Auditors’ Report
(English Translation for Reference Only)
To the shareholders of Dalian Refrigeration Company Limited
1. Opinion
We have audited the financial statements of Dalian Refrigeration Company Limited
(“Dalian Refrigeration Company”), which comprise the Company’s balance sheet as
at 31 December 2017, the Company’s income statement, the Company’s cash flow
statement and the Company’s statement of changes in shareholders’ equity for the
year then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements of Dalian Refrigeration
Company present fairly, in all material respects, the Company’s financial position as
at 31 December 2017, the Company’s results of operations and cash flows for the year
then ended in accordance with Accounting Standards for Business Enterprises.
2. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing for Chinese
Certified Public Accountants. Our responsibilities under those standards are further
described in the “Auditor’s Responsibilities for the Audit of the Financial Statements”
section of our report. We are independent of Dalian Refrigeration Company in
accordance with the Code of Ethics for Chinese Certified Public Accountants, and we
have fulfilled our other ethical responsibilities of the code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our
audit.
3. Key Audit Matters
Key audit matters are those matters that we consider, in our professional judgment,
were of most significance in our audit of the financial statements of the current period.
These matters were addressed in the context of our audit of the financial statements as
a whole and, in forming our audit opinion thereon, and we do not express a separate
opinion on these matters.
1. Revenue recognition
Key Audit Matter How the matter was addressed in the audit
Revenue of Dalian Refrigeration The main audit procedures carried out for
Company and its subsidiaries addressing the key audit matters are as follows:
mainly come from sales of products 1. Understand and evaluate effectiveness of
and installation. The key concern design and operation of the management ‘s
about the sales revenue is due to the internal control over revenue
large sales quantities and any 2. Carried out analytical review and evaluate
potential misstatements existing in the reasonableness of sales income and gross
the revenue recognition within the profit margin by segmenting the business and
appropriate accounting period. sales in conjunction with industry development
Key concern about installation and actual situation of Dalian Refrigeration
income is because the accounting Company.
involved by significant accounting 3. Sampling test the sales contracts, identify the
estimate and judgment. Having clause and terms in respect to the risk and
considered these matters, we reward transfer of the ownership. Evaluate the
recognized revenue recognition as recognition timing of revenue whether is in line
key audit matters. with the accounting standards.
4. Sampling select product sales revenue
record, reconcile to sales invoice, contracts,
dispatch note, acceptance note; Sampling select
installation sales revenue record, reconcile to
invoice, installation contracts and completion
report and Evaluate the recognition of revenue
whether is in line with the accounting standards
5. Obtain the system data and reconcile to the
data from accounting system so to ensure the
consistence.
6. Sampling select the transactions before and
after the balance sheet date, test the dispatch
note and other supporting documents so to
ensure whether the transaction is recorded into
the appropriate accounting period.
4. Other Information
The management of Dalian Refrigeration Company (hereinafter referred to as the
“Management”) is responsible for the other information. The other information
comprises the information included in the Dalian Refrigeration Company 2017 annual
report, but does not include the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of the other information, we are required to report that fact. We have
nothing to report in this regard.
5. Responsibilities of the Management and Those Charged with
Governance for the Financial Statements
The Management is responsible for the preparation of the financial statements in
accordance with Accounting Standards for Business Enterprises to achieve fair
presentation; and designing, implementing and maintaining internal control which is
necessary to enable that the financial statements are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Management is responsible for assessing
Dalian Refrigeration Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of
accounting unless the Management either intends to liquidate Dalian Refrigeration
Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible to overseeing Dalian Refrigeration
Company’s financial reporting process.
6. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with auditing standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are generally considered
material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial
statements.
During the course of audit in accordance with auditing standards, we exercise
professional judgment and maintain professional skepticism. We also carry out the
following works:
(1) Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our audit. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
(2) Obtain an understanding of internal control relevant to the audit in order
to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of its internal control (this
sentence would be deleted in circumstance when we are also responsible to issue an
opinion on the effectiveness of internal control in conjunction with the audit of the
financial statements).
(3) Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
Management.
(4) Conclude on the appropriateness of the Management’s use of the going
concern basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast significant
doubt on Dalian Refrigeration Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements in accordance
with the auditing standards or, if such disclosures are inadequate, we shall modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause Dalian
Refrigeration Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and also whether the financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
(6) Obtain sufficient and appropriate audit evidence of financial information
from Dalian Refrigeration Company and express our opinion. We are responsible for
directing, monitoring and implementing the group audit and take full responsibility
for audit opinion.
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings etc., including
any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have
complied with those relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence and related safeguards, where applicable.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial statements of
the current period and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation prohibited public disclosure about the
matter or when, in rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such
communication.
ShineWing Certified Public Accountants CICPA：Sui Guojun (Audit Partner)
LLP
CICAP：Wang Dong
China, Beijing April 20, 2018
Consolidated Balance Sheet
December 31, 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Items Note At the end of year At the beginning of year
Current Assets:
Monetary funds Ⅵ、1 394,809,694.11 715,215,638.54
Settlement fund
Outgoing call loan
Fair value through P&L assets
Derivative financial assets
Notes receivable Ⅵ、2 172,818,176.20 126,408,249.59
Accounts receivable Ⅵ、3 1,036,255,895.79 807,109,959.54
Prepayments Ⅵ、4 140,808,375.21 108,033,313.10
Insurance receivables
Reinsurance Receivable
Provision of reinsurance contract reserve receivable
Interest receivable Ⅵ、5 1,871,783.33 723,955.56
Dividend receivable Ⅵ、6 33,450.00 39,025.00
Other receivables Ⅵ、7 52,049,009.83 57,257,456.57
Financial assets purchased under agreement to resell
Inventories Ⅵ、8 352,279,664.64 349,538,424.06
Held for sale assets
Non-current assets due within 1-year
Other current assets Ⅵ、9 114,907,269.33 43,254,044.92
Total Current Assets 2,265,833,318.44 2,207,580,066.88
Non-Current Assets：
Loan and payment on other's behalf disbursed
Available-for-sale financial assets Ⅵ、10 515,783,193.99 545,565,116.64
Held-to-maturity investments
Long-term receivables
Long-term equity investment Ⅵ、11 1,568,255,738.12 1,292,912,901.49
Investments properties Ⅵ、12 103,861,275.27 28,605,652.94
Fixed assets Ⅵ、13 890,874,647.40 511,008,545.87
Construction in process Ⅵ、14 82,999,382.90 321,646,676.78
Engineer material
Disposal of fixed assets
Productive biological assets
Oil-gas assets
Intangible assets Ⅵ、15 143,918,516.87 154,714,212.52
R&D expenses
Goodwill Ⅵ、16 1,750,799.49 1,750,799.49
Long-term deferred expenses Ⅵ、17 14,431,131.01 4,448,719.77
Deferred tax asset Ⅵ、18 31,913,497.18 27,753,747.94
Other non-current assets
Total Non-current Assets 3,353,788,182.23 2,888,406,373.44
Total Assets 5,619,621,500.67 5,095,986,440.32
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
Consolidated Balance Sheet (continued)
December 31, 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Items Note At the end of year At the beginning of year
Current Liabilities:
Short-term borrowings Ⅵ、19 349,801,300.00 45,000,000.00
Loans from central bank
Deposits received and hold for others
Call loan received
Fair value through P&L liabilities
Derivative financial liabilities
Notes payable Ⅵ、20 260,443,167.67 194,562,734.79
Accounts payable Ⅵ、21 889,964,317.63 863,552,643.26
Advance received Ⅵ、22 147,172,195.05 150,098,892.29
Financial assets sold under agreements to repurchase
Fees and commissions payable
Employee pay payables Ⅵ、23 46,751,562.36 50,256,392.86
Taxes and duties payable Ⅵ、24 29,992,558.62 18,405,089.48
Interest payable 379,085.53
Dividend payable Ⅵ、25 863,516.60 863,516.60
Other payables Ⅵ、26 67,674,829.07 109,493,520.02
Amount due to reinsurance Ⅵ、27
Insurance contract provision
Entrusted trading of securities
Entrusted selling of securities
Liability held for sale
Non-current liabilities due within 1-year
Other current liabilities
Total Current Liabilities 1,793,042,532.53 1,432,232,789.30
Non-current Liabilities:
Long-term borrowings 160,000,000.00 160,000,000.00
Bonds Payable Ⅵ、28
Including: Preference shares
Perpetuity bonds
Long-term payables
Long-term employee benefit payables
Special payables
Provisions
Deferred income Ⅵ、29 100,336,504.07 57,396,619.00
Deferred Tax liabilities Ⅵ、18 71,429,566.31 75,683,681.95
Other non-current liabilities
Total Non-current Liabilities 331,766,070.38 293,080,300.95
Total Liabilities 2,124,808,602.91 1,725,313,090.25
Owners Equity(or Shareholders Equity):
Share capital Ⅵ、30 856,487,181.00 611,776,558.00
Other equity instrument
Including: Preference shares
Perpetuity bonds
Capital reserve Ⅵ、31 757,532,081.34 1,046,321,716.85
Less: Treasury stock Ⅵ、32 23,305,370.40 67,615,856.00
Other comprehensive income Ⅵ、33 407,269,002.11 431,639,323.52
Chartered reserve Ⅵ、34
Surplus reserves Ⅵ、35 668,150,375.30 620,578,847.52
Provision for general risk
Undistributed profit Ⅵ、36 750,397,795.56 658,387,158.97
Equity attributable to equity holders of the Company 3,416,531,064.91 3,301,087,748.86
Minority interest 78,281,832.85 69,585,601.21
Total Equity 3,494,812,897.76 3,370,673,350.07
Total Liabilities and Equity 5,619,621,500.67 5,095,986,440.32
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
Balance Sheet of Parent Company
December 31, 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Items Note At the end of year At the beginning of year
Current Assets:
Monetary funds 234,655,092.14 496,417,106.54
Fair value through P&L assets
Derivative financial assets
Notes receivable 57,455,446.82 90,509,540.07
Accounts receivable XVII、1 356,557,956.93 117,575,405.74
Prepayments 33,125,666.30 96,269,883.15
Interest receivable 1,871,783.33 723,955.56
Dividend receivable
Other receivables XVII、2 2,822,798.03 4,368,505.07
Inventories 149,549,915.80 151,230,744.47
Held for sale assets
Non-current assets due within 1-year
Other current assets 102,402,409.84 30,563,139.06
Total Current Assets 938,441,069.19 987,658,279.66
Non-Current Assets：
Available-for-sale financial assets 514,468,051.49 544,249,974.14
Held-to-maturity investments
Long-term receivables
Long-term equity investment XVII、3 2,044,438,551.88 1,713,412,501.09
Investments properties 114,812,363.92 28,605,652.94
Fixed assets 658,637,271.68 274,262,264.28
Construction in process 80,314,961.09 320,329,247.78
Engineer material
Disposal of fixed assets
Productive biological assets
Oil-gas assets
Intangible assets 71,715,598.15 88,113,279.88
R&D expenses
Goodwill
Long-term deferred expenses 12,737,555.16 3,658,276.80
Deferred tax asset 5,815,160.93 6,751,619.50
Other non-current assets
Total Non-current Assets 3,502,939,514.30 2,979,382,816.41
Total Assets 4,441,380,583.49 3,967,041,096.07
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
Balance Sheet of Parent Company (continued)
December 31, 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Items Note At the end of year At the beginning of year
Current Liabilities:
Short-term borrowings 260,000,000.00
Fair value through P&L liabilities
Derivative financial liabilities
Notes payable 119,034,784.44 85,834,371.87
Accounts payable 385,076,569.09 340,987,669.38
Advance received 61,450,463.91 74,949,113.25
Employee payables 11,445,665.15 9,796,460.53
Taxes and duties payable 1,274,710.89 1,234,137.19
Interest payable 379,085.53
Dividend payable 533,156.00 533,156.00
Other payables 30,346,173.96 74,954,775.74
Liability held for sale
Non-current liabilities due within 1-year
Other current liabilities
Total Current Liabilities 869,540,608.97 588,289,683.96
Non-current Liabilities:
Long-term borrowings 160,000,000.00 160,000,000.00
Bonds Payable
Including: Preference shares
Perpetuity bonds
Long-term payables
Long-term employee benefit payables
Special payables
Provisions
Deferred income 56,890,504.07 12,836,619.00
Deferred Tax liabilities 71,429,566.31 75,683,681.95
Other non-current liabilities
Total Non-current Liabilities 288,320,070.38 248,520,300.95
Total Liabilities 1,157,860,679.35 836,809,984.91
Owners Equity(or Shareholders Equity):
Share capital 856,487,181.00 611,776,558.00
Other equity instrument
Including: Preference shares
Perpetuity bonds
Capital reserve 802,034,176.17 1,036,115,161.54
Less: Treasury stock 23,305,370.40 67,615,856.00
Other comprehensive income 406,306,901.44 430,413,556.77
Chartered reserve
Surplus reserves 668,150,375.30 620,578,847.52
Undistributed profit 573,846,640.63 498,962,843.33
Total Equity 3,283,519,904.14 3,130,231,111.16
Total Liabilities and Equity 4,441,380,583.49 3,967,041,096.07
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
Consolidated Income Statement
For the year of 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Item Note Current year Last year
Ⅰ、Total operating revenue 2,079,715,105.37 1,893,200,939.64
Including: Operating revenue Ⅵ、37 2,079,715,105.37 1,893,200,939.64
Interest income
Earned premiums
Fees and commission income
Ⅱ、Total cost of operation 2,045,840,192.64 1,888,674,681.05
Including: Cost of operation Ⅵ、37 1,643,653,442.93 1,536,531,442.08
Interest expenses
Fees and commission expenses
Payments to surrenders of insurance contracts
Net amount of insurance claims expenses
Net charges of provision for insurance contracts
Dividends policy expenses
Reinsurance expenses
Business taxes and surcharges Ⅵ、38 19,553,933.04 17,932,226.42
Selling and distribution expenses Ⅵ、39 113,422,315.47 91,678,326.90
Administrative expenses Ⅵ、40 231,345,591.57 219,270,065.31
Financial expenses Ⅵ、41 10,855,836.96 2,378,038.61
Loss on impairment of assets Ⅵ、42 27,009,072.67 20,884,581.73
Add: Gain arising from the changes in fair value (loss listed with"-")
Investment income (Loss listed with "-") Ⅵ、43 180,132,262.51 172,600,178.47
Including: income from investments in associates and joint ventures (Loss listed with "-") 140,904,557.45 128,967,171.76
Exchange gain (Loss listed with "-")
Gain on asset disposal(Loss listed with "-") Ⅵ、44 552,588.02 -21,565,350.43
Other income Ⅵ、45 1,771,176.72
Ⅲ、Operating profit (Loss listed with "-") 216,330,939.98 155,561,086.63
Add: Non-operating income Ⅵ、46 2,330,234.97 38,222,022.99
Less: Non-operating expenses Ⅵ、47 187,380.52 285,318.73
Ⅳ、 Total profit (Loss listed with "-") 218,473,794.43 193,497,790.89
Less: Income tax expenses Ⅵ、48 13,917,742.62 7,966,473.68
Ⅴ、Net profit (Net loss listed with "-") 204,556,051.81 185,531,317.21
(I) Category in accordance with operation continuity 204,556,051.81 185,531,317.21
1、Net profit from continuing operation 204,556,051.81 185,531,317.21
2、Net profit from discontinuing operation
(II) Category in accordance with ownership 204,556,051.81 185,531,317.21
1、 Net profit attributable to equity holders(shareholders) of the Company 200,759,820.17 182,234,151.73
2、Minority interest 3,796,231.64 3,297,165.48
Ⅵ、 Other comprehensive income net off tax -24,370,321.41 -158,348,794.53
Total comprehensive income net off tax attributable to parent Company -24,370,321.41 -158,348,794.53
(Ⅰ)Items that may not be reclassified subsequently to the income statement - -
1.Change in net asset/liability from remeasurment on defined benefit plan
2.Under equity method, proportionate share of other comprehensive income in
invested company that may not be reclassified subsequently to the income
statement
(Ⅱ)Items that may be reclassified subsequently to the income statement Ⅵ、33 -24,370,321.41 -158,348,794.53
1.Under equity method, proportionate share of other comprehensive income
Ⅵ、33 -263,666.08 -3,160.87
invested company that may be reclassified subsequently to the income statement
2.Avaliable-for-sale financial assets fair value movements Ⅵ、33 -24,106,655.33 -158,345,633.66
3.Profit/loss on reclassification from held to maturities to avaliable-for-sale
financial assets
4.Cash flow hedges effective portion
5.Foreign currency translation difference
6. Others
Total comprehensive income net off tax attributable to minority interests
Ⅶ、Total comprehensive income 180,185,730.40 27,182,522.68
Total comprehensive income attributable to parent Company 176,389,498.76 23,885,357.20
Total comprehensive income attributable to minority interest 3,796,231.64 3,297,165.48
Ⅷ、 Earnings per share
(Ⅰ)Basic earnings per share 0.23 0.22
(Ⅱ)Diluted earnings per share 0.23 0.22
The business combination under the common control during this year, the net profit achieved by the acquiree is___Yuan. Net profit achieved by acquiree last year is ___Yuan.
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
Income Statement of Parent Company
For the year of 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Item Note Current year Last year
Ⅰ、Operating revenue XVII、4 616,759,880.66 558,404,871.04
Less: Cost of operation XVII、4 507,660,774.60 468,526,965.90
Business taxes and surcharges 7,988,392.84 5,674,459.53
Selling and distribution expenses 891,189.19 1,292,587.98
Administrative expenses 112,247,954.40 109,136,561.08
Financial expenses 4,027,140.72 350,400.16
Loss on impairment of assets 321,626.33 -5,320,922.94
Add: Gain arising from the changes in fair value (loss listed with"-")
Investment income (Loss listed with "-") XVII、5 198,438,477.12 187,574,249.05
Including: income from investments in associates and joint ventures (Loss listed with "-") 141,879,121.47 131,022,957.13
Gain on asset disposal(Loss listed with "-") 1,851,943.49 -21,377,966.78
Other income 128,650.51
Ⅱ、Operating profit (Loss listed with "-") 184,041,873.70 144,941,101.60
Add: Non-operating income 527,565.75 3,084,214.94
Less: Non-operating expenses 60,000.00
Ⅲ、 Total profit (Loss listed with "-") 184,569,439.45 147,965,316.54
Less: Income tax expenses 936,458.57 1,924,168.07
Ⅳ、Net profit (Net loss listed with "-") 183,632,980.88 146,041,148.47
(I) Net profit from continuing operation 183,632,980.88 146,041,148.47
(II) Net profit from discontinuing operation
Ⅴ、 Other comprehensive income net off tax -24,106,655.33 -158,345,633.66
(Ⅰ)Items that may not be reclassified subsequently to the income statement - -
1.Change in net asset/liability from remeasurment on defined benefit plan
2.Under equity method, proportionate share of other comprehensive income in
invested company that may not be reclassified subsequently to the income
statement
(Ⅱ)Items that may be reclassified subsequently to the income statement -24,106,655.33 -158,345,633.66
1.Under equity method, proportionate share of other comprehensive income
invested company that may be reclassified subsequently to the income statement
2.Avaliable-for-sale financial assets fair value movements -24,106,655.33 -158,345,633.66
3.Profit/loss on reclassification from held to maturities to avaliable-for-sale
financial assets
4.Cash flow hedges effective portion
5.Foreign currency translation difference
6. Others
Ⅵ、Total comprehensive income 159,526,325.55 -12,304,485.19
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
Consolidated Cash Flow Statement
For the year of 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Item Note Current year Last year
1. Cash flows from operating activities:
Cash received from sales of goods and rendering of services 1,490,364,517.50 1,635,367,200.41
Net increase in deposits from customers and inter-banks deposits
Net increase in loans from central bank
Net increase in loans from other financial institutions
Cash receipts of premium of direct insurance contracts
Net cash received from reinsurance contracts
Net increase in deposits from insurance policy holders and investment
Net increase in disposal of financial assets measured in fair value and through P&L
Cash receipts of interest, fees and commission
Net increase in placement from banks and other financial institution
Net increase in sales and repurchase operations
Cash received from taxes refund 13,249,610.37 15,004,822.89
Cash received relating to other operating activities Ⅵ、50 99,140,045.44 73,923,003.04
Sub-total of cash inflows from operating activities 1,602,754,173.31 1,724,295,026.34
Cash paid for goods and services 1,208,906,954.40 1,130,198,716.81
Net increase in loans and disbursement to customers
Net increase in deposit with central bank and inter-banks
Cash paid for claims of direct insurance contracts
Cash paid for interest, fee and commission
Cash paid for dividends of insurance policies
Cash paid to and on behalf of employees 328,550,494.59 320,358,728.02
Payments of taxes and surcharges 97,569,294.79 119,059,997.71
Cash paid relating to other operating activities Ⅵ、50 174,953,280.75 161,284,653.77
Sub-total of cash outflows from operating activities 1,809,980,024.53 1,730,902,096.31
Net cash flows from operating activities Ⅵ、50 -207,225,851.22 -6,607,069.97
2. Cash flows from investment activities:
Cash received from withdraw of investments 1,500,000.00 1,500,000.00
Cash received from investments income 124,960,986.95 109,727,833.19
Net cash received from disposal of fixed assets, intangible assets and other long-term assets 359,391.02 533,855.77
Net cash received from disposal of subsidiaries and other business units
Cash received relating to other investing activities
Sub-total of cash inflows from investing activities 126,820,377.97 111,761,688.96
Cash paid to acquire fixed assets, intangible assets and other long-term assets 121,653,422.49 339,787,389.83
Cash paid for investments 221,950,000.00 57,404,907.59
Net increase in pledged deposits
Net cash paid to acquire subsidiaries and other business units Ⅵ、50 56,150,000.00 -19,888,482.90
Cash paid relating to other investing activities Ⅵ、50 76,000,000.00
Sub-total of cash outflow from investing activities 475,753,422.49 377,303,814.52
Net cash flows from investing activities -348,933,044.52 -265,542,125.56
3. Cash flows from financing activities
Cash received from investment absorption 4,900,000.00 639,016,550.34
Including: Cash received by subsidiaries from investment absorpotion of non-controlling interest 4,900,000.00 5,390,000.00
Cash received from loans granted 467,829,700.00 312,380,000.00
Cash received from issue of bonds
Cash received relating to other financing activities Ⅵ、50 22,976,815.56 25,795,827.68
Sub-total of cash inflows from financing activities 495,706,515.56 977,192,378.02
Cash paid for settlement of borrowings 162,890,000.00 201,480,000.00
Cash paid for dividends, profits appropriation or payments of interest 71,104,725.59 42,474,168.02
Including: Dividens and profits paid to non-controlling interest 1,078,000.00
Cash paid relating to other financing activities Ⅵ、50 29,714,920.43 26,956,882.67
Sub-total of cash outflows from financing activities 263,709,646.02 270,911,050.69
Net cash flows from financing activities 231,996,869.54 706,281,327.33
4. Effect of changes in foreign exchange rate on cash and cash equivalents -2,383,390.47 1,724,849.71
5. Net increase in cash and cash equivalents Ⅵ、50 -326,545,416.67 435,856,981.51
Add: Cash and cash equivalents at beginning of year 691,238,822.98 255,381,841.47
6. Cash and cash equivalents at end of year Ⅵ、50 364,693,406.31 691,238,822.98
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
Cash Flow Statement of Parent Company
For the year of 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Item Note Current year Last year
1.Cash flow from operating activities
Cash receipts from sale of goods or rendering of services 466,954,711.78 573,989,576.16
Refunds of taxes
Other cash receipts in operating activities 67,958,978.50 43,293,827.34
Sub-total of cash inflows from operating activities 534,913,690.28 617,283,403.50
Cash payments for goods and services acquired 503,456,875.87 417,926,957.89
Cash payments to and on behalf of employees 125,201,385.18 126,059,533.97
Tax and duties payments 9,617,239.24 18,159,382.86
Other cash payments for operating activities 25,669,693.09 38,988,406.65
Sub-total of cash outflows from operating activities 663,945,193.38 601,134,281.37
Net cash flows from operating activities -129,031,503.10 16,149,122.13
2.Cash flows from investing activities
Cash received from withdraw of investments 1,500,000.00 4,170,375.54
Cash receipts from investments income 134,921,961.95 119,993,684.77
Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets 46,000.00 1,328,170.00
Net cash receipts from disposal of subsidiaries and other businesses
Other cash receipts in investing activities
Sub-total of cash inflows from investing activities 136,467,961.95 125,492,230.31
Cash payments for acquired fixed assets, intangible assets and other long-term assets 107,072,028.97 328,899,717.16
Cash payments for investment 221,950,000.00 168,990,635.74
Net cash payments for acquisition of subsidiaries and other businesses 56,150,000.00 21,535,918.03
Other cash payments in investing activities 76,000,000.00
Sub-total of cash outflows from investing activities 461,172,028.97 519,426,270.93
Net cash flows from investment activities -324,704,067.02 -393,934,040.62
3.Cash flows from financing activities
Cash received from capital injection 633,626,550.34
Cash receipts from borrowings 320,000,000.00 240,000,000.00
Cash receipts from issuing bond
Other cash receipts in financing activities 1,200,000.00 720,332.73
Sub-total of cash inflows from financing activities 321,200,000.00 874,346,883.07
Cash paid for settlement of borrowings 60,000,000.00 107,600,000.00
Cash paid for dividends, profits appropriation or payments of interest 68,187,672.87 37,733,665.57
Other cash payments in financing activities 3,430,000.00
Sub-total of cash outflows from financing activities 128,187,672.87 148,763,665.57
Net cash flows from financing activities 193,012,327.13 725,583,217.50
4.Effect of changes in foreign exchange rate on cash and cash equivalents 161,228.59 -20,326.62
5.Net increases in cash and cash equivalents -260,562,014.40 347,777,972.39
Add: the beginning balance of cash and cash equivalent 495,217,106.54 147,439,134.15
6.The ending balance of cash and cash equivalent 234,655,092.14 495,217,106.54
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
Consolidated Statement of Changes in Shareholer's Equity
For the Year of 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Current year
Equity attributable to the equity holders of the Company
Other equity instrument
Item
Share capital Minority interests Total equity
Preference Perpetuity Capital reserves Less: Treasury shares Other comprehensive income Special reserves Surplus reserves General risk provision Undistributed profits
Others
share bond
1. Balance at end of last year 611,776,558.00 1,046,321,716.85 67,615,856.00 431,639,323.52 620,578,847.52 658,387,158.97 69,585,601.21 3,370,673,350.07
Add: Changes in accounting policies -
Correction of prior periods errors -
Business combination under the same control -
Others -
2. Balance at beginning of current year 611,776,558.00 - - - 1,046,321,716.85 67,615,856.00 431,639,323.52 - 620,578,847.52 - 658,387,158.97 69,585,601.21 3,370,673,350.07
3. Increase/ Decrease for current year (Decrease listed with "-")244,710,623.00 - - - -288,789,635.51 -44,310,485.60 -24,370,321.41 - 47,571,527.78 - 92,010,636.59 8,696,231.64 124,139,547.69
（Ⅰ）Total of comprehensive income -24,370,321.41 200,759,820.17 3,796,231.64 180,185,730.40
（Ⅱ）Capital contribution and reduction - - - - -44,079,012.51 -44,310,485.60 - - - - - 4,900,000.00 5,131,473.09
1.Ordinary share -56,150,000.00 -44,310,485.60 4,900,000.00 -6,939,514.40
2.Capital contributed by other equity instrument holders -
3.Share-based payments charged to equity 12,070,987.49 12,070,987.49
4.Others -
（Ⅲ）Profit appropriations - - - - - - - - 47,571,527.78 - -108,749,183.58 - -61,177,655.80
1.Appropriation of surplus reserves 47,571,527.78 -47,571,527.78 -
2.Appropriation to general risks provision -
3.Distribution to equity holders (or shareholders) -61,177,655.80 -61,177,655.80
4.Others -
（Ⅳ）Shareholders interests internally transfered 244,710,623.00 - - - -244,710,623.00 - - - - - - - -
1.Transfer of capital reserve to capital (share capital) 244,710,623.00 -244,710,623.00 -
2.Transfer of surplus reserves to capital (share capital) -
3.Surplus reserves making up of losses -
4.Others -
（Ⅴ）Provision and utilisation of special reserves - - - - - - - - - - - - -
1.Provision for special reserve 2,016,809.74 2,016,809.74
2.Utilisation of special reserve -2,016,809.74 -2,016,809.74
（Ⅵ）Others -
4、Balance at end of current year 856,487,181.00 - - - 757,532,081.34 23,305,370.40 407,269,002.11 - 668,150,375.30 - 750,397,795.56 78,281,832.85 3,494,812,897.76
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
Consolidated Statement of Changes in Shareholer's Equity
For the Year of 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Last year
Equity attributable to the equity holders of the Company
Other equity instrument
Item
Share capital Minority interests Total equity
Preference Perpetuity Capital reserves Less: Treasury shares Other comprehensive income Special reserves Surplus reserves General risk provision Undistributed profits
Others
share bond
1. Balance at end of last year 360,164,975.00 630,264,991.95 39,503,800.00 589,988,118.05 580,769,740.16 525,925,066.25 66,257,548.71 2,713,866,640.12
Add: Changes in accounting policies -
Correction of prior periods errors -
Business combination under the same control 23,634,942.60 26,053,545.85 49,688,488.45
Others -
2. Balance at beginning of current year 360,164,975.00 - - - 653,899,934.55 39,503,800.00 589,988,118.05 - 580,769,740.16 - 551,978,612.10 66,257,548.71 2,763,555,128.57
3. Increase/ Decrease for current year (Decrease listed with "-")251,611,583.00 - - - 392,421,782.30 28,112,056.00 -158,348,794.53 - 39,809,107.36 - 106,408,546.87 3,328,052.50 607,118,221.50
（Ⅰ）Total of comprehensive income -158,348,794.53 182,234,151.73 3,297,165.48 27,182,522.68
（Ⅱ）Capital contribution and reduction 71,529,096.00 - - - 572,504,269.30 28,112,056.00 - - - - - 1,108,887.02 617,030,196.32
1.Ordinary share 71,529,096.00 560,231,963.55 28,112,056.00 1,108,887.02 604,757,890.57
2.Capital contributed by other equity instrument holders -
3.Share-based payments charged to equity 12,227,168.00 12,227,168.00
4.Others 45,137.75 45,137.75
（Ⅲ）Profit appropriations - - - - - - - - 39,809,107.36 - -75,825,604.86 -1,078,000.00 -37,094,497.50
1.Appropriation of surplus reserves 39,809,107.36 -39,809,107.36 -
2.Appropriation to general risks provision -
3.Distribution to equity holders (or shareholders) -36,016,497.50 -1,078,000.00 -37,094,497.50
4.Others -
（Ⅳ）Shareholders interests internally transfered 180,082,487.00 - - - -180,082,487.00 - - - - - - - -
1.Transfer of capital reserve to capital (share capital) 180,082,487.00 -180,082,487.00 -
2.Transfer of surplus reserves to capital (share capital) -
3.Surplus reserves making up of losses -
4.Others -
（Ⅴ）Provision and utilisation of special reserves - - - - - - - - - - - - -
1.Provision for special reserve 1,982,950.50 1,982,950.50
2.Utilisation of special reserve -1,982,950.50 -1,982,950.50
（Ⅵ）Others -
4、Balance at end of current year 611,776,558.00 - - - 1,046,321,716.85 67,615,856.00 431,639,323.52 - 620,578,847.52 - 658,387,158.97 69,585,601.21 3,370,673,350.07
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
Statement of Changes in Equity of Parent Company
For the Year of 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Current year
Other equity instrument
Item Share capital
Preference Perpetuity Capital reserves Less: Treasury shares Other comprehensive income Special reserves Surplus reserves Undistributed profits Total equity
Others
share bond
1. Balance at end of last year 611,776,558.00 1,036,115,161.54 67,615,856.00 430,413,556.77 620,578,847.52 498,962,843.33 3,130,231,111.16
Add: Changes in accounting policies -
Correction of prior periods errors -
Others -
2. Balance at beginning of current year 611,776,558.00 - - - 1,036,115,161.54 67,615,856.00 430,413,556.77 - 620,578,847.52 498,962,843.33 3,130,231,111.16
3. Increase/ Decrease for current year (Decrease listed with "-") 244,710,623.00 - - - -234,080,985.37 -44,310,485.60 -24,106,655.33 - 47,571,527.78 74,883,797.30 153,288,792.98
（Ⅰ）Total of comprehensive income -24,106,655.33 183,632,980.88 159,526,325.55
（Ⅱ）Capital contribution and reduction - - - - 10,629,637.63 -44,310,485.60 - - - - 54,940,123.23
1.Ordinary share -1,441,349.86 -44,310,485.60 42,869,135.74
2.Capital contributed by other equity instrument holders -
3.Share-based payments charged to equity 12,070,987.49 12,070,987.49
4.Others -
（Ⅲ）Profit appropriations - - - - - - - - 47,571,527.78 -108,749,183.58 -61,177,655.80
1.Appropriation of surplus reserves 47,571,527.78 -47,571,527.78 -
2.Distribution to equity holders (or shareholders) -61,177,655.80 -61,177,655.80
3.Others -
（Ⅳ）Shareholders interests internally transfered 244,710,623.00 - - - -244,710,623.00 - - - - - -
1.Transfer of capital reserve to capital (share capital) 244,710,623.00 -244,710,623.00 -
2.Transfer of surplus reserves to capital (share capital) -
3.Surplus reserves making up of losses -
4.Others -
（Ⅴ）Provision and utilisation of special reserves - - - - - - - - - - -
1.Provision for special reserve 2,016,809.74 2,016,809.74
2.Utilisation of special reserve -2,016,809.74 -2,016,809.74
（Ⅵ）Others -
4、Balance at end of current year 856,487,181.00 - - - 802,034,176.17 23,305,370.40 406,306,901.44 - 668,150,375.30 573,846,640.63 3,283,519,904.14
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
Statement of Changes in Equity of Parent Company
For the Year of 2017
Name of Enterprise：Dalian Refrigeration Company Limited Amount Unit:RMB
Last year
Other equity instrument
Item Share capital
Preference Perpetuity Capital reserves Less: Treasury shares Other comprehensive income Special reserves Surplus reserves Undistributed profits Total equity
Others
share bond
1. Balance at end of last year 360,164,975.00 640,764,783.03 39,503,800.00 588,759,190.43 580,769,740.16 428,747,299.72 2,559,702,188.34
Add: Changes in accounting policies -
Correction of prior periods errors -
Others -
2. Balance at beginning of current year 360,164,975.00 - - - 640,764,783.03 39,503,800.00 588,759,190.43 - 580,769,740.16 428,747,299.72 2,559,702,188.34
3. Increase/ Decrease for current year (Decrease listed with "-") 251,611,583.00 - - - 395,350,378.51 28,112,056.00 -158,345,633.66 - 39,809,107.36 70,215,543.61 570,528,922.82
（Ⅰ）Total of comprehensive income -158,345,633.66 146,041,148.47 -12,304,485.19
（Ⅱ）Capital contribution and reduction 71,529,096.00 - - - 575,432,865.51 28,112,056.00 - - - - 618,849,905.51
1.Ordinary share 71,529,096.00 563,160,559.76 28,112,056.00 606,577,599.76
2.Capital contributed by other equity instrument holders -
3.Share-based payments charged to equity 12,227,168.00 12,227,168.00
4.Others 45,137.75 45,137.75
（Ⅲ）Profit appropriations - - - - - - - - 39,809,107.36 -75,825,604.86 -36,016,497.50
1.Appropriation of surplus reserves 39,809,107.36 -39,809,107.36 -
2.Distribution to equity holders (or shareholders) -36,016,497.50 -36,016,497.50
3.Others -
（Ⅳ）Shareholders interests internally transfered 180,082,487.00 - - - -180,082,487.00 - - - - - -
1.Transfer of capital reserve to capital (share capital) 180,082,487.00 -180,082,487.00 -
2.Transfer of surplus reserves to capital (share capital) -
3.Surplus reserves making up of losses -
4.Others -
（Ⅴ）Provision and utilisation of special reserves - - - - - - - - - - -
1.Provision for special reserve 1,982,950.50 1,982,950.50
2.Utilisation of special reserve -1,982,950.50 -1,982,950.50
（Ⅵ）Others -
4、Balance at end of current year 611,776,558.00 - - - 1,036,115,161.54 67,615,856.00 430,413,556.77 - 620,578,847.52 498,962,843.33 3,130,231,111.16
Legal representative： Ji Zhijian Chief Financial Officer：Ma Yun Financial Manager ：Mao Chunhua
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
I. General Information
Dalian Refrigeration Company Limited (the “Company”) was reorganized and reformed from
main part of former Dalian Refrigeration Factory. On December 8, 1993, the company went
to the public as a listed company at Shenzhen Stock Exchange Market. On March 20, 1998,
the company successfully went to the public at B share market and listed at Shenzhen Stock
Exchange Market with total share capital of RMB350,014,975Yuan.
According to the 13th meeting of the 6th generation of board, extraordinary general meeting
for 2015 fiscal year and ' Restricted share incentive plan (draft)' , the Company planned to
introduce A ordinary shares to incentive objectives, which was 10,150,000 number of shares
would be granted to 41 share incentive objectives at granted price of RMB5.56Yuan per share.
Up to March 12th ,2015, the Company received new added share capital of
RMB10,150,000Yuan and the share capital had been verified by DaHua Certified Public
Accountants, and had been issued the capital verification report Dahuayanzi [2015]000086 on
March12th , 2015.
The general meeting for 2015 fiscal year held on 21st April 2016 approved the profit
distribution policy for the year of 2015, which agrees the profit distribution based on the total
360,164,975 number of shares as share capital, paid share dividend of 5 common shares for
every 10 shares through capital reserve. The policy stated above was fully implemented on
5th May 2016, and the registered capital was altered to 540,247,462.00Yuan.
The 17thmeeting of the 6th generation of board was held on 4th June 2015 and the 2nd interim
shareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the
proposal of non-public offering of ‘A shares’. China’s Securities Regulatory Commission
issued SFC license [2015]3137 on 30th December, 2015, approving that new non-public
offering cannot exceeded 38,821,954 number of shares. The company implemented the post
meeting procedures for China’s Securities Regulatory Commission, which is regarding
adjustment of bottom price and the number of the shares issued after the implementation of
profit distribution policy of 2015 in May, 2016, and accordingly revised the upper limit of
non-public offering of share to58,645,096 number of new ‘A shares’. The company issued the
non-public offering of 58,645,096 number of ‘A shares’ to 7 investors, and as a result, the
total number of shares of the company is changed to 598,892,558 shares, and the par value is
1yuan per share and the total share capital is 598,892,558.00Yuan. The share capital stated
above has been verified by DaHua Certified Public Accountants, and has been issued the
capital verification report Dahuayanzi [2016]000457 on 31st May 2016.
According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration Company
13
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
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 about granting the restricted shares
to incentive targets’ on September 20th, 2016 and set 20th September 2016 as share granted
date, and granted 12,884,000 number of restricted shares to 188 incentive targets at granted
price of 5.62Yuan per share. By 22ndNovember, 2016, the company has actually received the
newly subscribed registered share capital of 12,884,000Yuan subscribed by incentive targets.
The share capital stated above has been verified by DaHua Certified Public Accountants, and
has been issued the capital verification report Dahuayanzi [2016]001138 on 23rdNovember,
2016.
On May 20th, 2017, the general meeting for 2016 fiscal year was held and profit
appropriation scheme for 2016 FY was approved, which was every 10 shares will be
increased by 4 shares through capital reserve based on the total 611,776,558 number of shares.
After the profit appropriation scheme, the registered capital was changed to
RMB856,478,181.00Yuan.
The old address of the Company’s registered office as same as head office is No.888 Xinan
Road, Shahekou District, Dalian, China. In 2017, the Company relocated to new factory and
changed its address to No.16 East of Liao River RD, DDA, Dalian China as same as HQ’s
address. The parent company of the Company is Dalian Bingshan Group Co., Ltd., and there
is no ultimate controller regulated by the relevant law, regulations and rules.
The company falls into industrial manufacturing sector, mainly engaged in industrial
refrigeration, refrigerated and frozen food storage, and manufacture and installation of central
air-conditioning and refrigeration equipment. The scope of business includes refrigeration
equipment, valve, fixings refrigeration equipment, supported products processing and system
design of air-conditioning. The company also offers technical consultation, technical services,
commercial trade and material supply and marketing.
II. The scope of consolidation
There are 15 entities included in the current consolidated financial statements, including:
Proportion of
Proportion of
Names of subsidiaries Types Level shareholding
votes（%）
（%）
Dalian Bingshan Group Engineering
Subsidiary 2 100 100
Co., Ltd.
14
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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（%）
（%）
Dalian Bingshan Group Sales Co.,
Subsidiary 2 100 100
Ltd.
Dalian Bingshan Air-conditioning
Subsidiary 2 70 70
Equipment Co., Ltd.
Dalian Bingshan JiaDe Automation
Subsidiary 2 100 100
Co., Ltd.
Dalian Bingshan Lingshe Quick
Subsidiary 2 100 100
Freezing Equipment Co., Ltd.
Wuhan New World Refrigeration
Subsidiary 2 100 100
Industrial Co., Ltd.
Bingshan Technical Service（Dalian）
Subsidiary 2 100 100
Co.,Ltd.
Dalian Niweisi LengNuan
Subsidiary 2 55 55
Techonology Co., Ltd.
Dalian Xinminghua Electrical
Subsidiary 2 100 100
Technology Co., Ltd
Dalian Bingshan International
Subsidiary 2 100 100
Trading Co.,Ltd
Wuhan New World Air-conditioning Sub-
3 100 100
Refrigeration Engineering Co., Ltd subsidiary
Dalian Bingshan Security Leisure Sub-
3 100 100
Industrial Engineering Co., Ltd subsidiary
Ningbo Bingshan Air-conditioning Sub-
3 51 51
Refrigeration Engineering Co., Ltd subsidiary
Shanghai Bingshan Technical Service Sub-
3 51 51
Co., Ltd subsidiary
Chengdu Bingshan Refrigeration Sub-
3 51 51
Engineering Co., Ltd. subsidiary
This year, entities within the consolidation scope are changed comparing to last year. Because
two more entities are added into the group, Chengdu Bingshan Refrigeration Engineering Co.,
Ltd was newly invested and Dalian Bingshan International Trading Co.,Ltd was newly
acquired.
15
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
For the specific information of entity change in the consolidation scope, see the notes of VII.
The Change of Scope of Consolidation and VIII. The Equity in Other Entities.
III. Financial Statements Preparation Basis
（1） Preparing basis
The Company’s financial statements are prepared on the basis of going concern assumption,
according to the actual occurred transactions and events and in accordance with ‘Accounting
Standards for Business Enterprises’ and relevant regulations, and also based on the note IV
“Significant Accounting Policies, Accounting Estimates”.
（2） Going concern
The company has the capacity to continually operate within 12 months at least since the end
of report period, and hasn‘t the major issues impacting on the sustainable operation ability.
IV. Significant Accounting Policies and Accounting Estimates
1. Declaration for compliance with accounting standards for business enterprises
The financial statements are prepared by the Group according to the requirements of
Accounting Standard for Business Enterprise, and reflect the relative information for the
financial position, operating performance, cash flow of the Group truly and fully.
2. Accounting period
The Group adopts the Gregorian calendar year as accounting period from Jan 1 to Dec 31.
3. Operating cycle
Normal operating cycle refers to the duration starting from purchasing the assets for
manufacturing up to cash or cash equivalent realization. The group sets twelve months for
one operating cycle and as the liquidity criterion for assets and liability.
4. Functional currency
The Group adopts RMB as functional currency.
5. Accounting for business combination under same control and not under same control
As an acquirer, the assets and liabilities that The Group obtained in a business combination
under the same control should be measured on the basis of their carrying amount in the
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.
16
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
For a business combination not under same control, the asset, liability and contingent liability
obtained from the acquirer shall be measured at the fair value on the acquisition date. The
combination cost shall be the fair value, on the acquisition date, of the assets paid, the
liabilities incurred or assumed and equity securities issued by the acquirer in exchange for the
control of the acquire, and sum of all direct expenses(if the combination is achieved in stages,
the combination cost shall be the sum of individual transaction). The difference when
combination cost exceeds proportionate share of the fair value of identifiable net assets of
acquire should be recognized as goodwill. If the combination cost is less than proportionate
share of the fair value of identifiable net assets of acquiree, firstly, fair value of identifiable
asset, liability or contingent liability shall be reviewed, and so the fair value of non-monetary
assets or equity instruments issued in the combination consideration , after review, still the
combination cost is less than proportionate share of the fair value of identifiable net assets of
acquire, the difference should be recognized as non-operating income.
6. Method of preparation of consolidated financial statements
All subsidiaries controlled by the Group and structured entities are within the consolidation
scope.
If subsidiaries adopt different accounting policy or have different accounting period from the
parent company, appropriated adjustments shall be made in accordance with the Group policy
in preparation of the consolidated financial statements.
All significant intergroup transactions, outstanding balances and unrealized profit shall be
eliminated in full when preparing the consolidated financial statements. Portion of the
subsidiary’s equity not belonging to the parent, profit, loss for the current period, portion of
other comprehensive income and total comprehensive belonging to minority interest, shall
be presented separately in the consolidated financial statements under “minority interest of
equity”, ”minority interest of profit and loss”, “other comprehensive income attributed to
minority interest” and “total comprehensive income attributed to minority interest” title.
If a subsidiary is acquired under common control, its operation results and cash flow shall be
consolidated since the beginning of the consolidation period. When preparing the comparative
consolidated financial statements, adjustments shall be made to relevant items of comparative
figures as regarded that reporting entity established through consolidation has been always
there since the point when the ultimate controlling party starts to have the control.
If a business consolidation under common control is finally achieved in stages, consolidation
accounting method shall be disclosed additionally for the period in which the control is
obtained. For example, if a business consolidation under common control is finally achieved
in stages, when preparing the consolidated financial statements, adjustments shall be made for
17
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
the current consolidation status as if consolidation has always been there since the point when
the ultimate controlling party starts to control. In preparation of comparative figures, asset
and liability of the acquiree shall be consolidated into the Group’s comparative financial
statements, but to the extent no earlier than the point when the Group and acquiree are both
under ultimate control and relevant items under equity in comparative financial statements
shall be adjusted for net asset increased in combination. To avoid the duplicated computation
of net asset of acquiree, for long-term equity investment held by the Group before the
consolidation, relevant profit and loss, other comprehensive income and movement in other
net asset, recognized for the period between the combination date and later date when original
shareholding is obtained and when the Group and the acquiree are under common control of
same ultimate controlling party, shall be respectively used for writing down the opening
balance of retained earnings of comparative financial statements and profit and loss for the
current period.
If a subsidiary is acquired not under common control, its operation results and cash flow shall
be consolidated since the beginning of the consolidation period. In preparation of the
consolidated financial statements, adjustments shall be made to subsidiary’s financial
statements based on the fair value of its all identifiable assets, liability or contingent liability
on the acquisition date.
If a business consolidation under non-common control is finally achieved in stages,
consolidation accounting method shall be disclosed additionally for the period in which the
control is obtained. For example, if a business consolidation not under common control is
finally achieved in stages, when preparing the consolidated financial statements, the acquirer
shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair
value and recognize the resulting gain or loss as investment income for the current period.
Other comprehensive income, under equity method accounting rising from the interest held in
acquiree in relation to the period before the acquisition, and changes in the value of its other
equity other than net profit or loss, other comprehensive income and profit appropriation shall
be transferred to investment gain or loss for the period in which the acquisition incurs,
excluding the other comprehensive income from the movement on the remeasurement of ne
asset or liability of defined benefit plan.
When the Group partially disposes of the long –term equity investment in subsidiary without
losing the control over it, in the consolidated financial statements, the difference, between
disposals price and respective disposed value of share of net assets in the subsidiary since the
acquisition date or combination date, shall be adjusted for capital surplus or share premium,
no enough capital surplus, then adjusted for retained earnings.
When the Group partially disposes of the long –term equity investment in subsidiary and lose
18
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
the control over it, in preparation of consolidated financial statements, remaining share of
interest in the subsidiary shall be remeasured on the date of losing control. Sum of the share
disposal consideration and fair value of remaining portion of shareholding minus the share of
the net assets in the subsidiary held based on the previous shareholding percentage since the
acquisition date or combination date, the balance of above is recognized as investment
gain/loss for the period and goodwill shall be written off accordingly. Other comprehensive
income relevant to share investment in subsidiary shall be transferred to investment gain /loss
for the period on the date of losing control.
When the Group partially disposes of the long –term equity investment in subsidiary and lose
the control over it by stages, if all disposing transactions are bundled, each individual
transaction shall be seen as a transaction of disposal of a subsidiary by losing control. The
difference between the disposal price and the share of the net assets in the subsidiary held
before the date of losing control, shall be recognize as other comprehensive income until the
date of losing control where it is transferred into investment gain/ loss for the current period.
7. Joint arrangement classification and joint operation accounting
The Group’s joint arrangement includes joint operation and joint venture. For joint operation,
the Group as a joint operator shall recognize its own assets and its share of any assets held
jointly, its liabilities and its share of any liabilities incurred jointly, its revenue from the sale
of its share of the output arising from the joint operation, its share of the revenue from the
sale of the output by the joint operation; and its expenses, including its share of any expenses
incurred jointly. When an entity enters into a transaction with a joint operation in which it is a
joint operator, such as a sale or contribution of assets, it is conducting the transaction with the
other parties to the joint operation and, as such, the joint operator shall recognize gains and
losses resulting from such a transaction only to the extent of the other parties’ interests in the
joint operation.
8. Cash and cash equivalent
The cash listed on the cash flow statements of the Group refers to cash on hand and bank
deposit. The cash equivalents refer to short-term (normally with original maturities of three
months or less) and liquid investments which are readily convertible to known amounts of
cash and subject to an insignificant risk of changes in value.
9. Translation of foreign currency
(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
19
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
assets and liabilities in foreign currencies are translated into RMB at the exchange rate
prevailing at the balance sheet day. Exchange differences arising from the settlement of
monetary items are charged as in profit or loss for the period. Exchange differences of
specific borrowings related to the acquisition or construction of a fixed asset should be
capitalized as occurred, before the relevant fixed asset being acquired or constructed is ready
for its intended uses.
(2) Translation of foreign currency financial statements
The asset and liability items in the foreign currency balance sheet should be translated at a
spot exchange rate at the balance sheet date. Among the owner’s equity items except
“undistributed profit”, others should be translated at the spot exchange rate when they are
incurred. The income and expense should be translated at spot exchange rate when the
transaction incurs. Translation difference of foreign currency financial statements should be
presented separately under the other comprehensive income title. Foreign currency cash flows
are translated at the spot exchange rate on the day when the cash flows incur. The amounts
resulted from change of exchange rate are presented separately in the cash flow statement.
10. Financial assets and financial liabilities
A financial asset or liability shall be recognized when the entity becomes a party to the
contractual provisions of a financial instrument.
(1) Financial assets
1) Classification, recognition and measurement
The Group classifies its financial assets in the following categories: at fair value through
profit or loss, loans and receivables, held-to-maturity financial assets and available-for-sale.
The classification depends on the purpose for which the financial assets were acquired.
Management determines the classification of its financial assets at initial recognition.
Financial assets at fair value through profit and loss include trading financial assets and those
financial assets initially designated as fair value through profit and loss. When meeting one of
the following conditions, the company shall classify the assets into trading financial asset: it
is acquired principally for the purpose of selling in the near term and is part of a portfolio of
identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking; it is a derivative(except for a derivative that
is a designated and effective hedging instrument or a financial guarantee contract, or linked to
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
20
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
classified as the assets initially designated as fair value through profit and loss: it eliminates
or significantly reduces a measurement or recognition inconsistency that would otherwise
arise from measuring assets or liabilities or recognising the gains and losses on them on
different bases; or the financial instrument portfolio is managed and its performance is
evaluated and provided internally on that basis to the entity’s key management personnel on a
fair value basis, in accordance with a documented risk management or investment strategy;
or it is a hybrid instrument embedded by one or more instruments except for a embedded
derivate that does not significantly modify the cash flows or it is clear that separation of the
embedded derivative(s) is prohibited; it is a hybrid instrument that is required to be separated
but unable to be measured separately either at acquisition or at the end of a subsequent
financial reporting period. They are measured at fair value subsequently. Change on fair value
shall be recognized in the profit and loss. Interest or cash dividends received during the period
in which such financial assets are held, are recognized as ‘Investment income’. On disposal,
the difference between fair value of disposal and initial recorded amount are recognized as
‘Gain or loss on Investment’ and adjust the gain or loss from changes in fair value
accordingly.
Receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. Receivables are subsequently measured at amortized cost
using the effective interest method. The amortization, impairment and any gain or loss from
derecognition shall be recognized in the profit and loss for the current year.
Available-for-sale financial assets are non-derivative financial assets that are either
designated in this category or not classified as financial assets of any other class at initial
recognition. This category includes the derivative financial assets that linked to the
investments in equity instruments without a quoted price in an active market, no fair value
can be reliably measured and must be settled by delivery of such an equity instrument, and
shall be measured at cost subsequently. Others have a quoted price in an active market or fair
value can be measured reliably although no quoted price available, they shall be measured at
fair value. Any change on fair value shall be recognized in other comprehensive income and
subsequently be measured at fair value. Except impairment loss and exchange gain or loss
arising from foreign currency monetary financial assets, changes in fair value of
available-for-sale financial assets are directly recorded in shareholders’ equity until such
financial assets is derecognized and the accumulated fair value adjustments previously
recorded in equity are charged to profit or loss for the period. Interests for the period in
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
21
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
are charged to profit or loss for the period as ‘Investment income’. Equity instruments that a
quoted price is not applicable in an active market and no fair value can be reliably measured,
shall be measured at cost.
2)Recognition and measurement of transfer of financial assets
A financial asset is derecognised when any one of the following conditions is satisfied: i) the
rights to receive cash flows from the asset expire, ii) the financial asset has been transferred
and the entity transfers substantially all risks and rewards relating to the financial assets to the
transferee, iii) the financial asset has been transferred to the transferee, the entity has given up
its control of the financial asset although the entity neither transfers nor retains all risks and
rewards of the financial asset.
Where an entity neither transfers nor retains substantially all risks and rewards of financial
asset and does not give up the control over such financial asset, then the entity recognizes
such financial asset to the extent of its continuous involvement and recognizes the
corresponding liabilities.
In the case where the financial asset as a whole qualifies for the derecognition conditions, the
difference between the carrying value of transferred financial asset and the sum of the
consideration received for transfer and the accumulated amount of changes in fair value that
was previously recorded under other comprehensive income is charged into profit or loss for
the period.
In the case where only part of the financial asset qualifies for derecognition, the carrying
amount of financial asset being transferred is allocated between the portions that to be
derecognized and the portion that continued to be recognized according to their relative fair
value. The difference between the amount of consideration received for the transfer and the
accumulated amount of changes in fair value that was previously recorded in other
comprehensive income of the part qualifies for derecognition and the above-mentioned
allocated carrying amount is charged to profit or loss for the period.
3) Impairment of financial assets
The Group assesses the carrying amount of financial assets other than financial assets at fair
value through profit or loss at each balance sheet date. If there is objective evidence that the
financial asset is impaired, the Group shall determine the amount of any impairment loss
accounts.
The specific impairment provision methods of financial assets were as follows:
1) Provision for impairment of available-for-sale financial assets:
22
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
On balance sheet date, the Company executes individually inspection on each
available-for-sale financial statement, if the fair value of the equity instruments which is
invested on the balance sheet date is lower than its initial investment cost for more than 50%
(including 50%) or lower than its initial investment cost for the duration time for more than 1
year (including 1 year), which indicates that it had occurred impairment; if the fair value of
the equity instruments which invests on the balance sheet date is lower than its initial
investment cost for more than 20% (including 20%) but not reaches at 50%, the Company
will comprehensively considerate the other relevant factors such as the price volatility etc.
and will judge the equity investment whether had occurred impairment.
The aforesaid "cost" recognized in line with the initial investment cost of available for sale
financial instrument deducting principal recovered, amount amortized and the impairment
losses recorded into profits or losses. “fair value" recognized through the closing price of
Securities Exchange at period end unless the investment of available for sale equity
instrument was in the restricted stock trade period. For investment of available for sale equity
instrument was in the restricted stock trade period, recognized in line with the closing price of
Securities Exchange at period end deducting the risk of market player cannot sell the equity
instrument, thus, require compensation.
If objective evidence shows that impairment for available-for-sale financial assets will occur,
the cumulative loss arising from the decline in fair value that had been recognized directly in
equity is removed from equity and recognized as impairment loss, although the financial
assets are not derecognized. The accumulative losses that are transferred out shall be the
balance obtained from the initially obtained costs of the financial asset after deducting the
principals taken back and amortized amount, the current fair value and the impairment losses
originally recorded into the profits and losses account.
For an available for sale debt instrument, if there is objective evidence that the value of the
financial asset recovered and the recovery can be related objectively to an event occurring
after the impairment was recognized, the previously recognized impairment loss is reversed
and the amount of reversal is recognized in income statement. For an available for sale equity
instrument, if there is objective evidence that the value recovered and the recovery can be
objectively related to an event occurring after the impairment loss recognized, the previously
recognized impairment loss is reversed and directly recognized in equity. However, the
impairment losses incurred to an equity instrument investment for which there is no quoted
price in the active market and whose fair value cannot be reliably measured, or incurred to a
derivative financial asset which is linked to the equity instrument and which shall be settled
through the equity instrument, can not be reversed.
2) Provision for impairment of held-to-maturity financial assets
23
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
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 amortized cost on the reversing day if
no impairment provided before.
(2) Financial liabilities
1) Classification, basis for recognition and measurement
Financial liabilities of an entity are classified at initial recognition as “financial
liabilities at fair value through profit or loss” and “other financial liabilities” on initial
recognition
Financial liabilities at fair value through profit or loss include financial liabilities held
for trading and those designated as fair value through profit or loss on initial recognition
（relevant basis for classification shall be disclosed by reference to financial assets）.
They are subsequently measured at fair value. The net gain or loss arising from changes
in fair value, dividends and interest paid related to such financial liabilities are recorded
in profit or loss for the period in which they are incurred.
Other financial liability is measured at amortized cost by adopting the effective rate
method.
2) Financial liability derecognition
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
24
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
If there is an active market for the financial assets and liability measured at fair value,
the fair value is measured at the quoted price in the active market; originally obtained or
derived financial assets or liability is measured at market trade price. If no active market
exists for the financial asset or liability, applicable valuation techniques is used for fair
value measurement. When valuating, the price in the most advantageous market shall be
used for fair value measurement and applicable valuation techniques which enough data
is available for and supported by other information shall be adopted, and the group
chooses the input with same characters of asset or liability as considered by market
participant and try to give priority in use of observable input. Unobservable input shall
be used when observable inputcan not be obtained or it is infeasible to be obtained.
11. Provision for bad debts of receivables
The Group shall review the carrying amount of receivables fully at the balance sheet date.
The Group shall calculate the full provision for bad debts for the following receivables:
debtor has been log-out, bankruptcy, minus net asset, significant poor cash flow and
significant nature disaster leads to discontinue production and the debtors could not pay for
the debts within the foreseeable time. Other solid evidences indicates that the receivables
could not be paid or be of a slim chance.
The allowance method is applied to the potential loss of bad debt. The Group should make the
impairment test individually or group and accrue the bad debt provisions which shall be
recorded into current profit or loss at the end of the period. If there is defined evidence for the
receivables not to or not likely to be received, which shall be recognized as the loss of bad
debt and write off the accrued bad debts provisions after going through the approval
procedure of the Group.
(1) Individually significant amounts of accounts receivable accrued bad debt provision as per
portfolio
Judgment basis or amount standards of Top 5 of account receivables at year end
individually significant amounts
The accruing method of the receivables The bad debt provisions shall be accrued based on
with individually significant amounts the difference between current value of future cash
flow and the carrying amounts.
(2) Accounts receivable accrued bad debt provision by credit risk portfolio
The basis of portfolio
Accounts receivable due from subsidiaries
Inter-company
included in consolidated scope
25
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Other than accounts receivable due from
subsidiaries included in consolidated scope and
Accounting aging individual receivable with significant amount
without impairment, use the accounting aging of
the receivables
The basis of bad debt provision
Inter-company Individual identified method
Accounting aging Age analysis method
The percentage of provision for bad debts based on the age of receivables as followings:
Accounting aging Accrual percentage of the Accrual percentage of
receivables (%) other receivables (%)
Within 1 year 5 5
1-2 years 10 10
2-3 years 30 30
3-4 years 50 50
4-5 years 80 80
Over 5 years 100 100
(3) Individually insignificant amount accounts receivable but accrued bad debt provision as
per portfolio
The individual amount is not significant, but the
Accrual reason accrued bad debt provision on the basis of portfolio
can not reflect its risk characteristic
The bad debt provisions should be accrued based on
Accrual method the difference between current value of future cash
flow and the carrying amount.
12. Inventories
Inventories are materials purchasing, raw material, variance of cost materials, low-valuable
consumable, materials processed on commission, working-in-progress, semi-finished goods,
variance of semi-finished goods, and finished goods, engineering construction etc.
The inventories are processed on perpetual inventory system, and are measured at their
actual cost on acquisition. Weighted average cost method is taken for measuring the inventory
dispatched or used. Low value consumables and packaging materials is recognized in the
income statement by one-off method.
26
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
After yearend thorough inventory check, at the balance sheet date inventory impairment
should be provided or adjusted according to inventory category. For the finished goods, raw
material held for sale etc which shall be sold directly, the net realizable value should be
confirmed at the estimated selling price less estimated selling expenses and related tax and
expenses. The raw material held for production, its realizable value should be confirmed at
the estimated selling price of finished goods less estimated cost of completion, estimated
selling expenses and related tax. The net realizable value of inventories held for execution of
sale contracts or labor contracts shall be calculated based on the contract price. If the
quantities of inventories in the Group are more than quantities if inventories subscribed in the
sales contracts, the net realizable value of the excessive part of the inventories should be
calculated based on the general selling price. When the impairment indicators disappear,
impairment provision shall be reversed and
13. Long-term equity investment
Long term equity investments are the investment in subsidiary, in associated company and in
joint venture.
Joint control is the contractual agreement sharing of control over an economic activity by all
participants or participants’ combination and decisions or policies relating to the operating
activity of the entity require the unanimous consent of the parties sharing the control.
Significant influence exists when the entity directly or indirectly owned 20% or more but less
than 50% shares with voting rights in the investee company. If holding less than 20% voting
rights, the entity shall also take other facts or circumstances into accounts when judging any
significant influences. Factors and circumstances include: representation on the board of
directors or equivalent governing body of the investee, participation in financial or operating
activities policy-making processes, material transactions between the investor and the
investee, interchange of managerial personnel or provision of essential technical information.
When control exists over an investee, the investee is a subsidiary of an entity. The initial
investment cost for long-term equity investment acquired through business combination
under common control, is the carrying amount presented in the consolidated financial
statements of the share of net assets at the combination date in the acquired company. If the
carrying amount of net assets at the combination date in the acquired company is negative,
investment shall be recognized at zero.
If the equity of investee under common control is acquired by stages and business
combination incurs in the end, an entity shall disclose the accounting method for long-term
equity investment in the parent financial statement as a supplemental. For example, if the
equity of investee under common control is acquired by stages and business combination
27
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
incurs in the end, and it’s a bundled transaction, the entity shall regard all transactions as a
one for accounting. If it’s not a bundled transaction, the carrying amount presented in the
consolidated financial statements of the share of net assets at the combination date in the
acquired company since acquisition is determined as for the initial cost of long-term equity
investment. The difference between the cost initially recognized and carrying amount of
long-term equity investment prior to the business combination plus the newly paid
consideration for further share acquired, and capital reserve shall be adjusted accordingly. If
no enough capital reserve is available for adjustment, retain earnings shall be adjusted.
If long-term equity investment is acquired through business combination not under common
control, initial investment cost shall be the combination cost.
If the equity of investee not under common control is acquired by stages and business
combination incursion the end, an entity shall disclose the accounting method for long-term
equity investment in the parent financial statement as a supplemental. If the equity investment
of investee not under common control is acquired by stages and business combination
incursion the end, and it’s a bundled transaction, the entity shall regard all transactions as a
one for accounting. If it’s not a bundled transaction, the carrying amount of the equity
investment held previously plus newly increased investment cost are taken as the initial
investment cost under cost model. If equity investment is held under equity method before the
acquisition date, other comprehensive income under equity method previously shall not be
adjusted accordingly. When disposing of the investment, the entity shall adopt the same basis
as the investee directly disposing of related assets or liability for accounting treatment. Equity
held prior to acquisition date as available for sale financial assets under fair value model,
accumulated change on fair value previously recorded in other comprehensive shall be
transferred into investment gain/loss for the period.
Apart from the long-term equity investments acquired through business combination
mentioned above, the cost of investment for the long-term equity investments acquired by
cash payment is the amount of cash paid. For long-term equity investment acquired by issuing
equity instruments, the cost of investment is the fair value of the equity instrument issued. For
long-term equity investment injected to the entity by the investor, the investment cost is the
consideration as specified in the relevant contract or agreement.
The Group adopts cost method to account for investment in subsidiary and equity method for
investment in joint venture and affiliate.
Long-term equity investment subsequently measured under cost model shall increase the
carrying amount of investment by adjusting the fair value of additional investment and
relevant transaction expenses. Cash dividend or profit declared by investee shall be
28
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
recognized as investment gain/loss for the period based on the proportion share in the
investee.
Long-term equity investment subsequently measured under equity method shall be adjusted
for its carrying amount according to the share of equity increase or decrease in the investee.
The entity shall recognize its share of the investee’s net profits or losses based on the fair
value of the investee’s individual identifiable assets at the acquisition date, after making
appropriate adjustments thereto in conformity with the accounting policies and accounting
period, and offsetting the unrealized profit or loss from internal transactions entered into
between the entity and its associates and joint ventures according to the shareholding
attributable to the entity and accounted for as investment income and loss based on such
basis.
On disposal of a long-term equity investment, the difference between the carrying value and
the consideration actually received is recognized as investment income for the period. For
long-term investments accounted for under equity method, the movements of shareholder’s
equity, other than the net profit or loss, of the investee company, previously recorded in the
shareholder’s equity of the Company are recycled to investment income for the period on
disposal.
Where the entity has no longer joint control or significant influence in the investee company
as a result of partially disposal of the investment, the remaining investment will be changed to
be accounted for as available for sale financial assets, and the difference between the fair
value of remaining investment at the date of losing joint control or significant influence and
its carrying amount shall be recognized in the profit or loss for the year. Other comprehensive
income recognized from previous equity investment under equity model shall be accounted
for on the same basis as the investee directly disposing of related assets or liability when
stopping using under equity model.
Where the entity has no longer control over the investee company as a result of partially
disposal of the investment, the remaining investment will be changed to be accounted for
using equity method providing remaining joint control or significant influence over the
investee company. The difference between carrying amount of disposed investment and
consideration received actually shall be recognized in the profit and loss for the period as
investment gain or loss, and investment shall be adjusted accordingly as if it was accounted
for under equity model since acquisition. Where the entity has on longer joint control or
significant influence in the investee as a result of disposal, the investment shall be changed to
be accounted for as available for sale financial assets, and difference between the carrying
amount and disposal consideration shall be recognized in profit and loss for the period, and
29
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
the difference between the fair value of remaining investment at the date of losing control and
its carrying amount shall be recognized in the profit or loss for the year as investment gain or
loss.
If the entity loses its control through partially disposal of investment by stages and it’s not a
bundled transaction, the entity shall account for all transactions separately. If it’s a bundled
transaction, the entity shall regard all transactions as one disposal of subsidiary by losing
control, but the difference between disposal consideration and carrying amount of the equity
investment disposed prior to losing control, which arises from each individual transaction
shall be recognized as other comprehensive income until being transferred into profit and loss
for the period by the time of losing control.
14. Investment property
The investment property includes property and building and measured at cost model
Estimated
net
Useful life
Category residual Annual depreciation rate
(years)
value rate
(%)
Housing and Buildings 40 3% 2.43%
15. Fixed assets
Recognition criteria of fixed assets: defined as the tangible assets which are held for the
purpose of producing goods, rendering services, leasing or for operation & management, and
have more than one year of useful life.
Fixed assets shall be recognized when the economic benefit probably flows into the Group
and its cost can be measured reliably. Fixed assets include: building, machinery,
transportation equipment, electronic equipment and others.
All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and are
still being used and land is separately measured. Straight-line depreciation method is adopted
by the Group. Estimated net residual value rate, useful life, depreciation rate as follows:
Estimated net
Useful life Annual
No Category residual value
(years) depreciation rate
rate (%)
1 Housing and Buildings 20-40 3%,5%,10% 2.25-4.85%
2 Machinery equipment 10-22 3%,5%,10% 4.09-9.7%
30
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
3 Transportation equipment 4-15 3%,5%,10% 6-24.25%
4 Electronic equipment 5 3%,5%,10% 18-19.4%
5 Others equipment 10-15 3%,5%,10% 6-9.7%
The Group should review the estimated useful life, estimated net residual value and
depreciation method at the end of each year. If any change has occurred, it shall be regarded
as a change in the accounting estimates.
16. Construction in progress
The criteria and time spot of constructions in progress’s being transferred to fixed assets:
Constructions in progress are carried down to fixed assets on their actual costs when
completing and achieving estimated usable status. The fixed assets that have been completed
and reached 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.
31
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
18. Intangible assets
The intangible assets of the Group refer to land use right and software. For acquired
intangible assets, the actual cost are measured at actual price paid and relevant other expenses.
The cost invested into intangible assets by investors shall be determined according to the
stated value in the investment contract or agreement, except for those of unfair value in the
contract or agreement.
Land use right shall be amortized evenly within the amortization period since the remised
date.ERP system software and other intangible assets are amortized over the shortest of their
estimated useful life, contractual beneficial period and useful life specified in the law.
Amortization charge is included in the cost of assets or expenses, as appropriate, for the
period according to the usage of the assets. At the end of the year, for definite life of
intangible assets, their estimated useful life and amortization method shall be assessed. Any
change shall be treated as change on accounting estimate.
19. Impairment of long-term assets
The Group assesses at each balance sheet date whether there is any indication that long-term
equity investments, investment property, fixed assets, construction in progress and intangible
assets with definite useful life may be impaired. If there is any indication that an asset may be
impaired, the asset will be tested for impairment. Goodwill 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
32
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
comparing to its carrying amount and recognize the impairment loss. After that, testing the
assets group or assets portfolio with goodwill together, comparing the carrying amount of the
assets group or assets portfolio(including goodwill allocation) with recoverable amount ,
goodwill impairment shall be recognized when the recoverable amount is lower than its
carrying amount.
20. Long-term deferred expenses
Long-term deferred expenses of the Group refer to leasing expenses, redecoration expense
and others. The expenses should be amortized evenly over the beneficial period. If the
deferred expense cannot take benefit for the future accounting period, the unamortized
balance of the deferred expenses should be transferred into the current profit or loss. Leasing
expenses will be amortized within 10 years and 30years; redecoration expense and others
will be amortized within 3 years.
21. Employee benefits
Employee’s benefit comprises short-term benefit, post-employment benefit, termination
benefit and other long-term employee’s benefit.
Short-term benefit includes salary, bonus, allowance, welfare, social insurance, housing funds,
labour union expense, staff training expense, during the period in which the service rendered
by 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.
33
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Other long-term employee’s benefit refers to all other employee benefits other than short-term
benefit, post-employment benefit and termination benefit.
If other long-term employee’s benefit is qualified as defined contribution plan, contribution
made shall be recognized as liabilities accordingly for the period in which the service are
rendered by the employee and recognized in the profit or loss for the current period or
relevant cost of assets. Except other long-term employee’s benefit mentioned above,
obligation arising from defined benefit plan shall be recognized in the profit or loss for the
current period or relevant cost of assets in accordance with the period when the service are
rendered by the employee.
22. Contingent liabilities
When the company has transactions such as commitment to externals, discounting the trade
acceptance, unsettled litigation or arbitration which meets the following criterion, provision
should be recognized: It is the Company's present obligation; carrying out the obligation will
probably cause the Company's economic benefit outflow; the obligation can be reliably
measured.
Provision is originally measured on the best estimate of outflow for paying off the present
obligations, and to consider the risk, uncertainty, time value of monetary relevant to
contingent items. If the time value of monetary is significant, the best estimate will be
determined by discounted cash outflow in the future. At each balance sheet date, the book
value of provision is reviewed and adjustment will be made on the book value if there is any
change, in order to reflect the current best estimate.
When compensation from the 3rd party is expected for full or partial contingent liability
settlement, the compensation shall be recognized as an asset separately and measured at no
more 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
34
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
recognised as relevant cost or expense, and corresponding liabilities. If it is exercisable only
when the vesting period of service is expired or the prescribed conditions are achieve, the fair
value of liabilities undertaken by the Group are re-measured at each balance sheet date based
on the best estimate of exercisable situation.
The fair value of the liabilities is re-measured at each balance sheet date. Any changes are
recognised in the profit or loss for the year.
If the granted equity instruments are cancelled within the vesting period, the equity
instrument shall be treated as accelerated vesting and the balance linked to the remaining
vesting period shall be recognized in the profit or loss account, accordingly be recognized in
the capital reserve. If employees or other parties can choose but fail to satisfy non-vesting
conditions during the vesting period, the Company sees this as cancellation of granted equity
instruments.
24. Principle of recognition of revenue
The revenue of the Group is mainly from selling goods, providing labor services and
abalienating the right of use assets and construction contracts. Recognition standards for
revenue are as below:
（1） The revenue from selling goods: Company has transferred all the significant risks and
rewards of the ownership of the goods to the buyers, and retains neither continuing
managerial involvement to the degree usually associated with ownership nor effective
control over the goods sold. The relative sale proceeds have been reliably measured,
respective economic benefit probably inflow to the company, and the incurred or incurring
cost can be reliably measured, and then the revenue can be recognized.
In the reporting period, revenue recognition point and principle: goods is dispatched from
warehouse, client has no dispute on the quantity and quality of the goods, client collected or
authorized the agent to collect the good and sales amount is confirmed, have collected or
expected to collect the payment, cost of goods can be reliably measured, risk and reward is
transferred so the revenue is recognized.
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.
35
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
（2） Income from a alienating the right of use assets is recognized when satisfying
requirements related economic benefit flows in very possibly, income can be measured
reliably.
1) Amount of interest income is calculated according to the time and actual interest rate
of the monetary capital used by other party.
2) Income of using fee is calculated upon the charge period and calculation provided by
the related contract or agreement.
（3） The service revenue should be recognized when the outcome of the services can be
estimated reliably.
The outcome of the services can be estimated reliably means the following conditions must
be satisfied at the same time:
1) Amount can be measured reliably
2) Relevant economic benefit probably flow into the company
3) The stage of completion of the service can be estimated reliably
4) Cost incurred or expect to incur in the transaction can be measured reliably
Total service income shall be recognized according to the price agreed in the contract or
agreement which has been settled or to be settled unless the price is not fair. Service revenue
for the current period shall be recognized based on the figure worked out on the total income
multiply by the percentage of completion of the service after deducting the service revenue
recognized in the prior period at the balance sheet and accordingly recognized the cost based
on the figure worked out on the total cost multiply by the percentage of completion of the
service after deducting the service cost recognized in the prior period.
At the balance sheet date, if outcome of the service can not be estimated reliably, the
treatment shall apply respectively
1) Costs incurred may be probably recovered, revenue is recognized only to the extent of
costs incurred that are expected to be recoverable, and costs shall be recognized as an
expense in the period in which they are incurred
2) Costs incurred are not probable of being recovered, then these cost incurred are
recognized as an expense immediately, no revenue shall be recognized.
In the case that selling goods and rendering service are both included in the agreements
or contracts, when selling products and rendering service part can be separated and can
be 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
36
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
distinguished but can't be separately measured; selling products and rendering service
will be all treated as rendering service.
（4） Revenue from construction contract
1) When the result of the construction contract is able to be evaluated reliably at the
balance sheet date, the income and cost of the contract are recognized on completion
percentage basis.
The result of the fixed price of construction contract can be estimated reliably means the
following conditions must be satisfied at the same time:
① Amount can be measured reliably
② Relevant economic benefit probably flow into the company
③ Cost actually incurred can be well distinguished and measured reliably
④ The stage of completion and the cost expected to incur for the completion of the
contract can be estimated reliably
The result of the cost plus of construction contract can be estimated reliably means the
following conditions must be satisfied at the same time:
① Relevant economic benefit probably flow into the company
② Cost actually incurred can be well distinguished and measured reliably
Total construction contract income shall be recognized according to the price agreed in the
contract or agreement which has been settled or to be settled unless the price is not fair.
Construction contract income for the current period shall be recognized based on the figure
worked out on the total contracted income multiply by the percentage of completion of the
construction after deducting the revenue recognized in the prior period at the balance sheet
and accordingly recognized the cost based on the figure worked out on the total expected
cost multiply by the percentage of completion of the construction after deducting the
construction e cost recognized in the prior period. Construction contract income is
recognized to the extend where the change of the contract, claim for compensation and bonus
can bring the income and can be measured reliably.
2) If the result of the construction contract is not able to be evaluated reliably, the
treatment shall apply respectively
① If contract cost 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.
37
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
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 shall be recognized when the company complies with the conditions
attaching to the grant and when the company is able to receive the grant.
Assets-related government grant is the government fund obtained by the company for the
purpose of long-term assets purchase and construction or establishment in the other forms.
Income-related grants are the grant given by the government apart from the assets-related
grants. If no grant objective indicated clearly in the government documents, the company
shall judge it according to the principle mentioned above.
Where a government grant is in the form of a transfer of monetary asset, it is measured at the
amount received. Where a government grant is made on the basis of fixed amount or
conclusive evidence indicates relevant conditions for financial support are met and expect to
probably receive the fund, it is measured at the amount receivable. Where a government
grant is in the form of a transfer of non-monetary asset, it is measured at fair value. If fair
value cannot be determined reliably, it is measured at a nominal amount of RMB1 Yuan.
Assets-related government grants are recognized as deferred income ore directly offsetting
the book value of the asset, and Assets-related government grants recognized as deferred
income shall be evenly amortized to profit or loss over the useful life of the related asset.
Any assets are sold, transferred, disposed off or impaired earlier than their useful life expired
date, the remaining balance of deferred income which hasn’t been allocated shall be carried
forward to the income statement when the assets are disposed off.
Income-related government grants that is a compensation for related expenses or losses to be
incurred in subsequent periods are recognized as deferred income and credited to the
relevant period when the related expense are incurred. Government grants relating to
compensation for related expenses or losses already incurred are charged directly to the
profit or loss for the period. Government grants related to daily business, shall be recognized
as other income in accordance with business nature, otherwise, shall be recognized as
non-operating expenses.
If any government grant already recognized needs to be returned to the government, the
accounting shall be differed according to the following circumstances:
38
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
1) originally recognized as offsetting of related assets' book value, assets book value shall
be adjusted
2) if any deferred income, book value of deferred income shall be offset, excessive portion
shall be accounted into income statement
3) Other situation, it shall be accounted into income statement directly.
26. Deferred tax assets and deferred tax liabilities
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 recognized for
deductible tax losses that can be carried forward in accordance with tax law requirements for
deduction of taxable income in subsequent years. No deferred tax liabilities shall be
recognized for any temporary difference arising from goodwill initially recognition. No
deferred tax assets or liabilities shall be recognized for any difference arising from assets or
liabilities initial recognition on non-business combination with no effect on either accounting
profit or taxable profit (or deductible tax loss). At the balance sheet date, deferred tax assets
and deferred tax liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realized or liability is settled.
Deferred tax assets are recognized to the extent that it is probable that future taxable profit
will be available to offset the deductible temporary difference, deductible loss and tax
reduction.
27.Lease
The Company’s leasing business is operating lease.
As a leasee, the lease premium shall be recognized in the cost of asset based on straight line
method within the the period or directly to income statement.
28.Held for sale
（1） Any non-current assets or disposal group shall be classified as held for sale if the
following criteria are met: ⑴ according to the similar transactions for selling such assets or
disposal group in practice, the assets must be available for immediate sale under current
condition. ⑵The sale is highly probable with decision made on a probable selling proposal
and the firm purchase commitment has been obtained, the sale is expected to be completed
within one year. Certain regulations request that approvals must be given by relevant
authority or supervision regulator before the assets can be sold. Prior to the assets initially
classified as held for sale or disposal group, the carrying amounts of the asset(or all the assets
and liabilities in the disposal group) shall be measured in accordance with applicable
39
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
accounting standards. The Company shall recognize an impairment loss and account it in to
income statement for the current period, for any initial or subsequent write- down of the
asset(or disposal group) to its fair value less costs to sell if the carrying amount is higher than
its fair value less costs to sell. In the meantime, provision for assets impairment shall be
made.
（2） The company acquires a non-current asset(or disposal group) exclusively with a view
to its subsequent resale, it shall be classified as held for sale at the acquisition date only if the
condition of “expected sale can be completed within one year” can be met and also other
conditions of classified as held for sale can highly probably be met within a short period
following the acquisition(usually with three months). When measuring a newly acquired
asset(or disposal group) meeting the criteria to be classified as held for sale, it shall be
measured at the lower of its carrying amount had it not been so classified and fair value less
costs to sell. Except the non-current assets or disposal group acquired as part of a business
combination, the difference between its fair value less costs to sale and initial carrying
amount is recognized in the income statement.
（3） The Company that loss of control of a subsidiary due to a sale plan of its investment
shall classify its subsidiary planned for sale as a whole as held for sale in the single financial
statement of the parent only if the investment in subsidiary meets the criteria of held for sale,
regardless of whether the Company will retain a proportion of equity interest in its former
subsidiary after sale, and classify all assets and liabilities of the subsidiary as held for sale in
the consolidated financial statements
（4） The Company shall recognize a gain for any subsequent increase in fair value less
costs to sell of an asset and shall reverse the impairment to the extent that previously
recognized when being classified as held for sale, the revisable amount is recognized in the
income statement for the period. Any impairment from the period when the assets are not
classified as held for sale can not be reversed.
（5） The impairment loss recognised for a disposal group shall reduce the carrying amount
of goodwill of disposal group first, and then reduce the carrying amount of the non-current
assets based on its proportion on the book.
The Company shall recognize a gain for any subsequent increase in fair value less costs to sell
of a disposal group and shall reverse the impairment to the extent that previously recognized
when being classified as held for sale, in accordance with applicable measuring standards, the
revisable amount is recognized in the income statement for the period. Any impairment from
the period when the assets are not classified as held for sale and reduced goodwill can not be
reversed.
40
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
For any subsequently reversed amount, after the impairment loss is recognized for held for
sale disposal group, the Company shall increase the carrying amount of disposal group based
on the proportion of carrying amount of non-current assets excluding goodwill.
（6） Non-current assets classified as held for sale or disposal group shall not be depreciated
or amortized, interest and other expenses attributable to the liabilities of a disposal group
classified as held for sale shall continue to be recognized.
（7） When held for sale assets or disposal group can not meet the criteria for held for sale
classification so that they are not recognized as held for sale or non-current asset will be
removed from disposal group, they shall be measured at the lower of the following amounts:
⑴carrying amount of assets prior to it classified as held for sale, which is the amount after
depreciation, amortization or impairment adjustment as it had not been classified as held for
sale ; ⑵recoverable amount.
When the Company derecognizes the held for sale assets or disposal group, the remaining
unrecognized gain or loss shall be accounted in the income statement.
29. Discontinued operation
When meeting any one of the following criteria and the component can be identified
separately and the component has already been disposed off or classified as held for sale: ⑴
the component represents one independent main business or one single main business area;
⑵the component plans to be part of the related plan which represents one independent main
business or one single main business area; ⑶the component was specially acquired for resale
30. Other significant accounting policies, accounting Estimates
When preparing the financial statements, the management needs to use accounting estimate
and assumption, which will have effect on the application of accounting policy and amount of
asset, liability, income and expense. The actual circumstance maybe differs from the estimates.
The management needs to continuously assess the key assumption involved by estimate and
the judgment on uncertainty. Effect on the accounting estimate shall be recognized during the
period when estimate is changed and in future.
The following accounting estimate and key assumption will trigger the significant risk of
significant adjustment on the book value of asset and liability during the period of future.
（1） Impairment of receivable
Receivable is measured at amortized cost at the balance sheet date and assessed for any
impairment indicator and the acutely amount of impairment. Objective evidence for
impairment includes judgmental data of indicating significant decline of future cash flow of
individual or group of receivable, indicating significant negative financial performance of
41
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
debtors. Had receivable is recovered with certain proof, and in fact, it is relevant to the the
matters subsequent to the the loss recognition, the impairment recognized before shall be
reversed.
（2） Provision of inventory impairment
Inventory is periodically evaluated at the net realizable value and any cost higher than NRV
shall be recognized as inventory impairment loss. When evaluating the NRV, net realizable
value is determined by deducting the expected selling expense and relative tax from the
estimated selling price. When actual selling price or cost differs from the previous estimates,
management will make adjustment on NRV. Therefore, the results based on the present
experience may differ from the actual results, which caused the adjustment on the carrying
amount of inventory in the book. Provision for inventory impairment may vary with the
above reasons. Any adjustment on provision for inventory impairment will affect the income
statement.
（3） Provision of goodwill impairment
Each year, goodwill shall be assessed for any impairment. Recoverable amount of assets
group or asset portfolio including goodwill shall be the present value of future cash flow,
which needs estimates for calculation.
If management adjust the gross profit margin adopted by the present value of future cash flow
calculation of assets group or asset portfolio, adjusted gross profit margin is lower than the
margin applied, the impairment is required.
If management adjust the discounting rate before tax applied by the present value of future
cash flow calculation of assets group or asset portfolio, adjusted discounting rate before tax is
higher than the rate applied, the impairment is required.
If actual profit margin or discounting rate before tax is higher or lower than management’s
estimate, any impairment recognized before can not be reversed.
（4） Provision of fixed asset impairment
At the balance sheet date, the management shall implement impairment test on buildings,
plant and machinery etc which has any impairment indicator. The recoverable amount of FA
is the higher of PV of future cash flow and net value of fair value after disposal cost, the
calculation needs accounting estimate.
If management adjust the gross profit margin adopted by the present value of future cash flow
calculation of assets group or asset portfolio, adjusted gross profit margin is lower than the
margin applied, the impairment is required.
42
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
If management adjust the discounting rate before tax applied by the present value of future
cash flow calculation of assets group or asset portfolio, adjusted discounting rate before tax is
higher than the rate applied, the impairment is required.
If actual profit margin or discounting rate before tax is higher or lower than management’s
estimate, any impairment recognized before can not be reversed.
（5） Recognition of deferred tax assets
Estimate on deferred tax assets needs making estimation of taxable income and applied tax
rate in the following years in future. Whether deferred tax asset can be realized depends on
the enough probable taxable profit obtained in future. Tax rate change in future and the timing
of temporary difference reverse may also affect the income tax expense(income)and the
balance of deferred tax. Any change of estimate described here will cause the deferred tax
adjustment.
（6） Useful life span of fixed assets and intangible assets
At least every year end, the management shall review the useful life of FA and intangible
assets. Expected useful life is based on the management’s experience on the same class of
assets, with reference to the estimate applied in the industry in conjunction with expected
technology development. When previous estimate significantly changed, depreciation and
amortization in the future shall be adjusted accordingly.
31. Changes in Accounting Policies, Accounting Estimates
(1) Change in significant accounting policies
Changes on accounting policy and reasons Approval progress Memo
In 2017, the Ministry of Finance announced or
amended and implemented “Accounting Standards for
Business Enterprises No.42-Held for Sale non-current
assets, disposal group and discontinued operation". The accounting
Since May 28th, 2017, any held for sale non-current policy change has
assets, disposal group and discontinued operation been approved by the
existing on the implementation date shall be applied to 20th meeting of the
prospective application. When preparing the financial seventh generation of
statements for 2017FY, the policy has been adopted board.
and the accounting has been done in accordance with
this standard.
43
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Changes on accounting policy and reasons Approval progress Memo
. Updated standard shall be applied since June
12th,2017. Any government existing on January
1at,2017 shall be applied to prospective application. The accounting
Any new government grant obtained between January policy change has
1at,2017 and implementation date shall be adjusted in been approved by the
line with this standard too. When preparing the 20th meeting of the
financial statements for 2017FY, the policy has been seventh generation of
adopted and the accounting has been done in board.
accordance with this standard.
In 2017, the Ministry of Finance announced or
amended and implemented “Financial Statements
Format ”(Caikuai[2017]No.30)
Gain/loss on non-current assets disposal and on
The accounting
non-monetary assets exchange presented under
policy change has
“non-operating income/expense”is changed to “Gain
been approved by the
on asset disposal”. This accounting policy change shall
20th meeting of the
be retrospectively adjusted. Non-operating income in
seventh generation of
2016shall be decreased by 1,186,397.77Yuan, and
board.
expense shall be decreased by 22,751,748.20Yuan
respectively. Gain on asset disposal shall be adjusted by
-21,565,350.43Yuan. No effect on sum of asset and net
profit.
(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%
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)
44
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
70% of cost of own property or revenue
Real estate tax 1.2% or 12%
from leasing property
Land use tax Land using right area Fixed amount per
square meter
Other tax According to the
relevant provisions of
the state and local
Notes for tax entities with different EIT rate
Tax entities EIT rate
Dalian Refrigeration Company 15%
Dalian Bingshan Group Engineering Co., Ltd. 25%
Dalian Bingshan Group Sales Co., Ltd. 25%
Dalian Bingshan Air-conditioning Equipment Co., Ltd. 15%
Dalian Bingshan JiaDe Automation Co., Ltd. 15%
Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd. 25%
Wuhan New World Refrigeration Industrial Co., Ltd. 15%
Bingshan Technical Service （Dalian） Co.,Ltd. 15%
Dalian Niweisi LengNuan Techonoligy Co., Ltd. 15%
Dalian Xinminghua Electrical Technology Co., Ltd 15%
2. Tax preference
The company obtained the qualification of high and new technology enterprises on 29th
November, 2017 approved by Dalian Science Technology Bureau, Dalian Finance Bureau,
Dalian State Tax Bureau and Local tax Bureau.The Certificate No is GR201721200306, and
the validity duration is three years. According to the tax law, the company can be granted for
the preferential tax policy of enterprise income tax rate of 15% in three years.
The company’s subsidiary, Dalian Bingshan JiaDe Automation Co., Ltd. obtained the
qualification of high and new technology enterprises on 21st September, 2015 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
Local tax Bureau.The Certificate No is GR201521200115, and the validity duration is three
years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
The company’s subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd obtained the
qualification of high and new technology enterprises on 28th October, 2015 approved by Hubei
Science Technology Bureau, Hubei Finance Bureau, Hubei State Tax Bureau and Hubei Local
tax Bureau.The Certificate No is GR201542000772, and the validity duration is three years.
45
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years
The company’s subsidiary, Dalian Xinminghua Electrical Technology Co., Ltd obtained the
qualification of high and new technology enterprises on 29th November, 2017 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
Local tax Bureau. The Certificate No is GR2201721200301, and the validity duration is three
years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
The company’s subsidiary, Dalian Niweisi LengNuan Techonoligy Co., Ltd. obtained the
qualification of high and new technology enterprises on 29th November, 2017 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
Local tax Bureau. The Certificate No is GR2201721200108, and the validity duration is three
years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
The company’s subsidiary, Bingshan Technical Service （Dalian） Co., Ltd. obtained the
qualification of high and new technology enterprises on 29th November, 2017 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
Local tax Bureau. The Certificate No is GR2201721200155, and the validity duration is three
years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
The company’s subsidiary, Dalian Bingshan Air-conditioning Equipment Co., Ltd. obtained the
qualification of high and new technology enterprises on 29th November, 2017 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local
tax Bureau. The Certificate No is GR2201721200279, and the validity duration is three years.
According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
VI. Notes to Consolidated Financial Statements
The following disclosure date on this financial statement without special indication, “opening”
refers to January 1, 2017; “closing” refers to December 31, 2017; “current period” refers to the
period from January 1, 2017to December 31, 2017; and “last period” refers to the period from
January 1, 2016 to December 31, 2016; with the currency unit RMB.
1. Cash and cash in bank
Item Closing Balance Opening Balance
Cash on hand 62,880.11 83,511.72
46
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Closing Balance Opening Balance
Cash in bank 364,630,526.20 686,615,661.42
Other cash and cash equivalents 30,116,287.80 28,516,465.40
Total 394,809,694.11 715,215,638.54
Including: sum of deposits overseas
Note: other monetary funds is restricted, including deposit for bank acceptance notes of
25,559,515.54Yuan, guarantee deposit of 3,556,772.26Yuan, migrant deposit of
1,000,000.00Yuan, total of 30,116,287.80 Yuan.
2. Notes receivable
(1) Category of notes receivable
Items Closing Balance Opening Balance
Bank acceptance notes 59,496,684.07 41,906,247.02
Commercial acceptance notes 113,321,492.13 84,502,002.57
Total 172,818,176.20 126,408,249.59
(2) Pledged notes receivable up to December 31, 2016.
Items Closing pledged amount
Bank acceptance notes 16,110,843.93
Commercial acceptance notes
Total 16,110,843.93
(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 251,658,051.71
Commercial acceptance 18,102,321.88
notes
Total 269,760,373.59
(4) The closing balance of the notes receivable increased 36.71% compared with the opening
balance because of the increasing notes received due to more note payment at the year
end
3. Accounts receivable
(1) Category of accounts receivable
47
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance
Items Booking balance Provision Booking
Amount % Amount % balance
Accounts
receivable with
significant
individual amount
and separate bad
debt provision
Accounts
receivable with bad
debt provision
1,208,205,492.85 100.00 171,949,597.06 14.23 1,036,255,895.79
based on the
characters of credit
risk portfolio
Accounts
receivable with
insignificant
individual amount
and separate bad
debt provision
Total 1,208,205,492.85 100.00 171,949,597.06 14.23 1,036,255,895.79
(Continued)
Opening balance
Items Booking balance Provision
Booking balance
Amount % Amount %
Accounts
receivable with
significant
individual amount
and separate bad
debt provision
Accounts
receivable with bad
958,174,419.26 100.00 151,064,459.72 15.77 807,109,959.54
debt provision
based on the
48
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
characters of credit
risk portfolio
Accounts
receivable with
insignificant
individual amount
and separate bad
debt provision
Total 958,174,419.26 100.00 151,064,459.72 15.77 807,109,959.54
1) Accounts receivable with the bad debt provisions under accounting aging analysis method
Closing Balance
Aging Accounts Provision for Drawing proportion
receivable bad debts (%)
Within1 year 816,596,983.71 40,829,849.18 5.00
1 to 2 years 181,236,517.36 18,123,651.75 10.00
2 to 3 years 102,726,564.39 30,817,969.30 30.00
3 to 4 years 41,876,278.00 20,938,139.02 50.00
4 to 5years 22,645,807.94 18,116,646.36 80.00
Over 5 years 43,123,341.45 43,123,341.45 100.00
Total 1,208,205,492.85 171,949,597.06 —
2) Bad debt provision accrued and written-off (withdraw)
The bad debt provision has been accrued at the amount of 27,221,131.52Yuan during the
report period. Bad debt reversal or withdrawn incurred at the amount of 661,616.00 Yuan
during the year.
Including：Significant bad debt reversal or withdrawn in current period
Received Regained
Companies Reasons
amount form
Shandong Laiyang Huasheng judicial decision to
293,092.00 lawsuit
Food Co., Ltd receive the debt
Beijing Taizinai Milk Biology judicial decision to
368,524.00 lawsuit
Development Co.,LTD receive the debt
Total 661,616.00
3) Accounts receivable written off in current period
49
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Written off amount
Receivable actually written off 6,997,610.18
(2) The top five significant accounts receivable categorized by debtors
Closing
% of the
Company Closing Balance Aging Balance of
total AR
Provision
Guangzhou Fuli Estate
Co.,Ltd 44,290,000.00 Within 1 year 3.67 2,214,500.00
Panasonic Cold-Chain Within 1 year,
(Dalian) Co., Ltd. 31,120,658.05 1-2 years 2.58 1,591,317.35
Xinyi Yuanda
construction and Within 1 year,
Installation Engineering 27,709,087.18 1-2 years 2.29 2,145,439.31
Co., Ltd.
Jilin Changjitu
Development 27,000,000.00 Within 1 year 2.23 1,350,000.00
&Construction Co.,Ltd
CRECCL 25,221,586.00 Within 1 year 2.09 1,261,079.30
Total 155,341,331.23 12.86 8,562,335.96
4. Advances to suppliers
(1) Aging of advances to suppliers
Closing Balance Opening Balance
Items Amount Percentage Amount Percentage
(%) (%)
Within 1 year 96,449,107.72 68.50 91,708,963.35 84.89
1 to 2 years 43,020,607.78 30.55 15,856,969.05 14.68
2 to 3 years 871,279.01 0.62 467,380.70 0.43
Over 3 years 467,380.70 0.33
Total 140,808,375.21 100.00 108,033,313.10 100.00
Significant prepayment over 1 year
Closing Unsettled Reasons
Company Aging
Balance
Shenyang Debao Hongtai Agricultural Contract is not fully
15,252,880.00 1-2 years
Development Co., Ltd. implemented
Shenyang DebaoJiahong Agricultural 6,395,198.00 1-2 years Contract is not fully
50
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Technology Co.,Ltd implemented
Shanghai POMA Automation Contract is not fully
6,125,000.00 1-2 years
Equipment Co.,ltd implemented
Total 27,773,078.00 — —
(2) The top five significant advances to suppliers categorized by debtors
% of the total
Company Closing Balance Aging advances to
suppliers
Shenyang Debao Hongtai
Agricultural Development 15,252,880.00 1-2 years 10.83
Co., Ltd.
Dalian HOLLEY Coating Within 1 year,
Equipment Co., Ltd. 12,000,000.00 1-2 years 8.52
Mitsubishi Heavy Industries
Air-conditioners(Shanghai) 9,236,000.00 Within 1 year 6.56
Co.,Ltd
Dalian Ganghe Trading ltd 8,444,300.00 Within 1 year 6.00
Shenyang DebaoJiahong
Agricultural Technology 6,395,198.00 W1-2 years 4.54
Co.,Ltd
Total 51,328,378.00 36.45
(3) Note: The closing balance of the advances to supplier increased 30.34% comparing with the
opening balance because of the increasing advanced e payments at the year end.
5. Interest receivable
(1) Interest receivable
Items Closing Balance Opening Balance
Interest on Term deposits 921,783.33 723,955.56
Bank financial product 950,000.00
Total 1,871,783.33 723,955.56
The closing balance of the interest receivable increased 158.55% comparing with opening
balance because of bank financial product interest increase.
6. Dividends receivable
(1) Dividends receivable
51
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Company Closing Balance Opening Balance
Wuhan Steel and Electricity Co., Ltd. 33,450.00 39,025.00
Total 33,450.00 39,025.00
7. Other receivables
(1) The categories of other receivable
Closing Balance
Items
Booking balance Provision Booking
Amount % Amount % balance
Other receivables
with significant
individual amount - - - - -
and separate bad debt
provision
Other receivables
identified bad debt
provision based on 59,207,829.92 100.00 7,158,820.09 12.09 52,049,009.83
the characters of
credit risk portfolio
Other receivables
with significant
individual amount
and separate bad debt
provision
Total 59,207,829.92 100.00 7,158,820.09 12.09 52,049,009.83
(Continued)
Opening Balance
Items Booking balance Provision
Booking balance
Amount % Amount %
Other receivables
with significant
individual amount - - - - -
and separate bad
debt provision
Other receivables 64,905,774.51 100.00 7,648,317.94 11.78 57,257,456.57
52
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
identified bad debt
provision based on
the characters of
credit risk portfolio
Other receivables
with significant
individual amount
and separate bad
debt provision
Total 64,905,774.51 100.00 7,648,317.94 11.78 57,257,456.57
1) Other receivables accrued the bad debt provisions under accounting aging analysis method
Closing Balance
Aging Provision for Drawing proportion
Other receivables
bad debts (%)
Within 1 year 27,188,467.00 1,359,423.37 5.00
1-2 years 27,220,604.77 2,722,060.50 10.00
2-3 years 1,708,062.82 512,418.85 30.00
3-4 years 785,711.21 392,855.61 50.00
4-5 years 664,611.80 531,689.44 80.00
Over 5 years 1,640,372.32 1,640,372.32 100.00
Total 59,207,829.92 7,158,820.09 —
(2) Other receivables written off in current period
Item Written-off Amount
Other receivables written off 84,544.00
(3) Other receivables categorized by nature
Nature Closing Balance Opening Balance
Guarantee deposits 43,339,402.91 34,372,184.48
Petty cash 7,879,896.91 9,061,619.39
Accounts payable 5,520,797.71 16,038,288.24
Others 2,467,732.39 5,433,682.40
Total 59,207,829.92 64,905,774.51
(5)Other receivables from the top 5 debtors
53
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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
Shenyang Debao
Hongtai Agricultural
Deposit 12,000,000.00 1–2years 20.27 1,200,000.00
Development Co.,
Ltd.
Shenyang Debao
Jiahong Agricultural
Deposit 10,000,000.00 1–2years 16.89 1,000,000.00
Technology Co.,
Ltd.
Chengdu Silver low
Cold Chain Logistics Deposit 3,800,000.00 1–2years 6.42 190,000.00
Co., Ltd.
Dalian Delta HK& Within 1year,
Deposit 2,830,000.00 4.78 398,000.00
China Gas Co., Ltd. 3–4 years
National Tax office Exporting tax
of Dalian refund 2,272,241.76 Within 1 year 3.84 113,612.09
Total 30,902,241.76 52.20 2,901,612.09
8. Inventories
(1) Categories of inventories
Closing Balance
Item
Book value Provision for decline Net book value
Raw materials 93,097,749.58 1,120,202.77 91,977,546.81
Working in progress 57,136,761.54 57,136,761.54
Finished goods 138,840,644.36 358,460.00 138,482,184.36
Low-value 141,351.31 141,351.31
consumable
Self-manufactured 32,879,154.10 32,879,154.10
semi-finished products
Constructing projects 27,778,087.73 27,778,087.73
Materials on 3,884,578.79 3,884,578.79
consignment for
further processing
Total 353,758,327.41 1,478,662.77 352,279,664.64
(Continue)
Opening 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
54
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Opening Balance
Item
Book value Provision for decline Net book value
Finished goods 118,393,387.27 320,000.00 118,073,387.27
Low-value consumable 209,949.86 209,949.86
Self-manufactured 31,999,705.01 31,999,705.01
semi-finished products
Constructing projects 40,729,017.13 40,729,017.13
Materials on 2,353,515.43 2,353,515.43
consignment for further
processing
Total 350,929,368.62 1,390,944.56 349,538,424.06
(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 1,070,944.56 154,435.00 105,176.79 1,120,202.77 154,435.00
Finished goods 320,000.00 38,460.00 358,460.00 38,460.00
Total 1,390,944.56 192,895.00 105,176.79 1,478,662.77 192,895.00
(3) Accrual for provision for decline in the value of inventories
Basis for net realizable value
Item Reasons for reverse/write-off
recognition
Raw materials Lower of cost and NRV Sold within the year
Finished goods Lower of cost and NRV Sold within the year
9. Other current assets
Item Closing Balance Opening Balance
Prepaid income tax presented
1,247,766.25 734,482.13
at net amount after offsetting
VAT to be deducted 37,613,420.40 42,164,041.41
Bank financial product 76,000,000.00
Prepaid expenses 46,082.68 355,521.38
Total 114,907,269.33 43,254,044.92
The closing balance of the other current assets increased 165.66% comparing with the opening
balance because of bank financial product bought from ICBC bank.
10. Available-for-sale financial assets
(1) Available-for-sale financial assets
55
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
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
520,850,268.15 5,067,074.16 515,783,193.99 550,711,039.12 5,145,922.48 545,565,116.64
equity
instruments
Measured
as fair
503,296,003.65 1,424,468.25 501,871,535.40 533,156,774.62 1,503,316.57 531,653,458.05
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 520,850,268.15 5,067,074.16 515,783,193.99 550,711,039.12 5,145,922.48 545,565,116.64
(2) Available-for-sale financial assets measured at fair value method
Items Equity instruments available for sale Total
Cost 27,098,895.00 27,098,895.00
Fair value 501,871,535.40 501,871,535.40
FV accumulated change recognized in other
comprehensive income 476,197,108.65 476,197,108.65
Provision for impairment 1,424,468.25 1,424,468.25
(3) Available-for-sale financial assets measured at cost method
Proportion of Book Value
Investee shareholding in
Opening Closing
the investee(%) Increase Decrease
Balance Balance
Zibo traction motor co., ltd. 0.76 849,000.00 849,000.00
56
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Proportion of Book Value
Investee shareholding in
Opening Closing
the investee(%) Increase Decrease
Balance Balance
Liaoning Mike group Limited
5.57 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 5.60 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 dividend
Increase Decrease
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 33,450.00
Total 3,642,605.91 3,642,605.91 343,450.00
(4)Provision for available-for-sale financial assets impairment
57
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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
Beginning balance 5,145,922.48 5,145,922.48
Increased during current
year
Including: transfer from
other comprehensive
income
Decreased during current 78,848.32 78,848.32
year
Including: transfer from
fair value rising
Ending balance 5,067,074.16 5,067,074.16
(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, 2017, the company held 27,098,895 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 11,153,569.05Yuan.
58
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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
Associates
Panasonic
Appliances
Air-Conditioning 157,425,641.15 5,991,975.67 1,600,000.00 161,817,616.82 157,425,641.15
and Refrigeration
(Dalian) Co.Ltd
Dalian Honjo
Chemical Co., Ltd. 9,642,351.34 912,160.07 1,441,499.53 9,113,011.88 9,642,351.34
Panasonic
Cold-Chain 217,687,237.26 14,163,570.31 4,800,000.00 227,050,807.57 217,687,237.26
(Dalian) Co., Ltd.
Keinin-Grand
Ocean Thermal
Technology 52,952,413.79 12,652,398.53 8,000,000.00 57,604,812.32 52,952,413.79
(Dalian) Co., Ltd.
Panasonic
Compressor 484,003,393.99 44,000,847.56 38,000,000.00 490,004,241.55 484,003,393.99
(Dalian) Co., Ltd.
MHI Bingshan
Refrigeration 13,018,792.05 340,712.76 13,359,504.81 13,018,792.05
(Dalian) Co.,Ltd.
Beijing Huashang
Bingshan
Refrigeration and
Air-conditioning 769,463.27 661,677.89 1,431,141.16 769,463.27
Machinery Co.,
Ltd.
59
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Increase/Decrease
Gains and
Beginning losses Adjustment of Change Cash bonus Provision for Provision for
Investee recognized other of or profits impairment of Ending balance
balance Increased Decreased Others impairment
under the comprehensive other announced the current
equity income equity to issue period
method
Dalian Fuji
Bingshan Vending 160,787,194.81 26,894,028.83 7,840,000.00 179,841,223.64 160,787,194.81
Machine Co., Ltd.
Changzhou Jingxue
Refrigeration
Equipment Co., 151,527,707.42 14,564,351.32 166,092,058.74 151,527,707.42
Ltd.
Dalian Fuji Iceberg
Vending Machine 9,410,006.56 4,102,434.74 1,470,000.00 12,042,441.30 9,410,006.56
Sales Co., Ltd
Wuhan Lanning
Energy Science 6,132,033.33 -45,247.34 6,086,785.99 6,132,033.33
Co., Ltd.
Wuhan Sikafu
Power Control 6,156,369.01 -929,316.68 5,227,052.33 6,156,369.01
Equipment Co., Ltd
Panasonic cold
Machine System 23,400,297.51 4,424,366.91 27,824,664.42 23,400,297.51
(Dalian) Co., Ltd
Dalian Bingshan
Metal Technology 172,950,000.00 14,526,852.76 24,360,221.29 163,116,631.47
Co.,Ltd
Dalian Bingshan
Group
Management and 49,000,000.00 -1,356,255.88 47,643,744.12
Consulting Co.,ltd
Total 1,292,912,901.49 221,950,000.00 140,904,557.45 87,511,720.82 1,568,255,738.12 1,292,912,901.49
1、At the 1st general meeting in 2017, and 12th meeting of the 7th generation of board of directors approved Dalian Refrigeration Company to acquire 49% of
60
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
shareholding of Dalian Bingshan Metal Technology Co., Ltd through Dalian Bingshan Group, and Beijing Zhongqihua Assets Valuation Co.,LTD was
engaged to the thorough valuation of Dalian Bingshan Metal Technology Co., Ltd, valuation date is December 31st,2017. Based on the valuation results, the
share transferring price is 17,295Yuan for 49% shareholding of Dalian Bingshan Metal Technology Co., Ltd held by Dalian Refrigeration Company.
2、The 11thmeeting of the 7th generation of board of directors was held on November 25th, 2016, and approved to jointly set up Dalian Bingshan Group
Management and Consulting Co.,ltd with Dalian Bingshan Group. Dalian Refrigeration Company will hold 49% shareholding of Dalian Bingshan Group
Management and Consulting Co.,ltd and Dalian Bingshan Group will hold 51%. JV, Dalian Bingshan Group Management and Consulting Co.,ltd will be
invested in the form of cash and subscribed capital is 0.49million Yuan and is fully subscribed by December 31st,2017.
61
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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-right Construction in
Item s progress Total
Building
I. Initial Cost
1. Opening
30,031,254.35 30,031,254.35 30,031,254.35
Balance
2. Increase 162,707,850.49 24,391,511.82 187,099,362.31 162,707,850.49
(1) Outsourcing
(2) Transferred
from Construction 162,707,850.49 24,391,511.82 187,099,362.31 162,707,850.49
in progress
3. Decrease
(1) Disposal
(2)Transferred to
other
4. Closing
192,739,104.84 24,391,511.82 217,130,616.66 192,739,104.84
Balance
II. Accumulated
Depreciation
1. Opening
1,425,601.41 1,425,601.41 1,425,601.41
Balance
2. Increase 101,965,177.68 9,878,562.30 111,843,739.98 101,965,177.68
(1)Provision or
3,497,837.37 487,830.24 3,985,667.61 3,497,837.37
amortization
(2) Acquired from
business 98,467,340.31 9,390,732.06 107,858,072.37 98,467,340.31
combination
3. Decrease
(1) Disposal
(2) Transferred to
other
4. Closing
103,390,779.09 9,878,562.30 113,269,341.39 103,390,779.09
Balance
62
III. Impairment
Reserve
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
1. Opening
Balance
2. Increase
(1)Provision or
amortization
3. Decrease
(1) Disposal
(2) Transferred to
other
4. Closing
Balance
IV. Book Value
1. Closing book
89,348,325.75 14,512,949.52 103,861,275.27 89,348,325.75
value
2. Opening book
28,605,652.94 28,605,652.94 28,605,652.94
value
Note: On 31st July,2014, the company signed supplemental rental contract with MHI Bingshan
Refrigeration (Dalian) Co.,Ltd., and rent out # 6 building of workshop located on No. 106
Liaohe East Rd, Dalian Economic and Technology Development Zone to MHI Bingshan
Refrigeration (Dalian) Co.,Ltd. The rental area is 15,259.04 square metres, and annual rent is
RMB 4.2 million with the expiry date on 16th July, 2029.
The 13th meeting of the 7th generation board was held on April 22, 2017, and approved to rent
out the old plant and land located in No888, South West RD, Shahekou Districit, Dalian to
Bingshan Huigu Company. The lease premium is 4.62million Yuan per annum and contract is
from April 1st, 2017 to December 31, 2036. The company has signed the “estate leasing
contract” with Dalian Bingshan Huigu Development Company based on the requirement of
utilization of old land and plant and new business foster plan.
On June 1st, 2017, the company’s subsidiary, Bingshan Lingshe, signed the leasing contract with
Dalian Jingxue Energy Saving Technology Co. LTD and rented out # 7 building of workshop
located on No.92, Tieshan West Rd, DDA, Dalian. The rental area is 3653.76 square metres, and
annual rent is RMB 840K with the contracted date between June 1st,2017 and May 31st,2022.
Bingshan Lingshe also rented out Room 201, # 4 building located on No.92, Tieshan West Rd,
DDA, Dalian to Dalian Jingxue Energy Saving Technology Co. LTD . The rental area is
25square metres, and annual lease premium is RMB 15K with the contracted date between June
1st, 2017 and May 31st,2022
63
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(2) Investment property without owner’s certificates
Items Book value Reasons
# 6 building of workshop on No. 106 Liaohe East Rd,
27,873,369.74 Deed is in the progress
Dalian Economic and Technology Development Zone
#7 plant of Dalian Bingshan Lingshe 4,690,315.52 Deed is in the progress
32,563,685.26
13. Fixed assets
(1) Fixed assets detail
Transportati
Property& Machinery Other
Item on Equipment Total
buildings Equipment
Equipment
I. Initial Cost
1. Opening
451,766,766.84 515,351,153.65 23,073,454.57 48,512,512.27 1,038,703,887.33
Balance
2. Increase 312,268,203.78 158,905,376.90 518,421.39 19,837,583.07 491,529,585.14
(1) Purchase 16,772,328.28 12,781,975.54 518,421.39 2,711,867.43 32,784,592.64
(2) Transferred
from
295,495,875.50 146,123,401.36 17,125,715.64 458,744,992.50
construction-in
-progress
(3) Acquired
from business
combination
3. Decrease 170,885,099.5 18,918,423.62 3,913,338.53 2,003,230.21 195,720,091.86
(1) Disposal 14,553,174.07 17,280,051.40 3,913,338.53 2,003,230.21 37,749,794.21
(2) Transferred
156,331,925.43 1,638,372.22 157,970,297.65
to other
4. Closing 1,334,513,380.6
593,149,871.12 655,338,106.93 19,678,537.43 66,346,865.13
Balance 1
II.
Accumulated
Depreciation
1. Opening
155,865,048.40 320,193,873.95 14,385,210.02 36,696,181.34 527,140,313.71
Balance
2. Increase 12,781,020.11 24,929,359.24 1,775,250.71 3,436,982.94 42,922,613.00
64
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Transportati
Property& Machinery Other
Item on Equipment Total
buildings Equipment
Equipment
(1)Accrued 12,781,020.11 24,929,359.24 1,775,250.71 3,436,982.94 42,922,613.00
3. Decrease 104,572,515.02 16,789,146.76 3,286,181.24 2,293,669.98 126,941,513.00
(1) Disposal 7,694,395.77 15,199,925.70 3,286,181.24 2,293,669.98 28,474,172.69
(2) Transferred
96,878,119.25 1,589,221.06 98,467,340.31
to other
4. Closing
64,073,553.49 328,334,086.43 12,874,279.49 37,839,494.30 443,121,413.71
Balance
III.
Impairment
Reserve
1. Opening
555,027.75 555,027.75
Balance
2. Increase
(1)Accrued
3. Decrease 37,708.25 37,708.25
(1) Disposal 37,708.25 37,708.25
4. Closing
517,319.50 517,319.50
Balance
IV. Book
Value
1. Closing
529,076,317.63 326,486,701.00 6,804,257.94 28,507,370.83 890,874,647.40
book value
2. Opening
295,901,718.44 194,602,251.95 8,688,244.55 11,816,330.93 511,008,545.87
book value
(2) Fixed assets as pending certificate of ownership
Item Book value Reason for Pending
Office,Lianhe #1 plant,
#2plant,Jiacu plant and 264,114,617.95 Deed is in the progress
dormitory
Newly built plant 47,464,299.36 Deed is in the progress
65
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Book value Reason for Pending
Functional Lab plant 17,091,610.37 Deed is in the progress
Land is pledged and deed can
Lianhe #3 plant 42,023,144.41 not be granted
Total 370,693,672.09
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
16,348,332.17 16,348,332.17 250,913,095.82 250,913,095.82
reconstruction
Improvement
1,633,725.79 1,633,725.79 70,072,395.96 70,072,395.96
of machinery
Official
661,185.00 661,185.00
furniture
Self-heating
circulation
equipment 65,017,324.94 65,017,324.94
from mine air
return
Total 82,999,382.90 82,999,382.90 321,646,676.78 321,646,676.78
(2) Change in the significant construction in progress
Decrease
Opening Closing
Name Increase Transfer to Other
Balance Balance
fixed assets decrease
Buildings
reconstruction 250,913,095.82 65,986,306.15 295,813,516.96 4,737,552.84 16,348,332.17
Improvement
of machinery 70,072,395.96 92,130,914.62 160,569,584.79 1,633,725.79
Official
furniture 661,185.00 1,700,705.75 2,361,890.75
Software 1,226,947.93 1,226,947.93
Green land of
new factory 5,405,405.40 5,405,405.40
Self-heating
circulation
equipment 65,017,324.94 65,017,324.94
from mine air
return
Total 321,646,676.78 231,467,604.79 458,744,992.50 11,369,906.17 82,999,382.90
66
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(Continued)
Progress Including:
Percent of Interest
of Accumulated Accumulated
investment capitalizatio Source of
Name Budget construction capitalized capitalized
against n funds
interest interest of the
budget(%) rate(%)
year
Buildings
Self
reconstructi 337,527,099.00 95.16 95.16
on financing
Improveme
Loan/Self
nt of 167,000,000.00 97.13 97.13
machinery financing
Official Self
furniture 2,361,890.75 100.00 100.00
financing
Self
Software 1,226,947.93 100.00 100.00
financing
Green land
of new 8,921,154.88 100.00 100.00
factory
Self-heating
circulation
equipment 110,000,000.00 59.11 59.11
from mine
air return
Total — — — —
15. Intangible assets
(1) Intangible assets list
Land use
Item Knowhow Others Total
right
I. Initial Cost
1. Opening Balance 183,963,902.62 15,695,674.72 199,659,577.34
2. Increase 11,800,000.00 1,711,943.66 13,511,943.66
(1) Purchase 11,800,000.00 484,995.73 12,284,995.73
(2) Transferred from
1,226,947.93 1,226,947.93
construction-in-progress
3. Decrease 31,073,705.82 633,000.00 31,706,705.82
(1) Disposal 6,682,194.00 633,000.00 7,315,194.00
(2) Transferred to other 24,391,511.82 24,391,511.82
4. Closing Balance 152,890,196.80 11,800,000.00 16,774,618.38 181,464,815.18
II. Accumulated
amortisation
67
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Land use
Item Knowhow Others Total
right
1. Opening Balance 37,791,708.77 7,153,656.05 44,945,364.82
2. Increase 3,128,513.95 294,999.99 1,477,572.91 4,901,086.85
(1)Accrued 3,128,513.95 294,999.99 1,477,572.91 4,901,086.85
3. Decrease 12,041,338.36 258,815.00 12,300,153.36
(1) Disposal 2,650,606.30 258,815.00 2,909,421.30
(2) Transferred to other 9,390,732.06 9,390,732.06
4. Closing Balance 28,878,884.36 294,999.99 8,372,413.96 37,546,298.31
III. Impairment Reserve
1. Opening Balance
2. Increase
(1)Accrued
(2) Others
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance
IV. Book Value
1. Closing book value 124,011,312.44 11,505,000.01 8,402,204.42 143,918,516.87
2. Opening book value 146,172,193.85 8,542,018.67 154,714,212.52
16. Goodwill
(1) Original cost of goodwill
Increased during Decreased during
current year current year
Opening Closing
Name Enterprises
Balance Balance
merger Other Disposal Other
increase
Dalian Niweisi
LengNuan
1,440,347.92 1,440,347.92
Techonoligy Co.,
Ltd.
Dalian Bingshan
Security Leisure
Industrial 310,451.57 310,451.57
Engineering Co.,
Ltd
68
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Increased during Decreased during
current year current year
Opening Closing
Name Enterprises
Balance Balance
merger Other Disposal Other
increase
Total 1,750,799.49 1,750,799.49
(2) Goodwill impairment provision
Goodwill calculation method:
In the year 2015, the book value of equity investment of Dalian Niweisi LengNuan Technology
Co., Ltd exceeds the fair value of the proportion of the acquired company’s identifiable net asset.
The difference between the book value of equity investment of 48, 287,589.78 Yuan and the
identifiable net asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltd
of 46,847,241.86 Yuan on the acquisition date of July 31st 2015 is recognized as goodwill of
1,440,347.92 Yuan on the group consolidated financial report at the end of the year.
In the year 2016, the company purchases shares of Dalian BingshanBaoan Leisure Industry Co.,
Ltd and gains control. The transferred price is based on the net asset of Dalian BingshanBaoan
Leisure Industry Co., Ltd on June 30th 2016. Negotiated with Dalian BingshanBaoan Leisure
Industry Co., Ltd’s shareholder Baoan Water Project (China) Limited Company, the transfer
price is the combination cost on the purchasing date which is 5,359,548.42 Yuan, the fair value
of proportion of Dalian BingshanBaoan Leisure Industry Company’s identifiable net asset is
5,049,096.85 Yuan on the purchasing day, therefore, goodwill is 310,451.57Yuan on the
purchasing date.
The book value of goodwill from business combination of Dalian Niweisi LengNuan
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
2,427,605.34 138,478.32 2,289,127.02
dormitory use right
Renovation and
rebuilding 681,294.43 900,900.90 700,063.19 882,132.14
Lease 850,320.00 106,290.00 744,030.00
Membership fee for 489,500.00 16,500.00 473,000.00
69
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Opening Other Closing
Item Increase Amortization
Balance Decrease Balance
Golf
Technology
entrance fee of cold 1,867,125.00 280,068.75 1,587,056.25
and heat machinery
Greenland of new
factory 8,921,154.88 520,400.70 8,400,754.18
Warranty extension 94,339.62 39,308.20 55,031.42
Total 4,448,719.77 11,783,520.40 1,801,109.16 14,431,131.01
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 139,387,243.38 27,485,104.23 124,545,784.82 25,188,239.74
assets
Share option
Incentiveexpense 13,881,215.49 2,082,182.32 17,103,388.00 2,565,508.20
Unrealized profit
from internal 15,641,404.17 2,346,210.63
transaction
Total 168,909,863.04 31,913,497.18 141,649,172.82 27,753,747.94
(2) Deferred tax liabilities without offsetting
Item Closing Balance Opening Balance
Taxable Deferred tax Taxable Deferred tax
temporary liabilities temporary liabilities
difference difference
Fair value change of the
available-for-sale 476,197,108.65 71,429,566.31 504,557,879.67 75,683,681.95
financial assets
Total 476,197,108.65 71,429,566.31 504,557,879.67 75,683,681.95
(3) Unrecognized deferred tax assets details
Item Closing Balance Opening Balance
Deductible temporary difference 45,359,761.94 44,617,762.47
Deductible loss 6,173,430.97 48,658,772.82
Total 51,533,192.91 93,276,535.29
(4) Unrecognized deductible loss of deferred tax assets expired years
70
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Year Closing Balance Opening Balance Notes
2017 409,595.19
2018 1,196,797.80 2,044,154.14
2019 1,843,026.73
2020 3,240,819.97 11,863,347.41
2021 1,735,813.20 32,498,649.35
2022
Total 6,173,430.97 48,658,772.82
19. Short-term loan
(1) Category of short term loan
Loan category Closing Balance Opening Balance
Mortgage loan 45,000,000.00
Credit loan 349,801,300.00
Total 349,801,300.00 45,000,000.00
Note: Dalian Refrigeration Company borrowed 260million Yuan from bank and Bingshan
International Trading, a subsidiary of Dalian Refrigeration Company borrowed 980.13million
Yuan from bank , the other subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd.
borrowed RMB80million from Dalian Refrigeration Company.
20. Notes payable
Notes category Closing Balance Opening Balance
Bank acceptance notes 221,572,037.67 189,305,658.64
Commercial acceptance notes 38,871,130.00 5,257,076.15
Total 260,443,167.67 194,562,734.79
At the year end, there is no unpaid notes payable which is due. Closing balance increased by
33.86% because the note has not been due yet.
21. Accounts payable
(1) Accounts payable
Item Closing Balance Opening Balance
Material payments 593,418,202.00 660,416,857.54
Project payments 244,492,384.60 199,503,352.11
Equipment payments 48,813,078.50 3,565,090.35
Others 3,240,652.53 67,343.26
71
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Closing Balance Opening Balance
Total 889,964,317.63 863,552,643.26
(2) Accounts payable with age over 1 year
Reason of unpaid or not carried
Name of company Closing Balance
forward
Project is uncompleted contract is
Dalian Yida Construction Company 24,639,904.38 not finished
Project is uncompleted contract is
Panasonic Cold Chain (Dalian) 13,045,170.70 not finished
Heilongjiang Longleng Technology Project is uncompleted contract is
9,413,290.00 not finished
Co., Ltd
Binzhou Shanfu Refrigeration Project is uncompleted contract is
9,069,804.92 not finished
Engineering Co., Ltd
Total 56,168,170.00
22. Received in advance
(1) Received in advance
Item Closing Balance Opening Balance
Advanced on sales 147,172,195.05 150,098,892.29
Total 147,172,195.05 150,098,892.29
(2) Accounts received in advance aged over 1 year
Company Closing Balance Reason
Hongtai International Financing Unsettled contract payments on
lease(Tianjin) Co.,Ltd 42,075,051.51 sets projects
Unsettled contract payments on
Dandong Port 5,000,000.00 sets projects
Total 47,075,051.51
23. Employee’s payable
(1) Category of employee’s payable
Item Opening Increase Decrease Closing
Balance Balance
Short-term
50,256,392.86 303,853,777.75 307,369,873.66 46,740,296.95
employee’s payable
Post-employment
benefit –defined 36,701,139.02 36,689,873.61 11,265.41
contribution plan
72
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Opening Increase Decrease Closing
Balance Balance
Termination benefits 129,745.88 129,745.88
Other welfare due
within 1 year
Total 50,256,392.86 340,684,662.65 344,189,493.15 46,751,562.36
(2) Short-term employee’s payables
Item Opening Increase Decrease Closing
Balance Balance
Salaries, bonus,
allowance, and 33,496,485.39 239,928,455.13 237,741,088.17 35,683,852.35
subsidy
Welfare 14,173,682.87 11,423,684.36 17,140,532.05 8,456,835.18
Social insurance 19,260,015.40 19,254,330.99 5,684.41
Include: Medical
15,040,301.79 15,035,324.58 4,977.21
insurance
Supplemental
106,676.16 106,676.16
insurance
On-duty
injury 2,335,004.77 2,334,709.70 295.07
insurance
Maternity
1,778,032.68 1,777,620.55 412.13
insurance
Housing funds 1,575,760.60 28,370,586.47 28,407,118.00 1,539,229.07
Labor union and
1,010,464.00 4,527,777.08 4,483,545.14 1,054,695.94
training expenses
Short-term leave
with pay
Short term profit
share plan
Others 343,259.31 343,259.31
Total 50,256,392.86 303,853,777.75 307,369,873.66 46,740,296.95
(3) Defined contribution plan
73
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Opening Increase Decrease Closing
Balance Balance
Pension 35,356,670.57 35,345,745.93 10,924.64
Unemployment
1,134,468.45 1,134,127.68 340.77
insurance
Company Annuity
210,000.00 210,000.00
Plan
Total 36,701,139.02 36,689,873.61 11,265.41
The company joins the pension and unemployment plan in accordance with the state regulation,
and therefore, the company makes monthly contribution and bears no any other obligation other
than the monthly contribution. Accordingly the contribution will be recorded in the profit and
loss or the cost of assets when incurs.
(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 12,550,353.23 7,442,531.84
Enterprise income tax 13,418,675.14 7,007,154.72
Individual income tax 628,015.54 494,374.71
City maintenance and construction tax 907,478.69 520,432.62
Real estate tax 882,771.72 542,956.99
Land use tax 553,224.98 553,224.98
Education surcharge 613,577.67 371,260.24
River toll fee 965,963.53
Safeguard fund for disables 480.00 202,031.38
Stamp duty 437,981.65 305,158.47
Total 29,992,558.62 18,405,089.48
25. Interest payable
Item Closing Balance Opening Balance
Interest on short term loan 379,085.53
Total 379,085.53
26. Dividend payable
74
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Closing Balance Opening Balance
Ordinary share dividend 863,516.60 863,516.60
Total 863,516.60 863,516.60
27. Other accounts payable
(1) Other payables categorized by payments nature
Payments nature Closing Balance Opening Balance
Restricted share buy back 21,026,106.00 67,615,856.00
Loan from non-financial institutes 6,320,000.00 6,700,000.00
Cash pledge and security deposit 10,842,115.56 8,601,269.21
Apply for reimbursement and
unpaid 13,699,458.65 11,486,092.78
Cash from related parties 934,995.17 566,240.01
Receipts under custody 12,572,889.29 12,237,893.26
Others 2,279,264.40 2,286,168.76
Total 67,674,829.07 109,493,520.02
(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 21,026,106.00 of contract
Total 21,026,106.00
28. Long-term loan
(1) Category of long-term loan
Category Closing Balance Opening Balance
Guarantee loan 160,000,000.00 160,000,000.00
Total 160,000,000.00 160,000,000.00
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.
75
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
29. Deferred income
(1) Category of deferred income
Item Opening Increase Decrease Closing Formation
Balance Balance Basis
Asset
57,396,619.00 45,654,706.85 2,714,821.78 100,336,504.07
related
Revenue
10,639,876.15 10,639,876.15
related
Total 57,396,619.00 56,294,583.00 13,354,697.93 100,336,504.07 —
(2) Government subsidy project
Recorded into Related
Opening non Other Closing with
Government
Increase
subsidy item Balance -operation Change Balance asset/
income equity
Subsidy fund for
Asset
highly effective heat
pump and related 3,152,624.00 551,672.00 2,600,952.00 related
system
Contribution to Asset
subsidiary company 44,560,000.00 1,114,000.00 43,446,000.00 related
relocation
Application of
NH3 and CO2
instead of R22 Asset
9,683,995.00 16,601,133.00 10,352,900.06 15,932,227.94 related
screw refrigerating
machine combined
condensing unit
Compressor IC Asset
4,170,000.00 3,548.33 4,166,451.67 related
system
Ultrasonic Asset
intelligent defrost 4,000,000.00 4,000,000.00 related
technology
Eco Compressor Asset
31,000,000.00 809,127.54 30,190,872.46 related
project
76
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Research centre Income
and key lab 500,000.00 500,000.00 related
subsidy
Income
Patent bonus 20,000.00 20,000.00 related
Income
Patent subsidy 3,450.00 3,450.00 related
Income
Total 57,396,619.00 56,294,583.00 1,114,000.00 12,240,697.93 100,336,504.07 related
Asset related grant shall be offset the cost or expense within the asset’s useful life; income
related grant shall be booked into other income or offset cost or expense if it is relevant to
daily activity, otherwise it shall be booked into non-operating expense.
30. Share capital
Increase/decrease（+、-）
New
Opening Transfer from Closing
Item share Share Subtotal
balance capital others balance
issued dividend
reserve
Total
share 611,776,558.00 244,710,623.00 244,710,623.00 856,487,181.00
capital
On May 20th, 2017, the general meeting for 2016 fiscal year was held and profit appropriation
scheme for 2016 FY was approved, which was every 10 shares will be increased by 4 shares
through capital reserve based on the total 611,776,558 number of shares. The plan has been
implemented completely by May 31st, 2017. After the profit appropriation scheme, the registered
capital was changed to RMB856, 478,181.00Yuan.
31. Capital reserves
Items Opening Increase Decrease Closing Balance
Balance
Share premium 962,071,905.05 15,115,549.49 300,860,623.00 676,326,831.54
Other capital reserves 84,249,811.80 12,070,987.49 15,115,549.49 81,205,249.80
Total 1,046,321,716.85 27,186,536.98 315,976,172.49 757,532,081.34
（1） Statement of share premium decrease
77
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
1) This year mainly due to the reserve transfer to share capital of 244,710,623.00Yuan, refer to
note VI.30 share capital for details.
2) Dalian Refrigeration Company acquired Bingshan International Trading company’s
controlling shareholding through business combination under same control. As the
share acquisition, Dalian Refrigeration Company has restated the prior year’s
financial statements and adjusted the opening balance of capital reserve of
23,634,942.60Yuan and capital reserve decreased by 56,150,000.00Yuan during the
year for the same reason.
（2） Other capital reserve is the expense for share incentive plan amortization and decrease is
the other capital reserve to be recognized during elimination period when restricted share
comes to unlock condition.
32. Treasury Share
Opening Increase Decrease Closing
Items
Balance Balance
Share incentive
buy-back 67,615,856.00 2,279,264.40 46,589,750.00 23,305,370.40
Total 67,615,856.00 2,279,264.40 46,589,750.00 23,305,370.40
The company implements restricted share incentive plan in 2016 and recognizes buy-back obligation
as liability. At the year end, treasure stock is recognized based on the numbers of restricted share in
the vesting period and buy back price agreed in the share incentive plan.
78
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
33. Other comprehensive income
2016
Opening Less：Previously Closing
Items After-tax
Balance Amount for the recognized in profit After-tax attribute Balance
Less：income attribute to
period before or loss in other to the parent
tax minority
income tax comprehensive company
shareholder
income
I.Later can’t reclassified into
profit and loss of other
comprehensive income
II. Later reclassified into profit and
loss of other comprehensive income 431,639,323.52 -758,134.26 27,730,686.01 -4,118,498.86 -24,370,321.41 407,269,002.11
Proportional other comprehensive
income of investee which is
reclassified into income statement 2,765,125.85 263,666.08 -263,666.08 2,501,459.77
under equity method
Changes in fair value recognized in
gains and losses of the 428,874,197.67 -758,134.26 27,467,019.93 -4,118,498.86 -24,106,655.33 404,767,542.34
available-for-sale financial assets
Other comprehensive income
total 431,639,323.52 -758,134.26 27,730,686.01 -4,118,498.86 -24,370,321.41 407,269,002.11
79
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
34. Special Reserve
Opening Closing
Items Increase Decrease
Balance Balance
Safety production cost 2,016,809.74 2,016,809.74
Total 2,016,809.74 2,016,809.74
35. Surplus reserves
Item Opening Closing
Increase Decrease
Balance Balance
Statutory surplus reserve 299,882,056.06 18,363,298.09 318,245,354.15
Discretionary surplus reserve 320,696,791.46 29,208,229.69 349,905,021.15
Total 620,578,847.52 47,571,527.78 668,150,375.30
The company made profit distribution within the reporting period. According to the 2016 annual
meeting, 20% of net profit in the 2016 fiscal annual report is provided for discretionary surplus
reserve of 29,208,229.69 Yuan. In the meanwhile, 10% of net profit of parent company is
provided for statutory surplus reserve of 18,363,298.09 Yuan.
36. Undistributed profits
Item 2017 2016
Closing balance of 2016 658,387,158.97 525,925,066.25
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
26,053,545.85
control
Other factors
Opening balance of 2017 658,387,158.97 551,978,612.10
Add: net profit attributable to shareholders of
200,759,820.17 182,234,151.73
parent company in the year
Less: Provision for statutory surplus reserves 18,363,298.09 14,604,114.85
Provision for any surplus reserves 29,208,229.69 25,204,992.51
Provision of general risk
Dividends payable for common shares 61,177,655.80 36,016,497.50
80
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Share dividends
Closing balance of 2017 750,397,795.56 658,387,158.97
Note: opening balance of last year has been adjusted due to the business combination under
same control which triggered consolidation scope change. Opening balance of last year
has been affected by 26,053,545.85Yuan.
37. Operating revenue and cost
Items 2017 2016
Sales revenue Cost of sales Sales revenue Cost of sales
Revenue from
2,043,986,956.70 1,625,595,014.87 1,872,949,269.50 1,526,065,621.80
principle operation
Revenue from
35,728,148.67 18,058,428.06 20,251,670.14 10,465,820.28
other operation
Total 2,079,715,105.37 1,643,653,442.93 1,893,200,939.64 1,536,531,442.08
38. Operating taxes and surcharges
Items 2017 2016
City construction tax 3,872,117.40 5,529,542.02
Education surcharge 2,670,598.37 3,887,028.44
Property tax 6,132,613.95 2,845,708.77
Land use tax 4,900,926.20 3,267,248.67
Vehicle and vessel tax 32,024.47 4,177.44
Stamp duty 1,718,435.64 1,599,703.98
Others 227,217.01 798,817.10
Total 19,553,933.04 17,932,226.42
39. Selling expenses
Items 2017 2016
Official business expense 16,172,326.40 13,793,965.40
Employee benefit 37,798,487.92 31,495,022.77
Depreciation expense 334,486.58 405,097.18
Transportation expense 18,548,242.98 15,026,756.52
Business entertaining expense 12,056,961.89 7,767,799.36
Travel expense 13,229,495.33 9,582,123.03
Maintenance and repair expense 12,791,435.69 11,027,691.87
Advertisement and bids expense 2,184,356.83 1,173,168.59
81
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Other expense 306,521.85 1,406,702.18
Total 113,422,315.47 91,678,326.90
40. Administrative expenses
Items 2017 2016
Official expense 22,474,616.19 15,680,641.20
Employee benefit 138,811,457.97 131,643,380.51
Depreciation expense 8,182,795.40 9,169,896.40
Transportation expense 171,491.59 175,434.61
Business entertaining expense 3,512,217.30 4,206,418.37
Travel expense 7,530,675.32 7,822,881.36
Maintenance and repair expense 6,536,885.81 6,046,582.07
Advertisement expense 287,869.52 258,533.47
Other taxes and fee 1,524,590.51 5,882,445.29
Insurance expense 910,211.97 1,460,517.16
Technology development expense 20,480,936.70 16,843,552.24
Long-term assets amortization 5,546,087.90 4,874,233.44
Design consultant and test service expense 10,015,427.50 6,866,858.60
Safety production cost 3,979,165.98 5,683,421.94
Other expense 1,381,161.91 2,655,268.65
Total 231,345,591.57 219,270,065.31
41. Financial expenses
Items 2017 2016
Interest expenses 10,526,056.47 5,379,674.13
Less: Interest income 4,865,429.43 3,026,398.66
Add: Exchange loss 2,458,197.49 -1,992,684.34
Add: Others expenditure 2,737,012.43 2,017,447.48
Total 10,855,836.96 2,378,038.61
42. Assets impairment losses
Items 2017 2016
Loss of bad debts 26,816,177.67 20,884,581.73
Provision for inventory impairment 192,895.00
Total 27,009,072.67 20,884,581.73
43. Investment income
82
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Items 2017 2016
Long-term equity investment gain under
equity method 140,904,557.45 128,967,171.76
Gain from disposing long-term equity
investment 263,666.08 3,160.87
Gain from holding of financial assets
available for sale 11,497,019.05 16,000,450.40
Gain from disposal financial assets available
for sale 27,467,019.93 27,629,395.44
Total 180,132,262.51 172,600,178.47
44. Gain on assets disposal
Amounts recognized
into current
Item 2017 2016
non-recurring profit
or loss
Gains on disposal of non-current
552,588.02 -21,565,350.43 552,588.02
assets
Gain on non-current
assets disposal income not 552,588.02 -21,565,350.43 552,588.02
classified as held for sale
Incl: gain on fixed assets
552,588.02 -21,565,350.43 552,588.02
disposal
Total 552,588.02 -21,565,350.43 552,588.02
45. Other income
Items 2017 2016
VAT refund 657,176.72
Grant given by the government for
relocation 1,114,000.00
Total 1,771,176.72
46. Non-operating income
（1） Non-operating income list
Amounts recognized
into non-recurring
Item 2017 2016
profit or loss for the
year
Gain on debts restructuring 229,833.00
Government grant 1,473,958.00 6,395,714.51 1,473,958.00
Others 856,276.97 31,596,475.48 856,276.97
83
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Total 2,330,234.97 38,222,022.99 2,330,234.97
Non-operating expense this year increased 1,982.77% due to increased disposal of fixed assets
in the old factory.
（2） Government grant details
Item 2017 2016 With asset/income
Taxes refund 1,330,480.25
New wall materials specific
fund 305,038.00
Contribution to subsidiary
1,114,000.00 Income related
company relocation
Fostering fund in 2015 300,000.00
International market
development fund in 2016 247,200.00
Finance support 52,000.00 337,200.00
Service policy implemented
fund in 2016 13,200.00
Income related
Exporting incentive fund 22,000.00
Liaoning self-owned brand Income related
development project 270,000.00
Innovation in technology 283,000.00 Income related
Small and medium Income related
enterprises in Liaoning
province "specialization 30,000.00
special" product project
Stabilization subsidy 2,474,362.26 Income related
Patent subsidy 14,520.00 5,000.00 Income related
Subsidy fund for highly Asset related
effective heat pump and 551,672.00
related system
City research centre and key Income related
lab fund 500,000.00
Patent bonus 20,000.00 Income related
Total 1,473,958.00 6,395,714.51
（3） Non-operating income statement
Non-operating income decreased by 92.30% in comparison with last year, mainly because of the
acquisition of Dalian Xinminghua shareholding last year and 30,334,841.93 Yuan was
recognized as non-operating income which was the combination cost lower than proportion of
shareholding of fair value of identifiable assets.
84
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
47. Non-operating expenses
Amounts recognized
into non-recurring
Item 2017 2016
profit or loss for the
year
Outward donation 10,000.00 60,000.00 10,000.00
Others 177,380.52 225,318.73 177,380.52
Total 187,380.52 285,318.73 187,380.52
48. Income tax expenses
(1) Income tax expenses
Items 2017 2016
Current income tax expenses 19,032,298.13 12,405,225.52
Deferred income tax expenses -5,114,555.51 -4,438,751.84
Total 13,917,742.62 7,966,473.68
(2) Adjustment process of accounting profit and income tax expense
Items 2017
Consolidated total profit this year 218,473,794.43
Income tax expenses at applicable tax rate 32,771,069.16
Effect on subsidiary applied to different tax rate 2,437,403.18
Effect on prior period income tax -26,163.10
Effect on non-taxable income -21,135,683.62
Effect on non-deductible cost ,expense and loss 3,123,890.95
Effect on use of deductible loss from unrecognized deferred
tax assets in the prior period -185,487.87
Effect on temporary difference or deductible loss from
unrecognized deferred tax assets this year -4,534,341.78
Tax rate adjustment caused the opening balance of deferred
tax assets /liability change 1,467,055.70
Income tax expense 13,917,742.62
49. Other comprehensive income
Refer to the note VI.33 other comprehensive income for details.
50. Notes to cash flow statement
(1) Cash receipt/payment of other operating/investing/financing activities
85
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
1) Other cash received relating to operating activities
Items 2017 2016
Government grants 58,192,890.84 13,740,935.17
Received travel expense refund 2,648,675.53 3,070,900.72
Deposit given back 30,740,218.26 49,845,835.40
Receivable from relate party 28,355.16 2,184,788.63
Interest income 4,865,429.43 2,461,618.10
rd
Receivable from 3 party 1,886,442.36 70,987.00
Others 778,033.86 2,547,938.02
Total 99,140,045.44 73,923,003.04
2) Other cash paid relating to operating activities
Items 2017 2016
Business travel borrowing 6,831,117.22 6,075,257.80
Deposit paid 49,379,114.48 56,275,941.60
Expenditure 115,004,087.20 95,678,510.22
Bank handling charges 1,718,011.38 1,722,380.37
Others 2,020,950.47 1,532,563.78
Total 174,953,280.75 161,284,653.77
3) Others cash received relating to financing activities
Items 2017 2016
Bank financial product 76,000,000.00
Total 76,000,000.00
4) Others cash received relating to financing activities
Items 2017 2016
Collection of guarantee money at the year end 22,976,815.56 20,665,689.93
Refund fractional dividend 45,137.75
Interests on discount of bill acceptance 5,085,000.00
Total 22,976,815.56 25,795,827.68
5) Others cash played relating to financing activities
Items 2017 2016
Interests on discount of bill acceptance 295,067.11
Payment of guarantee money 29,116,287.80 21,576,815.56
86
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Note financing is due and is paid 598,632.63 5,085,000.00
Total 29,714,920.43 26,956,882.67
(2) Supplementary information of consolidated cash flow statement
Items 2017 2016
1. Adjusting net profit into cash flows of operating —— ——
activities:
Net profit 204,556,051.81 185,531,317.21
Add: Provision for impairment of assets 27,009,072.67 20,884,581.73
Depreciation of fixed assets, Amortization of
46,420,450.37 40,804,660.75
mineral resources, and biological assets
Amortization of intangible assets 5,388,917.09 4,997,057.34
Amortization of long-term deferred expenses 1,801,109.16 1,408,785.18
Losses on disposal of fixed assets, intangible assets, and
-681,321.46 -1,179,307.59
long-term assets (income listed with”-”)
Losses on write-off of fixed assets (income listed
128,733.44 22,748,252.08
with”-”)
Change of fair value profit or loss
Financial expense (income listed with”-”) 13,508,079.57 3,161,368.74
Investment loss (income listed with”-”) -180,132,262.51 -172,600,178.47
Decrease of deferred tax assets(increase listed
-4,159,749.24 -4,512,357.37
with”-”)
Increase of deferred tax liabilities(decrease
listed with”-”)
Decrease of inventories (increase listed with”-”) -2,828,958.79 -47,231,344.86
Decrease of operating receivables (increase listed
-78,030,384.16 302,021.78
with”-”)
Increase of operating payables (decrease listed
-252,691,001.17 -73,149,094.49
with”-”)
Others 12,485,412.00 12,227,168.00
Net cash flows arising from operating activities -207,225,851.22 -6,607,069.97
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
87
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
3. Net increase (decrease) of cash and cash equivalent
Closing balance of cash 364,693,406.31 691,238,822.98
Less: Opening balance of cash 691,238,822.98 255,381,841.47
Add: Closing balance of cash equivalent
Less: Opening balance of cash equivalent
Net increase of cash and cash equivalent -326,545,416.67 435,856,981.51
(3) Net cash paid for acquiring subsidiaries
Items 2017
Payment of Net cash and cash equivalent under the business merger 56,150,000.00
during the year
Including：Dalian Bingshan International Trade Co., Ltd. 56,150,000.00
Net cash paid for acquiring subsidiaries 56,150,000.00
(4) Cash and cash equivalents
Items 2017 2016
Cash 364,693,406.31 691,238,822.98
Including: Cash on hand 62,880.11 83,511.72
Bank deposit used for paying at any moment 364,630,526.20 691,155,311.26
Other monetary fund for paying at any moment
Deposit fund in central bank available for payment
Cash equivalent
Including: bonds investment with maturity in 3 months
Closing balance of cash and cash equivalents 364,693,406.31 691,238,822.98
Cash and cash equivalents restricted in the parent
company or subsidiary
51. The assets with the ownership or use right restricted
Items 2017 Reasons
Monetary fund 30,116,287.80 Guarantee money
Notes Receivable 16,110,843.93 Pledge
Fixed assets 94,612,451.78 Mortgage Loan
Intangible assets 51,222,206.00 Mortgage Loan
Total 192,061,789.51
Dalian Niweisi LengNuan Techonoligy Co., Ltd. pledged the bank acceptance note to Bank o f
88
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
China Dalian Gangxi Branch as guarantee for issuing the commercial acceptance note.
Wuhan New World Refrigeration Industrial Co., Ltd signed the “maximum pledge contract”
with GuangdaBank of China Wuhan branch on December 24, 2015. Property and land were
pledged and Wuhan New World Refrigeration Industrial Co., Ltd was granted for credit of
100million Yuan.
52. Monetary category of foreign currency
(1) Monetary category of foreign currency
Item Closing Balance Exchange Closing Balance
(foreign currency) Rate (RMB)
Cash — — 38,703,907.22
Including：USD 5,913,472.10 6.5342 38,639,808.80
Euro 3,725.04 7.8023 29,063.88
GBP 218.76 8.7792 1,920.54
JPY 572,113.00 0.057883 33,114.00
Accounts receivable — — 19,151,148.50
Including: USD 2,814,574.35 6.5342 18,390,991.72
GBP 86,586.11 8.7792 760,156.78
Short term borrowing — — 9,801,300.00
USD 1,500,000.00 6.5342 9,801,300.00
Accounts payable — — 4,738,246.24
Including: USD 564,054.40 6.5342 3,685,644.26
JPY 12,664,261.00 0.057883 733,045.42
GBP 36,399.28 8.7792 319,556.56
VII. Change of Consolidation Scope
1. Consolidation not under the same control
None
2. Consolidation under same control
（1）Consolidation under the same control during the year
89
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Basis for
Percentage
Basis for combination date
（%）of Combination
Name of the acquiree combination under recognition
shareholding date
same control
acquired
Ultimately under Actually obtain
same control the control
Dalian Bingshan before and after
International Trading 76 2017.3.31
Co., Ltd acquisition and the
control is not
temporary
Acquiree’s Acquiree’s net
Acquiree’s Acquiree’s net
income from the profit from the
Name of the income for profit for
beginning of year beginning of year
acquiree comparison comparison
of combination to of combination to
period period
acquisition date acquisition date
Dalian Bingshan 63,072,226.20 1,866,671.32 272,122,356.93 4,738,804.59
International
Trading Co., Ltd
Note:the 12th meeting of 7th generation of board held on February 15th, 2017 and 1st
extraordinary shareholders meeting held on March 8th, 2017 approved to acquire 76%
shareholding of Bingshan International Trading Company controlled by Bingshan Group in
exchange of 56.15million Yuan cash. After share transfer, Dalian Refrigeration Company
held 100% shareholding of Bingshan International Trading Company. Acquisition is
ultimately under same control of Dalian Bingshan Group before and after acquistion and the
control is not temporary, therefore, the combination is carried out under same control and the
acquisition date is recognized as March 31st, 2017.
（2） Cost of combination
Item Bingshan International
Trading Company
cash 56,150,000.00
Total of combination cost 56,150,000.00
90
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
（3） Book value of assets and liability of acquire on acquisition date
Items Bingshan International Trading Company
Acquisition date Last year end
Assets: 171,176,925.72 160,177,923.59
Monetary fund 24,517,467.97 35,490,832.78
Receivables 111,266,853.98 92,080,339.05
Inventory 28,525,631.04 25,675,356.58
Other current assets 2,812,632.99 2,783,834.27
Deferred tax assets 1,493,126.82 1,586,347.99
Liability 2,561,212.92 2,561,212.92
Payables 99,191,859.74 90,059,528.93
Net assets 10,319,700.00
Less: minority interest 88,872,159.74 90,059,528.93
Acquired net assets 71,985,065.98 70,118,394.66
3. Other reason of change on consolidation scope
In accordance with the board meeting of Bingshan Construction Company, a subsidiary of Dalian
Refrigeration Company, Bingshan Construction Company and Chengdu New World Company
jointly set up Chengdu Bingshan Refrigeration Engineering Co., Ltd. Bingshan Construction Company
invested 5.1million Yuan cash holding 51% of shares. Up to December 31st, 2017, Chengdu Bingshan
Refrigeration Engineering Co., Ltd’s business has been already formally running.
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
91
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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
Automation Co., Ltd. address
Dalian Bingshan Lingshe
Quick Freezing Dalian Dalian Manufacturing 100 Establish
Equipment Co., Ltd.
Wuhan New World
Refrigeration Industrial Wuhan Wuhan Manufacturing 100 Acquisition
Co., Ltd.
Bingshan Technical
Service （Dalian） Dalian Dalian Services 100 Establish
Co.,Ltd.
Dalian Xinminghua
Electrical Technology Dalian Dalian Electronic 100 Acquisition
Co., Ltd
Dalian Niweisi LengNuan
Dalian Dalian Manufacturing 55 Acquisition
Technology Co., Ltd.
Dalian Bingshan
International Trading Dalian Dalian Service 100 Acquisition
Company
Wuhan New World
Air-conditioning
Wuhan Wuhan Installation 100 Establish
Refrigeration Engineering
Co., Ltd
Ningbo Bingshan
Air-conditioning
Ningbo Ningbo Installation 51 Establish
Refrigeration Engineering
Co., Ltd
Dalian Bingshan Baoan
Leisure Industrial Dalian Dalian Installation 100 Acquisition
Engineering Co., Ltd
Shanghai Bingshan
Technical Service Co., Shanghai Shanghai Services 51 Establish
Ltd
Chengdu Bingshan
Refrigeration Engineering Chengdu Chengdu Services 51 Establish
Co., Ltd.
92
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
1) All the proportion of shareholding in subsidiaries were the same with voting right
2) The company held over 50% voting right in subsidiaries and could control these
subsidiaries with over 50% voting right
3) Change on the shareholding of the subsidiaries is explained in the Note II.change on the
combination scope
(2) There is no significant non-wholly-owned Subsidiary
2. 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
Panasonic Compressor Equity
Dalian Dalian Manufacturing 40
(Dalian) Co., Ltd method
Dalian Fuji Bingshan Equity
Dalian Dalian Manufacturing 49
Vending Machine Co., Ltd. method
The company assumes the affiliated as significant party either when the investment income from
investee presents 10% of the parent’s net profit or the proportion of shareholding of the investee’s net
asset represents 10% of the parent’s shareholder equity.
1) The company has the same percentage of shareholding and voting right in joint-venture or
affiliated company.
2) The company doesn’t have affiliated company which has significant influence although being held
less than 20% voting rights.
3) The company doesn’t have joint venture or affiliated companies which have no significant
influence although being held 20% or more voting rights.
（2） The key financial information of affiliated companies
Items 2017
93
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Panasonic Compressor Dalian Fuji Bingshan
(Dalian) Co., Ltd Vending Machine Co., Ltd.
Current assets 1,561,263,338.96 373,991,952.58
Including: Cash and cash equivalents 222,958,963.14 86,597,714.30
Non-current assets 330,137,817.56 264,531,025.64
Total assets 1,891,401,156.52 638,522,978.22
Current liabilities 656,825,153.46 185,438,746.74
Non-current liabilities 86,523,957.30
Total liabilities 656,825,153.46 271,962,704.04
Minority interests
Equity to the parent company 1,234,576,003.06 366,560,274.18
Proportions of net assets according to
493,830,401.22 179,614,534.35
the shareholding percentage
Adjusting events
—Goodwill
—Unrealized profits of insider
trading
--Others -3,826,159.67 226,689.29
Book value of equity investment of
490,004,241.55 179,841,223.64
affiliated companies
Fair value of equity investment with
public offer
Operating income 1,623,387,718.61 442,326,067.27
Financial expense -362,406.98 -484,458.47
Income tax expense 26,264,317.90 10,432,796.66
Net profit 119,567,490.02 54,885,773.13
Net profit of discontinuing operation
Other comprehensive income
Total comprehensive income 119,567,490.02 54,885,773.13
The current dividends received from
38,000,000.00 7,840,000.00
joint ventures
Continued：
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
94
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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
Including: 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 111,579,052.67 160,560,505.51 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
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
95
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
（3） Summary financial information of insignificant affiliated companies
Items 2017 2016
Total book value of investment of 897,265,918.24 443,642,191.48
affiliated companies
The total of following items
according to the shareholding
proportions
Net profit 69,639,419.82 10,779,436.18
Other comprehensive income
Total comprehensive income 69,639,419.82 10,779,436.18
（4） Significant restrictions of the ability of affiliated companies transferring funds to the
company.
None
（5） Excessive loss of affiliated companies.
None
（6） Contingency related to joint venture or affiliated company need to be disclosed.
None
IX. Risk Related to Financial Instruments
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 maximizing the shareholders’ and other investors’ profits. Based
on these objectives, the basic risk management policy is to recognize and analyze all sorts of
risk that the group company faced with, to set up the proper risk tolerance bottom line
conducting risk management, as well as to monitor these risks in a timely and effective manner,
and to ensure these risks under the limit level.
(1) Market risk
96
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
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 2017, 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
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
Items Closing Balance Opening balance
Monetary fund-USD 38,639,808.80 26,363,244.38
Monetary fund-JPY 33,114.00 24,490.05
Monetary fund-EURO 29,063.88 838,655.15
Monetary fund-STERLING 1,920.54 0.29
Receivable- STERLING 760,156.78 674,413.43
Receivable -USD 18,390,991.72 40,126,815.27
Short term borrowing-USD 9,801,300.00
Payables -USD 3,685,644.26 2,146,568.57
Payables -JPY 733,045.42 2,602,681.45
Payables - STERLING 319,556.56 309,736.03
Payables - EURO 134,415.89
Payables -SF 3,331,222.94
Dalian Refrigeration Company paid close attention to the effect on FX risk.
2) Interest rate risk
The interest risk of the Group incurred from bank loan, risk of a floating interest rate of financial
97
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
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 80,000,000.00 and Dalian Bingshan International Trading borrowed
short term loan RMB9.8013 million Yuan 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 2017, base on the assumption of interest rate change of 50 BP, the company’s net
profit of year 2017 will increase or decrease RMB1.2646 million Yuan.
3) Price risk
Dalian Refrigeration Company sells steel products according to the market price, so there will be effect
on the price variance.
(2)Credit risk
The credit risk of the company comes from monetary fund, notes receivable, accounts receivable, and
other accounts receivable etc.The management made credit policies and monitored changes of this credit
exposure.
The company's working capital was in bank with higher credit rating, so there was no significant credit
risk, nor significant losses due to the default of other entity. Upper limit policy is adopted to avoid any
credit risk from financial institution.
The company made relevant policy to control credit risk exposure from receivable, other receivable and
notes receivable. The company assesses the client’s credit background according to the client’s financial
performance, possibility of obtaining guarantee from the 3rd party, credit record and other factors such
as current market. The company will periodically monitor the credit situation of the client and will
take measures such as prompt letter, shorten credit period or cancel the credit to ensure the overall credit
risk within the controllable scope.
As at 31st December 2017, the top five customers of receivable accounts balance is
98
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
155,341,331.23Yuan.
(3) Liquidity risk
Liquidity risk was referred to the risk of shortage of funds incurred when the enterprise fulfill the
obligation of settlement by cash or other financial assets. The way to manage the liquidity risk is to
ensure enough fund available to fulfill the liability by due date in prevention from unacceptable loss of
or reputation damage to the Company. The Company periodically analyze the liability structure and
expiry date and the financial department of the company continued to monitors the short term or long
term capital needs to ensure maintain plenty of cash flow. And the same time they also monitor the
condition of bank loan agreements and obtain commitments from banks to provide plenty of funds.
The main fund comes from bank loan. By December 31st,2017, the credit limit still available is
340million Yuan and short term credit limit available is 340million Yuan.
As at 31st December 2017, the company’s financial assets and financial liabilities in line with non
discount cash flow of the contracts as following： Currency unity:10kYuan
Closing balance
2-5 Over 5
Items Within 1 year 1-2 years Total
years years
Financial Assets
Cash and cash in
39,480.97 39,480.97
bank
Notes receivable 17,281.82 17,281.82
Accounts receivable 103,625.59 103,625.59
Other Receivable 5,204.90 5,204.90
Available for sale
51,578.32 51,578.32
financial asset
Financial Liabilities
Short-term loan 34,980.13 34,980.13
Notes Payable 26,044.32 26,044.32
Accounts payable 88,996.43 88,996.43
Other payable 6,767.48 6,767.48
Employee’s payable 4,675.16 4,675.16
Tax payable 2,999.26 2,999.26
Dividend payable 86.35 86.35
Long-term loan 16,000.00 16,000.00
99
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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
Continuously
measured at FV
Available for sale
available for sale
asset 501,871,535.40 501,871,535.40
(1) Investment by
debt instruments
(2) Investment by
equity instruments 501,871,535.40 501,871,535.40
(3) Others
2. Basis for Market price of first level measurement of fair value
Equity instrument portion of the available for sale financial assets is measured at the
unadjusted closing quoted price on stock market on December 29, 2017.
3. For continuous and discontinuous 2nd level of FV, valuation technique adopted and key
parameter quantitive and qualitive information.
None.
4. For continuous and discontinuous 3rd level of FV, valuation technique adopted and key
parameter quantitive and qualitive information.
None..
5. For continuous 3rd level of FV, adjusted information of opening and closing balance and
sensitivity analysis of unobservable parameter.
100
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
None
6. Assets continuously measured at fair value have switched among different level during the
year.
None
7. Changes of valuation technique and reasons for changes
None
8. Assets and liability are disclosed at FV rather than measured at FV
None
XI. Related Parties Relationship and Transactions
(I) Related parties relationship
1. Parent company and ultimate controller
1) Parent company and ultimate controller
Parent Registered Business Registered Shareholding Voting
company address nature capital percentage power
(%) percentage
(%)
Dalian
Bingshan
Dalian Manufacture 158,580,000.00 19.96% 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 representative 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- control products, home electronic appliance, environment protect equipment
and etc. (unless the licenses needed)
2) Change of registered capital of controlling shareholder
Controlling shareholder Opening balance Increase Decrease Closing balance
101
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Controlling shareholder Opening balance Increase Decrease Closing balance
Dalian Bingshan Group 158,580,000.00 158,580,000.00
Co., Ltd.
3) Change of proportion of controlling shareholder’s shareholding and equity
Shareholding amount Ratio of shareholding（%）
Controlling Closing balance Opening balance Ratio Ratio at
shareholder at year end beginning of
year
Dalian Bingshan
Group Co., Ltd. 170,916,934.00 122,083,524.00 19.96% 19.96%
2. Subsidiaries
Referring to the content in the Note VIII. 1. (1) Organization structure of group company.
3. Affiliated company and joint venture
The information of the affiliated company and joint venture please refers to the noteVIII. 3 ‘The
significant affiliated company and joint venture’. The company had transactions with related
parties during the current period or last period, including:
Names of the joint ventures or affiliated
Relationships with the Company
company
Panasonic Refrigeration (Dalian) Co., Ltd Affiliated company of the Company
Affiliated
Panasonic Cold-chain (Dalian) Co., Ltd
Affiliated
Panasonic Compressor (Dalian) Co., Ltd
Affiliated
Dalian Honjo Chemical Co., Ltd
Keinin-Grand Ocean Thermal Technology Affiliated
(Dalian) Co., Ltd
Beijing Huashang Bingshan Refrigeration and Affiliated
Air-conditioning Machinery Co., Ltd
Dalian Fuji Bingshan Vending Machine Co., Affiliated
Ltd
Affiliated
MHI Bingshan Refrigeration (Dalian) Co.,Ltd.
Dalian Fuji Iceberg Vending Machine Sales Affiliated
Co., Ltd
Affiliated
Jiangsu Jingxue Freezing Equipment Co., Ltd.
102
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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
Panasonic Cooling Machine system (Dalian) Affiliated
co., Ltd
Affiliated
Dalian Bingshan Metal Technology Co.,Ltd
Dalian Bingshan Group Mangement and Affiliated
Consulting 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 Pate Technology Co.,LTd Subsidiary of Dalian Bingshan Group
Affiliated company of Dalian Bingshan
Dalian Spindle Cooling Towers Co., Ltd
Group
Affiliated company of Dalian Bingshan
BAC (Dalian) Co., Ltd
Group
Note: Dalian Third Refrigeration Equipment Factory has been renamed as Dalian Pate
Technology Co.,LTd on October 16th , 2017.
(II) Related Party transactions
1. Purchase of goods, offer and receive labour services etc inter-group transactions
1) Purchase of goods/receive labour services
Related party Content 2017 2016
Panasonic cold machine system Purchases of 116,159,861.59
(Dalian) co., Ltd goods 67,655,354.93
Panasonic Refrigeration (Dalian) Co., Purchases of 36,625,052.09
Ltd. goods 47,090,734.64
Purchases of 36,505,585.84
BAC (Dalian) Co., Ltd 41,865,711.10
goods
Panasonic Cold-chain (Dalian) Co., Purchases of 135,018,000.08
Ltd goods 41,897,553.16
Jiangsu Jingxue Freezing Equipment Purchases of 26,148,762.59
Co., Ltd. goods 28,938,719.21
Wuhan LanNing energy technology Purchases of 21,429,117.11
co., Ltd goods 22,360,810.41
Dalian Bingshan Group Refrigeration Purchases of 25,348,686.18
Equipment Co., Ltd goods 21,764,023.60
Beijing Huashang Bingshan
Purchases of
Refrigeration and Air-conditioning 11,965,812.07 3,803,218.03
goods
Machinery Co., Ltd.
103
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Related party Content 2017 2016
Purchases of 5,625,902.59
Dalian Pate Technology Co.,LTd 4,927,599.77
goods
Dalian Spindle Cooling Towers Co., Purchases of 4,621,938.47
Ltd goods 3,680,841.01
Panasonic compressor (Dalian) Co., Purchases of 3,415,394.87
Ltd goods 2,576,209.40
Dalian Bingshan Metal Technology Purchases of 577,427.88
Co., Ltd goods 500,078.87
Purchases of
Dalian Honjo Chemical Co., Ltd. 74,102.56
goods
Dalian Fuji Bingshan Vending Purchases of 359,807.67
Machine Co., Ltd goods
MHI Bingshan Refrigeration (Dalian) Purchases of 30,199.15
Co.,Ltd. goods
Total 295,297,550.73 415,668,954.14
2) Sales of goods/ labour services provision
Related party Content 2016 2015
Panasonic Cold-chain (Dalian) Co., Ltd Sales of goods 173,038,902.46 133,176,472.97
Panasonic Refrigeration (Dalian) Co.,
Sales of goods 107,638,666.72 76,396,710.08
Ltd.
Dalian Fuji Bingshan Vending Machine
Sales of goods 34,136,856.37 25,951,727.99
Co., Ltd
Panasonic Cold Machine system
Sales of goods 21,666,442.54 2,321,854.48
(Dalian) co., Ltd
MHI Bingshan Refrigeration (Dalian)
Sales of goods 21,470,860.07 17,508,233.63
Co.,Ltd.
Beijing Huashang Bingshan
Refrigeration and Air-conditioning Sales of goods 14,337,123.07 27,791,350.44
Machinery Co., Ltd.
Wuhan LanNing energy technology co., 12,555,063.86 31,564,672.87
Sales of goods
Ltd
7,496,076.45 4,289,463.10
Panasonic compressor (Dalian) Co., Ltd Sales of goods
Dalian Pate Technology Co.,LTd Sales of goods 2,180,488.20 2,777,710.00
Keinin-Grand Ocean Thermal
Sales of goods 834,672.00 766,630.42
Technology (Dalian) Co., Ltd.
Dalian Fuji Iceberg Vending Machine
Sales of goods 806,414.75 125,921.72
Sales Co., Ltd
104
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Jiangsu Jingxue Freezing Equipment
Sales of goods 676,308.07 377,379.23
Co., Ltd.
BAC (Dalian) Co., Ltd Sales of goods 649,816.64 48,042.74
Dalian Bingshan Group Refrigeration
Sales of goods 649,621.22 543,771.08
Equipment Co., Ltd
Dalian Bingshan Huigu Development
Sales of goods 622,131.50
Company
Dalian Bingshan Group Huahuida
Sales of goods 358,332.87
Financial Leasing Co.,LTd
Dalian Spindle Cooling Towers Co., Ltd Sales of goods 284,680.37 2,914,181.55
Wuhan Sikafu Power Control Equipment
Sales of goods 184,040.96 560,308.54
Co., Ltd
Dalian Honjo Chemical Co., Ltd Sales of goods 6,401.89
Dalian Bingshan Metal Technology Co.,
Sales of goods 48,779.66
Ltd
Total 399,586,498.12 327,169,612.39
2. Assets Lease
1) Assets rent out
Category of assets 2017Lease 2016 Lease
Lessor Lessee
rent out Income Income
Dalian
Refrigeration Dalian Bingshan
Office 97,297.30 98,742.86
Company Group Co., Ltd.
Limited
Dalian MHI Bingshan
Refrigeration
Refrigeration Plant 4,000,000.00 4,100,000.00
Company
Limited (Dalian) Co.,Ltd.
Dalian Dalian Bingshan
Refrigeration Huigu
Land and property 4,400,000.00
Company Development
Limited Company
Dalian Panasonic
Refrigeration Employee
Cold-chain (Dalian) 19,617.73
Company dormitory
Limited Co., Ltd
Dalian Panasonic
Refrigeration Employee
compressor 38,159.80
Company dormitory
Limited (Dalian) Co., Ltd
105
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Category of assets 2017Lease 2016 Lease
Lessor Lessee
rent out Income Income
Dalian Panasonic
Refrigeration Employee
Company Refrigeration 60,900.69
dormitory
Limited (Dalian) Co., Ltd.
Dalian
Refrigeration Dalian Honjo Employee
Company 3,625.28
Chemical Co., Ltd dormitory
Limited
Note: Dalian Refrigeration Company signed leasing contract with Dalian Bingshan
Group and rented out 576squre meter office to Dalian Bingshan group from April 1st,
2017 to March 31st, 2019 with annual lease premium of 144,000Yuan.
On 31st July,2014, the company signed supplemental rental contract with MHI Bingshan
Refrigeration (Dalian) Co.,Ltd., and rent out # 6 building of workshop located on No. 106
Liaohe East Rd, Dalian Economic and Technology Development Zone to MHI Bingshan
Refrigeration (Dalian) Co.,Ltd. The rental area is 15,259.04 square metres, and annual rent is
RMB 4.2 million with the expiry date on 16th July, 2029.
The 13th meeting of the 7th generation board was held on April 22, 2017, and approved to rent
out the old plant and land located in No888, South West RD, Shahekou District, Dalian to
Bingshan Huigu Company. The lease premium is 4.62million Yuan per annum and contract is
from April 1st, 2017 to December 31, 2036. The company has signed the “estate leasing
contract” with Dalian Bingshan Huigu Development Company based on the requirement of
utilization of old land and plant and new business forester plan.
2) Assets under lease
Category of 2017 Lease 2016 Lease
Lessor Lessee
assets rent in fees fees
Dalian Bingshan Dalian Refrigeration
Office, etc 135,782.86
Group Co. Company Limited
Dalian Bingshan Dalian Refrigeration
Land 219,267.25
Group Co. Company Limited
3. Warranty provided by Related Parties
The national development fund planned to support the company’s intelligent and green
equipment of cold chain and service industry base project, and provide the special fund to the
106
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
controlling shareholder of the company, Bingshan Group. Please refer to the “ Note VI.28 long
term borrowings”
4. Funds borrow from /lent to related party
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
Working
Dalian Bingshan Group Co., Ltd. 60,000,000.00 2017.08.31 2018.08.30 capital
Working
Dalian Bingshan Group Co., Ltd. 5,820,000.00 2017.09.27 2018.09.25 capital
Working
Dalian Bingshan Group Co., Ltd. 14,180,000.00 2017.12.04 2018.11.30 capital
Total 240,000,000.00
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 1,946,666.67Yuan.
Wuhan New World Refrigeration Industrial Co., Ltd., the subsidiary of the company, borrowed
80 million Yuan from Dalian Bingshan Group. At the year end, the loan has not been repaid and
interst is calcualted at the same interest rate of the bank. The interest paid is 904,331.71 Yuan.
5. Management Remuneration
Item 2017 2016
Total rewards for the key management 3,507,800.00 3,896,600.00
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 BAC (Dalian)
Co., Ltd 682,000.00 34,100.00
receivable
107
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Accounts Beijing Huashang
Bingshan
receivable Refrigeration and
8,913,856.35 524,792.82 38,284,385.35 3,543,453.34
Air-conditioning
Machinery Co.,
Ltd
Accounts Dalian Fuji
Bingshan Vending 5,296,495.78 264,824.79 1,520,221.58 76,011.08
receivable Machine Co., Ltd.
Accounts Dalian Spindle
Cooling Towers 19,500.00 975.00 46,659.20 2,332.96
receivable Co., Ltd
Accounts Thermo King
Suzhou 1,072,398.37 53,619.92
receivable
Accounts MHI Bingshan
Refrigeration 3,943,798.07 197,189.90 215,889.22 10,794.46
receivable (Dalian) Co.,Ltd.
Accounts Panasonic Cold
Machine system 1,011,420.13 50,571.01 988,213.08 49,410.65
receivable (dalian) Co., Ltd
Accounts Panasonic Cold
Chain (Dalian) 31,120,658.05 1,579,384.35 49,852,547.51 2,492,627.38
receivable Co., Ltd
Accounts Panasonic
Compressor 93,510.28 4,675.51 285,612.28 17,405.61
receivable (Dalian) Co., Ltd
Accounts Panasonic
Refrigeration 2,329,505.72 116,475.29 10,132,966.54 506,648.32
receivable (Dalian) Co., Ltd
Accounts Wuhan LanNing
Energy
receivable 7,376,782.55 368,839.13 14,466,855.00 723,342.75
Technology Co.,
Ltd
Accounts Wuhan Sikafu
Power Control
receivable 77,975.80 3,898.79 655,561.00 32,778.05
Equipment Co.,
Ltd
Accounts Dalian Bingshan
Group
receivable Refigeration 3,461.40 173.07
Equipment
Co.,Ltd
Accounts Keinin-Grand
Ocean Thermal
receivable 6,117.31 305.87
Technology
(Dalian) Co., Ltd.
Accounts Dalian Bingshan
Pate Technology 5,642.60 564.26
receivable Co.,Ltd
108
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Accounts Dalian Fuji
receivable Iceberg Vending
4,452.90 222.65
Machine Sales
Co., Ltd
Beijing Huashang
Bingshan
Other Refrigeration and
108,307.06 7,163.99 34,972.74 1,748.64
receivable Air-conditioning
Machinery Co.,
Ltd
Panasonic Cold
Other
Chain (Dalian) 89,016.00 4,450.80
receivable
Co., Ltd
Wuhan LanNing
Other Energy
43,680.84 2,184.04 3,814.37 190.72
receivable Technology Co.,
Ltd
Wuhan Sikafu
Other Power Control
10,817.95 540.90 320,000.00 16,000.00
receivable Equipment Co.,
Ltd
Dalian Spindle
Prepayment Cooling Towers 37,956.00
Co., Ltd
Jiangsu Jingxue
Freezing
Prepayment 782,768.00 5,469.00
Equipment Co.,
Ltd.
Panasonic Cold
Prepayment Machine system 2,373.00 837,819.00
(dalian) Co., Ltd
Panasonic
Prepayment Refrigeration 460,620.00 318,120.00
(Dalian) Co., Ltd
BAC (Dalian)
Prepayment 318,220.00
Co., Ltd
Panasonic Cold
Prepayment Chain (Dalian) 90,000.00
Co., Ltd
Notes Dalian Fuji
Bingshan Vending 1,182,028.15
receivable Machine Co., Ltd.
Notes Dalian Spindle
Cooling Towers 39,064.75
receivable Co., Ltd
Notes MHI Bingshan
Refrigeration 1,711,379.41 19,805,806.72
receivable (Dalian) Co.,Ltd.
109
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Notes Panasonic Cold
Machine system 53,989.08 1,778.45
receivable (Dalian) Co., Ltd
Notes Panasonic Cold
Chain (Dalian) 54,495,058.38 15,532,736.64
receivable Co., Ltd
Notes Panasonic
Compressor 1,182,680.29 200,000.00
receivable (Dalian) Co., Ltd
Notes Panasonic
Refrigeration 14,031,393.19
receivable (Dalian) Co., Ltd
Notes Jiangsu Jingxue
Freezing
receivable 4,277,035.00
Equipment Co.,
Ltd.
(1) Accounts Payable due from Related Party
Item Related party Closing Balance Opening Balance
Accounts Payable BAC Dalian Co., Ltd 6,078,640.00 29,773,959.00
Dalian Bingshan Pate Technology
Accounts Payable 5,550.00 2,022,156.94
Co.,Ltd
Dalian Bingshan Group
Accounts Payable 11,799,186.85 9,520,335.93
Refrigeration Equipment Co., Ltd.
Dalian Bingshan Metal
Accounts Payable 140,316.68
Technology Co., Ltd
Dalian Bingshan Pate Technology
Accounts Payable 5,119,096.22
Co.,Ltd
Dalian Fuji Bingshan Vending
Accounts Payable 983.82
Machine Co., Ltd.
Dalian Spindle Cooling Towers
Accounts Payable 7,544,866.00 5,339,188.00
Co., Ltd
Jiangsu Jingxue Efficient
Accounts Payable 14,043,679.12 8,505,375.05
Technology Co., Ltd.
Panasonic Cold machine system
Accounts Payable 20,582,489.66 3,680,482.86
(Dalian) Co., Ltd
Panasonic Cold Chain (Dalian)
Accounts Payable 13,180,390.70 28,245,301.70
Co., Ltd
Panasonic Compressor (Dalian)
Accounts Payable 1,696,000.00 1,766,420.00
Co., Ltd
Panasonic Refrigeration (Dalian)
Accounts Payable 644,319.10 50,667.31
Co., Ltd.
Wuhan LanNing Energy
Accounts Payable 7,725,855.00 15,300,000.00
technology Co., Ltd
Other accounts MHI Bingshan Refrigeration
payable (Dalian) Co.,Ltd. 270,000.00
110
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Other accounts Dalian Bingshan Pate Technology
payable Co.,Ltd 1,000.00
Other accounts Panasonic Compressor (Dalian)
payable Co., Ltd 9,425.59
Other accounts Panasonic Cold Chain (Dalian)
payable Co., Ltd 216,570.00
Beijing Huashang Bingshan
Accounts
Refrigeration and
Received in 399,609.61 459,609.61
Air-conditioning Machinery Co.,
Advance
Ltd
Accounts
Dalian Bingshan Huigu
Received in 1,100,000.00
Development Co.,Ltd
Advance
Accounts
Dalian Bingshan Group
Received in 50,000.00
Refrigeration Equipment Co., Ltd.
Advance
Accounts
Panasonic Cold machine system
Received in 90,360.00 171,000.00
(Dalian) Co., Ltd
Advance
Accounts
MHI Bingshan Refrigeration
Received in 450,000.00
(Dalian) Co.,Ltd.
Advance
Notes Payable BAC (Dalian) Co., Ltd 47,469,964.10 30,121,670.00
Dalian Bingshan Group
Notes Payable 7,812,262.79 1,312,540.00
Refrigeration Equipment Co., Ltd.
Dalian Bingshan Metal
Notes Payable 474,736.39 450,000.00
Technology Co., Ltd
Dalian Bingshan Pate Technology
Notes Payable 1,503,294.01
Co.,Ltd
Jiangsu Jingxue Efficient
Notes Payable 4,860,000.00 4,903,405.00
Technology Co., Ltd.
Panasonic Cold Chain (Dalian)
Notes Payable 1,657,321.00 3,939,286.50
Co., Ltd
Wuhan LanNing Energy
Notes Payable 1,355,550.00
technology Co., Ltd
Wuhan Sikafu Power Control
Notes Payable 620,000.00
Equipment Co., Ltd
(IV) Related Party Commitment
None
XII. Share-Based Payment
1． General situation of share payment
Items Situation
Total equity instruments granted by the company during none
111
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Items Situation
the period
Total equity instruments exercised by the company none
during the period
Total equity instruments invalid by the company during 413,000.00
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
In accordance with “Restricted Share Incentive Plan (draft)’ in 2016 and the 3rd extraordinary
shareholder’s meeting in 2017, incentive objective, Liu Jie, Meng Yunchan, Fang Zheng, Di Jun,
Zhang guanghui 5 persons resigned, therefore, the they are not entitled for share incentive.
These 5persons were granted for 413,000 numbers of shares in total. In accordance with
“dividend distribution plan of 2016”, based on the total number of 611,776,558shares, every
10shares will be granted for 4new shares from capital reserve transfer. After transfer, sum of the
unlocked restricted shares granted to these 5 persons is 578,200. On December 8, 2017, the 17th
meeting of 7th generation of directors board and the 14th meeting of 7th generation of supervisors
board approved “Amendment of share buyback plan of Restricted Share Incentive Plan in
2016”and “Approval of writing off bought back shares within the Restricted Share Incentive
Plan in 2016”, the Company bought them back and has written off the account. Share buyback
is planned to be settled by self financing and the sum of buy back price is 2,279,264.40 Yuan.
2． Share payment settled by equity
Items Situation
According to the fair value of restricted
Method for determining the fair value of the equity
stock on granted date (the fair value
instruments granted
changes after the grant date is uncertain)
The basis for determining the quantities of exercised Determined by the actual numbers of
equity instruments share exercised
The reasons for the significant difference between this
None
year’s estimation and last year’s estimation
112
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The cumulative amount of capital reserve which includes
36,488,675.49
share payment settled by equity
Total cost of share payment recognized by equity
12,070,987.49
settlement this year
1) The Situation of Granted Restricted Share in 2015
According to the 13th meeting of the 6th generation of board, the 1st interim shareholders’
meeting and the rules of ‘Restricted Share Incentive Plan (draft)’, the Company granted
10,150,000 numbers of restricted shares to 41 incentive targets by offering incentive targets ‘A’
original shares. The granted price is 5.56yuan per share, and the total capital raised is
56,434,000.00Yuan. The Company’s incentive targets include the directors, middle and senior
management personnel and other key personnel supposed to incent who held office when the
‘Share Incentive Plan’ was announced, but excluding the supervisors, the independent directors,
foreign directors and foreign management personnel. The 15th meeting of board of 6th generation
held on 4th March 2015 approved the ‘The Report Regarding Granting Incentive Targets
Restricted Shares’, which agrees to grant 10,150,000 numbers of restricted shares to 41
incentive targets, and set 4th March 2015 as share granted date.
2) The Situation of Granted Restricted Share in 2016
According to the 9th meeting of 7th generation of directors, the 3rd interim shareholders’ meeting
and the rules of ‘Restricted Share Incentive Plan (draft)’, the Company granted 12,884,000
numbers of restricted shares to 118 incentive targets by offering incentive targets ‘A’ original
shares. The granted price is 5.62yuan per share, and the total capital raised is
72,480,080.00Yuan. The Company’s incentive targets include the directors, middle and senior
management personnel and other key personnel supposed to incent who held office when the
‘Share Incentive Plan’ was announced, but excluding the supervisors, the independent directors,
foreign directors and foreign management personnel. The 9th meeting of board of 7th
generation held on 20th September 2016 approved the ‘The Report Regarding Granting
Incentive Targets Restricted Shares’, which agrees to grant 12,884,000 numbers of restricted
shares to 118 incentive targets, and set 20th September 2016 as share granted date.
3) The Situation of Unlocking Restricted Shares in 2016
The 4th meeting of the 7th generation of board held on 13th April 2016 approved the ‘Proposal for
unlocking in restricted share options incentive plan for the first unlocking-in period’. There
were 41 incentive targets who satisfied the requirements of unlocking- in, and the number of the
restricted shares can apply unlocking in to have listed and circulated is 3,045,000 that account
113
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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.
The 4th meeting of the 7th generation of director board approved “proposal for the 2nd
unlocking period of restricted share incentive plan”. Objectives qualifying for the unlocking
conditions are 41 persons, based on the “Profit distribution scheme of 2015”, every 10 share
capital will granted for 5 new shares by transferring from capital reserve. After transferring to
share capital, 6,090,000 numbers of restricted shares will be applied to unlocking condition and
can be listed in the market, representing 0.71% if total of share capital.
The 17th meeting of the 7th generation of director board approved “proposal of 1st unlocking
period of restricted share incentive plan in 2016”. Objectives qualifying for the unlocking
conditions are 113 persons, based on the “Profit distribution scheme of 2016”, every 10 share
capital will granted for 4 new shares by transferring from capital reserve. After transferring to
share capital, 5,237,820 numbers of restricted shares will be applied to unlocking condition and
can be listed in the market, representing 0.61% if total of share capital.
XIII. Contingency
As at 31 December 2017, the Group does not have any other contingencies for disclosure.
XIV. Commitment
As at 31 December 2017, 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
Convertible company bond Bonds are not
Issuing bond
privately issued
Significant External Acquired Wuhan Lanning
4,500,000
Investment shares
2017 annual shareholder’s meeting of Wuhan New World Refrigeration approved to acquire
27.27% shareholding held by Cheng Xiangrong, a shareholder of Wuhan Lanning Energy
Technology Co.,Ltd. After acquisition, Wuhan New World Refrigeration increased investment
in Wuhan Lanning to 12million Yuan, representing 54.55% of shareholding. Wuhan New
114
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
World Refrigeration has signed the transfer agreement with Cheng Xiangrong and paid
4.5million Yuan on January 12th, 2018. Updates of shareholders in Commercial and Industry of
Administration has been done in February, 2018, after acquisition, Wuhan New World
Refrigeration can control over Wuhan Lanning and acquisition date was recognized as February
28, 2018.
According to the 16th meeting of the 7th generation of board and the 2nd extraordinary
shareholders meeting, the Company approved to issue convertible bond privately. The bond can
be converted to A share, ‘GuoTaiJunAn’(#601211) held by Dalian Refrigeration Company
and total face value of the bond is less than 400million Yuan. On February 1st, 2018, the
Company has received the “Approval letter of privately listed convertible loan of Dalian
Refrigeration Company “( Shangzhenghan[2018]No125) from Shanghai Security and
Exchange Market. Up to today, the bond has not been issued yet.
.
2. Information about profit distribution
Items Content
Extract 20% of the free surplus reserves; based
on611,776,558 numbers of share in total, paid out cash
dividend of 1Yuan for every 10 shares(before tax),and cash
Dividend proposed to be distributed
dividend of B shares are 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 12th meeting of the 7th generation of board held on 20th April 2018 approved the profit
distribution policy for the year of 2017, extracting 20% of the free surplus reserves and based on
855,908,981 numbers of share in total, paying out cash dividend of 0.5Yuan for every 10
shares(before tax) and cash dividend of B shares are paid in Hong Kong dollars.
3. Sales Return
There is no significant sales return after the balance sheet date.
4. Except the subsequent event disclosed above, the Company has no other significant
subsequent event.
115
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
XVI. Other Significant Events
1. Error correction and effect in previous period.
The Company has no adjustment of prior period accounting error this year.
2. Debt Restructuring
The Company has no events of debt restructuring this year.
3. Asset exchange
(1) The exchange of non-monetary 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, Chengdu Bingshan. The East is
the subsidiaries of the Company, and they are Ningbo Bingshan Air-conditioning Refrigeration
Engineering Co., Ltd and Shanghai Bingshan Technical Service Co., Ltd.
(1) The basis and accounting policies of reporting segments
The internal organization structure, management requirements and internal report scheme are
the determination basis for the Company to set the operating segments. The segments
are those satisfied the following requirements.
1).The segment can generates revenue and incur expenses.
2).The management personnel can regularly evaluate the operation results of segments and
allocate resource ,assess its performance .
3).The financial situation, operation results, cash flow and other accounting information of
116
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
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
2017
Items Northeast Central
East China Offset Total
China China
1 Operating income 260,871.59 35,870.70 8,188.96 -96,959.74 207,971.51
2 Cost 258,083.18 35,343.89 8,116.69 -96,959.74 204,584.02
Impairment on assets 2,348.35 295.27 57.29 2,700.91
Depreciation and
4,192.26 1,152.06 16.73 5,361.05
amortization
3 Investment income from
14,187.91 -97.45 14,090.46
associates and joint venture
4 Operating profits(loss) 24,500.09 569.37 78.56 -3,300.64 21,847.38
5 Income tax 1,532.64 75.67 18.09 -234.63 1,391.77
6 Net profit(loss) 22,967.44 493.71 60.47 -3,066.01 20,455.61
7 Total assets 588,305.71 58,765.89 3,541.54 -88,650.99 561,962.15
8 Total liabilities 203,027.52 44,429.53 1,979.68 -36,955.87 212,480.86
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
117
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance
Item Booking balance Provision Booking
Amount % Amount % balance
debt provision
Accounts
receivable with bad
debt provision
414,554,206.31 100.00 57,996,249.38 13.99 356,557,956.93
based on the
characters of credit
risk portfolio
Accounting age as
230,841,994.64 55.68 57,996,249.38 25.12 172,845,745.26
characters
Related party
within
183,712,211.67 44.32 183,712,211.67
consolidation
scope
Accounts
receivable with
insignificant
individual amount
and separate bad
debt provision
Total 414,554,206.31 100.00 57,996,249.38 13.99 356,557,956.93
(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 178,100,272.41 100.00 60,524,866.67 33.98 117,575,405.74
the characters of
credit risk portfolio
Accounting age as
178,100,272.41 100.00 60,524,866.67 33.98 117,575,405.74
characters
Related party within
118
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Opening Balance
Item Booking balance Provision Booking
Amount % Amount % balance
consolidation scope
Accounts receivable
with insignificant
individual amount
and separate bad
debt provision
Total 178,100,272.41 100.00 60,524,866.67 33.98 117,575,405.74
1) The bad debt provisions of accounts receivable in the portfolio is accrued under
accounting aging analysis method:
Closing Balance
Aging Provision for bad Drawing Proportion
Accounts receivable
debts (%)
Within 1 year 125,157,912.50 6,257,895.63 5
1-2 years 28,442,788.14 2,844,278.81 10
2-3 years 21,662,625.64 6,498,787.69 30
3-4 years 20,667,685.67 10,333,842.84 50
4-5 years 14,247,691.41 11,398,153.13 80
Over 5 years 20,663,291.28 20,663,291.28 100
Total 230,841,994.64 57,996,249.38
(2) Bad debt provision accrued and reversed (withdraw)
The bad debt provision has been accrued in the amount of 766,311.58 Yuan, during the report
period, bad debt provision is recollected of 661,616.00Yuan.
Key amount of reverse or recollected:
Reverse(recollected) Regained
Companies Reasons
amount form
Shandong Laiyang Huasheng judicial decision to
293,092.00 lawsuit
Food Co., Ltd receive the debt
Beijing Taizinai Milk Biology judicial decision to
368,524.00 lawsuit
Development Co.,LTD receive the debt
Total 661,616.00 — —
119
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(3) No accounts receivable written off in current period.
Item Written off amount
Receivable actually written off 3,956,544.87
(4) The top five significant accounts receivable categorized by debtors
Closing
% of the
Company Closing Balance Aging Balance of
total AR
Provision
Guangzhou Fuli Estate
44,290,000.00 Within 1 year 10.68 2,214,500.00
Co.,Ltd
Xinyi Yuanda
Construction and Within 1 year,
Installation 27,709,087.18 1-2 years 6.68 2,145,439.31
Engineering Co., Ltd.
Jilin Changjitu
Development 27,000,000.00 Within 1 year 6.51 1,350,000.00
&Construction Co.,Ltd
Yangmei Fengxi
16,700,000.00 Within 1 year 4.03 835,000.00
Fertilizer
Dalian Mingdi
15,130,000.00 Within 1 year 3.65 756,500.00
TradingCo.,Ltd
Total 130,829,087.18 31.55 7,301,439.31
2. Other Receivables
(1) The category of other receivables
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
3,605,280.13 100.00 782,482.10 21.70 2,822,798.03
characters of credit risk
portfolio
Other receivables with
insignificant individual
amount and separate bad
debt provision
120
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Total 3,605,280.13 100.00 782,482.10 21.70 2,822,798.03
(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
5,595,672.42 100.00 1,227,167.35 21.93 4,368,505.07
based on the characters
of credit risk portfolio
Other receivables with
significant individual
amount and separate
bad debt provision
Total 5,595,672.42 100.00 1,227,167.35 21.93 4,368,505.07
1) The bad debt provisions of other receivables in the portfolio is accrued under accounting
aging analysis method
Closing Balance
Aging Provision for bad Drawing Proportion
Other receivables
debts (%)
Within 1 year 224,619.70 11,230.99 5.00
1-2 years 2,430,000.00 243,000.00 10.00
2-3 years 339,109.75 101,732.93 30.00
3-4 years 330,065.00 165,032.50 50.00
4-5 years 100,000.00 80,000.00 80.00
Over 5 years 181,485.68 181,485.68 100.00
Total 3,605,280.13 782,482.10 —
(2) Bad debt provision accrued and reversed (withdraw) in 2017.
The bad debt provision has been reversed by 444,685.25Yuan.
(3) Other receivables categorized by nature
121
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Nature Closing Balance Opening Balance
Petty cash 74,915.50 80,892.85
Guarantee deposits 3,501,260.43 5,502,139.57
Others 29,104.20 12,640.00
Total 3,605,280.13 5,595,672.42
(5) Other receivables from the top 5 debtors
Closing
Closing % of the
Name Category Aging Balance of
Balance total OR
Provision
Dalian Delta HK
Security 1-2 years,
China gas Co., 2,730,000.00 75.72 393,000.00
deposit 3-4 years
Ltd
Dalian Jinzhou
New district
Security
Funding agencies 339,109.75 2-3 years, 9.41 101,732.93
deposit
and institutions
accounting center
Dalian economic
and technological
development zone Security Over 5
funding agencies deposit 112,985.68 years 3.13 112,985.68
and institutions
accounting center
Henan Shuanghui
Security
Investment 100,000.00 4-5years 2.77 80,000.00
deposit
Company
Xinjiang
Petroleum Security Within 1
management deposit 60,000.00 year 1.66 3,000.00
Company
Total 3,342,095.43 92.69 690,718.61
122
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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 487,496,652.08 487,496,652.08 432,788,001.94 246,597,906.16
Investment of affiliates
1,280,624,499.15 1,214,360,893.12
and JV 1,556,941,899.80 1,556,941,899.80
Total 2,044,438,551.88 2,044,438,551.88 1,713,412,501.09 1,460,958,799.28
(2) Investments of subsidiaries
Subsidiaries names Opening Balance Increase Decrease Closing Balance
Dalian Bingshan Group Construction Co., Ltd 93,749,675.77 93,749,675.77
Dalian Bingshan Group Sales Co., Ltd 20,722,428.15 20,722,428.15
Dalian Bingshan Air-Conditioning Equipment
Co., Ltd 36,506,570.00 36,506,570.00
Dalian Bingshan Jiade Automation Co., Ltd 6,872,117.80 6,872,117.80
Dalian Bingshan Lingshe Quick Freezing
Equipment Co., Ltd 59,356,051.19 59,356,051.19
Dalian Niweisi LengNuan Technology Co.,
Ltd 48,287,589.78 48,287,589.78
Wuhan New World Refrigeration Industrial
Co., Ltd 84,674,910.81 84,674,910.81
Bingshan Technical Service （ Dalian ）
Co.,Ltd. 22,024,000.00 22,024,000.00
123
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Subsidiaries names Opening Balance Increase Decrease Closing Balance
Dalian Xinminghua Electronics Co., Ltd. 43,766,243.72 43,766,243.72
Dalian Bingshan International Trading
Co.,Ltd 16,828,414.72 54,708,650.14 71,537,064.86
Total 432,788,001.94 54,708,650.14 487,496,652.08
(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. Affiliated companys
Panasonic Refrigeration
(Dalian) Co., Ltd. 157,425,641.15 5,991,975.67 1,600,000.00 161,817,616.82
Panasonic Cold-chain
(Dalian) Co., Ltd 217,687,237.26 14,163,570.31 4,800,000.00 227,050,807.57
Panasonic Compressor
(Dalian) Co., Ltd 484,003,393.99 44,000,847.56 38,000,000.00 490,004,241.55
Dalian Honjo Chemical
Co., Ltd 9,642,351.34 912,160.07 1,441,499.53 9,113,011.88
Keinin-Grand Ocean
Thermal Technology 52,952,413.79 12,652,398.53 8,000,000.00 57,604,812.32
(Dalian) Co., Ltd
Beijing Huashang
Bingshan Refrigeration
and Air-conditioning 769,463.27 661,677.89 1,431,141.16
Machinery Co., Ltd
Dalian Fuji Bingshan
Vending Machine Co., 160,787,194.81 26,894,028.83 7,840,000.00 179,841,223.64
Ltd
124
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(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
MHI Bingshan
Refrigeration (Dalian) 13,018,792.05 340,712.76 13,359,504.81
Co.,Ltd.
Dalian Fuji Iceberg
Vending Machine Sales 9,410,006.56 4,102,434.74 1,470,000.00 12,042,441.30
Co., Ltd
Jiangsu Jingxue Freezing
Equipment Co., Ltd. 151,527,707.42 14,564,351.32 166,092,058.74
Panasonic cold machine
system (Dalian) Co., Ltd 23,400,297.51 4,424,366.91 27,824,664.42
Bingshan Metal
Technical Service 172,950,000.00 14,526,852.76 24,360,221.29 163,116,631.47
（Dalian） Co.,Ltd.
Dalian Bingshan Group
Mangement and 49,000,000.00 -1,356,255.88 47,643,744.12
Consulting Company
Total 1,280,624,499.15 221,950,000.00 141,879,121.47 87,511,720.82 1,556,941,899.80
At the 1st general meeting in 2017, and 12th meeting of the 7th generation of board of directors held on February 15th,2017, approved Dalian Refrigeration Company
to acquire 76% of shareholding of Dalian Bingshan International Trading Co., Ltd, and Beijing Zhongkehua Assets Valuation Co.,LTD was engaged to the thorough
valuation of Dalian Bingshan International Trading Co., Ltd, valuation date is December 31st,2017. Based on the valuation results, the share transferring price is
56.15million Yuan for 76% shareholding of Dalian Bingshan International Trading Co., Ltd held by Dalian Bingshan Group. After share transfer, the Company holds
100% of shareholding of Dalian Bingshan International Trading Co., Ltd.
125
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
4. Operating revenue and cost
Item 2017 2016
Revenue Cost Revenue Cost
Revenue from main
595,981,322.69 495,403,921.28 546,594,784.30 461,413,033.94
operation
Revenue from other
20,778,557.97 12,256,853.32 11,810,086.74 7,113,931.96
operation
Total 616,759,880.66 507,660,774.60 558,404,871.04 468,526,965.90
5. Investment income
Items 2017 2016
Income from long-term equity investments under equity
method 141,879,121.47 131,022,957.13
Income from disposing long-term share equity investments 263,666.08 56,278.70
Income from holding of financial assets available for sale 11,463,569.05 15,961,425.40
Income from disposing available for sale financial
investments 27,467,019.93 27,629,395.44
Income from long-term equity investments under cost
method 17,365,100.59 12,904,192.38
Total 198,438,477.12 187,574,249.05
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 20, 2018
126
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Supplementary Information to the Financial Statements
1. Non-operating profit or loss
Items 2017 Notes
Gain or loss from disposal of non-current assets 552,588.02
Override, no formal approval or accidental tax refund ,deduction or
exemption
Government grants recorded into profit or loss during current period 11,830,406.39
Expenses for using funds from non financial institution recognized
in current profit/loss
Gains from acquisition of subsidiary or associates when initial cost
is less than the fair value of identifiable net asset of invested
company
Profits/loss from non monetary assets exchange
Profits/loss from investments or management of assets entrusted by
others
Assets impairment provision accrued due to force majeure, e.g.:
suffering natural disasters
Profit or loss from debts restructuring
Expenses of enterprise restructuring
Gain/loss on excessive part from the transaction where the trading
price is obviously unfair.
Net gain/loss of subsidiary from combination under same control
1,418,670.20
between the beginning of year and consolidation date.
Gains/ loss from contingencies arising from the normal business of
the Company
Gain/loss from change of fair value by holding or disposing the
tradable financial asset and liabilities, and available for sale
27,467,019.93
financial 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
127
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The profits/gains from changes of fair value
Effects of gain/loss from one-off adjustments of gain/loss based on
laws and regulations of taxation and accounting.
non-operating revenue and expense besides the above items 668,896.45
Other profit or loss
Subtotal 41,937,580.99
Effect on income tax 6,520,362.10
Attributable to minority shareholders’ equity (after tax) -297,876.84
Total 35,715,095.73
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 5.97 0.23 0.23
Net profit after deducting non-recurring gains and losses
4.91 0.19 0.19
attributable to shareholders of parent company
Dalian Refrigeration Co., Ltd
April 20, 2018
128
