Dalian Refrigeration Co., Ltd. 2016 Annual Report
Dalian Refrigeration Co., Ltd.
2016 Annual Report
April, 2017
1
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 1 Important Notice, Table of Contents, and Definitions
The directors and the Board of Directors, the supervisors and the
Supervisory Board, and Senior staff members of Dalian Refrigeration Co.,
Ltd. (hereinafter referred to as the Company) hereby confirm that there are
not any important omissions, fictitious statements or serious misleading
carried in this report, and shall take all responsibilities, individual and/or
joint, for the reality, accuracy and completeness of the whole contents.
Chairman of the Board of Directors of the Company Mr. Ji Zhijian,
Financial Majordomo Mr. Ma Yun and the head of Accounting Department
Mrs. Mao Chunhua hereby confirm that the financial report of the annual
report is true and complete.
All the directors except Mr. Takagi Toshiyuki have attended this Board
meeting of the Company.
There is no significant risk having adverse influence on attainment of the
Company's future development strategy and business targets.The paragraph
"Discussion and Analysis of the Business situation" in Section 4 of this
Annual Report describes major risks the Company may be confronted with,
including the risk of the market promotion for new product and new
technology slow and the Accounts receivable is on the high side. See the
related sections for the countermeasures to be taken by the Company.
The profit distribution proposal reviewed and adopted at this Board meeting
of the Company is: Based on the total capital stock of 611,776,558 shares, the
dividend of RMB 1.00 in cash (including tax) will be distributed for every 10
shares; Based on the total capital stock of 611,776,558 shares, the Company
will transfer the capital reserve to increase capital stock, 4 shares for every
10 shares.
This report is written respectively in Chinese and in English. In the event of
any discrepancy between the two above-mentioned versions, the Chinese
version shall prevail.
2
Dalian Refrigeration Co., Ltd. 2016 Annual Report
CONTENTS
Section 1 Important Notice, Table of Contents, and Definitions ................................................................................2
Section 2 About the Company ....................................................................................................................................5
Section 3 Summary of Main Accounting Data and Financial Indicators....................................................................8
Section 4 Board of Directors' Report..........................................................................................................................9
Section 5 Important Issues........................................................................................................................................20
Section 6 Change in Share Capital and Shareholders' Information ..........................................................................26
Section 7 Information on Preferred Stock ................................................................................................................30
Section 8 Information on the Company’s Directors, Supervisors, Senior Management and Staff ...........................31
Section 9 Corporate Governance ..............................................................................................................................37
Section 10 Information on Corporate Bonds ............................................................................................................40
Section 11 Financial Report......................................................................................................................................41
Section 12 Contents of Reference Documents .......................................................................................................141
3
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Definitions
Defined item Stands for Meaning
Reporting period Stands for From Jan. 1, 2016 to Dec. 31, 2016
The Company, this Company Stands for Dalian Refrigeration Co., Ltd.
Wuhan New World Refrigeration Industries Co., Ltd., one of the subsidiaries of
Wuxin Refrigeration Stands for
the Company where the Company holds 100% of its shares.
Dalian Bingshan Group Engineering Co., Ltd，one of the subsidiaries of the
Bingshan Engineering Company Stands for
Company where the Company holds 100% of its shares.
Bingshan Technology Service (Dalian) Co., Ltd. one of the subsidiaries of the
Bingshan Service Company Stands for
Company where the Company holds 100% of its shares.
Dalian Bingshan Guardian Automation Co., Ltd., one of the subsidiaries of the
Bingshan Guardian Stands for
Company where the Company holds 100% of its shares.
Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd., one of the
Bingshan Ryosetsu Stands for
subsidiaries of the Company where the Company holds 100% of its shares.
Dalian Sanyo Meica Electronics Co., Ltd. Now renamed as Dalian new Meica
Sanyo Meica Stands for Electronics Technology Co., Ltd. one of the subsidiaries of the Company
where the Company holds 100% of its shares.
Dalian Bingshan Air-conditioning Equipment Co., Ltd. one of the controlled
Bingshan Air-conditioning
subsidiaries of this Company, where the Company holds 70% of its shares.
Changzhou Jingxue Freezing Equipment Co., Ltd. Now renamed as Jiangsu
Jiangsu Jingxue Stands for JingXue Insulation Technology Co., Ltd. one of the mutual shareholding
companies with this Company, where the Company holds 29.212% of its shares.
Panasonic Compressor (Dalian) Co., Ltd. one of the mutual shareholding
Panasonic Compressor Stands for
companies of the Company, where the Company holds 40% of its shares.
Panasonic Cold-Chain (Dalian) Co., Ltd. one of the mutual shareholding
Panasonic Cold-Chain Stands for
companies of the Company, where the Company holds 40% of its shares.
Panasonic Refrigeration (Dalian) Co., Ltd. one of the mutual shareholding
Panasonic Refrigeration Stands for
companies of the Company, where the Company holds 40% of its shares.
Panasonic Appliances Refrigeration System (Dalian) Co., Ltd. one of the mutual
Panasonic Appliances Refrigeration Stands for shareholding companies of the Company, where the Company holds 20% of its
shares.
Dalian Fuji-Bingshan Vending Machine Co., Ltd., one of the mutual
Dalian Fuji-Bingshan Stands for shareholding companies of this Company, where the Company holds 49% of its
shares.
Keihin Grand-Ocean Cooling & Heating Industry (Dalian) Co., Ltd., one of the
Keihin Grand-Ocean Stands for mutual shareholding companies with this Company, where the Company holds
20% of its shares.
4
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 2 About the Company
I. Company information
Short form of the stock DALENG GUFEN; DALENG-B
Stock code 000530; 200530
Listed stock exchange Shenzhen Stock Exchange
Legal name in Chinese 大连冷冻机股份有限公司
Legal English name and abbreviation Dalian Refrigeration Co., Ltd. DRC
Legal representative Ji Zhijian
Registered address 888 Xinan Road, Shahekou District, Dalian
Post code of Registered address 116033
Office address No.106, Liaohe East Road, Dalian Economic and Technological
Development Zone
Post code of Office address 116630
Internet web site of the Company www.daleng.cn
E-mail of the Company 000530@bingshan.com
II. Contact persons and information
Secretary of the Board of Directors Authorized representative for securities affairs
Name Song Wenbao Du Yu
DALENG GUFEN Securities﹠Legal Affairs DALENG GUFEN Securities﹠Legal
Address No.106, Liaohe East Road, Dalian Economic and AffairsNo.106, Liaohe East Road, Dalian
Technological Development Zone Economic and Technological Development Zone
Tel. 0411-87968130 0411-87968822
Fax 0411-87968125 0411-87968125
E-mail 000530@bingshan.com 000530@bingshan.com
III. Information disclosure and place of preparation for inquiry
Name of the newspaper designated by the Company for China Securities Daily and Hong Kong
information disclosure Commercial Daily
Address of the website designated by China Securities
http://www.cninfo.com.cn
Regulatory Commission for publishing this Annual Report
Securities﹠Legal Affairs Department of the
Place where this Annual Report was prepared for inquiry
Company
IV. Alteration to the registration
According to the requirement of SAIC, the Company
completed the joining together of three certificates, The
Organization code
unified social credit code of the Company is
912102002423613009.
Change in main business since the Company was listed No change
Changes in the holding shareholder No change
V. Other related information
Accounting firm engaged by the Company
5
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Name of accounting firm ShineWing CPAs (Special General Partnership)
9/F,A Building No.,8 north street of Chao Yang Men, Dong Cheng District Beijing,
Office location of accounting firm
China
Name of signing certified public
Lin Li, Wang Dong
accountant
Sponsor the Company appointed for performance of the consistent supervision duty in the reporting period
√Applicable □Not applicable
Name of Sponsor Institution Guotai Junan Securities Co., Ltd.
9/F,2nd Building Ying Tai center of Financial Street, Xi Cheng District Beijing,
Office location of accounting firm
China
Name of Sponsor Representative Zeng Dacheng, Han Yupeng
Period of consistent supervision 2016.6.18-2017.12.31
Financial consultant the Company appointed for performance of the consistent supervision duty in the reporting
period
□ Applicable √ Not applicable
VI. Main accounting data and financial indicators
Increase/decrease compared
2016 2015 2014
with previous year
Operating revenue 1,779,499,226.64 1,607,518,439.61 10.70% 1,425,715,596.96
Net profit attributable to shareholders of
178,632,660.24 129,947,307.39 37.47% 115,439,722.39
listed companies
Net profit belonging to the shareholders of
listed companies after the deduction of 145,227,418.21 126,122,809.25 15.15% 105,435,245.61
non-recurring profit and loss
Net cash flow from operating activities -7,706,320.22 -50,568,474.38 84.75% 28,495,772.47
Basic earnings per share 0.31 0.24 29.17% 0.22
Diluted earnings per share 0.31 0.24 29.17% 0.22
Decrease0.51 percentage
Weighted average return on net asset yield 5.87% 6.38% 5.98%
point
Increase/decrease compared At the end of
At the end of 2016 At the end of 2015
with previous year 2014
Total assets 4,983,511,574.26 4,082,499,864.42 22.07% 3,053,930,248.25
Owner's equity attributable to shareholders
3,247,797,768.92 2,647,609,091.41 22.67% 1,967,027,256.13
of listed companies
VII.1.Difference of accounting data between as per Chinese accounting standards and as per
International Accounting Standards
□ Applicable √ Not applicable
2. Difference of accounting data between as per Chinese accounting standards and as per
Foreign Accounting Standards
The difference of accounting data between as per Chinese Accounting Standards and as per International
Accounting Standards was 0.
6
Dalian Refrigeration Co., Ltd. 2016 Annual Report
VIII.The quarter main financial indicators
the first quarter the second quarter the third quarter the fourth quarter
Operating revenue 400,592,922.66 379,326,941.37 471,165,234.36 528,414,128.25
Net profit attributable to shareholders of listed companies 25,527,518.21 41,959,768.63 64,264,334.88 46,881,038.52
Net profit belonging to the shareholders of listed
companies after the deduction of non-recurring profit and 25,497,476.68 36,412,981.35 38,183,454.01 45,133,506.17
loss
Net cash flow from operating activities -89,736,770.51 46,524,738.11 -15,216,952.20 50,722,664.38
IX. Non-recurring profits and losses and their amounts
item 2016 2015 2014
Disposal gains and losses of non-current asset -23,302,650.34 -61,718.74 138,673.21
Tax returned/reduced by chance 499,945.82 441,073.42
Government subsidies included in current profit or loss 3,765,464.60 1,906,070.56 10,166,256.56
Earnings from the Company get subsidiaries, associated
companies and joint venture investment cost less than get
30,334,841.93
investment should enjoy the invested entity produced by
the fair value of the identifiable net assets yield
Debt restructuring gains and losses 229,833.00 -586,377.00
Disposal gains from investments on financial assets
27,629,395.44 36,617.40
available for sale
Other non-operating revenue or expense 976,314.82 2,896,432.61 1,594,812.69
Influence on income tax 6,113,785.77 671,259.97 2,021,019.49
Influence on minority shareholders 114,171.65 158,595.14 351,937.01
Total 33,405,242.03 3,824,498.14 10,004,476.78
7
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 3 The Company's Business profile
I. The Company’s Main business during the reporting period
The Company, as the largest industrial refrigeration equipment production enterprise in China, is committed to
developing the business of industrial refrigeration, food freezing and cold storage, central and commercial
air-conditioning, refrigeration components and engineering service, have covered the key areas of the refrigeration
industrial chain and forged the most complete cold and hot industrial chain in China.
II. Major changes in main assets
1. Major changes in main assets
Main assets Explain for major changes
Construction in progress Significantly increased compared to the same period, mainly due to the new factory construction.
Monetary funds Significantly increased compared to the same period，mainly due to the private issuing of A-shares.
Accounts in advance Significantly increased compared to the same period, mainly due to the Company and subsidiaries advance for projects
2. The main overseas assets
□ Applicable √ Not applicable
III. Analysis of core competence
Boasting the most complete cooling and heating product chain in the industry, the Company can offer to
customers the service of package projects from design, manufacture, installation to maintenance to well meet the
customized demand of customers.
Having the mature and perfect marketing network and after-sale service network, the Company can offer to
customers in more regions the more rapid and considerate high-quality service.
Taking refrigeration and air-conditioning as its main business, the Company effectively combines the independent
R&D and the joint ventures and cooperation, interacts positively between the integration of internal resources and
business model innovation, and has formed a unique development pattern appropriate to itself and the industry.
In the reporting period, the Company's core competence above-mentioned was improved further.
8
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 4 Management discussion and analysis
I. Summary
In 2016, based on operation policy of “leading innovation and creating value”, and theme as “innovation,
improvement and enhancement”, the Company kept a firm grasp on innovation-driven and industry-finance
combination, operation-oriented, under the help of capital operation, created an industry development mode,
accelerated research on technologies, strengthen plans of removal and reconstructed, speed up capital resource
integration and foundational management improvement, enhanced competitive power and operation efficiency,
strived to achieve main operation target and made it growth on a favorable way in the future.
In 2016, the Company realized operating income of RMB 1,779.5 million, representing 98.86% of the annual plan
of RMB 1,800 million and a year-on-year increase of 10.70%; realized total profit of RMB 188.18 million,
representing 121.41% of the annual plan of RMB 155 million and a year-on-year increase of 38.42%.
The Company positively advanced the application and promotion of new products and technologies during
reporting period. Petrochemical screw compressor, CO2 helical lobe compressor, falling-film semi-closed water
cooled screw chiller and CO2 evaporator condenser have been designed and commercialized. The R&D and
application project of pressure pre-cooling and ice-temperature fresh-keeping technology passed the sci-tech
achievements evaluation organized by Chinese Association of Refrigeration. 863 projects—high-capacity cold
water cooling, quick freezing and smart fish processing system through the review from technical expert group of
MOST(Ministry of Science and Technology). Marine screw compressor was identified by prototype of
new-products and new-technology.
In reporting period, the Company proceeded with the removal and reconstruct in an orderly manner. The private
placement was implemented successfully, which guaranteed the capital needs of removal and reconstruct. The
technical layout and plans in new plants had been optimized pursuit to the intelligent manufacturing plan. The
intelligent construction of new plant was implemented smoothly.
Capital resource integration was performed actively in reporting period. Purchased 70% shares of Sanyo Meica
for improving the intelligent standards of the products by changed it to be a wholly-owned subsidiary from
associated enterprise; acquired 5% shares of Bingshan Ryosetsu and capital increment for creating a
manufacturing base of cryogenic quick freezers by changed it to be a wholly-owned subsidiary from controlling
subsidiary; setting up Panasonic Appliances Refrigeration for clients in aspect of solving the fluorine cold-chain
system with purpose of meeting the rapidly growth needs of low-temperature logistics market in China; invested
in Fuji Bingshan for facing the market opportunity of growing vending machine in China by improved capacity
up to 100,000 sets per year from 50,000 sets per year so far.
On smooth unlock for the first stock incentive plan basis, the Company promoted the second equity incentive plan,
and the technical backbone and sales backbone were included in the incentive plans, further to extend coverage
for improving the growth incentive and favorable potential development of the Company.
In reporting period, ORC screw expander units and reek screw expander units of the subsidiary –Wuhan New
World Refrigeration are in the series promotion stage; the first two-stage screw pressure energy power of the
9
Dalian Refrigeration Co., Ltd. 2016 Annual Report
natural gas pipeline network and cold energy recovery system had started up successfully in Fushimen Station,
Quzhou, Zhejiang, and successfully passed the 72-hour industrial commissioning acceptance; high-pressure screw
compressor Ammonia high-temperature heat pump units and low-pressure screw blower finished the prototype
production; the model points of new products have completed the area layout in China basically, operation venue
from new products are growth dramatically, the strategy transition was resolutely implemented.
Subsidiary–Bingshan Engineering increased capital and upgrade the qualification in reporting period, actively
created new marketing business mode and focus on promoting the integrated solutions, thus orders have a huge
growth on a y-o-y basis. Solutions for the large-low-speed wind tunnel, agricultural product’s cold chain,
super-low temperature cold storage and air management system of new energy are recognized by the market.
Bingshan Engineering successfully wan the bidding of largest frozen beer station project, the monomer cold
storage refrigeration system project- the most cold chain logistic project, at the same time, the project promotes
the new products and new operational types of projects as centrifuge, CO2 cascade system, cast steel compressor,
electric heating reform and valley electricity energy-storage are being implemented.
Subsidiary–Bingshan Service’s ERP system has officially launched in reporting period, remote monitoring users
grew rapidly, service standards were improved efficiently, the service industry exploit in a order way. Accessories
income continued to growth, and the remote monitoring on-line broke through 100.
Subsidiary–Bingshan Guardian optimized the internet of cloud management platform and intelligent plant energy
management system in reporting period, developed many new products of intelligent controller of the internet,
further to strength the leading position in technology within the field.
Subsidiary–Bingshan Air-conditioner started with the clients of medical and auto industry AC, got to the root of
environmental needs, actively participated in relevant project with air treatment concerned. The sales revenue
from new field and new products of VOCs waste gas treatment and new energy air management system were
presenting more than 30%, which made a key role in promoting the business targets.
The associated company–Panasonic Compressor successfully developed the market in rail transit AC, the sales of
horizontal scroll compressor for electric passenger cars use were enlarging continually based on an advance
technology. Accumulative sales of horizontal scroll compressor have broken 100,000 sets, and became the new
efficiency growth point. Aggressively expanded into overseas market with a good achievements, India and North
America in particular. Completed R&D for E-scroll compressor, and put them into production, in field of
household AC, officially transformed and upgraded from B products to E products. Participated in national
standards setting of the AC compressor for electric vehicles, and honored the second prize of modern management
achievement for national enterprise management.
The associated company–Panasonic Cold Chain aggressively expanded into the Blue Ocean market complying
with the requirements change. Created high-end commercial merchandise of new retail model with Charoen
Pokphand Warehouse Club. Eyed on the growth development of community fresh supermarket and convenience
store, the company entered into new clients with C-Store, CITIC Guoan and Shanxi Tang Jiu in a row. The bulk
ultra-cold storage freezer MDF-682 – independent research and development, has officially offline. Operating
temperature achieved -86℃, the core products in healing domain, the biological medicine entered into a rapidly
growth. Industrialization of the inherent market service has steady developed, and signed the Qualify for
10
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Maintenance Agreement with Wal-Mart, Carrefour and Metro.
The single largest distributed energy project- CCHP in Harbin Airport was successfully landed by the associated
company- Panasonic Refrigeration in reporting period, made a better integrated solutions for the clients. The
performance test result for self-development direct combustion grade 1 unit of energy efficiency has reached the
standard, with better cost performance, leading in industry and more strength competition in market.
‘Refrigeration technique of circulative ammonia water-heat source”, which took the lead in research &
development, honored the first prize of S&T innovation and creation of the Second China’s Coking Industry S&T
Conference. Signed a strategic cooperation agreement with SBW and Beijing Gas and Heating Engineering
Design Institute , for expanding the distributed energy market vigorously.
The associated company-Panasonic Appliances Refrigeration integrated relevant resources from Panasonic Cold
Chain and Panasonic Compressor’s Fluorine cold-chain system effectively in reporting period, improved sales
channel, optimized design team, reinforced engineering construction and after-sale services, offered a better
integrated solutions of Fluorine cold-chain system for the clients. Relying on technological superiority, Panasonic
Appliances Refrigeration succeeded in obtaining the order of Central China Cold Fresh Port—the biggest cold
storage of garden stuff forced-air pre-cooling apparatus so far.
In reporting period, the associated company–Fuji Bingshan upgraded intelligent products, non-cash payment and
remote controlling system becoming the norm, sales broke 30,000 sets and revenue and net profit have a
continued favorable growth. By customized solutions, exploited new VIP client-Wahaha, the client base of drinks
has expanded. The intelligent white spirit vending machine has completed in development, and entered into the
field of white spirit retail. Large food machine and coffee machine started operation in a limited quantity. Body
welding automatic line came into use, and the efficiency higher up to 100%. Construction of second plant were
implemented in a order way, and double capacity has a steady progress.
The associated company-Keinin-Grand Ocean, depending on excellent quality and cost advantage, sales
performance created new high again. On base of the rectification completion on line 1 and 2, started the reforming
projects of fully automatic unmanned installed spares, stitching, welding and assembly, continued to improve the
quality of products.
II. Analysis of main business
1. Summary
See the related content “Section 4 Business situation discussion and analysis “ the “Summary”
2. Sales income and costs
(1) Sales income structure
2016 2015
Year-on-year
Proportion to the Proportion to the
Amount Amount increase/decrease
Sales costs Sales costs
Total sales income 1,779,499,226.64 100% 1,607,518,439.61 100% 10.70%
By industry
Refrigeration and
air-conditioning 1,759,247,556.50 98.86% 1,590,994,011.67 98.97% 10.58%
equipment
11
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Others 20,251,670.14 1.14% 16,524,427.94 1.03% 22.56%
By product
Refrigeration and
air-conditioning 1,759,247,556.50 98.86% 1,590,994,011.67 98.97% 10.58%
equipment
Others 20,251,670.14 1.14% 16,524,427.94 1.03% 22.56%
By region
Northeast China 1,515,747,732.22 85.18% 1,430,119,702.78 88.96% 5.99%
Central China 167,673,235.16 9.42% 159,483,265.64 9.92% 5.14%
East China 96,078,259.26 5.40% 17,915,471.19 1.12% 436.29%
(2) Main business structure
Increase/decrease Increase/decrease
Gross Increase/decrease of gross
of operating of operating costs
Operating revenue Operating costs revenues on a on a year-on-year
profit on a year-on-year
profit year-on-year basis basis
basis
By industry
Refrigeration and Decrease 0.63
1,759,247,556.50 1,448,130,516.25 17.68% 10.58% 11.44%
air-conditioning percentage points
By product
Refrigeration and Decrease 0.63
air-conditioning 1,759,247,556.50 1,448,130,516.25 17.68% 10.58% 11.44%
equipment percentage points
By region
Increase0.20
Northeast China 1,495,496,062.08 1,218,059,845.74 18.55% 3.25% 5.54%
percentage points
Decrease1.09
Central China 167,673,235.16 139,021,498.19 17.09% 5.14% 6.53%
percentage points
Decrease11.72
East China 96,078,259.26 91,049,172.32 5.23% 436.29% 511.6%
percentage points
(3)Was the Company's sales income on material objects more than that on labor service?
√ Yes □ No
Year-on-year
Industry category Item 2016 2015
increase/decrease
Sales volume 2,216 2,475 -10.46%
Main refrigeration unit for
Production output 2,197 2,457 -10.58%
industrial or commercial use
Inventory level 399 418 -4.55%
Reason for change in the related data by 30% or higher on a year-on-year basis
□ Applicable √ Not applicable
Note: During the period, marketing model of the Company turns to selling solution plans instead of selling
products, although sales of chiller are declined in the Period, operation revenue increased.
(4)Major orders in the hand of the Company
□ Applicable √ Not applicable
12
Dalian Refrigeration Co., Ltd. 2016 Annual Report
(5) Sales cost structure
2016 2015
Industry Proportion to Year-on-year
Item Proportion to the
category Amount the operating Amount increase/decrease
costs operating costs
Direct materials 1,243,018,835.10 85.22% 1,122,739,260.55 85.72% 10.71%
Labor wages 142,256,417.94 9.75% 115,116,769.44 8.79% 23.58%
Refrigeration
Depreciation 24,721,220.65 1.69% 25,191,991.42 1.92% 1.87%
and
Utilities 16,679,142.39 1.14% 15,079,414.99 1.15% 10.61%
air-conditioning
Others 31,920,720.45 2.19% 31,716,375.23 2.42% 0.64%
Total operating
1,458,596,336.53 100.00% 1,309,843,811.63 100.00% 11.36%
costs
(6) Was the Company's consolidated range change during the reporting period?
√Applicable □Not applicable
This year, there are 3 more entities were included in the scope of consolidation, they are Dalian New Meica
Electrical Technology Co., Ltd, Dalian Bingshan P&A Recreation Development Engineering Co., Ltd., and
Shanghai Bingshan Technical Service Co., Ltd, and one entity which is Dalian Bingshan Metal Processing Co.,
Ltd is excluded at the year end.
(7) Major change or adjustment in the Company's products or service in the reporting period
□ Applicable √ Not applicable
(8) Information on the Company's major customers and major suppliers
Information on the Company's major customers
Total sales volume from top five customers (yuan) 377,895,981.29
Proportion of the total sales volume from top five customers to the annual sales volume 21.24%
Proportion of the related party total sales volume from top five customers to the annual
14.49%
sales volume
Information on the Company's top five customers
Sales volume Proportion to the annual sales
No. Name of customer
(yuan) volume
1 Panasonic Cold-chain (Dalian) Co., Ltd 111,295,412.53 6.25%
2 Panasonic Refrigeration Co., Ltd. 76,396,710.08 4.29%
3 Dalian Bingshan Engineering&Trading Co.,Ltd. 70,224,178.49 3.95%
4 Shanghai Qingneng cole-chain equipment engineeringCo., Ltd 61,367,522.23 3.45%
5 Shenyang De Bao Hong Tai Agricultural development Co., Ltd. 58,612,157.96 3.29%
Total —— 377,895,981.29 21.24%
Information on the Company's major suppliers
Total purchase volume from top five suppliers (yuan) 459,343,082.12
Proportion of the total purchase volume from top five suppliers to the annual purchases volume 28.77%
Proportion of the related party total purchase volume from top five suppliers to the annual purchases volume 21.21%
Information on the Company's top five suppliers
Purchase Proportion to the annual
No. Name of supplier
volume (yuan) purchase volume
1 Panasonic Cold-chain (Dalian) Co., Ltd 134,456,421.45 8.42%
2 Panasonic Appliances Refrigeration System (Dalian) Co., Ltd. 116,159,861.59 7.28%
3 Dalian Bingshan Engineering & Trading Co., Ltd. 88,077,665.44 5.51%
4 Dalian Yi Da construction engineering Co., Ltd. 78,195,154.40 4.90%
5 Dalian Shentong Electric Co., Ltd 42,453,979.24 2.66%
13
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Total —— 459,343,082.12 28.77%
3. Expenses
Increase/decrease of gross
2016 2015 profit on a year-on-year Explain for major changes
basis
selling expenses 81,557,028.64 80,099,755.98 1.82%
administrative expenses 200,962,424.84 187,046,595.49 7.44%
mainly because the time deposits interest
financial expenses 4,595,430.84 130,314.66 3,426.41%
income declined.
4. R&D expenditure
In the reporting period, the Company had the total R&D expenditure of 85.95 million yuan, accounting for 2.65%
of the Company's net assets as of the end of 2016 or 4.83% of the Company's annual operating revenues. There
was no remarkable year-on-year change in related data.
Information on R&D expenditure
Increase/decrease of gross profit on a
2016 2015
year-on-year basis
The quantity of the person engaged in R&D 277 265 4.53%
The quantity proportion of the person engaged in
14.77% 14.00% Increase 0.77 percentage points
R&D
The spending amount on R&D（yuan） 85,949,812.65 80,858,177.51 6.30%
R&D spending accounts for the proportion of
4.83% 5.03% Decrease 0.20 percentage points
revenue
The amount of R&D investment（yuan） 0.00 0.00 0%
5. Cash flows
Year-on-year
Item 2016 2015
increase/decrease
Sub-total of cash inflows from operating activities 1,637,775,866.47 1,240,977,616.64 31.97%
Sub-total of cash outflows from operating activities 1,645,482,186.69 1,291,546,091.02 27.40%
Net amount of cash flow generated in operating activities -7,706,320.22 -50,568,474.38 84.75%
Sub-total of cash inflows from investing activities 112,872,226.96 66,925,062.39 68.65%
Sub-total of cash outflows from investing activities 377,277,714.52 303,324,669.75 24.38%
Net amount of cash flow generated in investing activities -264,405,487.56 -236,399,607.36 -11.85%
Sub-total of cash inflows from financing activities 972,107,378.02 222,387,876.63 337.12%
Sub-total of cash outflows from financing activities 265,815,959.61 189,088,218.64 40.58%
Net amount of cash flow generated in financing activities 706,291,418.41 33,299,657.99 2,021.02%
Net increase in cash and cash equivalents 434,023,855.60 -253,833,454.79 270.99%
Reason for change in the related data by 30% or higher on a year-on-year basis
√ Applicable □ Not applicable
1.Net cash flow arising from operation activities have a significant increase on a y-o-y basis, mainly because the
cash received from sale goods for purchasing commodities and receiving labor service are increased in the Period;
2. Net cash flow arising from financing activities have a significant increase on a y-o-y basis, mainly because the
equity subscription of the private offer and the restricted shares from incentive objects are received in the Period.
Reason for remarkable difference between the cash flows from the Company's operating activities in the reporting
14
Dalian Refrigeration Co., Ltd. 2016 Annual Report
period and the net annual profit
√ Applicable □ Not applicable
There was a remarkable difference between the net amount of cash flow generated in operating activities of the
Company and the net annual profit in the reporting period, mainly due to that the proportion of returns on
investment to the total profit of the Company was higher.
III. Analysis of the non-main business
□ Applicable √ Not applicable
IV. Analysis of assets & liabilities
1. Remarkable change in assets
Monetary unit: RMB yuan
End of 2016 End of 2015
Proportion
Proportion to Proportion increase/decrease
Amount to the total Amount
the total assets
assets
Monetary funds 679,724,805.76 13.64% 244,789,824.53 6.00% Increase 7.64 percentage points
Accounts receivable 759,053,298.97 15.23% 671,423,836.87 16.45% Decrease 1.22 percentage points
Inventories 323,863,067.48 6.50% 259,099,149.47 6.35% Increase 0.15 percentage points
Investment property 28,605,652.94 0.57% 24,497,584.00 0.60% Decrease 0.03 percentage points
Long-term equity
1,309,741,316.21 26.28% 1,220,367,767.73 29.89% Decrease 3.61 percentage points
investment
Fixed assets 509,422,197.88 10.22% 449,907,430.32 11.02% Decrease 0.08 percentage points
Construction in
321,646,676.78 6.45% 137,025,384.58 3.36% Increase 3.09 percentage points
progress
Short-term loans 45,000,000.00 0.90% 82,600,000.00 2.02% Decrease 1.12 percentage points
Long-term loans 160,000,000.00 3.21% Increase 3.21 percentage points
2. assets & liabilities which are measured by fair value
√ Applicable □ Not applicable
Finance asset held available for sales in fair value Changes in fair value included in the rights and interests of the
cumulative of the current period is 719,363,590.50 yuan，the final number is 531,653,458.05 yuan.
V. Analysis of investments
1.The overall situation
√ Applicable □ Not applicable
Investment in 2016 (yuan) Investment in 2015 (yuan) Amount of variation
1,309,741,316.21 1,220,367,767.73 7.32%
2.The significant equity investment during the reporting period
□Applicable √Not applicable
3 The significant non-equity investment during the reporting period
□Applicable √Not applicable
4.The financial asset investment
(1) the securities investment
□Applicable √Not applicable
(2) Derivative investment
□Applicable √Not applicable
During the reporting period, the Company does not exist derivative investment.
5. The use of funds raised
√ Applicable □ Not applicable
Total commitment investment for raised-fund project in the Period amounting to 580 million Yuan, after
15
Dalian Refrigeration Co., Ltd. 2016 Annual Report
adjustment, total investment turns to 561.2814 million Yuan. In reporting period, amount of 315.2522 million
Yuan invested, and pre-phase investment 87.6 million Yuan was replaced with the raised-fund. The temporary idle
raised-fund 80 million Yuan save as CD in the Period. Till end of the period, raised-fund 246.0292 million Yuan
are not used, and balance of the specific raised-fund account amounting to 246.66 million Yuan.
Actual time for raised-fund in the private placement in place appeared later, in previous phase, the Company has
limit in contribution of the raised-fund project with self-raised fund, and process layout and plan in the new plant
are continues to improved during the implementation in follow up process, the time for new-type equipment input
and debugging progress are later than expected. In consideration of the progress payment and guarantee money
for the equipment, being decided by the Company after research in purpose of guarantee a smooth transition of the
new-aged plants, and reducing the impact on routine operation of the Company from relocation, the serviceable
condition state of the relocation deferred to end of May in 2017 from year-end of 2016. The Report of Deferring
Serviceable Condition State of the Raised-Fund Project was deliberated and approved by the 13th session of 7th
BOD on 21 April 2017.
By the end of 30 June 2016, the pre-invested money for raised-fund project with self-raised capital amounting to
87,597,055.10 Yuan, the Dahua CPA carried out assurance service on the above mentioned money and issued an
Assurance Report of Dalian Refrigerator Co., Ltd. Pre-invested the Raised-fund Project with Self-raised Fund (Da
Hua He Zi[2016] No. 0034330). And on 5 July 2016, the 6th session of 7th BOD and 5th session of 7th Supervisory
Committee have deliberated and approved the “Report of Replace the Pre-Invested Fund with Raised-Fund ” ,
independent directors propose a clear agreement.
VI. The material assets and equity sale
1. The material assets sale
□Applicable √Not applicable
2. The material equity sale
□Applicable √Not applicable
VII. Analysis of major subsidiary companies and mutual shareholding companies
√ Applicable □ Not applicable
Operating
registered total assets net Net profit
Company name Type The main business income
capital ( yuan) assets( yuan) ( yuan)
( yuan)
Cold storage
participating
Jiangsu Jingxue board, industrial 81 million 735,748,543.01 381,963,072.25 502,464,526.22 56,770,513.19
company
doo
participating Refrigeration and JPY 4,000
Fuji Bingshan 432,727,466.79 327,674,501.05 453,146,399.31 52,088,861.48
company air-conditioning million
Keihin participating Refrigeration and USD 15.12
410,424,173.65 264,762,068.85 812,583,118.92 92,726,892.48
Grand-Ocean company air-conditioning million
Panasonic participating Refrigeration and JPY 6,200
1,718,572,082.29 1,222,728,273.04 1,752,750,321.32 158,997,350.73
Compressor company air-conditioning million
Subsidiary companies obtained or disposed in the reporting period
√Applicable □ Not applicable
16
Dalian Refrigeration Co., Ltd. 2016 Annual Report
the way of obtained or disposed
Name Subsidiary companies in the reporting The impact on overall production and performance
period
make the Sanyo Meica from the affiliated company accounted by equity method change to be
Dalian New Meica Electronics
Transferee equity subsidiary of the company, bring it into the company consolidated statement scope., improve
Technology Co.,Ltd
the intelligent level of the Company.
Dalian Bingshan-P&A Recreation To strengthen Ice and snow career of the Company and make the Dalian Bingshan-P&A
Tranfer equity to subsidiary
Development Engineering Co., Ltd. Recreation Development Engineering Co., Ltd. into the company consolidated statement scope.
Shanghai Bingshan Technology
Subsidiary investment Widen the channel of the Company product operation, to improve performance.
Service Co., Ltd
Dalian Bingshan Metal Processing Absorption merger between Relevant business are merge into Bingshan Ryosetsu in total, promoting the two companies
Co.,Ltd. subsidiaries have complementary advantages, upgrade industries and improved the management efficiency.
VIII. The structured corporate bodies which the Company controlled
□Applicable √Not applicable
IX. Development prospect of the Company
1. Industry trends
The Company belongs to the refrigeration and air conditioning industry. In recent years, the refrigeration and air
conditioning industry becomes increasingly influential in China's national economy, having a more and more
prominent position in the improvement of people's livelihood, getting more and more social concerns, getting
higher and higher industrial concentration, and having increasingly fierce market competition. With the rapid
development of industry’s integration, modularization, informatization and intelligentization, the involvement of
new enterprises, and the continuous generation of new hot spots, the field, opponents, products and contents of
competition are constantly changing.
Industry development turns into a new normal, and will gradually enter the year of differentiation in 2017. It will
be difficult for low-end products and enterprises lack of services to survive. The main competitors in the industry
will accelerate their transformation and upgrading, and constantly introduce new technologies and new solutions
by focusing on the emerging market demands, such as energy saving and environmental protection, distributed
energy use, coal to produce electricity, data center, etc. The traditional refrigeration market pay more attention to
energy saving and emission reduction, the advantages of a single technology are gradually replaced by the
integrated technology and integrated solutions. The backbone enterprises in the industry take capital as a means,
and continue to extend to the upstream and downstream of the industry.
2. Opportunities and challenges the Company faces
(1) Opportunities the Company faces
China accelerates the new urbanization which takes human as the core, speeds up the structural reform of
agricultural supply side, increases the investment in people's livelihood, including food, hygiene, health and
provision for the aged, greatly develops the cold chain logistics industry, and the refrigeration will be keeping a
high market growth, so the market demands of the company's main business expand. The energy-saving
transformation and security transformation for the stock complete engineering and refrigeration stations bring new
market demands and provide real business opportunities for the company to vigorously expand the productive
service market. The company can grasp the above opportunities by virtue of the innovative business model, solid
technical background, late-mover advantages of intelligent factories and advantages of institutional mechanisms.
(2) Challenges the company faces
17
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Informatization leads to more and more choices for customers and lower and lower alternative costs. The
traditional markets are rapidly being replaced by alternatives and lower-cost products. The transformation and
upgrading process is complex and there may be significant risk factors that have not been recognized yet.
3. The company’s development planning
The company will focus on the business philosophy of “leading innovation and creating value”, take the
parent-subsidiary company as the core, promote the integrated management, integrate internal and external
resources, upgrade industrial chain, establish new business model, strengthen technological innovation,
comprehensively enhance and broaden the business scale and development space, improve staff’s welfare, achieve
sustainable and healthy and harmonious development, and lay a solid foundation for a century Bingshan.
4. Fund needs and funding sources plan
In 2017, the company expects to settle the needed funds through its own funds and appropriate financing.
5. Main risks the company faces and response measures
(1) Risk of slow market promotion for new products and new technologies
Response measures: strengthen planning, do a good job in training and promotion for new products, new
technologies and solutions. Vigorously promote the marketing of science and technology and service marketing,
effectively use financial leasing, contract energy management, project company and other innovative models.
Solidly promote the upgrade of construction and design qualification, and strive to strengthen the interaction and
exchange with industry associations.
(2) Risk of slightly high accounts receivable.
Response measures: place extra emphasis on controlling increment and reducing stock, further strengthen the
management of accounts receivable. Control the amount of new accounts receivable by full payment for picking
up goods, reducing or canceling quality guarantee deposit, and taking bank credit tool as a guarantee, etc.
Establish special creditor's rights management agencies, develop special solutions, and strengthen the
debt-cleaning for accounts receivable with a long period.
6. Business plan in 2017
Sales revenue: 2,150 million yuan, an approximate increase of 21% compared with the sales revenue of 1,779.5
million yuan in 2016.
Total profit: 235 million yuan, an approximate increase of 25% compared with the total profit of 188.18 million
yuan in 2016.
In 2017, the Company will takes "activate, integrate and promote" as the theme, maintain strategic strength,
activate endogenous power, integrate system resources, collect competition resultant force, enhance operational
quality, and ensure the completion of operating income, profit targets in 2017.
Work to be focused in 2017:
1. R&D innovation. Further activate the technology stock of Daleng and Wuleng, improve the trial and error and
fault-tolerant mechanism, give a full play to the platform of cold and hot technology innovation center, pay
attention to the integration of industry and university and research and the trans-boundary application research,
actively promote the marketization of technological and innovative results, accelerate the upgrading of new
products and new technology, and continue to promote transformation and upgrading strategy.
2. Differentiated competition. Continue to deepen the market segmentation field; accelerate the transformation
from product sales to solution sales; promote scientific and technological marketing, form the unique advantages
of iceberg system solutions; vigorously expand new business and new markets; wholly optimize the cost of
solution; increase the innovation intensity and speed of technical solutions; persistently develop strategic
customers and VIP customers.
3. Intellectual upgrade. Gradually realize the integration of informatization, automation and digitization, establish
18
Dalian Refrigeration Co., Ltd. 2016 Annual Report
intelligent, environmentally friendly, efficient and safe new factories, and create higher value for customers.
4. Integration efficiency. Take operating rules as the benchmark, give full play to platforms of the operating
management, informatization, finance and others, strengthen the service, coordination and control functions, and
achieve resource integration, endogenous power and efficient operation.
5. Quality improvement. Strengthen the process control of cash flow, product quality, costs and others, increase
the assessment efforts to profitability and operational capacity, and improve operating quality.
6. Capital operation. Based on the overall positioning of the hot and cold industry investment platform, increase
the capital operation, optimize the stock, expand the increment, support and promote the industrial development,
and strive to enhance the market value.
The above business plan does not represent the listed company’s profit forecast for 2017, whether to achieve
depends on the changes in market conditions, the efforts of management team and other factors, there are a lot of
uncertainties, investors should pay special attention.
X. Record of investigation, communication, and other activities in the reporting period
Receiving time Way of receiving Received object type Basic situation index
Jan. 5, 2016 Roadshow in Shenzhen Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jan. 6, 2016 Roadshow in Shanghai Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jan. 7, 2016 Roadshow in Beijing Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jan.18, 2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jan. 27, 2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Feb.24, 2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
May 10, 2016 Roadshow in Shanghai Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jul.21,2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Sep.8,2016 Field investigation Individual http://irm.cninfo.com.cn/ssessgs/S000530
Sep.14,2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Oct.28,2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Nov.8,2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Nov.9,2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Nov.10,2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Nov.17,2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Dec.5,2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Dec.27,2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Dec.28,2016 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Number of reception 19
amount of reception for Institution 114
amount of reception for Individual 0
Whether to disclose, reveal or
disclose unpublished significant no
information
19
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 5 Important Issues
I Profit distribution and dividend payment
By giving consideration to both the return to shareholders and the Company's long-term development, and in
combination of the Company's profit made in the this year, the Company formulated the 2015 annual dividend
distribution plan of paying the cash of 1 yuan for every 10 shares, with capital reserve every 10 turn add 5 shares.
Reviewed and adopted at the Company's general meeting, the Company's Board of Directors has implemented the
plan in May 2016.
Formulation and implementation of the Company's cash dividend distribution policy in the reporting period
complied with the Company's Articles of Association and the general meeting's resolution, and the dividend
distribution standard and proportion were defined and clear and the applicable decision-making procedure and
system were complete. The independent directors agreed on it and the legal rights and interests of minority
shareholders were well protected.
Special notes to cash dividend payout policy
If the regulations of the Articles of Association or the requirements of the shareholders of
Yes
the company meeting are met:
If the dividend payout standard and proportion is definite and clear-cut: Yes
If relevant decision-making procedure and mechanism is complete: Yes
If the independent directors have performed their duties and played their due role: Yes
If small and medium shareholders have the opportunity to sufficiently express their
Yes
opinions and appeals and if their legal rights and interests are sufficiently protected:
If the condition and procedure for adjusting or changing the cash dividend payout policy
Yes
is compliant and transparent:
Table of profit distribution plan, plan of share-granting with capital accumulation fund of the Company in recent
three years
Plan of share-granting with
Dividend year Profit distribution plan
capital accumulation fund
with capital reserve every 10 turn
2016 RMB 1 yuan (cash) for every 10 shares (including tax)
add 4 shares.
with capital reserve every 10 turn
2015 RMB 1 yuan (cash) for every 10 shares (including tax)
add 5 shares.
2014 RMB 1.5 yuan (cash) for every 10 shares (including tax) None
Dividends in the annual consolidated net income Accounted for in the consolidated net
Cash dividend amount
year attributable to common shareholders of the income attributable to common
(tax included)
Company shareholders of the Company
2016 61,177,655.80 178,632,660.24 34.25%
2015 36,016,497.50 129,947,307.39 27.72%
2014 54,024,746.25 115,439,722.39 46.80%
The Company made profit in the reporting period and the undistributed profit of the parent company was positive
but no cash dividend distribution plan was proposed.
□ Applicable √ Not applicable
II Profit distribution preplan, and preplan of share-granting with capital accumulation fund
of the Company
Bonus shares to be presented for every 10 shares (shares) 0
Dividend to be distributed for every 10 shares (RMB yuan) (including tax) 1
20
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Transferred shares to be presented for every 10 shares (shares) 4
Equity base for distribution preplan (shares) 611,776,558
Total amount of cash dividend distribution (RMB yuan) (including tax) 61,177,655.80
Profit distributable to the shareholders in the current year 131,437,033.62
Proportion of cash dividend distribution accounting for total profit distribution (%) 100.00%
Cash dividend distribution policy:
When the development stage of the company belongs to a growth period with important fund disbursement arrangement(s), the
proportion of cash dividend distribution accounting for this profit distribution should reach 20% at minimum when conducting profit
distribution.
Notes to details about preplan for profit distribution or capital stock increase with capital reserve
According to the audit by ShineWing CPAs (Special General Partnership), the net profit made by the parent company of the Company
in 2016 was RMB 146.041 million and 10% of the net profit (RMB 14.604 million) was drawn as the legal surplus reserve.
Therefore, the profit distributable to the shareholders in the current year was RMB 131.437 million. Plus the initial undistributed
profit of RMB 428.747 million and minus the dividend of RMB 36.016 million of common shares paid in 2015 and the drawn free
surplus reserve of RMB 25.205 million (20%), the accumulated profit distributable to the shareholders was RMB 498.963 million.
The Company’s profit distribution preplan for 2016:
Based on the net profit made by the parent company of the Company in 2016 (146.041 million), 20% of the net profit (RMB 29.208
million) will be drawn as the free surplus reserve;
Based on the total capital stock of 611,776,558 shares, the dividend of RMB 1.00 in cash (including tax) will be distributed for every
10 shares, the total cash dividend is RMB 61.178 million, and the cash dividend for B share is converted and paid in Hong Kong
dollars; Based on the total capital stock of 611,776,558 shares, the Company will transfer the capital reserve to increase capital stock,
4 shares for every 10 shares.
The above preplan shall be submitted to the 2016 shareholders’ general meeting for review and approval.
III Implementation of commitments
1. Commitments of the Company or its shareholders holding 5% or higher of the shares in the reporting
period or carried to the reporting period
The implementation for management equity incentive plan is being performed currently.
The new stock increased from private placement under the name of Daleng were listed on 20 June 2016, the
follow seven investors including Zhejiang Caitong Capital Investment Co., Ltd., Xingzheng Security Asset
Management Co., Ltd., Penghua Fund Management Co., Ltd., First State Cinda Fund Co., Ltd., Shenzhen B&D
Capital Co., Ltd., Bosera Funds Management Co., Ltd. and Caitong Fund Management Co., Ltd. committed that:
the stock of Daleng subscribes in private placement process will lock-up for trading with 12 months since the first
trading date of the new shares increased in the placement.
IV. Non-operation capital occupation by holding shareholders and their related parties in the
listed company
The company had no capital occupation by the holding shareholders and their related parties in the listed company
within this reporting period.
V. Explain to the “non standard audit report” from the board of directors, board of
supervisors of the Company
□Applicable √Not applicable
VI. Change in accounting policies, accounting estimates and accounting methods compared
with the financial statements of the previous year
√Applicable □Not applicable
21
Dalian Refrigeration Co., Ltd. 2016 Annual Report
According to the Provisions of Treatments on Value-Added Tax (Cai Kuai [2016] No.22) issued from Ministry of
Finance, the property tax, land holding tax, stamp tax and vehicle & vessel usage tax, which are reckoned under
Administration Expense and operating cost, will list under the item of Taxes and surcharge, for those occurred
after 1 May 2016.
VII. Correction of major accounting mistakes in the reporting period, which should be
retroactively restated
□Applicable √Not applicable
XIII. Change in the range of consolidated statements compared with the financial statements
of the previous year
√Applicable □ Not applicable
This year, there are 3 more entities were included in the scope of consolidation, they are Dalian New Meica
Electrical Technology Co., Ltd, Dalian Bingshan P&A Recreation Development Engineering Co., Ltd., and
Shanghai Bingshan Technical Service Co., Ltd, and one entity which is Dalian Bingshan Metal Processing Co.,
Ltd is excluded at the year end.
The 3rd meeting of the 7th generation of board of directors approved to accept the 70% of shareholding transfer
from Dalian New Meica Electrical Technology Co., Ltd, a holding subsidiary, hence, Dalian New Meica Electrical
Technology Co., Ltd, has become the fully owned subsidiary after transfer. The transaction stated above has been
completed by 31st December 2016. Hence, the Company holds 100% shareholding of Dalian New Meica
Electrical Technology Co., Ltd when preparing the consolidated statements.
At the 5th meeting of the 7th generation of board of directors, the company and Hong Kong P&A Water Project
Co., Ltd both respectively transferred 50% shareholdings of Dalian Bingshan P&A Recreation Development
Engineering Co., Ltd. to the fully owned subsidiary, Dalian Bingshan Group Engineering Co., Ltd. After that, the
company would not hold any shares of Dalian Bingshan Group Engineering Co., Ltd any longer, and the fully
owned subsidiary, Dalian Bingshan Group Engineering Co., Ltd would have 100% shareholdings of Dalian
Bingshan P&A Recreation Development Engineering Co., Ltd.. The transactions stated above have been
completed by 31st, December 2016.
The board meeting of Dalian Bingshan Group Engineering Co., Ltd, a subsidiary of the company, approved
Dalian Bingshan Group Engineering Co., Ltd and Shanghai QingNeng Cold Chain Equipment Co., Ltd jointly
invested and constructed Shanghai Bingshan Technical Service Co., Ltd. Dalian Bingshan Group Engineering Co.,
Ltd invested 5,100,000Yuan, and held 51% shareholding. Shanghai Bingshan Technical Service Co., Ltd has been
formally operated by 31st December 2016.The 15th meeting of the 6th generation of board approved that Dalian
Bingshan Ryosetsu Quick Freezing Equipment Co.,Ltd., a holding subsidiary, acquired Dalian Bingshan Metal
Processing Co., Ltd which is a fully owned subsidiary. After the merger, Dalian Bingshan Quick Freezing
Equipment Co., Ltd would be the survival company, The transaction stated above has completed by 31st
December 2016.
IX. Engagement and dismissal of the accounting firm
Currently engaged accounting firm
Name of domestic accounting firm ShineWing CPAs (Special General Partnership)
Remuneration paid to the domestic accounting firm (in 10 thousand yuan) 107
Continuous audit service years of the domestic accounting firm 1
Name of certified public accountants with the domestic accounting firm Lin Li , Wang Dong
If the CPA firm retaining was changed in this period
√Applicable □ Not applicable
For maintaining the specific auditing service with a stable continuity, and guarantee audit quality and improve the
efficiency, being proposed by the auditing committee of the Board, and deliberated and approved by 11th session
of 7th board and 4th extraordinary shareholders’ general meeting 2016, the Company decided to appointed
ShineWing CPAs (special general partnership) as the auditing organ of the Company for year of 2016, that is
carrying an integrated audit for financial report and internal control of the Company. Independent director of the
Company propose a prior approval on the “Report of Engagement of Audit Organ for year of 2016” and express
an agreement independent opinions.
22
Dalian Refrigeration Co., Ltd. 2016 Annual Report
X. Facing suspend and terminate listing after the annual report disclosure
□ Applicable √ Not applicable
XI. Bankruptcy restructuring related matters
□ Applicable √ Not applicable
XII. Major lawsuit and arbitration issues
□ Applicable √ Not applicable
XIII. Punishment and rectification
□ Applicable √ Not applicable
XIV the credibility of companies and its controlling shareholder, actual controller
□ Applicable √ Not applicable
XV. The implementation and effect of equity incentive
√Applicable □ Not applicable
The first phase of restricted stock incentive plan has been implemented and completed granting the restricted
stock on March 2015. The twice phase of restricted stock incentive plan has been implemented and completed
granting the restricted stock on December 2016. 12, 884 thousand shares restricted stock has been granted to
the118 incentive objects. The details see the series announcement on China Securities, HK Commercial Daily and
Cninfo website.
XVI. Important associated transactions
1. Important associated transactions
In the reporting period, the total amount of normal associated transactions between the Company and associated
parties was 871,920 thousand yuan, accounting for 113.24% of the budgeted amount for the year 2016. This
included 497,040 thousand yuan, accounting for 130.80% of the budgeted amount for the year 2016, for
purchasing supporting products for package projects from associated parties, and 374,880 thousand yuan,
accounting for 96.12% of the budgeted amount for the year 2016, from selling supporting parts and components to
associated parties.
The Report of 2016 Actual Routine Related Transactions Amount Exceeds Expected Amount was approved by the
12th session of 7th board dated 15 Feb. 2017, and released specific notice. The details see the series announcement
on China Securities, HK Commercial Daily and Cninfo website . (No.2017-003 and 2017-007) dated 16 Feb.
2017.
2. Associated transactions related to purchases or sales of assets
3. Important associated transactions with joint external investments
4.Current associated rights of credit and liabilities
□ Applicable √ Not applicable
5. Other associated transactions
√ Applicable □ Not applicable
According to the 3rd meeting of the 7th Board of Directors, 70 percent equity of Sanyo Meica held by Sanyo
Electric Co., Ltd. was transferred to the Company.
According to the 5th meeting of the 7th Board of Directors, Panasonic Refrigeration System (Dalian ) Co., Ltd. was
established by Panasonic Cold Chain, Panasonic Compressor, Panasonic China, and the Company.
According to the 8th meeting of the 7th Board of Directors, Dalian Fuji Bingshan Vending Machine Co., Ltd. was
added capital by Fuji Electric Co., Ltd., and the Company.
According to the 11th meeting of the 7th Board of Directors, Dalian Bingshan Group Management Consulting Co.,
Ltd. was established by Dalian Bingshan Group Co., Ltd., and the Company.
The details see the series announcement on China Securities, HK Commercial Daily and Cninfo website on March
30, April 22, August 26, and November 26, 2016.
XVII. Major contract and its performance
1. Hosting, contracting and leasing status
(1) the hosting status
□ Applicable √ Not applicable
(2)the contracting status
□ Applicable √ Not applicable
(3) the leasing status
√ Applicable □ Not applicable
23
Dalian Refrigeration Co., Ltd. 2016 Annual Report
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 rental term till 16th
July, 2029. The annual rent fee is RMB 4.2 million after considering the time value of money.
2. Guaranteeing status
√ Applicable □ Not applicable
Resolution of 2nd meeting of 7th session of the Board of directors agreed to provide guarantee to Dalian Bingshan
Group Co., Ltd. for obtaining Development Fund of National Development Bank. Total amount of the loan was
RMB120 million with interest rate 1.2%, and the loan period was 10 years. The fund can only be used for cold
chain green intelligent equipment and the development of service industry. When Dalian Bingshan Group Co., Ltd.
receives the fund, it will transfer all the fund to the Company with the same conditions. The above guarantee to
Dalian Bingshan Group Co., Ltd. is to the Company itself actually.
3. Entrust others to cash assets management
(1)Trust management
□Applicable √Not applicable
(2)Entrusted loans
□Applicable √Not applicable
(3)Other important contracts
□ Applicable √ Not applicable
XVIII. Social responsibilities
√Applicable □ Not applicable
1. Performance of precise poverty alleviation social responsibility
(1) Overview of the annual targeted poverty alleviation
In 2016, the Company and its controlling shareholder, carried out a targeted measures in poverty alleviation in the
Songlin Village, Guangmingshan Town, Zhuanghe City, the fixed-point poverty alleviation. Main helping
measures are:
Firstly, pay highly attention to the poverty alleviation, actively do well in reception. In accordance with the
requirement of fixed-point poverty alleviation, we completed a top leaders responsibility mechanism, determined
the responsibility department for the docking work of poverty alleviation and actively to contact with the Songlin
Village. Formulate an anti poverty funds budget in full-amount, and ensuring the capital fully funded in time.
Secondly, implement poverty alleviation with facilities to solve traffic problems. According to the traffic
inconvenience in Songlin Village and actual needs of peasant bridge building, the Company donated 60000 Yuan
in May 2016 for specific construction of five love peasant bridges, and completed the bridges and put into use
before flood season for villagers.
Thirdly, love helping and solve problems in life. In order to well understand the situation of poverty alleviation
objects, persons in charge of grass-roots units are carried a research sympathy to Songlin Village, comprehend
operation development of the village and the individuals need helps, donated rice, oil, bedding and clothing as
well as the condolence payments, meanwhile, buying fruits and vegetables on site, expressing the support of
poverty alleviation from Bingshan staffs.
(2) Follow-up targeted poverty alleviation plan
In 2017, the Company will promote the poverty alleviation with innovative measures, ensuring an actual effect
achieved from the works.
Firstly, implemented the idea of target poverty alleviation and implement poverty alleviation with facilities, center
on actual needs of the village and fundamental facility of the agriculture development as well as agricultural
machinery equipment and deep processing of agricultural, to use the poverty alleviation funs on the blade.
Secondly, according to the actual condition of agricultural development in the village, and combined the needs of
enterprise with funds contributed as Bingshan, solve the labor surplus problems through proving jobs and creating
24
Dalian Refrigeration Co., Ltd. 2016 Annual Report
opportunities for farmers to increase their incomes.
Thirdly, offering a guarantee for poverty alleviation funds, funding the poverty-stricken households with specific
necessaries, and providing priority employment opportunities while funding the poverty students.
2. Performance of other social responsibility
For the specific performance of social responsibilities by the Company, refer to the social responsibility report for
2016.
The listed company and its subsidiaries whether belong to heavy pollution industry formulated by the state
environmental protection department
□ Yes √ No
XIX. Other important matters
□ Applicable √ Not applicable
XX. Other important matters of subsidiary company
□ Applicable √ Not applicable
25
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 6 Change in Share Capital and Shareholders' Information
I. Change in share capital
1. Change in share capital
Shares Shares
（before change） Changes （after change）
items
number proportion number proportion
I. Non-circulating share capital with restricted trade
29,374,451 8.16% 53,058,280 82,432,731 13.47%
conditions
3. Other domestic shares 29,374,451 8.16% 53,058,280 82,432,731 13.47%
Including: Shares held by domestic legal person 19,213,921 5.33% 25,123,796 44,337,717 7.24%
Including: Shares held by domestic natural person 10,160,530 2.82% 27,934,484 38,095,014 6.23%
II. Circulating share capital 330,790,524 91.84% 198,553,303 529,343,827 86.53%
1. Domestically listed ordinary shares 215,790,524 59.91% 141,053,303 356,843,827 58.33%
2. Domestically listed foreign shares 115,000,000 31.93% 57,500,000 172,500,000 28.20%
III. Total shares 360,164,975 100.00% 251,611,583 611,776,558 100.00%
The reason for the Change in share capital
On January 21, the Company finished the election of the directors and supervisors and employed the senior
management, so the member of these executives changed. On April 22, the first phase of restricted stock plan
unlocked. On May 3, the Company finished the work of interest distribution of the last year, transfer the capital
reserve to increase capital stock, 5 shares for every 10 shares. On Jun. 20, the private placement of A share began
to be traded on market. On July 22, the Share reform restricted shares held by the holding shareholder began to be
traded on market. On December 6, the second phase of restricted stock plan completed of granting.
The things mentioned above in the report have caused the change of the total amount of shares and the structure of
stock.
√Applicable □ Not applicable
The Company's 2015 annual profit distribution plans was approved by 2015 Shareholders’ General Meeting. The
Company's issuing of A-shares privately was approved by CSRC on Dec 30, 2015. The second phase of restricted
stock plan was approved by the 3rd Extraordinary Shareholders’ General Meeting of 2016.
The influence of change in share capital on the a recent year and recent issue for basic earnings per share ,diluted
earnings per share and net assets per share.
(1)The basic per share of 2015 is 0.36 yuan; According to the latest equity is adjusted for 0.24 yuan;
(2)The diluted per share of 2015 is 0.36 yuan; According to the latest equity is adjusted for 0.24 yuan;
(3)The net assets per share of 2015 is 7.35 yuan; According to the latest equity is adjusted for 4.33 yuan.
2. The restricted shares changes
√Applicable □ Not applicable
For details, please see the Chinese version of 2016 Annual Report.
II. Securities issuance and listing
1. Securities issuance in the report period
□ Applicable √ Not applicable
2. Change in total shares of the Company and structure of shareholders
On January 21, the Company finished the election of the directors and supervisors and employed the senior
management, so the member of these executives changed. On April 22, the first phase of restricted stock plan
unlocked. On May 3, the Company finished the work of interest distribution of the last year, transfer the capital
26
Dalian Refrigeration Co., Ltd. 2016 Annual Report
reserve to increase capital stock, 5 shares for every 10 shares. On Jun. 20, the private placement of A share began
to be traded on market. On July 22, the Share reform restricted shares held by the holding shareholder began to be
traded on market. On December 6 , the second phase of restricted stock plan completed of granting.
The things mentioned above in the report have caused the change of the total amount of shares and the structure of
stock, the structure of asset assets and liabilities changed at the same time.
3. Internal staff shares
□ Applicable √ Not applicable
III. Shareholders and actual controller
1. Number of shareholders and their shareholding
Total number of shareholders in the Total number of shareholders as of the last month before
36,246 41,152
reporting period disclosure of the annual report
Shareholding of top ten shareholders
Number of Number of
Proporti shares with pledged
Name Nature Total number
on sale shares or
restriction shares frozen
Domestic non-state-owned
Dalian Bingshan Group Co., Ltd. 19.96% 122,083,524 0 0
legal person
Sanyo Electric Co., Ltd. Overseas legal person 8.58% 52,502,250 0 0
Industrial Securities Golden Kylin No. 2 Colle
Others 2.79% 17,063,257 7,280,081 0
ctive Asset Management Plan
Zheshang Juchao New thinking hybrid securities
Others 1.81% 11,044,457 0 0
investment fund
National Social Security Funds 104 Portfolio Others 1.32% 8,100,000 5,864,510 0
BCM-Changxin quantitative hybrid securities
Others 1.21% 7,416,235 0 0
investment fund
National Social Security Funds 503 Portfolio Others 0.96% 5,864,510 5,864,510 0
Caitong Capital Kunze No. 2 Securities
Others 0.96% 5,864,509 5,864,509 0
vInestment Fund
Shenzhen B & D Capital Fengnian Jinjia No. 1
Others 0.96% 5,864,509 5,864,509 0
Fund
Zheshang Juchao industry grow hybrid securities
Others 0.77% 4,701,826 0 0
investment fund
Shareholding of top ten shareholders without sale restriction
Number of shares
Name Type of shares
without sale restriction
Dalian Bingshan Group Co., Ltd. 122,083,524 RMB denominated ordinary shares
Sanyo Electric Co., Ltd. 52,502,250 Domestically listed foreign shares
Zheshang Juchao New thinking hybrid securities investment fund 11,044,457 RMB denominated ordinary shares
Industrial Securities Golden Kylin No. 2 Collective Asset
9,783,176 RMB denominated ordinary shares
Management Plan
BCM-Changxin quantitative hybrid securities investment fund 7,416,235 RMB denominated ordinary shares
Zheshang Juchao industry grow hybrid securities investment fund 4,701,826 RMB denominated ordinary shares
Lin Zhenming 4,420,000 Domestically listed foreign shares
27
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Sun Huiming 3,724,449 Domestically listed foreign shares
Industrial and Commercial Bank of -Peng Hua reform dividend
3,638,357 RMB denominated ordinary shares
equity securities investment fund
BOIC SECURITIES LIMITED 3,162,744 Domestically listed foreign shares
Dalian Bingshan Group Co., Ltd. had the association
Notes to the associated relationship and uniform actions of the above relationship with Sanyo Electric Co., Ltd. among the above
shareholders shareholders.Sanyo Electric Co., Ltd. holds 26.6% of Dalian
Bingshan Group Co., Ltd.'s equity.
2.Contralling shareholder of the Company
Legal Founding Unified social
Name of holding shareholder Main business
representative date credit code
Research, development, manufacture, sales,
service and installation of industrial refrigeration
products, freezing and cold storage products,
91210200241 large-, medium- and small-size air-conditioning
Dalian Bingshan Group Co., Ltd. Ji Zhijian Jul. 3, 1985
2917931 products, petrochemical equipment products,
electronic and electric control products, home
appliance products and environment protection
products.
Shares held by the holding
shareholder in other overseas and
domestic listed companies as the None
holding shareholder or ordinary
shareholder in the reporting period
Change in the holding shareholder in the reporting period
□ Applicable √ Not applicable
3. Actual controller of the Company
The company has no actual controllers.
According to the actual situation of Dalian Refrigeration Co., Ltd. and its controlling shareholders, and compared
with the related laws and regulations including Company Law of People’s Republic of China, Management
Regulation on Listing Company Acquisition and Stock Listing Rules of Shenzhen Stock Exchange, with the
confirmation of Liaoning Huaxia law firm, the Company released the Public Notice on Not Having Actual
Controller.(No: 2015-025),) which was published on B04 of China Securities, A19 of HK Commercial Daily and
Cninfo website on April 24 2015.
28
Commission ofDalian Municipality Government
Dalian Refrigeration Co., Ltd. 2016 Annual Report
State-owned Assets Supervision and Administration
Dalian State-owned Assets Management Co., Ltd.
Dalian Equipment Manufacture Investment
Dalan Zhonghuida Refrigeration
Sanyo Electric Co., Ltd.
Yida Group Co., Ltd.
Dayang Co., Ltd.
Technology Co., Ltd.
Co., Ltd.
100% 100%
22.2% 4.4% 13.3% 13.3% 20.2% 26.6%
Dalian Bingshan Group Co., Ltd.
19.96%
Dalian Refrigeration Co., Ltd.
The actual controller controlled the Company through a trust or other asset management
□ Applicable √ Not applicable
4. Other legal-person shareholders holding of 10% or more shares
□ Applicable √ Not applicable
5.、controlling shareholders, actual controllers, restructuring the constraint to the stake and other
commitments underweight
□ Applicable √ Not applicable
29
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 7 Information on Preferred Stock
□ Applicable √ Not applicable
In the reporting period, the Company didn’t own preferred stock.
30
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 8 Information on the Company’s Directors, Supervisors,
Senior Management and Staff
I. Changes in shareholding by directors, supervisors and senior managers
Increase Decrease
Shares Shares
on holding in holding
Starting Ending held at held at
Office-holdi of shares of shares
Name Position Sex Age date of date of beginning the end of
ng state in this in this
office term office term of period period
period period
(shares) (shares)
(shares) (share)
Mar. 27, Jan.20,
Ji Zhijian Chairman Incumbent M 50 942,300 471,150 0 1,413,450
2014 2019
Mar. 27, Jan.20,
Xu Junrao Director Incumbent F 54 663,500 331,749 70,000 925,249
2014 2019
Feb. 5, Jan.20,
Liu Kai Vice Chairman Incumbent M 42 659,600 329,800 0 989,400
2013 2019
Jan. 21, Jan.20,
Ding Jie Director, GM Incumbent M 54 150,000 575,000 0 725,000
2016 2019
Jan. 21, Jan.20,
Shin Kudo Director Incumbent M 54 0 0 0 0
2016 2019
Kijima Leaving Mar. 27, Feb.6,
Director M 59 0 0 0 0
Tadatoshi office 2014 2017
Dai Independent Feb.12, Jan.20,
Incumbent F 66 0 0 0 0
Dashuang director 2015 2019
Independent Feb.12, Jan.20,
Liu Jiwei Incumbent M 56 0 0 0 0
director 2015 2019
Independent May.20 Jan.20,
Wang Yan Incumbent F 53 0 0 0 0
director 2015 2019
Chairman of
Leaving Feb. 5, Mar.11,
Yu Fuchun Board of M 57 10,140 5,071 0 15,211
office 2013 2017
Supervisors
Mao Feb. 5, Jan.20,
Supervisor Incumbent F 51 0 0 0 0
Chunhua 2013 2019
Jan. 21, Jan.20,
Dai Yuling Supervisor Incumbent F 39 0 0 0 0
2016 2019
Fan Otc.20, Jan.20,
DGM Incumbent M 53 0 500,000 0 500,000
Yuekun 2015 2019
Wang Jan. 21, Jan.20,
DGM Incumbent M 55 376,900 188,449 50,000 515,349
Zhiqiang 2016 2019
Chief Financial Jan. 21, Jan.20,
Ma Yun Incumbent M 45 0 500,000 0 500,000
Officer 2016 2019
31
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Song Feb. 5, Jan.20,
Board Secretary Incumbent M 43 282,800 141,400 0 424,200
Wenbao 2013 2019
Kobayashi Leaving Mar. 27, Jan.21
Vice Chairman M 55 0 0 0 0
Noriaki office 2014 2016
Leaving Feb. 5, Jan.21
Ma Yun Supervisor M 45 0 0 0 0
office 2013 2016
Chief Financial Leaving Feb. 5, Jan21,
Rong Yan F 47 376,900 188,450 12,000 553,350
Officer office 2013 2016
Li Leaving Dec. 12, Jan,21,
DGM M 50 376,900 188,450 169,605 395,745
Wenjiang office 2013 2016
Total -- -- -- -- -- -- 3,839,040 3,419,519 301,605 6,956,954
During the period, the Company carried out profit distribution plan for year of 2015, that is convert 5 shares from
capital reserve for every 10 shares.
In reporting period, the 2nd incentive plan was granted, GM of the Company Ding Jie, Deputy GM Fan Yuekun
and CFO Ma Yun were award 500,000 shares as incentive objects.
On 6 Feb. 2017, BOD received a resignation report from director Kijima Tadatoshi, director Mr. Kijima Tadatoshi
submit resignation report to the Board due to retirement. Mr. Takagi Toshiyuki was elected as the director of 7th
BOD with office term same as 7th BOD, who is nominated by 12th session of 7th BOD and deliberated and
approved by First extraordinary shareholder general meeting of 2017.
On 11 March 2017, Mr. Yu Fuchun, the employee representative supervisor of 7th supervisory committee of the
Company, is no longer serving as chairman of the supervisory committee and employee representative supervisor
for job changes. And in accordance with the regulation of Company Law and Article of Association, being
deliberated and approved by staff representative group, Ms. Cao Lili was elected as employee representative
supervisor 7th supervisory committee of the Company with offer term same as 7th supervisory committee. And Mr.
Mao Chunhua was elected as chairman of the supervisory committee of 7th supervisory, being decided on 9th
session of 7th supervisory committee.
II. Changes of directors, supervisors, senior managers of the Company
Name Position held Type Date Reason
Kobayashi Leaving office when expiration of
Vice Chairman Jan.21, 2016 Expiration of the term of office
Noriaki the term of office
Chief Financial Leaving office when expiration of
Rong Yan Jan.21, 2016 Expiration of the term of office
Officer the term of office
Leaving office when expiration of
Li Wenjiang DGM Jan.21, 2016 Expiration of the term of office
the term of office
Leaving office when expiration of
Ma Yun Supervisor Jan.21, 2016 Expiration of the term of office
the term of office
Leaving office when expiration of
Wang Zhiqiang Director Jan.21, 2016 Expiration of the term of office
the term of office
The general meeting of shareholders
Liu Kai Vice Chairman Be elected Jan.21, 2016
by election
The general meeting of shareholders
Ding Jie Director, GM Be elected and employed Jan.21, 2016
by election
32
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Employed by the Company
Fan Yuekun DGM Be employed Jan.21, 2016 Employed by the Company
Chief Financial
Ma Yun Be employed Jan.21, 2016 Employed by the Company
Officer
The general meeting of shareholders
Dai Yuling Supervisor Be elected Jan.21, 2016
by election
III Office holding
Professional background, main work experiences and the main duties and responsibilities of incumbent directors,
supervisors, senior managers of the Company
main duties and
Name Position held Professional background Main work experience
responsibilities
doctorate degree in Successively acting as director, GM, Chairman of Panasonic Related
Ji Zhijian Chairman management of the Dalian Cold-Chain.; President of Dalian Bingshan Group Co., Ltd.; responsibilities of
University of Technology Chairman of the Company. the Chairman
Successively acting as the Financial Majordomo, director of the Related
The MBA and senior
Xu Junrao Director Company; Vice President and chief accountant of Dalian Bingshan responsibilities of
account
Group Co., Ltd. the Director
graduate from Xi’an
Jiaotong University major
Related
Vice in mechanical designing Successively acting as Head of Production Management Dept.,
Liu Kai responsibilities of
Chairman and manufacturing and the Assistant GM, GM and director of the company.
the Director
MBA of Dalian University
of Technology
graduate from Xi’an
Jiaotong University major Related
in compressor and responsibilities of
Director, refrigeration technology, Served as the GM of Wuhan new world Refrigeration Co., Ltd. since the Director
Ding Jie
GM owed a master of business 2002 Related
administration of responsibilities of
Huazhong University of the GM
Science and Technology
Successively acting as manager of counselor and manager of
Related
graduated from Japan Soka ministry of Supervision of Panasonic Electric Industrial Co., Ltd. The
Shin Kudo Director responsibilities of
University chief accountant of Panasonic Electric (China), Panasonic Electric
the Director
AP(China)
Successively acting as manager of home electrochemical operation
Related
Kijima graduated from Osaka planning division, the electrochemical residential equipment branch
Director responsibilities of
Tadatoshi Prefecture University; of the company and Executive GM of Hangzhou Panasonic
the Director
Household Appliances Co., Ltd.
Dai Independent professor, international She serves as professor and doctoral tutor of the school of business Related
Dashuang director project management administration of Dalian university of Technology, the director of responsibilities of
33
Dalian Refrigeration Co., Ltd. 2016 Annual Report
appraiser, Chinese project management research center of Dalian university of the Independent
registered consulting technology. director
engineer.
Related
doctor of management, He has served successively as the director of finance department,
Independent responsibilities of
Liu Jiwei professor of accounting, professor of the accountancy of Dongbei University of Finance and
director the Independent
CPA. Economics,
director
She has served successively as vice dean of law school of Dongbei
graduate from China Related
University of Finance and Economics, the director of Chinese society
Independent University of Political responsibilities of
Wang Yan of Economic Law ,the president of the Economics law seminar of
director Science and Law， the Independent
Liaoning Province law society, and the arbitrator of Dalian Arbitration
professor of law director
Commission
Chairman of Related
He has served successively as the vice chairman of the Trade Union
Yu Fuchun Board of the senior political worker, responsibilities of
of the Company
Supervisors the Supervisor
Related
Mao Successively acting as Vice Head, and Head of the Financial Dept. of
Supervisor Senior Accountant responsibilities of
Chunhua the Company.
the Supervisor
Related
acting as the deputy chief of the Financial Dept. of Dalian Bingshan
Dai Yuling Supervisor Accountant responsibilities of
Group Company Ltd.
the Supervisor
He has served successively as the Deputy chief of the Financial
Chief Related
Management Dept. of the Company, the supervisor of the Company,
Ma Yun Financial The Accountant responsibilities of
and the Chief Financial Officer of Dalian Bingshan Group Sales Co.,
Officer CFO
Ltd.
He successively served as the general manager of operation &
graduated from Tsinghua
management division and GM assistant of Panasonic Cold-Chain
University with a bachelor
from 2003 to 2013; served as GM of Dalian HURLLY Group Co.,
Fan degree, major in
DGM Ltd. from June 2013 to July 2015; served as the general manager of Assist the GM
Yuekun engineering physics, and
operation & management division of the Company since September
MBA of Dalian University
2015. serves as the Deputy General Manager of the Company since
of Technology;
October 22, 2015.
graduate from Dalian Related
Wang Successively acting as DGM, Chief Engineer, and director of the
DGM University of responsibilities of
Zhiqiang Company.
Technology,Master Degree R&D
Related
Song Board graduate from Zhejiang Successively acting as representative for securities affairs, board
responsibilities of
Wenbao secretary University，CFA secretary of the company.
Board secretary
34
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Office holding in shareholder unit
√ Applicable □ Not applicable
If receiving remuneration or allowance from
Name of office holder Shareholder unit name Position held in shareholder unit
shareholder unit
Ji Zhijian Dalian Bingshan Group Co., Ltd. President, Chairman of the Board Yes
Xu Junrao Dalian Bingshan Group Co., Ltd. Vice President and chief accountant Yes
Office holding in other units
√ Applicable □ Not applicable
If receiving
remuneration or
name unit name Position held in other unit
allowance from other
unit
Panasonic Refrigeration (Dalian) Co., Ltd.; Chairman no
Panasonic Cold-chain (Dalian) Co., Ltd Chairman no
Ji Zhijian
Dalian Bingshan Group Management Consulting Co., Ltd. Chairman no
Dalian Zhong Huida Refrigeration technology Co., Ltd. Chairman no
Dalian Bingshan Group Engineering Co., Ltd. Chairman Yes
Liu Kai Bingshan Technology Service (Dalian) Co., Ltd. Chairman no
Dalian Bingshan Group Sales Co., Ltd. Chairman no
MHI Bingshan Refrigeraition (Dalian) Co., Ltd. Chairman no
Ding Jie
Wuhan New World Refrigeration Industry Co., Ltd. Chairman no
Dalian Huarui Heavy Industry Group Co., Ltd The independent yes
Dai Dashuang
Yingkou Port Liability Co., Ltd The independent yes
GF Securities Co., Ltd The independent yes
Liu Jiwei
Lingyuan Iron and Steel Co., Ltd The independent yes
Wang Yan Dalian international cooperation (group) Co., Ltd The independent yes
IV. Remuneration paid to directors, supervisors, and senior management
Decision-making procedure, decision-making basis and actual payment of remuneration for directors, supervisors
and senior management
Decision-making procedure: the Company's remuneration plan for directors and supervisors was proposed by the
Company's Remuneration and Evaluation Committee of the Board of Directors, and after approval by the Board
of Directors, submitted to the general meeting for adoption and put into effect. The Company’s remuneration plan
for senior management was put into effect after approval by the Company’s Board of Directors.
Decision-making basis: it was decided on the basis of main responsibilities and importance of the concerned
position and the remuneration level of similar positions in other similar enterprises and evaluated and rewarded
through the Company’s examination procedure for assets operation performance.
The total amount of remunerations actually ( pre-tax ) paid by the Company to directors, supervisors, and senior
management was 3.8966 million yuan.
Particulars about the annual remuneration of directors, supervisors and senior staff members
Annual remuneration and allowance( pre-tax )paid by the Company
Name
(ten thousand yuan)
Ji Zhijian 0
Xu Junrao 0
Liu Kai 0
35
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Ding Jie 79.54
Shin Kudo 0
Kijima Tadatoshi 0
Dai Dashuang 8.00
Liu Jiwei 8.00
Wang Yan 8.00
Yu Fuchun 16.70
Mao Chunhua 19.60
Dai Yuling 0
Fan Yuekun 71.58
Wang Zhiqiang 68.30
Ma Yun 68.00
Song Wenbao 41.94
Kobayashi Noriaki 0
Rong Yan 0
Li Wenjiang 0
Total 389.66
Equity incentive plans granted to directors, supervisors and senior management of the Company in the reporting
period
√ Applicable □ Not applicable
Granted
Held the restricted stock New granted restricted Held the restricted
Unlocked shares price
name position quantity at the stock during the stock quantity at the
during the period （yuan/sh
beginning of the period period end of the period
are）
Ding Jie Director, GM 150,000 45,000 500,000 5.62 725,000
Fan Yuekun DGM 0 0 500,000 5.62 500,000
Ma Yun CFO 0 0 500,000 5.62 500,000
total -- 150,000 45,000 1,500,000 -- 1,725,000
V. Status of the Company's staff
1. As of Dec. 31, 2016 the Company and its major subsidiary had 1,876 enrolled employees, including 1,040
persons engaged in production; 277 persons engaged in engineering and technology; 269 persons engaged in
marketing; 39 persons engaged in financing; and 251 persons engaged in management.
2. As of Dec. 31, 2016,, among enrolled employees of the Company and its major subsidiary, 60 persons have the
educational background of Master or higher; 507 persons have the educational background of university; 563
persons have the educational background of junior college; and 746 persons have the educational background of
secondary technical school or lower.
3. The Company applied the employee job performance wage system with distribution according to positions and
performance of an employee.
4. The Company formulated the annual training plan and gave purposeful training to an employee in consideration
of his/her post requirement.
5. The pension and medical expense for retired employees of the Company were paid by the social insurance
body.
36
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 9 Corporate Governance
I. Basic situation of corporate governance
Within the reporting period, the company centered around the operation subject as “Leading innovation, Creating
value” with the theme “innovation, improvement, promotion”, to further deepen and perfect the normative internal
control system and upgrade the governing level of the company continuously.
There were no problems with the Company concerning horizontal competition caused by restructures and other
reasons. The main normal associated transactions between the Company and the associated companies included
purchasing the supporting products for package projects from the associated companies, and selling the supporting
parts and components to the associated companies and providing them with the labor service. Associated
transactions between the Company and the associated companies are necessary for normal production and
operation and helpful for the Company’s healthy development, and therefore will continue. The Company will
strictly follow the related decision-making procedures and fulfill the obligation in information disclosure in order
to further regulate associated transactions.
Was there any deviation of the Company's corporate governance from the requirements in the Company Law and
China Securities Regulatory Commission's regulations?
□ Yes √ No
There was no deviation of the Company's corporate governance from the requirements in the Company Law and
China Securities Regulatory Commission's regulations.
II. Status of the Company's business, staff, asset, organization and finance separations from
the holding shareholder
The Company was separated from the holding shareholder in business, staff, asset, organization and finance, and
has the independent and complete business and operation capability.
III. Horizontal competitions
□ Applicable √ Not applicable
IV Shareholders’ general meeting convened in the reporting period
1. Annual Shareholders’ general meeting within this reporting period
The proportion of
Session number of meeting The type of the meeting date Disclosing date Disclosing index
participate investors
The 1st Extraordinary Shareholders’ General extraordinary Shareholders’ January http://www.cnin
32.83% January 22,2016
Meeting of 2016 general meeting 21,2016 fo.com.cn
The 2nd Extraordinary Shareholders’ General extraordinary Shareholders’ March http://www.cnin
33.87% March 24,2016
Meeting of 2016 general meeting 23,2016 fo.com.cn
2015 Annual Shareholders’ April http://www.cnin
Annual Shareholders’ General Meeting
33.90% April 22,2016
General Meeting 21,2016 fo.com.cn
The 3rd Extraordinary Shareholders’ General extraordinary Shareholders’ September September14,20 http://www.cnin
Meeting of 2016 31.65%
general meeting 13,2016 16 fo.com.cn
The 4th Extraordinary Shareholders’ General extraordinary Shareholders’ December December http://www.cnin
Meeting of 2016 30.26%
general meeting 15,2016 16,2016 fo.com.cn
37
Dalian Refrigeration Co., Ltd. 2016 Annual Report
V. Independent directors’ execution of duties in the reporting period
1. Attendance of independent directors to the meetings of the Board of Directors and general meetings
Attendance of independent directors to the meetings of the Board of Directors
Number of Failure to
Number of
Name of due board Number of Number of attend in
attendance by Number of
independent meetings in attendances on attendance by person for
communicatio absences
director the reporting the spot proxy successive two
n
period times or not
Dai Dashuang 12 5 7 0 0 No
Liu Jiwei 12 5 7 0 0 No
Wang Yan 12 5 7 0 0 No
Number of attendances as a
5
non-voting delegate
2. Objections to the related matters of the Company raised by independent directors
The independent directors have raised no objections to the related matters of the Company in the reporting period.
3. Other description of independent directors’ execution of duties
For details of the Company's independent directors' execution of duties, see the 2016 annual work report of the
independent directors of the Company.
VI.. Execution of duties of the special committees under the Board of Directors in the
reporting period
1. Execution of duties of the audit committee under the Board of Directors
With performance of its duty according to the Implementation Rules for the Audit Commission under the Board of
Directors and the Annual Reporting Work Rules for the Audit Commission, the Audit Commission under the
Board of Directors supervised the Company’s internal audit system and its implementation, audited the
Company’s accounting information and its disclosure and assessed the work of the external audit institution.
In order to maintain the continuity of the audit institution, ensure the quality of audit, improve the efficiency of the
audit, with the audit committee under the Board of Directors submittal, the 11th Meeting of 7th Session of the
Board and The 4th Extraordinary Shareholders’ General Meeting of 2016 approved, the Company decided to
engaged ShineWing CPAs (Special General Partnership) as the auditing institution for year of 2016 for integrated
auditing of financial report and internal control.
In the work of evaluation of a normative internal control system of the company, the Auditing Commission
brought into play actively the duty of organization, leadership and supervision. According to the company internal
control defect recognization standard, it examined and recognized the internal control defect recognization
summary table developed by the internal control evaluation work group of the company, and had an examination
reading of the internal control evaluation report of the company for 2016, believing that the status quo of the
internal control system of the company complies with related requirements and with the actual situation of the
company and it is being carried out satisfactorily. The internal control evaluation report of the company for 2016
reflects the above facts accurately.
In the Company’s 2016 annual audit work, the Audit Commission conducted positive communication and
effective coordination with the audit institution ShineWing CPAs .The Audit Commission conducted
communication with the person in charge of the project of the audit institution on the audit work plan, schedule,
matters that should be noticed in audit and other matters and reached an agreement with them. In the process of
audit, they kept close information on the progress of audit work and urged the audit institution many times to
ensure the quality and schedule in the audit work. Through serious review of the Company’s annual finance report
and annual report after completion of the audit work, the Audit Commission believed that the Company’s finance
report was comprehensive and authentic, and the finance report and other information disclosed by the Company
were objective and true, having reflected the true annual financial status of the Company.
38
Dalian Refrigeration Co., Ltd. 2016 Annual Report
The Audit Commission believed that in the 2016 annual audit service for the Company, ShineWing CPAs
implemented the audit for the Company on the practicing basis of independency, objectivity and fairness and
strictly abided by the new accounting standards. They worked out a well-considered plan, allocated all necessary
personnel, positively contacted our Audit Commission and independent directors, and completed the 2016 annual
audit service for the Company through its industrious and conscientious working. It is suggested that ShineWing
CPAs should be reengaged as the auditing agency for the company in 2017.
2. Execution of duties of the remuneration and evaluation committee under the Board of Directors
With performance of its duty according to the Implementation Rules for the Remuneration and Evaluation
Commission under the Board of Directors, the Remuneration and Evaluation Commission under the Board of
Directors examined the annual salary and remuneration level of the Company’s directors, supervisors and senior
executives, and believed that the decision-making procedure for salary and remuneration of the above persons and
the paying standard complied with the laws and regulations and the Company’s regulations, and the salary and
remuneration information disclosed in the Company’s Annual Report for 2016 was authentic and exact.
VII. Work of the Board of Supervisors
Was there any risk with the Company found by the Board of Supervisors in their supervision activities in the
reporting period?
□ Applicable √ Not applicable
The Board of Supervisors had no objections to the matters under supervision in the reporting period.
VIII. Performance evaluation and incentive system for senior management
Combined with the first and second phase of the restricted stock plan, the Company evaluated and rewarded
senior management through the Company's examination procedure for assets operation performance in the
reporting period.
IX. the internal control system
1. Details of material weakness in the internal control found in the reporting period described in the report
on self-evaluation of internal control.
□ Applicable √ Not applicable
There was no material weakness in the internal control found in the reporting period.
2. Report on self-evaluation of internal control
Details of material weakness in the internal control found in the reporting period described in the report on
self-evaluation of internal control
There was no material weakness in the internal control found in the reporting period.
Date of disclosing the full text of the report on
Apr. 22, 2017
self-evaluation of internal control
Disclosure reference to the full text of the For the 2016 annual report on self-evaluation of internal control
report on self-evaluation of internal control of the Company, visit the website www.cninfo.com.cn.
3. Internal control audit report
Description of the deliberation opinions in the internal control audit report
We think that as of Dec. 31, 2016, Dalian Refrigeration Co., Ltd. had maintained an effective internal control
over the financial reports in all material aspects according to Basic Enterprise Internal Control Specification and
relevant regulations.
Date of disclosing the full text of
Apr. 22, 2017
the internal control audit report
Disclosure reference to the full text For the 2016 annual internal control audit report of the Company, visit the
of the internal control audit report website www.cninfo.com.cn.
Did the accounting firm issue the internal control audit report with nonstandard opinions?
□ Applicable √ Not applicable
Was the internal control audit report issued by the accounting firm consistent with the opinion in the
self-evaluation report of the Board of Directors?
√Yes □ No
39
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 10 Information on Corporate Bonds
□ Applicable √ Not applicable
40
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 11 FinancialReport
I. Auditor’s Report
XYZH/2017DLA10194
To the Shareholders of Dalian Refrigeration Company Limited
We have audited the accompanying financial statements of Dalian Refrigeration Company Limited (“the Company”), which
comprises the consolidated and parent company balance sheet as at 31 December. 2016, the consolidated and parent company
income statement for the year of 2016, the consolidated and parent company cash flow statement for the year 2016, and the
statement of changes in shareholders’ equity and parent company for the year then ended, as well as notes to the financial
statements.
Management's Responsibility for the Financial Statements
The Company’s management is responsible for the preparation and fair presentation of these financial statements. This
responsibility includes: (1) preparing these financial statements in accordance with Accounting Standards for Business
Enterprises issued by the Ministry of Finance of the People‘s Republic of China, and fairly presenting them; (2) designing,
implementing and maintaining internal control which is necessary to enable that the financial statements are free from
material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with China Standards on Auditing for Certified Public Accountants. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements comply with the requirements of the Accounting Standards for Business Enterprises
issued by the Ministry of Finance of the People’s Republic of China and present fairly, in all material respects, the financial
position of the consolidated and parent company of the Company as at 31 December 2016, and financial performance and
cash flows of the consolidated and parent company of the Company for the year then ended.
ShineWing Certified Public Accountants Chinese CPA: Lin Li
Beijing. China Chinese CPA:Wamg Dong
21 April, 2017
41
Dalian Refrigeration Co., Ltd. 2016 Annual Report
II. Accounting statement (attached hereunder)
For details see page 141-page150
III. Notes to the accounting statement
(All amounts in RMB Yuan unless otherwise stated)
I. General Information
Dalian Refrigeration Company Limited (the “Company”) was reorganized and reformed from
main part of former Dalian Refrigeration Factory. On December 8, 1993, the company went to the
public as a listed company at Shenzhen Stock Exchange Market. On March 20, 1998, the
company successfully went to the public at B share market and listed at Shenzhen Stock
Exchange Market.
The general meeting for 2015 fiscal year held on 21st April 2016 approved the profit distribution
policy for the year of 2015, which agrees the profit distribution is based on the total 360,164,975
number of shares as share capital, paid out cash dividend of 1Yuan for every 10 shares(before tax)
and share dividend of 5 common shares for every 10 shares through capital reserve. The policy
stated above was fully implemented on 5th May 2016, and the registered capital was altered to
540,247,462.00Yuan.
The 17th meeting of the 6th generation of board was held on 4th June 2015 and the 2nd interim
shareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the proposal
of non-public offering of ‘A shares’. China’s Securities Regulatory Commission issued SFC
license [2015]3137 on 30th December, 2015, approving that new non-public offering cannot
exceeded 38,821,954 number of shares. The company implemented the post meeting procedures
for China’s Securities Regulatory Commission, which is regarding adjustment of bottom price and
the number of the shares issued after the implementation of profit distribution policy of 2015 in
May, 2016, and accordingly revised the upper limit of non-public offering of share to 58,645,096
number of new ‘A shares’. The company issued the non-public offering of 58,645,096 number of
‘A shares’ to 7 investors, and as a result, the total number of shares of the company is changed to
598,892,558 shares, and the par value is 1yuan per share and the total share capital is
598,892,558.00Yuan. The share capital stated above has been verified by DaHua Certified Public
Accountants, and has been issued the capital verification report Dahuayanzi [2016]000457 on 31st
May 2016.
According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration Company
Limited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting authorized the
board of directors to implement the Restricted Share Incentive Plan’ approved on the 3rd
provisional general meeting held on 13th September 2016, the 9th meeting of the 7th generation of
board deliberated and passed the ‘Proposal about granting the restricted shares to incentive
targets’ on September 20th , 2016 and set 20th September 2016 as share granted date, and granted
12,884,000 number of restricted shares to 188 incentive targets at granted price of 5.62Yuan per
42
Dalian Refrigeration Co., Ltd. 2016 Annual Report
share. By 22nd November, 2016, the company has actually received the new registered share
capital of 72,420,220,00Yuan subscribed by incentive targets, within this amount, in fact,
12,884,000Yuan are newly increased registered share capital, and 59,524,080.00Yuan is the
excessive part of the actual subscribed capital over newly increased registered share capital as
share premium and record into capital reserve. The share capital stated above has been verified by
DaHua Certified Public Accountants, and has been issued the capital verification report
Dahuayanzi [2016]001138 on 23rd November, 2016.
The address of the Company’s registered office as same as head office is No.888 Xinan Road,
Shahekou District, Dalian, China. The parent company of the Company is Dalian Bingshan Group
Co., Ltd., and there is no ultimate controller regulated by the relevant law, regulations and rules.
The company falls into industrial manufacturing sector, mainly engaged in industrial refrigeration,
refrigerated and frozen food storage, and manufacture and installation of central air-conditioning
and refrigeration equipment. The scope of business includes refrigeration equipment, valve,
fixings refrigeration equipment, supported products processing and system design of
air-conditioning. The company also offers technical consultation, technical services, commercial
trade and material supply and marketing.
II. The scope of consolidation
There are 13 entities included in the current consolidated financial statements, including:
Proportion of Proportion of
Names of subsidiaries Types Level
shareholding（%） votes（%）
Dalian Bingshan Group Engineering Co., Ltd. Subsidiary 1 100 100
Dalian Bingshan Group Sales Co., Ltd. Subsidiary 1 100 100
Dalian Bingshan Air-conditioning Equipment Co., Ltd. Subsidiary 1 70 70
Dalian Bingshan JiaDe Automation Co., Ltd. Subsidiary 1 100 100
Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd. Subsidiary 1 100 100
Wuhan New World Refrigeration Industrial Co., Ltd. Subsidiary 1 100 100
Bingshan Technical Service （Dalian） Co.,Ltd. Subsidiary 1 100 100
Dalian Niweisi LengNuan Techonoligy Co., Ltd. Subsidiary 1 55 55
Dalian Xinminghua Electrical Technology Co., Ltd Subsidiary 1 100 100
Wuhan New World Air-conditioning Refrigeration Engineering Sub-subsi
2 100 100
Co., Ltd diary
Dalian Bingshan Security Leisure Industrial Engineering Co., Sub-subsi
2 100 100
Ltd diary
Ningbo Bingshan Air-conditioning Refrigeration Engineering Sub-subsi
2 51 51
Co., Ltd diary
Shanghai Bingshan Technical Service Co., Ltd Sub-subs 2 51 51
43
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Proportion of Proportion of
Names of subsidiaries Types Level
shareholding（%） votes（%）
idiary
This year, there are 3 more entities were included in the scope of consolidation, they are Dalian
Xinminghua Electrical Technology Co., Ltd, Dalian Bingshan Security& Leisure Industrial
Engineering Co., Ltd, and Shanghai Bingshan Technical Service Co., Ltd, and one entity which is
Dalian Bingshan Metal Processing Co., Ltd is excluded at the year end.
The 5th meeting of the 7th generation of board of directors approved to increase the share capital of
fully owned subsidiary, Dalian Bingshan Group Engineering Co., Ltd, by cash of 50,000,000Yuan.
The proportion of capital contribution would remain unchanged after the capital increase, which is
still 100%. The 8th meeting of the 7th generation of board of directors approved to increase the share
capital of Dalian Bingshan Group Engineering Co., Ltd by cash of 21,000,000Yuan. The proportion
of capital contribution would remain unchanged after the capital increase, which is still 100%. The
proportion of shares held in Dalian Bingshan Group Engineering Co., Ltd is still 100% when
preparing the consolidated financial report.
At the 5th meeting of the 7th generation of board of directors, the company and Hong Kong BaoAn
Water Project Co., Ltd both respectively transferred 50% shareholdings of Dalian Bingshan
Security Leisure Industrial Engineering Co., Ltd to the fully owned subsidiary, Dalian Bingshan
Group Engineering Co., Ltd. After that, the company would not hold any shares of Dalian Bingshan
Group Engineering Co., Ltd any longer, and the fully owned subsidiary, Dalian Bingshan Group
Engineering Co., Ltd would have 100% shareholdings of Dalian Bingshan BaoAn Leisure
Industrial Engineering Co., Ltd. The transactions stated above have been completed by 31st,
December 2016.
The board meeting of directors held on 15th April 2016 approved to have 30% shareholdings of
Dalian Bingshan Group Sales Co., Ltd, which was transferred by the fully owned subsidiary,
Wuhan New World Refrigeration Industrial Co., Ltd. Therefore, Dalian Bingshan Group Sales Co
has become the fully owned subsidiary of the Company. The transactions stated above has
completed by 31st December 2016. Hence, the Company holds 100% shareholdings of Dalian
Bingshan Group Sales Co., Ltd when preparing the consolidated statements.
The board meeting of directors held on 27th January 2016 approved to have 40% shareholdings of
holding subsidiary, Dalian Bingshan JiaDe Automation Co., Ltd, hence, Dalian Bingshan JiaDe
Automation Co., Lmt has become the Company’s fully owned subsidiary. The transaction stated
above has completed by 31st December 2016. Hence, the Company holds 100% shareholdings of
Dalian Bingshan JiaDe Automation Co., Ltd when preparing the consolidated statements.
The 15th meeting of the 6th generation of board approved that Dalian Bingshan Lingshe Quick
44
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Freezing Equipment Co., Ltd, a holding subsidiary, acquired Dalian Bingshan Metal Processing Co.,
Ltd which is a fully owned subsidiary. Before the merger, the Company held 70% shareholding of
Dalian Bingshan Quick Freezing Equipment Co., Ltd., and held 100% shareholding of Dalian
Bingshan Metal Processing Co., Ltd. After the merger, Dalian Bingshan Quick Freezing Equipment
Co., Ltd would be the survival company, and the shareholding held by the Company increased from
70% to 95%. The 6th meeting of the 7th generation of board of directors approved to accept the 5%
of shareholding transfer from Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd, a
holding subsidiary, hence, Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd has
become the fully owned subsidiary after transfer. The transaction stated above has completed by
31st December 2016. Hence, the Company holds 100% shareholding of Dalian Bingshan Lingshe
Quick Freezing Equipment Co., Ltd when preparing the consolidated statements. In the meanwhile,
the Company increased the share capital of Dalian Bingshan Lingshe Quick Freezing Equipment
Co., Ltd by cash of 30,000,000Yuan. The proportion of capital contribution would not be changed
after the capital increase, which is still 100%.
The board meeting of directors held on 15th April 2016 approved to transfer 5% equity of Wuhan
New World Air-conditioning Refrigeration Engineering Co., Ltd to the fully owned subsidiary,
Wuhan New World Refrigeration Industrial Co., Ltd.
The meeting of directors held on 15th April 2016 decided to transfer 5% shareholding of Wuhan
New World Air-conditioning Refrigeration Engineering Co., Ltd to the fully owned subsidiary,
Wuhan New World Refrigeration Industrial Co., Ltd. Therefore, the Company indirectly held 100%
shareholding of Wuhan New World Air-conditioning Refrigeration Engineering Co., Ltd.
The 3rd meeting of the 7th generation of board of directors approved to accept the 70% of
shareholding transfer from Dalian Xinminghua electrical technology Co., Ltd., , a holding
subsidiary, hence, Dalian Xinminghua electrical technology Co., Ltd., has become the fully owned
subsidiary after transfer. The transaction stated above has been completed by 31st December 2016.
Hence, the Company holds 100% shareholding of Dalian Xinminghua electrical technology Co.,
Ltd when preparing the consolidated statements.
The board meeting of Dalian Bingshan Group Engineering Co., Ltd, a subsidiary of the company,
approved Dalian Bingshan Group Engineering Co., Ltd and Shanghai QingNeng Cold Chain
Equipment Co., Ltd jointly invested and constructed Shanghai Bingshan Technical Service Co., Ltd.
Dalian Bingshan Group Engineering Co., Ltd invested 5,100,000Yuan, and held 51% shareholding.
Shanghai Bingshan Technical Service Co., Ltd has been formally operated by 31st December 2016.
The original name of Dalian Bingshan Group Engineering Co., Ltd was Dalian Bingshan Group
Refrigerated air-conditioning Installation Co., Ltd, and was renamed as Dalian Bingshan Group
Engineering Co., Ltd on 19th January 2016. Enterprise business license was obtained and the
registration number is 9121020024236769XQ.
45
Dalian Refrigeration Co., Ltd. 2016 Annual Report
The original name of Dalian Niweisi LengNuan Techonoligy Co., Ltd was Dalian Sanyo
High-efficient Refrigeration System Co., Ltd, and was renamed as Dalian Niweisi LengNuan
Techonoligy Co., Ltd on 3rd May, 2016. Enterprise business license was obtained with the
registration number of 9121021378733517XF.
The original name of Dalian Xinminghua electrical technology Co., Ltd was Dalian Sanyo
Minghua Electrical Co., Ltd, and was renamed as Dalian Xinminghua Electrical Technology Co.,
Ltd on 27th October, 2016. Enterprise business license was obtained with the registration number of
91210213604820915Y.
For the specific information of entity change in the consolidation scope, see the notes of VII. The
Change of Scope of Consolidation and VIII. The Equity in Other Entities.
III. Financial Statements Preparation Basis
（1） Preparing basis
The Company’s financial statements are prepared on the basis of going concern assumption,
according to the actual occurred transactions and events and in accordance with ‘Accounting
Standards for Business Enterprises’ and relevant regulations, and also based on the note IV
“Significant Accounting Policies, Accounting Estimates”.
（2） Going concern
The company has the capacity to continually operate within 12 months at least since the end of
report period, and hasn‘t the major issues impacting on the sustainable operation ability.
IV. Significant Accounting Policies and Accounting Estimates
1. Declaration for compliance with accounting standards for business enterprises
The financial statements are prepared by the Group according to the requirements of Accounting
Standard for Business Enterprise, and reflect the relative information for the financial position,
operating performance, cash flow of the Group truly and fully.
2. Accounting period
The Group adopts the Gregorian calendar year as accounting period, i.e. from Jan 1 to Dec 31.
3.Operating cycle
Normal operating cycle refers to the duration starting from purchasing the assets for manufactuing
up to cash or cash equivelant realisation. The group sets twelve months for one operating cycle
and as the liquidity criterion for assets and liability.
4. Funcitonal currency
The Group adopts RMB as functional currency.
46
Dalian Refrigeration Co., Ltd. 2016 Annual Report
5. Accounting for business combination under same control and not under same control
As an acquirer, the assets and liabilities that The Group obtained in a business combination under
the same control should be measured on the basis of their carrying amount in the consolidated
financial statements on the combining date. As for the balance between the carrying amount of the
net assets obtained by the combining party and the carrying amount of the consideration paid by it,
the capital surplus shall be adjusted. If the capital surplus is not sufficient to be offset, the retained
earnings shall be adjusted.
For a business combination not under same control, the asset, liability and contingent liability
obtained from the acquirer shall be measured at the fair value on the acquisition date. The
combination cost shall be the fair value, on the acquisition date, of the assets paid, the liabilities
incurred or assumed and equity securities issued by the acquirer in exchange for the control of the
acquire, and sum of all direct expenses(if the combination is achieved in stages, the combination
cost shall be the sum of individual transaction). The difference when combination cost exceeds
proportionate share of the fair value of identifiable net assets of acquiree should be recognized as
goodwill. If the combination cost is less than proportionate share of the fair value of identifiable
net assets of acquiree, firstly, fair value of identifiable asset, liability or contingent liability shall
be reviewed, and so the fair value of non-monetary assets or equity instruments issued in the
combination consideration , after review, still the combination cost is less than proportionate
share of the fair value of identifiable net assets of acquire, the difference should be recognized as
non-operating income.
6. Method of preparation of consolidated financial statements
All subsidiaries controlled by the Group and structured entities are within the consolidation scope.
If subsidiaries adopt different accounting policy or have different accounting period from the
parent company, appropriated adjustments shall be made in accordance with the Group policy in
preparation of the consolidated financial statements.
All significant intragroup transactions, outstanding balances and unrealized profit shall be
eliminated in full when preparing the consolidated financial statements. Portion of the subsidiary’s
equity not belonging to the parent, profit, loss for the current period, portion of other
comprehensive income and total comprehensive belonging to minority interest, shall be
presented separately in the consolidated financial statements under “minority interest of
equity”, ”minority interest of profit and loss”, “other comprehensive income attributed to minority
interest” and “total comprehensive income attributed to minority interest” title.
If a subsidiary is acquired under common control, its operation results and cash flow shall be
consolidated since the beginning of the consolidation period. When preparing the comparative
consolidated financial statements, adjustments shall be made to relevant items of comparative
figures as regarded that reporting entity established through consolidation has been always there
since the point when the ultimate controlling party starts to have the control.
47
Dalian Refrigeration Co., Ltd. 2016 Annual Report
If a business consolidation under common control is finally achieved in stages, consolidation
accounting method shall be disclosed additionally for the period in which the control is obtained.
For example, if a business consolidation under common control is finally achieved in stages, when
preparing the consolidated financial statements, adjustments shall be made for the current
consolidation status as if consolidation has always been there since the point when the ultimate
controlling party starts to control. In preparation of comparative figures, asset and liability of the
acquiree shall be consolidated into the Group’s comparative financial statements, but to the extent
no earlier than the point when the Group and acquiree are both under ultimate control and relevant
items under equity in comparative financial statements shall be adjusted for net asset increased in
combination. To avoid the duplicated computation of net asset of acquiree, for long-term equity
investment held by the Group before the consolidation, relevant profit and loss, other
comprehensive income and movement in other net asset, recognized for the period between the
combination date and later date when original shareholding is obtained and when the Group and
the acquiree are under common control of same ultimate controlling party, shall be respectively
used for writing down the opening balance of retained earnings of comparative financial
statements and profit and loss for the current period.
If a subsidiary is acquired not under common control, its operation results and cash flow shall be
consolidated since the beginning of the consolidation period. In preparation of the consolidated
financial statements, adjustments shall be made to subsidiary’s financial statements based on the
fair value of its all identifiable assets, liability or contingent liability on the acquisition date.
If a business consolidation under non-common control is finally achieved in stages, consolidation
accounting method shall be disclosed additionally for the period in which the control is obtained.
For example, if a business consolidation not under common control is finally achieved in stages,
when preparing the consolidated financial statements, the acquirer shall remeasure its previously
held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting
gain or loss as investment income for the current period. Other comprehensive income, under
equity method accounting rising from the interest held in acquiree in relation to the period before
the acquisition, and changes in the value of its other equity other than net profit or loss, other
comprehensive income and profit appropriation shall be transferred to investment gain or loss
for the period in which the acquisition incurs, excluding the other comprehensive income from
the movement on the remeasurement of ne asset or liability of defined benefit plan.
When the Group partially disposes of the long –term equity investment in subsidiary without
losing the control over it, in the consolidated financial statements, the difference, between
disposals price and respective disposed value of share of net assets in the subsidiary since the
acquisition date or combination date, shall be adjusted for capital surplus or share premium, no
enough capital surplus, then adjusted for retained earnings.
When the Group partially disposes of the long –term equity investment in subsidiary and lose the
control over it, in preparation of consolidated financial statements, remaining share of interest in
48
Dalian Refrigeration Co., Ltd. 2016 Annual Report
the subsidiary shall be remeasured on the date of losing control. Sum of the share disposal
consideration and fair value of remaining portion of shareholding minus the share of the net assets
in the subsidiary held based on the previous shareholding percentage since the acquisition date or
combination date, the balance of above is recognized as investment gain/loss for the period and
goodwill shall be written off accordingly. Other comprehensive income relevant to share
investment in subsidiary shall be transferred to investment gain /loss for the period on the date of
losing control.
When the Group partially disposes of the long –term equity investment in subsidiary and lose the
control over it by stages, if all disposing transactions are bundled, each individual transaction shall
be seen as a transaction of disposal of a subsidiary by losing control. The difference between the
disposal price and the share of the net assets in the subsidiary held before the date of losing
control, shall be recognize as other comprehensive income until the date of losing control where it
is transferred into investment gain/ loss for the current period.
7. Joint arrangement classification and joint operation accounting
The Group’s joint arrangement includes joint operation and joint venture. For joint operation, the
Group as a joint operator shall recognize its own assets and its share of any assets held jointly, its
liabilities and its share of any liabilities incurred jointly, its revenue from the sale of its share of
the output arising from the joint operation, its share of the revenue from the sale of the output by
the joint operation; and its expenses, including its share of any expenses incurred jointly. When an
entity enters into a transaction with a joint operation in which it is a joint operator, such as a sale
or contribution of assets, it is conducting the transaction with the other parties to the joint
operation and, as such, the joint operator shall recognize gains and losses resulting from such a
transaction only to the extent of the other parties’ interests in the joint operation.
8. Cash and cash equivalent
The cash listed on the cash flow statements of the Group refers to cash on hand and bank deposit.
The cash equivalents refer to short-term (normally with original maturities of three months or less)
and liquid investments which are readily convertible to known amounts of cash and subject to an
insignificant risk of changes in value.
9. Translation of foreign currency
(1) Foreign currency transaction
Foreign currency transactions are translated at the spot exchange rate issued by People’s Bank of
China (“PBOC”) on the 1st day of the month when the transactions incurred. Monetary assets and
liabilities in foreign currencies are translated into RMB at the exchange rate prevailing at the
balance sheet day. Exchange differences arising from the settlement of monetary items are charged
as in profit or loss for the period. Exchange differences of specific borrowings related to the
acquisition or construction of a fixed asset should be capitalized as occurred, before the relevant
fixed asset being acquired or constructed is ready for its intended uses.
49
Dalian Refrigeration Co., Ltd. 2016 Annual Report
(2) Translation of foreign currency financial statements
The asset and liability items in the foreign currency balance sheet should be translated at a spot
exchange rate at the balance sheet date. Among the ower’s equity items except “undistributed
profit”, others should be translated at the spot exchange rate when they are incurred. The income
and expense should be translated at spot exchange rate when the transaction incurs. Translation
difference of foreign currency financial statements should be presented separately under the other
comprehensive income title. Foreign currency cash flows are translated at the spot exchange rate
on the day when the cash flows incur. The amounts resulted from change of exchange rate are
presented separately in the cash flow statement.
10. Financial assets and financial liabilities
A financial asset or liability shall be recognised when the entity becomes a party to the
contractual provisions of a financial instrument.
(1) Financial assets
1)Classification, recognition and measurement
The Group classifies its financial assets in the following categories: at fair value through profit or
loss, loans and receivables, held-to-maturity financial assets and available-for-sale. The
classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial recognition.
Financial assets at fair value through profit and loss include trading financial assets and those
financial assets initially designated as fair value through profit and loss. When meeting one of the
following conditions, the company shall classify the assets into trading financial asset: it is
acquired principally for the purpose of selling in the near term and is part of a portfolio of
identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking; it is a derivative(except for a derivative that is a
designated and effective hedging instrument or a financial guarantee contract, or linked to the
investments in equity instruments that do not have a quoted price in an active market,no fair value
can be reliably measured and must be settled by delivery of such an equity instrument. When
meeting one of the following conditions, the financial assets can be classified as the assets initially
designated as fair value through profit and loss: it eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise arise from measuring assets or
liabilities or recognising the gains and losses on them on different bases; or the financial
instrument portfolio is managed and its performance is evaluated and provided internally on that
basis to the entity’s key management personnel on a fair value basis, in accordance with a
documented risk management or investment strategy; or it is a hybrid instrument embedded by
one or more instruments except for a embedded derivate that does not significantly modify the
cash flows or it is clear that separation of the embedded derivative(s) is prohibited; it is a hybrid
instrument that is required to be separated but unable to be measured separately either at
50
Dalian Refrigeration Co., Ltd. 2016 Annual Report
acquisition or at the end of a subsequent financial reporting period. They are measured at fair
value subsequently. Change on fair value shall be recognized in the profit and loss. Interest or
cash dividends received during the period in which such financial assets are held, are recognised
as ‘Investment income’. On disposal, the difference between fair value of disposal and initial
recorded amount are recognised as ‘Gain or loss on Investment’ and adjust the gain or loss from
changes in fair value accordingly.
Receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Receivables are subsequently measured at amortised cost using the
effective interest method.The amortisation, impairment and any gain or loss from derecognition
shall be recognized in the profit and loss for the current year.
Available-for-sale financial assets are non-derivative financial assets that are either designated in
this category or not classified as financial assets of any other class at initial recognition. This
category includes the derivative financial assets that linked to the investments in equity
instruments without a quoted price in an active market, no fair value can be reliably measured and
must be settled by delivery of such an equity instrument, and shall be measured at cost
subsequently. Others have a quoted price in an active market or fair value can be measured
reliably although no quoted price available, they shall be measured at fair value. Any change on
fair value shall be recognized in other comprehensive income and subsequently be measured at
fair value. Except impairment loss and exchange gain or loss arising from foreign currency
monetary financial assets, changes in fair value of available-for-sale financial assets are directly
recorded in shareholders’ equity until such financial assets is derecognized and the accumulated
fair value adjustments previously recorded in equity are charged to profit or loss for the period.
Interests for the period in which the assets are held as investment in debt instrument is calculated
using the effective interest method and is charged to profit or loss for the period as ‘Investment
income’. Cash dividends declared by the investee company relating to available-for-sale equity
instruments are charged to profit or loss for the period as ‘Investment income’. Equity instruments
that a quoted price is not applicable in an active market and no fair value can be reliably measured,
shall be measured at cost.
2)Recognition and measurement of transfer of financial assets
A financial asset is derecognised when any one of the following conditions is satisfied: i) the rights
to receive cash flows from the asset expire, ii) the financial asset has been transferred and the
entity transfers substantially all risks and rewards relating to the financial assets to the transferee,
iii) the financial asset has been transferred to the transferee, the entity has given up its control of
the financial asset although the entity neither transfers nor retains all risks and rewards of the
financial asset.
Where an entity neither transfers nor retains substantially all risks and rewards of financial asset
and does not give up the control over such financial asset, then the entity recognises such financial
asset to the extent of its continuous involvement and recognises the corresponding liabilities.
51
Dalian Refrigeration Co., Ltd. 2016 Annual Report
In the case where the financial asset as a whole qualifies for the derecognition conditions, the
difference between the carrying value of transferred financial asset and the sum of the
consideration received for transfer and the accumulated amount of changes in fair value that was
previously recorded under other comprehensive income is charged into profit or loss for the
period.
In the case where only part of the financial asset qualifies for derecognition, the carrying amount
of financial asset being transferred is allocated between the portions that to be derecognised and
the portion that continued to be recognised according to their relative fair value. The difference
between the amount of consideration received for the transfer and the accumulated amount of
changes in fair value that was previously recorded in other comprehensive income of the part
qualifies for derecognition and the above-mentioned allocated carrying amount is charged to
profit or loss for the period.
3) Impairment of financial assets
The Group assesses the carrying amount of financial assets other than financial assets at fair value
through profit or loss at each balance sheet date. If there is objective evidence that the financial
asset is impaired, the Group shall determine the amount of any impairment loss accounts.
The specific impairment provision methods of financial assets were as follows:
1) Provision for impairment of available-for-sale financial assets:
On balance sheet date, the Company executes individually inspection on each available-for-sale
financial statement, if the fair value of the equity instruments which is invested on the balance
sheet date is lower than its initial investment cost for more than 50% (including 50%) or lower
than its initial investment cost for the duration time for more than 1 year (including 1 year), which
indicates that it had occurred impairment; if the fair value of the equity instruments which invests
on the balance sheet date is lower than its initial investment cost for more than 20% (including
20%) but not reaches at 50%, the Company will comprehensively considerate the other relevant
factors such as the price volatility etc. and will judge the equity investment whether had occurred
impairment.
The aforesaid "cost" recognized in line with the initial investment cost of available for sale
financial instrument deducting principal recovered, amount amortized and the impairment losses
recorded into profits or losses. “fair value" recognized through the closing price of Securities
Exchange at period end unless the investment of available for sale equity instrument was in the
restricted stock trade period. For investment of available for sale equity instrument was in the
restricted stock trade period, recognized in line with the closing price of Securities Exchange at
period end deducting the risk of market player cannot sell the equity instrument, thus, require
compensation.
If objective evidence shows that impairment for available-for-sale financial assets will occur,the
cumulative loss arising from the decline in fair value that had been recognized directly in equity is
52
Dalian Refrigeration Co., Ltd. 2016 Annual Report
removed from equity and recognized as impairment loss, although the financial assets are not
derecognized. The accumulative losses that are transferred out shall be the balance obtained from
the initially obtained costs of the financial asset after deducting the principals taken back and
amortised amount, the current fair value and the impairment losses originally recorded into the
profits and losses account.
For an available for sale debt instrument, if there is objective evidence that the value of the
financial asset recovered and the recovery can be related objectively to an event occurring after
the impairment was recognized, the previously recognized impairment loss is reversed and the
amount of reversal is recognized in income statement. For an available for sale equity instrument,
if there is objective evidence that the value recovered and the recovery can be objectively related
to an event occurring after the impairment loss recognized, the previously recognized impairment
loss is reversed and directly recognized in equity. However, the impairment losses incurred to an
equity instrument investment for which there is no quoted price in the active market and whose
fair value cannot be reliably measured, or incurred to a derivative financial asset which is linked
to the equity instrument and which shall be settled throguh the equity instrument, can not be
reversed.
2) Provision for impairment of held-to-maturity financial assets
If there is objective evidence that the value of a financial asset carried at amortized cost has
impaired, the amount of loss is measured at the difference between the asset’s carrying amount
and the present value of estimated future cash flows. If there is objective evidence that the value
of the financial asset recovered and the recovery can be related objectively to an event occurring
after the impairment was recognized, the previously recognized impairment loss is reversed and
the amount of reversal is recognized in income statement, but to the extent where the reversed
amount can not exceed the amortised cost on the reversing day if no impaiment provided before.
(2) Financial liabilities
1) Classification, basis for recognition and measurement
Financial liabilities of an entity are classified at initial recognition as “financial liabilities at
fair value through profit or loss” and “other financial liabilities” on initial recognition
Financial liabilities at fair value through profit or loss include financial liabilities held for
trading and those designated as fair value through profit or loss on initial recognition
（relevant basis for classification shall be disclosed by reference to financial assets）. They
are subsequently measured at fair value. The net gain or loss arising from changes in fair
value, dividends and interest paid related to such financial liabilities are recorded in profit or
loss for the period in which they are incurred.
Other financial liability is measured at amortized cost by adopting the effective rate method.
2) Financial liability derecognition
53
Dalian Refrigeration Co., Ltd. 2016 Annual Report
A financial liability is derecognized when the underlying present obligations or part of it are
discharged. Existing financial liability shall be derecognized and new financial liability shall
be recognized when the entity sign the agreement with creditor to undertake the new
financial liability in replacement of existing financial liability, and the terms of agreement
are different in substance. Any significant amendment to the agreement as a whole or part o
it is made, then the existing liabilities or part of it shall be derecognized and financial
liability after terms amendment shall be recognized as a new financial liability. The
difference between the carrying amount of the financial liability derecognized and the
consideration paid is recognized in profit or loss for the period.
3) Fair value measurement of financial asset and financial liability
If there is an acitve market for the financial assets and liability measured at fair value, the
fair value is measured at the quoted price in the active market; originally obtained or derived
financial assets or liability is measured at market trade price. If no active market exists for
the financial asset or liability, applicable valuation techniques is used for fair value
measurement. When valuating, the price in the most advantageous market shall be used for
fair value measurement and applicable valuation techniques which enough data is available
for and supported by other information shall be adopted, and the group chooses the input
with same characters of asset or liability as considered by market participant and try to give
priority in use of observable input. Unobservable input shall be used when observable
input can not be obtained or it is infeasible to be obtained.
11. Provision for bad debts of receivables
The Group shall review the carrying amount of receivables fully at the balance sheet date. The
Group shall calculate the full provision for bad debts for the following receivables: debtor has
been log-out, bankruptcy, minus net asset, significant poor cash flow and significant nature
disaster leads to discontinue production and the debtors could not pay for the debts within the
foreseeable time . Other solid evidences indicates that the receivables cound not be paid or be of a
slim chance.
The allowance method is applied to the potential loss of bad debt. The Group should make the
impairment test individually or grouply and accure the bad debt provisions which shall be
recorded into current profit or loss at the end of the period. If there is defined evidence for the
receivables not to or not likely to be received, which shall be recognized as the loss of bad debt
and write off the accrued bad debts provisions after going through the approval procedure of the
Group.
(1) Individually significant amounts of accounts receivable accrued bad debt provision as per
portfolio
54
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Judgment basis or amount standards of
Top 5 of account receivables at year end
individually significant amounts
The bad debt provisions shall be accrued based on the
The accruing method of the receivables with
difference between current value of future cash flow and the
individually significant amounts
carrying amounts.
(2) Accounts receivable accrued bad debt provision by credit risk portfolio
The basis of portfolio
Inter-company Accounts receivable due from subsidiaries included in consolidated scope
Other than accounts receivable due from subsidiaries included in consolidated scope and
Accounting aging individual receivable with significant amount without impariment, use the accounting aging
of the receivables
The basis of bad debt provision
Inter-company Individual identified method
Accounting aging Age analysis method
1) The percentage of provision for bad debts based on the age of receivables as followings:
Accounting aging Accrual percentage of the Accrual percentage of other
receivables (%) receivables (%)
Within 1 year 5 5
1-2 years 10 10
2-3 years 30 30
3-4 years 50 50
4-5 years 80 80
Over 5 years 100 100
2) The other methods is applied to accrualing of bad debts provision
Related parties No bad debt provision is needed, unless the related party is unable to pay back
Risk-free No bad debt provision is needed
(3) Individually insignificant amount accounts receivable but accrued bad debt provision as per
portfolio
The individual amount is not significant, but the accrued bad debt provision on the basis of
Accrual reason
portfolio can not reflect its risk characteristic
The bad debt provisions should be accrued based on the difference between current value of
Accrual method
future cash flow and the carrying amount.
12. Inventories
55
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Inventories are materials purchasing, raw material, variance of cost materials, low-valuable
consumable, materials processed on commission,working-in-progress, semi-finished goods,
variance of semi-finished goods ,and finished goods, engineering construction etc.
The inventories are processed on perpetual inventory system, and are measured at their actual
cost on acquistion. Weighted average cost method is taken for measuring the inventory dispatched
or used. Low value consumables and packaging materials is recognized in the income statement
by one-off method.
After year end thorough inventory check, at the balance sheet date inventory impairment should
be provided or adjusted according to invenotry category. For the finished goods, raw material held
for sale etc which shall be sold directly, the net realizable value should be confirmed at the
estimated selling price less estimated selling expenses and related tax and expenses. The raw
material held for production, its realizable value should be confirmed at the estimated selling price
of finished goods less estimated cost of completion, estimated selling expenses and related tax.
The net realizable value of inventories held for execution of sale contracts or labor contracts shall
be calculated based on the contract price. If the quantities of inventories in the Group are more
than quantities if inventories subscribed in the sales contracts, the net realizable value of the
excessive part of the inventories should be calculated based on the general selling price. When the
impariment indicators disappear, impairment provision shall be reversed and
13. Long-term equity investment
Long term equity investments are the investment in subsidiary, in associated company and in joint
venture.
Joint control is the contractual agreement sharing of control over an economic activity by all
participants or participants’ combination and decisions or policies relating to the operating activity
of the entity require the unanimous consent of the parties sharing the control.
Significant influence exists when the entity directly or indirectly owned 20% or more but less than
50% shares with voting rights in the investee company.If holding less than 20% voting rights, the
entity shall also take other facts or circumstances into accounts when judging any significant
influences. Factors and circumstances include: representation on the board of directors or
equivalent governing body ofthe investee, participation in financial or operating activities
policy-making processes,material transactions between the investor and the investee, interchange
of managerial personnel or provision of essential technical information.
When control exists over an investee, the investee is a subsidiary of an entity. The initial
investment cost for long-term equity investment acquired through business combination under
common control, is the carrying amount presented in the consolidated financial statements of the
share of net assets at the combination date in the acquired company. If the carrying amount of net
assets at the combination date in the acquired company is negative, investment shall be recognized
at zero.
56
Dalian Refrigeration Co., Ltd. 2016 Annual Report
If the equity of investee under common control is acquired by stages and business combination
incursin the end, an entity shall disclose the accounting method for long-term equity investment in
the parent financial statement as a supplemental. For example, if the equity of investee under
common control is acquired by stages and business combination incursin the end, and it’s a
bundled transaction, the entity shall regard all transactions as a one for accounting. If it’s not a
bundled transaction, the carrying amount presented in the consolidated financial statements of the
share of net assets at the combination date in the acquired company since acquisition is
determined as for the initial cost of long-term equity investment. The difference between the cost
initially recognized and carrying amount of long-term equity investment prior to the business
combination plus the newly paid consideration for further share acquired, and capital reserve shall
be adjusted accordingly. If no enough capital reserve is available for adjustment, retain earnings
shall be adjusted.
If long-term equity investment is acquired through business combination not under common
control, initial investment cost shall be the combination cost.
If the equity of investee not under common control is acquired by stages and business
combination incursin the end, an entity shall disclose the accounting method for long-term equity
investment in the parent financial statement as a supplemental. If the equity investment of investee
not under common control is acquired by stages and business combination incursin the end, and
it’s a bundled transaction, the entity shall regard all transactions as a one for accounting. If it’s not
a bundled transaction, the carrying amount of the equity investment held previously plus newly
increased investment cost are taken as the initial investment cost under cost model. If equity
investment is held under equity method before the acquisition date, other comprehensive income
under equity method previously shall not be adjusted accordingly. When disposing of the
investment, the entity shall adopt the same basis as the investee directly disposing of related assets
or liability for accounting treatment. Equity held prior to acquisition date as available for sale
financial assets under fair value model, accumulated change on fair value previously recorded in
other comprehensive shall be transferred into investment gain/loss for the period.
Apart from the long-term equity investments acquired through business combination mentioned
above, the cost of investment for the long-term equity investments acquired by cash payment is
the amount of cash paid. For long-term equity investment acquired by issuing equity instruments,
the cost of investment is the fair value of the equity instrument issued. For long-term equity
investment injected to the entity by the investor, the investment cost is the consideration as
specified in the relevant contract or agreement.
The Group adopts cost method to account for investment in subsidiary and equity method for
investment in joint venture and affiliate.
Long-term equity investment subsequently measured under cost model shall increase the carrying
amount of investment by adjusting the fair value of additional investment and relevant transaction
57
Dalian Refrigeration Co., Ltd. 2016 Annual Report
expenses. Cash dividend or profit declared by investee shall be recognized as investment gain/loss
for the period based on the proportion share in the investee.
Long-term equity investment subsequently measured under equity method shall be adjusted for its
carrying amount according to the share of equity increase or decrease in the investee. The entity
shall recognize its share of the investee’s net profits or losses based on the fair value of the
investee’s individual identifiable assets at the acquisition date, after making appropriate
adjustments thereto in conformity with the accounting policies and accounting period, and
offsetting the unrealized profit or loss from internal transactions entered into between the entity
and its associates and joint ventures according to the shareholding attributable to the entity and
accounted for as investment income and loss based on such basis.
On disposal of a long-term equity investment, the difference between the carrying value and the
consideration actually received is recognised as investment income for the period. For long-term
investments accounted for under equity method, the movements of shareholder’s equity, other
than the net profit or loss, of the investee company, previously recorded in the shareholder’s
equity of the Company are recycled to investment income for the period on disposal.
Where the entity has no longer joint control or significant influence in the investee company as a
result of partially disposal of the investment, the remaining investment will be changed to be
accounted for as available for sale financial assets, and the difference between the fair value of
remaining investment at the date of losing joint control or significant influence and its carrying
amount shall be recognized in the profit or loss for the year. Other comprehensive income
recognized from previous equity investment under equity model shall be accounted for on the
same basis as the investee directly disposing of related assets or liability when stopping using
under equity model.
Where the entity has no longer control over the investee company as a result of partially disposal
of the investment, the remaining investment will be changed to be accounted for using equity
method providing remaining joint control or significant influence over the investee company. The
difference between carrying amount of disposed investment and consideration received actually
shall be recognised in the profit and loss for the period as investment gain or loss, and investment
shall be adjusted accordingly as if it was accounted for under equity model since acquisition.
Where the entity has on longer joint control or significant influence in the investee as a result of
disposal, the investment shall be changed to be accounted for as available for sale financial assets,
and difference between the carrying amount and disposal consideration shall be recognized in
profit and loss for the period, and the difference between the fair value of remaining investment at
the date of losing control and its carrying amount shall be recognized in the profit or loss for the
year as investment gain or loss.
If the entity loses its control through partially disposal of investment by stages and it’s not a
bundled transaction, the entity shall account for all transactions separately. If it’s a bundled
transaction, the entity shall regard all transactions as one disposal of subsidiary by losing control,
58
Dalian Refrigeration Co., Ltd. 2016 Annual Report
but the difference between disposal consideration and carrying amount of the equity investment
disposed prior to losing control, which arises from each individual transaction shall be recognized
as other comprehensive income until being transferred into profit and loss for the period by the
time of losing control.
14. Investment property
The investment property includes property and building and measured at cost model
Estimated
Annual
Useful life net residual
Category depreciation
(years) value rate
rate
(%)
Housing and Buildings 40 3% 2.43%
15. Fixed assets
Recognition criteria of fixed assets: defined as the tangible assets which are held for the purpose
of producing goods, rendering services, leasing or for operation & management, and have more
than one year of useful life.
Fixed assets shall be recognized when the economic benefit probably flows into the Group and its
cost can be measured reliably. Fixed assets include: building, machinery, transportation equipment,
electronic equipment and others.
All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and are still
being used and land is separately measuered. Straight-line depreciation method is adopted by the
Group. Estimated net residual value rate, useful life, depreciation rate as follows:
Useful life Estimated net residual
No Category Annual depreciation rate
(years) value rate (%)
1 Housing and Buildings 20-40 3%,5%,10% 2.25-4.85%
2 Machinery equipment 10-22 3%,5%,10% 4.09-9.7%
3 Transportation equipment 4-15 3%,5%,10% 6-24.25%
4 Electronic equipment 5 3%,5%,10% 18-19.4%
5 Others equipment 10-15 3%,5%,10% 6-9.7%
The Group should review the estimated useful life, estimated net residual value and depreciation
method at the end of each year. If any change has occurred, it shall be regarded as a change in the
accounting estimates.
16. Construction in progress
The criteria and time spot of constructions in progress’s being transferred to fixed assets:
Constructions in progress are carried down to fixed assets on their actual costs when completing
and achieving estimated usable status. The fixed assets that have been completed and reached
59
Dalian Refrigeration Co., Ltd. 2016 Annual Report
estimated usable status but have not yet been through completion and settlement procedures are
charged to an account according to their estimate values; adjustment will be conducted upon
confirmation of their actual values. The Group should withdraw depreciation in the next month
after completion.
17. Borrowing costs
The borrowing cost includes the interest expenses of the borrowing, amortization of underflow or
overflow from borrowings, additional expenses and the foreign exchange profit and loss because
of foreign currency borrowings. The borrowing costs incurred which can be directly attribute to
the fixed assets, investments properties, inventories requesting over 1 year purchasing or
manufacturing so to come into the expected condition of use or available for sale shall start to be
capitalized when expenditure for the assets is being occurred, borrowing cost has occurred,
necessary construction for bringing the assets into expected condition for use is in progress. The
borrowing costs shall stop to be capitalized when the assets come into the expected condition of
use or available for sale. The borrowing costs subsequently incurred should be recorded into profit
and loss when occurred. The borrowing costs should temporarily stop being capitalized when
there is an unusual stoppage of over consecutive 3 months during the purchase or produce of the
capitalized assets, until the purchase or produce of the asset restart.
The borrowing costs of special borrowings, deducting the interest revenue of unused borrowings
kept in the bank or the investment income from transient investment should be capitalized. The
capitalized amount of common borrowings should be calculated as follows: average assets
expenditure of the accumulated assets expenditure excess the special borrowing, multiplied by the
capital rate. The capital rate is the weighted average rate of the common borrowings.
18. Intangible assets
The intangible assets of the Group refer to land use right and software. For acquired intangible
assets, the actual cost are measured at actual price paid and relevant other expenses. The cost
invested into intangible assets by investors shall be determined according to the stated value in the
investment contract or agreement, except for those of unfair value in the contract or agreement.
Land use right shall be amortized evenly within the amortization period since the remised
date.ERP system softwareand other intangible assets are amortized over the shortest of their
estimated useful life, contractual beneficial period and useful life specified in the law.
Amortization charge is included in the cost of assets or expenses, as appropriate, for the period
according to the usage of the assets. At the end of the year, for definite life of intangible assets,
their estimated useful life and amortization method shall be assessed. Any change shall be treated
as change on accounting estimate.
19. Impairment of non-current assets
The Group assesses at each balance sheet date whether there is any indication that long-term
equity investments, investment property, fixed assets, construction in progress and intangible
60
Dalian Refrigeration Co., Ltd. 2016 Annual Report
assets with definite useful life may be impaired. If there is any indication that an asset may be
impaired, the asset will be tested for impairment. Goodwill arising in a business
combination and intangible asset with infinite useful life are tested for impairment annually
no matter there is any indication of impairment or not.
Estimate of recoverable amount is the higher of its fair value less costs to sell and the present
value of the future cash flows expected to be derived from the asset.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount
shall be impaired and the difference is recognised as an impairment loss and charged to profit
or loss for the period. Once an impairment loss on the assets is recognised, it is not reversed
in a subsequent period.
After assets impairment loss is recognized, depreciation and amortisation of the impaired
asset shall be adjusted in the following period so that the adjusted carrying amount(less
expected residual value) can be depreciated and amortised systematically within the
remaining life.
When assessing goodwill for impairment, the carrying amount of goodwill shall be allocated
evenly to the assets group or assets portfolio. When testing the assets group or assets portfolio
including goodwill, if there is any indication of impairment , ignoring the goodwill and
testing the assets group or assets portfolio alone so to work out the recoverable amount and
comparing to its carrying amount and recognize the impairment loss. After that, testing the
assets group or assets portfolio with goodwill together, comparing the carrying amount of the
assets group or assets portfolio(including goodwill allocation) with recoverable amount ,
goodwill impairment shall be recognized when the recoverable amount is lower than its
carrying amount.
20. Long-term deferred expenses
Long-term deferred expenses of the Group refer to leasing expenses, redecoration expense and
others. The expenses should be amortized evenly over the beneficial period. If the deferred
expense cannot take benefit for the future accounting period, the unamortized balance of the
deferred expenses should be transferred into the current profit or loss. Leasing expenses will be
amortized within 10 years and 30years; redecoration expense and others will be amortized
within 3 years.
21. Employee benefits
Employee’s benefit comprises short-term benefit, post-employment benefit, termination benefit
and other long-term employee’s benefit.
Short-term benefit includes salary, bonus, allowance, welfare, social insurance, housing funds,
labour union expense, staff training expense, during the period in which the service rendered by
61
Dalian Refrigeration Co., Ltd. 2016 Annual Report
the employees, the actually incurred short term employee benefits shall be recognized as liability
and shall be recognized in P&L or related cost of assets based on benefit objective allocated from
the service rendered by employees.
Post-employment benefits include the basic pension scheme and unemployment insurance etc.
Based on the risk and obligation borne by the Group, post-employment benefits are classified into
defined contribution plan and defined benefit plan. For defined contribution plan, liability shall be
recognized based on the contributed amount made by the Group to separate entity at the balance
sheet date in exchange of employee service for the period and it shall be recorded into current
profit and loss account or relevant cost of assets in accordance with beneficial objective.
Termination benefits are employee’s benefit payable as a result of either an entity’s decision to
terminate an employee’s employment before the contract due date or an employee’s decision to
accept voluntary redundancy in exchange for those benefits. An entity shall recognize the
termination benefits as a liability and an expense at the earlier date when the entity cannot
unilateral withdraw the termination benefits due to employment termination plan or due to
redundancy suggestion, or when the entity can recognize the restructuring cost or expense arising
from paying termination benefits.
Other long-term employee’s benefit refers to all other employee benefits other than short-term
benefit, post-employment benefit and termination benefit.
If other long-term employee’s benefit is qualified as defined contribution plan, contribution made
shall be recognized as liabilities accordingly for the period in which the service are rendered by
the employee and recognized in the profit or loss for the current period or relevant cost of assets.
Except other long-term employee’s benefit mentioned above, obligation arising from defined
benefit plan shall be recognized in the profit or loss for the current period or relevant cost of assets
in accordance with the period when the service are rendered by the employee.
22. Contingent liabilities
When the company has transactions such as commitment to externals, discounting the trade
acceptance, unsettled litigation or arbitration which meets the following criterion, provision
should be recognized: It is the Company's present obligation; carrying out the obligation will
probably cause the Company's economic benefit outflow; the obligation can be reliably measured.
Provision is originally measured on the best estimate of outflow for paying off the present
obligations, and to consider the risk, uncertainty, time value of monetary relevant to contingent
items. If the time value of monetary is significant, the best estimate will be determined by
discounted cash outflow in the future. At each balance sheet date, the book value of provision is
reviewed and adjustment will be made on the book value if there is any change, in order to reflect
the current best estimate.
When compensation from the 3rd party is expected for full or partial contingent liability
settlement, the compensation shall be recognized as an asset separately and measured at no more
62
Dalian Refrigeration Co., Ltd. 2016 Annual Report
than the book value of contingent liability.
23. Share based payment
An equity-settled share-based payment in exchange for the employee’s services is measured at the
fair value at the date when the equity instruments are granted to the employee. Such fair value
during the vesting period of service or before the prescribed exercisable conditions are achieved is
recognised as relevant cost or expense on a straight-line during the vesting period based on the
best estimated quantity of exercisable equity instruments, accordingly increase capital reserve.
A cash-settled share-based payment is measured at the fair value at the date at which the Group
incurred liabilities that are determined based on the price of the shares or other equity instruments.
If it is immediately vested, the fair value of the liabilities at the date of grant is recognised as
relevant cost or expense, and corresponding liabilities. If it is exercisable only when the vesting
period of service is expired or the prescribed conditions are achieve, the fair value of liabilities
undertaken by the Group are re-measured at each balance sheet date based on the best estimate of
exercisable situation.
The fair value of the liabilities is re-measured at each balance sheet date. Any changes are
recognised in the profit or loss for the year.
If the granted equity instruments are cancelled within the vesting period, the equity instrument
shall be treated as accelerated vesting and the balance linked to the remaining vesting period shall
be recognized in the profit or loss account, accordingly be recognized in the capital reserve. If
employees or other parties can choose but fail to satisfy non-vesting conditions during the vesting
period, the Company sees this as cancellation of granted equity instruments.
24. Principle of recognition of revenue
The revenue of the Group is mainly from selling goods, providing labour services and
abalienating the right of use assets and construction contracts. Recognition standards for revenue
are as below:
（1） The revenue from selling goods: Company has transferred all the significant risks and
rewards of the ownership of the goods to the buyers, and retains neither continuing managerial
involvement to the degree usually associated with ownership nor effective control over the goods
sold. The relative sale proceeds have been reliably measured, respective economic benefit
probably inflow to the company, and the incurred or incurring cost can be reliably measured, and
then the revenue can be recognized.
In the reporting period, revenue recognition point and principle: goods is dispatched from
warehouse, client has no dispute on the quantity and quality of the goods, client collected or
authorized the agent to collect the good and sales amount is confirmed, have collected or
expected to collect the payment, cost of goods can be reliably measured, risk and reward is
transferred so the revenue is recognized.
63
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Complete sets of engineering projects, if selling products and building installation part can be
separated and can be measured separately, selling products will be treated as sales of products.
Selling products and building installation will not be able to be distinguished, or can be
distinguished but can't be separately measured, selling products and building installation will be
all treated as building installation.
（2） Income from abalienating the right of use 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 used by other party.
2) Income of using fee is calculated upon the charge period and calculation provided by the
related contract or agreement.
（3） The service revenue should be recognized when the outcome of the services can be
estimated reliably.
The outcome of the services can be estimated reliably means the following conditions must be
satisfied at the same time:
1) Amount can be measured reliably
2) Relevant economic benefit probably flow into the company
3) The stage of completion of the service can be estimated reliably
4) Cost incurred or expect to incur in the transaction can be measured reliably
Total service income shall be recognized according to the price agreed in the contract or
agreement which has been settled or to be settled unless the price is not fair. Service revenue for
the current period shall be recognized based on the figure worked out on the total income
multiply by the percentage of completion of the service after deducting the service revenue
recognized in the prior period at the balance sheet and accordingly recognized the cost based on
the figure worked out on the total cost multiply by the percentage of completion of the service
after deducting the service cost recognized in the prior period.
At the balance sheet date, if outcome of the service can not be estimated reliably, the treatment
shall apply respectively
1) Costs incurred may be probably recovered, revenue is recognized only to the extent of costs
incurred that are expected to be recoverable, and costs shall be recognized as an expense in
the period in which they are incurred
2) Costs incurred are not probable of being recovered, then these cost incurred are recognized
as an expense immediately, no revenue shall be recognized.
In the case that selling goods and rendering service are both included in the agreements or
contracts, when selling products and rendering service part can be separated and can be
64
Dalian Refrigeration Co., Ltd. 2016 Annual Report
measured separately, selling products will be treated as sales of products. Selling products
and rendering service will not be able to be distinguished, or can be distinguished but can't
be separately measured; selling products and rendering service will be all treated as
rendering service.
（4） Revenue from construction contract
1) When the result of the construction contract is able to be evaluated reliably at the balance
sheet date, the income and cost of the contract are recognized on completion percentage
basis.
The result of the fixed price of construction contract can be estimated reliably means the
following conditions must be satisfied at the same time:
① Amount can be measured reliably
② Relevant economic benefit probably flow into the company
③ Cost actually incurred can be well distinguished and measured reliably
④ The stage of completion and the cost expected to incur for the completion of the contract can
be estimated reliably
The result of the cost plus of construction contract can be estimated reliably means the following
conditions must be satisfied at the same time:
① Relevant economic benefit probably flow into the company
② Cost actually incurred can be well distinguished and measured reliably
Total construction contract income shall be recognized according to the price agreed in the
contract or agreement which has been settled or to be settled unless the price is not fair.
Construction contract income for the current period shall be recognized based on the figure
worked out on the total contracted income multiply by the percentage of completion of the
construction after deducting the revenue recognized in the prior period at the balance sheet and
accordingly recognized the cost based on the figure worked out on the total expected cost
multiply by the percentage of completion of the construction after deducting the construction e
cost recognized in the prior period. Construction contract income is recognized to the extend
where the change of the contract, claim for compensation and bonus can bring the income and
can be measured reliably.
2) If the result of the construction contract is not able to be evaluated reliably, the treatment
shall apply respectively
① If contract cost may be 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.
65
Dalian Refrigeration Co., Ltd. 2016 Annual Report
② If contract cost may not be recovered, the cost of the contract shall be recognized as contract
expenses when incurred, and no contract revenue shall be recognized.
3) In case the expected total cost is greater than the total income, the expected loss will be
recognized as expense of the current period immediately.
.25. Government grants
A government grant is a monetary asset or non-monetary asset granted by government without
consideration. It shall be recognized when the company complies with the conditions attaching to
the grant and when the company is able to receive the grant.
Where a government grant is in the form of a transfer of monetary asset, it is measured at the
amount received. Where a government grant is made on the basis of fixed amount or conclusive
evidence indicates relevant conditions for financial support are met and expect to probably
receive the fund, it is measured at the amount receivable. Where a government grant is in the
form of a transfer of non-monetary asset, it is measured at fair value. If fair value cannot be
determined reliably, it is measured at a nominal amount of RMB1 Yuan.
Assets-related government grants are recognized as deferred income, and evenly amortized to
profit or loss over the useful life of the related asset. Income-related government grants that is a
compensation for related expenses or losses to be incurred in subsequent periods are recognized
as deferred income and credited to the relevant period when the related expense are incurred.
Government grants relating to compensation for related expenses or losses already incurred are
charged directly to the profit or loss for the period.
26. Deferred tax assets and deferred tax liabilities
The deferred income tax assets or the deferred income tax liabilities should be recognized
according to the differences (temporary difference) between the carrying amount of the assets or
liabilities and its tax base. Deferred tax assets shall be respectively recognised for deductible tax
losses that can be carried forward in accordance with tax law requirements for deduction of
taxable income in subsequent years. No deferred tax liabilities shall be recognized forany
temporary difference arising from goodwill initially recognition. No deferred tax assets or
liabilities shall be recognized for any difference arising from assets or liabilities initial recognition
on non-business combination with no effect on either accounting profit or taxable profit (or
deductible tax loss). At the balance sheet date, deferred tax assets and deferred tax liabilities are
measured at the tax rates that are expected to apply to the period when the asset is realised or
liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be
available to offset the deductible temporary difference, deductible loss and tax reduction.
27.Lease
The leases of the Group refer to operating lease.
66
Dalian Refrigeration Co., Ltd. 2016 Annual Report
The rents paid for operating leases shall be recorded into the relevant asset costs or the profits and
losses for the current period by using the straight-line method over each period of the lease
term.Rents received, if the Group as a leaser shall be recognised as income under straight line
method.
28.Other significant accounting policy and estimate
Safety production cost
The company accrued the safety production cost in accordance with state regulation and
recognized in the cost of product or profit or loss for the current period as well as “special
reserve’. When using the accrued safety production cost, if it is expense, special reserve shall be
offset directly and any excessive proportion shall be directly recorded into profit and loss account;
if it is related to asset, “construction in progress” account shall be used for collecting expense and
then fixe asset will be recognized when the safety project is completed and reach the condition
available for use. Meanwhile, special reserve shall be offset based on the cost of fixed asset and
depreciation shall be recognized at the same amount. No depreciation shall be made any longer
in the following period.
29.Changes in Accounting Policies, Accounting Estimates
(1) Change in significant accounting policies
In accordance with the announcement of Caikuai No.22 [2016] by National Finance Department
regarding “Accounting on Value Added Tax” on 3rd December, 2016 and and interpreation of
“Accounting on Value Added Tax”, “business tax and surtax” account is adjusted to “tax and
surtax” after full implemenation of chang form business tax to VAT. This account is for recording
consumption tax, city maintenance and construction tax , resource tax, education tax and surtax,
propety tax, land use tax, vehicle and vessle tax and stampt duty tax and duties etc. Any
transaction incurred between 1st May, 2016 and the announcment date shall be adjusted
accordingly due to the effect on the asset, liability and income statement ; any transaction
incurred between 1st January, 2016 and 30th April, 2016, no need for retrospective adjustment and
neither for the comparative figures.
Due to the issue mentioned above, the Company and its subsidiaries reclassified the tax and
duties of 7,482,432.20Yuan in the administration expense account and the tax and duties of
78,200.00Yuan in the operating cost , in total, 7,560,632.20Yuan into tax and surtax account for
presentation and no effect on the current year’s net profit and net assets.
(2) Changes in accounting estimate None
V. Taxation
1. The main applicable tax and rate to the Group as follows:
67
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Tax Tax base Tax rate
Value-added tax (VAT) Sales revenue or Purchase 17%,13%,11%,6%,5%
Business tax Revenue from property lease, examination fee, 3%,5%
surcharge
City construction tax Value-added tax payables, business tax 7%
Education surcharge Value-added tax payables, business tax 3%
Local education surcharge Value-added tax payables, business tax 2%
Enterprise income tax(EIT) Current period taxable profit 15%,25%
70% of cost of own property or revenue from
Real estate tax 1.2% or 12%
leasing property
Land use tax Land using right area RMB 6 per square meter
(3) Notes for tax entities with different EIT rate
Tax entities EIT rate
Dalian Bingshan Group Engineering Co., Ltd. 15%
Dalian Bingshan Group Sales Co., Ltd. 25%
Dalian Bingshan Air-conditioning Equipment Co., Ltd. 25%
15%
Dalian Bingshan JiaDe Automation Co., Ltd.
25%
Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd.
15%
Wuhan New World Refrigeration Industrial Co., Ltd.
25%
Bingshan Technical Service （Dalian） Co.,Ltd.
25%
Dalian Niweisi LengNuan Techonoligy Co., Ltd.
25%
Dalian Xinminghua Electrical Technology Co., Ltd
2. Tax preference
The company obtained the qualification of high and new technology enterprises on 29th September,
2014 approved by Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax
Bureau and Local tax Bureau. The Certificate No is GF201421200004, and the validity duration is
three years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
The company’s subsidiary, Dalian Bingshan JiaDe Automation Co., Ltd. obtained the qualification
of high and new technology enterprises on 21st September, 2015 approved by Dalian Science
Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local tax Bureau. The
Certificate No is GR201521200115, and the validity duration is three years. According to the tax
law, the company can be granted for the preferential tax policy of enterprise income tax rate of 15%
in three years.
The company’s subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd obtained the
qualification of high and new technology enterprises on 28th October, 2015 approved by Hubei
Science Technology Bureau, Hubei Finance Bureau, Hubei State Tax Bureau and Hubei Local tax
Bureau. The Certificate No is GR201542000772, and the validity duration is three years. According
to the tax law, the company can be granted for the preferential tax policy of enterprise income tax
rate of 15% in three years
68
Dalian Refrigeration Co., Ltd. 2016 Annual Report
VI. Notes to Consolidated Financial Statements
The following disclosure date on this financial statement without special indication, “opening”
refers to January 1, 2016; “closing” refers to December 31, 2016; “current period” refers to the
period from January 1, 2016to December 31, 2016; and “last period” refers to the period from
January 1, 2015 to December 31, 2015; with the currency unit RMB.
1. Cash and cash in bank
Item Closing Balance Opening Balance
Cash on hand 83,511.72 57,023.71
Cash in bank 655,664,478.48 224,067,110.89
Other cash and cash equivalents 23,976,815.56 20,665,689.93
Total 679,724,805.76 244,789,824.53
Including: sum of deposits overseas
The restrained cash and cash in bank is shown as below
Item Closing Balance Opening Balance
Deposit for bank acceptances 18,512,681.41 18,503,739.86
Deposit for letter of credit
Deposit for letter of guarantee 3,064,134.15 2,161,950.07
Cash in bank for warrant of migrant workers 2,400,000.00 2,400,000.00
Total 23,976,815.56 23,065,689.93
The closing balance of the cash and cash in bank increased 177.68% comparing with the opening
balance because of the capital increasing from non-public share issued.
2. Notes receivable
(1) Category of notes receivable
Items Closing Balance Opening Balance
Bank acceptance notes 42,349,987.02 47,267,168.02
Commercial acceptance notes 88,076,238.72 24,432,349.66
Total 130,426,225.74 71,699,517.68
(2) Pledged notes receivable up to December 31, 2016.
Items Closing pledged amount
Bank acceptance notes 15,532,736.64
Commercial acceptance notes
Total 15,532,736.64
(3) Notes receivable endorsed or discounted but not mature at the end of year
69
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Item Closing amount no more Closing amount still recognized
recognized
Bank acceptance notes 147,781,322.57
Commercial acceptance notes 9,908,754.00
Total 157,690,076.57
(4) No notes receivable transferred to accounts receivable due to defaulting at the end of year
The closing balance of the notes receivable increased 81.91% compared with the opening balance
because of the increasing notes received
3. Accounts receivable
(1) Category of accounts receivable
Closing Balance
Items Booking balance Provision
Booking balance
Amount % Amount %
Accounts receivable with significant individual
amount and separate bad debt provision
Accounts receivable with bad debt provision
905,954,797.18 100.00 146,901,498.21 16.22 759,053,298.97
based on the characters of credit risk portfolio
Related party
Risk-free portfolio
Accounts receivable with insignificant
individual amount and separate bad debt
provision
Total 905,954,797.18 100.00 146,901,498.21 16.22 759,053,298.97
(Continued)
Opening balance
Items Booking balance Provision
Booking balance
Amount % Amount %
Accounts receivable with significant individual amount
and separate bad debt provision
Accounts receivable with bad debt provision based on
801,499,499.03 100.00 130,075,662.16 16.23 671,423,836.87
the characters of credit risk portfolio
Related party
Risk-free portfolio
Accounts receivable with insignificant individual
amount and separate bad debt provision
Total 801,499,499.03 100.00 130,075,662.16 16.23 671,423,836.87
70
Dalian Refrigeration Co., Ltd. 2016 Annual Report
1) There is no major single amount and bad debt provision provided individually.
2) Accounts receivable with the bad debt provisions under accounting aging analysis method
Closing Balance
Aging Proportion
Accounts receivable Provision for bad debts
(%)
Within1 year 500,555,590.68 25,027,779.50 5
1 to 2 years 230,303,186.71 23,030,318.69 10
2 to 3 years 76,923,413.03 23,077,023.91 30
3 to 4 years 34,426,228.56 17,213,114.28 50
4 to 5years 25,965,581.90 20,772,465.53 80
Over 5 years 37,780,796.30 37,780,796.30 100
Total 905,954,797.18 146,901,498.21
(2)Bad debt provision accrued and written-off (withdraw)
The bad debt provision has been accrued at the amount of 15,557,909.70 Yuan during the report
period and the increase of 1,167,926.35Yuan because of the merger. Bad debt reversal or
withdrawn incurred at the amount of 100,000.00 Yuan during the year.
Including：Significant bad debt reversal or withdrawn in current period
Companies Received amount Regained form Reasons
Dalian Jinguang ME Mechanical Engineering Co., Ltd 100,000.00 Bank Deposits Company keeps urging
Total 100,000.00
(3) No accounts receivable written off in current period
(4) The top five significant accounts receivable categorized by debtors
% of the Closing Balance of
Company Closing Balance Aging
total AR Provision
Panasonic Cold-Chain (Dalian) Co., Within 1 year, 1-2
47,410,594.36 5.23 2,422,031.17
Ltd. years
AB-InBev Sedrin Brewery Co.,Ltd 45,255,600.00 Within 1 year 5.00 2,262,780.00
Beijing Huashang Bingshan Within 1 year, 1-2
Refrigeration and Air-conditioning 38,284,385.35 years, 3-4 years, over 4.23 3,543,453.36
Machinery Co., Ltd. 5 years
Xinyi Yuanda construction and
31,300,000.00 Within 1 year 3.45 1,565,000.00
Installation Engineering Co., Ltd.
Within 1 year, 1-2
Xilingol Grandfarm MeatCo., Ltd. 20,340,000.00 2.25 1,371,202.35
years
Total 182,590,579.71 20.16 11,164,466.88
4. Advances to suppliers
(1) Aging of advances to suppliers
71
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Closing Balance Opening Balance
Items
Amount Percentage (%) Amount Percentage (%)
Within 1 year 89,812,017.45 94.40 40,798,252.80 92.26
1 to 2 years 4,861,645.81 5.11 3,420,635.11 7.74
2 to 3 years 467,380.70 0.49
Total 95,141,043.96 100.00 44,218,887.91 100.00
(2) The top five significant advances to suppliers categorized by debtors
% of the total advances
Company Closing Balance Aging
to suppliers
Dalian Bingshan International Tra Within 1 year,
14,610,882.17 15.36
ding Co.,Ltd. 1-2 years
Shenyang Debao Hongtai Agricult
13,206,355.64 Within 1 year 13.88
ural Development Co., Ltd.
Oritcranes (Liaoning) Co., Ltd. 10,368,000.00 Within 1 year 10.90
Dalian HOLLEY coating equipme
9,600,000.00 Within 1 year 10.09
nt Co., Ltd.
Shanghai industrial automation eq
9,147,900.00 Within 1 year 9.62
uipment Co., Ltd.
Total 56,933,137.81 59.85
The closing balance of the advances to supplier increased 115.16% comparing with the opening
balance because of the increasing advanced engineering payments.
5. Interest receivable
(1) Interest receivable
Items Closing Balance Opening Balance
Interest on Term Deposits 723,955.56
Total 723,955.56
The closing balance of the interest receivable increased 100% comparing with opening balance
because of company’s undue term deposit interest increase.
6. Dividends receivable
(1) Dividends receivable
Company Closing Balance Opening Balance
Wuhan Steel and Electricity Co., Ltd. 39,025.00 44,600.00
Total 39,025.00 44,600.00
7. Other receivables
(1) The categories of other receivable
Closing Balance
Items
72
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Booking balance Provision Booking
Amount % Amount % balance
Other receivables with significant individual
- - - - -
amount and separate bad debt provision
Other receivables identified bad debt
provision based on the characters of credit 60,376,356.44 100.00 7,393,642.55 12.25 52,982,713.89
risk portfolio
Related party
Risk-free portfolio
Other receivables with significant individual
amount and separate bad debt provision
Total 60,376,356.44 100.00 7,393,642.55 12.25 52,982,713.89
(Continued)
Opening Balance
Items Booking balance Provision
Booking balance
Amount % Amount %
Other receivables with significant individual
- - - - -
amount and separate bad debt provision
Other receivables identified bad debt provision
28,070,768.44 100.00 5,315,440.23 18.94 22,755,328.21
based on the characters of credit risk portfolio
Related party
Risk-free portfolio
Other receivables with significant individual
amount and separate bad debt provision
Total 28,070,768.44 100.00 5,315,440.23 18.94 22,755,328.21
1) There is no significant single amount and bad debt provision provided individually.
2) Other receivables accrued the bad debt provisions under accounting aging analysis method
Closing Balance
Aging
Other receivables Provision for bad debts Proportion(%)
Within 1 year 43,626,635.22 2,181,326.84 5
1-2 years 9,111,683.00 911,168.30 10
2-3 years 3,413,474.12 1,024,042.25 30
3-4 years 1,389,178.28 694,589.14 50
4-5 years 1,264,349.00 1,011,479.20 80
Over 5 years 1,571,036.82 1,571,036.82 100
Total 60,376,356.44 7,393,642.55
(2) Bad debt provision accrued or reversed
73
Dalian Refrigeration Co., Ltd. 2016 Annual Report
The bad debt provision has been accrued at the amount of 2,093,865.54 Yuan during the report
period and the amount increases 86,541.32 Yuan because of the consolidation. No bad debt
reversal or withdrawn incurred during the year
(3) Other receivables written off in current period
Item Written-off Amount
Other receivables written off (2 client) 102,204.54
Including：Key other receivables written off
Produced by
Written-off Written-off
Companies Category Reasons Related party
amount Procedures
transactions or not
Chongqing mans Client has been Authorized by
Deposit 50,530.00 No
ite Co. Ltd. deregistered Board
Fund can’t be
Petty cash collected Authorized by
Shi Feng 51,674.54 No
Board
Total 102,204.54
(4) Other receivables categorized by nature
Nature Closing Balance Opening Balance
Guarantee deposits 34,105,614.48 15,948,041.08
Petty cash 8,869,550.55 5,883,732.14
Accounts payable 15,371,514.59 4,007,029.29
Others 2,029,676.82 2,231,965.93
Total 60,376,356.44 28,070,768.44
(5)Other receivables from the top 5 debtors
% of Closing
Closing
Name Category Aging the total Balance of
Balance
OR Provision
Shenyang Debao Hongtai
Agricultural Development Performance bond 12,000,000.00 Within 1 year 19.88 600,000.00
Co., Ltd.
Shenyang Debao
Jiahong Agricultural Tech
Performance bond 10,000,000.00 Within 1 year 16.56 500,000.00
nology Co.,
Ltd.
Nanjing Yurun Debtor transferred Within 1year,
6,069,414.23 10.05 306,470.71
Food Co., Ltd. to be collected 1 – 2 years
Dalian Delta HK& China Within 1year,
deposit 2,830,000.00 4.69 216,500.00
Gas Co., Ltd. 2– 3 years
Jiahua Chemical 1 – 2 years,
payable 1,913,661.30 3.17 258,671.04
Ltd. 2 – 3 years
Total 32,813,075.53 54.35 1,881,641.75
The closing balance of the other receivables increased 132.84% comparing with the opening balance
because of performance bond.
74
Dalian Refrigeration Co., Ltd. 2016 Annual Report
8. Inventories
(1) Categories of inventories
Closing Balance
Item
Book value Provision for decline Net book value
Raw materials 68,988,506.23 1,070,944.56 67,917,561.67
Working in progress 88,255,287.69 88,255,287.69
Finished goods 92,718,030.69 320,000.00 92,398,030.69
Low-value consumable 209,949.86 209,949.86
Self-manufactured
semi-finished products 31,999,705.01 31,999,705.01
Constructing projects 40,729,017.13 40,729,017.13
Materials on consignment
for further processing 2,353,515.43 2,353,515.43
Total 325,254,012.04 1,390,944.56 323,863,067.48
(Continue)
Opening Balance
Item
Book value Provision for decline Net book value
Raw materials 65,069,599.90 6,954,631.11 58,114,968.79
Working in progress 71,830,972.13 1,148,743.24 70,682,228.89
Finished goods 74,379,267.69 2,588,149.42 71,791,118.27
Low-value consumable 134,671.91 134,671.91
Self-manufactured
semi-finished products 30,014,321.83 1,386,950.94 28,627,370.89
Constructing projects 27,558,415.02 27,558,415.02
Materials on consignment for
further processing 2,190,375.70 2,190,375.70
Total 271,177,624.18 12,078,474.71 259,099,149.47
(2) Provision for decline in the value of inventories
Increase Decrease
Opening Closing
Item Reverse/ Others
Balance Accrual Other Balance
Written- off transferred
Raw materials 6,954,631.11 5,883,686.55 1,070,944.56
Working in
1,148,743.24 1,148,743.24
progress
Finished goods 2,588,149.42 2,268,149.42 320,000.00
Self-manufactured
semi-finished 1,386,950.94 1,386,950.94
products
Total 12,078,474.71 10,687,530.15 1,390,944.56
(3) Accrual for provision for decline in the value of inventories
75
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Basis for net realizable value
Item Reasons for reverse/write-off
recognition
Raw materials Lower of cost and NRV Sold within the year
Working in Sold within the year
progress Lower of cost and NRV
Finished goods Lower of cost and NRV Sold within the year
Self-manufactured semi-finished Sold within the year
products Lower of cost and NRV
9. Other current assets
Item Closing Balance Opening Balance
Prepaid income tax presented at net
734,482.13 2,628,292.68
amount after offsetting
VAT to be deducted 39,380,207.14 13,779,722.47
Prepaid expenses 355,521.38 70,696.71
Total 40,470,210.65 16,478,711.86
The closing balance of the other current assets increased 145.59% comparing with the opening
balance because the VAT to be deducted increased.
10. Available-for-sale financial assets
(1) Available-for-sale financial assets
Item Closing Balance Opening Balance
Booking balance Provision Carrying amount Booking balance Provision Carrying amount
Available-for-sale
debt instruments
Available-for-sale
550,711,039.12 5,145,922.48 545,565,116.64 738,500,019.89 5,224,770.80 733,275,249.09
equity instruments
Measured as fair
533,156,774.62 1,503,316.57 531,653,458.05 720,945,755.39 1,582,164.89 719,363,590.50
value method
Measured as cost
17,554,264.50 3,642,605.91 13,911,658.59 17,554,264.50 3,642,605.91 13,911,658.59
method
Others
Total 550,711,039.12 5,145,922.48 545,565,116.64 738,500,019.89 5,224,770.80 733,275,249.09
(2) Available-for-sale financial assets measured at fair value method
Equity instruments Debt instruments
Items Others Total
available for sale available for sale
Cost 28,598,895.00 28,598,895.00
Fair value 533,156,774.62 533,156,774.62
76
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Equity instruments Debt instruments
Items Others Total
available for sale available for sale
FV accumulated change recognized in other
504,557,879.62 504,557,879.62
comprehensive income
Provision for impairment 1,503,316.57 1,503,316.57
(3) Available-for-sale financial assets measured at cost method
Book Value
Proportion of shareholding in
Investee Opening Closing
the investee(%) Increase Decrease
Balance Balance
Zibo traction motor co., ltd. 0.76 849,000.00 849,000.00
Liaoning Mike group Limited by
3.57 1,020,000.00 1,020,000.00
Share Ltd
Guotai Junan investment
0.22 3,057,316.00 3,057,316.00
management company
Cold King container temperature
17.80 11,207,806.00 11,207,806.00
control Co., Ltd.
Liaoning enterprises Industrial
4.20 105,000.00 105,000.00
Co., Ltd.
Wuhan steel electric Limited 0.06 1,315,142.50 1,315,142.50
Total 17,554,264.50 17,554,264.50
(Continue)
Provision for impairment
Investee Cash dividend
Opening Balance Increase Decrease Closing Balance
Zibo traction motor co., ltd. 849,000.00 849,000.00
Liaoning Mike group Limited by
310,000.00
Share Ltd
Guotai Junan investment
2,688,605.91 2,688,605.91
management company
Cold King container temperature
control Co., Ltd.
Liaoning enterprises Industrial Co.,
105,000.00 105,000.00
Ltd.
Wuhan steel electric Limited 39,025.00
Total 3,642,605.91 3,642,605.91 349,025.00
(4) Provision for available-for-sale financial assets impairment
Equity instruments Debt instruments
Category Others Total
available for sale available for sale
Beginning balance 5,224,770.80 5,224,770.80
Increased during current year
Including: transfer from other
comprehensive income
Decreased during current year 78,848.32 78,848.32
Including: transfer from fair value rising
Ending balance 5,145,922.48 5,145,922.48
(5) Other explanatory on available-for-sale financial assets
Guotai Junan Securities Co., Ltd. was listed on Shanghai Stock Security Exchange on 26th June 2015,
77
Dalian Refrigeration Co., Ltd. 2016 Annual Report
st
and until 31 December, 2016, the company held 28,598,895 numbers of shares of Guotai Junan
Securities Co., Ltd which was measured at fair value at the year end. The company received cash
dividend RMB 15,651,425.40Yuan.
The closing balance of the available-for-sale financial assets decreased 25.60% comparing with the
beginning balance because the company sold small portion of the shares and share price fell in
comparison with 31st December, 2015. .
78
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
11. Long-term equity investments
Increase/Decrease
Gains and
Beginning Adjustment of Cash bonus or Provision for Provision for
Investee losses Change Ending balance
balance other profits impairment of impairment
Increased Decreased recognized of other Others
comprehensive announced to the current
under the equity
income issue period
equity method
I. Joint venture
Dalian Bingshan
Security Leisure
2,837,097.81 2,524,548.42 -312,549.39
Industrial Engineering
Co., Ltd
Subtotal 2,837,097.81 2,524,548.42 -312,549.39
II. Associates
Dalian Bingshan
International Trading 15,691,101.62 1,137,313.10 16,828,414.72
Co.,Ltd.
Panasonic
Refrigeration (Dalian) 159,226,107.64 3,399,533.51 5,200,000.00 157,425,641.15
Co., Ltd.
Dalian Honjo
8,729,712.48 1,441,499.53 528,860.67 9,642,351.34
Chemical Co., Ltd.
Panasonic Cold-Chain
215,719,525.88 9,967,711.38 8,000,000.00 217,687,237.26
(Dalian) Co., Ltd.
Keinin-Grand Ocean
Thermal Technology 48,607,035.29 18,545,378.50 14,200,000.00 52,952,413.79
(Dalian) Co., Ltd.
Panasonic Compressor
457,892,368.92 58,511,025.07 32,400,000.00 484,003,393.99
(Dalian) Co., Ltd.
Dalian Xinminghua
-43,766,
Electrical Technology 21,958,069.24 21,535,918.03 272,256.45
243.72
Co., Ltd
79
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Increase/Decrease
Gains and
Beginning Adjustment of Cash bonus or Provision for Provision for
Investee losses Change Ending balance
balance other profits impairment of impairment
Increased Decreased recognized of other Others
comprehensive announced to the current
under the equity
income issue period
equity method
MHI Bingshan
Refrigeration (Dalian) 22,276,332.84 -9,257,540.79 13,018,792.05
Co.,Ltd.
Beijing Huashang
Bingshan Refrigeration
1,936,646.98 -1,167,183.71 769,463.27
and Air-conditioning
Machinery Co., Ltd.
Dalian Fuji Bingshan
Vending Machine Co., 113,268,454.28 21,995,198.40 25,523,542.13 160,787,194.81
Ltd.
Changzhou Jingxue
Refrigeration 141,722,024.61 15,648,082.81 5,842,400.00 151,527,707.42
Equipment Co., Ltd.
Dalian Fuji Iceberg
Vending Machine 4,496,415.53 4,913,591.03 9,410,006.56
Sales Co., Ltd
Wuhan Lanning
Energy Science Co., 6,006,874.61 125,158.72 6,132,033.33
Ltd.
Wuhan Sikafu Power
Control Equipment 7,200,000.00 -1,043,630.99 6,156,369.01
Co., Ltd
Panasonic cold
machine system 21,000,000.00 2,400,297.51 23,400,297.51
(Dalian) co., LTD
1,217,530,669.9 -43,766,
Subtotal 71,731,116.43 130,417,034.25 66,171,260.67 1,309,741,316.21
2 243.72
1,220,367,767.7 -43,766,
Total 71,731,116.43 2,524,548.42 130,104,484.86 66,171,260.67 1,309,741,316.21
3 243.72
80
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
1、At the 5th meeting of the 7th generation of board of directors, the company and Hong Kong BaoAn Water Project Co., Ltd both respectively transferred 50%
shareholdings of Dalian Bingshan Security Leisure Industrial Engineering Co., Ltd to the fully owned subsidiary, Dalian Bingshan Group Engineering Co., Ltd. The
company received payment for the share transferred of2.835million Yuan. After that, the company would not hold any shares of Dalian Bingshan Group Engineering
Co., Ltd any longer, and the fully owned subsidiary, Dalian Bingshan Group Engineering Co., Ltd would have 100% shareholdings of Dalian Bingshan BaoAn
Leisure Industrial Engineering Co., Ltd. The transactions stated above have been completed by 31st, December 2016.
2、The 8th meeting of the 7th generation of board of directors approved to increase capital to the affiliated company of Dalian Fuji ice Vending machine co., LTD by
cash. The capital increasing limit is 2.2 billion Japanese Yen. The payments have been paid by both parties based on the original contribution percentage within
two terms, first term, increases 0.68 billion Japanese Yen which should be paid before 30th September 2016; the second term is 1.52 billion Japanese Yen which
should be paid before 30th June 2019. The company owns 49% of the shareholding of the Dalian Fuji Company, the first term, the company need to increase the
capital of 0.3332 billion Japanese Yen ( The company paid the first term fund on 30th September 2016 using currency rate on that date which equals
RMB21,995,195.40 Yuan); The second term, need to increase the capital 0.7448 million Japanese Yen. The percentage of the shareholding of the Dalian Fuji ice
vending held by the company doesn’t change after the capital increase.
3、The company has made the decision at the 5th meeting of the 7th generation of board to jointly invest in Panasonic Cold Machine System (Dalian) Co., Ltd with
Panasonic Electric (China) Co., Ltd、Panasonic Cold Chain (Dalian) Co., Ltd and Panasonic Compressor (Dalian) Co., Ltd. The company has invested 21 million
Yuan presenting of 20% of shareholding. Until 31st December, 2016, Panasonic Cold Machine System (Dalian) Co., Ltd has officially put into operation.
4、The 3rd meeting of the 7th generation of board of directors approved to accept the 70% of shareholding transfer from Dalian Xinminghua electrical technology Co.,
Ltd, a holding subsidiary, hence, Dalian Xinminghua electrical technology Co., Ltd., has become the fully owned subsidiary after transfer. The transaction stated
above has been completed by 31st December 2016.
5、The company’s subsidiary, Wuhan New world refrigeration industry co., Ltd has made the decision at the board meeting to invest 7.2million Yuan in the form of
cash to set up Wuhan Kraft Power Control Equipment Co., Ltd together with Wuhan Kraft Technology Co., Ltd. After investment, the company holds 36% of
shareholding. By the end of 2016, Wuhan Kraft Power Control Equipment Co., Ltd has been put into operat
81
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
12. Investment property
(1) Investment property measured as cost method
Property& Construction
Item Land-use-rights Total
in progress
Building
I. Initial Cost
1. Opening Balance 25,259,944.57 25,259,944.57
2. Increase 4,771,309.78 4,771,309.78
(1) Outsourcing
(2) Transferred from Construction in
4,771,309.78 4,771,309.78
progress
(3) Acquired from business combination
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance 30,031,254.35 30,031,254.35
II. Accumulated Depreciation
1. Opening Balance 762,360.57 762,360.57
2. Increase
(1) Provision or amortization 663,240.84 663,240.84
(2) Acquired from business combination
(3)Other transfer
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance 1,425,601.41 1,425,601.41
III. Impairment Reserve
1. Opening Balance
2. Increase
(1) Provision or amortization
(2) Acquired from business combination
(3)Other transfer
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance
82
IV. Book Value
1. Closing book value 28,605,652.94 28,605,652.94
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(2) Investment property without owner’s certificates
Items Book value Reasons
# 6 building of workshop on No. 106 Liaohe East Rd, Dalian Final inspection
28,605,652.94
Economic and Technology Development Zone uncompleted
(3) Explanation of investment property
On 31st July,2014, the company signed supplemental rental contract with MHI Bingshan
Refrigeration (Dalian) Co.,Ltd., and rent out # 6 building of workshop located on No. 106 Liaohe
East Rd, Dalian Economic and Technology Development Zone to MHI Bingshan Refrigeration
(Dalian) Co.,Ltd. The rental area is 15,259.04 square metres, and annual rent is RMB 4.2 million
with the expiry date on 16th July, 2029.
13. Fixed assets
(1) Fixed assets detail
Property& Machinery Transportation Other
Item Equipment Total
buildings Equipment Equipment
I. Initial Cost
1. Opening Balance 410,553,157.61 608,130,475.12 25,350,158.35 29,613,012.49 1,073,646,803.57
2. Increase 48,140,843.34 103,322,919.40 2,128,279.80 22,728,853.15 176,320,895.69
(1) Purchase 6,927,234.11 5,413,344.07 1,781,602.61 16,297,877.42 30,420,058.21
(2) Transferred from
39,889,868.48 64,029,238.05 586,797.87 104,505,904.40
construction-in-progress
(3) Acquired from
1,323,740.75 33,880,337.28 346,677.19 5,844,177.86 41,394,933.08
business combination
(4) Transferred from
other
3. Decrease 6,927,234.11 196,102,240.87 6,531,288.58 4,456,002.34 214,016,765.90
(1) Disposal 6,927,234.11 196,102,240.87 6,531,288.58 4,456,002.34 214,016,765.90
(2) Transferred to other
4. Closing Balance 451,766,766.84 515,351,153.65 20,947,149.57 47,885,863.30 1,035,950,933.36
II. Accumulated
Depreciation
1. Opening Balance 144,232,577.42 439,963,821.58 16,024,686.66 21,226,057.87 621,447,143.53
2. Increase 11,632,470.98 41,200,770.06 1,978,520.63 17,957,394.90 72,769,156.57
(1)Accrued 10,722,658.11 14,688,361.58 1,674,659.92 13,382,377.67 40,468,057.28
(2) Acquired from
909,812.87 26,512,408.48 303,860.71 4,575,017.23 32,301,099.29
business combination
83
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Property& Machinery Transportation Other
Item Equipment Total
buildings Equipment Equipment
(3) Transferred from
other
3. Decrease 0.00 160,970,717.69 4,350,522.72 2,921,351.96 168,242,592.37
(1) Disposal 0.00 160,970,717.69 4,350,522.72 2,921,351.96 168,242,592.37
(2) Transferred to other
4. Closing Balance 155,865,048.40 320,193,873.95 13,652,684.57 36,262,100.81 525,973,707.73
III. Impairment
Reserve
1. Opening Balance 2,292,229.72 2,292,229.72
2. Increase
(1)Accrued
(2) Acquired from
business combination
(3) Transferred from
other
3. Decrease 1,737,201.97 1,737,201.97
(1) Disposal 1,737,201.97 1,737,201.97
(2) Transferred to other
4. Closing Balance 555,027.75 555,027.75
IV. Book Value
1. Closing book value 295,901,718.44 194,602,251.95 7,294,465.00 11,623,762.49 509,422,197.88
2. Opening book value 266,320,580.19 165,874,423.82 9,325,471.69 8,386,954.62 449,907,430.32
(2) No idle fixed assets until December, 31 2016.
(3) No fixed assets leases out under financing lease until December, 31 2016.
(4) No fixed assets leases out under operating lease until December, 31 2016.
(5) Fixed assets as pending certificate of ownership
Item Book value Reason for Pending
Properties 109,327,159.04 Final inspection uncompleted
84
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(6) Others
Wuhan New world refrigeration industry co., Ltd, a fully owned subsidiary of the company
borrowed 45million Yuan from bank by pledging the property &building, plant &machinery, and
land using right, refer to the note VI. 19 short term borrowing for details. There are no any other
fixed assets exchange and pledged guarantee.
14. Construction-in-progress
(1) Construction in progress details
Closing Balance Opening Balance
Item
Book Balance Provision Book Value Book Balance Provision Book Value
Buildings
250,913,095.82 250,913,095.82 135,257,174.97 135,257,174.97
reconstruction
Improvement of
70,072,395.96 70,072,395.96 1,768,209.61 1,768,209.61
machinery
Official furniture 661,185.00 661,185.00
Total 321,646,676.78 321,646,676.78 137,025,384.58 137,025,384.58
(2) Change in the significant construction in progress
Decrease
Opening Closing
Name Increase Transfer to fixed Other
Balance Balance
assets decrease
Buildings reconstruction 135,257,174.97 152,452,837.34 40,171,932.58 4,771,309.78 242,766,769.95
Improvement of machinery 1,768,209.61 77,622,090.88 1,171,578.66 78,218,721.83
Official furniture 661,185.00 661,185.00
Energy station project 63,162,393.16 63,162,393.16
Total 137,025,384.58 293,898,506.38 104,505,904.40 4,771,309.78 321,646,676.78
(Continued)
Percent of Accumulated Including: Interest
Source of
Name Budget investment against capitalized Accumulated capitalization
funds
budget(%) interest capitalized interest rate (%)
Buildings Self
351,685,931.96 81.82 82
reconstruction financing
Improvement of Loan/Self
94,113,060.83 83.11 83 933,333.34 1.20
machinery financing
Self
Official furniture 1,104,701.13 59.85 60
financing
Energy station Self
63,162,393.16 100.00 100
project financing
Total 510,066,087.08 933,333.34 1.20 —
85
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(3) There was no provision for impairment at the end of the year
(4) The reason of the closing balance increased 134.74% comparing with the opening balance
was new plant construction increased.
15. Intangible assets
(1) Intangible assets list
Item Land use right Knowhow Others Total
I. Initial Cost
1. Opening Balance 183,963,902.62 515,224.41 13,886,983.02 198,366,110.05
2. Increase
(1) Purchase 1,293,467.29
(2) Transferred from
construction-in-progress
(3) Acquired from business
combination
(4) Transferred from other
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance 183,963,902.62 515,224.41 15,180,450.31 199,659,577.34
II. Accumulated amortisation
1. Opening Balance 34,075,131.67 515,224.41 5,357,951.40 39,948,307.48
2. Increase 3,716,577.10 1,280,480.24 4,997,057.34
(1)Accrued 3,716,577.10 1,280,480.24 4,997,057.34
(2) Acquired from business
combination
(3) Transferred from other
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance 37,791,708.77 515,224.41 6,638,431.64 44,945,364.82
III. Impairment Reserve
1. Opening Balance
86
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Land use right Knowhow Others Total
2. Increase
(1)Accrued
(2) Acquired from business
combination
(3) Transferred from other
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance
IV. Book Value
1. Closing book value 146,172,193.85 8,542,018.67 154,714,212.52
2. Opening book value 149,888,770.95 8,529,031.62 158,417,802.57
(2) Explanation of intangible assets
1) At the end of reporting period, there is no intangible asset established by internal
development.
2) Wuhan New world refrigeration industry co., Ltd, a fully owned subsidiary of the company
borrowed 45million Yuan from bank by pledging the property &building, plant &machinery,
and land using right, refer to the note VI. 19 short term borrowing for details. There are no
any other intangible assets exchange and pledged guarantee.
16. Goodwill
(1) Original cost of goodwill
Increased during Decreased during
current year current year
Opening
Name Enterprises Closing Balance
Balance
merger Other Disposal Other
increase
Dalian Niweisi LengNuan
1,440,347.92 1,440,347.92
Techonoligy Co., Ltd.
Dalian Bingshan Security Leisure
Industrial Engineering Co., Ltd 310,451.57 310,451.57
Total 1,440,347.92 310,451.57 1,750,799.49
(2) Goodwill impairment provision
Goodwill calculation method:
In the year 2015, the book value of equity investment of Dalian Niweisi LengNuan Technology Co.,
Ltd exceeds the fair value of the proportion of the acquired company’s identifiable net asset. The
difference between the book value of equity investment of 48, 287,589.78 Yuan and the identifiable
87
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
net asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltd of 46,847,241.86
Yuan on the acquisition date of July 31st 2015 is recognized as goodwill of 1,440,347.92 Yuan on
the group consolidated financial report at the end of the year.
In the year 2016, the company purchases shares of Dalian Security Leisure Industry Co., Ltd and
gains control. The transferred price is based on the net asset of Dalian Security Leisure Industry Co.,
Ltd on June 30th 2016. Negotiated with Dalian Security Leisure Industry Co., Ltd’s shareholder
Security Water Project (China) Limited Company, the transfer price is the combination cost on the
purchasing date which is 5,359,548.42 Yuan, the fair value of proportion of Dalian Security Leisure
Industry Company’s identifiable net asset is 5,049,096.85 Yuan on the purchasing day, therefore,
goodwill is 310,451.57Yuan on the purchasing date.
The book value of goodwill from business combination of Dalian Niweisi LengNuan Technology
Co., Ltd and Dalian Security Leisure Industry Co., Ltd which are not under same control shall be
allocated into the relevant asset group using the reasonable method since acquisition date and taken
impairment test on relevant asset group where the goodwill is included. The obvious impairment
indication of the goodwill hasn’t been found. Thus no goodwill impairment provision has been
made.
17. Long-term repayments
Item Other Closing
Opening Balance Increase Amortization
Decrease Balance
Employee’s dormitory
2,566,083.66 138,478.32 2,427,605.34
use right
Renovation and
rebuilding 1,794,123.90 1,112,829.47 681,294.43
Inspection services 34,687.39 34,687.39
Lease 956,610.00 106,290.00 850,320.00
Membership fee for
Golf 506,000.00 16,500.00 489,500.00
Total 5,857,504.95 1,408,785.18 4,448,719.77
18. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offsetting
Item Closing Balance Opening Balance
Deductible temporary Deferred tax assets Deductible temporary Deferred tax assets
difference difference
Provision for
impairment of assets 114,300,933.14 22,627,026.82 107,112,240.49 19,372,358.73
Share option
Incentive expense 17,103,388.00 2,565,508.20 12,190,520.00 1,828,578.00
Total 131,404,321.14 25,192,535.02 119,302,760.49 21,200,936.73
(2) Deferred tax liabilities without offsetting
Item Closing Balance Opening Balance
Taxable temporary difference Deferred tax Taxable temporary Deferred tax
liabilities difference liabilities
88
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Asset revaluation increment in
business combination not under the
same control
Fair value change of the
available-for-sale financial assets 504,557,879.67 75,683,681.95 690,846,860.39 103,627,029.06
Total 504,557,879.67 75,683,681.95 690,846,860.39 103,627,029.06
(3) Unrecognized deferred tax assets details
Item Closing Balance Opening Balance
Deductible temporary difference 44,617,762.47 47,874,337.13
Deductible loss 48,658,772.82 15,856,452.86
Total 93,276,535.29 63,730,789.99
(4) Unrecognized deductible loss of deferred tax assets expired next period
Year Closing Balance Opening Balance Notes
2017 409,595.19 975,555.72
2018 2,044,154.14 2,350,012.09
2019 1,843,026.73 4,032,513.71
2020 11,863,347.41 8,498,371.34
2021 32,498,649.35
Total 48,658,772.82 15,856,452.86
19. Short-term loan
(1) Category of short term loan
Loan category Closing Balance Opening Balance
Mortgage loan 45,000,000.00 55,000,000.00
Credit loan 27,600,000.00
Total 45,000,000.00 82,600,000.00
(2) No overdue short term loan this year.
(3) Explanatory of the short-term loan
Wuhan New World Refrigeration Industrial Co., Ltd. borrowed RMB45,000,000 from bank and
mortgaged with its buildings, machinery and land-use-rights.
The reason of the closing balance decreased by 45.52% was the credit loan has been paid back.
20. Notes payable
Notes category Closing Balance Opening Balance
89
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Bank acceptance notes 174,617,232.53 203,432,038.63
Commercial acceptance notes 4,761,535.43 30,756,973.09
Total 179,378,767.96 234,189,011.72
At the year end, there is no unpaid notes payable which is due.
21. Accounts payable
(1) Accounts payable
Item Closing Balance Opening Balance
Material payments 636,011,064.22 554,938,956.23
Project payments 199,503,352.11 103,608,705.86
Equipment payments 3,565,090.35 1,850,841.17
Total 839,079,506.68 660,398,503.26
(2) Accounts payable with age over 1 year
Name of company Closing Balance Reason of unpaid or not carried forward
Wuhan Zhongwei explosive control system Project is uncompleted contract is not
10,412,365.00 finished
Co.,Ltd
Binzhou Shanfu Refrigeration Engineering Project is uncompleted contract is not
10,211,962.19 finished
Co., LTD
Project is uncompleted contract is not
Heilongjiang Longleng Technology 9,413,290.00 finished
Project is uncompleted contract is not
Wuhan Kaixing Development Co., LTD 8,201,894.75 finished
Project is uncompleted contract is not
BAC（Dalian）Co.,Ltd 6,271,540.00 finished
Total 44,511,051.94
22. Received in advance
(1) Received in advance
Item Closing Balance Opening Balance
Advanced on sales 136,231,829.62 70,458,014.46
Total 136,231,829.62 70,458,014.46
(2) Accounts received in advance aged over 1 year
Company Closing Balance Reason
China Aviation Planning and Construction Development
3,100,000.00 Unsettled contract payments on sets projects
Co., Ltd
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
90
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Company Closing Balance Reason
Total 7,085,981.40
(3) Note to received in advance
The closing balance increased by 93.35% comparing with the opening balance, mainly because of
the increase of prepayment from the client.
23. Employee’s payable
(1) Category of employee’s payables
Item Opening Balance Increase Decrease Closing Balance
Short-term employee’s payable 51,857,345.29 284,908,827.66 287,649,042.22 49,117,130.73
Post-employment benefit –defined
36,396,018.29 36,396,018.29
contribution plan
Termination benefits 609,128.18 609,128.18
Other welfare due within 1 year
Total 51,857,345.29 321,913,974.13 324,654,188.69 49,117,130.73
(2) Short-term employee’s payables
Item Opening Balance Increase Decrease Closing Balance
Salaries, bonus,
33,196,105.86 220,370,407.93 221,111,778.40 32,454,735.39
allowance, and subsidy
Welfare 15,411,064.20 15,126,506.96 16,363,888.29 14,173,682.87
Social insurance 646,551.22 18,805,192.53 19,451,743.75
Include: Medical
24.00 14,470,979.13 14,471,003.13
insurance
On-duty injury
0.81 1,576,540.51 1,576,541.32
insurance
Maternity
1,074,475.24 1,074,475.24
insurance
Housing
646,526.41 1,683,197.65 2,329,724.06
subsidies
Housing funds 1,917,436.58 26,198,011.50 26,539,687.48 1,575,760.60
Labour union and
686,187.43 4,164,576.18 3,937,811.74 912,951.87
training expense
Non-currency welfare 244,132.56 244,132.56
Total 51,857,345.29 284,908,827.66 287,649,042.22 49,117,130.73
91
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Non monetary benefit for the employee is 244,132.56Yuan, which is the long-term amortization
expense including employee’s dormitory and canteen.
(3) Defined contribution plan
Item Opening Balance Increase Decrease Closing Balance
Pension 32,634,069.75 32,634,069.75
Unemployment insurance 1,420,102.77 1,420,102.77
Heating fees 2,341,845.77 2,341,845.77
Total 36,396,018.29 36,396,018.29
The company join the pension and unemployment plan in accordance with the state regulation, and
therefore, the company makes monthly contribution and bears no any other obligation other than the
monthly contribution. Accordingly the contribution will be expensed to the profit and loss or the cost
of assets when incurs.
(4) Other explanatory of the employee’s payable
There was no amount delay paid at the end of the current period.
24. Tax payable
Item Closing Balance Opening Balance
Value-added tax 7,442,531.84 6,680,785.40
Business tax 1,621,471.10
Enterprise income tax 6,950,159.91 4,876,229.11
Individual income tax 491,249.24 394,393.08
City maintenance and construction tax 517,934.50 722,295.23
Real estate tax 542,956.99 233,857.61
Land use tax 553,224.98 553,224.98
Education surcharge 369,475.87 443,830.75
River toll fee 965,963.53 7,682.90
Safeguard fund for disables 580.00 680.00
Stamp duty 280,186.17 167,128.20
Total 18,114,263.03 15,701,578.36
25. Dividend payable
Item Closing Balance Opening Balance Reasons
Some shareholders
Ordinary share dividend 863,516.60 533,156.00 not claimed.
Total 863,516.60 533,156.00
92
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The closing balance increased by 61.96% in comparison with the opening balance due to some
shareholders not claimed.
26. Other accounts payable
(1) Other payables categorized by payments nature
Payments nature Closing Balance Opening Balance
Restricted share buy back 67,615,856.00 39,503,800.00
Loan from non-financial institutes 6,700,000.00 18,200,000.00
Cash pledge and security deposit 8,383,699.21 14,199,502.52
Apply for reimbursement and unpaid 7,473,031.32 17,038,250.51
Cash from related parties 566,240.01 627,014.92
Receipts under custody 12,237,893.26 9,255,791.05
Others 2,286,168.76 1,065,931.15
Total 105,262,888.56 99,890,290.15
(2) Significant other payables with age over 1 year
Name of company Closing Balance Reason of unpaid or not carried forward
Restricted share buy back 16,930,200.00 Not reach the return condition of contract
Total 16,930,200.00
27. Long-term loan
(1) Category of long-term loan
Category Closing Balance Opening Balance
Guarantee loan 160,000,000.00
Total 160,000,000.00
Guokaifazhan fund give support to the company’s intelligent and green equipment of cold chain
and service industry base project and provide special fund to the company’s holding shareholder,
Bingshan Group. The fund is 0.16billion Yuan with 10year’s expiration at 1.2% rate. Once the fund
arrives, Bingshan Group will give it to the company at the same rate of 1.2% in lump sum. The
above fund needed to be warranted by the company. The guarantee seems to be given for the
holding shareholder in the form, but it is for the company itself in nature.
28. Deferred income
(1) Category of deferred income
93
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Opening
Increase Decrease Closing Balance Formation Basis
Balance
Asset related 49,378,296.00 9,683,995.00 1,665,672.00 57,396,619.00
Revenue
related
Total 49,378,296.00 9,683,995.00 1,665,672.00 57,396,619.00 —
(2) Government subsidy project
Recorded into Related
Government subsidy Opening Balance Other
Increase non -operation Closing Balance with
item Change
income asset/equity
Subsidy fund for highly
effective heat pump and 3,704,296.00 551,672.00 3,152,624.00 asset
related system
Contribution to subsidiary 45,674,000 00 1,114,000.00 44,560,000.00 asset
company relocation
Application of NH3 and
CO2 instead of R22
9,683,995.00 9,683,995.00 asset
screw refrigerating
machine combined
condensing unit
Total 49,378,296.00 9,683,995.00 1,665,672.00 57,396,619.00 -
29. Share capital
Increase/decrease（+、-）
Opening New share Closing
Item Share Transfer from Subtotal
balance issued others balance
dividend capital reserve
Total share capital 360,164,975.00 71,529,096.00 180,082,487.00 251,611,583.00 611,776,558.00
The general meeting for 2015 fiscal year held on 21st April 2016 approved the profit distribution policy
for the year of 2015, which agrees the profit distribution is based on the total 360,164,975 number of
shares as share capital, paid out share dividend of 5 ordinary shares for every 10 shares through capital
reserve. The policy stated above was fully implemented on 5th May 2016, and the newly increase
number of shares was altered to 180,082,487.00shares.
The 17th meeting of the 6th generation of board was held on 4th June 2015 and the 2nd interim
94
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
shareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the proposal of
non-public offering of ‘A shares’. The company implemented the post meeting procedures for China’s
Securities Regulatory Commission, which is regarding adjustment of bottom price and the number of
the shares issued after the implementation of profit distribution policy of 2015 in May, 2016. The
company issued the non-public offering of 58,645,096 numbers of ‘A shares’ to 7 investors, and as a
result, the total share capital of the company increased 598,892,558Yuan, and the share premium of
502,636,258.34Yuan is recognized in the capital reserve for the fund received actually after any issuing
expense less share capital at par value. The share capital stated above has been verified by DaHua
Certified Public Accountants, and has been issued the capital verification report Dahuayanzi
[2016]000457 on 31st May 2016.
According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration Company Limited for
the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting authorized the board of
directors to implement the Restricted Share Incentive Plan’ approved on the 3rd provisional general
meeting held on 13th September 2016, the 9th meeting of the 7th generation of board deliberated and
passed the ‘Proposal about granting the restricted shares to incentive targets’ on September 20th , 2016
and set 20th September 2016 as share granted date, and granted 12,884,000 numbers of restricted shares
to 188 incentive targets at granted price of 5.62Yuan per share. By 22nd November, 2016, the company
has actually received the new registered share capital of 72,420,220,00Yuan subscribed by incentive
targets, within this amount, in fact, 12,884,000Yuan are newly increased registered share capital, and
59,524,080.00Yuan is the excessive part of the actual subscribed fund over newly increased registered
share capital as share premium and record into capital reserve. The share capital stated above has been
verified by DaHua Certified Public Accountants, and has been issued the capital verification report
Dahuayanzi [2016]001138 on 23rd November, 2016.
30. Capital reserves
Items Opening Balance Increase Decrease Closing Balance
Share premium 550,973,185.90 567,605,588.08 180,141,811.53 938,436,962.45
Other capital reserves 79,291,806.05 12,272,305.75 7,314,300.00 84,249,811.80
Total 630,264,991.95 579,877,893.83 187,456,111.53 1,022,686,774.25
Share premium decreased this year mainly due to the reserve transfer to share capital, refer to note
VI.29 share capital for details.
Share premium increased because the company issued the non-public offering of 58,645,096 numbers
of ‘A shares’ to 7 investors and granted12,884,000 numbers of restricted shares to 188 incentive
targets according to the restricted share incentive plan made in 2016, refer to note VI.29 share capital
for details.
95
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Other capital reserve is the expense for share incentive plan and the proportion of change in capital
reserve of investee under equity method enjoyed by the company.
31. Treasury Share
Items Opening Balance Increase Decrease Closing Balance
Share incentive
buy-back 39,503,800.00 50,685,656.00 22,573,600.00 67,615,856.00
Total 39,503,800.00 50,685,656.00 22,573,600.00 67,615,856.00
The company implements restricted share incentive plan and recognizes buy-back obligation as liability.
At the year end, treasure stock is recognized based on the numbers of restricted share in the vesting period
and buy back price agreed in the share incentive plan.
96
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2016
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
32. Other comprehensive income
2016
Opening Closing
Items Amount for the Less：Previously recognized in Less： After-tax attribute
Balance After-tax attribute to Balance
period before income profit or loss in other income to minority
the parent company
tax comprehensive income tax shareholder
I. Later can’t reclassified into profit and
loss of other comprehensive income
Recalculate the movement of net asset and
net liability of defined benefit plan
Proportional other comprehensive income of
investee which is not reclassified into income
statement under equity method
II. Later reclassified into profit and loss of
589,988,118.05 -134,168,362.59 24,180,431.94 -158,348,794.53 431,639,323.52
other comprehensive income
Proportional other comprehensive income of
investee which is reclassified into income 2,768,286.72 3,160.87 -3,160.87 2,765,125.85
statement under equity method
Changes in fair value recognized in gains and
losses of the available-for-sale financial 587,219,831.33 -134,168,362.54 24,177,271.07 -158,345,633.66 428,874,197.67
assets
Changes in gains and losses of the
available- for –sale financial asset
reclassified by held for maturity investment
The effective part of the gains and losses of
the cash flow hedging
Foreign currency translation differences of
financial statements
Other comprehensive income total 589,988,118.05 -134,168,362.59 24,180,431.94 -158,348,794.53 431,639,323.52
97
Dalian Refrigeration Co., Ltd. 2016 Annual Report
33. Special Reserve
Items Opening Balance Increase Decrease Closing Balance
Safety production cost 1,982,950.50 1,982,950.50
Total 1,982,950.50 1,982,950.50
34. Surplus reserves
Item Opening Balance Increase Decrease Closing Balance
Statutory surplus reserve 285,277,941.21 14,604,114.85 299,882,056.06
Discretionary surplus reserve 295,491,798.95 25,204,992.51 320,696,791.46
Total 580,769,740.16 39,809,107.36 620,578,847.52
The company made profit distribution within the reporting period. According to the 2015 annual
meeting, 20% of net profit in the 2015 fiscal annual report is provided for discretionary surplus
reserve of 25.205million Yuan. In the meanwhile, 10% of net profit of parent company is provided
for statutory surplus reserve of 14.6041million Yuan.
35. Undistributed profits
Item 2016 2015
Closing balance of 2015 525,925,066.25 486,167,740.13
Add: Adjustments to the opening balance of undistributed profits - -
Including: additional retrospective adjustments according
- -
to the new accounting standards
Change on accounting policy - -
Correction of prior period significant errors - -
Change on combination scope under same control - -
Other factors - -
Opening balance of 2016 525,925,066.25 486,167,740.13
Add: net profit attributable to shareholders of parent company
178,632,660.24 129,947,307.39
in the year
Less: Provision for statutory surplus reserves 14,604,114.85 12,602,496.26
Provision for any surplus reserves 25,204,992.51 22,378,995.91
Provision of general risk
Dividends payable for common shares 36,016,497.50 54,024,746.25
Share dividends -
Employee welfare fund 1,183,742.85
Closing balance of 2016 628,732,121.63 525,925,066.25
36. Operating revenue and cost
Items 2016 2015
98
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Sales revenue Cost of sales Sales revenue Cost of sales
Revenue from principle
1,759,247,556.50 1,448,130,516.25 1,590,994,011.67 1,299,526,134.12
operation
Revenue from other
20,251,670.14 10,465,820.28 16,524,427.94 10,317,677.51
operation
Total 1,779,499,226.64 1,458,596,336.53 1,607,518,439.61 1,309,843,811.63
37. Operating taxes and surcharges
Items 2016 2015
Business tax 792,351.26 2,923,558.17
City construction tax 5,523,384.02 5,537,296.43
Education surcharge 3,882,593.67 3,961,222.83
Dike maintenance fee 75,670.03
Property tax 2,845,708.77
Land use tax 3,267,248.67
Stamp duty 1,443,497.32
Vehicle and vessel tax 4,177.44
Other 90,505.35
Total 17,758,961.15 12,588,252.81
In accordance with the announcement of Caikuai No.22 [2016] by National Finance Department
regarding “Accounting on Value Added Tax”, propety tax, land use tax, vehicle and vessle tax and
stampt duty tax incurred since May 1st, 2016, previously accounted in the administration account are
adjusted to “tax and surtax” account
38. Selling expenses
Items 2016 2015
Handle official business expense 12,181,560.81 11,068,186.75
Employee benefit 31,495,022.77 35,936,748.51
Depreciation expense 405,097.18 464,268.28
Transportation expense 9,000,944.98 8,803,297.34
Business entertaining expense 7,767,799.36 7,139,713.17
Travel expense 9,582,123.03 10,734,718.12
Maintenance and repair expense 8,968,832.57 3,731,758.17
Advertisement and bids expense 748,945.76 470,935.68
Other expense 1,406,702.18 1,750,129.96
Total 81,557,028.64 80,099,755.98
39. Administrative expenses
99
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Items 2016 2015
Official expense 13,906,553.31 15,237,435.94
Employee benefit 124,498,741.29 113,018,720.80
Depreciation expense 8,833,292.93 7,578,564.10
Transportation expense 175,434.61 5,006.00
Business entertaining expense 3,485,657.61 3,089,233.55
Travel expense 3,332,827.63 3,777,397.06
Maintenance and repair expense 5,542,555.91 4,705,156.18
Advertisement expense 257,438.47 425,141.71
Other taxes and fee 5,528,042.75 9,424,970.21
Insurance expense 941,523.19 1,068,219.27
Technology development expense 16,843,552.24 17,126,086.75
Long-term assets amortization 4,874,233.44 4,640,649.75
Design consultant and test service expense 4,513,040.03 1,755,118.29
Safety production cost 5,683,421.94 2,382,233.92
Other expense 2,546,109.49 2,812,661.96
Total 200,962,424.84 187,046,595.49
40. Financial expenses
Items 2016 2015
Interest expenses 5,379,674.13 5,362,949.64
Less: Interest income 2,955,342.17 6,592,204.15
Add: Exchange loss 391,467.16 186,879.42
Add: Others expenditure 1,779,631.72 1,172,689.75
Total 4,595,430.84 130,314.66
Finance expense increased3,426.41% % due to the interest income fall.
41. Assets impairment losses
Items 2016 2015
Loss of bad debts 17,651,775.24 16,646,342.24
Provision for inventory impairment 477,284.08
Provision for fixed assets impairment -
Total 17,651,775.24 17,123,626.32
42. Investment income
Items 2016 2015
Long-term equity investment gain under equity
method 130,104,484.86 125,543,630.87
100
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Gain from disposing long-term equity investment
3,160.87
Investment gain from FV through P&L during the
holing period
Investment gain from disposal of FV through P&L
Investment gain from held to maturity assets during
holding period
Gain from holding of financial assets available for sale 16,000,450.40 3,364,489.50
Gain from disposal financial assets available for sale 27,629,395.44
After losing control , gain on the remaining
shareholding revaluation
Total 173,737,491.57 128,908,120.37
Investment income increased 34.78% because the company received the dividend from holding
available for sale financial asst, Guotaijunan and sold part of Guotaijunan’s share.
Collection of investment income is not significantly restricted.
43. Non-operating income
(1) Non-operating income list
Amounts recognized into
Item 2016 2015 current non-recurring
profit or loss
Gains on disposal of non-current assets 1,182,803.71 167,463.99 1,182,803.71
Including: gains on disposal of fixed
1,182,803.71 167,463.99 1,182,803.71
assets
gains on disposal of intangible assets
Default charge and penalty 294.915.22
Income from debt restructuring 229,833.00 229,833.00
Government grants 6,088,514.51 4,105,114.38 3,765,464.60
Debt need not paid 2,630,968.84
Others 31,596,475.48 260,901.11 31,596,475.48
Total 39,097,626.70 7,459,363.54 36,774,576.79
(2) Government subsidy list
With
Item 2016 2015
asset/income
Subsidy for 2014 pioneer from Dalian Foreign Trade Bureau 42,000.00 Income
Aid from Dalian Intellectual Property Service Centre 5,000.00 Income
Allowance for exporting from new &high technology zone of Income
Dalian 27,318.37
Subsidy for overseas exhibition Income
60,000.00
CDPF and centers for disease service subsidies Income
20,697.00
Subsidy of 2014 economic support policy Income
30,000.00 43,400.00
101
Dalian Refrigeration Co., Ltd. 2016 Annual Report
With
Item 2016 2015
asset/income
Subsidy for social security Income
11,165.00
Taxes refund Income
1,330,480.25 499,945.82
Liaoning self-owned brand development project Income
270,000.00
Subsidy of East and West Lake District Finance Bureau Science and Income
technology innovation 169,000.00
East and West Lake District Economic and Information Technology Income
Innovation project funding 114,000.00
Small and medium enterprises in Liaoning province "specialization Income
special" product project 30,000.00
Stabilization subsidy Income
2,474,362.26
Aid for patent from Wuhan Intellectual Property Bureau Income
5,000.00
Project #863, large quantity seawater precooling 1,696,490.19 Income
Subsidy fund for highly effective heat pump and related system 551,672.00 585,098.00 Asset
Contribution to subsidiary company relocation 1,114,000.00 1,114,000.00 Asset
Total 6,088,514.51 4,105,114.38
(3)Explanatory of the non-operating income
Non-operating income this year increased424.14% comparing with last period, because the company
acquired minority shareholding of Dalian Xinminghua Electrical Technology Co., Ltd and cost of
combination on the acquisition date is less than the proportion of shareholding of the acquired
company’s fair value of identifiable net asset. The difference is 30,334,841.93 Yuan and explained
in the Note VII,1.(2) cost of combination and goodwill.
44. Non-operating expenses
Amounts recognized into
Item 2016 2015 non-recurring profit or
loss for the year
Loss on disposal of non-current assets 22,748,252.08 229,182.73 24,485,454.05
Including: Loss on disposal of fixed assets 22,748,252.08 229,182.73 24,485,454.05
Loss on disposal of intangible assets
Loss from debt restructuring 586,377.00
Penalty loss 8,316.69
Outward donation 60,000.00 60,000.00
Others 225,318.73 282,035.87 225,318.73
Total 23,033,570.81 1,105,912.29 24,770,772.78
Non-operating expense this year increased 1,982.77% due to increased disposal of fixed assets in the
old factory.
45. Income tax expenses
102
Dalian Refrigeration Co., Ltd. 2016 Annual Report
(1) Income tax expenses
Items 2016 2015
Current income tax expenses 10,166,983.90 8,782,088.36
Deferred income tax expenses -3,917,992.76 -4,049,456.17
Total 6,248,991.14 4,732,632.19
(2) Adjustment process of accounting profit and income tax expense
Items 2016
Consolidated total profit this year 188,178,816.86
Income tax expenses at applicable tax rate 28,226,822.53
Effect on subsidiary applied to different tax rate 1,741,606.36
Effect on prior period income tax -664,367.17
Effect on non-taxable income -19,515,672.73
Effect on non-deductible cost ,expense and loss 1,188,640.84
Effect on use of deductible loss from unrecognized deferred tax assets in the prior period
Effect on temporary difference or deductible loss from unrecognised deferred tax assets this year -4,431,861.80
Accelerated R&D expense and disables salary -296,176.89
Income tax expense 6,248,991.14
(3) Other explanation
Income tax expenses this year increased 32.84% due to income tax rising
46. Other comprehensive income
Refer to the note VI.32 other comprehensive income for details.
47. Notes to cash flow statement
(1) Cash receipt/payment of other operating/investing/financing activities
1) Other cash received relating to operating activities
Items 2016 2015
Government grants 13,433,735.17 989,230.70
Received travel expense refund 2,047,713.33 3,352,659.29
Deposit given back 49,655,835.40 25,139,681.07
Receivable from relate 1,161,856.91
Interest income 2,390,561.61 11,419,665.11
Others 2,535,341.43 2,358,819.33
Total 71,225,043.85 43,260,055.50
2) Other cash paid relating to operating activities
103
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Items 2016 2015
Business travel borrowing 1,035,467.05 3,325,287.08
Deposit paid 55,026,146.60 26,407,383.40
Expenditure 87,702,948.38 79,560,411.38
Payment to related companies 519,142.61
Bank handling charges 1,494,655.69 1,123,590.67
Others 1,532,563.78 1,311,099.46
Total 146,791,781.50 112,246,914.60
3) Others cash received relating to financing activities
Items 2016 2015
Guarantee money took back 20,665,689.93 32,953,876.63
Return fragmentary dividend of listed company 45,137.75
Total 20,710,827.68 32,953,876.63
4) Others cash paid relating to financing activities
Items 2016 2015
Interests on discount of bill acceptance 284,976.03 45,446.93
Payment of guarantee money 21,576,815.56 20,665,689.93
Total 21,861,791.59 20,711,136.86
(2) Supplementary information of consolidated cash flow statement
Items 2016 2015
1. Adjusting net profit into cash flows of operating activities: —— ——
Net profit 181,929,825.72 131,215,022.15
Add: Provision for impairment of assets 17,651,775.24 17,123,626.32
Depreciation of fixed assets,Amortization ofmineral resources,
40,468,057.28
and biological assets 38,335,936.87
Amortization of intangible assets 4,997,057.34 4,507,956.43
Amortization of long-term deferred expenses 1,408,785.18 1,591,669.04
Losses on disposal of fixed assets, intangible assets, and long-term
-1,182,803.71 11,212.67
assets (income listed with”-”)
Losses on write-off of fixed assets (income listed with”-”) 22,748,252.08 50,506.07
Change of fair value profit or loss -
Financial expense (income listed with”-”) 5,535,429.16 5,560,290.68
Investment loss (income listed with”-”) -173,737,491.57 -128,908,120.37
Decrease of deferred tax assets(increase listed
-3,991,598.29 -4,049,456.17
with”-”)
104
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Increase of deferred tax liabilities(decrease
listed with”-”)
Decrease of inventories (increase listed with”-”) -54,076,387.86 71,261,447.45
Decrease of operating receivables (increase listed
13,828,579.47 -114,889,219.96
with”-”)
Increase of operating payables (decrease listed
-75,512,968.26
with”-”) -84,569,865.56
Others 12,227,168.00 12,190,520.00
Net cash flows arising from operating activities -7,706,320.22 -50,568,474.38
2. Significant investment and financing activities unrelated to —— ——
cash income and expenses
Liabilities transferred to capital - -
Convertible bonds within 1 year - -
Financing leased fixed assets - -
3. Net increase (decrease) of cash and cash equivalent —— ——
Closing balance of cash 655,747,990.20 221,724,134.60
Less: Opening balance of cash 221,724,134.60 475,557,589.39
Add: Closing balance of cash equivalent
Less: Opening balance of cash equivalent
Net increase of cash and cash equivalent 434,023,855.60 -253,833,454.79
(3) Net cash paid for acquiring subsidiaries
Items 2016
Payment of Net cash and cash equivalent under the business merger during the year 24,370,918.03
Including：Dalian Xinminghua Electrical Technology Co., Ltd. 21,535,918.03
Dalian Bingshan Security Leisure Industrial Engineering Co., Ltd 2,835,000.00
less： Net cash and cash equivalent held by subsidiaries on the date of purchase 44,259,400.93
Including：Dalian Xinminghua Electrical Technology Co., Ltd. 43,551,643.42
Dalian Bingshan Security Leisure Industrial Engineering Co., Ltd 707,757.51
Net cash paid for acquiring subsidiaries -19,888,482.90
(4) Cash and cash equivalents
Items 2016 2015
Cash 655,747,990.20 221,724,134.60
Including: Cash on hand 83,511.72 57,023.71
Bank deposit used for paying at any moment 655,664,478.48 221,667,110.89
Closing balance of cash and cash equivalents 655,747,990.20 221,724,134.60
48. The assets with the ownership or use right restricted
105
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Items 2016 Reasons
Monetary fund 23,976,815.56 Guarantee money
Notes Receivable 15,532,736.64 Pledge
Fixed assets 101,240,384.56 Mortgage Loan
Intangible assets 52,535,598.00 Mortgage Loan
Total 193,285,534.76
49. Monetary category of foreign currency
(1) Monetary category of foreign currency
Item Closing Balance (foreign Closing Balance (RMB)
Exchange Rate
currency)
Cash 876,704.32
Including：USD 1,954.72 6.9370 13,559.89
JPY 410,894.00 0.0596 24,489.28
GBP 98,556.32 8.5094 838,655.15
Accounts receivable 674,413.43
Including: GBP 79,255.11 8.5094 674,413.43
Accounts payable 309,736.03
Including: GBP 36,399.28 8.5094 309,736.03
VII. Change of Consolidation Scope
1. Consolidation not under the same control
（1）Consolidation not under the same control during the year
Percentage（%） Method of
Date of the Cost of the share Purchasing
Name of the acquiree of shareholding acquiring
share acquired acquired date
acquired share
Dalian Xinminghua
2016.07.31 21,535,918.03 70 Cash 2016.07.31
Electrical Technology
Co., Ltd.
Dalian Bingshan
Security Leisure
Industrial Engineering 2016.07.08 5,670,000.00 50 Cash 2016.07.08
Co., Ltd
106
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Income of acquiree
from purchasing date Net profit from
Name of the acquiree Recognition of date of purchasing until the year end purchasing date until
the year end
Dalian Xinminghua Board of directors and respective
authorities approved the acquisition, 32,557,210.04 157,544.92
Electrical Technology
equity transfer procedures have been
Co., Ltd.
completed, the payment has been
Dalian Bingshan Security settled, obtain the control over the
Leisure Industrial financial and operating policies 4,956,230.25 -602,397.87
Engineering Co., Ltd actually
（2） Cost of consolidation and goodwill
Dalian Bingshan Security
Items Dalian Xinminghua Electrical
Leisure Industrial
Technology Co., Ltd.
Engineering Co., Ltd
Cash 21,535,918.03 2,835,000.00
FV of non-monetary assets
FV of liability issued or assumed
FV of equity share issued
FV of contingent consideration
Fair value of the share held before the purchasing date 22,230,325.69 2,524,548.42
Total cost of consolidation 43,766,243.72 5,359,548.42
Loss: proportion of shareholding of fair value of 74,101,085.65 5,049,096.85
acquired identifiable net assets
Goodwill -30,334,841.93 310,451.57
The company acquired Dalian Xinminghua Electronic Technique Co.,LTD’s shareholding and obtained
control over it. The transfer price of shares is based on the net asset of Dalian Xinminghua Electronic
Technique valued on 31th July 2016. Having negotiated with Sanyo Electronic Corporation, the shareholder
of Dalian Xinminghua Electronic Technique Co., Ltd, the company paid 43,766,243.72 Yuan consideration
given for the acquisition based on the combination cost and will enjoy the proportion of shareholding of the
acquiree’s identifiable net asset measured at fair value on the acquisition date, which is 74,101,085.65.Yuan.
Thus, the combination cost on the acquisition day is less than the identifiable net asset of
30,334,841.93Yuan.
The company acquired Dalian Bingshan Security Leisure Industrial Engineering Co., Ltd’s
shareholding and obtained control over it. The transfer price of shares is based on the net asset of
Dalian Bingshan Security Leisure Industrial Engineering Co., Ltd valued on 30th June 2016. Having
negotiated with Baoan Hydraulic Engineering (China) Limited Company, the shareholder of Dalian
Bingshan Security Leisure Industrial Engineering Co., Ltd, the company paid 5,359,548.42Yuan
consideration given for the acquisition based on the combination cost and will enjoy the proportion of
107
Dalian Refrigeration Co., Ltd. 2016 Annual Report
shareholding of the acquiree’s identifiable net asset measured at fair value on the acquisition date,
which is 5,049,096.85Yuan. Thus, the goodwill arising from acquisition is 310,451.57Yuan on the
acquisition day.
（3） Acquirees’ identifiable assets and liabilities of on acquisition date
Dalian Xinminghua Electronic Dalian Bingshan Security Leisure
Technique Co.,LTD Industrial Engineering Co., Ltd
Items
Fair value on Book value on Fair value on Book value on
acquisition date acquisition date acquisition date acquisition date
Assets： 88,437,308.03 88,437,308.03 7,483,923.33 7,483,923.33
Cash and cash in bank 43,551,643.42 43,551,643.42 707,757.51 707,757.51
Notes receivable 300,000.00 300,000.00
Accounts Receivable 17,986,854.26 17,986,854.26 3,957,581.98 3,957,581.98
Prepayment 2,133,832.85 2,133,832.85 709,455.64 709,455.64
Other receivable 233,706.59 233,706.59 475,642.27 475,642.27
Inventories 14,419,691.66 14,419,691.66 1,465,964.55 1,465,964.55
Other current assets 815,381.00 815,381.00
Fixed assets 8,996,198.25 8,996,198.25 97,635.54 97,635.54
Deferred tax assets 69,885.84 69,885.84
Liabilities： 14,336,222.38 14,336,222.38 2,434,826.49 2,434,826.49
Accounts Payable 9,287,811.98 9,287,811.98 2,329,857.29 2,329,857.29
Other payable 3,430.29 3,430.29
Tax payable -597,911.96 -597,911.96 12,058.73 12,058.73
Employee payable 5,312,531.47 5,312,531.47 92,910.47 92,910.47
Dividend payable 330,360.60 330,360.60
Deferred tax liabilities
Net asset 74,101,085.65 74,101,085.65 5,049,096.84 5,049,096.84
Less: minority interest
Net asset available 74,101,085.65 74,101,085.65 5,049,096.84 5,049,096.84
（4） Gain or loss from the remeasurement of share held at fair value prior to purchasing date
Method and main
Gain or loss from The amount of other
Book value of the Fair value of the hypothesis of the
the comprehensive
original original purchasing date’s
remeasurement of income transferred
Name of the acquiree shareholding held shareholding held fair value of the
share held at fair to the investment
prior to acquisition prior to acquisition original equity held
value prior to income prior to the
date date prior to the
acquisition date date of purchase
purchasing date
Dalian Xinminghua 22,230,325.69 22,230,325.69 The fair value of 3,160.87
108
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Method and main
Gain or loss from The amount of other
Book value of the Fair value of the hypothesis of the
the comprehensive
original original purchasing date’s
remeasurement of income transferred
Name of the acquiree shareholding held shareholding held fair value of the
share held at fair to the investment
prior to acquisition prior to acquisition original equity held
value prior to income prior to the
date date prior to the
acquisition date date of purchase
purchasing date
Electronic Technique
identifiable net assets
Co.,LTD
is measured at its
book value
2. Other reasons for change on consolidation scope
The board meeting of Dalian Bingshan Group Engineering Co., Ltd, a subsidiary of the company,
approved Dalian Bingshan Group Engineering Co., Ltd and Shanghai QingNeng Cold Chain Equipment
Co., Ltd jointly invested and constructed Shanghai Bingshan Technical Service Co., Ltd. Dalian
Bingshan Group Engineering Co., Ltd invested 5,100,000Yuan, and held 51% shareholding. Shanghai
Bingshan Technical Service Co., Ltd has been formally operated by 31st December 2016
VIII. Interest in other entity
1. Equity of subsidiaries
(1) Organization structure of group company
Main business Registered Shareholding (%) Obtaining
Name of subsidiaries Business nature
address address Direct Indirect method
Dalian Bingshan Group Engineering
Dalian Dalian Installation 100 Establish
Co., Ltd.
Dalian Bingshan Group Sales Co., Ltd. Dalian Dalian Trading 100 Establish
Dalian Bingshan Air-conditioning
Dalian Dalian Manufacturing 70 Establish
Equipment Co., Ltd.
Dalian Bingshan JiaDe Automation Co.,
Dalian Dalian Manufacturing 100 Establish
Ltd.
Dalian Bingshan Lingshe Quick Freezing
Dalian Dalian Manufacturing 100 Establish
Equipment Co., Ltd.
Wuhan New World Refrigeration
Wuhan Wuhan Manufacturing 100 Merger
Industrial Co., Ltd.
Bingshan Technical Service （Dalian）
Dalian Dalian Services 100 Establish
Co.,Ltd.
Dalian Xinminghua Electrical Technology
Dalian Dalian Electronic 100 Merger
Co., Ltd
109
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Name of subsidiaries Main business Registered Business nature Shareholding (%) Obtaining
address address method
Dalian Niweisi LengNuan Techonoligy
Dalian Dalian Manufacturing 55 Merger
Co., Ltd.
Wuhan New World Air-conditioning Installation
Wuhan Wuhan 100 Establish
Refrigeration Engineering Co., Ltd
Ningbo Bingshan Air-conditioning
Ningbo Ningbo Installation 51 Establish
Refrigeration Engineering Co., Ltd
Dalian Bingshan Security Leisure
Dalian Dalian Installation 100 Merger
Industrial Engineering Co., Ltd
Shanghai Bingshan Technical Service Co.,
Shanghai Shanghai Services 51 Establish
Ltd
（1） All the proportion of shareholding in subsidiaries were the same with voting proportion；
（2） The company held over 50% voting right in subsidiaries；
（3） The company could control these subsidiaries with over 50% voting right
（4） Change on the shareholding of the subsidiaries is explained in the note II.change on the
combination scope
(2) There is no significant non-wholly-owned Subsidiary
2. Proportion of shareholding in the subsidiary change but still under control.
(1) The situation where owner’s proportion of shareholding has changed in the subsidiary.
The board meeting of directors held on 27th January 2016 approved to have 40% shareholdings of
holding subsidiary, Dalian Bingshan JiaDe Automation Co., Ltd, hence, Dalian Bingshan JiaDe
Automation Co., Lmt has become the Company’s fully owned subsidiary. The transaction stated
above has completed by 31st December 2016. Hence, the Company holds 100% shareholdings of
Dalian Bingshan JiaDe Automation Co., Ltd when preparing the consolidated statements.
The 15th meeting of the 6th generation of board approved that Dalian Bingshan Lingshe Quick
Freezing Equipment Co., Ltd, a holding subsidiary, acquired Dalian Bingshan Metal Processing
Co., Ltd which is a fully owned subsidiary. Before the merger, the Company held 70%
shareholding of Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd., and held 100%
shareholding of Dalian Bingshan Metal Processing Co., Ltd. After the merger, Dalian Bingshan
Quick Freezing Equipment Co., Ltd would be the survival company, and the shareholding held by
the Company increased from 70% to 95%. The 6th meeting of the 7th generation of board of
directors approved to accept the 5% of shareholding transfer from Dalian Bingshan Lingshe Quick
Freezing Equipment Co., Ltd, a holding subsidiary, hence, Dalian Bingshan Lingshe Quick
110
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Freezing Equipment Co., Ltd has become the fully owned subsidiary after transfer. The transaction
stated above has completed by 31st December 2016. Hence, the Company holds 100% shareholding
of Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd when preparing the consolidated
statements.
(2) Effect on the change of proportion of shareholdings in the subsidiaries
Dalian Bingshan JiaDe Dalian Bingshan Lingshe Quick
Items
Automation Co., Ltd Freezing Equipment Co., Ltd.
Cash 5,350,000.00 1,859,709.19
Total of acquisition cost/disposal consideration 5,350,000.00 1,859,709.19
Less: proportion of shareholdings of net asset in
8,335,136.96 1,916,249.94
the subsidiary when acquired or disposed off
Difference -2,985,136.96 56,540.75
Including：Capital surplus adjustment -2,985,136.96 56,540.75
3. Equity in joint venture arrangement or associated enterprise
(1) The important of joint ventures or affiliated companies
Shareholding (%)
Name of joint ventures or affiliated Main business Registered Accounting
Business nature
companies address address methods
Direct Indirect
Affiliated companies:
Jiangsu Jingxue Freezing Equipment
Changzhou Changzhou Manufacturing 29.21 Equity method
Co., Ltd.
Dalian Fuji Bingshan Vending Machine
Dalian Dalian Manufacturing 49 Equity method
Co., Ltd.
Keinin-Grand Ocean Thermal
Dalian Dalian Manufacturing 20 Equity method
Technology (Dalian) Co., Ltd
Panasonic Compressor (Dalian) Co., Ltd Dalian Dalian Manufacturing 40 Equity method
The company assumes the affiliated as significant party either when the investment income from investee
111
Dalian Refrigeration Co., Ltd. 2016 Annual Report
presents 10% of the parent’s net profit or the proportion of shareholding of the investee’s net asset represents
10% of the parent’s shareholder equity.
1) The company has the same percentage of shareholding and voting right in joint-venture or affiliated
company.
2) The company doesn’t have affiliated company which has important influence although being held less
than 20% voting rights.
3) The company doesn’t have joint venture or affiliated companies which have no significant influence
although being held 20% or more voting rights.
（2）The key financial information of affiliated companies
2016
Jiangsu Jingxue Keinin-Grand
Dalian Fuji Panasonic
Items Freezing Ocean Thermal
Bingshan Vending Compressor
Equipment Co., Technology
Machine Co., Ltd. (Dalian) Co., Ltd
Ltd. (Dalian) Co., Ltd
Current assets 544,766,000.08 280,972,490.97 324,274,111.23 1,368,463,901.88
Includig: Cash and cash
78,043,080.32 102,873,995.95 48,954,435.83 343,053,793.36
equivalents
Non-current assets 190,982,542.93 151,754,975.82 86,150,062.42 350,108,180.41
Total assets 735,748,543.01 432,727,466.79 410,424,173.65 1,718,572,082.29
Current liabilities 349,389,866.24 101,199,564.85 145,662,104.80 495,843,809.25
Non-current liabilities 3,963,050.80 3,853,400.89
Total liabilities 353,352,917.04 105,052,965.74 145,662,104.80 495,843,809.25
Minority interests 432,553.72
Equity to the parent company 382,395,625.97 327,674,501.05 264,762,068.85 1,222,728,273.04
Net assets calculated
according to the shareholding 111,579,052.67 160,560,505.51 52,952,413.77 489,091,309.22
proportions
Adjusting events
—Goodwill 39,948,654.75
—Unrealized profits of
insider trading
--Others -5,087,915.23
Book value of equity
investment of affiliated 151,527,707.42 160,787,194.81 52,952,413.79 484,003,393.99
companies
Fair value of equity
investment with public offer
Operating income 502,464,526.22 453,146,399.31 812,583,118.92 1,752,750,321.32
Financial expense 1,508,553.77 221,715.36 4,115,158.49 -12,526,005.42
Income tax expense 9,163,232.01 9,207,934.91 31,182,502.23 34,756,343.51
Net profit 56,713,066.91 52,088,861.48 92,726,892.48 158,997,350.73
112
Dalian Refrigeration Co., Ltd. 2016 Annual Report
2016
Jiangsu Jingxue Keinin-Grand
Dalian Fuji Panasonic
Items Freezing Ocean Thermal
Bingshan Vending Compressor
Equipment Co., Technology
Machine Co., Ltd. (Dalian) Co., Ltd
Ltd. (Dalian) Co., Ltd
Net profit of discontinuing
operation
Other comprehensive income
Total comprehensive income 56,713,066.91 52,088,861.48 92,726,892.48 158,997,350.73
The current dividends
14,200,000.00 32,400,000.00
received from joint ventures 5,842,400.00
Continued：
2015
Dalian Fuji Bingshan Keinin-Grand Ocean
Items Panasonic Compressor
Vending Machine Co., Thermal Technology
(Dalian) Co., Ltd
Ltd. (Dalian) Co., Ltd
Current assets 361,305,733.51 288,372,485.62 1,394,237,128.94
Including: Cash and cash
111,,996,908.81 36,215,091.45 146,029,500.91
equivalents
Non-current assets 61,629,639.07 96,260,501.77 350,839,627.19
Total assets 422,935,372.58 384,632,987.39 1,745,076,756.13
Current liabilities 188,191,481.16 141,597,811.02 587,437,711.53
Non-current liabilities 3,583,780.65
Total liabilities 191,775,261.81 141,597,811.02 587,437,711.53
Minority interests
Equity to the parent company 231,160,110.77 243,035,176.37 1,157,639,044.60
Net assets calculated according
113,268,454.28 48,607,035.27 463,055,617.84
to the shareholding proportions
Adjusting events
—Goodwill
—Unrealized profits of insider
trading
--Others -5,163,248.92
Book value of equity
investment of affiliated 113,268,454.28 48,607,035.27 457,892,368.92
companies
Fair value of equity investment
with public offer
Operating income 463,077,411.32 680,314,218.23 1,894,363,146.75
Financial expense -828,214.34 4,059,986.27 -1,628,116.62
Income tax expense 10,378,364.63 25,874,457.12 29,912,121.54
Net profit 58,543,688.14 79,365,464.49 161,351,528.59
Net profit of discontinuing
operation
Other comprehensive income
113
Dalian Refrigeration Co., Ltd. 2016 Annual Report
2015
Dalian Fuji Bingshan Keinin-Grand Ocean
Items Panasonic Compressor
Vending Machine Co., Thermal Technology
(Dalian) Co., Ltd
Ltd. (Dalian) Co., Ltd
Total comprehensive income 58,543,688.14 79,365,464.49 161,351,528.59
The current dividends received
5,314,796.52 9,600,000.00 34,000,000.00
from joint ventures
（3） Summary financial information of insignificant affiliated companies
Items 2016 2015
Total book value of investment of
450,033,912.21 448,182,203.86
affiliated companies
The total of following items according to
the shareholding proportions
Net profit 45,249,443.95 36,726,889.29
Other comprehensive income
Total comprehensive income 45,249,443.95 36,726,889.29
（4） No significant restrictions of the ability of affiliated companies transferring funds to the
company.
（5） No excessive loss of affiliated companies.
（6） No commitment related to affiliated company need to be disclosed.
（7） No Contingency related to joint venture or affiliated company need to be disclosed.
4. Structured entity beyond the consolidation scope
There is no structured entity beyond the consolidation scope
IX. Risk Related to Financial Instruments
The main financial instruments held by the group company are cash and cash in bank, accounts
receivable, accounts payable, available-for-sale financial asset and short term loan. The detailed
explanation is referred to this notes No.VI. The related risks of these financial instruments and the
risk management policy conducted to reduce these risks by the group company are introduced as
below. The Group management conducts to manage and monitor these risks exposure and control
these risks under certain risk level.
Objectives and policies of each risk management
The objectives of risk management conducted by the group company are to reach the balance
between risk and profit return by reducing the negative influence to operating performance to the
114
Dalian Refrigeration Co., Ltd. 2016 Annual Report
minimum level as well as maximising the shareholders’ and other investors’ profits. Based on these
objectives, the basic risk management policy is to recognize and analyse all sorts of risk that the
group company faced with, to set up the proper risk tolerance bottom line conducting risk
management, as well as to monitor these risks in a timely and effective manner, and to ensure these
risks under the limit level.
(1) Market risk
1) Exchange rate risk
Most of the company’s business is located in China, and settled with RMB. But the company defined
exchange rate risk of assets, liabilities dominated in foreign currency and future transaction
dominated in foreign currency (mainly including USD,JPY,HKD and GBP). The financial
department of the company monitors the company’s foreign currency transaction and the scale of
foreign assets and liabilities, and decreases exchange rate risk. During the current year the company
didn’t agree any forward foreign exchange contract or currency swap contract .As at 31st December
2016, the company’s assets and liabilities dominated in foreign currency are listed in RMB as
following：
Closing Balance
Items
USD JPY GBP EUR Total
Cash and cash in bank 1,954.72 410,894.00 98,556.32 511,405.04
Accounts receivable 79,255.11 79,255.11
Subtotal 1,954.72 410,894.00 177,811.43 590,660.15
Accounts Payable 36,399.28 36,399.28
Subtotal 36,399.28 36,399.28
The sensitive analysis：
As at 31st December 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, risk of a floating interest rate of financial liabilities
that lead to the company facing cash flow interest rate risk, financial liabilities with a fixed interest rate lead
to the company facing cash flow interest rate risk. The company determined the proportion of fixed interest
rate and floating interest rate according the current market circumstance. The company and Dalian Bingshan
Group Co.,Ltd borrowed long term loan RMB 160,000,000.00 with fixed interest rate. The subsidiary of the
company Wuhan New World Refrigeration Industrial Co., Ltd. borrowed short term loan RMB 45,000,000.00
with fixed interest rate.
115
Dalian Refrigeration Co., Ltd. 2016 Annual Report
The financial department of the company continuously monitors the interest rates level, and the management
would make some adjustment to lower the interest rate risk according to the latest market situation. Climbing
interest rate will increase the cost of newly increased interest-bearing liability and interest expense for
unsettled interest-bearing liability at floating rate and have adverse effect on the business performance.
The sensitive analysis：
As at 31st December 2016, base on the assumption of interest rate change of 50 BP, the company’s net profit
of year 2016 will increase or decrease RMB 651.7thousand Yuan
(2)Credit risk
The credit risk of the company comes from monetary fund, notes receivable, accounts receivable, and other
accounts receivable etc. The management made credit policies and monitored changes of these credit
exposure.
The company's working capital was in bank with higher credit rating, so there was no significant credit risk,
nor significant losses due to the default of other entity. Upper limit policy is adopted to avoid any credit risk
from financial institution.
The company made relevant policy to control credit risk exposure from receivable, other receivable and notes
receivable. The company assess the client’s credit background according to the client’s financial performance,
possibility of obtaining guarantee from the 3rd party, credit record and other factors such as current market.
The company will periodically monitor the credit situation of the client and will take measures such as
prompt letter, shorten credit period or cancel the credit to ensure the overall credit risk within the controllable
scope.
As at 31st December 2016, the top five customers of receivable accounts represent 21.05% of total accounts
receivable, and as at 31st December 2015 that was 14.91%.
Maximum risk exposure assumed by the company is the book value of each individual financial assets
(including derivative instruments) on the balance sheet. Except the financial guarantee stated in the note XIII,
there is no any other guarantee which can put the company into credit risk. The maximum credit risk
exposure coming from above financial guarantee has been disclosed in the note IX on the balance sheet date.
(3) Liquidity risk
Liquidity risk was referred to the risk of shortage of funds incurred when the enterprise fulfill the
obligation of settlement by cash or other financial assets.
The 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 funds.
As at 31st December 2016, the company’s financial assets and financial liabilities in line with non discount
116
Dalian Refrigeration Co., Ltd. 2016 Annual Report
cash flow of the contracts as following：
Closing balance
Items Within 1 year 1-2 years 2-5 years Over 5 years Total
Financial Assets
Cash and cash in bank 679,724,805.76 679,724,805.76
Notes receivable 130,426,225.74 130,426,225.74
Accounts receivable 759,053,298.97 759,053,298.97
Other Receivable 52,982,713.89 52,982,713.89
Available for sale financial
545,565,116.64 545,565,116.64
asset
Financial Liabilities
Short-term loan 45,000,000.00 45,000,000.00
Notes Payable 179,378,767.96 179,378,767.96
Accounts payable 839,079,506.68 839,079,506.68
Other payable 105,262,888.56 105,262,888.56
Employee’s payable 49,117,130.73 49,117,130.73
Long-term loan 160,000,000.00 160,000,000.00
Tax payable 18,114,263.03 18,114,263.03
Dividend payable 863,516.60 863,516.60
(Continued)
Opening balance
1-2 2-5
Items Within 1 year Over 5 years Total
years years
Financial Assets
Cash and cash in bank 244,789,824.53 244,789,824.53
Notes receivable 71,699,517.68 71,699,517.68
Accounts receivable 671,423,836.96 671,423,836.96
Other Receivable 22,755,328.21 22,755,328.21
Available for sale financial
733,275,249.09 733,275,249.09
asset
Financial Liabilities
Short-term loan 82,600,000.00 82,600,000.00
Notes Payable 234,189,011.72 234,189,011.72
Accounts payable 660,398,503.26 660,398,503.26
Other payable 99,890,290.15 99,890,290.15
Employee’s payable 51,857,345.29 51,857,345.29
Long-term loan
117
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Opening balance
1-2 2-5
Items Within 1 year Over 5 years Total
years years
Tax payable 15,701,578.36 15,701,578.36
Dividend payable 533,156.00 533,156.00
X. Disclosure of Fair Value
1. Amount and measurement level of the assets and liabilities measured at fair value at the year end
Fair value at the year end
First level Second level Third level
Items
measurement of fair measurement of fair measurement of fair Total
value value value
Financial assets available 531,653,458.05 531,653,458.05
(1) Investment by debt
instruments
(2) Investment by equity 531,653,458.05 531,653,458.05
instruments
(3) Others
Total assets continuously 531,653,458.05 531,653,458.05
measured at fair value
2. Basis for Market price of first level measurement of fair value
Equity instrument portion of the available for sale financial assets is measured at the unadjusted
closing quoted price on stock market on December 31, 2016.
3. Assets continuously measured at fair value have no switch among different level during the year.
4. Assets and liability are disclosed at FV rather than measured at FV
Assets not measured at FV are: receivable, short-term loan and payables
The difference between the book value of assets and liability mentioned above and fair value is
rather small.
XI. Related Parties Relationship and Transactions
(I) Related parties relationship
1. Parent company and ultimate controller
1) Parent company and ultimate controller
Parent company Registered Business Registered Shareholding Voting power
118
Dalian Refrigeration Co., Ltd. 2016 Annual Report
address nature capital percentage (%) percentage
(%)
Dalian Bingshan
Dalian Manufacture 158,580,000.00 19.96% 19.96%
Group Co., Ltd.
Dalian Bingshan Group Co., Ltd. is a sino –foreign joint venture located No.888 Xinan Road,
Shahekou District, Dalian, China. The legal representive of Dalian Bingshan Group Co., Ltd. is Ji
Zhijian, and the registered capital is RMB158.58 million. The registered business operation period is
from 3rd July 1985 to 2nd July 2035. The business scope include research, development,
manufacture, sales, service and instalment of refrigeration equipment, cooling and freezing
equipement, different size of air-conditioners, petrochemical equipment, electronic and electronic-
control products, home electronic appliance, environment protect equipment and etc. (unless the
licenses needed)
2) The company has no ultimate actual controller.
2. Subsidiaries
Referring to the content in the Note VIII. 1. (1) Organization structure of group company
3. Affiliated company and joint venture
The information of the affiliated company and joint venture please refers to the noteVIII. 3 ‘The
significant affiliated company and joint venture’. The company had transactions with related parties
during the current period or last period, including:
Names of the joint ventures or affiliated company Relationships with the Company
Panasonic Refrigeration (Dalian) Co., Ltd Affiliated company of the Company
Panasonic Cold-chain (Dalian) Co., Ltd Affiliated
Panasonic Compressor (Dalian) Co., Ltd Affiliated
Dalian Honjo Chemical Co., Ltd Affiliated
Keinin-Grand Ocean Thermal Technology (Dalian) Affiliated
Co., Ltd
Dalian Bingshan International Trading Co. , Ltd Affiliated
Beijing Huashang Bingshan Refrigeration and Affiliated
Air-conditioning Machinery Co., Ltd
Dalian Fuji Bingshan Vending Machine Co., Ltd Affiliated
MHI Bingshan Refrigeration (Dalian) Co.,Ltd. Affiliated
Dalian Fuji Iceberg Vending Machine Sales Co., Ltd Affiliated
Jiangsu Jingxue Freezing Equipment Co., Ltd. Affiliated
Panasonic Cooling Machine system (Dalian) co., LTD Affiliated
Wuhan LanNing energy technology co., LTD Affiliated wholly owned subsidiary of the Company
119
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Names of the joint ventures or affiliated company Relationships with the Company
Wuhan Sikafu Power Control Equipment Co., Ltd Affiliated wholly owned subsidiary of the Company
4. Other related parties
Name of related party Related party relationship
Dalian Bingshan Group Refrigeration Equipment Co., Ltd Affiliated company of Dalian Bingshan Group
Dalian Third Refrigeration Equipment Factory Subsidiary of Dalian Bingshan Group
Dalian Bingshan Metal Technology Co., Ltd Affiliated company of Dalian Bingshan Group
Dalian Spindle Cooling Towers Co., Ltd Affiliated company of Dalian Bingshan Group
BAC Dalian Co., Ltd Affiliated company of Dalian Bingshan Group
(II) Related Party transactions
1. The consolidated financial statements are based on the financial statements of individual
subsidiaries which are included in the consolidation scope and prepared after elimination effect
of intra-group transaction.
2. Purchase of goods, offer and receive labour services
1) Purchase of goods/receive labour services
Related party Content 2016 2015
Panasonic Cold-chain (Dalian) Co., Ltd Purchases of goods 134,456,421.45 193,000,774.15
Panasonic cold machine system (dalian) co., LTD Purchases of goods 116,159,861.59
Dalian Bingshan International Trading Co. , Ltd Purchases of goods 88,077,665.44 71,456,746.91
Panasonic Refrigeration (Dalian) Co., Ltd. Purchases of goods 36,625,052.09 15,802,549.92
BAC Dalian Co., Ltd Purchases of goods 32,939,920.88 39,198,256.38
Dalian Bingshan Group Refrigeration Equipment Co.,
Purchases of goods 24,809,044.30 19,240,996.98
Ltd
Jiangsu Jingxue Freezing Equipment Co., Ltd. Purchases of goods 24,371,971.14 11,909,299.18
Wuhan LanNing energy technology co., LTD Purchases of goods 21,429,117.11
Dalian Third Refrigeration Equipment Factory Purchases of goods 5,588,505.15 9,477,468.27
Dalian Spindle Cooling Towers Co., Ltd Purchases of goods 4,621,938.47 1,649,338.45
Beijing Huashang Bingshan Refrigeration and
Purchases of goods 3,803,218.03 1,398,717.87
Air-conditioning Machinery Co., Ltd.
Panasonic compressor (Dalian) Co., Ltd Purchases of goods 3,189,155.55 1,170,571.97
Dalian Bingshan Metal Technology Co., Ltd Purchases of goods 577,427.88 316,910.80
Dalian Fuji Bingshan Vending Machine Co., Ltd Purchases of goods 359,807.67 242,187.94
MHI Bingshan Refrigeration (Dalian) Co.,Ltd. Purchases of goods 30,199.15 125,734.92
Dalian Xinhuaming electrical Technology Co., Ltd. Purchases of goods 266,054.52
Total 497,039,305.90 365,255,608.26
2) Sales of goods/ labour services provision
Related party Content 2016 2015
Panasonic Cold-chain (Dalian) Co., Ltd Sales of goods 111,295,412.53 71,856,798.06
Panasonic Refrigeration (Dalian) Co., Ltd. Sales of goods 76,396,710.08 27,493,069.64
Dalian Bingshan International Trading Co. , Ltd Sales of goods 70,224,178.49 97,111,776.90
120
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Wuhan LanNing energy technology co., LTD Sales of goods 31,564,672.87
Beijing Huashang Bingshan Refrigeration and
Sales of goods 27,791,350.44 64,232,868.76
Air-conditioning Machinery Co., Ltd.
Dalian Fuji Bingshan Vending Machine Co., Ltd Sales of goods 25,951,727.99 18,409,705.00
MHI Bingshan Refrigeration (Dalian) Co.,Ltd. Sales of goods 17,508,233.11 7,621,072.14
Panasonic compressor (Dalian) Co., Ltd Sales of goods 3,656,688.99 5,196,070.67
Dalian Spindle Cooling Towers Co., Ltd Sales of goods 2,914,181.55 1,474,155.53
Dalian Third Refrigeration Equipment Factory Sales of goods 2,777,710.00 1,821,581.25
Panasonic Cold Machine system (Dalian) co., LTD Sales of goods 2,321,085.25
Wuhan Sikafu Power Control Equipment Co., Ltd Sales of goods 560,308.54
Dalian Bingshan Group Refrigeration Equipment Co., Ltd Sales of goods 543,771.08 776,009.44
Dalian Bingshan Metal Technology Co., Ltd Sales of goods 48,779.66 84,149.31
BAC Dalian Co., Ltd Sales of goods 48,042.74 96,085.47
Jiangsu Jingxue Freezing Equipment Co., Ltd. Sales of goods 377,379.23 105,270.84
Keinin-Grand Ocean Thermal Technology (Dalian) Co.,
Sales of goods 766,630.42 766,404.00
Ltd.
Dalian Honjo Chemical Co., Ltd Sales of goods 6401.89
Dalian Fuji Iceberg Vending Machine Sales Co., Ltd Sales of goods 125,921,72
Total 374,879,187.1 297,045,071.01
3. Assets Lease
1) Assets rent out
Category of 2016 Lease 2015 Lease
Lessor Lessee
assets rent out
Income Income
Dalian Refrigeration Dalian Bingshan Group Co.,
Company Limited Office 98,742.86 103,680.00
Ltd.
Dalian Refrigeration MHI Bingshan Refrigeration
Workshop 4,100,000.00 4,200,000.00
Company Limited (Dalian) Co.,Ltd.
Dalian Refrigeration Dalian Bingshan International
Office 118,800.00 124,740.00
Company Limited Trading Co. , Ltd
2) Assets under lease
Category of assets
Lessor Lessee 2016 Lease fees 2015 Lease fees
rent in
Dalian Bingshan Dalian Refrigeration
Office, etc 135,782.86 142,572.00
Group Co. Company Limited
Dalian Bingshan Dalian Refrigeration
Land 219,267.25 230,230.60
Group Co. Company Limited
121
Dalian Refrigeration Co., Ltd. 2016 Annual Report
The Company and Dalian Bingshan Group Co., Ltd signed the agreement, which the Company
leased out the 576-squre metres office to Dalian Bingshan Group Co., Ltd. The term of lease is from
January 1st 2016 to December 31st 2016, and the annual rent is 103,680,00yuan. The confirmed lease
income for current year is 98,742.86Yuan(after tax, business tax is replaced by VAT). The Company
rent research institute and garages, etc. from Dalian Bingshan Group Co., Ltd in term of lease from
January 1st 2016 to December 31st 2016. The annual rent is 142,572,00Yuan. The Company also rent
lands from Dalian Bingshan Group Co., Ltd. The term of lease is from January 1st 2016 to December
31st 2016, and the annual rent is 230,230,60Yuan.
The Company and MHI Bingshan Refrigeration (Dalian) Co., Ltd signed the agreement, the
Company leased out the No.106 workshop 6# block which is located at LiaoHe East Road,
Development district to MHI Bingshan Refrigeration (Dalian) Co., Ltd. The leasing area is
15,259.04 square metres. The term of lease is terminated on 16th July 2029, and the annual rent is
4,200,000Yuan.
The Company and Dalian Bingshan International Trading Co., Ltd had agreement of leasing out
693-square metres offices to Dalian Bingshan International Trading Co., Ltd. The term of lease is
from 1st January 2015 to 31st December 2016, and the annual rent is 124,730.00Yuan.
4. Warranty provided by Related Parties
The national development fund planned to support the company’s intelligent and green equipment of
cold chain and service industry base project, and provide the special fund to the controlling
shareholder of the company, Bingshan Group.
5. Funds borrow from /lent to related party
1）Funds borrowed from Related Party
Name of the related party Amount Starting date Ending date Explanation
Dalian Bingshan Group Co., Ltd. 160,000,000.00 2016.03.14 2026.03.13 Project fund investment
Total 160,000,000.00
Notes of borrowing funds
The company borrowed 0.16billionYuan from Bingshan Group, the controlling shareholder of the
Company for the plan to support the company’s intelligent and green equipment of cold chain and
service industry base project, loan interest is fixed interest rate @1.2% annual rate and paid
interest 1,418,666.67Yuan.
Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd, the subsidiary of the company,
borrowed 10million Yuan from Dalian Bingshan Group for its relocation. At the year end, the loan
has been repaid at the same interest rate of the bank. The interest paid is 311,085.42 Yuan.
122
Dalian Refrigeration Co., Ltd. 2016 Annual Report
6. Asset transfer and debt restructuring of related party: None
7. Management Remuneration
Item 2016 2015
Total rewards for the key management personnel( tax included) 3,896,600.00 3,753,800.00
(III) Balances with Related party
(1) Accounts receivable due from related parties
Closing Balance Opening Balance
Item Related party Bad debt Book Bad debt
Book Balance
Provision Balance Provision
Accounts
receivable
Panasonic Cold Chain (Dalian)
47,410,594.36 2,370,529.72 25,195,419.27 1,259,770.96
Co., Ltd
Beijing Huashang Bingshan
Refrigeration and
38,284,385.35 3,543,453.34 40,803,001.99 2,093,750.10
Air-conditioning Machinery Co.,
Ltd
Wuhan LanNing Energy
14,466,855.00 723,342.75
Technology co., LTD
Panasonic Refrigeration (Dalian)
10,132,966.54 506,648.32 5,473,096.64 273,654.83
Co., Ltd
Dalian Bingshan International &
3,838,047.96 199,610.90 3,410,519.80 170,525.99
Trading Co. , Ltd
Dalian Fuji Bingshan Vending
1,520,221.58 76,011.08 10,776,362.22 538,818.11
Machine Co., Ltd.
Panasonic Cold Machine system
987,313.08 49,365.65
(dalian) co., LTD
Dalian Bingshan Group
Refrigeration Equipment Co., 3,461.40 173.07
Ltd.
Wuhan Sikafu Power Control
655,561.00 32,778.05
Equipment Co., Ltd
MHI Bingshan Refrigeration
215,889.22 10,794.46 28,989.23 1,449.46
(Dalian) Co.,Ltd.
Panasonic Compressor (Dalian)
69,350.00 6,592.50 265,820.40 27,166.02
Co., Ltd
Dalian Spindle Cooling Towers
46,659.20 2,332.96 917,881.08 45,894.05
Co., Ltd
Keinin-Grand Ocean Thermal
6,117.31 305.87
Technology (Dalian) Co., Ltd
Dalian Third Refrigeration
5,642.60 564.26 5,642.60 282.13
Equipment Factory
Dalian Fuji Iceberg Vending
4,452.90 222.65
Machine Sales Co., Ltd
BAC Dalian Co., Ltd 112,420.00 5,621.00
Notes
receivable
MHI Bingshan Refrigeration
19,805,806.72 6,294,283.14
(Dalian) Co.,Ltd.
Panasonic Cold Chain (Dalian)
15,532,736.64 20,163,705.41
Co., Ltd
123
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Jiangsu Jingxue Freezing
4,277,035.00
Equipment Co., Ltd.
Dalian Bingshan International
4,017,976.15 9,847,217.00
Trading Co. , Ltd
Panasonic Refrigeration (Dalian)
200,000.00 2,909,535.58
Co., Ltd
Panasonic Cold machine system
1,778.45
(dalian) co., LTD
Panasonic Compressor (Dalian)
1,052,980.08
Co., Ltd
BAC Dalian Co., Ltd 100,000.00
Beijing Huashang Bingshan
Refrigeration and
4,000,000.00
Air-conditioning Machinery Co.,
Ltd
Dalian Spindle Cooling Towers
1,494,656.98
Co., Ltd
Accounts
Paid-in
Advance
Dalian Bingshan International
14,652,882.17 18,068,922.66
Trading Co. , Ltd
BAC Dalian Co., Ltd 318,220.00
Panasonic Cold Chain (Dalian)
90,000.00
Co., Ltd
Beijing Huashang Bingshan
Refrigeration and
378,268.10
Air-conditioning Machinery Co.,
Ltd
Jiangsu Jingxue Efficient
5,469.00 268,714.00
Technology Co., Ltd.
Other
Accounts
Receivable
Panasonic Cold Chain (Dalian)
137,520.50 6,876.03
Co., Ltd
Wuhan Sikafu Power Control
320,000.00 16,000.00
Equipment Co., Ltd
Beijing Huashang Bingshan
Refrigeration and
34,972.74 1,748.64
Air-conditioning Machinery Co.,
Ltd
Wuhan LanNing energy
3,814.37 190.72
technology co., LTD
(1) Accounts Payable due from Related Party
Item Related party Closing Balance Opening Balance
Accounts Payable
BAC Dalian Co., Ltd 29,658,022.00 40,548,590.02
Panasonic Cold Chain (Dalian) Co., Ltd 28,223,695.70 32,804,524.70
Wuhan LanNing Energy technology co.,
15,300,000.00
LTD
Dalian Bingshan Group Refrigeration
9,358,905.93 8,860,105.57
Equipment Co., Ltd.
Jiangsu Jingxue Efficient Technology
8,505,375.05 5,742,746.00
Co., Ltd.
124
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Dalian Spindle Cooling Towers Co., Ltd 5,339,188.00 344,750.00
Dalian Bingshan International Trading
3,762,700.19 5,671,660.46
Co. , Ltd
Panasonic Cold machine system (dalian)
3,680,482.86
co., LTD
Dalian Third Refrigeration Equipment
2,022,156.94 3,437,911.21
Factory
Panasonic Compressor (Dalian) Co., Ltd 1,696,000.00 45,650.00
Dalian Bingshan Metal Technology Co.,
798,283.30 222,692.68
Ltd
Panasonic Refrigeration (Dalian) Co.,
50,667.31
Ltd.
Notes Payable
BAC (Dalian) Co., Ltd 29,632,455.00 1,600,000.00
Dalian Bingshan International Trading
8,648,260.12 2,543,514.28
Co. , Ltd
Jiangsu Jingxue Efficient Technology
4,903,405.00 4,227,728.00
Co., Ltd.
Panasonic Cold Chain (Dalian) Co., Ltd 3,303,845.50 1,597,350.00
Dalian Bingshan Group Refrigeration
1,000,000.00 6,897,040.82
Equipment Co., Ltd.
Wuhan Sikafu Power Control Equipment
620,000.00
Co., Ltd
Dalian Third Refrigeration Equipment
450,000.00 2,730,000.00
Factory
Dalian Spindle Cooling Towers Co., Ltd 1,107,249.00
Panasonic Compressor (Dalian) Co., Ltd 136,199.00
Dalian Bingshan Metal Technology Co.,
100,000.00
Ltd
Accounts Received in
Advance
Beijing Huashang Bingshan Refrigeration
459,609.61 352,929.50
and Air-conditioning Machinery Co., Ltd
MHI Bingshan Refrigeration (Dalian)
450,000.00 5,850.00
Co.,Ltd.
Dalian Bingshan International Trading
214,039.00 79,008.70
Co. , Ltd
Panasonic Cold Machine System (dalian)
171,000.00
co., LTD
Panasonic Cold-Chain (Dalian) Co., Ltd 1,466,923.23
Other accounts
payable
Dalian Bingshan Group Co. , Ltd 294,956.06 10,412,056.06
MHI Bingshan Refrigeration (Dalian)
270,000.00 152,371.59
Co.,Ltd.
Dalian Third Refrigeration Equipment
1,000.00 1,000.00
Factory
Dalian Bingshan International Trading
283.95 346.00
Co. , Ltd
Beijing Huashang Bingshan Refrigeration
61,241.27
and Air-conditioning Machinery Co., Ltd
(IV) Related Party Commitment
None
(V) Others
None
XII. Share-Based Payment
1． General situation of share payment
125
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Items Situation
Total equity instruments granted by the company 12,884,000
during the period
Total equity instruments exercised by the company 12,884,000
during the period
Total equity instruments invalid by the company
during the period
The scope of the exercise price of the share options 2015:5.56 Yuan per share ， divide into 3 period, remaining
issued by the company at the year end and the contract period are12, 24 and 36 months
remaining term of the contract 2016:5.62 Yuan per share ， divide into 3 period, remaining
contract period are12, 24 and 36 months.
The scope of the exercise price of other equity and the
remaining term of the contract at the year end
2． Share payment settled by equity
Items Situation
Method for determining the fair value of the equity According to the fair value of restricted stock on granted date
instruments granted (the fair value changes after the grant date is uncertain)
The basis for determining the quantities of exercised
Determined by the actual numbers of share exercised
equity instruments
The reasons for the significant difference between this
None
year’s estimation and last year’s estimation
The cumulative amount of capital reserve which includes
24,417,688.00
share payment settled by equity
Total cost of share payment recognized by equity settlement
12,227,168.00
this year
1) The Situation of Granted Restricted Share in 2015
According to the 13th meeting of the 6th generation of board, the 1st interim shareholders’ meeting
and the rules of ‘Restricted Share Incentive Plan (draft)’, the Company granted 10,150,000 numbers
of restricted shares to 41 incentive targets by offering incentive targets ‘A’ original shares. The
granted price is 5.56yuan per share, and the total capital raised is 56,434,000.00Yuan. The
Company’s incentive targets include the directors, middle and senior management personnel and
other key personnel supposed to be incented who held office when the ‘Share Incentive Plan’ was
announced, but excluding the supervisors, the independent directors, foreign directors and foreign
management personnel. The 15th meeting of board of 6th generation held on 4th March 2015
approved the ‘The Report Regarding Granting Incentive Targets Restricted Shares’, which agrees to
grant 10,150,000 numbers of restricted shares to 41 incentive targets, and set 4th March 2015 as
share granted date.
126
Dalian Refrigeration Co., Ltd. 2016 Annual Report
2) The Situation of Granted Restricted Share in 2016
According to the 9th meeting of 7th generation of directors, the 3rd interim shareholders’ meeting and
the rules of ‘Restricted Share Incentive Plan (draft)’, the Company granted 12,884,000 numbers of
restricted shares to 118 incentive targets by offering incentive targets ‘A’ original shares. The granted
price is 5.62yuan per share, and the total capital raised is 72,480,080.00Yuan. The Company’s
incentive targets include the directors, middle and senior management personnel and other key
personnel supposed to be incented who held office when the ‘Share Incentive Plan’ was announced,
but excluding the supervisors, the independent directors, foreign directors and foreign management
personnel. The 9th meeting of board of 7th generation held on 20th September 2016 approved the
‘The Report Regarding Granting Incentive Targets Restricted Shares’, which agrees to grant
12,884,000 numbers of restricted shares to 118 incentive targets, and set 20th September 2016 as
share granted date.
3) The Situation of Unlocking Restricted Shares in 2016
The 4th meeting of the 7th generation of board held on 13th April 2016 approved the ‘Proposal for
unlocking in restricted share options incentive plan for the first unlocking-in period’. There were 41
incentive targets who satisfied the requirements of unlocking- in, and the number of the restricted
shares can apply unlocking in to have listed and circulated is 3,045,000 that account representing
0.50% of the Company’s total shares at the year end.
XIII. Contingency
As at 31 December 2016, the Group does not have any other contingencies for disclosure.
XIV. Commitment
As at 31 December 2016, the Group does not have any other significant commitments.
XV. Events after the Balance Sheet Date
1. Significant events had not adjusted
Impact on the
Reason unable
Items Content financial position and
to be estimated
operating results
agreed to accept 76% shareholding
Significant External Investment 56,150,000
of the Bingshan International Trade
agreed to accept 49% shareholding
Significant External Investment 172,950,000
of the Bingshan Metal Technology
Refinancing securities lending Refinancing securities lending Items are not
transactions transactions implemented
127
Dalian Refrigeration Co., Ltd. 2016 Annual Report
According to the 12th meeting of the 7th generation of board, the Company decided to use no more
than 25,000,000 numbers of share of ‘GuoTaiJunAn’ to participate refinancing securities lending
transactions in order to revitalise assets and increase the gain on investment of holding securities.
The Company, as the security lender for refinancing securities lending transactions this time, lent no
more than 25,000,000 numbers of shares held of ‘GuoTaiJunAn’ at the certain rate to China
Securities Finance Co., Ltd via securities exchange platform. China Securities Finance Co., Ltd
would repay the borrowed the securities, equity compensation, and expenses which is the interests
earned through lending Company’s ‘GuoTaiJunAn’ shares.
The 12th meeting of the 7th generation of board approved to accept 76% shareholdings of Dalian
Bingshan Internatioanl Trading Co., Ltd transferred by Dalian Bingshan Group. Hence, the
Company would hold 100% shareholdings of Dalian Bingshan Internatioanl Trading Co. The
transferential price was based on the value of net asset on 31st December 2016 assessed by the third
party, and was set to be 56,150,00Yuan after mutual negotiation.
The 12th meeting of the 7th generation of board approved to accept 49% of shareholdings of Dalian
Bingshan Metal Technology Co., Ltd transferred by Dalian Bingshan Group. Hence, the Company
would hold 49% shareholdings of Dalian Bingshan Metal Technology Co. The transferential price
was based on the value of net asset on 31st December 2016 assessed by the third party, and was set
to be 172,950,000Yuan after mutual negotiation.
2. Information about profit distribution
Items Content
Dividend proposed to be
distributed Extract 20% of the free surplus reserves; based on 611,776,558 numbers of share in total,
paid out cash dividend of 1Yuan for every 10 shares(before tax), and cash dividend of B
Dividend approved to be
distributed by the General shares are paid in Hong Kong dollars; the total, and share dividend of 4 common shares for
Meeting every 10 shares through capital reserve.
The 13th meeting of the 7th generation of board held on 21st April 2017 approved the profit
distribution policy for the year of 2016: extracting 20% of the free surplus reserves and based on
611,776,558 numbers of share in total, paying out cash dividend of 1Yuan for every 10 shares(before
tax) and cash dividend of B shares are paid in Hong Kong dollars. Share dividend of 4 common
shares for every 10 shares through capital reserve.
3. Sales Return
There is no significant sales return after the balance sheet date.
4. Except the subsequent event disclosed above, the Company has no other significant
subsequent event
128
Dalian Refrigeration Co., Ltd. 2016 Annual Report
XVI. Other Significant Events
1. Error correction and effect in previous period.
The Company has no adjustment of prior period accounting error this year.
2. Debt Restructuring
The Company has no events of debt restructuring this year.
3. Asset exchange
(1) The exchange of non-monetary asset None
(2) The exchange of other assests None
4. Annuity Plan None
5. Operation Termination None
6. Segment Information
The management of the Company divided the Company into 3 segments based on the geographic
area: Northeast China, Central China, and East China. The Northeast is the Company’s general
headquarters and the registered address. The Central is the subsidiary of the Company, Wuhan New
World Refrigeration Industrial Co., Ltd. The East is the subsidiaries of the Company, and they are
Ningbo Bingshan Air-conditioning Refrigeration Engineering Co., Ltd and Shanghai Bingshan
Technical Service Co., Ltd.
(1) The basis and accounting policies of reporting segments
The internal organisation structure, management requirements and internal report
scheme are the determination basis for the Company to set the operating segments. The
segments are those satisfied the following requirements.
1).The segment can generates revenue and incur expenses.
2).The management personnel can regularly evaluate the operation results of
segments and allocate resource ,assess its performance .
3).The financial situation, operation results, cash flow and other accounting
information of segments can be acquired.
The Company confirms the report segments based on the operating segments. The transfer price
among segments is set base on the market price. The assets and related expenses in common use are
allocated to different segments based on their proportion of revenue.
(2) The financial information of reporting segments
Amount unit ：Ten thousands Yuan
Items 2016
129
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Northeast
Central China East China Offset Total
China
1 Operating income 224,830.43 31,330.35 9,707.66 87,918.52 177,949.92
Including:Income from external
151,574.77 16,767.32 9,607.83 177,949.92
transaction
Income from internal
73,255.66 14,563.03 99.83 87,918.52
transaction
2 Selling expenses 207,517.08 31,468.70 9,671.19 87,918.52 160,738.45
Including:Investment income
13,102.30 -91.85 13,010.45
from associates and joint ventures
Impairment on assets 1,233.00 525.55 6.63 1,765.18
Depreciation and
3,634.15 1,038.07 15.17 4,687.39
amortization
3 Operating profits(loss) 18,742.85 33.75 41.28 18,817.88
4 Income tax 640.02 -43.39 28.28 624.91
5 Net profit(loss) 18,102.83 77.15 13.00 18,192.98
6 Total assets 504,700.28 56,849.61 2,672.78 65,871.51 498,351.16
7 Total liabilities 144,613.44 44,006.96 1,171.39 23,178.97 166,612.82
8 Other significant non-cash items 49,821.51 1,110.09 4.60 13,208.43 37,727.77
Capital expenditure 49,821.51 1,110.09 4.60 13,208.43 37,727.77
7. Other important transactions and matters affect the investor's decision
The company hasn’t had other important transactions and matters affect the investor's decision in
this period.
XVII. Notes to the Main Items of the Financial Statements of Parent Company
1. Accounts receivable
(1) Accounts receivable category
Closing Balance
Item Booking balance Provision Booking
Amount % Amount % balance
Accounts receivable with significant
individual amount and separate bad debt
provision
Accounts receivable with bad debt
provision based on the characters of 178,100,272.41 100.00 60,524,866.67 33.98 117,575,405.74
credit risk portfolio
Accounts receivable with insignificant
individual amount and separate bad debt
provision
Total 178,100,272.41 100.00 60,524,866.67 33.98 178,100,272.41
(Continued)
Opening Balance
Item Booking balance Provision
Booking balance
Amount % Amount %
130
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Opening Balance
Item Booking balance Provision
Booking balance
Amount % Amount %
Accounts receivable with significant
individual amount and separate bad debt
provision
Accounts receivable with bad debt
provision based on the characters of 262,260,040.72 100.00 65,568,099.85 25.00 196,691,940.87
credit risk portfolio
Accounts receivable with insignificant
individual amount and separate bad debt
provision
Total 262,260,040.72 100.00 65,568,099.85 25.00 196,691,940.87
1) No accounts receivable with significant individual amount and separate bad debt provision
needed at the end of 2016
2) The bad debt provisions of accounts receivable in the portfolio is accrued under accounting
aging analysis method:
Closing Balance
Aging
Accounts receivable Provision for bad debts Proportion(%)
Within 1 year 47,172,979.77 2,358,648.99 5
1-2 years 36,205,244.49 3,620,524.45 10
2-3 years 39,998,961.25 11,999,688.38 30
3-4 years 20,050,465.63 10,025,232.82 50
4-5 years 10,759,246.12 8,607,396.90 80
Over 5 years 23,913,375.15 23,913,375.15 100
Total 178,100,272.41 60,524,866.67
(2) Bad debt provision accrued and reversed (withdraw)
The bad debt provision has been accrued in the amount of -5,043,233.18 Yuan, during the report
period there is no bad debt provision is reversed or withdrawn.
(3) No accounts receivable written off in current period.
(4) The top five significant accounts receivable categorized by debtors
Closing % of the total Closing Balance of
Company Aging
Balance AR Provision
Xinyi Yuanda Construction and
31,300,000.00 Within 1 year 17.57 1,565,000.00
Installation Engineering Co., Ltd.
Beidahuang Taihua organic food 9,844,000.00 Within 1 year, 5.53 945,616.34
131
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Closing % of the total Closing Balance of
Company Aging
Balance AR Provision
co., LTD 1-2 years
Zhejiang Wan Kai New Material
7,800,000.00 Within 1 year 4.38 390,000.00
Co., Ltd
Dalian Jinyu New Energy
Technology Development Co., 5,500,000.00 Over 5 years 3.09 5,500,000.00
Ltd
Beijing Huashang Bingshan
Refrigeration and Within 1 year,
5,464,252.08 3.07 543,380.96
Air-conditioning Machinery Co., 1-2 years
Ltd.
Total 59,908,252.08 33.64 8,943,997.30
2. Other Receivables
(1) The category of other receivables
Closing Balance
Items Booking balance Provision Booking balance
Amount % Amount %
Other receivables with significant individual amount
- - - - -
and separate bad debt provision
Other receivables with bad debt provision based on
5,595,672.42 100.00 1,227,167.35 21.93 4,368,505.07
the characters of credit risk portfolio
Other receivables with insignificant individual
amount and separate bad debt provision
Total 5,595,672.42 100.00 1,227,167.35 21.93 4,368,505.07
(Continued)
Opening Balance
Items Booking balance Provision Booking
Amount % Amount % balance
Other receivables with significant individual amount and
separate bad debt provision
Other receivables with bad debt provision based on the
45,196,469.56 100.00 1,504,857.11 3.33 43,691,612.45
characters of credit risk portfolio
Other receivables with significant individual amount and
separate bad debt provision
Total 45,196,469.56 100.00 1,504,857.11 3.33 43,691,612.45
1) No accounts receivable with significant individual amount and separate bad debt provision
needed at the end of 2016
2) The bad debt provisions of other receivables in the portfolio is accrued under accounting
aging analysis method
132
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Closing Balance
Aging
Other receivables Provision for bad debts Proportion(%)
Within 1 year 2,531,892.85 126,594.64 5
1-2 years 1,372,430.48 137,243.05 10
2-3 years 497,850.99 149,355.30 30
3-4 years 659,047.48 329,523.74 50
4-5 years 250,000.00 200,000.00 80
Over 5 years 284,450.62 284,450.62 100
Total 5,595,672.42 1,227,167.35
(2) Bad debt provision accrued and reversed (withdraw) in 2016.
The bad debt provision has been provided in the amount of 277,689.76 Yuan during the report
period and no bad debt provision is reversed or withdrawn.
(3)No other accounts receivable write-off during the reporting period
(4) Other receivables categorized by nature
Nature Closing Balance Opening Balance
Security deposit 5,502,139.57 11,391,139.57
Petty cash 80,892.85 76,154.99
receivable accounts 33,729,175.00
Others 12,640.00
Total 5,595,672.42 45,196,469.56
(5) Other receivables from the top 5 debtors
Closing
% of the total
Name Category Closing Balance Aging Balance of
OR
Provision
Dalian Delta HK China gas within 1 year,
Security deposit 2,730,000.00 48.79 211,500.00
co., ltd 2-3 years
Dalian Jinzhou New district 1-2 years, 2-3
Funding agencies and Security deposit 1,586,623.95 years, 3-4 28.35 215,838.59
institutions accounting center years
Dalian Municipal
Construction engineering
Security deposit 500,000.00 3-4 years 8.94 250,000.00
labor insurance management
center
Dalian economic and
technological development
Security deposit 265,950.62 Over 5 years 4.75 265,950.62
zone funding agencies and
institutions accounting center
Shandong Noel food co., ltd Security deposit 200,000.00 4-5 years 3.57 160,000.00
Total 5,282,574.57 94.40 1,103,289.21
133
Dalian Refrigeration Co., Ltd. 2016 Annual Report
3. Long-term equity investments
(1) Category of long-term equity investments
Closing Balance Opening Balance
Item
Closing Balance Provision Book Value Opening Balance Provision Book Value
Investment of subsidiaries 415,959,587.22 415,959,587.22 246,597,906.16 246,597,906.16
Investment of affiliates and JV 1,297,452,913.87 1,297,452,913.87 1,214,360,893.12 1,214,360,893.12
Total 1,713,412,501.09 1,713,412,501.09 1,460,958,799.28 1,460,958,799.28
(2) Investments of subsidiaries
Provision in Closing Balance of
Subsidiaries names Opening Balance Increase Decrease Closing Balance
current period provision
Dalian Bingshan Group Refrigeration Installation Co., Ltd 22,749,675.77 71,000,000.00 93,749,675.77
Dalian Bingshan Group Sales Company 12,936,700.00 7,785,728.15 20,722,428.15
Dalian Bingshan Air-Conditioning Equipment Co., Ltd 36,506,570.00 36,506,570.00
Dalian Bingshan Jiade Automation Co., Ltd 1,522,117.80 5,350,000.00 6,872,117.80
Dalian Bingshan Metal Processing Co., Ltd 21,751,244.60 21,751,244.60
Dalian Bingshan Lingshe Quick Freezing Equipment Co.,
Ltd 5,745,097.40 53,610,953.79 59,356,051.19
Dalian Niweisi LengNuan Technology Co., Ltd 48,287,589.78 48,287,589.78
Wuhan New World Refrigeration Industrial Co., Ltd
84,674,910.81 84,674,910.81
Wuhan New World Refrigeration Air Conditioner
Engineering Co., Ltd 400,000.00 400,000.00
Bingshan Technical Service （Dalian） Co.,Ltd. 22,024,000.00
12,024,000.00 10,000,000.00
134
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Provision in Closing Balance of
Subsidiaries names Opening Balance Increase Decrease Closing Balance
current period provision
Dalian Xinminghua Electronics Co., Ltd. 43,766,243.72 43,766,243.72
Total 246,597,906.16 191,512,925.66 22,151,244.60 415,959,587.22
(3) Joint ventures& affiliated companies
Increase/Decrease
Gains and Provision
Provision
losses Adjustment of Changes for
Beginning Cash bonus or for
Investee recognized other of impairment Ending balance
balance Increased Decreased profits Others impairment
under the comprehensive other of the
announced at year end
equity income equity current
method period
1. Joint ventures
Dalian Bingshan –
Secuirty Leisure
2,837,097.81 2,524,548.42 -312,549.39
Industrial Engineering
Co., Ltd.
Subtotal 2,524,548.42 -312,549.39
2,837,097.81
2. Affiliated companys
Panasonic Refrigeration
159,226,107.64 3,399,533.51 5,200,000.00 157,425,641.15
(Dalian) Co., Ltd.
Panasonic Cold-chain
215,719,525.88 9,967,711.38 8,000,000.00
(Dalian) Co., Ltd 217,687,237.26
Panasonic Compressor
457,892,368.92 58,511,025.07 32,400,000.00
(Dalian) Co., Ltd 484,003,393.99
Dalian Honjo Chemical
8,729,712.48 1,441,499.53 528,860.67 9,642,351.34
Co., Ltd
Keinin-Grand Ocean
Thermal Technology 48,607,035.29 18,545,378.50 14,200,000.00 52,952,413.79
(Dalian) Co., Ltd
Dalian Bingshan
15,691,101.62 1,137,313.10 16,828,414.72
Internatioanl Trading
135
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Increase/Decrease
Gains and Provision
Provision
losses Adjustment of Changes for
Beginning Cash bonus or for
Investee recognized other of impairment Ending balance
balance Increased Decreased profits Others impairment
under the comprehensive other of the
announced at year end
equity income equity current
method period
Co. , Ltd
Beijing Huashang
Bingshan Refrigeration
1,936,646.98 -1,167,183.71 769,463.27
and Air-conditioning
Machinery Co., Ltd
Dalian Fuji Bingshan
Vending Machine Co., 113,268,454.28 21,995,198.40 25,523,542.13 160,787,194.81
Ltd
MHI Bingshan
Refrigeration (Dalian) 22,276,332.84 -9,257,540.79 13,018,792.05
Co.,Ltd.
Dalian Fuji Iceberg
Vending Machine Sales 4,496,415.53 4,913,591.03 9,410,006.56
Co., Ltd
Jiangsu Jingxue Freezing
141,722,024.61 15,648,082.81 5,842,400.00 151,527,707.42
Equipment Co., Ltd.
Panasonic cold machine
21,000,000.00 2,400,297.51 23,400,297.51
system (dalian) Co., Ltd
Dalian Xinminghua
21,958,069.24 21,535,918.03 272,256.45 -43,766,243.72
Electronics Co., Ltd.
Subtotal 1,211,523,795.31 64,531,116.43 131,335,506.52 66,171,260.67 -43,766,243.72 1,297,452,913.87
Total 1,214,360,893.12 64,531,116.43 2,524,548.42 131,335,506.52 66,171,260.67 -43,766,243.72 1,297,452,913.87
136
Dalian Refrigeration Co., Ltd. 2016 Annual Report
4. Operating revenue and cost
Item 2016 2015
Revenue Cost Revenue Cost
Revenue from main operation 546,594,784.30 461,413,033.94 529,921,896.78 439,578,679.65
Revenue from other operation 11,810,086.74 7,113,931.96 11,553,354.87 7,030,947.50
Total 558,404,871.04 468,526,965.90 541,475,251.65 446,609,627.15
5. Investment income
Items 2016 2015
Income from long-term equity investments under cost method 12,904,192.38 3,915,784.39
Income from long-term equity investments under equity method 130,022,957.13 125,536,756.26
Income from disposing long-term share equity investments 56,278.70
Income from holding of financial assets available for sale 15,961,425.40 3,319,889.50
Income from disposing long-term share equity investments 27,629,395.44
Total 187,574,249.05 132,772,430.15
XVIII. Approval of Financial Statements
The parent and consolidated financial statements of the Company were approved by the Board of
Directors of the Group on April 21, 2017.
137
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Supplementary Information to the Financial Statements
1. Non-operating profit or loss
Items 2016 Notes
Gain or loss from disposal of non-current assets -23,302,650.34
Override, no formal approval or accidental tax refund ,deduction or exemption
Government grants recorded into profit or loss during current period 3,765,464.60
Expenses for using funds from non financial institution recognised in current profit/loss
Gains from acquisition of subsidiary or associates when initial cost is less than the fair value
30,334,841.93
of identifiable net asset of invested company
Profits/loss from non monetary assets exchange
Profits/loss from investments or management of assets entrusted by others
Assets impairment provision accrued due to force majeure, eg: suffering natural disasters
Profit or loss from debts restructuring 229,833.00
Expenses of enterprise restructuring
Gain/loss on excessive part from the transaction where the trading price is obviously unfair.
Net gain/loss of subsidiary from combination under same control between the beginning of
year and consolidation date.
Gains/ loss from contingencies arising from the normal business of the Company
Gain/loss from change of fair value by holding or disposing the tradable financial asset and
liabilities, and available for sale financial assets, other than effective hedging in relation to 27,629,395.44
the company’s normal business
Reversal of impairment provision of accounts receivable separately tested for impairment
The profits/loss from external entrusted fund
Investment property subsequently measured at fair value
The profits/gains from changes of fair value
Effects of gain/loss from one-off adjustments of gain/loss based on laws and regulations of
taxation and accounting.
non-operating revenue and expense besides the above items 976,314.82
Other profit or loss
Subtotal 39,693,199.45
Effect on income tax 6,113,785.77
Attributable to minority shareholders’ equity (after tax) 114,171.65
Total 145,348,314.63
2. Return on equity and earnings per share
Weighted average Earnings per share (EPS)
Profit of report period return on net Basic EPS Diluted EPS
assets(%)
Net profit attributable to shareholders of parent company 5.87 0.31 0.31
138
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Net profit after deducting non-recurring gains and losses
4.78 0.25 0.25
attributable to shareholders of parent company
3. The differences under the domestic and foreign accounting standards
There is no difference under the domestic and foreign accounting standards.
139
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Section 12 Reference Documents
1. The accounting statements bearing the signatures and seals of the legal representative, the financial
majordomo and the accountants in charge.
2. The original copy of the auditor's report bearing the seal of the certified public accountants and the
signatures and seals of the certified accountants.
3. The original copies of all the Company's documents and the original copies of the bulletins
published on the newspapers designated by the China Securities Regulatory Commission in the
report period.
4. Time for reference: from Monday to Friday 8:00 - 11:30 (am) 1:00 - 4:30 (pm)
Liaison persons: Mr. Song Wenbao，Miss Du Yu
Tel: 0086-411-87968130
Fax: 0086-411-87968125
Dalian Refrigeration Company Limited
22, April, 2017
140
Dalian Refrigeration Co., Ltd. 2016 Annual Report
BALANCE SHEET
Prepared by Dalian Refrigeration Co., Ltd. December 31, 2016 Unit: RMB Yuan
31-Dec-2016 31-Dec-2015
Assets
Consolidation Parent Company Consolidation Parent Company
Current assets:
Monetary funds 679,724,805.76 496,417,106.54 244,789,824.53 149,314,329.13
Financial assets which are measured by fair value and
which changes are recorded in current profit and loss
Derivative financial assets
Notes receivable 130,426,225.74 90,509,540.07 71,699,517.68 40,690,578.22
Accounts receivable 759,053,298.97 117,575,405.74 671,423,836.87 196,691,940.87
Accounts in advance 95,141,043.96 96,269,883.15 44,218,887.91 22,523,974.19
Interest receivables 723,955.56 723,955.56
Dividend receivable 39,025.00 44,600.00
Other receivables 52,982,713.89 4,368,505.07 22,755,328.21 43,691,612.45
Inventories 323,863,067.48 151,230,744.47 259,099,149.47 122,212,395.56
Assets held for sale
Non-current asset due within one year
Other current assets 40,470,210.65 30,563,139.06 16,478,711.86 7,918,692.08
Total current assets 2,082,424,347.01 987,658,279.66 1,330,509,856.53 583,043,522.50
Non-current assets:
Finance asset held available for sales 545,565,116.64 544,249,974.14 733,275,249.09 731,960,106.59
Held-to-maturity investment
Long-term account receivable
Long-term equity investment 1,309,741,316.21 1,713,412,501.09 1,220,367,767.73 1,460,958,799.28
Investment property 28,605,652.94 28,605,652.94 24,497,584.00 24,497,584.00
Fixed assets 509,422,197.88 274,262,264.28 449,907,430.32 246,435,789.69
Construction in progress 321,646,676.78 320,329,247.78 137,025,384.58 109,277,419.44
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 154,714,212.52 88,113,279.88 158,417,802.57 90,015,524.05
Expense on Research and Development
Goodwill 1,750,799.49 1,440,347.92
Long-term expenses to be apportioned 4,448,719.77 3,658,276.80 5,857,504.95 5,033,031.30
Deferred income tax asset 25,192,535.02 6,751,619.50 21,200,936.73 8,675,787.57
Other non-current asset
Total non-current asset 2,901,087,227.25 2,979,382,816.41 2,751,990,007.89 2,676,854,041.92
Total assets 4,983,511,574.26 3,967,041,096.07 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
141
Dalian Refrigeration Co., Ltd. 2016 Annual Report
BALANCE SHEET (CONTINUED)
Prepared by Dalian Refrigeration Co., Ltd. December 31, 2016 Unit: RMB Yuan
31-Dec-2016 31-Dec-2015
Liabilities and shareholders’ equity
Consolidation Parent Company Consolidation Parent Company
Current liabilities:
Short-term loans 45,000,000.00 82,600,000.00 27,600,000.00
Derivative financial liabilities
Notes payable 179,378,767.96 85,834,371.87 234,189,011.72 177,683,261.74
Accounts payable 839,079,506.68 340,987,669.38 660,398,503.26 293,389,981.61
Accounts received in advance 136,231,829.62 74,949,113.25 70,458,014.46 25,768,511.15
Wage payable 49,117,130.73 9,796,460.53 51,857,345.29 11,208,398.45
Taxes payable 18,114,263.03 1,234,137.19 15,701,578.36 873,038.30
Interest payable
Dividend payable 863,516.60 533,156.00 533,156.00 533,156.00
Other accounts payable 105,262,888.56 74,954,775.74 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 1,373,047,903.18 588,289,683.96 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 57,396,619.00 12,836,619.00 49,378,296.00 3,704,296.00
Deferred income tax liabilities 75,683,681.95 75,683,681.95 103,627,029.06 103,627,029.06
Other non-current liabilities
Total non-current liabilities 293,080,300.95 248,520,300.95 153,005,325.06 107,331,325.06
Total liabilities 1,666,128,204.13 836,809,984.91 1,368,633,224.30 700,195,376.08
Shareholders’ equity
Share capital 611,776,558.00 611,776,558.00 360,164,975.00 360,164,975.00
Other equity instruments
Capital public reserve 1,022,686,774.25 1,036,115,161.54 630,264,991.95 640,764,783.03
Less:Treasury stock: 67,615,856.00 67,615,856.00 39,503,800.00 39,503,800.00
Other comprehensive income 431,639,323.52 430,413,556.77 589,988,118.05 588,759,190.43
Special preparation
Surplus public reserve 620,578,847.52 620,578,847.52 580,769,740.16 580,769,740.16
Retained profit 628,732,121.63 498,962,843.33 525,925,066.25 428,747,299.72
Translation of foreign currency capital
Total owner’s equity attributable to parent company 3,247,797,768.92 3,130,231,111.16 2,647,609,091.41 2,559,702,188.34
Minority interests 69,585,601.21 66,257,548.71
Total owner’s equity 3,317,383,370.13 3,130,231,111.16 2,713,866,640.12 2,559,702,188.34
Total liabilities and shareholder’s equity 4,983,511,574.26 3,967,041,096.07 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
142
Dalian Refrigeration Co., Ltd. 2016 Annual Report
INCOME STATEMENT
Prepared by Dalian Refrigeration Co., Ltd. January-December, 2016 Unit: RMB Yuan
January-December, 2016 January-December, 2015
Items
Consolidation Parent Company Consolidation Parent Company
I. Total sales 1,779,499,226.64 558,404,871.04 1,607,518,439.61 541,475,251.65
Including: Operating income 1,779,499,226.64 558,404,871.04 1,607,518,439.61 541,475,251.65
II. Total operating cost 1,781,121,957.24 579,660,051.71 1,606,832,356.89 553,784,280.70
Including: Operating cost 1,458,596,336.53 468,526,965.90 1,309,843,811.63 446,609,627.15
Taxes and associate charges 17,758,961.15 5,674,459.53 12,588,252.81 2,499,783.19
Selling and distribution expenses 81,557,028.64 1,292,587.98 80,099,755.98 4,045,795.92
Administrative expenses 200,962,424.84 109,136,561.08 187,046,595.49 109,448,960.03
Financial expense 4,595,430.84 350,400.16 130,314.66 -3,914,069.63
Impairment loss 17,651,775.24 -5,320,922.94 17,123,626.32 -4,905,815.96
Add: Gain/(loss) from change in fair value
Gain/(loss) from investment 173,737,491.57 187,574,249.05 128,908,120.37 132,772,430.15
Including: income form investment on affiliated
130,104,484.86 131,022,957.13 125,543,630.87 125,536,756.26
enterprise and jointly enterprise
III. Operating profit 172,114,760.97 166,319,068.38 129,594,203.09 120,463,401.10
Add: non-business income 39,097,626.70 4,221,368.65 7,459,363.54 5,314,670.19
Including: profit from non-current asset disposal 1,182,803.71 1,137,153.71 167,463.99 108,540.13
Less: non-business expense 23,033,570.81 22,575,120.49 1,105,912.29 302,694.05
Including: loss from non-current asset disposal 22,748,252.08 22,515,120.49 229,182.73 49,365.05
IV. Total profit 188,178,816.86 147,965,316.54 135,947,654.34 125,475,377.24
Less: Income tax 6,248,991.14 1,924,168.07 4,732,632.19 -549,585.31
V. Net profit 181,929,825.72 146,041,148.47 131,215,022.15 126,024,962.55
Net profit attributable to parent company 178,632,660.24 146,041,148.47 129,947,307.39 126,024,962.55
Minority shareholders’ gains and losses 3,297,165.48 1,267,714.76
VI. After-tax net amount of other comprehensive
-158,348,794.53 -158,345,633.66 587,219,831.33 587,219,831.33
incomes
After-tax net amount of other comprehensive
-158,348,794.53 -158,345,633.66 587,219,831.33 587,219,831.33
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
-158,348,794.53 -158,345,633.66 587,219,831.33 587,219,831.33
reclassified into gains and losses
1. Enjoyable shares in other comprehensive
incomes in investees that will be reclassified into -3,160.87
gains and losses under the equity method
2. Gains and losses on fair value changes of
-158,345,633.66 -158,345,633.66 587,219,831.33 587,219,831.33
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
……
143
Dalian Refrigeration Co., Ltd. 2016 Annual Report
After-tax net amount of other comprehensive
incomes attributable to minority shareholders
VII Total comprehensive income 23,581,031.19 -12,304,485.19 718,434,853.48 713,244,793.88
Total comprehensive income attributable to
20,283,865.71 -12,304,485.19 717,167,138.72 713,244,793.88
parent company
Total comprehensive income attributable to
3,297,165.48 1,267,714.76
minority shareholders
VIII. Earnings per share --
(I) basic earnings per share 0.31 0.24
(II) diluted earnings per share 0.31 0.24
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
144
Dalian Refrigeration Co., Ltd. 2016 Annual Report
CASH FLOW STATEMENT
Prepared by Dalian Refrigeration Co., Ltd. January -December, 2016 Unit: RMB Yuan
January -December, 2016 January -December, 2015
Items
Consolidation Parent Company Consolidation Parent Company
I. Cash flows arising from operating
activities:
Cash received from selling commodities and
1,565,037,310.87 573,989,576.16 1,196,653,392.32 389,780,864.03
providing labor services
Write-back of tax received 1,513,511.75 1,064,168.82
Other cash received concerning operating
71,225,043.85 43,293,827.34 43,260,055.50 24,780,873.67
activities
Subtotal of cash inflow arising from
1,637,775,866.47 617,283,403.50 1,240,977,616.64 414,561,737.70
operating activities
Cash paid for purchasing commodities and
1,073,090,356.24 417,926,957.89 801,379,413.53 286,847,416.04
receiving labor service
Cash paid to/for staff and workers 311,357,113.61 126,059,533.97 278,537,533.58 110,830,881.99
Taxes paid 114,242,935.34 18,159,382.86 99,382,229.31 28,319,534.99
Other cash paid concerning operating
146,791,781.50 38,988,406.65 112,246,914.60 28,857,855.35
activities
Subtotal of cash outflow arising from
1,645,482,186.69 601,134,281.37 1,291,546,091.02 454,855,688.37
operating activities
Net cash flows arising from operating
-7,706,320.22 16,149,122.13 -50,568,474.38 -40,293,950.67
activities
II. Cash flows arising from investing
activities:
Cash received from recovering investment 1,500,000.00 4,170,375.54 6,843,000.00
Cash received from investment income 109,727,833.19 119,993,684.77 66,637,747.39 68,332,980.68
Net cash received from disposal of fixed,
1,644,393.77 1,328,170.00 287,315.00 106,580.00
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
112,872,226.96 125,492,230.31 66,925,062.39 75,282,560.68
activities
Cash paid for purchasing fixed, intangible
339,761,289.83 328,899,717.16 60,687,631.79 38,025,775.39
and other long-term assets
Cash paid for investment 57,404,907.59 168,990,635.74 222,172,610.81 224,885,444.96
Net cash received from payment of
-19,888,482.90 21,535,918.03 20,464,427.15 26,993,388.94
subsidiaries and other business units
Other cash paid concerning investing
activities
Subtotal of cash outflow from investing
377,277,714.52 519,426,270.93 303,324,669.75 289,904,609.29
activities
Net cash flows arising from investing
-264,405,487.56 -393,934,040.62 -236,399,607.36 -214,622,048.61
activities
III. Cash flows arising from financing
activities
Cash received from absorbing investment 639,016,550.34 633,626,550.34 60,434,000.00 56,434,000.00
Including: Cash received from absorbing
minority shareholders' equity investment by 5,390,000.00
subsidiaries
Cash received from loans 312,380,000.00 240,000,000.00 129,000,000.00 27,600,000.00
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
972,107,378.02 874,346,883.07 222,387,876.63 100,179,665.64
activities
Cash paid for settling debts 201,480,000.00 107,600,000.00 106,500,000.00
Cash paid for dividend and profit distributing
42,474,168.02 37,733,665.57 61,877,081.78 54,732,538.85
or interest paying
145
Dalian Refrigeration Co., Ltd. 2016 Annual Report
Including: dividends or profit paid by
1,078,000.00 2,502,522.92
subsidiaries to minority shareholders
Other cash paid concerning financing
21,861,791.59 3,430,000.00 20,711,136.86 34,245,194.98
activities
Subtotal of cash outflow from financing
265,815,959.61 148,763,665.57 189,088,218.64 88,977,733.83
activities
Net cash flows arising from financing
706,291,418.41 725,583,217.50 33,299,657.99 11,201,931.81
activities
IV. Influence on cash due to fluctuation in
-155,755.03 -20,326.62 -165,031.04 -274,330.63
exchange rate
V. Net increase of cash and cash equivalents 434,023,855.60 347,777,972.39 -253,833,454.79 -243,988,398.10
Add: Balance of cash and cash equivalents at
221,724,134.60 147,439,134.15 475,557,589.39 391,427,532.25
the period -begin
VI. Balance of cash and cash equivalents at
655,747,990.20 495,217,106.54 221,724,134.60 147,439,134.15
the period–end
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
146
Dalian Refrigeration Co., Ltd. 2016 Annual Report
CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’
EQUITY
Prepared by Dalian Refrigeration Company Limited 2016-.01-12 Unit: RMB Yuan
2016.01-12
Owners’ equity attributable to parent company
Items Other Retained Minority Total of owners’
Lessen: Special Surplus equity equity
share capital Capital suplus comprehensive profits
treasury stock reserve reserve
income
I. balance at the end of last
360,164,975.00 630,264,991.95 39,503,800.00 589,988,118.05 580,769,740.16 525,925,066.25 66,257,548.71 2,713,866,640.12
year
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 39,503,800.00 589,988,118.05 580,769,740.16 525,925,066.25 66,257,548.71 2,713,866,640.12
this year
III. Increase/ decrease of
amount in this year (“-” 251,611,583.00 392,421,782.30 28,112,056.00 -158,348,794.53 39,809,107.36 102,807,055.38 3,328,052.50 603,516,730.01
means decrease)
(I) Total comprehensive
-158,348,794.53 178,632,660.24 3,297,165.48 23,581,031.19
incomes
(II) Capital increased and
71,529,096.00 572,504,269.30 28,112,056.00 1,108,887.02 617,030,196.32
reduced by owners
1. Common shares increased
71,529,096.00 560,231,963.55 28,112,056.00 1,108,887.02 604,757,890.57
by shareholders
2. Capital increased by
holders of other equity
instruments
3. Amounts of share-based
payments recognized in 12,227,168.00 12,227,168.00
owners’ equity
4. Other 45,137.75 45,137.75
(III) Profit distribution 39,809,107.36 -75,825,604.86 -1,078,000.00 -37,094,497.50
1. Withdrawing surplus
39,809,107.36 -39,809,107.36
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 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
611,776,558.00 1,022,686,774.25 67,615,856.00 431,639,323.52 620,578,847.52 628,732,121.63 69,585,601.21 3,317,383,370.13
period
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
147
Dalian Refrigeration Co., Ltd. 2016 Annual Report
2015.01-12
Owners’ equity attributable to parent company
Items Other Retained Minority Total of owners’
Lessen: Special Surplus equity equity
share capital Capital suplus comprehensive profits
treasury stock reserve reserve
income
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 39,503,800.00 587,219,831.33 34,981,492.17 39,757,326.12 -30,373,866.37 650,207,968.91
means decrease)
(I) Total comprehensive
587,219,831.33 129,947,307.39 1,267,714.76 718,434,853.48
incomes
(II) Capital increased and
10,150,000.00 47,976,985.66 39,503,800.00 -29,139,058.21 -10,515,872.55
reduced by owners
1. Common shares increased
10,150,000.00 35,784,208.92 39,503,800.00 -29,139,058.21 -22,708,649.29
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 -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. 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
360,164,975.00 630,264,991.95 39,503,800.00 589,988,118.05 580,769,740.16 525,925,066.25 66,257,548.71 2,713,866,640.12
period
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
148
Dalian Refrigeration Co., Ltd. 2016 Annual Report
STATEMENT OF CHANGES IN OWNERS’ EQUITY
Prepared by Dalian Refrigeration Company Limited 2016.01-12 Unit: RMB Yuan
2016.01-12
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
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 (“-” 251,611,583.00 395,350,378.51 28,112,056.00 -158,345,633.66 39,809,107.36 70,215,543.61 570,528,922.82
means decrease)
(I) Total comprehensive
-158,345,633.66 146,041,148.47 -12,304,485.19
incomes
(II) Capital increased and
71,529,096.00 575,432,865.51 28,112,056.00 618,849,905.51
reduced by owners
1. Common shares increased
71,529,096.00 563,160,559.76 28,112,056.00 606,577,599.76
by shareholders
2. Capital increased by
holders of other equity
instruments
3. Amounts of share-based
payments recognized in 12,227,168.00 12,227,168.00
owners’ equity
4. Other 45,137.75 45,137.75
(III) Profit distribution 39,809,107.36 -75,825,604.86 -36,016,497.50
1. Withdrawing surplus
39,809,107.36 -39,809,107.36
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 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 1,036,115,161.
611,776,558.00 67,615,856.00 430,413,556.77 620,578,847.52 498,962,843.33 3,130,231,111.16
period 54
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
149
Dalian Refrigeration Co., Ltd. 2016 Annual Report
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
150
