Auditors’ Report
(English Translation for Reference Only)
To the shareholders of Dalian Refrigeration Company Limited
1. Opinion
We have audited the financial statements of Dalian Refrigeration Company Limited
(“Dalian Refrigeration Company”), which comprise the consolidated as well as
Company’s balance sheet as at 31 December 2018, the Company’s and the
consolidated income statement, cash flow statement and statement of changes in
shareholders’ equity for the year then ended, and the related notes to the financial
statements.
In our opinion, the accompanying financial statements of Dalian Refrigeration
Company present fairly, in all material respects, the Company’s and the consolidated
financial position as at 31 December 2018, the Company’s and the consolidated
results of operations and cash flows for the year then ended in accordance with
Accounting Standards for Business Enterprises.
2. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing for Chinese
Certified Public Accountants. Our responsibilities under those standards are further
described in the “Auditor’s Responsibilities for the Audit of the Financial Statements”
section of our report. We are independent of Dalian Refrigeration Company in
accordance with the Code of Ethics for Chinese Certified Public Accountants, and we
have fulfilled our other ethical responsibilities of the code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our
audit.
3. Key Audit Matters
Key audit matters are those matters that we consider, in our professional judgment,
were of most significance in our audit of the financial statements of the current period.
These matters were addressed in the context of our audit of the financial statements as
a whole and, in forming our audit opinion thereon, and we do not express a separate
opinion on these matters.
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Revenue recognition
Key Audit Matter How the matter was addressed in the audit
Revenue of Dalian Refrigeration The main audit procedures carried out for
Company and its subsidiaries addressing the key audit matters are as follows:
mainly come from sales of products 1. Understand and evaluate effectiveness of
design and operation of the management ‘s
and installation. The key concern
internal control over revenue
about the sales revenue is due to the
2. Carried out analytical review and evaluate
large sales quantities and any the reasonableness of sales income and gross
potential misstatements existing in profit margin by segmenting the business and
the revenue recognition within the sales in conjunction with industry development
appropriate accounting period. and actual situation of Dalian Refrigeration
Key concern about installation Company.
income is because the accounting 3. Sampling test the sales contracts, identify the
clause and terms in respect to the risk and
involved by significant accounting
reward transfer of the ownership. Evaluate the
estimate and judgment. Having
recognition timing of revenue whether is in line
considered these matters, we with the accounting standards.
recognized revenue recognition as 4. Sampling select product sales revenue
key audit matters. record, reconcile to sales invoice, contracts,
dispatch note, acceptance note; Sampling select
installation sales revenue record, reconcile to
invoice, installation contracts and completion
report and Evaluate the recognition of revenue
whether is in line with the accounting standards
5. Checking actual installation cost by
reviewing the contract, invoice and supportive
document with signature for the equipment
received to evaluate the cost whether it really
incurred.
6. Sampling select the transactions before and
after the balance sheet date, test the dispatch
note and other supporting documents so to
ensure whether the transaction is recorded into
the appropriate accounting period.
4. Other Information
The management of Dalian Refrigeration Company (hereinafter referred to as the
“Management”) is responsible for the other information. The other information
comprises the information included in the Dalian Refrigeration Company 2018 annual
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report, but does not include the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of the other information, we are required to report that fact. We have
nothing to report in this regard.
5. Responsibilities of the Management and Those Charged with Governance
for the Financial Statements
The Management is responsible for the preparation of the financial statements in
accordance with Accounting Standards for Business Enterprises to achieve fair
presentation; and designing, implementing and maintaining internal control which is
necessary to enable that the financial statements are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Management is responsible for assessing
Dalian Refrigeration Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of
accounting unless the Management either intends to liquidate Dalian Refrigeration
Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible to overseeing Dalian Refrigeration
Company’s financial reporting process.
6. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with auditing standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are generally considered
material if, individually or in the aggregate, they could reasonably be expected to
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influence the economic decisions of users taken on the basis of these financial
statements.
During the course of audit in accordance with auditing standards, we exercise
professional judgment and maintain professional skepticism. We also carry out the
following works:
(1) Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our audit. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of its internal control (this sentence would
be deleted in circumstance when we are also responsible to issue an opinion on the
effectiveness of internal control in conjunction with the audit of the financial
statements).
(3) Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by the Management.
(4) Conclude on the appropriateness of the Management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
Dalian Refrigeration Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements in accordance
with the auditing standards or, if such disclosures are inadequate, we shall modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause Dalian
Refrigeration Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and also whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters,
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the planned scope and timing of the audit and significant audit findings etc., including
any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have
complied with those relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence and related safeguards, where applicable.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial statements of
the current period and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation prohibited public disclosure about the
matter or when, in rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such
communication.
ShineWing Certified Public Accountants LLP CP：Sui Guojun (Engagement Partner)
CAP：Wang Dong
China, Beijing April 19, 2019
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Consolidated Balance Sheet
December 31, 2018
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
ITEMS No AT END of YEAR AT BEG. of YEAR
Current Assets:
Monetary funds VI.1 343,026,485.11 394,809,694.11
Settlement fund
Outgoing call loan
Fair value through P&L assets
Derivative financial assets
Notes receivable&Accounts receivable VI.2 1,278,838,632.86 1,209,074,071.99
including: notes receivable VI.2 171,292,044.56 172,818,176.20
accounts receivable VI.2 1,107,546,588.30 1,036,255,895.79
Prepayments VI.3 158,405,300.50 140,808,375.21
Insurance receivables
Reinsurance Receivable
Provision of reinsurance contract reserve receivable
Other receivables VI.4 48,508,755.15 53,954,243.16
including: interest receivable VI.4 318,886.12 1,871,783.33
dividend receivable VI.4 33,450.00 33,450.00
Financial assets purchased under agreement to resell
Inventories VI.5 450,195,300.53 352,279,664.64
Held for sale assets
Non-current assets due within 1-year
Other current assets VI.6 18,266,589.12 114,907,269.33
Total Current Assets 2,297,241,063.27 2,265,833,318.44
Non-Current Assets：
Loan and payment on other's behalf disbursed
Available-for-sale financial assets VI.7 382,186,729.99 515,783,193.99
Held-to-maturity investments
Long-term receivables
Long-term equity investment VI.8 1,619,693,570.97 1,568,255,738.12
Investments properties VI.9 100,338,241.99 103,861,275.27
Fixed assets VI.10 953,298,058.11 890,874,647.40
Construction in process VI.11 19,796,212.82 82,999,382.90
Production biological assets
Oil-gas assets
Intangible assets VI.12 147,018,592.71 143,918,516.87
R&D expenses
Goodwill VI.13 1,750,799.49 1,750,799.49
Long-term deferred expenses VI.14 12,873,428.19 14,431,131.01
Deferred tax asset VI.15 34,082,754.72 31,913,497.18
Other non-current assets
Total Non-current Assets 3,271,038,388.99 3,353,788,182.23
Total Assets 5,568,279,452.26 5,619,621,500.67
legal representative：Ji Zhijian head of the accounting work：Ma Yun the person in charge of the accounting office ：Mao Chunhua
6
Consolidated Balance Sheet (continued)
December 31, 2018
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
ITEMS No AT END of YEAR AT BEG. of YEAR
Current Liabilities:
Short-term borrowings VI.16 250,000,000.00 349,801,300.00
Loans from central bank
Deposits received and hold for others
Call loan received
Fair value through P&L liabilities
Derivative financial liabilities
Notes payable&accounts payable VI.17 1,132,891,095.19 1,150,407,485.30
Advance received VI.18 122,151,101.00 147,172,195.05
Financial assets sold under agreements to repurchase
Fees and commissions payable
Employee pay payables VI.19 31,856,136.59 46,751,562.36
Taxes and duties payable VI.20 13,608,212.32 29,992,558.62
Other payables VI.21 63,313,958.43 68,917,431.20
including: interest payable VI.21 1,369,527.78 379,085.53
dividend payable VI.21 533,156.00 863,516.60
Amount due to reinsurance
Insurance contract provision
Entrusted trading of securities
Entrusted selling of securities
Held for sale liabilities
Non-current liabilities due within 1-year VI.22 2,999,574.93
Other current liabilities
Total Current Liabilities 1,616,820,078.46 1,793,042,532.53
Non-current Liabilities:
Long-term borrowings VI.23 160,000,000.00 160,000,000.00
Bonds Payable VI.24 176,000,000.00
including: preference share
perpetual debt
Long-term payables VI.25 1,532,949.94
Long-term employee payables
Provision for liabilities
Deferred income VI.26 103,542,093.79 100,336,504.07
Deferred Tax liabilities VI.15 51,954,442.22 71,429,566.31
Other non-current liabilities
Total Non-current Liabilities 493,029,485.95 331,766,070.38
Total Liabilities 2,109,849,564.41 2,124,808,602.91
Owners Equity(or Shareholders Equity):
Paid-in capital（Share capital) VI.27 855,434,087.00 856,487,181.00
Other equity instrument
Including:preference share
perpetual capital securities
Capital reserve VI.28 760,365,342.00 757,532,081.34
Less: Treasury stock VI.29 21,026,106.00 23,305,370.40
Other comprehensive income VI.30 296,909,965.55 407,269,002.11
Chartered reserve VI.31
Surplus reserves VI.32 721,091,040.02 668,150,375.30
△Provision for general risk
Undistributed profit VI.33 764,859,288.45 750,397,795.56
Equity attributable to equity holders of the Company 3,377,633,617.02 3,416,531,064.91
*Minority interest 80,796,270.83 78,281,832.85
Total Equity 3,458,429,887.85 3,494,812,897.76
Total Liabilities and Equity 5,568,279,452.26 5,619,621,500.67
legal representative：Ji Zhijian head of the accounting w ork：Ma Yun the person in charge of the accounting office ：Mao Chunhua
7
Balance Sheet of Parent Company
December 31, 2018
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
ITEMS No AT END of YEAR AT BEG. of YEAR
Current Assets:
Monetary funds 186,976,185.10 234,655,092.14
Fair value through P&L assets
Derivative financial assets
Notes receivable&Accounts receivable XVII.1 482,389,295.25 414,013,403.75
including: notes receivable XVII.1 63,673,648.65 57,455,446.82
accounts receivable XVII.1 418,715,646.60 356,557,956.93
Prepayments 69,577,538.44 33,125,666.30
Other receivables XVII.2 14,003,269.34 4,694,581.36
including: interest receivable 318,886.12 1,871,783.33
dividend receivable
Inventories 194,747,632.08 149,549,915.80
Held for sale assets
Non-current assets due within 1-year
Other current assets 8,056,055.09 102,402,409.84
Total Current Assets 955,749,975.30 938,441,069.19
Non-Current Assets：
Available-for-sale financial assets 380,771,587.49 514,468,051.49
Held-to-maturity investments
Long-term receivables
Long-term equity investment XVII.3 2,201,953,842.42 2,044,438,551.88
Investments properties 111,421,702.70 114,812,363.92
Fixed assets 725,516,578.53 658,637,271.68
Construction in process 18,010,457.61 80,314,961.09
Production biological assets
Oil-gas assets
Intangible assets 70,049,323.57 71,715,598.15
R&D expenses
Goodwill
Long-term deferred expenses 11,244,777.00 12,737,555.16
Deferred tax asset 4,303,943.48 5,815,160.93
Other non-current assets
Total Non-current Assets 3,523,272,212.80 3,502,939,514.30
Total Assets 4,479,022,188.10 4,441,380,583.49
legal representative：Ji Zhijian head of the accounting w ork：Ma Yun the person in charge of the accounting office ：Mao Chunhua
8
Balance Sheet of Parent Company (continued)
December 31, 2018
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
ITEMS No AT END of YEAR AT BEG. of YEAR
Current Liabilities:
Short-term borrowings 250,000,000.00 260,000,000.00
Fair value through P&L liabilities
Derivative financial liabilities
Notes payable&accounts payable 412,799,816.79 504,111,353.53
Employee pay payables 29,579,144.85 61,450,463.91
Taxes and duties payable 7,376,290.42 11,445,665.15
Other payables 3,399,150.12 1,274,710.89
including: interest payable 30,439,931.10 31,258,415.49
dividend payable 1,369,527.78 379,085.53
Held for sale liabilities 533,156.00 533,156.00
Non-current liabilities due within 1-year
Other current liabilities
Total Current Liabilities
Non-current Liabilities: 733,594,333.28 869,540,608.97
Long-term borrowings
Bonds Payable 160,000,000.00 160,000,000.00
including: preference share 176,000,000.00
perpetual debt
Long-term payables
Long-term employee payables
Provision for liabilities
Deferred income
Deferred Tax liabilities 60,907,828.40 56,890,504.07
Other non-current liabilities 51,954,442.22 71,429,566.31
Including: Chartered reserve fund
Total Non-current Liabilities 448,862,270.62 288,320,070.38
Total Liabilities 1,182,456,603.90 1,157,860,679.35
Owners Equity(or Shareholders Equity):
Paid-in capital（Share capital) 855,434,087.00 856,487,181.00
Other equity instrument
Including:preference share
perpetual capital securities
Capital reserve 804,867,436.83 802,034,176.17
Less: Treasury stock 21,026,106.00 23,305,370.40
Other comprehensive income 295,947,864.88 406,306,901.44
Chartered reserve
Surplus reserves 721,091,040.02 668,150,375.30
Undistributed profit 640,251,261.47 573,846,640.63
Total Equity 3,296,565,584.20 3,283,519,904.14
Total Liabilities and Equity 4,479,022,188.10 4,441,380,583.49
legal representative：Ji Zhijian head of the accounting w ork：Ma Yun the person in charge of the accounting office ：Mao Chunhua
9
Consolidated Income Statement
For the year of 2018
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Item No This year Last year
Ⅰ、Total operating revenue 1,966,064,612.44 2,079,715,105.37
Including: Operating revenue VI.34 1,966,064,612.44 2,079,715,105.37
Interest income
Earned premiums
Fees and commission income
Ⅱ、Total cost of operation 2,070,981,320.75 2,045,840,192.64
Including: Cost of operation VI.34 1,651,288,375.99 1,643,653,442.93
Interest expenses
Fees and commission expenses
Payments to surrenders of insurance contracts
Net amount of insurance claims expenses
Net charges of provision for insurance contracts
Dividends policy expenses
Reinsurance expenses
Taxes and surcharges VI.35 18,385,555.85 19,553,933.04
Selling and distribution expenses VI.36 109,791,230.22 113,422,315.47
Administrative expenses VI.37 195,039,866.99 193,221,098.64
R&D VI.38 46,904,366.84 38,124,492.93
Financial expenses VI.39 20,643,295.20 10,855,836.96
Including: Interest expenses VI.39 18,805,308.74 10,526,056.47
Interest income VI.39 2,487,236.95 4,865,429.43
Loss on impairment of assets VI.40 28,928,629.66 27,009,072.67
Add:other VI.41 5,700,277.26 1,771,176.72
Investment income (Loss listed with "-") VI.42 215,559,030.70 180,132,262.51
Including: income from investments in associates and joint ventures (Loss listed with "-") VI.42 137,440,422.49 140,904,557.45
Gain arising from the changes in fair value (loss listed with"-")
Exchange gain (Loss listed with "-")
Gain on asset disposal(Loss listed with "-") VI.43 374,143.29 552,588.02
Ⅲ、Operating profit (Loss listed with "-") 116,716,742.94 216,330,939.98
Add: Non-operating income VI.44 2,789,542.50 2,330,234.97
Less: Non-operating expenses VI.45 629,617.30 187,380.52
Ⅳ、 Total profit (Loss listed with "-") 118,876,668.14 218,473,794.43
Less: Income tax expenses VI.46 6,858,302.64 13,917,742.62
Ⅴ、Net profit (Net loss listed with "-") 112,018,365.50 204,556,051.81
(I) Classification by continuity 112,018,365.50 204,556,051.81
1、Net profit from continuing operation 112,018,365.50 204,556,051.81
2、Net profit from discontinuing operation
(II) Classification by ownership 112,018,365.50 204,556,051.81
1、Net profit attributable to equity holders(shareholders) of the Company 110,503,175.90 200,759,820.17
2、Minority interest 1,515,189.60 3,796,231.64
Ⅵ、 Other comprehensive income net off tax -110,359,036.56 -24,370,321.41
Net comprehensive income net off tax attributable to equity holders(shareholders) of the Company -110,359,036.56 -24,370,321.41
(Ⅰ)Items that may not be reclassified subsequently to the income statement - -
1.Change in net asset/liability from remeasurment on defined benefit plan
2.Under equity method, proportionate share of other comprehensive income in
invested company that may not be reclassified subsequently to the income
statement
(Ⅱ)Items that may be reclassified subsequently to the income statement VI.30 -110,359,036.56 -24,370,321.41
1.Under equity method, proportionate share of other comprehensive income
-263,666.08
invested company that may be reclassified subsequently to the income statement
2.Avaliable-for-sale financial assets fair value movements VI.30 -110,359,036.56 -24,106,655.33
3.Profit/loss on reclassification from held to maturities to avaliable-for-sale
financial assets
4.Cash flow hedges effective portion
5.Foreign currency translation difference
6.Other
Minority interest
Ⅶ、Total comprehensive income 1,659,328.94 180,185,730.40
Total comprehensive income attributable to parent Company 144,139.34 176,389,498.76
Total comprehensive income attributable to minority interest 1,515,189.60 3,796,231.64
Ⅷ、 Earnings per share
(Ⅰ)Basic earnings per share 0.13 0.23
(Ⅱ)Diluted earnings per share 0.13 0.23
legal representative：Ji Zhijian head of the accounting work：Ma Yun the person in charge of the accounting office ：Mao Chunhua
10
Income Statement of Parent Company
For the year of 2018
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Item No This year Last year
Ⅰ、Operating revenue XVII.4 575,336,492.16 616,759,880.66
Less: Cost of operation XVII.4 508,226,342.48 507,660,774.60
Taxes and surcharges 9,190,820.60 7,988,392.84
Selling and distribution expenses 774,651.62 891,189.19
Administrative expenses 90,172,124.16 91,774,158.28
R&D 21,552,749.89 20,473,796.12
Financial expenses 14,053,888.25 4,027,140.72
Including: Interest expenses 14,770,581.51 7,389,102.60
Interest income 1,921,776.06 4,232,187.62
Loss on impairment of assets 5,390,211.76 321,626.33
Add: Other income 2,056,087.00 128,650.51
Investment income (Loss listed with "-") XVII.5 235,219,734.52 198,438,477.12
Including: income from investments in associates and joint ventures (Loss listed with "-") 137,949,633.91 141,879,121.47
Gain arising from the changes in fair value (loss listed with"-")
Gain on asset disposal(Loss listed with "-") 271,569.52 1,851,943.49
Ⅱ、Operating profit (Loss listed with "-") 163,523,094.44 184,041,873.70
Add: Non-operating income 211,209.29 527,565.75
Less: Non-operating expenses 82,400.85
Ⅲ、 Total profit (Loss listed with "-") 163,651,902.88 184,569,439.45
Less: Income tax expenses 1,511,217.45 936,458.57
Ⅳ、Net profit (Net loss listed with "-") 162,140,685.43 183,632,980.88
1、Net profit from continuing operation 162,140,685.43 183,632,980.88
2、Net profit from discontinuing operation
Ⅴ、 Other comprehensive income net off tax -110,359,036.56 -24,106,655.33
(Ⅰ)Items that may not be reclassified subsequently to the income statement - -
1.Change in net asset/liability from remeasurment on defined benefit plan
2.Under equity method, proportionate share of other comprehensive income in
invested company that may not be reclassified subsequently to the income
statement
(Ⅱ)Items that may be reclassified subsequently to the income statement -110,359,036.56 -24,106,655.33
1.Under equity method, proportionate share of other comprehensive income
invested company that may be reclassified subsequently to the income statement
2.Avaliable-for-sale financial assets fair value movements -110,359,036.56 -24,106,655.33
3.Profit/loss on reclassification from held to maturities to avaliable-for-sale
financial assets
4.Cash flow hedges effective portion
5.Foreign currency translation difference
6.Other
Ⅵ、Total comprehensive income 51,781,648.87 159,526,325.55
Ⅶ、 Earnings per share
(Ⅰ)Basic earnings per share 0.06 0.07
(Ⅱ)Diluted earnings per share 0.06 0.07
legal representative：Ji Zhijian head of the accounting work：Ma Yun the person in charge of the accounting office ：Mao Chunhua
11
Consolidated Cash Flow Statement
For the year of 2018
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Item No This year Last year
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 1,406,762,006.49 1,490,364,517.50
Net increase in deposits from customers and inter-banks deposits
Net increase in loans from central bank
Net increase in loans from other financial institutions
Cash receipts of premium of direct insurance contracts
Net cash received from reinsurance contracts
Net increase in deposits from insurance policy holders and investment
Net increase in disposal of financial assets measured in fair value and through P&L
Cash receipts of interest, fees and commission
Net increase in placement from banks and other financial institution
Net increase in sales and repurchase operations
Cash received from taxes refund 37,310,011.82 13,249,610.37
Cash received relating to other operating activities V.48 57,298,204.14 99,140,045.44
Sub-total of cash inflows from operating activities 1,501,370,222.45 1,602,754,173.31
Cash paid for goods and services 1,033,353,346.60 1,208,906,954.40
Net increase in loans and disbursement to customers
Net increase in deposit with central bank and inter-banks
Cash paid for claims of direct insurance contracts
Cash paid for interest, fee and commission
Cash paid for dividends of insurance policies
Cash paid to and on behalf of employees 351,958,914.28 328,550,494.59
Payments of taxes and surcharges 88,740,477.26 97,569,294.79
Cash paid relating to other operating activities V.48 146,975,369.95 174,953,280.75
Sub-total of cash outflows from operating activities 1,621,028,108.09 1,809,980,024.53
Net cash flows from operating activities V.48 -119,657,885.64 -207,225,851.22
2. Cash flows from investment activities:
Cash received from return of investments 3,000,000.00 1,500,000.00
Cash received from investments income 150,471,312.40 124,960,986.95
Net cash received from disposal of fixed assets, intangible assets and other long-term assets 4,564,174.11 359,391.02
Net cash received from disposal of subsidiaries and other business units -3,087,767.47
Cash received relating to other investing activities V.48 76,000,000.00
Sub-total of cash inflows from investing activities 230,947,719.04 126,820,377.97
Cash paid to acquire fixed assets, intangible assets and other long-term assets 154,087,329.20 121,653,422.49
Cash paid for investments 9,900,000.00 221,950,000.00
Net increase in pledged deposits
Net cash paid to acquire subsidiaries and other business units 4,227,733.43 56,150,000.00
Cash paid relating to other investing activities V.48 76,000,000.00
Sub-total of cash outflow from investing activities 168,215,062.63 475,753,422.49
Net cash flows from investing activities 62,732,656.41 -348,933,044.52
3. Cash flows from financing activities
Cash received from investment absorption - 4,900,000.00
Including: Cash received by subsidiaries from investment absorpotion of non-controlling interest 4,900,000.00
Cash received from loans granted 410,954,000.00 467,829,700.00
Cash received from issue of bonds 174,504,000.00
Cash received relating to other financing activities V.48 32,116,287.80 22,976,815.56
Sub-total of cash inflows from financing activities 617,574,287.80 495,706,515.56
Cash paid for settlement of borrowings 510,674,100.00 162,890,000.00
Cash paid for dividends, profits appropriation or payments of interest 63,418,879.42 71,104,725.59
Including: Dividens and profits paid to non-controlling interest 3,615,000.00
Cash paid relating to other financing activities V.48 42,962,043.00 29,714,920.43
Sub-total of cash outflows from financing activities 617,055,022.42 263,709,646.02
Net cash flows from financing activities 519,265.38 231,996,869.54
4. Effect of changes in foreign exchange rate on cash and cash equivalents -3,584,007.99 -2,383,390.47
5. Net increase in cash and cash equivalents V.48 -59,989,971.84 -326,545,416.67
Add: Cash and cash equivalents at beginning of year 364,693,406.31 691,238,822.98
6. Cash and cash equivalents at end of year V.48 304,703,434.47 364,693,406.31
legal representative：Ji Zhijian head of the accounting work：Ma Yun the person in charge of the accounting office ：Mao Chunhua
12
Cash Flow Statement of Parent Company
For the Year of 2018
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Item No This year Last year
1.Cash flow from operating activities
Cash receipts from sale of goods or rendering of services 478,478,693.07 466,954,711.78
Refunds of taxes 21,407,074.38
Other cash receipts in operating activities 22,740,262.64 67,958,978.50
Sub-total of cash inflows from operating activities 522,626,030.09 534,913,690.28
Cash payments for goods and services acquired 489,595,806.59 503,456,875.87
Cash payments to and on behalf of employees 128,932,475.57 125,201,385.18
Tax and duties payments 8,443,980.99 9,617,239.24
Other cash payments for operating activities 25,098,969.48 25,669,693.09
Sub-total of cash outflows from operating activities 652,071,232.63 663,945,193.38
Net cash flows from operating activities -129,445,202.54 -129,031,503.10
2.Cash flows from investing activities
Cash receipts from return of investments 3,000,000.00 1,500,000.00
Cash receipts from investments income 150,437,862.40 134,921,961.95
Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets 429,000.00 46,000.00
Net cash receipts from disposal of subsidiaries and other businesses -
Other cash receipts in investing activities 76,000,000.00
Sub-total of cash inflows from investing activities 229,866,862.40 136,467,961.95
Cash payments for acquired fixed assets, intangible assets and other long-term assets 142,823,008.41 107,072,028.97
Cash payments for investment 109,800,000.00 221,950,000.00
Net cash payments for acquisition of subsidiaries and other businesses 56,150,000.00
Other cash payments in investing activities 76,000,000.00
Sub-total of cash outflows from investing activities 252,623,008.41 461,172,028.97
Net cash flows from investment activities -22,756,146.01 -324,704,067.02
3.Cash flows from financing activities
Cash received from capital injection
Cash receipts from borrowings 400,000,000.00 320,000,000.00
Cash received from issue of bonds 174,504,000.00
Other cash receipts in financing activities - 1,200,000.00
Sub-total of cash inflows from financing activities 574,504,000.00 321,200,000.00
Cash paid for settlement of borrowings 410,000,000.00 60,000,000.00
Cash paid for dividends, profits appropriation or payments of interest 56,097,200.94 68,187,672.87
Other cash payments in financing activities 3,446,078.94
Sub-total of cash outflows from financing activities 469,543,279.88 128,187,672.87
Net cash flows from financing activities 104,960,720.12 193,012,327.13
4.Effect of changes in foreign exchange rate on cash and cash equivalents -438,278.61 161,228.59
5.Net increases in cash and cash equivalents -47,678,907.04 -260,562,014.40
Add: the beginning balance of cash and cash equivalent 234,655,092.14 495,217,106.54
6.The ending balance of cash and cash equivalent 186,976,185.10 234,655,092.14
legal representative：Ji Zhijian head of the accounting w ork：Ma Yun the person in charge of the accounting office ：Mao Chunhua
13
Consolidated Statement of Changes in Shareholer's Equity
For the Year of 2018
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Current year
Equity attributable to the equity holders of the Company
Item Line Paid-up capital Other equity instrument Other △General Minority
Less: Treasury Special Total equity
(share capital) Capital reserves comprehensive Surplus reserves risk Undistributed profits interests
shares reserves
preference perpetual income provision
others
share bond
1. Balance at end of last year 1 856,487,181.00 757,532,081.34 23,305,370.40 407,269,002.11 668,150,375.30 750,397,795.56 78,281,832.85 3,494,812,897.76
Add: Changes in accounting policies 2 -
Correction of prior periods errors 3 -
Business combination within the same control 4 -
Others 5 -
2. Balance at beginning of current year 6 856,487,181.00 - - - 757,532,081.34 23,305,370.40 407,269,002.11 - 668,150,375.30 - 750,397,795.56 78,281,832.85 3,494,812,897.76
3. Increase/ Decrease for current year (Decrease listed
7 -1,053,094.00 - - - 2,833,260.66 -2,279,264.40 -110,359,036.56 - 52,940,664.72 - 14,461,492.89 2,514,437.98 -36,383,009.91
with "-")
（Ⅰ）Total of comprehensive income 8 -110,359,036.56 110,503,175.90 1,515,189.60 1,659,328.94
（Ⅱ）Capital contribution and reduction 9 -1,053,094.00 - - - 2,833,260.66 -2,279,264.40 - - - - - 4,614,248.38 8,673,679.44
1.Ordinary share 10 -1,053,094.00 -2,392,984.94 -2,279,264.40 4,614,248.38 3,447,433.84
2.Capital contributed by other equity instrument holders 11 -
3.Share-based payments charged to equity 12 5,226,245.60 5,226,245.60
4.Others 13 -
（III）Profit appropriations 14 - - - - - - - - 52,940,664.72 - -96,041,683.01 -3,615,000.00 -46,716,018.29
1.Appropriation to surplus reserves 15 52,940,664.72 -52,940,664.72 -
2.Appropriation to general risks provision 16 -
3.Appropriation to equity holders (or shareholders) 17 -42,795,399.87 -3,615,000.00 -46,410,399.87
4.Others 18 -305,618.42 -305,618.42
（IV）Transfer within equity 19 - - - - - - - - - - - - -
1.Transfer of capital reserve to capital (share capital) 20 -
2.Transfer of surplus reserves to capital (share capital) 21 -
3.Surplus reserves making up of losses 22 -
4.Carried over the change in net asset/liability from
23 -
remeasurment on defined benefit plan
5.Others 24 -
（V）Special reserves 25 - - - - - - - - - - - - -
1.Provision for special reserve 26 2,133,519.76 2,133,519.76
2.Utilisation of special reserve 27 -2,133,519.76 -2,133,519.76
（VI）Others 28 -
4、Balance at end of current year 29 855,434,087.00 - - - 760,365,342.00 21,026,106.00 296,909,965.55 - 721,091,040.02 - 764,859,288.45 80,796,270.83 3,458,429,887.85
legal representative：Ji Zhijian head of the accounting work：Ma Yun the person in charge of the accounting office ：Mao Chunhua
14
Consolidated Statement of Changes in Shareholer's Equity
For the Year of 2018
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Last year
Equity attributable to the equity holders of the Company
Item Line Paid-up capital Other equity instrument Other △General Minority
Less: Treasury Special Undistributed Total equity
(share capital) Capital reserves comprehensive Surplus reserves risk interests
shares reserves profits
preference perpetual income provision
others
share bond
1. Balance at end of last year 1 611,776,558.00 1,046,321,716.85 67,615,856.00 431,639,323.52 620,578,847.52 658,387,158.97 69,585,601.21 3,370,673,350.07
Add: Changes in accounting policies 2 -
Correction of prior periods errors 3 -
Business combination within the same control 4 -
Others 5 -
2. Balance at beginning of current year 6 611,776,558.00 - - - 1,046,321,716.85 67,615,856.00 431,639,323.52 - 620,578,847.52 - 658,387,158.97 69,585,601.21 3,370,673,350.07
3. Increase/ Decrease for current year (Decrease listed
7 244,710,623.00 - - - -288,789,635.51 -44,310,485.60 -24,370,321.41 - 47,571,527.78 - 92,010,636.59 8,696,231.64 124,139,547.69
with "-")
（Ⅰ）Total of comprehensive income 8 -24,370,321.41 200,759,820.17 3,796,231.64 180,185,730.40
（Ⅱ）Capital contribution and reduction 9 - - - - -44,079,012.51 -44,310,485.60 - - - - - 4,900,000.00 5,131,473.09
1.Ordinary share 10 -56,150,000.00 -44,310,485.60 4,900,000.00 -6,939,514.40
2.Capital contributed by other equity instrument holders 11 -
3.Share-based payments charged to equity 12 12,070,987.49 12,070,987.49
4.Others 13 -
（III）Profit appropriations 14 - - - - - - - - 47,571,527.78 - -108,749,183.58 - -61,177,655.80
1.Appropriation to surplus reserves 15 47,571,527.78 -47,571,527.78 -
2.Appropriation to general risks provision 16 -
3.Appropriation to equity holders (or shareholders) 17 -61,177,655.80 -61,177,655.80
4.Others 18 -
（IV）Transfer within equity 19 244,710,623.00 - - - -244,710,623.00 - - - - - - - -
1.Transfer of capital reserve to capital (share capital) 20 244,710,623.00 -244,710,623.00 -
2.Transfer of surplus reserves to capital (share capital) 21 -
3.Surplus reserves making up of losses 22 -
4.Carried over the change in net asset/liability from
23 -
remeasurment on defined benefit plan
5.Others 24 -
（V）Special reserves 25 - - - - - - - - - - - - -
1.Provision for special reserve 26 2,016,809.74 2,016,809.74
2.Utilisation of special reserve 27 -2,016,809.74 -2,016,809.74
（VI）Others 28 -
4、Balance at end of current year 29 856,487,181.00 - - - 757,532,081.34 23,305,370.40 407,269,002.11 - 668,150,375.30 - 750,397,795.56 78,281,832.85 3,494,812,897.76
legal representative：Ji Zhijian head of the accounting work：Ma Yun the person in charge of the accounting office ：Mao Chunhua
15
Parent Company Statement of Changes in Shareholer's Equity
For the Year of 2018
Name of Enterprise：Dalian Refrigeration Company Limited
Current year
Equity attributable to the equity holders of the Company
Item Line Paid-up capital Other equity instrument Other
Less: Treasury Special Total equity
(share capital) Capital reserves comprehensive Surplus reserves Undistributed profits
shares reserves
preference perpetual income
others
share bond
1. Balance at end of last year 1 856,487,181.00 802,034,176.17 23,305,370.40 406,306,901.44 668,150,375.30 573,846,640.63 3,283,519,904.14
Add: Changes in accounting policies 2 -
Correction of prior periods errors 3 -
Others 4 -
2. Balance at beginning of current year 5 856,487,181.00 - - - 802,034,176.17 23,305,370.40 406,306,901.44 - 668,150,375.30 573,846,640.63 3,283,519,904.14
3. Increase/ Decrease for current year (Decrease listed
6 -1,053,094.00 - - - 2,833,260.66 -2,279,264.40 -110,359,036.56 - 52,940,664.72 66,404,620.84 13,045,680.06
with "-")
（Ⅰ）Total of comprehensive income 7 -110,359,036.56 162,140,685.43 51,781,648.87
（Ⅱ）Capital contribution and reduction 8 -1,053,094.00 - - - 2,833,260.66 -2,279,264.40 - - - - 4,059,431.06
1.Ordinary share 9 -1,053,094.00 -2,392,984.94 -2,279,264.40 -1,166,814.54
2.Capital contributed by other equity instrument holders 10 -
3.Share-based payments charged to equity 11 5,226,245.60 5,226,245.60
4.Others 12 -
（III）Profit appropriations 13 - - - - - - - - 52,940,664.72 -95,736,064.59 -42,795,399.87
1.Appropriation to surplus reserves 14 52,940,664.72 -52,940,664.72 -
2.Appropriation to equity holders (or shareholders) 15 -42,795,399.87 -42,795,399.87
3.Others 16 -
（IV）Transfer within equity 17 - - - - - - - - - - -
1.Transfer of capital reserve to capital (share capital) 18 -
2.Transfer of surplus reserves to capital (share capital) 19 -
3.Surplus reserves making up of losses 20 -
4.Carried over the change in net asset/liability from
21 -
remeasurment on defined benefit plan
5.Others 22 -
（V）Special reserves 23 - - - - - - - - - - -
1.Provision for special reserve 24 2,133,519.76 2,133,519.76
2.Utilisation of special reserve 25 -2,133,519.76 -2,133,519.76
（VI）Others 26 -
4、Balance at end of current year 27 855,434,087.00 - - - 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
legal representative：Ji Zhijian head of the accounting work：Ma Yun the person in charge of the accounting office ：Mao Chunhua
16
Parent Company Statement of Changes in Shareholer's Equity
For the Year of 2018
Name of Enterprise：Dalian Refrigeration Company Limited
Last year
Equity attributable to the equity holders of the Company
Item Line Paid-up capital Other equity instrument Other
Less: Treasury Special Total equity
(share capital) Capital reserves comprehensive Surplus reserves Undistributed profits
shares reserves
preference perpetual income
others
share bond
1. Balance at end of last year 1 611,776,558.00 1,036,115,161.54 67,615,856.00 430,413,556.77 620,578,847.52 498,962,843.33 3,130,231,111.16
Add: Changes in accounting policies 2 -
Correction of prior periods errors 3 -
Others 4 -
2. Balance at beginning of current year 5 611,776,558.00 - - - 1,036,115,161.54 67,615,856.00 430,413,556.77 - 620,578,847.52 498,962,843.33 3,130,231,111.16
3. Increase/ Decrease for current year (Decrease listed
6 244,710,623.00 - - - -234,080,985.37 -44,310,485.60 -24,106,655.33 - 47,571,527.78 74,883,797.30 153,288,792.98
with "-")
（Ⅰ）Total of comprehensive income 7 -24,106,655.33 183,632,980.88 159,526,325.55
（Ⅱ）Capital contribution and reduction 8 - - - - 10,629,637.63 -44,310,485.60 - - - - 54,940,123.23
1.Ordinary share 9 -1,441,349.86 -44,310,485.60 42,869,135.74
2.Capital contributed by other equity instrument holders 10 -
3.Share-based payments charged to equity 11 12,070,987.49 12,070,987.49
4.Others 12 -
（III）Profit appropriations 13 - - - - - - - - 47,571,527.78 -108,749,183.58 -61,177,655.80
1.Appropriation to surplus reserves 14 47,571,527.78 -47,571,527.78 -
2.Appropriation to equity holders (or shareholders) 15 -61,177,655.80 -61,177,655.80
3.Others 16 -
（IV）Transfer within equity 17 244,710,623.00 - - - -244,710,623.00 - - - - - -
1.Transfer of capital reserve to capital (share capital) 18 244,710,623.00 -244,710,623.00 -
2.Transfer of surplus reserves to capital (share capital) 19 -
3.Surplus reserves making up of losses 20 -
4.Carried over the change in net asset/liability from
21 -
remeasurment on defined benefit plan
5.Others 22 -
（V）Special reserves 23 - - - - - - - - - - -
1.Provision for special reserve 24 2,016,809.74 2,016,809.74
2.Utilisation of special reserve 25 -2,016,809.74 -2,016,809.74
（VI）Others 26 -
4、Balance at end of current year 27 856,487,181.00 - - - 802,034,176.17 23,305,370.40 406,306,901.44 - 668,150,375.30 573,846,640.63 3,283,519,904.14
legal representative：Ji Zhijian head of the accounting work：Ma Yun the person in charge of the accounting office ：Mao Chunhua
17
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
I. General Information
Dalian Refrigeration Company Limited (the “Company”) was reorganized and reformed from
main part of former Dalian Refrigeration Factory. On December 8, 1993, the company went
to the public as a listed company at Shenzhen Stock Exchange Market. On March 20, 1998,
the company successfully went to the public at B share market and listed at Shenzhen Stock
Exchange Market with total share capital of RMB350,014,975Yuan.
According to the 13th meeting of the 6th generation of board, extraordinary general meeting
for 2015 fiscal year and ' Restricted share incentive plan (draft)' , the Company planned to
introduce A ordinary shares to incentive objectives, which was 10,150,000 number of shares
would be granted to 41 share incentive objectives at granted price of RMB5.56Yuan per share.
Up to March 12th ,2015, the Company received new added share capital of
RMB10,150,000Yuan and the share capital had been verified by DaHua Certified Public
Accountants, and had been issued the capital verification report Dahuayanzi [2015]000086 on
March12th , 2015.
The general meeting for 2015 fiscal year held on 21st April 2016 approved the profit
distribution policy for the year of 2015, which agrees the profit distribution based on the total
360,164,975 number of shares as share capital, paid share dividend of 5 common shares for
every 10 shares through capital reserve. The policy stated above was fully implemented on
5th May 2016, and the registered capital was altered to 540,247,462.00Yuan.
The 17thmeeting of the 6th generation of board was held on 4th June 2015 and the 2nd interim
shareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the
proposal of non-public offering of ‘A shares’. China’s Securities Regulatory Commission
issued SFC license [2015]3137 on 30th December, 2015, approving that new non-public
offering cannot exceeded 38,821,954 number of shares. The company implemented the post
meeting procedures for China’s Securities Regulatory Commission, which is regarding
adjustment of bottom price and the number of the shares issued after the implementation of
profit distribution policy of 2015 in May, 2016, and accordingly revised the upper limit of
non-public offering of share to58,645,096 number 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 to 598,892,558 shares, and the par value is
1yuan per share and the total share capital is 598,892,558.00Yuan. The share capital stated
above has been verified by DaHua Certified Public Accountants, and has been issued the
capital verification report Dahuayanzi [2016]000457 on 31st May 2016.
According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration Company
Limited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting
18
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
authorized the board of directors to implement the Restricted Share Incentive Plan’ approved
on the 3rdprovisional general meeting held on 13th September 2016, the 9th meeting of the 7th
generation of board deliberated and passed the ‘Proposal about granting the restricted shares
to incentive targets’ on September 20th, 2016 and set 20th September 2016 as share granted
date, and granted 12,884,000 number of restricted shares to 188 incentive targets at granted
price of 5.62Yuan per share. By 22ndNovember, 2016, the company has actually received the
newly subscribed registered share capital of 12,884,000Yuan subscribed by incentive targets.
The share capital stated above has been verified by DaHua Certified Public Accountants, and
has been issued the capital verification report Dahuayanzi [2016]001138 on 23rdNovember,
2016.
On May 19th, 2017, the general meeting for 2016 fiscal year was held and profit
appropriation scheme for 2016 FY was approved, which was every 10 shares will be
increased by 4 shares through capital reserve based on the total 611,776,558 number of shares.
After the profit appropriation scheme, the registered capital was changed to
RMB856,478,181.00Yuan.
On December 28, 2017, the company held the 3rd extraordinary shareholders meeting in
2017, and reviewed and approved the “Proposal on Repurchasing and Retiring Partially
Restricted Stocks of the 2016 Restricted Stock Incentive Plan”. On March 8, 2018, after the
company's repurchase and cancellation, the company implemented the corresponding capital
reduction procedures according to law. The registered capital of the company was changed
from 856,487,181 Yuan to 855,908,981 Yuan.
On May 4, 2018, the company held the 21st meeting of the 7th Board of Directors, and
reviewed and approved the “Proposal on Repurchasing and Retiring Partially Restricted
Stocks of the 2015 Restricted Stock Incentive Plan". On June 29, 2018, after the company's
repurchase and cancellation, the company implemented the corresponding capital reduction
procedures according to law. The registered capital of the company was changed from
855,908,981 Yuan to 855,434,087 Yuan
The old address of the Company’s registered office as same as head office is No.888 Xinan
Road, Shahekou District, Dalian, China. In 2017, the Company relocated to new factory and
changed its address to No.16 East of Liao River RD, DDA, Dalian China as same as HQ’s
address. The parent company of the Company is Dalian Bingshan Group Co., Ltd., and there
is no ultimate controller regulated by the relevant law, regulations and rules.
The company falls into industrial manufacturing sector, mainly engaged in industrial
refrigeration, refrigerated and frozen food storage, and manufacture and installation of central
air-conditioning and refrigeration equipment. The scope of business includes refrigeration
19
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
equipment, valve, fixings refrigeration equipment, supported products processing and system
design of air-conditioning. The company also offers technical consultation, technical services,
commercial trade and material supply and marketing.
II. The scope of consolidation
There are 15 entities included in the current consolidated financial statements, including:
Proportion Propor
of tion of
Names of subsidiaries Types Level
shareholdi votes
ng（%） （%）
Dalian Bingshan Group Engineering Co., Ltd. Subsidiary 2 100 100
Dalian Bingshan Group Sales Co., Ltd. Subsidiary 2 100 100
Dalian Bingshan Air-conditioning Equipment
Subsidiary 2 70 70
Co., Ltd.
Dalian Bingshan JiaDe Automation Co., Ltd. Subsidiary 2 100 100
Dalian Bingshan Lingshe Quick Freezing
Subsidiary 2 100 100
Equipment Co., Ltd.
Wuhan New World Refrigeration Industrial Co.,
Subsidiary 2 100 100
Ltd.
Bingshan Technical Service （Dalian） Co.,Ltd. Subsidiary 2 100 100
Dalian Niweisi LengNuan Techonology Co.,
Subsidiary 2 55 55
Ltd.
Dalian Xinminghua Electrical Technology Co.,
Subsidiary 2 100 100
Ltd
Dalian Bingshan International Trading Co.,Ltd Subsidiary 2 100 100
Wuhan New World Air-conditioning Sub-
3 100 100
Refrigeration Engineering Co., Ltd subsidiary
Dalian Bingshan Security Leisure Industrial Sub-
3 100 100
Engineering Co., Ltd subsidiary
Ningbo Bingshan Air-conditioning Refrigeration Sub-
3 51 51
Engineering Co., Ltd subsidiary
Sub-
Wuhan Lanning Energy Technology Co., Ltd 3 54.55 54.55
subsidiary
Chengdu Bingshan Refrigeration Engineering Sub-
3 51 51
Co., Ltd. subsidiary
20
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
This year, entities within the consolidation scope are changed comparing to last year. Because
Wuhan Lanning Energy Technology Co., Ltd was newly acquired and Shanghai Bingshan was
sold.
For the specific information of entity change in the consolidation scope, see the notes of VII.
The Change of Scope of Consolidation and VIII. The Equity in Other Entities.
III. 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 ‘Accounting
Standards for Business Enterprises’ and relevant regulations, and also based on the note IV
“Significant Accounting Policies, Accounting Estimates”.
（2） Going concern
The company has the capacity to continually operate within 12 months at least since the end
of report period, and hasn‘t the major issues impacting on the sustainable operation ability.
IV. Significant Accounting Policies and Accounting Estimates
1. Declaration for compliance with accounting standards for business enterprises
The financial statements are prepared by the Group according to the requirements of
Accounting Standard 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 for
manufacturing up to cash or cash equivalent realization. The group sets twelve months for
one operating 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 control
As an acquirer, the assets and liabilities that The Group obtained in a business combination
under the same control should be measured on the basis of their carrying amount in the
21
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
consolidated financial statements on the combining date. As for the balance between the
carrying amount of the net 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 retained earnings shall be adjusted.
For a business combination not under same control, the asset, liability and contingent liability
obtained from the acquirer shall be measured at the fair value on the acquisition date. The
combination cost shall be the fair value, on the acquisition date, of the assets paid, the
liabilities incurred or assumed and equity securities issued by the acquirer in exchange for the
control of the acquire, and sum of all direct expenses(if the combination is achieved in stages,
the combination cost shall be the sum of individual transaction). The difference when
combination cost exceeds proportionate share of the fair value of identifiable net assets of
acquire should be recognized as goodwill. If the combination cost is less than proportionate
share of the fair value of identifiable net assets of acquiree, firstly, fair value of identifiable
asset, liability or contingent liability shall be reviewed, and so the fair value of non-monetary
assets or equity instruments issued in the combination consideration , after review, still the
combination cost is less than proportionate share of the fair value of identifiable net assets of
acquire, the difference should be recognized as non-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 the
parent company, appropriated adjustments shall be made in accordance with the Group policy
in preparation of the consolidated financial statements.
All significant intergroup transactions, outstanding balances and unrealized profit shall be
eliminated in full when preparing the consolidated financial statements. Portion of the
subsidiary’s equity not belonging to the parent, profit, loss for the current period, portion of
other comprehensive income and total comprehensive belonging to minority interest, shall
be presented separately in the consolidated financial statements under “minority interest of
equity”, ”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 be
consolidated since the beginning of the consolidation period. When preparing the comparative
consolidated financial statements, adjustments shall be made to relevant items of comparative
figures as regarded that reporting entity established through consolidation has been always
there since the point when the ultimate controlling party starts to have the control.
22
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
If a business consolidation under common control is finally achieved in stages, consolidation
accounting 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, when preparing the consolidated financial statements, adjustments shall be made for
the current consolidation status as if consolidation has always been there since the point when
the ultimate controlling party starts to control. In preparation of comparative figures, asset
and liability of the acquiree shall be consolidated into the Group’s comparative financial
statements, but to the extent no earlier than the point when the Group and acquiree are both
under ultimate control and relevant items under equity in comparative financial statements
shall be adjusted for net asset increased in combination. To avoid the duplicated computation
of net asset of acquiree, for long-term equity investment held by the Group before the
consolidation, relevant profit and loss, other comprehensive income and movement in other
net asset, recognized for the period between the combination date and later date when original
shareholding is obtained and when the Group and the acquiree are under common control of
same ultimate controlling party, shall be respectively used for writing down the opening
balance of retained earnings of comparative financial statements and profit and loss for the
current period.
If a subsidiary is acquired not under common control, its operation results and cash flow shall
be consolidated since the beginning of the consolidation period. In preparation of the
consolidated financial statements, adjustments shall be made to subsidiary’s financial
statements based on the fair 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,
consolidation accounting 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 previously held equity interest in the acquiree at its acquisition-date fair
value and recognize the resulting gain or loss as investment income for the current period.
Other comprehensive income, under equity method accounting rising from the interest held in
acquiree in relation to the period before the acquisition, and changes in the value of its other
equity other than net profit or loss, other comprehensive income and profit appropriation shall
be transferred to investment gain or loss for the period in which the acquisition incurs,
excluding the other comprehensive income from the 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 without
losing the control over it, in the consolidated financial statements, the difference, between
23
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
disposals price and respective disposed value of share of net assets in the subsidiary since the
acquisition date or combination date, shall be adjusted for capital surplus or share premium,
no enough capital surplus, then adjusted for retained earnings.
When the Group partially disposes of the long –term equity investment in subsidiary and lose
the control over it, in preparation of consolidated financial statements, remaining share of
interest in the subsidiary shall be remeasured on the date of losing control. Sum of the share
disposal consideration and fair value of remaining portion of shareholding minus the share of
the net assets in the subsidiary held based on the previous shareholding percentage since the
acquisition date or combination date, the balance of above is recognized as investment
gain/loss for the period and goodwill shall be written off accordingly. Other comprehensive
income relevant to share investment in subsidiary shall be transferred to investment gain /loss
for the period on the date of losing control.
When the Group partially disposes of the long –term equity investment in subsidiary and lose
the control over it by stages, if all disposing transactions are bundled, each individual
transaction shall be seen as a transaction of disposal of a subsidiary by losing control. The
difference between the disposal price and the share of the net assets in the subsidiary held
before the date of losing control, shall be recognize as other comprehensive income until the
date of losing control where it is 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,
the Group as a joint operator shall recognize its own assets and its share of any assets held
jointly, its liabilities and its share of any liabilities incurred jointly, its revenue from the sale
of its share of the output arising from the joint operation, its share of the revenue from the
sale of the output by the joint operation; and its expenses, including its share of any expenses
incurred jointly. When an entity enters into a transaction with a joint operation in which it is a
joint operator, such as a sale or contribution of assets, it is conducting the transaction with the
other parties to the joint operation and, as such, the joint operator shall recognize gains and
losses resulting from such a transaction 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 an insignificant risk of changes in value.
9. Translation of foreign currency
24
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(1) Foreign currency transaction
Foreign currency transactions are translated at the spot exchange rate issued by People’s Bank
of China (“PBOC”) on the 1st 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 the balance sheet day. Exchange differences arising from the settlement of
monetary items are charged as in profit or loss for the period. Exchange differences of
specific borrowings related to the acquisition or construction of a fixed asset should be
capitalized as occurred, before the relevant fixed 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
spot exchange rate at the balance sheet date. Among the owner’s equity items except
“undistributed profit”, others should be translated at the spot exchange rate when they are
incurred. The income and expense should be translated at spot exchange rate when the
transaction incurs. Translation difference of foreign currency financial statements should be
presented separately under the other comprehensive income title. Foreign currency cash flows
are translated at the spot exchange rate on the day when the cash flows incur. The amounts
resulted from change of exchange rate are presented separately in the cash flow statement.
10. Financial assets and financial liabilities
A financial asset or liability shall be recognized when the entity becomes a party to the
contractual provisions of a financial instrument.
(1) Financial assets
1) Classification, recognition and measurement
The Group classifies its financial assets in the following categories: at fair value through
profit or loss, loans and receivables, held-to-maturity financial assets and available-for-sale.
The classification depends on the purpose for which the financial assets were acquired.
Management determines the classification of its financial assets at initial recognition.
Financial assets at fair value through profit and loss include trading financial assets and those
financial assets initially designated as fair value through profit and loss. When meeting one of
the following conditions, the company shall classify the assets into trading financial asset: it
is acquired principally for the purpose of selling in the near term and is part of a portfolio of
identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking; it is a derivative(except for a derivative that
is a designated and effective hedging instrument or a financial guarantee contract, or linked to
25
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
the investments in equity instruments that do not have a quoted price in an active market, no
fair value can be reliably measured and must be settled by delivery of such an equity
instrument. When meeting one of the following conditions, the financial assets can be
classified as the assets initially designated as fair value through profit and loss: it eliminates
or significantly reduces a measurement or recognition inconsistency that would otherwise
arise from measuring assets or liabilities or recognising the gains and losses on them on
different bases; or the financial instrument portfolio is managed and its performance is
evaluated and provided internally on that basis to the entity’s key management personnel on a
fair value basis, in accordance with a documented risk management or investment strategy;
or it is a hybrid instrument embedded by one or more instruments except for a embedded
derivate that does not significantly modify the cash flows or it is clear that separation of the
embedded derivative(s) is prohibited; it is a hybrid instrument that is required to be separated
but unable to be measured separately either at acquisition or at the end of a subsequent
financial reporting period. They are measured at fair value subsequently. Change on fair value
shall be recognized in the profit and loss. Interest or cash dividends received during the period
in which such financial assets are held, are recognized as ‘Investment income’. On disposal,
the difference between fair value of disposal and initial recorded amount are recognized as
‘Gain or loss on Investment’ and adjust the gain or loss from changes in fair value
accordingly.
Receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. Receivables are subsequently measured at amortized cost
using the effective interest method. The amortization, impairment and any gain or loss from
derecognition shall be recognized in the profit and loss for the current year.
Available-for-sale financial assets are non-derivative financial assets that are either
designated in this category or not classified as financial assets of any other class at initial
recognition. This category includes the derivative financial assets that linked to the
investments in equity instruments without a quoted price in an active market, no fair value
can be reliably measured and must be settled by delivery of such an equity instrument, and
shall be measured at cost subsequently. Others have a quoted price in an active market or fair
value can be measured reliably although no quoted price available, they shall be measured at
fair value. Any change on fair value shall be recognized in other comprehensive income and
subsequently be measured at fair value. Except impairment loss and exchange gain or loss
arising from foreign currency monetary financial assets, changes in fair value of
available-for-sale financial assets are directly recorded in shareholders’ equity until such
financial assets is derecognized and the accumulated fair value adjustments previously
recorded in equity are charged to profit or loss for the period. Interests for the period in
26
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
which the assets are held as investment in debt instrument is calculated using the effective
interest method and is charged to profit or loss for the period as ‘Investment income’. Cash
dividends declared by the investee company relating to available-for-sale equity instruments
are charged to profit or loss for the period as ‘Investment income’. Equity instruments that a
quoted price is not applicable in an active market and no fair value can be reliably measured,
shall be measured at cost.
2)Recognition and measurement of transfer of financial assets
A financial asset is derecognised when any one of the following conditions is satisfied: i) the
rights to receive cash flows from the asset expire, ii) the financial asset has been transferred
and the entity transfers substantially all risks and rewards relating to the financial assets to the
transferee, iii) the financial asset has been transferred to the transferee, the entity has given up
its control of the financial asset although the entity neither transfers nor retains all risks and
rewards of the financial asset.
Where an entity neither transfers nor retains substantially all risks and rewards of financial
asset and does not give up the control over such financial asset, then the entity recognizes
such financial asset to the extent of its continuous involvement and recognizes the
corresponding liabilities.
In the case where the financial asset as a whole qualifies for the derecognition conditions, the
difference between the carrying value of transferred financial asset and the sum of the
consideration received for transfer and the accumulated amount of changes in fair value that
was previously recorded under other comprehensive income is charged into profit or loss for
the period.
In the case where only part of the financial asset qualifies for derecognition, the carrying
amount of financial asset being transferred is allocated between the portions that to be
derecognized and the portion that continued to be recognized according to their relative fair
value. The difference between the amount of consideration received for the transfer and the
accumulated amount of changes in fair value that was previously recorded in other
comprehensive income of the part qualifies for derecognition and the above-mentioned
allocated carrying amount is charged to profit or loss for the period.
3) Impairment of financial assets
The Group assesses the carrying amount of financial assets other than financial assets at fair
value through profit or loss at each balance sheet date. If there is objective evidence that the
financial asset is impaired, the Group shall determine the amount of any impairment loss
accounts.
27
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The specific impairment provision methods of financial assets were as follows:
1) Provision for impairment of available-for-sale financial assets:
On balance sheet date, the Company executes individually inspection on each
available-for-sale financial statement, if the fair value of the equity instruments which is
invested on the balance sheet date is lower than its initial investment cost for more than 50%
(including 50%) or lower than its initial investment cost for the duration time for more than 1
year (including 1 year), which indicates that it had occurred impairment; if the fair value of
the equity instruments which invests on the balance sheet date is lower than its initial
investment cost for more than 20% (including 20%) but not reaches at 50%, the Company
will comprehensively considerate the other relevant factors such as the price volatility etc.
and will judge the equity investment whether had occurred impairment.
The aforesaid "cost" recognized in line with the initial investment cost of available for sale
financial instrument deducting principal recovered, amount amortized and the impairment
losses recorded into profits or losses. “fair value" recognized through the closing price of
Securities Exchange at period end unless the investment of available for sale equity
instrument was in the restricted stock trade period. For investment of available for sale equity
instrument was in the restricted stock trade period, recognized in line with the closing price of
Securities Exchange at period end deducting the risk of market player cannot sell the equity
instrument, thus, require compensation.
If objective evidence shows that impairment for available-for-sale financial assets will occur,
the cumulative loss arising from the decline in fair value that had been recognized directly in
equity is removed from equity and recognized as impairment loss, although the financial
assets are not derecognized. The accumulative losses that are transferred out shall be the
balance obtained from the initially obtained costs of the financial asset after deducting the
principals taken back and amortized amount, the current fair value and the impairment losses
originally recorded into the profits and losses account.
For an available for sale debt instrument, if there is objective evidence that the value of the
financial asset recovered and the recovery can be related objectively to an event occurring
after the impairment was recognized, the previously recognized impairment loss is reversed
and the amount of reversal is recognized in income statement. For an available for sale equity
instrument, if there is objective evidence that the value recovered and the recovery can be
objectively related to an event occurring after the impairment loss recognized, the previously
recognized impairment loss is reversed and directly recognized in equity. However, the
impairment losses incurred to an equity instrument investment for which there is no quoted
price in the active market and whose fair value cannot be reliably measured, or incurred to a
28
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
derivative financial asset which is linked to the equity instrument and which shall be settled
through the equity instrument, can not be reversed.
(2) Financial liabilities
1) Classification, basis for recognition and measurement
Financial liabilities of an entity are classified at initial recognition as “financial
liabilities at fair 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 trading and those designated as fair value through profit or loss on initial recognition
（relevant basis for classification shall be disclosed by reference to financial assets）.
They are subsequently 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 the period in which they are incurred.
Other financial liability is measured at amortized cost by adopting the effective rate
method.
2) Financial liability derecognition
A financial liability is derecognized when the underlying present obligations or part of
it are discharged. Existing financial liability shall be derecognized and new financial
liability shall be recognized when the entity sign the agreement with creditor to
undertake the new financial liability in replacement of existing financial liability, and
the terms of agreement are different in substance. Any significant amendment to the
agreement as a whole or part o it is made, then the existing liabilities or part of it shall
be derecognized and financial liability after terms amendment shall be recognized as a
new financial liability. The difference between the carrying amount of the financial
liability derecognized and the consideration paid is recognized in profit or loss for the
period.
3) Fair value measurement of financial asset and financial liability
If there is an active market for the financial assets and liability measured at fair value,
the fair value is measured at the quoted price in the active market; originally obtained or
derived financial assets or liability is measured at market trade price. If no active market
exists for the financial asset or liability, applicable valuation techniques is used for fair
value measurement. When valuating, the price in the most advantageous market shall be
used for fair value measurement and applicable valuation techniques which enough data
29
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
is available for and supported by other information shall be adopted, and the group
chooses the input with same characters of asset or liability as considered by market
participant and try to give priority in use of observable input. Unobservable input shall
be used when observable inputcan not be obtained or it is infeasible to be obtained.
11. Provision for bad debts of receivables
The Group shall review the carrying amount of receivables fully at the balance sheet date.
The Group shall calculate the full provision for bad debts for the following receivables:
debtor has been log-out, bankruptcy, minus net asset, significant poor cash flow and
significant nature disaster leads to discontinue production and the debtors could not pay for
the debts within the foreseeable time. Other solid evidences indicates that the receivables
could not be paid or be of a slim chance.
The allowance method is applied to the potential loss of bad debt. The Group should make the
impairment test individually or group and accrue the bad debt provisions which shall be
recorded into current profit or loss at the end of the period. If there is defined evidence for the
receivables not to or not likely to be received, which shall be recognized as the loss of bad
debt and write off the accrued bad debts provisions after going through the approval
procedure of the Group.
(1) Individually significant amounts of accounts receivable accrued bad debt provision as per
portfolio
Judgment basis or amount standards of Top 5 of account receivables at year end
individually significant amounts
The accruing method of the receivables The bad debt provisions shall be accrued based on
with individually significant amounts the difference between current value of future cash
flow and the carrying amounts.
(2) Accounts receivable accrued bad debt provision by credit risk portfolio
The basis of portfolio
Accounts receivable due from subsidiaries
Inter-company
included in consolidated scope
Other than accounts receivable due from
subsidiaries included in consolidated scope and
Accounting aging individual receivable with significant amount
without impairment, use the accounting aging of
the receivables
The basis of bad debt provision
Inter-company Individual identified method
Accounting aging Age analysis method
30
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The percentage of provision for bad debts based on the age of receivables as followings:
Accounting aging Accrual percentage of the Accrual percentage of
receivables (%) other receivables (%)
Within 1 year 5 5
1-2 years 10 10
2-3 years 30 30
3-4 years 50 50
4-5 years 80 80
Over 5 years 100 100
(3) Individually insignificant amount accounts receivable but accrued bad debt provision as
per portfolio
The individual amount is not significant, but the
Accrual reason accrued bad debt provision on the basis of portfolio
can not reflect its risk characteristic
The bad debt provisions should be accrued based on
Accrual method the difference between current value of future cash
flow and the carrying amount.
12. Inventories
Inventories are materials purchasing, raw material, variance of cost materials, low-valuable
consumable, 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
actual cost on acquisition. Weighted average cost method is taken for measuring the inventory
dispatched or used. Low value consumables and packaging materials is recognized in the
income statement by one-off method.
After yearend thorough inventory check, at the balance sheet date inventory impairment
should be provided or adjusted according to inventory category. For the finished goods, raw
material held for sale etc which shall be sold directly, the net realizable value should be
confirmed at the estimated selling price less estimated selling expenses and related tax and
expenses. The raw material held for production, its realizable value should be confirmed at
the estimated selling price of 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 shall be calculated based on the contract price. If the
31
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
quantities of inventories in the Group are more than quantities if inventories subscribed in the
sales contracts, the net realizable value of the excessive part of the inventories should be
calculated based on the general selling price. When the impairment indicators disappear,
impairment provision shall be reversed and
13. Long-term equity investment
Long term equity investments are the investment in subsidiary, in associated company and in
joint venture.
Joint control is the contractual agreement sharing of control over an economic activity by all
participants or participants’ combination and decisions or policies relating to the operating
activity of 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
than 50% shares with voting rights in the investee company. If holding less than 20% voting
rights, the entity shall also take other facts or circumstances into accounts when judging any
significant influences. Factors and circumstances include: representation on the board of
directors or equivalent governing body of the investee, participation in financial or operating
activities policy-making processes, material transactions between the investor and the
investee, interchange of managerial personnel or provision of essential technical information.
When control exists over an investee, the investee is a subsidiary of an entity. The initial
investment cost for long-term equity investment acquired through business combination
under common control, is the carrying amount presented in the consolidated financial
statements of the share of net assets at the combination date in the acquired company. If the
carrying amount of net assets at the combination date in the acquired company is negative,
investment shall be recognized at zero.
If the equity of investee under common control is acquired by stages and business
combination incurs in the end, an entity shall disclose the accounting method for long-term
equity investment in the parent financial statement as a supplemental. For example, if the
equity of investee under common control is acquired by stages and business combination
incurs in the end, and it’s a bundled transaction, the entity shall regard all transactions as a
one for accounting. If it’s not a bundled transaction, the carrying amount presented in the
consolidated financial statements of the share of net assets at the combination date in the
acquired company since acquisition is determined as for the initial cost of long-term equity
investment. The difference between the cost initially recognized and carrying amount of
long-term equity investment prior to the business combination plus the newly paid
consideration for further share acquired, and capital reserve shall be adjusted accordingly. If
no enough capital reserve is available for adjustment, retain earnings shall be adjusted.
32
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
If long-term equity investment is acquired through business combination not under common
control, initial investment cost shall be the combination cost.
If the equity of investee not under common control is acquired by stages and business
combination incursion the end, an entity shall disclose the accounting method for long-term
equity investment in the parent financial statement as a supplemental. If the equity investment
of investee not under common control is acquired by stages and business combination
incursion the end, and it’s a bundled transaction, the entity shall regard all transactions as a
one for accounting. If it’s not a bundled transaction, the carrying amount of the equity
investment held previously plus newly increased investment cost are taken as the initial
investment cost under cost model. If equity investment is held under equity method before the
acquisition date, other comprehensive income under equity method previously shall not be
adjusted accordingly. When disposing of the investment, the entity shall adopt the same basis
as the investee directly disposing of related assets or liability for accounting treatment. Equity
held prior to acquisition date as available for sale financial assets under fair value model,
accumulated change on fair value previously recorded in other comprehensive shall be
transferred into investment gain/loss for the period.
Apart from the long-term equity investments acquired through business combination
mentioned above, the cost of investment for the long-term equity investments acquired by
cash payment is the 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 equity investment injected to the entity by the investor, the investment cost is the
consideration as specified in the relevant contract or agreement.
The Group adopts cost method to account for investment in subsidiary and equity method for
investment in joint venture and affiliate.
Long-term equity investment subsequently measured under cost model shall increase the
carrying amount of investment by adjusting the fair value of additional investment and
relevant transaction expenses. Cash dividend or profit declared by investee shall be
recognized as investment gain/loss for the period based on the proportion share in the
investee.
Long-term equity investment subsequently measured under equity method shall be adjusted
for its carrying amount according to the share of equity increase or decrease in the investee.
The entity shall recognize its share of the investee’s net profits or losses based on the fair
value of the investee’s individual identifiable assets at the acquisition date, after making
appropriate adjustments thereto in conformity with the accounting policies and accounting
period, and offsetting the unrealized profit or loss from internal transactions entered into
33
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
between the entity and its associates and joint ventures according to the shareholding
attributable to the entity and accounted 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
the consideration actually received is recognized as investment income for the period. For
long-term investments accounted for under equity method, the movements of shareholder’s
equity, other than the net profit or loss, of the investee company, previously recorded in the
shareholder’s equity of the 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 a result of partially disposal of the investment, the remaining investment will be changed to
be accounted for as available for sale financial assets, and the difference between the fair
value of remaining investment at the date of losing joint control or significant influence and
its carrying amount shall be recognized in the profit or loss for the year. Other comprehensive
income recognized from previous equity investment under equity model shall be accounted
for on the same basis as the investee directly disposing of related assets or liability when
stopping using under equity model.
Where the entity has no longer control over the investee company as a result of partially
disposal of the investment, the remaining investment will be changed to be accounted for
using equity method providing remaining joint control or significant influence over the
investee company. The difference between carrying amount of disposed investment and
consideration received actually shall be recognized in the profit and loss for the period as
investment gain or loss, and investment shall 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 of disposal, 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 in profit and loss for the period, and
the difference between the fair value of remaining investment at the 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 a
bundled transaction, the entity shall account for all transactions separately. If it’s a bundled
transaction, 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
investment disposed prior to losing control, which arises from each individual transaction
34
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
shall be recognized as other comprehensive income until being transferred into profit and loss
for the period by the time of losing control.
14. Investment property
The investment property includes property and building and measured at cost model
Estimated
net
Useful life
Category residual Annual depreciation rate
(years)
value rate
(%)
Housing and Buildings 40 3% 2.43%
15. Fixed assets
Recognition criteria of fixed assets: defined as the tangible assets which are held for the
purpose of producing goods, rendering services, leasing or for operation & management, and
have more than one year of useful life.
Fixed assets shall be recognized when the economic benefit probably flows into the Group
and its cost 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
still being used and land is separately measured. Straight-line depreciation method is adopted
by the Group. Estimated net residual value rate, useful life, depreciation rate as follows:
Estimated net
Useful life Annual
No Category residual value
(years) depreciation rate
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
depreciation method at the end of each year. If any change has occurred, it shall be regarded
as a change in the accounting estimates.
Finance lease shall be recognized when one of the conditions are met, (1) the ownership of
the asset belongs to the company when the lease term is due , (2) the company has the option
35
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
to buy the 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 lease premium 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
of minimum lease payment, long term payable shall be recognized at the minimum lease
payment and the difference is unrecognized financing expense.
The depreciation policy of the leased fixed assets shall be consistent with that of the
self-owned fixed assets. If the ownership of asset can be reliably acquired by the lease term
due date, leased asset shall be depreciated through the expected service life, otherwise, it shall
be depreciated within the lower of the lease term and expected service life of the asset.
16. Construction in progress
Constructions in progress are carried down to fixed assets based on the construction budget
and actual costs on the date when completing and achieving estimated usable status, and the
fixed assets should be withdrew deprecation in the next month. Adjustment will be conducted
upon confirmation of their actual values after implementing the completion and settlement
procedures.
17. Borrowing costs
The borrowing costs incurred which can be directly attribute to the fixed assets, investments
properties, inventories requesting over 1 year purchasing or manufacturing so to come into
the expected condition of use or available for sale shall start to be capitalized 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. The
borrowing costs shall stop to be capitalized when the assets come into the expected condition
of use or available for sale. The borrowing costs subsequently incurred should be recorded
into profit and loss when occurred. The borrowing costs should temporarily stop being
capitalized when there is an unusual stoppage of over consecutive 3 months during the
purchase or produce of the capitalized assets, until the purchase or produce of the asset
restart.
The borrowing costs of special borrowings, deducting the interest revenue of unused
borrowings kept in the bank or the investment income from transient investment should be
capitalized. The capitalized amount of common borrowings should be calculated as follows:
average assets expenditure of the accumulated assets expenditure excess the special
borrowing, multiplied by the capital rate. The capital rate is the weighted average rate of the
common borrowings.
36
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
18. Intangible assets
The intangible assets of the Group refer to land use right and software, and should be
measured at actual costs. For acquired intangible assets, the actual cost are measured at actual
price paid and relevant other expenses. The cost invested into intangible assets by investors
shall be determined according to the stated value in the investment contract or agreement,
except for those of unfair value in the contract or agreement, which the actual costs should be
determined by the fair value.
Land use right shall be amortized evenly within the amortization period since the remised
date.ERP system software and other intangible assets are amortized over the shortest of their
estimated 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
period according 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 treated as change on accounting estimate.
19. Impairment of long-term assets
The Group assesses at each balance sheet date whether there is any indication that long-term
equity investments, investment property, fixed assets, construction in progress and intangible
assets with definite useful life may be impaired. If there is any indication that an asset may be
impaired, the asset will be tested for impairment. Goodwill and intangible asset with infinite
useful life are tested for impairment annually no matter there is any indication of impairment
or not.
Estimate of recoverable amount is the higher of its fair value less costs to sell and the present
value 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 be impaired and the difference is recognised as an impairment loss and charged to profit
or loss for the period. Once an impairment loss on the assets is recognised, it is not reversed
in a subsequent period.
After assets impairment loss is recognized, depreciation and amortisation of the impaired
asset shall be adjusted in the following period so that the adjusted carrying amount(less
expected residual value) can be depreciated and amortised systematically within the
remaining life.
Goodwill arising in a business combination and intangible asset with infinite useful life are
tested for impairment annually no matter there is any indication of impairment or not.
When assessing goodwill for impairment, the carrying amount of goodwill shall be allocated
37
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
evenly to the assets group or assets portfolio. When testing the assets group or assets portfolio
including goodwill, if there is any indication of impairment , ignoring the goodwill and
testing the assets group or assets portfolio alone so to work out the recoverable amount and
comparing to its carrying amount and recognize the impairment loss. After that, testing the
assets group or assets portfolio with goodwill together, comparing the carrying amount of the
assets group or assets portfolio(including goodwill allocation) with recoverable amount ,
goodwill impairment shall be recognized when the recoverable amount is lower than its
carrying amount.
20. Long-term deferred expenses
Long-term deferred expenses of the Group refer to leasing expenses, redecoration expense
and others. 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 the deferred expenses should be transferred into the current profit or loss. The
amortization period should be determined by the contract. If the contract without the
amortization period specification, leasing expenses will be amortized within 10 years and
30years; redecoration expense and others will be amortized within 3 years.
21. 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
38
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
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 defined benefit plan shall be recognized in the profit or loss for the
current period or relevant cost of assets in accordance with the period when the service are
rendered by the employee.
22. Contingent liabilities
When the company has transactions such as commitment to externals, discounting the trade
acceptance, unsettled litigation or arbitration which meets the following criterion, provision
should be recognized: It is the Company's present obligation; carrying out the obligation will
probably cause the Company's economic benefit outflow; the obligation can be reliably
measured.
Provision is originally measured on the best estimate of outflow for paying off the present
obligations.
When determining the best estimate, need to consider the risk, uncertainty, time value of
monetary relevant to contingent items. If the time value of monetary is significant, the best
estimate will be determined by discounted cash outflow in the future.
When compensation from the 3rd party is expected for full or partial contingent liability
settlement, the compensation shall be recognized as an asset separately and measured at no
more than the book value of contingent liability.
23. Share based payment
An equity-settled share-based payment in exchange for the employee’s services is measured
at the fair value at the date when the equity instruments are granted to the employee. Such fair
value during the vesting period of service or before the prescribed exercisable conditions are
achieved is recognised as relevant cost or expense on a straight-line during the vesting period
based on the best 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
39
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Group incurred 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 as relevant cost or expense, and corresponding liabilities. If it is exercisable only
when the vesting period of service is expired or the prescribed conditions are achieve, the fair
value of liabilities undertaken by the Group are re-measured at each balance sheet date based
on the best estimate of exercisable situation. According to the fair value which the Group
incurred liabilities, and recognizing acquired services as costs or expenses, and adjust
liabilities accordingly.
The fair value of the liabilities is re-measured at each balance sheet date. Any changes are
recognised in the profit or loss for the year.
If the granted equity instruments are cancelled within the vesting period, the equity
instrument shall be treated as accelerated vesting and the balance linked to the remaining
vesting period shall be recognized in the profit or loss account, accordingly be recognized in
the capital reserve. If employees or other parties can choose but fail to satisfy non-vesting
conditions during the vesting period, the Company sees this as cancellation of granted equity
instruments.
24. Principle of recognition of revenue
The revenue of the Group is mainly from selling goods, providing labor services and
alienating the right of use assets and construction contracts. Recognition standards for
revenue are as below:
（1） The revenue from selling goods: Company has transferred all the significant risks and
rewards of the ownership of the goods to the buyers, and retains neither continuing
managerial involvement to the degree usually associated with ownership nor effective
control over the goods sold. The relative sale proceeds have been reliably measured,
respective economic benefit probably inflow to the company, and the incurred or incurring
cost can be reliably measured, and then the revenue can be recognized.
In the reporting period, revenue recognition point and principle: goods is dispatched from
warehouse, client has no dispute on the quantity and quality of the goods, client collected or
authorized the agent to collect the good and sales amount is confirmed, have collected or
expected to collect the payment, cost of goods can be reliably measured, risk and reward is
transferred so the revenue is recognized.
Complete sets of engineering projects, if selling products and building installation part can
be separated and can be measured separately, selling products will be treated as sales of
products. Selling products and building installation will not be able to be distinguished, or
40
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
can be distinguished but can't be separately measured, selling products and building
installation will be all treated as building installation.
（2） The service revenue should be recognized when the outcome of the services can be
estimated reliably.
The outcome of the services can be estimated reliably means the following conditions must
be satisfied at the same time:
1) Amount can be measured reliably
2) Relevant economic benefit probably flow into the company
3) The stage of completion of the service can be estimated reliably
4) Cost incurred or expect to incur in the transaction can be measured reliably
Total service income shall be recognized according to the price agreed in the contract or
agreement which has been settled or to be settled unless the price is not fair. Service revenue
for the current period shall be recognized based on the figure worked out on the total income
multiply by the percentage of completion of the service after deducting the service revenue
recognized in the prior period at the balance sheet and accordingly recognized the cost based
on the figure worked out on the total cost multiply by the percentage of completion of the
service after deducting the service cost recognized in the prior period.
At the balance sheet date, if outcome of the service cannot be estimated reliably, the
treatment shall apply respectively
1) Costs incurred may be probably recovered, revenue is recognized only to the extent of
costs incurred that are expected to be recoverable, and costs shall be recognized as an
expense in the period in which they are incurred
2) Costs incurred are not probable of being recovered, then these cost incurred are
recognized as an expense immediately, no revenue shall be recognized.
In the case that selling goods and rendering service are both included in the agreements
or contracts, when selling products and rendering service part can be separated and can
be measured separately, selling products will be treated as sales of products. Selling
products and rendering service will not be able to be distinguished, or can be
distinguished but can't be separately measured; selling products and rendering service
will be all treated as rendering service.
（3） Revenue from construction contract
41
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
1) When the result of the construction contract is able to be evaluated reliably at the
balance sheet date, the income and cost of the contract are recognized on completion
percentage basis.
The result of the fixed price of construction contract can be estimated reliably means the
following conditions must be satisfied at the same time:
① Amount can be measured reliably
② Relevant economic benefit probably flow into the company
③ Cost actually incurred can be well distinguished and measured reliably
④ The stage of completion and the cost expected to incur for the completion of the
contract can be estimated reliably
The result of the cost plus of construction contract can be estimated reliably means the
following conditions must be satisfied at the same time:
① Relevant economic benefit probably flow into the company
② Cost actually incurred can be well distinguished and measured reliably
Construction contract income for the current period shall be recognized based on the figure
worked out on the total contracted income multiply by the percentage of completion of the
construction after deducting the revenue recognized in the prior period at the balance sheet
date and accordingly recognized the cost based on the figure worked out on the total
expected cost multiply by the percentage of completion of the construction after deducting
the construction cost recognized in the prior period. Construction contract income is
recognized to the extend where the change of the contract, claim for compensation and bonus
can bring the income and can be measured reliably.
2) If the result of the construction contract is not able to be evaluated reliably, the
treatment shall apply respectively
① If contract cost maybe recovered, the income is recognized at the cost actually
recovered, and the cost of the contract is recognized as contract expenses of the current
period when it is occurred.
② If contract cost may not be recovered, the cost of the contract shall be recognized as
contract expenses when incurred, and no contract revenue shall be recognized.
3) In case the expected total cost is greater than the total income, the expected loss will be
recognized as expense of the current period immediately.
.25. Government grants
42
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
A government grant shall be recognized when the company complies with the conditions
attaching 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 the
purpose 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 it according to the principle mentioned above.
Where a government grant is in the form of a transfer of monetary asset, it is measured at the
amount received. Where a government grant is made on the basis of fixed amount or
conclusive evidence indicates relevant conditions for financial support are met and expect to
probably receive the fund, it is measured at the amount receivable. Where a government
grant is in the form of a transfer of non-monetary asset, it is measured at fair value. If fair
value cannot be determined reliably, it is measured at a nominal amount of RMB1 Yuan.
Assets-related government grants are recognized as deferred income or directly offsetting
the book value of the asset, and Assets-related government grants recognized as deferred
income shall 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 expired
date, the remaining balance of deferred income which hasn’t been allocated shall be carried
forward to the income statement when the assets are disposed off.
Income-related government grants that is a compensation for related expenses or losses to be
incurred in subsequent periods are recognized as deferred income and credited to the
relevant period when the related expense are incurred. Government grants relating to
compensation for related expenses or losses already incurred are charged directly to the
profit or loss for the period. Government grants related to daily business, shall be recognized
as other income in accordance with business nature or offsetting related expenses, otherwise,
shall be recognized as non-operating income or expenses.
If any government grant already recognized needs to be returned to the government, the
accounting 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.
26. Deferred tax assets and deferred tax liabilities
43
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The deferred income tax assets or the deferred income tax liabilities should be recognized
according to the differences (temporary difference) between the carrying amount of the assets
or liabilities and its tax base. Deferred income tax assets shall be respectively recognized for
deductible tax losses that can be carried forward in accordance with tax law requirements for
deduction of taxable income in subsequent years. No deferred income tax liabilities shall be
recognized for any temporary difference arising from goodwill initially recognition. No
deferred income tax assets or liabilities shall be recognized for any difference arising from
assets or liabilities initial recognition on non-business combination with no effect on either
accounting profit or taxable profit (or deductible tax loss). At the balance sheet date, deferred
income tax assets and deferred income tax liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realized or liability is settled.
Deferred income tax assets are recognized to the extent that it is probable that future taxable
profit will be available to offset the deductible temporary difference, deductible loss and tax
reduction.
27.Lease
The Company’s leasing business includes operating lease and financing lease.
As an operating lease lessee and lessor, the lease premium shall be recognized in the cost of
asset based 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 the minimum lease payments is recognized as the leased asset, the minimum lease
payments are recognized as the long-term payables, and the difference is recognized as
unrecognized finance expense at the inception of the lease. The company shall adopt the
effective interest method to amortize and record as the financial costs during the assets lease
term.
28.Held for sale
（1） Any non-current assets or disposal group shall be classified as held for sale if the
following criteria are met: ⑴ according to the similar transactions for selling such assets or
disposal group in practice, the assets must be available for immediate sale under current
condition. ⑵The sale is highly probable with decision made on a probable selling proposal
and the firm purchase commitment has been obtained, the sale is expected to be completed
within one year. Certain regulations request that approvals must be given by relevant
authority or supervision regulator before the assets can be sold. Prior to the assets initially
classified as held for sale or disposal group, the carrying amounts of the asset(or all the assets
44
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
and liabilities in the disposal group) shall be measured in accordance with applicable
accounting standards. The Company shall recognize an impairment loss and account it in to
income statement for the current period, for any initial or subsequent write- down of the
asset(or disposal group) to its fair value less costs to sell if the carrying amount is higher than
its fair value less costs to sell. In the meantime, provision for assets impairment shall be
made.
（2） The company acquires a non-current asset(or disposal group) exclusively with a view
to its subsequent resale, it shall be classified as held for sale at the acquisition date only if the
condition of “expected sale can be completed within one year” can be met and also other
conditions of classified as held for sale can highly probably be met within a short period
following the acquisition(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 its carrying amount had it not been so classified and fair value less
costs to sell. Except the non-current assets or disposal group acquired as part of a business
combination, the difference between its fair value less costs to sale and initial carrying
amount is recognized in the income statement.
（3） The Company that loss of control of a subsidiary due to a sale plan of its investment
shall classify its subsidiary planned for sale as a whole as held for sale in the single financial
statement of the parent only if the investment in subsidiary meets the criteria of held for sale,
regardless of whether 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 financial statements
（4） The Company shall recognize a gain for any subsequent increase in fair value less
costs to sell of an asset and shall reverse the impairment to the extent that previously
recognized when being classified as held for sale, the revisable amount is recognized in the
income statement for the period. Any impairment from the period when the assets are not
classified as held for sale cannot be reversed.
（5） The impairment loss recognized for a disposal group shall reduce the carrying amount
of goodwill of disposal group first, and then reduce the carrying amount of the non-current
assets based on its proportion on the book.
（6）The Company shall recognize a gain for any subsequent increase in fair value less costs
to sell of a disposal group and shall reverse the impairment to the extent that previously
recognized when being classified as held for sale, in accordance with applicable measuring
standards, the revisable amount is recognized in the income statement for the period. Any
impairment from the period when the assets are not classified as held for sale and reduced
45
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
goodwill cannot be reversed.
（7）For any subsequently reversed amount, after the impairment loss is recognized for held
for sale disposal group, the Company shall increase the carrying amount of disposal group
based on the proportion of carrying amount of non-current assets excluding goodwill.
（8） Non-current assets classified as held for sale or disposal group shall not be depreciated
or amortized, interest and other expenses attributable to the liabilities of a disposal group
classified as held for sale shall continue to be recognized.
（9） When held for sale assets or disposal group cannot meet the criteria for held for sale
classification so that they are not recognized as held for sale or non-current asset will be
removed from disposal group, they shall be measured at the lower of the following amounts:
⑴carrying amount 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 ; ⑵recoverable amount.
（10）When the Company derecognizes the held for sale assets or disposal group, the
remaining unrecognized gain or loss shall be accounted in the income statement.
29. Discontinued operation
When meeting any one of the following criteria, the component can be identified separately
and the component has already been disposed off or classified as held for sale: (1) the
component represents one independent main business or one single main business area; (2)the
component plans to be part of the related plan which represents one independent main
business or one single main business area; (3)the component was specially acquired for resale
30. Other significant accounting policies, accounting Estimates
When preparing the financial statements, the management needs to use accounting estimate
and assumption, 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.
The management needs to continuously assess the key assumption involved by estimate and
the judgment on uncertainty. Effect on the accounting estimate shall be recognized during the
period when 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 any
impairment indicator and the acutely amount of impairment. Objective evidence for
46
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
impairment includes judgmental data of indicating significant decline of future cash flow of
individual or group of receivable, indicating significant negative financial performance of
debtors. Had receivable is recovered with certain proof, and in fact, it is relevant to the the
matters subsequent to 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
shall be recognized as inventory impairment loss. When evaluating the NRV, net realizable
value is determined by deducting the expected selling expense and relative tax from the
estimated selling price. When actual selling price or cost differs from the previous estimates,
management will make adjustment on NRV. Therefore, the results based on the present
experience may differ from the 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 on provision 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
group or asset portfolio including goodwill shall be the present value of future cash flow,
which needs estimates for calculation.
If management adjust the gross profit margin adopted by the present value of future cash flow
calculation 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
cash flow calculation of assets group or asset portfolio, adjusted discounting rate before tax is
higher than the rate applied, the impairment is required.
If actual profit margin or discounting rate before tax is higher or lower than management’s
estimate, any impairment recognized before cannot be reversed.
（4） Provision of fixed asset impairment
At the balance sheet date, the management shall implement impairment test on buildings,
plant and machinery etc which has any impairment indicator. The recoverable amount of FA
is the higher of PV of future cash flow and net value of fair value after disposal cost, the
calculation needs accounting estimate.
If management adjust the gross profit margin adopted by the present value of future cash flow
calculation of assets group or asset portfolio, adjusted gross profit margin is lower than the
47
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
margin applied, the impairment is required.
If management adjust the discounting rate before tax applied by the present value of future
cash flow calculation of assets group or asset portfolio, adjusted discounting rate before tax is
higher than the rate applied, the impairment is required.
If actual profit margin or discounting rate before tax is higher or lower than management’s
estimate, 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 in the following years in future. Whether deferred tax asset can be realized depends on
the enough probable taxable profit obtained in future. Tax rate change in future and the timing
of temporary difference 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,
with reference to the estimate applied in the industry in conjunction with expected technology
development. When previous estimate significantly changed, depreciation and amortization in
the future shall be adjusted accordingly.
31. Changes in Accounting Policies, Accounting Estimates
(1) Change in significant accounting policies
“The Notice of amendment to the standard enterprise’s financial statements format”
(Caikuai[2018]No.15 File announced by the Ministry of Finance on 15th June,
2018(hereinafter referred to as Caikuai No. 15 File). Due to the No.15 File, some of asset
items and liability items have been merged and some of income statements items have
been separated, and “interpretation of financial statement format for the company in 2018”
was announced on 7th September, 2018. Handling charge of personal income tax shall be
clearly presented under “other income”, the actual subsidy received from government
shall be presented under operating cash flow column when preparing the cash flow
statement regardless of asset related or income related.
The Company has prepared the financial statements in accordance with new statements
format and retrospectively made adjustment to the changes mentioned and respectively
48
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
adjusted the comparing figures in accordance with financial statements presentation, No.
30, accounting standards applicable in China.
Effect on the comparison figure as follows:
Restated figure
Figure prior to
on January
Items December Effect on amount memo
1,2018
31,2017
re
Notes receivable 172,818,176.20 -172,818,176.20
Accounts receivable 1,036,255,895.79
Notes receivable &
1,209,074,071.99 1,209,074,071.99
Accounts receivable
Interest receivable 1,871,783.33 -1,871,783.33
Dividend receivable 33,450.00 -33,450.00
Other receivable 52,049,009.83 1,905,233.33 53,954,243.16
Notes payable 260,443,167.67 -260,443,167.67
Accounts payable 889,964,317.63 -889,964,317.63
Notes payable
1,150,407,485.30 1,150,407,485.30
&Accounts payable
Interest payable 379,085.53 -379,085.53
Dividend payable 863,516.60 -863,516.60
Other payable 67,674,829.07 1,242,602.13 68,917,431.20
Administration expense 231,345,591.57 -38,124,492.93 193,221,098.64
R&D expense 38,124,492.93 38,124,492.93
(2) Changes in significant accounting estimates
None.
V. Taxation
1. The main applicable tax and rate to the Group as follows:
49
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Tax Tax base Tax rate
Value-added tax (VAT) Sales revenue or Purchase 17%,16%,13%,11%,
6%,5%
City construction tax Value-added tax payables 7%
Education surcharge Value-added tax payables 3%
Local education surcharge Value-added tax payables 2%
Enterprise income Current period taxable profit 15%,25%
tax(EIT)
70% of cost of own property or revenue
Real estate tax 1.2% or 12%
from leasing property
Land use tax Land using right area Fixed amount per
square meter
Other tax According to the
relevant provisions of
the state and local
Notes for tax entities with different EIT rate
Tax entities EIT rate
Dalian Refrigeration Company 15%
Dalian Bingshan Group Engineering Co., Ltd. 25%
Dalian Bingshan Group Sales Co., Ltd. 25%
Dalian Bingshan Air-conditioning Equipment Co., Ltd. 15%
Dalian Bingshan JiaDe Automation Co., Ltd. 15%
Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd. 25%
Wuhan New World Refrigeration Industrial Co., Ltd. 15%
Bingshan Technical Service （Dalian） Co.,Ltd. 15%
Dalian Bingshan International Trading Co.,Ltd 25%
Dalian Niweisi LengNuan Techonoligy Co., Ltd. 15%
Dalian Xinminghua Electrical Technology Co., Ltd 15%
2. Tax preference
The company’s subsidiary, Dalian Bingshan Air-conditioning Equipment Co., Ltd. obtained
the qualification of high and new technology enterprises on 29th November, 2017 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
Local tax Bureau. The Certificate No. is GR201721200279, and the validity duration is three
years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
50
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The company’s subsidiary, Dalian Bingshan JiaDe Automation Co., Ltd. obtained the
qualification of high and new technology enterprises on 16th November, 2018 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
Local tax Bureau. The Certificate No. is GR20181200562, and the validity duration is three
years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
The company’s subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd obtained the
qualification of high and new technology enterprises on 15th November, 2018 approved by
Hubei Science Technology Bureau, Hubei Finance Bureau, Hubei State Tax Bureau and Hubei
Local tax Bureau. The Certificate No. is GR201842000605, and the validity duration is three
years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
The company’s subsidiary, Bingshan Technical Service （Dalian） Co., Ltd. obtained the
qualification of high and new technology enterprises on 29th November, 2017 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
Local tax Bureau. The Certificate No. is GR201721200155, and the validity duration is three
years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
The company’s subsidiary, Dalian Niweisi LengNuan Techonoligy Co., Ltd. obtained the
qualification of high and new technology enterprises on 29th November, 2017 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
Local tax Bureau. The Certificate No. is GR201721200108, and the validity duration is three
years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
The company’s subsidiary, Dalian Xinminghua Electrical Technology Co., Ltd obtained the
qualification of high and new technology enterprises on 29th November, 2017 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
Local tax Bureau. The Certificate No. is GR201721200301, and the validity duration is three
years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
VI. Notes to Consolidated Financial Statements
The following disclosure date on this financial statement without special indication, “opening”
refers to January 1, 2018; “closing” refers to December 31, 2018; “current period” refers to the
period from January 1, 2018to December 31, 2018; and “last period” refers to the period from
January 1, 2017 to December 31, 2017; with the currency unit RMB.
51
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
1. Cash and cash in bank
Item Closing Balance Opening Balance
Cash on hand 74,387.33 62,880.11
Cash in bank 304,629,047.14 364,630,526.20
Other cash and cash equivalents 38,323,050.64 30,116,287.80
Total 343,026,485.11 394,809,694.11
Including: sum of deposits overseas
Note: other monetary funds is restricted, including deposit for bank acceptance notes of
29,755,016.08Yuan, guarantee deposit of 7,568,034.56 Yuan, migrant deposit of
1,000,000.00Yuan, total of 38,323,050.64 Yuan.
2. Notes receivable and accounts receivable
Items Closing Balance Opening Balance
notes receivable 171,292,044.56 172,818,176.20
receivable 1,107,546,588.30 1,036,255,895.79
Total 1,278,838,632.86 1,209,074,071.99
2.1 Notes receivable
(1) Category of notes receivable
Items Closing Balance Opening Balance
Bank acceptance notes 50,386,649.84 59,496,684.07
Trade acceptance notes 120,905,394.72 113,321,492.13
Total 171,292,044.56 172,818,176.20
(2) Pledged notes receivable up to December 31, 2018.
Items Closing pledged amount
Bank acceptance notes 9,181,872.34
Trade acceptance notes
Total 9,181,872.34
(3) Notes receivable endorsed or discounted but not mature at the end of year
Item Closing amount no more Closing amount still
recognized recognized
Bank acceptance notes 380,977,142.84
Trade acceptance notes 74,120,832.14
Total 455,097,974.98
52
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
2.2 Accounts receivable
(1) Category of accounts receivable
Closing Balance
Items Booking balance Provision Booking
Amount % Amount % balance
Accounts
receivable with
significant
individual amount
and separate bad
debt provision
Accounts
receivable with bad
debt provision
1,301,174,006.57 100.00 193,627,418.27 14.88 1,107,546,588.30
based on the
characters of credit
risk portfolio
Accounts
receivable with
insignificant
individual amount
and separate bad
debt provision
Total 1,301,174,006.57 100.00 193,627,418.27 14.88 1,107,546,588.30
(Continued)
Opening balance
Items Booking balance Provision
Booking balance
Amount % Amount %
Accounts
receivable with
significant
individual amount
and separate bad
debt provision
Accounts 1,208,205,492.85 100.00 171,949,597.06 14.23 1,036,255,895.79
53
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
receivable with bad
debt provision
based on the
characters of credit
risk portfolio
Accounts
receivable with
insignificant
individual amount
and separate bad
debt provision
Total 1,208,205,492.85 100.00 171,949,597.06 14.23 1,036,255,895.79
1) Accounts receivable with the bad debt provisions under accounting aging analysis method
Closing Balance
Aging Accounts Provision for Drawing proportion
receivable bad debts (%)
Within1 year 738,964,217.63 36,948,210.88 5.00
1 to 2 years 348,501,230.55 34,850,123.06 10.00
2 to 3 years 77,199,013.58 23,159,704.07 30.00
3 to 4 years 65,271,061.94 32,635,530.99 50.00
4 to 5years 26,023,168.04 20,818,534.44 80.00
Over 5 years 45,215,314.83 45,215,314.83 100.00
Total 1,301,174,006.57 193,627,418.27 —
(2)Bad debt provision accrued and written-off (withdraw)
The bad debt provision has been accrued at the amount of 28,458,939.70Yuan, due to merge,
receivable increased 83,082.50Yuan and decreased 296,952.78Yuan during the report period.
Bad debt reversal or withdrawn incurred at the amount of 564,616.10 Yuan during the year.
(3) Accounts receivable written off in current period
Item Written off amount
Receivable actually written off 7,131,864.31
(4) The top five significant accounts receivable categorized by debtors
54
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing
% of the
Company Closing Balance Aging Balance of
total AR
Provision
Xinyi Yuanda
Within 1 year
construction and
32,748,744.00 1-2years 2.52 5,357,592.61
Installation Engineering
2-3years
Co., Ltd.
Ningxia Wangwa Coal 29,002,800.00 Within 1 year 2.23 1,450,140.00
Shenzhen Zhaofude
24,749,430.13 Within 1 year 1.90 1,237,471.51
Tourism development
Xiangyang Tongjitang
24,300,000.00 Within 1 year 1.87 1,215,000.00
Logistic
Tianjin Haijixing
Agriculture Products 22,615,517.00 Within 1 year 1.74 1,130,775.85
Logistic
Total 133,416,491.13 10.26 10,390,979.97
3. Advances to suppliers
(1) Aging of advances to suppliers
Closing Balance Opening Balance
Items Amount Percentage Amount Percentage
(%) (%)
Within 1 year 107,871,448.52 68.10 96,449,107.72 68.50
1 to 2 years 33,233,538.29 20.98 43,020,607.78 30.55
2 to 3 years 16,117,708.59 10.17 871,279.01 0.62
Over 3 years 1,182,605.10 0.75 467,380.70 0.33
Total 158,405,300.50 100.00 140,808,375.21 100.00
Significant prepayment over 1 year
Closing Unsettled Reasons
Company Aging
Balance
Dalian HOLLEY Coating 1-2 years Contract is not fully
12,000,000.00
Equipment Co., Ltd. 2-3years implemented
Contract is not fully
Dalian Ganghe Trading Co.,Ltd 8,444,300.00 1-2 years
implemented
Mitsubishi Heavy Industries Air
Contract is not fully
Conditioning Systems (Shanghai) co. 5,220,700.00 1-2 years
implemented
LTD
Shanghai POMA Automation Contract is not fully
4,272,900.00 2-3years
Equipment Co.,ltd implemented
55
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Contract is not fully
Dalian Shengda Mechanic 3,163,296.60 2-3years
implemented
Total 33,101,196.60 — —
(2) The top five significant advances to suppliers categorized by debtors
% of the total
Company Closing Balance Aging advances to
suppliers
Dalian Shentong Electric
Co., Ltd. 16,845,909.86 Within 1 year 10.63
Dalian HOLLEY Coating 1-2 years
Equipment Co., Ltd. 12,000,000.00 2-3 years 7.58
Dalian Ganghe Trading ltd 8,444,300.00 1-2 years 5.33
Shenyang Baogang Northeast
Trading Co.,Ltd 6,187,698.58 Within 1 year 3.91
Nanjing Bingshan Electro-Mechanical
5,738,545.20 Within 1 year 3.62
Equipment Co. , Ltd
Total 49,216,453.64 31.07
4. Other receivable
Items Closing Balance Opening Balance
Interest receivable 318,886.12 1,871,783.33
Dividend receivable 33,450.00 33,450.00
Other receivable 48,156,419.03 52,049,009.83
Total 48,508,755.15 53,954,243.16
4.1 Interest receivable
(1) Interest receivable calssification
Items Closing Balance Opening Balance
Interest on Term deposits 318,886.12 921,783.33
Bank financial product 950,000.00
Total 318,886.12 1,871,783.33
The closing balance of the interest receivable decreased 82.96% comparing with opening
balance because of bank financial product interest decrease.
4.2. Dividends receivable
(1) Dividends receivable
Company Closing Balance Opening Balance
56
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Company Closing Balance Opening Balance
Wuhan Steel and Electricity Co., Ltd. 33,450.00 33,450.00
Total 33,450.00 33,450.00
4.3. Other receivables
(1) The categories of other receivable
Closing Balance
Items
Booking balance Provision Booking
Amount % Amount % balance
Other receivables
with significant
individual amount - - - - -
and separate bad debt
provision
Other receivables
identified bad debt
provision based on 55,773,046.43 100.00 7,616,627.40 13.66 48,156,419.03
the characters of
credit risk portfolio
Other receivables
with significant
individual amount
and separate bad debt
provision
Total 55,773,046.43 100.00 7,616,627.40 13.66 48,156,419.03
(Continued)
Opening Balance
Items Booking balance Provision
Booking balance
Amount % Amount %
Other receivables
with significant
individual amount - - - - -
and separate bad
debt provision
Other receivables 59,207,829.92 100.00 7,158,820.09 12.09 52,049,009.83
57
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
identified bad debt
provision based on
the characters of
credit risk portfolio
Other receivables
with significant
individual amount
and separate bad
debt provision
Total 59,207,829.92 100.00 7,158,820.09 12.09 52,049,009.83
1) Other receivables accrued the bad debt provisions under accounting aging analysis method
Closing Balance
Aging Provision for Drawing proportion
Other receivables
bad debts (%)
Within 1 year 34,331,425.87 1,716,571.29 5.00
1-2 years 12,586,685.18 1,258,668.52 10.00
2-3 years 5,115,834.33 1,534,750.30 30.00
3-4 years 993,899.04 496,949.52 50.00
4-5 years 677,571.21 542,056.97 80.00
Over 5 years 2,067,630.80 2,067,630.80 100.00
Total 55,773,046.43 7,616,627.40 —
(2) Provision for bad debt
The bad debt provision has been accrued at the amount of 460,213.96Yuan, due to merge,
receivable increased 1,625.00Yuan and decreased 2,031.65Yuan during the report period.
(3) Other receivables written off in current period
Item Written-off Amount
Other receivables written off 2,000.00
(4) Other receivables categorized by nature
Nature Closing Balance Opening Balance
Guarantee deposits 30,393,406.84 43,339,402.91
Petty cash 9,674,473.91 7,879,896.91
Accounts payable 13,564,390.30 5,520,797.71
Others 2,140,775.38 2,467,732.39
58
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Nature Closing Balance Opening Balance
Total 55,773,046.43 59,207,829.92
(5)Other receivables from the top 5 debtors
% of
Closing
Closing the
Name Category Aging Balance of
Balance total
Provision
OR
Share transfer
Liaoning Mike Group 8,588,400.00 Within 1 year 15.40 429,420.00
receipt
Dalian Delta HK& 2-3years
Deposit 2,730,000.00 4.89 969,000.00
China Gas Co., Ltd. 4-5years
Jiangsu Fuqiang New Within 1 year
Deposit 1,870,000.00 3.35 148,500.00
Material Co.,Ltd 1-2years
Army 63833 Deposit 1,600,000.00 Within 1 year 2.87 80,000.00
National Tax office
Deposit 1,300,000.00 Within 1 year 2.33 65,000.00
of Dalian
Total 16,088,400.00 28.84 1,691,920.00
5. Inventories
(1) Categories of inventories
Closing Balance
Item
Book value Provision for decline Net book value
Raw materials 93,238,803.85 1,095,201.13 92,143,602.72
Working in progress 87,240,651.75 87,240,651.75
Finished goods 188,490,721.70 88,460.00 188,402,261.70
Low-value
consumable 143,386.78 143,386.78
Self-manufactured
semi-finished products 24,660,370.80 24,660,370.80
Constructing projects 52,606,275.99 52,606,275.99
Materials on
consignment for 4,998,750.79 4,998,750.79
further processing
Total 451,378,961.66 1,183,661.13 450,195,300.53
(Continue)
Opening Balance
Item
Book value Provision for decline Net book value
Raw materials 93,097,749.58 1,120,202.77 91,977,546.81
Working in progress 57,136,761.54 57,136,761.54
59
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Opening Balance
Item
Book value Provision for decline Net book value
Finished goods 138,840,644.36 358,460.00 138,482,184.36
Low-value consumable 141,351.31 141,351.31
Self-manufactured
semi-finished products 32,879,154.10 32,879,154.10
Constructing projects 27,778,087.73 27,778,087.73
Materials on
consignment for further 3,884,578.79 3,884,578.79
processing
Total 353,758,327.41 1,478,662.77 352,279,664.64
(2) Provision for decline in the value of inventories
Increase Decrease
Opening Closing
Item Reverse/ Others
Balance Accrual Balance
Written- off transferred
Raw materials 1,120,202.77 9,476.00 34,477.64 1,095,201.13
Finished goods 358,460.00 270,000.00 88,460.00
Total 1,478,662.77 9,476.00 304,477.64 1,183,661.13
(3) Accrual for provision for decline in the value of inventories
Basis for net realizable value
Item Reasons for reverse/write-off
recognition
Raw materials Lower of cost and NRV Sold within the year
Finished goods Lower of cost and NRV Sold within the year
6. Other current assets
Item Closing Balance Opening Balance Nature
Prepaid income tax presented at
664,806.52 1,247,766.25
net amount after offsetting
VAT to be deducted 16,769,344.48 37,613,420.40
Bank financial product 76,000,000.00
Prepaid turnover tax 3,020.15
Prepaid expenses 829,417.97 46,082.68
Total 18,266,589.12 114,907,269.33
The closing balance of the other current assets decreased 84.10% comparing with the opening
balance because bank financial product “Suixin E” bought from ICBC bank last year is due.
7. Available-for-sale financial assets
60
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(1) Available-for-sale financial assets
Item Closing Balance Opening Balance
Booking Carrying Booking Carrying
Provision Provision
balance amount balance amount
Available-f
or-sale
debt
instruments
Available-f
or-sale
387,096,107.50 4,909,377.51 382,186,729.99 520,850,268.15 5,067,074.16 515,783,193.99
equity
instruments
Measured
as fair
370,461,843.00 1,266,771.60 369,195,071.40 503,296,003.65 1,424,468.25 501,871,535.40
value
method
Measured
as cost 16,634,264.50 3,642,605.91 12,991,658.59 17,554,264.50 3,642,605.91 13,911,658.59
method
Others
Total 387,096,107.50 4,909,377.51 382,186,729.99 520,850,268.15 5,067,074.16 515,783,193.99
(2) Available-for-sale financial assets measured at fair value method
Items Equity instruments available for sale Total
Cost 24,098,895.00 24,098,895.00
Fair value 369,195,071.40 369,195,071.40
FV accumulated change recognized in other
346,362,948.00 346,362,948.00
comprehensive income
Provision for impairment 1,266,771.60 1,266,771.60
(3) Available-for-sale financial assets measured at cost method
Book Value
Investee
Opening Closing
Increase Decrease
Balance Balance
Zibo traction motor co., ltd. 849,000.00 849,000.00
61
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Book Value
Investee
Opening Closing
Increase Decrease
Balance Balance
Liaoning Mike group Limited 1,020,000.00 1,020,000.00
Guotai Junan investment
management company 3,057,316.00 3,057,316.00
Cold King container
temperature control Co., Ltd. 11,207,806.00 11,207,806.00
Liaoning enterprises
Industrial Co., Ltd. 105,000.00 105,000.00
Dalian Guolian Energy
Development Co.,Ltd 100,000.00 100,000.00
Wuhan steel electric Limited 1,315,142.50 1,315,142.50
Total 17,554,264.50 100,000.00 1,020,000.00 16,634,264.50
(Continue)
Shareholding
Provision for impairment
percentage Cash
Investee
Opening Closing dividend
Increase Decrease
Balance Balance
Zibo traction motor co., ltd. 849,000.00 849,000.00 0.76
Liaoning Mike group Limited
by Share Ltd 300,000.00
Guotai Junan investment
management company 2,688,605.91 2,688,605.91 0.22
Cold King container
temperature control Co., Ltd. 17.80
Liaoning enterprises Industrial
Co., Ltd. 105,000.00 105,000.00 4.20
Dalian Guolian Energy
Development Co.,Ltd 10.00
62
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Shareholding
Provision for impairment
percentage Cash
Investee
Opening Closing dividend
Increase Decrease
Balance Balance
Wuhan steel electric Limited 0.06 33,450.00
Total 3,642,605.91 3,642,605.91 — 333,450.00
(4)Provision for available-for-sale financial assets impairment
Equity instruments available
Category Total
for sale
Beginning balance 5,067,074.16 5,067,074.16
Increased during current year
Including: transfer from other
comprehensive income
Decreased during current year 157,696.65 157,696.65
Including: transfer from fair value
rising
Ending balance 4,909,377.51 4,909,377.51
(5) Other explanatory on available-for-sale financial assets
Guotai Junan Securities Co., Ltd. was listed on Shanghai Stock Security Exchange on 26 th June
2015, and until 31st December, 2018, the company held 24,098,895.00 numbers of shares of
Guotai Junan Securities Co., Ltd which was measured at fair value at the year end. The
company received cash dividend RMB 10,839,558.00Yuan.
63
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
8.Long-term equity investments
Increase/Decrease
Gains and
Beginning losses Adjustment of Change Cash bonus Provision for Provision for
Investee recognized other of or profits impairment of Ending balance
balance Increased Decreased Others impairment
under the comprehensive other announced the current
equity income equity to issue period
method
Associates
Panasonic
Appliances
Air-Conditioning 161,817,616.82 16,473,241.56 3,000,000.00 175,290,858.38
and Refrigeration
(Dalian) Co.Ltd
Dalian Honjo
Chemical Co., Ltd. 9,113,011.88 631,746.15 912,160.20 8,832,597.83
Panasonic
Cold-Chain 227,050,807.57 11,171,813.19 6,000,000.00 232,222,620.76
(Dalian) Co., Ltd.
Keinin-Grand
Ocean Thermal
Technology 57,604,812.32 9,345,875.45 5,200,000.00 61,750,687.77
(Dalian) Co., Ltd.
Panasonic
Compressor 490,004,241.55 41,722,233.04 47,826,800.00 483,899,674.59
(Dalian) Co., Ltd.
MHI Bingshan
Refrigeration 13,359,504.81 423,834.55 13,783,339.36
(Dalian) Co.,Ltd.
Beijing Huashang
Bingshan
Refrigeration and
Air-conditioning 1,431,141.16 -163,001.57 1,268,139.59
Machinery Co.,
Ltd.
64
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Increase/Decrease
Gains and
Beginning losses Adjustment of Change Cash bonus Provision for Provision for
Investee recognized other of or profits impairment of Ending balance
balance Increased Decreased Others impairment
under the comprehensive other announced the current
equity income equity to issue period
method
Dalian Fuji
Bingshan Vending 179,841,223.64 8,416,237.11 188,257,460.75
Machine Co., Ltd.
Changzhou Jingxue
Refrigeration
Equipment Co., 166,092,058.74 14,717,114.30 5,842,400.00 174,966,773.04
Ltd.
Dalian Fuji Iceberg
Vending Machine 12,042,441.30 1,731,826.59 13,774,267.89
Sales Co., Ltd
Wuhan Lanning
Energy Science 6,086,785.99 4,500,000.00 -518,539.72 -10,068,246.27
Co., Ltd.
Wuhan Sikafu
Power Control 5,227,052.33 9,328.30 5,236,380.63
Equipment Co., Ltd
Panasonic cold
Machine System 27,824,664.42 5,004,924.40 2,108,000.00 30,721,588.82
(Dalian) Co., Ltd
Dalian Bingshan
Metal Technology 163,116,631.47 28,821,912.86 19,344,983.17 172,593,561.16
Co.,Ltd
Dalian Bingshan
Group
Management and 47,643,744.12 9,800,000.00 -348,123.72 57,095,620.40
Consulting Co.,ltd
Total 1,568,255,738.12 14,300,000.00 137,440,422.49 90,234,343.37 -10,068,246.27 1,619,693,570.97
1. The general meeting of Wuxin Refrigeration Company,the Company’s subsidiary decided to acquire 27.27% of shareholding of Wuhan Lanning Energy
65
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Technology Co., Ltd. After acquisition, Wuhan Lanning Energy Technology Co., Ltd became the subsidiary of Wuxin Refrigeration Company. Up to
December 31,2018, the above acquisition has been completed.
2. The 22nd meeting of the 7th generation of board of directors was held on August 24th, 2018, and approved to increase capital to Dalian Bingshan Group
Management and Consulting Co.,ltd together with Dalian Bingshan Group. The increased capital is 0.1billion Yuan and both parties should subscribe the
capital in accordance with original shareholding percentage, Dalian Refrigeration Company will hold 49% shareholding of Dalian Bingshan Group
Management and Consulting Co.,ltd and needs to pay 49million Yuan in total. 9.8million Yuan has been paid in full before October 31,2018. The rest of
39.2million Yuan shall be subscribed in full within 20years. The first payment of Dalian Refrigeration Company has been made to Dalian Bingshan Group
Management and Consulting Co.,ltd on October 22nd ,2018.
66
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
9. Investment property
(1) Investment property measured as cost method
Property&
Item Land-use-rights Total
Building
I. Initial Cost
217,130,616.6
1. Opening Balance 192,739,104.84 24,391,511.82
6
2. Increase 2,131,995.27 2,131,995.27
(1) Outsourcing 10,000.00 10,000.00
(2) Transferred from Construction in
2,121,995.27 2,121,995.27
progress
3. Decrease
(1) Disposal
(2)Transferred to other
219,262,611.9
4. Closing Balance 194,871,100.11 24,391,511.82
3
II. Accumulated Depreciation
113,269,341.3
1. Opening Balance 103,390,779.09 9,878,562.30
9
2. Increase 5,167,198.31 487,830.24 5,655,028.55
(1)Provision or amortization 4,491,165.63 487,830.24 4,978,995.87
(2) Acquired from business
676,032.68 676,032.68
combination
3. Decrease
(1) Disposal
(2) Transferred to other
118,924,369.9
4. Closing Balance 108,557,977.40 10,366,392.54
4
67
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Property&
Item Land-use-rights Total
Building
III. Impairment Reserve
1. Opening Balance
2. Increase
(1)Provision or amortization
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance
IV. Book Value
100,338,241.9
1. Closing book value 86,313,122.71 14,025,119.28
9
103,861,275.2
2. Opening book value 89,348,325.75 14,512,949.52
7
Note: On 31st July,2014, the company signed supplemental rental contract with MHI Bingshan
Refrigeration (Dalian) Co.,Ltd., and rent out # 6 building of workshop located 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 metres, and annual rent is
RMB 4.2 million with the expiry date on 16th July, 2029.
The 13th meeting of the 7th generation board was held on April 22, 2017, and approved to rent
out the old plant and land located in No888, South West RD, Shahekou Districit, Dalian to
Bingshan Huigu Company. The lease contract is from April 1st, 2017 to December 31, 2036. The
company has signed the “estate leasing contract” with Dalian Bingshan Huigu Development
Company based on the requirement of utilization of old land and plant and new business foster
plan. Current year’s lease premium is 7.86million Yuan.
On June 1st, 2017, the company’s subsidiary, Bingshan Lingshe, signed the leasing contract with
Dalian Jingxue Energy Saving Technology Co. LTD and rented out # 7 building of workshop
located on No.92, Tieshan West Rd, DDA, Dalian. The rental area is 3653.76 square metres, and
68
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
annual rent is RMB 1million Yuan in 2018 with the contracted date between June 1 st,2017 and
May 31st,2022. Bingshan Lingshe also rented out Room 201, # 4 building located on No.92,
Tieshan West Rd, DDA, 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 June 1st, 2017 and May 31st,2022
(2) Investment property without owner’s certificates
Items Book value Reasons
# 6 building of workshop on No. 106 Liaohe East Rd,
Dalian Economic and Technology Development Zone 27,141,086.54 Deed is in the progress
Total 27,141,086.54
10. Fixed assets
Items Closing Book Value Opening Book Value
Fixed asset 953,298,058.11 890,874,647.40
Fixed asset clearance
Total 953,298,058.11 890,874,647.40
(1) Fixed assets detail
Transportati
Property& Machinery Other
Item on Equipment Total
buildings Equipment
Equipment
I. Initial Cost
1.Opening
593,149,871.12 655,338,106.93 19,678,537.43 66,346,865.13 1,334,513,380.61
Balance
2. Increase 104,812,577.39 19,899,632.38 831,994.11 2,074,178.60 127,618,382.48
(1) Purchase 360,360.36 6,378,366.78 549,852.99 1,531,721.73 8,820,301.86
(2) Transferred
from
104,452,217.03 7,993,782.84 485,025.84 112,931,025.71
construction-in
-progress
(3) Sold and
5,527,482.76 5,527,482.76
buy back
(4) Acquired
from business 282,141.12 57,431.03 339,572.15
combination
3. Decrease 2,121,995.27 7,594,514.54 3,312,221.67 402,773.63 13,431,505.11
(1) Disposal 2,628,728.28 3,312,221.67 339,424.90 6,280,374.85
69
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Transportati
Property& Machinery Other
Item on Equipment Total
buildings Equipment
Equipment
(2) Transferred
2,121,995.27 2,121,995.27
to other
(3) Sold and
4,965,786.26 4,965,786.26
buy back
(4)Acquired
from business 63,348.73 63,348.73
combination
4.Closing
695,840,453.24 667,643,224.77 17,198,309.87 68,018,270.10 1,448,700,257.98
Balance
II.
Accumulated
Depreciation
1.Opening
64,073,553.49 328,334,086.43 12,874,279.49 37,839,494.30 443,121,413.71
Balance
2. Increase 20,244,190.98 31,605,929.51 1,740,140.11 6,219,925.89 59,810,186.49
(1)Accrued 20,244,190.98 31,605,929.51 1,695,467.81 6,201,811.33 59,747,399.63
(2)Acquired
from business 44,672.30 18,114.56 62,786.86
combination
3. Decrease 676,032.68 4,345,465.81 2,690,143.95 335,077.39 8,046,719.83
(1) Disposal 2,365,893.15 2,690,143.95 318,112.85 5,374,149.95
(2) Transferred
676,032.68 676,032.68
to other
(3) Sold and
1,979,572.66 1,979,572.66
buy back
(4)Acquired
from business 16,964.54 16,964.54
combination
4.Closing
83,641,711.79 355,594,550.13 11,924,275.65 43,724,342.80 494,884,880.37
Balance
III.
Impairment
Reserve
70
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Transportati
Property& Machinery Other
Item on Equipment Total
buildings Equipment
Equipment
1.Opening
517,319.50 517,319.50
Balance
2. Increase
(1)Accrued
3. Decrease
(1) Disposal
4.Closing
517,319.50 517,319.50
Balance
IV.Book Value
1.Closing
612,198,741.45 311,531,355.14 5,274,034.22 24,293,927.30 953,298,058.11
book value
2.Opening
529,076,317.63 326,486,701.00 6,804,257.94 28,507,370.83 890,874,647.40
book value
(2) Financing lease
Accumulated Impairment
Item Initial Cost Book Value
Depreciation Reserve
Machinery
2,527,482.76 67,764.48 2,459,718.28
Equipment
Total 2,527,482.76 67,764.48 2,459,718.28
(3) Fixed assets as pending certificate of ownership
Item Book value Reason for Pending
New office building ,Lianhe #1
plant, #2plant,Jiacu plant and 257,924,083.97 Deed is in the progress
dormitory
Newly built plant 45,975,967.68 Deed is in the progress
Functional Lab plant 16,121,233.97 Deed is in the progress
Land is pledged and deed
Lianhe #3,#4 plant 41,033,454.85 cannot be granted
Total 361,054,740.47
71
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
11. Construction-in-progress
Item Closing Book Value Opening Book Value
Construction-in-progress 19,796,212.82 82,999,382.90
Construction material
Total 19,796,212.82 82,999,382.90
(1) Construction in progress details
Closing Balance Opening Balance
Item
Book Balance Provision Book Value Book Balance Provision Book Value
Buildings
14,866,010.00 14,866,010.00 16,348,332.17 16,348,332.17
reconstruction
Improvement
3,342,959.0 3,342,959.00 1,633,725.79 1,633,725.79
of machinery
Construction of
intelligent 1,587,243.82 1,587,243.82
software
Self-heating
circulation
equipment 65,017,324.94 65,017,324.94
from mine air
return
Total 19,796,212.82 19,796,212.82 82,999,382.90 82,999,382.90
(2) Change in the significant construction in progress
Decrease
Opening Closing
Name Increase Transfer to Other
Balance Balance
fixed assets decrease
Buildings
reconstruction 16,348,332.17 19,538,157.34 21,020,479.51 14,866,010.00
Improvement
of machinery 1,633,725.79 8,249,634.41 6,540,401.20 3,342,959.00
Construction
of intelligent 1,587,243.82 1,587,243.82
software
Self-heating
circulation
equipment 65,017,324.94 20,352,820.06 85,370,145.00
from mine air
return
Total 82,999,382.90 49,727,855.63 112,931,025.71 19,796,212.82
(Continued)
72
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Progress Including:
Percent of Interest
of Accumulated Accumulated
investment capitalizatio Source of
Name Budget construction capitalized capitalized
against n funds
interest interest of the
budget(%) rate(%)
year
Buildings
Self
reconstruct 357,527,099.00 95.23 95.23
financing
ion
Improveme
Self
nt of 189,192,929.00 90.10 90.10
financing
machinery
Constructio
n of Self
intelligent 5,360,000.00 29.61 29.61
financing
software
Self-heatin
g
circulation Self
equipment 85,370,145.00 100.00 100.00
financing
from mine
air return
Total — — — —
12. Intangible assets
(1) Intangible assets list
Land use Non
Item Patent Others Total
right Patent
I. Initial Cost
1.Opening
152,890,196.80 11,800,000.00 16,774,618.38 181,464,815.18
Balance
2. Increase 6,000,000.00 5,000,000.00 1,130,215.28 12,130,215.28
(1) Purchase 1,123,377.67 1,123,377.67
(2) Transferred
from
6,000,000.00 5,000,000.00 6,837.61 11,006,837.61
construction-in
-progress
3. Decrease
(1) Disposal
(2)Transferred
to other
4.Closing
152,890,196.80 17,800,000.00 5,000,000.00 17,904,833.66 193,595,030.46
Balance
73
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Land use Non
Item Patent Others Total
right Patent
II.Accumulate
d
amortisation
1.Opening
28,878,884.36 294,999.99 8,372,413.96 37,546,298.31
Balance
2. Increase 3,095,102.98 2,612,657.96 1,500,004.00 1,822,374.50 9,030,139.44
(1)Accrued 3,095,102.98 1,657,555.96 500,000.00 1,821,120.94 7,073,779.88
(2)Increase
955,102.00 1,000,004.00 1,253.56 1,956,359.56
from merger
3. Decrease
(1) Disposal
(2) Transferred
to other
4. Closing
31,973,987.34 2,907,657.95 1,500,004.00 10,194,788.46 46,576,437.75
Balance
III.
Impairment
Reserve
1. Opening
Balance
2. Increase
(1)Accrued
(2) Others
3. Decrease
(1) Disposal
(2) Transferred
to other
4. Closing
Balance
IV. Book
Value
1. Closing
120,916,209.46 14,892,342.05 3,499,996.00 7,710,045.20 147,018,592.71
book value
74
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Land use Non
Item Patent Others Total
right Patent
2. Opening
124,011,312.44 11,505,000.01 8,402,204.42 143,918,516.87
book value
13. Goodwill
(1) Original cost of goodwill
Increased during Decreased during
current year current year
Opening Closing
Name Enterprises
Balance Balance
merger Other Disposal Other
increase
Dalian Niweisi
LengNuan
1,440,347.92 1,440,347.92
Techonoligy Co.,
Ltd.
Dalian Bingshan
Security Leisure
Industrial 310,451.57 310,451.57
Engineering Co.,
Ltd
Total 1,750,799.49 1,750,799.49
(2) Goodwill impairment provision
Goodwill calculation method:
In the year 2015, the book value of equity investment of Dalian Niweisi LengNuan Technology
Co., Ltd exceeds the fair value of the proportion of the acquired company’s identifiable net asset.
The difference between the book value of equity investment of 48, 287,589.78 Yuan and the
identifiable net asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltd
of 46,847,241.86 Yuan on the acquisition date of July 31st 2015 is recognized as goodwill of
1,440,347.92 Yuan on the group consolidated financial report at the end of the year.
In the year 2016, the company purchases shares of Dalian BingshanBaoan Leisure Industry Co.,
Ltd and gains control. The transferred price is based on the net asset of Dalian BingshanBaoan
Leisure Industry Co., Ltd on June 30th 2016. Negotiated with Dalian BingshanBaoan Leisure
Industry Co., Ltd’s shareholder Baoan Water Project (China) Limited Company, the transfer
price is the combination cost on the purchasing date which is 5,359,548.42 Yuan, the fair value
of proportion of Dalian BingshanBaoan Leisure Industry Company’s identifiable net asset is
5,049,096.85 Yuan on the purchasing day, therefore, goodwill is 310,451.57Yuan on the
purchasing date.
The book value of goodwill from business combination of Dalian Niweisi LengNuan
75
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Technology Co., Ltd and Dalian BingshanBaoan Leisure Industry Co., Ltd which are not under
same control shall be allocated into the relevant asset group using the reasonable method since
acquisition date and taken impairment test on relevant asset group where the goodwill is
included. The obvious impairment indication of the goodwill hasn’t been found. Thus no
goodwill impairment provision has been made.
14. Long-term repayments
Opening Other Closing
Item Increase Amortization
Balance Decrease Balance
Employee’s
2,289,127.02 138,478.32 2,150,648.70
dormitory use right
Renovation and
rebuilding 882,132.14 45,045.00 837,087.14
Lease 744,030.00 106,290.00 637,740.00
Membership fee for
Golf 473,000.00 16,500.00 456,500.00
Technology
entrance fee of cold 1,587,056.25 373,425.00 1,213,631.25
and heat machinery
Greenland of new
factory 8,400,754.18 892,115.52 7,508,638.66
Warranty extension 55,031.42 55,031.42
Service fee from
Technology center 106,918.24 37,735.80 69,182.44
Total 14,431,131.01 106,918.24 1,609,589.64 55,031.42 12,873,428.19
15. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offsetting
Item Closing Balance Opening Balance
Deductible Deferred tax Deductible Deferred tax
temporary difference assets temporary difference assets
Provision for
impairment of 158,842,386.89 31,736,544.09 139,387,243.38 27,485,104.23
assets
Share option
Incentive expense 13,881,215.49 2,082,182.32
Unrealized profit
from internal 15,641,404.20 2,346,210.63 15,641,404.17 2,346,210.63
transaction
Total 174,483,791.09 34,082,754.72 168,909,863.04 31,913,497.18
(2) Deferred tax liabilities without offsetting
Item Closing Balance Opening Balance
76
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Taxable Deferred tax Taxable Deferred tax
temporary liabilities temporary liabilities
difference difference
Fair value change of the
available-for-sale 346,362,948.00 51,954,442.22 476,197,108.65 71,429,566.31
financial assets
Total 346,362,948.00 51,954,442.22 476,197,108.65 71,429,566.31
(3) Unrecognized deferred tax assets details
Item Closing Balance Opening Balance
Deductible temporary difference 47,316,245.31 45,359,761.94
Deductible loss 50,277,991.93 6,173,430.97
Total 97,594,237.24 51,533,192.91
(4) Unrecognized deductible loss of deferred tax assets expired years
Year Closing Balance Opening Balance Notes
2018 1,196,797.80
2019
2020 3,240,819.97 3,240,819.97
2021 31,012,868.08 1,735,813.20
2022
2023 16,024,303.88
Total 50,277,991.93 6,173,430.97
16. Short-term loan
(1) Category of short term loan
Loan category Closing Balance Opening Balance
Credit loan 250,000,000.00 349,801,300.00
Total 250,000,000.00 349,801,300.00
17. Notes payable & Accounts payable
Category Closing Balance Opening Balance
Notes payable 273,401,536.58 260,443,167.67
Accounts payable 859,489,558.61 889,964,317.63
Total 1,132,891,095.19 1,150,407,485.30
17.1 Notes payable
Notes Category Closing Balance Opening Balance
77
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Notes Category Closing Balance Opening Balance
Bank acceptance notes 236,562,369.70 221,572,037.67
Commercial acceptance notes 36,839,166.88 38,871,130.00
Total 273,401,536.58 260,443,167.67
Note: There is no expired note unpaid at the year end.
17.2 Accounts payable
(1) Accounts payable
Item Closing Balance Opening Balance
Material payments 610,777,680.58 593,418,202.00
Project payments 192,942,733.62 244,492,384.60
Equipment payments 51,953,768.99 48,813,078.50
Others 3,815,375.42 3,240,652.53
Total 859,489,558.61 889,964,317.63
(2) Accounts payable with age over 1 year
Reason of unpaid or not carried
Name of company Closing Balance
forward
Dalian Yida Construction Company 18,729,717.59 Payment is undue
Wuhan KaiXing Economic
9,782,382.75 Payment is undue
Development Co., Ltd
WaFangDian HongGuang
9,682,383.22 Payment is undue
Machinery Manufacturing Co., Ltd
Heilongjiang Longleng Technology
9,413,290.00 Payment is undue
Co., Ltd
Jiangsu Jingxue Freezing Equipment
9,061,899.38 Payment is undue
Co., Ltd.
Total 56,669,672.94 —
18. Accounts received in advance
(1) Received in advance
Item Closing Balance Opening Balance
Advanced on sales 122,151,101.00 147,172,195.05
Total 122,151,101.00 147,172,195.05
(2) Accounts received in advance aged over 1 year
78
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Company Closing Balance Reason
Dandong Port Group Co.,Ltd 5,000,000.00 Contract is not competed
Total 5,000,000.00
19. Employee’s payable
(1) Category of employee’s payable
Item Opening Increase Decrease Closing
Balance Balance
Short-term
46,740,296.95 318,082,850.35 332,967,010.71 31,856,136.59
employee’s payable
Post-employment
benefit –defined 11,265.41 37,927,313.90 37,938,579.31
contribution plan
Termination benefits 196,231.73 196,231.73
Other welfare due
within 1 year
Total 46,751,562.36 356,206,395.98 371,101,821.75 31,856,136.59
(2) Short-term employee’s payables
Item Opening Increase Decrease Closing
Balance Balance
Salaries, bonus,
allowance, and 35,683,852.35 247,545,271.59 259,013,011.70 24,216,112.24
subsidy
Welfare 8,456,835.18 14,504,178.37 18,191,130.38 4,769,883.17
Social insurance 5,684.41 20,409,669.16 20,415,353.57
Include: Medical
4,977.21 15,954,854.10 15,959,831.31
insurance
Supplemental
3,401.74 3,401.74
insurance
On-duty
injury 295.07 2,335,916.95 2,336,212.02
insurance
Maternity
412.13 2,115,496.37 2,115,908.50
insurance
Housing funds 1,539,229.07 30,750,889.87 30,563,030.83 1,727,088.11
Labor union and 1,054,695.94 4,338,059.84 4,249,702.71 1,143,053.07
79
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Opening Increase Decrease Closing
Balance Balance
training expenses
Short-term leave
with pay
Short term profit
share plan
Others 534,781.52 534,781.52
Total 46,740,296.95 318,082,850.35 332,967,010.71 31,856,136.59
(3) Defined contribution plan
Item Opening Increase Decrease Closing
Balance Balance
Pension 10,924.64 36,379,250.82 36,390,175.46
Unemployment
340.77 1,191,463.08 1,191,803.85
insurance
Company Annuity Plan 356,600.00 356,600.00
Total 11,265.41 37,927,313.90 37,938,579.31
The company joins the pension and unemployment plan in accordance with the state regulation,
and therefore, the company makes monthly contribution and bears no any other obligation other
than the monthly contribution. Accordingly the contribution will be recorded in the profit and
loss or the cost of assets when incurs.
20. Tax payable
Item Closing Balance Opening Balance
Value-added tax 5,008,187.41 12,550,353.23
Enterprise income tax 4,011,845.57 13,418,675.14
Individual income tax 2,477,602.40 628,015.54
City maintenance and construction tax 308,110.57 907,478.69
Real estate tax 887,197.28 882,771.72
Land use tax 553,224.98 553,224.98
Education surcharge 210,076.03 613,577.67
River toll fee 557.18
Safeguard fund for disables 460.00 480.00
Stamp duty 150,950.90 437,981.65
Total 13,608,212.32 29,992,558.62
80
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
21. Other accounts payable
Item Closing Balance Opening Balance
Interest payable 1,369,527.78 379,085.53
Dividend payable 533,156.00 863,516.60
Other accounts payable 61,411,274.65 67,674,829.07
Total 63,313,958.43 68,917,431.20
21.1Interest payable
Item Closing Balance Opening Balance
Interest on short term loan 384,416.67 379,085.53
Interest on corporate bond 985,111.11
Total 1,369,527.78 379,085.53
21.2Dividend payable
Item Closing Balance Opening Balance
Ordinary share dividend 533,156.00 863,516.60
Total 533,156.00 863,516.60
21.3Other accounts payable
(1) Other payables categorized by payments nature
Payments nature Closing Balance Opening Balance
Restricted share buy back 21,026,106.00 21,026,106.00
Loan from non-financial institutes 6,100,000.00 6,320,000.00
Cash pledge and security deposit 9,487,599.86 10,842,115.56
Apply for reimbursement and
unpaid 15,032,744.10 13,699,458.65
Cash from related parties 934,995.17
Receipts under custody 4,362,549.92 12,572,889.29
Others 5,402,274.77 2,279,264.40
Total 61,411,274.65 67,674,829.07
(2) Significant other payables with age over 1 year
Reason of unpaid or not
Name of company Closing Balance
carried forward
Restricted share buy back 21,026,106.00 Not reach the unlock point
Total 21,026,106.00
81
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
22. Non-current liabilities due within one year
Item Closing Balance Opening Balance
Long-term loans due within one year
Bonds due within one year
Long-term payable due within one
2,999,574.93
year
Total 2,999,574.93
Note: The long-term payable due within one year is the financing lease payable of RMB
2,999,574.93.
23. Long-term loan
(1) Category of long-term loan
Category Closing Balance Opening Balance
Guarantee loan 160,000,000.00 160,000,000.00
Total 160,000,000.00 160,000,000.00
Note:In 2016, CDBDevelopment fund gave support to the company’s intelligent and green
equipment of cold chain and service industry base project and provide special fund to the
company’s holding shareholder, Bingshan Group. The fund is 0.16billion Yuan with 10year’s
expiration at 1.2% rate. Once the fund arrived, Bingshan Group gave it to the company at the
same rate of 1.2% in lump sum. The above fund needed to be warranted by the company. The
guarantee seems to be given for the holding shareholder, but it is for the company itself in fact.
24. Bonds payable
(1) Category of bonds payable
Category Closing Balance Opening Balance
Convertible corporate bonds 176,000,000.00
Total 176,000,000.00
(2) The changes of bond
Discount
Bond Opening Issued Interest at Closing
Bond name Par value Issue date Issue Amount premium Repay
term balance this year par value balance
amortization
Convertible
corporate 176,000,000.00 2018.7.30 3 years 176,000,000.00 985,111.11 176,000,000.00
bond
82
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Discount
Bond Opening Issued Interest at Closing
Bond name Par value Issue date Issue Amount premium Repay
term balance this year par value balance
amortization
Total 176,000,000.00 - - 176,000,000.00 985,111.11 176,000,000.00
(3) Convertible corporate bond
Approved by the Shanghai Stock Exchange “Letter of No-Objection to the Non-public
Issuance of Convertible Corporate Bonds of Dalian Refrigeration Co., Ltd.” ([2018] No.
125), the company non-publicly issued 1.76 million number of convertible corporate
bonds on July 30, 2018, at a par value of 100Yuan, and raised a total of 176 million
Yuan. The bond is based on simple annual interest rate with a fixed interest rate of 1.3%.
It is repayable once a year and pays interest once a year. The relevant issuance costs are
RMB 1,496,000.00.
The term of the bond swap is from the first trading day after the 6 months of issuance of
the convertible corporate bonds to the maturity date of the convertible corporate bonds,
which is from January 30, 2019 to July 2021. 29th. If the due date is on a statutory
holiday or a public holiday, it will be postponed to the next trading day. The initial
conversion price is 18 Yuan per share.
On the principal payment date of this bond, the company will pay all convertible bonds
to investors at the price of 108% of the par value of the convertible bonds (excluding the
last annual interest).
25. Long term accounts payable
Item Closing Balance Opening Balance
Long term accounts payable 1,532,949.94
Specific payable
Total 1,532,949.94
25.1Category by nature
Nature Closing Balance Opening Balance
Financial lease 856,524.11
Sale and leaseback 676,425.83
Total 1,532,949.94
26. Deferred income
(1) Category of deferred income
83
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Opening Increase Decrease Closing Formation
Balance Balance Basis
Government subsidy 100,336,504.07 12,871,308.31 9,675,483.98 103,532,328.40
Sale&leaseback
13,786.40 4,021.01 9,765.39
contract
Total 100,336,504.07 12,885,094.71 9,679,504.99 103,542,093.79 —
(2) Government subsidy project
The value Related
Recorded offset cost with
Government Opening Closing
Increase into other and asset/
subsidy item Balance Balance
income expense
this year equity
Subsidy fund
for highly
effective Asset
2,600,952.00 551,672.00 2,049,280.00
heat pump
and related
system
related
Contribution
to subsidiary Asset
43,446,000.00 1,114,000.00 42,332,000.00
company
relocation
related
Application
of NH3 and
CO2 instead Asset
of R22 screw
refrigerating 15,932,227.94 1,383,429.61 1,418,843.27 15,896,814.28
machine
combined
condensing Related/
unit Income
related
Compressor Asset
4,166,451.67 830,000.00 342,796.08 4,653,655.59
IC system
related
Ultrasonic Asset
intelligent 4,000,000.00 4,000,000.00 207,500.00 3,486,822.07 4,305,677.93
Related/
defrost Income
technology related
84
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The value Related
Recorded offset cost with
Government Opening Closing
Increase into other and asset/
subsidy item Balance Balance
income expense
this year equity
Eco Asset
Compressor 30,190,872.46 2,553,850.56 27,637,021.90
project related
R290
replacement Asset
of R22 large 4,877,498.70 4,877,498.70
industrial
screw unit
related
R290
replacement
of R22 Asset
1,780,380.00 1,780,380.00
industrial
double stage
screw unit
related
Total 100,336,504.07 12,871,308.31 1,321,500.00 8,353,983.98 103,532,328.40
Note: Asset related grant shall be offset the cost or expense within the asset’s useful life; income
related grant shall be booked into other income or offset cost or expense if it is relevant to daily
activity, otherwise it shall be booked into non-operating expense.
27. Share capital
Increase/decrease（+、-）
Transfer
Opening New Closing
Item Share from
balance share others Subtotal balance
dividend capital
issued
reserve
Total
share 856,487,181.00 -1,053,094.00 -1,053,094.00 855,434,087.00
capital
Note: On December 18, 2017, the company held the 3rd temporary shareholders meeting in 2017,
and reviewed and approved the “Proposal on Repurchasing and Retiring Partially Restricted Stocks
of the 2016 Restricted Stock Incentive Plan”. On March 8, 2018, after the company's repurchase
and cancellation, the company implemented the corresponding capital reduction procedures
85
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
according to law. The registered capital of the company was changed from 856,487,181 Yuan to
855,908,981 Yuan.
On May 4, 2018, the company held the 21st meeting of the 7th Board of Directors, and reviewed
and approved the “Proposal on Repurchasing and Retiring Partially Restricted Stocks of the 2015
Restricted Stock Incentive Plan". On June 29, 2018, after the company's repurchase and
cancellation, the company implemented the corresponding capital reduction procedures according
to law. The registered capital of the company was changed from 855,908,981 Yuan to 855,434,087
Yuan.
28. Capital reserves
Items Opening Increase Decrease Closing Balance
Balance
Share premium 676,326,831.54 19,665,314.32 2,773,227.66 693,218,918.20
Other capital reserves 81,205,249.80 5,606,488.32 19,665,314.32 67,146,423.80
Total 757,532,081.34 25,271,802.64 22,438,541.98 760,365,342.00
Note: The increase in the share premium and the decrease in other capital reserves is the other
capital reserve carried forward and recognized during the waiting period since the Company
terminated the implementation of the 2016 restricted stock incentive plan at the end of the year.
Other capital reserve is the amortization of share incentive plan.
29. Treasury Share
Opening Increase Decrease Closing
Items
Balance Balance
Share incentive
buy-back 23,305,370.40 1,166,814.54 3,446,078.94 21,026,106.00
Total 23,305,370.40 1,166,814.54 3,446,078.94 21,026,106.00
Note: The company implements restricted share incentive plan in 2016 and recognizes buy-back
obligation as liability. At the year end, treasure stock is recognized based on the numbers of
restricted share in the vesting period and buy back price agreed in the share incentive plan.
86
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
30. Other comprehensive income
2018
Opening Less：Previously Closing
Items After-tax
Balance Amount for the recognized in profit After-tax attribute Balance
Less：income attribute to
period before or loss in other to the parent
tax minority
income tax comprehensive company
shareholder
income
I.Later can’t reclassified into
profit and loss of other
comprehensive income
Re-measured the change in the
defined benefit plan
Other comprehensive income that
cannot be transferred to profit or
loss under the equity method
II. Later reclassified into profit and
loss of other comprehensive income 407,269,002.11 -84,556,464.00 38,486,042.15 -12,683,469.59 -110,359,036.56 296,909,965.55
Other comprehensive income that
can be transferred to profit or loss 2,501,459.77 2,501,459.77
under the equity method
Changes in fair value recognized in
gains and losses of the 404,767,542.34 -84,556,464.00 38,486,042.15 -12,683,469.59 -110,359,036.56 294,408,505.78
available-for-sale financial assets
Held-to-maturity investments are
reclassified as gains and losses on
available-for-sale financial assets
Effective portion of cash flow hedge
gains and losses
Foreign currency financial
statement conversion difference
87
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
2018
Opening Less：Previously Closing
Items After-tax
Balance Amount for the recognized in profit After-tax attribute Balance
Less：income attribute to
period before or loss in other to the parent
tax minority
income tax comprehensive company
shareholder
income
Other comprehensive income
total 407,269,002.11 -84,556,464.00 38,486,042.15 -12,683,469.59 -110,359,036.56 296,909,965.55
88
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
31. Special Reserve
Opening Closing
Items Increase Decrease
Balance Balance
Safety production cost 2,133,519.76 2,133,519.76
Total 2,133,519.76 2,133,519.76
32. Surplus reserves
Item Opening Closing
Increase Decrease
Balance Balance
Statutory surplus reserve 318,245,354.15 16,214,068.54 334,459,422.69
Discretionary surplus reserve 349,905,021.15 36,726,596.18 386,631,617.33
Total 668,150,375.30 52,940,664.72 721,091,040.02
Note:The company made profit distribution within the reporting period. According to the 2017
annual meeting, 20% of net profit in the 2017 fiscal annual report is provided for discretionary
surplus reserve of 36.7266 million Yuan. In the meanwhile, 10% of net profit of parent company
is provided for statutory surplus reserve of 16.2141millionYuan.
33. Undistributed profits
Item 2018 2017
Closing balance of 2017 750,397,795.56 658,387,158.97
Add: Adjustments to the opening balance of
undistributed profits
Including: additional retrospective adjustments
according to the new accounting standards
Change on accounting policy
Correction of prior period significant errors
Change on combination scope under same
control
Other factors
Opening balance of 2018 750,397,795.56 658,387,158.97
Add: net profit attributable to shareholders of
110,503,175.90 200,759,820.17
parent company in the year
Less: Provision for statutory surplus reserves 16,214,068.54 18,363,298.09
Provision for any surplus reserves 36,726,596.18 29,208,229.69
Provision of general risk
Dividends payable for common shares 42,795,399.87 61,177,655.80
89
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item 2018 2017
Common stock dividends converted to equity
Extract employee rewards and welfare funds 305,618.42
Closing balance of 2018 764,859,288.45 750,397,795.56
34. Operating revenue and cost
Items 2018 2017
Sales revenue Cost of sales Sales revenue Cost of sales
Revenue from
1,927,029,771.66 1,630,189,642.82 2,043,986,956.70 1,625,595,014.87
principle operation
Revenue from
39,034,840.78 21,098,733.17 35,728,148.67 18,058,428.06
other operation
Total 1,966,064,612.44 1,651,288,375.99 2,079,715,105.37 1,643,653,442.93
35. Taxes and surcharges
Items 2018 2017
City construction tax 2,608,031.47 3,872,117.40
Education surcharge 1,778,127.27 2,670,598.37
Property tax 7,498,485.12 6,132,613.95
Land use tax 4,900,926.22 4,900,926.20
Vehicle and vessel tax 28,624.48 32,024.47
Stamp duty 1,481,783.81 1,718,435.64
Others 89,577.48 227,217.01
Total 18,385,555.85 19,553,933.04
36. Selling expenses
Items 2018 2017
Official business expense 14,541,723.98 16,172,326.40
Employee benefit 37,524,589.01 37,798,487.92
Depreciation expense 306,944.63 334,486.58
Transportation expense 19,836,339.76 18,548,242.98
Business entertaining expense 11,812,108.77 12,056,961.89
Travel expense 13,858,056.93 13,229,495.33
Maintenance and repair expense 8,831,446.27 12,791,435.69
Advertisement and bids expense 2,567,404.72 2,184,356.83
Other expense 512,616.15 306,521.85
Total 109,791,230.22 113,422,315.47
90
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
37. Administrative expenses
Items 2018 2017
Official expense 23,529,993.42 22,474,616.19
Employee benefit 123,406,243.48 121,595,998.08
Depreciation expense 12,980,398.28 8,182,795.40
Transportation expense 391,017.67 171,491.59
Business entertaining expense 3,581,472.84 3,512,217.30
Travel expense 5,437,732.44 7,530,675.32
Maintenance and repair expense 5,501,445.69 6,108,789.47
Advertisement expense 530,748.08 287,869.52
Other taxes and fee 671,954.81 1,524,590.51
Insurance expense 868,433.40 910,211.97
Long-term assets amortization 7,937,790.99 5,546,087.90
Design consultant and test service expense 4,664,309.45 10,015,427.50
Safety production cost 3,622,742.67 3,979,165.98
Other expense 1,915,583.77 1,381,161.91
Total 195,039,866.99 193,221,098.64
38. Technology development expense
Items 2018 2017
Employee benefit 34,930,702.72 30,960,300.28
Depreciation and amortization expense 3,940,392.29 3,718,544.85
Raw material 6,166,891.75 1,832,069.57
Entrust external R&D investment 1,004,716.96 1,103,396.20
Other expense 861,663.12 510,182.03
Total 46,904,366.84 38,124,492.93
39. Financial expenses
Items 2018 2017
Interest expenses 18,805,308.74 10,526,056.47
Less: Interest income 2,487,236.95 4,865,429.43
Add: Exchange loss 2,149,687.05 2,458,197.49
Add: Others expenditure 2,175,536.36 2,737,012.43
Total 20,643,295.20 10,855,836.96
91
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Note: The amount of this period increased by 90.16% compared with the previous period,
mainly due to the increase in the interest rate of borrowings and the increase in interest
expenses.
40. Assets impairment losses
Items 2018 2017
Loss of bad debts 28,919,153.66 26,816,177.67
Provision for inventory impairment 9,476.00 192,895.00
Total 28,928,629.66 27,009,072.67
41. Other income
Items 2018 2017
VAT refund 483,731.06 657,176.72
Grant given by the government for
1,114,000.00 1,114,000.00
relocation
Government subsidy 4,094,657.00
Personal income tax handling fee refund 7,889.20
Total 5,700,277.26 1,771,176.72
Note: This period increased by 221.84% compared with the previous period, mainly due to the
increase of government subsidy projects. For more details, please refer to the relevant contents
of “VI. 51 Government Grants” in the notes.
42. Investment income
Items 2018 2017
Long-term equity investment gain under
equity method 137,440,422.49 140,904,557.45
Gain from disposing long-term equity
investment 243,382.33 263,666.08
Gain from holding of FV through P&L
Gain from disposal of FV through P&L
Gain from holding of held to maturity
financial assets
Gain from disposing of held to maturity
financial assets
Gain from holding of financial assets
available for sale
Gain from disposal financial assets available
for sale 11,173,008.00 11,497,019.05
Gain from FV remeasurement of the
remaining shares after losing control 66,702,217.88 27,467,019.93
Total 215,559,030.70 180,132,262.51
92
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
43. Gain on assets disposal
Amounts recognized
into current
Item 2018 2017
non-recurring profit
or loss
Gain on disposal group classified as held for
sale
Gain on non-current assets disposal 374,143.29 552,588.02 374,143.29
Gain on non-current assets disposal
classified as Held for sale
Gain on fixed assets disposal
Gain on intangible assets disposal
Gain on non-current assets disposal
374,143.29 552,588.02 374,143.29
not classified as Held for sale
Gain on fixed assets disposal 374,143.29 552,588.02 374,143.29
Gain on intangible assets disposal
Gain on nonmonetary asset exchange
Gain on disposal of non-current asset in the
debt restruction
Total 374,143.29 552,588.02 374,143.29
44. Non-operating income
（1） Non-operating income list
Amounts recognized
into non-recurring
Item 2018 2017
profit or loss for the
year
Gain on debts restructuring
Government grant 1,060,600.00 1,473,958.00 1,060,600.00
Unpayable dividends payable 330,360.60 330,360.60
Other items 1,398,581.90 856,276.97 1,398,581.90
Total 2,789,542.50 2,330,234.97 2,789,542.50
（2） Government grant details
Item 2018 2017 With asset/income
Company upgrade reward 50,000.00 Income related
Post-doctoral work funding 60,000.00 Income related
Grant from Dalian Quality 100,000.00 Income related
93
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item 2018 2017 With asset/income
and Technical Supervision
Bureau
Research and development
300,000.00 Income related
funding
“Small Jinxian” award fund 100,000.00 Income related
New wall materials specific
305,038.00 Income related
fund
Innovation platform
150,000.00 Income related
government subsidy
Fostering fund in 2016 300,600.00 Income related
Fostering fund in 2015 300,000.00 Income related
International market
247,200.00 Income related
development fund in 2016
Finance support 52,000.00 Income related
Service policy implemented
13,200.00 Income related
fund in 2016
Income related
Exporting incentive fund 22,000.00
Patent subsidy 14,520.00 Income related
City research center and key Income related
lab fund 500,000.00
Patent bonus 20,000.00 Income related
Total 1,060,600.00 1,473,958.00
（3） Non-operating income statement
Note: The other items of non-operating income in the current period mainly occurred when the
business combination of Wuhan Lanning Energy Technology Co., Ltd. under the same control
occurred in the current period, the merger cost at the acquisition date was less than the fair value
of the identifiable net assets acquired, which was 1,070,288.17 Yuan.
45. Non-operating expenses
Amounts recognized
into non-recurring
Item 2018 2017
profit or loss for the
year
Non-current assets scrap loss 350,034.46 350,034.46
Outward donation 60,000.00 10,000.00 60,000.00
Others 219,582.84 177,380.52 219,582.84
Total 629,617.30 187,380.52 629,617.30
94
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
46. Income tax expenses
(1) Income tax expenses
Items 2018 2017
Current income tax expenses 9,180,999.73 19,032,298.13
Deferred income tax expenses -2,322,697.09 -5,114,555.51
Total 6,858,302.64 13,917,742.62
(2) Adjustment process of accounting profit and income tax expense
Items 2018
Consolidated total profit this year 118,876,668.14
Income tax expenses at applicable tax rate 17,831,500.22
Effect on subsidiary applied to different tax rate -3,681,443.66
Effect on prior period income tax -802,039.82
Effect on non-taxable income -23,316,175.23
Effect on non-deductible cost ,expense and loss 4,888,292.78
Effect on use of deductible loss from unrecognized deferred
tax assets in the prior period -118,457.36
Effect on temporary difference or deductible loss from
unrecognized deferred tax assets this year 14,567,268.08
Tax rate adjustment caused the opening balance of deferred
tax assets /liability change 26,934.19
R&D expenditure accelerated deduction -2,537,576.56
Income tax expense 6,858,302.64
47. Other comprehensive income
Refer to the note VI.30 Other comprehensive income for details.
48. Notes to cash flow statement
(1) Cash receipt/payment of other operating/investing/financing activities
1) Other cash received relating to operating activities
Items 2018 2017
Government grants 18,385,645.52 58,192,890.84
Received travel expense refund 5,775,943.14 2,648,675.53
Deposit given back 25,493,801.51 30,740,218.26
Receivable from relate party 1,070,707.07 28,355.16
Interest income 3,885,734.11 4,865,429.43
rd
Receivable from 3 party 714,377.76 1,886,442.36
95
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Others 1,971,995.03 778,033.86
Total 57,298,204.14 99,140,045.44
2) Other cash paid relating to operating activities
Items 2018 2017
Business travel borrowing 8,938,421.56 6,831,117.22
Deposit paid 42,254,631.19 49,379,114.48
Expenditure 92,821,437.21 115,004,087.20
Bank handling charges 2,061,437.20 1,718,011.38
Others 899,442.79 2,020,950.47
Total 146,975,369.95 174,953,280.75
3) Others cash received relating to investing activities
Items 2018 2017
Bank financial product 76,000,000.00
Total 76,000,000.00
4) Others cash payed relating to investing activities
Items 2018 2017
Bank financial product 76,000,000.00
Total 76,000,000.00
5) Others cash received relating to financing activities
Items 2018 2017
Collection of guarantee money at the year end 29,116,287.80 22,976,815.56
Sale leaseback and financial lease 3,000,000.00
Total 32,116,287.80 22,976,815.56
6) Others cash payed relating to financing activities
Items 2018 2017
Interests on discount of bill acceptance 533,987.03
Payment of guarantee money 37,323,050.64 29,116,287.80
Sale& leaseback and financial lease 1,658,926.39
Repurchase of restricted stock 3,446,078.94
Note financing is due and is paid 598,632.63
Total 42,962,043.00 29,714,920.43
(2) Supplementary information of consolidated cash flow statement
96
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Items 2018 2017
1. Adjusting net profit into cash flows of operating —— ——
activities:
Net profit 112,018,365.50 204,556,051.81
Add: Provision for impairment of assets 28,928,629.66 27,009,072.67
Depreciation of fixed assets, Amortization of
64,227,416.81 46,420,450.37
mineral resources, and biological assets
Amortization of intangible assets 6,910,625.96 5,388,917.09
Amortization of long-term deferred expenses 1,658,331.76 1,801,109.16
Losses on disposal of fixed assets, intangible assets, and
-374,143.29 -681,321.46
long-term assets (income listed with”-”)
Losses on write-off of fixed assets (income listed
350,034.46 128,733.44
with”-”)
Change of fair value profit or loss
Financial expense (income listed with”-”) 22,389,316.73 13,508,079.57
Investment loss (income listed with”-”) -215,559,030.70 -180,132,262.51
Decrease of deferred tax assets(increase listed
-2,169,257.54 -4,159,749.24
with”-”)
Increase of deferred tax liabilities(decrease
listed with”-”)
Decrease of inventories (increase listed with”-”) -97,611,158.25 -2,828,958.79
Decrease of operating receivables (increase listed
-109,025,097.10 -296,492,807.92
with”-”)
Increase of operating payables (decrease listed
63,371,834.76 -34,228,577.41
with”-”)
Others 5,226,245.60 12,485,412.00
Net cash flows arising from operating activities -119,657,885.64 -207,225,851.22
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 304,703,434.47 364,693,406.31
Less: Opening balance of cash 364,693,406.31 691,238,822.98
Add: Closing balance of cash equivalent
97
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Items 2018 2017
Less: Opening balance of cash equivalent
Net increase of cash and cash equivalent -59,989,971.84 -326,545,416.67
(3) Net cash paid for acquiring subsidiaries
Items 2018
Payment of Net cash and cash equivalent under the business merger
4,500,000.00
during the year
Including: Wuhan Lanning Energy Technology Co., Ltd. 4,500,000.00
Less: Cash and cash equivalents held by the company on the date of
272,266.57
purchase
Including: Wuhan Lanning Energy Technology Co., Ltd. 272,266.57
Add: Cash or cash equivalents paid in the current year for business
combinations that occurred during the previous period
Net cash paid for acquiring subsidiaries 4,227,733.43
(4) Net cash received from disposal of subsidiaries during the year
Items 2018
Cash or cash equivalents received by the disposal of subsidiary during
5,100,000.00
the year
Including: Shanghai Bingshan Technology Service Co., Ltd. 5,100,000.00
Less：Cash and cash equivalents held by subsidiaries on the date of loss
8,187,767.47
of control
Including: Shanghai Bingshan Technology Service Co., Ltd. 8,187,767.47
Add：Cash or cash equivalents received by the disposal subsidiary
during the previous period
Net cash received from disposal of subsidiary -3,087,767.47
(5) Cash and cash equivalents
Items 2018 2017
Cash 304,703,434.47 364,693,406.31
Including: Cash on hand 74,387.33 62,880.11
Bank deposit used for paying at any moment 304,629,047.14 364,630,526.20
Other monetary fund for paying at any moment
Deposit fund in central bank available for payment
Cash equivalent
98
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Items 2018 2017
Including: bonds investment with maturity in 3 months
Closing balance of cash and cash equivalents 304,703,434.47 364,693,406.31
Cash and cash equivalents restricted in the parent
company or subsidiary
49. The assets with the ownership or use right restricted
Items 2018 Reasons
Monetary fund 38,323,050.64 Guarantee money
Notes Receivable 9,181,872.34 Pledge
Fixed assets 66,762,437.41 Mortgage Loan
Intangible assets 49,908,814.00 Mortgage Loan
Note: Dalian Niweisi LengNuan Techonoligy Co., Ltd. pledged the bank acceptance note to
ICBC bank Dalian DDA Branch as guarantee for issuing the commercial acceptance note.
Wuhan New World Refrigeration Industrial Co., Ltd signed the “maximum pledge contract”
with GuangdaBank of China Wuhan branch on December 24, 2015. Property and land were
pledged and Wuhan New World Refrigeration Industrial Co., Ltd was granted for credit of
100million Yuan.
50. Monetary category of foreign currency
(1) Monetary category of foreign currency
Closing Balance Exchange Closing Balance
Item
(foreign currency) Rate (RMB)
Cash 8,426,752.21
Including：USD 825,826.02 6.8632 5,667,809.15
Euro 3,725.04 7.8473 29,231.51
GBP 18,667.97 8.6762 161,967.04
JPY 41,491,959.00 0.061887 2,567,812.86
Accounts receivable 44,831,612.38
Including: USD 5,661,443.12 6.8632 38,855,616.42
GBP 114,295.86 8.6762 991,653.74
JPY 80,539,406.00 0.061887 4,984,342.22
Accounts payable 12,055,841.14
Including: USD 1,145,199.14 6.8632 7,859,730.74
GBP 38,846.28 8.6762 337,038.09
99
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance Exchange Closing Balance
Item
(foreign currency) Rate (RMB)
JPY 62,356,752.00 0.061887 3,859,072.32
51. Government Grants
(1) Basic information
Amount
recognized in
Category Amount Disclosure
current profit and
loss
High-tech enterprise recognition
subsidy 1,250,000.00 Other Income 1,250,000.00
Company upgrade reward 200,000.00 Other Income 200,000.00
Patent Grant 1,070.00 Other Income 1,070.00
Special fund subsidy for the
construction of manufacturing 207,500.00 Other Income 207,500.00
innovation center
Grants from Economic Development
Bureau of JinPu new district 70,000.00 Other Income 70,000.00
Fund by Enterprise Technology 500,000.00 500,000.00
Center verification Other Income
Relocation compensation 1,114,000.00 Other Income 1,114,000.00
R&D investment replenishment funds 290,000.00 Other Income 290,000.00
Import discount funds 1,466,087.00 Other Income 1,466,087.00
Financial support funds 50,000.00 Other Income 50,000.00
Technology Innovation Contest
Bonus 60,000.00 Other Income 60,000.00
VAT refund 483,731.06 Other Income 483,731.06
Personal tax handling fee refund 7,889.20 Other Income 7,889.20
Non-operating
Company upgrade reward 50,000.00 50,000.00
income
Non-operating
Postdoctoral work funding 60,000.00 60,000.00
income
Grants from Dalian Quality and Non-operating
100,000.00 100,000.00
Technical Supervision Bureau income
Non-operating
Research and development funding 300,000.00 300,000.00
income
Non-operating
“Small Jinxian” award fund 100,000.00 100,000.00
income
100
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Amount
recognized in
Category Amount Disclosure
current profit and
loss
Innovation platform government Non-operating
150,000.00 150,000.00
subsidy income
Non-operating
Fostering fund in 2016 300,600.00 300,600.00
income
Total 6,760,877.26 - 6,760,877.26
VII. Change of Consolidation Scope
1. Consolidation not under the same control
(1) Consolidation not under the same control occurred this year
Time spot of Equity equity
Cost of equity percentage
Name of the acquiree equity acquisition
acquisition （%）
acquisition method
Wuhan Lanning Energy
2018.03.01 10,068,246.27 54.55 Cash
Technology Co., Ltd.
(Continued)
Revenue of the Net profit of
acquiree from the acquiree
Name of the Purchase Recognition basis of purchase
the purchase from the
acquiree date date
date to the year purchase date
end to the year end
The acquisition was
approved by the board of
directors and administration
Wuhan department. The procedure
Lanning of equity transfer has been
Energy 2018.3.1 26,099,295.28 1,981,947.59
Technology processed, the funds have
Co., Ltd. been paid, and the actual
financial and operating
policies have been actually
controlled.
101
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
（2） Cost of combination and goodwill
Item Wuhan Lanning Energy
Technology Co., Ltd.
Cash 4,500,000.00
Fair value of non-cash assets
Fair value of debt issued or obligated
Fair value of equity securities issued
Fair value of contingent consideration
The fair value of the equity held before the purchase date on the
5,568,246.27
date of purchase
Total of combination cost 10,068,246.27
Less: fair share of identifiable net assets acquired 11,138,534.44
The combination cost is less than the proportion of fair value of
1,070,288.17
the identifiable net assets acquired
The company purchased the equity of Wuhan Lanning Energy Technology Co., Ltd. and
acquired the control. The equity acquisition price is based on the net assets of Wuhan Lanning
Energy Technology Co., Ltd. on February 28, 2018. After the negotiation with Cheng
XiangRong, Wu ZhiHong, and Xi'an Qitong New Energy Equipment Co., Ltd, the consideration
on the purchase date was determined to be 10,068,246.27 Yuan s the acquisition costs. The
company has the proportion of fair value share of the identifiable net assets on the purchase date
of Wuhan Lanning Energy Technology Co., Ltd, which is 11,138,534.44 Yuan. Therefore, the
combination cost on the purchase date is less than the amount of the fair value of the identifiable
net assets acquired at 1,070,288.17 Yuan.
（3） Book value of assets and liability of acquire on acquisition date
Wuhan Lanning Energy Technology Co., Ltd.
Items Fair value at purchase Book value at purchase
date date
Assets: 28,295,063.02 28,295,063.02
Monetary fund 272,266.57 272,266.57
Notes receivables 400,000.00 400,000.00
Accounts receivables 7,789,222.50 7,789,222.50
Prepayment 1,367,914.97 1,367,914.97
Other receivables 1,258,870.59 1,258,870.59
Inventory 7,923,588.27 7,923,588.27
Fixed Asset 274,070.17 274,070.17
Intangible assets 8,887,324.13 8,887,324.13
102
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Wuhan Lanning Energy Technology Co., Ltd.
Items Fair value at purchase Book value at purchase
date date
Long term prepaid expense 100,628.94 100,628.94
Deferred income tax asset 21,176.88 21,176.88
Liability: 7,876,118.12 7,876,118.12
Accounts payable 5,917,680.91 5,917,680.91
Received in advance 1,648,374.95 1,648,374.95
Employees’ payable 19,712.31 19,712.31
Tax payable 197,576.42 197,576.42
Other payables 92,773.53 92,773.53
Net assets 20,418,944.90 20,418,944.90
Less: minority interest 9,280,410.46 9,280,410.46
Acquired net assets 11,138,534.44 11,138,534.44
2. Consolidation not under the same control
None
3. Disposal of subsidiary
The difference between the
Equity Recognition disposal price and the
Equity Time spot
Name Equity disposal basis of time disposal of the investment
disposal of loss of
of subsidiary disposal price percentage spot of in the consolidated
method control
（%） control loss financial statements at the
level of the net assets of the
subsidiary
Equity
Transfer
Shanghai Bingshan Agreement
Equity
Technology Service 5,100,000.00 51.00 2018.6.30 and 243,382.33
Co., Ltd. transfer Resolution of
Shareholders'
Meeting
Note: Bingshan Engineering Company and Shanghai Qingneng Cold Chain Equipment
Engineering Co., Ltd. (hereinafter referred to as “Shanghai Qingneng”) signed an equity
transfer agreement on September 29, 2018 to transfer the 51% equity of Shanghai Bingshan
Technical Service Co., Ltd. held by Bingshan Engineering Company for RMB 5.1 million. At
103
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
the same time, according to the equity transfer agreement, equity transfer is based on the date of
June 30, 2018, any income or loss of Shanghai Bingshan Technical Service Company during the
period from the base date to the completion date of this equity transfer procedure will be fully
borne by Shanghai Qingneng, the equity transferee. The disposal date is June 30, 2018.
Therefore, from June 30, 2018, the company will no longer include Shanghai Bingshan
Technical Service Co., Ltd in the scope of consolidation.
4. Changes in scope of consolidation for other reasons
None.
VIII. Interest in other entity
1. Equity of subsidiaries
(1) Organization structure of group company
Main Shareholding
Registered Business (%) Obtaining
Name of subsidiaries business
address nature method
address Direct Indirect
Dalian Bingshan Group
Dalian Dalian Installation 100 Establish
Engineering Co., Ltd.
Dalian Bingshan Group
Dalian Dalian Trading 100 Establish
Sales Co., Ltd.
Dalian Bingshan
Air-conditioning Dalian Dalian Manufacturing 70 Establish
Equipment Co., Ltd.
Dalian Bingshan JiaDe
Dalian Dalian Manufacturing 100 Establish
Automation Co., Ltd.
Dalian Bingshan Lingshe
Quick Freezing Dalian Dalian Manufacturing 100 Establish
Equipment Co., Ltd.
Wuhan New World
Refrigeration Industrial Wuhan Wuhan Manufacturing 100 Acquisition
Co., Ltd.
Bingshan Technical
Service （Dalian） Dalian Dalian Services 100 Establish
Co.,Ltd.
Dalian Xinminghua
Dalian Dalian Electronic 100 Acquisition
Electrical Technology
104
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Main Registered Business Shareholding Obtaining
Name of subsidiaries
business address nature (%) method
Co., Ltd address
Dalian Niweisi LengNuan
Dalian Dalian Manufacturing 55 Acquisition
Technology Co., Ltd.
Dalian Bingshan
International Trading Dalian Dalian Service 100 Acquisition
Company
Wuhan New World
Air-conditioning
Wuhan Wuhan Installation 100 Establish
Refrigeration Engineering
Co., Ltd
Wuhan Lanning Energy
Wuhan Wuhan Trading 54.55 Acquisition
Technology Co., Ltd.
Ningbo Bingshan
Air-conditioning
Ningbo Ningbo Installation 51 Establish
Refrigeration Engineering
Co., Ltd
Dalian Bingshan Baoan
Leisure Industrial Dalian Dalian Installation 100 Acquisition
Engineering Co., Ltd
Chengdu Bingshan
Refrigeration Engineering Chengdu Chengdu Services 51 Establish
Co., Ltd.
1) All the proportion of shareholding in subsidiaries were the same with voting right
2) The company held over 50% voting right in subsidiaries
3) The company held over 50% voting right in subsidiaries and could control these
subsidiaries with over 50% voting right
4) Change on the shareholding of the subsidiaries is explained in the Note II.change on the
combination scope
2. Equity in joint venture arrangement or associated enterprise
（1） The important of joint ventures or affiliated companies
105
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Shareholding (%)
Main
Name of joint ventures or Registered Business Accounting
business
affiliated companies address nature methods
address Indire
Direct
ct
Panasonic Refrigeration Equity
(Dalian) Co., Ltd. Dalian Dalian Manufacturing 40
method
Panasonic Compressor Equity
(Dalian) Co., Ltd Dalian Dalian Manufacturing 40
method
Jiangsu Jingxue Energy Equity
Changzhou Changzhou Manufacturing 29.212
Saving Technology Co., Ltd. method
Dalian Bingshan Metal Equity
Dalian Dalian Manufacturing 49.00
Technology Co., Ltd. method
The company assumes the affiliated as significant party either when the investment income from
investee presents 10% of the parent’s net profit or the proportion of shareholding of the investee’s net
asset represents 10% of the parent’s shareholder equity.
1) The company has the same percentage of shareholding and voting right in joint-venture or
affiliated company.
2) The company doesn’t have affiliated company which has significant influence although being held
less than 20% voting rights.
3) The company doesn’t have joint venture or affiliated companies which have no significant
influence although being held 20% or more voting rights.
（2） The key financial information of affiliated companies
2018
Dalian
Panasonic Jiangsu
Panasonic Jingxue Energy Bingshan
Items Refrigeration
Compressor Saving Metal
(Dalian) Co., (Dalian) Co., Ltd Technology
Technology
Ltd. Co., Ltd.
Co., Ltd.
Current assets 937,998,259.09 1,376,419,885.42 763,646,546.20 336,224,040.64
Including: Cash 63,271,820.76 201,665,865.62 77,732,765.85 177,386,572.87
106
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
2018
Dalian
Panasonic Jiangsu
Panasonic Jingxue Energy Bingshan
Items Refrigeration
Compressor Saving Metal
(Dalian) Co., (Dalian) Co., Ltd Technology
Technology
Ltd. Co., Ltd.
Co., Ltd.
and cash
equivalents
Non-current
119,928,127.70 326,931,005.88 179,673,527.54 50,280,554.61
assets
Total assets 1,057,926,386.79 1,703,350,891.30 943,320,073.74 386,504,595.25
Current
610,291,097.47 484,391,688.87 470,852,478.59 73,598,900.93
liabilities
Non-current
5,827,003.92 140,000.00 9,889,839.36 -
liabilities
Total liabilities 616,118,101.39 484,531,688.87 480,742,317.95 73,598,900.93
Minority
376,885.32
interests
Equity to the
441,808,285.40 1,218,819,202.43 462,200,870.48 312,905,694.32
parent company
Net assets
calculated
according to the 176,723,314.16 487,527,680.97 135,018,118.29 153,323,790.22
shareholding
proportions
Adjusting
events
—Goodwill 39,948,654.75 19,269,770.94
—Unrealized
profits of
insider trading
--Others -1,432,455.78 -3,628,006.38
Book value of
equity
investment of 175,290,858.38 483,899,674.59 174,966,773.04 172,593,561.16
affiliated
companies
Fair value of
equity
investment with
public offer
Operating
901,900,860.21 1,429,072,323.70 594,134,424.82 455,607,253.17
income
Financial
-774,487.69 -1,955,502.09 1,939,901.48 -3,340,873.14
expense
107
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
2018
Dalian
Panasonic Jiangsu
Panasonic Jingxue Energy Bingshan
Items Refrigeration
Compressor Saving Metal
(Dalian) Co., (Dalian) Co., Ltd Technology
Technology
Ltd. Co., Ltd.
Co., Ltd.
Income tax
7,904,678.62 20,840,257.51 9,353,115.24 10,136,204.60
expense
Net profit 44,764,243.37 113,375,199.37 53,999,805.04 61,916,031.92
Net profit of
discontinuing
operation
Other
comprehensive
income
Total
comprehensive 44,764,243.37 113,375,199.37 54,149,642.80 61,916,031.92
income
The current
dividends
3,000,000.00 47,826,800.00 5,842,400.00 19,344,983.17
received from
joint ventures
(Continued)
2017
Items Panasonic Dalian Fuji Bingshan
Compressor Vending Machine Co.,
(Dalian) Co., Ltd Ltd.
Current assets 1,561,263,338.96 373,991,952.58
Including: Cash and cash equivalents 222,958,963.14 86,597,714.30
Non-current assets 330,137,817.56 264,531,025.64
Total assets 1,891,401,156.52 638,522,978.22
Current liabilities 656,825,153.46 185,438,746.74
Non-current liabilities 86,523,957.30
Total liabilities 656,825,153.46 271,962,704.04
Minority interests
Equity to the parent company 1,234,576,003.06 366,560,274.18
Net assets calculated according to the
493,830,401.22 179,614,534.35
shareholding proportions
Adjusting events
—Goodwill
—Unrealized profits of insider trading
108
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
2017
Items Panasonic Dalian Fuji Bingshan
Compressor Vending Machine Co.,
(Dalian) Co., Ltd Ltd.
--Others -3,826,159.67 226,689.29
Book value of equity investment of
490,004,241.55 179,841,223.64
affiliated companies
Fair value of equity investment with
public offer
Operating income 1,623,387,718.61 442,326,067.27
Financial expense -362,406.98 -484,458.47
Income tax expense 26,264,317.90 10,432,796.66
Net profit 119,567,490.02 54,885,773.13
Net profit of discontinuing operation
Other comprehensive income
Total comprehensive income 119,567,490.02 54,885,773.13
The current dividends received from
38,000,000.00 7,840,000.00
joint ventures
（3） Summary financial information of insignificant affiliated companies
Items 2018 2017
Affiliated company
Total book value of investment of 897,265,918.24
affiliated companies 607,706,323.17
The total of following items
according to the shareholding
proportions
Net profit 134,435,892.84 69,639,419.82
Other comprehensive income
Total comprehensive income 134,435,892.84 69,639,419.82
（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.
None
IX. Risk Related to Financial Instruments
109
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The main financial instruments held by the group company are cash and cash in bank, accounts
receivable, accounts payable, available-for-sale financial asset and short term loan. The detailed
explanation is referred to this notes No.VI. The related risks of these financial instruments and
the risk management policy conducted to reduce these risks by the group company are
introduced as below. The Group management conducts to manage and monitor these risks
exposure and control these risks under certain risk level.
1. Objectives and policies of each risk management
The objectives of risk management conducted by the group company are to reach the balance
between risk and profit return by reducing the negative influence to operating performance to
the minimum level as well as maximizing the shareholders’ and other investors’ profits. Based
on these objectives, the basic risk management policy is to recognize and analyze all sorts of
risk that the group company faced with, to set up the proper risk tolerance bottom line
conducting risk management, as well as to monitor these risks in a timely and effective manner,
and to ensure these risks under the limit level.
(1) Market risk
1) Exchange rate risk
Most of the company’s business is located in China, and settled with RMB. But the company
defined exchange rate risk of assets, liabilities dominated in foreign currency and future
transaction dominated in foreign currency (mainly including USD,JPY,HKD and GBP). The
financial department of the company monitors the company’s foreign currency transaction and
the scale of foreign assets and liabilities, and decreases exchange rate risk. During the current
year the company did not agree any forward foreign exchange contract or currency swap
contract .As at 31st December 2018, the company’s assets and liabilities dominated in foreign
currency are listed in RMB as following：
Items Closing Balance Opening balance
Monetary fund-USD 5,667,809.15 38,639,808.80
Monetary fund-JPY 2,567,812.86 33,114.00
Monetary fund-EURO 29,231.51 29,063.88
Monetary fund-GBP 161,967.04 1,920.54
Receivable- GBP 991,653.74 760,156.78
Receivable -USD 38,855,616.42 18,390,991.72
Receivable -JPY 4,984,342.22
Short term borrowing-USD 9,801,300.00
110
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Items Closing Balance Opening balance
Payables -USD 7,859,730.74 3,685,644.26
Payables -JPY 3,859,072.32 733,045.42
Payables - GBP 337,038.09 319,556.56
Dalian Refrigeration Company paid close attention to the effect on FX risk.
2) Interest rate risk
The interest risk of the Group incurred from bank loan, risk of a floating interest rate of financial
liabilities that lead to the company facing cash flow interest rate risk, financial liabilities with a fixed
interest rate lead to the company facing cash flow interest rate risk. The company determined the
proportion of fixed interest rate and floating interest rate according the current market circumstance. The
company and Dalian Bingshan Group Co.,Ltd borrowed long term 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 would make some adjustment to lower the interest rate risk according to the latest market
situation. Climbing interest rate will increase the cost of newly increased interest-bearing liability and
interest expense for unsettled interest-bearing liability at floating rate and have adverse effect on the
business performance.
The sensitive analysis：
As at 31st December 2018, base on the assumption of interest rate change of 50 BP, the company’s net
profit of year 2018 will increase or decrease1.2317 million Yuan.
3) Price risk
Dalian Refrigeration Company sells steel products according to the market price, so there will be effect
on the price variance.
(2)Credit risk
The credit risk of the company comes from monetary fund, notes receivable, accounts receivable, and
other accounts receivable 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 from financial institution.
The company made relevant policy to control credit risk exposure from receivable, other receivable and
111
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
notes receivable. 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. The company 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 31st December 2018, the top five customers of receivable accounts balance is
133,416,491.13Yuan.
(3) Liquidity risk
Liquidity risk was referred to the risk of shortage of funds incurred when the enterprise fulfill the
obligation of settlement by cash or other financial assets. The way to manage the liquidity risk is to
ensure enough fund available to fulfill the liability by due date in prevention from unacceptable loss of
or reputation damage to the Company. The Company periodically analyze the liability structure and
expiry date and the financial department of the company continued to monitors the short term or long
term capital needs to ensure maintain plenty of cash flow. And the same time they also monitor the
condition of bank loan agreements and obtain commitments from banks to reduce liquidity risks.
The main fund comes from bank loan. By December 31st, 2018, the credit limit still available is 430
million Yuan and short term credit limit available is 430 million Yuan.
As at 31st December 2018, the company’s financial assets and financial liabilities in line with non
discount cash flow of the contracts as following： Currency unity:10kYuan
Closing balance
Items Within 1 year 1-2 years 2-5 years Over 5 years Total
Financial Assets
Cash and cash in
34,302.65 34,302.65
bank
Notes receivable 17,129.20 17,129.20
Accounts receivable 110,754.66 110,754.66
Other Receivable 4,815.64 4,815.64
Available for sale
38,218.67
financial asset
Financial Liabilities
Short-term loan 25,000.00 25,000.00
Notes Payable 27,340.15 27,340.15
Accounts payable 85,948.96 85,948.96
112
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing balance
Items Within 1 year 1-2 years 2-5 years Over 5 years Total
Other payable 6,141.13 6,141.13
Employee’s payable 3,185.61 3,185.61
Tax payable 1,360.82 1,360.82
Dividend payable 53.32 53.32
Long-term loan 16,000.00
Bonds Payable 17,600.00 17,600.00
X. Disclosure of Fair Value
1. Amount and measurement level of the assets and liabilities measured at fair value at the year
end
Fair value at the year end
Items First level Second level Third level
measurement of measurement of measurement of Total
fair value fair value fair value
Financial assets
Continuously
measured at FV
Available for sale
available for sale
asset 369,195,071.40 369,195,071.40
(1) Investment by
debt instruments
(2) Investment by
equity instruments 369,195,071.40 369,195,071.40
(3) Others
2. Basis for Market price of first level measurement of fair value
Equity instrument portion of the available for sale financial assets is measured at the
unadjusted closing quoted price on stock market on December 28, 2018.
3. For continuous and discontinuous 2nd level of FV, valuation technique adopted and key
113
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
parameter quantitive and qualitive information.
None.
4. For continuous and discontinuous 3rd level of FV, valuation technique adopted and key
parameter quantitive and qualitive information.
None..
5. For continuous 3rd level of FV, adjusted information of opening and closing balance and
sensitivity analysis of unobservable parameter.
None
6. Assets continuously measured at fair value have switched among different level during the
year.
None
7. Changes of valuation technique and reasons for changes
None
8. Assets and liability are disclosed at FV rather than measured at FV
None
XI. Related Parties Relationship and Transactions
(I) Related parties relationship
1. Parent company and ultimate controller
(1) Parent company and ultimate controller
Parent Registered Business Registered Shareholding Voting
company address nature capital percentage power
(%) percentage
(%)
Dalian
Bingshan
Dalian Manufacture 158,580,000.00 19.98 19.98
Group Co.,
Ltd.
Note: Dalian Bingshan Group Co., Ltd. is a sino –foreign joint venture located No.106 Liaohe
East Road, Development Area, Dalian, China. The legal representative of Dalian Bingshan
114
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Group Co., Ltd. is Mr.Ji Zhijian, and the registered capital is RMB158.58 million. The
registered business operation period is from 3rd July 1985 to 2nd July 2035. The business scope
include research, development, manufacture, sales, service and installment of refrigeration
equipment, cooling and freezing equipment, different size of air-conditioners, petrochemical
equipment, electronic and electronic- control products, home electronic appliance,
environment protect equipment and etc. (unless the licenses needed)
(2) Change of registered capital of controlling shareholder
Controlling shareholder Opening balance Increase Decrease Closing balance
Dalian Bingshan Group 158,580,000.00 158,580,000.00
Co., Ltd.
(3) Change of proportion of controlling shareholder’s shareholding and equity
Shareholding amount Ratio of shareholding（%）
Controlling Closing balance Opening balance Ratio Ratio at
shareholder at year end beginning of
year
Dalian Bingshan
Group Co., Ltd. 170,916,934.00 170,916,934.00 19.98% 19.96%
2. Subsidiaries
Referring to the content in the Note VIII. 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 noteVIII. 3 ‘The
significant affiliated company and joint venture’. The company had transactions with related
parties during the current period or last period, including:
Names of the joint ventures or affiliated
Relationships with the Company
company
Panasonic Refrigeration (Dalian) Co., Ltd Affiliated company of the Company
Panasonic Cold-chain (Dalian) Co., Ltd Affiliated company of the Company
Panasonic Compressor (Dalian) Co., Ltd Affiliated company of the Company
Dalian Honjo Chemical Co., Ltd Affiliated company of the Company
Keinin-Grand Ocean Thermal Technology
Affiliated company of the Company
(Dalian) Co., Ltd
115
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Names of the joint ventures or affiliated
Relationships with the Company
company
Beijing Huashang Bingshan Refrigeration and
Affiliated company of the Company
Air-conditioning Machinery Co., Ltd
Dalian Fuji Bingshan Vending Machine Co.,
Affiliated company of the Company
Ltd
MHI Bingshan Refrigeration (Dalian) Co.,Ltd. Affiliated company of the Company
Dalian Fuji Iceberg Vending Machine Sales
Affiliated company of the Company
Co., Ltd
Jiangsu Jingxue Freezing Equipment Co., Ltd. Affiliated company of the Company
Panasonic Cooling Machine system (Dalian)
Affiliated company of the Company
co., Ltd
Dalian Bingshan Metal Technology Co.,Ltd Affiliated company of the Company
Wuhan Sikafu Power Control Equipment Co., Affiliated wholly owned subsidiary of the
Ltd Company
4. Other related parties
Name of related party Related party relationship
Dalian Bingshan Group Refrigeration Affiliated company of Dalian Bingshan
Equipment Co., Ltd Group
Affiliated company of Dalian Bingshan
Dalian Spindle Cooling Towers Co., Ltd
Group
Affiliated company of Dalian Bingshan
BAC (Dalian) Co., Ltd
Group
Dalian Pate Technology Co.,LTd Subsidiary of Dalian Bingshan Group
Dalian Bingshan Group Management
Subsidiary of Dalian Bingshan Group
Consulting Co., Ltd
Dalian Fuji Bingshan Intelligent Control System Affiliated company of Subsidiary of Dalian
Co., Ltd. Bingshan Group
Affiliated company of Subsidiary of Dalian
Dalian Bingshan Huigu Development Co., Ltd.
Bingshan Group
Dalian Bingshan Group Huahuida Financial Affiliated company of Subsidiary of Dalian
Leasing Co., Ltd Bingshan Group
(II) 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 2018 2017
Panasonic cold machine system Purchases of
(Dalian) co., Ltd goods 24,670,796.39 67,655,354.93
Panasonic Refrigeration (Dalian) Co., Purchases of
Ltd. goods 43,218,491.58 47,090,734.64
Purchases of
BAC (Dalian) Co., Ltd 45,572,758.35 41,865,711.10
goods
116
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Related party Content 2018 2017
Panasonic Cold-chain (Dalian) Co., Purchases of
Ltd goods 60,072,034.60 41,897,553.16
Jiangsu Jingxue Energy Saving Purchases of
Technology Co., Ltd. goods 8,179,886.68 28,938,719.21
Dalian Bingshan Group Refrigeration Purchases of
Equipment Co., Ltd goods 37,625,539.41 21,764,023.60
Beijing Huashang Bingshan
Purchases of
Refrigeration and Air-conditioning 11,965,812.07
goods
Machinery Co., Ltd.
Purchases of
Dalian Pate Technology Co.,LTd 7,176,638.43 4,927,599.77
goods
Dalian Spindle Cooling Towers Co., Purchases of
Ltd goods 6,998,403.46 3,680,841.01
Panasonic compressor (Dalian) Co., Purchases of
Ltd goods 203,264.80 2,576,209.40
Dalian Bingshan Metal Technology Purchases of
Co., Ltd goods 406,183.44 500,078.87
Purchases of
Dalian Honjo Chemical Co., Ltd. 74,102.56
goods
Dalian Fuji Bingshan Vending Purchases of
Machine Co., Ltd goods 456,410.26
Dalian Fuji Bingshan Intelligent Purchases of
Control System Co., Ltd. goods 674,528.28
Total 235,254,935.68 272,936,740.32
(2) Sales of goods/ labour services provision
Related party Content 2018 2017
Panasonic Cold-chain (Dalian) Co., Ltd Sales of goods 176,605,613.78 173,038,902.46
Panasonic Refrigeration (Dalian) Co.,
Sales of goods 101,207,395.30 107,638,666.72
Ltd.
Dalian Fuji Bingshan Vending Machine
Sales of goods 42,006,216.30 34,136,856.37
Co., Ltd
Panasonic Cold Machine system
Sales of goods 23,611,100.79 21,666,442.54
(Dalian) co., Ltd
MHI Bingshan Refrigeration (Dalian)
Sales of goods 9,891,321.54 21,470,860.07
Co.,Ltd.
Beijing Huashang Bingshan
Refrigeration and Air-conditioning Sales of goods 3,947,000.16 14,337,123.07
Machinery Co., Ltd.
Panasonic compressor (Dalian) Co., Ltd Sales of goods 13,460,146.51 7,496,076.45
Dalian Pate Technology Co.,LTd Sales of goods 3,011,326.99 2,180,488.20
117
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Related party Content 2018 2017
Keinin-Grand Ocean Thermal
Sales of goods 851,364.00 834,672.00
Technology (Dalian) Co., Ltd.
Dalian Fuji Iceberg Vending Machine
Sales of goods 701,334.64 806,414.75
Sales Co., Ltd
Jiangsu Jingxue Energy Saving
Sales of goods 388,876.29 676,308.07
Technology Co., Ltd.
BAC (Dalian) Co., Ltd Sales of goods 10,456,948.36 649,816.64
Dalian Bingshan Group Refrigeration
Sales of goods 3,709,869.31 649,621.22
Equipment Co., Ltd
Dalian Bingshan Huigu Development
Sales of goods 8,179,920.96 622,131.50
Company
Dalian Bingshan Group Huahuida
Sales of goods 6,070,260.04 358,332.87
Financial Leasing Co.,LTd
Dalian Spindle Cooling Towers Co., Ltd Sales of goods 430,939.11 284,680.37
Wuhan Sikafu Power Control Equipment
Sales of goods 184,040.96
Co., Ltd
Dalian Fuji Bingshan Intelligent Control
Sales of goods 603,448.33
System Co., Ltd
Total 405,133,082.41 387,031,434.26
2. Assets Lease
(1) Assets rent out
Category of assets 2018Lease 2017 Lease
Lessor Lessee
rent out Income Income
Dalian
Refrigeration Dalian Bingshan
Office 130,909.09 97,297.30
Company Group Co., Ltd.
Limited
Dalian MHI Bingshan
Refrigeration
Refrigeration Plant 4,000,000.00 4,000,000.00
Company
Limited (Dalian) Co.,Ltd.
Dalian Dalian Bingshan
Refrigeration Huigu
Office 7,438,049.60 4,400,000.00
Company Development
Limited Company
Dalian
Panasonic Employee
Refrigeration 79,127.27 19,617.73
Company Cold-chain (Dalian) dormitory
118
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Category of assets 2018Lease 2017 Lease
Lessor Lessee
rent out Income Income
Limited Co., Ltd
Dalian Panasonic
Refrigeration Employee
compressor 91,428.56 38,159.80
Company dormitory
Limited (Dalian) Co., Ltd
Dalian Panasonic
Refrigeration Employee
Company Refrigeration 77,837.84 60,900.69
dormitory
Limited (Dalian) Co., Ltd.
Dalian
Refrigeration Dalian Honjo Employee
Company 3,625.28
Chemical Co., Ltd dormitory
Limited
Dalian
Bingshan
Lingshe Jiangsu Jingxue
Quick Energy Saving
Plant and office 921,083.40 462,870.00
Freezing Technology Co.,
Equipment Ltd.
Co., Ltd
Note: Dalian Refrigeration Company signed leasing contract with Dalian Bingshan
Group and rented out 576squre meter office to Dalian Bingshan group from April 1st,
2017 to March 31st, 2019 with annual lease premium of 144,000Yuan.
On 31st July,2014, the company signed supplemental rental contract with MHI Bingshan
Refrigeration (Dalian) Co.,Ltd., and rent out # 6 building of workshop located 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 metres, and annual rent is
RMB 4.2 million with the expiry date on 16th July, 2029.
The company signed rental contract with Dalian Bingshan Huigu Development Company, and
rent out the old plant and land located in No.888, South West RD, Shahekou District, Dalian to
Dalian Bingshan Huigu Development Company from April 1st, 2017 to December 31, 2036. The
land area is 167,165.61 square metres and the housing area is 105,652.43 square metres, and the
rent for 2018 was 7.86 million Yuan.
(2) Assets under lease
119
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Category of 2018 Lease 2017 Lease
Lessor Lessee
assets rent in fees fees
Dalian Bingshan Dalian Refrigeration
Office, etc 106,290.00 106,290.00
Group Co. Company Limited
Dalian Bingshan Dalian Refrigeration
Land 94,943.33 162,760.00
Group Co. Company Limited
3. Warranty provided by Related Parties
The national development fund planned to support the company’s intelligent and green
equipment of cold chain and service industry base project, and provide the special fund to the
controlling shareholder of the company, Bingshan Group. Please refer to the “ Note VI.23 long
term borrowings”
4. Funds borrow from /lent to related party
Name of the Take Starting Ending Explanatio
Amount
related party in/out date date n
Project
Dalian Bingshan
Take in 160,000,000.00 2016.03.14 2026.03.13 fund
Group Co., Ltd.
investment
Total 160,000,000.00
The national development fund planned to support the company’s intelligent and green
equipment of cold chain and service industry base project, and provide the special fund to the
controlling shareholder of the company, Bingshan Group in 2016. After the above funds are in
place, Bingshan Group will allocate them to the company in full and without any additional
charge. The above special fund is 0.16 billionYuan in total, the loan interest is fixed interest rate
at 1.2% annual rate and paid interest 1,946,666.67Yuan for 2018.
5. Management Remuneration
Item 2018 2017
Total remuneration 3,781,400.00 3,507,800.00
(III) Balances with Related party
1.Accounts receivable due from related parties
Closing Balance Opening Balance
Item Related party Book Bad debt Book Bad debt
Balance Provision Balance Provision
Accounts BAC (Dalian)
Co., Ltd 2,289,340.93 114,467.05 682,000.00 34,100.00
receivable
120
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance Opening Balance
Item Related party Book Bad debt Book Bad debt
Balance Provision Balance Provision
Accounts Beijing Huashang
Bingshan
receivable Refrigeration and
Air-conditioning 13,484,313.93 2,194,502.13 8,913,856.35 524,792.82
Machinery Co.,
Ltd
Accounts Dalian Fuji
Bingshan Vending 6,255,865.97 312,793.30 5,296,495.78 264,824.79
receivable Machine Co., Ltd.
Accounts Dalian Spindle
Cooling Towers 67,486.00 3,374.30 19,500.00 975.00
receivable Co., Ltd
Accounts MHI Bingshan
Refrigeration 2,301,963.32 115,098.17 3,943,798.07 197,189.90
receivable (Dalian) Co.,Ltd.
Accounts Panasonic Cold
Machine system 4,933,468.75 246,673.44 1,011,420.13 50,571.01
receivable (dalian) Co., Ltd
Accounts Panasonic Cold
Chain (Dalian) 20,911,809.84 1,045,590.49 31,120,658.05 1,579,384.35
receivable Co., Ltd
Accounts Panasonic
Compressor 1,556,496.87 77,824.84 93,510.28 4,675.51
receivable (Dalian) Co., Ltd
Accounts Panasonic
Refrigeration 7,040,959.98 352,048.00 2,329,505.72 116,475.29
receivable (Dalian) Co., Ltd
Accounts Wuhan Sikafu
Power Control
receivable Equipment Co., 317,331.82 19,483.28 77,975.80 3,898.79
Ltd
Accounts Dalian Fuji
Bingshan
receivable Intelligent 280,000.00 14,000.00
Control System
Co., Ltd.
Accounts Dalian Bingshan
Group Huahuida
receivable Financial Leasing 1,935,465.61 96,773.28
Co., Ltd..
Accounts Dalian Bingshan
Huigu
receivable Development Co., 700,000.00 35,000.00
Ltd.
Wuhan Sikafu
Other Power Control
receivable Equipment Co., 251,993.71 12,599.69 10,817.95 540.90
Ltd
121
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance Opening Balance
Item Related party Book Bad debt Book Bad debt
Balance Provision Balance Provision
Beijing Huashang
Bingshan
Other Refrigeration and
receivable Air-conditioning 108,307.06 7,163.99
Machinery Co.,
Ltd
Panasonic Cold
Other
Chain (Dalian) 89,016.00 4,450.80
receivable
Co., Ltd
Jiangsu Jingxue
Energy Saving
Prepayment 60,214.80 782,768.00
Technology Co.,
Ltd.
Dalian Spindle
Prepayment Cooling Towers 37,956.00
Co., Ltd
Panasonic
Prepayment compressor 80.00
(Dalian) Co., Ltd
Panasonic
Prepayment Refrigeration 5,052,007.00 460,620.00
(Dalian) Co., Ltd
Panasonic Cold
Prepayment Machine system 2,373.00
(dalian) Co., Ltd
Dalian Bingshan
Group Huahuida
Prepayment 3,650,105.00
Financial Leasing
Co., Ltd..
Notes BAC (Dalian)
Co., Ltd 441,001.03
receivable
Notes Panasonic Cold
Machine system 4,210,388.96 53,989.08
receivable (dalian) Co., Ltd
Notes Panasonic Cold
Chain (Dalian) 50,565,030.10 54,495,058.38
receivable Co., Ltd
Notes Panasonic
Refrigeration 11,686,954.09 14,031,393.19
receivable (Dalian) Co., Ltd
Notes Dalian Fuji
Bingshan Vending 1,182,028.15
receivable Machine Co., Ltd
Notes Dalian Spindle
Cooling Towers 39,064.75
receivable Co., Ltd
122
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance Opening Balance
Item Related party Book Bad debt Book Bad debt
Balance Provision Balance Provision
Notes MHI Bingshan
Refrigeration 1,711,379.41
receivable (Dalian) Co.,Ltd.
Notes Panasonic
compressor 1,182,680.29
receivable (Dalian) Co., Ltd
2. Accounts Payable due from Related Party
Item Related party Closing Balance Opening Balance
Accounts Payable BAC Dalian Co., Ltd 9,295,740.00 6,078,640.00
Dalian Bingshan Group
Accounts Payable 6,137,617.64 11,799,186.85
Refrigeration Equipment Co., Ltd.
Dalian Bingshan Pate Technology
Accounts Payable 1,551,409.98 5,124,646.22
Co.,Ltd
Dalian Fuji Bingshan Vending
Accounts Payable 134,547.35 983.82
Machine Co., Ltd.
Dalian Spindle Cooling Towers
Accounts Payable 2,562,898.70 7,544,866.00
Co., Ltd
Jiangsu Jingxue Energy Saving
Accounts Payable 13,774,809.38 14,043,679.12
Technology Co., Ltd.
Dalian Fuji Bingshan Intelligent
Accounts Payable 295,000.00
Control System Co., Ltd.
Dalian Fuji Bingshan Vending
Accounts Payable 414,000.00
Machine Sales Co., Ltd.
Panasonic Cold machine system
Accounts Payable 31,395,663.27 20,582,489.66
(Dalian) Co., Ltd
Panasonic Cold Chain (Dalian)
Accounts Payable 3,861,712.32 13,180,390.70
Co., Ltd
Panasonic Compressor (Dalian)
Accounts Payable 1,696,000.00 1,696,000.00
Co., Ltd
Panasonic Refrigeration (Dalian)
Accounts Payable 6,409,209.89 644,319.10
Co., Ltd.
Dalian Bingshan Metal
Accounts Payable 142,587.67
Technology Co., Ltd
Beijing Huashang Bingshan
Accounts
Refrigeration and
Received in 399,609.61
Air-conditioning Machinery Co.,
Advance
Ltd
Accounts
Dalian Bingshan Huigu
Received in 1,100,000.00
Development Co.,Ltd
Advance
Accounts
Dalian Bingshan Group
Received in 50,000.00
Refrigeration Equipment Co., Ltd.
Advance
123
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Related party Closing Balance Opening Balance
Accounts
Panasonic Cold machine system
Received in 23,267.70 90,360.00
(Dalian) Co., Ltd
Advance
Accounts
Keinin-Grand Ocean Thermal
Received in 59,596.18
Technology (Dalian) Co., Ltd
Advance
Notes Payable BAC (Dalian) Co., Ltd 30,200,000.00 47,469,964.10
Dalian Bingshan Group
Notes Payable 26,838,133.04 7,812,262.79
Refrigeration Equipment Co., Ltd.
Dalian Bingshan Metal
Notes Payable 474,736.39
Technology Co., Ltd
Dalian Bingshan Pate Technology
Notes Payable 2,021,735.79 1,503,294.01
Co.,Ltd
Jiangsu Jingxue Energy Saving
Notes Payable 411,909.94 4,860,000.00
Technology Co., Ltd.
Panasonic Cold Chain (Dalian)
Notes Payable 1,657,321.00
Co., Ltd
Dalian Spindle Cooling Towers
Notes Payable 6,256,661.88
Co., Ltd
Panasonic Cold machine system
Notes Payable 8,334,675.20
(Dalian) Co., Ltd
(IV) Related Party Commitment
None
XII. Share-Based Payment
1． General situation of share payment
Items Situation
Total equity instruments granted by the company during none
the period
Total equity instruments exercised by the company none
during the period
Total equity instruments invalid by the company during 8,955,840.00
the period
The scope of the exercise price of the share options
issued by the company at the year end and the
remaining term of the contract
The scope of the exercise price of other equity and the
remaining term of the contract at the year end
124
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Note: (1) In accordance with “Restricted Share Incentive Plan (draft)’ in 2016 and the 3 rd
extraordinary shareholder’s meeting in 2017, incentive objective, Liu Jie, Meng Yunchan, Fang
Zheng, Di Jun, Zhang guanghui 5 persons resigned, therefore, they are not entitled for share
incentive. These 5 persons were granted for 413,000 numbers of shares in total. In accordance
with “dividend distribution plan of 2016”, based on the total number of 611,776,558shares,
every 10 shares will be granted for 4 new shares from capital reserve transfer. After transfer,
sum of the unlocked restricted shares granted to these 5 persons is 578,200. On December 8,
2017, the 17th meeting of 7th generation of directors board and the 14th meeting of 7th generation
of supervisors board approved “Amendment of share buyback plan of Restricted Share
Incentive Plan in 2016”and “Approval of writing off bought back shares within the Restricted
Share Incentive Plan in 2016”, the Company bought them back and has written off the account.
Share buyback is planned to be settled by self financing and the sum of buy back price is
2,279,264.40 Yuan.
(2) On May 4, 2018, the 21st meeting of 7th generation of directors board and the 16th meeting of
7th generation of supervisors board approved “Proposal on unlocking the third unlocking period
of Restricted Share Incentive Plan in 2015”, “Amendment of share buyback plan of Restricted
Share Incentive Plan in 2015” and “Approval of writing off bought back shares within the
Restricted Share Incentive Plan in 2015”. The total number of incentives objectives meeting this
unlocking condition is 39 heads. The number of restricted stocks that can be applied for
unlocking and listing is 5,919,606 numbers of shares, representing 0.692% of the total share
capital of the company at the end of 2018. According to the resolution above, the company
decided to cancel the qualifications of two incentives and repurchase and write off all the
restricted stocks that have been granted but not yet unlocked. The total number of shares
repurchased is 474,894 shares. The completion date of writing off bought back is May 30, 2018.
The funds used to pay for the repurchase of restricted stock are the company's self-owned funds,
and the total repurchase price is 1,166,814.54 Yuan.
(3) On December 10, 2018, the 25th meeting of 7th generation of directors board approved
“Proposal on Termination of Implementation of the 2016 Restricted Stock Incentive Plan and
Repurchase of Related Restricted Stocks”. Due to the recent changes in the macro economy and
market environment, the company's stock price fluctuated greatly. The company believes that it
is difficult to achieve the expected incentive purpose and effect by keeping implementing the
2016 restricted stock incentive plan. After prudent consideration by the board of directors, it was
decided to terminate the implementation of the 2016 restricted stock incentive plan and
125
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
repurchase and write off the restricted 12,221,580 numbers of shares that have been granted but
yet unlocked.
2． Share payment settled by equity
Items Situation
According to the fair value of restricted
Method for determining the fair value of the equity
stock on granted date (the fair value
instruments granted
changes after the grant date is uncertain)
The basis for determining the quantities of exercised Determined by the actual numbers of
equity instruments share exercised
The reasons for the significant difference between this
None
year’s estimation and last year’s estimation
The cumulative amount of capital reserve which includes
41,714,921.09
share payment settled by equity
Total cost of share payment recognized by equity
5,226,245.60
settlement this year
1) The Situation of Granted Restricted Share in 2015
According to the 13th meeting of the 6th generation of board, the 1st interim shareholders’
meeting and the rules of ‘Restricted Share Incentive Plan (draft)’, the Company granted
10,150,000 numbers of restricted shares to 41 incentive targets by offering incentive targets ‘A’
original shares. The granted price is 5.56yuan per share, and the total capital raised is
56,434,000.00Yuan. The Company’s incentive targets include the directors, middle and senior
management personnel and other key personnel supposed to incent who held office when the
‘Share Incentive Plan’ was announced, but excluding the supervisors, the independent directors,
foreign directors and foreign management personnel. The 15th meeting of board of 6th generation
held on 4th March 2015 approved the ‘The Report Regarding Granting Incentive Targets
Restricted Shares’, which agrees to grant 10,150,000 numbers of restricted shares to 41
incentive targets, and set 4th March 2015 as share granted date.
2) The Situation of Granted Restricted Share in 2016
According to the 9th meeting of 7th generation of directors, the 3rd interim shareholders’ meeting
and the rules of ‘Restricted Share Incentive Plan (draft)’, the Company granted 12,884,000
numbers of restricted shares to 118 incentive targets by offering incentive targets ‘A’ original
shares. The granted price is 5.62yuan per share, and the total capital raised is
72,480,080.00Yuan. The Company’s incentive targets include the directors, middle and senior
126
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
management personnel and other key personnel supposed to incent who held office when the
‘Share Incentive Plan’ was announced, but excluding the supervisors, the independent directors,
foreign directors and foreign management personnel. The 9th meeting of board of 7th
generation held on 20th September 2016 approved the ‘The Report Regarding Granting
Incentive Targets Restricted Shares’, which agrees to grant 12,884,000 numbers of restricted
shares to 118 incentive targets, and set 20th September 2016 as share granted date.
3) The Situation of Unlocking Restricted Shares in 2016
The 4th meeting of the 7th generation of board held on 13th April 2016 approved the ‘Proposal for
unlocking in restricted share options incentive plan for the first unlocking-in period’. There
were 41 incentive targets who satisfied the requirements of unlocking- in, and the number of the
restricted shares can apply unlocking in to have listed and circulated is 3,045,000 that account
representing 0.50% of the Company’s total shares at the year end.
The 4th meeting of the 7th generation of director board approved “proposal for the 2nd
unlocking period of restricted share incentive plan”. Objectives qualifying for the unlocking
conditions are 41 persons, based on the “Profit distribution scheme of 2015”, every 10 share
capital will granted for 5 new shares by transferring from capital reserve. After transferring to
share capital, 6,090,000 numbers of restricted shares will be applied to unlocking condition and
can be listed in the market, representing 0.71% if total of share capital.
The 17th meeting of the 7th generation of director board approved “proposal of 1st unlocking
period of restricted share incentive plan in 2016”. Objectives qualifying for the unlocking
conditions are 113 persons, based on the “Profit distribution scheme of 2016”, every 10 share
capital will granted for 4 new shares by transferring from capital reserve. After transferring to
share capital, 5,237,820 numbers of restricted shares will be applied to unlocking condition and
can be listed in the market, representing 0.61% if total of share capital.
On May 4, 2018, the 21st meeting of 7th generation of directors board and the 16th meeting of 7th
generation of supervisors board approved “Proposal on unlocking the third unlocking period of
Restricted Share Incentive Plan in 2015”, “Amendment of share buyback plan of Restricted
Share Incentive Plan in 2015” and “Approval of writing off bought back shares within the
Restricted Share Incentive Plan in 2015”. The total number of incentives objectives meeting this
unlocking condition is 39 heads. The number of restricted stocks that can be applied for
unlocking and listing is 5,919,606 numbers of shares, representing 0.692% of the total share
capital of the company at the end of 2018.
3． Termination or modification of share payment
127
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
On December 10, 2018, the 25th meeting of 7th generation of directors board and the 16th
meeting of 7th generation of supervisors board approved “Proposal on Termination of
Implementation of the 2016 Restricted Stock Incentive Plan and Repurchase of Related
Restricted Stocks”. Due to the recent changes in the macro economy and market environment,
the company's stock price fluctuated greatly. The company believes that it is difficult to achieve
the expected incentive purpose and incentive effect by continuing to implement the 2016
restricted stock incentive plan. After careful study by the board of directors, it was decided to
terminate the implementation of the 2016 restricted stock incentive plan and repurchase and
write off the restricted 12,221,580 shares that have been granted but yet unlocked. It accounted
for 1.43% of the company's total share capital at the end of 2018, and the repurchase price was
3.892 yuan/share. On February 26, 2019, the company repurchased and wrote off the restricted
stock mentioned above.
XIII. Contingency
As at 31 December 2018, the Group does not have any other contingencies for disclosure.
XIV. Commitment
As at 31 December 2018, the Group does not have any other significant commitments.
XV. Events after the Balance Sheet Date
1. Significant events had not adjusted
None..
2. Information about profit distribution
The 3rd meeting of the 8th generation of board was held on 19th April 2019 and approved the
profit distribution policy for the year of 2018, extracting 20% of the free surplus reserves and
based on 843,212,507.00 numbers of share in total, paying out cash dividend of 0.5Yuan for
every 10 shares (before tax) and cash dividend of B shares are paid in Hong Kong dollars.
3. Sales Return
There is no significant sales return after the balance sheet date.
4. Except the subsequent event disclosed above, the Company has no other significant
subsequent event.
XVI. Other Significant Events
1. Error correction and effect in previous period.
128
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
None
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 and the subsidiaries registered in Dalian. The Central is the
subsidiary of the Company, Wuhan New World Refrigeration Industrial Co., Ltd and its
subsidiary, Wuhan New World Air-conditioning Refrigeration Engineering Co., Ltd , Wuhan
Lanning, and Chengdu Bingshan. The East is the subsidiaries of the Company, and they are
Ningbo Bingshan Air-conditioning Refrigeration Engineering Co., Ltd and Shanghai Bingshan
Technical Service Co., Ltd.
(1) The basis and accounting policies of reporting segments
The internal organization structure, management requirements and internal report scheme are
the determination basis for the Company to set the operating segments. The segments
are those satisfied the following requirements.
1).The segment can generates revenue and incur expenses.
2).The management personnel can regularly evaluate the operation results of segments and
allocate resource ,assess its performance .
3).The financial situation, operation results, cash flow and other accounting information of
segments can be acquired.
129
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The Company confirms the report segments based on the operating segments. The transfer price
among segments is set base on the market price. The assets and related expenses in common use
are allocated to different segments based on their proportion of revenue.
(2)The financial information of reporting segments
Amount unit ：Ten thousands Yuan
2018
Items Northeast Central
East China Offset Total
China China
1 Operating income 246,866.47 37,284.66 4,392.84 -91,937.51 196,606.46
2 Cost 257,601.50 36,939.39 4,494.76 -91,937.51 207,098.14
Impairment on assets 2,096.31 836.70 -40.15 2,892.86
Depreciation and
6,242.11 1,142.43 13.04 7,397.58
amortization
3 Investment income from
13,794.96 -50.91 13,744.05
associates and joint venture
4 Operating profits(loss) 13,358.84 567.89 -96.22 -1,942.83 11,887.68
5 Income tax 532.84 129.87 23.13 685.84
6 Net profit(loss) 12,825.99 438.02 -119.35 -1,942.83 11,201.83
7 Total assets 593,062.49 65,158.97 3,638.31 -105,031.82 556,827.95
8 Total liabilities 214,398.25 39,456.54 2,195.80 -45,065.63 210,984.96
7. Other important transactions and matters affect the investor's decision
The company hasn’t had other important transactions and matters affect the investor's decision
in this period.
XVII. Notes to the Main Items of the Financial Statements of Parent Company
1. Notes receivable & Accounts receivable
Item Closing Balance Opening Balance
Notes receivable 63,673,648.65 57,455,446.82
Accounts receivable 418,715,646.60 356,557,956.93
Total 482,389,295.25 414,013,403.75
1.1 Notes receivable
(1) Notes receivable category
Item Closing Balance Opening Balance
Bank acceptance notes 4,104,269.00 7,831,005.00
130
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Closing Balance Opening Balance
Commercial acceptance notes 59,569,379.65 49,624,441.82
Total 63,673,648.65 57,455,446.82
(2) Notes receivable endorsed or discounted but not mature at the end of year
Closing amount no more Closing amount still
Item
recognized recognized
Bank acceptance notes 100,322,068.84
Commercial acceptance notes 318,300.00
Total 100,640,368.84
1.2 Accounts receivable
(1) Accounts receivable category
Closing Balance
Item Booking balance Provision Booking
Amount % Amount % balance
Accounts
receivable with
significant
individual amount
and separate bad
debt provision
Accounts
receivable with bad
debt provision
479,639,088.92 100.00 60,923,442.32 12.70 418,715,646.60
based on the
characters of credit
risk portfolio
Accounting age as
218,079,693.09 45.47 60,923,442.32 27.94 157,156,250.77
characters
Related party
within
261,559,395.83 54.53 261,559,395.83
consolidation
scope
Accounts
receivable with
insignificant
individual amount
and separate bad
debt provision
Total 479,639,088.92 100.00 60,923,442.32 12.70 418,715,646.60
131
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(Continued)
Opening Balance
Item Booking balance Provision Booking
Amount % Amount % balance
Accounts receivable
with significant
individual amount
and separate bad
debt provision
Accounts receivable
with bad debt
provision based on 414,554,206.31 100.00 57,996,249.38 13.99 356,557,956.93
the characters of
credit risk portfolio
Accounting age as
230,841,994.64 55.68 57,996,249.38 25.12 172,845,745.26
characters
Related party within
183,712,211.67 44.32 183,712,211.67
consolidation scope
Accounts receivable
with insignificant
individual amount
and separate bad
debt provision
Total 414,554,206.31 100.00 57,996,249.38 13.99 356,557,956.93
1) The bad debt provisions of accounts receivable in the portfolio is accrued under
accounting aging analysis method:
Closing Balance
Aging Provision for bad Drawing Proportion
Accounts receivable
debts (%)
Within 1 year 90,839,096.71 4,541,954.84 5
1-2 years 52,895,474.55 5,289,547.46 10
2-3 years 16,586,433.14 4,975,929.94 30
3-4 years 18,010,575.64 9,005,287.82 50
4-5 years 13,186,953.94 10,549,563.15 80
Over 5 years 26,561,159.11 26,561,159.11 100
Total 218,079,693.09 60,923,442.32
132
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(2) Bad debt provision accrued and reversed (withdraw) during the year.
The bad debt provision has been accrued in the amount of 4,476,494.58 Yuan, during the
report period, bad debt provision is recollected of 469,366.10Yuan.
(3) No accounts receivable written off in current period.
Item Written off amount
Receivable actually written off 2,018,667.74
(4) The top five significant accounts receivable categorized by debtors
Closing
% of the
Company Closing Balance Aging Balance of
total AR
Provision
Xinyi Yuanda Construction Within 1 year,
and Installation Engineering 32,748,744.00 1-2 years, 6.83 5,357,592.61
Co., Ltd. 2-3 years
Ningxia Wangwa Coal 29,002,800.00 Within 1 year 6.05 1,450,140.00
Guangzhou Fuli Estate Within 1 year,
Co.,Ltd 19,324,261.21 1-2 years 4.03 1,300,713.06
Yangmei Fengxi Fertilizer 16,700,000.00 1-2 years 3.48 1,670,000.00
Jilin Changjitu Development Within 1 year,
&Construction Co.,Ltd 13,080,000.00 1-2 years 2.73 754,000.00
Total 110,855,805.21 23.12 10,532,445.67
2. Other Receivables
Item Closing Balance Opening Balance
Interest receivable 318,886.12 1,871,783.33
Dividend receivable
Other receivable 13,684,383.22 2,822,798.03
Total 14,003,269.34 4,694,581.36
2.1 Interest receivable
(1) Interest receivable category
Item Closing Balance Opening Balance
Interest on Term deposits 318,886.12 921,783.33
Interest on Bank financial product 950,000.00
Total 318,886.12 1,871,783.33
2.2 Other receivable
(1) The category of other receivables
133
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance
Items Booking balance Provision Booking
Amount % Amount % balance
Other receivables with
significant individual
- - - - -
amount and separate bad
debt provision
Other receivables with bad
debt provision based on the
15,380,582.50 100.00 1,696,199.28 11.03 13,684,383.22
characters of credit risk
portfolio
Other receivables with
insignificant individual
amount and separate bad
debt provision
Total 15,380,582.50 100.00 1,696,199.28 11.03 13,684,383.22
(Continued)
Opening Balance
Items Booking balance Provision Booking
Amount % Amount % balance
Other receivables with
significant individual
amount and separate
bad debt provision
Other receivables with
bad debt provision
3,605,280.13 100.00 782,482.10 21.70 2,822,798.03
based on the characters
of credit risk portfolio
Other receivables with
significant individual
amount and separate
bad debt provision
Total 3,605,280.13 100.00 782,482.10 21.70 2,822,798.03
1) The bad debt provisions of other receivables in the portfolio is accrued under accounting
aging analysis method
134
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance
Aging Provision for bad Drawing Proportion
Other receivables
debts (%)
Within 1 year 12,411,089.50 620,554.48 5.00
1-2 years 140,928.00 14,092.80 10.00
2-3 years 2,430,000.00 729,000.00 30.00
3-4 years 50.00
4-5 years 330,065.00 264,052.00 80.00
Over 5 years 68,500.00 68,500.00 100.00
Total 15,380,582.50 1,696,199.28 —
(2) Bad debt provision accrued and reversed (withdraw) during the year.
The bad debt provision has been reversed by 913,717.18Yuan.
(3) Other receivables categorized by nature
Nature Closing Balance Opening Balance
Equity transfer fund 8,588,400.00
Petty cash 23,050.50 74,915.50
Guarantee deposits 6,681,152.00 3,501,260.43
Others 87,980.00 29,104.20
Total 15,380,582.50 3,605,280.13
(4) Other receivables from the top 5 debtors
Closing
Closing % of the
Name Category Aging Balance of
Balance total OR
Provision
Liaoning Mike Equity Within 1
Group transfer fund 8,588,400.00 year 55.84 429,420.00
Dalian Delta H
Security 2-3 years,
K China Gas C 2,730,000.00 17.75 969,000.00
deposit 4-5 years
o., Ltd.
Security Within 1
Army 63833 1,600,000.00 10.40 80,000.00
deposit year
Huaxia Hanhua
Security Within 1
Chemical Equip 800,000.00 5.20 40,000.00
deposit year
ment Co., Ltd.
Liaoning Jingwei
Engineering Ma
Security Within 1
nagement Co., L 800,000.00 5.20 40,000.00
deposit year
td. Dalian Branc
h
135
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing
Closing % of the
Name Category Aging Balance of
Balance total OR
Provision
Total 14,518,400.00 94.39 1,558,420.00
136
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
3. Long-term equity investments
(1) Category of long-term equity investments
Closing Balance Opening Balance
Item
Closing Balance Provision Book Value Opening Balance Provision Book Value
Investment of subsidiaries 587,496,652.08 587,496,652.08 487,496,652.08 487,496,652.08
Investment of affiliates
1,614,457,190.34 1,614,457,190.34 1,556,941,899.80 1,556,941,899.80
and JV
Total 2,201,953,842.42 2,201,953,842.42 2,044,438,551.88 2,044,438,551.88
(2) Investments of subsidiaries
Subsidiaries names Opening Balance Increase Decrease Closing Balance
Dalian Bingshan Group Construction Co., Ltd 93,749,675.77 93,749,675.77
Dalian Bingshan Group Sales Co., Ltd 20,722,428.15 20,722,428.15
Dalian Bingshan Air-Conditioning Equipment
Co., Ltd 36,506,570.00 36,506,570.00
Dalian Bingshan Jiade Automation Co., Ltd 6,872,117.80 6,872,117.80
Dalian Bingshan Lingshe Quick Freezing
Equipment Co., Ltd 59,356,051.19 59,356,051.19
Dalian Niweisi LengNuan Technology Co.,
Ltd 48,287,589.78 48,287,589.78
Wuhan New World Refrigeration Industrial
Co., Ltd 84,674,910.81 100,000,000.00 184,674,910.81
Bingshan Technical Service （ Dalian ）
Co.,Ltd. 22,024,000.00 22,024,000.00
137
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Subsidiaries names Opening Balance Increase Decrease Closing Balance
Dalian Xinminghua Electronics Co., Ltd. 43,766,243.72 43,766,243.72
Dalian Bingshan International Trading
Co.,Ltd 71,537,064.86 71,537,064.86
Total 487,496,652.08 100,000,000.00 587,496,652.08
(3) Joint ventures& affiliated companies
Increase/Decrease
Gains and Provision
Provision
losses Adjustment of Change for
Beginning Cash bonus or for
Investee recognized other s of impairment Ending balance
balance Increased Decreased profits Others impairment
under the comprehensive other of the
announced at year end
equity income equity current
method period
1. Affiliated companys
Panasonic Refrigeration
(Dalian) Co., Ltd. 161,817,616.82 16,473,241.56 3,000,000.00 175,290,858.38
Panasonic Cold-chain
(Dalian) Co., Ltd 227,050,807.57 11,171,813.19 6,000,000.00 232,222,620.76
Panasonic Compressor
(Dalian) Co., Ltd 490,004,241.55 41,722,233.04 47,826,800.00 483,899,674.59
Dalian Honjo Chemical
Co., Ltd 9,113,011.88 631,746.15 912,160.20 8,832,597.83
Keinin-Grand Ocean
Thermal Technology 57,604,812.32 9,345,875.45 5,200,000.00 61,750,687.77
(Dalian) Co., Ltd
Beijing Huashang
Bingshan Refrigeration
and Air-conditioning 1,431,141.16 -163,001.57 1,268,139.59
Machinery Co., Ltd
Dalian Fuji Bingshan
Vending Machine Co., 179,841,223.64 8,416,237.11 188,257,460.75
138
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Increase/Decrease
Gains and Provision
Provision
losses Adjustment of Change for
Beginning Cash bonus or for
Investee recognized other s of impairment Ending balance
balance Increased Decreased profits Others impairment
under the comprehensive other of the
announced at year end
equity income equity current
method period
Ltd
MHI Bingshan
Refrigeration (Dalian) 13,359,504.81 423,834.55 13,783,339.36
Co.,Ltd.
Dalian Fuji Iceberg
Vending Machine Sales 12,042,441.30 1,731,826.59 13,774,267.89
Co., Ltd
Jiangsu Jingxue Freezing
Equipment Co., Ltd. 166,092,058.74 14,717,114.30 5,842,400.00 174,966,773.04
Panasonic cold machine
system (Dalian) Co., Ltd 27,824,664.42 5,004,924.40 2,108,000.00 30,721,588.82
Bingshan Metal
Technical Service 163,116,631.47 28,821,912.86 19,344,983.17 172,593,561.16
（Dalian） Co.,Ltd.
Dalian Bingshan Group
Mangement and 47,643,744.12 9,800,000.00 -348,123.72 57,095,620.40
Consulting Company
Total 1,556,941,899.80 9,800,000.00 137,949,633.91 90,234,343.37 1,614,457,190.34
Note: (1) At the 22nd meeting of the 7th generation of board of directors was held on August 24th, 2018, the company approved to jointly inject the capital of Dalian
Bingshan Group Mangement and Consulting Company with Dalian Bingshan Group Co., Ltd. in monetary terms. The capital increased amount is 100 million Yuan,
which is paid by the shareholders in accordance with the original capital contribution ratio. The company holds 49% of the equity of Dalian Bingshan Group
Mangement and Consulting Company and pays 49 million Yuan. 9.8 million Yuan has been paid before October 31, 2018, and the remaining 39.20 million Yuan shall
be paid within 20 years. The company has transferred the first payment to the company account of Dalian Bingshan Group Mangement and Consulting Company on
October 22, 2018.
139
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(2) At the 23rd meeting of the 7th generation of board of directors was held on October 26th, 2018, the company decided to increase the capital of Wuhan New World
Refrigeration Industrial Co., Ltd. by 100 million Yuan. After the capital increase, the registered capital of Wuhan New World Refrigeration Industrial Co., Ltd. will
increase from 100 million Yuan to 200 million Yuan.
140
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
4. Operating revenue and cost
Item 2018 2017
Revenue Cost Revenue Cost
Revenue from main
548,705,260.10 493,112,549.07 595,981,322.69 495,403,921.28
operation
Revenue from other
26,631,232.06 15,113,793.41 20,778,557.97 12,256,853.32
operation
Total 575,336,492.16 508,226,342.48 616,759,880.66 507,660,774.60
5. Investment income
Items 2018 2017
Long-term equity investment gain under equity method 137,949,633.91 141,879,121.47
Gain from disposing long-term equity investment 263,666.08
Gain from holding of available for sale financial assets 11,139,558.00 11,463,569.05
Gain from disposal financial assets available for sale 66,702,217.88 27,467,019.93
Long-term equity investment gain under cost method 19,428,324.73 17,365,100.59
Total 235,219,734.52 198,438,477.12
XVIII. Approval of Financial Statements
The parent and consolidated financial statements of the Company were approved by the Board
of Directors of the Group on April 19, 2019.
141
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Supplementary Information to the Financial Statements
1. Non-operating profit or loss
In accordance with the provisions of the China Securities Regulatory Commission,
"Interpretation of Information Disclosure of Companies That Offer Securities to the Public
No. 1 - Non-recurring Gains and Losses (2008)", the company's 2018 annual non-recurring
gains and losses are as follows:
Items 2018 Notes
Gain or loss from disposal of non-current assets 374,143.29
Override, no formal approval or accidental tax refund ,deduction or
exemption
Government grants recorded into profit or loss during current period 8,124,911.87
Expenses for using funds from non financial institution recognized
in current profit/loss
Gains from acquisition of subsidiary or associates when initial cost
is less than the fair value of identifiable net asset of invested 1,070,288.17
company
Profits/loss from non monetary assets exchange
Profits/loss from investments or management of assets entrusted by
others
Assets impairment provision accrued due to force majeure, e.g.:
suffering natural disasters
Profit or loss from debts restructuring
Expenses of enterprise restructuring
Gain/loss on excessive part from the transaction where the trading
price is obviously unfair.
Net gain/loss of subsidiary from combination under same control
between the beginning of year and consolidation date.
Gains/ loss from contingencies arising from the normal business of
the Company
Gain/loss from change of fair value by holding or disposing the
tradable financial asset and liabilities, and available for sale
66,702,217.88
financial assets, other than effective hedging in relation to the
company’s normal business
142
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2018
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Items 2018 Notes
Reversal of impairment provision of accounts receivable separately
tested for impairment
The profits/loss from external entrusted fund
Investment property subsequently measured at fair value
The profits/gains from changes of fair value
Effects of gain/loss from one-off adjustments of gain/loss based on
laws and regulations of taxation and accounting.
Custodian fees obtained from entrusted operations
Non-operating revenue and expense besides the above items 29,037.03
Other profit or loss
Subtotal 76,300,598.24
Effect on income tax 11,478,840.61
Attributable to minority shareholders’ equity (after tax) 181,170.70
Total 64,640,586.93
2. Return on equity and earnings per share
In accordance with the provisions of the China Securities Regulatory Commission,
“Corporate Information Disclosure and Compilation Rules for Public Offering of Securities
No. 9 – Calculation and Disclosure of Return on Net Assets and Earnings Per Share (2010
Revision)”, the Company’s 2018 annual weighted average net Return on assets, basic
earnings per share and diluted earnings per share are as follows:
Weighted Earnings per share
average (EPS)
Profit of report period return on Basic Diluted
net assets EPS EPS
(%)
Net profit attributable to shareholders of parent company 3.21 0.13 0.13
Net profit after deducting non-recurring gains and losses
1.33 0.05 0.05
attributable to shareholders of parent company
Dalian Refrigeration Co., Ltd
April 19, 2019
143
