Shandong Zhonglu Oceanic Fisheries Co., Ltd
Auditor's Report
SCPAR (2022) No. 2348
Shanghai Certified Public Accountants (Special General Partnership)
Shanghai China
Auditor's Report
SCPAR (2022) No. 2348
Date: April 19, 2022
To the Shareholders of Shandong Zhonglu Oceanic Fisheries Co., Ltd:
I. Opinion
We have audited the financial statements of Shandong Zhonglu Oceanic Fisheries Co., Ltd
(hereafter referred to as “the Company”), which comprise the consolidated and the
Company's balance sheets as at December 31, 2021, the consolidated and the Company's
statements of income, the consolidated and the Company's statements of cash flows and the
consolidated and the Company's statements of changes in equity for the year then ended, and
notes to the financial statements.
In our opinion, the accompanying financial statements give a true and fair view of the
financial position of the Company as at December 31, 2021, and of its financial performance
and cash flows for the year then ended in accordance with Accounting Standards for Business
Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with Chinese Certified Public Accountants Auditing
Standards. 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 the Company in accordance with the Code of Ethics for Chinese Certified
Public Accountants and have fulfilled our other ethical responsibilities in accordance with the
Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
1
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 opinion thereon, and we do not provide a separate opinion on these matters.The key
audit matters identified in our audit are as follows:
A. Revenue recognition
1. The Matter
As disclosed in note 4.37the policy of revenue accounting and note 6.34 of amount of
revenue.
In 2021, Amount of operating revenue of the Company is RMB 93,428.44 million , Since
revenue is a key indicator of the company's profit, there is an inherent risk of misstatement
whether revenue is based on real transactions and whether it is included in the appropriate
accounting period, so we identify revenue recognition as a key audit matter.
2. Audit response
Our audit procedures aimed at Revenue recognition are mainly include:
(1) Understand, evaluate and test the design and implementation of internal control related to
revenue recognition and to conduct a walk through test for company, Check whether the
relevant internal control system is effectively implemented;
(2) Review revenue recognition principles and methods,Combine the essence of the
company's business with “the five-step method”, Check and analyze contract signing methods
and contents under different business models, Analyze the rights and obligations of the
contracting parties, Check the performance obligations to identify the performance
obligations within a period of time and at a certain point in the performance of the
performance of the judgment in accordance with the provisions of the accounting standards
for enterprises;
(3) Check the authenticity of the revenue, check the revenue confirmation basis such as: sales
contract, outgoing order, value statement or statement, transportation order, customs
declaration data, bill of lading, etc., obtains your company's credit policy and interview sales
department personnel Whether the credit policy of major customers has been changed this
year, and assess whether your company’s revenue recognition meets the requirements of the
Accounting Standards for Business Enterprises based on the post-period collection of
2
accounts receivable;
(4) Perform a cut-off test to check whether there is an intertemporal income by taking a
sample of revenue transactions recorded around the balance sheet date;
(5) Implement confirmation procedures for major customers, extract enough samples to
confirm the amount and balance of receivables and advance receivables, and confirm the
rationality of revenue recognition.
B. The impairment of inventory
1. The Matter
As disclosed in note 4.15 the policy of inventory accounting and note 6.6 inventory book
balance and provision for diminution in value of inventories, the Company held RMB
28,459.48million of inventory book balance as well as RMB 749.94million of impairment
reserve,and RMB 27,709.54 million of the carrying amount,of which accounted for 19.79% of
total assets at December 31 2021. In view of the significant amount of inventory, and the
process of making allowances for falling prices of inventories involves significant
management judgement, we identified the book balance and provision for diminution in value
of inventories as a key audit matter.
2. Audit response
Our audit procedures aimed at inventory impairment preparations are mainly include:
(1) Understand, evaluate and test the design and implementation of internal control related to
inventory management and impairment reserve for company;
(2) Supervise the inventory, check the quantity and status of the inventory and the expiration
date of the product; And in the follow-up audit process checked the sales and collection of
inventory;
(3) Obtain the age list of inventory at the end of period,and conduct an analytical review of
the long-age inventory to confirm whether the provision for inventory depreciation is
reasonable;
(4) Check the implementation of relevant accounting policies and the changes in the
inventory impairment of the previous year, and analyze whether the provision for inventory
impairment is sufficient. obtain the latest product sales prices before and after the balance
sheet date, for the inventory that has been sold after the balance sheet date We took a sample
3
and compared the actual selling price of the sample with the estimated selling price;.
(5) Obtain management's relevant basis for impairment calculation,check the critical data and
recalculate to evaluate the accuracy of management's impairment calculation process, and
review whether the financial statements are adequately and appropriately disclosed.
IV. Other Information
The directors of the Company are responsible for the other information. The other
information comprises all of the information included in the annual report other than 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 this other information, we are required to report that fact. We have nothing to report in
this regard.
V. Responsibilities of the Directors and Those Charged with Governance for the
Financial Statements
The directors of the Company are responsible for the preparation of financial statements that
give a true and fair view in accordance with Accounting Standards for Business Enterprises,
and for such internal control as the directors determine is necessary to enable the preparation
of the financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are responsible for assessing the
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 directors either
intend to liquidate the Company or to cease operations or have no realistic alternative but to
do so.
Those charged with governance are responsible for overseeing the Company’s financial
4
reporting process.
VI. 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 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.
As part of an audit in accordance with auditing standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
A. 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 opinion. 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.
B. Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
C. Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
D. Conclude on the appropriateness of the directors’ 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 the 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
or, if such disclosures are inadequate, to 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 the Company to cease to continue as a going concern.
E. Evaluate the overall presentation, structure and content of the financial statements, and
whether the financial statements represent the underlying transactions and events in a manner
5
that achieves fair presentation.
F. Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Company to express an opinion on the financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our 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, 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
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 where applicable, related safeguards.
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 precludes public disclosure about the matter or when, in
extremely 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.
C.P.A
Zhang Xiaorong
Ma Haijun
Shanghai Certified Public Accountants (Special General Partnership)
Shanghai, China
6
Consolidated Balance Sheet
Dec 31,2021
Prepared by：Shandong Zhonglu Oceanic Fisheries Co., Ltd. Unit：RMB Yuan
Ite Note As at As at Ite Note As at As at
Current assets: m 31/12/2021 31/12/2020 Current liabilities: m 31/12/2021 31/12/2020
Cash at bank and on hand 6.1 210,573,782 255,811,982 Short-term loans 6.1 10,013,291 41,268,275
Financial assets held for trading 6.2 .49 .215,000,000. Financial liabilities held for trading 6 .67 .50
Derivative financial assets 00 Derivative financial liabilities
Notes receivable Notes payable
Accounts receivable 6.3 37,806,586 66,263,029 Accounts payable 6.1 50,121,395 69,897,839
Receivables for financing .91 .81 Advances from customers 7 .04 .19
Prepayments 6.4 18,683,750 17,764,804 Contract liabilities 6.1 13,220,675 12,453,619
Other receivables 6.5 .613,596,759. .552,293,236. Employee benefits payable 6.1 .60 41,862,349
Including:Interest receivable 88 85 Taxes and surcharges payable 6.2 .064,258,871 .062,825,413.
Dividends receivable Other payables 6.2 9,774,065. 8,487,724.
Inventories 6.6 277,095,357 338,885,629 Including:Interest payable 1 87 32
Contract assets .75 .06 Dividends payable
Held-for-sale assets Held-for-sale liabilities
Non-current assets due within one year Non-current liabilities due within one year 6.2 4,909,314.
Other current assets 6.7 20,633,592 14,567,946 Other current liabilities 6.2 6514,100. 108,248.
Total current 568,389,829 700,586,629 Total current 3 137,722,425 176,903,470
Non-current assets: assets .87 .30 Non-current liabilities: liabilities .95 .48
Debt investments Long-term loans 6.2 149,393,532
Other debt investments Bonds payable 4 .37
Long-term receivables Including: Preference shares
Long-term equity investments Perpetual loans
Other equity instrument investments Lease liabilities 6.2
Other non-current financial assets Long-term account payable 5
Investment property 6.8 30,108,932 31,435,009 Long-term employee benefits payable 6.2 1,026,222. 1,243,452.
Fixed assets 6.9 476,894,877 506,290,822 Anticipation liabilities 6 58 93
Construction in process 6.1 .56 .703,705,815. Deferred income 6.2 13,691,209 14,488,797
Productive biological assets 0 .75 70 Deferred tax liabilities 6.1 2,777,589.
.07 .241,451,751.
Oil and gas assets Other non-current liabilities 4 45 23
Right-of-use assets 6.1 2,354,943. Total non-current liabilities 166,888,553 17,184,001
Intangible assets 6.1 12,110,397 12,811,879 Total .47 194,087,471
Development expenditures 2 .72 .55 Shareholders' equity: liabilities .42 .88
Goodwill Share capital 6.2 266,071,320 266,071,320
Long-term deferred expenses 6.1 220,738. 317,044. Other equity instruments 8 .00 .00
Deferred tax assets 6.1 1,644,945. 1,744,636. Including: Preference shares
Other non-current assets 6.1 143,137,267 2,719,397. Perpetual loans
Total non-current 5 .24 559,024,605 Capital reserve 6.2 284,054,997 284,054,997
assets .84 .59 Less:treasury shares 9 .75 .75
Other comprehensive income 6.3 -18,256,201 -12,783,539
Special reserve 6.3 .98232,783. .13
Surplus reserve 6.3 21,908,064 21,908,064
Undistributed profit 6.3 379,524,911 343,997,929
Equity attributable to parent company 3 933,535,874 903,248,772
Minority interests .90 .52
Total 1,095,523,98 1,065,523,76
Total of assets 1,400,134,96 1,259,611,23 Total liabilities and equity 1.29 3.01
Legal representativeLegal：Lu Lianxing 0.71Person in charge4.89accounting function：Fu Chuanhai Person in charge of accounting department：Lei Lixin 4.89
Consolidated Statement of Income
For the year ended 31
December 2021
Prepared by：Shandong Zhonglu Oceanic Fisheries Co., Ltd. Unit：RMB Yuan
Ite Not Year Year Ite Not Year Year
m e ended ended m e ended ended
1.Total operating income 6.3 31/12/202
934,284,40 31/12/202 Categorized by ownership
966,213,01 31/12/202 31/12/202
46.3 13.21 09.66 1 0
Including: Operating income 934,284,40 966,213,01 1. Net profit attributable to parent company 35,526,98 29,537,49
2.Total operating cost 4 3.21
933,025,96 9.66
956,907,16 2. Profit/loss attributable to minority shareholders 2.23
1,126,88 8.13
9,019,31
Less: Operating costs 6.3 7.92
849,588,13 9.77
878,417,35 6. Other comprehensive income net of tax 6.4 5.04
-6,886,43 6.73
-18,169,68
Taxes and surcharges 46.3 0.75
2,170,92 4.27
2,324,08 Total comprehensive income attributable to shareholders of parent 8 1.99
-5,472,66 1.99
-13,490,69
Selling and distribution expenses 56.3 6.08
3,548,61 6.97 company
3,669,75 (1) Comprehensive income not to be reclassified to profit or loss 2.85 5.30
General and administrative expenses 66.3 9.96
64,478,32 9.70
49,476,82 1) Changes in remeasurement of defined benefit obligations
Research and development expenses 76.3 0.35765,456 1.8657,924. 2) Other comprehensive income not to be reclassified to profit or loss in
Finance expenses 86.3 .70
12,474,51 28
22,961,22 3)equity methodchanges in other equity instrument investments
Fair value
Including:Interest expenses 9
6.3 4.08
1,548,60 2.69
2,264,46 4) Fair value changes in the enterprise's own credit risk
Interest income 96.3 0.65
569,224 8.56
666,925 5)Others
Add: Other income 96.4 .71
40,916,41 .40
24,237,44 (2) Comprehensive income to be reclassified to profit or loss 6.4 -5,472,66 -13,490,69
Investment income ("-" for loss) 06.4 8.36-77,554 7.1415,287. 1) Other comprehensive income to be reclassified to profit or loss in 8 2.85 5.30
Including: Investment income from associates and joint 1 .43 67 equity method from fair value changes of other debt instruments
2) Gain or loss
venturesIncome from derecognition of financial assets measured 3) The amount of financial assets reclassified to other comprehensive
at amortised gains
Net exposure hedgingcost ("-" for loss) income impairment provision of other debt investment
4) Credit
Gain from fair value changes ("-" for loss) 5) Cash flow hedging reserve
Credit impairment losses ("-" for loss) 6.4 1,631,06 -324,078 6) Currency translation difference 6.4 -5,472,66 -13,490,69
Impairment on assets ("-" for loss) 26.4 4.94
-7,167,43 .98
-2,613,58 7) Others 8 2.85 5.30
Gains from disposal of assets ("-" for loss) 36.4 8.13
3,494,32 3.9152,840. Other comprehensive income attributable to minority share-holders, net 6.4 -1,413,76 -4,678,98
3. Operating profits ("-" for loss) 4 6.93
40,055,25 06
30,673,76 of7. Total comprehensive income
tax 8 9.14
29,767,43 6.69
20,387,13
Add: Non-operating income 6.4 2.96884,810 1.87
10,758,56 (1) Total comprehensive income attributable to shareholders of parent 5.28
30,054,31 2.87
16,046,80
Less:Non-operating expenses 56.4 .2586,336. 9.39
658,478 companycomprehensive income attributable to minority shareholders
(2) Total 9.38
-286,88 2.83
4,340,33
4. Profit before tax ("-" for loss) 6 72
40,853,72 .99
40,773,85 8. Earnings per share 4.10 0.04
Less:income tax expenses 6.4 6.49
4,199,85 2.27
2,217,03 (1) Basic earnings per share 0.13 0.11
5. Net profit ("-" for net loss) 7 9.22
36,653,86 7.41
38,556,81 (2) Diluted earnings per share 0.13 0.11
Categorized by going concern basis 7.27 4.86
1. Profit or loss from continuing operations 36,653,86 38,556,81
2. Profit or loss from discontinued operations 7.27 4.86
If an enterprise merges under the same control in the current period, the net profit realized by the merged party before the merger is 0.00 RMB yuan, and the net profit realized by the merged party in the previous
period is 0.00 RMB yuan.
Legal representativeLegal：Lu Lianxing Person in charge of accounting function：Fu Chuanhai Person in charge of accounting department：Lei Lixin
Consolidated Statement of Cash Flows
For the year ended 31
December 2021
Prepared by：Shandong Zhonglu Oceanic Fisheries Co., Ltd. Unit：RMB Yuan
Ite Not Year Year Ite Not Year Year
m e ended ended m e ended ended
1. Cash flows from operating activities 31/12/202 31/12/202 3. Cash flows from financing activities: 31/12/202 31/12/202
Cash received from sales and services 1975,952,42 0961,184,99 Cash received from investments by others 1 0
Taxes and surcharges refunds 2.42
38,193,93 5.14
53,868,30 Including: cash received by subsidiaries from minority shareholders'
Cash received related to other operating activities 6.4 0.62
41,622,89 0.74
29,713,13 investments
Cash received from borrowings 227,138,47 51,867,03
Total cash inflows from operating activities 9 2.30
1,055,769,2 0.80
1,044,766,4 Cash received related to other financing activities 6.01 3.47
Cash paid for goods and services 45.34
690,728,21 26.68
729,377,07 Total cash inflows from financing activities 227,138,47 51,867,03
Cash paid to and for employees 8.89
165,791,07 2.80
169,022,38 Cash repayments for debts 6.01
105,644,25 3.47
62,615,30
Taxes and surcharges cash payments 2.24
7,890,85 1.13
12,515,54 Cash payments for distribution of dividends, profit and interest 5.24
2,311,23 4.72
2,159,58
Cash paid related to other operating activities 6.4 0.24
21,463,27 7.83
20,605,71 expenses
Including: dividends or profit paid by subsidiaries to minority 2.88 3.81
Total cash outflows from operating activities 9 9.15
885,873,42 4.27 shareholders
931,520,71 Cash paid related to other financing activities 6.4 3,627,73
Net cash flows from operating activities 0.52
169,895,82 6.03
113,245,71 Total cash outflows from financing activities 9 4.36
111,583,22 64,774,88
2. Cash flows from investing activities： 4.82 0.65 Net cash flows from financing activities 2.48
115,555,25 8.53
-12,907,85
Cash received from withdraw of investments 5,000,00 5,000,00 4. Effect of foreign exchange rate changes on cash and cash equivalents 3.53
-4,758,72 5.06
-12,686,37
Cash received from investment income 0.0049,972. 0.0015,287. 5. Net increase in cash and cash equivalents 8.85
-46,086,30 9.14
71,131,97
Net cash received from disposal of \property, plant and 60 67 5.94 3.21
5,119,124 21,653,74 Add: beginning balance of cash and cash equivalents 255,735,61 184,603,63
equipement,intangible assets and other long-term assets .64 7.69 1.93 8.72
Net cash received from disposal of subsidiaries and other business 6. Ending balance of cash and cash equivalents 209,649,30 255,735,61
units received related to other investing activities
Cash 5.99 1.93
Total cash inflows from investing activities 10,169,09 26,669,03
Cash paid for property, plant and equipement,intangible assets and 7.24
336,947,75 5.36
33,188,53
other payments for investments
Cash long-term assets 2.68 8.60
10,000,00
Net cash paid for acquiring subsidiaries and other business units 0.00
Cash paid related to other investing activities
Total cash outflows from investing activities 336,947,75 43,188,53
Net cash flows from investing activities 2.68
-326,778,65 8.60
-16,519,50
5.44 3.24
Legal representativeLegal：Lu Lianxing Person in charge of accounting function：Fu Chuanhai Person in charge of accounting department：Lei Lixin
Consolidated Statement of Changes in Equity
For the year ended 31
December 2021
Prepared by：Shandong Zhonglu Oceanic Fisheries Co., Ltd. Unit：RMB Yuan
Year 2021
Equity attributable to shareholders of parent company
Ite Other equity Other Total
m Less:trea General Undistrib Minority
Share instruments
Prefere Perpet Other Capital compreh Special Surplus Others Sub-tota owners'
sury risk uted interests
capital nce ual reserve reserve reserve l equity
s ensive
shares -12,783,5 profit
preparat 343,997,9
1. Ending balance of last year 266,071,3 share loans 284,054,9 21,908,0 903,248,7 162,274,9 1,065,523,
income ion
Add: Impact from changes in accounting 20.00 97.75 39.13 64.19 29.71 72.52 90.49 763.01
s
policies from corrections of errors in prior
period combination under common control
Others
2. Beginning balance of current year 266,071,3 284,054,9 -12,783,5 21,908,0 343,997,9 903,248,7 162,274,9 1,065,523,
3. Movement for current year("-" for decrease） 20.00 97.75 39.13 232,78 64.19 29.71 72.52 90.49 763.01
(1) Total comprehensive income 62.85 3.00 82.23 02.38 4.10 18.28
(2) Shareholder's contributions and withdrawals 62.85 82.23 19.38 4.10 35.28
of captial stock contributed by shareholders
2) Capital contributed by other equity
instruments holders recorded in
shareholder's equity
(3) Profits distribution
1) Appropriation of surplus reserve
2) Distribution to shareholders
3) Others
(4) Internal transfer within shareholder's equity
1) Conversion of capital reserve into share capital
2) Conversion of surplus reserve into share
capital of loss by surplus reserve
4) Change of defined benefit obligations carried
forward tocomprehensive income carried forward
to retained earnings
(5) Special reserve 232,78 232,78 232,78
1) Accrual of special reserve 3.00 3.00 3.00
2) Utilization of special reserve 0.51 0.51 0.51
(6) Others 7.51 7.51 7.51
4. Ending balance of current year 266,071,3 284,054,9 -18,256,2 232,78 21,908,0 379,524,9 933,535,8 161,988,1 1,095,523,
Legal representativeLegal：Lu Lianxing 20.00 Chuanhai 3.00
Person in charge of accounting function：Fu01.98 64.19 Person11.94charge of accounting department：Lei Lixin
Consolidated Statement of Changes in Equity (Continued)
For the year ended 31
December 2021
Prepared by：Shandong Zhonglu Oceanic Fisheries Co., Ltd. Unit：RMB Yuan
Year 2020
Equity attributable to shareholders of parent company
Ite Other equity Other Total
Less:trea General Undistrib Minority
m Share Prefere Perpet Other Capital
instruments
sury compreh Special Surplus
risk uted
Others Sub-tota
interests owners'
capital nce ual reserve reserve reserve l equity
s shares ensive profit
preparat 314,460,4
1. Ending balance of last year 266,071,3 share loans 284,054,9 707,15 21,908,0 887,201,9 157,934,6 1,045,136,
income ion
Add: Impact from changes in accounting 20.00 97.75 6.17 64.19 31.58 69.69 60.45 630.14
s
policies from corrections of errors in prior
period combination under common control
Others
2. Beginning balance of current year 266,071,3 284,054,9 707,15 21,908,0 314,460,4 887,201,9 157,934,6 1,045,136,
3. Movement for current year("-" for decrease） 20.00 97.75 -13,490,6 64.19 31.58 69.69 60.45 630.14
(1) Total comprehensive income 95.30 98.13 02.83 0.04 32.87
(2) Shareholder's contributions and withdrawals 95.30 98.13 02.83 0.04 32.87
of captial stock contributed by shareholders
2) Capital contributed by other equity
instruments holders recorded in
shareholder's equity
(3) Profits distribution
1) Appropriation of surplus reserve
2) Distribution to shareholders
3) Others
(4) Internal transfer within shareholder's equity
1) Conversion of capital reserve into share capital
2) Conversion of surplus reserve into share
capital of loss by surplus reserve
4) Change of defined benefit obligations carried
forward tocomprehensive income carried forward
to retained earnings
(5) Special reserve
1) Accrual of special reserve
2) Utilization of special reserve
(6) Others
4. Ending balance of current year 266,071,3 284,054,9 -12,783,5 21,908,0 343,997,9 903,248,7 162,274,9 1,065,523,
Legal representativeLegal：Lu Lianxing 20.00 Person in charge of accounting function：Fu39.13
Chuanhai 64.19 Person29.71charge of accounting department：Lei Lixin
Balance Sheet
Dec
31,2021
Prepared by：Shandong Zhonglu Oceanic Fisheries Co., Ltd. Unit：RMB Yuan
Ite Note As at As at Ite Note As at As at
Current assets: m 31/12/2021 31/12/2020 Current liabilities: m 31/12/2021 31/12/2020
Cash at bank and on hand 49,943,353 32,186,883 Short-term loans
Financial assets held for trading .89 .395,000,000. Financial liabilities held for trading
Derivative financial assets 00 Derivative financial liabilities
Notes receivable Notes payable
Accounts receivable 14. 8,731,060. 7,407,636. Accounts payable 12,713,180 7,330,041.
Receivables for financing 1 84 45 Advances from customers .90 56
Prepayments 3,565,433. 1,873,295. Contract liabilities 1,930,695 2,228,473
Other receivables 14. 119,015,186 204,498,840 Employee benefits payable 13,477,985 10,254,765
Including:Interest receivable 2 .36 .72 Taxes and surcharges payable .59426,832. .98674,445.
Dividends receivable 14. 85,085,303 101,777,374 Other payables 43,495,400 78,050,679
Inventories 2 .70 .9449,561,762 Including:Interest payable .72 .94
Contract assets .34 .59 Dividends payable
Held-for-sale assets Held-for-sale liabilities
Non-current assets due within one year Non-current liabilities due within one year 3,840,573
Other current assets 8,240,901 2,174,139. Other current liabilities .17 71,483.
Total current 236,875,784 302,702,558 Total current 75,884,668 98,609,889
Non-current assets: assets .50 .52 Non-current liabilities: liabilities .26 .07
Debt investments Long-term loans 149,393,532
Other debt investments Bonds payable .37
Long-term receivables 3,858,748 4,411,879. Including: Preference shares
Long-term equity investments 14. 232,189,455 232,189,455 Perpetual loans
Other equity instrument investments 3 .23 .23 Lease liabilities
Other non-current financial assets Long-term account payable
Investment property 30,108,932 31,435,009 Long-term employee benefits payable 682,730. 875,940.
Fixed assets .75 54,478,042 Anticipation liabilities 26 65
Construction in process 118,472,605 .63 Deferred income
Productive biological assets .94 Deferred tax liabilities
Oil and gas assets Other non-current liabilities
Right-of-use assets 1,003,689. Total non-current liabilities 150,076,262 875,940.
Intangible assets 06488,798. 790,045. Total 225,960,930 99,485,829
Development expenditures 76 68 Shareholders' equity: liabilities .89 .72
Goodwill Share capital 266,071,320 266,071,320
Long-term deferred expenses Other equity instruments .00 .00
Deferred tax assets Including: Preference shares
Other non-current assets 89,675,267 394,857. Perpetual loans
Total non-current 523,359,482 323,699,289 Capital reserve 279,115,900 279,115,900
assets .45 .46 Less:treasury shares .17 .17
Other comprehensive income
Special reserve
Surplus reserve 19,184,672 19,184,672
Undistributed profit -30,097,556 -37,455,874
Total 534,274,336 .25
Total of assets 760,235,266 626,401,847 Total liabilities and equity .06 626,401,847
.95 .98 .95 .98
Legal representativeLegal：Lu Lianxing Person in charge of accounting function：Fu Chuanhai Person in charge of accounting department：Lei Lixin
Statement of Income
For the year ended 31 December 2021
Prepared by：Shandong Zhonglu Oceanic Fisheries Co., Ltd. Unit：RMB Yuan
Ite Not Year Year Ite Not Year Year
m e ended ended m e ended ended
1.Including: Operating income 14. 139,327,28
31/12/202 113,685,12 4. Net profit ("-" for net loss)
31/12/202 7,358,31
31/12/202 2,669,27
31/12/202
Less: Operating costs 414. 17.43
116,889,77 1.82
0100,927,36 1. Profit or loss from continuing operations 1 7.80
7,358,31 0 7.62
2,669,27
Taxes and surcharges 4 4.06688,962 1.83735,280 2. Profit or loss from discontinued operations 7.80 7.62
Selling and distribution expenses .71
233,063 .66
307,386 5. Other comprehensive income net of tax
General and administrative expenses .78
32,987,05 .37
21,914,74 (1) Comprehensive income not to be reclassified to profit or loss
Research and development expenses 3.48623,103 3.78 1) Changes in remeasurement of defined benefit obligations
Finance expenses .64
2,366,26 5,006,50
2) Other comprehensive income not to be reclassified to profit or loss in
Including:Interest expenses 5.87
382,300 2.72 equity methodchanges in other equity instrument investments
1,065,75
3) Fair value
Interest income .01
116,329 0.00
331,901
4) Fair value changes in the enterprise's own credit risk
Add: Other income .43
13,154,77 .98
10,029,64
5)Others
Investment income ("-" for loss) 14. 1.02
8,867,10 4.81
7,896,26
(2) Comprehensive income to be reclassified to profit or loss
Including: Investment income from associates and joint 5 1.36 4.69 1) Other comprehensive income to be reclassified to profit or loss in
venturesIncome from derecognition of financial assets measured equity method from fair value changes of other debt instruments
2) Gain or loss
at amortised gains
Net exposure hedgingcost ("-" for loss) 3) The amount of financial assets reclassified to other comprehensive
Gain from fair value changes ("-" for loss) income impairment provision of other debt investment
4) Credit
Credit impairment losses ("-" for loss) -115,883 607,054 5) Cash flow hedging reserve
Impairment on assets ("-" for loss) .09
-117,230 .03
-203,609 6) Currency translation difference
Gains from disposal of assets ("-" for loss) .4217,065. .9355,893. 7) Others
2. Operating profits ("-" for loss) 22
7,344,88 20
3,179,09 6. Total comprehensive income 7,358,31 2,669,27
Add: Non-operating income 7.9813,479. 3.263,363. 7. Earnings per share 7.80 7.62
Less:Non-operating expenses 8250.00 62
290,132 (1) Basic earnings per share
3. Profit before tax ("-" for loss) 7,358,31 .05
2,892,32 (2) Diluted earnings per share
Less:income tax expenses 7.80 4.83
223,047
.21
Legal representativeLegal：Lu Lianxing Person in charge of accounting function：Fu Chuanhai Person in charge of accounting department：Lei Lixin
Statement of Cash Flows
For the year ended 31 December 2021
Prepared by：Shandong Zhonglu Oceanic Fisheries Co., Ltd. Unit：RMB Yuan
Item Note Year Year Item Note Year Year
ended ended ended ended
1. Cash flows from operating activities 31/12/2021 31/12/202 3. Cash flows from financing activities: 31/12/2021 31/12/202
Cash received from sales and services 78,815,60 0131,940,32 Cash received from investments by others 0
Taxes and surcharges refunds 9.56 1.16 Cash received from borrowings 207,138,47
Cash received related to other operating activities 88,202,29 12,775,98 Cash received related to other financing activities 6.01
44,124,03 32,182,16
Total cash inflows from operating activities 8.50
167,017,90 9.67
144,716,31 Total cash inflows from financing activities 2.99
251,262,50 8.08
32,182,16
Cash paid for goods and services 8.06
43,827,72 0.83
78,227,83 Cash repayments for debts 9.00
54,808,28 8.08
Cash paid to and for employees 1.36
40,070,47 5.29
41,123,81 Cash payments for distribution of dividends, profit and interest 4.01797,792.
Taxes and surcharges cash payments 5.04
4.81903,215. 1,105,108 expenses related to other financing activities
Cash paid 63
5,345,639 12,461,71
Cash paid related to other operating activities 39
80,422,02 .63
45,320,00 Total cash outflows from financing activities .48
60,951,71 2.55
12,461,71
Total cash outflows from operating activities 4.59
165,223,43 1.25
165,776,76 Net cash flows from financing activities 6.12
190,310,79 2.55
19,720,45
Net cash flows from operating activities 0.21
6.151,794,471
-21,060,44 4. Effect of foreign exchange rate changes on cash and cash equivalents 2.88-126,645 5.53
-393,346
2. Cash flows from investing activities： .91 9.38 5. Net increase in cash and cash equivalents .14
20,924,47 .88
-24,018,44
Cash received from withdraw of investments 5,000,000 5,000,000 Add: beginning balance of cash and cash equivalents 0.50
32,186,88 9.39
56,205,33
Cash received from investment income .00
25,559,17 .00685,177. 6. Ending balance of cash and cash equivalents 3.39
53,111,35 2.78
32,186,88
Net cash received from disposal of \property, plant and 2.60 67 3.89 3.39
30,000. 79,485.
equipement,intangible assets and other long-term assets 00 08
Net cash received from disposal of subsidiaries and other business
units received related to other investing activities
Cash 13,000,00
Total cash inflows from investing activities 0.00
43,589,17 5,764,662
Cash paid for property, plant and equipement,intangible assets and 2.60
214,643,32 .75
8,266,611
Cash long-term assets
other payments for investments 1.75 .41
10,000,00
Net cash paid for acquiring subsidiaries and other business units 0.00
Cash paid related to other investing activities 9,783,160
Total cash outflows from investing activities 214,643,32 .00
28,049,77
Net cash flows from investing activities 1.75
-171,054,14 1.41
-22,285,10
Legal representativeLegal：Lu Lianxing Person in charge of9.15 function：Fu Chuanhai Person in charge of accounting department：Lei Lixin
Statement of Changes in Equity
For the year ended 31 December 2021
Prepared by：Shandong Zhonglu Oceanic Fisheries Co., Ltd. Unit：RMB Yuan
Year 2021
Other equity instruments Other
Ite Less:treasu Undistribute Total
m Share Preferen Perpetua Capital comprehen Special Surplus Others
capital Others reserve ry shares reserve reserve d profit owners'
ce l loans sive equity
1. Ending balance of last year 266,071,32 shares 279,115,90 income 19,184,672 -37,455,87 526,916,018
Add: Impact from changes in accounting policies 0.00 0.17 .34 4.25 .26
Impact from corrections of errors in prior period
Others
2. Beginning balance of current year 266,071,32 279,115,90 19,184,672 -37,455,87 526,916,018
3. Movement for current year("-" for decrease） 0.00 0.17 .34 4.25
7,358,317 .267,358,317
(1) Total comprehensive income .80
7,358,317 .80
7,358,317
(2) Shareholder's contributions and withdrawals of captial .80 .80
1) Common stock contributed by shareholders
2) Capital contributed by other equity instruments holders
3) Share-based payment recorded in shareholder's equity
4) Others
(3) Profits distribution
1) Appropriation of surplus reserve
2) Distribution to shareholders
3) Others
(4) Internal transfer within shareholder's equity
1) Conversion of capital reserve into share capital
2) Conversion of surplus reserve into share capital
3) Recover of loss by surplus reserve
4) Change of defined benefit obligations carried forward to
retained earnings
5) Other comprehensive income carried forward to retained
earnings
6) Others
(5) Special reserve
1) Accrual of special reserve
2) Utilization of special reserve
(6) Others
4. Ending balance of current year 266,071,320 279,115,90 19,184,672 -30,097,556 534,274,336
Legal representativeLegal：Lu Lianxing 0.17
.00 Person in charge of accounting function：Fu Chuanhai .34 .45 .06
Person in charge of accounting department：Lei Lixin
Statement of Changes in Equity (Continued)
For the year ended 31 December 2021
Prepared by：Shandong Zhonglu Oceanic Fisheries Co., Ltd. Unit：RMB Yuan
Year 2020
Other equity instruments Other
Ite Less:treasu Undistribute Total
m Share Preferen Perpetua Capital comprehen Special Surplus Others
capital Others reserve ry shares reserve reserve d profit owners'
ce l loans sive equity
1. Ending balance of last year 266,071,32 shares 279,115,90 income 19,184,672 -40,125,151 524,246,74
Add: Impact from changes in accounting policies 0.00 0.17 .34 .87 0.64
Impact from corrections of errors in prior period
Others
2. Beginning balance of current year 266,071,32 279,115,90 19,184,672 -40,125,151 524,246,74
3. Movement for current year("-" for decrease） 0.00 0.17 .34 .872,669,277 0.64
2,669,277
(1) Total comprehensive income .62
2,669,277 .62
2,669,277
(2) Shareholder's contributions and withdrawals of captial .62 .62
1) Common stock contributed by shareholders
2) Capital contributed by other equity instruments holders
3) Share-based payment recorded in shareholder's equity
4) Others
(3) Profits distribution
1) Appropriation of surplus reserve
2) Distribution to shareholders
3) Others
(4) Internal transfer within shareholder's equity
1) Conversion of capital reserve into share capital
2) Conversion of surplus reserve into share capital
3) Recover of loss by surplus reserve
4) Change of defined benefit obligations carried forward to
retained earnings
5) Other comprehensive income carried forward to retained
earnings
6) Others
(5) Special reserve
1) Accrual of special reserve
2) Utilization of special reserve
(6) Others
4. Ending balance of current year 266,071,320 279,115,90 19,184,672 -37,455,874 526,916,018
Legal representativeLegal：Lu Lianxing 0.17
.00 Person in charge of accounting function：Fu Chuanhai .34 .25 .26
Person in charge of accounting department：Lei Lixin
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
1. Company profile
1.1 The Company's registered place, organization structure and the address of head quarter.
Shandong Zhonglu Oceanic Fisheries Co., Ltd. (the “Company”), whose registered address is No.29,
Miaoling Road, Qingdao, Shandong, was incorporated as a liability limited company in the People’s
Republic of China on July 30, 1999 according to the document of Lu Ti Gai Zi [1999] No.85 issued by
Shandong Development and Reform Commission, and the holding company of the Company is Shandong
Fisheries Enterprise Group General Corporation. On June 26, 2000, the Company issued 120 million
domestic listed foreign shares (B shares) to foreign investors with face value of 1 Yuan per share according
to the document of Zheng Jian Fa Xing Zi [2000] No.82 issued by the China Securities Regulatory
Commission. The B shares, Zhonglu B with stock code of 200992, have been listed on the Shenzhen Stock
Exchange since July 24, 2000.
The basic structure of the company: shareholders committee, board of directors, board of supervisors, the
board of directors office, human resources, financial management department, administration department,
audit department, Ocean shipping management department, disciplinary committee office, party group
work department, risk management and control department (legal affairs department).
1.2 The Company's business nature and main operation activities, like its industry, primary product or
service, customers' nature, trading strategy and supervisory environment etc.
Operating activity: ocean fisheries
Main product: tuna and its products.
Operating scope: aquatic products breeding, processing and sale; goods import and export business within
approved scope; ice machine manufacture and sale; refrigeration equipment manufacture, installation,
maintenance; refrigeration; load and unload services; housing lease.
Advance licensed operating scope: marine and oceanic fishing;
1.3 Name of the parent company and the ultimate parent company of the Group is Shandong State-owned
Assets Investment Holdings Co., Ltd
1.4 The approver and approval date of the financial reporting.
The financial statement is predetermined and authorized by the board of company on 19th April, 2022.
2. The consolidation scope of financial year 2021 consolidated financial statements includes the
Company and its subsidiaries (hereafter referred to as "the Company").
Consolidation scope of financial statement includes: 5 subsidiaries: Shandong Zhonglu Oceanic Fisheries
Transportation Co., Ltd.; Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd.; HABITAT
INTERNATIONAL CORP; Shandong Zhonglu Haiyan Oceanic Fisheries Co., Ltd. ; Zhonglu Ocean
(Qingdao) Industrial Investment Development Co., Ltd.; 4 sub-subsidiaries: LAIF FISHERIES
COMPANY LIMITED; Shandong Zhonglu Oceanic Fisheries Refrigeration Co., Ltd; AFRICA STAR
1
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
FISHERIES LIMITED; ZHONG GHA FOODS COMPANY LIMITED; 1 operational entity through
control over operating leases: YAW ADDO FISHERIES COMPANY LIMITED. The scope and changes
of the consolidated financial statements for this year are detailed in the notes "7. Changes in consolidation
scope " and "8. Interest in other entities ".
3. Basis of preparation of financial statements
3.1 Basis of preparation
On the basis of going concern and transactions and events actually occurred, accounting is based on
Accrual Basis. The company generally adopts historical cost to measure accounting elements. On the
premise that the amount of accounting elements determined can be obtained and measured reliably, the
company adopts Replacement cost, Net realizable value, Present value and Fair value to measure
accounting elements.
3.2 Going concern
Within at least 12 months of this report, the company should maintain its operational capacity without
matters that have potential impact on ability of the continuing operations.
4. Significant accounting policies and accounting estimates
4.1 Declaration on compliance with the Accounting Standards for Business Enterprises
The financial statements and notes are in accordance with the Accounting Standards for Business
Enterprises promulgated by the Ministry of Finance, the application guidelines, Interpretation of the
Accounting Standards for Business Enterprises, “No. 15 rules for the preparation and reporting of
information disclosure by companies that issue securities to the public – general provisions on financial
reports [2014 Amendment]" issued by the China Securities Regulatory Commission and relevant
supplementary provisions, which truly and completely reflect the company’s financial status, operating
results, changes in shareholders’ equity and cash flow and other relevant information.
4.2 Accounting period
The financial year of the Company is from January 1 to December 31 of each calendar year.
4.3 Operating cycle
The Company’s operating cycle is 12 months in each calendar year and it classifies the assets and liabilities'
liquidity by operating cycle.
4.4 Functional currency
The Company's functional currency is Chinese Renminbi.
2
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
4.5 Business combination
4.5.1 Business combinations involving enterprises under common control
In a business combination involving enterprises under common control, if the acquirer pays for the
business combination in cash, by transferring of non-cash assets or assuming liabilities, the initial
investment cost is the holding share of the acquiree's equity in the ultimate controlling party's consolidated
financial statements measured at the carrying amounts at the acquisition date. If the acquirer issues equity
instruments for the business combination, the acquirer measures the share capital by the par value of the
shares issued. The difference between the original investment cost and the carrying amount (or the total par
value of shares issued) will be adjusted to the capital reserve. If the capital reserve is insufficient to absorb
the difference, the remaining amount shall be deducted from the retained earnings. The intermediary fees
of auditing, legal services, evaluation and consultation and other related management expenses incurred for
business combination shall be recorded into current profits and losses when incurred. The bonds issued for
the combination of enterprise or the handling fees and commissions paid for assumption other debts shall
be included in initial measurement amount of the bonds and other debts issued. The handling fees,
commissions and other expenses incurred from the issuance of equity securities in the course of business
combination shall be offset against the premium income of equity securities, and retained earning shall be
offset if the premium income is not sufficient to be offset.
4.5.2 Business combinations involving enterprises not under uncommon control
(a) In a business combination involving enterprises not under common control, the combination costs are
determined according to the following conditions: a. the aggregate of the fair values of the assets paid, the
liabilities incurred or assumed and the equity instruments issued by the acquirer in exchange for control
over the acquiree at the acquisition date; b. for the Business combinations which is realized step by step
through multiple exchange transactions, the initial investment cost of long-term equity investment is the
sum of each single transaction cost; c. The intermediary fees of auditing, legal services, evaluation and
consultation and other related management expenses incurred for business combination shall be recorded
into the current profit and loss when incurred. Transaction cost of equity securities or debt securities issued
as consideration for the combination is included in the initial recognition amount of the equity securities or
debt securities; d. If the future events that may affect the merger cost are stipulated in the combination
contract or agreement, and if it is estimated that the future events are likely to occur and the amount of
influence on the merger cost can be measured reliably on the purchase date, it will be included in the initial
investment cost of the long-term equity investment.
(b) At the acquisition date, the acquired assets, liabilities and contingent liabilities of the acquiree that meet
the recognition criteria are measured at their fair value.
If investment cost of long-term equity investment is more than the difference in the share of fair value of
identifiable net assets acquired by the purchaser in the merger, it shall be recognized as goodwill.
If investment cost of long-term equity investment is less than the difference in the share of fair value of
identifiable net assets acquired by the purchaser in the merger, it shall be handled in the following way: a.
3
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Review the measurement of the fair value of all identifiable assets, liabilities and contingent liabilities of the
acquired purchaser and the combined cost; b. If the merger cost is still less than the fair value share of
identifiable net assets acquired during the merger after review, the difference shall be recorded into profit or
loss for the current period entirely.
4.6 Preparation of consolidated financial statements
The consolidated scope of the consolidated financial statements is determined on a control basis. Control
refers to the investor has the power of the investee, through participation in the investee related activities
and enjoy variable returns, and have the ability to use the power of the investee influence its return amount.
The Company incorporates all its subsidiaries (including individual entities under its control) into the scope
of the consolidated financial statements, including the enterprises controlled by the Company, divisible part
in the investees and structured entities.
If the parent company is an investment entity, the parent company should only include its subsidiaries (if
any) that provide relevant services for its investment activities into the scope of consolidation and prepare
consolidated financial statements; other subsidiaries shall not be consolidated. The parent company's
investment in other subsidiaries shall be measured at fair value and its changes shall be recorded into profits
and loss for the current period entirely. When the parent company simultaneously satisfies the following
conditions, the parent company belongs to the investment subject: a. The parent company obtains funds
from one or more investors for the purpose of providing investment management services to investors; b.
The sole purpose of the parent company's operations is to generate returns for investors through capital
gain, income from investment or both; c. The parent company measures and evaluates the performance of
almost all investments at fair value.
The unified accounting policy and period used by the company and the consolidated subsidiary when
preparing of consolidated statements. The consolidated financial statements are prepared based on the
individual financial statements of the Company and its subsidiaries, after elimination of the transactions
incurred among the Company and the subsidiaries. Where a subsidiary or business has been acquired
through a business combination involving enterprises under common control in the reporting period, the
company should adjust the opening balance of the consolidated balance sheet. Where a subsidiary or
business has been acquired through a business combination involving enterprises not under common
control in the reporting period, the company should not adjust the opening balance of the consolidated
balance sheet. Where a subsidiary or business has been acquired through a business combination involving
enterprises under common control in the reporting period, the income, expense, profit and cash flow of the
subsidiary from the beginning of the consolidation period to the end of the reporting period are included in
the consolidated income statement and cash flow statement. Where a subsidiary or business has been
acquired through a business combination involving enterprises not under common control in the reporting
period, the income, expenses, profit and cash flow of the subsidiary from the purchase date to the end of
the reporting period are included in the consolidated income statement and cash flow statement. The
company disposed of the subsidiary during the reporting period, the income, expenses, profit and cash flow
of the subsidiary from the beginning of the year to the disposal date are included in the consolidated
income statement and cash flow statement.
4
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
When the parent company purchases the equity of the subsidiary owned by the minority shareholders of
the subsidiary, in the consolidated financial statements, the difference between the newly acquired
long-term equity investment due to the purchase of minority equity and the proportion of the newly added
shareholding shall be entitled to the subsidiary’s continuous calculation from the date of purchase or the
date of consolidation should be adjusted to the capital reserve and if the capital reserve is insufficient to
absorb the difference, the remaining amount shall be deducted from the retained earnings.
In the consolidated financial statements, when the Company partly disposes its investment in a subsidiary
without losing its control on the subsidiary, the difference between the consideration received and its
corresponding portion of the net asset continually calculated from the purchase date or combination date
should be adjusted to the capital reserve and if the capital reserve is insufficient to absorb the difference,
the remaining amount will be deducted from the retained earnings.
In the consolidated financial statements, if the Company loses its control on an investee because of
disposing some portion of its equity investment in the investee, the remaining balance of its equity
investment will be remeasured at the fair value of the date at which it loses its control. The difference
between the sum of the consideration received and the fair value of the remaining equity investment, and
its corresponding interest portion of the net asset continually calculated from the purchase date or the
combination date should be recorded in the investment income of the current period, and be deducted to
goodwill simultaneously. Other comprehensive income (OCI) etc. relating to the investment in the former
subsidiary will be transferred to the investment income in the same period in which it loses its control,
other comprehensive income arising from the change in net liabilities or net assets of the defined benefit
plan remeasured by the investee shall be excluded.
4.7 Joint arrangement classification and accounting treatments
4.7.1 The classification of joint arrangement
Joint arrangements are classified as joint operations or joint ventures.
Joint operation refers to a joint arrangement in which the joint venture party enjoys the relevant assets of
the arrangement and assumes the relevant liabilities of the arrangement.
The Company acted as a party participating in joint operations, confirm the following items relating to its
interests in the joint operations and accounts for them in accordance with related requirements of
Accounting Standards for Business Enterprises:
(a) Its solely-held assets and solely-assumed liabilities, and its share of any assets and liabilities held jointly;
(b) Its revenue from the sale of its share of the output arising from the joint operation;
(c) Its share of the revenue from the sale of the output by the joint operation;
(d) Its own expenses and its share of any expenses incurred jointly.
A joint venture refers to a joint arrangement in which the joint venture party only has rights to the net
assets of the arrangement. Investments in joint ventures are accounted for by the company in accordance
with the equity method.
5
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
4.8 Cash and cash equivalents
The cash in the Company's statement of cash flows is cash on hand and deposits that can be readily drawn
on demand. Cash equivalents are short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of change in value.
4.9 Foreign currency transactions and translation of financial statements denominated in foreign currency
(1) In the initial confirmation of a foreign currency transaction, the foreign currency amount shall be
converted into THE RMB amount using an approximate exchange rate of the spot exchange rate at the
date when the transactions occurs.
(2) On the balance sheet date, foreign currency monetary items and foreign currency non-monetary items
shall be handled in accordance with the following methods:
(a) Foreign currency monetary items shall be translated at the central rate of THE EXCHANGE rate of
RMB published by the People's Bank of China on the balance sheet date. Foreign exchange difference
between the prevailing exchange rate on that date and the prevailing exchange rate on initial recognition or
on the previous balance sheet date are recognized in profit or loss for the current period.
(b) Non-monetary items denominated in foreign currency that are measured at historical cost are still
translated at amount in functional currency exchanged at the prevailing exchange rate at the transaction
date. Non-monetary items denominated in foreign currency that are measured at fair value are translated
using the exchange rate at the date when fair value was determined and the difference between the
translated functional currency amount and the prior translated amount on initial recognition or on the
previous balance sheet date are recorded in profit or loss for the current period or other comprehensive
income.
Monetary items refer to the monetary funds held by the company and the assets or liabilities to be collected
or paid at a fixed or determinable amount. The term "non-monetary items" refers to items other than
monetary items.
(3) The translation of financial statements denominated in foreign currency
(a) The assets and liabilities are translated to RMB amounts using the spot exchange rate at the balance
sheet date. Items of the equity, except for "retained earnings ", are translated at the spot exchange rate at
the dates when such items occurred.
(b) The revenue and expenditures in the statement of income are translated using an approximate exchange
rate of the spot exchange rate at the transaction date.
(c) The difference arising from foreign currency financial statements translation is presented in other
comprehensive income at the consolidated balance sheet within equity.
(4) The company shall translate the financial statements of overseas operations in an economy with
hyperinflation in accordance with the following methods:
6
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
The balance sheet items shall be restated using the general price index, and the income statement items
shall be restated using the changes of the general price index, and then translated according to the spot
exchange rate on the latest balance sheet date; when the overseas operation is no longer in the
hyperinflationary economy, the restatement shall be stopped and the financial statements restated shall be
converted according to the price level on the cessation date.
(5) When disposing of foreign operations, exchange differences of foreign currency financial statements
attributable to the foreign operations are transferred to profit or loss for the current period entirely or in
proportion with the disposal portion of the foreign operations.
4.10 Financial instruments
Financial instruments are the contracts under which the financial assets of an entity are formed and
correspondingly the financial liabilities or equity instruments of any other entity are formed. When a
company becomes a party to a financial instrument contract, the related financial asset or financial liability
is recognized.
4.10.1 Financial assets
4.10.1.1 Classification and initial measurement
According to the business model of financial assets management and contractual cash flow characteristics
of financial assets, the company divides financial assets into:
a) Financial assets measured at amortized cost;
b) Financial assets measured at fair value through other comprehensive income;
c) Financial assets measured at fair value through profit or loss.
The Company measures financial instruments at fair value upon their initial recognition. The related
transaction fees for the financial assets subsequently measured at fair value through profit or loss are
charged in profit or loss directly. The related transaction fees for other financial assets are included in their
initial costs. The Company measures the accounts receivable and notes receivable deriving from selling
goods or providing services at their transaction price if the accounts receivable and notes receivable do not
contain a significant financing component or the Company applies the practical expedient not considering
the significant financing component.
(a) Debt instruments
Debt instruments held by the company refer to those instruments that conform to the definition of
financial liabilities from the perspective of the issuer and are measured in the following three ways:
a) Measured at amortized cost:
The Company classifies a financial asset as subsequently measured at amortized cost that meets both of the
following conditions:
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
The financial asset is held within a business model whose objective is to collect contractual cash
flows; The contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
The company recognizes interest income on such financial assets in accordance with the effective interest
rate method. Such financial assets mainly include cash at bank and on hand, notes receivable and accounts
receivable, contract assets, other receivables, debt investments, lease receivables and long-term receivables,
etc. The company lists the debt investments and long-term receivables that mature within one year
(including one year) from the date of the balance sheet as non-current assets that mature within one year;
debt investments with a maturity of one year (including one year) at the time of acquisition are listed as
other current assets.
b) Measured at fair value through other comprehensive income
The Company classifies a financial asset as subsequently measured at fair value through other
comprehensive income that meets both of the following conditions:
The financial asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling the financial asset. The contractual terms give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal amount outstanding.
Such financial assets are measured at fair value and their changes are included in other comprehensive
income, but assert impairment losses or gains, exchange gains or losses and interest income calculated in
accordance with the effective interest rate method are included in profit or loss for the current period
entirely. Such financial assets are listed as other debt investments, and other debt investments maturing
within one year (including one year) from the date of the balance sheet are listed as non-current assets
maturing within one year; other debt investments with a maturity of one year (inclusive) at the time of
acquisition are listed as other current assets.
c) Measured at fair value through profit or loss
The Company classifies a financial asset as subsequently measured at fair value through profit or loss and
listed as financial assets held for trading unless it is subsequently measured at amortized cost or measured at
fair value through other comprehensive income. The Company may make an irrevocable election at initial
recognition to designate a financial asset as subsequently measured at fair value through profit or loss if
doing so eliminates or significantly reduces an accounting mismatch. Other non-current financial assets
shall be listed as those that mature more than one year from the balance sheet date and are expected to be
held for more than one year.
(b) equity instrument
The company shall measure the equity instrument investment over which it has no control, joint control or
significant influence according to the fair value through profit and loss, and list it as financial assets held for
trading; those expected to be held for more than one year from the balance sheet date shall be listed as
other non-current financial assets.
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
In addition, the Company designated part of non-tradable equity instrument investments as financial assets
measured at fair value through other comprehensive income, and listed as other equity instrument
investments. The related dividend income of such financial assets is recorded in the profit or loss for the
current period entirely. Once made, the designation cannot be revoked. Where the contingent consideration
recognized by the company in a business combination not under the common control constitutes a
financial asset, the financial asset shall be classified as a financial asset measured at fair value through profit
or loss.
For non-tradable equity instrument investments, the company may, upon initial recognition, irrevocably
designate them as financial assets measured at fair value through other comprehensive income. The
designation is made on a single investment basis that meets the definition of an equity instrument from the
issuer's point of view.
4.10.1.2 Impairment of assets
The company recognizes loss provisions on the basis of expected credit losses for financial assets measured
at amortized cost, debt instrument investments which measured at fair value through other comprehensive
income, lease receivables, contract assets and financial guarantee contracts. The Company considers
reasonable and reliable information about past events, current conditions and the forecast of future
economic conditions, and takes the risk of default as the weight to calculate the present value of the
difference between the cash flow receivable under the contract and the cash flow which expected to receive.
Then the probability-weighted amount of the present value should be recognized as expected credit loss.
At each balance sheet date, the company separately measures the expected credit losses of financial
instruments at different stages. If the credit risk of the financial instrument does not increase
significantly after the initial recognition, it is in the first stage, and the company measures the loss
provisions according to the expected credit losses in the next 12 months. If the credit risk of a
financial instrument has increased significantly since the initial recognition but no credit impairment
has occurred, the financial instrument is in the second stage, and the company shall measure the loss
provision according to the expected credit loss during the entire life of the instrument. If a financial
instrument has suffered credit impairment since its initial recognition, it is in the third stage, and the
company shall measure the loss provision according to the expected credit losses during the entire life
of the instrument.
The Company calculates interest income based on the book balance and effective interest rate of
financial instruments in stages I and II and with low credit risk. For financial instruments in the third
stage, the interest income shall be calculated on the basis of the amortized cost and the effective
interest rate after deducting the book balance from the provision for impairment.
For notes receivable and accounts receivable, lease receivables and contract assets, regardless of the
existence of a significant financing component, the Company may measure the loss provision in
accordance with the expected credit losses for the entire life of the company.
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
a) Credit risk significantly increases judgment criteria
At each balance sheet date, the Company evaluates whether the credit risk of the relevant financial
instrument has increased significantly since the initial recognition.
In determining whether credit risk has increased significantly since the initial recognition, the
Company considers that reasonable and evidence-based information that can be obtained without
unnecessary additional cost or effort, including qualitative and quantitative analyses based on historical
data of the Company, external credit risk ratings and forward-looking information Based on a single
financial instrument or a combination of financial instruments with similar credit risk characteristics,
the company compares the risk of default of financial instruments on the balance sheet date with the
risk of default on the initial recognition date to determine the change of the risk of default of financial
instruments during their expected lifetime.
When one or more of the following quantitative or qualitative criteria are triggered, the Company
believes that the credit risk of the financial instrument has increased significantly: a.The quantitative
standard is mainly that the default probability of the remaining duration on the reporting date
increases by more than a certain proportion compared with the initial confirmation; b.The qualitative
criteria mainly include the occurrence of significant adverse changes in the debtor's business or
financial situation, the list of early warning customers, etc; c.The upper limit indicator is that the
debtor's contract payment (including principal and interest) is generally overdue for more than 90 days,
and the longest is not more than 180 days.
b) Definition of assets with credit impairment
In order to determine the occurrence of credit impairment, the definition criteria adopted by the
Company are consistent with the internal credit risk management objectives for the relevant financial
instruments, and both quantitative and qualitative indicators are taken into account. When evaluating
whether the debtor has credit impairment, the company mainly considers the following factors: a. The
issuer or the debtor has significant financial difficulties; b. The debtor violates the contract, such as
default or overdue payment of interest or principal, etc.; c. Concessions granted by the creditor to the
debtor for economic or contractual reasons related to the debtor's financial difficulties that would not
have been made in any other circumstances; d. The debtor is likely to go bankrupt or undergo other
financial restructuring; e. Financial difficulties of the issuer or debtor cause the disappearance of the
active market for the financial asset; f. To purchase or generate a financial asset at a substantial
discount that reflects the fact that a credit loss has occurred.
The occurrence of credit impairment of financial assets may be caused by the joint action of multiple
events, not necessarily by independently identifiable events
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
c) Parameters for the measurement of expected credit losses
Depending on whether there is a significant increase in credit risk and whether there has been a credit
impairment, the company measures the impairment provisions for different assets at the expected
credit losses of 12 months or the whole life. The key parameters of expected credit loss measurement
include default probability, default loss rate and default risk exposure. The company considers
quantitative analysis and prospective information of historical statistical data (such as counterparty
rating, guarantee method and category of pledge, repayment method, etc.) to establish probability of
default, loss given default rate and default risk exposure model.
Relevant definitions are as follows:
a. Probability of default refers to the possibility that the debtor will be unable to fulfill its payment
obligations in the next 12 months or in the entire remaining term. The default probability of the company
is adjusted based on the results of the historical credit loss model, and forward-looking information is
added to reflect the default probability of the debtor in the current macroeconomic environment.
b. Loss given default rate refers to the company's expectation of the loss degree of default risk exposure.
Loss given default rates vary depending on the type of counterparty, method of recourse and priority, and
collateral. The loss given default rate is the percentage of the risk exposure loss at the time of default and is
calculated on the basis of the next 12 months or the entire lifetime;
c. Default risk exposure model is the amount payable to the company at the time of default in the next 12
months or for the remainder of its life.
d) Forward- looking information
Both the assessment of significant increases in credit risk and the calculation of expected credit losses
involve forward-looking information. By analyzing historical data, the company identifies key economic
indicators that affect the credit risks and expected credit losses of various business types.
When a single financial asset is unable to assess the information of expected credit loss at a reasonable cost,
the company divides the receivables into several combinations based on the characteristics of credit risk,
calculates the expected credit loss on the basis of the combination, and determines the combination based
on the following:
item the basis for determining the A method of measuring expected credit loss
combination
bank’s acceptance bill Acceptor Based on the historical credit loss experience, combined with the
receivable current situation and the forecast of the future economic
situation, the expected credit loss is calculated through the default
risk exposure and the expected credit loss rate of the whole life
trade acceptance receivable Acceptor Aging analysis method
Accounts receivable - Companies within the scope The provision for doubtful accounts is measured based on the
related party combination of the merger historical experience of credit losses and the current situation and
the expectation of future economic conditions
11
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
item the basis for determining the A method of measuring expected credit loss
combination
Accounts receivable - Non-consolidated corporate Based on the expected credit loss rate for the entire life of the
External customer and third party customers account age
portfolio
Lease receivables -
External customer
portfolio
Contract Assets - External Non-consolidated corporate Based on the expected credit loss rate for the entire life of the
customer portfolio and third party customers account age
Other receivables – related Companies within the scope The provision for doubtful accounts is measured based on the
party combination of the merger historical experience of credit losses and the current situation and
the expectation of future economic conditions
Other receivables - Non-consolidated corporate Loss provisions are measured according to the general approach,
External customer and third party customers the "three-stage" model.
portfolio
Long-term receivables - Non-consolidated corporate Loss provisions are measured according to the general approach,
External customer and third party customers the "three-stage" model.
portfolio
The comparison table between the aging of accounts receivable portfolio and the expected credit loss rate
of the entire life of accounts receivable portfolio and lease receivable portfolio:
Account receivable age Expected credit loss rate on accounts receivable
Within 6 months 5.00%
Six months to a year 10.00%
1 to 2 years 30.00%
2 to 3 years 50.00%
More than 3 years 100.00%
For other receivables divided into portfolios, the company refers to historical credit loss experience,
combined with current conditions and forecasts of future economic conditions, through default risk
exposure and the expected credit loss rate within the next 12 months or the entire duration to calculate the
expected credit loss. In order to reflect the changes in the credit risk of financial instruments since the
initial recognition, the company and its subsidiaries re-measure the expected credit losses on each balance
sheet date, and the resulting increase or reversal of the loss provision shall be regarded as impairment losses
or the profit is included in the current profit and loss. For financial assets measured at amortized cost, the
loss provision is deducted from the book value of the financial assets listed in the balance sheet; for debt
investments measured at fair value through other comprehensive income, the loss provision in the
company and its subsidiaries is recognized in other comprehensive income without deducting the book
value of the financial asset.
12
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
4.10.1.3 Terminate confirmation
The recognition of a financial asset shall be terminated if it meets any of the following conditions:
a. Termination of the contractual right to receive the cash flow of the financial asset;
b. The financial asset has been transferred, and the Company has transferred almost all the risks and
rewards in the ownership of the financial asset to the transferee;
c. The financial asset has been transferred. Although the company neither transfers nor retains almost all
risks and rewards in the ownership of the financial asset, it gives up control over the financial asset.
When other equity instrument investment is terminated for recognition, the difference between its book
value and the sum of the consideration received and the accumulative amount of the fair value changes
originally recorded directly into other comprehensive income shall be recorded into retained earnings;
When the recognition of other financial assets is terminated, the difference between its book value and the
sum of the consideration received and the accumulative amount of fair value changes originally recorded
directly into other comprehensive income shall be recorded into the profit or loss for the current period.
4.10.1.4 Write-off
If the company and its subsidiaries no longer reasonably expect to recover all or part of the contractual
cash flow of the financial asset, the book balance of the financial asset shall be directly written down. Such
write downs constitute a termination recognition of the underlying financial asset. This typically occurs
when the company and its subsidiaries determine that the debtor has no assets or sources of income that
can generate sufficient cash flow to repay the amount to be written down. However, in accordance with the
procedures for the company and its subsidiaries to recover amounts due, the financial assets that are
written down may still be affected by the execution activities.
If the financial assets that have been written down are recovered later, they shall be included in the profit or
loss for the current period as the reversal of the asset impairment loss.
4.10.2 Financial liabilities
Financial liabilities are classified into financial liabilities measured at amortized cost and financial liabilities
measured at fair value through profit or loss at the time of initial recognition.
The Company classifies financial liabilities as financial liabilities measured at amortized cost, except as
follows:
(a) Financial liabilities measured at fair value through profit or loss, including financial liabilities held for
trading (including derivatives that are financial liabilities) and financial liabilities designated at fair value
through profit or loss.
(b) Financial liabilities that arise when transfers of financial assets do not qualify for derecognition or when
the continuing involvement approach applies
(c) Financial guarantee contracts which are not classified as (a) or (b) and commitments to provide a loan at
a below market interest rate which are not classified as (a). In a business combination not under the
common control, if the company is recognized as the purchaser of the contingent consideration and forms
financial liabilities, the financial liabilities shall be measured at fair value through profit and loss.
13
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
At the time of initial recognition, in order to provide more relevant accounting information, the company
may designate financial liabilities as financial liabilities measured at fair value through profit or loss for the
current period. Such designation satisfies one of the following conditions:
(a) Can eliminate or significantly reduce accounting mismatches.
(b) Manage and evaluate the portfolio of financial liabilities or financial assets and portfolio of financial
liabilities on the basis of fair value in accordance with the enterprise risk management or investment
strategy stated in formal written documents, and report to key management personnel within the company
on this basis. Once made, the designation cannot be revoked.
The company's financial liabilities are mainly financial liabilities measured at amortized cost, including notes
payable and accounts payable, other payables, loans and bonds payable, etc. This kind of financial liability is
initially measured at its fair value after deducting transaction expenses, and the effective interest rate
method is adopted for subsequent measurement. Where the maturity is less than one year (including one
year), it is listed as current liabilities; Where the maturity is more than one year but matures within one year
(including one year) from the date of the balance sheet, it is shown as the non-current liabilities due within
one year; The remainder is shown as non-current liabilities.
When the current obligation of a financial liability (or a part of it) has been discharged, the company
derecognizes the part of the financial liability or the discharged obligation. The difference between the
book value of the derecognized part and the consideration paid is included in the current profit and loss.
When the current obligation of a financial liability (or a part of it) has been discharged, the company
derecognizes the financial liability (or this part of the financial liability).
4.10.3 Measurement method of financial instruments' fair value
For financial instruments that active markets exist, the Company uses the quoted prices in the active
markets to determine their fair value. If there is no active market for the financial instruments, the
Company uses valuation techniques to determine their fair value. When valuing, the company adopts
valuation techniques that are applicable under the current circumstances and that there are sufficient
available data and other information to support, and selects a valuation technique that is consistent with the
characteristics of the asset or liability considered by market participants in the transaction of the relevant
asset or liability. Input values and, where possible, prefer relevant observable input values. Unobservable
input values are used when the relevant observable input values are unavailable or impractical to obtain.
4.10.4 Subsequent measurement
After initial recognition, the company shall make subsequent measurement of different types of financial
assets at amortized cost, measured at fair value through other comprehensive income, or measured at fair
value through profit and loss.
14
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
After initial recognition, the company shall make subsequent measurement of different types of financial
liabilities at amortized cost, measured at fair value through profits and losses or through other appropriate
methods.
The amortized cost of a financial asset or financial liability shall be determined by the following adjustment
of the initial recognized amount of the financial asset or financial liability:
(a) Deduct the principal already repaid.
(b) Plus or minus the cumulative amortization amount formed by amortizing the difference between the
initial recognition amount and the amount at maturity using the effective interest rate method.
(c) Deduct the accumulated loss provisions (only applicable to financial assets).
The company recognizes interest income according to the effective interest rate method. Interest income is
calculated and determined by multiplying the book balance of the financial asset by the actual interest rate,
except in the following cases:
(a) For the financial assets acquired or originated with credit impairment, the Company shall calculate and
determine the interest income according to the amortized cost of the financial asset and the effective
interest rate adjusted by credit since the initial recognition.
(b) For financial assets purchased or generated without credit impairment but which become credit
impairment in subsequent periods, the Company shall calculate and determine its interest income according
to the amortized cost and effective interest rate of the financial asset in subsequent periods. Company
according to the policy of the financial asset amortized cost using the actual interest rate method to
calculate the interest income, if the financial instruments in the subsequent period no longer exist for its
credit risk has improved credit impairment, and the improved objectively and application after the policy
associated with the occurrence of an event, such as the debtor's credit rating was raised, The company turns
to the actual interest rate multiplied by the book balance of the financial asset to determine the interest
income.
4.11 Notes receivable
For the determination and accounting treatment of expected credit losses of notes receivable, please refer
to Note IV, 10 -- Financial Instruments.
4.12 Accounts receivable
For the determination and accounting treatment of expected credit losses of accounts receivable, please
refer to Notes IV, 10 -- Financial Instruments.
4.13 Receivables for financing
For the determination and accounting treatment of expected credit losses of receivables for financing,
please refer to Note IV, 10 -- Financial Instruments.
15
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
4.14. Other receivables
For the determination and accounting treatment of other expected credit losses of other receivables, please
refer to Note IV, 10 -- Financial Instruments.
4.15 Inventories
4.15.1 Categories of inventories
Inventories include raw materials, work-in-progress, semi-finished products, finished products,
commodities in stock, turnover materials, low-value consumables and contract performance costs., etc. The
"Contract performance cost" are detailed in 17, "Contract Costs".
4.15.2 Measurement of inventories upon delivery
Weighted average method is used to measure the actual costs of inventories upon delivery.
4.15.3 Provision for diminution in value of inventories
At each balance sheet date, inventories are measured at the lower of cost and net realizable value. When the
cost of inventory exceeds its net realizable value, provision for diminution in value of inventories is
recognized and included in the current profit and loss.
Net realizable value refers to the estimated selling price of inventories in daily activities minus the estimated
costs to be incurred upon completion, estimated selling expenses and related taxes.
The basis for determining the net realizable value of various inventories is as follows:
(a) Finished products, commodities in stock and materials for sale that directly used for sale are the
estimated selling price minus the estimated cost of sales and relevant taxes.
(b) Materials held for production are based on cost measurement when the finished products’ net realizable
value is higher than cost; the material price decline shows that the finished products’ net realizable value is
lower than cost, net realizable value is calculated as an estimated sales price minus the estimated cost, the
cost of sales and the relevant taxes amount.
(c) On the balance sheet date, if a part of the same inventory has contract price and the other parts do not
have contract price, the net realizable value shall be determined respectively, and the corresponding cost
shall be compared to determine the amount of withdrawal or reversal of the inventory depreciation reserve.
Goods in stock drops in price preparing shall be made on a single inventory item (or category of inventory)
and consolidated for inventories that are related to product series produced and sold in the same region,
have the same or similar end use or purpose, and are difficult to measure separately from other items.
4.15.4 Inventory count system
The Company adopts the perpetual inventory system.
4.15.5 Amortization methods of low-value consumables
Low-cost consumables are amortized by the equal-split amortization method.
16
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
4.16 Contract assets
4.16.1 Method and standard for the confirmation of contract assets
A contractual asset is a right to receive consideration that has been transferred to a customer and that right
depends on factors other than the passage of time. Contract assets and liabilities under the same contract
shall be shown on a net basis, and those under different contracts shall not be set off.
4.16.2 Determination method and accounting treatment method of expected credit loss of contract assets
The provision for impairment of contractual assets shall refer to the expected credit loss method of
financial instruments. For contract assets that do not contain significant financing components, the
Company adopts a simplified method to measure loss provisions. For the contract assets containing
significant financing elements, the Company shall measure the loss provisions in accordance with the
general method.
In the event of an impairment loss on a contract asset, the “asset impairment loss” shall be debited
according to the amount to be written down, and the contract asset impairment provision shall be credited;
the reverse entry shall be made when the accrued asset impairment provision is reversed.
4.17 Contract costs
4.17.1 Determination method of asset amount related to contract costs
The contract costs of the Company include the incremental costs to obtain a contract and the costs to fulfil
a contract.
If the costs incurred in fulfilling a contract with a customer are not within the scope of another standard
like Accounting Standards for Business Enterprises No. 14 - Revenue (Revised in 2017), they will be treated
as the costs to fulfil a contract and recognized as an asset when meeting the following conditions:
(a) the costs relate directly to a contract or to an anticipated contract that the Company can specifically
identify, including direct labour, direct materials, allocations of costs that relate directly to the contract,
costs that are explicitly chargeable to the customer under the contract and other costs that are incurred only
because the Company entered into the contract;
(b) the costs generate or enhance resources of the Company that will be used in satisfying performance
obligations in the future;
(c) the costs are expected to be recovered.
The cost of obtaining the contract, that is, the incremental cost of obtaining a contract is expected to be
recovered, is recognized as an asset as contract acquisition cost. Incremental costs are costs that would not
have occurred without the acquisition of the contract. If the amortization period of the asset does not
exceed one year, it may be recorded into the profit or loss for the current period at the time of occurrence.
Expenditures incurred by the enterprise to obtain the contract, other than incremental costs expected to be
recovered, shall be recorded in the profit or loss for the current period when incurred, unless these
expenditures are expressly borne by the customer.
17
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
4.17.2 Amortization of assets related to contract costs
Assets related to contract costs are amortized on the same basis as the commodity revenue related to the
asset is recognized, and are included in the current profit and loss.
4.17.3 Impairment of assets related to contract costs
The Company recognizes an impairment loss in profit or loss to the extent that the carrying amount of an
asset recognized exceeds:
(a) the remaining amount of consideration that the Company expects to receive in exchange for the goods
or services to which the asset relates; less
(b) the costs that relate directly to providing those goods or services and that are estimated to incur.
When the impairment conditions no longer exist or have improved that make the total of (a) and (b) higher
than carrying amount of an asset, the Company will recognize in profit or loss a reversal of some or all of
an impairment loss previously recognized. The increased carrying amount of the asset will not exceed the
amount that would have been determined (net of amortisation) if no impairment loss had been recognized
previously.
4.18 Hold assets for sale
4.18.1 Non-current assets held for sale and disposal group recognition criteria
A company that recovers its carrying value primarily through sales (including exchange of non-monetary
assets of commercial substance, the same below) rather than the ongoing use of a non-current asset or
disposal group will classify it as held for sale. The specific criteria are as follows:
(a) In accordance with the practice of selling such assets or disposal groups in similar transactions, they can
be sold immediately under the current conditions.
(b) The sale is very likely to occur, that is, the company has made a resolution on a sale plan and obtained a
firm purchase commitment, and the sale is expected to be completed within one year.
Among them, the disposal group refers to a group of assets that are disposed of as a whole in a transaction
through sale or other means, and the liabilities directly related to these assets transferred in the transaction.
If the asset group or combination of asset groups to which the disposal group belongs has apportioned the
goodwill obtained in the business combination in accordance with the Accounting Standards for Business
Enterprises No. 8 – Impairment of Assets, the disposal group shall include the goodwill apportioned to the
disposal group.
4.18.2 Accounting treatment
When the initial measurement or re-measurement on the balance sheet date is divided into non-current
assets held for sale and disposal group, if the book value is higher than the net amount after the fair value
minus the cost of sale, the book value is written down to the fair value The net amount after deducting the
selling expenses, the written-down amount is recognized as asset impairment loss, which is included in the
current profit and loss, and at the same time, an impairment provision for assets held for sale is made. For
the disposal group, the recognized asset impairment loss is first deducted from the book value of the
goodwill in the disposal group, and then deducted proportionally to the "Accounting Standards for
18
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Business Enterprises No. 42 - Non-current Assets Held for Sale, The book value of each non-current asset
specified in the measurement of "Disposal Group and Discontinued Operation" (hereinafter referred to as
"Hold-for-sale Standards"). If the net amount of the disposal group held for sale on the subsequent
balance sheet date increases after deducting the selling expenses, the previously written down amount shall
be restored, and the held-for-sale standard shall be applied after being classified as held-for-sale The
amount of asset impairment loss recognized for non-current assets subject to measurement requirements
shall be reversed, and the reversal amount shall be included in the current profit and loss, and the book
value of each non-current asset in the disposal group shall be subject to the measurement provisions of the
held-for-sale standard except for goodwill. The proportion increases its book value proportionally; the
book value of goodwill that has been written off, and the non-current assets that are subject to the
measurement requirements of the held-for-sale standard, the asset impairment loss recognized before being
classified as held-for-sale shall not be reversed.
No depreciation or amortization is provided for the non-current assets held for sale or the non-current
assets in the disposal group, and the interest and other expenses of the liabilities in the disposal group held
for sale continue to be recognized.
When the non-current assets or disposal groups no longer meet the classification conditions of the
held-for-sale category, they will no longer be classified as held-for-sale categories or the non-current assets
will be removed from the held-for-sale disposal group, and the lower of the following is measured:
(a) The book value before being classified as held-for-sale category, adjusted according to the depreciation,
amortization or impairment that should have been recognized under the assumption that it was not
classified as held-for-sale category;
(b) The recoverable amount.
4.19 Debt investment
For the confirmation method and accounting treatment method of expected credit loss of debt investment,
please refer to Note IV. 10 - Financial Instruments.
4.20 Other debt investments
For the confirmation method and accounting treatment method of expected credit losses of other debt
investments, please refer to Note IV. 10 - Financial Instruments.
4.21 Long-term receivables
For the confirmation method and accounting treatment method of the expected credit loss of long-term receivables, please refer to Note IV. 10 - Financial Instruments.
4.22 Long-term equity investment
Long-term equity investment refers to the equity investment in which the company controls and has significant influence on the investee, as well as the investment in its joint ventures.
4.22.1 Determination of initial investment cost
Long-term equity investment acquired through a business combination: For a business combination
involving enterprises under common control, the initial investment cost of a long-term equity investment is
the holding share of the acquiree's equity in the ultimate controlling party's consolidated financial
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
statements measured at the carrying amounts at the acquisition date. For a business combination not
involving enterprises under common control, the initial investment cost of a long-term equity investment is
the cost of acquisition determined at the date of acquisition.
For a long-term equity investment acquired in cash, the initial investment cost is the amount of cash paid.
For a long-term equity investment acquired by issuing equity securities, the initial investment cost is the fair
value of the equity securities issued. For a long-term equity investment acquired by debt restructuring, the
initial investment cost is determined according to related requirements of Accounting Standards for
Business Enterprises No. 12- Debt Restructuring. For a long-term equity investment acquired by exchange
of non-cash assets, the initial investment cost is determined according to related requirements of
Accounting Standards for Business Enterprises No. 7- Exchange of Non-monetary Assets .
4.22.2 Subsequent measurement and recognition of profit or loss
a) Where the Company is able to exercise control over an investee, the long-term equity investment is
accounted for using the cost method.
Long-term equity investments accounted for using the cost method are priced at the initial investment cost.
Additional or recovered investment should adjust the cost of long-term equity investment. Cash dividends
or profits announced to be distributed by the investee are recognized as investment income for the current
period.
b) Where the Company has investment in associates and joint ventures, the long-term equity investment is
accounted for using the equity method.
When the long-term equity investment is accounted for by the equity method, if the investment cost of the
long-term equity investment is greater than the share of the fair value of the identifiable net assets of the
investee at the time of investment, the investment cost of the long-term equity investment shall not be
adjusted; the investment cost of the long-term equity investment is less than If the investee should enjoy a
share of the fair value of the identifiable net assets of the investee at the time of investment, the book
value of the long-term equity investment shall be adjusted, and the difference shall be included in the
current profit and loss of the investment.
In the equity method accounting, when long-term equity investment is obtained, the investment profit and
loss and other comprehensive income are respectively recognized according to the share of net profit and
loss and other comprehensive income realized by the investee that should be enjoyed or shared, and the
book value of long-term equity investment shall be adjusted. The investing enterprise shall calculate the
portion that should be distributed according to the profits or cash dividends declared and distributed by the
invested unit, and correspondingly reduce the book value of the long-term equity investment. The investor
shall adjust the book value of the long-term equity investment and include it in the owner's equity for other
changes in the owner's equity other than the net profit and loss, other comprehensive income and profit
distribution of the investee.
To confirm the net loss of the investee, the book value of the long-term equity investment and other
long-term equity that substantially constitutes the net investment in the investee shall be written down to
zero, unless the company is obliged to bear additional losses to the investee . If the invested unit realizes a
net profit in the future, the investing enterprise shall resume the recognition of the profit-sharing amount
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
after its profit-sharing amount makes up for the unrecognized loss-sharing amount. For other changes in
the owner's equity of the investee other than net profit and loss, other comprehensive income and profit
distribution, the book value of the long-term equity investment is adjusted and included in the owner's
equity.
Long-term equity investments are accounted for under the equity method. When recognizing investment
gains and losses, the net profit of the investee is first adjusted to the fair value of the investee's identifiable
assets, accounting policies and accounting periods when the investment is obtained, and then adjustments
should be made according to the appropriate amount. The net profit or loss share of the investee that
enjoys or should be shared is recognized in the current investment profit and loss. The unrealized profit
and loss of internal transactions with associates and joint ventures shall be calculated according to the
shareholding ratio and attributable to the company, and the investment profit and loss shall be recognized
on the basis of offset.
4.22.3 Basis for recognition of joint control or significant influence over an investee
Joint control refers to the common control of an arrangement in accordance with relevant agreements, and
the relevant activities of the arrangement must be decided by the unanimous consent of the participants
sharing the control rights. When judging whether there is joint control, the first determine is whether all
participants or a combination of participants collectively control the arrangement. If all participants or a
group of participants must act in unison to decide the relevant activities of an arrangement, it is considered
that all participants or a group of parties collectively control the arrangement. Secondly, it is judged
whether the decision-making of the relevant activities of the arrangement must be unanimously agreed by
the participants who collectively control the arrangement. If there is a combination of two or more parties
that can collectively control an arrangement, it does not constitute joint control. When judging whether
there is joint control, the protective rights enjoyed are not considered.
Significant influence refers to the power to participate in the decision-making of an enterprise's financial
and operating policies, but cannot control or jointly control the formulation of these policies with other
parties. When determining whether it can exert significant influence on the investee, consider the voting
shares directly or indirectly held by the investor and the impact of current executable potential voting rights
held by the investor and other parties after it is assumed to be converted into the equity of the investee,
including the current convertible warrants, share options and convertible corporate bonds issued by the
investee.
4.23 Investment property
Investment real estate refers to real estate held for rent or capital appreciation, or both, including leased
land use rights, land use rights held and ready to be transferred after appreciation, and leased buildings.
Investment property of the Company use rights held for resale after appreciation. Investment property is
initially measured at acquisition cost, and is subsequently measured using the cost method or using the fair
value model.
4.23.1 Using the cost model
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
The investment real estate is depreciated or amortized on a straight-line basis according to the following
service life and estimated net residual value rate:
Category Depreciation period (years) Residual rate Annual depreciation rate
Buildings 20-40 0%-10% 2.25%-5.00%
4.23.2 Using the fair value model
No depreciation or amortization is made for investment real estate, and its book value is adjusted based on
the fair value of the investment real estate on the balance sheet date, and the difference between the fair
value and the original book value is included in the current profit and loss.
4.24 Fixed assets
4.24.1 Recognition criteria for fixed assets
Fixed assets refer to tangible assets held for the purpose of producing commodities, services rendering,
renting or business administration with useful lives exceeding one accounting year. Fixed assets can be
recognized when the following criteria are met: a) It is probable that the economic benefits relating to the
fixed assets will flow into the Company; and b) The costs of the fixed assets can be measured reliably.
4.24.2 Classification and depreciation method of fixed assets
The categories of fixed assets mainly include: buildings, boats & nets, machinery & equipment,
transportation equipment, furniture and office equipment. The Company adopts the straight line method
for depreciation. The useful life and residual value of an asset is assessed based on its nature and the
manner of use. At the end of each financial year, the useful lives, residual values and the depreciation
method are reviewed, and adjusted if there are variances with the original estimates. Other than fully
depreciated assets which are still in use and land individually measured and recorded, depreciation is
provided for all fixed assets.
Category The method for Depreciation period Residual rate Annual depreciation rate
depreciation (years)
Buildings Straight-line depreciation 20-40 0%-10% 2.25%-5.00%
Boats & nets Straight-line depreciation 5-30 3%-5% 3.17%-19.40%
Machinery & equipment Straight-line depreciation 8-20 0%-10% 4.50%-12.50%
Transportation equipment Straight-line depreciation 5 0%-10% 18.00%-20.00%
Furniture and office equipment Straight-line depreciation 5 0%-10% 18.00%-20.00%
4.25 Construction in progress
The construction in progress of the Company includes self-construction and sub-contracting construction.
Construction in progress is transferred to fixed assets when it has reached the working condition for its
intended use. The recognition criteria of intended use include any of the followings: a) The tangible work
22
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
of fixed assets (including installation) have been entirely or substantively completed; b) Trial production or
trial operation has occurred whose outcome indicates the asset can be operated properly or manufacture
quality product steadily; c) No expenditure or insignificant expenditure occur subsequently for the
constructed asset; d) The constructed asset has achieved or substantively achieved the requirement of
design or contract.
4.26 Borrowing costs
4.26.1 Recognition criteria for capitalization of borrowing costs
Borrowing costs are capitalized when they are directly attributable to the acquisition, construction or
production of a qualifying asset and included in the cost of related assets. Qualifying assets that meet
conditions for capitalization are fixed assets, investment property, inventory or other assets that take a
substantial period of time for construction or production in order to get ready for their intended use or sale.
Other borrowing costs are recognized as expenses and recorded in profit or loss for the current period
when incurred. Borrowing costs include borrowing interest, amortization of discount or premium,
auxiliary expenses, and foreign exchange differences arising from foreign currency borrowings.
4.26.2 Borrowing costs will be capitalized if they meet the following conditions at the same time
(a) The asset expenditure has occurred, and the asset expenditure includes the cash paid for the purchase,
construction or production of assets eligible for capitalization, the transfer of non-cash assets or the
payment of interest-bearing debts;
(b) The borrowing costs have been incurred;
(c) The acquisition, construction or production activities necessary to make the asset ready for its intended
use or sale have begun.
The capitalization of borrowing costs shall cease when the purchased, constructed or produced assets that
meet the capitalization conditions are ready for intended use or sale. If an asset that meets the capitalization
conditions is abnormally interrupted in the process of acquisition, construction or production, and the
interruption lasts for more than 3 months, the capitalization of borrowing costs will be suspended. The
borrowing costs incurred during the interruption period are recognized as expenses and included in the
current profit and loss until the acquisition, construction or production of the asset resumes. The
capitalization of borrowing costs continues if the interruption is a necessary procedure for the acquired,
constructed or produced assets eligible for capitalization to be ready for their intended use or sale.
4.26.3 During the capitalization period, the capitalized amount of interest (including the amortization of
discount or premium) for each accounting period shall be determined in accordance with the following
provisions:
(a) If a special loan is borrowed for the purchase, it is determined by the amount interest expense actually
incurred in the current period of the special loan, minus the interest income obtained from the unused loan
23
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
funds or the investment income obtained from temporary investment.
(b) If general borrowings are occupied for the purchase, it is determined by the weighted average of
accumulated asset expenditures of the accumulated asset expenditures in exceed the special borrowings by
the capitalization rate of occupied general borrowings. The capitalization rate is determined based on the
weighted average interest rate of general borrowings.
If there is a discount or premium on the loan, the amount of the discount or premium amortized in each
accounting period shall be determined according to the actual interest rate method, and the interest amount
of each period shall be adjusted. During the capitalization period, the capitalized amount of interest in each
accounting period shall not exceed the actual amount of interest incurred on the relevant borrowings in the
current period.
4.26.4 The auxiliary expenses incurred by special borrowing, which are incurred before the purchased, built
or produced assets meeting the capitalization conditions reach the scheduled state of being available for use
or sale, shall be capitalized according to the amount incurred when incurred and included into the cost of
the assets meeting the capitalization conditions; Where an asset purchased, built or produced conforming
to the capitalization conditions has reached the pre-scheduled state of being usable or saleable, it shall be
recognized as an expense according to the amount incurred at the time of occurrence and recorded into the
profit or loss for the current period. Auxiliary expenses incurred by general borrowing shall be recognized
as expenses according to the amount incurred when incurred, and shall be recorded into the profit or loss
for the current period.
4.27 Right-of-use assets
The right-of-use assets class of the company mainly includes housing and buildings.
4.27.1 Conditions for the confirmation of the right-of-use assets
The right-of-use assets refer to the right that the company, as the lessee, can use the leased assets during the
lease term. The company shall confirm the right-of-use assets on the date when the lease term begins.
Right-of-use assets are recognized when economic benefits are likely to flow in and costs can be measured
reliably.
4.27.2 Initial measurement of right-of-use assets
The right-of-use assets are initially measured at cost, which includes:
(a) The initial measurement amount of lease liabilities.
(b) The amount of lease payment paid on or before the beginning of the lease term, if there is lease
incentive, will be deducted from the amount of lease incentive already enjoyed.
(c) Initial direct expenses incurred by the lessee.
(d) The expected costs incurred by the lessee in disassembling and removing the leased asset, restoring the
site where the leased asset is located or restoring the leased asset to the state stipulated in the lease terms.
4.27.3 Subsequent measurement of the right-of-use assets
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
(a) Use the cost model to measure the right-of-use assets.
(b) Depreciation of the right-of-use assets. Where the ownership of the leased asset can be reasonably
determined at the end of the lease term, the company shall calculate depreciation during the remaining
service life of the leased asset. Where it is not reasonably certain that the ownership of the leased asset can
be acquired at the end of the lease term, the company shall calculate depreciation during the period during
which the lease term and the remaining service life of the leased asset are shorter. The specific depreciation
methods of various right-of-use assets are as follows.
4.27.4 Depreciation methods of various right-of-use assets
All types of fixed assets are depreciated using the straight-line method according to the following service
life time, estimated net residual value rateand depreciation rate:
Category The method for depreciation Depreciation period (years) Residual rate Annual depreciation rate
Buildings Straight-line depreciation 1.5-3 - -
4.27.5 Change of lease
When the lease liabilities are re-measured according to the present value of the changed lease payments and
the book value of the right-of-use assets is adjusted accordingly, if the book value of the right-of-use assets
has been reduced to zero but the lease liabilities still need to be further reduced, the remaining amount shall
be recorded into the profit or loss for the current period.
4.27.6 Impairment test method and impairment provision method of usufruct
On the balance sheet date, if there is any indication that the right-of-use assets are impaired, the
corresponding impairment provision shall be set aside according to the difference between the carrying
value and the recoverable amount.
4.28 Intangible assets
4.28.1 Intangible assets refer to identifiable non-monetary assets without physical form owned or
controlled by an enterprise. Intangible assets are initially measured at cost, and their service life is analyzed
and judged upon acquisition of intangible assets.
4.28.2 The company usually considers the following factors in determining the service life of intangible
assets:
(a) The usual life cycle of the products produced with the asset and the available information about the
service life of similar assets;
(b) The current situation of technology and process and the estimation of the future development trend;
(c) Market demand for products or services produced by the assets;
(d) Actions expected by current or potential competitors;
(e) The expected maintenance expenditure to maintain the ability of the asset to bring economic benefits,
and the company's expected ability to pay the related expenditure;
(f) Relevant legal provisions or similar restrictions on the asset control period, such as the franchise period,
25
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
lease period, etc.;
(g) Correlation with the service life of other assets held by enterprises.
If it is impossible to foresee the period during which intangible assets bring economic benefits to the
company, they shall be regarded as intangible assets with uncertain service life.
4.28.3 For intangible assets with limited service life, they shall be amortized systematically and reasonably
(or by straight line method) during their service life. At the end of each year, the company shall review the
service life and amortization method of intangible assets with limited service life. If the service life and
amortization method of intangible assets are different from those previously estimated, the amortization
period and amortization method will be changed.
For intangible assets with limited service life, when the straight-line method is used to calculate the
amortization amount, the service life and residual rate of each intangible asset are as follows:
Category Amortization period (years) Residual rate
land use rights 42-49 0%
software 5-10 0%
4.28.4 Internally generated projects
(a) Expenditure of internal research and development project, including expenditure of research stage and
expenditure of development stage, among which: Research is an original and planned investigation for the
acquisition and understanding of new scientific or technical knowledge; Development refers to the
application of research results or other knowledge to a plan or design for the production of new or
substantially improved materials, devices, products, etc., prior to commercial production or use.
(b) Expenditure in the research phase is recognized as an expense in profit or loss for current period when
it is incurred. Expenditure in the development phase of internally generated projects is capitalized if they
meet the following conditions at the same time:
1) It is technically feasible to complete the intangible asset so that it can be used or sold;
2) The intent that the intangible asset can be completed and used or sold;
3) The way in which the intangible assets can generate economic benefits include the ability to prove that
the products produced by using the intangible assets have a market or that the intangible assets themselves
exist in the market. If the intangible assets will be used internally, its usefulness shall be proved;
4) Have sufficient technical, financial and other resource support to complete the development of the
intangible asset and have the ability to use or sell the intangible asset;
5) Expenses attributable to the development stage of the intangible asset can be measured reliably.
4.29 Goodwill
Goodwill is the difference between the initial merger cost and the fair value share of identifiable net assets
acquired in the combination of enterprises not under common control. The company does not amortize
goodwill, which is measured by the amount of costs less accumulated impairment provisions and shown
26
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
separately in the consolidated balance sheet.
4.30 Impairment of long-term assets
For fixed assets, construction in process, intangible assets with limited service life, investment property
measured by cost model and non-current non-financial assets such as long-term equity investment in
subsidiaries, cooperative enterprise and associated enterprises, the company shall judge whether there is any
sign of impairment on the balance sheet date. If there is any indication of impairment, the recoverable
amount shall be estimated and the impairment test shall be conducted. Goodwill, intangible assets with
uncertain service life and intangible assets that have not yet reached a usable state, regardless of
whether there are signs of impairment, are tested for impairment every year.
If the impairment test results show that the recoverable amount of an asset is lower than its carrying value,
the impairment provision shall be made and the impairment loss shall be recorded according to the
difference. The recoverable amount is the higher of the net value of the fair value of the asset less the
disposal expense and the present value of the estimated future cash flows of the asset. The fair value of the
asset is determined according to the sales agreement price in a fair transaction; If there is no sales
agreement but there is an active market for the asset, the fair value shall be determined according to the bid
price of the buyer of the asset; Where there is no sale agreement and an active market for the asset, the fair
value of the asset is estimated based on the best available information. Disposal costs include legal fees
related to the disposal of assets, related taxes, handling fees and direct expenses incurred to bring the assets
into a saleable state. The present value of the estimated future cash flow of an asset is determined according
to the estimated future cash flow generated during the continuous use of the asset and the final disposal by
choosing an appropriate discount rate. The asset impairment reserve is calculated and recognized on the
basis of a single asset. If it is difficult to estimate the recoverable amount of a single asset, the recoverable
amount of the asset group to which the asset belongs shall be determined. Asset group is the minimum
portfolio of assets that can generate cash inflow independently.
As for the impairment test of goodwill, the book value of goodwill formed as a result of business
combination shall be allocated to the relevant asset group in a reasonable way from the purchase date; If it
is difficult to allocate to the related asset group, allocate to the related asset group portfolio. The relevant
asset group or asset group combination is the asset group or asset group combination that can benefit from
the synergies of the business combination and is not larger than the reporting segment identified by the
Company.
When conducting impairment tests on related asset groups or asset group combinations containing
goodwill, if there are signs of impairment in the asset groups or asset group combinations related to
goodwill, the impairment tests shall first be conducted on the asset groups or asset group combinations that
do not contain goodwill to calculate recoverable amounts and confirm the corresponding impairment
losses. And goodwill of the asset group or combination of group assets impairment test, comparing its
book value and recoverable amount, such as the recoverable amount is lower than the book value, the
27
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
amount of impairment loss first deduction allocation to the asset group or combination of group assets in
the book value of the goodwill, again according to the asset group or combination of group assets all assets
except goodwill in the book value of the share, Deduct the carrying value of other assets in proportion,
provided that the carrying value of each asset after deduction shall not be less than the net of the fair value
of the asset minus disposal expenses (if determined) and the present value of the estimated future cash
flows of the asset (if determined), whichever is higher, and shall not be less than zero.
Once the aforesaid impairment loss of assets is recognized, the part whose value can be recovered shall not
be turned back in subsequent periods.
4.31 Long-term deferred expenses
Long-term deferred expenses refer to expenses that have been paid but their benefit period is more than
one year (excluding one year). Long-term deferred expenses will be amortized in the benefit periods. If one
long-term deferred expense can't benefit the Company in the subsequent periods, the remaining balance of
the long-term deferred expense shall be recognized as expense in profit or loss for the current period.
Long-term deferred expenses are amortized on an average basis using the straight-line method over the
following years:
Category Amortization period (years)
Renovation costs 2 to 5 years
4.32 Contract liabilities
Contractual liabilities reflect obligations to transfer goods to customers for consideration received or
receivable. If the customer has paid the contract consideration or obtained the right to unconditionally
receive the contract consideration before transferring the goods to the customer, the contract liability shall
be recognized according to the amount received or receivable at the earlier date of the actual payment made
by the customer and the amount due and payable. Contract assets and liabilities under the same contract
shall be shown on a net basis, and those under different contracts shall not be set off.
4.33 Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Company in exchange
for service rendered by employees or for the termination of employment relationship. Employee benefits
include short-term employee benefits, post-employment benefits, termination benefits and other long-term
employee benefits. The benefits provided by the company to employees’ spouses, children, dependents,
survivors of deceased employees and other beneficiaries are also considered as employee benefits.
4.33.1 Short-time employee benefits
Short-term employee benefits refer to the employee compensation that the company needs to pay in full
within 12 months after the end of the annual report period for the employee to provide relevant services.
Short-term employee benefits include employee salary, bonus, allowance and subsidy, employee welfare,
28
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
medical insurance premium, industrial injury insurance premium and maternity insurance premium, housing
provident fund, labor union funds and employee education funds, short-term paid absenteeism, short-term
profit sharing plan, non-monetary welfare and other short-term remuneration.
In the accounting period in which employees have rendered services, the Company recognizes the
short-term employee benefits as liability, and charges to profit or loss for the current period or includes in
the cost of relevant assets.
4.33.2 Post-employment benefits
Post-employment benefits refer to various forms of remuneration and welfare provided by the company
for the service provided by the employee after the employee retires or terminates the labor relationship
with the company, excluding short-term remuneration and dismissal welfare.
The post-employment benefits plan includes a defined contribution plan and a defined benefit plan.
Among them, the set contribution plan refers to the post-employment welfare plan in which the company
no longer bears the further payment obligation after the fixed expenses are deposited in the independent
fund. Defined benefit plans refer to post-employment benefit plans other than defined contribution plans.
Defined contribution plan including basic endowment insurance, unemployment insurance, etc. During the
accounting period when the employee provides services, the amount payable calculated according to the
defined contribution plan is recognized as a liability and recorded into the profit or loss for the current
period or the cost of related assets.
At the end of the reporting period, the employee compensation costs arising from the defined benefit
plans are recognized as the following components:
(a) Service cost, including current service cost, past service cost and settlement gain or loss.
(b) Net interest on defined benefit plan net liabilities or net assets, including interest income on plan assets,
interest expense on defined benefit plan obligations, and interest affected by asset caps.
(c) Recalculate changes in net liabilities or net assets of defined benefit plans
Unless other accounting standards require or allow the cost of employee benefits to be included in the cost
of assets, items (a) and (b) above shall be included in the current profit and loss; Item (c) shall be included
in other comprehensive income and shall not be allowed to be transferred back to profit and loss in
subsequent accounting periods, but such amounts recognized in other comprehensive income may be
transferred within the scope of equity.
Under the defined benefit plan, the earliest date on which past service costs are recognized as current
expenses is:
(a) When modifying the defined benefit plan.
(b) When the company confirms relevant restructuring expenses or dismissal benefits.
Recognize a settlement gain or loss at the time of defined benefit plan settlement.
4.33.3 Termination benefits
Termination benefits refer to the compensation given to employees by the company for terminating their
labor relations with employees before the expiration of their labor contracts or for encouraging employees
to accept layoffs voluntarily.
29
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Termination benefits provided by the Company to employees are recognized as an employee benefit
liability and charged to profit or loss for the current period at the earlier of the following dates: (a) The
Company cannot unilaterally withdraw the offer of termination benefits because of an employment
termination plan or a curtailment proposal; and (b) When the Company recognizes costs or expenses
related to the restructuring that involves the payment of termination benefits.
4.33.4 Other long-term employee benefits
Other long-term employee benefits refers to all employee compensation except short-term compensation,
post-separation benefits and dismissal benefits, including long-term paid absenteeism, long-term disability
benefits, long-term profit sharing plans, etc.
If other long-term employee benefits provided by the Company to the employees meet the conditions for
classifying as a defined contributions plan, those benefits are accounted for in accordance with the above
requirements relating to defined contribution plan. Besides, net obligations or net assets of other long-term
employee benefits are recognized and measured in accordance with the above requirements relating to
defined benefits plan. At the end of the reporting period, the enterprise shall recognize the employee
compensation costs generated by other long-term employee benefits as the following components:
(a) Service cost
(b) Net interest on net liabilities or net assets of other long-term employee benefits
(c) Changes in net liabilities or net assets of other long-term employee benefits are re-measured.
In order to simplify the related accounting treatment, the total net amount of the above items is included in
the current profit and loss or the cost of the related assets
4.34 Lease liabilities
Recognize the present value of outstanding lease payments as lease liabilities on the commencement date
of the lease term, except for short-term leases and leases of low value assets. When calculating the present
value of the lease payment, the lease embedded interest rate is used as the discount rate. If the inherent
interest rate cannot be determined, the incremental interest rate of the lessee shall be used as the discount
rate. The interest expense of the lease liability during each period of the lease term shall be calculated
according to the fixed periodic interest rate and recorded into the profit and loss of the current period,
except for those recorded into the cost of assets in accordance with note 4 and 25. Variable lease payments
that are not included in the measurement of lease liabilities shall be included in current profit and loss
when actually incurred, unless otherwise stipulated to be included in the cost of related assets.
Lease term began, in the future when substantial changes occurred in the fixed payment, the guaranteed
residual value is expected to cope with the amount of change, is used to determine the lease payment ratio
index or change, call options, renewal options or terminate the option evaluation results or the actual
exercise changes, according to the changes of the lease the present value of the payments to measure lease
liability.
4.35 Estimated liabilities
Obligations related to contingent events that meet the following conditions at the same time are recognized
as estimated liabilities：
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
(a) The obligation is a present obligation of the enterprise;
(b) The performance of the obligation is likely to result in the outflow of economic benefits from the
enterprise;
(c) The amount of the obligation can be measured reliably.
Estimated liabilities should be initially measured according to the best estimate of the expenditure required
to perform the relevant current obligations.
4.36 Share-based payment
4.36.1 Types of share-based payment
Share-based payment is divided into equity-settled share-based payment and cash-settled share-based
payment.
Equity-settled share-based payment refers to a transaction in which an enterprise uses shares or other
equity instruments as consideration in order to obtain services. The equity instruments referred to here are
the enterprise's own equity instruments.
Cash-settled share-based payment refers to a transaction in which an enterprise undertakes an obligation to
deliver cash or other assets calculated and determined on the basis of shares or other equity instruments in
order to obtain services.
4.36.2 Determination method of fair value of equity instruments.
If there is an active market for equity instruments, it shall be determined according to the quotation in the
active market.
If there is no active market for equity instruments, use valuation techniques, including reference to prices
used in recent market transactions between parties who are familiar with the situation and willing to trade,
reference to the current fair value, discounted cash flow of other financial instruments that are substantially
the same. It is determined by methods such as cash method and option pricing model.
4.36.3 The basis for confirming the best estimate of vested equity instruments.
On each balance sheet date, according to the latest follow-up information such as the change in the number
of exercisable people and the completion of performance indicators, the number of stock options that are
expected to be exercised is revised, and the expenses to be apportioned in each period are confirmed on
this basis. For an option cost spanning multiple accounting periods, it can generally be apportioned
according to the proportion of the waiting period length of the option to the entire waiting period length in
a certain accounting period.
4.36.4 Accounting treatment related to implementation, modification and termination of share-based
payment plan
4.36.4.1 The equity-settled share-based payment that is exercisable immediately after the grant in exchange
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
for employee services shall be included in the relevant costs or expenses according to the fair value of the
equity instruments on the grant date, and the capital reserve shall be increased accordingly.
Equity-settled share-based payment that can be exercised in exchange for employee services after the
completion of the service during the waiting period or when the specified performance conditions are met,
on each balance sheet date during the waiting period, the best estimate of the number of exercisable equity
instruments is Based on the fair value of the equity instruments on the grant date, the services obtained in
the current period are included in the relevant costs or expenses and capital reserves.
On the balance sheet date, if the subsequent information indicates that the number of exercisable equity
instruments is different from the previous estimate, adjustments shall be made and adjusted to the actual
number of exercisable equity instruments on the exercise date.
For equity-settled share-based payments, no adjustments will be made to the confirmed costs and total
owner's equity after the vesting date. On the exercise date, the share capital and share premium will be
confirmed according to the exercise situation, and the capital reserves (other capital reserves) confirmed
during the waiting period will be carried forward.
For the granted equity instruments such as options in an active market, the fair value shall be determined
according to the quotation in the active market. For granted options and other equity instruments that do
not have an active market, the option pricing model should be used to determine their fair value, and the
option pricing model selected should at least consider the following factors:
a) The exercise price of the option;
b) The validity period of the option;
c) The current price of the underlying shares;
d) Estimated stock price volatility;
e) Estimated dividends on the shares;
f) The risk-free interest rate during the life of the option.
4.36.4.2 The cash-settled share-based payment that can be exercised immediately after the grant shall be
included in the relevant costs or expenses at the fair value of the liabilities assumed by the enterprise on the
grant date, and the liabilities shall be increased accordingly.
For the cash-settled share-based payment that can only be exercised after completing the services during
the waiting period or meeting the specified performance conditions, on each balance sheet date during the
waiting period, on the basis of the best estimate of the vesting situation, the liability shall be borne by the
enterprise according to the the fair value amount of the service obtained in the current period is included in
the cost or expense and the corresponding liability.
On each balance sheet date and settlement date before the settlement of the relevant liabilities, the fair
value of the liabilities is re-measured, and the changes are included in the current profit and loss.
4.37 Revenues
Accounting policies used for revenue recognition and measurement.
4.37.1 Principles of revenue recognition
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
When the contract with the customer meets the following conditions at the same time, the revenue is
recognized when the customer obtains the control of the relevant commodity:
(a) The parties to the contract have approved the contract and promised to perform their respective
obligations;
(b) The contract clarifies the rights and obligations of the parties to the contract in relation to the
transferred goods or the provision of labor services;
(c) The contract has clear payment terms related to the transferred goods;
(d) The contract has commercial substance, that is, the performance of the contract will change the risk,
time distribution or amount of future cash flows of the Group;
(e) The consideration entitled to the transfer of goods to the customer is likely to be recovered.
Evaluate the contract on the contract inception date, identify each individual performance obligation
contained in the contract, and allocate the transaction price to each individual performance obligation
according to the relative proportion of the stand-alone selling price of the commodities promised by each
individual performance obligation. In determining the transaction price, the influence of factors such as
variable consideration, significant financing components in the contract, non-cash consideration, and
consideration payable to customers are considered. Then determine whether each individual performance
obligation is performed within a certain period of time or at a certain point in time, and recognize revenue
separately when each individual performance obligation is performed.
If one of the following conditions is met, the performance obligation is fulfilled within a certain period of
time; otherwise, the performance obligation is fulfilled at a certain point in time:
a) The customer obtains and consumes the economic benefits brought by the company's performance
when the company performs the contract;
b) The customer can control the commodities under construction in the process of contract performance;
c) The commodities produced by the enterprise during the performance of the contract have irreplaceable
uses, and the enterprise has the right to receive payment for the part of the performance that has been
completed so far during the entire contract period.
For performance obligations performed within a certain period of time, revenue is recognized according to
the progress of performance within that period. The progress of contract performance is determined by the
input method or output method according to the nature of the transferred goods. When the progress of
contract performance cannot be reasonably determined, and the costs incurred are expected to be
compensated, revenue shall be recognized according to the amount of costs incurred until the progress of
contract performance can be reasonably determined.
If one of the above conditions is not met, revenue will be recognized at the transaction price allocated to
the single performance obligation when the customer obtains control over the relevant commodity. The
following indications should be considered when judging whether a customer has acquired control of a
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
commodity:
The enterprise has the current right to receive payment for the product, that is, the customer has the
current payment obligation for the product;
The enterprise has transferred the legal ownership of the product to the customer, that is, the
customer already owns the legal ownership of the product;
The enterprise has transferred the commodity in kind to the customer, that is, the customer has
physically possessed the commodity;
The enterprise has transferred the main risks and rewards of the ownership of the commodity to the
customer, that is, the customer has obtained the main risks and rewards of the ownership of the
commodity;
The customer has accepted the product;
Other indications that the customer has obtained control of the goods.
4.37.2 The company's revenue recognition method
(a) The company's revenue recognized at a certain point in time when controlling the relevant assets:
The company's purse seine fishery products are sold overseas. Generally, revenue is recognized after the
fishery products are delivered to customers and the right of collection is obtained; in the case of export
sales through local countries, revenue is recognized when the shipment orders and bills of lading are
obtained.
The Company long-line fishery is transported back and sold domestically and trading parties confirm the
change of the freight’s ownership according to sales contracts and decision tables based on values.
Financial department confirm the revenue on the basis of sales contract, decision tables.
The process of the company’s aquatic products domestic sales: Domestic Sales Department (tuna sales
center) ,according to domestic customers’ fax or mail orders, issue delivery confirmation. The company
delivers goods according to the invoice issued by the sales department and signed by the warehouse
management department, and confirms the sales revenue after the customer signs for it.
The oversea sales of the Company’s aquatic products processing: After the international trade
department obtains the purchase order from the foreign customer, it issues an export delivery confirmation
and arranges the storage and transportation department to stock the goods. The company confirms the
sales revenue based on the export receipts such as the invoice, packing list, and customs declaration.
(b) The company's revenue recognized during the performance period:
The recognition procedure of the company’s cold storage revenue：After the warehouse management
department obtains the customer’s order, the goods will be issued to the customer to confirm the specific
name, specification, number of pieces, weight and date of the goods after the goods are actually put in the
warehouse. The warehouse management supervisor will sign and the customer’s signature for confirmation.
The number of storage days is the basis for billing to recognize revenue.
4.38 Government grants
Government grants are the monetary assets and non-monetary assets received from the government
without consideration to be paid which are not including the capital injected by the government acted as an
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SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
owner role.
4.38.1 Judgment basis and accounting treatment method of government grants related to assets
If the government documents explicitly state that the government grants will be used to establish or form
long-term assets, the government grants will be classified as government grants related to assets.
Government grants related to assets are recognized as deferred income. They are amortized in profit or loss
for each period over the related assets' estimated useful period on a systematic basis.
If the relevant assets are sold, transferred, scrapped or damaged before the end of their useful life, the
undistributed balance of relevant deferred income shall be transferred to the profit and loss of the current
period of asset disposal.
Government grants related to the Company's routine operation will be recorded in other income based on
the nature of its economic substance and government grants not related to the Company's routine
operation will be recorded in non-operating income or expenses.
4.38.2 Judgment basis and accounting treatment method of government grants related to income
Except those grants which are classified as government grants related to assets, other government grants
are classified as government grants related to income.
If there is no explicit subsidy object in the government document, the portion related to long-term assets
will be classified as government grants related to assets and the rest portion will be classified as government
grants related to income.
If the grant related to income is a compensation for related expenses or losses to be incurred in subsequent
periods, the grant is recognized as deferred income, and amortized in profit or loss over the periods in
which the related costs are recognized. If the grant related to income is a compensation for related
expenses or losses already incurred, the grant is recognized directly in profit or loss for the current period.
Government grants related to the Company's routine operation will be recorded in other income based on
the nature of its economic substance and government grants not related to the Company's routine
operation will be recorded in non-operating income or expenses.
If the company obtains policy-based preferential loan discounts, it shall distinguish two situations when the
finance allocates the discounted funds to the lending bank and the finance directly allocates the discounted
funds to the enterprise:
When a bank receives the discount interest fund from the financial sector and then provides a loan to the
Company with preferential interest rate, the Company accounts for the loan at the actual received amount
and related interest expenses will be calculated based on the principal and the preferential interest rate.
When the Company receives the discount interest fund from the financial sector directly, the discount
interest fund will be deducted from related borrowing cost.
4.38.3 The recognition timing for government grants
If the government subsidy is a monetary asset, the company will recognize it when it meets the conditions
attached to the government subsidy and is actually received; if the government subsidy is a non-monetary
35
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
asset, the company recognizes the government subsidy when it obtains the control right of the
non-monetary asset. Among them, non-monetary assets are measured at fair value; if the fair value cannot
be obtained reliably, it is measured at the nominal amount.
When the confirmed government grant needs to be returned, if there is a relevant deferred income balance,
the book balance of the relevant deferred income will be offset, and the excess will be included in the
current profit and loss; if there is no relevant deferred income, it will be directly included in the current
profit and loss.
4.39 Deferred tax asset and deferred tax liability
Income tax is accounted for using the balance sheet liability method. Temporary differences arising from
the difference between the carrying amount of an asset or liability (asset or liability not recognized in
balance sheet but the tax base is ascertained by the current tax laws and regulation, the tax base is the
temporary difference) and its tax base are recognized as deferred tax calculating by the effective tax rate in
the expected period to receive the asset or discharge the liability.
On the basis of calculating and determining the current income tax (that is, the income tax payable in the
current period) and the deferred income tax expenses (or gains), the sum of the two is recognized as the
income tax expenses (or gains) in the income statement, but Excludes income tax effects of transactions or
events that are directly included in owners' equity.
On the balance sheet date, review the book value of deferred tax assets. If it is probable that sufficient
taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to be
utilized, the carrying amount of the deferred tax asset is reduced.
4.40 Leases
A lease is a contract that transfers or acquires the right to control the use of one or more identified assets
for a specified period in exchange for or payment of consideration. At the inception date of a contract,
assess whether the contract is or contains a lease.
4.40.1 Company as the lessee
The main types of leased assets are office buildings and cold storage.
4.40.1.1 Initially measured
On the commencement date of the lease term, the right to use the leased asset during the lease term is
recognized as a right-of-use asset, and the present value of the unpaid lease payments is recognized as a
lease liability (except for short-term leases and leases of low-value assets). When calculating the present
value of lease payments, the interest rate implicit in the lease is used as the discount rate; if the interest rate
implicit in the lease cannot be determined, the incremental borrowing rate of the lessee is used as the
discount rate.
4.40.1.2 Subsequently measured
With reference to the relevant depreciation provisions of "Accounting Standards for Business Enterprises
No. 4 - Fixed Assets", the right-of-use assets are depreciated (see Note IV. 27 "Right-of-use assets"), and it
36
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
can be reasonably determined that the ownership of the leased assets will be obtained when the lease term
expires. Depreciation is accrued over the remaining useful life of the leased asset. If it cannot be reasonably
determined that the ownership of the leased asset can be obtained at the expiration of the lease term,
depreciation shall be accrued within the shorter of the lease term and the remaining useful life of the leased
asset.
For lease liabilities, the interest expense in each period of the lease term is calculated at a fixed periodic
interest rate, and is included in the current profit and loss or included in the cost of relevant assets. Variable
lease payments that are not included in the measurement of lease liabilities are included in the current profit
and loss or the cost of related assets when they are actually incurred.
4.40.1.3 After the lease commencement date, when there is a change in the actual fixed payment amount, a
change in the estimated payable amount of the guaranteed residual value, a change in the index or ratio
used to determine the lease payment amount, a purchase option, a lease renewal option or a termination
option When there is a change in the assessment result or the actual exercise of the option, the company
re-measures the lease liability according to the present value of the changed lease payments, and adjusts the
book value of the right-of-use asset accordingly. If the book value of the right-of-use asset has been
reduced to zero, but the lease liability still needs to be further reduced, the remaining amount shall be
included in the current profit and loss.
4.40.1.4 Short-term leases and leases of low-value assets
For short-term leases (leases with a term of less than 12 months on the lease commencement date) and
leases of low-value assets, a simplified approach is adopted, and the right to use assets and lease liabilities
are not recognized. The Company recognizes lease payments for operating leases in profit or loss applying
a straight-line basis in each period over the lease term. The Company capitalized the initial direct expenses
incurred which are amortizes in profit or loss over the lease term on the same recognition basis as the lease
income.
4.40.2 Company as lessor
On the lease inception date, based on the substance of the transaction, leases are classified into finance
leases and operating leases. A finance lease is a lease that substantially transfers substantially all the risks and
rewards associated with ownership of the leased asset. Operating leases refer to leases other than finance
leases.
4.40.2.1 Operating lease
The Company recognizes lease payments for operating leases in profit or loss applying a straight-line basis
in each period over the lease term. Variable lease payments related to operating leases that are not included
in lease receipts are included in profit or loss for the current period when they are actually incurred.
4.40.2.2 Finance lease
On the commencement date of the lease period, the financial lease receivables are recognized and the
financial lease assets are derecognized. The financial lease receivables are initially measured with the net
37
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
investment in the lease (the sum of the unguaranteed residual value and the present value of the lease
receipts not yet received at the start date of the lease term, discounted at the interest rate embedded in the
lease), and the interest income during the lease period is calculated and recognized at a fixed periodic
interest rate. The variable lease payments obtained that are not included in the net lease investment
measurement are included in the current profit and loss when they are actually incurred.
4.40.2.3 Income adapted to the lease standard
The recognition procedure of the company’s Ship chartering revenue：Shandong Zhonglu Oceanic
Fisheries Transportation Co., Ltd. and HABITAT INTERNATIONAL CORPORATION uses time
charter for the chartering of transportation vessels. The company leases ships equipped with operators to
others for a certain period of time. During the lease period, it will be dispatched by the lessee, regardless of
whether it is operating or not, Lease fees are collected from the lessee on a daily basis, and the fixed costs
(such as personnel salaries, maintenance costs, etc.) are the responsibility of the company. Periodic
settlements are made with customers during the time lease period, and revenue is recognized based on the
number of lease days consistent with the customer.
The recognition procedure of the company’s housing and other rental revenue：After the company signs a
lease contract with the customer, it will collect the lease fee from the lessee according to the leased area and
contract unit price, and the fixed expenses incurred (such as personnel salaries, maintenance costs, etc.) will
be borne by the company. Regular settlements are made with customers during the lease period, and
revenue is recognized according to the lease period of the customers.
4.41 Operating lease and finance lease companies (the principles and methods for the confirmation of
annual lease in 2020 are as follows)
Treatment of an operating lease by a company as lessee
4.41.1 The treatment of rent
The Company recognizes lease payments for operating leases in profit or loss applying a straight-line basis
in each period over the lease term. Rent is included in the cost of related assets or profit or loss for the
current period.
4.41.2 Handling of initial direct expenses
The initial direct expenses incurred by the lessee in the operation of the lease shall be recorded into the
profit or loss for the current period.
4.41.3 The treatment of contingent rent
Under an operating lease, the lessee shall record the profit and loss of the contingent rent in the profit or
loss for the current period.
38
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
4.41.4 The treatment of incentive measures provided by the lessor
Under operating leases, the Company needs to include the rent paid or payable in the cost of relevant assets
or current profits and losses.
4.42 Changes of significant accounting policies and accounting estimates
4.42.1 The changes of accounting policies and reason for change
The Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 21 --
Leasing (hereinafter referred to as the "New Leasing Standards") in 2018. The company will implement the
New Leasing Standards and notice on January 1, 2021, and adjust the relevant content of accounting
policies.
Under the New Leasing Standards, the company elects not to re-evaluate whether a contract is a lease or
includes a lease for a contract that existed before the date of initial application. For leases as lessee, the
Company has chosen to adjust the cumulative impact of only leases outstanding as of January 1, 2021. The
cumulative effect amount of the first execution adjusts the amount of retained earnings and other related
items in the financial statements at the beginning of the current period of the first execution (i.e. January 1,
2021), and no adjustment is made to the comparable period information. Among them, for the finance
lease on the date of initial execution, the company, as the lessee, measures the right to use assets and lease
liabilities respectively according to the original book value of the assets in the finance lease and the finance
lease payable. For the operating lease on the date of initial execution, the lessee measures the lease liability
as the present value of the remaining lease payments discounted at the incremental borrowing rate on the
date of initial application; the unpaid rent accrued under the original lease criteria on an accrual basis shall
be included in the remaining lease payments.
For each lease, the Company elects to measure the right to use assets in accordance with one of the
following:
a. Assume the carrying value of the New Leasing Standards as of the commencement date of the lease
term (using the incremental borrowing rate on the first execution date as the discount rate);
b. An amount equal to the lease liability, adjusted as necessary according to the prepaid rent. And in
accordance with the revised Accounting Standards for Business Enterprises No. 8 -- Asset impairment, the
right-of-use assets are tested for impairment and corresponding accounting treatment is carried out.
The major changes and implications of the implementation of the New Leasing Standards are as follows:
According to the New Leasing Standards, the Company recognized the right-of-use assets of RMB
5,498,108.96 and lease liabilities of RMB 1,709,314.65 and non-current liabilities due within one year of
RMB 3,033,733.61 on January 1, 2021.
4.42.2 The New Lease Standards will be implemented for the first time since 2021
4.42.2.1 Consolidated Balance Sheet
Unit: RMB Yuan
39
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Item As at 1/1/2021 As at 1/1/2021 Amount of impact
Assets
Prepayments 17,764,804.55 17,128,089.89 -636,714.66
Right-of-use assets - 5,498,108.96 5,498,108.96
Liabilities
Other payables 8,487,724.32 8,606,070.36 118,346.04
Non-current liabilities due within one year - 3,033,733.61 3,033,733.61
Lease liabilities - 1,709,314.65 1,709,314.65
4.42.2.2 Balance Sheet
Unit: RMB Yuan
Item As at 1/1/2021 As at 1/1/2021 Amount of impact
Assets
Prepayments 1,873,295.83 1,497,219.79 -376,076.04
Right-of-use assets - 3,116,643.16 3,116,643.16
Liabilities
Other payables 78,050,679.94 78,140,930.74 90,250.80
Non-current liabilities due within one year - 2,009,743.15 2,009,743.15
Lease liabilities - 640,573.17 640,573.17
4.43 Significant accounting judgments and estimates
In the process of applying accounting policies, the company needs to make judgments, estimates and
assumptions about the book value of statement items that cannot be accurately measured due to the
inherent uncertainty of operating activities. These judgments, estimates and assumptions are made based on
the past historical experience of the company's management and taking into account other relevant factors.
These judgments, estimates and assumptions affect the reported amounts of revenue, expenses, assets and
liabilities and the disclosure of contingent liabilities at the balance sheet date. However, the actual results
caused by the uncertainty of these estimates may differ from the current estimates of the company's
management, resulting in significant adjustments to the carrying amounts of the assets or liabilities affected
in the future.
The company regularly reviews the aforementioned judgments, estimates and assumptions on a going
concern basis. If the change in accounting estimates only affects the current period of the change, the
amount of impact will be recognized in the current period of the change; if it affects both the current
period of the change and the future period, the affected amount shall be confirmed in the current period of
the change and the future period.
On the balance sheet date, the important areas where the company needs to make judgments, estimates and
assumptions about the amounts of financial statement items are as follows:
(1) Revenue recognition
As stated in Note IV.37, “Revenue”, the recognition of revenue involves the following significant
accounting judgments and estimates:
40
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Estimate the recoverability of consideration to which the customer is entitled for the transfer of goods to
the customer:
Enterprises mainly rely on past experience and work to make judgments. These major judgments and
changes in estimates may have an impact on operating income, operating costs, and profit or loss in the
current or subsequent periods of the change, and may have a significant impact.
(2) Significant accounting judgments and estimates related to leases
① Identification of lease
When a company identifies whether a contract is a lease or contains a lease, it needs to assess whether there
is an identified asset and the customer controls the right-of-use the asset for a certain period of time. In
assessing, it is necessary to consider the nature of the asset, substantive substitution rights, and whether the
customer is entitled to substantially all of the economic benefits arising from the use of the asset during
that period and is able to direct the use of the asset.
② Classification of lease
When a company acts as a lessor, it classifies leases as operating leases and finance leases. When classifying,
management needs to make analysis and judgment on whether all risks and rewards related to the
ownership of leased assets have been substantially transferred to the lessee.
③ Lease liabilities
When the company is the lessee, the lease liability is initially measured at the present value of the unpaid
lease payments on the commencement date of the lease term. In measuring the present value of lease
payments, the company estimates the discount rate to use and the lease term of lease contracts for which
renewal or termination options exist. When evaluating the lease term, the company comprehensively
considers all relevant facts and circumstances that bring economic benefits from the exercise of the option
by the company, including expected changes in facts and circumstances from the commencement date of
the lease term to the date when the option is exercised. Different judgments and estimates may affect the
recognition of lease liabilities and right-of-use assets, and will affect profit or loss in subsequent periods.
(3) Impairment of financial instruments
The company uses the expected credit loss model to evaluate the impairment of financial instruments. The
application of the expected credit loss model requires major judgments and estimates, and all reasonable
and evidence-based information, including forward-looking information, must be considered. When
making such judgments and estimates, the company infers the expected changes in the debtor's credit risk
based on historical repayment data combined with economic policies, macroeconomic indicators, industry
risks and other factors.
(4) Provision for inventory depreciation
According to the inventory accounting policy, the company measures at the lower of cost and net realizable
value. For inventories whose cost is higher than net realizable value and obsolete and slow-moving
41
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
inventory, provision for inventory depreciation is made. The impairment of inventories to net realizable
value is based on an assessment of the marketability of inventories and their net realisable value. Identifying
the impairment of inventories requires management to make judgments and estimates on the basis of
obtaining conclusive evidence and considering factors such as the purpose of holding inventories and the
impact of events after the balance sheet date. The difference between the actual result and the original
estimate will affect the book value of inventories and the accrual or reversal of the provision for
impairment of inventories in the period in which the estimate is changed.
(5) Provision for impairment of long-term assets
On the balance sheet date, the company judges whether there are signs of possible impairment of
non-current assets other than financial assets. For intangible assets with indefinite useful lives, in addition
to the annual impairment test, when there is an indication of impairment, the impairment test is also
performed. Other non-current assets other than financial assets shall be tested for impairment when there
is an indication that their carrying amount is unrecoverable.
When the book value of the asset or asset group is higher than the recoverable amount, that is, the higher
of the net amount after the fair value minus disposal costs and the present value of the expected future
cash flow, it indicates that an impairment has occurred.
The net amount after the fair value minus disposal costs is determined by reference to the sale agreement
price or observable market price of similar assets in an arm's length transaction, minus the incremental cost
that can be directly attributable to the disposal of the asset.
When estimating the present value of future cash flows, it is necessary to make significant judgments on the
output, selling price, relevant operating costs and the discount rate used in calculating the present value of
the asset (or asset group). When estimating the recoverable amount, the company will use all relevant
information that can be obtained, including the forecast of production, selling price and related operating
costs based on reasonable and supportable assumptions.
(6) Depreciation and amortization
After considering the residual value of investment real estate, fixed assets and intangible assets, the
company accrues depreciation and amortization on a straight-line basis within their useful lives. The
company periodically reviews the useful life to determine the amount of depreciation and amortization that
will be charged to each reporting period. The useful life is determined by the company based on past
experience with similar assets combined with expected technological updates. Depreciation and
amortization expense is adjusted in future periods if there are material changes from previous estimates.
(7) Deferred tax assets
To the extent that it is probable that there will be sufficient taxable profits to offset the losses, the company
recognizes deferred tax assets for all unused tax losses. This requires the management of the company to
42
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
use a lot of judgment to estimate the time and amount of future taxable profits, and combine tax planning
strategies to determine the amount of deferred tax assets that should be recognized.
(8) Income tax
In the normal business activities of the company, there are certain uncertainties in the final tax treatment
and calculation of some transactions. Whether some items can be listed as disbursements before tax
requires the approval of the tax authorities. If there is a difference between the final determination result of
these tax matters and the initially estimated amount, the difference will have an impact on the current
income tax and deferred income tax during the final determination period.
(9) Internal retirement benefits and supplementary retirement benefits
The company's internal retirement benefits and supplementary retirement benefits expenses and liabilities
are determined based on various assumptions. These assumptions include discount rate, growth rate of
average medical expenses, growth rate of subsidies for internal retirees and retirees and other factors.
Differences between actual results and assumptions will be recognized and charged to current year
expenses as soon as they occur. Although the management believes that reasonable assumptions have been
adopted, changes in actual experience and assumptions will still affect the company's internal retirement
benefits and supplementary retirement benefits expenses and liabilities.
(10) Other major accounting policies, accounting estimates and methods of preparing financial statements
The company shall determine the operating divisions based on the internal organizational structure,
management requirements and internal reporting system, and shall determine the reporting divisions based
on the operating divisions.
① This component can generate income and expenses in daily activities;
② The enterprise management can regularly evaluate the operating results of this component to decide to
allocate resources to it and evaluate its performance;
③ The enterprise can obtain the financial status, operating results and cash flow of this component of
accounting information.
5. Taxes
5.1 Main taxes categories and tax rates
Tax category Tax base Tax rate
Value added tax Output tax deducted input tax that can be 13%，9%、6%、5%、Tax exemption
credited against the output tax
Urban maintenance and Turnover taxes already paid 7%
construction tax
Enterprise income tax Taxable income Tax exemption、25%、8%
43
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Income tax rate of taxpayers adopting different income tax rate
Name of tax enterprise Tax rate of income tax
Shandong Zhonglu Oceanic Fisheries Co., Ltd. Ocean fisheries part is tax exemption; housing lease part is 25%.
Shandong zhonglu Haiyan Oceanic Fisheries Co., Ltd. tax exemption
AFRICA STAR FISHERIES LIMITED Export sales part is 8%, domestic sales part is 25%.
HABITAT INTERNATIONAL CORPORATION tax exemption
LAIF FISHERIES CO.LTD 25%
ZHONG GHA FOODS COMP ANY LIMITED 25%
Shandong Zhonglu Oceanic Fisheries Transportation 25%
Co., Ltd.
Shandong zhonglu ocean refrigeration co. LTD Aquatic products processing part is tax exemption; refrigeration
part is 25%.
Shandong Zhonglu Oceanic (Yantai) Food Co. Aquatic products processing part is tax exemption; refrigeration
part is 25%.
Sino-Ocean (Qingdao) Industrial Investment 25%
Development Co., Ltd.
5.2 Significant tax incentives and approval documents
5.2.1 Value added tax preferences
According to the government document (2000) No.260 < Interim Measures for the Administration of
Taxation of Self-Catched Aquatic Products Transported by Ocean-going Fishing Enterprises >,
Self-Catched aquatic products shipped back for domestic sale are regarded as the domestic products that
are free from tariff and import value added tax. Corresponding, the domestic sale business belongs to
primary agricultural products sale business are free from value added tax according to the rules of value
added tax. So, the company’ revenue from the pelagic fishery is free value added tax.
According to the "Notice on Comprehensively Implementing the Pilot Program of Replacing Business Tax
with Value-Added Tax" (No. 36 of 2016), the direct or indirect international freight forwarding services
provided by taxpayers are exempt from value added tax. The relevant sales income obtained by Shandong
Zhonglu Oceanic Fisheries Transportation Co., Ltd, a subsidiary of the Company, is exempt from value
added tax.
5.2.2 Enterprise income tax preferences
On the basis of relevant policies in the following documents: Order of the Chairman of the People’s
Republic of China (2007) No.63 、Decree of
the State Council of the People’s Republic of China No.512 < Enforcement regulations of People’s
Republic of China Enterprise Income Tax Law> 、Caishui [2008] No. 149 、
Caishui [2011] No.26 、 The state administration of Taxation[2011] No.48 .Income from activities of pelagic fishery and preliminary
production of agricultural products in which the Company is engaged is exempt from income tax. Income
from activities other than pelagic fishery and preliminary production of agriculture products that the
Company is engaged in is taxed 25%.
6. Notes to the consolidated financial statements
6.1 Cash at bank and on hand
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Cash on hand 1,975,275.82 2,817,043.32
Cash at bank 207,674,030.17 252,918,568.61
Other monetary funds 924,476.50 76,370.28
Total 210,573,782.49 255,811,982.21
Including: the total balance deposited overseas 87,451,424.69 54,297,720.99
The total amount of funds that have restrictions 924,476.50 76,370.28
on use due to mortgages, pledges, or freezes
Note: The other monetary funds of RMB 924,476.50 is the credit guarantee of the letter of guarantee; the deposits outside
the territory of China are the cash and bank deposits of the overseas subsidiaries.
6.2 Financial assets held for trading
6.2.1 Classification of trading financial assets
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Financial assets classified upon initial recognition as - 5,000,000.00
at fair value through profit or loss
Including: Structured Deposit - 5,000,000.00
Total - 5,000,000.00
6.3 Accounts receivable
6.3.1 Accounts receivable by aging
Aging Balance as at 31/12/2021
Within 6 months 38,283,321.00
6 months-1 years 737,361.46
1-2 years 1,043,422.97
2-3 years 86,821.17
More than 3 years 6,496,689.70
Total 46,647,616.30
6.3.2 Accounts receivable by provision method for allowance credit losses
Item As at 31/12/2021
Book Balance PCT (%) Allowance for PCT (%) Carrying amount
credit losses
45
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Item As at 31/12/2021
Book Balance PCT (%) Allowance for PCT (%) Carrying amount
credit losses
Individually assessment subject to - - - - -
allowance for credit losses
Grouping assessment subject to 46,647,616.30 100.00% 8,841,029.39 18.95% 37,806,586.91
allowance for credit losses
Total 46,647,616.30 100.00% 8,841,029.39 18.95% 37,806,586.91
(Continued)
Item As at 1/1/2021
Book Balance PCT Allowance for PCT Carrying amount
credit losses
Individually assessment subject to - - - - -
allowance for credit losses
Grouping assessment subject to 76,675,259.70 100.00% 10,412,229.89 13.58% 66,263,029.81
allowance for credit losses
Total 76,675,259.70 100.00% 10,412,229.89 13.58% 66,263,029.81
Accounts receivable that are assessed allowance for credit losses on grouping basis
Item As at 31/12/2021
Balance Allowance for PCT
credit losses
Within 6 months 38,283,321.00 1,914,166.05 5.00%
6 months-1 years 737,361.46 73,736.15 10.00%
1-2 years 1,043,422.97 313,026.89 30.00%
2-3 years 86,821.17 43,410.59 50.00%
More than 3 years 6,496,689.70 6,496,689.71 100.00%
Total 46,647,616.30 8,841,029.39
(Continued)
Item As at 1/1/2021
Balance Allowance for PCT
credit losses
Within 6 months 65,721,506.51 3,286,075.32 5.00%
6 months-1 years 2,974,381.80 297,438.18 10.00%
1-2 years 1,403,197.09 420,959.13 30.00%
2-3 years 336,834.09 168,417.05 50.00%
More than 3 years 6,239,340.21 6,239,340.21 100.00%
Total 76,675,259.70 10,412,229.89
6.3.3 Allowance for credit losses
46
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Item As at 1/1/2021 Amount of change in the current period As at
Provision Recovery or Write off Exchange 31/12/2021
reversal impact
Grouping 10,412,229.89 -1,558,165.28 - - -13,035.22 8,841,029.39
assessment
subject to
allowance for
credit losses
6.3.4 Accounts receivable due from the top five debtors of the Company are as follows:
Company name Balance as at Percentage of Balance of
31/12/2021 total accounts allowance for
receivable credit losses as
at 31/12/2021
HAIXINSHEN CO.,LTD 5,878,184.30 12.60% 293,909.22
PACIFIC PANDA.INC 3,600,962.12 7.72% 3,600,962.12
W.E.C.F. CO..LTD. 2,947,491.72 6.32% 147,374.59
OOO ICEBERG OTKRYTOE 2,685,738.12 5.76% 134,286.91
LUNDS FISHERIES,INC 2,484,534.61 5.33% 124,226.73
Total 17,596,910.87 37.73% 4,300,759.57
6.4 Prepayments
6.4.1 Aging analysis of prepayments
Aging As at 31/12/2021 As at 1/1/2021
Balance PCT Balance PCT
Within 1 year 18,422,346.91 98.62% 16,281,043.30 95.05%
1-2 years 31,878.50 0.17% 781,797.59 4.56%
2-3 years 229,525.20 1.21% - -
More than 3 years - - 65,249.00 0.39%
Total 18,683,750.61 100.00% 17,128,089.89 100.00%
6.4.2 The top five prepayments are as follows
Company name Relationship Balance as at Percentage of Prepayment Unbilled Reason
with the 31/12/2021 total prepaymen time
company
China Oceanographic Fisheries unrelated party 9,359,643.19 50.10% 2021 fishing
Association（Note） certificate
KIRIBATI GOVERNMENT NO.1 unrelated party 2,525,351.01 13.52% 2021 Billing period
not yet reached
MERCHANT UNION S.L unrelated party 1,219,334.07 6.53% 2021 Billing period
not yet reached
DONGYISHIPPING unrelated party 983,272.76 5.26% 2021 Billing period
47
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Company name Relationship Balance as at Percentage of Prepayment Unbilled Reason
with the 31/12/2021 total prepaymen time
company
ENTERPRISE PRIVATE not yet reached
LIMITED
Beijing Leading Holiday unrelated party 472,382.00 2.53% 2021 Billing period
International Travel Service Co., not yet reached
Ltd.
Total 14,559,983.03 77.94%
Note: The prepayment to China Oceanographic Fisheries Association is the prepayment for the fishing
certificate, of which 2,260,568.00 yuan is the amortization balance of the certificate, and 7,099,075.19 yuan
is the prepayment for the 2022 fishing certificate. As of December 31, 2021, the certificate has not been
processed.
6.5 Other receivables
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Interest receivable - -
Dividends receivable - -
Other receivables 3,596,759.88 2,293,236.85
Total 3,596,759.88 2,293,236.85
6.5.1 Other receivables
6.5.1.1 Aging of other receivables
Aging As at 31/12/2021
Within 6 months 2,913,142.64
6 months-1 years 386,976.02
1-2 years 644,679.67
2-3 years 59,440.52
More than 3 years 4,386,796.79
Total 8,391,035.64
6.5.1.2 Category of other receivables by nature
Nature Balance as at 31/12/2021 Balance as at 1/1/2021
Guarantee deposit 974,758.29 709,740.53
Current account and others 7,416,277.35 6,463,589.06
Total 8,391,035.64 7,173,329.59
6.5.1.3 The provision of allowance for credit losses
48
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
The allowance for credit losses Stage one Stage two Stage three Total
12-month ECL Lifetime ECL Lifetime ECL
(credit-unimpair (credit-impaired)
ed)
Beginning balance 429,704.55 - 4,450,388.19 4,880,092.74
Revaluation of beginning balance 429,704.55 - 4,450,388.19 4,880,092.74
Provision -18,159.80 - -54,739.86 -72,899.66
Reversal - - - -
Charge-off - - - -
Write-off - - 8,851.52 8,851.52
Exchange impact -4,065.80 - - -4,065.80
Total 407,478.95 - 4,386,796.81 4,794,275.76
6.5.1.4 Allowance for credit losses
Item As at Amount of change in the current period As at
1/1/2021 Provision Recovery or Write off Exchange 31/12/2021
reversal impact
Allowance for 4,880,092.74 -72,899.66 - 8,851.52 -4,065.80 4,794,275.76
credit losses of
other receivables
6.5.1.5 The written-off of other receivables during the year
Item Write-off amount
Other receivables actually written off 8,851.52
6.5.1.6 Other receivables due from the top five debtors are as follows:
Company name Nature of Balance as at Aging Percentage in Balance of
payment 31/12/2021 total other allowance for
receivables credit losses as
at 31/12/2021
Liye Ultra-low Temperature Claims 850,525.55 Within 6 months 10.14% 42,526.28
International Logistics (Dalian) Co.,
Ltd.
Shandong Tianzong Culture Media Margin 299,000.00 1-2 years 3.56% 89,700.00
Co., Ltd.
Bak Seong Ho employee loan 261,450.94 Within 6 months 3.12% 13,072.55
Wang Tingle employee loan 250,328.45 More than 3 2.98% 250,328.45
years
China Merchants Bank Co., Ltd. Margin 245,100.00 Within 2 years 2.92% 71,505.00
Qingdao Branch
Total 1,906,404.94 22.72% 467,132.28
6.6 Inventories
49
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
6.6.1 Inventories by categories
Item As at 31/12/2021 As at 1/1/2021
Book balance Provision for Carrying amount Book balance Provision for Carrying amount
diminution in diminution in
value or value or
impairment impairment
provision for provision for
costs to fulfil costs to fulfil
contracts contracts
Raw materials 82,776,760.71 1,219,147.19 81,557,613.52 98,361,885.77 974,526.46 97,387,359.31
Low-value 635,909.00 - 635,909.00 681,559.16 - 681,559.16
consumables
Commodities 195,084,739.68 5,310,785.27 189,773,954.41 238,760,203.86 2,730,462.49 236,029,741.37
Revolving 714,207.27 - 714,207.27 1,131,389.24 - 1,131,389.24
materials
Costs to fulfil 668,796.62 - 668,796.62 - - -
contracts
Inventories in 4,714,393.22 969,516.29 3,744,876.93 3,655,579.98 - 3,655,579.98
transit
Total 284,594,806.50 7,499,448.75 277,095,357.75 342,590,618.01 3,704,988.95 338,885,629.06
6.6.2 Provision for diminution in value of inventories and impairment of costs to fulfil contracts
Item As at Additions during the year Reductions during the year As at
1/1/2021 Provision Other Reversal or Exchange 31/12/2021
write-down impact
Raw materials 974,526.46 1,250,669.68 - 1,006,048.95 - 1,219,147.19
Commodities 2,730,462.49 4,935,908.16 - 2,333,768.19 21,817.19 5,310,785.27
Inventories in - 980,860.29 - - 11,344.00 969,516.29
transit
Total 3,704,988.95 7,167,438.13 - 3,339,817.14 33,161.19 7,499,448.75
6.7 Other current assets
Item As at 31/12/2021 As at 1/1/2021
Input tax to be deducted 20,462,827.93 14,353,098.17
Prepaid income tax 104,950.69 167,345.60
Prepaid other taxes 65,813.61 47,503.05
Total 20,633,592.23 14,567,946.82
6.8 Investment property
50
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
6.8.1Investment property measured by cost
Item Buildings Total
Cost
Balance as at 1/1/2021 51,308,578.35 51,308,578.35
Additions - -
Including: Purchase - -
Inventory\fixed assets\construction in progress transfer - -
Business combination increase - -
Reductions - -
Including: Disposition - -
Other transfer out - -
Balance as at 31/12/2021 51,308,578.35 51,308,578.35
Accumulated depreciation or amortization
Balance as at 1/1/2021 18,987,056.86 18,987,056.86
Additions 1,326,076.68 1,326,076.68
Including: Depreciation or amortization 1,326,076.68 1,326,076.68
Reductions - -
Including: Disposition - -
Other transfer out - -
Balance as at 31/12/2021 20,313,133.54 20,313,133.54
Provision for impairment
Balance as at 1/1/2021 886,512.06 886,512.06
Additions - -
Including: provision - -
Reductions - -
Including: Disposition - -
Other transfer out - -
Balance as at 31/12/2021 886,512.06 886,512.06
Carrying amount
As at 31/12/2021 30,108,932.75 30,108,932.75
As at 1/1/2021 31,435,009.43 31,435,009.43
6.9 Fixed assets
Category Balance as at 31/12/2021 Balance as at 1/1/2021
Fixed assets 476,894,877.56 506,290,822.70
Disposal of fixed assets - -
Total 476,894,877.56 506,290,822.70
6.9.1 Movement of fixed assets
Item Buildings Boats & nets Machinery & Transportation Furniture and office Total
equipment vehicles equipment
Cost
Balance as at 1/1/2021 118,596,220.58 672,849,533.87 56,325,734.17 8,610,783.16 10,323,462.65 866,705,734.43
Additions 4,558,366.99 14,821,299.04 5,783,115.26 1,606,403.72 995,727.20 27,764,912.21
Including: Purchase 1,146,788.99 14,821,299.04 2,180,507.65 1,606,403.72 995,727.20 20,750,726.60
Transfer from 3,411,578.00 - 3,602,607.61 - - 7,014,185.61
construction in process
Reductions 23,499.00 51,698,374.96 16,746.70 1,005,870.95 236,652.80 52,981,144.41
51
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Item Buildings Boats & nets Machinery & Transportation Furniture and office Total
equipment vehicles equipment
Including: Disposals or - 44,637,982.67 14,465.00 915,014.65 223,383.25 45,790,845.57
scrap
Impact of 23,499.00 7,060,392.29 2,281.70 90,856.30 13,269.55 7,190,298.84
exchange rate fluctuations
Balance as at 31/12/2021 123,131,088.57 635,972,457.95 62,092,102.73 9,211,315.93 11,082,537.05 841,489,502.23
Accumulated depreciation
Balance as at 1/1/2021 35,218,001.62 285,673,593.58 25,567,791.76 5,971,054.03 7,826,897.24 360,257,338.23
Additions 2,614,160.45 42,224,374.21 3,643,919.83 1,068,725.51 1,273,931.38 50,825,111.38
Including: Provision 2,614,160.45 42,224,374.21 3,643,919.83 1,068,725.51 1,273,931.38 50,825,111.38
Reductions 2,790.31 45,519,809.20 13,325.96 896,098.70 213,374.27 46,645,398.44
Including: Disposals or - 43,246,882.53 12,050.20 836,540.43 203,655.32 44,299,128.48
scrap
Impact of 2,790.31 2,272,926.67 1,275.76 59,558.27 9,718.95 2,346,269.96
exchange rate fluctuations
Balance as at 31/12/2021 37,829,371.76 282,378,158.59 29,198,385.63 6,143,680.84 8,887,454.35 364,437,051.17
Provision for impairment
Balance as at 1/1/2021 - 157,573.50 - - - 157,573.50
Additions - - - - - -
Reductions - - - - - -
Balance as at 31/12/2021 - 157,573.50 - - - 157,573.50
Carrying amount
As at 31/12/2021 85,301,716.81 353,436,725.86 32,893,717.10 3,067,635.09 2,195,082.70 476,894,877.56
As at 1/1/2021 83,378,218.96 387,018,366.79 30,757,942.41 2,639,729.13 2,496,565.41 506,290,822.70
Note: The original value of fixed assets that has been fully depreciated but still in use is RMB 61,522,257.89
as at December 31 2021.
① Temporarily idle fixed assets at 31/12/2021
Item Cost Accumulated Provision for Carrying amount Remark
depreciation impairment
Machinery & equipment 2,179,020.00 1,880,495.24 - 298,524.76 -
② Fixed assets for which the certificate of title has not been completed
According to the Debt Repayment Advice signed between the Company and Shandong Fishery Group Corporation in April
2006, and Civil Ruling Li Zhi Zi No.1299 published by Lixia District People's Court of Jinan in 2005, the building of
Shandong Fishery Group Corporation located at Heping road No.43 Lixia District of Jinan was used to repay debt. The
determined original book value of the office complex is RMB 54,223,132.40,book balance is RMB31,807,244.79 (of which
the self-use part is included in the fixed assets, and the leased part is included in the investment real estate), the real estate is
originally allocated land, there is no construction planning permit, and the housing property certificate has not been
processed.
6.10 Construction in process
Category Balance as at 31/12/2021 Balance as at 1/1/2021
Constructed in process 165,273,027.75 3,705,815.70
Construction materials - -
Total 165,273,027.75 3,705,815.70
6.10.1Construction in process
52
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Item As at 31/12/2021 As at 1/1/2021
Book balance Provision for Carrying amount Book balance Provision for Carrying amount
impairment impairment
The Atlantic 4,077,658.55 4,077,658.55 - 4,077,658.55 4,077,658.55 -
Seine project
Workshop flame - - - 948,526.58 - 948,526.58
retardant
renovation
project
Ultra-low - - - 2,757,289.12 - 2,757,289.12
temperature cold
storage
renovation
project
Lu Qing Yuan Yu 7,112,575.38 - 7,112,575.38 - - -
161 Squid Fishing
Boat
Lu Qing Yuan Yu 7,346,386.83 - 7,346,386.83 - - -
162 Squid Fishing
Boat
Tyrone 7 Seine 25,875,000.00 - 25,875,000.00 - - -
Boat
Tyrone 9 Seine 25,875,000.00 - 25,875,000.00 - - -
Boat
Sea Future cargo 32,341,459.60 - 32,341,459.60 - - -
ship
Office building 66,722,605.94 - 66,722,605.94 - - -
Total 169,350,686.30 4,077,658.55 165,273,027.75 7,783,474.25 4,077,658.55 3,705,815.70
① Movement of significant construction in progress
Project name Budget As at 1/1/2021 Additions Transfer to Other Percentage of
fixed assets reductions accumulated
input over
budget
Tyrone 7 Seine 207,000,000.00 - 25,875,000.00 - - 12.50%
Boat
Tyrone 9 Seine 207,000,000.00 - 25,875,000.00 - - 12.50%
Boat
Sea Future cargo 38,000,000.00 - 32,341,459.60 - - 85.11%
ship
Office building 79,000,000.00 - 66,722,605.94 - - 84.46%
Total 531,000,000.00 - 150,814,065.54 - -
(Continued)
53
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Project name Construction Accumulated Including: Capitalization Sources of Balance as at
progress (%) capitalized Interest rate in current funds 31/12/2021
interest capitalized in period
current period
Tyrone 7 Seine 12.50% 204,512.50 204,512.50 1.88% loan、self-raised 25,875,000.00
Boat
Tyrone 9 Seine 12.50% 204,512.50 204,512.50 1.88% loan、self-raised 25,875,000.00
Boat
SEA FUTURE 85.11% - - - self-raised 32,341,459.60
Office building 84.46% - - - self-raised 66,722,605.94
Total 409,025.00 409,025.00 150,814,065.54
6.11 Right-of-use asset
Item Buildings Total
Cost
Balance as at 1/1/2021 5,498,108.96 5,498,108.96
Additions - -
Including: New leases - -
Reductions - -
Balance as at 31/12/2021 5,498,108.96 5,498,108.96
Accumulated depreciation
Balance as at 1/1/2021 - -
Additions 3,148,617.28 3,148,617.28
Including: Provision 3,148,617.28 3,148,617.28
Reductions 5,452.18 5,452.18
Including: Exchange impact 5,452.18 5,452.18
Balance as at 31/12/2021 3,143,165.10 3,143,165.10
Provision for impairment
Balance as at 1/1/2021 - -
Additions - -
Reductions - -
Balance as at 31/12/2021 - -
Carrying amount
As at 31/12/2021 2,354,943.86 2,354,943.86
As at 1/1/2021 5,498,108.96 5,498,108.96
6.12 Intangible assets
Item Land use rights Computer Total
software
Cost
Balance as at 1/1/2021 17,154,729.00 2,287,236.24 19,441,965.24
Additions - 44,247.79 44,247.79
Including: Purchase - 44,247.79 44,247.79
Reductions - - -
54
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Item Land use rights Computer Total
software
Including: Disposition - - -
Balance as at 31/12/2021 17,154,729.00 2,331,484.03 19,486,213.03
Accumulated depreciation
Balance as at 1/1/2021 5,605,382.81 1,024,702.88 6,630,085.69
Additions 383,870.16 361,859.46 745,729.62
Including: Provision 383,870.16 361,859.46 745,729.62
Reductions - - -
Including: Disposition - - -
Balance as at 31/12/2021 5,989,252.97 1,386,562.34 7,375,815.31
Provision for impairment
Balance as at 1/1/2021 - - -
Additions - - -
Including: Provision - - -
Reductions - - -
Including: Disposition - - -
Balance as at 31/12/2021 - - -
Carrying amount
As at 31/12/2021 11,165,476.03 944,921.69 12,110,397.72
As at 1/1/2021 11,549,346.19 1,262,533.36 12,811,879.55
6.13 Long-term deferred expenses
Item Balance as at Additions Amortization Reductions Balance as at
1/1/2021 31/12/2021
Office renovation costs 317,044.17 82,349.24 177,916.67 738.74 220,738.00
6.14 Deferred tax assets and deferred tax liabilities
6.14.1 Deferred tax assets before offsetting
Item As at 31/12/2021 As at 1/1/2021
Deductible Deferred tax Deductible Deferred tax
temporary assets temporary assets
differences differences
Allowance for credit losses 891,919.22 222,979.80 921,549.53 230,387.38
Deferred income 5,687,864.64 1,421,966.16 6,056,998.38 1,514,249.60
Sub-total 6,579,783.86 1,644,945.96 6,978,547.91 1,744,636.98
6.14.2 Deferred tax liabilities before offsetting
Item As at 31/12/2021 As at 1/1/2021
Taxable Deferred tax Taxable Deferred tax
temporary liabilities temporary liabilities
differences differences
Accelerated depreciation of fixed assets before tax 11,110,357.81 2,777,589.45 5,807,004.90 1,451,751.23
deduction
55
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
6.14.3 The items not recognised deferred tax assets
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Deductible temporary differences -Allowance for credit losses 12,743,385.93 14,370,773.10
Deductible temporary differences -Provision for inventories 7,499,448.75 3,704,988.95
Deductible temporary differences -Deductible losses 16,328,215.40 -
Deductible temporary differences -Provision for impairment 4,077,658.55 4,077,658.55
of construction in progress
Total 40,648,708.63 22,153,420.60
Note: No deferred income tax assets are recognized for deductible temporary differences, due to the
exemption of corporate income tax for those companies that form deductible temporary differences. There
is uncertainty about whether some companies will be able to generate sufficient taxable income in the
future.
6.15 Other non-current assets
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Book Provision for Carrying amount Book balance Provision for Carrying
balance impairment impairment amount
Prepayment for 52,050,000.00 - 52,050,000.00 2,000,000.00 - 2,000,000.00
land
Prepayment for 91,087,267.24 - 91,087,267.24 719,397.06 - 719,397.06
construction in
process
Total 143,137,267.24 - 143,137,267.24 2,719,397.06 - 2,719,397.06
6.16 Short-term loans
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Collateral loan 10,013,291.67 28,072,326.86
Loans on credit - 13,195,948.64
Total 10,013,291.67 41,268,275.50
Note: the current loan includes Interest payable of RMB 13,291.67.
Loan collateral in 2021, (1) Smoke room title card no. 102954, no. 102984, No. 102985, No. 102986, No.
106566, NO. K028075 property, the book balance is RMB30,992,971.16; (2) Yanguo (2002) Land use right
No. 1047, book balance is RMB 5,031,624.56.
6.17 Accounts payable
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Within 1 year(including 1 year) 45,582,797.03 65,231,961.41
More than 1 year 4,538,598.01 4,665,877.78
Total 50,121,395.04 69,897,839.19
56
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
6.18 Contract liabilities
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Advance payment for goods 13,220,675.60 12,453,619.79
6.19 Employee benefits payable
6.19.1 Movement of employee benefits payable
Item As at 1/1/2021 Increase Decrease As at
31/12/2021
Short-term employee benefits 39,012,993.89 156,377,402.89 152,634,205.96 42,756,190.82
Post-employment benefits—defined contribution 2,806,413.68 11,207,692.59 11,397,489.95 2,616,616.32
plans
Termination benefits 33,227.17 1,247,153.80 1,249,802.08 30,578.89
Other benefits due within one year 9,714.32 26,247.91 28,637.20 7,325.03
Total 41,862,349.06 168,858,497.19 165,310,135.19 45,410,711.06
6.19.2 Details of the short-term employee benefits
Item As at 1/1/2021 Accrued Paid As at
31/12/2021
Salaries, bonus, and allowances 37,455,202.41 142,144,455.61 138,286,082.96 41,313,575.06
Staff welfare - 4,095,575.97 4,095,575.97 -
Social insurances - 4,843,202.25 4,843,202.25 -
Including: Medical insurance - 4,594,662.74 4,594,662.74 -
Work injury insurance - 248,539.51 248,539.51 -
Maternity insurance - - - -
Housing Fund - 4,989,011.89 4,989,011.89 -
Union funds and employee education fee 1,557,791.48 305,157.17 420,332.89 1,442,615.76
Short-term paid absences - - - -
Short-term profit sharing plan - - - -
Total 39,012,993.89 156,377,402.89 152,634,205.96 42,756,190.82
6.19.3 Defined contribution plans
Item As at 1/1/2021 Accrued Paid As at
31/12/2021
Primary endowment insurance - 8,497,551.82 8,497,551.82 -
Unemployment insurance - 376,628.63 376,628.63 -
Pension insurance 2,806,413.68 2,164,239.48 2,354,036.84 2,616,616.32
Social security and subsidies for retired workers - 169,272.66 169,272.66 -
Total 2,806,413.68 11,207,692.59 11,397,489.95 2,616,616.32
6.20 Taxes and surcharges payable
Category Balance as at 31/12/2021 Balance as at 1/1/2021
Value added tax 201,859.84 150,746.28
Enterprise income tax 2,149,052.53 508,778.23
Urban maintenance and construction tax 8,435.55 7,404.84
57
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Category Balance as at 31/12/2021 Balance as at 1/1/2021
Estate tax 242,944.78 190,068.25
Land use tax 121,326.11 105,674.51
Individual income tax 329,417.86 633,026.16
Educational surtax 6,025.38 5,289.17
Withholding tax 1,098,761.23 1,096,759.86
Other taxes and surcharges 101,048.23 127,666.48
Total 4,258,871.51 2,825,413.78
6.21 Other payables
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Interest payable - -
Dividends payable - -
Other payables 9,774,065.87 8,606,070.36
Total 9,774,065.87 8,606,070.36
6.21.1Other payables
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Deposit 2,591,521.16 2,620,321.34
Staff cost 1,922,570.29 1,072,824.55
Others 5,259,974.42 4,912,924.47
Total 9,774,065.87 8,606,070.36
6.22 Non-current assets due within one year
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Long-term loans due within one year 3,200,000.00 -
Lease liabilities due within one year 1,709,314.65 3,033,733.61
Total 4,909,314.65 3,033,733.61
6.23 Other current liabilities
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Advance collection of sales tax 14,100.55 108,248.84
6.24 Long-term loans
Long-term loans by category
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Loans on credit 7,612,534.71 -
Guarantee and Collateral loans 141,780,997.66 -
Total 149,393,532.37 -
Note 1: The long-term loan balance includes accrued interest of RMB 263,340.37.
Note 2: The guarantor of the guarantee and the mortgage loan is Shandong Zhonglu Ocean Ocean (Yantai)
Food Co., Ltd., and the collateral is the property of Shandong Zhonglu Aquatic Shipping Co., Ltd., and the
58
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
power certificate number is ,The book value is RMB 128,089.40 ,
and Shandong Province Zhonglu Ocean Fishery Co., Ltd. newly purchased an office building, and the title
certificate number is ,The book value
is RMB 66,722,605.94, the property is currently in the state of advance notice registration, and no mortgage
procedures have been processed as of December 31, 2021 .
6.25 Lease liabilities
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Lease liabilities - 1,709,314.65
6.26 Long-term employee benefits payable
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Post employment benefits—defined benefits plans 384,340.48 414,919.37
Other long-term benefits 641,882.10 828,533.56
Total 1,026,222.58 1,243,452.93
6.27 Deferred income
Item Balance as at Increase Decrease Balance as at Reason for the
1/1/2021 31/12/2021 deferred income
Government grants 14,488,797.24 445,900.00 1,243,488.17 13,691,209.07 Government
grants related
asset
Deferred income from government grants
Item Balance as at Increase Recorded in recorded in
1/1/2021 non-operating other income for
income for current period
current period
Construction special fund 8,967,252.60 - - 1,037,504.20
Subsidy of boat manufacture 5,521,544.64 445,900.00 - 205,983.97
Total 14,488,797.24 445,900.00 - 1,243,488.17
(Continued)
Item Recorded in Other changes Balance as at Related to
offset cost for 31/12/2021 assets/income
current period
Construction special fund - - 7,929,748.40 Assets
Subsidy of boat manufacture - - 5,761,460.67 Assets
Total - - 13,691,209.07
59
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
6.28 Share capital
Item Balance as at Movement Balance as at
1/1/2021 Issuance of Bonus shares Capital reserve Others sub-total 31/12/2021
new share transfer in
Total shares 266,071,320.00 - - - - - 266,071,320.00
6.29 Capital reserve
Item Balance as at Increase Decrease Balance as at
1/1/2021 31/12/2021
Share premiums 189,093,492.79 - - 189,093,492.79
Other capital reserve 94,961,504.96 - - 94,961,504.96
Total 284,054,997.75 - - 284,054,997.75
6.30 Other comprehensive income
Item Balance as at Year ended 31/12/2021
1/1/2021(A) Amount before Less: OCI in Less: OCI in
tax prior periods prior periods
transfer in profit carried forward
or loss for the to retained
current period earnings
OCI items which will be reclassified subsequently to -12,783,539.13 -6,886,431.99 - -
profit or loss
Translation differences from translation of foreign -12,783,539.13 -6,886,431.99 - -
currency financial statements
Total of OCI -12,783,539.13 -6,886,431.99 - -
(Continued)
Item Year ended 31/12/2021 Balance as at
Less: income tax Amount after Amount after 31/12/2021
tax attributable tax attributable (C)=(A)+(B
to the to minority
Company(B) interests
OCI items which will be reclassified subsequently to - -5,472,662.85 -1,413,769.14 -18,256,201.98
profit or loss
Translation differences from translation of foreign - -5,472,662.85 -1,413,769.14 -18,256,201.98
currency financial statements
Total of OCI - -5,472,662.85 -1,413,769.14 -18,256,201.98
6.31 Special reserve
Item Balance as at Increase Decrease Balance as at
1/1/2021 31/12/2021
Safety costs - 954,700.51 721,917.51 232,783.00
60
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
6.32 Surplus reserve
Item Balance as at Increase Decrease Balance as at
1/1/2021 31/12/2021
Statutory surplus reserve 21,908,064.19 - - 21,908,064.19
6.33 Undistributed profit
Item Year ended Year ended Appropriation proportion
31/12/2021 31/12/2020
Retained earnings As at 1/1/2021 before adjustment 343,997,929.71 314,460,431.58 -
The total adjustment of retained earnings As at - - -
1/1/2021 (Increase+, decrease-)
Retained earnings As at 1/1/2021 after adjustment 343,997,929.71 314,460,431.58 -
Add: Net profit attributable to the Company during 35,526,982.23 29,537,498.13 -
the year
Less: Appropriation of statutory surplus reserve - - -
Withdrawal of discretionary surplus reserve - - -
Extract general risk provision - - -
Common stock dividends payable - - -
Common stock dividends converted to share - - -
capital
Retained earnings as at 31/12/2021 379,524,911.94 343,997,929.71
6.34 Operating income and operating costs
6.34.1 Operating income and operating costs
Item Year ended 31/12/2021 Year ended 31/12/2020
Income Costs Income Costs
Primary operating business 925,478,546.47 847,799,212.70 957,971,299.47 876,609,493.00
Other operating business 8,805,856.74 1,788,918.05 8,241,720.19 1,807,861.27
Total 934,284,403.21 849,588,130.75 966,213,019.66 878,417,354.27
6.34.2 Status of income from contracts
① Operating income and operating costs by recognition timing
Revenue recognition timing Sales income Agent Refrigeration Other operating
Processing income income
income
At a point of time 818,907,933.44 4,064,189.24 - 4,554,606.75
Over a period of time - - 10,172,122.36 -
Total 818,907,933.44 4,064,189.24 10,172,122.36 4,554,606.75
61
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
② Income adapted to the lease standard
Item Vessels leasing House rental and others
Primary operating business 92,334,301.43 -
Other operating business - 4,251,249.99
Total 92,334,301.43 4,251,249.99
6.35 Taxes and surcharges
Item Year ended 31/12/2021 Year ended 31/12/2020
Urban maintenance and construction tax 20,427.36 172,674.56
Educational surcharge 8,730.91 73,964.81
Local educational surcharge 5,820.63 49,309.89
Local water conservancy construction fund -304.98 12,327.47
Property tax 1,247,826.59 1,285,586.41
Land use tax 542,585.28 421,428.69
Stamp duty 290,074.03 275,627.46
Vehicle and vessel tax 55,766.26 33,167.68
Total 2,170,926.08 2,324,086.97
6.36 Selling and distribution expenses
Item Year ended 31/12/2021 Year ended 31/12/2020
Employee compensation expenditure 2,166,098.09 2,197,949.48
Business promotion fees 725,851.68 585,425.19
Travelling expenses 74,793.63 165,925.16
Depreciation charges 123,919.04 73,027.96
Depreciation of right-of-use asset 90,777.05 -
Communication expenses 31,359.17 24,060.25
Others 335,821.30 623,371.66
Total 3,548,619.96 3,669,759.70
6.37General and administrative expenses
Item Year ended 31/12/2021 Year ended 31/12/2020
Employee compensation expenditure 45,810,749.61 34,614,101.99
Depreciation and amortization charges 1,928,160.24 1,869,160.28
Depreciation of Right-of-use assets 3,057,840.23 -
Travelling expenses 1,235,873.02 725,668.44
Business entertainment 562,059.13 463,172.36
Vehicle expenses 888,939.29 829,720.16
Agent service fees 1,211,002.54 1,180,503.10
Office expenses 4,441,038.20 4,886,702.18
Water and electricity expenses 1,309,137.24 1,157,511.99
Others 4,033,520.85 3,750,281.36
Total 64,478,320.35 49,476,821.86
62
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
6.38 Research and development expenses
Item Year ended 31/12/2021 Year ended 31/12/2020
Employee compensation expenditure 738,409.64 -
Materials 21,089.10 17,924.28
Others 5,957.96 40,000.00
Total 765,456.70 57,924.28
6.39 Finance expenses
Item Year ended 31/12/2021 Year ended 31/12/2020
Interest expenses 1,548,600.65 2,264,468.56
Less: interest income 569,224.71 666,925.40
Losses or gains from foreign exchange 10,378,601.88 20,054,225.77
Finance charges 884,531.16 1,145,378.30
Interest expenses on lease liabilities 102,193.34 -
Others 129,811.76 164,075.46
Total 12,474,514.08 22,961,222.69
6.40 Other income
Item Year ended 31/12/2021 Year ended 31/12/2020
Subsidy fund for improving international performance capacity 38,431,963.86 22,435,200.00
（Note 1）
Transportation insurance subsidy 165,500.00 -
Financial shipbuilding subsidy fund 205,983.97 199,376.00
Financial subsidy for Special Construction funds in Blue 738,267.48 738,267.48
Economic Zone（Note 2）
Special fund for cold chain logistics 299,236.72 338,039.76
Subsidy for the renovation of fishing boat equipment（Note 3） 983,373.00 -
Return of individual income tax service charge 24,855.48 51,138.63
Steady post subsidies 36,737.85 285,425.27
Work-for-training subsidy 18,000.00 -
Measurement Equipment subsidy 7,500.00 -
Research subsidies from the Institute of Oceanology - 180,000.00
Intellectual property rights subsidy funds 5,000.00 10,000.00
Total 40,916,418.36 24,237,447.14
Note 1: The company received RMB 38,431,963.86 government grants for improving international
performance capacity from finance bureau;
Note 2: According to (NO. 【2011】464) issued by Yantai Development and Reform Commission and Yantai Finance
Bureau，（NO【2011】514）issued by Yantai Economic
63
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
and Technological Development Zone Finance Bureau, Yantai Development Zone Finance Bureau issued
a special indicator of the company blue economic zone construction RMB 13,600,000.00, RMB
6,800,000.00 in 2012, RMB 6,800,000.00 in 2013, the company kept accounts in deferred income when
receiving the funds and are amortized in profit and loss for each period over the asset's estimated useful
period on a systematic basis. Other income amounts to 738,267.48 in 2021.
Note 3:This year, the company obtained subsidy funds of RMB 983,373.00 for the renovation and
renovation of facilities and equipment on ocean-going ships from Qingdao Ocean Development Bureau.
Since the aforementioned equipment renewal funds have been shared with the cost of related products in
previous years, they are directly included in the current profit and loss when they are received this time.
6.41 Investment income
Item Year ended 31/12/2021 Year ended 31/12/2020
Gain/(Loss) on financial assets held for trading for the 49,972.60 15,287.67
current period
Gains on debt restructuring -127,527.03 -
Total -77,554.43 15,287.67
6.42 Credit impairment losses
Item Year ended 31/12/2021 Year ended 31/12/2020
Allowance for credit losses of accounts receivable 1,558,165.28 -449,391.98
Allowance for credit losses of other receivables 72,899.66 125,313.00
Total 1,631,064.94 -324,078.98
6.43 Assets impairment losses
Item Year ended 31/12/2021 Year ended 31/12/2020
Provision for diminution in value of inventory and Loss of -7,167,438.13 -2,613,583.91
contract performance costs
6.44 Gains from disposal of assets
Item Year ended 31/12/2021 Year ended 31/12/2020
Gains and losses on disposal of fixed assets 3,494,326.93 52,840.06
Note : In the current period, the subsidiary Shandong Zhonglu Aquatic Shipping Co., Ltd. disposed of the
Taixing vessel with a disposal income of RMB 3,470,553.87.
6.45 Non-operating income
Item Year ended Year ended Amount to be included in
31/12/2021 31/12/2020 non-recurring gain or loss for the
year
Reparations income 884,810.25 627,280.18 884,810.25
Others - 10,131,289.21 -
Total 884,810.25 10,758,569.39 884,810.25
64
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
6.46 Non-operating expenses
Item Year ended Year ended Amount to be included in
31/12/2021 31/12/2020 non-recurring gain or loss for the
year
Loss of scrapped fixed assets 49,503.75 386,058.25 49,503.75
Donating - 207,712.00 -
Others 36,832.97 64,708.74 36,832.97
Total 86,336.72 658,478.99 86,336.72
6.47 Income tax expenses
6.47.1 Details of income tax expenses
Item Year ended 31/12/2021 Year ended 31/12/2020
Current income tax 2,774,329.98 664,050.34
Deferred income tax 1,425,529.24 1,552,987.07
Total 4,199,859.22 2,217,037.41
6.47.2 Reconciliation between income tax expenses and accounting profit is as follows:
Item Year ended 31/12/2021
Profit before tax 40,853,726.49
Income tax expenses calculated at statutory/applicable tax rates 10,213,431.62
Effect of different tax rate of subsidiaries -2,288,375.83
Effect of adjustment for income tax in prior year -
Effect of income not subject to income tax -7,866,473.44
Effect of expenses nondeductible for tax purposes -557,192.15
Effect of using deductible losses of deferred tax assets not recognised in prior periods 74,647.01
Effect of unrecognised deductible temporary differences and deductible losses in current period 4,623,822.01
Income tax expenses 4,199,859.22
6.48 Other comprehensive income
As note 30.
6.49 Notes to statement of cash flows
6.49.1 Cash received relating to other operating activities
Item Year ended 31/12/2021 Year ended 31/12/2020
Finance expenses- interest income 569,224.71 666,925.40
Government grants and others 40,153,114.89 23,598,067.00
Credit deposit - 1,929,052.36
Current account and other 900,552.70 3,519,086.04
Total 41,622,892.30 29,713,130.80
65
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
6.49.2 Cash paid related to other operating activities
Item Year ended Year ended
31/12/2021 31/12/2020
Cash payment to selling expenses 1,053,784.11 1,287,323.87
Cash payment to administrative expense 13,550,391.30 12,663,386.50
Cash payment to research and development expenses 27,047.06 57,924.28
Security deposit 884,531.16 597,417.07
Current account and other 5,947,525.52 5,999,662.55
Total 21,463,279.15 20,605,714.27
6.49.3 Cash paid related to other financing activities
Item Year ended Year ended
31/12/2021 31/12/2020
Lease payment 3,627,734.35 -
6.50 Supplement to statement of cash flows
6.50.1 Supplement to statement of cash flows
Item Year ended Year ended
31/12/2021 31/12/2020
1.Net profit adjusted to cash flows from operating activities
Net profit 36,653,867.27 38,556,814.86
Add:losses Provision for asset impairment 3,827,620.99 2,613,583.91
Credit impairment -1,631,064.94 324,078.98
Depreciation of fixed assets, depletion of oil and gas assets, depreciation of 52,151,188.06 50,780,458.83
productive biological assets and depreciation of investment property
Depreciation of right-of-use asset 3,148,617.28 -
Amortization of intangible assets 745,729.62 720,869.39
Amortization of long-term deferred expenses 177,916.67 334,152.83
Losses on disposal of fixed assets, intangible assets and other long-term assets ("-" -3,494,326.93 -52,840.06
for gains)
Losses on write-down of fixed assets ("-" for gains） 49,503.75 -9,725,724.88
Losses from changes in fair value ("-" for gains) - -
Financial expenses ("-" for income) 4,397,806.07 10,826,454.94
Investments losses ("-" for gains) 77,554.43 -15,287.67
Decreases in the deferred tax assets ("-" for increases) 99,691.02 101,235.84
Increases in the deferred tax liabilities ("-" for decreases) 1,325,838.22 1,451,751.23
Decreases in inventories ("-" for increases) 57,995,811.51 34,244,396.75
Decreases in operating receivables ("-" for increases) 20,661,022.03 23,242,398.53
Increases in operating payables ("-" for decreases) -6,290,950.23 -40,156,632.83
Others - -
Net cash flows from operating activities 169,895,824.82 113,245,710.65
2. Significant investing and financing activities not involving cash inflow and outflow
Conversion of debt into capital - -
Convertible corporate bonds maturing within one year - -
Fixed assets acquired under financial lease - -
66
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Item Year ended Year ended
31/12/2021 31/12/2020
3. Net change in cash and cash equivalents
Cash as at 31/12/2021 209,649,305.99 255,735,611.93
Less: cash As at 1/1/2021 255,735,611.93 184,603,638.72
Add: cash equivalents as at 31/12/2021 - -
Less: cash equivalents as at 31/12/2021 - -
Net increase in cash and cash equivalents -46,086,305.94 71,131,973.21
6.50.2 Cash and cash equivalents
Item Balance as at Balance as at
31/12/2021 1/1/2021
1. Cash 209,649,305.99 255,735,611.93
Including: cash on hand 1,975,275.82 2,817,043.31
Unrestricted bank deposits 207,674,030.17 252,918,568.62
2.Cash equivalents - -
Bond investments due within 3 months - -
3. Cash and cash equivalents As at 1/1/2021 209,649,305.99 255,735,611.93
6.51 Ownership or using rights of assets subject to restriction
Item Carrying amount Restriction
as at reason
31/12/2021
Cash at bank and on hand 924,476.50 Marginal deposit
Fixed assets 31,121,060.56 Collateral loan
Intangible assets 5,031,624.56 Collateral loan
Construction in process 66,722,605.94 Collateral loan
Total 103,799,767.56
6.52 Monetary items denominated in foreign currency
6.52.1 Monetary items denominated in foreign currency
Item Balance in Exchange rate Balance
foreign translated into
currency as at RMB as at
31/12/2021 31/12/2021
Cash at hand and in banks
Including: USD 15,469,531.99 6.3757 98,629,095.12
Euro 103,209.44 7.2197 745,141.16
GHS 18,752,266.28 1.0633 19,939,431.64
JPY 39,921,632.05 0.0554 2,212,257.24
XAF 20,651,000.60 0.0111 228,584.34
Accounts receivable
Including: USD 3,492,912.50 6.3757 22,269,762.24
GHS 2,595,049.26 1.0633 2,759,336.21
JPY 29,189,447.51 0.0554 1,617,533.23
Franc 187,673,483.00 0.0111 2,077,343.45
67
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Item Balance in Exchange rate Balance
foreign translated into
currency as at RMB as at
31/12/2021 31/12/2021
Other receivables
Including: USD 70,463.90 6.3757 449,256.69
GHS 244,241.60 1.0633 259,704.00
Accounts payable
Including: USD 2,182,678.02 6.3757 13,916,100.25
Euro 234.43 7.2197 1,692.51
XAF 911,181.91 1.0633 968,866.86
JPY 9,612,270.63 0.0554 532,663.98
XAF 74,994,511.00 0.0111 830,108.49
Other payables
Including: USD 350,654.68 6.3757 2,235,669.04
GHS 974,996.26 1.0633 1,036,721.16
Long-term borrowing
Including: USD 14,588,663.54 6.3757 93,012,942.11
6.52.2 Reporting currencies of significant foreign operating entities
Significant foreign operating entity Overseas location of Reporting Basis for
primary operation currency determination
HABITAT INTERNATIONAL CORPORATION The Republic of USD Business
Panama environment
LAIF FISHERIES COMPANY LIMITED The Republic of USD Business
Ghana environment
YAW ADDO FISHERIES COMPANY LIMITED The Republic of USD Business
Ghana environment
ZHONG GHA FOODS COMPANY LIMITED The Republic of USD Business
Ghana environment
AFRICA STAR FISHERIES LIMITED The Republic of USD Business
Ghana environment
6.53 Government subsidies
Item amount Report project recorded in
other income for
current period
Subsidy fund for improving international performance capacity 38,431,963.86 Other income 38,431,963.86
Transportation insurance subsidy 165,500.00 Other income 165,500.00
Financial shipbuilding subsidy fund 205,983.97 Deferred income 205,983.97
Financial subsidy for Special Construction funds in Blue Economic 738,267.48 Deferred income 738,267.48
Zone（Note 2）
Special fund for cold chain logistics 299,236.72 Deferred income 299,236.72
68
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Item amount Report project recorded in
other income for
current period
Subsidy for the renovation of fishing boat equipment（Note 3） 983,373.00 Other income 983,373.00
Return of individual income tax service charge 24,855.48 Other income 24,855.48
Steady post subsidies 36,737.85 Other income 36,737.85
Work-for-training subsidy 18,000.00 Other income 18,000.00
Measurement Equipment subsidy 7,500.00 Other income 7,500.00
Intellectual property rights subsidy funds 5,000.00 Other income 5,000.00
Total 40,916,418.36 40,916,418.36
7. Changes in consolidation scope
In the current period, the company newly established a subsidiary: Zhonglu Ocean (Qingdao) Industrial
Investment Development Co., Ltd., with a registered capital of USD 20.50 million, paid-in capital of USD
10.045 million, and a shareholding ratio of 100%.
8. Interest in other entities
8.1 Interest in subsidiaries
8.1.1 Constitution of the Company
Subsidiary name Registration Principal place of Business nature Shareholding Acquisition
place business Direct Indirect method
Shandong Zhonglu Shandong Shandong Refrigeration 100.00% Investment
Oceanic Fisheries Qingdao Qingdao transportation
Transportation Co.,
Ltd.
Shandong Zhonglu Shandong Yantai Shandong Yantai Food processing 74.23% 25.77% Investment
Oceanic (Yantai) Food
Co., Ltd.
Shandong Zhonglu Shandong Shandong Oceanic fishing 59.05% Investment
Haiyan Oceanic Qingdao Qingdao
Fisheries Co., Ltd.
Zhonglu Oceanic Shandong Shandong Refrigeration 51.00% 49.00% Investment
(Qingdao) Industrial Qingdao Qingdao transportation
Investment
Development Co., Ltd.
HABITAT The Republic of The Republic of Refrigeration 100.00% Investment
INTERNATIONAL Panama Panama transportation
CORPORATION
LAIF FISHERIES The Republic of The Republic of Oceanic fishing Shandong Zhonglu Haiyan Investment
COMPANY Ghana Ghana Oceanic Fisheries Co., Ltd
LIMITED holds 100% shares
AFRICA STAR The Republic of The Republic of Oceanic fishing Shandong Zhonglu Haiyan Investment
FISHERIES Ghana Ghana Oceanic Fisheries Co., Ltd
LIMITED holds 100% shares
ZHONG GHA The Republic of The Republic of Oceanic fishing Shandong Zhonglu Haiyan Investment
FOODS COMPANY Ghana Ghana Oceanic Fisheries Co., Ltd
69
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Subsidiary name Registration Principal place of Business nature Shareholding Acquisition
place business Direct Indirect method
LIMITED holds 100% shares
Shandong zhonglu Shandong Yantai Shandong Yantai Food processing Shandong Zhonglu Oceanic Investment
ocean refrigeration co. (Yantai) Food Co., Ltd. holds
LTD 100% shares
YAW ADDO The Republic of The Republic of Oceanic fishing Operating lease
FISHERIES Ghana Ghana
COMPANY
LIMITED
8.1.2 Significant non-wholly owned subsidiary
Company name Minority Profit or loss Dividends Balance of the
shareholding attributable to announced to minority
the minority for distribute to the interests as at
the current minority 31/12/2021
period
Shandong Zhonglu Haiyan Oceanic Fisheries Co., 40.95% 1,126,885.04 - 161,988,106.39
Ltd.
8.1.3 Main financial information of significant non-wholly owned subsidiary
Subsidiary name As at 31/12/2021
Current assets Non-current Total assets Current Non-current Total liabilities
assets liabilities liabilities
Shandong 230,078,254.48 228,556,206.12 458,634,460.60 57,308,361.86 5,761,460.67 63,069,822.53
Zhonglu Haiyan
Oceanic Fisheries
Co., Ltd.
(Continued)
Subsidiary name As at 1/1/2021
Current assets Non-current Total assets Current Non-current Total liabilities
assets liabilities liabilities
Shandong 283,125,223.39 224,970,520.62 508,095,744.01 106,308,989.61 5,521,544.64 111,830,534.25
Zhonglu Haiyan
Oceanic Fisheries
Co., Ltd.
(Continued)
Subsidiary name Year ended 31/12/2021
70
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Operating Net profit Total Cash flows from
income comprehensive operating
income activities
Shandong Zhonglu Haiyan Oceanic Fisheries Co., 249,754,578.58 2,751,856.01 -700,571.69 72,260,920.89
Ltd.
(Continued)
Subsidiary name Year ended 31/12/2020
Operating Net profit Total Cash flows from
income comprehensive operating
income activities
Shandong Zhonglu Haiyan Oceanic Fisheries Co., 279,848,444.29 22,025,193.47 -11,426,096.92 27,621,980.21
Ltd.
9. Related risks of financial instruments
The financial assets of the Company include notes receivable, account receivable and other receivables, the
financial liabilities include notes payable, account payable, other payables and long-term loan, for details see
Notes Ⅵ. Company is faced with Various risks in operating activities, including credit risk, liquidity risk
and market risk, board of directors establish and supervise company’s ERM architecture, establish and
supervise company’s risk management policy with full authority.
The goals of Company engaged in the risk management is to achieve the proper balance between the risks
and benefits, reduced the negative impact to the Company operating performance risk to a minimum,
maximized the profits of shareholders and other equity investors.
1. Credit risk
Credit risk what may lead to the financial losses was the other party of the contract failed to fulfill the
obligations and causes loss of the Company‘s financial assets. Credit risk is mainly from the customers’
receivables. The book value of account receivable, note receivable and other account receivable are the
biggest credit risk of the company’s financial assets.
2. Liquidity Risk
Liquidity risk is the risk that the company is in short of capital when fulfilling its obligations related to
financial liabilities. In the capital normal and stressful situation, the company ensures that there is sufficient
liquidity to fulfill the due debt, and consult with the financial institutions to maintain a certain level of
reserve credit line to reduce liquidity risk.
3. Market risk
(1) Foreign exchange risk
71
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. The
company's foreign exchange risk is mainly derived from the dollar denominated financial assets. The
amount of foreign currency denominated financial assets to be converted into RMB is as note 6.52 the
foreign currency monetary items stated.
(2) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flow of the financial instruments fluctuate due
to the fluctuation of market interest rate. The company's interest rate risk is mainly derived from long-term
bank borrowings, the company's borrowing are floating interest rates, there is a risk of RMB benchmark
interest rate changes.
10. Related parties and transactions
10.1 The parent company of the Company
Name of parent Registration Type of business Registered (%)Shareholding (%)Voting rights
company place capital ratio of the proportion % of the
Company Company
Shandong Shandong Investment and management, 4.5 billion 47.25% 47.25%
State-owned assets Jinan asset management and capital
investment Co. operation, entrustment
Ltd management, investment
consulting
Note: State-owned Assets Supervision and Administration Commission of Shandong Provincial People's
Government is the ultimate controller of the Company.
10.2 Subsidiaries of the Company
Details of subsidiaries refer to Note 8 Interest in other entities.
10.3 Other related parties
Entity name Relationship
Inspur Genersoft Software lnc. A company that has a transaction in the current period controlled by
the same parent company
Dezhou Bank Co.,LTD A company that has a transaction in the current period controlled by
the same parent company
ZhongTai XinCheng Asset Management Co., Ltd A company that has a transaction in the current period controlled by
the same parent company
10.4 Transactions with related parties
10.4.1 Leases with related parties
72
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
The company, as the lessee:
Lesser Condition of Year ended 31/12/2021 Year ended 31/12/2020
underlying assets Rental the rent Rental the rent
ZhongTai XinCheng Asset Office building 195,000.00 -
Management Co., Ltd
10.4.2 Remuneration of key management
Item Year ended 31/12/2021 Year ended 31/12/2020
Remuneration of key management 2,225,053.60 2,727,975.00
10.4.3 Other related transactions
10.4.3.1 Interest revenue
Item Related party Year ended 31/12/2021 Year ended 31/12/2020
Interest revenue Dezhou Bank Co.,LTD 2,274.66 1,392.99
10.5 Receivables due from and payables due to related parties
10.5.1 Other non-current assets
Item Related party Balance as at 31/12/2021 Balance as at 1/1/2021
Book balance Allowance for Book balance Allowance for
credit losses credit losses
Prepayments Inspur Genersoft Software lnc. 394,857.06 - 394,857.06 -
11. Commitments and contingencies
11.1 Commitments
None.
11.2 Contingencies
None.
12. Post balance sheet events
12.1 Significant non-adjustment events after balance sheet date
On January 11, 2022, Zhongtai Xincheng Asset Management Co., Ltd. unilaterally increased its capital by
RMB 100 million to Shandong Zhonglu Ocean (Yantai) Food Co., Ltd. (hereinafter referred to as: Yantai
Food), a wholly-owned subsidiary of the Company. It owns 27.54% of Yantai Foodstuffs shares and has a
significant influence on Yantai Food.
12.2 Distribution of profit
No.
13. Other significant events
13.1 Pension scheme
73
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
According to relative laws, regulations and policies, the pension system of the company has been
established to pay supplementary endowment insurance for employees (namely enterprise annuity) on the
basis of attending primary endowment insurance lawfully. The company has set the operating efficiency
coefficient in accordance with the actual operating conditions every year, and calculated the total amount
paid by the enterprise through it. In the enterprise pension, the borne expenses of the company have been
disclosed in the case of employee pay payable and the condition of the established escrow plan, and the
individual cost has been paid by the company from their salary. This year, the enterprise pension has been
increased RMB 2.16 million, relevant information shall be referred to "Attachment 6 (19) employee pay
payable".
13.2 Segment reporting
13.2.1 Determination basis of segment reporting and related accounting policy
The company’s mainly business are oceanic fishing, aquatic products processing, vessels leasing and others.
The company disclosure the branches reports by the character and plate of its main bussiness.
13.2.2 Financial information of segment reporting
Item Oceanic fishing Vessels leasing Aquatic products Others Elimination Total
processing and between branches
refrigeration
Operating income 382,802,775.17 92,334,301.43 614,442,426.72 180,087.86 -164,281,044.71 925,478,546.47
Operating cost 364,173,138.00 71,664,655.72 576,118,584.27 125,928.57 -164,283,093.86 847,799,212.70
Credit 1,209,747.43 14,008.32 466,622.95 -59,313.76 - 1,631,064.94
impairment losses
Impairment of -3,138,247.15 - -4,024,940.30 -4,250.68 - -7,167,438.13
assets
Depreciation and 36,035,069.88 9,098,675.03 7,702,289.14 3,387,417.58 - 56,223,451.63
amortization
Profit before tax 26,426,691.14 14,880,398.21 24,547,768.95 -25,001,131.81 - 40,853,726.49
Income tax - 1,476,541.19 2,723,318.03 - - 4,199,859.22
expenses
Net profit 26,426,691.14 13,403,857.02 21,824,450.92 -25,001,131.81 - 36,653,867.27
Total assets 736,419,607.35 232,500,932.84 370,318,230.33 173,579,725.80 -112,683,535.61 1,400,134,960.71
Total liabilities 107,939,243.67 41,066,699.30 70,883,681.59 200,948,395.77 -116,227,040.91 304,610,979.42
14. Notes to the financial statements of the Company
14.1 Accounts receivable
14.1.1 Aging analysis by aging
Aging Balance as at 31/12/2021
Within 6 months 9,190,590.36
6 months-1 years -
1-2 years -
2-3 years -
More than 3 years 5,689,018.01
74
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Aging Balance as at 31/12/2021
Total 14,879,608.37
14.1.2 Accounts receivable by provision method for allowance credit losses
Item As at 31/12/2021
Balance PCT Allowance for PCT Carrying
credit losses amount
Individually assessment subject - - - - -
to allowance for credit losses
Grouping assessment subject to 14,879,608.37 100.00% 6,148,547.53 41.32% 8,731,060.84
allowance for credit losses
Group 1: Non-affiliated party 14,879,608.37 100.00% 6,148,547.53 41.32% 8,731,060.84
customer portfolio
Group 2: Combination of - - - - -
related parties
Total 14,879,608.37 100.00% 6,148,547.53 41.32% 8,731,060.84
(Continued)
Item As at 1/1/2021
Balance PCT Allowance for PCT Carrying
credit losses amount
Individually assessment subject - - - - -
to allowance for credit losses
Grouping assessment subject to 13,483,880.01 100.00% 6,076,243.56 45.23% 7,407,636.45
allowance for credit losses
Group 1: Non-affiliated party 13,433,529.01 99.63% 6,076,243.56 45.23% 7,357,285.45
customer portfolio
Group 2: Combination of 50,351.00 0.37% - - 50,351.00
related parties
Total 13,483,880.01 100.00% 6,076,243.56 45.23% 7,407,636.45
Group 1: Accounts receivable due from non-affiliated party customer portfolio:
Aging As at 31/12/2021
Balance Allowance for PCT
credit losses
Within 6 months 9,190,590.36 459,529.52 5.00%
6 months-1 years - - -
1-2 years - - -
2-3 years - - -
More than 3 years 5,689,018.01 5,689,018.01 100.00%
Total 14,879,608.37 6,148,547.53
(Continued)
75
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Aging As at 1/1/2021
Balance Allowance for PCT
credit losses
Within 6 months 7,744,511.00 387,225.55 5.00%
6 months-1 years - - -
1-2 years - - -
2-3 years - - -
More than 3 years 5,689,018.01 5,689,018.01 100.00%
Total 13,433,529.01 6,076,243.56
Group 2: Accounts receivable due from combination of related parties :
Aging As at 31/12/2021 As at 1/1/2021
Balance ECL rate Allowance for Balance ECL rate Allowance for
credit losses credit losses
combination of - - - 50,351.00 - -
related parties
14.1.3 Allowance for credit losses
Item As at 1/1/2021 Amount of change in the current period As at
Provision Recovery or Write off Others 31/12/2021
reversal
Accounts 6,076,243.56 72,303.97 - - - 6,148,547.53
receivable
14.1.4 Accounts receivable due from the top five debtors of the Company are as follows:
Company name Balance as at Percentage in Balance of
31/12/2021 total accounts allowance for
receivable credit losses as at
31/12/2021
HAIXINSHEN CO.,LTD 5,435,011.18 36.53% 271,750.56
PACIFIC PANDA.INC 3,600,962.12 24.20% 3,600,962.12
PIONEER FOOD CANNERY LTD 2,017,638.08 13.56% 100,881.90
AFKO FISHERIES COMPANY LIMITED 870,928.08 5.85% 43,546.40
Xue Han 293,209.20 1.97% 293,209.20
Total 12,217,748.66 82.11% 4,310,350.18
14.2 Other receivables
Item Balance as at 31/12/2021 Balance as at 1/1/2021
Interest receivable - -
Dividends receivable 85,085,303.70 101,777,374.94
Other receivables 37,525,815.05 106,275,077.33
Less: Allowance for credit losses 3,595,932.39 3,553,611.55
Total 119,015,186.36 204,498,840.72
14.2.1 Dividends receivable
76
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
14.2.1.1 Classification and disclosure of dividends receivable
Item Balance as at 31/12/2021 Balance as at 31/12/2021
Subsidiary dividend 85,085,303.70 101,777,374.94
Less: Allowance for credit losses - -
Total 85,085,303.70 101,777,374.94
14.2.2 Other receivables
14.2.2.1 Aging analysis of other receivables
Aging Balance as at 31/12/2021
Within 6 months 18,995,609.66
6 months-1 years 2,685,259.35
1-2 years 2,548,353.45
2-3 years 2,898,011.07
More than 3 years 10,398,581.52
Total 37,525,815.05
14.2.2.2 Category of other receivables by nature
Nature Balance as at 31/12/2021 Balance as at 1/1/2021
Internal current account 33,377,123.62 102,455,780.95
Revolving fund and other 4,148,691.43 3,819,296.38
Less: Allowance for credit losses 3,595,932.39 3,553,611.55
Total 33,929,882.66 102,721,465.78
14.2.2.3 The provision of allowance for credit losses
The allowance for credit losses Stage one Stage two Stage three Total
12-month ECL Lifetime ECL Lifetime ECL
(credit (credit-impaired)
-unimpaired)
Beginning balance 55,390.16 - 3,498,221.39 3,553,611.55
Revaluation of beginning balance 55,390.16 - 3,498,221.39 3,553,611.55
Provision 53,574.17 - -9,995.05 43,579.12
Reversal - - - -
Charge off - - - -
Write-off - - 1,258.28 1,258.28
Other changes - - - -
Ending balance 108,964.33 - 3,486,968.06 3,595,932.39
14.2.2.4 Allowance for credit losses
Item Balance as at Amount of change in the current period Balance as at
1/1/2021 Allowance Take back or write off Other change 31/12/2021
turn back
Other 3,553,611.55 43,579.12 - 1,258.28 - 3,595,932.39
receivables
77
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
14.2.2.5 Other receivables written-off during the year
Item Write-off amount
Other receivables written off 1,258.28
14.2.2.6 Other receivables due from the top five debtors are as follows:
Company name Nature of Balance as at Aging As a percentage Ending balance
payment 31/12/2021 of the total of allowance for
amount credit losses
LAIF FISHERIES COMPANY current 18,343,166.52 0-3 years or 48.88% -
LIMITED payment more
YAW ADDO FISHERIES current 9,305,369.49 0-3 years or 24.8% -
COMPANY LIMITED payment more
AFRICA STAR FISHERIES current 3,189,007.27 0-3 years or 8.5% -
LIMITED payment more
Shandong Zhonglu Ocean current 1,995,947.71 1-3 years or 5.32% -
Refrigeration Co., Ltd. payment more
Sino-Ocean (Qingdao) Industrial current 302,683.00 0-6 months 0.81% -
Investment Development Co., Ltd. payment
Total 33,136,173.99 88.31% -
14.3 Long-term equity investments
Item As at 31/12/2021 As at 1/1/2021
Balance Provision Carrying amount Balance Provision Carrying amount
for impairment for impairment
Investment to 232,189,455.23 - 232,189,455.23 232,189,455.23 - 232,189,455.23
subsidiaries
Note: The parent company and HABITAT INTERNATIONAL CORP, a wholly-owned subsidiary, jointly
invested and set up Zhonglu Oceanic (Qingdao) Industrial Investment Development Co., Ltd. with the
parent company accounting for 51%. By December 31, 2021, the parent company had not actually
invested.
14.3.1 Investment to subsidiaries
Investee Balance as at Additions Reductions Balance as at Provision Balance of
1/1/2021 31/12/2021 for impairment provision
in current period for impairment
As at 1/1/2021
HABITAT 12,476,145.60 - - 12,476,145.60 - -
INTERNATI
ONAL CORP.
Shandong 22,869,513.38 - - 22,869,513.38 - -
Zhonglu
Oceanic
Fisheries
Transportation
Co., Ltd.
78
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Investee Balance as at Additions Reductions Balance as at Provision Balance of
1/1/2021 31/12/2021 for impairment provision
in current period for impairment
As at 1/1/2021
Shandong 55,448,185.24 - - 55,448,185.24 - -
Zhonglu
Oceanic
(Yantai) Food
Co., Ltd.
Shandong 141,395,611.01 - - 141,395,611.01 - -
zhonglu Haiyan
Oceanic
Fisheries Co.,
Ltd.
Total 232,189,455.23 - - 232,189,455.23 - -
14.4 Operating income and operating costs
14.4.1 Operating income and operating costs
Item Year ended 31/12/2021 Year ended 31/12/2020
Income Cost Income Cost
Primary operating business 135,171,275.55 115,100,856.01 108,685,800.84 99,119,500.56
Other operating business 4,156,011.88 1,788,918.05 4,999,320.98 1,807,861.27
Total 139,327,287.43 116,889,774.06 113,685,121.82 100,927,361.83
14.5 Investment income
Item Year ended Year ended
31/12/2021 31/12/2020
Gain/(Loss) from long-term equity investments in cost method 8,817,128.76 7,880,977.02
Gain/(Loss) on financial assets held for trading for the current period 49,972.60 15,287.67
Total 8,867,101.36 7,896,264.69
15. Supplementary information
15.1 Details of non-recurring gain or loss for the year
Item Amount Remark
Gain or loss on disposal of non-current assets 3,494,326.93 -
Government grants (except the government grants closely related to the business of the 2,484,454.50 -
Company and enjoyed according to unified quota or ration standards)
Gain or loss from fair value change of financial assets held-for-trading, other non-current 49,972.60 -
financial assets, derivative financial assets and financial liabilities held-for-trading etc., and
investment income from disposal of financial assets held-for-trading, other non-current
financial assets, other debt investments, financial liabilities held-for-trading and derivative
financial liabilities, excluding effective hedging operations related to normal business of
the Company
79
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
Notes to the Financial Statements January 1, 2021 - December 31, 2021
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
Item Amount Remark
Gain or loss from debt restructuring -127,527.03 -
Other non-operating income/(expenses) except the above items 798,473.53 -
Effects of income tax on non-recurring items 1,086,874.90 -
Effects of non-recurring items attributable to the minority shareholders of the Company 818,312.96 -
Total 4,794,512.67 -
Note: The company received 38,431,963.86 yuan of subsidy funds for the improvement of the country’s
international contract performance capacity this year. Because the subsidy is closely related to the
enterprise’s contract performance score and fishing vessel operation time, the subsidy fund is based on the
company’s contract performance score, fishing vessel operation time and other parameters, according to
the country, Standard calculation and confirmation of relevant provincial departments. Therefore, it is not
listed as non-recurring profit or loss.t.
15.2 Return on equity and earnings per share
Profit in report period Weighted average return Earnings per share
on equity Basic earnings Diluted earnings
per share per share
Net profit attributable to the common share holders 3.87% 0.13 0.13
Net profit attributable to the common shareholders after 3.35% 0.12 0.12
deducting non-recurring gain or loss items
80
