安道麦B(200553):2024年半年度财务报告（英文版）
原标题:安道麦B:2024年半年度财务报告（英文版） ADAMA Ltd. ENGLISH TRANSLATION OF FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2024 (Expressed in RMB '000) FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2024 CONTENTS PAGES THE CONSOLIDATED AND COMPANY'S BALANCE SHEETS 1 - 3 THE CONSOLIDATED AND COMPANY'S INCOME STATEMENTS 4 - 5 THE CONSOLIDATED AND COMPANY'S CASH FLOW STATEMENTS 6 - 7 THE CONSOLIDATED AND COMPANY'S STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY 8 - 10 NOTES TO THE FINANCIAL STATEMENTS 11 - 117 ADAMA Ltd. (Expressed in RMB '000) Consolidated Balance Sheet June 30 December 31 Notes 2024 2023 Current assets Cash at bank and on hand V.1 3,995,217 4,881,328 Financial assets held for trading V.2 2,125 1,912 Derivative financial assets V.3 222,662 850,137 Bills receivable V.4 83,882 86,303 Accounts receivable V.5 8,376,840 8,146,677 Receivables financing V.6 149,457 123,050 Prepayments V.7 297,531 305,883 Other receivables V.8 862,132 1,054,302 Inventories V.9 12,316,391 13,088,757 1,359,146 1,083,714 Other current assets V.10 27,665,383 29,622,063 Total current assets Non-current assets Long-term receivables V.11 55,147 68,752 Long-term equity investments V.12 29,305 31,474 Other equity investments V.13 132,579 132,018 Investment properties 21,327 22,145 Fixed assets V.14 9,800,110 10,040,113 Construction in progress V.15 2,699,358 2,507,328 Right-of-use assets V.16 575,852 625,235 Intangible assets V.17 4,995,395 5,318,281 Goodwill V.18 5,031,880 5,001,538 Deferred tax assets V.19 1,448,911 1,601,641 399,234 435,215 Other non-current assets V.20 25,189,098 25,783,740 Total non-current assets 52,854,481 55,405,803 Total assets ADAMA Ltd. (Expressed in RMB '000) Consolidated Balance Sheet (continued) June 30 December 31 Notes 2024 2023 Current liabilities Short-term loans V.21 4,597,378 5,733,522 Derivative financial liabilities V.22 280,518 607,787 Bills payable V.23 424,493 613,507 Accounts payable V.24 4,999,499 4,649,733 Contract liabilities V.25 1,389,717 1,514,365 Employee benefits payable V.26 782,939 847,039 Taxes payable V.27 550,325 407,230 Other payables V.28 1,773,384 1,469,319 Non-current liabilities due within one year V.29 2,013,951 2,297,888 882,320 753,827 Other current liabilities V.30 17,694,524 18,894,217 Total current liabilities Non-current liabilities Long-term loans V.31 2,891,645 2,885,939 Debentures payable V.32 6,844,166 6,919,423 Lease liabilities V.33 447,815 495,459 Long-term payables 95,571 97,840 Long-term employee benefits payable V.34 571,740 671,530 Provisions V.35 316,235 299,251 Deferred tax liabilities V.19 291,846 297,103 2,718,453 2,920,566 Other non-current liabilities V.36 14,177,471 14,587,111 Total non-current liabilities 31,871,995 33,481,328 Total liabilities Shareholders' equity Share capital V.37 2,329,812 2,329,812 Capital reserve V.38 12,950,464 12,950,464 Less: Treasury shares - - Other comprehensive income V.39 1,672,162 1,675,896 Special reserves 8,098 16,595 Surplus reserve V.40 273,617 273,617 3,748,333 4,678,091 Retained earnings V.41 Total equity attributed to the shareholders 20,982,486 21,924,475 of the company Non-controlling interests - - 21,924,475 20,982,486 Total Equity 52,854,481 55,405,803 Total liabilities and equity Steve Hawkins Efrat Nagar Legal representative Chief Financial Officer These financial statements were approved by the Board of Directors of the Company on August 27 2024. The notes form part of these financial statements. ADAMA Ltd. (Expressed in RMB '000) Company's Balance Sheet June 30 December 31 Notes 2024 2023 Current assets Cash at bank and on hand XV.1 72,509 163,646 Accounts receivable XV.2 1,013,459 1,141,839 Receivables financing XV.3 25,125 7,929 Prepayments 7,383 10,233 Other receivables XV.4 11,611 11,611 Inventories 235,078 218,984 Non-current assets due within one year - 125,000 9,127 7,574 Other current assets 1,374,292 1,686,816 Total current assets Non-current assets Long-term equity investments XV.5 17,430,716 17,430,716 Other equity investments 54,299 54,299 Investment properties 2,345 2,619 Fixed assets 1,604,248 1,711,062 Construction in progress 70,253 56,791 Right-of-use assets 1,661 1,877 Intangible assets 243,178 249,236 Deferred tax assets 28,827 80,241 Other non-current assets 207,068 273,783 19,642,595 19,860,624 Total non-current assets 21,016,887 21,547,440 Total assets Current liabilities Short-term loans 100,000 100,000 Bills payables 34,242 64,588 Accounts payables 144,343 150,265 Contract liabilities 6,415 12,190 Employee benefits payable 5,411 12,091 Taxes payable 2,039 4,852 Other payables 703,247 619,857 Non-current liabilities due within one year 415,808 537,820 1,411,505 1,501,663 Total current liabilities Non-current liabilities Long-term loans 575,971 949,017 Lease liabilities 962 885 Long-term employee benefits payable 100,500 101,628 Provisions 25,227 26,116 225,400 269,500 Other non-current liabilities 928,060 1,347,146 Total non-current liabilities 2,339,565 2,848,809 Total liabilities Shareholders’ equity Share capital V.37 2,329,812 2,329,812 Capital reserve 15,523,881 15,523,881 Other comprehensive income (1,002) (1,002) Special reserves 8,789 17,286 Surplus reserve V.40 273,617 273,617 542,225 555,037 Retained earnings 18,677,322 18,698,631 Total shareholders’ equity 21,016,887 21,547,440 Total liabilities and shareholders’ equity ADAMA Ltd. (Expressed in RMB '000) Consolidated Income Statement Six months ended June 30 Notes 2024 2023 V.42 14,910,289 17,253,201 I. Operating income Less: Cost of sales V.42 11,474,074 13,358,727 Taxes and surcharges V.43 48,358 51,420 Selling and Distribution expenses V.44 2,363,376 2,161,199 General and administrative expenses V.45 536,266 461,146 Research and Development expenses V.46 218,107 262,378 Financial expenses V.47 623,647 455,855 Including: Interest expense 532,560 565,782 Interest income 130,667 134,254 Add: Investment income, net V.48 4,418 10,090 Including: Income from investment in associates and joint ventures 4,418 3,439 Loss from changes in fair value V.49 (196,492) (782,218) Credit impairment reversal (losses) V.50 (15,676) 8,490 Asset impairment losses V.51 (59,134) (105,887) 18,217 23,402 Gain from disposal of assets V.52 (602,206) (343,647) II. Operating loss Add: Non-operating income 43,241 36,073 12,465 11,015 Less: Non-operating expenses (571,430) (318,589) III. Total loss 323,436 (76,433) Less: Income tax expenses (income) V.53 (894,866) (242,156) IV. Net loss (1). Classified by nature of operations (1.1). Continuing operations (894,866) (242,156) (2). Classified by ownership (2.1). Shareholders of the Company (894,866) (242,156) (2.2). Non-controlling interests - - V. Other comprehensive income (loss), net of tax V. 39 (3,734) 884,205 Other comprehensive income (net of tax) attributable to shareholders of the Company (3,734) 884,205 (1) Items that will not be reclassified to profit or loss: 8,522 14,741 (1.1) Re-measurement of defined benefit plan liability 8,522 14,741 (1.2) Fair Value changes in other equity investment - - (2) Items that were or will be reclassified to profit or loss (12,256) 869,464 (2.1) Effective portion of gains or loss of cash flow hedge 6,283 26,534 (18,539) 842,930 (2.2) Translation differences of foreign financial statements VI. Total comprehensive income (loss) for the period attributable to (898,600) 642,049 Shareholders of the Company Total comprehensive income (loss) for the period (898,600) 642,049 attributable to shareholders of the Company Total comprehensive income for the period - - attributable to Non-controlling interests VII. Earnings per share XIV.2 (1) Basic loss per share (Yuan/share) (0.38) (0.10) (2) Diluted earnings per share (Yuan/share) N/A N/A ADAMA Ltd. (Expressed in RMB '000) Company's Income Statement Six months ended June 30 Notes 2024 2023 XV.6 981,592 1,093,709 I. Operating income Less: Operating costs XV.6 831,781 893,238 Taxes and surcharges 5,450 4,292 Selling and Distribution expenses 3,695 2,744 General and administrative expenses 62,755 66,887 Research and Development expenses 2,497 16,129 Financial expenses 3,942 755 Including: Interest expense 19,087 24,412 Interest income 3,892 4,814 Add: Investment income, net - - Gain from changes in fair value (“-” means loss) (30,870) - Credit impairment reversal (losses) (2) 91 Asset Impairment reversal (losses) (3,565) (3,067) - 17 Gain from disposal of assets II. Operating Profit 37,035 106,705 Add: Non-operating income 1,606 7,815 39 509 Less: Non-operating expenses III. Total profit 38,602 114,011 51,414 20,379 Less: Income tax expense (income) (12,812) 93,632 IV. Net profit (loss) - - V. Other comprehensive income, net of tax (1) Items that will not be reclassified to profit or loss - - (1.1) Re-measurement of defined benefit plan liability - - (1.2) FV changes in other equity investment - - (12,812) 93,632 VI. Total comprehensive income (loss) for the period ADAMA Ltd. (Expressed in RMB '000) Consolidated Cash Flow Statement Six months ended June 30 Notes 2024 2023 I. Cash flows from operating activities: Cash received from sale of goods and rendering of services 13,538,583 17,397,575 Refund of taxes and surcharges 104,215 93,456 292,828 201,011 Cash received relating to other operating activities V.56(1) 13,935,626 17,692,042 Sub-total of cash inflows from operating activities Cash paid for goods and services 8,394,452 13,362,264 Cash paid to and on behalf of employees 2,093,554 2,464,353 Payments of taxes and surcharges 324,788 388,247 1,391,714 1,542,054 Cash paid relating to other operating activities V.56(2) 12,204,508 17,756,918 Sub-total of cash outflows from operating activities 1,731,118 (64,876) Net cash flows provided by (used in) operating activities V.57(1)a II. Cash flows from investing activities: Cash received from disposal of investments 63,100 158,498 Cash received from returns of investments - 1,710 Net cash received from disposal of fixed assets, intangible assets and other long-term assets 30,379 30,688 - 16,643 Cash received relating to other investing activities V.56(3) 93,479 207,539 Sub-total of cash inflows from investing activities Cash paid to acquire fixed assets, intangible assets and other long-term assets 800,485 1,178,443 Cash paid for acquisition of investments - 1,745 Net cash paid to acquire subsidiaries or other business units - 148,460 107,950 - Cash paid relating to other investing activities V.56(4) 908,435 1,328,648 Sub-total of cash outflows from investing activities (814,956) (1,121,109) Net cash flows used in investing activities III. Cash flows from financing activities: Cash received from borrowings 1,014,194 2,711,547 781,651 1,428,302 Cash received from other financing activities V.56(5) 1,795,845 4,139,849 Sub-total of cash inflows from financing activities Cash repayments of borrowings 2,792,435 1,599,428 Cash payment for dividends, profit distributions and interest 586,795 584,774 Including: Dividends paid to non-controlling interest 34,892 18,763 261,285 554,624 Cash paid relating to other financing activities V.56(6) 3,640,515 2,738,826 Sub-total of cash outflows from financing activities Net cash flow provided by (used in) financing activities (1,844,670) 1,401,023 IV. Effects of foreign exchange rate changes on cash and cash equivalent equivalent 42,030 130,246 V. Net increase (decrease) in cash and cash equivalents V.57(1)b (886,478) 345,284 4,857,358 4,225,253 Add: Cash and cash equivalents at the beginning of the year 3,970,880 4,570,537 I. VI. Cash and cash equivalents at the end of the period V.57(2) ADAMA Ltd. (Expressed in RMB '000) Company's Cash Flow Statement Six months ended June 30 Notes 2024 2023 I. Cash flows from operating activities: 621,379 Cash received from sale of goods and rendering of services 879,847 28,662 Refund of taxes and surcharges 41,484 XV.7(1) 12,564 25,659 Cash received relating to other operating activities 933,895 675,700 Sub-total of cash inflows from operating activities 551,879 Cash paid for goods and services 530,851 68,837 Cash paid to and on behalf of employees 69,738 6,605 Payments of taxes and surcharges 9,090 XV.7(2) 20,299 112,039 Cash paid relating to other operating activities 629,978 739,360 Sub-total of cash outflows from operating activities XV.8 303,917 (63,660) Net cash flows provided by (used in) operating activities II. Cash flows from investing activities: - - Cash received from returns of investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets - 17 XV.7.(3) 127,600 2,850 Cash received relating to other investing activities 127,600 2,867 Sub-total of cash inflows from investing activities Cash paid to acquire fixed assets, intangible assets and other long-term assets 17,913 36,808 XV.7.(4) - - Cash paid for other investing activities 17,913 36,808 Sub-total of cash outflows from investing activities 109,687 (33,941) Net cash flows provided by (used in) investing activities III. Cash flows from financing activities: 50,000 450,000 Cash received from borrowings 6,460 12,750 Cash received relating to other financing activities XV.7.(5) 56,460 462,750 Sub-total of cash inflows from financing activities 544,732 409,732 Cash repayments of borrowings 19,179 87,684 Cash payment for dividends, profit distributions or interest XV.7.(6) 3,884 3,837 Cash paid relating to other financing activities 567,795 501,253 Sub-total of cash outflows from financing activities (511,335) (38,503) Net cash flow used in financing activities 9,630 (880) IV. Effects of foreign exchange rate changes on cash and cash equivalents (88,101) (136,984) V. Net decrease in cash and cash equivalents XV.8(2) 157,186 258,330 Add: Cash and cash equivalents at the beginning of the year XV.8(2) 69,085 121,346 VI. Cash and cash equivalents at the end of the period ADAMA Ltd. (Expressed in RMB '000) Consolidated Statement of Changes in Shareholders’ Equity For the Six months ended June 30, 2024 Other Share Capital comprehensive Special Surplus Retained Non-controlling capital reserve income reserves reserve earnings Total interests Total equity 2,329,812 12,950,464 1,675,896 16,595 273,617 4,678,091 21,924,475 - 21,924,475 I. Balance at December 31, 2023 II. Changes in equity for the period - - (3,734) (8,497) - (929,758) (941,989) - (941,989) 1. Total comprehensive loss - - (3,734) - - (894,866) (898,600) - (898,600) 2. Appropriation of profits - - - - - (34,892) (34,892) - (34,892) 2.1 Distribution to non-controlling - - - - - (34,892) (34,892) - (34,892) interest 3. Special reserve - - - (8,497) - - (8,497) - (8,497) 3.1 Transfer to special reserve - - - 4,721 - - 4,721 - 4,721 3.2 Amount utilized - - - (13,218) - - (13,218) - (13,218) III. Balance at June 30, 2024 2,329,812 12,950,464 1,672,162 8,098 273,617 3,748,333 20,982,486 - 20,982,486 ADAMA Ltd. (Expressed in RMB '000) Statement of Changes in Shareholders’ Equity For the Six months ended June 30, 2023 Other Share Capital comprehensive Special Surplus Retained Non-controlling capital reserve income reserves reserve earnings Total interests Total equity I. Balance at December 31, 2022 2,329,812 12,986,333 1,080,590 15,818 242,498 6,469,604 23,124,655 - 23,124,655 - (40,496) 884,205 (30) - (323,824) 519,855 - 519,855 II. Changes in equity for the period 1. Total comprehensive income (loss) - - 884,205 - - (242,156) 642,049 - 642,049 2. Owner’s contributions and reduction - (40,496) - - - - (40,496) - (40,496) 2.1 Transactions with holders of - (40,496) - - - - (40,496) - (40,496) non controlling interest 3. Appropriation of profits - - - - - (81,668) (81,668) - (81,668) 3.1 Distribution to owners - - - - - (62,905) (62,905) - (62,905) 3.2 Distribution to non-controlling - - - - - (18,763) (18,763) - (18,763) interest 4. Special reserve - - - (30) - - (30) - (30) 4.1 Transfer to special reserve - - - 5,010 - - 5,010 - 5,010 4.2 Amount utilized - - - (5,040) - - (5,040) - (5,040) III. Balance at June 30, 2023 2,329,812 12,945,837 1,964,795 15,788 242,498 6,145,780 23,644,510 - 23,644,510 ADAMA Ltd. (Expressed in RMB '000) Company's Statement of Changes in Shareholders’ Equity For the Six months ended June 30, 2024 Other Share Capital comprehensive Special Surplus Retained capital reserve income reserves reserve earnings Total 2,329,812 15,523,881 (1,002) 17,286 273,617 555,037 18,698,631 I. Balance at December 31, 2023 - - - - (8,497) (12,812) II. Changes in equity for the period (21,309) - - - - - (12,812) 1. Total comprehensive income (12,812) - - - (8,497) - - (8,497) 2. Special reserve - - - 4,721 - - 4,721 2.1 Transfer to special reserve - - - (13,218) - - (13,218) 2.2 Amount utilized 2,329,812 15,523,881 (1,002) 8,789 273,617 542,225 18,677,322 Ⅲ. Balance at June 30, 2024 For the Six months ended June 30, 2023 Other Share Capital comprehensiv Special Surplus Retained capital reserve e income reserves reserve earnings Total 2,329,812 15,523,881 30,822 16,509 242,498 337,865 18,481,387 I. Balance at December 31, 2022 - (30) - 30,727 II. Changes in equity for the period - - 30,697 - - 93,632 1. Total comprehensive income - - - 93,632 - 2. Appropriation of profits - - - - (62,905) (62,905) - (62,905) (62,905) 2.1 Transfer to Distribution to shareholders - - - - (30) - - (30) 3. Special reserve - - - 5,010 - - 5,010 3.1 Transfer to special reserve - - - (5,040) - - (5,040) - - - 3.2 Amount utilized 2,329,812 15,523,881 30,822 16,479 242,498 368,592 18,512,084 Ⅲ. Balance at June 30, 2023 Notes to the Financial Statements I BASIC CORPORATE INFORMATION ADAMA Ltd. (hereinafter the “Company” or the “Group”) is a company limited by shares established in China with its head office located in Hubei Jingzhou. In June 2020, the controlling shareholder of the Company changed from China National Agrochemical Co,. Ltd. (hereinafter – “CNAC") to Syngenta Group Co., Ltd. (hereinafter “Syngenta Group”). As of August 2021, following the combination between China National Chemical Co., Ltd. (hereinafter - “ChemChina”) and Sinochem Holdings Corporation Ltd. (hereinafter - “Sinochem Holdings”), Syngenta Group, and subsequently the Company, are ultimately controlled by Sinochem Holdings - parent of both ChemChina and Sinochem Group Co., Ltd. (hereinafter “Sinochem Holdings”), subordinated to SASAC. The principal activities of the Company and its subsidiaries (together referred to as the “Group”) are engaged in development, manufacturing and marketing of agrochemicals, intermediate materials for other industries, food additives and synthetic aromatic products, mainly for export. For information about the largest subsidiaries of the Company, refer to Note VII. The Company’s consolidated financial statements had been approved by the Board of Directors of the Company on August 27, 2024. Details of the scope of consolidated financial statements are set out in Note VII "Interest in other entities", whereas the changes of the scope of consolidation are set out in Note VI "Changes in consolidation scope". II BASIS OF PREPARATION 1. Basis of preparation The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of Finance (the "MoF"). In addition, the Group has disclosed relevant financial information in these financial statements in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15－General Provisions on Financial Reporting (revised by China Securities Regulatory Commission (hereinafter "CSRC”) in 2023). 2. Accrual basis and measurement principle The Group has adopted the accrual basis of accounting. Except for certain financial instruments which are measured at fair value, deferred tax assets and liabilities, assets and liabilities relating to employee benefits, provisions, and investments in associated companies and joint ventures, the Group adopts the historical cost as the principle of measurement in the financial statements. Where assets are impaired, provisions for asset impairment are made in accordance with relevant requirements. In the historical cost measurement, assets obtained shall be measured at the amount of cash or cash equivalents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of cash or assets received, or the contractual amount in a present obligation, or the prospective amount of cash or cash equivalents paid to discharge the liabilities. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing market participants in an arm’s length transaction at the measurement date. Fair Notes to the Financial Statements II BASIS OF PREPARATION - (cont’d) 2. Accrual basis and measurement principle - (cont’d) The following table provides an analysis, grouped into Levels 1 to 3 based on the degree to which the fair value input is observable and significant to the fair value measurement as a whole: Level 1 - based on quoted prices (unadjusted) in active markets; Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable (other than quoted prices included within Level 1), either directly or indirectly; Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. 3. Going concern The financial statements have been prepared on the going concern basis. The Group has performed going concern assessment for the following 12 months from June 30,2024 and have not identified any significant doubtful matter or event on the going concern, as such the financial statement have been prepared on the going concern basis. III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES 1. Statement of compliance These financial statements are in compliance with the Accounting Standards for Business Enterprises to truly and completely reflect the Company's consolidated financial position as at June 30, 2024 and the Company's consolidated operating results, changes in shareholders' equity and cash flows for the six months then ended. 2. Accounting period The Group has adopted the calendar year as its accounting year, i.e. from 1 January to 31 December. 3. Business cycle The company takes the period from the acquisition of assets for processing to their realisation in cash or cash equivalents as a normal operating cycle. The operating cycle for the company is 12 months. 4. Reporting currency The Company and its domestic subsidiaries choose Renminbi (hereinafter "RMB") as their functional currency. Functional currencies of overseas subsidiaries are determined on the basis of the principal economic environment in which the overseas subsidiaries operate. The functional currency of the overseas subsidiaries is mainly the United States Dollar (hereinafter "USD"). The presentation currency of these financial statements is Renminbi. Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 5. Criteria of determining material item in the report and its benchmark Item Benchmark for Material Item Individual construction in progress project with a budget higher than RMB Material construction in progress projects 100 million 6. Business combinations 6.1 Business combinations not involving enterprises under common control and goodwill A business combination not involving enterprises under common control is a business combination in which all of the combining enterprises are not ultimately controlled by the same party or parties before and after the combination. The costs of business combination are the fair value of the assets paid, liabilities incurred or assumed and equity instruments issued by the acquirer for the purpose of achieving the control rights over the acquiree. The intermediary costs such as audit, legal services and assessment consulting costs and other related management costs that are directly attributable to the combination by the acquirer are charged to profit or loss in the period in which they are incurred. Direct capital issuance costs incurred in respect of equity instruments or liabilities issued pursuant to the business combination should be charged to the respect equity instruments or liabilities upon initial recognition of the underlying equity instruments or liabilities. The acquiree’s identifiable assets, liabilities and contingent liabilities acquired by the acquirer in a business combination, that meet the recognition criteria shall be measured at fair value at the acquisition date. The consideration transferred includes the fair value of any contingent consideration. (such as earnout arrangements with the former shareholders). After the acquisition date, the Group recognizes changes in the fair value of contingent consideration classified as a financial liability at fair value through profit or loss. Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial recognition. Where the cost of combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the remaining difference is recognized immediately in profit or loss for the current year. The goodwill raised because of the business combination should be separately disclosed in the consolidated financial statement and measured by the initial amount less any accumulative impairment provision. In a business combination achieved in stages, the Group remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognise the resulting gain or loss, if any, in profit or loss. Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 7. Basis for preparation of consolidated financial statements The scope of consolidation in consolidated financial statements is determined on the basis of control. Control is achieved when the Company has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. For a subsidiary disposed of by the Group, the operating results and cash flows before the date of disposal (the date when control is lost) are included in consolidated income statement and consolidated statement of cash flows. For a subsidiary acquired through a business combination not involving enterprises under common control, the operating results and cash flows from the acquisition date (the date when control is obtained) are included in consolidated income statement and consolidated statement of cash flows. The significant accounting policies and accounting years adopted by the subsidiaries are determined based on the uniform accounting policies and accounting years set out by the Company. All significant intra-group balances, transactions and unrealized profits are eliminated on consolidation. The portion of subsidiaries' equity that is not attributable to the Company is treated as non-controlling interests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balance sheet. The portion of net profits or losses of subsidiaries for the period attributable to non-controlling interests is presented as "non-controlling interests" in consolidated income statement below the "net profit" line item. Total comprehensive income attributable to non-controlling shareholders is presented separately in the consolidated income statement below the total comprehensive income line item. When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount is still allocated against non-controlling interests. Acquisition of non-controlling interests or disposal of equity interest in a subsidiary that does not result in the loss of control over the subsidiary is accounted for as equity transactions. The carrying amounts of the Company's interests and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. The difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is adjusted to capital reserve under owners' equity. If the capital reserve is not sufficient to absorb the difference, the excess is adjusted against retained earnings. Other comprehensive income attributed to the non-controlling interest is reattributed to the shareholders of the company. A put option issued by the Group to holders of non-controlling interests that is settled in cash or other financial instrument is recognized as a liability at the present value of the exercise price (according to the "anticipated acquisition method"). The Group’s share of a subsidiary’s profits includes the share of the holders of the non-controlling interests to which the Group issued a put option. Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 7. Basis for preparation of consolidated financial statements - (cont’d) In cases which the Group has a Call option in addition to the Put option above, due to the anticipated acquisition method implementation no value is given to the Call option in the consolidated financial statements. When the Group loses control over a subsidiary due to disposal of certain equity interest or other reasons, any retained interest is re-measured at its fair value at the date when control is lost. The difference between (i) the aggregate of the consideration received on disposal and the fair value of any retained interest and (ii) the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according to the original proportion of ownership interest is recognized as investment income in the period in which control is lost. Other comprehensive income associated with the disposed subsidiary is reclassified to investment income in the period in which control is lost. 8. Classification and accounting methods of joint arrangement There are two types of joint arrangements – joint operations and joint ventures. The type of joint arrangements is determined based on the rights and obligations of joint operator to the joint arrangements by considering the factors, such as the structure, the legal form of the arrangements, and the contractual terms, etc. A joint operation is a joint arrangement whereby the joint operators have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the joint ventures have rights to the net assets of the arrangement. 9. Cash and cash equivalents Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the Group's short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 10. Translation of transactions and financial statements denominated in foreign currencies 10.1 Transactions denominated in foreign currencies On initial recognition, foreign currency transactions are translated into functional currency using the spot exchange rate prevailing at the date of transaction. At the balance sheet date, foreign currency monetary items are translated into functional currency using the spot exchange rates at the balance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous balance sheet date are recognized in profit or loss for the period, except that (i) exchange differences related to a specific-purpose borrowing denominated in foreign currency that qualify for capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period. (ii) exchange differences related to hedging instruments for the purpose of hedging against foreign currency risks are accounted for using hedge accounting. Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 10. Translation of transactions and financial statements denominated in foreign currencies - (cont’d) 10.1 Transactions denominated in foreign currencies - (cont’d) When preparing financial statements involving foreign operations, if there is any foreign currency monetary items, which in substance forms part of the net investment in the foreign operations, exchange differences arising from the changes of foreign currency are recorded as other comprehensive income, and will be reclassified to profit or loss upon disposal of the foreign operations. Foreign currency non-monetary items measured at historical cost are translated to the amounts in functional currency at the spot exchange rates on the dates of the transactions and the amounts in functional currency remain unchanged. 10.2 Translation of financial statements denominated in foreign currency For the purpose of preparing consolidated financial statements, financial statements of a foreign operation are translated from the foreign currency into RMB using the following method: assets and liabilities on the balance sheet are translated at spot exchange rate prevailing at the balance sheet date; shareholders' equity items, except for retained earnings, are translated at the spot exchange rates at the dates on which such items arose; all items in the income statement as well as items reflecting the distribution of profits are translated at average rate or at spot exchange rates on the dates of the transactions; the retained earnings opening balance is previous year's translated retained earnings closing balance; the closing balance of retained earnings is calculated and presented on the basis of each translated income statement and profit distribution item. The difference between the translated assets and the aggregate of liabilities and shareholders' equity items is recorded as other comprehensive income. Cash Flows arising from transaction in foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on the date of the cash flow, the effect of exchange rate changes on the cash and cash equivalents is regarded as a reconciling item and present separately in the statement “effect of foreign exchange rate changes on the cash and cash equivalents". The opening balances and the comparative figures of prior year are presented at the translated amounts in the prior year's financial statements. On disposal of the Group's entire equity interest in a foreign operation, or upon a loss of control over a foreign operation due to disposal of certain equity interest in it or other reasons, the Group transfers the accumulated translation differences, which are attributable to the owners' equity of the Company and presented under other comprehensive income to profit or loss in the period in which the disposal occurs. In case of a disposal or other reason that does not result in the Group losing control over a foreign operation, the proportionate share of accumulated translation differences are re-attributed to non-controlling interests and are not recognized in profit and loss. For partial disposals of equity interest in foreign operations, which are associates or joint ventures, the proportionate share of the accumulated translation differences are reclassified to profit or loss. Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 11. Financial instruments The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual provisions of the instrument. At initial recognition, the Group measures a financial asset or financial liability at its fair value plus or minus (which is not measured at fair value through profit or loss) transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Initial recognition in trade receivables which do not contain a significant financing component, shall be made according to their transaction price. 11.1 Classification and measurement of financial assets After initial recognition, an entity shall measure a financial asset at: (a) amortised cost; (b) fair value through other comprehensive income (“FVTOCI”); or (c) fair value through profit or loss (“FVTPL”). 11.1.1 Financial assets at amortised cost A financial asset is measured at amortised cost if both of the following conditions are met: (a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and (b) the contractual terms of the financial asset 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 subsequently measured at amortised cost, using effective interest method. Gains or losses upon impairment and derecognition are recognized in profit or loss. 11.1.1.1 Effective interest method and amortised cost Effective interest method represents the method for calculating the amortized costs and interest income or expense of each period in accordance with the effective interest rate of financial assets or financial liabilities (inclusive of a set of financial assets or financial liabilities). Effective interest rate represents the rate that discounts the future cash flow over the expected subsisting period or shorter period, if appropriate, of the financial asset or financial liability to the current carrying value of such financial asset or financial liability. When calculating the effective interest rate, the Group will consider the anticipated future cash flow (not considering the future credit loss) on the basis of all contract clauses of financial assets or financial liabilities, as well as consider all kinds of charges which are an integral part of the effective interest rate, including transaction fees and discount or premium paid or received between both parties of financial asset or financial liability contract. Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 11. Financial instruments - (cont’d) 11.1 Classification and measurement of financial assets - (cont’d) 11.1.2 Financial assets at FVTOCI A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met: (a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A gain or loss on a financial asset measured at fair value through other comprehensive income is recognized in other comprehensive income, except for impairment gains or losses, foreign exchange gains and losses and interest calculated using the effective interest method, until the financial asset is derecognized or reclassified. When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. 11.1.3 Financial assets at FVTPL Financial assets at FVTPL are either those that are classified as financial assets at FVTPL or designated as financial assets at FVTPL. A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI. The Group may, at initial recognition, irrevocably designate a financial asset as measured at FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or （未完）  |