Dalian Refrigeration Co., Ltd. 2017 Annual Report
Dalian Refrigeration Co., Ltd.
2017 Annual Report
April, 2018
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 1 Important Notice, Table of Contents, and Definitions
The directors and the Board of Directors, the supervisors and the
Supervisory Board, and Senior staff members of Dalian Refrigeration Co.,
Ltd. (hereinafter referred to as the Company) hereby confirm that there are
not any important omissions, fictitious statements or serious misleading
carried in this report, and shall take all responsibilities, individual and/or
joint, for the reality, accuracy and completeness of the whole contents.
Chairman of the Board of Directors of the Company Mr. Ji Zhijian,
Financial Majordomo Mr. Ma Yun and the head of Accounting Department
Mrs. Mao Chunhua hereby confirm that the financial report of the annual
report is true and complete.
All the directors have attended this Board meeting of the Company.
There is no significant risk having adverse influence on attainment of the
Company's future development strategy and business targets.The paragraph
"Discussion and Analysis of the Business situation" in Section 4 of this
Annual Report describes major risks the Company may be confronted with,
including the risk of Increasing market competition risk,the market
promotion for new product and new technology slow and the Accounts
receivable is on the high side. See the related sections for the
countermeasures to be taken by the Company.
The profit distribution proposal reviewed and adopted at this Board meeting
of the Company is: Based on the total capital stock of 855,908,981 shares, the
dividend of RMB 0.5 in cash (including tax) will be distributed for every 10
shares; The Company will not transfer the capital reserve to increase capital
stock.
This report is written respectively in Chinese and in English. In the event of
any discrepancy between the two above-mentioned versions, the Chinese
version shall prevail.
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
CONTENTS
Section 1 Important Notice, Table of Contents, and Definitions ................................................................................2
Section 2 About the Company ....................................................................................................................................5
Section 3 Summary of Main Accounting Data and Financial Indicators....................................................................8
Section 4 Board of Directors' Report..........................................................................................................................9
Section 5 Important Issues........................................................................................................................................20
Section 6 Change in Share Capital and Shareholders' Information ..........................................................................26
Section 7 Information on Preferred Stock ................................................................................................................30
Section 8 Information on the Company’s Directors, Supervisors, Senior Management and Staff ...........................31
Section 9 Corporate Governance ..............................................................................................................................36
Section 10 Information on Corporate Bonds ............................................................................................................39
Section 11 Financial Report......................................................................................................................................40
Section 12 Contents of Reference Documents .......................................................................................................158
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Definitions
Defined item Stands for Meaning
Reporting period Stands for From Jan. 1, 2017 to Dec. 31, 2017
The Company, this Company Stands for Dalian Refrigeration Co., Ltd.
Wuhan New World Refrigeration Industries Co., Ltd., one of the subsidiaries of
Wuxin Refrigeration Stands for
the Company where the Company holds 100% of its shares.
Dalian Bingshan Group Engineering Co., Ltd，one of the subsidiaries of the
Bingshan Engineering Company Stands for
Company where the Company holds 100% of its shares.
Bingshan Technology Service (Dalian) Co., Ltd. one of the subsidiaries of the
Bingshan Service Company Stands for
Company where the Company holds 100% of its shares.
Dalian Bingshan Ryosetsu Quick Freezing Equipment Co., Ltd., one of the
Bingshan Ryosetsu Stands for
subsidiaries of the Company where the Company holds 100% of its shares.
Dalian Bingshan Engineering & Trading Co., Ltd. one of the subsidiary of this
Bingshan Engineering & Trading Stands for Company, where the controlling shareholder of the Company holds 76% of its
shares before, and the Company holds 100% of its shares since April 2017.
Panasonic Compressor (Dalian) Co., Ltd. one of the mutual shareholding
Panasonic Compressor Stands for
companies of the Company, where the Company holds 40% of its shares.
Panasonic Cold-Chain (Dalian) Co., Ltd. one of the mutual shareholding
Panasonic Cold-Chain Stands for
companies of the Company, where the Company holds 40% of its shares.
Dalian Fuji-Bingshan Vending Machine Co., Ltd., one of the mutual
Dalian Fuji-Bingshan Stands for shareholding companies of this Company, where the Company holds 49% of its
shares.
Dalian Bingshan Metal Technology Co., Ltd., one of the mutual shareholding
companies of the Company, where the controlling shareholder of the Company
Bingshan Metal Technology Stands for
holds 49% of its shares before, and the Company holds 49% of its shares since
April 2017.
Keihin Grand-Ocean Cooling & Heating Industry (Dalian) Co., Ltd., one of the
Keihin Grand-Ocean Stands for mutual shareholding companies with this Company, where the Company holds
20% of its shares.
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 2 About the Company
I. Company information
Short form of the stock DALENG GUFEN; DALENG-B
Stock code 000530; 200530
Listed stock exchange Shenzhen Stock Exchange
Legal name in Chinese 大连冷冻机股份有限公司
Legal English name and abbreviation Dalian Refrigeration Co., Ltd. DRC
Legal representative Ji Zhijian
No.106, Liaohe East Road, Dalian Economic and Technological
Registered address
Development Zone
Post code of Registered address 116630
No.106, Liaohe East Road, Dalian Economic and Technological
Office address
Development Zone
Post code of Office address 116630
Internet web site of the Company www.daleng.cn
E-mail of the Company 000530@bingshan.com
II. Contact persons and information
Secretary of the Board of Directors Authorized representative for securities affairs
Name Song Wenbao Du Yu
DALENG GUFEN Securities﹠Legal Affairs DALENG GUFEN Securities﹠Legal
Address No.106, Liaohe East Road, Dalian Economic and AffairsNo.106, Liaohe East Road, Dalian
Technological Development Zone Economic and Technological Development Zone
Tel. 0411-87968130 0411-87968822
Fax 0411-87968125 0411-87968125
E-mail 000530@bingshan.com 000530@bingshan.com
III. Information disclosure and place of preparation for inquiry
Name of the newspaper designated by the Company for China Securities Daily and Hong Kong Commercial
information disclosure Daily
Address of the website designated by China Securities
http://www.cninfo.com.cn
Regulatory Commission for publishing this Annual Report
Place where this Annual Report was prepared for inquiry Securities﹠Legal Affairs Department of the Company
IV. Alteration to the registration
Organization code 912102002423613009
Change in main business since the Company was listed No change
Changes in the holding shareholder No change
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Due to the relocation and transformation，the registered address of the Company has been changed from 888
Xinan Road, Shahekou District, Dalian to No.106, Liaohe East Road, Dalian Economic and Technological
Development Zone.
V. Other related information
Accounting firm engaged by the Company
Name of accounting firm ShineWing CPAs (Special General Partnership)
9/F,A Building No.,8 north street of Chao Yang Men, Dong Cheng District Beijing,
Office location of accounting firm
China
Name of signing certified public
Sui Guojun, Wang Dong
accountant
Sponsor the Company appointed for performance of the consistent supervision duty in the reporting period
√Applicable □Not applicable
Name of Sponsor Institution Guotai Junan Securities Co., Ltd.
9/F,2nd Building Ying Tai center of Financial Street, Xi Cheng District Beijing,
Office location of accounting firm
China
Name of Sponsor Representative Zeng Dacheng, Han Yupeng
Period of consistent supervision June 18, 2016-December 31,2017
Financial consultant the Company appointed for performance of the consistent supervision duty in the reporting
period
□ Applicable √ Not applicable
VI. Main accounting data and financial indicators
Increase/decrease
2016 compared with 2015
2017 previous year
Before After After
After adjustment Before adjustment
adjustment adjustment adjustment
Operating revenue 2,079,715,105.37 1,779,499,226.64 1,893,200,939.64 9.85% 1,607,518,439.61 1,721,064,308.11
Net profit attributable to shareholders of
200,759,820.17 178,632,660.24 182,234,151.73 10.17% 129,947,307.39 134,174,674.88
listed companies
Net profit belonging to the shareholders
of listed companies after the deduction of 165,044,724.44 145,227,418.21 148,598,436.25 11.07% 126,122,809.25 129,659,412.87
non-recurring profit and loss
Net cash flow from operating activities -207,225,851.22 -7,706,320.22 -6,607,069.97 -3,036.00% -50,568,474.38 -39,799,347.27
Basic earning per share 0.23 0.31 0.22 4.55% 0.36 0.17
Diluted earnings per share 0.23 0.31 0.22 4.55% 0.36 0.17
Weighted average return on net asset Decrease 0.01
5.97% 5.87% 5.98% 6.38% 6.58%
yield percentage points
Increase/decrease
2016.12.31 compared with 2015.12.31
2017.12.31 previous year
Before After Before
After adjustment After adjustment
adjustment adjustment adjustment
Total assets 5,619,621,500.67 4,983,511,574.26 5,095,986,440.32 10.28% 4,082,499,864.42 4,146,479,416.99
Owner's equity attributable to
3,416,531,064.91 3,247,797,768.92 3,301,087,748.86 3.50% 2,647,609,091.41 2,697,297,579.86
shareholders of listed companies
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
VII.1.Difference of accounting data between as per Chinese accounting standards and as per
International Accounting Standards
□ Applicable √ Not applicable
2. Difference of accounting data between as per Chinese accounting standards and as per
Foreign Accounting Standards
The difference of accounting data between as per Chinese Accounting Standards and as per International
Accounting Standards was 0.
VIII. The quarter main financial indicators
the first quarter the second quarter the third quarter the fourth quarter
Operating revenue 504,654,807.75 497,723,909.75 461,323,140.51 616,013,247.36
Net profit attributable to shareholders of listed companies 34,979,790.84 63,280,372.25 47,073,348.70 55,426,308.38
Net profit belonging to the shareholders of listed companies
34,254,953.33 35,705,910.16 47,499,687.40 47,584,173.55
after the deduction of non-recurring profit and loss
Net cash flow from operating activities -157,927,050.15 9,349,508.25 -55,016,219.36 -3,632,089.96
IX. Non-recurring profits and losses and their amounts
item 2017 2016 2015
Disposal gains and losses of non-current asset 552,588.02 -23,302,552.40 -64,700.24
Tax returned/reduced by chance 499,945.82
Government subsidies included in current profit or loss 11,830,406.39 4,072,664.60 2,830,070.56
Earnings from the Company get subsidiaries, associated
companies and joint venture investment cost less than get
30,334,841.93
investment should enjoy the invested entity produced by
the fair value of the identifiable net assets yield
Debt restructuring gains and losses 229,833.00 -586,377.00
The net profit and loss of the subsidiary period from the
beginning to the consolidation date of the company under 1,418,670.20
the same control.
Disposal gains from investments on financial assets
27,467,019.93 27,629,395.44
available for sale
Other non-operating revenue or expense 661,345.45 976,314.82 2,896,432.61
Influence on income tax 6,520,362.10 6,190,610.26 901,514.60
Influence on minority shareholders -297,876.84 114,171.65 158,595.14
Total 35,715,095.73 33,635,715.48 4,515,262.01
During the reporting period, the Company sold 1.5 million shares of Guotai Jun’an, and received investment
returns of 27,467,019.93 yuan.
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 3 The Company's Business profile
I. The Company’s Main business during the reporting period
The Company, as the largest industrial refrigeration equipment production enterprise in China, is committed to
developing Industrial refrigeration and heating business field, commercial refrigeration and refrigeration business
field, air-conditioning and environment business field, core parts business field, engineering and service business
field have covered the key areas of the refrigeration industrial chain and forged the most complete cold and hot
industrial chain in China.
II. Major changes in main assets
1. Major changes in main assets
Main assets Explain for major changes
Significantly decreased on a year-on-year basis, mainly because the increase in raised funds investment
Monetary funds
after non-public offering of shares.
Significantly increased on a year-on-year basis, mainly because the Company used the temporarily idle
Other current assets
raised funds to purchase bank financial products.
Significantly increased on a year-on-year basis, mainly because the buildings in the new factory area
Fixed assets
transferred to fixed assets.
Construction in Significantly decreased on a year-on-year basis, mainly because the buildings in the new factory area
progress transferred to fixed assets.
Significantly increased on a year-on-year basis, mainly because the Company rented out the entire land
Investment property
and buildings of the old factory area to Dalian Bingshan Wisdom Park Co., Ltd.
Short-term loans Significantly increased on a year-on-year basis, mainly because the credit loans increased.
2. The main overseas assets
□ Applicable √ Not applicable
III. Analysis of core competence
The Company closely focuses on main business of cold and heat; independent R&D and joint venture partnerships
are cooperate with each other effectively; capital resources integration and business model innovation are in a
positive interaction; the community of business and interest are being created in two ways; the develop mode with
Bingshan characteristic are formed.
The Company has the most integrated cold-heat industrial chain for offering kinds of comprehensive solution
services, including design, manufacture, installation and maintenance etc., and can satisfy individual requirements
preferably.
The Company possesses a mature and solid marketing networks and after-sale service network on/off-line, and
can offer high quality and high value-added services more initiative and faster for clients from around the city.
After overall relocation reform, the new factory of intelligence, environment protection, high efficiency and safety
are put into used, which produces a strong comparative advantage for creating higher value to the customers.
While move forward with transformation and upgrading for former business, the Company will implement the
cultivation for new business, thus the sustainable healthy development will come more and more feasible.
Core-competency of the Company further promoted in the reporting period.
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 4 Management discussion and analysis
I. Summary
In 2017, by adherence to the theme of "activation, integration and upgrading", the Company managed to
accomplish the major operating indicators through maintaining strategic commitment, activating endogenous
driving force, integrating system resources, gathering competitive forces and improving operating quality. In 2017,
the Company recorded operating income of RMB 2,079,720 million yuan with a year-on-year increase of 9.85%,
and recorded total profit of RMB 21,847 million yuan with a year-on-year increase of 12.90%.
During the reporting period, the overall relocation and transformation of the Company was successfully
completed, and the intelligent, environmental, efficient and safe new factory was put into use. It has been
identified by the Ministry of Industry and Information Technology as one of the first batch of service-based
manufacturing model enterprises, the national technological innovation demonstration enterprise, and it has been
awarded with the gold medal of quality by the governor of Liaoning Province in 2017.
During the reporting period, Wuxin Refrigeration, one of our subsidiaries, achieved significant progress in the
strategic transformation from traditional refrigeration and air conditioner to energy saving, emission reduction,
comprehensive energy utilization as well as process gas compressor. The company has almost completed layout of
the new products demonstration outlets across the whole nation and recorded a year-on-year increase of over 50%
in sales revenue from the new products. Through technical marketing and government marketing, our symbolic
new products, such as natural gas pipe network pressure power generation and cold energy recovery system, have
become available for commercial use for multiple projects in various regions.
During the reporting period, the Company's subsidiary Bingshan Engineering Company continued to deepen the
market segmentation, and achieved satisfying growth in ordering in various fields in which the company enjoyed
advantages, such as cold chain logistics and fishing. In particular, the company succeeded to execute over 20
contracts with subject transaction under any of them amounting to RMB 10 million or above. New achievements
have been made by the company in the segment of marine engineering since it has successfully entered into the
market of high-end ultra-low temperature ocean carriage ships when it realized successful shipping of
refrigeration station. The amount of orders placed was nearly RMB 100 million, up by 50% over the same period.
Great progress has been made in the development of new energy industry, and distributed energy projects have
come to the ground successively. The segment of ice and snow experienced a new breakthrough as it won the bid
in the high-end indoor snow field project developed by Guangzhou Wanda Mall, for which, the total contract
value amounted to approximately RMB 40 million.
During the reporting period, the Company's subsidiary Bingshan Service Company has flexibly applied Bingshan
Internet of things Cloud Platform, the all-in-one button repair mobile APP as firstly developed in the industry and
large refrigeration system hosting service model, enabling the company to record a year-on-year increase of over
50% in repair and maintenance income.
During the reporting period, the Company's subsidiary Bingshan Ryosetsu experienced rapid growth in its quick
freezing business, recording revenue of over RMB 50 million from quick freezing equipment with an increase of
more than 50% as compared to the corresponding period of last year. It has successfully entered the crayfish
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
processing industry which is prospering, enabling it to further strengthen the future development potential.
During the reporting period, the horizontal scroll compressors applicable for rail transit air conditioning systems
newly developed by Panasonic Compressor, an associated company of the Company has made obvious progress in
market expansion in metro, light rail and other fields. The "coal to electricity" heat pump compressor for
commercial use in north areas has been successfully developed and put into use in batches, which has occupied
the market opportunities. Overseas market expansion has achieved new results. In particular, the European market
contributed income of RMB 100 million, and the South Korean market also achieved significant increase in
income contribution. Impacted by the state's rectification in electric bus market and the reduction of subsidy, the
sales volume of the horizontal scroll compressor applicable for electric bus has shrunk in stages, and the net profit
has dropped considerably as compared to the corresponding period of previous year.
During the reporting period, Panasonic Cold Chain, an associated company of the Company, conformed to the
new trend of consumption and actively expanded the subdivision of the blue sea market. With respect to
convenience store business, based on the Internet of things technology and by applying the energy management
and store intelligent system to boost the intelligent upgrading of the cold chain equipment applicable for
convenience store, the revenue increased by about 30% over the same period. With respect to commercial kitchen
business, revenue from Hong Kong market increased by about 40% year on year. With respect to biomedical
business, application of medical cryogenic refrigerators, blood refrigerators, thermostat incubators and other new
products have achieved breakthroughs in hospitals, blood stations, scientific research and other fields, with
revenue increased by over 50% over the corresponding period of previous year.
During the reporting period, Fuji Bingshan, an associated company of the Company, vigorously promoted product
development oriented for intelligence, modular and diversification, and formed six major product series, including
beverage machine, food machine, liquor machine, dairy machine, coffee machine and box lunch machine, so as to
make rapid response to customers’ demands. The world's leading intelligent manufacturing plant newly
established for manufacturing automatic vending machines has been put into operation and realized double
increase of production capacity, which enables the company to better capture business opportunities in new retail
market.
During the reporting period, based on the overall positioning of the cold and heat industry investment platform,
the Company further intensified capital operation. The acquisition of the first batch of high-quality assets from the
controlling shareholder has been completed by the end of April 2017. The Company currently holds the entire
equity interest of Bingshan International Trade, and 49% equity interest of Bingshan Metal Technology. The
non-public issuance of exchangeable corporate bonds has been launched to seek low-cost bond financing and
reduction of holding in high price stock.
During the reporting period, the Company actively promoted incubation of new undertakings while focusing on
transformation and upgrading of the original causes. Through the investment platform company, the Company and
Tokyo Century Corporation jointly invested in establishment of Dalian Bingshan Group Hua Huida Financial
Leasing Co. Ltd to carry out cold and heat industry-chain-based financing. It is surprising that the company
recorded profit for the first year in which it was established. Besides, the Company and a subsidiary of Zhejiang
Southern Architecture Design Co., Ltd made joint investment in establishing Dalian Bingshan Wisdom Park Co.,
Ltd to take charge of the comprehensive utilization of the land parcel of the original plant after relocation and
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
manage to build an industry ecosystem within Bingshan Group. At the current stage, the investment attraction is
going well with significant progress and the alteration is processed in an orderly manner. Besides, the Company
and a subsidiary of K2DATA Technology (Beijing) Co., Ltd made joint investment in establishing Dalian Kelvins
Technology Co., Ltd to actively promote innovation of big data application by Bingshan in its cold and heat
industries, construction of the Internet of things and further development of intelligent manufacturing, so as to
assist Bingshan to realize smart growth in its core business segments.
II. Analysis of main business
1. Summary
See the related content “Section 4 Business situation discussion and analysis” the “Summary”
2. Sales income and costs
(1) Sales income structure
2017 2016
Year-on-year
Proportion to the Proportion to the
Amount Amount increase/decrease
Sales costs Sales costs
Total sales income 2,079,715,105.37 100% 1,893,200,939.64 100% 9.85%
By industry
Refrigeration and
air-conditioning 2,043,986,956.70 98.28% 1,872,949,269.50 98.93% 9.13%
equipment
Others 35,728,148.67 1.72% 20,251,670.14 1.07% 76.42%
By product
Refrigeration and
air-conditioning 2,043,986,956.70 98.28% 1,872,949,269.50 98.93% 9.13%
equipment
Others 35,728,148.67 1.72% 20,251,670.14 1.07% 76.42%
By region
Northeast China 1,639,118,557.71 78.81% 1,629,449,445.22 86.07% 0.59%
Central China 358,707,022.50 17.25% 167,673,235.16 8.86% 113.93%
East China 81,889,525.16 3.94% 96,078,259.26 5.07% -14.77%
(2) Main business structure
Increase/decrease of Increase/decrease
operating revenues of operating costs Increase/decrease of gross profit
Operating revenue Operating costs Gross profit
on a year-on-year on a year-on-year on a year-on-year basis
basis basis
By industry
Refrigeration and
2,043,986,956.70 1,625,595,014.87 20.47% 9.13% 6.52% Increase 1.60 percentage points
air-conditioning
By product
Refrigeration and
2,043,986,956.70 1,625,595,014.87 20.47% 9.13% 6.52% Increase 1.60 percentage points
air-conditioning equipment
By region
Northeast China 1,603,390,409.04 1,256,129,764.47 21.66% -0.36% -3.08% Increase 2.20 percentage points
Central China 358,707,022.50 296,519,736.37 17.34% 113.93% 113.29% Increase 0.25 percentage points
East China 81,889,525.16 72,945,514.03 10.92% -14.77% -19.88% Increase 5.69 percentage points
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
(3)Was the Company's sales income on material objects more than that on labor service?
√ Yes □ No
Year-on-year
Industry category Item 2017 2016
increase/decrease
Sales volume 2,058 2,216 -7.13%
Main refrigeration unit for
Production output 2,044 2,197 -6.96%
industrial or commercial use
Inventory level 385 399 -3.51%
Reason for change in the related data by 30% or higher on a year-on-year basis
□ Applicable √ Not applicable
(4)Major orders in the hand of the Company
□ Applicable √ Not applicable
(5) Sales cost structure
2017 2016
Proportion to Proportion to the Year-on-year
Industry category Item
Amount the operating Amount increase/decrease
costs operating costs
Direct materials 1,370,277,944.02 83.37% 1,320,953,940.65 85.97% 3.73%
Labor wages 179,276,307.57 10.91% 142,256,417.94 9.26% 26.02%
Refrigeration and Depreciation 27,966,168.83 1.70% 24,721,220.65 1.61% 13.13%
air-conditioning Utilities 14,846,776.23 0.90% 16,679,142.39 1.09% -10.99%
Others 51,286,246.29 3.12% 31,920,720.45 2.08% 60.67%
Total operating
1,643,653,442.93 100.00% 1,536,531,442.08 100.00% 6.97%
costs
(6) Was the Company's consolidated range change during the reporting period?
√Applicable □Not applicable
During the reporting period, there are 2 more entities were included in the scope of consolidation, which are
Dalian Bingshan Engineering &Trading Co., Ltd, and Chengdu Bingshan Refrigeration Engineering Co., Ltd.
(7) Major change or adjustment in the Company's products or service in the reporting period
□ Applicable √ Not applicable
(8) Information on the Company's major customers and major suppliers
Information on the Company's major customers
Total sales volume from top five customers (yuan) 418,847,562.09
Proportion of the total sales volume from top five customers to the annual sales volume 20.14%
Proportion of the related party total sales volume from top five customers to the annual
15.14%
sales volume
Information on the Company's top five customers
Sales volume Proportion to the annual sales
No. Name of customer
(yuan) volume
1 Panasonic Cold-chain (Dalian) Co., Ltd 173,038,902.46 8.32%
2 Panasonic Refrigeration (Dalian) Co., Ltd. 107,638,666.72 5.18%
3 Guangzhou R&F Properties Co., Ltd. 62,393,162.39 3.00%
4 Hongtai International Financial Leasing (Tianjin) Co., Ltd. 41,559,455.73 2.00%
5 Dalian Fuji-Bingshan Vending Machine Co., Ltd 34,136,856.37 1.64%
Total —— 418,767,043.67 20.14%
Information on the Company's major suppliers
Total purchase volume from top five suppliers (yuan) 238,695,565.48
Proportion of the total purchase volume from top five suppliers to the annual purchases volume 13.62%
Proportion of the related party total purchase volume from top five suppliers to the annual purchases volume 11.33%
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Information on the Company's top five suppliers
Purchase Proportion to the annual
No. Name of supplier
volume (yuan) purchase volume
1 Panasonic Appliances Refrigeration System (Dalian) Co., Ltd. 67,655,354.93 3.86%
2 Panasonic Refrigeration (Dalian) Co., Ltd. 47,090,734.64 2.69%
3 BAC Dalian Co., Ltd. 41,865,711.10 2.39%
4 Panasonic Cold-chain (Dalian) Co., Ltd. 41,897,553.16 2.39%
5 Chongqing Wanzhou Jinlong Copper Tube Sales Co., Ltd. 40,186,211.65 2.29%
Total —— 238,695,565.48 13.62%
3. Expenses
Increase/decrease of
2017 2016 gross profit on a Explain for major changes
year-on-year basis
Selling expenses 113,422,315.47 91,678,326.90 23.72%
Administrative expenses 230,822,141.57 219,270,065.31 5.27%
Short-term borrowings increased during the
Financial expenses 10,855,836.96 2,378,038.61 356.50% reporting period, and interest expenses increased
accordingly
4. R&D expenditure
In the reporting period, the Company had the total R&D expenditure of 93.80 million yuan, accounting for 2.75%
of the Company's net assets as of the end of 2017 or 4.51% of the Company's annual operating revenues of 2017.
There was no remarkable year-on-year change in related data.
Information on R&D expenditure
2017 2016 Increase/decrease on a year-on-year basis
The quantity of the person engaged in R&D 268 277 -3.25%
The quantity proportion of the person engaged in R&D 15.52% 14.77% Increase 0.75 percentage points
The spending amount on R&D（yuan） 93,795,151.25 85,949,812.65 9.13%
R&D spending accounts for the proportion of revenue 4.51% 4.54% Decrease 0.03 percentage points
The amount of R&D investment capitalization（yuan） 0.00 0.00 0%
5. Cash flows
Year-on-year
Item 2017 2016
increase/decrease
Sub-total of cash inflows from operating activities 1,602,754,173.31 1,724,295,026.34 -7.05%
Sub-total of cash outflows from operating activities 1,809,980,024.53 1,730,902,096.31 4.57%
Net amount of cash flow generated in operating activities -207,225,851.22 -6,607,069.97 -3,036.00%
Sub-total of cash inflows from investing activities 126,820,377.97 111,761,688.96 13.47%
Sub-total of cash outflows from investing activities 475,753,422.49 377,303,814.52 26.09%
Net amount of cash flow generated in investing activities -348,933,044.52 -265,542,125.56 -31.40%
Sub-total of cash inflows from financing activities 495,706,515.56 977,192,378.02 -49.27%
Sub-total of cash outflows from financing activities 263,709,646.02 270,911,050.69 -2.66%
Net amount of cash flow generated in financing activities 231,996,869.54 706,281,327.33 -67.15%
Net increase in cash and cash equivalents -326,545,416.67 435,856,981.51 -174.92%
13
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Reason for change in the related data by 30% or higher on a year-on-year basis
√ Applicable □ Not applicable
1.Net cash flow arising from operation activities have a significant decrease on a y-o-y basis, mainly because the
cash received from sale goods decreased, and cash paid for purchasing commodities increased during the
reporting period.
2. Net cash flow arising from investing activities have a significant decrease on a y-o-y basis, mainly because the
Company purchased 49% shares of Dalian Bingshan Metal Technology Co., Ltd. held by Dalian Bingshan Group
Co., Ltd. during the reporting period.
3. Net cash flow arising from financing activities have a significant decrease on a y-o-y basis, mainly because the
raised funds from non-public offering of shares last year.
Reason for remarkable difference between the cash flows from the Company's operating activities in the reporting
period and the net annual profit
√ Applicable □ Not applicable
There was a remarkable difference between the net amount of cash flow generated in operating activities of the
Company and the net annual profit in the reporting period, mainly due to that the proportion of returns on
investment to the total profit of the Company was higher.
III. Analysis of the non-main business
□ Applicable √ Not applicable
IV. Analysis of assets & liabilities
1. Remarkable change in assets
Monetary unit: RMB yuan
2017.12.31 2016.12.31
Proportion to Proportion to Proportion increase/decrease
Amount Amount
the total assets the total assets
Monetary funds 394,809,694.11 7.03% 715,215,638.54 14.03% Decrease 7.00 percentage points
Accounts receivable 1,036,255,895.79 18.44% 807,109,959.54 15.84% Increase 2.60 percentage points
Inventories 352,279,664.64 6.27% 349,538,424.06 6.86% Decrease 0.59 percentage points
Investment property 103,861,275.27 1.85% 28,605,652.94 0.56% Increase 1.29 percentage points
Long-term equity
1,568,255,738.12 27.91% 1,292,912,901.49 25.37% Increase 2.54 percentage points
investment
Fixed assets 890,874,647.40 15.85% 511,008,545.87 10.03% Increase 5.82 percentage points
Construction in
82,999,382.90 1.48% 321,646,676.78 6.31% Decrease 4.83 percentage points
progress
Short-term loans 394,809,694.11 7.03% 715,215,638.54 14.03% Increase 5.34 percentage points
Long-term loans 1,036,255,895.79 18.44% 807,109,959.54 15.84% Decrease 0.29 percentage points
2. Assets & liabilities which are measured by fair value
√ Applicable □ Not applicable
Finance asset held available for sales measured in fair value is 531,653,458.05 yuan at the year beginning，and
501,871,535.40 yuan at the year end, with a selling amount of 28,888,171.61 yuan.
V. Analysis of investments
1.The overall situation
√ Applicable □ Not applicable
Investment in 2017(yuan) Investment in 2016(yuan) Amount of variation
1,568,255,738.12 1,292,912,901.49 21.30%
2.The significant equity investment during the reporting period
√ Applicable □ Not applicable
The Company purchased 49% shares of Dalian Bingshan Metal Technology Co., Ltd. held by Dalian Bingshan
Group Co., Ltd. during the reporting period. The purchasing price was 172.95 million yuan.
14
Dalian Refrigeration Co., Ltd. 2017 Annual Report
3 The significant non-equity investment during the reporting period
□Applicable √Not applicable
4.The financial asset investment
(1) The securities investment
√ Applicable □ Not applicable
Changes
Account in the
Accumulative
Initial ing profit and
Stock Stock Book value at the change of fair Current sale Report period Book value in the Accounting Source
investment measure loss of the
code abbreviation beginning value credited to amount profit and loss ending subjects of funds
cost ment fair value
equity
model in this
period
fair
Financial
value Own
601211 Guotai Jun’an 28,598,895.00 531,653,458.05 0.00 476,197,108.65 28,888,171.61 11,153,569.05 501,871,535.40 assets available
measure funds
for sale
ment
total 28,598,895.00 -- 531,653,458.05 0.00 476,197,108.65 28,888,171.61 11,153,569.05 501,871,535.40 -- --
(2) Derivative investment
□Applicable √ Not applicable
During the reporting period, the Company does not exist derivative investment.
5. The use of funds raised
√ Applicable □ Not applicable
Total commitment investment for raised-fund project in the Period amounting to 580 million Yuan, after
adjustment, total investment turns to 561.2814 million Yuan. In reporting period, amount of 407.4699 million
Yuan invested, and pre-phase investment 87.6 million Yuan was replaced with the raised-fund. The temporary idle
raised-fund 80 million Yuan save as CD in the Period. The temporary idle raised-fund 76 million Yuan was used to
purchase the bank financial product in the Period. Till end of the reporting period, raised-fund 156.1732 million
Yuan are not used, and balance of the specific raised-fund account amounting to 156.1732 million Yuan.
Actual time for raised-fund in the private placement in place appeared later, in previous phase, the Company has
limit in contribution of the raised-fund project with self-raised fund, and process layout and plan in the new plant
are continues to improved during the implementation in follow up process, the time for new-type equipment input
and debugging progress are later than expected. In consideration of the progress payment and guarantee money
for the equipment, being decided by the Company after research in purpose of guarantee a smooth transition of the
new-aged plants, and reducing the impact on routine operation of the Company from relocation, the serviceable
condition state of the relocation deferred to end of May in 2017 from year-end of 2016. The Report of Deferring
Serviceable Condition State of the Raised-Fund Project was deliberated and approved by the 13th session of 7th
BOD on 21 April 2017. The production and operation of the Company’s new plant is normal till the end of 2017.
By the end of 30 June 2016, the pre-invested money for raised-fund project with self-raised capital amounting to
87,597,055.10 Yuan, the Dahua CPA carried out assurance service on the above mentioned money and issued an
Assurance Report of Dalian Refrigerator Co., Ltd. Pre-invested the Raised-fund Project with Self-raised Fund (Da
Hua He Zi[2016] No. 0034330). And on 5 July 2016, the 6th session of 7th BOD and 5th session of 7th
Supervisory Committee have deliberated and approved the “Report of Replace the Pre-Invested Fund with
Raised-Fund ” , independent directors propose a clear agreement.
15
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Till end of the reporting period, raised-fund 156.1732 million Yuan are not used, mainly for equipment guarantee
funds, engineering guarantee funds and the remaining engineering funds, which shall be paid after completion
acceptance and settlement audit.
VI. The material assets and equity sale
1. The material assets sale
□Applicable √Not applicable
2. The material equity sale
□Applicable √Not applicable
VII. Analysis of major subsidiary companies and mutual shareholding companies
√ Applicable □ Not applicable
Operating
registered total assets net Net profit
Company name Type The main business income
capital ( yuan) assets( yuan) ( yuan)
( yuan)
mutual
Full function JPY 4,000
Fuji Bingshan shareholding 638,522,978.22 366,560,274.18 442,326,067.27 54,885,773.13
vending machine million
company
mutual
Panasonic Refrigeration and JPY 6,200
shareholding 1,891,401,156.52 1,234,576,003.06 1,623,387,718.61 119,567,490.02
Compressor air-conditioning million
company
Subsidiary companies obtained or disposed in the reporting period
√Applicable □ Not applicable
the way of obtained or disposed
Name Subsidiary companies in the The impact on overall production and performance
reporting period
The company will have an independent export channel，further strengthen
Dalian Bingshan Engineering Enterprise merger under the same the sales and service system in overseas markets with combining business
& Trading Co., Ltd. control and specialization，and realize the sustainable development of the
international market.
Chendu Bingshan
Investment establishment of
Refrigeration Engineering Strengthening the construction of the marketing network of the Company
subsidiary company
Co., Ltd.
VIII. The structured corporate bodies which the Company controlled
□Applicable √Not applicable
IX. Development prospect of the Company
1. Industry development trend
In recent years, the influence of refrigeration and air conditioning industry in China's national economy is growing,
conferring increasing influence upon consumption upgrade, food safety and livelihood improvement. Besides,
development model under an entire set of service, modularization, information and intelligence is experiencing
rapid growth, with constant entrance of new market players and constant emerging of new hot spots. The field of
competition, competitors, products, connotation is constantly changing.
16
Dalian Refrigeration Co., Ltd. 2017 Annual Report
In 2018, industry development division will continue to increase, and competition will continue to intensify. The
transformation and upgrading of major players in the industry will further accelerate. New technologies and
solutions are being launched to cater for the emerging market demands on energy saving, environmental
protection, distributed energy utilization, coal to electricity and data center. Intelligent manufacturing and
service-oriented manufacturing are becoming increasingly prominent. With the gradual implementation of the
concept of green development, the traditional market pays more attention to energy saving and emission reduction.
The advantage of single technology is gradually replaced by the advantages of integrated technology and
comprehensive solution.
2. Challenges and opportunities faced by the Company
(1)Opportunities faced by the Company
China government has accelerated the people-oriented new urbanization, accelerated the agricultural supply side
structural reform and increased investment in food, sanitary, health, pension and other livelihood areas. In
addition, all levels of governments have introduced policies to support the cold chain logistics, which will secure a
relatively market growth of refrigeration industry, which in turn increases market demands of our major
operations. The energy saving and safety renovation projects for the complete set of engineering and refrigeration
stations bring new market demand, which provides a real business opportunity for the Company to vigorously
expand the production-oriented services market. With the innovative business model, strong technology bases,
backwardness advantages of the intelligent factory and system advantages, the Company is capable of capturing
the above opportunities in a good position.
(2)Challenges faced by the Company
Due to the complicated process of transformation and upgrading, there may be significant risk factors that have
not yet been identified. The speed of commercialization of new technology and new products needs to be
accelerated. We should make full use of financial innovation products and promote the development of the
physical industry with finance.
3. Development planning of the Company
The Company will focus on the refrigeration and heating industries under the operation policy of innovation and
value creation, promote business integration with the parent company and subsidiaries as the core business,
integrate internal and external resources, upgrade the industrial chain, innovate business model, strengthen
technological innovation, improve and expand the business scale and development space, improve employees’
benefits and realize sustained, healthy and harmonious development, thus to become an enterprise trusted and
respected by customers, partners and the society.
4. Capital requirement and fund sourcing plan
In 2018, the capital expected to be required for the Company's production operation and capital operation will be
financed by its own funds and appropriate financing.
5. Main risks the company faces and response measures
(1)Increasing market competition risk
Countermeasures: focus on refrigeration and heating industries, deeply plough market segmentation and seek for
business blue sea; improve intelligent manufacturing and service-based manufacturing in an orderly manner;
accelerate transformation and upgrading of the existing business; accelerate cultivation of new businesses; create
the iceberg cause and common interest.
(2)Risk of slow marketing of new products and technologies
Countermeasures: create differentiated competitiveness of new products and technologies; strengthen technology
marketing and service marketing, better satisfy individual needs of customers; make effective use of finance
leasing, contract energy management, project companies and other innovative modes.
17
Dalian Refrigeration Co., Ltd. 2017 Annual Report
(3)Risk of high level of trade receivables
Countermeasures: effective inventory management and intensified management on trade receivables; enhance
quality of contract through intensified customer credit assessment and contract appraisal; effective control of
increase in trade receivables by reduction of guarantee deposits, taking bank credit instruments as guarantee
deposits and finance leasing; improve contract execution through stricter review on goods delivery, intensified
control on project construction and post-sale service; prepare special composition solutions through professional
creditor’s right management institutions and accelerate settlement of trade receivables with relatively long aging.
6. Business plan in 2018
Sales revenue: 2,300 million yuan, an approximate increase of 10% compared with the sales revenue of 2,079.72
million yuan in 2017.
Total profit: 245 million yuan, an approximate increase of 12% compared with the total profit of 218.47 million
yuan in 2017.
In 2018, theme as the “committed to innovation focus on transformation share the same load”, the Company
will insist on new products and technologies development with the need of industry and market unswervingly.
Create a new market with new ideas and sub-dividing the market; makes the energy (secondary energy in
particular) exploitation and utilization to be a continuous force point in way of transformation and upgrading
strategy; under the help of double platform, we work in full cooperation, and to keep improving, sincere
cooperation and share the same load, achieved the overall target of operating income and profit for year of 2018.
Key works for 2018:
(1) Deepening of the traditional market. Deeply plough segment market with the industrial refrigeration such as
machine engine, extend application of CO2 high pressure compressor, and the NH3 extremely low filling system
solutions, enhance competiveness in advantage domain and range of low temperature market; activate the
development of commercial freezing market with packaged design, installation and construction for NH3 and CO2
refrigeration system, also with the intelligent control, operation study and excellent technical service; solid and
promote the implementation of energy-field projects, such as energy-saving, environment protection and high
efficiency, and obtain exemplary item project; seize the opportunity of Winter Olympic Games, and provide
solutions for the trend industry as ice and snow sports.
(2) New energy industrialization. Based on energy saving products and technology, build a energy saving
platform, and integrate resource of social products, markets and capital; provide comprehensive solutions for
energy conservation and energy management services in field of chemical industry, natural gas, mine, oil,
thermoelectricity and metallurgy etc.; to be an ESCO instead of manufacture of energy-saving products, earn in
way of value creation for clients, and achieve a rapid growth in new business.
(3) Service specialization. Create a refrigeration & air conditioning service network under the name of Bingshan
group, and exploit offline service network layout; integration resources and mutual share by gathering
refrigeration technician of the Group under the Bingshan service network; attract high quality customers by
machine room trusteeship and relevant services, expand value-added service and achieve a win-win with clients;
further to improve the online service platform building for under line service, remote monitor & control and
authoritative release.
X. Record of investigation, communication, and other activities in the reporting period
Receiving time Way of receiving Received object type Basic situation index
Jan.3, 2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jan.4, 2017 Investors communication meetings in Shanghai Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jan.12, 2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jan.18, 2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
18
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Jan.19 2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Mar.8, 2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Mar.9, 2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Apr.24,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
May 26, 2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jun.8,2017 Investors communication meetings in Beijing Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jun.13,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jun.14,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jun.16,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jun.21,2017 Investors communication meetings in Hangzhou Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jun.27,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jul.6,2017 Investors communication meetings in Suzhou Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jul.13,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Jul.19,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Aug.28,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Sep.8,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Sep.13,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Sep.25,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Oct.25,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Nov.1,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Nov.3,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Nov.28,2017 Field investigation Institution http://irm.cninfo.com.cn/ssessgs/S000530
Number of reception 26
amount of reception for Institution 171
amount of reception for Individual 0
Whether to disclose, reveal or disclose unpublished significant information no
19
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 5 Important Issues
I Profit distribution and dividend payment
By giving consideration to both the return to shareholders and the Company's long-term development, and in
combination of the Company's profit made in the this year, the Company formulated the 2016 annual dividend
distribution plan of paying the cash of 1 yuan for every 10 shares, with capital reserve every 10 turn add 4 shares.
Reviewed and adopted at the Company's general meeting, the Company's Board of Directors has implemented the
plan in June 2017.
Formulation and implementation of the Company's cash dividend distribution policy in the reporting period
complied with the Company's Articles of Association and the general meeting's resolution, and the dividend
distribution standard and proportion were defined and clear and the applicable decision-making procedure and
system were complete. The independent directors agreed on it and the legal rights and interests of minority
shareholders were well protected.
Special notes to cash dividend payout policy
If the regulations of the Articles of Association or the requirements of the shareholders of
Yes
the company meeting are met:
If the dividend payout standard and proportion is definite and clear-cut: Yes
If relevant decision-making procedure and mechanism is complete: Yes
If the independent directors have performed their duties and played their due role: Yes
If small and medium shareholders have the opportunity to sufficiently express their
Yes
opinions and appeals and if their legal rights and interests are sufficiently protected:
If the condition and procedure for adjusting or changing the cash dividend payout policy
Yes
is compliant and transparent:
Table of profit distribution plan, plan of share-granting with capital accumulation fund of the Company in recent
three years
Dividend Plan of share-granting with capital accumulation
Profit distribution plan
year fund
2017 RMB 0.5 yuan (cash) for every 10 shares (including tax) none
2016 RMB 1 yuan (cash) for every 10 shares (including tax) with capital reserve every 10 transfer 4 shares.
2015 RMB 1 yuan (cash) for every 10 shares (including tax) with capital reserve every 10 transfer 5 shares.
Dividends in the annual consolidated net income Accounted for in the consolidated net
Cash dividend amount
year attributable to common shareholders of the income attributable to common
(tax included)
Company shareholders of the Company
2017 42,795,449.05 200,759,820.17 21.32%
2016 61,177,655.80 182,234,151.73 33.57%
2015 36,016,497.50 134,174,674.88 26.84%
The Company made profit in the reporting period and the undistributed profit of the parent company was positive
but no cash dividend distribution plan was proposed.
□ Applicable √ Not applicable
II Profit distribution preplan, and preplan of share-granting with capital accumulation fund
of the Company
Bonus shares to be presented for every 10 shares (shares) 0
Dividend to be distributed for every 10 shares (RMB yuan) (including tax) 0.5
Transferred shares to be presented for every 10 shares (shares) 0
Equity base for distribution preplan (shares) 855,908,981
20
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Total amount of cash dividend distribution (RMB yuan) (including tax) 42,795,449.05
Profit distributable to the shareholders in the current year 165,269,682.79
Proportion of cash dividend distribution accounting for total profit distribution 100%
Cash dividend distribution policy:
When the development stage of the company belongs to a growth period with important fund disbursement arrangement(s), the
proportion of cash dividend distribution accounting for this profit distribution should reach 20% at minimum when conducting profit
distribution.
Notes to details about preplan for profit distribution or capital stock increase with capital reserve
According to the audit by ShineWing CPAs (Special General Partnership), the net profit made by the parent company of the Company
in 2017 was RMB 183.633 million and 10% of the net profit (RMB 18.363 million) was drawn as the legal surplus reserve.
Therefore, the profit distributable to the shareholders in the current year was RMB 165.27 million. Plus the initial undistributed profit
of RMB 498.963 million and minus the dividend of RMB 61.178 million of common shares paid in 2016 and the drawn free surplus
reserve of RMB 29.208 million (20%), the accumulated profit distributable to the shareholders was RMB 573.847 million.
The Company’s profit distribution preplan for 2017:
Based on the net profit made by the parent company of the Company in 2017 (183.633 million), 20% of the net profit (RMB 36.727
million) will be drawn as the free surplus reserve;
Based on the total capital stock of 855,908,981 shares, the dividend of RMB 0.5 in cash (including tax) will be distributed for every
10 shares, the total cash dividend is RMB 42.795 million, and the cash dividend for B share is converted and paid in Hong Kong
dollars.
III Implementation of commitments
1. Commitments of the Company or its shareholders holding 5% or higher of the shares in the reporting
period or carried to the reporting period
The implementation for management equity incentive plan is being performed currently.
The new stock increased from private placement under the name of Daleng were listed on 20 June 2016, the
follow seven investors including Zhejiang Caitong Capital Investment Co., Ltd., Xingzheng Security Asset
Management Co., Ltd., Penghua Fund Management Co., Ltd., First State Cinda Fund Co., Ltd., Shenzhen B&D
Capital Co., Ltd., Bosera Funds Management Co., Ltd. and Caitong Fund Management Co., Ltd. committed that:
the stock of Daleng subscribes in private placement process will lock-up for trading with 12 months since the first
trading date of the new shares increased in the placement.
IV. Non-operation capital occupation by holding shareholders and their related parties in the
listed company
The company had no capital occupation by the holding shareholders and their related parties in the listed company
within this reporting period.
V. Explain to the “non standard audit report” from the board of directors, board of
supervisors of the Company
□Applicable √Not applicable
VI. Change in accounting policies, accounting estimates and accounting methods compared
with the financial statements of the previous year
√Applicable □Not applicable
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". Since May 28th,
2017, any held for sale non-current assets, disposal group and discontinued operation existing on the
implementation date shall be applied to prospective application. When preparing the financial statements for
2017FY, the policy has been adopted and the accounting has been done in accordance with this standard.
Updated standard shall be applied since June 12th,2017. Any government existing on January 1at,2017 shall be
21
Dalian Refrigeration Co., Ltd. 2017 Annual Report
applied to prospective application. Any new government grant obtained between January 1at,2017 and
implementation date shall be adjusted in line with this standard too. When preparing the financial statements for
2017FY, the policy has been adopted and the accounting has been done in 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 non-monetary assets exchange presented under “non-operating
income/expense”is changed to “Gain on asset disposal”. This accounting policy change shall be retrospectively
adjusted. Non-operating income in 2016shall be decreased by 1,186,397.77Yuan, and 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.
VII. Correction of major accounting mistakes in the reporting period, which should be
retroactively restated
□Applicable √Not applicable
XIII. Change in the range of consolidated statements compared with the financial statements
of the previous year
√Applicable □ Not applicable
The range of consolidated statements of the Company changed in the reporting period, and two companies were
added, including Dalian Bingshan Engineering &Trading Co., Ltd., and Chengdu Bingshan Refrigeration
Engineering Co., Ltd.
IX. Engagement and dismissal of the accounting firm
Currently engaged accounting firm
Name of domestic accounting firm ShineWing CPAs (Special General Partnership)
Remuneration paid to the domestic accounting firm (in 10 thousand yuan) 107
Continuous audit service years of the domestic accounting firm 2
Name of certified public accountants with the domestic accounting firm Sui Guojun, Wang Dong
If the CPA firm retaining was changed in this period
□Applicable √Not applicable
X. Facing suspend and terminate listing after the annual report disclosure
□ Applicable √ Not applicable
XI. Bankruptcy restructuring related matters
□ Applicable √ Not applicable
XII. Major lawsuit and arbitration issues
□ Applicable √ Not applicable
XIII. Punishment and rectification
□ Applicable √ Not applicable
XIV The credibility of companies and its controlling shareholder, actual controller
√ Applicable □ Not applicable
The controlling shareholder of the Company and the Company don’t exist situation such as unfulfilled the court’s
effective judgments or failed to pay duly a large amount of debt during the reporting period.
XV. The implementation and effect of equity incentive
√Applicable □ Not applicable
The 2015 restricted stock incentive plan has been implemented and completed granting the restricted stock on
March 2015, following first batch of unlock on April 22, 2016, and second batch of unlock on May 23, 2017. The
2016 restricted stock incentive plan has been implemented and completed granting the restricted stock on
December 2016, following first batch of unlock on December 19, 2017. The details see the series announcement
on China Securities, HK Commercial Daily and Cninfo website.
XVI. Important associated transactions
1. Important associated transactions
In the reporting period, the total amount of normal associated transactions between the Company and associated
parties was 694,890 thousand yuan, accounting for 78.96% of the budgeted amount for the year 2017. This
included 295,300 thousand yuan, accounting for 73.83% of the budgeted amount for the year 2017, for purchasing
supporting products for package projects from associated parties, and 399,590 thousand yuan, accounting for
83.25% of the budgeted amount for the year 2017, from selling supporting parts and components to associated
22
Dalian Refrigeration Co., Ltd. 2017 Annual Report
parties.
2. Associated transactions related to purchases or sales of assets
3. Important associated transactions with joint external investments
4.Current associated rights of credit and liabilities
□ Applicable √ Not applicable
5. Other associated transactions
√ Applicable □ Not applicable
Approved by the 12th Meeting of the 7th Board of Directors and the 1st Extraordinary Shareholders’ General
Meeting of 2017, the Company purchased 76% shares of Dalian Bingshan Engineering &Trading Co., Ltd. held
by Dalian Bingshan Group Co., Ltd.
Approved by the 12th Meeting of the 7th Board of Directors and the 1st Extraordinary Shareholders’ General
Meeting of 2017, the Company purchased 49% shares of Dalian Bingshan Metal Technology Co., Ltd. held by
Dalian Bingshan Group Co., Ltd.
Approved by the 13th Meeting of the 7th Board of Directors, the Company rent the land and buildings of old plant
to Dalian Bingshan Wisdom Park Co., Ltd., which was located on 888, Southwest Road, Shahekou District,
Dalian.
For details, please see the related series announcement on China Securities, HK Commercial Daily and Cninfo
website.
XVII. Major contract and its performance
1. Hosting, contracting and leasing status
(1) the hosting status
□ Applicable √ Not applicable
(2)the contracting status
□ Applicable √ Not applicable
(3) the leasing status
√ Applicable □ Not applicable
The company signed rental contract with MHI Bingshan Refrigeration (Dalian) Co.,Ltd., and rent # 6 workshop
building located on No. 106 Liaohe East Rd, Dalian Economic and Technology Development Zone to MHI
Bingshan Refrigeration (Dalian) Co., Ltd. The rental area is 15,259.04 square meters, and the rental term till 16th
July, 2029. The annual rent fee is RMB 4.2 million after considering the time value of money.
On April 21, 2017, the Company convened the 13th meeting of 7th Board of Directors, and approved to rent out the
whole land and house of the Company’s old plant locating at No. 888, Southwest Road, Shahekou District, Dalian
to Dalian Bingshan Wisdom Park Co., Ltd., with rental land area of 167,165.61 square meters and housing area of
105,652.43 square meters. The lease term is from April 1, 2017 to December 31, 2036. The total rent for the
previous three years is RMB 20.34 million, of which the rent in 2017 is RMB 4.62 million, the rent in 2018 is
RMB 7.86 million, and the rent in 2019 is RMB 7.86 million. From January 2020, the two parties will negotiate
and determine the rent of the next three years according to the local market changes.
2. Guaranteeing status
√ Applicable □ Not applicable
Resolution of 2nd meeting of 7th session of the Board of directors agreed to provide guarantee to Dalian Bingshan
Group Co., Ltd. for obtaining Development Fund of National Development Bank. Total amount of the loan was
RMB120 million with interest rate 1.2%, and the loan period was 10 years. The fund can only be used for cold
chain green intelligent equipment and the development of service industry. When Dalian Bingshan Group Co., Ltd.
receives the fund, it will transfer all the fund to the Company with the same conditions. The above guarantee to
Dalian Bingshan Group Co., Ltd. is to the Company itself actually.
3. Entrust others to cash assets management
(1)Trust management
√Applicable □ Not applicable (ten thousand yuan)
Specific type Source of fund Amount of occurrence Undue balance Overdue amount
Bank financial products Temporarily unused raised fund 7,600 7,600 0
Total 7,600 7,600 0
(2)Entrusted loans
23
Dalian Refrigeration Co., Ltd. 2017 Annual Report
□Applicable √Not applicable
(3)Other important contracts
□ Applicable √ Not applicable
XVIII. Social responsibilities
√Applicable □ Not applicable
1. Performance of precise poverty alleviation social responsibility
(1) Overview of the annual targeted poverty alleviation
In 2017, the Company and its controlling shareholder carried out targeted measures in poverty alleviation in the
Songlin Village, Guangmingshan Town, Zhuanghe City, the fixed-point poverty alleviation continually. Main
helping measures are:
Firstly, pay highly attention to the poverty alleviation, actively do well in reception. Determine the responsibility
department for the docking work of poverty alleviation and actively to contact with the Songlin Village.
Formulate an anti poverty funds budget in full-amount, and ensuring the capital fully funded in time.
Secondly, implement poverty alleviation with facilities to solve traffic problems. According to the traffic
inconvenience in Songlin Village and actual needs of peasant bridge building, the Company donated money for
preparing to construct the party building cultural square.
Thirdly, follow up and focus on. Do real work for the local people, and a real solution to life’s difficulties.
(2) Follow-up targeted poverty alleviation plan
In 2018, the Company will promote the poverty alleviation with innovative measures, ensuring an actual effect
achieved from the works.
Firstly, implemented the idea of target poverty alleviation and implement poverty alleviation with facilities, center
on actual needs of the village and fundamental facility of the agriculture development as well as agricultural
machinery equipment and deep processing of agricultural, to use the poverty alleviation funs on the blade.
Secondly, according to the actual condition of agricultural development in the village, and combined the needs of
enterprise with funds contributed as Bingshan, solve the labor surplus problems through proving jobs and creating
opportunities for farmers to increase their incomes.
Thirdly, offering a guarantee for poverty alleviation funds, funding the poverty-stricken households with specific
necessaries, and providing priority employment opportunities while funding the poverty students.
2. Performance of other social responsibility
For the specific performance of social responsibilities by the Company, refer to the social responsibility report for
2017.
The listed company and its subsidiaries whether belong to heavy pollution industry formulated by the state
environmental protection department
√Yes □ No
24
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Distribution Pollutant
Main Number of Total Excessiv
Way of of the Emission discharge Total
Enterprise or subsidiary pollutant and discharge approved e
discharge discharge concentration standard discharge
features outlet emissions emission
outlet implemented
Unified 57 DB21 Not over
Dalian Refrigeration Co., Ltd. COD sequence 1 2.7 tons 6 tons
discharged ㎎/L standard
1627-2008
Ammonia Unified 10.2 DB21 Not over
Dalian Refrigeration Co., Ltd. sequence 1 0.54 tons 0.9 tons
nitrogen discharged ㎎/L standard
1627-2008
Unified 10.6 Not over
Dalian Refrigeration Co., Ltd. Dust sequence 1 3 GB9078-1996 2.59 tons 6.8 tons
discharged mg/m standard
XIX. Other important matters
□ Applicable √ Not applicable
XX. Other important matters of subsidiary company
□ Applicable √ Not applicable
25
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 6 Change in Share Capital and Shareholders' Information
I. Change in share capital
1. Change in share capital
Shares Shares
（before change） （after change）
items Changes
number proportion number proportion
I. Non-circulating share capital with restricted
82,340,713 13.46% -60,225,758 22,114,955 2.58%
trade conditions
Executive lock stock 154,117 0.02% +2,766,558 2,920,675 0.34%
Restricted stock after starting 58,645,096 9.59% -58,645,096 0 0
Equity incentive restricted stock 23,541,500 3.85% -4,347,220 19,194,280 2.24%
II. Circulating share capital 529,435,845 86.54% +304,936,381 834,372,226 97.42%
1. Domestically listed ordinary shares 356,935,845 58.34% +235,936,381 592,872,226 69.22%
2. Domestically listed foreign shares 172,500,000 28.20% +69,000,000 241,500,000 28.20%
III. Total shares 611,776,558 100% +244,710,623 856,487,181 100%
The reason for the Change in share capital
On March 16, 2017, Mr. Yu Fuchun, the original Chairman of Board of Supervisors, resigned. On May 24,
2017, the second patch of unlock of 2015 restricted stock incentive plan was implemented. On June 14, 2017, the
Company finished the work of interest distribution of last year, transfer the capital reserve to increase capital stock,
4 shares for every 10 shares. On June 20, 2017, the restricted private placement of A share began to be traded on
market. On June 29, 2017, Mr. Wang Zhiqiang, the original deputy general manager, resigned. On December 19,
2017, the first patch of unlock of 2016 restricted stock incentive plan was implemented.
The things mentioned above in the report have caused the change of the total amount of shares and the structure of
stock.
Approval of changes in shares
√Applicable □ Not applicable
The second patch of unlock of 2015 restricted stock incentive plan was approved by the 14th meeting of 7th Board
of Directors of the Company. The Company’s 2016 annual profit distribution plan was approved by 2016
Shareholders’ General Meeting. The first patch of unlock of 2016 restricted stock incentive plan was approved by
the 17th meeting of 7th Board of Directors of the Company.
The influence of change in share capital on the a recent year and recent issue for basic earnings per share ,diluted
earnings per share and net assets per share.
(1)The basic per share of 2016 is 0.31 yuan; According to the latest equity is adjusted for 0.22 yuan;
(2)The diluted per share of 2016 is 0.31 yuan; According to the latest equity is adjusted for 0.22 yuan;
(3)The net assets per share of 2016 is 5.31 yuan; According to the latest equity is adjusted for3.79 yuan.
2. The restricted shares changes
√Applicable □ Not applicable
For details, please see the Chinese version of 2017 Annual Report.
II. Securities issuance and listing
1. Securities issuance in the report period
□ Applicable √ Not applicable
2. Change in total shares of the Company and structure of shareholders
26
Dalian Refrigeration Co., Ltd. 2017 Annual Report
For details, please see the” I Change in share capital”
3. Internal staff shares
□ Applicable √ Not applicable
III. Shareholders and actual controller
1. Number of shareholders and their shareholding
Total number of shareholders in the Total number of shareholders as of the last month before
44,696 51,354
reporting period disclosure of the annual report
Shareholding of top ten shareholders
Number of Number of
Proporti shares with pledged
Name Nature Total number
on sale shares or
restriction shares frozen
Domestic non-state-owned
Dalian Bingshan Group Co., Ltd. 19.96% 170,916,934 0 0
legal person
Sanyo Electric Co., Ltd. Overseas legal person 8.58% 73,503,150 0 0
Domestic non-state-owned
Huatai securities Co. LTD. 1.32% 11,346,659 0 0
legal person
National Social Security Funds 104 Portfolio Others 1.17% 10,000,000 0 0
National Social Security Funds 503 Portfolio Others 0.96% 8,210,314 0 0
Tian an property insurance co., LTD. - win No 1. Others 0.85% 7,247,571 0 0
Lin Zhenming Foreign natural person 0.73% 6,280,000 0 0
JOHCM INTERNATIONAL
Overseas legal person 0.63% 5,396,942 0 0
SMALL CAP EQUITY FUND
Industrial Securities Golden Kylin No. 2 Colle
Others 0.60% 5,101,286 0 0
ctive Asset Management Plan
Wu An Domestic natural person 0.56% 4,760,000 0 0
Shareholding of top ten shareholders without sale restriction
Number of shares
Name Type of shares
without sale restriction
Dalian Bingshan Group Co., Ltd. 170,916,934 RMB denominated ordinary shares
Sanyo Electric Co., Ltd. 73,503,150 Domestically listed foreign shares
Huatai securities Co. LTD. 11,346,659 RMB denominated ordinary shares
National Social Security Funds 104 Portfolio 10,000,000 RMB denominated ordinary shares
National Social Security Funds 503 Portfolio 8,210,314 RMB denominated ordinary shares
Tian an property insurance co., LTD. - win 1. 7,247,571 RMB denominated ordinary shares
Lin Zhenming 6,280,000 Domestically listed foreign shares
JOHCM INTERNATIONAL
5,396,942 Domestically listed foreign shares
SMALL CAP EQUITY FUND
Industrial Securities Golden Kylin No. 2 Collective Asset Mana
5,101,286 RMB denominated ordinary shares
gement Plan
Wu An 4,760,000 Domestically listed foreign shares
27
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Dalian Bingshan Group Co., Ltd. had the association
Notes to the associated relationship and uniform actions of the above relationship with Sanyo Electric Co., Ltd. among the above
shareholders shareholders. Sanyo Electric Co., Ltd. holds 26.6% of Dalian
Bingshan Group Co., Ltd.'s equity.
2. Controlling shareholder of the Company
Legal Founding Unified social
Name of holding shareholder Main business
representative date credit code
Research, development, manufacture, sales,
service and installation of industrial refrigeration
products, freezing and cold storage products,
91210200241 large-, medium- and small-size air-conditioning
Dalian Bingshan Group Co., Ltd. Ji Zhijian Jul. 3, 1985
2917931 products, petrochemical equipment products,
electronic and electric control products, home
appliance products and environment protection
products.
Shares held by the holding
shareholder in other overseas and
domestic listed companies as the None
holding shareholder or ordinary
shareholder in the reporting period
Change in the holding shareholder in the reporting period
□ Applicable √ Not applicable
3. Actual controller of the Company
The company has no actual controller.
According to the actual situation of Dalian Refrigeration Co., Ltd. and its controlling shareholders, and compared
with the related laws and regulations including Company Law of People’s Republic of China, Management
Regulation on Listing Company Acquisition and Stock Listing Rules of Shenzhen Stock Exchange, with the
confirmation of Liaoning Huaxia law firm, the Company released the Public Notice on Not Having Actual
Controller.(No: 2015-025),) which was published on B04 of China Securities, A19 of HK Commercial Daily and
Cninfo website on April 24 2015.
28
Commission ofDalian Municipality Government
Dalian Refrigeration Co., Ltd. 2017 Annual Report
State-owned Assets Supervision and Administration
Dalian State-owned Assets Management Co., Ltd.
Dalian Equipment Manufacture Investment
Dalan Zhonghuida Refrigeration
Sanyo Electric Co., Ltd.
Yida Group Co., Ltd.
Dayang Co., Ltd.
Technology Co., Ltd.
Co., Ltd.
100% 100%
22.2% 4.4% 13.3% 13.3% 20.2% 26.6%
Dalian Bingshan Group Co., Ltd.
19.96%
Dalian Refrigeration Co., Ltd.
The actual controller controlled the Company through a trust or other asset management
□ Applicable √ Not applicable
4. Other legal-person shareholders holding of 10% or more shares
□ Applicable √ Not applicable
5.、controlling shareholders, actual controllers, restructuring the constraint to the stake and other
commitments underweight
□ Applicable √ Not applicable
29
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 7 Information on Preferred Stock
□ Applicable √ Not applicable
In the reporting period, the Company didn’t own preferred stock.
30
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 8 Information on the Company’s Directors, Supervisors,
Senior Management and Staff
I. Changes in shareholding by directors, supervisors and senior managers
Increase Decrease
Shares Shares
on holding in holding
Starting Ending held at held at
Office-holdi of shares of shares
Name Position Sex Age date of date of beginning the end of
ng state in this in this
office term office term of period period
period period
(shares) (shares)
(shares) (share)
Mar. 27, Jan.20,
Ji Zhijian Chairman Incumbent M 51 1,413,450 565,380 450,000 1,528,830
2014 2019
Mar. 27, Jan.20,
Xu Junrao Director Incumbent F 55 925,249 370,100 265,000 1,030,349
2014 2019
Feb. 5, Apr.2,
Liu Kai Vice Chairman Incumbent M 43 989,400 395,760 0 1,385,160
2013 2018
Jan. 21, Jan.20,
Ding Jie Director, GM Incumbent M 55 725,000 290,000 0 1,015,000
2016 2019
Takagi Mar. Jan.20,
Director Incumbent M 61 0 0 0 0
Toshiyuki 7,2017 2019
Jan. 21, Jan.20,
Shin Kudo Director Incumbent M 55 0 0 0 0
2016 2019
Dai Independent Feb.12, Jan.20,
Incumbent F 67 0 0 0 0
Dashuang director 2015 2019
Independent Feb.12, Jan.20,
Liu Jiwei Incumbent M 57 0 0 0 0
director 2015 2019
Independent May.20 Jan.20,
Wang Yan Incumbent F 54 0 0 0 0
director 2015 2019
Chairman of
Mao Mar. 20, Jan.20,
Board of Incumbent F 52 0 0 0 0
Chunhua 2017 2019
Supervisors
Jan. 21, Jan.20,
Dai Yuling Supervisor Incumbent F 40 0 0 0 0
2016 2019
Mar. Jan.20,
Cao Lili Supervisor Incumbent F 39
13,2017 2019
Fan Otc.20, Jan.20,
DGM Incumbent M 54 500,000 200,000 0 700,000
Yuekun 2015 2019
Chief Financial Jan. 21, Jan.20,
Ma Yun Incumbent M 46 500,000 200,000 0 700,000
Officer 2016 2019
Song Feb. 5, Jan.20,
Board Secretary Incumbent M 44 424,200 169,680 0 593,880
Wenbao 2013 2019
Kijima Director Leaving M 60 Mar. 27, Feb.6, 0 0 0 0
31
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Tadatoshi office 2014 2017
Chairman of
Leaving Feb. 5, Mar.11,
Yu Fuchun Board of M 58 15,211 6,084 0 21,295
office 2013 2017
Supervisors
Wang Leaving Jan. 21, Jun.29,
DGM M 56 515,349 206,140 0 721,489
Zhiqiang office 2016 2017
Total -- -- -- -- -- -- 6,007,859 2,403,144 715,000 7,696,003
During the reporting period, the Company carried out profit distribution plan for year of 2016, transferring 4
shares from capital reserve for every 10 shares.
On April 2, 2017, Mr. Liu Kai, the original vice chairman of Board of Directors, resigned due to work change. The
Company will elect the new vice chairman on the 20th meeting of 7th Board of Directors.
II. Changes of directors, supervisors, senior managers of the Company
Name Position held Type Date Reason
Kijima Tadatoshi Director Leaving office Feb.6,2017 Resign from the Company due to retirement
Resign from the Company due to work
Yu Fuchun Chairman of Board of Supervisors Leaving the office Mar.11,2017
change
Resign from the Company due to personal
Wang Zhiqiang DGM Leaving the office Jun.29,2017
reason
Takagi Toshiyuki Director Be employed Mar.7,2017 Be elected
Cao Lili Worker Supervisor Be employed Mar.13,2017 Be elected
Mao Chunhua Chairman of Board of Supervisors Be employed Mar.20,2017 Be elected
III Office holding
Professional background, main work experiences and the main duties and responsibilities of incumbent directors,
supervisors, senior managers of the Company
main duties and
Name Position held Professional background Main work experience
responsibilities
doctorate degree in Successively acting as director, GM, Chairman of Panasonic Related
Ji Zhijian Chairman management of the Dalian Cold-Chain.; Chairman and President of Dalian Bingshan Group Co., responsibilities of
University of Technology Ltd.; Chairman of the Company. the Chairman
Successively acting as the Financial Majordomo, director of the Related
The MBA and senior
Xu Junrao Director Company; Vice President and chief accountant of Dalian Bingshan responsibilities of
account
Group Co., Ltd. the Director
graduate from Xi’an
Jiaotong University major Successively acting as Head of Production Management Dept.,
Related
Vice in mechanical designing Assistant GM, GM and director of the Company; Chairman of Dalian
Liu Kai responsibilities of
Chairman and manufacturing and the Bingshan Group Engineering Co., Ltd.; Chairman of Dalian Bingshan
the Director
MBA of Dalian University Group Sales Co., Ltd.
of Technology
Ding Jie Director, graduate from Xi’an Served as the GM and director of Wuhan new world Refrigeration Related
32
Dalian Refrigeration Co., Ltd. 2017 Annual Report
GM Jiaotong University major Co., Ltd. since 2002 responsibilities of
in compressor and the Director
refrigeration technology, Related
owed a master of business responsibilities of
administration of the GM
Huazhong University of
Science and Technology
He had been work in the technology division, the information
machine division, PC department, IT product department, AVC
network department of Panasonic Electric Industrial Co., Ltd and
Takagi graduated from Osaka
Director Panasonic system network Co., Ltd.He serves as director in Panasonic
Toshiyuki Prefecture University;
Electric Industrial Co., Ltd, the deputy director of the electrochemical
residential equipment machine Co., Ltd, the director of air-condition
Co., Ltd.
Successively acting as manager of counselor and manager of
Related
graduated from Japan Soka ministry of Supervision of Panasonic Electric Industrial Co., Ltd. The
Shin Kudo Director responsibilities of
University chief accountant of Panasonic Electric (China), Panasonic Electric
the Director
AP(China)
professor, international
She serves as professor and doctoral tutor of the school of business Related
project management
Dai Independent administration of Dalian university of Technology, the director of responsibilities of
appraiser, Chinese
Dashuang director project management research center of Dalian university of the Independent
registered consulting
technology. director
engineer.
Related
doctor of management, He has served successively as the director of finance department,
Independent responsibilities of
Liu Jiwei professor of accounting, professor of the accountancy of Dongbei University of Finance and
director the Independent
CPA. Economics,
director
She has served successively as vice dean of law school of Dongbei
graduate from China Related
University of Finance and Economics, the director of Chinese society
Independent University of Political responsibilities of
Wang Yan of Economic Law ,the president of the Economics law seminar of
director Science and Law， the Independent
Liaoning Province law society, and the arbitrator of Dalian Arbitration
professor of law director
Commission
Chairman of Related
Mao Successively acting as Vice Head, and Head of the Financial Dept. of
Board of Senior Accountant responsibilities of
Chunhua the Company.
Supervisors the Supervisor
Related
acting as the deputy chief of the Financial Dept. of Dalian Bingshan
Dai Yuling Supervisor Accountant responsibilities of
Group Company Ltd.
the Supervisor
Related
Worker graduated from Harbin
Cao Lili served as organizer of organization department of the Company responsibilities of
Supervisor University of Commerce
the Supervisor
Fan graduated from Tsinghua He successively served as the general manager of operation &
DGM Assist the GM
Yuekun University with a bachelor management division and GM assistant of Panasonic Cold-Chain
33
Dalian Refrigeration Co., Ltd. 2017 Annual Report
degree, major in from 2003 to 2013; served as GM of Dalian HURLLY Group Co.,
engineering physics, and Ltd. from June 2013 to July 2015; served as the general manager of
MBA of Dalian University operation & management division of the Company since September
of Technology; 2015. serves as the Deputy General Manager of the Company since
October 22, 2015.
He has served successively as the Deputy chief of the Financial
Chief Related
Management Dept. of the Company, the supervisor of the Company,
Ma Yun Financial The Accountant responsibilities of
and the Chief Financial Officer of Dalian Bingshan Group Sales Co.,
Officer CFO
Ltd.
Related
Song Board graduate from Zhejiang Successively acting as representative for securities affairs, board
responsibilities of
Wenbao Secretary University，CFA secretary of the Company.
Board Secretary
Office holding in shareholder unit
√ Applicable □ Not applicable
If receiving remuneration or allowance from
Name of office holder Shareholder unit name Position held in shareholder unit
shareholder unit
Ji Zhijian Dalian Bingshan Group Co., Ltd. Chairman of the Board, President Yes
Xu Junrao Dalian Bingshan Group Co., Ltd. Vice President and chief accountant Yes
Office holding in other units
√ Applicable □ Not applicable
If receiving
remuneration or
name unit name Position held in other unit
allowance from other
unit
Panasonic Refrigeration (Dalian) Co., Ltd.; Chairman no
Dalian Bingshan Group Management Consulting Co., Ltd. Chairman no
Ji Zhijian Bingshan Technology Service (Dalian) Co., Ltd. Chairman no
Dalian Zhong Huida Refrigeration Technology Co., Ltd. Chairman no
Dalian Kelvins Technology Co., Ltd. Chairman no
Wuhan New World Refrigeration Industry Co., Ltd. Chairman no
Ding Jie Dalian Bingshan Group Engineering Co., Ltd. Chairman no
Dalian Bingshan Group Sales Co., Ltd. Chairman no
Dalian Huarui Heavy Industry Group Co., Ltd The independent yes
Dai Dashuang
Yingkou Port Liability Co., Ltd The independent yes
Liu Jiwei Lingyuan Iron and Steel Co., Ltd The independent yes
IV. Remuneration paid to directors, supervisors, and senior management
Decision-making procedure, decision-making basis and actual payment of remuneration for directors, supervisors
and senior management
Decision-making procedure: the Company's remuneration plan for directors and supervisors was proposed by the
Company's Remuneration and Evaluation Committee of the Board of Directors, and after approval by the Board
of Directors, submitted to the general meeting for adoption and put into effect. The Company’s remuneration plan
for senior management was put into effect after approval by the Company’s Board of Directors.
Decision-making basis: it was decided on the basis of main responsibilities and importance of the concerned
34
Dalian Refrigeration Co., Ltd. 2017 Annual Report
position and the remuneration level of similar positions in other similar enterprises and evaluated and rewarded
through the Company’s examination procedure for assets operation performance.
The total amount of remunerations actually ( pre-tax ) paid by the Company to directors, supervisors, and senior
management was 3.5078 million yuan.
Particulars about the annual remuneration of directors, supervisors and senior staff members
Annual remuneration and allowance( pre-tax )paid by the Company
Name
(ten thousand yuan)
Ji Zhijian 0
Xu Junrao 0
Liu Kai 0
Ding Jie 85.9
Takagi Toshiyuki 0
Shin Kudo 0
Dai Dashuang 8
Liu Jiwei 8
Wang Yan 8
Mao Chunhua 19.72
Dai Yuling 0
Cao Lili 0
Fan Yuekun 76
Ma Yun 72
Song Wenbao 45
Kijima Tadatoshi 0
Yu Fuchun 2.26
Wang Zhiqiang 25.9
Total 350.78
Equity incentive plans granted to directors, supervisors and senior management of the Company in the reporting
period
□ Applicable √ Not applicable
V. Status of the Company's staff
1. As of Dec. 31, 2017 the Company and its major subsidiary had 1,726 enrolled employees, including 933
persons engaged in production; 268 persons engaged in engineering and technology; 263 persons engaged in
marketing; 37 persons engaged in financing; and 225 persons engaged in management.
2. As of Dec. 31, 2017, among enrolled employees of the Company and its major subsidiary, 61 persons have the
educational background of Master or higher; 502 persons have the educational background of university; 526
persons have the educational background of junior college; and 637 persons have the educational background of
secondary technical school or lower.
3. The Company applied the employee job performance wage system with distribution according to positions and
performance of an employee.
4. The Company formulated the annual training plan and gave purposeful training to an employee in consideration
of his/her post requirement.
5. The pension and medical expense for retired employees of the Company were paid by the social insurance
body.
35
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 9 Corporate Governance
I. Basic situation of corporate governance
Within the reporting period, the company centered around the operation subject as “Leading innovation, Creating
value” with the theme “activation, integration and upgrading”, relying on the opportunity of overall relocation and
transformation of the Company, to further deepen and perfect the normative internal control system and upgrade
the governing level of the company continuously.
There were no problems with the Company concerning horizontal competition caused by restructures and other
reasons. The main normal associated transactions between the Company and the associated companies included
purchasing the supporting products for package projects from the associated companies, and selling the supporting
parts and components to the associated companies and providing them with the labor service. Associated
transactions between the Company and the associated companies are necessary for normal production and
operation and helpful for the Company’s healthy development, and therefore will continue. The Company will
strictly follow the related decision-making procedures and fulfill the obligation in information disclosure in order
to further regulate associated transactions.
Was there any deviation of the Company's corporate governance from the requirements in the Company Law and
China Securities Regulatory Commission's regulations?
□ Yes √ No
There was no deviation of the Company's corporate governance from the requirements in the Company Law and
China Securities Regulatory Commission's regulations.
II. Status of the Company's business, staff, asset, organization and finance separations from
the holding shareholder
The Company was separated from the holding shareholder in business, staff, asset, organization and finance, and
has the independent and complete business and operation capability.
III. Horizontal competitions
□ Applicable √ Not applicable
IV Shareholders’ general meeting convened in the reporting period
1. Annual Shareholders’ general meeting within this reporting period
The proportion of
Session number of meeting The type of the meeting date Disclosing date Disclosing index
participate investors
The 1st Extraordinary Shareholders’ General extraordinary Shareholders’ March http://www.cnin
30.31% March 8,2017
Meeting of 2017 general meeting 7,2017 fo.com.cn
2016 Annual Shareholders’ May http://www.cnin
30.75% May 20.2017
Annual Shareholders’ General Meeting general meeting 19.2017 fo.com.cn
nd
The 2 Extraordinary Shareholders’ General extraordinary Shareholders’ November November http://www.cnin
30.55%
Meeting of 2017 general meeting 10.2017 11.2017 fo.com.cn
The 3rd Extraordinary Shareholders’ General extraordinary Shareholders’ December December http://www.cnin
30.52%
Meeting of 2017 general meeting 28,2017 29,2017 fo.com.cn
V. Independent directors’ execution of duties in the reporting period
36
Dalian Refrigeration Co., Ltd. 2017 Annual Report
1. Attendance of independent directors to the meetings of the Board of Directors and general meetings
Attendance of independent directors to the meetings of the Board of Directors
Name of Failure to attend
Number of due board Number of Number of Number of
Number of in person for
independent meetings in the reporting attendances attendance by attendance by
absences successive two
director period on the spot communication proxy
times or not
Dai Dashuang 7 1 6 0 0 No
Liu Jiwei 7 1 6 0 0 No
Wang Yan 7 1 6 0 0 No
Number of attendances as a non-voting delegate 4
2. Objections to the related matters of the Company raised by independent directors
The independent directors have raised no objections to the related matters of the Company in the reporting period.
3. Other description of independent directors’ execution of duties
For details of the Company's independent directors' execution of duties, see the 2017 annual work report of the
independent directors of the Company.
VI.. Execution of duties of the special committees under the Board of Directors in the
reporting period
1. Execution of duties of the audit committee under the Board of Directors
With performance of its duty according to the Implementation Rules for the Audit Commission under the Board of
Directors and the Annual Reporting Work Rules for the Audit Commission, the Audit Commission under the
Board of Directors supervised the Company’s internal audit system and its implementation, audited the
Company’s accounting information and its disclosure and assessed the work of the external audit institution.
In the work of evaluation of a normative internal control system of the company, the Auditing Commission
brought into play actively the duty of organization, leadership and supervision. According to the company internal
control defect recognization standard, it examined and recognized the internal control defect recognization
summary table developed by the internal control evaluation work group of the company, and had an examination
reading of the internal control evaluation report of the company for 2017, believing that the status quo of the
internal control system of the company complies with related requirements and with the actual situation of the
company and it is being carried out satisfactorily. The internal control evaluation report of the company for 2017
reflects the above facts accurately.
In the Company’s 2017 annual audit work, the Audit Commission conducted positive communication and
effective coordination with the audit institution ShineWing CPAs .The Audit Commission conducted
communication with the person in charge of the project of the audit institution on the audit work plan, schedule,
matters that should be noticed in audit and other matters and reached an agreement with them. In the process of
audit, they kept close information on the progress of audit work and urged the audit institution many times to
ensure the quality and schedule in the audit work. Through serious review of the Company’s annual finance report
and annual report after completion of the audit work, the Audit Commission believed that the Company’s finance
report was comprehensive and authentic, and the finance report and other information disclosed by the Company
were objective and true, having reflected the true annual financial status of the Company.
The Audit Commission believed that in the 2017 annual audit service for the Company, ShineWing CPAs
implemented the audit for the Company on the practicing basis of independency, objectivity and fairness and
strictly abided by the new accounting standards. They worked out a well-considered plan, allocated all necessary
personnel, positively contacted our Audit Commission and independent directors, and completed the 2017 annual
audit service for the Company through its industrious and conscientious working. It is suggested that ShineWing
CPAs should be reengaged as the auditing agency for the Company in 2018.
2. Execution of duties of the remuneration and evaluation committee under the Board of Directors
37
Dalian Refrigeration Co., Ltd. 2017 Annual Report
With performance of its duty according to the Implementation Rules for the Remuneration and Evaluation
Commission under the Board of Directors, the Remuneration and Evaluation Commission under the Board of
Directors examined the annual salary and remuneration level of the Company’s directors, supervisors and senior
executives, and believed that the decision-making procedure for salary and remuneration of the above persons and
the paying standard complied with the laws and regulations and the Company’s regulations, and the salary and
remuneration information disclosed in the Company’s Annual Report for 2017 was authentic and exact.
VII. Work of the Board of Supervisors
Was there any risk with the Company found by the Board of Supervisors in their supervision activities in the
reporting period?
□ Applicable √ Not applicable
The Board of Supervisors had no objections to the matters under supervision in the reporting period.
VIII. Performance evaluation and incentive system for senior management
Combined with the 2015 restricted stock incentive plan and 2016 restricted stock incentive plan, the Company
evaluated and rewarded senior management through the Company's examination procedure for assets operation
performance in the reporting period.
IX. The internal control system
1. Details of material weakness in the internal control found in the reporting period described in the report
on self-evaluation of internal control.
□ Applicable √ Not applicable
There was no material weakness in the internal control found in the reporting period.
2. Report on self-evaluation of internal control
Details of material weakness in the internal control found in the reporting period described in the report on
self-evaluation of internal control
There was no material weakness in the internal control found in the reporting period.
Date of disclosing the full text of the report on
Apr. 21, 2018
self-evaluation of internal control
Disclosure reference to the full text of the For the 2017 annual report on self-evaluation of internal control
report on self-evaluation of internal control of the Company, visit the website www.cninfo.com.cn.
3. Internal control audit report
Description of the deliberation opinions in the internal control audit report
We think that as of Dec. 31, 2017, Dalian Refrigeration Co., Ltd. had maintained an effective internal control
over the financial reports in all material aspects according to Basic Enterprise Internal Control Specification and
relevant regulations.
Date of disclosing the full text of
Apr. 21, 2018
the internal control audit report
Disclosure reference to the full text For the 2017 annual internal control audit report of the Company, visit the
of the internal control audit report website www.cninfo.com.cn.
Did the accounting firm issue the internal control audit report with nonstandard opinions?
□ Applicable √ Not applicable
Was the internal control audit report issued by the accounting firm consistent with the opinion in the
self-evaluation report of the Board of Directors?
√Yes □ No
38
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 10 Information on Corporate Bonds
□ Applicable √ Not applicable
39
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 11 Financial Report
I. Auditor’s Report
XYZH/2018DLA10187
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.
Revenue recognition
Key Audit Matter How the matter was addressed in the audit
Revenue of Dalian Refrigeration The main audit procedures carried out for addressing
Company and its subsidiaries mainly the key audit matters are as follows:
come from sales of products and Understand and evaluate effectiveness of design and
installation. The key concern about the operation of the management ‘s internal control over
sales revenue is due to the large sales revenue
quantities and any potential Carried out analytical review and evaluate the
misstatements existing in the revenue reasonableness of sales income and gross profit
recognition within the appropriate margin by segmenting the business and sales in
accounting period. Key concern about conjunction with industry development and actual
installation income is because the situation of Dalian Refrigeration Company.
accounting involved by significant Sampling test the sales contracts, identify the clause
accounting estimate and judgment. and terms in respect to the risk and reward transfer of
Having considered these matters, we the ownership. Evaluate the recognition timing of
recognized revenue recognition as key revenue whether is in line with the accounting
audit matters. standards.
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
40
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Obtain the system data and reconcile to the data from
accounting system so to ensure the consistence.
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:
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.
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).
41
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Management.
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.
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.
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
42
Dalian Refrigeration Co., Ltd. 2017 Annual Report
II. Accounting statement
BALANCE SHEET
Prepared by Dalian Refrigeration Co., Ltd. December 31, 2017 Unit: RMB Yuan
31-Dec-2017 31-Dec-2016
Assets
Consolidation Parent Company Consolidation Parent Company
Current assets:
Monetary funds 394,809,694.11 234,655,092.14 715,215,638.54 496,417,106.54
Financial assets which are measured by fair value and
which changes are recorded in current profit and loss
Derivative financial assets
Notes receivable 172,818,176.20 57,455,446.82 126,408,249.59 90,509,540.07
Accounts receivable 1,036,255,895.79 356,557,956.93 807,109,959.54 117,575,405.74
Accounts in advance 140,808,375.21 33,125,666.30 108,033,313.10 96,269,883.15
Interest receivables 1,871,783.33 1,871,783.33 723,955.56 723,955.56
Dividend receivable 33,450.00 39,025.00
Other receivables 52,049,009.83 2,822,798.03 57,257,456.57 4,368,505.07
Inventories 352,279,664.64 149,549,915.80 349,538,424.06 151,230,744.47
Assets held for sale
Non-current asset due within one year
Other current assets 114,907,269.33 102,402,409.84 43,254,044.92 30,563,139.06
Total current assets 2,265,833,318.44 938,441,069.19 2,207,580,066.88 987,658,279.66
Non-current assets:
Finance asset held available for sales 515,783,193.99 514,468,051.49 545,565,116.64 544,249,974.14
Held-to-maturity investment
Long-term account receivable
Long-term equity investment 1,568,255,738.12 2,044,438,551.88 1,292,912,901.49 1,713,412,501.09
Investment property 103,861,275.27 114,812,363.92 28,605,652.94 28,605,652.94
Fixed assets 890,874,647.40 658,637,271.68 511,008,545.87 274,262,264.28
Construction in progress 82,999,382.90 80,314,961.09 321,646,676.78 320,329,247.78
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 143,918,516.87 71,715,598.15 154,714,212.52 88,113,279.88
Expense on Research and Development
Goodwill 1,750,799.49 1,750,799.49
Long-term expenses to be apportioned 14,431,131.01 12,737,555.16 4,448,719.77 3,658,276.80
Deferred income tax asset 31,913,497.18 5,815,160.93 27,753,747.94 6,751,619.50
Other non-current asset
Total non-current asset 3,353,788,182.23 3,502,939,514.30 2,888,406,373.44 2,979,382,816.41
Total assets 5,619,621,500.67 4,441,380,583.49 5,095,986,440.32 3,967,041,096.07
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao
Chunhua
43
Dalian Refrigeration Co., Ltd. 2017 Annual Report
BALANCE SHEET (CONTINUED)
Prepared by Dalian Refrigeration Co., Ltd. December 31, 2017 Unit: RMB Yuan
31-Dec-2017 31-Dec-2016
Liabilities and shareholders’ equity
Consolidation Parent Company Consolidation Parent Company
Current liabilities:
Short-term loans 349,801,300.00 260,000,000.00 45,000,000.00
Derivative financial liabilities
Notes payable 260,443,167.67 119,034,784.44 194,562,734.79 85,834,371.87
Accounts payable 889,964,317.63 385,076,569.09 863,552,643.26 340,987,669.38
Accounts received in advance 147,172,195.05 61,450,463.91 150,098,892.29 74,949,113.25
Wage payable 46,751,562.36 11,445,665.15 50,256,392.86 9,796,460.53
Taxes payable 29,992,558.62 1,274,710.89 18,405,089.48 1,234,137.19
Interest payable 379,085.53 379,085.53
Dividend payable 863,516.60 533,156.00 863,516.60 533,156.00
Other accounts payable 67,674,829.07 30,346,173.96 109,493,520.02 74,954,775.74
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 1,793,042,532.53 869,540,608.97 1,432,232,789.30 588,289,683.96
Non-current liabilities:
Long-term loans 160,000,000.00 160,000,000.00 160,000,000.00 160,000,000.00
Bonds payable
Long-term account payable
Long-term wage payable
Special accounts payable
Projected liabilities
Deferred income 100,336,504.07 56,890,504.07 57,396,619.00 12,836,619.00
Deferred income tax liabilities 71,429,566.31 71,429,566.31 75,683,681.95 75,683,681.95
Other non-current liabilities
Total non-current liabilities 331,766,070.38 288,320,070.38 293,080,300.95 248,520,300.95
Total liabilities 2,124,808,602.91 1,157,860,679.35 1,725,313,090.25 836,809,984.91
Shareholders’ equity
Share capital 856,487,181.00 856,487,181.00 611,776,558.00 611,776,558.00
Other equity instruments
Capital public reserve 757,532,081.34 802,034,176.17 1,046,321,716.85 1,036,115,161.54
Less:Treasury stock 23,305,370.40 23,305,370.40 67,615,856.00 67,615,856.00
Other comprehensive income 407,269,002.11 406,306,901.44 431,639,323.52 430,413,556.77
Special preparation
Surplus public reserve 668,150,375.30 668,150,375.30 620,578,847.52 620,578,847.52
Retained profit 750,397,795.56 573,846,640.63 658,387,158.97 498,962,843.33
Translation of foreign currency capital
Total owner’s equity attributable to parent company 3,416,531,064.91 3,283,519,904.14 3,301,087,748.86 3,130,231,111.16
Minority interests 78,281,832.85 69,585,601.21
Total owner’s equity 3,494,812,897.76 3,283,519,904.14 3,370,673,350.07 3,130,231,111.16
Total liabilities and shareholder’s equity 5,619,621,500.67 4,441,380,583.49 5,095,986,440.32 3,967,041,096.07
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao
Chunhua
44
Dalian Refrigeration Co., Ltd. 2017 Annual Report
INCOME STATEMENT
Prepared by Dalian Refrigeration Co., Ltd. January-December, 2017 Unit: RMB Yuan
January-December, 2017 January-December, 2016
Items
Consolidation Parent Company Consolidation Parent Company
I. Total sales 2,079,715,105.37 616,759,880.66 1,893,200,939.64 558,404,871.04
Including: Operating income 2,079,715,105.37 616,759,880.66 1,893,200,939.64 558,404,871.04
II. Total operating cost 2,045,840,192.64 633,137,078.08 1,888,674,681.05 579,660,051.71
Including: Operating cost 1,643,653,442.93 507,660,774.60 1,536,531,442.08 468,526,965.90
Taxes and associate charges 19,553,933.04 7,988,392.84 17,932,226.42 5,674,459.53
Selling and distribution expenses 113,422,315.47 891,189.19 91,678,326.90 1,292,587.98
Administrative expenses 231,345,591.57 112,247,954.40 219,270,065.31 109,136,561.08
Financial expense 10,855,836.96 4,027,140.72 2,378,038.61 350,400.16
Impairment loss 27,009,072.67 321,626.33 20,884,581.73 -5,320,922.94
Add: Gain/(loss) from change in fair value
Gain/(loss) from investment 180,132,262.51 198,438,477.12 172,600,178.47 187,574,249.05
Including: income form investment on affiliated
140,904,557.45 141,879,121.47 128,967,171.76 131,022,957.13
enterprise and jointly enterprise
Gain/(loss) from asset disposal 552,588.02 1,851,943.49 -21,565,350.43 -21,377,966.78
Other income 1,771,176.72 128,650.51
III. Operating profit 216,330,939.98 184,041,873.70 155,561,086.63 144,941,101.60
Add: non-business income 2,330,234.97 527,565.75 38,222,022.99 3,084,214.94
Less: non-business expense 187,380.52 0 285,318.73 60,000.00
IV. Total profit 218,473,794.43 184,569,439.45 193,497,790.89 147,965,316.54
Less: Income tax 13,917,742.62 936,458.57 7,966,473.68 1,924,168.07
V. Net profit 204,556,051.81 183,632,980.88 185,531,317.21 146,041,148.47
(I) Classification by continuous operation
1. Net profit from continuous operation 204,556,051.81 183,632,980.88 185,531,317.21 146,041,148.47
2. Net profit from discontinuing operation
(II)Classification by ownership
1.Net profit attributable to parent company 200,759,820.17 183,632,980.88 182,234,151.73 146,041,148.47
2.Minority shareholders’ gains and losses 3,796,231.64 3,297,165.48
VI. After-tax net amount of other comprehensive
-24,370,321.41 -24,106,655.33 -158,348,794.53 -158,345,633.66
incomes
After-tax net amount of other comprehensive
-24,370,321.41 -24,106,655.33 -158,348,794.53 -158,345,633.66
incomes attributable to owners of the Company
(I) Other comprehensive incomes that will not be
reclassified into gains and losses
1. Changes in net liabilities or assets with a
defined benefit plan upon re-measurement
2. Enjoyable shares in other comprehensive
incomes in investees that cannot be reclassified
into gains and losses under the equity method
(II) Other comprehensive incomes that will be
-24,370,321.41 -24,106,655.33 -158,348,794.53 -158,345,633.66
reclassified into gains and losses
1. Enjoyable shares in other comprehensive
incomes in investees that will be reclassified into -263,666.08 -3,160.87
gains and losses under the equity method
2. Gains and losses on fair value changes of
-24,106,655.33 -24,106,655.33 -158,345,633.66 -158,345,633.66
available-for-sale financial assets
3. Gains and losses on reclassifying
held-to-maturity investments into
available-for-sale financial assets
4. Effective hedging gains and losses on cash
flows
5. Foreign-currency financial statement
translation difference
45
Dalian Refrigeration Co., Ltd. 2017 Annual Report
6. Other
After-tax net amount of other comprehensive
incomes attributable to minority shareholders
VII Total comprehensive income 180,185,730.40 159,526,325.55 27,182,522.68 -12,304,485.19
Total comprehensive income attributable to
176,389,498.76 159,526,325.55 23,885,357.20 -12,304,485.19
parent company
Total comprehensive income attributable to
3,796,231.64 3,297,165.48
minority shareholders
VIII. Earnings per share
(I) basic earnings per share 0.23 0.22
(II) diluted earnings per share 0.23 0.22
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
46
Dalian Refrigeration Co., Ltd. 2017 Annual Report
CASH FLOW STATEMENT
Prepared by Dalian Refrigeration Co., Ltd. January -December, 2017 Unit: RMB Yuan
January -December, 2017 January -December, 2016
Items
Consolidation Parent Company Consolidation Parent Company
I. Cash flows arising from operating
activities:
Cash received from selling commodities and
1,490,364,517.50 466,954,711.78 1,635,367,200.41 573,989,576.16
providing labor services
Write-back of tax received 13,249,610.37 15,004,822.89
Other cash received concerning operating
99,140,045.44 67,958,978.50 73,923,003.04 43,293,827.34
activities
Subtotal of cash inflow arising from
1,602,754,173.31 534,913,690.28 1,724,295,026.34 617,283,403.50
operating activities
Cash paid for purchasing commodities and
1,208,906,954.40 503,456,875.87 1,130,198,716.81 417,926,957.89
receiving labor service
Cash paid to/for staff and workers 328,550,494.59 125,201,385.18 320,358,728.02 126,059,533.97
Taxes paid 97,569,294.79 9,617,239.24 119,059,997.71 18,159,382.86
Other cash paid concerning operating
174,953,280.75 25,669,693.09 161,284,653.77 38,988,406.65
activities
Subtotal of cash outflow arising from
1,809,980,024.53 663,945,193.38 1,730,902,096.31 601,134,281.37
operating activities
Net cash flows arising from operating
-207,225,851.22 -129,031,503.10 -6,607,069.97 16,149,122.13
activities
II. Cash flows arising from investing
activities:
Cash received from recovering investment 1,500,000.00 1,500,000.00 1,500,000.00 4,170,375.54
Cash received from investment income 124,960,986.95 134,921,961.95 109,727,833.19 119,993,684.77
Net cash received from disposal of fixed,
359,391.02 46,000.00 533,855.77 1,328,170.00
intangible and other long-term assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning investing
activities
Subtotal of cash inflow from investing
126,820,377.97 136,467,961.95 111,761,688.96 125,492,230.31
activities
Cash paid for purchasing fixed, intangible
121,653,422.49 107,072,028.97 339,787,389.83 328,899,717.16
and other long-term assets
Cash paid for investment 221,950,000.00 221,950,000.00 57,404,907.59 168,990,635.74
Net cash paid for achievement of subsidiaries
56,150,000.00 56,150,000.00 -19,888,482.90 21,535,918.03
and other business units
Other cash paid concerning investing
76,000,000.00 76,000,000.00
activities
Subtotal of cash outflow from investing
475,753,422.49 461,172,028.97 377,303,814.52 519,426,270.93
activities
Net cash flows arising from investing
-348,933,044.52 -324,704,067.02 -265,542,125.56 -393,934,040.62
activities
III. Cash flows arising from financing
activities
Cash received from absorbing investment 4,900,000.00 639,016,550.34 633,626,550.34
Including: Cash received from absorbing
minority shareholders' equity investment by 4,900,000.00 5,390,000.00
subsidiaries
Cash received from loans 467,829,700.00 320,000,000.00 312,380,000.00 240,000,000.00
Other cash received concerning financing
22,976,815.56 1,200,000.00 25,795,827.68 720,332.73
activities
Subtotal of cash inflow from financing
495,706,515.56 321,200,000.00 977,192,378.02 874,346,883.07
activities
Cash paid for settling debts 162,890,000.00 60,000,000.00 201,480,000.00 107,600,000.00
Cash paid for dividend and profit distributing
71,104,725.59 68,187,672.87 42,474,168.02 37,733,665.57
or interest paying
Including: dividends or profit paid by 1,078,000.00
47
Dalian Refrigeration Co., Ltd. 2017 Annual Report
subsidiaries to minority shareholders
Other cash paid concerning financing
29,714,920.43 26,956,882.67 3,430,000.00
activities
Subtotal of cash outflow from financing
263,709,646.02 128,187,672.87 270,911,050.69 148,763,665.57
activities
Net cash flows arising from financing
231,996,869.54 193,012,327.13 706,281,327.33 725,583,217.50
activities
IV. Influence on cash due to fluctuation in
-2,383,390.47 161,228.59 1,724,849.71 -20,326.62
exchange rate
V. Net increase of cash and cash equivalents -326,545,416.67 -260,562,014.40 435,856,981.51 347,777,972.39
Add: Balance of cash and cash equivalents at
691,238,822.98 495,217,106.54 255,381,841.47 147,439,134.15
the period -begin
VI. Balance of cash and cash equivalents at
364,693,406.31 234,655,092.14 691,238,822.98 495,217,106.54
the period–end
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
48
Dalian Refrigeration Co., Ltd. 2017 Annual Report
CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’
EQUITY
Prepared by Dalian Refrigeration Company Limited 2017.01-12 Unit: RMB Yuan
2017.01-12
Owners’ equity attributable to parent company
Items Other Retained Minority Total of owners’
Lessen: Special Surplus equity equity
share capital Capital suplus comprehensive profits
treasury stock reserve reserve
income
I. balance at the end of last
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
year
1. Change of accounting
policy
2. Correction of errors in
previous period
3. Merger of enterprises under
the same control.
II. Balance at the beginning of
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
this year
III. Increase/ decrease of
amount in this year (“-” 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
means decrease)
(I) Total comprehensive
-24,370,321.41 200,759,820.17 3,796,231.64 180,185,730.40
incomes
(II) Capital increased and
-44,079,012.51 -44,310,485.60 4,900,000.00 5,131,473.09
reduced by owners
1. Common shares increased
-56,150,000.00 -44,310,485.60 4,900,000.00 -6,939,514.40
by shareholders
2. Capital increased by
holders of other equity -
instruments
3. Amounts of share-based
payments recognized in 12,070,987.49 12,070,987.49
owners’ equity
4. Other -
(III) Profit distribution 47,571,527.78 -108,749,183.58 -61,177,655.80
1. Withdrawing surplus
47,571,527.78 -47,571,527.78
public reserve
2. Withdrawing general risk
preparation.
3. Distribution to all owners
-61,177,655.80 -61,177,655.80
(shareholders)
4. Others
(IV) Internal carrying
244,710,623.00 -244,710,623.00
forward of owners’ equity
1. New increase of share
244,710,623.00 -244,710,623.00
capital from capital reserves
2. Convert surplus reserves
to share capital
3. Surplus reserves make up
losses
4. Others
(V) Specific reserve
1. Withdrawn for the period 2,016,809.74 2,016,809.74
2. Used in the period -2,016,809.74 -2,016,809.74
(VI) Other
IV. Balance at the end of this
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
period
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
49
Dalian Refrigeration Co., Ltd. 2017 Annual Report
2016.01-12
Owners’ equity attributable to parent company
Items Other Retained Minority Total of owners’
Lessen: Special Surplus equity equity
share capital Capital suplus comprehensive profits
treasury stock reserve reserve
income
I. balance at the end of last
360,164,975.00 630,264,991.95 39,503,800.00 589,988,118.05 580,769,740.16 525,925,066.25 66,257,548.71 2,713,866,640.12
year
1. Change of accounting
policy
2. Correction of errors in
previous period
3. Merger of enterprises under
23,634,942.60 26,053,545.85 49,688,488.45
the same control.
II. Balance at the beginning of
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
this year
III. Increase/ decrease of
amount in this year (“-” 251,611,583.00 392,421,782.30 28,112,056.00 -158,348,794.53 39,809,107.36 106,408,546.87 3,328,052.50 607,118,221.50
means decrease)
(I) Total comprehensive
-158,348,794.53 182,234,151.73 3,297,165.48 27,182,522.68
incomes
(II) Capital increased and
71,529,096.00 572,504,269.30 28,112,056.00 1,108,887.02 617,030,196.32
reduced by owners
1. Common shares increased
71,529,096.00 560,231,963.55 28,112,056.00 1,108,887.02 604,757,890.57
by shareholders
2. Capital increased by
holders of other equity
instruments
3. Amounts of share-based
payments recognized in 12,227,168.00 12,227,168.00
owners’ equity
4. Other 45,137.75 45,137.75
(III) Profit distribution 39,809,107.36 -75,825,604.86 -1,078,000.00 -37,094,497.50
1. Withdrawing surplus
39,809,107.36 -39,809,107.36
public reserve
2. Distribution to all owners
-36,016,497.50 -1,078,000.00 -37,094,497.50
(shareholders)
3. Others
(IV) Internal carrying
180,082,487.00 -180,082,487.00
forward of owners’ equity
1. New increase of share
180,082,487.00 -180,082,487.00
capital from capital reserves
2. Convert surplus reserves
to share capital
3. Surplus reserves make up
losses
4. Others
(V) Specific reserve
1. Withdrawn for the period 1,982,950.50 1,982,950.50
2. Used in the period -1,982,950.50 -1,982,950.50
(VI) Other
IV. Balance at the end of this
611,776,558.00 1,046,321,716.85 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
period
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
50
Dalian Refrigeration Co., Ltd. 2017 Annual Report
STATEMENT OF CHANGES IN OWNERS’ EQUITY
Prepared by Dalian Refrigeration Company Limited 2017.01-12 Unit: RMB Yuan
2017.01-12
Owners’ equity attributable to parent company
Items Lessen: Other Total of owners’
Other equity Special Surplus Retained equity
share capital Capital suplus treasury comprehensive
instrument preparation reserve profits
stock income
I. balance at the end of last
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
year
1. Change of accounting
policy
2. Correction of errors in
previous period
II. Balance at the beginning of
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
this year
III. Increase/ decrease of
amount in this year (“-” 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
means decrease)
(I) Total comprehensive
-24,106,655.33 183,632,980.88 159,526,325.55
incomes
(II) Capital increased and
10,629,637.63 -44,310,485.60 54,940,123.23
reduced by owners
1. Common shares increased
-1,441,349.86 -44,310,485.60 42,869,135.74
by shareholders
2. Capital increased by
holders of other equity
instruments
3. Amounts of share-based
payments recognized in 12,070,987.49 12,070,987.49
owners’ equity
4. Other
-108,749,183.5
(III) Profit distribution 47,571,527.78
8
-61,177,655.80
1. Withdrawing surplus
47,571,527.78 -47,571,527.78
public reserve
2. Distribution to all owners
-61,177,655.80 -61,177,655.80
(shareholders)
3. Others
(IV) Internal carrying
244,710,623.00 -244,710,623.00
forward of owners’ equity
1. New increase of share
244,710,623.00 -244,710,623.00
capital from capital reserves
2. Convert surplus reserves
to share capital
3. Surplus reserves make up
losses
4. Others
(V) Specific reserve
1. Withdrawn for the period 2,016,809.74 2,016,809.74
2. Used in the period -2,016,809.74 -2,016,809.74
(VI) Other
IV. Balance at the end of this
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
period
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
51
Dalian Refrigeration Co., Ltd. 2017 Annual Report
2016.01-12
Owners’ equity attributable to parent company
Items Lessen: Other Total of owners’
Other equity Special Surplus Retained equity
share capital Capital suplus treasury comprehensive
instrument preparation reserve profits
stock income
I. balance at the end of last
360,164,975.00 640,764,783.03 39,503,800.00 588,759,190.43 580,769,740.16 428,747,299.72 2,559,702,188.34
year
1. Change of accounting
policy
2. Correction of errors in
previous period
II. Balance at the beginning of
360,164,975.00 640,764,783.03 39,503,800.00 588,759,190.43 580,769,740.16 428,747,299.72 2,559,702,188.34
this year
III. Increase/ decrease of
amount in this year (“-” 251,611,583.00 395,350,378.51 28,112,056.00 -158,345,633.66 39,809,107.36 70,215,543.61 570,528,922.82
means decrease)
(I) Total comprehensive
-158,345,633.66 146,041,148.47 -12,304,485.19
incomes
(II) Capital increased and
71,529,096.00 575,432,865.51 28,112,056.00 618,849,905.51
reduced by owners
1. Common shares increased
71,529,096.00 563,160,559.76 28,112,056.00 606,577,599.76
by shareholders
2. Capital increased by
holders of other equity
instruments
3. Amounts of share-based
payments recognized in 12,227,168.00 12,227,168.00
owners’ equity
4. Other 45,137.75 45,137.75
(III) Profit distribution 39,809,107.36 -75,825,604.86 -36,016,497.50
1. Withdrawing surplus
39,809,107.36 -39,809,107.36
public reserve
2. Distribution to all owners
-36,016,497.50 -36,016,497.50
(shareholders)
3. Others
(IV) Internal carrying
180,082,487.00 -180,082,487.00
forward of owners’ equity
1. New increase of share
180,082,487.00 -180,082,487.00
capital from capital reserves
2. Convert surplus reserves
to share capital
3. Surplus reserves make up
losses
4. Others
(V) Specific reserve
1. Withdrawn for the period 1,982,950.50 1,982,950.50
2. Used in the period -1,982,950.50 -1,982,950.50
(VI) Other
IV. Balance at the end of this
611,776,558.00 1,036,115,161.54 67,615,856.00 430,413,556.77 620,578,847.52 498,962,843.33 3,130,231,111.16
period
Legal Representative: Ji Zhijian Chief Financial Official: Ma Yun Person in Charge of Accounting Organization: Mao Chunhua
52
Dalian Refrigeration Co., Ltd. 2017 Annual Report
III. Notes to the accounting statement
(All amounts in RMB Yuan unless otherwise stated)
I. General Information
Dalian Refrigeration Company Limited (the “Company”) was reorganized and reformed from
main part of former Dalian Refrigeration Factory. On December 8, 1993, the company went to the
public as a listed company at Shenzhen Stock Exchange Market. On March 20, 1998, the
company successfully went to the public at B share market and listed at Shenzhen Stock
Exchange Market with total share capital of RMB350,014,975Yuan.
According to the 13th meeting of the 6th generation of board, extraordinary general meeting for
2015 fiscal year and ' Restricted share incentive plan (draft)' , the Company planned to introduce
A ordinary shares to incentive objectives, which was 10,150,000 number of shares would be
granted to 41 share incentive objectives at granted price of RMB5.56Yuan per share. Up to March
12th ,2015, the Company received new added share capital of RMB10,150,000Yuan and the share
capital had been verified by DaHua Certified Public Accountants, and had been issued the capital
verification report Dahuayanzi [2015]000086 on March12th , 2015.
The general meeting for 2015 fiscal year held on 21st April 2016 approved the profit distribution
policy for the year of 2015, which agrees the profit distribution based on the total 360,164,975
number of shares as share capital, paid share dividend of 5 common shares for every 10 shares
through capital reserve. The policy stated above was fully implemented on 5th May 2016, and the
registered capital was altered to 540,247,462.00Yuan.
The 17thmeeting of the 6th generation of board was held on 4th June 2015 and the 2nd interim
shareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the proposal
of non-public offering of ‘A shares’. China’s Securities Regulatory Commission issued SFC
license [2015]3137 on 30th December, 2015, approving that new non-public offering cannot
exceeded 38,821,954 number of shares. The company implemented the post meeting procedures
for China’s Securities Regulatory Commission, which is regarding adjustment of bottom price and
the number of the shares issued after the implementation of profit distribution policy of 2015 in
May, 2016, and accordingly revised the upper limit of non-public offering of share to58,645,096
number of new ‘A shares’. The company issued the non-public offering of 58,645,096 number of
‘A shares’ to 7 investors, and as a result, the total number of shares of the company is changed to
598,892,558 shares, and the par value is 1yuan per share and the total share capital is
598,892,558.00Yuan. The share capital stated above has been verified by DaHua Certified Public
Accountants, and has been issued the capital verification report Dahuayanzi [2016]000457 on 31st
May 2016.
According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration Company
Limited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting 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
53
Dalian Refrigeration Co., Ltd. 2017 Annual Report
th th
targets’ on September 20 , 2016 and set 20 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.
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.
54
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Proportion of
Proportion of
Names of subsidiaries Types Level shareholding
votes（%）
（%）
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.
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
55
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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.
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.
56
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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 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
57
Dalian Refrigeration Co., Ltd. 2017 Annual Report
comprehensive income and profit appropriation shall be transferred to investment gain or loss
for the period in which the acquisition incurs, excluding the other comprehensive income from
the movement on the remeasurement of ne asset or liability of defined benefit plan.
When the Group partially disposes of the long –term equity investment in subsidiary without
losing the control over it, in the consolidated financial statements, the difference, between
disposals price and respective disposed value of share of net assets in the subsidiary since the
acquisition date or combination date, shall be adjusted for capital surplus or share premium, no
enough capital surplus, then adjusted for retained earnings.
When the Group partially disposes of the long –term equity investment in subsidiary and lose the
control over it, in preparation of consolidated financial statements, remaining share of interest in
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.
58
Dalian Refrigeration Co., Ltd. 2017 Annual Report
9. Translation of foreign currency
(1) Foreign currency transaction
Foreign currency transactions are translated at the spot exchange rate issued by People’s Bank of
China (“PBOC”) on the 1st day of the month when the transactions incurred. Monetary assets and
liabilities in foreign currencies are translated into RMB at the exchange rate prevailing at the
balance sheet day. Exchange differences arising from the settlement of monetary items are charged
as in profit or loss for the period. Exchange differences of specific borrowings related to the
acquisition or construction of a fixed asset should be capitalized as occurred, before the relevant
fixed asset being acquired or constructed is ready for its intended uses.
(2) Translation of foreign currency financial statements
The asset and liability items in the foreign currency balance sheet should be translated at a spot
exchange rate at the balance sheet date. Among the 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 classified as the assets initially
designated as fair value through profit and loss: it eliminates or significantly reduces a
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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 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,
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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:
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
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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
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
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value, dividends and interest paid related to such financial liabilities are recorded in profit or
loss for the period in which they are incurred.
Other financial liability is measured at amortized cost by adopting the effective rate method.
2) Financial liability derecognition
A financial liability is derecognized when the underlying present obligations or part of it are
discharged. Existing financial liability shall be derecognized and new financial liability shall
be recognized when the entity sign the agreement with creditor to undertake the new
financial liability in replacement of existing financial liability, and the terms of agreement
are different in substance. Any significant amendment to the agreement as a whole or part o
it is made, then the existing liabilities or part of it shall be derecognized and financial
liability after terms amendment shall be recognized as a new financial liability. The
difference between the carrying amount of the financial liability derecognized and the
consideration paid is recognized in profit or loss for the period.
3) Fair value measurement of financial asset and financial liability
If there is an active market for the financial assets and liability measured at fair value, the
fair value is measured at the quoted price in the active market; originally obtained or derived
financial assets or liability is measured at market trade price. If no active market exists for
the financial asset or liability, applicable valuation techniques is used for fair value
measurement. When valuating, the price in the most advantageous market shall be used for
fair value measurement and applicable valuation techniques which enough data 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
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portfolio
Judgment basis or amount standards of Top 5 of account receivables at year end
individually significant amounts
The accruing method of the receivables The bad debt provisions shall be accrued based on
with individually significant amounts the difference between current value of future cash
flow and the carrying amounts.
(2) Accounts receivable accrued bad debt provision by credit risk portfolio
The basis of portfolio
Accounts receivable due from subsidiaries
Inter-company
included in consolidated scope
Other than accounts receivable due from
subsidiaries included in consolidated scope and
Accounting aging individual receivable with significant amount
without impairment, use the accounting aging of
the receivables
The basis of bad debt provision
Inter-company Individual identified method
Accounting aging Age analysis method
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 accrued bad debt provision
Accrual reason
on the basis of portfolio can not reflect its risk characteristic
The bad debt provisions should be accrued based on the difference between
Accrual method
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.
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The inventories are processed on perpetual inventory system, and are measured at their actual
cost on acquisition. Weighted average cost method is taken for measuring the inventory
dispatched or used. Low value consumables and packaging materials is recognized in the income
statement by one-off method.
After yearend thorough inventory check, at the balance sheet date inventory impairment should be
provided or adjusted according to inventory category. For the finished goods, raw material held
for sale etc which shall be sold directly, the net realizable value should be confirmed at the
estimated selling price less estimated selling expenses and related tax and expenses. The raw
material held for production, its realizable value should be confirmed at the estimated selling price
of finished goods less estimated cost of completion, estimated selling expenses and related tax.
The net realizable value of inventories held for execution of sale contracts or labor contracts shall
be calculated based on the contract price. If the quantities of inventories in the Group are more
than quantities if inventories subscribed in the sales contracts, the net realizable value of the
excessive part of the inventories should be calculated based on the general selling price. When the
impairment indicators disappear, impairment provision shall be reversed and
13. Long-term equity investment
Long term equity investments are the investment in subsidiary, in associated company and in joint
venture.
Joint control is the contractual agreement sharing of control over an economic activity by all
participants or participants’ combination and decisions or policies relating to the operating activity
of the entity require the unanimous consent of the parties sharing the control.
Significant influence exists when the entity directly or indirectly owned 20% or more but less than
50% shares with voting rights in the investee company. If holding less than 20% voting rights, the
entity shall also take other facts or circumstances into accounts when judging any significant
influences. Factors and circumstances include: representation on the board of directors or
equivalent governing body of the investee, participation in financial or operating activities
policy-making processes, material transactions between the investor and the investee, interchange
of managerial personnel or provision of essential technical information.
When control exists over an investee, the investee is a subsidiary of an entity. The initial
investment cost for long-term equity investment acquired through business combination under
common control, is the carrying amount presented in the consolidated financial statements of the
share of net assets at the combination date in the acquired company. If the carrying amount of net
assets at the combination date in the acquired company is negative, investment shall be recognized
at zero.
If the equity of investee under common control is acquired by stages and business combination
incurs in the end, an entity shall disclose the accounting method for long-term equity investment
in the parent financial statement as a supplemental. For example, if the equity of investee under
common control is acquired by stages and business combination incurs in the end, and it’s a
bundled transaction, the entity shall regard all transactions as a one for accounting. If it’s not a
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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 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
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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 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
Category Useful life Estimated net Annual depreciation rate
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(years) residual 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 rate
(years) depreciation rate
(%)
1 Housing and Buildings 20-40 3%,5%,10% 2.25-4.85%
2 Machinery equipment 10-22 3%,5%,10% 4.09-9.7%
3 Transportation equipment 4-15 3%,5%,10% 6-24.25%
4 Electronic equipment 5 3%,5%,10% 18-19.4%
5 Others equipment 10-15 3%,5%,10% 6-9.7%
The Group should review the estimated useful life, estimated net residual value and depreciation
method at the end of each year. If any change has occurred, it shall be regarded as a change in the
accounting estimates.
16. Construction in progress
The criteria and time spot of constructions in progress’s being transferred to fixed assets:
Constructions in progress are carried down to fixed assets on their actual costs when completing
and achieving estimated usable status. The fixed assets that have been completed and reached
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
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manufacturing so to come into the expected condition of use or available for sale shall start to be
capitalized when expenditure for the assets is being occurred, borrowing cost has occurred,
necessary construction for bringing the assets into expected condition for use is in progress. The
borrowing costs shall stop to be capitalized when the assets come into the expected condition of
use or available for sale. The borrowing costs subsequently incurred should be recorded into profit
and loss when occurred. The borrowing costs should temporarily stop being capitalized when
there is an unusual stoppage of over consecutive 3 months during the purchase or produce of the
capitalized assets, until the purchase or produce of the asset restart.
The borrowing costs of special borrowings, deducting the interest revenue of unused borrowings
kept in the bank or the investment income from transient investment should be capitalized. The
capitalized amount of common borrowings should be calculated as follows: average assets
expenditure of the accumulated assets expenditure excess the special borrowing, multiplied by the
capital rate. The capital rate is the weighted average rate of the common borrowings.
18. Intangible assets
The intangible assets of the Group refer to land use right and software. For acquired intangible
assets, the actual cost are measured at actual price paid and relevant other expenses. The cost
invested into intangible assets by investors shall be determined according to the stated value in the
investment contract or agreement, except for those of unfair value in the contract or agreement.
Land use right shall be amortized evenly within the amortization period since the remised
date.ERP system 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.
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After assets impairment loss is recognized, depreciation and amortisation of the impaired asset
shall be adjusted in the following period so that the adjusted carrying amount(less expected
residual value) can be depreciated and amortised systematically within the remaining life.
When assessing goodwill for impairment, the carrying amount of goodwill shall be allocated
evenly to the assets group or assets portfolio. When testing the assets group or assets portfolio
including goodwill, if there is any indication of impairment , ignoring the goodwill and testing
the assets group or assets portfolio alone so to work out the recoverable amount and comparing to
its carrying amount and recognize the impairment loss. After that, testing the assets group or assets
portfolio with goodwill together, comparing the carrying amount of the assets group or assets
portfolio(including goodwill allocation) with recoverable amount , goodwill impairment shall be
recognized when the recoverable amount is lower than its carrying amount.
20. Long-term deferred expenses
Long-term deferred expenses of the Group refer to leasing expenses, redecoration expense and
others. The expenses should be amortized evenly over the beneficial period. If the deferred
expense cannot take benefit for the future accounting period, the unamortized balance of the
deferred expenses should be transferred into the current profit or loss. Leasing expenses will be
amortized within 10 years and 30years; redecoration expense and others will be amortized
within 3 years.
21. Employee benefits
Employee’s benefit comprises short-term benefit, post-employment benefit, termination benefit
and other long-term employee’s benefit.
Short-term benefit includes salary, bonus, allowance, welfare, social insurance, housing funds,
labour union expense, staff training expense, during the period in which the service rendered by
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
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from paying termination benefits.
Other long-term employee’s benefit refers to all other employee benefits other than short-term
benefit, post-employment benefit and termination benefit.
If other long-term employee’s benefit is qualified as defined contribution plan, contribution made
shall be recognized as liabilities accordingly for the period in which the service are rendered by
the employee and recognized in the profit or loss for the current period or relevant cost of assets.
Except other long-term employee’s benefit mentioned above, obligation arising from defined
benefit plan shall be recognized in the profit or loss for the current period or relevant cost of assets
in accordance with the period when the service are rendered by the employee.
22. Contingent liabilities
When the company has transactions such as commitment to externals, discounting the trade
acceptance, unsettled litigation or arbitration which meets the following criterion, provision
should be recognized: It is the Company's present obligation; carrying out the obligation will
probably cause the Company's economic benefit outflow; the obligation can be reliably measured.
Provision is originally measured on the best estimate of outflow for paying off the present
obligations, and to consider the risk, uncertainty, time value of monetary relevant to contingent
items. If the time value of monetary is significant, the best estimate will be determined by
discounted cash outflow in the future. At each balance sheet date, the book value of provision is
reviewed and adjustment will be made on the book value if there is any change, in order to reflect
the current best estimate.
When compensation from the 3rd party is expected for full or partial contingent liability
settlement, the compensation shall be recognized as an asset separately and measured at no more
than the book value of contingent liability.
23. Share based payment
An equity-settled share-based payment in exchange for the employee’s services is measured at the
fair value at the date when the equity instruments are granted to the employee. Such fair value
during the vesting period of service or before the prescribed exercisable conditions are achieved is
recognised as relevant cost or expense on a straight-line during the vesting period based on the
best estimated quantity of exercisable equity instruments, accordingly increase capital reserve.
A cash-settled share-based payment is measured at the fair value at the date at which the Group
incurred liabilities that are determined based on the price of the shares or other equity instruments.
If it is immediately vested, the fair value of the liabilities at the date of grant is recognised as
relevant cost or expense, and corresponding liabilities. If it is exercisable only when the vesting
period of service is expired or the prescribed conditions are achieve, the fair value of liabilities
undertaken by the Group are re-measured at each balance sheet date based on the best estimate of
exercisable situation.
The fair value of the liabilities is re-measured at each balance sheet date. Any changes are
recognised in the profit or loss for the year.
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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.
（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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
4) Cost incurred or expect to incur in the transaction can be measured reliably
Total service income shall be recognized according to the price agreed in the contract or
agreement which has been settled or to be settled unless the price is not fair. Service revenue for
the current period shall be recognized based on the figure worked out on the total income
multiply by the percentage of completion of the service after deducting the service revenue
recognized in the prior period at the balance sheet and accordingly recognized the cost based on
the figure worked out on the total cost multiply by the percentage of completion of the service
after deducting the service cost recognized in the prior period.
At the balance sheet date, if outcome of the service can not be estimated reliably, the treatment
shall apply respectively
1) Costs incurred may be probably recovered, revenue is recognized only to the extent of costs
incurred that are expected to be recoverable, and costs shall be recognized as an expense in
the period in which they are incurred
2) Costs incurred are not probable of being recovered, then these cost incurred are recognized
as an expense immediately, no revenue shall be recognized.
In the case that selling goods and rendering service are both included in the agreements or
contracts, when selling products and rendering service part can be separated and can be
measured separately, selling products will be treated as sales of products. Selling products
and rendering service will not be able to be distinguished, or can be distinguished but can't
be separately measured; selling products and rendering service will be all treated as
rendering service.
（4） Revenue from construction contract
1) When the result of the construction contract is able to be evaluated reliably at the balance
sheet date, the income and cost of the contract are recognized on completion percentage
basis.
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Total construction contract income shall be recognized according to the price agreed in the
contract or agreement which has been settled or to be settled unless the price is not fair.
Construction contract income for the current period shall be recognized based on the figure
worked out on the total contracted income multiply by the percentage of completion of the
construction after deducting the revenue recognized in the prior period at the balance sheet and
accordingly recognized the cost based on the figure worked out on the total expected cost
multiply by the percentage of completion of the construction after deducting the construction e
cost recognized in the prior period. Construction contract income is recognized to the extend
where the change of the contract, claim for compensation and bonus can bring the income and
can be measured reliably.
2) If the result of the construction contract is not able to be evaluated reliably, the treatment
shall apply respectively
① If contract cost maybe recovered, the income is recognized at the cost actually recovered,
and the cost of the contract is recognized as contract expenses of the current period when it
is occurred.
② If contract cost may not be recovered, the cost of the contract shall be recognized as contract
expenses when incurred, and no contract revenue shall be recognized.
3) In case the expected total cost is greater than the total income, the expected loss will be
recognized as expense of the current period immediately.
.25. Government grants
A government grant 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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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:
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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 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.
For any subsequently reversed amount, after the impairment loss is recognized for held for sale
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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 ; ⑵
recoverable 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: ⑴the 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 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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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.
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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.
. 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.
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Changes on accounting policy and reasons Approval progress Memo
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)
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%
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Tax entities EIT rate
Dalian Refrigeration Company 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. 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.
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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)
Items Opening balance
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Booking balance Provision
Booking balance
Amount % Amount %
Accounts
receivable with
significant
individual amount
and separate bad
debt provision
Accounts
receivable with bad
debt provision
958,174,419.26 100.00 151,064,459.72 15.77 807,109,959.54
based on the
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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 Contract is not fully
6,395,198.00 1-2 years
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
identified bad debt
provision based on 64,905,774.51 100.00 7,648,317.94 11.78 57,257,456.57
the characters of
credit risk portfolio
87
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
% 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.
88
Dalian Refrigeration Co., Ltd. 2017 Annual Report
% of
Closing
Closing the
Name Category Aging Balance of
Balance total
Provision
OR
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
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
89
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Item Closing Balance Opening Balance
Booking Carrying Booking Carrying
Provision Provision
balance amount balance amount
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
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)
Cash
Investee Provision for impairment
dividend
91
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Opening Closing
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
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.
92
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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 and
Refrigeration 157,425,641.15 5,991,975.67 1,600,000.00 161,817,616.82 157,425,641.15
(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 (Dalian) 217,687,237.26 14,163,570.31 4,800,000.00 227,050,807.57 217,687,237.26
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 (Dalian) 484,003,393.99 44,000,847.56 38,000,000.00 490,004,241.55 484,003,393.99
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 769,463.27 661,677.89 1,431,141.16 769,463.27
Air-conditioning
Machinery Co., Ltd.
Dalian Fuji Bingshan
Vending Machine 160,787,194.81 26,894,028.83 7,840,000.00 179,841,223.64 160,787,194.81
Co., Ltd.
Changzhou Jingxue
Refrigeration 151,527,707.42 14,564,351.32 166,092,058.74 151,527,707.42
Equipment Co., Ltd.
93
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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 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 Co., 6,132,033.33 -45,247.34 6,086,785.99 6,132,033.33
Ltd.
Wuhan Sikafu Power
Control Equipment 6,156,369.01 -929,316.68 5,227,052.33 6,156,369.01
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 Consulting 49,000,000.00 -1,356,255.88 47,643,744.12
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 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.
、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.
94
Dalian Refrigeration Co., Ltd. 2017 Annual Report
12. Investment property
(1) Investment property measured as cost method
Property& Construction in
Item Land-use-rights Total
progress
Building
I. Initial Cost
1. Opening Balance 30,031,254.35 30,031,254.35 30,031,254.35
2. Increase 162,707,850.49 24,391,511.82 187,099,362.31 162,707,850.49
(1) Outsourcing
(2) Transferred from
Construction in 162,707,850.49 24,391,511.82 187,099,362.31 162,707,850.49
progress
3. Decrease
(1) Disposal
(2)Transferred to other
4. Closing Balance 192,739,104.84 24,391,511.82 217,130,616.66 192,739,104.84
II. Accumulated
Depreciation
1. Opening Balance 1,425,601.41 1,425,601.41 1,425,601.41
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
98,467,340.31 9,390,732.06 107,858,072.37 98,467,340.31
business combination
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance 103,390,779.09 9,878,562.30 113,269,341.39 103,390,779.09
III. Impairment
Reserve
1. Opening Balance
2. Increase
(1)Provision or
amortization
3. Decrease
(1) Disposal
(2) Transferred to other
4. Closing Balance
IV. Book Value 95
1. Closing book value 89,348,325.75 14,512,949.52 103,861,275.27 89,348,325.75
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
(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
96
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Transportati
Property& Machinery Other
Item on Equipment Total
buildings Equipment
Equipment
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
(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
97
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Transportati
Property& Machinery Other
Item on Equipment Total
buildings Equipment
Equipment
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
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 661,185.00 1,700,705.75 2,361,890.75
98
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Decrease
Opening Closing
Name Increase Transfer to Other
Balance Balance
fixed assets decrease
furniture
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
(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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Land use
Item Knowhow Others Total
right
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
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 310,451.57 310,451.57
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Increased during Decreased during
current year current year
Opening Closing
Name Enterprises
Balance Balance
merger Other Disposal Other
increase
Security Leisure
Industrial
Engineering Co.,
Ltd
Total 1,750,799.49 1,750,799.49
(2) Goodwill impairment provision
Goodwill calculation method:
In the year 2015, the book value of equity investment of Dalian Niweisi LengNuan Technology Co.,
Ltd exceeds the fair value of the proportion of the acquired company’s identifiable net asset. The
difference between the book value of equity investment of 48, 287,589.78 Yuan and the identifiable
net asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltd of 46,847,241.86
Yuan on the acquisition date of July 31st 2015 is recognized as goodwill of 1,440,347.92 Yuan on
the group consolidated financial report at the end of the year.
In the year 2016, the company purchases shares of Dalian BingshanBaoan Leisure Industry Co., Ltd
and gains control. The transferred price is based on the net asset of Dalian BingshanBaoan Leisure
Industry Co., Ltd on June 30th 2016. Negotiated with Dalian BingshanBaoan Leisure Industry Co.,
Ltd’s shareholder Baoan Water Project (China) Limited Company, the transfer price is the
combination cost on the purchasing date which is 5,359,548.42 Yuan, the fair value of proportion of
Dalian BingshanBaoan Leisure Industry Company’s identifiable net asset is 5,049,096.85 Yuan on
the purchasing day, therefore, goodwill is 310,451.57Yuan on the purchasing date.
The book value of goodwill from business combination of Dalian Niweisi LengNuan 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
Golf 489,500.00 16,500.00 473,000.00
Technology
entrance fee of cold 1,867,125.00 280,068.75 1,587,056.25
and heat machinery
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Opening Other Closing
Item Increase Amortization
Balance Decrease Balance
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Year Closing Balance Opening Balance Notes
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
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
Project is uncompleted contract is
Binzhou Shanfu Refrigeration 9,069,804.92 not finished
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Reason of unpaid or not carried
Name of company Closing Balance
forward
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Item Opening Increase Decrease Closing
Balance Balance
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
Item Closing Balance Opening Balance
Ordinary share dividend 863,516.60 863,516.60
Total 863,516.60 863,516.60
26. 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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Reason of unpaid or not
Name of company Closing Balance
carried forward
Total 21,026,106.00
27. 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.
28. 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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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.
29. Share capital
Item Opening Increase/decrease（+、-） Closing
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
balance New share Transfer from balance
Share Subtotal
issued capital others
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.
30. 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
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 Balance Increase Decrease Closing
Items
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.
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
income tax tax minority
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
34. 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.
35. 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
Share dividends
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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.
36. 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
37. 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
38. 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
Other expense 306,521.85 1,406,702.18
Total 113,422,315.47 91,678,326.90
39. Administrative expenses
112
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
40. 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
41. 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
42. Investment income
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 27,467,019.93 27,629,395.44
113
Dalian Refrigeration Co., Ltd. 2017 Annual Report
for sale
Total 180,132,262.51 172,600,178.47
43. 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
44. 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
45. 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
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 305,038.00
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Item 2017 2016 With asset/income
fund
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.
46. 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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
47. 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
48. Other comprehensive income
Refer to the note VI.33 other comprehensive income for details.
49. Notes to cash flow statement
(1) Cash receipt/payment of other operating/investing/financing activities
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
47. 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
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.
48. 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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Item Closing Balance Exchange Closing Balance
(foreign currency) Rate (RMB)
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
（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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Main Shareholding
Registered Business (%) Obtaining
Name of subsidiaries business
address nature method
address Direct Indirect
Dalian Bingshan Group
Dalian Dalian Installation 100 Establish
Engineering Co., Ltd.
Dalian Bingshan Group
Dalian Dalian Trading 100 Establish
Sales Co., Ltd.
Dalian Bingshan
Air-conditioning Dalian Dalian Manufacturing 70 Establish
Equipment Co., Ltd.
Dalian Bingshan JiaDe
Dalian Dalian Manufacturing 100 Establish
Automation Co., Ltd.
Dalian Bingshan Lingshe
Quick Freezing Dalian Dalian Manufacturing 100 Establish
Equipment Co., Ltd.
Wuhan New World
Refrigeration Industrial Wuhan Wuhan Manufacturing 100 Acquisition
Co., Ltd.
Bingshan Technical
Service （Dalian） Dalian Dalian Services 100 Establish
Co.,Ltd.
Dalian Xinminghua
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 Installation
Wuhan Wuhan 100 Establish
Refrigeration Engineering
Co., Ltd
Ningbo Bingshan
Air-conditioning
Ningbo Ningbo Installation 51 Establish
Refrigeration Engineering
Co., Ltd
Dalian Bingshan Baoan
Dalian Dalian Installation 100 Acquisition
Leisure Industrial
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Main Registered Business Shareholding Obtaining
Name of subsidiaries
business address nature (%) method
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.
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.
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
2017
Items 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：
Items 2016
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Jiangsu Dalian Fuji Keinin-Grand
Panasonic
Jingxue Bingshan Ocean Thermal
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
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
（3） Summary financial information of insignificant affiliated companies
Items 2017 2016
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
X. Disclosure of Fair Value
1. Amount and measurement level of the assets and liabilities measured at fair value at the year
end
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Fair value at the year end
Items First level Second level Third level
measurement of fair measurement of measurement Total
value fair value of fair value
Financial assets Continuously 531,653,458.05 531,653,458.05
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.
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
130
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
131
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
Affiliated
Dalian Fuji Bingshan Vending Machine Co., Ltd
Affiliated
MHI Bingshan Refrigeration (Dalian) Co.,Ltd.
Dalian Fuji Iceberg Vending Machine Sales Co., Affiliated
Ltd
Affiliated
Jiangsu Jingxue Freezing Equipment Co., Ltd.
Panasonic Cooling Machine system (Dalian) co., Affiliated
Ltd
Affiliated
Dalian Bingshan Metal Technology Co.,Ltd
Dalian Bingshan Group Mangement and Consulting Affiliated
Co.,Ltd
Affiliated wholly owned subsidiary of the
Wuhan LanNing energy technology co., Ltd
Company
Affiliated wholly owned subsidiary of the
Wuhan Sikafu Power Control Equipment Co., 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
132
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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.
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.
133
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
Company Office 97,297.30 98,742.86
Group Co., Ltd.
Limited
Dalian MHI Bingshan
Refrigeration
Company Refrigeration Plant 4,000,000.00 4,100,000.00
Limited (Dalian) Co.,Ltd.
134
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Category of assets 2017Lease 2016 Lease
Lessor Lessee
rent out Income Income
Dalian Dalian Bingshan
Refrigeration Huigu
Company Land and property 4,400,000.00
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
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
135
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Category of 2017 Lease 2016 Lease
Lessor Lessee
assets rent in fees fees
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
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
136
Dalian Refrigeration Co., Ltd. 2017 Annual Report
(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
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
137
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
138
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Notes MHI Bingshan
Refrigeration 1,711,379.41 19,805,806.72
receivable (Dalian) Co.,Ltd.
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
139
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
the period
Total equity instruments exercised by the company none
140
Dalian Refrigeration Co., Ltd. 2017 Annual Report
Items Situation
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
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
141
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
142
Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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.
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
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2017
Items Northeast Central
East China Offset Total
China China
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
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
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Closing Balance
Item Booking balance Provision Booking
Amount % Amount % balance
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
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
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Closing Balance
Aging Provision for bad Drawing Proportion
Accounts receivable
debts (%)
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 — —
(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
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Closing
% of the
Company Closing Balance Aging Balance of
total AR
Provision
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
Security Over 5
development zone 112,985.68 3.13 112,985.68
deposit years
funding agencies
and institutions
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Closing
Closing % of the
Name Category Aging Balance of
Balance total OR
Provision
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
3. Long-term equity investments
(1) Category of long-term equity investments
Closing Balance Opening Balance
Item
Closing Balance Provision Book Value Opening Balance Provision Book Value
Investment of subsidiaries 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
Dalian Xinminghua Electronics Co., Ltd. 43,766,243.72 43,766,243.72
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Subsidiaries names Opening Balance Increase Decrease Closing Balance
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
MHI Bingshan
Refrigeration (Dalian) 13,018,792.05 340,712.76 13,359,504.81
Co.,Ltd.
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Increase/Decrease
Gains and Provision
Provision
losses Adjustment of Changes for
Beginning Cash bonus or for
Investee recognized other of impairment Ending balance
balance Increased Decreased profits Others impairment
under the comprehensive other of the
announced at year end
equity income equity current
method period
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.
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
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
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Dalian Refrigeration Co., Ltd. 2017 Annual Report
Section 12 Reference Documents
1. The accounting statements bearing the signatures and seals of the legal representative, the
financial majordomo and the accountants in charge.
2. The original copy of the auditor's report bearing the seal of the certified public accountants and
the signatures and seals of the certified accountants.
3. The original copies of all the Company's documents and the original copies of the bulletins
published on the newspapers designated by the China Securities Regulatory Commission in the
report period.
4. Time for reference: from Monday to Friday 8:00 - 11:30 (am) 1:00 - 4:30 (pm)
Liaison persons: Mr. Song Wenbao，Ms Du Yu
Tel: 0086-411-87968130
Fax: 0086-411-87968125
Dalian Refrigeration Company Limited
20, April, 2018
158
