Bingshan Refrigeration & Heat Transfer
Technologies Co., Ltd.
2020 Semiannual Report
August, 2020
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 "Discussion and Analysis of the Business situation" in Section 4of this Semiannual Report describes major risks , including the risk ofincreasing market competition risk, the market promotion for new productand new technology slow and the accounts receivable is on the high side. Seethe related sections for the countermeasures to be taken by the Company.
The Company plans to distribute no cash dividends, no bonus shares andconvert no reserve fund into capital stock.
Chairman of the Board of Directors of the Company Mr. Ji Zhijian,Financial Majordomo Mr. Ma Yun, and the head of Accounting DepartmentMrs. Wang Jinxiu hereby confirm that the financial report of thesemi-annual report is true and complete.
This report is written respectively in Chinese and in English. In the event ofany discrepancy between the two above-mentioned versions, the Chineseversion shall prevail.
CONTENTS
Section 1 Important Notice, Table of Contents, and Definitions ...... 2
Section 2 About the Company ...... 5
Section 3 The Company's Business Profile ...... 8
Section 4 Business Discussion and Analysis ...... 9
Section 5 Important Issues ...... 15
Section 6 Change in Share Capital and Shareholders' Information ...... 18
Section 7 Information on Preferred Stock ...... 20
Section 8 Information on the Convertible Corporate Bonds ...... 21
Section 9 Information on the Company’s Directors, Supervisors, and Senior Managers ...... 22
Section 10 Corporate Bonds ...... 23
Section 11 Financial Report ...... 24
Section 12 Reference Documents ...... 125
Definitions
Defined item Stands for
MeaningReporting period Stands for From Jan. 1, 2020 to Jun. 30, 2020The Company, this Company
Stands for Bingshan Refrigeration & Heat Transfer Technologies Co.,Ltd.Wuxin Refrigeration Stands for
Wuhan New World Refrigeration Industry Co., Ltd., one of the subsidiaries of
the Company where the Company holds 100% of its shares.
Wuhan New World Refrigeration Industry Co., Ltd., one of the subsidiaries ofBingshan Engineering
Company
Stands for
Dalian Bingshan Group Engineering Co., Ltd.,one of the subsidi
| Bingshan Engineering | aries 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
Bingshan Technology Service (Dalian) Co., Ltd. one of the subsidiaries of thePanasonic Appliances Compressor (Dalian) Co., Ltd. one of the
associated
| Panasonic Appliances Compressor (Dalian) Co., Ltd. one of the | |
| companies of the Company, where the Company holds 40% of its | |
shares.Panasonic Cold-Chain Stands for
Panasonic Appliances Cold-
associated
| Chain (Dalian) Co., Ltd. one of the | |
| companies of the Company, where the Company holds 40% of its | |
shares.
System
Stands for
Panasonic RefrigeratingPanasonic Appliances Refrigerating System (Dalian) Co., Ltd., one of the
associated companies of the Company, where the Company holds 20% of it
| Panasonic Appliances Refrigerating System (Dalian) Co., Ltd., one of the | |
| s | |
sharesFuji-Bingshan Stands for
Dalian Fuji-
associated
| Bingshan Vending Machine Co., Ltd., one of the | |
| companies of the Company, where the Company holds 49% of its | |
shares.Bingshan Metal Technology
Stands for
Dalian Bingshan Metal Technology Co.,Ltd., one of the associated
companies
of the Companies, where the Company holds 49% of its shares.JingXue Co.,Ltd. Stands for
companiesJiangsu JingXue Insulation Technology Co.,Ltd., one of the
associated
| Jiangsu JingXue Insulation Technology Co.,Ltd., one of the | |
| companies of the Company, where the Company holds 29.212% of | |
its shares.Bingshan Wisdom Stands forDalian Bingshan Wisdom Park Co., Ltd., an indirect joint venture companyHua Hui Da Stands for
Dalian Bingshan Group Hua Hui Da Financial Leasing Co., Ltd.,an indirect
joint venture company
Systems
Stands for
Dalian Fuji Bingshan Control Systems Co., Ltd., an indirect joint venture
companyKelvins Stands forDalian Kelvins Technology Co., Ltd., an indirect joint venture company
Section 2 About the Company
I. Company information
Short form of the stock Bingshan; Bingshan BStock code 000530; 200530Listed stock exchange Shenzhen Stock ExchangeLegal 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 nameBingshan Refrigeration & Heat Transfer Technologies Co., Ltd.
Abbreviation of legal English nameBingshan
Legal representative Ji Zhijian
II. Contact persons and information
Secretary of the Board of Directors Authorized representative for securities affairs
Name Song Wenbao Du YuAddress
No.106, Liaohe East Ro
ad, Dalian Economic and
Technological Development Zone
| ad, Dalian Economic and | No.106, Liaohe East Road, Dalian Economic and |
Technological Development ZoneTel. 0411-87968130 0411-87968822Fax 0411-87968125 0411-87968125E-mail 000530@bingshan.com 000530@bingshan.com
III. Other situations
1. Contact of company
If the registered address, office address and zip code, website, email box of the Company had any change in thereport period
√ Applicable □Not applicable
With the Resolution of the 1
st
Extraordinary Shareholders’ General Meeting of 2020 and the permission ofMarket Supervision and Administration Department, the name of the Company has changed to be “BingshanRefrigeration & Heat Transfer Technologies Co.,Ltd. ”instead of “Dalian Refrigeration Co., Ltd.” from March17th ,2020。And with the resolution of 8th Meeting of 8th Session of the Board and the permission of ShenzhenStock Exchange, the Company's securities abbreviation for A- share has changed from“ Daleng Gufen” to“Bingshan”, the Company's securities abbreviation for B-share has changed from “Daleng B” to “Bingshan B”,which has been effected on March 24th ,2020.The Company's Stock Code has not changed. After the namechanged, the Company website has changed from www.daleng.cn to www.bingshan.cn since 1 April, 2020.
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-annual
report of the Company is prepared had no change in the report period. Refer to the Annual Report for 2019 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 Yuan2020.1-6 2019.1-6
Increase/decrease compared with
the same period of last yearOperating revenue
873,403,414.46
1,075,729,240.57
-18.81%
Net profit attributable to shareholders of listed companies
-23,604,345.52
108,373,919.30
-121.78%
Net profit belonging to the shareholders of listed companies
after the deduction of non-recurring profit and loss
-8,256,994.99
Net profit belonging to the shareholders of listed companies
35,262,178.97
-123.42%
Net cash flow from operating activities
-78,350,688.75
-77,776,037.88
-0.74%
Basic earnings per share
-0.028
0.127
-122.05%
Diluted earnings per share
-0.028
0.127
-122.05%
Weighted average return on net asset yield
-0.70%
3.16%
Decrease 3.86 percentage points
2020.6.30 2019.12.31
Increase/decrease compared with
2019.12.31Total assets
5,612,514,325.40
5,525,503,256.26
1.57%
Owner's equity attributable to shareholders of listed companies
3,330,664,309.16
3,379,565,029.89
-1.45%
Net profit attributable to parent company decreased and slipped into loss significantly y-o-y , mainly due to 1.in thesame period of last year, there was a large amount of non-recurring gains,following:(1) The Gain from change infair value of Guotai Junan has been recorded into the current profit and loss since Jan. 1, 2019, which is about 40.46million yuan;(2) During the same period of last year, the Company's exchangeable corporate bondholdersexchanged a total of 8.3889 million shares, increasing the current investment income about 40.57 million yuan.
2.During the reporting period, there are large amount of non-recurring losses, mainly due to that the negative changein fair value of Guotai Junan has made the Company loss about 16.42 million yuan first half-year.3.During the firsthalf of 2020, with the affection of the 2019-nCo, the profit of the Company and associated companies has decreasedalong with the operating revenue.
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
itemAmount
Disposal gains and losses of non-current asset 10,788.53
Government subsidies included in current profit or loss
151,538.60
Disposal gains from investments on financial assets available for sale, and ga
ins
-19,323,309.84
| ins | |
from fair value change of other non-current financial assetsOther non-operating revenue or expense 1,186,167.34
Influence on income tax -2,681,482.01
Influence on minority shareholders 54,017.17
Total -15,347,350.53
Section 3 The Company's Business Profile
I. The Company’s Main business during the reporting period
The Company revolves around hot and cold businesses, is committed to developing industrial refrigeration andheating business field, commercial refrigeration and refrigeration business field, air-conditioning and environmentbusiness field, core parts business field, engineering and service business field have covered the key areas of thecold and hot industrial chain and forged the complete cold and hot industrial chain in China.
II. Major changes in main assets
1. Major changes in main assets
Main assets Explain for major changesNotes receivable
Significantly decreased compared to the beginning of the year, mainly due to p
current period is reduced.Dividend receivable
Significantly increased compared to the beginning of the year, mainly due to the d
ayment by bills inividends
receivable before maturity.
2. The main overseas assets
□ Applicable √ Not applicable
III. Analysis of core competence
The 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.
Section 4 Business Discussion and Analysis
I. Summary
In the first half of 2020, the Company continued to focus on "exploitation, pragmatism, collaboration andaction" to maintain strategic momentum, strengthen development confidence, focus on hot and cold mainbusinesses, deepen market segmentation, continuously improve and innovate, and strive to achieve majorbusiness objectives. In the first half of 2020, the Company achieved operating income of 873,403 thousandyuan, a year-on-year decrease of 18.81%; achieved net profit attributable to shareholders of the Company of-23,604 thousand yuan. Net profit decreased and slipped into loss significantly y-o-y, mainly due to: in thesame period of last year, there were large amount of non-recurring gains; during the reporting period, therewere large amount of non-recurring losses; during the reporting period, with the affection of the 2019-nCo, theprofit has decreased along with the operating revenue for the Company and associate companies.
During the reporting period, the Company made steady progress and operated prudently. The prevention andcontrol of the epidemic situation was carried out pragmatically, the production and operation were stable andorderly, and the sales and orders steadily rebounded. The Company undertook the "Liaoning Province NovelCorona virus Infection Pneumonia Centralized Treatment Center Project and the Sixth Hospital of DalianNegative Pressure Ward Reconstruction Project", contributing professional strength to the prevention andcontrol of the epidemic. We optimized business and collaboration systems, implemented matrix management,and the technology and market were integrated more closely. We also renamed the Company, unified thetrade name and trademark, enhanced the brand value of Bingshan, and highlighted the Company’s hot andcold main business.
During the reporting period, Wuhan New World Refrigeration, a subsidiary of the Company, faced theimpact of the epidemic and resumed work in an orderly manner. It overcame many difficulties such as travellimitation and isolation, and assisted the key project of country's poverty alleviation, i.e. the refrigerationsystem complete installation project for developing the collective economic poultry industry at theimpoverished villages of Moyu County, Hetian District, Xinjiang, to ensure the feeding and production onschedule. Comprehensive solutions such as natural gas liquefaction, industrial waste heat utilization, andcoal mine shaft antifreeze were further optimized.
During the reporting period, Bingshan Engineering Company, a subsidiary of the Company, establishedseveral professional work departments to further develop its superior market segment. In the food cold chainmarket, it gave full play to the first-class qualification advantages, integrated resources, established strategiccooperation with major customers, won bids for carbon dioxide projects, corn deep processing projects,central kitchen projects, ammonia system renovation projects and other representative projects; in thepetrochemical market, it continued to consolidate its inherent advantages; in the beer and dairy market, keycustomers have been well maintained, and orders have increased significantly on a year-on-year basis; in thenatural gas liquefaction market, it has achieved new developments, and LNG engineering general contractingprojects have received orders again; in the ship market, R717, R507, and R404 refrigerant refrigerating unitshave been successfully launched, the installation of the freezing station for large air-cooled cold-storageboats that broke the monopoly of foreign ships was completed.
During the reporting period, Bingshan Service Company, the Company's subsidiary, accelerated digitalapplications through online and offline two-wheel drive. Bingshan Shared Service Platform has been built inan orderly manner and has provided services for many Bingshan-funded enterprises. Through producttraceability, APP one-click repair service, 4S regional security management, remote operation andmaintenance services, computer room hosting and transportation and other system solutions, it caneffectively solve the customers’ pain points.
During the reporting period, Panasonic Appliances Compressor, an associate company of the Company,continued its transformation. Through the reform of the marketing system and the construction of productinformatization, the focus of sales has shifted from large customers to small and medium customers. Itestablished a quality center testing center to integrate testing resources and improve the efficiency of qualitymanagement. The horizontal scroll compressor obtained the first batch of orders and officially entered theEuropean electric bus market.
During the reporting period, Panasonic Appliances Cold Chain, an associate company of the Company,focused on the new retail and new catering markets. Aiming at the novel corona virus epidemic, urgedconsumption patterns to change business opportunities, focused on core products such as refrigerating smartself pick-up cabinets, heating smart dining cabinets, and refrigerating smart vending cabinets, optimizedcontactless distribution/sales solutions, and further developed IoT smart cabinets in China and internationalmarkets.
During the reporting period, Panasonic Appliances Refrigeration, the Company's associated company,consolidated and improved its engineering competitiveness. It transformed from regional marketing to fieldmarketing, tilted towards key industries, deeply explored market segment, the engineering orders increasedsignificantly on a year-on-year basis. The full life cycle cold chain engineering network cloud platform withintegrated solutions as the core was built in an orderly manner, and digital applications were solidlypromoted.
During the reporting period, Fuji Bingshan, an associate company of the Company, continued to promote theintelligent and diversified development of its products. The newly developed multi-function intelligentaddressing mini supermarket expanded the sales function of multiple categories. Fully automatic freshlybrewed coffee machines, vending machines selling masks, and fresh machines placed in the community haveall been officially launched.
During the reporting period, Jingxue Company, an associate company of the Company, as an enterpriseunder review for the initial public offering on the ChiNext of the China Securities Regulatory Commission,submitted relevant applications to the ChiNext, which began the implementation of the registration systempilot, and has been officially accepted by the Shenzhen Stock Exchange on July 1, 2020, and is currentlyunder review.
During the reporting period, the Company actively promoted the cultivation and incubation of emergingbusinesses while transforming and upgrading its original businesses. Bingshan Wisdom Park Company, theCompany's indirect associate company, cooperated in the construction of the old factory's intelligentindustrial park, enriched humanistic feelings, and focused on intelligent innovation; Hua Hui Da actively
expanded financing channels and enlarged business scale around the high-quality customers of the hot andcold businesses of Bingshan; Fuji Bingshan Control helped the smart energy management of Bingshan,steadily promoted demonstration customers in market segments; Kelvins Technology implemented thegrowth strategy of software driving hardware, energizing the hot and cold business with innovativetechnology.
II. Analysis of main business
See the related content “Section 4 Business situation discussion and analysis” the “Summary”
Main financial data variations as compared to the same period of last year
Monetary unit: RMB YuanReport period
Same period of
last year
Increase or decreasefrom the same period
of last year
Reason for variationOperating revenue 873,403,414.46
1,075,729,240.57
-18.81%
Operating cost 748,075,096.12
919,759,979.86
-18.67%
Selling and distribution expenses
35,446,794.72
53,096,818.62
-33.24%
Sales business is blocked, salesexpenses are reduced.Administrative expenses 70,770,126.86
85,942,095.21
-17.65%
Financial expenses 10,061,328.07
5,467,587.19
84.02%
Short-term borrowing increases,and interest costs increase.Income tax -1,492,259.17
13,766,605.84
-110.84%
the Company's exchangeable
corporate exchanged for shares.Accrue income tax expense in thesame period last yearR&D expenses 24,715,021.28
28,549,864.17
-13.43%
Net cash flow coming from
operating activities
-78,350,688.75
| Net cash flow coming from | ||
-77,776,037.88
-0.74%
Net cash flow coming from
investment activities
9,300,097.50
-14,103,555.98
165.94%
Investment in new plant areadecreased during this period
Net cash flow coming from
fund-raising activities
36,370,952.10
| Net cash flow coming from | ||
1,327,544.30
2,639.72%
Company paid a r
In the same period last year, theestricted stock
incentive buyback.
estricted stockNet increase in cash and cash
equivalents
-32,637,366.94
Net increase in cash and cash
-90,285,250.23
63.85%
Sales income and costs
Report period Same period of last yearIncrease or decrease
from the same period
of last yearAmount
Proportion to the
Sales costs
Amount
Proportion to the
Sales costsTotal sales income
from the same period
873,403,414.46
100%
1,075,729,240.57
100%
-18.81%
By industryRefrigeration andair-conditioningequipment
857,035,486.66
98.13%
1,052,236,172.60
97.81%
-18.55%
Others16,367,927.80
1.87%
23,493,067.97
2.19%
-30.33%
By productRefrigeration andair-conditioningequipment
857,035,486.66
98.13%
1,052,236,172.60
97.81%
-18.55%
Others16,367,927.80
1.87%
23,493,067.97
2.19%
-30.33%
By regionNortheast China755,576,463.23
87.78%
916,385,518.53
85.19%
-17.55%
Central China111,618,986.85
11.39%
150,700,485.95
14.01%
-25.93%
East China6,207,964.38
0.83%
8,643,236.09
0.80%
-28.18%
Main business structure
Monetary unit: RMB yuan
Operating revenue
Operating costs
| Gross profit | |||
Increase/decrease ofoperating revenuesfrom the same period
of last year
| Increase/decrease |
| of operating costs |
from the sameperiod of last year
Increase/decrease ofgross profit from thesame period of last
yearBy industry
Refrigeration and
air-conditioning
857,035,486.66
Refrigeration and
732,433,950.29
14.54%
-18.55%
-18.92%
Increase 0.38
percentage points
By product
Refrigeration and
air-conditioningequipment
857,035,486.66
| Refrigeration and | ||
732,433,950.29
14.54%
-18.55%
-18.92%
Increase 0.38
percentage points
By regionNortheast China741,646,196.46
634,113,867.45
14.50%
-17.33%
-17.86%
Increase 0.55 percentage pointsCentral China109,181,325.82
92,260,558.49
15.50%
-25.48%
-25.29%
Decrease 0.22percentage points
East China6,207,964.38
6,059,524.36
2.39%
-28.18%
-22.49%
Decrease 7.16
percentage points
III. Analysis of the non-main business
□ Applicable √ Not applicable
IV. Analysis of assets & liabilities
1. Remarkable change in assets
Monetary unit: RMB yuan
30-6-2020 30-6-2019
Proportion increase/decrease.Amount
Proportionto the total
assets
Amount
Proportion tothe total assets
Monetary funds278,156,476.16
4.96%
231,766,622.54
4.13%
Increase 0.83 percentage points
Accounts receivable1,103,804,469.19
19.67%
1,242,102,434.51
22.15%
Decrease 2.48 percentage points
Inventories608,821,170.24
10.85%
506,818,620.94
9.04%
Increase 1.81 percentage points
Investment property93,684,345.08
1.67%
97,846,891.45
1.74%
Decrease 0.07 percentage points
Long-term equityinvestment
1,628,442,791.08
29.01%
1,628,330,214.50
29.04%
Decrease 0.03 percentage points
Fixed assets957,684,403.68
17.06%
926,981,106.12
16.53%
Increase 0.53 percentage points
Construction in progress
36,965,756.73
0.66%
49,722,435.06
0.89%
Decrease 0.23 percentage points
Short-term loans382,693,600.00
6.82%
289,000,000.00
5.15%
Increase 1.67 percentage points
Long-term loans160,000,000.00
2.85%
160,000,000.00
2.85%
2. Assets & liabilities which are measured by fair value
√ Applicable □ Not applicable
The beginning number is 290,478,047.92 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 -19,323,309.84 yuan，the current sale amount is 0yuan, and the final number is 271,154,738.08 yuan.
3. Restrictions on asset rights at the end of reporting period
√ Applicable □ Not applicable
Items 2020.6.30 ReasonsMonetary fund9,266,488.54
Guarantee moneyNotes Receivable19,345,284.19
PledgeFixed assets127,229,833.57
Mortgage Loan
V. Analysis of investments
1.The overall situation
√ Applicable □ Not applicable
Investment in the report period (yuan)
Investment in the same period of last year (yuan)
Amount of variation
1,628,442,791.08 1,628,330,214.50
0.01%
2.The significant equity investment during the reporting period
□ Applicable √ Not applicable
3 The significant non-equity investment during the reporting period
□Applicable √Not applicable
4.The financial asset investment
(1) The securities investment
√ Applicable □ Not applicable
Stockcode
Stockabbreviation
Initialinvestment
cost
Accountingmeasurement
model
the beginning
Book value at
Changes in theprofit and loss
of the fairvalue in this
period
Accumulative change offair valuecredited to
equity
Current sale
amount
Report periodprofit and loss
ending
Accounting
subjects
Sourceof funds
Book value in the
601211
GuotaiJun’an
15,710,008.00
fair valuemeasurement
290,478,047.
-19,323,309.84
-13,196,406.72
271,154,738.08
OtherNon-currentfinancial assets
Ownfunds
total 15,710,008.00
--
290,478,047.
-19,323,309.84
-13,196,406.72
271,154,738.08
-- --
(2) Derivative investment
□Applicable √ Not applicable
During the reporting period, the Company does not exist derivative investment.VI. The material assets and equity sale
1. The material assets sale
□Applicable √Not applicable
2. The material equity sale
□Applicable √Not applicable
VII. Analysis of major subsidiary companies and mutual shareholding companies
√ Applicable □ Not applicable
Type The main business registered capital
| Company name |
total assets( yuan)
net assets( yuan)
Operating income
( yuan)
Net profit
( yuan)Bingshan Metal
Technology
mutualshareholdingcompany
Pipe system connectors,
high-speed railconnectors, hydraulicvalve bodies, automotive
engine parts, etc.
USD 18.0645
million
417,025,302.57
338,723,775.91
204,625,692.76
25,242,882.57
PanasonicCompressor
mutualshareholdingcompany
Scroll Compressor JPY 6,200 million
1,529,863,210.48
1,119,485,633.81
498,727,220.29
30,316,392.38
Subsidiary companies obtained or disposed in the reporting period
□Applicable √Not applicable
VIII. The structured corporate bodies which the Company controlled
□Applicable √Not applicable
IX.Estimation of the business performance for Jan.-Sept., 2020
Estimation notice that the accumulated net profit from the beginning of year to the end of the next reportingperiod may be turned into loss or significantly change compared with the same period of the last year, andexplanation of the cause
□ Applicable √ Inapplicable
X. Main risks the company faces and response measures
(1)Increasing market competition risk
Countermeasures: focus on refrigeration and heating industries, deeply plough market segmentation; improveintelligent manufacturing and service-based manufacturing in an orderly manner; accelerate transformation andupgrading of the existing business; accelerate cultivation of new businesses; create the iceberg cause and commoninterest.
(2)Risk of slow marketing of new products and technologies
Countermeasures: create differentiated competitiveness of new products and technologies; strengthen technologymarketing and service marketing, better satisfy individual needs of customers; make effective use of financeleasing, contract energy management, project companies and other innovative modes.
(3)Risk of high level of trade receivables
Countermeasures: effective inventory management and intensified management on trade receivables; enhancequality of contract through intensified customer credit assessment and contract appraisal; effective control ofincrease in trade receivables by reduction of guarantee deposits, taking bank credit instruments as guaranteedeposits and finance leasing; improve contract execution through stricter review on goods delivery, intensifiedcontrol on project construction and post-sale service; prepare special composition solutions and incentive policy toaccelerate settlement of trade receivables with relatively long aging.
Section 5 Important Issues
I. Shareholders’ general meeting convened in the reporting periodSession number of meeting The type of the meeting
The proportion ofparticipate investors
date Disclosing date
participate investors
Disclosing index
The 1st
Meeting of 2020
E
| Extraordinary Shareholders’ General | xtraordinary Shareholders’ |
general meeting
29.88%
January16,2020
January 17,2020
http://www.cnin
fo.com.cn2019Annual Shareholders’ General Meeting
Annual Shareholders’ General
Meeting
29.74%
May15,2020
Annual Shareholders’ General
May 16,2020
http://www.cnin
fo.com.cn
II. Profit distribution and dividend payment
□ Applicable √ Not applicable
III. Commitments of the Company or its shareholders holding 5% or higher of the shares in the reportingperiod or carried to the reporting period
□ Applicable √ Not applicable
IV. Engagement and dismissal of the accounting firm
□ Applicable √ Not applicable
V. Explain to the “non standard audit report” of this reporting period from the board ofdirectors, board of supervisors of the Company
□Applicable √Not applicable
VI. Explain to the “non standard audit report” last year from the board of directors of theCompany
□Applicable √Not applicable
VII. Bankruptcy restructuring related matters
□ Applicable √ Not applicable
There were no bankruptcy restructuring related matters to the Company in the reporting period.
VIII. Major lawsuit issues
□ Applicable √ Not applicable
The Company had no major lawsuit issues in the reporting period.
IX. Punishment and rectification
□ Applicable √ Not applicable
X. The credibility of Companies and its controlling shareholder, actual controller
√ Applicable □ Not applicable
The controlling shareholder of the Company and the Company don’t exist situation such as unfulfilled the court’seffective judgments or failed to pay duly a large amount of debt during the reporting period.
XI. The implementation and effect of equity incentive
□ Applicable √ Not applicable
XII. Important associated transactions
1. Important associated transactions
In the reporting period, the total amount of normal associated transactions between the Company and associatedparties was 217,310 thousand-yuan, accounting for28.97% of the budgeted amount for the year 2020. Thisincluded 76,600 thousand-yuan, accounting for 27.36% of the budgeted amount for the year 2020, for purchasingsupporting products for package projects from associated parties, and 140,710 thousand yuan, accounting for
29.94% of the budgeted amount for the year 2020, from selling supporting parts and components to associatedparties.
2. Associated transactions related to purchases or sales of assets
□ Applicable √ Not applicable
3. Important associated transactions with joint external investments
□ Applicable √ Not applicable
4.Current associated rights of credit and liabilities
□ Applicable √ Not applicable
5.Other associated transactions
□ Applicable √ Not applicable
XIII.Non-operation capital occupation by holding shareholders and their related parties inthe listed company
The Company had no capital occupation by the holding shareholders and their related parties in the listedcompany within this reporting period.
XIV. Major contract and its performance
1. Hosting, contracting and leasing status
(1) the hosting status
□ Applicable √ Not applicable
(2) the contracting status
□ Applicable √ Not applicable
(3) the leasing status
√ Applicable □ Not applicable
The Company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co., Ltd., and rent # 6 workshopbuilding located on No. 106 Liaohe East Rd, Dalian Economic and Technology Development Zone to MHIBingshan Refrigeration (Dalian) Co., Ltd. The rental area is 15,259.04 square meters, and the rental term till 16
th
July, 2029. The annual rent fee for 2020 is RMB 4 million Yuan.The Company signed rental contract with Dalian Bingshan Wisdom Park Co., Ltd., and rent out the whole landand house of the Company’s old plant locating at No. 888, Southwest Road, Shahekou District, Dalian to DalianBingshan Wisdom Park Co., Ltd., with rental land area of 167,165.61 square meters and housing area of105,652.43 square meters. The lease term is from April 1, 2017 to December 31, 2036. The annual rent fee for2020 is RMB 8.646 million Yuan.On June 1st, 2017, the company’s subsidiary, Bingshan Lingshe, signed the leasing contract with Dalian JingxueEnergy 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 million Yuan in 2019 with thecontracted date between June 1st,2017 and May 31st,2022. Bingshan Lingshe also rented out Room 201, #4building located on No.92, Tieshan West Rd, DDZ, Dalian to Dalian Jingxue Energy Saving Technology Co. Ltd.The rental area is 25square metres, and annual lease premium is RMB 15K with the contracted date between June1st, 2017 and May 31
st
, 2022.
2. Guaranteeing status
√ Applicable □ Not applicable
Resolution of 2
nd
meeting of 7
th
session of the Board of directors agreed to provide guarantee to Dalian BingshanGroup Co., Ltd. for obtaining Development Fund of National Development Bank. Total amount of the loan wasRMB160 million with interest rate 1.2%, and the loan period was 10 years. The fund can only be used for coldchain green intelligent equipment and the development of service industry. When Dalian Bingshan Group Co., Ltd.receives the fund, it has transferred all the fund to the Company with the same conditions. The above guarantee toDalian Bingshan Group Co., Ltd. is to the Company itself actually.During the last reporting period ,Wuxin Refrigeration, the subsidiary company of the Company, was responsiblefor providing joint and several liabilities to its customers, Anhui Songze, for borrowing money from the bank. Theguarantee amount was 10 million yuan and the guarantee period was 3 years. Meanwhile, Anhui Songze providedcounter-guarantee to Wuxin Refrigeration with the equipment and ownership of the project.
3.Other important contracts
□Applicable √Not applicable
XV. Social responsibilities
√Applicable □ Not applicable
1、Major environmental issues
2、Fulfillment of social responsibilities for targeted poverty alleviation
In the first half of 2020, the Company joined hands with the controlling shareholder and continued to carrythrough the fixed-point poverty alleviation at Songlin Village, Guangmingshan Town, Zhuanghe City. TheCompany will continue to pay attention to the Infrastructure construction, and implement the poverty alleviationwork.In the second half of 2020, the Company will innovate the support measures and continue to promote accuratepoverty alleviation planning.I. Continue to keep close contact with Songlin Village, make timely on-site investigation, timely understand thelocal needs for help, and continue to give strong support in other aspects on the basis of helping to build thevillagers' loudspeaker project.
2. Continue to organize volunteer teams, mobilize the enthusiasm of funded enterprises, and take the Bingshanlove education center" in Songlin Village as the base to carry out regular educational donation activities, activelyalleviate poverty, give daily necessities and school supplies, and help students in need.
3. We will continue to coordinate poverty alleviation projects in the east and the west and earnestly fulfill oursocial responsibilities.
XVI. Other important matters
□ Applicable √ Not applicable
XVII. Other important matters of subsidiary company
□ Applicable √ Not applicable
Enterprise or
subsidiary
and features
Main pollutant
Way ofdischarge
discharge
outlet
Number of
Distribution ofthe discharge
outlet
Emission
concentration
Pollutantdischargestandardimplemente
d
Totaldischarg
e
Totalapproved
| concentration | ||
| emissions |
Excessiv
eemission
BingshanRefrigeration & HeatTransfer TechnologiesCo., Ltd
COD sequence 1
Unifieddischarged
154mg/L
DB211627-2008
2.03
tons
6 tons
Not over
Not overstandard
BingshanRefrigeration & HeatTransfer TechnologiesCo., Ltd
Ammonianitrogen
sequence 1
Unifieddischarged
0.87mg/L
standard
DB211627-2008
0.014
tons
0.9 tons
Not over
standard
Not over
BingshanRefrigeration & HeatTransfer TechnologiesCo., Ltd
Dust sequence 1
Unifieddischarged
10.6mg/m3
GB9078-19
1.41
tons
6.8 tons
Not over
standard
Not over
Section 6 Change in Share Capital and Shareholders' Information
I. Change in share capital
1. Change in share capital
items
Shares（before change）
Changes
Shares（after change）
number proportion number proportion
I. Non-circulating share capital with restrictedtrade conditions
3,058,879
0.36%
+47,612
3,106,491
0.37%
Other domestic shares 3,058,879
0.36%
+47,612
3,106,491
0.37%
II. Circulating share capital 840,153,628
99.64%
-47,612
840,106,016
99.63%
1. Domestically listed ordinary shares 598,653,628
71.00%
-47,612
598,606,016
70.99%
2. Domestically listed foreign shares 241,500,000
28.64%
241,500,000
28.64%
III. Total shares 843,212,507
100%
843,212,507
100%
The reason for the Change in share capitalDuring the reporting period , the supervisor Mr Zhao Huiming resign from the Company, all the shares are lockedup, the restricted shares increased.The thing mentioned above in the report have caused the change of the totalamount of shares and the structure of stock.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 per share ,dilutedearnings 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 shares is3,106,491, with an increase of 47,612.
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 47,718
Shareholding of top ten shareholdersName Nature Proportion
Total number
Number ofshares with
salerestriction
Number of
pledged shares
or shares
frozenDalian Bingshan Group Co., Ltd.Domestic non-state-owned legal person 20.27%
pledged shares
170,916,934
Sanyo Electric Co., Ltd. Overseas legal person 8.72%
73,503,150
Zhang Sufen Domestic natural person 2.00%
16,900,000
Lin Zhenming Foreign natural person 0.80%
6,753,920
Wu An Domestic natural person 0.53%
4,500,000
Sun Huiming Domestic natural person 0.52%
4,384,079
Xue Hong Domestic natural person 0.42%
3,530,730
Dalian industrial developmentinvestment Co., Ltd.
Domestic non-state-owned legal person 0.40%
3,406,725
Li Xiaohua Domestic natural person 0.36%
3,011,908
Chen Naisheng Domestic natural person 0.27%
2,311,330
Shareholding of top ten shareholders without sale restrictionName
Number of shares without sale
restriction
Type of sharesDalian Bingshan Group Co., Ltd.170,916,934
RMB denominated ordinary sharesSanyo Electric Co., Ltd. 73,503,150
Domestically listed foreign sharesZhang Sufen 16,900,000
RMB denominated ordinary sharesLin Zhenming 6,753,920
Domestically listed foreign sharesWu An 4,500,000
Domestically listed foreign sharesSun Huiming 4,384,079
Domestically listed foreign sharesXue Hong 3,530,730
Domestically listed foreign sharesDalian industrial development investment Co., Ltd. 3,406,725
RMB denominated ordinary sharesLi Xiaohua 3,011,908
RMB denominated ordinary sharesChen Naisheng 2,311,330
RMB denominated ordinary sharesNotes to the associated relationship and uniform actions of the
above shareholders
Dalian Bingshan Group Co., Ltd. had the association relationship with Sanyo Electric
Dalian Bingshan Group Co., Ltd. had the association relationship with Sanyo ElectricCo., Ltd. among the above shareholders. Sanyo Electric Co., Ltd. holds 26.6% of
Dalian Bingshan Group Co., Ltd.'s equity.
If the company shareholders had any agreed repurchase transaction in the report period
□ Yes √ No
IV. Variation in controlling shareholders or actual controllers
Variation in controlling shareholders in the report period
□ Applicable √ Not applicable
There were no changes in the controlling shareholder in the reporting period.Variation in actual controllers in the report period
□ Applicable √ Not applicable
Section 7 Information on Preferred Stock
□ Applicable √ Not applicable
In the reporting period, the Company didn’t own preferred stock.
Section 8 Information on the Convertible Corporate Bonds
□ Applicable √ Not applicable
In the reporting period, the Company didn’t own Convertible corporate bonds.
Section 9 Information on the Company’s Directors, Supervisors,
and Senior ManagersI. Changes in shareholding by directors, supervisors and senior managers
□ Applicable √ Not applicable
II. Changes of directors, supervisors, senior managers of the Company
Name Position held Type Date ReasonZhao Huiming
Supervisor Leaving office May 15, 2020 Resign from the Company due to job changesLi Sheng Supervisor be elected May 15, 2020 By-election of supervisor
Section 10 Corporate Bonds
The Company’s non-public issuance of exchangeable corporate bonds was listed at the Shanghai StockExchange on August 6, 2018. As of August 1, 2018, according to the using plan disclosed in theprospectus, the raised funds of the Company’s non-public issuance of exchangeable corporate bonds havebeen used to repay bank loans. The special account for the Company's 2018 exchangeable corporatebonds fund raising was cancelled in March 2019. During the reporting period, the Company'sexchangeable corporate were not exchanged for shares.
Section 11 Financial ReportI. 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 30,2020 Unit: RMB YuanItems
30-June-2020 31-Dec-2019Consolidation Parent Company
Consolidation Parent Company
Current assets:
Monetary funds
| 278,156,476.16 | 133,769,634.48 | 332,119,146.22 |
Financial assets which are measured by fair value andwhich changes are recorded in current profit and loss
175,586,251.46
Derivative financial assets
Transaction financial assets
Notes receivable 6
| 0,975,736.49 | 2,518,410.28 |
| 119,947,326.41 | 12,692,689.97 |
Accounts receivable
| 1,103,804,469.19 | 509,511,590.91 | 1,030,342,541.88 | 526,554,114.61 |
Accounts paid in advance 1
| 54,500,443.00 | 45,366,088.98 |
| 142,786,528.57 | 44,560,934.56 |
Other receivables 87,733,054.65
57,405,718.74
| 38,731,228.57 | 5,981,993.82 |
Interest receivables
| 348,833.33 | 348,833.33 |
| 583,833.33 | 583,833.33 |
Dividend receivable
| 42,152,903.12 | 50,338,786.40 |
-
| 33,450.00 |
Inventories
| 608,821,170.24 | 242,105,637.81 |
| 539,497,213.39 | 212,558,464.52 |
Contract assets
| 94,445,717.61 | 72,977,228.68 |
Assets held for sale
Non-current asset due within one year
Other current assets
| 11,714,155.30 | 245,006.96 |
| 14,172,130.45 | 32,843.40 |
Total current assets 2,400,151,222.64
| 1,063,899,316.84 | 2,217,596,115.49 |
Non-current assets:
977,967,292.34
Finance asset held available for sales
Held-to-maturity investment
Long-term account receivable
Long-term equity investment
| 1,628,442,791.08 | 2,311,152,962.49 |
| 1,662,181,009.14 | 2,244,411,383.88 |
Other non-current financial assets
| 284,146,396.67 | 282,731,254.17 |
| 303,469,706.51 | 302,054,564.01 |
Investment property
| 93,684,345.08 | 104,088,789.56 |
| 96,200,507.24 | 106,536,035.96 |
Fixed assets
| 957,684,403.68 | 748,876,456.86 |
| 992,435,172.94 | 776,349,872.24 |
Construction in progress
| 36,965,756.73 | 27,408,270.75 |
| 36,285,056.80 | 27,212,183.40 |
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets139,166,688.92
| 67,174,298.87 |
141,54
| 0,378.10 | 68,221,989.91 |
Expense on Research and Development
Goodwill1,750,799.49
1,750,799.49
Long-term expenses to be apportioned
| 10,459,043.73 | 9,005,609.76 |
| 11,646,845.47 | 9,751,998.84 |
Deferred income tax asset 60,062,
| 877.38 | 13,228,425.96 |
| 62,397,665.08 | 13,858,811.66 |
Other non-current asset
Total non-current asset
| 3,212,363,102.76 | 3,563,666,068.42 | 3,307,907,140.77 |
Total assets
3,548,396,839.905,612,514,325.40
| 5,612,514,325.40 | 4,627,565,385.26 |
5,525,503,2
| 56.26 | 4,526,364,132.24 |
Current liabilities:
Short-term loans 382,693,600.00
| 366,093,600.00 |
| 355,252,000.00 | 308,082,000.00 |
Financial liabilities which are measured by fair valueand which changes are recorded in current profit andloss
Derivative financial liabilities
Transaction financial liabilities
Notes payable
| 264,006,309.11 | 204,646,261.20 |
| 305,468,505.38 | 189,540,652.01 |
Accounts payable
| 940,681,481.86 | 321,427,663.26 |
293,479,043
| 814,331,684.02 | .69 |
Accounts received in advance
| 160,571,622.53 | 47,114,426.48 |
Contract liabilities
| 201,589,646.20 | 49,838,218.15 |
Wage payable
| 10,356,555.86 | 92,529.75 |
| 31,701,317.58 | 8,702,907.01 |
Taxes payable
6,394,7
| 8,930,118.03 | 49.72 |
| 8,184,018.69 | 5,156,115.24 |
Other accounts payable 61,043,778.19
36,375,922.22
| 55,921,060.69 | 18,817,980.14 |
Interest payable
| 5,180,733.92 | 5,180,733.92 |
| 6,396,385.83 | 6,386,700.29 |
Dividend payable
25,829,
| 28,304,531.21 | 531.21 |
| 533,156.00 | 533,156.00 |
Liabilities held for sale
Non-current liabilities due within one year
| 10,276,677.27 |
14,174,643.42
Other current liabilities
Total current liabilities
| 1,879,578,166.52 | 984,868,944.30 |
1,74
| 5,604,852.31 | 870,893,124.57 |
Non-current liabilities:
Long-term loans
| 160,000,000.00 | 160,000,000.00 |
| 160,000,000.00 | 160,000,000.00 |
Bonds payable
| 25,000,034.00 | 25,000,034.00 |
| 25,000,034.00 | 25,000,034.00 |
Preferred stock
Perpetual bond
Long-term account payable 397,771.84
397,771.84
Long-term wage payable
Special Payable
Anticipation liabilities
Deferred income
| 107,775,664.96 | 64,380,164.96 |
| 99,157,538.52 | 55,744,166.29 |
Deferred income tax liabilities
| 38,316,709.52 | 38,316,709.52 |
| 41,215,205.99 | 41,215,205.99 |
Other non-current liabilities
Total non-current liabilities
| 331,490,180.32 | 287,696,908.48 |
| 325,770,550.35 | 281,959,406.28 |
Total liabilities
1,27
| 2,211,068,346.84 | 2,565,852.78 |
| 2,071,375,402.66 | 1,152,852,530.85 |
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
| 726,768,468.00 | 771,270,562.83 |
| 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
| 799,133,083.37 | 799,133,083.37 |
| 768,723,812.53 | 768,723,812.53 |
Generic risk reserve
Retained profit
| 959,048,791.02 | 939,844,020.18 |
| 1,038,358,782.59 | 988,765,359.93 |
Total owner’s equity attributable to parent company
3,354,999,532.4
| 3,330,664,309.16 | 8 |
| 3,379,565,029.89 | 3,373,511,601.39 |
Minority interests
| 70,781,669.40 |
74,562,823.71
Total owner’s equity
| 3,401,445,978.56 | 3,354,999,532.48 |
| 3,454,127,853.60 | 3,373,511,601.39 |
Total liabilities and shareholder’s equity 5,612,514,3
| 25.40 | 4,627,565,385.26 |
| 5,525,503,256.26 | 4,526,364,132.24 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization:Wang Jinxiu
INCOME STATEMENTPrepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January-June, 2020 Unit: RMB Yuan
Items
January-June, 2020 January-June, 2019Consolidation Parent Company
Consolidation Parent Company
I. Total sales
| 873,403,414.46 | 421,537,668.16 |
1,075,729,240.
| 57 | 325,356,273.32 |
II. Total operating cost897,088,858.88
| 426,353,131.09 | 1,101,546,628.92 |
341,379,256.10
Including: Operating cost
748,075,096.12
| 748,075,096.12 | 359,831,813.22 | 919,759,979.86 | 276,893,396.82 |
Taxes and associate charges 8,02
| 0,491.83 | 4,653,637.89 | 8,730,283.87 |
Selling and distribution expenses
4,773,987.0235,446,794.72
| 35,446,794.72 | 11,354,625.22 |
| 53,096,818.62 | 5,371,238.79 |
Administrative expenses
| 70,770,126.86 | 28,433,528.41 |
85,942,
37,232,620.49
| 095.21 |
R&D expenses
| 24,715,021.28 | 14,305,119.21 |
| 28,549,864.17 | 13,071,247.34 |
Financial expense 10,061,328.07
| 7,774,407.14 | 5,467,587.19 |
Including: interest expense 9
4,036,765.64,635,047.81
| ,635,047.81 | 7,801,791.24 |
| 5,542,418.26 | 3,772,180.01 |
interest income
| 719,172.42 | 538,148.04 | 572,223.80 |
Add:Other income
211,170.876,507,868.29
| 6,507,868.29 | 442,124.83 |
2,035,436.84
Gain/(loss) from investment
| 22,943,077.11 | 31,608,757.06 | 117,127,421.73 | 120,796,775.76 |
Including: income from investment onaffiliated enterprise and jointly enterprise
| 16,816,173.99 | 17,295,970.66 | 72,239,478.13 | 72,908,832.16 |
Exchange gains
Gain/(loss) from change in fair value (loss as “-“)
-
| 19,323,309.84 | |
-
| 19,323,309.84 | 40,461,125.59 |
Credit impairment loss (loss as “-“) -
40,461,125.5914,041,906.01
-
| 14,041,906.01 | 3,350,941.44 |
Assets impairment loss (loss as “-“)
-16,
-
| 863,134.42 | 3,112,743.25 |
Gain/(loss) from asset disposal (loss as “-“)
| 10,788.53 |
| 1,242,799.31 | 582,050.16 |
III. Operating profit -
| 27,588,926.34 | 4,561,167.68 | 118,186,260.70 | 142,704,225.48 |
Add: non-business income 1,280,0
| 59.12 | 2,472,365.13 |
Less: non-business expense
200.07
93,891.78
44,972.15
| 93,891.78 |
| 121,643.51 | 75,126.57 |
IV. Total profit -
| 26,402,759.00 | 4,516,195.53 | 120,536,982.32 | 142,629,298.98 |
Less: Income tax -
-
| 1,492,259.17 | 2,268,110.77 |
| 13,766,605.84 | 11,086,452.65 |
V. Net profit -
| 24,910,499.83 | 6,784,306.30 | 106,770,376.48 |
(I) Net profit from continuous operation -
131,542,846.3324,910,499.83
| 24,910,499.83 | 6,784,306.30 | 106,770,376.48 |
(II)Net profit from discontinuing operation
131,542,846.33
Net profit attributable to parent company -
6,784,306.30
| 23,604,345.52 |
| 108,373,919.30 | 131,542,846.33 |
Minority shareholders’ gains and losses -
| 1,306,154.31 |
-
| 1,603,542.82 |
VI. After-tax net amount of other comprehensiveincomes
After-tax net amount of other comprehensive incomesattributable to owners of the Company
(I) Other comprehensive incomes that will not bereclassified into gains and losses
1. Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
| 2. Enjoyable shares in other comprehensive incomes in |
| invests that cannot be reclassified into gains and losses |
under the equity method
(II) Other comprehensive incomes that will bereclassified into gains and losses
invests that will be reclassified into gains and lossesunder the equity method
| 1. Enjoyable shares in other comprehensive incomes in | ||||||||
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 incomesattributable to minority shareholders
VII Total comprehensive income -
6,784,306.30
| 24,910,499.83 |
| 106,770,376.48 | 131,542,846.33 |
| Total comprehensive | income attributable to parent |
company
-
6,784,306.30
| 23,604,345.52 | 108,373,919.30 | 131,542,846.33 |
shareholders
-
Total comprehensive income attributable to minority1,306,154.31
| 1,306,154.31 |
-1,603,542.82
VIII. Earnings per share
(I) basic earnings per share -
| 0.028 |
| 0.127 |
(II) diluted earnings per share -
| 0.028 |
| 0.127 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: :Wang Jinxiu
CASH FLOW STATEMENT
Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January -June, 2020 Unit: RMB Yuan
Items
January -June, 2020 January -June, 2019Consolidation Parent Company
Consolidation Parent Company
I. Cash flows arising from operating activities:
labor services
Cash received from selling commodities and providing604,104,617.20
| 604,104,617.20 | 348,200,949.78 | 618,147,609.49 |
Write-back of tax received
227,740,556.2913,929,886.75
| 13,929,886.75 | 8,601,797.19 | 8,019,673.18 |
Other cash received concerning operating activities
| 32,877,448.75 | 14,383,755.85 | 17,779,038.66 |
Subtotal of cash inflow arising from operating activities
4,348,684.15
| 650,911,952.70 |
643,946,321.3
| 371,186,502.82 | 3 | 232,089,240.44 |
labor service
Cash paid for purchasing commodities and receiving476,548,876.58
| 476,548,876.58 | 289,314,215.08 | 426,426,299.23 | 159,249,772.95 |
Cash paid to/for staff and workers
| 158,669,594.81 | 51,668,871.50 | 188,059,306.43 |
66,691,776.
Taxes paid
31,669,562.21
| 31,669,562.21 | 14,614,702.80 |
| 43,807,228.95 | 14,147,587.37 |
Other cash paid concerning operating activities
| 62,374,607.85 | 17,567,587.34 |
| 63,429,524.60 | 13,181,849.87 |
Subtotal of cash outflow arising from operating activities
729,262,641.45
| 373,165,376.72 | 721,722,359.21 | 253,270,986.28 |
Net cash flows arising from operating activities -78,350,688.75
-
| 1,978,873.90 |
-
-
| 77,776,037.88 | 21,181,745.84 |
II. Cash flows arising from investing activities:
Cash received from recovering investment
Cash received from investment income
| 14,561,842.05 | 14,528,392.05 | 11,365,084.60 | 11,331,634.60 |
other long-term assets
Net cash received from disposal of fixed, intangible and414,448.00
| 414,448.00 |
1,691,73
| 1.61 | 810,000.00 |
units
Net cash received from disposal of subsidiaries and other
Other cash received concerning investing activities
Subtotal of cash inflow from investing activities
| 14,976,290.05 | 14,528,392.05 |
12,1
| 13,056,816.21 | 41,634.60 |
long-term assets
Cash paid for purchasing fixed, intangible and other5,676,192.55
| 5,676,192.55 | 3,370,306.88 | 27,160,372.19 | 23,937,190.63 |
Cash paid for investment
100,000,000.00
business units
Net cash paid for achievement of subsidiaries and other
Other cash paid concerning investing activities
Subtotal of cash outflow from investing activities
103,370,306.88
| 5,676,192.55 | 27,160,372.19 |
Net cash flows arising from investing activities
23,937,190.639,300,097.50
-88,841,914.83
| 9,300,097.50 |
-
-
| 14,103,555.98 | 11,795,556.03 |
III. Cash flows arising from financing activities
Cash received from absorbing investment
shareholders' equity investment by subsidiaries
Including: Cash received from absorbing minority
Cash received from loans
| 276,601,600.00 | 266,011,600.00 | 340,210,100.00 | 249,000,000.00 |
Cash received from issuing bonds
Other cash received concerning financing activities
| 36,847,200.56 |
38,323,050.64
Subtotal of cash inflow from financing activities
| 313,448,800.56 | 266,011,600.00 | 378,533,150.64 | 249,000,000.00 |
Cash paid for settling debts
| 254,287,177.09 | 208,000,000.00 | 303,180,583.85 | 250,000,000.00 |
paying
10,670,866.7
Cash paid for dividend and profit distributing or interest
| 2 | 9,007,757.61 | 6,158,656.56 |
4,843,793.50Including: dividends or profit paid by subsidiaries to
minority shareholders
Including: dividends or profit paid by subsidiaries to
Other cash paid concerning financing activities
| 12,119,804.65 | 67,866,365.93 | 47,566,389.36 |
Subtotal of cash outflow from financing activities
| 277,077,848.46 | 217,007,757.61 | 377,205,606.34 | 302,410,182.86 |
Net cash flows arising from financing activities
| 36,370,952.10 | 49,003,842.39 |
-
| 1,327,544.30 | 53,410,182.86 |
IV. Influence on cash due to fluctuation in exchange rate
| 42,272.21 |
| 329.36 | 266,799.33 |
-
V. Net increase of cash and cash equivalents
-
-
| 32,637,366.94 | 41,816,616.98 |
-
-
| 90,285,250.23 | 86,387,612.74 |
-begin
Add: Balance of cash and cash equivalents at the period301,527,354.56
| 301,527,354.56 | 175,586,251.46 | 304,703,434.47 | 186,976,185.10 |
period–end
VI. Balance of cash and cash equivalents at the268,889,987.62
| 268,889,987.62 | 133,769,634.48 | 214,418,184.24 | 100,588,572.36 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Wang Jinxiu
CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITYPrepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd 2020.01-06 Unit: RMB YuanItems
2020.01-06Owners’ equity attributable to parent company
Minority
equity
Total ofowners’equity
share capital
Capitalsuplus
Lessen:
treasury
stock
| share capital | ||
Othercomprehensive income
Specialpreparatio
n
Surplusreserve
Retained
profits
I. balance at the end of last
year
I. balance at the end of last843,212,507.00
726,768,468.00
| 843,212,507.00 |
| 2,501,459.77 | 768,723,812.53 | 1,038,358,782.59 | 74,562,823.71 | 3,454,127,853.60 |
policy
1. Change of accounting
previous period
2. Correction of errors in
this year
II. Balance at the beginning of843,212,507.00
726,768,468.00
843,212,507.00
| 2,501,459.77 | 768,723,812.53 | 1,038,358,782.59 | 74,562,823.71 | 3,454,127,853.60 |
amount in this year (“-
| III. Increase/ decrease of | |
| ” | |
means decrease)
-
| 30,409,270.84 | 79,309,991.57 |
-
-52,681,875.0
| 3,781,154.31 | 4 |
incomes
(I) Total comprehensive
-
-
| 23,604,345.52 | 1,306,154.31 |
-
24,910,499.83(II) Capital increased and
reduced by owners
(II) Capital increased and
by shareholders
1. Common shares increased
| 2. Capital increased by | |
| holders of other equity | |
instruments
3. Amounts of share-
| based | |
| payments recognized in | |
owners’ equity
4. Other
(III) Profit distribution
-
| 30,409,270.84 | 55,705,646.05 |
-
-
| 2,475,000.00 | 27,771,375.21 |
public reserve
1. Withdrawing surplus
-
| 30,409,270.84 | 30,409,270.84 |
-
2. Distribution to all owners
(shareholders)
2. Distribution to all owners
-
-
| 25,296,375.21 | 2,475,000.00 |
-
3. Others
27,771,375.21
forward of owners’ equity
| (IV) Internal carrying | |
capital from capit
| 1. New increase of share | |
| al reserves | |
to share capital
2. Convert surplus reserves
losses
3. Surplus reserves make up
4. Others
(V) Specific reserve
1. Withdrawn for the period
| 1,127,227.68 | 1,127,227.68 |
2. Used in the period
-
| 1,127,227.68 |
-
(VI) Other
1,127,227.68
period
IV. Balance at the end of this843,212,507.00
| 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: Ma Yun Person in Charge of Accounting Organization:Wang Jinxiu
Items
2019.01-06
Owners’ equity attributable to parent company
Total of
Minority equityowners’ equity
| share capital | owners’ equity |
Capital suplus
Lessen:
treasury
stock
Othercomprehensi
ve income
Special
preparationSurplus reserve
Retained
profits
Surplus reserveI. balance at the end of last
year
855,434,087.00
I. balance at the end of last
760,365,342.00
21,026,106.00
296,909,965.55
21,026,106.00
| 721,091,040.02 | 764,859,288.45 | 80,796,270.83 |
3,458,429,887.85
1. Change of accounting
policy
1. Change of accounting
-
294,408,505.78
| 294,408,505.78 |
previous period
2. Correction of errors in
this year
855,434,087.00
II. Balance at the beginning of
760,365,342.00
21,026,106.00
2,501,459.77
21,026,106.00
721,091,040.02
1,059,267,794.23
80,796,270.83
| 80,796,270.83 | 3,458,429,887.85 |
amount in this year (“-
| III. Increase/ decrease of | |
| ” | |
means decrease)
-12,221,580.00
-
33,596,874.00
-
| 33,596,874.00 | 21,026,106.00 |
| 32,428,137.09 | 33,785,156.86 |
-
39,81
| 1,603,542.82 | 7,403.13 |
incomes
(I) Total comprehensive
| 108,373,919.30 |
-
| 1,603,542.82 | 106,770,376.48 |
reduced by owners
-
(II) Capital increased and12,221,580.00
-
| 12,221,580.00 | 33,596,874.00 |
-
| 21,026,106.00 |
-
24,792,348.00
1. Common shares increased
by shareholders
-
1. Common shares increased
12,221,580.00
-
| 12,221,580.00 | 33,596,874.00 | 24,792,348.00 |
-
70,610,802.00
2. Capital increased by
| 2. Capital increased by | |
| holders of other equity | |
instruments
3. Amounts of share-
| based | |
| payments recognized in | |
owners’ equity
-
| 45,818,454.00 |
45,818,454.00
4. Other
(III) Profit distribution
| 32,428,137.09 |
-
| 74,588,762.44 |
-
| 42,160,625.35 | ||
| 1. Withdrawing surplus |
public reserve
| 32,428,137.09 |
-
| 32,428,137.09 |
-
2. Distribution to all owners
(shareholders)
2. Distribution to all owners
-
| 42,160,625.35 |
-
3. Others
42,160,625.35
forward of owners’ equity
| (IV) Internal carrying | |
| 1. New increase of share | |
| capital from capital reserves | |
to share capital
2. Convert surplus reserves
losses
3. Surplus reserves make up
4. Others
(V) Specific reserve
1. Withdrawn for the period
| 1,025,336.49 | 1,025,336.49 |
2. Used in the period
-
| 1,025,336.49 |
-
(VI) Other
1,025,336.49
IV. B
period
alance at the end of this843,212,507.00
| 843,212,507.00 | 726,768,468.00 |
2,501,459.77
| 753,519,177.11 | 1,093,052,951.09 | 79,192,728.01 | 3,498,247,290.98 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization:Wang Jinxiu
STATEMENT OF CHANGES IN OWNERS’ EQUITY
Prepared by Dalian Refrigeration Company Limited 2020.01-06 Unit: RMB Yuan
Items
2020.01-06
Owners’ equity attributable to parent company
Total of owners’
equityshare capital
Otherequityinstrument
Capitalsuplus
Lessen:
treasury
stock
Othercomprehensive
income
Specialpreparation
Surplusreserve
Retained
profits
year
I. balance at the end of last843,212,507.00
| 843,212,507.00 |
| 771,270,562.83 |
| 1,539,359.10 |
988,
| 768,723,812.53 | 765,359.93 | 3,373,511,601.39 |
policy
1. Change of accounting
2. Correction of errors in
previous period
2. Correction of errors in
this year
II. Balance at the beginning of843,212,507.00
| 843,212,507.00 |
| 771,270,562.83 |
| 1,539,359.10 |
| 768,723,812.53 | 988,765,359.93 |
,373,511,601.39III. Increase/ decrease of
amount in this year (“-
| III. Increase/ decrease of | |
| ” | |
means decrease)
-
| 30,409,270.84 | 48,921,339.75 |
-
18,512,068.91(I) Total comprehensive
incomes
(I) Total comprehensive
| 6,784,306.30 | 6,784,306.30 |
reduced by owners
(II) Capital increased and
by shareholders
1. Common shares increased
| 2. Capital increased by | |
| holders of other equity | |
instruments
3. Amounts of share-
| based | |
| payments recognized in | |
owners’ equity
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)
2. Distribution to all owners
-
-
| 25,296,375.21 | 25,296,375.21 |
3. Others
forward of owners’ equity
| (IV) Internal carrying | |
| 1. New increase of share | |
| capital from capital reserves | |
to share capital
2. Convert surplus reserves
losses
3. Surplus reserves make up
4. Others
(V) Specific reserve
1. Withdrawn for the period
| 1,127,227.68 | 1,127,227.68 |
2. Used in the period
-
| 1,127,227.68 |
-
(VI) Other
1,127,227.68
period
IV. Balance at the end of this843,212,507.00
| 843,212,507.00 |
771,27
| 0,562.83 |
1,539,359.10
| 799,133,083.37 | 939,844,020.18 | 3,354,999,532.48 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization:Wang Jinxiu
Items
2019.01-06
Owners’ equity attributable to parent company
Total of owners’
equityshare capital
Otherequityinstrument
Capitalsuplus
Lessen:
treasurystock
Othercomprehensive
income
Specialpreparation
Surplusreserve
Retained
profits
year
855,434,087.00
I. balance at the end of last
804,867,436.83
21,026,106.00
295,947,864.88
| 721,091,040.02 | 640,251,261.47 | 3,296,565,584.20 |
policy
1. Change of accounting
-
294,408,505.78
| 294,408,505.78 |
previous period
2. Correction of errors in
this year
855,434,087.00
II. Balance at the beginning of
804,867,436.83
21,026,106.00
1,539,359.10
721,091,040.02
934,659,767.25
3,296,565,584.20
III. Increase/ decrease of
amount in this year (“-
| III. Increase/ decrease of | |
| ” | |
means decrease)
-12,221,580.00
-
-
| 33,596,874.00 | 21,026,106.00 |
| 32,428,137.09 | 56,954,083.89 |
64,589,872.98(I) Total comprehensive
incomes
(I) Total comprehensive
| 131,542,846.33 | 131,542,846.33 | |||||||||||||||
reduced by owners
-
(II) Capital increased and12,221,580.00
| 12,221,580.00 |
-
-
| 33,596,874.00 | 21,026,106.00 |
-
24,792,348.00
1. Common shares increased
by shareholders
-
1. Common shares increased
12,221,580.00
| 12,221,580.00 |
-
| 33,596,874.00 | 24,792,348.00 |
-
70,610,802.00
2. Capital increased by
| 2. Capital increased by | |
| holders of other equity | |
instruments
3. Amounts of share-
payments recognized in
| based |
owners’ equity
-
| 45,818,454.00 |
4. Other
45,818,454.00
(III) Profit distribution
-
| 32,428,137.09 | 74,588,762.44 |
-
| 42,160,625.35 | ||
| 1. Withdrawing surplus |
public reserve
-
| 32,428,137.09 | 32,428,137.09 |
(shareholders)
2. Distribution to all owners
-
-
| 42,160,625.35 | 42,160,625.35 |
3. Others
forward of owners’ equity
| (IV) Internal carrying | |
| 1. New increase of share | |
| capital from capital reserves | |
to share capital
2. Convert surplus reserves
3. Surpl
losses
us reserves make up
4. Others
(V) Specific reserve
1. Withdrawn for the period
| 1,025,336.49 |
2. Used in the period
1,025,336.49
-
| 1,025,336.49 |
-
(VI) Other
1,025,336.49
IV. Balance at th
period
e end of this843,212,507.00
| 843,212,507.00 | 771,270,562.83 |
| 1,539,359.10 | 753,519,177.11 | 991,613,851.14 | 3,361,155,457.18 |
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization:Wang Jinxiu
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
th
generation 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
nd
interimshareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the proposalof non-public offering of ‘A shares’. China’s Securities Regulatory Commission issued SFClicense [2015]3137 on 30
th
December, 2015, approving that new non-public offering cannotexceeded 38,821,954 number of shares. The company implemented the post meeting proceduresfor China’s Securities Regulatory Commission, which is regarding adjustment of bottom price andthe number of the shares issued after the implementation of profit distribution policy of 2015 inMay, 2016, and accordingly revised the upper limit of non-public offering of share to58,645,096number of new ‘A shares’. The company issued the non-public offering of 58,645,096 number of‘A shares’ to 7 investors, and as a result, the total number of shares of the company is changed to598,892,558 shares, and the par value is 1yuan per share and the total share capital is598,892,558.00Yuan. The share capital stated above has been verified by DaHua Certified PublicAccountants, and has been issued the capital verification report Dahuayanzi [2016]000457 on 31stMay 2016.According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration CompanyLimited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting authorized theboard of directors to implement the Restricted Share Incentive Plan’ approved on the
rd
provisional general meeting held on 13th September 2016, the 9
th
meeting of the 7
th
generationof board deliberated and passed the ‘Proposal about granting the restricted shares to incentivetargets’ on September 20
th
, 2016 and set 20
th
September 2016 as share granted date, and granted12,884,000 number of restricted shares to 188 incentive targets at granted price of 5.62Yuan per
share. By 22
nd
November, 2016, the company has actually received the newly subscribedregistered share capital of 12,884,000Yuan subscribed by incentive targets. The share capitalstated above has been verified by DaHua Certified Public Accountants, and has been issued thecapital verification report Dahuayanzi [2016]001138 on 23
rd
November, 2016.On May 20
th
, 2017, the general meeting for 2016 fiscal year was held and profit appropriationscheme for 2016 FY was approved, which was every 10 shares will be increased by 4 sharesthrough capital reserve based on the total 611,776,558 number of shares. After the profitappropriation scheme, the registered capital was changed to RMB856,478,181.00Yuan.On December 18, 2017, the Company held the third extraordinary shareholders’ meeting of 2017which reviewed and approved the Proposal on Repurchasing and Cancelling Part RestrictedStocks of the 2016 Restricted Stock Incentive Plan”. On March 8, 2018, after the completion ofrepurchase and cancellation, the Company implemented the corresponding capital reductionprocedures according to law, and the registered capital of the Company was changed from856,487,181 Yuan to 855,908,981 Yuan.On May 4, 2018, the Company held the 21
st
meeting of the seventh board of directors whichreviewed and approved the Proposal on Repurchasing and Cancelling Party Restricted Stocks ofthe 2015 Restricted Stock Incentive Plan. On June 29, 2018, after the completion of repurchaseand cancellation, the Company implemented the corresponding capital reduction proceduresaccording to law, and the registered capital of the Company was changed from 855,908,981 Yuanto 855,434,087 Yuan.On 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 issued on July 5, 2017 about revision issued by the accounting standardsfor enterprises no. 14 - revenue income guidelines (hereinafter generally referred to as the"income guidelines"), in domestic and at the same time, listed companies and listed overseas andadopted international financial reporting standards or companies prepare financial statements onthe accounting standard for business enterprises, effective as of January 1, 2018; Other domesticlisted enterprises shall enter into force as of January 1, 2020; Non-listed enterprises thatimplement the accounting standards for Business Enterprises shall enter into force as of January 1,2021. In accordance with the above requirements, the Company will implement the relevantguidelines as of January 1, 2020.
1. Declaration for compliance with accounting standards for business enterprisesThe financial statements are prepared by the Group according to the requirements of AccountingStandard for Business Enterprise, and reflect the relative information for the financial position,operating performance, cash flow of the Group truly and fully.
2. Accounting period
The Group adopts the Gregorian calendar year as accounting period from Jan 1 to Dec 31.
3. Operating cycle
Normal operating cycle refers to the duration starting from purchasing the assets formanufacturing up to cash or cash equivalent realization. The group sets twelve months for oneoperating cycle and as the liquidity criterion for assets and liability.
4. Functional currency
The Group adopts RMB as functional currency.
5. Accounting for business combination under same control and not under same controlAs an acquirer, the assets and liabilities that The Group obtained in a business combination underthe same control should be measured on the basis of their carrying amount in the consolidatedfinancial statements on the combining date. As for the balance between the carrying amount of thenet assets obtained by the combining party and the carrying amount of the consideration paid by it,the capital surplus shall be adjusted. If the capital surplus is not sufficient to be offset, the retainedearnings shall be adjusted.For a business combination not under same control, the asset, liability and contingent liabilityobtained from the acquirer shall be measured at the fair value on the acquisition date. Thecombination cost shall be the fair value, on the acquisition date, of the assets paid, the liabilitiesincurred or assumed and equity securities issued by the acquirer in exchange for the control of theacquire, and sum of all direct expenses(if the combination is achieved in stages, the combinationcost shall be the sum of individual transaction). The difference when combination cost exceedsproportionate share of the fair value of identifiable net assets of acquire should be recognized asgoodwill. If the combination cost is less than proportionate share of the fair value of identifiablenet assets of acquiree, firstly, fair value of identifiable asset, liability or contingent liability shallbe reviewed, and so the fair value of non-monetary assets or equity instruments issued in thecombination consideration , after review, still the combination cost is less than proportionateshare of the fair value of identifiable net assets of acquire, the difference should be recognized asnon-operating income.
6. Method of preparation of consolidated financial statements
All subsidiaries controlled by the Group and structured entities are within the consolidation scope.If subsidiaries adopt different accounting policy or have different accounting period from theparent company, appropriated adjustments shall be made in accordance with the Group policy inpreparation of the consolidated financial statements.All significant intergroup transactions, outstanding balances and unrealized profit shall beeliminated in full when preparing the consolidated financial statements. Portion of the subsidiary’sequity not belonging to the parent, profit, loss for the current period, portion of othercomprehensive income and total comprehensive belonging to minority interest, shall bepresented separately in the consolidated financial statements under “minority interest ofequity”, ”minority interest of profit and loss”, “other comprehensive income attributed to minority
interest” and “total comprehensive income attributed to minority interest” title.If a subsidiary is acquired under common control, its operation results and cash flow shall beconsolidated since the beginning of the consolidation period. When preparing the comparativeconsolidated financial statements, adjustments shall be made to relevant items of comparativefigures as regarded that reporting entity established through consolidation has been always theresince the point when the ultimate controlling party starts to have the control.If a business consolidation under common control is finally achieved in stages, consolidationaccounting method shall be disclosed additionally for the period in which the control is obtained.For example, if a business consolidation under common control is finally achieved in stages, whenpreparing the consolidated financial statements, adjustments shall be made for the currentconsolidation status as if consolidation has always been there since the point when the ultimatecontrolling party starts to control. In preparation of comparative figures, asset and liability of theacquiree shall be consolidated into the Group’s comparative financial statements, but to the extentno earlier than the point when the Group and acquiree are both under ultimate control and relevantitems under equity in comparative financial statements shall be adjusted for net asset increased incombination. To avoid the duplicated computation of net asset of acquiree, for long-term equityinvestment held by the Group before the consolidation, relevant profit and loss, othercomprehensive income and movement in other net asset, recognized for the period between thecombination date and later date when original shareholding is obtained and when the Group andthe acquiree are under common control of same ultimate controlling party, shall be respectivelyused for writing down the opening balance of retained earnings of comparative financialstatements and profit and loss for the current period.If a subsidiary is acquired not under common control, its operation results and cash flow shall beconsolidated since the beginning of the consolidation period. In preparation of the consolidatedfinancial statements, adjustments shall be made to subsidiary’s financial statements based on thefair value of its all identifiable assets, liability or contingent liability on the acquisition date.If a business consolidation under non-common control is finally achieved in stages, consolidationaccounting method shall be disclosed additionally for the period in which the control is obtained.For example, if a business consolidation not under common control is finally achieved in stages,when preparing the consolidated financial statements, the acquirer shall remeasure its previouslyheld equity interest in the acquiree at its acquisition-date fair value and recognize the resultinggain or loss as investment income for the current period. Other comprehensive income, underequity method accounting rising from the interest held in acquiree in relation to the period beforethe acquisition, and changes in the value of its other equity other than net profit or loss, othercomprehensive income and profit appropriation shall be transferred to investment gain or lossfor the period in which the acquisition incurs, excluding the other comprehensive income fromthe movement on the remeasurement of ne asset or liability of defined benefit plan.When the Group partially disposes of the long –term equity investment in subsidiary withoutlosing the control over it, in the consolidated financial statements, the difference, between
disposals price and respective disposed value of share of net assets in the subsidiary since theacquisition date or combination date, shall be adjusted for capital surplus or share premium, noenough capital surplus, then adjusted for retained earnings.When the Group partially disposes of the long –term equity investment in subsidiary and lose thecontrol over it, in preparation of consolidated financial statements, remaining share of interest inthe subsidiary shall be remeasured on the date of losing control. Sum of the share disposalconsideration and fair value of remaining portion of shareholding minus the share of the net assetsin the subsidiary held based on the previous shareholding percentage since the acquisition date orcombination date, the balance of above is recognized as investment gain/loss for the period andgoodwill shall be written off accordingly. Other comprehensive income relevant to shareinvestment in subsidiary shall be transferred to investment gain /loss for the period on the date oflosing control.When the Group partially disposes of the long –term equity investment in subsidiary and lose thecontrol over it by stages, if all disposing transactions are bundled, each individual transaction shallbe seen as a transaction of disposal of a subsidiary by losing control. The difference between thedisposal price and the share of the net assets in the subsidiary held before the date of losingcontrol, shall be recognize as other comprehensive income until the date of losing control where itis transferred into investment gain/ loss for the current period.
7. Joint arrangement classification and joint operation accounting
The Group’s joint arrangement includes joint operation and joint venture. For joint operation, theGroup as a joint operator shall recognize its own assets and its share of any assets held jointly, itsliabilities and its share of any liabilities incurred jointly, its revenue from the sale of its share ofthe output arising from the joint operation, its share of the revenue from the sale of the output bythe joint operation; and its expenses, including its share of any expenses incurred jointly. When anentity enters into a transaction with a joint operation in which it is a joint operator, such as a saleor contribution of assets, it is conducting the transaction with the other parties to the jointoperation and, as such, the joint operator shall recognize gains and losses resulting from such atransaction only to the extent of the other parties’ interests in the joint operation.
8. Cash and cash equivalent
The cash listed on the cash flow statements of the Group refers to cash on hand and bank deposit.The cash equivalents refer to short-term (normally with original maturities of three months or less)and liquid investments which are readily convertible to known amounts of cash and subject to aninsignificant risk of changes in value.
9. Translation of foreign currency
(1) Foreign currency transaction
Foreign currency transactions are translated at the spot exchange rate issued by People’s Bank ofChina (“PBOC”) on the 1
st
day of the month when the transactions incurred. Monetary assets and
liabilities in foreign currencies are translated into RMB at the exchange rate prevailing at thebalance sheet day. Exchange differences arising from the settlement of monetary items are chargedas in profit or loss for the period. Exchange differences of specific borrowings related to theacquisition or construction of a fixed asset should be capitalized as occurred, before the relevantfixed asset being acquired or constructed is ready for its intended uses.
(2) Translation of foreign currency financial statements
The asset and liability items in the foreign currency balance sheet should be translated at a spotexchange rate at the balance sheet date. Among the owner’s equity items except “undistributedprofit”, others should be translated at the spot exchange rate when they are incurred. The incomeand expense should be translated at spot exchange rate when the transaction incurs. Translationdifference of foreign currency financial statements should be presented separately under the othercomprehensive income title. Foreign currency cash flows are translated at the spot exchange rateon the day when the cash flows incur. The amounts resulted from change of exchange rate arepresented separately in the cash flow statement.
10. Financial assets and financial liabilities
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 aresolely 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 all
risks 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 when
settling, nevertheless the amount is fixed, or varied partially or fully based on the its own equity’smarket 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 and
forecasts 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 policyBank acceptance note portfolio
Lower credit risk assessed by the managementCommercial acceptance noteportfolio
Same as receivables and provided for excepted credit loss
allowanceReferring 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.
Aging Provision ratioWithin 1 year 6.79%
1 year-2 years 15.34%
2 yeasr-3 years 29.07%
3 years－4 years
46.81%
4 years－5years
72.92%
Over 5 years 100.00%
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 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.
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 policyRelated parties portfolio within theconsolidation
Lower credit risk assessed by the managementOther related parties and non-relatedparties portfolio
Provided for excepted credit loss allowanceReferring 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.
Aging Provision ratioWithin 1 year 6.79%
1 year-2 years 15.34%
2 yeasr-3 years 29.07%
3 years－4 years
46.81%
4 years－5years
72.92%
Over 5 years 100.00%
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 uncollectiblereceivable. If the amount to be written off is bigger than the provision for impairment loss, thedifference is debit to “credit impairment loss”
13.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 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.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 policyRelated parties portfolio within theconsolidation
Lower credit risk assessed by the managementOther related parties and non-relatedparties portfolio
Same as receivables and provided for excepted credit loss
allowanceReferring 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.Aging Provision ratioWithin 1 year 3.35%
1 year-2 years 7.49%
2 yeasr-3 years 22.71%
3 years－4 years
43.35%
4 years－5years
66.59%
Over 5 years 100.00%
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”
14. Inventories
Inventories are materials purchasing, raw material, variance of cost materials, low-valuableconsumable, materials processed on commission, working-in-progress, semi-finished goods,variance of semi-finished goods, and finished goods, engineering construction etc.The inventories are processed on perpetual inventory system, and are measured at their actualcost on acquisition. Weighted average cost method is taken for measuring the inventorydispatched or used. Low value consumables and packaging materials is recognized in the incomestatement by one-off method.After yearend thorough inventory check, at the balance sheet date inventory impairment should beprovided or adjusted according to inventory category. For the finished goods, raw material heldfor sale etc which shall be sold directly, the net realizable value should be confirmed at theestimated selling price less estimated selling expenses and related tax and expenses. The rawmaterial held for production, its realizable value should be confirmed at the estimated selling priceof finished goods less estimated cost of completion, estimated selling expenses and related tax.The net realizable value of inventories held for execution of sale contracts or labor contracts shallbe calculated based on the contract price. If the quantities of inventories in the Group are morethan quantities if inventories subscribed in the sales contracts, the net realizable value of theexcessive part of the inventories should be calculated based on the general selling price. When theimpairment indicators disappear, impairment provision shall be reversed and
15. 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".
16. 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 otheraccounting 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.
17. Held for sale
（1） Any non-current assets or disposal group shall be classified as held for sale if the followingcriteria are met: according to the similar transactions for selling such assets or disposal group ⑴in practice, the assets must be available for immediate sale under current condition. The sale is ⑵highly probable with decision made on a probable selling proposal and the firm purchasecommitment has been obtained, the sale is expected to be completed within one year. Certainregulations request that approvals must be given by relevant authority or supervision regulatorbefore the assets can be sold. Prior to the assets initially classified as held for sale or disposalgroup, the carrying amounts of the asset(or all the assets and liabilities in the disposal group) shallbe measured in accordance with applicable accounting standards. The Company shall recognize animpairment loss and account it in to income statement for the current period, for any initial orsubsequent write- down of the asset(or disposal group) to its fair value less costs to sell if thecarrying amount is higher than its fair value less costs to sell. In the meantime, provision for assetsimpairment shall be made.
（2） The Company acquires a non-current asset(or disposal group) exclusively with a view to itssubsequent resale, it shall be classified as held for sale at the acquisition date only if the conditionof “expected sale can be completed within one year” can be met and also other conditions ofclassified as held for sale can highly probably be met within a short period following theacquisition(usually with three months). When measuring a newly acquired asset(or disposal group)meeting the criteria to be classified as held for sale, it shall be measured at the lower of itscarrying amount had it not been so classified and fair value less costs to sell. Except thenon-current assets or disposal group acquired as part of a business combination, the differencebetween its fair value less costs to sale and initial carrying amount is recognized in the incomestatement.
（3） The Company that loss of control of a subsidiary due to a sale plan of its investment shallclassify its subsidiary planned for sale as a whole as held for sale in the single financial statementof the parent only if the investment in subsidiary meets the criteria of held for sale, regardless ofwhether the Company will retain a proportion of equity interest in its former subsidiary after sale,and classify all assets and liabilities of the subsidiary as held for sale in the consolidated financialstatements
（4） The Company shall recognize a gain for any subsequent increase in fair value less costs tosell of an asset and shall reverse the impairment to the extent that previously recognized whenbeing classified as held for sale, the revisable amount is recognized in the income statement forthe period. Any impairment from the period when the assets are not classified as held for sale can
not be reversed.
（5） The impairment loss recognised for a disposal group shall reduce the carrying amount ofgoodwill of disposal group first, and then reduce the carrying amount of the non-current assetsbased on its proportion on the book.The Company shall recognize a gain for any subsequent increase in fair value less costs to sell of adisposal group and shall reverse the impairment to the extent that previously recognized whenbeing classified as held for sale, in accordance with applicable measuring standards, the revisableamount is recognized in the income statement for the period. Any impairment from the periodwhen the assets are not classified as held for sale and reduced goodwill can not be reversed.For any subsequently reversed amount, after the impairment loss is recognized for held for saledisposal group, the Company shall increase the carrying amount of disposal group based on theproportion of carrying amount of non-current assets excluding goodwill.
（6） Non-current assets classified as held for sale or disposal group shall not be depreciated oramortized, interest and other expenses attributable to the liabilities of a disposal group classifiedas held for sale shall continue to be recognized.
（7） When held for sale assets or disposal group can not meet the criteria for held for saleclassification so that they are not recognized as held for sale or non-current asset will be removedfrom disposal group, they shall be measured at the lower of the following amounts: carrying ⑴amount of assets prior to it classified as held for sale, which is the amount after depreciation,amortization or impairment adjustment as it had not been classified as held for sale ;
recoverable amount.⑵When the Company derecognizes the held for sale assets or disposal group, the remainingunrecognized gain or loss shall be accounted in the income statement.
18. 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 thanthe net profit or loss, of the investee company, previously recorded in the shareholder’s equity ofthe Company are recycled to investment income for the period on disposal.Where the entity has no longer joint control or significant influence in the investee company as aresult of partially disposal of the investment, the remaining investment will be changed to beaccounted for as available for sale financial assets, and the difference between the fair value ofremaining investment at the date of losing joint control or significant influence and its carryingamount shall be recognized in the profit or loss for the year. Other comprehensive incomerecognized from previous equity investment under equity model shall be accounted for on thesame basis as the investee directly disposing of related assets or liability when stopping usingunder equity model.Where the entity has no longer control over the investee company as a result of partially 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 the
year 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.
19. Investment property
The investment property includes property and building and measured at cost modelCategory
Useful life
(years)
Estimated netresidual value rate
Annual depreciation rate
Housing and Buildings 40 3% 2.43%
20. Fixed assets
Recognition criteria of fixed assets: defined as the tangible assets which are held for the purposeof producing goods, rendering services, leasing or for operation & management, and have morethan one year of useful life.Fixed assets shall be recognized when the economic benefit probably flows into the Group and itscost can be measured reliably. Fixed assets include: building, machinery, transportation equipment,electronic equipment and others.All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and are stillbeing used and land is separately measured. Straight-line depreciation method is adopted by theGroup. Estimated net residual value rate, useful life, depreciation rate as follows:
No Category
Useful life
(years)
Estimated netresidual value rate
Annualdepreciation rate
1 Housing and Buildings 20-40
3%,5%,10%
2.25-4.85%
2 Machinery equipment 10-22
3%,5%,10%
4.09-9.7%
3 Transportation equipment 4-15
3%,5%,10%
6-24.25%
4 Electronic equipment 5
3%,5%,10%
18-19.4%
5 Others equipment 10-15
3%,5%,10%
6-9.7%
The Group should review the estimated useful life, estimated net residual value and depreciationmethod at the end of each year. If any change has occurred, it shall be regarded as a change in theaccounting estimates.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 is
most 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.
21. Construction in progress
The criteria and time spot of constructions in progress’s being transferred to fixed assets:
Constructions in progress are carried down to fixed assets on their actual costs when completingand achieving estimated usable status. The fixed assets that have been completed and reachedestimated usable status but have not yet been through completion and settlement procedures arecharged to an account according to their estimate values; adjustment will be conducted uponconfirmation of their actual values. The Group should withdraw depreciation in the next monthafter completion.
22. 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.
23. Intangible assets
The intangible assets of the Group refer to land use right and software. For acquired intangible
assets, 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.
24. Impairment of long-term assets
The Group assesses at each balance sheet date whether there is any indication that long-termequity investments, investment property, fixed assets, construction in progress and intangibleassets with definite useful life may be impaired. If there is any indication that an asset may beimpaired, the asset will be tested for impairment. Goodwill arising in a business combinationand intangible asset with infinite useful life are tested for impairment annually no matter there isany indication of impairment or not.Estimate of recoverable amount is the higher of its fair value less costs to sell and the presentvalue of the future cash flows expected to be derived from the asset.If the recoverable amount of an asset is less than its carrying amount, the carrying amount shall beimpaired and the difference is recognised as an impairment loss and charged to profit or loss forthe period. Once an impairment loss on the assets is recognised, it is not reversed in a subsequentperiod.After assets impairment loss is recognized, depreciation and amortisation of the impaired assetshall be adjusted in the following period so that the adjusted carrying amount(less expectedresidual value) can be depreciated and amortised systematically within the remaining life.When assessing goodwill for impairment, the carrying amount of goodwill shall be allocatedevenly to the assets group or assets portfolio. When testing the assets group or assets portfolioincluding goodwill, if there is any indication of impairment , ignoring the goodwill and testingthe assets group or assets portfolio alone so to work out the recoverable amount and comparing toits carrying amount and recognize the impairment loss. After that, testing the assets group or assetsportfolio with goodwill together, comparing the carrying amount of the assets group or assetsportfolio(including goodwill allocation) with recoverable amount , goodwill impairment shall berecognized when the recoverable amount is lower than its carrying amount.
25. 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 deferred
expense 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.
26. 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.
27. Employee benefits
Employee’s benefit comprises short-term benefit, post-employment benefit, termination benefit
and 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 by
the employees, the actually incurred short term employee benefits shall be recognized as liability
and shall be recognized in P&L or related cost of assets based on benefit objective allocated from
the 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 into
defined contribution plan and defined benefit plan. For defined contribution plan, liability shall be
recognized based on the contributed amount made by the Group to separate entity at the balance
sheet date in exchange of employee service for the period and it shall be recorded into current
profit 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 to
terminate an employee’s employment before the contract due date or an employee’s decision to
accept voluntary redundancy in exchange for those benefits. An entity shall recognize the
termination benefits as a liability and an expense at the earlier date when the entity cannot
unilateral withdraw the termination benefits due to employment termination plan or due to
redundancy suggestion, or when the entity can recognize the restructuring cost or expense arising
from paying termination benefits.
Other long-term employee’s benefit refers to all other employee benefits other than short-term
benefit, post-employment benefit and termination benefit.
If other long-term employee’s benefit is qualified as defined contribution plan, contribution made
shall be recognized as liabilities accordingly for the period in which the service are rendered by
the 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.
28. 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.
29. 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.
30.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 accumulatedperformance 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 incurred
until 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.
31. Government grants
A government grant shall be recognized when the Company complies with the conditionsattaching to the grant and when the Company is able to receive the grant.Assets-related government grant is the government fund obtained by the Company for thepurpose of long-term assets purchase and construction or establishment in the other forms.Income-related grants are the grant given by the government apart from the assets-related grants.If no grant objective indicated clearly in the government documents, the Company shall judge itaccording to the principle mentioned above.Where a government grant is in the form of a transfer of monetary asset, it is measured at theamount received. Where a government grant is made on the basis of fixed amount or conclusiveevidence indicates relevant conditions for financial support are met and expect to probablyreceive the fund, it is measured at the amount receivable. Where a government grant is in theform of a transfer of non-monetary asset, it is measured at fair value. If fair value cannot bedetermined reliably, it is measured at a nominal amount of RMB1 Yuan.Assets-related government grants are recognized as deferred income ore directly offsetting thebook value of the asset, and Assets-related government grants recognized as deferred incomeshall be evenly amortized to profit or loss over the useful life of the related asset.Any assets are sold, transferred, disposed off or impaired earlier than their useful life expireddate, the remaining balance of deferred income which hasn’t been allocated shall be carriedforward to the income statement when the assets are disposed off.Income-related government grants that is a compensation for related expenses or losses to beincurred in subsequent periods are recognized as deferred income and credited to the relevantperiod when the related expense are incurred. Government grants relating to compensation forrelated expenses or losses already incurred are charged directly to the profit or loss for the period.Government grants related to daily business, shall be recognized as other income in accordancewith business nature, otherwise, shall be recognized as non-operating expenses.If any government grant already recognized needs to be returned to the government, theaccounting shall be differed according to the following circumstances:
1) originally recognized as offsetting of related assets' book value, assets book value shall be
adjusted
2) if any deferred income, book value of deferred income shall be offset, excessive portion
shall be accounted into income statement
3) Other situation, it shall be accounted into income statement directly.
32. 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.
33.Lease
The Company’s leasing business includes operating lease and financing lease.As an operating lease lessee and lesser, the lease premium shall be recognized in the cost of assetbased on straight line method within the period or directly to income statement.As a financing lease lessee, the lower of the fair value of leased assets and the present value of theminimum lease payments is recognized as the leased asset, the minimum lease payments arerecognized as the long-term payables, and the difference is recognized as unrecognized financeexpense at the inception of the lease. The company shall adopt the effective interest method toamortize and record as the financial costs during the assets lease term.
34. 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 of
significant adjustment on the book value of asset and liability during the period of future.
（1） Impairment of receivable
Receivable is measured at amortized cost at the balance sheet date and assessed for anyimpairment indicator and the acutely amount of impairment. Objective evidence for impairmentincludes judgmental data of indicating significant decline of future cash flow of individual orgroup of receivable, indicating significant negative financial performance of debtors. Hadreceivable is recovered with certain proof, and in fact, it is relevant to the the matters subsequentto the the loss recognition, the impairment recognized before shall be reversed.
（2） Provision of inventory impairment
Inventory is periodically evaluated at the net realizable value and any cost higher than NRV shallbe recognized as inventory impairment loss. When evaluating the NRV, net realizable value isdetermined by deducting the expected selling expense and relative tax from the estimated sellingprice. When actual selling price or cost differs from the previous estimates, management willmake adjustment on NRV. Therefore, the results based on the present experience may differ fromthe actual results, which caused the adjustment on the carrying amount of inventory in the book.Provision for inventory impairment may vary with the above reasons. Any adjustment onprovision for inventory impairment will affect the income statement.
（3） Provision of goodwill impairment
Each year, goodwill shall be assessed for any impairment. Recoverable amount of assets groupor asset portfolio including goodwill shall be the present value of future cash flow, which needsestimates for calculation.If management adjust the gross profit margin adopted by the present value of future cash flowcalculation of assets group or asset portfolio, adjusted gross profit margin is lower than the marginapplied, the impairment is required.If management adjust the discounting rate before tax applied by the present value of future cashflow calculation of assets group or asset portfolio, adjusted discounting rate before tax is higherthan the rate applied, the impairment is required.If actual profit margin or discounting rate before tax is higher or lower than management’sestimate, any impairment recognized before can not be reversed.
（4） Provision of fixed asset impairment
At the balance sheet date, the management shall implement impairment test on buildings, plantand machinery etc which has any impairment indicator. The recoverable amount of FA is thehigher of PV of future cash flow and net value of fair value after disposal cost, the calculationneeds accounting estimate.If management adjust the gross profit margin adopted by the present value of future cash flowcalculation of assets group or asset portfolio, adjusted gross profit margin is lower than the margin
applied, 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.
35. Changes in Accounting Policies, Accounting Estimates
The Ministry of Finance issued on July 5, 2017 about revision issued by the accounting standardsfor enterprises no. 14 - revenue income guidelines (hereinafter generally referred to as the"income guidelines"), in domestic and at the same time, listed companies and listed overseas andadopted international financial reporting standards or companies prepare financial statements onthe accounting standard for business enterprises, effective as of January 1, 2018; Other domesticlisted enterprises shall enter into force as of January 1, 2020; Non-listed enterprises thatimplement the accounting standards for Business Enterprises shall enter into force as of January 1,2021. In accordance with the above requirements, the Company will implement the relevantguidelines as of January 1, 2020.New Income Standards for the First Implementation Relevant to Financial Statements at theBeginning of the YearConsolidated balance sheet
Item31-Dec-2019
1-Jan-2020
The amount of
adjustmentNotes receivable
Accounts receivable 1,030,342,541.88
1,008,380,111.23
-21,962,430.65
Contract assets
21,962,430.65
+21,962,430.65
Deferred income tax assets
Accounts received in advance
160,571,622.53
-160,571,622.53
Contract liabilities
160,571,622.53
+160,571,622.53
Balance sheet of parent company
Item31-Dec-2019
1-Jan-2020
The amount of
adjustmentNotes receivable
Accounts receivable 526,554,114.61
525,838,172.89
-715,941.72
Contract assets
715,941.72
+715,941.72
Deferred income tax assets
Accounts received in advance 47,114,426.48
-47,114,426.48
Contract liabilities
47,114,426.48
+47,114,426.48
Changes in accounting estimateNone
VI. Taxation
1. The main applicable tax and rate to the Group as follows:
Tax Tax base Tax rateValue-added tax(VAT)
Sales revenue or Purchase 6%、9%、10%、13%、16%City constructiontax
Value-added tax payables 7%Education surcharge
Value-added tax payables 3%Local educationsurcharge
Value-added tax payables 2%Enterprise incometax(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 meterOther tax According to the relevant
provisions of the state and localNotes for tax entities with different EIT rateTax entities EIT rateBingshan 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., Ltd15%
2. Tax preference
The Company obtained the qualification of high and new technology enterprises on 29
th
November,2017 approved by Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State TaxBureau and Local tax Bureau.The Certificate No is GR201721200306, and the validity duration isthree years. According to the tax law, the Company can be granted for the preferential tax policy ofenterprise income tax rate of 15% in three years.
The Company’s subsidiary, Dalian Bingshan Air-conditioning Equipment Co., Ltd. obtained thequalification of high and new technology enterprises on 29
th
November, 2017 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR201721200279, and the validity duration is three years. Accordingto the tax law, it can be granted for the preferential tax policy of enterprise income tax rate of 15%in three years.The Company’s subsidiary, Dalian Bingshan Guardian Automation Co., Ltd. obtained thequalification of high and new technology enterprises on 16
th
November, 2018 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau.The Certificate No is GR20181200562, and the validity duration is three years. Accordingto the tax law, it can be granted for the preferential tax policy of enterprise income tax rate of 15%in three years.The Company’s subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd obtained thequalification of high and new technology enterprises on 15
th
November, 2018 approved by HubeiScience Technology Bureau, Hubei Finance Bureau, Hubei State Tax Bureau and Hubei Local taxBureau. The Certificate No is GR201842000605, and the validity duration is three years. Accordingto the tax law, it can be granted for the preferential tax policy of enterprise income tax rate of 15%in three years.The Company’s subsidiary, Bingshan Technology Service （Dalian） Co.,Ltd.. obtained thequalification of high and new technology enterprises on 29
th
November, 2017 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR2201721200155, and the validity duration is three years.According to the tax law, it can be granted for the preferential tax policy of enterprise income taxrate of 15% in three years.The Company’s subsidiary, Dalian Universe Thermal Technology Co., Ltd.. obtained thequalification of high and new technology enterprises on 29
th
November, 2017 approved by Dalian
Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR2201721200108, and the validity duration is three years.According to the tax law,it can be granted for the preferential tax policy of enterprise income taxrate of 15% in three years.The Company’s subsidiary, Dalian New Meica Electrical Technology Co., Ltd obtained thequalification of high and new technology enterprises on 29
th
November, 2017 approved by DalianScience Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local taxBureau. The Certificate No is GR2201721200301, and the validity duration is three years.According to the tax law, it can be granted for the preferential tax policy of enterprise income taxrate of 15% in three years.VII. Notes to Consolidated Financial Statements
The following disclosure date on this financial statement without special indication, “opening”refers to January 1, 2020; “closing” refers to June 30, 2020; “current period” refers to the periodfrom January 1, 2020 to June 30, 2020; and “last period” refers to the period from January 1, 2019to June 30, 2019; with the currency unit RMB.
1. Cash and cash in bank
Item Closing Balance Opening BalanceCash on hand
106,840.56
92,096.63
Cash in bank
268,783,147.06
301,435,257.93
Other cash and cash equivalents
9,266,488.54
30,591,791.66
Total
278,156,476.16
332,119,146.22
Note: Other cash and cash equivalents is restricted, including deposit for bank acceptance notes of6,636,005.82 Yuan,deposit to creditor of 69,000.00 Yuan,guarantee deposit of 2,561,482.72 Yuan, total of9,266,488.54 Yuan.
2. Notes receivable
(1) Category of notes receivable
Items Closing Balance Opening Balance
Bank acceptance notes
59,963,498.75
71,184,057.96
Commercial acceptance notes
1,012,237.74
48,763,268.45
Total
60,975,736.49
119,947,326.41
Categories according to bad debts provisionItems
Closing BalanceBooking balance
Provision
Booking valueAmount % Amount%Bad debtsprovision based on
61,049,474.22
100.00%
73,737.73
0.12%
60,975,736.49
Items
Closing BalanceBooking balanceProvision
Booking valueAmount % Amount
%groupIncluding: bankacceptance notes
59,963,498.75
98.34%
59,963,498.75
Trade acceptancenotes
1,085,975.47
1.69%
73,737.73
6.79%
1,012,237.74
Total
61,049,474.22
100.00%
73,737.73
0.12%
60,975,736.49
(Continued)
Items
Opening balanceBooking balance Provision
Booking valueAmount % Amount %Bad debtsprovision based ongroup
123,500,123.97
100.00%
3,552,797.56
2.88%
119,947,326.41
Including: bankacceptance notes
71,184,057.96
57.64%
71,184,057.96
Trade acceptancenotes
52,316,066.01
42.36%
3,552,797.56
6.79%
48,763,268.45
Total
123,500,123.97
100.00%
3,552,797.56
2.88%
119,947,326.41
Categories based on groupItems
Closing BalanceBooking balance Provision Provision（%）Trade acceptance notes
1,085,975.47
73,737.73
6.79
Total
1,085,975.47
73,737.73
6.79
(2) Provision for bad debts for the current period:
Category
Openingbalance
Change during the yearClosingBalanceAccrued Collected/reversed
Written-off
Tradeacceptancenotes
3,552,797.56
438,988.01
3,918,047.84
73,737.73
Total
3,552,797.56
438,988.01
3,918,047.84
73,737.73
(3) Notes receivable endorsed or discounted but not mature at the end of year:
Item Closing amount no more
recognized
Closing amount still
recognizedBank acceptance notes
197,699,977.38
Item Closing amount no more
recognized
Closing amount still
recognizedTotal
197,699,977.38
3. Accounts receivable
(1) Category of accounts receivable
Items
Closing BalanceBooking balance
Provision
Booking valueAmount % Amount
%Accountsreceivable withsignificantindividual amountand separate baddebt provision
50,985,562.10
3.66%
15,614,746.06
30.63%
35,370,816.04
Accountsreceivable with baddebt provisionbased on the group
1,340,314,231.72
96.34%
271,880,578.57
20.28%
1,068,433,653.15
Including: aging ascharacteristics ofcredit risk
1,340,314,231.72
96.34%
271,880,578.57
20.28%
1,068,433,653.15
Total
1,391,299,793.82
100.00%
287,495,324.63
20.66%
1,103,804,469.19
Items
Opening balanceBooking balance Provision
Booking value
Amount % Amount %Accountsreceivable withsignificantindividual amountand separate baddebt provision
51,480,562.10
3.97%
12,628,091.85
27.05%
38,852,470.25
Accountsreceivable with baddebt provisionbased on the group
1,244,625,041.06
96.03%
275,097,400.08
22.10%
969,527,640.98
Including: aging as
1,244,625,041.06
96.03%
275,097,400.08
22.10%
969,527,640.98
characteristics ofcredit risk
Total
1,296,105,603.16
100.00%
287,725,491.93
22.20%
1,008,380,111.23
Accounts receivable with significant individual amount and separate bad debt provision:
Items
Closing Balance
Booking balance
Provision %
Reasons forthe provision
Accounts receivable with significantindividual amount and separate bad debtprovision
50,985,562.10
15,614,746.06
30.63
Difficulty inrecouped
Total
50,985,562.10
15,614,746.06
--
| -- | ||
Accounts receivable with bad debt provision based on the group:
Items
Closing Balance
Booking balance
Provision
%
within 1 year 700,318,861.85
47,551,650.72
6.79%
1-2 years
286,565,692.33
43,959,177.20
15.34%
2-3 years
185,647,956.24
53,967,860.88
29.07%
3-4 years
54,975,136.64
25,733,861.46
46.81%
4-5 years
44,824,801.87
32,686,245.52
72.92%
more than 5 years
67,981,782.79
67,981,782.79
100.00%
Total
1,340,314,231.72
271,880,578.57
--
Accounts receivable with the bad debt provisions under accounting aging analysis method
Aging Closing BalanceWithin1 year700,318,861.85
11to 2 y
ears
286,565,692.33
| 11to 2 y | |
185,647,956.24
| 22 to 3 years | |
More than 3 years 218,767,283.40
3 to 4 years54,975,136.64
4 to 5 years95,810,363.97
More than 5 years 67,981,782.79
Total1,391,299,793.82
2) Bad debt provision accrued and written-off (withdraw)
Category
Openingbalance
Change during the periodClosingBalanceAccrued Collected/reversed
Written-off
Bad debtprovision
287,725,491.93
10,086,373.98
10,000.00
10,326,541.28
287,495,324.63
Total
287,725,491.93
10,086,373.98
10,000.00
10,326,541.28
287,495,324.63
3) Accounts receivable written off in current period
Item Written off amountReceivable actually written off 10,326,541.28
The amount of account receivable written off in the current period is RMB 10,326,541.28, and thebad debt provision has been withdrawn RMB 9,375,298.26, and the amount affecting the profit in2020 is RMB 951,243.02.
4) The top five significant accounts receivable categorized by debtors
Company
ClosingBalance
% of thetotal AR
Closing Balance
of ProvisionZhejiang Wankai New Materials Co.,Ltd
50,985,562.10
3.64%
15,614,746.06
Xinyi Yuanda construction and InstallationEngineering Co., Ltd.
32,748,744.00
2.35%
17,167,304.59
Panasonic Appliances Cold-Chain (Dalian) Co., Ltd.
31,658,836.68
2.28%
2,149,635.01
Shenzhen Zhaofude Tourism development
24,749,430.13
1.78%
7,194,659.34
Xiangyang Tongjitang Logistic
23,150,000.00
1.66%
3,551,210.00
Total
163,292,572.91
11.71%
4. Accounts paid in advance
(1) Aging of accounts paid in advance
Items
Closing Balance Opening BalanceAmount Percentage Amount PercentageWithin 1 year
116,719,429.98
75.55%
112,706,836.54
78.93%
1 to 2 years
10,014,184.30
6.48%
17,090,076.33
11.97%
2 to 3 years
20,656,290.68
13.37%
4,786,466.74
3.35%
Over 3 years
7,110,538.04
4.60%
8,203,148.96
5.75%
Total
154,500,443.00
142,786,528.57
Significant prepayment over 1 yearCompany
ClosingBalance
Aging
Unsettled ReasonsDalian Hengtong Refrigeration Equipmentengineering Co., Ltd
5,720,000.00
1-2 years2-3 years
Contract is not fully implementedShanghai POMA Automation Equipment Co.,ltd
4,272,900.00
4-5 years
Contract is not fully implementedDalian Shengda Construction Engineering Co. LTD
2,875,228.35
1-2 years
Contract is not fully implementedYunnan Xinneng Technology Co., Ltd
2,020,380.50
1-2 years
Contract is not fully implementedDalian Jingdian Steel Work Co., Ltd
1,313,924.02
2-3years
Contract is not fully implementedTotal
16,202,432.87
— —
(2) The top five significant accounts paid in advance categorized by debtors
Company
ClosingBalance
Aging
% of the total
advances to
suppliers
Dalian Shentong Electric Co., Ltd.
9,508,361.15
Within 1 year
6.15
DalianHeng Tong refrigeration Equipment EgineeringCo. LTD
5,720,000.00
1-2 years; 2-3
years
3.70
Shanghai POMA Automation Equipment Co.,ltd
4,272,900.00
4-5 years
2.77
Anhui Songze Energy Co. LTD
4,000,000.00
Within 1 year
2.59
Yunnan Xinneng Technology Co., Ltd
2,716,733.26
Within 1 year
1.76
Total
26,217,994.41
16.97
5. Other receivables
Items Closing Balance Opening BalanceInterest receivable348,833.33
583,833.33
Dividend receivable42,152,903.12
33,450.00
Other receivable45,231,318.20
38,113,945.24
Total
87,733,054.65
38,731,228.57
(1) Interest receivable
Items Closing Balance Opening BalanceInterest on Term deposits
348,833.33
583,833.33
Total
348,833.33
583,833.33
(2). Dividends receivable
Company Closing
Balance
Opening Balance
Wuhan Steel and Electricity Co., Ltd.
33,450.00
Panasonic Appliances Compressor (Dalian) Co. , Ltd.
36,026,000.00
Guotai Junan Securities Co., Ltd.6,126,903.12
Total
42,152,903.12
33,450.00
(3). Other receivables
1) Other receivables categorized by nature
Nature Closing Balance Opening BalanceGuarantee deposits33,539,619.85
23,419,558.44
Petty cash7,568,194.23
8,132,205.01
Receivables and Payables10,532,968.99
13,757,372.35
Others1,603,962.41
225,649.71
Total53,244,745.48
45,534,785.51
2) Provision for bad debts
Provision for bad debts
The first phase The second phase The third phase
Total
next 12 months
Expected Credit Lossfor the duration (NoCredit Devaluation)
Expected Credit Loss for
the duration (Creditimpairment has occurred)
Expected credit losses in the
Balance on January 1, 2020 7,420,840.27
7,420,840.27
The balance of January 1, 2020 inthe current period
—— —— —— ——Provision for bad debts 592,587.01
592,587.01
Balance on June 30, 2020 8,013,427.28
8,013,427.28
Other receivables accrued the bad debt provisions under accounting aging analysis method
Aging Closing BalanceWithin 1 year 31,604,557.17
1-2 years 8,547,197.14
2-3 years 4,600,092.98
Over 3 years 8,492,898.19
3-4 years 4,579,901.18
4-5 years 1,881,400.00
Over 5 years 2,031,597.01
Total
53,244,745.48
3) Provision for bad debt
Category
Openingbalance
Change during the yearClosingBalanceAccrued Collected/reversed
Written-off
Bad debtprovision
7,420,840.27
592,587.01
8,013,427.28
Total
7,420,840.27
592,587.01
8,013,427.28
4) Other receivables from the top 5 debtors
Name Category
ClosingBalance
Aging
% ofthe total
OR
Closing Balance
of Provision
State Taxation Administration DalianShahekou District Bureau
Export tax
refund
5,408,818.28
Within 1 year
10.16
181,195.41
Agriculture Bureau of Moyu County Deposit
2,049,000.00
2-3 years
3.85
465,327.90
Huangmei Kanghong Ecological AgricultureDevelopment Co., Ltd.
Deposit
2,279,000.00
1-2 years
4.28
170,697.10
Dalian HualiCoating Equipment Co., Ltd
Deposit
1,650,000.00
3-4 years
3.10
715,275.00
Dalian Delta HK& China Gas Co.,Ltd Deposit
1,100,000.00
Within 1 year
2.07
36,850.00
Total
12,486,818.28
23.45
1,569,345.41
6. Inventories
(1) Categories of inventories
Item
Closing BalanceBook value Provision for decline Net book valueRaw materials112,475,735.09
1,089,032.88
111,386,702.21
Working in progress104,046,721.36
104,046,721.36
Finished goods258,332,640.04
50,000.00
258,282,640.04
Low-value consumable150,998.50
150,998.50
Self-manufacturedsemi-finished products
34,848,590.82
0.00
34,848,590.82
Materials on consignmentfor further processing
914,331.28
914,331.28
Completed constructingprojects not settled
100,391,186.03
1,200,000.00
99,191,186.03
Total611,160,203.12
2,339,032.88
608,821,170.24
(Continue)
Item
Opening BalanceBook value Provision for decline Net book valueRaw materials99,955,218.42
1,089,032.88
98,866,185.54
Working in progress101,259,171.98
101,259,171.98
Finished goods225,850,272.78
50,000.00
225,800,272.78
Low-value consumable
137,722.99
137,722.99
Self-manufacturedsemi-finished products
26,595,183.32
0.00
26,595,183.32
Materials onconsignment for further
processing
2,505,829.92
2,505,829.92
Completed constructing
projects not settled
85,532,846.86
1,200,000.00
84,332,846.86
Total541,836,246.27
2,339,032.88
539,497,213.39
(2) Provision for decline in the value of inventories
Item
OpeningBalance
Increase Decrease
ClosingBalanceAccrual
Other
Reverse/Written- off
Otherstransferred
Raw materials
1,089,032.88
1,089,032.88
Finished goods
50,000.00
50,000.00
Completed constructingprojects not settled
1,200,000.00
1,200,000.00
Total
2,339,032.88
2,339,032.88
(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 NRVCompleted constructing projects unsettled Lower of cost and NRV
7. Contract assets
Item
Closing Balance
Opening Balance
Book value
Provision for
decline
Net book
value
Book value
Provision for
decline
Net book
valueContract assets
Provision for
102,887,603.42
8,441,885.81
94,445,717.61
23,562,311.61
1,599,880.96
21,962,430.65
Total
102,887,603.42
8,441,885.81
94,445,717.61
23,562,311.61
1,599,880.96
21,962,430.65
The amount and reasons for significant changes in the book value of the contract assets during thecurrent period:
Item
Changes in the amount
reasonContract assets
72,483,286.96
Newly signed contract
Total
72,483,286.96
| —— | ||||
Provision for bad debt
Item
Accrued Collected/reversed
Written-off
reason
Provision for impairment of contract assets
6,842,004.85
Total
6,842,004.85
| -- | ||||||
8. Other current assets
Item Closing Balance Opening BalancePrepaid expenses
599,467.91
119,323.70
Prepaid income tax presentedat net amount after offsetting
739,817.03
926,962.16
VAT to be deducted
10,374,870.36
13,114,701.01
Prepaid turnover tax
11,143.58
Total
11,714,155.30
14,172,130.45
9.Long-term equity investments
Investee
Beginning
balance
Increase/Decrease
Ending balance
Provision forimpairment
Increased
Decreased
Gains and
lossesrecognizedunder the
equitymethod
Adjustmen
t of othercomprehen
siveincome
Changeof otherequity
Cash bonus
or profitsannounced to
issue
Provision forimpairment of
the current
period
Others
Associates
Panasonic Appliances Air-conditioningand Refrigeration (Dalian) Co., Ltd.
177,390,883.01
-7,151,886.71
3,400,000.00
166,838,996.30
Dalian Honjo Chemical Co., Ltd. 8,535,439.50
202,736.66
8,738,176.16
Panasonic Appliances Cold-Chain(Dalian) Co., Ltd.
267,179,066.77
-5,126,459.68
262,052,607.09
Keihin-Grand Ocean ThermalTechnology (Dalian) Co., Ltd.
61,090,955.30
83,797.06
8,600,000.00
52,574,752.36
Panasonic Appliances Compressor(Dalian) Co., Ltd.
471,693,615.32
11,156,432.40
36,026,000.00
446,824,047.72
MHI Bingshan Refrigeration (Dalian)Co.,Ltd.
13,892,866.25
52,472.24
13,945,338.49
Beijing Huashang BingshanRefrigeration and Air-conditioningMachinery Co., Ltd.
1,537,672.84
-40,708.15
1,496,964.69
Dalian Fuji Bingshan Vending MachineCo., Ltd.
193,109,792.45
-2,512,123.83
190,597,668.62
Jiangsu JingXue Insulation TechnologyCo.,Ltd
185,385,615.80
5,010,588.30
190,396,204.10
Dalian Fuji Bingshan Vending MachineSales Co., Ltd
12,614,480.80
-1,069,983.28
11,544,497.52
Wuhan Sikafu Power ControlEquipment Co., Ltd
5,266,277.34
-479,796.67
4,786,480.67
Panasonic Appliances RefrigeratingSystem (Dalian) Co., Ltd.
33,975,371.41
2,290,230.84
2,528,392.05
33,737,210.20
Dalian Bingshan Metal TechnologyCo.,Ltd
172,730,683.19
13,479,968.92
186,210,652.11
Dalian Bingshan Group Managementand Consulting Co.,ltd
57,778,289.16
920,905.89
58,699,195.05
Total1,662,181,009.14
16,816,173.99
50,554,392.05
1,628,442,791.08
10. Other non-current financial assets
Item Closing Balance Opening BalanceMeasured as fair value method
284,146,396.67
| 303,469,706.51 |
Measured as cost method
Total
284,146,396.67
| 303,469,706.51 |
11. Investment property
Item
Property&
Building
Land-use-rights TotalI. Initial Cost
1. Opening Balance 194,717,932.54 24,391,511.82 219,109,444.36
2. Increase
(1) Outsourcing
(2) Transferred from
Construction in progress
3. Decrease
(1) Disposal
(2)Transferred to other
4. Closing Balance 194,717,932.54 24,391,511.82 219,109,444.36II. Accumulated Depreciation
1. Opening Balance 112,054,714.34 10,854,222.78 122,908,937.12
2. Increase 2,272,247.04 243,915.12 2,516,162.16
(1)Provision or amortization 2,272,247.04 243,915.12 2,516,162.16
(2) Transferred from
Construction in progress
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance 114,326,961.38 11,098,137.90 125,425,099.28III. 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
80,390,971.16 13,293,373.92 93,684,345.08
2. Opening book value
82,663,218.20 13,537,289.04 96,200,507.24
Note: The Company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co., Ltd., and rent # 6 workshop buildinglocated on No. 106 Liaohe East Rd, Dalian Economic and Technology Development Zone to MHI Bingshan Refrigeration (Dalian)Co., Ltd. The rental area is 15,259.04 square meters, and the rental term till 16th July, 2029. The annual rent fee for 2020 is RMB 4.0million Yuan.
In 2019, The annual rent fee for 2020 is RMB 4.0 million Yuan. The Company signed rental contract with Dalian BingshanWisdom Park Co., Ltd., and rent out the whole land and house of the Company’s old plant locating at No. 888, Southwest Road,Shahekou District, Dalian to 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 annual rent fee for 2020 is RMB
8.646 million Yuan.
On June 1
st
, 2017, the Company’s subsidiary, Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd., signed the leasingcontract with Dalian Jingxue Energy Saving Technology Co. Ltd. and rented out # 7 building of workshop located on No.92, TieshanWest Rd, DDA, Dalian. The rental area is 3653.76 square metres, and annual rent is RMB 840 thousand Yuan with the contracteddate between June 1
st
, 2017 and May 31
st
,2022. Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd. also rented out Room201, # 4 building located on No.92, Tieshan West Rd, DDA, Dalian to Dalian Jingxue Energy Saving Technology Co., Ltd. The rentalarea is 25 square metres, and annual lease premium is RMB 15 thousand Yuan with the contracted date between June 1
st
, 2017 andMay 31
st
, 2022.
12. Fixed assets
Items Closing Book Value Opening Book ValueFixed asset957,684,403.68
992,435,172.94
Fixed asset clearance
Total 957,684,403.68
992,435,172.94
(1) Fixed assets detail
Item
Property&
buildings
MachineryEquipment
Transportation
Equipment
OtherEquipment
TotalI. Initial Cost
1. Opening Balance
719,373,101.53
745,999,413.09
16,020,380.97
68,985,144.10
1,550,378,039.69
2. Increase
54,455.45
7,019,358.99
1,258,849.55
803,331.45
9,135,995.44
(1) Purchase
54,455.45
6,968,916.51
1,258,849.55
803,331.45
9,085,552.96
(2) Transferred
fromconstruction-in-progress
50,442.48
50,442.48
(3) Acquired from
businesscombination
3. Decrease
12,538,935.87
2,149,231.20
2,645,924.52
17,334,091.59
(1) Disposal
12,538,935.87
2,149,231.20
2,645,924.52
17,334,091.59
(2) Transferred to
other
Item
Property&
buildings
MachineryEquipment
Transportation
Equipment
OtherEquipment
Total
4. Closing Balance
719,427,556.98
740,479,836.21
15,129,999.32
67,142,551.03
1,542,179,943.54
II. AccumulatedDepreciation
1. Opening Balance
99,448,302.37
396,894,395.44
11,794,584.34
49,288,265.10
557,425,547.25
2. Increase
8,817,596.81
24,271,080.85
529,003.13
2,739,353.00
36,357,033.79
(1)Accrued
8,817,596.81
24,271,080.85
529,003.13
2,739,353.00
36,357,033.79
(2) Acquired from
businesscombination
3. Decrease
0.00
6,229,153.66
1,664,925.95
1,910,281.07
9,804,360.68
(1) Disposal
0.00
6,229,153.66
1,664,925.95
1,910,281.07
9,804,360.68
(2) Transferred to
other
4. Closing Balance
108,265,899.18
414,936,322.63
10,658,661.52
50,117,337.03
583,978,220.36
III. ImpairmentReserve
1. Opening Balance
517,319.50
517,319.50
2. Increase
(1)Accrued
3. Decrease
(1) Disposal
4. Closing Balance
517,319.50
517,319.50
IV. Book Value
1. Closing book
value
611,161,657.80
325,026,194.08
4,471,337.80
17,025,214.00
957,684,403.68
2. Opening book
value
619,924,799.16
348,587,698.15
4,225,796.63
19,696,879.00
992,435,172.94
(2)The situation of fixed assets leased through finance lease
Item
Initial Cost
Accumulated Depreciation
Impairment Reserve
Book Value
MachineryEquipment
2,527,482.76
469,126.14
2,058,356.62
13. Construction-in-progress
(1) Construction in progress details
Item
Closing Balance Opening BalanceBook Balance Provision
Book Value Book Balance Provision
Book ValueBuildingsreconstruction
14,866,010.00
14,866,010.00
14,866,010.00
14,866,010.00
Improvement1,058,255.11
1,058,255.11
502,148.95
502,148.95
Item
Closing Balance Opening BalanceBook Balance Provision
Book Value Book Balance Provision
Book Valueof machineryConstruction ofintelligentsoftware
12,203,165.20
12,203,165.20
12,161,571.62
12,161,571.62
Financing leaseitem
8,838,326.42
8,838,326.42
8,755,326.23
8,755,326.23
Total36,965,756.73
36,965,756.73
36,285,056.80
36,285,056.80
(2) Change in the significant construction in progress
Name Opening Balance
Increase
Decrease
Closing
BalanceTransfer tofixed assets
Otherdecrease
Improvement ofmachinery
502,148.95
556,106.16
1,058,255.11
Construction ofintelligent software
12,161,571.62
401,612.39
360,018.81
12,203,165.20
Financing lease item8,755,326.23
83,000.19
8,838,326.42
Total21,419,046.80
1,040,718.74
360,018.81
22,099,746.73
(Continued)
NameBudget
Percent ofinvestment
againstbudget
Progress
ofconstructio
n
Accumul
atedcapitaliz
edinterest
Including:
Accumulated
capitalizedinterest of the
year
Interestcapitalizatio
n
rate(%)
Source of
fundsImprovement ofmachinery
3,490,428.31
30.32%
30.32%
Selffinancing
Construction ofintelligentsoftware
15,040,000.00
81.14%
81.14%
Selffinancing
Financing leaseitem
15,020,000.00
58.85%
58.85%
Selffinancing
Total
33,550,428.31
—
—
14. Intangible assets
(1) Intangible assets list
Item
Land useright
Patenttechnology
Non Patenttechnology
Others TotalI. Initial Cost
1. Opening Balance
152,890,196.80
17,630,188.82
5,000,000.00
19,101,108.42
194,621,494.04
2. Increase
360,018.81
360,018.81
(1) Purchase
360,018.81
360,018.81
(2) Acquired from business
combination
Item
Land use
right
Patenttechnology
Non Patenttechnology
Others Total
(3)Transferred from
construction-in-progress
3. Decrease
(1) Disposal
4. Closing Balance
152,890,196.80
17,630,188.82
5,000,000.00
19,461,127.23
194,981,512.85
II.Accumulatedamortisation
1. Opening Balance
35,069,090.32
4,437,851.45
2,000,004.00
11,574,170.17
53,081,115.94
2. Increase
990,551.49
561,698.10
250,000.00
931,458.40
2,733,707.99
(1)Accrued
990,551.49
561,698.10
250,000.00
931,458.40
2,733,707.99
3. Decrease
(1) Disposal
4. Closing Balance
36,059,641.81
4,999,549.55
2,250,004.00
12,505,628.57
55,814,823.93
III. Impairment Reserve
1. Opening Balance
2. Increase
(1)Accrued
3. Decrease
(1) Disposal
4. Closing Balance
IV. Book Value
1. Closing book value
116,830,554.99
12,630,639.27
2,749,996.00
6,955,498.66
139,166,688.92
2. Opening book value
117,821,106.48
13,192,337.37
2,999,996.00
7,526,938.25
141,540,378.10
15. Goodwill
(1) Original cost of goodwill
Name
OpeningBalance
Increased during
current year
Decreased during
current year
ClosingBalanceEnterprises mergerincrease
Other
Disposal
Other
Dalian Universe ThermalTechnology Co., Ltd.
1,440,347.92
1,440,347.92
Dalian Bingshan GroupEngineering 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.
16. Long-term repayments
Item
OpeningBalance
Increase
Amortization
OtherDecrease
ClosingBalanceEmployee’s dormitory use right
2,012,170.38
69,239.16
1,942,931.22
Renovation and rebuilding1,175,049.06
405,529.42
769,519.64
Lease531,450.00
53,145.00
478,305.00
Membership fee for Golf440,000.00
8,250.00
431,750.00
Technology entrance fee of coldand heat machinery
840,206.25
186,712.50
653,493.75
Greenland of new factory6,616,523.14
446,057.76
6,170,465.38
Service fee from Technologycenter
31,446.64
18,867.90
12,578.74
Total
11,646,845.47
1,187,801.74
10,459,043.73
17. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offsetting
Item Closing Balance Opening Balance
Deductibletemporarydifference
Deferred tax
assets
Deductible temporary
difference
Deferred tax
assetsProvision forimpairment of assets
2,856,352.38
260,452.84
2,856,352.38
560,452.86
Unrealized profit frominternal transaction
14,598,643.89
2,189,796.58
14,598,643.87
2,189,796.58
Provision for creditimpairment
290,189,157.73
57,612,627.96
300,299,010.72
59,647,415.64
Total
307,644,154.00
60,062,877.38
317,754,006.97
62,397,665.08
(2) Deferred tax liabilities without offsetting
Item Closing Balance Opening Balance
Taxable temporarydifference
Deferred tax
liabilities
Taxable temporary
difference
Deferred tax
liabilitiesChanges in the fair valueof other non-currentfinancial assets
255,444,730.13
38,316,709.52
274,768,039.93
41,215,205.99
Total
255,444,730.13
38,316,709.52
274,768,039.93
41,215,205.99
(3) Unrecognized deferred tax assets details
Item Closing Balance Opening BalanceDeductible temporary difference
59,426,067.14
11,851,149.26
Deductible loss69,961,611.48
97,241,944.12
Total
129,387,678.62
109,093,093.38
(4) Unrecognized deductible loss of deferred tax assets expired years
Year Closing Balance Opening Balance Notes2020
3,240,819.97
2021
2022 716,158.09
716,158.09
2023 52,903,288.00
16,927,871.66
2024 16,342,165.39
76,357,094.40
2025
Total
69,961,611.48
97,241,944.12
18. Short-term loan
(1) Category of short term loan
Loan category Closing Balance Opening BalanceMortgage loan
16,600,000.00
47,170,000.00
Credit loan
366,093,600.00
308,082,000.00
Total
382,693,600.00
355,252,000.00
19. Notes payable
Notes category Closing Balance Opening BalanceCommercial acceptance notes
22,985,825.00
13,153,582.80
Bank acceptance notes
241,020,484.11
292,314,922.58
Total
264,006,309.11
305,468,505.38
20. Accounts payable
(1) Accounts payable
Item Closing Balance Opening BalanceMaterial payments
664,967,195.37
536,857,742.20
Project payments
256,212,791.53
207,388,636.82
Equipment payments
19,164,984.65
67,053,415.79
Others
336,510.31
3,031,889.21
Total
940,681,481.86
814,331,684.02
(2) Accounts payable with age over 1 year
Name of company
ClosingBalance
Reason of unpaid or not
carried forward
Panasonic Refrigerating System (Dalian) Co., Ltd.
13,774,637.70
Project is uncompletedcontract is not finishedHeilongjiang Longleng Technology Co., Ltd
9,413,290.00
Project is uncompletedcontract is not finishedWuhan KaiXing Economic Development Co., Ltd
6,845,648.14
Project is uncompletedcontract is not finishedBinzhou Shanfu Refrigeration Co.,Ltd
6,566,526.22
Project is uncompletedcontract is not finishedTotal36,600,102.06
21. Contract Liabilities
Item Closing Balance Opening BalanceAccounts received in advance201,589,646.20
160,571,622.53
Total
201,589,646.20
160,571,622.53
22. Employee’s payable
(1) Category of employee’s payable
Item Opening
Balance
Increase Decrease Closing
BalanceShort-term employee’spayable
31,701,317.58
133,143,875.44
153,347,067.55
10,304,848.64
Post-employment benefit–defined contribution plan
4,709,599.79
4,657,892.57
51,707.22
Termination benefits
206,650.00
206,650.00
Total
31,701,317.58
138,060,125.23
158,211,610.12
10,356,555.86
(2) Short-term employee’s payables
Item Opening
Balance
Increase Decrease Closing
BalanceSalaries, bonus,
26,129,186.34
108,836,058.57
129,222,948.73
5,806,996.28
Item Opening
Balance
Increase Decrease Closing
Balanceallowance, andsubsidyWelfare
4,142,390.78
4,959,663.22
4,464,050.23
3,258,602.73
Social insurance
6,701,840.32
6,687,262.77
136,001.66
Include: Medical
insurance
5,798,067.25
5,671,023.70
127,043.55
On-dutyinjuryinsurance
197,631.88
197,631.88
9,440.65
Maternityinsurance
875,891.12
875,891.12
Housing funds
162,229.36
10,703,749.17
10,991,711.73
-125,733.20
Labor union andtraining expenses
1,267,511.10
1,942,564.16
1,981,094.09
1,228,981.17
Total
31,701,317.58
133,143,875.44
153,347,067.55
10,304,848.64
(3) Defined contribution plan
Item Opening
Balance
Increase Decrease Closing
BalancePension
3,558,913.37
3,508,880.97
50,032.40
Unemployment insurance
34,398.23
32,723.41
1,674.82
Company annuity plan
1,116,288.19
1,116,288.19
Total
4,709,599.79
4,657,892.57
51,707.22
23. Tax payable
Item Closing Balance Opening BalanceValue-added tax4,431,168.46
2,486,893.96
Enterprise income tax1,099,836.96
2,246,427.46
Individual income tax90,640.38
244,461.02
City maintenance and construction tax110,760.05
60,130.79
Real estate tax1,897,782.33
1,853,410.62
Land use tax1,100,471.22
1,094,760.28
Stamp duty119,887.82
153,970.35
Education surcharge79,114.30
42,950.57
Green tax 456.51
573.64
Safeguard fund for disables
440.00
Total 8,930,118.03
8,184,018.69
24. Other accounts payable
ItemClosing Balance Opening BalanceInterest payable 5,180,733.92
6,396,385.83
Dividend payable
28,304,531.21
533,156.00
Other accounts payable
27,558,513.06
48,991,518.86
Total
61,043,778.19
55,921,060.69
. (1) Interest payable
Item Closing Balance Opening BalanceInterest on long term loan
5,018,233.79
6,260,969.04
Interest on corporate bond
162,500.13
135,416.79
Total5,180,733.92
6,396,385.83
(2). Dividend payable
Item Closing Balance Opening BalanceOrdinary share dividend
28,304,531.21
533,156.00
Total28,304,531.21
533,156.00
（3）Other accounts payable
Other payables categorized by payments naturePayments nature
Closing Balance Opening BalanceLoan from non-financial institutes
Cash pledge and security deposit9,850,863.02
9,620,594.19
Apply for reimbursement and unpaid7,442,222.80
21,211,414.23
Funds about related parties
0.00
5,900,000.00
Receipts under custody946,865.97
6,980,440.67
Others9,318,561.27
5,279,069.77
Total
27,558,513.06
48,991,518.86
25. Non-current liabilities due within one year
Item Closing Balance Opening Balance
Long-term accounts payable with one year
10,276,677.27
14,174,643.42
Total10,276,677.27
14,174,643.42
26. 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, Bingshan
Category Closing Balance Opening BalanceGuarantee loan 160,000,000.00
160,000,000.00
Total 160,000,000.00
160,000,000.00
Group 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.
27. Bonds payable
(1)Bonds payable
Item Closing Balance Opening BalanceExchangeable corporate bonds 25,000,034.00
25,000,034.00
Total25,000,034.00
25,000,034.00
(2)The changes of bond
Bond name Par value Issue date
Bond
term
| Bond | |
Issue Amount
Opening
balance
Issued
this year
Interest atpar value
Repay
Closing
balanceExchangeablecorporatebonds
176,000,000.00
2018.7.30 3 years
176,000,000.00
25,000,034.00
0.00
25,000,034.00
Total-- -- -- 176,000,000.00
25,000,034.00
0.00
25,000,034.00
(3)other notes:
Approved by the Shanghai Stock Exchange “Letter of No-Objection to the Non-public Issuance ofConvertible Corporate Bonds of Dalian Refrigeration Co., Ltd.” ([2018] No. 125), the companynon-publicly issued 1.76 million number of convertible corporate bonds on July 30, 2018, at a par valueof 100Yuan, and raised a total of 176 million Yuan. The bond is based on simple annual interest rate witha fixed interest rate of 1.3%. It is repayable once a year and pays interest once a year. The relevantissuance costs are RMB 1,496,000.00.The term of the bond swap is from the first trading day after the 6 months of issuance of the convertiblecorporate bonds to the maturity date of the convertible corporate bonds, which is from January 30, 2019to July 29, 2021.The total number of shares exchanged by the holders of "18 Da Leng EB" till Dec. 31, 2019 is8,388,887.00 shares, and the exchange price is 18 yuan per share
28. Long term accounts payable
Item Closing Balance Opening Balance
Long term accounts payable397,771.84
397,771.84
Total397,771.84
397,771.84
(1) Category by nature
Item Closing Balance Opening Balance
Financial lease397,771.84
397,771.84
29. Deferred income
(1) Category of deferred income
Item Opening
Balance
Increase
Decrease Closing
Balance
Formation
BasisGovernment subsidy
99,154,666.29
11,295,411.67
2,674,413.00
107,775,664.96
Sale-leaseback contract
2,872.23
2,872.23
Total
99,157,538.52
11,295,411.67
2,677,285.23
107,775,664.96
—
(2) Government subsidy project
Government subsidy item
OpeningBalance
Increase
Recordedinto other
income
Offset costor expense
ClosingBalance
Related with
asset/equity
Subsidy fund for highly
| Subsidy fund for highly |
| effective heat pump and |
related system
1,497,604.00
275,836.02
1,221,767.98
AssetrelatedRelocation compensation41,218,000.00
41,218,000.00
AssetrelatedApplication of NH
and CO
| instead of R22 screw |
| refrigerating machine |
combined condensing unit
14,477,971.01
787,005.30
13,690,965.71
AssetrelatedCompressor IC system
4,279,196.37
187,229.64
4,091,966.73
AssetrelatedUltrasonic intelligent defrosttechnology
4,010,844.42
15,000.00
132,416.76
3,863,427.66
AssetrelatedEco Compressor project
25,083,171.79
1,276,925.28
23,806,246.51
AssetrelatedR290 replacement of R22large industrial screw unit
4,877,498.70
8,129,164.50
13,006,663.20
Assetrelated
R290 replacement of R22
industrial double stage screwunit
1,780,380.00
R290 replacement of R22
2,967,300.00
4,747,680.00
AssetrelatedModel innovation solutionbased on industrial Internetplatform
1,930,000.00
1,930,000.00
AssetrelatedProduct standardization pilotproject
7,547.17
7,547.17
IncomerelatedQuick pre-cooling red watercirculation cooling devicefor poultry slaughtering
191,400.00
191,400.00
AssetrelatedTotal
99,154,666.29
11,295,411.67
15,000.00
2,674,413.00
107,775,664.96
Asset related grant shall be offset the cost or expense within the asset’s useful life; income related grantshall be booked into other income or offset cost or expense if it is relevant to daily activity, otherwise it shallbe booked into non-operating expense.
30. Share capital
Item
Openingbalance
Increase/decrease（+、-）
ClosingbalanceNewshareissued
Sharedividend
Transferfrom capital
reserve
others
Subtotal
shares
Total
843,212,507.00 843,212,507.00
31. 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
67,146,423.80
Total
726,768,468.00
726,768,468.00
32. Other comprehensive income
Items
OpeningBalance
2020.1-6
ClosingBalance
Amount for theperiod before
income tax
Less：
Previouslyrecognized in profit or
loss in othercomprehensive income
32. Other comprehensive income
Less：
income tax
After-tax attributeto the parentcompany
After-taxattribute tominorityshareholderI.Later can’t reclassified into profitand loss of other comprehensiveincome
II. Later reclassified into profit and lossof other comprehensive income
2,501,459.77
2,501,459.77
Proportional other comprehensiveincome of investee which is reclassifiedinto income statement under equitymethod
2,501,459.77
2,501,459.77
Other comprehensive income total2,501,459.77
2,501,459.77
33. Special Reserve
Items
OpeningBalance
Increase Decrease
ClosingBalanceSafety production cost
1,127,227.68
1,127,227.68
Total
1,127,227.68
1,127,227.68
34. Surplus reserves
Item Opening
Balance
Increase Decrease
ClosingBalanceStatutory surplus reserve
349,664,058.11
349,664,058.11
Discretionary surplus reserve
419,059,754.42
30,409,270.84
449,469,025.26
Total
768,723,812.53
30,409,270.84
799,133,083.37
The Company made profit distribution within the reporting period. According to the 2019 annual meeting,20% of net profit in the 2019 fiscal annual report is provided for discretionary surplus reserve of30,409,270.84 Yuan.
35. Undistributed profits
Item 2020-06-30 2019-06-30Closing balance of 2019
1,038,358,782.59
764,859,288.45
Add: Adjustments to the opening balance ofundistributed profits
294,408,505.78
Opening balance of 2020
1,038,358,782.59
1,059,267,794.23
Add: net profit attributable to shareholders ofparent company in the year
-23,604,345.52
108,373,919.30
Less: Provision for statutory surplus reserves
0.00
Provision for any surplus reserves
30,409,270.84
32,428,137.09
Dividends payable for common shares
25,296,375.21
42,160,625.35
Closing balance of the current period
959,048,791.02
1,093,052,951.09
36. Operating revenue and cost
Items
2020.01-06 2019.01-06
Sales revenue Cost of sales Sales revenue Cost of salesRevenue fromprinciple operation
857,035,486.66
732,433,950.29
1,052,236,172.60
903,291,760.46
Revenue fromother operation
16,367,927.80
15,641,145.83
23,493,067.97
16,468,219.40
Total
873,403,414.46
748,075,096.12
1,075,729,240.57
919,759,979.86
37. Operating taxes and surcharges
Items
2020.01-06 2019.01-06
City construction tax
822,185.02
1,253,720.56
Education surcharge
589,369.05
884,724.11
Property tax3,835,774.27
3,758,045.42
Land use tax2,189,549.16
2,185,948.32
Vehicle and vessel tax
11,571.44
10,907.04
Stamp duty563,772.21
633,223.16
Environmental Protection Tax8,270.68
3,606.49
Levee fee
108.77
Total
8,020,491.83
8,730,283.87
38. Selling expenses
Items
2020.01-06 2019.01-06
Official business expense
2,994,176.07
3,988,847.51
Employee benefit
18,899,327.99
21,396,465.27
Depreciation expense
110,392.35
155,303.69
Transportation expense
5,215,850.58
12,587,418.44
Business entertaining expense
2,356,885.18
4,881,843.49
Travel expense
3,742,450.00
5,066,994.70
Maintenance and repair expense 1,890,493.88
3,484,274.34
Advertisement and bids expense
806,949.46
980,196.85
Other expense
-569,730.79
555,474.33
Total
35,446,794.72
53,096,818.62
39. Administrative expenses
Items
2020.01-06 2019.01-06
Official expense
5,862,390.02
7,892,079.60
Employee benefit
44,701,524.40
52,352,461.45
Depreciation expense
5,681,960.08
6,251,109.67
Business entertaining expense
793,831.00
2,081,570.86
Travel expense
1,161,310.14
4,064,689.71
Maintenance and repair expense
3,332,999.96
2,309,890.96
Advertisement expense
100,998.04
408,712.91
Insurance expense
407,320.27
533,710.46
Long-term assets amortization
3,319,148.39
3,801,155.48
Design consultant and test service expense
3,623,329.62
2,237,748.01
Safety production cost
1,127,227.68
1,031,715.77
Other expense
658,087.26
2,977,250.33
Total
70,770,126.86
85,942,095.21
40. R&D expenses
Items
2020.01-06 2019.01-06
Employee benefit21,428,261.05
21,344,115.07
Depreciation and amortization expense2,110,399.66
2,405,920.60
Raw material478,225.01
3,770,083.72
Entrust external R&D investment6,283.00
132,075.47
Other expense691,852.56
897,669.31
Total
24,715,021.28
28,549,864.17
41. Financial expenses
Items
2020.01-06 2019.01-06
Interest expenses
17,434,559.05
5,542,418.26
Less: Interest income
1,421,000.67
572,223.80
Add: Exchange loss
-553,243.45
-570,799.89
Others expenditure
2,375,420.28
1,068,192.62
Total
10,061,328.07
5,467,587.19
42. Other income
Items
2020.01-06 2019.01-06
VAT refund
53,838.84
Grant given by the government for relocation
556,998.00
Government subsidy6,507,868.29
1,424,600.00
Total
6,507,868.29
2,035,436.84
43. Investment income
Items
2020.01-06
2019.01-06
Long-term equity investment gain under equity method16,816,173.99
72,239,478.13
Gain from holding of other non-current financial assets
6,126,903.12
4,320,252.20
Gain from disposal other non-current financial assets
40,567,691.40
Total22,943,077.11
117,127,421.73
44. Fair value change income
Items 2020.01-06 2019.01-06
Other non-current financial assets -19,323,309.84
40,461,125.59
Total-19,323,309.84
40,461,125.59
45. Credit impairment losses (loss listed as“-“)
Items 2020.01-06 2019.01-06Bad debt loss on notes receivable
3,479,059.83
Bad debt loss on receivable
-10,086,373.98
Bad debt loss on other receivable
-592,587.01
Bad debt loss on contract assets
-6,842,004.85
Total
-14,041,906.01
46. Assets impairment losses
Items
2020.01-06 2019.01-06
Loss of bad debts
-16,863,134.42
Provision for inventory impairment
Total
-16,863,134.42
The Assets impairment losses increased 108.60% in the current period compared with the previousperiod, mainly because of the increase in provision for bad debts against receivables in the currentperiod.
47. Gain on assets disposal
Item2020.01-06 2019.01-06
Gains on disposal of non-current assets10,788.53
1,242,799.31
Including: Gain on non-current assetsdisposal income not classified as heldfor sale
10,788.53
1,242,799.31
Including: gain on fixed assets disposal10,788.53
1,242,799.31
Total 10,788.53
1,242,799.31
48. Non-operating income
Item2020.01-06 2019.01-06
Amounts recognized intonon-recurring profit or loss
for the yearDebt restructuring gains 162,560.00
1,999,241.94
162,560.00
Government grant
337,400.00
Penalty and fine income 216,492.50
135,723.19
216,492.50
Others 987,052.84
987,052.84
Total 1,280,059.12
2,472,365.13
1,280,059.12
49. Non-operating expenses
Item2020.01-06
2019.01-06
Amounts recognized intonon-recurring profit or loss for the year
Outward donation
60,000.00
Quality Claim
48,522.19
46,516.94
48,522.19
Non-current assets scrap loss
44,972.15
15,126.57
44,972.15
Total
93,891.78
121,643.51
93,891.78
50. Income tax expenses
(1) Income tax expenses
Items2020.01-06 2019.01-06
Current income tax expenses
1,427,499.91
16,570,975.86
Deferred income tax expenses-2,919,759.08
-2,804,370.02
Total
-1,492,259.17
13,766,605.84
(2) Adjustment process of accounting profit and income tax expense
Items2020.01-06
Total profits-26,402,759.00
Current income tax expense accounted by tax and relevantregulations
-3,960,413.85
Influence of different tax rate suitable to subsidiary414,712.69
Influence of income tax before adjustment-641,993.37
Influence of non taxable income-542,965.09
Influence of not deductable costs, expenses and losses3,826,755.46
Influence of deductible temporary difference or deductible losses ofdeferred income tax assets derecognized in reporting period.
-588,355.00
Income tax expenses-1,492,259.17
51. Other comprehensive income
Refer to the note VII.32 other comprehensive income for details.
52. Notes to cash flow statement
(1) Cash receipt/payment of other operating/investing/financing activities
1) Other cash received relating to operating activities
Items2020.01-06 2019.01-06
Government grants12,168,371.56
1,762,000.00
Received travel expense refund1,063,272.24
2,190,560.23
Deposit given back14,765,375.21
11,938,968.66
Interest income314,336.56
859,925.57
Others4,566,093.18
1,027,584.20
Total
32,877,448.75
17,779,038.66
2) Other cash paid relating to operating activities
Items
2020.01-06 2019.01-06
Business travel borrowing
8,230,047.29
5,490,477.40
Deposit paid17,663,991.76
8,675,281.20
Expenditure34,127,531.31
47,585,026.48
Bank handling charges1,769,898.93
965,122.59
Others583,138.56
713,616.93
Total62,374,607.85
63,429,524.60
3) Others cash received relating to financing activities
Items2020.01-06 2019.01-06
Collection of guarantee money32,960,611.49
38,323,050.64
Sale leaseback and financial lease3,886,589.07
Total
36,847,200.56
38,323,050.64
4) Others cash played relating to financing activities
Items2020.01-06 2019.01-06
Payment of guarantee money9,266,488.54
17,348,438.30
Sale& lease back and financial lease2,853,316.11
2,815,038.27
Repurchase the restricted stock
47,566,389.36
Note financing is due and is paid
136,500.00
Total
12,119,804.65
67,866,365.93
53. Supplementary information of consolidated cash flow statement
Items2020.01-06 2019.01-06
1. Adjusting net profit into cash flows of operating
activities:
—— ——Net profit
-24,910,499.83
106,770,376.48
Add: Provision for impairment of assets
15,147,375.91
16,863,134.42
Depreciation of fixed assets, Amortization of mineralresources, and biological assets
34,750,769.26
33,043,962.66
Amortization of intangible assets
2,373,689.18
3,230,112.71
Amortization of long-term deferred expenses
2,175,118.39
804,794.82
Losses on disposal of fixed assets, intangible assets, andlong-term assets (income listed with”-”)
-55,668.73
-1,242,799.31
Losses on write-off of fixed assets (income listed with”-”)
45,369.59
15,126.57
Change of fair value profit or loss
19,323,309.84
-40,461,125.59
Financial expense (income listed with”-”)
9,635,047.81
5,275,618.93
Investment loss (income listed with”-”)
-22,943,077.11
-117,127,421.73
Decrease of deferred tax assets(increase listedwith”-”)
2,334,787.70
-2,804,370.02
Increase of deferred tax liabilities(decreaselisted with”-”)
-2,898,496.47
0.00
Decrease of inventories (increase listed with”-”)
-69,323,956.85
-56,623,320.41
Decrease of operating receivables (increase listed
with”-”)
-147,581,069.09
-109,300,254.90
Increase of operating payables (decrease listedwith”-”)
103,576,611.65
83,780,127.49
Others
0.00
Net cash flows arising from operating activities
-78,350,688.75
-77,776,037.88
2. Significant investment and financing activities
unrelated to cash income and expenses
Liabilities transferred to capital
Convertible bonds within 1 year
Financing leased fixed assets
3. Net increase (decrease) of cash and cash equivalent
Closing balance of cash
268,889,987.62
214,418,184.24
Less: Opening balance of cash
301,527,354.56
304,703,434.47
Net increase of cash and cash equivalent
-32,637,366.94
-90,285,250.23
(1) Cash and cash equivalents
Items2020.6.30 2020.1.1
Cash
268,889,987.62
301,527,354.56
Including: Cash on hand
106,840.56
92,096.63
Bank deposit used for paying at any moment
265,568,493.02
301,435,257.93
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
268,889,987.62
301,527,354.56
54. The assets with the ownership or use right restricted
Items 2020.6.30 ReasonsMonetary fund9,266,488.54
Guarantee moneyNotes Receivable19,345,284.19
PledgeFixed assets127,229,833.57
Mortgage LoanDalian Universe Thermal Technology Co., Ltd.and Dalian Bingshan Engineering&Trading Co.,Ltd. pledgedthe bank acceptance note to bank as guarantee for issuing the commercial acceptance note.Wuhan New World Refrigeration Industrial Co., Ltd signed the “maximum pledge contract” with Ever brightBank of China Wuhan branch. Property was pledged and Wuhan New World Refrigeration Industrial Co.,Ltd was granted for credit.
55. Monetary category of foreign currency
(1) Monetary category of foreign currency
Item Closing Balance
(foreign currency)
ExchangeRate
Closing Balance
(RMB)Cash—
—
10,315,403.21
Including：USD1,264,534.74
7.0795 8,962,273.69
GBP18,152.31
8.7144 158,186.50
JPY18,309,977.83
0.0658 1,204,943.02
Accounts receivable—
—
45,614,023.00
Including: USD6,173,806.55
7.0795 43,707,463.47
GBP63,815.36
8.7144 556,122.57
JPY20,521,015.00
0.0658 1,350,446.96
Accounts payable—
—
8,980,047.26
Including: USD911,800.72
7.0795 6,450,845.50
GBP37,274.28
8.7144 324,822.99
JPY33,497,124.47
0.0658 2,204,378.77
56. Government Grants
Category Amount Disclosure
Amount
recognized incurrent profit and
lossDalian special fund subsidy for theconstruction of manufacturingInnovation Center in 2017
15,000.00
Other Income
15,000.00
Featured carrier of massentrepreneurship and innovation
5,900,000.00
Other Income
5,900,000.00
R290 replacement of R22 largeindustrial screw unit
11,096,464.50
Deferred Income
Steady post subsidies136,538.60
Other Income
136,538.60
Total
17,148,003.10
-
6,051,538.60
57. Others
None
VIII. Interest in other entity
1. Equity of subsidiaries
(1) Organization structure of group company
Name of subsidiaries
Mainbusinessaddress
Registered
address
Business nature
Shareholding (%)
Obtaining
methodDirect
Indirect
Dalian Bingshan GroupEngineering Co., Ltd.
Dalian Dalian Installation 100 Establish
Name of subsidiaries
Main
Registered
| business | address |
Business nature
Shareholding (%)
Obtaining
| method |
Dalian Bingshan Group SalesCo., Ltd.
Dalian Dalian Trading 100 EstablishDalian Bingshan Air-conditioningEquipment Co., Ltd.
Dalian Dalian Manufacturing 70
EstablishDalian Bingshan GuardianAutomation Co., Ltd.
Dalian Dalian Manufacturing 100
EstablishDalian Bingshan Ryosetsu QuickFreezing Equipment Co., Ltd.
Dalian Dalian Manufacturing 100
EstablishWuhan New World RefrigerationIndustrial Co., Ltd.
Wuhan Wuhan Manufacturing 100
Acquisition
Bingshan Technical Service（Dalian） Co.,Ltd.
Dalian Dalian Services 100
EstablishDalian New Meica ElectronicsTechnology Co., Ltd
Dalian Dalian Electronic 100
Acquisition
Dalian Universe ThermalTechnology Co., Ltd.
Dalian Dalian Manufacturing 55
Acquisition
Dalian Bingshan Engineering &Trading Co., Ltd.
Dalian Dalian Service 100
Acquisition
Wuhan New WorldAir-conditioning RefrigerationEngineering Co., Ltd
Wuhan Wuhan
Installation
100 EstablishWuhan Lanning EnergyTechnology Co., Ltd.
Wuhan Wuhan
Trading
54.55 Acquisition
Ningbo BingshanAir-conditioning RefrigerationEngineering Co., Ltd
Ningbo Ningbo Installation 51.00 EstablishChengdu Bingshan RefrigerationEngineering Co., Ltd.
Chengdu
Chengdu
Services
51.00
Establish
1) All the proportion of shareholding in subsidiaries were the same with voting right
2) The company held over 50% voting right in subsidiaries and could control 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 oraffiliated companies
Mainbusinessaddress
Registeredaddress
Business
nature
Shareholding (%)
Accounting
methodsDirect Indirect
Panasonic AppliancesCompressor (Dalian) Co., Ltd.
Dalian Dalian Manufacturing
Equitymethod
Dalian Bingshan MetalTechnology Co., Ltd.
Dalian Dalian Manufacturing
EquitymethodThe 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 than
20% voting rights.
3) The Company doesn’t have joint venture or affiliated companies which have no significant influence although
being held 20% or more voting rights.
（2） The key financial information of affiliated companies
Items
30-06-2020/2020.01-06
Panasonic AppliancesCompressor (Dalian) Co., Ltd.
Dalian Bingshan MetalTechnology Co., Ltd.Current assets
1,223,509,851.91
373,441,442.40
Non-current assets306,353,358.57
43,583,860.17
Total assets1,529,863,210.48
417,025,302.57
Current liabilities410,377,576.67
78,301,526.66
Non-current liabilities
Total liabilities410,377,576.67
78,301,526.66
Minority interests
Equity to the parentcompany
1,119,485,633.81
338,723,775.91
Proportions of net assetsaccording to theshareholdingpercentage
447,794,253.52
165,974,650.20
Adjusting events
—Goodwill
19,269,770.94
—Unrealized profits of
Items
30-06-2020/2020.01-06
Panasonic AppliancesCompressor (Dalian) Co., Ltd.
Dalian Bingshan Metal
Technology Co., Ltd.insider trading--Others
-970,205.80
966,230.97
Book value of equityinvestment of affiliatedcompanies
446,824,047.72
186,210,652.11
Fair value of equityinvestment of affiliatedcompanies
Operating income
498,727,220.29
204,625,692.76
Net profit30,316,392.38
25,242,882.57
Net profit from closing
Other comprehensiveincome
30,316,392.38
25,242,882.57
Total comprehensiveincome
30,316,392.38
25,242,882.57
Continued：
Items
31-12-2019/2019.01-06
Panasonic AppliancesCompressor (Dalian) Co., Ltd.
Dalian Bingshan MetalTechnology Co., Ltd.Current assets
1,273,294,847.52
337,202,163.28
Non-current assets321,031,252.89
45,671,841.16
Total assets1,594,326,100.41
382,874,004.44
Current liabilities407,886,858.98
69,393,111.10
Non-current liabilities
Total liabilities407,886,858.98
69,393,111.10
Minority interests
Equity to the parentcompany
1,186,439,241.43
313,480,893.34
Net assets calculatedaccording to theshareholding proportions
474,575,696.57
153,605,637.74
Adjusting events
—Goodwill
19,269,770.94
—Unrealized profits ofinsider trading
--Others
-2,882,081.25
144,725.49
Book value of equityinvestment of affiliatedcompanies
471,693,615.32
172,730,683.20
Fair value of equityinvestment of affiliatedcompanies
Items
31-12-2019/2019.01-06
Panasonic AppliancesCompressor (Dalian) Co., Ltd.
Dalian Bingshan MetalTechnology Co., Ltd.Operating income
620,287,402.33
202,961,647.33
Net profit41,081,512.65
28,166,390.78
Net profit from closing
Other comprehensiveincome
41,081,512.65
28,166,390.78
Total comprehensiveincome
41,081,512.65
28,166,390.78
（3） Summary financial information of insignificant affiliated companies
Items30-06-2020/2020.01-06 31-12-2019/2019.01-06
Total book value of investment of affiliatedcompanies
733,355,484.16
607,706,323.17
The total of following items according to theshareholding proportions
Net profit3,936,888.40
47,324,500.55
Other comprehensive income
Total comprehensive income3,936,888.40
47,324,500.55
（4） Significant restrictions of the ability of affiliated companies transferring funds to the company.
None
（5） Excessive loss of affiliated companies.
None
（6） Contingency related to joint venture or affiliated company need to be disclosed.
NoneIX. 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 2020, the company’s assets and liabilitiesdominated in foreign currency are listed in RMB as following：
Items Closing Balance Opening balanceMonetary fund-USD
8,962,273.69
16,719,234.66
Monetary fund-JPY
1,204,943.02
1,142,608.46
Monetary fund-EURO
29,112.74
Monetary fund- GBP
158,186.5
385,286.46
Receivable - GBP
556,122.57
1,281,698.98
Receivable- USD
43,707,463.47
43,923,973.48
Receivable - EURO
57,832.75
Receivable - JPY
1,350,446.96
1,833,735.72
Payables -USD
6,450,845.5
5,245,528.61
Payables -EURO
10,394.62
Payables - JPY
2,204,378.77
2,807,578.63
Payables -GBP
324,822.99
341,063.39
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 160,000,000.00 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 2020, base on the assumption of interest rate change of 50 BP, the Company’s net profit will increase ordecrease RMB 1,352.9 thousand Yuan.
3) Price risk
As at 30 June 2020, 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, nor
significant 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 2020, the top five customers of receivable accounts balance is：163,292,572.91 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 availableto 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 2020, the credit limit still available is 398 million Yuan and shortterm credit limit available is 398 million Yuan.As at 30 June 2020, the Company’s financial assets and financial liabilities in line with non discount cash flow ofthe contracts as following： Currency unity: 10 thousand YuanClosing balanceItems
Within 1
year
1-2years
2-5years
Over 5years
TotalFinancial AssetsCash and cash in bank
27,815.65
27,815.65
Notes receivable
6,097.57
6,097.57
Accounts receivable
110,380.45
110,380.45
Other receivable
4,523.13
4,523.13
Other non-current financial assets
28,414.64
28,414.64
Contract asset
9,444.57
9,444.57
Financial Liabilities
Short-term loan
38,269.36
38,269.36
Notes Payable
26,400.63
26,400.63
Accounts payable
94,068.15
94,068.15
Other payable
2,755.85
2,755.85
Closing balanceItems
Within 1
year
1-2years
2-5years
Over 5years
TotalEmployee’s payable
1,035.66
1,035.66
Tax payable
893.01
893.01
Long-term loan
16,000.00
16,000.00
Bonds payable
2,500.00
2,500.00
X. Disclosure of Fair Value
1. Amount and measurement level of the assets and liabilities measured at fair value at the year end
Items
Fair value at the year endFirst levelmeasurement of fairvalue
Second levelmeasurement offair value
Third levelmeasurementof fair value
TotalFinancial assets Continuouslymeasured at FV available for sale
Other non-current financial assets271,154,738.08
12,991,658.59
284,146,396.67
(1) Investment by debt instruments
(2) Investment by equity instruments
271,154,738.08
12,991,658.59
284,146,396.67
(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, 2020.
3. For continuous and discontinuous 2
nd
level of FV, valuation technique adopted and key parameterquantitive and qualitive information.None.
4. For continuous and discontinuous 3
rd
level 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
NoneXI. Related Parties Relationship and Transactions(I) Related parties relationship
1. Parent company and ultimate controller
1) Parent company and ultimate controller
Parentcompany
Registered address
Businessnature
Registered
capital
Shareholding
percentage
(%)
Votingpowerpercentage
(%)DalianBingshan GroupCo., 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 CompanyPanasonic Appliances Air-conditioning andRefrigeration (Dalian) Co., Ltd
Affiliated company of the CompanyPanasonic Appliances Cold-chain (Dalian) Co., Ltd Affiliated company of the Company
Names of the joint ventures or affiliated company Relationships with the CompanyPanasonic Appliances Compressor (Dalian) Co., Ltd Affiliated company of the CompanyDalian Honjo Chemical Co., Ltd Affiliated company of the CompanyKeinin-Grand Ocean Thermal Technology (Dalian)Co., Ltd
Affiliated company of the CompanyBeijing Huashang Bingshan Refrigeration andAir-conditioning Machinery Co., Ltd
Affiliated company of the CompanyDalian Fuji Bingshan Vending Machine Co., Ltd Affiliated company of the CompanyMHI Bingshan Refrigeration (Dalian) Co., Ltd. Affiliated company of the CompanyDalian Fuji Bingshan Vending Machine Sales Co., Ltd
Affiliated company of the CompanyJiangsu JingXue Insulation Technology Co., Ltd. Affiliated company of the Company
Panasonic Refrigerating System (Dalian) Co., Ltd.Affiliated company of the CompanyDalian Bingshan Metal Technology Co., Ltd. Affiliated company of the CompanyWuhan Sikafu Power Control Equipment Co., Ltd.
Affiliated wholly owned subsidiary of the
Company
4. Other related parties
Name of related party
Related party relationshipDalian Bingshan Group Refrigeration Equipment Co., Ltd
Affiliated company of DalianBingshan GroupDalian Spindle Cooling Towers Co., Ltd
Affiliated company of DalianBingshan GroupBAC Dalian Co., Ltd
Affiliated company of DalianBingshan GroupDalian Bingshan Part Technology Co., Ltd. Subsidiary of Dalian Bingshan GroupDalian Bingshan Group Management and Consulting Co.,Ltd
Subsidiary of Dalian Bingshan GroupDalian Fuji Bingshan Intelligent Control System Co., Ltd.
Affiliated company of Subsidiary of
Dalian Bingshan GroupDalian Bingshan Wisdom Park Co., Ltd.
Affiliated company of Subsidiary of
Dalian Bingshan GroupDalian Bingshan Group Huahuida Financial Leasing Co.,Ltd
Affiliated company of Subsidiary of
Dalian Bingshan Group
5. Related Party transactions
1. Purchase of goods, offer and receive labour services etc inter-group transactions
1) Purchase of goods/receive labour services
Related party Content
2020.1-6 2019.1-6Dalian Bingshan Part Technology Co., Ltd.
Purchases ofgoods
1,386,362.74
3,741,590.18
Panasonic Appliances Air-conditioning and Refrigeration (Dalian)
Co., Ltd.
12,544,723.07
36,142,649.15
Panasonic Appliances Cold-chain (Dalian) Co., Ltd
19,945,469.77
23,174,161.33
Panasonic Appliances Compressor (Dalian) Co., Ltd
1,079,512.31
1,773,477.15
Panasonic Refrigerating System (Dalian) Co., Ltd.3,328,792.07
10,227,269.49
Dalian Fuji Bingshan Vending Machine Co., Ltd367,523.31
14,488.80
Dalian Fuji Bingshan Vending Machine Sales Co., Ltd
0.00
Dalian Spindle Cooling Towers Co., Ltd1,307,075.22
1,704,026.65
BAC Dalian Co., Ltd16,350,334.91
15,071,702.87
Dalian Bingshan Metal Technology Co., Ltd70,809.38
43,155.87
Beijing Huashang Bingshan Refrigeration and Air-
Machinery Co., Ltd
conditioning
Dalian Bingshan Group Refrigeration Equipment Co., Ltd12,654,852.80
12,909,130.64
Jiangsu JingXue Insulation Technology Co.,Ltd7,480,038.96
16,629,233.61
Dalian Bingshan Wisdom Park Co., Ltd64,991.82
342,045.83
Dalian Fuji Bingshan Intelligent Control System Co., Ltd.
Dalian Kelvins Technology Technology Co., Ltd24,458.00
Total76,604,944.36
121,772,931.57
2) Sales of goods/ labour services provision
Related party
Conte
nt
2020.1-6 2019.1-6Dalian Bingshan Part Technology Co., Ltd.
Salesofgoods
697,339.29
2,424,649.57
Panasonic Appliances Air-conditioning and Refrigeration
(Dalian) Co., Ltd.
24,550,377.53
48,139,165.51
Panasonic Appliances Cold-chain (Dalian) Co., Ltd
61,605,326.43
73,431,383.81
Panasonic Appliances Compressor (Dalian) Co., Ltd
3,787,087.37
7,987,011.69
Panasonic Refrigerating System (Dalian) Co., Ltd.8,265,834.12
15,372,612.19
Dalian Fuji Bingshan Vending Machine Co., Ltd
12,025,828.33
14,649,557.64
Dalian Fuji Bingshan Vending Machine Sales Co., Ltd
45,419.30
393,571.69
MHI Bingshan Refrigeration (Dalian) Co.,Ltd.
5,017,942.62
3,785,687.98
Dalian Spindle Cooling Towers Co., Ltd
322,836.39
146,937.92
Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd.
614,180.71
425,682.00
BAC Dalian Co., Ltd
16,935,526.04
11,715,950.10
Beijing Huashang Bingshan Refrigeration and Air-
Machinery Co., Ltd.
conditioning
32,657.62
Dalian Bingshan Group Refrigeration Equipment Co., Ltd
983,506.99
3,803,139.47
Jiangsu JingXue Insulation Technology Co.,Ltd
Wuhan Sikafu Power Control Equipment Co., Ltd
491,777.00
258,666.59
Dalian Bingshan Group Mangement and Consulting Co.,Ltd
Dalian Bingshan Group Huahuida Financial Leasing Co.,LTd
145,152.00
412,289.70
Dalian Bingshan Wisdom Park Co., Ltd
4,750,730.48
3,770,188.67
Dalian Fuji Bingshan Intelligent Control System Co., Ltd.
80,619.45
22,000.00
Dalian Kelvins Technology Technology Co., Ltd
Alphavita Bio-scientific (Dalian) Co., Ltd.
394,317.76
Total
140,713,801.81
186,771,152.15
2. Assets Lease
Assets rent out
Lessor Lessee
Category ofassets rent out
2020-6-30Lease Income
2019-6-30Lease Income
The Company
MHI BingshanRefrigeration (Dalian)Co.,Ltd.
Plant1,904,761.90
2,000,000.00
The Company
Dalian BingshanWisdom Park Co., Ltd
Office4,095,276.17
3,722,293.19
The Company
Panasonic compressor(Dalian) Co., Ltd
Employeedormitory
45,714.28
45,714.28
The Company
Panasonic Refrigeration(Dalian) Co., Ltd.
Employeedormitory
28,183.50
35,122.60
The Company
Jiangsu JingXueInsulation TechnologyCo.,Ltd
Plant and office
502,555.72
493,160.97
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 16
th
July, 2029. The annual rent fee for 2020 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 2020 is RMB 8.646 million Yuan.
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 ExplanationDalian Bingshan Group Co., Ltd.
160,000,000.00
2016.03.14 2026.03.13
Project fundinvestment
6. Balances with Related party
(1) Accounts receivable due from related parties
Item Related party
Closing Balance Opening BalanceBookBalance
Bad debtProvision
BookBalance
Bad debtProvisionAccountsreceivable
BAC Dalian Co.,Ltd
5,492,750.32
372,957.75
8,564,678.88
583,733.64
Accountsreceivable
Beijing HuashangBingshanRefrigeration andAir-conditioningMachinery Co.,Ltd
7,334,855.23
498,036.67
6,717,761.21
1,638,415.37
Accountsreceivable
Dalian FujiBingshan VendingMachine Co., Ltd.
14,149,812.29
960,772.25
2,683,672.86
182,221.39
Accountsreceivable
Dalian SpindleCooling TowersCo., Ltd
388,459.95
26,382.54
33,010.40
2,241.41
Accountsreceivable
MHI BingshanRefrigeration(Dalian) Co.,Ltd.
3,259,468.62
221,317.92
1,437,917.14
97,634.57
Accountsreceivable
PanasonicRefrigerationSystem (Dalian)Co., Ltd.
7,351,697.59
499,180.27
6,491,662.21
441,319.35
Accountsreceivable
PanasonicAppliances ColdChain (Dalian)Co., Ltd
39,805,809.91
2,702,814.49
16,875,971.95
1,153,468.33
Accountsreceivable
PanasonicAppliancesCompressor(Dalian) Co., Ltd
70,037.32
4,755.53
296,902.58
20,159.69
Accountsreceivable
PanasonicAppliancesAir-conditioningand Refrigeration
(Dalian) Co.,Ltd.
3,599,818.68
244,427.69
3,101,660.89
210,602.77
Accountsreceivable
Wuhan SikafuPower ControlEquipment Co.,Ltd
128,100.00
8,697.99
9,739.50
661.31
Accountsreceivable
Dalian FujiBingshanIntelligentControl SystemCo., Ltd.
73,500.00
4,990.65
100,251.50
6,807.08
Accountsreceivable
Dalian BingshanGroup HuahuidaFinancial LeasingCo.,LTd
311,170.61
21,128.48
1,935,465.61
296,900.42
Accountsreceivable
Dalian BingshanWisdom Park Co.,Ltd
5,023,000.00
341,061.70
920,000.00
62,468.00
Otherreceivable
Dalian BingshanGroupRefrigerationEquipment Co.,Ltd.
50,000.00
1,675.00
Prepayment
Jiangsu JingXueInsulationTechnologyCo.,Ltd
611,326.80
2,539,291.63
Prepayment
PanasonicAppliancesAir-conditioningand Refrigeration
(Dalian) Co.,Ltd.
525,324.70
164,600.00
Prepayment
Dalian BingshanGroupRefrigerationEquipment Co.,Ltd.
225,650.00
468,800.00
Prepayment
PanasonicRefrigerationSystem (Dalian)Co., Ltd.
627,451.00
341,601.00
Prepayment
PanasonicAppliances ColdChain (Dalian)Co., Ltd
3,938.00
3,938.00
Prepayment
Dalian SpindleCooling TowersCo., Ltd
56,500.00
Prepayment
Dalian BingshanPart TechnologyCo., Ltd.
2,800.00
2,800.00
Notesreceivable
BAC Dalian Co.,Ltd
8,401,389.26
11,317,936.09
Notesreceivable
PanasonicRefrigerationSystem (Dalian)Co., Ltd.
1,207,293.52
4,692,378.47
Notesreceivable
PanasonicAppliancesCompressor(Dalian) Co., Ltd
641,874.30
1,859,495.23
Notesreceivable
PanasonicAppliances ColdChain (Dalian)Co., Ltd
10,810,000.00
43,270,000.00
1,548,120.00
Notesreceivable
Dalian FujiBingshan VendingMachine Co., Ltd.
355,486.76
12,607,409.17
856,043.08
Notesreceivable
PanasonicAppliancesAir-conditioningand Refrigeration
(Dalian) Co.,Ltd.
18,494,998.52
450,703.89
Notesreceivable
MHI BingshanRefrigeration(Dalian) Co.,Ltd.
2,541,450.00
11,908.12
886,450.00
60,189.96
Notesreceivable
Dalian SpindleCooling TowersCo., Ltd.
136,860.45
(2) Accounts Payable due from Related Party
Item Related party Closing Balance
Opening Balance
Accounts Payable
BAC Dalian Co., Ltd23,167,547.00
6,536,883.20
Accounts Payable
Dalian Bingshan Group RefrigerationEquipment Co., Ltd.
10,291,983.37
4,904,782.83
Accounts Payable
Dalian Bingshan Part TechnologyCo., Ltd.
682,968.81
2,033,644.49
Accounts Payable
Dalian Fuji Bingshan VendingMachine Co., Ltd.
415,301.34
60,519.99
Accounts Payable
Dalian Spindle Cooling Towers Co.,Ltd.
3,470,669.00
2,235,874.00
Accounts Payable
Jiangsu JingXue InsulationTechnology Co.,Ltd
8,739,794.38
7,827,836.00
Accounts Payable
Dalian Fuji Bingshan IntelligentControl System Co., Ltd.
132,284.48
132,284.48
Accounts Payable
Dalian Fuji Bingshan VendingMachine Sales Co., Ltd
414,000.00
414,000.00
Accounts Payable
Panasonic Refrigeration System(Dalian) Co., Ltd.
26,322,849.32
22,882,950.32
Accounts Payable
Panasonic Appliances Cold Chain(Dalian) Co., Ltd
389,277.05
Accounts Payable
Panasonic Appliances Compressor(Dalian) Co., Ltd
1,774,444.60
1,696,000.00
Accounts Payable
Panasonic AppliancesAir-conditioning and Refrigeration
(Dalian) Co., Ltd.
1,771,490.40
19,565,101.85
Accounts Payable
Dalian Bingshan Metal TechnologyCo., Ltd.
80,014.61
66,651.05
Other accountspayable
Dalian Bingshan Group Co., Ltd
5,900,000.00
Other accountspayable
Dalian BingshanWisdom Park Co.,Ltd.
500,000.00
Other accountspayable
MHI Bingshan Refrigeration(Dalian) Co., Ltd.
170,000.00
170,000.00
AccountsReceived inAdvance
Dalian Spindle Cooling Towers Co.,Ltd.
2,000,000.00
1,869,651.43
AccountsReceived inAdvance
Dalian BingshanWisdom Park Co.,Ltd.
500,000.00
700,000.00
AccountsReceived inAdvance
Panasonic Appliances Cold Chain(Dalian) Co., Ltd
235,834.48
567,258.21
AccountsReceived inAdvance
Wuhan Sikafu Power ControlEquipment Co., Ltd.
153,555.20
192,034.80
AccountsReceived inAdvance
Panasonic Refrigeration System(Dalian) Co., Ltd.
AccountsReceived inAdvance
Keinin-Grand Ocean ThermalTechnology (Dalian) Co., Ltd.
AccountsReceived inAdvance
Dalian Bingshan Group RefrigerationEquipment Co., Ltd.
405,000.00
Notes Payable BAC Dalian Co., Ltd21,304,454.00
21,758,609.00
Notes Payable
Dalian Bingshan Group RefrigerationEquipment Co., Ltd.
6,986,259.12
10,722,797.72
Notes Payable
Dalian Bingshan Metal TechnologyCo., Ltd.
77,548.03
Notes Payable
Dalian Bingshan Pate TechnologyCo.,Ltd
2,500,000.00
1,200,000.00
Notes Payable
Jiangsu JingXue InsulationTechnology Co.,Ltd
627,084.00
Notes Payable
Panasonic Appliances Cold Chain(Dalian) Co., Ltd
1,657,321.00
64,984.00
Notes Payable
Dalian Spindle Cooling Towers Co.,Ltd
969,602.80
Notes Payable
Panasonic Refrigeration System(Dalian) Co., Ltd.
92,728.65
(II) Related Party CommitmentNoneXII. Share-Based Payment
1． General situation of share payment
□Applicable √Not applicable
2． Share payment settled by equity
□Applicable √Not applicable
3． Share Payments Settled in Cash
□Applicable √Not applicable
4. Modification and Termination of Share Payment
□Applicable √Not applicable
XIII. Events after the Balance Sheet Date
(1)Contingency
As at 30 June 2020, the Company does not have any other contingencies for disclosure.
(2)Commitment
As at 30 June 2020, 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.XIV. Other Significant Events
1. Error correction and effect in previous period.
The Company has no adjustment of prior period accounting error this year.
2. Debt Restructuring
The Company has no events of debt restructuring this year.
3. Asset exchange
(1) The exchange of non-monetary assets
None
(2) The exchange of other assets
None
4. Annuity Plan
None
5. Operation Termination
None
6. Segment Information
The management of the Company divided the Company into 3 segments based on the geographic area:
Northeast China, Central China, and East China. The Northeast is the Company’s general headquarters andthe 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 ： YuanItems
30-06-2020/2020.01-06
NortheastChina
Central
China
EastChina
Offset Total1 Operating income1,071,216,691.12
111,618,986.85
6,207,964.38
-315,640,227.89
873,403,414.46
2 Cost
1,088,054,189.71
117,228,210.68
7,446,686.38
-315,640,227.89
897,088,858.88
3 Investment income fromassociates and joint venture
17,295,970.66
-479,796.67
16,816,173.99
4 Operating profits(loss)-5,650,799.72
-11,589,109.88
-976,966.12
-8,185,883.28
-26,402,759.00
5 Income tax-1,369,839.24
-187,549.51
65,129.58
-1,492,259.17
6 Net profit(loss)-4,280,960.48
-11,401,560.37
-1,042,095.70
-8,185,883.28
-24,910,499.83
7 Total assets6,147,995,276.91
87,700,536.25
14,227,645.28
-1,137,409,133.03
5,612,514,325.40
8 Total liabilities
2,246,648,187.20
395,140,368.46
10,063,170.17
-440,783,378.99
2,211,068,346.84
XV. Notes to the Main Items of the Financial Statements of Parent Company
1. Accounts receivable
(1) Accounts receivable category
Item
Closing BalanceBooking balance ProvisionBookingbalanceAmount % Amount %Accountsreceivable with
significantindividual amount
and separate bad
50,985,562.10
8.66%
15,614,746.06
30.63%
35,370,816.04
Item
Closing BalanceBooking balance ProvisionBookingbalanceAmount % Amount %debt provision
Accountsreceivable with bad
debt provision
based on thecharacters of credit
risk portfolio
Accounting age ascharacters
296,912,703.73
50.41%
63,879,809.05
21.52%
233,032,894.68
Related party
within
consolidation
scope
241,107,880.19
40.93%
241,107,880.19
Accountsreceivable with
insignificantindividual amount
and separate bad
debt provision
Total
589,006,146.02
100.00%
79,494,555.11
13.50%
509,511,590.91
(Continued)
Item
Opening BalanceBooking balance ProvisionBookingbalanceAmount % Amount %Accounts receivable
with significantindividual amount
and separate bad
debt provision
50,985,562.10
8.29%
12,133,091.84
23.80%
38,852,470.26
Accounts receivable
with bad debtprovision based on
the characters ofcredit risk portfolio
Accounting age as
characters
266,070,550.78
43.21%
77,679,396.59
29.20%
188,391,154.19
Related party withinconsolidation scope
298,594,548.44
48.50%
0.00%
298,594,548.44
Accounts receivable
with insignificant
Item
Opening BalanceBooking balance ProvisionBookingbalanceAmount % Amount %individual amount
and separate bad
debt provisionTotal
615,650,661.32
100.00%
89,812,488.43
14.59%
525,838,172.89
Items
Closing Balance
Booking balance
Provision
%
Expected credit losses within 1 year 171,059,966.21
11,614,971.70
6.79%
Expect credit losses of 1-2 years
47,523,394.62
7,290,088.73
15.34%
Expect credit losses of 2-3 years
32,787,860.19
9,531,430.96
29.07%
Expect credit losses of 3-4 years
14,339,773.14
6,712,447.81
46.81%
Expect credit losses of 4-5 years
9,124,223.47
6,653,383.75
72.92%
Expect credit losses more than 5 years
22,077,486.10
22,077,486.10
100.00%
Total
296,912,703.73
63,879,809.05
--
(1)The bad debt provisions of accounts receivable in the portfolio is accrued under accounting aging analysismethod:
Aging Closing BalanceWithin1 year409,167,846.39
1 to 2 years
40,440,142.12
2 to 3 years
34,871,112.69
More than 3 years 104,527,044.82
3 to 4 years16,339,773.14
4 to 5 years62,109,785.57
More than 5 years 26,077,486.11
Total589,006,146.02
(2) Bad debt provision accrued and reversed (withdraw)
The bad debt provision has been accrued in the amount of 2,764,420.71 Yuan.
(3) No accounts receivable written off in current period.
Item Written off amountReceivable actually written off 7,563,512.61
(4) The top five significant accounts receivable categorized by debtors
Company
ClosingBalance
% of thetotal AR
ClosingBalance ofProvisionZhejiang Wankai NewMaterial Co., Ltd.
50,985,562.10
8.66%
15,614,746.06
Company
ClosingBalance
% of thetotal AR
ClosingBalance ofProvisionXinyi Yuanda Constructionand Installation EngineeringCo., Ltd.
32,748,744.00
8.56%
17,167,304.59
SINOPEC InternationalBusiness Ningbo Co., Ltd.
21,269,111.33
3.61%
3,262,681.68
Ningxia Wangwa Coal18,002,800.00
3.06%
2,761,629.52
Yangmei Fengxi Fertilizer(Group) Co. LTD. PingluBranch
16,700,000.00
2.84%
1,133,930.00
Total
139,706,217.43
26.73%
2. Other Receivables
Item Closing Balance Opening BalanceInterest receivable
348,833.33
583,833.33
Dividend receivable
50,338,786.40
Other receivable
6,718,099.01
5,398,160.49
Total
57,405,718.74
5,981,993.82
2.1 Interest receivable
(1) Interest receivable category
Item Closing Balance Opening BalanceInterest on term deposits
348,833.33
583,833.33
Interest on bank financial product
Total348,833.33
583,833.33
2.2 Dividend receivable
ItemClosing Balance Opening Balance
Guotai Junan Securities Co., Ltd.6,126,903.12
Panasonic Compressor (Dalian) Co., Ltd36,026,000.00
Dalian Bingshan Engineering & Trading Co., Ltd.5,160,883.28
Dalian Universe Thermal Technology Co., Ltd.3,025,000.00
Total
50,338,786.40
2.3 Other receivable
(1) Other receivables categorized by nature
Nature Closing Balance Opening BalanceGuarantee deposits2,765,156.58
3,848,019.79
Petty cash542,344.30
117,661.57
Equity transfer fund5,601,660.31
2,774,045.87
Others
68,554.00
Nature Closing Balance Opening BalanceGuarantee deposits2,765,156.58
3,848,019.79
Petty cash542,344.30
117,661.57
Equity transfer fund5,601,660.31
2,774,045.87
Others
68,554.00
Total
8,909,161.19
6,808,281.23
(2) Provision for bad debts
Provision for bad debts
The first phase The second phase The third phase
Total
next 12 months
Expected Credit Lossfor the duration (NoCredit Devaluation)
Expected Credit Loss for
the duration (Creditimpairment has occurred)
Expected credit losses in the
Balance on January 1, 20201,410,120.74
1,410,120.74
The balance of January 1, 2020 inthe current period
——
——
——
——
Provision for bad debts780,941.44
780,941.44
Balance on June 30, 2020 2,191,062.18
2,191,062.18
The bad debt provisions of other receivables in the portfolio is accrued under accounting aging analysismethod
Aging
Closing Balance
Within 1 year
3,416,061.88
1 to 2 years1,547,247.31
2 to 3 years
296,826.00
More than 3 years 3,649,026.00
3 to 4 years
2,450,461.00
4 to 5 years
1,100,000.00
More than 5 years
98,565.00
Total
8,909,161.19
(3) Bad debt provision accrued and reversed (withdraw) in the period.
The bad debt provision has been reversed by 780,941.44 Yuan.
(4) Other receivables from the top 5 debtors
Name Category
ClosingBalance
Aging
% of thetotal OR
ClosingBalance ofProvisionDalian Huali CoatingEquipment Co., Ltd.
Equity transfer
fund
1,650,000.00
3-4 years
18.52%
188,572.50
Dalian Delta HK China gasCo., Ltd.
Securitydeposit
1,100,000.00
Within 1
year
12.35%
3,685.00
China petroleum materialsTianjin Co. ,Ltd.
Securitydeposit
1,000,000.00
Within 1
year
11.22%
1,675.00
Dalian ChangdeWelding Co.,Ltd
Equity transfer
fund
780,000.00
3-4 years
8.76%
16,906.50
Shandong BorunCo.,Ltd
Securitydeposit
300,000.00
Within 1
year
3.37%
502.50
Total4,830,000.00
54.21%
211,341.50
3. Long-term equity investments
Category of long-term equity investments
Item
Closing Balance Opening BalanceClosing Balance Provision
Book Value Opening Balance Provision Book ValueInvestment of subsidiaries
687,496,652.08
687,496,652.08
587,496,652.08
587,496,652.08
Investment of affiliates and JV
1,623,656,310.41
1,623,656,310.41
1,656,914,731.80
1,656,914,731.80
Total
2,311,152,962.49
2,311,152,962.49
2,244,411,383.88
2,244,411,383.88
(1) Investments of subsidiaries
Subsidiaries names Opening Balance Increase Decrease Closing BalanceDalian Bingshan Group Construction Co., Ltd93,749,675.77
100,000,000.00
193,749,675.77
Dalian Bingshan Group Sales Co., Ltd20,722,428.15
20,722,428.15
Dalian Bingshan Air-Conditioning Equipment Co., Ltd36,506,570.00
36,506,570.00
Dalian Bingshan Guardian Automation Co., Ltd.6,872,117.80
6,872,117.80
Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd.59,356,051.19
59,356,051.19
Dalian Universe Thermal Technology Co., Ltd.48,287,589.78
48,287,589.78
Wuhan New World Refrigeration Industrial Co., Ltd184,674,910.81
184,674,910.81
Bingshan Technical Service （Dalian） Co.,Ltd.22,024,000.00
22,024,000.00
Dalian New Meica Electronics Co., Ltd.43,766,243.72
43,766,243.72
Dalian Bingshan Engineering & Trading Co., Ltd.71,537,064.86
71,537,064.86
Total
587,496,652.08
100,000,000.00
687,496,652.08
(2) Joint ventures& affiliated companies
Investee Beginning balance
Increase/Decrease
Ending balance
Provision forimpairment
at year endIncreased
Decreased
Gains and losses
recognizedunder the equity
method
| Gains and losses | Adjustment of |
othercomprehensive
income
sof other
equity
Cash bonus or
profitsannounced
Provision forimpairment of the
current period
Others
1. Affiliated companies
Change
Panasonic AppliancesAir-conditioning and
Refrigeration (Dalian) Co., Ltd.
177,390,883.01
-7,151,886.71
3,400,000.00
166,838,996.30
Panasonic AppliancesCold-chain (Dalian) Co., Ltd
267,179,066.77
-5,126,459.68
262,052,607.09
Panasonic AppliancesCompressor (Dalian) Co., Ltd
471,693,615.32
11,156,432.40
36,026,000.00
446,824,047.72
Dalian Honjo Chemical Co.,Ltd
8,535,439.50
202,736.66
8,738,176.16
Keinin-Grand Ocean ThermalTechnology (Dalian) Co., Ltd
61,090,955.30
83,797.06
8,600,000.00
52,574,752.36
Beijing Huashang BingshanRefrigeration andAir-conditioning MachineryCo., Ltd
1,537,672.84
-40,708.15
1,496,964.69
Dalian Fuji Bingshan VendingMachine Co., Ltd
193,109,792.45
-2,512,123.83
190,597,668.62
MHI Bingshan Refrigeration(Dalian) Co.,Ltd.
13,892,866.25
52,472.24
13,945,338.49
Dalian Fuji Bingshan VendingMachine Sales Co., Ltd
12,614,480.80
-1,069,983.28
11,544,497.52
Jiangsu JingXue InsulationTechnology Co.,Ltd
185,385,615.80
5,010,588.30
190,396,204.10
Panasonic RefrigerationSystem (Dalian) Co., Ltd.
33,975,371.41
2,290,230.84
2,528,392.05
33,737,210.20
Bingshan Metal TechnicalService （Dalian） Co.,Ltd.
172,730,683.19
13,479,968.92
186,210,652.11
Dalian Bingshan GroupMangement and ConsultingCompany
57,778,289.16
920,905.89
58,699,195.05
Total 1,656,914,731.80
17,295,970.66
50,554,392.05
1,623,656,310.41
4. Operating revenue and cost
Item
2020.01-06 2019.01-06
Revenue Cost Revenue CostRevenue from main operation
401,973,100.61
346,387,083.54
304,851,204.51
262,956,736.05
Revenue from other operation
19,564,567.55
13,444,729.68
20,505,068.81
13,936,660.77
Total
421,537,668.16
359,831,813.22
325,356,273.32
276,893,396.82
5. Investment income
Items
2020.01-06 2019.01-06
Income from long-term equity investments under cost method
8,185,883.28
3,000,000.00
Income from long-term equity investments under equity method17,295,970.66
72,908,832.16
Income from holding of other non-current financial assets6,126,903.12
4,320,252.20
Income from disposing other non-current financial assets
40,567,691.40
Total
31,608,757.06
120,796,775.76
XVI. Supplementary Information to the Financial Statements
1. Non-operating profit or loss
itemAmountDisposal gains and losses of non-current asset10,788.53
Government subsidies included in current profit or loss
151,538.60
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
-19,323,309.84
Income from changes in fair value during the period of holding financial assets
Other non-operating revenue or expense1,186,167.34
Influence on income tax-2,681,482.01
Influence on minority shareholders54,017.17
Total-15,347,350.53
2. Return on equity and earnings per share
Profit of report period
Weighted
averagereturn onnet assets
(%)
Earnings per share
(EPS)BasicEPS
Diluted
EPSNet profit attributable to shareholders of parent company
-0.70
-0.028
-0.028
Net profit after deducting non-recurring gains and lossesattributable to shareholders of parent company
-0.25
-0.01
-0.01
Section 12 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