DALIAN REFRIGERATION COMPANY LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2016
(NOT AUDITED)
1
BALANCE SHEET
Prepared by Dalian Refrigeration Co., Ltd. June 30, 2016 Unit: RMB Yuan
30-June-2016 31-Dec-2015
Assets
Consolidation Parent Company Consolidation Parent Company
Current assets:
Monetary funds 921,341,559.47 851,302,137.13 244,789,824.53 149,314,329.13
Financial assets which are measured by fair value and which
changes are recorded in current profit and loss
Derivative financial assets
Notes receivable 72,063,636.61 25,643,391.35 71,699,517.68 40,690,578.22
Accounts receivable 800,671,319.79 204,420,248.66 671,423,836.87 196,691,940.87
Accounts in advance 68,420,154.43 38,529,153.28 44,218,887.91 22,523,974.19
Interest receivables
Dividend receivable 35,000,000.00 35,000,000.00 44,600.00
Other receivables 38,928,913.96 57,919,305.61 22,755,328.21 43,691,612.45
Inventories 293,140,904.67 117,425,806.98 259,099,149.47 122,212,395.56
Assets held for sale
Non-current asset due within one year
Other current assets 2,012,228.60 1,280,838.92 16,478,711.86 7,918,692.08
Total current assets 2,231,578,717.53 1,331,520,881.93 1,330,509,856.53 583,043,522.50
Non-current assets:
Finance asset held available for sales 549,371,000.64 548,055,858.14 733,275,249.09 731,960,106.59
Held-to-maturity investment
Long-term account receivable
Long-term equity investment 1,216,177,395.25 1,468,504,154.95 1,220,367,767.73 1,460,958,799.28
Investment property 24,191,921.50 24,191,921.50 24,497,584.00 24,497,584.00
Fixed assets 431,589,357.99 234,918,500.32 449,907,430.32 246,435,789.69
Construction in progress 179,319,154.71 151,333,078.28 137,025,384.58 109,277,419.44
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 156,948,744.19 89,442,463.24 158,417,802.57 90,015,524.05
Expense on Research and Development
Goodwill 1,440,347.92 1,440,347.92
Long-term expenses to be apportioned 5,083,505.09 4,285,722.88 5,857,504.95 5,033,031.30
Deferred income tax asset 22,632,513.11 7,686,130.36 21,200,936.73 8,675,787.57
Other non-current asset
Total non-current asset 2,586,753,940.40 2,528,417,829.67 2,751,990,007.89 2,676,854,041.92
Total assets 4,818,332,657.93 3,859,938,711.60 4,082,499,864.42 3,259,897,564.42
2
BALANCE SHEET (CONTINUED)
Prepared by Dalian Refrigeration Co., Ltd. June 30, 2016 Unit: RMB Yuan
30-June-2016 31-Dec-2015
Liabilities and shareholders’ equity
Consolidation Parent Company Consolidation Parent Company
Current liabilities:
Short-term loans 162,600,000.00 107,600,000.00 82,600,000.00 27,600,000.00
Derivative financial liabilities
Notes payable 159,933,253.32 79,203,046.02 234,189,011.72 177,683,261.74
Accounts payable 802,354,889.82 330,066,579.00 660,398,503.26 293,389,981.61
Accounts received in advance 109,193,294.12 30,690,248.35 70,458,014.46 25,768,511.15
Wage payable 25,839,889.64 1,780,001.31 51,857,345.29 11,208,398.45
Taxes payable 27,925,296.64 7,659,324.30 15,701,578.36 873,038.30
Interest payable
Dividend payable 533,156.00 533,156.00 533,156.00 533,156.00
Other accounts payable 96,758,383.05 53,334,588.75 99,890,290.15 55,807,703.77
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 1,385,138,162.59 610,866,943.73 1,215,627,899.24 592,864,051.02
Non-current liabilities:
Long-term loans 160,000,000.00 160,000,000.00
Bonds payable
Long-term account payable
Long-term wage payable
Special accounts payable
Projected liabilities
Deferred income 48,545,460.00 3,428,460.00 49,378,296.00 3,704,296.00
Deferred income tax liabilities 76,041,391.79 76,041,391.79 103,627,029.06 103,627,029.06
Other non-current liabilities
Total non-current liabilities 284,586,851.79 239,469,851.79 153,005,325.06 107,331,325.06
Total liabilities 1,669,725,014.38 850,336,795.52 1,368,633,224.30 700,195,376.08
Shareholders’ equity
Share capital 598,892,558.00 598,892,558.00 360,164,975.00 360,164,975.00
Other equity instruments
Capital public reserve 954,138,677.42 967,623,605.46 630,264,991.95 640,764,783.03
Specialized reserve 39,503,800.00 39,503,800.00 39,503,800.00 39,503,800.00
Other comprehensive income 433,669,506.87 432,440,579.25 589,988,118.05 588,759,190.43
Special preparation
Surplus public reserve 605,974,732.67 605,974,732.67 580,769,740.16 580,769,740.16
Retained profit 532,190,863.08 444,174,240.70 525,925,066.25 428,747,299.72
Translation of foreign currency capital
Total owner’s equity attributable to parent
3,085,362,538.04 3,009,601,916.08 2,647,609,091.41 2,559,702,188.34
company
Minority interests 63,245,105.51 66,257,548.71
Total owner’s equity 3,148,607,643.55 3,009,601,916.08 2,713,866,640.12 2,559,702,188.34
Total liabilities and shareholder’s equity 4,818,332,657.93 3,859,938,711.60 4,082,499,864.42 3,259,897,564.42
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
3
INCOME STATEMENT
Prepared by Dalian Refrigeration Co., Ltd. January-June, 2016 Unit: RMB Yuan
January-June, 2016 January-June, 2015
Items
Consolidation Parent Company Consolidation Parent Company
I. Total sales 779,919,864.03 320,569,072.88 711,740,342.13 299,875,171.09
Including: Operating income 779,919,864.03 320,569,072.88 711,740,342.13 299,875,171.09
II. Total operating cost 792,230,279.52 326,095,453.00 692,522,643.78 292,127,877.31
Including: Operating cost 633,196,577.91 268,472,467.44 562,347,397.92 247,322,955.72
Taxes and associate charges 6,357,716.42 989,231.06 5,466,860.36 1,160,192.70
Selling and distribution expenses 38,272,388.37 1,157,365.43 35,327,320.58 1,506,513.32
Administrative expenses 100,558,702.28 54,874,915.91 88,737,103.40 51,690,825.61
Financial expense 2,913,489.28 180,568.43 -1,831,323.45 -3,950,961.70
Impairment loss 10,931,405.26 420,904.73 2,475,284.97 -5,601,648.34
Add: Gain/(loss) from change in fair value
Gain/(loss) from investment 76,942,313.59 76,688,140.71 48,393,081.52 52,308,865.91
Including: income form investment on affiliated
60,980,888.19 60,980,888.19 48,083,081.52 48,083,081.52
enterprise and jointly enterprise
III. Operating profit 64,631,898.10 71,161,760.59 67,610,779.87 60,056,159.69
Add: non-business income 7,728,227.93 6,541,575.73 2,768,512.07 2,043,822.27
Including: profit from non-current asset disposal 64,284.56 18,634.56 28,868.06 9,807.69
Less: non-business expense 284,024.49 65,248.12 4,465.70 437.18
Including: loss from non-current asset disposal 189,436.67 5,248.12 2,394.33 437.18
IV. Total profit 72,076,101.54 77,638,088.20 70,374,826.24 62,099,544.78
Less: Income tax 4,158,394.86 989,657.21 5,691,645.31 1,108,713.27
V. Net profit 67,917,706.68 76,648,430.99 64,683,180.93 60,990,831.51
Net profit attributable to parent company 67,487,286.84 76,648,430.99 65,477,775.99 60,990,831.51
Minority shareholders’ gains and losses 430,419.84 -794,595.06
VI. After-tax net amount of other comprehensive
-156,318,611.18 -156,318,611.18 852,972,585.40 852,972,585.40
incomes
After-tax net amount of other comprehensive
-156,318,611.18 -156,318,611.18 852,972,585.40 852,972,585.40
incomes attributable to owners of the Company
(I) Other comprehensive incomes that will not be
reclassified into gains and losses
1. Changes in net liabilities or assets with a
defined benefit plan upon re-measurement
2. Enjoyable shares in other comprehensive
incomes in investees that cannot be reclassified
into gains and losses under the equity method
……
(II) Other comprehensive incomes that will be
-156,318,611.18 -156,318,611.18 852,972,585.40 852,972,585.40
reclassified into gains and losses
1. Enjoyable shares in other comprehensive
incomes in investees that will be reclassified into
gains and losses under the equity method
2. Gains and losses on fair value changes of
-156,318,611.18 -156,318,611.18 852,972,585.40 852,972,585.40
available-for-sale financial assets
3. Gains and losses on reclassifying
held-to-maturity investments into
available-for-sale financial assets
4. Effective hedging gains and losses on cash
flows
5. Foreign-currency financial statement
translation difference
6. Other
4
……
After-tax net amount of other comprehensive
incomes attributable to minority shareholders
VII Total comprehensive income -88,400,904.50 -79,670,180.19 917,655,766.33 913,963,416.91
Total comprehensive income attributable to
-88,831,324.34 -79,670,180.19 918,450,361.39 913,963,416.91
parent company
Total comprehensive income attributable to
430,419.84 -794,595.06
minority shareholders
VIII. Earnings per share
(I) basic earnings per share 0.12 0.12
(II) diluted earnings per share 0.12 0.12
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
5
CASH FLOW STATEMENT
Prepared by Dalian Refrigeration Co., Ltd. January -June, 2016 Unit: RMB Yuan
January -June, 2016 January -June, 2015
Items
Consolidation Parent Company Consolidation Parent Company
I. Cash flows arising from operating
activities:
Cash received from selling commodities
and providing labor services 612,643,833.88 259,220,476.51 382,614,969.22 109,026,091.80
Write-back of tax received 1,219,944.42 745,652.66
Other cash received concerning operating
21,983,586.09 15,102,431.77 15,112,738.10 9,419,307.14
activities
Subtotal of cash inflow arising from
635,847,364.39 274,322,908.28 398,473,359.98 118,445,398.94
operating activities
Cash paid for purchasing commodities and
407,133,517.79 195,922,929.14 272,348,733.40 146,775,719.87
receiving labor service
Cash paid to/for staff and workers 161,880,409.64 67,168,303.41 152,175,815.25 66,965,526.52
Taxes paid 45,594,756.78 6,772,361.54 38,023,028.19 11,822,825.39
Other cash paid concerning operating
64,450,712.58 23,317,407.77 66,515,704.51 21,159,867.78
activities
Subtotal of cash outflow arising from
679,059,396.79 293,181,001.86 529,063,281.35 246,723,939.56
operating activities
Net cash flows arising from operating
-43,212,032.40 -18,858,093.58 -130,589,921.37 -128,278,540.62
activities
II. Cash flows arising from investing
activities:
Cash received from recovering investment 145,827.12
Cash received from investment income 47,177,286.07 47,132,686.07 19,113,061.37 19,113,061.37
Net cash received from disposal of fixed,
89,140.00 43,000.00 55,285.00 10,000.00
intangible and other long-term assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning investing
activities
Subtotal of cash inflow from investing
47,266,426.07 47,321,513.19 19,168,346.37 19,123,061.37
activities
Cash paid for purchasing fixed, intangible
81,863,897.67 74,864,341.64 29,845,066.20 19,426,933.55
and other long-term assets
Cash paid for investment 6,551,326.25 13,135,728.15 13,454,100.00 22,166,934.15
Net cash received from payment of
subsidiaries and other business units
Other cash paid concerning investing
activities
Subtotal of cash outflow from
88,415,223.92 88,000,069.79 43,299,166.20 41,593,867.70
investing activities
Net cash flows arising from investing
-41,148,797.85 -40,678,556.60 -24,130,819.83 -22,470,806.33
activities
III. Cash flows arising from financing
activities
Cash received from absorbing investment 561,931,354.34 561,931,354.34 60,434,000.00 56,434,000.00
Including: Cash received from absorbing
minority shareholders' equity investment by 4,000,000.00
subsidiaries
Cash received from loans 291,400,000.00 240,000,000.00 27,360,000.00
Other cash received concerning financing
20,710,827.68 720,332.73 32,953,876.63 16,145,665.64
activities
Subtotal of cash inflow from financing
874,042,182.02 802,651,687.07 120,747,876.63 72,579,665.64
activities
Cash paid for settling debts 52,600,000.00 21,760,000.00
Cash paid for dividend and profit
39,846,628.47 36,997,965.58 54,557,721.81 52,031,349.57
distributing or interest paying
6
Including: dividends or profit paid by
392,000.00
subsidiaries to minority shareholders
Other cash paid concerning financing
10,121,261.17 3,430,000.00 34,920,526.90 20,975,652.64
activities
Subtotal of cash outflow from
102,567,889.64 40,427,965.58 111,238,248.71 73,007,002.21
financing activities
Net cash flows arising from financing
771,474,292.38 762,223,721.49 9,509,627.92 -427,336.57
activities
IV. Influence on cash due to fluctuation in
-17,298.43 -24,068.33 -255,229.17 -287,527.51
exchange rate
V. Net increase of cash and cash
687,096,163.70 702,663,002.98 -145,466,342.45 -151,464,211.03
equivalents
Add: Balance of cash and cash equivalents
221,724,134.60 147,439,134.15 475,557,589.39 391,427,532.25
at the period -begin
VI. Balance of cash and cash equivalents at
908,820,298.30 850,102,137.13 330,091,246.94 239,963,321.22
the period–end
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
7
CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY
Prepared by Dalian Refrigeration Company Limited 2016.01-06 Unit: RMB Yuan
2016.01-06
Owners’ equity attributable to parent company
Items Lessen: Other Special Total of
Surplus Retained Minority equity
share capital Capital suplus treasury comprehensi preparatio Others owners’ equity
reserve profits
stock ve income n
I. balance at the end of last
360,164,975.00 630,264,991.95 39,503,800. 589,988,118.05 580,769,740.16 525,925,066.253 66,257,548.71 2,713,866,640.12
year 00
1. Change of accounting
policy
2. Correction of errors in
previous period
II. Balance at the beginning of
360,164,975.00 630,264,991.95 39,503,800. 589,988,118.05 580,769,740.16 525,925,066.253 66,257,548.71 2,713,866,640.12
this year 00
III. Increase/ decrease of
amount in this year (“-” 238,727,583.00 323,873,685.47 -156,318,611.18 25,204,992.51 6,265,796.83 -3,012,443.20 434,741,003.43
means decrease)
(I) Total comprehensive -156,318,611.18 67,487,286.84 430,419.84 -88,400,904.50
incomes
(II) Capital increased and
238,727,583.00 503,956,172.47 -2,364,863.04 740,318,892.43
reduced by owners
1. Common shares increased
58,645,096.00 503,917,805.38 -2,364,863.04 560,198,038.34
by shareholders
2. Capital increased by
holders of other equity
instruments
3. Amounts of share-based
payments recognized in 180,082,487.00 180,082,487.00
owners’ equity
4. Other 38,367.09
(III) Profit distribution 25,204,992.51 -61,221,490.01 -1,078,000.00 -37,094,497.50
1. Withdrawing surplus
25,204,992.51 -25,204,992.51
public reserve
2. Distribution to all owners
-36,016,497.50 -1,078,000.00 -37,094,497.50
(shareholders)
3. Others
(IV) Internal carrying
-180,082,487.00 -180,082,487.00
forward of owners’ equity
1. New increase of share
-180,082,487.00 -180,082,487.00
capital from capital reserves
2. Convert surplus reserves
to share capital
3. Surplus reserves make up
losses
4. Others
(V) Specific reserve
1. Withdrawn for the period 991,475.25 991,475.25
2. Used in the period 991,475.25 991,475.25
(VI) Other
IV. Balance at the end of this 39,503,800.
598,892,558.00 954,138,677.42 433,669,506.87 605,974,732.67 532,190,863.08 63,245,105.51 3,148,607,643.55
period 00
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
8
2015.01-12
Owners’ equity attributable to parent company
Items Lessen: Other Special Minority Total of owners’
Surplus Retained equity equity
share capital Capital suplus treasury comprehensive preparat Others
reserve profits
stock income ion
I. balance at the end of last
350,014,975.00 582,288,006.29 2,768,286.72 545,788,247.99 486,167,740.13 96,631,415.08 2,063,658,671.21
year
1. Change of accounting
policy
2. Correction of errors in
previous period
II. Balance at the beginning of
350,014,975.00 582,288,006.29 2,768,286.72 545,788,247.99 486,167,740.13 96,631,415.08 2,063,658,671.21
this year
III. Increase/ decrease of
amount in this year (“-” 10,150,000.00 47,976,985.66 39,503,800. 587,219,831.33 34,981,492.17 39,757,326.12 -30,373,866.37 650,207,968.91
means decrease) 00
(I) Total comprehensive
587,219,831.33 129,947,307.39 1,267,714.76 718,434,853.48
incomes
(II) Capital increased and 39,503,800.
10,150,000.00 47,976,985.66 -29,139,058.21 -10,515,872.55
reduced by owners 00
1. Common shares increased 39,503,800.
10,150,000.00 35,784,208.92 -29,139,058.21 -22,708,649.29
by shareholders 00
2. Capital increased by
holders of other equity
instruments
3. Amounts of share-based
payments recognized in 12,190,520.00 12,190,520.00
owners’ equity
4. Other 2,256.74 2,256.74
(III) Profit distribution 34,981,492.17 -90,189,981.27 -2,502,522.92 -57,711,012.02
1. Withdrawing surplus
34,981,492.17 -34,981,492.17
public reserve
2. Distribution to all owners
-54,024,746.25 -2,502,522.92 -56,527,269.17
(shareholders)
3. Others -1,183,742.85 -1,183,742.85
(IV) Internal carrying
forward of owners’ equity
1. New increase of share
capital from capital reserves
2. Convert surplus reserves
to share capital
3. Surplus reserves make up
losses
4. Others
(V) Specific reserve
1,982,950
1. Withdrawn for the period .50
1,982,950.50
1,982,950
2. Used in the period .50
1,982,950.50
(VI) Other
IV. Balance at the end of this
360,164,975.00 630,264,991.959 39,503,800. 589,988,118.05 580,769,740.16 525,925,066.25 66,257,548.71 2,713,866,640.12
period 00
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
9
STATEMENT OF CHANGES IN OWNERS’ EQUITY
Prepared by Dalian Refrigeration Company Limited 2016.01-06 Unit: RMB Yuan
2016.01-06
Owners’ equity attributable to parent company
Items Lessen: Other Total of owners’
Other equity Capital Special Surplus Retained equity
share capital treasury comprehensive
instrument suplus preparation reserve profits
stock income
I. balance at the end of last
360,164,975.00 640,764,783.03 39,503,800.00 588,759,190.43 580,769,740.16 428,747,299.72 2,559,702,188.34
year
1. Change of accounting
policy
2. Correction of errors in
previous period
II. Balance at the beginning of
360,164,975.00 640,764,783.03 39,503,800.00 588,759,190.43 580,769,740.16 428,747,299.72 2,559,702,188.34
this year
III. Increase/ decrease of
amount in this year (“-” 238,727,583.00 326,858,822.43 -156,318,611.18 25,204,992.51 15,426,940.98 449,899,727.74
means decrease)
(I) Total comprehensive
-156,318,611.18 76,648,430.99 -79,670,180.19
incomes
(II) Capital increased and
238,727,583.00 506,941,309.43 745,668,892.43
reduced by owners
1. Common shares increased
58,645,096.00 506.902,942.34 565,548,038.34
by shareholders
2. Capital increased by
holders of other equity
instruments
3. Amounts of share-based
payments recognized in 180,082,487.00 180,082,487.00
owners’ equity
4. Other 38,367.09 38,367.09
(III) Profit distribution 25,204,992.51 -61,221,490.01 -36,016,497.50
1. Withdrawing surplus
25,204,992.51 -25,204,992.51
public reserve
2. Distribution to all owners
-36,016,497.50 -36,016,497.50
(shareholders)
3. Others
(IV) Internal carrying -180,082,487.0
-180,082,487.00
forward of owners’ equity 0
1. New increase of share -180,082,487.0
-180,082,487.00
capital from capital reserves 0
2. Convert surplus reserves
to share capital
3. Surplus reserves make up
losses
4. Others
(V) Specific reserve
1. Withdrawn for the period 991,475.25 991,475.25
2. Used in the period 991,475.25 991,475.25
(VI) Other
IV. Balance at the end of this
598,892,558.00 967,623,605.46 39,503,800.00 432,440,579.25 605,974,732.67 444,174,240.70 3,009,601,916.08
period
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
10
2015.01-12
Owners’ equity attributable to parent company
Items Lessen: Other Total of owners’
Other equity Capital Special Surplus Retained equity
share capital treasury comprehensive
instrument suplus preparation reserve profits
stock income
I. balance at the end of last
350,014,975.00 582,288,006.29 1,539,359.10 545,788,247.99 391,728,575.59 1,871,359,163.97
year
1. Change of accounting
policy
2. Correction of errors in
previous period
II. Balance at the beginning of
350,014,975.00 582,288,006.29 1,539,359.10 545,788,247.99 391,728,575.59 1,871,359,163.97
this year
III. Increase/ decrease of
amount in this year (“-” 10,150,000.00 58,476,776.74 39,503,800.00 587,219,831.33 34,981,492.17 37,018,724.13 688,343,024.37
means decrease)
(I) Total comprehensive
587,219,831.33 126,024,962.55 713,244,793.88
incomes
(II) Capital increased and
10,150,000.00 58,476,776.74 39,503,800.00 29,122,976.74
reduced by owners
1. Common shares increased
10,150,000.00 46,284,000.00 39,503,800.00 16,930,200.00
by shareholders
2. Capital increased by
holders of other equity
instruments
3. Amounts of share-based
payments recognized in 12,190,520.00 12,190,520.00
owners’ equity
4. Other 2,256.74 2,256.74
(III) Profit distribution 34,981,492.17 -89,006,238.42 -54,024,746.25
1. Withdrawing surplus
34,981,492.17 -34,981,492.17
public reserve
2. Distribution to all owners
-54,024,746.25 -54,024,746.25
(shareholders)
3. Others
(IV) Internal carrying
forward of owners’ equity
1. New increase of share
capital from capital reserves
2. Convert surplus reserves
to share capital
3. Surplus reserves make up
losses
4. Others
(V) Specific reserve
1. Withdrawn for the period 1,982,950.50 1,982,950.50
2. Used in the period 1,982,950.50 1,982,950.50
(VI) Other
IV. Balance at the end of this
360,164,975.00 640,764,783.03 39,503,800.00 588,759,190.43 580,769,740.16 428,747,299.72 2,559,702,188.34
period
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
11
NOTES TO THE FINANCIAL STATEMENTS
(All amounts in RMB Yuan unless otherwise stated)
1. General information
Dalian Refrigeration Company Limited (the “Company”) was reorganized from main part of former
Dalian Refrigeration Factory, and incorporated in the People’s Republic of China (the “PRC”) on
December 18, 1993 as a joint stock limited company. The Company’s domestically listed RMB
denominated ordinary shares (“A shares”) and domestically listed foreign investment ordinary
shares (“B shares”) were listed on the Shenzhen Stock Exchange in the PRC in December 1993 and
March 1998 respectively. The Company together with its subsidiaries is hereinafter collectively
referred to as the “Group”. The Company deliberated and passed "2015 Annual Profit Distribution
Plan" by the third board meeting of the seventh board of directors, 2016 general meeting of
stockholders approved the Company to calculate according to the total capital of 360,164,975 shares
in 2016, increasing by transferring 5 shares of capital reserve per every 10 shares, which newly
increased 180,082,487 shares after the completion of transferring. The Company deliberated and
passed the "Proposal of private placement of A shares" by the 17th meeting of the 6th session of the
Board of directors, approved by 2015 second extraordinary general meeting and China Securities
Regulatory Commission, 2016 private placement of A shares newly increased by 58,645,096 shares.
The address of the Company’s registered office is No.888 Xinan Road, Shahekou District, Dalian,
China. The parent company of the Company is Dalian Bingshan Group Co., Ltd.
The principal activities of the Company are manufacture, sale and installation of refrigeration
equipments.
The financial statements were permitted to disclose by the board of directors of the Company on
25th August, 2016.
2. The scope of consolidation
There are 8 entities included in the current consolidated financial statements, including:
Proportion of Proportion of
Names of subsidiaries Types Level
shareholding（%） votes（%）
Dalian Bingshan Group Engeering Co., Ltd. Fully owned 1 100 100
Fully owned 1
Dalian Bingshan Group Sales Co., Ltd. 100 100
Dalian Bingshan Air-Conditioning Equipment Holding
1
subsidiary 70 70
Co., Ltd.
Fully owned 1
Dalian Bingshan Guardian Automation Co., Ltd. 100 100
Dalian Bingshan Ryosetsu Quick Freezing Holding 1 95 95
Equipment Co., Ltd. subsidiary
Wuhan New World Refrigeration Industrial Co., Fully owned 1
100 100
Ltd.
Fully owned 1
Bingshan Technical Service (Dalian ) Co., Ltd. 100 100
Holding 1
Dalian Universe Thermal Technology Co., Ltd 55 55
subsidiary
The subject included in consolidated financial statement in the reporting period decreased the Dalian
Bingshan Metal Processing Co., Ltd. over that of last period.
The Company’s 15th meeting of the 6th session of the Board of directors decided the Company’s
subsidiary Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd . to merge the original
wholly-owned subsidiary Dalian Bingshan Metal Processing Co., Ltd. The base date of merger was
December 31, 2014, and Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd.became the
surviving corporation after the merger. Up to June 30, 2016, above-mentioned changes have been
completed, and the Company’s shareholding ratio is changed to 95%. Therefore, in the current
consolidated statements, one consolidation subject Dalian Bingshan Metal Processing Co., Ltd.
12
would be removed.
The Company’s board of directors decided to accept 30% stock rights of Dalian Bingshan Group
Sales Co., Ltd. held by wholly-owned subsidiary Wuhan New World Refrigeration Industrial Co.,
Ltd . Up to June 30, 2016, the above-mentioned stock right transfer has been completed, the
Company's shareholding ratio changes to 100%, and Dalian Bingshan Group Sales Co., Ltd
becomes a wholly owned subsidiary of the Company.
The Company’s board of directors decided to accept 40% stock rights of the original holding
subsidiary, Dalian Bingshan Guardian Automation Co., Ltd., up to June 30, 2016, the
above-mentioned stock right transfer has been completed, the Company's shareholding ratio
changes to 100%, and Dalian Bingshan Guardian Automation Co., Ltd. becomes a wholly owned
subsidiary of the Company.
Dalian Universe Thermal Technology Co., Ltd. formerly known as Dalian Sanyo Efficient
Refrigeration System Co., Ltd. has changed its name to be Dalian Universe Thermal Technology
Co., Ltd. on May 3, 2016.
IV Basic of preparation of financial statements
1. Basic of preparation of financial statements
The financial statements have been prepared on the basic assumption of going concern and on the
accrual basis of accounting. The effects of evens and other transactions actually occurred and they
have been recorded and measured in accordance with the Accounting Standards for Business
Enterprises issued by Ministry of Finance.
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.
V.The main accounting policies, accounting estimates and corrections of accounting errors
1. Declaration on following Accounting Standard for Business Enterprises
Declaration from the Company: The financial statements made by the Company was in accordance
with Accounting Standards for Business Enterprises, which reflected the financial position, financial
performance and cash flow of the Company truly, objectively and completely.
2. Fiscal year
The Company adopts the calendar year as its fiscal year, i.e. from January 1 to December 31.
3. Operating Cycle
12 months are regarded as one operating cycle in the company, and which is as the division criterion
for the liquidity of assets and liabilities.
4. Functional currency
RMB was the functional currency of the Company.
5. Accounting method of business combination under the same control and not under the same
control
A. The Company adopts equity method for business combination under same control. The assets
and liabilities that the combining party obtained in a business combination shall be measured on
their carrying amount in the combined party on the combining date. The difference between the
carrying amount of net assets acquired by the combining party and the carrying amount of the
consideration paid by it (or the total par value of the shares issued) shall be adjusted to capital
surplus. If the capital surplus is not sufficient for adjustment, retained earning is adjusted
respectively. The business combination costs that are directly attributable to the combination, such
as audit fees, valuation fees, and legal service fees and so on are recognized in profit or loss during
the current period when they occurred. The bonds issued for a business combination or the handling
13
fees, commissions and other expenses for bearing other liabilities shall be recorded in the amount of
initial measurement of the bonds or other debts. The handling fees, commissions and other expenses
for the issuance of equity securities for the business combination shall be credited against the
surplus of equity securities; if the surplus is not sufficient, the retained earnings shall be offset.
Where a relationship between a parent company and a subsidiary company is formed due to a
business combination, the parent company shall, on the combining date, prepare consolidated
financial statements according to the accounting policy of the Company.
B. The Company adopts acquisition method for business combination not under same control. The
acquirer shall recognize the initial cost of combination under the following principles: a) When
business combination is achieved through a single exchange transaction, the cost of a business
combination is the aggregate of the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the
acquiree; b) For the business combination involved more than one exchange transaction, the cost of
the combination is the aggregate cost of the individual transactions; c) The costs directly attributed
to business combination are included in the cost of combination; d) Where a business combination
contract or agreement provides for a future event which may adjust the cost of combination, the
Company shall include the amount of the adjustment in the cost of the combination at the
acquisition date if the future event leading to the adjustment is probable and the amount of the
adjustment can be measured reliably.
The acquirer shall, on the acquisition date, measure the assets given and liabilities incurred or
assumed by an enterprise for a business combination in light of their fair value, and shall record the
balances between them and their carrying amounts into the profits and losses at the current period.
The acquirer shall distribute the combination costs on the acquisition date, and shall recognize all
identifiable assets, liabilities and contingent liabilities it obtains from the acquiree. a. the acquirer
shall recognize the difference that the combination costs are over the fair value of the identifiable
net assets obtained from acquiree as goodwill; b. if the combination costs are less than the fair value
of the identifiable net assets obtained from acquiree, the acquirer shall reexamine the measurement
of the fair values of the identifiable assets, liabilities and contingent liabilities obtained from the
acquiree as well as the combination costs; and then after the reexamination, the result is still the
same, the difference shall be recorded in the profit and loss of the current period.
Where a relationship between a parent company and a subsidiary company is formed due to a
business combination, the parent company shall prepare accounting books for future reference,
which shall record the fair value of the identifiable assets, liabilities and contingent liabilities
obtained from the subsidiary company on the acquisition date. When preparing consolidated
financial statements, it shall adjust the financial statements of the subsidiary company on the basis
of the fair values of the identifiable assets, liabilities and contingent liabilities determined on the
acquisition date according to the Company’s accounting policy of “Consolidated financial
statement”.
6. Basis of consolidation
(1) Scope of consolidation
Consolidated financial statements are included all subsidiaries of the parent.
(2) Increase or decrease of the subsidiaries
For any subsidiary acquired by the Company through business combination under the same control,
when the consolidated balance sheet for the current period is being prepared, the beginning balances
in the consolidated balance sheet are made corresponding modification. For addition business
combination not under same control during the reporting period, the Company makes no adjustment
for the beginning balances in the consolidated balance sheet. When disposing subsidiary during the
reporting period, the Company makes no adjustment for the beginning balances in the consolidated
balance sheet. For any subsidiary acquired by the Company through business combination under the
same control, when the consolidated income statement for the current period is being prepared, sales,
expense and profit for the period from the beginning of the consolidated period to the year end of
the reporting period are included in the consolidated income statement. For addition business
combination not under same control during the reporting period, revenue, expense and profit for the
period from acquisition date to the year end of the reporting period is included in the consolidated
income statement. When disposing subsidiary during the reporting period, sales, expense and profit
for the period from the beginning to the disposal date are included in the consolidated income
statement.
14
For any subsidiary acquired by the Company through business combination under the same control,
when the consolidated cash flow statement for the current period is being prepared, cash flow for
the period from the beginning of the consolidated period to the year end of the reporting period is
included in the consolidated cash flow statement. For addition business combination not under same
control during the reporting period, cash flow for the period from acquisition date to the year end of
the reporting period is included in the consolidated cash flow statement. When disposing subsidiary
during the reporting period, cash flow for the period from the beginning to the disposal date is
included in the consolidated cash flow statement.
(3)Principle of consolidation
The consolidated financial statements are based on the financial statements of individual
subsidiaries which are included in the consolidation scope and prepared after adjustment of
long-term equity investment under equity method and elimination effect of intra-group transaction.
(4) Minority interests
The portion of the equity of the subsidiaries that are not owned by the parent is presented as
minority interest in the consolidated balance sheet. The portion of the profit or loss of the
subsidiaries that are not owned by the parent is presented as minority interest in the consolidated
income statement.
(5) Excess losses
The amount which losses of subsidiaries during the period exceeds the proportion of minority’s
obligation is offset minority interest as agreed in the subsidiaries’ association or agreement and
minorities have ability to bear the excess losses. Otherwise, the excess losses are offset equity of the
parent company. Profits made afterward by subsidiaries are attributable to equity of the parent
company before recovery of excess losses.
7. Joint venture arrangements classification and co-operation accounting treatment
A.Joint venture arrangements classification
Under the terms of the structure of the company, the legal form of the joint venture arrangements
agreed in the joint venture arrangements, other factors such as the relevant facts and circumstances,
the joint venture arrangements include co-operation and joint ventures.
The joint venture arrangement unreached by individual entity is divided into common business;
joint venture arrangement reached by individual entity usually classified as a joint venture; but there
is conclusive evidence that any of the following conditions are satisfied and the division of joint
venture arrangements in line with the relevant laws and regulations for the common business:
(1)The legal form of a joint venture arrangement shows that the joint venture party have rights and
bear obligations in respect of the relevant assets and liabilities.
(2)Contractual terms of the JV agreement arrangements agrees that the joint venture party have
rights and bear obligations in respect of the relevant assets and liabilities.
(3)Other relevant facts and circumstances indicate that the joint venture party have rights and bear
obligations in respect of the relevant assets and liabilities.
If joint venture parties enjoy almost all outputs associated with the joint venture arrangements, and
the settle of the liability arrangement continued reliance on joint venture the joint venture party
support.
B. Accounting treatment of the joint operation
The Company confirms that the following items share a common interest in the business associated
with the Company, and audit in accordance with the provisions of the relevant enterprise accounting
standards:
(1)Confirm individual assets and common assets held based on shareholdings;
(2)Confirm individual liabilities and shared liabilities held based on shareholdings;
(3)Confirm the income from the sales revenue of co-operate business output
(4)Confirm the income from the sales of the co-operate business output based on shareholdings;
(5)Confirm the individual expenditure and co-operate business cost based on shareholdings.
The company co-operates to invest or sell assets (excluding the assets constituting the business),
before sold to third party, only confirm the part of transaction gains and losses that attributable to
other participants. Assets sold in accordance with "Enterprise Accounting Standards No. 8
Impairment of Assets" and other provisions, the Company confirmed all the loss.
The company co-operates to purchase assets (excluding the assets constituting the business), before
sold to third party, only confirm the part of transaction gains and losses that attributable to other
participants. Assets acquired in accordance with "Enterprise Accounting Standards No. 8
15
Impairment of Assets" and other provisions, the Company confirmed that part of loss based on
shareholdings.
The Company is not entitled to jointly controlled, if the Company co-operate the relevant assets and
bear related liabilities, need accounting treatment based upon the above principles.
Otherwise, should be accounted in accordance with the relevant provisions of accounting standards.
8. The standard for recognizing cash equivalent when making cash flow statement
Cash equivalent means the highly liquid, very safe investment which can be easily converted into
cash, and the company can hold it for a very short time (3 months from the date of purchase).
9. Method of foreign currency translation
When foreign currency translation occurs, the spot exchange rate on the date of translation (i.e., the
middle price of the intraday foreign exchange rate of RMB published by People’s Bank of China)
shall be converted into RMB for keeping accounts while the occurred foreign currency exchange or
the foreign exchange transactions shall be translated according to exchange rate adopted in actual
transactions. On the balance sheet date, the foreign currency monetary items and foreign currency
non-monetary items shall be treated in accordance with the following provisions:
The foreign currency monetary items shall be translated at the spot exchange rate on balance sheet
date, of which happen during the normal business period shall be recorded into gains and losses at
the current period; of which happen during organization period shall be recorded into long-term
deferred expense. The exchange gains or losses caused by the borrowing belonging to acquiring
fixed assets shall be treated by the capitalization of borrowing costs.
Foreign currency non-monetary items shall be translated at spot rate on the date of transaction, not
changing the amount of functional currency.
The Company translates the financial statements of its foreign operation in accordance with the
following provisions: a) the asset and liability items in the balance sheets shall be translated at a
spot exchange rate ruling at the balance sheet date. Among the owner's equity items, except the ones
as "retained earnings", others shall be translated at the spot exchange rate ruling at the time when
they occurred;. b) The income and expense items in the income statements shall be translated with
approximate exchange rate of the sight rate on the transaction occurring date. The foreign exchange
difference arisen from the translation of foreign currency financial statements shall be presented
separately under the owner's equity in the balance sheet.
10. The recognition and measurement of financial instruments and the transfer of the
financial instruments
(1) Recognition of the financial assets
When an enterprise becomes a party to a financial instrument, it shall recognize a financial asset or
financial liability. Where a financial asset satisfies any of the following requirements, the
recognition of it shall be terminated:
①Where the contractual rights for collecting the cash flow of the said financial assets are
terminated;
②Where the said financial asset has been transferred and meets the conditions for recognizing the
termination of financial assets as provided for in Accounting Standard for Business Enterprises No.
23 – Transfer of Financial Assets. Only when the prevailing obligations of a financial liability are
relieved in all or in part may the recognition of the financial liability be terminated in all or partly.
(2) The classification, recognition and measurement of financial assets and financial liabilities
The financial assets or financial liabilities got or born by the Company are measured according to
the following classifications:
①The financial assets or financial liabilities which are measured at their fair value and the variation
of which is recorded into the profits and losses of the current period
The interest rate or cash dividend which was gained in the period when the financial assets held by
the Company are measured at its fair value and of which the variation is recorded into the profits
and losses in the current period shall be recognized as investment income. On balance sheet date,
the in change in the fair value of the financial asset or financial liability which is measured at its fair
value and of which the variation is recorded into the profits and losses of the current period, shall be
16
recorded into the profits and losses of the current period; When the said financial assets of financial
liabilities are on disposal, the difference between the fair value and the amount in initial account
shall be recognized as investment income, meanwhile, the profits and losses arising from the change
in fair value shall be adjusted.
②The investments which will be held to their maturity
The investments which will be held to their maturity will regard the sum between the gained fair
value and the transaction expense thereof as the initially recognized amount. The interest on bonds
in payment, of which the mature interest is not drawn, shall be solely recognized as the receivables.
The interest revenue which is measured and recognized by the amortized cost and actual interest
rate during the period of the investments which will be held to their maturity shall be recorded into
investment income. The actual interest rate which is recognized in the period of gaining the
investments which will be held to their maturity, shall maintain unchanged within the predicted term
of existence or within a shorter applicable term of the said investment which will be held to their
maturity. The little difference between actual interest rate and coupon rate of which interest revenue
can be measured at the coupon rate shall be recorded into the profits of losses in the current period.
When the investments which will be held to their maturity are on disposal, the difference between
the obtained price and investment book value shall be recorded into the profits and losses in the
current period.
③The accounts receivables
The creditor’s right receivable formed during the Company selling commodity outside or offering
labor shall be regarded as the initially recognize amount in according with the receivable price
stipulated in the contract or agreement signed between the Company and the buyers. When the
Company recovers or disposes the accounts receivable, the difference between the obtained price
and the book value of the accounts receivable shall be recorded into the profits and losses in the
current period.
④Financial assets available for sale
The financial assets available for sale will be regarded as the initial recognized amount in according
with the sum between the fair value obtained from the said financial assets and the transaction
expense thereof. The interest on bonds of which the mature interest rate is not drawn in the payment
or the cash dividend which is declared but not extended in the payment shall be solely recognized as
the receivables.
The interest rate or cash dividend gained during the period of holding the financial assets available
for sale shall be recorded into investment income. On balance sheet date, the financial assets shall
be measured through fair value, while the change in fair value is recorded into capital reserves
(other capital reserves).
When the financial assets are on disposal, the difference between the obtained price and the book
value of the financial assets shall be recorded into investment income, meanwhile, the amount on
proposal transferring out from the accumulated amount which is directly recorded into shareholders’
equity and arises from the variation of the fair value, shall be recorded into investment income.
⑤Other financial liabilities
Other financial liabilities are regarded as the initial recognized amount in accordance with the sum
between the fair value and the transaction expense thereof. The Company shall make subsequent
measurement on other financial liabilities on the basis of the post-amortization costs.
(3) Main recognition method for the fair value of the financial assets or financial liabilities
① the quotation in the active market shall be used to recognize the fair value of the financial assets
or financial liabilities existing in active market.
② If the financial instruments do not exist in the active market, the fair value shall be recognized by
value appraisal techniques.
③ as for the financial assets initially obtained of produced at source and the financial liabilities
assumed, the fair value thereof shall be determined on the basis of the transaction price of the
market.
(4) Main impairment test method of the financial assets and impairment provision method
The recognition standard for impairment provision of the financial assets: the Company shall carry
out an inspection, on the balance sheet day, on the carrying amount of the financial assets other than
those measured at their fair values and of which the variation is recorded into the profits and losses
17
of the current period. Where there is any objective evidence proving that such financial asset has
been impaired, an impairment provision shall be made.
The withdrawal method for impairment provision of the financial assets: as for the impairment
provision of the financial assets is measured on the basis of post-amortization costs, if the current
value of the predicted future cash flow of the financial assets is below the difference in the carrying
amount of the said financial asset, the impairment provision of the financial assets shall be made; as
for the impairment provision of the financial assets available for sale, if the recoverable amount is
below the difference in the carrying amount, the impairment provision shall be made. Where a
sellable financial asset is impaired, even if the recognition of the financial asset has not been
terminated, the accumulative losses arising from the decrease of the fair value of the owners’ equity
which was directly included shall be transferred out and recorded into the profits and losses of the
current period.
11. Receivable accounts
(1) Recognition and providing of bad debt provision on individual receivable account with large
amount
Basis of recognition or standard
amount of individual account Top 5 of account receivables at year end
with large amount
Impairment test performed individually, bad debt provision will be
provided at the difference of expected cash flow lower than the book
Basis of bad debt provision
value. Without bad debt provision needed provided through individually
test, bad debt provision will be provided at age analysis method.
(2) Recognition and providing basis of bad debt reserves for group of receivable accounts with
similar characteristics of credit risks
①Basis of recognition and providing of bad debt provision
Basis of recognition for groups
Group of inner units Accounts receivable due from subsidiaries included in consolidated scope
Group by age analysis With similar characteristics of credit risks
Basis of bad debt provision
Group of inner units Individual identified method
Group by age analysis Age analysis method
②Age analysis
Provision rates for Provision rates for
Ages
account receivables other receivables
Within 1 year, (included, same for the followings) 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)Other minor amount
For the receivables which are not individually significant, and which individually significant but are
not provided provision individually, in accordance with credit risk characteristics, the method of
provision for bad debts is aging analysis method. The assessment is made collectively where
receivables share similar credit risk characteristics (including those having not been individually
assessed as impaired), based on their historical loss experiences, and adjusted by the observable
figures reflecting present economic conditions.
12. The classification, pricing and accounting methods for inventories; the recognition
standard and withdrawal method of the inventories falling price reserves
(1) Classification of the inventories: purchased materials, stocking materials, material cost
difference, entrusted processing materials, unfinished products, finished products, working on
18
project and etc.
(2) The inventory system is on the basis of perpetual inventory method.
(3) The inventories are priced by the historical cost method, so are the raw material and auxiliary
material, the sold material cost is carried over on the basis of first-in first-out method; the product
cost is accounted through standard cost method, the difference between the standard cost and
historical cost is undertaken by the cost of the finished goods in process, while the cost of sales is
carried over on the basis of weighted average method; low-value consumption goods will be
amortized once when drawn.
(4) As for the inventory write-down provided: each kind of inventories at the end of the report
period will be measured at the lower of cost or net realizable value, and a provision for inventory
write-down will be established for any difference between the cost and the lower net realizable
value. The net realizable value refers to the value minus the predicted expense needed in the process
of completing the production and sales from the predicted price for sale and the taxes.
13. Classified as the assets held for sale
A. Recognition criteria for the classification of the assets held for sale
The company will recognize the combination parts of the enterprise (or non-current assets) which
simultaneously meet the following requirements, as the components of the assets held for sale.
(1) The components should be immediately sold under the current condition only according to the
usual terms of the parts sold.
(2) The enterprise has made resolution for the disposal of the components, the approval of
shareholders’ meeting or relevant authority agency if the shareholder’s approval is requested by the
rules.
(3) The enterprise has signed the irrevocable transfer agreement with the transferee.
(4) The transfer shall be completed within one year.
B. Accounting method for the classification of the assets held for sale
For the fixed assets held for sale, the company shall adjust the estimated net residual value of the
fixed assets in order to make it reflecting the amount after the disposal costs deducted from the fair
value, which doesn’t exceed the original book value of the fixed assets when the condition of
holding for sale is met. The impairment losses of the assets shall be regarded and recorded into the
current profits and losses if the original book value is more than the balance of the estimated net
residual value after adjusting. The fixed assets held for sale which not withdraw the depreciation or
amortization shall be measured according to the lesser one between the balances of the book value
or the fair value minus the disposal costs respectively.
The equity investment, intangible assets and other non-current assets held for sale shall be handled
as per above mentioned principles, but excluding the deferred income tax assets, the financial assets
regulated in ―Accounting Standards for Enterprises No.22 – Recognition and Measurement of
Financial Instruments, the investment property and the biological assets measured by the fair value,
and the contractual right issued in the insurance contract.
14. Long-term equity investment
A. Investment cost confirmation
(1) For the long term equity investment from enterprise merger, the detailed accounting policy,
please refer to the accounting method of merger of enterprises under or not under the same
controller in Note IV / (V). While, the long term equity investment acquired through liability
reorganization is booked on the basis of fair value.
(2) The long-term equity investments acquired by other ways
For the long-term equity investment acquired by the cash payment method, the purchase price of
actual payment as the initial investment cost, which includes costs, taxes and other necessary
expenses directly relevant to the long-term equity investment acquired.
For the long-term equity investment acquired by the issuance of the equity securities, the fair value
of the issuance of the equity securities as the initial investment cost. The transaction costs occurred
in the issuance or acquirement of own equity instruments can be deducted from the equity for those
that can be directly included in the equity transactions.
The non-monetary asset exchange for a commercial real income and assets or the fair value other
assets can be reliably measured, the initial investment cost should be determined according to
long-term equity investment exchanged through the non-monetary asset exchange, unless there is
19
evidence showing that for the fair value of assets is more reliable; the non-monetary asset exchange
which does not meet the above premises, the book value of the exchanged assets to and the relevant
fees and taxes to be paid should be the initial investment cost of the long-term equity investment.
The initial investment cost of the long-term equity investments obtained through debt restructuring
should be determined in accordance with fair value.
B. Follow-up measurements & recognitions of profits or losses
(1) Cost method
The company can adopt the cost method to account the long-term equity investment controlled by
the invested party and follow the initial investment cost to calculate the price and add or take back
the investment and adjust the costs of long-term equity investment.
Except for the price of actual payment in acquiring investment or the cash dividends or profits
declared but not issued yet included in the consideration, the company shall recognize the cash
dividends or profits delivered by the invested party as the current investment returns.
(2) The equity method
The company shall adopt the equity method to account the long-term equity investment of the joint
ventures and the cooperative enterprises, and use the measurement of the fair value and record the
changes into the profits and losses for the parts of the equity investment of the joint ventures
indirectly held by risk investment agency, mutual fund, trust company or other similar bodies
including the investment-link-insurance funds.
For the initial investment cost of the long-term equity investment is more than the balance of the
shares of the fair value of the identifiable net assets from the invested party in investment, the initial
investment cost of the long-term equity investment shouldn’t be adjusted. If less, recorded into the
current profits and losses.
The investment returns and other comprehensive incomes will be respectively recognized as per the
shares of the net profits and losses and other comprehensive returns realized by those shared and
undertaken invested parties after the company acquires the long-term equity investment, and the
book value of long-term equity investment shall be adjusted simultaneously. Also, the shared parts
shall be calculated according to the profits and cash dividends delivered by the invested party, and
the book value of long-term equity investment shall be reduced correspondingly. For other changes
in owner’s equity of the invested parity except for net profits and losses, other comprehensive
returns and profits distribution, the book value of long-term equity investment shall be adjusted and
the owner’s equity should be recorded into.
The shared portions of the net profits and losses of the invested party shall be recognized by the
company after the net profits of the invested party are adjusted based on the fair value of the
identifiable assets from the invested party when acquiring the investment. Also, the profits and
losses of investment are recognized on the basis of the offset of the shared proportion for the
internal transaction profits and losses issued but not realized yet between the company and the joint
venture and the cooperation enterprises.
The following steps should be taken when the company confirms to share the losses of the invested
party: First, offset the book value of the long-term equity investment. Then, offset the book value of
the long-term receivables after recognize the investment losses based on the book value of
long-term equity of the net investment from the invested party if the book value of the long-term
equity investment is insufficient to offset. Last, recognize the estimated loads as per the estimated
liability undertaken and record into the current investment losses if additional liability is still needed
to undertake based on the provisions of investment contract or agreement after above-mentioned
steps.
For the profits realized by the invested party during the future period, the company shall handle
based on the opposite steps after deducting the unconfirmed losses undertaken, and resume the
recognized investment returns after reduce the confirmed book balance of estimated liabilities and
resume other book values of long-term rights and investments of the net investment from the
invested party.
C. Transformation of accounting method for the long-term equity investment
(1) The fair value measurement transformed to the equity method
For the equity investments originally held by the company and having non-control, joint control or
major impact on the invested party through the accounting treatment as per the confirmation of
financial instrument and the measurement criterion, which can have significant impact or haven’t
control on the invested party due to the additional investment, the sum of the fair value of the equity
investment originally held and the new investment costs based on the recognition of ―Accounting
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Standards for Enterprises No.22 – Recognition and Measurement of Financial Instruments‖ shall
be regarded as the initial investment costs accounted by the equity method.
If the equity investment held originally can be classified as the financial assets for sale, the
difference between the fair value and the book value, and the variation in the accumulative fair
value of other comprehensive returns recorded originally will be transferred into the current profits
and losses accounted by the equity method.
If the initial investment costs accounted by the equity method is less than the difference between the
portions of the fair value of the identifiable net assets shared from the invested party on the
additional investment date calculated and recognized as per the new shareholding proportion after
the additional investment, the book value of long-term equity investment should be adjusted and
which shall be recorded into the current nonbusiness incomes.
(2) The fair value measurement or the equity method transformed to the cost method
For the equity investments originally held by the company and having non-control, joint control or
major impact on the invested party through the accounting treatment as per the confirmation of
financial instrument and the measurement criterion, or the long-term equity investments in the joint
ventures and the cooperative enterprises held originally, which can have control on the invested
party under non-common control due to the additional investment, the sum of the book value of the
equity investment originally held and the new investment costs in preparation of individual financial
statement shall be regarded as the initial investment costs accounted by the cost method.
Other comprehensive returns accounted and recognized for the equity investment held prior to the
purchase date by adopting the equity method, should be conducted the accounting treatment
according to the same basis of relevant assets or liabilities directly disposed by the invested party.
If the equity investment held before the purchase date is conducted the accounting treatment
according to the relevant provisions of ―Accounting Standards for Enterprises No.22 –
Recognition and Measurement of Financial Instruments‖, the variation in the accumulative fair
value of other comprehensive returns recorded originally shall be transferred to the current profits
and losses accounted by the cost method.
(3) The equity method transformed to the fair value measurement
If the company loses the joint control or major impact on the invested party due to disposal of part
of equity investments, the remaining equity after disposed should be accounted according
to ―Accounting Standards for Business Enterprises No.22 – Recognition and Measurement of
Financial Instruments‖, and the balance between the fair value and the book value shall be
recorded into the current profits and losses on the date of joint control or major impact lost.
Other comprehensive returns accounted and recognized for the original equity investment by
adopting the equity method, should be conducted the accounting treatment according to the same
basis of relevant assets or liabilities directly disposed by the invested party when stop to account by
the equity method.
(4) The cost method transforming to the equity method
If the company loses the control of the invested party due to disposal of part of equity investments,
and the remaining equity after disposed can have joint control or major impact on the invested party
in preparation of individual financial statement, the equity method shall be adopted to conduct
accounting and the remaining equity shall be regarded to use the equity method to account and
adjust when acquiring.
(5) The cost method transforming to the fair value measurement
If the company loses the control of the invested party due to disposal of part of equity investments,
and the remaining equity after disposed can’t have joint control or major impact on the invested
party in preparation of individual financial statement, the relevant provisions of ―Accounting
Standards for Enterprises No.22 – Recognition and Measurement of Financial Instruments‖
should be followed to conduct the accounting treatment, and the balance between the fair value and
the book value shall be recorded into the current profits and losses on the date of control lost.
D. Disposal of the long-term equity investment
The difference between the book value and the price acquired actually in disposal of the long-term
equity investment should be recorded into the current profits and losses. The long-term equity
investment accounted by the equity method shall be conducted the accounting treatment of part of
other original comprehensive returns as per the corresponding proportion on the same basis of the
relevant assets or liabilities directly disposed by the invested party when the disposal of the
investment.
If the following one or multiply requirements are met for all transaction terms, conditions and
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economic impact in disposal of the equity investment of subsidiary, the multiply transactions will be
regarded as the package deal to conduct the accounting treatment:
(1) These transactions are signed simultaneously or after the consideration of the influence each
other.
(2) These transactions should be as a whole to achieve a complete business result.
(3) One transaction occurs depending on the issuance of at least other one transaction.
(4) It is uneconomic for one transaction, but economic with other transactions.
For the control on the original subsidiary lost due to disposal of part of the equity investment or
other reasons and the non-package deal, the relevant accounting treatment should be respectively
conducted for the individual financial statement and the consolidated financial statements:
(1) In the individual financial statement, the difference between the book value and the price
acquired actually in disposal of the equity shall be recorded into the current profits and losses. If the
remaining equity after disposed can have joint control or major impact on the invested party, the
equity method shall be adopted to conduct accounting and the remaining equity shall be regarded to
use the equity method to account and adjust when acquiring. If the remaining equity after disposed
can’t have joint control or major impact on the invested party, the relevant provisions
of ―Accounting Standards for Enterprises No.22 – Recognition and Measurement of Financial
Instruments‖ should be followed to conduct the accounting treatment, and the balance between the
fair value and the book value shall be recorded into the current profits and losses on the date of
control lost.
(2) In the consolidated financial statements, for all the transactions before the control on subsidiary
lost, and the balance between the disposal price and the long-term equity investment respectively
minus the net assets from the purchase date or the combination date of subsidiary, the capital
reserves (stock premium) shall be adjusted, or the retained earnings shall be adjusted when the
capital reserves are insufficient. When the control on the subsidiary lost, the remaining equity
should be measured again according to the fair value on the control lost date. The difference of the
consideration acquired by the disposal of equity and the fair value of the surplus equity minus the
net assets portion of the original subsidiary calculated from the purchase date a per the original
stock proportion shall be recorded into the current investment income after the control lost and
offset the business reputation. Other comprehensive returns relevant to the original subsidiary shares
investment shall be transferred into the current investment returns when the control lost.
For the package deal for all the transactions in disposal of the equity investment till the control lost,
all the transactions will be conducted the accounting treatment as a deal to dispose and the relevant
accounting treatment should be respectively conducted for the individual financial statement and the
consolidated financial statements:
(1) In the individual financial statement, all the differences between the book value of the long-term
equity investment of the prices disposed and the equity disposed before the control lost shall be
recognized as other comprehensive incomes and recorded into the current profits and losses in the
control lost.
(2) In consolidated financial statement, all the differences between the net assets portions of
subsidiary of the prices disposed and the investment disposed before the control lost shall be
recognized as other comprehensive incomes and recorded into the current profits and losses in the
control lost.
E. Criteria of the judgment of joint control and significant impact
If the company controls an arrangement together with other parties according to the relevant
agreement, the activity decision-making with significant impact for the arrangement should be
achieved after the unanimous agreement gained from the control parties, which is regarded as the
joint control of one arrangement with other parties and the arrangement is belong to the cooperative
arrangement.
The cooperative arrangement achieved by the independent body which should be as the cooperative
enterprises and the equity method shall be adopted to account according to the relevant agreement to
judge when the company has rights to the net assets of the independent body. If hasn’t rights, the
independent body shall be as the joint operation, the company shall recognize the items related to
the benefit portions of joint operation and the accounting treatment should be conducted according
to the relevant provisions of accounting standards for enterprises.
The significant impact refers to the investor has rights to participate in decision-making for the
finance and operation policy of the invested party, but can’t control or jointly control the setup of
these policies with other parties. The company has made judgment of significant impact on the
invested party through the following one or multiply conditions and under comprehensive
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consideration of all facts and status.
(1) There are representatives in the board of Directors or equivalent authorities of the invested party.
(2) Participate in the setup process of finance and operation policies of the invested party.
(3) There is major transactions occurred among the invested parties.
(4) Dispatch the management to the invested party.
(5) Offer the key technical data to the invested party.
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15. Investment real estates
The term Investment real estates refers to the real estates held for generating rentand/orcapital
appreciation, including the right to use any land which has already been rented, the right to use any
land which is held and prepared for transfer after appreciation & the right to use any building which
has already been rented.
The investment real estates are accounted by the cost, the purchased investment real estates include
the cost of the purchase price, related taxes and fees and other expenses which can be directly
attributable to the assets; the costs of investment real estate self constructed include the necessary
expenses to construct the asset to reach the predicted use state.
The Group adopts the cost method to conduct follow-up measurement on investment real estates are
accounted devaluations and amortized. The expected service life, net residual rate and value
depreciation rates of investment real estate are the same with fixed assets or intangible assets.
If the investment real estate is changed to self use, since the date of change, investment real estate
shall be converted into fixed assets or intangible assets. The function of self-use real estate is to earn
rent or capital appreciation, then since the date of change, the fixed assets or intangible assets shall
be converted into investment real estate. When the conversion happens, the book value before the
conversion will be the book value after the conversion.
When the investment real estate is disposed of, or permanently terminates its use and no economic
benefits are expected from its disposal, terminate the confirmation of the investment real estate.
Disposal income of investment property for sale, transfer, disposal of scrap or being destroyed is
charged to current profit or loss after deducting its book value and related taxes.
16. Fixed assets
(1) Confirmation conditions
Fixed assets refer to physical assets owned for purpose of production, service providing, leasing or
management, and operation with service life of more than one year. Fixed assets are recognized
when all of the following conditions are satisfied：a. Financial benefits attached to the fixed asset is
possibly inflowing to the Company; b. The cost of the fixed asset can be reliable measured.
(2)The initially measurement of fixed assets
The fixed assets of the company shall be initially measured by costs. Of which, the fixed assets
costs purchased include purchase price, import duties, other relevant taxes and other expenses that
make the fixed assets can be used. The costs of self-constructed fixed assets are the expenses arisen
from the construction of the assets reaching the expected use status. The fixed assets invested by the
investors shall be recorded into the accounting value according to the value agreed in the investment
contract or agreement, but the unfair value agreed in the contract or agreement shall be bookkept as
per the fair value. If the price for purchase of the fixed assets is beyond the usual credit term and
delay in payment, and there actually is financial, the cost of fixed assets shall be recognized based
on the present value of purchase price. The difference between the price paid actually and the
present value of purchase price shall be recorded into the current profits and losses within the credit
period except for the capitalization granted.
(3) The subsequent expenditure and disposal of fixed assets
a. Deprecation method of fixed assets
The fixed assets depreciation should be withdrawn within the expected service life according to the
recorded value minus the estimated net residual value. For the fixed assets after the impairment
provision withdrawn, the amount of depreciation shall be recognized according to the book value
after the impairment provision deducted and the usable service life in the future.
The company determines the service life and the estimated net residual value of the fixed assets
according to the nature and use of the fixed assets, reviews the service life, the estimated net
residual value and depreciation method of the fixed assets at the end of the year, and makes the
corresponding adjustment if it is different to the original estimated value.
Depreciation is calculated using the straight-line method to allocate their cost to their residual
values over their estimated useful lives, as follows:
Expected residual value
Fixed assets Estimated lifetime Annual depreciation rates
rates
Buildings 20-40 years 2.25-4.85% 3%、 5%、10%
Machinery and equipment 10-22 years 4.09-9.7% 3%、 5%、10%
Motor vehicles 4-15 year 6-24.25% 3%、 5%、10%
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Electric equipments 5 years 18-19.4% 3%、 5%、10%
Other equipments 10-15 years 6-9.7% 3%、 5%、10%
b. The subsequent expenditure of the fixed assets
The subsequent expenditure relevant to the fixed assets shall be recorded into the costs of the fixed
assets if the recognition requirements of the fixed assets are met. If not met, recorded into the
current profits and losses when occurring.
c. The disposal of the fixed assets
The fixed assets shall be derecognized when the assets are disposed and can be used or there is no
economic benefit from the disposal. The amount of the book value and the relevant taxes deducted
from the disposal incomes of the fixed assets sold, transferred, scraped or damaged.
(4) Cognizance evidence and pricing method of financial leasing fixed assets
The fixed assets acquired by the company in line with the following one or several criteria shall be
recognized as the fixed assets acquired under finance leases: (1) at the expiration of the lease, the
ownership of the leased assets shall be transferred to the company. (2) the company has the option
to purchase the leased assets, the purchase price is expected be far lower than the fair value of the
leased assets under the implementation of option right, so that it can be reasonably determined that
the company shall exercise the option on the acquisition date. (3) the lease term is the majority for
the leased assets even if the ownership no transferred. (4) the present value of the minimum lease
payments of the company almost is equal to the fair value of the leased assets on the acquisition
date. (5) For the special nature of the leased assets, only the company can use if no major
modification made.
For the fixed assets acquired under finance leases, the company takes less of the fair value of the
leased asset on the acquisition date and the present value of the minimum lease payments as
recorded value. Also, the minimum lease payments are accounted as the recorded value for the
long-term payables, and the difference are as the unconfirmed financing fees. The initial direct
expenses, such as commission charge, attorney fees, travel expenses and stamp duty attributable to
the lease item occurred in the process of the lease negotiation and the signature of lease contract,
shall be recorded into the leased assets value. The unrecognized financing charges in each period
during the lease term are amortized by effective interest method.
The company adopts the depreciation policy in line with its own fixed assets to count and draw the
depreciation of fixed assets acquired under finance leases. If the ownership of lease assets acquired
at the expiration of lease can be reasonably confirmed, the depreciation will be recognized in the use
life of lease assets. If can’t be confirmed, the shorter period between the lease term and the use life
of lease assets will be recognized as the depreciation.
17. Construction-in-progress
(1) Categories of projects under construction
The company shall measure the self-constructed constructions in progress at the actual cost, which
comprises those expenditures necessarily incurred for bringing the asset to working condition for its
intended use, including materials costs, labor costs, relevant taxes paid, capitalized loans, indirect
expense for apportion, etc.. The constructions in progress of the company should be accounted by
the project classification.
(2)Standard and timing for transferring of projects under construction to fixed assets
All the expenditures that bring the construction in process to the expected condition for use shall be
the credit value of the fixed asset. If the fixed asset construction in process has already reached the
expected condition for use, but hasn’t been made the final account; it shall be carried forward to a
fixed asset according to its estimated value based on the budget, cost or actual cost of the
construction starting from the date when it reaches the expected condition for use, and the fixed
asset shall be depreciated according to the company’s depreciation policy for fixed assets. After the
final account has been made, the original provisional estimated value shall be adjusted according to
the actual cost, but the depreciation which has originally been counted & drawn shall not be
adjusted.
18. Loan expenses
(1)Recognition principles for capitalizing of loan expenses
Borrowing expenses occurred to the Company that can be accounted as purchasing or production of
asset satisfying the conditions of capitalizing, are capitalized and accounted as cost of related asset.
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Other borrowing expenses are recognized as expenses according to the occurred amount, and
accounted into gain/loss of current term.
The assets meeting capital conditions refer to the fixed assets, investment real estates and
inventories which are constructed or produced in a long time to reach the predicted use or sale state.
When a loan expense satisfies all of the following conditions, it is capitalized: a. Expenditures on
assets have taken place, asset expenditures include the assets used to construct or produce the assets
which meet the capitalization conditions, and expend by cash or transferring non-cash assets or
bearing interest debt; b. Loan costs have taken place; c. The construction or production activities to
make assets to reach the intended use or sale of state have begun.
(2) Duration of capitalization of Loan costs
The capitalization period refers to the period from starting capitalization of loan costs to the stop of
capitalization, the period of the break of capitalization of Loan costs is not included.
When the construction or production meets the intended use or sale of state of capitalization
conditions, the Loan costs should stop capitalization. When the construction or production meets the
conditions of capitalization and can be used individually, the capitalization of the loan costs of the
assets should be stopped.
Where each part of a asset under acquisition and construction or production is completed separately
and is ready for use or sale during the continuing construction of other parts, but it can not be used
or sold until the asset is entirely completed, the capitalization of the borrowing costs shall be ceased
when the asset is completed entirely.
(3) Capitalization Suspension Period
Where the acquisition and construction or production of a qualified asset is interrupted abnormally
and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs
shall be suspended. If the interruption is a necessary step for making the qualified asset under
acquisition and construction or production ready for the intended use or sale, the capitalization of
the borrowing costs shall continue. The borrowing costs incurred during such period shall be
recorded into the profits & losses at the current period, till the acquisition and construction or
production of the asset restarts.
(4)Calculation of the amount of capitalization of Loan costs
Interest expense due to specialized Loan and its auxiliary expenses shall be capitalized before the
asset which satisfies the capitalizing conditions reaches its useable or saleable status.
Interest amount of common Loan to be capitalized equals to accumulated asset expense less
weighted average of specialized loan part of asset expense multiplies capitalizing rate of common
Loan occupied. Capitalizing rate is determined according to weighted average interest of common
Loan.
If the Loan has discount or premium, the discount or premium amount should be determined
according to actual interests in each accounting period. The interest amount should be adjusted in
each period.
19.Intangible assets and R&D expenses
The intangible assets refer to the identifiable non-monetary assets without physical substance owned
or controlled by the company, including software, land use rights, knowhow and etc.
(1)The initial measurement of intangible assets
The cost of the purchased intangible assets includes its buying price, relevant tax and the othe
expenses that are directly attributed to this assets meeting its predetermined objective and other
expenses that occur. The buying price of intangible assets is over the deferred payment under
normal credit conditions, which has the nature of financing materially, the cost of intangible assets
is determined on the basis of the present value of its buying price.
We acquire the mortgaged intangible assets from debtors through debt restructuring and determine
the entry value on the basis of the fair value of the intangible assets,we have the balance between
the book value of debt restructuring and the fair value of intangible assets used for mortgage
charged to the current profit and loss.
The entry value of the non-monetary assets exchanged into by the non-monetary assets are
determined on the basis of the fair value of the assets exchanged out if the exchange of
non-monetary assets has commercial nature and the assets exchanged into or out can be reliably
measured, unless there is authentic evidence indicating that the fair value of assets exchanged into
are more reliable; if the non-monetary assets that cannot meet the above prerequisite use the book
value of the assets exchanged out and relevant taxes payable as the cost of the non-monetary assets,
the profit and loss is not confirmed.
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The entry value of the intangible assets acquired by the absorption merger under the control of one
company is determined by the book value of the merged party; the entry value of the intangible
assets acquired by the absorption merger that is not under the control of one company is determined
by the fair value.
The cost of the intangible assets developed internally includes the materials consumed in developing
the assets, cost of service, registration fees, other patent used in developing, amortization of
concession and interest charges meeting the capitalization conditions and othe direct costs that occur
before the intangible assets meeting the predetermined objective.
(2)Subsequent measurement
The Company acquired intangible assets at the time of analysis to determine its life, is divided into a
finite useful life and intangible assets with indefinite useful life.
a. The intangible assets that have limited serviceable life are amortized by the straight-line method
during the period when the assets can bring about economic interests. The details are as follow:
Items Useful life Judging by
Land use rights 50 years Purchase contract
Software 5-10 years Predicted useful life
b. Intangible assets with uncertain service life may not be amortized. However, the Company shall
check the service life of intangible assets with uncertain service life during each accounting period.
Where there are evidences to prove the intangible assets have limited service life, it shall be
estimated of its service life, and be amortized according to the above method.
(3) The specific standards of the classification of research and development stages of internal R&D
projects of the company
Research stage: the stage of the creative and planned investigation and research activities that is to
acquire and understand new scientific or technological knowledge.
Development stage: the stage that the research achievement or other knowledge are applied in some
plans or designs for the production of newly or substantially improved materials, devices, products
and other activities before the commercial production or usage.
The expenditure of internal research and development projects in the research stage shall be
recorded into the current profits and losses when occurring.
(4) The special standards of the conformation of capitalization for the expenditure in development
stage
The expenditures of internal research and development projects in the development stage shall be
recognized as the intangible assets when the following requirements are simultaneously met:
a. Complete the intangible assets to make it usable or for sale and have the technical feasibility.
b. Have the intention to complete the intangible assets for using or sales.
c. The mode for the economic interest produced by the intangible assets includes the evidence of
there being the market for the products produced by the intangible assets or for the intangible assets
by self, and the usefulness for the assets used internal.
d. There are sufficient technical, financial resources and other resources for support to complete the
development of the intangible assets and there is ability to use or sell the intangible assets.
e. The expenditure belong to the intangible assets in the development stage can be reliably
measured.
The expenditure in the development stage but above-mentioned requirements not met, shall be
recorded into the current profits and losses when occurring. The development expenses recorded
into the profits and losses during previous period shall not be recognized again in the future period.
The capitalized expenses in the development stage are shown as the development costs on the
balance sheet, and shall be transferred to the intangible assets from the date that the project reaching
to the intended use.
20. Impairment of long-term assets
(1) At the end of accounting period, the Company shall check the long-term assets. There may be an
impairment of assets when the following signs occur. The recoverable amount shall be estimated
and the asset impairment loss shall be made in light of the difference that the recoverable amount of
assets is less than the book value when the impairment happens. The signs are stated as follows:
① The current market price of assets falls, and its decrease is obviously higher than the expected
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drop over time or due to the normal use;
②The economic, technological or legal environment in which the enterprise operates, or the market
where the assets is situated will have any significant change in the current period or in the near
future, which will cause adverse impact on the enterprise;
③The market interest rate or any other market investment return rate has risen in the current period,
and thus the discount rate of the enterprise for calculating the expected future cash flow of the assets
will be affected, which will result in great decline of the recoverable amount of the assets;
④Any evidence shows that the assets have become obsolete or have been damaged substantially;
⑤ The assets have been or will be left unused, or terminated for use, of disposed ahead of schedule;
⑥ Any evidence in the internal report of the enterprise shows that the economic performance of the
assets has been or will be lower than the expected performance, for example, the net cash flow
created by assets or the operating profit (or loss) realized is lower (higher) than the expected
amount;
⑦Other evidence indicates that the impairment of assets has probably occurred.
(2) The evidences to withdraw the impairment provision of long-term investment, fixed assets,
construction in process and intangible asset: at the end of the report period, the Company will
withdraw the asset impairment provision according to the difference that the recoverable amount of
single asset is less than the book value. The recoverable value shall be recognized according to the
high one between the net amount of fair value deducting disposal charge and the current value of the
expected future cash flow of assets. If the recoverable amount of the single asset cannot be obtained,
the recoverable amount shall be recognized on the basis of the asset group to which the asset
belongs.
(3) The business reputation formed by merger of enterprises shall be distributed into the related
asset group at the end of every year, then the asset group shall have the impairment test to measure
the recoverable amount, comparing to the book value, if the recoverable amount of the asset group
is less than the book amount, the difference shall first charge against the book value of the business
reputation which is apportioned to the asset group; if the book value of the business reputation is not
enough to charge against the difference, the uncharged balance shall be distributed by the other
assets of the asset group in accordance with the book value.
(4) The recognition of the asset group under impairment test: the related minimum of asset groups
that can share the synergetic benefit brought from merger through the prediction of the Company.
(5) The above impairment losses of assets cannot be reversed as soon as they are recognized.
21. Long-term amortizable expenses
The long-term amortizable expense refers to all the expenses that occurred and undertaken in the
current period or with the amortization limit of more than 1 year for the company. The long-term
amortizable expense shall be amortized within the benefit period according to the direct method.
The details are as follow:
Items Amortized years Notes
Rental expenses 30 years
Decoration expenses and etc. 3 years
22. Payroll
The payroll means that the enterprise gives various remunerations for obtaining services providing
by the employees or other relevant expenses. It includes the short-term compensation, the welfare
after demission, the demission welfare and the welfare of the long-term employees.
(1)The short-term compensation
Employee compensation refers to the reward or compensation of various modes provided by the
Company which wants to receive the service offering by the employees or to execute the release of
the labor relationship. The employee compensation including the short-term salary, departure
benefits, demission benefits and other long-term employee benefits.
The short-term compensation actually happened during the accounting period when the active staff
offering the
service for the Company should be recognized as liabilities and is included in the current gains
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and losses or relevant assets cost.
(2)The welfare after demission
The Company divides the departure benefits plan into defined contribution plans and defined benefit
plans. Benefits plan of after demission refer to the agreement between the Company and employees
on the departure benefits, or the regulations or methods formulated by the Company for providing
welfares after demission for the employees. Of which, defined contribution plans refers to the
departure benefits plan that the Company no more undertake the further payment obligations after
the payment and deposit of the fixed expenses for the independent funds; defined benefit plans
refers to the departure benefits plan except for the defined contribution plans.
A. Defined contribution plans
During the accounting period when providing the service for the employees, the Company will
recognize the deposited amount as the liabilities which measured by defined contribution plans and
include in the current gains and losses or the relevant assets cost.
B. Defined benefit plans
Other long-term employee benefits the Company had not executed the defined contribution plans or
met with the conditions of defined benefit plans.
(3)The demission welfare
When the Company is unable to unilaterally withdraw the plan on the cancellation of labor
relationship or the layoff proposal, or when recognizing the costs or expenses related to the
reorganization of paying the demission welfare, should recognize the payroll liabilities from the
demission welfare and include in the current gains and losses.
(4)The welfare of the long-term employees
The Company provides the other long-term employee benefit for the employees, and for those met
with the defined contribution plans, should be disposed according to the above accounting polices of
the defined contribution plans; the others except for the former, should be recognized according to
above accounting polices of the defined benefit plans and measure the net liabilities or net assets of
other long-term employee benefits.
23. Measurement method of estimated debts
(1) Recognition of estimated liabilities
a. The obligation pertinent to contingencies shall be recognized as estimated debts when the
following conditions are satisfied simultaneously:
That obligation is a current obligation of the enterprise;
b. It is likely to cause any economic benefit to flow out of the enterprise as a result of performance
of the obligation;
c. The amount of the obligation can be measured in a reliable way.
The Company shall check the book value of the estimated debts on the balance sheet date. If there is
any exact evidence indicating that the book value cannot really reflect the current best estimate, the
Company will adjust the book value in accordance with the current best estimate.
(2) Accounting of estimated liabilities
Estimated liabilities shall be conducted initial measurement according to the best estimates of
related existing liabilities, when the company recognizes the optimum estimation, it shall be in
overall consideration of risks, uncertainty and time value of currency and other factors related to
contingent matters. When the influence of time value of money is significant, the optimum
estimates shall be determined by discounting relevant future cash outflow
The optimum estimates are conducted as follows:
If there is a continuous range (or area) for the necessary expenses and the same result possibility
within the range, the optimum estimate is recognized according to the middle value, namely the
average of upper limit and lower limit of amount within the range.
If there no exits a continuous range (or area) for the necessary expenses or the different result
possibility within the range even if there is a continuous range, and if there are contingent matters
related to individual item, the optimum estimate is recognized according to the amount that has
most possibility to occur. If there are contingent matters involving multiple items, the optimum
estimate is counted and confirmed as per all the possible results and associated probabilities.
It can be recognized separately as assets when estimated liabilities are paid by the company but can
be fully or partly compensated by a third party and the compensation mostly sure can be received,
which does not exceed the book value of estimated liabilities.
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24. Share-based compensation
(1)Share-based compensation types
Share-based compensation divides into equity settlement and cash settlement.
(2) Determining methods for fair value of equity instruments
The fair value of equity instruments such as options granted and existing in the active market can be
determined by reference to the quotations in the active market. Otherwise, it is determined by option
pricing model, which should take into account the following factors: a. exercise prices of options;b.
validity of options; c. current prices of underlying shares; d. estimated volatility of share prices; e.
estimated dividends; f. risk-free interest rate of options within validity.
When determining the equity instruments fair value of the granted date, the company considers the
impact of the market conditions and non-vesting conditions as specified in Share-based
compensation agreements. If there are non-vesting conditions and employees or any other parties
satisfy all non-market vesting conditions (for example, service period), Share-based compensation
can be recognized as costs and expenses for received services.
(3)Basis of best exercisable equity instruments estimate
Every balance sheet day during the vesting period, the company makes best estimate according to
the most updated number of employees that are eligible to exercise their options and adjusts the
quantity of exercisable equity instruments. On vesting dates, the final estimated quantity of
exercisable equity instruments is consistent with the actual exercisable quantity.
(4)Accounting treatment for implementation, amendment and termination of share-based
compensation
Share-based compensation by equity settlement is calculated according to the fair value of granted
equity instruments. The Company can count it in costs and expenses by reference to the fair value of
the granted date and increase capital reserve accordingly if it can be exercised immediately after
being granted. If it cannot be exercised till services or performance meets the conditions during the
vesting period, then on every balance sheet date during the vesting period, received services can be
counted in related costs or expenses and capital reserve by reference to best estimates of exercisable
equity instruments quantity and its fair value of the granted date. No adjustments will be made on
already recognized costs or expenses and ownership equity after vesting dates.
For share-based compensation by cash settlement, the fair value is measured by reference to that of
the liabilities determined based the shares or other equity instruments the company undertakes. The
company can count it as costs and expenses by reference to the fair value of the granted date and
increase liabilities accordingly if it can be exercised immediately after being granted. If it cannot be
exercised till services or performance meets the conditions during the vesting period, then on every
balance sheet date during the vesting period, received services can be counted in related costs or
expenses and liabilities by reference to best estimates of exercisable equity instruments quantity and
the fair value of the liabilities the company undertakes. On every balance sheet date and settlement
date before the related liabilities are cleared, the fair value is re-calculated and the changes are
counted in current profit and loss.
(5) Equity instruments changes and accounting treatment
If the granted equity instruments are cancelled during the vesting period, the company treats it as
accelerated vesting and counts in current profit and loss the amounts that should be recognized
during the rest vesting period and recognizes capital reserve accordingly at the same time. 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.
25. Revenue recognition
(1) The recognition of the revenue from selling goods: the revenue from selling shall be recognized
by the following conditions: The significant risks and rewards of ownership of the goods have been
transferred to the buyer by the Company; the Company retains neither continuous management right
that usually keeps relation with the ownership nor effective control over the sold goods; the relevant
amount of revenue can be measured in a reliable way; the relevant revenue and costs of selling
goods can be measured in a reliable way.
(2) Giving of asset using rights: Income from giving of assets is recognized when satisfying
requirements: related economic benefit flows in very possibly, income can be measured reliably.
1) Amount of interest income is calculated according to the time and actual interest rate of the
monetary capital is used by other party.
2) Income of using fee is calculated upon the charge period and calculation provided by the related
contract or agreement.
30
(3) Labor revenues
When the results of the transaction of the company could be reliable estimated (that is the total
revenues and the total costs of labor service could be reliable measured and the completion degree
of the labor service could be reliable with the relevant price accounts could flow in), the company
would recognized the realization of the revenues on the settlement date according to the completion
percentage method. When the results of the transaction of the company could not be reliable
estimated, the company should recognized the revenues on the settlement date acc company ording
to the labor service cost amount which had occurred and be estimated that could be compensated
and include the happened cost in the current gains and losses.
(4)Construction contracts
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.
If the result of the construction contract is not able to be evaluated reliably, but the 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.
1) Contract progress is recognized at the ratio of accumulative actual cost on the predicted complete
cost.
2) In case the expected total cost is greater than the total income, the expected loss will be
recognized as expense of the current period. If the construction is in process, the balance is
accounted as inventory impairment provision; if the contract is not executed, the balance is
accounted as expected liability.
(5) Assets transfers with buy-back conditions
If the company signs buy-back agreement with the purchase party when selling products or
transferring other assets, it should make a judgment whether the product sale satisfies revenue
recognition conditions. As buy-back after sale is financing transaction, the company does not
recognize sales revenue when delivering products or assets. During buy-back, interests are put aside
and counted in financial expenses based on the differences between buy-back and sales prices.
26. Calculation method of government grants
The government grants related to the proceeds, if those used for compensating the relevant future
expenses or losses of the enterprise shall be recognized as deferred income and shall, during the
period when the relevant expenses are recognized, recorded in the current profits and losses; or if
those used for compensating the relevant expenses or losses that have been incurred to the enterprise
shall be directly recorded in the current profits and losses.
The government grants related to the assets shall be recognized as deferred income and shall be
distributed averagely in the related asset using period, then counted into current loss and interest.
However, government subsidiary according to nominated amount shall be counted into current loss
and interest directly.
27. Deferred income tax assets/Deferred income tax liability
Deferred income tax assets and liabilities are calculated and recognized according to the differences
(temporary differences) between the taxation base of assets and liabilities and the book value. As at
balance sheet dates, both are calculated at applicable tax rates during the period it is anticipated to
take the assets back or clear the liabilities.
(1) References for confirmation of deferred income tax assets
The Company recognizes the deferred tax income assets arising from deductible temporary
differences to the limit of the deductible losses and taxable income that it probably would achieve to
reduce deductible temporary differences and carry forward. However, it does not recognize those
arising from the initial measurements of assets or liabilities in the following transactions.
a.Transactions are not business merge; b. It neither affects the accounting profit nor taxable income
or deductible losses while transactions being made.
For the deductible temporary differences related to the investments by associated enterprises, which
meet the following conditions, deferred tax assets should be recognized accordingly: the temporary
differences are probable to revert in the foreseeable future and it is very likely to achieve taxable
income to deduct such differences.
(2)The confirmation basis of deferred income tax liabilities
The Company recognizes the payable but not paid yet taxable temporary differences of current or
prior periods as deferred tax liabilities, which exclude the following:
31
a. The temporary differences that are formed at initial measurement of goodwill;
b. Non-business merge transactions or events that neither affect accounting profits nor the
temporary differences arising from taxable income (or deductible losses);
c. The taxable temporary differences related to the investments by the subsidiaries and associated
enterprises, which can revert in a controllable timing but will not revert in the foreseeable future.
28.Lease
(1) Accounting of operational leasing
a. The leasing fees paid for the leased assets by the company shall be recorded as the current
expense according to the straight-line method in the whole lease term not excluding the rent free
period. The initially direct expense related to the lease transactions paid by the company shall be
recognized as the current expense.
When the assets lessor has assumed the lease-related expenses which should be borne by the
company, the company shall deduct these expenses from the total amount of rent, amortize in the
lease term according to the rents after deducted and record as the current expenses.
b. The leasing fees received for the leased assets by the company shall be recognized as the lease
income according to the straight-line method in the whole lease term not excluding the rent free
period. The initially direct expense related to the lease transactions paid by the company shall be
recognized as the current expense. For a large of amount, it will be capitalized and recorded as the
current revenue based on the same confirmation of lease income during the whole lease period.
When the company has assumed the lease-related expenses which should be borne by the lessee, the
company shall deduct these expenses from the total amount of rent and amortize in the lease term
according to the rents after deducted.
(2) Accounting Method for Financing Leases
a. The assets acquired under financing leases: the lower value between the fair value of leased assets
and the present value of the minimum lease payments is recognized as the recorded value, the
minimum lease payments are recognized as the recorded value of 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.
b. Finance leased assets: the company inception of the lease, the finance lease receivables, the
difference between the present value and the residual value of its unsecured recognized as
unrealized financing income recognized in the respective period of future lease rental income
received, initial direct costs related to the transaction with the rental companies, and included in the
initial measurement of the finance lease receivable and reduce the amount of revenue recognized
over the lease term.
29. Changes in significant accounting policies and estimates
(1) Change of main accounting policies
Not applicable.
(2) Change of main accounting estimations
Not applicable.
VI.Taxation
1. Value added tax (‘VAT’)
The Group is subject to VAT, which is a tax charged on top of the selling price at a general rate of
17% or 13% or 6% depending on different kinds of products. An input credit is available whereby
VAT previously paid on purchases of raw materials and semi-finished products can be used to offset
the VAT on sales to determine the net VAT payable.
2. The business tax rate is 5% or 3% of revenue.
3. Urban maintenance and construction tax is 7% of turnover tax payable.
4. Education surtax is 3% of turnover tax payable.
5. Local education surtax is 2% of turnover tax payable.
6. Income tax
32
(1)The parent company’s income tax was measured at 15%.
(2)Income tax of subsidiaries and associates
Taxation on profit of subsidiaries and associates is calculated at the applicable rates in accordance
with the relevant tax regulations. Certain subsidiaries and associates enjoy preferential income tax
policies with approvals from tax authorities. The applicable income tax rates of major subsidiaries
and associates are as follows:
Relationship with Applicable income
Names of the entities the Company tax rate in 2016
The conpany 15%
Dalian Bingshan Group Engeering Co., Ltd. Subsidiary 25%
Dalian Bingshan Group Sales Co., Ltd. Subsidiary 25%
Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd. 25%
Dalian Bingshan Air-Conditioning Equipment Co., Ltd. Subsidiary 25%
Dalian Bingshan Guardian Automation Co., Ltd. Subsidiary 15%
Wuhan New World Refrigeration Industrial Co., Ltd. Subsidiary 15%
Bingshan Technical Service (Dalian ) Co., Ltd. Subsidiary 25%
Dalian Universe Thermal Technology Co., Ltd Subsidiary 25%
The parent company was affirmed to be hi-tech enterprise by Dalian Municipal Bureau of Science and Technology,
Dalian Municipal Bureau of Finance, the State Administration of Taxation Dalian Municipal Office and Dalian Local
Taxation Bureau, Bingshan Guardian was affirmed to be hi-tech enterprise by Dalian Municipal Bureau of Science
and Technology, Dalian Municipal Bureau of Finance, the State Administration of Taxation Dalian Municipal Office
and Dalian Local Taxation Bureauand WNWRI was affirmed to be hi-tech enterprise by Wuhan Municipal Bureau of
Science and Technology, Wuhan Municipal Bureau of Finance, the State Administration of Taxation Wuhan
Municipal Office and Wuhan Local Taxation Bureau. Their applicable income tax rates were 15% for 2016.
VII. Notes to the consolidated financial statements
1. Monetary fund
Items 30-06-2016 31-12-2015
Cash on hand 58,492.04 57,023.71
Cash in bank 911,161,806.26 224,067,110.89
Other monetary fund 10,121,261.17 20,665,689.93
Total 921,341,559.47 244,789,824.53
The restrained amount of monetary fund is shown as below.
Items 30-06-2016 31-12-2015
Deposit for bank acceptances 10,121,261.17 18,503,739.86
Deposit for letter of credit
Deposit for letter of guarantee 2,161,950.07
Deposit for Migrant workers 2,400,000.00 2,400,000.00
Total 12,521,261.17 23,065,689.93
The reason of the ending balance of Monetary fund increased 276.38% compared with the beginning
balance was the raise fund from issuing of A-shares privately increased.
33
2. Notes receivable
(1) Classification
Items 30-06-2016 31-12-2015
Bank acceptance 57,845,288.47 47,267,168.02
Trade acceptance 14,218,348.14 24,432,349.66
Total 72,063,636.61 71,699,517.68
(2) pledged notes receivable at the end of the reporting period.
Items Pledged notes
Bank acceptance 16,722,611.89
Total 16,722,611.89
(3) The notes receivable endorsed but not matured at the end of the reporting period.
Items The derecognization amount Not derecognization amount
Bank acceptance 145,249,643.41
Trade acceptance 1,355,900.00
Total 146,605,543.41
3. Accounts receivable
(1) Classification
30-06-2016
Categories Balance Provision for doubtful debts
Book value
Amount Proportion Amount Proportion
Bad debt provided on group basis 941,691,457.08 100.00% 141,020,137.29 14.98% 800,671,319.79
Total 941,691,457.08 100.00% 141,020,137.29 14.98% 800,671,319.79
Continued:
31-12-2015
Categories Balance Provision for doubtful debts
Book value
Amount Proportion Amount Proportion
Bad debt provided on group
801,499,499.03 100.00% 130,075,662.16 16.23% 671,423,836.87
basis
Total 801,499,499.03 100.00% 130,075,662.16 16.23% 671,423,836.87
Accounts receivable which bad debt provisions are provided on age basis in the group
30-06-2016
Account ages
Amount Provision for bad debts Proportion rates
Within 1 year 660,568,574.49 33,028,428.74 5.00%
1 to 2 years 138,361,343.84 13,836,134.38 10.00%
2 to 3 years 46,719,231.93 14,015,769.58 30.00%
34
3 to 4 years 18,458,001.22 9,229,000.61 50.00%
4 to 5 years 33,367,508.11 26,694,006.49 80.00%
Over 5 years 44,216,797.49 44,216,797.49 100.00%
Total 941,691,457.08 141,020,137.29
(2) Provision for bad debts accrued, regain or switch back in the period
In the current period, RMB 10,944,475.13 were accrued provision for bad debts,
(3) There no accounts receivable being written-off during the current period
(4) Top 5 on amount of accounts receivable
Proportion Provision for bad
Companies Amount
(%) debts
Beijing Huashang Bingshan Refrigeration Equipment
45,465,710.84 4.83 2,337,085.54
Co., Ltd.
Yi Du(Shen Yang) cold-chain logistics development
40,995,409.60 4.35 2,245,740.10
Co., Ltd.
Xin Yi Yuan Da Construction installation engineering
37,730,000.00 4.01 1,886,500.00
Co., Ltd.
Panasonic Cold-Chain (Dalian) Co. , Ltd. 34,652,918.52 3.68 1,732,645.93
Anheuser-busch inbev beer (China) investment Co.,
Ltd. 21,475,600.00 2.28 1,073,780.00
Total 180,319,638.96 19.15 9,275,751.57
4. Advances to suppliers
(1) The aging of advances to suppliers
30-06-2016 31-12-2015
Account ages
Amount Proportion Amount Proportion
Within 1 year 63,498,863.63 92.81% 40,798,252.80 92.26%
1 to 2 years 4,921,290.80 7.19% 3,420,635.11 7.74%
Total 68,420,154.43 -- 44,218,887.91 --
35
(2)Top 5 on amount of advances to suppliers
Proportion
Companies Amount Ages Reasons
(%)
2015; Prepayment for
Dalian Bingshan Engineering & Trading Co. , Ltd. 18,849,997.66 27.55
2016 goods
Prepayment for
Dalian Hua Li coating equipment Co. , Ltd. 6,400,000.00 9.35 2016
goods
Dalian Sheng Da Mechanical and Electrical Equipment Co., Prepayment for
4,400,000.00 6.43 2016
Ltd. goods
Prepayment for
Ao LItong Crane (Liao Ning) Co., Ltd. 3,600,000.00 5.26 2016
goods
State Grid Liaoning Electric Power Co., Ltd. Dalian Power Prepayment for
3,251,369.12 4.75 2016
Supply Company goods
Total 36,501,366.78 53.34
The reason of the ending balance of advances to suppliers increased 54.73% compared with the
beginning balance was advanced equipment s increased.
5. Dividends receivable
Names 30-06-2016 31-12-2015
Wu Han steel electric ) Co. , Ltd. 44,600.00
Panasonic Compressor (Dalian) Co. , Ltd. 32,400,000.00
Panasonic Refrigeration (Dalian) Co. , Ltd. 2,600,000.00
Total 35,000,000.00 44,600.00
The ending balance of dividend receivable increased 78375.34% compared with the period-begin,
mainly due to the undue dividend receivable increased.
6. Other accounts receivable
(1) Classification
30-06-2016
Items Balance Provision for doubtful debts
Book value
Amount Proportion Amount Proportion
Bad debt provided on group basis 44,231,284.32 100.00% 5,302,370.36 11.99% 38,928,913.96
Total 44,231,284.32 100.00% 5,302,370.36 11.99% 38,928,913.96
Continued：
31-12-2015
Items Balance Provision for doubtful debts
Book value
Amount Proportion Amount Proportion
Bad debt provided on group basis 28,070,768.44 100.00% 5,315,440.23 18.94% 22,755,328.21
Total 28,070,768.44 100.00% 5,315,440.23 18.94% 22,755,328.21
36
There is no major single amount and bad debt provision provided individually.
Other accounts receivable which bad debt provisions are provided on age basis in the group:
30-06-2016
Account ages
Amount Provision for bad debts Proportion rates
Within 1year 29,081,657.02 1,454,082.84 5.00%
1 to 2 years 10,334,896.49 1,033,489.65 10.00%
2 to 3 years 1,718,858.90 515,657.67 30.00%
3 to 4 years 1,049,838.80 524,919.40 50.00%
4 to 5 years 1,359,061.57 1,087,249.26 80.00%
Over 5 years 686,971.54 686,971.54 100.00%
Total 44,231,284.32 5,302,370.36
(2) Provision for bad debts accrued, regain or switch back in the period
In the current period, RMB13,069.87 were switch back in the period.
(3) There was no write-off of other accounts receivable during the current year
(4) The nature of other accounts receivable
Items 30-06-2016 31-12-2015
Guarantee deposits 29,916,545.89 15,948,041.08
Petty cash 10,308,666.04 5,883,732.14
To or fro accounts 3,792,106.14 4,007,029.29
Others 213,966.25 2,231,965.93
Total 44,231,284.32 28,070,768.44
(5) Top 5 on amount of other accounts receivable
Proportio Provision for
Companies Contents Amount Ages
n bad debts
Dalian Tianbao Green Food Less than 1
Performance bonds 18,000,000.00 40.70% 1,300,000.00
Co., Ltd year
Less than 1
Jinzhou Dalian New District
year,1-2
Building energy efficiency Cash deposits 1,852,574.57 4.19% 315,242.86
years,2-3years
management office
,4-5years
Barkol Jian Kun Animal Less than 1
Performance bonds 1,294,561.00 2.93% 64,728.05
year
Husbandry Co., Ltd
Bin Zhou Goldman Food Less than 1
Bid bond 1,200,000.00 2.71% 60,000.00
Co., Ltd. year
Dalian Construction
Engineering labor Migrant workers
500,000.00 2-3 years 1.31% 150,000.00
insurance management pay deposit
center
Total 22,847,135.57 51.66% 1,889,970.91
The ending balance of accounts receivable increased 71.08% compared with the period-begin, mainly
due to the Bid bond increased.
37
7. Inventories
(1) Costs
30-06-2016 31-12-2015
Items
Provision for Provision for
Book balance impairment of Book value Book balance impairment of Book value
inventories inventories
Raw materials 56,381,116.97 70,000.00 56,311,116.97 65,069,599.90 6,954,631.11 58,114,968.79
Work-in-progress 50,354,541.52 5,000.00 50,349,541.52 71,830,972.13 1,148,743.24 70,682,228.89
Finished goods 105,258,153.51 718,171.20 104,539,982.31 74,379,267.69 2,588,149.42 71,791,118.27
Materials on
consignment for further 3,563,008.00 3,563,008.00 2,190,375.70 2,190,375.70
processing
Low-value
122,146.47 122,146.47 134,671.91 134,671.91
consumptions
Self-manufactured
35,727,374.46 35,727,374.46 30,014,321.83 1,386,950.94 28,627,370.89
semi-finished products
Constructing projects 42,527,734.94 42,527,734.94 27,558,415.02 27,558,415.02
Total 293,934,075.87 793,171.20 293,140,904.67 271,177,624.18 12,078,474.71 259,099,149.47
(2) Provision for impairment of inventories
Current year addition Current year disposal
Items 31-12-2015 30-06-2016
Provision Others Reversal Written-off Others
Raw materials 6,954,631.11 6,884,631.11 70,000.00
Work-in-progress 1,148,743.24 1,143,743.24 5,000.00
Finished goods 2,588,149.42 1,869,978.22 718,171.20
Self-manufactured
1,386,950.94 1,386,950.94
semi-finished products
Total 12,078,474.71 11,285,303.51 793,171.20
The Company carried out impairment test for the inventory at period-end, accrued inventory falling
price reserves in the Period.
8. Other current assets
Items 30-06-2016 31-12-2015
Enterprise income tax prepaid 1,535,831.40 2,628,292.68
the pending VAT input tax 13,779,722.47
Prepaid expenses 476,397.20 70,696.71
Total 2,012,228.60 16,478,711.86
The closing balance of the Company’s other current assets has reduced by 87.79% compared with
the opening balance, mainly due to the pending VAT input tax has been transferred to accounts
payable taxes from this account in current period.
9. Available for sale financial assets
38
30-06-2016 31-12-2015
Items Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Debt instruments
554,595,771.44 5,224,770.80 549,371,000.64 738,500,019.89 5,224,770.80 733,275,249.09
available for sale
Equity instruments
537,041,506.94 1,582,164.89 535,459,342.05 720,945,755.39 1,582,164.89 719,363,590.50
available for sale
Measured by fair
17,554,264.50 3,642,605.91 13,911,658.59 17,554,264.50 3,642,605.91 13,911,658.59
value
Measured by cost 554,595,771.44 5,224,770.80 549,371,000.64 738,500,019.89 5,224,770.80 733,275,249.09
Total 554,595,771.44 5,224,770.80 549,371,000.64 738,500,019.89 5,224,770.80 733,275,249.09
(1) Equity instruments available for sale measured by Fair value
Equity t instruments Debt instruments
Items Total
available for sale available for sale
Cost of Equity instrument/ amortized cost of debt instrument 30,098,895.00 30,098,895.00
The total amount of fair value change in other
430,901,220.15 430,901,220.15
comprehensive income
The confirmed deferred income tax liabilities 76,041,391.79 76,041,391.79
Fair value 1,582,164.89 1,582,164.89
The amount of impairment 535,459,342.05 535,459,342.05
Total 30,098,895.00 30,098,895.00
(2) Equity instruments available for sale measured by cost at the end of current year
Book balance
Names Increased Decreased
Beginning Ending
during current during current Shareholding(%)
balance balance
period period
Liaoning Mike Group Co., Ltd. 1,020,000.00 1,020,000.00 3.57
Guotai Junan Investment Management
3,057,316.00 3,057,316.00 0.22
Co., Ltd.
Thermo King Container Temperature
11,207,806.00 11,207,806.00 17.80
Control (Suzhou) Co., Ltd.
Wuhan Steel and Electric Co., Ltd. 1,315,142.50 1,315,142.50 0.06
Liaoning Enterprises United Industry
105,000.00 105,000.00 4.20
Company
Zibo Traction Motor Co., Ltd. 849,000.00 849,000.00 0.76
Total 17,554,264.50 17,554,264.50
Continued：
Provision for impairment
Decreased Cash dividends
Names Increased during the
Beginning during Ending
during current current period
balance current balance
period
period
Liaoning Mike Group Co., Ltd. 310,000.00
Guotai Junan Investment Management Co., Ltd. 2,688,605.91 2,688,605.91
Thermo King Container Temperature Control
(Suzhou) Co., Ltd.
39
Names Provision for impairment Cash dividends
during the
Wuhan Steel and Electric Co., Ltd. current period
Liaoning Enterprises United Industry Company 105,000.00 105,000.00
Zibo Traction Motor Co., Ltd. 849,000.00 849,000.00
Total 3,642,605.91 3,642,605.91 310,000.00
On 26 June 2015, Guotai Junan Securities Co., Ltd. (“Guotai Junan” for short) listed on Shanghai Stock Exchange,
stock code 601211; as for the 30,098,895 shares of Guotai Junan, the Company measured the shares on fair
value.The company received cash dividend 15,651,425.40 yuan within the period.
(3) Change of value of the equity instruments available for sale measured by cost within the
period.
Equity instruments Debt instruments
Categories others Total
available for sale available for sale
The impairment at the beginning of current year 5,224,770.80 5,224,770.80
The impairment at the end of the year 5,224,770.80 5,224,770.80
40
10. Long-term equity investments
Increase/Decrease
Provision
Beginning Gains and losses Adjustment Cash bonus or Provision for for
Name Changes Ending balance
balance recognized of other profits impairment of impairme
Increased Decreased of other Others
under the equity comprehensiv announced to the current nt
equity
method e income issue period
ⅠJoint venture
Dalian Bingshan – P&A
Recreation Development 2,837,097.81 -312,549.39 2,524,548.42
Engineering Co., Ltd.
subtotal 2,837,097.81 -312,549.39 2,524,548.42
Ⅱ Associates
Dalian Bingshan Engineering
15,691,101.62 993,294.34 16,684,395.96
&Trading Co.,Ltd.
Panasonic Refrigeration
159,226,107.64 -4,386,685.47 5,200,000.00 149,639,422.17
(Dalian) Co., Ltd.
Dalian Honjo Chemical Co.,
8,729,712.48 756,624.23 528,860.67 8,957,476.04
Ltd.
Panasonic Cold-Chain (Dalian)
215,719,525.88 2,999,101.22 8,000,000.00 210,718,627.10
Co., Ltd.
Keinin-Grand Ocean Thermal
Technology (Dalian) Co., 48,607,035.29 9,707,389.44 14,200,000.00 44,114,424.73
Ltd.
Panasonic Compressor (Dalian)
457,892,368.92 30,737,147.02 32,400,000.00 456,229,515.94
Co., Ltd.
Dalian Sanyo Meica
21,958,069.24 302,067.26 22,260,136.50
Electronics Co., Ltd.
MHI Bingshan Refrigeration
22,276,332.84 -5,414,843.75 16,861,489.09
(Dalian) Co.,Ltd.
Beijing Huashang Bingshan
Refrigeration and
1,936,646.98 -457,205.02 1,479,441.96
Air-conditioning Machinery
Co., Ltd.
Dalian Fuji Bingshan Vending
113,268,454.28 18,530,027.53 131,798,481.81
Machine Co., Ltd.
41
Increase/Decrease
Provision
Beginning Gains and losses Adjustment Cash bonus or Provision for for
Name Changes Ending balance
balance recognized of other profits impairment of impairme
Increased Decreased of other Others
under the equity comprehensiv announced to the current nt
equity
method e income issue period
Wuhan Skaff Power Control
1,000,000.00 0.00 1,000,000.00
Equipment Co., Ltd
Changzhou Jingxue Freezing
141,722,024.61 3,534,362.32 5,842,400.00 139,413,986.93
Equipment Co., Ltd
Dalian Fuji Bingshan Vending
4,496,415.53 3,992,158.46 8,488,573.99
Machine Sales Co., Ltd.
Wuhan Lan Ning Energy
6,006,874.61 0.00 6,006,874.61
Technology Co., Ltd.
subtotal 1,217,530,669.92 1,000,000.00 61,293,437.58 66,171,260.67 1,213,652,846.83
Total 1,220,367,767.73 1,000,000.00 60,980,888.19 66,171,260.67 1,216,177,395.25
The board of directors of the Company’s wholly-owned subsidiary Wuhan New World Refrigeration Industrial Co., Ltd. decided to co-found Wuhan Skaff Power
Control Equipment Co., Ltd.together with Wuhan Skaff Technology Co., Ltd. Wuhan New World Refrigeration Industrial Co., Ltd. invests 7,200,000.00 Yuan,
accounting for 36% of the investment ratio. Up to June 30, 2016, Wuhan New World Refrigeration Industrial Co., Ltd. has invested 1,000,000.00 Yuan.
42
11. Investment property
(1)Investment property details
Construction
Items Buildings Land-use-rights Total
in progress
1. Original value
(1)Beginning balance 25,259,944.57 25,259,944.57
(2)Current year addition
Outsourcing
Transferred from Inventories\Fixed
asset-original cost\Construction in
progress
Enterprise merger increase
Shareholders invest
Transferred from other
(3)Current year disposal
disposal
Transferred to other
(4)Ending balance 25,259,944.57 25,259,944.57
2.Accumulated depreciation
(1)Beginning balance 762,360.57 762,360.57
(2)Current year addition 305,662.50 305,662.50
provision or amortization 305,662.50 305,662.50
Enterprise merger increase
Transferred from other
(3)Current year disposal
disposal
Transferred to other
(4)Ending balance 1,068,023.07 1,068,023.07
3..Provision for impairment
(1)Beginning balance
(2)Current year addition
provision or amortization
Enterprise merger increase
Transferred from other
(3)Current year disposal
disposal
Transferred to other
(4)Ending balance
4.Book value
(1)Ending book value 24,191,921.50 24,191,921.50
(2)Beginning book value 24,497,584.00 24,497,584.00
43
(2) Investment property without owner’s certificates
Items Book value Reasons
# 6 workshop building on No. 106 Liaohe East Rd, Dalian
24,191,921.50 Final accounts uncompleted
Economic and Technology Development Zone
Total 24,191,921.50
(3) Explanation of investment property
The company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co.,Ltd., and rent #
6 workshop building 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 meters, and the rent term till 16th July, 2029. The annual rent fee is RMB 4.2 million after
considering the time value of money.
12. Fixed assets
(1) Fixed assets details
Other
Items Buildings Machinery Vehicles Total
equipments
1. Original value
(1)Beginning balance 410,553,157.61 608,130,475.12 25,350,158.35 29,613,012.49 1,073,646,803.57
(2)Current year addition 706,799.50 407,000.00 787,308.40 1,901,107.90
Purchased 519,278.13 407,000.00 733,873.95 1,660,152.08
Transferred from
187,521.37 53,434.45 240,955.82
Construction in progress
Enterprises merger
Shareholders investment
Leased in from financing
Other transferred in
(3)Current year reduction 300,521.02 1,617,939.15 36,351.15 1,954,811.32
Disposal 300,521.02 1,617,939.15 36,351.15 1,954,811.32
Leased out from
financing
Other transferred out
(4)Ending balance 410,553,157.61 608,536,753.60 24,139,219.20 30,363,969.74 1,073,593,100.15
2.Accumulated depreciation
(1)Beginning balance 144,232,577.42 439,963,821.58 16,024,686.66 21,226,057.87 621,447,143.53
(2)Current year addition 5,354,438.17 12,709,004.73 1,032,272.45 827,658.21 19,923,373.56
Provision 5,354,438.17 12,709,004.73 1,032,272.45 827,658.21 19,923,373.56
Enterprises merger
increased
Other transferred in
(3)Current year disposal 289,392.90 1,336,895.85 32,715.90 1,659,004.65
Disposal 289,392.90 1,336,895.85 32,715.90 1,659,004.65
Leased out from
financing
Other transferred out
(4)Ending balance 149,587,015.59 452,383,433.41 15,720,063.26 22,021,000.18 639,711,512.44
3..Provision for impairment
44
Other
Items Buildings Machinery Vehicles Total
equipments
(1)Beginning balance 2,292,229.72 2,292,229.72
(2)Current year addition
Withdrew
Enterprises merger
increase
Other transferred in
(3)Current year disposal
Disposal
Leased out from
financing
Other transferred out
(4)Ending balance 2,292,229.72 2,292,229.72
4.Net Book value
(1)Ending book value 260,966,142.02 153,861,090.47 8,419,155.94 8,342,969.56 431,589,357.99
(2)Beginning book value 266,320,580.19 165,874,423.82 9,325,471.69 8,386,954.62 449,907,430.32
(2)There were no idle fixed assets during the current period.
(3) Fixed assets without owner’s certificates
Items Book value Reasons
Buildings 78,706,835.45 Final accounts uncompleted
Total 78,706,835.45
(4) Wuhan New World Refrigeration Industrial Co., Ltd. borrowed RMB55,000,000 from bank and
mortgaged with its buildings, machinery and land-use-rights . Please refer to the note V.18.
13. Project in construction
(1) Details
Transferred Other
Increased Percen
into fixed decrease
Balance of during Balance of Sources of tage of
Items Budget assets during d during
31-12-2015 current 30-06-2016 funds compl
current current
period etion
period period
Internally
Buildings 30,145.00 135,257,174.97 42,276,676.11 177,533,851.08 generated 5.00%
renovation
funds
Internally
Machinery 17,184.00 1,768,209.61 204,615.39 187,521.37 1,785,303.63 generated
funds
Other 53,434.45 53,434.45
Equipments
Total 47,329.00 137,025,384.58 42,534,725.95 240,955.82 179,319,154.71
(2) There was no provision for impairment needed withdrawn.
(3) Construction in process increased 30.78% over that of last Period, refers to investment for the
new factory.
14. Intangible assets
(1) Intangible assets details
45
Items Land-use-rights Knowhow Others Total
1. Original value
(1)Beginning balance 183,963,902.62 515,224.41 13,886,983.02 198,366,110.05
(2)Current year addition 1,012,270.71 1,012,270.71
Purchase 1,012,270.71 1,012,270.71
Internal research and
development
Enterprises merger increase
Shareholders invest
Other transferred in
(3)Current year disposal
Disposal
Other transferred out
(4)Ending balance 183,963,902.62 515,224.41 14,899,253.73 199,378,380.76
2. Amortization
(1)Beginning balance 34,075,131.67 515,224.41 5,357,951.40 39,948,307.48
(2)Current year addition 1,854,053.45 627,275.64 2,481,329.09
Provision 1,854,053.45 627,275.64 2,481,329.09
Enterprises merger increase
Other transferred in
(3)Current year disposal
Disposal
Other transferred out
(4)Ending balance 35,929,185.12 515,224.41 5,985,227.04 42,429,636.57
3..Provision for impairment
(1)Beginning balance
(2)Current year addition
Withdraw
Enterprises merger increase
Other transferred in
(3)Current year disposal
Disposal
Other transferred out
(4)Ending balance
4.Net book value
(1)Ending book value 148,034,717.50 8,914,026.69 156,948,744.19
(2)Beginning book value 149,888,770.95 8,529,031.62 158,417,802.57
(2) There were no intangible assets increased by internal research and development.
(3) Please refer to the note Ⅴ.18 for land-use-rights mortgaged.
46
15. Goodwill
(1) The original value of the book
Increased during Decreased during
Items 31-12-2015 30-06-2016
current period current period
Dalian Universe Thermal
1,440,347.92 1,440,347.92
Technology Co., Ltd.
Total 1,440,347.92 1,440,347.92
(2) Preparation for the impairment of Goodwill
Goodwill calculation method: the balance between the book value of equity investment the
Company for purchasing Dalian Universe Thermal Technology Co., Ltd. and the fair value share of
acquiree's identifiable net assets obtained on the date of acquisition. The balance between the book
value of equity investment of 48,287,589.78 Yuan and the fair value share of identifiable net assets
of 46,847,241.86 Yuan belonging to Dalian Universe Thermal Technology Co., Ltd. on the
acquisition date of July 31, 2015 is the Company’s consolidated statements goodwill of
1,440,347.92 yuan at the end of period.
16. Long-term deferred expenses
Increased Amortized
Other
Items 31-12-2015 during current during current 30-06-2016
decrease
period period
Employee’s dormitory use right 2,566,083.66 78,915.26 2,487,168.40
Renovation and rebuilding 1,794,123.90 636,008.48 1,158,115.42
Inspection services 34,687.39 24,253.62 10,433.77
The Membership fee 506,000.00 8,250.00 497,750.00
House Rental 956,610.00 26,572.50 930,037.50
Total 5,857,504.95 773,999.86 5,083,505.09
17. Deferred income tax assets/Deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
30-06-2016 31-12-2015
Items Deductible Deductible
temporary Deferred tax assets temporary Deferred tax assets
difference difference
Provision for assets impairment 106,036,081.28 20,163,932.51 107,112,240.49 19,372,358.73
Equity incentive expenses 16,457,204.00 2,468,580.60 12,190,520.00 1,828,578.00
Total 122,493,285.28 22,632,513.11 119,302,760.49 21,200,936.73
(2) Deferred liabilities tax assets had not been off-set
30-06-2016 31-12-2015
Items Taxable temporary Deferred tax Taxable temporary Deferred tax
differences liabilities differences liabilities
Changes in fair value of
506,942,611.94 76,041,391.79 690,846,860.39 103,627,029.06
available for sale financial assets
Total 506,942,611.94 76,041,391.79 690,846,860.39 103,627,029.06
47
(3) Shown to offset the net after the deferred income tax assets and liabilities
Items 30-06-2016 31-12-2015
Deferred liabilities tax assets 22,632,513.11 21,200,936.73
Deferred income tax liabilities 76,041,391.79 103,627,029.06
(4) Unconfirmed deferred income tax assets report
Items 30-06-2016 31-12-2015
Deductable temporary difference 48,596,598.09 47,874,337.13
Deductable losses 30,513,755.44 15,856,452.86
Total 79,110,353.53 63,730,789.99
(5) Deductible losses of unrecognized deferred income tax assets will due the following years
Items 30-06-2016 31-12-2015 Notes
2017 975,555.72 975,555.72
2018 2,350,012.09 2,350,012.09
2019 4,032,513.71 4,032,513.71
2020 8,498,371.34 8,498,371.34
2021 14,657,302.58
Total 30,513,755.44 15,856,452.86 --
The temporary difference was not recognized as deferred income tax assets, because it is uncertain
if there will be enough taxable income.
18. Short-term loans
Terms of loans 30-06-2016 31-12-2015
Mortgage loan 55,000,000.00 55,000,000.00
Credit loan 107,600,000.00 27,600,000.00
Total 162,600,000.00 82,600,000.00
(1) Wuhan New World Refrigeration Industrial Co., Ltd. borrowed short-term loan RMB55,000,000
from bank and mortgaged with its buildings, machinery and land-use-rights. (2)Short-term loans
increased 96.85% over that of last Period, refers to investment for the Credit loan.
19. Notes payable
Items 30-06-2016 31-12-2015
Trade acceptance notes 140,245,974.40 30,756,973.09
Bank acceptance notes 19,687,278.92 203,432,038.63
Total 159,933,253.32 234,189,011.72
Short-term loans decreased 31.71% over that of last Period, refers to accounts payable with notes
decrease.
20. Accounts payable
48
Items 30-06-2016 31-12-2015
Payable for materials 687,051,954.05 554,938,956.23
Payable for projects 113,926,309.87 103,608,705.86
Payable for equipments 1,376,625.90 1,850,841.17
Total 802,354,889.82 660,398,503.26
There was no big amount among the accounts payable aged more than 1 year.
21. Accounts received in advance
(1) Details
Items 30-06-2016 31-12-2015
Advances on sales 109,193,294.12 70,458,014.46
Total 109,193,294.12 70,458,014.46
(2) Accounts received in advance aged over 1 year
Items 30-06-2016 Reasons
Jiangsu Ruixiang Chemical Co., Ltd. 2,023,581.40 Unsettled contract payments on sets projects
Inner Mongolia Datang Dingwang Chemical Co. Ltd. 1,962,400.00 Unsettled contract payments on sets projects
Total 3,985,981.40
Short-term loans increased 54.98% over that of last Period, refers to the order accounts payable in
advance increase.
49
22. Payroll payable
(1) Details
Increased during Decreased during
Items 31-12-2015 30-06-2016
current period current period
Short-term salary 51,857,345.29 121,869,099.39 147,886,555.04 25,839,889.64
Departure welfare-defined
18,770,758.52 18,770,758.52
contribution plans
Termination benefits 23,741.88 23,741.88
Total 51,857,345.29 140,663,599.79 166,681,055.44 25,839,889.64
There was no amount delay paid at the end of the current year.The ending balance of wages payable
decreased 50.17% over that of period-begin, mainly because the year-end bonus for year of 2015are
paid in the Period.
(2)Short-term salary
Increased Decreased
Items 31-12-2015 during current during current 30-06-2016
period period
1.Wages and salaries, bonuses, allowances
33,196,105.86 92,379,134.04 116,181,119.93 9,394,119.97
and subsidies
2.Staff welfare 15,411,064.20 3,199,913.29 4,790,247.07 13,820,730.42
3.Social insurance 646,551.22 9,391,290.22 10,037,841.44
Including： ①Medical insurance 24.00 6,756,367.37 6,756,391.37
② Work-related injury
0.81 611,607.79 611,608.60
insurance
③Materiel insurance 340,117.41 340,117.41
④Housing subsidies 646,526.41 1,683,197.65 2,329,724.06
4. Housing funds 1,917,436.58 14,696,175.71 14,873,149.86 1,740,462.43
5.Labor union fund and employee
686,187.43 2,025,223.63 1,826,834.24 884,576.82
education fee
6. Non-currency welfare 177,362.50 177,362.50
Total 51,857,345.29 121,869,099.39 147,886,555.04 25,839,889.64
The non-currency welfare of the current year was 177,362.50yuan,which amortization of long-term
expenses of employee’s dormitory use right, and dining hall expenses and etc.
(3) Defined contribution plans
Increased during Decreased during
Items 31-12-2015 30-06-2016
current period current period
Basic retirement pension 16,671,821.68 16,671,821.68
Unemployment
831,954.52 831,954.52
insurance
Enterprise annuity 1,266,982.32 1,266,982.32
Total 18,770,758.52 18,770,758.52
The company took part in the government’s basic retirement pension and unemployment insurance
according to the related legislation, and paid the insurance expenses every month and recorded as
expenses or costs of assets. There was no other obligation of payment.
50
23. Taxes payable
Items 30-06-2016 31-12-2015
Value-added tax 18,741,601.63 6,680,785.40
Business tax 1,621,471.10
Enterprise income tax 4,027,194.16 4,876,229.11
Individual income tax 614,887.58 394,393.08
City maintenance and construction tax 1,488,314.56 722,295.23
Property tax 485,839.93 233,857.61
Land use tax 553,225.00 553,224.98
Education surtax 621,213.04 247,975.64
Local education surtax 414,673.31 195,855.11
Water project fund/River route maintenance fee 874,220.42 7,682.90
Safeguard fund for disables 660.00 680.00
Dike maintenance fee
Stamp duty 103,467.01 167,128.20
Total 27,925,296.64 15,701,578.36
The reason of the ending balance increased 77.85% compared with the beginning balance was
value-added tax payable increased.
24. Dividend payable
Name of investors 30-06-2016 31-12-2015 Reasons
Some shareholders not
Legal person shareholders 533,156.00 533,156.00
claimed.
Total 533,156.00 533,156.00
25. Other accounts payable
(1) Details
Items 30-06-2016 31-12-2015
Obligation of restricted shares buy-back 39,503,800.00 39,503,800.00
Loan from non-financial institutes 17,220,000.00 18,200,000.00
Cash pledge and security deposit 12,464,120.16 14,199,502.52
Apply for reimbursement and unpaid 16,217,906.18 17,038,250.51
Cash from related parties 1,011,471.81 627,014.92
Receipts under custody 9,717,510.70 9,255,791.05
Others 623,574.20 1,065,931.15
Total 96,758,383.05 99,890,290.15
(2) Major amount aging over 1 year
Name of investors 30-06-2016 Unpaid reason
Dalian Bingshan Group Co., Ltd. 10,000,000.00 Subsidiary company borrowed for removal and reconstruction
Total 10,000,000.00
51
26. Long-term loans
(1)Details
Items 30-06-2016 31-12-2015
The pledge loan 160,000,000.00
Total 160,000,000.00
On March 29, 2016, the Company held 2016 second extraordinary general meeting which approved
the report on providing guarantee for special funds of China Development Bank development fund.
The guarantee form belongs to the controlling shareholder guarantee, but actually it is a guarantee
for obtaining financial support for the Company itself.
Other notes of long-term loans: the annual interest rate of above special fund loan is 1.2%, and the
interest settlement date is on the 20th of each quarter.
27. Deferred revenue
Increased
Decreased during
Items 31-12-2015 during current 30-06-2016 Reasons
current period
period
Associated with assets 49,378,296.00 832,836.00 48,545,460.00
Associated with earnings
Total 49,378,296.00 832,836.00 48,545,460.00 --
Subsidy from government
Converted to
Increased
non-business Other
Liabilities 31-12-2015 during current 30-06-2016 Notes
incomes during decrease
period
current period
Subsidy fund for Associated
highly effective
3,704,296.00 275,836.00 3,428,460.00 with the
heat pump and
related system asset
Contribution to Associated
subsidiary
45,674,000.00 557,000.00 45,117,000.00 with the
company
relocation asset
Total 49,378,296.00 832,836.00 48,545,460.00
28. Share capitals
Shares
Issuance of
Items 31-12-2015 converted Others 30-06-2016
new shares
from reserve
I. Non-circulating share capital
29,374,451 58,645,096 13,351,650 -2,662,375 98,708,822
with restricted trade conditions
1. State-owned shares
2. Shares held by domestic legal
19,213,921 44,337,717 9,606,960 73,158,598
persons
3. Other domestic shares 10,160,530 14,307,379 3,744,690 -2,662,375 25,550,224
Including: Shares held by
domestic natural person
II. Circulating share capital 330,790,524 166,730,837 2,662,375 500,183,736
1. Domestically listed ordinary
215,790,524 109,230,837 327,683,736
shares (A-share)
2. Domestically listed ordinary
115,000,000 57,500,000 172,500,000
shares (B-share)
III. Total 360,164,975 58,645,096 180,082,487 598,892,558
52
29 .Capital surpluses
Increased during current Decreased during current
Items 31-12-2015 30-06-2016
period period
Capital premium 550,973,185.90 499,651,121.38 180,082,487.00 870,541,820.28
Other capital
79,291,806.05 4,305,051.09 83,596,857.14
surplus
Total 630,264,991.95 503,956,172.47 180,082,487.00 954,138,677.42
Other notes: The Company's share premium increased in current period is mainly the share premium
recognized in the non-public offering of A shares, and the balance between the long-term equity
investment obtained by purchasing minority shareholdings and the net asset share calculated by the
newly increased shareholding ratio and sustainably being calculated since the acquisition date when
purchasing the stock rights held by the minority shareholders of the original holding subsidiary
Dalian Bingshan Guardian Automation Co., Ltd. in the current period.
Other capital reserve refers to the equity-based compensation expenses and incomes after-taxes
from selling odd lots.
30. Treasury stock
Increased during Decreased during
Items 31-12-2015 30-06-2016
current period current period
Implementation of equity
39,503,800.00 39,503,800.00
incentive to buy back
Total 39,503,800.00 39,503,800.00
31. Other comprehensive income
2016.01-06
After-tax
Items 31-12-2015 Amount for the 30-06-2016
Less：income attribute to
period before * **
tax the parent
income tax
company
I.Later can’t
reclassified into
profit and loss of
other
comprehensive
income
II. Later reclassified
into profit and loss
of other 589,988,118.05 -183,904,248.45 -27,585,637.27 -156,318,611.18 433,669,506.87
comprehensive
income
1. Later reclassified
into profit and loss of
other comprehensive
income of long term 2,768,286.72 2,768,286.72
investments
accounting by equity
method
2. Changes in fair
value recognized in
gains and losses of 587,219,831.33 -183,904,248.45 -27,585,637.27 -156,318,611.18 430,901,220.15
the available-for-sale
financial assets
53
2016.01-06
After-tax
Items 31-12-2015 Amount for the 30-06-2016
Less：income attribute to
period before * **
tax the parent
income tax
company
3. Foreign currency
translation
differences of
financial statements
Total 589,988,118.05 -183,904,248.45 -27,585,637.27 -156,318,611.18 433,669,506.87
*Less：Previously recognized in profit or loss in other comprehensive income
**After-tax attribute to minority shareholder
32. Special reserve
Increased Decreased
Items 31-12-2015 during current during current 30-06-2016
year year
Safety production expenses 991,475.25 991,475.25
Total 991,475.25 991,475.25
33. Surplus reserves
Increased during Decreased during
Items 31-12-2015 30-06-2016
current period current period
Statutory surplus reserves 285,277,941.21 285,277,941.21
Discretionary surplus reserve 295,491,798.95 25,204,992.51 320,696,791.46
Total 580,769,740.16 25,204,992.51 605,974,732.67
The increase of the surplus reserves were because the other reserved capital
RMB25.205-million-yuan was withdrawn on the basis of 20% of the company’s net profit of 2015
according to the resolution of the General Meeting of Shareholders of year 2015.
34. Retained earnings
Extraction or allocation
Items 30-06-2016
proportion
Retained earnings at the end of prior year 525,925,066.25
Add: Changes in accounting policies
At beginning of the year after retrospective adjustment 525,925,066.25
Add: Net profit of the current period 67,487,286.84
Less: Appropriation of statutory surplus reserves
20% of net profit of year
Appropriation of discretionary surplus reserve 25,204,992.51 2015
Appropriation of employee’s welfare and bonus fund in foreign invested company
RMB 0.10per share of year
Cash dividends 36,016,497.50
2015
Dividends transferred to share capital
Retained earnings at the end of the current period 532,190,863.08
35. Total operating income and operating cost
54
(1) Total operating income and cost
2016.01-06 2015.01-06
Items
Income Cost Income Cost
Key business 772,140,745.33 629,066,634.42 703,214,354.35 556,138,449.36
Other business 7,779,118.70 4,129,943.49 8,525,987.78 6,208,948.56
Total 779,919,864.03 633,196,577.91 711,740,342.13 562,347,397.92
36. Taxes and surcharges
Items 2016.01-06 2015.01-06
Business tax 1,586,176.90 1,465,636.16
City maintenance and construction tax 2,750,214.17 2,284,878.37
Education surtax 1,174,322.92 985,263.05
Local education surtax 782,044.05 655,805.10
Dike maintenance fee 75,277.68
Others 64,958.38
Total 6,357,716.42 5,466,860.36
37. Selling and distribution expenses
Items 2016.01-06 2015.01-06
Handle official business expenses 7,103,945.27 2,892,181.98
Salaries and subsidies 12,327,952.20 15,972,653.49
Depreciation expenses 209,599.16 253,348.11
Transportations expenses 4,421,080.73 4,077,525.44
Entertainment expenses 2,191,836.31 2,404,142.35
Traveling expenses 9,026,118.33 7,215,386.47
Maintenance and repair expenses 2,295,441.74 1,429,195.03
Advertisement and bids expenses 369,627.36 554,869.98
Others 326,787.27 528,017.73
Total 38,272,388.37 35,327,320.58
38. Administrative expenses
Items 2016.01-06 2015.01-06
Handle official business expenses 6,536,088.68 6,415,197.31
Salaries and subsidies 56,386,472.43 50,794,074.60
Depreciation expenses 4,494,752.21 3,515,372.56
Transportations expenses 149,474.47 507,034.43
Entertainment expenses 1,378,241.68 1,292,750.44
Traveling expenses 3,078,561.16 1,811,111.96
Maintenance and repair expenses 2,431,907.45 2,345,494.31
Advertisement expenses 97,363.40 95,386.88
Other taxes and fees 6,107,717.11 4,303,683.83
Insurance expenses 529,161.15 1,880,493.01
Research and development expenses 12,447,488.02 10,335,005.70
Amortization of long term assets 2,460,670.57 2,243,366.80
Design consultant and test service expenses 2,599,058.70 2,511,459.14
Safety production fees 1,218,456.35
55
Others 643,288.90 686,672.43
Total 100,558,702.28 88,737,103.40
39. Financial expenses
Items 2016.01-06 2015.01-06
Interest expenses 3,530,211.72 2,531,600.00
Less:Interest income 1,455,384.30 5,005,928.14
Losses on exchange(Less: Gain on exchange) 80,921.92 260,322.22
Other expenses 757,739.94 382,682.47
Total 2,913,489.28 -1,831,323.45
The financial expenses increased259.09% over that of last period, mainly because the loan interest
increased and basis of deposit decreased in the Period, then the interest income declined.
40. Impairment losses
Items 2016.01-06 2015.01-06
Provision for bad debts 10,931,405.26 2,475,284.97
Provision for obsolete inventories
Provision for the impairment of available-for-sale financial assets
Provision for the impairment of held to maturity investments
Provision for the impairment of long-term equity investments
Provision for the impairment of investing property
Provision for the impairment of fixed assets
Provision for the impairment of construction materials
Provision for the impairment of construction in progress
Provision for the impairment of bearer biological assets
Provision for the impairment of oil assets
Provision for the impairment of intangible assets
Provision for the impairment of goodwill
Provision for the impairment of other assets
Total 10,931,405.26 2,475,284.97
The Company's asset impairment loss in current period has an increase over the previous period,
mainly due to an increase in provision for bad debts of receivables in current period.
41. Gain/ (loss) from investment
(1) Details
Items 2016.01-06 2015.01-06
Calculated by equity method 60,980,888.19 48,083,081.52
Calculated by cost method
Gain from disposal associated company
Gain from holding of financial assets available for sale 15,961,425.40 310,000.00
Gain from disposal financial assets available for sale
Total 76,942,313.59 48,393,081.52
(2) Other notes: The Company's investment income in current period increased 58.99% over the
previous period, mainly due to the increase in investment income of financial assets available for
sale during the holding period; the withdrawal of investment income has no significant restriction.
42. Non-business incomes
(1)Details
The amount recorded in
Items 2016.01-06 2015.01-06 non-recurring gains and losses of
56
current period
Gain on the disposal of non-current
64,284.56 28,868.06 64,284.56
assets
Penalty and fine income 188,975.90 43,208.00 188,975.90
Subsidy fund from government 6,626,921.74 56,012.50 6,626,921.74
Deferred income 832,836.00 2,546,039.19
Debts need not paid 800.00 88,269.78 800.00
Others 14,409.73 6,114.54 14,409.73
Total 7,728,227.93 2,768,512.07 6,895,391.93
(2) Subsidy fund from government
Items 2016.01-06 2015.01-06 Explanations
Subsidy for information construction from Dalian Municipal
Bureau of Finance
Aid for patent from Dalian Intellectual Property Service
Centre
Subsidy of economic support policy 30,000.00 43,400.00 Related to gain
R22 alternative project subsidies 5,533,711.00 Related to gain
Subsidy for social security 11,165.00 Related to gain
Subsidy for circular economy project
Award for QC team
Aid for patent from Wuhan Intellectual Property Bureau
Subsidy and award for patent
Mayor’s Quality Award
Financial incentive award for increasing production and
sales
Subsidy for science and technology development
Subsidy for small and medium-sized enterprises exploiting
international market
Financial award for export
Taxes given back 1,063,210.74 1,447.50 Related to gain
International market developing fund for small and mid size
enterprises
Subsidy for the first set of important technology equipment
Reward for promoting increase of industry of year 2014
Subsidy for patent from Wuhan Intellectual Property Bureau
Subsidy for disposal of useless vehicles
Total 6,626,921.74 56,012.50 --
The non-operation revenue increased 179.15% over that of last period, mainly due to the increase of
Subsidy fund from government in the Period.
43. Non-business expenses
The amount recorded in
Items 2016.01-06 2015.01-06 non-recurring gains and losses of
current period
Loss on the disposal of non-current assets 189,436.67 2,394.33 189,436.67
Fines and penalties 50.00 2,071.37 50.00
Others 94,537.82 94,537.82
Total 284,024.49 4,465.70 284,024.49
57
The non-operation expenditure increased 6260.13% over that of last period, mainly due to the
increase in losses of the Company's non-current assets disposal in current period.
44. Income tax expenses
(1) Details:
Items 2016.01-06 2015.01-06
Current income tax expense 5,588,418.91 7,360,497.09
Deferred income tax expense -1,430,024.05 -1,668,851.78
Total 4,158,394.86 5,691,645.31
(2) Adjustment process of accounting profit and income tax expense
Items 2016.01-06
Total profits 72,076,101.54
Current income tax expense accounted by tax and relevant
10,811,415.23
regulations
Influence of different tax rate suitable to subsidiary 5,420,614.00
Influence of income tax before adjustment -1,511,065.98
Influence of non taxable income -11,541,347.04
Influence of not deductable costs, expenses and losses -280,923.25
Influence of deductable losses of deferred income tax assets
3,696,573.57
derecognized used in previous period
Influence of deductible temporary difference or deductible losses
-2,436,871.67
of deferred income tax assets derecognized in reporting period.
Income tax expenses 4,158,394.86
45. Relevant information about cash flow statement
(1) Other cash received relating to operating activities
Items 2016.01-06 2015.01-06
Government grants 6,221,088.91 54,565.00
Received travel expense receivable 5,013,079.16 5,113,665.00
Deposit received 1,060,540.84 644,271.81
Received amount paid on behalf of related companies 882,599.17 7,513,302.20
interest income 7,392,253.66 772,394.36
Others 1,414,024.35 1,014,539.73
Total 21,983,586.09 15,112,738.10
(2) Other cash paid relating to operating activities
Items 2016.01-06 2015.01-06
Borrowing of travel expense 5,315,059.64 4,880,283.65
Deposit paid 16,553,871.66 4,360,672.45
Expenditure 38,698,072.90 45,836,364.92
Bank handling charges 757,739.94 382,682.47
Others 3,125,968.44 11,055,701.02
Total 64,450,712.58 66,515,704.51
(3) Cash receipts related to other financing activities
58
Items 2016.01-06 2015.01-06
The dividend of odd lots 45,137.75
Guarantee money took back 20,665,689.93 32,953,876.63
Total 20,710,827.68 32,953,876.63
(4) Other cash paid relating to financing activities
Items 2016.01-06 2015.01-06
Interests on discount of bill acceptance 39,984.00
Guarantee money paid 10,121,261.17 34,920,526.90
Total 10,121,261.17 34,920,526.90
46. Complementary information for consolidated cash flow statement
(1) The relationship between the net profit and the net cash flows from operating activities
Items 2016.01-06 2015.01-06
1. Reconciliation from the net profit to the cash flows from operating
activities
Net profit 67,917,706.68 64,683,180.93
Add: Provisions for assets impairment 10,931,405.26 2,475,284.97
Depreciation of fixed assets 19,987,138.87 18,524,223.20
Amortization of intangible assets 2,481,329.09 2,180,457.64
Amortization of long-term deferred expenses 773,999.86 739,252.02
Losses on disposal of fixed assets, intangible assets and other long-term
-64,284.56 -28,868.06
assets
Losses on scrapping of fixed assets 189,436.67 2,394.33
Losses on variation of fair value
Finance expenses 3,547,510.15 2,486,829.17
Investment losses -76,942,313.59 -48,393,081.52
Decrease in deferred tax assets -1,431,576.38 -1,668,851.78
Increase in deferred tax liabilities
Decrease in inventory -22,756,451.69 22,423,162.65
Decrease in operating receivables 25,986,002.41 -106,331,110.05
Increase in operating payables -78,098,619.17 -87,682,794.87
Others 4,266,684.00
Net cash flows from operating activities -43,212,032.40 -130,589,921.37
2. Investing and financing activities that do not involve cash receipts and
payments
Conversion of debt into capital
Convertible bonds to be expired within one year
Fixed assets under finance lease
3. Net increase in cash and cash equivalents
Cash at the end of the period 908,820,298.30 330,091,246.94
Less: Cash at the beginning of the period 221,724,134.60 475,557,589.39
Plus: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Net increase in cash and cash equivalents 687,096,163.70 -145,466,342.45
59
(2) Cash and cash equivalents
Items 2016.01-06 2015.01-06
1.Cash 908,820,298.30 221,724,134.60
Including: cash on hand 58,492.04 57,023.71
Bank deposits that can be used for payment whenever necessary 908,761,806.26 221,667,110.89
Other monetary capital that can be used for payment whenever
necessary
2.Cash equivalents
Including: Bonds mature within 3 months
3.Balance of cash and cash equivalents at the end of the current period 908,820,298.30 221,724,134.60
Including: Cash or cash equivalents which was restricted in use of the
Company and subsidiaries in the group
47. The assets with the ownership or use right restricted
Items 30-06-2016 Reasons
Monetary fund 12,521,261.17 Guarantee money
Fixed assets 94,648,941.86 Subsidiaries’ assets mortgaged for loans
Intangible assets 53,192,294.00 Subsidiaries’ assets mortgaged for loans
Total 160,362,497.03
48. Foreign currency monetary items
Ending balance of Original Ending balance of RMB
Items Exchange rate
currency equivalent
Monetary fund
Included: USD 2,188.57 6.6312 14,512.85
EUR 5.60 7.375 41.30
JPY 637,056.00 0.064491 41,084.38
GBP 66,975.04 8.9212 597,497.73
Accounts receivable
Included: GBP 63,257.36 8.9212 564,331.56
Accounts payable
Included: GBP 36,399.28 8.9212 324,725.26
VIII. Changes of consolidation scope
The Company’s 15th meeting of the 6th session of the Board of directors decided the Company’s subsidiary Dalian
Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd . to merge the original wholly-owned subsidiary Dalian
Bingshan Metal Processing Co., Ltd. The base date of merger was December 31, 2014, and Dalian Bingshan
Ryosetsu Quick Freezing Equipment Co., Ltd. became the surviving corporation after the merger. Up to June 30,
2016, above-mentioned changes have been completed, and the Company’s shareholding ratio is changed to 95%.
Therefore, in the current consolidated statements, one consolidation subject Dalian Bingshan Metal Processing Co.,
Ltd would be removed.
Dalian Universe Thermal Technology Co., Ltd., formerly known as Dalian Sanyo Efficient Refrigeration System Co.,
Ltd. , has changed its name to be Dalian Universe Thermal Technology Co., Ltd. on May 3, 2016.
60
IX. Equity in other entities
1. Equity in subsidiary
(1) The structure of the enterprise group
Main Shareholding
Registered Business (%) Obtaining
Name of subsidiaries business
address nature method
address Direct Indirect
Dalian Bingshan Group Engineering Co., Ltd. Dalian Dalian Installation 100 Establish
Dalian Bingshan Group Sales Co., Ltd. Dalian Dalian Trading 100 Establish
Dalian Bingshan Air-Conditioning Equipment
Dalian Dalian Manufacturing 70 Establish
Co., Ltd.
Dalian Bingshan Guardian Automation Co.,
Dalian Dalian Manufacturing 100 Establish
Ltd.
Dalian Bingshan Ryosetsu Quick Freezing
Dalian Dalian Manufacturing 95 Establish
Equipment Co., Ltd.
Wuhan New World Refrigeration Industrial
Dalian Dalian Manufacturing 100 Purchase
Co., Ltd.
Bingshan Technical Service (Dalian ) Co., Ltd. Wuhan Wuhan Manufacturing 100 Establish
Wuhan New World Refrigeration 100
Wuhan Wuhan Installation Establish
Air-Conditioning Engineering l Co., Ltd.
Ningbo Bingshan Refrigeration Air 51
Ningbo Ningbo Installation Establish
Conditioner Engineering Co., Ltd
Dalian Universe Thermal Technology Co., Ltd Dalian Dalian Manufacturing 55 Merger
①All the holding proportion in subsidiaries were the same with voting proportion；
②The company held over 50% voting proportion in subsidiaries；
③ The company could control these subsidiaries；
(2) The company do not have Important Non-wholly-owned Subsidiary
2. The transaction of the company with its owner’s equity share changed but still controlling
the subsidiary
(1) Note to owner’s equity share changed in subsidiaries
The Company’s 15th meeting of the 6th session of the Board of directors decided the Company’s
subsidiary Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd. to merge the original
wholly-owned subsidiary Dalian Bingshan Metal Processing Co., Ltd. The base date of merger was
December 31, 2014, Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd. became the
surviving corporation after the merger. Up to June 30, 2016, above-mentioned changes have been
completed, and the Company’s shareholding ratio is changed to 95%. Therefore, in the current
consolidated statements, one consolidation subject Dalian Bingshan Metal Processing Co., Ltd
would be removed.
The Company’s board of directors decided to accept 30% stock rights of Dalian Bingshan Group
Sales Co., Ltd. held by wholly-owned subsidiary Wuhan New World Refrigeration Industrial Co.,
Ltd . Up to June 30, 2016, the above-mentioned stock right transfer has been completed, the
Company's shareholding ratio changes to 100%, and Dalian Bingshan Group Sales Co., Ltd.
becomes a wholly owned subsidiary of the Company.
The Company’s board of directors decided to accept 40% stock rights of the original holding
subsidiary, Dalian Bingshan Guardian Automation Co., Ltd., up to June 30, 2016, the
above-mentioned stock right transfer has been completed, the Company's shareholding ratio
changes to 100%, and Dalian Bingshan Guardian Automation Co., Ltd becomes a wholly owned
subsidiary of the Company.
The Company’s board of directors decided to transfer 5% stock rights of Wuhan New World
Refrigeration Air-Conditioning Engineering Co., Ltd. to Wuhan New World Refrigeration Industrial
Co., Ltd., up to June 30, 2016, the above-mentioned stock right transfer has been completed, the
Company's shareholding ratio changes to 0%, Wuhan New World Refrigeration Air-Conditioning
61
Engineering Co., Ltd. becomes a wholly owned subsidiary of Wuhan New World Refrigeration
Industrial Co., Ltd.
(2) The transaction’s influence to equity of minority shareholders and attributable to the owner's
equity of the parent company
Items Dalian Bingshan Guardian Automation Co., Ltd..
Cash 5,350,000.00
Total Purchase cost 5,350,000.00
Less：Net assets calculated by the proportion of shareholding
2,364,863.04
of the transaction
Difference 2,985,136.96-
Among them:adjust capital reserve 2,985,136.96
3. Equity in joint venture arrangement or associated enterprise
(1)The important of joint ventures or affiliated companies
Main Register Shareholding
Accountin
Name of joint ventures or affiliated companies business ed Business nature Indire
Direct g methods
address address ct
Joint ventures:
Dalian Bingshan – P&A Recreation Development Equity
Dalian Dalian Installation 50%
Engineering Co., Ltd method
Affiliated companies:
Keinin-Grand Ocean Thermal Technology Equity
Dalian Dalian Manufacturing 20%
(Dalian) Co., Ltd method
Equity
Panasonic Compressor (Dalian) Co., Ltd Dalian Dalian Manufacturing 40%
method
Equity
Dalian Fuji Bingshan Vending Machine Co., Ltd. Dalian Dalian Manufacturing 49%
method
(2)The main financial information of joint ventures
Items 30-06-2016/2016.01-06 31-12-2015/2015.01-06
Current assets 7,316,401.95 9,006,060.68
Including: Cash and cash equivalents 707,757.51 1,132,033.68
Non-current assets 167,521.38 471,614.42
Assets total 7,483,923.33 9,477,675.10
Current liabilities 2,434,826.49 3,803,479.48
Non-current liabilities
Total liabilities 2,434,826.49 3,803,479.48
Minority interests
Equity to the parent company 5,049,096.84 5,674,195.62
Net assets calculated according to the
2,524,548.42 2,837,097.81
shareholding proportions
Adjusting events
—Goodwill
—Unrealized profits of insider trading
—Employee’s welfare and bonus fund in foreign
invested company
Book value of equity investment of joint ventures 2,524,548.42 2,837,097.81
62
Items 30-06-2016/2016.01-06 31-12-2015/2015.01-06
Fair value of equity investment with public offer
Operating income 547,417.22 703,985.12
Finance expenses -103.89 -535.21
Income tax
Net profit -625,098.78 -794,000.74
Other comprehensive income
Total comprehensive income -625,098.78 -794,000.74
The dividends received from joint ventures during
current year
(3) The main financial information of affiliated companies
30-06-2016/2016.01-06
Items Keinin-Grand Ocean Dalian Fuji Bingshan
Panasonic Compressor
Thermal Technology Vending Machine Co.,
(Dalian) Co., Ltd
(Dalian) Co., Ltd Ltd.
Current assets 284,904,487.35 1,393,550,023.50 389,452,096.74
Non-current assets 90,765,552.36 338,825,743.26 61,267,026.08
Total assets 375,670,039.71 1,732,375,766.76 450,719,122.82
Current liabilities 155,097,916.12 585,119,988.41 177,472,374.15
Non-current liabilities 4,270,255.18
Total liabilities 155,097,916.12 585,119,988.41 181,742,629.33
Minority interests
Equity to the parent company 220,572,123.59 1,147,255,778.35 268,976,493.49
Net assets calculated according to the
44,114,424.73 458,902,311.34 131,798,481.81
shareholding proportions
Others -2,672,795.40
Adjusting events
—Goodwill
—Unrealized profits of insider
tradings
—Employee’s welfare and bonus fund
in foreign invested company
Book value of equity investment of
44,114,424.73 456,229,515.94 131,798,481.81
affiliated companies
Fair value of equity investment with
public offer
Operating income 396,083,571.29 835,196,599.56 285,818,272.42
Net profit 48,536,947.22 83,524,856.04 37,816,382.72
Net profit of discontinuing operation
Other comprehensive income
Total comprehensive income 48,536,947.22 83,524,856.04 37,816,382.72
The current dividends received from
14,200,000.00
joint ventures
Continued：
Items 31-12-2015/2015.01-06
63
Keinin-Grand Ocean Dalian Fuji Bingshan
Panasonic Compressor
Thermal Technology Vending Machine Co.,
(Dalian) Co., Ltd
(Dalian) Co., Ltd Ltd.
Current assets 288,372,485.62 1,394,237,128.94 361,305,733.51
Non-current assets 96,260,501.77 350,839,627.19 61,629,639.07
Total assets 384,632,987.39 1,745,076,756.13 422,935,372.58
Current liabilities 141,597,811.02 587,437,711.53 188,191,481.16
Non-current liabilities 3,583,780.65
Total liabilities 141,597,811.02 587,437,711.53 191,775,261.81
Minority interests
Equity to the parent company 243,035,176.37 1,157,639,044.60 231,160,110.77
Net assets calculated according to the
48,607,035.27 463,055,617.84 113,268,454.28
shareholding proportions
Others -5,163,248.92
Adjusting events
—Goodwill
—Unrealized profits of insider
tradings
—Employee’s welfare and bonus fund
in foreign invested company
Book value of equity investment of
48,607,035.27 457,892,368.92 113,268,454.28
affiliated companies
Fair value of equity investment with
public offer
Operating income 334,917,403.41 985,412,375.73 209,861,461.28
Net profit 38,063,823.88 80,005,169.74 25,328,865.57
Net profit of discontinuing operation
Other comprehensive income
Total comprehensive income 38,063,823.88 80,005,169.74 25,328,865.57
The current dividends received from
9,600,000.00
joint ventures
(4) Summary financial information of insignificant affiliated companies
Items 30-06-2016/2016.01-06 31-12-2015/2015.01-06
Total book value of investment of
581,510,424.35 597,762,811.43
affiliated companies
The total of following items according to
-- --
the shareholding proportions
Net profit 1,853,839.21 -964,253.70
Other comprehensive income
Total comprehensive income 1,853,839.21 -964,253.70
(5) No significant restrictions of the ability of joint venture or associated enterprise transfer funds
to the company.
(6)No excess loss of joint venture or associated enterprise.
(7)No commitment related to joint venture or affiliated company needed disclose.
(8)No Contingent liabilities related to joint venture or affiliated company needed disclose.
X. The risk related financial instruments
The Company faces a variety of financial risks in the course of operation: credit risk, liquidity risk
and market risk (mainly exchange risk and interest rate risk). The objective of the company‘s risk
64
management is to obtain a proper balance between the risks and benefits, reduce the risks‘ negative
impact on the company's operating performance.
1. Credit risk
The credit risk of the company included monetary fund, accounts receivable, notes receivable and
other accounts receivable etc. The management made credit policies and supervised changes of
these credit explosure.
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.
Company mainly faces customer credit risk caused by the credit sale. The Company would make an
evaluation on new customers‘ credit risk before signing new contracts, which includes external
credit rating and bank reference letter (when available) under certain circumstances. The Company
sets quota on credit sale for each customer and such quota is the maximum amount without
additional approvals. As at June 30, 2016, the big five customers of accounts receivable was19.15%
of total accounts receivable, and as at 31st December 2015 that was 11.69%.
Except guarantee events disclosed in the notes, there was no other credit risk of guarantee of the
company.
2. Liquidity risk
Liquidity risk was referred to the risk of shortage of funds incurred when the enterprise perform the
obligation of settlement by cash or other financial assets.
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 provide plenty of fund.
As at June 30, 2016, the company’s financial assets and financial liabilities in line with non discount
cash flow of the contracts as following：
30-06-2016
Items Original value of 1-2 2-5
Book value Within 1 year Over 5 years
the book years years
Monetary fund 921,341,559.47 921,341,559.47 921,341,559.47
Notes receivable 72,063,636.61 72,063,636.61 72,063,636.61
Accounts
800,671,319.79 941,691,457.08 800,671,319.79
receivable
Interest
receivable
Dividends
receivable
Other
38,928,913.96 44,231,284.32 38,928,913.96
receivables
Available for
sale financial 549,371,000.64 554,595,771.44 549,371,000.64
assets
Subtotal 2,382,376,430.47 2,533,923,708.92 1,833,005,429.83 549,371,000.64
Short-term
162,600,000.00 162,600,000.00 162,600,000.00
borrowings
Notes payable 159,933,253.32 159,933,253.32 159,933,253.32
Accounts
802,354,889.82 802,354,889.82 802,354,889.82
payable
Employees’
compensation 25,839,889.64 25,839,889.64 25,839,889.64
payable
Taxes payable 27,925,296.64 27,925,296.64 27,925,296.64
Dividend
533,156.00 533,156.00 533,156.00
payable
Other payables 96,758,383.05 96,758,383.05 96,758,383.05
Subtotal 1,275,944,868.47 1,275,944,868.47 1,275,944,868.47
65
Continued:
31-12-2015
Items Original value of 1-2 2-5
Book value Within 1 year Over 5 years
the book years years
Monetary fund 244,789,824.53 244,789,824.53 244,789,824.53
Notes receivable 71,699,517.68 71,699,517.68 71,699,517.68
Accounts
671,423,836.87 801,499,499.03 671,423,836.87
receivable
Interest receivable
Other receivables 22,755,328.21 28,070,768.44 22,755,328.21
Available for sale
733,275,249.09 738,500,019.89 733,275,249.09
financial assets
Subtotal 1,743,943,756.38 1,884,559,629.57 1,010,668,507.29 733,275,249.09
Short-term
82,600,000.00 82,600,000.00 82,600,000.00
borrowings
Notes payable 234,189,011.72 234,189,011.72 234,189,011.72
Accounts payable 660,398,503.26 660,398,503.26 660,398,503.26
Employees’
compensation 51,857,345.29 51,857,345.29 51,857,345.29
payable
Taxes payable 15,701,578.36 15,701,578.36 15,701,578.36
Dividend payable 533,156.00 533,156.00 533,156.00
Other payables 99,890,290.15 99,890,290.15 99,890,290.15
Subtotal 1,145,169,884.78 1,145,169,884.78 1,145,169,884.78
3. Market risk
(1) Exchange rate risk
Most of the company’s business located in China, and settled with RMB. But the company
defined exchange rate risk of foreign currency assets and future foreign currency transaction
(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.
①During the current year the company didn’t buy any forward foreign exchange contract or swap
contract.
② As at June 30,2016, the company’s foreign currency assets and foreign currency liabilities listed
in RMB as following：
30-06-2016
Items
USD JPY GBP EUR Total
Foreign currency
financial assets,
Monetary fund 14,512.85 41,084.38 597,497.73 41.30 653,136.26
accounts
564,331.56 564,331.56
receivable
Subtotal 14,512.85 41,084.38 1,161,829.290 41.30 1,217,467.82
Foreign currency
financial liability
Accounts payable 324,725.26 324,725.26
Subtotal 324,725.26 324,725.26
66
Continued:
31-12-2015
Items
USD JPY GBP EUR Total
Foreign currency
financial assets,
Monetary fund 12,746.41 12,351.43 39.73 25,137.57
accounts
1,188,836.80 1,188,836.80
receivable
Subtotal 12,746.41 12,351.43 1,188,836.80 39.73 1,213,974.37
Foreign currency
financial liability
Accounts payable 43,679.53 350,011.84 393,691.37
Subtotal 43,679.53 350,011.84 393,691.37
③ The sensitive analysis：
As at June 30, 2016, because the company’s foreign currency assets or liabilities were small, the
change of foreign exchange rate had little impact to the company’s net profit or shareholders' equity.
(2) Interest rate risk
The interest risk of the Group incurred from bank loan, interest rate 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 the subsidiary of the company Wuhan New World
Refrigeration Industrial Co., Ltd. borrowed short term loan RMB 162,600,000.00, 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 face interest rate increasing.
The sensitive analysis：
Base on the assumption of interest rate change of 50 BP, the company’s net profit of first half of
2016 will increase or decrease RMB 1,613,000.00.
XI.Fair value
1.Items measured at fair value
As at 30 June,2016,some equity investments of available-for-sale financial assets were measured at
the fair value.
Fair value level can be classified according to the input value of the lowest level that is significant
to whole measurement of fair value:
First level: quote of same assets or liabilities in an active market (unadjusted).
Second level: directly (price) or indirectly (derive from price) use observable input value other than
market quote of assets or liabilities in the first level.
Third level: use any input value not based on observable market data in assets or liabilities
(unobservable input value).
2.Item measured at fair value at the end of current year
Fair value at the end of current year
Items
First level Second level Third level Total
Sub-total of available for sale
535,459,342.05 535,459,342.05
financial assets
Debt instrument investment
Equity instrument investment 535,459,342.05 535,459,342.05
Other investment
Total assets 535,459,342.05 535,459,342.05
67
3.Determined on the basis of continuous first level for fair value measurement according to the
closed price of stock market as at 30 June,2016.
4.The above fair value of the company did not changed in different levels.
5.Financial assets and financial liabilities not measured at fair value mainly include: Cash and
bank balances, notes receivable,accounts receivable, other receivables, short-term loans, notes
payable, accounts payable, other payables, long-term payables, etc.The difference between the book
value of financial assets and financial liabilities that are not measured at fair value and fair value is
small.
XII. Related Parties Relationships and Transactions
1. Information of the company’s parent company
Registered Nature of Registered The parent The parent
Name of enterprise company's company's
address business capital shareholding voting right
Dalian Bingshan
Dalian Manufacture 158,580,000.00 20.38% 20.38%
Group Co., Ltd.
(1) Information of the company’s parent company
Dalian Bingshan Group Co., Ltd. Is a sino–foreign joint venture located No.888 Xinan Road,
Shahekou District, Dalian, China. The legal representative person of Dalian Bingshan Group Co.,
Ltd. is Ji Zhijian, and the registered capital is RMB158.6 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 product, freezing and cooling product,
different size of air-conditioners, petrochemical equipment, electronic and electronic control
product, home electronic appliance, environment protect equipment and etc. (Business needed
administrative permission must have the administrative license. )
(2) There is no ultimate controller of the Company.
2. The information of the subsidiaries please refers to IX.1 of this note.
3. The information of the affiliated company and joint venture please refers to IX.3 of this
note.
The companies had related party transaction with the company during the current period or had
transaction balance at the end of last period, including:
Names of the joint ventures or affiliated companies Relationships with the Company
Dalian Bingshan – P&A Recreation Development Engineering Co., Ltd Joint venture of the Company
Dalian Bingshan Engineering & Trading Co. , Ltd Affiliated company of the Company
Panasonic Refrigeration (Dalian) Co., Ltd Affiliated company of the Company
Dalian Honjo Chemical Co., Ltd Affiliated company of the Company
Panasonic Cold-chain (Dalian) Co., Ltd Affiliated company of the Company
Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd Affiliated company of the Company
Panasonic compressor (Dalian) Co., Ltd Affiliated company of the Company
Dalian Sanyo Meica Electronics Co., Ltd Affiliated company of the Company
Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd Affiliated company of the Company
Dalian Fuji Bingshan Vending Machine Co., Ltd Affiliated company of the Company
Affiliated company of the Company’s
Wuhan Skaff Technology Co., Ltd.
wholly owned subsidiary
MHI Bingshan Refrigeration (Dalian) Co., Ltd. Affiliated company of the Company
Changzhou Jingxue Freezing Equipment Co., Ltd. Affiliated company of the Company
68
Names of the joint ventures or affiliated companies Relationships with the Company
Dalian Fuji Bingshan Vending Machine sales Co., Ltd. Affiliated company of the Company
Affiliated company of the Company’s
Wuhan Lanning Science and Technology Co., Ltd.
wholly owned subsidiary
Dalian Universe Thermal Technology Co., Ltd was Affiliated company of the company during January to July of
2015, and its financial information of January to July of 2015 included in the above form.
4. Other type of the related parties
Names of the related parties Relationships with the Company
Dalian Bingshan Group Refrigeration Equipment Co., Ltd Subsidiary of Dalian Bingshan Group
Dalian Third Refrigeration Equipment Factory Subsidiary of Dalian Bingshan Group
Beijing Bingshan Serial Refrigeration Equipment Co., Ltd Subsidiary of Dalian Bingshan Group
Dalian Spindle Cooling Towers Co., Ltd Affiliated company of Dalian Bingshan Group
Dalian Bingshan Metal Technology Co., Ltd Affiliated company of Dalian Bingshan Group
Dalian Mahe Level Control Electrical Appliances Co., Ltd Affiliated company of Dalian Bingshan Group
Linde Engineering (Dalian) Co., Ltd Affiliated company of Dalian Bingshan Group
BAC Dalian Co., Ltd Joint venture of Dalian Bingshan Group
Linde Engineering (Hangzhou) Co., Ltd Affiliated company of Dalian Bingshan Group
5. The transactions between the Company and the related parties
(1) The transactions between the Company and the related parties, whose balance sheet has been
included in the consolidated statement and between the parties themselves have been offset.
(2) Purchases of goods from related parties
Details of
Names of the related parties 2016.01-06 2015.01-06
transaction
Panasonic Refrigeration (Dalian) Co., Ltd. Purchases of goods 16,350,205.01 716,562.50
Panasonic Cold-chain (Dalian) Co., Ltd. Purchases of goods 49,463,789.05 3,304,862.95
Panasonic Compressor (Dalian) Co., Ltd. Purchases of goods 492,916.24 784,752.13
Dalian Sanyo Meica Electronics Co., Ltd Purchases of goods 100,828.42
Dalian Bingshan Group Refrigeration Equipment Co., Ltd Purchases of goods 3,765,208.16 6,421,503.17
Dalian Third Refrigeration Equipment Factory Purchases of goods 2,084,492.27 4,812,153.85
Dalian Spindle Cooling Towers Co., Ltd Purchases of goods 2,395,299.17 322,813.68
BAC Dalian Co., Ltd Purchases of goods 12,887,831.74 13,730,297.37
Dalian Bingshan Engineering & Trading Co. , Ltd Purchases of goods 39,568,673.65 25,668,455.04
Dalian Bingshan Metal Technology Co., Ltd Purchases of goods 135,866.73 155,961.17
Dalian Universe Thermal Technology Co., Ltd Purchases of goods 763,338.56
Beijing Bingshan Serial Refrigeration Equipment Co., Ltd Purchases of goods 1,196,581.20
Beijing Huashang Bingshan Refrigeration and
Purchases of goods 735,876.07 1,350,427.36
Air-conditioning Machinery Co., Ltd
Dalian Fuji Bingshan Vending Machine Co., Ltd Purchases of goods 252,850.67 242,187.94
Changzhou Jingxue Freezing Equipment Co., Ltd. Purchases of goods 4,760,451.36
MHI Bingshan Refrigeration (Dalian) Co., Ltd. Purchases of goods
Dalian Mahe Level Control Electrical Appliances Co., Ltd Purchases of goods
Total 134,090,041.32 58,374,144.14
69
Sales of goods to related parties
Details of
Names of the related parties transaction 2016.01-06 2015.01-06
Panasonic Refrigeration (Dalian) Co., Ltd. Sales of goods 21,582,100.94 1,781,171.34
Panasonic Cold-chain (Dalian) Co., Ltd. Sales of goods 57,316,492.81 15,006,735.92
Panasonic Compressor (Dalian) Co., Ltd. Sales of goods 1,881,902.10 3,404,239.17
Dalian Bingshan Group Refrigeration Equipment Co., Ltd Sales of goods 333,368.74 667,450.61
Dalian Third Refrigeration Equipment Factory Sales of goods 1,271,146.60 806,213.11
Dalian Bingshan Engineering & Trading Co. , Ltd Sales of goods 15,835,494.96 40,431,688.39
Dalian Bingshan – P&A Recreation Development Engineering Co., Ltd Sales of goods 6,538.47
Beijing Bingshan Serial Refrigeration Equipment Co., Ltd Sales of goods 244,919.97 280,132.48
Beijing Huashang Bingshan Serial Refrigeration Equipment Co., Ltd Sales of goods 24,132,951.49 20,449,376.92
Dalian Fuji Bingshan Vending Machine Co., Ltd Sales of goods 17,124,023.00 5,074,438.78
Dalian Bingshan Metal Technology Co., Ltd Sales of goods 40,617.44 51,224.53
Dalian Universe Thermal Technology Co., Ltd Sales of goods 401,446.85
MHI Bingshan Refrigeration (Dalian) Co.,Ltd Sales of goods 4,310,615.52 2,702,016.14
Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd Sales of goods 383,428.42
Changzhou Jingxue Freezing Equipment Co., Ltd. Sales of goods 214,510.03
Dalian Spindle Cooling Towers Co., Ltd Sales of goods 1,767,403.68 194,966.55
Total 146,438,975.70 91,257,639.26
(3) Leasing fee from related party
Rental income of Rental income of
Lessee Leasing assets current period previous period
Dalian Bingshan Group Co., Ltd. Offices
MHI Bingshan Refrigeration (Dalian) Co.,Ltd. Workshops 2,100,000.00 2,100,000.00
Dalian Bingshan Engineering & Trading Co. , Ltd Offices
Total 2,100,000.00 2,100,000.00
Leasing fee to related party
Rental fees of Rental fees of
Leaser Leasing assets current period previous period
Dalian Bingshan Group Co., Ltd. Offices
Total
The Company signed a leasing agreement with Dalian Bingshan Group Co., Ltd., and leased 576
㎡ of offices to Dalian Bingshan Group Co., Ltd. The rental of offices is RMB 103,680.00 per year,
and the effective period of the contract is 2 years.
The Company rent office and garage of Dalian Bingshan Group Co., Ltd., and the rental is
RMB142,572.00 per year for 3 years.
The company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co., Ltd., and rent #
70
6 workshop building 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 meters, and rent term till 16th July, 2029. The annual rent fee is RMB 4.2 million considering
the time value of money.
The Company signed a leasing agreement with Dalian Bingshan Engineering & Trading Co. , Ltd.,
and leased 693 ㎡ of offices to Dalian Bingshan International Trade Co. , Ltd. The rental of offices
is RMB 124,740.00 per year.
(4) Guarantee with related companies.
During the reporting period, aiming at the implementation of special funds of China Development
Bank development fund, the Company has provided guarantee for controlling shareholder Dalian
Bingshan Group Co., Ltd.The guarantee form belongs to the controlling shareholder guarantee, but
actually it is a guarantee for obtaining financial support for the Company itself. During the reporting
period, in addition to providing guarantee for the controlling shareholders, the Company has not
provided guarantee for any illegal units or individuals.
(5) The borrowing of funds from related party
Name of the related party Amount Starting date Ending date Explanation
Borrowed for moving to new
Dalian Bingshan Group Co., Ltd. 10,000,000.00 2006.09.01
location
Total 10,000,000.00
The Company’s subsidiary Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd.
borrowed RMB 10,000,000.00 from Dalian Bingshan Group Co., Ltd. for moving to new location,
and the interests are counted same as bank loan.
(6)Related party asset transfer and debt restructuring
Not applicable.
6. Amounts due from/to related parties
(1) Accounts receivable
30-06-2016 31-12-2015
Names of the related parties
Provision for Provision for
Amount bad debts Amount bad debts
Panasonic Compressor (Dalian) Co., Ltd. 960,089.66 48,004.48 265,820.40 27,166.02
Panasonic Refrigeration (Dalian) Co., Ltd. 7,885,612.40 394,280.62 5,473,096.64 273,654.83
Panasonic Cold-chain (Dalian) Co., Ltd. 34,652,918.52 1,732,645.93 25,195,419.27 1,259,770.96
Dalian Bingshan Engineering & Trading Co., Ltd. 1,907,481.88 95,374.09 3,410,519.80 170,525.99
BAC Dalian Co., Ltd. 112,420.00 5,621.00
Beijing Bingshan Serial Refrigeration Equipment Co.,
473,863.52 23,693.18 484,253.52 24,212.68
Ltd.
Dalian Bingshan – P&A Recreation Development
24,430.00 2,443.00
Engineering Ltd.
Beijing Huashang Bingshan Refrigeration and
45,465,710.84 2,337,085.54 40,803,001.99 2,093,750.10
Air-conditioning Machinery Co., Ltd.
Dalian Fuji Bingshan Vending Machine Co., Ltd. 10,197,113.54 509,855.68 10,776,362.22 538,818.11
MHI Bingshan Refrigeration (Dalian) Co., Ltd. 3,064,364.31 153,218.22 28,989.23 1,449.46
71
Dalian Spindle Cooling Towers Co., Ltd. 1,892,743.42 94,637.17 917,881.08 45,894.05
Dalian Third Refrigeration Equipment Factory 5,642.60 282.13 5,642.60 282.13
(2) Notes receivable
Names of the related parties 30-06-2016 31-12-2015
Panasonic Compressor (Dalian) Co., Ltd 443,418.27 1,052,980.08
Dalian Bingshan Engineering & Trading Co., Ltd. 4,360,388.00 9,847,217.00
BAC Dalian Co., Ltd. 100,000.00
Panasonic Cold Chain (Dalian) Co., Ltd 22,242,891.65 20,163,705.41
Panasonic Refrigeration (Dalian) Co., Ltd 2,909,535.58
Beijing Bingshan Serial Refrigeration Equipment Co., Ltd 1,100,000.00 1,100,000.00
Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery
4,195,968.00 4,000,000.00
Co., Ltd
MHI Bingshan Refrigeration (Dalian) Co., Ltd. 6,294,283.14
Dalian Spindle Cooling Towers Co., Ltd. 510,000.00 1,494,656.98
(3) Accounts paid in advance
Names of the related parties 30-06-2016 31-12-2015
Panasonic Compressor (Dalian) Co., Ltd 411,712.00
Beijing Huashang Bingshan Refrigeration and
378,268.10
Air-conditioning Machinery Co., Ltd
Dalian Bingshan Engineering & Trading Co., Ltd. 18,891,997.66 18,068,922.66
Changzhou Jingxue Freezing Equipment Co., Ltd. 34,800.00 268,714.00
(4) Other accounts receivable
30-06-2016 31-12-2015
Name of the related party Provision
Provision for bad
Amount Amount for bad
debts
debts
Dalian Bingshan Engineering & Trading
116,332.60 5,816.63
Co., Ltd
(5) Accounts payable
Names of the related parties 30-06-2016 31-12-2015
Dalian Third Refrigeration Equipment Factory 2,778,685.48 3,437,911.21
BAC Dalian Co., Ltd. 34,330,793.00 40,548,590.02
Dalian Bingshan Group Refrigeration Equipment Co., Ltd. 5,696,095.27 8,860,105.57
Panasonic Refrigeration (Dalian) Co., Ltd. 1,200,000.00
Panasonic Cold-chain (Dalian) Co., Ltd. 32,891,792.70 32,804,524.70
Dalian Sanyo Meica Electronics Co., Ltd. 114,905.11
Dalian Spindle Cooling Towers Co., Ltd. 2,837,250.00 344,750.00
72
Dalian Bingshan Engineering & Trading Co., Ltd. 17,179,535.47 5,671,660.46
Panasonic Compressor (Dalian) Co., Ltd. 45,650.00 45,650.00
Changzhou Jingxue Freezing Equipment Co., Ltd. 7,496,856.10 5,742,746.00
Dalian Bingshan Metal Technology Co., Ltd. 281,656.75 222,692.68
Beijing Bingshan Serial Refrigeration Equipment Co., Ltd. 605,000.00
Beijing Huashang Bingshan Refrigeration and
307,209.90
Air-conditioning Machinery Co., Ltd
(6) Notes payable
Names of the related parties 30-06-2016 31-12-2015
Dalian Bingshan Group Refrigeration Equipment Co., Ltd. 4,000,000.00 6,897,040.82
BAC Dalian Co., Ltd. 20,000,000.00 1,600,000.00
Panasonic Cold-chain (Dalian) Co., Ltd. 1,597,350.00
Dalian Bingshan Engineering & Trading Co., Ltd. 2,464,302.22 2,543,514.28
Dalian Third Refrigeration Equipment Factory 1,018,772.50 2,730,000.00
Dalian Spindle Cooling Towers Co., Ltd. 1,107,249.00
Changzhou Jingxue Freezing Equipment Co., Ltd 4,227,728.00
Panasonic Compressor (Dalian) Co., Ltd. 136,199.00
Dalian Bingshan Metal Technology Co., Ltd. 100,000.00
(7) Accounts received in advance
Names of the related parties 30-06-2016 31-12-2015
Panasonic Cold-chain (Dalian) Co., Ltd. 297,855.22 1,466,923.23
Dalian Bingshan Engineering & Trading Co., Ltd. 622,008.70 79,008.70
Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd. 214,104.30 352,929.50
MHI Bingshan Refrigeration (Dalian) Co., Ltd. 5,850.00
Panasonic Refrigeration (Dalian) Co., Ltd. 58,700.66
Dalian Fuji Bingshan Vending Machine Co., Ltd. 39,228.02
Beijing Bingshan Serial Refrigeration Equipment Co., Ltd. 36.00
(8) Other accounts payable
Names of the related parties 30-06-2016 31-12-2015
Dalian Bingshan Group Co., Ltd. 10,458,745.32 10,412,056.06
Dalian Third Refrigeration Equipment Factory 1,000.00 1,000.00
Dalian Bingshan Engineering & Trading Co., Ltd. 283.95 346.00
MHI Bingshan Refrigeration (Dalian) Co., Ltd. 450,691.50 152,371.59
Beijing Huashang Bingshan Refrigeration and
61,241.27
Air-conditioning Machinery Co., Ltd.
Panasonic Compressor (Dalian) Co., Ltd. 100,751.04
XII Share-based payment
1. Overall situation
73
Total equity instrument awarded by the Company in the Period 10,150,000.00
Total equity instrument exercised in the Period 10,150,000.00
Total equity instrument that out of operation in the Period
5.56Yuan/Share, in three phases, the
Range of the outstanding exercise price for stock option at period-end remaining period in contract
and remaining period of the contract respectively has 12 months, 24
months and 36 months
Range of the outstanding exercise price for other equity instrument at
period-end and remaining period of the contract
2. Share-based payment settled by equity
In line with the fair value of the restricted shares at
Determination method for the fair value of equity
grant date (not determining the fair value change after
instrument at grant date
grant date)
Determination basis for the number of exercising equity
Determined by actual exercising numbers
instrument
Reason of major difference between the estimation in
N/A
the Period and last period
The aggregate amount of share-based payment that
16,457,204.00
reckoned into capital reserve with equity settlement
Total expenses recognized by share-based payment that
4,266,684.00
settle by equity in the Period
According to the 13th meeting of 6th session of the Board, resolution of the 1st extraordinary general
meeting of 2015 and regulation of Restricted Shares Incentive Plan (Draft), the Company awarded
the restricted shares to 41 equity incentive objects by way of orientate offering of A ordinary shares,
totally 10,150,000 shares are rewarded with price of 5.56 Yuan/Share, and the capital amounting to
RMB 56,434,000.00 in total after raised.
The equity incentive objects of the Company including the directors serves in the Company
(subsidiary included), the high-level management and other core employees that recognized as
incentive objects by the Board while the equity incentive plan announced, the supervisors,
independent directors, foreign directors and foreign managers are excluded.
On March 4, 2015, the Company held the 15th meeting of the 6th session of the Board which
examined and adopted the "Report on granting restricted stock to the incentive objects", agreed to
grant 10,150,000 shares of restricted stock to 41 incentive objects, and determined the grant date of
this equity incentive plan to be March 4, 2015.
XIV Commitments and Contingency
1. No major commitments to be disclosed till June 30, 2016.
2. No other contingency needed disclosed till June 30, 2016.
XV Post balance sheet issues
1. Significant events had not adjusted
(1) Issue shares
Not applicable.
(2) Investment
The Company’s 3th meeting of the 7th session of the Board The Company’s board of directors decided to accept 70%
stock rights of Dalian Sanyo Meica Electronics Co., Ltd held by Sanyo Electric Co., Ltd. After the above-mentioned
stock right transfer complete, the Company's shareholding ratio changes to 100%, and Dalian Sanyo Meica
Electronics Co., Ltd will become a wholly owned subsidiary of the Company.
The Company’s 3th meeting of the 7th session of the Board The Company’s board of directors decided to invest
Panasonic Appliances Refrigeration System (Dalian) Co., Ltd., Panasonic Cold Chain (Dalian) Co., Ltd., and
Panasonic Compressor (Dalian) Co., Ltd. The Company contributes RMB 21 million in cash, 20% equity held for
the joint venture.
The Company’s 6th meeting of the 7th session of the Board The Company’s board of directors decided to accept 5%
74
stock rights of Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd.held by Japan Ryosetsu Industry Co., Ltd.
After the above-mentioned stock right transfer complete, the Company's shareholding ratio changes to 100%, and
Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd will become a wholly owned subsidiary of the Company.
(3) Subsidiary absorbing and merging subsidiary
The Company’s 5th meeting of the 7th session of the Board agreed the wholly-owned subsidiary, Dalian Bingshan
Group Engineering Co., Ltd., to merge another wholly-owned subsidiary, Dalian Bingshan Group Sales Co., Ltd.
and increase capital of 50 million Yuan by cash to Dalian Bingshan Group Engineering Co., Ltd. After the
completion of this change of equity, Dalian Bingshan Group Engineering Co., Ltd. became the surviving corporation,
and the Company’s shareholding ratio was unchanged at 100%. Up to the balance sheet date, this work has been
under way.
(4) Significant lawsuit, arbitration and commitment
Not applicable.
(5) Others
The Company’s 5th meeting of the 7th session of the Board decided that the Company and Hong Kong Bao’an
Hydraulic Engineering (China) Co., Ltd . should simultaneously transfer 50% stock rights of Dalian Bingshan –
P&A Recreation Development Engineering Co., Ltdheld by them to the Company’s wholly owned subsidiary,
Dalian Bingshan Group Engineering Co., Ltd. After the completion of this change of equity, Dalian Bingshan
Bao’an Leisure Industry Engineering Co., Ltd. became a wholly owned subsidiary of Dalian Bingshan Group
Engineering Co., Ltd.
2. Significant sales return after balance sheet day
Not applicable.
3. There was no other post balance sheet significant events except above mentioned.
XVI. Other important things needed disclosed.
1. There was no corrections of prior period accounting errors during the current period.
2. There was no debt restructuring during the current period.
3. There was no assets exchange during the current period.
4. The Company didn’t design employer pension plan.
5. There was no discontinuing operation during the current period.
6. Segments information
(1) Standards and accounting policies of reporting segment
The company determines operating segment according to its organization structure, management
rules, inside reporting system. The operating segment should satisfy following conditions:
① The operating segment could generate income and incure expenses from normal operating
activities；
②The management could evaluate its operating effect, and then decide resources assignment and its
operating performance；
③The segment’s information of financial position and results of operations and cash flow could be
obtained.
The company determines reporting segment based on operating segments. The reporting segment
should satisfy one of the following conditions:：
① The operating segment’s income should be over 10% of total income；
② The number of the operating segment’s profit(or loss) should be over 10% of the number of total
profit and the number of total losses.
The transfer prices between segments were decided according to the market prices. The expenses of
common assets used by segments and other common expenses should be divided among the
segments according to the income.
(2) Elements of determining reporting segment and types of reporting segments’ products and
services
The company determined three reporting segments according to the geographic area, including
Northeast China, Central China and East China. The Northeast China segment included the
company’s head office and subsidiaries located in Dalian. The Central China segment included
subsidiary company Wuhan New World Refrigeration Industrial Co., Ltd. And the East China
75
segment included subsidiary’s subsidiary company Ningbo Bingshan Refrigeration Air Conditioner
Engineering Co., Ltd.
(3) The financial information of reporting segments
30-06-2016/2016.01-06
Items Northeast
Central China East China Offset Total
China
1 Operating income 103,741.55 7,232.97 537.25 33,519.78 77,991.99
Including: Income from
72,867.09 4,593.00 531.90 77,991.99
external transaction
Income from internal
30,874.46 2,639.97 5.35 33,519.78 0.00
transaction
2 Selling expenses 95,574.30 8,800.60 604.82 33,450.92 71,528.80
Including: Investment income
from associates and joint 6,098.09 6,098.09
ventures
Impairment on assets 1,099.90 -6.76 1,093.14
Depreciation and
1,795.12 521.52 7.61 2,324.25
amortization
3 Operating profits(loss) 8,869.92 -1,530.31 -63.14 68.86 7,207.61
4 Income tax 411.18 4.66 415.84
5 Net profit(loss) 8,458.74 -1,530.31 -67.80 68.86 6,791.77
6 Total assets 483,807.36 48,756.35 1,587.28 52,317.72 481,833.27
7 Total liabilities 154,713.05 37,521.16 1,266.69 26,528.40 166,972.50
8 Other significant non cash
9,110.91 517.12 6.65 793.16 8,841.52
items
Capital expenditure 9,110.91 517.12 6.65 793.16 8,841.52
The accounting policies of every operating segment were the same with described in the note
IV.The main accounting policies, accounting estimates and corrections of accounting errors.
7. There was no significant event which would affect the decision of investor during the
current period.
XVII. Notes to the financial statements of the parent company
1. Accounts receivable
(1) Classified by accounts nature
30-06-2016
Categories Balance Provision for doubtful debt
Book value
Amount Proportion Amount Proportion
Major single amount and
bad debt provision
provided individually
Bad debt provided on 269,878,897.31 100.00% 65,458,648.65 24.25% 204,420,248.66
group basis
Minor single amount but
bad debt provision
provided individually
Total 269,878,897.31 100.00% 65,458,648.65 24.25% 204,420,248.66
Continued:
76
31-12-2015
Categories Balance Provision for doubtful debt
Book value
Amount Proportion Amount Proportion
Major single amount and bad debt provision
provided individually
Bad debt provided on group basis 262,260,040.72 100.00% 65,568,099.85 25.00% 196,691,940.87
Minor single amount but bad debt provision
provided individually
Total 262,260,040.72 100.00% 65,568,099.85 25.00% 196,691,940.87
Accounts receivable which bad debt provisions are provided on age basis in the group.
30-06-2016
Account ages
Amount Provision for bad debts Proportion rates
Within 1 year 139,016,302.23 5,797,489.62 5.00%
1 to 2 years 56,986,569.49 5,698,656.95 10.00%
2 to 3 years 16,751,202.63 5,025,360.79 30.00%
3 to 4 years 8,461,294.73 4,230,647.36 50.00%
4 to 5 years 19,785,171.51 15,828,137.21 80.00%
Over 5 years 28,878,356.72 28,878,356.72 100.00%
Total 269,878,897.31 65,458,648.65
(2) Provision for bad debts accrued, regain or switch back in the period
In the current period, RMB 109,451.20 was regained.
(3) Accounts receivable top 5 on amount
Provision for bad
Companies Amount Proportion (%)
debts
Xi Yi Yuan Da Construction and Installation Engineerring
37,730,000.00 13.98 1,886,500.00
Co., Ltd.
Dalian Bingshan Group Sales Company 22,271,901.76 8.25
Bei Dahuang Tai Hua Organic Food Co., Ltd. 9,844,000.00 3.65 492,200.00
Beijing Huashang Bingshan Refrigeration and Air-conditioning
8,971,857.08 3.32 448,592.85
Machinery Co., Ltd.
Chong Qing Chuan Wei Hong Jin New Material Co., Ltd. 6,439,980.00 2.39 321,999.00
Total 85,257,738.84 31.59 3,149,291.85
2. Other accounts receivable
(1) Classified by account nature
30-06-2016
Items Balance Provision for doubtful debt
Book value
Amount Proportion(%) Amount Proportion
Major single amount and bad debt
provision provided individually
Bad debt provided on group basis 59,954,518.65 100 2,035,213.04 3.39 57,919,305.61
77
Minor single amount but bad debt
provision provided individually
Total 59,954,518.65 100 2,035,213.04 3.39 57,919,305.61
Continued：
31-12-2015
Items Balance Provision for doubtful debt
Book value
Amount Proportion(%) Amount Proportion(%)
Major single amount and bad debt
provision provided individually
Bad debt provided on group basis 45,196,469.56 100 1,504,857.11 3.33 43,691,612.45
Minor single amount but bad debt
provision provided individually
Total 45,196,469.56 100 1,504,857.11 3.33 43,691,612.45
Other accounts receivable which bad debt provisions are provided on age basis in the group
30-06-2016
Account ages
Amount Provision for bad debts Proportion rates
Within 1year 50,043,169.56 613,153.20 5.00%
1 to 2 years 8,717,850.99 871,785.10 10.00%
2 to 3 years 659,047.48 197,714.24 30.00%
3 to 4 years 250,000.00 125,000.00 50.00%
4 to 5 years 284,450.62 227,560.50 80.00%
Over 5 years
Total 59,954,518.65 2,035,213.04
(2) Provision for bad debts accrued, regain or switch back in the period
In the current period, RMB 530,355.93 was accrued provision for bad debts, and no amount was
switched back or regained.
(3) The nature of other accounts receivable
Items 30-06-2016 31-12-2015
Guarantee deposits 21,722,146.57 11,391,139.57
Petty cash 414,626.51 76,154.99
To or fro accounts 37,817,745.57 33,729,175.00
Prepayments over settlement periods
Total 59,954,518.65 45,196,469.56
(5) Top 5 on amount of other accounts receivable
78
Ending
balance of
Companies Nature Amount Age Proportion(%)
provision for
bad debts
Wuhan New World Refrigeration Receivable and Less than 1
37,780,105.57 63.01
Industrial Co., Ltd payable year
Less than 1
Performance
Dalian Tianbao Green Food Co., Ltd 18,000,000.00 year,1 to 2 30.02 1,300,000.00
bonds
years
Less than 1
Jinzhou Dalian New District organs year, 1 to 2
Guarantee
building energy efficiency 1,852,574.57 years,2 to 3 3.09 315,242.86
deposits
management office years,4 to
5years.
Dalian municipal construction Migrant
engineering labor insurance workers wages 500,000.00 2 to 3 years 0.84 150,000.00
management center margin
Zhe Jiang Quzhou New agricultural Performance Less than 1
320,000.00 0.54 16,000.00
industrial Co., Ltd bonds year
Total 58,452,680.14 97.50 1,781,242.86
3. Long-term equity investments
30-06-2016 31-12-2015
Nature Provision
Provision for
Book balance for Book value Book balance Book value
impairment
impairment
Subsidiaries 259,333,634.31 259,333,634.31 246,597,906.16 246,597,906.16
Joint ventures& affiliated
1,209,170,520.64 1,209,170,520.64 1,214,360,893.12 1,214,360,893.12
companies
Total 1,468,504,154.95 1,468,504,154.95 1,460,958,799.28 1,460,958,799.28
79
(1) Subsidiaries
Provision for Provision
Increased
Beginning Decreased during impairment of
Names during current Ending balance for
balance current period the current
period
period impairment
Dalian Bingshan Group Engineering Co., Ltd 22,749,675.77 22,749,675.77
Dalian Bingshan Group Sales Company 12,936,700.00 7,785,728.15 20,722,428.15
Dalian Bingshan Metal Processing Co., Ltd 21,751,244.60 21,751,244.60
Dalian Bingshan Air-Conditioning Equipment Co., Ltd 36,506,570.00 36,506,570.00
Dalian Bingshan Guardian Automation Co., Ltd 1,522,117.80 5,350,000.00 6,872,117.80
Dalian Bingshan Ryosetsu Quick Freezing Equipment Co.,
5,745,097.40 21,751,244.60 27,496,342.00
Ltd
Wuhan New World Refrigeration Industrial Co., Ltd 84,674,910.81 84,674,910.81
Wuhan New World Refrigeration Air Conditioner
400,000.00 400,000.00
Engineering Co., Ltd
Bingshan Technology Service (Dalian) Co., Ltd. 12,024,000.00 12,024,000.00
Dalian Universe Thermal Technology Co., Ltd 48,287,589.78 48,287,589.78
Total 246,597,906.16 34,886,972.75 22,151,244.60 259,333,634.31
80
(2) Joint ventures& affiliated companies
Increase/Decrease
Provision
Gains and losses Adjustment Chang Cash bonus or for Provision
Beginning
Names recognized of other es of profits impairment Ending balance for
balance Increased Decreased Others
under the equity comprehens other announced to of the impairment
method ive income equity issue current
period
1. Joint ventures
Dalian Bingshan – P&A
Recreation Development 2,837,097.81 -312,549.39 2,524,548.42
Engineering Co., Ltd
Subtotal 2,837,097.81 -312,549.39 2,524,548.42
2. Affiliated companies
Dalian Bingshan
Engineering & Trading Co. , 15,691,101.62 993,294.34 16,684,395.96
Ltd
Panasonic Refrigeration
159,226,107.64 -4,386,685.47 5,200,000.00 149,639,422.17
(Dalian) Co., Ltd
Dalian Honjo Chemical Co.,
8,729,712.48 756,624.23 528,860.67 8,957,476.04
Ltd
Panasonic Cold-Chain
215,719,525.88 2,999,101.22 8,000,000.00 210,718,627.10
(Dalian) Co., Ltd
Keinin-Grand Ocean
Thermal Technology 48,607,035.29 9,707,389.44 14,200,000.00 44,114,424.73
(Dalian) Co., Ltd
Panasonic Compressor
457,892,368.92 30,737,147.02 32,400,000.00 456,229,515.94
(Dalian) Co., Ltd
Dalian Sanyo Meica
21,958,069.24 302,067.26 22,260,136.50
Electronics Co., Ltd
MHI Bingshan Refrigeration
22,276,332.84 -5,414,843.75 16,861,489.09
(Dalian) Co.,Ltd
81
Increase/Decrease
Provision
Gains and losses Adjustment Chang Cash bonus or for Provision
Beginning
Names recognized of other es of profits impairment Ending balance for
balance Increased Decreased Others
under the equity comprehens other announced to of the impairment
method ive income equity issue current
period
Beijing Huashang Bingshan
Refrigeration and
1,936,646.98 -457,205.02 1,479,441.96
Air-conditioning Machinery
Co., Ltd
Dalian Fuji Bingshan
113,268,454.28 18,530,027.53 131,798,481.81
Vending Machine Co., Ltd
Changzhou Jingxue Freezing
141,722,024.61 3,534,362.32 5,842,400.00 139,413,986.93
Equipment Co., Ltd.
Dalian Fuji Bingshan
Vending Machine Sales Co., 4,496,415.53 3,992,158.46 8,488,573.99
Ltd
Subtotal 1,211,523,795.31 61,293,437.58 66,171,260.67 1,206,645,972.22
Total 1,214,360,893.12 60,980,888.19 66,171,260.67 1,209,170,520.64
82
4. Total operating income and operating cost
(1)Business income and cost
2016.01-06 2015.01-06
Items
Income Cost Income Cost
Key business 315,122,914.65 265,496,038.46 294,886,893.24 244,284,674.93
Other business 5,446,158.23 2,976,428.98 4,988,277.85 3,038,280.79
Total 320,569,072.88 268,472,467.44 299,875,171.09 247,322,955.72
5. Gain/ (loss) from investments
Category
Items 2016.01-06 2015.01-06
Long-term equity investment income accounted for by using the cost method 3,915,784.39
Long-term equity investment income accounted for by using the equity method 60,980,888.19 48,083,081.52
Gain on selling equity of associate company
Gain from disposal financial assets available for sale -254,172.88
Gain from holding of financial assets available for sale 15,961,425.40 310,000.00
Total 76,688,140.71 52,308,865.91
XVIII. Other supplementary Information
1. Non-recurring profits and losses
Non-recurring gains and losses items Amount Notes
1. Gain/loss from disposal of non-current assets -125,152.11
2.Tax return or exemption exceeding authority or without formal authorization documents 1,063,207.13
3.Governmental subsidy written into current gains and losses 5,563,711.00
4. Interest from non-financial enterprises written into current gains and losses
5.Gains/Losses on debt restructuring
6.Reversal of provision for impairment of long-term assets
7. Gain/loss from change of fair value of transactional asset and liabilities, and investment
gains from disposal of transactional financial assets and liabilities and sellable financial
assets, other than valid period value instruments related to the Company’s common
businesses.
8.Other net income and expense from non-operation 109,601.42
Total
Less：Affected amount of income tax from non-recurring gains and losses 1,010,614.26
Net amount of non-recurring gains and losses
Included: Attributable to minority shareholders’ equity 23,924.37
Attributable to the owners of parent company 5,576,828.81
83
2. Earnings per share
The weighted EPS
Items
average ROE Basic EPS Diluted EPS
Net profit attributable to the Company’s ordinary shareholders 2.52% 0.120 0.120
Net profit attributable to the Company’s ordinary shareholders
2.32% 0.110 0.110
after deducting non-recurring gains and losses
3. The differences between domestic and international accounting standards
There were no significant differences between domestic and international accounting standards among the
Company’s financial statements of the current period.
Dalian Refrigeration Co., Ltd.
August 25, 2016
84
