basic earnings per share | -0.017 | -0.028 | 39.29% |
| Diluted earnings per share | -0.017 | -0.028 | 39.29% |
| Weighted average return on net asset yield | -0.43% | -0.70% | Increase 0.27 percentage points |
| 2021.6.30 | 2020.12.31 | Increase/decrease compared with 2020.12.31 | |
| Total assets | 5,877,895,817.75 | 5,681,568,328.36 | 3.46% |
| Owner's equity attributable to shareholders of listed companies | 3,336,469,482.70 | 3,375,609,788.07 | -1.16% |
V.1.Difference of accounting data between as per Chinese accounting standards and as perInternational Accounting Standards
□ Applicable √ Not applicable
2. Difference of accounting data between as per Chinese accounting standards and as perForeign Accounting StandardsThe difference of accounting data between as per Chinese Accounting Standards and as per InternationalAccounting Standards was 0.
VI. Non-recurring profits and losses and their amounts
| item | Amount |
| Disposal gains and losses of non-current asset | 8,393.93 |
| Government subsidies included in current profit or loss | 914,454.99 |
| Disposal gains from investments on financial assets available for sale, and gains from fair value change of other non-current financial assets | -5,034,903.12 |
| Other non-operating revenue or expense | 1,377,409.33 |
| Influence on income tax | -370,653.73 |
| Influence on minority shareholders | 337,544.26 |
| Total | -2,701,535.40 |
Section 3 Management discussion and analysis
I. The Company’s Main business during the reporting period
Focusing on the hot and cold business, the Company is committed to the development of industrial refrigerationand heating business, commercial refrigeration business, air conditioning and environment business, engineeringand service business and new business fields, covering the key areas of the hot and cold industry chain andcreating a complete hot and cold industry chain.The Company's main products include piston and screw refrigeration compressors, pressure vessels, combinedwarehouses, controlled atmosphere storage, quick freezer, ice maker, flake ice maker, granulator, etc., which areused in national defense, scientific research, petroleum, chemical, textile, medicine, power generation, agriculture,animal husbandry, fishery and catering service industries. The Company's product sales and comprehensivesolutions provide both domestic and international markets, with self-supporting sales as the main and channelsales as the auxiliary.In the first half of 2021, rigid demands such as food safety, consumption upgrading, energy conservation andemission reduction will benefit the refrigeration and air conditioning industry. At the same time, the refrigerationand air conditioning industry is also facing the problems of intensified market competition, increased cost pressure,and difficulty in improving efficiency. In the face of opportunities and challenges, the Company focused on thehot and cold business, strengthened and optimized the professional work department, deeply cultivated theadvantageous market segments of cold chain logistics, beer and dairy products, petrochemical industry, marinerefrigeration, environmental simulation, ice and snow, and actively expanded and occupied the domestic market.
1. Industrial refrigeration and heating business
Industrial refrigeration is an important field reflecting the core technology of the Company. After years ofdevelopment, the Company has been close to the technical level of the main international competitors in the fieldof industrial refrigeration, and has achieved catching up in some fields. Based on the traditional refrigeration, theCompany realizes the balance of cold and heat through the utilization of heat, which greatly improves the energyutilization rate.
2. Commercial refrigeration business
Commercial refrigeration is the Company's core business. In China, the Company takes the lead in opening up thegreen intelligent cold chain from the first kilometer of the field to the last 100 meters of the residential community,which is the competitive advantage of the Company.Focusing on food refrigeration, the Company has patented products pre-cooling from the field, all kinds of quickfreezing equipment and refrigeration facilities of various specifications, and China's leading experience in thedesign and installation of large-scale ammonia and carbon dioxide refrigerators. On the basis of absorbing therelevant experience of Japan, Europe and the United States, combined with China's new needs, to provide newerproducts, better solutions and fresher experience for the field of food freezing and refrigeration.
3. Air conditioning and environment business
In recent years, relying on the complete industrial chain, the Company has continuously carried out transformationand upgrading in the field of air conditioning and environment, developed more energy-saving and environmentalprotection products around the blue sky project, and accelerated the transformation and upgrading from airtreatment to environmental governance.At present, the Company has developed a series of innovative products around the market segments ofcommercial air conditioning, central air conditioning and special air conditioning, and provides correspondingsolutions in different segments around these innovative products. For hospitals, electronic factories, high-end realestate, rail transit and other fields, provide targeted solutions.
4. Engineering and service business
Cold and hot engineering and service are the Company's advantageous business fields. In recent years, theCompany has realized transformation and upgrading from the manufacturer of cold and hot equipment to theservice provider of comprehensive solution of cold and hot through the development of engineering and serviceindustry, and realized the dual wheel drive of the enterprise, and provided more professional and accurate servicesto each segment market, and constantly created new value for customers and realized common growth.At present, the Company focuses on petrochemical technology, refrigeration, central air conditioning, ice andsnow engineering, artificial environment and other market segments. Relying on the enterprise's industrial chain,value chain and ecosystem, the Company provides services from consulting, planning, design to manufacturing,installation, commissioning and service in the whole process and life cycle. At the same time, according to theneeds of customers, promote the combination of industry and finance, and provide services for customers throughthe form of project general contracting and financial leasing.
The Company not only provides customized products and projects for customers, but also relies on BingshanIndustrial Internet to provide customers with full life cycle intelligent services. The Company's customized remotemonitoring system, relying on the Internet, Internet of things, cloud platform and big data, provides advanceservices for the refrigeration system, realizes rapid response to on-site maintenance through app software, andprovides 4S, energy-saving transformation, security transformation, computer room hosting and other services forthe cooling and heating system through these information and intelligent means.
5. New business
With the deepening of China's economic transformation and upgrading, as well as the continuous introduction ofenvironmental governance policies, the domestic industrial energy conservation and environmental protectionindustry is growing rapidly, the level of energy conservation and consumption reduction of enterprises and thecomprehensive utilization of resources is constantly improving, and the energy industrial structure has changed.Strengthening the optimal utilization of energy has become a development trend. For low-grade energy recycling,the Company provides customers with a series of energy-saving, environmental protection, efficient new products,in line with the national strategic requirements of energy conservation, emission reduction and sustainabledevelopment, and contributes professional wisdom to the national carbon peak and carbon neutral strategy.II. Analysis of core competenceThe Company focuses on main business of cold and heat; independent R&D and joint venture partnerships arecooperate with each other effectively; capital resources integration and business model innovation are in a positiveinteraction; the community of business and interest are being multi-storey created; the develop mode withBingshan characteristic are formed.The Company has the integrated cold-heat industrial chain for offering kinds of comprehensive solution services,including design, manufacture, installation and maintenance etc., and can satisfy individual requirementspreferably.The Company possesses a mature and solid marketing networks and after-sale service network on/off-line, andcan offer high quality and high value-added services more initiative and faster for clients from around the city.After overall relocation reform, the new factory of intelligence, environment protection, high efficiency and safetyare put into used, which produces a strong comparative advantage for creating higher value to the customers.While move forward with transformation and upgrading for former business, the Company will implement thecultivation for new business, thus the sustainable healthy development will come more and more feasible.Core-competency of the Company further promoted in the reporting period.III. Analysis of main business
In the first half of 2021, the Company further focused on the hot and cold main business and market segments,focused on the improvement of main business and the cultivation of new kinetic energy, continued to improve andinnovate, improve quality and efficiency, and solidly enhanced its core competitiveness. In the first half of 2021,the Company achieved operating income of 1,094,286 thousand yuan, a year-on-year increase of 25.29%;achieved net profit attributable to shareholders of the Company of -14,584 thousand yuan. Net profit slipped intoloss, mainly affected by the rising prices of raw materials, the cost pressure of the Company and associatedcompanies increased, and the improvement effect of the Company's main business was not fully reflected.During the reporting period, the Company adhered to the principle of innovation and took the initiative to change.The construction of corporate culture is carried out in a pragmatic way, unified thinking, dream weaving, andseveral core technical personnel return. The organization is strengthened and vigorously promoted, and themarket-oriented integrated operation is implemented through organizational restructuring and business processreengineering. Through the project management system, fully implement the project budget, the whole process ofoperation control, ensure profits and prevent risks. The improvement of engineering capacity and manufacturingcapacity was implemented in an orderly manner, with a significant year-on-year increase in orders and asignificant improvement in operating cash flow. The red water pre-cooling device was selected as "innovativeproducts of 2021 China Refrigeration Exhibition".During the reporting period, Bingshan Engineering company, a subsidiary of the Company, optimized and
strengthened its professional work department, specialized and deeply cultivated its advantageous marketsegments. It won the bid of Xinjiang Production and Construction Corps central kitchen project (the contractamount is about 340 million yuan), which is the largest single project contract in the history of the Company. Itwon the bid of Shanghai Star indoor comprehensive ice and snow venue project (the contract amount is about 130million yuan), which is the largest ice and snow integration contract in China at present. It won the bid ofZhongwei Guolian project (the contract amount is about 120 million yuan), which is the largest contract of applecontrolled atmosphere storage undertaken by the Company in recent years. Polysilicon projects have beenawarded repeatedly, with a total contract amount of about 80 million yuan. CO2 projects broke out in a centralizedway, and the influence increased rapidly.During the reporting period, Wuhan New World Refrigeration, a subsidiary of the Company, further implementedthe optimization of products and solutions in combination with the national strategy of "carbon peaking andcarbon neutralization". Integrate capital resources, focus on standard products and energy products withremarkable energy saving and emission reduction effect, and comprehensive solutions such as industrial wasteheat utilization, natural gas liquefaction, comprehensive utilization of natural gas pressure energy, and antifreezing of coal mine shaft. Marine screw expansion generator set was selected as "innovative product of 2021China Refrigeration Exhibition".During the reporting period, the new service platform of Bingshan Service company, a subsidiary of the Company,was put into use, and the pace of business innovation was accelerated. Bingshan service cloud platform 2.0 systemis officially launched, which will further improve the online service quality and provide customers withconvenient and fast remote services and data analysis. The trusteeship and operation guarantee business ofequipment room has been solidly promoted, and the layout of national service network has been continuouslyoptimized. Equipment recycling, equipment leasing, energy management and other service extension projectswere successfully implemented.
Main financial data variations as compared to the same period of last year
Monetary unit: RMB Yuan
| Report period | Same period of last year | Increase or decrease from the same period of last year | Reason for variation | |
| Operating revenue | 1,094,285,620.97 | 873,403,414.46 | 25.29% | |
| Operating cost | 950,404,769.26 | 748,075,096.12 | 27.05% | |
| Selling and distribution expenses | 56,710,524.65 | 35,446,794.72 | 59.99% | This is mainly due to the limitation of normal sales activities during the same period last year due to the outbreak of COVID-19. |
| Administrative expenses | 71,726,497.78 | 70,770,126.86 | 1.35% | |
| Financial expenses | 6,240,668.73 | 10,061,328.07 | -37.97% | Mainly is the current loan decreases, the interest expense decreases accordingly; At the same time, the amount of money collected increased, and the interest income increased. |
| Income tax | 2,514,997.49 | -1,492,259.17 | 268.54% | Mainly is the company held Guotai Junan stock market value changes deferred income tax. |
| R&D expenses | 30,738,151.60 | 24,715,021.28 | 24.37% |
| Net cash flow coming from operating activities | -28,887,836.28 | -78,350,688.75 | 63.13% | Mainly due to an increase in cash received from sales of merchandise. |
| Net cash flow coming from investment activities | 26,104,458.71 | 9,300,097.50 | 180.69% | Mainly due to the amount of equity transfer received from the second phase of Bingshan Consulting and a large dividend from Panasonic compressor. |
| Net cash flow coming from fund-raising activities | -57,923,362.57 | 36,370,952.10 | -259.26% | Mainly due to a decrease in the amount of cash received for borrowings and an increase in the amount of cash paid to service debt due to a decrease in working capital loans. |
| Net increase in cash and cash equivalents | -60,589,772.47 | -32,637,366.94 | -85.65% |
Sales income and costs
| Report period | Same period of last year | Increase or decrease from the same period of last year | |||
| Amount | Proportion to the Sales costs | Amount | Proportion to the Sales costs | ||
| Total sales income | 1,094,285,620.97 | 100% | 873,403,414.46 | 100% | 25.29% |
| By industry | |||||
| Refrigeration and air-conditioning equipment | 1,069,601,775.40 | 97.74% | 857,035,486.66 | 98.13% | 24.80% |
| Others | 24,683,845.57 | 2.26% | 16,367,927.80 | 1.87% | 50.81% |
| By product | |||||
| Industrial products | 864,579,358.55 | 79.01% | 706,209,216.71 | 80.86% | 22.43% |
| Installation project | 196,759,744.53 | 17.98% | 140,901,726.54 | 16.13% | 39.64% |
| Other products and services | 32,946,517.89 | 3.01% | 26,292,471.21 | 3.01% | 25.31% |
| By region | |||||
| Domestic sales | 1,036,222,666.10 | 94.69% | 811,120,620.69 | 92.87% | 27.75% |
| Foreign sales | 58,062,954.87 | 5.31% | 62,282,793.77 | 7.13% | -6.78% |
Main business structure
Monetary unit: RMB yuan
| Operating revenue | Operating costs | Gross profit | Increase/decrease of operating revenues from the same period of last year | Increase/decrease of operating costs from the same period of last year | Increase/decrease of gross profit from the same period of last year | |
| By industry | ||||||
| Refrigeration and air-conditioning | 1,069,601,775.40 | 939,531,941.76 | 12.16% | 24.80% | 28.28% | Decrease 2.38 percentage points |
| By product | ||||||
| Industrial products | 864,579,358.55 | 739,818,056.96 | 14.43% | 22.43% | 27.08% | Decrease 3.14 percentage points |
| Installation project | 196,759,744.53 | 192,591,016.59 | 2.12% | 39.64% | 36.23% | Increase 2.45 percentage points |
| Other products and services | 8,262,672.32 | 7,122,868.21 | 13.79% | -16.75% | -20.00% | Increase 3.50 percentage points |
| By region | ||||||
| Domestic sales | 1,011,538,820.53 | 887,688,139.05 | 12.24% | 26.91% | 29.89% | Decrease 2.02 percentage points |
| Foreign sales | 58,062,954.87 | 51,843,802.71 | 10.71% | -3.19% | 5.78% | Decrease 7.58 percentage points |
IV. Analysis of the non-main business
√Applicable □Not applicable
unit: RMB yuan
| income from investment | 28,211,757.61 | It is sustainable |
In the corporate profit composition, the investment income accounts for a large proportion, mainly because theCompany has many associated companies and the overall profitability is strong, and the investment income issustainable.During the reporting period, Panasonic Compressor, an associated company of the Company, grew steadily inresponse to changes. Market development has been steadily promoted, and the market share of leading productshas increased for two consecutive years. The research and development of 25HP high-power scroll compressorhas been completed and put into the market. The CO
rotary compressor has been successfully applied to the newgeneration hydrogen hybrid electric locomotive of CRRC. Deepen organizational change, set up South ChinaSupport Center, support direct sales and agents to develop the heat pump market.During the reporting period, the Company's associated company, Panasonic Cold Chain, continued to deepen itsadvantageous market. Master Kong's cooperation has been further expanded, and the beverage freezer market hasagain won large orders. In response to the personalized demand of Meituan optimization, the first one-piece,high-capacity refrigerant storage quick freezing equipment in China was quickly launched. Based on the goodcooperation of Costco's first store in China (Shanghai store), we successfully won the bid of Costco's second storein China (Suzhou store).During the reporting period, the Company's associated company, Panasonic Refrigerator System further improvedits engineering and manufacturing capabilities. It won the bid of Beijing Yizhuang pharmaceutical cold storageproject and contracted to build the first covid-19 vaccine cold storage with high quality. It won the bid forSinopharm Wuhan covid-19 vaccine storage project, and contracted to build the second covid-19 vaccine coldstorage at a high speed. The newly developed 40HP high-power semi-enclosed piston compressor is officiallylaunched, which can provide better service for customers.During the reporting period, Jingxue Energy Saving, an associated company of the Company, successfullyobtained the approval of China Securities Regulatory Commission for registration and was listed on the growthenterprise market of Shenzhen Stock Exchange on June 18, 2021. The future development will be assisted by thecapital market.
V. Analysis of assets & liabilities
1. Remarkable change in assets
Monetary unit: RMB yuan
| 30-6-2021 | 31-12-2020 | Proportion increase/decrease. | |||
| Amount | Proportion to the total assets | Amount | Proportion to the total assets | ||
| Monetary funds | 312,814,043.49 | 5.32% | 373,445,731.67 | 6.57% | Decrease 1.25 percentage points |
| Accounts receivable | 879,930,798.08 | 14.97% | 817,011,955.75 | 14.38% | Increase 0.59 percentage points |
| Contract assets | 93,128,010.70 | 1.58% | 91,430,011.60 | 1.61% | Decrease 0.03 percentage points |
| Inventories | 857,546,805.51 | 14.59% | 731,658,797.98 | 12.88% | Increase 1.71 percentage points |
| Investment property | 123,235,378.12 | 2.10% | 126,288,477.92 | 2.22% | Decrease 0.12 percentage points |
| Long-term equity investment | 1,606,295,377.43 | 27.33% | 1,597,241,363.62 | 28.11% | Decrease 0.78 percentage points |
| Fixed assets | 842,597,806.71 | 14.34% | 891,147,058.82 | 15.68% | Decrease 1.34 percentage points |
| Construction in progress | 39,010,357.07 | 0.66% | 34,254,599.42 | 0.60% | Increase 0.06 percentage points |
| Right of use assets | 22,430,952.90 | 0.38% | 0.00% | Increase 0.38 percentage points | |
| Short-term loans | 239,530,000.00 | 4.08% | 282,971,600.00 | 4.98% | Decrease 0.90 percentage points |
| Contract liabilities | 369,202,216.43 | 6.28% | 295,100,657.10 | 5.19% | Increase 1.09 percentage points |
| Long-term loans | 150,000,000.00 | 2.55% | 160,000,000.00 | 2.82% | Decrease 0.27 percentage points |
| Lease liabilities | 10,971,589.76 | 0.19% | 0.00% | Increase 0.19 percentage points |
2. The main overseas assets
□ Applicable √ Not applicable
3. Assets & liabilities which are measured by fair value
√ Applicable □ Not applicable
The beginning number is 226,312,440.24 yuan for other non-current financial assets measured by fair value.Changes in the profit and loss of the fair value in this period is -5,034,903.12 yuan，the current sale amount is 0yuan, and the final number is221,277,537.12 yuan.
3. Restrictions on asset rights at the end of reporting period
√ Applicable □ Not applicable
| Items | 2021.6.30 | Reasons |
| Monetary fund | 58,425,355.47 | Guarantee money |
| Notes Receivable | 21,890,716.83 | Pledge |
VI. Analysis of investments
1.The overall situation
√ Applicable □ Not applicable
| Investment in the report period (yuan) | Investment in the same period of last year (yuan) | Amount of variation |
| 1,606,295,377.43 | 1,597,241,363.62 | 0.57% |
2.The significant equity investment during the reporting period
□ Applicable √ Not applicable
3 The significant non-equity investment during the reporting period
□Applicable √Not applicable
4.The financial asset investment
(1) The securities investment
√ Applicable □ Not applicable
| Stock code | Stock abbreviation | Initial investment cost | Accounting measurement model | Book value at the beginning | Changes in the profit and loss of the fair value in this period | Accumulative change of fair value credited to equity | Current sale amount | Report period profit and loss | Book value in the ending | Accounting subjects | Source of funds |
| 601211 | Guotai Jun’an | 12,910,008.00 | fair value measurement | 226,312,440.24 | -5,034,903.12 | 0.00 | 0 | 2,194,701.36 | 221,277,537.12 | Other Non-current financial assets | Own funds |
| total | 12,910,008.00 | -- | 226,312,440.24 | -5,034,903.12 | 0.00 | 0 | 2,194,701.36 | 221,277,537.12 | -- | -- | |
As of June 30, 2021, the Company has held 12,910,008 shares of Guotai Jun’an Securities Co., Ltd.
(2) Derivative investment
□Applicable √ Not applicable
During the reporting period, the Company does not exist derivative investment.
VII. The material assets and equity sale
1. The material assets sale
□Applicable √Not applicable
2. The material equity sale
□Applicable √Not applicable
VIII. Analysis of major subsidiary companies and mutual shareholding companies
√ Applicable □ Not applicable
Unit: ten thousand yuan (except for registered capital)
| Company name | Type | The main business | registered capital | total assets | net assets | Operating income | Net profit |
| Panasonic Compressor | mutual shareholding company | Scroll Compressor | JPY 6,200 million | 154,876.86 | 113,966.42 | 57,928.96 | 6,651.48 |
| Jing Xue Insulation | mutual shareholding company | New building energy-saving board, refrigerated storage door | RMB108,000 thousand | 140,229.65 | 73,340.57 | 27,702.85 | 1,663.77 |
| Bingshan Metal Technology | mutual shareholding company | Pipe system connectors, high-speed rail connectors, hydraulic valve bodies, automotive engine parts, etc. | USD 18.0645 million | 41,244.70 | 33,771.73 | 23,188.97 | 2,336.18 |
| Songzhi Dayang Refrigeration & Heat Transfer Technology (Dalian) Co., LTD | mutual shareholding company | Automobile air conditioning, air conditioning equipment manufacturing | USD 15.11789 million | 39,581.84 | 29,488.05 | 27,884.32 | 1,520.57 |
Subsidiary companies obtained or disposed in the reporting period
□Applicable √Not applicable
IX. The structured corporate bodies which the Company controlled
□Applicable √Not applicable
X. Main risks the company faces and response measures
(1)Increasing market competition risk
Countermeasures: focus on the hot and cold main business, deeply cultivate the advantage market segmentation;rapidly improve the engineering and manufacturing power; orderly improve the level of intelligent manufacturingand service-oriented manufacturing; speed up the transformation and upgrading of inherent undertakings;accelerate the implementation of new kinetic energy cultivation; continue to build Bingshan enterprise and interestcommunity.
(2)Risk of slow marketing of new products and technologies
Countermeasures: create differentiated competitiveness of new products and technologies; strengthen thetechnology marketing and service marketing, and cultivate the market segmentation professionally; appropriateuse of financial leasing, contract energy management, project companies and other innovative models.
(3)Risk of high level of trade receivables
Countermeasures: strictly implement the project management system and further strengthen the management ofaccounts receivable; enhance quality of contract through intensified customer credit assessment and contractappraisal; effective control of increase in trade receivables by reduction of guarantee deposits, taking bank credit
instruments as guarantee deposits and finance leasing; improve contract execution through stricter review ongoods delivery, intensified control on project construction and post-sale service; prepare special compositionsolutions and incentive policy to accelerate settlement of trade receivables with relatively long aging.
Section 4 Corporate governance
I. Shareholders’ general meeting convened in the reporting period
| Session number of meeting | The type of the meeting | The proportion of participate investors | date | Disclosing date | Disclosing index |
| 2020Annual Shareholders’ General Meeting | Annual Shareholders’ General Meeting | 29.38% | May 14,2021 | May 15,2021 | http://www.cninfo.com.cn |
II. Changes of directors, supervisors, senior managers of the Company
| Name | Position held | Type | Date | Reason |
| Fan Yuekun | Director; DGM | Leaving office | March 26, 2021 | Resign from the Company due to job changes |
| Dai Dashuang | Independent director | Leave office after the end of term | May 14, 2021 | Leave office after the end of term |
| Liu Jiwei | Independent director | Leave office after the end of term | May 14, 2021 | Leave office after the end of term |
| Wang Yan | Independent director | Leave office after the end of term | May 14, 2021 | Leave office after the end of term |
| Ding Jie | GM | Termination of employment | Jan 1,2021 | Termination of employment due to job changes |
| Ma Yun | Chief Financial Officer | Leaving office | May 6, 2021 | Resign from the Company due to job changes |
| Yin Xide | Director | be elected | May 14, 2021 | By-election of supervisors at general meeting of shareholders |
| Zhai Yunling | Independent director | be elected | May 14, 2021 | By-election of supervisors at general meeting of shareholders |
| Liu Yuanyuan | Independent director | be elected | May 14, 2021 | By-election of supervisors at general meeting of shareholders |
| Yao Hong | Independent director | be elected | May 14, 2021 | By-election of supervisors at general meeting of shareholders |
| Yin Xide | GM | Appointed | Jan 1,2021 | Appointed by the Board of Directors |
| Wang Jinxiu | Chief Financial Officer | Appointed | May 14, 2021 | Appointed by the Board of Directors |
III. Profit distribution and dividend payment
□ Applicable √ Not applicable
IV．The implementation and effect of equity incentive
□ Applicable √ Not applicable
Section 5 Environmental and social responsibility
I．Major environmental issuesThe listed company and its subsidiaries whether belong to heavy pollution industry formulated by the stateenvironmental protection department
□Yes √ No
Administrative penalties imposed for environmental problems during the reporting period
□Yes √ No
| Enterprise or subsidiary | Main pollutant and features | Way of discharge | Number of discharge outlet | Distribution of the discharge outlet | Emission concentration | Pollutant discharge standard implemented | Total discharge | Total approved emissions | Excessive emission |
| Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. | COD | sequence | 1 | Unified discharged | 154㎎/L | DB21 1627-2008 | 4.384tons | None | Not over standard |
| Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. | Ammonia nitrogen | sequence | 1 | Unified discharged | 9.36㎎/L | DB21 1627-2008 | 0.089 tons | None | Not over standard |
| Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. | Dust | sequence | 1 | Unified discharged | 10.6mg/m3 | GB9078-1996 | 0.840 tons | None | Not over standard |
The Company received the new version of the "Sewage Discharge Permit" issued by the Dalian EcologicalEnvironment Bureau in July 2020. The Company discharges within the limit according to the required emissionconcentration of the new version of "Sewage Discharge Permit".II．Social responsibilitiesDuring the reporting period, on the basis of the previous targeted poverty alleviation, the company continued toconsolidate the poverty alleviation achievements according to the designated poverty alleviation arrangements ofDalian City:
1. In Songlin Village, Zhuanghe City, we continue to pay attention to students from poor families, carry outregular donation activities for students, and consolidate poverty alleviation through education;
2. Follow up the use of poverty alleviation facilities and provide assistance according to the actual needs ofpoverty alleviation areas;
3. Formulate a poverty alleviation plan for the second half of the year, carry out poverty alleviation throughconsumption appropriately, and connect poverty alleviation projects in eastern and western Regions.
Section 6 Important items
I. Commitments made by the actual controller, shareholders, related parties,purchasers, the company and other relevant parties that have completed theirperformance during the reporting period and have not completed their performanceas of the end of the reporting period
□ Applicable √ Not applicable
II. Non-operation capital occupation by holding shareholders and their related partiesin the listed company
□ Applicable √ Not applicable
III. Foreign guarantee in violation of regulations
□ Applicable √ Not applicable
IV. Engagement and dismissal of the accounting firm
□ Applicable √ Not applicable
V. Explain to the “non standard audit report” of this reporting period from the boardof directors, board of supervisors of the Company
□Applicable √Not applicable
VI. Explain to the “non standard audit report” last year from the board of directors ofthe Company
□Applicable √Not applicable
VII. Bankruptcy restructuring related matters
□ Applicable √ Not applicable
VIII. Major lawsuit issues
□ Applicable √ Not applicable
The Company had no major lawsuit issues in the reporting period.
IX. Punishment and rectification
□ Applicable √ Not applicable
X. The credibility of Companies and its controlling shareholder, actual controller
√ Applicable □ Not applicable
The controlling shareholder of the Company and the Company don’t exist situation such as unfulfilled thecourt’s effective judgments or failed to pay duly a large amount of debt during the reporting period.XI. Important associated transactions
1. Important associated transactions
In the reporting period, the total amount of normal associated transactions between the Company andassociated parties was 278,220 thousand yuan, accounting for40.32% of the budgeted amount for the year2021. This included 91,350 thousand yuan, accounting for 34.73% of the budgeted amount for the year2021, for purchasing supporting products for package projects from associated parties, and 186,870thousand yuan, accounting for 43.76% of the budgeted amount for the year 2021, from selling supportingparts and components to associated parties.
2.Associated transactions related to purchases or sales of assets
□ Applicable √ Not applicable
3.Important associated transactions with joint external investments
□ Applicable √ Not applicable
4.Current associated rights of credit and liabilities
□ Applicable √ Not applicable
5. Current associated rights of credit and liabilities with related financial companies orfinancial companies that the company holds
□ Applicable √ Not applicable
6. Other associated transactions
√ Applicable □ Not applicable
The Company acquired 20% equity of Hua Hui Da, which was held by Dalian Zhong Hui DaRefrigeration Technology Co., Ltd. with price of RMB 45.40 million yuan.XII．Major contract and its performance
1. Hosting, contracting and leasing status
(1) the hosting status
□ Applicable √ Not applicable
(2) the contracting status
□ Applicable √ Not applicable
(3) the leasing status
√ Applicable □ Not applicable
The Company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co., Ltd., and rent # 6workshop building located on No. 106 Liaohe East Rd, Dalian Economic and Technology DevelopmentZone to MHI Bingshan Refrigeration (Dalian) Co., Ltd. The rental area is 15,259.04 square meters, andthe rental term till 16th July, 2029. The annual rent fee for 2021 is RMB 4 million Yuan.The Company signed rental contract with Dalian Bingshan Wisdom Park Co., Ltd., and rent out thewhole land and house of the Company’s old plant locating at No. 888, Southwest Road, ShahekouDistrict, Dalian to Dalian Bingshan Wisdom Park Co., Ltd., with rental land area of 167,165.61 squaremeters and housing area of 105,652.43 square meters. The lease term is from April 1, 2017 to December31, 2036. The annual rent fee for 2021 is RMB 8.646 million Yuan.On March 17, 2021, the company signed a lease contract with Linde Hydrogenation Station Equipment(Dalian) Co., LTD., which will lease the 8,700 square meters of plant and office located at No. 106, EastLiaohe Road, Dalian Development Zone to Linde Hydrogenation Station Equipment (Dalian) Co., LTD.The lease term will be up to December 31, 2030, and the current rent is RMB 2,137,500.On June 1st, 2017, the company’s subsidiary, Bingshan Lingshe, signed the leasing contract with DalianJingxue Energy Saving Technology Co. Ltd and rented out #7 building of workshop located on No.92,Tieshan West Rd, DDZ, Dalian. The rental area is 3653.76 square metres, and annual rent is RMB 1.08million Yuan in 2021 with the contracted date between June 1st,2017 and May 31st,2022. BingshanLingshe also rented out Room 201, #4 building located on No.92, Tieshan West Rd, DDZ, Dalian toDalian Jingxue Energy Saving Technology Co. Ltd. The rental area is 25square metres, and annual leasepremium is RMB 15 thousand yuan with the contracted date between June 1st, 2017 and May 31st, 2022.
2. Guaranteeing status
√ Applicable □ Not applicable
Resolution of 2nd meeting of 7th session of the Board of directors agreed to provide guarantee to DalianBingshan Group Co., Ltd. for obtaining Development Fund of National Development Bank. Total amountof the loan was RMB160 million with interest rate 1.2%, and the loan period was 10 years. The fund canonly be used for cold chain green intelligent equipment and the development of service industry. WhenDalian Bingshan Group Co., Ltd. receives the fund, it has transferred all the fund to the Company withthe same conditions. The above guarantee to Dalian Bingshan Group Co., Ltd. is to the Company itselfactually.During the last reporting period ,Wuxin Refrigeration, the subsidiary company of the Company, wasresponsible for providing joint and several liabilities to its customers, Anhui Songze, for borrowingmoney from the bank. The guarantee amount was 10 million yuan and the guarantee period was 3 years.Meanwhile, Anhui Songze provided counter-guarantee to Wuxin Refrigeration with the equipment andownership of the project.
3.Entrusted Financial Management
□ Applicable √ Not applicable
4. Major contract of daily operation
□ Applicable √ Not applicable
5. Other important contracts
□Applicable √Not applicable
XIII. Description of other important matters
□Applicable √Not applicable
XV. Major matters of the company's subsidiaries
□Applicable √Not applicable
Section 7 Change in Share Capital and Shareholders'
InformationI. Change in share capital
1. Change in share capital
| items | （before change） | Changes | （after change） | ||
| number | proportion | number | proportion | ||
| I. Non-circulating share capital with restricted trade conditions | 3,058,879 | 0.36% | +132,560 | 3,191,439 | 0.38% |
| Other domestic shares | 3,058,879 | 0.36% | +132,560 | 3,191,439 | 0.38% |
| II. Circulating share capital | 840,153,628 | 99.64% | -132,560 | 840,021,068 | 99.62% |
| 1. Domestically listed ordinary shares | 598,653,628 | 71.00% | -132,560 | 598,521,068 | 70.98% |
| 2. Domestically listed foreign shares | 241,500,000 | 28.64% | 0 | 241,500,000 | 28.64% |
| III. Total shares | 843,212,507 | 100% | 0 | 843,212,507 | 100% |
The reason for the Change in share capitalDuring the reporting period, the Company appointed GM Yin Xide and Chief Financial Officer WangJinxiu, whose 75% of the Company's shares were locked; Company director,DGM Fan Yuekun resigned,Chief Financial Officer Ma Yun resigned, their shares in the Company all locked. The above reasonscause changes in the composition of shares.Approval of changes in shares
□ Applicable √ Not applicable
The influence of change in share capital on the recent year and recent issue for basic earnings pershare ,diluted earnings per share and net assets per share.
□ Applicable √ Not applicable
2. The restricted shares changes
√Applicable □ Not applicable
The beginning number of the restricted shares is 3,058,879, and the final number of the restricted sharesis 3,191,439, with an increase of132,560.II. Securities issuance and listing
1. Securities issuance in the report period
□ Applicable √ Not applicable
III. Shareholders and actual controller
1. Number of shareholders and their shareholding
| Total number of shareholders in the reporting period | 42,446 | ||||
| Shareholding of top ten shareholders | |||||
| Name | Nature | Proportion | Total number | Number of shares with sale restriction | Number of pledged shares or shares frozen |
| Dalian Bingshan Group Co., Ltd. | Domestic non-state-owned legal person | 20.27% | 170,916,934 | ||
| Sanyo Electric Co., Ltd. | Overseas legal person | 8.72% | 73,503,150 | ||
| Lin Zhenming | Foreign natural person | 0.80% | 6,740,000 | ||
| Wu An | Domestic natural person | 0.53% | 4,500,000 | ||
| Zhang Sufen | Domestic natural person | 0.52% | 4,390,000 | ||
| Zhang Hui | Domestic natural person | 0.52% | 4,388,975 | ||
| Xue Hong | Domestic natural person | 0.42% | 3,570,000 | ||
| Dalian industrial development investment Co., Ltd. | Domestic non-state-owned legal person | 0.40% | 3,406,725 | ||
| Li Xiaohua | Domestic natural person | 0.38% | 3,182,608 | ||
| Zhang Jun | Domestic natural person | 0.36% | 3,059,600 | ||
| Shareholding of top ten shareholders without sale restriction | |||||
| Name | Number of shares without sale restriction | Type of shares |
| Dalian Bingshan Group Co., Ltd. | 170,916,934 | RMB denominated ordinary shares |
| Sanyo Electric Co., Ltd. | 73,503,150 | Domestically listed foreign shares |
| Lin Zhenming | 6,740,000 | Domestically listed foreign shares |
| Wu An | 4,500,000 | Domestically listed foreign shares |
| Zhang Sufen | 4,390,000 | RMB denominated ordinary shares |
| Zhang Hui | 4,388,975 | RMB denominated ordinary shares |
| Xue Hong | 3,570,000 | Domestically listed foreign shares |
| Dalian industrial development investment Co., Ltd. | 3,406,725 | RMB denominated ordinary shares |
| Li Xiaohua | 3,182,608 | RMB denominated ordinary shares |
| Zhang Jun | 3,059,600 | RMB denominated ordinary shares |
| Notes to the associated relationship and uniform actions of the above shareholders | Dalian Bingshan Group Co., Ltd. had the association relationship with Sanyo Electric Co., Ltd. among the above shareholders. Sanyo Electric Co., Ltd. holds 26.6% of Dalian Bingshan Group Co., Ltd.'s equity. | |
At the end of the report period, the total number of shareholders of the Company was 42,446, including34,607 A-share shareholders and 7,839 B-share shareholders.
If the Company shareholders had any agreed repurchase transaction in the report period
□ Yes √ No
IV. Changes in shareholding of directors, supervisors and senior managers
□ Applicable √ Not applicable
V. Variation in controlling shareholders or actual controllers
Variation in controlling shareholders in the report period
□ Applicable √ Not applicable
There were no changes in the controlling shareholder in the reporting period.Variation in actual controllers in the report period
□ Applicable √ Not applicable
Section 8 Information on Preferred Stock
□ Applicable √ Not applicable
In the reporting period, the Company didn’t own preferred stock.
Section 9 Bond Related Information
The Company’s non-public issuance of exchangeable corporate bonds was listed at the Shanghai StockExchange on August 6, 2018. As of August 1, 2018, according to the using plan disclosed in theprospectus, the raised funds of the Company’s non-public issuance of exchangeable corporate bonds havebeen used to repay bank loans. The special account for the Company's 2018 exchangeable corporatebonds fund raising was cancelled in March 2019. During the reporting period, the Company'sexchangeable corporate were not exchanged for shares. Till the end of reporting period, the Company'sexchangeable corporate were exchanged for 8,388.9 thousand shares totally.
The Company’s non-public issuance of exchangeable corporate bonds has been fully repaid and officiallydelisted on July 30, 2021.
Section 10 Financial Report
I. The Company's semiannual financial report has not been audited.
II. Accounting statement
| BALANCE SHEET |
| Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. June 30, 2021 Unit: RMB Yuan |
| Items | 30-June-2021 | 31-Dec-2020 | ||
| Consolidation | Parent Company | Consolidation | Parent Company | |
| Current assets: | ||||
| Monetary funds | 312,814,043.49 | 189,640,632.51 | 373,445,731.67 | 208,325,740.71 |
| Financial assets which are measured by fair value and which changes are recorded in current profit and loss |
| Derivative financial assets |
| Transaction financial assets | ||||
| Notes receivable | 164,790,467.37 | 56,215,372.62 | 139,121,037.78 | 42,858,563.72 |
| Accounts receivable | 879,930,798.08 | 397,083,855.20 | 817,011,955.75 | 408,625,925.91 |
| Receivables financing | 67,877,483.26 | 9,778,000.00 | 61,737,282.56 | 5,752,810.30 |
| Accounts paid in advance | 252,035,577.19 | 86,256,149.64 | 154,481,509.35 | 62,620,914.33 |
| Other receivables | 38,404,665.67 | 15,025,382.07 | 67,527,176.86 | 41,183,397.14 |
| Interest receivables | 681,304.44 | 681,304.44 | 46,879.68 | 46,879.68 |
| Dividend receivable | 8,456,762.03 | 8,430,838.28 | 25,923.75 | 0.00 |
| Inventories | 857,546,805.51 | 301,061,601.22 | 731,658,797.98 | 255,635,206.96 |
| Contract assets | 93,128,010.70 | 35,427,393.71 | 91,430,011.60 | 38,366,253.50 |
| Assets held for sale | ||||
| Non-current asset due within one year | 38,952,641.30 | 16,412,400.84 | 42,003,576.60 | 19,488,435.75 |
| Other current assets | 16,217,621.86 | 297,622.89 | 23,214,091.44 | 27,637.13 |
| Total current assets | 2,721,698,114.43 | 1,107,198,410.70 | 2,501,631,171.59 | 1,082,884,885.45 |
| Non-current assets: |
| Finance asset held available for sales | ||||
| Held-to-maturity investment |
| Long-term account receivable | 65,846,409.09 | 45,968,318.60 | 65,867,973.25 | 45,964,783.15 |
| Long-term equity investment | 1,606,295,377.43 | 2,290,503,422.05 | 1,597,241,363.62 | 2,280,377,981.04 |
| Other Non-current financial assets | 234,169,195.71 | 232,854,053.21 | 239,304,098.83 | 237,888,956.33 |
| Investment property | 123,235,378.12 | 98,281,633.64 | 126,288,477.92 | 100,762,366.02 |
| Fixed assets | 842,597,806.71 | 696,077,930.09 | 891,147,058.82 | 721,701,015.39 |
| Construction in progress | 39,010,357.07 | 12,870,695.77 | 34,254,599.42 | 9,160,965.22 |
| Right of use assets | 22,430,952.90 | |||
| Engineering material |
| Disposal of fixed asset | ||||
| Productive biological asset |
| Oil and gas asset |
| Intangible assets | 143,862,195.55 | 75,232,020.06 | 145,442,721.24 | 76,619,078.55 |
| Expense on Research and Development |
| Goodwill | 1,750,799.49 | - | 1,750,799.49 | - |
| Long-term expenses to be apportioned | 8,874,332.48 | 7,512,831.60 | 9,660,538.07 | 8,259,220.68 |
| Deferred income tax asset | 68,124,898.77 | 14,228,195.97 | 68,979,526.11 | 13,940,130.98 |
| Other non-current asset | ||||
| Total non-current asset | 3,156,197,703.32 | 3,473,529,100.99 | 3,179,937,156.77 | 3,494,674,497.36 |
| Total assets | 5,877,895,817.75 | 4,580,727,511.69 | 5,681,568,328.36 | 4,577,559,382.81 |
| Current liabilities: | ||||
| Short-term loans | 239,530,000.00 | 227,000,000.00 | 282,971,600.00 | 276,011,600.00 |
| Financial liabilities which are measured by fair value and which changes are recorded in current profit and loss |
| Derivative financial liabilities | ||||
| Transaction financial liabilities |
| Notes payable | 313,465,695.40 | 199,707,563.63 | 295,151,372.38 | 202,747,834.50 |
| Accounts payable | 962,290,305.38 | 346,513,395.55 | 767,267,232.43 | 254,630,956.73 |
| Accounts received in advance |
| Contract liabilities | 369,202,216.43 | 70,862,201.49 | 295,100,657.10 | 67,468,174.27 |
| Wage payable | 10,432,902.16 | 115,864.45 | 31,125,808.94 | 11,187,502.65 |
| Taxes payable | 8,404,850.51 | 4,501,921.31 | 9,714,194.25 | 4,244,948.37 |
| Other accounts payable | 48,896,456.62 | 18,671,065.14 | 43,017,466.38 | 17,179,194.67 |
| Interest payable | 1,481,750.50 | 1,481,750.50 | 1,839,166.81 | 1,839,166.81 |
| Dividend payable | 8,965,281.07 | 8,965,281.07 | 533,156.00 | 533,156.00 |
| Liabilities held for sale |
| Non-current liabilities due within one year | 42,509,456.33 | 25,000,034.00 | 37,157,126.41 | 25,000,034.00 |
| Other current liabilities | 171,761,627.86 | 58,319,969.61 | 152,173,946.30 | 50,815,558.18 |
| Total current liabilities | 2,166,493,510.69 | 950,692,015.18 | 1,913,679,404.19 | 909,285,803.37 |
| Non-current liabilities: | ||||
| Long-term loans | 150,000,000.00 | 150,000,000.00 | 160,000,000.00 | 160,000,000.00 |
| Bonds payable |
| Preferred stock | ||||
| Perpetual bond |
| Lease liabilities | 10,971,589.76 | |||
| Long-term account payable | 8,682,041.09 | - | 14,622,463.75 | - |
| Long-term wage payable |
| Special Payable | ||||
| Anticipation liabilities | 420,512.50 | 7,592,239.01 |
| Deferred income | 102,329,269.37 | 62,564,767.37 | 104,457,568.86 | 64,121,068.86 |
| Deferred income tax liabilities | 31,255,129.37 | 31,255,129.37 | 32,010,364.83 | 32,010,364.83 |
| Other non-current liabilities |
| Total non-current liabilities | 303,658,542.09 | 243,819,896.74 | 318,682,636.45 | 256,131,433.69 |
| Total liabilities | 2,470,152,052.78 | 1,194,511,911.92 | 2,232,362,040.64 | 1,165,417,237.06 |
| Shareholders’ equity | ||||
| Share capital | 843,212,507.00 | 843,212,507.00 | 843,212,507.00 | 843,212,507.00 |
| Other equity instruments |
| Preferred stock | ||||
| Perpetual bond |
| Capital public reserve | 710,644,497.71 | 755,146,592.54 | 726,768,468.00 | 771,270,562.83 |
| Less: Treasury stock |
| Other comprehensive income | 2,501,459.77 | 1,539,359.10 | 2,501,459.77 | 1,539,359.10 |
| Special preparation |
| Surplus public reserve | 818,311,159.24 | 818,311,159.24 | 805,525,775.33 | 805,525,775.33 |
| Generic risk reserve |
| Retained profit | 961,799,858.98 | 968,005,981.89 | 997,601,577.97 | 990,593,941.49 |
| Total owner’s equity attributable to parent company | 3,336,469,482.70 | 3,386,215,599.77 | 3,375,609,788.07 | 3,412,142,145.75 |
| Minority interests | 71,274,282.27 | - | 73,596,499.65 | - |
| Total owner’s equity | 3,407,743,764.97 | 3,386,215,599.77 | 3,449,206,287.72 | 3,412,142,145.75 |
| Total liabilities and shareholder’s equity | 5,877,895,817.75 | 4,580,727,511.69 | 5,681,568,328.36 | 4,577,559,382.81 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
| INCOME STATEMENT | ||||
| Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January-June, 2021 Unit: RMB Yuan | ||||
| Items | January-June, 2021 | January-June, 2020 | ||
| Consolidation | Parent Company | Consolidation | Parent Company | |
| I. Total sales | 1,094,285,620.97 | 406,481,436.30 | 873,403,414.46 | 421,537,668.16 |
| II. Total operating cost | 1,125,502,134.17 | 430,343,974.93 | 897,088,858.88 | 426,353,131.09 |
| Including: Operating cost | 950,404,769.26 | 350,403,193.45 | 748,075,096.12 | 359,831,813.22 |
| Taxes and associate charges | 9,681,522.15 | 6,384,124.77 | 8,020,491.83 | 4,653,637.89 |
| Selling and distribution expenses | 56,710,524.65 | 21,863,336.01 | 35,446,794.72 | 11,354,625.22 |
| Administrative expenses | 71,726,497.78 | 33,484,241.78 | 70,770,126.86 | 28,433,528.41 |
| R&D expenses | 30,738,151.60 | 13,801,193.69 | 24,715,021.28 | 14,305,119.21 |
| Financial expense | 6,240,668.73 | 4,407,885.23 | 10,061,328.07 | 7,774,407.14 |
| Including: interest expense | 8,685,937.28 | 6,705,229.51 | 9,635,047.81 | 7,801,791.24 |
| interest income | 3,144,366.44 | 3,042,414.46 | 719,172.42 | 538,148.04 |
| Add: Other income | 914,454.99 | - | 6,507,868.29 | 442,124.83 |
| Gain/(loss) from investment | 28,211,757.61 | 29,386,783.07 | 22,943,077.11 | 31,608,757.06 |
| Including: income from investment on affiliated enterprise and jointly enterprise | 21,085,751.39 | 22,157,178.59 | 16,816,173.99 | 17,295,970.66 |
| Gain/(loss) from change in fair value (loss as “-“) | -5,034,903.12 | -5,034,903.12 | -19,323,309.84 | -19,323,309.84 |
| Credit impairment loss (loss as “-“) | -7,635,425.72 | -2,126,150.18 | -14,041,906.01 | -3,350,941.44 |
| Assets impairment loss (loss as “-“) | -1,016,603.72 | -403,392.99 | ||
| Gain/(loss) from asset disposal (loss as “-“) | 8,393.93 | -399.28 | 10,788.53 |
| III. Operating profit | -15,768,839.23 | -2,040,601.13 | -27,588,926.34 | 4,561,167.68 |
| Add: non-business income | 1,939,098.38 | 48.54 | 1,280,059.12 |
| Less: non-business expense | 561,689.05 | 373,198.48 | 93,891.78 | 44,972.15 |
| IV. Total profit | -14,391,429.90 | -2,413,751.07 | -26,402,759.00 | 4,516,195.53 |
| Less: Income tax | 2,514,997.49 | -1,043,300.45 | -1,492,259.17 | -2,268,110.77 |
| V. Net profit | -16,906,427.39 | -1,370,450.62 | -24,910,499.83 | 6,784,306.30 |
| (I) Net profit from continuous operation | -16,906,427.39 | -1,370,450.62 | -24,910,499.83 | 6,784,306.30 |
| (II)Net profit from discontinuing operation |
| Net profit attributable to parent company | -14,584,210.01 | -1,370,450.62 | -23,604,345.52 | 6,784,306.30 |
| Minority shareholders’ gains and losses | -2,322,217.38 | - | -1,306,154.31 |
| VI. After-tax net amount of other comprehensive incomes |
| After-tax net amount of other comprehensive incomes attributable to owners of the Company | ||||
| (I) Other comprehensive incomes that will not be reclassified into gains and losses |
| 1. Changes in net liabilities or assets with a defined benefit plan upon re-measurement | ||||
| 2. Enjoyable shares in other comprehensive incomes in invests that cannot be reclassified into gains and losses under the equity method |
| (II) Other comprehensive incomes that will be reclassified into gains and losses | ||||
| 1. Enjoyable shares in other comprehensive incomes in invests that will be reclassified into gains and losses under the equity method |
| 2. Gains and losses on fair value changes of available-for-sale financial assets | ||||
| 3. Gains and losses on reclassifying held-to-maturity investments into available-for-sale financial assets |
| 4. Effective hedging gains and losses on cash flows |
| 5. Foreign-currency financial statement translation difference | ||||
| 6、Others |
| …… |
| After-tax net amount of other comprehensive incomes attributable to minority shareholders | ||||
| VII Total comprehensive income | -16,906,427.39 | -1,370,450.62 | -24,910,499.83 | 6,784,306.30 |
| Total comprehensive income attributable to parent company | -14,584,210.01 | -1,370,450.62 | -23,604,345.52 | 6,784,306.30 |
| Total comprehensive income attributable to minority shareholders | -2,322,217.38 | - | -1,306,154.31 |
| VIII. Earnings per share |
| (I) basic earnings per share | -0.017 | - | -0.028 | |
| (II) diluted earnings per share | -0.017 | - | -0.028 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
| CASH FLOW STATEMENT | ||||
| Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January -June, 2021 Unit: RMB Yuan | ||||
| Items | ||||
| January -June, 2021 | January -June, 2020 | |||
| Consolidation | Parent Company | Consolidation | Parent Company | |
| I. Cash flows arising from operating activities: |
| Cash received from selling commodities and providing labor services | 829,930,587.89 | 363,144,362.91 | 604,104,617.20 | 348,200,949.78 |
| Write-back of tax received | 13,785,959.06 | - | 13,929,886.75 | 8,601,797.19 |
| Other cash received concerning operating activities | 43,810,533.99 | 10,124,431.16 | 32,877,448.75 | 14,383,755.85 |
| Subtotal of cash inflow arising from operating activities | 887,527,080.94 | 373,268,794.07 | 650,911,952.70 | 371,186,502.82 |
| Cash paid for purchasing commodities and receiving labor service | 611,357,308.87 | 250,713,151.99 | 476,548,876.58 | 289,314,215.08 |
| Cash paid to/for staff and workers | 180,167,491.49 | 57,127,778.83 | 158,669,594.81 | 51,668,871.50 |
| Taxes paid | 39,272,409.35 | 21,117,335.18 | 31,669,562.21 | 14,614,702.80 |
| Other cash paid concerning operating activities | 85,617,707.51 | 24,604,890.78 | 62,374,607.85 | 17,567,587.34 |
| Subtotal of cash outflow arising from operating activities | 916,414,917.22 | 353,563,156.78 | 729,262,641.45 | 373,165,376.72 |
| Net cash flows arising from operating activities | -28,887,836.28 | 19,705,637.29 | -78,350,688.75 | -1,978,873.90 |
| II. Cash flows arising from investing activities: | ||||
| Cash received from recovering investment | 3,262.34 |
| Cash received from investment income | 40,106,533.49 | 40,106,533.49 | 14,561,842.05 | 14,528,392.05 |
| Net cash received from disposal of fixed, intangible and other long-term assets | 79,228.00 | 5,000.00 | 414,448.00 | |
| Net cash received from disposal of subsidiaries and other units | 36,263,700.00 | 36,263,700.00 |
| Other cash received concerning investing activities | ||||
| Subtotal of cash inflow from investing activities | 76,452,723.83 | 76,375,233.49 | 14,976,290.05 | 14,528,392.05 |
| Cash paid for purchasing fixed, intangible and other long-term assets | 4,948,265.12 | 3,291,284.99 | 5,676,192.55 | 3,370,306.88 |
| Cash paid for investment | 45,400,000.00 | 45,400,000.00 | 100,000,000.00 |
| Net cash paid for achievement of subsidiaries and other business units | ||||
| Other cash paid concerning investing activities |
| Subtotal of cash outflow from investing activities | 50,348,265.12 | 48,691,284.99 | 5,676,192.55 | 103,370,306.88 |
| Net cash flows arising from investing activities | 26,104,458.71 | 27,683,948.50 | 9,300,097.50 | -88,841,914.83 |
| III. Cash flows arising from financing activities |
| Cash received from absorbing investment | ||||
| Including: Cash received from absorbing minority shareholders' equity investment by subsidiaries |
| Cash received from loans | 235,180,000.00 | 207,000,000.00 | 276,601,600.00 | 266,011,600.00 |
| Cash received from issuing bonds |
| Other cash received concerning financing activities | 60,343,934.67 | 23,123,472.43 | 36,847,200.56 |
| Subtotal of cash inflow from financing activities | 295,523,934.67 | 230,123,472.43 | 313,448,800.56 | 266,011,600.00 |
| Cash paid for settling debts | 284,622,721.99 | 266,011,600.00 | 254,287,177.09 | 208,000,000.00 |
| Cash paid for dividend and profit distributing or interest paying | 8,511,930.03 | 7,062,645.82 | 10,670,866.72 | 9,007,757.61 |
| Including: dividends or profit paid by subsidiaries to minority shareholders | ||||
| Other cash paid concerning financing activities | 60,312,645.22 | 22,103,989.52 | 12,119,804.65 |
| Subtotal of cash outflow from financing activities | 353,447,297.24 | 295,178,235.34 | 277,077,848.46 | 217,007,757.61 |
| Net cash flows arising from financing activities | -57,923,362.57 | -65,054,762.91 | 36,370,952.10 | 49,003,842.39 |
| IV. Influence on cash due to fluctuation in exchange rate | 116,967.67 | -448.17 | 42,272.21 | 329.36 |
| V. Net increase of cash and cash equivalents | -60,589,772.47 | -17,665,625.29 | -32,637,366.94 | -41,816,616.98 |
| Add: Balance of cash and cash equivalents at the period -begin | 314,978,460.49 | 185,202,268.28 | 301,527,354.56 | 175,586,251.46 |
| VI. Balance of cash and cash equivalents at the period–end | 254,388,688.02 | 167,536,642.99 | 268,889,987.62 | 133,769,634.48 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY
Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd 2021.01-06 Unit: RMB Yuan
| Items | 2021.01-06 | ||||||||
| Owners’ equity attributable to parent company | Minority equity | Total of owners’ equity | |||||||
| share capital | Capital suplus | Lessen: treasury stock | Other comprehensive income | Special preparation | Surplus reserve | ||||
| I. balance at the end of last year | 843,212,507.00 | 726,768,468.00 | 2,501,459.77 | 805,525,775.33 | 997,601,577.97 | 73,596,499.65 | 3,449,206,287.72 | ||
| 1. Change of accounting policy | |||||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 843,212,507.00 | 726,768,468.00 | 2,501,459.77 | 805,525,775.33 | 997,601,577.97 | 73,596,499.65 | 3,449,206,287.72 | ||
| III. Increase/ decrease of amount in this year (“-” means decrease) | -16,123,970.29 | 12,785,383.91 | -35,801,718.99 | -2,322,217.38 | -41,462,522.75 | ||||
| (I) Total comprehensive incomes | -14,584,210.01 | -2,322,217.38 | -16,906,427.39 | ||||||
| (II) Capital increased and reduced by owners | |||||||||
| 1. Common shares increased by shareholders | |||||||||
| 2. Capital increased by holders of other equity instruments | |||||||||
| 3. Amounts of share-based payments recognized in owners’ equity | |||||||||
| 4. Other | |||||||||
| (III) Profit distribution | 12,785,383.91 | -21,217,508.98 | - | -8,432,125.07 | |||||
| 1. Withdrawing surplus public reserve | 12,785,383.91 | -12,785,383.91 | - | ||||||
| 2. Distribution to all owners (shareholders) | -8,432,125.07 | -8,432,125.07 | |||||||
| 3. Others | |||||||||
| (IV) Internal carrying forward of owners’ equity | |||||||||
| 1. New increase of share capital from capital reserves | |||||||||
| 2. Convert surplus reserves to share capital | |||||||||
| 3. Surplus reserves make up losses | |||||||||
| 4. Others | |||||||||
| (V) Specific reserve | |||||||||
| 1. Withdrawn for the period | 1,201,021.67 | 1,201,021.67 | |||||||
| 2. Used in the period | -1,201,021.67 | -1,201,021.67 | |||||||
| (VI) Other | -16,123,970.29 | -16,123,970.29 | |||||||
| IV. Balance at the end of this period | 843,212,507.00 | 710,644,497.71 | 2,501,459.77 | 818,311,159.24 | 961,799,858.98 | 71,274,282.27 | 3,407,743,764.97 | ||
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
| Items | 2020.01-06 | ||||||||
| Owners’ equity attributable to parent company | Minority equity | Total of owners’ equity | |||||||
| share capital | Capital suplus | Lessen: treasury stock | Other comprehensive income | Special preparation | Surplus reserve | ||||
| I. balance at the end of last year | 843,212,507.00 | 726,768,468.00 | 2,501,459.77 | 768,723,812.53 | 1,038,358,782.59 | 74,562,823.71 | 3,454,127,853.60 | ||
| 1. Change of accounting policy | |||||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 843,212,507.00 | 726,768,468.00 | 2,501,459.77 | 768,723,812.53 | 1,038,358,782.59 | 74,562,823.71 | 3,454,127,853.60 | ||
| III. Increase/ decrease of amount in this year (“-” means decrease) | 30,409,270.84 | -79,309,991.57 | -3,781,154.31 | -52,681,875.04 | |||||
| (I) Total comprehensive incomes | -23,604,345.52 | -1,306,154.31 | -24,910,499.83 | ||||||
| (II) Capital increased and reduced by owners | |||||||||
| 1. Common shares increased by shareholders | |||||||||
| 2. Capital increased by holders of other equity instruments | |||||||||
| 3. Amounts of share-based payments recognized in owners’ equity | |||||||||
| 4. Other | |||||||||
| (III) Profit distribution | 30,409,270.84 | -55,705,646.05 | -2,475,000.00 | -27,771,375.21 | |||||
| 1. Withdrawing surplus public reserve | 30,409,270.84 | -30,409,270.84 | - | ||||||
| 2. Distribution to all owners (shareholders) | -25,296,375.21 | -2,475,000.00 | -27,771,375.21 | ||||||
| 3. Others | |||||||||
| (IV) Internal carrying forward of owners’ equity | |||||||||
| 1. New increase of share capital from capital reserves | |||||||||
| 2. Convert surplus reserves to share capital | |||||||||
| 3. Surplus reserves make up losses | |||||||||
| 4. Others | |||||||||
| (V) Specific reserve | |||||||||
| 1. Withdrawn for the period | 1,127,227.68 | 1,127,227.68 | |||||||
| 2. Used in the period | -1,127,227.68 | -1,127,227.68 | |||||||
| (VI) Other | |||||||||
| IV. Balance at the end of this period | 843,212,507.00 | 726,768,468.00 | 2,501,459.77 | 799,133,083.37 | 959,048,791.02 | 70,781,669.40 | 3,401,445,978.56 | ||
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
STATEMENT OF CHANGES IN OWNERS’ EQUITYPrepared by Dalian Refrigeration Company Limited 2021.01-06 Unit: RMB Yuan
| Items | 2021.01-06 | ||||||||
| Owners’ equity attributable to parent company | Total of owners’ equity | ||||||||
| share capital | Other equity instrument | Capital suplus | Lessen: treasury stock | Other comprehensive income | Special preparation | Surplus reserve | Retained profits | ||
| I. balance at the end of last year | 843,212,507.00 | 771,270,562.83 | 1,539,359.10 | 805,525,775.33 | 990,593,941.49 | 3,412,142,145.75 | |||
| 1. Change of accounting policy | |||||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 843,212,507.00 | 771,270,562.83 | 1,539,359.10 | 805,525,775.33 | 990,593,941.49 | 3,412,142,145.75 | |||
| III. Increase/ decrease of amount in this year (“-” means decrease) | -16,123,970.29 | 12,785,383.91 | -22,587,959.60 | -25,926,545.98 | |||||
| (I) Total comprehensive incomes | -1,370,450.62 | -1,370,450.62 | |||||||
| (II) Capital increased and reduced by owners | |||||||||
| 1. Common shares increased by shareholders | |||||||||
| 2. Capital increased by holders of other equity instruments | |||||||||
| 3. Amounts of share-based payments recognized in owners’ equity | |||||||||
| 4. Other | |||||||||
| (III) Profit distribution | 12,785,383.91 | -21,217,508.98 | -8,432,125.07 | ||||||
| 1. Withdrawing surplus public reserve | 12,785,383.91 | -12,785,383.91 | - | ||||||
| 2. Distribution to all owners (shareholders) | -8,432,125.07 | -8,432,125.07 | |||||||
| 3. Others | |||||||||
| (IV) Internal carrying forward of owners’ equity | |||||||||
| 1. New increase of share capital from capital reserves | |||||||||
| 2. Convert surplus reserves to share capital | |||||||||
| 3. Surplus reserves make up losses | |||||||||
| 4. Others | |||||||||
| (V) Specific reserve | |||||||||
| 1. Withdrawn for the period | 1,201,021.67 | 1,201,021.67 | |||||||
| 2. Used in the period | -1,201,021.67 | -1,201,021.67 | |||||||
| (VI) Other | -16,123,970.29 | -16,123,970.29 | |||||||
| IV. Balance at the end of this period | 843,212,507.00 | 755,146,592.54 | 1,539,359.10 | 818,311,159.24 | 968,005,981.89 | 3,386,215,599.77 | |||
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
| Items | 2020.01-06 | ||||||||
| Owners’ equity attributable to parent company | |||||||||
| Total of owners’ equity | |||||||||
| share capital | Other equity instrument | Capital suplus | Lessen: treasury stock | Other comprehensive income | Special preparation | Surplus reserve | Retained profits | ||
| I. balance at the end of last year | 843,212,507.00 | 771,270,562.83 | 1,539,359.10 | 768,723,812.53 | 988,765,359.93 | 3,373,511,601.39 | |||
| 1. Change of accounting policy | |||||||||
| 2. Correction of errors in previous period | |||||||||
| II. Balance at the beginning of this year | 843,212,507.00 | 771,270,562.83 | 1,539,359.10 | 768,723,812.53 | 988,765,359.93 | 3,373,511,601.39 | |||
| III. Increase/ decrease of amount in this year (“-” means decrease) | 30,409,270.84 | -48,921,339.75 | -18,512,068.91 | ||||||
| (I) Total comprehensive incomes | 6,784,306.30 | 6,784,306.30 | |||||||
| (II) Capital increased and reduced by owners | |||||||||
| 1. Common shares increased by shareholders | |||||||||
| 2. Capital increased by holders of other equity instruments | |||||||||
| 3. Amounts of share-based payments recognized in owners’ equity | |||||||||
| 4. Other | |||||||||
| (III) Profit distribution | 30,409,270.84 | -55,705,646.05 | -25,296,375.21 | ||||||
| 1. Withdrawing surplus public reserve | 30,409,270.84 | -30,409,270.84 | - | ||||||
| 2. Distribution to all owners (shareholders) | -25,296,375.21 | -25,296,375.21 | |||||||
| 3. Others | |||||||||
| (IV) Internal carrying forward of owners’ equity | |||||||||
| 1. New increase of share capital from capital reserves | |||||||||
| 2. Convert surplus reserves to share capital | |||||||||
| 3. Surplus reserves make up losses | |||||||||
| 4. Others | |||||||||
| (V) Specific reserve | |||||||||
| 1. Withdrawn for the period | 1,127,227.68 | 1,127,227.68 | |||||||
| 2. Used in the period | -1,127,227.68 | -1,127,227.68 | |||||||
| (VI) Other | |||||||||
| IV. Balance at the end of this period | 843,212,507.00 | 771,270,562.83 | 1,539,359.10 | 799,133,083.37 | 939,844,020.18 | 3,354,999,532.48 | |||
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
III. General Information
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd (the “Company”) was reorganizedand reformed from main part of former Dalian Refrigeration Factory. On December 8, 1993, theCompany went to the public as a listed Company at Shenzhen Stock Exchange Market. OnMarch 20, 1998, the company successfully went to the public at B share market and listed atShenzhen Stock Exchange Market with total share capital of RMB350,014,975Yuan.According to the 13
th meeting of the 6
thgeneration of board, extraordinary general meeting for2015 fiscal year and ' Restricted share incentive plan (draft)' , the Company planned to introduceA ordinary shares to incentive objectives, which was 10,150,000 number of shares would begranted to 41 share incentive objectives at granted price of RMB5.56Yuan per share. Up to March
th,2015, the Company received new added share capital of RMB10,150,000Yuan and the sharecapital had been verified by DaHua Certified Public Accountants, and had been issued the capitalverification report Dahuayanzi [2015]000086 on March12
th, 2015.The general meeting for 2015 fiscal year held on 21st April 2016 approved the profit distributionpolicy for the year of 2015, which agrees the profit distribution based on the total 360,164,975number of shares as share capital, paid share dividend of 5 common shares for every 10 sharesthrough capital reserve. The policy stated above was fully implemented on 5th May 2016, and theregistered capital was altered to 540,247,462.00Yuan.The 17
thmeeting of the 6
th generation of board was held on 4
th June 2015 and the 2
ndinterimshareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the proposalof non-public offering of ‘A shares’. China’s Securities Regulatory Commission issued SFClicense [2015]3137 on 30
thDecember, 2015, approving that new non-public offering cannotexceeded 38,821,954 number of shares. The company implemented the post meeting proceduresfor China’s Securities Regulatory Commission, which is regarding adjustment of bottom price andthe number of the shares issued after the implementation of profit distribution policy of 2015 inMay, 2016, and accordingly revised the upper limit of non-public offering of share to58,645,096number of new ‘A shares’. The company issued the non-public offering of 58,645,096 number of‘A shares’ to 7 investors, and as a result, the total number of shares of the company is changed to598,892,558 shares, and the par value is 1yuan per share and the total share capital is598,892,558.00Yuan. The share capital stated above has been verified by DaHua Certified PublicAccountants, and has been issued the capital verification report Dahuayanzi [2016]000457 on 31stMay 2016.According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration CompanyLimited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting authorized theboard of directors to implement the Restricted Share Incentive Plan’ approved on the
rdprovisional general meeting held on 13th September 2016, the 9
th meeting of the 7
thgenerationof board deliberated and passed the ‘Proposal about granting the restricted shares to incentivetargets’ on September 20
th, 2016 and set 20
thSeptember 2016 as share granted date, and granted12,884,000 number of restricted shares to 188 incentive targets at granted price of 5.62Yuan per
share. By 22
ndNovember, 2016, the company has actually received the newly subscribedregistered share capital of 12,884,000Yuan subscribed by incentive targets. The share capitalstated above has been verified by DaHua Certified Public Accountants, and has been issued thecapital verification report Dahuayanzi [2016]001138 on 23
rdNovember, 2016.On May 20
th
, 2017, the general meeting for 2016 fiscal year was held and profit appropriationscheme for 2016 FY was approved, which was every 10 shares will be increased by 4 sharesthrough capital reserve based on the total 611,776,558 number of shares. After the profitappropriation scheme, the registered capital was changed to RMB856,478,181.00Yuan.On December 18, 2017, the Company held the third extraordinary shareholders’ meeting of 2017which reviewed and approved the Proposal on Repurchasing and Cancelling Part RestrictedStocks of the 2016 Restricted Stock Incentive Plan”. On March 8, 2018, after the completion ofrepurchase and cancellation, the Company implemented the corresponding capital reductionprocedures according to law, and the registered capital of the Company was changed from856,487,181 Yuan to 855,908,981 Yuan.On May 4, 2018, the Company held the 21
stmeeting of the seventh board of directors whichreviewed and approved the Proposal on Repurchasing and Cancelling Party Restricted Stocks ofthe 2015 Restricted Stock Incentive Plan. On June 29, 2018, after the completion of repurchaseand cancellation, the Company implemented the corresponding capital reduction proceduresaccording to law, and the registered capital of the Company was changed from 855,908,981 Yuanto 855,434,087 Yuan.On January 17,2019, the Company held the first extraordinary shareholders’ meeting of 2019which reviewed and approved the Proposal on terminating the implementation of 2016 RestrictedStock Incentive Plan of the Company and logouting the restricted stock. On March 4,2019, theCompany has completed the capital reduction process, and the registered capital of the Companywas changed from 855,434,087 Yuan to 843,212,507 Yuan.On December 20
th, 2019, the Company held the 7th meeting of the 8th Board of Directors andapproved to change the Company’s name from Dalian Refrigeration Company Limited toBingshan Refrigeration & Heat Transfer Technologies Co., Ltd.The old address of the Company’s registered office as same as head office is No.888 Xinan Road,Shahekou District, Dalian, China. In 2017, the Company relocated to new factory and changed itsaddress to No.16 Liaohe East RD, Dalian Economic&Technology Development Zone(‘DDZ’),Dalian China as same as HQ’s address. The parent company of the Company is Dalian BingshanGroup Co., Ltd., and there is no ultimate controller regulated by the relevant law, regulations andrules.The Company is in industrial manufacturing sector, mainly engaged in industrial refrigeration,refrigerated and frozen food storage, and manufacture and installation of central air-conditioningand refrigeration equipment. The scope of business includes research and development, design,manufacture, sale, lease, installation and repair of refrigeration and heat equipment, accessories,
spare parts, and energy-saving and environmental protection products; Technical services,technical consultation, technical promotion; Design, construction, installation repair andmaintenance of complete sets of refrigeration and air conditioning projects, mechanical andelectrical installation projects, steel structure projects, anti-corrosion and heat preservation works;Rental of premises; Transport of ordinary goods; Property management; Low temperature storage;Import and export of goods and technologies. (With the exception of projects subject to approvalaccording to law, independently carry out business activities according to law with the businesslicense).This reporting period, entities within the consolidation scope has no change comparing to lastyear.IV. Financial Statements Preparation Basis
（1） Preparing basis
The Company’s financial statements are prepared on the basis of going concern assumption,according to the actual occurred transactions and events and in accordance with ‘AccountingStandards for Business Enterprises’ and relevant regulations, and also based on the note V“Significant Accounting Policies, Accounting Estimates”.
（2） Going concern
The Company has the capacity to continually operate within 12 months at least since the end ofreport period, and hasn‘t the major issues impacting on the sustainable operation ability.V. Significant Accounting Policies and Accounting Estimates
The Ministry of Finance on December 7, 2018, issued on revision issued by the accountingstandards for enterprises no. 21 - leases the notification (finance and accounting) [2018] no. 35, indomestic and at the same time, listed companies and listed overseas and adopted internationalfinancial reporting standards or enterprises, enterprise accounting standards to prepare its financialstatements shall be implemented as of January 1, 2019; Other enterprises implementing theaccounting standards for Business Enterprises shall come into force on January 1, 2021. Inaccordance with the above requirements, the Company will implement the relevant guidelinesfrom January 1, 2021.
1. Declaration for compliance with accounting standards for business enterprisesThe financial statements are prepared by the Group according to the requirements of AccountingStandard for Business Enterprise, and reflect the relative information for the financial position,operating performance, cash flow of the Group truly and fully.
2. Accounting period
The Group adopts the Gregorian calendar year as accounting period from Jan 1 to Dec 31.
3. Operating cycle
Normal operating cycle refers to the duration starting from purchasing the assets formanufacturing up to cash or cash equivalent realization. The group sets twelve months for oneoperating cycle and as the liquidity criterion for assets and liability.
4. Functional currency
The Group adopts RMB as functional currency.
5. Accounting for business combination under same control and not under same controlAs an acquirer, the assets and liabilities that The Group obtained in a business combination underthe same control should be measured on the basis of their carrying amount in the consolidatedfinancial statements on the combining date. As for the balance between the carrying amount of thenet assets obtained by the combining party and the carrying amount of the consideration paid by it,the capital surplus shall be adjusted. If the capital surplus is not sufficient to be offset, the retainedearnings shall be adjusted.For a business combination not under same control, the asset, liability and contingent liabilityobtained from the acquirer shall be measured at the fair value on the acquisition date. Thecombination cost shall be the fair value, on the acquisition date, of the assets paid, the liabilitiesincurred or assumed and equity securities issued by the acquirer in exchange for the control of theacquire, and sum of all direct expenses(if the combination is achieved in stages, the combinationcost shall be the sum of individual transaction). The difference when combination cost exceedsproportionate share of the fair value of identifiable net assets of acquire should be recognized asgoodwill. If the combination cost is less than proportionate share of the fair value of identifiablenet assets of acquiree, firstly, fair value of identifiable asset, liability or contingent liability shallbe reviewed, and so the fair value of non-monetary assets or equity instruments issued in thecombination consideration , after review, still the combination cost is less than proportionateshare of the fair value of identifiable net assets of acquire, the difference should be recognized asnon-operating income.
6. Method of preparation of consolidated financial statements
All subsidiaries controlled by the Group and structured entities are within the consolidation scope.If subsidiaries adopt different accounting policy or have different accounting period from theparent company, appropriated adjustments shall be made in accordance with the Group policy inpreparation of the consolidated financial statements.All significant intergroup transactions, outstanding balances and unrealized profit shall beeliminated in full when preparing the consolidated financial statements. Portion of the subsidiary’sequity not belonging to the parent, profit, loss for the current period, portion of othercomprehensive income and total comprehensive belonging to minority interest, shall bepresented separately in the consolidated financial statements under “minority interest ofequity”, ”minority interest of profit and loss”, “other comprehensive income attributed to minorityinterest” and “total comprehensive income attributed to minority interest” title.
If a subsidiary is acquired under common control, its operation results and cash flow shall beconsolidated since the beginning of the consolidation period. When preparing the comparativeconsolidated financial statements, adjustments shall be made to relevant items of comparativefigures as regarded that reporting entity established through consolidation has been always theresince the point when the ultimate controlling party starts to have the control.If a business consolidation under common control is finally achieved in stages, consolidationaccounting method shall be disclosed additionally for the period in which the control is obtained.For example, if a business consolidation under common control is finally achieved in stages, whenpreparing the consolidated financial statements, adjustments shall be made for the currentconsolidation status as if consolidation has always been there since the point when the ultimatecontrolling party starts to control. In preparation of comparative figures, asset and liability of theacquiree shall be consolidated into the Group’s comparative financial statements, but to the extentno earlier than the point when the Group and acquiree are both under ultimate control and relevantitems under equity in comparative financial statements shall be adjusted for net asset increased incombination. To avoid the duplicated computation of net asset of acquiree, for long-term equityinvestment held by the Group before the consolidation, relevant profit and loss, othercomprehensive income and movement in other net asset, recognized for the period between thecombination date and later date when original shareholding is obtained and when the Group andthe acquiree are under common control of same ultimate controlling party, shall be respectivelyused for writing down the opening balance of retained earnings of comparative financialstatements and profit and loss for the current period.If a subsidiary is acquired not under common control, its operation results and cash flow shall beconsolidated since the beginning of the consolidation period. In preparation of the consolidatedfinancial statements, adjustments shall be made to subsidiary’s financial statements based on thefair value of its all identifiable assets, liability or contingent liability on the acquisition date.If a business consolidation under non-common control is finally achieved in stages, consolidationaccounting method shall be disclosed additionally for the period in which the control is obtained.For example, if a business consolidation not under common control is finally achieved in stages,when preparing the consolidated financial statements, the acquirer shall remeasure its previouslyheld equity interest in the acquiree at its acquisition-date fair value and recognize the resultinggain or loss as investment income for the current period. Other comprehensive income, underequity method accounting rising from the interest held in acquiree in relation to the period beforethe acquisition, and changes in the value of its other equity other than net profit or loss, othercomprehensive income and profit appropriation shall be transferred to investment gain or lossfor the period in which the acquisition incurs, excluding the other comprehensive income fromthe movement on the remeasurement of ne asset or liability of defined benefit plan.When the Group partially disposes of the long –term equity investment in subsidiary withoutlosing the control over it, in the consolidated financial statements, the difference, betweendisposals price and respective disposed value of share of net assets in the subsidiary since the
acquisition date or combination date, shall be adjusted for capital surplus or share premium, noenough capital surplus, then adjusted for retained earnings.When the Group partially disposes of the long –term equity investment in subsidiary and lose thecontrol over it, in preparation of consolidated financial statements, remaining share of interest inthe subsidiary shall be remeasured on the date of losing control. Sum of the share disposalconsideration and fair value of remaining portion of shareholding minus the share of the net assetsin the subsidiary held based on the previous shareholding percentage since the acquisition date orcombination date, the balance of above is recognized as investment gain/loss for the period andgoodwill shall be written off accordingly. Other comprehensive income relevant to shareinvestment in subsidiary shall be transferred to investment gain /loss for the period on the date oflosing control.When the Group partially disposes of the long –term equity investment in subsidiary and lose thecontrol over it by stages, if all disposing transactions are bundled, each individual transaction shallbe seen as a transaction of disposal of a subsidiary by losing control. The difference between thedisposal price and the share of the net assets in the subsidiary held before the date of losingcontrol, shall be recognize as other comprehensive income until the date of losing control where itis transferred into investment gain/ loss for the current period.
7. Joint arrangement classification and joint operation accounting
The Group’s joint arrangement includes joint operation and joint venture. For joint operation, theGroup as a joint operator shall recognize its own assets and its share of any assets held jointly, itsliabilities and its share of any liabilities incurred jointly, its revenue from the sale of its share ofthe output arising from the joint operation, its share of the revenue from the sale of the output bythe joint operation; and its expenses, including its share of any expenses incurred jointly. When anentity enters into a transaction with a joint operation in which it is a joint operator, such as a saleor contribution of assets, it is conducting the transaction with the other parties to the jointoperation and, as such, the joint operator shall recognize gains and losses resulting from such atransaction only to the extent of the other parties’ interests in the joint operation.
8. Cash and cash equivalent
The cash listed on the cash flow statements of the Group refers to cash on hand and bank deposit.The cash equivalents refer to short-term (normally with original maturities of three months or less)and liquid investments which are readily convertible to known amounts of cash and subject to aninsignificant risk of changes in value.
9. Translation of foreign currency
(1) Foreign currency transaction
Foreign currency transactions are translated at the spot exchange rate issued by People’s Bank ofChina (“PBOC”) on the 1
st
day of the month when the transactions incurred. Monetary assets andliabilities in foreign currencies are translated into RMB at the exchange rate prevailing at the
balance sheet day. Exchange differences arising from the settlement of monetary items are chargedas in profit or loss for the period. Exchange differences of specific borrowings related to theacquisition or construction of a fixed asset should be capitalized as occurred, before the relevantfixed asset being acquired or constructed is ready for its intended uses.
(2) Translation of foreign currency financial statements
The asset and liability items in the foreign currency balance sheet should be translated at a spotexchange rate at the balance sheet date. Among the owner’s equity items except “undistributedprofit”, others should be translated at the spot exchange rate when they are incurred. The incomeand expense should be translated at spot exchange rate when the transaction incurs. Translationdifference of foreign currency financial statements should be presented separately under the othercomprehensive income title. Foreign currency cash flows are translated at the spot exchange rateon the day when the cash flows incur. The amounts resulted from change of exchange rate arepresented separately in the cash flow statement.
10. Financial assets and financial liabilities
The company shall recognize a financial asset or a financial liability when the company becomesparty to the contractual provisions of the instrument.
(1) Financial assets
1) Classification, recognition and measurement
The company shall classify financial assets as measured at amortized cost, fair value through othercomprehensive income or fair value through profit or loss on the basis of both the company’sbusiness model for managing the financial assets and the contractual cash flow characteristics ofthe financial asset.A financial asset shall be measured at amortized cost if both of the following conditions are met:
①the financial asset is held within a business model whose objective is to hold financial assets inorder to collect contractual cash flows;②the contractual terms of the financial asset give rise onspecified dates to cash flows that are solely payments of principal and interest on the principalamount outstanding. At initial recognition, the company shall measure the financial asset at its fairvalue and take any transaction costs that are directly attributable to the financial asset into account.After initial recognition, the company shall measure the financial asset at amortized cost. A gain orloss on a financial asset that is measured at amortized cost and is not a hedged item shall berecognized in profit or loss when the financial asset is derecognized, impaired, involved in foreignexchange or amortized for any difference arising between the initial recognized amount and dueamount by applying effective interest method.A financial asset shall be measured at fair value through other comprehensive income if both ofthe following conditions are met: ①the financial asset is held within a business model whoseobjective is achieved by both collecting contractual cash flows and selling financial assets and
②the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding. At initialrecognition, the company shall measure this financial asset at its fair value and take anytransaction costs that are directly attributable to the financial asset into account. A gain or loss on afinancial asset that is measured at fair value through other comprehensive income and is not ahedged item shall be recognized in other comprehensive income apart from a gain or loss on creditloss, foreign exchange and interest of the financial asset calculated by effective interest method.Accumulated gain or loss previously in the other comprehensive income shall be out of it andaccounted in the profit or loss account when the financial asset is derecognized.The company recognized interest revenue based on effective interest method. Interest revenueshall be calculated by applying the effective interest rate to the gross carrying amount of afinancial asset, except for: ①purchased or originated credit-impaired financial assets. For thosefinancial assets, the company shall apply the credit-adjusted effective interest rate to the amortizedcost of the financial asset from initial recognition. ②financial assets that are not purchased ororiginated credit-impaired financial assets but subsequently have become credit-impaired financialassets. For those financial assets, the company shall apply the effective interest rate to theamortized cost of the financial asset in subsequent reporting periods.The company designates an investment as fair value measured through other comprehensiveincome if an equity instrument held is not for trading. Once the decision is made, it is anirrevocable election. At initial recognition, the company shall measure the equity instrumentinvestment not for trading at its fair value and take any transaction costs that are directlyattributable to the financial asset into account. Any other gain or loss (including foreign exchangegain or loss) shall be accounted in other comprehensive income and shall not be subsequentlytransferred to profit or loss, unless the dividend received is accounted in profit or loss( excludingthe recovered investment cost). Accumulated gain or loss previously in the other comprehensiveincome shall be out of it and into retained earnings when the financial asset is derecognized.Apart from classified as the amortized cost financial assets and as fair value through othercomprehensive income financial assets, a financial asset is classified as fair value through profit orloss. At initial recognition, the company shall measure this financial asset at its fair value and takeany transaction costs that are directly attributable to the financial asset into account.A financial asset shall be classified as fair value through profit or loss if it is recognized contingentconsideration through business combination, which is not under same control situation.
2) Recognition and measurement of transfer of financial assets
A financial asset is derecognized when any one of the following conditions is satisfied: ①therights to receive cash flows from the asset is terminated, ②the financial asset has beentransferred and the company transfers substantially all risks and rewards relating to the financialassets to the transferee, ③the financial asset has been transferred to the transferee, the companyhas given up its control of the financial asset although the company neither transfers nor retains allrisks and rewards of the financial asset.
In the case where the financial asset as a whole qualifies for the derecognition conditions, thedifference between the carrying value of transferred financial asset and the sum of theconsideration received for transfer and the accumulated amount of changes in fair value in respectof the amount of partial derecognition (the contractual terms of the financial asset give rise onspecified dates to cash flows that are solely payments of principal and interest on the principalamount outstanding) , that was previously recorded under other comprehensive income istransferred into profit or loss for the period.In the case where only part of the financial asset qualifies for derecognition, the carrying amountof financial asset being transferred is allocated between the portions that to be derecognised andthe portion that continued to be recognised according to their relative fair value. The differencebetween the amount of consideration received for the transfer and the accumulated amount ofchanges in fair value that was previously recorded in other comprehensive income for the assetpartially qualified for derecognition (the contractual terms of the financial asset give rise onspecified dates to cash flows that are solely payments of principal and interest on the principalamount outstanding) and the above-mentioned allocated carrying amount is charged to profit orloss for the period.
(2) Financial liabilities
1) Classification, basis for recognition and measurement
Financial liabilities of the company are classified at initial recognition as “financial liabilities atfair value through profit or loss” and “other financial liabilities” on initial recognition.Financial liabilities at fair value through profit or loss include financial liabilities held for tradingand those designated as fair value through profit or loss on initial recognition. They aresubsequently measured at fair value. The net gain or loss arising from changes in fair value,dividends and interest paid related to such financial liabilities are recorded in profit or loss for theperiod in which they are incurred.Other financial liabilities shall be subsequently measured at amortized cost by applying effectiveinterest method. The company shall classify a financial liability as a liability measured atamortized cost except the followings: ①financial liability measured at fair value through profit orloss including tradable financial liability (derivative instrument of financial liability included) anddesignated as financial liability measured at fair value through profit or loss ② financial assetstransfers that do not qualify for derecognition or financial liability is formed from continuinginvolvement in transferred assets ③ financial guarantee contract not in the above category of
①or ② and loan commitment which is not in the category ① at the below the market loan rate.The company shall account the financial liability as it measured at fair value through profit or lossif the financial liability is formed by contingent consideration recognized by the buyer throughbusiness combination that is not under common control.
2) Financial liability derecognition
A financial liability is derecognized when the underlying present obligations or part of it aredischarged. Existing financial liability shall be derecognized and new financial liability shall berecognized when the company signs the agreement with creditor to undertake the new financialliability in replacement of existing financial liability, and the terms of agreement are different insubstance. Any significant amendment to the agreement as a whole or part o it is made, then theexisting liabilities or part of it shall be derecognized and financial liability after terms amendmentshall be recognized as a new financial liability. The difference between the carrying amount of thefinancial liability derecognized and the consideration paid is recognized in profit or loss for theperiod.
(3) Fair value measurement of financial asset and financial liability
The company uses the price in the primary market for financial assets and liability fair valuemeasurement, if no primary market exists, the price in the most advantageous market shall be usedfor fair value measurement and applicable valuation techniques which enough data is available forand supported by other information shall be adopted. Input for fair value measurement has 3 levels:
level 1 input is the unadjusted quoted price for identical asset or liability available at the activemarket on the measurement date; level 2 input is the directly or indirectly observable input forrelevant asset or liability apart from level 1 input; level 3 input is the unobservable input forrelevant asset or liability.
(4) Financial asset and financial liability offset
Financial asset and financial liability shall be presented in the balance sheet separately and cannotbe offset, unless the following conditions are all met: ①the company has the legal right torecognized offset amount and the right is enforceable. ②the company plans to receive or a legalobligation to pay cash at net amount.
(5) Distinguishment between financial liability and equity instrument and accountingfinancial liability and equity instrument shall be distinguished in accordance with the followingstandards: ① if the company cannot unconditionally avoid paying cash or financial asset to fulfil acontractual obligation, the contractual obligation is qualified or financial liability. For certainfinancial instrument, although there are no clear terms and conditions to include obligation ofpaying cash or other financial liability, contractual obligation may indirectly be formed throughother terms and conditions. ② the company’s own equity instrument shall also be consideredwhether it is the substitute of cash, financial asset or it is the remaining equity, after the issuerdeducts liability, enjoyed by the equity holder , if it must or can be used to settle a financial asset.If the former, the instrument is a financial liability of the issuer, otherwise it is an equityinstrument of the issuer. In certain circumstances, financial instrument contract is classified asfinancial liability, if financial instrument contract specifies the company must or can use its ownequity to settle the financial instrument, the contractual amount of right or obligation equals to thatof the numbers of own equity instrument available or to be paid multiplied by fair value whensettling, nevertheless the amount is fixed, or varied partially or fully based on the its own equity’s
market price(such as interest rate, certain commodity’s or financial instrument’s price variance).When classifying a financial instrument (or its component) in the consolidated statements, thecompany takes all terms and conditions agreed by the group member and instrument holder intoconsideration. If the group due to the instrument, as a whole, bears settlement obligation bypaying cash, other financial asset or other means resulted in financial liability, the instrument shallbe classified as financial liability.If a financial instrument or its component is financial liability, any gain or loss, interest, dividend,and any gain or loss from buy back or refinancing shall be accounted in profit or loss.If a financial instrument or its component is an equity instrument, when it was issued(includingrefinancing), bought back, sold or withdrawn, any change shall be regarded as equity change andno fair value change shall be recognized.
(6) Financial asset impairment
Based on expected credit loss, a financial asset measured at amortized cost, a debt instrumentinvestment measured at FVTOCI and a contractual asset shall all be subject to impairmentaccounting and be recognized for impairment loss allowance if any impairment.Expected credit loss is the weighted average of credit losses with the respective risks of a defaultoccurring as the weights. A credit loss herein is referred to as the present value, at originaleffective rate, of the difference between the contractual cash flows that are due to the companyunder the contract; and the cash flows that the company expects to receive, that's the present valueof the total cash shortage. A financial asset shall be the present value, at credit adjusted effectiverate, if it is a purchased or originated credit -impaired asset.The company adopts simplified approach for trade receivables, contract assets that do not containa significant financing component, and shall always measure the loss allowance at an amountequal to lifetime expected credit losses.Impairment requirements is to assess whether credit risk has been significantly increased sinceinitial recognition at each reporting date, if there have been significant increases in credit risk, thecompany shall measure the loss allowance for a financial instrument at an amount equal to thelifetime expected credit losses, at the reporting date, if the credit risk on a financial instrument hasnot increased significantly since initial recognition, the company shall measure the loss allowancefor that financial instrument at an amount equal to 12?month expected credit losses.When assessing expected credit losses, the company considers all reasonable and supportableinformation, including that which is forward-looking.The company shall measure expected credit losses of a financial instrument in a way that reflects:
an unbiased and probability?weighted amount that is determined by evaluating a range of possibleoutcomes; The time value of money; and reasonable and supportable information that is availablewithout undue cost or effort at the reporting date about past events, current conditions andforecasts of future economic conditions.
The company directly lowers the book value of the financial asset when contractual cash flowcannot be fully or partially recollected within rational expectation any longer.The company also assesses the expected credit loss of financial asset measured at amortized costbased on aging portfolio, other than pastdue credit loss assessment based on individual item.
11. Notes receivable
（1） Recognition of provision for impairment
On the basis of expected credit loss, the company always measures the loss allowance at anamount equal to lifetime expected credit losses for notes receivables which do not contain asignificant financing component and are generated in accordance with Revenue Standard- No 14of Accounting Standard for Business Enterprise.
(2) Expected credit loss risk portfolio assessment method based on portfolioThe company separately assesses the credit risk of financial assets which have significantlydifferent the credit risk, such as receivable with dispute or involved in litigation and arbitration;There are clear signs indicating the debtor is unlikely to fulfill the repayment obligations of thereceivables, etc.Apart from the financial asset to be assessed for credit risk separately, the company divides thefinancial assets into different group based on common characteristics of risk and assesses the riskbased on the portfolio.Based on the acceptor credit risk of notes receivable as the common risk characteristics, it isdivided into different categories and determined for expected credit loss accounting estimatepolicy.
| Portfolio category | Expected credit loss accounting estimate policy |
| Bank acceptance note portfolio | Lower credit risk assessed by the management |
| Commercial acceptance note portfolio | Same as receivables and provided for excepted credit loss allowance |
Referring to the experience of historical credit losses, the company prepares a table comparing theaging of notes receivable with the fixed reserve rate to calculate the expected credit losses on thisbasis.The Company prepares the comparison table between receivables aging and expected credit lossrate within lifetime and work out the expected credit loss by reference to historical credit lossexperience in combination with current situation and future forecast of economy condition.The company shall measure expected credit losses of a financial instrument in a way that reflects:
an unbiased and probability?weighted amount that is determined by evaluating a range of possibleoutcomes; The time value of money; and reasonable and supportable information that is availablewithout undue cost or effort at the reporting date about past events, current conditions andforecasts of future economic conditions.
The company prepares the comparison table between receivables aging and fixed provision rateand work out the expected credit loss by reference to historical credit loss experience.On the balance sheet date, expected credit loss of receivable shall be calculated. If the expectedcredit loss is larger than the book value of the provision of receivable impairment, the differenceshall be recognized as receivable impairment loss, debit to “credit impairment loss”, credit to“provision for bad debt”. Alternatively, the difference is recognized as impairment gain andreversed journal entry shall be made.Actually incurred credit loss shall be debit to “provision for bad debt”, credit to “notes receivable”,based on the approved amount to be written off as it is assured as uncollectible receivable. If theamount to be written off is bigger than the provision for impairment loss, the difference is debit to“credit impairment loss”.
12. Accounts receivable
(1) Recognition of provision for impairment
On the basis of expected credit loss, the company always measures the loss allowance at anamount equal to lifetime expected credit losses for trade receivables which do not contain asignificant financing component and are generated in accordance with Revenue Standard- No 14of Accounting Standard for Business Enterprise. For trade receivables which do contain asignificant financing component, the company chooses as its accounting policy to measure theloss allowance at an amount equal to lifetime expected credit losses.
(2) Expected credit loss risk portfolio assessment method based on portfolio
The company separately assesses the credit risk of financial assets which have significantlydifferent the credit risk, such as receivable with dispute or involved in litigation and arbitration;There are clear signs indicating the debtor is unlikely to fulfill the repayment obligations of thereceivables, etc.Apart from the financial asset to be assessed for credit risk separately, the company divides thefinancial assets into different group based on common characteristics of risk and assesses the riskbased on the portfolio.Apart from the trade receivables and other receivables to be assessed for credit risk separately,based on the counterparty as the common risk characteristics, it is divided into different categoriesand determined for expected credit loss accounting estimate policy.
| Portfolio category | Expected credit loss accounting estimate policy |
| Related parties portfolio within the consolidation | Lower credit risk assessed by the management |
| Other related parties and non-related parties portfolio | Provided for excepted credit loss allowance |
Referring to the experience of historical credit losses, the company prepares a table comparing theaging of accounts receivable with the fixed reserve rate to calculate the expected credit losses onthis basis.On the balance sheet date, expected credit loss of receivable shall be calculated. If the expectedcredit loss is larger than the book value of the provision of receivable impairment, the differenceshall be recognized as receivable impairment loss, debit to “credit impairment loss”, credit to“provision for bad debt”. Alternatively, the difference is recognized as impairment gain andreversed journal entry shall be made.Actually incurred credit loss shall be debit to “provision for bad debt”, credit to “receivable”,based on the approved amount to be written off as it is assured as uncollectible receivable. If theamount to be written off is bigger than the provision for impairment loss, the difference is debit to“credit impairment loss”
13. Receivables financing
In the process of managing enterprise liquidity, the Company carries out endorsement transfer ordiscount of most of the notes receivable before maturity, and terminates the confirmation of thediscounted or endorsed notes receivable based on the fact that the Company has transferred almostall the risks and rewards of the relevant notes receivable to the relevant counterparty. Thecompany's business model of managing notes receivable is aimed at both collecting the contractcash flow and selling the financial asset, so it is classified as the financial asset measured at fairvalue and its changes are included in other comprehensive income, and listed in the receivablesfinancing.
14.Other receivable
(1) Recognition of provision for impairment
On the basis of expected credit loss, the company always measures the loss allowance at anamount equal to lifetime expected credit losses for trade receivables which do not contain asignificant financing component and are generated in accordance with Revenue Standard- No 14of Accounting Standard for Business Enterprise. For trade receivables which do contain asignificant financing component, the company chooses as its accounting policy to measure theloss allowance at an amount equal to lifetime expected credit losses.
(2) Expected credit loss risk portfolio assessment method based on portfolio
The company separately assesses the credit risk of financial assets which have significantlydifferent the credit risk, such as receivable with dispute or involved in litigation and arbitration;There are clear signs indicating the debtor is unlikely to fulfill the repayment obligations of thereceivables, etc.Apart from the financial asset to be assessed for credit risk separately, the company divides thefinancial assets into different group based on common characteristics of risk and assesses the riskbased on the portfolio.
Apart from the trade receivables and other receivables to be assessed for credit risk separately,based on the counterparty as the common risk characteristics, it is divided into different categoriesand determined for expected credit loss accounting estimate policy.
| Portfolio category | Expected credit loss accounting estimate policy |
| Related parties portfolio within the consolidation | Lower credit risk assessed by the management |
| Other related parties and non-related parties portfolio | Same as receivables and provided for excepted credit loss allowance |
Referring to the experience of historical credit losses, the company prepares a table comparing theaging of other receivable with the fixed reserve rate to calculate the expected credit losses onthis basis.The company prepares the comparison table between receivables aging and expected credit lossrate within lifetime and work out the expected credit loss by reference to historical credit lossexperience in combination with current situation and future forecast of economy condition.The company shall measure expected credit losses of a financial instrument in a way that reflects:
an unbiased and probability?weighted amount that is determined by evaluating a range of possibleoutcomes; The time value of money; and reasonable and supportable information that is availablewithout undue cost or effort at the reporting date about past events, current conditions andforecasts of future economic conditions.The company prepares the comparison table between receivables aging and fixed provision rateand work out the expected credit loss by reference to historical credit loss experience.On the balance sheet date, expected credit loss of receivable shall be calculated. If the expectedcredit loss is larger than the book value of the provision of receivable impairment, the differenceshall be recognized as receivable impairment loss, debit to “credit impairment loss”, credit to“provision for bad debt”. Alternatively, the difference is recognized as impairment gain andreversed journal entry shall be made.Actually incurred credit loss shall be debit to “provision for bad debt”, credit to “notes receivable”,“receivable”, “other receivable” based on the approved amount to be written off as it is assured asuncollectible receivable. If the amount to be written off is bigger than the provision forimpairment loss, the difference is debit to “credit impairment loss”
15. Inventories
Inventories are materials purchasing, raw material, variance of cost materials, low-valuableconsumable, materials processed on commission, working-in-progress, semi-finished goods,variance of semi-finished goods, and finished goods, engineering construction etc.The inventories are processed on perpetual inventory system, and are measured at their actualcost on acquisition. Weighted average cost method is taken for measuring the inventory
dispatched or used. Low value consumables and packaging materials is recognized in the incomestatement by one-off method.After yearend thorough inventory check, at the balance sheet date inventory impairment should beprovided or adjusted according to inventory category. For the finished goods, raw material heldfor sale etc which shall be sold directly, the net realizable value should be confirmed at theestimated selling price less estimated selling expenses and related tax and expenses. The rawmaterial held for production, its realizable value should be confirmed at the estimated selling priceof finished goods less estimated cost of completion, estimated selling expenses and related tax.The net realizable value of inventories held for execution of sale contracts or labor contracts shallbe calculated based on the contract price. If the quantities of inventories in the Group are morethan quantities if inventories subscribed in the sales contracts, the net realizable value of theexcessive part of the inventories should be calculated based on the general selling price. When theimpairment indicators disappear, impairment provision shall be reversed and
16. Contract assets
Contract assets are the rights of the Company to receive consideration for the goods it hastransferred to the customer, and such rights are subject to factors other than the passage of time. Ifthe Company sells two clearly distinguishable goods to a customer and is entitled to receivepayment for the delivery of one of the goods, but the payment is contingent on the delivery of theother goods, the Company regards the right to receive payment as a contract asset.The method for determining the expected credit loss of the contract assets shall refer to thedescription of notes receivable and accounts receivable in notes 11 and 12 above.Accounting method: the Company calculates the expected credit loss of the contract assets on thebalance sheet date. If the expected credit loss is greater than the carrying amount of the currentcontract assets impairment provision, the Company will recognize the difference as an impairmentloss and debit "credit impairment loss" and credit "Contract assets impairment provision". On thecontrary, the Company recognizes the difference as impairment gain and makes oppositeaccounting records.If the Company actually suffers a credit loss and determines that the relevant contract assetscannot be recalled, and the write-off is approved, the Company shall debit "impairment provisionsof contract assets" and credit "contract assets" according to the approved amount of write-off. Ifthe amount of write-off is greater than the allowance for loss accrued, the difference shall bedebited as "credit impairment loss".
17. Contract Cost
(1) The method for determining the amount of assets related to the contract costThe Company's assets related to contract cost include contract performance cost and contractacquisition cost.Contract performance cost, that is, the cost of the Company to the contract, do not belong to other
accounting standards for enterprises the scope of the specification, and satisfy the followingconditions at the same time, as the performance contract cost recognized as an asset: the cost anda current or expected is directly related to the contract, including direct materials, direct labor,manufacturing cost (or similar fee), specific cost borne by the customer and only other cost arisingfrom this contract; this cost increases the Company's future resources for performance obligations;the cost is expected to be recovered.Contract acquisition cost, that is, the incremental cost incurred by the Company to acquire thecontract is expected to be recovered, shall be recognized as an asset as the contract acquisitioncost; if the amortization period of the asset does not exceed one year, it shall be recorded into thecurrent profit and loss at the time of occurrence. Incremental cost is cost (such as salescommissions, etc.) that the Company would not incur without obtaining a contract. Expensesincurred by the Company for the acquisition of the contract, in addition to the incremental costexpected to be recovered (such as travel expenses incurred whether the contract is acquired or not,etc.), shall be recorded into the current profit and loss when incurred, except those clearly borneby the customer.
(2) Amortization of assets related to contract cost
The assets related to the contract cost of the Company shall be amortized on the same basis as thecommodity income recognition related to the assets and shall be recorded into the current profitand loss.
(3) Impairment of assets related to the contract cost
When determining the impairment loss of assets related to the contract cost, the Company shallfirst determine the impairment loss of other assets related to the contract recognized in accordancewith accounting standards for other relevant enterprises. If the carrying value is higher than theresidual consideration expected to be obtained by the Company due to the transfer of thecommodity related to the asset and the estimated cost to be incurred for the transfer of thecommodity, the excess part shall be set aside for impairment loss and recognized as an assetimpairment loss.If the foregoing difference is higher than the carrying amount of the asset, the carrying amount ofthe asset shall be converted back to the original provision for impairment of the asset and recordedinto the current profit and loss. However, the carrying amount of the asset after conversion shallnot exceed the carrying amount of the asset under the circumstance of no provision forimpairment of the asset.
18. Long-term receivables
(1) Confirmation method of impairment provisio
On the basis of expected credit losses, the Company will always measure its loss provision inaccordance with the amount equivalent to the expected credit losses in the entire duration forlong-term receivables formed by transactions regulated by the Accounting Standards for
Enterprises No. 14 - Income Standards that do not contain significant financing components.Measurement of expected credit losses. Expected credit loss refers to the weighted average of thecredit loss of a financial instrument weighted by the risk of default. The credit loss herein refers tothe difference between all contractual cash flows receivable under the contract and all cash flowsexpected to be received by the Company discounted at the original effective interest rate, i.e. thepresent value of all cash shortfalls.
(2) A portfolio method to evaluate expected credit risk on the basis of portfolioThe Company evaluates the credit risk of financial assets with significantly different credit risks,such as: long-term receivables that have disputes with the other party or involve litigation orarbitration; Other receivables where there is a clear indication that the debtor is likely to be unableto meet its obligations, etc.Except for financial assets for which credit risk is assessed individually, the Company dividesfinancial assets into different groups based on common risk characteristics and evaluates creditrisk on a portfolio basis.In addition to long-term receivables with single credit risk assessment, it is divided into differentcombinations based on the relationship between long-term receivables transaction objects as thecommon risk characteristics, and the expected credit loss accounting estimation policy isdetermined:
Accounting policy for expected credit loss of portfolio classificationThe related party portfolio management within the scope of the merger evaluates that suchprojects have low credit riskOther related parties and combinations of non-related parties shall draw impairment provisions inaccordance with the expected loss rateWith reference to historical credit loss experience and combined with the current situation andforecast of future economic conditions, the company prepares a comparison table between the ageof long-term receivables and the expected credit loss rate of the entire duration to calculate theexpected credit loss.The Company's method of measuring expected credit losses on financial instruments reflectsfactors such as: an unbiased probability weighted average amount determined by evaluating arange of possible outcomes; Time value of money; Reasonable and evidence-based informationabout past events, current conditions, and projections of future economic conditions that areavailable at no unnecessary additional cost or effort at the balance sheet date.The Company calculates the expected credit loss of long-term receivables on the balance sheetdate. If the expected credit loss is greater than the carrying amount of the current impairmentprovision for long-term receivables, the Company recognizes the difference as the impairmentloss for long-term receivables, debits the "credit impairment loss" and credits the "bad debtprovision". Instead, the company recognizes the difference as an impairment gain and makes the
opposite accounting record.If the company decides that the related long-term receivables cannot be collected due to the actualcredit loss and is approved to cancel, the "bad debt reserve" and the "long-term receivables" shallbe debited and credited according to the approved amount of write-off. If the write-off amount isgreater than the loss provision already drawn, the difference will be debited to "credit impairmentloss" on a regular basis.
19. Long-term equity investment
Long term equity investments are the investment in subsidiary, in associated company and in jointventure.Joint control is the contractual agreement sharing of control over an economic activity by allparticipants or participants’ combination and decisions or policies relating to the operating activityof the entity require the unanimous consent of the parties sharing the control.Significant influence exists when the entity directly or indirectly owned 20% or more but less than50% shares with voting rights in the investee company. If holding less than 20% voting rights, theentity shall also take other facts or circumstances into accounts when judging any significantinfluences. Factors and circumstances include: representation on the board of directors orequivalent governing body of the investee, participation in financial or operating activitiespolicy-making processes, material transactions between the investor and the investee, interchangeof managerial personnel or provision of essential technical information.When control exists over an investee, the investee is a subsidiary of an entity. The initialinvestment cost for long-term equity investment acquired through business combination undercommon control, is the carrying amount presented in the consolidated financial statements of theshare of net assets at the combination date in the acquired company. If the carrying amount of netassets at the combination date in the acquired company is negative, investment shall be recognizedat zero.If the equity of investee under common control is acquired by stages and business combinationincurs in the end, an entity shall disclose the accounting method for long-term equity investmentin the parent financial statement as a supplemental. For example, if the equity of investee undercommon control is acquired by stages and business combination incurs in the end, and it’s abundled transaction, the entity shall regard all transactions as a one for accounting. If it’s not abundled transaction, the carrying amount presented in the consolidated financial statements of theshare of net assets at the combination date in the acquired company since acquisition isdetermined as for the initial cost of long-term equity investment. The difference between the costinitially recognized and carrying amount of long-term equity investment prior to the businesscombination plus the newly paid consideration for further share acquired, and capital reserve shallbe adjusted accordingly. If no enough capital reserve is available for adjustment, retain earningsshall be adjusted.
If long-term equity investment is acquired through business combination not under commoncontrol, initial investment cost shall be the combination cost.If the equity of investee not under common control is acquired by stages and businesscombination incursion the end, an entity shall disclose the accounting method for long-term equityinvestment in the parent financial statement as a supplemental. If the equity investment of investeenot under common control is acquired by stages and business combination incursion the end, andit’s a bundled transaction, the entity shall regard all transactions as a one for accounting. If it’s nota bundled transaction, the carrying amount of the equity investment held previously plus newlyincreased investment cost are taken as the initial investment cost under cost model. If equityinvestment is held under equity method before the acquisition date, other comprehensive incomeunder equity method previously shall not be adjusted accordingly. When disposing of theinvestment, the entity shall adopt the same basis as the investee directly disposing of related assetsor liability for accounting treatment. Equity held prior to acquisition date as available for salefinancial assets under fair value model, accumulated change on fair value previously recorded inother comprehensive shall be transferred into investment gain/loss for the period.Apart from the long-term equity investments acquired through business combination mentionedabove, the cost of investment for the long-term equity investments acquired by cash payment isthe amount of cash paid. For long-term equity investment acquired by issuing equity instruments,the cost of investment is the fair value of the equity instrument issued. For long-term equityinvestment injected to the entity by the investor, the investment cost is the consideration asspecified in the relevant contract or agreement.The Group adopts cost method to account for investment in subsidiary and equity method forinvestment in joint venture and affiliate.Long-term equity investment subsequently measured under cost model shall increase the carryingamount of investment by adjusting the fair value of additional investment and relevant transactionexpenses. Cash dividend or profit declared by investee shall be recognized as investment gain/lossfor the period based on the proportion share in the investee.Long-term equity investment subsequently measured under equity method shall be adjusted for itscarrying amount according to the share of equity increase or decrease in the investee. The entityshall recognize its share of the investee’s net profits or losses based on the fair value of theinvestee’s individual identifiable assets at the acquisition date, after making appropriateadjustments thereto in conformity with the accounting policies and accounting period, andoffsetting the unrealized profit or loss from internal transactions entered into between the entityand its associates and joint ventures according to the shareholding attributable to the entity andaccounted for as investment income and loss based on such basis.On disposal of a long-term equity investment, the difference between the carrying value and theconsideration actually received is recognized as investment income for the period. For long-terminvestments accounted for under equity method, the movements of shareholder’s equity, other than
the net profit or loss, of the investee company, previously recorded in the shareholder’s equity ofthe Company are recycled to investment income for the period on disposal.Where the entity has no longer joint control or significant influence in the investee company as aresult of partially disposal of the investment, the remaining investment will be changed to beaccounted for as available for sale financial assets, and the difference between the fair value ofremaining investment at the date of losing joint control or significant influence and its carryingamount shall be recognized in the profit or loss for the year. Other comprehensive incomerecognized from previous equity investment under equity model shall be accounted for on thesame basis as the investee directly disposing of related assets or liability when stopping usingunder equity model.Where the entity has no longer control over the investee company as a result of partially disposalof the investment, the remaining investment will be changed to be accounted for using equitymethod providing remaining joint control or significant influence over the investee company. Thedifference between carrying amount of disposed investment and consideration received actuallyshall be recognized in the profit and loss for the period as investment gain or loss, and investmentshall be adjusted accordingly as if it was accounted for under equity model since acquisition.Where the entity has on longer joint control or significant influence in the investee as a result ofdisposal, the investment shall be changed to be accounted for as available for sale financial assets,and difference between the carrying amount and disposal consideration shall be recognized inprofit and loss for the period, and the difference between the fair value of remaining investment atthe date of losing control and its carrying amount shall be recognized in the profit or loss for theyear as investment gain or loss.If the entity loses its control through partially disposal of investment by stages and it’s not abundled transaction, the entity shall account for all transactions separately. If it’s a bundledtransaction, the entity shall regard all transactions as one disposal of subsidiary by losing control,but the difference between disposal consideration and carrying amount of the equity investmentdisposed prior to losing control, which arises from each individual transaction shall be recognizedas other comprehensive income until being transferred into profit and loss for the period by thetime of losing control.
20. Investment property
The investment property includes property and building and measured at cost model
| Category | (years) | Estimated net residual value rate | Annual depreciation rate |
| Housing and Buildings | 40 | 3% | 2.43% |
21. Fixed assets
Recognition criteria of fixed assets: defined as the tangible assets which are held for the purposeof producing goods, rendering services, leasing or for operation & management, and have morethan one year of useful life.Fixed assets shall be recognized when the economic benefit probably flows into the Group and itscost can be measured reliably. Fixed assets include: building, machinery, transportation equipment,electronic equipment and others.All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and are stillbeing used and land is separately measured. Straight-line depreciation method is adopted by theGroup. Estimated net residual value rate, useful life, depreciation rate as follows:
| No | Category | (years) | Estimated net residual value rate | Annual depreciation rate |
| 1 | Housing and Buildings | 20-40 | 3%,5%,10% | 2.25-4.85% |
| 2 | Machinery equipment | 10-22 | 3%,5%,10% | 4.09-9.7% |
| 3 | Transportation equipment | 4-15 | 3%,5%,10% | 6-24.25% |
| 4 | Electronic equipment | 5 | 3%,5%,10% | 18-19.4% |
| 5 | Others equipment | 10-15 | 3%,5%,10% | 6-9.7% |
The Group should review the estimated useful life, estimated net residual value and depreciationmethod at the end of each year. If any change has occurred, it shall be regarded as a change in theaccounting estimates.Finance lease shall be recognized when one of the conditions are met, (1) the ownership of theasset belongs to the company when the lease term is due , (2) the company has the option to buythe asset and buy price is far lower than the fair value when exercising the option. (3) lease term ismost of the asset life (4) no significant difference between the present value of minimum leasepremium and fair value on the lease commencement date.On commencement date, leased asset shall be recognized at the lower of fair value and the PV ofminimum lease payment, long term payable shall be recognized at the minimum lease paymentand the difference is unrecognized financing expense.The depreciation policy of the leased fixed assets shall be consistent with that of the self-ownedfixed assets. If the ownership of asset can be reliably acquired by the lease term due date, leasedasset shall be depreciated through the expected service life, otherwise, it shall be depreciatedwithin the lower of the lease term and expected service life of the asset.
22. Construction in progress
The criteria and time spot of constructions in progress’s being transferred to fixed assets:
Constructions in progress are carried down to fixed assets on their actual costs when completingand achieving estimated usable status. The fixed assets that have been completed and reachedestimated usable status but have not yet been through completion and settlement procedures arecharged to an account according to their estimate values; adjustment will be conducted upon
confirmation of their actual values. The Group should withdraw depreciation in the next monthafter completion.
23. Borrowing costs
The borrowing cost includes the interest expenses of the borrowing, amortization of underflow oroverflow from borrowings, additional expenses and the foreign exchange profit and loss becauseof foreign currency borrowings. The borrowing costs incurred which can be directly attribute tothe fixed assets, investments properties, inventories requesting over 1 year purchasing ormanufacturing so to come into the expected condition of use or available for sale shall start to becapitalized when expenditure for the assets is being occurred, borrowing cost has occurred,necessary construction for bringing the assets into expected condition for use is in progress. Theborrowing costs shall stop to be capitalized when the assets come into the expected condition ofuse or available for sale. The borrowing costs subsequently incurred should be recorded into profitand loss when occurred. The borrowing costs should temporarily stop being capitalized whenthere is an unusual stoppage of over consecutive 3 months during the purchase or produce of thecapitalized assets, until the purchase or produce of the asset restart.The borrowing costs of special borrowings, deducting the interest revenue of unused borrowingskept in the bank or the investment income from transient investment should be capitalized. Thecapitalized amount of common borrowings should be calculated as follows: average assetsexpenditure of the accumulated assets expenditure excess the special borrowing, multiplied by thecapital rate. The capital rate is the weighted average rate of the common borrowings.
24. Right of use assets
The right to use assets refers to the right of the Company as the lessee to use the leased assetsduring the lease term.
(1) Initial measurement
On the commencement date of the lease term, the Company shall make an initial measurement ofthe right to use assets at the cost. The cost includes the following four items: (1) The initialmeasurement amount of lease liabilities; (2) The amount of the lease payment paid on or beforethe commencement date of the lease term, if there is a lease incentive, will be deducted from theamount of the lease incentive already enjoyed; (3) The initial direct costs incurred, namely theincremental costs incurred to achieve the lease; (4) The cost expected to be incurred for thedemolition and removal of the leased asset, the restoration of the leased asset site or the restorationof the leased asset to the state agreed in the lease terms, except those incurred for the productionof inventory.
(2) Follow-up measurement
After the commencement of the lease term, the Company shall adopt the cost model to carry outsubsequent measurement of the right to use assets, that is, to measure the right to use assets at thecost minus accumulated depreciation and accumulated impairment losses. If the Company
re-measures the lease liabilities in accordance with the relevant provisions of the lease standards,the book value of the right to use assets shall be adjusted accordingly.Depreciation of usufruct assetsFrom the commencement date of the lease term, the Company shall make depreciation of theusufruct. The usuary-use asset is usually depreciated in the month in which the lease begins (if theenterprise chooses to depreciate in the month in which the lease begins, it needs to be depreciatedaccording to the specific situation described). The amount of depreciation deducted shall,according to the use of the usufruct, be included in the cost of the relevant asset or the currentprofit and loss.When determining the depreciation method of the right to use assets, the Company shall make adecision based on the expected consumption mode of the economic benefits related to the right touse assets, and shall calculate and deduct the depreciation of the right to use assets by the straightline method.In determining the depreciable life of the use-right assets, the Company shall follow the followingprinciples: Where the ownership of the leased assets is reasonably determined at the end of thelease term, depreciation shall be accrued during the remaining service life of the leased assets;Where it is not reasonably certain that ownership of the leased asset will be acquired at the end ofthe lease term, depreciation shall be accrued within the shorter period of the lease term or theremaining useful life of the leased asset.Impairment of the right to use assetsIn case of impairment of the right to use assets, the Company shall carry out subsequentdepreciation according to the book value of the right to use assets after deducting the impairmentloss.
25. Intangible assets
The intangible assets of the Group refer to land use right and software. For acquired intangibleassets, the actual cost are measured at actual price paid and relevant other expenses. The costinvested into intangible assets by investors shall be determined according to the stated value in theinvestment contract or agreement, except for those of unfair value in the contract or agreement.Land use right shall be amortized evenly within the amortization period since the remiseddate.ERP system software and other intangible assets are amortized over the shortest of theirestimated useful life, contractual beneficial period and useful life specified in the law.Amortization charge is included in the cost of assets or expenses, as appropriate, for the periodaccording to the usage of the assets. At the end of the year, for definite life of intangible assets,their estimated useful life and amortization method shall be assessed. Any change shall be treatedas change on accounting estimate.
26. Impairment of long-term assets
The Group assesses at each balance sheet date whether there is any indication that long-term
equity investments, investment property, fixed assets, construction in progress and intangibleassets with definite useful life may be impaired. If there is any indication that an asset may beimpaired, the asset will be tested for impairment. Goodwill arising in a business combinationand intangible asset with infinite useful life are tested for impairment annually no matter there isany indication of impairment or not.Estimate of recoverable amount is the higher of its fair value less costs to sell and the presentvalue of the future cash flows expected to be derived from the asset.If the recoverable amount of an asset is less than its carrying amount, the carrying amount shall beimpaired and the difference is recognised as an impairment loss and charged to profit or loss forthe period. Once an impairment loss on the assets is recognised, it is not reversed in a subsequentperiod.After assets impairment loss is recognized, depreciation and amortisation of the impaired assetshall be adjusted in the following period so that the adjusted carrying amount(less expectedresidual value) can be depreciated and amortised systematically within the remaining life.When assessing goodwill for impairment, the carrying amount of goodwill shall be allocatedevenly to the assets group or assets portfolio. When testing the assets group or assets portfolioincluding goodwill, if there is any indication of impairment , ignoring the goodwill and testingthe assets group or assets portfolio alone so to work out the recoverable amount and comparing toits carrying amount and recognize the impairment loss. After that, testing the assets group or assetsportfolio with goodwill together, comparing the carrying amount of the assets group or assetsportfolio(including goodwill allocation) with recoverable amount , goodwill impairment shall berecognized when the recoverable amount is lower than its carrying amount.
27. Long-term deferred expenses
Long-term deferred expenses of the Group refer to leasing expenses, redecoration expense andothers. The expenses should be amortized evenly over the beneficial period. If the deferredexpense cannot take benefit for the future accounting period, the unamortized balance of thedeferred expenses should be transferred into the current profit or loss. Leasing expenses will beamortized within 10 years and 30years; redecoration expense and others will be amortizedwithin 3 years.
28. Contract liabilities
Contract liabilities reflect the Company's obligation to transfer the goods to the customer onconsideration received or receivable from the customer. Where the customer has paid the contractconsideration or the Company has obtained the right to receive the contract considerationunconditionally before the transfer of the goods to the customer, the liability of the contract shall berecognized in accordance with the amount received or receivable at the earlier point between theactual payment made by the customer and the due payment.
29. Employee benefits
Employee’s benefit comprises short-term benefit, post-employment benefit, termination benefitand other long-term employee’s benefit.Short-term benefit includes salary, bonus, allowance, welfare, social insurance, housing funds,labour union expense, staff training expense, during the period in which the service rendered bythe employees, the actually incurred short term employee benefits shall be recognized as liabilityand shall be recognized in P&L or related cost of assets based on benefit objective allocated fromthe service rendered by employees.Post-employment benefits include the basic pension scheme and unemployment insurance etc.Based on the risk and obligation borne by the Group, post-employment benefits are classified intodefined contribution plan and defined benefit plan. For defined contribution plan, liability shall berecognized based on the contributed amount made by the Group to separate entity at the balancesheet date in exchange of employee service for the period and it shall be recorded into currentprofit and loss account or relevant cost of assets in accordance with beneficial objective.Termination benefits are employee’s benefit payable as a result of either an entity’s decision toterminate an employee’s employment before the contract due date or an employee’s decision toaccept voluntary redundancy in exchange for those benefits. An entity shall recognize thetermination benefits as a liability and an expense at the earlier date when the entity cannotunilateral withdraw the termination benefits due to employment termination plan or due toredundancy suggestion, or when the entity can recognize the restructuring cost or expense arisingfrom paying termination benefits.Other long-term employee’s benefit refers to all other employee benefits other than short-termbenefit, post-employment benefit and termination benefit.If other long-term employee’s benefit is qualified as defined contribution plan, contribution madeshall be recognized as liabilities accordingly for the period in which the service are rendered bythe employee and recognized in the profit or loss for the current period or relevant cost of assets.Except other long-term employee’s benefit mentioned above, obligation arising from definedbenefit plan shall be recognized in the profit or loss for the current period or relevant cost of assetsin accordance with the period when the service are rendered by the employee.
30. Lease liability
(1) Initial measurement
The company shall initially measure the liabilities of the lease according to the present value ofthe outstanding lease payments on the commencement date of the lease term.
1) Lease payment
The lease payment amount refers to the amount paid by the Company to the Lessor in connectionwith the right to use the leased assets during the lease term, including: (1) Fixed payment amountand substantial fixed payment amount, less the amount related to the lease incentive where there is alease incentive; (ii) variable lease payments dependent on indices or ratios, which are determined at
the initial measurement on the basis of the indices or ratios on the commencement date of the lease;
(3) The exercise price of the purchase option when the Company reasonably determines that thepurchase option will be exercised; (4) The term of the lease reflects the amount of money to be paidfor the termination of the lease option when the Company will exercise it; (5) The amount expectedto be paid based on the residual value of the guarantee provided by the Company.
2) Discount rate
When calculating the present value of the lease payments, the Company shall use the interest rateembedded in the lease as the discount rate, which is the interest rate at which the sum of the presentvalue of the lease receipts and the present value of the unsecured residual value of the lessor is equalto the sum of the fair value of the leased asset and the initial direct expenses of the Lessor. If thecompany is unable to determine the inherent interest rate of the lease, the incremental borrowing rateshall be used as the discount rate. Such incremental borrowing rate shall mean the interest ratepayable by the Company during a similar period under similar mortgage conditions in order toacquire assets with a value similar to that of the usuable-use assets under similar economiccircumstances. The interest rate is related to: (1) the company's own situation, i.e., the company'ssolvency and credit standing; ② The term of the "loan", i.e. the lease term; (3) The amount of"borrowed" funds, that is, the amount of lease liabilities; (4) "collateral conditions", that is, thenature and quality of the underlying assets; (5) Economic environment, including the jurisdictionwhere the lessee is located, the valuation currency, the signing time of the contract, etc. Thecompany's bank loan interest rate/related lease contract interest rate/the company's latest similarasset mortgage interest rate/the interest rate of bonds issued by the enterprise in the same period......Based on the above adjustment factors to obtain the incremental borrowing rate.
(2) Follow-up measurement
On the commencement date of the lease term, the Company shall carry out subsequentmeasurement of the lease liabilities according to the following principles: (1) Increase the carryingamount of the lease liabilities when recognizing the interest of the lease liabilities; (2) Reduce thecarrying amount of lease liabilities when paying the lease payment; (3) When the lease paymentchanges due to revaluation or lease change, the book value of the lease liability shall be measuredagain.
The Company shall calculate the interest expense of the lease liability in each period of the leaseterm at a fixed periodic interest rate and record it into the current profit and loss, except for thosethat should be capitalized. The periodic interest rate refers to the discount rate used by the Companyfor the initial measurement of lease liabilities, or the revised discount rate used by the Company forthe remeasurement of lease liabilities due to changes in lease payments or changes in lease.
(3) Re-measurement
After the commencement of the lease term, in the event of any of the following circumstances, theCompany shall re-measure the lease liabilities according to the present value of the lease paymentsafter the change and adjust the book value of the usufruct accordingly. If the book value of the right
to use assets has been reduced to zero, but the lease liabilities still need to be further reduced, thecompany shall record the remaining amount into the profits and losses of the current period. (1)Changes in the substantial fixed payment amount (in this case, the original discount rate is used todiscount); (2) The estimated amount payable of the residual value changes (in this case, the originaldiscount rate is used to discount); (3) Any change in the index or rate used to determine the leasepayment (in which case the revised discount rate is used); (4) The evaluation result of the call optionchanges (in this case, the revised discount rate is used to discount); (5) Changes in the assessmentresult or actual exercise of the lease option to renew or terminate the lease option (in which case, therevised discount rate is used to discount the option).
31. Contingent liabilities
When the Company has transactions such as commitment to externals, discounting the tradeacceptance, unsettled litigation or arbitration which meets the following criterion, provisionshould be recognized: It is the Company's present obligation; carrying out the obligation willprobably cause the Company's economic benefit outflow; the obligation can be reliably measured.Provision is originally measured on the best estimate of outflow for paying off the presentobligations, and to consider the risk, uncertainty, time value of monetary relevant to contingentitems. If the time value of monetary is significant, the best estimate will be determined bydiscounted cash outflow in the future. At each balance sheet date, the book value of provision isreviewed and adjustment will be made on the book value if there is any change, in order to reflectthe current best estimate.When compensation from the 3rd party is expected for full or partial contingent liabilitysettlement, the compensation shall be recognized as an asset separately and measured at no morethan the book value of contingent liability.
32. Share based payment
An equity-settled share-based payment in exchange for the employee’s services is measured at thefair value at the date when the equity instruments are granted to the employee. Such fair valueduring the vesting period of service or before the prescribed exercisable conditions are achieved isrecognised as relevant cost or expense on a straight-line during the vesting period based on thebest estimated quantity of exercisable equity instruments, accordingly increase capital reserve.A cash-settled share-based payment is measured at the fair value at the date at which the Groupincurred liabilities that are determined based on the price of the shares or other equity instruments.If it is immediately vested, the fair value of the liabilities at the date of grant is recognised asrelevant cost or expense, and corresponding liabilities. If it is exercisable only when the vestingperiod of service is expired or the prescribed conditions are achieve, the fair value of liabilitiesundertaken by the Group are re-measured at each balance sheet date based on the best estimate ofexercisable situation.The fair value of the liabilities is re-measured at each balance sheet date. Any changes arerecognised in the profit or loss for the year.
If the granted equity instruments are cancelled within the vesting period, the equity instrumentshall be treated as accelerated vesting and the balance linked to the remaining vesting period shallbe recognized in the profit or loss account, accordingly be recognized in the capital reserve. Ifemployees or other parties can choose but fail to satisfy non-vesting conditions during the vestingperiod, the Company sees this as cancellation of granted equity instruments.
33. Revenue
The revenue of the Company is mainly from sales of complete sets of equipment, engineeringinstallation.The Company has performed the performance obligations in the contract, that is, when thecustomer obtains the control right of the relevant goods or services, the revenue is recognized.If the contract contains two or more performance obligations, the Company shall, at the beginningof the contract, allocate the transaction price to each individual performance obligation accordingto the relative proportion of the individual selling price of the commodities or services committedby each individual performance obligation, and measure the income according to the transactionprice allocated to each individual performance obligation.The transaction price is the amount of consideration to which the Company is expected to beentitled as a result of the transfer of goods or services to the customer, excluding paymentsreceived on behalf of third parties. The trading price recognized by the Company shall not exceedthe amount of accumulated recognized revenue that is highly unlikely to be materially reversedwhen the relevant uncertainties are eliminated. Refunds to customers are expected to be excludedfrom the transaction price as liabilities. Where there is a significant financing element in thecontract, the Company shall determine the transaction price based on the amount payable by theassumed customer in cash upon acquisition of control over the goods or services. The differencebetween the transaction price and the contract consideration shall be amortized over the term ofthe contract using the effective interest rate method. On the commencement date of the contract,the Company expects that the interval between the customer's acquisition of control of the goodsor services and the customer's payment shall not exceed one year, regardless of the significantfinancing element existing in the contract.If one of the following conditions is met, the Company shall perform its performance obligationswithin a certain period of time; otherwise, the performance obligation shall be performed at acertain point:
(1) When the customer performs the performance of the Company, it will obtain and consume theeconomic benefits brought by the performance of the Company.
(2) The customer can control the commodities under construction during the performance of theCompany.
(3) The commodities produced by the Company during the performance of the contract shall haveirreplaceable uses, and the Company shall have the right to receive payment for the accumulated
performance part which has been completed so far during the entire contract period.For the performance obligations performed within a certain period of time, the Company shallrecognize the income according to the performance progress within that period. If the performanceschedule cannot be reasonably determined and the Company is expected to be compensated forthe costs incurred, the revenue shall be recognized according to the amount of the cost incurreduntil the performance schedule can be reasonably determined.For performance obligations performed at a certain point, the Company recognizes revenue at thepoint when the customer acquires control over the relevant goods or services. In determiningwhether the customer has acquired control over the goods or services, the Company considers thefollowing indications:
(1). The Company shall have the right to receive the present payment for the goods or services.
(2) The Company has transferred the legal ownership of the goods to the customer.
(3) The Company has transferred the physical goods to the customer.
(4) The Company has transferred to the customer the major risks and rewards in the ownership ofthe goods.
(5) The customer has accepted the goods or services, etc.
The Company determines whether it is the principal responsible person or the agent at the time ofthe transaction based on whether it has control over the commodity before transferring it to thecustomer. If the Company is able to control the commodity before transferring the commodity tothe customer, the Company shall be the main person responsible and shall recognize the incomeaccording to the total amount received or the consideration; otherwise, the Company shallrecognize the income according to the amount of the commission or handling charge to be entitledto be collected, which shall be the net amount after the total amount of consideration received orreceivable is deducted from the price paid to other relevant parties, or determined according to theproportion of the established commission amount. The circumstances under which the Companyjudges that it can control the goods before transferring them to the customer include:
(1) The Company shall transfer the control right of commodities or other assets to the customerafter the third party obtains the control right.
(2) The Company can lead a third party to provide services to customers on behalf of theCompany.
(3) After the Company acquires the control of the commodity by a third party, it transfers thecommodity to the customer by integrating it with other products into a group of outputs byproviding significant services.In the specific determination of the ownership of a commodity prior to its transfer to a customer, itis not limited to the legal form of the contract, but takes into account all relevant facts andcircumstances, including:
(1) The Company undertakes the main responsibility of transferring the goods to the customers.
(2) The Company shall bear the inventory risk of the goods before or after the transfer of thegoods.
(3) The Company shall have the right to determine the prices of the commodities to be traded.
(4) Other relevant facts and circumstances.
The Company's right to receive consideration for the goods or services it has transferred to thecustomer (and such right is subject to factors other than the passage of time) is shown as a contractasset, and the impairment of the contract asset is calculated on the basis of the expected credit loss.The Company has the right to collect the consideration unconditionally from the customer as anaccount receivable. The obligation of the Company to transfer the goods or services to thecustomer upon receipt of the consideration receivable by the customer is shown as a contractliability.
34. Government grants
A government grant shall be recognized when the Company complies with the conditionsattaching to the grant and when the Company is able to receive the grant.Assets-related government grant is the government fund obtained by the Company for thepurpose of long-term assets purchase and construction or establishment in the other forms.Income-related grants are the grant given by the government apart from the assets-related grants.If no grant objective indicated clearly in the government documents, the Company shall judge itaccording to the principle mentioned above.Where a government grant is in the form of a transfer of monetary asset, it is measured at theamount received. Where a government grant is made on the basis of fixed amount or conclusiveevidence indicates relevant conditions for financial support are met and expect to probablyreceive the fund, it is measured at the amount receivable. Where a government grant is in theform of a transfer of non-monetary asset, it is measured at fair value. If fair value cannot bedetermined reliably, it is measured at a nominal amount of RMB1 Yuan.Assets-related government grants are recognized as deferred income ore directly offsetting thebook value of the asset, and Assets-related government grants recognized as deferred incomeshall be evenly amortized to profit or loss over the useful life of the related asset.Any assets are sold, transferred, disposed off or impaired earlier than their useful life expireddate, the remaining balance of deferred income which hasn’t been allocated shall be carriedforward to the income statement when the assets are disposed off.Income-related government grants that is a compensation for related expenses or losses to beincurred in subsequent periods are recognized as deferred income and credited to the relevantperiod when the related expense are incurred. Government grants relating to compensation forrelated expenses or losses already incurred are charged directly to the profit or loss for the period.Government grants related to daily business, shall be recognized as other income in accordance
with business nature, otherwise, shall be recognized as non-operating expenses.If any government grant already recognized needs to be returned to the government, theaccounting shall be differed according to the following circumstances:
1) originally recognized as offsetting of related assets' book value, assets book value shall beadjusted
2) if any deferred income, book value of deferred income shall be offset, excessive portionshall be accounted into income statement
3) Other situation, it shall be accounted into income statement directly.
35. Deferred tax assets and deferred tax liabilities
The deferred income tax assets or the deferred income tax liabilities should be recognizedaccording to the differences (temporary difference) between the carrying amount of the assets orliabilities and its tax base. Deferred tax assets shall be respectively recognized for deductible taxlosses that can be carried forward in accordance with tax law requirements for deduction oftaxable income in subsequent years. No deferred tax liabilities shall be recognized for anytemporary difference arising from goodwill initially recognition. No deferred tax assets orliabilities shall be recognized for any difference arising from assets or liabilities initial recognitionon non-business combination with no effect on either accounting profit or taxable profit (ordeductible tax loss). At the balance sheet date, deferred tax assets and deferred tax liabilities aremeasured at the tax rates that are expected to apply to the period when the asset is realized orliability is settled.Deferred tax assets are recognized to the extent that it is probable that future taxable profit will beavailable to offset the deductible temporary difference, deductible loss and tax reduction.
36. Lease
(1) Accounting treatment of operating leases
(1) Identification of lease
A lease is a contract whereby the lessor assigns the right to the use of an asset to the lessee for acertain period of time in exchange for consideration. On the commencement date of the contract,the Company evaluates whether the contract is a lease or includes a lease. A contract is a lease orincludes a lease if a party assigns the right to control the use of one or more identified assets for acertain period of time in exchange for consideration. To determine whether the contractrelinquishes the right to control the use of the identified assets for a given period, the Companyassesses whether the client under the contract is entitled to receive virtually all the economicbenefits arising from the use of the identified assets during the use period and is entitled todominate the use of the identified assets during the use period.
If the contract contains multiple separate leases at the same time, the company will divide thecontract and make accounting treatment for each separate lease. If the contract contains bothleasing and non-leasing parts, the company shall split the leasing and non-leasing parts foraccounting treatment.
(2) The Company acts as the lessee
On the commencement date of the lease term, the Company shall recognize the right to use assetsand liabilities of the lease. The recognition and measurement of right to use assets and leaseliabilities are shown in "27. Right to use Assets" and "33. Lease liabilities ".
2) Lease change
Lease change refers to the change of lease scope, lease consideration and lease term beyond theterms of the original contract, including the increase or termination of the right to use one or moreleased assets, the extension or shortening of the lease term stipulated in the contract, etc. Theeffective date of the lease change means the date on which the parties agree on the lease change.
If the lease changes and the following conditions are met at the same time, the Company will treatthe lease change as a separate lease for accounting: (1) The lease change expands the lease scopeor the lease term by increasing the right to use one or more leased assets; (2) The increasedconsideration shall be equivalent to the amount of the individual price for the extended portion ofthe lease scope or the extended lease term adjusted for the circumstances of the contract.
If the change of lease is not accounted for as a separate lease, the Company shall, on the effectivedate of the change of lease, apportion the consideration of the contract after the change inaccordance with relevant provisions of the lease standards and redefine the lease period after thechange; The revised discount rate is used to discount the changed lease payment amount tore-measure the lease liabilities. When calculating the present value of the lease payment after thechange, the Company shall use the lease embedded interest rate during the remaining lease periodas the discount rate; If it is not possible to determine the leasehold interest rate for the remaininglease term, the Company shall use the lessee's incremental borrowing rate on the effective date ofthe lease change as the discount rate. With respect to the impact of the above adjustment of leaseliabilities, the Company will make accounting treatment according to the following circumstances:
(1) If the change of lease results in the reduction of the scope of lease or the shortening of lease
term, the lessee shall reduce the book value of the right to use assets and record the profits orlosses related to partial or complete termination of lease into the current profit and loss. (2) If thelease liabilities are remeasured due to other lease changes, the lessee shall adjust the book value ofthe right to use assets accordingly.
3) Short-term leases and leases of low-value assets
For short-term leases with a lease term of no more than 12 months and low-value asset leases witha lower value when each leased asset is a new asset, the Company chooses not to recognize theright to use assets and lease liabilities. The Company will include the lease payments forshort-term leases and leases of low-value assets into the cost of the relevant assets or currentprofits and losses during each period of the lease term in accordance with the straight-line methodor other systematically reasonable method.
(3) Our company is the lessor
On the basis that this Contract is or includes a lease as assessed in (1), the Company, as the lessor,on the commencement date of the lease, divides the lease into a finance lease and an operatinglease.
If a lease substantially transfers almost all of the risks and rewards associated with ownership ofthe leased asset, the lessor classifies the lease as a finance lease and any lease other than financelease as an operating lease.
The Company generally classifies a lease as a finance lease if it has one or more of the followingconditions: (1) At the end of the lease term, the ownership of the leased asset passes to the lessee;
(2) The lessee has the option to purchase the leased asset, and the purchase price entered into issufficiently low compared with the fair value of the leased asset at the time the option is expectedto be exercised, so that it can be reasonably determined on the commencement date that the lesseewill exercise the option; (3) Although the ownership of the asset is not transferred, the lease periodaccounts for most of the service life of the leased asset (no less than 75% of the service life of theleased asset); (4) On the lease commencement date, the present value of the lease receipts isalmost equivalent to the fair value of the leased asset (not less than 90% of the fair value of theleased asset). ; ⑤ The leased assets are special in nature, and only the lessee can use them ifthere is no major transformation. The Company may also classify a lease as a finance lease if ithas one or more of the following signs: (1) If the lessee cancels the lease, the lessee shall bear the
loss caused to the lessor by the cancellation; (2) the profit or loss generated by the fluctuation ofthe fair value of the residual asset belongs to the lessee; (3) The lessee has the ability to continuethe lease at a rent far below the market level until the next period.
2) Accounting treatment of operating lease
Disposal of rentDuring each period of the lease term, the Company will use the straight-line method/othersystematic and reasonable methods to recognize lease receipts from operating leases as rentalincome.Incentives offeredIf the rent-free period is provided, the Company shall allocate the total rent by the straight linemethod/other reasonable method throughout the lease period without deducting the rent-freeperiod, and shall recognize the rental income during the rent-free period. If the Company bearscertain expenses of the Lessee, such expenses shall be deducted from the total rental income anddistributed according to the balance of the rental income after deduction.Initial direct costThe initial direct expenses incurred by the Company in connection with the operating lease shallbe capitalized to the cost of the underlying assets under lease and shall be booked into the currentprofits and losses in stages during the lease term on the same recognition basis as the rentalincome.DepreciationFor the fixed assets in the operating leased assets, the Company shall adopt the depreciation policyfor similar assets. Other operating leased assets shall be amortized in a systematic and reasonablemanner.Variable lease paymentsThe variable lease payments obtained by the Company in connection with the operating lease andnot included in the lease receipts shall be recorded into the current profit and loss when actuallyincurred.Changes in operating leasesIf an operating lease changes, the Company will treat it as a new lease as of the effective date ofthe change, and the amount received in advance or receivable for the lease related to the leasebefore the change is regarded as the amount received for the new lease.
(2) Accounting treatment of finance lease
Initial measurementOn the commencement date of the lease term, the Company shall recognize the finance leasereceivable and terminate the recognition of the finance lease assets. In the initial measurement of
the finance lease receivables, the Group shall take the net lease investment as the recorded valueof the finance lease receivables.The net lease investment is the sum of the present value of the unsecured residual value and thelease receipts not yet received at the commencement of the lease period, discounted at the interestrate contained in the lease. Lease revenue refers to the amount of money that the lessor shouldcollect from the lessee for the assignment of the right to use the leased assets during the lease term,including: (1) the fixed amount and substantial fixed amount payable by the lessee; If there is alease incentive, the amount related to the lease incentive will be deducted; (ii) variable leasepayments dependent on indices or ratios, which are initially measured according to the indices orratios on the commencement date of the lease; (3) the exercise price of the option to buy, providedthat it is reasonably determined that the lessee will exercise the option; (4) the amount to be paidby the lessee to exercise the termination option, provided that the lease term reflects that the lesseewill exercise the termination option; (5) Guarantee residual value provided to the lessor by thelessee, the party related to the lessee and an independent third party who has the economic abilityto perform the guarantee obligation.Subsequent measurementThe Company calculates and recognizes the interest income for each period of the lease term at afixed periodic interest rate. The periodic interest rate, it is to point to determine the net investmentin the lease use contains the discount rate (if relet, sublet's interest rate implicit in the lease cannotbe determined, using the original leasing of the discount rate (adjustments according to the initialdirect costs related to sublease)), or change in the financing lease is not as a separate leaseaccounting treatment, and meet if changes to take effect on the lease beginning date, The leasewill be classified as a financial lease at the revised discount rate determined in accordance withthe relevant provisions.Accounting treatment of lease changesIf the finance lease changes and meets the following conditions at the same time, the Companywill treat the change as a separate lease for accounting: (1) The change expands the scope of leaseby increasing the right to use one or more leased assets; (2) The increased consideration shall beequivalent to the amount of the individual price of the expanded lease area adjusted for thecircumstances of the contract.If the change of financing lease is not as a single lease accounting treatment, and meet if changesto take effect on the lease beginning date, the lease will be classified as an operating lease terms,the group since the day of the effect of the change of it as a new lease accounting treatment, andprior to the effect of the change of the net investment in the lease as the book value of the leasedasset.
37. Other significant accounting policies, accounting Estimates
When preparing the financial statements, the management needs to use accounting estimate andassumption, which will have effect on the application of accounting policy and amount of asset,
liability, income and expense. The actual circumstance maybe differs from the estimates. Themanagement needs to continuously assess the key assumption involved by estimate and thejudgment on uncertainty. Effect on the accounting estimate shall be recognized during the periodwhen estimate is changed and in future.The following accounting estimate and key assumption will trigger the significant risk ofsignificant adjustment on the book value of asset and liability during the period of future.
（1） Impairment of receivable
Receivable is measured at amortized cost at the balance sheet date and assessed for anyimpairment indicator and the acutely amount of impairment. Objective evidence for impairmentincludes judgmental data of indicating significant decline of future cash flow of individual orgroup of receivable, indicating significant negative financial performance of debtors. Hadreceivable is recovered with certain proof, and in fact, it is relevant to the the matters subsequentto the the loss recognition, the impairment recognized before shall be reversed.
（2） Provision of inventory impairment
Inventory is periodically evaluated at the net realizable value and any cost higher than NRV shallbe recognized as inventory impairment loss. When evaluating the NRV, net realizable value isdetermined by deducting the expected selling expense and relative tax from the estimated sellingprice. When actual selling price or cost differs from the previous estimates, management willmake adjustment on NRV. Therefore, the results based on the present experience may differ fromthe actual results, which caused the adjustment on the carrying amount of inventory in the book.Provision for inventory impairment may vary with the above reasons. Any adjustment onprovision for inventory impairment will affect the income statement.
（3） Provision of goodwill impairment
Each year, goodwill shall be assessed for any impairment. Recoverable amount of assets groupor asset portfolio including goodwill shall be the present value of future cash flow, which needsestimates for calculation.If management adjust the gross profit margin adopted by the present value of future cash flowcalculation of assets group or asset portfolio, adjusted gross profit margin is lower than the marginapplied, the impairment is required.If management adjust the discounting rate before tax applied by the present value of future cashflow calculation of assets group or asset portfolio, adjusted discounting rate before tax is higherthan the rate applied, the impairment is required.If actual profit margin or discounting rate before tax is higher or lower than management’sestimate, any impairment recognized before can not be reversed.
（4） Provision of fixed asset impairment
At the balance sheet date, the management shall implement impairment test on buildings, plant
and machinery etc which has any impairment indicator. The recoverable amount of FA is thehigher of PV of future cash flow and net value of fair value after disposal cost, the calculationneeds accounting estimate.If management adjust the gross profit margin adopted by the present value of future cash flowcalculation of assets group or asset portfolio, adjusted gross profit margin is lower than the marginapplied, the impairment is required.If management adjust the discounting rate before tax applied by the present value of future cashflow calculation of assets group or asset portfolio, adjusted discounting rate before tax is higherthan the rate applied, the impairment is required.If actual profit margin or discounting rate before tax is higher or lower than management’sestimate, any impairment recognized before can not be reversed.
（5） Recognition of deferred tax assets
Estimate on deferred tax assets needs making estimation of taxable income and applied tax rate inthe following years in future. Whether deferred tax asset can be realized depends on the enoughprobable taxable profit obtained in future. Tax rate change in future and the timing of temporarydifference reverse may also affect the income tax expense(income)and the balance of deferred tax.Any change of estimate described here will cause the deferred tax adjustment.
（6） Useful life span of fixed assets and intangible assets
At least every year end, the management shall review the useful life of FA and intangible assets.Expected useful life is based on the management’s experience on the same class of assets, withreference to the estimate applied in the industry in conjunction with expected technologydevelopment. When previous estimate significantly changed, depreciation and amortization in thefuture shall be adjusted accordingly.
38. Changes in Accounting Policies, Accounting Estimates
The Ministry of Finance issued the notice on the revision and issuance of the Accounting Standardsfor Business Enterprises No. 21 -- Lease on December 7, 2018 (No. 35 of the Department ofAccounting and Accounting [2018]), which will be implemented from January 1, 2021. Within acertain period, the lessor assigns the right to use the assets to the lessee in order to obtain thecontract of consideration. On the commencement date of the contract, the Company evaluateswhether the contract is a lease or includes a lease. A contract is a lease or includes a lease if a partyassigns the right to control the use of one or more identified assets for a certain period of time inexchange for consideration. To determine whether the contract relinquishes the right to control theuse of the identified assets for a given period, the Company assesses whether the client under thecontract is entitled to receive virtually all the economic benefits arising from the use of the identifiedassets during the use period and is entitled to dominate the use of the identified assets during the useperiod. For short-term leases with a lease term of no more than 12 months and low-value asset leases
with a lower value when each leased asset is a new asset, the Company chooses not to recognize theright to use assets and lease liabilities. The Company will include the lease payments for short-termleases and leases of low-value assets into the cost of the relevant assets or current profits and lossesduring each period of the lease term in accordance with the straight-line method or othersystematically reasonable method. The impact of the implementation of the new leasing criteria onthe relevant items of the balance sheet at the beginning of the current period is as follows:
Consolidated balance sheet
| Item | 31-Dec-2020 | 1-Jan-2021 | The amount of adjustment |
| Fixed assets | 891,147,058.82 | 867,177,638.62 | -23,969,420.20 |
| Right of use assets | 23,969,420.20 | +23,969,420.20 | |
| Long-term payables | 14,622,463.75 | -14,622,463.75 | |
| Lease liabilities | 14,622,463.75 | +14,622,463.75 |
Changes in accounting estimateNone
VI. Taxation
1. The main applicable tax and rate to the Group as follows:
| Tax | Tax base | Tax rate |
| Value-added tax (VAT) | Sales revenue or Purchase | 6%、9%、10%、13%、16% |
| City construction tax | Value-added tax payables | 7% |
| Education surcharge | Value-added tax payables | 3% |
| Local education surcharge | Value-added tax payables | 2% |
| Enterprise income tax(EIT) | Current period taxable profit | 15% or 25% |
| Real estate tax | 70% of cost of own property or revenue from leasing property | 1.2% or 12% |
| Land use tax | Land using right area | Fixed amount per square meter |
| Other tax | According to the relevant provisions of the state and local |
Notes for tax entities with different EIT rate
| Tax entities | EIT rate |
| Bingshan Refrigeration & Heat Transfer Technologies Co.,Ltd | 15% |
| Dalian Bingshan Group Engineering Co., Ltd. | 25% |
| Dalian Bingshan Group Sales Co., Ltd. | 25% |
| Dalian Bingshan Air-conditioning Equipment Co., Ltd. | 15% |
| Dalian Bingshan Guardian Automation Co., Ltd. | 15% |
| Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd. | 25% |
| Wuhan New World Refrigeration Industrial Co., Ltd. | 15% |
| Bingshan Technology Service （Dalian） Co.,Ltd. | 15% |
| Dalian Bingshan Engineering&Trading Co.,Ltd | 25% |
| Dalian Universe Thermal Technology Co., Ltd. | 15% |
| Dalian New Meica Electronics Technology Co., Ltd | 15% |
2. Tax preference
The company obtained the qualification of high and new technology enterprises on 3rd December,2020 approved by Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State TaxBureau and Local tax Bureau. The Certificate No. is GR202021200646, and the validity duration isthree years. According to the tax law, the company can be granted for the preferential tax policy ofenterprise income tax rate of 15% in three years.The company’s subsidiary, Dalian Bingshan Air-conditioning Equipment Co., Ltd. obtained thequalification of high and new technology enterprises on 3rd December, 2020 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No. is GR202021200672, and the validity duration is three years.According to the tax law, the company can be granted for the preferential tax policy of enterpriseincome tax rate of 15% in three years.The company’s subsidiary, Dalian Bingshan JiaDe Automation Co., Ltd. obtained the qualificationof high and new technology enterprises on 16th November, 2018 approved by Dalian ScienceTechnology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local tax Bureau. TheCertificate No. is GR20181200562, and the validity duration is three years. According to the taxlaw, the company can be granted for the preferential tax policy of enterprise income tax rate of 15%in three years.The company’s subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd obtained thequalification of high and new technology enterprises on 15th November, 2018 approved by HubeiScience Technology Bureau, Hubei Finance Bureau, Hubei State Tax Bureau and Hubei Local taxBureau. The Certificate No. is GR201842000605, and the validity duration is three years.According to the tax law, the company can be granted for the preferential tax policy of enterpriseincome tax rate of 15% in three years.The company’s subsidiary, Bingshan Technical Service （Dalian） Co., Ltd. obtained thequalification of high and new technology enterprises on 3rd December, 2020 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No. is GR202021200540, and the validity duration is three years.According to the tax law, the company can be granted for the preferential tax policy of enterpriseincome tax rate of 15% in three years.
The company’s subsidiary, Dalian Niweisi LengNuan Techonoligy Co., Ltd. obtained thequalification of high and new technology enterprises on 3rd December, 2020 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No. is GR202021200570, and the validity duration is three years.According to the tax law, the company can be granted for the preferential tax policy of enterpriseincome tax rate of 15% in three years.The company’s subsidiary, Dalian Xinminghua Electrical Technology Co., Ltd obtained thequalification of high and new technology enterprises on 3rd December, 2020 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No. is GR202021200699, and the validity duration is three years.According to the tax law, the company can be granted for the preferential tax policy of enterpriseincome tax rate of 15% in three years.VII. Notes to Consolidated Financial StatementsThe following disclosure date on this financial statement without special indication, “opening”refers to January 1, 2021; “closing” refers to June 30, 2021; “current period” refers to the periodfrom January 1, 2021 to June 30, 2021; and “last period” refers to the period from January 1, 2020to June 30, 2020; with the currency unit RMB.
1. Cash and cash in bank
| Item | Closing Balance | Opening Balance |
| Cash on hand | 46,859.50 | 154,668.54 |
| Cash in bank | 253,557,290.68 | 316,921,397.57 |
| Other cash and cash equivalents | 59,209,893.31 | 56,369,665.56 |
| Total | 312,814,043.49 | 373,445,731.67 |
Note: Other cash and cash equivalents is restricted, including deposit for bank acceptance notes of47,176,283.06 Yuan, deposit to creditor of 6,240,408.57 Yuan, guarantee deposit of 1,000,000.00 Yuan,,The bank account was frozen4,008,663.84 yuan due to the lawsuit, total of58,425,355.47Yuan.
2. Notes receivable
(1) Category of notes receivable
| Items | Closing Balance | Opening Balance |
| Bank acceptance notes | 149,782,112.94 | 109,424,884.35 |
| Commercial acceptance notes | 15,008,354.43 | 29,696,153.43 |
| Total | 164,790,467.37 | 139,121,037.78 |
Categories according to bad debts provision
| Items | Closing Balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Items | Closing Balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Bad debts provision based on group | 165,923,599.74 | 100.00% | 1,133,132.37 | 0.68% | 164,790,467.37 |
| Including: bank acceptance notes | 149,782,112.94 | 90.27% | 149,782,112.94 | ||
| Trade acceptance notes | 16,141,486.80 | 9.73% | 1,133,132.37 | 7.02% | 15,008,354.43 |
| Total | 165,923,599.74 | 100.00% | 1,133,132.37 | 0.68% | 164,790,467.37 |
(Continued)
| Items | Opening balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Bad debts provision based on group | 141,363,100.56 | 100.00% | 2,242,062.78 | 1.59% | 139,121,037.78 |
| Including: bank acceptance notes | 109,424,884.35 | 77.41% | 109,424,884.35 | ||
| Trade acceptance notes | 31,938,216.21 | 22.59% | 2,242,062.78 | 7.02% | 29,696,153.43 |
| Total | 141,363,100.56 | 100.00% | 2,242,062.78 | 1.59% | 139,121,037.78 |
(2) Provision for bad debts for the current period:
| Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/reversed | Written-off | |||
| Trade acceptance notes | 2,242,062.78 | 1,108,930.41 | 1,133,132.37 | ||
| Total | 2,242,062.78 | 1,108,930.41 | 1,133,132.37 | ||
(3)Notes receivable pledged by the company at the end of the period
| Items | Closing pledged amount |
| Bank acceptance notes | 21,890,716.83 |
| Total | 21,890,716.83 |
(4) Notes receivable endorsed or discounted but not mature at the end of year:
| Item | Closing amount no more recognized | Closing amount still recognized |
| Bank acceptance notes | 58,216,241.07 | |
| Trade acceptance notes | 1,563,000.00 |
| Item | Closing amount no more recognized | Closing amount still recognized |
| Total | 59,779,241.07 |
3. Accounts receivable
(1) Category of accounts receivable
| Items | Closing Balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Accounts receivable with significant individual amount and separate bad debt provision | 9,727,521.14 | 0.83% | 219,197.46 | 2.25% | 9,508,323.68 |
| Accounts receivable with bad debt provision based on the group | 1,156,631,348.02 | 99.17% | 286,208,873.62 | 24.75% | 870,422,474.40 |
| Including: aging as characteristics of credit risk | 1,156,631,348.02 | 99.17% | 286,208,873.62 | 24.75% | 870,422,474.40 |
| Total | 1,166,358,869.16 | 100.00% | 286,428,071.08 | 24.56% | 879,930,798.08 |
| Items | Opening balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Accounts receivable with significant individual amount and separate bad debt provision | 9,375,092.34 | 0.85% | 262,313.88 | 2.80% | 9,112,778.46 |
| Accounts receivable with bad debt provision based on the group | 1,089,352,275.04 | 99.15% | 281,453,097.75 | 25.84% | 807,899,177.29 |
| Including: aging as | 1,089,352,275.04 | 99.15% | 281,453,097.75 | 25.84% | 807,899,177.29 |
| characteristics of credit risk | |||||
| Total | 1,098,727,367.38 | 100.00% | 281,715,411.63 | 25.64% | 817,011,955.75 |
Accounts receivable with significant individual amount and separate bad debt provision:
| Items | Closing Balance | |||
| Booking balance | Provision | % | Reasons for the provision | |
| Changsha Runyi Urban and rural Development and Construction Co., LTD | 90,000.00 | 328.85 | 0.37% | Both parties shall implement the agreement on time, and the expected credit risk will be significantly reduced |
| Wuhan BOE Optoelectronic Technology Co., LTD | 4,539,400.70 | 88,878.28 | 1.96% | |
| Chengdu BOE Optoelectronic Technology Co., LTD | 3,078,990.00 | 73,449.61 | 2.39% | |
| Mianyang BOE Optoelectronic Technology Co., LTD | 1,403,517.44 | 34,752.40 | 2.48% | |
| Boe (Hebei) Mobile Display Technology Co., LTD | 615,613.00 | 21,788.32 | 3.54% | |
| Total | 9,727,521.14 | 219,197.46 | -- | -- |
Accounts receivable with bad debt provision based on the group:
| Items | Closing Balance | ||
| Booking balance | Provision | % | |
| within 1 year | 578,546,182.15 | 40,613,971.51 | 7.02% |
| 1-2 years | 168,760,467.84 | 28,250,502.32 | 16.74% |
| 2-3 years | 141,873,656.22 | 43,739,648.22 | 30.83% |
| 3-4 years | 162,871,209.59 | 80,344,367.69 | 49.33% |
| 4-5 years | 40,644,338.77 | 29,324,890.43 | 72.15% |
| more than 5 years | 63,935,474.09 | 63,935,474.09 | 100.00% |
| Total | 1,156,631,348.02 | 286,208,873.62 | -- |
Accounts receivable with the bad debt provisions under accounting aging analysis method
| Aging | Closing Balance |
| Within1 year | 578,546,182.15 |
| 11to 2 years | 168,760,467.84 |
| 22 to 3 years | 151,601,177.36 |
| More than 3 years | 267,451,041.81 |
| 3 to 4 years | 162,871,209.59 |
| 4 to 5 years | 40,644,338.77 |
| More than 5 years | 63,935,493.45 |
| Total | 1,166,358,869.16 |
2) Bad debt provision accrued and written-off (withdraw)
| Category | Opening balance | Change during the period | Closing Balance | |||
| Accrued | Collected/reversed | Written-off | Others | |||
| Bad debt provision | 281,715,411.63 | 14,796,226.65 | 276,589.05 | 6,794,738.07 | 3,565,418.18 | 286,428,071.08 |
| Total | 281,715,411.63 | 14,796,226.65 | 276,589.05 | 6,794,738.07 | 3,565,418.18 | 286,428,071.08 |
3) Accounts receivable written off in current period
| Item | Written off amount |
| Receivable actually written off | 6,794,738.07 |
4) The top five significant accounts receivable categorized by debtors
| Company | Closing Balance | % of the total AR | Closing Balance of Provision |
| Panasonic Appliances Cold-Chain (Dalian) Co., Ltd. | 44,027,208.91 | 2.94 | 3,090,710.07 |
| Xinyi Yuanda construction and Installation Engineering Co., Ltd. | 32,748,744.00 | 2.19 | 25,281,907.38 |
| Qingcheng County Zhongyi Energy Co., LTD | 26,600,000.00 | 1.78 | 4,452,840.00 |
| Shenzhen Zhaofude Tourism development | 21,028,740.12 | 1.41 | 10,187,313.50 |
| Guangzhou Wanda Cultural Tourism City Investment Co. LTD | 17,050,390.97 | 1.14 | 8,410,957.87 |
| Total | 141,455,084.00 | 9.46% | -- |
4. Receivables financing
| Items | Closing Balance | Opening Balance |
| Notes receivable | 67,877,483.26 | 61,737,282.56 |
| Total | 67,877,483.26 | 61,737,282.56 |
5. Accounts paid in advance
(1) Aging of accounts paid in advance
| Items | Closing Balance | Opening Balance | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 194,928,034.98 | 77.34% | 111,133,100.83 | 71.93% |
| 1 to 2 years | 16,242,227.23 | 6.44% | 24,880,404.77 | 16.11% |
| 2 to 3 years | 28,109,526.05 | 11.15% | 9,313,439.77 | 6.03% |
| Over 3 years | 12,755,788.93 | 5.06% | 9,154,563.98 | 5.93% |
| Total | 252,035,577.19 | 154,481,509.35 | ||
Significant prepayment over 1 year
| Company | Closing Balance | Aging | Unsettled Reasons |
| Dalian Hengtong Refrigeration Equipment engineering Co., Ltd | 5,720,000.00 | 1-2 years 2-3 years | Contract is not fully implemented |
| Shanghai POMA Automation Equipment Co.,ltd | 4,272,900.00 | 4-5 years | Contract is not fully implemented |
| Dalian Jingdian Steel Work Co., Ltd | 3,965,236.72 | Within 1 year 1-2 years 2-3 years | Contract is not fully implemented |
| Yunnan Xinneng Technology Co., Ltd | 2,554,677.66 | 1-2 years 2-3 years 3-4 | Contract is not fully implemented |
| years | |||
| Anhui Songze Energy Co., LTD | 2,080,000.00 | 1-2 years | Contract is not fully implemented |
| Total | 18,592,814.38 | — | — |
(2) The top five significant accounts paid in advance categorized by debtors
| Company | Closing Balance | Aging | % of the total advances to suppliers |
| Dalian Shentong Electric Co., LTD | 23,847,653.84 | Within 1 year | 9.46 |
| Shenyang Baosteel Northeast Trading Co. LTD | 13,339,547.30 | Within 1 yea | 5.29 |
| Heilongjiang Dadong Hei Tudi Agriculture Co. LTD | 7,620,000.00 | Within 1 yea | 3.02 |
| DalianHeng Tong refrigeration Equipment Egineering Co. LTD. | 5,720,000.00 | 1-2 years; 2-3 years | 2.27 |
| Hangzhou Zhonghong New Energy Technology Co., LTD | 5,703,000.00 | Within 1 yea | 2.26 |
| Total | 59,430,201.14 | 22.31 |
6. Other receivables
| Items | Closing Balance | Opening Balance |
| Interest receivable | 681,304.44 | 46,879.68 |
| Dividend receivable | 8,456,762.03 | 25,923.75 |
| Other receivable | 29,266,599.20 | 67,454,373.43 |
| Total | 38,404,665.67 | 67,527,176.86 |
(1) Interest receivable
| Items | Closing Balance | Opening Balance |
| Interest on Term deposits | 681,304.44 | 46,879.68 |
| Total | 681,304.44 | 46,879.68 |
(2). Dividends receivable
| Company | Closing Balance | Opening Balance |
| Wuhan Steel and Electricity Co., Ltd. | 25,923.75 | 25,923.75 |
| Panasonic Refrigeration (Dalian) Co. , Ltd. | 640,000.00 | |
| Guotai Junan Securities Co., Ltd. | 7,229,604.48 | |
| Dalian Benzhuang Chemical Co., LTD | 561,233.80 | |
| Total | 8,456,762.03 | 25,923.75 |
(3). Other receivables
1) Other receivables categorized by nature
| Nature | Closing Balance | Opening Balance |
| Guarantee deposits | 23,899,345.45 | 26,232,362.26 |
| Nature | Closing Balance | Opening Balance |
| Petty cash | 8,579,158.19 | 5,325,764.44 |
| Receivables and Payables | 3,841,762.27 | 47,714,138.78 |
| Others | 3,897,351.30 | 1,619,770.46 |
| Total | 40,217,617.21 | 80,892,035.94 |
2) Provision for bad debts
| Provision for bad debts | The first phase | The second phase | The third phase | Total |
| Expected credit losses in the next 12 months | Expected Credit Loss for the duration (No Credit Devaluation) | Expected Credit Loss for the duration (Credit impairment has occurred) | ||
| Balance on January 1, 2021 | 13,437,662.51 | 13,437,662.51 | ||
| The balance of January 1, 2021 in the current period | —— | —— | —— | —— |
| Provision for bad debts | 2,435,152.34 | 2,435,152.34 | ||
| Balance on June 30, 2021 | 11,002,510.17 | 11,002,510.17 |
Other receivables accrued the bad debt provisions under accounting aging analysis method
| Aging | Closing Balance |
| Within 1 year | 21,757,036.61 |
| 1-2 years | 4,198,274.97 |
| 2-3 years | 4,621,545.82 |
| Over 3 years | 9,640,759.81 |
| 3-4 years | 2,301,017.10 |
| 4-5 years | 3,111,136.00 |
| Over 5 years | 4,228,606.71 |
| Total | 40,217,617.21 |
3) Provision for bad debt
| Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/reversed | Written-off | |||
| Bad debt provision | 13,437,662.51 | 2,435,152.34 | 11,002,510.17 | ||
| Total | 13,437,662.51 | 2,435,152.34 | 11,002,510.17 | ||
4) Other receivables from the top 5 debtors
| Name | Category | Closing Balance | Aging | % of the total OR | Closing Balance of Provision |
| Coating Equipment Co., Ltd | Deposit | 1,650,000.00 | 4-5 yreas | 4.10 | 1,170,015.00 |
| Akto Animal Husbandry and Veterinary Office | Deposit | 1,482,608.60 | Within 1 year | 3.69 | 1,385,646.00 |
| Agriculture Bureau of Moyu County | Deposit | 1,135,440.00 | 1-2 years | 2.82 | 145,449.86 |
| Panasonic Refrigerating System | Deposit | 1,121,009.34 | Within 1 year | 2.79 | 73,314.01 |
| Dalian Delta HK& China Gas Co.,Ltd | Deposit | 1,100,000.00 | Over 5 years | 2.74 | 1,100,000.00 |
| Name | Category | Closing Balance | Aging | % of the total OR | Closing Balance of Provision |
| Coating Equipment Co., Ltd | Deposit | 1,650,000.00 | 4-5 yreas | 4.10 | 1,170,015.00 |
| Akto Animal Husbandry and Veterinary Office | Deposit | 1,482,608.60 | Within 1 year | 3.69 | 1,385,646.00 |
| Agriculture Bureau of Moyu County | Deposit | 1,135,440.00 | 1-2 years | 2.82 | 145,449.86 |
| Panasonic Refrigerating System | Deposit | 1,121,009.34 | Within 1 year | 2.79 | 73,314.01 |
| Dalian Delta HK& China Gas Co.,Ltd | Deposit | 1,100,000.00 | Over 5 years | 2.74 | 1,100,000.00 |
| Total | 6,489,057.94 | 3,874,424.87 |
7. Inventories
(1) Categories of inventories
| Item | Closing Balance | ||
| Book value | Provision for decline | Net book value | |
| Raw materials | 140,197,852.41 | 1,064,716.71 | 139,133,135.70 |
| Working in progress | 171,969,418.12 | 1,929,842.21 | 170,039,575.91 |
| Finished goods | 268,053,054.43 | 2,528,193.70 | 265,524,860.73 |
| Contract performance cost | 238,205,853.06 | 238,205,853.06 | |
| goods shipped in transit | |||
| A house acquired as payment for a debt | 20,206,542.00 | 5,203,103.50 | 15,003,438.50 |
| Low-value consumable | 220,801.08 | 220,801.08 | |
| Self-manufactured semi-finished products | 29,124,301.61 | 29,124,301.61 | |
| Materials on consignment for further processing | 294,838.92 | 294,838.92 | |
| Total | 868,272,661.63 | 10,725,856.12 | 857,546,805.51 |
(Continue)
| Item | Opening Balance | ||
| Book value | Provision for decline | Net book value | |
| Raw materials | 103,332,663.42 | 1,064,716.71 | 102,267,946.71 |
| Working in progress | 117,243,035.94 | 1,929,842.21 | 115,313,193.73 |
| Finished goods | 244,721,287.34 | 2,528,193.70 | 242,193,093.64 |
| Contract performance cost | 193,840,972.71 | 193,840,972.71 | |
| goods shipped in transit | 33,573,632.23 | 33,573,632.23 | |
| House acquired as payment for a debt | 20,206,542.00 | 5,203,103.50 | 15,003,438.50 |
| Low-value consumable | 171,759.42 | 171,759.42 | |
| Self-manufactured semi-finished products | 28,814,287.69 | 28,814,287.69 | |
| Item | Opening Balance | ||
| Book value | Provision for decline | Net book value | |
| Materials on consignment for further processing | 480,473.35 | 480,473.35 | |
| Total | 742,384,654.10 | 10,725,856.12 | 731,658,797.98 |
(2) Provision for decline in the value of inventories
| Item | Opening Balance | Increase | Decrease | Closing Balance | ||
| Accrual | Other | Written- off | Others transferred | |||
| Raw materials | 1,064,716.71 | 1,064,716.71 | ||||
| Working in progress | 1,929,842.21 | 1,929,842.21 | ||||
| Finished goods | 2,528,193.70 | 2,528,193.70 | ||||
| House acquired as payment for a debt | 5,203,103.50 | 5,203,103.50 | ||||
| Total | 10,725,856.12 | 10,725,856.12 | ||||
(3) Accrual for provision for decline in the value of inventories
| Item | Basis for net realizable value recognition | Reasons for reverse/write-off |
| Raw materials | Lower of cost and NRV | |
| Finished goods | Lower of cost and NRV | |
| Contract performance cost | Lower of cost and NRV |
8. Contract assets
| Item | Closing Balance | Opening Balance | ||||
| Book value | Provision for decline | Net book value | Book value | Provision for decline | Net book value | |
| Unexpired warranty money | 106,880,308.92 | 13,752,298.22 | 93,128,010.70 | 104,165,706.10 | 12,735,694.50 | 91,430,011.60 |
| Total | 106,880,308.92 | 13,752,298.22 | 93,128,010.70 | 104,165,706.10 | 12,735,694.50 | 91,430,011.60 |
The amount and reasons for significant changes in the book value of the contract assets during thecurrent period:
| Item | Changes in the amount | reason |
| Quality retention money | 2,714,602.82 | Completion of contract performance obligations |
| Total | 2,714,602.82 | —— |
Provision for bad debt
| Item | Accrued | Collected/reversed | Written-off | reason |
| Unexpired warranty money | 1,016,603.72 | |||
| Total | 1,016,603.72 | -- |
9. Non-current assets maturing within one year
| Item | Closing Balance | Opening Balance |
| Long-term receivables due within one year | 38,952,641.30 | 42,003,576.60 |
| Total | 38,952,641.30 | 42,003,576.60 |
10. Other current assets
| Item | Closing Balance | Opening Balance |
| Prepaid income tax presented at net amount after offsetting | 138,536.54 | 390,518.40 |
| VAT to be deducted | 15,676,930.73 | 22,375,761.22 |
| Prepaid turnover tax | 1,876.94 | |
| Prepaid expenses | 402,154.59 | 445,934.88 |
| Total | 16,217,621.86 | 23,214,091.44 |
11. Long term receivable
(1) Details
| Item | Closing Balance | ||
| Carrying amount | Provision | Book value | |
| Lease premium | |||
| ---Unrealized financing income | |||
| Goods sold by installments | 71,728,641.00 | 5,882,231.91 | 65,846,409.09 |
| ---Unrealized financing income | |||
| Services rendered by installments | |||
| Total | 71,728,641.00 | 5,882,231.91 | 65,846,409.09 |
| Item | Opening Balance | ||
| Carrying amount | Provision | Book value | |
| Lease premium | |||
| ---Unrealized financing income | |||
| Goods sold by installments | 71,750,205.16 | 5,882,231.91 | 65,867,973.25 |
| ---Unrealized financing income | 4,129,869.98 | ||
| Services rendered by installments | |||
| Total | 71,750,205.16 | 5,882,231.91 | 65,867,973.25 |
(2) Provision for bad debt
| bad debt provision | 1st stage | 2nd stage | 3rd stage | Total |
| Expected credit loss within 12 months | Expected credit loss within the whole period (no impairment) | Expected credit loss within the whole period (impairment incurred) | ||
| Opening balance | — | — | — | — |
| Opening balance during | 5,882,231.91 | 5,882,231.91 |
| bad debt provision | 1st stage | 2nd stage | 3rd stage | Total |
| Expected credit loss within 12 months | Expected credit loss within the whole period (no impairment) | Expected credit loss within the whole period (impairment incurred) | ||
| the year | ||||
| --transfer to the 2nd stage | ||||
| --transfer to the 3rd stage | ||||
| --reverse to the 2nd stage | ||||
| ----reverse to the 1st stage | ||||
| Accrued | ||||
| Reverse | ||||
| Cancelation | ||||
| Written off | ||||
| Other movement | ||||
| Closing balance | 5,882,231.91 | 5,882,231.91 |
12.Long-term equity investments
| Investee | Beginning balance | Increase/Decrease | Ending balance | Provision for impairment | |||||||
| Increased | Decreased | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Change of other equity | Cash bonus or profits announced to issue | Provision for impairment of the current period | Others | ||||
| Panasonic Appliances Refrigerating System (Dalian) Co., Ltd. | 172,549,678.96 | -14,304,960.25 | 1,280,000.00 | 156,964,718.71 | |||||||
| Panasonic Appliances Cold-Chain (Dalian) Co., Ltd. | 274,533,413.30 | 661,139.89 | 2,797,849.22 | 272,396,703.97 | |||||||
| Panasonic Appliances Compressor (Dalian) Co., Ltd. | 465,818,897.98 | 22,044,812.17 | 32,773,200.00 | 455,090,510.15 | |||||||
| Dalian Honjo Chemical Co., Ltd. | 8,746,197.03 | 355,303.63 | 561,233.80 | 8,540,266.86 | |||||||
| Songzhi Ocean Thermal Technology (Dalian) Co., Ltd. | 55,934,955.38 | 3,041,137.66 | 58,976,093.04 | ||||||||
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd. | 2,121,951.69 | -37,039.35 | 2,084,912.34 | ||||||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd. | 184,454,138.22 | -9,141,058.73 | 175,313,079.49 | ||||||||
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 14,891,119.67 | 1,697,477.05 | 16,588,596.72 | ||||||||
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 43,546.35 | -43,520.00 | 26.35 | ||||||||
| Jiangsu JingXue Insulation Technology Co.,Ltd | 203,208,828.97 | 3,558,478.80 | -16,123,970.29 | 190,643,337.48 | |||||||
| Panasonic Appliances Refrigerating System (Dalian) Co., Ltd. | 37,420,055.26 | 1,840,988.29 | 3,895,484.27 | 35,365,559.28 | |||||||
| Dalian Bingshan Metal Technology Co.,Ltd | 173,158,546.15 | 11,535,446.10 | 184,693,992.25 | ||||||||
| Dalian Bingshan Group Huahuida Finance Leasing Co. LTD | 45,400,000.00 | 948,973.33 | 46,348,973.33 | ||||||||
| Investee | Beginning balance | Increase/Decrease | Ending balance | Provision for impairment | |||||||
| Increased | Decreased | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Change of other equity | Cash bonus or profits announced to issue | Provision for impairment of the current period | Others | ||||
| Wuhan Sikafu Power Control Equipment Co., Ltd | 4,360,034.66 | -1,071,427.20 | 3,288,607.46 | ||||||||
| Total | 1,597,241,363.62 | 45,400,000.00 | 21,085,751.39 | -16,123,970.29 | 41,307,767.29 | 1,606,295,377.43 | |||||
13. Other non-current financial assets
| Item | Closing Balance | Opening Balance |
| Measured as fair value method | 234,169,195.71 | 239,304,098.83 |
| Measured as cost method | ||
| Total | 234,169,195.71 | 239,304,098.83 |
14. Investment property
| Item | Building | Land-use-rights | Total |
| I. Initial Cost | |||
| 1. Opening Balance | 232,232,862.29 | 26,094,438.38 | 258,327,300.67 |
| 2. Increase | |||
| (1) Outsourcing | |||
| (2) Transferred from Construction in progress | |||
| 3. Decrease | 1,638,372.22 | 1,638,372.22 | |
| (1) Disposal | 1,638,372.22 | 1,638,372.22 | |
| (2)Transferred to other | |||
| 4. Closing Balance | 230,594,490.07 | 26,094,438.38 | 256,688,928.45 |
| II. Accumulated Depreciation | |||
| 1. Opening Balance | 120,254,007.46 | 11,784,815.29 | 132,038,822.75 |
| 2. Increase | 2,743,004.26 | 260,944.38 | 3,003,948.64 |
| (1)Provision or amortization | 2,743,004.26 | 260,944.38 | 3,003,948.64 |
| (2) Transferred from Construction in progress | |||
| 3. Decrease | 1,589,221.06 | 1,589,221.06 | |
| (1) Disposal | 1,589,221.06 | 1,589,221.06 | |
| (2) Transferred to other | |||
| 4. Closing Balance | 121,407,790.66 | 12,045,759.67 | 133,453,550.33 |
| III. Impairment Reserve | |||
| 1. Opening Balance | |||
| 2. Increase | |||
| (1)Provision or amortization | |||
| 3. Decrease | |||
| (1) Disposal | |||
| (2) Transferred to other | |||
| 4. Closing Balance | |||
| IV. Book Value | |||
| 1. Closing book value | 109,186,699.41 | 14,048,678.71 | 123,235,378.12 |
| 2. Opening book value | 111,978,854.83 | 14,309,623.09 | 126,288,477.92 |
15. Fixed assets
| Items | Closing Book Value | Opening Book Value |
| Fixed asset | 842,597,806.71 | 867,177,638.62 |
| Fixed asset clearance | ||
| Total | 842,597,806.71 | 867,177,638.62 |
(1) Fixed assets detail
| Item | buildings | Machinery Equipment | Transportation Equipment | Other Equipment | Total |
| I. Initial Cost | |||||
| 1. Opening Balance | 681,216,088.70 | 598,100,796.53 | 13,856,528.42 | 68,106,145.62 | 1,361,279,559.27 |
| 2. Increase | 2,293,858.32 | 5,654,999.28 | 681,505.29 | 159,141.49 | 8,789,504.38 |
| (1) Purchase | 2,293,858.32 | 5,654,999.28 | 681,505.29 | 159,141.49 | 8,789,504.38 |
| (2) Transferred from construction-in-progress | |||||
| (3) Acquired from business combination | |||||
| 3. Decrease | 11,444,480.88 | 321,260.00 | 2,242,900.34 | 14,008,641.22 | |
| (1) Disposal | 11,444,480.88 | 321,260.00 | 2,242,900.34 | 14,008,641.22 | |
| (2) Transferred to other | |||||
| 4. Closing Balance | 683,509,947.02 | 592,311,314.93 | 14,216,773.71 | 66,022,386.77 | 1,356,060,422.43 |
| II. Accumulated Depreciation | |||||
| 1. Opening Balance | 112,737,387.24 | 319,158,435.03 | 9,550,618.82 | 52,138,160.06 | 493,584,601.15 |
| 2. Increase | 10,046,913.70 | 21,317,845.53 | 398,503.61 | 2,615,656.60 | 34,378,919.44 |
| (1)Accrued | 10,046,913.70 | 21,317,845.53 | 398,503.61 | 2,615,656.60 | 34,378,919.44 |
| (2) Acquired from business combination | |||||
| 3. Decrease | 12,510,158.90 | 294,046.48 | 2,148,918.89 | 14,953,124.27 | |
| (1) Disposal | 12,510,158.90 | 294,046.48 | 2,148,918.89 | 14,953,124.27 | |
| (2) Transferred to other | |||||
| 4. Closing Balance | 122,784,300.94 | 327,966,121.66 | 9,655,075.95 | 52,604,897.77 | 513,010,396.32 |
| III. Impairment |
| Item | buildings | Machinery Equipment | Transportation Equipment | Other Equipment | Total |
| Reserve | |||||
| 1. Opening Balance | 517,319.50 | 517,319.50 | |||
| 2. Increase | |||||
| (1)Accrued | |||||
| 3. Decrease | |||||
| (1) Disposal | 65,100.10 | 65,100.10 | |||
| 4. Closing Balance | 452,219.40 | 452,219.40 | |||
| IV. Book Value | |||||
| 1. Closing book value | 560,725,646.06 | 263,892,973.87 | 4,561,697.76 | 13,417,489.00 | 842,597,806.71 |
| 2. Opening book value | 568,478,701.46 | 278,425,042.00 | 4,305,909.60 | 15,967,985.56 | 867,177,638.62 |
16. Construction-in-progress
| Item | Closing book value | Opening book value |
| Construction-in-progress | 39,010,357.07 | 34,254,599.42 |
| Construction materials | ||
| Total | 39,010,357.07 | 34,254,599.42 |
(1) Construction in progress details
| Item | Closing Balance | Opening Balance | ||||
| Book Balance | Provision | Book Value | Book Balance | Provision | Book Value | |
| Buildings reconstruction | 8,278,796.16 | 8,278,796.16 | 3,628,913.65 | 3,628,913.65 | ||
| Improvement of machinery | 4,123,818.02 | 4,123,818.02 | 3,724,069.06 | 3,724,069.06 | ||
| Construction of intelligent software | 1,406,695.44 | 1,406,695.44 | 1,843,202.03 | 1,843,202.03 | ||
| network | 16,036,382.26 | 16,036,382.26 | 15,893,749.49 | 15,893,749.49 | ||
| Financing lease item | 9,164,665.19 | 9,164,665.19 | 9,164,665.19 | 9,164,665.19 | ||
| Total | 39,010,357.07 | 39,010,357.07 | 34,254,599.42 | 34,254,599.42 | ||
(2) Change in the significant construction in progress
| Name | Opening Balance | Increase | Decrease | Closing |
| Transfer to fixed assets | Other decrease | Balance | ||||
| Buildings reconstruction | 3,628,913.65 | 4,649,882.51 | 8,278,796.16 | |||
| Improvement of machinery | 3,724,069.06 | 917,269.38 | 517,520.42 | 4,123,818.02 | ||
| Construction of intelligent software | 1,843,202.03 | 436,506.59 | 1,406,695.44 | |||
| network | 15,893,749.49 | 142,632.77 | 16,036,382.26 | |||
| Financing lease item | 9,164,665.19 | 9,164,665.19 | ||||
| Total | 34,254,599.42 | 5,709,784.66 | 517,520.42 | 436,506.59 | 39,010,357.07 | |
(Continued)
| Name | Budget | Percent of investment against budget | of construction | Accumulated capitalized interest | Including: Accumulated capitalized interest of the year | rate(%) | Source of funds |
| Buildings reconstruction | 10,100,000.00 | 81.97% | 81.97% | Self financing | |||
| Improvement of machinery | 4,700,000.00 | 87.79% | 87.79% | Self financing | |||
| Construction of intelligent software | 3,690,750.00 | 49.94% | 49.94% | Self financing | |||
| network | 19,614,500.00 | 81.76% | 81.76% | Self financing | |||
| Financing lease item | 15,020,000.00 | 61.02% | 61.02% | 837,440.00 | 146,555.64 | Self financing | |
| Total | 53,125,250.00 | 81.97% | 81.97% | 837,440.00 | 146,555.64 | — |
17. Right of use assets
| Name | Machinery Equipment | Total |
| 1. Opening Balance | 29,156,745.84 | 29,156,745.84 |
| 3. Decrease | 65,311.89 | 65,311.89 |
| （1）Transferred to other | 65,311.89 | 65,311.89 |
| 4. Closing Balance | 29,091,433.95 | 29,091,433.95 |
| 1. Opening Balance | 5,187,325.64 | 5,187,325.64 |
| 2. Increase | 1,473,155.41 | 1,473,155.41 |
| （1）Accrued | 1,473,155.41 | 1,473,155.41 |
| 4. Closing Balance | 6,660,481.05 | 6,660,481.05 |
| 1. Closing book value | 22,430,952.90 | 22,430,952.90 |
| 2. Opening book value | 23,969,420.20 | 23,969,420.20 |
18. Intangible assets
(1) Intangible assets list
| Item | Land use right | Patent technology | Non Patent technology | Others | Total |
| I. Initial Cost | |||||
| 1. Opening Balance | 151,187,271.54 | 18,219,985.58 | 5,000,000.00 | 30,035,315.89 | 204,442,573.01 |
| 2. Increase | 1,776,527.23 | 1,776,527.23 | |||
| (1) Purchase | 1,776,527.23 | 1,776,527.23 | |||
| (2) Acquired from business combination | |||||
| (3)Transferred from construction-in-progress | |||||
| 3. Decrease | 765,564.10 | 765,564.10 | |||
| (1) Disposal | 765,564.10 | 765,564.10 | |||
| 4. Closing Balance | 151,187,271.54 | 18,219,985.58 | 5,000,000.00 | 31,046,279.02 | 205,453,536.14 |
| II.Accumulated amortisation | |||||
| 1. Opening Balance | 37,721,432.33 | 6,038,799.65 | 2,500,004.00 | 12,739,615.79 | 58,999,851.77 |
| 2. Increase | 1,540,404.37 | 800,474.10 | 250,002.00 | 765,522.45 | 3,356,402.92 |
| (1)Accrued | 1,540,404.37 | 800,474.10 | 250,002.00 | 765,522.45 | 3,356,402.92 |
| 3. Decrease | 764,914.10 | 764,914.10 | |||
| (1) Disposal | 764,914.10 | 764,914.10 | |||
| 4. Closing Balance | 39,261,836.70 | 6,839,273.75 | 2,750,006.00 | 12,740,224.14 | 61,591,340.59 |
| III. Impairment Reserve | |||||
| 1. Opening Balance | |||||
| 2. Increase | |||||
| (1)Accrued | |||||
| 3. Decrease | |||||
| (1) Disposal | |||||
| 4. Closing Balance | |||||
| IV. Book Value | |||||
| 1. Closing book value | 111,925,434.84 | 11,380,711.83 | 2,249,994.00 | 18,306,054.88 | 143,862,195.55 |
| 2. Opening book value | 114,975,297.19 | 11,591,389.17 | 2,499,996.00 | 16,376,038.88 | 145,442,721.24 |
19. Goodwill
(1) Original cost of goodwill
| Name | Opening Balance | Increased during current year | Decreased during current year | Closing Balance |
| Enterprises merger increase | Other | Disposal | Other | |||
| Dalian Universe Thermal Technology Co., Ltd. | 1,440,347.92 | 1,440,347.92 | ||||
| Dalian Bingshan Group Engineering Co., Ltd. | 310,451.57 | 310,451.57 | ||||
| Total | 1,750,799.49 | 1,750,799.49 |
(2) Goodwill impairment provision
In the year 2015, the book value of equity investment of Dalian Niweisi LengNuan Technology Co.,Ltd exceeds the fair value of the proportion of the acquired company’s identifiable net asset. Thedifference between the book value of equity investment of 48, 287,589.78 Yuan and the identifiablenet asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltd of 46,847,241.86Yuan on the acquisition date of July 31st 2015 is recognized as goodwill of 1,440,347.92 Yuan onthe group consolidated financial report at the end of the year.In the year 2016, Dalian Bingshan Group Construction Co., Ltd purchases shares of Dalian BingshanBaoan Leisure Industry Co., Ltd and gains control. The transferred price is based on the net asset ofDalian BingshanBaoan Leisure Industry Co., Ltd on June 30
th, 2016. Negotiated with DalianBingshan Baoan Leisure Industry Co., Ltd’s shareholder Baoan Water Project (China) LimitedCompany, the transfer price is the combination cost on the purchasing date which is 5,359,548.42Yuan, the fair value of proportion of Dalian BingshanBaoan Leisure Industry Company’s identifiablenet asset is 5,049,096.85 Yuan on the purchasing day, therefore, goodwill is 310,451.57Yuan on thepurchasing date. Dalian Bingshan Group Construction Co., Ltd absorbed Dalian Bingshan BaoanLeisure Industry Co., Ltd in 2019.The book value of goodwill from business combination of Dalian Niweisi LengNuan Technology Co.,Ltd and Dalian Bingshan Group Engineering Co., Ltd which are not under same control shall beallocated into the relevant asset group using the reasonable method since acquisition date and takenimpairment test on relevant asset group where the goodwill is included. The obvious impairmentindication of the goodwill hasn’t been found. Thus no goodwill impairment provision has been made.
20. Long-term unamortized expense
| Item | Opening Balance | Increase | Amortization | Other Decrease | Closing Balance |
| Employee’s dormitory use right | 1,873,692.06 | 69,517.83 | 1,804,174.23 | ||
| Renovation and rebuilding | 746,997.14 | 22,522.50 | 724,474.64 | ||
| Lease | 425,160.00 | 53,145.00 | 372,015.00 | ||
| Membership fee for Golf | 423,500.00 | 8,250.00 | 415,250.00 | ||
| Technology entrance fee of cold and heat machinery | 466,781.25 | 186,712.50 | 280,068.75 | ||
| Greenland of new factory | 5,724,407.62 | 446,057.76 | 5,278,349.86 | ||
| Total | 9,660,538.07 | 786,205.59 | 8,874,332.48 |
21. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offsetting
| Item | Closing Balance | Opening Balance | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Provision for impairment of assets | 24,416,367.17 | 4,326,008.37 | 23,719,518.02 | 4,011,984.07 |
| Unrealized profit from internal transaction | 14,077,263.75 | 2,111,589.56 | 14,077,263.75 | 2,111,589.56 |
| Deductible loss | 3,581,714.08 | 895,428.52 | 3,581,714.09 | 895,428.52 |
| Estimated debts | 7,171,726.51 | 1,792,931.63 | ||
| Provision for credit impairment | 300,363,081.60 | 60,791,872.32 | 298,515,515.22 | 60,167,592.33 |
| Total | 342,438,426.60 | 68,124,898.77 | 347,065,737.59 | 68,979,526.11 |
(2) Deferred tax liabilities without offsetting
| Item | Closing Balance | Opening Balance | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Changes in the fair value of other non-current financial assets | 208,367,529.13 | 31,255,129.37 | 213,402,432.24 | 32,010,364.83 |
| Total | 208,367,529.13 | 31,255,129.37 | 213,402,432.24 | 32,010,364.83 |
(3) Deferred income tax assets or liabilities shown net of offset
| Item | Deferred tax assets and liabilities at the end of the balance | The ending balance of a deferred tax asset or liability after offset | The amount of deferred tax assets and liabilities offset at the beginning of the period | The beginning balance of a deferred tax asset or liability after offset |
| Deferred tax assets | 68,124,898.77 | 68,979,526.11 | ||
| Deferred tax liabilities | 31,255,129.37 | 32,010,364.83 |
(4) Unrecognized deferred tax assets details
| Item | Closing Balance | Opening Balance |
| Deductible temporary difference | 7,106,167.83 | 3,738,153.26 |
| Deductible loss | 111,303,027.15 | 107,036,874.97 |
| Total | 118,409,194.98 | 110,775,028.23 |
(5) Unrecognized deductible loss of deferred tax assets expired years
| Year | Closing Balance | Opening Balance | Notes |
| 2021 | |||
| 2022 | 716,158.09 | 716,158.09 | |
| 2023 | 13,581,030.35 | 16,458,262.38 | |
| 2024 | 58,227,822.87 | 62,405,136.73 |
| Year | Closing Balance | Opening Balance | Notes |
| 2025 | 16,642,886.37 | 27,457,317.77 | |
| 2026 | 22,135,129.47 | ||
| Total | 111,303,027.15 | 107,036,874.97 |
22. Short-term loan
(1) Category of short term loan
| Loan category | Closing Balance | Opening Balance |
| Mortgage loan | 12,530,000.00 | 6,960,000.00 |
| Credit loan | 227,000,000.00 | 276,011,600.00 |
| Total | 239,530,000.00 | 282,971,600.00 |
23. Notes payable
| Notes category | Closing Balance | Opening Balance |
| Commercial acceptance notes | 4,480,825.00 | 2,078,041.90 |
| Bank acceptance notes | 308,984,870.40 | 293,073,330.48 |
| Total | 313,465,695.40 | 295,151,372.38 |
24. Accounts payable
(1) Accounts payable
| Item | Closing Balance | Opening Balance |
| Material payments | 668,265,369.08 | 459,748,015.17 |
| Project payments | 212,918,071.12 | 227,092,621.70 |
| Equipment payments | 67,075,483.91 | 76,820,952.59 |
| Others | 14,031,381.27 | 3,605,642.97 |
| Total | 962,290,305.38 | 767,267,232.43 |
(2) Accounts payable with age over 1 year
| Name of company | Closing Balance | Reason of unpaid or not carried forward |
| Panasonic Refrigerating System (Dalian) Co., Ltd. | 13,074,637.70 | Project is uncompleted contract is not finished |
| Wuhan United Liben Energy Technology Co., LTD | 7,566,320.00 | Project is uncompleted contract is not finished |
| Heilongjiang Longleng Technology Co., Ltd | 5,727,520.00 | Project is uncompleted contract is not finished |
| Lixingkai (Beijing) Energy System Technology Co.,Ltd | 5,097,305.82 | Project is uncompleted contract is not finished |
| Haoxing Nengtou(Beijing) Assets management Co.,Ltd | 4,878,499.00 | Project is uncompleted contract is not finished |
| Total | 36,344,282.52 |
25. Contract Liabilities
| Item | Closing Balance | Opening Balance |
| Item | Closing Balance | Opening Balance |
| Received in advance due from unrealized revenue | 369,202,216.43 | 295,100,657.10 |
| Total | 369,202,216.43 | 295,100,657.10 |
Significant change on the book value
| Item | Change amount | Change reason |
| Advance payment | 74,101,559.33 | According to the contract, received the payment from the client in advance |
| Total | 74,101,559.33 |
26. Employee’s payable
(1) Category of employee’s payable
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Short-term employee’s payable | 31,125,808.94 | 143,198,474.08 | 163,891,380.86 | 10,432,902.16 |
| Post-employment benefit –defined contribution plan | 13,956,332.95 | 13,956,332.95 | ||
| Termination benefits | 10,000.00 | 10,000.00 | ||
| Total | 31,125,808.94 | 157,164,807.03 | 177,857,713.81 | 10,432,902.16 |
(2) Short-term employee’s payables
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Salaries, bonus, allowance, and subsidy | 26,526,326.00 | 112,997,581.71 | 132,588,948.10 | 6,934,959.61 |
| Welfare | 3,080,018.99 | 7,144,168.71 | 8,199,315.51 | 2,024,872.19 |
| Social insurance | 16,445.29 | 9,684,764.08 | 9,701,209.37 | |
| Include: Medical insurance | 14,860.20 | 7,466,885.15 | 7,481,745.35 | |
| On-duty injury insurance | 1,079,000.51 | 1,079,000.51 | ||
| Maternity insurance | 1,585.09 | 1,025,367.39 | 1,025,367.39 | |
| Housing funds | 9,664,970.90 | 9,664,970.90 | ||
| Labor union and training expenses | 1,503,018.66 | 2,232,000.37 | 2,261,948.67 | 1,473,070.36 |
| Others | 1,474,988.31 | 1,474,988.31 | ||
| Total | 31,125,808.94 | 143,198,474.08 | 163,891,380.86 | 10,432,902.16 |
(3) Defined contribution plan
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Pension | 13,495,124.66 | 13,495,124.66 | ||
| Unemployment insurance | 461,208.29 | 461,208.29 | ||
| Total | 13,956,332.95 | 13,956,332.95 |
27. Tax payable
| Item | Closing Balance | Opening Balance |
| Value-added tax | 3,083,677.49 | 2,830,255.88 |
| Enterprise income tax | 977,933.24 | 3,114,706.06 |
| Individual income tax | 560,027.55 | 216,213.81 |
| City maintenance and construction tax | 152,847.30 | 238,887.83 |
| Real estate tax | 2,110,594.79 | 1,899,793.53 |
| Land use tax | 1,225,125.20 | 1,094,760.28 |
| Stamp duty | 184,721.60 | 151,410.38 |
| Education surcharge | 109,678.57 | 167,925.89 |
| Green tax | 244.77 | 240.59 |
| Total | 8,404,850.51 | 9,714,194.25 |
28. Other accounts payable
| Item | Closing Balance | Opening Balance |
| Interest payable | 1,481,750.50 | 1,839,166.81 |
| Dividend payable | 8,965,281.07 | 533,156.00 |
| Other accounts payable | 38,449,425.05 | 40,645,143.57 |
| Total | 48,896,456.62 | 43,017,466.38 |
. (1) Interest payable
| Item | Closing Balance | Opening Balance |
| Interest paid in installments Interest paid on long-term loans when the principal is repaid at maturity | 1,160,000.06 | 1,703,750.01 |
| Interest on corporate bond | 321,750.44 | 135,416.80 |
| Total | 1,481,750.50 | 1,839,166.81 |
(2). Dividend payable
| Item | Closing Balance | Opening Balance |
| Ordinary share dividend | 8,965,281.07 | 533,156.00 |
| Total | 8,965,281.07 | 533,156.00 |
（3）Other accounts payable
Other payables categorized by payments nature
| Payments nature | Closing Balance | Opening Balance |
| Loan from non-financial institutes | ||
| Cash pledge and security deposit | 17,414,381.19 | 8,518,729.05 |
| Apply for reimbursement and unpaid | 6,159,848.19 | 11,557,803.69 |
| Funds about related parties | 449,418.73 | |
| Receipts under custody | 1,856,331.86 | 6,191,124.03 |
| Others | 12,569,445.08 | 14,377,486.80 |
| Total | 38,449,425.05 | 40,645,143.57 |
29. Non-current liabilities due within one year
| Item | Closing Balance | Opening Balance |
| Bond payable due within one year | 25,000,034.00 | 25,000,034.00 |
| Long-term accounts payable with one year | 17,509,422.33 | 12,157,092.41 |
| Total | 42,509,456.33 | 37,157,126.41 |
30. Other current liabilities
| Item | Closing balance | Opening balance |
| Notes payable endorsed not derecognized | 120,152,124.49 | 121,572,682.35 |
| Output Vat to be carried forward | 51,609,503.37 | 30,601,263.95 |
| Total | 171,761,627.86 | 152,173,946.30 |
31. Long-term loan
(1) Category of long-term loan
CDB development fund give support to the Company’s intelligent and green equipment of cold chainand service industry base project and provide special fund to the Company’s holding shareholder, BingshanGroup. The fund is 0.16 billion Yuan with 10year’s expiration at 1.2% rate. Once the fund arrived, BingshanGroup gave it to the Company at the same rate of 1.2% in lump sum. The above fund needed to be warrantedby the Company. The guarantee seems to be given for the holding shareholder, but it is for the Companyitself in fact. The principal of 10 million yuan has been repaid in March 2021.
32. Lease liabilities
| Item | Closing Balance | Opening Balance |
| Lease liabilities | 10,971,589.76 | 14,622,463.75 |
| Total | 10,971,589.76 | 14,622,463.75 |
| Category | Closing Balance | Opening Balance |
| Guarantee loan | 150,000,000.00 | 160,000,000.00 |
| Total | 150,000,000.00 | 160,000,000.00 |
33. Long term accounts payable
| Item | Closing Balance | Opening Balance |
| Long term accounts payable | 8,682,041.09 | |
| Total | 8,682,041.09 |
(1) Category by nature
| Item | Closing Balance | Opening Balance |
| Financial lease | 8,682,041.09 | |
| Total | 8,682,041.09 |
34. Estimated debts
| Nature | Closing Balance | Opening Balance | Reason |
| Open litigation | 420,512.50 | 7,592,239.01 | |
| Total | 420,512.50 | 7,592,239.01 |
Shandong Meitian Energy Technology Co.,Ltd (hereinafter referred to as “Shandong Meitian”) suedWuhan New World Refrigeration Engineering Co., Ltd..(hereinafter referred to as “WuLeng Engineering”),over a dispute on the technology service contract with the following claims: It ordered WuLeng Engineeringto pay RMB 1,650,000.00 for service rendered, and RMB 100,000.00 for economic loss(in total RMB1,750,000.00), Wuhan New World Refrigeration Industry Co., Ltd. (hereinafter referred to as " WuxinRefrigeration ") shall jointly bear the liability for the above-mentioned arrears; The litigation costs shall beborne by Wuleng Engineering and Wuxin Refrigeration. Wuleng Engineering proposed counterclaim: itorders to terminate the "Project Cooperation Agreement"; Shandong Meitian returned the loan of RMB350,000.00 and the interest of RMB 37,663.55. The litigation costs shall be borne by Shandong Meitian.On December 13, 2020, the people's court of high and new technology industry development zone,Taian of Shandong province, made the judgment of first verdict of Lu 0991 Minchu No. 954 (2020), thatWuleng Engineering should pay a total of RMB 1.65million for service fee and economic loss. Economicloss should be based on RMB 1.65million of service fee, plus interest which is worked out based on theinterbank offer rate in China market published by the National wide Interbank Offering Center until the dateof actual payment. Wuxin Refrigeration is jointly liable for the above amount. Other claims of ShandongMeitian have been rejected; Rejected the counterclaim of Wuleng Engineering.On December 21, 2020, Wuleng Engineering appealed to the Intermediate People's Court of TaianShandong Province during the appeal period after the first instance verdict, as of the date of this report, thecase is still pending.
35. Deferred income
(1) Category of deferred income
| Item | Opening Balance | Increase | Decrease | Closing Balance | Formation Basis |
| Item | Opening Balance | Increase | Decrease | Closing Balance | Formation Basis |
| Government subsidy | 104,457,568.86 | 1,100,000.00 | 3,228,299.49 | 102,329,269.37 | |
| Total | 104,457,568.86 | 1,100,000.00 | 3,228,299.49 | 102,329,269.37 | — |
(2) Government subsidy project
36. Share capital
| Item | Opening | Increase/decrease（+、-） | Closing |
| Government subsidy item | Opening Balance | Increase | Recorded into Non-operating income | Offset cost or expense | Closing Balance | equity |
| Relocation compensation | 40,104,000.00 | 556,998.00 | 39,547,002.00 | related | ||
| Application of NH3 and CO2 instead of R22 screw refrigerating machine combined condensing unit | 16,398,350.48 | 1,014,161.94 | 15,384,188.54 | related | ||
| Compressor IC system | 3,907,129.99 | 184,384.86 | 3,722,745.13 | related | ||
| Ultrasonic intelligent defrost technology | 3,716,010.90 | 15,000.00 | 132,416.76 | 3,568,594.14 | related | |
| Eco Compressor project | 22,529,321.64 | 1,276,925.28 | 21,252,396.36 | related | ||
| R290 replacement of R22 large industrial screw unit | 13,006,663.20 | 13,006,663.20 | related | |||
| R290 replacement of R22 industrial double stage screw unit | 4,747,680.00 | 4,747,680.00 | related | |||
| New high-tech enterprise | 100,000.00 | 100,000.00 | related | |||
| Evaluation of national enterprise technology center | 1,000,000.00 | 1,000,000.00 | related | |||
| Subsidy fund for highly effective heat pump and related system | 48,412.65 | 48,412.65 | related | |||
| Total | 104,457,568.86 | 1,100,000.00 | 571,998.00 | 2,656,301.49 | 102,329,269.37 |
| balance | Share dividend | Transfer from capital reserve | others | balance | |||
| Total shares | 843,212,507.00 | 843,212,507.00 |
37. Capital reserves
| Items | Opening Balance | Increase | Decrease | Closing Balance |
| Share premium | 659,622,044.20 | 659,622,044.20 | ||
| Other capital reserves | 67,146,423.80 | 16,123,970.29 | 51,022,453.51 | |
| Total | 726,768,468.00 | 16,123,970.29 | 710,644,497.71 |
38. Other comprehensive income
| Items | Opening Balance | 2021.1-6 | Closing Balance | ||||
| Amount for the period before income tax | Less：Previously recognized in profit or loss in other comprehensive income | Less：income tax | After-tax attribute to the parent company | After-tax attribute to minority shareholder | |||
| I.Later can’t reclassified into profit and loss of other comprehensive income | |||||||
| II. Later reclassified into profit and loss of other comprehensive income | 2,501,459.77 | 2,501,459.77 | |||||
| Proportional other comprehensive income of investee which is reclassified into income statement under equity method | 2,501,459.77 | 2,501,459.77 | |||||
| Other comprehensive income total | 2,501,459.77 | 2,501,459.77 | |||||
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
39. Special Reserve
| Items | Opening Balance | Increase | Decrease | Closing Balance |
| Safety production cost | 1,201,021.67 | 1,201,021.67 | ||
| Total | 1,201,021.67 | 1,201,021.67 |
40. Surplus reserves
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Statutory surplus reserve | 356,056,750.07 | 356,056,750.07 | ||
| Discretionary surplus reserve | 449,469,025.26 | 12,785,383.91 | 462,254,409.17 | |
| Total | 805,525,775.33 | 12,785,383.91 | 818,311,159.24 |
The Company made profit distribution within the reporting period. According to the 2020 annual meeting,20% of net profit in the 2020 fiscal annual report is provided for discretionary surplus reserve of12,785,383.91 Yuan.
41. Undistributed profits
| Item | 2021-06-30 | 2020-06-30 |
| Closing balance of 2020 | 997,601,577.97 | 1,038,358,782.59 |
| Add: Adjustments to the opening balance of undistributed profits | ||
| Opening balance of 2021 | 997,601,577.97 | 1,038,358,782.59 |
| Add: net profit attributable to shareholders of parent company in the year | -14,584,210.01 | -23,604,345.52 |
| Less: Provision for statutory surplus reserves | ||
| Provision for any surplus reserves | 12,785,383.91 | 30,409,270.84 |
| Dividends payable for common shares | 8,432,125.07 | 25,296,375.21 |
| Closing balance of the current period | 961,799,858.98 | 959,048,791.02 |
42. Operating revenue and cost
| Items | 2021.01-06 | 2020.01-06 | ||
| Sales revenue | Cost of sales | Sales revenue | Cost of sales | |
| Revenue from principle operation | 1,069,601,775.40 | 939,531,941.76 | 857,035,486.66 | 732,433,950.29 |
| Revenue from other operation | 24,683,845.57 | 10,872,827.50 | 16,367,927.80 | 15,641,145.83 |
| Total | 1,094,285,620.97 | 950,404,769.26 | 873,403,414.46 | 748,075,096.12 |
(1) Main revenue from contract details
| Items | Division 1 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Classified at products type | 1,069,601,775.40 |
| Manufacture products | 675,316,303.74 |
| Project installation | 386,022,799.34 |
| Other products and service | 8,262,672.32 |
| Classified at geography location | 1,069,601,775.40 |
| domestic | 1,011,538,820.53 |
| overseas | 58,062,954.87 |
43. Operating taxes and surcharges
| Items | 2021.01-06 | 2020.01-06 |
| City construction tax | 1,446,546.32 | 822,185.02 |
| Education surcharge | 962,826.14 | 589,369.05 |
| Property tax | 4,035,908.73 | 3,835,774.27 |
| Land use tax | 2,450,307.46 | 2,189,549.16 |
| Vehicle and vessel tax | 8,942.04 | 11,571.44 |
| Stamp duty | 657,768.65 | 563,772.21 |
| Others | 119,222.81 | 8,270.68 |
| Total | 9,681,522.15 | 8,020,491.83 |
44. Selling expenses
| Items | 2021.01-06 | 2020.01-06 |
| Official business expense | 4,348,750.49 | 2,994,176.07 |
| Travel expense | 4,114,863.50 | 3,742,450.00 |
| Business entertaining expense | 2,525,127.61 | 2,356,885.18 |
| Maintenance and repair expense | 2,873,319.38 | 1,890,493.88 |
| Advertisement and bids expense | 1,044,426.89 | 806,949.46 |
| Depreciation expense | 98,213.00 | 110,392.35 |
| Transportation expense | 6,509,108.10 | 5,215,850.58 |
| Other expense | 1,370,485.55 | -569,730.79 |
| Total | 56,710,524.65 | 35,446,794.72 |
45. Administrative expenses
| Items | 2021.01-06 | 2020.01-06 |
| Employee benefit | 44,697,319.27 | 44,701,524.40 |
| Official expense | 6,540,910.41 | 5,862,390.02 |
| Depreciation expense | 5,684,128.55 | 5,681,960.08 |
| Long-term assets amortization | 3,926,562.28 | 3,319,148.39 |
| Maintenance and repair expense | 2,769,914.26 | 3,332,999.96 |
| Design consultant and test service expense | 3,154,130.36 | 3,623,329.62 |
| Safety production cost | 1,201,021.67 | 1,127,227.68 |
| Travel expense | 1,783,780.25 | 1,161,310.14 |
| Business entertaining expense | 814,439.73 | 793,831.00 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Items | 2021.01-06 | 2020.01-06 |
| Insurance expense | 364,092.63 | 407,320.27 |
| Advertisement expense | 66,647.41 | 100,998.04 |
| Other tax | 18,601.23 | |
| Other expense | 704,949.73 | 658,087.26 |
| Total | 71,726,497.78 | 70,770,126.86 |
46. R&D expenses
| Items | 2021.01-06 | 2020.01-06 |
| Employee benefit | 28,422,612.24 | 21,428,261.05 |
| Depreciation and amortization expense | 441,407.58 | 2,110,399.66 |
| Raw material | 1,367,252.76 | 478,225.01 |
| Entrust external R&D investment | 227,644.82 | 6,283.00 |
| Other expense | 279,234.20 | 691,852.56 |
| Total | 30,738,151.60 | 24,715,021.28 |
47. Financial expenses
| Items | 2021.01-06 | 2020.01-06 |
| Interest expenses | 8,711,437.07 | 9,632,767.81 |
| Less: Interest income | 3,200,439.42 | 882,852.63 |
| Add: Exchange loss | -471,153.98 | -552,914.09 |
| Others expenditure | 1,200,825.06 | 1,864,326.98 |
| Total | 6,240,668.73 | 10,061,328.07 |
48. Other income
| Items | 2021.01-06 | 2020.01-06 |
| Government subsidy | 907,398.00 | 6,507,868.29 |
| Personal income tax handling fee refund | 7,056.99 | |
| Total | 914,454.99 | 6,507,868.29 |
49. Investment income
| Items | 2021.01-06 | 2020.01-06 |
| Long-term equity investment gain under equity method | 21,085,751.39 | 16,816,173.99 |
| Gain from disposing of long-term equity investment | ||
| Gain from from debt restructuring | -6,860.60 | |
| Gain from disposal of other noncurrent financial assets | -96,737.66 | |
| Gain from holding of other non-current financial assets | 7,229,604.48 | 6,126,903.12 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Total | 28,211,757.61 | 22,943,077.11 |
50. Fair value change income (loss listed as“-“)
| Items | 2021.01-06 | 2020.01-06 |
| Other non-current financial assets | -5,034,903.12 | -19,323,309.84 |
| Total | -5,034,903.12 | -19,323,309.84 |
51. Credit impairment losses (loss listed as“-“)
| Items | 2021.01-06 | 2020.01-06 |
| Bad debt loss on notes receivable | 1,108,930.41 | 3,479,059.83 |
| Bad debt loss on receivable | -11,460,308.47 | -16,928,378.83 |
| Bad debt loss on other receivable | 2,435,152.34 | -592,587.01 |
| Credit impairment loss on long term receivable | 280,800.00 | |
| Total | -7,635,425.72 | -14,041,906.01 |
52. Assets impairment losses (loss listed as“-“)
| Items | 2021.01-06 | 2020.01-06 |
| Loss of contract asset impairment | -1,016,603.72 | |
| Total | -1,016,603.72 |
53. Gain on assets disposal
| Item | 2021.01-06 | 2020.01-06 |
| Gains on disposal of non-current assets | 8,393.93 | 10,788.53 |
| Including: Gain on non-current assets disposal income not classified as held for sale | 8,393.93 | 10,788.53 |
| Including: gain on fixed assets disposal | 8,393.93 | 10,788.53 |
| Total | 8,393.93 | 10,788.53 |
54. Non-operating income
| Item | 2021.01-06 | 2020.01-06 | Amounts recognized into non-recurring profit or loss for the year |
| Debt restructuring gains | 531,903.00 | 162,560.00 | 531,903.00 |
| Penalty and fine income | 216,492.50 | ||
| Others | 1,407,195.38 | 987,052.84 | 1,407,195.38 |
| Total | 1,939,098.38 | 1,280,059.12 | 1,939,098.38 |
55. Non-operating expenses
| Item | 2021.01-06 | 2020.01-06 | Amounts recognized into |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| non-recurring profit or loss for the year | |||
| Non-current assets scrap loss | 395,122.52 | 44,972.15 | 395,122.52 |
| Others | 166,566.53 | 48,522.19 | 166,566.53 |
| Total | 561,689.05 | 93,891.78 | 561,689.05 |
56. Income tax expenses
(1) Income tax expenses
| Items | 2021.01-06 | 2020.01-06 |
| Current income tax expenses | 2,143,118.35 | 1,427,499.91 |
| Deferred income tax expenses | 371,879.14 | -2,919,759.08 |
| Total | 2,514,997.49 | -1,492,259.17 |
(2) Adjustment process of accounting profit and income tax expense
| Items | 2021.01-06 | |
| Total profits | -14,391,429.90 | |
| regulations | -2,158,714.49 | |
| Influence of different tax rate suitable to subsidiary | -499,161.50 | |
| Influence of income tax before adjustment | -460,093.06 | |
| Influence of non taxable income | -4,648,381.01 | |
| Influence of not deductable costs, expenses and losses | 3,319,163.62 | |
| Effect on use of deductible loss from unrecognized deferred tax assets in the prior period | 4,222,207.39 | |
| Influence of deductible temporary difference or deductible losses of deferred income tax assets derecognized in reporting period. | 2,889,339.52 | |
| Income tax expenses | 2,514,997.49 | |
57. Other comprehensive income
Refer to the note VII.38 other comprehensive income for details.
58. Notes to cash flow statement
(1) Cash receipt/payment of other operating/investing/financing activities
1) Other cash received relating to operating activities
| Items | 2021.01-06 | 2020.01-06 |
| Government grants | 1,367,721.83 | 12,168,371.56 |
| Received travel expense refund | 449,912.15 | 1,063,272.24 |
| Deposit given back | 27,180,320.58 | 14,765,375.21 |
| Interest income | 1,910,435.81 | 314,336.56 |
| Others | 3,356,161.51 | 4,566,093.18 |
| Receivable from the related party | 9,545,982.11 | |
| Total | 43,810,533.99 | 32,877,448.75 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
2) Other cash paid relating to operating activities
| Items | 2021.01-06 | 2020.01-06 |
| Business travel borrowing | 5,217,215.20 | 8,230,047.29 |
| Deposit paid | 18,941,721.30 | 17,663,991.76 |
| Expenditure | 40,969,033.35 | 34,127,531.31 |
| Unsettled AR/AP among related party | 3,074,818.29 | |
| Bank handling charges | 1,155,480.12 | 1,769,898.93 |
| Others | 16,259,439.25 | 583,138.56 |
| Total | 85,617,707.51 | 62,374,607.85 |
3) Others cash received relating to financing activities
| Items | 2021.01-06 | 2020.01-06 |
| Collection of guarantee money | 58,467,271.18 | 32,960,611.49 |
| Sale leaseback and financial lease | 1,876,663.49 | 3,886,589.07 |
| Total | 60,343,934.67 | 36,847,200.56 |
4) Others cash played relating to financing activities
| Items | 2021.01-06 | 2020.01-06 |
| Payment of guarantee money | 58,467,271.18 | 32,960,611.49 |
| Sale& lease back and financial lease | 1,876,663.49 | 3,886,589.07 |
| Total | 60,343,934.67 | 36,847,200.56 |
59. Supplementary information of consolidated cash flow statement
| Items | 2021.01-06 | 2020.01-06 |
| 1. Adjusting net profit into cash flows of operating activities: | —— | —— |
| Net profit | -16,906,427.39 | -24,910,499.83 |
| Add: Provision for impairment of assets | 8,652,029.44 | 15,147,375.91 |
| Depreciation of fixed assets, Amortization of mineral resources, and biological assets | 34,378,919.44 | 34,750,769.26 |
| Depreciation of right of use assets | 1,473,155.41 | 0.00 |
| Amortization of intangible assets | 3,356,402.92 | 2,373,689.18 |
| Amortization of long-term deferred expenses | 786,205.59 | 2,175,118.39 |
| Losses on disposal of fixed assets, intangible assets, and long-term assets (income listed with”-”) | -8,393.93 | -55,668.73 |
| Losses on write-off of fixed assets (income listed with”-”) | 395,122.52 | 45,369.59 |
| Change of fair value profit or loss | 5,034,903.12 | 19,323,309.84 |
| Financial expense (income listed with”-”) | 8,711,437.07 | 9,635,047.81 |
| Investment loss (income listed with”-”) | -28,211,757.61 | -22,943,077.11 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| with”-”) | -854,627.34 | 2,334,787.70 |
| listed with”-”) | -755,235.46 | -2,898,496.47 |
| Decrease of inventories (increase listed with”-”) | -125,888,007.53 | -69,323,956.85 |
| with”-”) | -152,568,485.04 | -147,581,069.09 |
| with”-”) | 233,516,922.51 | 103,576,611.65 |
| Others | ||
| Net cash flows arising from operating activities | -28,887,836.28 | -78,350,688.75 |
| 2. Significant investment and financing activities unrelated to cash income and expenses | ||
| Liabilities transferred to capital | ||
| Convertible bonds within 1 year | 25,000,034.00 | |
| Financing leased fixed assets | ||
| 3. Net increase (decrease) of cash and cash equivalent | ||
| Closing balance of cash | 254,388,688.02 | 268,889,987.62 |
| Less: Opening balance of cash | 314,978,460.49 | 301,527,354.56 |
| Net increase of cash and cash equivalent | -60,589,772.47 | -32,637,366.94 |
(1) Cash and cash equivalents
| Items | 2021.6.30 | 2021.1.1 |
| Cash | 254,388,688.02 | 314,978,460.49 |
| Including: Cash on hand | 46,859.50 | 154,668.54 |
| Bank deposit used for paying at any moment | 254,341,828.52 | 314,852,391.95 |
| Other monetary fund for paying at any moment | ||
| Deposit fund in central bank available for payment | ||
| Cash equivalent | ||
| Including: bonds investment with maturity in 3 months | ||
| Closing balance of cash and cash equivalents | 254,388,688.02 | 314,978,460.49 |
60 The assets with the ownership or use right restricted
| Items | 2021.6.30 | Reasons |
| Monetary fund | 58,425,355.47 | Guarantee money |
| Notes Receivable | 21,890,716.83 | Pledge |
| Total | 80,316,072.30 |
Note: The bank account of Wuhan New World Refrigeration Industrial Co., Ltd is frozen due to litigations,the amount is 3.945 million Yuan. Wuhan Lanning Energy Technology Co., Ltd’s bank account is frozen due
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
to litigations, the amount is 97,600 Yuan.Dalian Niweisi LengNuan Techonoligy Co., Ltd. pledged the bank acceptance note to China Merchants bankDalian Branch as guarantee for issuing the commercial acceptance note.Dalian Xinminghua Electrical Technology Co., Ltd. pledged the bank acceptance note to China Merchantsbank Dalian Jinpu Branch as guarantee for issuing the commercial acceptance note.Dalian Bingshan Air-conditioning Equipment Co., Ltd. pledged the bank acceptance note to ICBC bankDalian DDZ Branch as guarantee for issuing the commercial acceptance note.
61. Monetary category of foreign currency
(1) Monetary category of foreign currency
| Item | Closing Balance (foreign currency) | Exchange Rate | Closing Balance (RMB) |
| Cash | — | — | |
| Including：USD | 1,233,178.15 | 6.4601 | 7,966,454.17 |
| Euro | 786.88 | 7.6862 | 6,048.12 |
| JPY | 2,603,881.00 | 0.0584 | 152,139.56 |
| GBP | 7,002.56 | 8.9410 | 62,609.89 |
| Accounts receivable | — | — | 45,614,023.00 |
| Including: USD | 5,549,031.84 | 6.4601 | 35,847,300.59 |
| GBP | 149,031.86 | 8.9410 | 1,332,493.86 |
| JPY | |||
| Accounts payable | — | — | |
| Including: USD | 947,459.24 | 6.4601 | 6,120,681.44 |
| Euro | 18,447.50 | 7.6862 | 141,791.17 |
| JPY | 12,075,675.00 | 0.0584 | 705,557.54 |
| GBP | 37,374.28 | 8.9410 | 334,163.44 |
62. Government Grants
| Category | Amount | Disclosure | Amount recognized in current profit and loss |
| Efficiency pump and its supporting systems | 7,800,000.00 | Deferred Income | 48,412.65 |
| Relocation compensation | 42,332,000.00 | Deferred Income | 556,998.00 |
| Application of combined compression NH3&Co2 replace R22 | 21,273,678.04 | Deferred Income | 1,014,161.94 |
| Refrigeration Compressor Intelligent Manufacturing System Fund | 5,000,000.00 | Deferred Income | 184,384.86 |
| Ultrasonic defrosting technology | 9,841,800.00 | Deferred Income | 147,416.76 |
| Environmental protection and energy saving refrigeration and air | 31,000,000.00 | Deferred Income | 1,276,925.28 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Category | Amount | Disclosure | Amount recognized in current profit and loss |
| Efficiency pump and its supporting systems | 7,800,000.00 | Deferred Income | 48,412.65 |
| Relocation compensation | 42,332,000.00 | Deferred Income | 556,998.00 |
| Application of combined compression NH3&Co2 replace R22 | 21,273,678.04 | Deferred Income | 1,014,161.94 |
| conditioning compressor technology industrialization project | |||
| R290 replace R22 | 13,006,663.20 | Deferred Income | |
| R290 replace R22 twin stage screw sets | 4,747,680.00 | Deferred Income | |
| High-tech enterprise recognition subsidy | 300,000.00 | Deferred Income | 200,000.00 |
| Subsidies after r&d investment | 1,000,000.00 | Deferred Income | |
| Others | 42,456.99 | 42,456.99 | |
| Total | 136,344,278.23 | - | 3,470,756.48 |
VIII. Change of Consolidation ScopeThere are no changes in scope of consolidationIX. Interest in other entity
1. Equity of subsidiaries
(1) Organization structure of group company
| Name of subsidiaries | Main business address | Registered address | Business nature | Shareholding (%) | Obtaining method | |
| Direct | Indirect | |||||
| Dalian Bingshan Group Engineering Co., Ltd. | Dalian | Dalian | Installation | 100 | Establish | |
| Dalian Bingshan Group Sales Co., Ltd. | Dalian | Dalian | Trading | 100 | Establish | |
| Dalian Bingshan Air-conditioning Equipment Co., Ltd. | Dalian | Dalian | Manufacturing | 70 | Establish | |
| Dalian Bingshan Guardian Automation Co., Ltd. | Dalian | Dalian | Manufacturing | 100 | Establish | |
| Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd. | Dalian | Dalian | Manufacturing | 100 | Establish | |
| Wuhan New World Refrigeration Industrial Co., Ltd. | Wuhan | Wuhan | Manufacturing | 100 | Acquisition | |
| Bingshan Technical Service （Dalian） Co.,Ltd. | Dalian | Dalian | Services | 100 | Establish | |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Name of subsidiaries | Main business address | Registered address | Business nature | Shareholding (%) | Obtaining method | |
| Dalian New Meica Electronics Technology Co., Ltd | Dalian | Dalian | Electronic | 100 | Acquisition | |
| Dalian Universe Thermal Technology Co., Ltd. | Dalian | Dalian | Manufacturing | 55 | Acquisition | |
| Dalian Bingshan Engineering & Trading Co., Ltd. | Dalian | Dalian | Service | 100 | Acquisition | |
| Wuhan New World Air-conditioning Refrigeration Engineering Co., Ltd | Wuhan | Wuhan | Installation | 100 | Establish | |
| Wuhan Lanning Energy Technology Co., Ltd. | Wuhan | Wuhan | Trading | 54.55 | Acquisition | |
| Ningbo Bingshan Air-conditioning Refrigeration Engineering Co., Ltd | Ningbo | Ningbo | Installation | 51.00 | Establish | |
| Chengdu Bingshan Refrigeration Engineering Co., Ltd. | Chengdu | Chengdu | Services | 51.00 | Establish | |
1) All the proportion of shareholding in subsidiaries were the same with voting right
2) The company held over 50% voting right in subsidiaries and could control these subsidiaries withover 50% voting right
3) There is no change on the shareholding of the subsidiaries.
(2) There is no significant non-wholly-owned Subsidiary.
2. Equity in joint venture arrangement or associated enterprise
(1) The important of joint ventures or affiliated companies
| Name of joint ventures or affiliated companies | Main business address | Registered address | Business nature | Shareholding (%) | Accounting methods | |
| Direct | Indirect | |||||
| Panasonic Compressor | Dalian | Dalian | Manufacturing | 40 | Equity method | |
| Jing Xue Insulation | Changzhou | Changzhou | Manufacturing | 21.91 | Equity method | |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Name of joint ventures or affiliated companies | Main business address | Registered address | Business nature | Shareholding (%) | Accounting methods | |
| Direct | Indirect | |||||
| Bingshan Metal Technology | Dalian | Dalian | Manufacturing | 49 | Equity method | |
| Songzhi Dayang Refrigeration & Heat Transfer Technology (Dalian) Co., LTD | Dalian | Dalian | Manufacturing | 25 | Equity method | |
The Company assumes the affiliated as significant party either when the investment income from investee presents10% of the parent’s net profit or the proportion of shareholding of the investee’s net asset represents 10% of theparent’s shareholder equity.
1) The Company has the same percentage of shareholding and voting right in joint-venture or affiliated company.
2) The Company doesn’t have affiliated company which has significant influence although being held less than20% voting rights.
3) The Company doesn’t have joint venture or affiliated companies which have no significant influence althoughbeing held 20% or more voting rights.
（2） The key financial information of affiliated companies
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Items | 30-06-2021/2021.01-06 | |||
| Panasonic Compressor | Jing Xue Insulation | Bingshan Metal Technology | Songzhi Dayang Refrigeration & Heat Transfer Technology | |
| Current assets | 1,250,747,128.82 | 1,179,793,108.93 | 370,543,496.54 | 317,505,812.09 |
| Non-current assets | 298,021,485.62 | 222,503,367.11 | 41,903,501.37 | 78,312,618.73 |
| Total assets | 1,548,768,614.44 | 1,402,296,476.04 | 412,446,997.91 | 395,818,430.82 |
| Current liabilities | 383,010,177.63 | 652,284,352.73 | 74,729,737.51 | 86,720,800.09 |
| Non-current liabilities | 26,094,286.57 | 16,207,048.62 | 14,217,165.53 | |
| Total liabilities | 409,104,464.20 | 668,491,401.35 | 74,729,737.51 | 100,937,965.62 |
| Minority interests | 399,413.03 | |||
| Equity to the parent company | 1,139,664,150.24 | 733,405,661.66 | 337,717,260.40 | 294,880,465.20 |
| Proportions of net assets according to the shareholding percentage | 455,865,660.10 | 160,681,846.42 | 165,481,457.60 | 58,976,093.04 |
| Adjusting events | ||||
| —Goodwill | 29,961,491.06 | 19,269,770.94 | ||
| —Unrealized profits of insider trading | ||||
| --Others | -775,149.95 | -57,236.29 | ||
| Book value of equity investment of affiliated companies | 455,090,510.15 | 190,643,337.48 | 184,693,992.25 | 58,976,093.04 |
| Fair value of equity investment of affiliated companies | ||||
| Operating income | 579,289,602.09 | 277,028,549.54 | 231,889,705.55 | 278,843,178.61 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Items | 30-06-2021/2021.01-06 | |||
| Panasonic Compressor | Jing Xue Insulation | Bingshan Metal Technology | Songzhi Dayang Refrigeration & Heat Transfer Technology | |
| Net profit | 66,514,772.97 | 16,637,748.36 | 23,361,750.71 | 15,205,688.28 |
| Net profit from closing | ||||
| Other comprehensive income | ||||
| Total comprehensive income | 66,514,772.97 | 16,637,748.36 | 23,361,750.71 | 15,205,688.28 |
| The current dividends received from joint ventures | 32,773,200.00 | |||
Continued：
| Items | 31-12-2020/2020.01-06 | |||
| Panasonic Compressor | Jing Xue Insulation | Bingshan Metal Technology | Songzhi Dayang Refrigeration & Heat Transfer Technology | |
| Current assets | 1,245,700,871.26 | 858,059,356.79 | 332,989,325.80 | 333,123,113.44 |
| Non-current assets | 309,811,760.93 | 192,469,083.17 | 44,431,510.18 | 84,661,159.92 |
| Total assets | 1,555,512,632.19 | 1,050,528,439.96 | 377,420,835.98 | 417,784,273.36 |
| Current liabilities | 366,066,971.54 | 478,133,992.64 | 63,065,326.29 | 123,961,987.60 |
| Non-current liabilities | 18,343,806.70 | 13,138,693.27 | 14,147,508.84 | |
| Total liabilities | 384,410,778.25 | 491,272,685.91 | 63,065,326.29 | 138,109,496.44 |
| Minority interests | 375,245.30 | |||
| Equity to the parent company | 1,171,101,853.94 | 558,880,508.75 | 314,355,509.69 | 279,674,776.92 |
| Net assets calculated according to the | 468,440,741.58 | 163,260,174.22 | 154,034,199.75 | 55,934,955.38 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Items | 31-12-2020/2020.01-06 | |||
| Panasonic Compressor | Jing Xue Insulation | Bingshan Metal Technology | Songzhi Dayang Refrigeration & Heat Transfer Technology | |
| shareholding proportions | ||||
| Adjusting events | ||||
| —Goodwill | 39,948,654.75 | 19,269,770.94 | ||
| —Unrealized profits of insider trading | ||||
| --Others | -2,621,843.60 | -145,424.54 | ||
| Book value of equity investment of affiliated companies | 465,818,897.98 | 203,208,828.97 | 173,158,546.15 | 55,934,955.38 |
| Fair value of equity investment of affiliated companies | ||||
| Operating income | 498,727,220.29 | 239,740,068.05 | 204,625,692.76 | 278,877,218.96 |
| Net profit | 30,316,392.38 | 7,932,858.81 | 25,242,882.57 | 702,135.41 |
| Net profit from closing | ||||
| Other comprehensive income | ||||
| Total comprehensive income | 30,316,392.38 | 7,932,858.81 | 25,242,882.57 | 702,135.41 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
(3) Summary financial information of insignificant affiliated companies
| Items | 30-06-2021/2021.01-06 | 31-12-2020/2020.01-06 |
| Total book value of investment of affiliated companies | 713,602,837.05 | 733,355,484.16 |
| The total of following items according to the shareholding proportions | ||
| Net profit | -25,310,849.92 | 3,936,888.40 |
| Other comprehensive income | ||
| Total comprehensive income | -25,310,849.92 | 3,936,888.40 |
IX. Risk Related to Financial Instruments
(1) Market risk
1) Exchange rate risk
Most of the Company’s business is located in China, and settled with RMB. But the company definedexchange rate risk of assets, liabilities dominated in foreign currency and future transaction dominated inforeign currency (mainly including USD, JPY, HKD and GBP). The financial department of the companymonitors the company’s foreign currency transaction and the scale of foreign assets and liabilities, anddecreases exchange rate risk. During the current year the company didn’t agree any forward foreignexchange contract or currency swap contract. As at 30 June 2021 the company’s assets and liabilitiesdominated in foreign currency are listed in RMB as following：
| Items | Closing Balance | Opening balance |
| Monetary fund-USD | 7,966,454.17 | 15,790,643.22 |
| Monetary fund-JPY | 152,139.56 | 2,714,504.45 |
| Monetary fund-EURO | 6,048.12 | |
| Monetary fund- GBP | 62,609.89 | 66.32 |
| Receivable - GBP | 1,332,493.86 | 1,331,614.56 |
| Receivable- USD | 35,847,300.59 | 34,739,431.77 |
| Receivable - EURO | ||
| Receivable - JPY | 2,162,789.04 | |
| Payables -USD | 6,120,681.44 | 6,553,114.36 |
| Payables -EURO | 141,791.17 | |
| Payables - JPY | 705,557.54 | |
| Payables -GBP | 334,163.44 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
The Company paid close attention to the effect on FX risk.
2) Interest rate risk
The interest risk of the Group incurred from bank loan, risk of a floating interest rate of financial liabilities that leadto the company facing cash flow interest rate risk, financial liabilities with a fixed interest rate lead to the companyfacing cash flow interest rate risk. The company determined the proportion of fixed interest rate and floating interestrate according the current market circumstance. The Company and Dalian Bingshan Group Co., Ltd. borrowed longterm loan RMB 150,000,000.00 with fixed interest rate.The financial department of the company continuously monitors the interest rates level, and the management wouldmake some adjustment to lower the interest rate risk according to the latest market situation. Climbing interest ratewill increase the cost of newly increased interest-bearing liability and interest expense for unsettled interest-bearingliability at floating rate and have adverse effect on the business performance.The sensitive analysis：
As at 30 June 2021, base on the assumption of interest rate change of 50 BP, the Company’s net profit will increase ordecrease RMB 434.30 thousand Yuan.
3) Price risk
As at 30 June 2021, there will be effect on the price variance for financial assets valued in fair value.
(2)Credit risk
The credit risk of the company comes from monetary fund, notes receivable, accounts receivable, and other accountsreceivable etc. The management made credit policies and monitored changes of this credit exposure.The company's working capital was in bank with higher credit rating, so there was no significant credit risk, norsignificant losses due to the default of other entity. Upper limit policy is adopted to avoid any credit risk fromfinancial institution.The company made relevant policy to control credit risk exposure from receivable, other receivable and notesreceivable. The company assesses the client’s credit background according to the client’s financial performance,possibility of obtaining guarantee from the 3rd party, credit record and other factors such as current market. Thecompany will periodically monitor the credit situation of the client and will take measures such as prompt letter,shorten credit period or cancel the credit to ensure the overall credit risk within the controllable scope.As at 30 June 2021, the top five customers of receivable accounts balance is：130,481,404.00 Yuan.
(3) Liquidity risk
Liquidity risk was referred to the risk of shortage of funds incurred when the enterprise fulfill the obligation ofsettlement by cash or other financial assets. The way to manage the liquidity risk is to ensure enough fund available
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
to fulfill the liability by due date in prevention from unacceptable loss of or reputation damage to the Company. TheCompany periodically analyze the liability structure and expiry date and the financial department of the companycontinued to monitors the short term or long term capital needs to ensure maintain plenty of cash flow. And the sametime they also monitor the condition of bank loan agreements and obtain commitments from banks to provide plentyof funds.The main fund comes from bank loan. By 30
June 2021, the credit limit still available is 473.4 million Yuan and shortterm credit limit available is 473.4 million Yuan.As at 30 June 2021 the Company’s financial assets and financial liabilities in line with non discount cash flow ofthe contracts as following： Currency unity: 10 thousand Yuan
| Closing balance | |||||
| Items | Within 1 year | 1-2 years | 2-5 years | Over 5 years | Total |
| Financial Assets | |||||
| Cash and cash in bank | 32,091.65 | 32,091.65 | |||
| Notes receivable | 16479.05 | 16479.05 | |||
| Accounts receivable | 87,993.08 | 87,993.08 | |||
| Receivables financing | 6,787.75 | 6,787.75 | |||
| Other receivable | 3,840.47 | 3,840.47 | |||
| Contract asset | 9,312.81 | 9,312.81 | |||
| Non-current assets maturing within one year | 3,895.26 | 3,895.26 | |||
| Long-term receivables | 6,584.64 | 6,584.64 | |||
| Other non-current financial assets | 23,930.41 | 23,930.41 | |||
| Financial Liabilities | |||||
| Short-term loan | 23,953.00 | 23,953.00 | |||
| Notes Payable | 31,346.57 | 31,346.57 | |||
| Accounts payable | 96,229.04 | 96,229.04 | |||
| Other payable | 3,844.94 | 3,844.94 | |||
| Employee’s payable | 1,043.29 | 1,043.29 | |||
| Tax payable | 840.49 | 840.49 | |||
| Non-current liabilities due within one year | 4,250.95 | 4,250.95 | |||
| Long-term loan | 15,000.00 | 15,000.00 | |||
| Long-term payables | 868.20 | 868.20 | |||
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
XI. Disclosure of Fair Value
1. Amount and measurement level of the assets and liabilities measured at fair value at the year end
| Items | Fair value at the year end | |||
| First level measurement of fair value | Second level measurement of fair value | Third level measurement of fair value | Total | |
| Financial assets Continuously measured at FV available for sale | ||||
| Other non-current financial assets | 221,177,537.12 | 12,991,658.59 | 234,169,195.71 | |
| (1) Investment by debt instruments | ||||
| (2) Investment by equity instruments | 221,177,537.12 | 12,991,658.59 | 234,169,195.71 | |
| (3) Others | ||||
2. Basis for Market price of first level measurement of fair value
Equity instrument portion of other non-current financial assets is measured at the unadjusted closing quotedprice on stock market on June 30, 2021.
3. For continuous and discontinuous 2
ndlevel of FV, valuation technique adopted and key parameterquantitive and qualitive information.None.
4. For continuous and discontinuous 3
rdlevel of FV, valuation technique adopted and key parameterquantitive and qualitive information.It was valued by cost price.
5. For continuous 3
rdlevel of FV, adjusted information of opening and closing balance and sensitivityanalysis of unobservable parameter.None
6. Assets continuously measured at fair value have switched among different level during the year.None
7. Changes of valuation technique and reasons for changes
None
8. Assets and liability are disclosed at FV rather than measured at FV
NoneXII. Related Parties Relationship and Transactions(I) Related parties relationship
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
1. Parent company and ultimate controller
1) Parent company and ultimate controller
| Parent company | Registered address | Business nature | Registered capital | Shareholding percentage (%) | Voting power percentage (%) |
| Dalian Bingshan Group Co., Ltd. | Dalian | Manufacture | 158,580,000.00 | 20.27 | 20.27 |
Dalian Bingshan Group Co., Ltd. is a sino –foreign joint venture located No.888 Xinan Road, ShahekouDistrict, Dalian, China.The legal representative of Dalian Bingshan Group Co., Ltd. is Mr.Ji Zhijian, and theregistered capital is RMB158.58 million. The registered business operation period is from 3
rd July 1985 to 2
nd
July 2035. The business scope include research, development, manufacture, sales, service and installment ofrefrigeration equipment, cooling and freezing equipment, different size of air-conditioners, petrochemicalequipment, electronic and electronic- control products, home electronic appliance, environment protectequipment and etc. (unless the licenses needed)
2. Subsidiaries
Referring to the content in the Note IX. 1. (1) Organization structure of group company.
3. Affiliated company and joint venture
The information of the affiliated company and joint venture please refers to the note IX. 3 ‘The significantaffiliated company and joint venture’. The company had transactions with related parties during the currentperiod or last period, including:
| Names of the joint ventures or affiliated company | Relationships with the Company |
| Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd | Affiliated company of the Company |
| Panasonic Appliances Cold-chain (Dalian) Co., Ltd | Affiliated company of the Company |
| Panasonic Appliances Compressor (Dalian) Co., Ltd | Affiliated company of the Company |
| Dalian Honjo Chemical Co., Ltd | Affiliated company of the Company |
| Songzhi Ocean Thermal Technology (Dalian) Co., Ltd | Affiliated company of the Company |
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | Affiliated company of the Company |
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Affiliated company of the Company |
| MHI Bingshan Refrigeration (Dalian) Co., Ltd. | Affiliated company of the Company |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Names of the joint ventures or affiliated company | Relationships with the Company |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | Affiliated company of the Company |
| Jiangsu JingXue Insulation Technology Co., Ltd. | Affiliated company of the Company |
| Dalian Jingxue Freezing Equipment Co., Ltd | Subsidiary of affiliated company |
| Shanghai Jingxue Freezing Equipment Co., Ltd | Subsidiary of affiliated company |
| Panasonic Refrigerating System (Dalian) Co., Ltd. | Affiliated company of the Company |
| Dalian Bingshan Metal Technology Co., Ltd. | Affiliated company of the Company |
| Wuhan Sikafu Power Control Equipment Co., Ltd. | Affiliated wholly owned subsidiary of the Company |
| Dalian Bingshan Group Huahuida Finance Leasing Co. LTD | Affiliated company of the Company |
4. Other related parties
| Name of related party | Related party relationship |
| Dalian Bingshan Group Refrigeration Equipment Co., Ltd | Affiliated company of Dalian Bingshan Group |
| Dalian Spindle Cooling Towers Co., Ltd | Affiliated company of Dalian Bingshan Group |
| BAC Dalian Co., Ltd | Affiliated company of Dalian Bingshan Group |
| Linde Hydrogen Refill Station Equipment(Dalian) Co.,Ltd | Affiliated company of Dalian Bingshan Group |
| Dalian Bingshan Part Technology Co., Ltd. | Subsidiary of Dalian Bingshan Group |
| Alphavita Bio-scientific (Dalian) Co., Ltd. | Subsidiary of Dalian Bingshan Group |
| Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | Affiliated company of Subsidiary of Dalian Bingshan Group |
| Dalian Kaierwen science Co.,Ltd | Affiliated company of Dalian Bingshan Group |
| Dalian Bingshan Wisdom Park Co., Ltd. | Affiliated company of Subsidiary of Dalian Bingshan Group |
5. Related Party transactions
1. Purchase of goods, offer and receive labour services etc inter-group transactions
1) Purchase of goods/receive labour services
| Related party | Content | 2021.1-6 | 2020.1-6 |
| Dalian Bingshan Part Technology Co., Ltd. | Purchases of goods | 1,100,719.55 | 1,386,362.74 |
| Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 14,283,046.33 | 12,544,723.07 | |
| Panasonic Appliances Cold-chain (Dalian) Co., Ltd | 4,418,110.43 | 19,945,469.77 | |
| Panasonic Appliances Compressor (Dalian) Co., Ltd | 1,913,993.12 | 1,079,512.31 | |
| Panasonic Refrigerating System (Dalian) Co., Ltd. | 31,810,662.45 | 3,328,792.07 | |
| Dalian Fuji Bingshan Vending Machine Co., Ltd | 1,351,425.38 | 367,523.31 | |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 330,309.73 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Related party | Content | 2021.1-6 | 2020.1-6 |
| Dalian Bingshan Part Technology Co., Ltd. | Purchases of goods | 1,100,719.55 | 1,386,362.74 |
| Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 14,283,046.33 | 12,544,723.07 | |
| Panasonic Appliances Cold-chain (Dalian) Co., Ltd | 4,418,110.43 | 19,945,469.77 | |
| Panasonic Appliances Compressor (Dalian) Co., Ltd | 1,913,993.12 | 1,079,512.31 | |
| Dalian Spindle Cooling Towers Co., Ltd | 562,428.33 | 1,307,075.22 | |
| Songzhi Ocean Thermal Technology (Dalian) Co., Ltd | |||
| BAC Dalian Co., Ltd | 14,119,984.98 | 16,350,334.91 | |
| Dalian Bingshan Metal Technology Co., Ltd | 70,809.38 | ||
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | |||
| Dalian Bingshan Group Refrigeration Equipment Co., Ltd | 5,841,211.35 | 12,654,852.80 | |
| Jiangsu JingXue Insulation Technology Co.,Ltd | 15,144,300.86 | 7,480,038.96 | |
| Wuhan Sikafu Power Control Equipment Co., Ltd. | |||
| Dalian Bingshan Group Huahuida Finance Leasing Co. LTD | 476,917.71 | ||
| Dalian Bingshan Wisdom Park Co., Ltd | 0.00 | 64,991.82 | |
| Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | |||
| Alphavita Bio-scientific (Dalian) Co., Ltd. | |||
| Dalian Bingshan Group Co., Ltd. | |||
| Linde Hydrogen Refill Station Equipment(Dalian) Co.,Ltd | |||
| Total | 91,353,110.22 | 76,604,944.36 |
2) Sales of goods/ labour services provision
| Related party | Content | 2021.1-6 | 2020.1-6 |
| Dalian Bingshan Part Technology Co., Ltd. | Sales of goods | 143,269.75 | 697,339.29 |
| Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 35,529,664.42 | 24,550,377.53 | |
| Panasonic Appliances Cold-chain (Dalian) Co., Ltd | 71,690,961.56 | 61,605,326.43 | |
| Panasonic Appliances Compressor (Dalian) Co., Ltd | 7,600,809.54 | 3,787,087.37 | |
| Panasonic Refrigerating System (Dalian) Co., Ltd. | 19,990,779.80 | 8,265,834.12 | |
| Dalian Fuji Bingshan Vending Machine Co., Ltd | 8,397,453.07 | 12,025,828.33 | |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 31,989.61 | 45,419.30 | |
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 12,830,587.15 | 5,017,942.62 | |
| Dalian Spindle Cooling Towers Co., Ltd | 3,073,360.72 | 322,836.39 | |
| Songzhi Grand Ocean Thermal Technology (Dalian) Co., Ltd. | 614,180.71 | ||
| BAC Dalian Co., Ltd | 17,129,169.19 | 16,935,526.04 | |
| Dalian Bingshan Group Refrigeration Equipment Co., Ltd | 2,498,729.42 | 983,506.99 | |
| Jiangsu JingXue Insulation Technology Co.,Ltd | |||
| Wuhan Sikafu Power Control Equipment Co., Ltd | 491,777.00 | ||
| Dalian Bingshan Group Huahuida Financial Leasing Co.,LTd | 145,152.00 | ||
| Dalian Bingshan Wisdom Park Co., Ltd | 4,281,358.92 | 4,750,730.48 | |
| Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | 285,694.57 | 80,619.45 | |
| Alphavita Bio-scientific (Dalian) Co., Ltd. | 1,290,650.45 | 394,317.76 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Total | 186,872,325.67 | 140,713,801.81 |
2. Assets Lease
Assets rent out
| Lessor | Lessee | Category of assets rent out | 2021.1-6 Lease Income | 2020.1-6 Lease Income |
| The Company | MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | Plant | 1,904,761.90 | 1,904,761.90 |
| The Company | Dalian Bingshan Wisdom Park Co., Ltd | Land/property | 4,095,276.18 | 4,095,276.17 |
| The Company | Panasonic compressor (Dalian) Co., Ltd | Employee dormitory | 22,857.14 | 45,714.28 |
| The Company | Panasonic Refrigeration (Dalian) Co., Ltd. | Employee dormitory | 25,834.86 | 28,183.50 |
| The Company | Dalian JingXue Insulation Technology Co.,Ltd | Plant and office | 502,555.72 | 502,555.72 |
| The Company | Wuhan Sikafu Power Control Equipment Co., Ltd | Plant | 97,732.86 | 106,495.04 |
| The Company | Linde Hydrogen Refill Station Equipment(Dalian) Co.,Ltd | Land/property | 1,961,055.05 |
Assets under lease
| Lessor | Category of assets rent in | Current year Lease fees | Last year Lease fees |
| Dalian Bingshan Group Huahuida Financial Leasing Co. | FA | 10,971,589.76 | 397,771.84 |
Note: The Company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co., Ltd., and rent # 6workshop building located on No. 106 Liaohe East Rd, Dalian Economic and Technology Development Zoneto MHI Bingshan Refrigeration (Dalian) Co., Ltd. The rental area is 15,259.04 square meters, and the rentalterm till 16th July, 2029. The annual rent fee for 2021 is RMB 4 million Yuan.
The Company signed rental contract with Dalian Bingshan Wisdom Park Co., Ltd., and rent out the wholeland and house of the Company’s old plant locating at No. 888, Southwest Road, Shahekou District, Dalianto Dalian Bingshan Wisdom Park Co., Ltd., with rental land area of 167,165.61 square meters and housingarea of 105,652.43 square meters. The lease term is from April 1, 2017 to December 31, 2036. The annualrent fee for 2021 is RMB 8.646 million Yuan.
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
On March 17, 2021, the company signed a lease contract with Linde Hydrogenation Station Equipment(Dalian) Co., LTD., which will lease the 8,700 square meters of plant and office located at No. 106, EastLiaohe Road, Dalian Development Zone to Linde Hydrogenation Station Equipment (Dalian) Co., LTD. Thelease term will be up to December 31, 2030, and the current rent is RMB 2,137,500.
On June 1st, 2017, the company’s subsidiary, Bingshan Lingshe, signed the leasing contract with DalianJingxue Energy Saving Technology Co. Ltd and rented out #7 building of workshop located on No.92,Tieshan West Rd, DDZ, Dalian. The rental area is 3653.76 square metres, and annual rent is RMB 1.08million Yuan in 2021 with the contracted date between June 1st,2017 and May 31st,2022. Bingshan Lingshealso rented out Room 201, #4 building located on No.92, Tieshan West Rd, DDZ, Dalian to Dalian JingxueEnergy Saving Technology Co. Ltd. The rental area is 25square metres, and annual lease premium is RMB15 thousand yuan with the contracted date between June 1st, 2017 and May 31st, 2022.
3) Guarantee with related companies.
The national development fund planned to support the company’s intelligent and green equipment of coldchain and service industry base project, and provide the special fund to the controlling shareholder of thecompany, Bingshan Group.
4) Funds borrow from /lent to related party
| Name of the related party | Amount | Starting date | Ending date | Explanation |
| Dalian Bingshan Group Co., Ltd. | 150,000,000.00 | 2016.03.14 | 2026.03.13 | Project fund investment |
6. Balances with Related party
(1) Accounts receivable due from related parties
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Item | Related party | Closing Balance | Opening Balance | ||
| Book Balance | Bad debt Provision | Book Balance | Bad debt Provision | ||
| Accounts receivable | Panasonic Refrigeration (Dalian) Co., Ltd | 13,546,229.35 | 950,945.30 | 10,217,335.97 | 717,256.99 |
| Accounts receivable | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 44,027,208.91 | 3,090,710.07 | 31,200,329.39 | 2,190,263.12 |
| Accounts receivable | Panasonic Appliances Compressor (Dalian) Co., Ltd | 3,110,093.86 | 218,328.59 | 170,229.87 | 11,950.14 |
| Accounts receivable | Panasonic Refrigeration System (Dalian) Co., Ltd. | 10,407,969.49 | 730,639.46 | 5,009,806.43 | 351,688.41 |
| Accounts receivable | MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 9,051,763.35 | 635,433.79 | 1,381,832.96 | 97,004.67 |
| Accounts receivable | Dalian Spindle Cooling Towers Co., Ltd | 1,830,162.95 | 128,477.44 | 2,099,049.80 | 147,353.30 |
| Accounts receivable | BAC Dalian Co., Ltd | 8,294,833.16 | 582,297.29 | 9,504,843.22 | 667,239.99 |
| Accounts receivable | Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | 7,240,855.23 | 3,675,419.18 | 7,240,855.23 | 3,675,419.18 |
| Accounts receivable | Dalian Bingshan Wisdom Park Co., Ltd | 4,862,268.00 | 34,331.21 | ||
| Accounts receivable | Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | 325,500.00 | 22,850.10 | 140,000.00 | 9,828.00 |
| Accounts receivable | Alphavita Bio-scientific (Dalian) Co., Ltd. | 849,060.12 | 59,604.02 | 796,179.45 | 55,891.80 |
| Accounts receivable | Dalian Fuji Bingshan Vending Machine Co., Ltd | 3,048,771.59 | 214,023.77 | 6,782,271.29 | 476,115.44 |
| Accounts receivable | Wuhan Sikafu Power Control Equipment Co., Ltd | 36,484.00 | 2,561.18 | ||
| Contract assets | Panasonic Refrigeration System (Dalian) Co., Ltd. | 307,000.00 | 21,551.40 | 72,500.00 | 5,089.50 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Contract assets | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 75,000.00 | 12,555.00 | 75,000.00 | 5,265.00 |
| Prepayment | Panasonic Refrigeration (Dalian) Co., Ltd | 540,000.00 | |||
| Prepayment | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 3,938.00 | 3,938.00 | ||
| Prepayment | Panasonic Refrigeration System (Dalian) Co., Ltd. | 403,290.00 | 343,673.53 | ||
| Prepayment | BAC Dalian Co., Ltd | 205,296.00 | |||
| Prepayment | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 421,735.10 | 222,875.00 | ||
| Prepayment | Jiangsu JingXue Insulation Technology Co.,Ltd | 1,021,506.00 | 6,397,458.41 | ||
| Prepayment | Dalian Kaierwen science Co., Ltd | 24,700.00 | 1,445,000.00 | ||
| Prepayment | Dalian Bingshan Wisdom Park Co., Ltd | 114,756.00 | |||
| Prepayment | Dalian Spindle Cooling Towers Co., Ltd | 207,390.00 | |||
| Receivable financing | BAC Dalian Co., Ltd | 12,764,203.50 | 10,501,112.93 | ||
| Receivable financing | Panasonic Refrigeration System (Dalian) Co., Ltd. | 2,452,032.93 | 6,185,494.14 | ||
| Receivable financing | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 15,130,000.00 | 16,320,000.00 | ||
| Receivable financing | Panasonic Refrigeration (Dalian) Co., Ltd | 0.00 | 5,049,112.09 | ||
| Receivable financing | Panasonic Appliances Compressor (Dalian) Co., Ltd | 1,025,446.21 | |||
| Receivable financing | Dalian Fuji Bingshan Vending Machine Co., Ltd | 494,341.48 | |||
| Notes receivable | Panasonic Refrigeration (Dalian) Co., Ltd | 2,348,753.70 | 4,125,319.49 | 289,597.43 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Notes receivable | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 6,400,000.00 | 449,280.00 | ||
| Other receivable | Panasonic Refrigeration System (Dalian) Co., Ltd. | 1,121,009.34 | 73,314.02 |
(2) Accounts Payable due from Related Party
| Item | Related party | Closing Balance | Opening Balance |
| Accounts Payable | Dalian Bingshan Part Technology Co., Ltd. | 1,450,562.24 | 1,988,696.08 |
| Accounts Payable | Panasonic Refrigeration System (Dalian) Co., Ltd. | 1,100,042.93 | 1,207,795.95 |
| Accounts Payable | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 12,490.04 | 7,109,782.64 |
| Accounts Payable | Panasonic Appliances Compressor (Dalian) Co., Ltd | 1,832,555.98 | 1,805,998.72 |
| Accounts Payable | Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 20,028,040.93 | 14,096,385.66 |
| Accounts Payable | Dalian Fuji Bingshan Vending Machine Co., Ltd. | 1,766,726.77 | |
| Accounts Payable | Dalian Fuji Bingshan Vending Machine Sales Co., Ltd. | 414,000.00 | 414,000.00 |
| Accounts Payable | Dalian Spindle Cooling Towers Co., Ltd. | 1,035,984.00 | 695,784.00 |
| Accounts Payable | BAC Dalian Co., Ltd | 26,981,503.45 | 24,377,268.45 |
| Accounts Payable | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 4,729,555.03 | 5,805,008.65 |
| Accounts Payable | Jiangsu JingXue Insulation Technology Co.,Ltd | 5,155,057.78 | 4,542,624.08 |
| Other accounts payable | MHI Bingshan Refrigeration (Dalian) Co., Ltd. | 170,000.00 | 170,000.00 |
| Other accounts payable | Dalian Bingshan Group Co., Ltd | 800,000.00 | |
| Other accounts payable | Jiangsu JingXue Insulation Technology Co.,Ltd | 70,000.00 | |
| Contract liability | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 87,977.15 | 87,977.15 |
| Contract liability | Dalian Fuji Bingshan Vending Machine Co., Ltd. | 1,877,057.65 | |
| Contract liability | Dalian Spindle Cooling Towers Co., Ltd. | 1,769,911.50 | |
| Contract liability | Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 10,752,300.88 | |
| Contract liability | Wuhan Sikafu Power Control Equipment Co., Ltd | 76,228.67 | |
| Notes Payable | Panasonic Appliances Compressor (Dalian) Co., Ltd | 100,000.00 | |
| Notes Payable | Panasonic Appliances Cold Chain (Dalian) Co., Ltd | 1,657,321.00 | 1,657,321.00 |
| Notes Payable | Dalian Spindle Cooling Towers Co., Ltd | 55,000.00 | 150,000.00 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Notes Payable | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 8,404,355.33 | 8,124,711.01 |
| Notes Payable | Jiangsu JingXue Insulation Technology Co.,Ltd | 924,445.75 | |
| Notes Payable | BAC Dalian Co., Ltd | 869,502.00 | |
| Notes Payable | Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 112,010.00 | |
| Notes Payable | Dalian Bingshan Pate Technology Co.,Ltd | 400,000.00 | 1,600,000.00 |
| Long term payable | Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd.. | 19,653,630.85 | 26,779,556.16 |
(II) Related Party Commitment
None
XIII.
1.Contingency
As at 30 June 2021, the Company does not have any other contingencies for disclosure.
2. Commitment
As at 30 June 2021, the Company does not have any other significant commitments.XIV.. Events after the Balance Sheet Date
(1)Contingency
As at 30 June 2021, the Company does not have any other contingencies for disclosure.
(2)Commitment
As at 30 June 2021, the Company does not have any other significant commitments.
(3)Other event
Except the subsequent event disclosed above, the Company has no other significant subsequent event.XV. Other Significant Events
1. Debt Restructuring
| Restructuring | Book Value of debt | Gain on debt restructuring | Capital increase |
| Debts settled by asset | |||
| Debt transfer into equity instrument | |||
| Amendment to other debt condition | 24,563,327.30 | 531,903.00 | |
| Hybrid restructuring |
Note: Through friendly negotiation, the Company's subsidiary Wuhan New World Refrigeration IndustryCo., LTD and wuhan Kaiping Industrial Equipment Co., LTD and other suppliers have reached an agreementthat the supplier will voluntarily reduce part of the total debts of Wuhan New World Refrigeration IndustryCo., LTD by RMB 531,903.00.
2. Segment Information
The management of the Company divided the Company into 3 segments based on the geographic area:
Northeast China, Central China, and East China. The Northeast is the Company’s general headquarters and
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
the registered address. The Central is the subsidiary of the Company, Wuhan New World RefrigerationIndustrial Co., Ltd, Wuhan Lanning Energy Technology Co., Ltd, and Chengdu Bingshan RefrigerationEngineering Co., Ltd. The East is the subsidiary of the Company, Ningbo Bingshan Air-conditioningRefrigeration Engineering Co., Ltd.
(1) The basis and accounting policies of reporting segments
The internal organization structure, management requirements and internal report scheme are the
determination basis for the Company to set the operating segments. The segments are those satisfiedthe following requirements.
1).The segment can generates revenue and incur expenses.
2).The management personnel can regularly evaluate the operation results of segments and allocate
resource ,assess its performance .
3).The financial situation, operation results, cash flow and other accounting information of segments
can be acquired.The Company confirms the report segments based on the operating segments. The transfer price amongsegments is set base on the market price. The assets and related expenses in common use are allocated todifferent segments based on their proportion of revenue.
(2)The financial information of reporting segments
Amount unit ：Ten thousand yuan
| Items | 30-06-2021/2021.01-06 | ||||
| Northeast China | Central China | East China | Offset | Total | |
| 1 Operating income | 122,879.28 | 12,410.86 | 641.77 | -26,503.35 | 109,428.56 |
| 2 Cost | 109,698.99 | 10,824.29 | 541.72 | -26,024.53 | 95,040.48 |
| Impairment loss on assets | 18.50 | -120.21 | 0.06 | -101.66 | |
| Impairment loss on credit | -779.83 | -10.03 | 26.31 | -763.54 | |
| Depreciation and amortization | 3,638.93 | 417.77 | 4,056.69 | ||
| 3 Investment income from associates and joint venture | 2,215.72 | -107.14 | 2,108.58 | ||
| 4 Operating profits(loss) | -114.17 | -1,303.85 | -21.12 | -1,439.14 | |
| 5 Income tax | 306.12 | -61.22 | 6.59 | 251.50 | |
| 6 Net profit(loss) | -420.29 | -1,242.64 | -27.71 | -1,690.64 | |
| 7 Total assets | 643,064.85 | 53,425.05 | 1,773.74 | -106,197.19 | 592,066.45 |
| 8 Total liabilities | 241,649.44 | 35,776.18 | 912.58 | -31,323.00 | 247,015.21 |
XVI. Notes to the Main Items of the Financial Statements of Parent Company
1. Accounts receivable
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
(1) Accounts receivable category
| Item | Closing Balance | |||||
| Booking balance | Provision | Booking balance | ||||
| Amount | % | Amount | % | |||
| Accounts receivable with significant individual amount and separate bad debt provision | 466,351,893.54 | 100.00 | 69,268,038.34 | 14.85 | 397,083,855.20 | |
| Accounts receivable with bad debt provision based on the characters of credit risk portfolio | ||||||
| Accounting age as characters | 301,803,732.77 | 35.28 | 69,268,038.34 | 22.95 | 232,535,694.43 | |
| Related party within consolidation scope | 164,548,160.77 | 64.72 | 164,548,160.77 | |||
| Accounts receivable with insignificant individual amount and separate bad debt provision | ||||||
| Total | 466,351,893.54 | 100.00 | 69,268,038.34 | 14.85 | 397,083,855.20 | |
(Continued)
| Item | Opening Balance | ||||
| Booking balance | Provision | Booking balance | |||
| Amount | % | Amount | % | ||
| Accounts receivable with significant individual amount and separate bad debt provision | 474,709,875.38 | 100.00 | 66,083,949.47 | 13.92 | 408,625,925.91 |
| Accounts receivable with bad debt provision based on the characters of credit risk portfolio | |||||
| Accounting age as | 250,449,415.13 | 52.76 | 66,083,949.47 | 26.39 | 184,365,465.66 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Item | Opening Balance | ||||
| Booking balance | Provision | Booking balance | |||
| Amount | % | Amount | % | ||
| characters | |||||
| Related party within consolidation scope | 224,260,460.25 | 47.24 | 224,260,460.25 | ||
| Accounts receivable with insignificant individual amount and separate bad debt provision | |||||
| Total | 474,709,875.38 | 100.00 | 66,083,949.47 | 13.92 | 408,625,925.91 |
| Items | Closing Balance | ||
| Booking balance | Provision | % | |
| Expected credit losses within 1 year | 173,207,981.34 | 12,159,200.29 | 7.02 |
| Expect credit losses of 1-2 years | 51,811,899.56 | 8,673,311.99 | 16.74 |
| Expect credit losses of 2-3 years | 24,026,524.46 | 7,407,377.49 | 30.83 |
| Expect credit losses of 3-4 years | 12,780,988.18 | 6,304,861.47 | 49.33 |
| Expect credit losses of 4-5 years | 18,861,946.60 | 13,608,894.47 | 72.15 |
| Expect credit losses more than 5 years | 21,114,392.63 | 21,114,392.63 | 100.00 |
| Total | 301,803,732.77 | 69,268,038.34 | -- |
(1)The bad debt provisions of accounts receivable in the portfolio is accrued under accounting aging analysismethod:
| Aging | Closing Balance |
| Within1 year | 337,756,142.11 |
| 1 to 2 years | 51,811,899.56 |
| 2 to 3 years | 24,026,524.46 |
| More than 3 years | 52,757,327.41 |
| 3 to 4 years | 12,780,988.18 |
| 4 to 5 years | 18,861,946.60 |
| More than 5 years | 21,114,392.63 |
| Total | 466,351,893.54 |
(2) Bad debt provision accrued and reversed (withdraw)
| Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/ reversed | Written-off | |||
| Bad debt provision | 66,083,949.47 | 3,728,098.72 | 40,000.00 | 584,009.85 | 69,268,038.34 |
| Total | 66,083,949.47 | 3,728,098.72 | 40,000.00 | 584,009.85 | 69,268,038.34 |
(3) No accounts receivable written off in current period.
| Item | Written off amount |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Item | Written off amount |
| Receivable actually written off | 584,009.85 |
(4) The top five significant accounts receivable categorized by debtors
| Company | Closing Balance | % of the total AR | Closing Balance of Provision |
| Xinyi Yuanda Construction and Installation Engineering Co., Ltd. | 32,748,744.00 | 7.02 | 25,281,907.38 |
| Qingcheng Zhongyi Energy Co., Ltd | 26,600,000.00 | 5.70 | 4,452,840.00 |
| Ningxia Wangwa Coal Co., Ltd. | 13,631,495.12 | 2.92 | 4,753,451.22 |
| Beidahuang Taihua Organic Food Co. Ltd | 9,615,000.00 | 2.06 | 2,964,304.50 |
| Guangzhou R&F Real Estate Co., LTD | 5,598,148.15 | 1.20 | 2,761,566.48 |
| Total | 88,193,387.27 | 18.90 |
2. Other Receivables
| Item | Closing Balance | Opening Balance |
| Interest receivable | 681,304.44 | 46,879.68 |
| Dividend receivable | 8,430,838.28 | |
| Other receivable | 5,913,239.35 | 41,136,517.46 |
| Total | 15,025,382.07 | 41,183,397.14 |
2.1 Interest receivable
(1) Interest receivable category
| Item | Closing Balance | Opening Balance |
| Interest on term deposits | 681,304.44 | 46,879.68 |
| Interest on bank financial product | ||
| Total | 681,304.44 | 46,879.68 |
1.2 Dividend receivable
| Item | Closing Balance | Opening Balance |
| Panasonic Refrigeration (Dalian) Co., Ltd | 640,000.00 | |
| Dalian Honjo Chemical Co., Ltd | 561,233.80 | |
| Guotai Junan Securities Co., Ltd. | 7,229,604.48 | |
| Total | 8,430,838.28 |
2.3 Other receivable
(1) Other receivables categorized by nature
| Nature | Closing Balance | Opening Balance |
| Equity transfer fund | 0.00 | 36,263,700.00 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Deposits | 2,438,302.00 | 3,640,939.00 |
| Petty cash | 733,627.61 | 557,035.76 |
| Guarantee deposits | 6,362,534.71 | 5,697,595.21 |
| Total | 9,534,464.32 | 46,159,269.97 |
(2) Provision for bad debts
| Provision for bad debts | The first phase | The second phase | The third phase | Total |
| Expected credit losses in the next 12 months | Expected Credit Loss for the duration (No Credit Devaluation) | Expected Credit Loss for the duration (Credit impairment has occurred) | ||
| Balance on January 1, 2021 | 5,022,752.51 | 5,022,752.51 | ||
| The balance of January 1, 2021 in the current period | —— | —— | —— | —— |
| Provision for bad debts | -1,401,527.54 | -1,401,527.54 | ||
| Balance on June 30, 2021 | 3,621,224.97 | 3,621,224.97 |
The bad debt provisions of other receivables in the portfolio is accrued under accounting aging analysismethod
| Aging | Closing Balance |
| Within 1 year | 3,623,574.61 |
| 1 to 2 years | 1,328,441.00 |
| 2 to 3 years | 968,247.71 |
| More than 3 years | 3,614,201.00 |
| 4 to 5 years | 2,415,636.00 |
| More than 5 years | 1,198,565.00 |
| Total | 9,534,464.32 |
(3) Bad debt provision accrued and reversed (withdraw) in the period.
| .Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/reversed | Written-off | |||
| Bad debt provision | 5,022,752.51 | 1,401,527.54 | 3,621,224.97 | ||
| Total | 5,022,752.51 | 1,401,527.54 | 3,621,224.97 | ||
(4) Other receivables from the top 5 debtors
| Name | Category | Closing Balance | Aging | % of the total OR | Closing Balance of Provision |
| Dalian Huali Coating Equipment Co., Ltd. | Outstanding debtor | 1,650,000.00 | 4-5 years | 17.31 | 1,170,015.00 |
| Dalian Delta HK China gas Co., Ltd. | Security deposit | 1,100,000.00 | Over 5 years | 11.54 | 1,100,000.00 |
| Xinjiang Oriental Hope New Energy Co., LTD | Security deposit | 1,000,000.00 | Within 1 year | 10.49 | 65,400.00 |
| Dalian Changde Welding Co.,Ltd | Outstanding debtor | 765,636.00 | 4-5 years | 8.03 | 542,912.49 |
| Xinjiang Tbea Electrical Engineering Project Management Co., LTD | Security deposit | 400,000.00 | Within 1 year | 4.20 | 26,160.00 |
| Total | 4,915,636.00 | 51.57 | 2,904,487.49 |
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
3. Long-term equity investments
Category of long-term equity investments
| Item | Closing Balance | Opening Balance | ||||
| Closing Balance | Provision | Book Value | Opening Balance | Provision | Book Value | |
| Investment of subsidiaries | 687,496,652.08 | 687,496,652.08 | 687,496,652.08 | 687,496,652.08 | ||
| Investment of affiliates and JV | 1,603,006,769.97 | 1,603,006,769.97 | 1,592,881,328.96 | 1,592,881,328.96 | ||
| Total | 2,290,503,422.05 | 2,290,503,422.05 | 2,280,377,981.04 | 2,280,377,981.04 | ||
(1) Investments of subsidiaries
| Subsidiaries names | Opening Balance | Increase | Decrease | Closing Balance |
| Dalian Bingshan Group Construction Co., Ltd | 193,749,675.77 | 193,749,675.77 | ||
| Dalian Bingshan Group Sales Co., Ltd | 20,722,428.15 | 20,722,428.15 | ||
| Dalian Bingshan Air-Conditioning Equipment Co., Ltd | 36,506,570.00 | 36,506,570.00 | ||
| Dalian Bingshan Guardian Automation Co., Ltd. | 6,872,117.80 | 6,872,117.80 | ||
| Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd. | 59,356,051.19 | 59,356,051.19 | ||
| Dalian Universe Thermal Technology Co., Ltd. | 48,287,589.78 | 48,287,589.78 | ||
| Wuhan New World Refrigeration Industrial Co., Ltd | 184,674,910.81 | 184,674,910.81 | ||
| Bingshan Technical Service （Dalian） Co.,Ltd. | 22,024,000.00 | 22,024,000.00 | ||
| Dalian New Meica Electronics Co., Ltd. | 43,766,243.72 | 43,766,243.72 | ||
| Dalian Bingshan Engineering & Trading Co., Ltd. | 71,537,064.86 | 71,537,064.86 | ||
| Total | 687,496,652.08 | 687,496,652.08 |
(2) Joint ventures& affiliated companies
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
| Investee | Beginning balance | Increase/Decrease | Ending balance | at year end | |||||||
| Increased | Decreased | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced | Provision for impairment of the current period | Others | ||||
| 1. Affiliated companies | |||||||||||
| Panasonic Appliances Air-conditioning and Refrigeration (Dalian) Co., Ltd. | 172,549,678.96 | -14,304,960.25 | 1,280,000.00 | 156,964,718.71 | |||||||
| Panasonic Appliances Cold-chain (Dalian) Co., Ltd | 274,533,413.30 | 661,139.89 | 2,797,849.22 | 272,396,703.97 | |||||||
| Panasonic Appliances Compressor (Dalian) Co., Ltd | 465,818,897.98 | 22,044,812.17 | 32,773,200.00 | 455,090,510.15 | |||||||
| Dalian Honjo Chemical Co., Ltd | 8,746,197.03 | 355,303.63 | 561,233.80 | 8,540,266.86 | |||||||
| Songzhi Ocean Thermal Technology (Dalian) Co., Ltd | 55,934,955.38 | 3,041,137.66 | 58,976,093.04 | ||||||||
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | 2,121,951.69 | -37,039.35 | 2,084,912.34 | ||||||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd | 184,454,138.22 | -9,141,058.73 | 175,313,079.49 | ||||||||
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 14,891,119.67 | 1,697,477.05 | 16,588,596.72 | ||||||||
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 43,546.35 | -43,520.00 | 26.35 | ||||||||
| Jiangsu JingXue Insulation Technology Co.,Ltd | 203,208,828.97 | 3,558,478.80 | -16,123,970.29 | 190,643,337.48 | |||||||
| Panasonic Refrigeration System (Dalian) Co., Ltd. | 37,420,055.26 | 1,840,988.29 | 3,895,484.27 | 35,365,559.28 | |||||||
| Bingshan Metal Technical Service （Dalian） Co.,Ltd. | 173,158,546.15 | 11,535,446.10 | 184,693,992.25 | ||||||||
| Dalian Bingshan Group Huahuida Finance Leasing Co. LTD | 45,400,000.00 | 948,973.33 | 46,348,973.33 | ||||||||
| Total | 1,592,881,328.96 | 45,400,000.00 | 38,845,178.59 | -16,123,970.29 | 41,307,767.29 | 1,603,006,769.97 | |||||
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2021Semiannual Report
4. Operating revenue and cost
| Item | 2021.01-06 | 2020.01-06 | ||
| Revenue | Cost | Revenue | Cost | |
| Revenue from main operation | 385,929,620.18 | 336,469,117.09 | 401,973,100.61 | 346,387,083.54 |
| Revenue from other operation | 20,551,816.12 | 13,934,076.36 | 19,564,567.55 | 13,444,729.68 |
| Total | 406,481,436.30 | 350,403,193.45 | 421,537,668.16 | 359,831,813.22 |
5. Investment income
| Items | 2021.01-06 | 2020.01-06 |
| Income from long-term equity investments under cost method | 8,185,883.28 | |
| Income from long-term equity investments under equity method | 22,157,178.59 | 17,295,970.66 |
| Income from holding of other non-current financial assets | 7,229,604.48 | 6,126,903.12 |
| Total | 29,386,783.07 | 31,608,757.06 |
XVII. Supplementary Information to the Financial Statements
1. Non-operating profit or loss
| item | Amount |
| Disposal gains and losses of non-current asset | 8,393.93 |
| Government subsidies included in current profit or loss | 914,454.99 |
| Income from changes in fair value during the period of holding financial assets available for sale and income from disposal of financial assets available for sale | -5,034,903.12 |
| Other non-operating revenue or expense | 1,377,409.33 |
| Influence on income tax | -370,653.73 |
| Influence on minority shareholders | 337,544.26 |
| Total | -2,701,535.40 |
2. Return on equity and earnings per share
| Profit of report period | Weighted average return on net assets (%) | Earnings per share (EPS) | |
| EPS | Diluted EPS | ||
| Net profit attributable to shareholders of parent company | -0.43% | -0.017 | -0.017 |
| Net profit after deducting non-recurring gains and losses attributable to shareholders of parent company | -0.36% | -0.014 | -0.014 |