Auditor's Report
SCPAR (2026) No. 6997
Date: April 22, 2026
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, 2025, 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, 2025, 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
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
Regarding income accounting policies, please refer to Note Ⅳ .27; Please refer to Note
Ⅵ.37 for the amount of income generated.
In 2025, your company's operating revenue amounted to 1486.6927 million yuan. As
revenue is a key indicator of company profits, there is an inherent risk of misstatement in
whether revenue is based on real transactions and whether it is included in appropriate
accounting periods. Therefore, we have identified revenue recognition as a key audit item.
Our audit procedures for revenue recognition mainly include:
① Understand the internal control design related to revenue recognition in your company,
evaluate the effectiveness of the design and implement walkthrough testing, and check
whether the relevant internal control systems are effectively implemented;
② Verify the principles and methods of revenue recognition, combined with the essence
of the company's business and the "five step method", examine the contract signing
methods and contents under different business models, analyze the rights and obligations of
the contract signing parties, examine various performance obligations, identify the
fulfillment of performance obligations over a period of time, and determine whether the
fulfillment of performance obligations at a certain point in time complies with the
provisions of the Enterprise Accounting Standards;
③ Check the authenticity of income and the basis for revenue recognition, such as sales
contracts, delivery orders, value statements or settlement documents, transportation bills,
customs declaration materials, bills of lading, credit policies, etc. Evaluate whether your
company's revenue recognition meets the requirements of the Enterprise Accounting
Standards based on the collection of accounts receivable after the period;
④ Conduct a cut-off test, select samples from income transactions recorded before and
after the balance sheet date, and check for any cross period income;
⑤ Implement a letter of confirmation procedure for major clients, extract sufficient
samples to verify the amount and balance of accounts receivable and contractual liabilities,
and confirm the reasonableness of revenue recognition.
B. The impairment of inventory
Regarding inventory accounting policies, please refer to Note Ⅳ.11; Please refer to Note
Ⅵ.6 for the book balance and provision for impairment of inventory.
As of December 31, 2025, the book balance of your company's inventory is 408.8094
million yuan, with a provision for impairment of 26.9035 million yuan and a book value of
Given the significant amount of inventory and the significant judgment of management
involved in the provision for inventory impairment, we have identified the provision for
inventory impairment as a key audit item.
Our audit procedures for inventory impairment mainly include:
① Understand the design of internal controls related to inventory management and
inventory impairment in your company, evaluate the effectiveness of the design and
implement walkthrough tests, and check whether the relevant internal control systems are
effectively implemented;
② Implementing inventory monitoring, checking the quantity, condition, and product shelf
life of inventory;
③ Obtain the inventory age list of ending inventory, conduct analytical review on
inventory with longer inventory age, and analyze whether the provision for inventory
impairment is reasonable;
④ Analyze the changes in the provision for inventory impairment made in previous years
during the current period, and assess the adequacy of the provision for inventory
impairment; Obtain the latest product sales prices before and after the balance sheet date,
sample the inventory sold after the balance sheet date, and compare the actual selling price
of the sample with the expected selling price;
⑤ Obtain the calculation table and relevant basis for impairment provision provision from
the management, evaluate the rationality of the key data provisioned, and recalculate to
evaluate the accuracy of the management's impairment calculation process;
⑥ Review whether the provision for inventory depreciation has been fully and
appropriately disclosed in accordance with the standard requirements.
C. Government Grants
Regarding other income accounting policies, please refer to Note Ⅳ .29; regarding the
amount of other income, please refer to Note Ⅵ.43; regarding government grants, please
refer to Note Ⅹ.
As of December 31, 2025, the current-period amount of other income of your Company
was 59.3710 million yuan, of which 55.7587 million yuan relating to the subsidy for
improvement of international performance capability had not been received. The
recognition of such amount in other income has a material impact on the company’s profit.
As of December 31, 2025, the total receivable subsidy for improvement of international
performance capability of the Company and its consolidated subsidiaries amounted to
Our audit procedures for government grants mainly include:
① Obtain the official documents in respect of government grants and inspect relevant
bank transaction records.
② Conduct formal inquiries with the responsible director of Laoshan District Bureau of
Agriculture and Rural Affairs so as to verify the authenticity and accuracy of the
government granting documents.
③ Calculate and accrue allowance for doubtful debts on receivables from government
grants in strict accordance with the Company’s accounting policies for bad debt provision.
④ Interview the relevant handling personnel to enquire into and document the detailed
application process of the government grants, the underlying causes for failure to receive
the funds, and whether a definite schedule for fund disbursement has been arranged.
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
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 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
Mao Xu
Zhenbing Wang
Shanghai Certified Public Accountants (Special General Partnership)
Shanghai, China
Ⅰ.Profile of the Company
The registered address of Shandong Zhonglu Oceanic Fishery Co., Ltd. (hereinafter referred to as “the
Company”) has a registered capital of RMB 266,071,300, and its registered address is 2501, Building 1,
established on July 30, 1999, by means of promotion with Shandong Aquaculture Enterprise Group as
the key promoter, with the approval of the Shandong Economic Restructuring Commission through
Document LTGZ [1999] No. 85. With the approval of the China Securities Regulatory Commission
through Document ZJFXZ [2000] No. 82 on June 26, 2000, the Company’s B-shares were listed on the
Shenzhen Stock Exchange on July 24, 2000. The short stock name is “Zhonglu B,” and the stock code is
“200992” .
The Company’s basic organizational structure consists of: Annual General Meeting, Board of Directors,
Board of Supervisors, General Manager’s Office (Party Committee’s Office), Board Office, Human
Resources Department (Organizational Department), Financial Management Department (Capital
Operations Department), Corporate Development Department, Audit Department, Oceanic Management
Departments, Discipline Inspection Committee’s Office, Party’s Mass Work Department, and Risk
Control Department (Legal Affairs Department).
The Company’s key products include tuna and its products.
The Company’s business scope is: general business items: processing and sale of aquatic products;
commodity import and export within the approved scope; manufacture and sale of machine-made ice;
manufacture, installation, and repair of refrigeration equipment; refrigeration and cold storage; loading,
unloading, and handling services; property leasing.
Business items with prerequisite licensing: open-water fishing and long-range fishing.
As of December 31, 2025, the parent company and ultimate controller is Shandong State-owned Assets
Investment Holding Co., Ltd.
This financial statement is approved by the resolution of the Board of Directors of the Company on
April 22,2026. In accordance with the Articles of Incorporation of the Company, the financial
statements will be submitted to the general meeting for consideration
Ⅱ. T Basis for the preparation of the financial statements.
The company takes continuing operation as the basis for preparing financial statements and takes the
accrual basis as the basis for bookkeeping. The company generally adopts the historical cost to measure
the accounting elements, and adopts the replacement cost, the realizable net value, the present value and
the fair value on the premise that the determined amount of the accounting elements can be obtained and
be measured reliably.
The company shall have the ability of going concern for at least 12 months from the end of this report,
and have no major matters affecting the ability of going concern.
Ⅲ. Statement following the Accounting Standards for Business Enterprises
The Company’s financial statements and notes were issued by the accounting standards, application
guidelines, accounting standards for business enterprises, the China Securities Regulatory Commission
issued the public issuance of securities company information disclosure reporting rules no. 15-the general
provisions of financial report [2023 revision] and the requirements of the relevant provisions, truly and
completely reflects the company's current financial situation, operating results, changes in shareholders'
equity and cash flow and other relevant information.
Ⅳ. Important accounting policies and accounting estimates
According to the actual characteristics of production and operation and the provisions of relevant
accounting standards for enterprises, the company has formulated several specific accounting policies and
accounting estimates for transactions and matters such as revenue recognition, see Note IV and 27
"revenue" for details. For the statement of significant accounting judgments and estimates made by
management team, please refer to Note IV, 34 "Major Accounting judgments and Estimates".
The fiscal year starts from January 1 to December 31 of the Gregorian calendar.
The normal business cycle is the period from the company's purchase of assets for processing to the
realization of cash or cash equivalents. The company takes 12 months as a business cycle and takes it as
the liquidity standard of assets and liabilities.
RMB Yuan
The preparation and disclosure of the financial statements follow the principle of importance. The
matters disclosed in the notes to the financial statements involve the importance criteria and the
importance criteria of the Company are as follows:
Item Position disclosed in the notes to Importance criteria determination method and
this Financial Statements selection basis
Other profits Note VI, 43 1 million yuan
Important non-wholly owned subsidiary Notes IX, 1, and (2) Asset size greater than 100 million Yuan
Important associate companies Notes IX, and 2 The net profit scale is greater than 5 million
yuan
Important projects under construction Note VI, 11 10 million yuan
control.
Enterprise merger refers to the transaction or event in which two or more separate enterprises are
merged to form a reporting entity. Business merger is divided into enterprise merger under the same
control and enterprise merger not under the same control.
(1) Enterprise merger under the same control
The enterprises participating in the merger are subject to the final control of the same party or the same
multiple parties before and after the merger, and the control is not temporary and is the enterprise
merger under the same control. For an enterprise merger under the same control, the party acquiring
control over the other enterprises participating in the merger on the merger date shall be the merger
party, and the other enterprises participating in the merger shall be the merged party. The merger date
refers to the date on which the merged party actually obtains the control right of the incorporated party.
The assets and liabilities acquired by the consolidated party are measured at the book value of the
consolidated party at the merger date. The balance between the book value of the net assets acquired by
the consolidated party (or the total book value of the issued shares) shall adjust the capital reserve
(equity premium); if the capital reserve (equity premium) is insufficient to offset, the retained earnings
shall be adjusted.
The merger party is the direct expenses incurred in the enterprise merger, which shall be recorded into
the current profit and loss at the time of occurrence.
(2) Enterprise merger not under the same control
If the enterprise participating in the merger is not under the final control of the same party or the same
multiple parties before and after the merger, it is the enterprise merger not under the same control. For
an enterprise merger not under the same control, the party who obtains the control right over the other
enterprises participating in the merger on the purchase date shall be the acquirer, and the other
enterprises participating in the merger shall be the acquiree. The date of purchase is the date on which
the acquirer actually obtains control over the acquiree.
For merger of enterprises not under the same control, the cost of consolidation includes the assets paid
by the acquirer on the purchase date to acquire control over the acquiree, liabilities incurred or assumed
by the acquirer and equity securities issued to acquire control of the acquiree at the purchase date. The
cost of audit for the merger of the enterprise, legal services, evaluation and consulting intermediary fees
and other management fees shall be recorded in the current profit and losses. The transaction expense of
equity or debt securities issued by the acquirer as the combined consideration shall be included in the
initial recognized amount of equity or debt securities. The contingent consideration involved shall be
included in the consolidated cost according to its fair value on the purchase date. If there is new or
further evidence of the existed situations of the purchase date within 12 months after it, the consolidated
goodwill shall be adjusted accordingly. The merger costs incurred by the acquirer and the identifiable
net assets acquired in the merger should be measured at the fair value of the purchase date. The
difference between the merger cost and the share of the fair value of the identifiable net assets of the
purchased party on the purchase date shall be recognized as goodwill. If the consolidated cost is less than
the fair value of identifiable net assets of the merger, first of the fair value of the identifiable assets,
liabilities and contingent liabilities and combined cost measurement, review the combined cost is still
less than the identifiable net assets of the merger, the difference included in the current profit and loss.
If the acquirer obtains the deductible temporary difference of the acquiree, and is not recognized on the
purchase date because it does not meet the conditions of deferred income tax assets for recognition, if
new or further information confirming the existence of relevant situations is obtained with in 12 months
after the purchase date, the acquirer shall confirm the deferred income tax assets and reduce the
goodwill, if the goodwill is insufficient, the difference shall be recognized as the current profit and loss;
Except for the above situation, the deferred income tax assets related to the enterprise merger shall be
included in the current profit and loss.
For business merger not under the same control achieved through multiple transactions step by step, it
should be determined whether the multiple transactions belongs to "package deal" according to the
Ministry of Finance on the notice of the accounting standards interpretation no. 5 (accounting [2012] no.
"package deal" (see Note Ⅳ .6, judging criteria of the control and preparation of the consolidated
financial statements), For "package transaction", refer to the previous paragraphs in this section for
accounting treatment; For those not belong to "package transaction", distinguish individual financial
statements from consolidated financial statements in the accounting statement:
In individual financial statements, the sum of the book value of the equity interest of the acquiree held
prior to the purchase date and the cost of new investment on the purchase date is taken as the initial
investment cost of the investment. Where the equity interest of the acquiree held prior to the purchase
date involves other comprehensive income, the other comprehensive income associated with the
investment will be accounted for on the same basis as if the acquiree had disposed of the relevant asset
or liability directly (i.e., With the exception of the corresponding share of the change resulting from the
remeasurement of net liabilities or net assets of the defined benefit plan by the acquiree under the equity
method, the remainder is transferred to investment income for the period).
In the consolidated financial statements, for the equity of the acquiree held prior to the purchase date,
remeasure at the fair value of the equity at the purchase date, the difference between the fair value and
its book value shall be included in the current investment income; Where the equity of the acquiree held
before the purchase date involves other comprehensive income, the other comprehensive income shall
be treated on the same basis as the direct disposal of the relevant assets or liabilities (i. e., Except for the
corresponding share accounted for under the equity method in the change resulting from the
remeasurement of net liabilities or net assets of the defined benefit plan by the acquirer, the remainder
is converted to investment income for the period at the purchase date).
(1) Judging standard of the control
The consolidation scope of consolidated financial statements is determined on the basis of control.
Control means that the Company has the power over the investee, enjoys a variable return by
participating in the relevant activities of the investee, and has the ability to use the power of the investee
to influence the amount of the return. Among them, the Company has the current right to enable the
Company to dominate the relevant activities of the investee regardless of whether the Company actually
exercises the power; if the return from the investee may change with the performance of the investee, it
shall be deemed to enjoy a variable return; if the Company exercises the decision-making power as the
principal responsible person, the Company shall be deemed to use the power of the investee to affect the
return amount. The scope of the merger includes the Company and all of its subsidiaries. Subsidiary,
refers to the subject controlled by the Company.
The Company judges whether to control the investee on the basis of comprehensive consideration of all
relevant facts and circumstances. The relevant facts and conditions mainly include: the purpose of the
establishment of the investee; the relevant activities of the investee and how to make decisions on the
relevant activities; whether the rights of the Company enable the Company to dominate the relevant
activities of the investee; whether the Company enjoys a variable return by participating in the relevant
activities of the investee; whether the Company has the ability to influence the power of the investee; the
relationship between the Company and the other parties, etc. Once changes in the relevant facts and
circumstances lead to changes in the relevant elements involved in the above control definition, the
Company will reevaluate them.
(2) Method of preparing the consolidated financial statements
From the date of acquiring the net assets of the subsidiary and the actual control right of production and
operation decisions, the Company will begin to bring it into the merger scope, and stop to do to so after
the date of losing the actual control right. For the subsidiaries under disposal, the operating results and
cash flow before the disposal date have been appropriately included in the consolidated income
statement and the consolidated cash flow statement; for the current disposition subsidiaries, the
beginning of the consolidated balance sheet will not be adjusted. For subsidiaries not under the same
control, the operating results and cash flow after the purchase date have been appropriately included in
the consolidated income statement and the consolidated cash flow statement, and the initial and
comparative numbers of the consolidated financial statements will not be adjusted. For the subsidiaries
increased by the enterprise merger under the same control and the merged party under the absorption
merger, the operating results and cash flow from the beginning of the current period to the merger date
have been appropriately included in the consolidated income statement and the consolidated cash flow
statement, and the comparison number of the consolidated financial statements shall be adjusted at the
same time.
At the time of preparing the consolidated financial statements, if the accounting policies or accounting
periods adopted by the subsidiary is inconsistent with that adopted by the Company, necessary
adjustments to the financial statements of the subsidiary shall be made in accordance with the
accounting policies and accounting periods of the Company. For subsidiaries not acquired under the
same control, their financial statements shall be adjusted on the basis of the fair value of identifiable net
assets on the purchase date.
All significant transaction balances, transactions and outstanding profits within the Company should be
offset by the preparation of the consolidated financial statements.
The shareholders' equity and the net profit and loss of the current period that are not owned by the
Company should be listed separately as the minority shareholders' equity and the minority shareholders'
profit and loss under the shareholders' equity and net profit in the consolidated financial statements. The
share of the current net profit and loss of the subsidiary belonging to the minority shareholders' equity
shall be listed in the item of "minority shareholders' profit and loss" under the net profit items in the
consolidated profit statement. The loss of the subsidiary shared by the minority shareholders exceeds the
share of the minority shareholders 'equity of the subsidiary at the beginning of the period, and the
number of the shareholders' equity is still reduced.
When the control of the original subsidiary is lost due to the disposal of some equity investment or other
reasons, the remaining equity shall be remeasured according to its fair value on the date of the loss of
control. The sum of the consideration obtained from the disposal of the shares and the fair value of the
remaining shares, after deducting the share of the net assets of the original subsidiary calculated from
the purchase date, shall be included in the investment income of the period of the loss of control. For
other comprehensive income related to the equity investment of the original subsidiary, the accounting
treatment of control shall be lost on the same basis as the direct disposal of the relevant assets or
liabilities of the subsidiary. Subsequently, the remaining equity shall be measured in accordance with the
Accounting Standards for Business Enterprises No.2 —— Long-term Equity Investment or Accounting
Standards for Business Enterprises No.22 —— Recognition and Measurement of Financial Instruments
and other relevant provisions, see Note Ⅳ and 14 "Long-term Equity Investment" or Note Ⅳ and 10
"Financial Instruments".
If the Company disposed of the equity investment in the subsidiary until the loss of control through
multiple transactions, it is necessary to distinguish whether the transaction of the equity investment until
the loss of control is a package transaction. If the terms, conditions and economic impact of the disposal
of subsidiary equity investments meet one or more of the following circumstances, usually indicating
that those multiple transactions should be treated as package transactions:
For each transaction that does not belong to the package transaction, according to the circumstances, the
principle of "partial disposal of long-term equity investment of subsidiaries without losing control" (see
Note Ⅳ,14 "long-term equity investment" (2) ④) and "loss of control of the disposal of the original
subsidiary" (see the preceding paragraph) should be applied in the accounting treatment. If the
transaction of the subsidiary equity investment until the loss of control is a package transaction, the
transaction shall be treated as a transaction of the disposal of the subsidiary and losing the control;
however, the difference between the disposal price and the share of the net assets of the subsidiary
before the loss of control should be recognized as other comprehensive income in the consolidated
financial statements, and the profit and loss of the period of the loss of control.
Joint venture arrangement means an arrangement under the joint control of two or more parties. The
Company shall, according to the rights and obligations enjoyed in the joint venture arrangement, divide
the joint venture arrangement into joint operation and joint company. Joint operation means the joint
venture arrangement in which the Company enjoys the relevant assets of the arrangement and assumes
the liabilities related to the arrangement. Joint company means a joint venture arrangement in which the
Company only enjoys rights to the net assets of the arrangement.
The company's investment in joint venture shall be calculated by equity method, which shall be treated
in accordance with the accounting policies described in Note Ⅳ,14 "Long-term Equity Investment" (2)
② "Long-term equity investment calculated by equity method".
The Company, as the joint venture, recognizes the assets held by the Company, the liabilities and the
liabilities held by the shares of the Company, and the liabilities held by the Company. Recognize the
income generated by the sale of the share of the output incurred by the Company, and the expenses
incurred by the Company in accordance with the share of the Company.
When the Company invests or sells assets as the joint venture (the assets do not constitute business, the
same should be applied below) or purchases assets from the joint venture, prior to the sale of such assets
to a third party, the Company recognizes only the portion of the profit or loss arising from the
transaction attributable to other participants in the joint venture. For the asset impairment loss in
accordance with the Accounting Standards for Business Enterprises No.8 —— Asset Impairment, the
Company shall recognize the loss for the assets that the Company purchased the assets, the Company
shall recognize the loss according to the share borne by itself.
Cash refers to cash on hand and deposits that can be used for payment at any time. Cash equivalents
refer to investments held by the company with a short term (generally due within three months from the
purchase date), which are highly liquid, easy to be converted into a known amount of cash and with little
risk of change in value.
(1) The method for determining the exchange rate when foreign currency transactions occur
When a foreign currency transaction is initially recognized, the approximate spot exchange rate on the
day of the transaction is used to convert the amount into RMB.
(2) On the balance sheet date, foreign currency currency items and foreign currency non-currency items
shall be treated in the following methods:
① Foreign currency currency items shall be converted through the central parity rate of RMB foreign
exchange price published by the People's Bank of China on the balance sheet date. The exchange
difference caused from the difference between the spot exchange rate on the balance sheet date and the
initial recognition date or the previous balance sheet date shall be included in the current profit and loss.
② Foreign currency non-monetary items measured at historical cost shall still be converted at the spot
exchange rate on the date of the transaction without changing the bookkeeping standard amount; foreign
currency non-monetary items measured at fair value shall be converted at the spot exchange rate on the
date of fair value; the difference between the original bookkeeping standard amount shall be treated as
the change of fair value (including change in exchange rate) and be included into the current profit and
loss or other comprehensive income according to the nature of the non-monetary items.
Monetary items refer to the monetary funds held by the Company and the assets or liabilities to be
collected in a fixed or definite amount.
Non-monetary items refer to items other than monetary items.
(3) Conversion method of foreign currency financial statements of overseas operating entities:
① The assets and liabilities in the balance sheet shall be converted at the spot exchange rate on the
balance sheet date, and the owner's equity items except the "undistributed profit" shall be converted at
the spot exchange rate at the time of occurrence;
② The income and expense items in the income statement shall be converted at the exchange rate
similar ③ The conversion difference in the foreign currency financial statements generated from the
above ① and ② conversion shall be listed separately under the owner's equity items in the balance
sheet.to the spot exchange rate on the date of the transaction;
④ The financial statements of overseas operations in hyperinflation economy shall be converted in the
following methods:
Restate the balance sheet items by using the general price index, and restate the income statement items
by using the general price index changes, then convert at the spot rate at the latest balance sheet date.
When the overseas operation is no longer in the hyperinflation economy, the restatement shall be
stopped and the financial statements reconverted according to the price level on the date of cessation.
⑤ In the disposal of overseas operations, the Company shall convert the difference between the foreign
currency financial statements related to the owner equity items of the balance sheet for the current
disposal of overseas operations, the conversion difference of the foreign currency financial statements
of the disposal portion shall be calculated at the proportion of the disposal and transferred to the profit
and loss of the current disposal.
The financial instrument means a contract that forms the financial assets of one party and forms the
financial liabilities or equity instruments of the other party. When the Company becomes a party to the
financial instrument contract, it recognize the relevant financial assets or financial liabilities.
(1) Financial Assets
According to the business model of managing financial assets and the contractual cash flow
characteristics of financial assets, the Company divides the financial assets into:
The Company manages the business model of financial assets measured at amortized cost, and the
contract cash flow characteristic of such financial assets is consistent with the basic lending arrangement,
that is, the cash flow generated on a specific date is only the payment of the principal and the interest
based on the outstanding principal amount. For such financial assets, the Company adopts the real
interest rate method to conduct the follow-up measurement for the amortized cost, and the profit or loss
generated by the amortization or impairment shall be recorded in the current profit and loss.
income
The business model of the Company for managing such financial assets is to target both collecting and
selling of the contractual cash flow, and the contractual cash flow characteristics of such financial assets
are consistent with the basic lending arrangement. The Company measures such financial assets at fair
value and their changes are included in other comprehensive income, but the impairment losses or gains,
exchange gains and losses and interest income calculated in accordance with the real interest rate method
are included in the current profits and losses.among:
<1> Debt instrument investment measured at fair value and whose changes are included in other c
Subsequent measurement should be performed at fair value. Interest rates, impairment losses or gains and
exchange gains and losses calculated by the real interest rate method shall be included in the current
profits and losses, while other gains or losses shall be included in other comprehensive gains. Upon the
termination of recognition, the accumulated gains or losses previously included in other comprehensive
income shall be transferred from other comprehensive income and recorded in the current profit and loss.
<2> Equity instrument investment measured at fair value and whose changes are included in other
comprehensive income
Subsequent measurement should be performed at fair value. The dividends obtained (except for the part
of the investment cost recovery) shall be included in the current profit and loss, and other gains or losses
shall be included in other comprehensive income. Upon the termination of recognition, the accumulated
gains or losses previously included in other comprehensive income shall be transferred from other
comprehensive income and included in the retained earnings.
For non-trading equity instrument investments, the Company may, upon initial recognition, irrevocably
designate them as a financial asset measured at fair value and its changes included in other comprehensive
income. The designation is made on the basis of a single investment, and the relevant investment meets
the definition of the equity instrument from the perspective of the issuer.
The Company classifies the above financial assets measured at amortized cost and the financial assets
measured at fair value and whose changes are included in other comprehensive income as the financial
assets measured at fair value and whose changes are included in the current profit and loss. In addition, at
the initial recognition, in order to eliminate or significantly reduce the accounting mismatch, the
Company designated some financial assets as financial assets measured at fair value and their changes are
included in the current profit and loss. For such financial assets, the Company adopts the fair value for
subsequent measurement, and the change in the fair value is included in the current profit and loss.
The investment in equity instruments over which the Company has no control, joint control and
significant influence will be measured at fair value and its changes will be included in current profit or
loss, and listed as trading financial assets; Those expected to hold for more than one year from the
balance sheet date are listed as other non-current financial assets.
Financial assets are measured at fair value at the initial recognition. For financial assets measured at fair
value and whose changes are included in the current profit and loss, relevant transaction expenses are
directly included in the current profit and loss; for other categories of financial assets, relevant transaction
expenses are included in the initial recognition amount. For accounts receivable or notes receivable arising
from the sale of products or the provision of services that do not include or do not take into account the
significant financing components, the amount of consideration that the Company is expected to be
entitled to collect shall be the initial recognition amount.
An equity instrument is a contract that demonstrates ownership of the remaining interest in the assets
excluding all liabilities. The company's issuance (including refinancing), repurchase, sale or cancellation
of equity instruments shall be treated as changes in equity, and the transaction expenses related to equity
transactions shall be deducted from the equity. The Company does not recognize the change in the fair
value of the equity instruments.
During the duration of the Company (including the "interest" generated by the "instruments" classified
as "equity instruments"), it shall be treated as profit distribution.
On the basis of expected credit loss, the Company makes impairment provision and confirms the
applicable expected credit loss measurement method (general method or simplified method).
Credit loss refers to the difference between all the contractual cash flows receivable under the contract
and all the expected cash flows collected, i. e., the present value of the total cash shortage. Among them,
for the financial assets purchased or derived with credit impairment, the Company shall discount the
actual interest rate of the financial assets.
The general method of measuring expected credit loss refers to measuring whether the credit risk of the
financial assets (including contract assets and other applicable items, the same below) assessed by the
Company on the balance sheet date has increased significantly since the initial confirmation, the
Company measures the loss preparation according to the amount equivalent to the expected credit loss in
the whole duration; if the credit risk does not increase significantly after the initial confirmation, the
Company measures the loss preparation according to the amount equivalent to the expected credit loss in
the next 12 months. For the financial assets purchased or derived with credit impairment, the Company
shall only recognize the cumulative changes of the expected credit loss during the initial period on the
balance sheet date. The Company considers all reasonable and grounded information, including
forward-looking information, when assessing expected credit losses.
For receivables and contractual assets that are formed from transactions regulated by Accounting
Standard for Business Enterprises No. 14 - Revenue and do not have a significant financing component
or that the Company does not take into account the financing component of contracts not exceeding one
year, the Company uses a simplified measurement method to measure the loss provision in terms of the
amount of expected credit losses over the entire duration.
For financial assets other than the above measurement methods, the Company assess whether its credit
risk has significantly increased since the initial recognition. If the credit risk has significantly increased
since the initial confirmation, the Company measures the loss provision according to the amount of the
expected credit loss in the entire duration; if the credit risk does not increase significantly after the
initial confirmation, the Company measures the loss provision according to the amount of the expected
credit loss in the next 12 months.
The Company uses available reasonable and warranted information, including forward-looking
information, to compare the risk of default of the financial instrument on the balance sheet date with the
risk of default on the initial recognition date to determine whether the credit risk of the financial
instrument has increased significantly since the initial confirmation.
On the balance sheet date, if the Company determines that the financial instrument only has a low credit
risk, it is assumed that the credit risk of the financial instrument has not increased significantly since the
initial recognition.
The Company evaluates expected credit risk and measures expected credit losses on the basis of a single
financial instrument or portfolio of financial instruments. When based on a combination of financial
instruments, the Company divides financial instruments into different combinations based on common
risk characteristics.
The Company re-measures the expected credit loss on each balance sheet date, and the increase or
reversal of the loss provision will be recorded as impairment loss or gains. For the financial assets
measured at amortized cost, the loss provision shall offset the book value of the financial assets listed in
the balance sheet; for the debt investment measured at fair value and its changes included in other
comprehensive income, the Company confirms the loss provision in other comprehensive income, which
does not offset the book value of the financial assets.
If the default probability of a financial asset within the expected duration determined on the balance
sheet date is significantly higher than the default probability determined during the expected duration
determined at the initial confirmation, it indicates that the credit risk of the financial asset is
significantly increased. Except in special circumstances, the Company should use the change of the
default risk in the next 12 months as a reasonable estimate of the change of the default risk during the
entire duration to determine whether the credit risk increases significantly after the initial confirmation.
The Company evaluates credit risks for individual financial assets with significantly different credit
risks, such as receivables of relevant parties, receivables for matters in dispute with the other side or
matters involved in litigation or arbitration, and receivables where the debtor is likely to fail to fulfill
repayment obligations.
In addition to individual financial assets that assess credit risk, the Company divides financial assets into
different groups based on common risk characteristics and evaluates credit risk on the basis of a
portfolio.
At the end of the period, the Company calculates the estimated credit loss of various financial assets, if
the estimated credit loss is greater than the book amount of the current impairment provision, the
difference should be recognized as an impairment loss; if it is less than the current impairment provision,
the difference should be recognized as an impairment gain.
The company needs to confirm the impairment loss of financial assets measured by amortized cost of
financial assets, debt instruments measured at fair value and whose changes are included in other
comprehensive incomes, as well as lease receivables, mainly including notes receivable, accounts
receivable, receivables financing, other receivables, creditor's rights investment, other creditor's rights
investment, long-term receivables, etc. In addition, for the contract assets and part of the financial
guarantee contracts, impairment provisions and credit impairment losses are confirmed in accordance
with the accounting policies described in this part.
<1> The account for receivables and contract assets for expected credit losses based on a combination of
credit risk characteristics
Basis for confirming
Consolidation category Method of measuring expected credit losses
the consolidation
Bank acceptance bill receivable With reference to the historical credit loss experience,
combined with the current situation and the forecast of
Bill type the future economic situation, the expected credit loss
Trade acceptance receivable should be calculated through the default risk exposure
and the expected credit loss rate of the whole duration
With reference to the historical experience of credit
loss, and combined with the current situation and the
Receivable-Account receivable
forecast of the future economic situation, the
age portfolio Account receivable
comparison table between the age of accounts
Contract asset - Account age
receivable and the expected credit loss rate of the whole
receivable age Portfolio
duration is prepared to calculate the expected credit
loss
Accounts receivable ——
Based on historical credit loss experience, current
consolidated related parties Scope of merger
conditions and expected future economic conditions
portfolio
With reference to the historical credit loss experience,
combined with the current situation and the forecast of
Other receivables - Account Account receivable the future economic situation, prepare the comparison
receivable age portfolio age table of other receivables age and the expected credit
loss rate, and calculate the expected credit loss rate in
the next 12 months or the whole duration
The allowance for bad debts is measured with reference
Other receivables - consolidated to historical credit loss experience, combined with
Scope of merger
related parties portfolio current conditions and expectations of future economic
conditions
<2> Aging combination of aging and expected credit loss ratio comparison table
Account receivable age Expected credit loss rate of accounts Expected credit loss rate of other
receivable receivables
Within 6 months 5.00% 5.00%
Six months to a year 10.00% 10.00%
More than 3 years 100.00% 100.00%
The age of accounts for the self-examination of accounts receivable and other receivables contracts
starts from the month when the payment actually occurs.
For the receivables and contract assets formed by the transactions regulated by the Accounting Standards
for Business Enterprises No.14 —— Income, the Company uses the simplified measurement method to
measure the loss preparation according to the amount equivalent to the expected credit loss within the
entire duration.
For leasing receivables, by the accounting standards for enterprises no. 14 —— income specification of
transaction formation, and without significant financing components or the company does not consider
not more than a year of financing receivables and contract assets of the contract, the company using the
simplified measurement method, according to the entire duration of expected credit loss amount
measurement loss.
For notes receivable and debt receivables measured at fair value and whose changes are included in
other comprehensive income, if the maturity period is within one year (including one year from the
initial confirmation date), they shall be reported as receivables financing. The Company measures the
impairment loss by using the amount of the expected credit loss of the entire duration.
Debt investment is mainly accounted for by bond investment measured at amortized cost. The Company
measures the impairment loss in the amount equivalent to the expected credit loss within the next 12
months, or for the entire duration, based on whether its credit risk has increased significantly since the
initial recognition.
Other creditor's rights investments shall be mainly accounted for bond investment measured at fair value
and whose changes are included in other comprehensive income. Financing of receivables with a
maturity period of more than one year from the initial confirmation date shall also be reported as other
creditor's rights investments. For other debt investments (including receivables listed in other debt
investments), the Company shall measure the impairment loss by using the amount equivalent to the
expected credit loss within the next 12 months or the entire duration based on whether its credit risk has
increased significantly after the initial confirmation. For receivables financing that does not include
major financing components, the Company measures the loss preparation according to the expected
amount of credit loss equivalent to the entire duration.
<3> The criteria for the identification of receivables and contract assets for the provision of expected
credit losses on a single basis
For receivables and contract assets whose credit risk is significantly different from combined credit risk,
the Company shall draw expected credit losses according a single item.
If the financial assets meet one of the following conditions, the recognition of them shall be terminated:
in the ownership of the financial assets to the transferred party;
almost all the risks and rewards in the ownership of the financial asset, it has abandoned the control of the
financial asset.
Upon the confirmation termination of the investment of other equity instruments, the difference between
the book value and the consideration received and the sum of the fair value directly recorded in other
comprehensive income shall be included in the retained earnings, and the book value of the remaining
financial assets and the sum of the fair value directly recorded in other comprehensive income shall be
included in the current profit and loss.
If the Company has neither transferred nor retained almost all the risks and rewards in the ownership of
the financial assets, and has not abandoned the control over the financial assets, the relevant financial
assets shall be recognized according to the extent of the transferred financial assets, and the relevant
liabilities shall be recognized accordingly. The degree to which the continued involvement of the
transferred financial assets is involved refers to the risk level faced by the enterprise caused by the change
in the value of the financial assets.
If the overall transfer of financial assets meets the conditions for termination of recognition, the
difference between the book value of the transferred financial assets and the sum between the sum of the
consideration received from the transfer and the fair value change originally included in other
comprehensive income shall be included in the current profit and loss.
If the partial transfer of the financial assets meets the conditions of termination of recognition, the book
value of the transferred financial assets shall be apportioned according to the relative fair value between
the fair value of the transfer and the sum of the sum of the transfer of the transfer shall be included into
the current profit and loss.
For the financial assets sold by recourse, or the endorsement transfer of the held financial assets, the
Company needs to determine whether almost all the risks and rewards in the ownership of the financial
assets have been transferred. If almost all the risks and rewards in the ownership of the financial asset
have been transferred to the transferred party, the recognition of the financial asset should be terminated;
if the financial asset retains the ownership of the financial asset and almost all the risks and rewards in the
ownership of the financial asset, the recognition of the financial asset should not be terminated, if there is
no transfer nor retention of almost all the risks and remuneration in the ownership of the financial asset,
the company shall continue to judge whether the enterprise has retained the control of the asset and
conduct treatment according to the principles described in the preceding paragraphs.
If the Company no longer reasonably expects that the contractual cash flow of the financial asset can be
recovered in whole or in part, the book balance of the financial asset will be written down directly. This
write-down constitutes the termination of recognition of the relevant financial assets. This usually occurs
when the Company determines that the debtor has no assets or sources of income to generate sufficient
cash flow to repay the amount that will be written down. However, the financial assets under the
Company may allow the process to be affected by the execution activities.
If the write-down financial assets are recovered later, they shall be transferred back as impairment losses
and recorded into the profits and losses of the current period.
(2) Financial liabilities
Financial liabilities are classified at the initial recognition as financial liabilities measured at amortized
cost and financial liabilities measured at fair value and whose changes are included in the current profits
and losses.
In addition to the following, the Company classifies financial liabilities as financial liabilities measured at
amortized cost costs:
① Financial liabilities measured at fair value and whose changes are included in current profits and losses,
include transactional financial liabilities (including derivatives of financial liabilities) and financial
liabilities designated as measured at fair value and whose changes are included in current profits and
losses.
② The transfer of financial assets does not meet the conditions for termination of recognition or
continues to be involved in the transferred financial assets.
③ The financial guarantee contract not subject to Item ① or ② of this Article and a loan commitment
at a below market rate that is not subject to Item ① of this Article. In a business merger not under the
same control, if the contingent consideration recognized by the Company as the acquirer forms the
financial liabilities, the financial liabilities should be measured at fair value and the changes should be
included in the profit and loss of the current period.
At the time of initial recognition, in order to provide more relevant accounting information, the Company
may designate financial liabilities measured at fair value and recorded in the profit and loss of the current
period, which meets one of the following conditions:
assets and financial liabilities on a fair value basis in accordance with the corporate risk management or
investment strategy set out in formal written documents, and report internally to key management on that
basis. Such designation, once made, cannot be revoked.
The financial liabilities of the Company are mainly financial liabilities measured at amortized cost,
including notes payable and accounts payable, other payables, borrowings and bonds payable, etc. Such
financial liabilities are initially measured according to the fair value after deducting transaction expenses,
and subsequently measured by the real interest rate method. If the term is less than one year (including
one year), it should be listed as current liabilities; if the term is more than one year but is due within one
year (including one year) from the balance sheet date, it should be listed as non-current liabilities due
within one year; the rest are listed as non-current liabilities.
When the current obligation of the financial liability has been discharged in whole or in part, the
Company terminate the recognition of the part of the financial liability or discharged obligation. The
difference between the book value of the terminated part and the consideration paid shall be included in
the current profit and loss.
If the current obligation of the financial liability (or a part of it) has been discharged, the Company shall
terminate the recognition of the financial liability (or such a part of the financial liability).
(3) Determination of fair value of financial instruments
For financial instruments with active market, the fair value should be determined by the quotation in the
active market. For financial instruments with no active market, the valuation techniques should be used to
determine their fair value. The company divides the input values used by the valuation technology at the
following levels and uses them successively:
① The first level of input value is an unadjusted offer of the same assets or liabilities in the active market
that can be obtained on the measurement date;
② The second level of input value is the input value directly or indirectly visible besides the first level of
input value, including: the quotation of similar assets or liabilities in the active market; the quotation of
the same or similar assets or liabilities in the nonactive market; the other observable input value other than
the quotation, such as the interest rate and yield curve observable during the normal quotation interval; the
input value of market verification, etc.;
③ The third level of input value is the unobservable input value of the relevant assets or liabilities,
including interest rates that cannot be directly observed or cannot be verified by observable market data,
stock volatility, future cash flow of abandonment obligations in business mergers, financial forecasts made
using their own data, etc.
(4) Follow-up measurement
After the initial recognition, the Company shall measure different categories of financial assets at
amortized cost, fair value and their changes in other comprehensive income or fair value and their changes
in the current profit and loss.
After the initial recognition, the Company shall measure different categories of financial liabilities at
amortized cost, fair value and changes in the current profit or loss or by other appropriate methods.
The amortized cost of a financial asset or financial liability is determined by the initial recognized amount
of the financial asset or financial liability after the following adjustments:
① Deduct the repaid principal.
② Add or subtract the cumulative amortization amount formed by amortifying the difference between
the initial recognized amount and the due date amount by the effective interest rate method.
③ Excluding accumulated losses (only for financial assets).
The Company recognizes the interest income in accordance with the real interest rate method. Interest
income should be calculated from the book balance of financial assets multiplied by the effective interest
rate unless:
interest income according to the amortized cost of the amortized assets and the actual interest rate of the
financial assets.
impairment in the subsequent period, the Company shall determine the interest income according to the
amortized cost and actual interest rate of the financial assets in the subsequent period. If the Company
uses the real interest rate method to calculate the credit impairment in the subsequent period, and the
improvement can be objectively related to an event occurring after the application of the above policy (if
the credit rating of the debtor's credit rating is raised), the Company transfers the real interest rate
multiplied by the book balance of the financial assets.
(1) Classification of inventory
Inventory includes raw materials, work-in-process, semi-finished products, finished goods, merchandise
inventory, consumable materials, data resources, etc.Contract performance costs with an amortization
period of no more than one year or one operating cycle are also presented as inventory. (For "Contract
Performance Cost", see Note Ⅳ, 28 and "Contract Acquisition Cost and Contract Performance Cost".)
(2) Method of valuation of issued issued
The inventory should be priced on the weighted average basis when issued.
(3) The basis for determining the net realizable value of inventory and the withdrawal method for
inventory depreciation reserve
On the balance sheet date, the inventory shall be measured according to the lower cost and the net
realizable value. If the inventory cost is higher than its net realizable value, the provision for inventory
depreciation shall be withdrawn and recorded into the current profit and loss. Net realizable value refers
to the amount after the estimated selling price of inventory minus the estimated cost, estimated sales
expenses and related taxes at completion.
The net realizable value of various inventories is determined as follows:
① The inventory of goods directly used for sale, such as finished products, goods and materials used for
sale, shall, in the normal process of production and operation, determine the net realizable value after the
estimated selling price of the inventory minus the estimated sales expenses and relevant taxes.
② For the inventory of materials to be processed, its net realizable value is determined in the normal
course of production and operation by the estimated selling price of the finished products produced less
the estimated cost to be incurred at the time of completion, estimated selling expenses and related taxes.
③ On the balance sheet date, if one part of the same inventory has the contract price without the other
part, the net realizable value shall be determined respectively, and compared with the corresponding cost,
the amount of the withdrawal or reversal of the inventory depreciation provision shall be determined
respectively.
Inventory depreciation provision shall be made according to a single inventory item (or inventory
category), and inventory depreciation provision shall be related to the same or similar product series
produced or sold in the same region, and is difficult to be measured separately from other items.
(4) Inventory system
The inventory system adopts the perpetual inventory system.
(5) The amortization method of low-value consumables and packaging
The low-value consumables are amortized by 50-50.
Contract assets refer to the right to receive consideration from customers for goods transferred,
provided that such right is subject to factors other than the passage of time.Where the Company sells
two distinct goods to a customer and has the right to receive consideration due to delivery of one good,
but such right is still subject to delivery of the other good, the right to receive consideration shall be
recognized as a contract asset.Contract assets and contract liabilities under the same contract are
presented on a net basis, while those under different contracts are not offset.
The specific determination method and accounting treatment of expected credit losses on contract assets
are presented in “Note IV, 10 Financial Instruments”.
(1) Non-current assets held for sale or disposal group recognition criteria
If the Company recovers its book value primarily by sale (including the exchange of non-monetary
assets with commercial substance, the same below) rather than the continuous use of a non-current asset
or disposal group, it should be categorized under “held for sale”. The specific criteria shall
simultaneously meet the following conditions:
① According to the practice of selling such assets or disposal groups in similar transactions, they can be
sold immediately under current conditions;
② The sale is most likely, where the company has made a resolution on a sale plan and obtained a
definite purchase commitment, and the sale is expected to be completed within a year.
Among them, the disposal group is a group of assets disposed of as a whole by sale or other method in a
transaction, and the liabilities directly related to those assets transferred in the transaction. Where the
asset group or asset group portfolio of the disposal group shares the goodwill acquired in the enterprise
merger in accordance with the Accounting Standards for Business Enterprises No.8-Asset Impairment,
the disposal group shall include the goodwill allocated to the disposal group.
(2) Accounting treatment methods
If the carrying value of non-current assets held for sale and disposal group is higher than the net amount
after using the fair value minus disposal expense when the initial measurement or remeasurement is
made at the balance sheet date, the carrying value should be written down to the net amount after using
the fair value minus the disposal expense, and the amount written down should be recognized as asset
impairment loss and included in current profit or loss, and the impairment provision for assets held for
sale should also be made. For the disposal group, the confirmed asset impairment loss first offset the
carrying value of goodwill in the disposal group, and then offset the book value of the non-current assets
stipulated in the accounting Standards for Business Enterprises No.42- -Non-current Assets held for Sale,
Disposal Group and Terminated Operation (hereinafter referred to as the "Standards for Holding for
Sale" in the disposal group). After deducting the selling expense, if the net amount of the fair value of
the disposal group held for sale increased on the subsequent balance sheet date, the amount previously
written down shall be restored and reversed within the amount of asset impairment loss recognized in the
non-current assets as prescribed by the held for sale standard after being classified into the holding for
sale category, the carry-back amount is recognised in profit or loss for the current period and its carrying
value is increased in proportion to the carrying value of each non-current asset in the disposal group as
measured by the applicable hold-for-sale criteria other than goodwill; The carrying value of goodwill
that has been written off, as well as the asset impairment losses recognized prior to classifying
non-current assets as held for sale under the applicable holding for sale measurement criteria, cannot be
rolled back.
There is no depreciation or amortization of 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.
If the non-current assets or disposal group no longer meets the requirements of the held for sale category,
it will not continue to divide the held for sale category or remove the non-current assets from the
disposal group held for sale and measure below:
① The book value before the held for sale category, the amount adjusted for depreciation, amortization
or impairment assumed not to be recognized in the held for sale category;
② Recoverable amount.
(3) Termination of operation
Termination of operations is a component of ownership that is separate and has been disposed of or
classified by the Company under one of the following conditions:
① The component represents an independent main business or a separate main operating area;
② This component is part of a plan associated with the disposition of a separate principal business or a
separate main business area of operation;
③ The component is a subsidiary acquired exclusively for resale.
The Company shall separately report the profit and loss of terminated operation in the income statement,
and the impairment loss and loss amount of terminated operation and loss shall be presented as the profit
and loss of terminated operation.
The long-term equity investment mentioned in this part refers to the long-term equity investment that
the Company has the control, joint control or significant influence on the invested unit. The Company
has no control, joint control or significant influence of the invested unit as a financial assets accounting
measured at fair value and included in the current profits and losses. If the changes is non-tradable, the
Company may choose to designate it as financial assets accounting measured at fair value and whose
changes are included in other comprehensive income. The accounting policies are detailed in Note IV
and 10 "Financial Instruments".
Joint control means the common control of the Company over an arrangement in accordance with the
relevant agreement, and the relevant activities of the arrangement must be decided after the unanimous
consent of the participants who share the control right. Significant impact means that the Company has
the right to participate in the decision-making of the financial and operational policies of the investee,
but is unable to control or jointly control the formulation of these policies together with other parties.
(1) Determination of the investment cost
For the long-term equity investment acquired by the enterprise merger under the same control, the initial
investment cost of the long-term equity investment shall be based on the merger date of the share of the
book value of the incorporated party in the consolidated financial statements of the final controlling
party. The difference between the initial investment cost of the long-term equity investment and the cash
paid, the transferred non-cash assets and the book value of the debts undertaken shall adjust the capital
reserves; if the capital reserve is insufficient, the retained earnings shall be adjusted. If the issue of
equity securities is taken as the merger consideration, the capital reserves shall be adjusted on the basis
of the share of the shareholders' equity of the merged party in the consolidated financial statements of
the final controlling party as the initial investment cost of the long-term equity investment and the total
face value of the issued shares as equity, and the difference between the initial investment cost of the
long-term equity investment and the total face value of the issued shares; if the capital reserve is
insufficient to offset, the retained earnings shall be adjusted. If the equity of the merged party under the
same control is acquired through multiple transactions step by step, and the enterprise merger under the
same control, whether it is a "package transaction" respectively: for a "package transaction", each
transaction shall be treated as a transaction that obtains control right. If it does not belong to the
"package transaction", the capital reserves shall be adjusted on the merger date according to the sum of
the book value of the equity of the shares of the final controller and the initial investment cost of the
book value before the merger date; if the capital reserve is insufficient, the retained earnings shall be
adjusted. The equity investment held by the equity method before the merger date or recognized as
financial assets measured at fair value and whose changes are included in other comprehensive income
shall not be accounted for for the time being.
For the long-term equity investment acquired by the enterprise merger not under the same control, the
merger cost shall be taken as the initial investment cost of the long-term equity investment on the
purchase date, and the merger cost includes the sum of the assets paid by the acquirer, the liabilities
incurred or assumed, and the equity securities issued. If the equity of the acquirer is acquired step by
step through multiple transactions and the enterprise merger is not under the same control, it shall be
treated whether it belongs to the "package transaction" respectively: for the "package transaction", each
transaction shall be treated as a transaction acquiring control. If it does not belong to the "package
transaction", the sum of the book value of the equity investment of the original acquiree plus the new
investment cost shall be the initial investment cost of the long-term equity investment calculated
according to the cost method. If the equity originally held is accounted by the equity method, the
relevant other comprehensive income shall not be treated for the time being.
The fee of audit, legal services, evaluation and consulting and other related management matters
incurred by the consolidated party or the acquirer shall be recorded into the current profits and losses at
the time of occurrence.
Equity investments other than long-term equity investments formed by business mergers are initially
measured at cost, which depends on the manner in which long-term equity investments are acquired. It is
determined in accordance with the actual cash purchase price paid by the Company, the fair value of the
equity securities issued by the Company, the value agreed in the investment contract or agreement, the
fair value or original book value of the assets exchanged in the non-monetary asset exchange transaction,
and the fair value of the long-term equity investment itself. Fees, taxes and other necessary expenses
directly related to the acquisition of long-term equity investments are also included in the cost of
investment. For the additional investment that can exert a significant impact on the invested unit or
exercise joint control but does not constitute control, the cost of long-term equity investment is the sum
of the fair value of the original equity investment plus the cost of the new investment determined in
accordance with Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement
of Financial Instruments.
(2) Follow-up measurement and profit and loss recognition methods
The long-term equity investment with joint control (except the co-operator) or significant impact, shall
be accounted by the equity method. In addition, the Company's financial statements use the cost method
to account for the long-term equity investment that can be controlled by the invested unit.
① Long-term equity investment calculated by the cost method
When the cost method is used, the long-term equity investment is priced at the cost of the initial
investment, and the cost of the additional or withdrawn investment is adjusted for the long-term equity
investment. In addition to the cash dividends or profits actually paid at the time of obtaining the
investment or the cash dividends declared but not yet paid included in the consideration, the investment
income of the current period shall be recognized in accordance with the cash dividends or profits
declared by the invested unit.
② Long-term equity investment accounted for by the equity method
When using the equity method, if the initial investment cost of a long-term equity investment is greater
than the fair value share of the investee's identifiable net assets when the investment is made, the initial
investment cost of the long-term equity investment should not be adjusted; If the initial investment cost
is less than the fair value share of the identifiable net assets of the investee, the difference should be
included in the current profit or loss, and the cost of long-term equity investment should be adjusted at
the same time.
When using the equity method, the investment income and other comprehensive income shall be
confirmed according to the share of the book value of the invested unit; the value and the book value of
the long-term equity investment shall be adjusted according to the profit or cash dividend of the
long-term equity investment and included in the capital reserve. When recognizing the share of the net
profit and loss of the invested entity, the net profit of the invested entity shall be adjusted on the basis of
the fair value of the identifiable assets of the invested entity at the time of obtaining the investment. If
the accounting policies and accounting periods adopted by the invested entity are inconsistent with the
Company, the financial statements of the invested entity shall be adjusted in accordance with the
accounting policies and accounting periods of the Company, and the investment income and other
comprehensive income shall be confirmed. For the transactions between the Company and the joint
venture, if the assets invested or sold do not constitute business, the unrealized internal transaction gains
and losses shall be offset by the Company, and the investment gains and losses shall be recognized.
However, the unrealized internal transaction loss incurred by the Company and the invested entity
belongs to the impairment loss of the transferred assets and shall not be offset. If the assets invested by
the Company into a joint venture or an associate constitute a business, and the investor thus obtains
long-term equity investment but does not acquire control, the fair value of the invested business shall be
taken as the initial investment cost of the new long-term equity investment, and the difference between
the initial investment cost and the book value of the invested business shall be fully included in the
current profit or loss. Where the assets sold by the Company to a joint venture or associate constitute a
business, the difference between the consideration obtained and the carrying value of the business
should be fully included in the current profit or loss. Where the assets purchased by the Company from
associates and joint ventures constitute business, the accounting treatment shall be carried out in
accordance with the provisions of Accounting Standard for Business Enterprises No. 20 - Business
Combination, and the gain or loss related to the transaction shall be fully recognized.
When confirming the net loss incurred by the investee, the book value of the long-term equity
investment and the other long-term equity that substantially constitute the net investment of the investee
shall be written down to zero. In addition, if the Company has the obligation to bear additional losses to
the investee, the estimated liabilities shall be recognized according to the expected obligations and
included in the current investment losses. If the invested entity achieves net profit in the following
period, the Company shall resume the recognized income share after the earnings share makes up for the
unrecognized loss share.
③ Acquisition of minority equity
At the time of preparing the consolidated financial statements, the capital reserves shall be adjusted due
to the difference between the new long-term equity investment of the purchase of minority shares and
the share of the net assets continuously calculated by the subsidiary since the purchase date (or merger
date). If the capital reserves are insufficient to write down, the retained earnings shall be adjusted.
④ Disposal of long-term equity investments
In the consolidated financial statements, the parent company shall partially dispose of the long-term
equity investment of the subsidiary and the difference between the disposal price and the long-term
equity investment of the subsidiary and the disposal of the relevant accounting policies described in
Note IV, 6, "Judgment Standard for Control and Preparation Method of Consolidated Financial
Statements" (2).
For the disposal of long-term equity investment under other circumstances, the difference between the
book value and the actual obtained price shall be recorded in the current profit and loss.
For the long-term equity investment calculated by the equity method, if the remaining equity after
disposal is still calculated by the equity method, the other comprehensive income parts originally
included in the shareholders' equity shall be treated on the same basis as the direct disposal of the related
assets or liabilities of the invested unit in the corresponding proportion. The owner's equity recognized
due to the owner's equity other than the net profit and loss, other comprehensive income and profit
distribution shall be transferred to the profit and loss of the current period.
If a long-term equity investment is accounted for by the cost method and the remaining equity is still
accounted for by the cost method after disposal, the other comprehensive income recognized by the
equity method or financial instrument recognition and measurement criteria before the acquisition of
control of the investee shall be accounted for on the same basis as the direct disposal of the relevant
assets or liabilities by the investee. And carry forward the current profit and loss pro rata; Changes in
owners' equity other than net profit and loss, other comprehensive income and profit distribution in the
net assets of investee units recognized as a result of the equity method of accounting are carried forward
to current profit and loss in proportion.
If the Company loses control of the investee due to the disposal of part of the equity investment, when
preparing individual financial statements, the remaining equity after disposal can exercise common
control or exert significant influence on the investee, it shall be calculated according to the equity
method, and when the remaining equity is regarded as self-acquired, it shall be adjusted by the equity
method. If the remaining equity after disposal cannot jointly control or exert significant influence on the
investee, it shall be accounted for in accordance with the relevant provisions of the Standards for the
recognition and measurement of financial instruments, and the difference between the fair value and the
carrying value on the date of loss of control shall be included in the current profit or loss. Other
comprehensive income recognised by the equity method or financial instrument recognition and
measurement standards before the Company acquired control of the investee shall be accounted for on
the same basis as the direct disposal of the relevant assets or liabilities by the investee when it loses
control of the investee. Changes in owner's equity other than net profit and loss, other comprehensive
income and profit distribution in the net assets of the investee recognized by the equity method are
transferred to current profit and loss when the control over the investee is lost. Among them, if the
remaining equity after disposal is accounted for by the equity method, other comprehensive income and
other owner's equity are carried forward in proportion; If the remaining equity after disposal is changed
to accounting treatment according to the recognition and measurement standards of financial
instruments, other comprehensive income and other owners' equity are all carried forward.
If the Company loses its joint control or significant impact on the invested unit due to the disposal of
part of the equity investment, the remaining equity after disposal shall be calculated according to the
financial instrument recognition and measurement criteria, and the difference between the fair value and
the book value on the day of the loss of joint control or significant impact shall be recorded into the
current profit and loss. The original equity investment due to the equity method and accounting
confirmation of other comprehensive income, in the termination of the accounting of the basis of the
same, because of the investment except the net profit and loss, other comprehensive income and profit
distribution of other owner's equity changes, when the equity method all into the current investment
income.
The Company will dispose of its equity investment in subsidiaries step by step through multiple
transactions until it loses control. If the above transactions are package transactions, each transaction
shall be accounted for as one transaction disposing of the equity investment of subsidiaries and losing
control, and the difference between the disposal price of each disposal and the book value of the
long-term equity investment corresponding to the equity disposed of before the loss of control shall be
the difference between the disposal price and the long-term equity investment corresponding to the
equity disposed before the loss of control. First recognized as other comprehensive income, when the
loss of control is transferred to the loss of control of the current period profit and loss.
See Note Ⅳ and 20 "Long-term asset impairment" for the recognition standard and withdrawal method
of impairment provisions for long-term equity investment.
The company's investment real estate refers to the real estate held for the purpose of earning rent or
capital appreciation, or both, including the land use right leased, the land use right held and ready to be
transferred after the appreciation, and the leased buildings. The investment real estate shall be initially
measured according to the cost, and the cost model shall be adopted to subsequently measure the
investment real estate or the fair value model on the balance sheet date.
(1) Adopt the cost model
Investment real estate is depreciated or amortized by the following useful life and estimated net residual
value rate:
Name Service life Estimated net residual Annual depreciation rate
value rate or amortization rate
House and buildings 20-40 years 0%-10% 2.25%-5.00%
See Note Ⅳ and 20 "Long-term asset impairment" for the recognition standard and withdrawal method
of investment real estate impairment provisions using the cost model.
(2) Adopt the fair value model
Without depreciation or amortization of the investment real estate, the book value shall be 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 shall be included in the current profit and loss.
An investment property shall be derecognized on disposal or when it is permanently withdrawn from use
and no future economic benefits are expected from its disposal. Proceeds from the sale, transfer,
retirement, or destruction of the investment property deducting its carrying amount and related taxes
shall be recognized in profit or loss for the current period.
(1) Fixed assets recognition conditions
Fixed assets refer to tangible assets held for the production of goods, providing labor services, leasing or
operation and management, and with a service life of more than one fiscal year. Fixed assets shall be
confirmed if the following conditions are met:
① Economic benefits related to this fixed asset are likely to flow into the enterprise;
② The cost of this fixed asset can be measured reliably.
(2) Various depreciation methods of fixed assets
All kinds of fixed assets adopt the straight line method and make depreciation according to the
following useful life, estimated net residual value rate and depreciation rate:
Categories Depreciation method Service life Estimated net salvage Yearly depreciation rate
rate
Houses and buildings straight-line depreciation 20-40 years 0%-10% 2.25%-5.00%
method
Ships and nets straight-line depreciation 5-30 years 3%-5% 3.17%-19.40%
method
Machinery equipment straight-line depreciation 8-20 years 0%-10% 4.50%-12.50%
method
Delivery equipment straight-line depreciation 5 years 0%-10% 18.00%-20.00%
method
Furniture and office straight-line depreciation 5 years 0%-10% 18.00%-20.00%
equipment method
(3) See Note Ⅳ and 20 "Long-term asset impairment" for the impairment test method and the
withdrawal method of the impairment provisions of fixed assets.
The cost of the project under construction shall be determined according to the actual project
expenditure, including the project expenditure incurred during the period under construction, the
capitalized borrowing expenses before the project reaches the predetermined usable state and other
related expenses.
The construction under construction is carried forward to fixed assets after reaching the predetermined
usable state, in which the construction under construction is carried forward to fixed assets when
delivered with fishing conditions, and the construction is carried forward to fixed assets when the
physical construction (including installation) work has been fully completed or has been substantially
completed.
See Note Ⅳ and 20 "Long-term asset impairment" for the impairment test method and impairment
provision method of the construction under construction.
(1) If the loan expenses incurred by the Company can be directly attributed to the purchase, construction
or production of the assets meeting the capitalization conditions, they shall be capitalized and included
in the relevant asset costs. Assets that meet the capitalization conditions refer to the assets such as fixed
assets, investment real estate and inventory that take a long time (usually one year or more) for purchase,
construction or production activities to reach the predetermined marketable status. Other borrowing
expenses shall be recognized as expenses according to the amount of occurrence and shall be included in
the current profits and losses. Borrowing expenses include borrowing interest, amortization of discount
or premium, auxiliary expenses and exchange difference due to foreign currency borrowing, etc.
(2) If the borrowing costs meet the following conditions, the capitalization should begin:
① Asset expenditure has been incurred, including the cash paid for the purchase, construction or
production of assets that meet the conditions for capitalization, the transfer of non-cash assets or the
assumption of interest-bearing debts;
② Borrowing expenses have been incurred;
When the purchase, construction or production of assets meeting the capitalization conditions reach the
predetermined usable or marketable status, the borrowing expenses shall be capitalized.
In case of the abnormal interruption of the assets for more than 3 consecutive months, the capitalization
of the borrowing expenses shall be suspended. The borrowing expenses incurred during the interruption
period are recognized as expenses and recorded into the current profits and losses until the purchase and
construction of the assets or the production activities resume. If the interruption is due to the
capitalization of the qualified assets purchased or produced as necessary for the intended usable or
marketable status, the capitalization of the borrowing costs continues.
(3) During the capitalization period, the amount of interest (including amortization of discounts or
premiums) capitalized for each accounting period shall be determined as follows:
① Where a special loan is borrowed for the purpose of purchase, construction or production of assets
that meet the conditions for capitalization, the amount shall be determined by the interest expense
actually incurred in the current period, minus the interest income of the unused borrowing funds
deposited in the bank or the investment income obtained from temporary investment.
② Where a general loan is occupied for the purpose of purchase, construction or production of assets
that meet the conditions for capitalization, the amount of interest on which the general loan shall be
capitalized shall be calculated and determined by multiplying the weighted average of the accumulated
asset expenditure exceeding the special loan by the capitalization rate of the general loan occupied. The
capitalization rate is determined according to the weighted average interest rate of general borrowing.
Where there is a discount or premium for the loan, the amount of discount or premium for each
accounting period shall be determined according to the actual interest rate method and the amount of
interest for each period shall be adjusted.
During the capitalization period, the amount of interest in each accounting period shall not exceed the
amount of interest actually incurred by relevant loans in the current period.
(4) The auxiliary expenses incurred by special loans, which are incurred before the assets purchased,
built or produced eligible for capitalization reach the predetermined usable or marketable state, are
capitalized according to the amount incurred at the time of occurrence and are included in the cost of
the assets eligible for capitalization; If an asset that is purchased, built or produced and eligible for
capitalization has reached a predetermined usable or marketable state, it shall be recognized as an
expense based on the amount incurred at the time of occurrence and recorded in the current profit or
loss. Auxiliary expenses incurred by general loans are recognized as expenses according to their amount
at the time of occurrence and are included in current profit or loss.
(1) Intangible assets refer to the identifiable non-monetary assets owned or controlled by an enterprise
without a physical form. Intangible assets are initially measured according to the cost. Analyze and judge
the service life of the intangible assets when they are acquired.
(2) The Company generally determines the useful life of intangible assets:
① Information on the usual life cycle of the product produced with the asset;
② Technology, process and other aspects of the current situation and the estimation of the future
development trend;
③ The market demand for the products or services produced with the asset;
④ Action expected by current or potential competitors;
⑤ Prospective maintenance expenditures to maintain the ability to bring economic benefits to the asset,
and the Company's ability to expect to pay related expenditures;
⑥ Relevant legal provisions or similar restrictions on the control period of the asset, such as the
concession period, lease term, etc.;
⑦ The correlation with the service life of other assets held by enterprises.
If it is impossible to foresee the period of intangible assets to bring economic benefits to the Company,
it shall be regarded as intangible assets with uncertain service life.
(3) For intangible assets with limited service life, the system shall amortize reasonably (or straight line
method) during the service life. At the end of each year, the Company will review the service life and
amortization methods of intangible assets with limited service life. If the service life and amortization
method of intangible assets are different from the previous estimate, the amortization period and
amortization method will be changed. For the intangible assets with limited service life, the service life
and the estimated net residual value rate of the intangible assets are as follows:
Name Service life Judging basis Estimated net
of service life salvage rate
Land use right 42-49 years Term of land certificate 0%
Software 5-10 years Historical experience 0%
See Note Ⅳ and 20 "Long-term asset Impairment" for the impairment test method and impairment
provision withdrawal method of intangible assets with limited service life.
(4) Intangible assets with uncertain service life include intangible assets that have been continued to be
used after amortization, while intangible assets with uncertain service life shall not be amortized
(5) Internal research and development
and development stage, including:
knowledge.
produce new or substantially improved materials, devices, products, etc.
recognized in the current period's profit and loss; expenditures during the development phase that meet
the following conditions are recognized as intangible assets:
products produced with the intangible assets exist in the market or that the intangible assets themselves
exist in the market, and that the intangible assets will be used internally, their usefulness shall be proved;
the intangible assets and having the ability to use or sell the intangible assets;
reliably.
For non-current non-financial assets such as fixed assets, construction projects under construction, use
assets with limited use life, intangible assets, investment real estate measured by cost mode and
long-term equity investment in subsidiaries, joint ventures and joint ventures, the Company determines
whether there are signs of impairment on the balance sheet date. If there are signs 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 the usable state shall be
subject to impairment test every year, regardless of whether there are signs of impairment.
If the result of the impairment test indicates that the recoverable amount of the asset is lower than its
book value, the impairment provision shall be drawn according to the difference and included in the
impairment loss. The recoverable amount is the higher value between the fair value of the asset minus
the disposal expense and the present value of the estimated future cash flow of the asset. The fair value
of the asset is determined according to the price of the sales agreement in fair trading; if there is no sales
agreement but there is an active asset market, the fair value is determined according to the acquiree bid
of the asset; if there is no sales agreement and asset active market, the fair value of the asset is estimated
on the basis of the best-available information. The disposal expenses include legal expenses related to
the disposal of the assets, related taxes, handling fees, and direct expenses incurred to bring the assets to
a marketable status. The present value of the estimated future cash flow of the asset shall be determined
according to the amount of the estimated future cash flow generated during the continuous use of the
asset and the final disposal at an appropriate discount rate. The asset impairment provision is calculated
and confirmed 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 shall be determined by the asset group to which
the asset belongs. Asset groups are the minimum portfolio that can independently generate cash inflows.
In the case of impairment test of goodwill, the carrying value of goodwill is allocated to the relevant
asset group reasonably from the date of purchase; if it is difficult to allocate to the relevant asset group,
it shall be allocated to the relevant asset group portfolio. The relevant asset group or asset group
portfolio is an asset group or asset portfolio that can benefit from the synergies of business consolidation
and is not greater than the reporting division determined by the Company.
When the impairment test is conducted on the relevant asset group or asset group portfolio containing
goodwill, if there are signs of impairment in the asset group or asset group portfolio related to goodwill,
the impairment test shall be conducted on the asset group or asset group portfolio excluding goodwill to
calculate the recoverable amount and confirm the corresponding impairment loss. Then conduct
impairment tests on the asset group or portfolio of asset groups containing goodwill, Compare its
carrying value to the recoverable amount, If the recoverable amount is lower than the carrying value,
The amount of impairment loss is first offset against the carrying value of goodwill in the asset group or
portfolio, According to the proportion of the book value of other assets except goodwill in the asset
group or asset group portfolio, offset the book value of other assets, Provided that the book value of
each asset after deduction shall not be lower than the fair value of the asset minus the net amount (if
certain) and the present value of the estimated future cash flow of the asset (if certain), And not lower
than zero.
Once the impairment loss of the above assets is recognized, the value shall not be recovered in the later
period.
Long-term deferred expenses are the expenses incurred by the Company that shall be borne by the
current and subsequent period for more than one year (excluding one year). Long-term deferred
expenses are equally amortized during the benefit period. If the long-term deferred expenses cannot
benefit the later accounting period, the unamortized surplus value will be transferred to the current
profit and loss.
Long-term deferred expenses are amortized on a straight-line basis over the following period:
Name Amortization period
Renovation costs 2-10years
Contract liabilities reflect the obligation to transfer goods to the customer for the consideration received
or receivable. If the customer has paid the contract consideration or has obtained the right to receive the
contract consideration unconditionally before the transfer to the customer, the contract liabilities shall be
recognized according to the amount received or receivable when the actual payment and the amount due.
Contractual assets and liabilities under the same contract shall be listed in net value, and contractual
assets and liabilities under different contracts shall not be offset.
(1) The range of employee compensation
Employee compensation refers to the various forms of compensation or compensation given by the
company for the service provided by the employee or for the termination of the labor relationship.
Employee compensation includes short-term compensation, post-resignation benefits, dismissal benefits
and other long-term employee benefits. The benefits provided by the company to the employees' spouses,
children, dependants, family of the deceased employees and other beneficiaries also belong to the
employee compensation.
(2) Short-term compensation refers to the full employee compensation to be paid within 12 months after
the end of the annual reporting period provided by relevant services.
Short-term salary includes social insurance premiums such as employees' wages, bonuses, allowances
and subsidies, employee welfare, medical insurance, working injury insurance and maternity insurance,
housing provident fund, trade union fund and employee education fund, short-term paid absence,
short-term profit sharing plan, non-monetary welfare and other short-term salary.
Short-term compensation during the accounting period when the employee provides services for the
company, the actual short-term compensation is recognized as a liability and recorded in the current
profit and loss or related asset costs.
Post-resignation benefits refer to all forms of remuneration and benefits provided by the Company for
the retirement of the employee or the termination of the labor relationship with the Company, except for
short-term compensation and dismissal benefits.
Post-resignation benefit plan include the defined contribution plan and the defined benefit plan. Among
them, the defined contribution plan is the post-resignation welfare plan in which the Company no longer
assumes further payment obligations; the defined benefit plan refers to the post-resignation welfare plan
other than the defined contribution plan.
The defined contribution plan includes basic endowment insurance, unemployment insurance, etc.
During the accounting period when the employee provides the service, the amount payable calculated
according to the defined contribution plan shall be recognized as liabilities and included in the current
profit and loss or related asset costs.
At the end of the reporting period, the employee compensation costs arising from the defined benefit
plan should be recognized as the following components:
① Service costs, including current service costs, past service costs, and settlement gains or losses.
② Net interest on the net liabilities or net assets of the defined benefit plan, including interest income
on the planned assets, interest expense on the obligations of defined benefit plan, and interest affected
by the asset ceiling.
③ Remeasure the change in the net liabilities or net assets of the defined benefit plan.
Unless other accounting standards require or allow employee benefit costs to be included in asset costs,
items ① and ② above shall be included in current profits and losses; item ③ shall be included in
other comprehensive benefits and will not be returned to profits and losses during subsequent accounting
periods, but these amounts recognized in other comprehensive benefits may be transferred within the
equity.
Under the defined benefit plan, the past service costs are recognized as current expenses on the
following date:
Determine a settlement benefit or loss when setting a defined benefit plan settlement.
(3) Dismissal benefits refer to the compensation given by the Company to the employee to terminate the
labor relationship with the employee before the expiration of the labor contract, or to encourage the
employee to voluntarily accept the reduction.
If the Company provides dismissal benefits to the employees, the Company shall confirm the liabilities
and include in the current profit and loss: when the Company cannot unilaterally withdraw the dismissal
benefits due to the termination of labor relationship plan or reduction proposal; when the Company
recognizes the costs or expenses related to the restructuring of the dismissal benefits.
(4) Other long-term employee benefits refer to all employee compensation except short-term
compensation, post-resignation benefits and dismissal benefits, including long-term paid absence,
long-term disability benefits, long-term profit sharing plan, etc.
Other long-term employee benefits provided by the Company to employees that meet the conditions of
the deposit plan shall apply to the relevant provisions of the above deposit plan.
Except for the circumstances that meet the conditions for the defined contribution plan, other long-term
employee welfare net liabilities or net assets shall be recognized and measured in accordance with the
relevant provisions of the defined benefit plan. At the end of this period, the Company recognizes the
employee compensation costs generated by other long-term employee benefits as the following
components:
① Service cost.
② Net interest on other long-term employee welfare net liabilities or net assets.
③ Re-measure changes in the net liabilities or net assets of other long-term employee benefits.
In order to simplify the relevant accounting treatment, the total net amount of the above items is
included in the current profit or loss or related asset costs.
recognized as estimated liabilities:
(1) This obligation is the current obligation of the enterprise;
(2) Performing this obligation is likely to lead to the outflow of economic benefits from the enterprise;
(3) The amount of the obligation can be reliably measured.
The estimated liabilities shall be initially measured at the best estimate of the expenditures required to
meet the relevant current obligations.
(4) Onerous contract
An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the
contract exceed the economic benefits expected to be received under it. When a contract to be fulfilled
becomes an onerous contract, and the obligations arising from it meets the aforementioned recognition
conditions of provisions, the portion of the estimated contract loss that exceeds the recognized
impairment loss (if any) on the subject assets of the contract shall be recognized as a provision.
(5) Constructive obligation
For detailed formal restructuring plans that have been announced, the direct expenses related to
restructuring shall be recognized as the provision amount, provided that the aforementioned recognition
conditions of provisions are met. [For constructive obligations in the sale of part of a business,
restructuring-related obligations are recognized only when the Company promises to sell part of its
business (that is, a binding sale agreement has been executed).]
(1) Accounting treatment method of share payment
Share payment is a transaction that grants the equity instruments or assumes the liabilities determined
based on the equity instruments for the purpose of obtaining the services provided by the employee or
other parties. Share payment is divided into share payment settled by equity and share payment settled in
cash.
① Share payments settled by equity
Share payment for equity settlement of services provided by the employee, should be measured at the
fair value of the employee equity instrument on the grant date. The amount of the fair value shall be
calculated in the relevant costs or expenses on the basis of the best estimate of the waiting period,
including the relevant costs or expenses on the grant date and the capital reserve shall be increased
accordingly.
On each balance sheet date during the waiting period, the Company makes the best estimate and corrects
the estimated number of feasible equity instruments based on the latest subsequent information,
including changes in the number of feasible employees. The impact of the above estimate shall be
included in the relevant costs or expenses of the current period, and the capital reserves shall be adjusted
accordingly.
In exchange for the equity settlement of the fair value of the service can be measured reliably, according
to the fair value of the service in the date, if the fair value of the other services cannot be measured
reliably, but the fair value of the equity instrument can be measured reliably, according to the fair value
of the date of the service, included in the relevant costs or expenses, and increase the shareholders'
equity accordingly.
② Payment in shares settled in cash
Share payments settled in cash are measured at the fair value of the liabilities determined on the basis of
shares or other equity instruments undertaken by the Company. If the right is available immediately
after the grant, increase the liabilities on the grant date and the amount of the right on the basis of the
best estimate on the basis of the fair value of the liabilities.
On each balance sheet date and settlement date before the settlement of relevant liabilities, the fair value
of the liabilities shall be measured and the changes shall be included in the current profit and loss.
(2) Modify or terminate the relevant accounting treatment of the share payment plan
When the Company changes the share payment plan, if the modification increases the fair value of the
granted equity instrument, the increase in the acquired services shall be recognized according to the
increase in the fair value of the equity instrument. The increase in the fair value of the equity instrument
is the difference between the fair value of the equity instrument on the date of amendment before and
after the amendment. If the amendment reduces the total fair value of share payment or adopts any other
way unfavorable to the employee, the accounting for the services obtained shall be deemed to have never
occurred unless the Company cancels part or all of the granted equity instruments.
During the waiting period, if the granted equity instrument is cancelled, the Company will treat the
cancellation of the granted equity instrument as an accelerated exercise of right, immediately record the
amount recognized during the remaining waiting period into the current profit and loss, and recognize
the capital reserves. If the employee or other party can choose to meet the non-viable conditions but not
within the waiting period, the company will cancel them as the interest granting instrument.
(3) Accounting for share payment transactions involving the Company and shareholders or actual
controllers of the Company
Where one of the settlement enterprises of the Company and the enterprise receiving services is outside
the Company, and one of the other is outside the Company, accounting treatment shall be made in the
consolidated financial statements of the Company in accordance with the following provisions:
① If the settlement enterprise settles with its own equity instrument, the share payment transaction shall
be treated as share payment for equity settlement; in addition, as share payment for cash settlement.
If the settlement enterprise is an investor of the service enterprise, it shall be recognized as a long-term
equity investment in the service enterprise according to the fair value of the equity instrument on the
grant date, and the capital reserves (other capital reserves) or liabilities shall be recognized.
② If the service enterprise has no settlement obligation or the employee is its own equity instrument,
the share payment transaction shall be treated as the share payment for equity settlement; if the service
enterprise has the settlement obligation and is not its own equity instrument, the share payment
transaction shall be treated as the share payment for cash settlement.
For the share payment transaction between the enterprises in the Company, and the settlement enterprise
is not the same enterprise, the confirmation and measurement of the share payment transaction in the
individual financial statements of the service enterprise and the settlement enterprise shall be handled in
accordance with the above principles.
(1) The distinction between perpetual bonds and preferred shares
Financial instruments such as perpetual bonds and preferred shares issued by the Company, which meet
the following conditions:
① The financial instrument does not include the contractual obligation to deliver cash or other financial
assets to other parties, or to exchange financial assets or financial liabilities with other parties under
potentially adverse conditions;
② If the financial instrument is required to be settled, if the financial instrument is not derivative, the
contractual obligation of delivering a derivative, the Company can only settle the financial instrument by
exchanging a fixed amount of cash or other financial assets in a fixed amount of its own equity
instruments.
Except for financial instruments that can be classified as equity instruments under the above conditions,
other financial instruments issued by the Company shall be classified as financial liabilities.
If the financial instruments issued by the Company are compound financial instruments, they shall be
recognized as a liability according to the fair value of the liability component, and shall be recognized as
"other equity instruments" according to the amount actually received after deducting the fair value of the
liability component. The transaction costs incurred in the issuance of compound financial instruments
shall be apportioned between the liability components and the equity component according to their
respective proportion to the total issuance price.
(2) Accounting methods for perpetual debt and preferred shares, etc
Financial instruments such as perpetual debt or preferred shares, or financial instruments classified as
financial liabilities, whose related interest, dividends (or dividends), gains or losses, and gains or losses
arising from redemption or refinancing, are included in the current profit and loss, except for the
borrowing expenses meeting the capitalization conditions (see Note IV and 18 "borrowing expenses").
For financial instruments such as perpetual bonds and preferred shares classified as equity instruments,
upon issuance (including refinancing), repurchase, sale or cancellation, the Company shall be treated as a
change in equity, and the relevant transaction costs shall also be deducted from the equity. The Company
treats the distribution of the equity instrument holder as a profit distribution.
The Company does not recognize the change in the fair value of the equity instruments.
Accounting policies used for revenue recognition and measurement
(1) Revenue recognition principle
When the contract with the customer meets both of the following conditions, revenue is recognized
when the customer obtains control of the relevant goods:
① The parties have approved the contract and undertake to perform their respective obligations;
② The contract specifies the rights and obligations of the parties related to the transfer of the goods or
services provided;
③ The contract has a clear payment clause related to the transferred goods;
④ The contract has commercial substance, that is, the performance of the contract will change the risk,
time distribution or amount of the Company's future cash flow;
⑤ A consideration entitled to for the transfer of goods to a customer is likely to be recovered.
Assess the contract on the start date of the contract, identify the individual performance obligations
contained in the contract, and share the transaction price to each individual performance obligation in
relative proportion to the individual selling price of the goods promised by each individual performance
obligation. The influence of variable consideration, significant financing components existing in the
contract, non-cash consideration, payable customer consideration and other factors are considered in
determining the transaction price. Then determine whether the individual performance obligation should
be performed within a certain period or at a certain point, and recognize the income respectively when
performing each individual performance obligation.
If one of the following conditions is met, it shall be performed within a certain period; otherwise, or at a
certain point:
the same time;
irreplaceable purposes, and the enterprise has the right to collect money for the accumulated
performance that has been completed during the whole contract period.
For the performance obligations performed within a certain period of time, the revenue shall be
recognized according to the performance progress during that period. The performance progress shall be
determined by the input method or the output method according to the nature of the transferred goods.
If the performance progress cannot be reasonably determined and the cost incurred is expected to be
compensated, the income shall be recognized according to the amount of the cost incurred until the
performance progress can be reasonably determined.
If one of the above conditions is not met, the revenue will be apportioned to the transaction price of the
individual performance obligation at the point when the customer obtains control of the relevant goods.
When determining whether the customer has acquired control of the commodity:
<1> The enterprise has the right to current payment for the goods, that is, the customer has the
obligation of current payment for the goods;
<2> The enterprise has transferred the legal ownership of the commodity to the customer, that is, the
customer has the legal ownership of the commodity;
<3> The enterprise has transferred the product to the customer, that is, the customer has the physical
possession of the commodity;
<4> The enterprise has transferred the main risks and remuneration in the ownership of the commodity
to the customer, that is, the customer has acquired the main risks and remuneration in the ownership of
the commodity;
<5> The customer has accepted the item;
<6> Other indications that the customer has acquired control of the goods.
(2) Methods of revenue recognition used by the Company
① Revenue recognized by the Company at a point in time in the control over assets
For the foreign sale of seine fish, the Company uses sales contracts and settlement contracts as the basis,
recognizes the change of ownership based on the date of settlement contracts, and then recognizes
revenue accordingly.
Most of the Company’s long-line fishing utensil and fishing goods will be transported back to China for
sale. Sales contracts and settlement contracts will be used as the basis. The Company recognizes the
change of ownership based on the date of settlement contracts and then recognizes revenue accordingly.
Processing of aquatic products for domestic sale by the Company: Shandong Zhonglu Oceanic (Yantai)
Food Co., Ltd. issues shipment confirmations according to faxed or email orders from domestic clients.
The Company delivers goods based on shipping notes issued by the sales department and confirmed by
the warehouse department. After clients acknowledge receipt, the Company will recognize revenue.
Processing of aquatic products for foreign sale by the Company: After receiving purchase orders from
foreign clients, the international trade department will issue export shipment confirmations and arrange
the storage and transport department to prepare the goods. The Company will revenue sales revenue
based on shipping notes, packing lists, customs declaration forms, and other export documents.
② Revenue recognized by the Company by performance period:
The Company’s revenue from cold storage: After receiving orders from clients and after the goods are
put in storage, the warehouse department will issue warehouse warrants to clients to confirm the specific
names, specifications, pieces, weight, and storage dates. After the warehouse warrants are signed by the
warehouse manager and confirmed by clients, the Company will recognize revenue by calculating the
storage fees based on the actual number of storage days.
(1) Method of determining the amount of assets related to the contract cost
The assets related to the contract costs include the contract acquisition costs and the contract
performance costs.
Contract acquisition cost, that is, if the incremental cost incurred in the contract acquisition is expected
to be recovered, it is recognized as an asset as the cost of contract acquisition. Incremental cost refers to
the cost that will not occur without obtaining a contract (such as sales commission, etc.). If the
amortization period of the asset does not exceed one year, it may be recorded into the current profit and
loss at the time of occurrence.
Other expenses incurred in the Company to obtain the Contract in addition to the incremental cost
expected to be recovered (e. g. travel expenses, bid expenses, bid expenses, and related expenses
incurred in preparing the bid materials) shall be recorded in the current profits and losses upon
occurrence, unless these expenses are clearly borne by the customer.
Contract performance cost, that is, the cost incurred in the performance of the contract, which does not
fall within the scope of other accounting standards for enterprises other than the Accounting Standards
for Business Enterprises No.14-Revenue (2017 Revision) and meets the following conditions, is
recognized as the contract performance cost as an asset:
① This cost is directly related to a current or expected acquired contract, including direct labor, direct
materials, manufacturing costs (or similar costs), costs clearly borne by the Customer, and other costs
incurred only because of the Contract;
② This cost increases the future resources of the enterprise to fulfill its performance obligations;
③ This cost is expected to be recoverable.
(2) Amortization of assets related to the contract costs
Assets related to the contract cost are amortized on the same basis as the recognition of the asset and
recorded into the current profit and loss.
(3) Impairment of assets relating to the contract costs
When determining the impairment of assets related to the contract cost, firstly determine the impairment
loss of other assets recognized in accordance with other relevant business accounting standards; Then, if
the book value is higher than the difference of Item ① minus Item ② , the excess part shall be
deducted and recognized as the asset impairment loss:
① The remaining consideration expected to obtain due to the transfer of the goods related to the asset;
② Estimated estimated for the transfer of the related goods.
During the period before the impairment factors after changes, make the enterprise after the item ①
minus the ② of the difference higher than the asset book value, back to the original asset impairment
provision, and included in the current profits and losses, but the book value of the assets should not
exceed the assumed not provision for impairment of the assets in the book value.
(1) A lease is a contract in which the Company has transferred or acquired the right to control one or
more use of identified assets for a certain period in exchange for or pay consideration. On the
commencement date of a contract, the Company evaluates whether the contract is a lease or contains a
lease.
(2) Judgment basis of government subsidies and accounting treatment methods related to assets
The government subsidies related to assets refers to the government subsidies obtained by the Company
for purchase and construction or otherwise forming long-term assets.
Government subsidies related to assets shall be recognized as deferred income. Where government
subsidies related to assets are recognized as deferred income, they shall be recorded into profits and
losses in reasonable and systematic ways within the service life of the relevant assets. The government
subsidies measured in accordance with the nominal amount shall be directly recorded into the current
profit and loss.
If the relevant assets are sold, transferred, scrapped or damaged before the end of their service life, the
undistributed balance of the relevant deferred income shall be transferred into the profit and loss of the
current period of asset disposal.
The government subsidies related to the daily activities of the Company shall be included in other profits
according to the essence of the economic business. The government subsidies unrelated to the daily
activities of the Company shall be included in the non-operating income and expenditure.
(3) The judgment basis and accounting treatment method of government subsidies related to income
Revenue-related government subsidies refer to government subsidies other than those related to assets.
For the government subsidies of comprehensive projects, the Company needs to be decomposed into
asset-related parts and earnings-related parts for accounting treatment separately; if it is difficult to
distinguish, it shall be classified as government subsidies related to income.
If government subsidies related to earnings are used to compensate the related expenses or losses of the
enterprise in the future period, they shall be recognized as deferred income and included in the current
profits and losses in the related costs or losses in the period to compensate the related expenses or losses
incurred by the enterprise, which shall be directly recorded in the current profits and losses.
The government subsidies related to the daily activities of the Company shall be included in other profits
according to the essence of the economic business. The government subsidies unrelated to the daily
activities of the Company shall be included in the non-operating income and expenditure.
(4) The time of recognition of government subsidies
Where the government subsidies are monetary assets, they shall be measured at the amount received.
The government subsidy, measured according to the receivable amount, shall be confirmed at the end of
the period by meeting the relevant conditions of the financial support policy, if the government subsidy
is non-monetary assets, the government subsidy shall be confirmed according to the ownership risk and
remuneration transfer of the non-monetary assets. Where non-monetary assets shall be measured at fair
value; if the fair value cannot be obtained reliably, they shall be measured at nominal amount.
When the recognized government subsidies need to be returned, if there is a balance of relevant deferred
income, the book balance of relevant deferred income shall be written down, and the excess part shall be
included into the current profit and loss; if there is no relevant deferred income, it shall be directly
recorded in the current profit and loss.
Income tax is accounted by the balance sheet debt method. On the balance sheet date, analyze and
compare the book value of assets and liabilities and their tax basis. If there is a difference between the
two, recognize the deferred income tax assets, deferred income tax liabilities and the corresponding
deferred income tax expenses (or earnings). On the basis of the calculation and determination of the
current income tax (i. e., income tax payable for the current period) and deferred income tax expenses
(or income), the sum of the two is recognized as the income tax expenses (or income) in the income
statement, but excluding the income tax impact of transactions or matters directly included in the
owner's equity.
Review the book value of deferred income tax assets. If it is likely that insufficient taxable income
amount may be obtained to offset the benefits of the deferred income tax assets, the book value of the
deferred income tax assets shall be written down.
A lease is a contract in which the Company has transferred or acquired the right to control one or more
use of identified assets for a certain period in exchange for or pay consideration. On the commencement
date of a contract, the Company evaluates whether the contract is a lease or contains a lease.
(1) The Company acts as lessee
The categories of leased assets of the Company are mainly office buildings and cold storage.
① Initial measurement
On the beginning date of the lease term, the Company shall recognize the right to use the lease assets as
the use right assets during the lease term, and recognize the present value of the outstanding lease
payment as lease liabilities, except for short-term lease and low-value asset lease. When calculating the
present value of the lease payment, the Company uses the lease interest rate as the discount rate; if the
lease interest rate cannot be determined, the lessee incremental borrowing rate shall be used as the
discount rate.
② Follow-up measurement
If the company can reasonably determine the ownership of the leased assets at the time of the expiration
of the lease term, the depreciation shall be withdrawn within the remaining useful life of the leased
assets. If it is impossible to reasonably determine that the ownership of the lease asset can be acquired at
the expiration of the lease term, the depreciation shall be deducted within the shorter period of the lease
term and the remaining service life of the leased asset.
See Note Ⅳ and 20 "Long-term asset impairment" for the impairment test method and impairment
provision method of the use assets.
For the lease liabilities, the Company shall calculate the interest expenses for each period during the
lease term at the fixed periodic interest rate, which is included in the current profit and loss or the
relevant asset costs. Variable lease payments not included in the measurement of lease liabilities are
recorded into current profit and loss or related asset costs upon actual occurrence.
After the start of the lease term, when the substantial fixed payment changes, the expected payable
amount changes, the index or ratio used to determine the lease payment changes, the purchase option,
the renewal option, or the actual exercise situation changes, the lease payment, and adjust the book value
of the use assets accordingly. If the book value of the use right assets has been reduced to zero, but the
lease liabilities still need to be further reduced, the remaining amount shall be included in the current
profit and loss.
③ Short-term lease and low-value asset leasing
For short-term lease (in the lease start day lease not more than 12 months) and low value asset lease, the
company to simplify processing method, do not confirm the use of assets and lease liabilities, and during
the lease period according to the line method or other system reasonable lease payments into the relevant
asset cost or current profit and loss.
④ Lease obligation
On the beginning date of the lease term, the Company recognizes the present value of the outstanding
lease payment as a lease liability. When calculating the present value of the lease payment, the lease
interest rate shall be used as the discount rate. If the interest rate of the lease cannot be determined, the
company's incremental borrowing rate shall be used as the discount rate. The difference between the
lease payment and its present value shall be regarded as the unidentified financing fee, and the interest
expense shall be recognized during the lease period at the discount rate of the present value of the lease
payment and included in the current profit and loss. Variable lease payments not included in the
measurement of lease liabilities shall be recorded into the current profit and loss upon actual occurrence.
After the commencement of the lease term, when the substantially fixed payment amount changes, the
expected payable amount changes, the index or ratio of the lease payment amount changes, the result of
the assessment or the change of the lease payment amount, if the book value of the asset has been
reduced to zero, but the lease liabilities still need to be further reduced, the remaining amount shall be
included in the current profit and loss.
(2) The Company acts as lessor
On the commencement date of the lease, the Company divides the lease into financial lease and
operating lease based on the substance of the transaction. A finance lease is a lease that substantially
transfers almost all of the risks and rewards associated with the ownership of the leased assets.
Operating lease refers to a lease other than a financial lease.
① Operating lease
The Company adopts the straight-line method to confirm the lease collection amount of the operating
lease as the rental income of each period during the lease term. Variable lease payments related to the
operating lease and not included in the lease collection amount shall be included in the current profit and
loss upon actual occurrence.
② The Company’s revenue applicable to the lease standards
The Company’s property and other lease revenue: After entering into a lease contract with a client, the
Company charges lease fees based on the lease area and the contractual unit price to the lessee and bears
any fixed costs (such as staff salaries, maintenance costs, etc.). During the lease term, the fees are settled
on a regular basis between the Company and the client. The Company recognizes revenue based on the
lease period.
③ Finance Lease
On the lease commencement date, the Group recognizes a lease receivable and derecognizes the
underlying asset of the finance lease.The lease receivable is measured initially at the net investment in
the lease (the sum of the present value of the unguaranteed residual value and the lease payments not yet
received at the lease commencement date, discounted using the interest rate implicit in the lease).
Interest income is recognized over the lease term using the fixed periodic interest rate method. Variable
lease payments received by the Group that are not included in the measurement of the net investment in
the lease are recognized in profit or loss when incurred.
(1) Production safety expenditures
In November 2022, the Ministry of Finance and the Ministry of Emergency Management issued the
Management Measures for the Withdrawal and Utilization of Production Safety Expenditures in
Enterprise (CZ [2022] No. 136), and it was implemented on, and as of, the date of issue. At the same
time, the Management Measures for the Withdrawal and Utilization of Production Safety Expenditures
in Enterprises (CQ [2012] No. 16) was superseded.
(2) Debt restructuring
When the Company participates in the debt restructuring as a creditor, and pays off the debt with assets
or turns the debt into equity instruments for debt restructuring, it shall be confirmed when the relevant
assets meet its definition and confirmation conditions. If the debt-offset assets are financial assets, see
Note IV, 10 and financial instruments; if the debt-offset assets are non-financial assets, the initial
measured amount is the sum of the fair value of the waived claims and other directly attributable costs.
The difference between the fair value of the abandoned claim and the book value shall be included in
the current profit and loss. If the debt is restructured by means of modifying other terms, the Company
shall, according to the substantive modification of the contract, judge whether the original creditor's
right to terminate the confirmation, and confirm a new creditor's right according to the revised terms, or
recalculate the book balance of the creditor's right.
When the company participates in debt restructuring, debt restructuring with assets or converting debt
into equity instruments, terminate the relevant assets and the liquidated liabilities meet the conditions for
termination of confirmation, and measure the fair value of the equity instruments (according to the fair
value of the liquidated debt when the fair value cannot be estimated reliably). The difference between
the book value of the paid debts and the book value of the transferred assets (or the recognized amount
of the equity instruments) shall be recorded in the current profit and loss.
If the debt is restructured by modifying other terms, the Company shall, according to the substantive
modification of the contract, confirm a new debt in accordance with the revised terms, or recalculate the
book balance of the debt. For the exemption of the debt restructuring, the recognition can only be
terminated if the Company no longer have the current obligation to repay the debt restructuring.
(1) Important accounting policy changes
① The Company started to implement the No. 17 of the Accounting Standards for Business Enterprises
Interpretation “on the division between current and non-current liabilities” in 2024. The accounting
policy change has no effect on the Company’s financial statements.
② The Company started to implement the Interpretation of No. 17 of the Accounting Standards for
Business Enterprises Interpretation “on accounting treatment for sale and leaseback transactions” in
③ The Company started to implement the No. 18 of the Accounting Standards for Business Enterprises
Interpretation “on accounting treatment for warranty-type quality assurance that does not belong to the
individual performance. ” The warranty-type quality assurance that does not belong to the individual
performance accrued by the Company was originally recognized in “selling expenses.” In accordance
with Article 2 of the No. 18 ASBE Interpretation, it is now recognized in “cost of sales” and “other
operating costs,” which is presented in the “operating costs” in the income statement. The accounting
policy change has no effect on the Company’s financial statements.
(2) Changes in important accounting estimates
None.
In the process of applying accounting policies, the company, due to the internal uncertainty of business
activities, needs to judge, estimate and assume the book value of the statement items that cannot be
accurately measured. These judgments, estimates and assumptions are based on the past history of the
company's management and on considering other relevant factors. These judgments, estimates and
assumptions affect the reported amount of revenues, expenses, assets and liabilities and the disclosure of
contingent liabilities on the balance sheet date. However, the actual results of the uncertainty of these
estimates may differ from the current estimates of the Company's management, which in turn results in
a significant adjustment of the carrying amount of the assets or liabilities affected in the future.
The Company shall periodically review the aforementioned judgments, estimates and assumptions on
the basis of the change, the accounting estimates shall be confirmed in the current period; and the
current period, the impact shall be confirmed in the current period and the future period.
On the balance sheet date, the Company shall judge, estimate and assume the amount of the financial
statement as follows:
(1) Revenue recognition
As described in Note IV, 27 “Revenue”, the following significant accounting judgments and estimates
are involved in revenue recognition:
① Identifying contracts with customers;
② Estimating the collectibility of the consideration to which the Company is entitled in exchange for
goods transferred to customers;
③ Identifying performance obligations in contracts;
④ Estimating variable consideration in contracts and the amount for which cumulative revenue
recognized is highly probable not to be reversed significantly when the related uncertainty is eliminated;
⑤ Assessing whether a significant financing component exists in contracts;
⑥ Estimating the standalone selling prices of individual performance obligations in contracts;
⑦ Determining whether a performance obligation is satisfied over time or at a point in time.
The Company mainly makes judgments based on past experience and practice. Changes in these
significant judgments and estimates may affect the operating income, operating costs and profit or loss
for the current or future periods of the change, and may have a material impact.
(2) Significant accounting judgments and estimates related to leasing
① Identification of leases
When identifying whether a contract is a lease or includes a lease, the Company needs to evaluate
whether an identified asset exists, and the Client controls the right to use the asset for a certain period. In
the appraisal, the nature of the asset, the material replacement right, and whether the client is entitled to
almost all the financial benefits arising from using the asset during the period and to dominate the use of
the asset are considered.
② Classification of leases
When the Company, as a lessor, classifies the lease into operating lease and financial lease. In the
classification, the management needs to make an analysis and judgment on whether all the risks and
rewards related to the ownership of the leased assets have been substantially transferred to the lessee.
③ Lease obligation
When the Company is the lessee, the lease liabilities are initially measured at the present value of the
lease payments outstanding on the beginning date of the lease term. When measuring the present value
of the lease payment, the Company estimates the discount rate used and the lease term of the lease
contract with a renewal option or termination option. In evaluating the lease term, the Company
considers all relevant facts and circumstances related to the economic benefits of exercising the option,
including the expected changes in the facts and circumstances between the beginning of the lease term
and the exercise date of the option. Different judgments and estimates may affect the recognition of
lease liabilities and tenure assets, and will affect the profits and losses of the subsequent period.
(3) Impairment of financial instruments
The Company uses the expected credit loss model to evaluate the impairment of financial instruments,
and application of the expected credit loss model requires the company to make significant judgments
and estimates, and to consider all reasonable and grounded information, including forward-looking
information. When making such judgments and estimates, the Company deduces the expected changes
in the debtor's credit risk based on the historical repayment data combined with economic policies,
macroeconomic indicators, industry risks and other factors.
(4) Reserve for inventory depreciation
According to the inventory accounting policy, the company measures the lower cost and the net
realizable value, and sets aside the inventory depreciation provision for the cost that is higher than the
net realizable value and the old and unsalable inventory. The impairment of inventory to net realizable
value is based on the sale of inventory and its net realizable value. The appraisal of inventory impairment
requires the management to make a judgment and estimate on the basis of obtaining conclusive evidence
and considering the purpose of holding the inventory and the impact of matters after the balance sheet
date. The difference between the actual result and the original estimate will affect the withdrawal or
reversal of the book value of the inventory and the inventory depreciation provision during the estimated
change period.
(5) Fair value of the financial instruments
For financial instruments that do not have an active trading market, the Company determines its fair
value through various valuation methods. These valuation methods include discounted cash flow model
analysis, etc. At the valuation, the Company estimates the future cash flow, credit risk, market volatility
and correlation, and selects the appropriate discount rate. These relevant assumptions are uncertain, and
their changes can have an impact on the fair value of the financial instruments.
(6) Long-term asset impairment provision
On the balance sheet date, the Company judged the possible impairment of non-current assets except the
financial assets. For the intangible assets with uncertain service life, in addition to the annual impairment
test, the impairment test is also conducted when there are signs of impairment. Other non-current assets
other than financial assets shall be tested for impairment when there is evidence that their book amount
is not recoverable.
When the book value of an asset or asset group is higher than the recoverable amount, that is, the net
value minus the disposal expense and the present value of the expected future cash flow, the impairment
has occurred.
The net fair value minus the disposal expense is determined by referring to the sales agreement price of
a similar asset in fair trading or the observable market price, minus the incremental cost that may be
directly attributable to the disposal of the asset.
When predicting the present value of future cash flows, it is necessary to make significant judgments on
the output, selling price, related operating costs and the discount rate used in calculating the present
value. In estimating the recoverable amount, the Company will use all relevant information available,
including projections of production, selling prices and associated operating costs based on reasonable
and supportive assumptions.
(7) Provision for Goodwill Impairment
The Company tests goodwill for impairment at least annually. In testing goodwill for impairment, the
present value of estimated future cash flows of the relevant asset group or combination of asset groups
including goodwill shall be calculated. Estimates of future cash flows shall be made for such asset group
or combination of asset groups, and a pre-tax discount rate that appropriately reflects the time value of
money and the risks specific to the assets shall be determined.
If the management revises the gross profit margin used in calculating the future cash flows of the asset
group or combination of asset groups, and the revised gross profit margin is lower than the current one,
additional provision for goodwill impairment shall be made.
If the management revises the pre-tax discount rate applied to discounting cash flows, and the revised
pre-tax discount rate is higher than the current one, additional provision for goodwill impairment shall
be made.
If the actual gross profit margin or pre-tax discount rate is higher or lower than management’s estimates,
the previously recognized goodwill impairment loss shall not be reversed.
(8) Depreciation and amortization
After considering the residual value of the investment real estate, fixed assets and intangible assets, the
Company shall make depreciation and amortization according to the straight-line method. The Company
periodically reviews the service life to determine the amount of depreciation and amortization expense
that will be included in each reporting period. The service life is determined by the Company based on
past experience with similar assets and combined with expected technical updates. If previous estimates
have changed significantly, depreciation and amortization charges will be adjusted in the future period.
(9) Development Expenditures
In determining the amount to be capitalized, the management of the Company is required to make
assumptions in respect of the estimated future cash flows of the assets, the applicable discount rate and
the estimated beneficial period.
(10) Deferred income tax assets
Within the limits of potentially sufficient taxable profits to offset losses, the Company recognizes
deferred income tax assets for all unused tax losses. This requires the management of the company to
use a lot of judgment to estimate the time and amount of future taxable profits, and combine the tax
planning strategy to determine the amount of deferred income tax assets that should be recognized.
(11) Income tax
In the normal business activities of the company, there are some uncertainties in the final tax treatment
and calculation of some transactions. Whether some items can be itemized before tax requires the
examination and approval of the competent tax authorities. If the final determination of these tax
matters varies from the original estimated amount, the difference will affect the current income tax and
deferred income tax during the final determination period.
(12) Internal retirement benefits and supplementary retirement benefits
The amount of the company's internal retirement benefits and supplementary retirement benefits
expenses and liabilities is determined according to various assumptions. These assumptions include the
discount rate, the average growth rate of medical expenses, the growth rate of subsidies for retired and
retired personnel, and other factors. Differences in actual results and assumptions will be immediately
recognized and charged for the current year. Although the management believes that reasonable
assumptions have been adopted, the change in the actual experience value and the assumptions will still
affect the expenses and liabilities of the Company's internal retirement benefits and supplementary
retirement benefits.
(13) Provisions
The Company estimates and recognizes appropriate provisions for product quality warranties, expected
contract losses, liquidated damages for delayed delivery, etc., based on contractual terms, current
knowledge and historical experience. When such contingent events have resulted in a present obligation,
and it is probable that the settlement of such present obligation will result in an outflow of economic
benefits from the Company, the Company recognizes provisions for contingent events at the best
estimate of the expenditure required to settle the relevant present obligation. The recognition and
measurement of provisions rely heavily on management’s judgment. In making such judgments, the
Company is required to evaluate factors relevant to these contingent events, including risks, uncertainties
and the time value of money.
Among others, the Company recognizes provisions for after-sales quality and maintenance commitments
provided to customers in connection with the sale, repair and retrofitting of sold products. Recent
maintenance experience data of the Company has been taken into account in recognizing provisions,
although such recent experience may not reflect future maintenance conditions. Any increase or
decrease in this provision may affect the profit or loss of future years.
(14) Fair Value Measurement
Certain assets and liabilities of the Company are measured at fair value in the financial statements. The
Board of Directors of the Company has established a Valuation Committee (led by the Chief Financial
Officer of the Company) to determine appropriate valuation techniques and inputs for fair value
measurement. In estimating the fair value of an asset or liability, the Company uses available observable
market data. If Level 1 inputs are not available, the Company engages independent qualified third-party
valuers to perform valuations. The Valuation Committee works closely with qualified external valuers to
determine appropriate valuation techniques and inputs for relevant models. The Chief Financial Officer
reports the findings of the Valuation Committee to the Board of Directors on a quarterly basis to explain
the causes of fluctuations in the fair value of relevant assets and liabilities. Information about the
valuation techniques and inputs used in determining the fair value of various assets and liabilities is
disclosed in Note XII to these financial statements.
statements
The Company determines its operating segments based on internal organizational structure, management
requirements, and internal reporting systems, and identifies reportable segments on the basis of
operating segments. The financial information of each reportable segment, including revenue, cost of
sales, total assets, and total liabilities, is disclosed in the notes to the financial statements. If the
Company is unable to disclose the total assets or total liabilities of each reportable segment, the reasons
shall be provided. An operating segment refers to a component of the Company that meets all of the
following conditions:
Ⅴ.Tax
Tax Taxation base Tax rate
VAT Output tax minus the deductible input tax 13%， 9%，6%， 5%， exempted
Urban maintenance & construction tax Circulation tax amount payable 7%
Business income taxes taxable income Exempted，25%， 20%， 8%
Explanation of enterprise income tax rate for tax entities with different rates
Name of tax entity Income tax rate
Shandong Zhonglu Oceanic Fisheries Co., LTD Pelagic fishing is exempted, the rest will be taxed at 25%
Shandong Zhonglu Haiyan Oceanic Fisheries Co., LTD exempted
AFRICA STAR FISHERIES LIMITED According to the local regulations of Ghana, the export part
is taxed at 8%, and the domestic part is taxed at 25%
HABITAT INTERNATIONAL CORPORATION exempted
LAIF FISHERIES CO.LTD 25%
ZHONG GHA FOODS COMP ANY LIMITED 25%
YAW ADDO FISHERIES COMPANY LIMTED According to the local regulations of Ghana, the export part
is taxed at 8%, and the domestic part is taxed at 25%
Shandong Zhonglu Aquatic Marine Co., LTD 20%
Shandong Zhonglu Oceanic Refrigeration Co., LTD The part of the aquatic product processing industry is
exempted, and other parts are 25%
Shandong Zhonglu Oceanic (Yantai) Food Co., LTD The part of the aquatic product processing industry is
exempted, and other parts are 25%
Zhonglu Oceanic (Qingdao) Industrial Investment and 25%
Development Co., LTD
Tax Preferences and Approval Documents
In accordance with Item 1 of Article 15 of the Provisional Regulations of the People’s Republic of
China on Value-Added Tax, Item 1 of Article 35 of the Implementation Rules of the Provisional
Regulations of the People’s Republic of China on Value-Added Tax, and the notice of the Ministry of
Finance and the State Taxation Administration on issuing the Notes to the Scope of Taxation for
Agricultural Products through CSZ [1995] No. 52, the sales revenue of the Company and its subsidiaries
from long-range fishing falls within the scope of the aquaculture industry as defined in the foregoing
provisions, and hence, it is entitled to the value-added tax preference.
In accordance with the provisions of the Notice on the Comprehensive Roll-out of Business Tax to
Value Added Tax Transformation Pilot Program (No. 36 of 2016), the value-added tax is exempt for the
direct or indirect international freight forwarding services provided by taxpayers. Shandong Zhonglu
Aquaculture Shipping Co., Ltd., a subsidiary of the Company, is exempt from the value-added tax for
the relevant sales revenue it has gained.
According to the enterprise income tax law of the People's Republic of China (the President of the
People's Republic of China order no. 63), the State Council of the People's Republic of China order no.
administration of taxation on enjoy preferential policies of enterprise income tax of agricultural
products (try out) notice (tax [2008] no. 149), the Ministry of Finance, the state administration of
taxation on enjoy preferential enterprise income tax of agricultural products about the scope of
supplementary notice (Fiscal and Taxation [2011] No.26) and the relevant provisions of the
Announcement of the State Administration of Taxation on the Implementation of Preferential
Enterprise Income Tax Treatment for Agriculture, Forestry, Animal Husbandry and Fishery Projects
(Announcement of the State Administration of Taxation No.48,2011), The company carries out the
primary processing of agricultural products and the entrusted primary processing of agricultural products,
The processing fees it charges, Can be handled according to the duty-free items of the primary
processing of agricultural products. The company engaged in ocean fishing business and primary
processing of agricultural products income is exempted from enterprise income tax. The income
obtained from the company except ocean fishing and primary processing of agricultural products shall
be paid at the rate of 25%.
According to the announcement of the Ministry of Finance and the State Administration of Taxation on
further implementing the preferential income tax policies for small and micro enterprises
(Announcement No. 13 of 2022 of the Ministry of Finance and the State Administration of Taxation)
and the announcement on the preferential income tax policies for small and micro enterprises and
individual industrial and commercial households (Announcement No. 6 of 2023 of the Ministry of
Finance and the State Administration of Taxation), the part of the annual taxable income not exceeding
shall be included at 20% .The subsidiary Shandong Zhonglu Aquatic Products Shipping Co., Ltd. shall
apply the tax preference.
Ⅵ. Notes to the key items in the consolidated financial statements
(The following items (including the main items in the financial statements of the parent Company) Unless
specifically noted, "beginning" means January 1,2025, "end" means December 31,2025, "previous end"
means December 31,2024, "Current" means 2025, and "previous" means 2024.）
Item Ending Balance Initial Balance
Cash on hand 615,541.90 1,510,503.38
Cash at bank 283,690,747.60 247,926,760.02
Other monetary funds 28,789,884.20 10,038,933.10
Total 313,096,173.70 259,476,196.50
Including: the total balance deposited overseas 141,966,335.85 104,529,095.33
The total amount of funds that have restrictions 28,789,884.20 10,038,933.10
on use due to mortgages, pledges, or freezes
Note: Overseas deposits are cash and bank deposits of foreign subsidiaries; other monetary funds are paper margin.
Notes receivable that have been endorsed or discounted by our company at the end of the period and have not yet matured
on the balance sheet date.
Item Ending Balance Initial Balance
Bank acceptance bills 10,177,175.00
total 10,177,175.00
(1) Accounts receivable by aging
Aging Ending book balance Opening book balance
Within 6 months 78,934,032.24 51,093,265.85
More than 3 years 6,501,141.07 6,525,704.44
Total 89,147,260.86 60,138,267.67
(2) Accounts receivable by provision method for allowance credit losses
Item Ending Balance
Book Balance PCT (%) Allowance for PCT Carrying
credit losses amount
Individually assessment subject to - - - - -
allowance for credit losses
Grouping assessment subject to 89,147,260.86 100.00% 11,173,546.24 12.53% 77,973,714.62
allowance for credit losses
Total 89,147,260.86 100.00% 11,173,546.24 12.53% 77,973,714.62
(Continued)
Item Initial Balance
Book Balance PCT Allowance for PCT Carrying
credit losses amount
Individually assessment subject to - - - - -
allowance for credit losses
Grouping assessment subject to 60,138,267.67 100.00% 9,616,250.39 15.99% 50,522,017.28
allowance for credit losses
Total 60,138,267.67 100.00% 9,616,250.39 15.99% 50,522,017.28
Accounts receivable that are assessed allowance for credit losses on grouping basis
Item Ending Balance
Balance Allowance for PCT
credit losses
Within 6 months 78,934,032.24 3,946,701.63 5.00%
More than 3 years 6,501,141.07 6,501,141.07 100.00%
Item Ending Balance
Balance Allowance for PCT
credit losses
Total 89,147,260.86 11,173,546.24
(Continued)
Item Initial Balance
Balance Allowance for PCT
credit losses
Within 6 months 51,093,265.85 2,554,663.34 5.00%
More than 3 years 6,525,704.44 6,525,704.44 100.00%
Total 60,138,267.67 9,616,250.39
(3) Allowance for credit losses
Item Initial Balance Amount of change in the current period Ending Balance
Provision Recovery or Write off Exchange
reversal impact
Grouping 9,616,250.39 1,673,403.38 84,106.16 32,001.37 11,173,546.24
assessment
subject to
allowance for
credit losses
Total 9,616,250.39 1,673,403.38 84,106.16 32,001.37 11,173,546.24
(4) Accounts receivable due from the top five debtors of the Company are as follows:
Company name Ending balance Ending Ending Proportion of Ending balance of
of accounts balance of balance of the total amount allowance for
receivable contract accounts doubtful accounts
assets receivable and
contract assets
A 13,908,773.10 13,908,773.10 15.60% 695,438.66
B 9,528,274.88 9,528,274.88 10.69% 476,413.74
C 8,289,160.64 8,289,160.64 9.30% 414,458.03
D 4,739,719.00 4,739,719.00 5.32% 236,985.95
Company name Ending balance Ending Ending Proportion of Ending balance of
of accounts balance of balance of the total amount allowance for
receivable contract accounts doubtful accounts
assets receivable and
contract assets
E 3,647,244.32 3,647,244.32 4.09% 182,362.22
Total 40,113,171.94 40,113,171.94 45.00% 2,005,658.60
(1) Aging analysis of prepayments
Aging Ending Balance Initial Balance
Balance PCT Balance PCT
Within 1 year 17,319,421.36 98.27% 27,825,036.62 98.29%
More than 3 years 2.81 0.00%
Total 17,625,072.87 100.00% 28,310,211.38 100.00%
(2) The top five prepayments are as follows
Company name Relationship Ending balance Proportion of Advance Reason for the
with the total amount payment time failure of
company settlement
SOUTHERN SEAS LOGISTIC unrelated party 6,853,080.00 38.88% 2025Annual Unfinished
LIMITED amortization
PARTIES TO THE NAURU unrelated party 2,446,022.40 13.88% 2025Annual Unfinished
AGREEMENT amortization
China Overseas Fisheries unrelated party 2,086,084.08 11.84% 2025Annual Unfinished
Association amortization
Weihai Huanhai Aquatic Products unrelated party 1,374,518.10 7.80% 2025Annual Billing period
Co., Ltd. not yet reached
KH Shipping unrelated party 1,333,845.82 7.57% 2025Annual Billing period
not yet reached
Total 14,093,550.40 79.96%
Item Ending Balance Initial Balance
Interest receivable - -
Dividends receivable - -
Item Ending Balance Initial Balance
Other receivables 105,905,380.86 71,692,831.62
Total 105,905,380.86 71,692,831.62
Other receivables
① Aging of other receivables
Aging Ending book balance Opening book balance
Within 6 months 70,798,681.01 71,753,653.34
More than 3 years 4,702,363.09 4,625,144.91
Total 130,636,333.59 80,704,840.73
② Category of other receivables by nature
Nature Ending book balance Opening book balance
Guarantee deposit 2,085,454.62 1,915,306.49
Current account and others 128,550,878.97 78,789,534.24
Total 130,636,333.59 80,704,840.73
③ Classified disclosure by bad debt provision method
category Ending Balance
Book balance proportion Bad debt Provision ratio book value
provision
Provision for bad debts based on
individual items
Provision for bad debts by 130,636,333.59 100.00% 24,730,952.73 11.17% 105,905,380.86
combination
Total 130,636,333.59 100.00% 24,730,952.73 11.17% 105,905,380.86
(Continued)
category Initial Balance
Book balance proportion Bad debt Provision ratio book value
provision
Provision for bad debts based on
individual items
Provision for bad debts by 80,704,840.73 100.00% 9,012,009.11 11.17% 71,692,831.62
combination
category Initial Balance
Book balance proportion Bad debt Provision ratio book value
provision
total 80,704,840.73 100.00% 9,012,009.11 11.17% 71,692,831.62
Combination provision item: aging combination
Aging of accounts Ending Balance
Book balance Bad debt Provision ratio
provision
Within 6 months 70,798,681.01 3,539,934.05 5.00%
More than 3 years 4,702,363.09 4,702,363.09 100.00%
Total 130,636,333.59 24,730,952.73
(Continued)
Aging of accounts Initial Balance
Book balance Bad debt Provision ratio
provision
Within 6 months 71,753,653.34 3,587,682.65 5.00%
More than 3 years 4,625,144.91 4,625,144.91 100.00%
Total 80,704,840.73 9,012,009.11
④ Provision for bad debt (provision for bad debt under the general expected credit loss model)
The allowance for credit losses Stage one Stage two Stage three Total
(credit-unimpair (credit-impaired
ed) )
Beginning balance 4,386,864.20 4,625,144.91 9,012,009.11
Revaluation of beginning balance 4,386,864.20 4,625,144.91 9,012,009.11
Provision 15,662,852.11 77,218.18 15,740,070.29
Reversal
Charge-off
Write-off 3,358.41 3,358.41
The allowance for credit losses Stage one Stage two Stage three Total
Exchange impact 17,768.26 17,768.26
Total 20,028,589.64 4,702,363.09 24,730,952.73
⑤ Allowance for credit losses
Item Initial Balance Amount of change in the current period Ending Balance
Provision Recovery or Write off Exchange
reversal impact
Allowance for 9,012,009.11 15,740,070.29 3,358.41 17,768.26 24,730,952.73
credit losses of
other
receivables
Total 9,012,009.11 15,740,070.29 3,358.41 17,768.26 24,730,952.73
⑥ Write-off of other receivables during the period
Item Write-off amount
Write-off of other receivables 3,358.41
⑦ Other receivables due from the top five debtors are as follows:
Company name Nature of the Ending balance Aging Proportion in Ending balance
fund t the total amount of allowance for
doubtful
accounts
Qingdao Laoshan District Bureau Government 107,287,931.00 Within 6 82.13% 18,200,796.80
of Agriculture and Rural Affairs grants months;1-2
years
Shandong State-owned Assets Custody fee 1,800,000.00 Within 6 months 1.38% 90,000.00
Investment Holdings Co., Ltd.
MRL LIMITED. Deposit 1,054,320.00 1-2 years 0.81% 316,296.00
Zhicheng Zhang Claims payment 973,052.92 0-3 years 0.74% 249,630.70
on behalf
China Shipowners Mutual Medical 278,918.18 2-3 years 0.21% 139,459.09
Assurance Association expenses
Total 111,394,222.10 85.27% 18,996,182.59
(1) Inventories by categories
Item Ending Balance Initial Balance
Book balance Provision for Carrying Book balance Provision for Carrying
diminution in amount diminution in amount
value or value or
impairment impairment
provision for provision for
costs to fulfil costs to fulfil
contracts contracts
Raw materials 188,879,786.63 5,166,031.66 183,713,754.97 155,978,130.93 5,407,142.40 150,570,988.53
Low-value 139,185.77 139,185.77 256,408.88 256,408.88
consumables
Commodities 212,748,925.25 21,737,464.61 191,011,460.64 353,097,476.86 55,671,479.56 297,425,997.30
Revolving 1,256,319.95 1,256,319.95 1,208,814.93 1,208,814.93
materials
Costs to fulfil 5,785,199.65 5,785,199.65 968,942.64 968,942.64
contracts
Total 408,809,417.25 26,903,496.27 381,905,920.98 511,509,774.24 61,078,621.96 450,431,152.28
(2) Provision for diminution in value of inventories and impairment of costs to fulfil contracts
Item Initial Balance Additions during the year Reductions during the year Ending Balance
Provision Other Reversal or Exchange
write-down impact
Raw materials 5,407,142.40 4,292,415.41 4,533,526.15 5,166,031.66
Commodities 55,671,479.56 18,615,454.28 52,546,492.35 2,976.88 21,737,464.61
Total 61,078,621.96 22,907,869.69 57,080,018.50 2,976.88 26,903,496.27
Item Ending Balance Initial Balance
Input tax to be deducted 27,973,475.15 21,609,942.76
Prepaid income tax 167,437.36 190,608.32
Prepaid other taxes 11,530.75 12,358.01
Total 28,152,443.26 21,812,909.09
Item Initial Balance Change in the current year
Additional Reduce Investment Other Other
investment investment gains and comprehensive changes in
losse income equity
Ji Nan Qin Zhen Food 878,622.04 -436,729.96
Technology Co., Ltd.
Total 878,622.04 -436,729.96
(Continued)
Item Change in the current year Ending Impairment
Declare a cash Provision for Other Balance reserve ending
dividend or impairment balance
profit
Ji Nan Qin Zhen Food Technology Co., 441,892.08
Ltd.
Total 441,892.08
Investment property measured by cost
Item Buildings Total
① Cost
Initial Balance 51,308,578.35 51,308,578.35
Additions - -
Reductions - -
Ending Balance 51,308,578.35 51,308,578.35
② Accumulated depreciation or amortization -
Initial Balance 24,291,363.58 24,291,363.58
Additions 1,326,076.68 1,326,076.68
Including: Depreciation or amortization 1,326,076.68 1,326,076.68
Reductions - -
Including: Disposition -
Ending Balance 25,617,440.26 25,617,440.26
③ Provision for impairment -
Initial Balance 886,512.06 886,512.06
Additions -
Reductions -
Ending Balance 886,512.06 886,512.06
④ Carrying amount -
Ending Balance 24,804,626.03 24,804,626.03
Initial Balance 26,130,702.71 26,130,702.71
Category Ending Balance Initial Balance
Category Ending Balance Initial Balance
Fixed assets 927,820,225.94 999,486,042.10
Disposal of fixed assets
Total 927,820,225.94 999,486,042.10
① Movement of fixed assets
Item Buildings Boats & nets Machinery & Transportation Furniture and Total
equipment vehicles office
equipment
Cost
Initial Balance 196,082,626.6 1,251,794,445.80 65,333,861.41 10,730,195.55 12,475,370.05 1,536,416,499.43
Additions -25,137.00 12,499,663.87 1,855,428.41 38,055.58 125,795.81 14,493,806.67
Including: Purchase - 20,610,636.71 1,861,569.21 164,238.93 144,716.30 22,781,161.15
Transfer from construction - 3,883,906.72 - - - 3,883,906.72
in process
Impact of exchange rate -25,137.00 -11,994,879.56 -6,140.80 -126,183.35 -18,920.49 -12,171,261.20
fluctuations
Reductions - 28,837,894.96 305,102.24 190,173.79 374,372.00 29,707,542.99
Including: Disposals or scrap - 28,837,894.96 305,102.24 190,173.79 374,372.00 29,707,542.99
Impact of exchange rate -
fluctuations
Ending Balance 66,884,187.58 10,578,077.34 12,226,793.86 1,521,202,763.11
Accumulated depreciation
Initial Balance 62,256,380.15 416,302,597.55 39,249,566.27 8,776,387.70 10,187,952.16 536,772,883.83
Additions 5,707,916.70 73,684,631.21 3,152,058.74 286,748.89 497,351.79 83,328,707.33
Including: Provision 5,715,925.16 79,424,492.56 3,155,311.85 387,607.10 512,416.55 89,195,753.22
Impact of exchange rate -8,008.46 -5,739,861.35 -3,253.11 -100,858.21 -15,064.76 -5,867,045.89
fluctuations
Reductions - 26,092,638.76 274,592.02 171,156.41 338,240.30 26,876,627.49
Including: Disposals or scrap - 26,092,638.76 274,592.02 171,156.41 338,240.30 26,876,627.49
Impact of exchange rate -
fluctuations
Ending Balance 67,964,296.85 463,894,590.00 42,127,032.99 8,891,980.18 10,347,063.65 593,224,963.67
Provision for impairment -
Initial Balance - 157,573.50 - - - 157,573.50
Additions -
Reductions -
Ending Balance - 157,573.50 - - - 157,573.50
Carrying amount -
Ending Balance 771,404,051.21 24,757,154.59 1,686,097.16 1,879,730.21 927,820,225.94
Initial Balance 133,826,246.47 835,334,274.75 26,084,295.14 1,953,807.85 2,287,417.89 999,486,042.10
② Temporarily idle fixed assets
Item Cost Accumulated Provision for Carrying Remark
depreciation impairment amount
Machinery & equipment 2,179,020.00 1,961,118.00 - 217,902.00
Netting gear 45,999,481.94 31,950,350.22 - 14,049,131.72
Total 48,178,501.94 33,911,468.22 - 14,267,033.72
③ Fixed assets with incomplete property rights certificates
According to the Debt Repayment Opinion signed between our company and Shandong Fisheries Group
Corporation in April 2006, as well as the Civil Ruling (2005) Lizhi Zi No. 1299 issued by the People's
Court of Lixia District, Jinan City, Shandong Fisheries Group Corporation will offset the debt owed to
Shandong Zhonglu Yuanyang Fisheries Co., Ltd. by its office complex building and office supplies
located at 43 Heping Road, Lixia District, Jinan City. The original book value of the office complex
building is 54,223,132.40 yuan, with a book value of 25,975,700.31 yuan (of which the self use part is
included in fixed assets and the rental part is included in investment real estate). The land used for this
property was originally allocated land, and the property ownership certificate is for the property. Not yet
processed。
Category Ending Balance Initial Balance
Constructed in process 205,135,249.27 118,015,048.57
Construction materials
Total 205,135,249.27 118,015,048.57
① Construction in process
Item Ending Balance Initial Balance
Book balance Provision for Carrying Book balance Provision for Carrying
impairment amount impairment amount
Atlantic Siege Project 4,077,658.55 4,077,658.55 - 4,077,658.55 4,077,658.55 -
The Marine Innovation 205,050,797.71 - 205,050,797.71 118,015,048.57 - 118,015,048.57
Industrial Park Project
Reefer vessel 84,451.56 - 84,451.56
total 209,212,907.82 4,077,658.55 205,135,249.27 122,092,707.12 4,077,658.55 118,015,048.57
② Movement of significant construction in progress
Project name Budget Initial Balance Additions Transfer to Other Ending
fixed assets reductions Balance
Tuna Trading Center 51,000,000.00 33,688,542.86 3,850,989.53 37,539,532.39
Gatekeepers of Cold Storage 174,010,000.00 69,042,410.12 78,587,152.71 147,629,562.8
Total 225,010,000.00 102,730,952.98 82,438,142.24 0.00 0.00 185,169,095.2
(Continued)
Project name Proportion of Project Interest Where: the Current Source of funds
cumulative progress capitalization amount of interest
project input accumulated interest capitalizati
to budget amount capitalization on rate
in the current
period
Tuna Trading Center 73.61% 65.17% 4,208,043.60 1,316,955.48 3.50% Long term loans
and own funds
Gatekeepers of Cold Storage 84.84% 76.00% 7,960,687.60 3,750,284.74 3.17% Long term loans
Total 12,168,731.20 5,067,240.22 -
Item Buildings Total
（1）Cost
Initial Balance 498,364.44 498,364.44
Additions
Including: New leases
Impact of exchange rate fluctuations
Reductions 498,364.44 498,364.44
Including: Exchange impact 498,364.44 498,364.44
Impact of exchange rate fluctuations
Ending Balance
Item Buildings Total
（2）Accumulated depreciation
Initial Balance 498,364.44 498,364.44
Additions
Including: Provision
Impact of exchange rate fluctuations
Reductions 498,364.44 498,364.44
Including: Exchange impact 498,364.44 498,364.44
Impact of exchange rate fluctuations
Ending Balance
Provision for impairment
Initial Balance
Additions
Reductions
Ending Balance
Carrying amount
Ending Balance
Initial Balance
Item Land use rights Computer software Total
①Cost
Initial Balance 69,409,842.26 2,335,115.89 71,744,958.15
Additions
Including: Purchase
Reductions
Including: Disposition
Ending Balance 69,409,842.26 2,335,115.89 71,744,958.15
②Accumulated depreciation -
Initial Balance 10,278,432.52 2,064,499.56 12,342,932.08
Additions 1,428,972.84 63,530.97 1,492,503.81
Including: Provision 1,428,972.84 63,530.97 1,492,503.81
Reductions
Including: Disposition
Ending Balance 11,707,405.36 2,128,030.53 13,835,435.89
③Provision for impairment
Initial Balance
Additions
Including: Provision
Reductions
Including: Disposition
Ending Balance
④Carrying amount
Ending Balance 57,702,436.90 207,085.36 57,909,522.26
Initial Balance 59,131,409.74 270,616.33 59,402,026.07
Item Initial Balance Additions Amortization Reductions Ending Balance
Office building decoration 1,784,037.79 679,675.63 256,903.04 2,206,810.38
Decoration of Tuna Technology 859,789.68 491,308.44 368,481.24
Museum
total 2,643,827.47 679,675.63 748,211.48 2,575,291.62
(1) Deferred tax assets before offsetting
Item Ending Balance Initial Balance
Deductible Deferred tax Deductible Deferred tax
temporary assets temporary assets
differences differences
Allowance for credit losses 1,156,930.27 235,661.23 986,375.92 201,474.13
Deferred income 4,011,354.26 1,002,838.57 4,640,134.32 1,160,033.58
Total 5,168,284.53 1,238,499.80 5,626,510.24 1,361,507.71
(2) Deferred tax liabilities before offsetting
Item Ending Balance Initial Balance
Taxable Deferred tax Taxable Deferred tax
temporary liabilities temporary liabilities
differences differences
Accelerated depreciation of fixed assets before tax 8,704,373.77 2,176,093.44 9,305,898.14 2,326,474.54
deduction
total 8,704,373.77 2,176,093.44 9,305,898.14 2,326,474.54
(3) The items not recognised deferred tax assets
Item Ending Balance Initial Balance
Deductible temporary differences -Allowance for credit 34,747,568.70 17,641,883.58
losses
Item Ending Balance Initial Balance
Deductible temporary differences -Provision for inventories 26,903,496.27 61,078,621.96
Deductible temporary differences -Deductible losses 37,197,760.25
Deductible temporary differences -Provision for impairment 4,077,658.55 4,077,658.55
of construction in progress
Total 65,728,723.52 119,995,924.34
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.
(4) The deductible losses of unconfirmed deferred income tax assets will expire in the following years
Year Ending Balance Initial Balance Remarks
year 2025 37,197,760.25
total 37,197,760.25
Item Ending Balance Initial Balance
Book Provision for Carrying Book balance Provision for Carrying
balance impairment amount impairment amount
Prepayment for 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00
land
Prepayment for 21,629,081.65 21,629,081.65 14,807,420.94 14,807,420.94
construction in
process
Total 23,629,081.65 23,629,081.65 16,807,420.94 16,807,420.94
Item Ending Balance
Book balance Book value Restricted type Restricted case
Monetary funds 28,789,884.20 28,789,884.20 Bill deposit；
Guarantee bond
deposit
Item Ending Balance
Book balance Book value Restricted type Restricted case
Fixed assets 473,692,267.44 432,974,053.41 Mortgage for
loan
Construction in Progress 194,062,840.63 194,062,840.63 Mortgage for
loan
Intangible Assets 52,255,113.26 48,074,703.98 Mortgage for
loan
Total 748,800,105.53 703,901,482.22
（continue）
Item Initial Balance
Book balance Book value Restricted type Restricted case
Monetary funds 10,038,933.10 10,038,933.10 Bill deposit；
Guarantee bond
deposit
Fixed assets 444,910,737.16 420,418,444.51 Mortgage for
loan
Total 454,949,670.26
Item Ending Balance Initial Balance
Collateral loan
Loans on credit 16,022,933.34 46,013,200.00
Total 16,022,933.34 46,013,200.00
Note: The loan balance of the current period includes the interest payable of RMB 22,933.34;
Item Ending Balance Initial Balance
Banker's acceptance 56,979,768.40 20,853,039.00
total 56,979,768.40 20,853,039.00
Item Ending Balance Initial Balance
Within 1 year(including 1 year) 77,509,149.94 140,710,875.88
More than 1 year 5,034,531.48 8,600,722.88
Item Ending Balance Initial Balance
Total 82,543,681.42 149,311,598.76
Item Ending Balance Initial Balance
Rent 1,201,097.79 1,539,814.03
Total 1,201,097.79 1,539,814.03
Item Ending Balance Initial Balance
Advance payment for goods 8,866,554.08 15,557,313.74
Total 8,866,554.08 15,557,313.74
(1) Movement of employee benefits payable
Item Initial Balance Increase Decrease Ending Balance
Short-term employee benefits 64,214,191.17 211,198,773.56 199,987,915.90 75,425,048.83
Post-employment benefits—defined contribution 1,773,522.92 13,776,595.58 13,851,385.17 1,698,733.33
plans
Termination benefits 1,215,115.75 1,215,115.75
Other benefits due within one year 3,578.34 9,669.66 13,248.00
Total 65,991,292.43 226,200,154.55 215,067,664.82 77,123,782.16
(2) Details of the short-term employee benefits
Item Initial Balance Accrued Paid Ending Balance
Salaries, bonus, and allowances 196,280,622.20 185,164,413.97 73,758,691.95
Staff welfare 2,926,749.74 2,926,749.74 -
Social insurances 5,758,287.85 5,758,287.85 -
Including: Medical insurance 5,177,751.80 5,177,751.80 -
Work injury insurance 580,536.05 580,536.05 -
Maternity insurance -
Housing Fund 5,102,426.81 5,102,426.81 -
Union funds and employee education fee 1,571,707.45 1,130,686.96 1,036,037.53 1,666,356.88
Short-term paid absences -
Short-term profit sharing plan -
Total 64,214,191.17 211,198,773.56 199,987,915.90 75,425,048.83
(3) Defined contribution plans
Item Initial Balance Accrued Paid Ending Balance
Primary endowment insurance - 10,337,519.24 10,337,519.24 -
Unemployment insurance - 443,348.75 443,348.75 -
Pension insurance 1,769,560.92 2,659,995.92 2,734,785.51 1,694,771.33
Social security and subsidies for retired workers 3,962.00 335,731.67 335,731.67 3,962.00
Total 1,773,522.92 13,776,595.58 13,851,385.17 1,698,733.33
Category Ending Balance Initial Balance
Value added tax 313,943.05 345,360.75
Enterprise income tax 1,132,290.71 1,707,735.60
Urban maintenance and construction tax 17,069.51 16,740.44
Estate tax 376,654.33 337,797.58
Land use tax 323,569.87 323,569.87
Individual income tax 724,602.15 555,560.15
Educational surtax 12,192.49 11,957.43
Withholding tax 5,617,389.27 2,875,953.23
Other taxes and surcharges 186,488.03 145,857.04
Total 8,704,199.41 6,320,532.09
Item Ending Balance Initial Balance
Interest payable
Dividends payable 5,234,835.31 3,311,799.62
Other payables 19,337,100.36 20,581,093.98
Total 24,571,935.67 23,892,893.60
(1) Dividends payable
Item Ending Balance Initial Balance Reasons for non-payment for
more than 1 year
Common stock dividend 5,234,835.31 3,311,799.62
Total 5,234,835.31 3,311,799.62
(2) Other payables
① Other payables by nature of payment
Item Ending Balance Initial Balance
Security deposit 5,518,240.83 5,357,745.00
Staff expenses 912,274.58 1,230,770.73
Safety cost 1,708,525.48 2,415,927.69
other 11,198,059.47 11,576,650.56
Total 19,337,100.36 20,581,093.98
② Material other payables with aging over 1 year
Company Name Nature of Payment Ending Balance Aging Percentage of Total
Other Payables at End of
Period
Qingdao Kaize Construction Deposit 5,000,000.00 3–4 years 25.86%
Engineering Management Co.,
Ltd.
Total 5,000,000.00 25.86%
Item Ending Balance Initial Balance
Long-term loans due within one year 16,679,833.33 14,879,833.33
Total 16,679,833.33 14,879,833.33
Item Ending Balance Initial Balance
Advance collection of sales tax 19,248.74 51,536.97
Total 19,248.74 51,536.97
Long-term loans by category
Item Ending Balance Initial Balance
Secured loan 191,985,241.69 114,210,091.81
Mortgage or guarantee a loan 286,074,007.87 281,323,150.54
Less: long-term loans maturing within one year 16,679,833.33 14,879,833.33
Total 461,379,416.23 380,653,409.02
Note 1: The guarantors for the guaranteed loans are respectively Shandong Zhonglu Haiyan Ocean Fishery Co., Ltd.,
Shandong Zhonglu Ocean (Yantai) Food Co., Ltd. and Shandong Zhonglu Ocean Fishery Co., Ltd.
Note 2: Mortgage and collateral include purse seine vessels Tailong 7 and Tailong 9 with a book value of RMB
estate ownership certificate numbers: Lu 2022 QDLS BDCQ No. 0051706, 0051707, 0051708, 0051709, 0051710,
value of RMB 26,389,065.38; construction in progress of Zhonglu Marine Innovation Industrial Park Project with a book
value of RMB 194,062,840.63; land use right owned by Zhonglu Ocean (Qingdao) Industrial Investment & Development
Co., Ltd., with real estate ownership certificate No. Lu 2022 Jiaozhou BDCQ No. 0000267, book value of RMB
(Yantai) Food Co., Ltd.
Item Ending Balance Initial Balance
Employee Benefits Payable 428,721.93 463,135.85
Other long-term benefits 63,931.96 71,839.89
Total 492,653.89 534,975.74
Item Initial Balance Increase Decrease Ending Balance Reason for the
deferred income
Government grants 53,576,277.76 2,170,000.00 2,633,323.85 53,112,953.91 asset-related
Total 53,576,277.76 2,170,000.00 2,633,323.85 53,112,953.91
Item Initial Balance Movement Ending Balance
Issuance of Bonus shares Capital reserve Others sub-total
new share transfer in
Total shares 266,071,320.00
Item Initial Balance Increase Decrease Ending Balance
Share premiums 189,093,492.79 189,093,492.79
Other capital reserve 106,526,779.23 106,526,779.23
Total 295,620,272.02 - - 295,620,272.02
Item Initial Balance Year ended 31/12/2025
(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 -313,223.04 -7,557,287.86
to profit or loss
Translation differences from translation of foreign -313,223.04 -7,557,287.86
currency financial statements
Total of OCI -313,223.04 -7,557,287.86
(Continued)
Item Year ended 31/12/2025 Ending Balance
Less: income Amount after Amount after (C)=(A)+(B
tax tax attributable tax attributable
to the to minority
Company(B) interests
OCI items which will be reclassified subsequently to - -6,016,522.32 -1,540,765.54 -6,329,745.36
profit or loss
Translation differences from translation of foreign -6,016,522.32 -1,540,765.54 -6,329,745.36
currency financial statements
Total of OCI - -6,016,522.32 -1,540,765.54 -6,329,745.36
Item Initial Balance Increase Decrease Ending Balance
Safety costs - 1,772,796.32 1,753,757.48 19,038.84
Total - 1,772,796.32 1,753,757.48 19,038.84
Item Initial Balance Increase Decrease Ending Balance
Statutory surplus reserve 21,908,064.19 21,908,064.19
Total 21,908,064.19 - - 21,908,064.19
Item Year ended Year ended
Item Year ended Year ended
Retained earnings As at 31/12/2024before adjustment 483,904,313.48 449,363,748.93
The total adjustment of retained earnings As at 1/1/2025 (Increase+,
decrease-)
Retained earnings As at 1/1/2025 after adjustment 483,904,313.48 449,363,748.93
Add: Net profit attributable to the Company during the year 33,472,952.45 34,540,564.55
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 31/12/2025 517,377,265.93 483,904,313.48
(1) Operating income and operating costs
Item Year ended 31/12/2025 Year ended 31/12/2024
Income Costs Income Costs
Primary operating business 1,475,811,120.90 1,355,798,503.23 1,373,652,687.28 1,266,523,354.64
Other operating business 10,881,588.76 2,356,533.15 11,007,578.68 3,277,047.87
Total 1,486,692,709.66 1,358,155,036.38 1,384,660,265.96 1,269,800,402.51
(2) Status of income from contracts
① Revenue applicable to the Company’s product sales, contract processing, cold storage, and other
business
Item Product sales revenue Processing income Cold storage revenue
Operating income Operating cost Operating Operating cost Operating Operating cost
income income
Confirm at a certain 1,315,140,197.44 1,232,569,722.85 8,018,794.72 7,060,273.53
point
Confirm within a - - 13,309,171.88 10,844,471.43
certain period of time
Total 1,315,140,197.44 1,232,569,722.85 8,018,794.72 7,060,273.53 13,309,171.88 10,844,471.43
（Continue）
Item Refrigerated transportation Other business income Total
revenue
Operating income Operating cost Operating Operating cost Operating income Operating cost
income
Confirm at a certain 4,950,776.23 417,960.11 1,328,109,768.3 1,240,047,956.4
point 9 9
Confirm within a 139,342,956.86 105,228,797.32 1,698,113.19 - 154,350,241.93 116,073,268.75
certain period of time
Total 139,342,956.86 105,228,797.32 6,648,889.42 417,960.11 1,482,460,010.3 1,356,121,225.2
② Income adapted to the lease standard
Item Rent Rental and others Total
Operating income Operating cost Operating income Operating cost
Income from main - -
business
Other business income 4,232,699.34 1,938,573.04 4,232,699.34 1,938,573.04
Total 4,232,699.34 1,938,573.04 4,232,699.34 1,938,573.04
(3) Description of the performance obligations
The sale of goods by the Company is the performance obligation at a certain point, and the Company
recognizes the income when the control of the goods transfers; the processing service of the Company is
the performance obligation at a certain point, and the Company recognizes the income when the delivery
delivers the products.
The cold storage fee income of the company belongs to the performance obligation within a certain
period of time, and the company recognizes the income based on the actual days of goods stored every
month.
The refrigerated transportation services by the Company are the performance obligation over a period of
time, and the Company recognizes the income based on the service days confirmed by customers and
the prices agreed in the contract.
The company's housing and other rental income of the company belongs to the performance obligations
performed within a certain period of time, and the company recognizes the income according to the
customer's lease period.
Item Year ended 31/12/2025 Year ended 31/12/2024
Urban maintenance and construction tax 108,097.57 129,975.52
Educational surcharge 46,278.54 55,488.54
Local educational surcharge 30,852.38 36,992.34
Property tax 1,916,835.05 1,901,257.76
Land use tax 507,589.88 507,812.60
Stamp duty 821,267.69 380,944.33
Vehicle and vessel tax 18,623.72 19,521.60
Others - -
Total 3,449,544.83 3,031,992.69
Item Year ended 31/12/2025 Year ended 31/12/2024
Employee compensation expenditure 1,519,542.80 1,670,191.44
Business promotion fees 1,541,076.98 1,339,792.88
Travelling expenses 198,122.92 267,149.84
Depreciation charges 97,628.39 90,767.57
Communication expenses 8,682.40 10,635.29
Others 926,457.11 846,959.38
Total 4,291,510.60 4,225,496.40
Item Year ended 31/12/2025 Year ended 31/12/2024
Employee compensation expenditure 48,333,781.77 43,119,338.77
Depreciation and amortization charges 6,191,148.48 5,017,898.93
Depreciation of Right-of-use assets - 91,626.45
Travelling expenses 2,627,857.62 2,515,157.42
Business entertainment 463,016.76 772,472.77
Vehicle expenses 1,092,968.15 887,006.05
Agent service fees 1,058,574.26 1,316,869.29
Office expenses 3,630,297.48 4,206,495.91
Water and electricity expenses 1,466,217.39 1,556,528.68
Others 5,459,096.34 4,579,830.24
Total 70,322,958.25 64,063,224.51
Item Year ended 31/12/2025 Year ended 31/12/2024
Item Year ended 31/12/2025 Year ended 31/12/2024
Employee compensation expenditure 1,761,176.13 1,512,361.81
Materials 2,414,908.33 3,401,774.43
Depreciation and amortization charges 1,646,665.19 741,413.93
Others 605,799.42 611,528.94
Total 6,428,549.07 6,267,079.11
Item Year ended 31/12/2025 Year ended 31/12/2024
Interest expenses 10,728,894.79 13,886,313.80
Less: interest income 1,413,486.86 770,654.61
Losses or gains from foreign exchange 4,210,015.83 -378,456.61
Finance charges 1,556,854.70 1,340,703.67
Interest expenses on lease liabilities -
Others 324,815.79 135,820.51
Total 15,407,094.25 14,213,726.76
Item Year ended 31/12/2025 Year ended 31/12/2024
International compliance Enhancement grant funds 55,758,700.00 62,020,500.00
Subsidy for Renovation and Upgrading of Onboard 1,741,547.04
Equipment of Fishing Vessels
Financial subsidies for special construction funds of the 698,486.88 698,486.88
Blue Economic Zone
Industrial and commercial capital investment in rural 451,092.85 1,400,000.00
revitalization project construction award
Subsidy for deep-freeze tuna vessel reimbursement - 5,715,437.90
others 721,143.84 2,069,973.30
total 59,370,970.61 71,904,398.08
Item Year ended 31/12/2025 Year ended 31/12/2024
Income from long-term equity investments accounted for by the -436,729.96 -535,409.28
equity method
Gains on debt restructuring - -135,804.65
Total -436,729.96 -671,213.93
Item Year ended 31/12/2025 Year ended 31/12/2024
Allowance for credit losses of accounts receivable -1,673,403.38 -449,855.83
Allowance for credit losses of other receivables -15,740,070.29 -3,605,114.76
Total -17,413,473.67 -4,054,970.59
Item Year ended 31/12/2025 Year ended 31/12/2024
Provision for diminution in value of inventory and Loss of -22,907,869.69 -54,938,355.20
contract performance costs
Total -22,907,869.690 -54,938,355.20
Item Year ended 31/12/2025 Year ended 31/12/2024
Gains and losses on disposal of fixed assets -47,108.24 -
Total -47,108.24 -
Item Year ended Year ended Amount to be included in
year
Others 238,593.49 4,715.59 238,593.49
Total 238,593.49 4,715.59 238,593.49
Item Year ended Year ended Amount to be included in
year
Loss of scrapped fixed assets 2,142,070.38 140,535.97 2,142,070.38
Others 28,150.55 7,124.76 28,150.55
Total 2,170,220.93 147,660.73 2,170,220.93
(1) Details of income tax expenses
Item Year ended 31/12/2025 Year ended 31/12/2024
Current income tax 2,867,647.99 3,387,280.07
Deferred income tax -27,373.19 -86,839.99
Total 2,840,274.80 3,300,440.08
(2) Reconciliation between income tax expenses and accounting profit is as follows:
Item Year ended 31/12/2025
Profit before tax 45,272,177.89
Income tax expenses calculated at statutory/applicable tax rates 11,318,044.47
Effect of different tax rate of subsidiaries -132,759.26
Effect of adjustment for income tax in prior year 45,226.19
Effect of income not subject to income tax -2,850,629.12
Effect of expenses nondeductible for tax purposes 80,617.34
Effect of using deductible losses of deferred tax assets not recognised in prior periods -2,562,776.56
Effect of unrecognised deductible temporary differences and deductible losses in current period -3,057,448.26
Income tax expenses 2,840,274.80
As note Ⅵ.33.
(1) Cash flows from operating activities
① Cash received related to other operating activities
Item Year ended 31/12/2025 Year ended 31/12/2024
Finance expenses- interest income 1,413,486.86 770,654.61
Government grants and others 10,800,306.76 13,750,099.95
Credit deposit - -
Current account and other 238,593.49 2,578,932.62
Total 12,452,387.11 17,099,687.18
② Cash paid related to other operating activities
Item Year ended Year ended
Cash payment to selling expenses 2,674,339.41 2,464,537.39
Cash payment to administrative expense 15,916,296.16 16,435,241.11
Cash payment to research and development expenses 3,692,016.19 4,013,303.37
Current account and other 7,878,697.84 1,962,352.87
Total 30,161,349.60 24,875,434.74
(2) Cash flows from investing activities
① Cash received related to other investing activities
Item Year ended Year ended
Construction deposit - 10,041,370.35
Total - 10,041,370.35
② Changes in liabilities arising from financing activities
Item Initial Balance Current increase Current decrease Ending Balance
Cash movement Non-cash Cash movement Non-cash
movement movement
Short-term loan 46,013,200.00 26,000,000.00 9,733.34 56,000,000.00 16,022,933.34
Long-term loan 380,653,409.02 97,291,702.81 114,137.73 16,679,833.33
Non-current 14,879,833.33 - 16,679,833.33 14,879,833.33 - 16,679,833.33
liabilities due
within one year
Total 441,546,442.35 123,291,702.81 16,803,704.40 70,879,833.33 16,679,833.33 494,082,182.90
(1) Supplement to statement of cash flows
Item Year ended Year ended
Net profit 42,431,903.09 31,854,817.12
Add:losses Provision for asset impairment 22,907,869.69 -16,459,514.46
Credit impairment 17,413,473.67 4,054,970.59
Depreciation of fixed assets, depletion of oil and gas assets, depreciation of 90,496,854.90 82,856,984.77
Item Year ended Year ended
productive biological assets and depreciation of investment property
Depreciation of right-of-use asset - 98,934.79
Amortization of intangible assets 447,401.49 509,254.30
Amortization of long-term deferred expenses 748,211.48 712,280.73
Losses on disposal of fixed assets, intangible assets and other long-term assets ("-" 47,108.24
for gains)
Losses on write-down of fixed assets ("-" for gains） 2,142,070.38 140,535.97
Losses from changes in fair value ("-" for gains) -
Financial expenses ("-" for income) 14,938,910.62 10,833,286.24
Investments losses ("-" for gains) 436,729.96 671,213.93
Decreases in the deferred tax assets ("-" for increases) 123,007.91 63,541.09
Increases in the deferred tax liabilities ("-" for decreases) -150,381.10 -150,381.08
Decreases in inventories ("-" for increases) 45,620,338.49 61,727,897.31
Decreases in operating receivables ("-" for increases) -92,291,171.65 -87,985,100.03
Increases in operating payables ("-" for decreases) -34,216,421.00 28,991,708.72
Others -
Net cash flows from operating activities 111,095,906.17 117,920,429.99
Conversion of debt into capital -
Convertible corporate bonds maturing within one year -
Fixed assets acquired under financial lease -
Cash as at 31/12/2025 284,306,289.50 249,437,263.40
Less: cash As at 1/1/2025 249,437,263.40 243,127,423.03
Add: cash equivalents as at 31/12/2025 -
Less: cash equivalents as at 31/12/2024 -
Net increase in cash and cash equivalents 34,869,026.10 6,309,840.37
(2) Cash and cash equivalents
Item Balance as at Balance as at
Including: cash on hand 615,541.90 1,510,503.38
Unrestricted bank deposits 283,690,747.60
Item Balance as at Balance as at
Bond investments due within 3 months
(3) Monetary funds other than cash and cash equivalents
Item Year ended Year ended argument
Other monetary funds 28,789,884.20 10,038,933.10 Bill deposit
(1) Monetary items denominated in foreign currency
Item Balance in foreign Exchange rate Balance translated
currency as at into RMB as at
Monetary funds 146,933,375.54
Among: USD 15,503,880.77 7.0288 108,973,676.87
EUR 3,315,700.40 8.2633 27,398,737.89
GHS 15,395,972.48 0.6726 10,355,388.09
FCFA
JPY 4,588,983.00 0.0448 205,572.69
Accounts receivable 47,820,313.26
Among：USD 3,392,753.60 7.0288 23,846,986.51
GHS 2,047,964.89 0.6726 1,377,476.67
JPY 159,428,435.00 0.0448 7,141,915.61
FCFA 1,225,060,803.12 0.0126 15,453,934.47
Prepayments 13,624,943.70
Among：USD 1,747,391.38 7.0288 12,282,064.54
FCFA 106,503,096.00 0.0126 1,342,879.16
Other receivables 3,360,070.84
Among：USD 472,615.21 7.0288 3,321,917.77
GHS 19,250.00 0.6726 12,947.75
AUD 439.50 4.6892 2,060.90
SBD 26,940.30 0.8591 23,144.41
Accounts payable 22,039,832.00
Among：USD 3,130,574.04 7.0288 22,004,178.82
JPY 272,500.00 0.0448 12,207.18
Item Balance in foreign Exchange rate Balance translated
currency as at into RMB as at
AUD 5,000.00 4.6892 23,446.00
Contract liabilities 8,315,716.56
Among：USD 176,799.45 7.0288 1,242,687.98
GHS 5,620,745.57 0.6726 3,780,550.81
JPY 73,497,729.00 0.0448 3,292,477.77
Other payables 16,740,252.86
Among：USD 2,207,920.42 7.0288 15,519,031.05
EUR 133,639.70 8.2633 1,104,310.79
GHS 173,816.23 0.6726 116,911.02
(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
(1) Our company acts as lessor
Operating lease
Item Lease income Among them: Income related
to variable lease payments not
included in lease collections
Rental income 4,232,699.34 -
total 4,232,699.34 -
Ⅶ. Research and development expenses
List by property
Item Year ended 31/12/2025 Year ended 31/12/2024
Employee compensation 1,761,176.13 1,512,361.81
Materials 2,414,908.33 3,401,774.43
Depreciation cost 975,356.75 741,413.93
Other 1,277,107.86 611,528.94
Total 6,428,549.07 6,267,079.11
Includes: Expensed research and development 6,428,549.07 6,267,079.11
expenditures
Ⅷ. Changes in consolidation scope
There are no consolidation scope changes in the current period.
Ⅸ. Interest in other entities
(1) Composition of the Company
Subsidiary name Principal Registered Place of Business Shareholding ratio（%） Acquisition
place of capital registration nature direct indirect mode
operation
Shandong Zhonglu aquatic shipping Co., Qingdao, 2,250.56 Ten Qingdao, Boat charter 100 Investment and
LTD Shandong thousand RMB Shandong establishment
Province Province
Shandong Zhonglu Yuanyang (Yantai) Yantai, 10,432.23 Ten Yantai, Food 46.69 25.77 Investment and
Food Co., LTD. (hereinafter referred to Shandong thousand RMB Shandong processing establishment
as "Zhonglu Food") Province and
refrigeration
Shandong Zhonglu Haiyan Ocean Qingdao, 22,161.73 Ten Qingdao, Pelagic 59.05 Investment and
Fishing Co., LTD. (referred to as Shandong thousand RMB Shandong fishing establishment
"Zhonglu Haiyan Zi") Province Province
Zhonglu Yuanyang (Qingdao) Industrial Qingdao, 19,200 Ten Qingdao, Food 66.63 33.37 Investment and
Investment Development Co., LTD Shandong thousand RMB Shandong processing establishment
Province Province and
refrigeration
HABITAT INTERNATIONAL Panama 150.74 Ten Panama Boat charter 100 Investment and
CORPORATION thousand USD establishment
LAIF FISHERIES COMPANY Ghana 40 Ten Ghana Pelagic Zhonglu Hai Investment and
LIMITED thousand USD fishing Yanzi holding establishment
AFRICA STAR FISHERIES LIMITED Ghana 40 Ten Ghana Pelagic Zhonglu Hai Investment and
thousand USD fishing Yanzi holding establishment
ZHONG GHA FOODS COMPANY Ghana 50 Ten Ghana Pelagic Zhonglu Hai Investment and
LIMITED thousand USD fishing Yanzi holding establishment
Subsidiary name Principal Registered Place of Business Shareholding ratio（%） Acquisition
place of capital registration nature direct indirect mode
operation
Shandong Zhonglu Ocean cold storage Yantai, 1,500 Ten Yantai, Warehousing Zhonglu Food Investment and
Co., LTD Shandong thousand RMB Shandong service holdings establishment
Province Province 100.00
YAW ADDO FISHERIES COMPANY Ghana Ghana Pelagic Operating lease
LIMITED fishing
(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 31/12/2025
period
Shandong Zhonglu Haiyan Oceanic Fisheries Co., 40.95% 2,437,513.35 159,274,299.31
Ltd.
Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd. 27.54% 6,521,437.29 2,023,035.69 104,394,041.11
Total 8,958,950.64 2,023,035.69
(3) Main financial information of significant non-wholly owned subsidiary
Subsidiary name Ending Balance
Current assets Non-current Total assets Current Non-current Total liabilities
assets liabilities liabilities
Shandong 390,989,961.45 188,427,536.15 579,417,497.60 184,446,707.40 6,022,562.33 190,469,269.73
Zhonglu Haiyan
Oceanic
Fisheries Co.,
Ltd.
Shandong 420,490,349.67 106,515,246.37 527,005,596.04 140,678,184.27 7,264,081.67 147,942,265.94
Zhonglu Oceanic
(Yantai) Food
Co., Ltd.
Total 811,480,311.12 294,942,782.52 1,106,423,093.6 325,124,891.67 13,286,644.00 338,411,535.67
(Continued)
Subsidiary name Initial Balance
Current assets Non-current Total assets Current Non-current Total liabilities
assets liabilities liabilities
Shandong 363,222,045.51 213,055,121.58 576,277,167.09 183,233,569.78 6,285,229.78 189,518,799.56
Zhonglu Haiyan
Oceanic
Fisheries Co.,
Ltd.
Shandong 431,697,984.77 113,182,468.49 544,880,453.26 173,873,796.39 8,277,392.13 182,151,188.52
Zhonglu Oceanic
(Yantai) Food
Co., Ltd
Total 794,920,030.28 326,237,590.07 1,121,157,620.3 357,107,366.17 14,562,621.91 371,669,988.08
(Continued)
Subsidiary name Year ended 31/12/2025
Operating Net profit Total Cash flows from
income comprehensive operating
income activities
Shandong Zhonglu Haiyan Oceanic Fisheries Co., 393,404,470.47 5,952,413.56 2,189,860.34 37,249,478.73
Ltd.
Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd 729,879,883.68 23,679,873.96 23,679,873.96 -3,840,203.19
Total 1,123,284,354.1 29,632,287.52 25,869,734.30 33,409,275.54
(Continued)
Subsidiary name Year ended 31/12/2024
Operating Net profit Total Cash flows from
income comprehensive operating
income activities
Shandong Zhonglu Haiyan Oceanic Fisheries Co., -17,948,798.86 -16,271,364.26 6,652,357.21
Ltd. 352,164,528.36
Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd 16,936,404.15 16,936,404.15 40,630,473.41
Total -1,012,394.71 665,039.89 47,282,830.62
Summary financial information of non-material joint ventures and associates
Item Ending Balance / Year ended Initial Balance / Year ended
Associated enterprise：
Jinan Qini Food Technology Co., LTD 441,892.08 878,622.04
Total 441,892.08 878,622.04
The sum of the following items in proportion to -436,729.96 -535,409.28
shareholding
Among them: Net profit -436,729.96 -535,409.28
Other comprehensive income - -
Total comprehensive income -436,729.96 -535,409.28
① The basis for holding less than 20% of the voting rights with a significant impact, or holding 20% or
more of the voting rights with no significant impact.
The subsidiary of the Company, Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd., holds 15.00% of
Jinan Qinzhen Food Technology Co., Ltd., and appoints directors, which has a significant impact on its
production and operation.
Ⅹ. Government subsidy
Closing balance of other receivables
Company Name Ending Balance (in Yuan)
Qingdao Laoshan District Bureau of Agriculture and Rural Affairs 107,287,931.00
Total 107,287,931.00
Note: In accordance with the Notice on the Publicity of Subsidies for Improving International
Performance Capability (2024) and the Notice on the Publicity of Subsidies for Improving International
Performance Capability (2025), as of December 31, 2025, the Company and its controlling subsidiaries
had total receivable subsidies for improving international performance capability of RMB 103,612,900.
On February 2, 2026, the Company received RMB 19,000,000 of such subsidies. As of the date of
issuance of the audit report, RMB 84,612,900 of subsidies for improving international performance
capability remained uncollected. The competent authority of such government grants, Qingdao Laoshan
District Bureau of Agriculture and Rural Affairs, has stated that the funds will be disbursed in an orderly
manner based on future fiscal fund conditions.
Financial As at New in the Current Amount Other in the As at And assets
statement item 31/12/2024 current period account transferred to current period 31/12/2025 / revenue
Amount of Amount of other income alteration correlation
subsidy non-operating in the current
income period
Deferred income 53,576,277.7 2,170,000.00 - 2,633,323.85 - 53,112,953.9 asset-related
Item Amount due in 2025 Amount due in 2024
Other income 59,370,970.61 71,904,398.08
Total 59,370,970.61 71,904,398.08
XI. Related risks of financial instruments
The main financial instruments of the Company include receivables, other receivables, payables and
other payables, etc. For details of various financial instruments, ssee Note VI. The goal of the company
engaged in risk management is to achieve an appropriate balance between risk and income, reduce the
negative impact of risk on the company's business performance to a minimum level, and maximize the
interests of shareholders and other equity investors. Based on this risk management objective, the basic
strategy of the company's risk management is to determine and analyze various risks faced by the
company, establish appropriate risk tolerance bottom line and conduct risk management, and timely and
reliably supervise various risks, and control the risks within a limited range.
(1) Credit risk
Credit risk is the risk of financial loss to the Company if the customers or counterparties to the financial
instruments fail to perform their obligations under the contracts.Credit risk mainly arises from accounts
receivable from customers.The carrying value of accounts receivable and notes receivable and other
receivables is the maximum credit risk of the Company for financial assets.
(2) Market risk
The market risk of financial instruments refers to the risk that the fair value of financial instruments or
the future cash flow fluctuates due to the market price changes, including the exchange rate risk, interest
rate risk and other price risks.
The Company uses sensitivity analysis technology to analyze the possible impact of reasonable and
possible changes of market risk-related variables on the current profit and loss or shareholders' equity.
Since any risk variable rarely changes in isolation and the correlation between variables will have a
significant effect on the final amount of impact of a change in a risk variable, the following is made
assuming that the change of each variable is independent.
① Exchange rate risk
Exchange rate risk refers to the risk that the fair value of financial instruments or the future cash flow
fluctuates due to changes in the foreign exchange rate. The foreign exchange risks faced by the Company
mainly come from the financial assets denominated in US dollars, and the amount of foreign currency
financial assets translated into RMB is presented in VI.54 Foreign Currency Monetary Items.
② Interest rate risk
Interest rate risk refers to the risk that the fair value of financial instruments or the future cash flow
fluctuates due to changes in the market interest rate. The interest rate risks faced by the Company mainly
come from long-term bank loans. The company's loans are floating interest rate, and there is the risk of
change in the RMB benchmark interest rate.
(3) Liquidity risk
Liquidity risk is the risk that the Company meets its obligations related to financial liabilities. Under the
case of normal and tight funds, the Company ensures that there is sufficient liquidity to fulfill the
maturing debts, and conducts financing consultations with financial institutions to maintain a certain level
of standby credit line to reduce liquidity risk.
XII. Related parties and transactions
Name of parent Registered Nature of business Registration The shareholding The proportion of the
company Address capital ratio of the parent voting rights of the
company in the parent company
Company
Shandong Shandong Investment and management, 4.5 billion 47.25% 47.25%
Name of parent Registered Nature of business Registration The shareholding The proportion of the
company Address capital ratio of the parent voting rights of the
company in the parent company
Company
State-owned Jinan asset management and capital
assets investment operation, entrustment
Co. 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.
Details of subsidiaries refer to Note IX. 1. Interests in other entities.
Significant joint ventures or associates of the Group are detailed in Note IX.2。
Any other joint venture or joint venture that has a balance of related party transactions with the Group in
the current period or related party transactions with the Group in the previous period
The company situation is as follows:
Name of a joint venture or joint venture Relationship with the Group
Jinan Qini Food Technology Co., LTD Associated enterprise
Entity name Relationship
Dezhou Bank Co., LTD Controlled by the same parent company
Zhongtai Xincheng Asset Management Co., LTD Controlled by the same parent company
(1) List of goods sold/services provided
Item Related party Current amount Amount incurred
transaction content in the previous
period
Ji Nan Qin Zhen Food Technology Co., Ltd. Tuna product 279,267.40 187,919.91
Shandong State-owned Assets Investment Holding Co., Ltd. Entrusted 1,698,113.20 1,698,113.20
management fee
Total 1,977,380.60 1,886,033.11
(2) Associated entrusted management/contracting and entrusted management/contracting
Entrusted management/contracting information of the company
Name of client Name of trustee Types of Commencement Trustee Custodial Current
entrusted assets date termination date income pricing recognized
basis Escrow income
Shandong Shandong Stock right 2022/4/14 Contract 1,698,113.20
State-owned Zhonglu ocean agreement
Assets fishing Co.,
Investment LTD
Holding Co.,
LTD
(3) Key management compensation
Item Current amount Amount incurred in the previous
period
Key management compensation 4,256,788.00 3,406,277.00
(4) Other related transactions
Item Affiliated party Current amount Amount
incurred in the
previous period
Deposit interest income Dezhou Bank Co. LTD 273.46 4,979.71
① Accounts receivable
Item Related party Ending Balance Initial Balance
Balance Allowance for Balance Allowance for
credit losses credit losses
Accounts receivable Jinan Qini Food Technology 138,262.40 6,913.12 139,828.40 7,814.97
Co., LTD
Other receivables Zhongtai Xincheng Asset 1,800,000.00 90,000.00 1,800,000.00 90,000.00
Management Co., LTD
Other receivables Shandong State-owned 372,858.72 18,642.94
Assets Investment Holding
Co., LTD
② Payable items
Item Related party Ending Balance Initial Balance
Balance Allowance for Balance Allowance for credit
credit losses losses
Dividends receivable Zhongtai Xincheng 5,234,835.31 3,311,799.62
Asset Management Co.,
LTD
ⅩⅢ. Commitments and contingencies
None.
None.
XIV. Post balance sheet events
None.
None.
XV. Other significant events
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 265.99 million , relevant information shall be referred to "Note VI.23 Employee Benefits
Payable".
(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 business.
(2) Financial information of segment reporting
Item Oceanic fishing Refrigerated Aquatic products Others Elimination Total
transportation processing and between branches
refrigeration
Operating 736,075,102.47 139,342,956.86 725,364,789.37 463,598.89 -125,435,326.69 1,475,811,120.90
income
Operating cost 693,406,658.79 105,228,797.32 682,201,281.19 397,092.62 -125,435,326.69 1,355,798,503.23
Credit -16,417,301.44 -229,119.37 -769,211.91 2,159.05 -17,413,473.67
impairment
losses
Impairment of -17,361,237.59 -5,546,632.10 -22,907,869.69
assets
Depreciation and 63,825,257.85 16,512,369.68 6,561,304.12 5,115,402.06 92,014,333.71
amortization
Profit before tax 19,871,172.54 24,269,390.97 26,462,284.83 -25,348,839.90 18,169.45 45,272,177.89
Income tax 0.00 53,112.33 2,782,410.87 4,751.60 2,840,274.80
expenses
Net profit 19,871,172.54 24,216,278.64 23,679,873.96 -25,353,591.50 18,169.45 42,431,903.09
Total assets 1,252,234,087.64 337,919,399.07 527,005,596.04 1,224,618,505.43 -1,173,564,493.2 2,168,213,094.94
Total liabilities 517,234,559.89 72,065,658.44 147,942,265.94 859,680,298.51 -787,048,630.97 809,874,151.81
XVI. Notes to major items in the parent company's financial statements
(1) Aging disclosure
Aging Ending book balance Opening book balance
Within 6 months 6,986,938.33 371,704.92
More than 3 years 5,689,018.01 5,689,018.01
Total 12,825,956.34 6,060,722.93
(2) Accounts receivable by provision method for allowance credit losses
Item Ending Balance
Balance PCT Allowance for PCT Carrying
credit losses amount
Individually assessment subject - - - - -
to allowance for credit losses
Grouping assessment subject to 12,825,956.34 100.00% 6,053,364.93 47.20% 6,772,591.41
allowance for credit losses
Group 1: Non-affiliated party 12,825,956.34 100.00% 6,053,364.93 47.20% 6,772,591.41
customer portfolio
Group 2: Combination of - 0.00% - - -
related parties
Total 12,825,956.34 100.00% 6,053,364.93 47.20% 6,772,591.41
(Continued)
Item Initial Balance
Balance PCT Allowance for PCT Carrying
credit losses amount
Individually assessment subject - - - - -
to allowance for credit losses
Grouping assessment subject to 6,060,722.93 100.00% 5,707,603.26 94.17% 353,119.67
allowance for credit losses
Group 1: Non-affiliated party 6,060,722.93 100.00% 5,707,603.26 94.17% 353,119.67
customer portfolio
Group 2: Combination of - 0.00% - - -
related parties
Total 6,060,722.93 100.00% 5,707,603.26 94.17% 353,119.67
Group 1: Accounts receivable due from non-affiliated party customer portfolio:
Aging Ending Balance
Balance Allowance for PCT
credit losses
Within 6 months 6,986,938.33 349,346.92 5.00%
More than 3 years 5,689,018.01 5,689,018.01 100.00%
Total 12,825,956.34 6,053,364.93
(Continued)
Aging Initial Balance
Balance Allowance for PCT
credit losses
Within 6 months 371,704.92 18,585.25 5.00%
More than 3 years 5,689,018.01 5,689,018.01 100.00%
Total 6,060,722.93 5,707,603.26
(3) Allowance for credit losses
Item Initial Balance Amount of change in the current period Ending Balance
Provision Recovery or Write off Others
reversal
Accounts 5,707,603.26 345,761.67 - - - 6,053,364.93
receivable
Total 5,707,603.26 345,761.67 - - - 6,053,364.93
(4) Account receivables and contractual assets in the top five closing balances collected by defaulter
Name of the company Ending balance of Ending balance Ending balance Proportion of Ending
accounts of contract assets of accounts the total amount balance of
receivable receivable and allowance for
contract assets doubtful
accounts
A 4,902,012.64 - 4,902,012.64 38.22% 245,100.63
B 1,545,161.37 - 1,545,161.37 12.05% 77,258.07
C 3,600,962.12 - 3,600,962.12 28.08% 3,600,962.12
D 494,464.38 - 494,464.38 3.86% 24,723.22
E 430,625.10 - 430,625.10 3.36% 430,625.10
Total 10,973,225.61 - 10,973,225.61 85.57% 4,378,669.14
Item Ending Balance Initial Balance
Interest receivable
Dividends receivable 26,199,905.76 35,932,821.99
Other receivables 186,581,184.21 154,348,571.29
Total 212,781,089.97 190,281,393.28
(1) Dividends receivable
① Classification and disclosure of dividends receivable
Item Ending Balance Initial Balance
Subsidiary dividend 26,199,905.76 35,932,821.99
Less: Allowance for credit losses - -
Total 26,199,905.76 35,932,821.99
(2) Other receivables
① Aging analysis of other receivables
Aging Ending book balance Opening book balance
Within 6 months 103,771,598.81 103,153,829.72
More than 3 years 32,493,625.82 13,009,773.80
Total 203,635,103.41 166,140,296.59
② Category of other receivables by nature
Nature Ending book balance Opening book balance
Intra-company transaction 157,404,302.58 136,748,535.22
Imprest funds and others 46,230,800.83 29,391,761.37
Total 203,635,103.41 166,140,296.59
③ Classified disclosure according to bad debt provision method
category Ending Balance
Book balance scale Bad debt reserve Provision ratio Book value
Provision for bad debts on an 6,936,767.11 3.41% 6,936,767.11 100.00% -
individual basis
Provision for bad debts on a 196,698,336.30 96.59% 10,117,152.09 5.14% 186,581,184.21
portfolio basis
Including：Aging portfolio 46,230,800.83 22.70% 10,117,152.09 21.88% 36,113,648.74
Combine related party 150,467,535.47 73.89% - - 150,467,535.47
combinations
Total 203,635,103.41 100.00% 17,053,919.20 8.37% 186,581,184.21
(continue)
Item Initial Balance
Book balance scale Bad debt reserve Provision ratio Book value
Provision for bad debts on an 6,936,767.11 4.18% 6,936,767.11 100.00% -
Item Initial Balance
Book balance scale Bad debt reserve Provision ratio Book value
individual basis
Provision for bad debts on a 159,203,529.48 95.82% 4,854,958.19 3.05% 154,348,571.29
portfolio basis
Including：Aging portfolio 29,391,361.37 17.69% 4,854,958.19 16.52% 24,536,403.18
Combine related party 129,812,168.11 78.13% - - 129,812,168.11
combinations
Total 166,140,296.59 100.00% 11,791,725.30 7.10% 154,348,571.29
Item Ending Balance
Carrying Provision for Provision Rate Reasons for
Amount Bad Debts Accrual
YAW ADDO FISHERIES COMPANY LIMITED 6,936,767.11 6,936,767.11 100.00% YAW payment
for vessel
purchase: The
vessel has been
disassembled,
and YAW is
unable to pay
the amount due.
Hence, a bad
debt provision
has been made.
Total 6,936,767.11 6,936,767.11 100.00%
Combined itemization：Aging portfolio
name Ending Balance
Book balance Bad debt reserve Provision ratio
More than 3 years 3,488,250.22 3,488,250.22 100.00%
name Ending Balance
Book balance Bad debt reserve Provision ratio
Total 46,230,800.83 10,117,152.09
（continue）
name Initial Balance
Book balance Bad debt reserve Provision ratio
More than 3 years 3,447,814.77 3,447,814.77 100.00%
Total 29,391,761.37 4,854,958.19
④ The provision of allowance for credit losses
The allowance for credit losses Stage one Stage two Stage three Total
(credit (credit-impaired
-unimpaired) )
Beginning balance 1,407,143.42 - 10,384,581.88 11,791,725.30
Revaluation of beginning balance 1,407,143.42 - 10,384,581.88 11,791,725.30
Provision 5,221,758.45 - 40,435.45 5,262,193.90
Reversal - - -
Charge off - - -
Write-off - -
Other changes - - -
Ending balance 6,628,901.87 - 10,425,017.33 17,053,919.20
⑤ Allowance for credit losses
Item Initial Balance Amount of change in the current period Ending Balance
Provision Recovery or Write off Exchange
reversal impact
Item Initial Balance Amount of change in the current period Ending Balance
Allowance for 11,791,725.30 5,262,193.90 - - - 17,053,919.20
credit losses of
other
receivables
Total 11,791,725.30 5,262,193.90 - - - 17,053,919.20
⑥ Other receivables due from the top five debtors are as follows:
Name of the unit Nature of Ending Balance Aging As a percentage Ending balance
payment of the total of allowance for
amount credit losses
LAIF. FISHERIES. COMPANY Current 70,624,026.75 Within 1 year 34.68% -
LIMITED account
Shandong Zhonglu Haiyan Ocean Current 40,410,113.50 Within 1 year, 19.84% -
Fishery Co., Ltd. account 1–3 years
Qingdao Laoshan District Bureau Government 39,758,735.00 0–6 months, 1–2 19.52% 6,440,958.00
of Agriculture and Rural Affairs grant years
receivable
YAW ADDO FISHERIES Current 11,083,500.71 Within 1 year, 5.44% -
COMPANY LIMITED account 1-3 years or
more
Shandong Zhonglu Aquatic Current 8,279,334.72 1-3 years or 4.07% -
Shipping Co., Ltd. account more
Total 170,155,710.68 83.55%
Item Ending Balance Initial Balance
Balance Provision Carrying amount Balance Provision Carrying amount
for impairment for impairment
Investment to 328,189,455.23 328,189,455.23 328,189,455.23 328,189,455.23
subsidiaries
Total 328,189,455.23 328,189,455.23 328,189,455.23 328,189,455.23
Investment to subsidiaries
Investee Initial Balance Additions Reductions Ending Balance
HABITAT INTERNATIONAL 12,476,145.60 - - 12,476,145.60
Investee Initial Balance Additions Reductions Ending Balance
CORP.
Shandong Zhonglu Oceanic 22,869,513.38 - - 22,869,513.38
Fisheries Transportation Co., Ltd.
Shandong Zhonglu Oceanic 55,448,185.24 - - 55,448,185.24
(Yantai) Food Co., Ltd.
Shandong zhonglu Haiyan Oceanic 141,395,611.01 - - 141,395,611.01
Fisheries Co., Ltd.
Zhonglu Ocean (Qingdao) 96,000,000.00 - - 96,000,000.00
Industrial Investment Development
Co., Ltd.
Total 328,189,455.23 - - 328,189,455.23
(1) Operating income and operating costs
Item Year ended 31/12/2025 Year ended 31/12/2024
Income Cost Income Cost
Primary operating business 326,925,080.02 306,754,412.39 365,145,627.80 337,377,622.64
Other operating business 7,528,623.53 3,525,898.68 7,967,752.33 3,144,057.83
Total 334,453,703.55 310,280,311.07 373,113,380.13 340,521,680.47
(2) The income generated by the contract
① Current operating income is classified according to the time of revenue recognition
Classification of Product sales revenue Other business income total
contract Operating income Operating cost Operating income Operating cost Operating income Operating cost
Confirm at a 326,925,080.02 306,754,412.39 - - 326,925,080.02 306,754,412.39
certain point
Confirm within - - 1,698,113.19 - 1,698,113.19 -
a certain period
of time
Total 326,925,080.02 306,754,412.39 1,698,113.20 - 328,623,193.21 306,754,412.39
② Income from applicable lease criteria
Item Rent Rental and others Total
Operating income Operating cost Operating income Operating cost
Income from main
business
Other business income 5,830,510.34 3,525,898.68 5,830,510.34 3,525,898.68
Total 5,830,510.34 3,525,898.68 5,830,510.34 3,525,898.68
Item Year ended Year ended
Gain/(Loss) from long-term equity investments in cost method 31,522,678.67 18,183,814.22
Bill discounting expenses - -100,548.20
Total 31,522,678.67 18,083,266.02
XVII. Supplementary information
Item Amount Remark
Disposal of profits and losses of non-current assets, including the offset part of the asset -2,189,178.62 -
impairment provisions
The government subsidies included in the current profit and loss, except the government 3,612,270.61 -
subsidies that are closely related to the normal operation of the company, conform to
the national policies and regulations, are enjoyed according to the determined standards,
and have a sustained impact on the company's profit and loss
In addition to the effective hedging business related to the normal operation of the -
Company, the gains and losses arising from the fair value changes caused by the holding
of financial assets and financial liabilities and the gains and losses generated by the
disposal of financial assets and financial liabilities
Custodian fee income obtained from the entrusted operation 1,698,113.19 -
Other non-operating income and expenses other than the above items 210,442.94 -
Deduct: Income tax impact 243,495.76 -
The impact of minority shareholders' equity 51,577.75 -
Total 3,036,574.61 -
Note: In accordance with the Notice on Implementing the 2021 Fishery Development Subsidy Policy
(Document No. Nongban Jicai [2021] No. 24) and the Notice on Implementing 2025Agricultural
Industry Development Fund Projects Related to Distant-Water Fisheries (Document No. Nongyu
Yuanhan [2025] No. 81), the Company received a government grant of RMB 55,758,700 this year to
enhance international performance capabilities. As of December 31, 2025, no such subsidy has been
received. Since this grant is directly associated with the Company’s performance rating and fishing
vessel operating hours and is calculated based on parameters including the Company’s performance
rating and fishing vessel operating hours according to the rates set by relevant national and provincial
authorities, it has not been presented as non-recurring profit or loss.
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 3.11% 0.13 0.13
Net profit attributable to the common shareholders after 2.82% 0.11 0.11
deducting non-recurring gain or loss items
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