Dalian Refrigeration Company Limited
For the year ended December 31, 2016
Auditor’s Report
Reference Page
Auditor’s report
Financial statements
— Consolidated balance sheet 1-2
— Balance sheet of parent company 3-4
— Consolidated income statement 5
— Income statement of parent company 6
— Consolidated cash flow statement 7
— Cash flow statement of parent company 8
— Consolidated statements of changes in equity 9-10
— Statements of changes in equity of parent company 11-12
— Notes to financial statement 13-132
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Auditors’ Report
(English Translation for Reference Only)
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
(Special General Parternship)
BeijingChina Chinese CPA: Wang Dong
21 April, 2017
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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)
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 yearheld on 21st April 2016 approved the profit
distribution policy for the year of 2015, which agrees the profit distribution basing 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
sharesthrough capital reserve. The policy stated above was fully implemented on 5th May
2016, and the registered capital was altered to 540,247,462.00Yuan.
The 17thmeeting of the 6th generation of board was held on 4th June 2015 and the 2nd interim
shareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the
proposal of non-public offering of ‘A shares’. China’s Securities Regulatory Commission
issued SFC license [2015]3137 on 30th December, 2015, approving that new non-public
offering cannot exceeded 38,821,954 number of shares. The company implemented the post
meeting procedures for China’s Securities Regulatory Commission, which is regarding
adjustment of bottom price and the number of the shares issued after the implementation of
profit distribution policy of 2015 in May, 2016, and accordingly revised the upper limit of
non-public offering of share to58,645,096 number of new ‘A shares’. The company issued the
non-public offering of 58,645,096 number of ‘A shares’ to 7 investors, and as a result, the
total number of shares of the company is changed to 598,892,558 shares, and the par value is
1yuan per share andthe total share capital is 598,892,558.00Yuan. The sharecapital 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 3rdprovisional general meeting held on 13th September 2016, the 9th meeting of the 7th
generation of board deliberated and passed the ‘Proposal aboutgranting the restricted shares
to incentive targets’ on September 20th, 2016 and set 20th September 2016 as share granted
date, and granted 12,884,000 number of restricted shares to 188 incentive targets at granted
price of 5.62Yuan per share. By 22ndNovember, 2016, the company has actually received the
new registered share capital of 72,420,220,00Yuan subscribed by incentive targets, within this
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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)
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 sharecapital
stated above has been verified by DaHua Certified Public Accountants, and has been issued
the capital verification report Dahuayanzi [2016]001138 on 23rdNovember, 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 foodstorage, 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
Subsidiary 1 100 100
Co., Ltd.
Dalian Bingshan Group Sales Co.,
Subsidiary 1 100 100
Ltd.
Dalian Bingshan Air-conditioning
Subsidiary 1 70 70
Equipment Co., Ltd.
Dalian Bingshan JiaDe Automation
Subsidiary 1 100 100
Co., Ltd.
Dalian Bingshan Lingshe Quick
Subsidiary 1 100 100
Freezing Equipment Co., Ltd.
Wuhan New World Refrigeration
Subsidiary 1 100 100
Industrial Co., Ltd.
Bingshan Technical Service（Dalian）
Subsidiary 1 100 100
Co.,Ltd.
Dalian Niweisi LengNuan Subsidiary 1 55 55
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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)
Proportion of
Proportion of
Names of subsidiaries Types Level shareholding
votes（%）
（%）
Techonoligy Co., Ltd.
Dalian Xinminghua Electrical
Subsidiary 1 100 100
Technology Co., Ltd
Wuhan New World Air-conditioning Sub-subsidi
2 100 100
Refrigeration Engineering Co., Ltd ary
Dalian Bingshan Security Leisure Sub-subsidi
2 100 100
Industrial Engineering Co., Ltd ary
Ningbo Bingshan Air-conditioning Sub-subsidi
2 51 51
Refrigeration Engineering Co., Ltd ary
Shanghai Bingshan Technical Service Sub-subsidi
2 51 51
Co., Ltd ary
This year, there are 3 more entities were included in the scope of consolidation, they are Dalian
Xinminghua Electrical Technology Co., Ltd, Dalian Bingshan BaoanLeisure 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 5thmeeting 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 8thmeeting 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 5thmeeting 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 Baoan 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.
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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 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 15thmeeting 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 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 6thmeeting 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 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 3rdmeeting of the 7th generation of board of directors approved to accept the 70% of
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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)
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.
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
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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 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 Groupadopts 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.
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
liabilityobtained 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
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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)
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.
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 financialstatements, 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, assetand
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
19
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)
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 financialstatements, the acquirer
shall remeasure itspreviously 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 equitymethod accounting rising from the interest held in
acquiree in relation to the period before theacquisition, 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 acquisitionincurs,
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 consolidatedfinancial 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 financialstatements, remaining share of
interest in the subsidiary shall be remeasured on the date of losing control. Sum of the share
disposal consideration and fair value of remaining portion of shareholding minus the share of
the net assets in the subsidiary held based on the previous shareholding percentage since the
acquisition date or combination date, the balance of above is recognized as investment
gain/loss for the period and goodwill shall be written off accordingly. Other comprehensive
income relevant to share investment in subsidiary shall be transferred to investment gain /loss
for the period on the date of losing control.
When the Group partially disposes of the long –term equity investment in subsidiary and lose
the control over it by stages, if all disposing transactions are bundled, each individual
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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)
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 jointoperation; andits expenses, including its share of any expenses
incurred jointly. When an entity enters into a transaction with a joint operation in which it is
ajoint operator, such as a sale or contribution of assets, it is conducting thetransaction with the
other parties to the joint operation and, as such, the jointoperator shall recognize gains and
losses resulting from such a transaction onlyto 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.
(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
21
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)
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 acquisition or at the end of a subsequent
financial reporting period. They are measured at fair value subsequently. Change on fair value
22
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)
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.
23
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)
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.
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
24
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)
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.
Ifobjective evidence shows that impairment for available-for-sale financial assets will
occur,the cumulative loss arising from the decline in fair value that had been recognized
directly in equity is removed from equity and recognized as impairment loss, although the
financial assets are not derecognized. The accumulative losses that are transferred out shall be
the balance obtained from the initially obtained costs of the financial asset after deducting the
principals taken back and 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 ofheld-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
25
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)
Financial liabilities of an entity are classified at initial recognition as “financial
liabilities at fair value through profit or loss” and “other financial liabilities” on initial
recognition
Financial liabilities at fair value through profit or loss include financial liabilities held
for trading and those designated as fair value through profit or loss on initial recognition
（relevant basis for classification shall be disclosed by reference to financial assets）.
They are subsequently measured at fair value. The net gain or loss arising from changes
in fair value, dividends and interest paid related to such financial liabilities are recorded
in profit or loss for the period in which they are incurred.
Other financial liability is measured at amortized cost by adopting the effective rate
method.
2) Financial liability derecognition
A financial liability is derecognized when the underlying present obligations or part of
it are discharged. Existing financial liability shall be derecognized and new financial
liability shall be recognized when the entity sign the agreement with creditor to
undertake the new financial liability in replacement of existing financial liability, and
the terms of agreement are different in substance. Any significant amendment to the
agreement as a whole or part o it is made, then the existing liabilities or part of it shall
be derecognized and financial liability after terms amendment shall be recognized as a
new financial liability. The difference between the carrying amount of the financial
liability derecognized and the consideration paid is recognized in profit or loss for the
period.
3) Fair value measurement of financial asset and financial liability
If there is an 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
26
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)
input shall be used when observable inputcan not be obtained or it is infeasible to be
obtained.
11. Provision for bad debts of receivables
The Group shall review the carrying amount of receivables fully at the balance sheet date.
The Group shall calculate the full provision for bad debts for the following receivables:
debtor has been log-out, bankruptcy, minus net asset, significant poor cash flow and
significant nature disaster leads to discontinue production and the debtors could not pay for
the debts within the foreseeable time . Other solid evidences indicates that the receivables
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
Judgment basis or amount standards of Top 5 of account receivables at year end
individually significant amounts
The accruing method of the receivables The bad debt provisions shall be accrued based on
with individually significant amounts the difference between current value of future cash
flow and the carrying amounts.
(2) Accounts receivable accrued bad debt provision by credit risk portfolio
The basis of portfolio
Accounts receivable due from subsidiaries
Inter-company
included in consolidated scope
Other than accounts receivable due from
subsidiaries included in consolidated scope and
Accounting aging individual receivable with significant amount
without impariment, use the accounting aging of
the receivables
The basis of bad debt provision
Inter-company Individual identified method
Accounting aging Age analysis method
27
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) The percentage of provision for bad debts based on the age of receivables as followings:
Accounting aging Accrual percentage of the Accrual percentage of
receivables (%) other receivables (%)
Within 1 year 5 5
1-2 years 10 10
2-3 years 30 30
3-4 years 50 50
4-5 years 80 80
Over 5 years 100 100
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 accountsreceivable but accrued bad debt provision as
per portfolio
The individual amount is not significant, but the
Accrual reason accrued bad debt provision on the basis of portfolio
can not reflect its risk characteristic
The bad debt provisions should be accrued based on
Accrual method the difference between current value of future cash
flow and the carrying amount.
12. Inventories
Inventories are materials purchasing, raw material, variance of cost materials, low-valuable
consumable, materials processed on commission,working-in-progress, semi-finished goods,
varianceof 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 adjustedaccording to invenotry category. For the finished goods, raw
material held for sale etc which shall be sold directly, the net realizable value should be
28
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)
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.
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
29
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)
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 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.
30
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)
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.
31
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)
If the entity loses its control through partially disposal of investment by stages and it’s not a
bundled transaction, the entity shall account for all transactions separately. If it’s a bundled
transaction, the entity shall regard all transactions as one disposal of subsidiary by losing
control, but the difference between disposal consideration and carrying amount of the equity
investment disposed prior to losing control, which arises from each individual transaction
shall be recognized as other comprehensive income until being transferred into profit and loss
for the period by the time of losing control.
14. Investment property
The investment property includes property and building and measured at cost model
Estimated
net
Useful life
Category residual Annual depreciation rate
(years)
value rate
(%)
Housing and Buildings 40 3% 2.43%
15. Fixed assets
Recognition criteria of fixed assets: defined as the tangible assets which are held for the
purpose of producing goods, rendering services, leasing or for operation & management, and
have more than one year of useful life.
Fixed assets shall be recognized when the economic benefit probably flows into the Group
and its cost can be measured reliably. Fixed assets include: building, machinery,
transportation equipment, electronic equipment and others.
All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and are
still being used and land is separately measuered. Straight-line depreciation method is
adopted by the Group. Estimated net residual value rate, useful life, depreciation rate as
follows:
Estimated net
Useful life Annual
No Category residual value
(years) depreciation rate
rate (%)
1 Housing and Buildings 20-40 3%,5%,10% 2.25-4.85%
2 Machinery equipment 10-22 3%,5%,10% 4.09-9.7%
3 Transportation equipment 4-15 3%,5%,10% 6-24.25%
4 Electronic equipment 5 3%,5%,10% 18-19.4%
5 Others equipment 10-15 3%,5%,10% 6-9.7%
32
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 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 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
33
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)
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 long-term assets
The Group assesses at each balance sheet date whether there is any indication that long-term
equity investments, investment property, fixed assets, construction in progress and intangible
assets with definite usefullife 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.
34
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)
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 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
35
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)
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 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
36
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)
recognised in the profit or loss for the year.
If the granted equity instrumentsare 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 thequantity and quality of the goods, client collected or
authorized the agent to collect the good and sales amount is confirmed, have collected or
expected to collect the payment, cost of goods can be reliably measured, risk and reward is
transferred so the revenue is recognized.
Complete sets of engineering projects, if selling products and building installation part can
be separated and can be measured separately, selling products will be treated as sales of
products.Selling products and building installation will not be able to be distinguished, or
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
requirementsrelated 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.
37
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） 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 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.
38
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 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 maybe recovered, the income is recognized at the cost actually
recovered, and the cost of the contract is recognized as contract expenses of the current
period when it is occurred.
② If contract cost may not be recovered, the cost of the contract shall be recognized as
contract expenses when incurred, and no contract revenue shall be recognized.
3) In case the expected total cost is greater than the total income, the expected loss will be
recognized as expense of the current period immediately.
.25. Government grants
A government grant is a monetary asset or non-monetary asset granted by government
39
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)
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-businesscombination 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 clause of the lease agreement states that all risk and rewards related to the leased asset
has been transferred to the leasee in nature, then the lease is regarded as financing lease,
others are recognized as operating lease.
（1） Operating lease accounting
40
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) The leasing fees paid for the leased assets by the company shall be recorded as the
current expense according to the straight-line method in the whole lease term not
excluding the rent free period. The initially direct expense related to the lease
transactions paid by the company shall be recognized as the current expense.
When the assets lessor has assumed the lease-related expenses which should be borne by
the company, the company shall deduct these expenses from the total amount of rent,
amortize in the lease term according to the rents after deducted and record as the current
expenses.
2) The leasing fees received for the leased assets by the company shall be recognized as the
lease income according to the straight-line method in the whole lease term not excluding
the rent free period. The initially direct expense related to the lease transactions paid by
the company shall be recognized as the current expense. For a large of amount, it will be
capitalized and recorded as the current revenue based on the same confirmation of lease
income during the whole lease period.
When the company has assumed the lease-related expenses which should be borne by the
lessee, the company shall deduct these expenses from the total amount of rent and
amortize in the lease term according to the rents after deducted.
（2） Financing lease accounting
(1)The assets acquired under financing leases: the lower value between the fair value of
leased assets and the present value of the minimum lease payments is recognized as the
recorded value, the minimum lease payments are recognized as the recorded value of
long-term payables, and the difference is recognized as unrecognized finance expense at the
inception of the lease.
The company shall adopt the effective interest method to amortize and record as the financial
costs during the assets lease term.
(2)Finance leased assets: the company inception of the lease, the finance lease receivables,
the difference between the present value and the residual value of its unsecured recognized as
unrealized financing income recognized in the respective period of future lease rental income
received, initial direct costs related to the transaction with the rental companies, and included
in the initial measurement of the finance lease receivable and reduce the amount of revenue
recognized over the lease term.
28. Other significant accounting policy and estimate
Safety production cost
The company accrued the safety production cost in accordance with state regulation and
41
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)
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 withthe 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:
Tax Tax base Tax rate
Value-added tax (VAT) Sales revenue or Purchase 17%,13%,11%,6%,5%
Business tax Revenue from property lease, 3%,5%
examination fee, surcharge
42
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)
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 Current period taxable profit 15%,25%
tax(EIT)
70% of cost of own property or revenue
Real estate tax 1.2% or 12%
from leasing property
Land use tax Land using right area Fixed amount per
square meter
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%
Dalian Bingshan JiaDe Automation Co., Ltd. 15%
Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd. 25%
Wuhan New World Refrigeration Industrial Co., Ltd. 15%
Bingshan Technical Service （Dalian） Co.,Ltd. 25%
Dalian Niweisi LengNuan Techonoligy Co., Ltd. 25%
Dalian Xinminghua Electrical Technology Co., Ltd 25%
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 grantedfor 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 grantedfor 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
43
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)
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 grantedfor the preferential tax policy of
enterprise income tax rate of 15% in three years
VI. Notes to Consolidated Financial Statements
The following disclosure date on this financial statement without special indication, “opening”
refers to January 1, 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 18,503,739.86
18,512,681.41
Deposit for letter of credit
Deposit for letter of guarantee 2,161,950.07
3,064,134.15
Cash in bank for warrant of migrant workers 2,400,000.00
2,400,000.00
Total
23,065,689.93
23,976,815.56
The closing balance of the cash and cash in bank increased177.68% 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
44
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)
Commercialacceptance 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
Commercialacceptance notes
Total 15,532,736.64
(3) Notes receivable endorsed or discounted but not mature at the end of year
Item Closing amount no more Closing amount still
recognized recognized
Bank acceptance notes 147,781,322.57
Commercialacceptance
9,908,754.00
notes
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
Amount % Amount % balance
Accountsreceivabl
e 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
45
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)
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 %
Accountsreceivable
with significant
individual amount
and separate bad
debt provision
Accounts
receivable with bad
debt provision
801,499,499.03 100.00 130,075,662.16 16.23 671,423,836.87
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 801,499,499.03 100.00 130,075,662.16 16.23 671,423,836.87
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
46
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)
Closing Balance
Aging Accounts Provision for Drawing proportion
receivable 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 reversalor withdrawn in current period
Received Regained
Companies Reasons
amount form
Dalian Jinguang ME Mechanical
100,000.00 Bank deposits Company keeps urging
Engineering Co., Ltd
Total 100,000.00
(3) No accounts receivable written off in current period
(4) The top five significant accounts receivable categorized by debtors
Closing
% of the
Company Closing Balance Aging Balance of
total AR
Provision
Panasonic Cold-Chain Within 1 year,
47,410,594.36 5.23 2,422,031.17
(Dalian) Co., Ltd. 1-2 years
AB-InBev Sedrin
45,255,600.00 Within 1 year 5.00 2,262,780.00
Brewery Co.,Ltd
BeijingHuashang Within 1 year,
BingshanRefrigeration 1-2 years, 3-4
38,284,385.35 4.23 3,543,453.36
and Air-conditioning years, over 5
Machinery Co., Ltd. years
Xinyi Yuanda
construction and 31,300,000.00 Within 1 year 3.45 1,565,000.00
Installation Engineering
47
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)
Closing
% of the
Company Closing Balance Aging Balance of
total AR
Provision
Co., Ltd.
Xilingol Grandfarm Me Within 1 year,
20,340,000.00 2.25 1,371,202.35
atCo., Ltd. 1-2 years
Total 182,590,579.71 20.16 11,164,466.88
4. Advances to suppliers
(1) Aging of advances to suppliers
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 supplierscategorized by debtors
% of the total
Company Closing Balance Aging advances to
suppliers
Dalian Bingshan Internation Within 1 year,
14,610,882.17 15.36
al Trading Co.,Ltd. 1-2 years
Shenyang Debao Hongtai
Agricultural Development C 13,206,355.64 Within 1 year 13.88
o., Ltd.
Oritcranes (Liaoning) Co.,
10,368,000.00 Within 1 year 10.90
Ltd.
Dalian HOLLEY coating e
9,600,000.00 Within 1 year 10.09
quipment Co., Ltd.
Shanghai industrial automat
9,147,900.00 Within 1 year 9.62
ion equipment Co., Ltd.
Total 56,933,137.81 59.85
The closing balance of the advances to supplierincreased115.16% comparing with the opening
balance because of the increasing advanced engineering payments.
5. Interest receivable
(1) Interest receivable
48
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)
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’sundue 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
Booking balance Provision Booking
Amount % Amount % balance
Other receivableswith
significant individual
amount and - - - - -
separatebad debt
provision
Other receivables
identified bad debt
provision based on 60,376,356.44 100.00 7,393,642.55 12.25 52,982,713.89
the characters of
credit risk portfolio
Related party
Risk-free portfolio
Other receivableswith
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)
49
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)
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 based on 28,070,768.44 100.00 5,315,440.23 18.94 22,755,328.21
the characters of
credit risk portfolio
Related party
Risk-free portfolio
Other
receivableswith
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 Provision for Drawing proportion
Other receivables
bad debts (%)
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
50
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 bad debt provision has been accruedat the amount of 2,093,865.54 Yuan during the report
periodand the amount increases 86,541.32Yuan 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 Related party
Companies Category Reasons
amount Procedures transactions or
not
Client has
Chongqing ma Authorized
Deposit 50,530.00 been No
nsite Co. Ltd. by Board
deregistered
Fund can’t be
Shi Feng Petty cash 51,674.54 Authorized
No
collected
by 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 the
Name Category Aging Balance of
Balance total
Provision
OR
Shenyang Debao
Hongtai Agricultural Performance
12,000,000.00 Within 1 year 19.88 600,000.00
Development Co., bond
Ltd.
Shenyang Debao
Jiahong Agricultura Performance
10,000,000.00 Within 1 year 16.56 500,000.00
l Technology Co., bond
Ltd.
Nanjing Yurun Debtor 6,069,414.23 Within1year, 10.05 306,470.71
51
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)
% of
Closing
Closing the
Name Category Aging Balance of
Balance total
Provision
OR
Food Co., Ltd. transferred to 1–2years
be collected
Dalian Delta HK& Within
China Gas Co., L Deposit 2,830,000.00 1year,2 – 3 4.69 216,500.00
td. years
Jiahua Chemical 1 – 2 years,2
Payable 1,913,661.30 3.17 258,671.04
Ltd. – 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 deposit.
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 2,353,515.43 2,353,515.43
further processing
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
52
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)
Opening Balance
Item
Book value Provision for decline Net book value
Constructing projects 27,558,415.02 27,558,415.02
Materials on
consignment for further 2,190,375.70 2,190,375.70
processing
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-manufactu
red
1,386,950.94 1,386,950.94
semi-finished
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
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 Sold within the year
semi-finished products Lower of cost and NRV
9. Other current assets
Item Closing Balance Opening Balance
Prepaid income tax presented
734,482.13 2,628,292.68
at net amount after offsetting
VAT to be deducted 39,380,207.14 13,779,722.47
Prepaid expenses 355,521.38 70,696.71
53
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)
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 Carrying Booking Carrying
Provision Provision
balance amount balance amount
Available-f
or-sale
debt
instruments
Available-f
or-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
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
54
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) Available-for-sale financial assets measured at cost method
Proportion of BookValue
Investee shareholding in Opening Closing
Increase Decrease
the investee(%) Balance Balance
Zibo traction motor co., ltd. 0.76 849,000.00 849,000.00
Liaoning Mike group Limited
3.57 1,020,000.00 1,020,000.00
by Share Ltd
Guotai Junan investment
0.22 3,057,316.00 3,057,316.00
management company
Cold King container
17.80 11,207,806.00 11,207,806.00
temperature control Co., Ltd.
Liaoning enterprises
4.20 105,000.00 105,000.00
Industrial 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
Cash
Investee Opening Closing
Increase Decrease dividend
Balance Balance
Zibo traction motor co., ltd. 849,000.00 849,000.00
Liaoning Mike group Limited
310,000.00
by 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
105,000.00 105,000.00
Co., 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
Debt
Equity instruments 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
55
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)
Debt
Equity instruments instruments
Category Others Total
available for sale available for
sale
Decreased during current 78,848.32 78,848.32
year
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, and until 31st 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. .
56
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 losses Adjustment of Change Cash bonus Provision for Provision for
Investee recognized other of or profits impairment of Ending balance
balance Increased Decreased Others impairment
under the comprehensive other announced the current
equity income equity to issue period
method
I. Joint venture
Dalian Bingshan
Security Leisure
Industrial 2,837,097.81 2,524,548.42 -312,549.39
Engineering Co.,
Ltd
Subtotal 2,837,097.81 2,524,548.42 -312,549.39
II. Associates
Dalian Bingshan
International 15,691,101.62 1,137,313.10 16,828,414.72
Trading Co.,Ltd.
Panasonic
Refrigeration 159,226,107.64 3,399,533.51 5,200,000.00 157,425,641.15
(Dalian) 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
48,607,035.29 18,545,378.50 14,200,000.00 52,952,413.79
Technology
(Dalian) Co., Ltd.
57
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 losses Adjustment of Change Cash bonus Provision for Provision for
Investee recognized other of or profits impairment of Ending balance
balance Increased Decreased Others impairment
under the comprehensive other announced the current
equity income equity to issue period
method
Panasonic
Compressor 457,892,368.92 58,511,025.07 32,400,000.00 484,003,393.99
(Dalian) Co., Ltd.
Dalian Xinminghua
Electrical
21,958,069.24 21,535,918.03 272,256.45 -43,766,243.72
Technology Co.,
Ltd
MHI Bingshan
Refrigeration 22,276,332.84 -9,257,540.79 13,018,792.05
(Dalian) Co.,Ltd.
Beijing Huashang
Bingshan
Refrigeration and
1,936,646.98 -1,167,183.71 769,463.27
Air-conditioning
Machinery Co.,
Ltd.
Dalian Fuji
Bingshan Vending 113,268,454.28 21,995,198.40 25,523,542.13 160,787,194.81
Machine Co., 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 6,006,874.61 125,158.72 6,132,033.33
Co., Ltd.
58
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 losses Adjustment of Change Cash bonus Provision for Provision for
Investee recognized other of or profits impairment of Ending balance
balance Increased Decreased Others impairment
under the comprehensive other announced the current
equity income equity to issue period
method
Wuhan Sikafu
Power Control 7,200,000.00 -1,043,630.99 6,156,369.01
Equipment Co., Ltd
Panasonic cold
Machine System 21,000,000.00 2,400,297.51 23,400,297.51
(Dalian) Co., Ltd
Subtotal 1,217,530,669.92 71,731,116.43 130,417,034.25 66,171,260.67 -43,766,243.72 1,309,741,316.21
Total 1,220,367,767.73 71,731,116.43 2,524,548.42 130,104,484.86 66,171,260.67 -43,766,243.72 1,309,741,316.21
1、At the 5thmeeting 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 8thmeeting 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
59
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)
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 5thmeeting 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 Yuanpresenting of 20% of shareholding. Until 31st December, 2016, Panasonic Cold Machine System (Dalian) Co., Ltd has officially put into
operation.
4、The 3rdmeeting 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 cashto 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 operation.
60
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& Land-use- Construction
Item rights in progress Total
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
4,771,309.78 4,771,309.78
Construction in 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 61
(3)Other transfer
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. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance
IV. Book Value
1. Closing book value 28,605,652.94 28,605,652.94
2. Opening book value 24,497,584.00 24,497,584.00
(2) Investment property without owner’s certificates
Items Book value Reasons
# 6 building of workshop on No. 106 Liaohe East Rd, Final inspection
28,605,652.94
Dalian Economic and Technology Development Zone uncompleted
(3) Explanationof 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
410,553,157.61 608,130,475.12 25,350,158.35 29,613,012.49 1,073,646,803.57
Balance
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 business 1,323,740.75 33,880,337.28 346,677.19 5,844,177.86 41,394,933.08
combination
62
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
(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
451,766,766.84 515,351,153.65 20,947,149.57 47,885,863.30 1,035,950,933.36
Balance
II.
Accumulated
Depreciation
1. Opening
144,232,577.42 439,963,821.58 16,024,686.66 21,226,057.87 621,447,143.53
Balance
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 business 909,812.87 26,512,408.48 303,860.71 4,575,017.23 32,301,099.29
combination
(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
155,865,048.40 320,193,873.95 13,652,684.57 36,262,100.81 525,973,707.73
Balance
III.
Impairment
Reserve
1. Opening
2,292,229.72 2,292,229.72
Balance
2. Increase
(1)Accrued
63
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
(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
555,027.75 555,027.75
Balance
IV. Book
Value
1. Closing
295,901,718.44 194,602,251.95 7,294,465.00 11,623,762.49 509,422,197.88
book value
2. Opening
266,320,580.19 165,874,423.82 9,325,471.69 8,386,954.62 449,907,430.32
book value
(2) Noidle fixed assets until December 31, 2016.
(3) No fixed assets leases out underfinancing 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
(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.
64
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)
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
70,072,395.96 70,072,395.96 1,768,209.61 1,768,209.61
of machinery
Official
661,185.00 661,185.00
furniture
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 Other
Balance Balance
fixed assets decrease
Buildings
135,257,174.97 152,452,837.34 40,171,932.58 4,771,309.78 242,766,769.95
reconstruction
Improvement
1,768,209.61 77,622,090.88 1,171,578.66 78,218,721.83
of machinery
Official
661,185.00 661,185.00
furniture
Energy station
63,162,393.16 63,162,393.16
project
Total 137,025,384.58 293,898,506.38 104,505,904.40 4,771,309.78 321,646,676.78
(Continued)
Percent of Including:
Accumulated Interest
investment Accumulated Source of
Name Budget capitalized capitalization
against capitalized funds
interest rate(%)
budget(%) interest
Buildings Self
351,685,931.96 81.82 82
reconstruction financing
Improvement Loan/Self
94,113,060.83 83.11 83 933,333.34 1.20
of machinery financing
Official Self
1,104,701.13 59.85 60
furniture financing
Energy station Self
63,162,393.16 100.00 100
project financing
Total 510,066,087.08 933,333.34 1.20 —
65
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 increased134.74% comparing with the opening balance
was new plant construction increased.
15. Intangible assets
(1) Intangible assets list
Land use
Item Knowhow Others Total
right
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
66
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)
Land use
Item Knowhow Others Total
right
1. Opening Balance
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 ClosingBalanc
Name Enterprises
Balance e
merger Other Disposal Other
increase
Dalian Niweisi
LengNuan
1,440,347.92 1,440,347.92
Techonoligy Co.,
Ltd.
Dalian Bingshan
Security Leisure
Industrial 310,451.57 310,451.57
Engineering Co.,
67
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)
Increased during Decreased during
current year current year
Opening ClosingBalanc
Name Enterprises
Balance e
merger Other Disposal Other
increase
Ltd
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 net asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltd
of 46,847,241.86 Yuan on the acquisition date of July 31st 2015 is recognized as goodwill of
1,440,347.92 Yuan on the group consolidated financial report at the end of the year.
In the year 2016, the company purchases shares of Dalian BingshanBaoan Leisure Industry Co.,
Ltd and gains control. The transferred price is based on the net asset of Dalian BingshanBaoan
Leisure Industry Co., Ltd on June 30th 2016. Negotiated with Dalian BingshanBaoan Leisure
Industry Co., Ltd’s shareholder Baoan Water Project (China) Limited Company, the transfer
price is the combination cost on the purchasing date which is 5,359,548.42 Yuan, the fair value
of proportion of Dalian BingshanBaoan Leisure Industry Company’s identifiable net asset is
5,049,096.85 Yuan on the purchasing day, therefore, goodwill is 310,451.57Yuan on the
purchasing date.
The book value of goodwill from business combination of Dalian Niweisi LengNuan
Technology Co., Ltd and Dalian BingshanBaoan Leisure Industry Co., Ltd which are not under
same control shall be allocated into the relevant asset group using the reasonable method since
acquisition date and taken impairment test on relevant asset group where the goodwill is
included. The obvious impairment indication of the goodwill hasn’t been found. Thus no
goodwill impairment provision has been made.
17. Long-term repayments
Opening Other Closing
Item Increase Amortization
Balance Decrease Balance
Employee’s
2,566,083.66 138,478.32 2,427,605.34
dormitory 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
68
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)
18. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offsetting
Item Closing Balance Opening Balance
Deductible Deferred tax Deductible Deferred tax
temporary difference assets temporary difference assets
Provision for
impairment of 114,300,933.14 22,627,026.82 107,112,240.49 19,372,358.73
assets
Share option
Incentiveexpense 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 Deferred tax Taxable Deferred tax
temporary liabilities temporary liabilities
difference difference
Asset revaluation
increment in business
combination not under
the same control
Fair value change of the
available-for-sale 504,557,879.67 75,683,681.95 690,846,860.39 103,627,029.06
financial assets
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 years
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
69
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)
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
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
Reason of unpaid or not carried
Name of company Closing Balance
forward
Wuhan Zhongwei explosive control Project is uncompleted contract is
10,412,365.00 not finished
system Co.,Ltd
Binzhou Shanfu Project is uncompleted contract is
10,211,962.19 not finished
RefrigerationEngineering Co., Ltd
70
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)
Reason of unpaid or not carried
Name of company Closing Balance
forward
Heilongjiang Longleng Project is uncompleted contract is
9,413,290.00 not finished
TechnologyCo., Ltd
Wuhan Kaixing Development Co., Project is uncompleted contract is
8,201,894.75 not finished
Ltd
Project is uncompleted contract is
BAC（Dalian）Co.,Ltd 6,271,540.00 not 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 Unsettled contract payments on
Construction Development Co., Ltd 3,100,000.00 sets projects
Unsettled contract payments on
Jiangsu Ruixiang Chemical Co., Ltd 2,023,581.40 sets projects
Inner Mongolia Datang Dingwang Unsettled contract payments on
Chemical Co., Ltd 1,962,400.00 sets projects
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 payable
Item Opening Increase Decrease Closing
Balance Balance
Short-term
51,857,345.29 284,908,827.66 287,649,042.22 49,117,130.73
employee’s payable
Post-employment
36,396,018.29 36,396,018.29
benefit –defined
71
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 Balance
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 Increase Decrease Closing
Balance Balance
Salaries, bonus,
allowance, and 33,196,105.86 220,370,407.93 221,111,778.40 32,454,735.39
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
Housingfunds 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 expenses
Non-currency
244,132.56 244,132.56
welfare
Total 51,857,345.29 284,908,827.66 287,649,042.22 49,117,130.73
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
72
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 Balance
Pension 32,634,069.75 32,634,069.75
Unemployment
1,420,102.77 1,420,102.77
insurance
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 recorded in 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
Ordinary share dividend 863,516.60 533,156.00 shareholders not
claimed.
Total 863,516.60 533,156.00
73
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 payablescategorized 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
Reason of unpaid or not
Name of company Closing Balance
carried forward
Not reach the return condition
Restricted share buy back 16,930,200.00 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
CDBDevelopment 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 arrived, Bingshan Group gave it to the company at the same rate of 1.2% in
lump sum. The above fund needed to be warranted by the company. The guarantee seems to
be given for the holding shareholder, but it is for the company itself in fact.
28. Deferred income
(1) Category of deferred income
74
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 Formation
Balance Balance Basis
Asset
49,378,296.00 9,683,995.00 1,665,672.00 57,396,619.00
related
Revenue
related
Total 49,378,296.00 9,683,995.00 1,665,672.00 57,396,619.00 —
(2) Government subsidy project
Recorded
Opening into non Other Closing Related with
Government
Increase
subsidy item Balance -operation Change Balance asset/equity
income
Subsidy fund
for highly
effective heat 3,704,296.00 551,672.00 3,152,624.00 Assetrelated
pump and
related system
Contribution to
subsidiary 45,674,000 00 1,114,000.00 44,560,000.00 Assetrelated
company
relocation
Application of
NH3 and CO2
instead of R22
screw
refrigerating 9,683,995.00 9,683,995.00 Assetrelated
machine
combined
condensing
unit
Total 49,378,296.00 9,683,995.00 1,665,672.00 57,396,619.00 -
29. Share capital
75
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（+、-）
Transfer
Opening New share Closing
Item Share from Subtotal
balance issued others balance
dividend capital
reserve
Total
share 360,164,975.00 71,529,096.00 180,082,487.00 251,611,583.00 611,776,558.00
capital
The general meeting for 2015 fiscal yearheld 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 ordinaryshares for every 10
sharesthrough 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
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
76
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)
share capital stated above has been verified by DaHua Certified Public Accountants, and has been
issued the capital verification report DHYZ [2016]001138 on 23rd November, 2016.
30. Capital reserves
Items Opening Increase Decrease Closing Balance
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.
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
Opening Increase Decrease Closing
Items
Balance 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 companyimplements 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.
77
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 After-tax Closing
Items Amount for the Less：Previously recognized Less： After-tax attribute
Balance attribute to Balance
period before in profit or loss in other income to the parent
income tax
minority
comprehensive income tax company
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 589,988,118.0 431,639,323.5
loss of other comprehensive income
-134,168,362.59 24,180,431.94 -158,348,794.53
5 2
Proportional other comprehensive
income of investee which is
reclassified into income statement 2,768,286.72 3,160.87 -3,160.87 2,765,125.85
under equity method
Changes in fair value recognized in 587,219,831.3 428,874,197.6
gains and losses of the -134,168,362.54 24,177,271.07 -158,345,633.66
available-for-sale financial assets 3 7
Changes in gains and losses of the
available- for –sale financial asset
reclassified by held for maturity
investment
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)
2016
Opening After-tax Closing
Items Amount for the Less：Previously recognized Less： After-tax attribute
Balance attribute to Balance
period before in profit or loss in other income to the parent
income tax
minority
comprehensive income tax company
shareholder
The effective part of the gains and
losses of the cash flow hedging
Foreign currency translation
differences of financial statements
Other comprehensive income 589,988,118.0 431,639,323.5
-134,168,362.59 24,180,431.94 -158,348,794.53
total 5 2
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)
33. Special Reserve
Opening Closing
Items Increase Decrease
Balance 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 Closing
Increase Decrease
Balance 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 1,460.418million 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 178,632,660.24 129,947,307.39
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)
parent company 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
Sales revenue Cost of sales Sales revenue Cost of sales
Revenue from 1,448,130,516.2 1,590,994,011.6 1,299,526,134.1
1,759,247,556.50
principle operation 5 7 2
Revenue from other
20,251,670.14 10,465,820.28 16,524,427.94 10,317,677.51
operation
Total 1,458,596,336.5 1,607,518,439.6 1,309,843,811.6
1,779,499,226.64
3 1 3
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 withthe 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.
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)
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
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
82
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)
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 decreased.
41. Assets impairment losses
Items 2016 2015
Loss of bad debts 17,651,775.24 16,646,342.24
Provision for inventoryimpairment 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
Gain fromdisposing 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 3,364,489.50
available for sale 16,000,450.40
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 increased34.78% 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
Item 2016 2015 into current
non-recurring profit
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)
or loss
Gains on disposal of non-current
1,182,803.71 167,463.99 1,182,803.71
assets
Including: gains on disposal of
1,182,803.71 167,463.99 1,182,803.71
fixed 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
Item 2016 2015 With asset/income
Subsidy for 2014 pioneer
from Dalian Foreign Trade 42,000.00 Incomerelated
Bureau
Incomerelated
Aid from Dalian Intellectual
Property Service Centre 5,000.00
Allowance for exporting from Incomerelated
new &high technology zone 27,318.37
of Dalian
Subsidy for Incomerelated
overseasexhibition 60,000.00
CDPF and centers for disease Incomerelated
service subsidies 20,697.00
Subsidy of 2014 economic Incomerelated
support policy 30,000.00 43,400.00
Subsidy for social security 11,165.00 Incomerelated
Taxes refund 1,330,480.25 499,945.82 Incomerelated
Liaoning self-owned brand Incomerelated
development project 270,000.00
Subsidy of East and West Incomerelated
Lake District Finance Bureau
Science and technology 169,000.00
innovation
East and West Lake District Incomerelated
Economic and Information
Technology Innovation 114,000.00
project funding
Small and medium Incomerelated
enterprises in Liaoning 30,000.00
province "specialization
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)
Item 2016 2015 With asset/income
special" product project
Stabilization subsidy 2,474,362.26 Incomerelated
Aid for patent from Wuhan Incomerelated
Intellectual Property Bureau 5,000.00
Project #863, large quantity
1,696,490.19 Incomerelated
seawater precooling
Subsidy fund for highly
effective heat pump and related 551,672.00 585,098.00 Assetrelated
system
Contribution to subsidiary
1,114,000.00 1,114,000.00 Assetrelated
company relocation
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 non-recurring
Item 2016 2015
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
22,748,252.08 229,182.73 24,485,454.05
assets
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.
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)
45. Income tax expenses
(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 temporarydifference 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
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)
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
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
40,468,057.28
resources, 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
-1,182,803.71 11,212.67
long-term assets (income listed with”-”)
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)
Losses on write-off of fixed assets (income listed
22,748,252.08 50,506.07
with”-”)
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”-”)
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 -84,569,865.56
with”-”)
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 2,835,000.00
Co., Ltd
less： Net cash and cash equivalentheld by subsidiaries on the date of 44,259,400.93
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)
Items 2016
purchase
Including：Dalian Xinminghua Electrical Technology Co., Ltd. 43,551,643.42
Dalian Bingshan Security Leisure Industrial Engineering 707,757.51
Co., Ltd
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
47. The assets with the ownership or use right restricted
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
48. Monetary category of foreign currency
(1) Monetary category of foreign currency
Item Closing Balance Exchange Closing Balance
(foreign currency) Rate (RMB)
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
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)
（1）Consolidation not under the same control during the year
Date of the Percentage（%） Method of
Name of the Cost of the Purchasing
share of shareholding acquiring
acquiree share acquired date
acquired acquired share
Dalian 2016.07.31 21,535,918.03 70 Cash 2016.07.31
Xinminghua
Electrical
Technology Co.,
Ltd.
Dalian Bingshan
Baoan Leisure
Industrial 2016.07.08 5,670,000.00 50 Cash 2016.07.08
Engineering Co.,
Ltd
Income of
acquiree from Net profit from
Name of the Recognition of date of
purchasing date purchasing date
acquiree purchasing
until the year end until the year end
Dalian Xinminghua Board of directors and 32,557,210.04 157,544.92
Electrical respective authorities
Technology Co., Ltd. approved the acquisition,
equity transfer procedures
Dalian Bingshan have been completed, the
Baoan Leisure payment has been settled,
Industrial 4,956,230.25 -602,397.87
obtain the control over the
Engineering Co., Ltd financial and operating
policies actually
（2） Cost of consolidation and goodwill
Items Dalian
Dalian Bingshan
Xinminghua
Security Leisure
Electrical
Industrial Engineering
Technology Co.,
Co., Ltd
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
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)
Items Dalian
Dalian Bingshan
Xinminghua
Security Leisure
Electrical
Industrial Engineering
Technology Co.,
Co., Ltd
Ltd.
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 Baoan 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 Baoan Leisure Industrial Engineering Co., Ltd valued on 30th June 2016.
Having negotiated with Baoan Hydraulic Engineering (China) Limited Company, the shareholder
of Dalian Bingshan Baoan 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 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 Baoan Leisure
Technique Co.,Ltd Industrial Engineering Co., Ltd
Items Fair value on Book value on Fair value on Book value on
acquisition acquisition acquisition acquisition date
date date 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
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)
Dalian Xinminghua Electronic Dalian Bingshan Baoan Leisure
Technique Co.,Ltd Industrial Engineering Co., Ltd
Items Fair value on Book value on Fair value on Book value on
acquisition acquisition acquisition acquisition date
date date date
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
The amount of
Gain or loss Method and main other
Book value of the Fair value of the from the hypothesis of the comprehensive
original original remeasurement purchasing date’s income
Name of the
shareholding held shareholding held of share held at fair value of the transferred to the
acquiree
prior to prior to fair value prior original equity investment
acquisition date acquisition date to acquisition held prior to the income prior to
date purchasing date the date of
purchase
Dalian Xinminghua The fair value of
Electronic Technique 22,230,325.69 22,230,325.69 identifiable net 3,160.87
Co.,Ltd
assets is measured
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 amount of
Gain or loss Method and main other
Book value of the Fair value of the from the hypothesis of the comprehensive
original original remeasurement purchasing date’s income
Name of the
shareholding held shareholding held of share held at fair value of the transferred to the
acquiree
prior to prior to fair value prior original equity investment
acquisition date acquisition date to acquisition held prior to the income prior to
date purchasing date the date of
purchase
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 Shareholding
Registered Business (%) Obtaining
Name of subsidiaries business
address nature method
address Direct Indirect
Dalian Bingshan Group
Dalian Dalian Installation 100 Establish
Engineering Co., Ltd.
Dalian Bingshan Group
Dalian Dalian Trading 100 Establish
Sales Co., Ltd.
Dalian Bingshan
Air-conditioning Dalian Dalian Manufacturing 70 Establish
Equipment Co., Ltd.
Dalian Bingshan JiaDe
Dalian Dalian Manufacturing 100 Establish
Automation Co., Ltd.
Dalian Bingshan Lingshe
Quick Freezing Dalian Dalian Manufacturing 100 Establish
Equipment Co., Ltd.
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)
Main Registered Business Shareholding Obtaining
Name of subsidiaries
business address nature (%) method
Wuhan New World address
Refrigeration Industrial Wuhan Wuhan Manufacturing 100 Merger
Co., Ltd.
Bingshan Technical
Service （ Dalian ） Dalian Dalian Services 100 Establish
Co.,Ltd.
Dalian Xinminghua
Electrical Technology Dalian Dalian Electronic 100 Merger
Co., Ltd
Dalian Niweisi LengNuan
Dalian Dalian Manufacturing 55 Merger
Techonoligy Co., Ltd.
Wuhan New World
Air-conditioning
Wuhan Wuhan Installation 100 Establish
Refrigeration Engineering
Co., Ltd
Ningbo Bingshan
Air-conditioning
Ningbo Ningbo Installation 51 Establish
Refrigeration Engineering
Co., Ltd
Dalian Bingshan Baoan
Leisure Industrial Dalian Dalian Installation 100 Merger
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
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. 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 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.
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.
(2) Effect on the change of proportion of shareholdings in the subsidiaries
Dalian Bingshan Dalian Bingshan Lingshe
Items JiaDe Automation Quick Freezing Equipment
Co., Ltd Co., Ltd.
Cash 5,350,000.00 1,859,709.19
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)
Dalian Bingshan Dalian Bingshan Lingshe
Items JiaDe Automation Quick Freezing Equipment
Co., Ltd Co., Ltd.
Total of acquisition cost/disposal 5,350,000.00 1,859,709.19
consideration
Less: proportion of shareholdings of net
asset in the subsidiary when acquired 8,335,136.96 1,916,249.94
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 (%)
Main
Name of joint ventures or Registered Business Accounting
business
affiliated companies address nature methods
address
Direct Indirect
Affiliated companies:
Jiangsu Jingxue Freezing Equity
Changzhou Changzhou Manufacturing 29.21
Equipment Co., Ltd. method
Dalian Fuji Bingshan Equity
Dalian Dalian Manufacturing 49
Vending Machine Co., Ltd. method
Keinin-Grand Ocean Thermal Equity
Dalian Dalian Manufacturing 20
Technology (Dalian) Co., method
Ltd
Panasonic Compressor Equity
Dalian Dalian Manufacturing 40
(Dalian) Co., Ltd method
The company assumes the affiliated assignificant party either when the investment income from investee
presents 10% of the parent’s net profit or the proportion of shareholding of the investee’s net asset
represents 10% of the parent’s shareholder equity.
1) The company has the same percentage of shareholding and voting right in joint-venture or
affiliated company.
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)
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 affiliatedcompanies which have no significant
influence although being held 20% or more voting rights.
（2） The key financial information ofaffiliated companies
2016
Jiangsu Dalian Fuji Keinin-Grand
Panasonic
Jingxue Bingshan Ocean Thermal
Items Compressor
Freezing Vending Technology
(Dalian) Co.,
Equipment Machine Co., (Dalian) Co.,
Ltd
Co., Ltd. Ltd. 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 382,395,625.97 327,674,501.05 264,762,068.85 1,222,728,273.04
company
Net assets calculated
according to the 160,560,505.51
111,579,052.67 52,952,413.77 489,091,309.22
shareholding
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
97
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)
2016
Jiangsu Dalian Fuji Keinin-Grand
Panasonic
Jingxue Bingshan Ocean Thermal
Items Compressor
Freezing Vending Technology
(Dalian) Co.,
Equipment Machine Co., (Dalian) Co.,
Ltd
Co., Ltd. Ltd. Ltd
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
Net profit of
discontinuing operation
Other comprehensive
income
Total comprehensive 56,713,066.91 52,088,861.48 92,726,892.48 158,997,350.73
income
The current dividends
received from joint 5,842,400.00 14,200,000.00 32,400,000.00
ventures
Continued：
2015
Keinin-Grand
Dalian Fuji
Items Ocean Thermal Panasonic Compressor
Bingshan Vending
Technology (Dalian) Co., Ltd
Machine Co., 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
231,160,110.77 243,035,176.37 1,157,639,044.60
company
Net assets calculated
according to the 113,268,454.28 48,607,035.27 463,055,617.84
shareholding proportions
Adjusting events
—Goodwill
—Unrealized profits of
insider trading
98
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)
2015
Keinin-Grand
Dalian Fuji
Items Ocean Thermal Panasonic Compressor
Bingshan Vending
Technology (Dalian) Co., Ltd
Machine Co., Ltd.
(Dalian) Co., Ltd
--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
Othercomprehensive
income
Total comprehensive
58,543,688.14 79,365,464.49 161,351,528.59
income
The current dividends
received from joint 5,314,796.52 9,600,000.00 34,000,000.00
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.
99
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)
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 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
1,954.72 410,894.00 98,556.32 511,405.04
bank
Accounts receivable 79,255.11 79,255.11
100
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)
Closing Balance
Items
USD JPY GBP EUR Total
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.
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.
101
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 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 20.15% 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 cash flow of the contracts as following：
Closing balance
1-2 2-5
Items Within 1 year Over 5 years Total
years years
Financial Assets
Cash and cash in
679,724,805.76 679,724,805.76
bank
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
545,565,116.64 545,565,116.64
financial asset
102
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)
Closing balance
1-2 2-5
Items Within 1 year Over 5 years Total
years years
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
244,789,824.53 244,789,824.53
bank
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
733,275,249.09 733,275,249.09
financial 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
Tax payable 15,701,578.36 15,701,578.36
Dividend payable 533,156.00 533,156.00
103
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)
X. Disclosure of Fair Value
1. Amount and measurement level of the assets and liabilities measured at fair value at the year
end
Fair value at the year end
Items First level Second level Third level
measurement of measurement of measurement of Total
fair value fair value fair value
Financial assets 531,653,458.05 531,653,458.05
available for saleby
(1) Investment
debt instruments
(2) Investment by 531,653,458.05 531,653,458.05
equity
instruments
(3) Others
Total assets 531,653,458.05 531,653,458.05
continuously
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: accountsreceivable, short-term loan and accountspayable.
The difference between the book value of assets and liabilitymentioned above and fair value is
rather small.
XI. Related Parties Relationship and Transactions
(I) Related parties relationship
104
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. Parent company and ultimate controller
1) Parent company and ultimate controller
Parent Registered Business Registered Shareholding Voting
company address nature capital percentage power
(%) percentage
(%)
Dalian
Bingshan
Dalian Manufacture 158,580,000.00 19.96% 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
Mr.Ji Zhijian, and the registered capital is RMB158.58 million. The registered business
operation period is from 3rd July 1985 to 2nd July 2035. The business scope include research,
development, manufacture, sales, service and installment of refrigeration equipment, cooling
and freezing equipment, different size of air-conditioners, petrochemical equipment, electronic
and electronic- controlproducts, 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
Relationships with the Company
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 Affiliated
(Dalian) Co., Ltd
105
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)
Names of the joint ventures or affiliated
Relationships with the Company
company
Dalian Bingshan International Trading Co. , Affiliated
Ltd
Beijing Huashang Bingshan Refrigeration and Affiliated
Air-conditioning Machinery Co., Ltd
Dalian Fuji Bingshan Vending Machine Co., Affiliated
Ltd
MHI Bingshan Refrigeration (Dalian) Co.,Ltd. Affiliated
Dalian Fuji Iceberg Vending Machine Sales Affiliated
Co., Ltd
Jiangsu Jingxue Freezing Equipment Co., Ltd. Affiliated
Panasonic Cooling Machine system (Dalian) Affiliated
co., Ltd
Affiliated wholly owned subsidiary of the
Wuhan LanNing energy technology co., Ltd
Company
Wuhan Sikafu Power Control Equipment Co., Affiliated wholly owned subsidiary of the
Ltd Company
4. Other related parties
Name of related party Related party relationship
Dalian Bingshan Group Refrigeration Affiliated company of Dalian Bingshan
Equipment Co., Ltd Group
Dalian Third Refrigeration Equipment Factory Subsidiary of Dalian Bingshan Group
Affiliated company of Dalian Bingshan
Dalian Bingshan Metal Technology Co., Ltd
Group
Affiliated company of Dalian Bingshan
Dalian Spindle Cooling Towers Co., Ltd
Group
Affiliated company of Dalian Bingshan
BAC (Dalian) Co., Ltd
Group
(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., Purchases of
134,456,421.45 193,000,774.15
Ltd goods
Panasonic cold machine system Purchases of
116,159,861.59
(dalian) co., Ltd goods
Dalian Bingshan International Purchases of
88,077,665.44 71,456,746.91
Trading Co. , Ltd goods
106
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)
Related party Content 2016 2015
Panasonic Refrigeration (Dalian) Co., Purchases of
36,625,052.09 15,802,549.92
Ltd. goods
Purchases of
BAC (Dalian) Co., Ltd 32,939,920.88 39,198,256.38
goods
Dalian Bingshan Group Refrigeration Purchases of
24,809,044.30 19,240,996.98
Equipment Co., Ltd goods
Jiangsu Jingxue Freezing Equipment Purchases of
24,371,971.14 11,909,299.18
Co., Ltd. goods
Wuhan LanNing energy technology Purchases of
21,429,117.11
co., Ltd goods
Dalian Third Refrigeration Purchases of
5,588,505.15 9,477,468.27
Equipment Factory goods
Dalian Spindle Cooling Towers Co., Purchases of
4,621,938.47 1,649,338.45
Ltd goods
Beijing Huashang Bingshan
Purchases of
Refrigeration and Air-conditioning 3,803,218.03 1,398,717.87
goods
Machinery Co., Ltd.
Panasonic compressor (Dalian) Co., Purchases of
3,189,155.55 1,170,571.97
Ltd goods
Dalian Bingshan Metal Technology Purchases of
577,427.88 316,910.80
Co., Ltd goods
Dalian Fuji Bingshan Vending Purchases of
359,807.67 242,187.94
Machine Co., Ltd goods
MHI Bingshan Refrigeration (Dalian) Purchases of
30,199.15 125,734.92
Co.,Ltd. goods
Dalian Xinhuaming electrical Purchases of
266,054.52
Technology Co., Ltd. goods
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.,
Sales of goods 76,396,710.08 27,493,069.64
Ltd.
Dalian Bingshan International Trading
Sales of goods 70,224,178.49 97,111,776.90
Co. , Ltd
Wuhan LanNing energy technology co.,
Sales of goods 31,564,672.87
Ltd
Beijing Huashang Bingshan
Refrigeration and Air-conditioning Sales of goods 27,791,350.44 64,232,868.76
Machinery Co., Ltd.
Dalian Fuji Bingshan Vending Machine
Sales of goods 25,951,727.99 18,409,705.00
Co., Ltd
107
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)
MHI Bingshan Refrigeration (Dalian)
Sales of goods 17,508,233.11 7,621,072.14
Co.,Ltd.
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
Sales of goods 2,777,710.00 1,821,581.25
Factory
Panasonic Cold Machine system
Sales of goods 2,321,085.25
(Dalian) co., Ltd
Wuhan Sikafu Power Control Equipment
Sales of goods 560,308.54
Co., Ltd
Dalian Bingshan Group Refrigeration
Sales of goods 543,771.08 776,009.44
Equipment Co., Ltd
Dalian Bingshan Metal Technology Co.,
Sales of goods 48,779.66 84,149.31
Ltd
BAC (Dalian) Co., Ltd Sales of goods 48,042.74 96,085.47
Jiangsu Jingxue Freezing Equipment
Sales of goods 377,379.23 105,270.84
Co., Ltd.
Keinin-Grand Ocean Thermal
Sales of goods 766,630.42 766,404.00
Technology (Dalian) Co., Ltd.
Dalian Honjo Chemical Co., Ltd Sales of goods 6401.89
Dalian Fuji Iceberg Vending Machine
Sales of goods 125,921,72
Sales Co., Ltd
Total 374,879,187.1 297,045,071.01
3. Assets Lease
1) Assets rent out
Category of assets 2016Lease 2015 Lease
Lessor Lessee
rent out Income Income
Dalian
Refrigeration Dalian Bingshan
Office 98,742.86 103,680.00
Company Group Co., Ltd.
Limited
Dalian MHI Bingshan
Refrigeration
Refrigeration Workshop 4,100,000.00 4,200,000.00
Company
Limited (Dalian) Co.,Ltd.
Dalian Dalian Bingshan
Office 118,800.00 124,740.00
Refrigeration International
108
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)
Category of assets 2016Lease 2015 Lease
Lessor Lessee
rent out Income Income
Company Trading Co. , Ltd
Limited
2) Assets under lease
Category of 2016 Lease 2015 Lease
Lessor Lessee
assets rent in fees fees
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
The Company and Dalian Bingshan Group Co., Ltd signed the agreement, which the Company
leased out the 576squre 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
693square 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
109
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）Funds borrowed from Related Party
Name of the related party Amount Starting date Ending date Explanation
Project fund
Dalian Bingshan Group Co., Ltd. 160,000,000.00 2016.03.14 2026.03.13 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.
6. Asset transfer and debt restructuring of related party: None
7. Management Remuneration
Item 2016 2015
Total rewards for the key management
3,896,600.00 3,753,800.00
personnel( tax included)
(III) Balances with Related party
(1) Accounts receivable due from related parties
Closing Balance Opening Balance
Item Related party Book Bad debt Book Bad debt
Balance Provision Balance Provision
Accounts
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
110
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)
Wuhan LanNing
Energy
14,466,855.00 723,342.75
Technology Co.,
Ltd
Panasonic
Refrigeration 10,132,966.54 506,648.32 5,473,096.64 273,654.83
(Dalian) 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 3,461.40 173.07
Equipment Co.,
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 69,350.00 6,592.50 265,820.40 27,166.02
(Dalian) 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)
112,420.00 5,621.00
Co., Ltd
Notes
receivable
111
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)
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
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 200,000.00 2,909,535.58
(Dalian) Co., Ltd
Panasonic Cold
machine system 1,778.45
(dalian) Co., Ltd
Panasonic
Compressor 1,052,980.08
(Dalian) Co., Ltd
BAC (Dalian)
100,000.00
Co., Ltd
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)
318,220.00
Co., Ltd
Panasonic Cold
Chain (Dalian) 90,000.00
Co., Ltd
Beijing Huashang
Bingshan
Refrigeration and
378,268.10
Air-conditioning
Machinery Co.,
Ltd
112
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)
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)
28,223,695.70 32,804,524.70
Co., Ltd
Wuhan LanNing Energy
15,300,000.00
technology Co., Ltd
Dalian Bingshan Group
9,358,905.93 8,860,105.57
Refrigeration Equipment Co., Ltd.
Jiangsu Jingxue Efficient
8,505,375.05 5,742,746.00
Technology Co., Ltd.
Dalian Spindle Cooling Towers
5,339,188.00 344,750.00
Co., Ltd
Dalian Bingshan International
3,762,700.19 5,671,660.46
Trading Co. , Ltd
Panasonic Cold machine system
3,680,482.86
(dalian) Co., Ltd
Dalian Third Refrigeration
2,022,156.94 3,437,911.21
Equipment Factory
Panasonic Compressor (Dalian)
1,696,000.00 45,650.00
Co., Ltd
113
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)
Dalian Bingshan Metal
798,283.30 222,692.68
Technology Co., Ltd
Panasonic Refrigeration (Dalian)
50,667.31
Co., Ltd.
Notes Payable
BAC (Dalian) Co., Ltd 29,632,455.00 1,600,000.00
Dalian Bingshan International
8,648,260.12 2,543,514.28
Trading Co. , Ltd
Jiangsu Jingxue Efficient
4,903,405.00 4,227,728.00
Technology Co., Ltd.
Panasonic Cold Chain (Dalian)
3,303,845.50 1,597,350.00
Co., Ltd
Dalian Bingshan Group
1,000,000.00 6,897,040.82
Refrigeration Equipment Co., Ltd.
Wuhan Sikafu Power Control
620,000.00
Equipment Co., Ltd
Dalian Third Refrigeration
450,000.00 2,730,000.00
Equipment Factory
Dalian Spindle Cooling Towers
1,107,249.00
Co., Ltd
Panasonic Compressor (Dalian)
136,199.00
Co., Ltd
Dalian Bingshan Metal
100,000.00
Technology Co., Ltd
Accounts
Received in
Advance
Beijing Huashang Bingshan
Refrigeration and
459,609.61 352,929.50
Air-conditioning Machinery Co.,
Ltd
MHI Bingshan Refrigeration
450,000.00 5,850.00
(Dalian) Co.,Ltd.
Dalian Bingshan International
214,039.00 79,008.70
Trading Co. , Ltd
Panasonic Cold Machine System
171,000.00
(Dalian)Co., Ltd
Panasonic Cold-Chain (Dalian)
1,466,923.23
Co., Ltd
Other accounts
payable
Dalian Bingshan Group Co. , Ltd 294,956.06 10,412,056.06
MHI Bingshan Refrigeration
270,000.00 152,371.59
(Dalian) Co.,Ltd.
Dalian Third Refrigeration
1,000.00 1,000.00
Equipment Factory
Dalian Bingshan International
283.95 346.00
Trading Co. , Ltd
114
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)
Beijing Huashang Bingshan
Refrigeration and
61,241.27
Air-conditioning Machinery Co.,
Ltd
(IV) Related Party Commitment
None
(V) Others
None
XII. Share-Based Payment
1． General situation of share payment
Items Situation
Total equity instruments granted by the company during 12,884,000
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
issued by the company at the year end and the period, remaining contract period are24
remaining term of the contract and 36 months
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 paymentsettled by equity
Items Situation
According to the fair value of restricted
Method for determining the fair value of the equity
stock on granted date (the fair value
instruments granted
changes after the grant date is uncertain)
The basis for determining the quantities of exercised Determined by the actual numbers of
equity instruments share exercised
The reasons for the significant difference between this
None
year’s estimation and last year’s estimation
115
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 cumulative amount of capital reserve which includes
24,417,688.00
share payment settled by equity
Total cost of share payment recognized by equity
12,227,168.00
settlement this year
1) The Situation of Granted Restricted Share in 2015
According to the 13th meeting of the 6th generation of board, the 1st interim shareholders’
meeting and the rules of ‘Restricted Share Incentive Plan (draft)’, the Company granted
10,150,000 numbers of restricted shares to 41 incentive targets by offering incentive targets ‘A’
original shares. The granted price is 5.56yuan per share, and the total capital raised is
56,434,000.00Yuan. The Company’s incentive targets include the directors, middle and senior
managementpersonnel and other key personnel supposed to incent who held office when the
‘Share Incentive Plan’ was announced, but excluding the supervisors, the independent directors,
foreign directors and foreign management personnel. The 15th meeting of board of 6th generation
held on 4th March 2015 approved the ‘The Report Regarding Granting Incentive Targets
Restricted Shares’, which agrees to grant 10,150,000 numbers of restricted shares to 41
incentive targets, and set 4th March 2015 as share granted date.
2) The Situation of Granted Restricted Share in 2016
According to the 9th meeting of 7th generation of directors, the 3rd interim shareholders’ meeting
and the rules of ‘Restricted Share Incentive Plan (draft)’, the Company granted 12,884,000
numbers of restricted shares to 118 incentive targets by offering incentive targets ‘A’ original
shares. The granted price is 5.62yuan per share, and the total capital raised is
72,480,080.00Yuan. The Company’s incentive targets include the directors, middle and senior
managementpersonnel and other key personnel supposed to incent who held office when the
‘Share Incentive Plan’ was announced, but excluding the supervisors, the independent directors,
foreign directors and foreign management personnel. The 9th meeting of board of 7th
generation held on 20th September 2016 approved the ‘The Report Regarding Granting
Incentive Targets Restricted Shares’, which agrees to grant 12,884,000 numbers of restricted
shares to 118 incentive targets, and set 20th September 2016 as share granted date.
3) The Situation of Unlocking Restricted Shares in 2016
The 4th meeting of the 7th generation of board held on 13th April 2016 approved the ‘Proposal for
unlocking in restricted share options incentive plan for the first unlocking-in period’. There
were 41 incentive targets who satisfied the requirements of unlocking- in, and the number of the
restricted shares can apply unlocking in to have listed and circulated is 3,045,000 that account
116
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)
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
financial position
Items Content unable to be
and operating
estimated
results
agreed to accept 76%
Significant External
shareholding of the Bingshan 56,150,000
Investment
International Trade Co., Ltd
agreed to accept 49%
Significant External
shareholding of the Bingshan 172,950,000
Investment
Metal Technology Co., Ltd
Refinancing securities Refinancing securities Itemsare not
lending transactions lending transactions implemented
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.,
117
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)
Ltd.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., Ltd. 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 mutualnegotiation.
2. Information about profit distribution
Items Content
Extract 20% of the free surplus reserves; based
on611,776,558 numbers of share intotal, paid out cash
dividend of 1Yuan for every 10 shares(before tax),and cash
Dividend proposed to be distributed
dividend of B sharesare paid in Hong Kong dollars;the
total,and share dividend of 4 common shares for every 10
shares through capital reserve.
Dividend approved to be distributed by the
General Meeting
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.
3. Sales Return
There is no significant sales return after the balance sheet date.
4. Except the subsequent event disclosed above, the Company has no other significant
subsequent event.
XVI. Other Significant Events
1. Error correction and effect in previous period.
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.
118
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. Asset exchange
(1) The exchange of non-monetary assets
None
(2) The exchange of other assets
None
4. Annuity Plan
None
5. Operation Termination
None
6. Segment Information
The management of the Company divided the Company into 3 segments based on the
geographic area: Northeast China, Central China, and East China. The Northeast is the
Company’s general headquarters and the 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
119
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)
2016
Items Northeast Central
East China Offset Total
China China
1 Operating income 224,830.43 31,330.35 9,707.66 87,918.52 177,949.92
Including:Income from
151,574.77 16,767.32 9,607.83 177,949.92
external 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 from associates and 13,102.30 -91.85 13,010.45
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
49,821.51 1,110.09 4.60 13,208.43 37,727.77
items
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
120
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)
Closing Balance
Item Booking balance Provision Booking
Amount % Amount % balance
Accounts
receivable with bad
debt provision
178,100,272.41 100.00 60,524,866.67 33.98 117,575,405.74
based on the
characters of 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
Amount % Amount % balance
Accounts receivable
with significant
individual amount
and separate bad
debt provision
Accounts receivable
with bad debt
provision based on 262,260,040.72 100.00 65,568,099.85 25.00 196,691,940.87
the characters of
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
121
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) The bad debt provisions of accounts receivable in the portfolio is accrued under
accounting aging analysis method:
Closing Balance
Aging Provision for bad DrawingProportion
Accounts receivable
debts (%)
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
Company Closing Balance Aging Balance of
total 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 Within 1 year,
9,844,000.00 5.53 945,616.34
organic food Co., Ltd 1-2 years
Zhejiang Wan Kai New
7,800,000.00 Within 1 year 4.38 390,000.00
Material Co., Ltd
Dalian Jinyu New
Energy Technology 5,500,000.00 Over 5 years 3.09 5,500,000.00
Development Co., Ltd
Beijing Huashang
Bingshan Refrigeration Within 1 year,
5,464,252.08 3.07 543,380.96
and Air-conditioning 1-2 years
Machinery Co., Ltd.
Total 59,908,252.08 33.64 8,943,997.30
2. Other Receivables
(1) The category of other receivables
122
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)
Closing Balance
Items Booking balance Provision Booking
Amount % Amount % balance
Other receivables with
significant individual
- - - - -
amount and separate bad
debt provision
Other receivables with bad
debt provision based on the
5,595,672.42 100.00 1,227,167.35 21.93 4,368,505.07
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
45,196,469.56 100.00 1,504,857.11 3.33 43,691,612.45
based on the 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
123
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) The bad debt provisions of other receivables in the portfolio is accrued under accounting
aging analysis method
Closing Balance
Aging Provision for bad DrawingProportion
Other receivables
debts (%)
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
Closing % of the
Name Category Aging Balance of
Balance total OR
Provision
Dalian Delta HK within 1
Security
China gas Co., 2,730,000.00 year, 2-3 48.79 211,500.00
deposit
Ltd years
Dalian Jinzhou
New district 1-2 years,
Security
Funding agencies 1,586,623.95 2-3 years, 28.35 215,838.59
deposit
and institutions 3-4 years
accounting center
124
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)
Closing
Closing % of the
Name Category Aging Balance of
Balance total OR
Provision
Dalian Municipal
Construction
engineering labor Security
500,000.00 3-4 years 8.94 250,000.00
insurance deposit
management
center
Dalian economic
and technological
development zone Security Over 5
265,950.62 4.75 265,950.62
funding agencies deposit years
and institutions
accounting center
Shandong Noel Security
200,000.00 4-5 years 3.57 160,000.00
food Co., Ltd deposit
Total 5,282,574.57 94.40 1,103,289.21
125
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. 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 ofaffiliates
1,297,452,913.87 1,297,452,913.87 1,214,360,893.12 1,214,360,893.12
and JV
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
Closing
Opening Closing Provision in
Subsidiaries names Increase Decrease Balance of
Balance 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 Co.,
Ltd 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
126
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)
Closing
Opening Closing Provision in
Subsidiaries names Increase Decrease Balance of
Balance Balance current period
provision
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
12,024,000.00 10,000,000.00 22,024,000.00
（Dalian） Co.,Ltd.
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 –
SecuirtyLeisure Industrial 2,837,097.81 2,524,548.42 -312,549.39
Engineering Co., Ltd.
Subtotal 2,524,548.42 -312,549.39
2,837,097.81
2. Affiliated companys
127
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 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
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
Internatioanl Trading 15,691,101.62 1,137,313.10 16,828,414.72
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.
128
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 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
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 2,524,548.42 131,022,957.13 66,171,260.67 -43,766,243.72 1,297,452,913.87
129
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)
4. Operating revenue and cost
Item 2016 2015
Revenue Cost Revenue Cost
Revenue from main
546,594,784.30 461,413,033.94 529,921,896.78 439,578,679.65
operation
Revenue from other
11,810,086.74 7,113,931.96 11,553,354.87 7,030,947.50
operation
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 12,904,192.38 3,915,784.39
method
Income from long-term equity investments under equity 131,022,957.13 125,536,756.26
method
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.
130
大连冷冻机股份有限公司财务报表附注
2016 年 01 月 01 日至 2016 年 12 月 31 日
（本财务报表附注除特别注明外，均以人民币元列示）
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 of identifiable net asset of invested 30,334,841.93
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
tradablefinancial asset and liabilities, and available for sale financial
27,629,395.44
assets, other than effective hedging in relation to 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
131
大连冷冻机股份有限公司财务报表附注
2016 年 01 月 01 日至 2016 年 12 月 31 日
（本财务报表附注除特别注明外，均以人民币元列示）
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 33,405,242.03
2. Return on equity and earnings per share
Weighted Earnings per share
average (EPS)
Profit of report period return on Basic Diluted
net assets EPS EPS
(%)
Net profit attributable to shareholders of parent company 5.87 0.31 0.31
Net profit after deducting non-recurring gains and losses
4.77 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.
Dalian Refrigeration Co., Ltd
April 21, 2017
132
